ALV.DE - Allianz SE

XETRA - XETRA Delayed Price. Currency in EUR
-2.40 (-1.13%)
At close: 5:35PM CEST
Stock chart is not supported by your current browser
Previous Close213.10
Bid210.85 x 214900
Ask210.95 x 10000
Day's Range210.05 - 212.30
52 Week Range170.46 - 219.05
Avg. Volume954,859
Market Cap89.231B
Beta (3Y Monthly)0.86
PE Ratio (TTM)11.54
EPS (TTM)18.26
Earnings DateNov 8, 2019
Forward Dividend & Yield9.00 (4.22%)
Ex-Dividend Date2019-05-09
1y Target Est213.69
  • At €213, Is Allianz SE (ETR:ALV) Worth Looking At Closely?
    Simply Wall St.

    At €213, Is Allianz SE (ETR:ALV) Worth Looking At Closely?

    Today we're going to take a look at the well-established Allianz SE (ETR:ALV). The company's stock received a lot of...

  • Financial Times

    ‘Old guard’ ought to know better

    It is sad to see a distinguished group of retired central bankers and the chief executives of Deutsche Bank and Allianz criticising the European Central Bank monetary policy and specifically Mario Draghi’s ...

  • Financial Times

    ‘Ruthless’ Deutsche Bank retail boss faces costs fight

    Just two months since he was anointed Deutsche Bank’s new retail tsar, Manfred Knof is facing his first major test. in more than a generation as chief executive Christian Sewing abandons the lender’s ambitions to be a force on Wall Street. On Monday, the targets for Deutsche’s retail business, which employs about 28,000 people in Germany and account for about a third of the bank’s revenue, were in sharp focus as acrimonious pay negotiations with one of the country’s most powerful labour unions hung in the balance.

