US portfolio trading volumes have more than doubled this year as the rapid electronification of corporate bond markets is encouraging more investors to buy and sell large blocks of bonds in one go. There were US$802bn of portfolio trades in US corporate bond markets in the first nine months of the year, according to Tradeweb’s analysis of TRACE data, up from US$389m in 2023. Portfolio trading accounted for a record 11% of US corporate bond trading volumes in September, up from just under 5% at the start of last year. That comes as a growing number of investors are adopting portfolio trading as a convenient way to reshuffle their exposure across credit markets, ranging from asset managers to hedge funds and insurance companies. Banks have been investing heavily to cater to this demand, with some starting to offer clients the ability to execute cross-asset trades by including other instruments like municipal bonds and mortgages in portfolios alongside corporate debt. “We've made significant investments globally in electronic trading, which are uplifting the entire credit ecosystem,” said Sonali Theisen, global head of FICC e-trading and markets strategic investments at Bank of America. “We're making portfolio trading more data-driven to ensure we’re focused on the right signals and information. This is also driving improvements in portfolio optimisation and is helping us to earn more bilateral, solutions-oriented risk transfer trades with our clients," she said. Electronic trading has revolutionised the way corporate bonds are traded and organised in recent years. The growing prevalence of algorithms to price bonds, along with the emergence of exchange-traded funds as an outlet for offloading risk, has helped trading volumes across US corporate bond markets increase by around 50% over the past five years, according to Coalition Greenwich. Portfolio trading has come to typify this shift towards a more equity-like trading paradigm by allowing investors to buy or sell hundreds of different securities worth as much as US$2bn in a short space of time – a feat that seemed impossible only a few years ago in these once human-dominated markets. "There has been a shift in the way people contextualise risk in credit; there are now more equity-like calculations of beta [ie, how bonds move relative to the wider market] and of factors [different buckets of risk such as industry, region, tenor, etc]," said Theisen. "It’s now become something of an arms race on how to systematically recycle risk through the different strategies.” Banks are devoting huge resources to keep pace with the fierce competition in this space, including from non-bank specialist trading firms like Jane Street. Technological prowess has fast become indispensable in a world where the speed at which trading desks respond to client enquiries could be the difference between winning a trade and being an also-ran. “The benchmark keeps changing,” said a senior fixed-income banker. "If a client has a US$500m portfolio trade and everyone takes 30 minutes to quote, then that’s fine. But as soon as one dealer does it quicker – in 10 seconds, for example – then the bar changes and you have to get better and more efficient to stay competitive.” Entering the mainstream Investors certainly appear to approve of the direction of travel. Tradeweb has seen a roughly 20% annual increase in firms conducting portfolio trades on its platform in the first nine months of the year. Ted Husveth, manager director for US credit at Tradeweb, said traditional asset managers were initially the main users of portfolio trades, but it's now become widespread among the investor community. "As it’s matured as a protocol and gained popularity as an execution method, the type of user has broadened to really be across the board: everything from traditional asset managers to systematic hedge funds, credit fundamental hedge

Pfizer sold £2.43bn of Haleon stock on Monday evening through an accelerated bookbuild as investors continue to increase their exposure to the FTSE 100 name, while proceeds were boosted by selling another £230m of shares back to the consumer healthcare company. Haleon came to market in July 2022 as a spin-off from GSK with hefty overhangs from GSK's residual stake of 13.5% plus shares owned by Pfizer at 32%. The rest of the stock went to GSK shareholders, but as a member of the FTSE 100 index there has remained pent-up demand for exposure – even more so since Johnson & Johnson listed US peer Kenvue in 2023. That carried through to Monday's ABB, which was the sixth equity offering and took ABB/follow-on sales by GSK and Pfizer to £7.8bn. Pfizer pivoted to an ABB on Monday having completed a follow-on, complete with SEC-registered prospectus, with its previous sale in March. That coincidentally also raised £2.43bn and marketing made sense as the largest previous