You can't live on base salary alone, says the anonymous ABS professional. It's unfortunate, therefore, that a bonus looks like wishful thinking.
Last week I had a go at sub-prime lenders, but my main concern now is not to become sub-prime myself. My mortgage is reverting to my lender's base rate next summer. There have been several BoE rate increases since I took out my mortgage and the consequences are starting to pinch.
With 50% LTV, I don't exactly look like an obvious sub-prime case. However, my base salary only covers my mortgage payments, which are interest only, and the bills. If I were to revert to my lender's base rate (which ironically happens to be Northern Rock), my base salary would only just cover the higher interest payments, leaving me just 200 a month to feed the family and pay the bills.
It doesn't look good, given that the latest rumour is that bonuses will be paid mostly in shares, if they are paid at all.
My predicament is typical of the main risk facing the ABS market - refinancing risk. Soon some of the loans which were entered into with low spreads will have to be refinanced with higher credit spreads and higher swap spreads. The combination of the two could affect a large proportion of cashflow-poor transactions.
In this context, it will be no surprise that the highlight of my week was the news that cuts in the base rate are now more certain.
I also received a call from a headhunter. Lately, I have been the one calling them. I not only need a new plan B, as my old one - to change team within the bank - was killed by the credit crunch, but this is also a time when ABS bankers need a plan C.
Unfortunately, the job in question was for a monoline insurer. This is definitely not the moment to be picky, but beyond the fact that working for a monoline might not offer the same excitement as working for a bank, there is a serious level of uncertainty as to whether they are going to be able to operate in the future.
This being said, there is nothing exciting about surfing the web, which has become my new job description, nor is there is any certainty about my job. However, what is the point in leaving one uncertain world just to join another perhaps more uncertain one?
Investors have their eyes on the monolines, and we should too, because if they were to disappear it would push any regeneration of the market even further back. What happened with CIFG is a good warning, though with the capital injection committed last week it might be a safer place than a bank. Now, with their market showing unprecedented signs of weakness, even my covered bond colleagues think they are at risk.
We have been told that our global head has brought forward a visit that he wanted to pay us. I cannot wait to see him.