  • When This $2 Trillion Market Turns, Start Worrying About Brexit

    When This $2 Trillion Market Turns, Start Worrying About Brexit

    (Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.For post-Brexit Britain, the kindness of strangers and their money will be more vital than ever.Prime Minister Boris Johnson has amped up his rhetoric that the U.K. will leave the European Union at the end of this month -- even if the two sides can’t agree on the terms of its departure or their future trading relationship. In the worst-case scenario, a chaotic exit followed by ratings downgrades, a plunge in the pound, a government boosting spending and a central bank struggling to support markets could see capital flee from the country’s bonds.It’s far from the consensus call -- gilts have up to now acted as a haven from Brexit risk. But some money managers are starting to worry about the U.K.’s heavy reliance on foreign investment to finance its large current-account deficit -- or in Bank of England Governor Mark Carney’s words the “kindness of strangers.”“If we have a no-deal Brexit then these strangers are going to get worried,” said Mike Riddell, a portfolio manager at Allianz Global Investors, which has reduced its U.K. debt holdings in recent weeks on the risk of a post-Brexit recession and rate hike. “In that environment are gilts going to be a safe haven? Absolutely not -- they are going to be the opposite of safe havens.”A bond market crash would drive up the government’s borrowing costs, making it more painful for any post-Brexit administration to spend its way out of trouble. Along with the initial economic disruption, that would risk snowballing into a deeper recession. Johnson struck a defiant tone Sunday, saying the U.K. will leave the European Union on Oct. 31 amid signs that talks have stalled.While the pound has slumped 18% since the June 2016 Brexit vote, gilts have returned investors nearly 20%. They have surged this year on global trade tensions and gloominess over the world economy, offering similar returns to U.S. Treasuries and more than Germany, according to Bloomberg Barclays Indexes. And unlike German bonds, they still offer positive yields.The past year has seen overseas buyers snap up gilts at the fastest pace since 2016, increasing their holdings since the Brexit referendum by around 100 billion pounds ($123 billion), according to data from the BOE. That compares to $7 billion of foreign investor net outflows from U.K. equities this year.While debt from developed markets tends to rally on economic weakness -- due to speculation central banks will cut interest rates -- in emerging markets capital tends to flee, due to rising repayment risks or a loss of confidence. Volatility in sterling is already at emerging-market levels and U.K. assets are set for a substantial repricing once the Brexit outcome becomes known, the BOE’s Carney said last month.Zero ExposureRiddell’s $2.8 billion Allianz Gilt Yield Fund has “got room to go more bearish,” while the $788 million Allianz Strategic Bond Fund has “zero exposure” to gilts, he said.North Asset Management’s Chief Investment Officer George Papamarkakis has a similar view and is looking at betting on a decline in long-maturity gilts. To him, whoever forms the next government after a no-deal Brexit is likely to increase spending.“It is pretty simple equation -- you’ve got less demand because of uncertainty and you would have more supply because the policy of choice now is fiscal,” Papamarkakis said. “That’s why it is a pretty clear trade to be short longer-dated gilts.”Diverse InvestorsThe U.K.’s Debt Management Office says the gilt market is in a relatively solid position given deep liquidity and a diverse investor base, being more than triple the size it was 11 years ago at over 1.6 trillion pounds.“The underlying strength of the market has stood us in good stead over the past few years against the impact of a number of external events, not least the result of the EU referendum in 2016 and the unexpected result of the general election in 2017,” said Robert Stheeman, the DMO’s chief executive. “Contrary to the expectations of many, the gilt market has reacted in an orderly way.”Foreign investors held over 556 billion pounds of gilts, or 28% of the total, as of March. While this vote of confidence implies they don’t expect a disorderly Brexit in the near future, the data on non-resident buying needs to be watched for any signs of slowing demand, said John Wraith, the head of U.K. rates strategy at UBS Group AG.How the BOE and credit agencies deal with the fallout from Brexit will be key for investors. In the immediate aftermath of the Brexit referendum, the BOE cut rates and S&P Global Ratings slashed the nation’s sovereign rating by two levels. Fitch Ratings said earlier this year that a two-notch downgrade could again be possible in the case of a severe economic shock.Financial institutions around the world are watching the developments. For the Royal Bank of Canada, it’s time to sell five-year U.K. bonds against their German equivalent. For Paul Nicholson, a portfolio manager at Australia’s Queensland government-owned QIC Ltd, the “absolutely farcical” Brexit process means he is taking no chances.“At the moment we have exited all U.K. positions -- all bonds, all currencies and a vast majority of our credit positions,” said Nicholson. “What we want to do is wait on the sidelines and see how it plays out.”(Updates with Johnson comment in fifth paragraph.)\--With assistance from Tanvir Sandhu.To contact the reporters on this story: Anooja Debnath in London at;John Ainger in Brussels at jainger@bloomberg.netTo contact the editors responsible for this story: Paul Dobson at, Neil Chatterjee, William ShawFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Mario Draghi Leaves a Toxic ECB Legacy for Bankers

    Mario Draghi Leaves a Toxic ECB Legacy for Bankers

    (Bloomberg Opinion) -- Mario Draghi, the departing head of the European Central Bank, has been buffing up his “savior of the euro” image in a swansong series of interviews. But not everyone is standing up to applaud.Echoing many of his less-than-impressed fellow Germans, the chief executive officer of insurer Allianz SE laid into both the ECB and Draghi last week. “The politicians and the regulators have told us they fixed the banking system and insurance system in terms of this negative spiral of financial sector risk morphing into sovereign risk and [looping] back,” Oliver Baete said. “It is the biggest non-truth that exists.”Coming from the boss of Germany’s pre-eminent commercial financial institution, that’s a stinging judgment. What seems to have riled him most is any implication that there is no reason to worry about national commercial lenders holding too much of their country’s sovereign debt, and the resulting potential for market contagion if a bank (or a sovereign) gets into trouble. In fairness to the ECB president, his constant deluge of monetary stimulus has worked well for most at-risk euro area countries, who have used the opportunity to painstakingly work themselves out of financial stress.But Baete is looking squarely at the exception: Italy, the euro zone’s third-biggest economy. Rome is still saddled with the bloc’s biggest national debt and its debt-to-GDP ratio is above 130%. What galls the Allianz boss is that a policy that’s essentially there to solve Italy’s problems (negative rates) makes it extremely difficult for his company to squeeze out a profit. And as the chart below shows, there’s no evidence of the link between Italy’s banks and its sovereign debt being broken. This so-called “doom loop” between sovereign debt and banks was a big fault-line during the the euro crisis earlier this decade. Fears grew about certain countries being too reliant on domestic banks buying their bonds — an umbilical cord that meant the state was propped up by its lenders and vice versa. It was a highly stressful time where some sovereign bond yields soared to double-digits.It has taken 2.7 trillion euros ($3 trillion) of quantitative easing — increasing by 20 billion euros a month from November — along with other stimulus programs to force yields down to where they are today. Ireland, Spain and Portugal have even managed to achieve mainstream bond market status, with negative yields on debt out to nearly 10 years in maturity. Countries such as Spain have taken the opportunity to lower their debt in relative terms, as the chart below shows. Italy, not so much.Exacerbating those lingering doom-loop concerns are other worries about whether the ECB is providing rigorous enough oversight of the bloc’s banks, another key part of Draghi's remit since 2014. My Bloomberg Opinion colleague Elisa Martinuzzi has written about the central bank’s troubling support for the bailout of Italy’s Banca Monte dei Paschi di Siena SpA.Without Draghi, and his "whatever it takes" promise to support the euro in July 2012, the single currency project may have collapsed. But the too-big-to-fail problem still exists in European banking. This is one area where Draghi doesn’t deserve full marks.To contact the author of this story: Marcus Ashworth at mashworth4@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at©2019 Bloomberg L.P.

