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Thursday, 17 April 2014

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Upfront

The Siren song

IFR 2028 12 April to 18 April 2014

The return of Greece to debt markets after a four-year exile was, predictably enough, an absolute blow-out. A book of nearly €20bn allowed Greece to offload €3bn at a coupon of 4.95%. About 600 accounts joined the queue for paper, leaving many frustrated as they saw the issue trade a further 20bp tighter in the grey market.

Top News

Greece takes small step on road to recovery

IFR 2028 12 April to 18 April 2014 | By Sarka Halas

Greece’s first bond issue since it inflicted painful losses on bondholders two years ago has been hailed as the kick-start the country needs to drag itself out of the financial crisis and the latest sign that Europe has turned a corner on its crisis.

Cheap revolvers over?

IFR 2028 12 April to 18 April 2014 | By Alasdair Reilly

JP Morgan’s chief executive Jamie Dimon’s warning, in his annual letter to shareholders, that the cost of providing committed undrawn revolving credits, trade finance and standby letters of credit could rocket has once again highlighted the heavy losses that banks are taking to give clients cut-price loans under the new capital regime.

Frontier credits find favour

IFR 2028 12 April to 18 April 2014 | By Christopher Langner, Sudip Roy

Investors desperate for higher-yielding securities are snapping up bonds on offer from speculative-rated countries, potentially ignoring associated political risks in the process.

WH Group cuts US$5.3bn IPO at low end

IFR 2028 12 April to 18 April 2014 | By Fiona Lau

WH Group launched its jumbo Hong Kong IPO at a more conservative price than expected as investors took a cautious stance on the Chinese pork producer’s ability to meld with US-based Smithfield Foods, which it bought last year.

Numericable priced to sell

IFR 2028 12 April to 18 April 2014 | By Claire Ruckin

Bankers are taking no chances on the jumbo €6.55bn loan package backing Numericable’s acquisition of French telecoms firm SFR, with pricing set at a level to minimise market risk on a landmark deal expected to soak up liquidity and reduce the heat in the leveraged loan market. 

Ally Financial takes rapid-fire approach to IPO

IFR 2028 12 April to 18 April 2014 | By Stephen Lacey

Ally Financial’s transition from government to private hands is off to an ignominious start. An all-secondary sale by the US Treasury in the US$2.38bn IPO of the former General Motors financing arm was followed by profit-taking by investors that participated in a series of private sales of stock in recent months.

Fears raised over concentrating risk

IFR 2028 12 April to 18 April 2014 | By

Regulators should review the business model of clearing houses that handle over-the-counter derivatives to ensure they can withstand future crises, a senior investment banker said last week, pointing out that the capitalisation of Europe’s leading central counterparties was around one-thousandth that of the European banking system.

Swaps resolution expected ahead of G-20

IFR 2028 12 April to 18 April 2014 | By Helen Bartholomew

Regulatory efforts to tackle the “too big to fail” issue could be nearing a conclusion as legal impediments surrounding swap termination rights that have been hampering a cross-border resolution regime for financial institutions look set be resolved in the coming months, eradicating the threat of future taxpayer bailouts.

Seibu IPO slashed as Cerberus opts out

IFR 2028 12 April to 18 April 2014 | By Frances Yoon

US private equity firm Cerberus Capital Management shocked Japan’s financial markets when it ditched plans to sell part of its stake in conglomerate Seibu Holdings at the eleventh hour. The move came in response to a significant cut in the company’s valuation for the IPO and reduced expected proceeds by ¥136bn (US$1.3bn).

Optimism spurs Indian issuers

IFR 2028 12 April to 18 April 2014 | By Manju Dalal, Neha D’silva

Indian issuers are rushing to the offshore bond market to cash in on the pre-election euphoria as investors bet that the next government will move forward with key reforms. Last week, two Indian companies printed offshore bonds amounting to US$2.25bn, marking the busiest week for issuance from the country in the dollar market since May 2011.

IFR Magazine Top News in Full (subscription required)

People & Markets

US banks told to find US$68bn more

IFR 2028 12 April to 18 April 2014

The eight largest US banks will have raised an additional US$68bn by the start of 2018 after regulators forced banks to include off-balance sheet and derivatives exposures in their final calculations, increasing the amount of capital they will be required to hold.

JP Morgan off to a weak start

IFR 2028 12 April to 18 April 2014

JP Morgan posted poor first-quarter results, missing analysts’ expectations and setting the bar pretty low for its major US rivals, all of which are scheduled to report their own numbers over coming days.

Goldman loses European restructuring head

IFR 2028 12 April to 18 April 2014

Andrew Wilkinson, who was in charge of restructuring across Europe at Goldman Sachs and co-head globally, has decided to leave the bank to become a partner at international law firm Weil Gotshal and Manges.

