Corporate Debt

Europe has way out of Covid corporate debt trap

27 May 2020

Germany, Britain and France have approved $140 bln in state-backed loans to firms. As that number rises, so does the risk of a damaging debt overhang. Linking repayments to profit, so that some companies pay nothing, would help forestall that growth-sapping scenario.

ArcelorMittal spring clean has dark hint of winter

12 May 2020

Shares in the world’s largest steelmaker slumped after it said it would raise $2 bln of shares and equity-linked debt. Cutting borrowing is prudent with lockdowns sapping demand. The unexpected nature of the move, and partial take-up by the Mittal family, are less reassuring.

Fed jump-start leaves CLO buyout motor sputtering

11 May 2020

The vehicles that buy most leveraged loans are suffering as downgrades saddle them with too much ropey debt. The Federal Reserve’s lending facilities will help – but not enough to gin up much appetite for new loans. Private equity dealmaking could be stuck in the slow lane.

Corona Capital: Tepid earnings, red-hot bonds

30 April 2020

Concise views on the pandemic’s corporate and financial fallout. Halfway through earnings season, things are going from mediocre to bad at big U.S. companies. Meanwhile, Boeing’s $25 billion bond issue shows the Fed has cast a spell on the corporate debt market.

GE boss’s options are to shine or shrivel

27 April 2020

Larry Culp’s recent goal of reducing the company’s $59 bln of debt to a manageable level this year is toast: It relied on cash flow from the airlines unit. He could hunker down, but that risks making GE weaker. Selling, say, a stake in the healthcare business would be wiser.

Corona Capital: Primed debt, Lysol

24 April 2020

Concise views on the pandemic’s corporate and financial fallout: Senior creditors get “primed”; Reckitt Benckiser warns customers not to inject Lysol.

Corona Capital: Airbnb

15 April 2020

Concise views on the pandemic’s corporate and financial fallout: Airbnb’s new $1 bln loan doesn’t come cheap, especially when compared to Booking Holdings. But the home-renting unicorn has troubles, from few assets to offer as security to how to ensure properties are virus-free.

Corona Capital: American football fail

14 April 2020

Concise views on the pandemic’s corporate and financial fallout: The NFL has better finances and sturdier supporters than the XFL, which just filed for bankruptcy right after its reboot. But the Super Bowl operator’s future also rests on coronavirus-induced physical distancing.

SoftBank spat will aggravate WeWork’s pain

7 April 2020

The office-sharing group is suing its main shareholder after SoftBank canned a $3 bln tender offer, previously part of last autumn’s rescue deal. Minorities, including employees, may lose out. But a questionable board fight is the last thing WeWork needs as tenants stay at home.

Corona Capital: Saudi/Carnival, PG&E

6 April 2020

Concise views on the pandemic’s corporate and financial fallout: Today, Saudi Arabia’s Public Investment Fund takes an 8% stake in beleaguered cruise outfit Carnival, and the coronavirus may dislodge one of the moving parts in California utility PG&E’s plan to exit bankruptcy.

Corona Capital: Ackman’s hedge, Oil stockpiles

26 March 2020

Concise views on the pandemic’s corporate and financial fallout, including investor Bill Ackman’s surprise reversal of fortune, and the U.S. shale oil bailout that wasn’t.

More regulation, less return for U.S. utilities

19 March 2020

A defensive sector looks less so amid the coronavirus pandemic. A sharp rise in unemployment will make regulators less willing to green-light rate increases. Yet the grid still needs heavy investment, virus or not. PG&E’s return from bankruptcy illustrates the dilemma.

OPEC shock pours fuel on credit-market cinders

9 March 2020

The collapse in oil prices and worsening epidemic are causing turmoil in corporate debt markets. Yet the price moves are hard to justify, even matching the damage from Lehman Brothers’ failure in 2008. That adds weight to fears that bank trading limits can exacerbate a crisis.

HNA journey lurches to fitting return home

20 February 2020

The Chinese conglomerate was already cash-strapped before the coronavirus hammered travel. Selling assets has been a struggle, leaving $80 bln of debt piled up. A government bailout in the making should imprint a strong reminder about the risks of costly overseas adventures.

Anta Sports puts ultimate buy rating on itself

17 January 2020

After outrunning short-sellers, the Chinese apparel giant is issuing 1 bln euros of convertible debt that pays nothing and can’t be swapped for equity until shares rise 40%. Strong take-up will signal confidence Anta can repeat its success reviving Fila with Finland’s Amer.

Investors fuel unicorns’ belief in their own magic

7 January 2020

Private tech startups can control their valuations by only raising money when their worth is rising. Valuing businesses based on a fraction of their capital and the latest preferred-share terms also creates problems. Even WeWork may not be enough of a reality check.

Chinese buyout shop grabs for last UK pizza crust

14 November 2019

Hony Capital paid 900 mln pounds for PizzaExpress in 2014. Now it’s facing a wipeout as the restaurant chain falters. Snapping up unsecured bonds might boost its bargaining power in debt talks, but its hand looks weak. The firm’s best hope is that nobody wants a messy default.

SoftBank debt burden may stoke an asset fire sale

5 November 2019

The group’s $45 bln of borrowing seems low compared with $260 bln of equity holdings. Yet that ignores layers of leverage, and overstates SoftBank’s asset value. If CEO Masayoshi Son’s giant tech-investment machine runs into trouble, he may have to offload stakes like Alibaba.

GE-style pension tweaks blend finance and fear

14 October 2019

Asking future retirees to cash out early from defined-benefit pensions can help close funding holes like the $27 bln one at the U.S. conglomerate. Two things could help GE get the better end of the deal: falling interest rates, and uncertainty over the success of its turnaround.

Corporate debt doomsayers are overstating the risk

7 October 2019

Over half of U.S. investment-grade corporate debt is rated BBB, one level above junk. This has alarmed observers from the Fed to Pimco who fear U.S. companies could struggle in a downturn. But BBBs are not all created equal. Many such borrowers boast improving credit metrics.