sections

Friday, 05 February 2016

CLICK HERE TO ACCESS THE DIGITAL EDITION OF IFR MAGAZINE

Italy

That (kitchen) sinking feeling

IFR 2119 6 February to 12 February 2016

At the end of January, Italian sovereign bonds tanked after the European Central Bank began making disgruntled noises about the worryingly high levels of bad loans permeating the country’s bloated banking system.

Top News

Dell laptop

Dell's US$10bn loans test market

IFR 2119 6 February to 12 February 2016 By

The first US$10bn chunk of pro rata loans in a US$45bn financing package backing computer giant Dell’s purchase of data storage products maker EMC Corp is testing banks’ appetite for funded US dollar assets before tapping the institutional loan and high-yield bond markets.

A National Australia Bank (NAB) sign

Cheap and cheerful as UK IPOs return

IFR 2119 6 February to 12 February 2016 By

National Australia Bank breathed life into Europe’s 2016 IPO market last week, floating Clydesdale and Yorkshire Banking Group with a market capitalisation of £1.583bn. CMC Markets followed a couple of days later, with four more European pricings due this week.

Canary Wharf financial district

European banks' non-core losses hit €35bn

IFR 2119 6 February to 12 February 2016 By

Further losses linked to non-core assets at UBS, Credit Suisse and Deutsche Bank revealed over recent days – with more expected at Barclays when it updates the market next month ...

ChemChina headquarters

ChemChina smashes Asian record

IFR 2119 6 February to 12 February 2016 By

China’s largest chemical company is initially funding the deal entirely with debt through a mixture of recourse and non-recourse facilities, leveraging both its own balance sheet and that of its target.

A construction site in central Jakarta

Lippo misreads duration demand

IFR 2119 6 February to 12 February 2016 By

Nervous HY investors shun complex transaction and long duration

Ezubo logo

Fraud shatters China's P2P IPO dreams

IFR 2119 6 February to 12 February 2016 By ,

Last Monday, the state-run Xinhua News Agency reported that Ezubo, a peer-to-peer lending company in Anhui, had conned investors out of over Rmb50bn (US$7.61bn) through a Ponzi scheme.

Red Square

Russia bond sparks sanctions conundrum

IFR 2119 6 February to 12 February 2016 By

Investors are facing a conundrum if Russia decides to push ahead with plans to print a Eurobond this year, as bond market experts say that the money raised can be used to bypass Western financial sanctions on Russian companies.

Financial Ministry palace in Rome

Italy goes the whole nine yards

IFR 2119 6 February to 12 February 2016 By

The Italian Republic priced a €9bn 2.70% 30-year benchmark on Tuesday that was lauded by bankers and underlines the extent to which the European Central Bank is able to allay market concerns around Italy in particular and the global economy in general.

Mask with colours of Columbia's flag

Colombia eyes bond as woes mount

IFR 2119 6 February to 12 February 2016 By

Colombia is preparing to tap the bond markets at a rough time, as a slide in oil prices has dented its fiscal accounts and is threatening the oil exporting nation’s credit standing.

Endurance International logo

Junk market faces Triple C test

IFR 2119 6 February to 12 February 2016 By

Leveraged finance bankers are chipping away at an up-to-US$30bn pipeline of high-yield bond sales at the fastest pace so far this year, but lower-rated credits remain a tough sell.

IFR Magazine Top News in Full (subscription required)

People & Markets

Deutsche Bank headquarters in Frankfurt

Europe's banks trail behind US rivals

IFR 2119 6 February to 12 February 2016

Europe’s major investment banks underperformed their US rivals by a distance last quarter, signalling that market share gains by the big Wall Street firms in the past five years could accelerate in 2016.

Tidjane Thiam

'Perfect storm' hits Credit Suisse earnings

IFR 2119 6 February to 12 February 2016

Credit Suisse reported a SFr6.44bn pretax loss for the final three months of 2015 and chief executive Tidjane Thiam warned that “challenging” conditions in January could persist for the rest of the quarter, sending shares to their lowest point in over 20 years.

keith mullin

Goldman tools up for trouble

IFR 2119 6 February to 12 February 2016

DO GOLDMAN SACHS’s most recent executive shifts give away valuable clues as to how investment banks’ corporate and institutional clients will need to be serviced as this treacherous market gives rise to all sorts of doom and gloom scenarios and outlooks, and market-structure shifts in FICC call for new ideas?

