PPCC: Pisitófilos Creditófagos. Primavera 2024

[Derby]

https://www.ft.com/content/318ff981-d189-4bd6-b608-a9709097eedc

Declining fertility rates will transform global economy, report says

The proportion of births in low-income countries projected to nearly double to 35 per cent by 2100

Falling fertility rates in most countries over the next quarter century will drive a global demographic shift that will have a far-reaching social and economic impact, according to a new study.

Three-quarters of nations are projected to fall below population replacement birth rates by 2050, leaving growth concentrated in a minority of low-income states in sub-Saharan Africa and Asia that face acute threats from resource shortages and climate change.

The research published in The Lancet medical journal on Wednesday highlights the ever-sharper divide between the countries still powering population growth and those where birth numbers are dwindling.

“We are facing staggering social change through the 21st century,” said Stein Emil Vollset, the paper’s senior author and a professor at the Institute for Health Metrics and Evaluation. “The world will be simultaneously tackling a ‘baby boom’ in some countries and a ‘baby bust’ in others.”

The study of 204 countries and territories forecasts 76 per cent will dip below population replacement rates by 2050 — a number that will rise to 97 per cent by 2100. The proportion of live births in low-income countries is projected to all but double from 18 per cent in 2021 to 35 per cent by the end of the century. Sub-Saharan African countries are forecast to account for half of global births by 2100.

“The implications are immense,” said Natalia Bhattacharjee, co-lead author of the study and lead research scientist at IHME. “These future trends in fertility rates and live births will completely reconfigure the global economy and the international balance of power — and will necessitate reorganising societies.

(...)Governments need to accept and plan for the reality that women should be able to have the number of children they want and be supported accordingly, said Sarah Harper, a professor of gerontology at Oxford university.

That required “joined-up thinking” in areas such as migration policy, and consideration of how smaller populations could have the beneficial effect of easing pressure on land, housing, biodiversity and the climate, she added.

“We live on a finite planet, and falling populations — while novel historically — have many advantages for the 21st century, albeit requiring new economic models,” Harper said.

[Derby]

https://www.ft.com/content/620e5f54-493c-413d-a46c-f1fb0c4a4149

Accenture cuts revenue forecast in signal of slower consulting market

New York-listed group points to ‘uncertain macro environment’

Accenture has cut its annual revenue forecast in the latest sign that the once booming consulting market is slowing.

Pointing to an “uncertain macro environment”, the New York-listed group said on Thursday that its full-year revenues would grow between 1 and 3 per cent, below an earlier prediction of 2 to 5 per cent, underlining the challenges facing the consulting sector.

Professional services firms are having to contend with slowing demand from clients and rising costs amid a tougher economic environment, as a combination of higher interest rates and geopolitical uncertainty prompt companies to spend less on consultants.(...)

[Derby]

https://www.bloomberg.com/news/articles/2024-03-21/greece-ups-golden-visa-investment-sum-amid-house-market-pressure

Greece Ups Golden Visa Investment Sum Amid Housing Pressure

Investors need to invest as much as €800,000 in popular areas
Investment amount needed rises to €400,000 in rest of country

The Greek government plans to increase the minimum amount that potential foreign property buyers must pay to secure a Golden Visa, citing pressure on the country’s house purchase and rental market.

Investors will now need to invest a minimum of €800,000 ($873,280) in popular areas such as the capital Athens, the second-largest city Thessaloniki, Mykonos and Santorini and other islands with a population of above 3,100 inhabitants, according to a statement from the Finance Ministry.(...)

[Derby]

https://www.aol.com/looming-office-real-estate-crash-160047340.html

The looming office-real-estate crash will be worse than the Global Financial Crisis decline, Fitch says

*The decline of office values could match or exceed 2008-era depreciation, Fitch Ratings said.

*If office real estate were to recover, it would be a more protracted rebound.

*The delinquency rate of mortgage-backed securities backed by office loans will more than double this year.

The plunge in US office values could match or exceed 2008's real estate fallout, as prices have yet to bottom out, Fitch Ratings wrote in a note on Wednesday.

Office values have dropped an estimated 35% so far this cycle. While that's still above the 47% plunge witnessed during the Great Financial Crisis, the latest situation offers no reason to expect the descent to slow.

"In contrast, property values had recovered to roughly 80% of their pre-crisis peak in this same timeframe following the GFC, having regained approximately half of their value declines," the ratings agency wrote.

