Fitch

Brexit: All The Latest News, What Happens Next And How To Trade It

Sterling drops, banking stocks tumble and peripheral EGB and credit spreads widen after the U.K.’s vote to leave the EU; verbal and direct intervention by central banks help currencies off earlier lows. U.K. PM David Cameron has resigned, announcing there needs to be a new prime minister in place by October.

Here Is Why One Credit Rating Agency Believes Russia Is Safer Than The US

If posed with the question who has the better credit rating, the United States or Russia, most people would presumably pick the United States. However, that is not the case for Dagong Global Credit Rating Co, one of the three biggest credit rating companies in China. Here's why...

Brazilian Telecom Giant Files Largest Bankruptcy In Nation's History

Brazil’s troubled telephone company Oi SA on Monday filed the largest bankruptcy protection request in the country’s history just days after debt restructuring talks with creditors collapsed. The filing of Oi and six subsidiaries lists 65.4 billion reais ($19.26 billion) in debt.

The Problem With Corporate Debt

There are actually two problems with corporate debt. One is that there is too much of it... the other is that a lot of it appears to be going sour.

16% Of Europe's IG Corporate Bonds Now Yield Below 0%

In addition to negative yielding sovereign debt, it's now time to also look at corporate debt, because the amount of euro-denominated investment-grade corporate bonds with negative yields has tripled over the last six weeks, a move accelerated by their inclusion in the European Central Bank's quantitative easing programme. Specifically around 16%, or 440 billion euros, of the 2.8 trillion euros of these bonds now yield less than zero, up from around 5% at the start of May, according to Tradeweb data.

Fitch Cuts Japan's Credit Outlook To Negative

Following Abe's decision to delay the April 2017 increase in the consumption tax, warnings about Japan's rating (recall that Japan's consolidated debt/GDP ratio is the highest in the world at 400%) were inevitable, and moments ago Fitch was the first to come out and while "affirming" Japan's AA rating, it was the first major agency to cut its outlook from Stable to Negative. Expect the other two big agencies to do the same, followed inevitably by downgrades.

Mario Draghi Is Now Buying Junk Bonds

A few days after the ECB unexpectedly announced its CSPP, or corporate bond buying program which based on its definition was limited to investment grade, non-financial debt, we explained "Why The ECB Will Be Forced To Buy Junk Bonds", saying that "the EU corporate sector’s penchant for bond buybacks may ultimately force Draghi further down the ratings ladder lest the ECB should end up entangled tender offers or else end up without enough debt to monetize." This was confirmed on the very first day of the ECB's bond purchases.

Toyota Issues Bond At A 0.001% Coupon, Japan's Lowest Ever

Overnight a Toyota Motor unit sold yen bonds with the lowest coupon ever for a Japanese company. Toyota Finance Corp issued 20 billion yen ($186 million) of notes at a yield of 0.001%, according to a filing with the nation’s Finance Ministry. That’s the lowest coupon ever for a regular bond by a domestic company that isn’t backed by the government

Historic Milestone: Negative Yielding Debt Surpasses $10 Trillion For The First Time

The world passed a historic milestone in the past week when according to Fitch negative-yielding government debt rose above $10 trillion for the first time, which as the FT adds envelops an increasingly large part of the financial markets "after being fuelled by central bank stimulus and a voracious investor appetite for sovereign paper." It also means that almost a third of all global government debt now has a negative yield.

Mizuho CEO Warns Japan Sales Tax Delay Is "Admission Abenomics Has Failed"

Yasuhiro Sato, president of Mizuho, Japan's second-largest bank by assets, said Abe's framing of the sales tax delay would determine whether it sparked concerns about the government's credibility regarding its plans for fiscal consolidation. "The worst scenario is [the government] will just announce a delay in the tax increase.  That could send a message that Abenomics has failed or Japan is heading for a fiscal danger zone and then it will harm Japanese government bonds' credit ratings."

Monetary Lunacy: The ECB Could End Up Funding Bayer's Purchase Of Monsanto

Today we find an even more striking example of just how broken the global bond market has become thanks to the ECB because as Reuters writes, Bayer could receive financing from none other than the European Central Bank to help fund its takeover of the world's largest seed company, US-based Monsanto, according to the terms of the ECB's bond-buying program.

China Has Quietly Bailed Out Over $220 Billion In Bad Debt In The Past 2 Months

Today we learned that not only was China going through with its unprecedented debt-for-equity swap, but it has already equitized over $220 billion in non-performing loans. Note: these are not traditional, Chapter 11 prepacks where the debt is converted into equity and the debt holder gets the keys to the company. In this case, it is the Chinese government itself which indirectly via state-owned banks, has become the de facto owner of countless companies.

Frontrunning: May 17

  • As Brexit vote looms, U.S. banks review their European commitments (Reuters)
  • Oil’s Strength Continues to Boost Global Stocks (WSJ)
  • Trump closing gap with Clinton, poll shows (Hill)
  • In Adjacent Pennsylvania Counties, Republicans Are Split on Donald Trump (WSJ)
  • Make America Gold Again: Calls for Everyone's Favorite Standard Are Back (BBG)