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Friday, 29 August 2014

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Upfront

Caveat emptor

Buyer beware

IFR 2047 23 August to 29 August 2014

Every capital markets regulator in the world shares the goal of protecting consumers. Yet when it comes to bank capital, their approaches vary wildly.

Top News

bonds

CBA targets record retail hybrid

IFR 2047 23 August to 29 August 2014 By

Australia’s biggest bank is pressing ahead with plans to offer complex hybrid capital securities to retail buyers, even after the UK regulator deemed the format too risky for individual investors.

struc fin

Investors speculate on 'lottery ticket' RMBS

IFR 2047 23 August to 29 August 2014 By , Andrew Park

Desperation for yield prompted investors last week to put big “lottery ticket” bets on several RMBS issues from 2006. The securities are deemed worthless by some, but for others they have the potential for large payouts.

argentina

Investors braced for long fight in Argentina

IFR 2047 23 August to 29 August 2014 By Davide Scigliuzzo, Paul Kilby

Argentina’s latest debt swap proposal may have made resolution of its default mess an even more distant prospect, but the sovereign’s bond prices still remain surprisingly robust.

M&A

M&A could hurt bondholders

IFR 2047 23 August to 29 August 2014 By Shankar Ramakrishnan

The bidding war for discount retailer Family Dollar has exposed the weaker covenants that have seeped into US bonds issued during the red-hot issuance run of the past few years.

derivs

Less is more as market evolves

22 August 2014 By Mike Kentz

For years running up to the 2008 crisis, over-the-counter swap dealers and clearing houses boasted of growing notionals in their derivatives books as a way to exhibit their trading and risk management prowess. That the ballooning numbers also served to inflate the perceived importance of the OTC derivatives market was simply a pleasant by-product.

bonds

Crossroads ahead for SFR bonds

IFR 2047 23 August to 29 August 2014 By

As the first anniversary of the fledgling single family rental bond market approaches, issuers find themselves at a crossroads as it becomes harder to source homes at knockdown prices.

bond argentina

Yen bonds affect holders of Argentina CDS

IFR 2047 23 August to 29 August 2014 By , Davide Scigliuzzo

Holders of Argentina CDS protection are likely to receive significantly lower payouts than they expected after the ISDA Determinations Committee decided to include two yen-denominated bond issues in the list of securities deliverable into the auction.

bonds

Singapore nears covered debut

IFR 2047 23 August to 29 August 2014 By Kit Yin Boey

The first covered bond issue from a Singaporean bank could finally be on its way as regulators near an agreement to open a market estimated to be worth S$25bn (US$20bn). Singapore’s central bank set rules for covered bonds almost a year ago, but the first deals have been delayed for lack of clarity over title issues involving the city’s pension fund.

ETFs

Junk bond ETFs boost hedge funds

IFR 2047 23 August to 29 August 2014 By

Junk-bond exchange-traded funds created for retail investors have been hijacked by hedge funds using them to make broad bets on bond prices, causing roller-coaster distortions in the high-yield market. Funds designed for retail investors have morphed into hedging tools that sell off too suddenly, and in too great a size, for illiquid high-yield bonds to keep up.

malaysia

Malaysian regulator wary of SPACs

IFR 2047 23 August to 29 August 2014 By S Anuradha

The rejection of an IPO application that would have been Malaysia’s biggest cash-shell listing has underscored regulators’ concerns over the increasingly popular special-purpose acquisition company format.

IFR Magazine Top News in Full (subscription required)

People & Markets

A sign outside the headquarters of JP Morgan Chase & Co in New York

US banks set to claw back in FICC

IFR 2047 23 August to 29 August 2014

US banks are expected to claw back market share in the fixed income, currencies and commodities trading space over the remainder of the year, after losing ground to their European rivals over the past few quarters.

Keith Mullin 475px June 2014

On African banking's highs and lows

IFR 2047 23 August to 29 August 2014

I’VE HAD AFRICA on my mind this week for a few reasons. Closest to home, we’re in full swing pulling together IFR’s eighth annual African Capital Markets Conference scheduled for October 16 in London, which I’ll be chairing. As the title suggests, we’ll be focusing predominantly on capital markets activity, but we’ll also be delving into the African banking sector, in particular its ability to finance growth.

An exterior view of the Standard Chartered headquarters is seen in London

StanChart’s US lapses hit HK business

IFR 2047 23 August to 29 August 2014

Standard Chartered’s US$300m settlement with the New York financial regulator for lapses in its anti-money laundering controls in the US has put the emerging markets bank’s Asian business under the spotlight.

