China issues draft rules on A-share spin-offs

Eq WIN 2298 Eq WIN 2298

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution Aug 26 2019 China Industrial Securities International US$200m Aug 28 2020 5 100 - 5 5.25% area, 5% - - - CISI/CMBCHK/Zhongtai/Industrial/Orient/Everbright HK - Aug 26 2019 Ascott Residence Trust S$150m Perpetual (Sept 4 2024) 3.88 100 SOR+235.2 3.88 4.125% area, 3.88% 0 S$1.05bn - OCBC SG 96%, Other 4%. AM/Bks/Corp 54%, PB 46%. Aug 26 2019 Mapletree Treasury S$300m Sep 3 2031 3.15 100 SOR+142.5 3.15 3.3% area, 3.15% 0 S$900m - OCBC SG 99%, Other 1%. FM 50%, Agcy/Bks 14%, PB 36%. Aug 28 2019 Hysan Development US$500m Sep 4 2029 2.82 99.577 T+140 2.869 T+160 area - US$890m A3 GS/JPM/Miz/UBS Asia 95%, Eur 5%. FM 69%, Bks 28%, PB 3%. Aug 28 2019 Korean Air (KDB guarantee) US$300m Sep 4 2022 2 99.641 T+70 2.124 T+95 area, T+70/75 - US$1.1bn Aa2/AA CS/KDB/UBS Asia 74%, Eur 26%. FM 51%, Ins/Corp 26%, Bks 19%, PB 4%. Aug 28 2019 PSA International US$500m Sep 5 2029 2.125 99.081 T+77.5 2.228 T+100 area, T+80 (+/-2.5) 2.5 US$1.5bn Aa1 DBS/HSBC Asia 92%, EMEA 8%. FM 46%, Bks 34%, OI 9%, Ins 8%, PB/Corp/Other 3%. Aug 28 2019 Times China Holdings US$100m incr (US$500m) Jul 16 2023 6.75 100 - 6.75 - - - B1/B+/BB- Haitong /CCBI /CISI - Aug 29 2019 Export-Import Bank of India ¥25bn Sep 5 2022 0.59 100 OS+70 0.59 OS+70/75 - - Baa2/JCR BBB+ Daiwa/MUMSS/Miz/SMBC Nikko - Aug 29 2019 Export-Import Bank of India ¥7bn Sep 5 2024 0.66 100 OS+78 0.66 OS+78/85 - - Baa2/JCR BBB+ Daiwa/MUMSS/Miz/SMBC Nikko - Aug 29 2019 UOB (covered) US$500m Sep 5 2022 1.625 99.694 MS+32 1.73 MS+32 area - - Aaa/AAA CS/HSBC/ING/UBS/UOB Asia 58%, Eur 42%. Bks 68%, CB 23%, FM 9%. Aug 29 2019 Bocom Leasing US$200m Sep 5 2024 2.625 99.374 T+135 2.76 T+165 area - US$900m A3/-/A BoCom/BOCOMI/BoC/DBS/HSBC/Miz/StCh Asia 99%, Eur 1%. Bks 87%, FM/Ins/Other 12%, PB 1%. Aug 29 2019 Bocom Leasing US$400m Sep 5 2024 3mL+117.5 100 3mL+117.5 - 3mL+150 area - US$1.8bn A3/-/A BoCom/BOCOMI/BoC/DBS/HSBC/Miz/StCh Asia 99%, Eur 1%. Bks 64%, FM/Other 34%, PB 2%. Aug 29 2019 ARA Asset Management S$350m Perpetual (Sep 4 2026) 5.6 100 SOR+406 5.6 5.8% area, 5.6% - - - CS/DBS/OCBC/UOB - Aug 29 2019 Bank of the Philippine Islands Green SFr100m Sep 24 2021 0 100.04 MS+96.8 / Eidg+108 -0.02 -0.05%/0.0%, -0.02% - >SFr100m, >30acs Baa2 CS/UBS Switz 100%. AM 70.3%, PB/Retail 15.7%, Ins 13%, PF 1%.

