Overview

Debt capital markets have been at the heart of regulatory and policy debates since the global financial crisis of 2008. In this work, Vincenzo Bavoso explores the role financial markets and products have in fuelling episodes of crises and financial instability. Focussing on the law and regulation, but also drawing on current economics and finance scholarship, Debt Capital Markets examines both the pre-2008 regulatory environment, and the framework that has emerged from post-crisis regulatory corrections since. Charting the evolution of debt capital markets and the transformation and liberalisation of the financial markets throughout the 1980s and 1990s, the book outlines how debt capital markets - from bonds to more sophisticated forms of securitised credit - have become engines of private debt creation, excessive levels of leverage, and inevitably, financial instability. It covers all the main channels of debt intermediation in capital markets (bonds, commercial paper, covered bonds, securitisation, collateralised debt obligations, collateralised loan obligations), and explains relevant synergies with adjacent markets and products (such as credit derivatives, repurchase agreements, or FinTech lending). Bavoso argues that the regulatory response after the 2008 global financial crisis has been insufficient so that debt capital markets remain the main locus of financial instability today. His book provides a complex analysis of financial markets that accounts for theoretical, practical, and regulatory aspects. It provides a multifaceted and contextual appraisal of the role of debt capital markets, together with the legal and regulatory challenges posed by their development.

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9780198893257

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Vincenzo Bavoso explores the origins of the rise of modern debt capital markets and the risks they pose to the financial system. He skilfully explains how substantial growth and innovation in debt capital markets contributed in Europe and the US to a highly-leveraged banking and financial system and how post-2008 regulatory reforms have not addressed the underlying systemic risks. His call for a redesign of capital markets regulation that moves away from the assumptions of efficient capital markets to a more realistic assessment of the market failures and financial stability risks caused by the growth of private debt in capital markets and its transmission through the shadow banking system will certainly draw the attention of regulators and policymakers. This book will lead the field in addressing the financial stability risks posed by debt capital markets. * Kern Alexander, Professor of International Financial Law, University of Zurich * Debt capital markets are the breeding ground for financial crises. Debt Capital Markets: Law, Regulation, and Policy will be the go-to resource for practitioners, policymakers, and scholars looking to better understand this crucial area of modern finance. * Morgan Ricks, Herman O. Loewenstein Chair in Law, Vanderbilt Law School *

Author Information

Vincenzo Bavoso is Professor of Commercial Law at the University of Manchester Law School. Previously, he was a research associate in the Tipping Points project at Durham University; a lecturer in law at Kingston University; London, and a teaching associate at the University of Manchester, where he also completed his PhD. Visiting appointments include the Institute of Advanced Legal Studies, London; the China-EU School of Law, at the China University of Political Science and Law, Beijing; the National University of Singapore; and the Chinese University of Hong Kong. Prior to entering academia he was a legal practitioner, having qualified to the bar in Italy.

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