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Thursday, 03 September 2015

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IFR Securitisation Roundtable 2015 Cover image

IFR Securitisation Roundtable 2015Video

IFR’s Securitisation Roundtable – entitled “The Great European Securitisation Debate” – took place on May 28. Even though the general market at that point had turned volatile and Bund yields had been whipsawing, it was long before Greece went into arrears with the IMF and Greeks had voted against the latest austerity package. So the following discussion needs to be read with this in mind.

IFR German SME Funding Roundtable 2015 Cover image

IFR German SME Funding Roundtable 2015

IFR’s 2015 Roundtable on German SME Funding, held on June 16 in Frankfurt, took place in the wake of violent swings in the bond market. Not long before the discussion, volatility in 10-year Bund futures had hit levels it hadn’t seen for three years as the broad market lost its sang-froid.

All IFR Special Reports

In this week's IFR Magazine

Upfront

An investor reacts to falling share prices

Learning by default

IFR 2098 29 August to 4 September 2015

The recent rise and fall of China’s stocks is already shaping up as a defining moment in the liberalisation of the country’s capital markets. Having reverted to form with a heavy-handed intervention in July, China’s typically meddlesome authorities seem to be learning from their mistakes.

Top News

bonds china

Asian credit loses safe-haven status

29 August 2015 By

Asian credit lost its status as a global safe haven last week, as the market slumped in response to a steep drop in Chinese equities and weakening Asian currencies on a day that Chinese media dubbed “Black Monday”.

China rattles global markets

China rattles global markets

IFR 2098 29 August to 4 September 2015 By Timothy Sifert

A 15% two-day plunge in Chinese shares and a surprise rate cut rattled markets last week as global investors lost confidence in mainland authorities’ ability to manage the inevitable slowdown in the world’s second-biggest economy.

China turmoil delays Asian IPOs

China turmoil delays Asian IPOs

IFR 2098 29 August to 4 September 2015 By

Extreme swings in global equity markets took their toll on Asian IPOs last week, derailing Singapore’s first mainboard flotation of the year and complicating plans to launch at least US$5.5bn of Chinese listings.

asia bonds

Bank lead orders cause alarm

IFR 2098 29 August to 4 September 2015 By

Both investors and issuers are expressing concern over the role of bookrunners who submit early orders to support Asian bond issues.

Abengoa

Three banks back Abengoa rights issue

IFR 2098 29 August to 4 September 2015 By , Robert Smith

Troubled Spanish energy company Abengoa has three banks on board for its all-important €650m rights issue, according to people with knowledge of the matter, with Credit Agricole, HSBC and Santander agreeing to a standby underwrite.

Exelon logo

Exelon M&A upset may prove costly

IFR 2098 29 August to 4 September 2015 By ,

Exelon’s plan to acquire Pepco Holdings suffered a costly setback on the very last leg of its approval process when the District of Columbia Public Service Commission rejected the US$6.8bn bid.

restructuring ukraine privatbank

PrivatBank restructuring gets investor nod

IFR 2098 29 August to 4 September 2015 By

PrivatBank could finally make a breakthrough with its creditors after a minority holdout group of investors who had previously blocked the Ukrainian lender’s attempts to restructure its debts said it would agree to the latest set of proposals.

chinese medical

Mindray Medical in MBO mystery

IFR 2098 29 August to 4 September 2015 By , Carol Zhong, Chien Mi Wong

Doubts are emerging over another big acquisition of a US-listed Chinese company after the latest sell-off in global equity markets. Executives of medical devices manufacturer Mindray Medical International are talking to lenders about a US$2.2bn loan, but have yet to line up banks to support a planned US$3.56bn management buyout.

IFR Magazine Top News in Full (subscription required)

People & Markets

M&T Bank branch

Compliance costs weigh on returns

IFR 2098 29 August to 4 September 2015

After US$259bn of litigation and fines linked to past misdemeanours across the rates, foreign exchange and asset-backed securities markets, the end is almost in sight for banks – at least with regard to the big historical offences.

Chinese investors react

Volatile equities threaten revenue engine

IFR 2098 29 August to 4 September 2015

Equities have been the main firing engine for investment banks in the first half of the year, offsetting declining underwriting and fixed income businesses, but volatility in world markets this past week could throw a spanner in the works.

CITIC Securities head office

Stock market slump bruises China brokers

IFR 2098 29 August to 4 September 2015

The stock market slump that has seen A-shares drop by 43% from their 2015 high is starting to eat into the earnings of one of the bourses’ primary beneficiaries: Chinese brokers.

Shanghai Stock Exchange building

China bonds head to bourses

IFR 2098 29 August to 4 September 2015

The continued turmoil in Chinese equities is lifting interest in exchange-traded bonds, broadening the domestic fixed-income market as investors look for alternatives to volatile A-shares.

China Securities Regulatory Commission

China chaos blamed on exodus of regulatory 'turtles'

IFR 2098 29 August to 4 September 2015

At the height of the 2008 financial crisis, as Wall Street slashed jobs, Beijing took advantage of the disarray to poach top Chinese financial talent from overseas to help reform its stock markets.