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

BofA pays US$17bn to settle fraud allegations

IFR 2047 23 August to 29 August 2014

Bank of America has agreed to pay a record US$16.7bn to the US Department of Justice to settle wide-ranging allegations of fraud related to legacy mortgage underwriting and residential mortgage backed bond syndication.

Headquarters of the China Banking Regulatory Commission

China details wealth-management assets

IFR 2047 23 August to 29 August 2014

Wealth-management assets in China’s banking sector jumped 24% in the first half, but most of these are either invested in low-risk securities or cash – not risky shadow banking investments – according to a report commissioned by the China Banking Regulatory Commission.

    More from People & Markets

    Bonds

    Rebounding market braced for busy September

    IFR 2047 23 August to 29 August 2014

    Reports of the high-yield market’s death have been greatly exaggerated, with professionals across the market bracing for a rush of new deals in Europe if conditions continue to recover.

    Wells Fargo

    Wells Fargo offers rarity

    IFR 2047 23 August to 29 August 2014

    Wells Fargo made a quick return to the Kangaroo market last Tuesday with a public 10-year senior unsecured Australian dollar bond, a rarity from either an international or a domestic bank.

    Portugal to lengthen maturity profile with syndicated 15-year

    IFR 2047 23 August to 29 August 2014

    The Republic of Portugal could price its longest-dated issue since exiting a €78bn bailout in May, as it seeks to lock in low financing costs.

    A Dollar General store in Colorado

    Takeover tussle ensues for Family Dollar

    IFR 2047 23 August to 29 August 2014

    A takeover tussle emerged in the discount retailer segment, with Dollar General last Monday embarking on a bidding war with rival discount retailer Dollar Tree to buy Family Dollar.

    ME Bank adds to T2 supply

    IFR 2047 23 August to 29 August 2014

    Members Equity Bank reaffirmed the Australian wholesale market’s growing appetite for Tier 2 bank capital bonds with last Wednesday’s increased A$300m (US$279m) offering of subordinated floating-rate notes.

      More from Bonds

      Loans

      European leveraged loans volume

      Sprint finish

      IFR 2047 23 August to 29 August 2014 By Claire Ruckin

      After a two-week lull in Europe’s leveraged loan market, bankers are gearing up for a busy remainder of 2014, which is expected to see volumes surpass last year’s total and continue the year-on-year increases seen since 2008.

      Autobar van

      Autobar nears agreement

      IFR 2047 23 August to 29 August 2014 By Sandrine Bradley

      UK vending machine business Autobar is close to agreeing a final restructuring plan with 75% of its lenders.

      Dubai Duty Free

      Dubai buoyed by refinancing of post-crisis loans

      IFR 2047 23 August to 29 August 2014 By Sandrine Bradley

      The return to the market of two high-profile Dubai borrowers seeking to lower margins on existing loans has highlighted banks’ willingness to lend more cheaply to the Emirate and boosted hopes among lenders for a pick-up in deal flow in the fourth quarter.

      Petrovietnam's headquarters in Hanoi

      PetroVietnam eyes M&A funding

      IFR 2047 23 August to 29 August 2014 By , Kane Wu

      Vietnam Oil & Gas Group, also known as PetroVietnam, is set to make a splash in the M&A and loan markets with financing of up to US$1.8bn to fund a potential bid for Murphy Oil’s Malaysian oil and gas assets.

      South Africa: Eskom seeks up to US$1bn

      IFR 2047 23 August to 29 August 2014

      State-owned power utility Eskom is in talks with banks for a secured syndicated loan of up to US$1bn.

      AbbVie raises two deals

      IFR 2047 23 August to 29 August 2014

      The £13.5bn bridge loan backing US drugmaker AbbVie’s £32bn acquisition of Dublin-based Shire will be reduced through a new £3.2bn two-year term loan. 

      UK: Big Yellow seals refi

      IFR 2047 23 August to 29 August 2014

      Self-storage company Big Yellow has agreed £215m of new loans to replace its existing banking facilities that were due to mature in 2016, cutting its average cost of debt and extending its average debt maturity to 7.8 years.

      Sweden: Stena Drilling gets ECA-backed loan

      IFR 2047 23 August to 29 August 2014

      Stena Drilling has agreed a US$574m loan backing the purchase of a semi-submersible mid-water drilling rig.

