Leasing out mutuality

Sale and leaseback transactions represent an expensive addiction the cost of which does not appear, even now, to be fully appreciated by the Board.

– Lord Myners, update on review into the Co-operative Group Read more

Leaving Las Bambas

We take an unseemly level of interest in Peruvian copper mine projects on FT Alphaville. It’s a side-effect of writing for Lex.

But then so too has a consortium of highly strategic Chinese resources investors (Minmetals, Guoxin International Investment, Citic)…

They’ve bought Glencore Xstrata’s stake in Las Bambas, a very big Peruvian copper asset, for $5.8bn cash, according to a release from Baar, Switzerland on Sunday: Read more

That new Greek bond — the terms

Coupon not fixed yet. But note a) that they’ve hired lots of banks to sell this and b) the law… Read more

Credit ratings are weird, Crimea edition

Ho ho Standard & Poor’s, very clever, but we saw right through your April Fool’s joke.

First, the parody of lifeless regulatory jargon here is just a little too carried away: Read more

ECB credibility

Ebbing, one month at a time. (Via Eurostat’s March flash estimate)

This is nuts, oh and by the way Mark Zuckerberg is Lex Luthor

Virtual reality is more Mister Mxyzptlk’s department, and $2bn is not quite This is nuts territory.

But can you feel the LexCorp-style corporate governance, and ambition, here? Read more

Pari passu, plus ça change

Ah, spring: a season of renewal. The scent of flowers carried on a gentle breeze.

And the international financial community can go back to arguing all over again about whether a promise which Argentina made in a bond issued twenty years ago – to treat creditors equally – will end up making sovereign debt restructuring harder to achieve. Read more

“TIMCHENKO, Gennady… Geneva, Switzerland” (UPDATED)

There’s a familiar name on the latest Specially Designated Nationals List in the US sanctions against Russia…

TIMCHENKO, Gennady (a.k.a. TIMCHENKO, Gennadiy Nikolayevich; a.k.a. TIMCHENKO, Gennady Nikolayevich; a.k.a. TIMTCHENKO, Guennadi), Geneva, Switzerland; DOB 09 Nov 1952; POB Leninakan, Armenia; alt. POB Gyumri, Armenia; nationality Finland; alt. nationality Russia; alt. nationality Armenia (individual) [UKRAINE2]… Read more

In Putin’s Russia, risk prices you

Or, why investors might be less than sanguine about sanctions against Russia.

We could start with the OFZs.

 Read more

When will I Cu again

Deutsche: yes, copper financing in China is big.

How big? Try a tenth of all short-term FX loans — and 750,000 or so tonnes of metal in Shanghai bonded warehouses alone — big.

But then, they think it will mostly stay profitable… Read more

Oh look, another RBS risk factor

Spotted deep in the bank’s 2013 results. “We will be a more UK focused bank…” — you can say that again. Read more

“As with any new industry, there are certain bad actors…”

Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading.

Banks or Bitcoin operators? Click here to find outRead more

So long, Ukraine $1,984,838,000 5.00 per cent Notes due 2015

Notwithstanding the approval and publication by the Central Bank of Ireland of the prospectus dated 17 February 2014 in relation to the undermentioned proposed issue of securities, the Issuer hereby confirms that no such securities will be issued.


The data keiretsu

OK, headline inflation and the god complex notwithstanding…

We’re open to the idea Whatsapp is worth almost $40 a user. Really. You know, something like:

  1. 450m active users, emphasis on active, many of whom are outside the US (and messaging across borders).
  2. Rare is the service that lets Android phones talk to iPhones easily, incidentally, or has non eye-stabby group messaging. “Network externalities” as the oleaginous VCs put it in Palo Alto.
  3. It’s price to users not earnings. Assume first that service will earn $5 or so over from each user, over a typical lifetime of using Whatsapp on current $1 a year pricing. Double or triple the pricing and the return looks better. Throw (oh, we dunno) mobile payments and better still. Now, quite plausibly, throw in 2bn, not 450m, users.
  4. So sure it’s a momentum trade. And sure, valuation is nuts, but Facebook is mostly paying in its shares, and Facebook shareholders made that valuation nuts. The basic trick here is not new: accrete earnings (users) with stock. Bluntly, Mark Zuckerberg has Lex Luthor-level ambitions — Facebook having LexCorp-level corporate governance. So come along for the ride.

Okey-dokey. But we’re still far from sure we get to more than $40 a user back.

