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Wednesday, 23 April 2014

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Upfront

Cutting back

IFR 2029 19 April to 25 April 2014

Credit Suisse opened the European bank reporting season with some pretty sobering numbers – not least in fixed income sales and trading, where the Swiss bank had its worst first quarter since 2008. Low rates and new regulations were always going to hurt the business, but it is clear from the bank’s reaction – cuts will now be deeper – that it wasn’t expecting things to be quite this bad.

Top News

€10bn test for high-yield market

IFR 2029 19 April to 25 April 2014 | By Robert Smith

Numericable and Altice will test the limits of the high-yield bond market later this month with a €10bn-equivalent bond financing for their acquisition of French telecoms unit SFR from Vivendi.

Iceland's banks coming back from the dead

IFR 2029 19 April to 25 April 2014 | By Aimee Donnellan

Iceland’s Arion Banki is to provide an even greater test of investor appetite for risky banks than recent deals from Greece as it plots its first wholesale market funding in a major currency in six years.

Investors lap up Romania in euros

IFR 2029 19 April to 25 April 2014 | By Sudip Roy

Romania proved that investors are able to distinguish between the risks in Ukraine and Russia, and elsewhere in Central and Eastern Europe after printing a blowout €1.25bn 10-year note issue on Tuesday.

Tech sell-off curbs PRC listings

IFR 2029 19 April to 25 April 2014 | By Fiona Lau

The recent global sell-off in internet stocks in the US forced China’s Weibo and Leju Holdings to raise significantly less last week than targeted, adding pressure to the long line of Chinese IPOs waiting in the wings. The outcomes of the two IPOs show that investors are price-sensitive and picky over tech stocks.

AQR pushes Monte dei Paschi to raise €5bn

IFR 2029 19 April to 25 April 2014 | By

The remarkable transformation in appetite for peripheral European financials was illustrated again last week as bankers barely batted an eyelid when asked to increase their underwriting commitments for Banca Monte dei Paschi di Siena’s rights issue from an aggregate €3bn up to €5bn.

Anaemic aftermarket baffles bankers

IFR 2029 19 April to 25 April 2014 | By Graham Fahy

Bankers are struggling to explain why recent European IPOs have performed badly in the aftermarket, with only three of the past eight public offerings registering gains of any notable size for investors.

Caesars prints issue as workout looms

IFR 2029 19 April to 25 April 2014 | By Natalie Harrison

Gaming company Caesars made a big leap forward in its complex restructuring plan last week after selling a US$675m high-yield bond issue – the final piece of financing for a crucial sale of four of its casinos for US$1.8bn.

IFR Magazine Top News in Full (subscription required)

People & Markets

Credit Suisse to cut deeper

IFR 2029 19 April to 25 April 2014

Credit Suisse has concluded that deeper cuts to its fixed income franchise will be needed over coming months, with management finally bowing to years of pressure to scale back in the area after revealing that the business suffered its worst start to the year since 2008.

FICC revenue decline inflicts more pain

IFR 2029 19 April to 25 April 2014

Fixed income, currencies and commodities revenues continued to fall in the first quarter, normally the best time of the year for the business, with all the major US banks save Morgan Stanley posting declines compared with a year earlier.

DCM fees near their peak, warn analysts

IFR 2029 19 April to 25 April 2014

US banks posted mixed results for investment banking fees in the first quarter, adding to analyst concerns that the boost provided by a boom in debt issuance might be starting to subside, while equity capital markets and advisory income continue to disappoint.

China trusts reduce risky lending

IFR 2029 19 April to 25 April 2014

Trust companies in China are becoming more cautious about lending and are reducing exposure to the real-estate sector amid rising defaults.

Europe signs off on banking union

IFR 2029 19 April to 25 April 2014

European lawmakers have finally signed off on new laws to make it easier to shut problem banks after long wrangling over rules for an industry blamed for triggering the worst economic slump in a generation.

More from People & Markets

Bonds

Wells taps markets on both sides of the pond

IFR 2029 19 April to 25 April 2014

Wells Fargo went on a funding spree last week, tapping the euro and US dollar markets to raise the equivalent of US$5.53bn at both ends of the risk spectrum.

