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Thursday, 21 August 2014

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CDS use spikes as HY bond liquidity evaporates

15 August 2014 By Natalie Harrison,

Thin secondary bond market liquidity spurred investors to step up their use of credit default swaps during the past month’s sell-off in US high-yield. There is, however, still a risk of substantial losses even though there has been no major change to underlying credit fundamentals.

A Deutsche Bank logo is pictured in front of the Deutsche Bank headquarters in Frankfurt

Biotech DK'd by US institution

IFR 2046 16 August to 22 August 2014 By Robert Sherwood

Vascular Biogenics went public and then, all of a sudden, it did not. As a result of an unusual set of circumstances, Deutsche Bank and Wells Fargo, joint bookrunners on the Israeli biotech’s IPO, terminated their underwriting agreement with the company seven full days after pricing after a “substantial US shareholder did not fund payment” for shares it had agreed to purchase.

People walk at the headquarters of Alibaba in Hangzhou, Zhejiang province.

Alibaba streamlines ahead of IPO

IFR 2046 16 August to 22 August 2014

Alibaba Group has potentially increased the future payout from its financial services affiliate just weeks before its New York IPO is expected to be launched.

European Commission HQ in Brussels

European Commission to ease Solvency II charges

IFR 2046 16 August to 22 August 2014 By Anna Brunetti

The European Commission has lowered capital charges for insurers and pension funds investing in securitisation, making it less punitive for them to hold the asset class, according to a final draft circulated among member states.

Debt talks

Debt talks collapse

IFR 2046 16 August to 22 August 2014 By Joan Magee

Argentina debt talks collapsed last week as disagreements over the price of its bonds and the absence of a government guarantee to honour payments on them left both sides calling it a day.

Priceline

Priceline US$1bn CB turns red for banks

IFR 2046 16 August to 22 August 2014 By Stephen Lacey

In a seemingly perverse game of musical chairs, online travel site operator Priceline Group has cinched US$1bn at the most favourable terms possible in the form of a seven-year convertible bond issue. The question is whether the banks that found a seat – Wells Fargo and Citigroup – were able to extract a profit on the trade.

Argentina

Acceleration could deepen Argentina crisis

IFR 2046 16 August to 22 August 2014 By Davide Scigliuzzo

Holdout investors’ legal battle with Argentina could get a lot messier should holders of newly defaulted debt decide to declare principal and interest immediately due. The move, known as acceleration, could push Argentina into a new restructuring on up to US$30bn in debt and significantly complicate efforts to put its decade-long debt woes to rest.

russia capital

Russian banks prepare for DCM drought

IFR 2046 16 August to 22 August 2014 By Abhinav Ramnarayan,

Russia’s largest lenders have been forced to put their international DCM businesses on hold in the face of sanctions from the West, with some bankers in those divisions fearing for their jobs if the political stand-off is not resolved in the next six months.

Dollars

Investors hoard cash, bracing for sell-off

IFR 2046 16 August to 22 August 2014 By

The number of investors buying crash protection against a sharp fall in stock markets over the coming months has risen to its highest level since October 2008, according to Bank of America Merrill Lynch’s fund manager survey for August, while investor cash holdings have risen sharply to 5.1% – their highest level since June 2012.

Endemol

Global volatility hits leveraged debt

IFR 2046 16 August to 22 August 2014 By Tessa Walsh

The global leveraged loan market has been hit hard and fast by wider capital markets volatility. Massive outflows from US high-yield bonds in recent weeks have prompted a pricing correction in US loans, which is filtering through globally and has led to a raft of deals, including a high-profile US$3.9bn M&A loan for Charter Communications, being postponed until September or sweetened to sell.   Where the US leads, Europe and Asia tend to follow, as foreign companies have been raising funds in the huge, liquid US TLB market, which has offered more favourable terms for the past two years. Deals have been delayed worldwide and pricing and discounts have widened, eating into lead banks’ profits, as borrowers and arrangers gamble that ...

IFR Magazine Top News in Full (subscription required)

People & Markets

Default rates rise

China lenders braced for trust defaults

IFR 2046 16 August to 22 August 2014

Default rates in China’s trust loan sector are set to rise in the next 18 months as regulators rein in credit growth and loans to underperforming companies come due.

European Central Bank (ECB) headquarters

ECB short-staffed as regulatory duties loom

IFR 2046 16 August to 22 August 2014

The European Central Bank faces the prospect of being short-staffed when it takes over supervision of the eurozone’s banks in November, after admitting that it is having difficulty in filling hundreds of new positions.

