Bonds

Greek restructuring unlikely for now as EU fights

27 Apr 2010

Investors thought Greece was fine for too long. Now they see imminent default. But EU support will probably get Greece through till 2011, while the IMF presses for fiscal revolution. After that, a debt restructuring with losses for creditors may be harder to avoid.

Subordination another threat for Greek bondholders

21 Apr 2010

Lenders to Athens could find foreigners bearing gifts are dangerous. If emergency funding from the EU and IMF keep default away, all well and good. But if Greece still can't pay up, nonofficial creditors could suffer. The fear of that will make Greek debt even less appealing.

Portugal must tighten now — and so must the EU

21 Apr 2010

Spreads on Portuguese debt are widening as investors begin to see another Greece. It's hardly surprising. The government's stability plan, approved by the European Commission, foresees soaring debts. The EU should get tougher. Portugal needs to cut spending now to avoid a crisis.

CDO backlash a worry for all investment banks

19 Apr 2010

Fraud charges against Goldman Sachs are a concern for all investment banks involved in creating the complex debt securities. Merrill Lynch, Citigroup, and UBS issued more CDOs than Goldman during the boom. With further investigations on the way, investors are right to be nervous.

Listed credit funds a better bet second time round

7 Apr 2010

Stock marketlisted funds that invest in credit sound like a relic of the boom. The first generation suffered during the crisis. A new HarbourVest fund benefits from a simple structure and better timing. Success isn't assured, but it should fare better than its predecessors.

Ineos proposes cheeky but sensible debt U-turn

1 Apr 2010

The highly indebted UK chemicals firm wants to sell bonds. That would reduce pressure on liquidity, but lenders first have to waive some tough terms agreed in last year's restructuring. It would be a galling reversal, but a compromise will probably leave lenders better off.

RBS debt swap could have been sweeter

26 Mar 2010

The UK bank is finally buying back some of its hybrid debt. The move offers an escape route for investors facing two years without income, boosts capital and tidies up the lender's balance sheet. But the delay in doing the deal has made it less attractive for both sides.

Time is ripe to phase out corporate debt subsidy

25 Mar 2010

Allowing companies to deduct interest from their profits before calculating tax has never made sense. It encourages them to take on excess leverage. In the wake of the debt crisis, policymakers are finally talking about reforming the system. But change will require a big push.

Dubai close to ending Dubai World nightmare

25 Mar 2010

The government will convert $10 bln of loans in Dubai World and Nakheel into equity and inject $9.5 bln of new money. That allows lenders full repayment of their principal. The banks still face a haircut on interest payments, but it could have been a lot worse.

Matalan restarts European dividend recap game

25 Mar 2010

The UK retailer has sold a 225 million pound bond to pay a dividend to its founder, the first deal of its kind in Europe in two years. Buyout firms, heavy users of recaps in the boom times, will be glad Matalan has blazed a trail. But don't expect a flood of copycats just yet.

EU summit Greek standoff could restart contagion

22 Mar 2010

Despite Germany's fierce rhetoric opposing a Greek bailout, there is still a chance of compromise at this week's EU summit. But if euro zone leaders can't clarify their position, the crisis could spread to other weak members such as Portugal and Spain.

Lending cap may be needed to prevent next boom

18 Mar 2010

Western policymakers agree on the need to spot and prick future financial bubbles. But as the FSA's Adair Turner rightly points out, tweaking banks' capital ratios will not be sufficient to prevent excesses. Regulators may also need powers to stop people from borrowing too much.

Turner half-right to lambast liquidity fetish

18 Mar 2010

The boss of the UK's FSA has hit out at the notion that more liquidity in financial markets is always good. Some of his arguments and proposals have merit. But some of his solutions especially leverage controls on hedge funds and Tobinstyle transaction taxes are misguided.

Italian derivatives scandal marks watershed

17 Mar 2010

Deutsche, JPMorgan, UBS and Depfa face a court battle over allegations of fraudulent derivatives transactions in Milan. The possible financial fallout from the case itself looks limited. But the test case could prompt copycat suits. And it adds to the furore around derivatives.

Repo 105 rams home need for global standards

16 Mar 2010

Lehman's now notorious scheme for shifting $50 bln off its balance sheet was made possible by mixing U.S. and UK accounting and legal standards. Smart bankers are always going to shop around for the answer they want; regulators need to cooperate to close all the gaps they can.

Few followers for Rabobank’s capital revolution

15 Mar 2010

The Dutch mutual has raised 1.25 bln euros by issuing contingent bonds. The deal shows there's a market for this new form of bank capital. But some investors remain wary and regulators have yet to bless it. Other strong banks may follow suit, but don't expect a rush.

Corporate credit calm may not be here to stay

12 Mar 2010

Conditions for corporate issuers have turned favourable as fears about a euro zone debt crisis have eased. But corporate treasurers shouldn't be complacent. The sovereign debt problem hasn't gone away for good. Now looks like a good moment for opportunistic corporate bond sales.

ECB lenience gives Greek banks breathing space

12 Mar 2010

The European Central Bank has hinted it will continue to accept Greek government bonds as collateral. That s a relief for the country s banks, which rely heavily on the ECB for their funding. But replacing those loans while coping with a shrinking economy will be tough.

China needs to rebalance banks and bond market

10 Mar 2010

Many governments worry about having too many bonds to sell. Beijing has the reverse problem. A shortage of supply makes bond yields too low while banks lend too much and too carelessly to local governments. The solution to this problem is simple make bond issuance easier.

Dubai World creditors face painful choices

9 Mar 2010

The conglomerate is close to a plan for restructuring $26 bln of debt and moving to a sustainable capital structure. If creditors want repayment in a hurry, they will probably have to take a savage haircut. But if they resist a deal, the process travels to uncertain territory.