Year: 2009

Is the bond market bonanza a blip?

29 Jul 2009

JPMorgan and Moody s think it may be. The $600bnplus of US corporate bonds floated in the first half gave underwriters something to celebrate after a painful drought. But although market conditions remain attractive, the festivities may not last.

Fidelity and Deutsche try marriage of convenience

29 Jul 2009

The US fund manager is teaming up with the German bank to channel IPOs to investors. Both operate in competitive markets that are recovering from upheaval, and the deal gives the two parties extra selling points. But it probably doesn't involve much love or even money.

Dollar General IPO a rare bright spot for KKR

29 Jul 2009

Those who buy shares in the US retailer, which prices all its wares at $1, could be pleased too. It has proved a great countercyclical investment for KKR and the buyout shop s operating fixes boosted the company s earnings. Henry Kravis may be in for a muchneeded windfall.

Nomura enjoys Lehman boost – but how to keep it?

29 Jul 2009

The Japanese bank clocked up a $1.3bn trading gain as its Lehman acquisition kicked in at last. But Nomura risks a brain drain when retention bonuses are paid in October. And away from the trading floor, investmentbanking profits and big deals remain elusive outside of Japan.

Eads should stop backing insider-trading suspects

29 Jul 2009

A report for French regulators says the European aerospace group s former CEO and other executives should be fined for their controversial sale of Eads shares in 2006. Eads has always defended its employees actions. Continuing to do so will damage its reputation.

Should tax breaks on corporate debt be abolished?

29 Jul 2009

And should banks face a hot money tax to deter them from becoming too reliant on wholesale funding? Would it be wise to fold the UK s FSA into the Bank of England? Find out the views of the audience at Wednesday s Breakingviews.com seminar on how to fix the financial system.

No easy way to deflate China’s new-issues bubble

28 Jul 2009

When a tollroad operator s share price triples on the first day of trading, you know China s IPO market isn t working right. The problem is not unscrupulous underwriters or careless regulators. It s foolish investors with too much money. They probably have to learn the hard way.

Will Webster be Warburg Pincus’ next MBIA?

28 Jul 2009

The private equity firm has lost some $600m on its bet on the bond insurer. Now it s dipping its toe back into financial services with a modest investment in a Connecticut bank. Some aspects of the deals are similar. But its new target is stronger and its timing appears better.

Branson exits US mobile venture with a whimper

28 Jul 2009

The entrepreneur is selling Virgin Mobile to Sprint at 37% of its IPO price a mediocre result. Meanwhile, Abu Dhabi is ponying up money for his loopy spaceship venture and his Aussie airline plans a rights issue. Investors seem enthusiastic, but Branson hasn't always delivered.

Momentum investing distorts markets

28 Jul 2009

Speculators are accused of amplifying swings in commodity prices. Highfrequency traders might be doing the same to stock prices. The defence of these momentum investors is that they add to market liquidity. But when too many traders chase the crowd, the market mechanism fails.

Kingman times exit from UKFI cleverly

28 Jul 2009

The UK civil servant who gained renown as the fund manager of the government s bank stakes is to step down. Kingman will be a hot commodity in the private sector. But with the bank stakes yet to be reprivatised, he leaves before he can be properly judged in his current role.

Savings drive record emerging market bond volume

28 Jul 2009

Firsthalf issuance was the most ever, belying forecasts earlier this year of widespread capital shortages. Chinese and corporate issuers dominated. Companies in countries with big savings pools did the most business showing the advantages of thrift.

Fresh policies could reinvigorate Japan

28 Jul 2009

The opposition DPJ, leading in the polls, would reorient Japan s government spending from infrastructure to cash payments to individuals. That wouldn t boost growth directly, but would increase imports and open up the economy. The new approach could be worth trying.

Risanamento can’t blame market for E2.8bn problem

28 Jul 2009

The Italian developer is set to refinance that much debt to avoid becoming the crisis s biggest Italian casualty. A nearly20% decline in property sales has hurt, but an Italian fondness for cosy relations between banks and entrepreneurs probably let it take too many risks.

GE Capital doesn’t deserve special treatment

28 Jul 2009

The conglomerate s finance arm says it s critical to the US economy, better than a bank, has adequate loanloss reserves and doesn t need more capital. Yet it s fighting plans to further regulate its $650bn balance sheet because it's too big to fail. Something doesn t compute.

