BREAKINGVIEWS
Actavis sale dresses up barely investment grade
The acquisitive drugmaker attracted huge demand for $21 bln of bonds one notch above junk. They yield 1.75 percentage points over U.S. Treasuries, less than Verizon’s bigger, better-rated issue did in 2013. Buyers of top-tier debt can’t help but keep looking further downward.
Surviving small banks look battle-hardened at last
The crisis wiped out nearly 2,000 U.S. community lenders. Those left struggled with patchy loan demand, ultra-low interest rates and new rules. An improving economy and a hike from the Fed will help, if none succumb to rate shock. Any that do will only have themselves to blame.
Caixabank faces bigger price tag to secure BPI
The Spanish bank has already bid 1.1 bln euros for its Portuguese peer, but fellow BPI investor Isabel dos Santos wants a merger with local rival BCP. That would create competition issues. But dos Santos’ blocking stake suggests Caixa may have to pay up – if it can afford it.
M&A optimism over Merck KGaA is about to be tested
The chemical and drugmaker has become one of Germany’s hottest stocks, gaining 55 pct in a year. Solid revenue growth and a dividend hike for 2014 underscore the renewal. To keep investors onside, Merck must now smoothly integrate a $17 bln takeover, the biggest in its history.
HK property shows limits of new central bank tools
Regulators in the former colony have spent five years tightening mortgage controls, but real estate prices are still rising. It’s a reminder not to expect too much from “macro-prudential” policies. Authorities can stop banks from lending too much. Deflating a bubble is trickier.
Brazil water crisis heats up climate tail risks
Sao Paulo’s drought stems from statistical hubris similar to the Wall Street models that failed to predict the 2008 financial crash. Decisions to prop up banks and markets had near immediate effect, though. Climate-related black swans are likely to prove more pernicious.
$15 bln tech M&A spree poor fix to limp sales
Chipmaker NXP and networking gear firm HP need strong demand to compensate for falling prices. Trouble is, that has not happened. Buying Freescale and Aruba will help cut costs, build scale and fill in niches. But neither deal turns tech hardware into a growth market.
Trust Citi to win from losing most profitable unit
The U.S. mega-bank has at last offloaded OneMain to rival Springleaf for $4.25 bln. The subprime unit’s 6.7 pct return on assets far exceeds anything else at Citi. And yet the deal provides a one-off income boost, frees up capital, accesses tax breaks and removes a distraction.
Barclays' trading woes offset pay restraint
The UK bank has cut investment bank bonuses by a quarter, atoning for a PR gaffe last year when pay rose despite a drop in profit. But 2014 results show returns in the unit are also lower. To maintain its turnaround, Barclays may have to shrink the misfiring division further.
Alibaba's split nationalities invite trouble
Taiwan wants to boot the e-commerce group out for not declaring itself Chinese. Yet Alibaba’s home changes depending on who asks. China’s taxman sees Hong Kong, licensing bodies see China, and investors see the Cayman Islands. The confusion may encourage regulatory meddling.
India's $13bln spectrum auction has room for upset
The top mobile operators are limbering up to renew licences that support as much as 70 pct of their revenues. The worry is that rivals or new entrants such as Reliance Jio may bid aggressively for additional bandwidth. An expensive auction will weigh on balance sheets.
John Browne's Russian truce points to oil M&A boom
The former BP boss will head L1, a $10 bln energy fund owned by oligarch Mikhail Fridman. The duo once sparred over BP’s assets east of the Urals. Their alliance today highlights the deal opportunities created by oil’s rout - even if L1’s Russian roots are a problem.
French telco buyout shows dealmaker in a hurry
Vivendi is selling its residual 20 pct in Numericable-SFR to the mobile operator itself and parent Altice for 3.9 bln euros. This helps Altice’s billionaire boss Patrick Drahi prepare for a follow-on deal with Bouygues. It’s harder to see why Vivendi would accept a big markdown.
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Austria finds apt target for landmark bank bail-in
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India's infrastructure push could be envy of West
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Buffett highlights the paradoxes of being Warren
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U.S. airlines throwing stones from glass hangars
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Lloyds investment case hinges on its next dividend
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India goes back to future with $137 bln rail push
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Oil finally percolating toward a level price
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Simpler is better for Reed Elsevier
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Morgan Stanley makes $2.7 bln hit an afterthought
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Greece’s U-turns have only just begun
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China rate cut shows back-to-front monetary policy
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U.S. student loans could need $500 bln bailout
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Europe can afford to cut Greece some slack
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Weak euro can lift Airbus profit further
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Verizon taps out unwise riposte to new web rules
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Never mind Bill Gross: Allianz is thriving
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JPMorgan pruning could help fees sprout anew
