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FT editor Rula Khalf, selects his favorite stories in this weekly newspaper.

Good morning. Investors are expecting a dowish shift in the Federal Reserve after the end of Jay Powell’s tenure. After April 2026, the Fed Fund rate, as lies by Futures Market, is falling for past monthIt is likely to be due to a deep expectation that Trump will choose the obedient pigeon (how to put one?) To replace Powell in May. But this can also be caused by recent economic data being good. Let’s hope that it is the latter. email us: unhedged@ft.com,

Meta and Private Loans

On Friday, our colleagues Eric Plot, Oliver Barns and Hannah Murphy wrote He

Meta is trying to raise $ 29BN to fund all its push in Artificial Intelligence. , , Conversation between Instagram-Malik and Private credit According to people familiar with the case, investors have upgraded with many big players including Apollo Global Management, KKR, Brookfield, Carlile and Pimco. , ,

Meta They are expecting them to raise $ 3BN equity and then another $ 26BN loan. But it is arguing how to structure to increase the loan on a large scale. , ,

[Meta is] Keeping in mind the methods that can make the loan more easily traditional after release, people said. This factor is a potential investor who has studied the transaction, raised in view of its sheer shape.

It hit us, first read, as a little strange. There is a place to raise traditional debt capital easily at competitive prices: Corporate Bond Market. It will eat more meta debt as a pig has a corn account. Meta is a great credit. It has a net cash position of $ 21bn (including leases). Its loan/equity ratio is .16. It produced $ 50BN in free cash flow in the last twelve months, as it has dumped $ 44BN on capital expenditure. Its 2054 bonds trade on a yield of less than 30 years in a yield of less than 30 years.

The company, briefly, looks easy to lend rather than a company, a wild-low-level, which requires a wheezi private debt-equity structure to get a hand on some money. All of this is miles away from Intel, a leveraged and lawmpting company that stucks a debt and equity deal Last year to finance a new chipmaking plant with Apollo.

A well -structured deal can close the additional loan from the meta balance sheet of the meta, and even for anyone else the huge data center can be some of the risk of investment. Therefore (someone can argue) a smart deal can look like a classic, capital-light tech company, which is worthy of high value/income ratio on its equity (P/e is now around 26). But this argument does not work. Meta is not a particularly capital-publish business, and a financing structure is not going to change it in the eyes of investors. Or it should not be at any rate.

The way we can make an understanding of such a deal, it is not in the context of meta. demand Private loan for financing, but large property manager ‘ supply Of luggage. Private credit providers in the five years ended in 2024 (more than $ 1TN have been raised more than $ 1TN. According To McInse). Private equity also has a weight of dried powder. So maybe the world’s Apolos and KKR are appealing to the meta because their finance is cleverly structured, but because it is cheaper. Investors can work for themselves what it means for the future returns of private capital.

We will get Central Bank Digital Currency, but we probably need the first crisis

Last week we Argued A deposit token released by JPMorgan Chase does not add too much value as payment techniques, out of the facility of crypto asset trading. The bank pitchs it as a way to make it cross-limit payments more time and efficient-but it only works when both the payable and the payment are JP Morgan Clients, and if so, the payment from across the border must be smooth anyway.

That said, if the stores of commercial banks in the Central Bank were token, the money can actually proceed between various banks, even beyond the borders, “at the speed of the Internet”. If so, there may be a two-tier digital money system (commercial bank deposit tokens and central bank digital currency), which is fully conforming for our current two-level analog monetary system (Commercial Bank deposit and bank store held in the central bank). In that world, JPMD can have a very comprehensive use case, as it can be exchanged in real time for Bank of America or HSBC deposit tokens (they are not yet present, but they will).

A lot of ink has spread on the subject of central bank digital currencies – their use Matterstheir riskHow to do Design them (I highly recommend this one Bhajan book From our colleagues in monetary policy radar). In short, CBDCs is a digital form of a country’s official currency, which is controlled and issued by the central bank. They can come in two tastes, in theory: retail CBDC, which can be used by the general public and for physical cash for a digital analog; And wholesale CBDC, which can only be used between commercial banks for interbank transactions.

Creating retail CBDCs is not currently on the table in the US. Earlier there are many issues to solve, but the biggest obstacle has been Trump Administration so far. executive Order Banning their composition. It is probably because Trump wants to protect the private digital currency industry (in which he is one Participant) From government competition. It is a matter of shame. Citizens should only be banned to own the obligations of the state, only in the ancient form of paper or metal bits? And PGIM’s chief global economist Dalip Singh argued with us, if the world is moving towards CBDC, it inspires America to lead the charge or play a big role in at least CBDC regulation.

The wholesale CBDCs can occur on the table, however. Former CFTC chairman Harvard Kennedy School, Tim Masad argued us that Trump ruling did not really target the wholesa CBDC – just retail. “I don’t think they are particularly worried [wholesale]And finally [the Trump administration] want[s] They. “In principle, wholesale CBDCs are not risky.

Therefore, so far, token retoks are firmly in the hands of payment companies and stablecoin issuers. We hope that innovation flowers will continue. Resistance from Trump administration and slow pace of change in governments (and especially) governments mean officially supported, international, digital two-tier money and banking system is closed in a way.

how will we get there? There is a prediction of unhealthy, which we know about the history of banking. Private digital money will continue to grow until in a moment of stress, it falls in a major crisis. Governments will have to intervene extensively. Of that intervention, a proper digital money system will be born with little luck.

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