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Thursday, 02 July 2015

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IFR Bank Capital Roundtable 2015 cover image

IFR Bank Capital Roundtable 2015

The Great Bank Capital Debate rumbles on. IFR’s latest event on this evolving topic was held as the TLAC and MREL initiatives wend their way closer to final versions at the same time as banks are – to the extent the rules have been finalised or where the direction of travel is otherwise clear – fine-tuning resolution plans, working towards assumed leverage ratio minimums, and dealing with funding, liquidity and a host of other issues in a world that has become increasingly convoluted.

IFR Top 250 Borrowers 2015 Cover

IFR Top 250 Borrowers 2015

Shifting sands – Credit markets posted yet another year of storming supply, a scene played out in an unnatural landscape constantly reshaped by shifting sands. On the one hand, the US called time on its quantitative easing bond-buying programme; but, on the other, the European Central Bank scrambled up the dunes to proclaim an initiative of its own. In the QE stakes, Frankfurt simply replaced Washington.

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Upfront

Greek Prime Minister Alexis Tsipras

Hedges trimmed

IFR 2089 27 June 2015 to 3 July 2015

Since credit default swaps became synonymous with the financial crisis, dealers have done their level best to sing the praises of the instrument as a crucial tool for protecting against big losses in bond portfolios.

Top News

Greek

Greek deal won't save its banks

IFR 2089 27 June 2015 to 3 July 2015 By

An eleventh-hour deal between Greece and its creditors to unlock desperately needed funds for the government and narrowly avoid default will not end the acute liquidity and solvency crisis being faced by the country’s banks.

Kurds

Kurdistan to push the boundaries

IFR 2089 27 June 2015 to 3 July 2015 By

Kurdistan is hoping to push the investment frontiers with a debut bond offering after meeting investors in London last week. The government, which represents the semi-autonomous region of northern Iraq, is seeking to raise about US$500m.

Ukraine

Reprofiling may be best option for Ukraine

IFR 2089 27 June 2015 to 3 July 2015 By

Despite continuing to insist its bondholders take a haircut, Ukraine may be better off acceding to creditors’ demands and extending bond maturities without touching the instruments’ principal.

BOC

BOC sets Silk Road landmark

IFR 2089 27 June 2015 to 3 July 2015 By Frances Yoon

Bank of China underlined the scale of China’s ambitions for what it bills as a “new Silk Road” last week with a US$4bn multi-currency bond offering to fund infrastructure projects linking Asia and Europe.

PRC issuers step up US exodus

PRC issuers step up US exodus

IFR 2089 27 June 2015 to 3 July 2015 By Timothy Sifert

Several US-listed Chinese companies are planning to go private, a trend that is expected to provide big business for mainland banks as issuers restructure and look to relist closer to home.

Mongolia

Mongolia Dim Sum underwhelms

IFR 2089 27 June 2015 to 3 July 2015 By

Mongolia broke new ground last week as the first high-yield sovereign to price a Dim Sum bond, but some market participants said the offering’s small size and investor reception were disappointing.

USA

US HG market logs new quarterly record

IFR 2089 27 June 2015 to 3 July 2015 By Paul Kilby

The US investment-grade bond market saw the highest issuance volume in a quarter last week, setting the asset class on course for another record year.

Heinz and Kraft

Heinz storms dollar market

IFR 2089 27 June 2015 to 3 July 2015 By ,

Investors piled into the US$10bn bond deal backing HJ Heinz’s US$46bn merger with Kraft Foods last Tuesday, helping the company pay hardly any new-issue concession on the deal, which was followed the day after by smaller tranches in euros and sterling.

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People & Markets

Fees

Goldman Sachs holds on to top spot as Morgan Stanley gains

IFR 2089 27 June 2015 to 3 July 2015

Goldman Sachs, the biggest investment banking fee earner globally in the year to date, saw its lead over rivals shrink again during June, with its share of the pot falling to 7.4% from 7.6% at the end of May.

