The end of the first quarter; a time for pause, a time for reflection . . . and in the case of this year, a time of standstill in the new issue markets. The fact that the hiatus in primary capital market issuance was preceded by a period of virtually non-stop activity, where for many bankers Christmas hardly proved much of an interruption, suggests more of a welcome break than the beginning of the end. After all, while the woes of GM and AIG were largely attributed to have tipped the markets ove

Paradoxes abound. Investment banks and corporate/investment banking subsidiaries of commercial banks yet again turned in record – or near-record – profits for the first quarter, and much of this derived from fixed-income. Notwithstanding that at a number of these firms it was trading rather than debt capital markets that accounted for the lion's share, it might look somewhat askew that job-shedding is accelerating at the same time. It is not as if a sea-change in asset-allocation is being heard.

Volumes have boomed in the Swiss sector in 2005 to date, with the amount issued in the international Swiss arena up around 51% on the same period last year. This is in spite of the pace definitely slowing down in March in the wake of the general spread-widening in the international credit markets which followed Telecom Italia's 50-year issue in euros and the GM profit warning. The effect of this on Swiss spreads has been muted. Firstly, Swiss issuance is much more concentrated in the higher rati

The need for yen bond alternatives in the face of diminishing domestic corporate supply, plus the absence of major credit shocks overseas, enabled Samurai volume in 2004 to reach ¥1.43trn, its highest since 2001. “If the Japanese economy does stay poorly and rates stay steady, then the Samurai market should remain active for Single A to Triple B rated names,” summed up Stephen Apted of Daiwa Securities SMBC, reflecting the sentiment held by other yen bankers that volume for 2005 will top that of

Since its inception the euro has failed to cut it as a major funding tool for Asian issuers. Yet after five years in the wilderness, the last six months has been the busiest period on record for Asian issuers in euros. Since the start of 1999 the euro has accounted for just US$10bn equivalent of the US$162bn in bond supply from the region, a meagre 6% of all issuance. A lack of euro funding needs alongside negligible arbitrage opportunities has kept a lid on issuance. Yet in the last six months

Asia had its busiest year on record in 2004, breaching the US$40bn mark in international issuance for the first time. Already in 2005, around US$10bn has been raised, with many analysts betting on another big year. “It looks like another busy year . . . and US$40bn again looks likely. It will probably be similar themes, with heavy Korean issuance and another big funding year for the Republic of the Philippines,” summed up Amy Li, JP Morgan’s portfolio strategist. Korea accounted for US$16bn in 2

The spectre of deteriorating credit fundamentals and rising inflation recently surfaced to become the market's main pre-occupation, but a solid undercurrent of developing regulatory issues has set the course for several sectors. Prior to the GM-provoked widening in the credit markets, investors' thirst for yield made Trust Preferred Securities (Trups) desirable. Trups provide an additional degree of yield over senior securities, are classified as equity under a regulatory viewpoint, yet the inte

Hybrid capital for non-financial corporates seemed to be back on the agenda earlier this year after a number of earlier false starts. Bankers began 2005 extremely upbeat for this asset class, particularly after French supermarket operator Casino achieved 50% equity credit from S&P and 100% credit from Fitch for its €500m perpetual issue via lead managers BNP Paribas and UBS. But in spite of their upbeat expectations, bankers have seen no further activity since Casino, and with corporate issuance

The beginning of 2005 was a distinctly fruitful one for recent EU entrants as far as their capital markets activities were concerned. The first three months saw brisk issuing activity from the likes of the Republics of Hungary, Poland, the Czech Republic and the Republic of Lithuania, which were all keen to tap into investors' deep pockets. Perhaps the most striking element about these transactions was the fact that they came at eye-watering spreads, distancing new EU entrants further from the e

The FSA earlier this year held a couple of exploratory meetings to sound out the banking and mortgage industry, not only on a UCITS 22.4 compliant regulatory framework but also, tied in with this, the preferential risk-weighting that the unique asset class enjoys in other jurisdictions. The full integration of UK covered bonds into its European peer group could be only a matter of time as a UCITS compliant regulatory framework – which carries the weight of law – could well be in place by the end

Beware the Ides of March. It is unlikely Shakespeare’s soothsayer had in mind the debt capital markets when he bade Julius Caesar take care in 44BC, although more than 2000 years later a few market participants might well have felt as if they had been ambushed and knifed when the lengthy bull run came to a shuddering halt in the middle of the month. In spite of consequent stabilisation – albeit at wider spread levels – there was an understandable stagnation in primary issuance. While it appears

Delta hedging of synthetic CDO issuance continued to play a major part in the tight credit spread environment which gripped the market again in the first quarter of 2005. Only the fallout from GM's profit warning and the subsequent rating agency action conspired to divert spreads from their tightening pattern, although hedging activity from CDOs certainly helped protect the downside. The market had grown used to a tight environment amid a dearth of corporate issuance, while good conditions for p

The build-up of new brands and the hiring frenzy in the CMBS space suggests a new paradigm in European real estate lending. Still, it is important to remember that the number of completed conduit CMBS is not huge, nor is the conduit’s share of the lending market. Liberal estimates put conduit lending at 10% of the total European real estate market, and although “the pipeline of conduit deals in Q2 2005 is north of 20, there hasn’t been a ton of deals executed as yet”, a CMBS ratings analyst said

Supply levels in 2004 surpassed expectations; non-dollar issuance rose by 74% to record levels of €16.72bn last year compared with €9.625bn in 2003 as the number of deals leapt from 34 to 68, according to Thomson Financial, and returns were over 10% down on 2003. The JP Morgan European HY index returned 14.6% on December 15 2004, against 27.3% the year before. Historically, hedge funds have not had a significant influence in high-yield, yet their activity in junk bonds grew substantially in 2004