Debt

China is wrong venue for an SDR revival

1 Sep 2016

Beijing wants to revive interest in Special Drawing Rights, the IMF quasi-currency it is about to join. The World Bank will sell $2 bln of SDR debt in China to help. Global investors badly need an alternative to the dollar but China's rickety bond market is a poor place to start.

Apollo wagers $4.3 bln on Amazonian capitulation

26 Aug 2016

Leon Black's private-equity firm is taking Rackspace private as the cloud-computing firm has struggled to compete against Amazon, Microsoft and other tech heavyweights. If Rackspace's strategic shift to sell services on these platforms succeeds, Apollo will have a nice payday.

China opens door further to yield tourists

22 Aug 2016

China's $7.5 trln bond market is already fairly open to foreigners. But a looming "bond connect" would bring in extra buyers who don't want to set up shop on the mainland. Relatively juicy yields will be a big lure. The downsides are corporate opacity and limited volatility.

Bond market exuberance hangs on UK vagaries

16 Aug 2016

Gilts’ turbo-charged surge is lifting other debt markets in its wake. Global investors care deeply about wrinkles that might help or hinder UK bonds. High on this list is how easily the Bank of England can buy long-dated gilts as part of its asset purchase programme.

Greece will prove if IMF mea culpa is genuine

29 Jul 2016

The international lender's handling of the Greek 2010 bailout is censured by an internal report. Some of the critique is dated and IMF boss Christine Lagarde says lessons were already learnt. The litmus test will be how trenchantly she insists on new debt relief for the country.

Carlyle’s dentist bond is full of cavities

25 Jul 2016

The private equity firm's bond for a British dentist chain sets new precedent in loose debt covenants. The UK vote to leave the EU has not tamed investors' animal spirits. With central banks promising ever looser policy, it's easy for issuers to extract generous terms.

New fintech firms hit early by same old problems

11 Jul 2016

Avant's woes put it in league with Prosper and Lending Club. Technology helped such modern-day credit providers find better ways to lend, but like other nonbank finance firms they rely on fickle sources of funding. This time it didn't even take a credit crunch to spark a rout.

UK banks can lend but customers may not borrow

5 Jul 2016

The Bank of England has cut capital needs for British lenders. Even beforehand, UK banks looked strong enough to keep credit flowing. The issue, as with in the aftermath of the 2008 crisis, is whether prolonged uncertainty will stop businesses feeling confident enough to borrow.

ECB picks bad time to give Monte Paschi good slap

4 Jul 2016

The EU bank regulator wants the Tuscan bank to sell bad loans quicker. It's right, but MPS could need capital. That may require a politically contentious bail-in of Italian creditors, or Brussels to cave in to Prime Minister Matteo Renzi by watering down state aid rules.

Puerto Rico law just first step in fiscal fix

30 Jun 2016

The U.S. Senate late on Wednesday passed a framework for the territory to restructure some $70 bln of debt. Puerto Rico, however, also faces an economic crunch and a healthcare crisis. Giving it a version of the Chapter 9 bankruptcy process is only chapter 1 in its rehab.

Believe bonds not stocks on Brexit damage

30 Jun 2016

Stocks have rebounded after the referendum, suggesting Britain’s prospects aren’t too grim. Yet falling gilt yields point to bleaker outcomes. In the absence of hard economic data, a post-vote slump in consumer morale supports the pessimistic thesis.

Breakdown: Solving Asia’s other bad debt problem

30 Jun 2016

It's not just China: soured loans are clogging up Indian lenders too. Though a cleanup is underway, the worry is that the departure of central bank chief Raghuram Rajan will delay it. But Prime Minister Narendra Modi needs to fix the banks to fulfil a pledge to create jobs.  

Lending Club financial innovations skipped culture

28 Jun 2016

The cratered online loan marketplace says its founder and ex-CEO inflated loan volumes on top of other failings. Only 18 months after its IPO, the supposed disruptor is retrenching. To move fast and break things is risky in finance – especially so when mixed with self-dealing.

Guest view: U.S. inaction on Puerto Rico risks chaos

27 Jun 2016

The island territory can no longer make debt payments, its economy is in free fall, foreclosures are surging and citizens are fleeing, says Moody’s Analytics Chief Economist Mark Zandi. To avoid a humanitarian crisis, the Senate needs to pass the PROMESA act without delay.

India prizes fiscal prudence over corporate debt

23 Jun 2016

A share buyback by a state-owned miner and an auction of telecom spectrum suggests companies may have to borrow to help the government meet its deficit targets. New Delhi seems intent to meet its pledge to raise $23 billion for the state coffers - even if it upsets India Inc.

“Bremain” Italy trade only for the fleet of foot

22 Jun 2016

Forget the pound, Italian debt could be a beneficiary if Britons vote to stay in their EU referendum. Fears over a European breakup should abate, and less money will flow into safe heavens like German debt. The snag is that Italy itself is a cauldron of political risk.

EU rethink of bank debt better late than never

22 Jun 2016

The European Commission wants to harmonise rules for bank bail-inable debt. The current patchwork of different national regimes is confusing and impedes resolution. A single model would be simplest, but could limit flexibility. At the very least more standardisation is desirable.

Landesbanken head for fresh political stitch-up

8 Jun 2016

Germany's notorious state-owned banks are facing yet another crisis. Bremer Landesbank is reeling from a 400 mln euro hit on shipping loans. It deserves bailing in. But politics may mean it staggers on beyond its sell-by date - a common Landesbanken problem.

Italy’s bailout fund is more grower than shower

2 Jun 2016

Buying shares in just two Italian banks may use up half of the money the Atlante fund was given to clean up the financial system. Its remaining 1.7 bln euros pales next to Italy’s 300-plus bln euros of bad debt. Making a dent in that calls for leverage and luck.

Deutsche Bank’s mortgage mess hits new low

1 Jun 2016

The SEC is investigating whether the German lender masked up to $1.5 bln of losses by mispricing mortgage bonds. Now it seems Deutsche’s own risk managers warned of a problem, to little avail. Such post-crisis shenanigans justify Wall Street’s name remaining in the gutter.