Chinese natural gas giant ENN Group, controlled by billionaire Wang Yusuo, is lighting up Hong Kong’s loan market with a rare syndicated financing supporting the proposed take-private of its Hong Kong-listed unit that will streamline the group’s operations and align with China’s energy security goals. Bank of China is initially providing the loan on a sole basis for ENN’s bid to acquire the remaining 65.72% of ENN Energy Holdings, valuing the energy distributor at HK$90.5bn (US$11.64bn). More details on the financing will emerge when BOC launches the deal into syndication, but a sizeable borrowing is expected and will provide lenders starved of lucrative event-driven loans a too-good-to-miss opportunity. “Although the details of the financing are yet to be determined, we heard that the terms are quite generous, and we are keen to join the transaction for a quality asset that offers much higher returns than plain vanilla loans,” said a senior M&A loan banker from a Chinese bank. Despite ENN Energy's strong fundamentals and critical role in China’s energy transition, its Hong Kong-listed shares traded at a discount of around a third to Shanghai-listed ENN Natural Gas last year, prior to the parent's bid, a level that is not considered unusual for companies of this size in this sector. Lenders said that ENN Energy’s withdrawal from the public market could capitalise on its undervalued stock and position itself more effectively for the transition to cleaner energy. China has set targets to achieve peak carbon emissions by 2030 and carbon neutrality by 2060. “ENN Energy’s strong cashflow and market position make it an attractive target for investors looking to invest in the energy transition,” said a second senior loan banker from a Chinese bank. “In addition, the delisting could provide the company with the flexibility to support the country’s ambitious energy transition goals, with easier access to favourable policies and subsidies.” ENN’s offer on March 18 of HK$80 per ENN Energy share represents a 47.6% premium over the close on March 17. In a report earlier this month, Fitch said ENN Energy’s take-private deal could strengthen the parent’s credit profile and give it control over the target’s cashflow. The buyout plan follows a slew of delistings in Hong Kong. Sixteen listed companies went private last year, according to official figures, following 26, 30, 17 and 14, respectively, in 2020 to 2023. Bankers anticipate a rise in lending opportunities from Hong Kong this year as shrinking equity market liquidity and persistent valuation gaps increase the appeal of delisting that can unlock value and shift focus to long-term growth. “We think small to midcap firms suffering chronic liquidity constraints, state-owned enterprises shifting focus to mainland markets, and businesses requiring restructuring that demand more flexibility away from market scrutiny would be the prime candidates for going private in the near term," said a third China-based senior M&A loan banker. “Global private equity firms and investors, flush with capital, are also actively looking for undervalued assets in Asia and Hong Kong companies represent an attractive target for them.” Other companies heard to be exploring an exit from Hong Kong's stock exchange in recent months include noodle restaurant chain Tam Jai International, property developer Soundwill Holdings and menswear company Goldlion Holdings. Solo or syndication? The rising wave of delistings has not translated into the same number of syndicated lending opportunities, however. Chinese banks dominate event-driven financings, preferring to underwrite and hold the deals on a sole basis rather than syndicating them. That approach allows them to secure higher returns and execute transactions more swiftly in a highly competitive market. Bankers pointed out that most Hong

The latest political shakeup at Fannie Mae and Freddie Mac is threatening the US sustainable debt market as the mortgage finance giants rank among the largest issuers of ESG-labelled bonds. The two government-controlled enterprises have seen over a dozen board members ousted since US president Donald Trump last month appointed former private equity executive William Pulte as head of the Federal Housing Finance Agency overseeing the firms. Government-owned Ginnie Mae has laid off more than a quarter of its workforce amid a cost-cutting push by Elon Musk’s department of government efficiency initiative. ESG-focused bankers and investors worry that the management overhaul could jeopardise the agencies’ longstanding sustainable bond programmes, which have been a driving force for issuance in