IFR Magazine - June 13, 2020

JUNE 13 2020 ISSUE 2337 www.ifre.
com
Too much, too soon for frenzied credit market:

reality bites at end of rollercoaster week
In demand: six European sovereigns raise

€40bn from €303bn of orders in just two days
Lift-off for €10bn buyout financing for

ThyssenKrupp’s elevators division
STRUCTURED FINANCE PEOPLE & MARKETS LOANS LOANS

Morgan Stanley Loss adjuster: EQT’s €2.3bn fund 3ANTANDERûROCKETSû
to reopen UK derivatives losses lNANCINGûRAISESû UPûRANKINGSûASû
RMBS with weigh on trading the bar for private CRISISûSHAKESûUPû
£300m BTL deal PROlTS equity and ESG European lending
05 06 07 10
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Upfront
OPINION INTERNATIONAL FINANCING REVIEW
The coming storm Secondary education
F inancial markets got a dose of reality last week. They

needed it. At the begining of the week, equity and credit
markets were chugging along as if the March and April sell-
I f the latest Hong Kong listings are any guide, Chinese
companies have little to fear from US threats to kick them
off American exchanges.
offs were an aberration. Data showing the US unemployment The rapturous response to the secondary listings of
rate was “only” 13.3% in May was deemed good news. It Netease and JD.com underlines the depth of the local
wasn’t. It was terrible and a stark illustration of the economic following for big Chinese technology stocks. JD.com’s
devastation being wrought by Covid-19. 53BNûSHAREûSALEûISûTHEûCITYSûMOSTûPOPULARûPUBLICû
Yet the S&P 500 had turned positive for the year, the OFFERINGûOFûTHEûYEARûWITHûTHEûRETAILûPORTIONûCLOSEûTOûû
Nasdaq hit a record high and credit market indices were TIMESûOVERSUBSCRIBEDû.ETEASEûPOSTEDûAûSOLIDûlRST DAYû
moving closer towards levels that prevailed in January and pop, and traded on Friday at a small premium to its US
February rather than the peak of the sell-off in March. price.
That changed on Wednesday after Federal Reserve Chair These listings challenge the assumption that Chinese
Jerome Powell’s sober assessment of the US economy and companies would somehow struggle to fund their expansion
THENûCONlRMATIONûOFûANûUPTURNûINûREPORTEDûCORONAVIRUSû without access to the US equity market.
cases in parts of the US. Both were blunt reminders of what is -OREûSIGNIlCANTLYûTHEYûALSOûLESSENûTHEûTHREATûOFûAûFORCEDû
actually happening to those who had got heady on the easing delisting if Chinese companies fail to make their audit trail
of lockdowns and the prospect of a quick recovery. available to US regulators. Once a secondary listing is in
As a result, on Thursday, US and European equity markets PLACEûITûWOULDûNOTûBEûDIFlCULTûFORûAû#HINESEûCOMPANYûTOû
saw their biggest one-day falls since March – and credit make Hong Kong its primary trading venue, bringing
markets suffered in sympathy. international shareholders along with them.
Whether this becomes another prolonged sell-off or a few In fact, that switch may be already under way.
unsettling days before markets go on their merry way again Alibaba, which started the ball rolling with its US$13bn
remains to be seen. Hong Kong listing last November, has seen a much bigger
But the shock was coming. In the bond market, issuers were shift in its shareholder base than expected, with about
getting greedy and investors were back in “hunt for yield” mode. 46% of all trading over the past month now taking place in
“Madness”, “nuts”, “ridiculous” were just some of the the city.
words bankers used to describe the action. On Thursday, 33 million Alibaba shares changed hands in
Corporate hybrids? Yes please. Bank AT1s? Not a problem. Hong Kong, versus 29.7 million (via 3.71 million ADRs) the
Asian real estate? Here’s a US$20m order. same day in New York, giving Hong Kong a 53% share. At 55%,
4HEûDISCONNECTûBETWEENûECONOMICûREALITYûANDûlNANCIALû the Hong Kong stock will be deemed to have become
markets has never been greater. Alibaba’s primary listing, in a test the exchange applies over
We all know why, of course. So far this year, announced THEûWHOLEûlNANCIALûYEAR
GLOBALûlSCALûANDûMONETARYûSTIMULUSûAMOUNTSûTOû53TRNû A Hong Kong primary listing would not exempt Alibaba
according to Bank of America. from any US disclosure rules, but it would make it eligible for
!NDûTHATûlREPOWERûHASNTûALLûBEENûUSEDûUPû"UTûWHILEûTHEû the Stock Connect trading link with mainland China,
support of governments and central banks is necessary and opening up a new investor base. It would also simplify the
right following the coronavirus outbreak, one day there will cancellation of its New York listing, if such a move were to be
have to be a reckoning. enforced.
One day, companies that are maintaining a zombie-like If trading in JD.com and Netease follows a similar path,
existence will be unable to borrow any more money to cover any US attempts to use the capital markets as a trade or
their ever-bigger debt piles. political bargaining chip will carry little weight. The
One day, the economic realities of what’s happening will sooner politicians come to that conclusion, the
make themselves felt. better.
International Financing Review June 13 2020 1

Top news
Bottomless demand for sovereigns 04 Return of UK RMBS 05 Derivatives losses weigh 06
Too much, too soon for frenzied

credit market?
Bonds Investors gravitate towards riskier structures but mini sell-off brings renewed doubts
BY SUDIP ROY think we slow a bit, but don’t credit spreads haven’t recovered SURPASSEDûõBNû4HEûlRSTû
stop,” said the banker. to the tights of that period. three days of last week saw
Questions about the intensity of Even on Thursday as the S&P h4HEûMARKETûISûONûlREûANDû about €60bn of issuance – from
the credit binge were being 500 fell nearly 6%, some bond probably better than January SSA through to high-yield – with
raised towards the end of last issuers still managed to print and February when it was the week shortened by the
week after US and European deals. While a public holiday in thought we were in a utopian Corpus Christi holiday on
equity markets suffered their parts of Europe meant the euro phase,” said a syndicate banker Thursday.
biggest one-day falls since March market took a breather, three US before Powell’s comments. It is an even more incredible
on Thursday, bringing doubts high-yield issuers priced deals story in the US where
about whether the pace would and THAIOIL sold a US$1bn dual- investment-grade issuance
be sustained. tranche offering – inside fair
“I personally don’t volume of US$1.1trn is just
A sober assessment of the US value too – with some of the buy this strength. US$27bn shy of the amount
economic outlook by Federal paper going to US accounts. Give it three to six raised in the whole of 2019. The
Reserve Chair Jerome Powell on The second half of the week months and I think full-year record of US$1.33trn set
Wednesday, and a jump in WASûINûSTARKûCONTRASTûTOûTHEûlRSTû it has to unravel as in 2017 looks set to be smashed.
reported coronavirus cases in half as primary markets on both But while supply has boomed
the reality and costs
some US states in the south and sides of the Atlantic were busy – ever since central banks began
west on Thursday, led to despite the odd no-go call.
of Covid are seen” pumping unprecedented
renewed selling. While sovereigns led the way, amounts of liquidity into the
Whether this becomes a WITHûlVEûEUROZONEûGOVERNMENTSû lNANCIALûSYSTEMûINûRESPONSEûTOû
prolonged sell-off or just a minor raising funds and three other the coronavirus outbreak, the
correction of a market that had European nations pricing rally was causing a sense of
risen too fast, too soon remains publicly syndicated bonds, the disquiet in some quarters.
to be seen, but both Powell’s credit markets across the world “I personally don’t buy this
comments and the coronavirus were also active as investors STRENGTHû3HORTûTERMûlNEûTHEREû
data delivered a reality check to gravitated towards lower-rated is a huge amount of cash trying
investors who had begun to get issuers and riskier structures. REALITY CHECK? TOûlNDûAûHOMEûANDûCERTAINû
excited about the prospect of a “The huge bid for bank At €269bn, publicly syndicated SECTORSûSUCHûASûTECHûWILLûBENElTû
quick economic recovery. capital, corporate hybrids, Asian issuance by European sovereigns and rightly should be strong. But
“I think we needed it as the high-yield and so on is in the euro and sterling markets give it three to six months and I
market was too frothy and incredible,” said another senior is already almost double the think it has to unravel as the
issuers were getting greedy,” banker earlier in the week. amount raised in the whole of reality and costs of Covid are
said a senior banker on Friday. The market backdrop was so 2019. No other year in recent seen,” said one fund manager.
Bankers may now have to good ahead of Wednesday’s times has seen €200bn of Others agreed that there will
reassess their pipelines and the FOMC meeting that some issuance. be an eventual fallout. “Maybe
speed at which they planned to thought it was even better than As for euro issuance overall, lNANCIALûMARKETSûHAVEûNOWûJUSTû
bring deals into the market. “We at the start of the year even if the total for the year has already BEENûCOMMODITISEDûBYûlSCALûANDû
had a few issuers early in the monetary stimulus, the latter
week that said ‘no’ as we were a RECOVERING GROUND mostly. It’s simply now too
few basis points wider. Now I THE AVERAGE YIELD ON EURO BB CREDITS much money chasing too few
%
guess they are 25bp wider. So 7.5
lNANCIALûASSETSûWHETHERûTHATûISû
that could mean they say ‘no bonds or stocks,” wrote Tim Ash,
way, I need to get the 25bp back’ 6.5 EM sovereign strategist at
or they could say ‘OK, I messed BlueBay.
5.5
up and this could retrace more’. “And the instruments
It’s too early to tell,” said the 4.5 themselves now have no
banker. relationship to the underlying
3.5
The good news for bond assets or investments, whether
markets is that the technical 2.5 that is companies or sovereigns.
support is still huge. “Investors – There has to be a price for all
and the ECB – are still buying. 1.5 this, surely. Maybe later on in
2/1/20 2/2/20 2/3/20 2/4/20 2/5/20 2/6/20
We will just need to see higher INmATIONûORûPERHAPSûBADûPOLICYû
new-issue premiums. Net-net, I Source: iBoxx/Refinitiv choices.”
2 International Financing Review June 13 2020

For daily news stories
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EQT raises the bar for ESG 07 Lift-off for TKE 08 Santander rockets up rankings 10
In the meantime, though, the credits was evident in the euro IN ON THE ACT that’s reducing defaults,” said
fear of missing out pushed corporate market as three High-yield issuers were also !ZHARû(USSAINûHEADûOFûGLOBALû
investors into corners of the unrated issuers – Portuguese getting in on the act. Following credit at Royal London Asset
market they would not have utility GALP ENERGIA, French only a trickle of deals in Management.
looked at just a few weeks ago. small appliance manufacturer European primary over the past “That creates an environment
“It looks like the yield hunt SEB, and ILIAD, a three months, supply began to on the technical side that is very
has reached its illogically logical telecommunications operator pick up. supportive. Defaults aren’t
height,” said Olga Budnovits, a across France and Italy – raised going to be anything like what
portfolio manager at Main funds. Galp and SEB had not “Hybrids are of great people thought they were going
Partners. issued since 2017. interest to us at the to be two months or even a
“It was not that long ago moment. I am getting month ago.”
TAKING ADVANTAGE that you would have advised
Borrowers can hardly be against unrated borrowers
something like a CAUTIONARY TALE
blamed for taking advantage. issuing, but the market is in Double B yield on a But while sectors such as
In emerging markets, for good shape,” said another bond from what is high-yield and emerging
example, supply from Africa syndicate banker as these usually a very high markets play catch up, other
tentatively started again even deals priced. quality issuer” areas were providing a
though several governments cautionary tale.
from the region are seeking MOMENTUM PLAY On Monday, Additional Tier 1
debt relief. DEUTSCHE BORSE and VW, transactions from COMMERZBANK
HELIOS TOWERS (B2/B), a meanwhile, maintained the and ABN AMRO demonstrated the
telecommunications company momentum in the recently strength of the primary market,
in Africa with a portfolio of reopened corporate hybrid with combined demand for the
AROUNDûûTOWERSûACROSSûlVEû market. two trades peaking above
countries, priced a US$750m h)TûISûAMAZINGûHOWûSOMEûOFû €19.5bn.
5.5-year non-call two issue at a those credits that a few months Leading the way was VIRGIN But by mid-morning on
yield of 7.125%. That compared ago you would have been wary MEDIA as it dipped into the euro, Tuesday both deals were bid
with initial talk of the 7.75% of have really rallied,” said a sterling and US dollar markets below par, at 99 and 98.60,
area. banker at one of the leads as VW to clean up its debt stack prior respectively, setting a new tone,
Initially the company was priced its €3bn dual-tranche to its merger with O2. bankers said. By Friday morning
targeting a US$425m deal to offering. “Finally the European issuers they had fallen to 97 and 97.62
fund a tender offer on its “Hybrids are of great interest are coming out of hiding,” said a respectively, according to
US$600mn 9.125% senior notes to us at the moment. I am high-yield analyst. 2ElNITIVûPRICES
due 2022. getting something like a Average junk bond yields Still, demand for less
But such was the level of Double B yield on a bond have recovered to 4.3%, down straightforward deals did not
interest following a day of from what is usually a very from a peak of 8.9% in March, disappear as on Wednesday BPER
marketing, the tender was high quality issuer,” said an ACCORDINGûTOû2ElNITIVûDATAû BANCA BECAMEûTHEûlRSTû)TALIANû
cancelled and the deal was investor. Some analysts are cautiously lender outside the country’s top
UPSIZEDûWITHûTHEûPROCEEDSûNOWû h'IVENûTHEûYIELDû)ûCANûlNDûINû optimistic about the outlook, tier to enter the market since
to be used to fully take out the senior, even if I go to the more thanks to supportive technicals. the coronavirus outbreak.
2022s at their call date next riskier issuers which I don’t “In high-yield, there’s been And NATIONWIDE BUILDING SOCIETY
month. really want to do, there is a clear no supply, because issuers took the AT1 revival to the
Another regional issuer, BENElTûTOûHYBRIDSûANDûWEûHAVEû haven’t needed to come. But sterling market, printing a
AFRICA FINANCE CORP (A3, actually increased their share in because of government support £750m deal on more than
negative outlook) was also in our portfolio.” they’ve got liquidity anyway and £4.4bn of demand. It was the
the market on the same lRSTûSTERLING DENOMINATEDû!4û
RUNNING OUT OF STEAM
day. The pan-African since November.
S&P 500 INDEX
multilateral institution, h)TSûAMAZINGûHOWûFARûWEVEû
3,300
based in Nigeria, sold a come and we really are getting
3,250
53MûlVE YEARûBONDûATûAû 3,200
very close [to pre-crisis
yield of 3.25%, signifying a 3,150
spreads],” said a DCM
minimal premium at most. 3,100 banker. “The worry is whether
“The screen was full on 3,050 we have, in the last three or
Tuesday and order books 3,000 four days, moved too far too
everywhere were stellar. Fish 2,950 fast?”
aren’t biting – they’re 2,900 “The market needs to
swallowing the whole bloody 2,850 consolidate because you can’t go
arm you hold out,” said the 2,800 10bp tighter every day.”
11/5/20
13/5/20
15/5/20
17/5/20
19/5/20
21/5/20
23/5/20
25/5/20
27/5/20
29/5/20
31/5/20
10/6/20
6/6/20
8/6/20
2/6/20
4/6/20
syndicate banker. Additional reporting by Eleanor

Another example of the Duncan, Tom Revell, Ed Clark, Robert
growing interest in esoteric Source: Refinitiv Hogg

Top news
Bottomless demand for sovereign issues
Bonds Investors clamour for sovereign paper in banner week for syndications
BY HELENE DURAND we have an unprecedented level they need more [funding] and though they were higher-rated
of central bank support which they all want to come before the names,” he said.
Six sovereign issuers descended GIVESûTHEûMARKETûCONlDENCEv summer,” another DCM banker Not that bumper supply has
on the European primary market Syndications have become a said. been an issue for the market.
last week, raising €40bn- mainstay for sovereign issuers Spain and Ireland, for Spain’s €12bn 20-year saw
equivalent over two days in an trying to chip away at their example, had recently outlined books pass €78bn, Ireland’s
extraordinary manifestation of increased funding needs UPSIZEDûFUNDINGûNEEDS €6bn 10-year had demand over
demand that saw books peak over resulting from the coronavirus “The ECB has buoyed markets €69bn, while Greece’s €3bn 10-
€303.5bn-equivalent, despite the pandemic. and the tone is phenomenal, so year had interest of more than
relentless pace that has Over €269bn-equivalent has clearly the decision to come now €15.75bn, all thanks to a market
characterised the sector in 2020. been raised using the method in is the right one,” he said, adding held aloft by an all-powerful
IRELAND, SPAIN and GREECE, three euros and sterling this year, that other sovereigns that had central bank.
issuers that almost a decade ago versus over €139bn-equivalent wanted to bring their deals last “If the ECB didn’t buy any
were caught up in one of the for the whole of 2019, according Tuesday, opted to step back bonds, we would be in a very
worst sovereign crises to hit the to IFR data, and bankers expect when it became clear how much different place, but not just in
region, were greeted by a deluge the tempo to remain rapid while supply was expected. sovereigns, it would have an
of investor demand. conditions are strong. “You could have had a bit of a impact on all markets,” said a
They emerged on the same “All these sovereigns are TRAFlCûJAMûBUTûSOMEûISSUERSû lead banker on Spain’s trade.
day as the UK brought a £9bn accelerating their plans because decided to step back, even
October 2050 and ahead of NORMALISING
another €9bn that was priced BUMPER YEAR FOR SOVEREIGN SYNDICATIONS Bankers across the board agreed
the following day by GERMANY €bn that concessions, having been
equivalent
and FINLAND. 300
elevated during the peak of the
“There are six hundred billion pandemic, were showing signs
reasons why, as an investor, you 250 of normalising and getting back
should buy bonds,” said a DCM to pre-coronavirus levels at
200
banker referring to the ECB around 3bp–4bp.
Pandemic Emergency Purchase 150 “Concessions are narrowing and
Programme that was increased compressing,” a head of SSA
100
by €600bn at its last meeting. syndicate said. “Sovereigns are
171 125 121 133 167 122 139 269
He added: “You have to 50 clearly cheaper than they were
remember, some of the big issuers pre-Covid, but given the amount of
0
like ESM or KfW have been 2013 2014 2015 2016 2017 2018 2019 2020 ytd supply that’s out there, it’s getting
missing from the market, while Source: IFR absorbed so easily. The ECB is a
Technicals overwhelm fundamentals

Bonds Cashed up investors look past flashing economic warning signs
BY WILLIAM HOFFMAN spreads seen in January 2019 analysts noted in a report improve to around 5.5% by 2022,
when concerns of excessive released last week. while output is expected to have
US high-grade credit spreads corporate debt peaked, but “With recent data suggesting contracted by 6.5% at the end of
have retraced their wides of the spreads are still wide of the that the most severe recession this year, compared with the
year and many market tights of January when average since World War II will also lNALûQUARTERûOFû
participants believe strong spreads were 99bp over. likely be the shortest one, risk “Sooner or later spreads have
technicals will keep the This spread tightening was premia will likely remain well- to adjust to the reality that
premium over Treasuries low triggered by the combination of behaved as investors continue to economic data are going to be
despite weak underlying the Federal Reserve’s look through the unprecedented bad for a very long time or the
economic fundamentals. commitment to back the bond contraction in earnings and fundamentals – earnings, GDP
Spreads for high-quality market with corporate REVENUEûTHATûMARKEDûTHEûlRSTû growth, consumption – need to
names have retraced 90% of their purchases in primary and half of the year.” improve,” said Jeff MacDonald,
coronavirus crisis-induced secondary markets and the The short-term picture is HEADûOFûlXED INCOMEûSTRATEGIESû
widening as average high-grade US$1.1trn injected into the certainly bleak as Fed chairman at Fiduciary Trust International.
credit spreads fell to 156bp over market on the back of that Jerome Powell made clear in a “Someone needs to blink in
Treasuries last Monday in from promise. PRESSûBRIElNGûONû7EDNESDAY this game of chicken between
400bp over in late March, “The speed of the recovery in He expects the US economic fundamentals and the
according to ICE BofA data. risk appetite has positively unemployment rate to end the pricing of risk assets, especially
Current levels match average surprised us,” Goldman Sachs year around 9.3% and only spreads in investment grade.”

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driving force in terms of spread

performance and concession
While France may have
cracked open the 20-year part of Morgan Stanley to
compression. It’s the main route the curve for sovereigns last
alongside the EU plan which is
spurring on this compression.”
month, Spain surpassed its
EUROZONEûPEERûBOTHûINûTERMSûOFû
reopen UK RMBS
Leads started marketing DEMANDûANDûDEALûSIZE Structured Finance Buy-to-let deal due this week
Ireland’s trade at the 34bp area “It’s a testament to Spain that
over mid-swaps and then ITûCOULDûRAISEûSUCHûAûLARGEûSIZEûINû BY CHRIS MOORE €80bn–€85bn, which would have
managed to land it 4bp tighter. 20-year,” a banker working on been the highest since 2009.
h)TSûPHENOMENALvûTHEûlRSTû the deal said. MORGAN STANLEY PRINCIPAL FUNDING is In the UK, non-bank lenders,
DCM banker said. “It has to be “Rates are very low so CLOSEûTOûPRICINGûTHEûlRSTûPUBLICLYû which typically rely on
one of Ireland’s biggest books, if investors appreciate the yield offered UK securitisation since the securitisation for funding, are
not the biggest, and a great they can get with Spain against coronavirus outbreak shuttered likely to contribute the bulk of
follow-on from their seven-year. a relatively limited political markets. new issuance through the rest of
And it’s of extremely high uncertainty.” Last week sole lead Morgan the year.
quality, a real barnstormer.” Stanley announced a £300m UK However their portfolios are
Italy’s €14bn 10-year deal the STRONG STATEMENT buy-to-let RMBS called TUDOR ROSE typically more vulnerable than
previous week had shown the And for Greece, which was MORTGAGES 2020-1, securitising banks’ to economic stress caused
depth of the investor base in that bringing its second syndication mortgages it bought from Axis by the coronavirus, and there are
part of the curve, though since the ECB started purchasing Bank UK. Axis is a subsidiary of concerns about how many of the
Ireland’s absence from the tenor its paper, demand closed over India’s Axis Bank and is being mortgages currently on payment
in the syndicated format in recent €15.75bn for a €3bn deal. Pricing wound down by its parent. holidays may end up defaulting.
times helped spur demand. landed at 160bp over mid-swaps, “It is not what we would have Some 15.8% of the mortgages in
“Ireland’s on-the-run 10-year the tight end of the 170bp– wanted but we should be the Tudor Rose portfolio were on
was getting old, so it was time 175bp IPTs and offering around grateful for small mercies,” said Covid-19-related payment
for them to do a new 10-year,” 10bp of concession. one ABS investor. holidays as of April 30.
the DCM banker said. At 160bp, the deal offered a Back in 2009 it was Lloyds !"3ûSYNDICATEûOFlCIALSûREPORTû
“Also, in pre-Covid days, they coupon of 1.5%, versus Italy’s Bank that reopened UK RMBS a growing, but modest, sterling
were trading very close to 1.65% last week. AFTERûTHEûlNANCIALûCRISISûWITHûANû pipeline from non-high street
&RANCEûPRETTYûMUCHûmATûBUTûTHEû “Greece has been on quite a issue from its Permanent RMBS issuers – all waiting to see what
spread is back to high teens/20s journey in the last couple of master trust. investors make of Tudor Rose.
area versus France, so Ireland years,” a lead banker said. “So And last year, after a “If it tightens in from initial
offers value again.” much of their long-term lRST QUARTERûLULLûWHENûINVESTORSû price thoughts it will surpass
In the case of Spain’s 20-year, funding has been soaked up for and issuers fretted over Libor many expectations, which
the pricing level was set at 28bp OFlCIALûINSTITUTIONSûWHICHû replacement and new regulations, would be super-encouraging,
over the mid-price of the means that they have very little it was Nationwide’s Silverstone and other programmes and
sovereign’s July 2035 Bono, funding needs. For them to master trust that successfully shelves could build from there,”
down from initial price price at this level versus Italy reopened the market. said one securitisation banker
thoughts in the low 30s. was really impressive.” But Tudor Rose – for all the away from the deal.
historical associations of the SPV “And if reception is a bit more
name – is a far cry from those lukewarm, that wouldn’t give
TECHNICALS OVER “You can look at the rebound established programmes from me any concerns about investor
FUNDAMENTALS and say that markets are too far familiar high street lenders. appetite or cash because it’s
The market continues to look out ahead of it, but at the end of However those lenders show evident that that’s out there –
past these dismal economic the day the technical is just so no sign they want to securitise. it’s just a question of [spread]
numbers as spreads are now strong that it’s likely that credit This year should have been a levels currently, and levels are
tighter than at any point during moves tighter,” said Jason Shoup, bumper year for UK RMBS as improving week by week.”
the previous recession. head of global credit strategy at banks and building societies Tudor Rose is offering a £253.9m
$URINGûTHEûOFlCIALû Legal & General Investment upped issuance to fund Triple A (S&P/DBRS) tranche with
recessionary period from Management America. redemptions coming due from the spread set at Sonia plus 125bp
January 2008 to June 2009 the At the start of the year one the Bank of England’s Term and issue price to be decided.
lowest average high-grade credit bank’s head of US syndicate Funding Scheme. Initial price thoughts on Thursday
spreads fall was 205bp over predicted spreads would end the But now the opposite is true: were Sonia plus mid 100s, and by
Treasuries and the median over year in the 150bp–180bp range. those redemptions can be met by Friday afternoon the tranche was
that same period was 251bp, Despite all the volatility from the renewed central bank support, more than 1.7 times covered.
according to ICE BofA data. the pandemic he still thinks including the new TFSME Also on offer are AA/AA, A+/A
While there is an spreads will end up in that operation, which was introduced and A–/BBB tranches, with IPTs of
acknowledgement that the range. following the onset of Covid-19. low to mid 200s, high 200s and mid
economics are extremely poor However, that prediction is to high 300s. The BBB–/BB, BB/B and
right now, investors believe the dependent on a smooth FORECAST SLASHED BB+/BBH tranches are shown as
technicals such as low supply reopening of the economy. That has led Barclays to slash its hCALLûDESKvûWITHû)04SûONûTHEûlRSTû
expectation in the second half of While conditions in New York forecast for 2020 European two tranches at mid to high 400s to
THEûYEARûANDûANûINmUXûOFûFOREIGNû have improved, at least 20 states securitisation (excluding CLOs) to 500bp area, and low 600s.
investors outweigh the are reporting a new surge in €50bn, the lowest annual total Pricing is targeted for early
fundamentals. Covid-19 cases this week. since 2009. It previously expected this week.

Top news
Derivatives losses weigh
on bank trading profits
People & Markets Provisions seen as a major focus in the coming quarters
BY CHRISTOPHER WHITTALL Securities, which competes with when markets nosedive, as they swap in which it regularly pays a
banks trading products did earlier this year. BANKûAûlXEDûSUMûINûEXCHANGEû
The largest investment banks including bonds and cleared Instead, the bank must judge for an amount pegged to a
reported a tenfold annual derivatives, suggested the losses how likely a client is to default mOATINGûINTERESTûRATEûnûAû
increase in losses related to could even cause some banks to over the life of a trade and bake common trade for those looking
DERIVATIVESûTRADESûINûTHEûlRSTû reassess their activities. that into how it accounts for the to hedge against an increase in
quarter, a foretaste of how these “What we always see after position, via a so-called credit borrowing costs. March’s decline
activities are likely to curb these types of crises is that valuation adjustment. in interest rates caused the
PROlTABILITYûINûTRADINGûUNITSûTHISû certain banks reconsider their The bank also adds a funding BANKSûmOATINGûPAYMENTSûTOû
year and may even force some to positions in these markets valuation adjustment to account decrease markedly, putting it “in
reassess their presence in these because they either lost more for times when it effectively the money” on the swap.
markets. money than expected or they lends to (or borrows from) the But even though the value of
Losses from credit and just realise that the capital client during the life of a trade – the bank’s position rose, it can
funding charges on derivatives commitment to being involved a common feature of long-dated only realise those gains if its
positions at the top 12 isn’t commensurate with the derivatives. client remains solvent and keeps
investment banks totalled more opportunity,” he said. “CVA and FVA numbers tend making its swaps payments. As
THANû53BNûINûTHEûlRSTûTHREEû to be large for any banks that the corporate treasurer doesn’t
months of the year, according to SUBSTANTIAL RISKS have a big derivatives business,” post margin, the bank now has a
Amrit Shahani, research director Trading derivatives, while said Jon Gregory, a senior greater exposure to its client and
ATûANALYTICSûlRMû#OALITIONûAû usually a lucrative activity for adviser at consultancy Solum MUSTûINCREASEûITSû#6!ûTOûREmECTû
tenfold increase compared with banks, is also fraught with risks Financial, who has written that.
the previous year. That took the that go far beyond whether the extensively on the subject. If the crisis has also made the
shine off a bumper quarter for value of a position rises or falls. “It’s a business that, in very client more likely to default, as
most banks’ trading units, Chief among these is abnormal market conditions measured by wider credit
whose annual revenue gains of counterparty risk, the danger when volatility is high, is very spreads, the bank will have to
more than 32% declined to 14% that the entity on the other side sensitive to basis risks and raise credit provisions still
when including the losses. of the trade goes bust. second order risks that can further.
The scale of the losses – which Derivatives contracts are suddenly look really “The fact that banks are being
mainly relate to provisions often lengthy, tying a bank to its substantial.” cautious in terms of provisions is
against a potential rise in client client for years or even decades. to be expected,” said a senior
defaults as well as an increase in Most trades pass through MARKET SLUMP bank trader. “No one knows
banks’ funding rates – lay bare middlemen known as clearing -ARCHSûSLUMPûINûlNANCIALû what the actual data look like in
the eye-watering costs banks can houses to combat counterparty markets proved a potent terms of bankruptcies. The only
incur on these complex products risk, but many clients such as cocktail for desks handling thing you can do is to be
when market volatility rises. corporate treasurers deal banks’ derivatives trades. cautious.”
Analysts say the charges will directly with banks to avoid Interest rates plummeted, There is a also funding
remain a major focus in the having to post large sums of altering the value of contracts component to consider, as the
quarters to come, not least margin if a trade moves against struck at higher levels, while bank may have to meet margin
because of discrepancies in the them. company borrowing costs calls on trades it had entered in
SIZEûOFûPROVISIONSûDIFFERENTû Not receiving margin poses a rocketed. the cleared, interbank swaps
banks have made. SIGNIlCANTûPROBLEMûFORûTHEû Consider a corporate market to offset its client
h)TûWILLûBEûSIGNIlCANTûGIVENû bank, leaving it open to losses treasurer with an interest-rate position. Financing those margin
how much these charges impact calls may become costlier still if
TOP 12 INVESTMENT BANKS' CREDIT AND FUNDING DERIVATIVES
their performance. It changes the bank’s own borrowing rate
LOSSES IN FIRST QUARTER
their market share, it changes has increased. As a result, the
US$m
their rankings and it changes 4,000
bank’s FVA on the trade rises.
HSBC
the return on equity for JP Morgan reported the
3,500 UBS
shareholders,” said Shahani. heaviest losses related to
3,000 BofA
“Some banks that have been DERIVATIVESûCHARGESûINûTHEûlRSTû
2,500 Goldman Sachs
conservative in booking these quarter – US$951m - which it
charges could start looking 2,000 said was predominantly driven
JP Morgan
better as the quarters go by, 1,500 by a widening in funding
while those who were more 1,000 spreads. Bank of America and
optimistic could end up looking 500
All 12 banks All others Goldman Sachs recorded losses
much worse.” 0
in the region of US$500m.
Paul Hamill, global head of 2019 2020 JP Morgan has the largest
FICC distribution at Citadel Source: Coalition (aggregate numbers); company earnings (individual bank losses) derivatives book of all US banks,

visit www.ifre.com
ACCORDINGûTOûTHEû/FlCEûOFûTHEû
Comptroller of the Currency, at EQT raises the bar for ESG
nearly US$70trn, 63% of which
aren’t centrally cleared. People & Markets Private equity firms start to show ESG colours
FUNDING LOSSES BY TESSA WALSH focus on biodiversity, climate companies to maximise social
A lack of transparency around and social responsibility. change and generate valuable
how banks calculate and A sharp rise in ESG-linked fund 4HEûlRMûHASûõBNûOFûASSETSû data.
disclose their numbers makes it lNANCINGûTOPPEDûBYûAûõBNû under management across 19 “We see this fund facility as
hard to predict how the sustainability-linked loan for active funds in private capital, the most suitable and
situation will evolve in the Sweden’s EQT shows that real assets and credit. interesting opportunity at this
coming quarters. PRIVATEûEQUITYûlRMSûAREûFUTURE “We are driving beta actions, stage to insert ESG into the heart
One central takeaway is PROOlNGûPORTFOLIOûCOMPANIESûTOû where we want to increase the of the value proposition for our
that funding losses appear to protect their returns, and ESG hygiene level overall in the clients and accelerate a system
have been the dominant highlights a potentially lucrative portfolio because the market transformation,” Lennehag said.
force so far. UBS reported a stream of new deals for banks. needs to reach a new level,” said
US$378m loss on FVA and %14SûFUNDûlNANCINGûCANûTOPû Therese Lennehag, head of TWO TRACKS
53MûONû#6!ûINûTHEûlRSTû out at €5bn and raises the bar for sustainability at EQT. “Then we &UNDûlNANCINGSûAREûUSEDûTOû
quarter, a breakdown experts the private equity sector as the dive in to each of EQT’s portfolio IMPROVEûPRIVATEûEQUITYûlRMSû
say is broadly indicative of the biggest ESG-linked fund bridge companies and work with the returns by bridging capital
wider industry. facility. It follows a deal for things that will create alpha commitments from limited
That may be, in part, because KKR’s Global Impact Fund earlier VALUEûSPECIlCûTOûTHEIRûINDUSTRYû partners. Two types of fund
there is no simple way for LASTûWEEKûWHICHûWASûTHEûlRSTû53û operations and value lNANCINGûDEALSûLINKEDûTOû%3'û
banks to guard against an FUNDûlNANCING proposition.” commitments are emerging,
increase in FVA. By contrast, It is a bold move designed to EQT has a 10-year track record in line with similar
they can hedge counterparty drive change throughout the in ESG, which puts it at the developments in the loan and
risk at the outset of trades by companies that EQT owns by forefront of ESG adoption in the bond markets.
buying instruments such as linking pricing on the PRIVATEûEQUITYûINDUSTRYû4HEûlRMû Deals that focus on “use of
credit-default swaps. sustainability-linked loan to the was also an early signatory to proceeds” are earmarked for
“FVA is something that can’t performance of EQT’s future the UN’s Principles of SPECIlCûPROJECTSûWHEREASû
be hedged ... so it tends to be portfolio companies. Responsible Investing. sustainability-linked deals tie
more volatile,” said a second “This is a game-changing 4HEûlNANCINGûISûBEINGû THEûCOSTûOFûCAPITALûTOûlRMSû
senior bank trader. moment for EQT, but also for provided by a syndicate of 17 progress on ESG targets outlined
The fact that there is no the private equity industry,” said global banks, including BNP in corporate CSR strategies
industry standard for 0ERû&RANZENûPARTNERûANDûCO Paribas and SEB as sustainability aligned with the UN’s
calculating FVA muddies the head of EQT’s private equity coordinators. BNP Paribas is also Sustainable Development Goals
waters still further. Some banks advisory team. facility agent and sustainability and Paris climate targets.
may use internal funding Pricing on the loan is tied to agent. KKR’s recent deal was a use of
CURVESûOTHERSûMAYûDECIDEûANû whether EQT’s portfolio h0RIVATEûEQUITYûlRMSûREALISEû PROCEEDSûFUNDûlNANCINGûALONGû
aggregated industry borrowing companies hit key performance they can play a role in furthering with another €80m deal for an
rate is more appropriate. Some indicators. Aggregated results THEûSUSTAINABLEûlNANCEûAGENDAû unnamed global private equity
may even ignore a rise in will drive improved pricing on and incorporating ESG in fund lRMûINûLATEû-AYû"OTHûDEALSûWEREû
borrowing rates if they think it the bridge facility, creating a lNANCINGûFACILITIESûISûAû arranged by Standard Chartered.
will be temporary. virtuous circle, where better demonstration of this,” said &RENCHû0%ûSHOPû%URAZEOûALSOû
Whatever the approach, ESG progress lowers capital costs Alexandra Basirov, global head completed a €1.5bn SLL fund
there’s no getting around the and improves resilience. OFûSUSTAINABLEûlNANCEû&)#ûATû lNANCINGûINû*ANUARYûTHATûLINKEDû
fact that these enormous EQT has selected three KPIs, BNP Paribas. to carbon neutrality at the
costs exist for banks and will for gender equality, renewable EQT is well capitalised after its corporate level, and
have to be absorbed at some energy transition and IPO in September 2019 and sustainability governance for its
point. GOVERNANCEûWHICHûlTûTHEûlRMSû opted to focus on its portfolio portfolio companies.
Exiting these trading
activities is also easier said than
done, not least because the
losses are mainly driven by
popular client products such as Are your colleagues as well-informed as you?
interest-rate and cross-currency
swaps. If there are other people in your team, department or company who you think would benefit from the
“That’s bread and butter for authoritative and independent content that IFR offers, you should know that considerable discounts are
most banks alongside offering available to companies with multiple subscriptions.
loans,” said Gregory. “There’s a
To discuss your requirements, please contact your local IFR representative:
general acceptance among
BANKSûTHATûTHISûISûAûDIFlCULTûANDû EMEA: +44 (0)20 7542 45 69, cmi.emeasales@refinitiv.com
sometimes low return-on- Americas: +1 (646) 223 5543, cmi.americassales@refinitiv.com
capital business to be in – and a Asia-Pacific and Japan: +852 291 26606, cmi.asiasales@refinitiv.com
volatile one as well.”

Top news
Lift-off for €10bn TKE financing
Loans/Bonds Jumbo leveraged deal for buyout of ThyssenKrupp’s elevators division to launch this month
BY CLAIRE RUCKIN Deutsche Bank, Barclays, Credit and the European high-yield movement working out how
Suisse, RBC and UBS, are on track market is open. All these things much should be loans, the split
Banks are preparing to launch a to do that. are positive indicators for between Term Loan A or Term
widely-expected €10bn dual- 'IVENûITSûSIZEûTHEûDEALûHASû receptivity,” a senior banker said. Loan B, the amount of bonds and
currency loan and bond been eagerly awaited. the currency split between euros
lNANCINGûTOûBACKûAûBUYOUTûOFû Had it launched in March or SLICE AND DICE and US dollars.
THYSSENKRUPP’s elevators division, April the underwriters would have A number of investors are being “It is a big deal and a big
pre-sounding investor appetite lost money as the underwritten PRE SOUNDEDûONûTHEûlNANCINGû chunk of the market has to play
to optimise the structure and terms were set pre-coronavirus with materials set to go out it. Will there be an A and B on
play the markets off each other and the market widened shortly on the company, the term loans? Will the loan get
to achieve best execution. SIGNIlCANTLYûDURINGûTHATûPERIOD performance and the proposed DOWNSIZEDûANDûTHEûBONDû
Advent, Cinven and But markets have regained a capital structure. Syndication is UPSIZEDû$OûYOUûPLAYûEUROSûANDû
Germany’s RAG Foundation lot of ground and lead banks are due to launch at the end of June dollars off each other to slice and
agreed a €17.2bn acquisition of now focused on minimising any when the offering dice it? It is about optimising the
ThyssenKrupp’s elevators losses and perhaps even making memorandums are ready. structure and comes down to
division in February, AûPROlTûPLACINGûAûHUGEûEMPHASISû The funded part of the pricing in the context of how
underwritten with a debt on getting the sell-down strategy lNANCINGûTOTALSûõBNû much there is to sell and
lNANCINGûPUTûTOGETHERûBEFOREû correct. comprising €6.55bn of senior liquidity,” a second senior
Covid-19 disrupted markets and “They will be asking people leveraged loans and senior banker said.
put sell-downs and new issuance what they think they can do and secured notes and €1.7bn of 4HEûlNANCINGûALSOûCOMPRISESû
on hold. at what price. The secondary loan senior unsecured notes. unfunded loans. The original
The plan was always to market is up, the iTraxx is in, the The split between the secured commitment totalled an €800m
syndicate towards the end of US high-yield market is going and unsecured is set but within revolving credit facility and
June and arranging banks, led by gangbusters, the European loan the secured part of the capital some €1.2bn of guarantee
Goldman Sachs and including market has proved constructive structure there could be a lot of facilities that could prove
ICMA principles to help sustainable push

People & Markets But critics question effectiveness of self-regulation when it comes to sustainable debt
BY TESSA WALSH its carbon emissions and its “We don’t see this as an be followed by a thorough strategy
transition to renewables. alternative to green bonds or use- explanation and documented KPI
The International Capital Lars Eiberholm, head of of-proceeds bonds, but more as a targets,” Eiberholm said.
Markets Association has treasury and sustainability at complement,” said Orith 4HEû3,"ûPRINCIPLESûHAVEûlVEû
completed two important pieces Nordic Investment Bank and chair !ZOULAYûGLOBALûHEADûOFûGREENûANDû core components that cover the
of work that aim to give impetus of ICMA’s green and social bond sustainable lending at Natixis. selection of KPIs, calibrating
TOûTHEûmEDGLINGûSUSTAINABILITY executive committees, said the “It’s opening the door to a sustainability performance
linked bond market and principles are key to developing number of issuers that were not targets, bond characteristics,
maintain standards in the social SLBs and to ensuring market lNDINGûITûEASYûTOûSTRUCTUREûUSE REPORTINGûANDûVERIlCATIONûANDû
bond market, which has seen integrity and transparency. of-proceeds bonds and still offer detail that aims to bring
rapid growth during the Issuance of SLBs, which tie believed that they had some role clarity and consistency to the
coronavirus crisis. pricing to companies’ ESG in environmental and social SLB market.
ICMA’s publication of strategies and the UN’s transactions.” KPIs, for example, must be
principles for sustainability- Sustainable Development Goals relevant, material to the issuer’s
linked bonds (SLBs) is expected (SDGs) by monitoring TRANSITION POTENTIAL overall business, measurable
to encourage more issuers to performance against targets – or The instrument could also be ANDûQUANTIlABLEûEXTERNALLYû
link bond pricing to their ability key performance indicators – is suitable for helping “brown” VERIlABLEûANDûABLEûTOûBEû
to hit general ESG targets, rather expected to grow and could companies transition to being benchmarked.
than take the traditional green match or exceed the success of more environmentally friendly. However, not everyone is
bond route of earmarking the product in the private loan Another ICMA working group convinced yet, with pressure
money – via “use of proceeds” market. More than US$38bn of ONûCLIMATEûTRANSITIONûlNANCEûHASû group ShareAction asking for
STRUCTURESûnûFORûSPECIlCûPROJECTS sustainability-linked loans have YETûTOûPRESENTûITSûlNALûREPORTû more transparency.
The industry body hopes that been issued this year, according but is expected to offer “We are not seeing a
more companies will follow TOû2ElNITIVû,0#ûDATA DElNITIONSûAFTERûCONSULTINGûWITHû transparent methodology to set
Italian utility Enel’s lead into the SLBs are designed to appeal to the market. THEûBOUNDARIESûOFûlNANCIALû
market for SLBs. Enel is the only COMPANIESûlNDINGûITûDIFlCULTûTOû “Can this instrument be used for products or to set companies
issuer so far to use the structure, IDENTIFYûSPECIlCûPROJECTSûORû issuers in transition? I believe so. It transition plans in line with Paris
having sold two deals last year capital expenditure to back might even be a very good goals,” said ShareAction’s
with coupon step-ups linked to traditional bonds. instrument for that, but needs to communications manager Beau

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expensive for the arranging

banks depending on the fees
maximum capacity. The Asian
market is also opening up for Coty assembles
they have to pay to bring in new builds again.
additional banks. However, the
SIZEûOFûTHEûUNFUNDEDûFACILITIESû
“There could be a lot more
pain if it was a marginal credit.
record club loan
could be subject to change. It is a great credit,” the second Loans KKR calls in relationship banks
The sponsors are also banker said.
expected to have placed around Although a few M&A situations BY CLAIRE RUCKIN Term Loan B, as well as a
€1.5bn of PIK that ranks behind are starting to emerge, there is US$300m revolving credit facility.
the senior unsecured notes. UNLIKELYûTOûBEûAûmOODûOFûNEWûDEALSû KKR’s acquisition of a majority The loans will be denominated in
this year, especially if a feared stake in US-based cosmetics US dollars, euros and sterling.
SIZE MATTERS second wave of the pandemic maker COTY‘s hair and nail care Both banks and investors will
A number of investors have been arrives in the autumn. That could business is being backed with a take the TLA and TLB. The TLB
apprehensive about taking on also swing in TKE’s favour as US$1.3bn club loan, the largest WILLûBEûPRICEDûWITHûAûlVEûHANDLEû
risk as a result of Covid-19. investors look to put money to in Europe’s leveraged debt and will be leveraged around 3.5
(OWEVERûGIVENûTHEûSIZEûOFûTHEû work in new deals. MARKETûSINCEûTHEûlNANCIALûCRISISû times the company’s
lNANCINGû4HYSSEN+RUPPSû “TKE is a benchmark deal and after banks were unwilling to approximate US$350m Ebitda.
elevators division is a benchmark the sort of deal that accounts need UNDERWRITEûAûlNANCINGûAMIDûTHEû 4HEûlNANCINGûWILLûHAVEûAû
deal that most investors will need to own on top of which it is Covid- coronavirus pandemic. leveraged covenant and is offered
to play to prove their portfolio is resilient and an excellent credit. KKR agreed to acquire a 60% with 101 soft call for 12 months,
diverse and representative of the There are not many opportunities stake in certain Coty brands, MEANINGûITûWONTûBEûRElNANCEDû
market. to do high quality new deals for including Wella, Clairol, OPI and or repriced during that period.
The business is also seen as a the foreseeable next couple of GHD – known collectively as
strong credit that has proved quarters. This is new money, not a Wella – in early May, valuing the CLOSE RELATIONS
resilient during the pandemic. RElNANCINGûORûAûRESCUEûISSUEûSOûITû company at US$4.3bn. KKR drew on its relationships
Some 70%–75% of its business is a chance to put money to work with banks and funds to put in
comes from servicing elevators and get a good return that just “There is nothing PLACEûSUCHûAûBIGûCLUBûlNANCING
and many of those contracts isn’t available in the secondary that is normal about While some other borrowers
have been upheld even if MARKETvûTHEûlRSTûSENIORûBANKERû might try to do something
buildings were closed or not at said.
the market we are in similar, it is unlikely to become
and what is unique a trend and could be reserved
O’Sullivan, referring to the 2015 ICMA chief executive Martin is raising US$1.3bn solely for top-tier sponsors.
Paris climate agreement designed Scheck said that the “highly on a club basis. It is “It is a relationship-based
to keep the rise in global innovative and versatile debt a highly impressive transaction. People need to like the
warming to below two degrees. instrument ... can really expand credit and KKR otherwise they
achievement”
The fact that issuers set and THEûSUSTAINABLEûlNANCEûMARKETû won’t be doing it. The fact the deal
monitor their own targets on while preserving its integrity”. is done is testament that banks
sustainable debt is also Buyouts are typically backed have been super supportive,” the
controversial. EVERYONE IN WITHûUNDERWRITTENûlNANCINGSû senior banker said.
“If you leave economic actors ICMA also released a 2020 update that are subsequently syndicated 4HEûlNANCINGûWASûPUTû
to self-regulate you will end up of the social bond principles that to investors, but banks had together towards the end of
protecting insiders and the expands eligible social bond lower risk appetite due to Covid- April when banks were still
status quo,” said Gianfranco CATEGORIESûANDûTHEûDElNITIONûOFû 19 and were unable to provide averse to underwriting risk.
Gianfrate, the sustainable target populations to a global an underwrite for Coty. Since then, a trio of banks –
lNANCEûLEADûEXPERTûATûTHEû population, in line with recent KKR opted to raise a club loan, Morgan Stanley, Barclays and BNP
EDHEC risk institute in Paris. guidance for social bonds which is set to close in June, Paribas – agreed to underwrite
addressing the coronavirus crisis. securing around 10 banks and a €3.5bn of debt to back a takeover
TECHNICAL ISSUES It also published a collection of handful of investors to commit bid for Spanish telecoms
Some technical issues around case studies. US$1.3bn, where the exposure company MASMOVIL. Emerging on
SLBs remain to be resolved, The trade association updated will be held on balance sheet. *UNEûû-AS-OVILûWASûTHEûlRSTû
CHIEmYûREGARDINGûTHEûCOUPONû its framework for impact “There wasn’t an underwriting underwrite in Europe’s leveraged
step-up mechanism that reporting to include guidance market so KKRûHADûTOûlNDûMOREû loan market since the pandemic.
activates if borrowers fail to hit for biodiversity and a CREATIVEûWAYSûTOûlNANCEûTHEû It is also a KKR deal.
their targets, which could be framework for impact reporting transaction,” a senior banker While the market is now open
DIFlCULTûFORûINVESTORSûTOûINCLUDEû for social bonds, as well as said. “There is nothing that is to some underwrites, MasMovil
in conventional portfolios and guidance on mapping green, normal about the market we are is a very different credit to
also make bonds ineligible for social and sustainability bonds in and what is unique is raising Wella, as it is rated and has an
the ECB’s bond-buying to the UN’s SDGs. US$1.3bn on a club basis. It is a existing loan borrower base.
programme. “The update of the social highly impressive achievement. “MasMovil came four weeks
Hopes are high, however, that bond principles accompanies a "ANKûCLUBûlNANCINGSû;INûTHEû after Coty. MasMovil is rated and
the instrument will deliver after pivotal moment for social bonds leveraged market] are normally has existing debt outstanding –
a slow start, and the new that have shown their relevance US$200m to US$300m.” it is a different set of
principles are expected to give with a surge of issuance 4HEûlNANCINGûCOMPRISESû circumstances. However, the
COMFORTûANDûCONlDENCEûTOû addressing the consequences of 53BNûOFûFUNDEDûDEBTûVIAûAûlVE market is developing rapidly,”
issuers. Covid-19,” Scheck said. year Term Loan A and a six-year the senior banker said.

Top news
Santander rockets up rankings as
crisis shakes up Europe lending
Loans Spanish bank climbs to third in loan league tables – up fifteen places from a year ago
BY GARETH GORE, ALASDAIR REILLY revolving credit facilities taken loans league table in Europe. our clients as soon as they need
out by ALSTOM, BP, BOSCH and UPM- Santander now ranks third, it,” said Rafael Noya, Santander’s
SANTANDER is embarking on a KYMMENE in recent weeks. ACCORDINGûTOû2ElNITIVûDATAûUPûû HEADûOFûGLOBALûDEBTûlNANCEûh7Eû
major push in the European The sudden surge in lending – places on its ranking at this are deploying capital to clients
corporate debt space, with the the bank increased its corporate point a year ago. and have been fully open for
Spanish lender keen to take LENDINGûBYûõBNûINûTHEûlRSTû “We are very agile and have business since the inception of
advantage of any market seven weeks of the crisis – has been able to approve substantial the crisis.”
distortions caused by the current propelled it up the syndicated transactions in order to support
crisis to increase its market CHANGING DYNAMICS
share and win new clients from EMEA LOANS BOOKRUNNERS – Santander’s rise up the league
rivals. FULLY SYNDICATED VOLUME tables has to be seen in the
It has aggressively deployed BOOKRUNNERS: 1/1/2020 TO DATE context of the crisis, however.
its balance sheet in recent Managing No of Total Share Many corporates have fully
weeks, leading several large bank or group issues US$(m) (%) drawn down their existing
deals for some of the region’s 1 BNP Paribas 86 57,362.70 18.4 facilities, which has drained the
biggest corporates, including 2 Credit Agricole 59 24,569.60 7.9 balance sheets of many banks
three €10bn-plus facilities – for 3 Santander 57 20,483.90 6.6 and left them unable to compete
aircraft manufacturer AIRBUS, 4 HSBC 51 16,653.17 5.3 as aggressively on new facilities
carmaker DAIMLER and oil and gas 5 SG 42 15,380.77 4.9 launched.
producer ROYAL DUTCH SHELL. 6 UniCredit 56 15,125.75 4.9 At the same time, some banks
Although those three have 7 JP Morgan 35 14,993.19 4.8 based outside the region – those
long-standing relationships with 8 Deutsche Bank 37 14,330.76 4.6 from the US and Japan, which
Santander, the bank has also 9 Citigroup 31 12,631.06 4.1 are traditionally big corporate
won a number of new loan 10 Natixis 24 8,559.75 2.7 lenders in Europe – have at least
mandates, and regained clients Total 313 311,720.25 partially refocused their efforts
it has not banked for years, Proportional credit
back home, leaving a gap in the
acting as a lead arranger on new Source: Refinitiv SDC code: R17 market for a bank such as
UPL bond finds fertile ground

Emerging Markets Indian agrochemicals giant shows market is open for high-grade issuers
BY DANIEL STANTON An outstanding 2028 bond Final orders for UPL were over being overwhelmed by more
issue was bid at a G-spread of US$2bn from 146 accounts, with than half a million cases by the
Investors handed India a vote 377bp and, accounting for the !SIA 0ACIlCûTAKINGûûOFûTHEû end of July.
OFûCONlDENCEûLASTûWEEKûWITHû longer tenor, one bookrunner Reg S notes and EMEA 36%. Fund UPL is rated on par with the
strong support for the country’s estimated the new 10-year had managers and asset managers sovereign at Baa3/BBB–/BBB–,
lRSTû53ûDOLLARûBONDûISSUEûINû been priced 10bp–15bp inside booked 72%, insurers 13%, banks with negative outlooks on the
almost a month, despite a the curve. 7%, private banks 4% and others S&P and Fitch ratings. Moody’s
sovereign downgrade and a Not only that, but the new 4%. said that UPL’s business was
mounting toll from the Covid-19 issue rallied 10bp in secondary The strong response came fairly resilient during the
outbreak. trading on Wednesday, despite despite Moody’s decision on coronavirus pandemic and
Agrochemicals maker UPL CORP generally weaker market June 1 to downgrade the Indian national lockdown, and
raised US$500m of 10-year conditions. sovereign by a notch to Baa3, the noted that only 10% of its
MONEYûONû4UESDAYûlNDINGûTHATû “A lot of curves are repricing lowest rung of investment revenues come from India –
market conditions had actually after primary issues. It grade, with a negative outlook. explaining why its UPL rating
improved since Moody’s happened with Thailand, The rating agency warned that outlook is stable while it has a
downgraded the sovereign now it’s happening with India faces a period of sustained negative outlook for the Indian
earlier this month. India,” said a banker at one slower growth and highlighted sovereign.
UPL’s 4.625% 2030 bond of the bookrunner, referring the persistent stress in the 4HISûWASûTHEûlRSTû)NDIANûDOLLARû
offering was priced at 99.565 to to the previous week’s new lNANCIALûSYSTEMû#OVID ûCASESû issue since state-owned REC sold
yield 4.68%, or Treasuries plus issue from Thai oil group also continued to climb last US$500m of three-year bonds on
385bp, tightening 50bp from PTT Exploration and WEEKûWITHûOFlCIALSûWARNINGû May 12. That deal had to comply
initial guidance. Production. that Delhi’s health system faces with a Reserve Bank of India rule

visit www.ifre.com
Santander with spare balance also has his eye on improving PUNCHING BELOW BALANCEûSHEETSûnûHAVEûSEIZEDûTHEû
sheet. the bank’s standing in the If successful, the strategy will moment and stepped into a gap
But rivals have nonetheless sovereign, supranational and address something of an left by regular Anglo-Saxon
taken note of the Spanish agency space – although that is anomaly. Despite being one of lenders,” said another senior
bank’s sudden surge up the more a medium rather than the largest banks in Europe – LOANûBANKERûATûAûRIVALûlRM
rankings. They say that, while short-term plan. with assets of €1.5trn it But when the big M&A
DEALûmOWûISûDOWNûYEARûTO DATEûnû But his strategy is not just ranks only behind HSBC, lNANCINGSûANDûTHEûSPECIALISTû
the number of syndicated deals about throwing around money. BNP Paribas, Credit Agricole advice and long-standing
has declined by about a quarter The bank has increased its and Deutsche Bank – it has relationships that go with it,
from a year ago – Santander’s distribution capacity in recent perennially punched well returns, will Santander get the
MOVEûISûSIGNIlCANT years and aims to consistently below its weight in the loan call?
“Santander has been pursuing be a top 10 bank in the markets and bond markets. Noya expects the bank’s
an aggressive strategy,” said one where it chooses to compete. The bank counters that it is current stock of loans – it had
BANKERûATûAûRIVALûlRMûPOINTINGû Last year, it ranked 15th in strong where it chooses to extended €80bn of credit to
to its success in the UK. “It has European syndicated loans with compete – and in particular in a corporates in Europe at the
taken advantage of the crisis to a 2.4% market share. few niche markets such as ENDûOFûTHEûlRSTûQUARTERûnûTOû
basically throw money at its “Santander increased over PROJECTûlNANCEû7HILEûITûISûNOTû gradually be paid back over
clients – to get as large tickets the past few years its ability considered a big player in bonds coming months as clients take
and as much market share as to distribute assets in the and loans, it does make good out borrowing in the bond
possible on deals.” market, with the idea of money in the space: last year it market. Nonetheless, he says
structuring our portfolio not earned €1.5bn, more than many the bank has the capacity to do
CHANGE OF GUARD only to put assets in our balance higher-ranked players. more.
The big push from the bank sheet until they matured, but Whether its current push will “Given the current liquidity
coincides with a change of also to sell them in the market,” lead to bigger revenues remains and market conditions, we don’t
guard. Noya, who has spent the said Noya. to be seen. It is clearly hoping expect the existing revolvers to
past 13 years working for “Santander has invested that lending to clients during remain drawn for a long time,”
3ANTANDERûINû"RAZILûTOOKûONûHISû heavily on several fronts: how to these times will be rewarded said Noya. “Probably they will
new role at the end of March. He tap the market, accessing the with new business. But as many be repaid this year or at the
took over from Ignacio market, sales, syndicate and also banks will testify, lending is not beginning of the next one, so
$OMINGUEZû!DAMEûWHOûHASû structuring. We want to position always enough to secure it’s a temporary use of our
moved to head Santander’s ourselves as a house that can ancillary business. balance sheet.”
investment bank across Iberia. support clients, but which at the “In the absence of the normal “We are still underwriting
Noya has big plans for the same time, can handle the stream of M&A activity, both very large transactions, and
business. As well as expanding exposure that we carry on our BNP Paribas and Santander – we’ll continue to do that at the
the corporate debt footprint, he balance sheet.” backed with very extensive right conditions.”
requiring issuers to pay all-in Since issuer UPL Corp is not PIPELINE INTACT widening 14bp in the last three
funding costs of not more than incorporated in India it is not The deal bodes well for Indian days of the week.
450bp over US dollar Libor for subject to the RBI yield cap, but state-owned issuers such as Price tension for UPL’s new
offshore bonds. it would have priced the issue POWER FINANCE CORP and STATE BANK deal was also helped by a tender
REC barely managed to comfortably within that limit. OF INDIA, which are considering offer at par for UPL Corp’s
SQUEEZEûBELOWûTHEû2")ûCEILINGû India-headquartered UPL Ltd US dollar bond offerings. US$500m 3.25% bonds due
paying a yield of 4.865% and a owns about 78% of Mauritius- Bankers said the pipeline October 31 2021, which the
spread over Treasuries in the incorporated UPL Corp, while remained unaffected by the issue will fund. The Treasury
high 400s. PRIVATEûEQUITYûlRMû40'û#APITALû correction in risk appetite after spread on the 2021s declined
At the time, long-tenor bonds and the Abu Dhabi Investment UPL priced, with the Asian from 511bp on May 12 to 329bp
looked out of reach for Indian Authority each hold 11%. iTraxx investment-grade index on Tuesday, having reached a
issuers, but UPL managed to peak of 772bp in late April.
print at a longer tenor than REC HOW MANY INDIAN RUPEES US$1 BUYS “The lack of recent primary
and beat both its yield and 77
supply from India certainly
spread, thanks to improvements helped, but so did the tender,”
76
in market conditions. said another banker involved.
The 10-year US Treasury yield 75 “Hopefully, this will encourage
rose to 0.83% at the time of other Indian issuers.”
74
pricing from 0.67% on May 12. Bank of America, JP Morgan,
Over the same period the cost of 73 MUFG, Citigroup, Rabobank, Societe
lVE YEARû#$3ûFORû3TATEû"ANKûOFû 72 Generale and UBS were joint
India, the nearest thing to an global coordinators and
71
Indian sovereign benchmark, bookrunners for the new issue.
declined to 132bp mid from 70 BofA, JP Morgan and MUFG are
Feb 20
Jan 20
Mar 20
Apr 20
May 20
Jun 20
217bp on May 12 – a long way dealer-managers for the tender

from the peak of 305bp in late offer, which ends on June 15. DF
March. Source: Refinitiv King is information agent.

Top news
FTSE names embrace retail revolution
Equities Retail orders flood in for UK accelerated bookbuilds
BY LUCY RAITANO PRE-EMPTION FOR THE MANY investors. Signed by industry been aiming to “democratise”
UK fundraising guidelines were heavyweights such as Andy Bell capital markets for years and
The revolution in European relaxed at the start of April to and Peter Hargreaves, the letter stepped up his campaign as
equity capital markets resulting allow companies desperate for seems to have worked. corporates completed large
from the coronavirus pandemic cash during the pandemic to A source at one company that fundraisings in March and April.
HASûlNALLYûSEENûRETAILûINVESTORSû increase share capital by up to has used PrimaryBid’s services in SSP Group, ASOS and WH Smith
embraced by UK corporates that 20% without having to give recent weeks said including WEREûAMONGûTHEûlRSTûCOMPANIESûTOû
have traditionally shied away SHAREHOLDERSûTHEûRIGHTûOFûlRSTû retail was now deemed raise emergency cash in excess of
from the hassle of catering to refusal, known as pre-emption. necessary to avoid bad publicity. the previous guideline of 10% in
individual buyers. Dropping pre-emption means “A retail tranche is something March and April and provided
Where previously accelerated fundraisings can be completed that always should have quick returns for participants in
bookbuilds in the UK have in a day rather than several happened,” said Anand the fundraisings.
excluded retail, nine ABBs from weeks and also makes deal Sambasivan, co-founder and
main market FTSE companies in execution considerably cheaper. CEO of PrimaryBid. “The only COMPASS SETS THE DIRECTION
the past month (that raised a Corporates have done their reason it didn’t was because Sambasivan gives credit to
combined £3.8bn in total) have best to allocate shares to existing retail was too fragmented, and “forward-thinking” Compass
included retail. shareholders, giving them soft all the admin that went along 'ROUPûFORûBECOMINGûTHEûlRSTû
Complaints that retail pre-emption. Now they are with it, but if you point FTSE 100 company to use the
shareholders were missing out turning in increasing number to technology at it you can solve it.” platform on its £2bn capital raise
on participating in the wave of UK digital investment platform Main market London-listed on May 19, raising £559,035
FOLLOW ONûACTIVITYûHASûlNALLYûSEENû PrimaryBid to serve their companies to have recently used through the platform.
existing technology embraced. individual shareholders. the PrimaryBid platform to tap The Compass deal went a long
The move follows the In response to the rule retail investors include Compass way to set a precedent due to its
dramatic abandonment of the change, PrimaryBid published Group, Avacta, Segro, Biffa, SIZEûWITHûAûSPATEûOFûOTHERSû
default way of marketing IPOs in an open letter on April 20 calling Ocado and IWG. following suit.
Europe which has enabled the for UK public companies to Sambasivan, who previously Another stand-out deal was
new-issue market to be revived mandate retail tranches to worked in capital markets at Bank the £48m fundraising by Avacta,
despite lockdowns. ensure fair treatment of all of America and Credit Suisse, has which was surging on the back
Banks step up for Cathay rights

Equities Struggling carrier takes in US$5.3bn from rights issue and government aid
BY FIONA LAU, 0ACIlCû!IRû#HINAûANDû1ATARû The four banks will Wednesday before closing 1%
ANURADHA SUBRAMANYAN Airways will take up their underwrite 376m shares or lower at HK$8.72. The stock fell
entitlements in full, but will see about 15% of the deal, equivalent a further 3.4% to HK$8.42 last
Four banks are underwriting a their stakes slightly diluted as a to US$226m. Morgan Stanley Thursday and was quoted at
portion of CATHAY PACIFIC AIRWAYS’ result of the government bailout. will underwrite half of that HK$8.28 on Friday, down 6%
HK$11.7bn (US$1.5bn) rights After the recapitalisation, Swire amount, BOCI 20%, HSBC 20% since the announcement.
ISSUEûTHEûlRSTûTIMEûINTERNATIONALû WILLûOWNûûOFû#ATHAYû0ACIlCû and BNP 10%. The underwriting The rights issue comes alongside
banks have backed a major down from 45%, Air China 28.2%, commission is 2%. an issue of HK$19.5bn preference
Asian rights issue since the down from 29.99%, and Qatar “Cathay is a leading carrier in shares and a HK$1.95bn warrants
coronavirus outbreak. Airways 9.4%, down from 9.9%. Hong Kong and we believe its issue to the Hong Kong
Cathay last Tuesday 2IGHTSûISSUESûINû!SIA 0ACIlCû business will recover gradually. government, which is also
announced the rights issue have become more common The government bailout also providing a HK$7.8bn bridge loan.
alongside a HK$29.3bn bailout since the Covid-19 outbreak, but GIVESûUSûCONlDENCEûTOûJOINûTHEû The government, in return, will
from the Hong Kong most have been underwritten by deal,” said a banker on the deal. own a 6.08% stake in the company,
government that will help the government-related entities and “We think the discount have the right to appoint two
CITYSûmAGûCARRIERûWEATHERûTHEû majority shareholders. The offered by the rights price is big observers to attend Cathay’s board
pandemic. #ATHAYû0ACIlCûTRANSACTIONûSHOWSû enough to attract investors.” meetings and have access to
The Hong Kong-listed airline that banks remain capable of Cathay’s shares took a wild management and information.
is selling 2.5bn shares on a 7-for- BACKSTOPPINGûRESCUEûlNANCINGSû ride last week, highlighting the According to Hong Kong’s
11 basis at a rights price of even in one of the hardest-hit risks facing the underwriters in lNANCIALûSECRETARYû0AULû#HANûTHEû
HK$4.68 each, a discount of 47% industries. a volatile market. Down 24% this government does not plan to hold
to last Monday’s close of BNP Paribas, BOC International, year before the recapitalisation the Cathay stake for the long term.
HK$8.81 and of 35% to the HSBC and Morgan Stanley are the plans were announced, Cathay The preference shares carry a
theoretical ex-rights price. underwriters. Morgan Stanley is SHARESûBRIEmYûREBOUNDEDûBYûASû 3% dividend, which will step up
Major shareholders Swire also the sole adviser to Cathay. much as 19% at one point on TOûûAFTERûlVEûYEARSûWHILEûTHEû

visit www.ifre.com
of providing Covid-19 tests,

WHEREûTHEû!""ûWASûUPSIZEDûBYû
ASûTHEûBENElTSûOFûAûRETAILûOFFERING
ECM bankers have always Albertsons de-risks
£3m because of the strength of been cool on including retail,
RETAILûDEMANDûnûAûDElNITEûlRSTû
Retail bought £4.9m of the deal.
more often in the context of
IPOs, as the additional demand is
IPO ahead of launch
Last week both UK warehouse deemed marginal and requires Equities Apollo steps in to cash out owners
REIT SEGRO and supermarket OCADO other brokers to be involved
maxed out at £7m through the increasing overall complexity. BY STEPHEN LACEY Albertsons’ valuation when it
platform alongside institutional But retail has shown it can act goes public. If Albertsons were
offers of £680m and £650m just as quickly as institutional A clear benchmark has been set to be valued at a market cap of
respectively. EU prospectus investors, with books open for for US grocer ALBERTSONS‘ IPO US$8bn, then Apollo will be
regulations allow up to the same time for both investor after Apollo Global Management deeply in the hole on its
€8m-equivalent to be raised from groups. And while retail proceeds invested US$1.75bn through investment. At US$12bn, it
retail in this way – so this could may be small change alongside a convertible preferreds at a would be deeply in the money.
easily spread across Europe. deal like Ocado’s it can be US$10bn valuation – with no Apollo essentially stepped in
Sambasivan described the meaningful for others and is a big adjustment for the IPO pricing. as a surrogate for the MCB that
Ocado placing as “poetic”, given win for investor relations. The all-secondary investment would have been sold to the
that when he was a shareholder “We’ve regularly got north of that was agreed in May gave public. Albertsons IPO is now
he was frustrated at being £20m in just a few hours of Apollo a 17.5% stake as Cerberus entirely secondary stock, with
unable to participate in one of demand, we feel like we’re Capital Management and other those shares presumably coming
the online grocer’s fundraisings. breaking records on each new owners cashed out the same from Cerberus and other
7ASTEûMANAGEMENTûlRMûBIFFA offering,” said Sambasivan. amount. owners.
wrapped up last week with a Bankers are not rushing to Albertsons is one of the most Apollo will receive a 6.75%
£100m capital raise, £1m of which embrace the approach – they eagerly awaited US listings of annual dividend payable
was raised through PrimaryBid. won’t after all get paid for the the year, especially as a QUARTERLYûWITHûTHEûlRSTûPAYMENTû
retail tranche – but one BENElCIARYûOFûTHEû#OVID û due on September 30. If an IPO
CULTURE SHIFT syndicate banker involved in pandemic as restaurants were raising at least US$1bn does not
Behavioural shifts in risk-adverse one of the recent transactions closed. happen by October 2021 the
capital markets can be tricky to acknowledged it hadn’t made a Those positives were known dividend steps up to 8.75%, the
trigger but quick to catch on, and huge difference to the process. at the time Apollo and Cerberus GROCERûDISCLOSEDûINûlLINGSûLASTû
it is apparent that issuers are “They don’t need to do it, but agreed to the early takeout. week.
quickly becoming more if they want to do it we’re What was not was how quickly Apollo’s investment is
CONlDENTûINûTHEûPLATFORMûASûWELLû supportive,” he said. the US IPO market would convertible at US$35.68 per
recover. Already in June, 14 share. The security cannot be
companies have completed called for three years and
exercise price of the warrants is and Securities are underwriting mOATSûRAISINGû53BNûTHEû thereafter only at prices above
set at HK$4.68. The interest rate the offer, which is priced at a 31% highest monthly total by both US$42.47, a 19% premium to the
on the bridge loan is Hibor plus discount to the pre-deal close. number and volume since base conversion price.
150bp. In Singapore, state-owned May 2019, according to Existing owners led by
The company said last month INVESTMENTûlRMû4EMASEKû 2ElNITIVûDATA Cerberus sold their shares at
that it had made an unaudited Holdings continues to back local As a result, Apollo appears to US$34.26 apiece, the difference
loss of HK$4.5bn at Cathay lRMSû)TûISûUNDERWRITINGû3Mû have a peach of deal. Albertsons in prices covering bank fees.
0ACIlCûANDûTHEûCOMPANYSûOTHERû (US$431m) of loss-making had considered launching its IPO Credit Suisse, a bookrunner on
airline Cathay Dragon from SEMBCORP MARINE’s S$2.1bn rights in June, though that timeline the IPO, advised Cerberus while
January to April. Last Tuesday, it issue. has now been pushed into July, Barclays, also a bookrunner on
said the drop in passenger Parent Sembcorp Industries bankers involved in the process the IPO, advised Apollo.
revenue to around only 1% of will subscribe to its S$1.27bn told IFR. Bank of America, Goldman Sachs,
prior year levels has meant that entitlement and an additional “We were originally thinking JP Morgan, Citigroup, Morgan
it has been burning cash at a S$230m in case of about doing a mandatory Stanley, Wells Fargo and Deutsche
rate of HK$2.5bn to HK$3bn per undersubscription. [convertible] side-by-side with Bank are the other bookrunners
month since February. Sembcorp Marine is selling the IPO, but then the IPO market on an 18-strong IPO syndicate.
5-for-1 rights shares at S$0.20 closed,” said one banker who Albertsons also disclosed in
OTHER RIGHTS ISSUES apiece or a 76% discount to the advised on the Apollo THEûLATESTûlLINGSûTHATûITûHADû
A W1trn (US$829m) rights issue pre-deal close of S$0.85. investment. “The strength of the entered into a new 20-year
for KOREAN AIR LINES, which won In India, it is common for BUSINESSûANDûDIFlCULTYûOFûTHEû)0/û master lease agreement at an
the support of local banks, is a controlling shareholders, not market contributed to a deal initial annual rate of US$179.4m.
similar story. South Korea’s banks, to underwrite rights issues happening between Apollo and Albertsons, which failed in an
largest airline announced the – even if the shareholders may Cerberus. earlier run at the public markets
rights plans in May alongside a REQUIREûBANKûlNANCINGûTOûDOûSO “The goal was not to pressure in late 2015, is now ripe to go
W1.2trn government capital Likely rights issuers are the company to go public, but to public.
injection to help it withstand MAHINDRA AND MAHINDRA FINANCIAL PROVIDEûTHEMûmEXIBILITYûTOûHITû Cerberus initially invested in
the effects of the crisis. SERVICES (Rs35bn), SHRIRAM the window that makes most Albertsons in 2006 and doubled
KB Securities, Kiwoom Securities, TRANSPORT FINANCE (Rs20bn) and sense.” down in 2013 by helping to fund
Korea Investment & Securities, Mirae ADITYA BIRLA FASHION & RETAIL Unlike other pre-IPO converts, the acquisitions of Supervalu
Asset Daewoo and NH Investment (Rs10bn). there is no ratchet tied to and Safeway.