Instead, current values are near a four-year low, and Fitch expects any future recovery to be more protracted than what followed the 2008 crash. Extending the timeline is the endurance of remote work trends, bleak refinancing conditions, and significantly higher interest rates.

According to Goldman Sachs estimates from late 2023, the share of US workers still working from home is in the range of 20%-25%, significantly slashing the need for office space.

These factors could permanently diminish property valuations and spark higher-than-expected losses on commercial mortgage-backed securities backed by loans on office properties.

Fitch expects the CMBS delinquency rate to jump above the post-GFC peak. This year, the rate will jump from February's 3.6% to 8.1%, the agency said, before hitting 9.9% in 2025.

"CMBS defaulted conduit office loans has increased since 2020, stretching beyond four years in 2022 compared to the pre-pandemic average of approximately 2.5 years between 2009 and 2019, indicating property liquidations and the realization of losses for office loans currently in default could play out through 2028 and beyond," Fitch said.

Office sector challenges are part of broader distress in the commercial real estate space. Prices are facing their steepest drop-off in the last-half century, the IMF warned in January, as higher borrowing costs erode the availability of financing to the sector.

Falling values and more expensive borrowing costs have caused many property owners to negotiate extensions of their loans past their original maturity date. But this may only be delaying an eventual crash, analysts have warned, with a $2.2 trillion wave of commercial real-estate debt set to mature in 2027. Goldman Sachs wrote this week that the trend of extending and modifying commercial mortgages can't continue much longer.

Meanwhile, delinquent loans are already making up a larger portion of collateralized loan obligations, an investment product that groups riskier commercial real-estate debt. CLO distress rocketed 440% higher in the 12 months ahead of January.

https://www.fitchratings.com/research/structured-finance/us-office-cre-values-yet-to-trough-recovery-will-be-protracted-20-03-2024

[conejo]

Última hora…

https://theobjective.com/espana/tribunales/2024-03-21/cgpj-amnistia-inconstitucional-igualdad/

[Derby]

https://www.ft.com/content/a532c1ca-2016-474f-87af-360e74bae2f5

Iberdrola shrugs off potential Trump presidency as it shifts billions to US

Europe’s largest power utility plans to commit €14bn of investment package to country in next 3 years

Iberdrola will direct the biggest portion of a €41bn investment plan to the US, shrugging off the impact of a possible Donald Trump presidency on America’s flagship green energy policy.

Europe’s largest electricity company by market value said it would commit 34 per cent of that total to the US over the next three years, with the next biggest portion going to the UK, which will receive 24 per cent, or nearly €10bn.(...)

[Currobena]

[Alguien tiene que ser culpabilizado del disgusto que el Capital le va dar al propietariado. ¿Quiénes? LAS CUATRO HESPÉRIDES, guardianas del jardín de Occidente —cuando lo más occidental era Dakar— frente a la selva oriental:
— MACRON 
— TRUMP
— MILEI
— AYUSO
Cada hespéride, asociada a un lucero. El de Ayuso, el del alba, maza de cabeza esférica con púas, planeta Venus, lucífero, que canta las mañanas.]

O sea que la previsión es que Trump gane las elecciones en noviembre.

Se tiene que comer el marrón que viene.

[Derby]

https://www.ft.com/content/12e0c608-25c2-41b3-829a-c4e85d9b54fa

It’s time to be honest about America’s commercial real estate hangover

The ‘pretend and extend’ tactics playing out in the sector need to end

That doughty — somewhat dull — Canadian insurance company known as Manulife does not often attract attention. This week, however, it caused a frisson in the real estate world.

Shortly before Jay Powell, Federal Reserve chair, announced that the central bank was keeping benchmark rates at 5.25 per cent to 5.5 per cent, Colin Simpson, Manulife’s chief financial officer, revealed that the group had written down the value of its US office investments by 40 per cent from a pre-Covid peak.

“I like to think our property portfolio is of reasonably high quality and quite resilient,” Simpson told Bloomberg. “But the structural forces of higher interest rates and trends around return-to-office make it a difficult market.” In plain English: working from home has hurt.

At first glance, that looks scary; 40 per cent is a big number. But in reality investors should celebrate. One bit of good(ish) news is that Manulife has relatively deep pockets, and thus can absorb this blow. The second, more important, point is that Manulife’s move shows that some players are finally getting more honest about America’s commercial real estate pain.

This is welcome — and belated. For as hopes of US rate cuts have intensified in recent months, CRE has tumbled into a debilitating pattern of “extend and pretend”: lenders have essentially rolled over troubled loans, hoping for a miraculous future Fed rescue.

