Deutsche hybrids: from poster boy to problem child

February 9, 2016

The German lender has moved to reassure investors fretting about delayed coupons on its new AT1 securities, after CDS prices collapsed. Unlike hybrid forebears in 2008, AT1s should absorb losses. Yet instead of dampening volatility, the fear of a trigger is exacerbating it.

Activist + private equity = no M&A for Symantec

February 5, 2016

The internet security group netted $5.3 bln from selling Veritas. Pressured by Elliott, it’s now borrowing $500 mln from Silver Lake and returning all the cash to investors rather than keeping a war chest. Symantec’s questionable dealmaking record makes the straitjacket merited.

Chancellor: The illusion of debt-fuelled earnings

By Edward Chancellor
November 18, 2015

Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.

Hadas: The world would be better off without debt

By Edward Hadas
October 22, 2015

Why do governments borrow instead of just creating money? Mostly because they always have. Why do companies feel the need to take on leverage? Foolish tradition. If the financial world were designed for today’s economy, fixed-rate reimbursable debt wouldn’t be created.

Monte dei Paschi’s independence looks shaky

December 5, 2011

The foundation that controls half the ancient Italian lender's shares is struggling to pay off its debts. But Monte dei Paschi also needs yet more capital. The bank may be able to shrink its balance sheet. If it fails, it may have to find a merger partner or seek state support.

Sino-Forest’s debt games are bad for creditors

December 15, 2011

The decision not to pay $10 mln interest may push the scandal-hit Chinese timber firm towards default and a restructuring process. Bond holders are in a weak negotiating position. Most of the assets, if they really exist, are inside China, where it is hard to enforce claims.

Owners face fight to keep zombie companies

November 12, 2009

Junior bondholders in Wind Hellas are planning to challenge the restructuring of the Greek telecom operator. They face an uphill struggle to overturn a plan devised by current owner Weather Investment. But such aggressive restructurings, where shareholders keep control at the expense of junior creditors, are going to get harder.

Ford steps on gas, but congestion ahead

November 2, 2009

Ford Motor has certainly given investors plenty to cheer about: its first North American operating profit in more than four years and positive cash flow. Its credit ratings, however, remain bottom of the barrel.

Deutsche toughs out capital calls

October 29, 2009

Deutsche Bank <DBKGn.DE>, almost alone among big European
banks, has resisted the temptation to raise equity capital since the crisis began. However, given its exposure to volatile trading revenues and with a slew of acquisitions on the way, it should raise cash while it can.

One last gamble for Gala debt holders

October 23, 2009

Junior creditors are becoming increasingly activist in restructuring leveraged buyout debt. Mezzanine investors in Gala Coral are seeking to protect themselves by brokering a deal in exchange for more control. Activism may work in this case. But it does little to address the heavy refinancing burden faced by private equity-owned companies.