Government Debt

MPS solution requires further bondholder sacrifice

7 Dec 2016

The Italian bank has secured a fifth of the 5 billion euros it needs in new equity by turning some bonds into shares. The priorities are to protect retail depositors and attract outside investment. Institutional investors, and Brussels, will both have to give a little.

French bond rot has capacity to spread

7 Dec 2016

Gallic bonds are trailing euro zone peers. This suggests investors are worrying that the far-right's Marine Le Pen might do better in the 2017 presidential elections than polls show. Were her chances to improve materially, market damage would quickly spread across the region.

S&P’s sleight of hand is South Africa’s gain

2 Dec 2016

The credit ratings firm has downgraded the sub-Saharan state's local currency bonds but spared its foreign debt. This allows South Africa to escape junk status for the time being. Almost as important, there's no excuse now for firing respected finance minister Pravin Gordhan.

Credit markets ill-prepared for Trump presidency

21 Nov 2016

The U.S. president-elect may boost spending and growth. But higher interest rates would also push up funding costs for companies and emerging economies. Though credit investors have largely shrugged off Trump’s victory, the end of loose monetary policy could prove a shock.

Russia cracks down on economy minister at a cost

15 Nov 2016

Alexei Ulyukayev may or may not be guilty of accepting a $2 mln bribe. But the detaining of the economy minister means Russia loses one of its more rational government voices. It also raises the risk of reduced fiscal caution that the domestic economy can ill afford.

Portugal delays day of reckoning for another year

19 Oct 2016

Further tax increases mean the troubled country should avoid a debt downgrade, keeping its bonds eligible for ECB money-printing. Yet Lisbon's high debt load and weak growth mean the risk of a restructuring hasn't gone away. It could kick in after next year's German elections.

Government bonds signal confusion, not cheer

19 Sep 2016

Yields on long-term sovereign debt have perked up across the developed world. Normally that's a sign of optimism. Yet borrowing costs remain ultra-low. The upward drift most likely reflects uncertainty about central bank policy and worries about the effects of negative rates.

Global bond rout gives Draghi a reprieve

14 Sep 2016

The rise in yields as prices fall makes more German debt eligible for ECB purchases, under its own arcane rules. President Mario Draghi is still, though, running out of bonds to buy. Canny market timing is a poor substitute for a real solution: Germany could simply borrow more.

Mongolia’s hangover needs more than IMF medicine

19 Aug 2016

The nomad state hiked interest rates to 15 pct to defend a plunging currency. An IMF rescue seems likely, and the new government has shown it is willing to take the pain needed. Longer-term, the real cure for its economic ills will be to woo nervous foreign investors back.

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.