Breakingviews

Trading illiquidity theories lack solid ground

June 18, 2015

Blackstone’s Steve Schwarzman is the latest financial bigwig to argue that the enforced shrinkage of banks’ activities is hurting liquidity so badly that it could fuel the next crisis. A look at how markets have changed – and how brokers actually behave – suggests otherwise.

Hope yet for creditors in China property-bond saga

May 28, 2015

Defaulting developer Kaisa has lost white-knight bidder Sunac. That leaves foreign bondholders dealing with the company’s discredited chairman. However, China’s real estate market is recovering. The Shenzhen-based company may even be able to hammer together a better deal.

Bond turmoil signals new era of return-free risk

May 15, 2015

Forget the risk-free rate - investment safe havens are in short supply. Cash can be costly. Gold is a dollar proxy. And recent gyrations in the largest debt markets have undermined the concept of risk-free returns. When this last compass fails, investors are really at sea.

Europe’s credit boom locks in mediocre returns

April 16, 2015

Investors are throwing money at European companies. Carrefour and Danone paid little over 1 pct a year to borrow for a decade; Novartis got 20-year funds at similar levels. A Breakingviews calculator shows how bond buyers’ generosity could backfire.

Actavis sale dresses up barely investment grade

March 4, 2015

The acquisitive drugmaker attracted huge demand for $21 bln of bonds one notch above junk. They yield 1.75 percentage points over U.S. Treasuries, less than Verizon’s bigger, better-rated issue did in 2013. Buyers of top-tier debt can’t help but keep looking further downward.

Rob Cox: Fragility bigger worry than volatility

October 21, 2014

Recent rollercoaster markets are a symptom of a more concerning malady. They reflect the shock accompanying recognition that widely accepted assumptions about everything from monetary policy to geopolitics, and even the state of global health, are dangerously flimsy.

Rampant market fear clarifies global divide

October 15, 2014

A slump in 10-year U.S. Treasury yields and the evaporation of this year’s stock gains augur poorly for the Fed’s bond-buying exit. Yet the domestic economy has been improving. Slowing growth elsewhere presents the bigger worry. America’s central bank can’t do much about that.

Chinese banks learn Western capital tricks

October 3, 2014

The country’s largest lenders have changed the way they measure the riskiness of their loans. That has made their capital ratios look healthier. Western lenders have long taken the same approach. Even so, it’s another reason to question Chinese banks’ balance sheets.

Bill Gross and Janus Capital made for each other

September 26, 2014

Both are formerly hot fund managers looking for a fresh start. Investors are exuberant about the possibilities of Gross recapturing some old glory under Janus, the Roman god of new beginnings. It is more likely a case of past performance not being indicative of future results.

BES bail-in leaves CDS traders struck out

August 5, 2014

Banco Espirito Santo’s bail-in meant a killing for any traders that bought the bank’s senior debt and shorted its subordinated bonds. But not all arbs will be celebrating. A technicality means those who shorted credit default swaps on BES’s junior debt have lost out.