EPDA's 4th Annual European Government Bond Summit

Programme

5th November 2009

17:00 - 18:00
Pre - Conference Registration  
Pre-register for the conference on 5th November and join us for the networking drinks reception afterwards.

18:00 - 20:00
Welcome Networking Drinks Reception Hosted by   

Keynote Address
Jens Thomsen, Member of the Board of Governors, Danmarks Nationalbank

6th November 2009

08:30 – 09:15
Registration and Breakfast

09:15 – 09:30 
Opening Remarks

Mark Austen, Managing Director, AFME
Stanislas de Caumont, Managing Director, Head of Government Bonds Trading, Credit Suisse

09:30 – 10:00
Keynote Address 
Tatjana Verrier, Head of Financial Services, Directorate-General for Competition, European Commission

10:00 – 11:15 
Poor Economic Growth, Demographic Pressures, Inflation/Deflation Risks. How Will All This Play Out in the Coming Years and What Impact Will This Have on Already Ballooning Government Deficits and Overall Debt?
The crisis has resulted in an enormous amount of new supply in the government bond markets. And issuers will still have vast amounts of supply coming in future years. Demographic pressures will exacerbate this. Inflation and deflation concerns will play their part. Economic growth may be in the doldrums for years to come so increased tax revenues cannot be relied on. These will all impact ratings going forward. And can we be sure that there will not be another credit event that will put us back on the brink of a financial meltdown? All this is happening in a regulatory environment where capital is likely to get more expensive going forward. This however could benefit a risk free asset like government bonds as banks will be required to hold more liquid assets. Should we be worried or is the current tightening of government bond markets something we can rely on going forward?

2 short 10 minute presentations on the below topics followed by panel discussion

• Economic growth and inflation/deflation in the future
• Impact on AAA ratings

Moderator:
James Rutter, Head of Special Reports, Financial News

Panellists:
Laurence Boone, Director, Chief French Economist, Barclays Capital
Pierre Cailleteau, Sovereign Credit Officer, Moody's Investors Service Ltd.
Jacques Cailloux, Chief European Economist, The Royal Bank of Scotland
Paul Mortimer Lee, Global Head of Economics, BNP Paribas

11:15 – 11:45 
Morning Coffee Break

11:45 – 12:45 
Primary Markets: Do Issuers Have the Appropriate Strategies and Tools to Satisfy Investor Needs?
With a gloomy economic forecast and storm clouds on the horizon for government ratings, investors have still been fleeing to quality in government bonds. In 2009, supply has increased enormously but auctions and syndications are still being filled. Country spreads and bid/offer spreads have tightened considerably in recent months. But as we have seen in the previous panel, large storm clouds are possibly on the horizon. In times of crisis, it usually ushers in change. Pressure drives innovation. What strategies or tools do issuers have at their disposal to ensure they place their debt in the years to come? What is the right combination of long bonds vs short, floating vs bullet, nominal vs linkers? What about new products? Convertible bonds which could be converted into floating or fixed rates, or gold, or shares which the government owns or other currencies, all on some sort of triggering event? Longevity bonds which create an effective hedge against longevity risk for an ageing population? Or national savings bonds which fund strategic investment opportunities? Another possibility is all issuers coming together to create one Common European bond or bill in order to create an exceptionally liquid market? And some have even suggested government sponsored climate bonds where investors would receive returns from the selling off of carbon credits? What can we expect in the years to come?

Moderator:
Antonio Cavarero, Senior Trader, Deputy Head of Inflation Trading, Société Générale

Panellists:
Laurent Fransolet, Managing Director, Head of Euro Fixed Income Strategy, Barclays Capital
Padhraic Garvey, Managing Director, Head of Development Market Rates Strategy, ING
David Keeble, Executive Director, Head of Interest Rate Strategy, Calyon
Harvinder Sian, Strategist, The Royal Bank of Scotland

12:45 – 13:45
Lunch Hosted by

13:45 - 14:15
Keynote Address
Matthew Rutherford, Deputy Assistant Secretary, Federal Finance, U.S. Department of Treasury

14:15 - 15:15
Primary Markets: How Will Issuers React to the Economic Forecasts? Will They Change Strategies and Use New Tools?  
With a negative economic outlook and a large supply coming over the next years, how will issuers react? Will there be a fundamental shift in strategy? Will pressures push them to adopt new tools? Will attractive FX swap levels combined with a desire to tap a new investor base lead to more issuance in foreign currency? Will new market circumstances make old risk management frameworks redundant? What about current issuance techniques; are they robust enough for the current supply environment? And speaking of supply; how will issuers adapt their strategies when banks are (p)repaying their capital injections? And how do issuers believe investors will react? Do issuers believe investors will buy new novel products if they are offered? Or can the market continue to operate as it has in the last few years without any fundamental change? Issuers will look into the future and discuss the possibilities they have at their disposal.

Moderator:
John Berrigan, Acting Director for Macro-Financial Stability in DG ECFIN (Directorate E), European Commission

Panellists:
Maria Cannata, General Manager, Public Debt, Italian Treasury
Philippe Mills, Chief Executive, Agence France Trésor 
Robert Stheeman, Chief Executive, UK Debt Management Office
Erik Wilders, Head, Dutch State Treasury Agency

15:15 – 15:45
Afternoon Coffee Break


15:45 – 16:45 
Secondary Markets: In Challenging Times is Liquidity Available at a Level That is Needed?
The activity of institutions and therefore the market is clearly changing as a direct result of the crisis. This will continue with the high budget deficits still expected in the years to come (negative economic outlook). Some dealers may now not be as committed to provide liquidity as in 2007 due to deleveraging/balance sheet reasons. The liquidity in the markets will depend on the new established level of leverage and capital requirements faced by institutions. Institutions have been forced to review their risk appetite. As a result, a lot of banks are changing the underlying strategy of their business. Trading volumes are still down significantly compared to 2007. However, competition has returned in Q3 to the market and new entrants are emerging. Dealers balance sheets are improving and more is being allocated to government bond trading. Nevertheless, although the current liquidity offered to investors is much better than a few months ago, it is still less uniformly distributed than in early 2007. Can this be considered the new level of activity for a new market framework? Will the crisis mean a profound change for the government bond market even though it is seen as risk free asset? And all this comes at a time when governments are increasing the supply of instruments to the market enormously.

• (Is market making dead and should we only talk about transparency? If there IS a role for market making; is the current quotation obligation for PDs up to its task?) Is there a possibility of migration to an exchange of at least some part of the market ?
• What about liquidity for clients? How can its delivery be improved?
• What can end investors expect?
• What is the role of electronic trading (if any) in such markets?
• What has changed with the pricing of derivatives? Will the BTP future work?
• Is there a (How do we price) counterparty risk in Government Bond trading? Should markets institute a CCP immediately in voice and electronic trading to minimize counterparty risk?

Moderator:
Mark Austen, Managing Director, AFME

Panellists:
Stanislas de Caumont, Managing Director, Head of Government Bonds Trading, Credit Suisse
Grainne Dooley, Vice President, Quantitative Fixed Income Portfolio Manager,Pioneer Investments
Gregor MacIntosch, Head of Rates, Standard Life Investments 
Nick Robinson, Head of Trading, Fixed Income, Schroders
Christophe Roupie, Executive Director, Global Head of Trading and Securities Financing, AXA Investment
Paul Spurin, Head of European Government Bonds, The Royal Bank of Scotland

Mark Austen, Managing Director, AFME