EU’s spending snags spoil joint borrowing success 12 Mar 2024 Europe’s 800 bln euro stimulus plan is stuck. The bonds that finance it sell like hotcakes, but so far it has paid out only 225 bln euros as countries struggle with projects. Unless the bloc can show it can use the money it raises from investors, it will lose much-needed funds.
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.
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.
Banks’ hidden losses are surprise survivor of 2023 13 Dec 2023 The same paper deficits that helped fell Silicon Valley Bank in March still burden lenders worldwide. Bank of America alone sits on $130 bln; US banks nurse a record sum. Investors are now better at telling what’s scary from what’s not, but fuzzy accounting remains unhelpful.
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.
The case for a career in bond investing 27 Oct 2023 Rising rates and volatile markets have hammered the conventional case for buying fixed income securities. But higher yields, pockets of value in credit and a possible weakening of the strong US dollar mean there are still opportunities in bonds for budding portfolio managers.
China puts $137 bln Band-Aid on local debt wounds 25 Oct 2023 Beijing will funnel the borrowed cash to regional governments to spend on water and other infrastructure projects. It’s part of a “basket of measures” aimed at alleviating their worsening $13 trln debt crisis. Absent proper restructuring, it’ll only buy local authorities time.
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.
Bond rout threatens to feed on itself 6 Oct 2023 Strong jobs data pushed 10-year US Treasury yields up again. Alongside nagging inflation and political turmoil, it raises concerns the Fed will keep interest rates higher for a while. Pricier borrowing costs depress asset values, which can lead to a crisis that sparks more fear.
Toilet maker artfully unclogs bondholder backup 29 Sep 2023 Embattled Ideal Standard has struck a $640 mln deal to be bought by Germany’s Villeroy & Boch. The key was persuading creditors to accept less than par on 2026 debt. Other struggling companies could make use of similar financial plumbing.
Ukraine war gives wings to India bond index debut 22 Sep 2023 JPMorgan will add the country’s sovereign debt to its emerging market index, easing concentration issues following Russia’s exclusion. It drags foreigners into a $1 trln market. New Delhi sees new gains from opening but it may have to bend on taxes and more to win wider backing.
UBS bondholders tee up risky goldfish impression 20 Sep 2023 The $84 bln bank may issue contingent convertible bonds, months after a state-led takeover of Credit Suisse burned the defunct lender’s debt. Market prices suggest it may not pay a big penalty for Switzerland’s sins. That invites bank overseers to burn other CoCos in future.
New economic rules shatter US bonds’ crystal ball 19 Sep 2023 Government debt has been signaling a downturn for 440 days, but there’s been no recession. The famed predictive power of the yield gap between different vintages of Treasuries is waning. As the global economy evolves, warnings from the fixed-income markets can be safely ignored.
Germany’s plight is good news for bond investors 24 Aug 2023 Yields on Berlin’s 10-year obligations have spiked this month, mirroring US ones. That looks overdone: Europe’s largest economy is slowing, inflation is falling and the central bank is unlikely to hike rates much more. Such Teutonic frailty should firm up debt valuations.
US soft landing means bumpy ride for bonds 8 Aug 2023 Yields on 10-year government debt are near a 5-year high even though inflation is falling without a recession or huge job losses. Fixed-income traders are right to worry. Better growth may fuel more price rises, keeping rates elevated and deepening Washington’s fiscal problems.
Altice’s beaten-up debt is only a bet for the bold 8 Aug 2023 Patrick Drahi’s telco empire faces a funding crunch, with $60 bln of debt coming due by 2030. He must pull off a tough turnaround in France and sell assets, a tricky task made even harder by a corruption probe. Even with current high yields, Altice debt is a risky punt on Drahi.
GIC’s real estate safe haven is hard to copy 26 Jul 2023 Singapore’s $690 bln sovereign fund nearly doubled its real estate allocations to 13% in three years. Its student homes to logistics portfolio provides a timely inflation hedge for one of the most active investors in its class. Peers trying to catch up will overpay.
Capital Calls: Funky bank debt 14 Jun 2023 Concise views on global finance: Credit investors are increasingly willing to buy quasi-equity instruments known as AT1s, despite a near-death experience for the asset class amid the Credit Suisse crisis in March.
ECB’s crisis tool works best if it’s never used 30 May 2023 The European Central Bank is touting its powers to buy sovereign bonds if they come under attack from the market. That has kept traders in check, so far. The trick for Frankfurt officials is to convincingly threaten to deploy emergency measures without ever having to.