Debt

Anta Sports puts ultimate buy rating on itself

17 January 2020

After outrunning short-sellers, the Chinese apparel giant is issuing 1 bln euros of convertible debt that pays nothing and can’t be swapped for equity until shares rise 40%. Strong take-up will signal confidence Anta can repeat its success reviving Fila with Finland’s Amer.

Private credit pioneers will face a stress test

30 December 2019

A weak economy, high debt and falling profits should mean more corporate defaults in 2020. The pain will fall particularly on lenders specialising in private loans, who have $278 billion of assets under management. Rising losses will sort the sheep from the goats.

Buyout barons’ debt machine will blow a gasket

19 December 2019

The $1 trln market for bonds backed by leveraged loans has fuelled the boom in private-equity dealmaking. A weaker economy will make investors wary of buying these so-called CLOs, and force vehicles to curb lending. That means higher borrowing costs, and probably fewer takeovers.

Bad debt sale will test Greek banks’ recovery

12 December 2019

Eurobank is preparing to dispose of $8 bln in dud loans under a government scheme to cut such exposures by $33 bln. CEO Fokion Karavias has enough capital to absorb a projected $1.4 bln loss. Rivals whose shares have also gained from an economic rebound have less wiggle room.

Low bond yields wreck age-old investment credos

19 November 2019

Allocating 60% to equities and 40% to fixed income used to count as a balanced choice. Yet depressed debt yields mean such portfolios offer a dwindling buffer against setbacks in stocks. Investors who turn to hard-to-trade assets to diversify risks will only face other problems.

Viewsroom: LVMH wants more sparkle

31 October 2019

The $200 bln luxury conglomerate is making a $14.5 bln bid for Tiffany. The iconic brand known for putting its bling in blue boxes would be wise to accept the proposal. Plus: Venezuela’s leadership saga and a surreal debt drama collide. And: the world’s most expensive chocolate.

Pemex debt riddle stumps Mexican president

15 October 2019

The IMF has panned the isolationist approach AMLO, as he's known, is taking. His budget relies on the state oil giant producing cash, but Pemex needs all the pesos and dollars it can get to boost production and reduce $102 bln of debt. Without private investment, it can't add up.

GE-style pension tweaks blend finance and fear

14 October 2019

Asking future retirees to cash out early from defined-benefit pensions can help close funding holes like the $27 bln one at the U.S. conglomerate. Two things could help GE get the better end of the deal: falling interest rates, and uncertainty over the success of its turnaround.

PG&E faces judicial bankruptcy brownout

10 October 2019

Just as the California utility cut off customers to avoid wildfire risks, a judge opened the door for creditors to seize power over its restructuring. They are offering more to fire victims, and less to equity holders. Running the agenda matters: PG&E stock fell another 30%.

Corporate debt doomsayers are overstating the risk

7 October 2019

Over half of U.S. investment-grade corporate debt is rated BBB, one level above junk. This has alarmed observers from the Fed to Pimco who fear U.S. companies could struggle in a downturn. But BBBs are not all created equal. Many such borrowers boast improving credit metrics.

Europe’s IPO bankers more like badgers than dodos

3 October 2019

Proceeds from stock raises are at a seven-year low, and fees are stingier than in the U.S. Add structural threats, and equity arrangers might appear to face extinction. In fact, the need to maintain client ties means the sector faces a badger-style cull, not a dodo-style fate.

Leveraged loan partygoers take a much-needed rest

1 October 2019

Growth in risky corporate debt has slowed. Investors worrying about the economy are driving a harder bargain with private equity-owned groups like Shutterfly and Sotheby’s. Yet sovereign bond yields are ultra-low and buyout firms have huge cash piles. The lull may be temporary.

Hadas: The trillion-dollar lesson on fiscal policy

18 September 2019

Donald Trump’s tax cuts will lead Washington to borrow nearly $1 trln, or 4.5% of GDP, this year. The politics of deficits are controversial, but the monetary economics shouldn’t be. While large deficits can cause inflation or constrain growth, today’s shortfalls may do neither.

GE’s Larry Culp is playing a bad hand well

11 September 2019

The CEO is selling what he can to save what he must. Ceding control of oil services firm Baker Hughes will mean a hefty writedown for the conglomerate, but it brings divestments to nearly $20 bln on his watch and reduces leverage. That buys Culp time to fix GE’s troubled core.

Junking Ford threatens shares more than bonds

10 September 2019

Moody’s has downgraded the carmaker’s debt rating, citing weakening cash flow and earnings. But that’s old news already priced into the $36 bln company’s bonds. While CEO Jim Hackett has some tough years ahead, bankruptcy risk is remote. The dividend, though, is much less secure.

Italy’s budget is chance to reset EU relations

4 September 2019

The first test for Prime Minister Giuseppe Conte is to get his new administration’s sums to add up. Though debt is still rising, tightening spending while the economy weakens risks fuelling deeper anti-EU sentiment. Brussels should give the new government some flexibility.

Argentina debt flashback includes glimmer of hope

29 August 2019

President Mauricio Macri wants to restructure the country’s borrowings as his four-year effort to restore its economy and market standing nears an end. History warns against optimism, but the move could give his likely successor some breathing room – if he doesn’t squander it.

British drug group can’t even give away opioids

6 August 2019

Mallinckrodt suspended a plan to spin off its painkiller business to shareholders. It was a too-transparent attempt to shield itself against legal liabilities from thousands of lawsuits. With falling sales, hefty debt, and a potentially big settlement looming, its future is grim.

End is in sight for Italy’s bad loan emergency

6 August 2019

The country’s banks have halved the pile of shaky debt from a 341 bln euro peak in 2015, helped by frantic sales. The pace at which good credit is turning sour has also slowed. New European Commission boss Ursula von der Leyen has one less hurdle on the way to a banking union.

Puerto Rico leadership change offers second chance

25 July 2019

Governor Ricardo Rossello is resigning after mass protests over crude chat messages and a corruption probe. Political turmoil has stymied efforts to restructure the U.S. territory’s debt and strengthen fiscal oversight. The next leader can’t afford to waste Puerto Rico’s crisis.