Sunday, 23 October 2016

King Abdullah Financial District in Riyadh

Big and beautiful

IFR 2156 22 October to 28 October 2016

Hats off to Saudi Arabia. Many observers (including IFR) were advising the sovereign to be conservative on size with its international bond market debut.

Top News

Saudi prices record-breaking deal

Saudi creates bond market history

IFR 2156 22 October to 28 October 2016 By

Saudi Arabia re-wrote the record books with its debut in the international markets last week as it sold the biggest emerging markets bond deal in history, establishing a new benchmark for the Middle East in the process.

Lukoil gas station

Lukoil revives deal as demand grows for Russia

IFR 2156 22 October to 28 October 2016 By

Lukoil looks set to become the latest issuer to tap into growing demand for Russian paper, with the oil giant close to pulling the trigger on a deal that has been delayed for the past two years.

Henry Kravis

KKR reaps reward from going it alone

IFR 2156 22 October to 28 October 2016 By

When private equity firm KKR set its sights on a small Midwestern retailer in late 2015, it turned to some of the largest banks on Wall Street to obtain debt financing for the acquisition. It found no takers.

A Sprint store in New York

Sprint widens reach for spectrum bonds

IFR 2156 22 October to 28 October 2016 By

Investors from all corners of the capital markets piled into Sprint’s US$3.5bn of spectrum-backed bonds last week, giving the loss-making telecoms carrier a much-needed liquidity boost.

Financial Conduct Authority (FCA) logo

FCA targets league tables for reform

IFR 2156 22 October to 28 October 2016 By Alex Chambers,

League table manipulation is one of the greatest issues facing investment banking, according to the UK market regulator. The Financial Conduct Authority’s report into investment banking seemed to declare the issue more important than the apparent corruption in IPO allocations it discovered through extensive analysis, or reciprocity between banks, which it said exists but does not stifle competition.

British pounds and Euro banknotes

Sterling bonds struggle as Brexit blues bite

IFR 2156 22 October to 28 October 2016 By Robert Smith,

Investors’ tolerance for riskier sterling deals is waning fast in the primary bond market, as telecoms services outfit Daisy pulled a high-yield corporate bond and insurer JRP Group had to offer a punchy 9% yield to get a capital trade over the line.

Citic logo

Japan warms to China risk

IFR 2156 22 October to 28 October 2016 By Frances Yoon

Citic Group’s ¥100bn (US$964m) Samurai bond issue smashed records for a Chinese issuer in the Japanese market. It could have been even larger.

Banca Monte dei Paschi Siena

Bond investors stall BMPS capital raising

IFR 2156 22 October to 28 October 2016 By Alex Chambers

Banca Monte dei Paschi di Siena subordinated bond investors are resisting recapitalisation proposals that could see their holdings swapped into equity in the troubled bank.

Zhongtong (ZTO) Express sorting centre

ZTO Express to deliver on US IPO

IFR 2156 22 October to 28 October 2016 By

ZTO Express may beat its US$1.3bn target from the biggest US listing from China in two years after generating a strong response early in bookbuilding.

US dollar and euro banknotes

Cut-price euros on leveraged finance

IFR 2156 22 October to 28 October 2016 By

Cross-border leveraged loans that comprise euro-denominated facilities and US dollar-denominated facilities are seeing the euro tranches priced cheaper than the dollar pieces, as borrowers take advantage of the abundant liquidity on offer in the European market.

IFR Magazine Top News in Full (subscription required)

People & Markets

Bank of America Merrill Lynch logo

FICC rebound saves quarter for US banks

IFR 2156 22 October to 28 October 2016

Fixed-income trading powered US bank results in the third quarter to take up the slack where revenues from capital markets and merger advisory slipped.

Goldman Sachs sign

Goldman, BAML surf DCM wave in Q3

IFR 2156 22 October to 28 October 2016

Investment banking division revenue at the top five US banks was up in the third quarter as revenue from debt and equity underwriting perked up, neutralising the downturn in merger and acquisition deal flow in the quarter.

JP Morgan & Chase Co. building in New York

JP Morgan set to look for new China JV

IFR 2156 22 October to 28 October 2016

JP Morgan’s move to exit its Chinese securities joint venture has again shone the spotlight on the hurdles facing global banks in the mainland capital markets.