Top news
North Korea forages for dollars
Emerging Markets Government bond issue targets elite’s foreign currency holdings
BY DANIEL STANTON, JIHYE HWANG KOREA has embarked on a so- Pyongyang’s loans from Western Fitch Solutions, which is
called “bond-buying” governments were repackaged independent of Fitch’s credit
North Korea’s introduction of US programme. In 2003, it sold INTOûZERO COUPONûBONDSûAFTERûITû rating division, expects the
dollar bonds signals a foreign People’s Life Bonds denominated stopped servicing the debt in the North Korean economy to shrink
currency shortage rather than a in North Korean Won and 1980s, and turned into a €163m by 6% this year.
step towards engagement with targeted at resident individuals. tranche denominated in Exports to China dropped to
the global capital markets, The bonds had a 10-year tenor Deutschmark and a SFr240m US$50m last year from US$350m
according to experts. and did not pay coupons, but (US$253m) tranche, both of in 2016, according to North
News sources and analysts bondholders selected by a which were supposed to mature Korea watchers, and are
said that the North Korean lottery were due to be repaid in March this year but are expected to be even lower this
regime appeared to sell more than the principal. believed to be outstanding. year. That could make it hard to
government bonds onshore last “The last time the government fund new projects.
month after sanctions and the issued bonds, it was alleged that ECONOMIC CRISIS 2ODONGû3INMUNûTHEûOFlCIALû
global coronavirus pandemic they essentially coerced Tomas Ojea Quintana, UN newspaper of North Korea’s
caused its foreign currency individuals and businesses to special rapporteur on human Workers’ Party, wrote in April
reserves to dwindle. purchase [them],” wrote Fitch rights in North Korea, voiced that major projects due to be
Details of the issue are not Solutions, the credit and country alarm on Tuesday at “widespread completed this year include the
known, but Daily NK, a news research unit of Fitch Group, in a food shortages and construction of Pyongyang
service focused on North Korea report on May 22. malnutrition” in the country, General Hospital and the upgrade
and considered credible by It is not known whether that is MADEûWORSEûBYûAûNEARLYûlVE of an iron and steel factory.
experts, reported that 60% of the the case this time, although some month border closure with Fitch Solutions wrote that
bonds were allocated to state- Western commentators have China and strict quarantine state-owned enterprises like
owned enterprises and 40% to pointed to the likelihood that it measures against Covid-19, Construction Bureau 8, which is
individuals, including donju, or is. In any case, investing in North Reuters reported. He urged the building the hospital, would use
entrepreneurs. Korea’s debt is not for the faint- UN Security Council to ease the bond proceeds to procure
4HISûISûNOTûTHEûlRSTûTIMEûTHATû hearted: it has never repaid any sanctions to ensure food raw materials from local
the DEMOCRATIC PEOPLE’S REPUBLIC OF of its offshore borrowings. supplies. companies.
J.Crew blockers take fashionable turn

in junk bond market
Bonds US junk bond markets see a rise in asset-stripping restrictions but do they go far enough?
BY PAUL KILBY “In the current environment has left companies seeking and cruise operators have sought
PEOPLEûAREûFOCUSEDûONûPRIZEDû creative ways to raise capital. liquidity through asset-backed
“J.Crew blockers” are back in assets and this is a way of being A long list of high-yield bonds bonds and in some cases have hit
vogue, this time in the junk protected from the company are being scrutinised for their J. their secured debt capacity.
bond market where issuers are moving them elsewhere.” Crew potential, as some borrowers “We expect the buy-side,
increasingly inserting such Ever since J.Crew used openly exploit such loopholes. especially in high-yield, to
provisions to prohibit the loopholes in debt covenants to Diamond Sports even leveraged continue to protect assets,” said
transfer of assets out of shift intellectual property to an its ability to use unrestricted 3COTTû+IMBALLûlXED INCOMEû
creditors’ reach. unrestricted subsidiary in subsidiaries to move collateral as portfolio manager at BMO
2ETAILERû'!0ûWASûTHEûlRSTû 2016, the name of the now an incentive to get bondholders to Global Asset Management.
company post Covid-19 to add bankrupt clothing retailer has participate in its exchange offer, h2EVENUEûANDûCASHmOWSû
J.Crew blockers on bonds, become a byword for what are albeit with little success. remain stressed in this still
followed by Viking Cruises and a seen as shifty manoeuvres by “Issuers have been more partially shutdown economy, so
little over a week ago Victoria’s borrowers. COGNISANTûOFûTHEûBENElTSûOFûTHESEû preserving IP and other assets is
Secret and Bath & Body Works Blockers have been more loopholes, creating more risk of a needed protection.”
owner L Brands came with its common in the loan and direct exploitation,” said Charlotta Over the past few months
own version. lending market where lenders Chung, head of US legal research borrowers have offered various
“Since the Covid-19 shutdown, have more leverage. at CreditSights. “But that risk is versions of J.Crew blockers. Most
we have seen some companies But this type of asset-stripping tempered by lender and creditor of them such as Viking Cruises
put J.Crew blockers into their has received renewed focus awareness.” and L Brands have focused on
indentures,” said Scott Webster, in the bond market at a time This is particularly true in imposing limitations on the
a senior covenant analyst at when the economic fallout sectors hard hit by the health transfer of intellectual property
Covenant Review. from the Covid-19 pandemic crisis where retailers, airlines – which J.Crew famously used.

visit www.ifre.com
“After the programme was

announced, the black market
both supply and demand are
down after it closed its border PG&E eyes US$27bn
value of the North Korean Won with China in January to limit the
went down, which supports the
possibility that foreign currency
spread of the coronavirus.
Experts on the North Korean
capital raise
savings were involved,” said economy estimated in early Bonds/Equities Utility to emerge from Chapter 11
Florian Schmidt, CEO of 2018 that it would face foreign
Frontier Strategies, a capital currency shortages as the BY PAUL KILBY, PHILIP SCIPIO debt, which is typically not
MARKETSûCONSULTANCYûlRMûFORû sanctions began to bite, yet counted in debt metrics,
Asian frontier markets. “There imports of non-sanctioned California-based utility PG&E is according to CreditSights.
seems to be a shortage of euros products increased in 2018–19 readying a massive US$27bn On top of that, the company
and dollars in the system right as purchasing power in the capital raise across both debt has amended terms on US$9bn
now, whereas in the past the private sector increased. and equity markets to fund its in equity backstop commitments
access to foreign currency has “Chairman Kim Jong Un has way out of bankruptcy and pay TOûSIMPLIFYûTHEûEXITûlNANCINGû
always been relatively easy and promoted the idea of a off billions of dollars in legal PG&E CFO Jason Wells said in a
was tacitly accepted by the prosperous economy with claims stemming from its statement last week.
government.” people saving and accumulating INVOLVEMENTûINûDEADLYûWILDlRES “Today’s announcement is
A researcher from a South wealth,” said Schmidt. “As a 4HEûCOMPANYûlLEDûFORû#HAPTERû another positive step towards
Korean government-linked result a fairly wealthy middle 11 protection early last year and PG&E’s emergence from
institution said that the last class has emerged in Pyongyang. is now nearing the end of the #HAPTERûûENSURINGûWILDlREû
time North Korea sold bonds, it Now might be payback time.” process with an reorganisation victims are paid more quickly
WASûTOûTACKLEûINmATIONû(EûDIDû Schmidt said that the “bond- plan that will involve some and positioning the company for
not wish to be named because buying” programme, if US$57bn in funding, of which AûSUSTAINABLEûlNANCIALûFUTUREvû
his institution had not been able successful, could fund more US$27bn will be sourced from he said on Monday.
TOûCONlRMûTHEûNEWûBONDûISSUE than half of this year’s budget. public offerings. (IGH PROlLEûINVESTORSûSUCHûASû
Another Seoul-based researcher Rodong Sinmun reported that The company will emerge David Tepper’s Appaloosa, Dan
estimated that North Korea’s state budgetary revenue was with a bigger balance sheet – Loeb’s Third Point, and Fidelity
COMMODITYûTRADEûDElCITûWASû expected to grow 4.2% from the carrying some US$17bn more have now agreed to buy
US$2.3bn last year and would have previous year, while debt than it did before, US$3.25bn of common PG&E
worsened this year. He believes expenditure would increase by according to CreditSights. But it stock at up to US$10.50 a share
that North Korea is currently 6%. It did not give any monetary will be one that is arguably more through placement agents
SUFFERINGûFROMûDEmATIONûBECAUSEû values. favourable to bondholders who Goldman Sachs and JP Morgan after
will be better protected against PG&E emerges from Chapter 11.
FURTHERûWILDlREûLIABILITIESûANDûSITû Those investors can back out
GAP expanded those provisions creditors’ reach as it expressly higher up the capital structure. of the deal if the equity backstop
with prohibitions on the transfer prevents collateral being held “It is recapitalisation story and commitments are drawn or if
of both real-estate and IP from the by a non-guarantor – a very rare they are doing it in a split-rated PG&E does not emerge from
company or guarantor to a non- provision in high-yield bonds. FASHIONvûSAIDû3COTTû+IMBALLûlXED Chapter 11 within 45 days
guarantor restricted subsidiary or “They even expressly block such income portfolio manager at BMO starting June 8.
to an unrestricted subsidiary. transfers as asset sales,” she said. Global. That deal and where it prices
“They have done a good job of Covenant analysts have been “If they market it wide with a is contingent upon the closing
blocking the collateral from calling for stricter and broader decent concession they will get and pricing levels on a separate
going out of the creditor group, blockers to prevent asset an audience in both [high-grade US$5.75bn sale of straight equity
which is something refreshing to stripping, even the elimination and high-yield]. Right now the and equity units that are similar
SEEvûSAIDû6ALERIEû0OTENZAûHEADû of unrestricted subsidiaries market has transitioned back in to mandatory convertibles.
of high-yield research at Xtract, a altogether. favour of the issuer.” h4HEûlNALûBOXûTOûCHECKûISûFORû
COVENANTûRESEARCHûlRM But with the US junk bond About US$17bn of that the bankruptcy judge to sign off
market back in full force as US$27bn in public funding will on it, and I don’t see any reason
NOT BULLET-PROOF volumes pick up and investors take the form of debt, including why he wouldn’t,” said Andrew
Even so, none of the blocking prioritise yield over covenant US$4.8bn of new high-yield Devries, senior utility and power
provisions are seen as bullet- protections, such safety shields holdco bonds and US$5.9bn of analyst at CreditSights.
proof and borrowers would may be less forthcoming. new high-grade secured opco The new and better US$9bn
HAVEûLITTLEûDIFlCULTYûlNDINGû And in the meantime, bonds, which are expected to equity offering as part of the
ways around them, say analysts. borrowers are likely to continue come to market soon through JP funding package may help
“GAP only goes half way,” said exploiting such loopholes. Morgan and Bank of America, ENTICEûSOMEûlXED INCOMEû
0OTENZAûh!ûFEWûBONDSûSUCHûASû “Over the past years, the bond respectively. INVESTORSûTHOUGHûFUTUREûWILDlREû
GAP’s have blocked the company market has grown to accept PG&E is also issuing new risks remain a major concern for
from using investment capacity MOREûmEXIBILITYûINûMOVINGûASSETSû 4.55% 2030 and 4.95% 2050 the buyside.
to move certain assets, but they to unrestricted subsidiaries,” said bonds to replace existing bonds “I am assuming it will be well
could still use an asset sale.” Eric Leicht, head of White & with coupons of over 5%, as well received given the equity raise
0OTENZAûARGUESûINûAûREPORTû Case’s global banking practice. as US$6bn of what it calls new and the strength of this market,”
that Royal Caribbean’s recent “There is a lot of value that can temporary utility debt. said another investor.
lRST LIENûNOTEûISûPERHAPSûTHEû be moved away from creditors. That temporary debt is “[But] I am not sure how the
strongest in terms of stopping Those agreements are out there probably bank borrowings that MARKETûWILLûEVALUATEûWILDlREû
assets being transferred out of and the path is clear.” will be replaced by securitisation risk.”

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People
19
&
Cerberus,
named after
Markets
21 Former trader
Robert Begbie 26 India’s
freeze on
the mythological is named permanent fresh bankruptcy
hound of Hades, calls CEO of NatWest proceedings could
on Commerzbank to Markets, and needs to hurt its fragile banking
adopt a new strategy cut costs to revive its system and delay the
fortunes clear-up of bad debts
FRONT STORY POLITICS
HSBC, StanChart under fire for HK stance

Investor Aviva rebukes banks for publicy supporting China law
HSBC and STANDARD CHARTERED faced more GROUPûPROlTû3TANDARDû#HARTEREDûHASûMADEû “That show of fealty seems to have earned
criticism last week following their public US$3.3bn in Hong Kong in the last two HSBC little respect in Beijing, which
support for China’s planned security law in YEARSûORûûOFûITSûUNDERLYINGûPROlT continues to use the bank’s business in
Hong Kong, earning a rebuke from a major But the banks’ stances on the new law China as political leverage against London,”
shareholder in both banks. have prompted a backlash among politicians Pompeo said.
AVIVA INVESTORS, which is the 18th and 20th in the UK and the US with both governments Several market observers expressed
largest shareholder in HSBC and StanChart having strongly criticised the new law. disquiet about HSBC’s support for the new
respectively, publicly criticised the pair’s law, although some said the Anglo-Asian
backing of Beijing’s proposal. WALKING A TIGHTROPE lender, which makes around a third of its
“We are uneasy at the decisions of HSBC The UK has mooted the possibility of revenues from Hong Kong and literally has a
and Standard Chartered to publicly support offering refuge to up to nearly 3 million licence to print money in the special
the proposed new national security law in Hong Kong citizens eligible for British administrative region, was left with few
Hong Kong without knowing the details of National (Overseas) passports. The US has options.
the law or how it will operate in practice,” said it will remove some of the economic “HSBC doesn’t really have much of a
said Aviva Investors’ equities chief privileges afforded to the city after it was choice in the matter,” said Patrick Perret-
INVESTMENTûOFlCERû$AVIDû#UMMING DEEMEDûNOûLONGERûSUFlCIENTLYûAUTONOMOUSû Green, the former head of foreign exchange
“If companies make political statements, from mainland China by US Secretary of and local markets strategy in Asia at
they must accept the corporate State Mike Pompeo. Citigroup, who now runs his own
responsibilities that follow. Consequently, Pompeo weighed in on HSBC’s response INDEPENDENTûRESEARCHûlRMû!D-ACRO
WEûEXPECTûBOTHûCOMPANIESûTOûCONlRMûTHATû on Tuesday, saying “the CCP’s browbeating “It’s been suggested in the Chinese media
they will also speak out publicly if there are of HSBC . . . should serve as a cautionary before that if the bank doesn’t cooperate
any future abuses of democratic freedoms tale”, in a statement titled: “On China’s then they could easily be replaced by the
connected to this law.” Attempted Coercion of the United Chinese banks in Hong Kong,” he said.
Cumming’s statement came after HSBC Kingdom”. Thomas Blott
released a picture on WeChat of its Asia-
0ACIlCûCHIEFûEXECUTIVEû0ETERû7ONGûSIGNINGûAû
petition backing the new law. Beijing says
the new law is necessary to tackle HONG KONG: PROFIT CASHCOW
separatism, subversion and terrorist HSBC PRE-TAX PROFITS 2017-19, IN US$bn STANCHART UNDERLYING OPERATING PROFIT
2018-19, IN US$bn
activities, but critics say it undermines the
autonomy that was promised to Hong Kong 9.02
for 50 years under the Sino-British Joint 3.99
$ECLARATION 8.22 3.35
Standard Chartered released a short

statement earlier this month saying “the
national security law can help maintain the
long-term economic and social stability of
Hong Kong”.
Hong Kong is a crucial market for the 33.16
0.69
London-headquartered banks. HSBC has
z Hong Kong z Mainland China z Rest of the World
MADEû53BNûINûPROlTSûINû(ONGû+ONGûINû
the last three years, or a whopping 66% of Source: Annual reports

“Over the last 10 years we haven’t needed
to focus on costs down to the gnat’s ass”
EVERCORE CEO RALPH SCHLOSSTEIN, P20
“The stresses that even our most senior

Traders gear up for office return people working from home, particularly if
they’ve got kids and family running about, is
US investment banks will use the dog days of protocols for keeping employees safe. But putting a lot of pressure on people,” Gorman
summer – when bankers often close their they are likely to feature socially distanced said.
laptops and open beach umbrellas – to test a desks, temperature checks, limits on elevator Working from home has also upset the
RETURNûTOûOFlCESûAFTERûTHEûCORONAVIRUSûLOCKDOWN capacity and regular deep cleansing. balance between personal time and work –
At least a quarter of traders are expected 3PEAKINGûATû-ORGANû3TANLEYSûlNANCIALû posing mental health concerns. Without the
to test a return to trading desks in July and services conference last week, several bank TRANSITIONûOFûLEAVINGûTHEûOFlCEûTOûSEPARATEû
August, several sources said. They said the executives said they expect to return at least the workday from home everyone is trying
timing is ideal given the typical slowdown in 80% of employees to bank sites when plans TOûlNDûAûBALANCEûHEûSAID
trading and the number of people normally are fully operable. Gorman batted back the idea that Morgan
away from the desks. Morgan Stanley chief executive James 3TANLEYûWOULDûREDUCEûITSû.EWû9ORKûOFlCEû
While JP Morgan, Citigroup, Bank of America, Gorman said systems had held up well while footprint.
Goldman Sachs and Morgan Stanley have all 90% of staff had worked from home. He has “The vast majority of our employees for the
touted the successful migration of traders – as previously targeted for 50% of staff to return vast majority of their time will continue to
WELLûASûOTHERûBANKûSTAFFûnûAWAYûFROMûOFlCESû TOû.EWû9ORKûOFlCESûLATERûTHISûYEAR WORKûINûOFlCESvû'ORMANûSAIDûh"UTûAREûTHEREû
during the outbreak of a global pandemic, most .EWû9ORKûBANKSûCLOSEDûTHEIRûOFlCESûINû ways in which we can consolidate and learn,
have been preparing for traders to return to mid-March and while the technical aspects particularly in some of the big money centres,
centralised hubs before September, sources said. of having 90% of staff working from home where you want less density of people?
The banks declined to comment on plans MAYûHAVEûWORKEDûmAWLESSLYûTHEYûAREûNOTû Absolutely. But it’s not like we’re going to
TOûRETURNûTOûOFlCESûORûPOST CORONAVIRUSû without problems. suddenly cut our real estate footprint in half.”
Germany loss drags down EU bank returns to 6%

Europe’s major banks made an aggregate Germany’s 17 biggest banks lost money in SOVEREIGNûDEBTûEXPOSUREûATûTHEûENDûOFû$ECEMBERû
PROlTûOFûõBNûLASTûYEARûTOûDELIVERûAûRETURNû aggregate last year, leaving them with a accounting for 12% of their total assets. Of that,
on regulatory capital of just 6%, which negative return on regulatory capital (RoRC) õTRNûWASûDOMESTICûSOVEREIGNûEXPOSURE
INCLUDEDûAûõMûLOSSûFORû'ERMANûLENDERSû of 0.2%, the EBA said. The eurozone crisis of 2011 raised concerns
the EU’s banking watchdog said. The leading 10 banks in France made a that banks in some countries held too much
4HEûLOWûPROlTABILITYûOFû%UROPEANûBANKSûISû õBNûPROlTûLASTûYEARûDELIVERINGûAû2O2#ûOFû debt issued by their own government,
one of the biggest problems for the industry 7.9%, the report said. potentially feeding a sovereign doom loop,
and means recovering from problems such as "RITAINSûTOPûBANKSûMADEûAûPROlTûOFû especially in Southern European countries.
the current coronavirus and lockdown could õBNû2O2#ûOFû ûINûû3PAINSûMADEû )TALYSûBANKSûHADûõBNûOFûSOVEREIGNû
take years. It also deters new investment. US AûõBNûPROlTû û)TALYSûMADEûõBNû exposure, representing 13.9% of their assets,
banks typically deliver far higher returns, (6.1%) and banks in the Netherlands made INCLUDINGûõBNûOFûDOMESTICûBONDSû3PAINSû
making them quicker to recover from õBNû û"ANKSûINû.ORWAYû3WEDENûANDû BANKSûHELDûõBNûOFûSOVEREIGNûEXPOSUREû
setbacks and more attractive for investors. Poland delivered average RoRC of more than ûOFûASSETS ûINCLUDINGûõBNûOFû
The scale of EU banks’ low returns is 10%, and in Austria the average was 9.8%. domestic bonds.
rarely exposed, but the European Banking &RANCESûBANKSûHADûõBNûOFûSOVEREIGNû
Authority showed the scale of the problem SOVEREIGN DOOM LOOP? exposure at the end of last year (11.3% of
in its latest transparency exercise, covering The EBA, which postponed its planned stress test ASSETS ûINCLUDINGûõBNûOFû&RENCHûBONDSû
127 banks from 27 countries (including the of EU banks this year due to the coronavirus 5+ûBANKSûHADûSOVEREIGNûEXPOSUREûOFûõBNû
UK) up to the end of 2019. CRISISûSAIDûTHEûûBANKSûHADûõTRNûOFû INCLUDINGûõBNûOFûDOMESTICûEXPOSURE
Who’s moving where…

Ashish Jhajharia and Benelux region. NATIXIS has Eedle joined Natixis in
Saadi Soudavar have Josef Ritter, head of appointed Simon 2012 as regional head
been promoted to EMEA ECM since Eedle to head its of CIB for the Middle
co-heads of EMEA the departure of corporate and East, based in Dubai.
ECM at DEUTSCHE co-head Ed Sankey investment banking Riccardi joined Natixis
BANK. Jhajharia to HSBC last June, business in Britain in 2010 and will stay
was previously head is now co-head of and Barbara Riccardi in Dubai and oversee
of syndicate and global ECM alongside (left) as regional head CIB there, in Turkey
Soudavar covered a Jeff Bunzel. He is of CIB for the Middle and a new office in
number of countries also taking on the East. Eedle takes over Saudi Arabia.
including the UK, chairmanship of the from Serge Ekue, who
Greece, Turkey, the EMEA reputational left in March, and will
Nordics and the risk committee. be based in London.

People
& Markets
NEW NORMAL
#ITIGROUPûCHIEFûlNANCIALûOFlCERû-ARKû-ASONû
Cerberus demands changes at
said it’s too soon to tell what the new
normal looks like.
‘disastrous’ Commerzbank
But, having bankers spread out from 53ûPRIVATEûEQUITYûlRMûCERBERUS is calling on COST CUTS
centralised hubs has revealed potential real COMMERZBANK to appoint two of its nominees The 150-year-old Commerzbank has had a
estate opportunities. to the supervisory board, cut costs and adopt rough few months as it swung to a loss,
“We’ve got to let some of this play out a a new strategy, as it battles to make a halted its 2019 dividend plans, backtracked
bit more to see what the new normal looks success of a big bet on German banks. on the sale of its Polish lender mBank, faced
like, but we expect there will be some things In a letter to Commerzbank’s chairman credit rating downgrades, and lost a long-
worthy of considering,” Mason said. last week, Cerberus complained that the standing sponsorship deal with a local
Some, however, expect the new normal to bank had failed to heed its advice after SOCCERûTEAMûTOûRIVALû$EUTSCHEû"ANK
look a lot like the old normal. more than 70 meetings. Shares in Commerzbank, bailed out by the state
“We’re in the relationship-building Germany’s second-biggest bank have DURINGûTHEûLASTûlNANCIALûCRISISûHASûALSOû
business,” said Moelis co-president Navid fallen about 60% since Cerberus bought WARNEDûITSûTARGETûFORûTURNINGûAûPROlTûINûû
Mahmoodzadegan. “And it’s hard to build a 5% stake in 2017. now seems “very ambitious” amid the
relationships if you’re not sitting in front of The investor, describing Commerzbank’s coronavirus outbreak.
people. So I suspect once we get through performance as “disastrous”, demanded it Commerzbank CEO Martin Zielke said on
this crisis, our real estate footprint won’t APPOINTûTWOûhHIGHLYûQUALIlEDûINDIVIDUALSûTOû Thursday the bank was focused on cutting
look too much different than it has in the BEûIDENTIlEDûBYûUSvûTOûITSûSUPERVISORYûBOARD costs and “we see additional potential
past.” Cerberus said shareholders would be beyond current plans”. He plans to present
Philip Scipio HIGHLYûSUPPORTIVEûOFûhSIGNIlCANTûCHANGEvûTOû additional savings measures in August. It is
the supervisory board, management board in talks with unions about staff reductions.
and strategy, but did not give details on
The EBA report said capital ratios what the new strategy should be.
“The precarious situation of
continued to improve last year, and the “The window of opportunity to address
weighted average Common Equity Tier 1 the challenges faced by Commerzbank is
Commerzbank requires swift
ratio across the banks was 14.8% at the end RAPIDLYûCLOSINGvû#ERBERUSûWROTEûINûTHEûlVE and decisive action now”
OFû$ECEMBERûUPûFROMûûATûTHEûENDûOFû page letter, seen by Reuters.
September. Commerzbank said in a statement it was One top investor said Cerberus’ pressure
All banks had a ratio above 11%, well FOCUSEDûONûCOSTSûANDûEFlCIENCYûh4HEûBANKû could help in that regard. “Perhaps
above regulatory requirements, the EBA takes careful note of shareholders’ opinions Cerberus’ move will even help management
said. Banks in Spain had the lowest average – including critical ones,” it said. to push through more cost-cutting measures
#%4ûRATIOûOFûûATûTHEûENDûOFû$ECEMBER Such public shareholder campaigns are with the unions,” the investor said.
The EBA said asset quality of EU banks rare in Europe, and in Germany activist Just months after buying into
also remains on an improving trend, investors are often viewed warily – as Commerzbank, Cerberus also took a 3%
although it warned last month that could SHAREHOLDERSûFOCUSEDûONûSHORT TERMûPROlTSû STAKEûINû$EUTSCHEû"ANK
reverse due to the impact of the coronavirus. rather than what is best for companies in Cerberus was behind a push to merge the
Non-performing loans represented 2.7% of the long term. The German government is two banks last year, people told Reuters at the
ASSETSûATûTHEûENDûOFû$ECEMBERûLESSûTHANûHALFû the largest shareholder in Commerzbank time, though the effort failed and both banks
THEûLEVELûlVEûYEARSûAGOû"UTûTHEûSCALEûOFû.0,Sû with a 15% stake. embarked on separate restructuring measures.
remains a problem in several countries – the “In my view, state ownership does not “The precarious situation of Commerzbank
ratio was 35.2% in Greece, 19.3% in Cyprus make it any easier for Cerberus to achieve requires swift and decisive action now,”
and 6.7% in Italy. its strategic goals,” said Klaus Nieding of Cerberus wrote, demanding a reply by June 12.
Steve Slater SHAREHOLDERûLOBBYûGROUPû$37 Patricia Uhlig, Tom Sims
Please contact us if you have information about job moves: peoplemarkets@refinitiv.com
Daiwa Securities in Guggenheim’s UNICREDIT has hired Marracino replaces

Group’s boutique restructuring group Roberta Marracino Maurizio Beretta, who
investment bank, and was previously as head of ESG has led the Italian
DC ADVISORY, has a managing director strategy and impact bank’s ESG and
hired Ajay Bijoor in the restructuring banking. Marracino social impact banking
from Guggenheim group at Peter J will start on July 1 and in recent years.
Securities as a Solomon. He began will also coordinate Marracino joins from
managing director his career at Credit the UniCredit Zurich Insurance and
in its debt advisory Suisse First Boston. Foundation’s previously spent 15
and restructuring activities. She will years in two spells at
group. Bijoor was report to Wouter McKinsey.
most recently a Devriendt, head of
managing director finance and controls.

Bellwether
Bellwether: n. From the practice of placing a bell around the by Jernej Omahen, Goldman’s head of European bank
neck of a castrated ram so that it might lead its flock RESEARCHûATûTHEû53ûlRMSûVIRTUALûBANKûCONFERENCE
Although it was online, you could still feel the tension
#%2"%253û7()#(û(/,$3 a stake in Commerzbank, appears when Omahen opened up by saying Khan joined at “an
to have lost patience in Germany’s second biggest lender interesting time”. Was he actually going to ‘go there?’
and recently lambasted it for a disastrous performance Sadly, it turned out he was referring to the coronavirus,
and demanded a change in strategy. not Spygate.
"UTûTHEûPRIVATEûEQUITYûlRMûISûAûGLUTTONûFORûPUNISHMENTû
and is also a shareholder in Commerz’s bigger rival %6%2#/2%3û02%3)$%.4û!.$ûCEO
$EUTSCHEû"ANKûWHEREûITûISûUNDERSTOODûTOûHAVEûHADûAû If you work Ralph Schlosstein says the global
hand in the seemingly immovable Paul Achleitner’s at Evercore downturn in M&A due to the
“decision” to stand down as the bank’s chairman in 2022. and see Ralph CORONAVIRUSûHASûPLACEDûTHEûlRMûINû
So it’s not to be messed with, something that will return to the unfamiliar territory. “Over the last
come as no surprise to those with a working knowledge 10 years we haven’t needed to focus
office after
of Greek mythology – or access to Wikipedia. on costs down to the gnat’s ass,”
Cerberus, often referred to as the hound of Hades, lockdown Schlosstein told Morgan Stanley’s
is a multi-headed dog that guards the gates of the armed with bank conference.
underworld to prevent the dead from leaving. Which a magnifying Now, Evercore is looking to do
makes its shareholding in Germany’s two troubled banks glass and a fly just that as it grapples with a lower
entirely logical. swatter, look growth environment. So if you
As any fool knows, the important thing about hounds work at Evercore and see Ralph
is not to show them any fear. But that may be too late
busy RETURNûTOûTHEûOFlCEûAFTERûLOCKDOWNû
for Commerz, whose shares have fallen a terrifying 60% armed with a magnifying glass and
since Cerberus bought a 5% stake in 2017. AûmYûSWATTERûLOOKûBUSY
“The window of opportunity to address the challenges
faced by Commerzbank is rapidly closing,” Cerberus ROYAL BANK OF Scotland has shaken up the management
wrote ominously in a letter to the bank, in which it of NatWest Markets for the second time in six
demanded the appointment to the bank’s board of two months.
hHIGHLYûQUALIlEDûINDIVIDUALSûTOûBEûIDENTIlEDûBYûUSvû 3INCEû$ECEMBERûTHEûUNITûHASûBEENûRUNûBYû#%/û2OBERTû
(IGHLYûQUALIlEDûINûWHATûTHOUGH Begbie and CFO Robert Horrocks on an interim basis.
But now Begbie has been appointed to the job full-
IQBAL KHAN LASTûWEEKûGAVEûHISûlRSTûBIGûPUBLICû TIMEûWHILEû(ORROCKSûHASûMADEûWAYûFORû$AVIDû+INGû3Oû
presentation since taking over as co-head of global the unit’s two-Bob management team now has a more
wealth management at UBS. He was being interviewed permanent look.
Who’s moving where…

MOELIS has hired banking experience Simon Field has of public-sector Jonas Wikmark has Josh Presley has
Philippe Gallone from and advised on been appointed global banking for South and been promoted to moved back to
Morgan Stanley as over US$200bn of head of escrow in South-East Asia. He co-head of Nordics London from New
a managing director transactions. He HSBC‘s investment joined HSBC in 2008 banking for JP York at CREDIT
in its healthcare started his career at bank, as part of a and has worked in MORGAN, tasked with SUISSE and switched
group, based in Credit Suisse First push to expand the securities services and driving growth in one roles from syndicate to
London. Gallone Boston, and is a business. Field will global banking. HSBC of its major European debt capital markets.
had been co-head physician by training. be part of the issuer said it plans to grow markets. Wikmark, a Presley will head
of EMEA healthcare services team and is its escrow business, 17-year veteran of the corporates for the UK
banking at Morgan based in Singapore, in which an agent US bank, will share and Swiss regions.
Stanley since 2016. where he relocated holds an asset for his new role with
He has more than 15 to two years ago, safekeeping. Klaus Thune, Reuters
years of investment and is currently head reported.

People
& Markets
Begbie given reins to lead NatWest
Markets turnaround
ROYAL BANK OF SCOTLAND has appointed former and structured investor product sales, head tasks: the business has been shrinking for
lXED INCOMEûTRADERûRobert Begbie as chief of balance sheet management, and head of years but still made a £25m loss last year and
executive of NATWEST MARKETS on a capital planning and management for US a £70m loss in 2018.
permanent basis and hired former MUFG UNITû#ITIZENSûACCORDINGûTOûHISûPROlLEûONû “When I took over as CEO, re-focusing
executive David King as the investment bank LinkedIn. NatWest Markets was one of my top
UNITSûlNANCEûCHIEF RBS said King was expected to take over as priorities, and our work here is well under
They will have the task of turning round CFO some time this summer. He was way to deliver against the strategy set out in
the business after years of struggle, which previously CEO of MUFG Securities EMEA February,” Rose said in a statement last
will include halving its size and axing jobs to for nine years until April 2019, according to week.
focus on core products such foreign HISû,INKED)NûPROlLE That strategy includes halving NWM’s
EXCHANGEûlNANCINGûANDûHEDGINGûFORû King replaces Robert Horrocks, who has risk-weighted assets to £20bn in the
corporate clients. BEENûINTERIMû#&/ûSINCEû$ECEMBERû(ORROCKSû medium term. RBS said last year the
Begbie has been interim CEO of NatWest took over from Richard Place in the role and turnaround could take three to four years.
-ARKETSûSINCEû$ECEMBERûû(EûTOOKûOVERû WASûPREVIOUSLYûTREASURYûlNANCEûDIRECTOR NWM has about 5,000 staff – fewer than
from Chris Marks, who was axed by RBS King will join Begbie on the NWM board one-third of the 16,800 employees in the
CEO Alison Rose shortly after she took over as an executive director. investment bank in 2009.
in November. Rose axed NWM’s two leaders a month RBS also said Donal Quaid would be group
Begbie was previously treasurer of RBS. after she took over, putting her stamp on treasurer on a permanent basis. Quaid has
He joined RBS in 1994 as head of the business before announcing another been interim treasurer since Begbie moved
lXED INCOMEûTRADINGûANDûHASûHELDûVARIOUSû restructuring attempt in February. Fixing UPûINû$ECEMBER
roles, including head of equity derivative the investment bank is one of her biggest Steve Slater
UBS rejigs private markets unit clients for illiquid investment opportunities
SUCHûASûPRE )0/ûlNANCINGûSTRUCTUREDûCREDITû
UBS has made changes to its private markets- within the wealth management division, and secondary equity monetisations.
focused groups in its investment banking including unlisted equity, private debt, special The new committees are designed to
and wealth management divisions aimed at situations, real estate and infrastructure. improve coordination between groups
bolstering collaboration between the two $Eû&ILIPPOûWHOûLEADSû5"3SûCORPORATEû looking at private market opportunities in
units so it can capitalise on increased client lNANCEûTEAMûANDû-ATTOLIûWHOûHEADSûUPûTHEû UBS’s wealth management and investment
demand for private market opportunities. 'REATERû#HINAûFAMILYûOFlCEûBUSINESSûWILLû banking divisions.
The changes include newly created regional also co-chair new private markets The changes come as more investment
positions of head of distribution within the committees in their respective regions. banks are bolstering their private market
direct investments group. Giuseppe De Filippo The other co-heads of the new committees offerings as more private companies delay
has been appointed to that position for are Isabelle Toledano-Koutsouris in EMEA and going public and ultra-high-net-worth and
Europe, the Middle East and Africa, and Enrico Selina Cheung in APAC. Toledano-Koutsouris FAMILYûOFlCEûCLIENTSûINûPARTICULARûAREû
Mattoli WILLûLEADûITûFORû!SIA 0ACIlCûACCORDINGûTOû and Cheung are the heads in their regions of targeting private market deals in order to
a memo sent to staff and seen by IFR. THEûPRIVATEûlNANCINGûMARKETSûTEAMSûWHICHû ENHANCEûTHEIRûPORTFOLIOûDIVERSIlCATIONûORû
The direct investments group effectively sit within the investment bank and were set increase returns.
comprises the bank’s alternatives business up last year to meet demand from the bank’s Thomas Blott
Please contact us if you have information about job moves: peoplemarkets@refinitiv.com
Ed Hoyle has taken Emerging markets EM credit traders CREDIT SUISSE has JEFFERIES has Ed Jenkins, HSBC‘s
over Carl Piccolo’s trader Akash Garg Mark Shillam and appointed Edmond hired Shujin Chen as chief risk officer for
fixed income syndicate has left BNP Paribas Thomas Layzell have Huang as head of head of China FIG Asia-Pacific, will step
responsibilities at to join JP MORGAN left Mizuho and are China equity strategy. research from Chinese down from his role
STANDARD BANK, trading CEEMEA heading to BNP Huang retains his brokerage firm Huatai on July 1 for family
sources said. One credit in London, PARIBAS, sources existing positions as Securities. Chen spent reasons. Jenkins will
source said Piccolo, sources said. He said. Shillam, who head of Hong Kong and three years at Huatai, take a sabbatical
who was global joined BNP Paribas in was head of emerging China equity research where she led H-share and plans to return
head of fixed income 2019, following a two- markets trading at and regional head of research. in October. Mark
syndicate, is retiring year spell at ING as an the Japanese bank, industrial research. He McKeown will handle
after 20 years at the EM credit trader. joined Mizuho in 2013. replaces Vincent Chan, Jenkins’ role on an
bank. Layzell joined Mizuho who recently joined interim basis.
in 2018. Aletheia Capital.

“The window of opportunity to address the challenges
faced by Commerzbank is rapidly closing”
PRIVATE EQUITY FIRM CERBERUS, A DISGRUNTLED INVESTOR, P19
Capital markets week ahead:

Royalty Pharma, ThyssenKrupp, Via Varejo
DRUG MONEY Royalty Pharma hopes to win (US$800m) capital raise on Monday. It’s issue from Scandic Hotels. The Nordic hotel
the crown for the biggest US IPO of the year selling new shares to shore up its balance OPERATORûISûRAISINGûFUNDSûTOûGETûITSûlNANCIALû
on Tuesday when it prices its US$2bn sheet after the pandemic forced it to close health back on track after a collapse in
Nasdaq listing. The company, which was its 1,000 stores across the country. bookings sent its occupancy rate to a record
founded in 1996, pitches itself as a kind of Although it has since reopened some low of 6% in April. It has since reported an
venture capitalist for the pharmaceutical BRANCHESûITSûlNANCESûHAVEûBEENûHARDûHITû upswing in demand, and is hopeful of a
INDUSTRYûINJECTINGûCAPITALûINTOûlRMSû and the cash call will give it some breathing decent holiday season.
developing new drugs in exchange for a space.
share in the royalties. SALES RACK UK clothes retailer Ted Baker is
The deal hopes to tap into strong demand set to wrap up a £100m open offer on
for the jumbo IPOs that have made it to Wednesday that it hopes will put its
market since the coronavirus crisis began. lNANCESûINûAûMUCHûBETTERûPOSITIONûTOû
3UCHûWASûTHEûDEMANDûFORûTHEû*$%û0EETSûANDû weather the crisis. The company, which is
Warner Music listings that banks were able on its third chief executive in little over a
to wrap up bookbuilding early on both year, has embarked on a top-to-bottom
deals. But Royalty Pharma is coming up strategy overhaul, restructured its debt and
against some tough markets, following a 6% sold off its headquarters in a bid to steady
plunge in the S&P 500 on Thursday. the ship.
FILTER TIPS GVS hopes to raise more than

õMûFROMûITSû-ILANû)0/ûONû4HURSDAYû4HEû
COMPANYûMANUFACTURESûlLTERSûFORûTHEû
healthcare and energy industries and has
seen a surge in demand during the
pandemic, especially for its masks. That
business line in particular has helped keep
the listing on track while other planned
Italian listings have fallen by the wayside
due to the pandemic.
LIFT MUSIC Banks are set to begin sounding TURNDOWN SERVICE Creditors to the UK
OUTûINVESTORSûONûAûEAGERLYûAWAITEDûõBNû OVER THE COUNTER PharmaSGP prices its budget hotel chain Travelodge hold a vote
loan backing the leveraged buyout of õMû&RANKFURTû)0/ûTHEûSAMEûDAYû4HEû on Wednesday on whether or not to accept
ThyssenKrupp’s lifts business by a German drugmaker focuses on over-the- a huge cut in the money owed to them. The
consortium that includes Advent, Cinven counter products based on natural owners of the chain, which include
and German coal industry foundation RAG- ingredients – an approach that has Goldman Sachs and hedge funds Avenue
Stiftung. Given the size of the deal and attracted a lot of ESG-focused investors to Capital and Goldentree, are attempting to
uncertain outlook, banks are keen to hear THEûDEALû*USTûTWOûANALYSTSûHAVEûlELDEDû engineer a cramdown plan, making use of
how best to structure the deal, which is questions from 170 investors over an eight- new insolvency legislation brought in for
expected to launch later this month. day marketing period for the listing. the pandemic.
DIP STICK A US$1bn loan backing the REELING THEM IN Grieg Seafood hosts a
acquisition of Lummus Technology by The series of calls with investors starting on
Chatterjee Group and Rhone Capital closes Monday as it seeks to lure them into a LAST WEEK IN NUMBERS
on Monday. The company, which develops planned green bond in Norwegian krone. €241bn – Total demand for syndicated
TECHNOLOGYûFORûOILûRElNERIESûISûBEINGûSPUNû The Norwegian salmon and trout farmer deals from Italy, Spain, Greece and the
OFFûFROMû-C$ERMOTTû)NTERNATIONALûWHICHû was spun off from the Grieg Group, a UK on Tuesday
lLEDûFORûBANKRUPTCYûINû*ANUARYû0ROCEEDSû privately held company that specialises in HK$29bn – Bailout for airline Cathay
from the sale will go towards paying down shipping, in 2007. It is the latest green 0ACIlCûINCLUDINGûRIGHTSûISSUEûWARRANTSû
a debtor-in-possession loan. transaction to hit the market following a and a government loan
slower-than-expected start to the year. €3bn – Amount raised by automaker
EVERYTHING MUST GO Brazilian home Volkswagen through a dual-tranche
appliances and electronics retailer Via NO VACANCIES Subscription ends on subordinated bond deal
Varejo hopes to wrap up a R$4bn Wednesday for a SKr1.8bn (US$180m) rights

People
& Markets
Investors eye Asian private credit
Institutional investors expect an uptick in LIMITED COMPETITION eyeing distressed debt opportunities in China
private credit activity in Asia, as the The majority of institutional investors in and India, in particular.
economic dislocation caused by the Covid-19 Asia to-date have focused their efforts on According to the China Banking and
pandemic is expected to lead to a pullback direct lending, due to the number of small Insurance Regulatory Commission, total
in lending from both international and local and mid-sized borrowers that struggle to NPLs in China’s banking sector are
banks. access bank credit in the region. Rmb2.61trn (US$369bn), equivalent to 1.9%
Private debt volumes, encompassing The target clients for these institutional of total loans, although most analysts
everything from senior secured lending investors tend to be companies with ESTIMATEûTHEûlGUREûTOûBEûFARûHIGHER
through to distressed debt, have increased earnings before interest, tax, depreciation In India, total NPLs are Rs8.94trn
SIGNIlCANTLYûINû!SIAûSINCEûTHEûGLOBALû and amortisation of between US$15m and (US$118bn), equivalent to 9.1% of total
lNANCIALûCRISISûASûINVESTORSûGLOBALLYûHAVEû US$100m, which are usually below the radar sector loans, according to data from the
sought out alternative investment of most major banks, sources said. Reserve Bank of India. Analysts are
opportunities because of the relatively Larger deals, at least in developing Asia, are predicting that the NPL ratio could double to
attractive yields on offer. rare, but institutional lenders have closed 18%–20% over the next 12 months as a result
Volumes in the region are still dwarfed by some big deals with private equity-backed of the economic impact from the country’s
those in North America and Europe, BORROWERSûBYûOFFERINGûMOREûmEXIBLEûTERMSû lockdown. Several institutional investors
however. According to research from than banks are willing to provide, such as less said that they were looking at distressed
alternative investment information provider amortisation or a delayed drawdown. debt opportunities in India already.
Preqin, total private debt assets under Whereas in Europe and North America mid- In China, international investors have had
management in Asia, which reached a market deals have become increasingly limited exposure to distressed debt as NPLs
record US$56.8bn last year, were less than a crowded, leading to lower pricing and looser are typically sold to the country’s big four
lFTHûTHEûSIZEûOFûTHOSEûINû.ORTHû!MERICA covenants, most institutional investors were asset management companies, which in
Still, several institutional investors told sanguine about the situation in Asia, saying that turn are reluctant to sell them on at a
IFR they were allocating more capital, as competition was limited and the terms more discount that would satisfy institutional
well as resources, to the region because of investor-friendly than seen in other regions. investors’ return targets.
the increasing demand among borrowers “The US and Europe are certainly more According to research from PwC, only 14
ANDûBECAUSEûCOMPETITIONûISûLESSûlERCEûTHANû established markets and hence more deals closed last year involving a foreign buyer,
in Europe or North America. crowded,” said Neeraj Seth, head of Asian with around US$1.1bn in foreign capital
Most institutional investors typically credit at BlackRock. committed. However, several investors said that
invest using a combination of their balance “In Asia, if you analyse the market in a the pandemic had increased the opportunities
sheet and capital from their global credit matrix structure with different countries on for international investors, especially given that
funds, although a few such as BlackRock one axis and various private credit strategies China was already pushing deleveraging in its
already have closed Asian private credit across the risk-return spectrum on the other lNANCIALûSECTORûBEFOREûTHEûCRISISûHITûINCLUDINGû
funds. axis, the competitive landscape doesn’t look among the big four AMCs.
“It [private credit] has grown for sure intense relative to the number of “Because the shadow banking system was
since the GFC, but relative to the rest of the institutions that are active in broader already being reined in by the government
world, it has trailed very far behind,” said private credit strategies.” over the last few years, and commercial
"RIANû$ILLARDûHEADûOFû!SIAûCREDITûATû++2û banks are focused on cleaning up their NPLs,
h!SIAûISûAROUNDûTWO THIRDSûOFûGLOBALû'$0û FEW OPTIONS companies in China today have fewer
growth, which is a useful proxy for capital The economic disruption caused by Covid-19 sources of credit to turn to,” said Benjamin
consumption, but only around 7% of private is expected to lead to a rise in non-performing Fanger, managing partner at ShoreVest.
credit AUM is dedicated to Asia.” loans, with a number of institutional investors Thomas Blott
HK activist Webb takes step back

Hong Kong-based activist investor and has made him arguably the city’s most known to trigger stock market routs,
corporate governance evangelist David Webb FAMOUSûGADmYûALTHOUGHûHEûWOULDûSTILLû although he has always said he does
is stepping back from posting regular continue to speak out on important issues. NOTûPROlTûFROMûANYûRESEARCHûHEûMAKESû
opinion pieces after being diagnosed with Having retired from a career in public.
prostate cancer. investment banking in 1998 at the age of 33, Around six weeks after he published his
Webb, 54, whose research on Webb-site. Webb has spent the past 20 plus years “Enigma” report in 2017, detailing a
com is widely read in Hong Kong banking splitting his time between managing his complex web of cross-shareholdings among
circles, said he would only be posting own money and championing good Hong Kong-listed companies, the share
sporadically as he concentrates on battling corporate governance practice. His research, prices of dozens of the companies he wrote
the disease. He said he would eschew some which often involves painstakingly sifting about plummeted.
of the in-depth, investigative research that through reams of disclosures, has been Thomas Blott

“If companies make political statements, they must
accept the corporate responsibilities that follow”
AVIVA CHIEF INVESTMENT OFFICER DAVID CUMMING, P17
Ratings agencies wary of corporate credit rebound

Corporate bond issuers rated by Fitch are surveys, and was based on the views of more typically that leads to a downgrade 50%–60%
likely to see revenues tumble by US$5trn in than 100 individual sector analysts. of the time in the following 12 months.
AGGREGATEûTHISûYEARûORûONE lFTHûRAISINGû
doubts about their ability to service their MARKET BOUNCE DOWNGRADES AHEAD
US$14trn of debts and meaning downgrades Prices of existing corporate bonds have Other ratings agencies are also reluctant to
may lie ahead. recovered dramatically from their lows in lift corporate ratings just yet, despite the
The slump is due to the economic late March when the economic lockdowns roaring primary market.
problems wrought by the coronavirus WEREûlRSTûIMPOSED “Our reactions have been more measured
pandemic, compounded by a low oil price. “The rate at which spreads have tightened than the market reactions have been. Some
A large component of the rated from the late-March wides has been credits blew out dramatically then came back
companies are in the oil and gas sector, remarkable,” said Craig Nicol, strategist at in,” said Anne Van Praagh, managing director
particularly hit by the low oil price this year. $EUTSCHEû"ANKû(EûSAIDûûOFû3INGLEûANDû of global strategy and research at Moody’s.
A smaller proportion are in sectors, such as $OUBLEû"ûCORPORATEûCREDITSûWEREûNOWû “Our reactions are more stable. We said at
retail, leisure and transport, that have been showing a cash price higher than before the the beginning we might move ratings down
severely impacted by the lockdown pandemic started. or put them on watch but did not move
measures many countries have had to adopt. “While we wouldn’t go as far as saying that things down as much as people thought
4HEûAGGREGATEûlGURESûSHOWûTHEûTOUGHû these names are fully priced, the upside from relative to the market. We still see lots of
situation facing corporate bond issuers and HEREûHASûDIMINISHEDûSIGNIlCANTLYvûHEûSAIDû%VENû uncertainty regarding the economy even if
INDICATEûTHATûINDEBTEDûlRMSûMAYûFACEûAû the other names in this bucket of corporate less than three months ago.”
harder time. The global economy is CREDITûWEREûNOWûONLYûlVEûPOINTSûBELOWûWHEREû S&P also still sees problems ahead. The
expected to decline by 3% this year and some they were pre-pandemic, on a cash basis. agency said European speculative-grade
countries may see output declines of more Hunter said it was not clear the current corporate defaults could spike to 8.5% by March
than 10%, the International Monetary Fund strong primary market for corporate bonds 2021 from 2.4% in March this year. That would
has estimated. would be sustained in the second half of the mean 62 such companies would default.
“It will be a long slow climb back and take year. h%XPANSIVEûMONETARYûANDûlSCALûSUPPORTû
until the end of next year for aggregate “Second-quarter numbers due out in July could lessen defaults over the near term, but
revenues to get back to 2019 levels,” said and August may not be pretty and there much assistance to-date adds to existing
Richard Hunter, global head of corporate could be a spike in the virus leading to more debt piles at a time when basic revenue is
ratings at Fitch. travel bans. There could also be investor lacking, which could lead to a protracted
He said Fitch’s analysis, unlike many fatigue in the relief rally,” he said. period of higher defaults, rather than typical
others, was a bottom-up look at the impact He said 85% of companies that suffered cyclical behaviour,” said Nick Kraemer, head
of the pandemic on individual issuers rather negative action in the last three months had of performance analytics at S&P.
than extrapolating from general economic stayed on negative outlook or watch, and Christopher Spink
Bankrupt Hertz asks to sell US$1bn in stock

Will investors buy shares in a company nears an exit from bankruptcy protection. The request to the court is to authorise,
already in bankruptcy? Car rental company PG&E’s existing shares traded throughout but not require, Jefferies to sell 246.7m
HERTZ GLOBALûISûHOPINGûTOûlNDûOUTû(ERTZû with the presumption that the company had shares through at-the-market transactions
advised by Jefferies, is asking the US SIGNIlCANTûVALUEûBEYONDûITSûLIABILITIES worth up to US$1bn. Jefferies would receive
bankruptcy court to approve a US$1bn “Offering shares during the early part of a a selling commission of up to 3% of the gross
offering of existing but unissued shares. case is opportunistic,” said one investment proceeds of any shares.
(ERTZûlLEDûFORûBANKRUPTCYûPROTECTIONûONû banker. “It’s possible because the markets are The request to the bankruptcy court said
May 22 as economic shutdown related to the extremely frothy at the moment, with Hertz shares traded at 56 cents a share
coronavirus dried up its revenue stream. investors buying almost anything.” But, he said, ONûTHEûlRSTûDAYûOFûITSûBANKRUPTCYûBUTûROSEû
%QUITYûISûUSUALLYûTHEûlRSTûCASUALTYûINû if equity investors are willing to bet that Hertz more than tenfold to trade at US$5.53 on
bankruptcy proceedings as creditors holding is valuable and poised to rebound after the June 8.
SECUREDûLOANSûANDûBONDûDEBTûAREûlRSTûINûLINEû economy reopens, this could be a great trade. “The recent market prices of and the
to be repaid. Existing equity is typically trading volumes in Hertz’s common stock
wiped out and new equity is issued near the EMERGENCY RELIEF potentially present a unique opportunity for
end of a case to repay creditors or Hertz is asking the court for “emergency the debtors to raise capital on terms that are
recapitalise the company. relief” to test the willingness of the market far superior to any debtor-in-possession
There are cases when the value of the to buy its equity. While shares of bankrupt lNANCINGvû(ERTZûSAID
bankrupt company exceeds its debts and companies have often traded up during the !NDûUNLIKEûTYPICALûBANKRUPTCYûlNANCINGû
existing equity holders see a recovery. course of a bankruptcy proceeding, an selling stock would not impose new
California utility PG&E last week prepared offering of new shares during the case is covenants, it said.
to offer debt, loans and new equity as it highly unusual. Philip Scipio

People
& Markets
European banks say Q2 activity robust
European banking executives expressed economic activity during the third quarter, were mainly involved in groceries, he said at
cautious optimism last week about second- which could fuel an acceleration later in the the Goldman conference.
quarter trading – although they held back YEARûINû-!ûhASûCORPORATESûANDûlNANCIALû “We have done a bottom-up look across all
from some of the bullish predictions made sponsors vie to get ahead of the pack”. those high and medium-risk sectors. We
by US peers in recent weeks. It said more corporate carve-outs could HAVEûIDENTIlEDûTHEûSINGLEûASSETSûTHATûNEEDû
CREDIT SUISSE‘s new chief executive Thomas occur as clients “strive for optimum business say, more attention. Clearly some have
'OTTSTEINûINûOFlCEûSINCEû&EBRUARYûSAIDûACTIVITYû models and structures in lower growth moved to work out,” he said. “[We] will be
so far had been “robust” in May and June. environment”. helping our clients as well as we can through
“Those early indications that we have seen US bank chiefs have indicated trading THEIRûCASHmOWûDIFlCULTIESv
now in the last couple of weeks have been revenues in the second quarter will continue Credit Suisse’s Mathers said the outlook
actually quite promising and going in the THEIRûSTRONGûlRST QUARTERûPERFORMANCEû*0û for its corporate loans had improved since
RIGHTûDIRECTIONvûHEûSAIDûATûAûlNANCIALSû Morgan last month said its Q2 markets THEûENDûOFûTHEûlRSTûQUARTERûPARTICULARLYûFORû
conference organised by Goldman Sachs. revenues were on track to be up 50% from oil and gas names. The bank had SFr2.9bn
“We clearly had a lot of stress in the system the same period last year. (US$3.06bn) of exposure to non investment
in the second half of March, but things really grade oil and gas at the end of March.
calmed down in April and they continue to be LOANS OUTLOOK “There’s been a very substantial narrowing
quite robust in May and June.” DEUTSCHE BANK@SûCHIEFûRISKûOFlCERû3TUARTû,EWISû of spreads over the course of the last two
Gottstein warned that economic data for WASûCAUTIOUSûBUTûCONlDENTûABOUTûLOANSûMADEû months, which I think one would expect to
the second quarter would be “very bad” for by its corporate and investment bank to BEûBENElCIALûTOûTHEûRESERVEûBUILDûTHATûWEû
Europe and the US. But he said investment companies involved in commercial real TALKEDûABOUTûATûTHEûENDûOFûTHEûlRSTûQUARTERvû
banking colleagues were having a high level estate, oil and gas, aviation and retail. he said, citing central bank support for sub-
of engagement with clients. He said the CRE portfolio was “pretty investment grade credit.
Many corporate clients have made the ROBUSTvûSINCEûITûWASûWELLûDIVERSIlEDûANDûHADû “We’ve obviously seen a very sharp rise in
MOSTûOFûTHEûLOWERûRATESûAVAILABLEûTOûRElNANCEû reasonably low loan-to-value ratios of around oil and gas prices from the very distressed
THEMSELVESûSAIDûCHIEFûlNANCIALûOFlCERû$AVIDû 60%. Similarly the aviation loans were PERIODûATûTHEûENDûOFûTHEûlRSTûQUARTERû3Oû)û
Mathers. He said there had been a “very high AGAINSTûMODERNûmEETS think in many ways, those types of risk
degree” of appetite. $EUTSCHEûHADûLIMITEDûEXPOSUREûTOûNON exposures have probably improved since the
In a separate piece of research Credit Suisse investment-grade oil and gas credits such as ENDûOFûTHEûlRSTûQUARTERv
said it expected a solid rebound in European US shale developers and its retail names Christopher Spink
Travelodge uses new law for relief

TRAVELODGE last month fought off an by value of landlords owed rent will be default. But Travelodge’s proposals were not
application by some of its landlords to allowed to vote on the deal. considered adequate by all the landlords.
wind-up the UK hotel chain, after it failed to Travelodge said the CVA was designed to “As this is a complex process involving
pay its second-quarter rents. The company temporarily reduce its obligations around 300 individual landlords, each with
cited a planned new UK law aimed at “particularly those relating to its largest differing interests, the company has decided to
protecting tenants from eviction during the lXEDûCOSTûITEMûLANDLORDûRENTSvû)TûSAIDûITûDIDû move to a formal CVA process to achieve the
coronavirus crisis – even though it is not yet not want to “compromise the claims of other temporary rent reductions required,” it said.
in force. creditors” such as its bank lenders and If the CVA is rejected, Travelodge has said it
The measures have since been put forward holders of its senior secured 2025 bonds. could make use of the new cram-down proposals
to parliament, as part of the corporate It said such other creditors will not be in the corporate insolvency and governance bill,
insolvency and governance bill, and are impacted by the CVA, except by waiving their which allow haircuts to be imposed on all
being debated. Travelodge, owned by rights to declare a cross-default on launch of the creditors provided one class approves them.
GOLDMAN SACHS, GoldenTree and Avenue CVA. These creditors had already agreed to that. Travelodge said the business could lose
Capital, obtained the secret injunction At least 75% of unsecured creditors by value £350m of revenues this year due to closures,
despite the laws not being passed. must approve the CVA and at least 50% of those with much in its peak period between April
The High Court judgment was published unconnected with the company. The CVA can and September. The company’s annual rent
on Monday, days after Travelodge launched a also be challenged up to 28 days after the vote. bill is £215m. Under the CVA, £230m in rent
company voluntary arrangement. It is Goldman and Travelodge’s shareholders will be paid up to the end of 2021.
proposing to reduce the rents it pays on its have agreed to invest £40m more in the Nick Leslau’s Prestbury is Travelodge’s
564 hotels by at least 50% until the end of company, £10m of which is only available if biggest investor with 123 hotels. It said it was
2021. Creditors, including landlords, will the CVA goes through and any challenge is scrutinising the proposals “in order to best
vote on the proposals on June 19. rejected. The remaining £30m is contingent protect its position”.
There has been upset among its 300 on a £60m facility already provided by the Another landlord said the CVA was likely
landlords, since the CVA allows holders of SHAREHOLDERSûBEINGûRElNANCED to go through since it would be hard for most
other unsecured debts to vote on the plans, Before the CVA was launched, discussions landlords to let their buildings to alternative
including those held by Travelodge’s equity had been held between the company and its tenants currently.
owners. At the same time only a proportion landlords about how to cure the rental Christopher Spink

“It’s hard to build relationships if
you’re not sitting in front of people”
MOELIS CO-PRESIDENT NAVID MAHMOODZADEGAN, P19
India bankruptcy freeze to hurt banks

India’s freeze on fresh bankruptcy Some analysts believe there could be an months to limit the spread of the
proceedings due to the coronavirus incentive for banks to revert to their old coronavirus.
pandemic is expected to hurt the country’s ways for handling large non-performing
already fragile banking system and delay accounts in the absence of bankruptcy DISTRESSED OPPORTUNITIES
bad debt resolutions. proceedings and with weak progress on $EPENDINGûONûTHEûPACEûOFûECONOMICû
The government amended the Insolvency inter-creditor agreements. recovery, there is a risk that bad loans as a
and Bankruptcy Code 2016 so that no new “Any such action would be negative as it percentage of total loans will rise more than
BANKRUPTCYûCASESûCANûBEûlLEDûFORûDEFAULTSû would delay timely recognition of bad assets 500bp, or even double in the next two years
arising on or after March 25, when the and affect recoverability,” said Saswata from an estimated 9% at the end of March
lockdown was declared, with the suspension Guha, director at Fitch. quarter, according to Fitch.
to last for six to 12 months. Also, given the suspension of section 10 Banks are also likely to face bigger principal
While the suspension of fresh bankruptcy lLINGSûUNDERûTHEû)"#ûWHEREBYûCORPORATEû losses. Corporate insolvency resolution
cases will help businesses facing a near-term DEBTORSûCANNOTûVOLUNTARILYûlLEûFORû proceedings are likely to suffer from lower
LIQUIDITYûCRUNCHûhBANKSûANDûlNANCIALû insolvency, some businesses may not be able valuations and a possible decline in interest
institutions are worried that the credit to get the immediate support that was from bidders because of the uncertainty across
discipline which was enforced by the previously available under the bankruptcy many sectors of the economy.
bankruptcy code may go for a toss”, said Aviral code. “This in turn may result in creditors
Jain, co-head and managing director of global “This will lead to unnecessary decay of having to agree on higher haircuts,” said
RESTRUCTURINGûADVISORYûATû$UFFûû0HELPS their businesses for the next six to 12 !BHISHEKû$AFRIAûVICE PRESIDENTûOFû)CRAûINûAû
India introduced a new insolvency and MONTHSvûSAIDû*AINûATû$UFFûû0HELPSûh'IVENû recent note.
bankruptcy framework in 2016 to try to these circumstances, it would be prudent if However, the economic pain is expected
speed up debt workouts and has tweaked it the central bank announces a one-time to throw up opportunities for distressed
over the years. restructuring scheme to resolve such debt investors.
The clean-up track record for India’s stressed assets during the six-months “There is an opportunity to extend credit
banking system is weak, though, with few moratorium period.” to good quality borrowers due to an increase
SIGNIlCANTûRESTRUCTURINGSûINûTHEûPASTûUNTILû On March 27, the RBI offered a three- in demand for capital following the
THEûCENTRALûBANKûPUSHEDûlNANCIALû month moratorium on loans, which was slowdown in growth, and a constraint in
institutions to appropriately recognise the extended by another three months on May SUPPLYûASûNON BANKINGûlNANCIALûCOMPANIESû
stress on their balance sheet. The Reserve 22, to tide debtors over the economic crisis. are less able to provide liquidity,” said
Bank of India forced lenders in 2017 to begin Goldman Sachs expects India’s economy to Haseeb Malik, partner and head of Asia
insolvency proceedings against some of the shrink 45% year on year in the April to June corporate and traded credit at Varde
biggest defaulters, rather than rolling over QUARTERûANDûûINûlSCALûûAFTERû)NDIAû Partners.
bad debts or understating them. imposed a lockdown lasting more than two Krishna Merchant
Please contact us if you have

information about job moves at
your firm or within the market
Call +44 (0)20 7542 4367

or email steve.slater@refinitiv.com

BONDS
SSAR Corporates FIG Covered Bonds High-Yield Structured Finance
FRONT STORY FINANCIALS
Nationwide demonstrates sub recovery

AT1 revival goes up a notch after UK lender prints
Bankers eye more opportunities as calls come due
NATIONWIDE BUILDING SOCIETY laid bare the They said the deal should perform better h'ENERICALLYûSPEAKINGûIFûTHEûRElNANCINGû
remarkable recovery in subordinated debt on the secondary market than cost is higher than the reset, there is still a
levels as it brought the Additional Tier 1 Commerzbank and ABN AMRO’s euro tolerance window where an issuer will want
revival to the UK on Wednesday, printing a trades, which have traded below par after TOûBEûMOREûINVESTOR FRIENDLYû;ANDûCALL=vûSAIDû
£750m deal on more than £4.4bn of demand. having been priced without premiums. THEûlRSTûSYNDICATEûBANKER
.ATIONWIDESûDEALûTHEûlRSTûSTERLING “Coming off the back of weaker “But it’s hard put a number on. Things
denominated AT1 since November, followed performance yesterday, perhaps [Nationwide] are subjective on things like investor
the reopening of the euro AT1 market on STARTEDûAûBITûMOREûTENTATIVELYvûSAIDûAûBANKERû RELATIONSv
Monday by Commerzbank and ABN AMRO, away from the trade. “That’s not a criticism, "ANKERSûSAIDûTHEûCROSS CURRENCYûSWAPû
with combined demand for the duo peaking ITSûJUSTûTHEûRIGHTûTHINGûTOûDOv must also be considered, as some issuers
above €19.5bn. The deal initially traded below par on favour the US dollar market for their
But the UK lender was entering a softer Thursday as markets deteriorated, falling as low subordinated issuance.
market, after the credit rally stalled on ASûûBUTûROSEûTOûûONû&RIDAYûMORNING 2"3Sû53BNûû!4ûnûBIDûATûûnûISû
Tuesday. up for call on August 10.
Leads Bank of America, Citigroup, JP Morgan HUNT BACK ON Analysts at Morgan Stanley expect RBS to
and Morgan Stanley opened books for the Bankers suggested the success of last week’s extend the bond, because redeeming it will
PERPETUALûNON CALLû$ECEMBERûû AT1s will prompt other issuers with INCURûANû&8ûHITûTHATûTHEYûCALCULATEûTOûBEû
transaction with initial guidance of the UNRElNANCEDû!4ûCALLSûTOûLOOKûMOREûCLOSELYû AROUNDûaM
ûAREA at the market. “While we believe it could easily tap the
4HEûCOUPONûWASûSUBSEQUENTLYûSETûATûû “The hunt for yield is back on, and I think market with a new AT1 and at a coupon
for an expected £600m–£750m, before THATLLûmUSHûOUTûAûFEWûMOREvûSAIDûAû$#-ûBANKER. comparable with where its current bond
BEINGûlXEDûATûaM &ELLOWû5+ûISSUERSû2"3ûANDû"ARCLAYSûANDû WILLûRESETûOURûVIEWûISûTHATûTHISû&8ûLOSSûWILLû
Notably, Nationwide was able to secure a Ireland’s AIB are among those banks with drive the decision to leave the current AT1
lower coupon than it achieved with a AT1s coming up for call this year that have OUTSTANDINGvûTHEYûSAID
SMALLERûSHORTER DATEDû!4ûBEFOREûTHEû not been fully replaced. Barclays’ and AIB’s deals are callable in
coronavirus outbreak. As the levels available in primary close on $ECEMBER
In September it priced a £600m perpetual the reset spreads of outstanding deals, the
NON CALLû$ECEMBERûû!4ûATû likelihood of some issuers, at least, CAPITAL ENHANCEMENT
Bankers said the deal demonstrated just RElNANCINGûANDûREDEEMINGûTHEIRûDEALSûISû Nationwide said it was entering the market
how far the market has rallied since the increasing, bankers said. TOûENHANCEûITSûhALREADYûROBUSTvûCAPITALûLEVELSû
GLOBALûSELL OFFûINû-ARCHûWHICHûHITûTHEûSECTORû against a backdrop of heightened
hard. uncertainty arising from the coronavirus
STERLING SUB DEBT RECOVERS
The iBoxx GBP Banks Subordinated Index AVERAGE YIELD OF IBOXX GBP BANKS
pandemic. The building society already
PEAKEDûATûûONû-ARCHûûBUTûHASû SUBORDINATED INDEX meets all of its capital requirements.
TIGHTENEDûSIGNIlCANTLYûSINCEûANDûCLOSEDûATû 5.0 )TSû5+ûLEVERAGEûRATIOûSTOODûATûûATûTHEû
ûONû4UESDAYûITSûLOWESTûLEVELûSINCEû ENDûOFûTHEûlRSTûQUARTERûDOWNûFROMûûAû
March 11. 4.5 year earlier. The fall was mostly due to the
When Nationwide tapped the market in REDEMPTIONûOFûAûaBNû!4ûINû*UNEûû
3EPTEMBERûTHEûINDEXûWASûATû mitigated by its £600m issue in September.
4.0
“AT1s have moved a fair clip from the )TSû#%4ûRATIOûWASûûOFûITSûRISKû
wides and are pretty much back to where WEIGHTEDûASSETSûATûTHEûENDûOFûTHEûlRSTû
3.5
WEûWEREûATûBACK ENDûOFûvûSAIDûAû quarter, the highest among major European
syndicate banker. “It’s remarkable we’ve banks, according to analysts.
3.0
GONEûALLûWAYûOUTûANDûBACKûINûAGAINv 4HEûRATIOûFELLûFROMûûATû1ûûBUTû
.ATIONWIDESûaMûûPERPûNON CALLû remains far in excess of its CET1
SûnûITSûONLYû!4ûOUTSTANDINGûnûWEREû 2.5 REQUIREMENTûOFû
TRADINGûATûAûYIELD TO CALLûOFûûATû 4HEûBONDSûHAVEûAûSIX MONTHûANYTIMEûCALLû
Wednesday’s open, according to Tradeweb. 2.0 OPTIONûAHEADûOFûITSûlRSTûRESETûDATEûANDû
3/5/20
3/6/20
3/4/20
3/1/20
3/2/20
3/3/20
Bankers put fair value for the new issue at CONVERTûINTOû#OREû#APITALû$EFERREDû3HARESûIFû

nûIMPLYINGûAûBPnBPû .ATIONWIDESû#%4ûRATIOûDROPSûBELOWû
concession. Source: Eikon Tom Revell

Delta prints before airline sell-off WEEK IN NUMBERS
Bonds fall in secondary as rally runs out of steam 0.70%

