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Friday, 19 September 2014

Top News

Alibaba

Alibaba's US$21.8bn IPO delivers

IFR 2051 20 September to 26 September 2014 By Stephen Lacey,

A conservative valuation stance and a partly superstitious approach to pricing, even in the face of overwhelming demand, ensured the long-awaited US$21.8bn NYSE IPO of Alibaba Group was a mostly seamless exercise last week.

AngloGold

AngloGold debacle tarnishes UBS and Goldman

19 September 2014 By Graham Fahy

Institutional shareholders have humiliated AngloGold Ashanti by forcing the miner to abandon plans for a huge capital increase and a spin-off of its international assets.

Fresenius

100% debt convertible bond trumps HY

IFR 2051 20 September to 26 September 2014 By

Fresenius Medical Care has illustrated the flexibility of equity-linked products by removing any threat of dilution from its €400m convertible bond issue. By repurchasing the embedded option through a matching derivative from joint bookrunner Societe Generale, the dialysis product-maker secured 100% debt treatment and therefore did not require shareholder approval.

ECB

Low appetite for TLTRO

IFR 2051 20 September to 26 September 2014 By

Banks took less than a quarter of the funds available to them in the first of the European Central Bank’s long-awaited targeted longer-term refinancing operations, raising concerns that the institution’s latest efforts to reinvigorate lending in countries mired in recession and deflation may underwhelm.

ECB

S&P highlights ECB’s regulatory dilemma

IFR 2051 20 September to 26 September 2014 By

An analysis of the short-term funding of Europe’s 50 largest banks has shown how delicately the European Central Bank will need to tread over the next month as it completes its comprehensive assessment of the health of Europe’s banks.

AB InBev

AB InBev M&A sparks debt buzz

IFR 2051 20 September to 26 September 2014 By Shankar Ramakrishnan, Tessa Walsh

The highly liquid global debt markets are in fine fettle and easily capable of financing another mammoth M&A deal of around US$100bn, bankers said at LPC’s 20th annual loan conference in New York.

Credit Suisse logo

Fed slaps Credit Suisse for risky lending

IFR 2051 20 September to 26 September 2014 By Tessa Walsh, Natalie Harrison, Lynn Adler

Wall Street banks are expected to rein in reckless underwriting after the Federal Reserve appeared to single out Credit Suisse for flouting lending guidelines.

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange

Shoemaker execs flee with company loan

IFR 2051 20 September to 26 September 2014 By , Saeed Azhar, Carol Zhong

Lenders that provided a US$60m loan in August to Chinese Frankfurt-listed shoemaker Ultrasonic were left reeling after two of the borrower’s top executives disappeared after the company’s three-year loan had been drawn down in full.

Market volatility

Volatility likely for delayed CDS rebirth

IFR 2051 20 September to 26 September 2014 By

The rebirth of the US$21trn credit default swap market will be delayed by two weeks, Markit and ISDA confirmed on Wednesday, in a sign that the industry is struggling to get ready for the most substantial overhaul to CDS in over five years.

The Alcoa Aluminium plant in Alcoa, Tennessee

Alcoa prefunds US$2.35bn acquisition

IFR 2051 20 September to 26 September 2014 By Stephen Lacey,

Alcoa’s move to acquire Firth Rixson was widely applauded by the financial markets when it was agreed to in June. The acquisition, while expensive, marked a continued transition by the company toward higher, value-added precision parts and away from its roots as an aluminium producer and processor.

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People & Markets

The Bank for International Settlements (BIS) in Basel

Basel zones in on trading books

IFR 2051 20 September to 26 September 2014

The Basel Committee on Banking Supervision has suggested that banks could be holding too little capital against their trading books as a result of overly optimistic models that underestimate the amount of risk within their bond, equity, loan and derivatives books. 

A sign outside the headquarters of JP Morgan Chase & Co in New York

US banks toughen internal stress tests

IFR 2051 20 September to 26 September 2014

US banks have toughened up their internal stress testing after pressure from the Federal Reserve, with more pessimistic projections for the economy, unemployment and loan repayments leading to lower projected capital levels in the latest mid-year tests.

