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An article forecasting the effects of the 2013 implementation of the Third Basel Accord on the management of risk-weighted assets is presented. The author discusses and offers diagrams on the changes in European investment banking regulations governing liquidity, capital adequacy ratios, and counterparty risk, as well as examining the additional government regulations on the German investment banking industry.

The article discusses the emergence of a liquid asset class in Europe in the form of bond issues from local authorities, municipals and regions, commonly and collectively referred to as sub-sovereign borrowers. Total primary market issuance from European sub-sovereign issuers was below €10 billion in 1999 and less than €20 billion in 2000. Increased demand for exposure to the asset class among investors in Europe has followed increased supply. Within the euro-denominated market for sub-sovereign issue, however, German Länder are the most prolific borrowers. In the first half of 2003, German issuers accounted for 88% of new issuance among all European sub-sovereign borrowers. Elsewhere in Europe, Italy has emerged as an increasingly fertile source of municipal and regional bond issuance, with local authorities enjoying more funding autonomy in recent years. A third European market that has been increasingly active as a source of local authority issuance has been Spain. The city of Barcelona was upgraded by Standard & Poor's in April 2003 from AA- to AA reflecting the city's strong budgetary performance and its declining debt levels. Although the depth and diversification of the European sub-sovereign market has expanded in recent years, doubt remains about its credentials as an asset class in its own right.

The article focuses on the feedback being sought by the European Banking Authority (EBA) on its proposed methodology for determining assets included in the stock of high quality liquid assets (HQLA) that banks can hold in the liquidity coverage ratio (LCR). The LCR is aimed at protecting banks from short term market crises. The range of assets eligible for the LCR buffer was expanded by the Basel Committee. EBA plans to assess asset classes using a scorecard system.

The article discusses the developments in the sovereign, supranational and agency (SSA) secondary bond market in Europe. It cites the apprehensions shown by market players on the impending arrival of the European Stability Mechanism (ESM) in the market. It claims that the ESM is expected to purchase highly liquid assets based on the European Financial Stability Facility (EFSF) guidelines.

The article presents information on financial markets, European government's borrowing of money and the collapse of brokerage firm MF Global. The stock market of Dow fell by three percent and Hong Kong by five percent due to the European government's high interest rates. As reported, the customer assets in MF Global are openly stolen. It took liquid assets instead of cash from customer accounts to post as illegal collateral for emergency funding which the lender took and liquidated.

The article reports that European Central Bank director general of market operations Francesco Papadia has criticized the alleged gap between central bank repo criteria and eligible liquid assets for banks. According to the author, market experts have interpreted the comments as an implicit support for European securitizations to become eligible level two liquid assets once the European Union has implemented Basel III, CRD IV. He adds that securitization may return as a source of liquidity.

The article focuses on opposition expressed by the European Covered Bond Council (ECBC) towards the Basel Committee on Banking Supervision's proposal to categorize covered bonds as corporate bonds in a broader definition of highly liquid assets. The ECBC argued that covered bonds should be included in a narrow definition of highly liquid assets for liquidity buffers. The Basel Committee plan will required banks to hold enough liquid assets to continuously pass a Liquidity Coverage Ratio (LCR) test.

Only remarkable conditions will draw Uruguay back to the international bond markets in 2015, the country's debt management unit (DMU) told GlobalCapital. [ABSTRACT FROM AUTHOR]

The article focuses on the investment opportunity in European distressed debt. Topics discussed include the banks' acceleration of their dispositions of illiquid assets to improve their balance sheets, the myths surrounding the misconception on the distressed-debt opportunity and the liquidation of companies resulting from bankruptcies. Also mentioned is the idea that European culture and work practices prevent successful restructurings.

The article questions if anyone will start buying Europe's debt other than the European Central Bank (ECB). The authors note the little incentive for many European Union (EU) government bonds and the lack of skills of traditional buyers of sovereign debt to cope with the reality that sovereign bonds are credit risks. They think that most European bonds are no longer risk-free, liquid assets as claimed by European authorities.