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Monday, 25 July 2016

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Pro-government demonstrators take part in a march

Troubled times

IFR 2143 23 July to 29 July 2016

In a year dominated by political events, none was more dramatic than the attempted coup in Turkey just over a week ago. Even seasoned Turkey-watchers were taken aback.

Top News

Yapi Kredi branch

Coup attempt derails Yapi bond

IFR 2143 23 July to 29 July 2016 By , Robert Hogg

Yapi Kredi’s decision to cancel a bond issue last week following the attempted coup in Turkey has divided bankers, with some questioning the advice the lender was given, and others arguing that canning the deal was a sensible call.

Teva plant

Investors scrap for Teva bonds

IFR 2143 23 July to 29 July 2016 By , Hillary Flynn

Teva Pharmaceutical raised more than US$20bn across three currencies last week via an acquisition-driven bond that took advantage of pent-up demand for corporate paper in a yield-starved market.

A dentist poses with a teeth model

Open wide: Mydentist revives sterling junk appetite

IFR 2143 23 July to 29 July 2016 By Robert Smith

Mydentist on Friday priced the first sterling junk bond issue since the UK voted to leave the European Union, accelerating pricing after receiving a flood of orders that one fund manager described as “a total blowout”.

Turk Eximbank logo

Eximbank increases offering despite coup fallout

IFR 2143 23 July to 29 July 2016 By Sandrine Bradley

The signing of Turk Eximbank’s increased €400m-equivalent syndicated loan last Thursday shows that the loan market remains open for Turkish borrowers in the aftermath of the thwarted coup attempt, but lenders expect the size of future deals to decrease – and pricing to increase.

JR Kyushu operated train

JR Kyushu hopes to follow Line's success

IFR 2143 23 July to 29 July 2016 By Robert Hartley

Japanese railway operator JR Kyushu is set to bring a US$3bn–$5bn Tokyo Stock Exchange listing later this year, hoping it will be able to emulate the popularity of the Tokyo-US listing of Japanese messenger app Line.

ENAV control tower

Enav prices IPO with ease

IFR 2143 23 July to 29 July 2016 By

For an IPO market that is supposed to be dead in the wake of the UK’s decision to leave the European Union and the end of school term that triggers an evacuation of the City, the success of Enav’s privatisation IPO is all the more remarkable.

Canadian Imperial Bank of Commerce sign

CIBC adds to negative-yield universe

IFR 2143 23 July to 29 July 2016 By

Canadian Imperial Bank of Commerce last Monday became the first non-eurozone issuer to price a euro deal at a negative yield in any sector.

European Central Bank (ECB) headquarters

Indiscriminate ECB bond buying is ‘QE for the world’

IFR 2143 23 July to 29 July 2016 By

The European Central Bank has hoovered up bonds with apparently indiscriminate abandon since it implemented its corporate sector purchase plan in June, despite expectations that it would take a more strategic approach.

A "welcome to Amsterdam" sign

Amsterdam eyes London spoils

IFR 2143 23 July to 29 July 2016 By Steve Slater

The Netherlands is facing pressure to ease the toughest rules on bankers’ bonuses in the world, as financial centres seek to grab banking business from London after Britain’s EU exit.

A SoftBank shop

SoftBank loan prompts debt fears

IFR 2143 23 July to 29 July 2016 By Robert Smith, Carol Zhong

Telecommunications and technology company SoftBank Group has obtained a ¥1trn (US$9.5bn) bridge loan to back its £24.3bn acquisition of UK chip designer ARM Holdings, increasing investors’ concerns about the company’s ability to manage its US$112bn debt pile.

IFR Magazine Top News in Full (subscription required)

People & Markets

Jonathan Rogers

1MDB: The end is in sight

IFR 2143 23 July to 29 July 2016

A RESOLUTION TO the scandal at Malaysian state investment company 1MDB came a step closer last week thanks to an intervention by the US authorities.

Morgan Stanley

FICC angst lingers despite Q2 rebound

IFR 2143 23 July to 29 July 2016

Fixed income trading desks at US banks reported their strongest second-quarter performance in three years, but it was not enough to make up for the grim first quarter and herald a change in mood over longer-term prospects.