  • Financial Times

    FirstFT: Today’s top stories

    , according to text messages released by House committees leading the impeachment proceedings into the US president. Bill Taylor, the acting US ambassador in Kiev, wrote to Gordon Sondland, US ambassador to the EU, to express his misgivings as officials tried to set up a meeting between Mr Trump and Volodymyr Zelensky, Ukraine’s president.

  • Financial Times

    Allianz boss stands firm in face of souring European outlook

    Since becoming chief executive of Europe’s largest insurer, there is one group that Oliver Bäte has consistently disappointed: M&A bankers. Germany’s Allianz has in recent years been linked with a series of large takeovers, including the UK’s RSA, Zurich Insurance and Australia’s QBE, that would have generated juicy fees for dealmakers.

  • Financial Times

    Europe’s biggest insurer lambasts ECB over rates

    Europe’s top insurance boss has launched a blistering attack on Mario Draghi and the European Central Bank over the “politicisation” of monetary policy in the region. Oliver Bäte, chief executive of Europe’s ...

  • Financial Times

    ECB/Allianz: Bayern for blood

    Who would trust an insurance company if it could not deliver in a crisis? Oliver Bäte, boss of Europe’s largest insurer, Allianz, knows credibility is important. The former McKinsey consultant was talking his book: the Munich-based insurer would earn more on its investments if the ECB lifted its ultra-low interest rates.

  • Reuters

    Lloyd's of London insurer Axis Capital drops bid to cover Carmichael mine -source

    NEW YORK/LONDON, Oct 2 (Reuters) - Lloyd's of London insurer Axis Capital has become the latest to rule itself out of providing coverage for Adani Enterprises Ltd's contentious Carmichael coal mine project in Australia, a source close to the company said on Wednesday. The Queensland-based Carmichael mine is expected to chalk up annual production of 8 million to 10 million tonnes of thermal coal, responsible for a large slice of the world's carbon emissions. As a result, 14 large insurers including AXA SA, Allianz, Liberty Mutual Insurance Co, Munich Re, Swiss Re and local market leader QBE Insurance Group Ltd have already confirmed they will not insure Carmichael, according to lobby group Market Forces.

  • Reuters

    UPDATE 3-Allianz seen as frontrunner for BBVA insurance arm - sources

    PARIS/MUNICH/MADRID, Oct 1 (Reuters) - German insurer Allianz has emerged as the frontrunner to invest in the bancassurance business of Spanish lender BBVA, two sources close to the deal told Reuters, after Italian rival Generali pulled out of the race. The deal is worth more than 1 billion euros ($1.1 billion)and is expected to be sealed by the end of the year, the sources said. If successful, it would give Allianz a platform to revive its Spanish distribution network after a previous agreement with Banco Popular came to an end following Popular’s sale to Santander in 2017.