    More from People & Markets

    Bonds

    Apple

    Apple makes Kangaroo leap

    IFR 2098 29 August to 4 September 2015

    Apple’s stellar Kangaroo debut has confirmed that a lack of supply rather than a lack of demand is holding back Australia’s stunted corporate bond market.

    European Union flags

    Shifting bank bail-in regimes make buying senior harder

    IFR 2098 29 August to 4 September 2015

    Discrepancies in how countries implement European Union rules on how to deal with troubled banks risk transforming the formerly homogeneous senior bond market into a mishmash of differing rights and claims, leaving investors unsure of where they stand.     

    Finns paddle hard to reach target

    IFR 2098 29 August to 4 September 2015

    The Republic of Finland had to lean on orders from lead managers to get a €3bn 0.875% 10-year bond issue away, which led to some criticising the timing and others concluding that the market is not quite there for longer-dated euro trades.

    Hybrids in focus after S&P downgrades RWE

    IFR 2098 29 August to 4 September 2015

    A chunky €4bn equivalent of hybrid debt stock was not enough to stave off a one-notch rating downgrade for German utility RWE last week, a blow for the asset class that is often used by issuers to protect ratings.

    Bank of Cyprus eyes return to wholesale funding

    IFR 2098 29 August to 4 September 2015

    Bank of Cyprus is considering a return to the wholesale funding markets as it seeks to normalise its financing structure, a significant turnaround for the lender which bailed in creditors just two years ago.    

      More from Bonds

      Loans

      Loan mutual funds and ETFS manage US$136.5bn

      Mutual funds hold more cash

      IFR 2098 29 August to 4 September 2015 By Kristen Haunss

      Some of the largest US loan mutual funds have increased cash and bond holdings in the past year to make it easier to repay investors in times of market volatility as regulators warn about the possible perils of insufficient liquidity.

      Schlumberger headquarters

      Market volatility tests M&A bridge loans

      IFR 2098 29 August to 4 September 2015 By

      Global volatility may see tougher terms on new European M&A bridge loans and banks may have to wait longer than expected for bridge loans to be repaid, as borrowers wait for more favourable conditions to issue bonds or raise equity, bankers said. 

      CIT Group logo

      CIT partners with TPG Special Situations

      IFR 2098 29 August to 4 September 2015 By Leela Parker Deo

      Commercial lender CIT Group Inc has announced a joint venture with funds managed by TPG Special Situations Partners (TSSP), the dedicated special situations and credit platform of global private investment firm TPG.

      Ciro’s Plaza

      Goldman SPV borrows for RE buy

      IFR 2098 29 August to 4 September 2015 By Carol Zhong

      Standard Chartered is arranging a three-year term loan of US$313.5m to back a consortium’s purchase of Ciro’s Plaza, a commercial complex in Shanghai’s Huangpu district.

      A Homeplus store

      Homeplus buyout financing mezz

      IFR 2098 29 August to 4 September 2015 By , Kane Wu

      UBS is backing one of three consortia that bid around W7trn (US$5.81bn) for the buyout of British retailer Tesco’s South Korean unit, Homeplus, with an underwritten jumbo mezzanine loan.

      September deals lining up

      IFR 2098 29 August to 4 September 2015 By

      Despite another serious bout of global volatility, Europe’s leveraged loan market is gearing up for the launch of around 10 deals totalling €4.5bn in September, with success or failure likely to be determined by a flight to quality.

      Yuexiu borrows to buy building

      IFR 2098 29 August to 4 September 2015 By Chien Mi Wong

      China-based Yuexiu Real Estate Investment Trust is in the market with a US$442m dual-currency loan that will finance the purchase of a commercial building in Shanghai for Rmb2.63bn (US$424m).

      Johnson & Johnson baby powder

      ​J&J seeks to refinance US$10bn revolver

      IFR 2098 29 August to 4 September 2015

      New Jersey-based healthcare conglomerate Johnson & Johnson is seeking to refinance the company’s existing US$10bn, 364-day revolving credit.

      More from Loans

      Equities

      An Indian Oil Corp gas station

      Placement keeps ECM hopes alive

      IFR 2098 29 August to 4 September 2015

      The Indian government sold a Rs94bn (US$1.4bn) stake in Indian Oil Corporation last Monday, ignoring sell-offs across global equity markets to place the entire offering with state-owned buyers – including about US$1.2bn with the country’s biggest life insurer.

      ABN AMRO bank head office

      ABN AMRO rounds out IPO syndicate

      IFR 2098 29 August to 4 September 2015

      Bank of America Merrill Lynch, Barclays, Citigroup and JP Morgan have been mandated for the joint bookrunner roles on the Dutch government’s likely second-half IPO of ABN AMRO.

