JP Morgan brings complex derivatives to wider audience

Wall Street’s reluctant second effort at direct listing a tech unicorn, the “non-IPO” on the NYSE of email-killing software company Slack Technologies, was more seamlessly executed than its first (a direct listing of Spotify Technology last year). But there was not a lot of chest-beating in banking circles. Slack’s financial advisers took the lion’s share of US$22m of fees – not a bad payday considering the limited duties involved in a process that requires no capital raising, and therefore no underwriting, no roadshow and none of the other standard features of US IPOs. Not dissimilar to recent IPOs, Slack’s stunning US$23bn valuation crystallised by its public debut will be hard for many to get their head around. But putting aside the artifice of Slack’s 48% debut “gain” (the base reference price was purely notional), the direct listing process was effective in coming up with a market price for Slack stock. The fact that the stock traded in a tight band, and closed right near where it opened, meant buyers and sellers had little to complain about. It also meant there were none of the usual recriminations of traditional IPOs about companies selling stock too cheaply or investors being burned by overpaying amid the hype. That’s definitely refreshing, but the Slack experience won’t be enough to convince most tech unicorns to go down the direct listing route, particularly those such as Uber and Lyft that can really use the extra capital. And banks won’t be going out of their way to recommend this path. But for the right company in the right circumstances, it now looks like a more comforting way to gain all of the benefits of being a public company. Once more with feeling History, said Marx, repeats itself “the first time as tragedy, the second as farce”. It would be pushing it to describe the ECB’s quantitative easing policy as a tragedy but another round of bond buying could be interpreted as a farce. It is, after all, only six months since the central bank ended its €2.6trn programme that saw it buy government bonds, corporate debt, asset-backed securities and covered bonds. But the odds are shortening that it may resume buying securities after president Mario Draghi raised the prospect of “additional stimulus” at a speech in Portugal last week. Citigroup strategist Hans Lorenzen said that another corporate sector purchase programme – he called it CSPP 2.0 – was his “central scenario” for the second half of the year. The scale of another CSPP could be similar to before. Lorenzen reckons the bank has the capacity to buy €150bn–€200bn of bonds. The big question is, though, if the first attempt failed to rouse the eurozone economy out of its slumber, why would another succeed? Issuers aren’t likely to bother to wait to find out as they seek to take advantage of a compression of yields that has seen the 10-year Bund edge closer to the ECB’s deposit rate of –0.40%, while benchmark bonds from France and Sweden crept into negative yield territory for the first time. UniCredit, for example, last week printed a €1.25bn six-year non-call five senior preferred new issue at a yield of just 1.32%, with the spread tightened by up to 35bp during the execution process. Investors put in €4.3bn of orders. Yet while UniCredit might be rebuilding its reputation after a difficult few years, it remains the biggest bank in the eurozone’s most troubled economy. Bankers said the response was down to the “Draghi effect”. Of course, a new bond buying programme would be supportive of credit markets. The worry, though, is what happens afterwards, especially if another round of QE ultimately fails again. Future historians may end up as disparaging about the ECB’s QE experiment as Marx was about the Second Empire in France. Cornerstone capers The surprise cancellation of a cornerstone investment almost two months after a US$1.2bn Hong Kong IPO poses some tricky questions for the city’s equity markets. The biggest surprise, however, is that it has never happen

Blackstone Mortgage Trust landed US$270m from a block sale of stock overnight on Thursday, becoming the latest mortgage REIT to access ECM this year. Blackstone Mortgage, unlike many of its counterparts, is selling from a position of strength. A seven-strong syndicate of bookrunners headed by Citigroup offloaded their purchase of 7.5m shares at US$36 each, the bottom of a US$36-$36.25 marketing range and a 1.7% discount to the US$36.62 last sale on Thursday. Most notably, the US$36 print was struck at 1.3-times book value (US$27.32) at March 31, making the equity raise accretive to earnings. Apollo Commercial Real Estate Finance and Ares Commercial Real Estate Finance, both serial ECM issuers that funded earlier in the year, trade at 1.02 and 1.01 times book value, according to Refinitiv data. Blackstone Mortgage shares held steady post-pricing on Friday at US$36.10. Blackstone Mortgage leveraged its premium pedigree to secure a US$500m term loan in April on which it pays a spread of Libor plus 250bp. Blackstone Mortgage is using proceeds from the equity raise to fund its US$875m investment pipeline for the second quarter.