Junk rush to hit M&A upside

IFR 2029 19 April to 25 April 2014

The rush for junk bonds is threatening to strip out any upside high-yield investors could get from event risk, just as large-scale M&A and IPO activity returns to Europe.

SEA and Kedrion bring unrated Italian supply

IFR 2029 19 April to 25 April 2014

Airport operator SEA and biopharma group Kedrion both priced €300m bonds last week, bringing unrated Italian deals in a quiet week for high-grade corporate credit.

NBG plans Piraeus follow-up

IFR 2029 19 April to 25 April 2014

National Bank of Greece, rated Caa1/CCC/B–, is preparing to sell the second senior unsecured bank bond offering from the country in the past four weeks, with fixed income investors increasingly willing to back Europe’s most troubled credits.

Auchan goes it alone

IFR 2029 19 April to 25 April 2014

French retailer Auchan was the sole issuer in the euro corporate market on Tuesday, selling a new seven-year bond after a year’s absence from the primary market.

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Loans

Banks step up sales of troubled loans

IFR 2029 19 April to 25 April 2014 | By Claire Ruckin

European commercial banks are actively managing loan exposure and are more willing to sell loans for stressed and distressed companies quickly in Europe’s secondary market as distressed debt investors line up to buy the loans.

Sibur deal hanging by a thread

IFR 2029 19 April to 25 April 2014 | By Sandrine Bradley

The US$1bn club loan for Russian petrochemicals company Sibur is hanging in the balance after several banks withdrew from the deal due to issues around US economic sanctions against Russia. At least four banks have walked away from the deal as Sibur has so far refused to include enhanced sanctions clauses in the loan documentation, according to bankers. 

China: Lenovo seeks waivers for acquisitions

IFR 2029 19 April to 25 April 2014 | By Jacqueline Poh, Sandra Tsui

Lenovo Group is seeking waivers on the financial covenants of two existing loans, and to adjust the pricing, in preparation for recently planned acquisitions.

Centerbridge mulls options for Apcoa refinancing

IFR 2029 19 April to 25 April 2014 | By Claire Ruckin

Distressed debt investor Centerbridge is looking at ways to refinance debt in struggling German car parking business Apcoa once it completes an imminent debt restructuring that will see it take control of the company.

Hong Kong: Champion forms club

IFR 2029 19 April to 25 April 2014

Champion REIT is forming a bank group for a HK$7.5bn (US$967m) term loan to refinance a HK$7bn facility due next month.

More from Loans

Equities

Sabre clipped on take-off

IFR 2029 19 April to 25 April 2014

Sabre Corp, the private equity backed travel logistics firm, was viewed as an antidote to the broader investor unrest that has led to disappointing outcomes on the pricing of IPOs. Large, liquid, and stable, the company provided a GDP-plus investment opportunity on the growth in global travel.

Medical device maker raises US$50m

IFR 2029 19 April to 25 April 2014

In what was essentially a re-IPO, medical device manufacturer TransEnterix raised US$50m as the last step to secure an NYSE listing. The funding was supported by investors that participated in a private placement as part of a reverse-merger into a shell company in September.

Italy: UniCredit to float online unit

IFR 2029 19 April to 25 April 2014

UniCredit expects to float about a third of its online banking unit FinecoBank before the summer, in a deal that could be worth as much as €1bn.

Moelis takes a long-term view

IFR 2029 19 April to 25 April 2014

Moelis & Co, the M&A specialist founded by former UBS investment banking chief Ken Moelis, last week weathered circumspect market conditions for new issues. In a week that saw 10 US-listed IPOs priced at or below target, the firm brokered a settlement to preserve value for its shareholders.

Thailand readies REITs

IFR 2029 19 April to 25 April 2014

The Thailand revenue department’s recent decision not to provide tax incentives to real estate investment trusts is likely to trigger REIT listings in the second half of the year. The decision may not have been in their favour, but developers had been awaiting clarity on the tax treatment and are now preparing IPOs totalling about Bt25bn (US$775m).

