US
If you’re looking for a hot new area with wonderful growth potential and the possibility of new and exciting products, government debt may be it.
According to the FT’s Gillian Tett, ‘the word inside some big western investment banks is that public finance is set to be a focus for innovation in the coming years, in much the same way, say, that mortgage finance or leveraged buyouts used to spark so much creativity.’
Tett appears to be onto something. Sean Taor, global head of rates syndicate at Barclays Capital, tells us the European government bond market will, “have to innovate.”
“Last year, sovereign debt issuance in Europe was up 43% on 2008,” says Taor. “It will carry on rising this year, although not by as much. You will therefore have increased debt and a hugely increased redemption profile, particularly in 2012 and 2013. At the same time, the interest rate environment won’t be as bond friendly in future and the challenges will be greater.
“European governments will have to look at other ways of issuing government debt rather than plain vanilla bonds and syndications,” Taor predicts.
For the moment, however, jobs for government debt professionals are at the vanilla end of the spectrum. One headhunter says Deutsche, Morgan Stanley and Calyon are hiring, but the focus is on standard government bond traders.
Taor points out that banks already have the capability for innovating around government debt in house: “The expertise is here, it just hasn’t been focused around sovereign debt until now.”
oh goody, financial innovation in 2010 = financial meltdown in 2018. don’t these people ever learn? they should stick to selling vanilla govies and lose these delusions of grandeur.
Planes can crash, perhaps we should go back to horse and buggy travel?
Is gov debt the new goldman sachs?
lets be honest, the govies/syndicate desk always gets last pick of the MBA draft, do we really want these geniuses “innovating”?
Who is dumb enough to buy all these certificates of confiscation? Bonds, the biggest bubble of all.
lets all buy some packaged Greek bonds!!!
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Innovate = complicate = make harder to price = bigger fees for Barclays & co…
not all securitisation is bad or have performed badly, in fact securtised bonds have been rallying hard in the last 6 months as people realised that you can’t tar all securitsation with the same brush of US subprome mortgages!
its the mentality that we see from the comments above that have contributed to these massive spreads and created opportunities for people like myself to make lots and lots of money. Discrimate anything with your uneducated in finance at your peril, you are likely to be the ones to lose out in the long run. be greedy when others are fearful, and don’t can get caught up by the hubris created by the financial press, do your own rational analysis.