Credit

The Exchange: Howard Marks

11 October 2018

The founder of Oaktree Capital, with $120 bln of assets, doesn’t see signs of an imminent correction or crisis. But investors, particularly in the credit markets, are acting bullish in ways they’ll inevitably regret when the cycle turns, Marks told Rob Cox earlier in October.

Breakdown: Pouring liquidity onto India’s fires

28 September 2018

Loans from shadow banks have grown far faster than at traditional lenders. Strains are now showing, amid rising interest rates, a weak rupee and $150 bln of bad bank debt. Multiple flare-ups will call the RBI to duty again, including to douse the financial system with more money.

Banks double down on Casino’s owner

17 September 2018

The French supermarket’s heavily indebted parent got a fresh 500 mln euro unsecured loan. That buys Rallye time to sell assets and avoid handing over its 51 pct stake in the grocer to creditors. For banks which are already on the hook, it’s an attempt to avert a messy collapse.

Spectre of the late 1930s haunts Ray Dalio

12 September 2018

The Bridgewater founder made positive returns in 2008 when few other asset managers did. Today, he tells Breakingviews, he worries about the U.S. deficit and debt pressures that could soon go critical. The risk of populism and conflict sounds eerily like the pre-war years.

Hadas: The paradox of risk-free finance

5 September 2018

A new study claims that national deposit insurance makes financial crises more likely. It may exaggerate, but guarantees are a sign of a basic problem in banking. The mix of public service and private risk is always potentially toxic. Separation would be hard but worthwhile.

Even a cleaner China is tempted by old playbook

20 August 2018

Beijing is cracking down on rating agency Dagong over its cosy relationships, in a rare rebuke. Yet it is also telling banks to step up support for infrastructure in order to prop up growth. Beijing wants to stimulate the economy and to keep tidying: it may struggle to do both.

Walmart credit-card shift signals race to bottom

13 July 2018

Investors knocked 7 pct off $25 bln consumer-finance firm Synchrony on fears the giant retailer will move its card business to Capital One. That looks optimistic, given Amex’s experience with Costco. But loosening credit standards suggest industry-wide pain lies ahead.

Bond markets start to call Saudi bluff on Bahrain

26 June 2018

The tiny Gulf kingdom’s bond yields are spiking. Bahrain’s borrowing and dependence on a high oil price make its debt hard to sustain. But Saudi Arabia has no interest in its neighbour devaluing or falling apart. The more markets push, the more likely Riyadh is to step in.

Trump gives China a fresh excuse to push bailouts

25 June 2018

Beijing will release $108 bln into the banking system to calm markets rattled by trade war talk. Unfortunately, officials want lenders to use most of the cash to swap bad debt for equity in ailing state commodity firms. The private sector needs the money more.

Bank of Ireland reset channels Celtic Tiger ghost

13 June 2018

The Irish lender plans to increase its loan book by a fifth and beat a 10 percent return on equity by 2021. A booming domestic economy helps, but the challenge will be avoiding past mistakes of chasing growth at the expense of asset quality. Small wonder investors are sceptical.

Steinhoff payout may test South Africa reform zeal

27 April 2018

Hedge funds piled into 1.6 bln euros of the failed retailer’s bonds betting that its healthy South African unit will honour them. The fallout from Steinhoff’s collapse may make a payout politically tricky, and challenge new President Cyril Ramaphosa’s market-friendly credentials.

ECB has big enough stick to repel bad-loan revolt

24 April 2018

A political backlash may force the European Central Bank to ditch plans for stricter provisioning of 760 bln euros of dud loans. The saga has weakened chief supervisor Daniele Nouy, and may delay reform of Europe’s banking union. But the ECB has other tools to cut the loan pile.

Capita swerve averts Carillion-style crash

23 April 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

China’s surprise reserve cut exposes growth angst

17 April 2018

The central bank cut reserve requirements for banks, freeing $200 bln for lending. That backs up other moves to help over-stretched banks amidst a purge on loose credit. The timing, however, suggests Beijing is looking for a cushion if the economy slows, or a trade war escalates.

Intesa offers partial hope for Italy’s dud loans

17 April 2018

The Italian lender is nearing a deal with Swedish group Intrum to shed 10.8 bln euros of dodgy loans from its balance sheet. Domestic peers will be cheered by the price, which is higher than rivals have attained in similar transactions. Then again, Intesa is a better bank.

Texas downgrade worry is a good problem to have

12 April 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.

Bolloré’s best bet is to play along with Singer

10 April 2018

Vivendi chair Vincent Bolloré may lose a fight for control of Telecom Italia with activist investor Elliott. Selling his 24 pct stake would mean a loss, assuming he can find a buyer. Staying put while Paul Singer’s group tries to revive the Italian telco is a better option.

Equifax CEO pick has lesson for Facebook

28 March 2018

The hacked $14 bln credit-scorer’s new boss is more technocrat than tech nerd. Then again, Facebook’s poor handling of its data woes suggests having a coding genius in charge is no certain solution. Hiring an outside manager willing to ask tough questions is a step forward.

Cox: A beneficent billionaire should buy Remington

27 March 2018

The AR-15 maker filed bankruptcy papers a day after millions of Americans marched in favor of banning its products. Owners and creditors just want out in a hurry. But Bloomberg, Gates or Bezos could turn Remington into a force for sensible gun policies with mere pocket change.

Chancellor: Index investment riskier than it looks

22 March 2018

That investors are abrogating their responsibilities to allocate capital intelligently is a danger from the rapid growth of passive fund management. Less widely aired, but of greater concern, is the threat posed to financial stability by the dominance of benchmark-tracking funds.