Saudi’s Aramco plan B is too clever by half 27 Jul 2018 With the oil giant’s listing stalled, Riyadh wants to lever it up to buy a stake in chemicals group SABIC. It shouldn’t overburden Aramco, and offers a roundabout way of getting money to the state. But compared to an IPO it’s riskier, and does less to boost Saudi capital markets.
Bank of Japan’s trial balloon shot down on runway 23 Jul 2018 Bond yields and the yen rose after Reuters reported the central bank was debating whether to scale back monetary stimulus. The move would be good for bank investors. But the scale of the market reaction and economic reality will make it hard for Governor Haruhiko Kuroda to act.
HNA’s market thaw provides only cold comfort 20 Jul 2018 Three listed units of the troubled Chinese conglomerate lost a combined $1.5 bln in value after long trading halts ended. It signals a lack of confidence about HNA’s restructuring plans as it regroups without its late chairman. Pity investors trapped by a 10 pct downside limit.
Univision broadcasts a warning to today’s buyouts 11 Jul 2018 The Spanish language TV company is trying sell websites it bought two years ago. The Onion – no joke – was never a fit. Neither was a massive debt load imposed 11 years ago when five private owners bought it. With lenders now looser than ever, private equity risks painful reruns.
Malaysia taps brakes along China’s Belt and Road 5 Jul 2018 Prime Minister Mahathir Mohamad has suspended work on a $20 bln rail link between his country’s east and west coasts. It’s a rare setback for Beijing's massive infrastructure initiative. The project's importance, though, means Kuala Lumpur can afford to fight for a better deal.
Bank CoCos get a new reason to go pop 2 Jul 2018 Exchange-traded funds are pooling bonds that convert into equity in a crisis. It’s an odd mix: ETFs allow investors to buy or sell assets easily, while contingent convertibles can be hard to trade. The union may mean more investors for funky debt, but also bigger price moves.
Debt relief puts floor under Greek bank pains 28 Jun 2018 A government deal with creditors should lower funding costs for Greece’s big four lenders. With bad loans accounting for 48 percent of lending, normality remains a way off. But ending shareholder angst over debt sustainability could be the first step in banks’ rehabilitation.
Euro banks’ leverage games mock Basel playbook 25 Jun 2018 The Bank for International Settlements says European lenders flatter their leverage ratios by shrinking balance sheets just before reporting dates. It shows how global rules are weakened by uneven implementation. The danger is that banks’ profits are riskier than they look.
UK estate agents wounded by taxes and technology 25 Jun 2018 Britain’s largest real estate broker, Countrywide, has become the latest to warn earnings will fall as transactions dwindle. Higher taxes have hit amateur landlords while online property companies are squeezing fees. Given high fixed costs, agents will struggle to plug the gap.
Greece swaps bailout hell for eternal purgatory 22 Jun 2018 Eight years after seeking financial help Athens can at last support itself, helped by extra euro zone funds and debt relief. But borrowings of over 300 bln euros mean it must maintain a tight budget, and submit to regular scrutiny. Doubts over its debt sustainability will linger.
Italian bad loan sale defies political risks 20 Jun 2018 Banco BPM sold 5 billion euros of dud loans for 34 percent of face value, amongst the highest prices to date. Rosy valuations and the ECB’s more lenient stance on disposals are a boon for lenders. But buyers risk downplaying the threat posed by Italy’s radical government.
China eases HNA’s glide path 19 Jun 2018 The troubled conglomerate has billions in debt coming due soon. Official pressure on banks to support HNA bonds could therefore help it refinance, minimising the risk of an unplanned financial accident. That also buys time for more selloffs to further sharpen its focus on travel.
AT&T and Comcast alike in debt, not in risk 18 Jun 2018 Big acquisitions will leave the telco and cable firm with more than $170 billion of debt each. At first, Comcast’s bid for bits of Fox would create the heavier relative leverage load. But it’s AT&T’s recently closed merger with Time Warner that looks more vulnerable.
Casino sell-off is part of a bigger debt gamble 12 Jun 2018 The French supermarket is selling 1.5 bln euros of assets to pay down loans. Controlling shareholder Rallye relies on dividends to service its own heavy debts. The risk is Chairman and CEO Jean-Charles Naouri is running the grocer for financial needs higher up the food chain.
Argentina’s $50 bln IMF deal has a year to work 8 Jun 2018 President Macri, like Cardinal Mazarin’s preferred generals, has been lucky as well as bold so far in his efforts to fix Latin America’s No. 3 economy. With elections not due until late 2019 and the deal shielding social spending, he has time to beat opponents’ IMF-phobia - just.
Hadas: Market complacency curses debtor countries 31 May 2018 President Erdogan is wrong to claim a sinister “interest rate lobby” has aggravated Turkey’s structural weaknesses. Foolish foreigners have, however, financed unsustainable consumption binges in this and other economies. Remedies range from regulatory nudges to capital controls.
How the EU can help save Italy from itself 31 May 2018 A new radical government will cast doubt over euro membership and inflame migration tensions. Other EU countries could help ease voter discontent by tweaking the bloc’s fiscal rules, and taking more migrants. That won’t be easy, but it beats Italy leaving the single currency.
EU sovereign debt fix fails Italian test 24 May 2018 The European Commission wants to make it easier for investors to buy bonds that pool euro zone government debt. It’s part of a plan to reduce banks' exposure to indebted states. Recent Italian worries show such securities might help, but also why they are unlikely to work.
Italy’s next economy minister is the one to watch 22 May 2018 Radical parties have proposed little-known academic Giuseppe Conte to head their government. Yet the economic portfolio matters more for the indebted country’s future. The new minister’s attitude towards the euro will go a long way towards determining investors’ faith in Italy.
Local bureaucrats struggle to come clean in China 17 May 2018 Beijing is suppressing off-balance-sheet borrowing by regional governments, while new rules ease bond issuance. Yet the gap between their legal fundraising and fiscal obligations persists, hobbling efforts to cut a $2.6 trln debt pile. Mixed messages from the centre are to blame.