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Tuesday, 22 July 2014

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Top News

VEB Bank Sanctions

Sanctions imperil Russian debt pipeline

IFR 2042 19 July to 25 July 2014 By Sandrine Bradley, Sudip Roy

New sanctions imposed on Russia by the US have dashed hopes that Russia’s syndicated loans market is reopening, while the international bond market, which has shown strong appetite for Russian borrowers in recent weeks, may also now be off limits for the country’s issuers.

China

China CDS trading booms

18 July 2014 By ,

Trading in China sovereign credit default swaps has more than doubled in the past year as fears over slowing growth and rising corporate defaults in the world’s second-largest economy have transformed the contract into the go-to Asia hedge for macro investors.

Cote d'Ivoire

Cote d'Ivoire breaks with its past

IFR 2042 19 July to 25 July 2014 By Sudip Roy

Cote d’Ivoire put its chequered past behind as investors swarmed the sovereign’s new bond last Wednesday in a deal that showed just how strong the technical backdrop remains for new issues from emerging markets.

Yahoo

Yahoo to retain larger Alibaba stake

IFR 2042 19 July to 25 July 2014 By Daniel Stanton

Web giant Yahoo indicated last week it would sell fewer shares than planned in the forthcoming IPO of Alibaba Group after amending a share buyback agreement with the Chinese e-commerce company.

Xiaomi

Better ring to Xiaomi's new loan

IFR 2042 19 July to 25 July 2014 By , Kane Wu

Chinese budget smartphone maker Xiaomi, accustomed to making waves in the world of telecoms and technology, looks set to do the same in the loan markets, with a US$1bn borrowing following a botched attempt earlier this year.

PT

Oi, Portugal Telecom rejig merger

IFR 2042 19 July to 25 July 2014 By Joan Magee, Davide Scigliuzzo, Robert Smith

News that the long-awaited merger between Portugal Telecom and Brazil’s largest telecoms company Oi will go ahead sent bonds and shares in both companies sharply higher last Wednesday, only for them to slump again by the end of the week.

KfW

KfW's new shade of Green

IFR 2042 19 July to 25 July 2014 By Sarka Halas

KfW set the bar higher for Green bonds last week with a debut issue that trumps others both in terms of size and transparency.

Solar

Asia welcomes landmark Green bond

IFR 2042 19 July to 25 July 2014 By Frances Yoon

Advanced Semiconductor Engineering has sold the first Green bond from Asia’s private sector in a deal that highlights the potential for sustainable investing in the region. 

Fed

Yellen tests biotech resilience

IFR 2042 19 July to 25 July 2014 By Stephen Lacey, Anthony Hughes

Federal Reserve chair Janet Yellen did no favours to the IPO market last week by calling into question valuations in growth sectors of the US equity market, notably biotech and social media.

IFR Magazine Top News in Full (subscription required)

People & Markets

Fixed income trading revenues

Banks report false dawn for FICC revival

IFR 2042 19 July to 25 July 2014

Surprising strength in June salvaged what was on track to be another terrible quarter for fixed income trading across the Street but the big five US banks that reported second-quarter numbers last week still lamented relative weakness in FICC during the quarter.

Bellwether. n. From the practice of placing a bell around the neck of a castrated ram

​Meisters of the Universe

IFR 2042 19 July to 25 July 2014

PERHAPS AS PENANCE for getting the outcome of the World Cup so wrong – the bank’s analysts, foolishly, backed Brazil – Goldman Sachs’s board of directors travelled to Germany to hold its annual board of directors meeting.

The headquarters of Morgan Stanley is pictured in New York

Equity trading disappoints

IFR 2042 19 July to 25 July 2014

Despite optimistic predictions that revenue from equity trading was poised to pick up the slack from weaker fixed income activity, that does not look likely any time soon given the evidence in the second quarter, which showed equities suffered from the same problems that dampened FICC performance – low volatility.

A Goldman Sachs sign is seen above the floor of the New York Stock Exchange

US investment banking fees surge

IFR 2042 19 July to 25 July 2014

US banks rode the surge in capital markets activity in the second quarter to beat analysts’ earnings expectations, in some cases posting record fee performance.

A sign for Bank Street is pictured in the financial district Canary Wharf

​High-yield helps European banks

IFR 2042 19 July to 25 July 2014

US bulge-bracket investment banks, which have largely undergone restructuring, are expected to steal a march on their lagging European peers when these firms release their latest set of results this month.

    More from People & Markets

    Bonds

    Reynolds American's Camel cigarettes are stacked on a shelf inside a tobacco store in New York

    M&A surge no guarantee for bonds

    IFR 2042 19 July to 25 July 2014

    Bankers are welcoming the heady surge in M&A activity but the bond markets are unlikely to get as big a piece of the pie as in years past, as borrowers make more use of both equity and loans.

