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Uncle Pipeline’s Corner

Uncle Pipeline has been a Financial Pipeline contributor since 1996. An expert in investing in bonds to managing your personal finances, he’s the kindly uncle who is always there for you with great financial advice. Always opinionated but never boring, Uncle Pipeline’s insightful anecdotes and simple explanations will help you to make better decisions about your money. He’s like a stiff pull of hard liquor – a little hard to swallow, but remarkably warming and helpful in the end.

You can trust him to curate the financial news you need to know about.

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World’s tax collectors look to divvy up tech giants’ billions*

Publication: Wall Street Journal
The world’s tax collectors have been gunning for Silicon Valley. Now they’re trying to figure out how to divide up the spoils. [Read more]
Why you have to read this
A big shift for large tech companies will come when they start actually paying taxes on most of their revenues. Expect this to not only continue but to increase once a new system is in place.

Santander gives bond investors a nasty surprise

Publication: Bloomberg
Banco Santander SA reminded investors that juicy bonds can come with nasty surprises. The Spanish lender rattled the bank Additional Tier 1 market by saying it will skip an option to call 1.5 billion euros ($1.7 billion) of perpetual contingent-convertible notes next month, sending the bonds tumbling. The announcement came late Tuesday, right at the deadline for a decision, after the bank kept investors in the dark for weeks regarding the call option and in the aftermath of another deal, a sale of dollar AT1 notes on Wednesday. [Read more]
Why you have to read this
Earlier this week, Banco Santander decided not to call a convertible contingent (coco) bond at its first call date. This roiled portfolio managers globally who thought they had a handshake deal with banks on how these securities would be treated. At the end of the day, investors are responsible for understanding the structures and risks of the securities they buy, and issuers are responsible for doing what is in the best long-term interest of their companies. It will be interesting to see if other banks follow suit and how the market will price these securities going forward.

The benchmark set to replace Libor suffers volatility spike*

Publication: Wall Street Journal
Recent volatility in the market for overnight cash loans is raising concerns about a new benchmark that could set interest rates for trillions of dollars in mortgages and corporate debt. [Read more]
Why you have to read this
One of the most important developments in the last 10 years in the financial markets has been the move to phase out Libor. AND it is something that Finpipe has written extensively about! (LINK ARTICLE). The replacement of Libor with SOFR has been controversial and some believe it may never actually happen. Cracks in the efficacy of SOFR appear to already be showing and solutions will need to be found.

*While we’re doing our best to deliver the latest and greatest industry news to you, sometimes our delivery can only take it so far. Please note this particular article is behind a paywall and will require a subscription for you to read it.