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☆ Japan sees rising interest rates expanding its growing debt pile
▼ + stars: | 2023-01-24 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

The latest projections showed the budget target will be met in fiscal 2026. Rises in interest rates will test the government's ability to service the industrial world's heaviest debt burden at more than double the size of Japan's annual gross domestic product. "We see underlying interest rates to be somewhat higher, which will cause outstanding government debt to deviate upward due to the BOJ's move last month," a Cabinet Office official said. In comparison, the previous estimates issued in July showed long-term rates to stick to 0.1% in fiscal 2022-2025. The projections show that in case long-term interest rates rise by an additional 0.5 percentage-points, that would increase the government debt-to-GDP ratio by 3.3 percentage-points.

☆ Japan warns of dire finances as BOJ struggles to contain yields
▼ + stars: | 2023-01-23 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

It is not unusual for the finance minister to refer to Japan's strained finances. The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen to 32.5 trillion yen for the 2025/2026 fiscal year. "Overall JGB issuance, including rolling over bonds, remain at an extremely high level worth about 206 trillion yen. We must secure fiscal space under normal circumstances to safeguard trust in Japan and people's livelihood at a time of emergency." LABOUR REFORMPrime Minister Fumio Kishida echoed Suzuki's resolve to revive the economy and tackle fiscal reform.

☆ Japan finmin warns of severe finances as BOJ struggles to contain yields
▼ + stars: | 2023-01-23 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen ($29 billion) to 32.5 trillion yen ($251 billion) for the 2025/2026 fiscal year. "The government will strive to stably manage Japanese government bond (JGBs) issuance through close communication with the market," he said. "Overall JGB issuance, including rolling over bonds, remain at an extremely high level worth about 206 trillion yen ($1.6 trillion). We must secure fiscal space under normal circumstances to safeguard trust in Japan and people's livelihood at a time of emergency." lABOUR REFORMPrime Minister Fumio Kishida echoed Suzuki's resolve to revive the economy and tackle fiscal reform.

☆ Japan's finance minister warns of severe finances as BOJ struggles to contain yields
▼ + stars: | 2023-01-23 | by ( ) www.cnbc.com time to read: +1 min

Morning commuters in front of the Bank of Japan headquarters in Tokyo, Japan, on Jan. 16, 2023. Japan's finances are becoming increasingly precarious, Finance Minister Shunichi Suzuki warned on Monday, just as markets test whether the central bank can keep interest rates ultra-low, allowing the government to service its debt. Japan's public debt is more than double its annual economic output, by far the heaviest burden in the industrialized world. The government has been helped by near-zero bond yields, but bond investors have recently sought to break the Bank of Japan's (BOJ) 0.5% cap on the 10-year bond yield, as inflation runs at 41-year highs, double the central bank's 2% target. "Japan's public finances have increased in severity to an unprecedented degree as we have compiled supplementary budgets to respond to the coronavirus and similar issues," Suzuki said in a policy speech starting a session of parliament.

☆ European junk debt sales spring back to life as sentiment improves
▼ + stars: | 2023-01-20 | by ( Chiara Elisei | ) www.reuters.com time to read: +3 min

According to Refinitiv data, those sales so far in January add to almost $2.2 billion worth of sales in December and $760 million in November. Decades-high inflation and aggressive central bank rate hikes also weighed on debt markets with investors shunning risk assets. Firms are either selling new debt or asking investors to extend the maturity of existing debt, offering in return an increase in the interest they pay. Last week, Air France SA-KLM (AIRF.PA) sold a debut sustainability-linked bond worth one billion euros, giving the European credit market its first major high-yield deal in months. Analysts say that such firms could struggle with selling new debt and might require shareholder support to entice investors.

Spreads indicate the premium investors demand to hold corporate bonds rather than safer government debt. However, some investors expect credit spreads may widen again to reflect a recession potentially ahead. Hedge funds and some asset managers short credit, meaning they are betting on a fall in a bond's price, by buying products like credit default swaps (CDS), which rise in value if the risk of a credit default event increases. Primary markets indicate there is no lack of demand for corporate bonds. They expect credit spreads to widen in the first half of this year.

☆ 2022 was the worst-ever year for U.S. bonds. How to position your portfolio for 2023
▼ + stars: | 2023-01-07 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

Interest rates started 2022 at rock-bottom — where they'd been for the better part of the time since the Great Recession. Bond prices move opposite interest rates — as interest rates rise, bond prices fall. Duration is a measure of a bond's sensitivity to interest rates and is impacted by maturity, among other factors. We can see why long-dated bonds suffered especially big losses in 2022, given interest rates jumped by about 4 percentage points. The traditional dynamics of a 60/40 portfolio — a portfolio barometer for investors, weighted 60% to stocks and 40% to bonds — will likely return, advisors said.

