sections

Saturday, 02 August 2014

Argentina

The dogs that didn’t bark

IFR 2044 2 August to 8 August 2014

Emerging markets investors could be forgiven for thinking they were trapped in some sort of time warp last week.

Top News

VTB

Russia's eye-catching rebound fades

IFR 2044 2 August to 8 August 2014 By Abhinav Ramnarayan, Sudip Roy

Russian credit prices were volatile at the end of a week that saw a further round of sanctions from the US and EU, as well as a court ruling on Yukos Oil that said Moscow had to stump up US$50bn to its former shareholders as compensation for appropriating the company’s assets.

MOSCOW

Loan market shut to Russian names

IFR 2044 2 August to 8 August 2014 By Chris Mangham, Tessa Walsh

Fresh EU and US sanctions have frozen Russian companies out of the international syndicated loan market.

Argentina bonds

Argentina: acceleration fears rise

IFR 2044 2 August to 8 August 2014 By Joan Magee, Davide Scigliuzzo

A rush to contain the fallout from Argentina’s default last Wednesday is under way as markets continue to bet that the beleaguered sovereign will ultimately be able to repay exchange bondholders in full.

China

China reforms build IPO hopes

IFR 2044 2 August to 8 August 2014 By Daniel Stanton,

China’s plans to reform the shareholding structures of several large state-owned enterprises may lead to some huge Hong Kong IPOs as early as next year. The government’s plan to reform SOEs gained momentum when Bank of Communications said in a statement last Monday it was studying plans to diversify its ownership structure and improve its corporate governance.

Russia

Derivatives (and Kalashnikovs) get sanctions relief

IFR 2044 2 August to 8 August 2014 By

As financial lawyers scramble to assess the impact on financial markets of the latest round of international sanctions against Russia, two unlikely bedfellows have been earmarked by the US Treasury as safe for the time being.

Mobileye

Pre-holiday IPO rush produces mixed results

IFR 2044 2 August to 8 August 2014 By Anthony Hughes

US ECM bankers last week priced the most IPOs in a week since 2007, but mixed aftermarket performances, rising volatility, macro concerns and general investor fatigue look set to bring activity to a crawl, right in time for the traditional late summer break.

Automated teller machines of Banco Espirito Santo in downtown Lisbon

BES on the brink as bailout talk grows

IFR 2044 2 August to 8 August 2014 By Aimee Donnellan

The dramatic saga surrounding BES reached crisis point on Friday as the lender’s massive €3.6bn loss sparked talk of a government bail-out and fuelled fears that senior bondholders might be at risk – alongside those holding the bank’s subordinated paper.

Screens

High-yield investors welcome volatility

IFR 2044 2 August to 8 August 2014 By Natalie Harrison

High-yield bankers will unleash a barrage of deals over the next two weeks, even though big outflows from high-yield funds and rate rise fears have put the asset class in its most volatile state in months.

IFR Magazine Top News in Full (subscription required)

People & Markets

The headquarters of Deutsche Bank are pictured in Frankfurt

Deutsche fresh capital already eroded

IFR 2044 2 August to 8 August 2014

Deutsche Bank has already begun to eat into the capital cushion it built through a €8bn rights issue just five weeks ago, after new adjustments to its internal models led to a jump in risk-weighted assets, eroding its capital ratio by half a percentage point in the second quarter alone.

High frequency trading

Dark pool probe widens

IFR 2044 2 August to 8 August 2014

UBS, Deutsche Bank and Credit Suisse admitted last week that they have been swept up in the regulatory probe of high frequency traders and the platforms on which they trade.

A sign for Bank Street is pictured in the financial district Canary Wharf

UK bankers face seven-year claw-backs

IFR 2044 2 August to 8 August 2014

Miscreant bankers face having their bonuses clawed back for up to seven years after their award, under measures set out by the Bank of England as it tightens its regulatory clampdown on wrongdoing in the financial sector.

Barclays bank logo

Barclays sees markets slump amid rebalancing

IFR 2044 2 August to 8 August 2014

Barclays continued to lose ground across its markets business in the second quarter, with revenues down 16% from a year ago to £1.4bn after a poor performance at each of its macro, credit and equities divisions.