Citi sign

Sluggish capital markets sink underwriting revenues

IFR 2143 23 July to 29 July 2016

Investment banking revenue fell again in the second quarter, dragged down by a 45% decline in revenue from equity underwriting as IPO activity remained sluggish.

Logo of the European Banking Authority

MREL targets still a big unknown

IFR 2143 23 July to 29 July 2016

European banks might need to raise between €130bn and €790bn to meet new loss-absorbing capital rules, the European Banking Authority said last week, highlighting just how much of the final calibration remains up in the air.

Men walk past a 1Malaysia Development Berhad (1MDB) billboard at the fund's flagship Tun Razak Exchange development in Kuala Lumpur.

US outlines case against Malaysia fund

IFR 2143 23 July to 29 July 2016

US prosecutors last week moved to seize over US$1bn of assets they claimed were stolen from 1Malaysia Development, casting fresh scrutiny over the role banks played in raising and transferring money for the controversial state investment fund.

    More from People & Markets

    Bonds

    Crunching yields

    Spain and Cyprus squeeze yields

    IFR 2143 23 July to 29 July 2016

    Peripheral eurozone countries Spain and Cyprus made triumphant returns to the bond market last week, with the yields on offer trumping any concerns over political uncertainties, particularly with further monetary policy easing on the horizon.

    Covenant Review warns on Mydentist's ‘new and aggressive’ clause

    IFR 2143 23 July to 29 July 2016

    A sterling junk bond Mydentist sold to investors last week contained a new type of portability clause that could be “exceedingly easy to manipulate” in the company’s favour, said credit research firm Covenant Review in a report published on Thursday. 

    Germany suffers another technical failure

    IFR 2143 23 July to 29 July 2016

    While the headline-grabbing events in the sovereign market were Spain’s and Cyprus’s syndicated deals (see section lead), the auction market also threw up some newsworthy fare, albeit not so positive.

    Senior supply slips in June, July

    US banks appease European investors with slew of senior

    IFR 2143 23 July to 29 July 2016

    Three US banks attracted around €20bn of orders as they issued a combined €8.75bn of euro senior unsecured debt last week, underlining the clamour for paper among European investors.

    US dollar bills

    Syndicate desks see up to US$20bn in IG supply

    IFR 2143 23 July to 29 July 2016

    US high-grade issuance volumes are likely to be up to US$20bn this week, supply being dominated by financials with most corporates still in self-imposed earnings blackouts, said bankers.

      More from Bonds

      Loans

      Douglas Holding logo

      Vast liquidity lures borrowers

      IFR 2143 23 July to 29 July 2016 By Hannah Brenton

      The European leveraged loan market is braced for a flurry of opportunistic deals, as bankers and borrowers pounce on favourable conditions ahead of the summer slowdown.

      Hofer sign

      Schuldschein market continues to grow

      IFR 2143 23 July to 29 July 2016 By

      The corporate Schuldschein market totalled €14bn in the first half of the year, the highest half-yearly volume on record, according to Thomson Reuters LPC data, as borrowers continue to take advantage of competitive market conditions to secure long-term funding on attractive terms.

      Trafigura logo

      Trafigura launches US$1.4bn loan refinancing

      IFR 2143 23 July to 29 July 2016 By Carol Zhong, Chien Mi Wong

      Commodity trading firm Trafigura Beheer has launched syndication of US$1.4bn-equivalent revolving credit and term loan facilities that will be used to refinance the company’s existing Asian credit facilities. The borrower is Singapore-based Trafigura Pte Ltd.

      Turk Eximbank logo

      Eximbank increases offering despite coup fallout

      IFR 2143 23 July to 29 July 2016 By Sandrine Bradley

      The signing of Turk Eximbank’s increased €400m-equivalent syndicated loan last Thursday shows that the loan market remains open for Turkish borrowers in the aftermath of the thwarted coup attempt, but lenders expect the size of future deals to decrease – and pricing to increase.

      Bharat Petroleum refinery is seen in Mumbai

      Consortium seeks funds for Russian oilfield

      IFR 2143 23 July to 29 July 2016 By Chien Mi Wong

      State-owned Bharat Petroleum Corp, Indian Oil Corp and Oil India have sent a request for proposals for bridge loans of up to US$1.9bn to back their purchase of a stake in Russia’s second-largest producing oilfield.