Deutsche Bank could unveil plans to significantly reduce its US rates and equities businesses as soon as this week as part of a wider plan to reduce its investment banking assets by as much as a quarter. The US Federal Reserve is due to announce on Thursday the second part of its stress tests measuring the strength of the bank’s compliance and other non-quantitative measures, which could prompt Deutsche to clarify its intentions in the US. If no announcement is made after the US stress test results, the bank could announce measures with its second quarter results due on July 24. Deutsche said it was “working on measures to accelerate its transformation so as to improve its sustainable profitability. We will update all stakeholders if and when required.” The assets earmarked for disposal or run-down are expected to be performing rather than distressed. They would be placed in a non-core unit, which could house as much as €90bn of risk-weighted assets. They would principally be long-dated derivatives. In 2012 Deutsche embarked on a similar asset-reduction strategy, largely tackling distressed assets amounting to €128bn. That process finished in 2016. Under chief executive Christian Sewing, appointed in April 2018, it has further reduced assets across its corporate and investment bank by €130bn. In April the bank ceased merger talks with Commerzbank and Sewing has said the bank is reviewing the business and strategy of its investment bank, with “tough cutbacks” envisaged. He told shareholders at their annual meeting in May: “We will accelerate transformation by rigorously focusing our bank on profitable and growing businesses which are particularly relevant for our clients.” Sewing said origination and advisory and FX trading were areas where the bank was achieving “appropriate” returns on equity and said all other divisions would be scrutinised in the same way. “We will analyse this very closely and will be just as disciplined and uncompromising with this as we are with costs,” he said. Sewing wants to focus on more stable areas, such as wealth management, via recently spun-off DWS, and global transaction banking, which he wants to work more closely with the rest of CIB.   CUTTING LOSSES Andrew Coombs, analyst at Citigroup, said equities and the US investment bank were prime candidates to be culled as both suffered from “poor profitability”. He estimated that equities, which accounted for a fifth of investment banking revenues, last year made a €500m pre-tax loss and was still “almost certainly loss-making. These strategic steps therefore have some merit.” Last year Deutsche’s US holding company, which has US$133bn of assets, returned to profit, making an adjusted US$672m pre-tax profit. Getting out of rates would not save as much in costs as stopping equities, but would allow the bank to reduce its assets, and leverage, noticeably. “Exiting from US equities would save substantial costs, and should be relatively easy to execute, particularly as most of the headcount outside of Europe sits in US, with flexible labour laws,” Coombs said. “A further reduction in prime [brokerage] balances would also free up leverage exposure.” But despite equities being unprofitable, Coombs said cutting back in this area could be tricky as it supported other parts of the business, as did rates. “Two of the target growth areas, transaction banking and private banking, rely heavily on rates & equities respectively,” he said.   LOSING BANKERS Any cuts would mainly be achieved through reducing the bank’s 9,000 employees in the US. Coombs estimated outside Europe Deutsche had between 1,000 and 1,500 equities and rates front office staff. US chief Tom Patrick is also reportedly set to be replaced by investment bank CFO Christiana Riley. Deutsche declined comment. Deutsche is losing senior bankers in the US. Citigroup on Friday hired Deutsche’s chairman for the Americas John Eydenberg and chairman of global investment banking and capital markets cover

Green Plains, the third-largest producer of ethanol in the US, is getting crushed by negative operating economics as a glut of production and waning demand has it losing money on each gallon of ethanol sold. To see it through “greener” times and initiatives to lower production costs, Green Plains undertook a multi-faceted refinancing that hinged on a new US$105m five-year convertible bond issue. After confidentially marketing the refinancing on Tuesday, the company went public that evening with plans to use part of the proceeds to repay US$56.8m principal of a 3.25% CB issue that is out-of-the-money and comes due in October and the balance to buy back US$40m of stock concurrently. Notably, it also eliminated a 12-cent quarterly stock dividend, saving itself roughly US$20m of cash payouts annually. Jefferies and BMO Capital Markets marketed the new five-year CBs overnight at a coupon of 3.5%–4% and conversion premium of 25%–30%. They set pricing the following morning at a 4% coupon and 25% conversion premium, the investor-friendly ends of talk. Green Plains’ shares did fall 