Tesla Alum Targets Grid Transformation with Heron
Long-serving Tesla executive Drew Baglino has launched a new startup to address a major bottleneck in the energy sector transformers. Baglino discusses his company's technology and his experience at Tesla with Caroline Hyde and Ed Ludlow on 'Bloomberg Technology.' (Source: Bloomberg)
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Yahoo
6 minutes ago
- Yahoo
Home remodeling bond sales surge as Americans avoid moving
(Bloomberg) — Wall Street is cranking up the bond machine as US homeowners — finding that buying a new house is out of reach since mortgage rates started climbing in 2022 – are instead getting home equity loans and sprucing up their current properties. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract The Global Struggle to Build Safer Cars NYC Residents Want Safer Streets, Cheaper Housing, Survey Says The Buffalo Architect Fighting for Women in Design US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Roughly $18 billion of bonds, backed by consumer loans on everything from second mortgages to loans that get repaid from future home value, were issued last year, according to data compiled by Deutsche Bank AG (DB) and Bloomberg. That's triple the amount in the year prior, and sales are on pace for a similar level in 2025. With a near-record $35 trillion tied up in US home equity, households are dipping into their housing wealth to pay for renovations and other purchases rather than buy new homes that would require them to switch into mortgages at higher rates. With sales of previously owned homes — and thus new loans — stalling, the home loan industry is paying attention. 'They're taking their mortgage-making factories and starting to use them to create home equity products,' said Gabe Rivera, co-head of securitized products at PGIM. Investment firms are scooping up the loans and then repackaging hundreds or thousands of them at a time into bonds of varying size and risk, a process known as securitization. This year, Atlanta-based Angel Oak Capital Advisors and New York's Annaly Capital Management Inc. both issued their first-ever bonds secured by home equity lines of credit. In April, mortgage servicing giant Mr. Cooper Group Inc. joined the growing ranks with its first bond backed by second mortgages. Home equity-backed bonds are still a relatively small corner of the market, at least compared with the vast bond offerings for mortgages guaranteed by the quasi-government entities Fannie Mae (FNMA, FNMAS, FNMFO), Freddie Mac (FMCC, FMCCH, FMCCM) and their sister organization Ginnie Mae. Together, the trio are expected to crank out some $1.15 trillion of MBS this year alone, according to Citigroup Inc. estimates. Still, the field is growing. TPG Angelo Gordon estimates there's a $2 trillion market for home equity products. And thanks to tighter lending standards and regulations, the debt also appears safer than in the 2008 financial crisis, when many borrowers in riskier loans fell into foreclosure. That's piqued the interest of big investors, including private credit firms, which are deploying other strategies to scale up access to home equity. One method is to agree to purchase substantially all of the loans that mortgage lenders write, even ones that haven't yet been made, as long as each fits certain criteria. Those arrangements are known as 'forward flow' agreements. Despite the growth in direct lending, the public securities markets often represent the largest and most liquid source of capital to fund such deals. To homeowners, the vast difference between the rate on their current mortgage and what they'd get with a new mortgage poses a problem. Before, when a consumer wanted to convert some home equity into cash, they could simply replace their existing mortgage with a new bigger one in a cash-out refinancing. But with mortgage rates still high, that no longer makes sense. Instead, homeowners are using either a home equity line of credit, which is a revolving credit line akin to a credit card, or they can take out a second mortgage. Both achieve a similar purpose: convert home equity into an up-front cash advance, without jeopardizing the existing mortgage. 'Home equity products are designed to let homeowners take cash out against their house while keeping in place senior mortgages with below-market coupons,' said PGIM's Rivera. Use of a newer solution, home equity investment, or HEI, contracts more than tripled last year. They work by giving a homeowners an up front cash payment, in exchange for which borrowers agree to give lenders some of their future home equity. HEI contracts are often used by borrowers with somewhat lower credit scores than those who borrow against their existing equity or take out second lien mortgages, and are often used to consolidate debt or pay for remodeling and home renovation projects, according to DBRS. Some investors caution that HEI contracts resemble mortgage products with adjustable interest rates from the early 2000s, which ended up delivering losses to investors. 'Investors considering bonds backed by these contracts should carefully scrutinize them,' said Michael Hislop, an analyst at Curasset Capital Management. 