Divisive Debt Maneuvers; Bank Stress Returns
The Credit Edge by Bloomberg Intelligence
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The Impact of the March Crisis on the Economy, Economic Growth and Credit Growth
extension risk is basically when you buy an 81 security of a bank, you are assuming that the bank will call the security on the first call date. And banks under my coverage, for example, Australia. Australian banks in the past have always called 81 securities on the firstcall date. For Canadian banks, they are not known for calling the 81 securities at the first calldate. So in terms of extension risk, I see a little bit for Canadian banks, but not for Australian banks. But something to watch out is what will be the impact of the crisis we had in March on the economy, economic growth and credit growth. Why? Because if we see a significant tightening of underwriting standards
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