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Forex Flash: Credit markets notch solid week despite Friday jitters – Deutsche Bank

FXstreet.com (Barcelona) - There were a few jitters in credit markets on Friday after news that the Manchester-based mutual Co-Operative Bank was downgraded six notches by Moody’s to Ba3 from A3. Moody's flagged a potential capital shortfall arising from further substantial losses on the bank's real-estate exposures.

Co-Op's subordinated bonds reportedly sold off more than 20 points on Friday, which briefly affected sentiment in other financials. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The bank said that it does not need government support and it will sell large parts of its business to bolster capital ratios.” As of 30 June 2012, the bank's market share among UK monetary financial institutions was 0.68%, based on total consolidated assets of £48bn, according to Moody's.

Despite the jitters, credit markets had another solid week. Indeed, Reuters reported that 25 US high yield deals totaling USD11.185bn priced last week and the majority were reportedly some three to four times oversubscribed with most generally performing on the break.

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