Corporate Debt

Pandemic complicates AB InBev’s debt rehab

29 October 2020

The $93 billion brewer canned its interim dividend but its ideal leverage of 2 times EBITDA remains out of reach. CEO Carlos Brito is expected to step down soon, his successor will need cash to invest in brands hit by Covid-19. Selling another chunk of the Asian unit would help.

GE boss reaches milestone in Sisyphean trial

28 October 2020

Larry Culp managed to offset damage from grounded planes and declining power-sector demand with helpfully timed payments to report positive cash flow in the third quarter. Other challenges remain, from debt to GE’s insurance business. Then there’s the existential part.

China Evergrande starts running low on options

14 October 2020

The property developer lost a fifth of its market value after a discounted stock sale raised only half the targeted $1.1 bln. Creditors also just cut the highly indebted company some slack. Boss Hui Ka Yan may be forced to accelerate asset sales to raise the capital he needs.

UK’s $34 bln virus loss is not as bad as it seems

7 October 2020

Bankruptcies and fraud mean taxpayers may take a big hit on a small-firm loans scheme, a spending watchdog said. But estimates vary, and the cost of inaction could have been higher. Crucially, finance minister Rishi Sunak can boost recoveries by eschewing post-crisis austerity.

Evergrande’s debt scares creditors into submission

7 October 2020

The stressed property giant persuaded investors owed nearly $15 bln to convert their obligations to unlisted shares. Details are scant, but it’s another miraculous escape for founder Hui Ka Yan. The deal looks crummy, and it highlights how real estate has trapped policymakers.

Corona Capital: NYC

30 September 2020

Concise views on the pandemic’s corporate and financial fallout: New York City’s economic reboot comes up against a new outbreak.

Corona Capital: U.S. debt, Junk bonds, Vaccines

3 September 2020

Concise views on the pandemic’s corporate and financial fallout: U.S. debt rises to levels not seen since World War Two; this year’s returns on high-yield debt turn positive despite the coronavirus; and Donald Trump’s hope of a vaccine by Nov. 1 is dangerously political.

Fed policy review will leave market put untouched

26 August 2020

Chair Jay Powell’s every utterance is being scoured for hints of whether a new framework will introduce innovations like average-inflation targeting. But one thing won’t change. Rate setters will backstop markets, as they have done for a decade, and investors are counting on it.

Corona Capital: Nvidia, Air conditioners

20 August 2020

Concise views on the pandemic’s corporate and financial fallout: Nvidia goes gangbusters, HVAC units have their moment in the sun.

S&P checks in for long stay at Hotel Covid Gloom

19 August 2020

The rating agency cut the debt rating of Accor to junk. S&P puts more weight on its forecast of a slow post-pandemic recovery than on the French hotel group’s relatively strong balance sheet and encouraging recent trends. Such a cautious approach comes with its own risks.

Corona Capital: Vroom, Estonia WFH, Johnny Rockets

13 August 2020

Concise views on the pandemic’s corporate and financial fallout: How Vroom can power through the pandemic; Estonia tries to lure those with wanderlust; Casual dining puts on the Covid-19.

Corona Capital: Junked cans

11 August 2020

Concise views on the pandemic’s corporate and financial fallout: An aluminum company with a junk rating issues debt with a ridiculously low interest rate.

Central banks have a way to spur greener recovery

24 June 2020

Fed chief Jerome Powell and ECB boss Christine Lagarde are purchasing bonds without taking account of whether they are supporting the carbon-intensive status quo. There are good reasons for that. But they can at least demand more disclosure of climate risks before buying.

BP’s funky debt charts end of credit’s lockdown

18 June 2020

The oil major issued $12 bln of bonds that count as equity, its first such deal. Investors’ hunger for esoteric securities from a tricky sector illustrates their enduring need for yield, thanks to central bank largesse. A weak economy and risk-hungry markets are a dangerous mix.

Corona Capital: Marijuana

5 June 2020

Concise views on the pandemic’s corporate and financial fallout: Cannabis retailers in California miss out on pandemic surge in vices.

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.