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Saturday, 01 November 2014

European Banking Authority (EBA) chairman Andrea Enria

The opposite of zero risk

IFR 2057 1 November to 7 November 2014

It isn’t often that you get to see exactly what banks have stuffed into their books, but one of the great benefits of the European Banking Authority’s stress tests is that dozens of banks across the eurozone are periodically forced to lift the veil.

Top News

Kurdistan

Kurdistan eyes debt financing

31 October 2014 By

The Kurdistan Regional Government is sounding out investors about a potential debt financing, although a number of grey areas need to be clarified before any deal emerges.

Evraz - Russia - Steel

Evraz seeks dollars through back door

IFR 2057 1 November to 7 November 2014 By

Evraz Canada, the North American subsidiary of the Russian steel company, is being closely watched by the market as it looks to price a US$350m debut bond at a time when its parent and other Russian corporates are shut out of debt capital markets.

France and Italy

European banks increase sovereign bets

IFR 2057 1 November to 7 November 2014 By

Major European banks doubled their exposure to government debt in the two years running up to the latest stress tests despite a worsening in the economic fundamentals of many countries, according to an IFR analysis of European Banking Authority data.

Ferrari

Ferrari prances towards IPO

IFR 2057 1 November to 7 November 2014 By

Fiat Chrysler Automobiles set the market aflutter last week – not with its plans to recapitalise through equity and equity-linked issues totalling several billion dollars in the next two months, but with the IPO of just 10% of Ferrari.

SG

All eyes on Scientific Games bond

IFR 2057 1 November to 7 November 2014 By , Mariana Santibanez

Underwriters are facing another problem when backing leveraged buyouts – and this time it’s not regulators but unpredictable debt markets. That means that the market will be closely watching the reception given to a US$3bn-plus high-yield bond for Scientific Games to get clues on investors’ appetite for risk.

Monte Dei Paschi

Stress test triggers more equity

IFR 2057 1 November to 7 November 2014 By

If equity markets had been less welcoming of recapitalisation deals earlier this year, the results of the ECB’s recent assessment of European banking would have been dramatically different. The list of stress test failures released by Europe’s central bank reads like a greatest hits of 2014 equity fundraisings, with the new capital mostly filling the gaps identified.

Hutchison Whampoa logo

Hutch beats Asian bond record

IFR 2057 1 November to 7 November 2014 By Lianting Tu

Hong Kong conglomerate Hutchison Whampoa last week beat its own record for Asia’s largest corporate bond with an opportunistic dual-currency issue that raised an impressive US$5.4bn. 

Screens

MAC launches bridge swaps gap

IFR 2057 1 November to 7 November 2014 By Mike Kentz

A regulatory struggle to transform the trading infrastructure for over-the-counter swaps may be on the cusp of a big leap towards the exchange-like regime envisioned under Dodd-Frank regulations. Several segments of the market are poised to coalesce around a new standardised swaps contract – known as a Market-Agreed Coupon or “MAC” swap – within an order book framework that more closely resembles exchange trading.

IFR Magazine Top News in Full (subscription required)

People & Markets

The headquarters of Deutsche Bank are pictured in Frankfurt

Pressure on Deutsche as RoE falls

IFR 2057 1 November to 7 November 2014

Deutsche Bank faces an uphill struggle to get its investment bank back on track after the return on equity at its flagship business fell back into single figures in the third quarter, to one of its lowest levels since the global financial crisis.

Barclays bank logo

Barclays profit slides on equities slump

IFR 2057 1 November to 7 November 2014

Barclays’ investment bank struggled in the third quarter, with the business posting one of its worst results in recent years – second only to the loss it booked at the end of last year – after a torrid performance in equities trading.

Entrance of a UBS branch office in Basel

Provision ruins solid quarter for UBS

IFR 2057 1 November to 7 November 2014

UBS set aside SFr1.68bn (US$1.78bn) for expected fines related to market manipulation and legacy mortgage issues in the third quarter, ruining what otherwise would have been another strong quarter for its investment bank, with almost all businesses putting in a decent performance.