Fees

Top banks consolidate positions in slow July

IFR 2044 2 August to 8 August 2014

Dealmaking slowed in July as decision makers took to the beach in the Northern hemisphere, with investment banks generating fees of US$8.6bn during the month from bonds, equities and loans, down from June’s US$9.1bn.

People walk past the headquarters of Swiss bank UBS in Zurich

Origination boom boosts UBS RoE to 30%

IFR 2044 2 August to 8 August 2014

UBS posted a solid 30% return on equity at its slimmed-back investment bank in the second quarter, putting many of its larger rivals in the shade after a surge in revenues at its debt and equity capital markets divisions.

A pedestrian is seen passing the head office of the Lloyds Banking Group in central London

Lloyds fined US$370m for rigging Libor

IFR 2044 2 August to 8 August 2014

Lloyds could face further punishment after agreeing to pay fines totalling US$370m for its part in a global interest rate rigging scandal and for attempting to manipulate fees for a government lending scheme to help banks.

The logo of French BNP Paribas bank is seen in central Paris

Solid quarter offsets mammoth fine for BNP Paribas

IFR 2044 2 August to 8 August 2014

A surprisingly resilient performance across each of its fixed income, equities and advisory, and corporate banking franchises helped BNP Paribas’ corporate and investment bank to its biggest profit in five quarters during the three months to the end of June.

    More from People & Markets

    Bonds

    BNPP under fire for breaching convention

    IFR 2044 2 August to 8 August 2014

    BNP Paribas’ decision to act as a sole lead manager on a debut covered bond deal unleashed the wrath of its competitors last week, even though the French bank was merely breaking with market convention.

    Tyson Foods meat products

    Tyson paves way for US$3.25bn bond

    IFR 2044 2 August to 8 August 2014

    Determined not to squander the years it spent clawing its way out of the junk bond market, Tyson Foods has pandered to bond investors by issuing more equity than first expected to pay for its US$8.2bn acquisition of Hillshire Brands.

    Casino draws in investors

    IFR 2044 2 August to 8 August 2014

    French retailer Casino Guichard Perrachon brought the corporate market back to life on Wednesday with an oversubscribed €900m 12-year deal.

    Wind mills

    Green boom needs regulatory lasso

    IFR 2044 2 August to 8 August 2014

    The speed of growth in the Green bond market in the past year is raising serious questions over whether the lack of scrutiny and binding requirements in the sector are storing up problems for the future.

    NRG Yield makes debut a green one

    IFR 2044 2 August to 8 August 2014

    NRG Yield, the recently spun-off alternative energy generation unit of NRG Energy, made its debut bond offering last week with a US$500m 10-year subordinated debenture that could open the door for other trades from similarly structured yieldco entities.

    Hospira tax inversion trade could be boon for bonds

    IFR 2044 2 August to 8 August 2014

    Medical device maker Hospira is reportedly the latest company seeking to avoid US taxes by purchasing an offshore company, with rumours circulating the markets last week that it is in negotiations with France’s Danone.

    Dollar Tree plans US$2.8bn notes for acquisition of Family Dollar

    IFR 2044 2 August to 8 August 2014

    US discount retailer Dollar Tree plans to debut in the junk bond market with US$2.8bn of notes to help pay for its US$8.5bn acquisition of rival Family Dollar Stores.

    Sondrio debuts covered in deserted FIG market

    IFR 2044 2 August to 8 August 2014

    Banca Popolare di Sondrio attracted over €1.1bn of orders from 50 investors for a debut covered bond issue priced last week after a two-day execution process.

      More from Bonds

      Loans

      Logo of drug capsule maker Capsugel

      Pricing differentiation enters the fray

      IFR 2044 2 August to 8 August 2014

      Europe’s leveraged loan market is experiencing real pricing differentiation where assets are being assessed on credit fundamentals, eroding the standard wholesale pricing model that has defined the market up to now.

