Bonds

Italy’s next economy minister is the one to watch

22 May 2018

Radical parties have proposed little-known academic Giuseppe Conte to head their government. Yet the economic portfolio matters more for the indebted country’s future. The new minister’s attitude towards the euro will go a long way towards determining investors’ faith in Italy.

Vanguard puts bond fund managers on notice

21 May 2018

The giant fund firm wants to launch the first U.S. exchange-traded product for global fixed-income. Rising rates pose risks to those who buy it, but the $54 trln bond market is largely untapped by cheap index trackers. Active securities pickers will have one less place to hide.

Settling 1MDB scores will be easier than debts

18 May 2018

Malaysia’s new government can reopen investigations in the state fund but they are stuck with its debt. Reckless promises of support, and a previous desperate clean-up, put the state on the hook for about $8 bln. Trying to dodge these obligations would do more harm than good.

UniCredit may be stuck with costly crisis capital

10 May 2018

The Italian bank should not be able to treat the proceeds of a 2009 hybrid issue as equity, a hedge fund argues. CEO Jean Pierre Mustier might prefer to get rid of the expensive instruments. But it’s hard to extract UniCredit from the transaction without upsetting investors.

Computers come for debt capital markets jobs

1 May 2018

Citi, JPMorgan and Bank of America will later this year roll out an online platform that will streamline the way in which companies issue bonds and help investors to compare credits. A successful launch could over time help these banks to shrink their sales and syndicate teams.

Steinhoff payout may test South Africa reform zeal

27 Apr 2018

Hedge funds piled into 1.6 bln euros of the failed retailer’s bonds betting that its healthy South African unit will honour them. The fallout from Steinhoff’s collapse may make a payout politically tricky, and challenge new President Cyril Ramaphosa’s market-friendly credentials.

WeWork junk-bond investors enable a contradiction

26 Apr 2018

The trendy shared-office outfit is the latest firm with heady prospects and huge cash burn to tap credit markets. Like Uber, Tesla and Netflix, WeWork needs funds for expansion to justify its valuation. Yet the healthy cash flow creditors prefer may only come with slower growth.

U.S. bond yields may be throwing investors a curve

23 Apr 2018

The difference between short- and long-term Treasury rates is the smallest since before the financial crisis, raising fears of a coming recession. Yet the yield curve is a flawed warning, sometimes flashing years before a downturn hits. There are far better things to worry about.

Zambia debt dispute undermines African credit

17 Apr 2018

The copper producer has denied it has dollar debt beyond its $8.7 bln of foreign borrowing. Its vague clarification comes two years after a $3 bln bond scandal in neighbouring Mozambique. Bilateral lending, particularly from China, is blurring the credit picture across Africa.

Trillion-dollar U.S. deficits are funding headwind

10 Apr 2018

Recent tax cuts will push the annual federal budget shortfall into 13 figures and debt to nearly 100 pct of GDP by 2028, Congress’s number-crunchers reckon. The forecast, on the eve of a big auction of Treasury securities, gives investors one more reason to demand higher yields.

Legal woes could impair SocGen’s 2020 vision

29 Mar 2018

The French lender says it is close to settling with U.S. regulators over investigations relating to Libya and Libor. A sanctions-busting probe could pose a sterner test, though. Any fine above 1.8 bln euros could threaten SocGen’s capital target – and put pressure on dividends.

Ego is Italy’s main barrier to radical government

26 Mar 2018

The rightist League sided with the 5-Star Movement to elect parliament’s speakers. It’s a sign the two forces, which want to unpick reforms and spend more, can collaborate. A coalition of mavericks would strain euro zone relations. But agreeing on a prime minister will be tough.

China bond-index debut a timely counter to tariffs

23 Mar 2018

Bloomberg will include the country’s government and policy-bank debt in a key global index. That should attract foreign investors and encourage more liberalization. It’s also a reminder amid rising trade tensions that flows of money far outweigh those of goods and services.

Volatility now has a life of its own

15 Mar 2018

Measures of how much asset prices are expected to gyrate have risen from ultralow levels. But investment strategies that worked a decade ago may not now. Volatility can now lead, not just follow asset prices and old market relationships may break down when turmoil hits.

Debt straitjacket will confine Italy’s next leader

2 Mar 2018

Candidates in Sunday’s election promise to spend more. But the winner won’t have much wiggle room. If Italy’s primary budget surplus dips below 1 pct of GDP, cutting overall debt will be hard, a Breakingviews calculator shows. Rising interest rates are a further constraint.

Cox: How to rid your portfolio of assault weapons

1 Mar 2018

Since Breakingviews first highlighted the role of BlackRock, Vanguard and other fund managers in financing manufacturers of AR-15 rifles after the Parkland school shooting, readers have asked how they can be sure they're not complicit. Here's a handy tear sheet to guide them.

Indonesia lays bare green-bond growing pains

27 Feb 2018

The country's $1.25 billion fundraising is hard to square with its palm-oil and coal exports. Issuers with the least eco-conscious credentials, though, are also important to lure onto the bandwagon with financial incentives. It's the various shades of green that are awkward.

Why bank investors give a FICC about volatility

16 Feb 2018

Global fixed income trading revenue declined 11 pct last year, Coalition data shows. It’s a big reason investment banks again failed to cover their cost of capital. Market ructions will reveal whether a cyclical upturn is near – or whether banks need to accept structural decline.

Volatility good and bad for Europe’s bank chiefs

7 Feb 2018

For the past two years Deutsche Bank’s John Cryan, Credit Suisse’s Tidjane Thiam and Barclays’ Jes Staley have been able to blame poor performance on becalmed markets. Higher volatility undermines that excuse. Trading revenues must grow or they risk shareholder revolt.

U.S. stock plunge is a welcome reality check

5 Feb 2018

Indexes fell over 4 pct on Monday and share-price volatility surged to a seven-year high. Companies remain very profitable and higher bond yields should be no surprise. But a breather – at a minimum – was overdue after a record run. It’s also a reminder of shifting fundamentals.