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution NON CORE                           Aug 28 2019 NRC Group NKr600m Sep 13 2024 (Sep 2022) 3mN+400 100 3mN+400 - - - - - Danske -

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution EUROS                           Aug 29 2019 Mun Hyp €500m Sep 5 2023 0.01 102.341 MS-2 / B+38.4 -0.567 MS-1 area   >€860m, 30acs Aaa BLB/CS/DZ/Helaba Ger 54%, Nordics 26%, CEE 6%, Asia 5%, Benelux 4%, Fr 2%, Aus/Switz 1%, ME 1%, Other 1%. CB/OI 47%, Bks 27%, AM 26%. SWISS FRANCS                           Aug 27 2019 PfZ SFr100m incr (SFr580m) Jan 27 2027 0 104.964 MS+8 / Eidg+41 -0.654 MS+8 - - Aaa SKB - Aug 27 2019 PfZ SFr60m incr (SFr660m) Jan 29 2031 0.55 111.339 MS+7 / Eidg+52 -0.42 MS+7 - - Aaa SKB - Aug 27 2019 PfZ SFr115m Sep 10 2037 0 104.571 MS+3 / Eidg+57 -0.248 MS+3 - - Aaa SKB -

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution US DOLLARS                           Aug 27 2019 Swiss Re T1 US$1bn Perpetual (Sep 2024) 4.25 100 T+286.4 4.25 4.75% area, 4.375% area, 4.25% - >US$7bn A2/A BNPP/BAML/Citi/CS/MS - Aug 28 2019 BBVA T1 US$1bn Perpetual (Mar 2025) 6.5 100 T+519.2 6.5 7% area, 6.625% area, 6.5% - - Ba2/-/BB BAML/Barc/BBVA/GS/JPM/MS - Aug 30 2019 Aozora Bank US$300m Sep 9 2022 2.55 99.914 T+115 2.58 T+135 area - - -/A- GS/MS/Citi - EUROS                           Aug 27 2019 HSBC France €1.25bn Sep 3 2027 0.1 99.849 MS+48 0.119 MS+low 60s, MS+50 (+/-2) 3 >€2bn Aa3/AA-/AA- HSBC Ger/Aus 33%, Fr 31%, Benelux 14%, Asia 9%, Nordics 5%, UK/Ire 4%, S.Eur 3%, Switz 1%. FM 58%, CB/OI 17%, Ins/PF 15%, Bks/PB 10%. Aug 27 2019 ING Groep (holdco) €1bn Sep 3 2025 (Sep 2024) 0.1 99.975 MS+60 / B+98.2 0.105 MS+85 area, MS+65/70 0 >€2.4bn Baa1/A-/A+ ING/Barc/DB/Natx/UBS/Uni Fr 25%, Ger/Aus 20%, UK/Ire 13%, S.Eur 12%, Asia 9%, Nordics 9%, Benelux 5%, Switz. 4%, Other 3%. FM 58%, CB/OI 18%, Bks 15%, Ins/PF 9%. Aug 27 2019 KBC Group T2 €750m Dec 3 2029 (Dec 2024) 0.5 99.403 MS+110 / B+150 0.616 MS+130 area, MS+110/115 2.5 >€1.85bn -/BBB/A- DB/HSBC/JPM/KBC/MS/Natx Fr 42%, Benelux 18%, Nordics 10%, UK/Ire 9%, Ger/Aus 8%, Switz 5%, S.Eur 4%, Asia 1%, Other 3%. FM 72%, Ins/PF 18%, CB/OI 7%, Bks/PB 3%. Aug 27 2019 Nykredit Realkredit SNP €500m Jul 10 2024 0.125 99.634 MS+70 / B+110.4 0.201 MS+85 area, MS+70/75 1 >€1.1bn -/A/A BAML/BNPP/ING/Natx/Nyk - Aug 27 2019 Svenska Handelsbanken SNP €750m Sep 3 2026 0.05 99.805 MS+50 / B+93.6 0.078 MS+70 area, MS+50/55 2 >€1.5bn A3/A Citi/CS/GS/HSBC/HCM Fr 30%, Ger/Aus 30%, Nordics 11%, UK/Ire 8%, S.Eur 8%, Asia 7%, Benelux 3%, Other 3%. AM 54%, Ins/PF 19%, CB/OI 14%, Bks/PBs 11%, Broker/Other 2%. Aug 28 2019 BAWAG €500m Sep 3 2027 0.375 99.178 MS+90 / B+132.1 0.48 MS+100 area, MS+90 (+/-2) - >€500m, >65acs Baa2 Barc/Erste/GS/HSBC/SG Ger/Aus 41%, UK/Ire 24%, S.Eur 13%, Fr 9%, Switz 5%, Asia 3%, Benelux 2%, Other 3%. AM 55%, Bks/PB 38%, Ins/PF 7%. Aug 28 2019 Bank of Nova Scotia €750m Sep 4 2026 0.125 99.576 MS+65 / B+106.5 0.186 MS+75 area - >€1bn