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Thursday, 08 December 2016

Chance for greatness

IFR 2162 3 December to 9 December 2016

It will be a long time until an emerging markets debut creates the buzz that Saudi Arabia generated, but Kuwait will not fall far short when it enters the market next year.

Top News

Banca Popolare di Bari

Atlante sidesteps Bari NPL ABS

IFR 2162 3 December to 9 December 2016 By Mariana Ionova

Banca Popolare di Bari is poised to sell the riskier bonds in its landmark bad loan securitisation without the help of Atlante, according to people familiar with the situation, as Italy’s rescue fund focuses its attention on bigger problems in the country’s beleaguered banking sector.

Slippers at a local market in Kuwait City

Kuwait kick-starts process for marquee debut

IFR 2162 3 December to 9 December 2016 By , Robert Hogg

Bankers are gearing up to fight for the most sought-after emerging markets bond mandate of 2017 after Kuwait sent RFPs for its debut transaction.

A man walks past the Bank of England in the City of London

Bank of England tests bake in AT1 conversion

IFR 2162 3 December to 9 December 2016 By

Additional Tier 1 bonds would be fair game to be converted into equity if UK banks hit severe problems, the Bank of England’s most stringent stress tests yet showed on Wednesday.

Chile's team players argue with the referee.

Tensions build over allocations and pricing feedback

IFR 2162 3 December to 9 December 2016 By

Bond investors and syndicate bankers are growing increasingly frustrated with each other as the already thorny topic of allocations and how to reward investors for their feedback is being further poisoned by new regulations.

Apollo Investment Corp logo

Apollo fixes sights on Athene IPO

IFR 2162 3 December to 9 December 2016 By

Fixed annuity provider Athene might come with the backing of private equity firm Apollo Global Management, but it marks an elaborate departure from the parade of sponsor-backed companies put in front of investors in recent years.

Kangaroo in Western Austrlia

Australia's Western Power eyes mega float

IFR 2162 3 December to 9 December 2016 By Robert Hartley

The Government of Western Australia has announced plans to float 51% of the state’s power grid, Western Power, setting the scene for a major listing from the infrastructure sector.

An aerial view of Jakarta

Indonesia steps into new world

IFR 2162 3 December to 9 December 2016 By

The Republic of Indonesia, rated Baa3/BB+/BBB–, sold US$3.5bn of bonds across three tenors last Thursday, becoming the first emerging market sovereign to print a syndicated deal since the US election unleashed a new wave of volatility.

Bank of England

RBS flunks BoE stress test

IFR 2162 3 December to 9 December 2016 By Steve Slater

Royal Bank of Scotland must bolster its capital after failing this year’s stress test of British lenders, as the state-backed institution faces a big US fine for misconduct and continues to struggle with its turnround.

European Central Bank headquarters

Government bond sell-off to hit bank capital

IFR 2162 3 December to 9 December 2016 By

Europe’s largest banks are preparing for a hit to their capital buffers at the end of the year, when many will be forced to write down the value of about €1trn of government bonds held as available for sale amid a regulatory clampdown on such holdings.

Matteo Renzi

Italian referendum drives hedging activity

IFR 2162 3 December to 9 December 2016 By

Investors flocked to options markets ahead of Italy’s constitutional reform referendum as polls indicated a rejection of the proposals in Sunday’s vote, triggering the likely resignation of Prime Minister Matteo Renzi and a wave of political uncertainty that could throw eurozone banks into a new crisis.

IFR Magazine Top News in Full (subscription required)

People & Markets

Rothschild benefits from US expansion

IFR 2162 3 December to 9 December 2016

Rothschild, long dominant in its European stronghold, has set out plans to expand in North America to increase the revenues it makes from its core advisory franchise.

StanChart cuts investment bank jobs

IFR 2162 3 December to 9 December 2016

Standard Chartered is cutting around 10% of its corporate and institutional banking staff, with the largest numbers going in Hong Kong and Singapore, people with knowledge of the matter said last week.

