Equity capital markets bankers started the year in a buoyant mood, telling clients and colleagues alike that the return of Donald Trump would unleash animal spirits in the stock market – and help revive the ailing IPO market after its worst year since the global financial crisis. But those hopes look to have been dashed at the first hurdle, with ECM desks seemingly on course for an even more dismal start to the year than last year and – barring a last-minute surge in activity over the next 10 days – their worst first quarter since 2009. Adding to their woes, the prospects for a rebound in the short to medium term look optimistic at best, with many investors reacting to Trump’s unpredictable policy decisions with their feet – as evidenced by one fund manager survey last week showing the largest exodus out of US stocks on record. Even though there are some big-ticket deals in the pipeline in the immediate future – notably a US$2.69bn IPO from AI data centre operator CoreWeave – pessimism has begun to set in among ECM bankers. “There is definitely more caution around the first half of this year with low volumes and not a line in the pipeline that is a must-have before the summer,” said one global head. ECM volumes stood at US$118.6bn at the end of last week, according to LSEG data. With just 10 days left until the end of the quarter, business activity looks to be well down on the US$141bn notched up in the first quarter a year ago – and potentially below the US$121bn post-financial crisis nadir in 2016. The biggest drop has been in follow-ons, where volumes of US$77bn are more than US$15bn below where they were at this point last year. But those figures belie the true extent of the slowdown. Some US$14.6bn of that total is due to a single sale: in Charles Schwab, one of the biggest selldowns in history. There have been other big-ticket follow-on deals – this month saw Hong Kong's largest primary follow-on offering in almost four years, with Chinese electric vehicle maker BYD raising HK$43.5bn (US$5.6bn), while the Agnelli family sold a €3bn stake in carmaker Ferrari just days earlier – but smaller, ad-hoc deals have to a significant extent dried up.Dismal performance While IPO volumes are marginally up on last year, some of the deals that have come to market have performed dismally. LNG operator Venture Global ended up having to almost half its original valuation in order to get its deal away and its shares have halved in value since the IPO. “The current problem is the level of uncertainty – particularly with Trump – given that IPOs, even on a post-Covid-19 timeline, are typically three weeks-plus in the market in Europe which is a lot of time to be exposed to uncertainty,” said the global ECM head. The root cause of the lacklustre quarter has been volatile equity markets – especially in the US, where the prospect of bitter trade wars with the country’s largest trade partners and a seemingly indiscriminate purge of federal employees has severely dented confidence. The benchmark S&P 500 has fallen by around 4% so far this year, in stark contrast to stock markets in Europe, many of which have posted double-digit increases over the same period. US tech stocks have been particularly badly hit, with the Magnificent Seven losing hundreds of billions of dollars in value. With the Trump administration’s confrontational approach to trade and geopolitics likely to weigh on investor confidence in the months ahead, economists are predicting further market turbulence, with some predicting that US stocks could yet have further to fall. “Will US exceptionalism resume? We believe it won’t,” said Rupert Thompson, chief economist at the UK asset management group Iboss. “The US market remains excessively expensive even after the recent correction." Investors have slashed holdings of US equities by recor

A handful of European refinancing-related leveraged loans have foundered on the rocks of a degrading primary market, but confidence is intact that a bid remains for new money. As volatility seen in the US spilled onto European shores, TV show production house All3Media (B2/B) cancelled its repricing exercise, Portuguese agrochemicals company Rovensa (B3/B–/B–) decided not to go ahead with a refinancing and extension and Netherlands-based drinks maker Refresco (B1/B+) withdrew its repricing and add-on term loan B, while French insurance broker April (B1/B) pulled the repricing portion of its loan but managed to get a TLB add-on across the line. The market selloff came after US president Donald Trump threatened to impose additional penalties if the EU follows through with its plan to enact counter tariffs on some US goods, raising recession fears. Headlines around potential liability management exercises for two French companies – Cerba Healthcare and care home operator Colisee – as well