Biography
Latest posts

- The Greek government

- One or two French banks

- The Finnish government

- Spanish banks, UK banks, hmm a few banks really

These are just some of the world-class institutions Joseph has managed to annoy with stuff he’s dug up over the years. He joined FT Alphaville way back in March 2010.

Joseph likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

He doesn’t have a finance background.

It’s 1998 all over again, all over again

It’s 1998 again in emerging markets, and it’s good:

The best parallel with recent events – major shock (this time, the UK vote), DM central bank liquidity reassurance and market surge – is, in our view, the collapse of Long-Term Capital Management (LTCM) in September 1998. In addition to a bailout for LTCM, the Fed ‘turned on a dime’ then and cut rates by 75bp in two months; risk markets took off. While MSCI GEMs fell much more before Sept. 1998 (Asia and Russian crises) than recently, EM rose by 31% in two months after LTCM and by 120% by March 2000. As usual, the USD played a role; after a four-year 34% rally to August 1998, the $ TWI fell by 11% after LTCM. The extremes will be hard to repeat, but the earlier episode confirms how liquidity is a ‘great healer’…

 Read more

Barroso, now offering lessons from nobody

This crisis originated in North America. Many of our financial sector were contaminated by… how can I put it… unorthodox practice from some sectors of the financial market. But we are not putting the blame on our partners… Frankly, we are not coming here to receive lessons in terms of democracy… we are certainly not coming here to receive lessons from nobody.

– José Manuel Barroso, then President of the European Commission, speaking at the G20 summit in Los Cabos, Mexico in 2012, at the height of the eurozone debt crisis. Read more

“The profit share finally bites hard”

Looking beyond the Article 50 kabuki, beyond the evaporation of British bank and homebuilder equity, beyond the fantasy diplomacy by one country about which shade of EEA it might decide to accept from 27 others…

A bracing thought for the broader backdrop, which you might have missed from Credit Suisse’s European credit team on Monday (emphasis ours): Read more

Banks — the Brexit reckoning

RBS: -34%
LLOYDS: -29%
BARCLAYS: -30%
HSBC: -5.1%
STANCHART: -7.8%

Prices at pixel time. A reminder of the Bank of England statement from earlier: Read more

Some sort of house of cards

Mr. Musk said it is “important that there not be some sort of house of cards that crumbles if one element of the pyramid of Tesla, SolarCity and SpaceX falters.”

He said his loans [backed by Tesla and SolarCity stock] aren’t risky to shareholders because they add up to less than 5% of his total net worth, which exceeds $10 billion. That figure doesn’t include Mr. Musk’s large stake in SpaceX, which is private. He said he could easily put up more SpaceX or Tesla shares as collateral if needed.

“The odds that a margin call cannot be addressed are almost zero,” Mr. Musk said in the interview.

Elon Musk, the corporate financier, to the WSJ in AprilRead more

A Knight Bachelor of the Realm

Would you mind not looking at me like that all the time. It’s really disturbing.

Your lady here is sort of suggesting here I should remember about a board meeting in 20-whatever it was.

 Read more

Mr Clippy the LBO machine

Microsoft has $105bn in cash. Read more

Mr Putin’s proceeds (and his bond plumbing)

When sovereign debtors issue bonds, the “use of proceeds” clause tends to be mere boilerplate.

“General budgetary purposes” usually covers it — although bondholders (those who bother to read the contract) will sometimes just have to hope that means something like servicing existing debts, rather than servicing the president’s daughter’s limo.

Similarly, the “general corporate purposes” line in a state enterprise’s government-guaranteed debt will usually be taken to mean just that, and not something worryingly niche, like arming a small navy. (It happens.)

They’re sovereigns. You’re not supposed to be too insistent about what they do with the money.

Times have changed though. Or at least they have for Russia. Read more

The Prince, the Firm, and the Fund

Because if his Royal Highness the prince wants the world’s largest sovereign wealth fund — then who’s to say no?

As for the Arab and Islamic depth, we have the Qiblah of Muslims. We have Medina. We have a very rich Islamic heritage.

We have great Arab depth. The Arabian Peninsula forms the basis of Arabism. The kingdom constitutes a large part of it. That issue has not been exploited in full.

We have a pioneer investment power at the level of the world. Today, you see that many statements are being made, including statements indicating that the Saudi Sovereign Fund will be the largest fund in the world by far, compared to the other funds.

That will be the main engine for the whole world and not only the region. There will be no investment, movement or development in any region of the world without the vote of the Saudi Sovereign Fund.

 Read more

The clause that wouldn’t die

You won’t find a certain Latin phrase anywhere on it. Still, just for the record, here’s evidence that Argentina did learn at least one thing from the pari passu saga.

Presenting the new pari passu clause, from the prospectus for the gargantuan $16.5bn bond which Argentina is issuing to pay off holdouts and place that saga behind it: Read more

A Mozambican bond offer so good, it’s bad

What’s the biggest coupon you can get lending US dollars to an African government south of the Sahara these days?