Jim Esposito

Goldman shake-up sees Esposito head securities strategy

IFR 2119 6 February to 12 February 2016

Goldman Sachs named Jim Esposito chief strategy officer in its securities division, a new role. Esposito was previously co-head of the global financing group, a role he assumed with Marc Nachmann after Stephen Scherr was named chief of strategy for the bank in 2014.

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

Bellwether

IFR 2119 6 February to 12 February 2016

IS IT A bird? Is it a plane? No, it’s a bond deal.

    More from People & Markets

    Bonds

    Fallen angels loom over Europe

    IFR 2119 6 February to 12 February 2016

    Analysts expect billions of euros of investment-grade corporate bonds to come crashing down to junk, and while the market is better prepared than ever to smooth the transition, there is still scope for some nasty shocks.

    Goldman Sachs sign

    Outlook bleak for crumbling financials supply

    IFR 2119 6 February to 12 February 2016

    Banks looking to raise funding in the European market are facing an increasingly torrid backdrop, with 2016’s volumes considerably lagging last year’s, putting issuers on the back foot just as they need to make a dent in their programmes.  

    BMW logo

    Private placements to the fore as public primary dries up

    IFR 2119 6 February to 12 February 2016

    Torrid conditions pushed blue-chip corporates to turn to private placements in January as elevated premiums dampened public issuance in what is normally one of the sector’s busiest months.

    Caisse Amortissement de la Dette Sociale logo

    SSAR sales surge

    IFR 2119 6 February to 12 February 2016

    Cades (Caisse Amortissement de la Dette Sociale) was among the latest SSAR borrowers to access the sterling market, with volume from the sector now over half the level printed in the currency in the whole of 2015.

    Macquarie set for debut

    IFR 2119 6 February to 12 February 2016

    Macquarie Bank is set to become the sixth Australian lender to sell covered bonds, potentially denominated in euros, after a round of European investor meetings, starting this Monday. Barclays, HSBC and Societe Generale are the arrangers.

      More from Bonds

      Loans

      SolarWinds logo

      Anxious investors want tighter terms

      IFR 2119 6 February to 12 February 2016 By Jonathan Schwarzberg

      Worried investors are calling for tighter terms and conditions on US leveraged loans as pricing continues to move higher for lower-rated companies while the market tries to digest a multi-billion-dollar logjam of deals from last year in a deteriorating macroeconomic environment.

      A Staples in Burbank, California

      Euro market braced for turbulence

      IFR 2119 6 February to 12 February 2016 By Hannah Brenton

      The European leveraged loan market has so far withstood the turmoil gripping the US market – but with large US loans, including cross-border deals, forced to flex terms considerably, there are concerns that the storm could be heading across the Atlantic.

      Virtus Partners logo

      Moves to improve loan settlement times

      IFR 2119 6 February to 12 February 2016 By Kristen Haunss

      Investors in the US leveraged loan market are seeking to cut the time it takes to complete a trade, as regulators warn that funds may not be able to meet redemptions during volatility.

      Pump jack

      Regulators to classify more energy loans as high-risk

      IFR 2119 6 February to 12 February 2016 By Lynn Adler

      US regulators are likely to classify more oil and gas loans as high-risk when they start a new bank portfolio review in early February, due to the fall in crude prices to a 12-year low since the previous review. This will cut credit access and escalate defaults for cash-starved energy companies, analysts and investors said.

      Kemi Adeosun

      Loans hammered by low oil prices

      IFR 2119 6 February to 12 February 2016 By Sandrine Bradley

      Local and international banks are closely monitoring loan exposure of around US$16bn to the country’s oil and gas sector after the finance minister said that Nigeria needs to borrow around US$9bn to fund its 2016 budget deficit and capital projects as low oil prices continue to hammer emerging markets finances.

      Dell laptop

      Dell's US$10bn loans test market

      IFR 2119 6 February to 12 February 2016 By

      The first US$10bn chunk of pro rata loans in a US$45bn financing package backing computer giant Dell’s purchase of data storage products maker EMC Corp is testing banks’ appetite for funded US dollar assets before tapping the institutional loan and high-yield bond markets.