      Logo of French low-cost telecoms provider Iliad

      Iliad lines up financing for T-Mobile bid

      IFR 2044 2 August to 8 August 2014

      Telecoms company Iliad has lined up a US$13bn financing to back a US$15bn bid for 56.6% of T-Mobile US, providing the latest and biggest boost to an already hectic European leveraged market.

      Telepizza

      Telepizza dodges restructuring with refinancing

      IFR 2044 2 August to 8 August 2014

      Struggling Spanish pizza delivery business Telepizza is set to refinance existing loans with a new first-lien loan and a new PIK loan that will help it to escape an expensive debt restructuring.

      Logo of the Monetary Authority of Singapore

      Regulator seeks PRC lending data

      IFR 2044 2 August to 8 August 2014

      The Monetary Authority of Singapore has sought information from some Singapore-based lenders about their Chinese clients and loan exposure to China amid an investigation into a suspected commodity financing fraud at China’s Qingdao port. 

      TLB first for Chinese credit

      IFR 2044 2 August to 8 August 2014

      Packaging company HCP Global is set to become the first Chinese credit to complete a Term Loan B, in a move that underlines the continued appeal of the US institutional loan market.

      3M office

      3M, Omnicom allocate revolvers

      IFR 2044 2 August to 8 August 2014

      Manufacturing conglomerate 3M and advertising and marketing communications services company Omnicom Group have both allocated five-year revolvers.

      GKN logo

      UK: GKN seals £800m of facilities

      IFR 2044 2 August to 8 August 2014

      Engineering group GKN has agreed £800m of revolving credit facilities to replace £830m of existing bilateral revolvers that were due to mature in 2016 and 2017.

      Sankaty buys JPM loan portfolio

      IFR 2044 2 August to 8 August 2014

      Sankaty Advisors swooped in to buy US$1.3bn of loans and other securities from JP Morgan in its biggest portfolio takeover yet, and sees opportunity to soak up more from European banks shedding assets to meet regulatory requirements.

      More from Loans

      Equities

      The logo of VTB Bank

      Sanctions strangle pipeline

      IFR 2044 2 August to 8 August 2014

      The Russian pipeline looks once again to be in disarray, with European capital markets to be shut to state-owned banks, while Barack Obama said on Wednesday that VTB, Bank of Moscow and the Russian Agricultural Bank would be cut off from the US economy.

      Synchrony Financial logo

      GE out of sync with investors

      IFR 2044 2 August to 8 August 2014

      The lack of a near-term catalyst and the disappointing performance of recent consumer finance IPOs contributed to a flat debut last week by Synchrony Financial, the GE private label credit card operation.

      Flipkart logo

      India: Still waiting for internet IPOs

      IFR 2044 2 August to 8 August 2014

      Equity buyers shopping for a slice of the Indian e-commerce pie will have to wait a bit longer, after market leader Flipkart chose to raise US$1bn from private investors rather than through an IPO.

      A Zions Bank branch

      Zions eases stress with US$525m ABB

      IFR 2044 2 August to 8 August 2014

      Regional bank Zions Bancorporation raised US$525m via a rapid-fire equity offering early last week, a capital injection that more than meets the bank’s resubmitted capital plan approved by the Federal Reserve on Friday.

      An employee speaks on the phone in the headquarters of Industrial and Commercial Bank of China Ltd (ICBC) in Beijing

      China: ​ICBC set for jumbo issue

      IFR 2044 2 August to 8 August 2014

      Industrial and Commercial Bank of China secured board approval to issue preferred shares of up to Rmb80bn (US$12.84bn) after peers Agricultural Bank of China and Bank of China had earlier announced similar plans. 

      Mobileye IPO drives investors wild

      IFR 2044 2 August to 8 August 2014

      Mobileye, the Israel-based autonomous driving software company, last week delivered one of the strongest outcomes seen on a recent US tech IPO, surging 44% on debut even after substantially enlarging the deal during the roadshow.

      Westlake Chemical sub IPO provides lift

      IFR 2044 2 August to 8 August 2014

      Master limited partnerships are all the rage and for good reason: valuations being paid by public investors are not rooted in fundamental analysis, but on the basis of current income plus growth. In other words a fixed-income surrogate with growth baked in on purchases of assets in the future.

