Editor’s letter

This year’s Credit Congress produced a succession of fascinating talks and panel discussions. One of the highlights was John Botti’s keynote speech on how investors need to start thinking about credit holistically. Botti is head of Crédit Lyonnais Credit Management, a London- and New York-based fund within Calyon that is able to invest with significant freedom and flexibility.

Botti calls this approach the “credit toolbox”; he told delegates that to outperform in credit, investors need to look at all areas of a company’s balance sheet – from senior secured debts right down to equities. Managers need to look at a balance sheet in the context of the company’s sector and the overall credit market. And markets need to be looked at in context: euro compared with dollar, high grade with high yield and distressed.

Other attention-grabbers were loan portfolio managers explaining to investors how they are using the credit default swap market to hedge exposures and how this now includes increasing risk to build a more diversified portfolio. And Peter Matza, head of funding at RWE, gave a spirited defence of current covenant packages on a panel with the three protagonists of the ‘improving market standards’ initiative.

But surely the greatest feature of the day was the confusion caused by sticky toffee pudding being served at lunch. Served at roughly the same time as the main course and looking remarkably like rice, many of the delegates almost made the mistake of eating their lunch the wrong way round. To Credit’s knowledge only one person – Simon Greaves, Application Network’s head of marketing in Europe and one of the event’s sponsors – actually ended up spooning the pudding all over his vegetables. He subsequently mused that the dish was slightly on the sweet side.