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Saturday, 22 November 2014

Royal Bank of Scotland (RBS) logo

Getting it all wrong

IFR 2060 22 November to 28 November 2014

To miscalculate your Core Tier 1 equity ratio by 100 basis points is embarrassing enough, but to do it for a process meant to test your resilience and renew confidence in the European banking sector is just downright humiliating. RBS chose a late Friday afternoon to announce to the world that, under the European Banking Authority’s October stress test, its CET1 ratio should have been 5.7% under the adverse scenario – not the 6.7% it stated.

Top News

Alibaba

Alibaba smashes Asian record

21 November 2014 By , Lianting Tu

Alibaba Group wowed the markets last Thursday with the largest US dollar bond sale on record from an Asian company, pricing its US$8bn debut at levels even tighter than some of the world’s best-known issuers.

HK

CGN to power year-end IPO frenzy

IFR 2060 22 November to 28 November 2014 By

CGN Power, China’s largest nuclear energy producer, is so confident of securing orders for its US$3bn Hong Kong IPO that it has limited most of its bookrunners from pre-marketing the deal.

Abengoa

'Abengoa 3.0' hits major glitch

21 November 2014 By Robert Smith

When Abengoa unveiled its “Abengoa 3.0” strategy to investors at the start of September, the Spanish clean energy firm promised a “game-changer” that would reduce its cost of capital and boost its equity valuation.

Towergate

Towergate teeters as bonds tank

IFR 2060 22 November to 28 November 2014 By Sandrine Bradley, Robert Smith

Restructuring specialists are approaching Towergate’s bondholders after the UK insurance broker’s bonds plummeted to fresh lows on news that it had fully drawn its revolving credit facility, casting doubt on whether it can continue as a going concern.

The Bank for International Settlements (BIS) in Basel

Funding ratio rule sparks repo clearing call

IFR 2060 22 November to 28 November 2014 By Mike Kentz

The US$1.6trn per day repo market is facing calls that it be moved into a centrally cleared framework as soon as possible as new Basel Committee rules threaten to further crimp a business already under severe constraints.

Russia

Russian bank yield shows new reality

IFR 2060 22 November to 28 November 2014 By

Credit Bank of Moscow underlined the new reality facing Russian issuers when it paid an eye-popping yield of 16.5% on a new Rbs5bn (US$109m) 10.5-year Tier 2 rouble Eurobond.

Skyscrapers

Paramount REIT goes big

IFR 2060 22 November to 28 November 2014 By Robert Sherwood

New York City office REIT Paramount Group’s historic US$2.3bn IPO last week proved once again that success in real estate boils down to owning prime locations. By embracing the old real estate adage of location, location, location, Paramount received a boost from sovereign wealth funds that were interested in funding investments in Tier 1 property assets in the US. The deal is the largest ever US REIT IPO.

Halliburton

M&A lending hits post-crisis record

IFR 2060 22 November to 28 November 2014 By Karen Schwartz

Two huge acquisition bridge loans have pushed global M&A lending to a post-crisis high of US$665bn so far this year as takeovers continue to flourish despite recent global market volatility and increased regulation.

IFR Magazine Top News in Full (subscription required)

People & Markets

Bank of England Governor and chairman of the Financial Stability Board Mark Carney

Bankers face fixed pay claw-backs

IFR 2060 22 November to 28 November 2014

Claw-backs could be extended to the fixed pay component of banker pay – and not just bonuses – under radical new recommendations from the head of the Financial Stability Board designed to further discourage excessive risk-taking and short-termism.

BNPP

Janbon moves aside as Gerardin cements power

IFR 2060 22 November to 28 November 2014

Yann Gerardin has cemented his day-to-day control as head of BNP Paribas’s corporate and investment bank by carving the business into new silos and eliminating the job of the head of fixed income, a position currently held by Frederic Janbon.

Jeremy Bennett

Bennett quits as Nomura boss after 18 months

IFR 2060 22 November to 28 November 2014

Nomura is looking to appoint its fifth chief executive for Europe, Middle East and Africa in just four years after its most recent head, Jeremy Bennett, resigned after only 18 months in the job.

