Corporate Debt

Vulture funds will have to learn how to fly again

28 Dec 2021

Distressed debt investors are looking like the pterodactyls of finance. Defaults are low, thanks to rock-bottom interest rates. Specialists like Oaktree can push into more opaque assets like private credit or far-flung places. But new risks will favour the bigger predators.

China property debt crisis puts founders on spot

7 Dec 2021

Investors are pushing troubled developer Kaisa to avoid default and follow rival Agile’s lead by selling bonds that convert into equity. That, and other options on the table, present founder-executives with a hard choice: cede prized majority control, or risk insolvency.

China property market faces more nationalisation

6 Dec 2021

Evergrande, the country’s most indebted developer, has admitted it might formally default. With $10 bln in property bonds maturing in January alone, officials are under pressure to keep the sector from collapsing. The most expedient solution is to put more housing in state hands.

It’s a dangerous time to buy China’s property dip

3 Dec 2021

Small Chinese developer Fantasia shocked markets when it defaulted on a $206 mln bond out of the blue, despite $4 bln in cash on its balance sheet. Now creditors are pushing it toward bankruptcy. Investors eying distressed property bonds should think twice; Fantasia has company.

Bondholders are biggest losers in telco LBO frenzy

1 Dec 2021

Telecom Italia’s bonds fell on fears that the securities may not be redeemed if KKR’s $37 bln buyout succeeds. The M&A boom has made unexpected targets of large public companies. Even when investors enjoy stronger protections, as with UK rival BT, these offer limited solace.

Capital Calls: Volkswagen, Turkey

1 Dec 2021

Concise views on global finance: The German carmaker may take mining stakes to secure electric-vehicle raw materials, echoing Henry Ford, the U.S. production-line pioneer; the Turkish central bank is resorting to old tricks to prop up the lira but it’s an unsustainable strategy.

China property bond rejig is destined to fail

30 Nov 2021

Developer Kaisa wants holders of $400 mln in notes to extend for 18 months. They’d get no real sweetener and would be pushed behind $3.6 bln of other maturing debt. Boss Kwok Ying-shing went through a $2 bln restructuring in 2015. Now he seems on course for a $12 bln repeat.

China property chaos unearths insurance landmines

10 Nov 2021

The $2 bln developer Yango is scrambling to avoid default. But a 2020 share sale to backer Taikang Life puts it on the hook to pay out generous dividends. Such opaque debt-like equity deals with insurers are common in the sector. They threaten to undermine restructuring efforts.

Funky debt offers SoftBank fix for UK retail hole

3 Nov 2021

Masayoshi Son’s group has an option to buy part of the e-commerce unit of stricken retailer THG, in which it owns a stake. Honouring that would mean big losses, but walking away could amplify the UK group’s woes. Investing in a new convertible bond might buy time for a recovery.

Capital Calls: Aussie climate plan stumbles

28 Oct 2021

Concise views on global finance: The federal government won’t sign a pledge to reduce methane emissions.

Evergrande payment wins some restructuring credit

22 Oct 2021

The developer has wired an $84 mln coupon to bondholders just days before a potential default. It suggests goodwill ahead of an inevitable debt rejig. If boss Hui Ka Yan is prepared to actively work with creditors, he could set standards for other distressed situations in China.

Capital Calls: WeWork listing, Polish games maker

21 Oct 2021

Concise views on global finance: The battle-scarred office-sharing outfit finally started trading on the NYSE after its deal with a blank-check company closed; CD Projekt delays chunky updates to its flagship “Cyberpunk” video game, avoiding a repeat of last winter.

Capital Calls: NatWest’s guilty-plea logic

7 Oct 2021

Concise views on global finance: The UK lender could receive a lower money-laundering fine for accepting culpability.

Evergrande crisis inspires shrewd bottom-feeding

7 Oct 2021

Tycoon Joseph Lau offered just $250 mln for the 25% of Chinese Estates his family doesn’t own. Shares were hit by its long backing of its ailing peer, whose boss plays poker with Lau. As with a rival’s mooted deal for an Evergrande unit stake, current owners may have to fold.

China’s bad loan markets will pad property crash

5 Oct 2021

The real estate crisis is rich pickings for distressed debt investors, as new exchanges and special courts have become more efficient at resolving duff loans. President Xi Jinping is no capitalist, but when it comes to popping bubbles, he’s allowed room for market forces.

Evergrande restructuring is well-balanced so far

29 Sep 2021

Local officials are helping suppliers get paid and consumers receive flats bought in advance, soothing buyer anxieties. Bigger investors in the struggling Chinese developer will therefore shoulder bigger losses. It’s a tolerable mix of political expedience and financial sense.

Credit markets will withstand Evergrande shocks

23 Sep 2021

The global corporate bond market has barely flinched at the crisis at the Chinese property developer, which is a big issuer of junk debt. Loose monetary policy, healthy company balance sheets, and a hunt for yield explain the nonchalance. This will encourage more risk taking.

Viewsroom: Evergrande is a mostly domestic crisis

23 Sep 2021

Global investors have woken up to the potential financial risks that the heavily indebted Chinese property developer poses. Breakingviews Asia columnists explain, though, that even in a worst-case scenario its effects beyond the country’s borders should be limited.

Wall Street will learn to love Evergrande’s crash

21 Sep 2021

New York woke up to the developer’s problems on Monday, moving stocks and bond prices. Offshore exposure to Evergrande debt is opaque; a Chinese real estate crisis would be painful. But contagion risk is limited, and a housing correction has upsides for frustrated foreign banks.

Capital Calls: Lagarde channels Thatcher

9 Sep 2021

Concise views on global finance: The ECB boss will buy fewer bonds but tells markets: “The lady isn’t tapering.” A tough decision on whether to scale back bond purchases more decisively will come later.