Qudian IPO feeds debt-hungry Chinese millennials 18 Oct 2017 The online lender backed by e-commerce giant Alibaba’s financial arm has priced its U.S. listing above expectations, says Reuters. It boasts fast growth, low defaults and - shockingly for tech - profitability. As young Chinese shoppers rack up debt, Qudian will keep earning.
Microfinance goes mainstream in India 16 Oct 2017 IndusInd, a bank, has agreed to buy Bharat Financial Inclusion in an all-share deal valuing the poster child of niche lending at $2.4 bln. The 11 pct premium is small but fair given concerns over the long-term sustainability of independent pure-play lenders to the poor.
CDO cousin thrives a decade after the crisis 11 Oct 2017 The subprime-mortgage fiasco killed the business of pooling debt securities but not its commercial-lending relative, the collateralized loan obligation. CLO issuance has surged on the back of solid credit and investors’ hunger for yield. The bonanza has plenty of life left.
Portuguese banks face long exit from bad-debt woes 6 Oct 2017 The three biggest banks plan to jointly manage their bad debts rather than selling them off. They have little choice. With common equity Tier one capital ratios averaging 11 percent and earnings depressed, lenders can ill-afford further hits to capital.
Trump gets Puerto Rico priorities in a muddle 4 Oct 2017 The president’s vow to wipe out the U.S. commonwealth’s debt sent its bonds plunging. The devastation wrought by Hurricane Maria may necessitate another restructuring. But it doesn’t address the island’s problems. Its citizens need money, supplies and services, not distraction.
ECB bad-loan blitz to spur Italy insolvency reform 4 Oct 2017 The European Central Bank wants lenders to fully provision against new bad loans within seven years. That could be painful in Italy, where repossessing collateral can take even longer. The new rules give Rome a short window to finally get its bankruptcy law into shape.
Review: Ellen Pao cracked door for women in tech 29 Sep 2017 In "Reset," the venture capitalist recounts her decision to fight Kleiner Perkins in court over sexism, rather than settling. She lost, but several women have since publicly confronted the bro-culture of Silicon Valley at Uber, SoFi and beyond, yielding more promising results.
Equifax can’t even oust its failed CEO effectively 26 Sep 2017 Rick Smith is "retiring," as the euphemism goes, after a massive cyber attack and fumbled response - and with little financial penalty. The interim management plan makes clear the board hadn't planned succession adequately either. Equifax needs regime change at every level.
UK banks are trapped in a pincer movement 25 Sep 2017 The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.
Eminem IPO risks a Slim Shady rap 25 Sep 2017 An online site for buying and selling artists' royalties is floating a unit that will buy into the revenue from music catalogs, starting with the Detroit star's. The interests may be partial, though, and the revenue volatile. The financial remix sounds off-key for public markets.
Private equity gets a double-dip on debt 14 Sep 2017 Hosts hate guests who dip half-eaten snacks back in the sauce. But buyout firms are doing something similar: loan documents now let them add extra debt onto already indebted companies. Loose monetary policy encourages boisterous behaviour, but maybe not for much longer.
Time isn’t always on Warren Buffett’s side 12 Sep 2017 Berkshire Hathaway’s bid to buy a fifth more of Home Capital was rejected by the Canadian lender’s shareholders. The setback comes weeks after Texas utility Oncor was snatched out from under Buffett's conglomerate. His opportunism is sometimes exposed on closer inspection.
Italy’s latest bank bailout is gentle on taxpayers 11 Sep 2017 The country’s deposit fund is forking out 640 mln euros to clean up three small banks before they are sold to Credit Agricole. Prepping a target for a foreign rival looks generous and the fund’s returns are uncertain. At least taxpayers will be spared a hit this time.
Brazil’s Temer gets a win as more graft oozes up 6 Sep 2017 Forcing state lender BNDES to cut back soft loans to business will shrink the government's role in the economy and help its ailing finances. New graft allegations against the president’s predecessors show how badly such measures are needed. Sometimes corruption can be his friend.
U.S. housing hangover shows few signs of lifting 29 Aug 2017 Home prices keep climbing as inventories sit at historic lows yet the pace of construction lags. What might stimulate builders is worsening affordability for millennials, and may be persuading boomers to stay put. A decade after the crisis, the market is still dysfunctional.
Calpine $5.6 bln buyout puts chips on gas hegemony 18 Aug 2017 A consortium is taking the heavily indebted electricity company private at a 51 pct premium. It’s a bet natural gas will dominate the nation’s power grid. Problems with other sources justify that for now. Longer term, stagnant electricity prices and usage makes it a big risk.
Bondholders can play hardball with Portugal’s Novo 18 Aug 2017 Bailed-out lender Novo Banco wants creditors to take a haircut, to smooth a sale to Lone Star. But creditors have numbers to block the swap, and could recapitalise the bank themselves. Novo has a history of scrapping with bondholders. This time creditors may have the upper hand.
Mortgage interest deduction’s death long overdue 16 Aug 2017 White House officials are considering limiting a tax break that encourages home purchases. The incentive mostly helps the rich and induces risky behavior. The gimmick has also had little impact, with the home-ownership rate falling to a 51-year low in 2016. Its demise is welcome.
Deutsche’s problems extend well beyond trading 27 Jul 2017 CEO John Cryan is successfully cutting costs but revenue fell even faster in the second quarter, by 10 pct from a year ago. The lender suffered from the same difficult trading conditions that hit peers but its retail unit also disappointed. The boss is running to stand still.
U.S. colleges may need to start on M&A course 25 Jul 2017 After tripling in real terms since the early 1970s, tuition costs are now rising only a hair faster than CPI. Cost cuts won't offset flagging enrollment, the result of a stronger job market and demographic shifts. Merging could help, especially for small private schools.