Venture Global reopened the US junk bond primary market on Tuesday, breaking a two-week lull in new issuance activity in the wake of US president Donald Trump's sweeping tariff threats. But the success of the LNG producer’s upsized debt sale does not mark a return to normality, with the funding landscape still risk-off as investors remain on edge over the outcome of Trump’s 90-day pause on imposing higher tariffs on imports to the US from around the globe. "Investors are open to pricing new [higher-quality] deals but the healing process and the full reopening of the primary environment to include all types of deals will take some additional time to play out," said Ben Burton, global head of leveraged finance syndicate at Barclays. Venture Global was a good candidate to reopen the market as investors bought into the company's narrative that an investment-grade rating is on the cards. The Ba2/BB+/BB deal drew US$4bn of reverse enquiries before it was announced on Tuesday, according to two portfolio managers. The deal was issued in the name of Venture Global Plaquemines, one of the company's export terminals. The US$2.5bn dual-tranche offering, upsized from US$1.5bn, came just a week after investors pulled US$9.63bn from high-yield ETFs and funds, delivering what Goldman Sachs analysts described as "flowmageddon", and the first recent shock to what had been very positive technicals for the asset class. In turn, secondary prices have sunk. Average high-yield spreads came off recent wides to hit 409bp on Tuesday but remain considerably higher than the post-financial crisis tight of 259bp seen just three months ago, according to ICE BofA data. Average yields for the asset class are above 8% versus 6.97% on January 21. Pricing and other attractions Inevitably, Venture Global had to pay up to become the first junk-rated issuer in the primary market since healthcare logistics company Owens & Minor sold a US$1bn bond on April 1, the day before Trump shocked the world with his "liberation day" tariffs. Final yields of 7.50% on the eight-year and 7.75% on 10-year paper came 100bp wide to where a 2033 issued by Venture Global Calcasieu Pass, another of the company’s export terminals, was trading. Aside from attractive pricing, Venture Global had other characteristics that helped lure rattled investors. While this was a debut deal for the Plaquemines unit, the parent and other subsidiaries have been heavy issuers in the junk bond market and have broad name recognition among the buyside. Investors also liked the fact that both tranches carried investment-grade-style bullet maturities, as opposed to the call options typically seen on high-yield bonds. High-yield bonds tend to trade only as high as their call prices, whereas bullet bonds have much more upside potential should the market rally or the company's credit story improve, as it is expected to do. A tougher market But not all borrowers can leverage such advantages, leaving several financings related to leveraged buyouts failing to gain traction. Patterson Companies, a dental and animal health products distributor, has delayed its US$2.35bn debt and loan sale backing its acquisition by Patient Square Capital. Canadian plastic vehicle components manufacturer ABC Technologies’ bond and loan deal to fund its acquisition of the UK's TI Fluid Systems has also failed to see the light of day. LBOs may have a tougher time in the broadly syndicated markets. Memories are still fresh of the last cycle of hung deals, leading banks to be more selective in how they commit capital in a less certain market. Even so, some are moving forward with buyout offerings from what they consider to be higher-quality credits. For instance, US$2bn of committed debt financing for Silver Lake's acquisition of a 51% stake in Altera from Intel is expected to be sold in the loan and bond markets. "The overarching theme is more caution, but the market is still open to underwriting opportunitie

