Bonds

Cap Gemini junked by S&P

7 Jan 2005

The French IT services group needs to stop customers defecting on worries about its financial strength. CapGem may need to raise equity sooner or later. But the longer it can leave this, the better.

IFRS puts kibosh on convertibles

5 Jan 2005

Publicis is refinancing a E690m convertible bond that would have looked much more costly under new IFRS accounting standards. Other companies may follow so long as the options embedded in their convertibles are not in the money.

Tiscali receives unsolicited CCC+ rating

22 Dec 2004

It isn t clear why credit ratings agency Fitch has taken the unusual step of rating the Italian ISP without being asked to do so. All the same, the very low credit rating is a blow for Tiscali, which badly needs to raise fresh funds.

MyTravel agrees restructuring with bondholders

20 Dec 2004

Both sides have decided that it's in their interests to come to a compromise rather than engage in further litigation. That's understandable. Yet it is a fudge that leaves the legal status of subordinated debt unclear.

Parmalat moves closer to debt-for-equity swap

17 Dec 2004

The inclusion of almost all the claims against the group in the creditors' list will accelerate the restructuring. Parmalat's bond prices continue their steady ascent. That suggests payday is coming from all the lawsuits it is spraying around.

Alitalia reaches deal to split itself in two

24 Sep 2004

This looks like a case of sneakily injecting state aid into Alitalia. The EU should be on guard. A deal with the unions has cleared the way for the airline to split its flight and ground service units, leaving its debts with the latter.

Fight over Parmalat’s lost billions gets messy

20 Aug 2004

The administrator has fired off lawsuits at banks and auditors. Someone may get stung, if Parmalat s bond prices are any guide. Enrico Bondi s charge sheet references some familiar trades. Breakingviews recaps its analysis of them.

Frustrated hedge funds try a new strategy

11 Aug 2004

It s called longshort credit. At its most basic, you just buy good credits and shortsell bum ones. But then it gets trickier. And it is questionable whether every startup adopting the strategy has the right skills for it.

Parmalat bondholders lose out

15 Jul 2004

Banks owed money by some Parmalat operating companies will swap their loans for equity of the same value. That leaves less for bondholders. But there s little danger of the plan getting blocked. The voting procedure makes that difficult.

Italian companies face bond squeeze

15 Jun 2004

Companies that issued unrated bonds are in trouble, now that they can t refinance using the same securities. Bondholders, banks and investors are realising the consequences of their folly. That s a healthy dose of realism for corporate Italy.

Retailers’ bondholders risk a mugging by LBOs

28 May 2004

As Philip Green s bid for M&S shows, onetime investmentgrade bondholders risk being subordinated to new highyield debt structures. The problem is inadequate covenants. Bondholders should negotiate better ones. A bid as big as Green s may spur them into action.

Junk bonds the latest victim of rising rates

17 May 2004

That prices are finally falling is hardly surprising. A correction was long overdue. The correction will affect opportunistic refinancings and private equity deals.

CGE to raise £2bn to buy power stations – report

7 Apr 2004

The group has changed tack. It will now offer cash in addition to bonds for distressed UK power stations. This will increase its bids attractiveness, but success for CGE is still a long shot due to rising electricity prices.

Bond investors need to get defensive

30 Dec 2003

Bullish buyers drove bond prices up in 2003. The market now looks very expensive. And which ever way the global economy goes in 2004, they are exposed.

Rhodia pays for breathing room

23 Dec 2003

The French chemicals company has come to an agreement to reschedule its onerous debt. But Rhodia will be forced to raise E300m in equity at a heavily diluted price.

Prada finds Italian banks to replace Deutsche

18 Nov 2003

Prada has been a headache for Deutsche. But if it gets out, it will lose the chance to run the books on the group s IPO when it happens. The Italian luxury group has been embroiled in complex negotiations with Deutsche Bank since it breached the covenants on a E700m loan.

Corporate bonds look vulnerable

7 Oct 2003

A stronger euro, a more volatile stock market and mixed news on the economy don't bode well for credit spreads. With valuations looking a little stretched, bond traders may be tempted before long to lock in their gains for the year.

Bigger bookrunners don’t always get fatter fees

25 Sep 2003

That much is evident in preliminary thirdquarter league tables for the debt capital markets. Some parts of the debt business are more lucrative than others. But some banks make more money than others on the same stuff.

Bunds fare best in bond market crunch

27 Aug 2003

European government bonds have outperformed US Treasuries during the selloff. They still look like a safer bet than US debt, regardless of economic recovery.

Junk bond market takes a wobble

20 Aug 2003

But if borrowers lose easy access to credit a vicious circle can develop. Investors must closely monitor this. The reason rising government bond yields isn t terribly worrying. And valuations are now more defensible.