Corporate Debt

WeWork junk-bond investors enable a contradiction

26 Apr 2018

The trendy shared-office outfit is the latest firm with heady prospects and huge cash burn to tap credit markets. Like Uber, Tesla and Netflix, WeWork needs funds for expansion to justify its valuation. Yet the healthy cash flow creditors prefer may only come with slower growth.

Capita swerve averts Carillion-style crash

23 Apr 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

VW truck IPO may squander $20 bln opportunity

19 Apr 2018

The German carmaker might list its trucks and buses unit next year. The flotation could boost the group’s shares by nearly a fifth, if the market values the division more highly than the rest of it. Yet a partial listing and Volkswagen’s messy governance would limit the upside.

Beijing sets off careless Wanda fire sale

19 Apr 2018

Officials pushed the developer to shed assets to pay down debt, forcing it to scramble to stave off default. Buyers of its properties got discounts that let them book billions in quick profit. In retrospect, Beijing’s meddling looks more hapless than prudent.

China’s surprise reserve cut exposes growth angst

17 Apr 2018

The central bank cut reserve requirements for banks, freeing $200 bln for lending. That backs up other moves to help over-stretched banks amidst a purge on loose credit. The timing, however, suggests Beijing is looking for a cushion if the economy slows, or a trade war escalates.

Intesa offers partial hope for Italy’s dud loans

17 Apr 2018

The Italian lender is nearing a deal with Swedish group Intrum to shed 10.8 bln euros of dodgy loans from its balance sheet. Domestic peers will be cheered by the price, which is higher than rivals have attained in similar transactions. Then again, Intesa is a better bank.

Zambia debt dispute undermines African credit

17 Apr 2018

The copper producer has denied it has dollar debt beyond its $8.7 bln of foreign borrowing. Its vague clarification comes two years after a $3 bln bond scandal in neighbouring Mozambique. Bilateral lending, particularly from China, is blurring the credit picture across Africa.

Bolloré’s best bet is to play along with Singer

10 Apr 2018

Vivendi chair Vincent Bolloré may lose a fight for control of Telecom Italia with activist investor Elliott. Selling his 24 pct stake would mean a loss, assuming he can find a buyer. Staying put while Paul Singer’s group tries to revive the Italian telco is a better option.

HNA takes circuitous route to streamlining

6 Apr 2018

The Chinese conglomerate's $6.4 bln stake in U.S. hotelier Hilton is now up for sale. It's a curious choice for a company built around travel and logistics. Financial services make less sense inside HNA. The restructuring choices suggest strategy may be a secondary consideration.

Cox: A beneficent billionaire should buy Remington

27 Mar 2018

The AR-15 maker filed bankruptcy papers a day after millions of Americans marched in favor of banning its products. Owners and creditors just want out in a hurry. But Bloomberg, Gates or Bezos could turn Remington into a force for sensible gun policies with mere pocket change.

Review: The flimsy finances behind China’s miracle

9 Mar 2018

The People’s Republic has long defied the economic doom-mongers. In “China’s Great Wall of Debt”, Dinny McMahon exposes the fragility and contradictions of the country’s growth model. It’s a detailed and original reality check on the latest bout of China hype.

HNA is enjoying a pleasant stay at Hilton

7 Mar 2018

The cash-strapped Chinese group bet $6.5 bln on the U.S. hotelier, using lots of borrowed money. It has now sold stock in the spun-off Park Hotels for $1.4 bln, while retaining another $7.6 bln stake. HNA has been a crazily prolific investor, but this trip was worth it.

George Foreman Grill maker gets leaner, not meaner

26 Feb 2018

The maker of the famed kitchen device – as well as bits and bobs ranging from faucets to fish food – is combining with its majority owner in a deal valued at $10 billion. Spectrum Brands comes out with a neater structure. Its collection of businesses, though, is still messy.

RBS is a step away from ending its lost decade

23 Feb 2018

The state-owned UK lender made its first after-tax profit in 10 years. A 4 pct rise in revenue and falling costs moves boss Ross McEwan closer to his return on tangible equity target. Settling U.S. charges over mortgage securities is the last hurdle to restarting dividends.

JPMorgan finally dresses the part

21 Feb 2018

Building a new New York headquarters may sound like exuberance on the part of boss Jamie Dimon. But the bank needs space and can afford it, and the city could gain too. Since JPMorgan is outperforming rivals with newer digs, it’s not just a case of keeping up with the Blankfeins.

Italian bank recap requires M&A faith

19 Feb 2018

Mid-sized lender Creval is raising 700 mln euros from shareholders to repair its balance sheet. Pruning bad loans will require even more capital, and projected returns are slim. The hope is that the cleaned-up bank will become a target once domestic consolidation kicks off.

Cox: Wall Street’s antisocial role in selling guns

15 Feb 2018

Lazard advised AR-15 maker Remington days before Wednesday’s school shooting, perpetrated with a similar rifle. Yet its asset managers talk about responsibility. So does the boss of BlackRock, the top owner of firearms shares. They could be helping reduce American carnage.

Broadcom’s next sweetener: a bigger breakup fee

14 Feb 2018

The chipmaker's increased $120 bln-plus offer for Qualcomm has finally persuaded its quarry to talk. But the $8 bln of insurance Broadcom is offering in case antitrust regulators in Beijing or Washington block the deal probably isn't enough. History may justify twice as much.

HNA sale sets stage for a great escape

13 Feb 2018

Selling half a marquee Hong Kong project for $2 bln should help offset a liquidity crunch. Plenty of other foreign assets could be sold without disrupting the Chinese outfit’s core businesses. Since deals were largely debt-funded, HNA needs good prices to make a difference.

Steinhoff reminds creditors they are not all equal

1 Feb 2018

The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.