8.7% post-deal pricing on Wednesday to US$11.38, a five-year low, but that was a somewhat muted response given the implications of eliminating the stock dividend and transferring market risk onto buyers of the CBs. “There was some pushback of ‘Go out and market for a day’,” conceded one banker involved in the underwriting. “Realistically, the stock could have gone down 20% or 25%. “Green Plains didn’t have to do the CB but wanted to preserve financial flexibility for capital projects.” CRUSHED BY MARGINS Green Plains has been working through a supply/demand glut that has seen it post net losses on a quarterly basis since the beginning of 2018, which was exacerbated by retaliatory tariffs China implemented in April 2018. “Literally you could see the start of the trade war and what it did to put our market in a bit [of an] oversupply situation,” said Green Plains CEO Todd Becker on the company’s quarterly earnings call in May. “[To get back to historical margins] its really going to come down to the discipline of the industry.” Green Plains lost eight cents on each of the 155m gallons of ethanol sold in the first quarter. That led to a US$44.2m loss from the ethanol business and a US$40m consolidated operating loss. That compares with between 15 and 22 cents positive operating margins before the imposition of the Chinese tariffs, according to Becker. US exports of ethanol to China, which peaked at 4.7m gallons in 2016 and totalled 1.25m barrels in the first three months of 2018, have been zero since tariffs were implemented last April, according to data from the US Energy Information Administration. Green Plains shored up liquidity by selling three ethanol plants to Valero in November for US$319.8m and a vinegar plant that same month for US$353.9m. It used those proceeds to repay and terminate a US$500m Term Loan B, making the CB holders the most senior creditors aside from banks on its revolving credit facilities. “Convert investors are the first in line for the first time,” said a second banker. “By cutting the dividend, management communicated that the best return for shareholders is to put capital back into the business. “But they wanted to offset some of that hit by buying stock equivalent to two-year’s worth of dividends.” Green Plains is spending US$50m on capex this year to drive production costs down from 28 cents per gallon of ethanol to 24 cents, as part of a Project 24 initiative it hopes to complete by the middle of next year. Separately, the company is also investing in a separate production process that extracts more protein from corn than traditional manufacturing, which it believes will boost margins by 12 to 20 cents per gallon sold. There are other reasons to believe in a turnaround. In June, the US Environmental Protection Agency approved legislation to increase ethanol content in gasoline to 15%, from 10%, on a year-round basis, though gas

Standard General, a New York-based special situations fund, elected not to proceed with a planned 5m-share secondary sale in Twin River Worldwide following a 7.2% decline in the once-bankrupt casino operator’s shares over three out of four planned days of marketing. Twin River shares rebounded by 3.1% to US$29.82 on Thursday, after the deal was pulled, on volume of 1.3m shares, small volume in an illiquid stock. The sell-down represented about 12% of the outstanding shares and roughly 23 days’ trading volume, though it’s worth pointing out that the stock had only been trading for 23 days. Twin River, which filed for bankruptcy in 2009 and emerged 17 months later, “went public” in May through a reverse merger with NYSE-listed Dover Downs Gaming & Entertainment. “I wish we could have gotten a deal done,” said one banker involved in the underwriting. “But the selling shareholder did not want to transact at these levels. It all depends on who’s looking at the percentage decline.” Stifel, Cowen and BTIG, the would-be bookrunners on the transaction, had planned to price the deal post-close on Thursday after one more day of marketing. Twin River had sought to incentivise new investors by initiating a 10-cent quarterly dividend, payable on July 23 to shareholders of record on July 9. The company also had implemented a US$250m share repurchase programme, a portion of which it could have utilised on the stock sale. Speaking on last month’s earnings call, CEO George Papanier said the listing was a major step in Twin River’s evolution as it looked to open its equity “to a broader investor base”. Twin River last month completed a recapitalisation that saw it term out funding with a US$300m seven-year term loan, US$400m eight-year high-yield bond issue, and a US$250m revolving credit facility. Credit Suisse and Bank of America – not Stifel, Cowen or BTIG – bagged the bulk of fees on those transactions. Twin River, which owns casinos in Rhode Island, Mississippi, Delaware and Colorado, does have a value proposition. With the recapitalisation in its pocket, the company would have bankrolled adjusted Ebitda of US$176.5m last year on revenues of US$534m.

