RSS feedcorporate bonds
’What happens when the risk-free rate isn’t risk free?
“Corporate finance is built on the idea that companies are more likely to go bust than governments.” Discuss.
According to the thinkers at the Economist, it is time to rethink the notion that the risk-free rate can always be used as a basis for pricing other assets:
The men who short-sold the world
Well, not quite. But shorting specialists Data Explorers did come up trumps on Monday with a report which took a global perspective on the last twelve months’ short and long positions.
According to Data Explorers,
More good news on corporate default rates
We wondered whether corporate defaults had peaked towards the end of last year after Moody’s reported the first decrease in the speculative-grade default rate since January 2008, down from 12.9 per cent in November to 12.5 per cent in December.
Corporate bonds: The rot sets in as gold shines
It’s happening… corporate bond markets are already in the grip of that “massive case of indigestion” that commentators were warning about last month. But the mounting risk aversion to sovereign debt,
And here’s the corporate contagion
A couple of weeks ago, FT Alphaville noted missing Greek corporate contagion.
This Thursday we’ve found it.
And it’s not just corporate names in Greece, but also companies in Iberia and Italy:
That Bloomberg grab is courtesy of Gary Jenkins,
Kontrast and Kompare
Preliminary guidance for Kraft’s bond seems to be out.
The below is courtesy of Marc Ostwald at Monument Securities
Just for fun, Ostwald provides details of a new Lithuanian 10-year bond:
Paying for Cadbury
Just a day after its offer for the British chocolatier was declared unconditional, Kraft is looking to refinance the £7.1bn bridge loan it took on to fund the £11.7bn cash-and-scrip bid.
The US food company is planning a “jumbo”
For corporate bonds, a week is an eternity
“Corporate markets head for indigestion”, was the headline last week for a bleak prognosis:
After the busiest start to any year for sovereign emerging-market debt, it’s corporate bond investors around the world who now seem to be heading for a massive case of indigestion,
Grεεk cοrpοrαtε cοntαgiοn
Is Greek CDS getting out of hand?
On Wednesday, the cost of insuring debt of the Hellenic Republic rose to a record 353.5bp, according to CMA DataVision. Which means the country’s CDS chart looks something like this:
Corporate markets head for indigestion
After the busiest start to any year for sovereign emerging-market debt, it’s corporate bond investors around the world who now seem to be heading for a massive case of indigestion, as ShortView noted last week.
Speculative default rates decrease, Moody’s says
Here’s something to boost Monday’s junk bond-craze.
Moody’s reports that the speculative-grade default rate has decreased for the first time since January 2008. Here’s the relevant bit from the ratings agency’s December default report.
[Modern Football Finance] Debt double-Glazering
On sale today:
Issuer: MU Finance plc.
Sec Type: Senior Secured Notes Distribution: 144A and RegS (no Reg Rights)
Amount: £500,000,000 equiv.
On sale today…
… corporate bonds from a rather unusual seller: the Bank of England.
Yes, on Friday the BoE will begin selling some of the corporate bonds it started buying back in January 2009, as part of its programme to inject liquidity into the financial system.
BA and BT’s promiscuous pensions
As the market waits with bated breath for an update on British Airways’ triennial review of its pension scheme, we note some parallels with another leviathan of UK corporate pension deficits — BT.
The telephone company released its second-quarter earnings last month,
What next for Nakheel?
Hindsight is a wonderful — and sometimes amusing — thing.
That was part of a recent web project for Emirates property-developer Nakheel — as well as the basis of a billboard campaign across Dubai.
Goldilocks still popular among fund managers, BofAML says
It’s the non-shock headline of the day perhaps; but fund managers surveyed by Bank of America Merrill Lynch continue to position themselves for the `ideal’ economic recovery scenario — one where the growth rate is neither too hot,
Booting the debt-buyback tax break
Clever clever Alliance Boots.
Having booked an exceptional gain of £106m last fiscal year by buying back £191m of its debt below par, it looks set to repeat the performance this year.
From the FT:
Asia’s booming bond markets
What did Pimco say last week?
You have to have a keen eye for the next big (bond-related) buck to keep up with the world’s largest bond fund manager, which is moving to set up an Asian bond fund just as the region is seeing a surge of activity in fixed-income markets — both in dollar-denominated and local currency debt.
Where’s the money (market funds)?
David Galland, of Casey Research, is long on conspiracy in his Pragmatic Capitalist article on money market funds.
Let’s be clear. The US Treasury has not suddenly decided to withdraw its guarantee on money market funds (MMFs) — the guarantee was due to expire on September 18,
`There’s no free lunch in credit anymore’
So say Deutsche Bank credit analysts Jim Reid and Nick Burns.
They’re looking into credit markets in a note out on Wednesday, and specifically whether the markets have normalised since the start of the credit crisis and the collapse of Lehman Brothers one year ago.
Hybrid debt attack, from Moody’s
Perhaps genuinely expected by the market this time — a Moody’s downgrade of Lloyds, RBS, Allied Irish Banks and Bank of Ireland subordinated, or hybrid, debt.
On the UK side:
London, 09 September
Adventures in hybrid debt, fixed income fund edition
So who buys banks’ hybrid, or subordinated, debt?
Fixed income funds (FIFs), for a start. And S&P’s just-released report into UK FIFs makes for an interesting illustration of what’s been going on in the sector.
Delusions, corporate credit edition
Scenario 1: The eurozone will grow by 1.5 per cent over the next year.
Scenario 2: Parts of the European corporate bond market are tear-jerkingly deluded.
The chart below shows how BBB-rated non-financial investment grade European corporate debt has gone from pricing in a depression at the end of last year to becoming “modestly overvalued”,
Attendant QE rallies, exits and the Japanese experience
Here, just for you dear readers, is a selection of analyst reaction to the Bank of England’s surprise Thursday decision to extend quantitative easing by £50bn.
The highlights are our own, throughout,
The Legal & General defaults begin
Compare and contrast the following statements:
Shareholders have exposure to 10% of total assets under management, or £28bn. The portfolio is of high quality. In the first period of 2009 there have been no defaults on our bond portfolio.
Not your average crisis in corporate credit
From Goldman Sachs.
Investors go moo
From Bloomberg:
June 29 (Bloomberg) — Investors are moving in lockstep like never before, driving up stocks, commodities and emerging markets and risking a replay of last year, when they all plunged the most since World War II.
Corporate credit bears
While rising government bond yields have been making headlines of late, especially in relation to the possibility that they could derail an economic recovery, corporate bonds — which were a bull story in early 2009 — have languished in the background.
Britain’s exploding pensions, redux
We’ve written about the relationship between corporate bonds and pensions fund a couple of times before, but now is probably a good time to revisit the issue, given that the credit team at Dresdner/Commerzbank have just published a pensions special.
Of bonds and stocks and the Weimar Republic
You’d have to be living under a bailout-sized rock not to be aware of the current debate surrounding equities vs corporate bonds.
HSBC has now thrown its hat in the ring, in a 24-page research note entitled “The triumph of the pessimists”,