      The headquarters of the Bank of Cyprus

      Wilbur Ross backs another bank

      IFR 2044 2 August to 8 August 2014

      Bank of Cyprus is raising €1bn to shore up its capital ratios ahead of more stress tests later this year, through a three-tranche approach.

      More from Equities

      Derivatives

      IntercontinentalExchange logo

      CCPs ramp up collateral efforts

      IFR 2044 2 August to 8 August 2014

      How to protect the hundreds of billions of euros worth of collateral that will be tied up in central counterparties has become a major focus for market participants ahead of mandatory derivatives clearing in Europe going online around year-end.

      SocGen

      Low vol hits equity revenues

      IFR 2044 2 August to 8 August 2014

      Early year exuberance for resurgent 2014 equity revenues came to an abrupt halt as the top dealers posted a 13% year-on-year revenue slump for the second quarter.

      ISDA to determine ESFG credit event

      IFR 2044 2 August to 8 August 2014

      ISDA’s European credit determinations committee has accepted a request to decide whether a credit event has occurred with respect to Espirito Santo Financial Group – the largest shareholder in Portuguese lender Banco Espirito Santo, with a 27% stake.

      Academic proposes CCP nationalisation

      IFR 2044 2 August to 8 August 2014

      Regardless of the Dodd-Frank efforts to eliminate bailouts of Too-Big-To-Fail entities, the US government should codify plans to nationalise OTC swaps clearing houses in the event they approach failure, according to a leading academic.

      Credit hub disagreements subside

      IFR 2044 2 August to 8 August 2014

      Almost a year after a surprise CFTC dictum caused a minor scuffle between banks and swaps execution facilities working to implement Dodd-Frank reforms, market incumbents have largely accepted the need for the pre-trade credit checking facilities at the centre of the disagreement.

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      Capital CityCapital City logo    

      Bellwether. n. From the practice of placing a bell around the neck of a castrated ram

      Kalash 'n carry

      IFR 2044 2 August to 8 August 2014

      OVER A BISCUIT and a cup of tea, Bellwether was trying to establish the implications of financial sanctions against Russia when it stumbled across a list of frequently asked questions on the website of the US Treasury department.

      Fees

      Top banks consolidate positions in slow July

      Dealmaking slowed in July as decision makers took to the beach in the Northern hemisphere, with investment banks generating fees of US$8.6bn during the month from bonds, equities and loans, down from June’s US$9.1bn.

      Play

      Play PIK delivers owners big payday

      Play sold the largest public euro payment-in-kind note this year to purely fund a dividend, returning more than €400m of cash to its Greek and Icelandic owners.

      Shah June 24 2014

      Bund spreads tell a different story

      Shah: As 10-year Bund yields head lower, so do yields in other eurozone countries in the semi-core and periphery.

      IFR FFL

      The IFR Fantasy Football League 2014-15

      The capital markets’ biggest battlefield is once again ready to rumble… 

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      Football sponsors in the fast-laneVideo

      Top clubs are going up a gear with major deals from sponsors who want to combine appeal in two male fantasy zones: cars and goal-scoring. Ciara Sutton reports.

      All Spotlight

      IFR Top 250 Borrowers Cover 2014

      IFR Top 250 Borrowers 2014

      The bigger the better – in everything. Freddie Mercury, the late lead singer of Queen, wasn’t alone in judging the world and its wares solely on the merit of size. Take bond investors. When the Federal Reserve announced its intention to begin tapering its quantitative easing programme last May, expectations were of an inexorable rise in US yields.

      IFR Emerging Europe & Turkey Cover 2014

      IFR Emerging Europe and Turkey Special Report 2014

      At cruising altitude; turbulence ahead?: This report reaches you at a time when Emerging Europe and Turkey could be stuck on the tarmac. The political situation means Ukraine is grounded and Russia may yet have to consider an emergency landing, yet the rest of the CEE region appears to be about to take off.

      All Special Reports