Tui problems bigger than Hapag-Lloyd financing

28 Jul 2009

The German group s 43%owned shipping unit is set for a E330m liquidity injection. But Tui itself generates little cash and may be in a precarious position. With Hapag in serious trouble, Tui is relying heavily on its travel subsidiary for cash to repay its debts.

Ericsson looks smart to lock up Nortel assets

28 Jul 2009

A decade ago, the Swedish telecom group and Finnish rival Nokia were the biggest opponents of the wireless CDMA telecom standard. So why did Ericsson trump Nokia to buy Nortel s declining CDMA business? Turns out, controlling the past may be a way to control the future.

Lawmaker holiday trumps Obama’s financial reforms

28 Jul 2009

The US Congress is about to hit the beach, leaving the president s ambitious agenda hanging. That s probably good remaking the banking world is not a task to be rushed. And Obama needs to get it right the first time.

Deutsche Bank pays for nifty crisis management

28 Jul 2009

The German lender cut risk, grew revenue and harvested investment gains in Q2. But its results were dented by provisions on billions of assets reclassified during the crisis. Deutsche could have taken bigger writedowns last year. Instead, it is paying a deferred tax on recovery.

Rio Tinto stuck at Chinese road-block

28 Jul 2009

It s hard to negotiate with a government that has arrested four of your employees. That s where the miner stands. It can t settle iron ore contracts with its largest customer, which is statecontrolled. Nor can it be sure of approval for a tieup with BHP that would raise $5.8bn.

Delphi denouement puts creditors back in charge

28 Jul 2009

The US government s handson role in the car sector shortchanged creditors of bankrupt Chrysler and GM. In the Delphi case creditors had more clout, and they seem to have prevailed. It looks like the fair outcome. Now the challenge is to make the parts maker profitable.

Prop traders should welcome tougher FSA tests

27 Jul 2009

The UK watchdog wants bank traders who take big risks to be individually regulated, and possibly interviewed, before being let loose on the markets. The move may be just pointless boxticking. But there could be gains for all if the plan legitimises this controversial business.

US housing rebounds, but won’t lead recovery

27 Jul 2009

New home sales, existing home sales and housing starts all rose in June. But housing starts are still far below previous cyclical lows, and sales levels are boosted by fiscal and monetary subsidies. These seem to have brought a bottom, but won t end housing s bear market.

Mob delivers grisly lesson in Chinese economics

27 Jul 2009

Worker unrest is risk number one. That has to be Beijing s conclusion from the reported killing of a steel boss by a 30,000strong crowd. With unemployment higher than the official rate of 4.3%, jobs lost from a stronger currency look more dangerous than irritated foreigners.

Citi’s new shareholders need a bluffer’s guide

27 Jul 2009

US taxpayers will soon own a third of the beleaguered megabank's shares. It's a complex beast, so Breakingviews.com's Antony Currie has drafted a welcome notecumprimer that Dick Parsons, the Citi chairman, might want to send to the bank s 148m new shareholders.

Ryanair land grab comes at a cost

27 Jul 2009

The European budget airline has to slash ticket prices to fill up its planes. But Ryanair is still solidly profitable while rivals are bleeding cash. As long as the company can afford its growth plans, investors should be willing to put up with some lower profits.

Vodafone hangs on in there

24 Jul 2009

The mobile giant s organic revenue fell 2% in the first quarter. But that s not bad in a midst of a recession. With a low valuation, good cash generation and a 6.5% dividend yield, the shares have room to recover further.

Why would anyone sit on a state-controlled board?

24 Jul 2009

The US and UK governments are trying to identify expert, untarnished directors for banks, carmakers and other companies in which they own big stakes Citi, GM and RBS, to name a few. It s not so easy to find people who tick the boxes and are willing to do the job.

BoE faces QE dilemma

23 Jul 2009

One member of the monetary policy committee has been criticised for suggesting the programme of printing new money may be put on hold. That won t help the government sell gilts but that s hardly the BoE s job. As for QE itself, it doesn t seem to be working.

Reeling Cerberus struggles for sound footing

23 Jul 2009

The buyout firm suffered badly on Chrysler. Aside from owning battered US car finance businesses, it has troubles in Japan. Its apparent interest in a safebutunexciting $3bn pharma deal could be an effort to put its stumbles behind it. But they won't be so easily forgotten.