However, Wednesday’s Fed meeting underscored a key point: Powell’s priority now is not to protect CRE, but to keep inflation under control at a time when consumer activity remains surprisingly lively and inflation is moving sideways around 3 per cent. Thus the trillion-dollar question is how many other players will now follow Manulife’s lead — and finally address one of the biggest hangovers from the past decade’s cheap money party?

The answer matters because the financial system is currently beset by a tottering pile of cheap CRE loans. Research from Newmark last year suggests over half of this emanated from banks; regional banks were particularly frenetic lenders when the Fed made money almost free during Covid-19.

However, funding has also come from private lenders and the commercial mortgage-backed securities sector, often bundled into collateralised loan obligations.

Since Covid, however, CRE values have fallen by 33 per cent on average, and as much as 60 per cent in some places, primarily for office buildings, according to Goldman Sachs. And while demand for high quality properties remains high, the outlook for low quality buildings is grim.

Flashes of pain are appearing in capital markets: this week it emerged that delinquencies were surging on CLOs. Some banks are stressed too: the New York Community Bank was recently forced into an emergency $1bn capital raise due to CRE losses, and this week the Klaros Group warned that more than 250 small banks out of the 4,500 existing banks in the US were also vulnerable.

But what is striking is not that some flashpoints have emerged, but how little pain has been crystallised so far. That is partly because capital market lenders are rolling over bad loans: Newmark recently told clients that “out of an estimated $163bn in 2023 CMBS maturities (based on original maturity date), $83.3bn remain outstanding” — ie borrowers have exercised “extension options”.

However banks are displaying forbearance too: Goldman Sachs estimates that $270bn of commercial mortgages which were supposed to mature in 2023 have been extended into 2024. As a result, a record high pile of cheap loans are supposedly due to mature this year. Newmark estimates that there is now around $1.3tn of troubled CRE debt, of which $670bn matures in the next two years.

Around a third of this debt pile was originated when rates were rock-bottom in the pandemic, it adds. Thus even if the Fed cut rates this summer, as Powell indicated on Wednesday, these borrowers face a refinancing shock: the Fed governors’ median projection is that rates “will be 4.6 per cent at the end of this year, 3.9 per cent at the end of 2025, and 3.1 per cent at the end of 2026”.

So what will happen next? A repeat of 2008 seems unlikely: the overall banking system is fairly well capitalised and since last year’s collapse of Silicon Valley Bank, the Fed has scrambled to create systems to contain contagion. Thus while the 2008 shock was about lender and borrower pain, today’s crunch is primarily about the creditors.

But the problem is that as long as these “pretend and extend” tactics are playing out, uncertainty will haunt the property sector, threatening to undermine American growth. What needs to happen now, in other words, is not just for lenders to become more transparent about their losses and write them down — as Manulife did — but distressed properties to start trading too. Only then can the pandemic-era excesses be resolved, either by tearing unwanted buildings down or repurposing them.

In that sense, then, the fact that the Fed sat on its hands on Wednesday is good news; indeed, for my taste it would do better to remain hawkish for longer. Investors need to get used to a world where money has a more normal price, in which they cannot always bet on a Fed “put”. If — or when — that happens with real estate, we will know that the past decade’s distortions are finally coming to an end.

[Cadavre Exquis]

https://twitter.com/amturiel/status/1770738287516258778

Saludos.

[Derby]

https://www.theatlantic.com/ideas/archive/2024/03/austin-texas-rents-falling-housing/677819/

America’s Magical Thinking About Housing

The city of Austin built a lot of homes. Now rent is falling, and some people seem to think that’s a bad thing.

If you want to understand America’s strange relationship with housing in the 21st century, look at Austin, where no matter what happens to prices, someone’s always claiming that the sky is falling.

In the 2010s, the capital of Texas grew faster than any other major U.S. metro, pulling in movers from around the country. Initially, downtown and suburban areas struggled to build enough apartments and single-family homes to meet the influx of demand, and housing costs bloomed across the region. Since the beginning of the pandemic, even as rent inflation has gone berserk nationwide, no city has experienced anything like Austin’s growth in housing costs. In 2021, rents rose at the most furious annual rate in the city’s history. In 2022, rent growth exceeded every other large city in the country, as Austin’s median rent nearly doubled.

