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Friday, 29 May 2015

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Upfront

Carlos Slim

Slim pickings

IFR 2084 23 May 2015 to 29 May 2015

Despite sky-high equity valuations and plenty of reasons why there may be a correction, the management teams running corporates are surprisingly cautious about locking-in high stock prices by selling convertible bonds.

Top News

Movil

Equity-linked gets Slim's backing

IFR 2084 23 May 2015 to 29 May 2015 By

Carlos Slim’s America Movil last week gave the equity-linked market a much-needed shot in the arm with a record-breaking €3bn bond exchangeable into Dutch telecoms firm KPN. Investors rushed to buy with a flood of orders at strike, allowing the deal to be priced at the best terms for the issuer and still be 2.5 times covered.

The Sun Hung Kai Properties Vertical Run for the Chest race takes competitors up 82 floors at the International Commerce Centre, Hong Kong’s tallest building.

Huatai adds to China frenzy

IFR 2084 23 May 2015 to 29 May 2015 By ,

Chinese brokerage Huatai Securities took full advantage of the frenzy in China’s stock markets last week to price its Hong Kong IPO at the top of its target range to raise HK$34.7bn (US$4.47bn).

Waiting for ECB impact on mezz

ECB delves into leveraged loans

IFR 2084 23 May 2015 to 29 May 2015 By

The European Central Bank has asked European banks to provide detailed information on their leveraged lending operations as it starts to pay closer attention to a market that has come under regulatory scrutiny in the US.

The US Securities and Exchange Commission (SEC) headquarters in Washington

Investors buy up bonds at heart of SEC case

IFR 2084 23 May 2015 to 29 May 2015 By , Andrew Park

Investors are snapping up pieces of a bond at the centre of a new US legal battle, betting it will deliver huge profits if regulators can prove it was part of an elaborate fraud.

Patrick Drahi (C), Executive Chairman of cable and mobile telecoms company Altice and founder of Numericable

Altice shocks with Suddenlink bid

IFR 2084 23 May 2015 to 29 May 2015 By ,

Acquisitive European telecoms firm Altice surprised the market with yet another large M&A deal last week, revealing plans to buy US regional cable firm Suddenlink Communications for US$9.1bn.

Dealers

Dealers call for auction harmony

IFR 2084 23 May 2015 to 29 May 2015 By

Primary dealers are intensifying calls for European government issuers to harmonise the way they auction bonds. Facing a crippling capital regime under Basel III, rates businesses are on an efficiency drive and the complex web of auction systems, processes, procedures and calendar clashes that make up the European government bond market is proving costly and cumbersome to manage.

Shopify

Shopify buoys languid US tech ECM market

IFR 2084 23 May 2015 to 29 May 2015 By

Canadian ecommerce platform provider Shopify gave the US technology IPO market a much-needed thrill last week, surging on its NYSE/TSX debut amid massive levels of oversubscription.    

Oil and Gas

Oil rally drives producer hedging

IFR 2084 23 May 2015 to 29 May 2015 By Mike Kentz

A rally in oil prices that has pushed WTI spot levels above US$60 has drawn a spate of hedging activity as producers look to lock in 2016 cashflows.

Riga

Greece talks could steer EFSF's bond plans

IFR 2084 23 May 2015 to 29 May 2015 By

Ongoing discussions on the Greek debt crisis are likely to have a big impact on just how much enthusiasm the European Financial Stability Facility will generate for a planned return to bond markets this week.  

Argentina

Buenos Aires on verge of comeback bond

IFR 2084 23 May 2015 to 29 May 2015 By

If local newspaper reports prove to be true, Argentina’s Province of Buenos Aires is all set to launch a new bond deal worth at least US$500m in the next few days.

China

China drives muni debt swap

IFR 2084 23 May 2015 to 29 May 2015 By Pete Sweeney, Nathaniel Taplin

China’s plan to help local governments swap their debt for bonds might avert a funding crunch for the provinces and help its slowing economy, but it risks suspending reform of its dysfunctional credit markets just to push the debt problem down the road.