The US IPO market’s golden run of late could be tested in the coming week as nine companies seek to raise US$2.4bn ahead of the July 4th break. New issues mostly delivered for investors in the past week, a week when US stocks also touched record highs. Though Slack’s smoothly executed direct NYSE listing was the big event in ECM, six traditional IPOs priced and all but one produced initial gains in the aftermarket. The exception was gene therapy drug developer Prevail Therapeutics, which fell 20% on debut, while one scheduled deal (Dermavant Sciences) failed to price. Investors have otherwise shown an eagerness to pay stretched valuations for growth companies, as evidenced by stunning debuts this month from companies such as Revolve, CrowdStrike and, in the past week, Grocery Outlet. With nine IPOs looking to price before ECM takes a break in the following holiday week, the coming week will rank as the second busiest week of the year by number of deals if all are able to price. The deal mix has in recent weeks become heavily weighted to biotech offerings, which by nature are more hit or miss than more predictable software and consumer retail deals. The biggest test in the coming week is likely to come not from a biotech but in the form of the IPO of McKesson/Blackstone-backed healthcare data analytics and payments company Change Healthcare. Change is a leveraged deal that has been previously delayed and is now structured with a mandatory convertible security (for US$250m of the total US$1bn deal size) to ease digestion. Early indications suggest Change has faced some investor pushback during roadshow presentations. Tellingly, several other leveraged IPOs that were seen as launch possibilities in this window, namely iHeartMedia and Endeavor, are now post-July 4 business. The strongest demand may come for two biotech IPOs, Adaptive Biotechnologies and BridgeBio Pharma, both of which are raising more than US$200m and are therefore larger than the typical new issue from the sector. The tech sector offers the US$285m IPO of online luxury goods consignment store The RealReal, and an US487m offering from IT hardware company Cambium Networks. The recent scramble for hot IPOs remains at odds with the muted performance of many secondary offerings. The largest follow-on of the week was another US$1bn block sell-down of Invitation Homes, but the stock traded below the reoffer price in Friday’s aftermarket.

HIGH YIELD              Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution US DOLLARS                           Jun 17 2019 LABL Escrow Issuer US$700m Jul 15 2026 (Jul 2022) 6.75 100 T+481 6.75 7% area, 6.75% - - B2/B BAML/DB/Barc/BMO/CS/HL/MS - Jun 17 2019 LABL Escrow Issuer US$690m Jul 15 2027 10.5 100 850 10.5 10%/10.25%, 10.5% - - Caa2/B- BAML/DB/Barc/BMO/CS/HL/MS - Jun 18 2019 Cedar Fair US$500m Jul 15 2029 (Jul 2024) 5.25 100 T+319 5.25 - - - B1/BB- JPM/UBS/WFS/FITB/Key - Jun 18 2019 Clean Harbors US$545m Jul 15 2027 (Jul 2022) 4.875 100 T+289 4.875 4.875%/5%, 4.875% - - Ba3/BB+ GS/BAML/JPM/STRH - Jun 18 2019 Clean Harbors US$300m Jul 15 2029 (Jul 2024) 5.125 100 T+307 5.125 5.125%/5.25%, 5.125% - - Ba3/BB+ GS/BAML/JPM/STRH - Jun 18 2019 LSB Industries US$35m May 1 2023 9.625 102.125 T+714 8.955 102 area - - Caa1/CCC+ GS - Jun 18 2019 Sirius XM Radio US$1.5bn Jul 15 2024 4.625 100 T+279 4.625 - - - Ba3/BB JPM/Barc/Citi/BAML/BNPP/CA/GS/Mizuho/MS/RBC/STRH/Scotia/USB/WFS - Jun 19 2019 Avis Budget Car Rental US$400m 7/15/2027 (Jul 2022) 5.75 100 T+381 5.75 5.875% area, 5.75% - - B1/BB BAML/Citi/MS/Scotia - Jun 19 2019 Nordboard US$350m 7/15/2027 (Jul 2022) 5.75 100 T+361 5.75 5.75% area, 5.75% - - Ba1/BB+ BAML/RBC - Jun 19 2019 Nexstar US$1.2bn 7/15/2027 (Jul 2022) 5.625 100 T+369 5.625 5.875% area, 5.625% - - B3/B BAML/CS/DB/MUFG/STRH/BNPP/Citizens/FITB/Regions/Citi/GS/Miz - EUROS                           Jun 20 2019 Cogent Communicaations €135m Jun 30 2024 (Jun 2021) 4.375 100 B+502.6 4.375 4.5% area, 4.375% - - B3/B- BAML - NON CORE                           Jun 18 2019 Avida Finans AT1 SKr200m Perpetual (Jun 2024) 3mS+950 100 3mS+950 - 3mS+900/1000, 3mS+900/950     - Carnegie/DnB - Jun 18 2019 Nordisk Bergteknik SKr300m Jun 26 2023 (Jun 2021) 3mS+600 100 3mS+600 - - - - - Swed - Jun 18 2019 SSAB SKr1.4bn Jun 26 2024 3mS+270 100 3mS+270 - 3mS+270/280 - ~SKr3.1bn combined -/BB+ DNB/Nordea - Jun 18 2019 SSAB SKr600m Jun 26 2024 2.75 99.862 MS+270 - MS+270/280 - ~SKr3.1bn combined -/BB+ DNB/Nordea -

Citigroup has hired seven senior bankers from rivals as it beefs up its banking, capital markets and advisory business in the United States, including grabbing three people from ailing Deutsche Bank, and three from rival Goldman Sachs. Citi has hired Mark Keene as global co-head of technology in its banking and capital markets business, alongside Herb Yeh. It also hired Mark Hantho and John Eydenberg as vice-chairmen for BCMA. All three joined from Deutsche, where they had spent a combined 43 years. Citi also hired Liz Milonopoulos and Brian Yick as new co-heads of internet investment banking. Milonopoulos joined from Goldman and Yick was at Barclays. The bank hired Doretta Mistras for its healthcare team and Michael Marcus in its financial sponsors group, both from Goldman. The hiring reflects a push by Citi to sharpen its focus on the US market, and make a greater challenge to Goldman, Morgan Stanley and JP Morgan, the leading Wall Street firms for advisory work in the US and globally. Citi pulled together its capital markets origination business alongside its corporate and investment banking unit and revamped its senior leadership in September, when BCMA was created. That brought it in line with the set-up at many of its rivals, in having a single unit for M&A advisory alongside helping companies raise debt and equity. BCMA has been led by Tyler Dickson, previously global head of capital markets origination since 2008, and Manuel Falco, who was head of the corporate and investment bank in Europe, the Middle East and Africa since 2009. TECH HIRES Keene will join Yeh in San Francisco, according to a memo to staff seen by IFR. He had spent 13 years at Deutsche, most recently global co-head of technology, media and telecoms, after leading its technology franchise for the Americas. He previously spent 12 years at Lehman Brothers, where he ran semiconductor coverage. Milonopoulos was most recently head of digital media and advertising in the TMT group in Goldman’s investment banking division. Yick was co-head of internet banking at Barclays, which hired a co-head from Deutsche Bank earlier this year. Most major banks are ramping up their technology coverage as the industry is transformed by digital disruption and increasingly overlapping with other industries, such as autos. FIRE POWER As vice-chairmen, Hantho and Eydenberg will work with all sectors, products, and regions, memos sent to staff said. Hantho spent 12 years at Deutsche, most recently as chairman of global investment banking and capital markets coverage. He held other senior roles at Deutsche, and also at Bank of America Merrill Lynch and Morgan Stanley. Eydenberg spent 18 years at Deutsche, most recently as chairman for the Americas. He was also vice-chairman of the corporate and investment bank for the Americas and headed the sponsors and leveraged finance business. Before investment banking, he served six years as an officer in the US Navy. Mistras will join Citi as a managing director in its healthcare group. Marcus is joining as a managing director in the financial sponsors group. All of the new hires will take gardening leave most likely the full summer and start in September.

