The ECB will begin something truly unprecedented on Wednesday June 8. It will start buying corporate debt in a bid to push inflation to the hallowed 2 per cent mark and boost growth with it. What’s more, it will buy this debt both in the secondary market and the primary one.
Known as the corporate sector purchase programme (CSPP), market watchers say the move could push the cost of borrowing in euros to new lows. Some even argue the programme could become the central bank’s most market disruptive intervention yet. Read more
Some interesting stuff on corporate balance sheets from SocGen’s Albert Edwards on Wednesday.
Edwards observes, for example, that corporate leverage is finally recovering after a temporary retraction:
An interesting column from Clyde Russell at Reuters (H/T John Kemp) pointing out the key problems facing miners today. They can’t get sufficient returns on capital invested, so should they even bother trying?
From Russell: Read more
On Friday morning when a report landed in FT Alphaville’s inbox with the headline “Lagging Corporate France… The French – at least their brands are popular”, our interest was piqued. It’s a one-pager from independent equity research firm AlphaValue. It contains interesting snippets about how French companies have a lot of goodwill booked on their balance sheets when compared to their European peers.
As Investopedia tells us: Read more
An interesting announcement from Eurex Repo on Tuesday (our emphasis):
Eurex Repo, Eurex Clearing and Clearstream, all part of Deutsche Boerse Group, will introduce an extension of the integrated and innovative GC Pooling market for secured funding which will be made available for active GC Pooling participants (banks) to further strengthen their service scope towards corporate customers. Launch is scheduled for Q4 2012. Read more
Treasuries have gone through the looking glass.
As we’ve discussed, it’s largely because market participants have become overly obsessed with holding safe-haven securities, demanding Treasuries and nothing else. Read more
JP Morgan’s corporate finance advisory group plays a guessing game in its new report about the eventual demise of our cheap capital environment (hat tip to the FT’s Helen Thomas):
You already know that US corporates have been saving their retained earnings as cash this year, while the IG-bond rally has been driven increasingly by companies taking advantage of the debt-equity arb.
In other words, the one thing non-financial corporates have not been doing with their cash is spending it on labour and capital. Read more
Corporate cash hoarding is still on the rise.
And here, courtesy of UBS’s global investment strategy team, is the extent to which it’s increasing among US non-financial corporates: Read more
Private placement deals – whereby companies tap investors directly for loans – are on track for one of their strongest years, highlighting the extent to which companies are seeking to diversify their funding sources away from banks, the FT reports. Companies tapped the market for $27.4bn in the first half of the year, only just shy of the $28.5bn raised in the whole of 2009, according to data from Thomson Reuters. Corporates have otherwise benefited in making issues thanks to the depressed interbank market, notes Lena Komileva in the FT.
Here’s an interesting snippet from CFO magazine, which may — or may not — explain the recent plunge in top-quality bond yields:
Over the past year, treasurers and CFOs have increasingly pursued the corporate equivalent of putting their money under the mattress: placing most of their outfit’s short-term cash in bank deposits, rather than in such things as commercial paper, Eurodollar deposits, or even treasury mutual funds or T-bills. Read more