Baird revenues surge past US$1bn mark

IFR 2028 12 April to 18 April 2014

Robert W Baird posted record revenues of US$1.07bn last year, with a surge in income from private wealth management and asset management helping to offset a more mixed performance across the firm’s equity and debt capital markets platforms.

Bob Diamond poaches Barclays banker

IFR 2028 12 April to 18 April 2014

Ex-Barclays boss Bob Diamond has poached a former senior colleague from the British bank to head Atlas Mara, a venture he wants to build into the leading bank in sub-Saharan Africa.

More from People & Markets

Bonds

Iberian utilities Iberdrola and EDP draw strong demand

IFR 2028 12 April to 18 April 2014

The corporate bond market had a distinctly Iberian flavour on Tuesday, with new deals from Spanish utility Iberdrola and Portuguese utility EDP.

Greece makes first post-bailout foray

IFR 2028 12 April to 18 April 2014

Greece, rated Caa3/B–/B– (all stable) priced a April 2019 4.75% €3bn bond offering a yield of 4.95% on Thursday, its first international market issue since 2010.

Wind clears legacy debt

IFR 2028 12 April to 18 April 2014

Wind pulled off a tour de force last week, refinancing legacy PIK debt with 2014’s largest European high-yield deal so far while getting ready for future consolidation within the Italian mobile sector.

US dollar bond markets look set to out-CoCo euro bonds

IFR 2028 12 April to 18 April 2014

Bankers are gearing up for another flurry of CoCo issuance in the Yankee bond market, as European banks turn their attention to the fact that their Additional Tier 1 transactions trade much tighter in dollars than euros.

Smooth landing in euro debut for Sydney Airport

IFR 2028 12 April to 18 April 2014

Sydney Airport, rated Baa2/BBB, made its European debut on Thursday with a very well-received €700m 10-year Eurobond offering via leads BNP Paribas, Credit Agricole and JP Morgan.

More from Bonds

Loans

No let-up in highly leveraged deals

IFR 2028 12 April to 18 April 2014 | By Lynn Adler

Banks are continuing to underwrite highly leveraged loans for low-rated companies that are drawing US regulators’ attention, Thomson Reuters data show, despite a looming review by federal agencies that are trying to clamp down on these transactions.

VimpelCom's new loan prompts selling

IFR 2028 12 April to 18 April 2014 | By Sandrine Bradley

The last-minute signing of a US$1.8bn club loan for Russian mobile phone operator VimpelCom is expected to prompt further sales of Russian loans in Europe’s secondary market as banks try to make room for the unexpected exposure by selling other loans,  bankers and traders said.

Saga to refi

IFR 2028 12 April to 18 April 2014

Acromas-owned Saga, the over-50s consumer and financial services business, is refinancing £1.4bn (US$2.34bn) of debt to pave the way for a possible listing.

ICICI guarantees Lanco debt

IFR 2028 12 April to 18 April 2014 | By Prakash Chakravarti

ICICI Bank has guaranteed a US$450m loan to help Lanco Infratech get back on its feet and also to give the lender a way out of a funded position in the troubled conglomerate. This deal is the latest in a series of credit-enhanced loans for Indian companies struggling to manage their debt amid currency volatility and a slowing economy.

Diaverum allocates

IFR 2028 12 April to 18 April 2014

Bridgepoint’s dialysis clinic operator Diaverum has closed and allocated an €884m refinancing of existing debt and new money raising. 

Japan: Mitsubishi US$1bn revolver renewed

IFR 2028 12 April to 18 April 2014

The annual US$1bn 364-day revolving credit arranged by Citigroup for Mitsubishi Corp was rolled over on March 26.

Germany: Senvion signs €850m loan refinancing

IFR 2028 12 April to 18 April 2014

Construction and machinery maker Bauer Group is switching its financing to a syndicated loan after posting its first loss for 14 years and breaching covenants on a number of existing loans.

Sweden: Alfa Laval takes SKr12bn bridge loan

IFR 2028 12 April to 18 April 2014

Alfa Laval is backing its NKr13bn (US$2.16bn) acquisition of oil and gas pumping systems firm Frank Mohn with a fully committed SKr12bn (US$1.83bn) bridge loan from SEB.

More from Loans

Equities

Property firms watch as Emirates REIT flies

IFR 2028 12 April to 18 April 2014

The successful completion of Emirates REIT’s US$175m Nasdaq Dubai listing may lead to other Emirati property firms and banks with real estate portfolio assets choosing the IPO route.

La Quinta accommodates growth on IPO

IFR 2028 12 April to 18 April 2014

Not all hotel stays are the same. Mid-tier hotel operator La Quinta touted growth rather than the stability of its business, a message that received a lukewarm reception from investors on its US$650m IPO. Shares of the Blackstone Group-backed hotel operator initially broke offer price but rallied on follow-through buying from investors that participated in the deal.

