Debt

The Exchange: China’s bad debt opportunity

15 Sep 2020

Beijing is letting lenders go belly-up as it attacks systemic risk. That’s all fine for Benjamin Fanger, founder of ShoreVest, a manager $1.8 bln of soured loans. He talks with Pete Sweeney about the message China is sending bankers, and the opportunity for foreign investors.

Argentina’s debt victory lap is way too early

1 Sep 2020

Buenos Aires is crowing about getting 99% approval for its $65 bln restructuring deal. It’s a good first step, but it should have been easier. Negotiating a realistic reform plan with the IMF will be tricky, and balancing growth and stability in the future will be harder still.

Distressed debt cash flood could sink returns

31 Aug 2020

Investors are pouring billions into funds that take advantage of credit carnage. Brookfield's Oaktree unit just raised a whopping $12 bln. But assets chasing these bets have ballooned since 2008, and stimulus limits the opportunities. Many managers may fall short of expectations.

Banks’ bad-debt nightmare may have a happy ending

27 Aug 2020

Major lenders in the U.S. and Europe are understandably fretting about dud corporate credit. But, assuming reasonable loan recoveries, they’ve collectively set aside enough to weather a 7% default rate. With money cheap and governments supportive, the cushion looks comfortable.

China bank failure fires quiet warning shot

10 Aug 2020

Beijing will let Baoshang Bank go under in the first such insolvency since 2001. The liquidation of the lender, used as a piggy bank by an insurer, will raise credit costs for small peers, pushing more of them to the brink. It’s an overdue cleansing, but a risky time to do it.

HSBC is firing on just one shaky cylinder

3 Aug 2020

The $90 bln lender’s investment bank is the only business that’s really growing, as the group racks up further bad-debt charges. CEO Noel Quinn is cutting costs fast. But with low interest rates crimping revenue, he might need to take a sharper knife to restructuring plans.

Ecuador spat reveals sovereign-debt market cracks

30 Jul 2020

Investors are suing to halt the country’s $17.4 bln restructuring, claiming it’s hoodwinking bondholders. They have a point. Going to court is a long shot, but Ecuador’s tactics will hurt its market-friendly makeover. And it may prompt an overhaul of how countries borrow, too.

Investors emerge faster than emerging economies

21 Jul 2020

Fitch Ratings may soon label more countries in the world as junk than investment grade. And Covid-19 has added to the problems that many poorer countries already faced. Even so, falling U.S. bond yields are forcing money managers to raise their exposure to riskier markets.

Ecuador is willing pawn in Argentina debt standoff

20 Jul 2020

Quito will tweak voting rules in its $17.4 bln restructuring, helping creditors pressure the larger LatAm debtor to do likewise. It’s an easy change to make and would still help emerging-market borrowers avoid being held to ransom in the future. Buenos Aires should take the hint.

Indian syndicate’s sprawl smells of desperation

20 Jul 2020

A $42 bln housing lender, HDFC, hired a record 19 banks to raise $1.9 bln, says IFR. It suggests the well-capitalised issuer is worried liquidity flows might dry up soon as India’s pandemic keeps burning. The fee-starved advisers are settling for scraps. Neither is a good sign.

China’s jobless recovery risks debt indigestion

16 Jul 2020

Output rose 3.2% last quarter, as a record $1.7 trln in loans kicked in. But investment is tepid, employers are shedding jobs, and retail remains anaemic. Beijing is also running low on distressed credit buyers. With bad debt set to rise, pressure to find alternatives will build.

Argentina remains the bad boy of sovereign debt

14 Jul 2020

The serial defaulter’s new restructuring proposal offers creditors decent value – but only after months of off-the-charts acrimony. Creditors were a tough bunch to please, but the government’s strategy stymied progress. The country can’t get out of its own way.

Corona Capital: Lockdown diets, Beating the Fed

14 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: Covid-19 is prompting diets for both animal and human; and the Fed takes a hit on a garbage deal.

India’s banks peddle bad-loan black holes

14 Jul 2020

ICICI wants to raise some $2 bln, joining peers seeking capital as customers take advantage of interest holidays on a huge one-third of borrowings. Defaults system-wide could double to a whopping 20%, or worse. Amid so much disarray, the strong will inevitably get stronger.

Review: Poking China’s ironclad asset bubbles

10 Jul 2020

Sceptics have predicted the financial implosion of the People’s Republic for years. In “China: The Bubble that Never Pops”, Tom Orlik argues it may never happen. It’s a useful antidote to free-market complacency. Beijing’s competitive threat will not go away on its own.

Indonesia cautiously crosses central bank rubicon

9 Jul 2020

Bank Indonesia will buy $28 bln of bonds directly from the government, breaking a long-held taboo. It will refund interest gains, and the securities will be tradeable, providing price transparency. That’s about as credible as an emerging market monetary authority can hope to be.

Japanese bond market shift spells stronger yen

7 Jul 2020

Central bank boss Haruhiko Kuroda has kept yields on 10-year debt near zero but let those on longer-dated ones rise. Now most of Japan’s yield curve is above that of France. Dwindling returns on overseas bonds could reduce local demand for foreign currency, sparking a yen rally.

Mexico’s stingy populist is haunted by history

2 Jul 2020

The president, known as AMLO, is the rare left-winger queasy about budget deficits, even in the face of a pandemic. This may be because of his nostalgia for the country’s mid-century boom, which was undone by debt-fueled spending. He has learned the wrong lessons from the past.

Argentina drama comes down to politics and Pac-Man

22 Jun 2020

Talks between the serial defaulter and its largest creditor group have stalled. The remaining gap is not huge. But the government seems intent on scoring a political win and may deploy an unusual strategy to do it. Rising frustrations may make an agreement hard to reach.

FOMO draws a crowd to Reliance’s Jio club

19 Jun 2020

Mukesh Ambani has delivered on a promise to make his group net-debt free after raising $22 bln. Most of that came from selling pricey stakes in tech unit Jio to KKR and others. A fear of missing out on India’s next big thing will have helped. Still, the frenzy is rational.