Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

<a href="https://www.smartkarma.com/entities/nikola-corp" target="_blank" data-smartkarma-citation="entities:29029:1" rel="noopener">Nikola Corp (NKLA US)</a> ousted <a href="https://www.bloomberg.com/news/articles/2021-07-29/nikola-founder-charged-for-allegedly-misleading-investors?sref=Q1XEaVVD" target="_blank" rel="noopener">founder/CEO Trevor Milton was charged in federal court today with criminal and civil fraud</a> for lying to investors for years about “nearly every aspect of the business” to juice the stock price.This comes just two weeks after <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> CEO Elon Musk defended himself in court over his role in <a href="https://www.bloomberg.com/news/articles/2021-07-13/musk-keeps-temper-in-check-in-tesla-solarcity-trial-testimony?sref=Q1XEaVVD" target="_blank" rel="noopener">pushing Tesla in 2016 to buy SolarCity</a> for an insupportable $2 billion without revealing its near-bankruptcy distress in order to bail out his relatives who ran it. Tesla already paid $60 million last year to settle the case, but Musk, true to form, stubbornly resists any efforts to hold him accountable for just about anything, no matter the harm.It could cost him $2 billion to refund the purchase price for SolarCity if he loses, and the Tesla shareholders suing have a credible case, but Musk is used to getting off without serious consequences.After all, he has defied courts, federal regulators, police, state and local government authorities for years with little more than a slap on the wrist.But this year things have changed, whether Elon Musk realizes it yet or not.

Nikola Corp (NKLA US) ousted founder/CEO Trevor Milton was charged in federal court today with criminal and civil fraud for lying to investors for years about “nearly every aspect of the business” to juice the stock price.This comes just two weeks after Tesla Motors (TSLA US) CEO Elon Musk defended himself in court over his role in pushing Tesla in 2016 to buy SolarCity for an insupportable $2 billion without revealing its near-bankruptcy distress in order to bail out his relatives who ran it. Tesla already paid $60 million last year to settle the case, but Musk, true to form, stubbornly resists any efforts to hold him accountable for just about anything, no matter the harm.It could cost him $2 billion to refund the purchase price for SolarCity if he loses, and the Tesla shareholders suing have a credible case, but Musk is used to getting off without serious consequences.After all, he has defied courts, federal regulators, police, state and local government authorities for years with little more than a slap on the wrist.But this year things have changed, whether Elon Musk realizes it yet or not.

Nikola's Ex CEO Trevor Milton Arrested for Lying to Investors. Some Ask, "What About Elon?"

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*No Stranger To Losses: As initially discussed in our “Credit Suisse Group – Hit Parade Continues” note dated March 30, 2021, we expressed our concerns related to various high profile screw-ups at Credit Suisse Group (CSGN.VX) [Credit Suisse]. Credit Suisse’ high profile challenges still include: Archegos Capital Management; Greensill Capital; Wirecard, and Luckin Coffee; and   *Adding Insult To Injury: According to Bloomberg, construction start-up, Katerra, has burned through over USD 2.0 bn and is now being shut down.  Credit Suisse initially indicated losses of between USD 1.0-USD 1.5 bn on its Greensill-related exposures.  Well, this figure appears to increase those losses closer to USD 2.0 bn.

*No Stranger To Losses: As initially discussed in our “Credit Suisse Group – Hit Parade Continues” note dated March 30, 2021, we expressed our concerns related to various high profile screw-ups at Credit Suisse Group (CSGN.VX) [Credit Suisse]. Credit Suisse’ high profile challenges still include: Archegos Capital Management; Greensill Capital; Wirecard, and Luckin Coffee; and   *Adding Insult To Injury: According to Bloomberg, construction start-up, Katerra, has burned through over USD 2.0 bn and is now being shut down.  Credit Suisse initially indicated losses of between USD 1.0-USD 1.5 bn on its Greensill-related exposures.  Well, this figure appears to increase those losses closer to USD 2.0 bn.  

