Debt

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.

China has a template to remake its Belt and Road

25 July 2019

The Asian Infrastructure Investment Bank has financed over $8 bln of projects while promoting high standards and responsible lending. It’s a sharp contrast to the amorphous, opaque Belt and Road. Officials looking to retool that initiative should learn from their own successes.

U.S. bond vigilantes morph into deficit patsies

23 July 2019

Treasury prices didn’t budge after lawmakers struck a spending deal, even though it promises years of trillion-dollar deficits. Investors used to target congressional profligacy. But a world awash in money has co-opted them. Now they won’t enforce discipline until it’s too late.

India unlocks a $200 bln stressed debt market

22 July 2019

The country’s first comprehensive bankruptcy code has hit bumps with cases like the drawn-out takeover of Essar Steel. But the framework is starting to offer better recovery, prompting creditors to act sooner. That’s good news for lenders and investors like Apollo and Oaktree.

Viewsroom: AB InBev’s stubborn financial beer gut

18 July 2019

The $150 bln brewer of suds like Budweiser and Stella has scrapped its Asia unit’s Hong Kong float. CEO Carlos Brito now needs new ways to reduce the company’s debt. And as the second pulled IPO in weeks amid civil unrest, it puts the city’s financial hub under a spotlight.

Abu Dhabi’s private equity plunge is sensible idea

15 July 2019

Hiking direct investments to the asset class by the emirate’s $700 bln sovereign wealth fund - and cutting reliance on fee-hungry buyout firms - raises risks when the economic cycle turns. But ADIA’s status as one of the more measured SWF dealmakers affords a degree of comfort.

WeWork debt plan veers into circularity

8 July 2019

The shared-office provider may borrow up to $4 bln against profitable buildings before its IPO. Adding to its roughly $6 bln pot of cash might perhaps make the money-losing WeWork’s path to profitability more credible, and so attract more investment. But the logic has big flaws.

Dixon: Bold PM can bring virtuous circle to Greece

3 July 2019

Liberal conservative Kyriakos Mitsotakis is expected to replace leftist Alexis Tsipras as prime minister after Sunday’s election. If he roots out the bad practices that have bedevilled Greece for decades, the country could finally enjoy an investment-led recovery.

Africa growth outlook puts democrats on back foot

3 July 2019

Ballooning populations mean per capita wealth is falling in key democracies Nigeria and South Africa. That’s a recipe for trouble. Alongside a stronger performance by autocratic Egypt, it also makes worrying reading for those who believe a democratic Africa is a more stable one.

Italian mini-bond plan speeds Brussels showdown

10 June 2019

Leaders of the ruling coalition favour using small public bonds to clear a 53 bln euro state debt backlog. Creditors deserve to be paid. But issuing alternative debt – or turning the bonds into a parallel currency – will only accelerate a confrontation with the European Union.

Sticks will help Africa debt more than carrots

5 June 2019

One idea to curb binge borrowing is to offer UK legal protection to creditors only if financing terms are publicly disclosed. London may lose business but those who go elsewhere will look shifty and end up paying higher rates. The proposal is better than more debt forgiveness.

AB InBev’s debt belly needs more than fizzy growth

7 May 2019

Pricier beer helped the brewer’s first-quarter sales rise faster than expected. Yet AB InBev still has an unsightly debt pile and is battling falling volumes in key regions. An IPO of its Asian operations sooner rather than later would help investors breathe more easily.

Tesla’s $2 bln capital raise repeats sins of past

2 May 2019

The electric-car maker’s issue of shares and convertible bonds will barely cover planned capital expenditure, let alone losses like the one it just reported. CEO Elon Musk is betting vehicle sales will rebound quickly. That’s the kind of hubris that put Tesla in its current fix.

Loose credit helps LBO funds slay sacred debt cows

30 April 2019

Lenders to private equity managers are increasingly giving up protections. Loan investors more used to demanding and receiving better terms than bonds are now accepting similar conditions – and, in some cases, even worse ones. That could lead to a nasty shock.