Debt

Samsung may finally listen to pushy shareholders

24 Jan 2024

Palliser and other outsiders want the South Korean conglomerate’s defacto holding firm, Samsung C&T, to boost returns. It’s underperformed for years but if a court ruling goes in the favour of group leader Jay Y Lee next month, he’ll have a new reason to listen to agitators.

Fixed income investors have reasons to be fearful

23 Jan 2024

Uncertainty over the direction of inflation and monetary policy is buffeting markets. In this Exchange podcast Jim Grant, founder of ‘Grant’s Interest Rate Observer’, discusses his gloomy outlook for US bonds and sounds a warning about the risks of shadow banking.

Fractured world is changing investment geography

23 Jan 2024

Washington and Beijing’s quasi-Cold War, and rising protectionism, are already hurting foreign direct investment. Though some states are gaining from China’s falling FDI, overall cross-border flows are down. If Trump becomes US president, they will take another hit.

Strong yuan, not stock market, tops Xi’s wish list

23 Jan 2024

The State Council pledges it will promote a stable capital market. Yet Beijing is showing more urgency in supporting the yuan, weakened by foreign selling. A strong currency is central to President Xi Jinping’s goal to make China a financial power. A strong stock market can wait.

Davos holds up funhouse mirror to shifting world

22 Jan 2024

Delegates from the Middle East and India made a splash at last week’s World Economic Forum, reflecting their wealth and investment appeal. Europeans and Chinese were subdued. Big Tech looks the winner from AI. This year’s Swiss conflab arguably exaggerated more than it distorted.

Private credit gets the slice-and-dice treatment

19 Jan 2024

Managers like Blackstone and Blue Owl are selling ‘collateralised loan obligations’ backed by privately issued debt. Such alchemy, common in traditional lending, helps lenders raise cheap funds. It also adds complexity, and makes private credit more dependent on flighty markets.

Reparation bonds could unlock $300 bln for Ukraine

15 Jan 2024

The US and EU are struggling to keep writing mega cheques to Kyiv and reluctant to hand over frozen Russian central bank assets. One alternative is for Ukraine to sell bonds backed by future claims for reparations. It could then use the cash to defend itself against Moscow.

Bond deluge will nudge ECB to softer rate stance

4 Jan 2024

European countries’ fiscal needs and the end of central bank buying mean a record 675 bln euros of sovereign debt will be on sale in 2024. That may keep borrowing costs high for states like Italy. ECB President Christine Lagarde can help by meeting investor hopes for swift cuts.

Altice’s best hope will be a Middle East lifeline

18 Dec 2023

Telecoms tycoon Patrick Drahi is dismantling his empire to cope with a $60 bln debt wall. Attracting new investors may be tricky given low growth and a corruption scandal. Luckily Gulf states like the UAE and Saudi Arabia are flush with cash and keen to grab Western assets.

Capital clarity would speed up Alstom’s journey

7 Dec 2023

The French train maker must cut debt by 2 bln euros to repair its balance sheet. Selling assets worth at best 1 bln euros won’t be enough to restore investor credibility while cash flow stability remains in doubt. Delaying a capital call risks hampering the group’s revival.

Capital Calls: Roche, Brookfield/Origin

4 Dec 2023

Concise views on global finance: The $224 bln Swiss drugmaker is splurging $2.7 bln on obesity drug developer Carmot; the Canadian investment firm’s joint $13 bln bid for Origin Energy has failed. The trick now is to show what lessons it’s learned from its 16-month-plus campaign.

EU fiscal pact ignores green elephant in the room

21 Nov 2023

The bloc’s budget goals failed to keep national debts in check. On average, they are now 83% of GDP, well above target. A revamp is a step forward. Yet with the climate challenge set to strain state finances, new rules alone will do little without more jointly funded investments.

IPO laggards’ race to the bottom misses the target

10 Nov 2023

Italy is siding with the UK in changing listing rules to stop firms moving to foreign venues. Greater voting power for founders may appeal to tech or family-owned companies. Yet Rome’s high debt and slow growth mean that, like in Brexit-battered Britain, the exodus may continue.

Telecom Italia rival plan has too many pitfalls

3 Nov 2023

An ex-executive and a fund say the telco could raise 16 bln euros by offloading a Brazilian unit and other assets to slash its debt pile. That would spare it from selling its prized network to KKR. Yet bagging such valuations while executing a multi-step project looks tricky.

Rich countries are stumbling into a debt trap

3 Nov 2023

Large deficits and higher interest rates are pushing up the cost of servicing hefty piles of sovereign borrowing. Elusive growth, stubborn spending and hawkish central banks make it hard for governments to regain control. Little wonder bond investors are heading for the exit.

Flights to safety in a dangerous world are on sale

20 Oct 2023

Fears of war, pestilence or financial collapse usually drive demand for safe assets like US treasuries or gold, making them a gauge of unease. Yet amid spiraling global threats, that isn’t happening. Whether from calm or complacency, the price of geopolitical insurance is cheap.

Why an economic soft landing may prove elusive

13 Oct 2023

Financial markets suggest the US economy will avoid a deep recession even as interest rates rise. The British economist Bernard Connolly argues these expectations are deluded. If he’s right, inflation-linked bonds will be a good bet for investors, argues Edward Chancellor.

Europe’s rising bond vigilantes are necessary evil

11 Oct 2023

Debt costs for weaker states like Italy are jumping. Europe’s delay in agreeing new fiscal rules means hostile markets are the only credible check on government spending. Slowing growth and a hamstrung ECB means the backdrop may well get choppier.

IMF’s bond vigilante script is ripe for a rewrite

10 Oct 2023

The International Monetary Fund wants politicians to close the fiscal taps. Yet it’s also warning about a sharp slowdown in global growth. Markets are worried about debt levels but without spending and investment the world will stagnate.

Israel war casts US as flawed-but-familiar haven

9 Oct 2023

Dysfunction in D.C. continues to freeze legislation, including new aid for Israel. Despite that, past conflicts – 9/11, Ukraine’s war with Russia – suggest the dollar will remain the safe haven. Investors’ reckoning with budgets, infighting, and an election will have to wait.