A2/A-/AA- HSBC/JPM/NatWest/Scotia/UBS - Aug 28 2019 BNP Paribas SNP €1bn Sep 4 2026 0.125 99.258 MS+70 / B+111.3 0.232 MS+95 area, MS+75/80 - >€1.7bn Baa1/A-/A+/AH BNPP - Aug 29 2019 pbb €500m Sep 5 2024 0.125 99.498 MS+75 / B+116.5 0.226 MS+75 area 20 ~€625m -/A- CMZ/DZ/HSBC/LBBW - Aug 29 2019 SocGen €1.75bn Sep 6 2021 3mE+65 100.854 3mE+23 - 3mE+low 30s, 3mE+25 (+/-2) 3 ~€2.3bn, >65acs A1/A/A+/AH SG Fr 44%, Ger/Aus/Switz 29%, UK/Ire 16%, S.Eur 5%, Benelux 5%, Nordics 1%. AM 85%, Bks/PB 11%, CB/OI 3%, Ins/PF 1%. STERLING                           Aug 27 2019 CYBG £400m Sep 3 2027 (Sep 2026) 4 99.589 G+375 4.068 G+390 area - >£750m Baa3/BBB-/BBB+ BAML/Lloyds/MS/NatWest - SWISS FRANCS                           Aug 28 2019 Credit Suisse Group T1 SFr525m Perpetual (Nov 2025) 3 100 SARON+395.7 / MS+387.2 3 3%/3.25%, 3% 0 vs US$ SFr525m -/BB-/BB CS Switz 100%. PB/Retail 66.29%, AM 22.56%, PF 10.53%, Ins 0.62%. Aug 29 2019 Berner KB SFr70m incr (SFr220m) May 3 2027 0.4 106.524 MS+30 / Eidg+67 -0.443 MS+30/32 - - A1/ZKB AA- BernKB - Aug 29 2019 Berner KB SFr100m Sep 30 2039 0.1 100.745 MS+35 / Eidg+84 0.063 MS+30/35 - - A1/ZKB AA- BernKB - NON CORE                           Aug 28 2019 UBS T1 S$750m Perpetual (Sep 2024) 4.85 100 SOR+337.2 4.85 5% area, 4.85% - S$3.2bn -/-/BBB- UBS(GC)/DBS/StCh/UOB SG 71%, Asia 25%, Eur 4%. PB/Corp 65%, FM/Ins 33%, Bks 2%. Aug 28 2019 BEN Bank A$300m Sep 6 2024 3mBBSW+97 100 3mBBSW+97 - 3mBBSW+95/97 - - A3/BBB+/A- ANZ/NAB/UBS/WBC - Aug 28 2019 BEN Bank A$200m Sep 6 2024 1.7 99.869 ASW+97 1.7275 ASW+95/97 - - A3/BBB+/A- ANZ/NAB/UBS/WBC - Aug 29 2019 Liberty Financial A$200m Mar 6 2023 3mBBSW+260 100 3mBBSW+260 - 3mBBSW+265 area - - -/BBB- DB/NAB - Aug 29 2019 Suncorp-Metway A$350m Aug 24 2020 3mBBSW+40 1

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution US DOLLARS                           Aug 26 2019 Texas Instruments US$750m Sep 4 2029 2.25 99.689 T+75 2.285 T+95 area 7 US$3.1bn A1/A+/A+ BAML/Barc/JPM - EUROS                           Aug 27 2019 Atlas Copco €300m Sep 3 2029 0.125 99.12 MS+47 0.214 S+80bp area, MS+50/55 -11 ~€1.6bn -/A+/A+ BNPP/Citi/SEB - Aug 27 2019 GM Financial €650m Sep 2 2022 0.2 99.982 MS+75 / B+112.8 0.206 MS+100/105, MS+80 area 25 >1.55bn Baa3/BBB/BBB BBVA/CA-CIB/GS/Lloyds/MS/SG - Aug 27 2019 Hella €500m Jan 26 2027 0.5 99.928 MS+90 / B+136.4 0.51 MS+115/120, MS+90/95 7 >€1.3bn Baa1 CMZ/DB/LBBW/Uni Ger/Aus 77%, Fr 7%, UK/Ire 2%, S.Eur 10%, Switz 2%, Other 2%. FM 80%, Ins/PF 9%, Bks/PWM 10%, Other 1%. Aug 27 2019 Otto €50m incr (€300m) Apr 10 2026 2.625 101.962 MS+272.6 / B+317.2 2.3 2.375% area - - - DZ/ING/MM Warburg - Aug 27 2019 Prologis €600m Sep 10 2027 0.25 99.818 MS+65 / B+108.9 0.273 MS+90 area, MS+70/75 3 - A3/A- GS/HSBC/JPM/MS - Aug 27 2019 Prologis €700m Sep 10 2031 0.625 99.988 MS+80 / B+135.1 0.626 MS+110 area, MS+85/90 10 - A3/A- GS/HSBC/JPM/MS - Aug 27 2019 Prologis €500m Sep 10 2049 1.5 97.539 MS+150 / B+182.2 1.604 MS+165 area, MS+155/160 25 - A3/A- GS/HSBC/JPM/MS - Aug 27 2019 