Corporate Debt

Elliott’s double dip spares Citrix banks’ blushes

22 Sep 2022

Paul Singer’s hedge fund has made an unusual bet, picking up $1 bln of bonds backing its own buyout of cloud firm Citrix. The banks get shot of a balance-sheet albatross. And by getting a big discount on debt issued in a frothy market, Elliott benefits from their pain twice over.

Anxious Kaisa investors throw good money after bad

21 Sep 2022

Foreign bondholders in the Chinese property firm, which has $12 bln of offshore credit in default, are offering $2 bln to take over stalled projects plus restructure debt. A similar proposal failed last year, but as its woes worsen, Kaisa may reconsider. Pricing is the trick.

Adani’s Fitch debt spat is good news all round

8 Sep 2022

The U.S. group’s CreditSights unit rankled the $255 bln opaque Indian behemoth last month by calling it “deeply overleveraged”. But it got Adani’s executives talking more, and investors now have two clearer views of the company to weigh up. That’s a transparently good outcome.

Capital Calls: Chinese property bonds

16 Aug 2022

Concise views on global finance: Beijing plans to guarantee new domestic fixed-income issues by half a dozen homebuilders, but that’s hardly enough to revive overall demand for housing.

Capital Calls: Tech bros give Allbirds the boot

9 Aug 2022

Concise views on global finance: The maker of popular nondescript sneakers with a purpose is getting tripped up on demand. Its stock price pounding may make it vulnerable to a takeover.

China’s rental push could grease property slide

27 Jul 2022

Officials struggling to complete $300 bln of stalled apartment projects are mulling flipping them into leased units. More inventory is good in the long run but a falling housing market needs buyers more than renters. Depressing already low yields will deter investment.

Evergrande gives Beijing another reason to step in

25 Jul 2022

The developer’s CEO resigned after a probe found he helped divert funds from a subsidiary. This puts a restructuring plan for $19 bln of offshore bonds at risk. Authorities grappling with a widening property crisis now have more incentive to intervene directly in Evergrande.

Credit Suisse pays up to pretend all is well

17 Jun 2022

The Swiss lender’s efforts to refinance hybrid credit mean it’s paying a steep 9.75% coupon. Investors expect banks to offer to buy back this sort of debt, but Santander opted not to in 2019. Credit Suisse’s ongoing headaches means it has less scope for such brusque treatment.

ECB’s crisis weapon pledge is vague and late

15 Jun 2022

The European Central Bank will “accelerate” work on a new tool to control soaring bond yields from weak sovereigns. The lack of detail reflects divisions within the bank on when and how to use such a programme. It’s an invitation to markets to test the ECB’s resolve yet again.

Central banks still have space to fight inflation

15 Jun 2022

Jerome Powell and Christine Lagarde are tightening monetary policy to try to control soaring prices. Previous shocks have prompted the Fed and ECB chiefs to pause or loosen again. Despite plunging equity prices this time, calmer credit markets imply the “Fed Put” is far off.

Tech convertible boom was a tax on the gullible

3 Jun 2022

Fast-growing firms including Affirm, DraftKings and MicroStrategy issued $100 bln of zero-coupon convertible debt over the past couple of years. Holders get no interest, taking instead an option that’s now in many cases near worthless. Some may not even recoup their principal.

China’s real estate renovation is too cosmetic

26 May 2022

The central bank joined wider efforts to help the property sector by cutting five-year lending rates to 4.45%. Banks remain sceptical of developers however, and bonds are trading at distressed prices. Lack of faith in the industry’s foundations make it harder to build a recovery.

Private equity can pull away from Wall Street

1 Apr 2022

Sponsors like Thoma Bravo are perfecting a playbook that demotes banks by tapping direct lenders for financing and sourcing transactions directly, bypassing auctions. Banks make a chunk of their annual fees from the buyout business. This threatens that pot.

Private credit funds take page from start-up book

23 Mar 2022

Lending to deals like Thoma Bravo’s $11 bln purchase of Anaplan – which has no operating cash flow – is toxic for big banks. But private credit funds are signing up. They may be trying to disrupt lending markets while gaining clients. That sounds a lot like a risky tech model.

LBO shops offering credit get best of both worlds

22 Mar 2022

Buyout firms have $3.4 trln of dry powder. With markets upended and regulatory uncertainty, there’s no better time to spend it. But lenders have suddenly shut their purses. Private equity shops with those resources, like Blackstone and Apollo, can play two sides of every deal.

Russian debt coin toss will get harder to call

8 Mar 2022

Gazprom and Rosneft are repaying bonds despite fears Moscow may renege on its own debt. The depressed prices of Russian corporate debt mean investors who rightly bet on repayment can double their money. Yet rising tensions and murky workouts mean the trade will get riskier.

Central banks will give risky debt a helpful shock

13 Jan 2022

Benchmark bond yields are rising as rate-setters around the world scale back asset purchases. That will reduce the appeal of corporate debt, but a correction in credit markets is nothing to fear. A setback may lead to less hazardous terms for bondholders, and a rout is unlikely.

Everyone wins in India’s telecoms debt reset

12 Jan 2022

New Delhi is set to become Vodafone Idea’s top owner via a $2.2 bln debt-for-equity swap. The deal saves India’s No. 3 operator, spares its lenders and averts a duopoly. With the government on side, raising tariffs and securing outside investment will be easier too.

China’s next debt crisis will be municipal

10 Jan 2022

Local government investment vehicles owe $8 trillion, over half national GDP, and are big dollar bond issuers. Collapsing property sales and Omicron stress are squeezing them. Beijing may let some default; others might try to dump assets in a weak market. It could get ugly.

Reliance channels its name in 40-year bond

6 Jan 2022

It sold the longest tenure paper by an Indian firm as part of a $4 bln deal, on the back of a big successful expansion into consumer businesses. Bagging cheap funding now looks smart. But as China’s tech upheaval shows, four decades is plenty to test India’s reliance on Reliance.