South Mountain Merger, a SPAC headed by SPAC veteran Charles Bernicker, landed an upsized US$225m on its IPO this past week. Sole bookrunner Citigroup placed 22.5m units at the US$10.00 fixed price after the market close on Wednesday, wrapping up a three-day public roadshow in addition to an earlier testing-the-waters exercise. BlueCrest Capital Management, the UK-based former hedge fund now family office manager of billionaire Michael Platt, purchased 2.2m of the 22.5m units sold, giving it a 7.9% stake, second behind only the 20% position of principal sponsor Harbour Reach. South Mountain initially broke offer on its Nasdaq debut Thursday to US$9.99 and closed flat-to-offer at US$10.00 on volume of 5.7m units - rare for a SPAC to break, given the investor put, and unusual to see such high first-day churn. South Mountain plans on using the funding to explore for acquisitions of fintech companies, specifically those focused on the “rapidly evolving payment ecosystem”. The vehicle is structured typically with each one unit comprised of one common share and one-half warrant exercisable at US$11.50 per full warrant, 100% of the proceeds held in trust, and a 24-month investment horizon. The focus on fintech is certainly not unique, but it is consistent with the South Mountain’s management pedigree. Charles Bernicker, South Mountain’s CEO, was previously the CFO at secure payments provider CardConnect ahead of its acquisition by former SPAC Fintech Acquisition I in 2017 and eventual sale to First Data for US$15.00 a share, above the $10.00 SPAC IPO print. Bernicker also advised international payments provider International Money Express on its sale to Fintech Acquisition II. IMXI trades at US$14.12. That CardConnect was sold at premium to its IPO price and IMXI trades at a premium bodes well for South Mountain. South Mountain is the first SPAC IPO for Citigroup this year. The mandate is a bit of a coup, given that Cantor led Fintech Acquisition I, II and III, so there may be some motivation to seek alternative M&A advice. There was some market chatter that Cantor turned down the mandate because Bluecrest/Platt are large buyers of SPAC IPOs. QUICK PITCH Cantor is readying the launch of Pivotal Investment II, a SPAC headed by SPAC veteran and New York Islanders owner Jonathan Ledecky. Sized at US$300m, Pivotal Investment II is tentatively slated to price the evening of July 11, pending the formal launch of the roadshow. The quick turnaround is notable. Pivotal Investment I last month agreed to purchase electronic compliance provider KLDiscovery in a transaction valued at US$800m. The purchase agreement came just 110 days after Pivotal Investment’s US$200m IPO in January, the fastest-ever IPO-to-acquisition agreement in history, according to SPAC specialist SPACInsider. Churchill Capital was the prior record holder at 130 days. Pivotal I is trading at US$11.72 on bullish expectations for KLDisovery. Pivotal II is being co-sponsored by Ledecky and an investment vehicle affiliated with Kevin Griffin, the CEO of middle-market lender MGG Investment Group. There are potential tie-ins, and conflicts of interest, to the MGG affiliation, the company notes in the offering prospectus. Pivotal SPAC Funding II, the Griffen vehicle, has agreed to invest up to US$150m on a back-end acquisition, though the commitment is non-binding and can be made in securities of its choosing. The sponsor group has vowed to seek a third-party fair value opinion if the acquisition target is an affiliated company. Pivotal Investment II is structured as a more aggressive one share, one-third warrant and 100% of IPO proceeds held in trust. As an offset to the more acquisition-friendly IPO structure, the vehicle has just 18 months to complete an acquisition, making it more attractive to investors.