The logo of the Financial Conduct Authority (FCA)

​FCA targets syndication and reciprocity

IFR 2089 27 June 2015 to 3 July 2015

The UK’s Financial Conduct Authority has hit the industry with a request for thousands of details relating to recent bond and equity deals as part of an investigation into how banks make up underwriting syndicates as well as how they advise on mergers and acquisitions.

The Bank For International Settlements (BIS) in Basel

Basel details disclosure standards around NSFR

IFR 2089 27 June 2015 to 3 July 2015

The Basel Committee on Banking Supervision has issued new disclosure standards to accompany its Net Stable Funding Ratio guideline, to ensure that banks report the same information on the ratio in the same way.

The Canary Wharf financial district

UK bankers face world's toughest bonus rules

IFR 2089 27 June 2015 to 3 July 2015

Top bankers in Britain could have their bonuses clawed back a decade after they were awarded, under proposals from regulators that would make industry pay curbs the toughest in the world.

Logos of the Hong Kong Exchanges and Clearing Ltd (HKEx)

Hong Kong rejects dual-class shares

IFR 2089 27 June 2015 to 3 July 2015

Hong Kong’s securities regulator has rejected draft proposals by the city’s stock exchange to change listing rules that saw the bourse lose Alibaba Group’s record US$25bn IPO to New York last year.

    More from People & Markets

    Bonds

    Euro notes

    Liquidity crisis undermines terms

    IFR 2089 27 June 2015 to 3 July 2015

    The pricing of new bonds has been operating in its own bubble, until now immune to shrinking liquidity in the secondary market. But new deals are beginning to feel the strain as asset managers are increasingly forced to use the primary market to rebalance portfolios.

    Logo of the European Investment Bank

    SSAs line up for potential window

    IFR 2089 27 June 2015 to 3 July 2015

    Several SSA issuers are girding their loins for a potential window for primary issuance this week, should there be a positive result from talks between Greece and its creditors over the weekend.

    Deutsche Bank headquarters in Frankfurt

    Regulation and rating shifts cast shadow over senior market

    IFR 2089 27 June 2015 to 3 July 2015

    Investors looking to buy senior bank debt are facing an ever-more complex environment as shifting regulatory goalposts and changing rating methodologies turn this funding cornerstone into a much less palatable investment.

    Rabobank makes T2 breakthrough

    IFR 2089 27 June 2015 to 3 July 2015

    Rabobank’s successful issue of the first Basel III-compliant Tier 2 Kangaroo bond promises to encourage other offshore lenders to target Asia-Pacific investors for bank capital.

    Size matters for Cap Gemini

    IFR 2089 27 June 2015 to 3 July 2015

    With substantial financing needs, Cap Gemini refused to let an issuance window slip through its fingers on Wednesday, taking the first opportunity to get a deal done regardless of the price.   

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      Loans

      The US Federal Reserve building in Washington

      Regulators get tough

      IFR 2089 27 June 2015 to 3 July 2015 By Lynn Adler, Kristen Haunss

      Big investment banks are facing their toughest test yet in the current 2015 Shared National Credit review, months after regulators warned the banks that the quality of US leveraged loans that they arranged was not as good as the banks claimed.

      Douglas Holding logo

      Douglas increases loan, pricing

      IFR 2089 27 June 2015 to 3 July 2015 By

      A leveraged loan backing CVC’s buyout of German perfume and cosmetics retailer Douglas was increased to €1.22bn from €800m at launch and the bonds reduced as the loan market continues to look more attractive to borrowers and investors amid growing macroeconomic volatility.

      On Assignment office building

      Competitors need not apply

      IFR 2089 27 June 2015 to 3 July 2015 By Kristen Haunss

      Staffing firm On Assignment has joined a growing list of US companies that are banning rivals and often their private equity owners from participating in their leveraged loans by adding them to a blacklist to stop them from gaining access to private information.

