(Reuters/IFR) - UBS might struggle to attract big institutional investors for more loss-absorbing bonds it wants to sell, after investors voiced distaste for the structure and price of an initial US$2bn deal announced on Wednesday.
(RLPC) – Dubai’s DP World is in talks with banks for a US$1bn loan to replace its existing US$3bn deal that matures in October. The global ports operator is self-arranging the deal, with pricing within the 200bp bracket.
The European corporate primary market was in risk-on mode on Wednesday as Dutch telecom business KPN shrugged off a downgrade with a €750m bond and German retailer Metro was on track to raise €500m despite a recent profit warning.
Carmaker Mazda has launched a 75% domestic, 25% international follow-on to raise ¥179.1bn (US$2.24bn), a third bigger than reports had indicated. Yet the stock actually gained some ground today inching up 1.38% to ¥147, having lost 10% on Tuesday when news of a smaller capital increase leaked.
Frankfurt Stock Exchange traders followed a long tradition by wearing carnival costumes from Germany’s carnival on Tuesday. (All pictures from Reuters)
Dutch telecoms firm Koninklijke KPN, rated Baa2/BBB, is looking to raise €750m via a 10-year bond maturing in March 2022, just a day after S&P downgraded its rating by one notch citing expectations of weaker earnings in 2012.
It may not be booming, but the structured equity market is showing just what a New Year can do for issuance. Nexans was the fourth name to visit in Europe this year and the repeat issuer met with a strong response for its up to €275m January 2019 CBs, ending with a book eight times covered and pricing at the tightest terms. HSBC and Societe Generale were joint bookrunners.
Two Bank of England policymakers voted for a bigger stimulus to the economy in February than their colleagues could support, minutes to the BoE’s Feb. 8-9 meeting showed on Wednesday. The news is likely to re-open the debate about whether the central bank will add further quantitative easing in May…
Better customer classification and disclosure is needed to ward off another Lehman mini-bond note fiasco, according to a new report from the Technical Committee of the International Organisation of Securities Commissions.
VTB Capital continues its global expansion with a series of hires in its Middle East and Africa investment banking business. The Russian bank has taken on five people in Dubai from rival global firms including Credit Suisse, Deutsche Bank and UBS.
Australia’s equity market is gearing up for another tough test with two chunky IPOs expected this year. TRUenergy, an energy producer and supplier owned by Hong Kong’s CLP Holdings, will hold a beauty contest next month for roles on an A$3bn IPO in the second half, Reuters reported.
Greece will only start to receive a second €130bn bailout, agreed in the early hours of Tuesday morning by eurozone finance ministers, if private sector investors agree to a tougher than expected haircut of 53.5% on their existing €206bn nominal holdings of Greek Government Bonds. 
UBS to issue more loss-absorbing capital
LOANS: Dubai's DP World seeks US$1bn loan
Corporate Bonds: New issue premiums shrink; Viridian surfaces in high-yield
EQUITIES: Mazda taps for US$2.2bn
Picture Review: Carnival in Frankfurt
PREVIEW: KPN shrugs off downgrade with new 10-year
STRUCTURED EQUITY: Nexans 8x covered in New Year surge
IFR Comment: Gilts rally after dove-ish MPC minutes
DERIVATIVES: IOSCO rules to avoid Lehman mini-bond fiasco
P&M: VTB Capital's hiring spree signals global intent
EQUITIES: TRUenergy to test ASX with A$3bn IPO
Greek bailout depends on debt swap take-up
Top Stories from this week's IFR Magazine
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Upfront: This means war!
An asset purchase scheme to bolster a weak economy. Plan B after failed government fiscal policies. Devaluation by stealth.
Ziggo abandons European IPO model
Dutch cable operator Ziggo is set to abandon the four-week IPO process that has long been standard in Europe and instead opt for an accelerated – and far smaller – deal using the US model in an effort to ensure success when it launches next month. The change is a reaction to last year, when 27 major corporate IPOs – worth up to US$27bn – were cancelled in Europe.