Siemens €1bn Sep 5 2021 0 100.633 MS+22 / B+57.1 -0.315 MS+50 area, MS+30 area 11 >€4.7bn A1/A+ GS/Barc/BBVA/BAML/CS/Helaba - Aug 27 2019 Siemens €500m Sep 5 2027 0 101.041 MS+30 / B+70.7 -0.207 MS+55/60 area, MS+35/40 11 >€2.2bn A1/A+ GS/Barc/BBVA/BAML/CS/Helaba - Aug 27 2019 Siemens €1bn Sep 5 2029 0.125 99.465 MS+45 / B+87.4 0.179 MS+75 area, MS+50/55 12 >€4.3bn A1/A+ GS/Barc/BBVA/BAML/CS/Helaba - Aug 27 2019 Siemens €1bn Sep 5 2034 0.5 99.282 MS+60 / B+109.3 0.55 MS+90 area, MS+65/70 12 >€4.3bn A1/A+ GS/Barc/BBVA/BAML/CS/Helaba - Aug 28 2019 Castellum €400m Sep 4 2026 0.75 99.735 MS+125 / B+166.7 0.789 MS+150 area   ~€900m Baa2 JPM/Nordea/SEB - Aug 28 2019 Engie €750m Mar 4 2027 0 100.007 MS+43 / B+85.2 -0.001 MS+65 area, MS+45/50 - >€1.25bn A3/A-/A CM-CIC/Lloyds/RBC/StCh Ger/Aus 19%, Fr 21%, UK/Ire 32%, Switz 7%, Benelux 6%, S.Eur 5%, Nordics 5%, Other 3%. FM 78%, CB/Agcy 12%, Bks/PWM 5%, Ins/PF 4%, Other 1%. Aug 28 2019 Hochtief €500m Sep 3 2027 0.5 99.252 MS+100 / B+142.5 0.596 MS+130/135, MS+105 area - >€1.1bn -/BBB BNPP/CMZ/DB/HSBC/SG(a), Miz/Uni(p) Ger/Aus 47%, Fr 18%, Benelux 15%, S.Eur 9%, UK/Ire 9%, Other 2%. AM 51%, Bks 36%, Ins 12%, Agcy 7%, Other 1%. Aug 28 2019 Hochtief €250m Sep 3 2031 1.25 99.591 MS+150 / B+200.2 1.287 MS+170 area, MS+150/155 - >€400m -/BBB BNPP/CMZ/DB/HSBC/SG(a), Miz/Uni(p) Ger/Aus 49%, UK/Ire 18%, Fr 17%, S.Eur 10%, Benelux 4%, Other 2%. AM 56%, Bks 19%, Ins 18%, Agcy 7%. Aug 28 2019 Molnlycke €500m Sep 5 2029 0.875 99.316 MS+125 / B+165.8 0.947 MS+160 area, MS+135 area - >€2.5bn -/BBB- Barc/BNPP/Nordea/SEB - Aug 28 2019 National Grid hybrid €500m Dec 5 2079 (Dec 2024) 1.625 100 MS+214.1 1.625 2.125% area, 1.75%/1.875%, 1.625% - >€5.2bn combined Baa3/BBB/BBB- GCs Barc/JPM, JBs BNPP/GS - Aug 28 2019 National Grid hybrid €750m Sep 5 2082 (Sep 2027) 2.125 100 MS+253.2 2.125 2.625% area, 2.25%/2.375%, 2.125% - >€5.2bn combined Baa3/BBB/BBB- GCs Barc/JPM, JBs BNPP/GS - Aug 28 2019 Orange €750m Sep 4 2026 0 100.168 MS+43 / B+84.9 -0.024 MS+70/75, MS+45/50 - >€2.25bn Baa1/BBB+/BBB+ GCs CA-CIB/GS. JBs Barc/BBVA/DB/ING - Aug 28 2019 Orange €1bn Sep 4 2032 0.5 99.3 MS+73 / B+126.9 0.556 MS+105 area, MS+80 area - >€4bn Baa1/BBB+/BBB+ GCs CA-CIB/GS. JBs Barc/BBVA/DB/ING - Aug 28 2019 Orange €750m Sep 4 2049 1.375 99.004 MS+138 / B+167.4 1.416 MS+165 area, MS+145 area - >€2.75bn Baa1/BBB+/BBB+ GCs CA-CIB/GS. JBs Barc/BBVA/DB/ING - Aug 28 2019 TVO €550m Mar 9 2026 1.125 99.691 MS+165 / B+206.8 1.175 MS+185 area, MS+165/170 - >€1.1bn BB+/BBB- BNPP/CA-CIB/Miz/Nordea - Aug 29 2019 Samhällsbyggnadsbolaget i Norden €500m Sep 4 2026 1.125 99.34 MS+167 / B+209.5 1.224

