Sailing troubled waters

The last 12 months have certainly been interesting. But at times like these it is easiest to differentiate between the highest quality issuers and everyone else. During the extended bull market that ended in the summer of 2007 there was a gradual erosion of the kind of hard-headed investor scrutiny that has since returned in force. Companies wishing to raise capital had found it easy surfing the waves of investor exuberance, without having to worry unduly about pricing their debt. No more though. The winners in this market are those that put...

An important preliminary element of the Inter-American Development Bank’s (IADB) issuance process is continual dialogue with investors to gauge demand and canvas feedback. Much of its debt is issued on a reverse enquiry basis. This leads it to issue in a wide range of currencies: it has issued in eight already in 2008, and managed 12 last year. The bank has been a beneficiary of a flight to quality since the onset of the credit crunch. Investors are keener than ever to access Triple A names to minimise their credit exposure, especially as...

Times are tough for investment bankers of just about every stripe, and it is no different for those in the world of non-core bonds. It is a world that encompasses many markets, many of which have experienced their share of volatility, but there is cause for optimism that what might be called the core of the non-core currencies – Australian, New Zealand and Canadian dollars – could have fully recovered by the end of the year. For the many emerging markets currencies which enjoy considerably less liquidity, the outlook is somewhat more debatable...

Institutions can be grouped by their risk tolerances. Pension funds’ risk appetite is principally a reflection of their liabilities: the age of their policyholders and the level of funding already covered. Larger mismatches and more imminent liabilities reduce pension funds’ risk appetites and encourage greater allocations to bonds, which match the liabilities. Insurance companies, for both cultural and regulatory reasons, manage their liabilities much more closely than pension funds. An increasing trend towards liability driven investment (LDI...

The new Hypo Real Estate Group came into being as a result of its acquisition of DEPFA BANK late last year, a move that implied a significant strategic shift for both entities. DEPFA span off its real estate business to Aareal in 2002 and has, over the years, successfully positioned itself as a thoroughbred public-sector covered bond issuer. Hypo Real Estate, in contrast, has primarily established itself as a real estate bank. More recently, however, it has utilised its public sector business through the Hypo Public Sector Finance Bank...

Volkswagen’s ability to access the securitisation market reflects the loyalty of its investor base – a fact that other securitisation borrowers need to sit up and take notice of. In the pre-crisis world of leveraged demand, it was all too easy for borrowers to forget the importance of maintaining a good long-term relationship with investors. Breeding loyalty is about integrity, honesty and trust. "We are a frequent issuer and feel we have a certain responsibility towards the market," Stefan Rolf, head of Volkswagen Financial Services' ABS...

The volume of Samurai issues achieved already this year is truly remarkable, already matching the total annual issuance over much of this past decade. The fact that the majority of new prints came at a time when the sub-prime jitters were still being felt makes it all the more impressive. And the volume could well increase, given that some ¥797.9bn of Samurais are maturing this year, according to data from Thomson Reuters. The Samurai market offered the liquidity to foreign borrowers after the credit crunch carnage brought tightening to other...

In spite of the vast numbers involved, General Electric (GE) had little problem selling US$8.5bn in bonds just a few weeks after the announcement of its Q1 results. In doing so it proved what really counts – and probably even more so in a down market – is company quality, a Triple-A rating and a long history of reliability and performance. “We anticipated demand [for the deal] would be solid, but subscription was much bigger than we thought,” said Kitty Yoh, GE’s deputy treasurer. “This was a strong endorsement.” At this juncture market...

Those with a penchant for market history need backtrack only a year to discover that the past is indeed a foreign country, where things are done differently. Mid-2007 saw the credit markets at the zenith of their longest bull-run on record. Investment bankers, investors and issuers were united in either their inability – or unwillingness – to call an end to proceedings. Spreads were at all-time tights, fund managers awash with cash and order books many times covered. Fast-forward twelve months and, while elements of that scenario remain intact...

"Our primary mission is pretty simple," said Mike Ciota from Federal Home Loan Banks (FHLB) Office of Finance, "it is to provide liquidity to member banks and financial institutions through secured lending. There are about 8100 across the country, and we support them by raising funds in the global debt markets." The FHLB are purely an issuer. Each of the 12 FHLB has members in their own region, ranging in size from several hundred to well over a thousand and including commercial banks, insurers, credit unions, and savings and loans...

It was a busy Spring for Merrill Lynch, which issued more than US$25bn of long-term debt in April and May in US and Canadian dollars, and sterling, at tenors ranging from two to 30 years. Among the issuances were a US$7bn two-tranche; five and 10-year senior notes; and a £850m 10-year – its largest-ever sterling offering. But its flagship offering of the year to date was a US$9.5bn deal in April when it shrugged off near historic wides to raise US$7bn from institutional and US$2.55bn from retail markets, paying more than 300bp for five-year and...