Bonds

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.

The Greek crisis show has another month to run

16 Feb 2010

European leaders have confirmed that the Greek deficit reduction plan will be judged for seriousness in March. In the meantime, they will try to convince their own voters that spendthrift Greece won't simply get a handout, while trying to calm investor fears of an EU breakdown.

European junk bond market far from full health

4 Feb 2010

Manchester Utd s recent bond issue has been thrashed in the secondary market. It s not the first highyield issue to falter lately. The market may have bounced back from last year s lows, but bankers should recognise that the highyield recovery can t be taken for granted.

Dubai (inadvertently) gets something right

26 Jan 2010

A subsidiary of Dubai Holding, the private investment vehicle of the emirate's ruler, says S&P doesn't understand the group's relationship with the government. Too true. No outsiders have much of a clue. For Dubai to regain investors' trust, it can't just talk about transparency.

Vulture funds and Goldman pay to play at Gala

22 Jan 2010

Apollo and Cerberus have teamed up with the investment bank to buy a slug of junior debt in Gala Coral. The new investors may have to pay up to win over the UK gaming group's senior lenders. But if they succeed, they will have picked up Gala on the cheap.

Blackstone’s UK retail bank foray could make sense

21 Jan 2010

Backing a new mortgage lender would be an odd move for the buyout group. But a startup bank may not be much harder than bottomfishing for assets among UK financials. And the rates environment means Blackstone could secure privateequity returns.

Carlos Slim succeeds where Murdoch, Zell failed

13 Jan 2010

The Mexican billionaire has done the seemingly impossible: made money in the newspaper racket. His investment in the New York Times a year ago was well timed. By contrast, Rupert Murdoch wrote down most of Dow Jones value and Sam Zell's Tribune went bust.

Bondholders should stick to their guns at Pearl

13 Jan 2010

The UK insurer has proposed a debt restructuring that would force bondholders to take a 25 pct writedown on their holdings in return for the prospect of resumed coupon payments. Bondholders are rightly digging in. Pearl's prospects aren't so bad as to make the offer compelling.

Junk debt rally ignores 2010’s biggest risk

11 Jan 2010

A declining rate of company defaults has led investors to let risk premiums on highyield debt get dangerously low. It's good that fewer companies are failing. But high debt prices don't leave room for the potential fallout when central banks really start pulling out of markets.

US watchdogs emit rare growl at bubble

7 Jan 2010

A lowprofile forum of bank supervisors has told banks not to rely on interest rates staying low. It doesn't signal any quick change in monetary policy. But it does reflect the political winds. It's as if regulators finally want to be seen trying to preempt excesses.