Bonds

The case for a career in bond investing

27 Oct 2023

Rising rates and volatile markets have hammered the conventional case for buying fixed income securities. But higher yields, pockets of value in credit and a possible weakening of the strong US dollar mean there are still opportunities in bonds for budding portfolio managers.

China puts $137 bln Band-Aid on local debt wounds

25 Oct 2023

Beijing will funnel the borrowed cash to regional governments to spend on water and other infrastructure projects. It’s part of a “basket of measures” aimed at alleviating their worsening $13 trln debt crisis. Absent proper restructuring, it’ll only buy local authorities time.

Why an economic soft landing may prove elusive

13 Oct 2023

Financial markets suggest the US economy will avoid a deep recession even as interest rates rise. The British economist Bernard Connolly argues these expectations are deluded. If he’s right, inflation-linked bonds will be a good bet for investors, argues Edward Chancellor.

Europe’s rising bond vigilantes are necessary evil

11 Oct 2023

Debt costs for weaker states like Italy are jumping. Europe’s delay in agreeing new fiscal rules means hostile markets are the only credible check on government spending. Slowing growth and a hamstrung ECB means the backdrop may well get choppier.

Bond rout threatens to feed on itself

6 Oct 2023

Strong jobs data pushed 10-year US Treasury yields up again. Alongside nagging inflation and political turmoil, it raises concerns the Fed will keep interest rates higher for a while. Pricier borrowing costs depress asset values, which can lead to a crisis that sparks more fear.

Toilet maker artfully unclogs bondholder backup

29 Sep 2023

Embattled Ideal Standard has struck a $640 mln deal to be bought by Germany’s Villeroy & Boch. The key was persuading creditors to accept less than par on 2026 debt. Other struggling companies could make use of similar financial plumbing.

Ukraine war gives wings to India bond index debut

22 Sep 2023

JPMorgan will add the country’s sovereign debt to its emerging market index, easing concentration issues following Russia’s exclusion. It drags foreigners into a $1 trln market. New Delhi sees new gains from opening but it may have to bend on taxes and more to win wider backing.

UBS bondholders tee up risky goldfish impression

20 Sep 2023

The $84 bln bank may issue contingent convertible bonds, months after a state-led takeover of Credit Suisse burned the defunct lender’s debt. Market prices suggest it may not pay a big penalty for Switzerland’s sins. That invites bank overseers to burn other CoCos in future.

New economic rules shatter US bonds’ crystal ball

19 Sep 2023

Government debt has been signaling a downturn for 440 days, but there’s been no recession. The famed predictive power of the yield gap between different vintages of Treasuries is waning. As the global economy evolves, warnings from the fixed-income markets can be safely ignored.

Germany’s plight is good news for bond investors

24 Aug 2023

Yields on Berlin’s 10-year obligations have spiked this month, mirroring US ones. That looks overdone: Europe’s largest economy is slowing, inflation is falling and the central bank is unlikely to hike rates much more. Such Teutonic frailty should firm up debt valuations.

US soft landing means bumpy ride for bonds

8 Aug 2023

Yields on 10-year government debt are near a 5-year high even though inflation is falling without a recession or huge job losses. Fixed-income traders are right to worry. Better growth may fuel more price rises, keeping rates elevated and deepening Washington’s fiscal problems.

Altice’s beaten-up debt is only a bet for the bold

8 Aug 2023

Patrick Drahi’s telco empire faces a funding crunch, with $60 bln of debt coming due by 2030. He must pull off a tough turnaround in France and sell assets, a tricky task made even harder by a corruption probe. Even with current high yields, Altice debt is a risky punt on Drahi.

GIC’s real estate safe haven is hard to copy

26 Jul 2023

Singapore’s $690 bln sovereign fund nearly doubled its real estate allocations to 13% in three years. Its student homes to logistics portfolio provides a timely inflation hedge for one of the most active investors in its class. Peers trying to catch up will overpay.

Capital Calls: Funky bank debt

14 Jun 2023

Concise views on global finance: Credit investors are increasingly willing to buy quasi-equity instruments known as AT1s, despite a near-death experience for the asset class amid the Credit Suisse crisis in March.

ECB’s crisis tool works best if it’s never used

30 May 2023

The European Central Bank is touting its powers to buy sovereign bonds if they come under attack from the market. That has kept traders in check, so far. The trick for Frankfurt officials is to convincingly threaten to deploy emergency measures without ever having to.

UK race to the bottom spreads to credit safeguards

19 May 2023

German property group Adler has managed to push a restructuring through London courts that violates normal principles of debtholder fairness. That might encourage other companies to follow suit. But as with watering down equity listing standards, it carries a cost.

Debt conundrum gives Italy weak hand in EU talks

18 May 2023

The pandemic and the war have taken the country’s indebtedness off investors’ radar. Yet high interest rates, slower growth and a budget deficit mean Rome will struggle to cut its fiscal burden. That makes it harder for PM Giorgia Meloni to ask for lenient European rules.

Inflation’s real benefits beat theoretical costs

5 May 2023

A barrage of shocks have battered the world’s developed economies, leaving central bankers struggling to adapt. Allowing prices to rise not only eases the economic adjustment but shrinks big debt piles, argues Felix Martin. That’s helpful to everyone – except bond investors.

Lagarde fine-tuning will aid sputtering euro zone

4 May 2023

The European Central Bank’s move to raise rates by just 25 basis points and speed up its exit from bond-buying signals a less aggressive approach. High inflation calls for more hikes, but Frankfurt’s decision to use a scalpel rather than a hammer will benefit Europe’s economy.

Resolving Credit Suisse: an alternative history

27 Apr 2023

Swiss authorities merged the bank with UBS, rather than risk a financial panic by bailing in bondholders. Yet Credit Suisse was arguably unique and small enough to be wound down. Breakingviews imagines that scenario, which may serve as a template if the enlarged group ever fails.