This might sound like the beginning of a familiar and depressing story—one that Americans have gotten used to over the past few decades, especially if they live in a coastal blue state. California and New York, anchored by “superstar” clusters in Silicon Valley, Hollywood, and Wall Street, have pulled in some of the nation’s most creative workers, who have pushed price levels up. But a combination of stifling construction regulations, eternal permitting processes, legal tools to block new development, and NIMBY neighbors restricted the addition of more housing units. Rent and ownership costs rose in America’s richest cities, until families started giving up and moving out. As the economics writer Noah Smith has argued, California and New York are practically driving people out of the state “by refusing to build enough housing."

But Austin—and Texas more generally—has defied the narrative that skyrocketing housing costs are a problem from hell that people just have to accept. In response to rent increases, the Texas capital experimented with the uncommon strategy of actually building enough homes for people to live in. This year, Austin is expected to add more apartment units as a share of its existing inventory than any other city in the country. Again as a share of existing inventory, Austin is adding homes more than twice as fast as the national average and nearly nine times faster than San Francisco, Los Angeles, and San Diego. (You read that right: nine times faster.)

The results are spectacular for renters and buyers. The surge in housing supply, alongside declining inbound domestic migration, has led to falling rents and home prices across the city. Austin rents have come down 7 percent in the past year.

One could celebrate this report as a win for movers. Or, if you’re The Wall Street Journal, you could treat the news as a seriously frightening development.

“Once America’s Hottest Housing Market, Austin Is Running in Reverse,” announced the headline of the top story on the WSJ website on Monday. The article illustrated “Austin’s recent downswing” and its “glut of luxury apartment buildings” with photographs of abandoned downtown plazas, as if the fastest-growing city of the 2010s had been suddenly hollowed out by a plague and left to zombies and tumbleweeds.

Running in reverse. Downswing. Glut. This is the same Wall Street Journal that, in 2021, noted that rent inflation was demolishing American budgets and, in 2022, gawked at all-time-high rents in places like New York City. Sure, falling housing costs are an annoyance if you’re trying to sell your place in the next quarter, or if you’re a developer operating on the razor’s edge of profitability. But this outlook seems to set up a no-win situation. If rising rent prices are bad, but falling rent prices are also bad, what exactly are we supposed to root for in the U.S. housing market?

This is a surprisingly complex question for Americans today. In the U.S., our houses are meant to perform contrary roles in society: shelter for today and investment vehicle for tomorrow. This approach creates a kind of temporal disjunction around the housing market, where what appears sensible for one generation (Please, no more construction near me, it’s annoying and could hurt my property values!) is calamitous for the next (Wait, there’s nowhere near me for my children to live!).

If homeownership is best understood as an investment, like equities, we should root for prices to go up. If housing is an essential good, like food and clothing, we should cheer when prices stay flat—or even when they fall. Instead, many Americans seem to think of a home as existing in a quantum superposition between a present-day necessity and a future asset.

This magical thinking isn’t just a phenomenon of real-estate reporting. It is deeply rooted even in the highest echelons of policy making. Just look at the Democratic Party’s 2020 platform. The document reads (emphasis mine):

Homeownership has long been central to building generational wealth, and expanding access to homeownership to those who have been unfairly excluded and discriminated against is critical to closing the racial wealth gap.

But then the same platform goes on to say (emphasis mine):

Housing in America should be stable, accessible, safe, healthy, energy efficient, and, above all, affordable. No one should have to spend more than 30 percent of their income on housing, so families have ample resources left to meet their other needs and save for retirement.

See the issue? On the one hand, the Democratic Party says we are all relying on homeownership to close the racial wealth gap, which implies that we should root for today’s home values to significantly rise, so that today’s minority owners can build wealth. On the other hand, the party says we need houses to be “above all, affordable.” In that case, we should despair when home values rise too fast, because it implies that the next generation of owners will be priced out of the market.

I don’t think the authors of the Democratic Party platform are careless or clueless. I think they’re doing their best to articulate a folk wisdom: Housing should, somehow, deliver permanent affordability and constant appreciation, at the same time. And perhaps they’re trying to reconcile the awkwardness of a market where ordinary middle-class people are both sellers and buyers of an essential yet expensive good; where high inflation would help some people, while deflation would help others.

Americans’ inconsistent approach to housing doesn’t end with these contradictory desires. In 2022, three economists asked several thousand Americans a few simple questions about how supply and demand works in various markets. For example, if automakers suddenly stopped making new cars and trucks, what happens to the price of used vehicles? Or, if a farm started using an amazing new fertilizer and got a huge boost in grain yield, what will happen to the price of the grain? Contrary to the assumption that Americans don’t understand basic economics, the survey respondents did pretty well on the test. They correctly guessed that a shortage of cars would shift car prices up and that a surge in grain production would shift grain prices down. So far, so good.