THE YIELD ON 10-YEAR TREASURIES
DELTA AIR LINES returned to the bond market defaults and collateral repossession across AFTER THE FOMC’S MEETING LAST WEEK,
on Wednesday to take advantage of strong the company’s capital structure. IN WHICH THE FED MAINTAINED ITS
primary conditions as it continues to shore DOVISH STANCE AS IT PLAYED DOWN
up its liquidity position. MORE LIQUIDITY THE CHANCES OF A QUICK ECONOMIC
4HEûAIRLINEûPRICEDû53BNûOFûlVE YEARû $ESPITEûRAISINGûOVERû53BNûINûTHEûCAPITALû RECOVERY
UNSECUREDûNOTESûATûûAFTERûTIGHTENINGû markets since early March – as well as %
FROMûINITIALûPRICEûTHOUGHTSûOFûûANDû 53BNûOFûSUPPORTûUNDERûTHEû#!2%3û!CTûnû 2.0
1.8
GUIDANCEûOFûTHEûûAREA $ELTAûISûLOOKINGûTOûFURTHERûBOLSTERûITSû
1.6
But the bonds dipped in the secondary market liquidity position, saying it expects to report
1.4
on Thursday amid a resurgence of concerns over AûûDROPûINûSECOND QUARTERûREVENUESûATûTHEû
1.2
the state of the economy and the extent of the end of June. 1.0
#OVID ûPANDEMICûANDûASûBONDûINVESTORSûTOOKû 0.8
DOWNûSOMEûPROlTSûAFTERûAûLONGûRALLY 0.6
4HEûûûUNSECUREDûNOTESûDROPPEDû “Our stress test shows Delta 0.4
2/1/20 2/2/20 2/3/20 2/4/20 2/5/20 2/6/20
TOûûTOûYIELDûûINûSECONDARYûTRADINGû having sufficient liquidity
HAVINGûPRICEDûATûûONû7EDNESDAY to withstand a two-year
“Airlines in general started to sell off (on
7EDNESDAY ûWHILEû$ELTAûWASûPRINTINGûTHEûNEWû
deal, and it falls squarely into the camp of
downcycle, but the outlook
for US major airlines remains
€3bn
THE AMOUNT THAT VW RAISED
things that are going to dip on a day like speculative based on timing THROUGH A DUAL-TRANCHE
TODAYvûSAIDûONEûHIGH YIELDûBONDûTRADERûh4HATû uncertainties of domestic and SUBORDINATED BOND DEAL AS THE
NEWûISSUEûHASûTOûREPRICEûWITHûTHEûMARKETv international traffic rebounds” REOPENING OF THE CORPORATE HYBRID
!MERICANû!IRLINESûûSûWEREûALSOû MARKET GATHERS MOMENTUM
down six points to 59 on Thursday, United
!IRLINESûûSûDROPPEDûûPOINTSûTOû This time it approached the market with
79 and aerospace components supplier
4RANS$IGMûSAWûITSûûûNOTESûDROPûlVEû
points to 94.40, according to MarketAxess.
UNSECUREDûBONDSûRATEDû"AA""""ûWITHû
proceeds being used to support liquidity,
which may include the repayment of debt
49%
THE SIZE OF THE ECB’S BALANCE SHEET
$ELTASûBONDûOFFERINGûWASûRUNûBYûTHEû MATURINGûOVERûTHEûNEXTûûMONTHS AS A PERCENTAGE OF GDP, UP FROM 39%
INVESTMENT GRADEûSYNDICATEûDESKSûOFûGoldman 7HILEûmIGHTûACTIVITYûISûSTARTINGûTOûPICKûUPûnû AT THE END OF 2019
Sachs and Morgan Stanley. $ELTAûADDEDûûDOMESTICûmIGHTSûINû*UNEûnûTHEû Balance sheet as % of GDP
140
AIRLINEûSECTORûREMAINSûAûDIFlCULTûONEûFORûMANYû
HIGH YIELDûINVESTORS 120
“Airlines in general started to One bond buyer said he was cautious on 100
sell off on Wednesday while investing in an unsecured airline bond at par 80
Delta was printing the new with potential zero recovery rate. 60
At the end of March, the company was 40

deal, and it falls squarely into
burning US$100m of cash a day, which it 20
the camp of things that are expects to drop to around US$40m by the 0
Fed ECB BoE BoJ
going to dip on a day like today” end of June. End 2019 Current
)TûHOPESûTOûREDUCEûTHISûDAILYûOUTmOWûTOû Source: Bank of America
4WOûHIGH YIELDûBUYSIDEûSOURCESûSAIDûTHEREû ZEROûBYûTHEûENDûOFûûASûTRAVELûDEMANDû
was a large amount of reverse enquiry on picks up. It also aims to garner over US$14bn
THEûDEALûFROMûINVESTMENT GRADEûACCOUNTSû
WITHûBOTHûINVESTORSûREPORTINGûSMALLER THAN
expected allocations in the new issue.
of liquidity by the end of June, as well as
US$6bn of unencumbered assets, as it tries
to weather the storm.
€241bn
THE AMOUNT OF PEAK DEMAND FOR
While investors who receive small h/URûSTRESSûTESTûSHOWSû;$ELTA=ûHAVINGû THE SYNDICATED DEALS FROM ITALY,
allocations tend to try to source more bonds in SUFlCIENTûLIQUIDITYûTOûWITHSTANDûAûTWO YEARû SPAIN, GREECE AND THE UK ON TUESDAY.
the secondary market, the selling seen on downcycle, but the outlook for US major THE LATTER GOT £70bn OF ORDERS,
Thursday discouraged that, the sources said. airlines remains speculative based on timing WHILE THE OTHER THREE GOT MORE
$ELTAûALSOûWARNEDûONû7EDNESDAYûEVENINGû uncertainties of domestic and international THAN €160bn COMBINED
THATûITûEXPECTEDûTOûFAILûTHEûlXEDûCHARGEûRATIOû TRAFlCûREBOUNDSvûWROTEû#REDIT3IGHTSûANALYSTû
on its primary credit facilities early next Roger King in a note on Wednesday.
year – a test of a company’s ability to meet
obligations such as debt and equipment
lease payments.
Still, the bonds were seen as coming
relatively cheap – particularly at initial price
TALKûOFûûnûGIVENûITSûûû
€2.316bn
THE AMOUNT OF CORPORATE BONDS THE
The company said it expected to obtain an unsecured notes were trading at a yield of ECB BOUGHT (NET) IN THE WEEK TO JUNE
amendment prior to breaching that ûONû4UESDAYûBEFOREûTHEûNEWûDEALûWASû 5 AS PART OF ITS CSPP COMPARED WITH
covenant, but if it failed to, a breach could announced. PURCHASES OF €642m THE WEEK EARLIER
lead to a default which could trigger other David Bell In total, it has bought €32.205bn

BONDS SSAR
versus the benchmark for these trades is “As soon as you go beyond two years, you
EXCEEDINGLYûATTRACTIVEv LOSEûONSHOREûMONEYûMARKETûDEMANDvûHEû
SSAR BMO, Goldman Sachs, Morgan Stanley and said. “This, though, looks like it’s in the top
Nomura WEREûLEADûMANAGERSûFORû)$" ûOFû3/&2ûDEALSûINûTERMSûOFûSIZEûIFûNOTûû
h)ûTHINKûTHEû2OLLS 2OYCEûOFûTHEûTRADESûWASû for a trade longer than two years. So it’s a
US DOLLARS )$"ûWHICHûWASûAûCOREûBORROWERûBRINGINGûAû NUANCEDûTRADEûTHATSûGONEûVERYûWELLv
core maturity, but both KBN and the World The proceeds will support the World
SSA ISSUERS HIT THEIR MARKS IN "ANKûHAVEûDONEûPHENOMENALLYûWELLvûSAIDû Bank’s sustainable development activities in
DOLLARS the second banker. member countries.
+".ûWHICHûISûûOWNEDûBYûTHEû+INGDOMûOFû
Three Triple A issuers mined the dollar .ORWAYûCUTûPRICINGûBYûBPûFORûITSû53BNû DEVELOPING SITUATION
market on Tuesday, with the INTER-AMERICAN YEARûOFFERINGûFORûAûLAUNCHûATûSWAPSûPLUSûBP NEW DEVELOPMENT BANK has made further
DEVELOPMENT BANK, KOMMUNALBANKEN and the h)TSûTOUGHûTOûlNDûFAIRûVALUEûBUTûITûLOOKSû progress towards its international capital
WORLD BANK all bringing off successful trades. CLOSEûTOûITvûSAIDûTHEûSECONDûBANKER markets debut, holding a global investor call
)$"û!AA!!! ûSHEDûBPûFROMû)04SûOFûTHEû "OOKSûGREWûTOûMOREûTHANû53BNû on Wednesday.
BPûAREAûOVERûSWAPSûFORûITSû53BNûlVE YEARû excluding lead manager orders. 0REVIOUSLYû3HANGHAI BASEDû.$"ûHASûONLYû
'LOBALûBENCHMARKû4HEûlNALûSPREADûOFûBPû KBN was making a return to the dollar issued Panda debt in the domestic Chinese
saw it print the trade through its curve. MARKETûAFTERûPRINTINGûAû53BNûlVE YEARû market. However, it has voiced ambitions of
h)TSûANOTHERûSUPERBûRESULTûFORûTHEMvûSAIDû in March at 15bp over swaps. issuing in other member state currencies.
a banker away from the trade. “They’ve )TûHASûAûFUNDINGûPROGRAMMEûOFû53BN Citigroup, Credit Agricole, Goldman Sachs
been very aggressive in terms of new issue EQUIVALENTûFORûûACROSSûBENCHMARKSû International, HSBC and JP Morgan are leads for
concessions this year but it doesn’t look like private placements, retail and other the proposed US dollar Reg S senior
it’s affected their deals, they’ve managed to institutional markets. The aim is to issue unsecured Covid Response bond, which was
PULLûOFFûTHEIRûTRADESû'REATûRESULTv AROUNDûnûOFûTHATûTARGETûINûDOLLARûANDû lRSTûANNOUNCEDûINûLATEû-AY
IoIs exceeded US$4.5bn and demand grew euro benchmarks.
through the bookbuild to peak at more than Bank of America, BMO, Citigroup and Morgan
US$6bn. Books closed at over US$5.75bn. Stanley were lead managers. EUROS
A second banker said that as spreads have 4HEû7ORLDû"ANKû!AA!!! ûWASûOUTûWITHûAû
tightened over the past weeks, so the quality of 53MûFOUR YEARû'LOBALû3/&2 LINKEDû&2. GERMANY, FINLAND LAND TIGHT ON
the books has increased as fast money retreats. The was set 1bp inside IPTs, landing at SECOND SYNDICATION ROUND
“4HEûDOLLARûMARKETûISûINûVERYûlNEûFETTLEvû BPûVIAûBMO and WFS.
said the second banker. “The central banks The second banker said that it looked as if 'ERMANYûANDû&INLANDûMANAGEDûTOûENTICEû
are always looking to beat the benchmark, THEûISSUERûHADûNOTûPAIDûUPûVERSUSûITSûlXED investors to their syndications despite
WHICHûISû4REASURIESû4HEûRELATIVEûPICK UPû rate dollar curve. printing at no concession to their curves, an
ALL INTERNATIONAL GREEN BONDS ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues US$(m) (%) bank or group issues €(m) (%)
1 BNP Paribas 21 3,841.05 7.2 1 JP Morgan 824 234,557.91 8.7 1 BNP Paribas 262 80,065.84 8.6
2 Citigroup 14 3,408.82 6.4 2 Citigroup 653 199,759.76 7.4 2 JP Morgan 213 67,394.81 7.2
3 JP Morgan 20 3,319.23 6.2 3 BofA Securities 663 190,427.86 7.1 3 Barclays 208 59,096.26 6.3
4 Credit Agricole 16 3,267.38 6.1 4 Barclays 585 184,440.48 6.9 4 HSBC 217 58,971.73 6.3
5 SG 13 3,135.83 5.9 5 Goldman Sachs 451 141,757.37 5.3 5 Credit Agricole 189 55,718.84 6.0
6 ING 20 3,073.64 5.7 6 HSBC 528 136,570.95 5.1 6 Deutsche Bank 180 49,790.69 5.3
7 Barclays 17 2,907.19 5.4 7 BNP Paribas 442 129,793.57 4.8 7 UniCredit 167 47,532.92 5.1
8 BofA Securities 20 2,726.27 5.1 8 Deutsche Bank 434 118,522.38 4.4 8 SG 155 46,298.10 5.0
9 Deutsche Bank 11 2,358.98 4.4 9 Morgan Stanley 349 117,084.56 4.4 9 Citigroup 149 45,532.85 4.9
10 HSBC 16 2,183.94 4.1 10 Credit Agricole 319 85,079.21 3.2 10 BofA Securities 149 41,581.21 4.5
Total 96 53,603.38 Total 2,893 2,691,623.74 Total 948 931,848.69
Excludes social bonds and mixed use of proceeds. Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt,
US Global ABS/MBS. US Global ABS/MBS.
Source: Refinitiv SDC code: JG1 Source: Refinitiv SDC code: J1 Source: Refinitiv SDC code: N1
EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING JUNE 12 2020

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Jun 9 2020 Germany €2.4885bn 0.00 Nov 15 2027 -0.47 1.92
Jun 10 2020 UK (i) £900m 0.125 Nov 22 2036 -2.55 2.52
Jun 10 2020 Portugal €585m 2.875 Jul 21 2026 0.137 2.08
Jun 10 2020 Portugal €920m 0.475 Oct 18 2030 0.595 1.50
Jun 11 2020 UK £3.25bn 1.00 Apr 22 2024 -0.041 2.52
Jun 11 2020 UK £3.25bn 0.125 Jan 31 2028 0.111 2.06
Jun 11 2020 Italy €5bn 0.30 Oct 15 2023 0.46 1.37
Jun 11 2020 Italy €2.5bn 0.85 Jan 15 2027 1.10 1.43
Jun 11 2020 Italy €2bn 1.45 Mar 1 2036 1.91 1.42
Source: IFR

impressive feat given that their deals
emerged just a day after four sovereigns had
already pummelled the market with new
paper (see Top News story).
Sweden schedules green
7ITHûõBNûRAISEDûINûTHEûSINGLEûCURRENCYû
alone by sovereigns the day before, concerns
bond for August
about possible indigestion would have been
valid, especially given that Germany and SSAR Scandinavian sovereign aims to join green cohort
&INLANDûAREûMUCHûTIGHTERûNAMESûTHANû
Ireland, Spain or Greece. SWEDEN is getting ready to issue a green bond of makes it even more attractive,” said Hans
Yet, once again, demand far surpassed the around SKr20bn (US$2.17bn) in August which Lindblad, director general of the debt office.
amount on offer, with books passing will finance government expenditures aimed at The bond is expected to be issued at SKr20bn,
õBNûFORûTHEûõBNûRAISEDû meeting the country’s environmental and climate but Sweden has already targeted SKr30bn of
“Markets are clearly performing and have targets. green expenditure. The size of the issue reflects
CLEARLYûBENElTEDûFROMûTHEûLIQUIDITYûTHATSû The planned deal is the latest in a wave of the country’s funding strategy and current
been pumped into the system by central anticipated European sovereign green bonds market conditions.
BANKSvûAû$#-ûBANKERûSAIDû in the second half of the year. Hungary issued “We are now finalising the details in
“Whether it’s right or not you can debate, a €1.5bn 15-year green bond recently with zero order to be ready to issue the green bond in
but central banks have dusted off their new-issue premium and many sovereigns, August. With this new bond, we can offer an
PLAYBOOKSûFROMûTHEûûCRISISûANDû including Germany and Spain, are set to follow. investment alternative with low risk and a
responded to this one very quickly and kept Sweden’s government has unveiled the distinctly green stamp of approval,” said Anna
MARKETSûOPENû7EûHAVENTûBLINKEDv framework for the green bond, which will be issued Sjulander, acting head of debt management
Triple A rated GERMANY, returning to by its National Debt Office, and also outlined the at the debt office.
syndication barely over a month since budget expenditure to which the bond will be linked, Sweden will mandate banks to syndicate the
PRICINGûITSûlRSTûEUROûSYNDICATEDûCONVENTIONALû which is primarily climate investments, seas and green bond, and set the maturity closer to the
trade, once again offered little in the way of water, biodiversity and railway maintenance. issue date.
premium. The framework has been given the highest The green bond will supplement Sweden’s
Books peaked at over €44bn, but a sharp “dark green” rating by ESG ratings firm Cicero, traditional government bonds and allow
PRICINGûREVISIONûANDûAûPRINTûmATûTOûFAIRûVALUEû and the bond will be issued under the debt investors to monitor the country’s green
meant some accounts did not stay for the office’s EMTN programme. investments and how they help it meet broader
RIDEûANDûORDERSûFELLûTOûOVERûõBN “The fact that the bond has the highest environmental and climate targets.
“It was very much the same as the last possible green rating is an affirmation that Tessa Walsh
ONEvûANOTHERû$#-ûBANKERûSAIDûh4HEYûHADûAû
very clear view on pricing and knew what
they wanted to get. Most of the drops were WITHûDEMANDûESPECIALLYûFROMûTHEûREAL adopted syndications for its conventional
LEVERAGEDûACCOUNTSv money community. About a year ago, they euro trades, and other sovereigns that have
Hedge funds featured heavily in ALLûTHOUGHTûITûWASûFARûTOOûEXPENSIVEv syndicated maturities they do not typically
'ERMANYSûõBNû YEARûINû-AYûTAKINGû 5NLIKEûTHEû YEARûTHATûCAMEûWITHûAû do, the borrower has had to adapt.
ûOFûTHEûTRADEûWHILEûASSETûMANAGERSûANDû negative yield, the tap was in positive “Syndications are very helpful for these
INSURANCEPENSIONûFUNDSûTOOKûûANDûû TERRITORYûALBEITûBYûAûSMALLûMARGINûATûû sovereigns in that it allows them to raise a lot
respectively. Similar to Germany, there was price more in a single event than they would at
And while they might have dropped from sensitivity in the book for FINLAND@SûõBNû AUCTIONSvûTHEûlRSTû$#-ûBANKERûSAIDûh)TûMEANSû
THEû YEARûTAPûTHEYûSTILLûFEATUREDûHEAVILYûINû YEARûWITHûINTERESTûDROPPINGûTOûõBNûFROMûAû you can establish a line with immediate
THEûlNALûDISTRIBUTIONûWITHûûPLACEDûWITHû PEAKûOFûOVERûõBNû LIQUIDITYûRATHERûTHANûHAVEûTOûBUILDûITûOVERûTIMEv
HEDGEûFUNDSû5+ûACCOUNTSûTOOKûûOFûTHEû “The size of the order book was a record
deal. high, similar to what has been witnessed in FRENCH AGENCIES REMAIN IN VOGUE
other euro sovereign bond syndications
SENSITIVITY LATELYvûSAIDû!NUû3AMMALLAHTIûDEPUTYû The second social bond in as many months from
Last Wednesday’s €6bn tap of the August director, funding, liquidity and investor UNEDIC has been greeted with an impressive
ûTRADEûVIAûBNP Paribas, Danske, Goldman RELATIONSûATû&INLANDSûSTATEûTREASURYûINûAû reception as the SSA market continues to attract
Sachs and JP MorganûPRICEDûATûBPûOVERûTHEû statement. strong levels of investor demand.
!UGUSTûûINSIDEûTHEûBPûAREAûGUIDANCE Leads BNP Paribas, Credit Agricole, Goldman &OLLOWINGûONûFROMûITSûINAUGURALûSOCIALû
h4HEûBOOKûDROPPEDûBUTûTHATSûAûREmECTIONû Sachs, NatWest Markets and Nomura started OFFERINGûINû-AYûTHEûISSUERû!A!! ûPLACEDûAû
OFûTHEûTIGHTENINGûANDûTHEûZEROûCONCESSIONvûAû MARKETINGûTHEûBONDûATûMID SWAPSûPLUSûBPû õBNûû.OVEMBERûûDEALûLASTû
banker close to the deal said. AREAû)04SûBUTûLANDEDûATûBPûmATûTOûFAIRû Wednesday that was more than twice
“But you have to remember, this trade value. subscribed.
was well telegraphed and a bit like the UK h)TSûAûFANTASTICûTRADEvûTHEûSECONDû$#-û “Momentum is clearly very good with all
$-/ûDEALSûTHEûMARKETûHADûTIMEûTOûADJUSTv BANKERûSAIDûh%VENûTHOUGHûITSûPRICINGûmATûTOû trades getting large order books, and it feels
He added that, while it looked tight on a fair value, the book is of very high quality. that investors are really chasing the market
headline basis, some accounts had been 4HEûMARKETûISûVERYûMUCHûRISK ONûAFTERûLASTû ATûTHEûMOMENTvûAûBOOKRUNNERûSAID
drawn to the deal by the repricing of week and investors are looking to pick up “There’s very good demand in general and
Germany’s curve versus asset swaps. extra yield in any way they can, which WEREûSEEINGûGOODûDEMANDûFORû&RENCHû
h)NûMID -ARCHûTHEûûWASûAROUNDûLESSû MEANSûGOINGûLONGûINûNAMESûLIKEû&INLANDv agencies too. There’s been some broad
BPnBPûANDûITSûNOWûmATTISHvûHEûSAIDû 4HEûDEALûWASû&INLANDSûlRSTû YEARû tightening of SSA spreads but it still feels like
“That’s quite a difference and clearly helps syndication. Like Germany, which has THEû&RENCHûNAMESûHAVEûSOMEûVALUEûINûTHEMv

BONDS SSAR
"OOKSûOPENEDûATûBPûAREAûOVERûTHEû PARTûOFûTHEûCURVEûWITHûAû YEARûDEALûTHATû expect it to receive a good level of support

.OVEMBERûû/!4ûANDûWITHûDEMANDû MARKEDûITSûlRSTûCONVENTIONALûEUROûOFFERINGû FROMûTHEû&RENCHûGOVERNMENT
PASSINGûTHEûõBNûMARKûEXCLUDINGû*,-û without an EPIC label. “We still consider our comparables to be
interest), the issuer was able to achieve an 4HEûISSUERûnûSTILLûû&RENCHûSTATE OWNEDû &RENCHûPUBLICûAGENCIESûINûGENERALûANDû
OVERALLûTIGHTENINGûOFûBPûlXINGûTHEûlNALû ANDûINûCHARGEûOFûTHEûlNANCINGûOFûTHEû3.#&û NATIONALûTRANSPORTATIONûCOMPANIESvû
SPREADûATûBP Group – announced plans for a benchmark Marchessaux said.
Bank of America, Credit Agricole, HSBC, JP deal last Monday through joint lead “We have noticed a widening of our
Morgan, Natixis and NatWest Markets were lead managers BNP Paribas, Credit Agricole, Natixis, spread but it’s hard to determine whether
managers. NatWest Markets and Societe Generale. THISûISûDUEûTOûTHEûONGOINGû#OVID ûCRISISûORû
4HEû&RENCHûUNEMPLOYMENTûAGENCYûAIMSû They opened order books the following something more structural with potentially,
to respond to its surging funding MORNINGûATûTHEûBPûAREAûOVERû/!4SûHAVINGû THEûVIEWûOFûSOMEûINVESTORSûSHIFTINGû3.#&û
REQUIREMENTSûDUEûTOûTHEû#OVID ûPANDEMICû received indications of interest in excess of FROMûAGENCYûTOûCORPORATEv
through the issuance of social bonds, with €400m (excluding JLM interest).
the last two rounds of social issuance 5LTIMATELYûTHEûBOOKûTOPPEDûõBNû DIFFERENT STROKES FOR
ACCOUNTINGûFORûALMOSTûûOFûTHEûPLANNEDû BOOSTEDûBYûõMûOFû*,-ûINTERESTûANDû3.#&û DIFFERENT LAENDER
total funding requirement for the year. WASûABLEûTOûlXûTHEûSPREADûATûBPû4HISû
To put the size of the recent funding in allowed it to print a deal size of €1bn with a LOWER SAXONY and NORTH RHINE-WESTPHALIA
context, the medium and long term funding ûCOUPON maintained the run of German Laender
programme has been increased to €14bn for h7EûWEREûEXPECTINGûTOûDOûAROUNDûTHREE grinding new issue pricing levels tighter last
ûCOMPAREDûWITHûTHEûõBNnõBNû quarters of a billion, so the result was pretty week, but investors gave the two bonds on
the issuer raised in each of the past two GOODûSIZE WISEûANDûSPREAD WISEvûSAIDû.ICOLASû offer very different receptions.
years. -ARCHESSAUXû3.#&SûHEADûOFûCAPITALû So while investors piled into Lower
A syndicate banker described the trade as markets and investor relations. 3AXONYSûEIGHT YEARûBONDûTHEû YEARûTAPû
well received, with the spread more or less 4HEûGEOGRAPHICûDIVERSIlCATIONûANDûTHEû FROMû.ORTHû2HINE 7ESTPHALIAûWASûMETûWITHû
at fair value. proportion of real money investors were a more restrained reaction.
“It’s the right kind of maturity and you very strong, according to Marchessaux. .27û!A!!!!! ûREOPENEDûITSûû*UNEû
could argue the spread is decent as well. All “This was never expected to be a jumbo û,3!ûONû7EDNESDAYûANDûTHEûSTATEûWASû
in all, a really nice outcome and a bit of a trade, and you also have to remember that vying for investors’ attention alongside the
CRACKERûTOûPRINTv THEYREûSTILLûAûRELATIVELYûNEWûNAMEvûSAIDûAû 'ERMANûSOVEREIGNSûõBNûTAPûOFûITSûû
In addition to a favourable backdrop in $#-ûBANKERûWHOûDESCRIBEDûTHEûBOOKûASû !UGUSTûûANDûANOTHERû YEARûEUROûTRADEû
terms of general market sentiment, the SOLIDûh)TSûMOREûOFûAûSLOWûBURNERv FROMû&INLAND
EXPLICITûGUARANTEEûFROMûTHEû&RENCHûSTATEû But given the exuberant nature of the BayernLB, BNP Paribas, Erste, LBBW and
also aided the deal. markets recently, the outcome left some NordLBûSTARTEDûMARKETINGûATûTHEûMID SWAPSû
Unedic typically issues benchmarks with observers wondering whether the deal got a plus 14bp area, a level that caught onlookers
an explicit guarantee, but its previous social bit lost in the mix on a busy day of issuance. off guard, as it marked a departure from the
ISSUANCEûCAMEûINûNON GUARANTEEDûFORMAT h)TûDIDNTûREALLYûGETûGOINGvûSAIDûAû issuer’s usual bookbuilding process.
“There’s always a bit of a question around syndicate banker away from the trade, who NRW is one of the few German regions
SOMEûOFûTHEû&RENCHûNAMESûANDûTHEûKINDûOFû described the pricing as very cheap versus that has historically started marketing with
implicit type guarantees, the EPIC ones, so I OATs. AûNEWûISSUEûPREMIUMûTYPICALLYûBPnBPû
think the explicit guarantee really helps “Unfortunately, whether they pay 55bp or This time, however, bankers said it began
THEREûFORûSUREvûTHEûSYNDICATEûBANKERûSAID 65bp over OATs, I don’t think that changes mATûTOûTHEûCURVEûWITHûONEûEVENûSEEINGûITûASû
the picture materially because of the through the curve.
SNCF DEAL SHOWS MARKET IS NO underlying issues that they have, which is a “The level was shockingly tight. They
RUNAWAY TRAIN bit of a shame but that’s the reality. How started marketing at the same level as
THEYûCHANGEûTHATûISûTRICKYûTOûSEEv &INLANDûTHATûTELLSûYOUûEVERYTHINGûYOUûNEEDû
SOCIETE NATIONALE SNCF SAseemed to receive a !LTHOUGHûTHEûISSUERû!A!!n! ûLOSTûITSû TOûKNOWvûAûBANKERûAWAYûFROMûTHEûTRADEû
lacklustre response as it ventured into a new EPIC status in January, ratings agencies still said.
ALL US DOLLAR FIXED-RATE GLOBALS ALL INTERNATIONAL US$ BONDS ALL SOVEREIGN BONDS IN EUROS
1 JP Morgan 189 72,470.55 11.5 1 JP Morgan 534 152,903.84 10.3 1 BNP Paribas 29 29,228.76 11.3
2 Citigroup 174 71,082.24 11.2 2 Citigroup 480 141,020.76 9.5 2 JP Morgan 35 25,390.10 9.8
3 BofA Securities 190 69,912.56 11.0 3 BofA Securities 486 137,010.82 9.2 3 Citigroup 22 17,212.77 6.7
4 Goldman Sachs 113 49,337.22 7.8 4 Barclays 325 107,727.60 7.2 4 HSBC 16 15,413.47 6.0
5 Morgan Stanley 92 39,021.91 6.2 5 Goldman Sachs 339 102,940.15 6.9 5 Barclays 26 15,004.07 5.8
6 Wells Fargo 111 36,107.96 5.7 6 Morgan Stanley 266 89,614.32 6.0 6 Credit Agricole 17 14,276.63 5.5
7 Barclays 90 33,415.56 5.3 7 Wells Fargo 255 70,968.02 4.8 7 SG 16 13,932.02 5.4
8 Deutsche Bank 65 25,435.98 4.0 8 HSBC 222 56,498.79 3.8 8 UniCredit 8 12,884.59 5.0
9 RBC 65 22,031.25 3.5 9 Deutsche Bank 236 56,478.66 3.8 9 Goldman Sachs 16 12,106.66 4.7
10 TD Securities 56 20,907.38 3.3 10 RBC 165 44,532.72 3.0 10 BofA Securities 20 11,788.20 4.6
Total 347 632,870.63 Total 1,348 1,489,492.60 Total 98 258,368.04
Excluding equity-related debt, ABS/MBS. Including Euro, foreign and global issues. Excluding equity-related debt, Excluding ABS/MBS.
US Global ABS/MBS.
Source: Refinitiv SDC code: O5 Source: Refinitiv SDC code: O1 Source: Refinitiv SDC code: N4

&INLANDû!A!!!! ûSOLDûAûõBNû YEARû POWERINGûTHROUGHûTHEûaBNû'ILTûSALEû attribute their absence to the fact that the
on Wednesday at swaps plus 10bp, having TARGETûITûHASûFORûTHEû!PRILûTOû*ULYûûPERIOD arbitrage has looked unattractive.
started with IPTs of the 14bp area. )NCLUDINGûLASTûWEEKSûaBNû/CTOBERûû “There’s been very little from EIB and
“If you go tight and have competing supply trade through Barclays, Goldman Sachs, JP NOTHINGûFROMû+F7û)TSûGOODûTHATû, "ANKû
at the long end of the curve, people will pass if Morgan, Nomura and Santander, the issuer has SPOTTEDûTHEûOPPORTUNITYûlRSTûANDûTHEûRESULTSû
THERESûJUSTûNOTûENOUGHûPREMIUMûONûITvûAû NOWûRAISEDûMOREûTHANûaBNûVIAûTHEû AREûVERYûSTRONGvûAûBANKERûAWAYûSAID
second banker away from the transaction said. syndication method, around £7bn more The arbitrage has been improving in
In the end, NRW added €500m to the THANûTHEûENTIREûnûPROGRAMME recent weeks, and although it is not as
outstanding bond, with pricing unchanged. “[The deal] saw the largest number of compelling as prior to the pandemic crisis,
“We knew it was aggressive but we INVESTORûORDERSûRECEIVEDûATûANYû$-/û bankers say it looks good.
wanted to know how far we could push SYNDICATIONûûSEPARATEûORDERSvûSAIDû3IRû h7EVEûSEENûAûSIGNIlCANTûTIGHTENINGûINûTHEû
THINGSvûAûLEADûSAID 2OBERTû3THEEMANûTHEû$-/SûCHIEFû sterling secondary space, there’s been a lack of
The issuer was reticent to release book executive, in a statement. SUPPLYûANDûINCREASINGûDEMANDûFROMûOFlCIALû
updates, which outsiders took as an “This provides another very encouraging INSTITUTIONSûANDûCENTRALûBANKSvûAûLEADûSAID
indication that the trade was not subscribed. indication of the strength and depth of the -AKINGûTHEûMOSTûOFûTHATûSITUATIONû, "ANKû
The lack of updates was similar to Berlin’s Gilt market and the degree of support we opted to extend its sterling curve with a
MOSTûRECENTûLONG DATEDûFORAYû)Nû-AYûITûDIDû receive from market participants in FOUR YEARûTRADEû
not disclose demand levels for a €500m DELIVERINGûAûRECORDû'ILTûlNANCINGû The lead said shorter maturities worked
û*UNEûûPAPERûITûSOLDûATûPLUSûBPû PROGRAMMEv better in the sterling sector, but that most
with the price seen as aggressive. "OOKSûCLOSEDûAROUNDûaBNûNOTûFARûOFFû tenors would have gone well due to the
the record demand the issuer received for its supply shortage.
LOWER SAXONY PUSHES TIGHTER aBNû/CTOBERûûTRANSACTIONûINûMID -AY 0RIORûTOûTHEûNEWûTRADEû, "ANKûONLYûHADû
In contrast, LOWER SAXONY on Tuesday “They’ve done three big issues over a period three outstanding bonds in the currency: its
RECEIVEDûROBUSTûDEMANDûANDûSETûAûNEWûmOORû of about four weeks, and what’s key here is LONGESTûWASûAûaMûû$ECEMBERûû
FORûPRICINGûWHENûITûSOLDûAûõBNû*UNEûû that they’ve been able to mobilise a WHICHûPRICEDûATûBPûOVERû'ILTSûINû*ULYûû
LSA at a spread of swaps plus 1bp. historically sizeable deal yet they were able to ANDûISûPRESENTLYûQUOTEDûATûPLUSûBPûONû
“Lower Saxony was tighter than previous PRICEûITûATûTHEûTIGHTûENDvûAûLEADûMANAGERûSAID Tradeweb.
trades and now serves as a new reference 4HEûBONDûPRICEDûATûBPûOVERûTHEûû Marketing started with the spread
POINTvûAûLEADûSAID Gilt, the tight end of the 0.5bp–1bp ALREADYûSETûATûBPûOVERû'ILTSûFORûAûMINIMUMû
h)FûWEûGETûANOTHERûEIGHT YEARûINûTHEûMARKETû guidance. DEALûSIZEûOFûaM
ITûMAYûOPENûATûPLUSûBPûORûEVENûmATv “I don’t think they were targeting such a The lead said the spread was aligned with
Barclays, DekaBank, Natixis, NordLB and large size but the £9bn was very much based HISûFAIRûVALUEûESTIMATEûOFûPLUSûBP
UniCreditûSTARTEDûMARKETINGûmATûTOûTHEûCURVEû ONûDEMANDvûTHEû$#-ûBANKERûSAIDûh)TûWASû Other leads pointed out that the level was
OPENINGûBOOKSûATûTHEûPLUSûBPûAREA driven by investors. What that allows them ATTRACTIVEûVERSUSû+F7Sûû$ECEMBERû
“This was a shorter tenor than NRW and to have is immediate liquidity in the bond SûWHICHûWEREûSEENûTRADINGûINûTHEûLOWû
in contrast to that trade we got €1bn in ANDûTHATSûVERYûPOWERFULv SûATûTHEûBEGINNINGûOFûTHEûSESSION
ORDERSûINûNOûTIMEvûTHEûLEADûSAIDû/RDERSû , "ANKûWASûABLEûTOûlXûTHEûDEALûSIZEûATû
ULTIMATELYûPEAKEDûINûEXCESSûOFûõBN L-BANK CATERS TO INVESTORS’ NEEDS £750m after orders passed the £950m mark.
WITH RARE STERLING OUTING The books subsequently closed in excess of
£1.05bn.
STERLING L-BANKûEXECUTEDûITSûlRSTûSTERLINGûDEALûINûTWOû !ûSECONDûLEADûSAIDûTHEû, "ANKûTRADEû
YEARSûONû7EDNESDAYûANDûTAPPEDûPENT UPû HIGHLIGHTEDûTHEûONGOINGûDEMANDûFORûSAFE
UK DMO COMPLETES SYNDICATION DEMANDûWITHûAûaMû$ECEMBERûû haven names offering some yield.
HAT TRICK transaction arranged through Bank of , "ANKSû$ECEMBERûûPAPERûYIELDSû
America, BMO, NatWest Markets and RBC. ûSEMI ANNUALLYûWHILEû+F7Sû
The UK DMO completed the third syndication %URO BASEDûISSUERSûHAVEûBEENûSCARCEûINûTHEû $ECEMBERûûBONDûWASûQUOTEDûATûû
FROMûITSûnûPROGRAMMEûLASTûWEEKû STERLINGûMARKETûSINCEûMID !PRILûANDûBANKERSû on Tradeweb.
ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
bank or group issues €(m) (%) bank or group issues €(m) (%) bank or group issues €(m) (%)
1 HSBC 28 9,863.21 12.0 1 JP Morgan 12 5,517.23 10.1 1 UniCredit 31 10,500.31 17.1

2 JP Morgan 23 8,630.45 10.5 2 Credit Agricole 10 4,789.84 8.8 2 JP Morgan 16 4,829.45 7.9
3 Barclays 18 6,535.15 7.9 3 Goldman Sachs 7 4,685.00 8.6 3 Barclays 19 4,631.60 7.5
4 Credit Agricole 23 6,191.72 7.5 4 HSBC 7 4,420.76 8.1 4 DGZ-DekaBank 25 4,088.56 6.7
5 Deutsche Bank 14 5,642.12 6.9 5 BNP Paribas 11 4,317.13 7.9 5 Deutsche Bank 18 3,695.58 6.0
6 BNP Paribas 22 5,224.83 6.3 6 SG 8 4,152.33 7.6 6 Nord/LB 23 3,692.54 6.0
7 BofA Securities 11 4,871.92 5.9 7 Deutsche Bank 9 4,041.09 7.4 7 BayernLB 15 3,613.83 5.9
8 SG 18 4,661.63 5.7 8 BofA Securities 9 3,830.37 7.0 8 HSBC 21 3,251.61 5.3
9 NatWest Markets 12 4,401.28 5.3 9 UniCredit 5 3,502.13 6.4 9 TD Securities 12 2,236.38 3.6
10 Natixis 14 4,196.77 5.1 10 Natixis 5 3,323.08 6.1 10 NatWest Markets 10 2,120.69 3.5
Total 103 82,283.12 Total 36 54,617.66 Total 102 61,350.07
Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS. Excluding ABS/MBS.
Source: Refinitiv SDC code: N6 Source: Refinitiv SDC code: N5 Source: Refinitiv SDC code: N7

BONDS SSAR
CPPIB SUCCESSFULLY BUILDS ITSû3EPTEMBERûSûITSûTHIRDûVISITûTOûTHEû The sustainable development bonds will
STERLING CURVE CURRENCYûINû contribute to the AIIB’s regular operations,
!WAYûFROMûTHEû5+û$-/ûTHEûSTERLINGû INCLUDINGûITSûRESPONSEûTOûTHEû#OVID û
The CANADA PENSION PLAN INVESTMENT BOARD has market has been relatively quiet of late pandemic. They were offered to onshore
landed the biggest sterling deal, excluding compared to the frenzied action in US investors as well as offshore institutional
THEû5+û$-/ûINûOVERûAûFORTNIGHTûASûTHEû dollars and euros, but there have been some investors via Bond Connect.
issuer continues to ramp up its funding in recent signs of increased activity with “The issuance will raise important capital
the currency. ISSUERSûLOOKINGûTOûTAPûPENT UPûDEMAND TOûFACILITATEû!))"SûRESPONSEûTOû#OVID ûINû
&OLLOWINGûITSûaMûlVE YEARûDEBUTûINû h!FTERûTHEûSUCCESSûOFû, BANKûYESTERDAYûITSû the short term and maintain its
*ANUARYûANDûAûaMû YEARûINû!PRILûLASTû CLEARûTHATûTHERESûGOODûDEMANDûOUTûTHEREvû commitment to investing in sustainable
&RIDAYSûûaBNû*ULYûûBONDûNOTûONLYû said a syndicate banker, speaking last INFRASTRUCTUREûINûTHEûLONGûTERMvûTHEû!))"Sû
marked another increase in size and the Thursday. president and chairman of the board, Jin
biggest round of sterling funding yet for the , "ANKûEXECUTEDûITSûlRSTûSTERLINGûDEALûINû Liqun, said in a press release.
Triple A rated issuer, but also a new tenor. two years last Wednesday, printing a £750m “As an international organisation
A bookrunner noted that despite the $ECEMBERûûONûBOOKSûOVERûaBNû headquartered in Beijing, AIIB is also playing
issuer being relatively new, the level of )$"û!AA!!! ûBEGANûMARKETINGûAûaMû a role in the internationalisation of China’s
engagement with investors base was strong. MINIMUMûTAPûOFûITSûû3EPTEMBERûûINû capital markets by providing both onshore
“Within the space of six months they’ve an attempt to improve its liquidity by taking ANDûOFFSHOREûINVESTORSûWITHûAûVERYûHIGH
JUSTûPUTûAûWHOLEûCURVEûOUTûTHEREûTHREEûlVEû the total outstanding to over £500m. quality RMB investment. This successful
and 10 years which is pretty quick by “They wanted to try and get it to £500m, transaction serves as an important
ANYONESûSTANDARDSvûAûSECONDûBOOKRUNNERû as that tends to open it up, as a few of the benchmark for our future issues in the years
said. “Each one of these deals had to be good BIGûTREASURIESûDONTûBUYûSUBûaMûTRADESvû AHEADvû,IQUNûSAIDû4HEû!))"ûISûûOWNEDûBYû
to do the next one and they’ve had a the banker said. China.
FANTASTICûSETûOFûRESULTSvû 7ITHûlNALûBOOKSûPASSINGûaMûAûaMû &INALûORDERSûREACHEDû2MBBNûORûû
After appointing Barclays, Bank of America, tap was priced, taking the new deal size to TIMESûTHEûISSUEûSIZEûFROMûMOREûTHANûû
NatWest Markets and TD Securities as lead aMûANDûTHEûTOTALûAMOUNTûRAISEDûBYûTHEû INVESTORSû$OMESTICûINVESTORSûWEREûALLOCATEDû
managers last Wednesday, books grew from ISSUERûINûTHEûCURRENCYûTOûaBNûTHISûYEAR ûOFûTHEûNOTESûANDûINTERNATIONALûINVESTORSû
AûlRSTûUPDATEûOFûaBN PLUSûTOûENDûINûEXCESSû There was no movement from guidance û4HEûLATTERûINCLUDEDûCENTRALûBANKSûSAIDû
of £1.7bn. INûTHEûlNALûSPREADûOFûBPûOVERûTHEûû a person familiar with the deal.
û)NITIALûPRICEûTHOUGHTSûWEREûBPûAREAûn 3EPTEMBERûû'ILTû ,ASTûMONTHûTHEû!))"ûISSUEDû53BNûOFû
BPû70)2 ûOVERûTHEûû*ULYûû'ILTû4HEû Barclays, BofA Securities and HSBC were joint ûlVE YEARûSUSTAINABLEûDEVELOPMENTû
lNALûSPREADûlXEDûINûTHEûMIDDLEûOFûTHEûRANGEû lead managers. BONDSûTOûHELPûFUNDûITSû#OVID û#RISISû
at 47bp. The rationale behind the trade looked 2ECOVERYû&ACILITYûOFûUPûTOû53BN
The second lead estimated fair value at more opportunistic than strategic, and #HIEFûlNANCIALûOFlCERû!NDREWû#ROSSûSAIDû
45bp. while still not as attractive as before the THEû0ANDAûBONDûISSUEûTHEû!))"SûlRSTûLOCALû
In terms of comparables, bankers looked pandemic, the arbitrage has improved. currency bond offering, was another
at EIB and World Bank – two key sterling “Sterling secondaries in general have MILESTONEûINûITSûDIVERSIlEDûFUNDINGûSTRATEGYû
issuers. been getting tighter in the past few trading with access to investors globally. The bank
The EIB and World Bank both have July SESSIONSvûSAIDûANOTHERûSYNDICATEûBANKERû has registered a Rmb10bn quota with
ûPAPERûWHICHûWEREûQUOTEDûONû%IKONûATû û)$"ûHADûALREADYûBEENûACTIVEûDURINGûTHEû Chinese regulators.
'ILTSûPLUSûBPûANDûBPûRESPECTIVELYûONû WEEKûRAISINGû53BNûTHROUGHûAûlVE YEARû )Nû!PRILûTHEû!))"ûAPPROVEDûAû2MBBNû
&RIDAYû offering on Tuesday. The spread on that loan to upgrade China’s public health
The motivation behind the deal appears trade was tightened by 4bp from IPTs to end infrastructure and provide emergency
to be clearly strategic with the issuer ATûMID SWAPSûPLUSûBPûONûBOOKSûINûEXCESSû equipment and supplies in response to the
RECENTLYûREITERATINGûITSûCOMMITMENTûTOûLONG of US$5.75bn. #OVID ûPANDEMIC
term investments in the UK. .EWû$EVELOPMENTû"ANKûRATEDû!!ûBYû
/VERûûOFûTOTALûPORTFOLIOûASSETSûWEREû BOTHû30ûANDû&ITCHûINûEARLYû!PRILûISSUEDû
invested in the UK as of the end of March NON-CORE CURRENCIES 2MBBNûOFûTHREE YEARû0ANDAûBONDSûATûû
and with two rounds of sterling funding WHICHûWASûmATûTOûTHEû#$"ûCURVEûATûTHATûTIMEû
since, CPPIB seem to be looking to increase AIIB ISSUES DEBUT PANDA BOND 4HEûDEALûWASûTHEûlRSTûCORONAVIRUS THEMEDû
their exposure. Panda bond issue from a multilateral
“The most important thing, and not a lot The ASIAN INFRASTRUCTURE INVESTMENT BANK, lNANCIALûINSTITUTION
of people know this, is that CPP Investments RATEDû!AA!!!!!!ûHASûPRICEDûAû2MBBNû Another person familiar with the deal
has a massive presence in the UK. They do 53M ûTHREE YEARûDEBUTû0ANDAûBONDû expects more international issuers will visit
NEEDûSTERLINGvûSAIDûTHEûlRSTûLEADûMANAGER ISSUEûATûûNEARûTHEûTIGHTûENDûOFûTHEû the Panda market after the AIIB’s successful
UK investments for the issuer include INDICATIVEûRANGEûOFûn print.
sizeable stakes in the parent company of The multilateral development bank is the “Some international Triple A issuers are
!NGLIANû7ATERû7ESTlELDû3TRATFORDû#ITYûANDû lRSTûISSUERûWITHûINTERNATIONALû4RIPLEû!û planning to issue Panda bonds and are in
Wembley Park. ratings to tap the Panda market since different stages of preparation. One may
Chinese regulators relaxed and streamlined COMEûOUTûINûTHEûNEARûFUTUREvûSAIDûTHEû
IDB PICKS UP MORE POUNDS the guidelines governing Panda bonds in person. The AIIB is also highly likely to issue
other Panda bonds under its remaining
The INTER-AMERICAN DEVELOPMENT BANK jumped &INALûPRICINGûWASûBPûINSIDEû#HINAû quota to establish a more complete curve.
in ahead of an expected benchmark deal for $EVELOPMENTû"ANKSûCURVEûTHEûDEûFACTOû 4RIPLEû!ûRATEDû)NTERNATIONALû&INANCEû#ORPû
#00)"ûONû&RIDAYûWITHûANûOPPORTUNISTICûTAPûOFû benchmark for Panda bonds. International Bank for Reconstruction and

$EVELOPMENTû7ORLDû"ANK ûANDû!SIANû benchmark such as BBSW that includes a BPnBPûFROMûINITIALûTALKûTOûLAUNCHûAû
$EVELOPMENTû"ANKûHAVEûPREVIOUSLYûISSUEDû counterparty risk premium and can blow 53BNûTHREE PARTûDEAL
Panda bonds. OUTûDURINGûTIMESûOFûlNANCIALûSTRESS û(0ûPRICEDûAû53BNûlVE YEARûATûBPû
Bank of China was the lead underwriter and /BVIOUSûCANDIDATESûINCLUDEûREGULARû&2.û OVERû4REASURIESûAû53BNûSEVEN YEARûATû
bookrunner on the AIIB’s transaction. BNP ISSUERSûSUCHûASû1UEENSLANDûANDû7ESTERNû BPûANDûAû53Mû YEARûATûBPû
Paribas (China), China Construction Bank, China Australia, though both seem perfectly happy 4HEûTHREE PARTûDEALûWASûANNOUNCEDû
International Capital Corp and HSBC Bank using the dominant BBSW regime, ALONGSIDEûAûTENDERûOFFERûFORû53BNû
(China) were joint lead underwriters. Credit ACCORDINGûTOûONEû$#-ûMANAGER outstanding across four notes maturing this
Agricole CIB (China)ûWASûlNANCIALûADVISER Outside the states he pointed to SSAs that year and next.
have already issued bonds referencing HP’s printing and laptop business is separate
SAFA EXPANDS AONIA-LINKED MARKET OFFSHOREûRISK FREEûOVERNIGHTûRATESûESPECIALLYû from the more active participant in the capital
Sonia, the Sterling Overnight Index Average, MARKETSû(EWLETT 0ACKARDû%NTERPRISEûWHICHûISû
The SOUTH AUSTRALIAN GOVERNMENT FINANCING and Sofr, the US Secured Overnight ALSOûRATEDû"AA""""""ûBUTûFOCUSESûONûSERVERSû
AUTHORITY further broadened the local &INANCINGû2ATE and networking equipment.
MARKETûFORûRISK FREEûREFERENCEûRATESûLASTû Local and overseas banks could also use )Nû!PRILû(0%ûPRICEDûAû53BNûTHREE
4HURSDAYûWITHûAûRECORD BREAKINGû Aonia as more and more investors adopt the YEARûATûBPûOVERûANDûAû53BNûlVE YEARû
!BNû53M ûSALEûOFûTHREE YEARû required systems and become comfortable ATûBPûOVERû
!ONIA LINKEDûmOATING RATEûNOTES WITHûTHEûPRODUCTûTHEû$#-ûMANAGERû 4HOSEûNOTESûHAVEûTIGHTENEDûSIGNIlCANTLYû
4HEûNOTESûWHICHûFOLLOWû3!&!SûTRIOûOFû suggested. INûTHEûSECONDARYûWHEREûTHEûû/CTOBERû
ONE YEARû!ONIA LINKEDû&2.SûWEREûPRICEDûATû "EYONDû3!&!û#OMMONWEALTHû"ANKûOFû SûNOWûTRADEûAROUNDûBPûOVERû
DAILYûCOMPOUNDEDû!ONIAûPLUSûBPûANDû !USTRALIAûLASTû.OVEMBERûSOLDûANû!ONIA considerably tighter than where HP Inc’s
raised more than the targeted A$100m– linked securitisation, the A$1.5bn Medallion lVE YEARûTRADEûPRICEDû
$1bn issue size as the accumulated order 4RUSTû3ERIESû ûPRIMEû2-"3ûANDûPLANSû Even so, if the deal is completed as
book was allocated in full. to use Aonia for all its future new RMBS. PLANNEDûALLûOFûTHEûCOMPANYSûSHORT TERMû
The enlarged deal attracted several notes will be tendered and replaced with
investors new to Aonia and one that had NO LEADS REQUIRED LOWER COUPONûDEBTû
NEVERûBOUGHTûANYû3!&!ûNOTESûBEFOREû4HEû )NTERESTINGLYû3!&!ûEMPLOYEDûNOûLEADû 7ITHû YEAR AND SHORTERû4REASURIESûSTILLû
majority of demand came from local or managers for its latest transaction, with TRADINGûBELOWûûTHEûNEWûBONDSûPRICEDû
FOREIGNûBANKSûSEEKINGûHIGH QUALITYûLIQUIDû investors instead invited to bid through WITHûCOUPONSûOFûnûnûMUCHûLOWERû
assets, while there was strong interest from 3!&!Sû STRONGûDEALûPANELûMEMBERSû than the bonds targeted in the tender,
ASSETûMANAGERSûANDûOFlCIALûINSTITUTIONSûFROMû comprising ANZ, Bank of America, Citigroup, WHICHûHAVEûCOUPONSûOFûnû
Australia, Asia and Europe. #"!û$EUTSCHEû"ANKû(3"#û*0û-ORGANû.!"û 2ESEARCHûlRMû#REDIT3IGHTSûHOWEVERûDIDû
“Considering the challenging environment, .OMURAû2"#û#APITALû-ARKETSû4ORONTO note that HP Inc. landed wide of software
it was a remarkable achievement to extend the $OMINIONû"ANKû5"3ûANDû7ESTPAC company VMware, which is majority owned
curve, adopt a new quarterly rather than 4HEûOVERALLûFEESûPAIDûBYû3!&!ûAREûONûAûPARû BYû$ELLû4ECHNOLOGIESû
monthly coupon payment format, while with the combined payments typically made 6-WARESûûSûWEREûLASTûSEENû
attracting new investors and larger volumes to a much smaller subset of lead managers. TRADINGûAROUNDûBPûOVERû4REASURIESû
FROMûTHEûEXISTINGûINVESTORûBASEvûSAIDû!NDREWû They were distributed to the panel members according to MarketAxess data.
+ENNEDYûDIRECTORûFORûTREASURYûSERVICESûATû3!&! according to the allocated amounts each of
Kennedy estimated the new issue them brought in. COVID-19 IMPACTS
CONCESSIONûTOûBEûAROUNDûBPûVERSUSû3!&!Sû “We have had many discussions with the HP Inc. faces some challenges, especially as
interpolated Aonia curve, once adapted for panel banks and thought it fair to allow all COMPANIESûBUYûFEWERûOFlCEûSUPPLIESûWITHû
quarterly coupon payments. of them to participate, a decision which remote working environments still largely
Aonia is the Reserve Bank of Australia’s generated greater awareness of the deal and in place.
overnight cash rate, which is published many more bilateral discussions between Management already fended off an
DAILYûANDûOFFERSûAûRISK FREEûALTERNATIVEûTOûTHEû BANKSûANDûINVESTORSvûEXPLAINEDû+ENNEDY attempted hostile takeover by printing
domestic Bank Bill Swap Rate (BBSW), the COMPANYû8EROXûWHICHûDROPPEDûTHEûBIDû
conventional reference point for Australian amid new pressures from the economic
DOLLARûmOATING RATEûNOTES FALLOUTûCAUSEDûBYûTHEû#OVI ûPANDEMICû
3!&!ûSOLDûTHEûINAUGURALû!MûONE YEARû h$RIVENûBYûTHEûCORONAVIRUS DRIVENû
!ONIA LINKEDûmOATERûINû*UNEûûFOLLOWEDû CORPORATES economic weakness over the next few
BYûAû!MûONE YEARû&2.ûOFFERINGûINû quarters, Moody’s expects varying degrees
$ECEMBERûANDûAûFURTHERû!MûONE YEARû of challenges in [HP Inc.’s] portfolio, led by a
note issue this March. US DOLLARS full quarter of ongoing weakness in
commercial printing and related supplies as
POTENTIAL ENTRANTS HP INC PRICES DEBUT BOND AS many businesses worldwide continue to
3!&!ûRATEDû!A!!û-OODYS30 û INDEPENDENT PRINTING COMPANY OPERATEûREMOTELYûANDûPRINTûLESSvû-OODYSû
REMAINSûTHEûONLYû!ONIA LINKEDûISSUERûINûTHEû wrote in a report.
senior unsecured market, but that could HP INC.ûSTEPPEDûINTOûTHEû53ûHIGH GRADEûBONDû Yet HP Inc. has ample liquidity to bridge
change as the success and size of its latest MARKETûLASTû4UESDAYûFORûTHEûlRSTûTIMEûASûAû the gap, including some US$4bn of cash on
deal at least encourages discussions with SEPARATEûENTITYûSINCEû(EWLETT 0ACKARDûSPLITû hand and US$5bn in undrawn revolving
potential participants. INûTWOûINûûASûITûSOUGHTûTOûRElNANCEû credit facilities, according to an investor
Aonia is seen as especially suitable for expensive legacy debt at cheaper levels. presentation.
highly rated state governments that want to The printer and computer business, rated The company stated it is committed to
PRICEûOFFûAûRISK FREEûRATEûRATHERûTHANûAûCREDITû "AA""""""ûMANAGEDûTOûTIGHTENûSPREADSû MAINTAININGûHIGH GRADEûRATINGSûANDûLEVERAGEû

BONDS CORPORATES
ONûTHEûLOWûENDûOFûITSû ûTIMESûDEBTûTOû TREMENDOUSûMARKETûRALLYvû"RIANû+ENNEDYû ABOUTû53BNûFORûITSû53BNû

Ebitda range, up from 1.1 times gross portfolio manager at Loomis Sayles, said on transaction.
LEVERAGEûANDûûTIMESûNETûLEVERAGEû Wednesday. Many of the trades also came with negative
currently, HP Inc.’s Treasurer Zac Nesper h7EûHAVEûSEENûSOMEûPROlT TAKINGûTHEûPASTû NEWûISSUEûCONCESSIONSûACCORDINGûTOû)&2ûDATAû
said during the presentation. couple of days. What you are really seeing is including bonds from eBay, Equinix,
h/PERATINGûTRENDSûAREûWEAKûDUEûTOû#OVID û investors are being forced down in credit 7ESTLAKEû&LORIDAû'ASû4RANSMISSIONû.ORTHERNû
and other ongoing issues (eg, print supplies QUALITYv States Power and Phillips 66.
decline due to increased competition), "Yû4HURSDAYûHOWEVERûAVERAGEûHIGH The rest of the week saw a mixed
although the company has a strong PC grade spreads had widened back to 170bp, performance, with an eclectic group of
BUSINESSûANDûGROWTHûOPPORTUNITIESûINû$û BPûWIDERûTHANûTHEûPREVIOUSû&RIDAYûASû borrowers rushing to raise funding before
PRINTINGvû#REDIT3IGHTSûNOTEDûINûITSûREPORTû INVESTORSûTOOKûPROlTSûANDûMARKETSûSOLDûOFFû THEûENDûOFûTHEû&/-#ûMEETINGû
on concerns over the underlying FLORIDA GAS TRANSMISSION managed a 7bp
IG MARKETS SHOW SHIFT IN SENTIMENT fundamentals of the economy. negative new issue concession on its
FOLLOWING PAYROLL REPORT -ONDAYûSAWûûBORROWERSûRAISEû 53Mû YEARûONûAûCLOSEûTOû53BNûBOOKû
53BNû ûAûRISK ONûDAYûTHATûSAWûDECENTû But on Thursday, HPûHADûTOûPAYûAûHEFTYûBPû
&EARSûOVERûAûSPIKEûINûCORONAVIRUSûINFECTIONSû book sizes and negative new issue PREMIUMûONûITSûTWO PARTûDEALû ûITSûDEBUTûASûAû
ANDû&EDûCHAIRû*EROMEû0OWELLSûGRIMMER concessions across virtually all trades. separate entity since Hewlett Packard split
THAN EXPECTEDûECONOMICûOUTLOOKûTOOKûTHEû .EWSûTHATûDAYûTHATûTHEû53ûHADûOFlCIALLYû INûTWOûINûûSEEûSEPARATEûSTORY
AIRûOUTûOFûVIBRANTûHIGH GRADEûPRIMARYû ENTEREDûAûRECESSIONûINû&EBRUARYûENDINGûITSû
market last week after a strong start. longest ever economic expansion, did little
7ITHûTHEû&/-#ûMEETINGûBEINGûHELDûONû to put off bond buyers, who were still EUROS
Tuesday and Wednesday, syndicate desks FOCUSEDûONûTHEûPREVIOUSû&RIDAYSûBETTER THAN
FRONT LOADEDûDEALSûWITHûûBORROWERSû expected job numbers. RISK-ON SENTIMENT TEMPTS CYCLICAL
RAISINGû53BNûOVERûTHEûlRSTûTHREEûDAYSû “The market is embracing risk and there NAMES BACK TO MARKET
OFûTHEûWEEKû ûSHORTûOFûTHEû53BN BNû ISûAPPETITEvû*EFFREYû-AC$ONALDûHEADûOFû
bankers had predicted for the week. lXEDûINCOMEûSTRATEGIESûATû&IDUCIARYû4RUSTû A number of issuers from sectors more at
The market reaction to Powell’s Company, said on Monday. risk during an economic downturn took to
comments was swift, with both credit and “If I’m an issuer and I’m looking to bring the euro primary market last week,
equity markets sinking on Thursday and a deal to market, I want to bring it to market encouraged by a heightened interest in
JUSTûONEûHIGH GRADEûDEALûPRICINGûTHATûDAYû ûAû when there is solid risk appetite and I can more cyclical names.
53BNûTWO PARTûTRADEûFROMû4HAIû/IL GETûGOODûEXECUTIONûONûMYûNEWûISSUEvû h)TSûAûFAIRLYûRISK ONûMARKETvûSAIDûAû
Until then, markets had remained robust, Companies that priced deals on Monday banker. “You feel this is a market where
though the pace of deals has been slowing included EBAY and conglomerate GE, which HIGH BETAûISSUERSûCANûTAKEûADVANTAGEv
of late, and volumes for the second half are SOLDûAû YEARûTAPûTHROUGHû'%û#APITALû This refocusing on more volatile and
still on track to exceed last year’s total. &UNDINGûANDûAû YEARûTAPûTHROUGHû'ENERALû cyclical names allowed issuers of senior
!SûOFû4HURSDAYûYEAR TO DATEûHIGH GRADEû Electric Co. paper to ratchet in pricing to inside where
VOLUMEûSTOODûATû53TRNûVERSUSû Other deals were issued by KOREA ELECTRIC bankers saw fair value.
53TRNûFORûALLûOFûû4HISûCOMESûAFTERû POWER, EQUINIX, MAGNA INTERNATIONAL, BRIXMOR,
ANOTHERûWEEKûOFûHEFTYûINmOWSûWITHû ROPER TECHNOLOGIES, NORTHERN STATES POWER, OPPORTUNITIES IN OIL
53BNûENTERINGû53ûHIGH GRADEûFUNDSû PHILLIPS 66, DUKE ENERGY FLORIDA and PLAINS ALL h#YCLICALû;SECTORS=ûAREûAûMINElELDûATûTHEû
for the week ending June 10, according to AMERICAN. moment, but one area I’d say there are
Lipper data. Transactions that day drew decent OPPORTUNITIESûINûISûOILvûSAIDûANûASSETû
That is close to the US$9.914bn seen the DEMANDûFROMûACCOUNTSûASûEXEMPLIlEDûBYû manager. “What we look for are companies
PREVIOUSûWEEKû ûAûRECORDûAMOUNTûFORûTHEû 2OPERû4ECHNOLOGIESûWHICHûSAWûAû53BNû WITHûDIVERSIlEDûREVENUEûSTREAMSûTHATûOFFERû
asset class. book on its US$600m note. SOMEûSPREADvû
“You have had a tremendous amount of Other robust deals included TORONTO- Last Monday, Austrian integrated oil and
cash coming into the market and a DOMINION BANK, whose order books reached gas company OMVû!!n ûRAISEDûõBNûTOû
ALL INV-GRADE US CORPORATE BONDS ALL US INVESTMENT GRADE CORPORATE DEBT ALL CORPORATE BONDS IN EUROS
1 JP Morgan 92 22,536.82 11.0 1 JP Morgan 407 144,891.27 13.0 1 BNP Paribas 132 25,664.22 9.6
2 BofA Securities 93 22,156.75 10.8 2 BofA Securities 391 124,779.94 11.2 2 HSBC 96 18,516.35 6.9
3 Morgan Stanley 59 16,773.42 8.2 3 Citigroup 330 110,976.10 9.9 3 Barclays 71 17,023.52 6.4
4 Citigroup 66 16,360.70 8.0 4 Morgan Stanley 251 90,304.65 8.1 4 Deutsche Bank 76 16,891.13 6.3
5 Barclays 53 14,003.82 6.8 5 Goldman Sachs 229 83,518.31 7.5 5 BofA Securities 70 14,184.54 5.3
6 Goldman Sachs 47 13,494.26 6.6 6 Wells Fargo 227 76,978.52 6.9 6 Citigroup 72 13,993.02 5.2
7 Wells Fargo 60 10,432.67 5.1 7 Barclays 169 51,776.20 4.6 7 JP Morgan 77 13,766.07 5.2
8 Mizuho 44 8,473.35 4.1 8 Deutsche Bank 111 35,850.25 3.2 8 SG 76 12,996.84 4.9
9 MUFG 30 6,988.08 3.4 9 RBC 133 33,473.68 3.0 9 Credit Agricole 70 12,170.79 4.6
10 US Bancorp 35 6,426.27 3.1 10 HSBC 102 33,446.95 3.0 10 UniCredit 64 9,344.92 3.5
Total 174 205,745.49 Total 753 1,116,986.15 Total 279 266,875.82
Excluding equity-related debt, ABS/MBS, all foreign issues, global issues Excluding equity-related debt. FIGs, ABS/MBS.
and non corporates.
Source: Refinitiv SDC code: F6a Source: Refinitiv SDC code: F9 Source: Refinitiv SDC code: N8

Corporates flash ESG credentials in
European primary
CORPORATES ESG supply surge broadens across euros and sterling
European corporate markets maintained their 80bp, roughly flat to fair value, according to producers or transmission companies such
green streak last week, with borrowers offering some bankers. as National Grid,” said Arthur Krebbers,
green and transitional bonds across euros and On the same day, Dutch electricity and gas NatWest Markets’ head of sustainable finance
sterling. network operator Enexis sold a €500m no-grow corporates.
The pricing advantages for the issuers of ESG June 2032 green bond 10bp through fair value at The deal was announced at price thoughts of
bonds was apparent in the euro market, where a spread of 60bp over swaps. Books peaked at the 150bp area and investors proved receptive,
SNAM (Baa2/BBB+/BBB+) and ENEXIS (Aa3/A+) over €2.8bn and the deal was announced at IPTs resulting in an order book that peaked above
completely erased premiums on their respective of 95bp area. £1bn. Demand slid back to around £930m as
bonds. “I think there is an argument to be made for pricing was tightened to mid-Gilts plus 130bp.
Italian energy infrastructure company Snam green giving you that price advantage, especially The inaugural bond was issued under
brought a more controversial form of ESG debt, when you have had broader supply picking back Northern Powergrid’s Green Finance Framework,
a transition bond. up, perhaps that green label gives you a slightly which enables the firm’s North East and
Transition bonds were considered the most broader investor pool and less price sensitivity,” Yorkshire arms to finance green projects through
appropriate strategy for Snam, given that the said a banker. a variety of debt instruments.
range of categories within the use of proceeds The bond marked the issuer’s inaugural Northern Powergrid is involved in carbon
exceed what could be aligned with the EU’s green deal, having published its green finance transition in the UK and about 80% of the local
green bond taxonomy, said a banker. framework in May, with proceeds from the new authorities where it operates have declared a
“But it shows that they are a part of this issue going towards eligible projects. climate emergency.
transition to a new economy. For me, this is
the type of thing that needs doing, helping to GREEN STERLING KEEPING THINGS DOMESTIC
provide capital to sectors that need to transition. The sterling market is playing its part in the Although sterling ESG issuance has jumped over
When you are advising, you shouldn’t shy away recent growth in supply of ESG debt, with the past month, the absence of international
from the challenging issues.” NORTHERN POWERGRID (A3/A/A–) selling its first issuers is stark.
The new deal was the first to be issued under green bond last Tuesday, a £300m deal due CPI Property Group, the Luxembourg-listed
the company’s new transition bond framework, June 2062. commercial real-estate owner, is the only
a shift from its previous “climate action” The pace of ESG issuance in sterling is on the non-UK corporate to issue sterling bonds with
framework. up as corporates turn their attention to green proceeds earmarked for green projects in the
Under the new framework, the issuer and sustainable financing, following the trend in past 18 months, according to IFR data.
announced, among other things, an updated the euro new-issue market. “Sterling investors don’t always help
target of CH4 reduction of 40% by 2025 Including Northern Powergrid’s trade, four themselves. As a syndicate guy you know
compared to the previous plan’s 25%, and the corporate borrowers have tapped the UK sterling is the toughest market generally, and it
setting of a new target to reduce direct and currency for ESG funding since the start of May: took a long time for them to start signalling they
indirect CO2 equivalent emissions by 40% by Southern Power, Severn Trent and Pearson wanted to buy again after March,” said a banker
2030. raised some £1.475bn of notes. Only two away from Tuesday’s trade.
Despite a book of only €1.8bn, Snam still appeared in the first four months of the year. “Then, when you add in green, an issuer
achieved good price progression on its €500m “It is the first distribution network operator usually needs to have the projects to fund in
0.75% June 2030s. Announcing at IPTs of mid- in the UK to do a green debt issue. These sterling, so that leaves the UK corporates.”
swaps plus 115bp area, the deal was priced at instruments have so far been issued by energy Ed Clark
HELPûlNANCEûITSûACQUISITIONûOFûAûûSTAKEûINû This was the second time OMV had taken swaps plus 175bp area guidance,
Borealis, increasing its shareholding of the TOûTHEûBONDûMARKETûASûAûMEANSûOFûlNANCINGû DEMANDûFORûTHEû*UNEûSûWASûSOLIDû
CHEMICALSûCOMPANYûTOû its growing stake in Borealis. In April, it enough for the spread to be tightened to
“A lot of oil companies are seeing good raised €1.75bn over three tranches, with 165bp. Leads began marketing the note
DEMANDûFROMûBONDûINVESTORSvûSAIDûAûSECONDû proceeds earmarked for the same purpose as ATûTHEûBPûAREA
banker. “They are still able to buy at a Monday’s bonds. h#ONSTRUCTIONûISûAûDIFlCULTûONEû&ORûUSû
decent spread, but the tone around oil has ,EADSûSAIDûFAIRûVALUEûONûTHEûTHREE YEARûWASû there are certainly opportunities, but
IMPROVEDv AROUNDûBPûBASEDûONûSECONDARIESû&ORûTHEû perhaps these are not as clear cut as
4OTALûBOOKSûFORû/-6SûDUAL TRANCHEû year note, they pegged fair value at about 90bp. SOMETHINGûLIKEûOILûORûINDUSTRIALSvûSADûAû
DEALûEXCEEDEDûõBNûWITHûAûSKEWû second asset manager.
TOWARDSûTHEûõMû*UNEûSûWHICHû ACS CONSTRUCTS BOND MARKET RETURN ACS also opted to exceed the expected
LEADSûLANDEDûATûAûSPREADûOFûBPûOVERû ACS (BBB, S&P), the Spanish construction €500m and raise €750m.
swaps. It came alongside a €750m June company, also tapped the euro market, for Having no outstanding bonds itself,
ûNOTEûTHATûOFFEREDûAûlNALûSPREADûOFû ITSûlRSTûBONDûISSUEûINûlVEûYEARS bankers looked to sector and ratings peers
45bp. Both tranches priced through fair û$ESPITEûPICKINGûUPûAûRELATIVELYû SUCHûASû&ERROVIALû""" û(OCHTIEFû""" ûANDû
value. MODESTûBOOKûOFûOVERûõBNûATûTHEûMID HeidelbergCement (BBB).

