MUMBAI: India's market watchdog has started a probe into auto parts maker Castex Technologies , after investors alleged it manipulated its stock to trigger the conversion of bonds into equity, a source with direct knowledge of the matter said. Castex's stock price more than quadrupled in the three months to end-June, triggering the mandatory conversion of $130 million of bonds into company equity. The shares subsequently fell sharply. The company was not immediately available for comment on Friday.
Those who traded credit in the frothy days of 2007 will recall that virtually every piece of new paper, including LBO debt, would come to market with the skimpiest of creditor protections, i.e., "covenant lite" which to many was an indication that money was literally being thrown without any discrimination in the last epic chase for yield, just as many were preparing for the imminent market backlash. Which they got shortly thereafter.
New Greek bonds are priced at roughly 22 cents on the dollar. Simply put, the market expects yet another credit event. Yet try buying CDS protection on the new Greek bonds. You can't.
The Financial Times reports Greek yields up as CDS trading put on hold
Yields on new Greek bonds have jumped sharply in the past week amid worries over a shutdown of the market in insurance-like products used to hedge the risk of holding Athens’ debt.
Judge Rejects Bondholders' Lawsuit Over Pension DebtIn bankruptcy, the federal courts have ruled that cities can reduce pension obligations. They can, but they don't have to. In Detroit, bondholders were sacrificed to maintain police and fire pensions with minimal haircuts.
A week ago we highlight the "last bubble standing" was finally bursting, and as China's corporate bond bubble deflates rapidly, it appears investors are catching on to the contagion possibilities this may involve as one analyst warns "the cost has built up in the form of corporate credit risks and bank risks for the whole economy."
The Crowdcube Mini-Bond has been created to take the pain and cost out of raising finance for established businesses. It brings retail bonds to the online investor universe by tapping into the rapidly evolving crowdfunding audience, at the same time as enabling issuers to access finance from a crowd of registered investors, as well as their own customer base and the general public.
Investment Directions submits: Yesterday, I discussed whether the Fed was paying attention to inflation’s apparent resurgence (“Tame Inflation Just Growled – Is the Fed Listening?”). Today, let’s talk about the box the Fed is in, what its choices are and how the direction chosen would affect bondholders.