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Friday, 22 August 2014

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Top News

bonds

CBA targets record retail hybrid

IFR 2047 23 August to 29 August 2014 By

Australia’s biggest bank is pressing ahead with plans to offer complex hybrid capital securities to retail buyers, even after the UK regulator deemed the format too risky for individual investors.

struc fin

Investors speculate on 'lottery ticket' RMBS

IFR 2047 23 August to 29 August 2014 By , Andrew Park

Desperation for yield prompted investors last week to put big “lottery ticket” bets on several RMBS issues from 2006. The securities are deemed worthless by some, but for others they have the potential for large payouts.

argentina

Investors braced for long fight in Argentina

IFR 2047 23 August to 29 August 2014 By Davide Scigliuzzo, Paul Kilby

Argentina’s latest debt swap proposal may have made resolution of its default mess an even more distant prospect, but the sovereign’s bond prices still remain surprisingly robust. Indeed, the latest gambit in the long-running Argentine saga – a complicated swap that risks running afoul of US law and that most believe cannot work – has hardly hit prices at all.

M&A

M&A could hurt bondholders

IFR 2047 23 August to 29 August 2014 By Shankar Ramakrishnan

The bidding war for discount retailer Family Dollar has exposed the weaker covenants that have seeped into US bonds issued during the red-hot issuance run of the past few years.

derivs

Less is more as market evolves

22 August 2014 By Mike Kentz

For years running up to the 2008 crisis, over-the-counter swap dealers and clearing houses boasted of growing notionals in their derivatives books as a way to exhibit their trading and risk management prowess. That the ballooning numbers also served to inflate the perceived importance of the OTC derivatives market was simply a pleasant by-product.

bonds

Crossroads ahead for SFR bonds

IFR 2047 23 August to 29 August 2014 By

As the first anniversary of the fledgling single family rental bond market approaches, issuers find themselves at a crossroads as it becomes harder to source homes at knockdown prices.

bond argentina

Yen bonds affect holders of Argentina CDS

IFR 2047 23 August to 29 August 2014 By , Davide Scigliuzzo

Holders of Argentina CDS protection are likely to receive significantly lower payouts than they expected after the ISDA Determinations Committee decided to include two yen-denominated bond issues in the list of securities deliverable into the auction.

bonds

Singapore nears covered debut

IFR 2047 23 August to 29 August 2014 By Kit Yin Boey

The first covered bond issue from a Singaporean bank could finally be on its way as regulators near an agreement to open a market estimated to be worth S$25bn (US$20bn). Singapore’s central bank set rules for covered bonds almost a year ago, but the first deals have been delayed for lack of clarity over title issues involving the city’s pension fund.

malaysia

Malaysian regulator wary of SPACs

IFR 2047 23 August to 29 August 2014 By S Anuradha

The rejection of an IPO application that would have been Malaysia’s biggest cash-shell listing has underscored regulators’ concerns over the increasingly popular special-purpose acquisition company format.

IFR Magazine Top News in Full (subscription required)

People & Markets

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

US banks set to claw back in FICC

IFR 2047 23 August to 29 August 2014

US banks are expected to claw back market share in the fixed income, currencies and commodities trading space over the remainder of the year, after losing ground to their European rivals over the past few quarters.

Keith Mullin 475px June 2014

On African banking's highs and lows

IFR 2047 23 August to 29 August 2014

I’VE HAD AFRICA on my mind this week for a few reasons. Closest to home, we’re in full swing pulling together IFR’s eighth annual African Capital Markets Conference scheduled for October 16 in London, which I’ll be chairing. As the title suggests, we’ll be focusing predominantly on capital markets activity, but we’ll also be delving into the African banking sector, in particular its ability to finance growth.

An exterior view of the Standard Chartered headquarters is seen in London

StanChart’s US lapses hit HK business

IFR 2047 23 August to 29 August 2014

Standard Chartered’s US$300m settlement with the New York financial regulator for lapses in its anti-money laundering controls in the US has put the emerging markets bank’s Asian business under the spotlight.

An ATM machine at a Bank of America office is pictured in Burbank, California

BofA pays US$17bn to settle fraud allegations

IFR 2047 23 August to 29 August 2014

Bank of America has agreed to pay a record US$16.7bn to the US Department of Justice to settle wide-ranging allegations of fraud related to legacy mortgage underwriting and residential mortgage backed bond syndication.