A Deutsche Bank sign is seen outside of a corporate building in Shanghai's financial district.

China shift continues as Cai departs

IFR 2060 22 November to 28 November 2014

The looming departure of Deutsche Bank’s renowned China dealmaker Henry Cai is the latest sign of a generational change in the Greater China capital markets.

Shanghai-Hong Kong Stock Connect launched

Cautious start for Shanghai-HK Connect

IFR 2060 22 November to 28 November 2014

China’s first cross-border equity trading scheme got off to a slow start last week, but market participants say the lack of major technical problems so far should entice more international funds to the landmark link-up.

​FX scandal threatens bonuses

IFR 2060 22 November to 28 November 2014

Banks that have settled with regulators over foreign exchange rate-rigging face a dilemma regarding how to satisfy public opinion by slashing bonus payments without also discouraging investment banking staff from remaining with their institutions.

RBS admits to error in European stress tests

IFR 2060 22 November to 28 November 2014

Royal Bank of Scotland admitted last Friday it submitted erroneous data for European bank stress tests in October and had in fact only just scraped through, calling into question whether it can pass a tougher British test.

US Fed takes up bank culture issue

IFR 2060 22 November to 28 November 2014

The US Federal Reserve has raised concerns among banks that it may begin to use some of the post-crisis power vested in it to force changes in what it sees as wide differences in the culture of banks in the country.

    More from People & Markets

    Bonds

    Real money checks out of covereds as ECB muscles in

    IFR 2060 22 November to 28 November 2014

    The European Central Bank’s aggressive covered bond buying strategy is severely distorting valuations and turfing out real money investors from the market, storing up the risk of disenfranchising them and pushing them to look elsewhere.

    Areva cut to junk

    IFR 2060 22 November to 28 November 2014

    France-based nuclear services group Areva faced further pressure last week after it suspended its 2015 and 2016 financial targets on Tuesday, prompting S&P to downgrade it to junk just a few days later.

    AT&T prints largest IG corporate euro deal of 2014

    IFR 2060 22 November to 28 November 2014

    Last Thursday marked the busiest day of the week in the corporate market, with a mixed bag of five deals from highly rated blue chips to unrated names.

    Issuers hit records despite dwindling appetite

    IFR 2060 22 November to 28 November 2014

    Credit Agricole printed the tightest eight-year jumbo covered bond benchmark since the crisis at swaps minus 2bp, while Belfius achieved the tightest-ever spread for a Belgian covered deal at swaps minus 4bp last week, making the most of price-insensitive central bank demand.

    Bank of England Governor and chairman of the Financial Stability Board Mark Carney

    Grappling with TLAC ramifications

    IFR 2060 22 November to 28 November 2014

    The implications of plans to tackle the problems of banks considered too-big-to-fail was the hot topic of discussion at IFR’s annual FIG conference last Thursday.

    Volatility to shut sub bond market until 2015

    IFR 2060 22 November to 28 November 2014

    Banks may have to wait until the new year to fortify their balance sheets with subordinated bonds as the latest bout of volatility gives investors pause on buying riskier debt.

    BSkyB back for more

    IFR 2060 22 November to 28 November 2014

    BSkyB returned to the European market last Monday with a €1.8bn-equivalent dual-currency offering, but unlike its European debut just months before, the media conglomerate failed to make the same splash.

    HAA haunts Erste in Tier 2 market

    IFR 2060 22 November to 28 November 2014

    Limited interest in Erste Group Bank’s Tier 2 deal suggests that appetite for Austrian subordinated bonds has dwindled after the country passed a law allowing the write-off of Hypo Alpe-Adria’s subordinated debt earlier this year.

      More from Bonds

      Loans

      No rebound for energy

      Banks gear up for Russian return

      IFR 2060 22 November to 28 November 2014

      Bankers are gearing up to resume work on new syndicated loans for Russian companies that are not subject to international sanctions in 2015 to avoid losing further business after the conflict between Russia and Ukraine wiped out revenues in 2014.