sale was £885.6m. The latest sale secured the best pricing of all six trades in the name at 380p per share, with the stock up 22.15% this year as of Monday’s 392.9p close. Wall-crossing with long-only accounts began on September 27 and hedge funds were included on Monday, ensuring coverage of the 540m shares initially offered. The sale of 6% of Haleon launched shortly after the London close on Monday, with a formal covered message following after around 15 minutes. Alongside the shares offered, Haleon also agreed to buy back £230m of shares from Pfizer at the same price. The offering was open to US investors on a 144A basis. The follow-on in March came alongside a £315m buyback. Monday's sale was upsized to 640m shares after 7pm, with orders below 380p per share at risk of missing out. Books were multiple times covered above that level and closed at 7:15pm. The upsized offering represented approximately 7% of share capital and roughly 20 days’ trading. Pricing at 380p is a 3.3% discount to the close, which was the third highest since listing. The March follow-on priced at 308p, the lowest level of all six trades. Ready and waiting Bankers involved said that there was significant reverse enquiry in the name. “This was one of the most highly anticipated situations in Europe for the second half and one of the most heavily reversed blue-chip stocks,” said a banker involved in the sale. There was heavy scaling back in a book of more than 150 lines, with one anchor in for several hundred million dollars and around half the trade going to long-only money. The top 10 orders took more than 50% of the deal and the top 20 accounted for more than 70%. Allocations were skewed to long-only money. Including the buyback, Pfizer sold 701m shares, reducing its stake to 15% from 22.6%, subject to a 60-day lockup. Haleon bought 60.5m shares and said that 30.16m will be cancelled and the remaining 30.36m will be held as treasury shares. The total haul for Pfizer is £2.66bn, including the buyback. Over its two sales, Pfizer has picked up more than £5.4bn. Haleon shares actually rose, slightly, on Tuesday to a close of 395p. The stock has reversed direction since, falling to 388.1p on Thursday. Although the stock is well up this year, much of that move has been since early July, with shares largely trading between 315p and 340p in the first half. The US ADS line is up even more year to date at 28.6% as of Monday's close of US$10.58. Bank of America and Goldman Sachs were joint global coordinators, and joint bookrunners with Deutsche Numis, HSBC and RBC Capital Markets. Barclays, BNP Paribas, Mizuho, PNC Capital Markets and Siebert Williams Shank were co-managers. There was significant rotation since the previous trade from Pfizer, with global coordinators and bookrunners all replaced. RBC was promoted to a bookrunner from co-manager, with Barclays going in the opposite direction.

Digital lender Kbank has started marketing an up to W984bn (US$740m) IPO that is set to be South Korea's biggest listing in nearly three years, with around 20 smaller KRX IPOs likely to follow this month. The company started taking orders on Tuesday from international investors for the float, which comprises 82m shares (50% primary/50% secondary) in an indicative price range of W9,500–W12,000, which implies a market capitalisation of W3.96trn–W5trn. If the bank succeeds on its second listing attempt – it shelved an IPO in February last year – it would be South Korea's largest IPO since LG Energy Solution's W12.8trn float in January 2022. The deal is set to revive interest in the local IPO market after video game developer Shift Up’s W435bn deal in July, the last sizeable float with international marketing, an ECM banker said. International bookbuilding runs until October 16, with pricing slated for October 18. The shares are expected to list on October 30. Listings in South Korea raised US$2.07bn in the first nine months of this year, up 20.5% from US$1.7bn in 2023, according to LSEG data. Mixed views Kbank's valuation does not look very cheap compared to its peers but investors are optimistic it can still trade up in the secondary market. ”It won’t be a huge jump on debut but a mild gain should be there," one investor said. There are mixed views on whether Kbank should be considered a tech name or a banking stock, the investor said. Shares in Kbank were trading at W13,400 on Thursday on over-the-counter platform U-stockplus, an 11.7% premium to the top of the IPO range. However, analysts say low-end pricing would be more reasonable. Aequitas Research director Sumeet Singh said Kbank should "probably optimistically" trade in line with Kakao Bank, another digital-only lender. Kakao Bank raised W2.55trn from a KRX IPO in August 2021 at W39,000 per share. The stock had almost halved to W21,000 as of Wednesday. Singh estimates Kbank's price-to-book