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Today's big stories

American colleges have sold $36 billion worth of bonds this year – the most since 2004
Why investment giant Pimco still sees benefits in bonds despite record-low yields – Read Now
Altice Europe’s largest shareholder offered to take full control of the telecoms company

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Investors Love College

What’s Going On Here?

Years of working hard, playing hard, and practicing esoteric marching band routines have paid off for US colleges’ class of 2020: they’ve graduated with the highest mark in bond sales since 2004.

What Does This Mean?

US colleges have sold $36 billion worth of debt to investors so far this year. While universities around the world have faced pandemic-related uncertainty, even those without students physically returning to campus seem in little hurry to lower their hefty tuition fees. That income stability might be what’s attracted investors to universities’ bonds in their droves – along with the top colleges’ reassuring credit ratings. Harvard bonds due to be repaid in 2050, for instance, are deemed similarly safe to the US government’s – but they also offer inventors a higher yield (tweet this)...

Why Should I Care?

For markets: Good Yield Hunting.
Investor demand for super-secure government and big company bonds has pushed their prices to record highs and their yields – which move inversely – to record lows. That’s spurring some bond investors to take greater risks in the hopes of making more profit. But for the likes of Samsung Life Insurance Company – South Korea’s biggest life insurer – the rationale for buying into US college debt is more straightforward: Korea’s aging population necessitates more payouts and therefore reliable long-term investment returns to fund them.

Zooming in: Nu Alpha Psi.
For years, university endowment funds – the pools of money that help keep them running – have themselves invested in so-called “alternative” assets deemed too risky for ordinary investors: private equity, for instance. And while that worked well for a while, recent analysis suggests many such funds are now underperforming simple stock and bond portfolios – illustrating that with greater potential reward comes greater risk too.

Bling bling: How the rich invest in ways that make them richer.

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Low Point

What’s Going On Here?

Thanks to central banks’ efforts to support their economies, bond yields in most rich countries are close to all-time lows. Traditionally, investors have bought bonds in search of a steady return – but with such low yields, is there any point? Investment management giant Pimco thinks so…

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✋ Square up from a distance

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3/3

Collect Call

What’s Going On Here?

The founder of Altice Europe rang round the telecoms and media giant’s other investors on Friday, offering to buy out their public stakes in the company for a combined $3 billion.

What Does This Mean?

Altice’s first boss remains by far its largest shareholder – and through his investment firm he’s offering the company’s other investors a 25% “premium” to what their Amsterdam-listed shares were worth on Thursday, valuing the entire business at almost $6 billion. If they accept, Altice Europe will once again become a private company, although sister company Altice USA will stay public.

While Altice’s board of directors has recommended investors take the money and run, some analysts argue the offer lowballs what the company’s actually worth. Its French founder may be taking advantage of the 42% collapse in Altice’s share price so far this year; that fall’s accelerated recently, while the average European telecom stock is down just 17% for 2020.

Why Should I Care?

For markets: Forever in your debt.
Telecoms companies are famed for their ability to borrow huge sums, which they can customarily comfortably repay from the steady cash flows their long-term recurring service contracts provide. But when the going gets tough both bond- and shareholders tend to get going, piling on pressure in the form of steeper interest rates on future borrowing, for one. While Altice Europe’s plans to invest in growth and reduce its debt won’t change once it’s taken private, it may be able to achieve those goals more easily without the regular and intense interrogation of public investors and analysts.

The bigger picture: Operator: please hold.
Altice isn’t alone in looking to “delist”: German startup hub Rocket Internet said earlier this month it’d buy back its shares from investors and take the company off the stock market. After seeing its share price lose over half its value since “going public” in 2014, Rocket too has decided a better way to conduct its sometimes controversial business is in private investors’ pockets.

Keep it quiet: When firms go private, profit gets made – here’s how.

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💬 Quote of the day

“The difference between hope and despair is a different way of telling stories from the same facts.”

– Alain de Botton (a British-Swiss philosopher and author)

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📚 What we're reading

A gripping story is all it takes to tackle climate change (Grist)
Cape Town is the new Silicon Valley (The Next Web)
Did AI ruin chess? (Wired)

Finimize - 📈 Investors go back to college

Today's big stories

Investors Love College

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Low Point

✋ Square up from a distance

Collect Call

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💳 Point your sale this way

Older messages

😷 Coronavirus hurts insurers

🤢 Tesla's 30% crash

✈️ Morgan Stanley’s first-class upgrade

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