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Negotiating the European Muni Bond Maze

Monday, August 12, 2013 - 02:35

Aug. 12 - KPMG Partner Steven Hall explains the European rules surrounding municipal bonds and its pros and cons.

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I'm familiar -- can load up on US municipal bonds due to -- existing rules. -- to discuss Stephen holt -- KPMG. Stephen is essentially rules coming in line with fossil isn't it. Yes so on to the balls -- requirements for capital when. Where regional governments are considered as as -- at all sovereign risk Ben thanks can treat them as a farewell sovereign exposures. And European requirements so bring those rules -- -- -- felt a -- things that are. If this individual authorities in a particular country. Teams voters regional governments to be. Equivalent to sovereign risk when banks and invest in those regional government exposures can treat them as if the sovereign risk I'm not. Provides fairly -- and capital requirement which is which is critical in this current capital constrained environment. Now sixty all the pros and cons why shouldn't justice and -- is these meaningful hours. Well from my from a yield perspective at the moment where you go very low review of home on government forms to government bonds attract fairly -- capital requirements potentially 0% -- -- -- went to it. Municipal -- allow you to provide. Significant enhancements -- not yield. Now clearly there is a corresponding. Risk associated with -- but if the capital requirements so dollars and useful -- to be treated as if there was sovereign risk. Then you'll you getting a -- capital requirement which is attractive. And you'll say just no luck -- harm you -- you wouldn't what you would -- never rejecting. With sovereign bonds of course the other key questions as well Stephen it shouldn't mean east would be considered softens. The big concern here is. When you've cult I need. Outside counsel in the -- Qaeda in Iraq that can raise council Texas but is -- assignment as you counsel and exposure to come ready someone into part about it. There's not really broadly equivalent to sovereign risk. The same thing in the US. Do those municipal authorities can they -- palace should I even even if they can raise taxes should they be considered as if at all the US sovereign risk nothing -- -- his -- The judgment comes in where the supervision authority should be making matters judgment -- Right very interesting space so well time shall we check in with -- As the situation. And the rules change I was Stephen hole partner at KPMG I'm managing -- Thinks is what is.

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Negotiating the European Muni Bond Maze

Monday, August 12, 2013 - 02:35