IFR's daily digest of views & news for capital markets professionals
Changing banking for good? Not from where I sit
IFR Editor-at-large Keith Mullin on George Osborne, the break-up of RBS and the “daft” recommendations of the Parliamentary Commission on Banking Standards.
IFR Comment: PBOC - Markets throw in the towel, things getting serious
It was another day of records for China’s money markets overnight with the one-day and seven-day repo rates up into double digits and trading as high as 25% and 20% respectively. As a result of the moves we now have an inversion in the one to five-year spread on swaps at its widest level even going beyond the 2011 wides.
DERIVATIVES: Great volatility rotation takes hold
Fixed income assets have become more volatile than equities over the past few weeks, turning an age-old market dynamic on its head and providing a further sign of investors re-balancing portfolios towards stocks and shares.
UK watchdog says Lloyds must raise £8.6bn capital
(Reuters) - Lloyds Banking Group must plug a capital shortfall of £8.6bn, Britain’s banking regulator said on Thursday, a day after the government signalled plans to return the part-state owned lender to the private sector.
US credit pounded after Bernanke signals tapering
US credit markets were battered on Wednesday as Treasury yields spiked after Federal Reserve chairman Ben Bernanke signalled a possible end to its asset purchase program later this year.
IFR Comment: Norges - 50/50 for cut in September?
We have been here before with the rate cut script for the Norges bank.
Guest Comment: Distressed investing in Cyprus after the bail-in
Lawyers from the international law firm of Richards Kibbe & Orbe discuss the legal positions, opportunities and potential pitfalls of investing in one of the eurozone’s most troubled members after its landmark bail-in.
IFR Comment: Poor prospects for Swiss bonds as rates rise
Top-rated Swiss-franc denominated long-term bonds could suffer the most severe losses if interest rates rise, according to a note from UBS Wealth Management this week, which recommended that investors instead seek exposure to higher-yielding paper and covered bonds.
IFR Comment: PBOC - Non-action a lesson on responsible lending
Money market rates in China continue their march higher as the PBOC shows little sign of wanting to provide liquidity relief. The seven-day repo rate is at its highest since October 2007 with some swap rates also hitting multi-year highs. The expectation is that the liquidity squeeze will continue as the PBOC looks to teach banks a lesson about responsible lending.
SolarCity amps up pressure on short sellers
Elon Musk once again has seemingly defied market expectations. A month after a surprise US$600m CB deal for electric-car maker Tesla, the enigmatic chief of all things future is seeking to defy critics with a US$175m raise from the planned sale of convertible bond by SolarCity, the solar-power utility Musk took public late last year.
Brazil's Votorantim Cimentos scraps IPO
The prospects for a strong year in Brazilian equity issuance were dealt another blow yesterday when the country’s largest cement company, Votorantim Cimentos, postponed what was expected to be one of the world’s largest IPOs this year.
Analysis: Half-way to lost decade, Europe's growth task as tough as ever
(Reuters) – Half-way towards a lost decade for Europe’s economy, pessimism persists about the political will to halt a worrying slide in the region’s potential growth.
IFR Comment: BoE - Cost of further QE outweighs the benefits
The minutes of the June BoE MPC meeting provided us with the usual results in the form of a 6-3 vote for QE and 9-0 for unchanged rates. The big surprise was the discussion relating to further QE – for some members the costs are higher than the benefits.
IFR Top 250 Borrowers Special Report 2013
The past year has been characterised by spread-tightening across the credit spectrum. This has left investors scrambling for yield in a low-rate, low-return market, with a few changing the way they viewed their mandates.
From this week's IFR Magazine
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Upfront
Irrational despair
Has Big Ben struck midnight to end the bond markets’ ball? Judging by the scale of the credit markets sell-off in recent weeks investors certainly think so.
Top News
Banks eye sovereign bond reductions
European governments look set to lose the backing of their biggest group of creditors, with some of the region’s banks likely to trim the €1.72trn they own in low-yielding government debt in coming quarters, in a bid to boost profitability.
China IPO 'breakthrough' gets mixed reviews
The China Securities Regulatory Commission is preparing IPO reforms that would allow market forces, rather than regulators, to dictate the key terms of future listings.
More pressure on Hong Kong IPOs
Rising market volatility claimed another victim, as Hopewell Hong Kong Properties, a spin-off of the property and hospitality arm of Hopewell Holdings, pulled its Hong Kong IPO of up to HK$6.05bn (US$780m).
VW gives 2012 CBs a facelift
European equity-linked issuance had dropped off so much in the second quarter that any deal is an event, but the return of 2012’s convertible bond poster child Volkswagen truly was a significant moment for this small but cherished market.
Investors see through D-Bond marketing spiel
Germany has been doing its utmost to hype up its new-fangled regional funding initiative, the Deutschland Bond, but that has not stopped bank strategists calling the product a political charade and investors cursing its complexity.
Workday CB capitalises on post-IPO surge
One of 2012’s hottest US IPOs, human resources software company Workday, has taken advantage of highly favourable financing terms in the US convertible bond market to raise up to US$600m, almost as much as it raised from its October IPO.
Coty IPO breaks issue
After a long drawn-out and somewhat turbulent stay in the US IPO pipeline, Coty completed its US$1bn flotation last week. Following a 12-month dual-track process, Coty’s IPO drama continued into the aftermarket as the newly-issued shares immediately broke offer on Thursday, despite assurance from syndicate managers that the deal was well-covered.
Secondary PE offers alpha opportunity
As part of the never-ending search for alpha, institutional investors are taking a closer look at secondary opportunities in the private equity space and other private markets, where they are able to pick up assets at significantly improved valuations, and often with a lower risk profile than is available in primary markets.
Chinese banks step up for M&A deals
A jumbo loan backed by a standby letter of credit facility for Chinese pork producer Shuanghui International has underlined the ability of China’s banks to support overseas acquisitions.
Banorte rides Mexico ECM wave
Mexico’s third-largest bank Grupo Financiero Banorte is awaiting the green light for a follow-on of up to US$3bn that could become the biggest deal in the country this year. The transaction also highlights the country’s burgeoning attraction versus former investor favourite Brazil.
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