June 2020

Top Stories

Loans: Crunch time for credit

Loans: Crunch time for credit

Central bank intervention has delayed the deluge of insolvency that Covid-19 lockdowns will cause, but it can only plug the dike for so long. Lenders face the grim prospect of deciding who to save and who to let go.

Private equity bets on post-Covid survivors with hybrid capital

Companies never want to sell equity at rock bottom prices, but bank lenders will often only relax covenants and hold off seizing assets if new capital comes in below them. Enter private equity managers with dry powder, snapping up big preferred stock deals to help cash-strapped issuers bolster their capital structures.

Home offices get a tech upgrade

Amid the wild price swings and surging volumes in bond and equity markets that characterized the first phase of the pandemic, traders just about coped while working from home. Even as some return to the office, technology must cope with the new ways of working.

Fintech

Coming soon to your e-wallet: central bank digital currency

Coming soon to your e-wallet: central bank digital currency

Fears that the Covid-19 virus might live on banknotes and coins has focused public attention on once esoteric experiments with central bank digital currency. The virus has also exposed the slow pace of emergency government support payments through the conventional banking system, so what once sounded futuristic may be coming soon. CBDC just got real.

Banking

Can Europe’s neobanks survive the funding shake out?

Can Europe’s neobanks survive the funding shake out?

A shift away from cash due to the Covid-19 lockdowns should be a godsend for firms such as Revolut, N26, Monzo and Starling. But venture capital funds were already getting fed up with neobanks’ growth-first strategies before the coronavirus caused a slump in core payments revenues. Those with weaker equity backing may struggle to survive.

Belt and Road Initiative

China: End of the Belt and Road?

China: End of the Belt and Road?

Mainland Chinese firms invested $72.2 billion in Africa between 2014 and 2018, much of it through the Belt and Road Initiative. Now that Covid-19 has struck, there is a growing sense of unease in Beijing over calls to write off debt to stressed African states.

China

Chinese bonds: buyer beware

Chinese bonds: buyer beware

Foreign capital is flooding into Chinese bonds, but investors would be wise to scrutinize the myriad ways by which issuers can wriggle out of meeting their obligations. China’s bond markets are vibrant and attractive, but – all too often – unruly.

In C-Reits, China sees chance to steady the ship

China has moved closer to approving its first onshore real estate investment trusts. When tax and gearing issues are overcome, the market could overtake the US to be the world’s largest, bankers say.

Latin America

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