      Dome of the US Capitol

      House subcommittee holds hearing on BDC legislation

      IFR 2089 27 June 2015 to 3 July 2015 By Leela Parker Deo

      The US House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing this week to discuss draft legislation aimed at modernising regulatory oversight of the Business Development Company industry.

      TransGrid logo

      NSW kicks off US$10bn energy sale

      IFR 2089 27 June 2015 to 3 July 2015 By Sharon Klyne

      New South Wales kicked off its eagerly awaited A$13bn (US$10bn) energy sale last week, with keen interest expected from Canadian and Australian pension funds, as well as Chinese state-owned enterprises.

      Metalloinvest logo

      Russian giants continue to tap Western banks

      IFR 2089 27 June 2015 to 3 July 2015 By Sandrine Bradley

      Mining group Metalloinvest is likely to be the next Russian firm to secure a loan with international lenders, as a handful of large Russian borrowers continue to find ways to meet their funding needs in the face of western economic sanctions.

      A Heinz ketchup bottle and a bottle of Kraft parmesan cheese

      Heinz, Kraft refi loans

      IFR 2089 27 June 2015 to 3 July 2015

      JP Morgan has agreed a US$4bn five-year senior unsecured revolver to replace existing revolving credits at HJ Heinz and Kraft Foods following the combination of the two food giants. The new facility will mature in 2020.

      ​Park Square raises US$2.4bn fund

      IFR 2089 27 June 2015 to 3 July 2015 By Tessa Walsh

      Park Square Capital, one Europe’s largest alternative capital providers, has raised US$2.4bn of committed capital for its Credit Opportunities II senior debt programme to invest in senior debt including leveraged loans as regulation continues to transform the market.

      More from Loans

      Equities

      Converts defy bond market pause

      IFR 2089 27 June 2015 to 3 July 2015

      The pipeline of European corporates awaiting the chance to issue bonds is bulging with many deals having completed roadshows but not yet launched, as Greece casts its shadow over the market. The equity-linked market, however, tells a different story with three convertible bonds issued last week.

      Spire Healthcare sign

      Canny Cinven accelerates Spire sale

      IFR 2089 27 June 2015 to 3 July 2015

      European private equity house Cinven is steadily building its reputation as one of the canniest practitioners of equity capital markets. The alternative asset manager exited its remaining 38.3% stake in the UK’s Spire Healthcare last week through a combination of strategic sale and an accelerated bookbuild, with both priced significantly above last year’s IPO.

      Gener8 Maritime logo

      Gener8 Maritime knocked off course

      IFR 2089 27 June 2015 to 3 July 2015

      The separation of investment banking and research analysts can lead to some unfortunate situations where the two work against each other, such as in last week’s IPO of Gener8 Maritime, a crude-oil tanker operator.

      bluebird bio logo

      Bluebird bio marks new breed of biotech funding

      IFR 2089 27 June 2015 to 3 July 2015

      High-flying orphan disease drug developer bluebird bio last week made its third trip to the equity capital markets since its IPO two years ago, hauling in US$500m in an upsized equity offering, the proceeds of which will help to advance its immuno-oncology programmes.

      Apartment blocks and office buildings are seen in Beijing

      China set for first public REIT

      IFR 2089 27 June 2015 to 3 July 2015

      China is to welcome its first public offering from a real estate investment trust, a major breakthrough for efforts to introduce the popular global product to the mainland market.

      CaixaBank's headquarters in Barcelona

      Spain: Greek weakness hits Caixabank following sale

      IFR 2089 27 June 2015 to 3 July 2015

      Holding company Criteria sold a 2.28% stake in Caixabank last Tuesday night at €4.30, a 3.17% discount to that evening’s close of €4.441 for a deal size of €585m. The offering represented approximately five days’ trading.

      Ireland: Ardagh eyes container spin-off

      IFR 2089 27 June 2015 to 3 July 2015

      Ardagh is moving ahead with a long-promised IPO of metals container business Oressa. The privately held packaging company, which itself has flirted with going public, will use proceeds from the offering to reduce debt following a series of acquisitions.