SG

Debt opens doors for SG in Asia

IFR 2051 20 September to 26 September 2014

Societe Generale is seeking to add more debt capital markets bankers to boost its share of financing markets in China, India and South-East Asia and help to connect Asian enterprises with capital and investments in Europe and Africa.

Financial Conduct Authority logo

Banks facing equity research overhaul

IFR 2051 20 September to 26 September 2014

European investment banks are trying to figure out how to make equity research pay, after the latest regulatory push to break the current “bundled” arrangements that allow dealing commissions to pay both for executing trades and for associated services such as research.

Intesa Sanpaolo logo

Italian NPL sales set to accelerate

IFR 2051 20 September to 26 September 2014

Sales of non-performing loans in Italy are expected to pick up once the country’s banks, increasingly overburdened by their size and number, have got past the hurdle of next month’s publication of the European Central Bank’s asset quality review and accompanying stress tests.

The headquarters of the People's Bank of China in Beijing

China injects US$81bn into biggest banks

IFR 2051 20 September to 26 September 2014

China’s central bank is injecting a combined Rmb500bn (US$81.35bn) of liquidity into the country’s top banks, according to media reports, a sign that authorities are stepping up efforts to shore up a faltering economy.

Greek banks to get DTA capital boost

IFR 2051 20 September to 26 September 2014

Greece appears set to join Italy, Spain and Portugal as the latest country to permit its banks to convert deferred tax assets into capital, in a controversial move that comes just six weeks ahead of eurozone-wide stress tests that are expected to highlight billion-euro shortfalls across the currency bloc.

Banks win concessions on LCR

IFR 2051 20 September to 26 September 2014

US regulators have loosened some of the requirements in the final liquidity coverage ratio after intense lobbying from the industry, offering banks a rare victory in the post-crisis regulatory landscape.

    More from People & Markets

    Bonds

    Goldman makes Middle East push with sukuk

    IFR 2051 20 September to 26 September 2014

    Goldman Sachs managed to allocate a majority of its debut sukuk issue to Middle East investors, achieving its aim of diversifying its investor base and of marketing its franchise in the region.

    RBC extends covered curve

    IFR 2051 20 September to 26 September 2014

    Royal Bank of Canada issued the first covered Kangaroo of the year on September 12 with its A$750m five-year floating-rate note pricing to yield three-month BBSW plus 57bp.

    KfW reopens 2025s for A$150m

    IFR 2051 20 September to 26 September 2014

    KfW tapped its 4.0% February 27 2025 Kangaroo line for A$150m last Wednesday to lift the issue size to A$600m. Citigroup and TD Securities were joint lead managers for the tap, which priced at 97.848 for a yield of 4.2575%, 54.5bp over the April 2025 ACGB.

    Quebec taps 2025 line again

    IFR 2051 20 September to 26 September 2014

    The Province of Quebec has added A$175m to its 4.2% March 2025 Kangaroo line, lifting the issue size to A$400m. The tap last Wednesday priced at 96.949 for a yield of 4.57%, 85.25bp over the April 2025 ACGB.

    IFC taps 2019s for A$450m

    IFR 2051 20 September to 26 September 2014

    The International Finance Corp has added A$450m to its 3.25% July 22 2019 Kangaroo line to lift the issue size to A$1.2bn. ANZ, Deutsche Bank and TD Securities were joint lead managers for last Tuesday’s reopening, which priced at 98.885 for a yield of 3.5025%, 47.5bp over the March 2019 ACGB.

    IFC returns to Dim Sum

    IFR 2051 20 September to 26 September 2014

    The International Finance Corp priced its five-year bond offering of Rmb1bn (US$163m) last Wednesday morning to yield 3.10%. With this offering, the IFC becomes the largest issuer of London-listed renminbi bonds, which supports the globalisation of the Chinese currency and London’s ambition to be the offshore renminbi hub in Europe.

    Acosta LBO leads US$1.055bn high-yield day

    IFR 2051 20 September to 26 September 2014

    Private equity firm Carlyle completed the financing of its US$4.75bn leveraged buyout of sales and marketing firm Acosta on Monday at attractive rates, giving the high-yield market a boost following a string of tough trades and pulled deals.