BONDS CORPORATES
MOHAWK DITCHES CP FOR BONDS h5TILITIESûWEREûTHEûlRSTûWINNERSûAFTERûTHEû SAYûSOMETHINGûINûTHEûTRAVELûINDUSTRYvûSAIDûAû

The only rated issuer in the euro corporate coronavirus outbreak but haven’t performed as second investor.
MARKETûLASTû4UESDAYûWASû53ûmOORINGû well since. But because they can offer the longer “And when you can get these wider levels,
manufacture MOHAWK INDUSTRIESû"AA""" MATURITIESûTHATSûWHEREûWEûSEEûINTERESTv WEûVIEWûTHEMûEVENûMOREûPOSITIVELYv
""" ûLOOKINGûTOûSECUREûLONGER TERMû .OTûALLûBORROWERSûESCAPEDûPAYINGûNEW A second banker said that sentiment
funding in the bond market to replace issue premiums last week. EDENREDû""" û appeared to be improving towards autos.
commercial paper. THEû&RENCHûPREPAIDûCORPORATEûSERVICESû “It is amazing how some of those credits
The deal was deliberately structured to be company, returned to the primary market that a few months ago you would have been
eligible for the ECB’s CSPP programme, AFTERûANû MONTHûABSENCEûTOûRElNANCEû WARYûOFûHAVEûREALLYûRALLIEDvûHEûSAID
according to leads, with the trade issued out õMûOFûBONDSûDUEûINû/CTOBERûANDûPAIDûASû “And if [as an investor] you are going to be
OFûTHEû,UXEMBOURG LISTEDû-OHAWKû#APITALû much as a 15bp NIP, according to one lead. in autos, I think you are certainly going to
&INANCE Sized at €600m, the issuer only brought in WANTûTOûBEûINû67v
Proceeds will primarily be used to repay AûlNALûBOOKûOFûõBNûWITHûLEADSûSETTINGûTHEû 9IELDSûWEREûSETûATûûANDûû
ALLûORûAûPORTIONûOFûTHEûõMûOUTSTANDINGû SPREADûONûTHEû*UNEûSûATûBPûJUSTûBPû Combined books were at more than €6.75bn
under Mohawk’s European commercial inside the 165bp area IPTs. ATûTIGHTûENDSûOFûTHEûûAREAûn û
paper programme, a strategy typically used ANDûnûGUIDANCE
when operating in stressed market YIELD APPETITE FUELS BLOWOUT BOOKS &ORûCOMPARABLESûLEADSûBarclays, Bank of
conditions. FOR CORPORATE HYBRIDS America, BNP Paribas, Deutsche Bank and Royal
“In volatile markets it is too risky to rely Bank of Canada used the borrower’s
ONûYOURûSHORT TERMûFUNDINGûFROMûROLLINGû VOLKSWAGEN and DEUTSCHE BOERSE capitalised outstanding hybrids, including its €1.75bn
OVERû#0vûSAIDûAûTHIRDûBANKER ONûGROWINGûINTERESTûINûHIGHER YIELDINGû ûNON CALLû-ARCHûSûANDûõBNû
“Therefore, terming the debt out through structures last week to bring in hefty books ûNON CALLû*UNEûSûBIDûATûYIELDSûOFû
the bond market is more expensive but FORûHYBRIDûRElNANCINGS ûANDûûPRE ANNOUNCEMENTû4HEû
safer. As well as Mohawk, there are quite a Lower yields and negative concessions in NEWûISSUEûISûEXPECTEDûTOûBEûRATEDû"AA"""
few other examples of this recently, but other products have been encouraging
MAINLYû53ûCOMPANIESvû investors towards riskier instruments, with PRINTING WHILE THE PRICING’S GOOD
Although leads did not release book updates last week’s borrower’s becoming the third Proceeds from the new bonds are earmarked
GIVENûTHEûõMûNO GROWû*UNEûûISû3%# and fourth corporate hybrid issuers since FORûRElNANCINGû67SûõBNûûNON
registered, bankers away from the trade the market reopened in late May. CALLûûHYBRIDûASûWELLûASûGENERALû
suggested a book around €4.6bn. Based on “Hybrids are of great interest to us at the corporate purposes.
price progression, demand appeared to have moment. I am getting something like a With pricing on newly issued euro
been strong, with the borrower shedding 55bp $OUBLEû"ûYIELDûONûAûBONDûFROMûWHATûISû hybrids returning to acceptable levels for
of spread from IPTs to land at 195bp. USUALLYûAûVERYûHIGH QUALITYûISSUERvûSAIDûONEû issuers, corporates have begun taking the
The corporate is far from a regular issuer asset manager. OPPORTUNITYûTOûRElNANCEûCALLSûFALLINGûNEXTû
in the euro market, last funding in the h'IVENûTHEûYIELDû)ûCANûlNDûINûSENIORûEVENû year.
COMMONûCURRENCYûINûBONDûFORMATûlVEûYEARSû if I go to the more riskier issuers, which I h9OUûTENDûTOûRElNANCEûAûHYBRIDûWAYûAHEADû
AGOû4HATûTRADEûAûõMûû*ANUARYûû don’t really want to do, there is a clear of time because the market is more
which was not eligible for CSPP, is BENElTûTOûHYBRIDSûANDûWEûHAVEûACTUALLYû VOLATILEvûSAIDûAûTHIRDûBANKERûh"UTûNOWûYOUû
Mohawk’s only outstanding euro INCREASEDûTHEIRûSHAREûINûOURûPORTFOLIOv have the extra dynamic of all the recent
BENCHMARKûANDûPRE ANNOUNCEMENTûWASûBIDû 67ûISSUEDûõBNûOFûSUBORDINATEDûBONDSû market volatility and the uncertainty about
ATûBP LASTû7EDNESDAYûFARûEXCEEDINGûITûRElNANCINGû the future, which can give issuers the
Other comparables for the new issue used NEEDûOFûõBN IMPETUSûTOûBEGINûLOOKINGûNOWv
by leads included the issuer’s US dollar The carmaker is arguably the banner
bonds, as well as euro trades from the likes credit for the product, so a book peaking at HIGH QUALITY, HIGHER YIELD
OFûPACKAGINGûANDûPAPERûGROUPû-ONDIû"AA OVERûõBNûFORûTHEûDUAL TRANCHEûISSUEûWASû DEUTSCHE BOERSE hit the sweet spot for hybrid
""" ûANDû53ûHOMEûAPPLIANCEûMANUFACTUREû an encouraging sign. ISSUANCEûLASTû-ONDAYûASûAûWELL RATEDûNAMEû
7HIRLPOOLû"AA""" However, VW had to offer attractive OFFERINGûHIGHER YIELDINGûDEBT
terms. Not only did the trade offer yield in The German exchange operator returned
DURATION DOMINATES NON-CYCLICALS absolute terms, but also provided a to a market highly accommodating towards
,ASTû-ONDAYû&RENCHûUTILITYûVEOLIAû"AA""" û SUBSTANTIALûPICK UPûOVERûITSûSENIORûBONDS HYBRIDûDEBTûANDûWASûLOOKINGûTOûRElNANCEû
was able to tighten the pricing on its new h&ORûAûLOTûOFûINVESTORSûTHEûATTRACTIONûISûTHATû THEûUPCOMINGûCALLûONûITSûõMûû
bond through fair value. CLEARûDElNITIONûYOUûAREûGETTINGûBETWEENû HYBRIDûDUEûû4HEûTRADEûISûCALLABLEûINû
û4HEû*ANUARYûSûWEREûANNOUNCEDûATû some issuers’ senior and subordinated &EBRUARYûûBUTû$EUTSCHEû"OERSEûWANTEDû
)04SûOFûBPûAREAûBUTûLEADSûMANAGEDûTOû CURVESvûSAIDûAûBANKER to capitalise on the current clear interest in
PRINTûTHEûõMûDEALûATûAûSPREADûOFûBPû !Tû)04SûOFûTHEûûAREAûFORûTHEû0.#û THEûPRODUCTûANDûRElNANCEûAHEADûOFûTIMEû
Some saw this as much as 10bp inside fair ANDûûFORûTHEû0.#ûTHEûBONDSûOFFEREDû according to a lead.
value. RESPECTIVEûYIELDûPICK UPSûOFûAROUNDûBPû $EUTSCHEû"OERSEûISûRATEDû!!ûBYû30ûATû
Although utilities have not seen the same ANDûBPûOVERû67SûSENIORûCURVE the senior level, with the hybrid expected
PERFORMANCEûASûHIGHER BETAûNAMESû Although auto credits are seen as TOûBEûRATEDû!û)TûANNOUNCEDûITSûõMûNO
investors are still showing a keen interest in particularly exposed to the negative GROWû.#ûATûINITIALûPRICEûTHOUGHTSûOFû
the sector, especially when they come at economic impact of the global spread of nûAREAû!CTIVEûBOOKRUNNERSûBNP
longer maturities. #OVID ûTHISûDIDûNOTûAPPEARûTOûWEIGHûONû Paribas, Citigroup, Deutsche Bank and JP
“There is a clear bid for duration among demand for the VW’s new hybrid. Morgan were able to tighten the yield to
THEûHIGH QUALITYûNAMESvûSAIDûTHEûlRSTûASSETû h!ûGEOGRAPHICALLYûDIVERSIlEDûLARGE SCALEû ûTHANKSûTOûANûORDERûBOOKûOFûOVERû
manager. auto is better positioned to recover than, õBN

Corporate market undaunted by softer tone
IG CORPORATES Bankers still expect healthy supply though hybrids may take back seat
Supply in the European corporate primary this “Ultimately you still have a huge amount of NOT SO HUNGRY FOR HYBRIDS
month should prove resilient to a substantial support from central banks and if issuers end Issuers’ appetite to raise subordinated debt,
softening in markets, but the spread widening up paying slightly higher spreads or premiums however, may have been dented by the sell-off,
could affect the willingness of high-beta to issue, that is not bad for us,” said an asset as bonds widen in the secondary market.
credits and issuers of riskier instruments to manager. “The big attraction for issuers was the
bring deals. “The rally was itself quite surprising and performance of their outstanding hybrids.
Sentiment was hit hard by a sober assessment we already had to take a cautious approach to I mean you saw VW’s tighten something
of the US economic outlook by Fed Chair Jerome issuers and sectors.” like 100bp before they issued,” said the first
Powell last week. It took another blow from The second banker said that technicals syndicate banker.
a reported increase in coronavirus cases in remained very strong, which means the widening “Coupons have been going up so this
some US states the following day, which led to should remain manageable. performance was what was bringing issuers to
renewed selling. One factor that has the potential to slow the market. If secondaries aren’t doing as well
“It is weird when you think about it. Arguably the pace of supply is the high level of issuance then this clearly impacts the reasoning behind
the market shouldn’t have rallied like it did, but already seen this year. With corporate treasuries issuing.”
equally it probably shouldn’t have sold off like it taking advantage in recent weeks of the Volkswagen raised €3bn via a pair of hybrids
has,” said a syndicate banker. tightening in spreads and low concessions, last week, but the yield on both legs has
“Nothing has really changed that much.” many have fulfilled much of their funding already begun to rise. Its €1.5bn 3.5% PNC5,
How this shapes future supply from corporate requirements. for example, was issued at a yield of 3.5% on
issuers in Europe is up for debate, but some If pricing becomes less attractive some issuers Wednesday and last Friday morning was bid at
bankers are actually predicting heavier issuance may have little incentive to print. 3.625% on Tradeweb.
this week. “Corporates have done such a huge amount Equally, as risk appetite wavers, the
“I have the feeling supply next week will be of funding already on the basis that even if they momentum built by unrated issuers could fade.
much larger. Issuers are still on the lookout for didn’t immediately need it, conditions were good Unrated companies were able to print deals last
debt,” said a second syndicate official. and the future is uncertain,” said a DCM banker. week, many bringing trades that were three or
“Some of this will be refis, some is M&A “This means there are plenty that don’t four times subscribed and came with limited or
driven. Not necessarily funding for new capex. necessarily need to issue.” no new-issue premiums.
But this will come with further widening and However, some signs of sentiment improving Unrated borrowers already have to issue
increases in NIPs.” had already begun to appear and European at relatively wide spreads compared to their
Issuers should still be able to access the equities rallied last Friday. rated peers and some may be put off from new
market at acceptable levels, although may have “The market has firmed up since the weak issuance if the levels needed to print widens
to pay higher premiums than has been the norm opening despite the volatility in stocks,” said a further, said bankers.
over recent weeks. second DCM banker. Ed Clark
Although fair value was hard to pinpoint, “So now they are rushing back in and May, this has translated into very strong
BASEDûONûCOMPARABLESûSUCHûASû$EUTSCHEû looking for yield, so those assets will tighten PRIMARYûMARKETSv
Bahn or Alliander, bankers plumped for a EVENûFURTHERv
lGUREûAROUNDûn NO RATING, NO PROBLEM
UNRATED ISSUERS PUSH INTO THRIVING A number of infrequent borrowers were
SECONDARY PERFORMANCE IG PRIMARY LOOKINGûTOûRAISEûFUNDINGûINûTHEûINVESTMENT
As investors have fully resumed their search grade market last week.
for yield, subordinated debt has rallied hard 4HEûINVESTMENT GRADEûCORPORATEûMARKETû “Now that you have some unrated issuers
in the secondary market. maintained its increasingly positive tone ANNOUNCINGû)ûTHINKûTHISûREmECTSûTHATû
“Now is a great time for these issuers LASTûWEEKûASûUNRATEDûISSUERSûRE EMERGEDûTOû INCREASEDûRISK ONûSENTIMENTvûSAIDûAûSECONDû
TOûBEûISSUINGûHYBRIDSvûSAIDûAûFOURTHû raise new funding. syndicate banker.
banker away. )NmOWSûINTOûCREDITûFUNDSûTHEû “It was not that long ago that you would
“Not only have the new deals been announcement of the EU’s €750bn rescue have advised against unrated borrowers
selling well but they have been trading fund, an expansion of the pandemic ISSUINGûBUTûTHEûMARKETûISûINûGOODûSHAPEv
well, so more borrowers should be emergency purchase programme and GALP ENERGIA, the unrated Portuguese
looking at this now that pricing has come BETTER THAN EXPECTEDûNONFARMûPAYROLLSû ENERGYûCOMPANYûSOLDûITSûlRSTûDEALûINûTHEû
BACKûINv NUMBERSûCREATEDûFERTILEûCONDITIONSûFORûHIGH European primary for two and a half years
4HEûõMûû0.#ûHYBRIDû grade borrowers. ONû4UESDAYûPRINTINGûAûõMûNO GROWû
&IRMENICHûISSUEDûINû-AYûATûAûYIELDûOFûû “Investors have been seeing strong *ANUARYûûATûSWAPSûPLUSûBPûHAVINGû
FORûEXAMPLEûWASûLASTûWEEKûBIDûATûû INmOWSûANDûTHEYûNEEDûTOûDEPLOYûTHISûMONEYû ANNOUNCEDûTHEûDEALûATûTHEûBPûAREAû4HEû
according to Tradeweb. INTOûYIELD PRODUCINGûPRODUCTSûLIKEûCREDITû ISSUERûAMASSEDûORDERSûOFûAROUNDûõBN
“I think some investors were caught out by GIVENûHOWûNEGATIVEûRATESûAREûINû%UROPEvû “It is marketed very much like a crossover
how aggressive the price tightening in said one syndicate banker. CREDITvûSAIDûAûTHIRDûBANKER
CORPORATEûCREDITûWOULDûBEvûSAIDûTHEûSECONDû “Combined with slightly less issuance 4HEûUTILITYûWASûJOINEDûBYû&RENCHûSMALLû
asset manager. volumes than we were seeing in April and appliance manufacturer SEB, also returning

BONDS FIG
TOûTHEûPUBLICûMARKETûFORûTHEûlRSTûTIMEûSINCEû government bonds, in the most extreme March, but they have returned to buying as
ûANDûWHICHûSAWûAûSIMILARûAMOUNTûOFû example of its impact on the domestic credit THEû&EDERALû2ESERVEûANDû%UROPEANû#ENTRALû
movement in spread. market. Bank have also demonstrated their
2AISINGûõMûWITHûAûNO GROWû*UNEûû The central bank on Tuesday offered to willingness to support credit markets,
the issuer initially offered the deal at the buy corporate bonds with one to three years causing spreads to tighten again.
BPûAREAûBEFOREûCUTTINGûITûTOûBPûONûAû TOûMATURITYûANDûRECEIVEDûcBNûOFûBIDS The BoJ is scheduled to buy corporate bonds
book of around €1.6bn. Market participants were able to sell WITHûTHREEûTOûlVEûYEARSûTOûMATURITYûONû*UNEûû
Although subscription rates did not reach CORPORATEûBONDSûATûAVERAGEûYIELDSûOFûnû It has not announced yet whether it will again
the levels seen on some rated deals recently, but the BoJ actually bought some bonds at SETûAûmOORûFORûTHATûOPERATIONûBUTûSOMEû
BANKERSûSAIDûTHATûWASûLARGELYûAûREmECTIONûOFû YIELDSûASûLOWûASûnûTHEûmOORûTHEûCENTRALû participants believe it will do so by using a JGB
some buyers being unable to invest in bank put in place for this operation. WITHûlVEûYEARSûTOûMATURITYûASûAûREFERENCE
unrated names rather than signalling a 0ARTICIPANTSûBELIEVEDûTHATûTHEûmOORûWASû
weakening in overall market sentiment. BASEDûONûWHEREûTHREE YEARû*'"SûHADûCLOSEDû
ILIADûAûTELECOMSûOPERATORSûINû&RANCEûANDû the previous day. They also said it was
Italy, generated similar interest a day later, REASONABLEûTOûHAVEûAûmOORûINûORDERûTOû
SELLINGûAûõMû*UNEûûOFFûAûBOOKûOFûOVERû prevent the Japanese credit market from FIG
€1.9bn. overheating, especially after the BoJ decided
“Ultimately, those unrated names might to boost its corporate debt purchases in
get some larger books because they come at March and increased those purchases in EUROS
MUCHûWIDERûSPREADSvûSAIDûAûTHIRDûBANKER April to help Japanese companies raise funds
“It can be a strange balancing between smoothly. COMMERZ, ABN AMRO REAP HUGE
seeing good demand because they come at a “There is nothing wrong with setting the AT1 DEMAND
wider spread and demand being limited mOORvûSAIDûAûSALESPERSONûATûAû*APANESEû
BECAUSEûNOTûEVERYONEûCANûBUYûUNRATEDv securities house. “There is no need for them COMMERZBANK and ABN AMRO reopened the
)LIADSûNEWûTRADEûWASûOFFEREDûATûTHEûBPû to buy corporate bonds at a yield below European Additional Tier 1 market in style
AREAûOVERûMID SWAPSûEQUIVALENTûTOûAûYIELDûOFû *'"Svû(EûADDEDûTHATûONEûOFûHISûCLIENTSûASKEDû LASTû-ONDAYûASûAûCONmUENCEûOFûSUPPORTIVEû
AROUNDûû$EMANDûWASûSUCHûTHATûLEADSû him to sell electric power company bonds technicals and positive signs on coupon risk
COULDûTAKEûTHISûINûTOûBPûFORûAûYIELDûOFû through the operation. saw combined demand peak at more than
In effect, the results of the operation €19.5bn despite big moves in price
indicated that Japanese investors were so progression.
CONlDENTûOFûTHEûCENTRALûBANKSûSUPPORTûFORû Bankers billed the simultaneous deals as
SWISS FRANCS the credit markets they chose not to let go of the biggest test of the AT1 market since the
bonds unless they could sell at yields coronavirus crisis began.
STRAUMANN EXTENDS WITH SECOND equivalent to those of JGBs. Only one AT1 had been sold in Europe
DEAL OF THE YEAR The strong results came even after heavy since the crisis hit, a €675m deal for Bank of
supply in the domestic market the previous Ireland on May 14 for which investors were
STRAUMANN HOLDING returned to the market WEEKû!CCORDINGûTOû$EAL7ATCHû)&2SûSISTERû WALL CROSSEDûWHILEû"ANKûOFû.OVAû3COTIAûSOLDû
WITHûAûLONGûlVE YEARûISSUEûONû7EDNESDAYû publication, 16 corporate issuers tapped the Aû53BNû!4ûONû-AYû
4HEû/CTOBERûûBONDûWASûINITIALLYû MARKETûRAISINGûcBNû4HEûISSUERSû h".3ûWASûTHEûlRSTûPROPERûTESTûOFûMARKETû
MARKETEDûATûMID SWAPSûPLUSûBPnBPû included TOKYO METRO, which borrowed strength, albeit in US dollars, and this is a
BEFOREûBOOKSûOPENEDûFORûAû3&RMû cBNûVIAûAûûûûANDû YEARûBONDû real reopening of the euro market, with two
53M ûNO GROWûATûPLUSûBPnBPû offering, and Z HOLDINGS, formerly Yahoo national champions coming to top up their
The bond priced at the tight end. *APANûWHICHûRAISEDûcBNûFROMûAûlVE !4ûBUCKETSvûSAIDûAû$#-ûBANKER
7ITHûONLYûONEûOTHERûBONDûTHEûû/CTOBERû tranche bond issue. "OOKSûFORû#OMMERZBANKSûPERPETUALûNON
SûTHEû.)0ûWASûHARDûTOûPINPOINTû Japanese issuers’ aggressive pricing CALLû!PRILûûTRANSACTIONûWEREûOPENEDû
although one banker away from the deal expectations – the result of the BoJ’s WITHûINITIALûPRICEûTHOUGHTSûOFûTHEûûAREAûBYû
spotted it coming 10bp inside fair value. willingness to buy corporate bonds at zero leads Barclays, BNP Paribas, Commerzbank,
0RIVATEûBANKSûTOOKûûANDûASSETû credit spreads – are also pushing domestic Deutsche Bank and UBS.
MANAGERSûûFROMûANûALL 3WISSûGROUPûOFû investors to focus more on international 'UIDANCEûWASûSETûATûûWITHûBOOKSû
ûACCOUNTSû credits, which are not eligible for the BoJ’s OVERûõBNûBEFOREûAûõBNûDEALûWASû
UBS and ZKB were leads on the deal, which purchases. LAUNCHEDûATûû4HEûBOOKûCLOSEDûATû
ISûRATEDû"""ûBYûBOTHûLEADSû4HEû “Some pension funds are starting to walk AROUNDûõBNûHAVINGûPEAKEDûABOVEûõBN
3WITZERLAND BASEDûCOMPANYûISûACTIVEûINûTHEû away from domestic bonds as they feel pricing ABN AMRO followed, with themselves,
lELDûOFûIMPLANTûANDûRESTORATIVEûDENTISTRYû levels in some deals are too aggressive, so they Credit Suisse, Goldman Sachs, HSBC and
and oral tissue regeneration. have started to look at the international yen Morgan Stanley MARKETINGûTHEûPERPETUALûNON
market hoping that foreign issuers will price CALLû3EPTEMBERûûDEALûWITHû)04SûOFûTHEû
their bonds in line with the secondary market ûAREA
YEN LEVELSûINûDOLLARSûANDûEUROSvûSAIDûAû*APANESEû 'UIDANCEûWASûSETûATûTHEûûAREAûANDû
syndicate banker. THEûSIZEûATûõBNûWITHûBOOKSûOVERûõBNû4HEû
BOJ BUYS CORPORATE BONDS FLAT Indeed, the latest Samurai bond offering book continued to grow and the coupon was
TO JGBS from Credit Agricole earlier this month SETûATû
DREWûAûHEFTYûcBNûOFûORDERSûWITHûSTRONGû 4HEûlNALûBOOKûSTOODûATûOVERûõBNûAFTERû
The BANK OF JAPANûBOUGHTûcBNû53BN û support coming from pension funds. peaking above €10bn.
of corporate bonds last week at negative Pension funds had been facing unrealised “Even though we knew the market was
YIELDSûINCLUDINGûAûPORTIONûmATûTOû*APANESEû losses after global credit spreads widened in strong and we were expecting a very good

deal, we were surprised to the upside in VERYûSTRONGûTIGHTENINGûINûCREDITûLASTûWEEKû û were bid at 99 at last Monday’s open. By
terms of the depth of demand, with books you don’t get more strong signals than that &RIDAYûMORNINGûTHEYûHADûFALLENûFURTHERû
TOUCHINGûõBNûFORûTHEû!".ûTRADEvûSAIDûAû ALLûINûONEûGOvûSAIDûAûSYNDICATEûBANKERûONû THANKSûTOûAûBROADERûMARKETûSELL OFFûTOûûANDû
syndicate banker at one of ABN’s leads. Commerzbank’s deal. ûRESPECTIVELYûACCORDINGûTOû2ElNITIVû
“There was also a surprise to the upside in prices.
PRICINGv RATIONALES
Both deals were deemed to have been The two transactions were seemingly driven FIG MARKET REFLECTS AS PREMIUMS
PRICEDûWITHûNOûNEW ISSUEûPREMIUMûANDû by different motivations. RISE, DEMAND FALLS
bankers highlighted the size of the moves The new issue is Commerzbank’s second
from guidance to reoffer as being AT1, following a US$1bn debut last July. 4HEû&)'ûMARKETûTOOKûAûBREATHERûLASTûWEEKûASû
particularly impressive. As a relative newcomer to the market, the exuberance of previous days gave way to
h5SUALLYûAFTERûAûSIZEABLEûlRSTûMOVEû;FROMû #OMMERZBANKûISûYETûTOûlLLûITSû!4ûBUCKETû)Tû a more sober tone, with premiums rising
IPTs to guidance] you’re then looking to recently unveiled a dedicated AT1 issuance and books shrinking, yet a diverse cast of
TIGHTENûANûEIGHTHûORûSOûFROMûTHEREvûSAIDûTHEû PROGRAMMEûALLOWINGûITûTOûISSUEûUPûTOûõBNû issuers still scored successful trades.
$#-ûBANKERûh)FûYOUREûTHENûTAKINGûTWOûORû of the product. Amid a global rally, spreads across the
THREE EIGHTHSûTHATûSHOWSûYOUûHAVEûAûREALLYû Commerzbank said the programme lNANCIALûSPACEûTIGHTENEDûSIGNIlCANTLYûINûTHEû
STRONGûMARKETv would enable it to take advantage of recent lRSTûWEEKûOFû*UNEûANDûINTOûLASTû-ONDAYû
Bankers saw fair value for changes to banks’ capital requirements, allowing issuers to reap huge books in the
Commerzbank’s new issue at around WHICHûALLOWûTHEMûTOûUSEû!4ûANDû4IERûû primary market while pricing deals inside
û4HEYûCITEDû#OMMERZBANKSû53BNû BONDSûTOWARDSûTHEIRû0ILLARûû2EQUIREMENTS fair value.
û0.#û!4ûTRADINGûATûAûYIELD TO CALLû Market participants interpreted ABN But on Tuesday the sustainability of the
EQUIVALENTûTOûAROUNDûûINûEUROS !-2/SûDEALûASûAûRElNANCINGûOFûITSûõBNû rally was questioned, before renewed
&AIRûVALUEûFORû!".û!-2/SûDEALûWASûSEENû û!4ûWHICHûISûCALLABLEûONû turbulence in equities later in the week cast
ATû û4HEû$UTCHûLENDERSûõBNû 3EPTEMBERû further doubt on the direction of the market.
û0.#SûWEREûBIDûATû The bonds traded well below par for much “It’s been an interesting day. The notion
of the last three months, hitting a low of that things were getting too good to be true,
PATH CLEARED? ûINûMID -ARCHûREmECTINGûINVESTORSû and we required some sort of collective
AT1 coupon risk has been in focus after expectation they would be extended. But PAUSEûFORûBREATHûCAMEûTOûFRUITIONvûSAIDûAû
MEPs last month put forward amendments they have recovered in recent weeks and syndicate banker.
to the European Union’s Capital
ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
Requirements Regulation proposing a
BOOKRUNNERS: 1/1/2020 TO DATE BONDS (ALL CURRENCIES)
suspension of such distributions.
Managing No of Total Share BOOKRUNNERS: 1/1/2020 TO DATE
But by Monday, market participants were
bank or group issues €(m) (%) Managing No of Total Share
INCREASINGLYûCONlDENTûTHEûPROPOSALSûWOULDû
1 Credit Agricole 39 11,590.06 10.7 bank or group issues US$(m) (%)
not be taken up, after a statement by the
2 SG 27 8,573.90 7.9 1 Citigroup 17 3,269.04 13.9
Greens said politicians of other parties were
3 BNP Paribas 25 6,500.25 6.0 2 Credit Agricole 9 2,438.77 10.3
not prepared to accept “legally binding
4 Natixis 19 6,494.61 6.0 3 HSBC 12 1,922.54 8.2
LIABILITYûFORûBANKûINVESTORSvûINûTHEûFORMûOFû
5 JP Morgan 34 6,415.13 5.9 4 BofA Securities 11 1,882.57 8.0
an AT1 coupon ban.
6 Deutsche Bank 29 6,329.84 5.8 5 JP Morgan 10 1,584.41 6.7
4HATûCONlDENCEûWASûPROVEDûWELLûPLACEDû
7 Barclays 26 6,299.18 5.8 6 Barclays 10 1,477.29 6.3
on Tuesday when the parliamentary ECON
8 HSBC 29 4,532.80 4.2 7 Morgan Stanley 9 1,271.38 5.4
COMMITTEEûlNALISEDûITSûPOSITION
9 UniCredit 23 4,335.86 4.0 8 Goldman Sachs 7 1,072.75 4.5
4HEûlNALûTEXTûSTATESûONLYûTHATûTHEû
10 Lloyds Bank 5 3,240.45 3.0 9 UBS 4 918.72 3.9
European Commission should consider by
Total 166 108,521.77 10 BNP Paribas 5 861.68 3.7
END ûIFûADDITIONALûPOWERSûAREûREQUIREDû
Including banks, insurance companies and finance companies. Excluding Total 31 23,581.62
for regulators to impose restrictions on equity-related and covered bonds. Excluding publicly owned institutions.
banks’ distributions in exceptional Source: Refinitiv SDC code: N11 Source: Refinitiv SDC code: J3a
circumstances.
ALL GLOBAL AND EUROMARKET YEN BONDS ALL INTERNATIONAL YEN BONDS
Supportive technicals have also
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
contributed to perfect conditions, bankers
Managing No of Total Share Managing No of Total Share
said.
bank or group issues ¥(m) (%) bank or group issues ¥(m) (%)
AT1s, the riskiest form of bank debt, were
HITûHARDûINûTHEûGLOBALûSELL OFFûTRIGGEREDûBYû 1 Mizuho 4 83,608.33 22.0 1 Sumitomo Mitsui 9 113,483.33 20.2
the pandemic. The average yield of the Bank 2 Goldman Sachs 2 60,275.00 15.9 2 Mizuho 7 103,958.33 18.5
of America CoCo index more than doubled 3 BofA Securities 1 48,875.00 12.9 3 Goldman Sachs 2 60,275.00 10.7
WITHINûAûFEWûWEEKSûPEAKINGûATûûONû 4 JP Morgan 1 48,875.00 12.9 4 JP Morgan 1 48,875.00 8.7
March 19. 5 Sumitomo Mitsui 3 32,233.33 8.5 5 BofA Securities 1 48,875.00 8.7
But much of that has now been reversed 6 Nomura 2 20,833.33 5.5 6 Nomura 5 41,183.33 7.3
amid the sizeable and sustained rally in 7 Mitsubishi UFJ MS 2 19,733.33 5.2 7 Mitsubishi UFJ MS 5 40,083.33 7.1
8 MUFG 1 12,500.00 3.3 8 Credit Agricole 5 32,100.00 5.7
credit markets. The index tightened from
9 BNP Paribas 1 12,500.00 3.3 9 Daiwa Securities 4 28,683.33 5.1
ûTOûûINûTHEûWEEKûRUNNINGûUPûTOû
10 Credit Agricole 2 11,750.00 3.1 10 MUFG 1 12,500.00 2.2
the new issues, returning to its lowest level
Total 7 379,250.00 Total 13 562,250.00
since March 6.
Excluding equity-related debt. Including preferreds. Including all Euro, foreign and global issues. Excluding equity-related
“Expectations for AT1 supply are low and debt.
THEREûWEREûMASSIVEû;CREDITûFUND=ûINmOWSûANDû Source: Refinitiv SDC code: K10 Source: Refinitiv SDC code: K12

BONDS FIG
“The problem is transactions paying no ZURICH INSURANCE COMPANY brought the day’s FRENCH DUO INJECT FURTHER VIGOUR
new issue premiums, or negative premiums, other subordinated trade, printing €750m of TO SNP MARKET
can continue only as long as we see an û.#ûSUBORDINATEDûNOTESûATûBPû
OVERALLûRALLYûûANDûTODAYûISûTHEûlRSTûDAYûINûAû OVERûMID SWAPSûWITHûBOOKSûLASTûREPORTEDû 4WOûMOREû&RENCHûISSUERSûHAVEûTAPPEDûTHEû
FEWûSESSIONSûWEVEûNOTûHADûTHATv above €1.5bn. REJUVENATEDûEUROûSENIORûNON PREFERREDû
Last Monday, Additional Tier 1 Bankers away from the deal said it was market with deals that were well received
transactions from Commerzbank and ABN priced with a 0bp–5bp concession. and in high demand.
AMRO demonstrated the strength of the SOCIETE GENERALE entered the SNP market
primary market, with combined demand for NORMALISATION for the second time in under a month, while
the two trades peaking above €19.5bn. Elsewhere, KBC GROUP sold its second LA BANQUE POSTALEûBECAMEûAûlRST TIMEûISSUERû
"UTûBYûMID MORNINGûONû4UESDAYûBOTHûDEALSû benchmark green bond issue, following its OFûCALLABLEûSENIORûNON PREFERREDûDEBT
WEREûBIDûBELOWûPARûATûûANDûû õMûlVE YEARûDEBUTûINû*UNEû h)TSûAûBIGûDAYûFORûTHEûMARKETvûSAIDûAû
respectively, setting a new tone, bankers said. Leads BofA, Credit Agricole, Commerzbank, syndicate banker, “although people will
“It’s amazing how far we’ve come and we ING, KBC and Natixis opened books for the probably be disappointed with the rest of
REALLYûAREûGETTINGûVERYûCLOSEû;TOûPRE CRISISû NEWûõMûNO GROW ûSEVEN YEARûNON CALLû THEûWEEKûnûASûWEûEXPECTûITûTOûBEûQUIETvû
SPREADS=vûSAIDûAû$#-ûBANKERûh4HEûWORRYûISû six holdco senior offering with initial price La Banque Postale started marketing a
have we, in the last three or four days, THOUGHTSûOFûMID SWAPSûPLUSûBPûAREA õMNûû.#ûATûGUIDANCEûOFûMID
MOVEDûTOOûFARûTOOûFASTv 4HEûSPREADûWASûREVISEDûTOûBPûnBPû70)2 û SWAPSûPLUSûBPûAREAûLANDINGûTHEûTRADEû
“The market needs to consolidate because BEFOREûBEINGûlXEDûATûTHEûTIGHTûENDûOFûTHATûRANGEû ATûBPûWITHûBOOKSûPEAKINGûINûEXCESSûOFû
you can’t go 10bp tighter every day. I’m not with books closing in excess of €1.75bn. õBNûWITHûONEûOFlCIALûFROMûTHEû
saying this is the top of the market, but Bankers away from the deal judged it to syndicate expressing pleasure at the
PERHAPSûPEOPLEûNEEDûTOûREASSESSûAûLITTLEûBITv BEûLANDINGûROUGHLYûmATûTOûFAIRûVALUE outcome.
Bankers suggested some investor They said KBC’s deal, and a €750m six Bookrunners were BNP Paribas, Citigroup,
attention was also drawn away to the SSA YEARûNON CALLûlVEûSENIORûNON PREFERREDû3.0 û Commerzbank, La Banque Postale, UBS and
MARKETûWHEREûõBN EQUIVALENTûOFû PRICEDûATûBPûBYû,Aû"ANQUEû0OSTALEûONû UniCredit.
demand was poured into syndications on Monday, show how far senior spreads have “With a call premium of around 15bp,
Tuesday. moved in recent weeks. THEYûPAIDûPRETTYûMUCHûZEROûNEW ISSUEû
Nevertheless, bankers said all the h)TSûGOODûTOûSEEû3.0SHOLDCOûSENIORSû PREMIUMvûSAIDûAûBANKERûAWAYûFROMûTHEû
lNANCIALûINSTITUTIONSûINûTHEûMARKETûONû GETTINGûDONEûINSIDEûBPûAGAINvûSAIDûTHEû deal.
Tuesday were able to achieve solid results, at lRSTû$#-ûBANKER As market sentiment continued to
least. “Levels are normalising, and that brings into strengthen in recent weeks, there has been
“We are seeing smaller order books, yet I play higher beta, larger spread names. And for an increasing appetite for SNP deals, with
suspect issuers in most cases have been able these lower beta guys, the best in class, levels lenders offering callable structures to
TOûACHIEVEûTHEIRûSIZEûANDûPRICEûOBJECTIVESvû HAVEûBECOMEûVERYûATTRACTIVEûAGAINv mitigate the reduction in regulatory value in
SAIDûTHEûlRSTûSYNDICATEûBANKER THEûRUN UPûTOûlNALûMATURITY
“It does feel like NIPs and book sizes have ITALIANS RETURN Higher spreads have also made callables
gone backwards, but they are still UNICREDITûWASûMEANWHILEûMAKINGûITSûlRSTû more palatable to issuers of SNP, as the cost
PALATABLEv FORAYûINTOûTHEûMARKETûSINCEû&EBRUARYû of the call option remains relatively stable
)TSûSIX YEARûNON CALLûlVEûSENIORûPREFERREDû compared to the widening in spreads.
RISK APPETITE issue was marketed with initial price 3OCIETEû'ENERALEûOPENEDûBOOKSûFORûAûSELF
"ANKERSûSINGLEDûOUTûAûõMû4IERûûISSUEû THOUGHTSûOFûMID SWAPSûPLUSûBPûAREAûVIAû LEDûõBNûû*UNEûûWITHû)04SûOFû
from RAIFFEISEN BANK INTERNATIONAL as proof sole bookrunner UniCredit. MID SWAPSûPLUSûBPûAREA
that the market, while not as strong as it 4HEûSPREADûWASûSUBSEQUENTLYûlXEDûATûBPû “The maturity was an empty point of the
was, still had much to offer. BEFOREûTHEûSIZEûWASûSETûATûõBNûWITHûTHEû CURVEûANDûTHEûLASTûDEALûWASûAû.#vûSAIDûAû
Leads BNP Paribas, BofA Securities, Morgan lNALûBOOKSûSTANDINGûINûEXCESSûOFûõBN syndicate banker.
Stanley, Raiffeisen Bank International and Societe The deal comes on the back of a The trade was ultimately launched at
GeneraleûMARKETEDûTHEûõMûNO GROW û SIGNIlCANTûRALLYûINû)TALIANûSPREADS MID SWAPSûPLUSûBPûWITHûTHEûlNALûBOOKû
YEARûNON CALLûSEVENûTRANSACTIONûWITHûINITIALû Intesa Sanpaolo, for example, priced a STANDINGûABOVEûõBN
PRICEûTHOUGHTSûOFûMID SWAPSûPLUSûBPû õBNûlVE YEARûBULLETûSENIORûPREFERREDû “This was a pretty strong result, with the
area. OFFERINGûATûBPûONû-AYûû4HEûDEALûWASû YEARûEXTREMELYûWELLûBIDûLATELYvûSAIDûAû
'UIDANCEûWASûSETûATûBPûAREAûBEFOREûTHEû BIDûATûBPûONû4UESDAY banker away.
SPREADûWASûlXEDûATûBPûWITHûTHEûBOOKSû The tightening paved the way for BPER SNP issuance, and in particular demand
CLOSINGûABOVEûõBN BANCAûTOûSELLûITSûlRSTûSENIORûPREFERREDû FORûLONGER DATEDûMATURITIESûHASûIMPROVEDûOFû
#ITINGû2")Sûû-ARCHûûNON CALLû BENCHMARKûONû7EDNESDAYûPRINTINGûAûTWICE late as the extreme levels of volatility caused
SûATûBPûATû4UESDAYSûOPENûBANKERSû SUBSCRIBEDûõMûlVE YEARûDEALûATûBPû by the coronavirus pandemic have
saw fair value for the new issue at about INSIDEû)04SûOFûBP DISSIPATEDûSIGNIlCANTLYûASûEUROZONEû
BPûIMPLYINGûAûNEWûISSUEûCONCESSIONûOFû "ANKERSûDEEMEDûITûAûGOODûRESULTûFORûAûLESS countries ease lockdown measures and look
around 5bp. FOLLOWEDûSECOND TIERûPERIPHERALûNAMEû to return to business.
While demand was more modest than for despite the softer market backdrop. “The big risk is that [spreads] have moved
other recent subordinated offerings, “The exercise worked well, they were able so much that even in spite of all the positive
bankers said the result was impressive given to get a good trade and a reasonable price market technicals it makes sense that we
Tuesday’s weaker backdrop. MOVEvûSAIDûAûBANKERûATûONEûOFûTHEûLEADS might see a step back in terms of spreads.
“It shows you investors’ appetite for risk "0%2ûWASûTHEûlRSTû)TALIANûBANKûOUTSIDEûTHEû We typically see that, so it’s key for issuers
ISûSTILLûVERYûMUCHûTHEREvûSAIDûAûSECONDû country’s top tier to enter the market since TOûGETûTHEIRûDEALSûOUTûQUICKLYvûTHEûlRSTû
syndicate banker. THEûCORONAVIRUSûCRISISûlRSTûHITûMARKETS banker said.

METLIFE AND ATHENE AWAKEN securities as it looks to make them more And they have pushed back against
FA-BACKED SUPPLY EFlCIENTûFROMûAûREGULATORYûPERSPECTIVEû suggestions that the coronavirus might
4HEû$ANISHûLENDERûISûSEEKINGûTOûSWAPûTHEû cause that deadline to be delayed.
METLIFE GLOBAL FUNDINGûBROKEûAûMONTHS LONGû ûBULLETSûFORûûNON CALLûS 7HILEûTHEREûMAYûBEûAûNEEDûFORûhSHORT TERMû
IMPASSEûFORû&! BACKEDûDEBTûONû4UESDAYûWITHû $ANSKEûSAIDûTHEûPURPOSEûOFûTHEûOFFERûWASû REPRIORITISATIONvûBECAUSEûOFû#OVID ûMARKETû
AûõMûSEVEN YEARûBONDûRECEIVINGûONLYû to manage its MREL “as the new notes are participants “should remain focused on the
modest demand despite offering a meaty expected to be eligible for MREL until the continued importance of removing reliance on
NEW ISSUEûPREMIUM OPTIONALûREDEMPTIONûDATEvû ,IBORûBYûTHEûENDûOFûvûTHEû"ANKûOFû
In terms of comparables, bookrunners The bonds would lose their regulatory %NGLANDSû&INANCIALû0OLICYû#OMMITTEEûSAIDûINû
looked at MetLife’s euro curve. Prior to the value for MREL purposes in their last year to -AYSû)NTERIMû&INANCIALû3TABILITYû2EPORT
new trade, the issuer’s longest bond was a maturity.
ûûWHICHûWASûQUOTEDûATûMID SWAPSû Bankers said the swap made sense for
PLUSûBPûONû4RADEWEB both the issuer and its bondholders. SWISS FRANCS
4HEYûALSOûLOOKEDûATûTHEûMOSTûRECENTû&! “Going from bullets to callables is, in
BACKEDûTRANSACTIONûANûõMûûû TERMSûOFû-2%,ûEFlCIENCYûMUCHûBETTERûFORû FINANCIALS TO THE FORE IN
NOTEûSOLDûBYû.EWû9ORKû,IFEû'LOBALû&UNDINGû THEûISSUERvûSAIDûAû$#-ûBANKERû SWISS FRANCS
INû*ANUARYûTHATûWASûATûMID SWAPSûPLUSûBPû h!NDûASSUMINGûTHEYûGETûCALLEDûONûTHEûlRSTû
on Tradeweb on Tuesday. call date, for all intents and purposes the CREDIT AGRICOLEûBROUGHTûAû3&RMû
Barclays, Credit Suisse, Deutsche Bank and JP investor is getting the same instrument and 53M ûNO GROWû YEARûSENIORûNON
Morgan set the ball rolling with initial price getting a fee ... it seems a simple, fair preferred deal on Thursday. Books for the
THOUGHTSûATûBPnBPûOVERûMID SWAPS EXCHANGEv /CTOBERûûISSUEûOPENEDûATûMID SWAPSû
One banker close to the trade saw fair )NûTHEûANY AND ALLûEXCHANGEûOFFERSû plus 95bp area and it priced in line with
value around 67bp, while a second banker, LAUNCHEDûONû&RIDAYûMORNINGû$ANSKEûISû GUIDANCEûFORûAûûYIELDûEQUIVALENTûTOû
away from the deal, gauged it closer to 60bp. TARGETINGûITSû53BNûû*ANUARYûSûANDû 96.4bp over government bonds.
&INALûBOOKSûCLOSEDûINûEXCESSûOFûõMû ITSûõBNûû-AYûSû #REDITû!GRICOLEûONLYûPAIDûAûBPûPREMIUMû
after peaking at over €950m. This enabled It is seeking to shift investors into two versus its euro SNP curve, when adjusted for
MetLife to print a €500m bond at 75bp. new securities whose terms will be almost currency basis, according to one banker
“On the face of it, it looks a bit soggy. It’s the identical to the outstanding bonds’, except away from the deal.
lRSTûSUB õBNûBOOKûWEVEûSEENûFORûAûWHILEû THEYûWILLûMATUREûINûûANDûCANûBEûCALLEDû The bonds went mainly to asset
Only moving 10bp–15bp is a smaller move INûûnûWITHûTHEûRESETûDATESûMATCHINGû MANAGERSûWHICHûTOOKûMOREûTHANûûWHILEû
THANûMOSTûWEVEûSEENvûTHEûSECONDûBANKERûSAID precisely the outstanding notes’ maturity INSURERSûTOOKûJUSTûOVERûû!ûTOTALûOFûû
h)DûSAYûITSûJUSTûTOûDOûWITHû&!ûNOTESûBEINGû dates. accounts took part for an average ticket of
a bit niche and the overall audience being $ANSKEûHASûSETûMINIMUMûSIZESûFORûTHEû AROUNDû3&RM
NOTûASûLARGEûASûFORûRUN OF THE MILLû NEWûISSUESûOFû53MûANDûõM Credit Suisse was sole bookrunner, with
transactions, so they’ve had to pay up a bit. The bank is offering an exchange fee of Credit Agricole as joint lead no books,
They probably also got a bit unlucky with 53ûPERû53ûPRINCIPALûAMOUNTûANDûõû The issuer, Credit Agricole London Branch
THEûTONEûONûTHEûDAYv per €1,000. ISûRATEDû!A!!!nûWHILEûTHEûISSUEûISûRATEDû
In comparison, MetLife offered no The offer will expire on June 19, with the "AA!n!
CONCESSIONûONûAûõMûûûTRANSACTIONû RESULTSûANNOUNCEDûONû*UNEûû Concurrently on Thursday, RAIFFEISEN
LASTû3EPTEMBERûANDûDREWûOVERûõBNûINû Bank of America, BNP Paribas, Danske Bank SCHWEIZ GENOSSENSCHAFT opened books for a
ORDERSûWHILEû.EWû9ORKû,IFESûSEVEN YEARû and JP Morgan are dealer managers. MINIMUMû3&RMûûONE YEARûSENIORû
PAPERûATTRACTEDûõBNûOFûDEMAND unsecured bond, with the price set from the
Looking ahead, ATHENE GLOBAL FUNDING will STARTûATûûFORûAûnûYIELD
KEEPûTHEûMOMENTUMûGOINGûWITHûITSûLONG STERLING 2ATEDû!ûSTABLEûBYû-OODYSûITûCAMEûINûAû
AWAITEDûMAIDENûEUROûTHREE YEARû&! BACKEDû 3&RMûSIZEûANDûWENTûMAINLYûTOûBANKû
transaction. NATWEST ISSUES ITS FIRST treasuries, with only seven accounts taking
Barclays, Credit Suisse and Deutsche Bank held SONIA-LINKED STRUCTURED NOTE PARTûFORûAû3&RMûAVERAGEûTICKET
an investor call on Tuesday for the upcoming Raiffeisen Schweiz itself was sole lead.
deal, which has been in the works since NATWEST MARKETSûHASûISSUEDûITSûlRSTû3ONIA
&EBRUARYû4HEûEXECUTIONûWASûDELAYEDûBECAUSEû LINKEDûSTRUCTUREDûNOTEûAûTHREE YEARûmOOREDû
OFûTHEûPANDEMICûCRISISûWITHû$EUTSCHEû"ANKû mOATERûINû-4.ûFORMAT
added to the ticket in the interim. NatWest has previously been at the
Both MetLife and Athene picked euros with forefront of UK efforts to switch from the COVERED BONDS
a view to diversifying their investor bases. Libor benchmark to Sonia. Last year, the
h4HERESûNOûCOSTûBENElTûFORûEITHERûISSUERû BANKûRANûTHEûlRSTûCONSENTûSOLICITATIONû
if anything, MetLife probably paid a couple process to switch a bond from Libor to EUROS
of basis points more to access the euro 3ONIAûBROUGHTûTHEûlRSTû3ONIAûLOANûTOûMARKETû
market. I think euro investors are getting a ANDûBROUGHTûTHEûlRSTû,IBOR TO 3ONIAûLOAN LBBW REVIVES PFANDBRIEF SECTOR
GOODûDEALvûTHEûlRSTûBANKERûSAID 4HEûNEWû3ONIA LINKEDû-4.ûISûSIZEDûATû WITH SIX-YEAR OEPFA
£10.704m and was executed for structured
DANSKE SEEKS SNP BULLET-CALLABLE SWAP PRODUCTSûDISTRIBUTORûI$!$û4HEûANNUALû LBBW breathed life into the Pfandbrief sector
COUPONûPAYSûTHEûGREATERûOFû3ONIAûORû ONû-ONDAYûWITHûAûõMûSIX YEARûPUBLICû
DANSKE BANK has launched an exchange offer The UK regulators want Libor to be SECTORûISSUEûTHEûlRSTûCOVEREDûBONDûISSUEDû
FORûTWOûOFûITSûSHORT DATEDû53ûDOLLARûANDûEURO PHASEDûOUTûBYûTHEûENDûOFûûWHENûTHEYû out of Germany since March, according to
DENOMINATEDûSENIORûNON PREFERREDû SAYûlRMSûCANûNOûLONGERûRELYûONûIT )&2ûDATA

BONDS HIGH-YIELD
Like recent covered bond transactions, Bankers anticipate issuance will remain
LBBW followed the script of very limited SLOW PACED SWISS FRANCS
supply leading to exuberant demand – the “The liquidity party will continue; the
deal was more than three times subscribed ECB made it very clear it won’t take the CREDIT SUISSE GOES INTO COVEREDS
despite not offering any concession. PUNCHBOWLûAWAYûANYTIMEûSOONvûTHEûTHIRDû
“We were wondering when the next banker away said. CREDIT SUISSEûRAISEDû3&RMû53M ONû
German covered bond would come. A lot of 7EDNESDAYûTHROUGHû YEARûANDûEIGHT YEARû
issuers have parked their bonds or money ACHMEA’S CPT GETS BLOWOUT DEMAND covered bonds.
straight at the ECB due to its [purchase] -ARKETINGûBEGANûATûAûnûYIELDûFORû
programme, so they don’t have a great ACHMEA BANKûREVIVEDûAû$UTCHûCONDITIONALû THEûSHORTERûTRANCHEûANDûMID SWAPSûPLUSû
MOTIVATIONûTOûTAPûTHEûMARKETvûAûBANKERû PASS THROUGHûCOVEREDûBONDûSECTORûTHATûHASû 55bp–60bp for the longer. Books opened for
away said. seen limited supply since October, and AûSETû3&RMûnYEARûATûAûûYIELDûANDûAû
h4HISûWASûTHEûlRSTûTESTûOUTûOFû'ERMANYû received blowout demand for its efforts. MINIMUMû3&RMûEIGHT YEARûATûPLUSûBPû
ANDû)ûTHINKûITûWASûMOREûTHANûSUCCESSFULvû A banker close to the deal said Tuesday’s area.
Leads ABN AMRO, Credit Agricole, trade was more than just a reopening of the 4HEûSHORTERûONEûWASûSETûATûûANDûTHEû
Commerzbank, LBBW and UBS started market and that it sent the upbeat message LONGERûUPPEDûTOû3&RMûATûPLUSûBP
MARKETINGûATûMID SWAPSûPLUSûBPûAREAûFORûAû THATûNON %#" ELIGIBLEûNAMESûAREûALSOûINûGOODû 4HEûBONDSûAREûNOTû3."ûREPO ELIGIBLEûSOû
õMûNO GROWûTRANSACTIONûAûLEVELûTHATû demand in the sector. pay a premium over the benchmark PSHypo
IMPLIEDûANûINITIALûNEW ISSUEûPREMIUMûOFû “Irrespective of whether the ECB is and PfZ curves.
4bp, according to bankers away. buying or not, there’s so much cash around Bank treasuries took the largest portions
,""7ûHASûOUTSTANDINGû3EPTEMBERûû in this market that people don’t really care. of both tranches at just under a half of each,
ANDû3EPTEMBERûûPUBLICûSECTORûDEALSûTHATû It’s the heyday of selling whatever you feel ASSETûMANAGERSûTOOKûûOFûEACHûANDû
were respectively quoted at plus 5bp and LIKEûSELLINGvûAûSECONDûBANKERûCLOSEûTOûTHEû insurers and pension funds together took
BPûPRE MANDATEûONû4RADEWEB trade said. n
Orders peaked at €1.75bn within two The CPT structure has not been the Credit SuisseûWASûSOLEûLEADûONûTHEû&ITCHû!!!û
HOURSûENABLINGûTHEûISSUERûTOûRElNEûGUIDANCEû most favoured among covered bond rated deals.
TOûPLUSûBPûnBP û0RICINGûCAMEûINûATûTHEû INVESTORSûANDûTHEû%#"SûDECISIONûINûû
TIGHTûENDûOFûTHEûRANGEûWITHûTHEûlNALûORDERû to exclude these securities from its
book still in excess of €1.7bn. purchase programme did little to improve
“The market is really in very good shape, the product’s popularity.
NEW ISSUEûCONCESSIONSûAREûDECREASINGûBONDSû 4HISûWASûDEMONSTRATEDûBYûTHEûDIFlCULTYû HIGH-YIELD
are coming at fair value and the tightening !CHMEAûHADûGETTINGûAûõMûû&EBRUARYû
POTENTIALûFORûISSUERSûISûQUITEûLARGEvûAûSECONDû û#04ûOFFûTHEûGROUNDûINû&EBRUARYûû
banker away said. 4HEûNOTESûOFFEREDûAûBPûNEWûISSUEû UNITED STATES
4HEûlRSTûBANKERûBELIEVESûSUBSEQUENTû concession but were only marginally
covered bonds will come at markedly tighter oversubscribed with €590m in orders. HIGH-YIELD SUPPLY SURGES AMID
spreads, provided nothing crucial occurs on Now, however, a corner appears to have ECONOMY WORRIES
the macroeconomic front. been turned in a context of limited covered
More measured in his views, a third banker bond supply and wider CPT spreads. (IGH YIELDûBONDûSUPPLYûCONTINUEDûATûAûBRISKû
SAIDûTHATûALTHOUGHû'ERMANûANDû&RENCHûISSUERSû $UTCHû#04SûHAVEûUNDERPERFORMEDû pace last week before worries resurfaced
MAYûBEûABLEûTOûMOVEûPRICINGûBYûBPûORûBPû $UTCHûSOFTûBULLETSûANDûCURRENTLYûOFFERûAû over the state of the US economy and a
the scope for tightening will be limited. BPûPICK UPûACCORDINGûTOû!".û!-2/û RENEWEDûRISEûINû#OVID ûINFECTIONS
h7EVEûMOREûORûLESSûREACHEDûPRE #OVIDû research. $EALSûFROMûûBORROWERSûTOTALLINGû
levels already, so I think from now on it will This time around, bookrunners ABN 53BNûWEREûSOLDûONûTHEûlRSTûTHREEûDAYSû
be an uphill battle and not that easy to AMRO, DZ Bank, ING, Rabobank, Societe Generale of the week, with around half of them
justify a further push. There may be more and UniCredit BEGANûMARKETINGûAûlVE YEARûATû upsized in a sign of strong funding
[tightening] potential for issuers that are still THEûMID SWAPSûPLUSûBPûAREAûFORûAûõMû conditions.
OFFERINGûWIDERûSPREADSvûHEûSAID NO GROWûDEAL 4HISûFOLLOWEDûTHEû53BNûTHATûWASû
!CHMEASûSûISSUEDûATûPLUSûBPûWEREû priced the week before, which was the fourth
ALL COVERED BONDS (ALL CURRENCIES) QUOTEDûATûPLUSûBPûONû4RADEWEB consecutive week of over US$10bn supply.
BOOKRUNNERS: 1/1/2020 TO DATE 'UIDANCEûWASûSUBSEQUENTLYûRElNEDûTOûTHEû (IGH YIELDûVOLUMEûHASûSOAREDûTHISûYEARû
Managing No of Total Share BPûAREAûnBP ûAFTERûORDERSûPASSEDûTHEû WITHû53BNûSOLDûINûTHEûYEAR TO DATEû
bank or group issues US$(m) (%) õBNûMARKûh$EPENDINGûONûHOWûYOUûTWEAKû through Wednesday, compared with
1 Barclays 38 8,185.30 7.5 THEûCURVEûFAIRûVALUEûISûEITHERûBPûORûBPvû 53BNûINûTHEûSAMEûPERIODûINûû
2 Credit Suisse 20 8,049.04 7.3 the second banker said. ACCORDINGûTOû)&2ûDATA
3 BNP Paribas 26 5,947.88 5.4 Achmea printed its bond at the tight end 3TRONGûPRIMARYûCONDITIONSûONûTHEûlRSTû
4 HSBC 26 5,804.39 5.3 OFûTHEûGUIDANCEûRANGEûANDûDREWûAûlNALûORDERû three days of the week were supported by
5 Natixis 21 4,647.69 4.2 BOOKûTHATûEXCEEDEDûõBNûTHEûLARGESTû ANOTHERûBIGûWEEKûOFûINmOWSûINTOûHIGH YIELDû
6 Credit Agricole 21 4,631.27 4.2 RECORDEDûFORûAû$UTCHû#04ûACCORDINGûTOû!".û FUNDSûWITHû53BNûPILEDûINTOûJUNKû
7 Commerzbank 20 4,536.92 4.1 AMRO analysts. bond funds in the reporting week through
8 ING 21 4,525.75 4.1 “The lack of supply [in covereds] is really Wednesday, according to Lipper data.
9 NatWest Markets 17 4,311.12 3.9 kicking in and redemptions are high in But the pace of the primary supply slowed
10 UBS 16 3,708.30 3.4 June. That book shows you how hot this on Thursday, with just two new deals
Total 129 109,567.31 MARKETûREALLYûISvûSAIDûAûBANKERûAWAYûFROMû emerging as the market sold off on concerns
Source: Refinitiv SDC code: J15a the trade. ABOUTûAûRESURGENCEûOFû#OVID ûCASESûASûWELLû

ASûTHEû&EDERALû2ESERVESûBLEAKûOUTLOOKûONû SAIDû3COTTû"UCHTAûHEADûOFûlXED INCOMEû NOTESûWHICHûWEREûTRADINGûATûAûYIELDûOFûû
the economy that will mean rates stay close strategy at Brean Capital, in a note to clients on Monday.
TOûZEROûTHROUGHûTOû on Monday. 4HOSEûOUTSTANDINGûSûTRADEDûASûLOWûASû
Technical factors are also at play after a “This has caused many fundamental ûINûLATEû-ARCHûBUTûHAVEûRALLIEDûASûAUTOû
RALLYûTHATûSAWûAVERAGEûHIGH YIELDûSPREADSû credit players to underperform their manufacturing and sales pick up.
ALMOSTûHALVEûFROMûBPûONû-ARCHûûTOû benchmarks, and may cause problems down The new notes are aimed at redeeming
550bp on June 5, according to the trader. THEûROADûASûINVESTORSûWHOûHADûANûUP IN THEûOUTSTANDINGûAMOUNTûONûITSûûû
“This week we saw the S&P 500 go quality bias will be forced to reach for yield notes.
positive on the year, and I think that was an and do not have the luxury of simply Prior to the crisis, American Axle was on a
awakening to a lot of people that the market ABSORBINGûLOSSESûSHOULDûTHEYûOCCURvû deleveraging push that is now on hold,
had gone a little too far given all of the CreditSights analysts said.
POTENTIALûRISKSû7EûSTILLûHAVEûTOûSEEû1û AUTO SUPPLIER AMERICAN AXLE Expense and capital expenditure
earnings and we know they will be really RAISES CASH FOR REFI reduction plans are now the priority.
BADvûSAIDûAûHIGH YIELDûBONDûTRADER h7EûLIKEûTHEû!8,ûCREDITûSTORYûALTHOUGHûTHATû
(IGH YIELDûSPREADSûSTARTEDûTOûWIDENûFROMû AMERICAN AXLE & MANUFACTURING raised ISûNOTûONEûOFûDE LEVERAGINGûRIGHTûNOWûBUTûONEû
Monday through to Thursday, moving from 53MûONû4UESDAYûTOûRElNANCEûEXISTINGû OFûSURVIVINGûDOWNCYCLEvûSAIDû#REDIT3IGHTSûINûAû
BPûTOûBPûOVERû4REASURIESûONû bonds, as the auto sector restarts report on Tuesday. “We underscore that last
Wednesday. manufacturing in a boost for component DOWNTURNûALSOû!8,ûSURVIVEDûDESPITEûAûLOTûOFû
Where the market goes from here depends suppliers. (volatility) and two of its largest customers (GM
a lot on how investors weigh up weak The transaction followed a rally in the ANDû#HRYSLER ûlLINGûFORûBANKRUPTCYv
fundamentals against strong technical factors. company’s outstanding bonds which Still, ratings agencies drew attention to
h9OUûCOULDûARGUEûWEûWEREûDUEûAûPULL tracked the reopening of the US economy THEûRISKûOFûAûSECONDûWAVEûOFû#OVID û
BACKvûSAIDû3TEVEû2EPOFFûTAXABLEûBONDû and resumption of car manufacturing. infections interrupting the recovery in car
portfolio manager at GW&K Investment !MERICANû!XLEûPRICEDûTHEû""nûRATEDû production or from an extended recession
Management. EIGHT YEARûNON CALLûTHREEûSENIORûUNSECUREDû putting more pressure on vehicle demand.
“There has been a lot of momentum and NOTESûATûûINSIDEûPRICEûTALKûOFûTHEû Indeed, the new American Axle notes
there’s a lot of people on the same side of ûAREA traded off on Thursday after a bleak
the boat now, but I would be surprised if we 4HEûlNALûCOUPONûOFFEREDûONLYûAûSLIGHTû ECONOMICûOUTLOOKûFROMûTHEû&EDERALû2ESERVEû
saw the same severity of that downturn in PICK UPûTOûTHEûlRMSûEXISTINGûûû on Wednesday.
-ARCHûJUSTûWITHûTHEû&EDûBEINGûTHEREv
/NûTOPûOFû&EDERALû2ESERVEûSUPPORTûANYû ALL US$ DENOMINATED HIGH-YIELD BONDS ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS
PULL BACKûINûSUPPLYûAMIDûSOFTERûFUNDINGû BOOKRUNNERS – 1/1/2020 TO DATE 1/1/2020 TO DATE
conditions would be another support for the Managing No of Total Share Managing No of Total Share
market, he said. bank or group issues US$(m) (%) bank or group issues €(m) (%)
“If issuance stops and people continue to 1 JP Morgan 149 18,463.84 10.2 1 JP Morgan 23 2,400.03 8.7
look for yield, the technicals will remain so 2 BofA Securities 146 17,922.90 9.9 2 Deutsche Bank 19 2,131.19 7.7
STRONGvûSAIDû2EPOFF 3 Citigroup 117 14,034.72 7.8 3 Citigroup 17 1,901.20 6.9
4 Barclays 110 13,435.38 7.4 4 BNP Paribas 18 1,773.81 6.4
OPTIMISM 5 Goldman Sachs 110 12,668.73 7.0 5 Barclays 16 1,643.71 6.0
Prior to last week, borrowers had been able 6 Morgan Stanley 76 10,897.28 6.0 6 Credit Suisse 12 1,510.63 5.5
to lock in cheap funding as optimistic 7 Wells Fargo 88 10,073.61 5.6 7 HSBC 18 1,400.73 5.1
investors drive credit spreads tighter 8 Deutsche Bank 89 8,775.35 4.9 8 BofA Securities 11 1,274.55 4.6
FOLLOWINGûTHEû&EDSûEFFORTSûTOûKEEPûRATESûLOWû 9 Credit Suisse 78 8,061.77 4.5 9 ING 13 1,247.05 4.5
and provide a backstop through its 10 RBC 53 5,633.67 3.1 10 Credit Agricole 9 1,180.65 4.3
secondary buying programme. Total 278 180,624.62 Total 53 27,524.21
h4HEûRALLYûOFûAûLOTûOFûLOW ENDûNAMESûHASû Including US domestics, Euro, foreign, globals. Excluding equity-related debt. Excluding equity-related debt.
been dazzling in recent weeks with a Source: Refinitiv SDC code: B5 Source: Refinitiv SDC code: B6
material and impressive quality spread
compression pattern very much in evidence ALL ASIAN HIGH-YIELD ISSUERS ALL EUROPEAN HIGH-YIELD ISSUERS
within US HY and overall not factoring in 1/1/2020 TO DATE 1/1/2020 TO DATE
MUCHûCHANCEûOFûBADûNEWSvûWROTEû Managing No of Total Share Managing No of Total Share
CreditSights analysts in a note on Sunday. bank or group issues US$(m) (%) bank or group issues US$(m) (%)
4HEûRISKIESTûENDûOFûTHEûHIGH YIELDûMARKETû 1 Citigroup 23 3,905.69 10.5
1 Credit Suisse 24 2,602.99 10.1
had been outperforming, with Triple C 2 JP Morgan 28 3,219.79 8.6
2 UBS 20 2,163.41 8.4
BONDSûDELIVERINGûOVERûûTOTALûRETURNSûINû 3 BofA Securities 8 1,704.13 6.6 3 Deutsche Bank 17 2,572.81 6.9
the past month as of Monday, compared 4 Goldman Sachs 12 1,444.22 5.6 4 BNP Paribas 21 2,449.48 6.6
WITHûûFORû$OUBLEû"ûCREDITSûACCORDINGûTOû 5 Haitong Secs 36 1,414.16 5.5 5 Barclays 18 2,409.62 6.5
ICE BofA data. 6 Tianfeng Securities 4 1,320.00 5.1 6 Credit Suisse 12 1,927.92 5.2
Part of this has been down to investors 7 Citic 23 1,299.33 5.0 7 BofA Securities 13 1,706.24 4.6
CHASINGûYIELDûINûAûRISK ONûENVIRONMENTûANDû 8 Standard Chartered 10 951.95 3.7 8 HSBC 18 1,563.65 4.2
ASû&EDERALû2ESERVEûSUPPORTûDRIVESûSPREADSû 9 Morgan Stanley 11 908.74 3.5 9 ING 12 1,535.69 4.1
tighter. 10 Guotai Junan Secs 22 900.26 3.5 10 Credit Agricole 8 1,462.98 3.9
“While helping to lower borrowing costs Total 64 25,859.28 Total 58 37,239.00
for issuers, this rally has caused risk to be Excluding equity-related debt. Excluding equity-related debt.
SEVERELYûMISPRICEDûINûTHEûCREDITûMARKETSvû Source: Refinitiv SDC code: B06d Source: Refinitiv SDC code: B06c

BONDS HIGH-YIELD
The notes were seen trading as low as When the exchange offer was announced take down a ton of Virgin notes ahead of the
97.50 on Thursday, according to ONû-AYûûTHEûSENIORûNOTESûWEREûTRADINGûASû /ûTRANSACTIONûANDûTHEûPOTENTIALûNEWû
MarketAxess. low as 55. But they have since climbed to ISSUANCEûTHEREv
Both Moody’s and S&P have negative over 70 in secondary trading, according to A second investor welcomed the recent
OUTLOOKSûONûTHEûlRMSû""nûUNSECUREDû MarketAxess. SPATEûOFû6-%$ûBONDSûSAYINGûTHATû%UROPEANû
ratings. $IAMONDû3PORTSûWARNEDûINVESTORSûINû-AYû HIGH YIELDûINVESTORSûAREûINûNEEDûOFûISSUANCEû
American Axle had a cash position of that it was considering alternatives that from large capital structures following a
53MûATûTHEûENDûOFûTHEûlRSTûQUARTERûANDû would strip collateral from secured prolonged drought in the primary market.
-OODYSûEXPECTSûITûTOûlNISHûTHEûYEARûWITHûAû bondholders if the exchange offer was h6-%$ûDEALSûHAVEûBEENûSUCKEDûUPûANDû
similar amount, as the substantial negative unsuccessful. HAVEûDONEûWELLûVERYûEASILYvûSAIDûTHEûSECONDû
CASHmOWûINûTHEûSECONDûQUARTERûISûOFFSETûBYû The company indicated it was considering investor. “There’s real demand for a bit of
the recovery in auto operations in the designating subsidiaries as “unrestricted YIELDûnûANDû6-%$ûISNTûEVENûALLûTHATûYIELDYv
second half of the year. SUBSIDIARIESvûWHICHûCOULDûBEûUSEDûTOûMOVEû )NVESTORSûINûTHEû2&.SûAREûFUNDAMENTALLYû
)NûAûREPORTûRELEASEDûONû4UESDAYû&ITCHûSAIDû collateral outside the reach of secured TAKINGû6-%$ûUNSECUREDûBONDûRISKû
that auto supplier earnings will have fallen bondholders and use it to raise new debt – a according to an investor presentation seen
to their lowest in the second quarter of move that was most commonly associated BYû)&2
ûBUTûWILLûGRADUALLYûIMPROVEûINûTHEûTHIRDû WITHû*#REWûINû 6-%$SûRECEIVABLEûlNANCINGûNOTESûRANKû
quarter. !NALYSTSûATûCREDITûRESEARCHûlRMû#OVENANTû junior to Virgin Media’s secured debt but are
Component sales in the US are expected Review said the company had the ability to structurally senior to its senior unsecured
TOûBEûDOWNûûINûTHEûSECONDûQUARTER do this, regardless of the success of the notes. Virgin Media is ultimately responsible
4HEûBIGGESTûIMPACTûONûFREEûCASHmOWûWILLû exchange offer, under the existing and for the payment of coupon and principal.
HAVEûBEENûINûTHEûlRSTûHALFûOFûûASûAûRESULTû proposed covenants. With this bond, Virgin Media will have
of weak earnings, but this should also RElNANCEDûALLûOFûITSûSENIORûUNSECUREDSûANDû
improve in the second half, the ratings ALLûOFûITSûRECEIVABLEûlNANCINGûBONDSû
agency said. EUROPE/MIDDLE EAST/ according to CreditSights analysts.
“Auto suppliers are cyclical businesses, AFRICA “Its next benchmark bonds do not
they’re capital intensive and they’re BECOMEûCALLABLEûUNTILû*ANUARYûûANDû
dependent on consumer buying power and VIRGIN MEDIA REFINANCES DEBT AHEAD management are not in a rush to bring the
SENTIMENTvûSAIDû3TEVEû2EPOFFûTAXABLEûBONDû OF O2 TIE-UP NEWûSUPPLYûRELATEDûTOûTHEû/5+û
portfolio manager at GW&K Investment recapitalisation. As such, after this deal, we
Management. VIRGIN MEDIAûHASûBEENûONûAûRElNANCINGûSPREEû expect Virgin to give the primary market a
“But as long as they’re not overly levered hitting the market four times in two weeks, BREAKvûWROTEûANALYSTS
and they can take advantage of capital as it looks to clean up its debt stack ahead of Now that all of Virgin’s senior notes have
markets when they can, pushing out the ITSûCOMBINATIONûWITHû/ been taken out, it can undertake a
maturity runway far enough, investors are The latest deal from the UK cable operator h0ERMITTEDû3TRUCTUREû2EORGANISATIONvûSAIDû
willing to believe that this will pass and WASûAûaM EQUIVALENTûEIGHT YEARûNON CALLû CreditSights.
STRESSûMAYûNOTûBEûACUTEv THREEûVENDORûlNANCINGûNOTESûSPLITûBETWEENû “This allows Virgin to release any and all
sterling and US dollars. of the guarantees of the senior notes and to
SINCLAIR DEBT SWAP FOR SPORTS Lead bookrunners Deutsche Bank (B&D) and grant a share pledge on the capital stock of
NETWORK BONDS FALLS FLAT Credit Suisse held calls with investors to THEûISSUERûANDûANYûAFlLIATEûISSUERvûANALYSTSû
market the bond on June 10. wrote.
An attempt by SINCLAIR BROADCAST GROUP to The sterling component was a tap of The move would bring the language of
ease the debt load on its regional sports 6-%$SûaMûû*ULYûSûISSUEDû Virgin’s senior notes in line with the other
network operator DIAMOND SPORTS was met JUSTûAûWEEKûEARLIERûONû*UNEû ,IBERTYûCABLE SILOSûANDûMAYûALSOûRELATEûTOû
with tepid demand from investors as a Meanwhile, the other tranche was the MANAGEMENTûWANTINGûAûSINGLE SILOûCAPITALû
debt exchange deadline passed on Tuesday COMPANYSûlRSTû2&.ûINû53ûDOLLARSû STRUCTUREûFORûTHEûNEWû6IRGIN /û
night. ACCORDINGûTOû)&2ûDATAû7HISPERSûFORûTHATû53û combination, said CreditSights.
(OLDERSûOFûJUSTû53MûOFûTHEûlRMSû dollar bond were heard by one US investor The UK cable and broadband company
ûûSENIORûNOTESûORûûOFû ATûn announced on May 7 a plan to merge with
outstanding, agreed to swap their bonds for Virgin landed the £400m sterling tap at MOBILEûNETWORKûOPERATORû/ûINûAûDEALûTHATûHASûAû
NEWûûSENIORûSECUREDûNOTESûDUEû 99.50, and the US$500m US dollar bond at COMBINEDûENTERPRISEûVALUEûINûEXCESSûOFûaBN
4HOSEûINVESTORSûWILLûRECEIVEû53MûINû û"OTHûTRANCHESûPRICEDûONû*UNEû Liberty Global and Telefonica, which own
face value of new notes and US$10m in cash. 0ROCEEDSûFROMûTHEûDEALûRATEDû"""û 6IRGINû-EDIAûANDû/ûRESPECTIVELYûAREû
4HATûLEAVESûAROUNDû53BNû -OODYS30&ITCH ûWILLûBEûUSEDûTOû COMBININGûTHEûBUSINESSESûINûAû ûJOINTû
outstanding on the senior notes, the RElNANCEûTHEûCOMPANYSûaMûRECEIVABLEû venture to take on the likes of BT and Sky.
company said on Thursday. lNANCINGûNOTESûDUEû The merger is expected to close in the
4HEûPOORûTAKE UPûALSOûFAILEDûTOûMEETûTHEû Some investors grumbled that they felt MIDDLEûOFû
consent threshold to strip the covenants oversaturated by Virgin issuance. Virgin Media started its run of issuance
FROMûTHEûS “To be honest, I’m not inclined to play – WITHûAû53MûûUNSECUREDû*ULYûSûINû
The exchange offer was seen by WEûHAVEûENOUGHû6IRGINûNOWvûSAIDûONEû THEû53ûDOLLARûMARKETûONû*UNEûûTOûRElNANCEû
CreditSights analysts as an attempt to take INVESTORûWHOûHADûBOUGHTû6IRGINSûõMû DOLLARûANDûEUROûBONDSûMATURINGûINû
advantage of the steep discounts on the YEARûNON CALLûlVEûBONDûTHATûCAMEûONû*UNEû )TûFOLLOWEDûUPûONû*UNEûûWITHûaMûINû
company’s bonds in the secondary market “It just seems ridiculous how often we’re .#ûVENDORûlNANCINGûNOTESûATûûUSEDû
as it tries to deal with the shutdown of seeing them in the market over the past TOûRElNANCEû6IRGINû-EDIASûaMûû
sports broadcasting revenues. couple of weeks. It gets harder and harder to 2&.SûDUEû!PRILû