  • U.K.’s New Brexit Deal Gambit May Emerge as Early as Next Week

    U.K.’s New Brexit Deal Gambit May Emerge as Early as Next Week

    (Bloomberg) -- The U.K. government plans to present detailed proposals to break the Brexit deadlock with the European Union after a Conservative Party conference next week, people familiar with the matter said.The plan would set out solutions for the post-Brexit border between Northern Ireland and the Irish Republic, a dispute that has dogged divorce talks for almost two years and delayed the U.K.’s departure from the EU.It’s a sign that while the two sides remain far apart, the looming Oct. 31 deadline for Britain to leave the bloc and EU reluctance to see Brexit drag on may be focusing negotiators’ minds.EU officials have acknowledged in private that movement in the talks is unlikely before the meeting of Conservative grass-roots members in Manchester, which ends Oct. 2. Prime Minister Boris Johnson’s government is preparing to send the proposal in time for other EU governments to scrutinize it before leaders meet for a summit in Brussels on Oct. 17-18, the people said.In an interview with The Times on Saturday, Brexit Secretary Stephen Barclay said the U.K. would share a legal text of its proposals “in coming days” after the conference.The prime minister is vowing to take the U.K. out of the EU on Oct. 31 whether he gets an amended divorce deal or not, even though Parliament passed a law forcing him to request a Brexit delay if there’s no deal.A delay can be granted only if the U.K. seeks one and if all the 27 remaining EU leaders approve it. German Chancellor Angela Merkel would give the green light for a postponement beyond Oct. 31 only if it was explicitly for a U.K. general election, according to BuzzFeed News on Saturday, citing unnamed diplomats.EU leaders believe it would be disastrous if the U.K.’s proposals for the Irish border came so late they would have to do more than tie up loose ends at the summit, so they want to see the U.K.’s plan in a matter of days.EU’s PatienceMore than three years after Britons voted to leave, Johnson also faces a serious risk that the EU’s patience has run out.Any U.K. request for another exit delay would be likely to require strong justification, such as an early election to resolve the political impasse over Brexit, and a sense from the U.K. government that it could use the extra time to craft a majority in Parliament for a divorce deal.Chief Brexit negotiator Michel Barnier said there’s no need for further EU efforts to prepare for a no-deal Brexit because “the EU has already finalized its work.” In a letter this week to his U.K. counterpart Barclay, Barnier reiterated that the deal that’s on the table “is the best way to protect citizens and businesses.”Boris Johnson’s Voters Give Their Verdict on Torrid Brexit WeekJohnson has said he wants to replace the proposed Irish “backstop,” which aims to avoid a hard border, with an alternative set of arrangements. EU and U.K. negotiators agreed on the plan almost a year ago, only to see Parliament in London reject it.As drafted, the backstop would keep the entire U.K. tied into the EU’s customs union and some single-market rules until the two sides come up with a better way of keeping the Irish border free of infrastructure and checks. Johnson says that’s unacceptable and has put forward ideas for carrying out checks and making customs declarations away from the border, and for using so-called trusted-trader systems and technology.(Updates with Barclay comment in fifth paragraph, Germany in seventh.)\--With assistance from Sarah Jacob.To contact the reporters on this story: Ian Wishart in Brussels at;Patrick Donahue in Berlin at pdonahue1@bloomberg.netTo contact the editors responsible for this story: Ben Sills at, Marion Dakers, Jacqueline MackenzieFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Investors Scramble for Pound Hedges as Brexit Drama Flares Up