☆ Credit Suisse seeing strong demand for new sterling-denominated bond
▼ + stars: | 2023-01-05 | by ( Chiara Elisei | ) www.reuters.com time to read: +1 min

Jan 5 (Reuters) - A new bond being sold by Credit Suisse on Thursday met with strong demand from investors, a lead memo seen by Reuters showed, in a positive sign for the embattled Swiss bank. The sterling-denominated bond is expected to be priced later on Thursday and follows the sale of two U.S. dollar-denominated Credit Suisse bonds on Wednesday. Credit Suisse sold a $1.25 billion two-year bond, with a 7.95% coupon and an 8.06% yield, and a $2.5 billion dollar five-year bond with a 7.50% coupon and a 7.551% yield. The high yields reflect the higher premium investors are demanding to hold Credit Suisse debt as the bank goes through a restructuring. Credit Suisse has been battered by mishaps, including a $5.5 billion loss on U.S. investment firm Archegos.

☆ Ghana again extends domestic debt exchange registration deadline
▼ + stars: | 2022-12-25 | by ( Cooper Inveen | ) www.reuters.com time to read: +2 min

REUTERS/Francis KokorokoACCRA, Dec 24 (Reuters) - Ghana has further extended the deadline to register for its domestic debt exchange to Jan. 16 in order to "secure internal approvals" from the financial sector, the Finance Ministry said in a statement late on Saturday. The ministry also announced a change to the debt exchange, with eight additional instruments to be created. Ghana announced a domestic debt exchange program earlier this month and said that external restructuring was being negotiated with creditors. The ministry had previously extended the registration deadline for the domestic debt exchange to Dec. 30, from Dec. 19 originally. The Finance Ministry said on Saturday that it expects to reach a domestic debt restructuring settlement no later than Jan. 31.

☆ Japan unveils record budget in boost to military capacity
▼ + stars: | 2022-12-23 | by ( ) www.reuters.com time to read: +2 min

[1/2] Japan's Prime Minister Fumio Kishida attends a press conference in Tokyo, Japan, on December 16, 2022, addressing some topics such as National Security Strategy, political and social issues facing Japan in today's World crisis. To fund defence spending for military facilities, warships and other vessels, the government decided to use construction bonds worth 434.3 billion yen, to be issued in fiscal 2023, in an unprecedented move. The budget got a boost from Kishida's controversial plan to double Japan' defence spending to 2% of GDP by 2027, straining Japan's already tattered finances under the weight of public debt at 2.5 times the size of its economy. In a brighter sign for the economy, the budget draft expected Japan to rake in a record tax revenue worth 69.44 trillion yen, reflecting improving corporate profits and 69.44 trillion yen to lower new bond issuance to 35.62 trillion yen. The budget assumed next fiscal year's exchange rate at 137 yen to the dollar, the weakest since 2010, in calculating fiscal 2023 budget spending for defence and diplomacy, the officials said.

The budget - endorsed by Prime Minister Fumio Kishida's cabinet on Friday - features record military and welfare spending as it confronts regional security challenges from an ever-assertive China and an unpredictable North Korea. Reuters GraphicsRECORD MILITARY, WELFARE SPENDINGThe need for more military spending comes at a time of intensifying economic challenges as the Ukraine war, soaring inflation and rising rates worldwide push the global economy to the brink of recession. For fiscal 2023, the defence spending will rise to 6.8 trillion yen, up 1.4 trillion yen from this year. The government also set aside 3.4 trillion yen to help finance its five-year defence build-up plan. On the brighter side, tax revenue is estimated at a record 69.4 trillion yen thanks in part to recovery in corporate profits, allowing the government to reduce new bond sales by 1.3 trillion yen to 35.6 trillion yen.

Tokyo aims to achieve a primary budget surplus, excluding new bond sales and debt servicing costs, by the fiscal year ending March 2026. The budget's size at 114.4 trillion yen marks a big jump from the current fiscal year's initial figures at 107.6 trillion yen. For fiscal 2023, the defence spending amounts to 6.8 trillion yen, up 1.4 trillion yen from this year. The government would also set aside 3.4 trillion yen to help finance its five-year defence build-up plan. On the brighter side, tax revenue is seen hitting a record 69.4 trillion thanks in part to recovery in corporate profits, allowing the government to reduce new bond sales by 1.3 trillion yen to 35.6 trillion yen.