      Dominion Resources logo

      Dominion taps for Questar buy

      IFR 2119 6 February to 12 February 2016

      Power producer Dominion Resources is backing its US$4.4bn acquisition of natural gas distribution company Questar with a US$3.9bn senior unsecured bridge and term loan facility. Mizuho and RBC committed to provide the debt financing.

      ​RBC and CIBC to finance Rona buy

      IFR 2119 6 February to 12 February 2016

      RBC and CIBC have arranged committed financing to back home improvement retailer Lowe’s C$3.2bn acquisition of Canada’s Rona.

      More from Loans

      Equities

      RBL Bank branch

      Past failings delay RBL Bank IPO

      IFR 2119 6 February to 12 February 2016

      India’s stock market regulator has delayed the US$150m–$250m IPO of RBL Bank over previous violations of disclosure rules, complicating efforts to complete the country’s first bank listing since 2010. 

      Mark Papa

      New oil SPAC looks to clean up

      IFR 2119 6 February to 12 February 2016

      Now seems an odd time to raise money to launch a new oil company. As crude prices have slumped to the 30s, US explorers have found access to capital markets funding choked off. In an effort to fill the funding gap created by the new price dynamic, E&P companies are ditching assets.

      Biotechs reopen US IPO market

      Biotechs break IPO dry spell

      IFR 2119 6 February to 12 February 2016

      The US IPO drought of 2016 came to an end on Tuesday night as BeiGene and Editas Medicine priced the year’s first new issues. Each was already well oversubscribed from the outset of marketing, with bankers taking extra measures to ensure positive outcomes.

      Chinese investors react

      China worries shutter IPOs

      IFR 2119 6 February to 12 February 2016

      In an announcement on the Stock Exchange of Hong Kong last Wednesday, the company said it would not proceed with the IPO due to excessive market volatility. It had been due to price the flotation after books closed last Tuesday.

      ArcelorMittal steel plant in Liege

      Luxembourg: ArcelorMittal steels itself for US$3bn cash call

      IFR 2119 6 February to 12 February 2016

      Goldman Sachs, Bank of America Merrill Lynch and Credit Agricole are providing standby underwriting for a US$3bn capital raise for ArcelorMittal as the steel manufacturer works to pay down debt. The fundraising comes alongside the US$1bn sale of a 25% minority stake in Spanish engineering group Gestamp.

      American Campus Communities logo

      American Campus builds room for growth

      IFR 2119 6 February to 12 February 2016

      It has been a long time since American Campus Communities sold stock, at least in a publicly marketed transaction. Nearly four years after having last done so, the student housing REIT provided an incentive for investors to participate in a roughly US$643.5m overnight follow-on offering.

      China: CR Pharma plans float

      IFR 2119 6 February to 12 February 2016

      China Resources Pharmaceutical Group plans a Hong Kong IPO to raise at least US$1bn, according to people close to the deal.

      Japan: LaSalle Logiport REIT benefits from yield focus

      IFR 2119 6 February to 12 February 2016

      LaSalle Logiport REIT has raised ¥105.58bn (US$892m) from an IPO of new investment units, priced at the top of the indicative range, according to sources close to the deal.

      More from Equities

      Derivatives

      JP Morgan Chase & Co. corporate headquarters

      Structured products go green

      IFR 2119 6 February to 12 February 2016 By

      Structured note issuers are responding to a scramble for yield in the growing market for socially responsible investments by expanding cross-asset efforts in bespoke products linked to benchmarks with strong environmental, social and governance credentials.

      US Treasury swap spreads (Bp)

      Swap spreads jump on Treasury inflows

      IFR 2119 6 February to 12 February 2016 By Mike Kentz

      A surge of demand for US Treasury bonds pushed 10-year yields to 12-month lows and narrowed the negative gap against Libor-based financing rates that took hold in September.

      London Stock Exchange

      MS's Ross to head LSE's Curve

      IFR 2119 6 February to 12 February 2016 By

      The London Stock Exchange Group has appointed Andrew Ross as chief executive officer of its CurveGlobal derivatives platform. Ross joins after 16 years at Morgan Stanley where he was most recently global head of agency listed derivative electronic execution and European head of clearing. 