Hong Kong pushes for China bond link

IFR 2162 3 December to 9 December 2016

As the Shenzhen-Hong Kong Stock Connect prepares for its official launch this week, the Hong Kong government has tabled proposals for a similar scheme to establish a trading link for retail investors between the bond markets in China and Hong Kong.

Macquarie restructures capital markets units

IFR 2162 3 December to 9 December 2016

Macquarie Group has merged two of its three capital markets businesses in a move that follows a recent push for consolidation at other banks.

Banks may not get easy ride with Trump, outgoing adviser says

IFR 2162 3 December to 9 December 2016

The election of Donald Trump as US president does not necessarily mean the government will go easier on banks, a former adviser in outgoing President Barack Obama’s administration said.

    More from People & Markets

    Bonds

    Issuers stage sterling revival

    IFR 2162 3 December to 9 December 2016

    Marks and Spencer, Severn Trent and The AA breathed life into a moribund sterling market last week, selling the first bonds in the currency in more than a month.

    SSA investors grapple with political risk strategies

    IFR 2162 3 December to 9 December 2016

    Public debt investors, trying not to get caught on the wrong side of another shock political result in the West, are using an array of strategies to tackle this new kind of uncertainty.

    Financial bond deals issued in the week ending December 2

    IFR 2162 3 December to 9 December 2016

    FINANCIALS

    Shrinking supply to improve high-grade technicals

    IFR 2162 3 December to 9 December 2016

    Both borrowers and investors could benefit from stronger technicals in the US high-grade market if forecasts of shrinking primary supply for 2017 prove true.

    Corporate bond deals issued in the week ending December 2

    IFR 2162 3 December to 9 December 2016

    CORPORATES

      More from Bonds

      Loans

      Corporate debt still dominated by loans

      IFR 2162 3 December to 9 December 2016 By Tessa Walsh

      Corporate bond issuance may be on track for a record 2016, but Europe’s €11.2trn of outstanding debt is still dominated by loans, according to a report by Fitch Ratings.

      Banks to launch US$5bn-equiv Micro Focus loan in January

      IFR 2162 3 December to 9 December 2016 By

      Around US$5bn-equivalent of leveraged loans backing UK software company Micro Focus International’s acquisition of Hewlett Packard Enterprises’ software business are due to launch to syndication in January.

      Earnings remain low despite deal glut

      IFR 2162 3 December to 9 December 2016 By

      A flood of European leveraged loans has done little to alleviate the pressure on earnings from deals, with fierce competition for the few underwritings available and a pricing squeeze on best-efforts loans.

      TransAsia's banks to sell planes

      IFR 2162 3 December to 9 December 2016 By Evelynn Lin

      Creditors to TransAsia Airways are pushing for the sale of two aircraft to cover loan repayments after Taiwan’s third-largest carrier said it would shut down over financial and flight safety problems.

      Banks mull ECB clampdown impact

      IFR 2162 3 December to 9 December 2016 By Tessa Walsh, Hannah Brenton

      The European Central Bank’s looming restraints on leveraged lending are raising questions among bankers as the new guidelines could hit profitability as well as curbing systemic risk by reducing the number of high-risk loans on banks’ balance sheets.

      Leveraged loan returns hit four-year highs

      IFR 2162 3 December to 9 December 2016 By Lynn Adler, Jonathan Schwarzberg

      Floating-rate leveraged loans issued to highly indebted US companies are seeing the highest total returns in four years, propelled by a secondary loan price surge since February when prices dropped to four-year lows.

      Energy loans higher as OPEC agrees to cut production

      IFR 2162 3 December to 9 December 2016 By

      Oil and gas-related US term loans climbed in the US secondary market last week, lifted by a rally in crude prices as OPEC agreed to curb production.

