The European Central Bank will buy €60bn of debt a month under an expanded asset purchase programme designed to shake the eurozone out of six years of economic stagnation and push banks into selling bond holdings so they can use the cash to lend.
Investors snapped up the Kingdom of Spain’s new 10-year bond last Tuesday in anticipation of the ECB’s announcement of a quantitative easing programme later in the week, a bet that appeared to pay off after a larger-than-expected package pushed the new notes dramatically tighter.
Greece’s Syriza might look to learn lessons from how Ireland successfully negotiated with the European Central Bank, should the opposition party form the next Greek government – as predicted – after this Sunday’s election and try to revise the country’s current €240bn bailout programme.
Black clouds are forming over emerging markets as analysts warn that a deluge of ratings downgrades is on the horizon, potentially triggering a torrent of forced selling as some investors become shut out of the market.
German cable group Tele Columbus priced its €474m Frankfurt IPO on January 22 – the earliest a fully-marketed float has priced in a new year in EMEA this century. It is also the first IPO to price globally this year, and there is good reason Europe has – on this rare occasion – come first.
Cloud content management and storage company Box went to extra lengths last week to ensure its US$175m IPO provided a windfall for investors, securing an eleventh-hour cornerstone commitment from a major existing backer before pricing the deal amid overwhelming demand for the shares.
Asia’s richest man, Li Ka-shing, is on an acquisition and borrowing binge as he sets about expanding his business empire barely a couple of weeks after announcing its reorganisation. His flagship Hutchison Whampoa is raising £6bn (US$9bn) through a loan to finance a proposed bid for Telefonica’s British unit O2.
Legend Holdings is mulling a Hong Kong IPO of US$2bn–$3bn this year at a time when other Chinese conglomerates are looking to spin off their assets to release investment value.
Leveraged loans of European and US energy companies with exposure to the oil and gas sectors have fallen again by up to 10 points this year in secondary markets as traders and investors try to manage positions.
Chinese state-owned utility State Grid Corp took €1bn (US$1.13bn) out of the euro bond market last week as bankers in Europe forecast even more to come from foreign issuers looking for currency diversity.