Bonds

China’s own "Little Greeces" should help themselves

18 Nov 2011

Shanghai became the first local government to sell bonds this week. Provinces like Hainan, which has debts of almost 100 percent of GDP, cannot easily go down that route. Beijing might not come to the rescue, so they need help themselves with austerity and asset sales.

Equity-bond decoupling shows risks have changed

17 Nov 2011

Investors may be rethinking the inherent riskiness of equities, especially compared to sovereign bonds. That is a logical response to seismic shifts in the european debt markets. Shares aren’t invincible but they are pretty well equipped for these rough times.

Markets start to reflect euro zone’s darkest fears

16 Nov 2011

Government bond yields across the single currency are showing signs of severe strain. Only Germany is viewed as a reliable safe haven. An Italian default and euro zone breakup may still be unlikely. But investors are now clearly factoring such a scenario into their calculations.

BNP debt sale bad news for euro zone governments

3 Nov 2011

The French lender has slashed its exposure to Greek, Spanish and Italian debt at a cost of 3 bln euros. Though BNP can afford to take the hit, smaller rivals are less robust. Banks’ aversion to sovereign bonds is also bad news for governments that need to finance their deficits.

U.S. government has chance to borrow very long

30 Sep 2011

Thanks to the Fed’s maneuvers, Uncle Sam could sell bonds maturing decades from now at uncommonly low yields. Moreover, pension funds need the paper. The Treasury has kicked around the idea of 50 or 100-year bonds before. Maybe it’s time to actually issue some.

Tyco sets new example for conglomerate bondholders

19 Sep 2011

When the industrial group last broke into three in 2007, an ugly fight with creditors ensued. This time, Tyco’s paying them more heed. It plans to spread $4 bln of debt evenly rather than dump it into one unit. Lenders to other breakup candidates may want to gird themselves.

Euro bonds are not the answer

19 Sep 2011

The euro countries aren’t going to agree to guarantee each others’ debts in time to solve the current crisis. And, once it’s over, neither euro bonds nor fiscal integration is desirable. Market discipline is a better way run monetary union in the long run.

Diving bond yields mask investor ambivalence

25 Aug 2011

Fear still trumps greed in the minds of most investors. It allowed the German government to sell 10-year bunds at super-punchy prices on Aug. 24. There may well be enough buyers to push real yields negative. But the investment appetite is far from overwhelming.

Four challenges for a common euro bond

24 Aug 2011

Can a debt union save the euro zone? With overall debt at 85 percent of GDP, the region still has the financial capacity to underwrite peripheral economies. But issuing common bonds requires time and political change. Here are the four obstacles to overcome.

Australia is the canary in China’s coalmine

19 Jul 2011

Chinese commodities demand created a mining boom, and turned Australia's credit market into a proxy for its trade partner's economy. That market is now flashing red for Australia's exposure to a Chinese slowdown. Even if China averts a dreaded hard landing, Australia may not.

The EU has only itself to blame for ratings mess.

7 Jul 2011

Euro zone luminaries have attacked Moody's for downgrading Portugal to junk. But Europe has wasted many chances to dethrone the agencies and instead chooses to fetishise them. The ECB in its current approach to Greece is a stark example.

Dubai creditworthiness still fragile

15 Jun 2011

The emirate is taking advantage of the contrast between its financial recovery and the Arab unrest with plans to launch a second sovereign bond since its own debt crisis. But Dubai is only marginally less risky than Lebanon or Egypt, and its debt maturity profile is unsettling.

CLO revival only partly soothes LBO funding fears

9 Jun 2011

The buyout boom's biggest enablers are staging a comeback, easing some worries about financing private equity deals. But buyout barons shouldn't get too excited: cautious buyers, lower leverage and regulatory fears mean CLOs are likely to be far smaller than in the boom.

Greek restructuring could put CDS in firing line

11 May 2011

Market fears that EU politicians are conniving to prevent a payout on Greek credit default swaps if it restructures smack of paranoia. But this is a possibility. A restructuring without a payout could be a pain for derivative supporters, but it wouldn't kill sovereign CDS.

S&P warning may have wrong effect on Washington

19 Apr 2011

Prodding Obama and Congress to agree on a debt plan might achieve just the opposite. S&P's dour take on Treasuries could inflame the debtceiling debate, leaving little energy for a grand budget compromise. And the austerity the agency desires would have few takers anyway.

S&P states the much-needed obvious on U.S. debt

18 Apr 2011

The rating agency's shift to a negative outlook on Uncle Sam's AAA credit shouldn't come as any surprise. But both lawmakers and markets deserved the reminder. S&P's move should be a reality check for political pointscorers in Washington and headinsand investors alike.

Vulture funds can still find tasty morsels

22 Feb 2011

Credit markets, once the damsel in distress, are no longer hollering for help. Low interest rates and fatter earnings have helped companies clean up their balance sheets. But that doesn't mean distressed debt investors are out of luck. Opportunity calls, just not as loudly.

Gimmicky prudence could be enough for California

10 Jan 2011

The governor s budget slashes spending by $12.5 bln, but the total is still more than the previous year s final version. Still, combined with the cutbacks since 2008 and assuming no doubledip recession, the additional parsimony if it flies may suffice to stave off crisis.

It’s official: the biggest banks are the weakest

16 Dec 2010

If Basel's new rules had been in place last year, the 94 largest lenders would have needed 577 bln euros of new capital. Delaying the standards has given banks time to rebuild their balance sheets. But the figures are a startling reminder of how far they still have to go.

Debt tax perk may be crisis’ biggest missed chance

10 Nov 2010

As the G20 prepares to endorse Basel III, voices are again being raised against the absurdity of tax systems that encourage banks to load themselves up with debt. If governments are sincere about reform, a fiscal push is urgently needed.