Mark Schwartz

Goldman Asia chairman Schwartz to leave

IFR 2156 22 October to 28 October 2016

Mark Schwartz is stepping down as Goldman Sachs’ Asia-Pacific chairman at the end of the year, triggering a search for a replacement at a time when the US bank is scaling back its resources in the region.

Donald Trump and Hillary Clinton

Fear of Trump win replaced by worry of Democrat sweep

IFR 2156 22 October to 28 October 2016

Anxiety over a Donald Trump victory in the race to become the next president of the United States is being replaced by a new concern that the Democrats could win the White House, Senate and House of Representatives and come down hard on Wall Street.

    More from People & Markets


    Goldman Sachs sign

    TLAC callables all the rage

    IFR 2156 22 October to 28 October 2016

    US banks unleashed a torrent of callable senior debt in US dollars and euros this week, finding strong investor demand for the structure, which is designed to cut the cost of new regulations.

    UK faces big test with Gilt syndication

    IFR 2156 22 October to 28 October 2016

    Tensions will run high this week for the UK DMO’s first Gilt syndication since chaos in the currency market and concerns over a potential hard Brexit catapulted yields higher.

    Yields on corporate hybrids issues in 2016

    No trip around town for Aroundtown's hybrid debut

    IFR 2156 22 October to 28 October 2016

    Aroundtown Property’s debut hybrid struggled over the line last week, as the firm adopted a gung-ho approach to marketing despite the credit being relatively niche and the hybrid sector still challenged.

    Danone and Verizon to restart euro M&A market

    IFR 2156 22 October to 28 October 2016

    Danone and Verizon Communications are set to reboot the European M&A debt market with jumbo multi-currency bonds this week after a recent hiatus in the sector, following Anheuser-Busch InBev and Air Liquide’s blockbuster trades in the first half of the year.

    Citigroup extends Aussie Global curve

    IFR 2156 22 October to 28 October 2016

    Citigroup (Baa1/BBB+/A) raised A$550m (US$419m) from last Thursday’s sale of dual-tranche seven-year SEC-registered Global senior unsecured notes.

      More from Bonds


      ChemChina headquarters

      Chinese giants in merger talks

      IFR 2156 22 October to 28 October 2016 By Umesh Desai, Carol Zhong

      A possible merger with fellow Chinese state-owned group Sinochem could bring welcome relief to debt-laden chemicals giant ChemChina as it looks to wrap up the US$43.5bn acquisition of Switzerland-based seeds company Syngenta.

      ONGC logo

      ONGC Videsh seals bigger bridge

      IFR 2156 22 October to 28 October 2016 By Chien Mi Wong

      ONGC Videsh has sealed a US$875m six-month bridge to fund its purchase of an additional stake in a Russian oilfield. 

      Fitch Ratings headquarters in New York

      European loan funds growing strongly, says Fitch

      IFR 2156 22 October to 28 October 2016 By Tessa Walsh

      Europe-domiciled loan funds had €40bn of assets under management at the end of June 2016, and have grown 50%–60% in the past five years as the European investor base continues to transition from banks to funds, according to a report by Fitch Ratings.

      Euro Garages logo

      Euro Garages wins lender consent despite pushback

      IFR 2156 22 October to 28 October 2016 By , Hannah Brenton

      UK petrol station forecourt operator Euro Garages has won consent to raise an €876m-equivalent loan backing its merger with European Forecourt Retail despite pushback from existing lenders.

      Chesapeake Energy natural gas well pad

      Chesapeake loan surges as investors call for refi protection

      IFR 2156 22 October to 28 October 2016 By , Lynn Adler

      Natural gas producer Chesapeake Energy’s US$1.5bn leveraged loan has hit stratospheric heights in the secondary market normally reserved for high-yield bonds, boosted by a combination of stiff investor protections and rebounding commodity prices.

      Mondelez logo

      Mondelez wraps US$6bn in loans

      IFR 2156 22 October to 28 October 2016

      Confectionery, food and drinks company Mondelez has completed US$6bn in loans comprising a US$4.5bn senior unsecured revolver for Mondelez International and up to US$1.5bn in term loans for subsidiary Mondelez International Holdings Netherlands.

