Corporate Debt

Babcock CEO’s reset comes with valuation upside

9 April 2021

David Lockwood may soon unveil a writedown at the 1 bln pound UK engineering group, which is also saddled with heavy debt. Those concerns obscure the relatively promising trend of UK defence spending. Lockwood’s CV offers hope of a cleanup – and significantly higher share price.

UK’s Gupta merits net zero rescue in all senses

1 April 2021

The steel entrepreneur’s tottering industrial empire is a tricky candidate for a state bailout. But it could give the government a chance to decarbonise a major source of emissions. Done smartly, it may help Britain hit green goals and stabilise a perennially flaky sector.

Capital Calls: Defence IPO, ViacomCBS and GameStop

24 March 2021

Concise views on global finance in the Covid-19 era: Italy’s Leonardo postpones the initial public offering of its U.S. unit; ViacomCBS and GameStop's rising stocks give them both a chance to raise fresh cash.

Review: When “Ocean’s Eleven” meets Chapter 11

19 March 2021

“The Caesars Palace Coup” rolls a casino caper and legal thriller into one edifying book. Dense bankruptcy lingo sometimes bogs down the ruthless scrap over $18 bln of distressed debt. And it’s hard to find a Danny Ocean in a Wall Street dramatis personae full of Terry Benedicts.

Corporate debt party will survive rate storm

17 March 2021

Rising government bond yields are dragging up companies’ borrowing costs. Yet the premium that investors demand to buy debt issued by firms is still relatively low. Central banks’ asset buying and the prospect of lockdowns lifting mean credit markets will avoid too big a tantrum.

Capital Calls: American Airlines, Crypto PayPal

8 March 2021

Concise views on global finance in the Covid-19 era: The U.S. carrier is issuing new debt and hocking some airline miles to pay back the U.S. Treasury loan that carried restrictions on pay and dividends; PayPal investors give a shrug over another dive into bitcoin-land.

Next Hertz drivers face a hairy ride

4 March 2021

Hedge funds Knighthead and Certares want to lead an injection of up to $4.2 bln in equity to take the wheel at the bankrupt car-rental firm. It would restart less indebted and should be more efficient. The rise of ride-sharing, however, puts a speed limit on potential returns.

Sustainable debt may be too popular for own good

2 March 2021

Investors are piling into bonds sold by companies such as H&M or Tesco which punish issuers for missing environmental targets. Demand has been such that the funding is now dirt-cheap. That could distort the price of the securities, and their intended effect.

Pandemic speeds AB InBev’s necessary revamp

25 February 2021

More drinking at home and higher raw materials costs will pressure the $100 bln brewer’s margins in 2021. After years of zero-based budgets, it needs looser purse strings to revive sales. But with $83 bln of debt, its valuation discount to less profitable rivals will persist.

Greek banking reform takes hazy turn

16 February 2021

On the eve of Piraeus Bank’s big recap, the head of the country’s bank bailout fund, HFSF, abruptly resigned. He had championed better corporate governance. The move overshadows welcome Greek banking improvements, including a bad debt cleanup plan and new insolvency code.

Bond markets will be new climate vigilantes

27 January 2021

Booming demand for sustainable funds and new EU rules will make debt investors more wary of buying securities issued by polluters. There are already signs that is happening in the oil and gas sector. Higher funding costs should be a powerful spur for companies to get serious.

Netflix cash position puts M&A into frame

19 January 2021

The $220 bln streaming service expects free cash flow to break even in 2021 just as competition with Disney and others intensifies. Pressure to attract more subscribers with fresh programming keeps growing. That makes a studio or content acquisition more appealing than buybacks.

Default wave will hit the little guy hardest

28 December 2020

Covid-19 has saddled companies with debts. Big groups with reserves and access to capital now look like they can ride it out. Smaller outfits won't stay afloat so easily: think local coffee shops vs. Starbucks. Governments need to get creative to help the worst-hit businesses.

Corona Capital: Poverty, Beer cans, Budget hotels

24 December 2020

Concise views on the pandemic’s corporate and financial fallout: Hong Kong’s poverty problem was getting worse even before the virus struck; AB InBev sells the family aluminium to cut debt; Whitbread, owner of hotel chain Premier Inn, tries to get its landlords to share the pain.

Latin America debt will hit post-crisis sweet spot

22 December 2020

Corporate defaults in the region have jumped during the pandemic and political concerns persist. But ultra-low global interest rates and expectations that richer countries could spend more on infrastructure will be enough to entice yield-hungry investors to these markets.

Corona Capital: New York City, Fed/climate change

15 December 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s exodus puts local government in a tight spot; the Fed’s belated move shows a change in Washington.

Funky debt bonanza is breeding complacency

8 December 2020

Companies from BP to Gazprom are issuing more bonds that count as equity than ever before. Low rates and investors’ thirst for yield explain why, yet the benefits of such hybrids are modest. To avoid future strife, companies should sell debt that is better at absorbing losses.

China’s Xi has precious opportunity to clean up

4 December 2020

From property to cars to chips, President Xi Jinping is pushing new rules to defuse risks and reallocate capital. It echoes his forceful effort to deleverage the economy in 2017. With world leaders distracted by the pandemic, Xi can endure more disruption this time around.

Blackstone upends bond history with Ancestry.com

3 December 2020

The genealogy provider is disenfranchising large creditors in a $1.2 bln debt deal helping to fund the private equity shop’s buyout. Bondholders could push back in the future, but they can’t afford to sit out in a liquidity-drenched market. Issuers will keep their upper hand.

Corona Capital: Chevron, Boeing, OPEC, Orange

3 December 2020

Concise views on the pandemic’s corporate and financial fallout: Chevron cuts spending, prudently; Boeing orders are a solid step; OPEC makes up its mind; and Orange’s Belgian deal has some juice.