!NDûONû*UNEûûITûLANDEDûTHEûõMû h4HEYREûUSINGûTHISûWINDOWûTOûRElNANCEû Proceeds from the bond will redeem all
YEARûNON CALLûlVEûBONDûANDûAû53MûTAPû THEIRûOUTSTANDINGûCAPûSTRUCTUREvûHEûSAID OFûTHEûCOMPANYSûûEUROûNOTESûDUEû
OFûTHEûû*ULYûS “Market conditions are very constructive. /CTOBERûûCALLABLEûINû*ULYûANDûALSOûAû
Proceeds from those two bonds were used The timing of this deal is based on the portion of Iqvia’s revolving credit facility
TOûRElNANCEû6IRGINû-EDIASûCALLABLEûû53û recent rally, which followed the ECB’s balance.
DOLLARûSENIORûNOTESûDUEû*ANUARYûûû ANNOUNCEMENTûTHATûITûWASûINCREASINGû0%00v Iqvia priced its €711m bond on
STERLINGûSENIORûNOTESûDUEû&EBRUARYûû The ECB said on June 4 it would up its 7EDNESDAYûATûû0RICEûTALKûWASûTHEûû
û53ûDOLLARûSENIORûNOTESûDUEû&EBRUARYû Pandemic Emergency Purchase Programme area.
ûANDûITSûû53ûDOLLARûSENIORûNOTESûDUEû BYûõBNûTOûõTRN Virgin Media and Swiss packaging group
&EBRUARYû “Issuers like this have the luxury of SIG Combibloc both announced deals on
TIMINGûTHESEûTHINGSvûSAIDûAûSECONDûINVESTOR -ONDAYû*UNEûûTOûRElNANCEûPARTûOFûTHEIRû
SIG COMBIBLOC REPLACES ENTIRE “Once these guys have tested the waters it capital structures. Later on in the week,
DEBT STACK will be time for slightly riskier, more Virgin Media returned to the euro bond
NUANCEDûCREDITSûTOûCOMEûTOûMARKETv MARKETûWITHûAûDUAL CURRENCYûRECEIVABLESû
Crossover credit SIG COMBIBLOC found strong Similar to recent crossover deals, SIG’s lNANCINGûTRADE
DEMANDûFORûITSûTWO PARTûTRADEûONû4HURSDAYû bond will probably attract plenty of One buysider said he wanted to see more
paving the way for other, riskier credits to come INVESTMENT GRADEûINVESTORSûSAIDûTHEûSECONDû borrowers with large capital stacks coming
TOûTHEûEUROûHIGH YIELDûMARKETûSAIDûINVESTORS BANKERû7HILEûTHEûBONDSûAREûTAGGEDûNON CALLû TOûTHEû%UROPEANûHIGH YIELDûPRIMARYûMARKETû
!CCOUNTSûPLACEDûORDERSûOFûALMOSTûõBNûFORû LIFEûAûHIGH YIELDûEXPRESSIONûTHEûDOCUMENTSû to loosen up what has been a chronically
the Swiss packaging company’s €1bn deal, are IG style, he said. illiquid secondary market.
WHICHûWASûSPLITûBETWEENûNON CALLûLIFEûTHREEû h4HEûDEALûWILLûlTûWELLûINTOûBOTHû)'ûANDû(9û Lack of liquidity and the sheer expense of
ANDûlVE YEARûNOTES POCKETSvûSAIDûTHEûSECONDûBANKER transacting in secondary has particularly
“SIG is a very good credit and it’s more !VERAGEûYIELDSûFORû$OUBLEû"ûCREDITSûHADû HURTûACTIVEûMANAGERSûINûHIGH YIELDûASûTHEû
LOWû4RIPLEû"ûTHANûMIDû$OUBLEû"ûINûMYû COMPRESSEDûTOûAROUNDûûBYû&RIDAYûDOWNû market recovers, said a second investor.
OPINIONvûSAIDûONEûINVESTOR FROMûMID -ARCHûHIGHSûINûEXCESSûOFû “The pain trade is watching the most
“Pricing is okay but it leaves a very Investors have been watching the rally BEATEN UPûPARTûOFûTHEûMARKETûCONTINUEûTOû
SLENDERûNEWûISSUEûCONCESSIONv with some trepidation. DRIFTûUPvûSAIDûTHEûSECONDûINVESTOR
The buyside has shown keen interest for “I’m wary around primary because issuers !VERAGEûYIELDSûHADûRECOVEREDûTOûûLASTû
packaging names. SIG’s outing follows peer coming to the market after such a fast rally WEEKûDOWNûFROMûAûPEAKûOFûûINû-ARCHû
Ardagh, which has been in the market on will be hoping to print a lot tighter than according to Eikon data. In secondary, bonds
lVEûSEPARATEûOCCASIONSûnûINûDOLLARSûANDûEUROSû they would have been able to a couple of that were previously trading below a cash
– since the start of April. WEEKSûAGOvûSAIDûTHEûSECONDûINVESTOR PRICEûOFûûHAVEûJUMPEDûnûPOINTSûSAIDû
-ARKETINGûSTARTEDûATûTHEûûAREAûANDûû h)ûTHINKû1ûWILLûBEûAûBITûOFûAûWAKE UPû THEûlRSTûINVESTOR
area, ahead of guidance for an expected €400m call for investors in terms of seeing what “Bonds have started to move up in
THREE YEARûATûnûANDûANûEXPECTEDû sort of shape these companies are in, and vacuums on very thin liquidity. It’s just not
õMûlVE YEARûATûn what the outlook is given how weak THATûEASYûTOûBUYûINûSECONDARYvûSAIDûTHEûlRSTû
4HEûSIZESûWEREûLATERûRESHUFmEDûWITHû3)'û economic prospects are for the investor.
LANDINGûõMûTHREESûATûûANDûõMû FORESEEABLEûFUTUREv h)TûISûREmECTIVEûOFûTHEûENDEMICûILLIQUIDITYû
lVESûATû A third investor called the rally OFûTHEû%UROPEANûHIGH YIELDûMARKETv
#OMPARABLESûINCLUDEDû$OUBLEû"û hINCREDIBLEvûBUTûNOTEDûTHATûITûHADûNOTû Iqvia has €4.5bn in bonds currently
PACKAGINGûCREDITSû"ERRYû'LOBALûANDû3MURlTû reached all corners of the market. outstanding, according to Eikon data.
Kappa, the investor said. h-OREûTHANûAûFEWûCREDITSûAREûBACKûTOûû “Iqvia is a credit that we like and it’s a
3MURlTû+APPAûHASûAûû&EBRUARYû tights. Meanwhile there are a few that NICEûCREDITûTOûOWNû4HEYREûRElNANCINGûSOMEû
ûWHICHûWASûSEENûQUOTEDûATûû HAVENTûBOUNCEDûBACKûATûALLvûHEûSAIDû bonds, and [the way those bonds have
according to MarketAxess data. “Maybe the pause in the equity market rally behaved] is a pretty easy story, which says
)TûALSOûHASûû*ANUARYûSûBIDûATû MIGHTûCAUSEûAûBITûOFûRATIONALISATIONv SOMETHINGûABOUTûTHEûMARKETvûSAIDûTHEûlRSTû
Global coordinators and bookrunners investor.
Goldman Sachs "$ , UBS and UniCredit EUROPEAN HIGH-YIELD PRIMARY CREAKS
started virtual investor meetings on Monday OPEN ON MARKET EXUBERANCE PARTIAL RECOVERY
*UNEûûCredit Suisse was a bookrunner. Junk bonds from issuers relatively
h)ûWOULDûCALLûITûAûRElNANCINGûEXERCISEûONû As markets rally across the world on hopes DECOUPLEDûFROMû#OVID ûRELATEDûSHUTDOWNSû
the balance sheet – proceeds from this issue that economies will start to reopen, the have seen a partial recovery from the
together with a new term loan facility will OPTIMISMûHASûlNALLYûREACHEDûTHEûSHORESûOFû INDISCRIMINATEûSELL OFFûSEENûINû-ARCH
RElNANCEûEXISTINGûTERMûLOANûFACILITIESûANDûBEû THEû%UROPEANûHIGH YIELDûMARKET )NûMID -ARCHû)QVIASûû/CTOBERûSû
USEDûFORûGENERALûCORPORATEûPURPOSESvûSAIDûAû &OLLOWINGûONLYûAûTRICKLEûOFûDEALSûINû WEREûSEENûBIDûATûAûYIELDûOFûûANDûAûPRICEû
banker familiar with the deal. primary over the past three months, US OFûû4HEûSAMEûBONDSûWEREûSEENûPRE
3)'û#OMBIBLOCûISûRElNANCINGûITSûENTIREû healthcare company IQVIA on Tuesday ANNOUNCEMENTûONû-ONDAYûATûûORû
capital structure. The notes come alongside became the third company in two days to )QVIAûALSOûHASûAûõMûû*ANUARYûû
AûPROPOSEDûõMûTERMûLOANûANDûõMû ANNOUNCEûAûEUROûHIGH YIELDûBONDûTHATûWILLû EUROûNOTEûSEENûBIDûPRE ANNOUNCEMENTûATû
revolving bank credit facility. RElNANCEûUPCOMINGûMATURITIES û$URINGû-ARCHSûSELL OFFûTHOSEûBONDSû
SIG last tapped the public bond market in h&INALLYûTHEû%UROPEANûISSUERSûAREûCOMINGû WEREûSPOTTEDûATû
ûACCORDINGûTOû)&2ûDATAû!FTERûGOINGû OUTûOFûHIDINGvûSAIDûAûHIGH YIELDûANALYST “Iqvia is a credit that is entirely
PUBLICûINûûTHEûCOMPANYûWANTEDûTOûSHIFTû Iqvia held investor calls on Tuesday for a independent of what is going on with
from a secured to an unsecured capital 53M EQUIVALENTûûNON CALLûTHREEû ;#OVID =ûANDûITSûEQUITYûVALUEûISûVIRTUALLYû
structure, said a second banker. senior unsecured bond. BACKûATûWHEREûITûWASvûSAIDûTHEûlRSTûINVESTOR

BONDS HIGH-YIELD
Iqvia’s share price was last week at ACCORDINGûTOûBANKERSûSPEAKINGûTOû)&2ûATûTHEû )Nû&EBRUARYûûTHEû%UROPEANû

53ûHAVINGûFALLENûASûLOWûASû53ûINû time. Commission launched an investigation to
March. It had been trading around US$160 “We are considering issuing a green bond EXPLOREûPOTENTIALûANTI COMPETITIVEû
INû&EBRUARYûBEFOREûTHEûGLOBALûSELL OFF now because we recently launched an behaviour in the Norwegian salmon
“Look at where the bonds are trading now ambitious strategy for sustainable growth industry.
in comparison with March. That’s TOWARDSûûANDûWOULDûLIKEûTOûHAVEûOPTIONSû Grieg Seafood and Mowi are two of the
fundamentally why this issuer is going to FORûlNANCINGûTHEûINVESTMENTSvûSAIDû'RIEGû companies under investigation.
market – especially while the picture is still 3EAFOODû#&/û!TLEû(ARALDû3ANDTORV The investigation won’t necessarily affect
PRETTYûGOODvûSAIDûTHEûlRSTûINVESTOR “There are few such bonds in the seafood the green nature of the bonds involved, and
)QVIAûCARRIESûAû"AûRATINGûFROMû-OODYSû industry, so it will be an opportunity to Mowi’s green bond was comfortably
and a BB rating from S&P. DIVERSIFYûPORTFOLIOSv oversubscribed. But it could be taken into
Moody’s analysts noted that ESG Grieg has a second opinion issued by the consideration by investors with an ESG
considerations for the credit include the climate research institution Cicero, which element to their investing.
COMPANYSûAGGRESSIVEûlNANCIALûPOLICYû scored the green bond framework “medium One green bond investor, who said he
which they called a key governance risk. GREENvûSAIDû3ANDTORV wasn’t familiar with either Grieg Seafood or
h)QVIAûHASûMAINTAINEDûHIGHûlNANCIALû Sandtorv said the company has multiple Mowi, said he would “absolutely take into
LEVERAGEûPRIMARILYûTHROUGHûDEBT FUNDINGû projects planned that aim to reduce the ACCOUNTûANYûMATERIALû%3' RELATEDûCONCERNSû
SHAREûREPURCHASESvûWROTEûANALYSTS environmental impact from its operations in our diligence whether it was a green bond
Moody’s added that it expects the pace of and value chain, and to improve the health ORûNOTv
share repurchases and acquisitions will ANDûWELFAREûOFûITSûlSH “We would be very unlikely to invest in a
moderate compared with prior years and the “This is an ethical responsibility, but it is also company that was being formally
COMPANYSûLEVERAGEûOFûûTIMESûDEBT%BITDAû KEYûTOûREACHûOURûOPERATIONALûANDûlNANCIALû INVESTIGATEDûFORûPRICEûlXINGûASûAûDIRECTû
will decline modestly over the next few years. TARGETSvûHEûSAIDûh7EûFEELûTHATûTHESEûPROJECTSûlTû REmECTIONûOFûWEAKûGOVERNANCEvûHEûSAID
WELLûWITHINûAûGREENûBONDûFRAMEWORKv Based on the EU investigation, US
ECB FILLIP The results of the projects will in turn competition authorities launched their
4HEû%UROPEANûHIGH YIELDûMARKETûGOTûANû IMPROVEû'RIEGSûOPERATIONALûANDûlNANCIALû OWNûINVESTIGATIONûINû.OVEMBERûANDûCLASS
ADDITIONALûTAIL WINDûONû4UESDAYûAFTERû performance, said Sandtorv. ACTIONûLAWSUITSûHAVEûBEENûlLEDûBYûSOMEû
European Central Bank policymaker Olli One example of these projects includes customers.
Rehn was quoted saying that he had an POST SMOLTûFACILITIESûWITHûRECIRCULATINGû h'RIEGû3EAFOODûISûNOTûAWAREûOFûANYûANTI
hOPENûMINDvûINûTHEûDEBATEûOVERûWHETHERûTHEû TECHNOLOGYû4HATûINVOLVESûKEEPINGûTHEûlSHû competitive behaviour, not in Norway, the
bank should buy corporate bonds that lose LONGERûINûLAND BASEDûFACILITIESûANDûREDUCINGû EU, the US nor in any other countries where
THEIRûINVESTMENT GRADEûRATINGûINûTHEûCURRENTû time in the sea, Sandtorv said. WEûOPERATEvûSAIDûAûSPOKESPERSONûWHOû
crisis, although he said that there has been 4HEûIDEAûISûTHATûTHEûlSHûWILLûBEûMOREûROBUSTû CONlRMEDûTHEûINVESTIGATIONS
no serious discussion over the issue. when they enter the sea phase – because they “We are fully collaborating with
h#ONCERNINGûPOSSIBLEûPURCHASESûOFûHIGH would be less exposed to diseases, sea lice and European and American authorities in this
yield bonds, this is something that one can harmful plankton – and will increase survival matter, and are following up the lawsuits
contemplate and I look at the various rates. The aim of the technology is to decrease LEGALLYv
OPTIONSûWITHûANûOPENûMINDvû2EHNûSAID THEûENVIRONMENTALûFOOTPRINTûOFûTHEûlSHûANDû Mowi did not immediately respond to a
“But we have not had serious discussions also the company’s cost, said Sandtorv. request for comment.
ONûTHISûANDû)ûWOULDûRATHERûlRSTûHAVEûOURû The company has other projects on the go
internal discussion on this matter before THATûAIMûTOûIMPROVEûlSHûHEALTHûANDûWELFAREû ICELAND FOODS REASSURES
COMMENTINGûONûITûINûPUBLICv and reduce its carbon footprint. BONDHOLDERS AFTER BUYOUT
h4HESEûPROJECTSûAREûWIN WINûFORûTHEû
GRIEG SEAFOOD DEEPENS GREEN ENVIRONMENTûlSHûWELFAREûANDûCOMPANYû ICELAND FOODS‘ management looked to
BOND POOL PROlTSvûSAIDû3ANDTORV reassure bondholders last week that the
“If we decide to issue the green bond, it company will be able to repay its
GRIEG SEAFOOD is poised to add another will be an opportunity for investors who mOATING RATEûBONDSûDUEû*ULYûAFTERûBUYINGû
building block to the nascent green bond care about the environment, animal welfare out South African investment company
aquaculture sector, despite a European ANDûPROlTSûCOMBINEDv Brait.
#OMMISSIONûANTI COMPETITIVEûBEHAVIOURû DNB Markets and Nordea are bookrunners &OUNDERûANDûEXECUTIVEûCHAIRMANû-ALCOLMû
investigation hanging over the company. and green bond advisers. Investor calls Walker and chief executive Tarsem
Grieg’s proposed Norwegian krone senior BEGANûONû&RIDAY $HALIWALûSAIDûONû-ONDAYûTHATûTHEYûWILLûPAYû
UNSECUREDûlVE YEARûNOTEûOFFERINGûWOULDû Some of the deal’s features, such as the £115m to acquire Brait’s stake in the
make it only the second borrower in the CALLûPERIODûANDûWHETHERûITûWILLûBEûINûlXEDûORû business, giving them and related parties
aquaculture sector to issue green bonds, mOATING RATEûFORMATûAREûSTILLûUNDERû sole ownership of Iceland via a newly
ACCORDINGûTOû)&2ûDATA consideration. established company.
It will follow fellow Norwegian seafood While the Nordic green bond market is The £115m will be paid in three cash
producer Mowi, which joined the ranks of dominated by Swedish debt, neighbouring instalments until July.
corporate borrowers issuing green bonds countries are gradually catching up. h)CELANDû&OODSûISûABLEûTOûCOMPLETEûTHISû
that burnish their ESG credentials. 4HEûNON 3WEDISHû.ORDICûSUPPLYûOFûGREENû transaction through a distribution made
-OWIûPRICEDûAûõMûlVE YEARûNON CALLû BONDSûINCREASEDûBYûMOREûTHANûûLASTûYEARû entirely within the available restricted
THREEûUNRATEDûmOATING RATEûTRANSACTIONûINû according to market players. payment capacity, while also leaving
January that, with demand of over €700m, But as with all new or expanding sectors enough capacity for deferred payments
OPENEDûTHEûGATESûFORûlSHûFARMINGûCOMPANIESû of the market, there have been some WHENûTHEYûFALLûDUEvûSAIDûAûSTATEMENTûSEENû
looking to tap the green bond market, hiccups. BYû)&2

3OMEûûOFû)CELANDûWASûOWNEDûBYû on to devalue mortgage collateral in the The deals are DUBLIN BAY SECURITIES 2018-1
*OHANNESBURG LISTEDû"RAITûWITHûTHEûBALANCEû future. #LASSû#ûRATEDû"AA ûROUNDSTONE SECURITIES
held by Malcolm Walker, who founded the Last month the ECB set out a list of NO. 1û#LASSESû#û$ûANDû%ûRATEDû!û"AAûANDû
supermarket group in 1970, his son and supervisory expectations for European " ûDILOSK RMBS NO.2û#LASSESû#ûANDû$ûRATEDû
joint managing director, Richard Walker, BANKSûASKINGûTHEMûTOûIDENTIFYûCLIMATE !ûANDû"AA ûANDûEUROPEAN RESIDENTIAL LOAN
and other management. related and environmental risks and SECURITISATION 2019-PL1û#LASSESû#û$ûANDû%û
Brait, under pressure to reduce debt, said incorporate them in their existing risk RATEDû!û"AAûANDû"A
in November it planned to sell its stakes in management framework. Many of the loans in these deals have
several UK companies, including Iceland, 4HEû%#"ûREPORTûMENTIONSûONEûlRMûTHATû restructuring histories, and many were
WITHINûlVEûYEARS took the average energy label of its originated at the peak of the Irish house
)CELANDû ûRATEDû""û ûHASûTHREEûNOTESû mortgage portfolios into account. And it price bubble.
ISSUEDûBYûSUBSIDIARYû)CELANDû"ONDCOûaMû gives the example of another institution h$EALSûWITHûLOANSûORIGINATEDûBEFOREûû
INûû*ULYûSûaMûû-ARCHû that offers retail borrowers better mortgage FEATUREûBORROWERSûWHOûWEREûUNDERûlNANCIALû
SûANDûaMûINûû*ULYûûmOATING RATESûWHENûLENDINGûAGAINSTûMOREûENERGY strain during the crisis and still may not
RATEûBONDSûACCORDINGûTOû2ElNITIVû%IKONû EFlCIENTûPROPERTIES HAVEûFULLYûRECOVEREDvû-OODYSûSAID
data. Moody’s expects building regulations It expects rising unemployment to
h4HEûMANAGEMENTûOFû)CELANDû&OODSû INVOLVINGûENERGYûEFlCIENCYûTOûBECOMEû weaken deal performance.
wishes to reassure the holders of the notes increasingly strict, while it says climate “The current recession will likely lead to a
issued by Iceland Bondco plc about change means physical risks to property, second wave of restructurings, but previous
AFFORDABILITYvûSAIDûTHEûCOMPANYûSTATEMENT SUCHûASûmOODINGûAREûLIKELYûTOûINCREASEûOVERû experience shows that these measures do
h)CELANDû&OODSûHASûAûTRACKûRECORDûOFûCASHû time too. NOTûALWAYSûPREVENTûDELINQUENCIESv
generation, and through diligent cash )TûALSOûNOTESûTHATûlRMSûBRINGINGû2-"3û The four deals all closed less than two
management, combined with a reduced with the EU’s simple, transparent and years ago, meaning they have had limited
capital expenditure programme (while not standardised securitisation label will need to time to build up extra credit enhancement
compromising its store opening plans), its make available information related to the TOûHELPûOFFSETû#OVID ûSTRESSESû
LEVERAGEûRATIOûFOLLOWINGûTHEûlRSTûPAYMENTûOFû environmental performance of the $ELINQUENCIESûBEGANûRISINGûSINCEûCLOSINGû
this transaction is below the ratio as at underlying mortgages. -OODYSûSAIDûWITHû$ILOSKûûTHEûMOSTû
-ARCHûûûANDûBELOWûTHEûRATIOûASûATûTHEû PRONOUNCEDûITûREPORTEDûûOFûLOANSûINû
SAMEûPOINTûûMONTHSûAGOûWHILEûITSûCASHû MOODY’S EYES GROWING COVID STRESSES, arrears of 90 days or more, compared with
balances are in excess of £140m, which PUTS FOUR IRISH RMBS ON REVIEW ûONEûYEARûAGO
LEAVESûSUFlCIENTûHEADROOMûTOûREPAYûTHEû One of the four RMBS, European
aMû&2.ûREDEMPTIONûDUEûONû*UNEûû 5+ûNON CONFORMINGû2-"3ûDELINQUENCIESû 2ESIDENTIALû,OANû3ECURITISATIONû 0,ûISû
v REPORTEDûINû-AYûROSEûûANDûAREûUPûBYû BACKEDûBYûPERFORMINGûANDûRE PERFORMINGû
)CELANDSûaMû2#&ûFACILITYûREMAINSû MOREûTHANûûACROSSûALLû%UROPEANû2-"3û loans bought and securitised by Lone Star.
undrawn. The statement said that a loan has Moody’s said on Tuesday, comparing data Last week Moody’s acted on two other
BEENûESTABLISHEDûFROMû)CELANDû&OODSûTOûTHEû WITHûTHEûlRSTûFOURûMONTHSûOFûTHEûYEAR ,ONEû3TARûDEALSûBOTHûBACKEDûBYûNON
NewCo to fund the payment. But investors will need to look beyond performing Irish mortgages.
“We view the acquisition somewhat defaults and delinquencies when assessing They are EUROPEAN RESIDENTIAL LOAN
negatively, as it will increase net leverage at deal performance in the coming months. SECURITISATION 2019-NPL1 and EUROPEAN
)CELANDû&OODSûWHICHûISûTOûFUNDûTHEû “As a result of payment moratoriums, RESIDENTIAL LOAN SECURITISATION 2019-NPL2.
acquisition through distributions from the metrics that assess the level of portfolio -OODYSûPUTûTHEûlRSTûDEALSû#LASSû"ûANDû#LASSû
RESTRICTEDûGROUP vû,UCRORû!NALYTICSûANALYSTSû INTERESTûANDûPRINCIPALûCASHmOWSûHAVEû #ûRATEDû"AAûANDû"ûUNDERûREVIEWûFORû
wrote on Tuesday. become more reliable performance possible downgrade.
Iceland’s management will present its indicators than traditional metrics like And it did the same for the second deal’s
FULL YEARûRESULTSûONû*UNEû DEFAULTSûANDûDELINQUENCIESvûSAIDû!NTHONYû #LASSESû!ûTOû#ûWHICHûAREûRATEDû!û"AAûANDû
!Nû)CELANDû&OODSûSPOKESMANûDECLINEDûTOû 0ARRYûSENIORûVICE PRESIDENTûATû-OODYS "
provide further comment. Parry said interest and scheduled In the same rating action, Moody’s also
principal receipts showed small declines acted on Abanca’s Spanish NPL
across all sectors, although excess spread securitisation PROSIL ACQUISITION, putting its
remained healthy and reserve funds were "AAû#LASSû!ûUNDERûREVIEWûFORûPOSSIBLEû
largely fully funded. downgrade.
STRUCTURED FINANCE 4HEREûWASûAûSHARPûDECLINEûINûPRE
payments, with May investor reports
SHOWINGû!"3ûDEALSûRECEIVEDûûLESSû EMEA ABS
EMEA MBS PRINCIPALûCOMPAREDûWITHûTHEûlRSTûFOURû
months of the year. BBVA PRINTS SPANISH SRT AUTO ABS
RMBS, COVEREDS TO BENEFIT FROM ECB 4HATûlGUREûROSEûTOûûFORû5+ûAUTOû!"3û
CLIMATE CHANGE GUIDE – MOODY’S which have been particularly affected as the BBVAûCAMEûTOûMARKETûLASTûWEEKûWITHûITSûlRSTû
lockdown forced dealerships to close. PUBLICûTRANSACTIONûSINCEûûAûSIGNIlCANTû
A draft guide from the ECB on climate change &ORû%UROPEANû2-"3ûINûGENERALûPRE risk transfer trade backed by a €1.1bn
RISKSûWILLûBENElTû2-"3ûANDûCOVEREDûBONDSû PAYMENTSûWEREûDOWNûûINû-AY portfolio of Spanish auto loans.
because it will force banks to manage and Moody’s most recent rating action in the Most of the capital structure for BBVA
disclose those risks, Moody’s said last week. sector involved four Irish RMBS backed by CONSUMER AUTO 2020-1ûWASûPRE PLACEDûBUTûAû
Such proactive management should in legacy mortgages, with nine tranches put on õMûPORTIONûOFûTHEû#LASSû!ûWASûPUBLICLYû
turn reduce the chance of those risks going review for downgrade. marketed to investors.

STRUCTURED FINANCE
Arranger and sole lead Deutsche Bank !NDûITûISûFARûINSIDEûTHEûBPûSPREADûFROMû BBVA has not announced its rationale for
PRICEDûTHATû#LASSû!ûATûTHREE MONTHû%URIBORû $UTCHûAUTOûLEASEû!"3û"UMPERû.,û ûWHICHû THEûTRADEû"UTûITSû1ûRESULTSûPRESENTATIONû
PLUSûBPûAFTERûBPûAREAû)04SûONû was priced by LeasePlan one week earlier, but reported CET1 fell by 90bp over the previous
Wednesday followed by 75bp–77bp (WPIR) its residual value component meant it was not three months, something an SRT
guidance on Thursday morning. eligible for the ECB’s ABS Purchase Programme. securitisation could help improve.
4HEûõMûSENIORûTRANCHEûRATEDû!A ""6!SûDEALûWASûELIGIBLEûANDûTHEûTELL TALEû 2EGULATORYûCHANGESûMEANûITSûû#%4û
!!!!û-OODYS30$"23 ûANDûWITHûAû ûOFlCIALûINSTITUTIONûINVOLVEMENTû REQUIREMENTûISûNOWûINûFACTûLOWERûATûû
year average life, was sold to 17 separate probably indicates central bank buying. In FROMûûPREVIOUSLYû4HEûCURRENTûû
accounts, including protected orders. turn, the 45bp differential between its Class CET1 level puts it at the bottom of the
4HEûõMûPORTIONûTHATûWASûSOLDûAWAYû A and LeasePlan’s gives some indication of BPnBPûBUFFERûITûISûSEEKINGûTOû
FROMûPROTECTEDûORDERSûWASûûTIMESûCOVEREDû the strong technical support that ECB maintain over the minimum required.
ATûTHEûlNALûSPREADûANDûWENTûTOûOFlCIALû eligibility can provide. On Thursday, just as the new issue was
INSTITUTIONû ûBANKûTREASURYû ûASSETû Two years ago BBVA sold a similar being priced, Moody’s put three tranches
MANAGERû ûANDûOTHERû ûINVESTORSû transaction called BBVA CONSUMER AUTO 2018-1, FROMûTHATûû""6!ûDEALûONûREVIEWûFORû
*URISDICTIONSûWEREû3PAINû û&RANCEû û selling only mezzanine and junior notes. DOWNGRADEûACTINGûONû#LASSESû#û$ûANDû%û
"ENELUXû ûANDû5+û Two years ago that was enough to get capital WHICHûITûRATESû"AAû"AûANDû"
The 75bp spread compares with the 40bp RELIEFûBUTûSIGNIlCANTûRISKûTRANSFERû Moody’s said its rating action was
achieved last month by two German auto requirements have since changed and all prompted by expected economic disruption
DEALSûFROMû"-7ûANDû-ERCEDES "ENZ tranches need to be placed. caused by the coronavirus outbreak.
NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 12/6/2020

Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
AXIS 2020-1 US$104.932 1.77 1.680 Keybanc Aaa/NR/NR ABS
AXIS 2020-1 US$15.279 3.00 2.500 Keybanc Aa1/NR/NR ABS
AXIS 2020-1 US$13.291 3.33 3.060 Keybanc Aa3/NR/NR ABS
AXIS 2020-1 US$17.266 3.58 5.040 Keybanc NR/NR/NR ABS
BBVA Consumer Auto 2020-1 €951.5 3.9 3mE+75bp Deutsche Bank Aa1/AA/NR ABS
BBVA Consumer Auto 2020-1 €27.5 3.9 3mE+120bp Deutsche Bank A1/A+/NR ABS
BBVA Consumer Auto 2020-1 €33 3.9 3mE+200bp Deutsche Bank A2/A-/NR ABS
BBVA Consumer Auto 2020-1 €33 3.9 3mE+300bp Deutsche Bank Baa3/BB+/NR ABS
BBVA Consumer Auto 2020-1 €22 3.9 3mE+675bp Deutsche Bank Ba1/B+/NR ABS
BBVA Consumer Auto 2020-1 €33 3.9 3mE+1100bp Deutsche Bank NR/NR/NR ABS
BBVA Consumer Auto 2020-1 €5.5 4.1 3mE+1500bp Deutsche Bank NR/NR/NR ABS
DRIVE 2020-2 US$109 0.12 0.324 JP Morgan/BMO/Santander/Societe Generale P1/A1+/NR ABS
DRIVE 2020-2 US$275 0.61 0.855 JP Morgan/BMO/Santander/Societe Generale Aaa/AAA/NR ABS
DRIVE 2020-2 US$65 0.61 1mUSL+53bp JP Morgan/BMO/Santander/Societe Generale Aaa/AAA/NR ABS
DRIVE 2020-2 US$129.52 1.51 0.830 JP Morgan/BMO/Santander/Societe Generale Aaa/AAA/NR ABS
DRIVE 2020-2 US$135.42 2.13 1.420 JP Morgan/BMO/Santander/Societe Generale Aa1/AA/NR ABS
DRIVE 2020-2 US$128.43 2.83 2.280 JP Morgan/BMO/Santander/Societe Generale A2/A/NR ABS
DRIVE 2020-2 US$100.45 3.53 3.050 JP Morgan/BMO/Santander/Societe Generale Baa3/BBB/NR ABS
Freddie Mac Series K-1515 US$105.800 9.64 1.433 JP Morgan/PNC NR/NR/NR CMBS
GMALT 2020-2 US$128 0.24 0.28 Barclays/Mizuho/Deutsche Bank/Societe Generale P1/A1+/NR ABS
GMALT 2020-2 US$400 1.09 0.71 Barclays/Mizuho/Deutsche Bank/Societe Generale Aaa/AAA/NR ABS
GMALT 2020-2 US$60 1.09 1mUSL+40bp Barclays/Mizuho/Deutsche Bank/Societe Generale Aaa/AAA/NR ABS
GMALT 2020-2 US$429 1.96 .800 Barclays/Mizuho/Deutsche Bank/Societe Generale Aaa/AAA/NR ABS
GMALT 2020-2 US$90.14 2.40 1.010 Barclays/Mizuho/Deutsche Bank/Societe Generale Aaa/AAA/NR ABS
GMALT 2020-2 US$59.76 2.56 1.560 Barclays/Mizuho/Deutsche Bank/Societe Generale Aa1/AA+/NR ABS
GMALT 2020-2 US$55.63 2.69 2.560 Barclays/Mizuho/Deutsche Bank/Societe Generale Aa3/A+/NR ABS
GMALT 2020-2 US$34.34 2.80 3.210 Barclays/Mizuho/Deutsche Bank/Societe Generale A3/A/NR ABS
MEFA 2020-A US$198.08 3.87 2.30 RBC CM NR/AAA/NR ABS
MEFA 2020-A US$13.20 9.77 3.76 RBC CM NR/AA/NR ABS
Pepper Residential Sec Tr 26 A$160 0.6 1mBBSW+105bp CBA/Maquarie/NAB/Standard Chartered/Westpac Aaa/AAA/NR RMBS
Pepper Residential Sec Tr 26 A$330 3.10 1mBBSW+180bp CBA/Maquarie/NAB/Standard Chartered/Westpac Aaa/AAA/NR RMBS
Pepper Residential Sec Tr 26 A$108.5 3.10 1mBBSW+240bp CBA/Maquarie/NAB/Standard Chartered/Westpac Aaa/AAA/NR RMBS
Pepper Residential Sec Tr 26 A$38.5 4.10 1mBBSW+310bp CBA/Maquarie/NAB/Standard Chartered/Westpac NR/AA/NR RMBS
Pepper Residential Sec Tr 26 A$21 4.10 1mBBSW+410bp CBA/Maquarie/NAB/Standard Chartered/Westpac NR/A/NR RMBS
Pepper Residential Sec Tr 26 A$15.4 4.10 1mBBSW+535bp CBA/Maquarie/NAB/Standard Chartered/Westpac NR/BBB/NR RMBS
Pret 2020-Npl2 US$165 2.00 3.721 Credit Suisse NR/NR/NR RMBS
Pret 2020-Npl2 US$17 2.96 6.170 Credit Suisse NR/NR/NR RMBS

)TûSAYSûTHEûûPORTFOLIOSûHISTORICALLYû Last week’s new issue was structured with THEMûGOINGûFROMûINTOûDEFAULTû&ITCHû2ATINGSû
high default rates make it more likely to be AûTWO YEARûREVOLVINGûPERIODûGIVINGûTHEû#LASSû said on June 5.
negatively impacted by the sudden, sharp !ûAû YEARûAVERAGEûLIFEûANDûPUTTINGûTHEû Not surprisingly, retail loans led all CMBS
economic downturn. Cumulative defaults mezzanine at 5.4 years. PROPERTYûTYPESûFORû DAYûPLUSûDELINQUENCIESû
STANDûATûûOFûTHEûORIGINALûPOOLûBALANCEû INû-AYûATûûWHICHûWASûUPûFROMûûINû
and replenishments. QANDER CONSUMER FINANCE MANDATES April.
The portfolio for the new deal comprises POSSIBLE DUTCH ABS Several large retail operators like JC
ûCONTRACTSûWITHûWEIGHTEDûAVERAGEû 0ENNEYûRECENTLYûlLEDûFORûBANKRUPTCYû
seasoning of 1.1 years and a WA interest rate QANDER CONSUMER FINANCE has mandated ABN protection while many store operators will
OFûû4HEûNEWUSEDûSPLITûISûû AMRO and Deutsche Bank to explore a run at reduced capacity for sometime.
ANDûTHEREûISûAû YEARûREVOLVINGûPERIOD POTENTIALûNEWû$UTCHûCONSUMERû!"3û 4HIRTY DAYûDELINQUENCIESûONûHOTELûLOANSû
transaction. INCREASEDûTOûûFROMûûASûGLOBALû
NEWDAY FUNDING 2017-1 TO BE !CCORDINGûTOûTHEûANNOUNCEMENTû1ANDERû travel has been slow to recover from the
CALLED IN JULY intends to use the proceeds to exercise the plunge even social distancing measures
seller call option of AURORUS 2017ûATûTHEûlRSTû have eased a bit.
.EW$AYû#ARDSûSAIDûLASTûWEEKûITûWILLûNOTû OPTIONALûREDEMPTIONûDATEûINû!UGUSTû (OTELûANDûRETAILûLOANSûMADEûUPûûANDû
EXERCISEûTHEûOPTIONûTOûEXTENDûAûûCARDû ûRESPECTIVELYûOFûTHEûTOTALû DAYû
securitisation, NEWDAY FUNDING 2017-1. Instead, DELINQUENCIESûINû-AYû&ITCHûSAID
ITûWILLûREDEEMûTHEûDEALûONûITSû*ULYûûû US MBS )FûALLûOFûTHEû DAYûDELINQUENTûLOANSû
scheduled redemption date. BECOMEû DAYûDELINQUENTûNEXTûMONTHûITû
)Nû-ARCHû.EW$AYûCHOSEûTOûEXTENDû CMBS DELINQUENCIES SEEN HITTING WOULDûADDûBPûTOûTHEûOVERALLûDELINQUENCYû
another securitisation, NEWDAY PARTNERSHIP CRISIS-LEVEL IN JUNE: GOLDMAN RATEûTOûMAKEûITûûTHEûRATINGSûAGENCYû
FUNDING 2015-1, by one year beyond its April said.
scheduled redemption date. US CMBS spreads are set to remain at Almost half of all securitised loans are
This time, it says its decision to call HISTORICALûWIDEûLEVELSûAFTERûTHEû PLUSûDAYû now in special servicing in May, while
hREmECTSûCURRENTûFUNDINGûMARKETûCONDITIONSû DELINQUENCYûRATEûONûPRIVATE LABELû#-"3û roughly a quarter of all CMBS hotel loans are
and the strength of the liquidity position in JUMPEDûFROMûABOUTûûINû!PRILûTOûûINû INûSPECIALûSERVICINGû&ITCHûSAIDû
THEû.EW$AYû&UNDINGûMASTERûTRUSTûASûWELLûASû May for its biggest monthly rise on record,
THEû.EW$AYûGROUPûASûAûWHOLEv Goldman Sachs analysts said last week. US MALL OPERATOR CBL IN DEFAULT,
.EW$AYûSAYSûFUNDSûTOûREDEEMûWILLûCOMEû 4HEYûFORECASTûTHATûDELINQUENCYûlGUREû PUTTING CMBS AT RISK
from drawings under the existing WOULDûNEARLYûDOUBLEûTOûûTHISûMONTHûJUSTû
committed senior variable funding loan SHORTûOFûTHEûPEAKûSEENûINû US mall operator CBL & ASSOCIATES said on
NOTESûISSUEDûBYû.EW$AYû&UNDINGû,OANû.OTEû Spreads on conduit CMBS had retreated June 5 it has defaulted on a secured
Issuer Ltd, and from drawings under the from their peaks in March on hopes the US CREDITûLINEûRAISINGûhSUBSTANTIALûDOUBTvû
originator variable funding loan notes economy would recover quickly from about its ability to continue as a going
ISSUEDûBYû.EW$AYû&UNDINGû,OANû.OTEû)SSUERû SUDDENûCONTRACTIONûDUEûTOûTHEû#OVID û concern in the next year as rent
Ltd. Those drawings are funded by the pandemic. revenues have plummeted amid the
.EW$AYûGROUPSûCORPORATEûCASH The federal government’s latest jobs #OVID ûPANDEMIC
REPORTûRELEASEDûONû&RIDAYûOFFEREDûAûGLIMMERû The real estate investment trust breached
BANK11 PLACES PART OF REVOCAR of optimism as the jobless rate unexpectedly CERTAINûCOVENANTSûONûITSû53BNûSECUREDû
2020 MEZZ FELLûTOûûINû-AYûFROMûûTHEûMONTHû CREDITûFACILITYûAFTERûOVER DRAWINGûONûTHEû
before. credit line, which is backed by 17 malls and
German credit company BANK11 FUR However, the hotel and retail industries three related centres.
PRIVATKUNDEN UND HANDEL has privately placed are expected to struggle to meet their debt The administrative agents on the credit
AûSMALLûPORTIONûOFûõMû'ERMANûAUTOûLOANû payments even as local governments allow FACILITYûHAVEûNOTIlEDû#",ûTHATûISûINûDEFAULTû
ABS REVOCAR 2020 through arranger UniCredit. more businesses to reopen, according to but the lenders have not yet exercised their
The deal’s Classes A and B were retained, Goldman analysts. right to accelerate the debt. CBL is pursuing
WHILEû#LASSESû#ûTOû%ûWEREûPARTIALLYûPRE Worries about another surge in late a waiver, the company said in regulatory
placed. payments from CMBS borrowers will likely lLINGSûONû&RIDAY
Bank11 typically places its securitisations keep conduit CMBS spreads, especially those #",ûALSOûOPTEDûNOTûTOûMAKEûANû53Mû
privately, but normally includes the seniors ONûRISKIERûLOWER RATEDûTRANCHESûATûELEVATEDû INTERESTûPAYMENTûDUEûONûITSûûUNSECUREDû
INûTHATûPROCESSûTOOû4HEûlRMSûTWOûNEWû levels, they said. BONDSûONû*UNEûû)TûHASûAû DAYûGRACEûPERIODû
ISSUESûINûûBOTHûPRE PLACEDûTHEIRû#LASSû!û “Widespread uncertainty about the to make the payment, and a skipped
RETAINEDûTHEû#LASSû"ûANDûPRE PLACEDûTHEûRESTû ultimate outcomes for distressed property payment is an event of default under the
of the stack. sectors has caused CMBS BBB– spreads to secured credit facility.
4HEûPARTûPRE PLACEDûTRANCHESûINûTHEûNEWû REMAINûWIDEûBYûHISTORICALûSTANDARDSvûTHEYû CBL owns mall properties that secure
ISSUEûCOMPRISEûAûõMû"""!nû#LASSû#ûAû wrote in a research note. loans that have been packaged into
õMû""n"""nû#LASSû$ûANDûAûõMû Spreads on Triple B minus rated conduit COMMERCIALûMORTGAGE BACKEDûSECURITIES
unrated Class E. DEALSûAREûRUNNINGûATûJUSTûUNDERûBPû 7ELLSû&ARGOûANALYSTSûSAIDûTHEREûISû
4HEûlXEDûRATEûCOUPONSûONûTHOSEûTHREEû versus 1,100bp in March. But they are still 53BNûINû#-"3ûEXPOSUREûACROSSûûLOANSû
TRANCHESûAREûûûANDû FARûWIDERûTHANûTHEûBPûLEVELûATûSTARTûOFûTHEû TOûTHEûMALLûOPERATORûWITHû53MûOFûTHESEû
4HATûCOMPARESûWITHûûûANDûûFORû year. loans already with special servicers and two
the same Classes from its previous ABS in More of these early stage delinquent loans loans in foreclosure.
October last year. Ratings were slightly lower, will likely keep missing payments and be h!ûBANKRUPTCYûlLINGûWOULDûPROMPTûTHEû
ATû""""""ûANDû""""ûFORûTHEû#ûANDû$ moved into special servicing in a bid to keep REMAINDERûTOûBEûTRANSFERREDûIMMEDIATELYvû

STRUCTURED FINANCE
7ELLSû&ARGOûWROTEûINûAûRESEARCHûNOTEûONû extreme volatility in the mortgage bond “The overall agency CMBS market has
Monday. market and ignited margin calls for some STABILISEDûANDûTHEûNEEDûFORûTHEû&EDûTOû
About half of CBL’s CMBS loans are funds. provide unconditional support has
TRACKEDûBYû#-"8ûINDEXESûWITHûTHEûSERIESûû It also led to a plunge in revenues for hotels DIMINISHEDvû7ELLSû&ARGOûANALYSTSûWROTEûINûAû
having the greatest exposure at US$447m, and retailers, which are major borrowers in the research note last week.
according to JP Morgan. commercial real estate market. Last Tuesday, it bought only US$54m in
/Nû-ARCHûû#",ûREPORTEDûITûHADû Proceeds from the stock offering will go &ANNIEû-AEû#-"3ûOUTûOFûTHEû53Mû
53MûINûCASHûANDûCASHûEQUIVALENTSû towards working capital and general SUBMITTEDûBYûPRIMARYûDEALERSûFORûTHEû&EDûTOûBUY
COMPAREDûWITHû53MûONû$ECEMBERûû corporate purposes, including bolstering 3PREADSûONûSENIORû&ANNIEû#-"3ûAREû
liquidity and originating commercial RUNNINGûATûBPûOVERûSWAPSûmATûFROMûTHEû
)TûPOSTEDûAûNETûLOSSûOFû53MûINûTHEû mortgage loans and other target assets and start of the year and tighter than their
lRSTûQUARTERûCOMPAREDûWITHûAûLOSSûOFû investments. recent wide of 160bp, according to Wells
53MûFORûTHEûSAMEûPERIODûINû &ARGO
CBL also said it will also probably fail to US FED TO KEEP BUYING AGENCY CMBS
meet the minimum debt yield covenant of ‘SCRATCH-AND-DENT’ RMBS ISSUERS
ûUNDERûTHEûCREDITûFACILITYûTHROUGHûTHEû 4HEû53û&EDERALû2ESERVEûSAIDûLASTû7EDNESDAYû SEE OPENING
lRSTûQUARTERûOFû it will continue to purchase agency
Meanwhile, CBL said it has hired Weil, COMMERCIALûMORTGAGE BACKEDûSECURITIESû Investment managers are repackaging
Gotshal & Manges and Moelis & Co to help along with US Treasuries and agency hSCRATCH AND DENTvûMORTGAGESûINTOûBONDSûINû
explore ways to reduce overall leverage and MORTGAGE BACKEDûSECURITIESûTOûMAINTAINû AûSIGNûOFûFURTHERûTHAWINGûINûTHEû53ûPRIVATE
interest expense and to extend the maturity stability in those markets amid a recession. LABELûRESIDENTIALûMORTGAGE BACKEDûSECURITIESû
of its debt. 4HEû&EDûBEGANûBUYINGûMULTI FAMILYû#-"3û market.
“Given the severity of the Covid backed by FANNIE MAE, FREDDIE MAC and GINNIE Investor appetite for riskier mortgage
downturn, coupled with its high levels of MAE since late March in an effort to bolster bonds outside of those guaranteed by FANNIE
INDEBTEDNESSû#",ûMAYûFACEûDIFlCULTYûINû LENDINGûINûTHEûCOMMERCIALûREAL ESTATEû MAE, FREDDIE MAC and GINNIE MAE has grown in
MEETINGûITSûDEBTûOBLIGATIONSvû7ELLSû&ARGOû market, which had been virtually frozen as recent weeks with spreads on agency MBS
analysts said. THEû#OVID ûOUTBREAKûWORSENED ANDûTOP RATEDûSECURITISEDûBONDSûSUCHûASû
They added several of CBL’s holdings that 0OLICY MAKERSûSAIDûINûAûSTATEMENTûAFTERûAû prime auto and credit card ABS returning to
secure CMBS deals are joint ventures so they TWO DAYûPOLICYûMEETINGûTHATûTHEû&EDûWOULDû levels seen prior to the global market rout in
MAYûNOTûBEûINCLUDEDûINûAûBANKRUPTCYûlLING purchase Treasuries, agency MBS and CMBS March.
“at least at the current pace to sustain Credit specialist PRETIUM CREDIT MANAGEMENT
BLACKSTONE MORTGAGE SELLS STOCKS smooth functioning of markets for these PRICEDûLASTû7EDNESDAYûAû53Mû
TO HELP FUND PROPERTY LOANS securities, thereby fostering effective TRANSACTIONûSECUREDûBYûNON PERFORMINGû
transmission of monetary policy to broader home loans, PRET 2020-NPL2ûITSûlRSTûSUCHûDEALû
BLACKSTONE MORTGAGE TRUST said last Tuesday lNANCIALûCONDITIONSv since early March.
ITûHADûRAISEDû53MûFROMûAûM SHAREû 4HEû&EDûPLANSûTOûCONDUCTûWEEKLYû#-"3û A fund managed by asset manager PACIFIC
offering of Class A common stock to help it PURCHASESûRANGINGûFROMû53MûTOû INVESTMENT MANAGEMENT CO was set to price last
originate mortgage loans and other assets US$500m. WEEKûAû53Mû2-"3ûBRAVO 2020-RPL1,
(see Equity Americas section for more 3INCEû-ARCHûûTHEû&EDûHASûPURCHASEDû backed by reperforming mortgages.
details). 53BNûINûAGENCYû#-"3 .ON PERFORMINGûANDûREPERFORMINGûMORTGAGESû
4HEû.EWû9ORK BASEDûREALûESTATEûINVESTMENTû 4HEû&EDûSAIDûITûWILLûALSOûREINVESTûALLû AREûSOMETIMESûREFERREDûTOûASûhSCRATCH AND DENTvû
trust, part of the world’s biggest private equity principal payments from its holdings of loans. They either are currently delinquent for
manager BLACKSTONE, makes senior loans agency CMBS. more than 90 days, or were once delinquent by
collateralised by commercial real estate in 4HEû&EDûHASûSLOWEDûITSûPURCHASESûOFû 90 days or more but the borrowers have
North America, Europe, and Australia. agency CMBS in recent weeks as spreads on resumed making payments.
The REIT sector was rattled in March as senior notes have largely returned to levels Investment managers buy these
FEARSûABOUTûTHEû#OVID ûPANDEMICûCAUSEDû PRIORûTOûTHEûMARKETûSELL OFFûINû-ARCH mortgages in the secondary market at a
ALL EUROPEAN ISSUERS GLOBAL STRUCTURED FINANCE IN EUROS ALL INTL ISSUERS (EXCLUDING SELF-FUNDED)
bank or group issues US$(m) (%) bank or group issues €(m) (%) bank or group issues US$(m) (%)
1 BofA Securities 9 2,648.44 13.1 1 Credit Agricole 2 1,352.56 13.5 1 Goldman Sachs 33 8,231.69 10.0
2 BNP Paribas 7 2,138.59 10.6 2 BofA Securities 3 1,209.15 12.0 2 JP Morgan 37 7,127.39 8.6
3 Lloyds Bank 9 1,984.53 9.8 3 BNP Paribas 4 1,170.25 11.6 3 Citigroup 36 7,059.82 8.6
4 Citigroup 7 1,620.64 8.0 4 ING 2 873.04 8.7 4 Barclays 39 6,743.27 8.2
5 Credit Agricole 2 1,514.09 7.5 5 Commerzbank 2 873.04 8.7 5 Credit Suisse 34 6,305.70 7.6
6 Barclays 8 1,274.13 6.3 6 Goldman Sachs 2 791.39 7.9 6 BofA Securities 29 5,456.30 6.6
7 JP Morgan 4 1,091.33 5.4 7 LBBW 2 648.40 6.5 7 Wells Fargo 24 4,934.54 6.0
8 Commerzbank 2 956.17 4.7 8 JP Morgan 2 574.63 5.7 8 Deutsche Bank 32 4,924.79 6.0
9 ING 2 956.17 4.7 9 Morgan Stanley 2 547.58 5.4 9 Morgan Stanley 19 3,657.35 4.4
10 Morgan Stanley 3 850.78 4.2 10 Barclays 4 539.69 5.4 10 Nomura 22 3,579.25 4.3
Total 36 20,245.68 Total 17 10,048.57 Total 172 82,563.08
Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, PFI bonds and credit-linked notes. Excludes US
domestics) and excludes CDOs. domestics) and excludes CDOs. global ABS/MBS, CDOs and self funded issues.
Source: Refinitiv SDC code: B16n Source: Refinitiv SDC code: B16g Source: Refinitiv SDC code: J10d

Pepper extends run of Aussie non-bank RMBS
RMBS No direct AOFM support required for A$700m non-conforming issue
PEPPER became the sixth non-bank lender RMBS and other ABS originated by smaller Pepper previously accessed the market
to access the RMBS market since Firstmac lenders during the Covid-19 crisis. last October with the A$750m equivalent
reopened the segment on March 27 with last non-conforming RMBS, Pepper PRS25,
Wednesday’s A$700m (US$484m) no-grow, MARGIN PRESSURE which included a US dollar and green euro
non-conforming sale via PEPPER RESIDENTIAL The Pepper PRS26 A$160m Class A1s notes with tranche.
SECURITIES TRUST NO 26 (PRS26). a 0.6 year weighted-average life was priced at The senior Aussie tranche of PRS25, the
The transaction was also the fourth one-month BBSW plus 105bp. A$161.4m Class A1a notes, with a 2.3 year WAL,
RMBS in a row not directly supported by the The A$330m Class A1a and A$108.5m Class was priced at one-month BBSW plus 128bp,
Australian Office of Financial Management’s A2 notes, both with 3.1 year WALs, was priced 52bp tighter than the latest A1a note which has
A$15bn Structured Finance Support Fund 180bp and 240bp over one-month BBSW. a longer 3.1 year WAL.
scheme. The A$38.5m Class B, A$21m Class C and The PRS25 A$100m Class A2, A$42.3m Class
Pepper has, however, benefited from a A$15.4m Class D notes, all with 4.1-year WALs, B, A$23m Class C and A$16.5m Class D notes,
combined A$224.6m of secondary market was priced 310bp, 410bp and 535bp wide of all with 4.0 year WALs, were priced at one-
purchases of its outstanding RMBS tranches one-month BBSW. month BBSW plus 160bp, 190bp, 280bp and
by the AOFM between May 6 and June 3, which Pricing was not disclosed for the A$9.1m 380bp or 80bp, 120bp, 130bp and 155bp inside
freed up existing investors to buy the new bonds Class E, A$6.4m Class F or A$5.55m Class G1 the PRS26 equivalents.
on offer. notes, while the A$5.55m Class G2 notes were CBA was arranger for the latest trade and
The AOFM also invested A$39m in Pepper’s retained. joint lead manager with NAB, Macquarie,
warehouse facilities on May 28 under the SFSF, Respective credit support for the Class A1s to Standard Chartered and Westpac.
which was formed on March 19 to underpin D notes is 30%, 30%, 14.5%, 9%, 6% and 3.8%. John Weavers
DISCOUNTûINûHOPESûTHEYûCANûPROlTûFROMû "UTûTHEûYIELDSûWEREûABOVEûTHEûûYIELDû matching what it had forecast for GMALT

them by reselling them later in securitised ONûTHEû! ûNOTEûANDûTHEûûYIELDûONûTHEû
form. ! ûINû0RETIUMSûPREVIOUSûNON PERFORMINGû 4HEûAVERAGEû&)#/ûSCOREûOFû'-ûLEASEû
9EAR TO DATEûREPERFORMINGû2-"3ûSUPPLYû deal in March. holders in the latest deal is high at 770,
HASûTOTALLEDû53BNûDOWNûFROMû which is in line with transactions going back
5BNûFORûTHEûSAMEûPERIODûINûû TOûûACCORDINGûTOû-OODYS
WHILEûNON PERFORMINGû2-"3ûISSUANCEûHASû US ABS Used car prices slumped in April fuelled by
REACHEDû53BNûBELOWûTHEû53BNû the economic shutdown and expectations of a
for the same span last year, according to JP GM AUTO LEASE ABS KICKS INVESTOR surge in used car supply as troubled car rental
Morgan. DEMAND INTO HIGH GEAR COMPANIESûLOOKûTOûDOWNSIZEûTHEIRûmEETS
What has complicated the structuring The widely followed Manheim Used
of these types of RMBS is the number of GENERAL MOTORS‘ latest securitisation of 6EHICLEû6ALUEû)NDEXûSANKûBYûûINû!PRILû
loans in forbearance as a result of the US vehicle leases last Monday showed the steepest monthly drop on record,
pandemic, which could further delay investor appetite for auto ABS is ALTHOUGHûITûRECOVEREDûBYûNEARLYûûINû-AY
payments. spreading beyond prime car loans as &ALLINGûUSEDûCARûPRICESûPUTûCARûLEASEû!"3û
Subordinate tranches in reperforming used car prices recover from their transactions at risk of higher net losses,
ANDûNON 1-û2-"3ûAREûMOSTûVULNERABLEûIFû plunge in April. according to Moody’s.
forbearance and delinquency rates go up in '-SûlRSTûAUTOûLEASEû!"3ûOFFERINGûSINCEû However, the residual value of GMALT
THEûSECONDûHALFûOFûû*0û-ORGANûANALYSTSû &EBRUARYûGMALT 2020-2ûRAISEDû53BNû deals “has been stronger than that of the
said. with all tranches multiple times OVERALLûMARKETvû-OODYSûANALYSTSûSAIDûINûAû
h)NTERESTûSHORTFALLSûINûNON 1-ûANDû20,û oversubscribed, according to a source PRE SALEûREPORTûONû'-!,4û
SUBSûAREûTHEûMOSTûIMMEDIATEûRISKSvûTHEYû familiar with the deal.
WROTEûINûAûRESEARCHûNOTEûLASTû&RIDAY The senior Triple A tranches were 10 to 17 SUNNOVA THROWS SPOTLIGHT ON
)NûTHEûLATESTû0RETIUMûDEALûûOFûTHEû times oversubscribed, while the riskiest SOLAR LOAN ABS
loans that are at least 60 days past were !!ûRATEDûPAPERûWASûFOURûTIMESû
granted forbearance, according to deal oversubscribed, the source said. SUNNOVA ENERGY CORPûISûREADYINGûAû53Mû
documents. Spreads on most classes came 10bp to SOLARûLOAN BACKEDûNOTEûBRINGINGûSOMEûLIFEûTOû
Given their potential risks, these two and 15bp narrower than the low end of their AûmEDGINGûPARTûOFûTHEûASSET BACKEDûMARKETû
other forthcoming RMBS issues will price guidance, but they were anywhere that has been virtually frozen for nearly four
probably have to lure investors with higher FROMûBPûTOûBPûWIDERûTHANûLEVELSûINû months.
yields. '-SûPRIORûAUTOûLEASEûDEALû'-!,4û 3UNNOVASûLATESTû!"3ûFOLLOWSûAû53Mû
Pretium sold its latest RMBS at yields Losses on this GM deal are expected to offering from LOANPAL – a provider of
BELOWûTHEIRûGUIDANCEû4HEû53Mû! û stay low, even with the surge in lNANCINGûFORûTHEûRESIDENTIALûSOLARûINDUSTRYûnû
NOTEûCAMEûINûATûAûYIELDûOFûûLOWERûTHANûAû UNEMPLOYMENTûDUEûTOûTHEû#OVID û and SOLAR MOSAIC, mandated last Thursday a
TALKEDûRANGEûOFûnûWHILEûTHEû pandemic, according to Moody’s. 53MûSOLARûLOANûOFFERINGûMSAIC 2020-1.
53Mû!ûTRANCHEûCLEAREDûATûûBELOWû It projected net credit losses on this pool Solar Mosaic and Sunnova’s deals are
ITSûGUIDANCEûOFûn OFûLEASESûONûMAINLYû356SûANDûTRUCKSûATûû expected to further test appetite for a sector

STRUCTURED FINANCE
THATûSTILLûCONTAINSûRISKSûINûAûPOSTû#OVID û AUTO ABS ISSUERS BEEF UP RESERVES delinquency for auto loans even as
economic landscape and has only seen AMID DELINQUENCY WORRIES unemployment will probably stay elevated
53MûOFû!"3ûISSUANCEûSOûFARûTHISûYEAR INTOûLATEûûFROMûTHEIRûRECORDûSURGEûINû
4HEû(OUSTON BASEDûCOMPANYûWHICHûISûAû Auto ABS issuers have shored up the cash April.
unit of Sunnova Energy International, last reserves on their recent deals in an effort to Moreover, some auto lenders have
TAPPEDûTHEû!"3ûMARKETûINû&EBRUARYûWITHûAû address investor concerns about a spike in allowed borrowers to defer their loan
53MûOFFERINGûSECUREDûBYûRESIDENTIALû delinquencies after lender forbearance PAYMENTSûFORûAûFEWûMONTHSûSINCEûTHEû#OVID
leases and contracts. measures and government stimulus run out. 19 outbreak.
The new offering, SNVA 2020-A, features two Bigger reserve funds on the recent wave &URTHERMOREûSOMEûOFûTHEMûLIKEû&ORDû
CLASSESûOFûDEBTûWITHûlVE YEARûMATURITIESû of auto deals bolstered the appeal of the have temporarily suspended repossession of
53MûINû#LASSû!ûNOTEûANDû hottest sector in the ABS market, said lNANCEDûVEHICLES
53MûINû#LASSû"ûTRANCHE analysts and investors. All these programmes, together with the
Kroll assigned a preliminary A– rating on Higher reserve levels mean there is more GOVERNMENTSûlNANCIALûSUPPORTûWILLû
THEû!ûNOTEûANDûAû"" ûRATINGûONûTHEû"ûNOTEû cash available to ensure timely interest probably keep delinquencies relatively low
and proceeds are slated to repay some of payments to ABS holders. into the summer.
3%)SûRECENTûlNANCINGS “You are seeing more credit But investors worry if businesses have to
Sunnova hired Credit Suisse as the sole ENHANCEMENTSvûSAIDû-ERGANSERû#APITALû shut down again due to a wave of virus
BOOKûMANAGERûFORû3.6!û !ûWHICHûISû portfolio manager Peter Kaplan. “You have outbreak later this year, delinquencies
expected to price this week. more cash on hand to make interest AMONGûSUB PRIMEûBORROWERSûINûPARTICULARû
4HEûDEALûISûEXPECTEDûTOûSETTLEûONû*UNEû PAYMENTSv would shoot higher.
On May 14, SEI said it had closed a private 4HESEûHEAVIERûCASH LINEDûOFFERINGSûCOMEû h)ûTHINKûSUB PRIMEûBORROWERSûAREûGOINGûTOû
placement of convertible debt for up to as the number of securitised auto loans that be the most affected by another work
US$190m and an additional privately were extended – allowing borrowers to SHUTDOWNvû-ERGANSERSû+APLANûSAID
negotiated exchange of US$55m of its DEFERûPAYMENTSûnûROSEûTOûûINû!PRILûFROMû 4OTALûDELINQUENCIESûFORû7ESTLAKESûSUB
existing convertible debt for an equal ûINû-ARCHûDUEûTOûAûSURGEûINûJOBLESSNESSû PRIMEûLOANûPORTFOLIOûCAMEûINûûINû!PRILû
principal amount. Moody’s said in a report on Wednesday. COMPAREDûWITHûûAûYEARûEARLIERûWHILEûITSû
“This capital will provide the liquidity 4HEûUNEMPLOYMENTûRATEûHITûAûPOST 7ORLDû LOANûLOSSESûGREWûTOûûFROMûûDUEûTOû
Sunnova needs to continue our strong 7ARû4WOûHIGHûATûûINû!PRILûBEFOREû THEûPANDEMICû30ûSAIDûINûAûPRE SALEûREPORTû
growth and to be fully prepared for any SLIPPINGûTOûûAûMONTHûLATERû)TûWASûONLYû on the Westlake deal.
future market disruptions as a result of this ATûûINû&EBRUARYûPRIORûTOûTHEû#OVID û 4HEûûRESERVEûFUNDûLEVELûWOULDûCOVERû
CRISISvû3UNNOVAûCHIEFûEXECUTIVEûOFlCERû outbreak in the US. about two to three months of servicing fees
William Berger said in a statement on the “Levels of extensions in auto loan ABS and interest payment to ABS holders, the
COMPANYSûlRST QUARTERûRESULTS spiked in April, heightening the risk of rating agency said.
slower payments to securitisation
LINGERING RISKS NOTEHOLDERSvû-OODYSûANALYSTSûWROTE
Indeed, the surge in US unemployment has &ORûNOWûDELINQUENCIESûHAVEûSTAYEDûLOWû ASIA-PACIFIC ABS
increased worries about rising defaults on ENOUGHûTHATûAUTOûISSUERSûEVENûSUB PRIMEû
solar and other consumer loans, though ones, can lock in cheap funding costs and LIBERTY SOUNDS OUT INVESTORS
+ROLLûESTIMATEDûITSûBASE CASEûLOSSûONûTHEû investors are snapping up new paper.
LATESTû3UNNOVAûDEALûTOûRANGEûFROMûûTOû SANTANDERûPRICEDûAû53MûSUB PRIMEû .ON BANKûLENDERûLIBERTY FINANCIAL is taking
ûAûBITûLOWERûTHANûTHEû û auto loan deal on Wednesday with its senior indications of interest for the indicative
on its previous deal. tranches 10 times oversubscribed, two !Mû53M ûLIBERTY SERIES 2020-2
There also remains lingering concerns sources familiar with the deal said. RMBS offering that may launch this week.
about the unique challenges facing the solar Its DRIVE 2020-2 offering carries a reserve &ORûTHEûSENIORû!Mû#LASSû!Aû!Mû
industry, which competes with other energy LEVELûOFûûWHICHûWASûHIGHERûTHANûûFORûALLû #LASSû!BûANDû!Mû#LASSû!ûNOTESûWITHû
SOURCESûANDûITSûSUPPORTûFROMûTAXûBENElTSûTOû PREVIOUSûDEALSûGOINGûBACKûTOûûACCORDINGû RESPECTIVEûWEIGHTED AVERAGEûLIVESûOFûûû
homeowners. to Moody’s. ANDûûYEARSûINITIALûGUIDANCEûISûONE MONTHû
“We’ve had concerns regarding the Three upcoming auto deals have also BBSW plus 100bp area, 165bp–170bp and
costs borne to the borrower especially if increased their reserve funds in anticipation BPûAREAûRESPECTIVELY
other energy options become more OFûPICK UPûOFûLATEûLOANûPAYMENTS NAB is arranger and joint lead manager
AFFORDABLEvûSAIDû)NCOMEûANDû2ESEARCHû MERCEDES-BENZûLIFTEDûITSûRESERVEûLEVELûTOûû with Bank of America, CBA, Deutsche Bank and
Management senior portfolio manager FORûITSû53MûPRIMEûAUTOûDEALûMBART 2020- Westpac.
Jake Remley said. 1û4HISûWASûHIGHERûTHANûTHEûûFORûITSû A regular issuer of RMBS, Liberty
“Also we have concerns around the previous offering last year. WORLD OMNI made PREVIOUSLYûACCESSEDûTHEûMARKETûONû-AYûû
PERMANENCEûOFûTHEûTAXûBENElTSûnûWEûlNDûITû the same move for its WOART 2020-B prime WITHûTHEûDUAL CURRENCYû!MûNON
DIFlCULTûTOûHANDICAPûTHATûPOLITICALûRISKûASûAû auto deal. WESTLAKE increased its reserve CONFORMINGû,IBERTYû3ERIESû ûWHICHû
driver of borrower behaviour, especially in FUNDINGûLEVELûFORûITSûSUB PRIMEûAUTOûDEALû INCLUDEDûAûRAREûYENûTRANCHEûOFûcBNû
THEûLARGEûSTATESûSUCHûASû#ALIFORNIAv WLAKE 2020-1ûTOûûFROMûûINûTHEû !M ûTHATûREPRESENTEDûûOFûTHEû
Against that backdrop, Sunnova is previous deals. transaction.
expected to pay higher yields than its issue FORD MOTOR will leave the reserve level on 4HEû!USTRALIANû/FlCEûOFû&INANCIALû
INû&EBRUARYûWHENûITSû$OUBLEû"nûPAPERû its forthcoming prime auto deal, FORDO 2020-B Management bought all of the A$64.5m
CLEAREDûATû ATûûAFTERûRAISINGûITûFORûANûOFFERINGûEARLIERû #LASSû!ûNOTESûUNDERûITSû!BNû3TRUCTUREDû
Two weeks earlier, for instance, Loanpal THISûYEARûFROMû &INANCEû3UPPORTû&UNDûSCHEMEûWHICHûDROVEû
PRICEDûITSû$OUBLEû"ûRATEDûNOTEûATûAû 2ATINGûAGENCIESûINûTHEIRûBASE CASEû THEûPRICINGûMARGINûDOWNûTOûBPûOVERûONE
CONSIDERABLYûHIGHERûYIELDûOFû estimate projected only a modest rise in month BBSW.

