Q&A: counterparty risk - Spot the differentiation
The credit quality of product issuers has become a prime concern following the downfall of US investment bank Bear Stearns. Sophia Morrell asks seven industry players - issuing banks, an index provider, a distributor, a risk analysis and pricing company and a lawyer - about how counterparty risk is affecting business in the US
Structured Products: How sensitive are investors to an issuer's credit rating? Do they distinguish between the credit quality of different institutions?
Anna Pinedo, partner, Morrison and Foerster: Investors are particularly sensitive to all of the headlines about write-downs at the large financial institutions and the ratings downgrades or ratings warnings that have followed. Investors anticipate that there will be additional write-downs by large financial institutions and, as a consequence
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