Debt

Malaysia taps brakes along China’s Belt and Road

5 Jul 2018

Prime Minister Mahathir Mohamad has suspended work on a $20 bln rail link between his country’s east and west coasts. It’s a rare setback for Beijing's massive infrastructure initiative. The project's importance, though, means Kuala Lumpur can afford to fight for a better deal.

Bank CoCos get a new reason to go pop

2 Jul 2018

Exchange-traded funds are pooling bonds that convert into equity in a crisis. It’s an odd mix: ETFs allow investors to buy or sell assets easily, while contingent convertibles can be hard to trade. The union may mean more investors for funky debt, but also bigger price moves.

Debt relief puts floor under Greek bank pains

28 Jun 2018

A government deal with creditors should lower funding costs for Greece’s big four lenders. With bad loans accounting for 48 percent of lending, normality remains a way off. But ending shareholder angst over debt sustainability could be the first step in banks’ rehabilitation.

Euro banks’ leverage games mock Basel playbook

25 Jun 2018

The Bank for International Settlements says European lenders flatter their leverage ratios by shrinking balance sheets just before reporting dates. It shows how global rules are weakened by uneven implementation. The danger is that banks’ profits are riskier than they look.

UK estate agents wounded by taxes and technology

25 Jun 2018

Britain’s largest real estate broker, Countrywide, has become the latest to warn earnings will fall as transactions dwindle. Higher taxes have hit amateur landlords while online property companies are squeezing fees. Given high fixed costs, agents will struggle to plug the gap.

Greece swaps bailout hell for eternal purgatory

22 Jun 2018

Eight years after seeking financial help Athens can at last support itself, helped by extra euro zone funds and debt relief. But borrowings of over 300 bln euros mean it must maintain a tight budget, and submit to regular scrutiny. Doubts over its debt sustainability will linger.

Italian bad loan sale defies political risks

20 Jun 2018

Banco BPM sold 5 billion euros of dud loans for 34 percent of face value, amongst the highest prices to date. Rosy valuations and the ECB’s more lenient stance on disposals are a boon for lenders. But buyers risk downplaying the threat posed by Italy’s radical government.

China eases HNA’s glide path

19 Jun 2018

The troubled conglomerate has billions in debt coming due soon. Official pressure on banks to support HNA bonds could therefore help it refinance, minimising the risk of an unplanned financial accident. That also buys time for more selloffs to further sharpen its focus on travel.

AT&T and Comcast alike in debt, not in risk

18 Jun 2018

Big acquisitions will leave the telco and cable firm with more than $170 billion of debt each. At first, Comcast’s bid for bits of Fox would create the heavier relative leverage load. But it’s AT&T’s recently closed merger with Time Warner that looks more vulnerable.

Casino sell-off is part of a bigger debt gamble

12 Jun 2018

The French supermarket is selling 1.5 bln euros of assets to pay down loans. Controlling shareholder Rallye relies on dividends to service its own heavy debts. The risk is Chairman and CEO Jean-Charles Naouri is running the grocer for financial needs higher up the food chain.

Argentina’s $50 bln IMF deal has a year to work

8 Jun 2018

President Macri, like Cardinal Mazarin’s preferred generals, has been lucky as well as bold so far in his efforts to fix Latin America’s No. 3 economy. With elections not due until late 2019 and the deal shielding social spending, he has time to beat opponents’ IMF-phobia - just.

Hadas: Market complacency curses debtor countries

31 May 2018

President Erdogan is wrong to claim a sinister “interest rate lobby” has aggravated Turkey’s structural weaknesses. Foolish foreigners have, however, financed unsustainable consumption binges in this and other economies. Remedies range from regulatory nudges to capital controls.

How the EU can help save Italy from itself

31 May 2018

A new radical government will cast doubt over euro membership and inflame migration tensions. Other EU countries could help ease voter discontent by tweaking the bloc’s fiscal rules, and taking more migrants. That won’t be easy, but it beats Italy leaving the single currency.

EU sovereign debt fix fails Italian test

24 May 2018

The European Commission wants to make it easier for investors to buy bonds that pool euro zone government debt. It’s part of a plan to reduce banks' exposure to indebted states. Recent Italian worries show such securities might help, but also why they are unlikely to work.

Italy’s next economy minister is the one to watch

22 May 2018

Radical parties have proposed little-known academic Giuseppe Conte to head their government. Yet the economic portfolio matters more for the indebted country’s future. The new minister’s attitude towards the euro will go a long way towards determining investors’ faith in Italy.

Local bureaucrats struggle to come clean in China

17 May 2018

Beijing is suppressing off-balance-sheet borrowing by regional governments, while new rules ease bond issuance. Yet the gap between their legal fundraising and fiscal obligations persists, hobbling efforts to cut a $2.6 trln debt pile. Mixed messages from the centre are to blame.

UniCredit may be stuck with costly crisis capital

10 May 2018

The Italian bank should not be able to treat the proceeds of a 2009 hybrid issue as equity, a hedge fund argues. CEO Jean Pierre Mustier might prefer to get rid of the expensive instruments. But it’s hard to extract UniCredit from the transaction without upsetting investors.

Review: China experts enter their own “New Era”

27 Apr 2018

Two new books from respected scholars try to make sense of the country under Xi Jinping. Both see it fast moving toward a more centralised political regime, with messy and probably unpredictable consequences. As interesting is the shifting mood among China analysts themselves.

WeWork junk-bond investors enable a contradiction

26 Apr 2018

The trendy shared-office outfit is the latest firm with heady prospects and huge cash burn to tap credit markets. Like Uber, Tesla and Netflix, WeWork needs funds for expansion to justify its valuation. Yet the healthy cash flow creditors prefer may only come with slower growth.

Hadas: Debt overload is an easy problem to solve

25 Apr 2018

Three financial revolutions would be enough to bring down debt. Tax corporate debts, don’t subsidise them. Let the public share unearned gains on land. And replace government debt with newly printed money. These ideas may sound too radical – until the next mega-crisis arrives.