      Monaco: Gaslog Partners dumps on retail

      IFR 2089 27 June 2015 to 3 July 2015

      Gaslog Partners’ US$179.3m acquisition-related fundraising proved difficult to digest, as units of the LNG shipper tumbled 8.6% to US$22.85 on Tuesday in the wake of an overnight placement of 7.5m units at US$23.90. The hefty offering equated to nearly 100 days’ trading volume and the sell-off was the result of a retail-heavy allocation labelled by one syndicate source as “retail dump”.

      More from Equities

      Derivatives

      A Greek flag flutters in front of the Acropolis hill in Athens,

      Upside hedges predict Greek resolution

      IFR 2089 27 June 2015 to 3 July 2015 By

      A rush of inflows into European equities and an accompanying exodus from fixed income has thrown further weight behind the long-awaited “Great Rotation” thesis. But far from a high-conviction bull-rush, equity derivatives flows suggest that investors are taking a defensive approach with low-delta strategies that reflect the fear of missing out on any bounce that could follow a resolution between Greece and its creditors.

      Credit Suisse headquarters

      Credit Suisse raises swap clearing fees as costs bite

      IFR 2089 27 June 2015 to 3 July 2015 By

      Credit Suisse has joined a growing list of dealers to raise fees for clearing of over-the-counter derivatives, as the bank moved to offset rising regulatory costs associated with the business.

      More from IFR Derivatives

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      OMFIF

      Greece threatens US and Nato engagement in Mediterranean

      By John Kornblum, Senior Counsellor at Noerr LLP

      Former US Ambassador to Germany John Kornblum on the geopolitical fallout of the Greek crisis.

      OMFIF

      Keeping Greece in an unhappy club

      By David Marsh, Managing Director and Co-founder of OMFIF

      In currency upsets, foreigners always get the blame.

      China

      Asian G3 bond issuance posts first-half record

      Asian issuers sold a record amount of international bonds in the first half of 2015, underlining the region’s resilience in the face of mounting turmoil in the rates markets.

      Greek

      Greek referendum shines light on divisions after five years of misery

      (Reuters) - Georgia Golemi, a pharmacy owner, plans to oppose international bailout terms in a Greek referendum on Sunday, while Michalis Fioravantes, a state-funded teacher, says he will vote for them.

      Bitcoin sign

      Bitcoin firms struggle with regulatory navigation

      Bitcoin-based start-ups are struggling to navigate uncharted regulatory territory as blockchain technology seeps into various corners of the financial services community, where multiple regulatory regimes often apply.

      Screens

      Emerging EMEA: H1 volumes drop more than 50%

      So there we have it in black and white, the whole sorry story. It’s now official – CEEMEA issuance volumes for the first half of the year are at their lowest for more than five years.

      Greek

      In? Out? In between? A Greek legal riddle for EU

      (Reuters) - The president of the European Commission, Jean-Claude Juncker, has told Greeks that saying ‘No’ to a bailout deal would be a vote to ditch the euro. Greece’s Finance Minister Yanis Varoufakis has said Greece had no intention of quitting and cannot be forced out.

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

      The three musketeers

      IFR 2089 27 June 2015 to 3 July 2015

      THE SCRAP FOR Bouygues Telecom was over before it started, which is a shame as the banking sub-plot was starting to rival Game of Thrones for intrigue, betrayal and internecine rivalry.

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      Behind the rattled nerves of China's marketsVideo

      Chinese stocks are on a major slide, falling more than 20% since mid-June. Tara Joseph explains why the government’s experiment with margin trading is causing a lot of uncertainty on markets.

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      Sun shines on British economyVideo

      Britain’s economy grew more strongly than previously thought in the first three months of the year. As Grace Pascoe reports, households’ disposable income also rose at the fastest annual pace since 2001.

      All Spotlight