IFR Magazine Top News in Full (subscription required)

People & Markets

The Canary Wharf financial district

​Banks on probation after FX fines

IFR 2084 23 May 2015 to 29 May 2015

Some of the biggest banks face the prospect of criminal charges for future misdemeanours after the latest US$6bn fines imposed by US and UK authorities in relation to trading malpractice.

Hugh “Skip” McGee

McGee's merchant bank launch signals energy M&A boom

IFR 2084 23 May 2015 to 29 May 2015

The launch of a merchant bank by two former senior Barclays bankers focused on M&A in the energy space has boosted hopes that consolidation in the sector might finally be round the corner.

Alan Cloete

Deutsche veterans Grassie and Cloete to leave

IFR 2084 23 May 2015 to 29 May 2015

Colin Grassie and Alan Cloete, two of the longest-standing senior bankers at Deutsche Bank with 38 years of service between them at the firm, are to leave as part of the latest management overhaul.

Logo of the Financial Conduct Authority (FCA)

FCA turns up the heat on primary markets

IFR 2084 23 May 2015 to 29 May 2015

The UK Financial Conduct Authority has confirmed that it will scrutinise how capital markets operate, cranking up the pressure on investment banks to show that they work in a fair and transparent way.

Peters 475px June 2014

Promises, promises

22 May 2015

Borrowing always fills the gap when expectations about living standards run ahead of reality.

    More from People & Markets

    Bonds

    Fitch headquarters in New York

    Improving health of banks counters support-led downgrades

    IFR 2084 23 May 2015 to 29 May 2015

    Banks across the globe woke up to lower ratings last Wednesday after Fitch moved to factor in the decreased probability of state support should they run into trouble.

    A McDonald's restaurant is pictured in Encinitas, California

    No stomach for long-dated Big Mac

    IFR 2084 23 May 2015 to 29 May 2015

    McDonald’s bit off more than it could chew in the euro corporate bond market on Monday, forcing it to pull the 20-year tranche of a jumbo bond sale after investors failed to show up.

    Bund volatility gives a lesson in duration risk

    IFR 2084 23 May 2015 to 29 May 2015

    The recent sell-off in Bunds has shaken European high yield bond investors’ complacency towards duration risk, throwing into sharp relief an earlier clamour for longer-dated Double B rated bonds with slim coupons.

    Club deals appeal, but not to all

    IFR 2084 23 May 2015 to 29 May 2015

    A handful of financial issuers have looked beyond the public market this year to bolster their balance sheets, and while it can provide a way for borrowers to raise much-needed capital, this route is not for everyone.

    ITW craters in secondary, reverse Yankees return

    IFR 2084 23 May 2015 to 29 May 2015

    The poor performance of the 15-year bond for Illinois Tool Works (ITW) emphasised the perils investors face at the longer end of the euro market that has been battered by rates volatility.

      More from Bonds

      Loans

      Noble Group logo

      Noble sees bank group shrink

      IFR 2084 23 May 2015 to 29 May 2015 By , Kane Wu, Carol Zhong

      Embattled commodity trader Noble Group managed to increase marginally the size of its refinancing last week, but its syndicate group shrank as some existing lenders stayed away on concerns over allegations of improper accounting practices.

      Gazprom logo

      Gazprom M&T elicits mixed response

      IFR 2084 23 May 2015 to 29 May 2015 By Sandrine Bradley, Kane Wu

      Russian oil and gas giant Gazprom is raising a US$350m one-year revolving credit facility that will refinance existing debt for its UK and Singapore subsidiaries. Although Gazprom is not subject to international sanctions, the deal is receiving mixed responses from lenders who remain concerned about Russian exposure.  

      Presidio logo

      ​Presidio slashes call protection

      IFR 2084 23 May 2015 to 29 May 2015 By Jonathan Schwarzberg

      Raging investor appetite created by a drought of US leveraged loans is helping companies including IT firm Presidio to push through a raft of borrower-friendly measures on heavily oversubscribed deals.