      Investors urge SEC reform of CDS rules

      IFR 2119 6 February to 12 February 2016 By Mike Kentz

      Derivatives market participants are asking the Securities Exchange Commission to speed up the implementation of Dodd-Frank rules for security-based swaps – primarily single-name credit default swaps – in the hope that regulatory reform will rejuvenate the flagging market when credit investors are desperate for robust hedging instruments.

      Buyside loses faith on equivalence pact

      IFR 2119 6 February to 12 February 2016 By

      US asset managers have begun re-papering legal agreements with their bank clearing providers as they lose faith that US and European regulators will reach an agreement to recognise each other’s clearing regimes before European rules go live.

      More from IFR Derivatives

      Digital Edition

      Access a digital edition of the latest print magazine here.

      To read the IFR Magazine Digital Edition you will need to enter your details in the login section.

      If you have forgotten your password, or would like to find out more about IF subscriptions, please email rm.clientsupport@thomsonreuters.com.

      Capital CityCapital City logo    

      Prat-Gay (L) and Luis Caputo

      Debt mediator praises Argentina's Macri for courage in tackling dispute

      05 February 2016

      (Reuters) -  Argentina’s new President Mauricio Macri and his finance minister showed “courage and flexibility” in dealing with the country’s legal battle with creditors, the US court-appointed mediator in the case said on Friday.

      A man makes a phone call using his mobile phone

      Dialing for dollars: Mobile phones could be next ABS asset class

      05 February 2016 By

      Mobile phone contracts could be the next big thing turned into bonds in the US securitization market, Moody’s Investors Service said on Friday.

      Logo of Brazil's Gerdau

      Gerdau bonds give back gains on Moody's junk rating

      05 February 2016 By

      Bonds issued by Brazil’s Gerdau quickly gave back earlier gains on Friday after Moody’s demoted the steel company to junk with a three-notch downgrade.

      A Manitowoc Model 999 lattice-boom crawler crane

      Manitowoc Cranes widens yield on junk bond to 14% – source

      05 February 2016

      Manitowoc Cranes was forced on Friday to restructure a bond offering from its cranes unit, shortening the maturity and hiking the yield talk to 14%, a source told IFR.

      Goldman Sachs sign

      Outlook bleak for crumbling financials supply

      05 February 2016 By

      Banks looking to raise funding in the European market are facing an increasingly torrid backdrop with 2016’s volumes considerably lagging last year’s, putting issuers on the back foot just as they need to make a dent in their programmes.

      Electronic Arts logo

      Fed uncertainty dashes hopes for primary surge

      05 February 2016 By , Hillary Flynn

      Hopes of a late-week surge in high-grade primary volumes were dashed on Friday when US payrolls data upset sentiment and left bankers bracing for a slower-than-expected month ahead.

      Schlumberger headquarters

      Schlumberger breaks drought in oil sector supply

      05 February 2016 By

      Investors poured into an offering from oilfield services giant Schlumberger on Friday after a generous starting point helped quash nerves around the struggling sector.

      The Fitch Ratings building is seen in New York

      Fitch upgrades Ireland to 'A', affirms Austria at 'AA+'

      05 February 2016 By Michael Cartine

      (Reuters) - Fitch raised Ireland’s credit rating a notch to ‘A’ on Friday, taking the unusual step of upgrading a country’s debt in the middle of an election campaign, a move that could potentially hand the government parties a boost.

      UPDATE: Morgan Stanley's Ross to head LSE futures platform

      05 February 2016 By

      *Adds confirmation and comment from LSE

      Permodalan Nasional Berhad logo

      LOANS: PNB set to launch £628m refi

      05 February 2016

      Malaysian government-linked investment fund Permodalan Nasional (PNB) is expected to launch a five-year refinancing loan of £628m (US$916.5m) after the Lunar New Year holidays.

      P&M: Loan bankers depart from Barclays Australia

      05 February 2016

      Duncan Connellan, head of loan capital markets and leveraged finance at Barclays in Australia, is among a couple of loan bankers who have left the bank, following the firm’s decision to close operations Down Under last month.

      P&M: Morgan Stanley names Zamsky fixed income COO

      05 February 2016 By Olivia Oran

      Morgan Stanley has made a number of management changes within its fixed income division after promoting Sam Kellie-Smith to run the division in January.

