Bonds

U.S. corporate borrowing slump is a bearish signal

25 Jan 2019

American companies are issuing much less debt in 2019, even after a 20 pct slump in 2018. One reason is higher earnings after lower taxes, but another is cuts in planned investments. That’s how a trade war and political dysfunction could put the economy on a slower growth track.

The Exchange: Flint Mayor Karen Weaver

18 Jan 2019

Before its tainted-water scandal hit in 2014, the Michigan city was already infamous for high crime and poverty rates after a prolonged economic slump. Weaver discusses the fallout from the water crisis – and explains how the birthplace of General Motors is undergoing a revival.

Bond markets shrug off Danske dirty-money risks

11 Jan 2019

The bank at the centre of a money-laundering scandal saw its cost of issuing risky debt more than double. Still, its yields are far below those of Italy’s UniCredit. The troubles at the Danish lender may have further to run, and are harder to predict, than Rome’s political drama.

Masters of detail will rule in jumpy markets

10 Jan 2019

Big swings in both directions in equities and bonds make it dangerous for investors to jump out of one and into the other. Better to drill down and find groups with healthy balance sheets and decent free cash flow. Those chasing high growth or cheap valuations could come unstuck.

Saudi’s sunny debt offer belies gathering clouds

10 Jan 2019

Riyadh’s successful $7.5 bln bond sale suggests investors have moved on from the Khashoggi murder. Yet long-dated Saudi debt trades at an implied discount to its rating. With the kingdom too optimistic about oil prices and facing peak demand, markets won’t always be so friendly.

Credit Suisse Mozambique mess is shameful at best

4 Jan 2019

Three of the Swiss lender’s former bankers have been arrested on charges of facilitating kickbacks on $2 bln of loans for the African country. Credit Suisse blames deceptive employees and says it has tightened controls. Even if the fallout ends there, it’s highly embarrassing.

Buyout lenders will enter a new world of pain

4 Jan 2019

Rising bond yields and volatile markets mean the leveraged finance boom is over. The lenders which financed it have taken more risk than ever, and given away the ability to control struggling companies. When deals do go bad, they will get back much less than they are used to.

Three key indicators to watch like a hawk in 2019

2 Jan 2019

Want to know whether there’s going to be a U.S. recession, a trade-war flare-up, or corporate implosions? You could obsess over news and social media – or skim a few proxy indicators like the price of soybeans, the Treasury yield curve, and the number of stocks in bear territory.

Welcome the new AI investment overlords

27 Dec 2018

Man vs. machine will replace active vs. passive as the dominant battle in the $80 trln money-management war. Pressure to cut costs keeps mounting while artificial intelligence gets better at systematic trading, crunching data and identifying trends. Logic favors the computers.

European banks stuck in bond market prison

13 Dec 2018

Lenders may need to raise over 500 bln euros of loss-absorbing capital when investors are fretting over weak growth, rising rates, and geopolitical tensions. Borrowing costs are rising, and even strong banks are scrapping deals. To avert a crunch, the ECB may have to step in.

U.S. bond yields turn from green light to red

4 Dec 2018

Treasury yields plunged to a three-month low on Tuesday and flashed a potential recession signal. While easy rates have supported the economy and stock market during the recovery, the latest moves suggest troubling weakness. They also raise the risk of a Fed policy mistake.

Motown shifts recovery up a gear

4 Dec 2018

Detroit is selling its first bonds since taking back full financial control from the state. The city that went bankrupt in 2013 now has balanced budgets, higher tax revenue and a surplus. But issues like blight and a crumbling school system present tricky speed-bumps to negotiate.

Italian budget climbdown would be just a start

26 Nov 2018

The anti-austerity government may trim its 2019 budget deficit target to defuse a clash with the European Commission. That would ease financial market tensions which risked undermining any benefits of extra spending. The stimulus is still being spent in the wrong places, though.

GE may be canary in credit market’s coal mine

15 Nov 2018

The firm’s bonds tanked this week even as an asset sale briefly lifted its shares. That’s a warning shot for all credit investors. U.S. companies carry more debt than ever, and quality has deteriorated. Rising interest rates and slowing growth could make this a big problem.

Beijing’s stock rescuers can’t leave market alone

25 Oct 2018

Officials are raising over $14 bln to stave off a market selloff. Unlike the “national team” intervention during the 2015 crash, anxious local governments are getting involved early. The issue is similar: once again officials have let China’s debt problem infect equities.

Bond investors add fuel for Uber’s profit bonfire

18 Oct 2018

The ride-hailing company has tapped the junk market for $2 bln, even though it generates no EBITDA from which to pay interest. Investors are betting either that Uber will turn a profit – or more likely, that its dash for growth will lure future investors who can pay them back.

Hadas: Beware of the curse of financial markets

17 Oct 2018

In theory, movements in bond and stock prices have big economic effects. In practice, the ties are fairly tenuous. But the widespread belief that these minor and inaccurate indicators are valuable is enough to give them power. A bad week in the markets can do real economic harm.

Green bonds are fertile spot for climate activists

8 Oct 2018

Buyers of debt earmarked for environment-friendly uses are tougher on borrowers than, say, those lending to typical private-equity deals. And up to $60 trln of such funding is needed by 2030. That may give green creditors a stronger platform than shareholders to push for change.

M&A bankers better off hunting pheasant than elk

3 Oct 2018

The value of deals above $10 bln popped by 150 pct in the first nine months of the year. Some, like Comcast’s purchase of Sky, come with chunky financing fees. Still, the glory is spread less thinly on smaller deals, which are also growing quickly, and are easier to close.

Foreign exodus to test Italy’s bond market buffers

31 Aug 2018

Fear of bold public spending is spooking foreign investors, making it harder for the government to fund itself. Italy can lean on banks and local savings to plug the gap. But gorging on debt hurts lenders and growth. And “Quitaly” concerns may lead Italians to move cash abroad.