      Radiate shops US$1.48bn LBO loan

      IFR 2162 3 December to 9 December 2016

      Radiate Holdco is arranging a US$1.48bn financing to back the US$2.25bn buyout of telecommunications providers RCN Telecom Services and Grande Communications Networks.

      More from Loans

      Equities

      WildHorse Resource touts growth on IPO

      IFR 2162 3 December to 9 December 2016

      WildHorse Resource Development, the Natural Gas Partners-backed E&P, is off and running with an all-primary IPO seeking to raise as much as US$577.5m.

      Advent abandons Cotiviti follow-on

      IFR 2162 3 December to 9 December 2016

      Healthcare payments company Cotiviti and sponsor Advent International opted to abandon a US$300m secondary sell-down just ahead of pricing late on Wednesday, a rare move that reflected disappointment with the price rather than a lack of demand.

      Blackstone RSVPs for Invitation Homes IPO

      IFR 2162 3 December to 9 December 2016

      Invitation Homes, Blackstone Group’s vehicle for investing in single family rental properties, is making final preparations to go public, having recently filed its confidential IPO documents with the SEC.

      SM Energy drills down into Permian

      IFR 2162 3 December to 9 December 2016

      The equity-debt tightrope for US E&Ps has gotten a lot easier to tread post-OPEC. SM Energy became the first producer to venture into a violently bullish market by raising US$363.37m through an overnight stock sale last Thursday.

      China: Zhou Hei Ya exercises greenshoe

      IFR 2162 3 December to 9 December 2016

      Food maker Zhou Hei Ya International has raised an additional HK$374m from its IPO, after exercising a greenshoe option in full.

      ​China: Citic Press prepares IPO

      IFR 2162 3 December to 9 December 2016

      Citic Press Group, a subsidiary of Citic Group, has applied to the Beijing branch of the China Securities Regulatory Commission for permission to begin preparations for a proposed A-share IPO, with China Securities as pre-listing tutor.

      China: Ex-chairman sells Phoenix shares

      IFR 2162 3 December to 9 December 2016

      Xu Jie, a former executive director and board chairman of Phoenix Healthcare, and Xu Xiaojie, raised HK$248m through the sale of their shares in the company last Wednesday. 

      China: Hebei Yichen pre-markets IPO

      IFR 2162 3 December to 9 December 2016

      Hebei Yichen Industrial, which provides rail-fastening systems in China, has started pre-marketing a US$100m Hong Kong IPO.

      More from Equities

      Derivatives

      ISDA and Markit launch variation margin protocol

      IFR 2162 3 December to 9 December 2016 By

      ISDA and IHS Markit have launched the 2016 variation margin protocol that automates the process for amending collateral documents and setting up new agreements to comply with uncleared swaps margin rules that are set to take effect in March.

      Matteo Renzi

      Italian referendum drives hedging activity

      IFR 2162 3 December to 9 December 2016 By

      Investors flocked to options markets ahead of Italy’s constitutional reform referendum as polls indicated a rejection of the proposals in Sunday’s vote, triggering the likely resignation of Prime Minister Matteo Renzi and a wave of political uncertainty that could throw eurozone banks into a new crisis.

      Pipes are pictured at Mexico's national oil company Pemex's refinery in Salamanca, in Guanajuato state

      Mexico to net US$2.9bn from oil hedge

      IFR 2161 26 November to 2 December 2016 By

      Mexico is set to book a US$2.9bn gain on its 2016 oil hedging programme, making it the second year in a row that the country has netted a multi-billion dollar payout from its options-based commodity hedges, according to recent estimates by the International Monetary Fund.

      European options face MiFID II threat

      IFR 2161 26 November to 2 December 2016 By

      Europe’s equity options market is facing new obstacles after it emerged that best-execution requirements under the Markets in Financial Instruments Directive may undermine innovation in pricing.