      Hess gas station

      Hess plugs funding hole with US$1.5bn of equity

      04 February 2016 By

      Fresh from reporting a historic loss, mid-major oil E&P Hess Corporation is looking to bolster its balance sheet with a two-part, US$1.5bn equity-linked raise. The financing, structured as US$1bn of common stock and US$500m mandatory convertible preferred, is due to price overnight Thursday.

      Credit Suisse headquarters

      Credit Suisse AT1 bonds take hit after poor earnings

      04 February 2016 By

      Credit Suisse’s Additional Tier 1 bonds fell on Thursday after the Swiss bank reported its first full-year loss since 2008.

      Mauricio Cardenas

      As oil suffers, Colombia eyes tough time for bond offer

      04 February 2016 By

      Colombia is preparing to tap the bond markets but at a rough time, as a slide in crude prices has dented fiscal accounts and is threatening the oil exporting nation’s credit standing.

      A commercial development in Williston, North Dakota

      Slowest start in CMBS in four years; supply forecast cut

      04 February 2016 By

      Commercial mortgage bond issuance was just US$4.8bn in January, making it the slowest start to any year for the asset class since 2012, according to analysts at Kroll Bond Rating Agency.

      All Latest news

      Bank of the Year: UBS

      Bank of the Year: UBS

      IFR Review of the Year 2015 By

      How often has any bank been able to lay genuine claim to creating a benchmark for how the business is conducted? Faced with some tough decisions about its own future amid the chaos of the new order, UBS fashioned an innovative and sustainable operating model that is now a blueprint for others to follow. It is IFR’s Bank of the Year.

      IFR Awards 2015

      IFR Awards 2016

      IFR Awards dinner raises £1.22m for Save the Children

      01 February 2016

      The IFR Awards dinner on January 27 raised £1.22m for Save the Children with the banking community once again pledging large sums in support of the charity. Bank of the Year UBS and UBS Optimus Foundation together donated a record £800,000 to be named bookrunner.

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

      Bellwether

      IFR 2119 6 February to 12 February 2016

      IS IT A bird? Is it a plane? No, it’s a bond deal.

      Opinion

      keith mullin

      Goldman tools up for trouble

      DO GOLDMAN SACHS’s most recent executive shifts give away valuable clues as to how investment banks’ corporate and institutional clients will need to be serviced as this treacherous market gives rise to all sorts of doom and gloom scenarios and outlooks, and market-structure shifts in FICC call for new ideas?

      IFR

      BoJ - Experimental policy with a shock and awe focus

      Divyang Shah on Bank of Japan’s surprise negative interest rate policy.

      keith mullin

      One quarter’s earnings does not a strategy make

      If Aristotle were around today, he’d probably be a strategist or investment consultant.

      James Saft - June 2014

      Contrarian hedge funds earn keep; momentum mutual funds, not so much

      Two thirds of hedge funds create genuine value through contrarian strategies, says new study.

      James Saft - June 2014

      Japan may follow own advice to China – capital controls

      China’s own situation adds markedly to the complexity and difficulty of Japan’s, says James Saft.

      US dollar and Chinese yuan banknotes

      Beijing’s currency contradictions

      Chinese weigh benefits and costs of seigniorage.

      IFR

      Welcome to Bretton Woods III

      The original Bretton Woods system of fixed exchange rates broke down in the early 1970s when the US ditched the gold standard. But in the post-Asia crisis period, the Bretton Woods II surfaced, popularised by Garber, Dooley and Folkerts-Landau, and argued that Asian countries (the periphery) committed to export-led growth through an undervalued exchange rate would export capital to the US (the core).

      OMFIF

      Time for US-China swap agreement

      How Fed, PBoC could steady the renminbi.

      keith mullin

      IFR awards, Andrea Orcel and the UniCredit factor

      WHAT A NIGHT! IFR’s 21st annual gala awards event, which took place last Wednesday in London, was another remarkable success that hopefully put a dent in the doom, gloom and depression the markets have been living over the past few weeks.

      Peters 475px June 2014

      Time for the hedgies to go private?

      STUDENTS OF HISTORY will recognise “Happy Time” as the term used by German submariners to describe the period after the fall of France in 1940 when the U-Boat fleet roamed the Atlantic with next to no opposition, sinking British and Britain-bound shipping more or less at will. In the bond markets, the same sobriquet could be applied to the six or 12 months either side of the fall of the House of Lehman in 2008 when risk limits were ample and market liquidity was still untouched by regulatory constraints.