Weekend reading links

1. Ananth points to this article on the floatation of Virgin Galactic, the loss-making $2.3 bn valued space tourism company for the immensely rich. Some of the comments are delicious,

And while 3 bn persons need fresh water and healthy food we all wish you a nice flight...

I'm sure the Vision Fund will invest in this...

New 'beyound meat'!

2. FT has an article on China's strategic investments in metals. This about the Chinese state-owned Citic Metals in Ivanhoe Mines in Democratic Republic of Congo,

Chinese companies already own some of the richest deposits of copper and cobalt in the DRC and beyond, metals that are critical to the switch away from fossil fuels to renewable energy. They have invested at least $8bn in Congolese mining assets since 2012, with miner China Molybdenum buying the Tenke copper and cobalt mine from Freeport-McMoran for $2.65bn in 2016... China has long coveted the idea of having a large mining company to rival western groups such as BHP, Anglo American and Rio Tinto, which they see as controlling the world’s best deposits.

3. Is Mark Zuckerberg the epitome of everything that is wrong with Big Tech? It is hard to not come away from watching his Congressional deposition on Libra without feeling concerned about the competence of Facebook's leadership.

4. Bloomberg points to the likely source of the next round of financial market crisis - CLOs. Sample this,

CLOs own about 54% of all leveraged loans outstanding... An alarming number of leveraged loans—29% by some estimates—are rated B- by S&P Global Ratings or B3 by Moody’s Investors Service. For both ratings companies, that’s just one rung above CCC, the very lowest tier before default.

5. How many times will this repeat? The latest episode of African debt defaults appear on the horizon. High fiscal deficits, fraud and deception, and the increased share of non-concessional commercial debt have all been contributors. Sample the signatures of troubles in frontier market debt,

Almost half of frontier market countries are either at high risk of falling into debt distress or are already distressed, the IMF has said, up from zero as recently as 2014. The warning comes as issuance of hard currency frontier market debt is set to hit a record high this year, with $38bn set to be raised, according to the IMF... Mozambique is already in default after it borrowed more than $2bn, much of it concealed from the IMF and donors, ostensibly to finance a tuna fishing fleet and maritime security projects, only for much of the money to be diverted to kickbacks for bankers and government officials, according to US prosecutors. The Republic of the Congo, Africa’s third-largest oil producer, Zimbabwe, The Gambia and Grenada are also on a list of nine states the IMF classes as being “in debt distress”. A further 24 countries, including Ethiopia, Ghana, Zambia, Haiti, Laos and Tajikistan are deemed to be at “high” risk of following suit, by far the highest level since comparable records began in 2010... The outstanding stock of such debt has already tripled to $200bn over the past five years with the median issuer now labouring under a debt pile equivalent to 7 per cent of gross domestic product and close to half its gross reserves, compared with 3 per cent and 20 per cent respectively in 2014. In terms of debt to GDP, the median frontier issuer now has a ratio of about 55 per cent, a rise of almost 20 percentage points since 2013.

Despite the growing risks frontier market yields have fallen from 8.2 per cent in November 2018 to 6.2 per cent as investors search for yields.

But with global monetary accommodation most likely in its final phase, this graphic on debt redemption (or roll-over) schedules looks ominous.

6. FT on the changing face of American capital markets. The abundance of private capital has led to an almost having of listed companies in the US.

7. In the context of the RCT focused Nobel Prize, some very good articles - Sanjay G Reddy, Ingrid Harvold Kvangraven, TCA Srinivasa Raghavan, Jean Dreze, and this one unravels the actual story behind the claims made here.