Canadian apartment investor InterRent REIT took advantage of its high share price to fund acquisitions through a C$175m (US$132m) block sale overnight Tuesday, becoming the latest Canadian operator to tap into demand for REITs. ScotiaBank, Desjardins Capital Markets and BMO Capital Markets combined on the sale of 12.5m units, 11.8% of outstanding and 60 days’ trading volume, reoffered at C$14 each, a 3.2% discount to the C$14.46 last sale. InterRent shares closed TSX trading on Wednesday at C$14.08. The transaction was straightforward, according to one banker involved, despite the 29 cent annual dividend (payable monthly) equating to a paltry 2% yield. Blocks, particularly by REITs, are standard fare. Year-to-date, Canadian companies have raised US$6.1bn through follow-on stock sales, and US$2.25bn of that has been by REITs. Concurrent with the deal launch, InterRent said it had entered into conditional agreements to purchase four apartment complexes in Montreal for C$166m. That is in addition to an earlier C$28m purchase in Montreal that increases its exposure in the city to 27% of total apartments operated. After funding the purchases, InterRent said that debt to gross book value of 37.6% provided it with capacity to pursue other acquisitions.

FINANCIALS              Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution US DOLLARS                           Jun 17 2019 Bank of America US$1bn Perpetual (Jun 2024) 5.125 100 - 5.125 5.25%5.375%, 5.125% (#) - - Baa3/BBB-/BBB- BAML - Jun 17 2019 Jackson National Life US$300m Jun 20 2024 2.65 99.805 T+85 2.692 T+90 area, T+85 (#) 11 US$350m A1/AA-/AA- BAML/Citi/JPM/MS - Jun 17 2019 Jackson National Life US$300m Jun 20 2029 3.05 99.76 T+100 3.082 T+115 area, T+100 (#) 1 US$450m A1/AA-/AA- BAML/Citi/JPM/MS - Jun 17 2019 KKR Group Finance US$500m Jul 1 2029 3.75 99.719 T+170 3.784 T+190 area, T+175 area - US$1.5bn NR/A/A Citi/GS/Miz/MS/KKR - Jun 20 2019 Athene Global Funding US$300m Jun 25 2024 2.75 99.722 T+107 2.81 T+120 area, T+110 (+/-3) 3 US$1bn A/A Barc/CS/DB - Jun 20 2019 Banco Santander SA US$1.5bn Jun 27 2024 2.706 100 T+95 2.706 T+120 area, T+100 (+/-5) -5 US$3bn A2/A/A BAML/Citi/JPM/MS/Santan - Jun 20 2019 Banco Santander SA US$1bn Jun 27 2029 3.306 100 T+130 3.306 T+155 area, T+135 (+/-5) -5 US$3bn A2/A/A BAML/Citi/JPM/MS/Santan - EUROS                           Jun 17 2019 BPCE SNP €1.25bn Sep 26 2024 0.625 99.825 MS+80 / B+125.6 0.659 MS+100 area, MS+80/85 2 >€2.3bn, >125acs Baa2/A-/A+ Natx - Jun 17 2019 Credit Agricole SNP €1bn Jun 24 2024 0.5 99.818 MS+70 / B+113.2 0.537 MS+90 area, MS+75 (+/-5) 0 >€2.4bn, ~150acs Baa2/A-/A+ CA-CIB - Jun 17 2019 Credit Suisse SNP €1bn Jun 24 2027 (Jun 2026) 1 