    Deutsche Bahn rolls out first syndicated floater

    IFR 2042 19 July to 25 July 2014

    Two European corporates hit the market last Monday, both issuing €300m trades.

    EFSF sends RFP

    IFR 2042 19 July to 25 July 2014

    The EFSF, rated Aa1/AA/AA+, sent a request for proposal to a selection of banks from the EFSF/ESM Market Group with regards to an upcoming transaction scheduled for the week of July 21.

    Goldman FIGSCO on ice until September

    IFR 2042 19 July to 25 July 2014

    Goldman Sachs is to delay its Fixed Income Global Structure Collateral Obligation transaction until September at the earliest due to volatility brought on by the BES travails in Portugal.

    Talanx finds demand for solo senior operation

    IFR 2042 19 July to 25 July 2014

    Germany’s third-largest insurer, Talanx, capitalised on a deserted FIG market last Wednesday to sell its second senior unsecured bond. The A– rated insurer priced the €500m 12-year deal at mid-swaps plus 97bp on the back of over €2.5bn of orders, having initially tested interest at 105bp area, before revising guidance to plus 100bp area (plus or minus 3bp).

      More from Bonds

      Loans

      VEB Bank Sanctions

      Sanctions imperil Russian debt pipeline

      IFR 2042 19 July to 25 July 2014 By Sandrine Bradley, Sudip Roy

      New sanctions imposed on Russia by the US have dashed hopes that Russia’s syndicated loans market is reopening, while the international bond market, which has shown strong appetite for Russian borrowers in recent weeks, may also now be off limits for the country’s issuers.

      Xiaomi

      Better ring to Xiaomi's new loan

      IFR 2042 19 July to 25 July 2014 By , Kane Wu

      Chinese budget smartphone maker Xiaomi, accustomed to making waves in the world of telecoms and technology, looks set to do the same in the loan markets, with a US$1bn borrowing following a botched attempt earlier this year.

      Logo of drug capsule maker Capsugel

      Deal rush to prompt pushback

      IFR 2042 19 July to 25 July 2014 By Claire Ruckin

      A flood of leveraged loans in Europe is facing the prospect of investor pushback over the summer months as investors, spoilt for choice for the first time this year, become more selective.

      Shanda Games logo

      Eight to play on Shanda LBO

      IFR 2042 19 July to 25 July 2014 By

      Logo of Dutch TV production company Endemol

      Restructuring bankers face up to thinning deal pipeline

      IFR 2042 19 July to 25 July 2014 By Sandrine Bradley

      Deal pipelines are becoming thinner for restructuring bankers as low interest rates and refinancing using the buoyant high-yield market continue to shield struggling businesses from the realities of harsher financial restructurings.

      Corus steel company logo

      India: A dozen line up for Tata Steel

      IFR 2042 19 July to 25 July 2014 By

      A dozen lenders are tipped to win the mandate for the loan component of Tata Steel subsidiary Corus Group’s US$7bn refinancing exercise, which also includes a US$1.2bn bond offering.

      The Imperial Tobacco Seita cigarette plant in Carquefou, near Nantes

      Imperial Tobacco lights up market

      IFR 2042 19 July to 25 July 2014 By Alasdair Reilly

      British cigarette maker Imperial Tobacco is set to launch loans totalling US$13.1bn to back its acquisition of selected brands and assets from Reynolds American.

      Cov-lite issuer defaults above average for first time

      IFR 2042 19 July to 25 July 2014 By Leela Parker Deo

      For the first time, covenant-lite borrowers are defaulting at a rate above the average for US non-investment-grade companies, according to a Moody’s report. Combined with eroding debt cushions, this could lead to lower recovery rates in the next default cycle.

      More from Loans

      Equities

      Ignore Vincent Tan, says MOL

      Ignore Vincent Tan, says MOL

      IFR 2042 19 July to 25 July 2014

      Malaysian tycoon Vincent Tan plans to list his e-payment services provider MOL Global in the US, but the firm has had to warn investors not to pay attention to his comments to the media.

      Spire Healthcare logo

      Three anchors for Spire flotation

      IFR 2042 19 July to 25 July 2014

      Three investors have declared positions in Spire Healthcare, which debuted in London on Friday. Despite a weak market backdrop, the shares opened at 211p, then hovered around the IPO pricing of 210p until a slight rise in the afternoon made for a close of 210.50p, with stabilisation said to be quite light.

      Orion Engineered Carbons logo

      Orion Engineered reworks US$430m IPO

      IFR 2042 19 July to 25 July 2014

      Orion Engineered Carbons, a sponsor-backed chemicals company, last week launched bookbuilding on a US$430m IPO that is significantly tweaked from an earlier iteration. The revised format is part of a broader refinancing designed to minimise borrowing costs, with its owners parking planned exits for a later date.