the US. That concern intensified last week when Fannie Mae added board member Omeed Malik, co-founder of 1789 Capital, a venture capital firm known for its anti-ESG stance. "One of the first casualties would be their green bond programme, I’m afraid," said Sean Kidney, chief executive of the nonprofit Climate Bonds Initiative. "Let’s face it, who in the US will want to put a big target on their back right now?" About US$190bn of sustainable bonds have been issued in the US this year, with US$166bn, or around 87%, coming from mortgage-backed securities issued by enterprises owned or sponsored by the government, according to investment management firm Sage Advisory. “Saying Fannie Mae, Freddie Mac and Ginnie Mae are important to the US sustainable bond market is a vast understatement,” said Andy Poreda, a senior research analyst at Sage. If these agencies stop issuing sustainable bonds, “it would unfortunately be just another nail in the coffin for a marketplace that has essentially ceased to exist", he said. While many US investors are “unlikely to shed a tear” over reduced ESG bond issuance, foreign investors holding about 12% of agency MBS debt may take a different view, Poreda said. It is not the first time the mortgage giants have been subject to political pressure. Last year, Fannie and Freddie rebranded their "social index" to remove minority borrowers as a factor in social bond issuance. Fannie Mae, Freddie Mac and Ginnie Mae did not respond to requests for comment. Greenhushing Agency MBS and CMBS play an important role in the sustainable securitisation market, which makes up the majority of ESG-labelled bond issuance in the US. Last year more than 80% of the US$72bn supply came from GSEs including Fannie and Freddie, according to Bank of America. BofA’s data exclude Ginnie’s MBS issuance, which investors can categorise as social bonds after a language and policy change in October 2023. “We expect less federal support for green and social projects, which is likely to dampen growth in, but not eliminate, green and social securitised product issuance,” said Elana Lipchak, director of ABS strategy at BofA. The potential pullback of green incentives under the Inflation Reduction Act could lower volumes in solar and green auto ABS, but green issuance in data centre ABS and CMBS markets is expected to continue, Lipchak said. A senior ESG banker at a major US bank said it would be surprising to see new entrants to the US sustainable bond market, although repeat issuers such as utilities may still tap the market. “I have to admit, it’s going to be a tough slog here in the US,” the banker said. “We are greenhushing for sure. Everyone is just keeping their head low and nobody wants to invite trouble.” Still, some investors see agency MBS as a bright spot in the sustainable bond market and a tool to reduce credit risk in times of market volatility. “The spreads of agency mortgages have been very attractive. We’re pretty confident that during macro instability, they would hold up much better than we would see on the corporate sid

Colombia on Tuesday broke a two-week standstill in the Latin American primary market, securing US$3.8bn from a two-part bond transaction. No bonds had been issued since the day before US president Donald Trump announced a raft of tariffs on trading partners. The timing of the country's largest international debt deal led to a sharp difference of opinion among market players. "This was the first EM sovereign Eurobond issuance since 'liberation day' and came just days after the biggest weekly US Treasury yield increase in over two decades and a big EM spread widening on top of it," said Viktor Szabo, investment director for EM debt and sustainable finance at aberdeen. "The timing surprised me." "It was bad timing," said Alejandro Arreaza, a Latin America economist at Barclays. "This transaction was expected in March but it was postponed due to a change in minister and director of public credit. It would have been better for them to wait a bit more because under current conditions the price for them was high." In mid-March, Colombian finance minister Diego Guevara resigned amid a budget clash with president Gustavo Petro. He was replaced by German Avila. Other market pros said any further delay in getting the deal done would have been unwise – given that market conditions can get worse as well as better. "I think it was excellent timing," said Graham Stock, senior EM sovereign strategist at RBC BlueBay Asset Management. "They saw a window of lower volatility, took advantage of it and were able to complete the bulk of their 2025 financing needs." Market volatility