Bonds

Italy’s bank rescue has side order of moral hazard

10 Aug 2021

UniCredit may buy most of sickly Monte dei Paschi, with government help. It’s unclear if that means taking on its junior debt, which would be a windfall for creditors at the expense of Italian taxpayers and EU rules. Yet bond markets are starting to hope for something juicy.

Rush for inflation insurance hedges faith in Fed

5 Aug 2021

The price of 10-year inflation-linked U.S. debt keeps hitting new highs. This partly reflects how expensive normal Treasuries have become. It also suggests investors are worried that price pressures could last far longer than U.S. central bank boss Jerome Powell expects.

Bonds and equities both mislead on future growth

4 Aug 2021

The fall in U.S. bond yields would normally flag an economic downturn, while record highs for the S&P 500 Index ought to be a sign of a brighter future. Central banks are distorting price signals. The reality – and growth – is likely to be somewhere in the middle.

Guest view: Investing when inflation is a mystery

23 Jul 2021

Trying to outguess asset prices on how fast consumer prices will rise is pointless, Gerard O’Reilly, chief investment officer at Dimensional Fund Advisors, says. Better to focus on ways of outpacing or hedging against what’s anticipated by market gauges of inflation expectations.

Mind-blowing earnings are already so last season

21 Jul 2021

Big companies are set to report stellar second-quarter results. But the best will soon be in the rear-view mirror and many worries, notably about Covid-19 variants, lie ahead. Head-scratching drops in U.S. bond yields will only make stock markets even more prone to stumbles.

Lagarde’s green turn may not need to be that sharp

16 Jul 2021

The ECB boss’s 293 bln euro corporate bond programme may soon tilt toward environmental saints and away from sinners. Too heavy a hand could distort markets and inflate green bubbles. But it’s a big enough change for it not to matter if, as seems likely, the intervention is mild.

Capital Calls: Intel, SPAC lobby

16 Jul 2021

Concise views on global finance: Buying GlobalFoundries would boost Intel’s ambitions to make chips for other firms, but spinning it off afterward might please investors more; a new D.C. group sets up shop to defend the blank-check craze.

Capital Calls: Gates split, Chinese IPOs, Telenor

8 Jul 2021

Concise views on global finance: Bill and Melinda Gates agree a post-divorce plan for their joint charitable organisation; medical data firm LinkDoc is among the first to pull its U.S. listing; the Norwegian telco gets just $105 mln for unit hobbled by Myanmar junta.

EU bond ban is smarter way to police errant banks

16 Jun 2021

The bloc froze 10 lenders out of its first recovery bond sale because of past market-rigging, the FT reported. The direct hit for JPMorgan and others is small. But they can only rejoin the fold by proving they’ve changed. That’s a keener incentive to stay clean than fines.

EU bonds will take shine off Germany’s over time

15 Jun 2021

Investors flocked to buy the maiden issue of the bloc’s 800 bln euro joint funding programme. But the yield is higher than Berlin’s, implying it’s not yet Europe’s safest asset. Closing the gap requires more liquidity and a sustained political commitment. Both seem likely.

How to turn a software firm into a bitcoin wallet

9 Jun 2021

MicroStrategy’s holdings of the digital currency already make up over half of its $6 bln enterprise value. Now the business-analytics software group has sold $500 mln in junk bonds specifically to buy more. With crypto accounting wacky, it could make for a crazy ride.

Drahi paints debt masterpiece with Sotheby’s bond

13 May 2021

The auction house owned by Patrick Drahi is raising $300 mln to fund a dividend. The tycoon may soon have recouped one-third of the cost of a 2019 acquisition by debt-funded payouts. The boom in such deals even for leveraged, cyclical businesses shows how desperate lenders are.

UK takes slow road to Scotland breakaway risk

10 May 2021

Pro-secession parties increased their majority in Scottish elections, while Boris Johnson’s Conservatives cemented their position in England. Yet even if a new referendum takes place, the outcome is far from certain. The breakup threat will take time to show up in asset prices.

Fed’s Jay Powell picks the road less travelled

27 Apr 2021

The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.

Viewsroom: The Super League’s short, unhappy life

22 Apr 2021

The richest European soccer clubs, including Juventus and Real Madrid, swiftly aborted plans to create a breakaway competition. But as Liam Proud and Peter Thal Larsen explain, the financial appeal of a U.S.-style sporting cartel remains irresistible. Plus, Huarong’s woes.

Huarong foreign bondholders get sweet nothings

21 Apr 2021

The market is stabilising around the troubled bad debt manager holding $21 bln in dollar bonds. Its key offshore unit says it has returned to profit; Beijing notes Huarong has adequate liquidity. It’s better than silence but thin gruel for a relief rally.

Capital Calls: Netflix, GameStop

9 Apr 2021

Concise views on global finance in the Covid-19 era: The video-streaming service sprays webs of money to secure movies; GameStop’s “Chewy of Gaming” strategy.

Russia has defences against U.S. sabre-rattling

25 Mar 2021

Given the U.S. president reckons his Russian counterpart is a “killer”, new sanctions on Russian government debt are possible. Jumpy prices forced Moscow to cancel a bond auction. But with a trade surplus and low external debt, Kremlin finances will hold up.

Corporate debt party will survive rate storm

17 Mar 2021

Rising government bond yields are dragging up companies’ borrowing costs. Yet the premium that investors demand to buy debt issued by firms is still relatively low. Central banks’ asset buying and the prospect of lockdowns lifting mean credit markets will avoid too big a tantrum.

South Africa enters greener bond-market crosshairs

11 Mar 2021

With 90% of its power coming from coal, the Rainbow Nation is one of the worst CO2 emitters. Mining’s political heft also means foot-dragging on climate policy. With big external funding needs, the kick from bond investors when they flick the green switch will hurt hardest.