Alpha-Centric ESG Research

Kyle Rudden

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in <a href="https://www.smartkarma.com/insights/bitcoin-on-balance-sheets-indirect-crypto-exposure-considerations-for-crypto-leery-esg-investors" target="_blank" data-smartkarma-citation="insights:52207" rel="noopener">Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors</a>. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates <a href="https://www.smartkarma.com/entities/bitcoin-usd" target="_blank" data-smartkarma-citation="entities:25895:1" rel="noopener">Bitcoin (XBT)</a>'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

More and more, companies are using cryptocurrency (especially Bitcoin) as part of their corporate treasury management strategies, discussed in Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors. That trend is behind the topic of this report.Greater mainstream corporate and institutional use of Bitcoin is driving the growth in demand for cryptocurrency custody services, and banks around the world are rushing to fill that demand. It is a logical and relatively safe foray into the cryptocurrency space, albeit not without some risk.For ESG investors wishing to avoid direct or indirect cryptocurrency exposure, perhaps due to their views on crypto's wretched Environmental footprint, the banks herein will have significant indirect crypto exposure. However, I personally find it hard to be categorically bearish on this theme.Whilst the theme in the first Insight (holding Bitcoin on balance sheets) represents real risk, this is different. It could be argued that crypto custody perpetuates Bitcoin (XBT)'s climate impacts, thus is a bad thing. Perhaps, from a purely idealistic ESG viewpoint, that is partially true.However, the connection from custody service to carbon emissions is so far removed, and the risks associated with entering the crypto custody space are so comparatively minimal, that the opinion on this theme should be "neutral" at worst, and definitely not across-the-board "negative."But really, that is for each investor to decide, because the crypto/ESG issue is highly subjective.

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Executive Summary:<a href="https://www.smartkarma.com/entities/societe-generale-sa" target="_blank" data-smartkarma-citation="entities:21478:1" rel="noopener">Société Générale (SocGen)</a> recently presented plans to target sustained profitability with a lower standard deviation of performance in its Corporate and Investment Banking (CIB) unit. The firm produced its first annual loss in 30 years from equity derivative positioning as firms cut their prior year dividends due to Covid-19 concerns. As such, SocGen intends to make its results less sensitive to market dislocations.Late last year, SocGen announced a retail banking restructuring plan which effectively increases the resolution potential of the firm should it reach the point of non-viability (PoNV). Taken on its own, this move was not bondholder friendly. Please see: <a href="https://www.smartkarma.com/compose/insight/52061/Soci%C3%A9t%C3%A9%20G%C3%A9n%C3%A9rale%20AT1:%20Resolution%20or%20Resilience%20in%20the%20Retail%20Restructuring?%20Take%20Shorter%20Duration.%20Read%20more:%20https://skr.ma/U3otL" target="_blank" rel="noopener">Société Générale AT1: Resolution or Resilience in the Retail Restructuring?</a> for more details.However, the bank’s plans and actions already undertaken to reduce the volatility in the global markets’ operations may reduce the likelihood of approaching the PoNV. Combined with a meaningful buffer of capital above the level at which Additional Tier 1 bond suspension could be required, SocGen’s AT1 bonds may be ripe for picking.

Executive Summary:Société Générale (SocGen) recently presented plans to target sustained profitability with a lower standard deviation of performance in its Corporate and Investment Banking (CIB) unit. The firm produced its first annual loss in 30 years from equity derivative positioning as firms cut their prior year dividends due to Covid-19 concerns. As such, SocGen intends to make its results less sensitive to market dislocations.Late last year, SocGen announced a retail banking restructuring plan which effectively increases the resolution potential of the firm should it reach the point of non-viability (PoNV). Taken on its own, this move was not bondholder friendly. Please see: Société Générale AT1: Resolution or Resilience in the Retail Restructuring? for more details.However, the bank’s plans and actions already undertaken to reduce the volatility in the global markets’ operations may reduce the likelihood of approaching the PoNV. Combined with a meaningful buffer of capital above the level at which Additional Tier 1 bond suspension could be required, SocGen’s AT1 bonds may be ripe for picking.

