Saturday, 26 July 2014

The euro sculpture

Keeping the pressure on

IFR 2043 26 July to 1 August 2014

The ECB’s Targeted Long-Term Refinancing Operation looks to put more pressure on the spread margins of bank bonds, leaving investors again scrabbling around for incremental returns.

Top News


TLTRO to stall bank funding plans

IFR 2043 26 July to 1 August 2014 By , Aimee Donnellan

Banks are likely to shelve plans to sell senior unsecured bonds, with bosses opting to save money by replacing private funding with much cheaper emergency funds from the European Central Bank designed to spur lending.

saudi arabia

Saudi Arabia opens door to foreigners

IFR 2043 26 July to 1 August 2014 By Abhinav Ramnarayan

Saudi Arabia last week announced plans to open its stock markets to foreign participants by mid-2015, a move that analysts say is hugely significant for equity investors – and the bankers that serve them.


Conciliatory Seadrill returns to right wrongs

IFR 2043 26 July to 1 August 2014 By

Seadrill has taken the first steps towards restoring its reputation with equity-linked investors after the Norwegian oil services company offered investors an apology and completed a revised conversion incentive offer on its US$650m 3.375% 2017 bonds last week.


Blackstone leverages up Hilton stake

IFR 2043 26 July to 1 August 2014 By Anthony Hughes

Private equity companies that have sharply increased their holdings of publicly traded securities recently are looking at ways to return capital to their limited partners and book higher returns without selling the underlying positions. Blackstone’s large margin loan secured by its holdings in Hilton may point the way.


Election to restart Indonesian deals

IFR 2043 26 July to 1 August 2014 By S Anuradha, Frances Yoon

The election of a new federal government promises to kick-start issuance in Indonesia’s capital markets, but much will rely on whether or not the country makes investments to improve the economy.

US tax

Bankers push 'tax-dodge' M&A

IFR 2043 26 July to 1 August 2014 By Philip Scipio,

US bankers and lawyers are inciting a sense of urgency among corporate clients to get tax-reducing acquisitions of offshore companies signed before the end of this year, now that a slew of recent so-called tax-inversion trades has set off alarms in Congress.


China backs IMF debt revamp plans

IFR 2043 26 July to 1 August 2014 By

Senior officials in China have expressed support for the proposed reforms to the way sovereign debt might be restructured set out recently by the International Monetary Fund but they would like to see a further shake-up of international decision-making bodies such as the Paris Club.


Argentina and holdouts play chicken

IFR 2043 26 July to 1 August 2014 By Joan Magee, Davide Scigliuzzo, Paul Kilby

The prospect of a technical default by Argentina is looming this week as the government and holdout investors stare each other down in a very public battle of nerves ahead of the expiration of a grace period for debt payments on July 30.


Greece eyes SME 'minibonds'

IFR 2043 26 July to 1 August 2014 By ,

The first batch of issuance under a “minibond” programme that the Athens Exchange Group (Athex) has been promoting to finance Greek SMEs is set for launch after the summer break.

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People & Markets

The logo of Swiss bank Credit Suisse is seen in front of a branch office in Zurich

Credit Suisse retrenches

IFR 2043 26 July to 1 August 2014

Credit Suisse will exit commodities trading and make further cuts to its already dramatically shrunken macro products business, as the firm responds to a lacklustre trading environment that has made its capital and returns targets more difficult to meet by retrenching further.

The headquarters of Deutsche Bank are pictured in Frankfurt

Deutsche criticised over US reporting

IFR 2043 26 July to 1 August 2014

Deutsche Bank is facing intense pressure to fix material weaknesses in the regulatory reporting of its US operations, according to excerpts from leaked correspondence between it and the US Federal Reserve and widely published in the media.

Barclays bank logo

Barclays hits back over LX dark pool

IFR 2043 26 July to 1 August 2014

Barclays has called for the Supreme Court of the State of New York to throw out a case accusing it of misleading clients at its LX dark pool and fabricating statistics to hide the true nature of trading, saying that the investigation by the New York Attorney General contained some “fatal flaws”.

Misconducts in FX markets under scrutiny

FX probe becomes criminal investigation

IFR 2043 26 July to 1 August 2014

The investigations into possible misconduct in foreign exchange markets have been notched up a gear after the UK’s Serious Fraud Office opened a criminal investigation into allegations of fraudulent conduct in the area.

A shareholder watches an electronic board inside a stock exchange market in Jinan

Stock scheme stokes confusion

IFR 2043 26 July to 1 August 2014

Investors and brokers in Hong Kong and the PRC are complaining that regulators have not given them either enough time or information to take full advantage of the new cross-border stock-trading programme due to launch in October.

Stanley Ross

Death of a Eurobond doyen

IFR 2043 26 July to 1 August 2014

Stanley Ross, one of the pioneers of the Eurobond market, died on July 23 at the age of 83.

