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.
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.
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 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.
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’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.
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.
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.
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).
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.