Then the economists asked the participants about housing. They said: If a new law makes it easier to build dwellings near train stops, what happens to housing prices? Well, all of a sudden, the laws of supply and demand no longer applied. More than a third of participants said that “a large, exogenous increase in their region’s housing stock” would cause rents and home prices to rise. “The public understands the implications of supply and demand in markets for agricultural commodities, for labor, and even for cars, a durable consumer good that, like housing, trades in new and second-hand markets,” the authors wrote. Only when the subject is housing do many Americans despair that you can never build your way out of a shortage.

Housing is a pit of oxymoronic thinking. The Wall Street Journal tells its readers that it’s bad when rents go up but also bad when rents go down. The Democratic Party platform says homes have to be affordable and also that they ought to appreciate faster than the rate of inflation. Americans in research surveys say that if grain yields surge, grain prices go down, but that if housing construction surges, housing costs go up.

I’m listing these examples not to be despondent about the prospects for housing abundance, but rather to be realistic. Housing is, in fact, both a present need and a future investment. In a dual-side marketplace, I suppose you could argue that any change in price is bad for some party. But the externalities of housing abundance outweigh the loss to any particular party rooting to profit from scarcity. More and denser housing has been found to reduce inequality and raise personal income; to increase individual exercise rates and reduce obesity; to limit carbon emissions and preserve thousands of acres of natural splendor; and even to increase productivity and innovation.

The miracle of Austin is helpful to recognize, because it restores clarity to a simple truth: Houses are essential, but they are not magical. The normal rules of supply and demand apply. Perhaps more blue cities and states should make a point of applying those rules—and build more damn homes.

[saturno]

¿Cuál es la realidad?, bueno, nadie me ha querido contestar a la pregunta que hice, ¿cómo se financian las expansiones económicas, con bajadas de tipos o ganando guerras?

Sigo esperando.

Es en Ucrania donde se decide cuándo y hasta dónde se bajan tipos.

Que estemos con todo el escenario cíclico tan avanzado y la parte del mundo real no solo no esté finiquitada sino que esté en primer plano de las noticias indica que esta vez las cosas se están complicando.

.

https://www.transicionestructural.net/index.php?topic=2601.msg226582#msg226582

Una guerra NO es un escenario cíclico-

Ni siquiera ganándolas- Cuidado con lo que llamas 'realidad'

El sofisma de salir de una crisis con una guerra es propaganda bursátil neoliberal montada en 1991, haciendo  que fueran otros los que las llevaran- Eso es así desde el Imperio inglés (ejemplo de las guerras napoleonicas; que ganaron los rusos y prusianos), Las guerras perdidas por otros, conservan la  deuda por suministros, y si además resultas estar del lado del vencedor, entonces además reescribes la historia (ejemplo de la IIGM)-

Aparte de para un negocio servil, una guerra se hace para destruir al contendiente, y la alternativa es la muerte-

[conejo]

El 95% de los pisos que se venden en Benidorm se paga al contado

Se confirma el vuelco que ha situado como mayoritario el pago al contado en la compra de vivienda. Sobre todo, en algunos segmentos de inmuebles y en algunas zonas de España como la Costa Blanca, donde alcanza el 95%, según los datos del último informe la inmobiliaria Engel & Völkers analizados por THE OBJECTIVE. Una forma de pago que ya era la tónica predominante en el lujo –viviendas de entre dos y cinco millones de euros– y superlujo –viviendas de más de cinco millones de euros–, pero que poco a poco ha ido ‘permeando’ a otro tipo de vivienda, tal y como aseguran fuentes del sector y como constatan los últimos datos.

En enero, último dato ofrecido por el Consejo General del Notariado, los préstamos hipotecarios para adquisición de vivienda crecieron un 7,6% interanual, hasta las 22.452 operaciones. La cuantía promedio de estos préstamos descendió un 2,1% interanual, alcanzando los 144.313 euros en promedio. El porcentaje de compras de viviendas financiadas mediante un préstamo hipotecario se situó en el 46,3%. Esto supone que, en el primer mes del año, la compra de vivienda al contado supuso el 53,7%.

Un pago a tocateja que también constatan desde la inmobiliaria Engel & Völkers, especializada en inmuebles de alto standing. De todas las propiedades vendidas en España durante el año pasado por esta inmobiliaria, especializada también en la gestión de activos comerciales, yates y aviones, más de la mitad se compraron sin recurrir a hipoteca en las principales capitales españolas.