as a handful of BWICs hitting the screens, exacerbated the volatility in the secondary market. In response, average bids for the top 40 European leveraged loans fell to 98.02 of face value on March 13, down from the year's peak at 99.19 on February 26. Only around 20% of the EMEA market traded above par on March 13, in contrast to over 57% on February 26, according to LPC data. Repricing transactions, which by their nature are sensitive to fluctuations in the secondary market, were the first in line to be knocked out of the execution stage. “Pricing had got to a level that was too tight to be sustainable for the CLO machine,” said Jeremy Selway, Deutsche Bank's head of leveraged finance capital markets for EMEA. “With the larger deals we were doing over last month, we were continuously surprised at how tight we could go. The volatility last week gave everyone a reason to start saying no. We were trying at levels that tend to stop making sense at some point, and I think we just reached that point.” At least five other repricing exercises that were planned to come to the market were put on hold, according to a leveraged finance banker. Among other non-repricing issuers, Swedish enterprise software firm IFS (B3/B) and multinational lottery operator Allwyn International (Ba2/BB/BB–), were forced to widen margins from initial guidance by 25bp to get their euro transactions through. Similarly, French provider of energy distribution systems TSG (B2/B) and European meat producer Group of Butchers (B2/B) respectively settled their €600m TLB and €705m TLB at 400bp over Euribor, the wider end of their 375bp–400bp price talk. Luxembourg-based insulation foam maker Armacell (B3/B) finalised a €730m term loan at 400bp over Euribor, wider than its 350bp–375bp original guidance. “Straight repricings are going to come under more scrutiny, but actually the nature of the other transactions means they may still work,” said the leveraged finance banker. “Some issuers may have to push the pricing, while others may try and apply a bit of relationship pressure to banks to get their deals over the line.” Exceptions Not all issuers saw their repricings suffer. Bankers said Germany-based metals recycling company Befesa (Ba2/BB) was helped by its strong rating on the way to successfully repricing its €650m term loan B at 225bp over Euribor, 50bp inside the existing margin. “I don’t think the withdrawal of deals speaks to demand disappearing," said a second leveraged finance banker. "The market is feeling a bit shaky, but liquidity is still there. We are really trying to price to perfection, and investors are still placing orders for the credits they like." Veterinary care provider IVC Evidensia (B3/B/B) repriced its £1.143bn term loan B at 500bp over Sonia, at par, cutting the margin from 575bp. The sterling deal faced different dynamics to the eu

The Philippines has become the latest Asian country to offer more flexible listing requirements, as it prepares for its largest IPO. On Wednesday, the Securities and Exchange Commission indicated it was open to lowering the 20% free-float requirement for IPOs on the Philippine Stock Exchange to 15% to ease the pressure on large issuers, provided the higher level is attained within two years of listing. Mcjill Bryant Fernandez, commissioner at the SEC, said the regulator was firm about the 20% free-float but is "open to applications for exemptive relief". Ramon Monzon, president and CEO of the PSE, said on the sidelines of the exchange operator's InvestPH conference that the SEC had agreed to relax the initial 20% requirement for companies offering at least Ps5bn (US$87m) of shares, according to comments reported by local media. The SEC's intervention comes after fintech company GCash requested a lower free-float for its planned IPO. GCash is a mobile payments app used to transfer money, pay bills, invest or buy insurance, and shop online. GCash's parent company is Globe Fintech Innovations, also known as Mynt. Ant Group, Mitsubishi UFJ Financial Group and Philippines conglomerate Ayala are also shareholders. According to media reports, the company is seeking a valuation of at least US$8bn so that a 20% free-float would mean it had to sell US$1.6bn of shares in the IPO. A 15% free-float requirement would cut that to US$1.2bn. Food company Monde Nissin's Ps48.6bn (US$849m at the current exchange rate) IPO in 2021 was the country's largest float to date. Since then the Philippines has only seen IPOs below US$200m in size and issuers are not confident that the market has the capacity to absorb such a large issue. Last year's largest IPOs came from energy developer and operator Citicore Renewable Energy (Ps6.93bn) and gold producer OceanaGold Philippines (Ps6.1bn). "The Philippines needs more consumer and technology listings to make it attractive to both