Asia may reward private equity’s patient capital 15 Mar 2018 After years of wrestling with the region's founding families and companies, the buyout model is paying off, new research from Bain suggests. Deals are pricey, but getting bigger. If more like Toshiba and GLP come along, Asia itself could turn into a solid long-term investment.
Broadcom’s next sweetener: a bigger breakup fee 14 Feb 2018 The chipmaker's increased $120 bln-plus offer for Qualcomm has finally persuaded its quarry to talk. But the $8 bln of insurance Broadcom is offering in case antitrust regulators in Beijing or Washington block the deal probably isn't enough. History may justify twice as much.
CFPB scores too low on Equifax transparency 5 Feb 2018 The consumer-finance watchdog is dialing back its probe of the $15 bln U.S. credit-scoring firm’s massive data breach last year. Trump’s CFPB head says the regulator has gone too far in the past. Perhaps – but if protecting vital data isn’t its remit, he needs to explain what is.
Banks’ crypto caution reveals double standards 5 Feb 2018 Lloyds Banking Group’s ban on credit card customers buying bitcoin is part of a broader backlash against crypto-currencies. Lenders are protecting customers from losses, while trying to avoid future fines. It makes the futures markets’ embrace of bitcoin all the more jarring.
Steinhoff reminds creditors they are not all equal 1 Feb 2018 The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.
Intesa can afford to speed bad debt cleanup 11 Jan 2018 Italy’s biggest retail bank may sell up to 15 bln euros of sour loans. It looks like a reversal of boss Carlo Messina’s plan to keep bad debts rather than sell them cheaply. But Intesa can take the hit and, with regulators bearing down on dud assets, a quick exit makes sense.
British shoppers are a shaky economic backstop 8 Jan 2018 Consumer spending on Visa cards in 2017 was the weakest in five years. Profit warnings from retailers Mothercare and Debenhams add to the glum outlook. Despite easing cost inflation and a tight job market, customers who have kept the UK economy moving are becoming less reliable.
Credit markets will enjoy one last hurrah 26 Dec 2017 Healthy global growth will make chief executives and buyout firms more willing to take risks and keep a lid on defaults. There’s also a case for locking in cheap borrowing costs before central banks become less generous. But the next wave of blowups is building.
Portugal beats Italy in bond market pecking order 15 Dec 2017 The country that needed a bailout in 2011 can borrow for less than its larger peer. Investors’ preference for Portuguese debt reflects its more vibrant economy, and messy Italian politics. Lisbon can keep outshining Rome, so long as lax bond markets don’t encourage bad habits.
Hadas: Greed is best indicator of financial crisis 26 Oct 2017 New research casts small-time property investors as the secret villains in the 2007 U.S. house price collapse. As usual, the love of leverage was the root of financial distress. Balance sheets are stronger today, but investors still haven’t learned the virtue of moderation.
UK banks are trapped in a pincer movement 25 Sep 2017 The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.
Retailers’ credit-card life vest is over-inflated 6 Sep 2017 Macy's-branded plastic contributed nearly 40 pct of EBIT last year. At Kohl's and J.C. Penney, too, finance propped up profit. It's a quick fix at best for struggling U.S. mall tenants. They may find their credit-card partners pulling back as stores close and charge-offs rise.
Accounting revamp does European banks a favour 25 Aug 2017 Changes that come into force in 2018 will force lenders to provision for bad loans in a new way. Banks say earnings will be more volatile as a result. Perhaps at the outset. But the switch will also make them safer and lower their cost of capital over the economic cycle.
Provident Financial kneecaps cash-greedy investors 22 Aug 2017 The door-to-door lender slashed its profit forecast, ousted its CEO and is under investigation from the UK authorities. Worse still, the dividend yield just fell from 8 percent to zero. Yield-chasing funds had fair warning the company was living beyond its means.
Calpine $5.6 bln buyout puts chips on gas hegemony 18 Aug 2017 A consortium is taking the heavily indebted electricity company private at a 51 pct premium. It’s a bet natural gas will dominate the nation’s power grid. Problems with other sources justify that for now. Longer term, stagnant electricity prices and usage makes it a big risk.
Bondholders can play hardball with Portugal’s Novo 18 Aug 2017 Bailed-out lender Novo Banco wants creditors to take a haircut, to smooth a sale to Lone Star. But creditors have numbers to block the swap, and could recapitalise the bank themselves. Novo has a history of scrapping with bondholders. This time creditors may have the upper hand.
Etihad’s airlines fail, but odd CDO remains aloft 17 Aug 2017 Air Berlin and Alitalia are insolvent. Their debt is probably worthless, except for an unusual collateralised debt obligation that part-owner Etihad used to fund them. It is trading at a price that suggests Etihad might bail it out. Fuzzy guarantees often end badly.
Cool credit markets could be own undoing 10 Jul 2017 Corporate bonds shrugged off the recent “taper tantrum” that hit government debt and equities. Investors may be betting that central banks will only slowly tighten policy, supporting demand for riskier assets. Yet unruffled markets may only hasten policymakers’ rush for the exit.
Beijing’s reversal on credit scores is ominous 5 Jul 2017 China's central bank no longer wants to let private outfits like Alibaba assess consumer creditworthiness, Reuters says. That’s doubly unwelcome. Borrowers need better credit scoring. And this will concentrate even more power in the state’s Orwellian “social credit” system.
Bank of England tries surrogate rate hike 27 Jun 2017 The central bank’s bubble-pricking committee is raising the minimum capital ratio for UK banks by up to a full percentage point. The surgical tool may help to rein in frothy consumer lending. But the blunt instrument of higher policy rates cannot be delayed forever.