99.644 MS+105 / B+154.7 1.053 MS+130 area, MS+105/110 0 ~€3.2bn Baa2/BBB+/A- CS Fr 27%, UK 21%, Ger 19%, N.Eur 9%, S.Eur 7%, Asia 7%, Benelux 6%, Switz 3%, Other 1%. AM 51%, Ins 23%, Bks 12%, Sov 11%, HF 2%. Jun 17 2019 KBC €250m incr (€1bn) Jan 25 2024 1.125 103.109 MS+63 / B+108.3 0.439 MS+70 area, MS+63/65 0 >€400m Baa1/A-/A CS/DB/GS/KBC - Jun 18 2019 Bankia SNP €500m Jun 25 2024 1 99.956 MS+125 / B+169.4 1.009 MS+160 area, MS+135 area -5 >€3.2bn BBB-/BBB/BBB BAML/Bankia/BNPP/GS - Jun 18 2019 UniCredit €1.25bn Jun 25 2025 (Jun 2024) 1.25 99.663 MS+155 / B+199.5 1.32 MS+185/190, MS+165 area 5 €4.3bn, ~300acs Baa1/BBB/BBB Uni/ABN/Barc/BBVA/CMZ/Natx Fr 24.4%, UK 23.6%, Ger/Aus 11.2%, It 10.4%, Nordics 10%, Iberia 8.3%, Benelux 5.3%, Switz 3.4%, Other 3.4%. FM 77.3%, Bks/PB 13.9%, Ins 4.4%, OI 4.0%, Other 0.4%. Jun 18 2019 Westpac NZ Green €500m Jun 25 2024 0.3 99.921 MS+55 / B+100.1 0.316 MS+high 60s, MS+55/60 12 >€1.1bn A1/AA- DZ/HSBC/JPM/WBC - Jun 19 2019 Pireaus Bank T2 €400m Jun 26 2029 (Jun 2024) 9.75 100 MS+995.2 9.75 10.25% area, 9.75% - >€850m Caa3/CCC GS/UBS - Jun 19 2019 Santander Consumer Finance €1bn Jun 27 2024 0.375 99.586 MS+67 / B+110.4 0.459 MS+90 area, MS+70/75 0 €2.5bn A2/A-/A- BAML/Citi/Santan/SG/Uni - YEN                           Jun 18 2019 HSBC ¥60bn Jun 25 2024 0.204 100 OS+24 0.204 OS+23/27 - - Aa3/AA- Daiwa/HSBC/Miz/Nomura/SMBC Nikko - SWISS FRANCS                           Jun 18 2019 LGT Bank SNP SFr150m Jul 5 2028 0.375 100.066 MS+65 0.368 MS+65/70 15 SFr150m, 36acs A3/A UBS Switz 100%. AM 51.9%, Bks/PB 28.7%, Ins 9.9%, PF 9.5%. NON CORE                           Jun 18 2019 Nykredit Realkredit SKr1bn Jan 20 2023 3mS+90 100 3mS+90 - - - - -/BBB+/A Nordea/Nyk/Swed - Jun 18 2019 Íslandsbanki SKr500m Jun 26 2029 (Jun 2024) 3mS+390 100 3mS+390 - - - - -/BBB- Danske/Nordea/Swed - Jun 19 2019 Barclays A$200m Jun 26 2024 3mBBSW+215 100 3mBBSW+215 - 3mBBSW+225 area, 3mBBSW+220/225 - - Baa3/BBB/A ANZ/Barc/CBA/NAB/WBC - Jun 19 2019 Barclays A$300m Jun 26 2024 3.25 99.817 ASW+215 3.29 ASW+225 area, ASW+220/225 - - Baa3/BBB/A ANZ/Barc/CBA/NAB/WBC - Jun 19 2019 Barclays A$300m Jun 26 2029 4 100 ASW+247 4 ASW+260, ASW+250/260 - - Baa3/BBB/A ANZ/Barc/CBA/NAB/WBC -

COVERED BONDS              Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution STERLING                           Jun 17 2019 TD £1bn Jun 24 2022 SONIA+47 100 SONIA+47 - SONIA+50 area - >£1.3bn Aaa/-/-/AAA HSBC/Lloyds/NatWest/Santan/TD UK 77%, Ger/Aus 7%, Switz 5%, Fr 4%, Other 7%. Bks 62%, AM 32%, Ins/PF 5%, OI 1%. NON CORE                           Jun 19 2019 Landshypotek Bank SKr4.4bn incr (SKr5.4bn) Feb 5 2024 3mS+100 103.73 3mS+20 - 3mS+19/20 - >SKr6bn -/AAA DNB/Nordea/Swed -