Top Stories from IFR Magazine
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 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.
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.
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.
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.
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.
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.
Syndicated lending in EMEA fell to US$140bn in the first three months of 2014. This was the lowest first-quarter volume since 2004, as the market suffered from a fall in refinancing, the continued absence of large-scale M&A financings and increased competition from the buoyant bond and equity markets.
Greece is planning to return to the international bond market this month, four years after it became the first eurozone country to be bailed out and only two years since defaulting on its debts. With the country showing signs of pulling out of a crippling recession, the government aims to raise €2bn in a sale of five-year bonds, bankers told IFR last Thursday.
Pakistan is marketing its first US dollar bond in seven years. A successful deal would make it one of the lowest-rated countries to sell international debt. Investors will be concerned by political risks and economic uncertainties, but sentiment is improving.
The UK’s National Audit Office’s report into the £1.98bn privatisation of Royal Mail Group has concluded that the UK government had been cautious in pricing last year’s IPO in order to provide certainty of success against a backdrop of terrible industrial relations – but that the deal could have provided better value for the taxpayer.
Brazilian telco Oi has finally launched a share offering of up to US$10.6bn, with all of the 14 banks originally mandated for the deal remaining on board despite a row over whether the deal would be backstopped and a temporary suspension of the trade.
Market-maker/high-frequency trading firm Virtu Financial remains intent on launching its IPO as early as April 21, despite opting last week to delay the deal due to controversy stemming from renowned author Michael Lewis’ newly published book, “Flash Boys: A Wall Street Revolt”.
*Updates Ukraine’s downgrade by Moody’s
Japanese real estate investment trusts have been on a roll since the introduction of Abenomics. But Japan’s consumption tax hike is set to test the durability of the country’s REIT market amid concern that weaker spending could undermine a recent recovery in property prices that was spurred by Prime Minister Shinzo Abe’s loose monetary policies.
Credit risk stemming from bank derivative activities has dipped to its lowest level since the crisis, suggesting that industry and regulatory efforts to reduce risk are having the desired effect. However, the real driver has been low rates volatility that has created stable swap book valuations – something that could quickly change as the Fed cranks up its tapering efforts.
Major derivatives dealers are struggling to price interest rate swaps because of uncertainty in the European regulatory regime triggered by the countdown to mandatory central clearing for over-the-counter derivatives which started last month.
With the latest Fed stress tests out of the way, US banks and investors are now weighing up the potential impact of the next major regulatory move – the so-called Orderly Liquidation Authority resolution rules, which could see the eight largest US banks having to issue at least US$83bn of subordinated bonds in coming years.
The Basel Committee on Banking Supervision is pushing national regulators to clamp down on what it sees as abuse of risk-weighted asset optimisation programmes as a backdoor way for banks to reduce the amount of capital they are required to hold, amid concerns that some have become too lenient over the practice.
King Digital Entertainment, maker of the highly popular mobile game Candy Crush Saga, dealt a setback to the resurgent US tech IPO market by stumbling on its debut, in stark contrast to the windfall gains seen on many recent sector offerings.