      Brixmor Property Group logo

      Brixmor markets US$2.75bn of loans

      IFR 2143 23 July to 29 July 2016

      Real estate investment trust Brixmor Property Group is in the market with US$2.75bn of loans to refinance debt. The borrower is subsidiary Brixmor Operating Partnership.

      Pirelli tyre

      Pirelli to sign €6.4bn refi

      IFR 2143 23 July to 29 July 2016

      Pirelli is set to sign €6.4bn of loans to replace the €6.8bn 18-month bridge loan that backed ChemChina’s acquisition of the Italian tyre-maker.

      PerkinElmer closes in on RCF

      IFR 2143 23 July to 29 July 2016

      Scientific instruments maker PerkinElmer is increasing its revolver to US$1bn from US$700m and extending the maturity to 2021 from 2019.

      More from Loans

      Equities

      Patheon NV CEO James Mullen

      Patheon IPO finds robust demand

      IFR 2143 23 July to 29 July 2016

      Shares in contract drug maker Patheon opened 19% above their IPO price on Thursday, having earlier priced towards the upper end of the marketing range, in another positive step for the recovery of the US IPO market. 

      Buwog logo

      Bemusement at speedy Buwog flip

      IFR 2143 23 July to 29 July 2016

      A €375m accelerated bookbuild in Austrian real estate company Buwog generated a flurry of chatter last week as seller Sapinda Invest had purchased the shares just six weeks earlier.

      Kinsale Insurance logo

      Kinsale IPO goes where others fear to tread

      IFR 2143 23 July to 29 July 2016

      Kinsale Capital, a specialist insurer of hard-to-place small business risks, plans to bolster its capital base and fund its premium growth with the primary proceeds from an up to US$96m IPO scheduled to price on July 27.

      Blackstone Group logo

      Blackstone real estate pipeline bulges

      IFR 2143 23 July to 29 July 2016

      Blackstone Group continues to make efficient use of capital markets through block sell-downs of publicly traded portfolio companies. The alternative asset manager holds so much sway in fact that investors are beginning to go directly through the firm to source product, rather than making requests indirectly.

      ICICI Prudential billboard

      First insurance IPO under way

      IFR 2143 23 July to 29 July 2016

      ICICI Prudential Life Insurance last week started pre-marketing India’s first IPO from the insurance sector, betting that an upbeat outlook for the country’s financial services industry will support the biggest listing in years.

      Earnings, summer depress issuance

      IFR 2143 23 July to 29 July 2016

      US stocks are trading at or near all-time highs but ECM activity remains relatively subdued, in part due to the distraction of second-quarter earnings.

      Hapag-Lloyd logo

      Hapag-Lloyd merges with UASC to counter shipping slowdown

      IFR 2143 23 July to 29 July 2016

      Just eight months after listing in Frankfurt, container shipping giant Hapag-Lloyd is to merge with United Arab Shipping Company in the hope that increased scale and synergies can counter falling freight rates and rising fuel costs.

      Wind-blade maker chopped to size

      IFR 2143 23 July to 29 July 2016

      TPI Composites, a manufacturer of blades for wind turbines, weathered the brunt of frustration on an IPO that was both downsized and priced well below target. Customer concentration, an absence of US-listed public comparables, and small deal size all contributed to pushback, but a disastrous track record of alternative energy was ever-present.

      More from Equities

      Derivatives

      Institutions develop a taste for bond ETFs

      21 July 2016 By

      ETFs have become a staple of European institutional equity portfolios over recent years, but fixed income investors have remained relatively oblivious to the merits of passive investing. Now, according to ETF provider BlackRock, attitudes are starting to change.

      ISDA rules credit event on Puerto Rico

      19 July 2016 By

      The International Swaps and Derivatives Association has determined that a failure to pay credit event occurred in respect to Puerto Rico missing bond payments of more than US$900m earlier this month.

      New US derivatives tax threatens equity hedging

      15 July 2016 By

      A new rule that brings some equity derivatives into the ambit of US withholding tax may undermine demand for hedging among overseas investors as brokers scramble to implement the requirements.