Sportsman's Warehouse guns for US$162.5m via IPO

IFR 2028 12 April to 18 April 2014

Wall Street has changed a lot in recent years, but bulge-bracket firms haven’t caved in entirely to demands from the politically correct on who they do business with.

Zoe's Kitchen serves up growth

IFR 2028 12 April to 18 April 2014

Investment bankers like to say that the best deals can price in any market. Zoe’s Kitchen put the old ECM adage to the test against brutal conditions with its US$87.5m IPO and passed with flying colours.

China: No discount from Fosun

IFR 2028 12 April to 18 April 2014

Fosun International plans to raise up to HK$5.18bn (US$669m) from a rights issue of 501m–531m shares. The company is selling the shares at HK$9.76 each on a 39-for-500 basis.

Oi, we're still in the doldrums

IFR 2028 12 April to 18 April 2014

A deal by telecoms Oi is expected to go through this month, despite the fact that Brazilian ECM has been in the doldrums for years and 2014 is not looking any different.

J-REIT demand remains firm

IFR 2028 12 April to 18 April 2014

Japan Real Estate Investment has raised ¥29.5bn (US$281m) through a follow-on offering priced at the tight end of its discount range. The pricing reflected the strong demand for J-REITs, despite recent weakness in Japanese equities. 

Australia: BOQ funds Investec buy

IFR 2028 12 April to 18 April 2014

Bank of Queensland has announced a 3-for-26 fully underwritten accelerated renounceable entitlement offer to raise A$400m.

More from Equities

Derivatives

ISDA aims to revive swaps reputation

IFR 2028 12 April to 18 April 2014 | By Helen Bartholomew

After taking a reputational beating in the wake of the crisis, over-the-counter derivatives have struggled to make their business case to politicians around the world, resulting in an unprecedented regulatory overhaul that industry professionals see as a threat to the wider economy.

Spiking vol drives options activity

IFR 2027 5 April to 11 April 2014 | By Helen Bartholomew

Last month’s hawkish language from Fed chair Janet Yellen, which was accompanied by a jump in volatility, triggered an uptick in US options trading volumes for March, cementing the first quarter of 2014 as the busiest in three years for listed options trading.

Margin lending bifurcates

IFR 2026 29 March to 4 April 2014 | By Helen Bartholomew

An expected uptick in M&A stands to position margin lending as an increasingly important revenue stream for the handful of banks that are able to put their funding advantage to work.

Cumulative impact of swaps reforms 'scary'

IFR 2028 12 April to 18 April 2014 | By

The cumulative impact of capital, leverage and initial margin rules on the over-the-counter derivatives market continues to be poorly understood, senior bank executives said at the ISDA AGM in Munich last week.

Race on for Aussie clearing mandate

IFR 2028 12 April to 18 April 2014 | By Helen Bartholomew

Australian regulators are under pressure to push ahead with a planned mandate for clearing Australian dollar-denominated interest rate swaps through central counterparties if they are to get ahead of US regulators, which are planning to extend the clearing mandate beyond the current crop of four currencies.

More from IFR Derivatives

Digital Edition

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Special report: ISDA AGM 2014 coverage

A PDF overview of the best stories coming out of the ISDA Annual General Meeting in Munich, as reported by the IFR derivatives team.

Top man

IFR 2028 12 April to 18 April 2014

ONE OF THE great attractions of the boutique investment banking model since the crisis is that small firms are not bound by the same restrictions over compensation as their bulge bracket peers. So when Ken Moelis quit UBS to set up his eponymous firm in 2007 he left behind a world that would embrace clawback and deferred compensation to build a much happier place. 

Is BlackRock a black swan? Video

Jeffrey Goldfarb and Richard Beales discuss the next phase of the hunt for global systemic risk and whether the US$4.3trn asset manager and its ilk or specific funds are more to fear.

Cautionary tale for Japan M&A in Ranbaxy fail Video

Daiichi Sankyo is giving up control of Ranbaxy Laboratories to Sun Pharma for US$3.2bn. Breakingviews’ Peter Thal Larsen says it serves as a reminder of what can go wrong in overseas ventures.

More from Spotlight

IFR Fantasy Football League: GW33 Preview

The Gunners are still in a with a shout –  Herman Bake’s Maidstone Gunners that is.  A 67 point performance, coupled with a mediocre week for the Born Strikers, means only one point separates the IFR FFL with six rounds to go.

IFR Latin America Special Report 2014

The good, the bad and the downright ugly: The People’s Republic of China may be more than 10,000 miles away from Latin America, but given the influence it has been having on the region, you could be forgiven for thinking it occupies the same barrio. There’s been no bigger influence on the region’s economy over the past few years than the PRC. With China’s growth slowing to about 7.5% from the runaway double-digit peak it reached in 2010–11, it’s not surprising that LatAm has suffered similarly.

More from Latest Special Reports