ESG bonds grab biggest share yet of corporate sales

When one door closes, another one often opens, at least in capital markets. European banks, alarmed at the yields they have to pay to raise capital in their home currencies, have spotted an opportunity to achieve lower costs in Singapore dollars, printing S$3.2bn (US$2.3bn) of paper so far this year. As a wealth management hub, Singapore is home to a deep pool of private bank clients, who care less about ratings than the perceived strength of an issuer. That makes bank capital deals an ideal fit for the market, given that European Additional...

Vornado Realty Trust has amended and extended US$2.05bn of loans. The loans comprise a US$1.25bn revolving credit facility and a US$800m term loan. The RCF has been reduced from US$1.5bn and its maturity date extended to December 2027 from March 2024. The term loan will also now mature in December 2027, extended from February 2024. The revolver pays a margin of 115bp over SOFR and a facility fee of 25bp. For the term loan, the margin is 130bp over SOFR. Under an existing swap agreement, US$750m of the term loan has been swapped to a fixed...

CLOs are warning investors that rising rates and 40-year high inflation may impact on their returns. As recession fears mount after rapid interest rate hikes by the Federal Reserve to try to temper rising inflation, the floating-rate leveraged loan market is grappling with increased borrowing costs and the potential for higher defaults. CLOs are broadening the risk factor language in their deal documents to alert investors that rising interest rates and increased costs may weigh on the companies they lend to. If borrowers cannot make interest...

With the economic outlook worsening, a looming wave of restructurings looks set to break in the second half of the year and some issuers are already getting ahead of the curve and launched processes early this month. Many of the cases so far involve state-backed entities. On Tuesday, Scandinavian airline SAS filed for bankruptcy protection in the US under Chapter 11. The carrier, whose pilots are also on strike, had been in talks with its major shareholders, Sweden and Denmark, about raising capital. Each state holds 21.8% of the shares and...

Lombard Odier Investment Managers has launched a new sustainability-themed equity fund that will invest in opportunities arising from the transformation of global food systems, which the firm sees as a US$1.5trn market by 2030. While the war in Ukraine has raised the profile of the issue by exposing the vulnerability of food systems and supply chains, it is still a relatively underdeveloped area in financial markets. LOIM believes the global food and agriculture sector is about to undergo radical change on the scale of the energy transition...

The International Capital Market Association has announced new and updated definitions for key performance indicators used to measure the achievement of sustainability-related goals incorporated in sustainability-linked bond issues, suggestions that may influence the selection of targets used by loan issuers. The updated publications, released on June 28, may act as a guide to the still-developing sustainability-linked loan market in the US, influencing the standardisation of what remains a very tailored financial product. Wholesale adoption,...

In what seems a desperate effort to shore up liquidity, cash-strapped former SPACs are entering into agreements with hedge funds to sell stock in the future, but only under certain conditions. EV truck maker Nikola, which went public in March 2020 by merging with VectoIQ Acquisition and paid US$125m in December to settle fraud charges brought by the SEC against founder Trevor Milton, is one of a growing number of former SPACs to sign equity lines of credit (ELOC). Nikola has two such agreements with hedge fund Tumim Stone Capital totalling...

The holiday-shortened week brought little ECM activity, though ongoing angst about inflation, recession, and the impact on corporate earnings leaves little near-term scope for a significant pick-up in deal action. Though nine IPOs were on the road and scheduled to price this time last year, currently there are none and few hopefuls seem likely to push the go button this coming week. The past week's sole US ECM deal was a TSG Consumer Partners' US$98m sell-down of its stake in 2021 IPO and wine maker Duckhorn Portfolio, though the company's...

Enel, sustainable finance pioneer and leading issuer, wants the European Union to develop a separate Sustainability-Linked Bond Standard rather than folding SLBs in under the coming Green Bond Standard as the European Parliament proposes. Termed by some the “De Paoli suggestion” after the Italian utility’s chief financial officer Alberto De Paoli, the move marks Enel’s response to the bid by the parliament’s economic and monetary affairs committee to broaden the GBS – in part by applying it to all sustainable bonds, including SLBs, and not just...

Deezer took a pounding on its first day as a public company in Paris. The French music-streaming service listed via SPAC I2PO that is already infamous for the 91.4% redemption rate of SPAC investors that opted to redeem their shares at €10 rather than invest in Deezer. That decision already looked sound with I2PO shares at €8.50 for a number of days in a row, but on the first official day as Deezer on Tuesday the stock slumped to a close of €6, a near 30% drop for the day. On Friday afternoon the shares were even lower at €5.384. A banker...

European banks are facing a dilemma over when to repay ultra-cheap facilities obtained from the European Central Bank during the pandemic. In 2020 and 2021, banks borrowed €2.2trn under the third series of targeted longer-term refinancing operations, swelling the size of the ECB’s balance sheet significantly. What’s more, they were effectively paid 1% to do so, thanks to a discounted rate that came into effect in June 2020. The money was intended to help banks keep open their own facilities to businesses and households affected by the...

Property developers Times China Holdings and Helenbergh China Holdings were downgraded last week due to rising refinancing risk. Moody's lowered Times China's issuer rating to Caa1 from B2, and bonds rating to Caa2 from B3. Fitch downgraded Helenbergh China's issuer rating to B– from B+. It also put the company on rating watch negative, citing uncertainty over the repayment of its debt obligations in 2023. Times China has one onshore bond issue, Rmb1.1bn (US$164m) of 5.5% notes, due this year, but it also has US$300m of 6.6% bonds, US$500m...