      ESMA mulls two-year clearing delay for small swap users

      15 July 2016 By

      The European Securities and Markets Authority (ESMA) has launched a consultation that could give small derivative users a two-year grace period before they must start clearing their trades.

      Sterling cleared margins surge on Brexit vote

      13 July 2016 By

      Initial margin on cleared sterling interest rates swaps has jumped by as much as 25% since Britain voted to leave the EU, increasing the cost of hedging for UK-based investors.

      More from IFR Derivatives

      Digital Edition

      Access a digital edition of the latest print magazine here.

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      Capital CityCapital City logo    

      JP Morgan & Chase Co. building in New York

      JP Morgan to stop settling government securities for dealers

      22 July 2016

      (Reuters) - JP Morgan Chase & Co will stop settling US government securities transactions for most dealers by the end of next year as it streamlines its business, the bank said on Friday.

      P&M: Martinez-Piqueras takes sole responsibility at UBS

      22 July 2016

      Javier Martinez-Piqueras is now head of European ECM and corporate solutions at UBS. His former co-head Jasper Tans has moved to become co-head of EMEA country coverage and origination ex-UK alongside Juan Monte.

      Standard & Poor's building in New York

      Global default tally hits 104 – S&P

      21 July 2016 By

      The global default tally has climbed to 104 so far this year, with more than half of the issuers coming from the troubled energy and natural resources sector, S&P Global Ratings said on Thursday.

      Fairmount Santrol logo

      Frac sand manufacturer funds through the downturn

      21 July 2016 By

      Parse through second-quarter results of oilfield services companies and there is a strange sense of optimism. Yes, current operating conditions are indeed bad, but there are signs of budding recovery.

      Patheon NV CEO James Mullen

      Patheon draws big crowd to IPO

      21 July 2016 By

      Contract drug maker Patheon opened 19% above its IPO price Thursday, after pricing of the deal towards the upper end of the marketing range in another positive step for the recovery of the US IPO market.

      A Naviera Armas ferry

      Lecta and Naviera Armas set talk

      21 July 2016 By Robert Smith

      Lecta and Naviera Armas both set talk on their high-yield bonds on Thursday, with the two Spanish Single B issuers targeting pricing in the mid to high 6% range.

      Nationwide building society

      Nationwide senior deal tightens in secondary

      21 July 2016 By

      Nationwide Building Society’s US$1.25bn five-year senior bond traded 10bp tighter in secondary on Thursday, demonstrating further improvement in sentiment towards UK banks.

      JP Morgan & Chase Co. building in New York

      US banks appease European investors with slew of senior

      21 July 2016 By

      Three US banks attracted around €20bn of orders as they issued a combined €8.75bn of euro senior unsecured debt this week, underlining the clamour for paper among European investors.

      Teva's oral solid dosage plant

      Teva wraps up bond market tour in Swiss

      21 July 2016 By

      Teva Pharmaceutical wrapped up the final leg of its M&A-driven debt financing on Thursday, which totalled nearly US$20bn-equivalent across multiple currencies in a four-day sweep.

      1Malaysia Development Berhad (1MDB) billboard

      Goldman Sachs under spotlight in Malaysian fund scandal

      21 July 2016

      (Reuters) - Goldman Sachs’ work with Malaysian sovereign wealth fund 1MDB is under the spotlight over US government allegations that billions of dollars were diverted for the personal use of officials and some people associated with them.

      Diamond Resorts International resort

      UPDATE – Bankers pull forward debt financing for Diamond Resorts

      21 July 2016 By

      Bankers have pulled forward the leveraged loan and high-yield bond financing backing the buyout of timeshare company Diamond Resorts International by private equity group Apollo, one of the bankers on the deal said on Thursday.

      ENAV control tower

      Italian government to raise €759m from Enav IPO

      21 July 2016

      Books closed at 12.30pm in London today for the Milan IPO of Italian air traffic controller Enav with investors advised that pricing would come at €3.30, the upper half of the €2.90–€3.50 price range.

      NCI Building Systems logo

      CD&R trims stake in NCI Building Systems

      20 July 2016 By

      Clayton Dubilier & Rice added a US$145.4m sell-down of shares in metal building products company NCI Building Systems to what has already been a busy year for asset realisations for the private equity firm.

