5 February 2019 FT — Articles to Read

5 February 2019


Question: What percentage of senior citizens are forced into taking social security sooner than planned according to Voya Financial?


Year of the pig – Pg. 1

–        Chinese begin lunar holiday


Gross bows out as investors take flight from former ‘bond king’ – Pg. 1

–        ….managed nearly $300bn at his peak and co-founded bond-investing powerhouse Pimco

–        Mr Gross, 74, is quitting Janus Henderson, the asset manager he joined four years ago after an acrimonious split with Pimco.  The fund he managed fell below $1bn this year following poor performance and client withdrawals.  He will instead focus on his personal assets and $390m charitable foundation

–        In 2016, he warned that the unprecedented bond-buying programmes pursued by central banks after the financial crisis had created a “supernova that will explode one day”

–        Aggressive reduction in benchmark interest rates below zero, combined with quantitative easing and investors’ ravenous appetite for bonds, resulted in yields on more than $10tn of sovereign debt sinking into negative territory


Name and shame…Chinese app exposes debtor living next door – Pg. 4

–        The “deadbeat map” app with WeChat, China’s popular social media service, claims it can reveal all bad debtors residing within 500 metres of the phone.  It was launched just before the Lunar New Year holiday, when people are supposed to have discharged debts to begin the year with a clean slate

–        The app will name and shame people who have not paid up…

–        For now, the app works only for claims recognized by the Hebei court

–        (Prof Note: This, if omnipresent, will have drastic consequences.  I remember when I first became a CFO.  As payroll fell underneath me I knew everyone that had court-ordered payments for child and/or spousal support.  My initial, uninformed, reaction was, “these people are deadbeats!”  While I later understood that, yes they could be “deadbeats”, the separation could have been so acrimonious that this was the solution by the parties and may not have resulted from an unwillingness to pay by the employee.  My point, the existence of debt without ALL information is just that, i.e. the existence of debt.  Best to keep opinions quiet as ALL information is rarely known.)


Notice of Class Action Settlement – Pg. 5

–        If you transacted in Euribor Products between June 1, 2005 and March 31, 2011, inclusive (“Class Period”), then your rights will be affected and you may be entitled to a benefit (Prof Note: Worth reading the page)


Non-bank lending surge stirs painful subprime memories – Pg. 19

–        There is no clear definition for so-called private debt, which is often also called direct lending or mid-market lending.  It broadly consists of bespoke loans made by specialized lenders such as fund managers, insurers and tax-advantaged vehicles known as “business development companies”

–        Unlike leveraged loans, private debt is tyupically not widely traded, and unlike bonds, the market is largely unregulated and opaque

–        The US market has swelled from about $300bn in 2010 to about $700bn by the end of last year

–        Demand has two drivers: the falling returns on offer from more mainstream parts of the debt market, and the desire to diversify into new assets classes that are – in theory, at least – less correlated to the undulations of stocks and bonds

–        KKR estimates that the average private debt yield has fallen 6-8%, down from the low teens a few years ago


Answer: 60%