Jonathan Rogers new June 2014

Introducing the bond syndicate app

IFR 2046 16 August to 22 August 2014

The inexorable rise of mobile technology is disrupting the capital markets.

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

BofA haggles over terms of US$17bn settlement

IFR 2046 16 August to 22 August 2014

Bank of America and the US Department of Justice continue to haggle over the terms of a proposed US$17bn settlement over alleged fraud in mortgage origination prior to the financial crisis, having finally agreed on the dollar amount of the penalty.

Barclays bank logo

​nQuants team leaves Barclays

IFR 2046 16 August to 22 August 2014

Barclays has confirmed that a team of 60 quantitative traders will leave the bank by the end of the year as part of an ongoing restructuring of its investment bank.

    More from People & Markets

    Bonds

    The logo of Germany's Commerzbank is pictured at the bank's headquarters in Frankfurt

    Europeans eye Yankees for issuance

    IFR 2046 16 August to 22 August 2014

    European banks are expected to flock to the Yankee bond market with Additional Tier 1 and Tier 2 issuance in the autumn, now that the cost savings of issuing in dollars have far outstripped those in euros.

    Logo of French oil giant Total

    Total returns

    IFR 2046 16 August to 22 August 2014

    Total returned to the Swiss market with a blow-out deal on Tuesday, returning to the currency for the first time in more than six years and generating a sizeable order book as accounts piled in to a well-rated European corporate.

    Kinder Morgan rallies on consolidation efforts

    IFR 2046 16 August to 22 August 2014

    Kinder Morgan bonds rallied sharply last Monday on expectations the borrower’s debt will be upgraded to investment-grade following plans to merge all of the US pipeline giant’s publicly traded companies into one group.

    Summer lull hits high-grade market

    IFR 2046 16 August to 22 August 2014

    The summer lull finally had an impact on the US high-grade market at the end of what was still a decent week, in which 31 tranches of bonds were issued for a total US$16.5bn. New-issue demand remained more price-sensitive throughout the week and was clearly not over the top, as seen earlier this year.

    Luxembourg appoints banks for potential sukuk

    IFR 2046 16 August to 22 August 2014

    The Grand Duchy of Luxembourg (Aaa/AAA/AAA) has appointed HSBC and BNP Paribas to lead a potential debut sukuk transaction and will hold fixed income roadshows at the end of September, according to a source familiar with the matter. 

      More from Bonds

      Loans

      Endemol

      Global volatility hits leveraged debt

      IFR 2046 16 August to 22 August 2014 By Tessa Walsh

      The global leveraged loan market has been hit hard and fast by wider capital markets volatility. Massive outflows from US high-yield bonds in recent weeks have prompted a pricing correction in US loans, which is filtering through globally and has led to a raft of deals, including a high-profile US$3.9bn M&A loan for Charter Communications, being postponed until September or sweetened to sell.   Where the US leads, Europe and Asia tend to follow, as foreign companies have been raising funds in the huge, liquid US TLB market, which has offered more favourable terms for the past two years. Deals have been delayed worldwide and pricing and discounts have widened, eating into lead banks’ profits, as borrowers and arrangers gamble that ...

      Time Warner Cable

      Charter weighs up financing options

      IFR 2046 16 August to 22 August 2014 By Michelle Sierra, Natalie Harrison,

      Charter Communications Inc could return to the leveraged loan market as soon as September and may also try to tap the high-yield bond market to raise the remaining US$3.9bn it needs to buy Time Warner’s cable assets, after having to more than halve a senior secured loan to US$3.5bn from US$7.4bn due to market volatility. 

      Wine glasses

      Treasury Wine bidders eye volatile US market

      IFR 2046 16 August to 22 August 2014 By , Sharon Klyne

      A bidding war for Australia’s Treasury Wine Estates is set to test the US leveraged loan market, which is in the throes of a market correction sparked by huge high-yield bond outflows that have caused several Asian borrowers to postpone US financings or sweeten terms in recent weeks.

      Logo of the Federal Deposit Insurance Corporation (FDIC)

      Tighter lev lending guidelines could cramp CLO issuance

      IFR 2046 16 August to 22 August 2014 By Billy Cheung

      The issuance of Collateralised Loan Obligation (CLO) funds could decline depending on how harshly regulators enforce tighter leveraged lending guidelines against banks this summer, a report by Moody’s Investors Service said. 

      Singapore: Mercuria in refi talks

      IFR 2046 16 August to 22 August 2014 By Kane Wu

      Mercuria Energy Trading held individual meetings with the lead banks of its existing US$1bn loan to discuss its plans to refinance two one-year tranches of the loan, which was signed last November and is due to mature in three months.

