Argentina remains the bad boy of sovereign debt 14 Jul 2020 The serial defaulter’s new restructuring proposal offers creditors decent value – but only after months of off-the-charts acrimony. Creditors were a tough bunch to please, but the government’s strategy stymied progress. The country can’t get out of its own way.
Corona Capital: Lockdown diets, Beating the Fed 14 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Covid-19 is prompting diets for both animal and human; and the Fed takes a hit on a garbage deal.
Mexico’s stingy populist is haunted by history 2 Jul 2020 The president, known as AMLO, is the rare left-winger queasy about budget deficits, even in the face of a pandemic. This may be because of his nostalgia for the country’s mid-century boom, which was undone by debt-fueled spending. He has learned the wrong lessons from the past.
Argentina drama comes down to politics and Pac-Man 22 Jun 2020 Talks between the serial defaulter and its largest creditor group have stalled. The remaining gap is not huge. But the government seems intent on scoring a political win and may deploy an unusual strategy to do it. Rising frustrations may make an agreement hard to reach.
Corona Capital: UK debt, Oaktree, KKR, Chanel 19 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: UK government borrowing surges past GDP; Howard Marks is sceptical about the stock market revival; KKR bets on cheap and local European holidays; Chanel takes a gloomier view than rivals on the luxury rebound.
China’s Zambia debt problem is Africa-sized 15 Jun 2020 Beijing-backed lenders are owed nearly a third of the African state’s $10 bln external debt pile. They will be under pressure to share in any restructuring pain. Caving in will set a precedent across a continent that has borrowed $146 bln from China in the last two decades.
Italy gives sovereign debt revolution a nudge 12 Jun 2020 The country will sell bonds whose payout is linked to how GDP evolves. It’s a first step that only targets domestic savers. But cultivating an international market for such securities could help countries, particularly ones locked into the euro, to better weather economic shocks.
Argentina gets too cheeky with its creditors 8 Jun 2020 The serial defaulter wants to put its restructuring to a creditor vote, but leave room to decide later which votes count and which don’t. That would require a tweak to a common clause designed to make bond negotiations simpler. Emerging-market borrowers would be worse off for it.
Argentina risks stumbling at the finish line 3 Jun 2020 The nine-time defaulter and its creditors are nearing a $65 bln restructuring deal. It might not seem fair for Argentina to give more ground, especially when it has IMF support. It can’t risk being frozen out of global capital markets, though. Playing tough could backfire.
African debt holiday choices open new divisions 20 May 2020 Kenya won’t take up a G20-backed offer to poorer nations to suspend debt repayments. That’s because private creditors may take a dim view of such a move, irrespective of what ratings agencies say. Africa’s laggards have to accept the offer and will look worse in comparison.
Debt forgiveness is, unfortunately, a bad idea 14 May 2020 Over 300 officials from around the world have urged the IMF and World Bank to cancel poor countries’ debt. But that would favor heavier borrowers, it doesn’t ask for any accountability, it could limit future lending, and it hands advantages to China. A debt standstill is safer.
Argentina’s whiz kid may flunk restructuring test 7 May 2020 Martin Guzman, the 37-year-old economy minister, is trying to get a deal with holders of over $65 bln of debt using academic theories about what's sustainable. He makes valid points but the clock is ticking before default. Pragmatism is needed – otherwise it may tick for him too.
Debt freeze for poor nations is in interest of all 30 Apr 2020 Private creditors can choose to join rich countries in giving lower-income economies a payments holiday. The G20, IMF and World Bank have sticks and carrots to encourage participation. And a temporary pause is better than a series of defaults that would disrupt emerging markets.
Guest view: Mutual debt is spectre haunting the EU 22 Apr 2020 European leaders meet on Thursday to discuss how to tackle the economic costs of the pandemic. Collective borrowing is the most contentious item on the agenda. Carlo Altomonte of Bocconi University and Fabrizio Pagani of Muzinich explain how a joint “recovery fund” might work.
Argentina overplays hand in bond pain déjà vu 20 Apr 2020 BlackRock and other creditors have come out against the serial defaulter’s plan to restructure some $66 bln in debt. New legal protections should help their cause, and a messy default could attract holdouts. But time is their biggest advantage: Argentina needs money.
Glencore mine grab would have a tiny silver lining 20 Apr 2020 Zambia may seize assets, including the commodity giant’s Mopani copper mine, to help with Chinese debt relief, the WSJ says. That would make the African state a pariah and confirm fears of debt-trap diplomacy by Beijing. At least Glencore might win some useful U.S. sympathy.
Dixon: How will pandemic debts be paid for? 20 Apr 2020 The UK introduced income tax to fund the Napoleonic Wars. America imposed it to pay for the civil war. The coronavirus pandemic is not literally a war. But it will lead to massive borrowing. Higher taxes are a better way to repay it than austerity, default or inflation.
EU virus aid is no panacea for Italy’s debt woes 17 Apr 2020 The country ravaged by Covid-19 could draw on an EU euro bailout fund to help manage the pandemic. But interest savings look small, unless the ECB also helps. Political resistance to use such funds means Rome probably won’t use the aid until it faces a bond market crisis.
Africa debt holiday may be better for bondholders 14 Apr 2020 The continent wants to delay $40 bln of external payments. Convincing the IMF and China will be easier than private creditors, who are owed half. With Covid-19 upending normal rules, though, granting relief is the right move. It will also help avoid costlier chaotic defaults.
Turkish whip-round is sloshing state money about 14 Apr 2020 Saddled with dwindling FX reserves, high inflation and a budget deficit, Turkey’s President Tayyip Erdogan is asking for aid from individuals and firms to protect society’s most vulnerable from the Covid-19 fallout. But so far the biggest contributors are stretched state banks.