      Tong Jinquan

      Listing first for Lion City

      IFR 2042 19 July to 25 July 2014

      IREIT Global has launched an IPO of S$372.3m (US$299.8m) with an initial portfolio of German properties – the first Singapore REIT with such assets.

      Benefitfocus

      Goldman pares Benefitfocus stake

      IFR 2042 19 July to 25 July 2014

      Benefitfocus, a provider of software that went public last September, suffered a heavy fall last week ahead of a US$96.3m first-time follow-on offering that allowed principal backer Goldman Sachs to reduce its position in the company. 

      Orbitz stake sale preps Travelport for IPO

      IFR 2042 19 July to 25 July 2014

      The IPO plans of Travelport Wordwide were given an indirect boost last week when the Blackstone-backed travel technology company sold the bulk of its remaining 38% stake in online travel agent Orbitz Worldwide via an upsized block trade.

      SunEdison powers up on solar carve-out

      IFR 2042 19 July to 25 July 2014

      TerraForm Power, the carve-out IPO of SunEdison’s solar-power fleet, is the latest beneficiary of a series of progressively more aggressive alternative energy vehicles.

      Sage Therapeutics soars in first-day trading

      IFR 2042 19 July to 25 July 2014

      Bookbuilds on biotech IPOs are all about deal optics. Almost universally the strategy is a late-stage, pre-IPO investment, followed by a testing the waters exercise, and finally the formal public launch, the latter featuring explicit or implicit participation by venture capitalist or cross-over institutional investors.

      More from Equities

      Derivatives

      The Chicago Mercantile Exchange

      Swaptions clearing proves tall order

      IFR 2042 19 July to 25 July 2014 By

      Efforts from central counterparties to expand the range of rates products they clear are stalling amid growing industry concern that it could be dangerous to shoehorn more exotic derivatives into clearing houses.

      LCH.Clearnet logo

      CCP switch services gain traction

      IFR 2042 19 July to 25 July 2014 By Mike Kentz

      Swaps brokers are looking to capitalise on growing market demand to reduce the margin costs associated with central clearing, by launching services that allow users to switch between derivatives clearing houses with greater ease. 

      Sparring

      Regulators spar in quest for clearing harmony

      IFR 2042 19 July to 25 July 2014 By Mike Kentz

      A prolonged battle for supremacy over the regulation of the US$710trn global over-the-counter derivatives market has entered its next chapter, as European officials seek to take the temperature of recently appointed US policymakers on the crucial issue of central clearing.

      European bank stocks diverge from credit

      IFR 2042 19 July to 25 July 2014 By

      The divergence between European equity and bank debt is expected to broaden further in the coming months as fundamental changes in banking regulations continue to impact the industry, giving credit investors a lucrative relative value play.

      A Citibank sign on a bank branch in midtown Manhattan, New York

      EQD bankers quit as activity stalls

      IFR 2041 12 July to 18 July 2014 By Helen Bartholomew

      After a solid first quarter, equity derivatives desks have endured a difficult three months as volumes declined alongside a plunge in volatility, further denting hopes that the business will play a significant role in plugging the revenue gap left by the fixed income slump.

      More from IFR Derivatives

      Digital Edition

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      Budget India

      P&M: India unveils draft rules for infrastructure trusts

      India has announced the guidelines for infrastructure trusts (InVITs), a new asset class introduced in this year’s budget.

      Smoke and mirrior

      Holy smoke and mirrors

      Just as every child is unique but also pretty much the same, many of Europe’s most troubled banks have problems that are idiosyncratic but share similar essential traits.

      Cameron

      UK prepares for possible EU failure

      Hugo Dixon: Cameron sets the stage for Brexit.

      Bellwether. n. From the practice of placing a bell around the neck of a castrated ram

      ​Meisters of the Universe

      IFR 2042 19 July to 25 July 2014

      PERHAPS AS PENANCE for getting the outcome of the World Cup so wrong – the bank’s analysts, foolishly, backed Brazil – Goldman Sachs’s board of directors travelled to Germany to hold its annual board of directors meeting.

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      Chat app Line sends message to marketVideo

      Mammoth Japanese messaging service Line has kicked off the IPO process, but investor excitement may have come to the Tokyo Exchange a tad early. Yonggi Kang reports.

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      BRICS $100bn bid for a bigger sayVideo

      Leaders of the BRICS emerging market nations launch a $100 billion development bank and a currency reserve pool in their first concrete step towards reshaping the Western-dominated international financial system. Ciara Sutton reports for Reuters TV.

      All Spotlight

      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