The Bank of England

Bank of England sets out new leverage ratio

IFR 2057 1 November to 7 November 2014

The Bank of England has told British banks they will be required to hold more capital to guard against the risks of bad loans, but the new measures were less stringent than many had expected.

An ATM machine at a Bank of America office is pictured in Burbank, California

BofA settlement held up by SEC deadlock

IFR 2057 1 November to 7 November 2014

Bank of America’s historic US$16.6bn mortgage settlement with the US Department of Justice is being held up at the Securities and Exchange Commission as two commissioners refuse to grant what have become standard waivers.

Haitong makes international push

IFR 2057 1 November to 7 November 2014

Haitong International Securities has made an offer to acquire independent research broker Japaninvest, a purchase that would to increase its global platform, as international demand for Greater China stocks grows.

Who's moving where...

IFR 2057 1 November to 7 November 2014

The former head of UBS’s investment bank, Carsten Kengeter, is to become the next chief executive officer at Deutsche Boerse, after incumbent Reto Francioni announced his departure. Kengeter left the Swiss bank back in February 2013, just months after losing his position as head of the investment bank, to head the bank’s new non-core division of unwanted and non-strategic assets. He was replaced in his former position by Andrea Orcel. He will take up his new position as CEO of Deutsche Boerse on June 1.

RBS takes £400m charge, warns of more to come

IFR 2057 1 November to 7 November 2014

State-backed Royal Bank of Scotland has set aside £400m to cover potential fines for manipulating currency markets and warned further charges for past misconduct would continue to hit its profits.

    More from People & Markets

    Bonds

    The AT&T logo is pictured by its store in Carlsbad, California

    Formosa market diversification haven

    IFR 2057 1 November to 7 November 2014

    US telecoms giant AT&T has demonstrated the potential for Taiwan’s Formosa market to become a main port of call for US companies increasingly needing to diversify away from their investor base at home, by issuing a record-sized US$1.295bn offering targeted at the island’s insurance sector.

    Bail-in of senior European bank debt not fully priced in

    IFR 2057 1 November to 7 November 2014

    The European senior bank debt market is yet to fully factor in the risk of bail-in, despite an approaching deadline that will see some countries introduce burden-sharing measures into local laws as early as 2015.

    Lloyds

    Lloyds goes on price discovery rollercoaster

    IFR 2057 1 November to 7 November 2014

    As strong as the bid for subordinated bank debt has been in the US this year, Lloyds discovered it is no slam dunk to get a Tier 2 deal done in the Yankee market.

    Walgreens gears up for jumbo multi-currency trade

    IFR 2057 1 November to 7 November 2014

    US drug retailer Walgreens could come to the market in the early part of this week with a jumbo triple-tranche multi-currency deal, according to market sources.  

    Ireland urged to press ahead with syndication

    IFR 2057 1 November to 7 November 2014

    Ireland could press ahead with a long-awaited syndication to repay some of its IMF loans as early as this week, bankers said on Friday.      

    NRW.Bank reaches new Green bond milestone

    IFR 2057 1 November to 7 November 2014

    NRW.Bank reached a new milestone in the Green bond market last week, taking advantage of the lack of supply to price a new €500m four-year through its curve.

    High-yield E&P energy bonds are risky temptations

    IFR 2057 1 November to 7 November 2014

    Investors betting that oil prices will recover are starting to support the battered prices of high-yield bonds from E&P energy companies. But market strategists warn they could face steep losses if the price of oil remains under pressure – particularly if they are not more selective about which credits to buy.

    Emiliano and Sabadell break peripheral covered record

    IFR 2057 1 November to 7 November 2014

    Phenomenal demand for covered bonds from the ECB and central banks in Europe last week resulted in the tightest pricing for peripheral issuers since the crisis.

      More from Bonds

      Loans

      A Fat Face store

      Lenders feel the pinch

      IFR 2057 1 November to 7 November 2014

      Recent market volatility has created casualties among a raft of riskier US and European leveraged loans that were trapped in a market correction as investors demanded higher returns.