      P&G markets US$8bn refinancing

      IFR 2156 22 October to 28 October 2016

      Household products maker Procter & Gamble is in the market with an US$8bn refinancing via Citigroup and JP Morgan.

      Bayer logo

      Germany: Bayer details US$56.9bn bridge

      IFR 2156 22 October to 28 October 2016

      Allocations have emerged on drug and crop chemicals group Bayer’s US$56.9bn bridge loan backing its agreed US$66bn takeover of US seeds company Monsanto.

      More from Loans


      PNB Housing Finance logo

      PNB Housing tests tricky IPO waters

      IFR 2156 22 October to 28 October 2016

      PNB Housing Finance is set to price India’s second-largest IPO this year at a “reasonable” level after two bungled high-profile equity raisings from the financial sector.

      Charter Hall Group logo

      Long WALE REIT to sweeten offer

      IFR 2156 22 October to 28 October 2016

      Charter Hall Group is preparing for a second bite of the cherry after the surprise withdrawal of its A$1.12bn (US$858m) Charter Hall Long WALE REIT IPO last week.

      Forterra logo

      Forterra drains investors with US$331.6m IPO

      IFR 2156 22 October to 28 October 2016

      The water contamination crisis in Flint, Michigan exposed chronic problems with America’s aging infrastructure.

      Crispr Therapeutics logo

      From gene editing to IPO editing

      IFR 2156 22 October to 28 October 2016

      Underwriters were forced to re-engineer gene editing company Crispr Therapeutics’ IPO last week, and not in the positive sense one might associate with the company’s potentially ground-breaking technology.

      NBCC sale under way

      IFR 2156 22 October to 28 October 2016

      The government of India plans to raise Rs22bn (US$328.7m) from the sale of 90m NBCC shares at a floor price of Rs246.50 through Axis, Citigroup and Nomura.

      Barbeque Nation hiring for IPO

      IFR 2156 22 October to 28 October 2016

      Sayaji Hotels-owned casual dining chain Barbeque Nation Hospitality is hiring banks for an IPO of Rs5bn-Rs10bn (US$75m-$150m).

      Two companies to sell rights

      IFR 2156 22 October to 28 October 2016

      Sealand Securities has applied for approval to the China Securities Regulatory Commission for a proposed issue of up to 1.26bn rights shares on a 3-for-10 basis to raise Rmb5bn (US$739.3m).

      CR Pharma raises US$1.8bn

      IFR 2156 22 October to 28 October 2016

      China Resources Pharmaceutical Group has raised HK$14bn (US$1.8bn) from its Hong Kong IPO, pricing the shares slightly below the midpoint of the indicative range.

      More from Equities


      Buyside resists push for standardised collateral

      IFR 2156 22 October to 28 October 2016 By

      Buyside derivatives users are pushing back against banks seeking to impose standardised collateral agreements, ahead of rules requiring variation margin on uncleared swaps set to come into force in March.

      Cost of clearing hurts small firms, says ISDA

      IFR 2156 22 October to 28 October 2016 By

      Smaller derivatives users are finding it increasingly difficult to get access to clearing as banks raise prices and set thresholds that some counterparties cannot reach.

      Deutsche suffers US ETF outflows

      IFR 2155 15 October to 21 October 2016 By

      A wave of outflows from Deutsche Bank’s exchange traded fund business accelerated in September as money flooded out of dollar-hedged equity trackers that were at the forefront of the bank’s US ETF growth through 2015.

      Europe eyes early-January swap margin launch

      IFR 2155 15 October to 21 October 2016 By

      Attempts to rush out Europe’s non-cleared swap margin rules for mid-December implementation were reined in last week and the new rules are now likely to take effect from early January.

      Banks pressure Esma on swap ID impasse

      IFR 2155 15 October to 21 October 2016 By

      Banks last week ramped up pressure on European regulators to agree a format for derivative identifiers, necessary for banks to know which contracts will be subject to new rules under the Markets in Financial Instruments Directive II.

