Debt

Le Pen will fail as star of Meloni in Paris

3 Jul 2024

Markets are relatively calm about the prospect of a far-right government after Sunday’s second electoral round. They may believe that Marine Le Pen’s party would mimic the apparent moderation of Italy’s Giorgia Meloni. Her fiscal plans, inexperience and beliefs suggest otherwise.

New UK government can claim competence dividend

2 Jul 2024

Eight years of political upheaval and economic uncertainty raised the risk premium for investors. Now the centrist Keir Starmer is set to take over, while France and the US face electoral turmoil. For the first time since the Brexit vote, the country looks a relative safe haven.

Ukraine bondholders’ haircut is a necessary evil

1 Jul 2024

The stricken country wants holders of $20 bln of private sector debt to take a big hit. In ordinary times, Kyiv’s request would be galling. Yet paying foreign fund managers may annoy Kyiv’s public sector backers. And the stigma of default matters less in wartime.

The risk of a euro crisis is rising

1 Jul 2024

While political instability in France adds to the single currency’s fragility, it probably won’t trigger another meltdown. But euro zone members’ high debts, pressing spending needs and low growth at a time of rising nationalism and geopolitical conflict are storing up trouble.

France raises ghosts of last euro zone crisis

27 Jun 2024

French voters will go to the polls this weekend for the first round of the parliamentary elections. In this Viewsroom podcast, Breakingviews columnists discuss why the country’s rising bond yields and the risks of contagion will be uncomfortably familiar for investors.

Olympic Games can withstand Atos farce

26 Jun 2024

The French firm managing the Paris sporting event’s IT backbone is close to bankruptcy. It may find 800 mln euros of short-term financing from President Macron’s government and loans even after creditors ditched restructuring talks. But its future after the Games is less certain.

Why the French vote also matters to Italy

25 Jun 2024

The outcome of snap elections in France will reverberate beyond its borders. Debt-laden Italy is particularly exposed if borrowing costs rise. In this Exchange podcast, former top Treasury official Fabrizio Pagani discusses Rome’s fiscal challenges in a changing EU landscape.

France would feel lonely if debt crisis hit

18 Jun 2024

Market fears of a far-right victory in the elections sent yields on the country’s 2.3 trln euro debt to 12-year highs. If traders’ worries deepen, support from the European Central Bank is not a given. And a eurosceptic government would be deprived of Brussels’ goodwill.

China’s risky answer to wall of debt is more debt

18 Jun 2024

The central government is issuing special ultra-long bonds to steer the $18 trln economy towards ‘high quality growth’. In piling risk onto the country’s last decent balance sheet, President Xi Jinping is betting the People’s Republic can continue to defy a debt crisis.

French investors face full year of financial funk

13 Jun 2024

If Marine Le Pen’s far-right RN party wins next month’s election and sticks to its pledges, France’s 5% budget deficit will balloon. President Emmanuel Macron could call a new election, but not for 12 months. Amid paralysis or worse, the state’s fiscal position may get messier.

Macron lobs petrol on fiery French economic waters

10 Jun 2024

After suffering a beating in European elections, France’s president has called a snap parliamentary poll. Debt investors are already antsy about the country’s yawning deficit. A new electoral battle with Marine Le Pen’s far-right National Rally party will hardly help matters.

Oaktree can still score a skilful goal with Inter

6 Jun 2024

The US fund ended up owning the loss-making Italian club after the previous owner missed a payment. Fetching valuations similar to what Elliott secured for rival AC Milan looks tricky. Yet American interest in soccer and on-field success point to a sale price exceeding $1 bln.

Investors are hunting securitization’s oddballs

4 Jun 2024

Whether a bundt cake bakery or an internet address, if it generates steady cash, it can be diced up in the financial alchemy of securitization. In this Exchange podcast, Janus Henderson’s John Kerschner explains the promise and perils, and why the oddest assets can be the best.

Russian bond rout raises risk of financial crunch

4 Jun 2024

Yields on the country’s debt are at 20-year highs on worries about the budget largesse lavished on the economy. With inflation rising and interest rates at 16%, President Vladimir Putin’s desire to keep funding the conflict in Ukraine could result in lasting fiscal turmoil.

Donald Trump verdict judged leniently by investors

31 May 2024

The former US president joins Italy’s Berlusconi and other politicians in the criminal hall of shame. He also may yet be re-elected, but there’s no extra risk being imputed to the country’s debt, currency or markets. However robust the system, sanctioned wrongdoing will erode it.

Saudi expands strategic toolbox with Lenovo deal

29 May 2024

A PIF unit is the sole investor in the laptop maker’s $2 bln convertible bond. It pays no interest and can’t be swapped for stock until 2027. The real value to the kingdom is Lenovo’s pledge to build a new factory and regional HQ there to bolster Riyadh’s manufacturing goals.

China cashes in banking chips for tech drive

28 May 2024

Beijing's latest $48 bln semiconductor fund is its third and largest. Unlike earlier efforts, which have relied on cash-strapped local governments, the fund counts major lenders like ICBC as investors. It marks a new and riskier phase of China's tech self-sufficiency ambitions.

Japan’s new widowmaker trade may have shorter life

23 May 2024

For more than two decades, investors who bet against Japanese government bonds lost their shirts. Taking a long position in the yen has been similarly painful recently as the currency dropped by 50% against the dollar. Yet there are several reasons why the slide could reverse.

China’s 25% bond spike shows rational exuberance

23 May 2024

Retail investors pushed up prices of 30-year sovereign notes on their debut. The brief surge echoes how they receive IPOs and underscores voracious demand for safe havens. It will tempt Beijing to channel excessive savings of households into the $4 trln government bond market.

The world can survive a strong dollar – for now

13 May 2024

The greenback has gained 17% against major currencies in three years. Other countries avoided repeating past crises through better fiscal policies and less foreign borrowing. But in the long run a mighty buck will put economies under stress, especially in emerging markets.