Debt

Argentina’s creditors made two silly mistakes

28 October 2020

Some investors say their newly restructured bonds have tanked due to President Fernandez’s lousy policies. They’re right. But they’re shouting in the wind, because they agreed to a debt rejig based on unenforceable promises, and gave up what leverage they had in the process.

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.

Corona Capital: Oil, Delta, Hunger

13 October 2020

Concise views on the pandemic’s corporate and financial fallout: OPEC and the International Energy Agency issue forecasts that bode ill for crude demand; the U.S. airline steers through turbulence; and a food crisis is exacerbating problems facing the most vulnerable in society.

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.

Moutai ladles out value from its punch bowl

18 September 2020

China’s liquor titan is issuing $2.2 bln of bonds to help buy a highway operator from a struggling local government. The ludicrous diversification erased $10 bln from its enormous market cap. It’s a sobering reminder of how the country’s listed companies can be called to serve.

Old-school value stocks are a dying breed

17 September 2020

The number of listed U.S. firms has halved over 25 years thanks to mergers and buyouts fueled by cheap debt. Those remaining are borrowing more, worsening Covid's damage. Most newcomers to public markets lose money. Investors looking for solid earnings are running out of options.

The Exchange: China’s bad debt opportunity

15 September 2020

Beijing is letting lenders go belly-up as it attacks systemic risk. That’s all fine for Benjamin Fanger, founder of ShoreVest, a manager $1.8 bln of soured loans. He talks with Pete Sweeney about the message China is sending bankers, and the opportunity for foreign investors.

Argentina’s debt victory lap is way too early

1 September 2020

Buenos Aires is crowing about getting 99% approval for its $65 bln restructuring deal. It’s a good first step, but it should have been easier. Negotiating a realistic reform plan with the IMF will be tricky, and balancing growth and stability in the future will be harder still.

Distressed debt cash flood could sink returns

31 August 2020

Investors are pouring billions into funds that take advantage of credit carnage. Brookfield's Oaktree unit just raised a whopping $12 bln. But assets chasing these bets have ballooned since 2008, and stimulus limits the opportunities. Many managers may fall short of expectations.

Banks’ bad-debt nightmare may have a happy ending

27 August 2020

Major lenders in the U.S. and Europe are understandably fretting about dud corporate credit. But, assuming reasonable loan recoveries, they’ve collectively set aside enough to weather a 7% default rate. With money cheap and governments supportive, the cushion looks comfortable.

China bank failure fires quiet warning shot

10 August 2020

Beijing will let Baoshang Bank go under in the first such insolvency since 2001. The liquidation of the lender, used as a piggy bank by an insurer, will raise credit costs for small peers, pushing more of them to the brink. It’s an overdue cleansing, but a risky time to do it.

HSBC is firing on just one shaky cylinder

3 August 2020

The $90 bln lender’s investment bank is the only business that’s really growing, as the group racks up further bad-debt charges. CEO Noel Quinn is cutting costs fast. But with low interest rates crimping revenue, he might need to take a sharper knife to restructuring plans.

Ecuador spat reveals sovereign-debt market cracks

30 July 2020

Investors are suing to halt the country’s $17.4 bln restructuring, claiming it’s hoodwinking bondholders. They have a point. Going to court is a long shot, but Ecuador’s tactics will hurt its market-friendly makeover. And it may prompt an overhaul of how countries borrow, too.

Investors emerge faster than emerging economies

21 July 2020

Fitch Ratings may soon label more countries in the world as junk than investment grade. And Covid-19 has added to the problems that many poorer countries already faced. Even so, falling U.S. bond yields are forcing money managers to raise their exposure to riskier markets.

Ecuador is willing pawn in Argentina debt standoff

20 July 2020

Quito will tweak voting rules in its $17.4 bln restructuring, helping creditors pressure the larger LatAm debtor to do likewise. It’s an easy change to make and would still help emerging-market borrowers avoid being held to ransom in the future. Buenos Aires should take the hint.

Indian syndicate’s sprawl smells of desperation

20 July 2020

A $42 bln housing lender, HDFC, hired a record 19 banks to raise $1.9 bln, says IFR. It suggests the well-capitalised issuer is worried liquidity flows might dry up soon as India’s pandemic keeps burning. The fee-starved advisers are settling for scraps. Neither is a good sign.

China’s jobless recovery risks debt indigestion

16 July 2020

Output rose 3.2% last quarter, as a record $1.7 trln in loans kicked in. But investment is tepid, employers are shedding jobs, and retail remains anaemic. Beijing is also running low on distressed credit buyers. With bad debt set to rise, pressure to find alternatives will build.

Argentina remains the bad boy of sovereign debt

14 July 2020

The serial defaulter’s new restructuring proposal offers creditors decent value – but only after months of off-the-charts acrimony. Creditors were a tough bunch to please, but the government’s strategy stymied progress. The country can’t get out of its own way.

Corona Capital: Lockdown diets, Beating the Fed

14 July 2020

Concise views on the pandemic’s corporate and financial fallout: Covid-19 is prompting diets for both animal and human; and the Fed takes a hit on a garbage deal.

India’s banks peddle bad-loan black holes

14 July 2020

ICICI wants to raise some $2 bln, joining peers seeking capital as customers take advantage of interest holidays on a huge one-third of borrowings. Defaults system-wide could double to a whopping 20%, or worse. Amid so much disarray, the strong will inevitably get stronger.