      A man walks past a logo of Olam International Limited at its office in Singapore.

      Olam makes most of Temasek halo

      IFR 2057 1 November to 7 November 2014

      Commodities trading firm Olam International, looking to capitalise on a change in its shareholding, is targeting tight pricing on a proposed takeout of a US$2.2bn 12-month bridging loan signed in May.

      Styrolution logo

      Recovery ratings gain more prominence on lev loans

      IFR 2057 1 November to 7 November 2014

      An increasing number of banks are taking account of recovery ratings when structuring European leveraged loans, as more CLOs are placing greater emphasis on the metric when committing to a deal.

      Eastman Chemical

      Eastman Chemical allocates

      IFR 2057 1 November to 7 November 2014

      Eastman Chemical has wrapped up a US$1bn five-year term loan and a US$1.25bn five-year revolver.

      TPG in refinancing talks

      IFR 2057 1 November to 7 November 2014

      Private equity firm TPG Capital is in discussions with existing lenders to refinance a leveraged loan it raised in 2013 to fund the acquisition of Australian poultry firm Inghams Enterprises.

      Ethiopia: Railway financing signed

      IFR 2057 1 November to 7 November 2014

      The Ethiopian government has closed an US$865m financing to fund the development of the Awash-Weldia/Hara Gebeya Railway Project, one of the key routes that will form part of the National Railway Network.

      Turkey: Avea nets US$400m club

      IFR 2057 1 November to 7 November 2014

      Turk Telekom subsidiary Avea signed a US$400m five-year loan with a club syndicate of banks.

      Israel: TowerJazz agrees term loan

      IFR 2057 1 November to 7 November 2014

      Integrated circuit maker TowerJazz has sealed a US$111m four-year term loan to refinance existing bank debt that was due to mature over the next two years.

      More from Loans

      Equities

      Logo of Spanish airports operator Aena

      Aena IPO fails over technical issue

      IFR 2057 1 November to 7 November 2014

      The Spanish government’s €4.9bn privatisation IPO of airport operator Aena was looking dead in the water at the end of the week, leaving bankers working on the flotation deeply frustrated.

      Nimericable logo

      Numericable rallies on SFR funding

      IFR 2057 1 November to 7 November 2014

      French cable operator Numericable Group saw its shares rally strongly last week as it set out terms for the €4.7bn fundraising that will back its €13.5bn acquisition of French telecoms business SFR. The deal was well-flagged, yet shares rose 11.1% on Wednesday to close at €53.75.

      A general view of the lobby outside of the Carlyle Group offices in Washington

      Carlyle rushes to exit with US$945m Axalta IPO

      IFR 2057 1 November to 7 November 2014

      Buyout firm Carlyle Group plans to sell a 20% stake in former DuPont industrial paint subsidiary Axalta Coating Systems through an up to US$945m IPO launched on Thursday and set to be priced on Tuesday November 11.

      National Commercial Bank

      Saudi Arabia: Banking on low fees

      IFR 2057 1 November to 7 November 2014

      Bankers working on National Commercial Bank’s US$6bn privatisation are putting up with low fees in the hope that more business appears on the horizon.

      Chimerix logo

      Chimerix funds Ebola drug development

      IFR 2057 1 November to 7 November 2014

      Chimerix, an orphan drug company focused on antiviral treatments, is taking aim at the Ebola virus.

      REITs go to block

      IFR 2057 1 November to 7 November 2014

      Block execution has become an increasingly popular mode of raising capital for real estate investment trusts. ECM bankers have become increasingly comfortable with taking on risk for REITs because of high trading liquidity and the ability to push capital committed shares through retail channels.

      Shell gains valuable M&A currency

      IFR 2057 1 November to 7 November 2014

      Witness the progressively lower yield achieved on recent MLPs and one can’t help but be impressed. Royal Dutch Shell affiliate Shell Midstream Partners became the record holder by achieving a 2.83% annual payout on its US$920m IPO, besting the 3.33% threshold set by Dominion Midstream Partners on its IPO last month.