El 95% en la Costa Blanca

En Valencia únicamente el 35% de los compradores de esta inmobiliaria ha recurrido a los bancos para obtener financiación al comprar una vivienda, frente al 65% de recursos propios, en línea con otras ciudades de la comunidad. Pero muy por encima del resto destaca la Costa Blanca. Según los datos de la inmobiliaria, con una presencia intensa en la zona, en municipios como Altea, Calpe, Moraira, Benissa y Benidorm el 95% de los clientes que adquirieron una propiedad el año pasado lo hicieron con fondos propios, un porcentaje de financiación testimonial que también está presente en Marbella.

Se trata, en todas estas localizaciones, de zonas con un fuerte peso de ciudadanos extranjeros. De hecho, según el informe de la inmobiliaria, la mayoría de los compradores de vivienda en Benidorm es extranjero, con una mayor presencia en Finestrat y Rincon de Loix donde acaparan el 80% de las adquisiciones, con los británicos, holandeses, belgas, polacos y ucranianos a la cabeza, frente al 20% de los nacionales. Por el contrario, en la Playa de Poniente, la distribución es más homogénea entre clientes nacionales (45%) e internacionales (55%). Dentro de toda la zona de Costa Blanca, de media, el 42% de los compradores de vivienda fueron extranjeros frente al 58% de nacionales.

Una llegada de extranjeros y predominio en el mercado inmobiliario que se ha producido en todo Alicante. Si en 2022, el 58% de los clientes de Engel & Völkers eran nacionales, en 2023 este porcentaje se ha reducido al 46% frente al 54% restante de internacionales capitaneados por belgas y holandeses, que han acaparado el 20%, seguidos de suizos, alemanes, escandinavos y ucranianos. En Alicante, de media, apenas el 30% de las operaciones de esta inmobiliaria se cerraron con necesidad de financiación bancaria.

Mientras, en Madrid, el número de clientes de la inmobiliaria que pide hipoteca para afrontar la compra de la vivienda continuó a la baja en un contexto de subidas de los tipos de interés. Si en 2021, el 61% de las compraventas cerradas por Engel & Völkers requirieron de hipoteca, este porcentaje ha ido bajando paulatinamente hasta alcanzar el 47% en 2023.

La demanda de vivienda de lujo, imparable en Madrid

Un vuelco que ha situado como mayoritario el pago al contado, hasta alcanzar el 53% de las operaciones. En Madrid Capital el porcentaje de compradores extranjeros se ha mantenido apenas sin cambios respecto a 2022 después del significativo aumento cercano a los 8 puntos porcentuales registrado el año anterior en la capital. Del total de compras, el 77% fueron nacionales mientras que el 23% de compradores de vivienda en Madrid fueron extranjeros. Los clientes internacionales volvieron a estar liderados por los mejicanos y estadounidenses, seguidos de franceses, italianos, filipinos y argentinos.

[Derby]

La banca en la sombra...

https://www.bloomberg.com/news/articles/2024-03-22/sweden-financial-crisis-intrum-is-struggling-with-mountain-of-debt

Bond Traders Raise the Alarm on Intrum's Mountain of Debt

Like rivals, the Swedish debt collector took on massive leverage to fund its wager on bad loans. Now it’s struggling to cope with a hard new reality.

If Andres Rubio is troubled by the ugly financial state of the large debt-collection company that he runs, he doesn’t let on in public.

The chief executive officer of Sweden’s Intrum AB was smiling broadly during an interview with Bloomberg last week to discuss the hiring of advisers to look at restructuring the ailing company’s debt. “Very positive,” was his view of the firm’s debt-servicing division, a growing business with “tremendous potential.”

For Intrum’s creditors and investors, battered by the plummeting price of its debt and shares, that mood bears no relation to their own dismal experience lately. “It’s a company that’s communicated really badly over the years,” says Karin Haraldsson, portfolio manager at bondholder Lannebo Fonder, pointing out that executives were so unstressed on a recent capital markets call that it was “quite strange” when a week later they signaled a possible restructuring.

Intrum has risen to prominence over the past decade as one of Europe’s largest debt collectors, an industry that took off after the financial crisis by gobbling up swaths of “bad loans” from big retail banks — where customers were struggling with repayments — and doing the collections themselves. In the era of cheap money, these firms borrowed massively to fuel their expansion.

