Debt

EU debt fears hinder U.S. green subsidies riposte

24 Jan 2023

Ursula von der Leyen has pledged a European response to protectionist U.S. energy handouts. The European Commission president can improve permitting speed and offer token subsidies. But her best weapon, a permanent form of the EU-wide pandemic bond-sale programme, is far off.

Chinese convertible bonds set off cash crunch

13 Jan 2023

Video app Bilibili, e-commerce firm Pinduoduo and peers jumped on the convertible debt boom, issuing $27 bln worth since 2019. With share prices down, holders will want companies to buy the notes back early. As growth slows, their desperation is an opportunity for private equity.

EU’s frozen Russian assets plan is best put on ice

12 Jan 2023

The European Commission wants to use nearly $200 bln of Russian assets to help finance the reconstruction of Ukraine. Germany seems to like the idea. But it is legally shaky, financially marginal, and politically fraught. For now Europe and its allies must shoulder the task.

Guest view: Debt fixes can help rebuild Ukraine

11 Jan 2023

Even as Russia’s invasion ravages the country, policymakers need to start planning for reconstruction, write William Rhodes and Stuart Mackintosh. States and private creditors will chip in. U.S.-backed Brady bonds, which helped ease past crises, can provide further relief.

Macron’s fiscal torpor will weaken France

29 Dec 2022

The French president is running the only big European economy whose public debt, now at 112% of GDP, is still rising. High government spending helped during the crises but is now pushing up bond yields, stifling growth. Budget neglect will also erode Paris’s influence in the EU.

Private lending will grow up by slimming down

22 Dec 2022

The industry led by Ares and Blackstone reached over $1.3 trln in assets, but now faces a reckoning. Lenders that took risky bets to compete with banks face difficult negotiations with private-equity borrowers. Bigger, more sophisticated players should still thrive.

Euro crisis shield is stuck in hedge fund mode

21 Dec 2022

The European Stability Mechanism, set up to help troubled euro countries, aspires to be the bloc’s debt manager. But member states’ distrust of perceived German control and stigma around its aid make this unlikely. Managing old bailout loans is the fund’s best hope.

Bond-buying scars will open European can of worms

16 Dec 2022

The ECB faces large losses if it keeps hiking interest rates, because of higher payments to banks on 3.9 trln euros of reserves amassed through asset purchases. National central banks will pick up the tab. And governments will bicker on how to share the pain.

Asia debt craze spawns vicious tech funding circle

9 Dec 2022

India’s Byju’s wants easier terms on an existing $1.2 bln loan, one of a series of punchy deals the region’s hottest money-losing firms sold to BlackRock and others ahead of planned listings. Poor results and rising funding costs raise the stakes on getting IPOs across the line.

The bubble in predicting the end of the world

1 Dec 2022

The globe faces multiple threats to peace and prosperity. Several new books address the challenges of enormous debt, geopolitical rivalries and climate change, predicting disastrous consequences. The best thing investors can do is keep a level head, writes Edward Chancellor.

Capital Calls: Funky debt shock

29 Nov 2022

Concise views on global finance: Germany property group Aroundtown won’t be the last to flout bond market convention on hybrid debt.

Debt woes will restrain Enel’s global ambitions

22 Nov 2022

CEO Francesco Starace vowed to cut the 52 bln euro utility’s net debt by 21 bln euros, amid spiralling gas costs. Focusing on fewer regions looks sensible and may shield investments and dividends. But it will hinder Enel’s efforts to stay one of the top energy transition winners.

UK’s new fiscal plan narrowly navigates recession

17 Nov 2022

As the economy shrinks, new finance chief Jeremy Hunt intends to raise taxes and cut spending. The 55 bln pound package goes some way to rebuilding Britain’s cracked credibility with investors. Delaying the pain by a few years could also help his party’s electoral prospects.

UK market watchdogs rely on kindness of foreigners

9 Nov 2022

The Bank of England has intervened in government bond trading twice in less than three years. Both times, selling by overseas funds was partly to blame. British regulators have limited oversight of the $2.4 trln gilts market. Their best hope is help from counterparts elsewhere.

Fed gets credit for providing perpetual angst

8 Nov 2022

Investors in Asia are overreacting after a South Korean issuer flipflopped on a decision to exercise a call option on a $500 mln bond. Liquidity measures from Seoul eased an earlier rout but pressure from U.S. rate hikes is turning boring corners of finance into something hot.

Europe’s pain will be ultimately worth it

31 Oct 2022

The European Union faces a tough period as the energy crisis bites and debt troubles return. But the bloc could have the world’s cheapest and cleanest energy by the mid-2030s and it will probably emerge stronger geopolitically, says Hugo Dixon.

Risky debt selloff has much further to run

28 Oct 2022

Investors are dumping corporate bonds as interest rates rise. Relatively safe investment grade securities have fallen harder than those issued by junk-rated borrowers, which hit $650 bln last year. That will reverse as high-yield debt starts pricing in defaults and a recession.

Western economies rediscover meaning of scarcity

27 Oct 2022

For several decades, constraints on supplies of labour, energy and capital appeared to have all but disappeared. Now they are back, humbling leaders like former British Prime Minister Liz Truss. Allocating scarce resources means more state intervention, writes Edward Chancellor.

Italy’s new premier starts with a big faux pas

27 Oct 2022

Giorgia Meloni vowed to hike a 2,000 euro cap on cash payments, reversing attempts to boost electronic transactions. That will make it harder to track 100 bln euros of annual untaxed revenue. With debt at 147% of GDP, Italy cannot afford to be complacent on chronic tax evasion.

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.