ratio at 1.64–2.08 times in 2024 and 1.55–1.96 times in 2025, while Kakao Bank and Japanese online peers Rakuten Bank and SBI Sumishin Net Bank trade at an average of 1.9 times in 2024, with an expected ratio of 1.7 times in 2025. The market expects South Korea's central bank to cut interest rates this month but ECM bankers said this would have a limited impact on Kbank. “Lowering interest rates might not be a good sign for banking as it will compress margins for the loan business, but may lead to an increase in loan demand from customers," a South Korean ECM banker said. IPO rush Restaurant chain The Born Korea is set to join Kbank in listing on the main board via a planned W84bn float this month, while the other IPOs in the pipeline are targeting Kosdaq listings. Biopharmaceutical firm Orum Therapeutics is the biggest among the nearly 20 Kosdaq aspirants with a plan to raise up to W108bn. The Kosdaq IPOs are coming at the same time because some of the companies had to make additional disclosures, delaying the listing. Regulators are also taking more time to review deals after they found that the sales projections in the prospectus for fabless semiconductor Fadu's W194bn IPO in August last year were overly optimistic, another South Korean ECM banker said. Kbank, which has more than 10 million users, plans to sell 55%–75% of the shares to institutional investors, 25%–30% to retail and up to 20% to an employee stock ownership plan. BC Card, a consumer credit subsidiary of KT Corp, will remain the largest shareholder in the company with a 30.4% stake. The digital lender was launched in 2017 and offers deposits, loans, credit cards and wealth management products. It posted net income of W85.4bn for the first half, up from W25bn a year earlier. NH Investment and Securities, KB Securities and Bank of America are working on the float.

Adani Airport Holdings last week printed its largest bond in the domestic market since Hindenburg Research's explosive report on its parent last year, while Adani Road Transport is considering a rupee bond to fund a road project and investor meetings have started for a US dollar secured bond backed by four solar and wind plants. Adani Airport on Monday sold Rs19.5bn (US$233m) of three-year, 11-month and seven-day bonds at 9.35%, payable monthly. The annual coupon is around 9.75%. Mutual funds and financial intermediaries, which were anchor investors, were the main buyers, according to sources. Adani Road Transport is working on a rupee bond of Rs15bn–Rs17bn to fund a project under a hybrid annuity model with the National Highways Authority of India, with the deal expected by the end of October. The bonds will be sold in one or two tranches with tenors of 13–15 years and a call option or spread reset after three to five years, according to sources. A hybrid annuity model is a kind of public-private partnership in which the government makes some payments according to construction milestones and then pays annuities during operations. An Adani Group spokesperson did not reply to an email seeking confirmation of the road unit's plan. The airport unit's bonds attracted "robust participation from a diverse group of investors, with a significant portion being absorbed by mutual funds", Nitin Chaturvedi, head of treasury at Adani Group, said in a LinkedIn post. This is the first time domestic mutual funds have subscribed to a bond from an Adani Group entity since US short-seller Hindenburg's report on the group in January 2023. The report led to a collapse in the share prices of seven listed group companies and forced Adani Enterprises to withdraw a Rs200bn follow-on offer last year and scrap plans for a public bond sale. The Gautam Adani-controlled group has denied the allegations of stock manipulation and false accounting. "Domestic mutual funds were sceptical about investing in the bonds of Adani Group units last year, but now the perception has changed," said a DCM banker. A second banker said: "There is no specific apprehension on Adani Group any more and mutual funds are ready to pick up a sizeable chunk of the deal." Mutual fund investors are keen on taking exposure to Adani Group bonds after Adani Energy Solutions raised Rs83.7bn through a qualified institutional placement of shares in August and its maiden public bond issue of Rs8bn in September was oversubscribed. SBI Equity Hybrid Fund, Aditya Birla Sun Life Mutual Fund and Aditya Birla Finance were anchor investors in the Adani Airport bonds for Rs2.85bn, Rs500m and Rs1bn, respectively. Following the bidding, Rs9.5bn was allocated to SBI Equity Hybrid Fund, Rs1.25bn to Aditya Birla Sun Life Mutual Fund, Rs3bn to financial intermediaries of Aditya Birla Group, Rs5bn to Axis Bank and Rs750m to a wealth advisory firm, according to a source. Earlier this year, Adani Group conducted non-deal roadshows and invited mutual