    Investors Scramble for Pound Hedges as Brexit Drama Flares Up

    (Bloomberg) -- As U.K. Prime Minister Boris Johnson hardens his no-deal rhetoric and fuels mounting anger in Parliament, the hunt is back on for hedges to protect against the worst-case scenarios for Brexit.The dash is showing up in currency market derivatives, with one investor betting a notional 190 million pounds ($235 million) that sterling will fall more than 10% to $1.108 by the Halloween deadline for leaving the European Union. Options remain the most efficient pound bets amid the possibility of a chaotic divorce and a left-wing Labour government, according to Allianz Global Investors.Sterling steadied on Thursday after Johnson came out fighting in the House of Commons, refusing to resign or apologize after the U.K. Supreme Court ruled unanimously that his decision to suspend Parliament had been unlawful. The pound has gained more than 2% since early September yet persistent uncertainty around when and how Brexit will take place is helping to keep fund managers on the sidelines.“If you are expecting a big move, then deep out-of-the-money options will provide the best possible payoff,” said Kacper Brzezniak, a portfolio manager at Allianz. “The Brexit issue has not been solved and no deal, Corbyn or no deal with Corbyn, are all still very much possible,” he added, referring to Labour leader Jeremy Corbyn.NOTE: Pound Confronts Brexit Reality as Exuberance FadesFor Allianz, a “staggering” number of unlikely events need to happen before a Brexit deal can be secured, and that means a directional bet on the currency remains too risky.In contrast, options remain “not too expensive” with implied volatility falling from recent highs, Brzezniak said. The out-of-the-money put option is a bet that the currency will slip from current prices over a set period of time. Out of a notional total of 78.6 billion pounds worth of pound-dollar options since Sept. 1, 40 billion pounds were on bets looking for a weaker pound as of Wednesday. One third of these were on strikes $1.20 and below.Currency options aren’t the only way investors are hedging their risk. Bets are being racked up in the money market for a disruptive Brexit that will force the Bank of England into aggressive monetary easing.(Updates with political developments from first paragraph.)\--With assistance from Vassilis Karamanis and Neil Chatterjee.To contact the reporter on this story: Charlotte Ryan in London at cryan147@bloomberg.netTo contact the editors responsible for this story: Paul Dobson at, William Shaw, Michael HunterFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Moody's

    Allianz Life Insurance Co of North America -- Moody's announces completion of a periodic review of ratings of Allianz Life Insurance Company of North America

    Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Allianz Life Insurance Company of North America and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.


    Push for ‘Net Zero’ Investments Could Bolster Demand for Alternatives

    Those alternative investments could include timber and agriculture, says Günther Tallinger, a member of the management board of insurer Allianz.

  • Bloomberg

    Fintech Fundbox Raises $176 Million to Lend to Business Using AI

    (Bloomberg) -- Fintech Fundbox Inc. has raised $176 million in a new funding round from investors including Allianz SE and General Catalyst. The company plans to announce the funding on Tuesday, along with a new $150 million credit facility. A Fundbox spokesman said the new round valued the company at between $500 million and $1 billion, but would not disclose the exact valuation. The San Francisco-based startup is both a lender and a payments processor for small businesses. It uses artificial intelligence to assess the creditworthiness of potential borrowers, collecting data from other software and services used by the business, as well as their bank accounts.The platform also facilitates quick payments to the borrower’s suppliers. “We are focused on unlocking the working capital that’s tied up in unpaid invoices," Chief Operating Officer Prashant Fuloria said. By using Fundbox, “the seller gets paid right away," he added.Fundbox plans to use the fresh funding to hire employees in its engineering team and to expand the number of platforms it works with. The company will use the credit facility to lend directly to customers, Fuloria said.The business-to-business fintech lending industry has piqued the interest of entrepreneurs and investors in recent months. Other players include fast-growing Brex Inc., which offers quick credit decisions and credit cards for startups, also using non-traditional metrics. Jack Dorsey’s Square Inc., too, lends money to its small business customers.“There will always be competition where people flood the same customers,” said Joseph Engelhart, chief investment officer of Allianz X, the insurer’s investment arm. “What we like is the underlying technology where we think they still have an edge in extending credit to the right people.”Investors in Fundbox’s latest round include Allianz, Hamilton Lane Inc. and Synchrony Financial. It also saw participation from existing VCs including Khosla Ventures and Spark Capital Growth. The company declined to disclose which investors provided the credit facility. Inc.’s Jeff Bezos and celebrity venture capitalist Ashton Kutcher are also investors in the company, but did not participate in the most recent round. The startup has raised $300 million in funding so far.\--With assistance from Yaacov Benmeleh.To contact the reporter on this story: Ed Ludlow in San Francisco at eludlow2@bloomberg.netTo contact the editors responsible for this story: Anne VanderMey at, ;Mark Milian at, Andrew PollackFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • Exclusive: Aviva's Asian units attract interest from global suitors - sources

