Softbank’s $12.4bn refinancing is a feat 1 Dec 2006 It wasn't easy for the Japanese group to fund the purchase of Vodafone's Japan business using a wholebusiness securitisation technique. Mobile operators especially troubled ones aren't obvious securitisation candidates. That it got done at all is a sign of huge liquidity.
Infrastructure bubble may not be wholly irrational 30 Nov 2006 At least as far as the fund managers who are sucking in money, pushing up valuations and piling on leverage are concerned. S&P warns of a dotcomstyle bubble. But heads I win, tails you lose incentives mean the behaviour could, in a narrow sense, be rational. At least so far as the fund managers who are sucking in money, pushing up valuations and piling on leverage are concerned.
Will Citadel doom the prime broker boom? 29 Nov 2006 The Chicago hedge fund may borrow some $2bn through a landmark bond issue, reducing its dependence on Wall Street brokers for leverage. This is a costeffective way to hoard rainyday funds and a smart move given the convergence of hedge funds and investment banks.
Eurotunnel will test new French bankruptcy law 28 Nov 2006 Two investors think they have been crammed down by Eurotunnel and the courts. They may have a point. It seems unfair that creditors with different economic interests should be forced to vote together. The law could use a tweak.
Ford hocks silver to keep it 27 Nov 2006 The carmaker s $18bn secured financing deal suggests it has decided against selling assets like Volvo and its credit arm. Given the market for these assets, this may be wise. But if it fails to execute a turnaround with the proceeds, it s game over.
French law rides to rescue of Eurotunnel plan 21 Nov 2006 The vote of the senior creditors next week is what really matters. And while there are angry dissidents among them, they are in a minority. The French safeguard bankruptcy process marginalises potential opponents. Bondholders can kick up a fuss, but they ve done relatively well.
Experian’s standoff with bondholders to end 14 Nov 2006 A disagreement with one group of bondholders over the demerger from GUS appears to be ending with a compromise. The bondholders, which are mostly hedge funds, had hoped to make a tidy profit, but a buyout threat has made an agreement essential.
Demand overwhelms supply in the junk bond market 13 Nov 2006 HCA s record issue has been trading well above par. Demand is strong because the high yield carry trade has been very profitable this year. But with credit quality declining this market could blow up when favourable conditions change.
Eurotunnel’s chief plays chicken with creditors 25 Oct 2006 The gap between Eurotunnel and its creditors doesn t seem to be closing. Yet liquidation may be just a week or so away. As in chicken, both sides are aiming to make the other blink first. Both can't be right. Many games of chicken end in a car wreck.
Leveraged loan market should open up 13 Oct 2006 Under the current private system loan investors get more information than bond investors. That s a problem now because hedge funds both buy bonds and make loans. They could have an informational advantage.
Europe’s record E4.5bn junk deal is a breeze 6 Oct 2006 Philips chipmaker division NXP managed to get this giant bond deal away despite worries about the size and health of the highyield market. But don't read too much into it. NXP benefited from a sensible structure and the market's lack of a future deal pipeline.
Bond market balance of power shifts to investors 3 Oct 2006 The week that news broke of Europe s largestever Pik financing may be an odd time to question the strength of the credit markets. But the last few months has seen investors push for the return of a form of bondholder protection last seen after the dotcom crash.
Stakebuilders shouldn’t use CFDs 28 Sep 2006 While it's clearly wrong for investors to use derivatives to build stakes, it s impractical to force all CFD holders to disclose positions. The information would overload the system. A better idea would be to only punish those who convert undisclosed CFDs into stakes.
Bondholders flex muscle over technical defaults 30 Aug 2006 True, bond investors have been slow to put up much of a fight against valuedestructive actions like leveraged buyouts. But as more companies delay regulatory filings, bondholders are crying default. It s an incremental move in the bondholder value revolution.
Increased debt explains corporate wall of cash 21 Aug 2006 Cash on corporate balance sheets has exploded over the past five years nearly tripling at FTSE 100 companies. This probably isn t pessimism. The oil bonanza explains part. But mostly it appears to be a function of rising levels of net debt.
Terrorism threat a red herring for BAA’s £12bn financing 17 Aug 2006 The financing for Ferrovial s takeover of BAA isn t in jeopardy despite losses from flight cancellations. The real hurdle will be convincing existing bondholders to migrate their bonds into the new financing structure.
Debt quality starts to slide 17 Aug 2006 In the last two months, 16 companies have fallen into junk, while only four have risen up to investment grade. The totals aren t huge, but so much deterioration in prosperous times is alarming. If a recession comes, a debt disaster could follow.
Investors prefer bonds 16 Aug 2006 Fund managers are more comfortable with bond valuations, according to a Merrill Lynch survey. But with yields low relative to inflation, there s little room for error in their calculations.
Suntrust’s stumble could herald rising bank woes 16 Aug 2006 Investors weren t convinced by the Atlanta bank s explanation that a $200m troubled loan was just a one off. The stock dropped 4%. This could mark the start of a broader credit downturn. With loan demand falling too, US bank earnings look vulnerable.
Air China’s IPO turbulence may be a warning sign 10 Aug 2006 Until now investors have been willing to buy just about anything that the Chinese government has put up for sale. But the downsizing of Air China's new issue by nearly 40% is a sign that the demand for stateowned companies is waning.