Bonds

Corona Capital: NYC

30 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s economic reboot comes up against a new outbreak.

Some of China’s best reformers are indexes

25 Sep 2020

Officials changed key rules to get FTSE Russell’s global fixed income index to include local bonds, potentially pulling $140 bln into the market. They made similar liberalisations to woo MSCI. There’s still work to do, but foreign money retains clout in Beijing.

Angst-ridden end to 2020 is written into options

23 Sep 2020

As if Covid-19 hadn’t sparked enough market gyrations, the next three months bring U.S. elections, tense UK-EU trade talks, and more. Central bankers are keeping bonds on a tight leash so jitters will be channelled into currencies. That is already showing up in FX option prices.

Moutai ladles out value from its punch bowl

18 Sep 2020

China’s liquor titan is issuing $2.2 bln of bonds to help buy a highway operator from a struggling local government. The ludicrous diversification erased $10 bln from its enormous market cap. It’s a sobering reminder of how the country’s listed companies can be called to serve.

Green bonds could slide into irrelevance

17 Sep 2020

Securities used to finance environmentally friendly investments are thriving, with everyone from JPMorgan to Germany charging in. Yet the $800 bln market does not necessarily mean greener issuers. As investors get better at differentiating, green bonds could become redundant.

Italy is fumbling as striker and referee on Borsa

11 Sep 2020

Rome is tipping the scales for Euronext’s Milan bourse bid via its sovereign fund, frustrating other bidders. LSE will struggle to freely pick a winner in a race including Deutsche Boerse and SIX. State meddling isn’t new, but this deal may further raise Italy’s cost of capital.

EU banks’ sovereign-debt relapse brings new risks

24 Aug 2020

Lenders from Italy’s Intesa Sanpaolo to Spain’s BBVA have boosted holdings of domestic government bonds, helped by cheap ECB funds. The exposure leaves them vulnerable if euro zone breakup fears return. And it makes completing Europe’s banking union and cross-border M&A harder.

Corona Capital: Nvidia, Air conditioners

20 Aug 2020

Concise views on the pandemic’s corporate and financial fallout: Nvidia goes gangbusters, HVAC units have their moment in the sun.

Corona Capital: Vroom, Estonia WFH, Johnny Rockets

13 Aug 2020

Concise views on the pandemic’s corporate and financial fallout: How Vroom can power through the pandemic; Estonia tries to lure those with wanderlust; Casual dining puts on the Covid-19.

Indian syndicate’s sprawl smells of desperation

20 Jul 2020

A $42 bln housing lender, HDFC, hired a record 19 banks to raise $1.9 bln, says IFR. It suggests the well-capitalised issuer is worried liquidity flows might dry up soon as India’s pandemic keeps burning. The fee-starved advisers are settling for scraps. Neither is a good sign.

China’s jobless recovery risks debt indigestion

16 Jul 2020

Output rose 3.2% last quarter, as a record $1.7 trln in loans kicked in. But investment is tepid, employers are shedding jobs, and retail remains anaemic. Beijing is also running low on distressed credit buyers. With bad debt set to rise, pressure to find alternatives will build.

Corona Capital: Mets star bidders, Robot slayers

10 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Power couple J. Lo and A-Rod are giving hedge fund manager Steve Cohen competition for the New York Mets baseball team; Covid-19 is accelerating automation of the meat industry.

Review: Poking China’s ironclad asset bubbles

10 Jul 2020

Sceptics have predicted the financial implosion of the People’s Republic for years. In “China: The Bubble that Never Pops”, Tom Orlik argues it may never happen. It’s a useful antidote to free-market complacency. Beijing’s competitive threat will not go away on its own.

Indonesia cautiously crosses central bank rubicon

9 Jul 2020

Bank Indonesia will buy $28 bln of bonds directly from the government, breaking a long-held taboo. It will refund interest gains, and the securities will be tradeable, providing price transparency. That’s about as credible as an emerging market monetary authority can hope to be.

BBVA’s green bond is the lightest shade possible

8 Jul 2020

The Spanish bank issued 1 bln euros of contingent convertible hybrid debt, with an environmentally friendly label. The perpetual and fungible nature of bank capital muddies the link to sustainable projects. Demand for such debt gives bankers reason to keep pushing the envelope.

Japanese bond market shift spells stronger yen

7 Jul 2020

Central bank boss Haruhiko Kuroda has kept yields on 10-year debt near zero but let those on longer-dated ones rise. Now most of Japan’s yield curve is above that of France. Dwindling returns on overseas bonds could reduce local demand for foreign currency, sparking a yen rally.

German lift LBO hits ceiling on lax lending

29 Jun 2020

Advent and Cinven, who paid $19 bln for Thyssenkrupp’s elevator unit, had to tweak terms for the deal’s funding after an investor revolt. Rock-bottom interest rates give buyout groups a strong hand with creditors. After the Covid-19 crisis, however, lenders’ tolerance has limits.

Central banks have a way to spur greener recovery

24 Jun 2020

Fed chief Jerome Powell and ECB boss Christine Lagarde are purchasing bonds without taking account of whether they are supporting the carbon-intensive status quo. There are good reasons for that. But they can at least demand more disclosure of climate risks before buying.

BP’s funky debt charts end of credit’s lockdown

18 Jun 2020

The oil major issued $12 bln of bonds that count as equity, its first such deal. Investors’ hunger for esoteric securities from a tricky sector illustrates their enduring need for yield, thanks to central bank largesse. A weak economy and risk-hungry markets are a dangerous mix.

Corona Capital: Next crisis, Overvalued markets

16 Jun 2020

Concise views on the pandemic’s corporate and financial fallout: Deutsche Bank analysts sound a warning about future catastrophes, while investors try to square overpriced stocks with their hopes of a recovery.