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 12/6/2020
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
SSAR
US DOLLARS
Jun 9 2020 IADB US$4bn Jul 15 2025 0.625 99.97 MS+17 / T+22.4 0.631
Jun 9 2020 KBN US$1.5bn Jun 14 2030 1.125 99.539 MS+38 / T+36.38 1.174
Jun 9 2020 World Bank US$750m Jun 17 2024 Sofr+39 100 Sofr+39 -
Jun 12 2020 SEK US$500m Dec 12 2023 1.75 104.31 MS+21 / T+27.65 0.496
EUROS
Jun 9 2020 Greece €3bn Jun 18 2030 1.5 99.375 MS+160 / B+187.8 1.568
Jun 9 2020 Ireland €6bn Oct 18 2030 0.2 99.135 MS+30 / B+59.7 0.285
Jun 9 2020 Lower Saxony €1bn Jun 16 2028 0.01 101.07 MS+1 / B+33.4 -0.12
Jun 9 2020 SNCF €1bn Apr 25 2040 1 97.884 OAT+60 1.119
Jun 9 2020 Spain €12bn Oct 31 2040 1.2 99.09 SPGB+28 1.251
Jun 10 2020 Finland €3bn Sep 15 2040 0.25 99.019 MS+10 / B+32.6 0.3
Jun 10 2020 Germany €6bn incr Aug 15 2050 0 94.51 B+2.5 0.187
(€14bn)
Jun 10 2020 NRW €500m incr Jun 12 2040 1.5 122.31 MS+14 / B+37.2 0.343
(€2.125bn)
Jun 10 2020 Unedic €4bn Nov 29 2029 0.25 99.851 OAT+25 0.266
STERLING
Jun 9 2020 UK DMO £9bn Oct 22 2050 0.625 96.343 G+0.5 0.76
Jun 10 2020 L-Bank £750m Dec 9 2024 0.375 99.786 G+42 0.423
Jun 11 2020 IADB £250m incr Sep 15 2026 0.5 100.73 G+40 0.381
(£525m)
Jun 12 2020 CPPIB £1bn Jul 25 2023 0.375 99.719 G+47 0.466
SWISS FRANCS
Jun 10 2020 Lausanne SFr100m Jul 6 2032 0.35 100.18 MS+47 / Eidg+52.9 0.335
Jun 10 2020 Lausanne SFr100m Jul 6 2050 0.6 101.1 MS+65 / Eidg+67.9 0.56
NON CORE
Jun 9 2020 BNG Bank A$20m incr Jul 17 2028 3.3 114.85 ASW+63, 1.355
(A$1.485bn) ACGB+49.75
Jun 9 2020 NWB A$15m incr Dec 16 2030 1.67 100.19 ASW+64, 1.65
(A$65m) ACGB+54.2
Jun 9 2020 NWB A$50m Dec 16 2030 1.67 100 ASW+64, 1.67
ACGB+54
Jun 10 2020 BNG A$20m incr Nov 27 2030 1.6 99.809 ASW+64, 1.62
(A$190m) ACGB+60.4
Jun 9 2020 NIB SKr300m incr Mar 22 2022 0.125 100.25 MS-9 -0.02
(SKr4bn)
Jun 10 2020 Akademiska Hus SKr2bn Jun 12 2023 0.45 100 - 0.45
Jun 10 2020 World Bank SDB C$1.5bn Jul 2 2025 0.75 99.788 MS+3 / G+40.9 0.793
Jun 11 2020 SAFA A$1.2605bn Jun 16 2023 0 100 AONIA+34 -

Jun 12 2020 IFC A$120m incr Apr 15 2035 1.5 99.044 ASW+51, 1.573
(A$375m) ACGB+35.25
Jun 12 2020 Western Australia A$300m Jul 23 2041 2.25 99.624 EFP+139, 2.273
ACGB+63.5
Jun 12 2020 Munifin NZ$150m Jun 26 2023 0.625 99.71 MS_46, NZGB+39 0.723
CORPORATES
US DOLLARS
Jun 8 2020 Brixmor Operating US$500m Jul 1 2030 4.05 99.776 T+320 4.077
Partnership

BONDS SUMMARY DETAILS
Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution
MS+21 area, MS+19 -1 >US$5.75bn, 117acs Aaa/AAA BMO / GS / MS / Nomura Amers 42.2%, APAC 34.4%, EMEA
area 23.4%. CB/OI 50.2%, Bks 32.5%, AM
14.9%, Ins/PF/Corp 2.4%.
MS+40 area, MS+40 - US$2.6bn Aaa/AAA BofA / BMO / Citi / MS EMEA 58%, Amers 28%, Asia 14%. CB/
area OI 53%, FM/Ins 29%, Bks 18%
Sofr+40 area - US$825m Aaa/AAA BMO / WFS -
MS+22 area - >US$700m Aa1/AA+ TD / DB -
MS+170/175, 10 >€15.7bn B1/BB-/BB/BBL BNPP / BofA / DB / GS / HSBC / JPM UK 27.5%, Greece 15%, Fr 12.5%, Ger/Aus/
MS+160/+165 WPIR Switz 9%, It 7%, Nordics 7%, RoEur 6.5%,
N/Amer 15%, Other 0.5%. FM 59%, Bks/PB
21%, HF/FIs 14.5%, Ins/PF 5.5%.
MS+34 area, MS+32 3 >€69bn, >400acs A2/AA-/A+ Barc / BNPP / Danske / Davy / UK 24%, Fr/Benelux 13%, Ire 12%, Nordics
area NatWest / Nomura 11%, Ger 10%, It 7%, Sp/Port 7%, RoEur 8%,
US/Other 8%. AM 37%, Bks/Intermediaries
36%, CB/OI 11%, Ins/PF 9%, HF 7%.
MS+3 area, MS+2 - >€2bn -/-/AAA Barc / Deka / Natx / NordLB / Uni -
(+/-1)
OAT+62 area, - >€1.3bn Aa3/AA-/A+ BNPP / CA-CIB / Natx / NatWest / SG Ger/Aus/Switz 45%, Fr 28%, UK 9%, It
OAT+62 area 9%, Asia 5%, RoEur 4%. Ins/PF 48%, AM
28%, Bks/PB 17%, CB/OI 4%, Other 3%.
SPGB+low 30s, 4 >€78bn Baa1/A/A-/A BBVA / CA-CIB / Citi / GS / MS / Fr/It 25%, UK/Ire 18.8%, UK/Ire 18.8%,
SPGB+29 area NatWest Ger/Aus/Switz 16.8%, Sp 16.7%, RoEU
8.5%, US/Canada 4.8%, Nordics 4.2%,
Asia 2.6%, Other 2.6%. FM 33.8%, Tsy
27.7%, Ins/PF 18.1%, Bks 8.5%, HF 6.1%,
CB/OI 2.4%, Other 3.4%.
MS+14 area, MS+12 - >€25bn, 220acs Aa1/AA+/AA+ BNPP / CA-CIB / GS / NatWest / -
area Nomura
B+4.5 area 0 >€31.5bn, 120acs Aaa/AAA/AAA BNPP / Danske / DB / GS / JPM UK 31%, Ger 22%, Benelux 14%, Nordics
11%, It 4%, Fr 3%, RoEur 5%, RoW 10%.
AM 46%, HF 21%, Ins/PF 9%, Bks 8%,
CB/OI 2%, Other 14%.
MS+14 area - - Aa1/AA-/AAA BLB / BNPP / NordLB / Erste / LBBW -
OAT+29 area, - >€8.75bn Aa2/-/AA BofA / CA-CIB / HSBC / JPM / Natx -

OAT+26 area / NatWest
G+0.5/+1 - >£72.8bn, 192acs Aa2/AA/AA- Barc / GS / JPM / Nomura / Santan UK ~91%, Other ~9%.
G+42 - >£1.05bn Aaa/AAA/- BofA / BMO / NatWest / RBC -
G+40 area - >£250m Aaa/AAA/- Barc / BofA / HSBC -
G+47 area, G+47 (#) - >£1.7bn Aaa/AAA/AAA Barc / BofA / NatWest / TD -
MS+47 5 - -/A+/-/CS High A / CS / Raiff / ZKB -

ZKB A+
MS+65 25 - -/A+/-/CS High A / CS / Raiff / ZKB -
ZKB A+
ASW+63 - A$0 Aaa/AAA Miz -
ASW+64 - A$0 Aaa/AAA TD -
- - A$0 Aaa/AAA TD -
ASW+64 - A$0 Aaa/AAA/AAA Nomura -
- - - Aaa/AAA Danske -
- - - -/AA SEB -
- - >C$1.7bn Aaa/AAA BofA / RBC / Scotia / TD Amers 51%, EMEA 31%, Asia 18%. Bks/
Corp 35%, AM/Ins/PF 33%, CB/OI 31%
AONIA+34 - A$1.2605bn Aa1/AA+ - -
ASW+51 - - Aaa/AAA DB / TD -
- - - Aa1/AA+ Citi -
MS+46 - - Aa1/AA+ BNZ -
T+387.5 area, -16 US$3.3bn Baa3/BBB-/BBB- BofA/Citi/JPM/WFS -

T+330 (+/-5)

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 12/6/2020 (CONTINUED)
Jun 8 2020 Duke Energy Florida US$500m Jun 15 2030 1.75 99.863 T+90 1.765
Jun 8 2020 eBay US$300m Mar 11 2025 1.9 103.432 T+70 1.141
Jun 8 2020 eBay US$450m Mar 11 2030 2.7 103.176 T+145 2.325
Jun 8 2020 Equinix US$500m Jul 15 2025 1.25 99.77 T+85 1.297
Jun 8 2020 Equinix US$500m Jul 15 2027 1.8 99.749 T+115 1.838
Jun 8 2020 Equinix US$1.1bn Jul 15 2030 2.15 99.711 T+130 2.182
Jun 8 2020 Equinix US$500m Jul 15 2050 3 98.264 T+145 3.089
Jun 8 2020 General Electric US$1.5bn May 1 2050 4.35 100.176 T+270 4.339
Jun 8 2020 GE Capital Funding US$1.5bn May 15 2030 4.4 105.074 T+290 3.769
Jun 8 2020 Magna International US$750m Jun 15 2030 2.45 99.569 T+162.5 2.499
Jun 8 2020 Northern States Power US$700m Jun 1 2051 2.6 98.118 T+105 2.69
Jun 8 2020 Plains All American Pipeline US$750m Sep 15 2030 3.8 99.794 T+295 3.825
Jun 8 2020 Philips 66 US$150m Apr 9 2025 3.85 111.947 T+80 1.25
Jun 8 2020 Philips 66 US$850m Dec 15 2030 2.15 99.701 T+130 2.182
Jun 8 2020 Roper Technologies US$600m Jun 30 2030 2 98.877 T+125 2.125
Jun 9 2020 American Campus US$400m Jan 30 2031 3.875 99.142 T+315 3.974
Communities Operating
Partnership
Jun 9 2020 Fidelity National Financial US$650m Jun 15 2030 3.4 99.756 T+260 3.429
Jun 9 2020 Healthpeak Properties US$600m Jan 15 2031 2.875 99.125 T+215 2.972
Jun 9 2020 HP US$1.15bn Jun 17 2025 2.2 99.769 T+185 2.249
Jun 9 2020 HP US$1bn Jun 17 2027 3 99.718 T+240 3.045
Jun 9 2020 HP US$850m Jun 17 2030 3.4 99.7 T+260 3.425
Jun 9 2020 Westlake Chemical US$300m Jun 15 2030 3.375 99.588 T+260a 3.424
Jun 10 2020 Ares Finance US$400m Jun 15 2030 3.25 99.771 T+250 3.277
Jun 10 2020 Florida Gas Transmission US$500m Jul 1 2030 2.55 99.763 T+180 2.577
Jun 10 2020 Pinnacle West Capital US$500m Jun 15 2025 1.3 99.99 T+95 1.302
Jun 10 2020 Sempra Energy US$900m Oct 15 2025 4.875 100 4.875 4.875
EUROS
Jun 8 2020 ACS €750m Jun 17 2025 1.375 99.947 MS+165 / B+197.8 1.386
Jun 8 2020 Deutsche Boerse €600m Perpetual (Jun 2027) 1.25 100 MS+143.1 / B+176 1.25
Jun 8 2020 OMV €750m Jun 16 2023 0 99.584 MS+45 / B+76.1 0.139
Jun 8 2020 OMV €750m Jun 16 2030 0.75 99.493 MS+85 / B+112.3 0.803
Jun 8 2020 SATO Corp €50m Jun 12 2030 2.45 100 - 2.45
Jun 8 2020 Veolia Environnement €500m Jan 15 2032 0.8 100 MS+78 0.8
Jun 9 2020 GALP Energia €500m Jan 15 2026 2 99.754 MS+227 / B+260.6 2.048
Jun 9 2020 Klepierre €140m incr Dec 13 2032 1.625 97.54 MS+180 / B+217.8 1.847
(€640m)
Jun 9 2020 Mohawk Industries €500m Jun 12 2027 (Apr 2027) 1.75 99.889 MS+195 / B+227.7 1.949
Jun 9 2020 SEB €500m Jun 16 2025 1.375 99.169 MS+180 / B+211.6 / 1.549
OAT+196
Jun 10 2020 Edenred €600m Jun 18 2029 1.375 99.958 MS+145 / B+176.5 1.38

T+115 area 3 US$1.25bn A1/A Barc/BNPP/MUFG -

T+100 area, -4 US$1.25bn Baa1/BBB+/BBB+ CS/JPM/MS -
T+75 (+/-5)
T+175 area, -7 US$2.3bn Baa1/BBB+/BBB+ CS/JPM/MS -
T+150 (+/-5)
T+120 area, -8 US$2.3bn Baa3/BBB-/BBB- BofA/GS/JPM -
T+95 (+/-5)
T+120 (+/-5)
T+135 (+/-5)
T+155 (+/-5)
T+275 area 8 US$3.5bn Baa1/BBB MS -
T+295 area 6 US$3.5bn Baa1/BBB MS -
T+212.5/+225 -8.5 US$4.1bn A3/A- BofA/Citi/TD(a)/BNPP/RBC/ -
Scotia(p)
T+130 area, -4 US$2.bn Aa3/A/A+ MS/MUFG/USB/WFS -
T+110 (+/-5)
T+335 area -13 US$3.6bn Ba1/BBB-/BBB- Barc/BofA/JPM/RBC -
T+115 area, -9 US$550m A3/BBB+ BNPP/GS/MUFG/Scotia -
T+85 (+/-5)
T+170 area, -11 US$2.5bn A3/BBB+ BNPP/GS/MUFG/Scotia -
T+135 (+/-5)
T+170 area, -9 US$3.6bn Baa2/BBB+ BofA/JPM/WFS -
T+135 (+/-5)
T+365 area, -16 US$2.3bn Baa2/BBB DB/JPM -
T+325 (+/-5)
T+300 area, 19 - Baa2/BBB BofA/JPM(a)/USB(p) -

T+260 (the #)
T+250 area, 7 US$2.7bn Baa1/BBB+/BBB+ BofA/Barc/MS/WFS -
-
T+212.5 area, 37 US$2.8bn Baa2/BBB/BBB+ BNPP/GS/HSBC/JPM -
T+185 (the #)
T+255 area, 37 US$2.2bn Baa2/BBB/BBB+ BNPP/GS/HSBC/JPM -
T+240 (the #)
T+275 area, 41 US$1.9bn Baa2/BBB/BBB+ BNPP/GS/HSBC/JPM -
T+260 (the #)
T+325 area -18 US$1.75bn Baa2/BBB-/BBB Citi/JPM/WFS -
T+high 200s - US$865m BBB+/BBB+ BofA/Citi -
T+215 area -7 US$2.9bn Baa2/BBB+ JPM/PNC/RBC/USB -
T+115 area, - US$850m A3/BBB+ JPM/PNC/WFS -
T+100 (+/-5)
5.125%/5.25%, - US$1.5bn Ba1/BBB-/BBB- Barc/Citi/CS/GS/MS -
4.875% (the #)
MS+200 area, -5 >€1.75bn -/BBB- GS / SG / BNPP / Caixa / HSBC / ING Sp 38%, Ger/Aus/Switz 25%, UK 15%, Fr
MS+175 area / JPM / Santan / Uni 13%, Benelux 4%, Other 5%. FM 50%, CB/
OI 27%, Ins/PF 14%, Bks/PB 7%, Other 2%.
1.875%/2%, 1.5% -25 >€4.1bn -/A+ BNPP / Citi / DB / JPM / BofA / CMZ -
area / HSBC / SG
MS+85/90, MS+55 -5 >€2.3bn A3/-/A- Citi / CMZ / Erste / LBBW / Miz / RBI Fr 40%, Ger/Aus 21%, UK/Ire 12%,
area Nordics 11%, S.Eur 11%, Benelux 3%,
Switz 1%, Other 1%. FM 73%, Ins/PF
10%, Bks/PWM 7%, CB/OI 9%, Other 1%.
MS+130 area, -5 >€3.2bn A3/-/A- Citi / CMZ / Erste / LBBW / Miz / RBI Ger/Aus 31%, Fr 24%, Benelux 18%,
MS+95 area Nordics 13%, UK/Ire 5%, S.Eur 5%, Switz
3%, Other 1%. FM 65%, CB/OI 14%, Ins/
PF 14%, Bks/PWM 6%, Other 1%.
0 - - -/BBB SEB -
MS+120 area, -8 ~€3bn Baa1/BBB HSBC / Barc / NatWest / Santan / -
MS+90 area StCh
MS+260 area, - ~€1.1bn - BBVA / BNPP / CaixaBI / Miz / -
MS+235 area Santan / Uni
MS+190 area - - -/A- ABN / DB / Miz -
MS+250 area, - €4.6bn Baa1/BBB+/BBB+ BofA / JPM / BNPP -

MS+210 area
MS+215 area, - ~€1.6bn - BNPP / CA-CIB / Citi / HSBC / Natx -
MS+185 area
MS+165 area 15 >€1bn -/BBB+ Barc / CA-CIB / SG / BNPP / Citi / -
CMZ / HSBC / JPM

Jun 10 2020 Enexis green €500m Jun 17 2032 0.625 99.793 MS+60 / B+96.9 0.643
Jun 10 2020 Iliad €650m Jun 17 2026 2.375 98.547 MS+285 / B+319.1 2.64
Jun 10 2020 Snam €500m Jun 17 2030 0.75 99.856 MS+80 / B+108.8 0.765
Jun 10 2020 VW International Finance €1.5bn Perpetual (Jun 2025) 3.5 100 MS+374.6 / B+407 3.5
Jun 10 2020 VW International Finance €1.5bn Perpetual (Jun 2029) 3.875 100 MS+395.8 / 3.875
B+427.8
Jun 11 2020 Cibus Nordic Real Estate €135m Sep 18 2023 3mE+450 - - -
Jun 11 2020 SIG Combibloc €450m Jun 18 2023 1.875 100 B+255 1.875
Jun 11 2020 SIG Combibloc €550m Jun 18 2025 2.125 100 B+276 2.125
STERLING
Jun 8 2020 Wessex Water £50m Sep 17 2029 1.5 98.356 G+140 1.686
Jun 9 2020 Northern Powergrid £300m Jun 16 2062 1.875 98.793 G+130 1.908
SWISS FRANCS
Jun 8 2020 PSP Swiss Property SFr50m incr Feb 6 2025 1 104.05 MS+65 / Eidg+68 0.123
(SFr150m)
Jun 10 2020 Straumann Holding SFr200m Oct 3 2025 0.55 100.2 MS+100 / 0.512
Eidg+105
NON CORE
Jun 9 2020 Vasakronan NKr324m incr Jun 4 2025 3mN+131.5 100.52 3mN+131.5 -
(NKr500m)
Jun 8 2020 Specialfastigheter SKr500m Jun 15 2023 0.38 100 - 0.38
Jun 8 2020 Specialfastigheter SKr300m Jun 15 2023 3mS+75 101.57 - -
Jun 11 2020 Fastighets AB Stenvalvet SKr300m Jun 16 2023 1.75 99.957 - -
Jun 11 2020 Fastighets AB Stenvalvet SKr500m Jun 16 2023 3mS+165 100 3mS+165 -
Jun 11 2020 Kungsleden SKr300m Jun 18 2025 3mS+195 100 3mS+195 -
FINANCIALS
US DOLLARS
Jun 8 2020 Lloyds Banking Group US$1bn Jun 15 2023 1.326 100 T+110 1.326
Jun 9 2020 Credit Agricole US$1.5bn Jun 16 2026 1.907 100 T+150 1.907
(Jun 2025)
Jun 9 2020 Principal Financial Group US$500m Jun 15 2030 2.125 99.517 T+135 2.179
Jun 10 2020 Toronto-Dominion Bank US$1.75bn Jun 12 2023 0.75 99.926 T+58 0.775
Jun 10 2020 Toronto-Dominion Bank US$1.bn Jun 12 2025 1.15 99.995 T+83 1.151
Jun 11 2020 Fidelis Insurance US$300m Jun 30 2030 4.875 99.021 T+433.8 5
EUROS
Jun 8 2020 ABN Amro Bank AT1 €1bn Perpetual (Sep 2025) 4.375 100 MS+467.4 4.376
Jun 8 2020 Commerzbank AT1 €1.25bn Perpetual (Apr 2026) 6.125 100 MS+636.3 6.131
Jun 8 2020 La Banque Postale SNP €750m Jun 17 2026 (Jun 2025) 0.5 99.421 MS+88 / B+118.9 0.618
Jun 8 2020 Societe Generale €1bn Jun 12 2030 1.25 99.478 MS+135 / B+161.3 1.306
Jun 9 2020 KBC Group €500m Jun 16 2027 (Jun 2026) 0.375 99.281 MS+72 / B+105.1 0.497
Jun 9 2020 Metropolitan Life €500m Jul 16 2027 0.55 99.89 MS+75 / B+107.8 0.566
Jun 9 2020 RBI T2 €500m Jun 18 2032 (Jun 2027) 2.875 99.432 MS+315 / B+347.8 2.966

MS+95 area, MS+65 -10 ~€2.8bn Aa3 ABN / BNPP / CMZ / ING Fr 28%, Ger/Aus 31%, Benelux 15%, UK/
area Ire 12%, Asia 6%, S.Eur 3%, Switz 3%,
Other 2%. FM 68%, Ins/PF 20%, OI/
Agcy 10%, Bks/PWM 1%, Other 1%.
MS+320 area, - >€1.9bn - BNPP / CA-CIB / Natx / Uni / BofA / -
MS+290 area CIC / Helaba / HSBC / ING / SMBC
Nikko / SG
MS+115 area, -2 ~€1bn Baa2/BBB+/BBB+/ BcaIMI / BBVA / BNPP / BofA / GS / Fr 26%, Ger/Aus 22%, Benelux 16%,
MS+85/+90 DNV GL 2nd opinion JPM / MUFG / SG / Uni UK/Ire 10%, It 9%, Switz 5%, Iberia 4%,
Other 4%. AM/FM 80%, Bks/PB 12%,
Ins/PF 6%, Other 2%.
3.875% area, - €2.9bn Baa2/BBB- Barc / BNPP / BofA / DB / RBC -
3.625% area
4.375% area, - €2.55bn Baa2/BBB- Barc / BNPP / BofA / DB / RBC -
3.875%/4%
- - - - Danske / Nordea -
2% area, 1.875%/2% - €2.9bn combined Ba2/BBB-/-/MSCI GS / UBS / Uni / CS -
AA / Sustainalytics
18.8 - Low Risk /
EcoVadis Platinum
2.25% area, - €2.9bn combined Ba2/BBB-/-/MSCI GS / UBS / Uni / CS -
2.125%/2.25% AA / Sustainalytics
18.8 - Low Risk /
EcoVadis Platinum
G+140/+145, - ~£75m Baa1/-/BBB+ Barc / HSBC / NatWest -

G+150 area, G+135 - >£930bn A3/A/A- NatWest / Lloyds / Santan -
area
MS+41/43 - 10acs -/-/A- KBBS / UBS Switz 100%. Tsy 61%, AM 20%, Bks/PB
12%, PF 6%.
MS+115/+125, -10 108acs UBS BBB+/ ZKB ZKB / UBS Switz 100%. PB 45.5%, AM 31%, Ins
MS+100/+115 BBB+ 10.5%, PF 8%, Tsy 5%.
- - - CICERO SEB -
- - - -/AA+ Danske -
- - - -/AA+ Danske -
- - - - SEB -
- - - - SEB -
- - - Baa3 HCM -
T+140 area, -1 US$4.35bn A3/BBB+/A+ GS/Lloyds/MS -

T+115 (+/-5)
T+185 area, 3 US$4.3bn Baa1/A+/A- BofA/Citi/DB/TD -
T+155 (+/-5)
T+150 area, 1 US$650m Baa1/A-/A- Citi/CS/WFS -
T+135 (the #)
T+80 area, 3 US$2.6bn Aa3/A GS/JPM/SMBC/TD/WFS -
T+60 (+/-2)
T+100 area, 2 US$1.5bn Aa3/A GS/JPM/SMBC/TD/WFS -
T+85 (+/-2)
- - - -/BBB WFS -
- - -
5.25%/5.5%, 4.75% - >€8bn -/-/BBB- ABN / CS / HSBC / GS / MS -

area cpn
7% area, 6.375% -25 ~€8.5bn Ba2/BB- Barc / BNPP / CMZ / DB / UBS -
area
MS+120 area, 8 >€2.5bn -/BBB/BBB+ BNPP / Citi / CMZ / LBP / UBS / Uni -
MS+90/+95
MS+160 area, 7 €2.5bn Baa2/BBB/A- SG Fr 30%, UK/Ire 22%, Ger/Aus/Switz 16%,
MS+135 It 9%, Asia 8%, Nordics 7%, Iberia 4%,
Benelux 3%, Other 1%. AM 53%, Ins/PF
29%, Bks/PB 7%, CB/OI 7%, HF 4%.
MS+100 area, 7 >€1.75bn Baa1/A-/A BofA / CA-CIB / CMZ / ING / KBC Fr 23%, Benelux 20%, Ger/Aus/Switz 19%,
MS+75 area / Natx UK 17%, Iberia 10%, It 7%, Nordics 4%. AM
83%, Ins/PF 11%, Bks 5%, Other 1%.
MS+85/+90, - >€700m Aa3/AA-/AA- Barc / CS / DB / JPM -
MS+350 area, 5 >€1.3bn, >100acs Baa3 BNPP / BofA / MS / RBI / SG UK 33%, Ger/Aus/Switz 27%, Fr 19%, It 11%,
MS+320 area Nordics 3%, Neth 3%, Other 4%. FM 69%,
Ins/PF 16%, Bks/PB 9%, HF 5%, Other 1%.

Jun 9 2020 UniCredit €1.25bn Jun 16 2026 (Jun 2025) 1.25 99.563 MS+160 / B+191.7 1.341
Jun 9 2020 Zurich Finance (Ireland) T2 €750m Jun 17 2050 (Jun 2030) 1.875 99.699 MS+195 / B+223.5 1.908
Jun 10 2020 BPER Banca €500m Jul 7 2025 1.875 99.57 MS+220 / B+252.5 1.965
STERLING
Jun 10 2020 Nationwide £750m Perpetual (Dec 2027) 5.75 100 G+562.5 5.75
SWISS FRANCS
Jun 11 2020 Credit Agricole SFr175m Oct 1 2026 0.5 100.07 MS+95 / 0.488
Eidg+96.4
Jun 11 2020 Raiffeisen Schweiz SFr175m Jun 22 2021 0 100.2 - -0.2
COVERED BONDS
EUROS
Jun 8 2020 LBBW €500m Jun 17 2026 0.01 101.2 MS+3 / B+35.2 -0.19
Jun 9 2020 Achmea Bank €500m Jun 16 2025 0.01 100.13 MS+24 / B+55.4 -0.01
SWISS FRANCS
Jun 10 2020 Credit Suisse SFr200m Dec 17 2024 0 100 MS+51.6 / 0
Eidg+52.8
Jun 10 2020 Credit Suisse SFr400m Jun 16 2028 0.25 100.18 MS+54 / Eidg+61.7 0.227
HIGH YIELD
US DOLLARS
Jun 5 2020 NMI Holdings US$400m Jun 1 2025 7.375 100 T+691 7.375
Jun 8 2020 Griffon US$150m Mar 1 2028 5.75 100.25 T+399 5.696
(Mar 2023)
Jun 8 2020 International Game US$750m Jan 15 2029 5.25 100 T+447 5.249
Technology (Jan 2023)
Jun 8 2020 Sirius XM Radio US$1.5bn Jul 1 2030 4.125 100 T+325 4.125
(Jul 2025)
Jun 8 2020 Virgin Media US$250m Jul 15 2030 5 101 T+400 4.873
(Jul 2025)
Jun 9 2020 American Axle & US$400m Jul 1 2028 6.875 100 T+620 6.875
Manufacturing (Jul 2023)
Jun 9 2020 BWX Technologies US$400m Jun 30 2025 4.125 100 T+344 4.125
Jun 9 2020 HTA US$750m Dec 18 2025 7 99.439 T+663 7.125
(Dec 2022)
Jun 9 2020 Hillebrand US$400m Jun 15 2025 5.75 100 T+532 5.75
(Jun 2022)
Jun 9 2020 Realogy US$550m Jun 15 2025 7.625 100 T+722 7.625
(Jun 2022)
Jun 10 2020 Acadia Healthcare US$450m Jul 1 2028 5.5 100 T+485 5.5
(Jul 2023)
Jun 10 2020 Delta Air US$1.25bn Jan 15 2026 7.375 99.986 - 7.375
Jun 10 2020 Level3 Financing US$1.2bn Jul 1 2028 4.25 100 T+369 4.25
(Jul 2023)
Jun 10 2020 New Gold US$400m Jul 15 2027 7.5 100 T+695 7.5
(Jul 2023)
Jun 10 2020 Virgin Media US$500m Jul 15 2028 5 100 T+436 5
Jun 11 2020 Varsity Brands US$150m Dec 22 2024 L+800 97 - 9.833

(Dec 2022)
Jun 11 2020 Watco US$500m Jun 15 2027 6.5 100 T+601 6.5
EUROS
Jun 10 2020 Iqvia €711m Jun 15 2028 (Jun 2023) 2.875 100 B+330 2.875
STERLING
Jun 10 2020 Virgin Media £400m incr Jul 15 2028 (Jul 2023) 4.875 99.5 G+482 4.95
(£900m)


MS+185 area, - >€2.3bn Baa1/BBB/BBB- Uni -
MS+160
MS+215 area, - >€1.5bn A2/A CA-CIB / DB / HSBC / JPM -
MS+200 area
MS+250 area, - >€1bn Ba3/-/BB Barc / BNPP / Citi / Medio / Santan -
MS+220/+225
6.25% area, 5.75% - >£4.4bn Ba1/BB+/BBB- BofA / Citi / JPM / MS -

cpn
MS+95 area 2 32acs Baa1/A-/A+ CS Switz 100%. AM 82.4%, Ins 10.86%, PF

5.14%, PB 1.6%.
-0.2% yld 0 7acs A3 Raiff Switz 100%. Tsy 80%, AM 10%, PF 10%.
MS+7 area 0 >€1.7bn Aaa ABN / CA-CIB / CMZ / LBBW / UBS -

MS+30 area, MS+25 0 >€2.8bn, >100acs Aaa/-/AAA ABN / DZ / ING / Rabo / SG / Uni Ger/Aus 40%, Benelux 28%, Nordics 13%, Fr
(+/-1) 4%, UK 4%, S.Eur 3%, Switz 3%, Other 5%.
AM 45%, Bks 43%, Ins/PF 7%, CB/OI 5%.
0%/0.05%, 0% area 10 SFr188m, 26acs -/-/AAA CS Switz 100%. Bks/Tsy 46%, AM 29%, Ins
yld, 0% yld 15%, PF 10%, Retail/PB 1%.
MS+55/+60, MS+55 13 SFr388m, 37acs -/-/AAA CS Switz 100%. Bks/Tsy 49%, AM 29%, PF
area 12%, Ins 8%, Retail/PB 1%.
7.75%/8% area, - - - JPM/RBC/SunTrust -

7.625% area,
7.375%
99.5%/100% - - B2/B+ BofA/DB/BNP -
5.5% area, - - Ba3/BB Barc/Bofa/BNPP/FIFTB/JPM/ -

5.25% at par MEDIO/Scotia/USI/WFS/KEY
4.25%/5% area - - B3/BB JPM/Barc/Citi/GS/MS/BofA/BNPP/ -
BMO/CA/Miz/RBC/Scotia/STRH/
USB/WFS
101% - - B2/B JPM/BofA/GS/Barc/BNPP/Citi/ -
HSBC/MS/Natwest/Scotia/SocGen
7% area - - B2/B- BofA/Barc/Citi/JPM/RBC. Sr Co- -
Mgrs: BMO/PNC/USB
- - - Ba3/BB MS/WFS/JPM/PNC/TD/USB -
7.375% area, - - B2/B BofA/JPM/STNDRD/ABSA/Barc -
7.125%
6% area, - - Ba1/BB+ HSBC/Citizens/JPM/PNC -
5.75%
8%/8.25% area - - - JPM/Barc/BofA/CapOne/Citizens/ -
CrAg/GS/STRH/BMO/Scotia/TD/
SANT/CS
5.625% area - - Caa1/B BofA/Citi/GS/BMO/CapOne/CA- -
CIB/53/Wells/DB/JPM/MUFG/
Regions
8% area, - - Baa3/BB/BB+ GS/MS -
7.50% (+/- 12.5)
4.25% area, - - Ba3/BB/BB Citi/BofA/Barc/CS/GS/JPM/MS/ -
4.25% RBC/WFS/FITB/Miz/STRH/TD/
Citizens/MUFG/Regions/DB
7.5%/7.75% area - - Caa1/B BofA/JPM/RBC -
5.00% area - - B1/B/B+ DB/CS/ING/RBC/ABN/BofA/IMI/ -

CA-CIB/Lloyds
L+825-850 @96 - - - Jeff/Barc/GS -
w/1% floor
6.5% area - - Caa1/B- JPM/BMO/Citi/STRH/USB/WFS -
3% area - - Ba3/BB GS / BofA / HSBC / JPM / PNC -
99.5 - - B1/B/B+ DB / CS / ABN / CA-CIB / ING / -

BcaIMI / Lloyds / BofA / RBC

GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (12/6/2020)
Moody’s S&P Fitch Moody’s S&P Fitch
Sovereign 1 2 3 4 5 6 Sovereign 1 2 3 4 5 6
Abu Dhabi Aa2 – AA AA+ AA AA+ Laos – – – – B– n BBB+
Albania B1 Ba2 B+ BB – – Latvia A3 Aaa A AAA A– AAA
Andorra – Ba2 BBB AAA BBB+ A+ Lebanon Caa2 Caa1 CCC n CCC CC CCC
Angola B3 B2 B– n B– Bn B Lesotho – – – – B B+
Argentina Caa2 Caa1 CC n B- RD CCC Liechtenstein – Aaa AAA AAA – –
Armenia Ba3 Ba1 – – BB– BB Lithuania A3 p Aaa A AAA A– p AAA
Aruba – – BBB+ n BBB+ BBB– n BBB Luxembourg Aaa Aaa AAA AAA AAA AAA
Australia Aaa Aaa AAA AAA AAA n AAA Macau Aa3 Aa2 – – AA n AAA
Austria Aa1 Aaa AA+ AAA AA+ AAA Macedonia (FYR) – – BB– BB BB+ n BBB–
Azerbaijan Ba2 Ba2 BBn BB+ BB+ BB+ Malaysia A3 A1 A– A+ A– A
Bahamas Baa3 Baa1 BB+ BBB- – – Maldives B2 n Ba3 – – Bn B
Bahrain B2 Ba3 B+ p BB– BB– BBB– Malta A2 Aaa A– p AAA A+ AAA
Bangladesh Ba3 Ba2 BB– BB– BB– BB- Mauritius Baa1 A2 – – – –
Barbados Caa1 B2 B– B- – – Mexico Baa1 n A1 BBB+ n A+ BBB– BBB+
Belarus B3 B3 B B B B Moldova B3 B2 – – – –
Belgium Aa3 Aaa AA AAA AA– AAA Mongolia B3 n B1 B B+ B B+
Belize Caa1 n B1 CCC n CCC+ – – Montenegro B1 p Ba1 B+ n AAA – –
Bermuda A2 Aa3 A+ AA+ – – Montserrat – – BBB– BBB– – –
Bolivia Ba3 Ba2 B+ B+ B+ B+ Morocco Ba1 Baa2 BBB– BBB+ BBB– n BBB
Bosnia Herzegovina B3 B3 B BB– – – Mozambique Caa2 Caa1 CCC+ CCC+ CCC B–
Botswana A2 n Aa3 A– A+ – – Namibia Ba2 n Baa3 – – BB BB+
Brazil Ba2 Ba1 BB– BB+ BB – n BB Netherlands Aaa Aaa AAA AAA AAA AAA
Bulgaria Baa2 A3 BBB A BBB p A– New Zealand Aaa Aaa AA p AAA AA AAA
Cambodia B2 B1 – – – – Nicaragua B2n B1 B- B- B- B-
Cameroon B2 Ba2 Bn BBB– Bn BB+ Nigeria B2 n B1 B B+ B+ n B+
Canada Aaa Aaa AAA AAA AAA AAA Norway Aaa Aaa AAA AAA AAA AAA
Cape Verde – – B BB– B– B Oman Ba1 n Baa3 BB n BB+ BB+ BBB-
Cayman Islands Aa3 Aa2 – – – – Pakistan B3 B2 B– B– B– B–
Chile A1 Aa2 A+ AA A AA Panama Baa1 A2 BBB+ n AAA BBB A
China A1 Aa3 A+ A+ A+ A+ Papua New Guinea B2 B1 B– B– – –
Colombia Baa2 A3 BBB– BBB+ BBB n BBB+ Paraguay Ba1 Baa3 BB BB+ BB+ BB+
Congo (DR) B3 n B3 CCC+ CCC+ – – Peru A3 A1 BBB+ A BBB+ d A–
Congo (Rep) Caa2 n B2 B- BBB- CCC B+ Philippines Baa2 A3 BBB+ A- BBB p BBB+
Cook Islands – – B+ AAA – – Poland A2 Aa3 A– A A– AA–
Costa Rica B2 n Ba2 B nd BB– d Bn B+ n Portugal Baa3 p Aa3 BBB AAA BBB AA
Cote d’Ivoire Ba3 Baa3 – – B+ p BBB– Qatar Aa3 Aa3 AA– AA AA– AA
Croatia Ba2 p Baa3 BBB BBB+ BBB- p BBB+ Ras al–Khaimah A AA+ A AA+
Cuba Caa2 Caa2 – – – – Romania Baa3 n A3 BBB– A– BBB– n BBB+
Curacao – – BBB+ BBB+ – – Russia Baa3 Baa2 BBB- BBB BBB BBB
Cyprus Ba2 p A2 BBB- AAA BBB– p A Rwanda B2 B1 B+ B B+ B+
Czech Rep Aa3 Aa1 AA– AA+ AA- AAA St Vincent & Gren B3 Ba3 – – – –
Denmark Aaa Aaa AAA AAA AAA AAA San Marino – – – – BBB- n BBB+
Dominican Rep Ba3 Ba1 BB– n BB+ BB– BB– Saudi Arabia A1 n A1 A– A A A+
Ecuador B3 n B2 B– B– RD CCC Senegal Ba3 Baa1 B+ BBB– – –
Egypt B2 B1 B B B+ B+ Serbia Ba3 Ba1 BB+ BBB– BB+ BBB–
El Salvador B3 B1 B- AAA B– n B Seychelles – – – – B+ BB
Estonia A1 Aaa AA– AAA AA- AAA Singapore Aaa Aaa AAA AAA AAA AAA
Ethiopia B2 B1 B B Bn B Slovakia A2 Aaa A+ AAA A AAA
Fiji Ba3 Ba3 BB– BB– – – Slovenia Baa1 p Aa1 AA– AAA A AAA
Finland Aa1 Aaa AA+ AAA AA+ p AAA Solomon Islands B3 B2 – – – –
France Aa2 p Aaa AA AAA AA n AAA South Africa Baa3 n A3 BB– BB+ BB+ n BBB–
Gabon Caa1 p B1 B BB+ South Korea Aa2 Aa1 AA AAA AA– AA+
Georgia Ba2 Baa3 BB BBB– BB n BBB– Spain Baa1 Aa1 A AAA A– AAA
Germany Aaa Aaa AAA AAA AAA AAA Sri Lanka B2 Ba3 B– B– B– n B–
Ghana B3 n B1 Bn B+ B B Suriname B2 Ba3 B B+ CCC B-
Greece B1 Baa1 BB– AAA BB BBB+ Sweden Aaa Aaa AAA AAA AAA AAA
Guatemala Ba1 Baa3 BB– BB+ BB n BB+ Switzerland Aaa Aaa AAA AAA AAA AAA
Honduras B1 Ba2 BB– BB – – Tanzania B1n Ba3 – – – –
Hong Kong Aa2 n Aaa AA+ AAA AA– AAA Taiwan Aa3 Aa2 AA– AA+ AA– AA+
Hungary Baa3 Baa1 BBB A– BBB A Thailand Baa1 A2 BBB+ A BBB+ p A–
Iceland A3 p A3 A A An A+ Trinidad & Tobago Ba1 n Baa3 BBB BBB+ – –
India Baa3 n Baa1 BBB– BBB+ BBB– BBB– Tunisia B2 n Ba3 – – B B+
Indonesia Baa2 A3 BBB n BBB+ BBB BBB Turkey B1n B1 B+ BB– BB– BB–
Iraq Caa1 B3 B– AAA B– n B– Turks & Caicos – – BBB+ AAA – –
Ireland A2 Aaa AA– AAA A+ AAA Uganda B2 Ba3 BB A– B+ B+
Israel A1 Aa3 AA- AA+ A+ AA Ukraine Caa1p B3 B B Bp B
Italy Baa3 Aa3 BBB n AAA BBB– AA– UAE Aa2 Aa2 – – – –
Jamaica B2 Ba3 B+ n BB– B+ BB– UK Aa2 Aaa AA + AAA AA n AAA
Japan A1 p Aaa A+* AA+ A AAA USA Aaa Aaa AA+ AAA AAA AAA
Jordan B1 Ba1 B+ BB BB– n BB Uruguay Baa2 A2 BBB A– BBB– n BBB+
Kazakhstan Baa3 p Baa2 BBB– BBB BBB BBB+ Uzbekistan – – BB– n d BB–
Kenya B2 n Ba3 B+ BB– B+ BB– Venezuela C Ca SD CC – –
Kuwait Aa2 Aa2 AA AA+ AA AA+ Vietnam Ba3 Ba1 BB BB BB p BB
Kyrgyzstan B2 Ba3 – – – – Zambia Caa2 n B3 CCC+ CCC+ CCC B–
1 Moody’s Government Bonds 5 Fitch Government Bonds n Negative outlook/on watch * Taken off positive watch/ c Improvement in ratings,
2 Moody’s Country Ceilings 6 Fitch Country Ceilings for downgrade outlook outlook or watch status
3 S&P Government Bonds p Positive outlook/on watch N New rating ** Taken off negative watch/ d Deterioration in ratings,
4 S&P Transfer and for upgrade W Rating withdrawn outlook outlook or watch status
Convertibility Assessments SD Selective default

EMERGING MARKETS
China 64 Hong Kong 64 India 65 Indonesia 65 Macau 67 Philippines 67 Thailand 67 Albania 70
Croatia 70 Russia 71 Bahrain 71 Argentina 72 Ecuador 73
FRONT STORY AFRICA
African issuers make their presence felt

Continent sees first supply in months
Helios treated to significant interest
Two African issuers injected life back into orders to purchase up to US$60m and is disturbing and there were questions on
the region’s bond market on Tuesday, US$25m, respectively. my part if the company was able to extract
proving the existence of deep reserves of Such was the interest from other accounts cash from the DRC to the holdco even before
interest for deals at different ends of the that the deal was upsized from the US$425m the coronavirus,” said Budovnits.
rating spectrum. Helios said it was originally targeting, while “So I decided to stay away. The premium
African credits have been among the it also cancelled a tender offer on its to a similar deal from IHS is just not that
worst hit by the global spread of coronavirus US$600m 9.125% senior notes due 2022. enticing to jump in.”
and several governments are seeking debt “Given the strength of feedback and IoIs,
relief as a result. the tender has been cancelled and a full call
But with credit markets on a tear thanks announced,” said a lead. “So this is now a “We were not in a super rush
to huge stimulus measures by central banks FULLûRElNANCINGûNOTûPARTIALvû4HEûû to refi. Our strategy was to do
and governments, interest is growing in bonds can be called next month. what was in our control, have
riskier areas of the market. 0RICINGûTIGHTENEDûSIGNIlCANTLYûWITHû)(3û
the docs and everything ready
Some investors are uncomfortable with Towers, the largest mobile
the strength of the rally. telecommunications infrastructure provider
and press go at the drop of a
“That is something that I struggle to get in Africa, Europe and the Middle East by hat. We are the first African
my head around daily,” said one EM tower count, the most obvious comparable. corporate to do a bond since
portfolio manager, given the global IHS has a March 2021 bond bid at 7.15%, Covid and we’re proud of that as
economic outlook. ACCORDINGûTOû2ElNITIVûDATA well as the deal”
But while others may agree with that “I’m assuming [Helios] lands in the low 7s,
view, the fear of missing out is driving WHICHûISûBASICALLYûmATûTOûTHROUGHû)(3û AFRICA FINANCE CORPORATION (A3, negative), a
investment decisions. although bid-offers in secondary are fairly pan-regional multilateral based in Nigeria, was
“It looks like the yield hunt has reached wide, so you can’t actually pick up IHS also in the market, raising US$700m. Initial
its illogically logical height,” said Olga bonds at those levels,” said the banker away. PRICEûTHOUGHTSûFORûAûlVE YEARûBONDûWEREû
Budovnits, a portfolio manager at Main Helios landed the note at 7.125% and released at 3.625% area, but a book in excess of
Partners. eventually took US$750m on a book of US$2bn saw pricing tightened to 3.25%.
One borrower taking advantage was US$3bn. h!&#ûISûDElNITELYûCHEAPûFORûTHEûRATINGvû
HELIOS TOWERS (B2/B), an independent Greenwood said conversations with said Budovnits after IPTs were announced.
telecommunications company in Africa investors have changed in their nature from “It’s a supra bank sitting on a lot of
with an extensive portfolio of around 7,000 the issuer’s debut over three years ago, unutilised capital and liquidity, so that’s
TOWERSûACROSSûlVEûCOUNTRIES when the questions were focused on what keeps the rating high despite what
“The market had been very poor and took country risk. might be happening in the invested part of
a big dip with Covid,” said Tom Greenwood, “This time round it was much more about its balance sheet.”
CFO of Helios Towers. the business strategy and M&A One banker away from the deal reckoned
h7EûWEREûNOTûINûAûSUPERûRUSHûTOûRElû/URû opportunities,” he said. “Investors have it was starting with a premium of 40bp, but
strategy was to do what was in our control, been comforted to some extent by our great that was more or less wiped out during the
have the docs and everything ready and business performance. Q1 2020 was our 21st execution process.
PRESSûGOûATûTHEûDROPûOFûAûHATû7EûAREûTHEûlRSTû consecutive quarter of Ebitda growth, which “You look at the African credits which in
African corporate to do a bond since Covid is really strong.” the downdraft were trading at very
and we’re proud of that as well as the deal.” Greenwood said the main buyers of the distressed levels. Now you see someone like
After a day of calls with investors, leads bond were large institutional accounts AFC looking to get a record-low coupon for
opened books on an expected US$700m 5.5- through their EM desks. them,” said an EM trader.
year non-call two guaranteed bond at 7.75% Not every investor is comfortable with Bankers cautioned, however, against
area. taking on the risk, though, especially given EXPECTINGûAûSTEADYûmOWûOFû!FRICANûISSUANCEû
“Smart timing. The market is very strong the devastating economic impact of health emphasising that Helios in particular drew
and it looks like they are going to get a good emergencies in a country such as the INTERESTûFORûSPECIlCûCREDITûANDûSECTORûREASONS
outcome,” said one banker away from the Democratic Republic of Congo, which has “The towers sector is not cyclical and not oil
deal. had to tackle Ebola and now Covid-19. and gas. It doesn’t necessarily mean you would
The transaction had anchor investment “Helios is in part a derivative risk on a see a similar response to other Single B issuers,”
through Emerging Africa Infrastructure relatively stable telecom business. But on said a second banker away from the deal.
Fund and DEG. They committed to place THEûOTHERûHANDûTHEûNEWSmOWûFROMûTHEû$2#û Sudip Roy, Robert Hogg

185bp/182bp over Treasuries last Thursday existing notes upon maturity” if the
morning. exchange offer is not completed.
ASIA-PACIFIC Moody’s said Mengniu’s strong liquidity Moody’s said that Hilong’s liquidity
POSITIONûANDûPOSITIVEûFREEûCASHmOWûWILLû SOURCESûANDûEXPECTEDûOPERATINGûCASHmOWSû
continue to provide a buffer against OVERûTHEûNEXTûûMONTHSûAREûINSUFlCIENTûTOû
CHINA potential market volatility. It expects cover Rmb1.7bn (US$240m) of short-term
adjusted debt/Ebitda to stay below 2.8x in debt.
INVESTORS LAP UP MENGNIU DAIRY the coming 12–18 months, as Ebitda growth &ITCHûCITEDûTHEûHIGHûRElNANCINGûRISKû
DUAL-TRANCHER will outpace an increase in debt. associated with Hilong’s exchange offer,
Moody’s said Mengniu’s Baa1 rating is given that so far it “has not met the
CHINA MENGNIU DAIRYûDREWûlNALûORDERSûOFûMOREû supported by its three strategic minimum acceptance amount and there has
than US$5.7bn for a tightly priced US$800m shareholders: Cofco, Danone and Arla Foods. been limited progress in moving funds
Reg S dual-tranche senior unsecured bond In particular, it has factored in strong offshore”.
issue that extended its curve to 10 years. support from Cofco because the two “share Hilong on May 29 added a cash portion to
!û53MûûlVE YEARûTRANCHEûWASû joint responsibility for developing a quality the exchange offer in order to attract more
priced at 99.526 to yield 1.975%, or dairy business in China”. bondholders.
Treasuries plus 160bp. A US$300m 2.5% 10- Under the revised terms, eligible holders
year tranche was priced at 99.587 to yield HILONG DOWNGRADED AFTER EXCHANGE of the 2020s will receive US$900 in principal
2.547%, or Treasuries plus 175bp. OFFER STALLS amount of new 1.75-year US dollar senior
This is the Hong Kong-listed Chinese Reg S notes due 2022 and US$100 in cash as
DAIRYûPRODUCTSûCOMPANYSûlRSTû YEARû Moody’s and Fitch downgraded HILONG an upfront consideration plus US$5 in cash
bond issue since its US dollar debut in HOLDING on June 9, citing heightened as an early incentive for exchanging each
û)TSûTHREEûPREVIOUSûDEALSûALLûHADûlVE RElNANCINGûRISKSûAFTERûTHEû#HINESEûOILû US$1,000 of principal.
year tenors. services company warned it may default if Before the revision, there was no upfront
Final pricing for both tranches came 80bp investors continue to reject an exchange cash consideration, with holders set to
inside initial guidance of 240bp area and offer for its US dollar bonds maturing this receive the new 2022s on a par-to-par basis.
255bp area, and was about 40bp inside month. The new 2022s will have a minimum yield
Mengniu’s pre-transaction curve, according Moody’s lowered Hilong’s issuer and to maturity of 9.75%.
to a banker on the deal. The 80bp revision is senior unsecured bond ratings to B3 from B2 As well as adding the upfront cash
one of the biggest on an investment-grade and placed them on review for further consideration and extending the deadline,
offering from China this year. downgrades. Hilong increased the threshold for
At reoffer spreads of Treasuries plus Fitch cut Hilong’s issuer and senior unsecured proceeding with the exchange offer to at
160bp and 175bp, the two tranches also bond ratings to CC from B and removed the least 80% in principal amount of the 2020s
undercut fair value estimates of 180bp and ratings from negative rating watch. being tendered and accepted, up from 75%.
192bp (ANZ) and 185bp–190bp and 200bp– )NûAû*UNEûûlLINGû(ONGû+ONG LISTEDû(ILONGûSAIDû Admiralty Harbour, CLSA, HSBC and SPDB
205bp (Nomura). it had again extended the deadline for an International are dealer-managers on the
“Investors like the name. This is not a exchange offer on US$165.114m of 7.25% senior exchange offer and DF King is the
frequent issuer and there is not much unsecured notes due June 22. It also dropped a information and exchange agent.
supply. Its results were also better than the plan for a concurrent new money issue.
market expected,” said the banker. Hilong has extended the deadline by 10
Mengniu (Baa1/BBB+) last Tuesday days to June 15, having already sweetened HONG KONG
PREDICTEDûlRST HALFûPROlTûWOULDûFALLûn the terms of the exchange and pushed the
60% year-on-year as a result of the Covid-19 deadline to June 5 from June 3. Settlement is CHAMPION TRIUMPHS ON PRICING
disruption, but said revenues in April and now expected on June 22.
May were up more than 10% on 2019 as )NûTHEûlLINGûTHEûCOMPANYûWARNEDûTHATûITû Hong Kong real estate investment trust
operations returned to normal, sending the hMAYûNOTûHAVEûSUFlCIENTûFUNDSûTOûREPAYûTHEû CHAMPION REIT last Monday sold a US$300m
stock up 5.5%.
Excess demand spilled over into ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS
Mengniu’s 3% 2024s, which tightened by BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
40bp last Wednesday, the pricing day, to Asia-Pacific Managing No of Total Share
around 160bp over Treasuries. Managing No of Total Share bank or group issues US$(m) (%)
However, there was considerable order bank or group issues US$(m) (%)
1 Citigroup 122 33,401.14 9.1
ATTRITIONûATûlNALûGUIDANCEûWITHûTHEûBOOKû 1 HSBC 125 15,022.82 9.0
2 JP Morgan 117 28,016.51 7.6
shrinking from a peak of more than 2 Citigroup 73 11,326.06 6.8
3 HSBC 159 26,917.19 7.3
US$14.5bn. 3 Standard Chartered 69 8,348.35 5.0
4 Standard Chartered 93 21,227.15 5.8
The banker said some fast money 4 BofA Securities 32 6,703.72 4.0
5 Deutsche Bank 59 20,516.79 5.6
accounts, such as proprietary trading desks, 5 UBS 56 6,634.18 4.0
6 Goldman Sachs 63 18,678.26 5.1
had withdrawn their orders as they saw 6 Bank of China 76 6,573.10 4.0
7 BNP Paribas 74 17,089.42 4.6
little upside after the aggressive tightening. 7 Credit Suisse 55 6,213.38 3.7
8 BofA Securities 63 16,812.25 4.6
But real money accounts remained in the 8 JP Morgan 50 5,738.37 3.5
9 Barclays 65 11,722.57 3.2
book. 9 Goldman Sachs 33 5,604.76 3.4
10 Morgan Stanley 41 9,906.69 2.7
The newly priced notes traded weak in 10 DBS Group 54 5,047.05 3.0
Total 537 367,695.81
THEûAFTERMARKETûWITHûTHEûlVE YEARûABOUTû Total 352 166,125.13
Excluding equity-related debt.
3bp wider and the 10-year about 8bp wider, Excluding equity-related debt.
respectively at 164bp/162bp and Source: Refinitiv SDC code: L4 Source: Refinitiv SDC code: L1

EMERGING MARKETS ASIA-PACIFIC
China developers seize window

ASIA Busiest week for new high-yield issues since January
Chinese high-yield developers are rushing to the or flat to their curves with final pricing tightening is more transparent and their assets are more
dollar bond market as spreads have continued to 50bp–60bp from initial guidance. The exception transferrable in the event of a liquidity crunch,”
tighten since Zhenro Properties Group reopened was Radiance’s US$250m deal, which only he said.
the market for the sector in mid-May. tightened 25bp from IPG. In a report dated June 8, Nomura said it
Seven property companies raised a combined Some of the deals were more than six times expected the solid demand in the dollar market
US$2.16bn last week, a return to the levels of subscribed, including Greenland’s offering, to persist as the spread differential between
activity last seen before the Covid-19 pandemic which despite a relatively large issue size of offshore and onshore property bonds has
closed high-yield primary in early March. It was US$500m was eight times covered, and CCRE’s become more attractive.
the busiest week since January 12–18, which US$400m issue, which was nearly nine times It also expects solid Single B names to
also featured seven deals, but still lagged the subscribed. Both were priced on June 8. gradually catch up with Double B names
January 5–11 peak for the year, when 14 property as risk appetite returns, but there will be a
deals were priced, according to IFR data. SOLID DEMAND divergence among Single B credits as small
“We’ve seen the strong recovery from the “Most of the deals that priced in the week developers with tight liquidity could face
March sell-offs with bond yields for many of the didn’t see considerable order attrition despite refinancing pressure.
property names coming back to the 2019 year- the significant tightening from IPGs, although Nomura has raised its estimate for the gross
end level, although still wider than January’s we saw a bigger drop [in orders] on Tuesday’s supply of offshore bonds from China’s property
tightest levels,” said a banker from a Chinese deals because of weaker market sentiment on sector this year to US$50bn–$55bn, from a
brokerage. “Developers are opportunistic, they’re the day,” said the banker. “The market overall prediction of US$45bn earlier.
monitoring the market and waiting for the right remains stable and supportive and we don’t see “The need for a liquidity buffer on delayed
window.” the window for developers closing soon.” pre-sales should drive more aggressive bond
Five frequent issuers with an established The new issues all had two or three-year issuance,” Nomura wrote. Chinese property sales
curve tapped the market last week – GREENLAND tenors to meet investor preferences. “Investors ground to a halt for much of the first quarter as
HOLDING GROUP, CENTRAL CHINA REAL ESTATE, are more comfortable with the short-end of showrooms were forced to close at the height of
CHINA FORTUNE LAND DEVELOPMENT, RONSHINE the curve. If risk appetite further improves, the Covid-19 outbreak.
CHINA HOLDINGS and POWERLONG REAL ESTATE developers will try longer-dated bonds,” said a Some developers may use their offshore debt
HOLDINGS. There were also two relatively new banker from a Chinese investment bank. issuance quotas to refinance 2021 maturities,
names with a short offshore track record, He said high-yield bond supply will continue while others may issue bonds with a tenor of less
RADIANCE GROUP and SINIC HOLDINGS (GROUP). to come mainly from China’s property sector as it than one year, for which they do not need to use
All transactions were oversubscribed, and has the lowest default risk among the country’s their quotas.
most of the issuers priced the new bonds inside high-yield issuers. “The business of developers Carol Chan
10-year Reg S bond in an offering that was managers booked 78%, banks 13%, and Spreads for Indian investment-grade
six times subscribed. private banks, corporates and others 9%. issuers have tightened after an initial knee-
The 2.95% bond was priced at 98.6 to yield The senior unsecured notes have an jerk reaction to Moody’s downgrade this
3.114%, or Treasuries plus 220bp, inside expected rating of Baa1 by Moody’s, in line month of the sovereign to Baa3 from Baa2,
initial guidance of the 260bp area. with the issuer’s parent company Champion with an unchanged negative outlook.
The Hong Kong-listed issuer previously REIT. PFC is rated Baa3/BBB–/BBB–, according to
visited the international bond market in Mizuho Securities, SMBC Nikko, UBS, BNP 2ElNITIVûDATA
2013 with a debut US$400m 10-year bond. Paribas, Citigroup, HSBC, JP Morgan, Standard “Although growth concerns remain for
That bond is fairly illiquid, but Nomura Chartered, DBS Bank, ICBC International and India for the next few months because of
saw fair value for the new issue at CMB International were global coordinators the lockdown, some investment-grade
Treasuries plus 225bp, based on bonds and bookrunners. CommerzBank was a joint issuers may come back to the dollar bond
from other Hong Kong landlords such as lead manager. market because of lack of supply and
Swire Properties and Hysan Development. The company owns and manages Three tightening of spreads,” said a DCM banker.
A source close to the deal estimated that Garden Road and Langham Place in Hong The spread on PFC’s 3.95% April 2030
Champion REIT had priced inside fair value, as Kong. bonds have tightened by 44bp to 367bp
2027 and 2029 bonds from Hysan, which is SINCEû*UNEûûACCORDINGûTOû2ElNITIVûDATA
rated a notch higher at A3/BBB+/A–, were seen In the domestic market, PFC raised
at G spreads of 225bp and 231bp, respectively. INDIA Rs55.24bn (US$731m) from two-tranche
Some key accounts were initially deterred BONDSûACCORDINGûTOûAû"3%ûlLING
by the tight price guidance, but came in PFC SENDS RFP FOR DOLLAR BONDS
later, said the source.
Final orders were over US$1.8bn from 124 POWER FINANCE CORP has sent banks a request INDONESIA
accounts, including US$130m from the for proposals for a potential Reg S/144A US
leads. The issue size was capped at dollar bond issue, according to market GEO ENERGY STRIKES IT LUCKY
US$300m. sources.
Asia took 96% of the Reg S bonds and The tenor and size will be decided after GEO ENERGY RESOURCES said that holders of its
EMEA 4%. Asset managers and fund the appointment of banks. US dollar bonds had not consented to a

Kepco shakes off coal shadow
SOUTH KOREA Green bond issue succeeds despite investor doubts over transition strategy
KOREA ELECTRIC POWER CORPORATION garnered and private banks and others 1%. the projects need to be approved by the
strong investor demand for a five-year green The bonds held up with the tight pricing in the government, which under the current
bond issue despite mounting pressure from aftermarket on their first few days of trading, but administration has been calling for a shift to
global investors over its involvement in overseas spreads widened to around 85bp over Treasuries renewables and cutback in the dependence
coal projects. last Friday, according to Tradeweb, broadly in on coal and nuclear power.
The state-backed utility, rated Aa2/AA/AA–, line with a wider market sell-off. The Indonesian projects recently received the
priced US$500m of 1.125% senior unsecured The near-monopoly operator of South Korea’s green light in the South Korean government’s
notes at 99.695 to yield 1.188%, or Treasuries electricity grid is under pressure from global preliminary feasibility test after being deemed to
plus 75bp, inside initial guidance of 120bp area. investors over its climate policy. have “insufficient business value” last year.
Final pricing came flat to Korea Development Kepco said it has received a letter from Kepco has acknowledged investors’ ESG
Bank’s five-year bonds, priced in late May at Blackrock asking for fuller disclosure on concerns and said it will focus on low-carbon
plus 90bp, and tighter than other comparable its overseas coal projects, while a group of and environmentally friendly projects in the
credits, including Korea East-West Power and international investors, including APG Asset future, while participating in coal projects only
Kepco’s other genco subsidiaries, according to Management, Church Commissioners of under strict standards, according to a letter to
an investor note. England and UBS Asset Management, urged it investors early last month.
Despite the tight pricing, the deal was over in late March to reconsider its plans to finance In a statement, Kepco said its new bond
10 times subscribed, drawing final orders of new overseas coal-fired power plants. offering demonstrated investor demand for
more than US$5.2bn from 270 accounts. There APG shunned the new green bond, saying sustainable investments and highlighted that
was virtually no attrition from the peak book of it wanted to see a climate transition strategy it was the first South Korean company to issue
US$5.3bn at final guidance. from Kepco, as with all energy companies it green bonds for two straight years.
“Generally, around 150–200 accounts buy invests in. Kepco previously visited the international
[South] Korean paper so the bonds were well The Dutch pension fund, which managed bond market in June last year with a debut green
received thanks to good market conditions, €538bn in assets last year, has already sold a bond offering, which was its first offshore deal
strong credit and the ESG factor,” said a banker €60m equity stake in Kepco over lack of progress for nearly nine years.
on the deal. to lower carbon emissions. This left APG with a The government holds a 51% stake in the firm.
Investor demand was also seen in the US, minimal position in Kepco, with less than €1m Proceeds will be allocated to green eligible
which took 22% of the notes. Asian investors held in a passive strategy. categories, in accordance with Kepco’s
bought 66% and the rest went to EMEA. Asset Kepco plans to invest in new coal mines sustainable finance framework.
managers and fund managers took 62%, and power stations including Jawa 9 and Citigroup, HSBC and JP Morgan were
insurers and pension funds 15%, banks 13%, 10 in Indonesia and Vung Ang 2 in Vietnam, bookrunners.
central banks and sovereign wealth funds 9% pending final board approval. Before that, Jihye Hwang
proposal intended to remove a put option, for the tender offer. Morrow Sodali is exploration carried out in May by SMG
but that a new discovery might mean it does information and tender agent. Consultants at one of its mines in
not need to redeem the bonds early anyway. When the company issued the dollar Kalimantan had revealed reserves of a
The coal miner had offered holders of its bonds, it had agreed to acquire two mines further 29 million tons. It is also in talks
US$154.017m 8% bonds due 2022 a cash from Titan Global Energy, but the with the Indonesian authorities to extend its
payment of US$10 per US$1,000 of principal transaction was terminated on April 1 after PERMITSûFORûTHEû3$*ûANDû4"2ûMINESûBYûlVEû
amount if they consented to amend the being on hold for months. and six years, respectively.
terms. Geo Energy needs to have 80 million tons As a result, Geo said the put option on the
The proposed amendments would have of coal reserves by April 4 2021, as well as a bonds may fall away whether or not it
allowed Geo to take on new debt and production operations permit that expires makes another acquisition by April 2021.
removed a clause that gives investors the no earlier than October 4 2025, otherwise
option to redeem the bonds in April 2021. bondholders have the right to trigger a put GARUDA EXTENSION APPROVED
The company needed holders of 75% of the option. If its reserves reach 120 million tons,
bonds to give their consent in order to make the put option will be removed. GARUDA INDONESIA said holders of 90.88% of its
the changes. The company would have met these targets US$500m 5.95% sukuk issue due on June 3
The consent solicitation ran alongside a if it had completed the Titan Global Energy have agreed to amend the terms, giving it
tender offer for the bonds, which expires on acquisition, but the collapse of the agreement breathing room as travel restrictions weigh
June 18. Geo offered US$430 per US$1,000 of left it looking to either make another on the airline industry.
face value for holders that tendered by June acquisition or change the terms of the notes. Following the approval, the carrier will
4, and U$$400 for those that tendered after Geo Energy had 74.5 million tons of extend the maturity by three years and
that date but by June 18. reserves at the end of March, and the leases waive covenants until operations return to
Holders of US$20.86m of the bonds had on its two biggest mines, run by subsidiaries normal.
tendered them by the early-bird deadline of Sungai Danau Jaya and Tanah Bumbu Holders of 89% of the sukuk had approved the
June 4. Resources, expire in 2022. proposal as of the early-bird deadline of June 1.
Deutsche Bank was dealer-manager for the Fortuitously, the company said in an The airline offered to pay 1.25% of
consent solicitation and holds the same role announcement on June 5 that preliminary principal amount to sukuk holders that gave

their consent to the proposal by June 1. This US$107.6m in the same period in 2019. It The investor demand came despite the
payment dropped to 0.5% for those that gave had cash of US$265m and US$676m of deal being unrated and the negative
their approval after June 1 but by June 8. undrawn loans at the end of March. headlines about port operators in
Garuda, which is 60% state-owned, is in Proceeds from the offering will be used to connection with virus containment
discussions with the government about a repay part of its revolving credit facility and measures.
possible bridge loan, but nothing has been for general corporate purposes. Unctad, the United Nations organisation
OFlCIALLYûCONlRMED Bank of America was sole global coordinator THATûTRACKSûTRADEûmOWSûEXPECTSûWORLDûTRADEû
PJT PartnersûWASûlNANCIALûADVISERûTOû for the MGM China trade. to fall by 27% in the second quarter from the
Garuda and Allen & Overy was legal adviser. The new bonds were quoted at a cash lRSTûBECAUSEûOFûTHEûPANDEMICûTHATûHADû
Clifford Chance was legal adviser to an ad price of 100.1 on Friday, according to ALREADYûLEDûTOûAûûDROPûINûTHEûlRSTûTHREEû
hoc committee of investors that holds 28% MarketAxess. months of this year.
of the sukuk. Deutsche Bank is sole global coordinator Nomura saw fair value for the new 2030s
The measures required approval by 75% of and lead left bookrunner for the Wynn at 4.75%, calling the issuer a cross-over
those present at a meeting comprising Macau deal. candidate if rated, for example, between
holders of at least 75% of the sukuk. BBB– and BB+.
It added that the bonds should trade about
PHILIPPINES mATûTOûTHEûSûOFû!DANIû0ORTSûANDû3PECIALû
MACAU Economic Zone, rated Baa3 by Moody’s,
ICTSI SHRUGS OFF TRADE SLUMP BECAUSEûOFû)#43)SûDIVERSIlEDûPORTû
MGM ADDS TO CASINO COMEBACK operations and lower reliance on the coal
Philippine port operator INTERNATIONAL supply chain. Nomura also cited strong
MGM CHINA on Thursday priced a US$500m CONTAINER TERMINAL SERVICES has printed a domestic technicals in the Philippine
lVE YEARûNON CALLûTWOûBONDûISSUEûATûPARûTOû US$400m 4.75% 10-year bond that was more corporate sector.
yield 5.25%, inside initial guidance of 5.625% than 4.5 times covered, shrugging off 4HEû0HILIPPINESûCREDITûPROlLEûHASûBEENû
area, just as a rival casino operator forecasts of a slump in global trade due to characterised by a robust economic
announced a new deal. the coronavirus outbreak. PERFORMANCEûSTRENGTHENINGûlSCALûPOSITIONû
The 144A/Reg S deal has expected ratings The senior unsecured notes issue was and limited vulnerability to external shocks
of Ba3/BB– (Moody’s/S&P), in line with the priced at 99.607 to yield 4.8%, which was at in recent years, according to a Moody’s
ISSUERûMAKINGûITûTHEûlRSTûHIGH YIELDûDEALûOFû THEûTIGHTûENDûOFûlNALûGUIDANCEûANDûWELLû report in May, although the virus outbreak
the year from the Macau casino sector. inside initial guidance in the 5.25% area. presents near-term challenges.
Nomura put fair value at around 5%, 4HEû2EGû3ûDEALûDREWûlNALûORDERSûOFûMOREû Proceeds of the new bonds will be used to
based on the MGM China 2024 and 2026 than US$1.85bn from 111 accounts. It also RElNANCEûANDûEXTENDûTHEûMATURITYûOFûTHEû
bonds, which were quoted at yields of 4.76% paid a negative new issue concession of group’s liabilities, and for general corporate
and 5.26% mid. 5bp–10bp compared with similar credits purposes.
Final guidance had already been set when from the Philippines, although there was a Asia bought 80%, EMEA 19% and offshore
peer WYNN MACAU, rated B1/B+ (Moody’s/ new issue premium of 10bp–15bp compared US accounts 1%. Fund managers and asset
Fitch), announced price talk of 5.5% area for with its own curve. managers took 65% of the notes, private
a US$750m 5.5-year non-call two offering, This was calculated by looking at the 40bp banks and banks 21% and insurers and
which was set to be priced in New York DIFFERENCEûBETWEENûlVE YEARûANDû YEARû pensions 14%.
hours on Friday. Treasury yields, then applying this to ICTSI’s ICTSI develops, manages and operates
Triple B rated SANDS CHINA had reopened 2025 bonds and adding 10bp for the extra PORTSûINû!SIA 0ACIlCûTHEû!MERICASû%UROPEû
the US dollar market for Macau casino credit risk, according to a banker on the the Middle East and Africa.
credits with a US$1.5bn dual-tranche deal. Citigroup, Credit Suisse and JP Morgan were
Yankee trade on June 2 that repriced its “The bond offered an attractive headline bookrunners.
curve. SPREADûANDûITûWASûTHEûlRSTûNON SOVEREIGNû
MGM China owns and operates the MGM Philippines dollar credit post Covid-19,” said
Macau and MGM Cotai casino, hotel and the banker. THAILAND
entertainment resorts in Macau. New York- While the new bonds were also priced
listed MGM Resorts International holds a amid an overall credit rally, a ICTSI funding THAI OIL DUAL-TRANCHER PRICES
majority stake in MGM China, and investors OFlCIALûSAIDûTHEûCOMPANYSûHEALTHYûBALANCEû INSIDE CURVE
can put the bonds at a cash price of 101 if sheet and defensive business structure
there is a change of control. There is also a contributed to the strong demand. THAI OIL has raised US$1bn from a two-
put option at par if MGM China loses its “There was a reduction in trade volumes tranche bond offering that priced inside its
gaming licence. from the lockdown but we were able to secondary curve after tightening twice from
Macau closed casinos for a 15-day period RETAINûOURûMARGINvûTHEûOFlCIALûSAID initial guidance just before a sell-off in US
in February to prevent the spread of ICTSI’s Ebitda was US$830m in FY19 and markets on Thursday.
coronavirus. MGM China’s casinos resumed 53MûINûTHEûlRSTûQUARTERûOFûTHISûYEARû A US$400m 10-year 2.5% note priced at
full operations on March 20 with additional with a relatively stable margin at 53%–57%, 99.859 to yield 2.516% or Treasuries plus
safety measures such as fewer seats at thanks to continued cost improvements, 185bp. Initial guidance had been set at plus
gaming tables and greater distances according to a note from Nomura analysts. 245bp area and was later revised to the
between slot machines. The new bonds were quoted 15bp tighter 210bp area.
In the two months ended May 31, MGM INûTHEûAFTERMARKETûONûTHEIRûlRSTûTRADINGûDAYû A US$600m 30-year tranche was priced at
China lost an average of US$61.2m per last Thursday at 4.65% but were trading par to yield 3.75%, inside initial guidance
month, measured in property Ebitda terms, weaker at 4.71% last Friday, according to that began at the 4.3% area and was revised
COMPAREDûWITHûANûAVERAGEûMONTHLYûPROlTûOFû Tradeweb. to the 3.95% area.

GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 12/6/2020
ASIA
Jun 8 2020 Central China Real Estate US$400m Aug 27 2023 7.65 99.543 - 7.8
Jun 8 2020 Champion REIT US$300m Jun 15 2030 2.95 98.6 T+220 3.114
Jun 8 2020 Greenland Holding US$500m Dec 16 2022 6.25 99.718 6.45%(YTP) 6.45
Jun 8 2020 Kepco US$500m Jun 15 2025 1.125 99.695 T+75 1.188
Jun 9 2020 China Fortune Land US$300m Jun 16 2022 6.92 100 - 6.92
Development
Jun 9 2020 Ronshine China US$250m Dec 15 2023 (Dec 2022) 7.35 100 - 7.35
Jun 9 2020 Shanghai Construction US$600m Jun 16 2025 2.25 99.456 T+195 2.366
Jun 9 2020 UPL US$500m Jun 16 2030 4.625 99.565 T+385 4.68
Jun 10 2020 China Mengniu Dairy US$500m Jun 17 2025 1.875 99.526 T+160 1.975
Jun 10 2020 China Mengniu Dairy US$300m Jun 17 2030 2.5 99.587 T+175 2.547
Jun 10 2020 Credicorp US$500m Jun 17 2025 2.75 99.459 T+250 2.867
Jun 10 2020 International Container US$400m Jun 17 2030 4.75 99.607 - 4.8
Terminal Services
Jun 10 2020 Powerlong Real Estate US$250m incr Jul 23 2023 6.95 99.853 - 7
(US$420m)
Jun 10 2020 Radiance US$250m Sep 17 2023 (Jun 2022) 8.8 99.195 - 9.25
Jun 10 2020 Zhengzhou Airport Economy US$300m Jun 17 2023 3.4 100 - 3.4
Zone Xinggang Investment
Group
Jun 11 2020 MGM China US$500m Perpetual 5.25 100 - 5.25
Jun 11 2020 Sinic Holdings US$210m Jun 18 2022 10.5 98.473 - 11.38
Jun 11 2020 ThaiOil Treasury Center US$400m Jun 18 2030 2.5 99.859 T+185 2.516
Company Ltd
Jun 11 2020 ThaiOil Treasury Center US$600m Jun 18 2050 3.75 100 T+233.8 3.75
Company Ltd
EMEA
Jun 9 2020 Albania €650m Jun 16 2027 3.5 99.239 MS+378.4 / 3.625
B+412.3
Jun 9 2020 AFC US$700m Jun 16 2025 3.125 99.427 MS+279.8 / 3.25
T+284.1
Jun 9 2020 Dubai Islamic Bank US$1bn Jan 16 2026 2.95 99.988 MS+245 / T+254.3 2.952
Jun 9 2020 Helios Towers US$750m Dec 18 2025 (Jun 2022) 7 99.439 - 7.125
Jun 9 2020 PPF Telecom €100m incr May 20 2024 3.5 102.6 MS+303.8 / 2.75
(€600m) B+336.1
Jun 10 2020 Croatia €2bn Jun 17 2031 1.5 98.572 MS+165 / B+197.4 1.643
Jun 11 2020 VEON Rbs20bn Jun 18 2025 6.3 100 - 6.3

LATAM
Jun 10 2020 Credicorp Capital US$500m Jun 17 2025 2.75 99.459 T+250 2.867

8.35% area - US$3.5bn, 259acs -/-/BB- BNPP/BofA/Citi/CNCBI/CS/Haitong/ APAC 93%, EMEA 6%, US O/S 1%. FM/
MS/StCh AM/HF 77%, BKs/FI 11% , PB 7%, Ins/
Corp 5%.
T+260 area, T+220 - US$1.8bn, 124acs Baa1 Miz/SMBCNikko/UBS/BNPP/Citi/ Asia 96%, EMEA 4%. AM/FM 78%, Bks
HSBC/JPM/StCh/DBS/ICBCI/CMBI/ 13%, PB/Corp/Other 9%.
CMZ
7% area, 6.45% - US$4bn, 188acs Ba2 BOCI/Haitong/ShenwanHongyuan/ Asia 90%, Eur 10%. FM/AM 85%, FI 11%,
(YTP) CLSA/GuotaiJunan PB 4%.
T+120 area, T+75 7 US$5.2bn, 270acs Aa2/AA HSBC/Citi/JPM Asia 66%, US 22%, EMEA 12%. AM/FM
62%, Ins/PF 15%, Bks 13%, CB/SWF 9%,
PB/Other 1%.
7.5% area, 6.92% - - Ba3 BOCI/CNCBI/CMBI/GuotaiJunan/ -
Haitong/JPM/CCBI/CLSA/CS/HSBC/
Orient/UBS
7.95% area - US$1.3bn, 83acs -/BB-/BB+ (China CS/CNCBI/Citi/Haitong/HSBC/ Asia 81%, Eur 19%. FM/AM 87%, FI/Bks
Chengxin) Orient/UBS 7%, PB 6%.
T+245 area - US$5.1bn, 203acs Baa2 Haitong/HSBC/ANZ/BoC/BoCom/ Asia 96%, Eur 4%. AM/FM 49%, Bks/FI
BNPP 39%, Sov/Ins 11%, PB/Other 1%.
T+435 area, T+385 -15 US$2bn, 146acs Baa3/BBB-/BBB- BofA/JPM/MUFG/Citi/Rabo/SG/UBS APAC 64%, EMEA 36%. AM/FM 72%, Ins
# 13%, Bks 7%, PB 4%, Other 4%.
T+240a - US$3.7bn, 147acs Baa1 BOCHK/Barc/Citi/DBS/GS/JPM/Miz/ Asia 91%, EMEA 9%. AM/FM 70%, Bks
SG/StCh 26%, PB/Corp/Other 4%.
T+255a - US$2bn, 102acs Baa1 BOCHK/Barc/Citi/DBS/GS/JPM/Miz/ Asia 85%, EMEA 15%. AM/FM 69%, Bks
SG/StCh 23%, Ins 5%, PB/Corp/Other 3%.
Low 300s area, - - -/BBB/BBB+ BofA/GS/JPM -
T+262.5/+275
5.25% aare, 4.85% - US$1.85bn, 111acs - Citi/CS/JPM Asia 80%, EMEA 19%, US O/S 1%.
(+/-5) AM/FM 65%, PB/Bks 21%, Ins/PF
14%.
7.5% area - US$1.6bn, 73acs B2 BofA/CS/DB/GuotaiJunan/ ASIA 99%, EMEA 1%. FM/AM 88%, PB
Haitong/JPM/UBS/HSBC/ 7%, Bks/FI 5%.
CNCBI/BOCI/BEA
9.5% area YTP, - US$1.1bn, 47acs -/B-/B/BB- (Lianhe GuotaiJunan/Haitong/CICC/ABCI/ APAC 96%, EMEA 4%. FM/AM/Ins 77%,
9.25% YTP Global) AMTD/BNPP/Central/CMBI/ PB/Corp 15%, Bks/FI 8%.
CMBCCap/CRIC/DBS/Dongxing/
GFSec/Heungkong/UBS/Vision/
Zhongtai
4% area - - -/-/BBB+ CICC/Industrial/BoCom/SPDB/ -
CEBIntl/StCh/CSI/BOCI/
WingLungBank/CNCBI/Dongxing/
GuotaiJunan/CMBC
5.625% area, 5.25% - US$4.3bn Ba3/BB- BofA/BoCom/BoC/Barc/ -
BNPP/JPM/SMBCNikko/
UBSICBCMacau
11.875% area - US$1.5bn, 76acs -/-/B+ GuotaiJunan/BOCI/UBS/CS/BNPP/ ASIA 98%, EUROPE 2% | AM/FM/HF
BofA/CCBI/CMBCHK/CMBI/Haitong/ 85%, PB 9%, BANK 6%
HSBC/Tianda
T+245 area, T+210 0 - Baa2/BBB+ ANZ/BofA/BNPP/Citi/DB/StCh -
area,
T+185 (the #)
4.3% area, 3.95% 0 - Baa2/BBB+ ANZ/BofA/BNPP/Citi/DB/StCh -
area,
3.75% (the #)
4.125% area, - €3bn B1/B+ BcaIMI/Citi/JPM/RBI -

3.625%/3.75%
3.625% area, - US$2bn A3 BofA/JPM/MUFG/1ADB/GS -
3.25%/3.3.75%
MS+280 area, - US$4.5bn A3/-/A ABC/DIB MENA 51%, Asia 28%, Eur 21%. Bks/PB
MS+250/+255 /ENBD/1ADB/HSBC/ICBC/KFH 39%, FM 52%, Supra/Other 9%.
/Sharjah/StCh/ICDPS
7.75% area, 7.375% - US$3bn B2/B BofA/JPM/StBk/Absa -
area /Barc
2.875% area, 0.0275 - €160m Ba1/BB+/BBB- BNPP/HSBC/CS -
MS+210 area, - €9bn Ba2/BBB-/BBB- BcaIMI/Barc/DB/JPM -

MS+180 area
6.375% area - Rbs25bn -/BB+/BBB- Alfa/Citi/Sber/VTB -
T+low 300s, - US$4.25bn BBB/BBB+ BofA/GS/JPM -

T+262.5/+275

The South-East Asian oil supplier’s dollar The sovereign (B1/B+) began marketing over €9bn. Although interest fell away
bonds due 2028 were quoted at a G-spread of the June 2027 note at 4.125% area. It was towards €8bn after some sweeping pricing
205bp and its 2049s at 3.85%, so leads competing for space on a busy day which revisions, it meant Croatia had the scope to
ESTIMATEDûTHATûTHEûlNALûPRICINGûLEVELSûOFûTHEû included jumbo euro trades from Ireland, take out more than its initial €1.5bn target.
new senior unsecured bonds were 10bp– Spain and Greece. “Croatia generated the largest order book
20bp inside the issuer’s secondary curve. “The fact that Albania issued in 144A from any CEE sovereign tranche of debt this
The guidance was revised twice on the format allowed US accounts to come in, year as well as their second lowest coupon
back of strong orders, which exceeded which makes a huge difference,” said a lead. in history,” said Matt Doherty, head of
53BNûWITHINûTHEûlRSTûûMINUTESûANDû “A few weeks ago you would have said that CEEMEA syndicate at Deutsche Bank, which
peaked at more than US$7bn. investors were looking for yield, but the was one of the leads.
(OWEVERûlNALûCOMBINEDûORDERSûDROPPEDû yield Albania achieved is not that high from “This is a remarkable achievement by the
drastically to over US$2.4bn from 115 an EM perspective.” country given we remain in a challenging
accounts as the market backdrop suddenly North Macedonia (BB–/BB+), for example, market environment due to the Covid
worsened in late Asian hours and US sold a €700m six-year in late May at 3.95%. crisis,” said Doherty.
equities took a tumble, according to bankers “Perhaps one of the concerns was markets European accounts drove demand,
on the deal. The S&P 500 fell almost 6% on have moved so far so quickly,” said a second although US offshore accounts were
Thursday, the biggest drop in 12 weeks. lead. ALLOCATEDûNEARLYûONE lFTHûOFûTHEû2EGû3ûONLYû
The new 10-year and 30-year notes traded “North Macedonia is now close to 3% and notes.
wider in the aftermarket last Friday, in line has had a huge run. But the bond market is Croatia’s initial focus had been on price. It
with the overall market trading 5bp–10bp dynamic and the last thing a bond trader began marketing the notes at swaps plus
wider. The 2030s were trading at Treasuries needs is a memory – just because the price 210bp area, but managed to tighten to 165bp.
plus 192bp and the 2050s at 3.82%. was different yesterday doesn’t mean the ,EADSûSAWûTHATûASûmATûTOûFAIRûVALUEûWHILEûAû
Subsidiary ThaiOil Treasury Center will new price is wrong.” SECONDûBANKERûAWAYûPUTûTHEûlNALû.)0ûATûBP
issue the bonds with a guarantee from Thai Albania was able to tighten pricing by One of the attractions of Croatia is that it
Oil. Issuing bonds through treasury centres 50bp to 3.625%. is investment-grade like regional neighbours
gives Thai companies an exemption on The books peaked at more than €3.3bn, but Hungary (Baa3/BBB/BBB) and Romania (Baa3/
withholding tax on interest payments. FELLûAWAYûAûTOUCHûTOûlNISHûATûMOREûTHANûõBN BBB–/BBB–).
The 144A/Reg S bonds have expected “The orders were a bit barbell in nature, But Hungary trades very tight and
ratings of Baa2/BBB+ (Moody’s/S&P). Both with anchor orders at one end then smaller Romania is on a negative rating trajectory,
ratings agencies have a negative outlook, price-taker types at the other. That’s what trades wide and has a large number of bonds
due to reduced demand for oil as the global you want as it enables you to wrestle some outstanding. Croatia offers enough spread to
economy slows because of the coronavirus of the power away from the anchor orders,” pique the interest of investors and is on a
pandemic. the second lead said. positive outlook with Moody’s.
However, one of the leads said there was Albania’s return to the international In a report published in April, ING
strong investor demand because oil price capital markets had been long mooted. In economists said that Croatia’s economy
volatility has decreased since the end of &EBRUARYûlNANCEûMINISTERû!NILAû$ENAJûSAIDû could shrink by more than 7% this year,
April. In addition, there is limited supply the sovereign was planning to issue a though that could be followed by 4.5%
from Thai issuers which appealed to asset Eurobond of up to €600m in May rather growth in 2021.
MANAGERSûLOOKINGûFORûDIVERSIlCATION than November as originally planned. “The government measures aimed at
Demand was also seen for longer tenors The country had budgeted to borrow supporting the business environment
than the seven-year bond which Thailand’s €500m before it was hit by a quake late last (mainly tax/loan payments deferrals and
PTT Exploration and Production priced year that killed 51 people and left around minimum wage subsidies) will act more as a
recently. 17,000 people homeless. backstop rather than pure economic
PTT, in which the Thai government holds Banca IMI, Citigroup, JP Morgan and Raiffeisen stimulus, although we are mildly optimistic
a 51% stake, owns around 48% of Thai Oil. In Bank International were lead managers. that public investments will not succumb to
the event of a change of control, the coupon cost-optimisation pressures,” they said.
on the bonds will increase by 125bp.
Bank of America, Citigroup, Standard CROATIA ALL INTL EMERGING MARKETS BONDS
Chartered, ANZ, BNP Paribas and Deutsche Bank BOOKRUNNERS: 1/1/2020 TO DATE
were bookrunners. CROATIA SWEEPS THROUGH PRIMARY Europe/Africa
Managing No of Total Share
CROATIA breezed through the primary on bank or group issues US$(m) (%)
Wednesday with a €2bn June 2031 offering
1 JP Morgan 27 9,674.56 16.0
that was more than four times subscribed.
EUROPE/AFRICA The sovereign, rated Ba2/BBB–/BBB–, was
2 Citigroup
3 BNP Paribas
17
13
7,777.06 12.8
5,535.96 9.1
following successful recent efforts from two 4 Deutsche Bank 8 3,972.67 6.6
ends of the credit range in Estonia (A1/AA–/ 5 SG 8 3,414.43 5.6
ALBANIA AA–) and Albania (B1/B+). 6 Barclays 8 2,959.96 4.9
h)ûEXPECTûITûWILLûmYvûSAIDûAûBANKERûAWAYû 7 HSBC 10 2,905.94 4.8
SOVEREIGN FINDS WAY THROUGH “No reason why, having seen all these 8 UniCredit 7 2,874.87 4.7
BUSY TRAFFIC transactions go well, that Croatia wouldn’t 9 ING 5 2,174.78 3.6
do the same. Expect a huge book, and for it 10 Standard Chartered 4 1,759.25 2.9
ALBANIAnavigated a hectic primary market to go through a lot of price tightening.” Total 49 60,625.31
on Tuesday, emerging with a €650m seven- Croatia carried IoIs of nearly €1bn into Excluding equity-related debt.
YEARûBONDûTHATûPRICEDûmATûTOûFAIRûVALUE the 11-year trade and saw demand swell to Source: Refinitiv SDC code: L2

EMERGING MARKETS EUROPE/AFRICA
The government’s balance sheet will also on the rouble in the next 12 months, with The 7.50% January 2025 note was placed
weaken. additional pressure expected in the coming at the beginning of this year, with GFH
“From a quasi-balanced budget, we now months from recovered demand for imports, unable to move pricing. However, the
EXPECTûTHEûlSCALûDElCITûTOûREACHûTHEûû including imported services. "AHRAINIûlNANCIALûINSTITUTIONû" " ûWHICHû
area this year, with a lot of uncertainty Donets estimates the downside at 5%–7% has a chequered history, was able to set a
coming from revenues behaviour. This will from the current level of near to 69 versus new benchmark in the international
push the debt-to-GDP above 80% (from 71% the US dollar. markets.
in 2019), virtually erasing most of the h!TûTHEûSAMEûTIMEûSIGNIlCANTû&8ûSALESûBYûTHEû The details of the increase were not
PAINFULLYûDIFlCULTûIMPROVEMENTSûACHIEVEDû Ministry of Finance (via the Central Bank of disclosed in an announcement published on
over the last years,” said ING analysts. Russia) in recent weeks have been supporting the Dubai Financial Market.
Banca IMI/Privredna banka Zagreb, Barclays the rouble, and the Ministry of Finance has S&P downgraded GFH by one notch in
Bank and JP Morgan were the other leads. stated that it will continue to do so, not only to March. The ratings agency said that GFH’s
offset lower oil prices, but also production cuts earnings materially depend on its
due to the OPEC+ agreement,” said Donets. investment banking revenue, which it
RUSSIA “This is likely to translate into a more expected to be under pressure over the
stable rouble performance even amid low following quarters.
VEON EXPLORES ROUBLE ANGLE oil prices as compared with 1Q20. We “We also consider that GFH is more
estimate that the FY20 exchange rate will exposed to the deteriorated liquidity
Telecoms VEON sold a Rbs20bn (US$287m) average 73.5 versus the US dollar.” situation than commercial banks due to its
lVE YEARû%UROROUBLEûONû4HURSDAYûATûû FUNDINGûPROlLEvû30ûWROTEûATûTHEûTIME
using roubles as a way to hedge against “GFH relies more on short-term (3-12
exposures in the currency. REGIONAL months) wholesale funding than
The offering came 20bp inside initial commercial banks. In addition, as a
guidance of the 6.50% area. PPF RETURNS TO FOUR-YEAR SEAM wholesale bank it has no direct access to
Andrey Solovyev, global head of debt central bank funding, and cannot directly
capital markets at VTB Capital, which was PPF TELECOM returned to the market on borrow from its commercial banking
one of the bookrunners, said that given part Tuesday with a €100m tap of a note it sold in subsidiary.”
of the company’s revenues are in roubles, mid-May. S&P said that GFH’s treasury portfolio
raising money in the currency offered a The issuer (Ba1/BB+/BBB-), which was remains relatively liquid and, absent new
natural hedge for the issuer. previously known as PPF Arena 1, is a CEE credit events, it should be able to meet its
The other bookrunners were Alfa-Bank, telecoms provider, and is the holding company liquidity requirements for the next quarters,
Citigroup and Sberbank CIB. of O2 Czech Republic, CETIN and Telenor CEE. even if new funding may be more limited.
The settlement currency for the new It had started marketing the tap of its The issuer said the proceeds of the sukuk
bond is roubles, but there is an optional FX €500m 3.50% May 2024 senior secured notes will be used to further strengthen GFH’s
election on any coupon payments and around 20bp back of secondary levels with balance sheet and diversify its income.
principal at maturity in US dollars, on guidance of 2.875% area. The yield was then
request. set at 2.75% off books of more than €160m.
Books for VEON’s issue at one point “We maintain our “Buy” LEBANON
reached over Rbs30bn, but fell away to recommendation on the notes, which we
Rbs25bn when the yield was set. believe represent good relative value within EUROBOND HOLDERS COULD HAVE
“International investors actively the European high-yield telecoms universe,” HAD OIL TANKER SEIZED
participated in the deal, most of the wrote Lucror Analytics.
international demand came from UK and “We also note that the company’s PPF LEBANON could have recently had an oil tanker
Continental European investors,” said 2.125% January 2025 notes trade expensive seized by Eurobond holders because of its
Solovyev. relative to both the 2024s and the PPF stinging debt crisis and the government was
Earlier in June, VEON announced it had 3.125% March 2026 notes, and suggest taking steps to avoid such risks in future, the
entered into a Rbs100bn term loan current holders of the 2025s consider energy minister said on Thursday.
agreement with Sberbank. switching into the 2026s or 2024s.” Lebanon plunged into a US$31bn
“We expect VEON’s leverage to remain BNP Paribas, Credit Suisse and HSBC were sovereign default in March, saying it needed
moderate, at around 2x in the medium global coordinators and bookrunners for the to preserve dwindling dollars for vital
term,” said Fitch in assigning a BBB– rating reopening. imports, and has since entered talks with
to the new issue. the International Monetary Fund.
û)TûDElNESû6%/.SûNETûDEBTûTOû%BITDAûWITHû Speaking at the presidential palace about
the Algerian operations deconsolidated, but a fuel oil shortage, Energy Minister
REmECTINGûDIVIDENDSûFROMûTHISûSUBSIDIARYû Raymond Ghajar listed the potential seizure
h$ELEVERAGINGûmEXIBILITYûISûDRIVENûBYû MIDDLE EAST of an oil tanker off its shore by bondholders
MODESTûPOSITIVEûFREEûCASHmOWûGENERATIONû as among the issues complicating the
but also low single-digit revenue growth and country’s supplies.
SLIGHTLYûIMPROVINGûPROlTABILITYûFROMûvû BAHRAIN “We have been exposed on this issue to
said Fitch. several setbacks, including what happened
S&P assigned an expected BB+ rating to GFH INCREASES SUKUK about two weeks ago because we weren’t
the deal. able to open credit at the central bank in the
Sofya Donets, Russia & CIS economist at GFH tapped its sukuk on Tuesday, increasing required time, so there was a risk that the
Renaissance Capital, says that unprecedented the amount by US$200m and taking the oil tanker would be subject to seizure by the
lSCALûSTIMULUSûATûûOFû'$0ûISûLIKELYûTOûWEIGHû issue up to US$500m. Eurobond holders,” said Ghajar.

“We are studying this issue in order to ITûCHOSEûTOûDOûAûLONGûlVE YEARûISSUEûRATHERûTHANûAû CORDOBA, which like many of its counterparts
ultimately reach a result that enables the seven-year that it was also exploring in February. in Argentina, plans to restructure its debt.
Lebanese state to not be exposed on this But while spreads are wider than they The group, which comprises large
matter,” Ghajar added, according to a were before the pandemic, DIB (A3/-/A) was institutional holders of the province’s
presidency statement. able to price the sukuk 10bp inside fair international bonds, retained BroadSpan
The minister did not mention who the value at 245bp over swaps, 35bp tighter Capital and Mens Sana Advisors ASûlNANCIALû
owner of the tanker was and could not than initial guidance. The sukuk were advisers.
immediately be reached for further comment. quoted 6bp tighter in the aftermarket. Between 2016 and 2017, the province
An economic rescue plan put forward by Another striking aspect of the deal was raised US$1.685bn in the international bond
"EIRUTûMAPSûOUTûABOUTû53BNûINûlNANCIALû that 49% was allocated to Asian and market, leaving it with several maturities in
SECTORûLOSSESûBUTûTHEûlGURESûAREûSUBJECTûTOû European accounts. coming years.
change depending on the discount taken by “Asian accounts are comfortable with Its next big maturity is on June 10 2021
foreign and local bondholders. sukuk, and for European investors DIB is a when the US$750m 7.125% notes come due.
Beirut is hoping an IMF reform well-known credit,” said the lead. But unlike the sovereign and other
programme can secure billions of dollars in Bank ABC, Dubai Islamic Bank, Emirates NBD provinces, such as Buenos Aires, Cordoba
lNANCINGûANDûRESTOREûECONOMICûGROWTH Capital, First Abu Dhabi Bank, HSBC, ICBC, the has yet to use the grace period to delay
Islamic Corporation for the Development of the interest payments.
Private Sector, KFH Capital, Sharjah Islamic Bank The province’s governor Juan Schiaretti
UAE and Standard Chartered were the leads. has reportedly said he would cover about
SHARJAH ISLAMIC BANK has hired banks to US$25m of interest, which was due on the
DIB PROVES WORTH THE WAIT arrange the sale of benchmark dollar sukuk, 2021 bond on June 10.
three people with knowledge of the matter said. Those bonds have seen little price action,
DUBAI ISLAMIC BANK revived a sukuk offering on The sukuk issuance was likely to be soon, but traded at a dollar price of 57.30 on June
Tuesday it had originally planned to issue in two of the people said on Wednesday, 5, up from the 43.10 seen on May 11,
late February but was delayed by the adding that the banks appointed were according to MarketAxess data.
coronavirus outbreak. Sharjah Islamic Bank’s relationship lenders. “Members of the Committee plan to
With only Sharjah and Bahrain printing The size was likely be US$500m, but it conduct any interactions with the
sukuk since the pandemic, DIB was able to could be more if demand is strong, one authorities in a manner that is consistent
take advantage of the supply-demand person said. with the G20-endorsed Principles for Stable
imbalance. Sharjah Islamic Bank, which had US$500m Capital Flows and Fair Debt Restructuring,”
h4HEûSUKUKûMARKETûISûABSOLUTELYûlNEûFROMû sukuk that matured in March, did not the group said in a statement last week.
a liquidity perspective. In fact, it’s even immediately respond to a request for comment.
better than last year,” said a lead.
The mandate was announced on Monday, BRAZIL
allowing DIB to conduct a global call and
give time for Islamic investors to get their IRON ORE RALLY BOLSTERS CSN,
sharia approvals in place. AMERICAS VALE BONDS
The bank then printed US$1bn January
2026 sukuk at a lower yield than the Rising iron ore prices are making bonds
US$750m February 2025 sukuk priced in ARGENTINA issued by Brazilian miner VALE and steel
November. The 2026 note priced at 2.952% company CSN outperformers within the
compared with 3.002% achieved last year. GROUP FORMS FOR PROVINCE OF recent rally in emerging market assets.
“It demonstrates how far the market has CORDOBA DEBT TALKS Increased demand from China, one of the
rallied,” said the lead. world’s largest importers of iron ore, paired
3TILLûASûAûlNANCIALûINSTITUTIONûSPREADûISûMOREû A group of bondholders have formed a with potential shortages in the commodity
important to DIB than yield. That was the reason committee to start talks with the PROVINCE OF following mine closures is bolstering sales
ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS INTERNATIONAL ISLAMIC FINANCE DEBT
Middle East Latin America Managing No of Total Share

Managing No of Total Share Managing No of Total Share bank or group issues US$(m) (%)
bank or group issues US$(m) (%) bank or group issues US$(m) (%)
1 Standard Chartered 10 2,294.11 23.9
1 Standard Chartered 20 11,119.56 15.4 1 JP Morgan 26 8,207.24 13.0 2 HSBC 7 1,018.70 10.6
2 Citigroup 14 8,914.83 12.4 2 Deutsche Bank 9 6,669.76 10.6 3 Dubai Islamic Bank 5 628.19 6.5
3 Goldman Sachs 5 7,224.37 10.0 3 BofA Securities 22 5,421.47 8.6 4 Natixis 2 618.86 6.4
4 HSBC 14 6,309.82 8.8 4 Goldman Sachs 19 4,788.17 7.6 5 First Abu Dhabi 4 538.81 5.6
5 Deutsche Bank 7 5,435.40 7.5 5 BNP Paribas 10 4,588.02 7.3 6 Islamic Dev Bank 4 524.52 5.5
6 JP Morgan 12 3,731.06 5.2 6 Citigroup 12 4,530.65 7.2 7 Citigroup 3 412.44 4.3
7 BofA Securities 4 3,659.54 5.1 7 Scotiabank 12 4,046.06 6.4 8 Kuwait Finance 4 321.39 3.3
8 Credit Agricole 8 3,289.04 4.6 8 Itau Unibanco 13 3,881.82 6.1 9 JP Morgan 1 300.00 3.1
9 First Abu Dhabi 9 3,116.23 4.3 9 BBVA 8 2,660.24 4.2 10 Riyadh Bank 1 300.00 3.1
10 Barclays 5 2,474.03 3.4 10 HSBC 9 2,596.66 4.1 Total 13 9,599.42
Total 61 72,106.69 Total 67 63,160.47
Excluding equity-related debt.
Excluding equity-related debt. Excluding equity-related debt.
Source: Refinitiv SDC code: L5 Source: Refinitiv SDC code: L3 Source: Refinitiv SDC code: J27

EMERGING MARKETS AMERICAS
contracts and in turn bond prices for both down 8%,” said Sebastian Lema, an analyst
credits. with asset manager Noctua Partners. PERU
Vale’s 6.250% 2026s were trading at a That rally in iron ore appears to have
dollar price of 118.568 to yield 2.933% on made all the difference to investor CREDICORP DRAWS BIG CROWD IN DEBUT
Wednesday, up more than eight points since sentiment toward CSN, which still faces DOLLAR BOND
May 11, according to MarketAxess data. SUBSTANTIALûRElNANCINGûRISKSûAMIDûAûPOORERû
And as the second largest exporter of iron OUTLOOKûFORûITSûmAT ROLLEDûSTEELûBUSINESSû 0ERUVIANûlNANCIALûSERVICESûCOMPANYûCREDICORP
ore in Brazil, steel maker CSN has also This month Moody’s moved its outlook on sold a heavily subscribed debut bond in the
received a boost, with its 6.75% 2028s its B2 rating to negative, citing weakening primary market on Wednesday, drawing eight-
changing hands at 87.10 to yield 9.132%, up credit metrics amid an expected decline in and-a-half times in demand from investors.
more than 20 points since May 5, just when steel demand. The company, which owns Peru’s largest
iron prices started to climb. Despite several liability management bank BANCO DE CREDITO DEL PERU, sold a
“The bullish sentiment around iron ore is exercises, CSN still faces some R$9bn (US$1.8bn) 53MûlVE YEARûSENIORûNOTEûATûûTOû
due to China’s recovery and supply in debt maturities between 2021-2022, mostly in yield 2.867% or 250bp over Treasuries.
disruptions,” said Omotunde Lawal, head of the form of bank debt, said Moody’s. Pricing came inside initial price thoughts of
the emerging markets corporate debt group low 300bp and guidance of 262.5bp-275bp.
at Barings. %VENûSOûTHEûlNALûSPREADûOFFEREDûAûDECENTû
“I think Vale’s mine closure, announced a ECUADOR pick-up to its banking subsidiary BCP, which
couple of days ago, is giving a bit more issued a 2.70% 2025 note last year that closed
tailwind to iron ore prices.” HOLDERS OF ECUADOR 2024s at a G-spread of 203bp on Tuesday,
Earlier this month, the Brazilian FORM GROUP according to MarketAxess data.
government ordered the closure of Vale’s It also came with a nice spread over the
Itabira mines after a cluster of employees Another group of investors have come sovereign curve, where Peru’s 7.35% 2025 was
were infected with the coronavirus. together to prepare for talks with ECUADOR trading at around 123.370 to yield 1.731%.
Vale is one of the world’s largest iron ore over its upcoming restructuring of some “This bond is representative of Peru’s
companies, and the closure of its Itabira US$17bn of external bonds. economy and is trading wide to the
operation equates to about a 10% shortage in Holders of Ecuador’s 2024 bonds sovereign. It’s essentially Peru risk,” said a
production. announced last week that they had formed a market source close to the deal.
“The reality is that these things are still group and had retained Quinn Emanuel Books swelled to peak at around US$4.25bn
quite immaterial in terms of Vale’s scale. So Urquhart & Sullivan to advocate for their after 199 accounts participated in the deal,
one mine closure a year for a couple of unique interests in talks with the sovereign. which was executed at a rapid pace with
weeks doesn’t really move the needle very “Ecuador 2024 notes are governed by an launch taking place during morning hours.
much,” said Lawal. indenture dated June 20 2014, the material Credicorp, rated BBB/BBB+ by S&P and
Ratings agency Moody’s took a similar terms of which are unique in Ecuador’s Fitch, was given a similar rating to its BCP
view, noting in a report that “the setback on capital structure and distinguish Ecuador subsidiary, which is rated BBB+/BBB+.
production supports iron ore prices, which 2024 notes from Ecuador’s other external Low leverage, strong liquidity
are trading near or above US$100/ton, and indebtedness,” the group said in a MANAGEMENTûANDûSTRONGûDIVIDENDûmOWSû
better positions the company to withstand statement. were drivers for its BBB+ rating, Fitch said in
the operating environment challenges”. They join another group of institutional a report.
While most commodities have been investors, represented by BroadSpan Capital Credicorp has consolidated return of
under pressure, iron ore prices have been on LLC and UBS Investment Bank, that announced average equity and return on average assets
a tear recently breaking through the last week that they had formed a creditor of 17.1% and 2.4%, respectively, as of
53TONûMARKûFORûTHEûlRSTûTIMEûSINCEû committee. December 2019, said Fitch.
August. Earlier this month, Ecuador set down the Proceeds will be used to strengthen the
“Year-to-date, iron ore and gold are the path towards a broad restructuring as it lNANCIALûlRMSûRESERVEûFUNDûANDûOTHERû
only commodities with gains, whereas you races to complete debt talks before mid- general corporate purposes.
still have Brent down 38%, copper down August when the grace period on deferred The deal was led by Bank of America,
6.5%, and soft commodities such as soybeans coupon payments ends. Goldman Sachs, and JP Morgan.
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LOANS
Australia China Hong Kong Singapore Denmark Egypt France
Sweden û UAE û UK United States Leveraged Loans û Restructuring
FRONT STORY EUROPEAN INVESTMENT-GRADE MARKET
Loan market adjusts to new landscape

Borrowers face shorter tenors, more expensive bank debt
More attractive terms on offer in bond market
The European investment-grade loan “It’s alright having a great structure and CRUDE CONTROL
market is getting to grips with the new PRICINGûBUTûSOMEûBANKSûSTILLûMIGHTûNOTûDOû Oil and gas companies BP and ROYAL DUTCH
normal after a manic three months during the deal. Some have decided to support SHELL also tapped bond markets after putting
which companies hurriedly put in place clients in their home markets and retreated. billions of dollars of additional liquidity
expensive liquidity facilities and drew down /THERSûHAVEûNOTvû facilities in place as they battled not only the
on revolving credit facilities amid the Lenders will be taking a more cautious impact of the pandemic but also a sharp
uncertainty of the coronavirus crisis. approach over the next few months but drop in oil prices.
Banks are now turning their attention to UNLIKEûTHEûlNANCIALûCRISISûOFûûTHEREûISû -EANWHILEû&RENCHûOILûANDûGASûGROUPû
THEûREQUIREDûRElNANCINGûOFûCREDITûFACILITIESû no liquidity problem at banks and capital TOTALûISSUEDûõBNûOFûBONDSûINû!PRILûMATURINGû
traditionally one of the main drivers of remains available at the right price. INûûANDûûFOLLOWINGûITûUPûINû-AYû
lending in Europe. But borrowers and )NûTHEûlNANCIALûCRISISûITûWASûVERYûDIFFERENTû WITHûõBNûOFûISSUANCEûMATURINGûINûû
lenders face a much-changed landscape. with banks’ own funding lines being cut. ANDûû&INANCINGûARMû4OTALû#APITALûRAISEDû
“We are done with the public aid 53BNûOFû YEARûBONDSûINûLATEû-AY
packages and liquidity facilities. What you TENOR SEARCH The company had previously drawn
are seeing now is banks focusing on dealing -EANWHILEûTHEûBONDûMARKETSûBOOSTEDûBYû US$6bn of its credit lines to strengthen its
WITHûTHEûUSUALûmOWûOFûRElNANCINGû"UTû CENTRALûBANKSûCONTINUEûTOûPROVIDEûAû LIQUIDITYûANDûARRANGEDûAû53BNûSHORT
companies want longer maturities and welcome source of long-term funded debt to TERMû!,&ûINû!PRIL
TIGHTERûPRICINGûTHANûAREûCURRENTLYûAVAILABLEvû HIGHLYûRATEDûCORPORATESûHELPINGûTOûTAKEûTHEû 4HATûlNANCINGûHADûANûINITIALû MONTHû
a senior banker said. strain of banks by replacing drawings on maturity with two six-month extension
credit facilities and reducing the need for options.
the additional liquidity facilities put in place
“We’re asking where banks are in response to the crisis.
willing to allocate capital and Some bond desks have been busier in the “It’s alright having a great
for how long; and where they lRSTûSIXûMONTHSûOFûTHEûYEARûTHANûTHEYûWEREû structure and pricing, but some
are backing relationships and INûTHEûWHOLEûOFûûBANKINGûSOURCESûSAID banks still might not do the
h!TûTHEûBEGINNINGûBORROWERSûREQUIREDûAû
where they are not” deal. Some have decided to
QUICKûlXûTOûCOVERûTHEûIMMEDIATEûUNCERTAINTYû
and turned to the loan market to secure support clients in their home
SHORT TERMûLIQUIDITYvûTHEûSECONDûBANKERûSAID markets and retreated”
h"UTûNOWûTHEYûAREûSAYINGû@)VEûGOTûAû
0RE CRISISûHIGH GRADEû%UROPEANû month liquidity facility but I’m not sure
companies would typically expect to be able how long this crisis will last so I’ll go to the
TOûRElNANCEûCREDITûFACILITIESûFORûlVEûYEARSû bond market for longer-term issuance’. It 4HEû!,&ûWASûUNDERWRITTENûBYû".0û0ARIBASû
PLUSûTWOûONE YEARûEXTENSIONûOPTIONSûOFTENû MAKESûSENSEv ANDû#REDITû!GRICOLEû#)"ûASûBOOKRUNNINGû
on wafer-thin margins. French construction materials company mandated lead arrangers.
h,OANûPRICINGûISûSTILLûFAIRLYûHIGHûANDû SAINT-GOBAINûWASûANûEARLYûMOVERûISSUINGûAû 4HEû3CHULDSCHEINûMARKETûWHICHûHASû
borrowers are looking for a cheaper õBNûBONDûINû-ARCHûTOûREINFORCEûITSû REOPENEDûAFTERûAûBRIEFûHIATUSûALSOûOFFERSû
ALTERNATIVEûTOûAûFULLûRElNANCINGû!DDINGû lNANCINGûDAYSûAFTERûAGREEINGûAûõBNûSHORT companies another route to longer-term
extension options or extending existing term RCF. Proceeds from the bond were lNANCINGûTHANûISûAVAILABLEûINûTHEûLOANû
credit facilities on a short-term basis is the USEDûTOûREDUCEûTHEû2#&ûBYûõMûGIVINGûTHEû market.
preferred choice until pricing and company a combined additional liquidity of Recent issues have been well-received by
MATURITIESûRETURNûTOûMOREûNORMALûLEVELSvû õBNû investors who are able to commit to
the senior banker said. 3INCEûTHENûHIGH PROlLEû%UROPEANûNAMESû MATURITIESûOFûUPûTOûlVEûYEARSûANDûBEYONDû
The main challenge facing lenders is to such as AIRBUSûDAIMLERûBASFûSAFRANûSIEMENS more easily because they are relatively small
IDENTIFYûTHEûRElNANCINGûLOANSûTHATûNEEDû and THALES have tapped the bond market for commitments.
prioritising and discovering how the new long-term funding after raising substantial 'ERMANûSAVINGSûANDûCOOPERATIVEûBANKSû
world looks. short-term liquidity facilities as the crisis which do not invest in the wider bond
“We’re asking where banks are willing to unfolded. MARKETûCONTINUEûTOûSTRONGLYûSUPPORTûTHEû
allocate capital and for how long; and where “The bond market is able to function and ASSETûCLASSûWHILEû!SIANûINVESTORSûHAVEûTAKENû
they are backing relationships and where REMAINSûOPENûATûAûPRICEû!LLûSORTSûOFûISSUERSû a more cautious approach during the crisis.
THEYûAREûNOTvûAûSECONDûBANKERûSAID CANûTAPûITvûTHEûSECONDûBANKERûSAID Alasdair Reilly

BPûEARLIERûWHILEûFACILITIESû"ûANDû#ûOFFERû borrowing which was completed in
BPûCOMPAREDûWITHûBPûPREVIOUSLYû4HEû 3EPTEMBERûLASTûYEARûWITHûûLENDERSû#ATHAYû
ASIA-PACIFIC margins are based on a net debt-to-Ebitda United Bank and Taishin International Bank
RATIOûOFûBETWEENûûTIMESûANDûûTIMES WEREûTHEû-,!"SûONûTHATûlNANCINGûWHICHû
WASûSPLITûINTOûTRANCHESûOFû53MûANDû
AUSTRALIA FAR EAST VISITS MELBOURNE 53M EQUIVALENTûINû#AMBODIANûRIELSû
Cathay United (Cambodia) provided the riel
THIRTEEN COMMIT TO VODAFONE-TPG Hong Kong developer FAR EAST CONSORTIUM TRANCHEûWHICHûWASûNOTûSYNDICATED
INTERNATIONALûHASûOBTAINEDûAû!MûLOANû )NûGENERALûSYNDICATIONûTHEû53ûDOLLARû
Thirteen lenders have committed to a for a mixed-use property construction tranche offered a top-level all-in pricing of
JUMBOû!BNûLOANûSUPPORTINGûTHEû project in Melbourne. BPûBASEDûONûAûMARGINûOFûBPûOVERû
proposed merger of VODAFONE HUTCHISON ANZ was the mandated lead arranger and ,IBORûANDûANûAVERAGEûLIFEûOFûûYEARS
AUSTRALIA and TPG TELECOM after pricing was BOOKRUNNERûFORûTHEûLOANûWHICHûOFFERSûANû The borrower – Cambodia’s largest
sweetened. INTERESTûMARGINûOFû""39ûPLUSûBPûAûLINEû MICROlNANCEûINSTITUTIONûnûEVOLVEDûFROMûAû
&IVEûBANKSûFROMûAû!BNûLOANû FEEûOFûBPûANDûANûESTABLISHMENTûFEEûOFû project sponsored by the European Union
CANCELLEDûINûûHAVEûDROPPEDûOUTûWHILEû BP and three ministries of the country’s
MOSTûOFûTHEûREMAININGûûBANKSûSCALEDûUPû Bank of East Asia Singapore and Labuan GOVERNMENTûINûû)TSûSHAREHOLDERSûAREû
their commitments. OCBC Bank and China BRANCHESûChina Minsheng BankûFubon Bank "ANKûOFû%ASTû!SIAû+OOKMINû"ANKû,ANKAû
Construction Bank joined as new lenders. Hong KongûHang Seng BankûHSBCûIndustrial Orix Leasing and Prasac Staff.
4HEûOTHERûûLENDERSûAREûSMBCûANZû and Commercial Bank of ChinaûPing An Bankû
WestpacûBank of AmericaûBank of ChinaûMizuho Taipei Fubon Commercial Bank and United
BankûMUFGûDBS BankûDeutsche BankûCredit Overseas Bank have joined in syndication. CHINA
Agricole CIB and ING. FEC MAY22 is the borrower.
6ODAFONEû(UTCHISONû!USTRALIAûINTENDSûTOû The borrowing is Far East Consortium’s YANLORD LAUNCHES US$1bn REFI
DRAWûDOWNû!BNûFOLLOWINGûAûCOURTû second syndicated loan for the West Side
MEETINGûSCHEDULEDûONû*UNEûûPRIORûTOûTHEû Place property in Melbourne. Property developer YANLORD LAND GROUP has
implementation of the scheme in relation to )NûûITûRAISEDûANû!MûCONSTRUCTIONû LAUNCHEDûAûROUGHLYû53BN EQUIVALENTû
the merger. LOANûFORûTHEûPROJECTûCOMPRISINGûOVERûû YEARûLOANûFORûRElNANCING
0ROCEEDSûFROMûTHEûlRSTûDRAWDOWNûWILLû APARTMENTSûAû ROOMû2ITZû#ARLTONû(OTELû CMB Wing Lung BankûDBS BankûHang Seng
help repay outstanding amounts of a Dorsett Hotel and extension of new BankûHSBCûShanghai Pudong Development Bank
Vodafone Hutchison Finance’s syndicated laneway connecting Lonsdale Street and and Standard Chartered are the mandated
LOANSûOFû53BNûANDû!BNûWHICHûWASû Little Londsdale Street with an array of lead arrangers and bookrunners of the
SIGNEDûINûûANDûûRESPECTIVELY restaurants and retail sites. TRANSACTIONûWHICHûOFFERSûANûINTERESTûMARGINû
The company intends to follow up with a OFûBPûOVERû,IBOR(IBOR
SECONDûDRAWDOWNûOFû!BNûFOLLOWINGûTHEû The facility comprises a term loan with an
scheme implementation to repay TPG CAMBODIA AVERAGEûLIFEûOFûûYEARSûANDûAûREVOLVINGû
Telecom’s existing debt. credit facility.
The borrowing for the merged group PRASAC LIFTS LOAN TO US$95m Banks can choose to participate in either
COMPRISESûAû!BNûTHREE YEARûTERMûLOANû 53ûORû(ONGû+ONGûDOLLARSûANDûEITHERûINûTHEû
TRANCHEû!ûAû!BNûlVE YEARû4ERMû,OANû PRASAC MICROFINANCE INSTITUTION has increased TERMûLOANûORûTHEûREVOLVERûORûAûCOMBINATIONû
4RANCHEû"ûANDûAû!MûlVE YEARûREVOLVINGû AûDUAL TRANCHEûLOANûTOû53MûFROMû of both tranches.
credit facility Tranche C. 53MûAFTERûATTRACTINGûEIGHTûBANKSûINû -,!SûCOMMITTINGû53M EQUIVALENTûORû
)Nû!PRILûTHEûINTERESTûMARGINSûONûTHEûSELF general syndication. more will earn top-level all-in pricing of
arranged club facility were increased by Taishin International Bank was the original BPûBASEDûONûUPFRONTûFEESûOFûBPûANDû
BPûONûEACHûOFûTHEûTHREEûTRANCHES mandated lead arranger and bookrunner of BPûRESPECTIVELYûFORûTHEûTERMûLOANûANDû
&ACILITYû!ûNOWûPAYSûBPûOVERû""39ûFROMû THEûlNANCINGûWHILEûBank SinoPac joined with the revolver.
the same title. ,EADûARRANGERSûTAKINGû53MnMû
ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY Mandated lead arranger is Bank of Taiwan. EARNûBPûALL INûBASEDûONûUPFRONTûFEESûOFû
SYNDICATED VOLUME (INCLUDING JAPAN) Participants are Land Bank of Taiwan, KGI Bank, BPûANDûBPûFORûTHEûTWOûTRANCHESû
BOOKRUNNERS: 1/1/2020 TO DATE Mega International Commercial Bank, Hua Nan WHILEûARRANGERSûTAKINGû53MnMû
Managing No of Total Share Commercial Bank, Shanghai Commercial & RECEIVEûALL INûPRICINGûOFûBPûBASEDûONûFEESû
bank or group issues US$(m) (%) Savings Bank and Sunny Bank. OFûBPûANDûBP
1 Mizuho 210 38,276.72 19.4 4HEûDEALûCOMPRISESûAû53MûTHREE YEARû )Nû!PRILûû9ANLORDûOBTAINEDûAû
2 MUFG 373 33,444.20 17.0 4RANCHEû!ûANDûAû53MûlVE YEARû4RANCHEû"û 53M EQUIVALENTû YEARûCLUBûLOANûFROMû
3 Bank of China 151 24,886.26 12.6 WITHûRESPECTIVEûAVERAGEûLIVESûOFûûYEARSû SIXûBANKSûACCORDINGûTOû2ElNITIVû,0#ûDATAû
4 Sumitomo Mitsui 231 20,727.39 10.5 ANDûûYEARS Proceeds were for general corporate
5 DBS Group 21 5,067.30 2.6 Lenders were offered top-level all-in purposes.
6 China Merchants Bk 10 4,876.61 2.5 PRICINGûOFûBPûORûBPûVIAûINTERESTû The borrower’s previous syndicated
7 ANZ 23 4,673.53 2.4 MARGINSûOFûBPûANDûBPûOVERû,IBORûANDû FACILITYûWASûAû53BN EQUIVALENTû
8 HSBC 30 4,018.01 2.0 AûPARTICIPATIONûFEEûOFûBPûFORû4RANCHESû!û YEARûLOANûOBTAINEDûINû!PRILûûFROMûû
9 Ag Bank of China 11 3,456.88 1.8 ANDû"ûRESPECTIVELY LENDERSûINCLUDINGû#-"û7INGû,UNGû"ANKû
10 Credit Agricole 10 2,955.14 1.5 Funds will be used as general working $"3û(ANGû3ENGû"ANKû(3"#ûANDû3TAN#HARTû
Total 1,206 197,006.03 capital for business expansion. ASûTHEû-,!"S
Proportional credit Pricing on the loan is tighter than Prasac That facility offered top-level all-in pricing
Source: Refinitiv SDC code: S3a -ICROlNANCESû53MûTHREE YEARû OFûBPûANDûBPûRESPECTIVELYûFORûTHEû

LOANS ASIA-PACIFIC
term loan and revolver based on the same

INTERESTûMARGINûOFûBPûOVERû,IBOR(IBOR
JINJIANG SEEKS LOAN AND WAIVER

Indonesia Inc eyes offshore debt
ASIA South-East Asia’s largest economy provides spark amid pandemic woes
Singapore-listed ZHENENG JINJIANG ENVIRONMENT
HOLDINGûFORMERLYûNAMEDû#HINAû*INJIANGû Indonesia is emerging as the lone bright spot in its return to the syndicated loan markets after a
%NVIRONMENTû(OLDINGûISûRAISINGûAûLOANûOFû South-East Asia’s syndicated loan market with four-year hiatus.
ABOUTû53MûTOûREPAYûAû53ûDOLLARûBONDû a pipeline of around US$6bn of offshore loans Meanwhile, Freeport Indonesia is going back
ISSUEûDUEûINû*ULYûEVENûASûITûSEEKSûAûWAIVERû primed for launch in the coming months. to the drawing board with a US$2.8bn loan it
for a covenant breach on an existing Instant noodles manufacturer INDOFOOD was preparing to launch in April after mandating
borrowing. SUKSES MAKMUR, state-owned electricity utility nine banks in late February. A smaller loan size
Standard Chartered is the mandated lead PERUSAHAAN LISTRIK NEGARA, gold and copper of around US$1.2bn–$1.5bn is being discussed,
ARRANGERûANDûBOOKRUNNERûOFûTHEûLATESTûLOANû miner FREEPORT INDONESIA and BANK RAKYAT but it could be another two months before the
WHICHûPAYSûALL INûPRICINGûOFûABOUTûBP INDONESIA are among a number of top-tier borrower makes a decision on the fundraising for
The loan has been launched into limited borrowers that are eyeing offshore borrowings. the construction of a new copper smelter.
syndication. The deals will provide a boost for lenders in Adding to the jitters, telecommunications
0ROCEEDSûWILLûBEûUSEDûTOûREPAYûAû53Mû the region, who have been starved of action company TIPHONE MOBILE INDONESIA fell victim to
6% senior unsecured note issue maturing on since the Covid-19 outbreak upended economic the pandemic, having defaulted on a US$181m-
*ULYû activity globally. Year-to-date loan volume from equivalent three-year loan signed in June
-EANWHILEûTHEûCOMPANYûISûSTILLûSEEKINGûAû Indonesia stood at US$4.87bn as of June 11, 2018. The company, which missed an interest
WAIVERûFORûBREACHESûOFûAûlNANCIALûCOVENANTû nearly a third lower than US$6.97bn raised in the payment in March, has hired a financial adviser
ONûAû53M EQUIVALENTûSYNDICATEDûLOANû first six months of 2019, according to Refinitiv to restructure its debt.
SIGNEDûINû*UNEû LPC data.
Jinjiang’s interest coverage ratio had “Indonesia seems to be the brighter spot in PAYING UP?
fallen below the minimum requirement of 3 South and South-East Asia with a few deals Given the circumstances, some borrowers might
TIMESûFORûTHEû MONTHûPERIODSûENDEDû*UNEû cooking, although traction is very slow,” said a need to pay up in order to attract bank liquidity,
ûûANDû$ECEMBERûû Singapore-based syndicated loans banker. “That especially as participating banks have become
4HEûCOMPANYûSAIDûONû-AYûûITûHADûNOTû said, transactions are coming in and will boost more risk-averse and funding costs are rising.
received any notice for accelerated volumes a lot in the second half.” “For widely syndicated deals, I expect pricing to
prepayment of the facility. Indofood is expected to shortlist around half be wider to take into account the funding costs of
3TAN#HARTûWASûALSOûTHEûSOLEû-,!"ûOFûTHEû a dozen banks for a US$2bn loan backing the a wider pool of participating banks,” said the first
*UNEûûBORROWINGûWHICHûWASû*INJIANGSû proposed US$3bn acquisition of its manufacturer loans banker. “We have seen the cost of funds for
debut offshore syndicated loan and attracted partner Pinehill. banks has gone up by 50bp–100bp on average.”
ûOTHERûLENDERS The deal is expected to be well received given Borrowers with strong financials or rarity
,ASTû!UGUSTû*INJIANGû%NVIRONMENTû it is an acquisition financing and marks the value, such as PLN and Indofood, are likely to
obtained a waiver from majority lenders for borrower’s return to the loan market for the first achieve tighter pricing, he said.
mandatory pre-payment regarding a change time in more than a decade. Pricing on BRI’s new financing, comprising a
in the controlling shareholder of the PLN is seeking a US$500m multi-tranche US$500m one-year tranche, a US$200m two-
company. This followed the sale of a loan, adding to another US$1bn borrowing it was year piece, and a US$300m five-year portion
COMBINEDûûSTAKEûINûTHEûCOMPANYûHELDû sounding out a couple of months ago. is only marginally higher than for its previous
BYûSHAREHOLDERSû$OUû:HENGGANGûHISûWIFEû Borrowers that initially opted for club loans multi-tranche facility in March 2019.
7EIû8UEFENGûANDûDAUGHTERû*ENNIFERû7EIûTOû are now mulling the option of syndication. BRI’s That US$700m loan paid top-level all-in
state-owned Zhejiang Provincial Energy US$1bn multi-tranche financing and INDOMOBIL pricing of 60bp, 91bp and 103bp based on
Group. FINANCE INDONESIA‘s US$240m three-year facility interest margins of 40bp, 74bp and 84bp over
)NûITSûANNUALûREPORTûRELEASEDûONû*UNEûû were initially intended as club loans. Libor and remaining lives of 0.75, 2.75 and 3.75
the company said it will continue to actively However, the financings are now expected years for its three tranches.
seek the support of the largest controlling to be syndicated. Along with agricultural Despite what was considered tight pricing
SHAREHOLDERûSTATE OWNEDû:HEJIANGû commodities firm FKS FOOD AND AGRI‘s US$250m then, BRI tasted success with a US$700m three-
0ROVINCIALû%NERGYû'ROUPûTOûIMPROVEûTHEû five-year refinancing, they will be among the first tranche loan, which attracted participation from
GROUPSûlNANCINGûCHANNELSûANDûREDUCEû few to test sentiment. 27 lenders, including 15 that joined in general
lNANCINGûCOSTSûSOûASûTOûSTRENGTHENûTHEû “No deals from Indonesia have launched post- syndication.
working capital of the group. Covid. It’s a chicken-and-egg situation, where Fifteen months later, sentiment among
lenders are waiting for new deals to launch in lenders has turned cautious largely because of
MIDEA OBTAINS US$168m LOAN order to gauge market appetite and pricing the impact from the pandemic.
levels,” said a second Singapore-based loans “We will be very selective in lending to
3HENZHEN LISTEDûHOMEûAPPLIANCEûMAKERû banker. borrowers from Indonesia’s banking sector as
-IDEAû'ROUPûHASûRAISEDûAû53MûlVE YEARû Moody’s has downgraded Indonesia’s banking
term loan from eight lenders. PANDEMIC JITTERS industry outlook to negative from stable in
Credit Agricole CIB was the mandated lead For some Indonesian borrowers, the future looks early April over concerns of rising credit costs
arranger and bookrunner of the transaction. more uncertain. Financial services company and declining profitability as the pandemic is
MLAs are Bank of China, China Construction Bank, SARANA MULTI INFRASTRUKTUR is still undecided disrupting the global economy,” said a senior
Postal Savings Bank of China, Bank of on the launch of a US$500m five-year loan after loans banker from a Taiwanese bank.
Communications, ICBC, Agricultural Bank of mandating five banks in April. The deal marks Chien Mi Wong
China and ICBC Luxembourg.

LEI SHING HONG REFI LAUNCHES
Chailease units on borrowing spree Hong Kong-based LEI SHING HONG CREDIT has
LAUNCHEDûAû53M EQUIVALENTûTHREE YEARû
ASIA Cambodian, Singaporean, Thai subsidiaries follow affiliates term loan into general syndication after
attracting four Taiwanese lenders in the
Taiwan-listed CHAILEASE HOLDING is on a Lead arrangers taking US$20m–$29m senior syndication phase.
borrowing spree across South-East Asia with its will receive all-in pricing of 130bp and 135bp Far Eastern International Bank is the original
Cambodian and Thai subsidiaries becoming the via a 30bp fee. Arrangers joining with mandated lead arranger and bookrunner of
latest to tap the loan markets. US$10m–$19m earn all-in pricing of THEûFACILITYûWHICHûCANûBEûINCREASEDûTOûUPûTOû
Mizuho Bank is the coordinator for a loan of 126.67bp and 131.67bp via a 20bp fee. 53M EQUIVALENT
around US$100m for Chailease Thailand and is Newly established CHAILEASE INTERNATIONAL KGI BankûMega International Commercial
reaching out to relationship banks. FINANCIAL SERVICES (SINGAPORE) is the borrower. BankûTaishin International Bank and Yuanta
Chailease’s Cambodian unit is also sounding Chailease Holding’s Vietnam-based Commercial Bank joined in senior syndication
the market for a US dollar loan. unit CHAILEASE INTERNATIONAL LEASING has with the same title.
The terms of the two borrowings are yet to also launched a three-year loan of up to 4HEûDEALûWHICHûCANûBEûDRAWNûINû(ONGû
be determined, but they follow close on the US$70m the week before last. Bank SinoPac +ONGûORû53ûDOLLARSûOFFERSûIDENTICALûPRICINGû
heels of two other loans totalling US$150m for is the sole MLAB of the transaction, which ASûTHEûCOMPANYSûPREVIOUSûLOANûPAYINGûANû
Chailease’s Singaporean and Vietnamese units. has an initial size of US$50m and a US$20m INTERESTûMARGINûOFûBPûOVERû,IBORûORû
Mizuho is also the sole mandated lead arranger greenshoe. (IBORûANDûHASûAû YEARûAVERAGEûLIFE
and bookrunner of a US$100m three-year bullet The deal offers a top-level all-in pricing of The borrower will pay any excess interest
loan for the Singaporean unit, which comprises a 149.05bp based on an interest margin of 130bp RATEûBEYONDûAûBPûDIFFERENCEûBETWEENû
US$100m Tranche A and a US$100m Tranche B. The over Libor and an upfront fee of 50bp. 4!)&8ûANDû,IBOR
two tranches cannot exceed a combined US$100m. Earlier this month, Chailease International Banks are invited to join at three ticket
Tranches A and B offer interest margins of Finance Corp, another unit of Chailease LEVELSû-,!"SûRECEIVEûAûTOP LEVELûALL INû
120bp and 125bp over Libor, respectively. The Holding, obtained an increased Rmb3.79bn PRICINGûOFûBPûFORûCOMMITMENTSûOFû
borrower will pay any excess interest rate beyond (US$413m) three-year term loan. 53MûORûMOREûVIAûAûBPûMANAGEMENTû
a 35bp difference between TAIFX and Libor. Mizuho Bank (China) was the sole MLAB of FEEû-,!SûEARNûANûALL INûPRICINGûOFûBPû
MLAs joining with US$30m or above earn a that loan, which pays a margin of 85bp over FORûTICKETSûOFû53MnMûVIAûAûBPûFEEû
top-level all-in pricing of 133.33bp and 138.33bp the one-year loan prime rate. Banks were while lead arrangers get an all-in pricing of
based on an upfront fee of 40bp for tranches A offered a top-level participation fee of 30bp. BPûFORû53MnMûVIAûAûBPûFEE
and B, respectively. Evelynn Lin The guarantor is parent company Lei
Shing Hong. Funds are for working capital
ANDûRElNANCINGûPURPOSES
&UNDSûWILLûBEûUSEDûTOûRElNANCEûDEBTûANDû "ANKû#4"#û"ANKû(ANGû3ENGû"ANKû-5&'û The borrower last tapped the loan market
for general corporate purposes. ANDû7ESTPACû"ANKINGû#ORPûASû-,!"S FORûAû53M EQUIVALENTûBORROWINGûINû
-IDEAû'ROUPûISûTHEûGUARANTORûWHILEûITSû The facility paid a top-level all-in pricing of $ECEMBERû
subsidiary MIDEA INTERNATIONAL is the BPûBASEDûONûTHEûMARGINûOFûBPûOVERû Far Eastern International Bank also led
borrower. ,IBORûORû(IBORûANDûANûAVERAGEûLIFEûOFûûYEARS THATûDEALûWHICHûOFFEREDûAûTOP LEVELûALL INû
)Nû-AYûLASTûYEARûTHEûBORROWERûRAISEDûAû )Nû!PRILûTHISûYEARû&ITCHûDOWNGRADEDû&ARû PRICINGûOFûBPûVIAûAûMARGINûOFûBPûOVERû
53MûlVE YEARûBULLETûTERMûLOANû#!#)"û %ASTû(ORIZONûTOû""ûFROMû"""¦ûWITHûAû ,IBORûORû(IBORûANDûAûBPûFEE
ALSOûLEDûTHATûDEALûWHICHûOFFEREDûAûTOP LEVELû NEGATIVEûOUTLOOKûOVERûEXPECTATIONSûTHATûTHEû The borrower provides mortgage loans
ALL INûPRICINGûOFûBPûBASEDûONûANûINTERESTû COMPANYSûASSETûQUALITYûANDûPROlTABILITYû against various collateral bases including
MARGINûOFûBPûOVERû,IBOR WILLûDETERIORATEûWHICHûWILLûLEADûTOûHIGHERû HOMESûSHOPSûINDUSTRIALûFACILITIESûCARûPARKSû
leverage as the operating environment has advertisement spaces and marine vessels.
SIGNIlCANTLYûWEAKENED
HONG KONG 4HEûNEGATIVEûOUTLOOKûREmECTSûTHEû LINK REIT BANKS ON SUSTAINABILITY
potential for further pressure on Far East
FAR EAST HORIZON RETURNS (ORIZONSûCREDITûPROlLEûFROMûTHEûSIGNIlCANTû LINK FINANCEûAûWHOLLYûOWNEDûSPECIALûPURPOSEû
slowdown in economic activity if the Covid- VEHICLEûOFû(ONGû+ONG LISTEDû,INKû2%)4ûHASû
FAR EAST HORIZON has approached relationship ûPANDEMICûLASTSûLONGERûTHANûEXPECTED SIGNEDûAû(+BNûlVE YEARûSUSTAINABILITY
BANKSûFORûAû53BNûTHREE YEARûRElNANCINGû &ITCHûADDEDûTHATûh&ARû%ASTû(ORIZONSû linked loan with OCBC Bank.
larger than the borrowing it completed a FUNDINGûANDûLIQUIDITYûPROlLEûREMAINSû Proceeds will be used for general working
year ago. ADEQUATEûSUPPORTEDûBYûITSûESTABLISHEDû capital and corporate funding purposes.
4HEû(ONGû+ONG LISTEDûlNANCIALûSERVICESû FRANCHISEûANDûMARKETûPOSITIONûALTHOUGHû The interest margin on the facility will be
company is offering an interest margin of funding conditions could become more reduced on a tiered basis subject to Link
BPûOVERû,IBORûFORûTHEûLATESTûFACILITYûnûTHEû challenging for the sector as a whole. The 2%)4SûENVIRONMENTALûSOCIALûANDû
SAMEûASûTHATûONûITSû53BN EQUIVALENTûTHREE company also has a high level of governance performance.
year loan signed which was in May last year. UNENCUMBEREDûASSETSûWHICHûCOULDûBEûUSEDû Link REIT’s ESG metrics will be measured
Relationship banks are working on credit FORûASSET BACKEDûSECURITISATIONûANDûAûLARGEû by its continued inclusion in leading global
approvals to form the arranger group. amount of unused credit lines to support its sustainability indices as well as
4HEû53BN EQUIVALENTûTHREE YEARûLOANû funding needs and reduce short-term improvements in its Global Real Estate
CLOSEDûINû-AYûLASTûYEARûHADûûLENDERSû RElNANCINGûRISKSv Sustainability Benchmark score.
PARTICIPATINGûINCLUDINGû#HINAû%VERBRIGHTû 3INOCHEMû'ROUPûOWNSûABOUTûûOFûTHEû ,INKû2%)4ûRAISEDûAûDEBUTû!Mû
"ANKû(ONGû+ONGûBRANCHû#-"û7INGû,UNGû borrower. 53M ûSUSTAINABILITY LINKEDûLOANûINû

LOANS EMEA
March from DBS Bank. The facility was used 4HEûLOANûSPLITûINTOûAû!MûPIECEûANDûAû &+3û&OODûû!GRIûSOURCESûAGRICULTURALû
for general corporate funding purposes !M EQUIVALENTûPORTIONûWASûLAUNCHEDûINû COMMODITIESûINCLUDINGûSOYBEANSûSOYBEANû
including sustainability initiatives. -ARCHûOFFERINGûANûINTERESTûMARGINûOFûBPû MEALûWHEATûCORNûANDûSUGARûFROMûAROUNDû
)Nû!PRILûTHEûCOMPANYûOBTAINEDûAû OVERû""39û)TûCANûBEûDRAWNûINû!USTRALIANûANDû THEûWORLDûANDûSHIPSûTHEMûTOû3OUTH %ASTû
!MûlVE YEARûBILATERALûLOANûFROMû!.:û .EWû:EALANDûDOLLARS !SIA
THATûBACKEDûITSûACQUISITIONûOFûAû STOREYû )Nû-ARCHûTHEûCOMPANYûALSOûAMENDEDûANDû It is engaged in a diverse range of
OFlCEûTOWERûINû3YDNEYSûCENTRALûBUSINESSû increased existing revolving credit facilities business in Indonesia and across the
district. TOTALLINGû!MûANDû.:BNû53BN û REGIONûINCLUDINGûGRAINûIMPORTINGûANDû
MATURINGûFROMû*ANUARYûûTOû!PRILû SALESûPORTûFACILITYûOPERATIONSûSUGARûANDû
mOURûMANUFACTURINGûANDûTHEûSTARCHû
JAPAN FLETCHER WINS COV HEADROOM business.
ARCLAND SAKAMOTO TO BRIDGE FLETCHER BUILDING‘s lenders have agreed to SEMBCORP MARINE UNIT BAGS
AMENDûlNANCIALûCOVENANTSûTHROUGHûTOûTHEû US$500m
ARCLAND SAKAMOTO is set to raise a one-year ENDûOFûûIFûNEEDEDûASûTHEûCOMPANYû
BRIDGEûLOANûOFûUPûTOûcBNû53BN ûTOû experiences an uncertain trading !ûSUBSIDIARYûOFûOFFSHOREûENGINEERINGû
back its planned acquisition of Lixil Viva. environment as a result of the coronavirus company Sembcorp Marine has entered
SMBCûISûTHEûSOLEûLENDERûOFûTHEûLOANûWHICHû pandemic. into a bilateral revolving facility for up to
is secured with Lixil Viva shares. 5NDERûTHEûAGREEMENTSû&LETCHERû"UILDINGû 53M
4HEûBORROWINGûISûSPITûINTOûAûcBNû may opt to rely on more favourable levels Sembcorp Marine is providing a
TERMûLOANûFORûTHEûACQUISITIONûANDûAûcBNû FORûITSûlNANCIALûCOVENANTSûFROMû*UNEûûTOû guarantee for the loan for ESTALEIRO JURONG
4ERMû,OANû"ûFORûRElNANCINGûEXISTINGûDEBTûATû $ECEMBERûûACCORDINGûTOûlLINGSûTOûTHEû ARACRUZûWHICHûOWNSûANûINTEGRATEDû
the target. .EWû:EALANDû%XCHANGEûANDûTHEû!USTRALIANû SHIPYARDûINû"RAZIL
Home improvement store operator Securities Exchange on Wednesday. Standard CharteredûISûTHEûSOLEûLENDERû
!RCLANDû3AKAMOTOûLAUNCHEDûAûcûPERû Total interest cover ratio may be lowered arranger and agent.
share offer for Lixil Viva on Wednesday. The TOûûTIMESûFROMûTHEûNORMALûLEVELûOFûTWOû 5NDERûTHEûFACILITYûAGREEMENTûAû
OFFERûENDSûONû*ULYû TIMESûANDûSENIORûINTERESTûCOVERûRATIOûTOûXû pre-payment will be triggered if Sembcorp
Luxury toilet maker LIXIL Group has FROMûXûWITHûEARNINGSûBEFOREûINTERESTûANDû Industries’ ownership in Sembcorp Marine
AGREEDûTOûSELLûITSûENTIREûûINTERESTûINûITSû TAXESûINû1ûûSETûATû.:Mû53M û DROPSûBELOWû
Saitama-based home improvement store for testing these ratios. )FûTHISûHAPPENSûLOANSûANDûTRADEûFACILITIESû
unit. The company expects to be in compliance TOTALLINGûAPPROXIMATELYû3BNû
,ASTûMONTHû,IXILû'ROUPûSAIDûITûWOULDûSELLû with its normal covenant levels at June. 53BN ûASûOFû*UNEûûMAYûBEûAFFECTED
)TALIANûMAKERûOFûCURTAINûWALLSû0ERMASTEELISAû Should Fletcher Building need to rely on Singapore-listed Sembcorp Industries
WHICHûITûBOUGHTûFORûABOUTûcBNûINûûTOû THEûMOREûFAVOURABLEûCOVENANTûLEVELSûITûWILLû OWNEDûûOFû3EMBCORPû-ARINEûASûATû
53ûCONSTRUCTIONûGROUPû!TLASû(OLDINGSûFORûANû not pay a dividend until it is in compliance $ECEMBERûû
undisclosed amount. with and agrees to be tested at normal
levels.
JAL LANDS ¥88bn FINANCING 4HEûCOMPANYûHASûAROUNDû.:BNûINû
available liquidity and a leverage ratio of
JAPAN AIRLINESûHASûSIGNEDûAûcBNû YEARû ABOUTûXûBELOWûITSûTARGETûOFûnûTIMES EUROPE/MIDDLE
AIRCRAFTûlNANCINGûITSûSECONDûOFûTHEûYEAR EAST/AFRICA
Japan Bank for International Cooperation
ISûPROVIDINGûAûGUARANTEEûFORûTHEûBORROWINGû SINGAPORE
WHICHûlNANCESû*!,SûPURCHASEûOFûEIGHTû DENMARK
AIRCRAFTûFROMû!IRBUS FKS FOOD & AGRI TO LAUNCH
MUFG and Mizuho Bank were the mandated CHR HANSEN TAPS BRIDGE LOAN
LEADûARRANGERSûWHILEûBank of Kyoto and SMBC FKS FOOD & AGRIûPLANSûTOûLAUNCHûAû53Mû
joined in syndication. lVE YEARûBORROWINGûINTOûGENERALûSYNDICATIONû Bioscience group CHR HANSEN is backing its
*!,SûPREVIOUSûAIRCRAFTûlNANCINGûWASûAû this month with two banks at the top. 53MûACQUISITIONûOFû53 BASEDû
cBNûBORROWINGûALSOûWITHûAû*")#û The agricultural commodities supplier PROBIOTICSûCOMPANYû5!3û,ABSûWITHûAûBRIDGEû
GUARANTEEûINû&EBRUARY has appointed BNP Paribas and Rabobank as loan.
the mandated lead arrangers and The low interest bridge loan is being
BOOKRUNNERSûOFûTHEûLOANûWHICHûWILLûBEûUSEDû provided by Chr Hansen’s core banks.
NEW ZEALAND for capital expenditure and general Chr Hansen tapped the loan market in
CORPORATEûANDûRElNANCINGûPURPOSES !UGUSTûûFORûAûõMûlVE YEARû
RYMAN CLOSES A$200m LOAN 4HEûTWOûBANKSûWEREûALSOû-,!"SûONûTHEû revolving credit facility.
COMPANYSûPREVIOUSûOFFSHOREûLOANûINûû 4HATûlNANCINGûWASûCOORDINATEDûBYû3%"û
.EWû:EALAND LISTEDûAGEûCAREûANDûRETIREMENTû 4HEûFACILITYûSIZEûWASûINCREASEDûTOû53Mû ALONGûWITHû$ANSKEû"ANKû.ORDEAû"ANKû
village operator RYMAN HEALTHCARE has closed FROMû53MûWITHûFOURûBANKSûJOININGûINû .YKREDITû"ANKûANDû3VENSKAû
Aû!Mû53M ûlVE YEARûDUAL TRANCHEû syndication. Handelsbanken as bookrunners and
loan. )Nû*ULYûû*APANSû-ITSUIûû#OûANDûTHEû MANDATEDûLEADûARRANGERSû".0û0ARIBASûANDû
Sole mandated lead arranger and Development Bank of Japan jointly acquired HSBC were mandated lead arrangers.
bookrunner Commonwealth Bank of Australia SHARESûINû&+3û&OODûû!GRIûWITHûAûTOTALû #HRû(ANSENûISûACQUIRINGû5!3û,ABSûFROMû
ENDEDûUPûWITHû!MûAFTERûBank of Baroda INVESTMENTûOFûAPPROXIMATELYû53MûFORû private equity fund Lakeview Equity
JOINEDûWITHûAû!MûCOMMITMENT ANûEQUITYûSTAKEûOFû Partners.