local and foreign investors," a Singapore-based ECM banker said. "A successful listing by GCash can bring life into this rather illiquid market." A free-float of at least 20% is a requirement for inclusion in the PSE index. JP Morgan, Morgan Stanley, UBS, HSBC and Jefferies are working on the GCash IPO, which was initially expected to be in a US$1bn–$1.5bn range. The issue is being planned for the second half. Asian precedents Asian stock exchanges have tweaked rules to facilitate large IPOs in the past. In 2022, the Indonesia Stock Exchange allowed multiple voting rights for the first time in GoTo Gojek Tokopedia's Rp15.8trn IPO (US$959m at the current exchange rate) and also allowed the ride hailing and e-commerce app to sell just 3.9% of its capital as against the usual 7.5%. In the same year, the Securities and Exchange Board of India allowed the government to sell a 3.5% stake in Life Insurance Corp of India's Rs206bn (US$2.39bn at the current exchange rate) float, much lower than the usual 10% IPO requirement. Sebi initially gave the government two years to raise LIC's free-float to 10%, but later extended the deadline to May 2027 after the stock traded weakly. The Stock Exchange of Hong Kong published a consultation paper in January this year that proposes lowering the initial minimum public float at listing to tiered thresholds of between 5% and 25% from the current standard 25% threshold (though it can be lowered to 15% or even lower for large floats, on a case-by-case basis). An initial free-float requirement of 10% of issued shares, or HK$600m (US$77m) by market value, would be established. In February, the Stock Exchange of Thailand sought feedback from the market on a proposal to allow companies with a paid-up capital of Bt10bn (US$297m) or more to sell 17% of their capital at the time of listing as against 20% under current rules. Market participants had to give their feedback by March 18.

The launch of a groundbreaking new fund has underscored the growing appeal of parametric insurance structures. This trigger or index-linked form of cover, which pays out when a pre-determined event occurs, unlike traditional indemnity insurance, offers notable potential in development finance despite a high-profile recent failure. The “pioneering” Lumyna – Twelve Capital Parametric ILS Fund is the first insurance-linked securities fund based on parametric structures, according to its investment manager Twelve Securis. Its launch “reflects the maturity of the parametric market, demonstrating that this expanding sector now provides viable investment opportunities for ILS investors with a distinct risk profile,” said Rhodri Morris, head of ILS analytics at Twelve Securis. It “provides an important potential source of new capital to underwrite parametric insurance risks,” said Kevin Dedieu, chief scientific officer and co-founder at Descartes Underwriting. Descartes, a parametric specialist that partners with Italy’s mega insurer Generali on natural catastrophe cover, serves as an originator and consultant to the fund. The fund will hold 40%–45% of its assets (US$46m currently ahead of a second tranche from its undisclosed European institutional seed investor) in private parametric transactions and a similar proportion in catastrophe bonds. For the sake of liquidity and diversification, the latter may also include traditional indemnity structures – as can its holdings of industry loss warranties. Twelve Securis and alternative assets platform Lumyna (part of Generali) began marketing the fund, which is categorised as a light-green Article 8 vehicle under the European Union’s Sustainable Finance Disclosure regulation, to investors last month. “You are essentially sacrificing a degree of liquidity in exchange for enhanced returns,” Morris said, noting that parametric structures also lower ILS investors’ potential exposure to “trapped collateral” through the lengthy claims assessment that can impact traditional cat bonds. The fund is focused initially on wind and earthquake risk in North America. In time, it may expand to other “peak perils” such as European and Japanese wind and earthquake risk and even “secondary perils” such as wildfires or floods. But this will require “deep understanding of how the underlying modelling works, not only for each peril individually but also in terms of their interdependencies and correlations,” Morris said. Besides the seed investor, several other institutions have already invested in the fund’s euro, sterling and US dollar share classes. Australian dollar, Swedish krona, Swiss franc and yen classes are also available. Developing economies too While the new fund is focused on the most developed markets, parametric structures offer significant potential in developing economies – where the bulk of the world’s US$1.8trn “protection gap” lies, according