Bonds

Bonds step in where bank loans fear to tread

8 Oct 2009

Nonfinancial companies have raised more money in bond markets than through syndicated loans so far in 2009. That s a first, and a dramatic change from two years ago when loans dominated. With banks capital now tightly constrained, this shift makes sense.

CIT will struggle to sell its soul twice

30 Sep 2009

The troubled business lender pledged nearly all its assets to secure lastditch funding in July. Now it faces a deadline to restructure its $30bn debt load. The odds are against it: junior lenders are unlikely to accept anything but bankruptcy or the functional equivalent.

Chavez reaps big benefit from global stimulus

25 Sep 2009

Venezuela's strongman accuses the US and others of exploitation. But the return of liquidity has encouraged him to borrow $5.7bn locally and $4bn abroad and brought $46bn of energy commitments from Russia and China. The opportunistic Chavez is grabbing money while it s there.

Over-regulation of ratings could have happy ending

24 Sep 2009

There must be a point at which credit raters would give up officially sanctioned status to avoid unworkable red tape or financial liability for errors. If that led to governmentfree ratings and ratingsfree laws, Richard Beales says the financial world could be a better place.

Junk borrowers trade death row for long jail time

22 Sep 2009

Resurgent debt markets have helped several highyield borrowers refinance loans, averting death by bankruptcy in the short term. But with interest costs most likely at least doubling, their cash flows will be squeezed condemning some to protracted pennypinching, if not worse.

Pilgrim’s Pride investors should do the funky chicken

21 Sep 2009

Brazil's JBS is plucking the poultry company out of bankruptcy for $2.8bn meaning creditors are paid in full and equity holders even get a few nuggets. With stock prices buoyant, there's a chance other bust companies will also pay back more than was thought possible.

Senior creditors finally get a consolation prize

16 Sep 2009

Bankrupt chemical company LyondellBasell is offering senior creditors the chance to buy extra stock as it exits Chapter 11. It doesn't make up for being squashed by earlier bankruptcy lenders. But it's worth watching as a way to give frustrated creditors a few additional options.

Harrah’s plays catch up – but isn’t home and dry

9 Sep 2009

The US casino operator has just completed the latest stage of a restructuring designed to cut its debt. But the business may still be worth less than what it owes creditors. It s a reminder of how frothy debt markets became and why new creditors to old LBOs should be cautious.

Industry’s derivatives reform: too little, too late

8 Sep 2009

Despite dealers attempts to reduce counterparty risk and improve transparency since Lehman s collapse, it looks as if US watchdogs aren't convinced. As politicians return to Washington from their summer breaks, Congress appears poised to crack down.

Hole poked in rating agencies’ lawsuit shield

3 Sep 2009

Rating firms use US free speech protections to deflect litigation. Now a judge has cast doubt on this defence by allowing a lawsuit over a structured finance deal to go ahead. If the case succeeds, the rating agencies may face a flood of suits they actually have to fight.

Schwarzman finesses debt market – again

13 Aug 2009

The Blackstone boss took advantage of the leveraged loan market s boom to fund his LBOs at minuscule cost. Now his buyout shop has sold $600m of bonds to tap the investmentgrade market rally. But his new investors should do better than their unfortunate loan market counterparts.

Securitisation’s recovery is no sure thing

12 Aug 2009

The Fed is considering extending the Talf programme that has helped resuscitate the market for new assetbacked deals. But US plans to force issuers to keep skin in the game and banks to keep many assets on their balance sheets could restrict securitisation s usefulness.

Bank of England keeps worrying – and printing

6 Aug 2009

The UK central bank surprised, and unsettled sterling, by adding £50bn to its existing £125bn quantitative easing programme. The BoE is right to be worried about the economic prospects. Unfortunately, it s not clear still more moneyprinting will bring about a recovery.

Resecuritisations highlight capital rule loophole

5 Aug 2009

Brisk business reworking troubled mortgage bonds is driven in part by financial firms desire to minimise capital charges. But the underlying assets and potential losses stay the same they just get shifted around. It's another case of regulators relying too much on ratings.

GE Capital doesn’t deserve special treatment

28 Jul 2009

The conglomerate s finance arm says it s critical to the US economy, better than a bank, has adequate loanloss reserves and doesn t need more capital. Yet it s fighting plans to further regulate its $650bn balance sheet because it's too big to fail. Something doesn t compute.

BoE faces QE dilemma

23 Jul 2009

One member of the monetary policy committee has been criticised for suggesting the programme of printing new money may be put on hold. That won t help the government sell gilts but that s hardly the BoE s job. As for QE itself, it doesn t seem to be working.

Could CIT and Lehman have saved each other?

16 Jul 2009

Uncle Sam won t send the $76bn lender a lifeboat, dooming it to the same bankrupt fate as the Wall Street firm. Ironically, if Lehman had consummated talks to buy CIT back in 2002, the resulting pig s breakfast might have been considered too big to fail.

Rating firms may have to eat their own cooking

15 Jul 2009

Calpers is suing the big three over $1bn of losses on tripleA rated SIVs. The big US pension plan says they re to blame since they helped structure the deals before rating them. That argument just might breach the raters' legal defences and unleash a flood of litigation.

US opens second front on credit derivatives

14 Jul 2009

The Justice Department is asking banks that own data provider Markit for information as it investigates possible CDS market abuse. Its legal options aren't clearcut, but its ability to embarrass could threaten the lightly regulated environment favoured by derivatives dealers.

CIT’s life-and-death struggle could drag on

14 Jul 2009

The corporate lender needs liquidity desperately. Asset sales are problematic and CIT s tripleC rating precludes accessing debt markets without a government guarantee. Yet the firm has the means to soldier on for several more months in hope of a rescue.