Debt

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.

It’s time to worry about Greece again

26 Aug 2022

A bugging scandal threatens Prime Minister Kyriakos Mitsotakis’ government and renewed political instability. It’s not a re-run of the Grexit crisis. But the country’s high deficit and debt are a cause for concern when interest rates and energy prices are rising, says Hugo Dixon.

Cinemas’ debt horror show compels a director’s cut

25 Aug 2022

Regal owner Cineworld is prepping to file for bankruptcy. Punters are slowly returning to theatres, but studios are taking their time to release “Top Gun”-style blockbusters. With less income and rising wage costs there need to be fewer screens, and fewer operators.

China shadow bankers pray to be systemically risky

23 Aug 2022

Auditors are investigating the country’s $3 trln trust industry that caters to wealthier investors. Falling property prices are stressing such non-bank lenders. But securing a bailout for rich clients would require a miracle given President Xi Jinping’s “common prosperity” push.

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.

Banks’ LBO debt hangover may leave lasting scars

16 Aug 2022

Dicey markets forced Goldman Sachs and peers to take a hit on $80 bln of buyout loans that got stuck on their balance sheets. Calmer conditions mean the worst may be over. But the trauma, along with rising rates and competition from private lenders, adds to the case for job cuts.

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.

Country Garden snagged by risky ties that bind

28 Jul 2022

A plan by China’s biggest property developer to raise equity led to $2 bln in lost market value for its management company. There’s growing concern about the unit’s independence after a scandal at rival Evergrande. A cleaner break, like having a different board chair, might help.

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.

Ukraine needs hard cash more than debt relief

21 Jul 2022

The war-torn country needs $9 bln a month to cover its costs. Its central bank is running out of reserves. A bond payment freeze will help, but only at the margin. Western allies need to launch a coordinated aid effort to keep the country afloat.

Real estate will defeat Beijing, again

21 Jul 2022

The campaign against property speculators was a good idea at a bad time. As with prior attempts, Chinese officials bit off more than the economy can chew. With buyers in open revolt and growth below 1%, capitulation is inevitable. The longer it takes, the more abject it will be.

Raging crisis puts Sri Lanka’s creditors on spot

11 Jul 2022

Protesters are forcing out the president after petrol pumps ran dry. It removes one obstacle to an IMF rescue. Now bondholders need to swallow big losses on Colombo’s $50 bln of foreign debt. An ugly global economy means citizens and lenders face a long, hard road to recovery.

Telecom Italia breakup opens new M&A lines

7 Jul 2022

The struggling former state monopoly is saddled with 23 bln euros of net debt. Selling its prized fixed-line network would eliminate most of that, slashing leverage for the services company left behind. For investors, the hope is that Telecom Italia’s rump also comes into play.

Macron’s travails could turn into fiscal mess

5 Jul 2022

The French president’s electoral platform was bound to stress the state budget. Now a deadlocked parliament may only agree on increased spending and more tax cuts. With borrowing above 110% of GDP, and no credible plan to control public finances, Paris’s debt looks vulnerable.

Cosseted bank bondholders need to feel more pain

4 Jul 2022

Credit Suisse’s repayment of a hybrid bond at its first call despite the higher cost of replacing it highlights flaws in the $212 bln market. Post-2008 reforms were meant to make such capital permanent, but lenders fear angering investors. Bank watchdogs can take a harder stance.

It’s time to rediscover the importance of interest

30 Jun 2022

The cost of money is not only key to controlling prices. It also affects the value of financial assets, the allocation of capital, and the appetite for debt. Ultralow interest rates distorted these decisions, Edward Chancellor says. Little wonder financial anxiety is rising.

China’s property bottom leaves few standing tall

30 Jun 2022

Vanke, the second-largest developer by sales, reckons parts of the housing market are recovering. Rivals with weaker credit ratings are struggling with debt repayments and face a wall of maturities. A rebound requires access to borrowing markets where investors remain sceptical.

Capital Calls: Russian default, Inflation and debt

27 Jun 2022

Concise views on global finance: Moscow defaulted on its foreign debt for the first time in over 100 years, leaving bondholders in limbo; the Bank for International Settlements wants rates raised “quickly and decisively”, but is also worried about higher borrowing costs.

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.