February 23, 2012 – 8:18 am
As a part of its restructuring of debt, the Greek government has decided to issue GDP-linked securities: Each participating holder will also receive detachable GDP-linked Securities of the Republic with a notional amount equal to the face amount of the New Bonds of the Republic issued to that participating holder. The GDP-linked Securities will provide [...]
January 20, 2012 – 10:03 am
After arduous negotiations and risking approaching a dangerous zone, last week, Yell, the publisher of the yellow pages, reached an agreement to buy back £159.5m in debt. The company has seen continued decline in print revenue from competition of internet search engines. Struggling under a £2.6bn debt burden, it became clear last year that the [...]
November 23, 2011 – 8:47 am
Earlier this month, Dynegy filed for bankruptcy. Well, not the entire company, just one part of it. The bankruptcy seems to have been written on the wall after failed attempts to sell the entire company. The old management, external auditors and rating agency Moody’s all declared that Dynegy, saddled with debt and facing declining cash [...]
October 18, 2011 – 1:39 pm
Brokers dealers and investment banks get a substantial amount of their funding from the repo market. In a typical repo, party #1 (the borrower) gets funds from selling securities to party #2 (the lender); when the repo matures the transaction is reversed: party #1 repurchases the securities by paying party #2 the initial funds plus [...]
October 14, 2011 – 7:33 am
Something about yesterday’s earnings announcement by JPMorgan has folks rattled: Third-quarter results included the following significant items:$1.9 billion pretax ($0.29 per share after-tax) benefit from debit valuation adjustment (“DVA”) gains in the Investment Bank, resulting from widening of the Firm’s credit spreads… The market is pricing JPMorgan’s outstanding debt with higher spreads, i.e., at a [...]
In the upcoming years, European telecoms need to issue an average of €30 billion in bonds. But financial market instability suggests that even highly credit-worthy companies may have trouble gaining access to funds. Liquidity risk management once again became a pillar of corporate financial policy following the Lehman collapse in 2008. It involves a continuous [...]
At a recent TMT conference I attended, a speaker from Moody’s characterized the target capital structure of investment-grade Telecom operators as a Net Debt-to-Ebitda ratio of between 2.0x and 3.0x.[1] To remain within the target interval, firms need to balance their investments and payout policies with cash available from operations. A ratio above 3.0x negatively [...]
January 15, 2011 – 11:53 am
A new academic research paper by Campello, Lin, Ma and Zou takes a stab at documenting the impact of corporate hedging on the terms at which the company can borrow money in the syndicated loan market. (older version available here for free) For the last two decades, syndicated loans have been the largest source of [...]
