UBS bondholders tee up risky goldfish impression 20 Sep 2023 The $84 bln bank may issue contingent convertible bonds, months after a state-led takeover of Credit Suisse burned the defunct lender’s debt. Market prices suggest it may not pay a big penalty for Switzerland’s sins. That invites bank overseers to burn other CoCos in future.
New economic rules shatter US bonds’ crystal ball 19 Sep 2023 Government debt has been signaling a downturn for 440 days, but there’s been no recession. The famed predictive power of the yield gap between different vintages of Treasuries is waning. As the global economy evolves, warnings from the fixed-income markets can be safely ignored.
Apple’s high valuation exposes it to China’s whims 7 Sep 2023 The $2.8 trln tech giant's shares lost 7% in two days after reports said Beijing will impose a ban on officials using iPhones. Current retaliatory measures shouldn’t matter much to valuation. But more draconian assumptions show a problem, especially at Apple’s elevated multiple.
Bond rout will amplify Powell’s Jackson Hole words 23 Aug 2023 Yields on 10-year US debt are near a 16-year-high. That’s lifting borrowing costs even though the Federal Reserve is likely done with raising rates. More expensive loans may cause a recession. When he speaks on Friday, the Fed chair needs to calm markets without caving into them.
WeWork multitasked when it had just one job 9 Aug 2023 The office subletter conceded it might collapse, just months after a debt-for-equity recapitalization and four years since a funding round valued it at $47 bln. Mismanagement, hype and debt-fueled growth are to blame. Rival IWG suggests the business model works if kept in check.
Chinese homebuilders see no light at end of tunnel 9 Aug 2023 The property crisis is claiming one of the few big developers left standing. Country Garden might dodge a default but slowing sales make honouring $200 bln of liabilities and building 1 mln apartments hard. Beijing is pushing firms to the brink, and they have reason to push back.
US soft landing means bumpy ride for bonds 8 Aug 2023 Yields on 10-year government debt are near a 5-year high even though inflation is falling without a recession or huge job losses. Fixed-income traders are right to worry. Better growth may fuel more price rises, keeping rates elevated and deepening Washington’s fiscal problems.
Altice’s beaten-up debt is only a bet for the bold 8 Aug 2023 Patrick Drahi’s telco empire faces a funding crunch, with $60 bln of debt coming due by 2030. He must pull off a tough turnaround in France and sell assets, a tricky task made even harder by a corruption probe. Even with current high yields, Altice debt is a risky punt on Drahi.
China Evergrande throws its creditors a brick 18 Jul 2023 The world’s most indebted property developer released results for 2021 and for 2022, a last-ditch move to keep its stock listing. Any resumption in the trading of its shares will also provide a clue on the value of its restructuring plan for some $20 bln of offshore debt.
Capital Calls: AMC’s meme investor backlash 18 Jul 2023 Concise views on global finance: A new lawsuit looking to force a shareholder meeting adds to growing antagonism between $2 bln movie theater chain AMC and the retail investors who buoyed its business during the pandemic. For boss Adam Aron, meme stock stardom comes at a cost.
Thames Water’s leaky financials are far from fixed 13 Jul 2023 The privately owned UK water company managed to cobble together a rescue from existing shareholders. But in this Viewsroom podcast, Breakingviews columnists discuss why the fresh funds may not be enough, and the threat of nationalisation hangs over the sector as a whole.
Czech sphinx’s Casino bet trumps French insiders 5 Jul 2023 The retailer must choose between two offers to cut its 6.4 bln euro debt load. Daniel Kretinsky’s deal brings more equity, helping the grocer spruce up stores and compete. But he will need France to ditch its preference for domestic owners like rival tycoon Xavier Niel.
Resetting student loans brings Econ 101 lessons 30 Jun 2023 Some 43 mln college grads may feel less confident financially with the Supreme Court striking down President Joe Biden’s debt forgiveness plan. Big chunks of income are no longer freed up. Payments also start anew soon after a Covid hiatus, adding another drag for many consumers.
UK water meltdown resurrects bank crisis dilemmas 29 Jun 2023 The government may take over indebted 18 bln pound utility Thames Water. Funding a big potential capital hole via bills and taxpayer cash injections could be as politically toxic as 2008-era bailouts of RBS and peers. But imposing losses on creditors may spark even more turmoil.
Capital Calls: US IPOs 29 Jun 2023 Concise views on global finance: Thrift store chain Savers Value Village is the latest consumer goods company to enjoy a successful stock market debut in New York.
Debt ballast slows cruise ships’ return 28 Jun 2023 Royal Caribbean will launch the world’s biggest ship next year, and the firm shouldn’t have trouble finding passengers. Operating profit could surge well beyond pre-pandemic levels too. But debt larded on during lockdowns will continue to weigh down cruise companies.
Swiss $17 bln CoCo case could bite UBS on the tail 21 Jun 2023 Bondholders are suing regulator FINMA for ordering the writedown of funky hybrid bonds to smooth a Credit Suisse deal. If they win, the debt may come back to life, giving UBS a capital hole. Or the government may pick up the tab, creating new political headaches.
China’s world banks are geopolitical victims 15 Jun 2023 Canada suspended activity at the AIIB after a senior employee claimed it has become an instrument of the Chinese Communist Party. The Beijing-based infrastructure lender tried to play by global rules, but multilateral funding models are struggling to evade diplomatic tensions.
Capital Calls: Funky bank debt 14 Jun 2023 Concise views on global finance: Credit investors are increasingly willing to buy quasi-equity instruments known as AT1s, despite a near-death experience for the asset class amid the Credit Suisse crisis in March.
Casino’s fate rests on billionaires whack-a-mole 9 Jun 2023 Tycoon Xavier Niel and Czech investor Daniel Kretinsky are vying for control of the hard-pressed French retailer, which needs to restructure some 3 bln euros of debt. Founder Jean-Charles Naouri may be pushed out. Creditors’ backing will determine who will come out on top.