Now, like peers such as Permira-backed Lowell in the UK and Italy’s doValue, Intrum is racing to adapt to a hard new reality. The inflow of “non-performing” loans that once fed the business isn’t as plentiful today, as economies do better than feared. And the €5.4 billion ($6 billion) of Intrum’s own debt that paid for its ambitions is fast becoming a millstone around the firm’s neck. Investors have had enough of repeatedly missed promises to cut leverage.

Its travails are yet another serious test for corporate Sweden, already struggling with a beleaguered commercial property sector — SBB most notably — that’s having to refinance billions of dollars of debt at a time of stubbornly higher rates. The future of Intrum and its ilk is crucial to Europe’s banks, too, who’ve come to rely on these firms taking bad loans off their balance sheets.

Intrum has started hunting for fixes, including the sale of 30% of its bad-loan book to Cerberus Capital Management, but its shares and bonds have still hit record lows. As prices plunge, many mainstream debtholders are selling out and opportunist buyers — such as hedge funds who seek to profit from distressed situations — are buying in, according to people with knowledge of the matter who spoke to Bloomberg on the condition of anonymity.

Some bondholders are teaming up to recruit their own lawyers and advisers after Intrum’s hiring of debt experts Houlihan Lokey and Milbank increased the chances of a substantial restructuring. A large group that includes Arini, Bain Capital, BlackRock Inc. and others is holding talks already.

“This is a company that hasn’t understood the change in the hiking cycle,” says Helen Rodriguez, head of European special situations at Creditsights. “It’s been focusing on acquisitions, share action and land grabbing when clearly it should have worked on its liquidity and debt profile two to three years ago.”

S&P, Moody’s and Fitch have all just cut Intrum’s credit rating to B or B3, deep into “highly speculative” junk bond territory, and indicated more reductions may follow. The 2025 bonds are trading at a pretty distressed 69 cents on the euro. Short sellers account for 24% of Intrum’s free float, according to data from S&P Global Market Intelligence as of March 21.



“It’ll need a capital injection, there’s no way around it,” says Michael Falken, chief investment officer at Tidan Capital, who’s shorting the shares. “The asset sale puts a temporary band-aid on a rather stressed capital structure.”

Rubio — who joined Intrum’s board five years ago and has had the top job since 2022 — says there are no talks with shareholders about such an injection, adding that liquidity from the Cerberus deal covers near-term bond maturities and that the advisers are there to “directly address” long-term debt: “That’s what this exercise is about. We don't need cash or anything today.”

Private equity firm Nordic Capital and pension fund AMF, who hold nearly 40% of the share capital, have declined to comment on Intrum’s plight. JPMorgan analysts have slashed their share price target to 5 kronor, signaling more agony for shareholders clinging on at a current price of about 20 kronor.

Bad Marriage

According to several investors, the firm’s woes can be traced back to its 2017 merger with Norway’s Lindorff, a fellow debt collector of a similar century-old vintage that was owned by Nordic Capital. Before then Stockholm-listed Intrum Justitia (its pre-merger name) was viewed as an unflashy, well-run company with a rock-solid balance sheet.

At the time, analysts at Carnegie called the tie-up a “perfect match.” But any marital bliss was brief. To win European Union approval, Intrum had to divest Lindorff’s business in five countries, accounting for 30% of the estimated cost synergies. That triggered a share slump. Lars Wollung, Intrum Justitia’s longstanding CEO, was fired back in 2015 after opposing the merger.

While Intrum was known for providing debt-collection services to banks and companies in exchange for a fee, it quickly dived into the capital-hungry and higher-margin activity of snapping up bad-loan portfolios wholesale for itself. One of its larger shareholders from the pre-merger days, who sold out, says the merged company’s strategy was an extreme gamble on low interest rates, and its driving ethos was to take on debt to buy debt.

Ironically, Rubio’s plan to steer Intrum to safety involves a back-to-basics approach that leans heavily on its original debt-collection services, an activity that’s traditionally needed lots of staff but not much capital. “We have 80,000 clients, we have all the top 25 banks in Europe,” says the CEO. The unit “will only be more important going forward than it’s been in the past.”

For the “investment” side of the business — the bit that buys large portfolios of bad loans from banks and other companies — the idea is to seek out more firms like Cerberus who can provide the financing while Intrum does the actual collections. “We want to grow our investing business by partnering with third-party capital as opposed to using our own balance sheet,” says Rubio.