      Uncleared swaps make trueEX trading debut

      IFR 2161 26 November to 2 December 2016 By

      Uncleared swaps are set to move a step closer to their more efficient, centrally cleared counterparts after swap exchange operator trueEX launched the first venue for real-time execution of the products.

      More from IFR Derivatives

      Digital Edition

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      World Class Capital eyes mortgage debt expansion

      07 December 2016 By

      Commercial real estate firm World Class Capital Group is eyeing an expansion into mortgage lending and debt securities, a person with knowledge of the matter told IFR.

      BNP Paribas pulls in pricing on second AT1 of year

      07 December 2016 By

      BNP Paribas launched its second Additional Tier 1 deal of the year well inside initial price guidance on Wednesday, with US$6bn of investor orders in the book.

      BNP Paribas taps reverse inquiry for second AT1 of year

      07 December 2016 By

      BNP Paribas took advantage of reverse inquiry to launch a US dollar Additional Tier 1 trade on Wednesday, its second AT1 of the year.

      Credit Suisse’s Thiam targets more markets cuts

      07 December 2016 By

      Credit Suisse is to cut more costs from its global markets division in an effort to meet group pre-tax profit targets for 2018. Those initial targets were set out by chief executive Tidjane Thiam in October 2015 but market conditions have changed, calling for a revision of his plans.

      Citigroup 4th-qtr markets revenue trending up 20 pct vs year ago - Reuters News

      07 December 2016

      Citigroup Inc fourth-quarter markets revenue is running about 20 percent higher than last year, chief financial officer John Gerspach said on Wednesday.

      Depressed bank returns face digitisation threat - McKinsey

      07 December 2016 By Steve Slater

      Weak economic growth, regulation and digitisation could significantly reduce profits for global banks in the next three years, to heap more pressure on an industry struggling to make decent returns, consultancy McKinsey said.

      EQUITY-LINKED: US$500m CB launched in CRCC

      07 December 2016

      A Rmb3.45bn (US$500m) five-year convertible bond has been launched in China Railway Construction Corp.

      EU fines C.Agricole, HSBC, JP Morgan €485m for Euribor fixing

      07 December 2016 By Philip Blenkinsop

      The European Commission fined banks Credit Agricole, HSBC and JP Morgan a total of €485m for their part in a cartel to fix the price of financial benchmarks linked to the euro.

      Strong interest for Honor's high-risk subprime auto debut

      06 December 2016 By

      Honor Finance’s debut US$100m ABS was seeing strong demand despite being backed by deeply subprime used-car loans - one of the riskiest deals of its kind in recent months, according to investors and bankers.

      US corporate bond issuance breaks records for 6th year

      06 December 2016 By John Balassi, Michael Gambale,

      US investment grade bond issuance volumes reached US$1.276trn on Tuesday, breaking annual issuance records for the sixth year running, according to IFR data.

      Junk energy companies rush to primary market

      06 December 2016 By

      Junk-rated energy companies are rushing to the US bond market at the fastest pace in nearly two years, looking to refinance debt following a sharp rally in spreads over the past week.

      JPMorgan CEO says bank may look to pay special dividend - Reuters News

      06 December 2016

      The stock of JPMorgan Chase & Co JPM.N has been climbing so much that “at a certain price,” the company may consider issuing a special dividend to distribute excess capital rather than buying back additional stock, Chief Executive Jamie Dimon said on Tuesday.

      Ford Motor to raise US$2.8bn debt to fund new technology - Reuters News

      06 December 2016

      Ford Motor Co will raise US$2.8bn in long-term debt, according to a filing with U.S. securities regulators, funds which a senior executive said on Monday will help fund investments in new technology including self-driving cars.

      The logo of Barclays bank is seen at its office in the Canary Wharf business district of London

      Barclays saves £35m from Canary Wharf sub-let to government

      06 December 2016 By Steve Slater

      Barclays is sub-letting one of its offices in London’s Canary Wharf financial district to the UK government to save £35m a year, part of its plan to cut costs and improve profitability.

