Breakingviews

Deutsche has enough capital but not enough clarity

February 10, 2016

The German lender’s solvency is strong enough to withstand the most likely clouds on the horizon. But Deutsche Bank’s 1.4 trln euro balance sheet is opaque and stuffed with derivatives. Boss John Cryan could deliver relief by opening up on its oil and other exposures.

Argentina’s Macri puts money where his mouth is

February 8, 2016

The president offered holdout creditors a 25 pct discount on $9 bln of defaulted debt. Two agreed. Hedge fund Elliott is holding out; Argentina’s Congress and a U.S. judge must OK any deal. But a functional economy and access to global markets may finally be in reach.

Sweeter Cairn bid is Vedanta’s least bad option

January 25, 2016

Anil Agarwal’s Vedanta Resources is edging towards loan covenant limits. Bondholders are losing faith in the mining tycoon’s ability to tap buried cash and repay $8 bln of debt. The stress may force Agarwal to sweeten a deal to merge subsidiaries and simplify the group structure.

New Greek opposition leader may cause instability

By Hugo Dixon
January 11, 2016

The election of Mitsotakis, a liberal reformer, as leader of the centre-right New Democracy party means PM Tsipras now faces a credible opponent. While this is in Greece’s long-term interests, it raises the risk of short-term clashes between Athens and its euro zone creditors.

Dixon: EU enters brave new world of bank bail-ins

By Hugo Dixon
January 4, 2016

Europe has wasted too much taxpayers’ money rescuing failing lenders. So it is right to try to get investors to help foot the bill in future. But the tough new regime carries political risks which could make the rumpus caused by recent bail-ins in Italy and Portugal look minor.

Balance sheets will get more unbalanced in 2016

December 28, 2015

The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.

Glencore deserves credit for lessons learned

December 10, 2015

The Swiss miner and commodities trader will cut debt even faster than it vowed in September. Planning for copper prices below current levels is wise. Chief Executive Ivan Glasenberg can’t control China’s demand for metals, but at least his balance sheet now reflects reality.

Dixon: Turkey’s economy threatened on many fronts

By Hugo Dixon
December 7, 2015

A row with Russia, a resurgence of violence within its borders and the prospect of the Fed raising rates have coincided with President Erdogan’s increasing politicisation of the economy and bad governance. This could prove a toxic cocktail given the private sector’s high debt.

Another reckoning looms for Sharp

December 2, 2015

Lenders have bailed out the embattled Japanese electronics firm twice in the past three years. A more radical overhaul now looks likely – perhaps involving state-backed fund INCJ and affiliate Japan Display. If credit markets are right, there is little value for shareholders.

Puerto Rico debt payment marks end of fiscal rope

December 1, 2015

The cash-strapped U.S. territory scraped together $355 mln for creditors, avoiding default on its government-guaranteed debt. A $945 mln payment due on Jan. 1 will be harder to deliver. Unless Congress offers relief soon, bondholders will still face a messy restructuring.