      Anadarko affiliate funds acquisition

      IFR 2057 1 November to 7 November 2014

      The long-awaited consolidation of midstream MLPs is in full swing. In the latest in a series of high-profile transactions over the past month, Anadarko Petroleum affiliate Western Gas Partners (WES) secured all the equity needed to fund its US$1.5bn acquisition of a 50% interest in privately held Nuevo Midstream.

      More from Equities

      Derivatives

      Fighting for higher returns

      Fixed income trading enters new era

      IFR 2057 1 November to 7 November 2014

      Banks are re-drawing the battle lines in fixed income trading, with firms taking radically different views on where profits can be made under the new regulatory regime in a division that has historically accounted for the lion’s share of investment banking revenues.

      Jamie Cawley

      Cawley resurfaces at BGC

      IFR 2057 1 November to 7 November 2014

      Jamie Cawley, founder and former head of start-up swap execution facility Javelin Capital Markets, has been hired to head BGC Derivative Markets, the SEF subsidiary of BGC Partners.

      The Commodity Futures Trading Commission building in Washington, DC

      Swap market fears CFTC deadline

      27 October 2014

      An upcoming US regulatory deadline is distressing swaps users as execution platforms say they will not be able to offer transactions pairing interest rate swaps with certain other derivatives following the cut-off.

      Swap transaction costs remain a mystery

      IFR 2057 1 November to 7 November 2014

      Four years on from Dodd-Frank derivatives reforms being signed into federal law, transaction costs for over-the-counter swaps remain a mystery to the market.

      Cross-currency swap tear-ups hit US$500bn

      IFR 2057 1 November to 7 November 2014

      Banks have torn up more than US$500bn of outstanding contracts in the US$25trn cross-currency swap market since compression cycles got under way for the product just six months ago.

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

      Squids’ in

      IFR 2057 1 November to 7 November 2014

      DEUTSCHE BANK PROVED in its results that when it comes to investment banking, it’s still red in tooth and claw. While rivals are scaling back and bigging up retail banking (you know who you are), Deutsche’s IB still sits at the top of the press release, rather than buried close to the annex, like UBS’s.

      Fees

      Top banks stretch out lead in busy October

      JP Morgan, Bank of America Merrill Lynch and Morgan Stanley each gained a little extra market share during October, eking out an additional 10bp of the pie as the end of the year draws closer.

      RBS

      Be afraid, be very afraid of the eurozone's zombie banks

      Alberto Gallo of RBS on the tricks the ECB might employ.

      UBS

      Trial of former UBS executive dredges up bank's shady past

      (Reuters) - From bundles of cash inside scraps of newspaper to setting up shell companies, the trial in Florida of a former UBS executive is a reminder of the extreme methods some Swiss bankers used to hide clients’ cash.

      GW9

      IFR Fantasy Football: GW 10 Preview

      A poor week for most punters in the IFRFFL gave a few brave souls ample opportunity to make up some ground.

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      BNP Paribas avoids banking bluesVideo

      BNP Paribas has bucked the trend at the end of a difficult week for banks. Net income for Q3 at France’s biggest bank rose 11% despite a lacklustre economic environment. Sara Hemrajani reports.

      All Spotlight

      IFR India Offshore Financing Roundtable 2014

      IFR India Offshore Financing Roundtable 2014

      IFR’s Indian Offshore Finance Roundtable, held in Mumbai in September, was notable for many reasons. First of all, it took place on the day the new Modi government hit the key milestone of its first 100 days in office.

      IFR German Corporate Funding Roundtable 2014 Cover image

      IFR German Corporate Funding Roundtable 2014

      Is Germany in a credit bubble, participants were asked at IFR’s 2014 German Corporate Funding Roundtable in September. It was the final question at the end of a thoughtful and insightful discussion. The cascade of answers was enlightening: “no”, “not yet”, “no, but it’s approaching”, “we’re close” and “it’s coming and it won’t be the banks that get hurt this time”.

      All Special Reports