      United Biscuits factory

      Yildiz launches £985m deal for UB buy

      IFR 2060 22 November to 28 November 2014

      The acquisition of UK-based snacks maker United Biscuits by Turkey’s largest food group Yildiz Holding is backed with a £985m leveraged loan financing.

      A Trans Maldivian Airways aircraft

      Airline returns for second recap

      IFR 2060 22 November to 28 November 2014

      Improved business performance following a significant boost in tourism to the Republic of Maldives has prompted Trans Maldivian Airways to return to the loan markets with a US$200m–$225m deal.

      Abaco makes concessions amid oil price slump

      IFR 2060 22 November to 28 November 2014

      Abaco Energy Technologies sweetened the terms on US$175m in debt to attract investors to an acquisition credit, as oilfield service providers and drillers continue to struggle amid a protracted slump in oil prices.

      Adani kicks off Carmichael financing

      Adani kicks off Carmichael financing

      IFR 2060 22 November to 28 November 2014

      Adani Enterprises last week took a first step towards raising the funds it needs to develop its US$7bn Carmichael mine project in Australia with a memorandum of understanding for a US$1bn loan.

      Hyflux seeks covenant change

      IFR 2060 22 November to 28 November 2014

      Singapore water purification and fluid treatment firm Hyflux has asked lenders to amend covenants on a US$200m revolving credit facility after reporting a 40% slump in revenues for the first nine months of 2014. 

      Actavis logo

      Actavis outlines loans for Allergan buy

      IFR 2060 22 November to 28 November 2014

      Dublin-based Actavis outlined the structure of the loans backing its US$66bn acquisition of Allergan. The loans, which are being arranged by JP Morgan, Mizuho Bank and Wells Fargo, comprise US$5bn of term loans, and an up to US$36.4bn bridge loan and a US$4.698bn cash bridge facility.

      Confusion remains despite regulators' efforts

      IFR 2060 22 November to 28 November 2014

      Regulators’ attempts to clarify US leveraged lending guidelines have answered some questions raised by banks, but also added fresh layers of complexity into loan underwriting decisions, banking sources said.

      More from Loans

      Equities

      Trans-cab taxis

      Trusts press on after taxi IPO skids

      IFR 2060 22 November to 28 November 2014

      Singapore’s IPO market is finally showing some signs of revival, after a series of pulled and downsized transactions in the past few months. But the positive outlook was not helped when taxi company Trans-cab Holdings pulled its float at the last minute.

      Adama Agricultural Solutions postpones IPO

      Adama postpones on China pushback

      IFR 2060 22 November to 28 November 2014

      Adama Agricultural Solutions, the largest generic pesticides maker in the world, postponed its IPO just hours ahead of scheduled pricing on Thursday, reflecting investor pushback against the company’s control by a state-owned Chinese company and its exposure to currently weak agriculture markets.

      A GoPro Hero 3+ camera

      GoPro secondary takes shine off stock price

      IFR 2060 22 November to 28 November 2014

      Sports camera maker GoPro’s share price took a heavy tumble following last week’s US$780m follow-on, highlighting the challenges facing high-growth IPOs in managing the transition to a full free-float and enabling insiders to monetise huge capital gains.

      Biotechs lock in gains

      IFR 2060 22 November to 28 November 2014

      Biotechnology stocks generally rely on passing drug development milestones to drive stock prices.

      Essent brings first-time follow-on

      IFR 2060 22 November to 28 November 2014

      Formed in the ashes of the housing crisis, private mortgage insurance firm Essent Group raised US$267m in its first ever follow-on offering. In addition to providing new capital for the issuer, the offering also provided a means for founding shareholders to begin taking profits. 

      US ECM takes well-earned breather

      IFR 2060 22 November to 28 November 2014

      US ECM activity will slow to a crawl this week ahead of Thursday’s Thanksgiving holiday, with no major IPOs scheduled for the shortened week. But there are plenty of new issues in the pipeline and ready to roll for the short final window of the year starting December 1.

