This week in charts
Defense expenditure
S&P 500 stock concentration
Large cap growth stocks
MSCI EAFE & MSCI USA performance
Private equity firms slash use of risky debt tactic to fund payouts
Private equity firms have sharply curtailed their use of a controversial debt financing manoeuvre to return cash to investors, after institutions raised concerns about how some groups have embraced new forms of leverage to compensate for a lack of deals.
Buyout firms have increasingly added an additional layer of leverage on top of their typical deal-linked borrowing, taking on debt secured against their fund investments, with some firms relying on those funds to pay dividends to investors.
NAV loans, which are collateralised by the individual investments in a fund and can equal as much as 20 per cent of the fund’s overall value, have enabled firms to extract cash from their portfolios without having to sell assets in difficult markets.
Toronto Condo Developers See Lowest New Unit Sales in 27 Years
Sales of newly built condos in Canada’s largest city fell 57% from last year, to just 3,159 transactions in the first half of this year, consultancy Urbanation said in a Report Thursday. That’s the fewest in the first half of a year since 1997, helping unsold inventory rise to a record.
While the Bank of Canada cut rates in June for the first time in four years, the quarter-point decrease may not be enough to relieve pressure on a housing market that has grown unaffordable for many Canadians. With inflation easing and the unemployment rate rising, the central bank is widely expected to continue reducing borrowing costs — including at its rate decision next week.
The lower mortgage rates those cuts would bring may be the best hope for making new condos more affordable to buyers.
This week’s fun finds
The Fried Chicken Sandwich Wars Are More Cutthroat Than Ever Before
For a chain that offers endless combos of mostly anything as long as it can fit in the confines of a bowl, a bulging fried chicken sandwich smothered in a special sauce was an “interesting direction,” concedes Tracy Kim, Dig’s chief executive officer. It works well for high school kids, she says. More important, the chain, which has nearly three dozen locations in the Northeast, was responding to what customers wanted. “We got a lot of requests, especially through catering, for a handheld offering,” Kim says.
Dig could have spun out any number of holdable foods—a Havarti and roasted turkey on olive ciabatta, an artichoke pesto flatbread or a barbacoa taco with purple slaw—all would have been perfectly on-brand. Instead, it made a hard pivot to a fast-food favorite. Even though Dig’s version is antibiotic-free and baked instead of fried, this seemed to indicate something else was going on. The Fried Chicken Sandwich Wars were back, if they ever ended at all.
Hawaiian shirt Monday
From left to right: Miguel, Jack, Mikhail and Juan of the Investment Analytics and ESG team
A perfect example of how great partners inspire one another, even in fashion.
