ctindale
As is always the case with my posts directed to you, they are not "loaded" questions, rather to seek clarification and exchange views. I trust you understand and accept this point.
This being the case, you comment:
"In the context of ANZ hold billions of debt in the form of bonds, these bonds are made up of high risk debt from over 800 different companies"
I seem to recall that ANZ have said this exposure is to AA and AAA companies. If this is the case then I would not call it "high risk debt". Please correct me if I am wrong.
On a technical point, which you may know the answer (I have been removed from the scene for too long, and have forgotten), but:
Does the fact ANZ (or others) have in place credit insurance enable them to take the asset off the balance sheet and treat the exposure as a "contingent" item?
That is, similar to bank accepted bills (BABS), whereby rather than have direct lending to a customer (on balance sheet) they take a Bill of Exchange from the customer and on-sell into the market. Thereby turning the exposure into an off balance sheet (contingent) items.
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