Ghana’s bond due 2030 of course. It will pay 10.75 per cent starting from its first coupon date next month.

And what will investors get for agreeing to swap Mozambique’s government-guaranteed tuna debt for its own sovereign paper? Read more

So long, and thanks for all the tuna bonds

When Zambia issued its first international bond, in 2012, investors could knock themselves out reading a 106-page prospectus of disclosure regarding the southern African sovereign’s finances.

 Read more

It’s been emotional

It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E. Singer, is now well on its way to being resolved…

Daniel Pollack, Special Master in the pari passu deal negotiations

Could it be? Is it over? Read more

The CoCo that popped

Let’s go back in time — to May 2014. Deutsche Bank was in the market to raise capital, including at least €1.5bn of additional Tier 1 capital securities. Or CoCo (short for contingent convertible) bonds. Read more

Lay off Tim Geithner, yeah?

For a writer about skin in the game, here’s someone who seems not to like Tim Geithner putting more of his skin in the game of private equity investing.

— NassimNicholasTaleb (@nntaleb) February 8, 2016

 Read more

Pari passu: the force awakens

After a long hiatus, a convoluted saga gets a new cast of characters.

Although has the basic plot changed very much? Read more

A history of leverage and the mining industry, 2010-2015

Or, in chart form via Investec… Read more

Nyet

All those San Francisco meetings paid off.

Franklin Templeton and other private creditors will agree to swallow a writedown on their Ukrainian bonds. Cutting a fifth off bond principal, it’s much less than many expected. Bond prices were rallying hard at pixel time.

Then there is the issue of Moscow. Since Russia’s said no about restructuring its own Ukrainian bond. Read more

DIY private equity

Or, a coda to our recent post on hacking the world’s most expensive asset class.

If investors locking up their money in leveraged buyout funds really could have gotten the same aggregate return all along simply by buying the right, leveraged stocks in the public market — then there’s an interesting implication.

Why isn’t everyone already doing it? Read more

Someone didn’t read Santiago Principle No. 14…

That would be the Santiago Principles signed up to by sovereign wealth funds in 2008, regarding good governance — including via-a-vis the custodians of SWFs’ often-plentiful assets.

While it was BNY Mellon who paid nearly $15m on Tuesday to settle SEC charges that it handed out internships to the family of a SWF client’s official, in order to retain the fund’s business… Read more

How does that bail-in instrument work again?

Following the results of the Asset Quality Review and Stress Tests before the end of the year, the bail in instrument will apply for senior debt bondholders whereas bail in of depositors is excluded.

Eurogroup statement on Greece, August 14th

Which ‘instrument’ might that be for wiping the senior bonds of under-capitalised Greek banks? Read more

Google “super excited” to discover segment reporting

In segment 1 of ‘Alphabet, Inc.’: Boring things that make money

In segment 2: Eternal life, meatbagless cars, talking thermostats Read more

Just another sovereign default

Another sovereign issuer started defaulting on its debt on Monday — treading a path well-worn by governments who run out of money.

This is Puerto Rico and the US muni market however, so the actual statement from its Government Development Bank, on missing a Public Finance Corporation bond payment, might make it appear as if things are different this time: Read more

No really, here’s how we’d restructure Greece’s debt, by the IMF

Here is another very strange, and short, document. Click to read.

It’s an update to the Greek debt sustainability analysis by IMF staff — yes one of those analyses again — which was originally published just before Greece’s July 5th referendum. Read more

Swift conclusion

Deep down in Tuesday’s nuclear agreement between Iran and six great powers… (emphasis ours) Read more

Let’s talk about… the 1953 London Agreement on German External Debts

At length. Because haven’t you heard?

Germany is a hypocritical creditor.

It won’t give Greece the debt relief which it received itself in the 1950s.

Thomas Piketty said it. So it must be true: Read more

How we would have restructured Greece’s debt, by the IMF

Here is an earnest, but very strange, document. Click to read.

It’s a Greek debt sustainability analysis by IMF staff. Yes, one of those analyses. A preliminary one, but in many ways the DSA to end all DSAs. Read more

Defaulting on the IMF: a stupid idea whose time had come

This belief — that an implicit official sector guarantee has quietly settled over every sovereign debt instrument issued by every geopolitically significant country on the planet — is a fallacy. The moral hazard implications of allowing this idea to prosper are staggering. More importantly, the official sector lacks the resources to make good on such an implicit guarantee, even if it wanted to do so.

– Lee Buchheit, ‘Sovereign fragility’, 2014

Coming home to roost now though, isn’t it? Read more

“The Governing Council stands ready to reconsider its decision”

The decision being to keep emergency liquidity to Greek banks going at its level last week. From the ECB’s Sunday statementRead more

“The Eurogroup has been open until the very last moment…”

After that late-night announcement in Athens of a July 5th referendum, the response on Saturday…

In one sense, Greece’s full membership of the euro is, quite literally, already being consigned to the footnotes of history.