      Stanbic Bank logo

      Gulf banks increase lending footprints in Asia, Africa

      IFR 2084 23 May 2015 to 29 May 2015 By Archana Narayanan

      An US$85m loan taken out by a Ugandan bank this year points to an emerging trend in international capital markets: the rise of the Gulf as a syndicated loan market for Africa and Asia.

      Logo of Century Ginwa Retail Holdings

      Century Ginwa on hold after chairman goes AWOL

      IFR 2084 23 May 2015 to 29 May 2015 By Carol Zhong

      Century Ginwa Retail Holdings’ US$132.8m loan was put on hold following the Chinese department store chain’s announcement that it had lost trace of its chairman.

      Banks ready jumbo financing for Endo

      IFR 2084 23 May 2015 to 29 May 2015 By ,

      Leveraged finance bankers are readying another jumbo debt financing in the pharmaceutical sector – this time for specialty drugmaker Endo International, which is buying Par Pharmaceutical for US$8.05bn.

      Secondary loan prices hold up despite repricing

      IFR 2084 23 May 2015 to 29 May 2015 By , Lynn Adler

      Rising US secondary loan prices have stalled amid a wave of repricing as companies slash borrowing costs, but excess demand from investors is stopping prices from falling as primary deals remain scarce.

      Royal Mail

      UK: Royal Mail cuts pricing

      IFR 2084 23 May 2015 to 29 May 2015

      Royal Mail has amended and extended £1.05bn of its existing syndicated loan that was agreed in 2013 to back the company’s IPO.

      More from Loans

      Equities

      Par Pharmaceutical logo

      Par Pharma takes M&A over IPO

      IFR 2084 23 May 2015 to 29 May 2015

      Par Pharmaceutical and private equity backer TPG Capital were making final preparations to take the speciality pharmaceuticals firm public, only to settle on a far more lucrative option – an all-cash takeover by Endo International.

      Black Knight Financial Services logo

      Black Knight shines on debut

      IFR 2084 23 May 2015 to 29 May 2015

      In the biggest US IPO last week, Fidelity National Financial-backed mortgage servicing technology platform provider Black Knight Financial Services delivered a balanced outcome on its NYSE debut after raising US$441m to de-leverage its balance sheet.

      Hella logo

      Placing lights up Hella

      IFR 2084 23 May 2015 to 29 May 2015

      Members of the founding family of automotive headlights and electronics company Hella delivered on an IPO pledge to raise the company’s free-float to a level commensurate to its €4.7bn market cap.

      Press Ganey logo

      Press Ganey scores on IPO

      IFR 2084 23 May 2015 to 29 May 2015

      Data analytics firm Press Ganey Holdings converted its growing profile in an increasingly consumer-driven healthcare sector to a premium valuation by securing a greater-than-expected US$222.5m from its IPO.

      Aramark logo

      Banks accelerate risk tolerance on sponsor sales

      IFR 2084 23 May 2015 to 29 May 2015

      Soft aftermarket trading on recent sponsor-backed block trades involving Envision Therapeutics in March and Hilton Worldwide earlier this month has not curbed investment banks’ tolerance for risk. Highlighting their continued appetite for risk trades, Credit Suisse may have been left holding some of its circa US$790m purchase of Aramark shares acquired from financial sponsors.

      MBIA logo

      Warburg Pincus takes loss on crisis-era MBIA investment

      IFR 2084 23 May 2015 to 29 May 2015

      Sponsor Warburg Pincus sold about 60% of its pre-crisis-era investment in bond insurer MBIA via a US$426m block trade last week, but was forced to accept a steep discount to offload the long-held position.

      Rare bond defies history

      IFR 2084 23 May 2015 to 29 May 2015

      Private equity firm Saratoga Investama Sedaya has completed Indonesia’s first equity-linked financing in five years, overcoming other local borrowers’ history of defaults to monetise a stake in telecom tower operator Tower Bersama Infrastructure.

