Bonds

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.

Listed hedge funds die hard

14 Oct 2010

It feels like boomtime again in hedge fund land, with Brevan Howard the latest manager to be raising permanent capital with a listed credit fund. Previous such vehicles have flopped. The new breed may be better designed, but investors can't say they haven't been warned.

China’s billionaires not ready to give like Gates

28 Sep 2010

Bill Gates and Warren Buffett may struggle to rustle up philanthropic spirits on their tour of China. The country's billionaires are still insecure about their wealth, and trustworthy charities are lacking. Yet as China's wealth gap widens, more generosity might be a good idea.

Basel buffers could be painful for Europe’s banks

14 Sep 2010

Most lenders are comfortably above the new 7 percent minimum capital ratio set by regulators. But extra reserves to dampen the economic cycle, and to make systemic banks safer, could eat up much of the excess. It's too early for banks to think about returning cash.

Basel’s capital buffer may turn out to be a floor

7 Sep 2010

Regulators are close to setting new minimum capital requirements for banks, including a cushion that they can dip into in bad times. But if lenders view this buffer as a minimum level that they dare not breach, the new standards could be tougher than the authorities intended.

Basel’s Coco plan is step in right direction

2 Sep 2010

The body that sets global banking rules wants all capital instruments to be written down if a lender gets into trouble. The plan will help to reduce moral hazard, though it may increase the cost of credit. There are also some imperfections in Basel's plan.

Banks get cold feet over football funding

20 Aug 2010

New rules from the sport's governing bodies in England and Europe are forcing clubs to rein in on debt. Banks that help finance player transfers are also considering pulling out. If lenders limit their support to cheering their teams, football's longterm health will improve.

China’s loan crackdown may have unintended penalty

13 Aug 2010

Beijing has ordered banks to bring loans made to trust companies back onto their books. Closing the loophole will help reduce financial risks. But the move could also leave make it harder for banks to meet existing lending limits, restricting the supply of credit.