Debt

Are Dublin and Lisbon ready for Greek bondage?

29 Nov 2012

Ireland and Portugal wouldn’t mind benefiting from the type of debt relief that Greece just received. But if Athens got sweet terms, it surrendered part of its fiscal sovereignty in return. Other countries are only half-serious when they call for equal treatment.

Spain’s bank rescue is part bail-in, part bail-out

29 Nov 2012

Madrid has lopped 10 bln euros off its bank rescue tab by cutting the value of its worst lenders’ hybrid debt. Ireland’s 2011 haircuts were steeper. Politics means Spain had to balance burden-sharing with ways to soften the blow for the retail punters who must share the pain.

Japan shuns fiscal cliff, won’t escape growth funk

14 Nov 2012

Opposition parties have agreed to end the budget impasse in return for an election as early as next month. But if the next government takes an ultra-hawkish stance on debt and deficits, Japan’s economy could slip into a deeper hole.

QE-lenient world gives Vietnam financial pardon

6 Nov 2012

Even after a downgrade by Moody’s last month, investors are willing to lend Hanoi dollars for less. Rising exports helped avert a balance of payments crisis and officials apologized for economic goofs. But in a world awash with cash, investors are too eager to forgive and forget.

Do Venezuela debt investors have a death wish?

3 Oct 2012

They’re pushing the country’s 10-year yields to near-historic lows, in what looks like a bet on Hugo Chavez losing at the ballot box or succumbing to illness soon. But neither he nor his policies will be easily unseated. That could mean bond buyers are planning their own funeral.

Portugal jumps the gun on ECB’s new plans

3 Oct 2012

Lisbon has raised long-term funds in a canny debt swap and now plans to issue new debt, mimicking a similar move by Ireland. Investors’ willingness to take risk highlights Portugal progress in reforming its economy. The deal may also help kickstart the ECB’s bond purchases.

Fortescue buys some breathing space – at a price

18 Sep 2012

The Australian miner has refinanced $4.5 bln of debt with a five-year secured loan. That avoids breached covenants or a dilutive share issue, allowing it to benefit from past spending. Other creditors won’t like being pushed down the pecking order, but the alternative was worse.

Fortescue may get off easy for over-leveraging

17 Sep 2012

The iron-ore miner borrowed heavily to fund a spending binge on the assumption prices would stay high. Now it’s comeuppance time. The shares fell 14 pct on Sept. 13 on talks over debt covenants. But Fortescue isn’t about to run out of cash and there’s time for prices to recover.

Stop worrying and learn to love corporate bonds

10 Sep 2012

What’s a bond investor to do when safe government yields range from negligible up to low? For now, the solution appears to be buying corporate debt. That means being exposed to a slowing economy, and could end badly if central banks withdraw their largesse. But the good times probably won’t end soon.

No need for Malaysia to jump off a fiscal cliff

6 Sep 2012

Two rating agencies have taken harsh views of the country’s public debt in the past month. But Kuala Lumpur shouldn’t panic. Public spending is helping to attract private investors. Though Malaysia needs to broaden its tax base, hasty belt-tightening would be counterproductive.

Greek lesson encourages can pay, won’t pay states

20 Aug 2012

Belize is trying to force a restructuring. The Caribbean nation is more or less solvent, but its cash is precious and its debt expensive. Foreign creditors have limited leverage, as the Greek and Argentine examples show. They can lose their shirts even if countries don’t go bust.

Citigroup CDO judge’s chutzpah admirable if doomed

14 Aug 2012

Jed Rakoff filed a feisty rebuttal to claims he overreached in rejecting Citi’s $285 mln settlement with the SEC. He secured his image as a public interest champion and likely stiffened the U.S. watchdog’s spine. But he’ll rightly lose this fight, and it’s time to move on.

Uncle Sam may never divorce Aunt Frannie

10 Aug 2012

The two mortgage agencies earned $8 bln between them in the second quarter. Rather than speed up plans to reform them, though, funding-starved politicians may get too hooked on the revenue from their bailout dividend payments. That could make Fannie and Freddie untouchable.

Uncle Sam still living well beyond his means

8 Aug 2012

While June consumer credit just missed its 2008 peak, overall debt in the first quarter was 250 pct of GDP against 232 pct four years ago. While the consumer has deleveraged a bit, business debt is flat and government debt has soared. At some point, this has to end.

Ireland gives euro zone a hint of crisis freedom

26 Jul 2012

Dublin is issuing long-term debt for the first time since the rescue of 2010. The funding is likely to be pricey. But if the deal gets sold, it will show that bailouts needn’t be forever, or end in default. With Spain and Italy on the brink, euro zone partners will be thankful.

Plenty of room for wrangling over Spanish recaps

29 Jun 2012

Madrid has won a victory of sorts: the euro zone can prop up its banks directly. So the state’s debt load won’t need to shoot up by 100 billion euros. But there are many unanswered questions - including when, on what terms and even if Spain will tap the funds.

Taking the leverage out of economic growth

21 Jun 2012

For two decades private sector debt in the U.S. and euro zone expanded at a faster rate than nominal GDP. The binge helped boost output, but led to the crisis. Reducing leverage without choking growth is a challenge that economists and central bankers have just begun to ponder.

Even crazy cheap debt can be cheaper still

21 Jun 2012

In a world of rock-bottom rates, some corporate issuers are finding ways to save even more. Time Warner Cable, a U.S. company with only U.S. customers, just sold $1 bln of 30-year paper denominated in sterling. The textbook arbitrage may save it 25 basis points. It’s easy money.

Japan’s retiree raid augurs political paralysis

20 Jun 2012

The PM has cut a deal to double consumption tax and start paying off debt more than double GDP. It’s a good start if it passes. But raising taxes on Japan’s rising retiree class may be political suicide and further delay spending cuts needed to avoid a sovereign debt crisis.

Germany could live with Eurobills

7 Jun 2012

Full mutualisation of euro zone government debt looks like a pipe dream for now. But pooling together short-term debt could help weak countries, without incurring the risk of moral hazard and potential losses of full-blown euro bonds.