Paycom gets its cheque a little late

IFR 2029 19 April to 25 April 2014

Payroll software provider Paycom Software overcame delayed pricing and a slide in market valuations of software companies to deliver modest gains on its NYSE debut last Tuesday.

IBK boost for ECM

IFR 2029 19 April to 25 April 2014

Solid foreign-investor support for Industrial Bank of Korea’s offering of global depositary shares last week has raised hopes that cheaper valuations and relatively stronger aftermarket performances will boost demand for upcoming South Korean deals.

Japan: Seibu prices IPO at low end

IFR 2029 19 April to 25 April 2014

Seibu Holdings has priced its ¥44.5bn (US$438m) IPO at the low end of guidance. US private equity firm Cerberus Capital Management ditched plans to sell part of its 35.5% stake in the deal because of the low valuation when bookbuilding began.

More from Equities

Derivatives

Banks pile into structured solutions

IFR 2029 19 April to 25 April 2014 | By

There was a time when “structured” was a dirty word in finance, conjuring up images of CDO squared, leveraged super senior tranches and other nefarious inventions of the boom years. But six years and a serious makeover later, structured solutions are once again at the heart of investment banks’ sales and trading efforts, albeit in a very different guise.

Investors shun US inflation protection

IFR 2029 19 April to 25 April 2014 | By Mike Kentz

Investors remain complacent with regard to US inflation risks even though some market indicators point to a forthcoming rise in headline figures, bank strategists say.

GE exec bemoans regulatory fragmentation

IFR 2029 19 April to 25 April 2014 | By Mike Kentz

A major buyside executive has joined the chorus of complaints from derivatives dealers and industry groups regarding the divergent approaches being taken by US and European regulators in implementing G-20 swaps reforms.

ISDA aims to revive swaps reputation

IFR 2028 12 April to 18 April 2014 | By Helen Bartholomew

After taking a reputational beating in the wake of the crisis, over-the-counter derivatives have struggled to make their business case to politicians around the world, resulting in an unprecedented regulatory overhaul that industry professionals see as a threat to the wider economy.

Spiking vol drives options activity

IFR 2027 5 April to 11 April 2014 | By Helen Bartholomew

Last month’s hawkish language from Fed chair Janet Yellen, which was accompanied by a jump in volatility, triggered an uptick in US options trading volumes for March, cementing the first quarter of 2014 as the busiest in three years for listed options trading.

More from IFR Derivatives

Digital Edition

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Do you know who I am?

IFR 2029 19 April to 25 April 2014

BELLWETHER IS PRETTY confident in handing Sajid Javid the accolade as the first former head of credit trading for Asia-Pacific (excluding Japan) at Deutsche Bank to become UK culture secretary.

Currency Watch

Shah: China continues to guide the renminbi lower while the BoE eyes sterling’s strength.

COMMENT: On M&A and other drugs

Anthony Peters ponders the debt market implications of a mega-merger in pharma. 

Investors get a ringside seat on China reform Video

The US$37bn merger of CITIC Group and its listed subsidiary will give investors an unprecedented glimpse into the inner workings of China’s state-owned giants, says Breakingviews’ John Foley.

China’s SOEs fail to shake toxic culture Video

The sacking of the China Resources chairman amid a corruption probe is yet another worrying sign of the insider culture pervading China’s state-owned enterprises, says Breakingviews’ John Foley.

Is BlackRock a black swan? Video

Jeffrey Goldfarb and Richard Beales discuss the next phase of the hunt for global systemic risk and whether the US$4.3trn asset manager and its ilk or specific funds are more to fear.

More from Spotlight

IFR Latin America Special Report 2014

The good, the bad and the downright ugly: The People’s Republic of China may be more than 10,000 miles away from Latin America, but given the influence it has been having on the region, you could be forgiven for thinking it occupies the same barrio. There’s been no bigger influence on the region’s economy over the past few years than the PRC. With China’s growth slowing to about 7.5% from the runaway double-digit peak it reached in 2010–11, it’s not surprising that LatAm has suffered similarly.

More from Latest Special Reports