fund investors to tour its assets in India, sources said. Adani Enterprises, the group's flagship company, plans to launch a US$1.5bn–$2bn qualified institutional placement as early as this week, subject to investor demand. Cashflow-backed structure Few details were immediately available on the US dollar bond deal beyond a red herring document released on Friday that lists DBS, Emirates NBD, First Abu Dhabi Bank, ING, IMI-Intesa Sanpaolo, Mizuho, MUFG, SMBC Nikko, Societe Generale and State Bank of India as bookrunners. The deal from Adani Road Transport, meanwhile, is expected to be popular with investors who like the hybrid annuity model as it has a cashflow-backed structure with good visibility of revenue, fund managers said. "If the bonds are NHAI-backed and the credit quality is good, there will be interest from mutual funds," one fund manager said. The second banker said: "There will be investor appetite for bonds which are backed by ass

New York climate week opened with an announcement from global financial institutions endorsing the UN-backed COP28 declaration to triple nuclear energy capacity by 2050, signalling changing priorities for the energy transition at the increasingly influential summit. The week – officially "Climate Week NYC" – ran from September 22–29. The pledge by 14 of the world's biggest banks and financial institutions to increase their support for nuclear energy is a step forward and discussions around finance focused on extending the lives of – or reopening – existing nuclear facilities, while the discussion of new nuclear technologies is at an earlier stage. Nuclear energy is seeing increasing interest from tech companies due to the growth of artificial intelligence technologies and increasing power demands of data centres. Microsoft said on September 20 that it had signed a 20-year power supply deal with Constellation Energy that will resurrect a unit of Three Mile Island nuclear plant in Pennsylvania, the site of the worst nuclear accident in US history. To support financing, banks are looking for a helpful policy environment, consistent funding for projects and distributed risk among stakeholders. Funding options discussed include cross-government grants, bank debt, private equity and long-term offtake agreements. “Perhaps one of the interesting things to come from the ESG backlash [in the US in particular] is a move towards pragmatic policy,” said Oliver Morning, global head of carbon and environmental markets trading at Barclays. Canada’s nuclear policy has given it a financing edge. In November 2021, the country's Bruce Power was the first corporate issuer of a green bond to fund the life extension of a nuclear facility. It issued a second bond in March 2023 and in December 2023 followed with the creation of the world's first carbon offset protocol for avoided emissions from the refurbishment of reactors. Ontario Power Generation issued its inaugural green bond in July 2022 and updated its green bond framework to include allocation to research and development for new nuclear technologies, including small modular reactors. Natural remedies? A growing focus on water and blue investments was another notable development of the week with potential deals for oceans, waterways, and sanitation reflecting recent developments in the blue bond market, including the International Capital Market Association’s blue bond guidance along with growing investor demand. Increased interest and funding in blue developments are expected to yield projects including sustainable fisheries, biodiversity, sea defences, pollution and waste management projects, marine energy, water stress and sanitation. Carbon markets were another focal point and positive developments are expected at COP29 in Azerbaijan in November to create international carbon trading markets and credit flows between countries as well as international registry systems after countries failed to reach agreement last year. Meanwhile, voluntary carbon markets are undergoing an upgrade with more than 50 initiatives focusing on improving the integrity of carbon credits, including MSCI's new ratings tool for carbon credits. A reduction of fears about the quality of carbon credits could open the door to large-scale deals and financing requirements. “The concerns about market integrity [for carbon credits] are well on their way to being addressed, and compliance markets are coming on strong, so the financing needs are becoming more and more apparent [and] that is going to come to the doorstep of capital markets,” said Dirk Forrister, president and CEO of the International Emissions Trading Association. Carbon markets are increasingly becoming entwined with the discussion about biodiversity, particularly around forestry in the context of carbon removal but also as the concept of biodiversity credits gains ground. "Biodiversity and n