      US Xpress truck

      US Xpress eight-year junk bond whispers widen to 11% – sources

      20 July 2016 By

      The price whispers on a high-yield bond sale for trucking company US Xpress Enterprises has been widened by around 200bp to 11% area after pushback from investors, according to several buyside sources.

      Morgan Stanley

      Morgan Stanley FICC revenues not constrained by job cuts – Pruzan

      20 July 2016 By Philip Scipio

      Morgan Stanley was able to capitalize on a turnaround in fixed income trading in the second quarter of 2016, despite steep cuts to the group last year, its Chief Financial Officer Jonathan Pruzan told IFR on Wednesday.

      Logo of the European Banking Authority

      MREL targets still a big unknown

      20 July 2016 By

      European banks may need to raise anywhere between €130bn and €790bn to meet new loss-absorbing rules, the European Banking Authority said on Tuesday, highlighting just how much of the final calibration remains up in the air.

      All Latest news

      Special Reports

      Asian Bank Capital
      Bank capital has long been a hot topic in Asia, but the asset class has so far failed to ignite the kind of excitement that the Basel reforms once promised – at least outside of Australia. That is all about to change.

      Top 250 Borrowers
      Few would claim that the conditions in the capital markets could currently be described as normal. Even so, the underlying environment is both strong and deep. Includes IFR's Top 250 Borrowers ranking.

      Financing Sustainable Infrastructure
      Climate change has risen towards the top of the global policy agenda as the impact of rising temperatures is felt around the world. This is providing a strong impetus towards transitioning the world towards a low-carbon economy.

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

      The G bomb

      IFR 2143 23 July to 29 July 2016

      JUST WHEN YOU thought the tone of the US presidential election couldn’t get any lower, and Donald Trump supporters go and drop the “G bomb”.

      Opinion

      keith mullin

      Time for State Bailouts 2.0?

      A LOT OF people leapt on the launch this past week of the EBA’s public consultation on its interim report on the implementation and design of MREL. It’s hardly beach reading but the deadline for responses is August 30, so stick it in your suitcase as you head off on vacation.

      Anthony Peters columnist format

      Populist politics

      Having watched Donald’s acceptance speech at the Republican National Convention in Columbus last night, I wonder if the question of whether government should lead or reflect public opinion is the defining difference between the respective stances of Trump and his presumptive Democrat opponent Hilary Clinton.

      James Saft - June 2014

      After Brexit, the game is 'wait and see'

      Central banks are joining companies in taking a “wait and see” strategy to manage the effects of Brexit.

      Anthony Peters columnist format

      Wild Turkey

      Despite being a political scientist and historian by background, I have so far largely desisted from commenting on developments in Turkey. This morning, however, after the imposition of the three-month state of emergency, things are different.

      James Saft - June 2014

      Among active managers patience is the principal virtue

      If you are going to use active investment managers you may want to limit yourself to those who are both truly active and, crucially, unusually patient.

      Anthony Peters columnist format

      Volatility and risk

      Tuesday, never the best day of the week from a momentum perspective, disappointed. Although in the middle of the US earnings season, stock market volumes were pitiful and most major indices ended within 1% of their respective Monday closes. 

      Anthony Peters columnist format

      Remorse and reflection

      As a major influence on events, Brexit might not have shuffled off the stage but the world is settling down to the realities of separation; in terms more real to many of us, the marriage has broken down and we’ve packed our bags and moved out. 

      Anthony Peters columnist format

      Political Times

      Some years ago the “pink ’un” had an advertising slogan which read “We live in Financial Times”. We did and the phrase was a sublime piece of copy writing. Now, like it or not, we live in political times. 

      Anthony Peters columnist format

      Standing together with Europe

      I spent Thursday in London watching England playing Pakistan at cricket at Lords and intended today to pen a light-hearted review of the new British government. I woke up, however, to news of yet another horror visited upon the people of France by some fanatical idiot. 

      James Saft - June 2014

      Momentum, greed and baseball cards

      To paraphrase Walter Matthau on poker, it seems baseball card collecting combines all the worst aspects of capitalism (and investing) that have made our country so great.