was significantly lower on Monday and Tuesday (the day of the transaction), with the VIX trading in the low-to-mid 30s, compared with the week of April 7 when daily highs were in the mid-to-high 50s, according to LSEG data. "Given we have no idea what will happen tomorrow, you have to issue whenever you get the go-ahead. We don't know if the situation will be better in six months," said a buyside analyst. Either way, Colombia paid a high price. The Baa2/BB+/BB+ issuer sold a US$1.9bn 7.375% five-year senior unsecured note priced to yield 7.50% or 351.3bp over Treasuries, in from initial price thoughts of 7.875% area. It also sold a US$1.9bn 8.50% 10-year senior unsecured note priced to yield 8.75%, or 441.1bp over Treasuries, from IPTs of 9% area. The starting new issue concession was 55bp–60bp, according to a banker away from the deal, and two buyside players said final NICs were 25bp–30bp. In Colombia's deal in November, in which the timing was also considered unfavourable, the NIC was estimated at 15bp by market players. "Even with some tightening in the final pricing, this looks like a very expensive issuance for Colombia," Szabo said. The deal was 2.7 times subscribed by 237 investors. Good signal Colombia's ability to execute a very large capital raise was a good signal for others. "There were a lot of names waiting to see who would be the first mover and who was willing to step out, and there was a decent reception," a banker away from the deal said. This was Colombia's largest international transaction, according to the finance ministry. BNP Paribas, Goldman Sachs and Scotiabank were bookrunners.

Top US banks smashed through another plateau for equities trading last quarter, with four of the five biggest institutions reporting record revenues in the business. While bank analysts keep predicting the extraordinary run for equities trading has topped out, banks continue to find room to outperform. The extreme volatility unleashed by the upending of US trade relations has also set the stage for another strong quarter. Across the big five of Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America and Citigroup, revenue from equity trading hit US$15.8bn in aggregate in the January-March quarter, up 34% from a year earlier. “We obviously saw significant moves in equity markets as people positioned for a different kind of trade policy during March,” Goldman chief executive David Solomon told analysts. “And we saw significant moves in the March period which actually led to higher activity for us in a variety of ways. We're early in the [second] quarter but so far, the business is performing very well and clients are very active,” he said. Goldman, Morgan Stanley, JP Morgan and BofA all reported record first-quarter equities revenue. Goldman remained top dog. Its revenue from equities trading in January–March was US$4.19bn, up 27% from a year earlier and above expectations. That kept it just ahead of Morgan Stanley, which posted revenue of US$4.13bn, up 45%. Goldman's revenue from equities intermediation rose 28% to US$2.55bn, primarily due to significantly higher revenues in derivatives. Its equities financing revenue rose 24% to a record US$1.65bn, thanks to higher net revenues in portfolio financing and record average prime balances for the quarter, the bank said. “This quarter was characterised by rapidly shifting sentiment, with the market backdrop ending in a very different place than where it started,” Solomon said, with ongoing policy uncertainty and market volatility driving many clients to reposition their portfolios, resulting in increased trading activity. Morgan Stanley's bigger jump in equity trading revenue was across products and regions, particularly Asia, with strength in prime brokerage and derivatives, the bank said. JP Morgan reported a 48% jump in equity trading revenue to US$3.81bn, keeping the top three well ahead of the pack. BofA's revenue from equity trading hit US$2.19bn, up 17% from a year earlier, as it tries to keep pace with the leaders. “We'll keep closing the gaps,” said chief executive Brian Moynihan. “In the given quarter, people may shoot up higher because of this element or that element. Our job is to be consistent across all of the elements we participate in and keep driving that.” Citi's revenue from equity trading rose 23% to US$1.5bn on the back of equity derivatives and momentum in prime services. Prime balances were up about 16%, the bank said. "Opportunity ahead" Revenues from fixed-income, currency and commodities trading also benefited from the volatility, and across the five banks hit US$20.8bn, up 6% from the hefty tally