ECB squeeze leaves room for fiscal war response 24 Mar 2022 The central bank is fighting inflation and cutting bond purchases, leaving European governments to shoulder the cost of the Ukraine war. That may add up to 4% of GDP to public debt loads inflated by the pandemic. But even with rising yields, national budgets can afford it.
Russia kicks default drama into future 17 Mar 2022 Moscow says it sent $117 mln due in bond interest payments. While sanctions made the decision painful, not paying its dues or offering roubles instead of dollars would have meant years of legal disputes and made the economy even more dependent on oil. That may still happen.
Emmanuel Macron changes stripes as election nears 15 Mar 2022 The French president’s chances of winning a second term have been boosted by his performance during the pandemic and since Russia’s attack on Ukraine. But the main plank of his platform is to “protect” the French. That’s a far cry from the bold reformer who ran five years ago.
Western curbs give Moscow rational default card 3 Mar 2022 Sanctions mean President Vladimir Putin has reason not to repay at least some of his $200 bln of debt, and less fear of the consequences. That would leave creditors stuck for years, with little hope of a recovery. Even depressed prices of Russian bonds may prove optimistic.
Viewsroom: Ukraine, ECB and India’s giant insurer 17 Feb 2022 Worries about an invasion of Ukraine have rattled markets, but Dasha Afanasieva says Russian investors are more sanguine. The European Central Bank faces a tougher inflation juggling act, argues Swaha Pattanaik. And Una Galani discusses the listing of India’s Life Insurance Corp.
ECB has central banking’s hardest juggling act 15 Feb 2022 President Christine Lagarde faces a less acute inflation problem than U.S. or UK peers. But she’ll have to raise interest rates to curb price pressures while ensuring bond yield gaps between euro zone nations don’t widen to worrying levels. The two goals may become incompatible.
Guest view: Fed hikes spell emerging-market strain 4 Feb 2022 Poorer indebted economies face growing difficulties as the U.S. Federal Reserve signals its readiness to raise interest rates. William Rhodes, former president of Citibank, and economist Stuart Mackintosh lay out what creditors, borrowers and the IMF can do to avert a crisis.
Central banks will give risky debt a helpful shock 13 Jan 2022 Benchmark bond yields are rising as rate-setters around the world scale back asset purchases. That will reduce the appeal of corporate debt, but a correction in credit markets is nothing to fear. A setback may lead to less hazardous terms for bondholders, and a rout is unlikely.
Sri Lanka debt pain will go from China to Wall St 11 Jan 2022 The poster child for Beijing’s “debt-trap diplomacy” is asking for easier repayment terms amid a worsening financial crisis. Defaulting on U.S. dollar bonds may be a better option. That would help Colombo kick a credit addiction as worrying as its growing dependence on China.
China’s next debt crisis will be municipal 10 Jan 2022 Local government investment vehicles owe $8 trillion, over half national GDP, and are big dollar bond issuers. Collapsing property sales and Omicron stress are squeezing them. Beijing may let some default; others might try to dump assets in a weak market. It could get ugly.
Central bankers’ word is no longer their bond 1 Nov 2021 The Reserve Bank of Australia has for several days stopped defending a debt yield target. Such unreliability makes asset prices jumpier. Breaking faith is especially unadvisable when high inflation means rate-setters need markets and the public to trust them more than ever.
ECB needs a louder megaphone to reach bond markets 28 Oct 2021 President Christine Lagarde said she won’t hike rates as soon as investors anticipate. But that didn’t change their expectations and euro zone debt yields rose. She will have to do a better job of convincing them if she is to avert an unwanted tightening in financing conditions.
EU cheer only partly masks green bond shortcomings 12 Oct 2021 The bloc’s debut 12 bln euro issue of debt earmarked for environmental aims was a big success and may encourage more launches. But such securities only incentivise sustainable behaviour if issuers can borrow at cheaper rates. That’s not always the case.
Zambia chips away at China’s secret debt edifice 1 Oct 2021 The African state owes Chinese lenders $6.6 bln, twice as much as previously thought. That doesn’t change its overall debt burden, just the mix of creditors. But it alters the power balance in restructuring talks. The case for borrowers to be more transparent just got stronger.
U.S. debt ceiling impasse warrants nuclear options 30 Sep 2021 If Republicans don’t agree to lift the threshold, real people will be hurt right away as the government cuts its outlays by perhaps 40%. Even a brief delay on debt payments risks a market crash. To avoid a catastrophic longer standoff, Democrats could threaten extreme steps.
Capital Calls: U.S. debt, Hollywood, Blue Prism 28 Sep 2021 Concise views on global finance: Republicans have blocked additional federal borrowing, bringing a default closer; talent agencies CAA, ICM, and Endeavor take different strategic directions; private equity group Vista seems to be getting UK software group Blue Prism cheaply.
Fed plan for U.S. default would be step into abyss 22 Sep 2021 Lawmakers are again arguing over D.C.'s credit limit. If they let debt go unpaid, the Fed would have to step in. Options proposed in the past include lending against delinquent Treasuries or even buying them. Funding a bankrupt government would break risky new political ground.
Rishi Sunak pays if BoE inflation bet goes awry 22 Sep 2021 Surging prices mean the UK finance minister has to pay more interest on outstanding debt. Blame Britain’s love of bonds tied to inflation. The bill will be even bigger if price pressures are more stubborn than the Bank of England expects, forcing hasty monetary policy tightening.
Capital Calls: Airline partnerships, Labor market 21 Sep 2021 Concise views on global finance: An alliance between American and JetBlue could fall foul of the U.S government, even though Washington could benefit from it; U.S. Bancorp’s promised savings in its deal to buy MUFG Union may be easier than usual to achieve without firing people.
UK power market deficiencies flash red at bad time 20 Sep 2021 Britain may spend hundreds of millions of pounds propping up its energy sector. Soaring prices are a global problem, but the UK has a more liberal market and fewer alternative power sources. It’s a poor look as Boris Johnson prepares to lecture others on cutting carbon emissions.