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April 2008 | ifr special report | 5 NON-CORE BOND MARKETS ROUNDTABLE

Michael Winfield, IFR; David Smith, JPMorgan; Holger Kron, Deutsche Bank; Horst Seissinger, KfW; Paul Johnson, RBC Capital Markets; Alexander Liebethal, KfW; Philip Wright, IFR; Sjaak-Jan Baars, Rabobank; Moti Jungreis, TD Securities; Isabelle Laurent, EBRD

Just talking from an investment bank perspective — and I take the point that quite often we are aggressive in these markets and we need to underwrite trans- actions and warehouse stocks to feed into retail or small institutional demand — I think the cash market has started to balance out again. If you look at Double A credits, certainly Double A bank names, with the CDS trading with a hundred handle and issuers launching at levels that are priced to sell in the context of that CDS, the basis versus CDS is starting to become attractive for underwriting houses. I think there is a point approaching, and I hope soon, where domestic banks, local financials, can start to access these markets again, which have been closed for the last six or nine months.

IFR: In terms of timing, are you saying that is likely to happen this year?

Paul Johnson: Yes, I think it will. There is no doubt financials have to fund. We have seen from the core markets that they are realistically looking at the right funding

I think there is a point

approaching, and I hope soon, where domestic banks, local financials, can start to access these markets again.

IFR: If anything, we have seen the Australian banks funding anywhere apart from domestically. They have all done Samurais in the last few months and they have all been active in the European markets.

levels now: they are taking the price. That is the first stage of this market starting to recover. As far as local currency markets are concerned — and I am thinking more in terms of non-core dollars at the moment; Australian, Canadian, Kiwi — there will be an opportunity not only for domestic access, but to get back into the offshore markets.

Paul Johnson: They have been funding domestically as well. It is no secret they have a lot of funding to do and they have been looking for opportunities in the market. There is a very active and busy Australian offshore market at the moment, which is probably eating into market share for some of the other currencies, just simply because of where real yields are: outright yields are very high. Certainly, if you compare it to Hungary or Poland, these are high- yielding, more attractive assets, particu- larly with the Asian recognition they have. I do not think it will be a long time before some of the domestic banks or domestic names, be they financials or corporates, start to look at accessing the offshore markets again. There is already good volume going through. There have been plenty of low points to pick out so

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