One pitfall faced by Europe’s debt collectors is that when they buy a bad-loan portfolio, it’s only in the first couple of years that they can be most sure of getting consumers to pay them back. As the loan book gets older, repayments from the “long tail” are tougher to get. This meant they had to keep buying new portfolios to make sure their loans were fresh, something that was much easier to finance when interest rates were near zero.

There’s also just less stuff to buy. After last decade’s sovereign debt crisis Intrum snapped up non-performing loans across Europe, including part of a €10.8 billion portfolio from Italy’s Intesa Sanpaolo SpA in a cut-rate deal that priced the portfolio at 29% of its book value. But Italian banks have cleaned up their act and stricter rules, a better economy and Covid loan guarantees have hugely reduced the amount of new bad loans. It’s been the same elsewhere.

Fears about the industry go far beyond Intrum. Bonds sold by Lowell have dropped sharply as investors fret about the roughly €1.3 billion of debt it has due next year. Italy’s biggest debt collector, doValue, is refinancing and is in talks to buy a smaller peer from Elliott Management Corp., a deal that will hand the hedge fund a stake in doValue and secure its support for a capital increase.

The UK’s Arrow Global, bought by TDR Capital in 2021, did manage to cut leverage and do more capital partnerships, but the process took a few years.
Unloved Leverage

While Intrum has heralded the Cerberus deal for providing enough cash to meet its immediate obligations, creditors are wondering at what cost, with some questioning whether the distressed-debt behemoth will have cherry-picked the best loan books. Although the sale improved the Swedish firm’s liquidity, it will also push its leverage even higher because the debt reduction from the transaction won’t offset the loss of earnings.

Intrum has already moved back a deadline for cutting its debt to 3.5 times earnings to the end of 2025. The firm “always says it plans to de-lever to three times and never delivers,” says Lannebo’s Haraldsson.

Some creditors still aren’t wholly convinced that the company will meet its immediate commitments, most notably the bonds that are due to mature in 2024 which are priced currently at about 88 cents on the euro. That suggests “market participants see a risk they’ll be included in a potential debt exercise,” says Magnus Thyni, portfolio head at Swedish asset manager Simplicity AB, which owns bonds maturing in later years.

Rubio rejects the notion that Cerberus has grabbed Intrum’s most attractive assets, pointing to the wide-ranging partnership between the two firms as a counterpoint, plus the fact that the deal involved thousands of portfolios across 13 jurisdictions, and the lifeline offered by the sale. “We did the Cerberus deal purely for liquidity reasons to make sure that we could meet this year’s and next year’s maturities,” he says.

Investors are resigned to a possible restructuring of later-dated debt, but want promises to be kept on the 2024 bonds. “I think they’ll have to pay” in full, says Alberto Gesualdi, a partner at high-yield fund Ver Capital in Milan, which owns that year’s maturity. “Otherwise it would be a reputational disaster.”

Another thorny problem for the company is a chunky revolving-credit facility that needs to be extended to keep vital liquidity on tap.

For the longer-term debt all bets are off as Houlihan and Milbank examine whether a deep restructuring is needed. Some investors question whether the debt selloff has been overdone — and Intrum’s acting finance chief has ruled out a “full loan restructure” — but they’re still braced for the worst when looking at a 2026 bond whose value has fallen to just 61 cents on the euro.

“It seems like they’re doing the right thing now but why did they leave it so late?” asks Mark Remington, high-yield portfolio manager at EFG Asset Management, an Intrum bondholder.

“The most likely way forward is some kind of amend and extend of the bonds, as they have liquidity for near-term maturities,” Thyni concludes. “The problem is they have to convince the market of their strategy. And that’s going to be a tough task considering how long they’ve been talking about reducing leverage without delivering.”

[Vipamo]

En España la escalada de precios parece ser infinita, mientras tanto en Alemania:

https://www.spiegel.de/wirtschaft/staerkstes-minus-seit-2000-immobilienpreise-sinken-2023-um-8-4-prozent-a-5fe092ec-9c05-4c8c-b6e9-bc1cfa9aa3b6

Se oficializa y comunica una caída del 8,4% en 2023.

[Derby]

https://www.reuters.com/business/signa-manager-under-investigation-fraud-prosecutor-says-2024-03-22/

Signa manager under investigation for fraud, prosecutor says

BERLIN, March 22 (Reuters) - A managing director of a project company belonging to collapsed property group Signa is under investigation on suspicion of serious fraud, Austria's anti-corruption prosecutor said in a statement on Friday.

It is suspected that investments did not go towards the projects promised to investors, the statement said, adding that the sum of damages was still under investigation.