Bonds

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.

Low bond yields wreck age-old investment credos

19 Nov 2019

Allocating 60% to equities and 40% to fixed income used to count as a balanced choice. Yet depressed debt yields mean such portfolios offer a dwindling buffer against setbacks in stocks. Investors who turn to hard-to-trade assets to diversify risks will only face other problems.

Spanish instability numbs markets into complacency

11 Nov 2019

Bonds and stocks barely budged after Prime Minister Pedro Sanchez failed to win a majority in national polls. Forming a government will likely mean striking a deal with far-left and pro-Catalan parties. With growth slowing and high debt levels, it’s hard to square investor calm.

UK gilts’ odd stability is precarious

6 Nov 2019

Britain’s main political parties are in a bidding war to woo voters before an election. Yet UK debt yields are steady. Hopes of more Bank of England easing is one reason. Bond vigilantes will wake up if a smooth Brexit opens the way for rate rises and government spending surges.

China’s eco-friendly debt can be a shade greener

16 Oct 2019

Beijing's rules for its pioneering $40 bln green bond market are still too pliable: a refiner last week issued a note to pay for a petrochemical complex. A central bank review now underway offers a chance to boost credibility by pushing guidelines closer to international norms.

Leveraged loan partygoers take a much-needed rest

1 Oct 2019

Growth in risky corporate debt has slowed. Investors worrying about the economy are driving a harder bargain with private equity-owned groups like Shutterfly and Sotheby’s. Yet sovereign bond yields are ultra-low and buyout firms have huge cash piles. The lull may be temporary.

Viewsroom: WeWork overhaul won’t be enough

26 Sep 2019

Adam Neumann lost his CEO role and control of the shared-office provider after its valuation plummeted in preparation for a now-postponed IPO. But WeWork’s business model remains a problem. Plus: Thomas Cook’s collapse hits China’s Fosun. And: parsing financial climate pledges.

Aston Martin gets license to kill or cure itself

25 Sep 2019

The eye-popping 12% interest rate on the luxury automaker’s new $150 mln bond highlights creditor concerns about demand, cash burn and Brexit. But if targets for a new SUV are not met quickly and the company again runs short of cash, investors may find the yield is not enough.

Nigeria is right to fight $9 bln arbitration claim

25 Sep 2019

The African nation is refusing to honour a ruling by UK-based judges on a failed gas project. Abuja is on thin ice because it failed to appeal on time. But the contract awarded to a little-known Irish firm looks suspect. Reopening the case would be a victory for common sense.

Beijing enables corporate debt dysfunction

20 Sep 2019

A provincial government funding vehicle has declined to redeem its perpetual bonds for the first time. State-backed companies embraced equity-like hybrid debt in part to hit their deleveraging targets. With $75 bln of it effectively coming due, the shortcut could prove costly.

Climate-linked debt’s influence starts to spread

11 Sep 2019

Italian utility Enel’s new bond has a coupon that rises if it misses green-energy goals. Unlike previous sustainability bonds, it can use the cash for anything. That should widen the market for such debt. Investors can magnify the impact by demanding tougher penalties.

Junking Ford threatens shares more than bonds

10 Sep 2019

Moody’s has downgraded the carmaker’s debt rating, citing weakening cash flow and earnings. But that’s old news already priced into the $36 bln company’s bonds. While CEO Jim Hackett has some tough years ahead, bankruptcy risk is remote. The dividend, though, is much less secure.