Headquarters of the China Banking Regulatory Commission

China details wealth-management assets

IFR 2047 23 August to 29 August 2014

Wealth-management assets in China’s banking sector jumped 24% in the first half, but most of these are either invested in low-risk securities or cash – not risky shadow banking investments – according to a report commissioned by the China Banking Regulatory Commission.

    More from People & Markets

    Bonds

    Portugal to lengthen maturity profile with syndicated 15-year

    IFR 2047 23 August to 29 August 2014

    The Republic of Portugal could price its longest-dated issue since exiting a €78bn bailout in May, as it seeks to lock in low financing costs.

    Finland poised to reopen euro market with five-year

    IFR 2047 23 August to 29 August 2014

    The Republic of Finland could bring a new five-year euro benchmark as early as this week if the sovereign sticks to the same tactics it used last year and the year before.

    Origin lines up new hybrid

    IFR 2047 23 August to 29 August 2014

    Australian energy company Origin Energy has mandated Barclays, Goldman Sachs and UBS to arrange investor meetings in Europe and Asia ahead of a potential hybrid bond deal.  

    Takeover tussle ensues for Family Dollar

    IFR 2047 23 August to 29 August 2014

    A takeover tussle emerged in the discount retailer segment, with Dollar General last Monday embarking on a bidding war with rival discount retailer Dollar Tree to buy Family Dollar.

    Rebounding market braced for busy September

    IFR 2047 23 August to 29 August 2014

    Reports of the high-yield market’s death have been greatly exaggerated, with professionals across the market bracing for a rush of new deals in Europe if conditions continue to recover.

      More from Bonds

      Loans

      Sprint finish

      IFR 2047 23 August to 29 August 2014 By Claire Ruckin

      After a two-week lull in Europe’s leveraged loan market, bankers are gearing up for a busy remainder of 2014, which is expected to see volumes surpass last year’s total and continue the year-on-year increases seen since 2008.

      Autobar nears agreement

      IFR 2047 23 August to 29 August 2014 By Sandrine Bradley

      UK vending machine business Autobar is close to agreeing a final restructuring plan with 75% of its lenders.

      Dubai buoyed by refinancing of post-crisis loans

      IFR 2047 23 August to 29 August 2014 By Sandrine Bradley

      The return to the market of two high-profile Dubai borrowers seeking to lower margins on existing loans has highlighted banks’ willingness to lend more cheaply to the Emirate and boosted hopes among lenders for a pick-up in deal flow in the fourth quarter.

      PetroVietnam eyes M&A funding

      IFR 2047 23 August to 29 August 2014 By , Kane Wu

      Vietnam Oil & Gas Group, also known as PetroVietnam, is set to make a splash in the M&A and loan markets with financing of up to US$1.8bn to fund a potential bid for Murphy Oil’s Malaysian oil and gas assets.

      Chryso close

      IFR 2047 23 August to 29 August 2014

      French private equity firm Wendel’s building materials business Materis is in exclusive talks to sell its admixtures producer Chryso to LBO France for €290m.

      APR Energy agrees refi

      IFR 2047 23 August to 29 August 2014

      London-listed electricity generator rental firm APR Energy closed a US$770m five-year loan to replace an existing financing totalling US$650m.

      Banks underwrite Faster

      IFR 2047 23 August to 29 August 2014

      Banks have underwritten debt to back Swiss private equity firm Capvis’s acquisition of Italian hydraulic couplings manufacturer Faster from Argan Capital.

      Sensata takes US$1bn for Schrader buy

      IFR 2047 23 August to 29 August 2014

      Dutch sensor and controls company Sensata Technologies is backing its US$1bn acquisition of US automotive sensor and valve maker Schrader International with US$1bn of committed financing from Barclays and Morgan Stanley.

      More from Loans

      Equities

      Syndicates swell

      IFR 2047 23 August to 29 August 2014

      The temporary slowdown in IPO issuance created by August holidays has provided an opportunity to assess the deal flow so far this year, with the result revealing a striking increase in the number of bookrunners employed on European IPOs.

      GLP J-REIT prices tight

      IFR 2047 23 August to 29 August 2014

      Logistics specialist GLP J-REIT has raised ¥30.8bn from an offering of new shares that priced at the tight end of guidance.

      Hotel REIT launches follow-on

      IFR 2047 23 August to 29 August 2014

      Japan Hotel REIT Investment Corporation has launched a follow-on offering to raise up to ¥20bn (US$194m).

