Debt

Portuguese banks face long exit from bad-debt woes

6 Oct 2017

The three biggest banks plan to jointly manage their bad debts rather than selling them off. They have little choice. With common equity Tier one capital ratios averaging 11 percent and earnings depressed, lenders can ill-afford further hits to capital.

Trump gets Puerto Rico priorities in a muddle

4 Oct 2017

The president’s vow to wipe out the U.S. commonwealth’s debt sent its bonds plunging. The devastation wrought by Hurricane Maria may necessitate another restructuring. But it doesn’t address the island’s problems. Its citizens need money, supplies and services, not distraction.

ECB bad-loan blitz to spur Italy insolvency reform

4 Oct 2017

The European Central Bank wants lenders to fully provision against new bad loans within seven years. That could be painful in Italy, where repossessing collateral can take even longer. The new rules give Rome a short window to finally get its bankruptcy law into shape.

Review: Ellen Pao cracked door for women in tech

29 Sep 2017

In "Reset," the venture capitalist recounts her decision to fight Kleiner Perkins in court over sexism, rather than settling. She lost, but several women have since publicly confronted the bro-culture of Silicon Valley at Uber, SoFi and beyond, yielding more promising results.

Equifax can’t even oust its failed CEO effectively

26 Sep 2017

Rick Smith is "retiring," as the euphemism goes, after a massive cyber attack and fumbled response - and with little financial penalty. The interim management plan makes clear the board hadn't planned succession adequately either. Equifax needs regime change at every level.

UK banks are trapped in a pincer movement

25 Sep 2017

The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.

Eminem IPO risks a Slim Shady rap

25 Sep 2017

An online site for buying and selling artists' royalties is floating a unit that will buy into the revenue from music catalogs, starting with the Detroit star's. The interests may be partial, though, and the revenue volatile. The financial remix sounds off-key for public markets.

Private equity gets a double-dip on debt

14 Sep 2017

Hosts hate guests who dip half-eaten snacks back in the sauce. But buyout firms are doing something similar: loan documents now let them add extra debt onto already indebted companies. Loose monetary policy encourages boisterous behaviour, but maybe not for much longer.

Time isn’t always on Warren Buffett’s side

12 Sep 2017

Berkshire Hathaway’s bid to buy a fifth more of Home Capital was rejected by the Canadian lender’s shareholders. The setback comes weeks after Texas utility Oncor was snatched out from under Buffett's conglomerate. His opportunism is sometimes exposed on closer inspection.

Italy’s latest bank bailout is gentle on taxpayers

11 Sep 2017

The country’s deposit fund is forking out 640 mln euros to clean up three small banks before they are sold to Credit Agricole. Prepping a target for a foreign rival looks generous and the fund’s returns are uncertain. At least taxpayers will be spared a hit this time.

Brazil’s Temer gets a win as more graft oozes up

6 Sep 2017

Forcing state lender BNDES to cut back soft loans to business will shrink the government's role in the economy and help its ailing finances. New graft allegations against the president’s predecessors show how badly such measures are needed. Sometimes corruption can be his friend.

U.S. housing hangover shows few signs of lifting

29 Aug 2017

Home prices keep climbing as inventories sit at historic lows yet the pace of construction lags. What might stimulate builders is worsening affordability for millennials, and may be persuading boomers to stay put. A decade after the crisis, the market is still dysfunctional.

Calpine $5.6 bln buyout puts chips on gas hegemony

18 Aug 2017

A consortium is taking the heavily indebted electricity company private at a 51 pct premium. It’s a bet natural gas will dominate the nation’s power grid. Problems with other sources justify that for now. Longer term, stagnant electricity prices and usage makes it a big risk.

Bondholders can play hardball with Portugal’s Novo

18 Aug 2017

Bailed-out lender Novo Banco wants creditors to take a haircut, to smooth a sale to Lone Star. But creditors have numbers to block the swap, and could recapitalise the bank themselves. Novo has a history of scrapping with bondholders. This time creditors may have the upper hand.

Mortgage interest deduction’s death long overdue

16 Aug 2017

White House officials are considering limiting a tax break that encourages home purchases. The incentive mostly helps the rich and induces risky behavior. The gimmick has also had little impact, with the home-ownership rate falling to a 51-year low in 2016. Its demise is welcome.

Deutsche’s problems extend well beyond trading

27 Jul 2017

CEO John Cryan is successfully cutting costs but revenue fell even faster in the second quarter, by 10 pct from a year ago. The lender suffered from the same difficult trading conditions that hit peers but its retail unit also disappointed. The boss is running to stand still.

U.S. colleges may need to start on M&A course

25 Jul 2017

After tripling in real terms since the early 1970s, tuition costs are now rising only a hair faster than CPI. Cost cuts won't offset flagging enrollment, the result of a stronger job market and demographic shifts. Merging could help, especially for small private schools.

Greek bonds are a bet on euro zone support

18 Jul 2017

Athens wants to issue bonds just after receiving another bailout tranche. If Greece had to finance itself at market rates it would struggle to stay solvent. But debt relief from European governments and ECB bond-buying will reduce the risk. Investors may find the wager appealing. Full view will be published shortly.

U.S. student debt dims home-ownership outlook

17 Jul 2017

Economic growth is supposed to lure millennials out of their parents’ basements. But a study from the New York Fed suggests that borrowing for surging college costs accounts for up to a third of the decline in home buying by 28-to-30-year-olds. That purchasing power won’t return.

Bond market breathes life into erstwhile zombies

17 Jul 2017

European investors are refinancing companies like Dutch retailer Hema that not long ago were trading at distressed levels. Such credits are enticing when central banks have squashed yields, and Europe’s economy is recovering. Markets are unlikely to remain so forgiving for long.