Discover and read the best of Twitter Threads about #Creditrisk

Most recents (9)

Stochastic and Deterministic LGD Loss Given Default Models are different.
Many bankers are unable to understand the different mathematical assumptions that can make the computations.
That is a big risk per se!
@BIS_org
#model #Risk #Validation #Creditrisk #FRM
#MachineLearning
What is a hazard rate assumption?
How can credit risk be modelled using hazard rates?
This is beyond an average #banker.
Most primal bankers only understood the 5 or later the 7Cs of credit.
Accounting, cashflows, creating a charge on assets, foreclosure, special asset mgmt, etc
Actually, Quantitative Risk Management has not helped at all, in my opinion.
Blindly applying maths and statistics has made decision-making worst.
Banking was about relationship mgmt, business model analysis, accounting trickeries, branch operations, etc
Now it's like a lab work
Read 4 tweets
Two major incidents in Debt Markets & learnings from that:

1. @FTIIndia saga of #Winding up 6 #DebtSchemes

2. Delay in @KotakMF #FMPs repayments to Investors & giving time to Borrowers to repay

Disclaimer: Not justifying their actions/inactions/investments etc.
Hugely negative reactions by Media/Investors/MFDs - vociferously blaming respective AMCs, filing Court cases, knocking on doors of the regulator and beyond

Did not make an effort to understand actions of the #AMCs which were done to protect #InvestorInterests
What were choices with AMCs:

1. Winding up by FT/ Delay by Kotak or,

2. Sell underlying collateral at huge discounts, pay what is recovered to #Investors & raise their hands as this is part of #CreditRisk
Read 12 tweets
Let’s talk about the pitfalls of past performance, when credit risk works, and beating #inflation in #retirement.
Which #mutualfunds did well last year? One year Mutual Fund return...
Would you #invest in long duration/ gilt funds?
Read 9 tweets
Should #NRIs based out of Singapore and the US #invest in India now?
Should we #invest now or wait until the #USElections2020 are over?
What happens to my #portfolio if #Trump doesn’t come back to power?
Read 13 tweets
நண்பர்களே, சென்ற வாரம் அரசின் திட்டங்களில் கடன் பெறுவது பற்றி அறிந்து கொண்டோம். இந்த வாரம் வங்கியில் தொழில் செய்ய கடன் பெறுவது எப்படி என பார்க்கலாம்.

இதற்கு பின்வரும் 2 கேள்விகளுக்கும் அதன் துணைக்கேள்விகளுக்கும் சரியான பதில் இருந்தால் வங்கியில் கடன் வாங்குவது சுலபம்
1. கடன் வாங்கி அந்த பணத்தை என்ன செய்வீர்கள்? (End use of funds)
2.அந்த பணத்தை எப்படி திருப்பி அடைப்பீர்கள்? (source of repayment)

இந்த கேள்விகள் பார்க்க மிக சுலபமாக தெரியும். ஆனால் உங்கள் பதிலானது நிறைய துணைக்கேள்விகளை கேட்க வைக்கும். அந்த பதிலில் இருந்தே உங்களுக்கு கடன் தருவது
பற்றி வங்கி முடிவு எடுக்கும்.

எகா. நீங்கள் ஒரு பெட்ரோல் பங்க் நடத்துகிறீர்கள். உங்கள் டேங்கின் கொள்ளளவு 50,000 லிட்டர். யாருக்கும் நீங்கள் கடன் தருவதில்லை, cash and carry business என வைத்துக் கொள்வோம். வருடம் 5 கோடி வியாபாரம் நடக்கிறது.
Read 10 tweets
Extended COVID-19 lockdown is likely to amplify #credit risk (owing to a slowdown in business). #Investors must stick to #debt #mutualfunds where the #fund manager does not chase #yields by taking higher #CreditRisk. @fifaindiaorg @cafemutual @networkfp @bsindia @livemint (1)
#Investors should prefer to #invest in instruments issued by government & public sector enterprises. Must stay away from those having high exposure to private issuers, whether AAA or not. No one should forget that #investing in #debt #funds is, was & will never be risk-free. (2)
Currently it is proposed to opt for a pure #LiquidFund and/or #OvernightFund which does not have high exposure to private issuers, no matter AAA or not.

Assess your #RiskAppetite & #investment tenure while #investing in #debt #funds & prefer safety of principal over returns.
Read 3 tweets
Current Credit Risk fiasco can be traced back to Regulator when they recategorised #AccrualSchemes as #CreditRisk. That gave open mandate to FMs to take this risk.

It was up to #Advisors and #Investors to have got lured by higher yields with higher risks or not chased yields .
This started when Regulator merged Institutional and Retail plans in the garb of protecting Retail Investors. Not realizing both segments have different risk appetite and knowledge levels
Ideally, they should have continued these two plans of institutional and retail (maybe same expense ratios) but different investment mandates to FMs.
Read 7 tweets
Launch of a new Series:

#BondwithMisterBondforEdelweissBharatBondFund:
This is the silver lining all of us have been looking for in these crisis times.

Read this thread and see this Video: great investment opportunity at right time:

bit.ly/2JbYyro

@iRadhikaGupta
This scheme follows constantly rolling down strategy i.e. currently it will buy 3 year or 10 Bonds. Next year they will buy 2 year or 9 year similar papers and so on.

Currently debt markets are roiled with dealys, defaults & downgrades. This scheme avoids #CREDITRISK
There has been flight of Liquidity due to FII pullouts. This has increased Yields under these two options of Edelweiss Bharart Bond Fund. A great opportunity to invest and treat them like open ended FMPs.

Investors will get huge Indexation & LTCG Tax benefits.
Read 3 tweets
Debt Markets facing lack of buyers: Since 9th March, 1 yr CD rates have gone up by 50 bps, 2-3 yr AAA PSUs yields have gone up by 50-100 bps, blue chip HFCs like HDFC bond yields have gone up by 70-80 bps & 10 yr corp bond yields too by 50 bps
This is a good time to capture higher yields in AAA rated PSU/Corporate Bond schemes following Constantly Rolling Down strategy with longer duration and no #CreditRisks.
When most Central Banks have cut rates aggressively, #RBI has still kept this option in its armoury and only announced liquidity infusion of Rs.1 lac crore thru LTRO.
Read 7 tweets

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