    Exclusive: Aviva's Asian units attract interest from global suitors - sources

    HONG KONG/SINGAPORE (Reuters) - German insurer Allianz, Nippon Life and MS&AD Insurance are vying with rivals to buy the Singapore and Vietnam businesses of Britain's Aviva in a deal likely to be worth up to $2.5 billion, sources said. Canada's Sun Life Financial and Manulife Financial Corp are also among roughly half a dozen suitors for the businesses, said the people with knowledge of the matter, who declined to be named as the talks are confidential.

  • Reuters

    INSIGHT-Fire and hail push insurers to rethink climate change risks

    By the time David Kaisel got back from selling his flour at a farmers' market, a wildfire in California's Capay Valley had burnt both his tractor and the shipping container where he kept some tools. Kaisel is the kind of customer making insurers rethink their approach to climate change so they can sell policies without incurring too much risk. "I’m already accustomed to drought, but in the past year I learned first-hand the consequences of both record rainfall and wildfire," Kaisel said.

  • Macron Is Making a Push to Direct France’s Big Money Toward Tech

    Macron Is Making a Push to Direct France’s Big Money Toward Tech

    (Bloomberg) -- Emmanuel Macron is courting France’s big institutional investors in a bid to make the country more attractive to tech money -- and see Paris become the seat of a European Nasdaq index.In Paris on Tuesday, the French president is set to announce a multi-billion euro pledge by banks and insurers, including Axa SA, Natixis SA, Aviva Plc and Allianz SE, to invest in France’s tech companies, his office told reporters. The French daily, La Lettre A, said the commitment may amount to 5 billion euros ($5.5 billion) over three years, a report his office declined to confirm.It’s part of a broader push by Macron’s government to attract more investment for innovation. Other measures include eased regulations and tax cuts. His long-term goal is the creation of a European version of the tech-heavy Nasdaq index, if possible based in Paris, his office said.There’s still a long way to go for that to happen. In the first half of this year, France’s four growth equity operations raised 580 million euros, Data compiled by EY show. That compares with five operations in Germany reaching 1.13 billion euros in the same period and seven operations in the U.K. that amounted to 2.39 billion euros.Apart from attracting more growth equity funds, to see such an index in Paris, Macron has to create smoother exit options, a tech-friendly stock exchange and harmonized Europe-wide regulations.Investors have pledged to either inject more money in existing venture capital funds such as Idinvest and Partech, in a ‘fund of funds’ created by state-backed investor BpiFrance, or to create their own fund, an official in Macron’s office said, declining to be named in accordance with Elysee Palace rules.Innovation companies raised about 2.79 billion euros in the first half this year in France, compared to 1.95 billion euros over 2018, according to the EY data. France is catching up to the U.K., the region’s leader, which had 5.3 billion euros of venture capital and growth equity in the period.French and foreign investors and company leaders will mix Tuesday evening as Macron hosts one of his trademark tech diners. Companies invited include Founders Fund, Accel and Lightspeed Venture Partners, and also sovereign funds for Saudi Arabia, Singapore, Qatar, Kuwait and South Korea.To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.netTo contact the editors responsible for this story: Ben Sills at, Caroline Alexander, Richard BravoFor more articles like this, please visit us at©2019 Bloomberg L.P.

  • What Makes Allianz SE (ETR:ALV) A Great Dividend Stock?
    Simply Wall St.

    What Makes Allianz SE (ETR:ALV) A Great Dividend Stock?

    Allianz SE (ETR:ALV) is a true Dividend Rock Star. Its yield of 4.2% makes it one of the market's top dividend payer...

  • WeWork Mystery: Who Owns 75% of Its Junk Bonds?

    WeWork Mystery: Who Owns 75% of Its Junk Bonds?

