Bonds

Why the French vote also matters to Italy

25 Jun 2024

The outcome of snap elections in France will reverberate beyond its borders. Debt-laden Italy is particularly exposed if borrowing costs rise. In this Exchange podcast, former top Treasury official Fabrizio Pagani discusses Rome’s fiscal challenges in a changing EU landscape.

Investors are hunting securitization’s oddballs

4 Jun 2024

Whether a bundt cake bakery or an internet address, if it generates steady cash, it can be diced up in the financial alchemy of securitization. In this Exchange podcast, Janus Henderson’s John Kerschner explains the promise and perils, and why the oddest assets can be the best.

Russian bond rout raises risk of financial crunch

4 Jun 2024

Yields on the country’s debt are at 20-year highs on worries about the budget largesse lavished on the economy. With inflation rising and interest rates at 16%, President Vladimir Putin’s desire to keep funding the conflict in Ukraine could result in lasting fiscal turmoil.

China’s 25% bond spike shows rational exuberance

23 May 2024

Retail investors pushed up prices of 30-year sovereign notes on their debut. The brief surge echoes how they receive IPOs and underscores voracious demand for safe havens. It will tempt Beijing to channel excessive savings of households into the $4 trln government bond market.

China’s new property fix is a work in progress

20 May 2024

Local governments can now borrow up to $138 bln to buy unsold homes. It's the strongest signal yet that Beijing is determined to revive the country's ailing housing market. The amount is not enough. But it lays the foundations for providing more support as needed.

China stimulus starts with a bond, not a bang

17 May 2024

Beijing will issue $138 bln-worth of special sovereign debt. It's not much by itself, but combined with planned offerings from local governments, fiscal support could top 3.2% of GDP this year. It can spur ailing credit demand and speed up investment in strategic sectors.

Macron wades into a very French debt crisis

24 Apr 2024

Some investors are avoiding the country’s bonds after its budget deficit topped 5% of GDP. Paris is unlikely to require an IMF or European bailout. But President Emmanuel Macron has to bring public finances under control. That will come at a heavy political and economic price.

Private credit paints a new scream for banks

22 Apr 2024

Lending against wealthy patrons’ art has been dominated by financial institutions. Sotheby’s $700 mln sale of bonds backed by such loans offers non-bank rivals a template to upend the status quo. A rebounding securitization market can feed this machine, if it fits a careful mold.

Telecom tycoon ensnared by his hefty debt machine

18 Apr 2024

Patrick Drahi built the ocean-spanning Altice empire on the back of aggressive dealmaking and $60 bln of borrowing. The bill is coming due with interest rates elevated. In this Viewsroom podcast, Breakingviews columnists discuss what comes next as bondholders get restless.

Look out for a return of the US bond rollercoaster

16 Apr 2024

As short-term interest rates spiked, longer-term borrowing costs have lagged. The yield on three-month US Treasury bonds has exceeded the return on 10-year securities for 76 weeks, a near record. If this anomaly unwinds, falling bond prices could hurt fund managers and Uncle Sam.

How Patrick Drahi can clamber out of his debt hole

11 Apr 2024

The tycoon’s Altice telecom empire is straining under $60 bln of borrowings, and creditors of its French unit are gunning for a fight. Yet loose bond terms, and the debt’s low trading prices, lend Drahi an escape route. He just needs to hope investors have short memories.

ECB’s rate cuts can help bond traders – and itself

8 Apr 2024

Holders of euro zone government debt have lost 14% in three years. Frankfurt policymakers can change that by cutting rates in June, before major peers. Lower borrowing costs would have another winner: the European Central Bank, which could save $7 bln a year in interest expenses.

‘Wilful default’ bond spat can shake Hong Kong

5 Apr 2024

A group of creditors including Asian buyout firm PAG say an education firm can but won't redeem a $315 mln offshore debt. It's unusual amid the surge in defaults by Chinese issuers, and suggests investors need to worry about better parts of their portfolios too. 

Ukraine loan is matter of politics and accounting

25 Mar 2024

Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.

Macron’s fiscal chickens come home to roost

21 Mar 2024

The French president is scrambling to deal with an official report likely to show dismal public finances and a deficit near 6% of GDP. He ignored warnings as debt topped 110% of economic output. Bond investors are relaxed but spending cuts will be the price of his insouciance.

EU’s spending snags spoil joint borrowing success

12 Mar 2024

Europe’s 800 bln euro stimulus plan is stuck. The bonds that finance it sell like hotcakes, but so far it has paid out only 225 bln euros as countries struggle with projects. Unless the bloc can show it can use the money it raises from investors, it will lose much-needed funds.

Fixed income investors have reasons to be fearful

23 Jan 2024

Uncertainty over the direction of inflation and monetary policy is buffeting markets. In this Exchange podcast Jim Grant, founder of ‘Grant’s Interest Rate Observer’, discusses his gloomy outlook for US bonds and sounds a warning about the risks of shadow banking.

Bond deluge will nudge ECB to softer rate stance

4 Jan 2024

European countries’ fiscal needs and the end of central bank buying mean a record 675 bln euros of sovereign debt will be on sale in 2024. That may keep borrowing costs high for states like Italy. ECB President Christine Lagarde can help by meeting investor hopes for swift cuts.

Banks’ hidden losses are surprise survivor of 2023

13 Dec 2023

The same paper deficits that helped fell Silicon Valley Bank in March still burden lenders worldwide. Bank of America alone sits on $130 bln; US banks nurse a record sum. Investors are now better at telling what’s scary from what’s not, but fuzzy accounting remains unhelpful.

Rich countries are stumbling into a debt trap

3 Nov 2023

Large deficits and higher interest rates are pushing up the cost of servicing hefty piles of sovereign borrowing. Elusive growth, stubborn spending and hawkish central banks make it hard for governments to regain control. Little wonder bond investors are heading for the exit.