Jonathan Rogers new June 2014

A postcard from Yangon

IFR 2043 26 July to 1 August 2014

I’M WRITING THIS column from Yangon in Myanmar. It’s the country’s biggest city but not its capital. That distinction – aficionados of pub quizzes take note – goes to Naypyidaw.

Who's moving where...

IFR 2043 26 July to 1 August 2014

Scott O’Malia is to step down from his role as a commissioner at the US Commodity Futures Trading Commission on August 8, after he tendered his resignation. O’Malia is stepping down early, having taken up a five-year term in October 2009 that had been scheduled to expire next April, to join ISDA as CEO (see related story). From 1992 to 2001, he served as senior legislative assistant to US senator Mitch McConnell, now the Senate minority leader.

    More from People & Markets


    kangaroo caf

    Glencore raises Kangaroo hopes

    IFR 2043 26 July to 1 August 2014

    The stalled corporate Kangaroo bond market may soon receive a welcome lift, if Anglo-Swiss mining giant Glencore translates its recent Australian investor roadshow into an inaugural Australian dollar transaction.

    Royal Mail starts cheap, jumps tighter

    IFR 2043 26 July to 1 August 2014

    Royal Mail made its eagerly awaited bond market debut on Wednesday, attracting more than €5.5bn of demand for the €500m 10-year trade.

    Winoa pulls after investor resistance

    IFR 2043 26 July to 1 August 2014

    The Winoa Group pulled a planned bond deal on Tuesday, after investors pushed back on the transaction’s structure in the clearest sign yet that sentiment in the European high-yield market is turning.

    Gecina secures tight spread

    IFR 2043 26 July to 1 August 2014

    Gecina returned to the market on Wednesday with a €500m no-grow seven-year bond at mid-swaps plus 92bp, coming with a 1.75% coupon at a 99.317 reoffer price for a 1.855% yield.

    Reed Elsevier back in sterling

    IFR 2043 26 July to 1 August 2014

    Reed Elsevier took advantage of a clear run in the European corporate bond market on Friday, pricing a more than twice subscribed £300m five-year issue.

    KKR uses bond to claw back more equity from Capsugel

    IFR 2043 26 July to 1 August 2014

    KKR has clawed back nearly 80% of its US$1.1bn equity investment in the acquisition of drugs maker Capsugel, after rewarding itself with a second payment-in-kind toggle dividend in a year.

    Platinum pays up for acquisition funds

    IFR 2043 26 July to 1 August 2014

    Platinum Equity Advisors had to pay much more than it wanted to finance its acquisition of Transworld Systems amid worries about the credit and a raft of other concerns.

    Citgo and Micron raise US$1.8bn in quiet market

    IFR 2043 26 July to 1 August 2014

    Citgo Petroleum and Micron Technology raised a combined US$1.8bn in the high-yield market Wednesday, indicating that investors are clearly demanding more in concessions to compensate for market weakness.

      More from Bonds


      B2B sky

      Reach for the Sky

      IFR 2043 26 July to 1 August 2014

      A £6.6bn-equivalent loan financing backing BSkyB’s acquisition of Sky Italia and Sky Deutschland from Rupert Murdoch’s 21st Century Fox means that nearly US$60bn of European investment grade M&A-related loans have been announced over the past two weeks, dwarfing the US$34.4bn of acquisition loans completed at the half-year point.

      Singapore Skyline.jpg

      F1 refi brings shareholder payouts to US$3.5bn

      IFR 2043 26 July to 1 August 2014

      Motorsports company Formula One’s latest US$3.8bn loan refinancing pays a US$1bn dividend that brings total shareholder payouts to around US$3.5bn in four separate debt deals.

      Logo of Energy Future Holdings

      EFH seeks longer bankruptcy

      IFR 2043 26 July to 1 August 2014

      Energy Future Holdings, the largest power company in Texas, has asked a judge to extend the period in which it controls its Chapter 11 bankruptcy and said it is scrapping its original debt-cutting plan in favour of an auction of its Oncor unit.

      bonds india

      Bond frenzy squeezes loan margins

      IFR 2043 26 July to 1 August 2014

      Loan pricing for Indian borrowers is beginning to head south, as international lenders react to an upturn in the country’s economic and political outlook and unprecedented competition from the overseas bond markets.

      china ports

      Mercuria plans lender call

      IFR 2043 26 July to 1 August 2014

      Mercuria Energy Trading plans a conference call with lenders to explain the status of its alumina stock currently stuck at China’s Qingdao port, amid preliminary discussions on an upcoming loan refinancing. 

      UK: J Sainsbury agrees first green loan

      IFR 2043 26 July to 1 August 2014

      Supermarket group J Sainsbury has agreed a £200m “green” loan, the first commercial loan to be structured to directly support environmental and sustainable initiatives.

      3M markets US$2.25bn

      IFR 2043 26 July to 1 August 2014

      Manufacturing conglomerate 3M is in the market with a US$2.25bn five-year revolver via JP Morgan and Citigroup that will back general corporate purposes.