      Blackstone cuts Pinnacle stake

      IFR 2060 22 November to 28 November 2014

      Blackstone Group last week showed little sentimentality ahead of this week’s indulgent celebration of food, selling a US$650m chunk of its remaining stake in Pinnacle Foods.

      Habit IPO feeds late-year growth bid

      IFR 2060 22 November to 28 November 2014

      Habit Restaurants fed the buyside’s late-year bid for growth with its US$90m flotation. A marketing strategy focused on the California burger chain’s national expansion and growth at existing stores culminated in glorious results, including a 120% aftermarket gain. 

      More from Equities

      Derivatives

      Electronic trading

      SEF monopoly adds to CDS woes

      IFR 2060 22 November to 28 November 2014

      Once heralded as clear winners in the derivatives trading revolution, electronic trading platforms are struggling to make ends meet. Predatory pricing practices have driven fees to all-time lows and shut the door in the face of many competitors as liquidity migrates into the hands of a dwindling number of established players.

      Tullett Prebon logo

      Tullett takes hard line on trader liability

      IFR 2060 22 November to 28 November 2014

      Market participants are alleging that inter-dealer broker Tullett Prebon is improperly forcing swaps users to sign intrusive legal agreements that include the right to penalise an individual trader transacting on its swaps broking platform – as opposed to just a firm – for up to five years after an alleged offence.

      Algorithms

      Algos boom in futures market

      IFR 2060 22 November to 28 November 2014

      Algorithms are becoming an increasingly important tool for trading listed derivatives, new research shows, as the growing complexity of futures markets has boosted the case for more automated trading in the space.

      The US Securities and Exchange Commission (SEC) headquarters in Washington

      SEC to tackle swaps rules

      IFR 2059 15 November to 21 November 2014

      The SEC is finally set to move forward with finalising derivatives rules connected to Dodd-Frank, according to chair Mary Jo White. White said at the SIFMA annual meeting in New York last Monday that the agency might consider trade reporting rules before the year-end.

      The Chicago Board of Options Exchange (CBOE)

      Vol spike revitalises exchanges

      IFR 2058 8 November to 14 November 2014

      An unexpected spike in US equity volatility drove futures and options volumes close to all-time highs in October, delivering welcome profits at major derivatives exchanges that were struggling to weather depressed trading activity.

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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

      Heads I win

      IFR 2060 22 November to 28 November 2014

      CALLS FOR A formal oath for the banking profession have been strengthened following a study by three economists from the University of Zurich. After putting 128 staff at “a large international bank” through a coin-tossing test, they found that bankers were about as honest as anyone else – until they were reminded that they were bankers.

      China

      Discounting the Chinese premium

      Alibaba’s massive debt deal performed more like US credit.

      IFR

      ECB Watch

      Draghi’s lifting inflation expectations “as fast as possible”.

      Bank of England Governor and chairman of the Financial Stability Board Mark Carney

      Bankers grapple with TLAC ramifications

      The implications of plans to tackle the problems of banks considered Too-Big-Too-Fail was the hot topic of discussion at IFR’s annual FIG conference on Thursday.

      Vamanos

      IFR Fantasy Football League - GameWeek 12 Preview

      After the last international break of 2014, we are heading into the December fixture congestion season, where points may be plentiful. Born Strikers are still on top, but the rest of the Top 10, at least, are well within striking distance.

      IFR India Report 2014 Cover

      IFR India Special Report 2014

      The pivotal moment - India’s capital markets are approaching a pivotal moment. After Narendra Modi’s landslide election victory earlier this year, initial enthusiasm has begun to give way to lingering doubts that the new regime can deliver on its reform agenda.

      IFR India Offshore Financing Roundtable 2014

      IFR India Offshore Financing Roundtable 2014

      IFR’s Indian Offshore Finance Roundtable, held in Mumbai in September, was notable for many reasons. First of all, it took place on the day the new Modi government hit the key milestone of its first 100 days in office.

      All Special Reports