Private credit paints a new scream for banks 22 Apr 2024 Lending against wealthy patrons’ art has been dominated by financial institutions. Sotheby’s $700 mln sale of bonds backed by such loans offers non-bank rivals a template to upend the status quo. A rebounding securitization market can feed this machine, if it fits a careful mold.
Telecom tycoon ensnared by his hefty debt machine 18 Apr 2024 Patrick Drahi built the ocean-spanning Altice empire on the back of aggressive dealmaking and $60 bln of borrowing. The bill is coming due with interest rates elevated. In this Viewsroom podcast, Breakingviews columnists discuss what comes next as bondholders get restless.
Look out for a return of the US bond rollercoaster 16 Apr 2024 As short-term interest rates spiked, longer-term borrowing costs have lagged. The yield on three-month US Treasury bonds has exceeded the return on 10-year securities for 76 weeks, a near record. If this anomaly unwinds, falling bond prices could hurt fund managers and Uncle Sam.
How Patrick Drahi can clamber out of his debt hole 11 Apr 2024 The tycoon’s Altice telecom empire is straining under $60 bln of borrowings, and creditors of its French unit are gunning for a fight. Yet loose bond terms, and the debt’s low trading prices, lend Drahi an escape route. He just needs to hope investors have short memories.
ECB’s rate cuts can help bond traders – and itself 8 Apr 2024 Holders of euro zone government debt have lost 14% in three years. Frankfurt policymakers can change that by cutting rates in June, before major peers. Lower borrowing costs would have another winner: the European Central Bank, which could save $7 bln a year in interest expenses.
‘Wilful default’ bond spat can shake Hong Kong 5 Apr 2024 A group of creditors including Asian buyout firm PAG say an education firm can but won't redeem a $315 mln offshore debt. It's unusual amid the surge in defaults by Chinese issuers, and suggests investors need to worry about better parts of their portfolios too.
Ukraine loan is matter of politics and accounting 25 Mar 2024 Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.
Macron’s fiscal chickens come home to roost 21 Mar 2024 The French president is scrambling to deal with an official report likely to show dismal public finances and a deficit near 6% of GDP. He ignored warnings as debt topped 110% of economic output. Bond investors are relaxed but spending cuts will be the price of his insouciance.
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.