And, all that said — who told China? (Or Korea, or Japan)

Chart via Nomura. And so to the keiretsu effect. Read more

This is (beyond) nuts. When’s the crash?

in exchange for an aggregate of 183,865,778 shares of Parent’s Class A common stock (valued at $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share (“Specified Price”)) and $4 billion in cash… In addition, upon Closing, Parent will grant 45,966,444 restricted stock units to WhatsApp employees (valued at $3 billion based on the Specified Price). Read more

Ukraine $1,984,838,000 5.00 per cent Notes due 2015 — and the burning tyres therein

Moscow doesn’t send tanks into revolting former vassals any more. It sends dollars.

For anyone who decides to follow the money when it comes to Ukraine’s split between the EU and Russia, the consequences can sometimes be grimly surreal when it gets to the prosaic matters of bond finance. Read more

The €1,000,000,000,000 question

Just how much would tickets go for at a German Constitutional Court hearing into any future quantitative easing programme by eurozone central banks… if a €1tn programme could easily buy a fifth of German bonds in a year?

 Read more

How Scotland really lost sterling union

This post is just to flesh out a point in this great piece by John McDermott — so read that first.

But we think it’s an important point. An alternative title for this post: What’s under your gilt?

After all, it is the debt that has enabled Her Majesty’s government to turn so breezily confident that currency union with an independent Scotland “is not going to happen”, fully seven months before an independence referendum. Read more

Turkey hikes, aggressively




The overnight lending rate had been 7.75 per cent, the borrowing rate was 3.5 per cent and the repo rate 4.5 per cent. So — just a tad aggressive… Read more

What’s a chengyu for ‘subprime is contained’?

There is a nice chengyu in the latest note from Bin Gao, BofAML’s China rates strategist: 居安思危, ‘be prepared’.

Oh yes, and the note also compares this week’s rescue of Credit Equals Gold No.1 to a Bear Stearns moment for China. Read more

Argentina exposure du jour [updated]

Typical — you take off as the risk on Spanish bonds fades… only to get sold off as Argentina implodesRead more

The Greater Chinese offshore habit

It’s not just princelings.

New Pride
Coral Spring
Best Future
Double Reach
Corporate Hero [hmm]
Prime Sunlight

Those are the six British Virgin Islands holding companies attached to the three nightclubs being listed in Hong Kong this week. Read more


Inflation had returned to the 2% target… and cost pressures were subdued. Members therefore saw no immediate need to raise Bank Rate even if the 7% unemployment threshold were to be reached in the near future. Moreover, it was likely that the headwinds to growth associated with the aftermath of the financial crisis would persist for some time yet and that inflationary pressures would remain contained…

Someone tell cable? Read more

Peugeot et le patriotisme

L’Etat intervient de multiples manières: il organise la résistance économique lorsque que nous avons des défaillances d’entreprises; il remet de l’ordre dans le désordre…

– Arnaud Montebourg, French minister for industry

OK… Now how does the Peugeot share sale actually work? Read more

Selling StanChart… to Australia

The share price is down a fifth in 12 months. It’s cheaper than Lloyds (on price to tangible book), as a bank with Asia supposedly at its feet. The boardroom is a mess and last week’s “reorganisation” may not fend off an eventual cash call.

Still, after that excellent year for Standard Chartered — Citi’s analysts suggest it’s time for ANZ to buy it: Read more

How to translate “QE” into German

First, rewrite history (as Aufhebung). Read more

Eurozone sovereign convergence redux?

Just to put an already-huge year-end move in Portuguese bond yields into some wider context…

Here’s a chart (via Reuters) of the five-year yield since August 2010 — to which levels it’s now, roughly, returned. Click to enlarge.

 Read more

London and those foreign buyers, datapoint du jour

UK home-builders trying to move ahead of the political wind on foreign investors buying up London property?

In any case, though we missed this on Wednesday it seems part of the Zeitgeist — eleven of them agreed not to sell UK (read: London) new-builds abroad before they go on the domestic market from next year: Read more

The PBOC, Bitcoin, and Chinese aunties

Some are betting that Beijing will eventually endorse Bitcoin. This week Lightspeed Venture Partners of San Francisco and a China-based sister fund announced a $5m investment in BTCChina…

Financial Times, November 22


The People’s Bank of China even did a Q&A on Thursday to explain why it’s more or less forbidden the Chinese financial system from dabbling in Bitcoin… Read more

Dear Dromeus Capital investor…

One-year total return of the Athens stock index, to the end of October 2013: +50%

One-year return of the Bloomberg Greece Sovereign Bond Index, same period: +134%

One-year net return of Dromeus Capital’s Greek Advantage Fund: +107%

Yep — FT Alphaville hears that the first-year performance of Dromeus Capital’s Greece-focused fund would make it one of 2013′s best-performing, having already made a strong start at the beginning of the year.

It’s another indicator of how much both Greek equities, and the sovereign’s restructured debt, have recovered this year… Read more