Valeant’s multiple organ failure puts it in ICU

March 21, 2016

The beleaguered drugmaker has found accounting improprieties. It is booting CEO Mike Pearson but ex-CFO Howard Schiller has refused to quit as a director. The board, the numbers and the strategy are fractured. Some $30 bln of debt means Valeant risks an Enron or WorldCom endgame.

Deutsche makes investors offer they should refuse

February 12, 2016

The German bank is offering to buy back 5 billion euros of bonds. A big take-up means more capital for Deutsche, but could also imply a lack of confidence in the bank’s solvency. Given the potential for bond prices to snap back, it may be better for investors to sit it out.

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

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

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

By Wei Gu
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.