      More from IFR Derivatives

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      Moody's sign

      Moody's says DoJ preparing complaint alleging rating violations

      21 October 2016

      (Reuters) - Moody’s Corp, parent of ratings agency Moody’s Investor Services, said on Friday the US Justice Department was preparing a civil complaint against the company, alleging violations of federal law in the run-up to the financial crisis.

      A headframe of salt producer K+S Group

      ECB left owning 'junk' credit as K+S is downgraded

      21 October 2016

      (Reuters) - The European Central Bank was left owning ‘junk’ credit for the first time ever on Friday as the bonds of German potash maker K+S that it owns were downgraded by the rating agency S&P.

      Daisy Group logo

      Daisy postpones sterling high-yield bond deal

      21 October 2016 By Robert Smith

      Daisy has called off its attempt to issue a £385m high-yield bond, according to a lead.

      Kemi Adeosun

      Nigeria to issue Eurobond worth $1 billion before the end of the year

      21 October 2016

      (Reuters) - Nigeria expects to sell a Eurobond worth around US$1bn before the end of the year and is in the process of appointing managers for the sale, Finance Minister Kemi Adeosun said on Friday.

      Toys 'R' Us store

      Investors want more juice from Toys 'R' Us CMBS

      20 October 2016 By

      Bond investors are pushing back on a US$512m deal thataims to mortgage a chain of stores occupied by struggling retailer Toys “R” Us.

      Starbucks Drive Thru sign

      As Green bond definitions grow, so does the market

      20 October 2016 By Hillary Flynn

      The multi-billion dollar Green bond market is set to get bigger still as a broader set of issuers dive into the asset class, said panelists at a S&P conference this week in New York.

      UBS logo

      Swiss lobby US ahead of UBS, Credit Suisse RMBS settlements

      20 October 2016

      (Reuters) - Switzerland urged US officials to consider the global importance of UBS and Credit Suisse in a recent meeting ahead of potential fines for Switzerland’s two big banks over claims they mis-sold mortgage-backed securities, a top Swiss diplomat said.

      Wind Hellas logo

      Wind Hellas sounds out bond investors – sources

      20 October 2016 By Robert Smith

      Greece’s Wind Hellas has met with high-yield bond investors to gauge their appetite ahead of a potential return to the debt market, according to people with knowledge of the matter.

      Verizon logo

      Corporate syndicate bankers gear up for blockbuster sessions

      20 October 2016 By

      Corporate syndicates are preparing to fire on all cylinders next week to bring a mix of well-flagged M&A, sterling, and euro drive-by deals to market in what could be a blockbuster week of issuance.

      Goldman Sachs sign

      GS opens European market for callable TLAC bonds

      20 October 2016 By

      Goldman Sachs priced Europe’s first senior euro deal with a call option designed to reduce the cost of compliance with anticipated Total Loss Absorbing Capacity regulations.

      Apartment buildings in Bobigny, France

      French RMBS adds extra variety to bulging pipeline

      20 October 2016 By Tom Porter

      GE Money Bank France will begin meetings with investors on Friday for its second French RMBS, which along with its debut in July represents the only public issuance of the product in 2016.

      JP Morgan Chase corporate headquarters

      JP Morgan eyes new Chinese securities JV

      20 October 2016 By ,

      JP Morgan is discussing the sale of its stake in its Chinese securities joint venture, in a move that will clear the way for the US bank to seek a controlling stake in a new JV in the near future.

      A Wells Fargo bank branch

      Bank trio readies risk-retention CMBS deal

      19 October 2016 By

      Wells Fargo, Bank of America and Morgan Stanley are prepping a new CMBS bond aimed at meeting new risk-retention rules that will change the shape of the industry, three people told IFR.

      Surinamese flag

      Suriname makes international bond market debut

      19 October 2016 By

      Suriname debuted in the international bond markets on Wednesday, selling a US$550m 10-year deal snapped up by investors who shrugged off any jitters over political or economic risk.

      Saudi Arabian flag

      Saudi Arabia prices EM record US$17.5bn bond

      19 October 2016 By Michael Gambale

      Saudi Arabia on Wednesday priced the largest-ever bond from an emerging markets sovereign, selling a US$17.5bn trade of five, 10 and 30-year tranches, a lead on the deal told IFR.