Green sovereign bond shoots are starting to sprout in Latin America, where governments from Patagonia to the Caribbean are establishing their environmental, social and governance (ESG) credentials. While the region’s corporates have been issuing Green bonds for some time, Latin American sovereigns have been slower off the mark. That is starting to change in a region that has had a mixed experience with Green bond issues. Chile earlier this year became the first Latin American country to sell Green bonds in US dollars and euros, while heads of public credit have said that Colombia and Peru are considering issuance as well. The region’s corporates have been tapping the Green bond market since Peruvian wind farm operator Energia Eolica issued Latin America’s first such security in December 2014. Since then Brazilian corporates have dominated, making up 48% of Green bond issuance since 2014, followed by Chile (16%) and Mexico (13%), according to S&P. Corporates and development banks have accounted for 80% of all Green bonds out of the region as of May, according to the ratings firm. Despite such strides Green issuers from the region still only account for a small fraction of overall volumes globally and from emerging markets. Of the more than US$100bn Green bonds issued globally so far this year, just US$3.5bn came from Latin America, according to the Climate Bonds Initiative and Refinitv data. With its recent deals, Chile is now among the top 10 sovereign issuers globally in term of amounts raised through Green bonds, according to Moody’s. France leads with US$20.825bn raised, followed by the Netherlands (US$6.662bn), Belgium (US$5.548bn), Poland (US$4.262bn), Ireland (US$3.459bn), Indonesia (US$2bn), Hong Kong (US$1bn) and Nigeria (US$71m).   SLOW GOING It may be some time before other Latin American sovereigns join the group. “We are in a very early stages of considering (a Green bond) as a possibility for the Republic of Colombia,” director of public credit and national treasury, Cesar Arias told IFR earlier this summer. The country has begun conversations with multilaterals and is arranging talks internally with cabinet members, he said. Issuers still have to weigh time and cost against the advantage of doing a deal, which more often than not provide few cost benefits versus non-Green bond deals. “The work done to eventually issue a Green bond is a fair amount,” Andres Perez, Chile’s head of international finance told IFR earlier this year. “It is taxing in terms of the amount of resources needed but it is also important for all our Green efforts.” Chile’s Green bonds were part of a broader ESG agenda by the administration of president Sebastian Pinera. And while the green label was not expected to affect pricing, it did broaden Chile’s investor base among a growing group of funds dedicated to ESG investing. “For the majority of issuers, it’s still a marginal [price advantage], although issuers may see other corporate imaging benefits,” said a New York-based syndicate banker. Selling Green bonds in a region that has been plagued by corruption scandals and transparency issues in recent years has proven difficult. Mexico City Airport’s series of Green bond issues fell foul of corruption allegations from president Andres Manuel Lopez Obrador, who eventually forced holders to sell back their bonds.