      Linn Energy balances capital structure

      IFR 2084 23 May 2015 to 29 May 2015

      Having slashed capex as well as its dividend, Linn Energy went on the offensive last night with a US$188.6m overnight raising. The financing follows a reduction last week in the E&P limited partnership’s borrowing base and supplements an ongoing at-the-market sales programme that has seen it raise US$44m so far this year.

      More from Equities

      Derivatives

      VIX versus VXX performance (rebased)

      Spot-tracking ETFs struggle at launch

      IFR 2084 23 May 2015 to 29 May 2015 By Mike Kentz

      An innovative exchange-traded fund that aims to track spot levels of the CBOE’s Volatility Index – rather than the corresponding futures market that is used by existing offerings – has failed to live up to expectations in its first week.

      Shanghai-Hong Kong Stock Connect

      Stock Connect rush triggers hedging demand

      IFR 2084 23 May 2015 to 29 May 2015 By

      The rapid liberalisation of China’s stock markets is generating demand for new risk management tools as international investors await a landmark decision from index provider MSCI on the inclusion of mainland A-shares in its benchmark Emerging Markets index.

      More from IFR Derivatives

      IFR Eurozone Special Report

      IFR Eurozone: Stimulating times

      After years of bailouts, downturn, debt, fouls and penalties, it would appear the eurozone first team is finally showing signs of being ready to compete.

      IFR Private Placements Roundtable 2015 Cover image

      IFR Private Placements Roundtable 2015

      Private placements have received a lot of attention in Europe in the past year to 18 months. They have been captured fully by the Capital Markets Union debate in Europe as a potentially new funding alternative to bank lending for the benefit of SMEs.

      All In Depth

      Christine Lagarde

      On Lagarde, Cretans and the logic of FIFA

      Peters caps the week with a global spin on Greece, China, the Fed and football.

      December 02, 2014

      China passes the parcel on provincial debt

      China needs to rethink its bonds-for-loans scheme, says Gareth Gore. 

      ESM

      European rescue fund seeks to invest in lower-rated debt

      (Reuters) - Europe’s rescue fund is seeking to revise its investment guidelines to allow it to buy lower-rated debt as it grapples with record low interest rates, according to documents from the ESM and German finance ministry seen by Reuters.

      Diller

      European corporates: Expedia sticks to the safe tenor neighbourhood

      Expedia and TenneT are taking no risks in Thursday’s market with their well-flagged deals, by sticking to shorter dated tenors while market volatility continues unabated.

      A sign is seen outside a branch of Santander in Wilmslow, northern England

      Santander UK sets eyes on AT1 first, tackles legacy debt

      Santander UK has mandated banks for an inaugural Additional Tier 1 bond that could potentially revive a European bank CoCo market that has been dormant since February.

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

      Not out

      IFR 2084 23 May 2015 to 29 May 2015

      CRICKET-LOVING ANSHU JAIN will have wished he was at Lords to watch an enthralling opening day’s play between England and New Zealand rather than stuck inside a conference room at Deutsche’s AGM, being lambasted by German investors for his new strategy.

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      Will Greece sidestep next debt payment?Video

      Officials say cash-strapped Greece could avoid paying back the IMF on June 5 without defaulting if it lumps together all IMF repayments due in June. As Joel Flynn reports it could win Athens more time to negotiate a funding deal.

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      Mutual fund moves boost Hong Kong stocksVideo

      Stocks in Hong Kong jump on Tuesday toward seven-year highs after Beijing announced hopes for greater cross-border investment with a new mutual fund scheme. Meg Teckman reports.

      All Spotlight

      GW38

      IFR Fantasy Football League: Dutch Glory wins on the final day

      By IFR Fantasy Football League Secretary General

      After flirting with the top prize over the past few years, Albert de Waard and his Dutch Glory side finally surged past his Netherlands-based colleagues to give him a first IFRFFL crown in a nail-biting finale.

      All IFR FFL