Bonds

Argentina overplays hand in bond pain déjà vu

20 Apr 2020

BlackRock and other creditors have come out against the serial defaulter’s plan to restructure some $66 bln in debt. New legal protections should help their cause, and a messy default could attract holdouts. But time is their biggest advantage: Argentina needs money.

Corona Capital: LVMH, L’Oréal, Pandemic bonds

16 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. LVMH holds onto the luxury of cash, cutting its dividend; L’Oréal makes the best of lockdowns with more than 50% growth in e-commerce sales in the first quarter; and even Covid-19 fails to trigger pandemic bonds.

Amadeus ups the bar for travel-sector crisis prep

3 Apr 2020

The $20 bln Spanish IT group is raising $1.6 bln in debt and equity to bolster its balance sheet. The financial terms are fairly beneficial for Amadeus, implying that it’s not exactly desperate for cash. Still, with steep declines in air traffic it’s wise to plan for the worst.

Bond market throws Carnival a costly lifeline

1 Apr 2020

The virus-stricken cruise operator is finalising a $4 bln bond issue, secured against its ships, at an eye-watering 12% yield. That reflects fears the industry may be permanently submerged. Still, it shows that even the most troubled companies still have access to emergency cash.

Bond ETF turmoil exposes credit’s faulty wiring

27 Mar 2020

The share price of some of these funds plummeted below the value of the less liquid assets underpinning them, upping selloff fears. But ETFs aren’t really to blame; rather it’s the corporate debt market’s opaque pricing. Uncle Sam’s new role as a buyer could spur change.

Corona Capital: Ackman’s hedge, Oil stockpiles

26 Mar 2020

Concise views on the pandemic’s corporate and financial fallout, including investor Bill Ackman’s surprise reversal of fortune, and the U.S. shale oil bailout that wasn’t.

Corona Capital: Dining bonds

20 Mar 2020

Concise views on the pandemic’s corporate and financial fallout: Restaurant industry cooks up a unique form of funding to help alleviate revenue wipeout.

Bond market minor casualty of Macron’s war footing

17 Mar 2020

Yields on French debt rose after the French president announced 45 billion euros in crisis spending to help business. Like Italy, France is bending fiscal rules to mobilise against Covid-19. Opening state coffers makes sense, even if it worsens longer-term debt to GDP outlook.

Christine Lagarde makes hard ECB job even harder

13 Mar 2020

A blunt remark by the European Central Bank chief drove up Italian bond yields - the last thing she wanted. She could get away with not knowing what pushes traders’ buttons when markets were placid. But that lacuna means she’s facing a crisis saddled with a credibility deficit.

Virus pain may leave CoCos with lasting infection

10 Mar 2020

Monday’s selloff was the worst ever for bank contingent convertible bonds. More could lie ahead if losses caused by the coronavirus and oil collapse allow lenders to stop paying coupons. The more banks that trigger hybrids, the less they will worry about spooking bond markets.

Pandemic bonds are the sick man of finance

26 Feb 2020

They’re supposed to harness market power to help in a health crisis. Yet pandemic bonds are ill-suited to the task. Complex restrictions and the need to lure buyers mean creditors tend to get the upper hand – and recipients of the funds may benefit little even if they win.

Revolving Treasury door may crush UK budget rigour

13 Feb 2020

Sajid Javid unexpectedly quit as finance minister and will be replaced by his deputy, Rishi Sunak. The latter is a Goldman Sachs alumnus but his political instincts will trump his finance ones. The next budget will show his readiness for spending more without hiking taxes.

Deutsche finds Cryan’s “bad” CoCos hard to resist

11 Feb 2020

The lender is issuing $1 bln of contingent convertible securities, blasted by ex-CEO John Cryan as unreliable capital. It’s doing better under Christian Sewing, and hybrid bonds have regulators’ blessing. For now, banks, investors and watchdogs are happy to downplay the risks.

Buenos Aires dares bondholders to game of chicken

27 Jan 2020

Creditors vote this week on the province’s bid to delay a $250 mln debt payment. Opponents can argue the delay is unneeded and would complicate restructuring Argentina’s sovereign bonds. But they don’t have much leverage. And investors’ short memories give Buenos Aires an edge.

Guest view: China bonds enjoy best of worst times

23 Jan 2020

Defaults are at record highs, yet foreign money keeps chasing yield in the country’s fixed-income market. China finance specialist and author Fraser Howie argues Beijing can console itself: its bonds are part of the global investment landscape as never before.

Aramco’s next stop will be bond, not stock, market

18 Dec 2019

Despite raising $25.6 bln from listing 1.5% of Saudi Aramco, Riyadh will want to flog more. But even if it can find a friendly foreign wealth fund, Saudi might still have to cut the price. An easier path would be to load Aramco up with debt and pay itself a fat special dividend.

Lebanon’s financial alchemy is losing its magic

18 Dec 2019

The world’s third most indebted nation – with borrowings north of 150% of GDP – may be careening toward a default and an IMF rescue. A complex financial engineering scheme that propped up the banking system is now sputtering. Local banks and foreign bondholders could take a hit.

Greek poise goes beyond flawed bond markets

12 Dec 2019

The $720 mln rights issue by Lamda to start work on Athens’ Hellenikon project gives a boost to Prime Minister Kyriakos Mitsotakis, who championed the development. It’s a far better gauge of confidence in Greece than sovereign debt yields, which are partly skewed by ECB policy.

Climate-bond cold shoulder gets harder to justify

10 Dec 2019

Even though green bonds perform well and can weather economic cycles better than regular issues, they’re still constrained by limited demand. Poor transparency and a comparability have been a turnoff, but a new Nasdaq tool means even that argument no longer holds much water.

UK watchdog gives bad finance a belated growl

28 Nov 2019

Britain’s financial regulator will ban the marketing of risky so-called minibonds to unsophisticated investors. The clampdown makes sense, but comes late, and may still leave loopholes. It highlights the limits of the FCA’s power, as well as the softness of its bark.