in the first quarter of 2024. JP Morgan led the pack with FICC revenue rising 8% to US$5.85bn. Citi's FICC revenues rose 8% to US$4.48bn, Goldman's rose 2% to US$4.4bn, BofA's increased 4.7% to US$3.46bn and at Morgan Stanley FICC revenues were up 4.8% to US$2.6bn. BofA has previously been dinged for missing windfalls in trading because it was seen as too risk adverse. Moynihan on the bank's earnings call pushed back against that assessment. “It's not for lack of capital or lack of risk-taking,” Moynihan said. “There's plenty of opportunity ahead ... Expect us to keep gaining share.” Total trading revenue rose 16% in aggregate across the top five banks, making up for a muted performance for investment banking fees as M&A and IPO activity remained sluggish. (See People & Markets section)

A rewriting of capital rules floated by US Treasury secretary Scott Bessent to give banks relief from the supplementary leverage ratio and allow them more leeway to step in and intermediate stress has been received with lukewarm enthusiasm by the big US banks. Talk of rewriting capital rules follows the biggest selloff of Treasuries in more than two decades in the wake of a new tariff regime announced on April 2. Banks were receptive but want more than appears to be on the table. Removing Treasuries from the SLR calculation, which essentially forces banks to allocate capital relative to their total leverage exposure, would reduce the amount of capital banks need to set aside, freeing up their balance sheets to support the Treasury market. But the Federal Reserve would have to approve the change. “The SLR requires us to hold capital … against riskless assets and Treasuries and cash that doesn't make a lot of sense and we've been saying that for a long time,” Bank of America chief executive Brian Moynihan told analysts last week. He said his bank has US$1.2trn in government-guaranteed and government-issued securities on its balance sheet. Capitalising that under the bank’s 5.7% SLR is “a big number", Moynihan said. While Bessent wants SLR relief to clear the decks for banks to buy Treasuries, it may not be that simple. "Part of the cocktail" Market participants say that is because other aspects of the financial system, including regulatory surcharges on the global systemically important banks, will need to be overhauled too. “The SLR isn’t a binding constraint for all banks, but generally it does matter because if you want to add a lot of Treasuries, you’re going to have to capitalise it,” said Mark Kehoe, portfolio manager at MacKay Shields. “Regulation overhaul needs to be holistic for real change to occur. Changing the SLR is just one component. Other items like GSIB [surcharges] need to change too for the banks to step into the broker-dealer role.” Bank executives drove home that point after Bessent floated the idea of SLR relief. SLR is only part of the broader relief banks need, Morgan Stanley CEO Ted Pick told analysts. “Whether it's a GSIB or CCAR, LCR, Basel III endgame, the entire panoply of acronyms, the SLR reform might be part of the cocktail in the short term, but really we would look for reform broadly, and we're much prepared for that,” Pick said. Goldman Sachs is not SLR constrained at the moment, CEO David Solomon said on the bank’s first-quarter earnings call. It is constrained by Common Equity Tier 1. “I think you've got to look at this as a very holistic thing,” Solomon said. There's a lot going on from a regulatory perspective and regulatory reform will be a tailwind for the industry. “Obviously, it includes SLR reform to the degree it comes; it includes capital reform to the degree it comes,” Solomon said. He said he wants to see material progress across capital, leverage, liquidity and supervision. “The reason to change some of these things is so banks, the big market-makers, could intermediate more in the markets,” JP Morgan CEO Jamie Dimon told analysts. “If they don't, the Fed will have to intermediate, which I think is just a bad policy.” Bank debt relief As the SLR rule also mandates that banks issue and carry a certain amount of long-term debt relative to their overall assets, relief would result in significantly reduced issuance from some of the biggest borrowers in the US high-grade bond market. JP Morgan analysts estimate the reduction in required long-term debt could range from US$54bn to US$160bn, depending on the scope of the revisions to SLR. The Fed temporarily suspended SLR in 2020 as the pandemic roiled markets. When the relief expired in March 2021, the impact on bank funding needs was immediately evident. Bond issuance swelled to US$47bn for US GSIBs the f