Bonds

Central banks have no choice but to keep the faith

20 Jul 2017

ECB chief Mario Draghi and Bank of Japan boss Haruhiko Kuroda have spent trillions of euros and yen without generating much inflation. Nor is it clear when a pick-up in growth will feed through into prices. Yet they are obliged to insist their policies will work eventually.

Greek bonds are a bet on euro zone support

18 Jul 2017

Athens wants to issue bonds just after receiving another bailout tranche. If Greece had to finance itself at market rates it would struggle to stay solvent. But debt relief from European governments and ECB bond-buying will reduce the risk. Investors may find the wager appealing. Full view will be published shortly.

Bond market breathes life into erstwhile zombies

17 Jul 2017

European investors are refinancing companies like Dutch retailer Hema that not long ago were trading at distressed levels. Such credits are enticing when central banks have squashed yields, and Europe’s economy is recovering. Markets are unlikely to remain so forgiving for long.

Bank of England puts price on bond fund stupidity

12 Jul 2017

Regulators worry that the growth of open-ended bond funds could cause fire sales. A central bank paper estimates that could add nearly half a percentage point to companies’ funding costs. Pointy-headed analysis should reinforce the case for more sensible investment models.

Cool credit markets could be own undoing

10 Jul 2017

Corporate bonds shrugged off the recent “taper tantrum” that hit government debt and equities. Investors may be betting that central banks will only slowly tighten policy, supporting demand for riskier assets. Yet unruffled markets may only hasten policymakers’ rush for the exit.

India’s bond market deserves a good whipping

7 Jul 2017

The securities regulator is cracking down on the fast-growing corporate bond market. With a large chunk of new issues coming from firms in dubious financial health with too generous ratings, it is a good time to force companies and rating agencies alike to raise their standards.

Next stop for Chinese bonds is credible ratings

3 Jul 2017

A new Bond Connect lets foreign fund managers buy into the mainland’s $9 trln market from Hong Kong. The easier access is welcome and should speed up China’s inclusion in key indexes. But big inflows, especially into corporate bonds, will require more plausible credit ratings.

Green bonds could help build new Silk Road

30 Jun 2017

Investors have yet to warm to the Belt and Road, China’s huge infrastructure plan. Beijing’s new development bank, the AIIB, could help by issuing green bonds to fund railways and ports. But if the projects’ environmental credentials are weak, the lender’s reputation will suffer.

Draghi’s taper tizzy is sign of dangers to come

29 Jun 2017

Comments by ECB chief Mario Draghi drove up bond yields and the euro, despite later protestations that markets had misread him. The ado owes more to investor complacency than fuzzy talk. It highlights traders’ twitchiness and the challenges in withdrawing ultra-loose policy.

Draghi’s hints have more clout than Yellen’s deeds

28 Jun 2017

ECB chief Mario Draghi had more market impact by alluding to higher rates than Fed Chair Janet Yellen did by hiking them two weeks ago. That fits a recent pattern: central bankers who have yet to tighten policy are more apt to upset expectations – and that’s what moves prices.

Hong Kong’s test-bed role is valuable and fragile

28 Jun 2017

Beijing has gifted the city with schemes linking investors to mainland currency, stock and bond markets. The tightly controlled pilots offer unique access to China. But they could either be swept away by deeper overhauls, or hobbled if the central government retreats on reform.

Argentina grinds toward economic credibility

22 Jun 2017

Within just a couple of days Latin America’s third-largest economy sold a rare 100-year bond and was then surprisingly snubbed for inclusion in a major stock index by MSCI. Amid all the noise, President Mauricio Macri is slowly asserting the dullness of competence.

China underscores new hard line on outbound M&A

22 Jun 2017

The banking regulator is probing loans made to serial acquirers Anbang, Fosun, HNA and Wanda, reports say. Following the detention of Anbang's chairman, the message is clear: bold foreign M&A is out of bounds. The puzzle is why the authorities let the splurge last for so long.

Century-bond hope defeats Argentine experience

19 Jun 2017

Less than three years after the last of eight defaults in 200 years, Buenos Aires is tempting desperate investors with a yield of nearly 8 pct. Mauricio Macri's reforms have stoked confidence. But the deal says more about short-term fads than the long-term odds of repayment.

Germany’s euro-bond allergy will be hard to cure

13 Jun 2017

France’s pro-European president, Emmanuel Macron, has given new hope to advocates of joint euro zone debt. But expect Teutonic resistance. Europe’s biggest economy is loath to give an implicit bailout guarantee to its own regions so will hardly extend one to other countries.

Lebenthal marks end of two eras on Wall Street

8 Jun 2017

It was 1925 when Alexandra's grandparents opened their municipal-bonds shop. Her father James and TV ads gave it renown in the 1970s. She's now exiting as CEO after a lack of scale impeded efforts to revive the firm post-crisis. Family offices, not brokerages, are the new order.

U.S. stocks and bonds are in economic tug-of-war

7 Jun 2017

Bullish equity investors have pushed the S&P 500 to new highs despite soft data and fading hopes for business friendly policies. With yields tumbling even as a new rate hike looms, fixed income is more attuned to a possible downturn. When the stories converge, it won't be pretty.

Euro zone “safe” bonds would be anything but

31 May 2017

The European Commission has suggested creating low-risk securities by pooling sovereign bonds. The idea is to reduce banks’ exposure to governments. But risks would still be interconnected. Without a common tax base and joint liability, no pan-euro zone debt can be truly secure.

Goldman steps in avoidable $2.8 bln Venezuela mess

30 May 2017

Money managers at the firm bought oil giant PDVSA’s debt at a big discount, indirectly handing the central bank needed dollars. Investments aren’t necessarily moral choices, but can hit reputations. After trouble in Greece and Malaysia, Goldman ought to have a better nose for it.

ChemChina creates new strain of LBO funding

26 May 2017

The chemicals giant is refinancing the debt backing its $44 bln purchase of Switzerland’s Syngenta. This involves less equity than a typical leveraged buyout, and $18 bln of perpetual bonds sold to three Chinese entities. This is M&A finance cross-bred with government policy.