The amount of new public-sector debt investors will have to absorb in 2023 will be twice as much as the previous record a decade ago, BofA notes. As early as November, the ECB's bond market contact group cited the high amount of debt private investors would have to buy as the most frequently mentioned concern. JPMorgan, the leader for euro government debt sales, expects a fall. The biggest challenge for governments will be timing, Dutch debt office head Saskia van Dun told Reuters last week. They will also have to be careful when picking maturities to issue and compensate investors enough to buy the debt, investors said.

☆ Analysis: Italy's rates clash with ECB a sign of things to come for euro zone
▼ + stars: | 2022-12-20 | by ( Francesco Canepa | ) www.reuters.com time to read: +4 min

Summary Euro zone governments offering cost-of-living subsidiesECB has warned it won't compensate for "policy errors"Clashes seen widening beyond ItalyFRANKFURT, Dec 20 (Reuters) - Attacks by Italy's new government on the European Central Bank over its plans to raise borrowing costs may be a sign of things to come for a euro zone struggling with inflation and debt. It also showed the ECB did not fear penalising the most indebted of the 19 euro zone countries, Italy among them, which tend to see their borrowing costs rise disproportionately when credit becomes more expensive. "The ECB is clearly ready to take risks with fragmentation in the euro area," Gilles Moec, chief economist at AXA Investment Managers, said. With bigger deficits to refinance and the ECB raising interest rates while also winding down its bond purchases, markets have pushed up yields across the euro zone and particularly for the weakest borrowers, such as Italy. But the ECB has been clear it won't be used to rescue countries that have made imprudent "policy errors".

Summary FY2023/24 budget likely hit record amount for 11th yearGovt to curb new JGB issuanceTax revenue seen hitting record above 69 trln yenTOKYO, Dec 20 (Reuters) - Japan will issue around 35.5 trillion yen ($258.52 billion) in new government bonds for the fiscal 2023/24 annual budget, government sources told Reuters on Tuesday, adding to the industrial world's heaviest public debt. The new borrowing is less than the 36.9 trillion yen last year, marking the second straight year of declines as authorities seek to curb borrowing costs, the sources said. Still, Japan's overall budget proposal for the 2023-24 fiscal year would likely top 114 trillion yen ($831.27 billion) extending a record amount for the 11th straight year. Several rounds of heavy stimulus have bloated fiscal spending by 1.4 times the amount of an initial budget spending plan in the past three years. That has likely made it even more difficult to achieve a primary budget balance excluding new bond sales and debt servicing costs by the fiscal year through March 2026.

TOKYO, Dec 20 (Reuters) - Japan is arranging the issue of new government bonds of around 35.5 trillion yen ($258.52 billion) for the fiscal 2023/24 annual budget, sources told Reuters on Tuesday, adding to the industrial world's heaviest public debt. Japan's budget spending plan for the fiscal year starting from April could be as high as 114 trillion yen, largely financed with bond issuance and record tax revenues, the Nikkei newspaper reported earlier on Tuesday. Japan is saddled with a debt burden of more than twice the size of its $5 trillion economy, the world's third largest. Several rounds of coronavirus stimulus spending measures have bloated fiscal spending by 1.4 times the amount of an initial budget spending plan. That has jeopardised the goal of achieving a primary budget balance excluding new bond sales and debt servicing by the fiscal year through March 2026.

☆ Avaya nears chapter 11 bankruptcy filing - WSJ
▼ + stars: | 2022-12-16 | by ( ) www.reuters.com time to read: +1 min

Dec 15 (Reuters) - IT firm Avaya Holdings Corp (AVYA.N) is reaching a chapter 11 bankruptcy filing to restructure its balance sheet, in a bid to turn around its business and move past accounting problems, the Wall Street Journal reported on Thursday. Earlier this week, it said it was in talks with its financial stakeholders regarding a comprehensive resolution to strengthen its balance sheet. Another plan, supported by holders of Avaya's unsecured bonds, proposes to restructure the company out of court, including by issuing new bonds and loans to retire some old debt, the report said. Avaya's shares have fallen nearly 97% this year, crimping its market cap to around $45 million from more than $2 billion a year ago. Reporting by Anirban Chakroborti and Eva Mathews in Bengaluru; editing by Uttaresh.VOur Standards: The Thomson Reuters Trust Principles.