to Swiss Re. “Parametric has an enormous role to play in building corporate and national resilience, especially in the face of climate change,” said Dedieu, who highlights the trigger-based structure’s ability to “quickly [put] money into the hands of those in need following a catastrophic event”. Moreover, “potential capital providers have often very little exposure in [developing] countries,” Rowan Douglas, chief executive, climate risk and resilience at insurance broker Howden, told IFR previously. An October 2024 report by Generali and the UNDP’s Insurance and Risk Finance Facility identified a host of natural hazards, plus agricultural and business risks, that parametric insurance can mitigate. It argued that the structure can support most of the 17 United Nations Sustainable Development Goals. “There are use cases for parametric that

Turmoil in Indonesia's financial markets caused Bank Tabungan Negara to pull a proposed US dollar five-year Tier 2 social bond on Tuesday, just a day after peer Bank Mandiri sold its largest bond to date. Bank Mandiri hit the market on Monday with an US$800m 4.9% three-year senior note priced at 99.384 to yield 5.124%, or US Treasuries plus 113bp, tightening 32bp from initial guidance on the back of peak US$3bn and final US$2.8bn orders. State-owned BTN, rated Baa2 (Moody's), was ready to follow the next day, with Mandiri Securities, Standard Chartered and UBS announcing initial price guidance of 6.55% area. BTN's Reg S return to the US dollar market after five years started well, with orders reaching US$700m before 3pm on Tuesday, but final price guidance never came. During the day Indonesia's markets took a turn for the worse, with the equity benchmark index falling as much as 7% to a multi-year low, triggering a temporary trading halt, and the rupiah dropping to a two-week low, as investors expressed concerns about the government's fiscal plans. Bank Mandiri's new bonds opened 7bp tighter at Treasuries plus 106bp on Tuesday, but although they widened by a couple of basis points during the volatility to 108bp they were back to 106bp on Friday afternoon. Bank Mandiri's stock closed down 3.2% on Tuesday, Bank Rakyat Indonesia lost 3.9% and Bank Negara Indonesia shed 3.2%. BTN closed down 1% after dropping to its lowest level since 2020, according to LSEG data. The banks' stocks continued to trade lower throughout the week. Finance minister Sri Mulyani Indrawati called a press conference on Tuesday to assuage investor fears and deny rumours that she would be resigning as public spending keeps growing while tax revenues undershoot official forecasts. The government argues that the economy is fundamentally strong, despite concerns from investors over weakening consumer spending. Investors have been watching markets closely since president Prabowo Subianto took power in October with plans to increase social spending, including a multi-billion US dollar meal programme for school children and pregnant women. "Given the volatility of the equity market the issuer decided to postpone their transaction," said a banker on the BTN deal. "It was never really a credit issue for this name ... it just happened to be the market." The banker said BTN will continue to monitor the market to look for a better window to return with its Ba3 (Moody's) Tier 2 notes. Reluctant An Indonesia-based banker said state-owned banks may be more reluctant to issue US dollar bonds after BTN's experience. Analysts at CreditSights wrote on Wednesday that investor sentiment towards Indonesian risk assets "could remain weak in the near term," and they cautioned that "Indonesian [US dollar] bonds could see more volatility from negative headlines and overarching macro risks". They attributed the selloff on Tuesday to factors including economic concerns and policy uncertainty, rumours of cabinet changes including the finance minister, and geopolitical concerns linked to the US. Market participants blamed the conditions for BTN's pulled deal as well, with one investor calling the timing "unlucky". A banker away from the BTN deal said the trade was hit by the market worries, not the bank's fundamentals. He believes the pulled deal will not prevent it from coming back later. A second banker away said BTN is less well known to US dollar investors than its peers, and its credit metrics are not as strong as other Indonesian banks, leaving it more vulnerable. The CreditSights analysts had estimated fair value around 216bp over Treasuries, or 6.25%, in a Tuesday morning note, showing ample premium at the 6.55% area initial guidance. Alaa Bushehri, head of emerging market corporate debt at BNP Paribas Asset Management, said that even though spreads for Indonesian credits widened in the past week, credits are still tightly priced. "We find better opportunities currently out