      Logo of Houlihan Lokey

      MOVES-Forshaw heads to Houlihan Lokey

      06 December 2016 By

      Houlihan Lokey has hired leveraged finance banker Anthony Forshaw as managing director in London, signalling its intent to move into the capital markets advisory space.

      CMBS loan defaults set to spike in 2017, says S&P

      05 December 2016 By

      Loan servicers may need to staff up ahead of an anticipated spike in defaults of old CMBS loans next year which could fall under their control, S&P warned on Friday.

      All Latest news

      Special Reports

      IFR German Corporate Funding Roundtable 2016
      IFR convened its fifth annual German Corporate Funding Roundtable in Frankfurt in mid-November just as bond markets, led by US Treasuries, were starting their sharp re-pricing off the back of higher inflation expectations and tighter US money.

      IFR India's Path to Sustainable Growth Roundtable 2016
      IFR recently convened a highly insightful roundtable discussion in Washington DC, entitled “India’s Path to Sustainable Growth: Challenges and Opportunities”. State Bank of India chair Arundhati Bhattacharya delivered some affirmative opening comments that eloquently framed the discussion that followed./p>

      IFR German SME Funding Roundtable
      IFR’s 4th annual German SME Funding Roundtable, held at the end of September in Frankfurt, was another absorbing encounter.

      IFR US ECM Roundtable
      IFR’s US ECM Roundtable was held on September 12, just ahead of the Fed’s decision to hold the line on interest rates and the US presidential election. The Fed only postponed a cycle of rate-tightening and the end of the accommodative environment that has sustained the current bull market.

      From the practice of placing a bell around the neck of a castrated ram to lead the flock

      Give ’em a tenor

      IFR 2162 3 December to 9 December 2016

      SIXTEEN STAFF FROM Citigroup’s European headquarters are aiming for pop stardom by releasing a single on iTunes to raise money for Richard House Children’s Hospice in East London.

      Opinion

      Anthony Peters columnist format

      Crisis? What crisis!

      A recent trip to Milan left me with one abiding memory: the way in which nobody at all seems to be flapping over the outcome of Sunday’s referendum. 

      Anthony Peters columnist format

      The politics show

      Today’s column should really start with a review of the rather good looking numbers that Friday’s US payroll report threw up but, not that it should come as a surprise, they have been swamped by a wave of political news. 

      Anthony Peters columnist format

      Normalising the curve

      It’s time for the monthly US nonfarm payroll report but it’s safe to say no-one will be on the edge of their seat in anticipation. 

      keith mullin

      Are banks in denial over direct lending?

      I’ve been watching with interest the emergence of direct lending funds in Europe over the past couple of years and I’ve been moved to pose a question. 

      Anthony Peters columnist format

      Slick back and relax

      For equity investors November went out with all bells ringing and whistles blowing. 

      Anthony Peters columnist format

      Speak softly and carry a big stick

      European bonds were supposed to be in lock-down ahead of the Italian referendum but when it came to the Tesoro selling €1.5bn 10-year BTPs along with €1.75bn five-year notes and a mixed bag of 2022 and 2024 FRNs, there was no shortage of buyers. 

      Anthony Peters columnist format

      Dog’s breakfast

      European bond markets remain a mess. 

      Anthony Peters columnist format

      Bah humbug

      Do we in Europe really need to go into this Black Friday malarkey? We’ve already been hyped into getting excited about Halloween and Fathers’ Day, two very American excuses to go shopping for stuff nobody needs. 

      Anthony Peters columnist format

      Reality... what a concept

      Has the world suddenly gone mad or has the world always been mad and is now trying to find a path back to sanity? 

      Anthony Peters columnist format

      Thanksgiving turkeys

      While the rest of the world is still jumping up and down and celebrating the Dow Jones’ scaling of the 19,000-point mark, bond markets are in a more reflective mood.