'What kinds of borrowers are going to find HEI the most attractive? Ones without money to make mortgage payments.' DBRS said defaults of HEI contracts have been relatively rare so far, according to its 2024 report. By and large, securitizations of home equity have performed relatively well in recent years. Lending volume for home equity-related debt is far below the years leading up to the housing bubble bursting nearly two decades ago. Industry insiders say that consumer housing reforms made after the subprime housing bubble of the early 2000s have purged most of the riskier borrowers from the market and that structural housing shortages are keeping upward pressure on home prices. Even so, there are dangers. The good performance has coincided with a period of strong housing price growth and low unemployment. If home prices were to enter a sustained decline, pressures could emerge, according to Ryan Singer, head of residential credit at Balbec Capital. 'It's true that there are trillions of dollars in home equity,' said Singer. 'But if you look at the individual mortgages, you can actually see that borrowers are making very small down payments on average, and that there are plenty of people with no equity in their homes.' Still, as long as interest rates remain elevated homeowners will continue to look for alternative ways to borrow. And with plenty of specialist companies tapping into structured debt markets for the first time, Wall Street's bond machine will keep humming. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy
Yahoo
19 minutes ago
- Yahoo
Emerging Assets Surge on Risk Rally Fueled by Bleak US Data
(Bloomberg) -- Emerging-market assets surged across the board Thursday, as another round of jobs data soured sentiment in the US. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract The Global Struggle to Build Safer Cars NYC Residents Want Safer Streets, Cheaper Housing, Survey Says The Buffalo Architect Fighting for Women in Design US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn MSCI's EM stock gauge has advanced 2.2% this week, reaching its highest level since October amid increased appetite for riskier assets. An index of developing-nation currencies is up 0.3% Thursday as expectations for a more dovish Federal Reserve undermine the dollar. The greenback also sank following reports US President Donald Trump and Chinese President Xi Jinping spoke Thursday. 'The fact that the labor sector is showing signs of softening in the US is a major factor aiding the deterioration of the dollar across the board,' said Juan Perez, director of trading at Monex USA. News of the call between Washington and Beijing is also aiding commodities, bolstering many developing world currencies, he said. The Korean won led gains in the MSCI currency index, extending an advance from earlier in the week after a presidential election helped end a political power vacuum. The currency stands out among other outperforming peers in the past month, said Chris Turner, a strategist at ING Bank NV, who highlighted demand for higher yielding currencies in Latin America, South Africa and Czech koruna. The market is betting Korean officials will be asked to allow the won to strengthen 'should market forces dictate such a move,' Turner said in a note. He anticipates the won will extend its gains beyond the 1350 level against the dollar. The Brazilian real jumped to its highest level since October amid the EM currency rally, and is among the top gainers in the MSCI currency index. In credit markets, Peru is selling new global bonds denominated in its local currency for the first time in almost a year. At the same time, the South American nation is offering to repurchase notes due in 2026, 2028, 2029 and 2031 for cash, according to a Thursday statement. Some of the old debt will be exchanged for new bonds. Elsewhere, Kazakhstan held borrowing costs unchanged for a second meeting and cast doubt on a reduction this year. And Poland's central bank will take future decisions based on incoming data but will act to tame inflation in a sustainable manner, Governor Adam Glapinski said at a news conference. --With assistance from Andras Gergely. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
21 minutes ago
- Boston Globe
How Trump got me to turn against America
Advertisement I am rooting for Elon Musk's rockets which employees they could do without, and there's not much evidence that they ever cared. Now I am cheering on Tesla's extremely successful rival in the electric car market, I'm not just rooting for a Chinese company; I'm rooting for China, a despicable police state — maybe I'll stop right there. What kind of a country Advertisement I'm happy that foreign tourists aren't coming here. As far as I'm concerned, stay the hell away. These decisions are affecting people, for instance hospitality workers in New England, who are feeling the sting of Canadian travelers Two friends from Nova Scotia visited Providence, R.I., last week on urgent family business. They told us all their friends asked them: 'Why are you going to America?' If I were planning a trip from abroad, I would visit (the late) Canada as the '51st state' — what a joke. We should be so lucky to be the 11th province, though I doubt they would have us. I've been able to temper my enthusiasm for Harvard University over the years, but you bet I am rooting for it in its absurd Sure, let's shoot ourselves in the foot, or whatever appendage the former World Wrestling Entertainment czarina 'Education' Secretary Linda McMahon deems appropriate. As brilliant scholars ditch US universities for Oxford, Cambridge, the Sorbonne, and Tsinghua University, I'll be egging them on. Advertisement America's greatest strength is its embrace of change, and I'm not someone who believes change has to proceed in a leftward direction. I What's happening now isn't change but cultural suicide. With ignorance celebrated as a virtue, and jingoism masquerading as policy, we will quickly lose our attraction to other countries, and ultimately our own self-esteem. I wish I didn't feel this way, but I do. Alex Beam's column appears regularly in the Globe. Follow him
