Credit

Capital Calls: NatWest nerves

28 Oct 2022

Concise views on global finance: Shares in the government-backed UK lender fell 8% after it revealed an impairment charge 43% above what analysts had expected.

European banks’ perfect moment will prove fleeting

26 Oct 2022

Rates are rising, traders are busy, and customers are paying their debts. That helpful backdrop helped Barclays, Deutsche and Santander average a punchy 11% return on tangible equity so far in 2022. But with recession looming, and bad-debt buffers looking low, it may not last.

A private lender eats buyout bankers’ lunch

11 Oct 2022

With public debt markets shut, funds that help finance leveraged buyouts and other deals have become the only game in town. In this episode of the Exchange podcast, Blue Owl co-founder Marc Lipschultz explains how private credit has muscled in on investment bankers’ home turf.

Europe’s sturdy banks risk becoming punch bags

8 Sep 2022

Lenders like Lloyds and Deutsche are set for a rate-hike windfall even as the region faces recession. As in the pandemic, governments may prod them to offer borrowers loan repayment holidays and cheap credit to pay their bills. But this time, banks may not get as many sweeteners.

Beijing is too bashful with its balance sheet

15 Aug 2022

Corporate loans plunged in July while real estate worsened and retail stayed weak. Even as the central bank cuts interest rates, the government is staying fiscally conservative, relying on indebted local provinces to stimulate demand. That looks increasingly unsustainable.

Banks’ private-credit fightback may underwhelm

4 Aug 2022

JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.

Cheery bank CEOs have the edge on gloomy investors

29 Jul 2022

Santander, BNP, ING, Lloyds and SocGen have lost 27% of their value since mid-February, on fears higher rates will cause defaults to rise. Chief executives, meanwhile, expect returns to stay high. Share prices implying steeper losses than 2020 suggest the selloff is overdone.

Capital Calls: Spotify hums along

27 Jul 2022

Concise views on global finance: The music service led by Daniel Ek added more subscribers and revenue in the quarter outperforming Netflix and Twitter.

Capital Calls: Shopify’s mea culpa

26 Jul 2022

Concise views on global finance: A memo from the e-commerce company’s CEO spells out how they miscalculated the "new normal."

Review: Lex Greensill epitomised post-2008 finance

22 Jul 2022

The Australian’s firm was one of many loosely regulated shadow banks that sprang up after the last crisis. Duncan Mavin’s “The Pyramid of Lies” explains how Greensill duped big lenders, investors and politicians. As interest rates rise, he’s unlikely to be the last failure.

Breakdown: Private credit’s main threat is itself

7 Jul 2022

Direct lenders like Ares or Apollo are displacing banks and investors when funding buyouts. Breakingviews explains how more flexible and generous lending terms helped these upstarts grab market share. As credit markets turn, the $1.2 trln industry’s success could be its weakness.

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.

Twin crises will help Asian debt funds thrive

26 May 2022

Covid-19 and war in Ukraine are curbing the risk appetite of banks that already neglect all but the region’s best borrowers. The situation opens the door for funds like KKR’s new one. A pan-regional approach also learns from previous missteps in India.

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.

Buy gas now, pay later is a hard tiger to ride

1 Apr 2022

Fintech firms Klarna and Zip are offering U.S. punters interest-free instalments as a way to manage higher fuel bills. The fact that consumers use loans to afford mere essentials raises the risk of defaulted payments. And unlike discretionary sales, Klarna isn’t getting a fee.

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.

SocGen $6 bln car deal leaves shares in slow lane

6 Jan 2022

The French bank is helping fund the purchase of LeasePlan by its automotive unit ALD. Returns look high and the move helps the pair shift to an electric future. But since investors prefer focused banks, rather than conglomerates, CEO Frédéric Oudéa won’t get much credit.

Live now, pay later is fintech’s latest extension

21 Dec 2021

Instalment financing, rebranded as “buy now, pay later,” has been the hot consumer financial innovation powering groups like Klarna and Afterpay. Look for the next iteration to entice consumers beyond shopping and leisure, including doctor’s visits, utilities and even taxes.

Peer-to-peer lending’s demise is cautionary tale

13 Dec 2021

The business of directly linking savers and borrowers is all but dead after pioneers Zopa and $3 bln LendingClub pulled out. Creating an asset class requires regulatory buy-in, while bank funding costs are hard to beat. Both lessons are relevant for newer fintech upstarts.

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.