Debt

Bad debt sale will test Greek banks’ recovery

12 Dec 2019

Eurobank is preparing to dispose of $8 bln in dud loans under a government scheme to cut such exposures by $33 bln. CEO Fokion Karavias has enough capital to absorb a projected $1.4 bln loss. Rivals whose shares have also gained from an economic rebound have less wiggle room.

Low bond yields wreck age-old investment credos

19 Nov 2019

Allocating 60% to equities and 40% to fixed income used to count as a balanced choice. Yet depressed debt yields mean such portfolios offer a dwindling buffer against setbacks in stocks. Investors who turn to hard-to-trade assets to diversify risks will only face other problems.

Viewsroom: LVMH wants more sparkle

31 Oct 2019

The $200 bln luxury conglomerate is making a $14.5 bln bid for Tiffany. The iconic brand known for putting its bling in blue boxes would be wise to accept the proposal. Plus: Venezuela’s leadership saga and a surreal debt drama collide. And: the world’s most expensive chocolate.

Pemex debt riddle stumps Mexican president

15 Oct 2019

The IMF has panned the isolationist approach AMLO, as he's known, is taking. His budget relies on the state oil giant producing cash, but Pemex needs all the pesos and dollars it can get to boost production and reduce $102 bln of debt. Without private investment, it can't add up.

GE-style pension tweaks blend finance and fear

14 Oct 2019

Asking future retirees to cash out early from defined-benefit pensions can help close funding holes like the $27 bln one at the U.S. conglomerate. Two things could help GE get the better end of the deal: falling interest rates, and uncertainty over the success of its turnaround.

PG&E faces judicial bankruptcy brownout

10 Oct 2019

Just as the California utility cut off customers to avoid wildfire risks, a judge opened the door for creditors to seize power over its restructuring. They are offering more to fire victims, and less to equity holders. Running the agenda matters: PG&E stock fell another 30%.

Corporate debt doomsayers are overstating the risk

7 Oct 2019

Over half of U.S. investment-grade corporate debt is rated BBB, one level above junk. This has alarmed observers from the Fed to Pimco who fear U.S. companies could struggle in a downturn. But BBBs are not all created equal. Many such borrowers boast improving credit metrics.

Europe’s IPO bankers more like badgers than dodos

3 Oct 2019

Proceeds from stock raises are at a seven-year low, and fees are stingier than in the U.S. Add structural threats, and equity arrangers might appear to face extinction. In fact, the need to maintain client ties means the sector faces a badger-style cull, not a dodo-style fate.

Leveraged loan partygoers take a much-needed rest

1 Oct 2019

Growth in risky corporate debt has slowed. Investors worrying about the economy are driving a harder bargain with private equity-owned groups like Shutterfly and Sotheby’s. Yet sovereign bond yields are ultra-low and buyout firms have huge cash piles. The lull may be temporary.

Hadas: The trillion-dollar lesson on fiscal policy

18 Sep 2019

Donald Trump’s tax cuts will lead Washington to borrow nearly $1 trln, or 4.5% of GDP, this year. The politics of deficits are controversial, but the monetary economics shouldn’t be. While large deficits can cause inflation or constrain growth, today’s shortfalls may do neither.

GE’s Larry Culp is playing a bad hand well

11 Sep 2019

The CEO is selling what he can to save what he must. Ceding control of oil services firm Baker Hughes will mean a hefty writedown for the conglomerate, but it brings divestments to nearly $20 bln on his watch and reduces leverage. That buys Culp time to fix GE’s troubled core.

Junking Ford threatens shares more than bonds

10 Sep 2019

Moody’s has downgraded the carmaker’s debt rating, citing weakening cash flow and earnings. But that’s old news already priced into the $36 bln company’s bonds. While CEO Jim Hackett has some tough years ahead, bankruptcy risk is remote. The dividend, though, is much less secure.

Italy’s budget is chance to reset EU relations

4 Sep 2019

The first test for Prime Minister Giuseppe Conte is to get his new administration’s sums to add up. Though debt is still rising, tightening spending while the economy weakens risks fuelling deeper anti-EU sentiment. Brussels should give the new government some flexibility.

Argentina debt flashback includes glimmer of hope

29 Aug 2019

President Mauricio Macri wants to restructure the country’s borrowings as his four-year effort to restore its economy and market standing nears an end. History warns against optimism, but the move could give his likely successor some breathing room – if he doesn’t squander it.

British drug group can’t even give away opioids

6 Aug 2019

Mallinckrodt suspended a plan to spin off its painkiller business to shareholders. It was a too-transparent attempt to shield itself against legal liabilities from thousands of lawsuits. With falling sales, hefty debt, and a potentially big settlement looming, its future is grim.

End is in sight for Italy’s bad loan emergency

6 Aug 2019

The country’s banks have halved the pile of shaky debt from a 341 bln euro peak in 2015, helped by frantic sales. The pace at which good credit is turning sour has also slowed. New European Commission boss Ursula von der Leyen has one less hurdle on the way to a banking union.

Puerto Rico leadership change offers second chance

25 Jul 2019

Governor Ricardo Rossello is resigning after mass protests over crude chat messages and a corruption probe. Political turmoil has stymied efforts to restructure the U.S. territory’s debt and strengthen fiscal oversight. The next leader can’t afford to waste Puerto Rico’s crisis.

China has a template to remake its Belt and Road

25 Jul 2019

The Asian Infrastructure Investment Bank has financed over $8 bln of projects while promoting high standards and responsible lending. It’s a sharp contrast to the amorphous, opaque Belt and Road. Officials looking to retool that initiative should learn from their own successes.

U.S. bond vigilantes morph into deficit patsies

23 Jul 2019

Treasury prices didn’t budge after lawmakers struck a spending deal, even though it promises years of trillion-dollar deficits. Investors used to target congressional profligacy. But a world awash in money has co-opted them. Now they won’t enforce discipline until it’s too late.

India unlocks a $200 bln stressed debt market

22 Jul 2019

The country’s first comprehensive bankruptcy code has hit bumps with cases like the drawn-out takeover of Essar Steel. But the framework is starting to offer better recovery, prompting creditors to act sooner. That’s good news for lenders and investors like Apollo and Oaktree.