Freddie Mac pitches REO plan
Freddie Mac has begun talks with institutional mortgage-bond investors interested in buying hundreds of distressed single-family residential properties across the US in order to convert them to rental units, according to people with knowledge of the discussions.
Greece pushes ahead as time runs out
Greece is still expected to press ahead in the coming weeks with its long-awaited plan to persuade private sector bondholders to voluntarily swap their holdings for new instruments at a lower overall value, even though many elements of its second €130bn bailout remain unclear.
Morgan Stanley gets stuck with TDC block
Morgan Stanley acquired a 7.16% shareholding in Danish telecoms firm TDC last week after failing to sell an accelerated bookbuild – a type of trade so risky that they are popularly known in ECM circles as “widow-makers”.
Vultures prepare for Greek battle
Greece looks set to face a protracted legal battle with so-called “vulture funds” over large chunks of its foreign-law-governed bonds, regardless of the outcome of the ongoing negotiations to restructure its debt.
Aegon's longevity breakthrough
Insurance-based solutions for longevity hedging have been the norm since the market kicked off in 2009, but limited capacity has resulted in lumpy deal flow. That could all change if the latest deal – a €12bn hedge for Dutch insurer Aegon – is anything to go by.
Innovative UBS Tier 2 slumps
UBS last week priced the first European Tier 2 issue that allows for bondholders to be permanently written down to zero, but the deal’s performance and debate around its features showed there is still a long way to go before these structures are readily accepted.
Xstrata drills for US$6bn loan waiver
Xstrata has asked its banks to allow US$6bn of existing syndicated loans to stay in place as it waits for approval of its US$90bn merger with Glencore, bankers said. Lenders are expected to agree to waive change of control provisions that will be triggered when Xstrata’s merger with Glencore completes and that could otherwise prompt a loan refinancing.
ETFs up volatility in HY market
The US high-yield market is poised to become intrinsically more volatile going forward as increased participation by exchange traded funds, mixed with shrinking dealer inventories, become the norm.
Credit swings cause earnings rethink
The impact of credit spreads on US bank earnings has become so volatile that it is causing a rethink of derivatives valuations. Last month’s earnings releases revealed such sharp swings from Q3 to Q4 and on a year-on-year basis that banks either reported some of their worst earnings results or they managed to hold their own, depending on which accounting numbers are used.
Dollars go Dutch
The Dutch State Treasury Agency finally introduced its Dutch Direct Auction process to the US dollar market after spending more than a year explaining it to investors around the globe. This thorough preparation proved key to the exercise’s success, with the agency eventually able to allocate US$3,274,649,000 of five-year paper – well in excess of the US$2bn that was initially flagged.
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Solar projects shine in US market
Berkshire-Hathaway-owned MidAmerican Energy Holdings broke new ground in the US corporate bond market last week by having its solar project, Topaz Solar Farms, raise US$850m of 27-year amortising bonds to fund construction of one of the world’s biggest solar energy projects.
CCC prices IPO at top, despite shortfall
At a time when investors are calling for urgent reforms to China’s IPO system, Hong Kong-listed China Communications Construction added to the controversy last week. The company priced its scaled-back Shanghai IPO at the top of its target range, even though the book was undersubscribed.
Movil plans US$35bn of investments
America Movil will opportunistically tap the debt markets this year to fund potential acquisitions as well as for refinancing, according to the company’s chief financial officer.
Lev borrowers rush to extend
Several issuers with legacy leveraged buyout and M&A loans raised at the height of the market in 2007 are now taking advantage of favourable conditions to extend maturities, thanks to the growing popularity of amend and extend deals among investors that remain starved of loan supply.
Bumi turns to China after high-yield dream fades
Bumi Resources may prove to be a headache for equity investors and a disappointment for bond investors, but banks – at least the ones brave enough to lend to the Indonesian coalminer – cannot seem to get enough.