      Omnicom out with US$2.5bn refi

      IFR 2043 26 July to 1 August 2014

      Advertising and marketing communications services company Omnicom is out with a US$2.5bn five-year revolver for refinancing, led by Citigroup, JP Morgan and Wells Fargo.

      More from Loans


      Synchrony Financial logo

      GE discounts Synchrony at IPO

      IFR 2043 26 July to 1 August 2014

      General Electric’s rebranded North American private label credit card operation Synchrony Financial is hoping to buck the disappointing performance of other large consumer finance IPOs this year, relying on a discount to peers to drive investor interest in its US$3.3bn IPO.

      Spark Energy logo

      Technical issues delay deals

      IFR 2043 26 July to 1 August 2014

      Two companies, one a promising biotech, the other an electricity retailer, were forced to pivot their funding plans midstream when securities regulators required additional, last-minute disclosure.

      British Sky Broadcasting Group (BSkyB) logo

      BSkyB funds for Italia and Deutschland units

      IFR 2043 26 July to 1 August 2014

      Brokers Barclays and Morgan Stanley priced a £1.358bn accelerated bookbuild for British Sky Broadcasting on Friday morning. The declared support at launch of 39.14% shareholder 21st Century Fox to maintain its stake means that league table credit is significantly lower, but there was still plenty to do for a Friday trade in late July.

      WH Group

      Tastier return for WH Group

      IFR 2043 26 July to 1 August 2014

      WH Group has decided to close institutional order books earlier than planned on its HK$15.9bn (US$2.06bn) Hong Kong IPO, after getting a better response than it received to its downsized HK$14.6bn float that failed in April. 

      Mobileye logo

      Mobileye hits the road with US$528m IPO

      IFR 2043 26 July to 1 August 2014

      In a deal that could help re-ignite enthusiasm for technology IPOs, Mobileye last week launched a widely expected US$528m IPO that will allow key backers including Goldman Sachs to pare their positions in the fast-growing autonomous driving software developer.

      El Pollo Loco steps out

      IFR 2043 26 July to 1 August 2014

      Overcoming a recent softening in restaurant stocks, West Coast fast-food chain El Pollo Loco proved the exception among sponsor-backed deals to raise US$107m last week in a deal that was many times oversold.

      UK: Schroder trust back for more

      IFR 2043 26 July to 1 August 2014

      Schroder Real Estate Investment Trust has hinted at an imminent equity placing, having raised £40.2m to fund its pipeline of property acquisitions in March. The trust then said that it would ask shareholders to vote on a placing programme at its EGM on April 16, when the programme was subsequently approved.

      Det Norske logo

      Norway: End in sight for rights issue

      IFR 2043 26 July to 1 August 2014

      Rights trading finished last Thursday for oil exploration group Det Norske’s NKr3bn (US$483m) fundraising. The shares closed at NKr67, up 2.29% on the day, versus the rights price of NKr48.

      More from Equities


      Market awaits new CDS contract

      Market braced for new CDS

      IFR 2043 26 July to 1 August 2014

      The countdown has begun to the most substantial overhaul of the US$21trn credit default swap market in more than a decade, as a new contract designed to insure against sovereign and bank debt restructurings is set to be rolled out in a matter of weeks.

      US Treasury yields

      Eurodollar shorts remain despite Treasury rally

      IFR 2043 26 July to 1 August 2014

      Speculative short positioning and open interest in benchmark three-month Eurodollar futures contracts remain near record highs, indicating that the surprising rally in US Treasury yields over the first half of the year has not scared investors away from rate-rise plays just yet.

      Scott O’Malia

      Former regulator becomes face of industry lobby

      IFR 2043 26 July to 1 August 2014

      Former Republican CFTC commissioner Scott O’Malia will become CEO of chief derivatives lobby group ISDA on August 8, marking a dramatic shift that could signal a change in course for the traditionally hardline association, which has fought against stricter rules for the US$710trn over-the-counter swaps market.

      The Chicago Mercantile Exchange

      Swaptions clearing proves tall order

      IFR 2042 19 July to 25 July 2014

      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

      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. 

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

      Number withheld

      IFR 2043 26 July to 1 August 2014

      IMITATION IS THE sincerest form of flattery, so IFR should have been (kind of) pleased to discover that some of Hong Kong’s less scrupulous business newspapers have started phoning up banks pretending to be IFR staff in order to get information on equity deals.

      Hugo Dixon

      What is EU capital markets union?

      Jean-Claude Juncker, the EC’s president-elect, has embraced the goal of creating a capital markets union for the EU.

      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.

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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.

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      China economy warms up, but HSBC says remain cautiousVideo

      Better than expected China growth data suggests an anticipated second-half uptick has arrived early, rather than a change of fortunes for the world’s second largest economy, says HSBC’s John Zhu.

      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