      A Freeport-McMoran mine in Indonesia

      Freeport-McMoRan seeks bridge to profitability

      IFR 2098 29 August to 4 September 2015

      Freeport-McMoRan’s recapitalisation gained renewed momentum after yet another round of cuts to mining costs and production to help it weather a downturn in commodity prices. The initiatives follow a recent similar round of cuts at its oil & gas unit and provide a bridge to significant free cashflow in 2016, though the company will continue to burn through money in the interim.

      Southern Co logo

      Southern Co makes power play on gas

      IFR 2098 29 August to 4 September 2015

      Southern Co on Monday unveiled an US$8bn, all-cash acquisition of AGL Resources in what represents a long-term play on low-cost natural gas. While the tie-up, announced after negotiations over the “last several weeks”, has strategic merits, the high price paid will stress the regulated utility’s balance sheet and require sustained equity issuance.

      Metallurgical Corporation of China logo

      PRC pipeline defies stock slump

      IFR 2098 29 August to 4 September 2015

      Chinese issuers continued to forge ahead with plans for sizeable private share placements last week even as stocks plunged to a new year-lows, down 40% from the June peak.

      Talmer Bank And Trust branch

      Market turmoil unsettles ECM outlook

      IFR 2098 29 August to 4 September 2015

      Market turmoil and an interruption-filled calendar look almost certain to result in a slow post-Labor Day resumption of ECM activity this year. Last week’s stock market volatility saw only one US ECM deal priced, a US$145m secondary sale of shares in Talmer Bancorp, and there are again no IPOs on the calendar for this week.

      Ross sheds Talmer stake

      IFR 2098 29 August to 4 September 2015

      In last week’s sole US ECM transaction, billionaire distressed debt investor Wilbur Ross raised about US$145m by selling the remaining 13.6% stake held in Troy, Michigan-based Talmer Bancorp in an overnight block trade.

      SandRidge revives MLP plan

      IFR 2098 29 August to 4 September 2015

      Embattled energy E&P SandRidge Energy has revived hopes of bolstering liquidity by spinning off its waste-water disposal operations through an IPO. The company, which has already undertaken a series of distressed debt-for-equity exchanges, significantly revised the terms of the proposed spin-off.

      More from Equities

      Derivatives

      Intercontinental Exchange logo

      ICE plans single-name CDS platform

      IFR 2098 29 August to 4 September 2015 By Mike Kentz

      Recent efforts to revive the once robust market for single-name credit default swaps are set to be augmented by the launch of a buyside-centric anonymous trading platform by the Intercontinental Exchange – possibly in the next few months, according to traders.

      Electronic trading

      Three As hobble SEFs

      IFR 2098 29 August to 4 September 2015 By

      The evolution of electronic derivative trading has continued its stuttering progress in recent months, with swap execution facility volumes barely growing, according to data from Isda last week. However, little further growth can be expected until long-standing structural issues are resolved, market participants say.

      More from IFR Derivatives

      Digital Edition

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      OMFIF

      China and the poisoned chalice

      By David Marsh, managing director and co-founder of OMFIF

      Beijing must be wary of overstretch.

      All Guest Columnists: OMFIF

      In Depth

      RMB

      Forex reserves unwind could reverse bond supercycle

      (Reuters) - China’s summer shock may mark the end of an era of globalization that helped define world markets for more than a decade.

      Zar Amrolia

      P&M: Former FIC chief Amrolia to leave Deutsche for algo company

      Zar Amrolia, the former co-head of fixed income and currencies at Deutsche Bank who stepped aside last November to take on a new technology development role, is to leave the bank at the end of September, according to one person familiar with the information.

      John Deere headquarters

      John Deere ABS flies solo in volatile market

      John Deere braved the US debt markets alone on Tuesday, finding constructive issuance conditions for a new equipment lease ABS even as another global rout in stocks set off more volatility.

      Pacific Exploration & Production logo

      Pacific Exploration bonds outperform in weak markets

      Bonds issued by E&P company Pacific Exploration – formerly known as Pacific Rubiales – outperformed on Tuesday despite a selloff in broader markets that was prompted by data pointing to a weakening Chinese economy.

      ICICI Bank

      P&M: India names SBI and ICICI as banks 'too big to fail'

      The Reserve Bank of India designated State Bank of India and ICICI Bank last night as systemically important banks.

      From the practice of placing a bell around the neck of a castrated ram to lead the flock

      From prop to pot

      IFR 2098 29 August to 4 September 2015

      WHILE NO FINANCIAL pros have gone to prison for their part in the financial crisis, in the US at least plenty are getting stoned.

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      China's factories shrink further in AugustVideo

      A worrying sign for the health of China’s overall economy, the country’s manufacturing sector contracted the fastest pace in several years according to twin surveys for August. Meg Teckman reports.

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      Markets nervous over China 'confessions'Video

      Shares in British hedge fund manager Man Group Plc have fallen more than 6% following a report that the head of its China unit has been taken into custody as part of a probe into the country’s recent market volatility. As Ivor Bennett reports, the news follows an apparent TV confession about market manipulation from a Chinese financial journalist.

      All Spotlight