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To see the digital version of this review, please click here.
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Markets are more agnostic about elections than the public at large. Even as half (or more) of America was gnashing its teeth over the election of the country’s first non-politician president since Eisenhower, the “Trump Rally” was in full flight. Equities powered to record highs and, spurred by Opec, a bounce in oil prices helped re-open capital markets for junk-rated energy companies that had been all but frozen out for months. Even as a sell-off in Treasuries and other sovereigns kicked in, US investment-grade issuance still powered its way...
At the end of the year, new risk retention rules come into play for the commercial mortgage-backed securities market in the US. From Christmas Eve, banks must retain at least 5% of every issue – or find someone else to do so on their behalf - in what has been dubbed the new “skin in the game” rules. The aim is to stop the kind of seat-of-your-pants origination that was characterised in last year’s hit securitisation movie “The Big Short”. Banks that have to retain a tranche of their own deals are less likely to play fast and loose with...
It has been a year that will probably be defined by the political demise of former president Dilma Vana Rousseff. The political scandal that brought her down weighed on the economy for the first half of the year, as it had for much of 2015, taking Brazil to the edge of a financial cliff. But her impeachment in August has steered the country from the precipice, and as 2016 ends Brazilians can again hope that their country is on the path to recovery and prosperity. Juan Carlos Rodado, director of LatAm research at Natixis CIB Americas, said: “The...
On October 14 2016, changes to the Securities and Exchange Commission rules governing money market funds came into effect. The news may have come as little surprise to the market, which had been given two years to adjust to the new regulatory environment, but one thing is for sure: the cost of liquidity for those needing to fund in US dollars has increased. It is an important change, and one that has already affected business models, funding strategies, and client relationships within the banking sector. The full extent of the implications,...
Bunds were hardly a screaming buy at the beginning of 2016. Far from it: shorter-dated paper offered investors next to no yield at all; and even at the longer end, a 0.1% coupon on 30-year debt must have seemed like scant compensation for all the risks that might befall the investment during that time. But applying that logic might have cost you your job: Bunds were one of the best-performing assets in 2016. If you’d started the year buying German government debt maturing in 2046, by the end of July you’d have been sitting on a paper gain of...
The election of Mauricio Macri as president in November 2015 did more than simply end years of Peronist rule in Argentina – it offered a chance to bring the sovereign back in from the cold. The country had been a pariah for more than a decade, frozen out of the international capital markets as a result of a long-running legal battle with its holdout creditors. That fight had led to a technical default and prevented the sovereign from raising much-needed hard currency funds, even as cash reserves dwindled and the country plunged into the red....
Working out how to finance Dell’s mega-merger was always going to take some time and preparation. But Dell’s US$60bn pursuit of cloud computing company EMC was especially tricky. Junk-rated Dell, already groaning under some outstanding debt, needed a package that would raise funds without putting extra pressure on its balance sheet. And the bond markets did not seem to be deep enough to support the US$38bn financing – especially given that the junk-bond market was then in the throes of a vicious sell-off. Dell instead put together a banking...
Sprint was already burning through plenty of cash in the autumn as it saw another wall of debt maturities appearing on the horizon, including a US$2bn bond coming due in just a couple months. The company was keen to cut its reliance on the volatile high-yield market, where it had been the number one issuer of bonds for quite some time. And it needed to reduce its high interest expenses and try to slow its relentless march through its cash stores as it fought off intense competition in the US wireless market. So Goldman Sachs stepped forward...
No deal demonstrated JP Morgan’s success in US ECM this year better than the US$2.2bn block trade in the shares of independent exploration and production company Anadarko Petroleum. The September deal – the biggest E&P risk trade on record – netted the bank an estimated US$50m in underwriting fees, in an era in which block trades are better known for their poor economics. Moreover, the bank’s Wall Street rivals did not share a penny of the payday. It was the kind of outcome that showed not only why JP Morgan topped US equity underwriting league...
Barclays mounted a serious challenge to dominant US lenders in 2016 and was the top-placed non-US bookrunner in the award period, as the transatlantic investment bank targets global growth. “In 2017 we will continue to invest in this business … and we certainly have ambition to be in the top three, not only in the US but globally as well,” said Jean Francois Astier, the bank’s global head of leveraged finance. It was a very good year for Barclays, particularly in leveraged finance, where the bank topped the highly competitive US leveraged...
“Restructuring is about how you make lemonade out of lemons,” says Tim Coleman, head of the restructuring and special situations group at PJT Partners. The crucial part is keeping warring creditors from destroying the lemons – or breaking the jug. In another relatively quiet year for restructuring, PJT was ranked at the top of the list for closed assignments owing to the firm’s determination to push transactions over the finish line, getting the best result for both its clients and all parties involved. It was honest broker in significant deals...
It was another busy year in the US high-grade market during 2016, with some US$1.3trn of deals coming to market. But despite the volumes, deal execution was far from straightforward. Money-market reforms, the slump in crude prices, the shock votes for Donald Trump and Brexit, ongoing uncertainty about the next hike in rates – there was headline risk aplenty. Against that backdrop, issuers had to be more careful about timing: they had to be opportunistic and pick their spots carefully. That put bookrunners under pressure to come up with...
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