    (Bloomberg Opinion) -- To get a sense of how the market feels about the day-to-day drama coming out of WeWork, investors have little choice but to turn to its bonds.After all, the company has no publicly traded shares — and, if the latest twist in its saga is to be believed, that might be the case for longer than anticipated. Executives of WeWork and its largest investor, SoftBank Group Corp., are discussing whether to shelve plans for an initial public offering, people with knowledge of the talks told Bloomberg News. On top of that, the office-rental company may rely on junk bonds for funding for the foreseeable future or even explore a whole-business securitization, a WeWork executive said, according to a person familiar with the matter.Not surprisingly, WeWork’s junk bonds are tumbling. They fell below 100 cents on the dollar on Tuesday for the first time since the company filed to go public last month, with both the number of trades and overall volume reaching the highest in about a month. While a dip below face value doesn’t inherently spell doom, it’s nevertheless a sign that the bad news is starting to take its toll on investors.But here’s the mystery: Who exactly are those investors?We know who holds about 25% of WeWork’s $669 million in high-yield debt due 2025 because Bloomberg aggregates data from the most recent public filings. So, for instance, Lord Abbett & Co. held about $43.8 million as of May 31, or about 6.5%. The second-largest holder is Allianz SE, which includes funds from Pacific Investment Management Co.; grouped together, it owns about $21 million, or a bit more than 3%. Three State Street Corp. exchange-traded funds hold a combined $9.6 million, or 1.44%. In the period through July 31, funds from TIAA-CREF and Ameriprise Financial Inc. pared back their exposure. Still, that’s far from a complete picture. Only knowing who owns 25% of a company’s bonds is minuscule, even for the high-yield market. WeWork makes up about 0.05% of the Bloomberg Barclays U.S. Corporate High Yield Index. Here’s a sampling of other debt with nearly identical weightings and comparable maturities, and how much of its ownership is public:Lamar Media Corp. bond maturing in 2026: 47% known Seven Generations Energy bond maturing in 2025: 72% known J2 Global bond maturing in 2025: 51% known Navient Corp. bond maturing in 2021: 57% known Antero Resources Corp. bond maturing in 2023: 67% known CVR Partners LP bond maturing in 2023: 64% knownSuffice it to say, bonds in the high-yield index with lower publicly reported ownership than WeWork are few and far between. So if active money managers, ETFs, pensions(1) and life insurers make up only a quarter of investors, who else is left?  Hedge funds would be a likely place to start looking. WeWork’s bond matures in less than six years and offers a yield of more than 8%. (At the height of the rally last month, it yielded closer to 7%.) The Bloomberg Barclays high-yield index has a comparable average maturity of 5.76 years, but its yield is just 5.6%. There’s been no indication that SoftBank and its affiliates own any of the securities, but they do own about 29% of WeWork stock, which shows just how much the Japanese conglomerate has riding on the company’s success. Opportunistic investors appear to have jumped into WeWork’s bond at least twice this year. The bond soared after the company’s April 29 announcement that it filed paperwork confidentially with the Securities and Exchange Commission to hold an IPO and then again after it filed its S-1 prospectus in August. As I wrote in May, an IPO could give WeWork a cash injection that ought to cover interest for a while. It would also give bondholders a layer of protection in the capital structure because public shareholders would take the biggest hit if WeWork fizzles.These big investors, whoever they may be, can’t be feeling too comfortable right now, given the state of the IPO. As for We Co., the parent of WeWork, becoming a regular presence in the capital markets, I’ll just say this: It’s one thing to be Netflix Inc. — whose stock price has more than doubled since the start of 2017 — and tap the high-yield bond market again and again (its bonds maturing in 2026 have 73.5% public ownership). It’s quite another to be WeWork, given that its IPO range could wind up closer to $20 billion, compared with the $47 billion valuation it had earlier this year. There is no shortage of investors, analysts and commentators who see WeWork as the height of market folly. It’s a company with an unusual corporate structure and a business model that seems destined to implode when the economic cycle turns.So far, the bond market isn’t convinced that WeWork is about to crash and burn. That is, if anyone can trust trading among investors who are largely unknown.(1) The California Public Employees' Retirement System, or Calpers, held about $2.6 million of the bond as of June 30, data compiled by Bloomberg show. It's possible other pension funds don't disclose such precise figures.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at©2019 Bloomberg L.P.