Blog

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Hedge funds have adopted a new tactic in the distressed debt wars, arguing in a New York lawsuit filed on Tuesday that heavy-handed deals violate US anti-monopoly and cartel laws.

Manulife’s CQS, Algebris Funds and Deltroit Asset Management claim they were cut out of a deal that handed a group of other similarly situated bondholders disproportionate economic benefits in a debt restructuring earlier this year.

The lawsuit, which relates to the recent restructuring of Swiss vending machine operator Selecta, represents the first time that competition law has been invoked as an alleged charge of wrongdoing in the increasingly fractious realm of distressed debt litigation.

The claimants allege that a so-called co-operation agreement struck between the majority bondholders — a group that included Invesco, Man Group, Strategic Value Partners and Diameter — was specifically designed to keep the bulk economic benefits of a bond exchange from those not invited to join.

According to the complaint, the bonds currently held by the majority group trade at more than 70 cents on the dollar while the minority group has paper trading at half that level.

“The co-operation agreement is a classic example of an anti-competitive and collusive agreement between competitors . . . to control the price for Selecta Group BV’s first lien debt”, the complaint said. It alleged the agreement violated the federal Sherman Act and the New York state Donnelly Act.

So-called non pro-rata debt restructurings, where lenders or bondholders holding equally-ranked paper get different payouts, have proliferated in the US over the past decade. But only in recent years have European companies attempted such manoeuvres.

The Selecta deal drew attention this year among analysts and investors for what was believed to be one of the most complex and aggressive bond exchanges in recent memory.

Selecta, which was previously owned by KKR, had sought a solution to upcoming maturities in a near €1.5 debt stack it could not pay off.

The majority bondholder group used Dutch law on distressed disposals to take control of Selecta, and then offered a coercive bond exchange to the smaller holders.

That offer presented the smaller holders with a choice to either keep their existing paper, but pushed to the bottom of the creditor hierarchy, or take new senior paper which gave the majority group the ability to strip covenants and other protections ahead of potential future transactions through which the majority group could extract even more benefits.

Litigation over non-pro rata debt exchanges has typically centred on contract or securities law, which generally requires unanimous or supermajority approval within a class of creditors to change debt terms or execute a refinancing transaction.

Theories about how competition law may apply in intra-class disputes have surfaced in recent debates between academics and advisers.

However, those had focused on circumstances where a debtor company declared that a creditor co-operation agreement was anti-competitive, not a dispute between creditors as with Selecta.

The plaintiffs, who have separately alleged the restructuring violated contractual provisions of the bond indenture that required 90 per cent support for the deal, are requesting damages.

Samir Parikh, a law professor at Wake Forest University in North Carolina, expressed scepticism about the chances of success of the minority bondholder’s claims, but said that such a lawsuit was predictable.

“Parties resorting to antitrust law is unsurprising given the strong desire to undermine co-operation agreements and the relative ineffectiveness of other levers that have been pulled to date.”

Inflation has jumped to 3.2% in the year to September, from 2.1% in June, as waning government subsidies feed through to higher household power bills.

Any lingering chance of a rate cut next Tuesday was squashed after the new Australian Bureau of Statistics figures also confirmed a troubling rise in underlying inflation.

The Reserve Bank’s preferred trimmed mean measure – which removes the impact of large, temporary price moves – climbed by 1% in the three months to September and far ahead of the RBA’s predicted rate of 0.6%.

_{Sign up: AU Breaking News email}

That left inflation on this trimmed mean measure at 3% in the year, against 2.7% in June.

Michele Bullock, the RBA’s governor, this week made it clear that a quarterly rise in underlying inflation of 0.9% would be a “material miss”, signalling the monetary policy board would not be prepared to deliver a fourth rate cut.

While Australians will feel the bite of higher electricity prices, what has been more concerning for the central bank is the unexpected and unwelcome lift in underlying inflation.

Bullock this week made it clear that the central bank is, for now, more worried about the prospect of resurgent inflation than a recent jump in unemployment.

Bullock said the labour market was not about to “fall off a cliff” and that the jobless measure was “still pretty low”.

By Emily Bary

Volume growth picked up in the latest quarter, suggestive of healthy payment activity

Visa’s revenue exceeded expectations in the September quarter.

Volume growth picked up in Visa’s latest quarter, signaling a robust spending landscape.

The company on Tuesday reported 9% growth in payment volume for its September quarter, up from the 8% growth rate posted in the June quarter.

The “continued healthy consumer spending,” as described by Chief Executive Ryan McInerney, drove Visa (V) to beat revenue expectations for the latest quarter. The company posted $10.7 billion on the top line, up 12% from a year earlier and above the $10.6 billion that analysts tracked by FactSet were forecasting.

Adjusted earnings per share came in at $2.98, topping estimates by a penny.

Read: SoFi’s business is on fire, and these earnings numbers show what’s clicking

Visa benefited from 12% growth in cross-border volume, which is largely seen as a proxy for spending related to international travel but also includes things like e-commerce transactions conducted between a merchant and buyer each based in different countries. Cross-border volume tends to be more profitable than domestic volume.

Shares of Visa were edged 0.4% higher in the extended session, with the company’s outlook potentially encouraging as well. Visa just began its new fiscal year and expects a low-single-digit revenue growth rate for fiscal 2026. Analysts tracked by FactSet were looking for $44.2 billion in annual revenue, implying expectations for 10.5% growth.

“As technologies like AI-driven commerce, real-time money movement, tokenization and stablecoins converge to reshape commerce, our focus on innovation and product development positions Visa to lead this transformation,” McInerney said in his statement.

Investors will get another look at the payment-technology landscape on Thursday morning, when Mastercard Inc. (MA) reports its September-quarter results.

See also: PayPal partners with OpenAI – and its stock is rewarded

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  10-28-25 2025ET
Copyright (c) 2025 Dow Jones & Company, Inc.