      More from Loans

      Equities

      Syndicates swell

      IFR 2047 23 August to 29 August 2014

      The temporary slowdown in IPO issuance created by August holidays has provided an opportunity to assess the deal flow so far this year, with the result revealing a striking increase in the number of bookrunners employed on European IPOs.

      Tesoro Logistics logo

      Tesoro Logistics de-risks balance sheet

      IFR 2047 23 August to 29 August 2014

      Offering a slightly wider discount than would normally be the case, but achieving a similar outcome, Tesoro Logistics, the midstream subsidiary of oil refiner Tesoro, moved to de-risk its balance with the proceeds of a US$144.2m overnight equity sale, the first by the company this year but in addition to a US$200m at-the-market programme that kicked off in June.

      QBE Insurance Group headquarters

      Australia: QBE doubles efforts for rebound

      IFR 2047 23 August to 29 August 2014

      QBE Insurance Group last week completed Australia’s largest institutional equity placement of the year so far and announced plans for an IPO of one of its subsidiaries in efforts to revive its battered share price.

      TriNet preps for first-time add-on

      IFR 2047 23 August to 29 August 2014

      Human resources outsourcing firm TriNet is set to take advantage of its strong post-IPO stock price performance by pricing a US$100m first-time follow-on in the coming weeks.

      India: Karur QIP raises US$102m

      IFR 2047 23 August to 29 August 2014

      Karur Vysya Bank raised Rs6.2bn (US$102m) through a qualified institutional placement of 13.4m shares at Rs466 each.

      China: Preferred plans

      IFR 2047 23 August to 29 August 2014

      Bank of China has applied to the China Securities Regulatory Commission for approval to sell A/H dual-tranche preferred shares of up to Rmb100bn (US$16bn).

      London Stock Exchange

      UK: LSE sets terms for capital increase

      IFR 2047 23 August to 29 August 2014

      The London Stock Exchange will ask shareholders to approve a £962.8m capital increase to finance its US$2.67bn acquisition of index provider and investment manager Frank Russell.

      Canada: AltaGas builds up Montney

      IFR 2047 23 August to 29 August 2014

      AltaGas wasted little time funding its latest growth initiative by securing C$400m (US$367.4m) through an overnight block sale of stock on Tuesday, after entering into a joint venture agreement with oil and gas explorer Painted Pony Petroleum. The funding matches the expected C$325m–$350m to fund construction of a new gas processing facility located in the Montney Shale of Western Canada and C$50m invested in Painted Pony as part of the JV.

      More from Equities

      Derivatives

      LCH.Clearnet logo

      Regulators tackle CCP resolution

      IFR 2047 23 August to 29 August 2014 By , Mike Kentz

      Six years on from the bankruptcy of Lehman Brothers, regulators have yet to draw up a framework to handle the collapse of a different breed of systemically important institutions that have become an integral part of financial markets: clearing houses for over-the-counter derivatives.

      Market volatility

      Skew spikes as hedging returns

      08 August 2014Updated: 08 August 2014 By Helen Bartholomew

      The recent equity market correction and corresponding jump in volatility have led to renewed demand for downside put options as investors seek to protect their equity exposure amid concerns that economic and geopolitical issues could conspire to deliver a rocky second half.

      Collateral optimisation benefits the big

      IFR 2047 23 August to 29 August 2014 By Mike Kentz

      Market participants expecting to glean material cost-savings in the over-the-counter swaps market through collateral optimisation strategies may want to think again, according to a report from Deloitte.

      Nikkei 225 index

      Second wave comes for Japanese equities

      IFR 2047 23 August to 29 August 2014 By

      The flow of money into Japanese equities is once more picking up pace, as investors eye more upside in what was the most successful macro trade of 2013.

      FX derivs market overhaul begins

      IFR 2047 23 August to 29 August 2014 By Mike Kentz

      A year after over-the-counter interest rate and credit derivatives first migrated into a mandatory clearing environment, US regulators have been forced to back away from plans to authorise foreign exchange derivatives rules as the market struggles to harmonise the clearing process with the physical delivery of FX transactions.

      More from IFR Derivatives

      Digital Edition

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      Heron London

      Vertically challenged

      The City of London’s Heron Tower is set to play host to a unique relay race for charity, with teams sprinting up the tallest building in the Square Mile.

      IFR FFL

      The IFR Fantasy Football League 2014-15

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

      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