      Bank of America Merrill Lynch logo

      MOVES-BAML reshuffles debt capital markets

      19 October 2016 By

      Bank of America Merrill Lynch has reshuffled its debt capital markets team, appointing Andrew Karp and Brendan Hanley as co-heads of global DCM, according to an internal memo seen by IFR.

      All Latest news

      Special Reports

      Rmb Bond Market Roundtable
      China is going global, and so is its currency. The renminbi officially entered the International Monetary Fund’s basket of global reserve currencies on October 1, and barely a week goes by without talk of major reforms to open some aspect of the country’s capital markets to the world.

      IMF/World Bank
      With 189 member states encompassing virtually the entire globe, the IMF is uniquely positioned to monitor the health of the economic environment throughout the world. Each region presents its own set of circumstances – some positive, some negative – and the ingenuity of the capital markets to navigate a way through this varied landscape should never be underestimated.

      Asian Debt Capital Markets
      There is a clear driver behind the deals in Asia’s primary markets today, and that is the search for yield. From perpetual bonds in Singapore to subordinated Samurais in Japan and high-yield sovereign debt in Sri Lanka, investors are jumping at the chance to boost returns.

      Asian Bank Capital
      Bank capital has long been a hot topic in Asia, but the asset class has so far failed to ignite the kind of excitement that the Basel reforms once promised – at least outside of Australia. That is all about to change.

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


      IFR 2156 22 October to 28 October 2016

      “IF THERE’S SOME secret international cabal, I’ve been left out of the party again,” said Goldman Sachs boss Lloyd Blankfein in response to the claim by US presidential candidate Donald Trump that “Hillary Clinton meets in secret with international banks to plot the destruction of US sovereignty in order to enrich these global financial powers, her special interest friends and her donors”.


      Keith Mullin 475px June 2014

      FICC rides to the rescue

      FIXED-INCOME TRADING, the bête noire of investment banking for so long, bailed out what might have been an otherwise so-so third-quarter performance for the Big Five US firms as clients regained some sangfroid and showed more willingness to trade. Now, how often have you heard that?

      James Saft - June 2014

      When “dark markets” are unfair to mutual fund investors

      Funds conducting off-exchange trades within their own fund family are likely favouring their “stars” at the expense of the also rans.

      Anthony Peters columnist format

      Is China changing gear?

      China’s third-quarter GDP figure released this morning was highly encouraging at 6.7% year-on-year and 1.8% quarter-on-quarter, and the 6.1% reading for industrial production and 10.7% growth in retail sales were also pretty impressive. How nice is that? 

      James Saft - June 2014

      Yellen’s “high-pressure economy” risky for asset markets

      Good monetary policy it may or may not be, but a “high pressure economy” would bring significant risks for stocks and bonds.

      Anthony Peters columnist format

      A big yellow reality check

      Alcoa might be the first to report quarterly earnings and to set the tone in the basic industries sector but it is Caterpillar, the maker of big yellow things, which is the real bellwether as it straddles both the commodities and the manufacturing space. 

      Anthony Peters columnist format

      An eventful week

      The most important event last week and surely the one discussed least at dinner parties – or while binge-watching box-sets to take-away pizzas if that’s more your style – was the deeply disappointing quarterly report from Alcoa. 

      keith mullin

      Commerzbank champions Robo-CIB

      DO I SENSE some early excitement around hoped-for future happenings at Commerzbank in the wake of the recently-unveiled restructuring? OK, on the basis that that no-one can be happy about the pain of heavy job cuts, excitement may not be le mot juste.

      Anthony Peters columnist format

      New order

      If my sole purpose were to write a review of the week I’d have to summarise it as not having been very pretty. Bond yields up, equities and sterling down, China all over the place, Wells Fargo’s John Stumpf out and Samsung up in flames… I think that more or less covers it. 

      Anthony Peters columnist format

      Much ado about nothing

      Much ado again over the September FOMC minutes. There was a study out recently that looked at past minutes, tried to tie them up with later policy action and concluded that the correlation is plus/minus diddly-squat. 

      keith mullin

      Dispatches from Washington

      IFR editor-at-large Keith Mullin reports from the US on regulatory rumblings and capital markets musings.