Bonds

Spanish mortgage bottom-fishing only for the brave

3 Sep 2012

Investors hope for juicy yields buying beaten-up covered bonds secured on Spanish mortgages. Losses would need to reach apocalyptic levels for investors to suffer. But no one can really tell what would happen in a covered bond default.

Put Dylan’s tangled bond in the credit watchtower

31 Aug 2012

Goldman Sachs is said to be working on a tiered bond secured on Bob Dylan royalties. Investors’ blood may run for the freewheelin’ early tracks. Modern times material may be attractive too. But the street rocking 1980s stuff could leave junior creditors blowing in the wind.

New optimism may torpedo Asia’s safe-haven bonds

16 Aug 2012

Investors driven by weak global growth, low interest rates and strong Asian finances have sought shelter in the region’s bonds. But Asia’s growth hasn’t fallen as fast as feared. If the U.S. or China move to revive growth, those bonds could prove vulnerable to a brightening mood.

European Central Bank faces bond-buying Catch-22

14 Aug 2012

If the ECB wants its bond-buying programme to work, it must reassure investors that it wouldn’t rank above them in a restructuring. But solving that problem could raise another one - accumulated losses for the ECB would amount to massive transfers within the euro zone.

Goldman shows not all innovation in finance is bad

2 Aug 2012

A $9.6 mln loan to the Big Apple is a canny use of pocket change. The bond will yield a tidy profit only if criminal recidivism in the city declines. It may be PR, but Goldman has a chance to prove not all Wall Street concoctions are weapons of financial mass destruction.

Securitizing rent has more problems than promise

26 Jul 2012

Crafting bonds backed by rent is being touted as a way to fund mass purchases of foreclosed U.S. homes. But big obstacles - sparse data, management challenges and new risks for investors - complicate matters. It could be years before such bonds are sold. And they won’t be cheap.

Islamic bonds offer cheaper funding for lucky few

17 Jul 2012

Sharia-compliant bonds, once a pricey source of funds, are now cheaper than their conventional equivalents. A growing pool of captive Islamic capital is driving down yields and spurring interest far beyond the Middle East. But not everyone can take advantage.

Ireland may just be able to return to bond market

4 Jul 2012

Last week’s euro summit dangled a big carrot: that Dublin’s punishing bank bailout which brought the country to its knees may be rejigged. Irish bond yields are now as low as Spain’s. But much detail needs to be agreed, leaving scope for disappointment.

Euro sovereign bond plan may just work

29 Jun 2012

The details are still vague. But if funds are used to provide cash directly to governments rather than buy bonds in the secondary market, there may be enough money to bail out Italy and Spain. But if the countries aren’t held to tough reform, it could be a bridge to default.

Bond market misses Korea’s youthful monetary tilt

14 Jun 2012

Global exports are slowing, so investors are buying South Korean bonds to bet its central bank will have to cut rates. But young Koreans increasingly want to work in domestic services, not welding Hyundais. With inflation low and joblessness falling, the bank may just sit tight.

Guide for the perplexed: What is a euro bond?

13 Jun 2012

Euro zone politicians will chew over the multiple variations on the theme of debt mutualisation at this month’s summit. Here’s our guide to everything you always wanted to know about Eurobills, redemptions bonds, red/blue bonds, deficit bonds etc but never dared ask.

Euro bonds will be hard for investors to swallow

5 Jun 2012

Investors might be attracted to new-fangled euro bonds. Risks with peripheral sovereign debtors might be diffused and yields could look more generous. It is far from certain, however, that the small-print details will bear close inspection from buysiders.

Liquidity fears trump sense in Asia’s markets

5 Jun 2012

Investors fretting about a euro breakup are moving into the wrong Asian markets. They are favouring liquid Australian and South Korean bonds. But it is hot money that could burn investors if the story changes. Higher-yield bonds from say, the Philippines, might be a better bet.

Market moves point to grown-up asset allocation

1 Jun 2012

Yields on safe bonds are down and equities aren’t suffering too badly. That split makes no sense in a binary world where risk is either off or on. But it may be a sign of investors’ maturity. Asset allocations should reflect a range of investment dangers, and opportunities.

French-German euro bond clash isn’t serious yet

23 May 2012

François Hollande likes them and Angela Merkel doesn’t. But the leaders are unlikely to clash on the need for euro bonds - at least for now. Both know the bonds won’t solve the immediate crisis. And before they can disagree, they must clarify what they’re arguing about.

Germany’s zero-coupon bond redefines ROC

22 May 2012

Forget return on capital. Germany is promising no more than return of capital with a new zero-interest bond. Investors get their money back in two years, with almost nothing more than a warm feeling of security in the meantime. Still, a lot can happen in two years.

Bondholders start dabbling with bad old habits

22 Mar 2012

U.S. companies refinancing debt account for much of the $367 bln of U.S. corporate debt sold this year. Such fundraising is good for Corporate America. But investors are also snapping up more dross. Such a short-term approach to risk and returns may come back to bite - again.

Safe haven tremors signal big investment shift

19 Mar 2012

The first cracks are appearing in the high edifice of safe haven bonds. Sovereign yields are rising, gold weakening and the dollar advancing after a decade of weakness. Global investors should assume that we are on the cusp of change.

Say hello to 100 years of financial repression

14 Mar 2012

The UK might issue ultra-long bonds. The yield would be ultra-low, courtesy of the Bank of England’s monetisation policy. Buyers would be ultra-foolish, but they may come – that’s how financial repression works. This looks like a symbolic victory for the government over savers.

High yield U.S. tourists sail into European storm

15 Feb 2012

The European Central Bank’s cheap money and the siren call of high yields are luring global investors into the European junk bond market. But the region’s slowing economy could suck the wind out of the market’s sails.