Pricing dateIssuerAmountMaturityCoupon (%)ReofferSpread (bp)Yield (%)Pricing stepsNIP (bp)Book sizeRatingsBookrunnersDistribution US DOLLARS Aug 28 2019 EIB US$3bn Sep 6 2022 1.375 99.687 MS+11 / T+6.25 1.482 MS+11 3 >US$6.9bn, >110acs Aaa/AAA/AAA Barc/BAML/TD APAC 45%, EMEA 36%, Amers 19%. CB/OI 53%, Bk Tsy 35% AM 12%. Aug 28 2019 JFM US$1bn Sep 5 2024 1.75 99.89 MS+47 / T+40.2 1.773 MS+48 area(I/G) 4 >US$1.3bn A1/A+ BAML/JPM/Miz/MS EMEA 45%, APAC 44%, Amers 11%. CB/OI 56%,Bks/PB 22%, AM/HF 9%, Ins/PF 7%, Other 6%. Aug 28 2019 KfW US$3bn Aug 5 2024 1.375 99.636 MS+15 / T+8.25 1.369 MS+15 area (I/G) 2 >US$4.75bn, >85acs Aaa/AAA/Scope AAA GS/HSBC/Nomura Europe 47%, Asia 40%, Amers 12%, Other 1%. Bks 49%, CB/OI 41%, AM 7%, Other 3%. Aug 29 2019 BNG US$3bn Sep 6 2022 1.5 99.81 MS+18 / T+13.45 1.565 MS+18 0 >US$3.3bn, 69acs Aaa/AAA/AAA HSBC/MS/Scotiabank/TD Amers 34.2%, Asia 33.7%, EMEA 32.1%. CB/OI 72.5%, Bks 22.8%, FM/Ins 3.7%, Other 1.1%. EUROS Aug 27 2019 Land Rhineland-Palatinate €250m incr (€500m) May 31 2029 0.25 105.741 MS-8 / B+37.9 -0.329 MS+8 area - - -/-/AAA HSBC/NordLB/RBI - Aug 28 2019 Finland €3bn Sep 15 2024 0 103.775 MS-20 / B+16.9 -0.734 MS-17 area, MS-18 area 4 >€13.6bn, >80acs Aa1/AA+/AA+ Barc/BAML/CA-CIB/Danske/GS Fr/Benelux 24%, UK 20%, Ger/Aus/Switz 14%, Nordics 13%, RoEur 20%, Amers 8%, ME/Asia 1%. FM 40%, CB/OI 25%, Bks/Tsy 22%, Ins/PF 7%, HF 6%. Aug 28 2019 Hamburg €250m Sep 3 2049 0.2 99.855 MS+15 / B+45.7 0.205 MS+15 area - >€290m -/-/AAA BLB/Deka/HSB/Natx/TD - Aug 28 2019 Hessen €250m incr (€500m) Jun 10 2022 0 101.769 - - - - - -/AA+ Uni - STERLING Aug 28 2019 Quebec £250m Dec 13 2024 0.75 99.715 G+52 0.806 G+52 area - - Aa2/AA-/AA- RBC/HSBC/NatWest - SWISS FRANCS Aug 28 2019 Stadt Lausanne SFr100m Sep 28 2054 0.05 100.087 MS+28 / Eidg+57.6 0.047 MS+28 - - -/A+/ZKB A+ CS/Raiff/ZKB - NON CORE Aug 27 2019 Rentenbank A$200m incr (A$450m) May 25 2029 3.2 116.411 ASW+44 / ACGB+48.5 1.39 ASW+44 - - Aaa/AAA/AAA JPM - Aug 27 2019 IFC Green SKr600m Sep 3 2026 0.0225 - - - - - - Aaa/AAA Nordea - Aug 28 2019 EIB NKr500m incr (NKr8.75bn) Jan 26 2024 1.5 100.561 - - - - - Aaa/AAA/AAA DNB -

Revenue declines caused by secular headwinds, weak covenants and an activist-dominated board favouring shareholders are some of the negatives facing Xerox bondholders, said JP Morgan after downgrading the company to underweight last week. Activist investors Carl Icahn and Darwin Deason now hold about 17.2% of Xerox’s common stock between them, and the board is heavily skewed towards investment professionals, including a former senior partner of Apollo Management, the bank noted. While management has vowed to maintain a strong balance sheet and return the company to investment grade, capital allocations have largely favoured shareholder returns over debt payments, it said. And that is likely to continue. “We believe Xerox’s capital policy will continue to disproportionably benefit shareholders,” the bank’s analysts wrote. While the company, rated Ba1/BB+/BB, has faced secular headwinds in its core printing business, it has enjoyed solid free cashflows as margins remain resilient. JP Morgan estimates that it will generate about US$1bn in free cashflow this year, though about US$850m of that is likely to go to shareholders via dividends and buybacks. Even so, with a comfortable maturity profile and slightly over US$700m in cash and equivalents, plus US$1.8bn