Credit

TPG returns to credit party fashionably late

15 May 2023

The buyout firm’s $3 bln purchase of direct-lending firm Angelo Gordon takes it back into a business it split off in 2020, and will make it look more like bigger peers like KKR. Missing the last private-credit wave is no bad thing, since TPG could catch the crest of the next one.

Ukraine banks’ robust health masks big challenges

11 May 2023

After previous central bank reforms and an influx of deposits, the Ukrainian financial sector remains strong. But bad loans are at 38% and the three largest banks are state-owned. To support Ukraine’s reconstruction they will need more balance sheet cleanups, and privatisations.

Why retail bankers are beating dealmakers

26 Jan 2023

JPMorgan, Citigroup and Goldman Sachs’ earnings revealed that the basic business of lending money is thriving, while investment banking is not. In this Viewsroom podcast, Breakingviews columnists debate what this says about the U.S. economy and what to expect from the Europeans.

New buy-now-pay-later fad runs old-school risks

8 Dec 2022

After Klarna and others saw their valuations slashed, venture investors are now pouring money into business-focused lenders like Wayflyer. It sounds like digital trade finance, which has a patchy past. There’s often a good reason that small borrowers can’t get money elsewhere.

ECB’s bank loan-loss worries look overdone

7 Dec 2022

Chief supervisor Andrea Enria fears that BNP, ING and others are flying blind into a 2023 default storm. But rate hikes will give the 10 largest lenders a 120 bln euro profit buffer before their capital gets hit. The big banks can afford to keep going with dividends and buybacks.

Capital Calls: NatWest nerves

28 Oct 2022

Concise views on global finance: Shares in the government-backed UK lender fell 8% after it revealed an impairment charge 43% above what analysts had expected.

European banks’ perfect moment will prove fleeting

26 Oct 2022

Rates are rising, traders are busy, and customers are paying their debts. That helpful backdrop helped Barclays, Deutsche and Santander average a punchy 11% return on tangible equity so far in 2022. But with recession looming, and bad-debt buffers looking low, it may not last.

A private lender eats buyout bankers’ lunch

11 Oct 2022

With public debt markets shut, funds that help finance leveraged buyouts and other deals have become the only game in town. In this episode of the Exchange podcast, Blue Owl co-founder Marc Lipschultz explains how private credit has muscled in on investment bankers’ home turf.

Europe’s sturdy banks risk becoming punch bags

8 Sep 2022

Lenders like Lloyds and Deutsche are set for a rate-hike windfall even as the region faces recession. As in the pandemic, governments may prod them to offer borrowers loan repayment holidays and cheap credit to pay their bills. But this time, banks may not get as many sweeteners.

Beijing is too bashful with its balance sheet

15 Aug 2022

Corporate loans plunged in July while real estate worsened and retail stayed weak. Even as the central bank cuts interest rates, the government is staying fiscally conservative, relying on indebted local provinces to stimulate demand. That looks increasingly unsustainable.

Banks’ private-credit fightback may underwhelm

4 Aug 2022

JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.

Cheery bank CEOs have the edge on gloomy investors

29 Jul 2022

Santander, BNP, ING, Lloyds and SocGen have lost 27% of their value since mid-February, on fears higher rates will cause defaults to rise. Chief executives, meanwhile, expect returns to stay high. Share prices implying steeper losses than 2020 suggest the selloff is overdone.

Capital Calls: Spotify hums along

27 Jul 2022

Concise views on global finance: The music service led by Daniel Ek added more subscribers and revenue in the quarter outperforming Netflix and Twitter.

Capital Calls: Shopify’s mea culpa

26 Jul 2022

Concise views on global finance: A memo from the e-commerce company’s CEO spells out how they miscalculated the "new normal."

Review: Lex Greensill epitomised post-2008 finance

22 Jul 2022

The Australian’s firm was one of many loosely regulated shadow banks that sprang up after the last crisis. Duncan Mavin’s “The Pyramid of Lies” explains how Greensill duped big lenders, investors and politicians. As interest rates rise, he’s unlikely to be the last failure.

Breakdown: Private credit’s main threat is itself

7 Jul 2022

Direct lenders like Ares or Apollo are displacing banks and investors when funding buyouts. Breakingviews explains how more flexible and generous lending terms helped these upstarts grab market share. As credit markets turn, the $1.2 trln industry’s success could be its weakness.

Central banks still have space to fight inflation

15 Jun 2022

Jerome Powell and Christine Lagarde are tightening monetary policy to try to control soaring prices. Previous shocks have prompted the Fed and ECB chiefs to pause or loosen again. Despite plunging equity prices this time, calmer credit markets imply the “Fed Put” is far off.

Twin crises will help Asian debt funds thrive

26 May 2022

Covid-19 and war in Ukraine are curbing the risk appetite of banks that already neglect all but the region’s best borrowers. The situation opens the door for funds like KKR’s new one. A pan-regional approach also learns from previous missteps in India.

Private equity can pull away from Wall Street

1 Apr 2022

Sponsors like Thoma Bravo are perfecting a playbook that demotes banks by tapping direct lenders for financing and sourcing transactions directly, bypassing auctions. Banks make a chunk of their annual fees from the buyout business. This threatens that pot.

Buy gas now, pay later is a hard tiger to ride

1 Apr 2022

Fintech firms Klarna and Zip are offering U.S. punters interest-free instalments as a way to manage higher fuel bills. The fact that consumers use loans to afford mere essentials raises the risk of defaulted payments. And unlike discretionary sales, Klarna isn’t getting a fee.