      Southeastern Grocers shuts down IPO

      IFR 2047 23 August to 29 August 2014

      Southeastern Grocers, the parent of the Winn-Dixie and BI-LO chain of supermarkets, has pulled the plug on its IPO plans, taking one of the larger deals on file out of the pipeline. The deal had been in registration since last September with Citigroup, Credit Suisse and Deutsche Bank assigned as joint bookrunners to a US$500m IPO, though the offering document has not been updated since November.

      Carlyle hits the cycle

      IFR 2047 23 August to 29 August 2014

      Chemicals-related companies have often proven lucrative targets for PE firms. LyondellBasell Industries, a former Apollo Global Management portfolio company, is considered one of the best LBOs on record, while (going further back) Celanese was a huge winner for Blackstone Group.

      Shake Shack serves up IPO

      IFR 2047 23 August to 29 August 2014

      Fast-growth hamburger chain operator Shake Shack appears to be heading for a lucrative payout on its initial public offering. The company, which currently operates 51 locations worldwide, including 30 in the domestic US, last week selected JP Morgan and Morgan Stanley to lead its IPO.

      Car parts retailer looks to build

      IFR 2047 23 August to 29 August 2014

      Motorcar Parts of America last week unveiled details of a planned US$57m all-primary follow-on sale of stock, in what is essentially a re-IPO. Joint bookrunners Craig-Hallum Capital and Roth Capital  have set an open-ended timetable for marketing the 2m-share offer by providing no specific timings but indicating that pricing is likely this week.

      Tesoro Logistics de-risks balance sheet

      IFR 2047 23 August to 29 August 2014

      Offering a slightly wider discount than would normally be the case, but achieving a similar outcome, Tesoro Logistics, the midstream subsidiary of oil refiner Tesoro, moved to de-risk its balance with the proceeds of a US$144.2m overnight equity sale, the first by the company this year but in addition to a US$200m at-the-market programme that kicked off in June.

      More from Equities

      Derivatives

      Market volatility

      Skew spikes as hedging returns

      08 August 2014Updated: 08 August 2014 By Helen Bartholomew

      The recent equity market correction and corresponding jump in volatility have led to renewed demand for downside put options as investors seek to protect their equity exposure amid concerns that economic and geopolitical issues could conspire to deliver a rocky second half.

      Regulators tackle CCP resolution

      IFR 2047 23 August to 29 August 2014 By , Mike Kentz

      Six years on from the bankruptcy of Lehman Brothers, regulators have yet to draw up a framework to handle the collapse of a different breed of systemically important institutions that have become an integral part of financial markets: clearing houses for over-the-counter derivatives.

      FX derivs market overhaul begins

      IFR 2047 23 August to 29 August 2014 By Mike Kentz

      A year after over-the-counter interest rate and credit derivatives first migrated into a mandatory clearing environment, US regulators have been forced to back away from plans to authorise foreign exchange derivatives rules as the market struggles to harmonise the clearing process with the physical delivery of FX transactions.

      Second wave comes for Japanese equities

      IFR 2047 23 August to 29 August 2014 By

      The flow of money into Japanese equities is once more picking up pace, as investors eye more upside in what was the most successful macro trade of 2013.

      Collateral optimisation benefits the big

      IFR 2047 23 August to 29 August 2014 By Mike Kentz

      Market participants expecting to glean material cost-savings in the over-the-counter swaps market through collateral optimisation strategies may want to think again, according to a report from Deloitte.

      More from IFR Derivatives

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      Shah June 24 2014

      Carry trades prosper...

      … as volatility outlook stays dim.

      Korea

      DERIVATIVES: Korea reforms boost dividend focus

      A W41trn (US$400bn) package aimed at reinvigorating South Korea’s economy has sharpened investor focus on dividends in a country whose corporate earnings payout ratio is the lowest in the world.

      Heron London

      Vertically challenged

      The City of London’s Heron Tower is set to play host to a unique relay race for charity, with teams sprinting up the tallest building in the Square Mile.

      IFR FFL

      The IFR Fantasy Football League 2014-15

      The capital markets’ biggest battlefield is once again ready to rumble… 

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      Can ECB help struggling euro zone?Video

      Euro zone economic growth ground to a halt in the second quarter as France’s economy stagnated and Germany’s shrank. Joel Flynn asks what, if anything, can the ECB do and how Russian sanctions could further cloud the outlook?

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      UK village sold lock, stock and beachVideo

      A whole village on Devon’s south coast recently sold for less than the price of some London houses, highlighting the disparity between property prices across the country. Hayley Platt 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