of untapped revolver, Xerox should have little trouble making debt payments. That said a new holding company structure that is part of a recent reorganisation does pose risks for existing bondholders, the bank said. Xerox Corporation is now a direct wholly owned subsidiary of the holding company, which will act as guarantor on an existing credit facility and further senior note issuance. That holdco structure increases “risks around leverage and cashflows” through shareholder distributions, asset purchases and other moves that could be detrimental to bondholders. As Xerox’s bonds were issued when it was investment grade, they lack the protections imbedded in high-yield structures, such as debt capacity limits and restricted payments. There is nothing in the covenants that would stop Xerox from placing existing or new assets at the holdco, said Fitch in March. “To the extent Xerox places or acquires assets at the holdco, and/or guarantees future debt without extending the guarantee to existing bondholders, down notching of the non-guaranteed debt could be warranted,” the rating agency said. Rating agencies have expressed their uneasiness about asset sales and the lack of information about the use of proceeds. In March S&P and Fitch placed their respective BB+ and BB ratings on watch negative, with both agencies voicing concern about the planned sale of the customer finance unit. Such a sale could push leverage to over 4x if proceeds do not go towards debt repayments, said S&P at the time. Xerox was last in the primary bond market in 2017, when it was still investment grade and rated Baa3/BBB–. At the time it issued a US$1bn 2023 bond at 99.92 to yield 3.641%. Those bond have been trading at a dollar price of 102.1 or a yield of 3.476%, according to MarketAxess data. “At these levels, we view the risk/reward for Xerox bonds as asymmetrically skewed to the downside,” said JP Morgan.

Credit Suisse Group AG took advantage of unprecedentedly low rates and the hunt for yield to print the largest Tier 1 CoCo in the Swiss franc, and the first deal in the currency to benchmark against the upcoming SARON reference. The SFr525m perpetual non-call 6.25 Tier 1 issue started on Wednesday morning with IPTs at 3%–3.25%, before books opened for a minimum SFr250m at a 3% coupon and yield. A final book of SFr525m with 81 top-line accounts (fronting a much larger number of private wealth clients) saw the bonds sized to demand, with an initial and reset spread of swaps versus SARON+395.7bp, equivalent to swaps versus Libor+387.2bp. That level was in line with Credit Suisse’s recent US dollar Tier 1, and around 45bp wide of its Swiss franc bonds, both of which are illiquid and trading well over par. The first call is in November 2025, long after Swiss Libor is retired in favour of SARON. As such, the bonds will reset versus SARON, although the current Libor mid-swap rate was released for comparison. Private banks and retail took almost two-thirds of the paper, with a solid institutional bid from asset managers with 22.56% and pension funds with 10.53%. Insurers took only 0.62%. The bonds will be rated BB–/BB by S&P/Fitch. Although official denominations were 5k, Credit Suisse had an informal agreement to set a minimum 50k sale with its managers and investors. A permanent writedown will be triggered if the group’s CET1 ratio falls below 7%. Credit Suisse was sole bookrunner.

