Debt

China property credit crisis drags in Ping An Life

4 Feb 2021

China Fortune Land Development's $814 mln of overdue loans have local officials warning its collapse could create systemic risk. Over 200 financial institutions are involved. Beijing might let CFLD serve as a warning, unless the life insurance giant steps in to save its stake.

Washington takes low road back to Latin America

1 Feb 2021

Days before Donald Trump left office, a U.S. development bank agreed to help Ecuador repay some $3.5 bln of debt in exchange for locking China out of its telecom network. Reviving relationships in the region makes economic sense, but it’ll take more than chasing Beijing away.

Federal debt monster lurks for Biden, Yellen & Co

19 Jan 2021

The U.S. president-elect’s pick to lead the Treasury says going big with coronavirus relief is smart for now. But debt at 100% of GDP and counting will inevitably become a millstone. Big-ticket agenda items, from higher taxes to lower defense spending, can’t be avoided for long.

Buyout captains’ animal spirits will trump reason

13 Jan 2021

Last year marked a record number of LBOs and $580 billion in total value. Warning shots are ringing: leverage levels are high, bankruptcies are rising and aggressive tactics recently took a hit in U.S. courts. But with coffers filled and low borrowing costs, signs flash go.

Argentina borrows from the Elliott playbook

8 Jan 2021

The country used an obscure but widespread legal clause to argue for dismissing part of a lawsuit over GDP-linked warrants. Paul Singer’s fund once helped push Argentina to default with such wordplay. If Buenos Aires' tactics pay off, other creditors will have to pay attention.

Cleanup peeks through India’s distressed deal mess

7 Jan 2021

Competing $5 bln bids from Oaktree and Piramal for collapsed housing lender DHFL look closely matched on a mix of criteria. Missed deadlines and mudslinging have marred the process. And yet better recovery rates and a jailed tycoon are good signs for the young insolvency regime.

Default wave will hit the little guy hardest

28 Dec 2020

Covid-19 has saddled companies with debts. Big groups with reserves and access to capital now look like they can ride it out. Smaller outfits won't stay afloat so easily: think local coffee shops vs. Starbucks. Governments need to get creative to help the worst-hit businesses.

Guest view: China’s role in emerging economy debt

24 Dec 2020

Developing nations, struggling to repay loans, are being slowly locked out of credit markets. Their plight is likely to worsen. But when it comes to resolving this looming crisis, China has been largely missing in action. It should be held to a higher standard.

Latin America debt will hit post-crisis sweet spot

22 Dec 2020

Corporate defaults in the region have jumped during the pandemic and political concerns persist. But ultra-low global interest rates and expectations that richer countries could spend more on infrastructure will be enough to entice yield-hungry investors to these markets.

Corona Capital: New York City, Fed/climate change

15 Dec 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s exodus puts local government in a tight spot; the Fed’s belated move shows a change in Washington.

Funky debt bonanza is breeding complacency

8 Dec 2020

Companies from BP to Gazprom are issuing more bonds that count as equity than ever before. Low rates and investors’ thirst for yield explain why, yet the benefits of such hybrids are modest. To avoid future strife, companies should sell debt that is better at absorbing losses.

Mining deal explores Sino-Australian common ground

8 Dec 2020

Perth-based IGO is in talks to buy a minority stake in a Tianqi Lithium mine for $1.5 bln. The Chinese company could use the money to cover $1.9 bln of debt from its investment in Chile’s SQM. It also would be welcome cooperation amid heated tensions between the two countries.

Corona Capital: Skis, Italian banks, Dividends

26 Nov 2020

Concise views on the pandemic’s corporate and financial fallout: Europe’s hopes for a common ski policy hit a mogul; Italian lender Credito Valtellinese faces a lonely bidding war; Aviva’s payout cut is less stingy than it looks.

Zambia default risks bitter reckoning for all

16 Nov 2020

The African country failed to make a $42 mln interest payment to bondholders. Meagre reserves and mining exports mean its economy can limp on, although neighbour Zimbabwe shows the dangers of financial exclusion. Compromise between China and Western creditors is the only way out.

Argentina’s creditors made two silly mistakes

28 Oct 2020

Some investors say their newly restructured bonds have tanked due to President Fernandez’s lousy policies. They’re right. But they’re shouting in the wind, because they agreed to a debt rejig based on unenforceable promises, and gave up what leverage they had in the process.

GE boss reaches milestone in Sisyphean trial

28 Oct 2020

Larry Culp managed to offset damage from grounded planes and declining power-sector demand with helpfully timed payments to report positive cash flow in the third quarter. Other challenges remain, from debt to GE’s insurance business. Then there’s the existential part.

Corona Capital: Oil, Delta, Hunger

13 Oct 2020

Concise views on the pandemic’s corporate and financial fallout: OPEC and the International Energy Agency issue forecasts that bode ill for crude demand; the U.S. airline steers through turbulence; and a food crisis is exacerbating problems facing the most vulnerable in society.

Evergrande’s debt scares creditors into submission

7 Oct 2020

The stressed property giant persuaded investors owed nearly $15 bln to convert their obligations to unlisted shares. Details are scant, but it’s another miraculous escape for founder Hui Ka Yan. The deal looks crummy, and it highlights how real estate has trapped policymakers.

Moutai ladles out value from its punch bowl

18 Sep 2020

China’s liquor titan is issuing $2.2 bln of bonds to help buy a highway operator from a struggling local government. The ludicrous diversification erased $10 bln from its enormous market cap. It’s a sobering reminder of how the country’s listed companies can be called to serve.

Old-school value stocks are a dying breed

17 Sep 2020

The number of listed U.S. firms has halved over 25 years thanks to mergers and buyouts fueled by cheap debt. Those remaining are borrowing more, worsening Covid's damage. Most newcomers to public markets lose money. Investors looking for solid earnings are running out of options.