Bonds

Carney hopes for UK face bond-market bears

30 May 2013

The new governor of the Bank of England is expected to help the UK economy. Like the U.S. Fed, Mark Carney may try to keep bond yields low by issuing “forward guidance”. But his efforts may founder against bearish bond trends unless the bank prints money and mops up gilts.

India in depth: A costly flirtation with “linkers”

21 May 2013

Inflation-linked bonds will give gold-addled savers a safer investment option. But limited initial issuance means New Delhi will have to pay up to lure investors until the securities become more liquid. A bolder commitment to the new asset class can save the government money.

Greece’s vicious circle may be turning virtuous

15 May 2013

Yields on Greek 10-year bonds hit their lowest level in nearly three years. Investors are returning now that fears of a euro zone exit have receded and the country’s finances and politics look more stable. The economy is still in trouble, but it’s moving in the right direction.

Greece offers value in distorted low-rate world

13 May 2013

German Finance Minister Wolfgang Schaeuble worries that loose monetary policy is distorting markets. That doesn’t show for Greece, whose bonds still pay a hefty yield even after risks of a euro exit have receded. Athens remains an outlier in the peripheral dash for trash.

Portugal marks triumph of Draghi bluff

8 May 2013

Lisbon’s first 10-year bond since the country’s bailout makes ECB bond buying possible - but less likely. Mario Draghi’s promise to intervene has tamed markets, and central banks worldwide are forcing investors to take on risk. That virtuous circle has one weak link: politics.

Apple debt shows revival of yield desperation

1 May 2013

The tech giant sold 30-year paper with a coupon under 4 pct. Markets have also seen a surge in dividend recaps, PIK toggles and other throwbacks to the pre-crisis leverage boom. One culprit is central banks sucking supply and squashing rates. Such distortions usually end badly.

Former junk bond king has more leverage than ever

1 May 2013

Three decades after Michael Milken mastered raising money he now trades mostly in intellectual capital. This year, the likes of Carlos Slim and Tony Blair joined old friends at his annual Beverly Hills jamboree. These growing networks are a better sort of crony capitalism.

Euro zone spread monster is only half-dead

29 Apr 2013

The euro zone crisis has tuned to a slow burn. Government bond spreads now discipline, rather than terrorize governments. However they hurt local economies and, by several measures, are still higher than they should be. It shows the success, and limits, of ECB policy.

Bond vigilantes succumb to unlikely complacency

24 Apr 2013

Euro zone bond investors are shrugging off rising national debts, missed growth targets and political uncertainty. Having first terrorized policymakers into austerity, they now seem to think they will be reflated to safety. The relaxed approach leaves a lot to trust.

Europe has unconditional bond-buyer at last: Japan

11 Apr 2013

The Bank of Japan’s money printing machine is forcing down risky government bond yields 6,000 miles away. The hope of Japanese money is helping euro zone bond markets shake off a swathe of bad news. European governments shouldn’t take gentle markets for granted.

Exposed bondholders suffer solar burns in China

22 Mar 2013

When solar power was hot in 2008, investors in Suntech bought bonds with no claim on the panel maker’s Chinese business. Now they are likely to emerge from bankruptcy proceedings with pennies. Have lessons been learned? Recent issues by debt-laden property developers suggest not.

Ireland shows powers of virtual ECB

14 Mar 2013

Dublin has sold the first 10-year bonds since its bailout. The move helps it qualify for controversial ECB bond buying - and shows it doesn’t need it. Mario Draghi’s virtual intervention is working wonders. The euro crisis goes on.

Markets wrong to downplay Italian political risk

5 Mar 2013

Italian bond spreads have risen since the election. But it could have been worse - and considering the possible scenarios, it should. The priority is political reform, so a credible government can emerge at the next election. But even this isn’t assured.

Corporate hybrid boom retreads bank capital fiasco

25 Feb 2013

Corporate hybrids, securities that blend debt and equity, are booming. They give companies tax-efficient cheap capital, and investors yield. But the more the market grows, the greater the fallout if issuers, like banks during the last crisis, actually use their equity features.

Soaring kiwi dollar tests faith in inflation goal

22 Feb 2013

New Zealand, which pioneered inflation targeting, faces its biggest test in 23 years. The central bank is under pressure to respond to capital inflows and the overvalued dollar. While it’s right to reject a Swiss-style peg, a single-minded focus on prices is no longer sensible.

Ethical economy: The menace of financial markets

20 Feb 2013

Are free and open markets for stocks, bonds and currencies the glory of the capitalist system? Quite the contrary. Because financial assets have no clear value, these markets are always too influenced by disruptive wild emotions, and encourage destructive greed.

Telecoms debt issue signals Greek renaissance

31 Jan 2013

Greece’s biggest telecoms company has sold 700 million euros of bonds - the first such move since 2011. The cash will help OTE reduce debt and fund investment in new technology. It may also be a tentative sign that business in the Aegean is regaining some semblance of normality.

Colombia faces bigger threats than guerrillas

25 Jan 2013

FARC’s resumption of hostilities after a two-month ceasefire is disappointing. But peace talks continue. Colombia’s solid economic growth, though, is being infected by hot money from abroad distorting the currency and heading to the wrong sectors. That seems the greater worry.

China’s bail-in bonds leave room for conflict

23 Jan 2013

ICBC may become the first Chinese bank to issue debt that can be written down to zero by the regulator in a crisis. Since the state is also the bank’s biggest shareholder, that leaves bondholders exposed. If bad loans swell, outsiders could be forced to foot a chunk of the bill.

Governments on right side of credit cycle for once

17 Jan 2013

Investors are lapping up contingent capital securities in bailed-out banks. Dublin sold on a CoCo from its bank rescue. Belgium’s KBC is issuing the bonds to recapitalise. The boom is helping Ireland and Belgium recoup bailout costs. They should take the money while they can.