    Burger King readies bond financing for Tim Hortons buy

    IFR 2051 20 September to 26 September 2014

    US fast-food chain Burger King last week began marketing a long-awaited US$2.25bn high-yield bond to help finance its US$11.5bn acquisition of Canadian doughnut group Tim Hortons.

      More from Bonds

      Loans

      Lenders ride M&A wave

      IFR 2051 20 September to 26 September 2014

      German car parts manufacturer ZF Friedrichshafen’s US$13.5bn acquisition of US-based TRW Automotive, and German business software maker SAP’s US$7.3bn takeover of US peer Concur Technologies, are the latest M&A transactions to provide a boost to a loan market weary of the grind of cut-price refinancing.

      Investors want a bigger bite of Whopper deal

      IFR 2051 20 September to 26 September 2014

      Investors are pushing back on pricing and terms on the US$7.25bn loan package that backs Burger King Worldwide’s US$12bn acquisition of Canadian restaurant chain Tim Hortons.

      Liquidity, low-growth point to healthy pipeline

      IFR 2051 20 September to 26 September 2014

      A strong credit environment, ample liquidity and a borrower focus on M&A-driven growth suggest a healthy outlook for acquisition-related middle market dealflow for the remainder of the year.

      Atlantis seeks club deal for refinancing

      IFR 2051 20 September to 26 September 2014

      Standard Chartered is leading a deal to refinance a US$880m five-year loan for Dubai’s Atlantis, The Palm that signed just over a year ago.

      ZF to seek investment grade after TRW buy

      IFR 2051 20 September to 26 September 2014

      German auto parts maker ZF Friedrichshafen is aiming for investment-grade status in the mid-term for the debt backing its US$13.5bn acquisition of US rival TRW Automotive Holdings.

      Ultrasonic lenders to take legal action

      IFR 2051 20 September to 26 September 2014

      The lenders on a US$60m syndicated loan for Frankfurt-listed Ultrasonic are considering taking legal action against the company following the disappearance of its top executives. 

      IDFC seeks waivers for transition

      IFR 2051 20 September to 26 September 2014

      Infrastructure financier IDFC, in line for one of India’s two new banking licences, is seeking waivers on its secured loans as it prepares to become a banking entity. 

      J&J rolls over revolver

      IFR 2051 20 September to 26 September 2014

      Conglomerate Johnson & Johnson is looking to roll over an existing US$10bn 364-day revolver agreed in 2013.

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      Equities

      Skylark

      Skylark cuts IPO size to US$734m, sets price range

      IFR 2051 20 September to 26 September 2014

      Skylark, a restaurant operator controlled by Bain Capital, has cut the size of its IPO to ¥80.1bn (US$734m) after shareholders decided to decrease the amount of secondary shares in the offering. 

      Jumbo Wanda IPO takes shape

      IFR 2051 20 September to 26 September 2014

      Billionaire Wang Jianlin’s Dalian Wanda Commercial Properties is raising funds in what will be Hong Kong’s biggest China-related property IPO.

      Management credited on ProQR IPO

      IFR 2051 20 September to 26 September 2014

      Dutch cystic fibrosis specialist ProQR Therapeutics raised US$97.5m last Wednesday night in a Nasdaq IPO that was both upsized and priced at the top of the indicative range.

      Fortress media vehicle raises US$105m

      IFR 2051 20 September to 26 September 2014

      Fortress Investments-backed New Media Investments, created earlier this year as a spin-off from Newcastle Investment Corp, raised gross proceeds of US$105.6m to fund working capital and potential acquisitions.

      Impact success builds Thai REIT appeal

      IFR 2051 20 September to 26 September 2014

      The success of Impact Growth Real Estate Investment Trust’s Bt7.9bn (US$244m) IPO, Thailand’s first such listing, is encouraging other issuers to resume work on their floats.

      PE investors seek Indian exits

      IFR 2051 20 September to 26 September 2014

      The recent rally in Indian stocks has offered private equity investors an opportunity to monetise their Indian holdings through initial public offerings.

      EOC extends Singapore bookbuild

      IFR 2051 20 September to 26 September 2014

      EMAS Offshore Construction has extended the bookbuilding period for its share sale of S$214m–$254m (US$172m–$204m) until September 25. Originally, books were to have closed on September 16, but an ECM banker said the response to the share offer had been muted.