      Ukraine: Short-term loans still available

      IFR 2046 16 August to 22 August 2014 By Sandrine Bradley

      Two loans for agribusinesses Kernel and Nibulon and a potential new deal for steel and mining group Metinvest are showing that some Ukrainian companies are able to tap the syndicated loan market despite the continuing tensions between Russia and Ukraine after Russia annexed the Crimea in March.  

      Bioplan shelved, more changes for Albertons

      IFR 2046 16 August to 22 August 2014

      The US$585m credit facility backing the combination of Bioplan and Arcade Marketing has been shelved until September due to challenging market conditions that prompted a wave of repricings in the US leveraged loan market last week. 

      South Africa: AngloGold agrees US$1bn deal

      IFR 2046 16 August to 22 August 2014

      South African miner AngloGold Ashanti has agreed a US$1bn, five-year unsecured revolving credit facility with its syndicate of banks.

      More from Loans

      Equities

      An Ally Financial sign is seen on a building in Charlotte, North Carolina

      Treasury opts to dribble out Ally stake

      IFR 2046 16 August to 22 August 2014

      Barely four months after Ally Financial went public, the US Treasury Department moved last week to dispose of its remaining 16% stake in the auto lender and direct bank by immediately beginning a so-called “dribble-out” sale programme that will see it gradually reduce the stake through daily on-market trades.

      Power pylon

      Colombia pulls utility sale

      IFR 2046 16 August to 22 August 2014

      The Colombian government pulled a planned sale of a majority stake in Isagen late on Tuesday after a significant decline in the share price of the hydropower outfit ahead of pricing.

      Kinder Morgan sign

      A kinder Kinder Morgan

      IFR 2046 16 August to 22 August 2014

      Kinder Morgan has responded to shareholder pressure by agreeing to consolidate what arguably is one of the most complicated corporate structures. The acquisition of three separate affiliated entities lowers the company’s overall costs of funding previously absorbed by those affiliates.

      Provident Financial logo

      UK: Provident buy gets shareholder backing

      IFR 2046 16 August to 22 August 2014

      Doorstep lender Provident Financial broke the market monotony last week to raise £120m to finance its purchase of car finance specialist Moneybarn. Provident said the purchase of Duncton Group and its subsidiaries operating under the Moneybarn brand would broaden the group’s product offering.

      Mexico opens tap on energy sector

      IFR 2046 16 August to 22 August 2014

      Bankers are bracing for a deluge of Mexican equity issues in coming years, including an eventual jumbo IPO from state-owned oil monopoly Pemex, now that the country’s president has signed a landmark energy reform into law.

      Confidence back in Singapore IPOs

      IFR 2046 16 August to 22 August 2014

      Two positive debuts helped restore confidence in Singapore IPOs last week, paving the way for the first business trust listing of oil storage terminals later this year.

      AH4R hits equity market

      IFR 2046 16 August to 22 August 2014

      American Homes 4 Rent has become something of a capital markets omnivore when it comes to funding new investments in single-family rental properties. A broken IPO for much of its public existence, AH4R has tapped securitisation and preferred equity markets for alternative sources of capital.

      Zoe's posts healthy returns

      IFR 2046 16 August to 22 August 2014

      Zoe’s Kitchen returned to the market with a US$136m follow-on offering last week that capitalised on the restaurant chain’s strong financial performance. One of the best performing IPOs of 2014, Zoe’s selling shareholders have been released to sell 4m shares well-within lock-up expiry. 

      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.

      South Korea reforms boost dividend focus

      IFR 2046 16 August to 22 August 2014 By Helen Bartholomew

      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.

      Vol drives dispersion demand

      IFR 2046 16 August to 22 August 2014 By Helen Bartholomew

      A recent uplift in volatility and a corresponding rise in implied correlation have created an attractive entry point for investors positioning for a continued move to more fundamentally driven equity prices. For some, it has also forced a shift in the types of trades that provide exposure to the macro-to-micro evolution.

      CME makes Asian FX push

      IFR 2046 16 August to 22 August 2014 By Mike Kentz

      As Asian politicians and regulators move towards opening up trade while implementing G-20 derivatives reforms, exchanges are positioning to take hold of new market demand.

      CME to list forward-starting swap alternative

      IFR 2046 16 August to 22 August 2014 By Mike Kentz

      CME Group is looking to capitalise on increased investor interest for contracts that bridge the gap between over-the-counter swaps and exchange-traded futures, since Dodd-Frank reforms have begun to increase costs and operational inefficiencies in swaps trading.

      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