SocGen: AT1 Is Ripe for Picking as CIB Is Restructured

Executive Summary: <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit (UCGIM)</a> shocked bond markets recently by announcing that it would not be paying the coupon on its CASHES legacy Tier 1 notes. Subsequently, adding confusion to this saga, Bloomberg reports that some investors received notification of a coupon payment. Operational risk anyone?Nonetheless, we believe value can be had in the firm’s Senior Non-Preferred (NPS) securities. Rated Baa2, BBB- and BB+ by Moody’s, S&amp;P and Fitch respectively, these securities are Bank of America Merrill Lynch index eligible, which aids in their liquidity.The real risk for UCGIM bondholders going forward is two-fold. One, the firm may engage in consolidation beyond absorbing a cleaner <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-siena" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Siena (BMPS IM)</a>. The risk here is over-extending into another asset quality quagmire. Two, investor risk perceptions regarding Italy could deteriorate. We think the former, that is excessive M&amp;A activity, is more likely than the latter over the near term.Cancelling the CASHES coupon payment shortly after Mr. Orcel’s arrival is not a good omen. Possibly paying a coupon that was set to be cancelled is even worse. Nonetheless, we see UCGIM’s Senior Non-Preferred debt as offering an attractive risk/ reward opportunity.

Executive Summary: UniCredit (UCGIM) shocked bond markets recently by announcing that it would not be paying the coupon on its CASHES legacy Tier 1 notes. Subsequently, adding confusion to this saga, Bloomberg reports that some investors received notification of a coupon payment. Operational risk anyone?Nonetheless, we believe value can be had in the firm’s Senior Non-Preferred (NPS) securities. Rated Baa2, BBB- and BB+ by Moody’s, S&amp;P and Fitch respectively, these securities are Bank of America Merrill Lynch index eligible, which aids in their liquidity.The real risk for UCGIM bondholders going forward is two-fold. One, the firm may engage in consolidation beyond absorbing a cleaner Banca Monte dei Paschi di Siena (BMPS IM). The risk here is over-extending into another asset quality quagmire. Two, investor risk perceptions regarding Italy could deteriorate. We think the former, that is excessive M&amp;A activity, is more likely than the latter over the near term.Cancelling the CASHES coupon payment shortly after Mr. Orcel’s arrival is not a good omen. Possibly paying a coupon that was set to be cancelled is even worse. Nonetheless, we see UCGIM’s Senior Non-Preferred debt as offering an attractive risk/ reward opportunity.

UniCredit: CASHES Paid or Not, Senior Non-Preferred Offers Value

United Kingdom

Deutsche Bank AG is a global financial service provider delivering commercial, investment, private, and retail banking. The Bank offers debt, foreign exchange, derivatives, commodities, money markets, repo and securitization, cash equities, research, equity prime services, loans, convertibles, advice on M&A and IPO's, trade finance, retail banking, asset management, and corporate investments.

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Deutsche Bank AG (DBK1 LI)

Nikola's Ex CEO Trevor Milton Arrested for Lying to Investors. Some Ask, "What About Elon?"

Many of Milton's lies are very different vs tales Tesla CEO Elon Musk has told investors for years. Others seem troublingly similar. With new...

Vicki Bryan

Credit Suisse Group – Here We Go Again

CREDIT SUISSE GROUP: There were already concerns related to various high profile screw-ups. The latest appears to be Greensill-related construction...

Thomas J. Monaco

Banks on the Bitcoin Bandwagon: Cashing in Through Crypto Custody Services

Bitcoin holdings by issuers and investors is driving crypto custody demand. Big banks are stepping. A big opportunity, but some ESG investors might...

Kyle Rudden

SocGen: AT1 Is Ripe for Picking as CIB Is Restructured

SocGen’s AT1 bonds may be ripe for picking as the firm doubles down on reducing revenue volatility. The recently issued 4.75% 2026 note trades at a...

Hank Calenti, CFA

UniCredit: CASHES Paid or Not, Senior Non-Preferred Offers Value

Cancelling the CASHES coupon payment was not a good omen. Possibly paying the coupon is even worse. Nonetheless, UCGIM’s Non-Preferred Senior...

Hank Calenti, CFA

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