The podcast discusses EU's workaround to support Ukraine, rising European CLO issuance, TikTok advertisers' plans amid US ban threat, and Amazon/Microsoft's AI investments in India.
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Quick takeaways
The EU's innovative legal workaround enables support for Ukraine by using profits from Russia's frozen assets, overcoming Hungary's veto.
Collateralized Loan Obligations (CLOs) are experiencing a resurgence in Europe due to attractive yields and improved transparency post-2008 crisis.
Deep dives
EU Finds Solution for Ukraine Funding Despite Hungarian Obstruction
The European Union has devised a sophisticated legal loophole to provide monetary support to Ukraine, even in the face of Hungary's opposition. This workaround allows the EU to use profits from Russia's frozen assets to purchase weapons for Ukraine, bypassing Hungary's veto on offering aid. The G7 proposed a $50 billion loan for Kiev, with repayment also planned through these profits. Hungary's pro-Russian stance within the EU complicates matters, but the bloc's foreign ministers are set to discuss this innovation.
Resurgence of Collateralized Loan Obligations in Europe
Collateralized Loan Obligations (CLOs) are making a robust comeback in Europe as investors seek higher returns. Despite their past association with the 2008 financial crisis, CLOs are now appealing due to their attractive yields and relatively stable loan performances. Enhanced transparency and structural improvements post-crisis have attracted European investors. However, the longevity of this trend hinges on a sustained supply of junk loans, linked to the market's leverage buyout and M&A activities.
The EU has devised a legal workaround to sidestep Hungary’s veto on buying weapons for Ukraine, investment vehicles that scoop up risky loans are being launched at a record rate in Europe this year, and agencies representing TikTok’s biggest advertisers are drawing up contingency plans as the US prepares to ban the popular video app. Plus, Amazon and Microsoft are scaling up infrastructure investments for artificial intelligence in India.
The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help from Denise Guerra, Breen Turner, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Our intern is Prakriti Panwar. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.