The global macro, policy and political mix dynamic has never been more uncertain, and standard economic and market models based on mean reversion and historical precedence have rarely been less useful. It is against this backdrop that Saxo Bank and Standard Chartered have released their extremely-out-of-consensus 'Outrageous Predictions' and 'Market Surprises of 2023' forecasts, respectively. Given the political, economic and financial market turmoil of the past 12 months, none of these scenarios over the next 12 could be completely ruled out. chartWALL, MEET MUDLet's take a few of these predictions, starting with Standard Chartered's yuan and euro calls. Deutsche Bank's baseline 2023 economic outlook even has euro zone growth outpacing U.S. growth next year.

HONG KONG/SHANGHAI, Nov 25 (Reuters) - China's central bank will offer cheap loans to financial firms for buying bonds issued by property developers, four people with direct knowledge of the matter said, the strongest policy support yet for the crisis-hit sector. China has stepped up support in recent weeks for the property sector, a pillar accounting for a quarter of the world's second-biggest economy. As a result of the crackdown, though, property sales and prices fell, developers defaulted on bonds and suspended construction. Chinese media reported on Monday the central bank planned to provide 200 billion yuan in interest-free relending loans to commercial banks through the end of March for housing completions. Among other recent official support, China's interbank bond market regulator said this month it would widen a programme to support about 250 billion yuan ($35 billion) of debt offerings by private firms.

☆ Air France raises 300 million euros with convertible bond issue
▼ + stars: | 2022-11-16 | by ( Silvia Aloisi | ) www.reuters.com time to read: +2 min

PARIS, Nov 16 (Reuters) - Air France-KLM on Wednesday raised just over 300 million euros ($312 million) by issuing subordinated bonds convertible into stock, seeking to strengthen its capital and pay back state aid but sending its shares plummeting. Air France said in February that it was considering options for raising of up to 4 billion euros of capital, including a rights issue and quasi-equity debt issues. The bonds, which can be exchanged into existing Air France shares as well as converted into new shares, were offered through a placement to qualified investors, the airline said. Major shareholder CMA CGM, a shipping company, participated in the issue pro rata to its 9% equity stake in the company, Air France said in a statement. "The company is not aware of any subscription intention from its other main shareholders," Air France said.

☆ Air France issues bonds convertible into shares for 300 mln euros
▼ + stars: | 2022-11-16 | by ( Silvia Aloisi | ) www.reuters.com time to read: +2 min

The shares plunged 13% in early trading as the issue dilutes current shareholders in Air France if the bonds are converted into new shares unless they buy into it. Air France said in February that it was considering options for a capital raising of up to 4 billion euros, including a rights issue and quasi equity debt issues. The bonds, which can also be exchanged with existing Air France shares, will be offered through a placement to qualified investors, the airline said. Air France-KLM received 10.4 billion euros in support in 2020 when the coronavirus pandemic hit, including through direct French and Dutch state loans. "The company is not aware of any subscription intention from its other main shareholders," Air France said.

☆ Chadwick Boseman and 'Black Panther: Wakanda Forever': How the sequel makes a case for recasting
▼ + stars: | 2022-11-11 | by ( Brian Lowry | ) edition.cnn.com time to read: +4 min

Editor’s Note: The following contains spoilers about “Black Panther: Wakanda Forever.”CNN —“Black Panther: Wakanda Forever” deftly completes the difficult task of continuing the franchise without its star, Chadwick Boseman, sensitively acknowledging his death by killing off the character of King T’Challa. Writing around his absence isn’t the first time that a fantasy story has been changed to accommodate a tragic loss. The death of Carrie Fisher (right) created "an impossible question" for the producers of "Star Wars: The Rise of Skywalker." To be fair, “Wakanda Forever” does as well and probably better than should have been expected under such trying circumstances. The question might well be impossible, but the answer is right there, and rooted in screen history.

☆ Credit Suisse launches $2 bln, 11-year bond issue - source
▼ + stars: | 2022-11-09 | by ( ) www.reuters.com time to read: 1 min

LONDON, Nov 9 (Reuters) - Credit Suisse (CSGN.S) has launched a $2 billion, 11-year bond issue, a source familiar with the matter told Reuters on Wednesday. The new bond was set to be priced at a spread of 485 basis points over Treasuries, the source said, adding that the deal would be finalised later in the day. Earlier, Credit Suisse raised three billion euros from the sale of a bond due in March 2029 by its holding company. This bond had a final price at a of 495 basis points over the mid-swap level, the source said. Reporting by Chiara Elisei; Ediing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

Banks and corporations use the market to manage interest rate risks and traders depend on it as reference for pricing other assets. To make a swap, market participants turn to a dealer or bank to facilitate the deal. DRAINEDPart of the issue is a lack of bond market supply. Last week, the RBA's head of domestic markets, Jonathan Kearns, noted the swaps market dysfunction. Nor are other swap markets globally seeing similar pressures.

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