Bonds

Wall Street starts to feel the sting of bankruptcies

27 Jan 2009

Until now, most bank writedowns were the result of marking stillfunctioning loans to market rather than borrowers going belly up. Goldman s revelation of $850m of losses on Lyondell loans suggests the next wave of financial difficulty actual corporate defaults is rolling in.

Apollo, Cerberus get sweet deal in Lyondell

26 Jan 2009

The bankrupt chemicals giant's $8bn of DIP financing always looked a lot. But some of it is rebadged prebankruptcy debt, not new money. That's a plus for the two investment firms and other lenders involved. And it has understandably riled those who weren't so lucky.

Blackrock could play Batman to hedge fund Jokers

21 Jan 2009

The asset manager s fourthquarter numbers weren t great, although its base of feeearning assets kept it in the black. But its unusually broad range of asset types and hybridfee model could position it well to pounce on money fleeing hedge funds and funds of funds.

Barclays desperately needs a confidence boost

20 Jan 2009

Investors have lost faith in the UK lender s claims on capital strength. Monday s disclosure, with a promise to tell more, was a step in the right direction. But Barclays should trust shareholders with all the facts. An outside valuation of the balance sheet would also help.

Neiman Marcus is test case for lenient LBO debt

14 Jan 2009

The highend US retailer was one of the first to issue pik toggle and covenantlite debt. It is now paying some interest in kind. But that s not as alarming as other companies similar moves. Neiman gives LBO bosses a chance to prove that lenient debt terms aren t always toxic.

Credit thaw starts, but ice age isn’t over

14 Jan 2009

Libor spreads are narrowing. Coveredbond and highyield issues are back. That suggests credit is coming out of the deep freeze. But asset reallocation and low government bond yields may account for some of the revival. Economic reality points to a continued cold snap.

Fed-issued bonds would make world riskier

10 Dec 2008

The US central bank would be at the market s mercy if it issued debt without Treasury backing. The Fed can t raise taxes, so prices would reflect sentiment about the Fed balance sheet. Snap judgments about policy moves could reduce their effectiveness or worse, influence them.

US mortgage rate scheme may push on a string

4 Dec 2008

The Treasury thinks lower interest rates will spur demand. That may be true, incrementally. But mortgages are already cheap. The factors keeping most buyers on the sidelines are ongoing house price deflation and growing economic uncertainty.

The credit crunch in round numbers

3 Dec 2008

Annual risk premium on iTraxx index of European companies rated subinvestment grade: now a record 10 percentage points. Estimated junkrated corporate default rate next year: more than 10%. Global junk bonds sold last month: a big zero. Talk about putting the o s in gloom .

US bank guarantee fails to eliminate credit fears

3 Dec 2008

The version of this piece published yesterday contained incorrect data on the yield on Citigroup s governmentguaranteed bond. A corrected version follows.

The Fed’s quantitative easing: A guide for the perplexed

2 Dec 2008

The Federal Reserve looks to be taking a page from the Bank of Japan s book and using money supply growth, rather than interest rate targeting alone, to spur the US economy. With rate cuts proving ineffectual, it may have little choice. Dwight Cass explains.

Goldman’s $5bn US-backed deal a crowd pleaser

25 Nov 2008

It looks advantageous for the Wall Street firm, its regular bondholders and new investors who usually buy government and mortgage agency debt. And now Goldman has opened the market, rivals should get better rates. That s just what the market needs even if it is still a bailout.

US guarantee scepticism slams mortgage debt

20 Nov 2008

Fannie Mae and Freddie Mac bonds should be ideal for investors seeking high returns on lowrisk debt. But they re staying away in droves. That reflects growing uncertainty over whether the US government will make good on its guarantees.

Loan market’s acute pain may also be chronic

19 Nov 2008

Spiralling risk aversion and the collapse of the securitisation machine caused the corporate loan market to seize up. But potential secondary market problems threaten to keep some investors on the sidelines.

CMBS woes show economy is growing threat

19 Nov 2008

Interbank lending is thawing, so lack of liquidity no longer appears to be a mortal threat to banks. But they re not out of the woods the commercial real estate mortgage meltdown shows how the US economic downturn is just beginning to take its toll.

Convertibles push tech companies towards the brink

17 Nov 2008

US technology companies issued gobs of convertible debt in recent years and much of it is maturing soon. Low stock prices make conversion unlikely, and paying the debt off would drain precious cash. With refinancing absurdly expensive, issuers have few attractive choices.

Credit insurers don’t need new aid

17 Nov 2008

European suppliers are squealing because credit insurers are pulling back. The squeeze is real, but two large insurers are already backed by the Dutch and French governnments. The better way forward is for customers to speed up payments and let the market cull some weaklings.

Buyout loan orphans return to burden banks

13 Nov 2008

Just when Wall Street s leveraged loan headache had subsided to a manageable throb, more pain threatens. Loans repackaged for hedge funds are ending up back with banks as the schemes unwind. Worse, no one knows the extent of banks potential exposure.

Banks snub Fed’s New Year’s present

12 Nov 2008

The US central bank just offered $150bn of shortterm loans that can be drawn over the yearend period as a confidenceboosting measure. Banks only took $13bn despite a microscopic interest rate. Liquidity constraints no longer appear to be behind the lending freeze.

US bank credit logjam worsens automaker woes

3 Nov 2008

Despite Bernanke s helicopter assaults, lending tightened sharply over the last three months. Industrial borrowers are facing the toughest loan market in recent memory. And even prime consumers can t get loans which contributed to a collapse in US auto sales.