Europe’s defence industry is emerging as a rare hotspot for dealmaking activity as strong revenue prospects encourage companies to consider acquisitions, alliances, listings or fundraisings, although bankers said that while the pipeline of deals is long, it might be slow moving. Bankers said potential IPO candidates include Franco-German military defence system supplier KNDS; IDV, the defence unit of Italian truckmaker Iveco, Prague-based ammunitions maker The Czechoslovak Group and a spinoff by Germany’s ThyssenKrupp of its warship division. Cross-border M&A may be a challenge as countries protect their defence industries, but domestic acquisitions are expected as firms aim to be national champions. Joint ventures and international alliances could also prove fruitful, as Italy’s Leonardo and Germany’s Rheinmetall have already shown. “I think there will be more in-country M&A, more IPOs and more big partnerships,” said an industry banker at a major investment bank, who asked not to be named. Perhaps more exciting is the prospect of work for a swarm of smaller innovative firms in defence technology. They are likely to be targets for the big incumbent military equipment providers that need new and more agile products. Or the younger firms may raise funds for growth from a deepening pool of investors willing to buy into the sector, and use it to disrupt the established order and make large-scale production more efficient and procurement easier. Bankers said there are dozens of such companies, including Bavaria-based drone technology developer Helsing, which raised €450m in July in a Series C financing round that valued the firm at about €4bn, or Quantum Systems, which raised €40m in September and is aiming to expand production. "The traditional players will continue to benefit – there is a need for armoured vehicles, tanks, transportation, air defence, missiles and ammunition,” said Frank Bretag, UniCredit's head of industrials advisory, which includes a defence subsector. “But we’re also going to need new capabilities above and beyond the traditional technologies and equipment and an interaction between the traditional and the new, whether that’s drones, air defence, cloud computing, artificial intelligence or space capabilities. “There is a lot of need from the traditional players to establish know-how on that, which they could do via acquisitions or cooperation with other players." "Time to re-arm" All the activity is a result of a seismic reshaping of the military landscape in Europe after Russia’s full invasion of Ukraine in February 2022 and fears that the US commitment to defending Europe is waning. Europe is expected to increase defence spending by €800bn or more. EU governments want European companies to be the main recipients, although they lack production capacity, and US firms are also expected to reap some of the windfall. Share prices, valuations of private companies and investment banking fees have all jumped on the back of that prospect. The STOXX Europe Aerospace & Defense Index closed on Wednesday at 2,098 points, almost four times the level in October 2020, up 64% since the start of 2024 and up 23% this year, despite a modest pullback over the last month. The jump in valuation for private firms is best shown by US defence technology company Anduril, which is reported to have been in talks to raise US$2.5bn at a valuation of US$28bn, double its valuation six months earlier when it raised US$1.5bn. Similarly, the valuation put on Helsing in July was more than double its price tag in a fundraising less than a year earlier, and other private firms have seen valuations soar, which bankers said give them capacity to strike deals of their own. “After the rise in share prices and in private valuations, there is acquisition currency available. There is also a very deep pool of additional capital available

The bid for Italy's syndicated sovereign bonds has returned to something approaching normality after months of blowout trades. But with the chaos unleashed by US president Donald Trump's unpredictable tariffs policy far from settled, the bid for the country's €11bn dual-tranche offering on Wednesday showed that the days of record order books are firmly in the rearview mirror – at least for now. For the broader SSA market, it is only the latest sign that a new market dynamic is at play, for issuers big and small, one that demands extra care when it comes to pricing, timing and maturity choice. That said, Italy still cleared its offering with plenty of room to spare, with combined books reaching €103bn. "We are still very happy about the total size of demand and the quality of the demand," said an official at the Tesoro, which manages Italy's debt. "What really counts for us is being able to allocate the bonds into good and stable hands." He said the ability to do that is separate from the bid-to-cover ratio. That said, "the bid-to-cover ratio shows with clear evidence that the market has changed … Compared to the syndicated issuances we had in January and February, this increased volatility we experienced in March and especially April has impacted the sensitivity and general risk mood of investors". Gareth Hill, a senior fund manager at Royal London Asset Management, was positive about the outcome. "The deals closed, allocated and priced reasonably quickly and it felt like a very orderly transaction; books didn’t seem to be overly inflated, and the deals appear to be performing reasonably well post-launch." Bankers away from the deal said that bookbuilding looked a little slow. "I guess it's coming up to Easter and people are still focused on Trump," said one, adding that no benchmark deals are achieving blowout performances in the current market. "To get in and out of the market and get something done is a good result." A lead on the deal said he was not concerned by the more modest book compared with earlier deals this year, given that the largest sovereign order books are often inflated by hedge fund orders that tend not to be allocated. He said allocated orders on Wednesday were of the same quality Italy has seen in previous transactions. Italy's €8bn seven-year garnered a €50bn bid by final terms, the last time an update was given, and the no-grow €3bn 30-year eurozone inflation-linker drew €53bn of interest. Having tightened by 1bp from guidance, the shorter line landed at 13bp over the 3.15% November 2031 BTP while the linker came in by 2bp to land at 36bp over the 0.15% May 2051 eurozone inflation-linked BTP. "We were able to price in a range that was in the end not much different, in terms of new issue premium, compared to previous transactions," the Tesoro official said. He told IFR that the seven-year left 1.5bp–2bp of new issue concession while the linker offered 2.5bp–3bp. RLAM participated in both tranches. It was drawn by the hedging properties of the seven-year, Hill said, where futures can be used to control country-level exposure. It bought the 30-year linker on the basis of the attractive real yields on offer. The single-tranche order books may have been well off those Italy had enjoyed earlier this year and in autumn, when it regularly received more than €100bn per tranche, but they were not out of line with books from the last five years, IFR data show. Italy has had books as small as €10.7bn per tranche since 2020 but its median order book over the period is €55bn. Upgraded The sovereign had a reason to issue, even though the market was still grappling with Trump's shifting trade policy. The Friday before the deal cleared, S&P upgraded the country to BBB+ from BBB on the basis of high domestic savings and monetary flexibility, among other things. S&P, which has its outlook at stable, now has the highest sovereign rating for

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)

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