Thomas Cook managed to reach an agreement around a recapitalisation plan with Chinese investor Fosun Tourism, its lending banks and the majority of its bondholders, though it is not clear how well the latter will do out of the deal. Fosun will contribute £450m of new money to Thomas Cook in return for a stake of at least 75% of the tour operator business and 25% of the group’s airline. The Hong Kong group already ran a joint venture in China with Thomas Cook. Meanwhile, Thomas Cook’s bank lenders and bondholders will not only convert existing debt into equity, but also contribute an additional £450m of fresh cash. This will give them ownership of around 75% of the airline and up to 25% of the tour operator business. “It still looks unclear how much recovery is available to noteholders given their subordination to the RCF debt and hedging liabilities,” said an asset manager away from the transaction. He added: “Typically in these situations [the new money] comes into the capital structure as super senior debt, which would further layer any residual amount of the original notes.” According to the announcement the recapitalisation will also result in existing shareholders suffering a big dilution of their interests. Thomas Cook will launch three schemes of arrangement of group borrower companies to seek creditor consent to amend terms of the 2022 and 2023 senior notes and the 2017 revolving credit facility, according to the announcement. “If the deal crosses the line, Thomas Cook lives another day, but I would think that it’s game over for the existing equity holders and potentially for the noteholders as well,” said the asset manager. The bonds in question are the company’s €750m 6.25% June 2022 and €400m 3.875% July 2023 notes. Despite the news the bonds have moved little, both bid around 20 cash price last week, according to Tradeweb. The company’s shares are trading around 6p, having fallen some 80% year-to-date, according to Eikon data.

Investors showed enthusiasm for Deutsche Lufthansa, Fastighets AB Balder and Solvay’s returns to benchmark funding as the foot came off the accelerator for corporate issuance following a “manic” start to last week. Investors devoured Lufthansa’s issue, placing more than €3.25bn of orders for the €500m no-grow by mid-morning. Price thoughts for the five-year started at mid-swaps plus 125bp area but the healthy appetite shown by investors allowed guidance to be tightened and then further revised down to 85bp to 90bp before landing at the tight end of the range. The deal follows an investor call on Wednesday with the Baa3/BBB/BBB (Moody’s/S&P/Scope) rated issuer that had mandated Deutsche Bank, Goldman Sachs, JP Morgan and UniCredit. The credit last issued a benchmark in August 2015 when it raised €500m with a 5.25% 60-year non-call 5.5-year hybrid, now bid at 134.5bp on Tradeweb. “They have been funding in other markets over the intervening years, but the public market is so geared towards issuance at the moment that it made sense to come back,” said a lead banker. It attempted to return to the primary sector in 2016 but shelved a proposed €500m seven-year when it could not attain the desired pricing. Rather than put an exact figure on fair value the banker pointed to Ryanair, EasyJet and IAG as comparables. Ryanair has a €750m 1.125% August 2023 issue trading at 66.7bp bid, while EasyJet has a €500m 0.875% June 2025, bid at 95bpm, according to Tradeweb. Belgian chemical company Solvay issued a €600m 10-year, initially expected at €500m. IPTs of 110bp area over swaps attracted a book north of €2.3bn, allowing for the level to be moved by 28bp to 82bp. BNP Paribas and HSBC were global coordinators and also active books alongside Credit Agricole and MUFG. CreditSights saw a concession of between 5bp and 10bp when guidance was set at plus 85bp to 90bp. The spread was later set at 82bp. The proceeds will be used for an early repayment of a US$800m 3.4% 2020 issue among other general corporate purposes. The Baa2/BBB(Moody’s/S&P) rated issuer has only printed one other benchmark in the last four years, according to IFR data. “It’s absolutely another case of an issuer returning to the market because of how good conditions are for them,” said a banker on the deal. In November 2018, the company issued a €300m 4.25% perpetual non-call 5.25 hybrid, now bid at 222.6bp according to Tradeweb. Solvay has not issued senior debt since 2015. Fastighets AB Balder, a Swedish real estate company, issued a €500m January 2027 deal at 157bp above swaps via bookrunners Deutsche Bank and Danske. The BBB (S&P) rated company was the fifth Swedish corporate to issue last week following Atlas Copco, Castellum, Molnlycke Holding and SBB. “It was a manic start to the week and some of the issuers coming later in the week might benefit from it being a little less busy,” said a banker away from Friday’s issues. A second banker away concurred that the quieter market towards the end of the week, combined with the positive sentiment generated by the success of the deals earlier in the week, would likely benefit the later issuers.