      Regis sets IPO price

      IFR 2051 20 September to 26 September 2014

      Regis Healthcare, a private residential aged care provider, has set the price for its A$486m (US$436m) IPO. The company will sell 133.1m shares at a fixed price of A$3.65 each, representing a 2015 EV/Ebitda ratio of 12.2.

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      Derivatives

      Alpha versus beta

      Return to alpha

      IFR 2050 13 September to 19 September 2014

      Once touted as a revolution in investment strategy by bridging the gap between active and passive approaches, smart beta indices that weight holdings according to factors other than market cap have struggled to live up to their back-test hype. While the sluggish performance highlights the need for a more active approach to passive investing, for some it is a sign that investment trends may be tilting back towards alternative alpha.

      US Fed tapering QE

      Industry warns on uncleared margin timeline

      IFR 2050 13 September to 19 September 2014

      Proposed margin requirements for uncleared swaps have been set out with an untenable compliance timeline that will lead to a proliferation of market disputes due to a lack of consistency on margin calculations, warn industry participants. 

      CBOE 10-year US Treasury Note VIX versus S&P 500 VIX performance (rebased)

      CBOE adds Treasury VIX futures

      IFR 2050 13 September to 19 September 2014

      The CBOE futures exchange is set to launch new contracts tracking its VIX-style index of Treasury note volatility. The November 13 launch presents an exchange traded solution for investors looking to hedge against large swings in the US rates market as the Federal Reserve steps up the tapering of its asset purchase scheme and moves ever closer to a first rate rise in over eight years.

      Judge backs extraterritorial approach

      IFR 2051 20 September to 26 September 2014

      A US District Court Judge has dismissed claims against the CFTC regarding its efforts to regulate foreign OTC swap activity that touches the US market.

      Automation weighs on rates volatility

      IFR 2051 20 September to 26 September 2014

      Historically low interest rate volatility has taken its toll on fixed income revenues, forcing many dealers to streamline their business models and rethink the future of FICC as the driver of investment banking profits.

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      Capital CityCapital City logo    

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

      The morning after

      IFR 2051 20 September to 26 September 2014

      THE SCOTTISH INDEPENDENCE vote had traders on red alert, with some staff at Barclays clocking in at midnight on Friday in order to stay on top of the potential chaos in the global foreign exchange markets. Meanwhile, UBS strategist Geoff Yu was planning to stay up all night.

      IFR Awards lined up on table

      IFR Awards 2014: Call for entries

      We invite banks to pitch now for the IFR Awards and IFR Americas Awards 2014. In order to help with our selection, banks and issuers may submit brief written presentations along with supporting data. IFR journalists will also organise pitch meetings. However, pitching is entirely optional and consideration for an award will not be limited to advisers or issuers that participate in this way.

      Timothy Sifert

      Old China Hands need new tricks

      PRC-focused investment bankers now need more than just high-level connections to get by.

      FSB

      FSB tackles swaps data fragmentation

      The Financial Stability Board today put forward proposals to build a central aggregator to combat data fragmentation in the US$710trn over-the-counter derivatives market in order to help global regulators identify build-ups of systemic risk.

      GW4

      IFR Fantasy Football League - GameWeek 5 update

      A Diego Costa hat trick kept scores lofty in GW4 of the IFR FFL, as the gap at the top of the table tightened.

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      Asia corporate sentiment is slippingVideo

      Worries over a patchy global economic recovery and political tensions are hurting business sentiment in one of the fastest growing regions on the planet, according to a fresh Reuters/INSEAD survey. Tara Joseph reports.

      All Spotlight

      IFR IMF World Bank Report Cover 2014

      IFR IMF/World Bank Report 2014

      Playground rules - The collaborative effort of European governments and regulators is akin to children rushing around the school playground with a football. Enthusiasm and no lack of skill are undermined by issues of translation and the fierce desire of all to score the winning goal.

      IFR German SME Funding 2014

      IFR German SME Funding Roundtable 2014

      The lack of credit in the real economy and the paucity of cash available for investment have been cited all over Europe as a major blocker of growth and investment, particularly for small and medium-sized enterprises. It’s an emotive issue that’s has the attention of politicians of all hues.

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