FRANCE
Oman borrowers resume NEXANS AGREES STATE-BACKED LOAN
talks with lenders Cable systems company NEXANS has agreed a

õMûSTATE BACKEDûTERMûLOANûTOûSTRENGTHENûTHEû
MIDDLE EAST Discussions with sovereign and oil company OQ stalled earlier this year company’s liquidity during the coronavirus crisis.
4HEû&RENCHûSTATEûISûGUARANTEEINGûûOFû
International and regional lenders have However, burdened by high levels of debt and THEûlNANCING
reopened talks with Omani borrowers for a deficit that Fitch said could climb to around In line with other French state-guaranteed
new syndicated loans just weeks after initial US$12bn in 2020 – 18% of GDP – Oman is more lNANCINGSûTHEûLOANûHASûANûINITIALû MONTHû
discussions stalled over a sovereign rating vulnerable to oil price swings than most of its maturity with extension options for up to a
downgrade, the coronavirus pandemic and wealthier Gulf neighbours and some bankers FURTHERûlVEûYEARS
plummeting oil prices. are more cautious about how quickly Oman can BNP Paribas ISûCOORDINATORûWHILEûCredit
Lenders are considering a sovereign loan for return to the loan market. Agricole CIB is facility agent. CICûCredit
the sultanate and a loan for OQ, formerly known “Oman (the sovereign) is always looking for Agricole Ile de FranceûNatixis and Societe
as Oman Oil. funds. It’s not easy to lend to Oman, I think it is Generale also participated.
In March, the sultanate was forced to put too early to determine,” a second banker said. !TûTHEûENDûOFû-ARCHûBEFOREûTHEûLOANûWASû
a US$2bn sovereign loan on hold after it was Oil company OQ has also reopened financing AGREEDû.EXANSûHADûAROUNDûõBNûOFûLIQUIDITYû
downgraded by Fitch further into junk territory, talks. INCLUDINGûANûUNDRAWNûõMûREVOLVINGû
to BB from BB+. The impact of Covid-19 and a “OQ was struggling at the end of April to put CREDITûFACILITYû)NûEARLYû!PRILûTHEûCOMPANYû
crash in oil prices were also contributing factors. together a deal. It got to the point no-one was DREWûõMûFROMûTHEû2#&ûTOûREPAYû
However, lenders are now willing to resume looking at it, but now it is back on the table. I commercial papers at maturity.
talks as the initial panic in the market begins to think US$1.5bn is what they wish for but they will
ease and oil prices have risen after OPEC agreed settle for smaller,” the first banker said.
to extend oil output cuts until the end of July. A deal for OQ is likely to be priced at around GERMANY
“There has been a seismic shift. A month ago 300bp over Libor, he said, which could attract
it would not have been possible for Oman to interest from smaller regional banks that TOM TAILOR FALLS SHORT
raise a loan. But within the last few weeks there are priced out of deals for stronger rated oil
has been a marked improvement,” said one companies, such as Abu Dhabi’s ADNOC, which Fashion company TOM TAILOR HOLDING SEûWILLûlLEû
banker. pays around 100bp. These banks might also fill for insolvency despite its eponymous clothing
“The market is now open again, even for a gap left by some of the larger lenders with too BRANDûSUBSIDIARYûSECURINGûAûõMûLOANû
Oman. Banks that had virtually stopped lending much oil and gas exposure. guaranteed by the federal government and the
in the region are coming back and pricing is “Some of the bigger UAE banks plus the STATESûOFû(AMBURGûANDû.ORTHû2HINE 7ESTPHALIA
coming down.” international banks might already have too much 4HEûGUARANTEE BACKEDûlNANCINGûMATURESû
OMAN could now get as much as US$3bn for oil sector exposure at this stage, but smaller ATûTHEûENDûOFû3EPTEMBERû
its sovereign loan, the banker said, depending on regional banks are keen,” he said. 4HEûCOMPANYûWILLûALSOûEXTENDûõMûOFû
what it is willing to pay. Sandrine Bradley ITSûCREDITûLINESûTOûTHEûENDûOFû3EPTEMBERû
4HEûlNANCINGûPACKAGEûWILLûALLOWû4OMû
Tailor GmbH to continue operating its
amount would depend on how the bond business unchanged.
EGYPT WENTûnû)ûTHINKûAROUNDû53BNûWOULDûBEûAû (OWEVERûTHEûGUARANTEEDûFUNDINGûFALLSû
SUFlCIENTûNOWvû short of the amount requested by the
SOVEREIGN BEGINS TALKS Banks on the loan are likely to be the COMPANYûFORûTHEûENTIREûGROUPûINCLUDINGû
SAMEûASûTHOSEûINVOLVEDûINûTHEûBONDûWHICHû WOMENSWEARûSUBSIDIARYû"ONITAûWHICHûDOESû
EGYPT is in preliminary discussions with CLOSEDûFOURûTIMESûSUBSCRIBEDûONû-AYûû not qualify for further funding or guarantees.
banks for a multi-billion dollar syndicated ANDûWASûLEDûBYûLEADûMANAGERSû".0û0ARIBASû "ONITAûHASûINSUFlCIENTûLIQUIDITYûTOûCOVERû
LOANûFOLLOWINGûTHEûCOUNTRYSû53BNûBONDû #ITIGROUPû(3"#û*0û-ORGANûANDû3TANDARDû THEûOUTmOWSûOFûFUNDSûRELATEDûTOûTHEû#OVID û
issuance in May. #HARTEREDû)TûCOMPRISEDûAû53BNû-AYû PANDEMICûANDûWILLûAPPLYûFORû#HAPTERû
!ûREQUESTûFORûPROPOSALSûHASûNOTûBEENûSENTû ûNOTEûAû53BNû-AYûûNOTEûANDû style protective shield proceedings under its
TOûBANKSûYETûBUTûLENDERSûEXPECTûTHATûTHEû Aû53BNû-AYûûNOTE own administration procedure.
NORTHû!FRICANûCOUNTRYûWILLûBEûLOOKINGûFORûAû !PPETITEûFORû%GYPTûRATEDû"""ûHASû The group said that because of intragroup
LOANûOFûAROUNDû53BN BEENûHELPEDûBYûAûONE YEARû53BNû OBLIGATIONSûTOû"ONITAû4OMû4AILORû(OLDINGû
"EFOREûTHEûBONDûWASûRAISEDû%GYPTûHADû Rapid Financing Instrument package 3%SûINSOLVENCYûISûNOWûINEVITABLEûANDûTHEû
indicated that it would try and tap the loan agreed with the IMF to help with any COMPANYûWILLûlLEûFORûINSOLVENCYûWITHûTHEû
market for around US$3bn. Following the payment gaps businesses face as a result of Hamburg local court.
SUCCESSûOFûTHEûBONDûHOWEVERûTHEûSIZEûOFûTHEû the coronavirus pandemic that was
loan request is expected to be lower. approved in May.
“The bond issuance was very successful. It Before the bond issuance the sovereign NETHERLANDS
attracted great liquidity and there is HADû53BNûLEFTûTOûFUNDûDURINGûTHEûlSCALû
DElNITELYûFURTHERûINTERESTûFROMûTHEûLOANû YEARûWHICHûRUNSûUNTILûTHEûENDûOFû*UNEû4HEû DSM LINES UP BRIDGE
MARKETvûSAIDûONEûBANKERûh"EFOREûTHEûBONDû additional proceeds will go towards the
they indicated they might look for a loan of REQUIREMENTSûFORûTHEûNEXTûlSCALûYEARû Life sciences and materials science company DSM
up to US$3bn but they said the exact EXPECTEDûTOûTOTALû53BN BN HASûLINEDûUPûAûCOMMITTEDûBRIDGEûLOANûTOûlNANCEû

LOANS EMEA
ITSûõMûACQUISITIONûOFû!USTRIA BASEDûANIMALû
nutrition and health business Erber Group.
DSM has a strong balance sheet and is
committed to maintaining an investment-
Sovereign loan delayed
GRADEûCREDITûPROlLE UGANDA Deal has an end of June deadline for completion
The company’s liquidity is supported by
õBNûOFûUNDRAWNûREVOLVINGûCREDITû UGANDA‘s sovereign loan has been delayed by The other €300m portion of the financing
FACILITIESûINCLUDINGûAûõBNûSUSTAINABILITY the impact of the coronavirus, low oil prices and was arranged and underwritten by TDB Bank as
LINKEDû2#&ûORIGINALLYûAGREEDûINû-AYûû South Africa’s recent sovereign downgrade. underwriter and initial mandated lead arranger
THATûMATURESûINû The €300m loan, underwritten by and closed on April 14, with Societe Generale
4HEûCOMPANYûAGREEDûANûADDITIONALûõMû Standard Bank, will be used to fund Ugandan taking a €130m portion. It is a separate facility to
2#&ûINû!PRIL infrastructure projects. It forms part of a bigger Standard Bank’s €300m loan and backs similar
4HEû2#&SûAREûNOTûSUBJECTûTOûlNANCIALû €600m seven-year loan, which is the country’s but different infrastructure projects.
covenants or material adverse change first ever sovereign loan. Both €300m facilities have the same pricing
clauses. The deal, which the Ugandan government and tenors and were agreed by the Ugandan
brought to market in November, pays 445bp over parliament, meaning it is not possible to
Libor. renegotiate pricing.
SPAIN Standard Bank has been hit by the increased In addition, the deal has an end of June
cost of funds following South Africa’s latest deadline for completion when the Ugandan
GESTAMP GETS €200m EIB LOAN downgrade at the end of April when S&P government’s budget process for the current
downgraded its long-term foreign-currency fiscal year ends.
Car parts maker GESTAMPûHASûAGREEDûAûõMû credit rating to BB- from BB, which has slowed “Pricing can’t go up, as parliament approved it
loan from the European Investment Bank for the progress of the deal. at that level,” said the second banker. “Getting it
research and development to make cars “The deal has been caught in the headwinds done by the end of June is key.”
safer and lighter. of Covid-19 and its impact, including the South Uganda is, however, seen as a good risk. The
4HEûCOMPANYûEXPECTSûTOûAGREEûAûõMû African downgrade and a general contraction in East African economy is growing faster than 6%
loan from another multilateral lender for liquidity,” said one banker. “It will get done but and is rated B2 by Moody’s and B+ by Fitch with
the same purpose. things are just slower.” a stable outlook.
The company has agreed a covenant Banks looking to come into the deal, which “Uganda’s stable macroeconomic context, low
WAIVERûUNTILûTHEûSECONDûQUARTERûOFûûONû will be a small club loan, are also struggling with liquidity and debt distress risks, and manageable
ITSûõBNûSYNDICATEDûLOANûTOûREINFORCEûITSû the increased cost of funds public debt stock were conducive to the
lNANCIALûmEXIBILITYûDURINGûTHEûCORONAVIRUSû “Other lenders are also getting delayed. transaction,” TDB said when it closed its €300m
crisis. Everything is far more under the microscope than facility.
û)Nû*ANUARYû'ESTAMPûEXTENDEDûTHEû before,” a second banker said. Sandrine Bradley
MATURITIESûONûITSûSYNDICATEDûLOANûTOû
4HEûlNANCINGûCOMPRISESûAROUNDûõMû
OFûTERMûLOANSûANDûAûõMûSUSTAINABILITY 4HEûlNANCINGûHASûAûPRICINGûMECHANISMû MEDICOVER AMENDS RCF COVENANT
LINKEDûREVOLVINGûCREDITûFACILITYûWHICHûHASû designed to incentivise portfolio
been fully drawn. companies to improve their ESG Healthcare and diagnostic company MEDICOVER
4HEûlNANCINGûWASûCOORDINATEDûBYû""6!û PERFORMANCEûSPECIlCALLYûINûTERMSûOFû HASûAMENDEDûTHEûCOVENANTûONûITSûõMû
ALONGSIDEû3ANTANDERû"ANKûOFû!MERICAû gender equality on the board of directors; revolving credit facility to provide additional
"ANKIAû#AIXA"ANKûANDû$EUTSCHEû"ANKûASû renewable energy transition; and mEXIBILITYûDURINGûTHEûCORONAVIRUSûPANDEMIC
bookrunning mandated lead arrangers. sustainability governance. Medicover has seen revenue impacted by
The mechanism is directly tied to EQT’s the crisis after governments placed
higher level targets on diversity and climate restrictions on movement and health
SWEDEN as well as its governance model. services in the markets where it operates.
4HEûlNANCINGûISûBEINGûPROVIDEDûBYû
EQT LINKS BRIDGE TO ESG syndicate including BNP Paribas and SEB as EMEA LOANS BOOKRUNNERS – FULLY
SUSTAINABILITYûCOORDINATORSûANDû".0û0ARIBASû SYNDICATED VOLUME
Investment group EQT has signed a fund as facility agent and sustainability agent. BOOKRUNNERS: 1/1/2020 TO DATE
bridge facility with pricing linked to the EQT and future portfolio companies will Managing No of Total Share
ENVIRONMENTALûSOCIALûANDûGOVERNANCEû work with advisers to develop customised bank or group issues US$(m) (%)
performance of its private equity portfolio and measurable key performance indicators 1 BNP Paribas 86 57,362.70 18.4
companies. FORûTHEûINDIVIDUALûCOMPANIESûWHICHûWILLûBEû 2 Credit Agricole 59 24,569.60 7.9
The fund level subscription credit facility reported quarterly and audited annually. 3 Santander 57 20,483.90 6.6
TOTALSûõBNûANDûHASûANûUPPERûLIMITûOFû This approach will contribute to an 4 HSBC 51 16,653.17 5.3
AROUNDûõBNû)TûISûTHEûlRSTû%3' LINKEDûFUNDû increase of reliable and comparable ESG 5 SG 42 15,380.77 4.9
BRIDGEûFACILITYûOFûTHISûSIZEûINûTHEûGLOBALûFUNDû data. 6 UniCredit 56 15,125.75 4.9
lNANCINGûMARKETSû%14ûSAID The aggregated results from the portfolio 7 JP Morgan 35 14,993.19 4.8
“This is a game-changing moment for companies’ ESG efforts will be compared 8 Deutsche Bank 37 14,330.76 4.6
%14ûBUTûALSOûTHEûPRIVATEûEQUITYûINDUSTRYû with the pre-set KPI targets. The portfolio’s 9 Citigroup 31 12,631.06 4.1
further evidencing how our industry also AVERAGEDûFULlLMENTûRATEûWILLûIMPACTûTHEû%3'û 10 Natixis 24 8,559.75 2.7
CANûBENElTûFROMûSUSTAINABLEûlNANCINGvû BRIDGEûFACILITYSûINTERESTûRATEûWITHûANû Total 313 311,720.25
SAIDû0ERû&RANZENûPARTNERûANDûCO HEADûOFûTHEû improved ESG performance meaning lower Proportional credit
%14û0RIVATEû%QUITYû!DVISORYû4EAM pricing. Source: Refinitiv SDC code: R17

3)'ûALSOûPRICEDûAûõMûSENIORûUNSECUREDû
Banks pile into Liberty- BONDûDUEûûATûAûCOUPONûOFûûANDûAû

õMûSENIORûUNSECUREDûBONDûDUEûûATûAû
COUPONûOFûûPERûANNUM
Telefonica loan 4HEûRElNANCINGûFULLYûREPLACESû3)'Sû

EXISTINGûõBNû4ERMû,OANû!ûõMû4ERMû
,OANû"ûANDûõMû2#&
EUROPE Commitments scaled back to half the initial ask SIG has corporate and bond ratings of
"""nûFROMû30ûANDû"AûFROMû-OODYSû)Tû
More than 30 banks have piled into a £4bn banks and a larger ticket to get paid bigger fees. ALSOûHASûANû!!û%3'ûRATINGûFROMû-3#)ûANû
loan to back a US$38bn merger of the UK “This is just Europe for you, there are too many ûLOWûRISK ûSCOREûFROMû3USTAINALYTICSûANDû
businesses of LIBERTY GLOBAL and TELEFONICA banks. In this deal there are the regional Spanish a Platinum CSR rating from EcoVadis.
after the borrowers tapped their large banking banks, the pan-European banks and the US
relationships to secure the deal within a 10-day banks,” a second senior banker said. “It is a good
period. quality asset and a pretty straightforward deal so UAE
JP Morgan and Citigroup underwrote the £4bn banks piled in.”
2.5-year term loan in May to back the merger DP WORLD OFFERED IN SECONDARY
of Liberty’s Virgin Media with Telefonica’s O2. LEVERAGE UP
Syndication of the loan was launched shortly The loan will be used to initially de-risk the 0IECESûOFûAû53BNûlNANCINGûBACKINGûTHEû
afterwards and closed at the end of May when transaction. It is then expected to be refinanced privatisation of global port operator DP
another 30 banks were bought into the deal. next year and increased to in excess of £6bn WORLDûAREûBEINGûOFFEREDûINûSECONDARYûINû!SIA
Some 36 banks were initially approached through a combination of multi-currency The deal comprises three acquisition
with 32 able to commit to the loan, which pays a leveraged loans and high-yield bonds, sitting lNANCEûFACILITIESûWITHûTENORSûOFûUPûTOûTHREEû
margin of 150bp over Libor with a 40bp upfront across both balance sheets. Leverage at that YEARSûASûWELLûASûAû53BNûlVE YEARûTERMû
fee, within the tight 10-day deadline. point will be between four and five times. LOANûTHATûPAYSûANûINTERESTûMARGINûOFûBPû
The banks were initially asked to commit to at “Liberty and Telefonica is going to be one of over Libor.
least £250m, but were then scaled back by 50% the most active issuers on the street and so while PORTS AND FREE ZONE WORLD FZE is the
to £125m. this is an I-grade transaction for now, Liberty borrower.
“That is a pretty big scale-back. It is not will be doing more deals and significant debt 0ROCEEDSûRAISEDûWILLûlNANCEûTHEû
unprecedented in investment-grade lending but issuance, and as a result makes it one of the ACQUISITIONûOFûAûûSTAKEûOFû$0û7ORLDûBYû
it is not typical either,” a senior banker said. “It most attractive borrowers in the market,” the first 0ORTûANDû&REEû:ONEû7ORLDûPROVIDEûAûONE
is an indication of the strength of Liberty and senior banker said. TIMEûDIVIDENDûDISTRIBUTIONûTOû$UBAIû7ORLDû
Telefonica as corporate borrowers.” The take-out next year is expected to draw ANDûRElNANCEûDEBTûATûTHEû0&:7ûANDû$0û
The 32 banks are Citigroup, JP Morgan, ABN significant attention from leveraged loan and World level.
AMRO, BBVA, Banca Sabadell, Bank of America, high-yield bond investors, attracted by its size Citigroup and Deutsche Bank fully
Bankia, Bankinter, Barclays, BNP Paribas, and the fact that the TMT sector has been strong underwrote the facility.
CaixaBank, Commerzbank, Credit Agricole CIB, and performed well despite the coronavirus. )NûSENIORûSYNDICATIONûEmirates NBD and
Credit Suisse, Deutsche Bank, Goldman Sachs, The combined company will have the largest First Abu Dhabi Bank joined as active
HSBC, ING, Intesa Sanpaolo, Lloyds, Mediobanca, non-investment-grade balance sheet in Europe, BOOKRUNNERSûANDûMANDATEDûLEADûARRANGERSû
Mizuho, Morgan Stanley, MUFG, NatWest, bankers said. while Abu Dhabi Islamic BankûBank of Nova
Natixis, RBC, Santander, Societe Generale, SMBC, The parent companies, which expect to ScotiaûCredit Agricole CIBûDubai Islamic Bankû
Scotiabank and UniCredit. achieve £6.2bn of synergies on an annual basis HSBCûEmirates Islamic BankûJP MorganûSamba
The large bank group reflects the vast amount by the fifth full year after closing, will have equal and Standard Chartered CAMEûINûASû-,!"S
of relationships both entities have. However, a ownership of the combined entity. ,ASTûMONTHûTHEûLOANûWASûLAUNCHEDûINTOûAû
number of lenders would have preferred fewer Claire Ruckin targeted general syndication involving less
THANûûRELATIONSHIPûBANKS
General syndication closed at the end of
4HEû2#&ûWASûORIGINALLYûAGREEDûFORûõMû laboratories. The company’s largest markets LASTûWEEKûWITHûlNALûALLOCATIONSûANDûSIGNINGû
ASûPARTûOFûTHEûCOMPANYSû)0/ûINûûVIAû are Poland and Germany. expected by the end of this week. Banks in
.ORDEAûASûBOOKRUNNERûANDûMANDATEDûLEADû senior syndication were given the go ahead
ARRANGERûWITHû).'û"ANKû:ACHODNIû7"+û to sell the deal down in the secondary loan
and SEB as mandated lead arrangers. SWITZERLAND market.
)Nû*ANUARYûûTHEû2#&ûWASûINCREASEDûBYû h/NCEûGENERALû;SYNDICATION=ûCLOSEDûTHEû
õMûTOûõMûONûTHEûSAMEûTERMSûWITHû SIG LINKS TO SUSTAINABILITY BANKSûWEREûFREEûTOûTRADEûINûSECONDARYvûSAIDû
the existing group of lenders. The facility ONEûBANKERûh4HISûISûNORMALûPROCESSûYOUûSEEû
MATURESûINû*UNEû Packaging company SIG COMBIBLOC has it a lot in Turkish bank deals. They have just
)Nû.OVEMBERûõMûOFûTHEû2#&ûWASû AGREEDûõMûOFûSUSTAINABILITY LINKEDû STARTEDûTALKSûINûSECONDARYûTHOSEûTRADESû
CANCELLEDûASûTHEûCOMPANYûRAISEDûAûõMû LOANSûASûPARTûOFûITSûWIDERûõBNûDEBTû COULDûTAKEûUPûTOûAûMONTHûTOûHAPPENv
year Schuldscheindarlehen on top of its RElNANCING )TûISûUNCLEARûWHYûTHEû!SIANûSECONDARYûLOANû
DEBUTûõMûlVEûANDûSEVEN YEARû33$ûPLACEDû 4HEûLOANSûCOMPRISEûAûõMûTERMûLOANû market is being targeted in particular. It
in October. ANDûAûõMûREVOLVINGûCREDITûFACILITYûPAYINGû could be because the dividend being paid to
(ELABAû).'ûANDû3%"ûWEREûLEADûARRANGERSû MARGINSûOFûBPûOVERû%URIBOR $UBAIû7ORLDûFROMûTHEû53BNûlNANCINGû
on the SSD. The loan was preplaced with a broad will in part be used to repay some of its bank
-EDICOVERûOPERATESûAMBULATORYûCLINICSû group of relationship and investment banks DEBTûFREEINGûUPûTHESEûLENDERSûLIMITSûTOûTHEû
HOSPITALSûSPECIALITYûCAREûFACILITIESûANDû INû-ARCHû REGIONûTHEûBANKERûSAID

LOANS NORTH AMERICA
h!TûTHEû$UBAIû7ORLDûLEVELûAûNUMBERûOFû 4HEûLOANûINCLUDESûAû53MûlVE YEARû compliance with its debt covenants during

!SIANûBANKSûWILLûGETûPAIDûOUTûSOûTHEYûMIGHTû term loan that will be used to replace an the crisis.
BEûINTERESTEDûINûINVESTINGûINûTHISûDEALvûTHEû EXISTINGû53MûTERMûLOANûTHATûWILLûBEû !ûMAXIMUMûLEVERAGEûCOVENANTûHASûBEENû
banker said. cancelled on completion of the bond. The INCREASEDûTOûûTIMESûFROMûûTIMESûWHILEûAû
)Nû&EBRUARYû$UBAIûANNOUNCEDûTHATû0ORTû TERMûLOANûMAYûBEûINCREASEDûTOû53M MINIMUMûlXEDûCHARGEûHASûBEENûREDUCEDûTOû
ANDû&REEû:ONEû7ORLDûAûWHOLLYûOWNEDû There is also a revolving credit facility of ûTIMESûFROMûûTIMES
subsidiary of state investment vehicle Dubai UPûTOû53MûFORûGENERALûCORPORATEûANDû The amended debt includes Tiffany’s
7ORLDûWILLûBUYûPUBLICLYûLISTEDûSHARESûOFû$0û working capital purposes. 53MûREVOLVINGûCREDITûFACILITYûWHICHû
7ORLDûINûAûDEALûWITHûAû53BNûVALUATION Drawings under the new term loan and MATURESûINû/CTOBERû
RCF are conditional on the closing of the 4HEûCOMPANYûDREWû53MûOFûTHEû2#&û
new bond. INûTHEûlRSTûQUARTERûTOûINCREASEûITSûCASHû
UK (ELIOSûOPERATESûINû'HANAû#ONGO POSITIONûANDûMAINTAINûlNANCIALûmEXIBILITYû
"RAZZAVILLEû$2#û4ANZANIAûANDû3OUTHû!FRICA during the crisis.
M&B ADDS LIQUIDITY The drawdown was permitted under the
terms of the acquisition.
Pub and restaurant group MITCHELLS & BUTLERS
has agreed increased credit facilities and MOLINA HEALTHCARE NETS US$1bn
AMENDEDûITSûDEBTûPROVIDINGûADDITIONALû NORTH AMERICA
lNANCIALûmEXIBILITYûTOûMEETûTHEûCHALLENGEûOFû MOLINA HEALTHCAREûHASûSIGNEDûAû53BNûlVE
THEû#OVID ûCRISIS year revolving credit facility via
-"ûHASûAGREEDûaMûOFûUNSECUREDû UNITED STATES administrative agent Truist Bank that
LIQUIDITYûFACILITIESûUNTILûTHEûENDûOFûû REPLACESûAûLOANûSIGNEDûINû*UNEû
comprising the extension of the maturity DANAHER SIGNS US$2.5bn RCF 4HEû2#&ûISûDOUBLEûTHEûSIZEûOFûTHEûPREVIOUSû
OFûITSûEXISTINGûaMûREVOLVINGûCREDITû facility. Several provisions were added to the
FACILITYûANDûaMûOFûNEWûADDITIONALû Medical technology company DANAHER has AGREEMENTûINCLUDINGûANûINCREASEûINûTHEû
FACILITIESûWHICHûAREûSTRUCTUREDûUNDERûTHEû SIGNEDûAû53BNû DAYûREVOLVINGûCREDITû aggregate principal amount of incremental
government-backed Coronavirus Large facility. term loans established under the credit
Business Interruption Loan Scheme. Bank of America is the administrative agent AGREEMENTûTOû53MûFROMû53MûPLUSû
4HEûUNSECUREDûlNANCINGûHASûAûNEWû on the loan. Citigroup is the syndication an unlimited amount as long as the
COVENANTûSTRUCTUREûTOûREmECTûTHEûCOMPANYSû agent. Wells FargoûMUFGûBNP ParibasûUS consolidated net leverage ratio is not greater
REVISEDûTRADINGûPROlLEûTHROUGHûTHEûRECOVERYû BankûHSBCûJP MorganûBarclays and Mizuho are than three times.
of its business following reopening. documentation agents. The applicable margin for the credit
The company has agreed further waivers 4HEûLOANûREPLACESûANûEXISTINGû53BNû facility is based on the company’s
ANDûAMENDMENTSûTOûITSûaBNûOFûSECUREDû DAYû2#&ûTHATûTHEûCOMPANYûSIGNEDûONû!UGUSTû CONSOLIDATEDûNETûLEVERAGEûRATIOû&ORûûTIMESû
debt to avoid technical breaches during û ORûMOREûTHEûMARGINûISûBPûOVERû,IBORûWITHû
the enforced closure of its sites due to the There were no amounts outstanding AûBPûCOMMITMENTûFEEûFORû ûTIMESûITû
crisis. UNDERûTHEûPRIORû53BNûFACILITY ISûBPûANDûBPûFORû ûTIMESûITûISû
4HEûSECUREDûlNANCINGûAMENDMENTSû The company may choose to convert any BPûANDûBPûFORû ûTIMESûITûISûBPû
include waivers on debt service coverage loans outstanding on the maturity date ANDûBPûANDûFORûLESSûTHANûûTIMESûITûISû
RATIOûTESTSûMINIMUMûCAPITALûEXPENDITUREû under the new RCF into term loans that BPûANDûBP
spend and a waiver to allow drawings of up would mature one year later. Danaher /Nû*UNEûû-OLINAûRAISEDû53MûINû
TOûaMûUNDERûTHEûSECUREDûlNANCINGûFORû WOULDûHAVEûTOûPAYûAûFEEûEQUALûTOûûOFûTHEû ûSENIORûNOTESûDUEû
the repayment principal and interest. The principal amount of the loans outstanding The company used approximately
drawings are to be repaid in full by the end and satisfy certain conditions if it wishes to 53MûOFûTHEûNETûPROCEEDSûTOûREPAYûITSû
OFû-ARCHû make this conversion. 53MûTERMûLOANûFACILITY
-"ûHASûCASHûBALANCESûOFûaMûAFTERû 4HEû2#&ûCARRIESûAûMARGINûOFûBPnBPû -OLINAûISûRATEDû"" ûBYû30
FULLYûDRAWINGûTHEûEXISTINGûFACILITIESûaMû over Libor depending on the company’s debt
2#&û$URINGûCLOSUREûTHEû%BITDAûLOSSûINûAû RATINGû)TûHASûAûFACILITYûFEEûOFûBPnBP AMERICAS LOANS BOOKRUNNERS – FULLY
four-week period has stabilised to around The credit facility requires Danaher to SYNDICATED VOLUME
aMûINCLUDINGûRENTûTHEûCOMPANYûSAID KEEPûITSûCONSOLIDATEDûLEVERAGEûRATIOûATûû BOOKRUNNERS: 1/1/2020 TO DATE
Cash burn before debt service is at times or less. Managing No of Total Share
BETWEENûaMûANDûaMûPERûFOUR WEEKû 4HEûCOMPANYûISûRATEDû"""ûBYû30 bank or group issues US$(m) (%)
period as the company pays down supplier 1 BofA Securities 504 133,345.50 13.4
balances. TIFFANY AMENDS COVENANTS 2 JP Morgan 421 125,334.45 12.6
-"ûEXPECTSûTOûSTARTûREOPENINGûITSûPUBSû 3 Citigroup 249 82,384.48 8.3
and restaurants from early July. Jewellery chain TIFFANY & CO has amended its 4 Wells Fargo 321 77,045.83 7.8
DEBTûCOVENANTSûAFTERûSALESûSLUMPEDûûINû 5 Goldman Sachs 140 31,410.93 3.2
HELIOS TOWERS LINES UP REFI THEûlRSTûQUARTERûDURINGûTHEûCORONAVIRUSû 6 Morgan Stanley 80 31,223.61 3.1
crisis. 7 Barclays 145 29,791.13 3.0
,ONDON LISTEDû!FRICANûTELECOMMUNICATIONSû The move comes as the company works to 8 RBC 141 29,733.04 3.0
towers operator HELIOS TOWERS has lined up a COMPLETEûITSû53BNûSALEûTOû&RENCHû 9 Credit Suisse 91 26,490.15 2.7
53MûLOANûASûPARTûOFûAûWIDERûRElNANCINGû luxury goods group LVMH. 10 US Bancorp 175 25,896.73 2.6
EXERCISEûINCLUDINGûAû53MûBONDûANDûANû 4HEûPRECAUTIONARYûAMENDMENTûWHICHûISû Total 1,571 993,898.45
UPûTOû53MûTENDERûOFFERûONûANûEXISTINGû EFFECTIVEûUNTILûTHEûlRSTûQUARTERûOFûûWILLû Proportional credit
bond. give Tiffany headroom to remain in Source: Refinitiv SDC code: R7

TRANE TECH BAGS RCF
Banks balance appetite for Heating and cooling technology company

TRANE TECHNOLOGIESûHASûSIGNEDûAû53BNû
high-quality loans with risk month revolving credit facility.

JP Morgan is administrative agent on the
LOANûWHILEûCitigroup is syndication agent.
US Market for five-year tenors has dropped for the first time since 2008 Proceeds will be used for working capital
PURPOSESûTOûSUPPORTûTHEûCOMMERCIALûPAPERû
As immediate requests for liquidity due to companies through the next few months,” programmes and for general corporate purposes.
the coronavirus crisis start to flatten, banks said Dan Chapman, managing director of loan The company terminated a previous
lending to highly rated companies are looking syndicate and sales at US Bancorp. “Lenders 53BNûlVE YEARû2#&ûTHATûWASûDUEûTOûEXPIREû
at how they can keep up business momentum remain focused on providing credit to key INû
and simultaneously protect themselves relationships.” Pricing for the new RCF is linked to a debt
from potentially higher costs of funding and In May, companies including FORTUNE RATINGS BASEDûGRIDû&ORû!! ûORûHIGHERûTHEû
deteriorating credit risk. BRANDS, HP, PEPSICO and GENERAL MOTORS MARGINûISûBPûOVERû,IBORûWITHûAûBPû
The approach is a delicate balancing act of signed 364-day revolving credit agreements. COMMITMENTûFEEûFORû"AA"""ûITûISûBPû
developing new business and addressing client Even companies that had multi-year ANDûBPûFORû"AA"""ûITûISûBPûANDûBPû
needs while mitigating the effects of another agreements decided to refinance with short- FORû"AA""" ûITûISûBPûANDûBPûANDûFORû
economic downturn if the pandemic has a term loans rather than five-year loans. LOWERûTHANû"AA""" ûITûISûBPûANDûBP
second wave. In April, GM refinanced approximately 4HEûCOMPANYûISûRATEDû"""ûBYû30
The bank market has been relieved of some US$6bn in short-term loans, including a
pressure on lending capacity in the last month. US$1.95bn 364-day loan and a US$4bn three- THERMO FISHER SIGNS €3bn LOAN
Several investment-grade companies are year loan. A US$10.5bn five-year facility was
paying down some of their pandemic-related not refinanced. THERMO FISHER SCIENTIFIC signed a €3bn one-
liquidity facilities with proceeds from corporate “Today, while many borrowers are busy year unsecured term loan to replace part of
bond issuances, such as SOUTHWEST AIRLINES refinancing revolver draws in the bond market, THEûõBNûBRIDGEûLOANûBACKINGûITSû
and PAYPAL, which both issued bonds in May I-grade lenders are reluctant to go beyond 364 53BNûACQUISITIONûOFû'ERMANûGENETICû
and committed part of the proceeds to paying days due to Covid-19 uncertainties,” Chapman testing company Qiagen.
down credit facilities. said. 4HEûlNANCINGûPAYSûAûMARGINûSTARTINGûATû
Still, lenders are aware that despite pay In April, the market for five-year tenors BPûOVERû%URIBORûFORûAûRATINGûOFû""""AAû
downs, outstanding loans still exceed pre- dropped for the first time since 2008, making ORûBETTERûRISINGûTOûBPûFORûAûRATINGûOFû"""
pandemic levels. Despite their appetite for up a 6% market share. "AAûANDûTOûBPûFORûAûRATINGûLOWERûTHANû
new-money deals, banks are grappling with Chapman said the return to longer tenors """"AAû#OMMITMENTûFEESûAREûBPûBPû
how costly it is to hold large funded loans on will be gradual, and pricing will remain ANDûBPûFORûTHEûRESPECTIVEûRATINGûLEVELS
their balance sheets. elevated. 4HEREûAREûTWOûlNANCIALûCOVENANTSûONûTHEû
“We’re still funded much higher than we “I’m hearing that three years is the new five lNANCINGûCOMPRISINGûMAXIMUMûNETûDEBTûTOû
were,” said a senior banker. years, and even three-year deals are rare. The %BITDAûOFûûTIMESûSUBSEQUENTLYûSTEPPINGû
In March and April, there was a deluge of market is not ready to go back to the way it was DOWNûTOûûTIMESûANDûTOûûTIMESû
drawdowns in response to the pandemic’s yet,” he said. depending on the timeline of the acquisition;
economic disruption. Then companies asked According to a Fitch report on June 1, the ANDûMINIMUMûINTERESTûCOVERûOFûûTIMES
for incremental short-term facilities and risk for US corporate issuers becoming fallen Joint lead arrangers and joint
amendments to agreements to get them angels - losing their investment-grade rating - BOOKRUNNERSûONûTHEûlNANCINGûAREû
through the crisis. remains high. So far, downgraded debt across administrative agent JP Morgan and
Regardless of the uptick in short-term more than two dozen fallen angel issuers has syndication agent Morgan Stanley. Bank of
liquidity requests and drawdowns, investment- neared US$200bn, according to the report. America is documentation agent.
grade lender capacity is robust amid a thinner Since the pandemic began, another 29 issuers HSBCûMizuho BankûDeutsche BankûUS Bankû
pipeline of event-driven financings. As of the have been downgraded to BBB-, just one notch BNP ParibasûCitigroupûCredit SuisseûMUFGû
end of April, investment-grade loan volume is above junk. SMBCûBank of Nova ScotiaûINGûKeyBankûWells
down 5% year-on-year. A second wave of downgrades due to Fargo and Nordea are lenders.
“I think the balancing factor for the market deteriorating economic conditions could Thermo Fisher also amended the
is that there isn’t much merger and acquisition increase sub-investment-grade downgraded REMAININGûBRIDGEûLOANûINCREASINGû
financing. In a normal market, you’d have debt to US$400bn, Fitch said. MAXIMUMûLEVERAGEûTOûûTIMESûANDû
some bridge financing, so from a bank capacity Tighter terms including minimum liquidity amended and extended its existing
standpoint everything that has come to market requirements for borrowers and higher pricing 53BNûUNSECUREDûREVOLVINGûCREDITûFACILITY
has been absorbed fine,” the banker said. are being implemented as a safeguard during The existing RCF was extended by one
the uncertainty. Only time will tell if that YEARûTOû*ULYûûANDûTHEûLEVERAGEûWASû
SHOWING RESTRAINT becomes the new reality for the investment- INCREASEDûTOûûTIMESûFROMû*UNEûû
While capacity has remained in place, lender grade market. SUBSEQUENTLYûSTEPPINGûDOWNûTOûûTIMESû
vigilance around credit risk and portfolio “Banks are going to continue to be cautious ANDûTOûûTIMESûDEPENDINGûONûTHEûTIMELINEû
quality is an ongoing priority. and address the needs of their clients,” said the of the acquisition.
“Many banks were supportive during senior banker. “Things have improved, but we 4HERMOû&ISHERûSIGNEDûTHEûõBNûBRIDGEû
the initial pandemic wave, stepping in to are not out of the woods by any means.” LOANûINû!PRILûTHROUGHûADMINISTRATIVEûAGENTû
provide incremental liquidity and to help get Daniela Guzman JP Morgan and Morgan Stanley as joint lead
arrangers and joint bookrunners.

LEVERAGED LOANS
Credit SuisseûMacquarieûRBC Capital Hamilton is backed by investment fund

MarketsûSociete GeneraleûUBS and SunTrust EIG Management Co and private equity
LEVERAGED LOANS are arranging the deal. fund The Carlyle Group’s Carlyle Power
Proceeds will support the company’s Partners.
acquisition by private investors The )Nû*ANUARYûTHEûINVESTMENTûFUNDSûAGREEDû
UNITED STATES Chatterjee Group and Rhone Capital. to acquire the Liberty Energy Center and
Lummus develops technology that Patriot Energy Center from power
JETBLUE MARKETS US$500m LOAN SERVICESûTHEûPROCESSINGûANDûRElNINGûOFû developer Panda Power Funds.
crude oil. "ASEDûINû0ENNSYLVANIAûTHEû,IBERTYûANDû
Low-cost airline JETBLUE AIRWAYS is in the #ORPORATEûRATINGSûAREû""ûANDûTHEûlRST 0ATRIOTûENERGYûCENTRESûAREûGAS lREDû
MARKETûWITHûAû53MûLOANûTHATûITûWILLû LIENûLOANûISûRATEDû"" combined-cycle gas power plants.
put towards general corporate purposes. /Nû-ARCHûûOILûANDûGASûCONSTRUCTIONû #ORPORATEûlNANCIALûADVISERûDUFF & PHELPS
4HEûFOUR YEARûLOANûISûOFFEREDûATûBPn ANDûENGINEERINGûlRMûMCDERMOTT HASûAGREEDûAû53MûlRST LIENû
BPûOVERû,IBORûWITHûAûûmOORûANDûAûû/)$ INTERNATIONAL advanced an agreement to incremental term loan.
4HEûLOANûISûNON CALLABLEûFORûTHEûlRSTûYEARû sell Lummus to the pair of investors after The debt priced in line with guidance at
CALLABLEûATûûINûYEARûTWOûANDûCALLABLEûATû McDermott did not receive any higher bids BPûOVERû,IBORûWITHûAûûmOORû4HEû/)$û
PARûTHEREAFTERû)TûWILLûAMORTISEûATûûPERû for the assets during a solicitation period. WASûTIGHTENEDûTOûûFROMûûATûLAUNCH
year. /Nû*ANUARYûû-C$ERMOTTûSAIDûITûWASû 4HEûINCREMENTALûLOANûWHICHûINCLUDESû
BarclaysûBNP ParibasûGoldman Sachs and GOINGûTOûlLEûFORûBANKRUPTCYûANDûAGREEDûTOû ûSOFTûCALLûPROTECTIONûFORûûMONTHSûWILLû
Morgan Stanley AREûARRANGINGûTHEûlNANCING sell Lummus to Chatterjee and Rhone BEûFUNGIBLEûWITHû$UFFûû0HELPSûlRST LIENû
The debt is secured by the airline’s slots #APITALûWHICHûWEREûSTALKINGûHORSEû FACILITYûMATURINGûINû!PRILû
ATû.EWû9ORKSû*&+ûANDû,A'UARDIAûAIRPORTSû BIDDERSûFORû53BN #ORPORATEûRATINGSûAREû"" ûANDûTHEûlRST
ANDûTHEû2ONALDû2EAGANû.ATIONALû!IRPORTûINû Proceeds from the sale of Lummus are LIENûLOANûISûRATEDû""
Washington DC. expected to repay McDermott’s debtor-in- Proceeds from the incremental facility
4HEûLOANûISûALSOûCOVEREDûBYûAûûTIMESû POSSESSIONûlNANCINGûFUNDûEMERGENCYû WILLûFUNDûTHEûACQUISITIONûOFû6IRTUEûAûDATA
minimum collateral coverage ratio that costs and provide cash to the company’s driven regulatory compliance service
will be tested twice a year. balance sheet. PROVIDERûREPAYûAûDRAWNûREVOLVINGûCREDITû
JetBlue must also maintain at least McDermott struck a deal with creditors facility and add cash to the company’s
53MûINûUNRESTRICTEDûLIQUIDITY in January to exchange more than US$3bn balance sheet.
)Nû!PRILûTHEûAIRLINEûDREWûDOWNûONûITSû OFûDEBTûFORûûEQUITYûINûTHEûREORGANISEDû Goldman SachsûStone Point Capital Marketsû
53MûREVOLVINGûCREDITûFACILITYûTOû company. UBSûBank of AmericaûMorgan StanleyûKKR
SUPPORTûLIQUIDITYûANDûOBTAINEDû53Mû 5NDERûTHEûRESTRUCTURINGû-C$ERMOTTû Capital Markets and Credit Suisse arranged
from the US Treasury to help navigate the RECEIVEDû53BNûINû$)0ûlNANCINGûFROMû the incremental loan.
lNANCIALûIMPACTSûOFûTHEûCORONAVIRUSû senior secured lenders. )Nû-ARCHû$UFFûû0HELPSûRAISEDûAû
pandemic. 4HEû$)0ûCOMPRISEDû53BNûINûSECUREDû 53BNûlRST LIENûDEBTûPACKAGEûTHATû
)Nû-ARCHû*ET"LUEûBORROWEDû53BNûINû TERMûLOANSû53MûINûLETTERSûOFûCREDITû backed its acquisition by a global investor
THEûFORMûOFûAû DAYûDELAYED DRAWûTERMû and a roll up of pre-petition debt including consortium led by Stone Point Capital and
loan. 53MûINûSUPERPRIORITYûTERMûLOANSûANDû Further Global Capital Management.
IT operations management service 53MûINûSUPERPRIORITYûLETTERSûOFûCREDIT
provider HELP/SYSTEMS HOLDINGS has detailed INTERNET BRANDS GETS ADD-ON
Aû53MûADD ONûLOAN HAMILTON TIGHTENS TERMS
4HEûLOANûISûOFFEREDûATûAûû/)$û#ALLû Online media company INTERNET BRANDS has
PROTECTIONûISûSETûATûûSOFTûCALLûFORûû HAMILTON PROJECTS ACQUIROR has tightened AGREEDûAû53MûTERMûLOAN
months. THEûMARGINûONûAû53BNûDEBTû The incremental loan priced at
4HEû53MûADD ONûLOANûISûFUNGIBLEû lNANCING BPûOVERû,IBORûWITHûAûûmOORûAû
WITHûTHEûCOMPANYSûEXISTINGû53Mû 4HEûlNANCINGûCOMPRISESûAû53Mû û/)$ûANDûûSOFT CALLûPROTECTIONûFORû
DEBTûFACILITYû)TûHASûAûûMATURITYûAû SEVEN YEARûTERMûLOANû"ûANDûAû53Mû ûMONTHS
SPREADûOFûBPûOVERû,IBORûANDûAûûmOOR lVE YEARûREVOLVINGûCREDITûFACILITY
Proceeds will be used to support two The term loan is now being offered at US LEVERAGED LOANS
ACQUISITIONSûBYûTHEûCOMPANYûBOLSTERûITSû BPûOVERû,IBORûWITHûAûûmOORûANDûAûû BOOKRUNNERS: 1/1/2020 TO DATE
balance sheet and cover related fees and OID. Managing No of Total Share
expenses pertaining to the buyouts. )NITIALLYûTHEûLOANûWASûPITCHEDûATûBPû bank or group issues US$(m) (%)
Jefferies is arranging the loan. OVERû,IBORûWITHûAûûmOORûANDûAû û/)$ 1 BofA Securities 278 47,831.77 11.9
Call protection remains unchanged at a 2 JP Morgan 198 36,108.58 9.0
LUMMUS OUTLINES TERMS ûSOFTûCALLûFORûûMONTHS 3 Wells Fargo 164 33,395.04 8.3
Morgan StanleyûBNP Paribas and Credit 4 Citigroup 112 26,918.00 6.7
LUMMUS TECHNOLOGY outlined the terms of a Suisse arranged the deal. 5 Goldman Sachs 111 22,623.51 5.6
LOANûITûHASûUPSIZEDûTOû53BNûFROMû !NûEXCESSûCASHmOWûSWEEPûWILLûOPENûATû 6 Credit Suisse 76 20,478.00 5.1
53M ûANDûSTEPûDOWNûTOûûONCEû(AMILTONSû 7 Barclays 99 20,018.01 5.0
The seven-year loan is being offered at NETûDEBTûTOû%BITDAûISûATûûTIMES 8 Morgan Stanley 58 15,262.94 3.8
BP BPûOVERû,IBORûWITHûAûûmOORûAûû 4HEûLOANûWILLûBEûGOVERNEDûBYûAûûTIMESû 9 RBC 68 12,875.31 3.2
/)$ûANDûûSOFTûCALLûPROTECTIONûFORûSIXûMONTHS debt service coverage ratio. 10 Jefferies 50 11,390.73 2.8
The debt package also comprises a 4HEûlRST LIENûLOANûRATEDû"" ûBYû30û Total 755 400,673.24
53MûREVOLVINGûCREDITûFACILITYûANDûAû will support the purchase of two power Excluding Project Finance.
53MûLETTERûOFûCREDITûFACILITY plants. Source: Refinitiv SDC code: P2

The loan will mature alongside an 4HEûINVESTMENTûlRMSûWILLûACQUIREûAûû ûANDûINCLUDESûûSOFTûCALLûPROTECTIONû
EXISTINGûFACILITYûDUEûINû3EPTEMBERû stake in Univision from private equity FORûûMONTHS
Credit SuisseûKKR Capital MarketsûBank of SPONSORSû3ABANû#APITALû'ROUPû-ADISONû Both loans include a maintenance
America and Deutsche Bank arranged the $EARBORNû0ARTNERSû0ROVIDENCEû%QUITYû leverage covenant.
deal. 0ARTNERSû40'ûANDû4(,û0ARTNERS Credit SuisseûINGûABN AMROûRabobank
0ROCEEDSûWILLûRElNANCEûTHEûCOMPANYSû Mexican mass media company Televisa and BNP Paribas were physical bookrunners
revolving credit facility and go towards will retain its 36% stake in Univision. ANDûUNDERWRITERSûONûTHEûlNANCING
general corporate purposes. )Nû-ARCHûû$EUTSCHEû"ANKûLEDûAûDEALû 4HEûlRMûRELAUNCHEDûTHEûDEALûAFTERûITûWASû
#ORPORATEûRATINGSûAREû""ûANDûTHEûlRST to extend the maturity of Univision’s term forced to postpone the transaction in
LIENûLOANûISûRATEDû"" LOANûBYûFOURûYEARSûTOû-ARCHû March due to the coronavirus outbreak.
)Nû!UGUSTûû)NTERNETû"RANDSû Food distributor CHEF’S WAREHOUSE has The deal was originally launched in
ARRANGEDûAû53BNûDEBTûlNANCINGûTOû secured consent from lenders to partly &EBRUARYûANDûCOMPRISEDûAûõBNû4,"û
support its acquisition of healthcare AMENDûANDûEXTENDûAû53Mû PAYINGûBP BPûOVERû%URIBORûWITHûAû
website WebMD. OUTSTANDINGûlRST LIENûTERMûLOAN ûmOORûATûû/)$
4HEûDEALûCOMPRISEDûAû53BNû /FûTHEûOUTSTANDINGûLOANûAMOUNTû On relaunch it converted part of the TLB
SEVEN YEARûlRST LIENûLOANûANDûAû53Mû 53MûWILLûCARRYûAûMARGINûOFûBPû TOûAû4,!ûTOûBEûHELDûBYûTHEûARRANGINGû
eight-year second-lien loan. OVERû,IBORûANDûTHEûMATURITYûWILLûBEû BANKSû4HEû4,!ûAMORTISESûATûûPERûYEAR
Internet Brands is backed by private EXTENDEDûTOû 0ROCEEDSûWILLûBACKûTHEûlRMSûõMû
EQUITYûlRMû++2 4HEûREMAININGû53MûOUTSTANDINGû ACQUISITIONûOFû&INLANDSû#RAMOûASûWELLûASû
Mixed martial arts franchise ULTIMATE WILLûMAINTAINûEXISTINGûPRICINGûATûBPû RElNANCEûALLûOFû"OELSûANDû#RAMOSûDEBTû
FIGHTING CHAMPIONSHIPûHASûSEALEDûAû53Mû OVERû,IBORûWITHûANûUNCHANGEDûû and pay transaction costs.
add-on loan. maturity. 30ûRATINGSûAREû"" 22ûWITHûAûNEGATIVEû
4HEûDEBTûPRICEûATûBPûOVERû,IBORûWITHû "OTHûTRANCHESûCARRYûAûûmOOR outlook. Moody’s and Fitch ratings are at
AûûmOORûAûû/)$ûANDûûSOFT CALLû Investors consenting to the amendment """ ûWITHûAûNEGATIVEûOUTLOOK
protection for six months. and extension of the loan will receive a
KKR Capital Markets and Goldman Sachs BPûFEEû#HEFSû7AREHOUSEûWILLûPAYûDOWNû NORD ANGLIA RAISES €200m ADD-ON
ARRANGEDûTHEûlNANCINGûWHICHûWILLûBEû ûOFûTHEûNEWLYûAMENDEDûLOANûAMOUNT
attached to an existing loan maturing in #HEFSû7AREHOUSEûHASûADDEDûAû53Mû International schools operator NORD ANGLIA
!PRILû minimum liquidity covenant to the sum of HASûRAISEDûAûõMûADD ONûTHATûWASû
Proceeds will repay a drawn revolving aggregate cash and asset-based loan INCREASEDûFROMûõM
credit facility. availability to the amended facility. The fungible term loan priced in line
#ORPORATEûANDûlRST LIENûRATINGSûAREû"" The amended loan is non-callable for the WITHûGUIDANCEûATûBPûOVERû%URIBORûWITHû
)Nû3EPTEMBERûûTHEû--!ûFRANCHISEû lRSTûYEARûFOLLOWEDûBYûHARDûCALLûPROTECTIONû AûûmOORûANDûWILLûMATUREûINû3EPTEMBERû
RAISEDûAû53MûADD ONûLOANûTIEDûTOûTHEû ATûûINûTHEûSECONDûYEAR ûINûLINEûWITHûTHEûEXISTINGûTERMûLOANû"
SAMEûFACILITYûATûBPûOVERû,IBORûWITHûAûû Both the corporate family rating and the 4HEûDEALûWASûISSUEDûWITHûAûû/)$
mOOR lRST LIENûFACILITYûISûRATEDû""ûWITHûAû 4HEûLOANûARRANGEDûBYûDeutsche Bankû
RECOVERYûRATINGûOFû HSBC and JP MorganûWILLûBEûUSEDûFORû
UNIVISION EYES EXTENSION Jefferies arranged the loan. general corporate purposes.
.ORDû!NGLIAûRATEDûATû"" ûLASTûTAPPEDû
Media company UNIVISION COMMUNICATIONS THEûLOANûMARKETûINû$ECEMBERûûWHENûITû
WASûSCHEDULEDûTOûCLOSEûONû&RIDAYûAû53BNû EUROPE/MIDDLE EAST/ SECUREDûAûõMûADD ONûTERMûLOANûTOû
loan that it aims to extend by two years to AFRICA back an acquisition. That loan priced at
BPûOVERû%URIBORûWITHûAûûmOOR
4HEûlRST LIENûLOANûWASûOFFEREDûATû BOELS UPS TLB .ORDû!NGLIAûALLOCATEDûAû53BN
BPûOVERû,IBORûWITHûAûûmOORûAû equivalent euro-denominated term loan B
û/)$ûANDûûSOFT CALLûPROTECTIONû $UTCHûEQUIPMENTûRENTALûlRMûBOELS INû*UNEûûBACKINGûITSû53BNûTAKEû
FORûûMONTHS increased the term loan B of its acquisition private by Canada Pension Plan
%XISTINGûPRICINGûWASûBPûOVERû,IBORû LOANûFORûAûSECONDûTIMEûTOûõBNûFROMû Investment Board and Baring Private
WITHûAûûmOOR õBNûHAVINGûALREADYûUPPEDûTHEûLOANû %QUITYû!SIA
Goldman Sachs and Deutsche Bank were FROMûõMûATûLAUNCH 4HATûlNANCINGûCOMPRISEDûAû53Mû
arranging the transaction. !SûAûRESULTûOFûTHEûINCREASEûTHEûlRMûREDUCEDû PRE PLACEDûlRST LIENûTERMûLOANûANDûAû
#ORPORATEûANDûlRST LIENûRATINGSûAREû"" Aû4ERMû,OANû!ûTRANCHEûTOûõMûFROMû 53MûPRE PLACEDûSECOND LIENûTERMû
!NûEXCESSûCASHmOWûSWEEPûWILLûALSOûBEû õMû4HEûORIGINALûSIZEûOFû4,!ûWASûõMû LOANûASûWELLûASûANûAPPROXIMATEû53Mû
AMENDEDûTOûOPENûATûûWITHûAûSTEPûDOWNû ANDûTHEûTOTALûLOANûSIZEûOFûTHEûACQUISITIONûLOANû revolving credit facility.
TOûûONCEûTHEûNETûLEVERAGEûRATIOûREACHESû REMAINSûTHEûSAMEûATûõBN .ORDû!NGLIAûHASûûSCHOOLSûINûû
ûTIMESûANDûûONCEûNETûLEVERAGEûISû /NûTHEû4,"ûTHEû/)$ûlRMEDûATûûTHEû COUNTRIESûACROSSûTHEû!MERICASû%UROPEû
LOWEREDûTOûûTIMES TIGHTûENDûOFûREVISEDûGUIDANCEûOFû û #HINAû3OUTHEASTû!SIAû)NDIAûANDûTHEû
#URRENTLYûTHEû%#&ûSWEEPûOPENSûATûû ANDûFROMû ûATûLAUNCHû4HEûMARGINûWASû Middle East.
ANDûSTEPSûDOWNûTOûûONCEûNETûLEVERAGEûISû UNCHANGEDûATûBPûOVERû%URIBORûWITHûAû
ûTIMESûANDûûONCEûNETûLEVERAGEûISûû ûmOOR HURTIGRUTEN SECURES TLC
times. 4HEûPRICINGûFORûTHEû4,!ûREMAINSû
)Nû&EBRUARYû5NIVISIONûANNOUNCEDûITûHADû UNCHANGEDûATûBPûOVERû%URIBORûWITHûAû .ORWEGIANûCRUISEûCOMPANYûHURTIGRUTEN
been acquired by private investors ûmOOR HASûSECUREDûAûõMûTHREE YEARû4ERMû,OANû
Searchlight Capital Partners and 4HEû4,!ûWILLûMATUREûINû!UGUSTûû #ûPRICEDûATûBPûOVERû%URIBORûWITHûAûû
Forgelight. while the TLB will mature in February mOORû

LEVERAGED LOANS
4HEûDEALûFORûGENERALûCORPORATEû !ûCONSORTIUMûCOMPRISINGûPRIVATEûEQUITYû Credit SuisseûJP MorganûFifth Third Bankû
PURPOSESûISûNON CALLûFORûTHEûlRSTûYEARûANDû lRMSû7ARBURGû0INCUSû!SIAû'ENERALû!TLANTICû MUFGûPNC and Wells Fargo were also lead
callable at a premium of two points in the 3INGAPOREû&UNDû/CEANû,INKû0ARTNERSûANDû ARRANGERSûONûTHEû!",
SECONDûYEARûANDûATûPARûTHEREAFTER *INBOû9AOûCHAIRMANûANDû#%/ûOFûCOMûISû -ACYSû53BNû2#&ûWHICHûITûDREWûDOWNû
JP Morgan and Goldman Sachs were global in talks with some relationship Chinese INû-ARCHûTOûPRESERVEûlNANCIALûmEXIBILITYûINû
coordinators. JP Morgan was admin agent. banks for the debt funding. LIGHTûOFûTHEûCORONAVIRUSûHASûBEENûREDUCEDû
Hurtigruten last tapped the loan market /Nû!PRILûûCOMûANNOUNCEDûTHATûTHEû and amended to provide the retailer with up
INû.OVEMBERûûWHENûITûPRICEDûANûõMû consortium proposed to acquire all of its TOû53MûINûUNSECUREDû2#&
ADD ONûATûBPûOVERû%URIBORûWITHûAûû OUTSTANDINGûORDINARYûSHARESûFORû53ûINû "ANKûOFû!MERICAûISûTHEûADMINISTRATIVEû
mOORûANDûATûPARû4HATûLOANûWASûUSEDûTOû CASHûPERûORDINARYûSHAREûORû53ûINûCASHû agent on that RCF.
REPAYûTHEûlRMSû.ORWEGIANûKRONEûBONDû PERû!$3 /Nû4UESDAYû-ACYSûDISCLOSEDû
facility. The offer values the business at about PRELIMINARYûEARNINGSûFORûTHEûlRSTûQUARTERû
Moody’s downgraded Hurtigruten to B3 53BNûTHEû#HINESEûlRMûSAID ENDINGû-AYû
FROMû"ûINû-ARCHûCITINGûEXPECTATIONSûTHATû )Nû*ULYûûCOMûOBTAINEDûAû53Mû 4HEûRETAILERûREPORTEDû53BNûINûlRST
decline in bookings and increase in lVE MONTHûSENIORûLOANûFROMû/HIOû2IVERû QUARTERûSALESûAûûDECLINEûFROMû53BNû
cancellations for Hurtigruten’s cruises Investment. a year earlier. It also reported an adjusted
caused by coronavirus fears and travel %BITDAûLOSSûOFû53MûINûTHEûlRSTûQUARTERû
restrictions will lead to weakening credit FROMûADJUSTEDû%BITDAûOFû53MûINû
metrics and pressure on its liquidity. CEO Jeff Gennette attributed the decline in
30ûALSOûDOWNGRADEDûTHEûlRMûINû-ARCHû sales to the government-mandated store
TOû###ûFROMû" RESTRUCTURING closures resulting from the coronavirus spread.
TDR Capital bought the business h4HEûPANDEMICûSIGNIlCANTLYûIMPACTEDû
alongside Periscopus and Home Capital in OURûlRST QUARTERûSALESûANDûEARNINGSûRESULTSû
LATEû UNITED STATES but I am proud of the way our team
Hurtigruten operates cruises along the NAVIGATEDûTHISûDIFlCULTûPERIODûANDû
.ORWEGIANû#OAST MACY’S CLOSES FINANCING maintained the business while our stores
WEREûCLOSEDvûHEûSAID
GARRETT MOTION GETS COVENANT Department store chain MACY’S has closed a -ACYSûWILLûRELEASEûITSûFULLûlRST QUARTERû
RELIEF 53BNûDEBTûlNANCINGûPACKAGEûWHICHû EARNINGSûONû*ULYû
will go toward funding business
US auto technology business GARRETT operations. SERTA SIMMONS SIGNS AGREEMENT
MOTION has completed an amendment to its 4HEûlNANCINGûCOMPRISESûAû53BNû
DEBTûTOûALLOWûCOVENANTûRELIEFûONûAûõMû ASSET BASEDûLENDINGûFACILITYûANDû53BNû Mattress manufacturer SERTA SIMMONS
REVOLVERûDUEûûAûõMû4ERMû,OANû!û in senior secured notes. BEDDING has signed a transaction support
DUEûûAûõMûTERMûLOANû"ûDUEûû 4HEû!",ûCOMPRISESûAû53BNû AGREEMENTûWITHûAûMAJORITYûOFûITSûlRSTûANDû
ANDûAû53Mû4,"ûDUEû REVOLVINGûCREDITûFACILITYûWHICHûINCLUDESûAû second-lien term loan lenders to slash
4HEûlRMûOFFEREDûLENDERSûAûBPû swingline sub-facility and a letter of credit 53MûOFûDEBT
CONSENTûFEEûANDûAûBPûSPREADûINCREASEûONû SUB FACILITYûINûADDITIONûTOûAû53Mû 5NDERûTHEûTERMSûOFûTHEû43!ûTHEû
THEûREVOLVERûANDû4,!ûANDûAûBPûINCREASEû bridge facility. Macy’s will be allowed to COMPANYûWILLûRECEIVEû53MûOFûlRST OUTû
on the TLB during the covenant relief REQUESTûINCREASESûUPûTOû53MûINû NEWûMONEYûDEBTûANDû53MûOFûSECOND
period. additional capacity under the revolving OUTûDEBTûWHICHûWILLûBEûSWAPPEDûFORûAû
4HEREûWILLûBEûANûADDITIONALûBPûSPREADû credit facility. PORTIONûOFûlRSTûANDûSECOND LIENûDEBT
increase if both credit agencies downgrade Bank of America is a lead arranger and The second-out debt will be exchanged
THEûlRM ADMINISTRATIVEûAGENTûONûTHEû!",û)TûISûALSOû INûAûRATIOûOFû53ûFORûEVERYû53ûOFû
JP Morgan led the amendment. the issuer of the swingline and letter of lRST LIENûLOANSûANDû53ûFORûEVERYû
'ARRETTû-OTIONûRATEDûATû""" ûWASûLASTû credit facilities. 53ûOFûSECOND LIENûLOANS
INûTHEûLOANûMARKETûINû3EPTEMBERûû
when it secured a seven-year TLB that EUROPEAN LEVERAGED LOANS EMEA SPONSORED LOAN BOOKRUNNERS
COMPRISEDûAûõMûFACILITYûANDûAû53Mû BOOKRUNNERS: 1/1/2020 TO DATE BY VOLUME: 1/1/2020 TO DATE
facility. Managing No of Total Share Europe, Middle East, Africa
4HEûEUROûTRANCHEûPRICEDûATûBPûOVERû bank or group issues US$(m) (%) Managing No of Total Share
%URIBORûANDûTHEûDOLLARûLOANûPRICEDûATûBPû 1 HSBC 17 4,890.43 7.6 bank or group issues US$(m) (%)
OVERû,IBORû4HATûDEBTûlNANCINGûWASûTOû 2 BNP Paribas 24 4,484.16 7.0 1 HSBC 9 2,403.18 7.1
support its spin-off from aero parts maker 3 Goldman Sachs 19 4,403.23 6.9 2 BNP Paribas 12 2,092.56 6.2
Honeywell. 4 Credit Agricole 16 4,195.10 6.5 3 Morgan Stanley 9 2,059.59 6.1
5 Barclays 19 4,134.55 6.5 4 SG 7 1,955.99 5.8
6 JP Morgan 21 3,730.02 5.8 5 Deutsche Bank 12 1,836.03 5.5
ASIA-PACIFIC 7 Deutsche Bank 20 3,444.46 5.4 6 Credit Agricole 9 1,797.03 5.3
8 Citigroup 9 3,114.58 4.9 7 Barclays 11 1,722.40 5.1
BANKS VIE FOR 58.COM MANDATE 9 Natixis 8 3,029.11 4.7 8 BofA Securities 8 1,635.26 4.9
10 UniCredit 12 2,780.58 4.3 9 UniCredit 7 1,590.84 4.7
Banks are bidding for the mandate to lead a Total 87 64,072.20 10 Credit Suisse 14 1,554.12 4.6
debt package of about US$3bn to back the Excluding project finance. Western Europe only included. Total 48 33,614.62
PROPOSEDûTAKE PRIVATEûOFû.ASDAQ LISTEDû Excluding project finance.
ONLINEûCLASSIlEDSûMARKETPLACEû58.COM. Source: Refinitiv SDC code: P10 Source: Refinitiv SDC code: P13

/FlCIALSûFROMû1UEBECûHAVEûALSOûOFFEREDû
Murray Energy bankruptcy 53MûINûAIDûTOû#IRQUEûDUû3OLEILûWHICHû

started as a group of street performers in
Canada.
exit delayed 0RIVATEûEQUITYûlRMû40'ûACQUIREDûAû

MAJORITYûSTAKEûINûTHEûCOMPANYûINûûINûAû
53BNûDEAL
US DIP loan in question
MURRAY ENERGY‘s exit from Chapter 11 bankruptcy bar Murray or other lenders from interfering with EUROPE/MIDDLE EAST/
protection has been delayed indefinitely by the its ability to preserve the DIP FILO collateral. AFRICA
bankruptcy court until the coal supplier files a GACP said that Murray defaulted on a
complete plan of reorganisation. financial covenant under its US$90m DIP FILO GMS IMPLEMENTS RESTRUCTURING
The court will only decide on new dates for the loan by inflating the assets securing the loan.
plan confirmation once the company files all the According to previous negotiations between !BUû$HABI BASEDûOFFSHOREûCONTRACTORûGULF
requested supplements to the proposed plan. the company and GACP, the current assets MARINE SERVICESûHASûlNALISEDûANDû
Murray has yet to file, among other things, report was only to comprise coal receivables implemented a debt restructuring that it
term sheets for a proposed takeback debt and inventory but Murray included non-coal AGREEDûWITHûITSûBANKSûINû-ARCHûWHICHû
agreement and an exit facility loan agreement. receivables in the statement. includes the extension of term loan
The company’s US$440m debtor-in- In addition to the alleged default, GACP facilities and a new working capital
possession loan comprises US$350m in new said that assets securing the FILO loan are facility.
money and a US$90m first in, last out loan deteriorating, which could affect its recovery '-3ûHASûRENEWEDûITSû53MûTERMû
facility that rolled up the company’s pre-petition value. It said that the value of the coal LOANûEXTENDINGûTHEûMATURITYûTOû*UNEûû
FILO facility. receivables and inventory are already “far below” û4HEûRENEWEDûFACILITIESûHAVEûAû
Murray has about US$1.9bn in pre-petition the US$160m floor set in the financial covenant. CHANGEDûAMORTISATIONûPROlLEûWITHûAû
secured loan debt, comprising US$150.7m GACP also said that in the event of default, it 53MûREDUCTIONûINûlXEDûAMORTISATIONû
under an asset-based loan facility due 2021, a is entitled to “block or limit withdrawals from any PAYMENTSûUNTILû
US$1.72bn superpriority term loan due 2022, bank accounts that are a part of the collateral” The cash interest margin is the same as
and a US$51m term loan that matures this year, for its DIP FILO loan, and it is therefore seeking previous facilities and is indexed to the net
according to an October court filing. It also has court permission to enforce this. leverage of the company.
US$788m in pre-petition secured bond debt, and Murray responded to GACP’s court request, )TûHASûALSOûAGREEDûAû53MûWORKINGû
US$45m in unsecured debt. calling it an attempt to upend its exit from CAPITALûFACILITYûTHATûALSOûMATURESûONû*UNEûû
Murray’s next court hearing, scheduled for bankruptcy and “obtain rights and remedies
June 15, has also been adjourned. The hearing GACP does not have” under the DIP credit GMS will now seek shareholder approval
was to address a request from one of the agreement. for a share capital increase before the end
company’s DIP lenders to protect its collateral. Murray filed for bankruptcy in October, driven OFûû)TûISûAIMINGûTOûRAISEûNETûPROCEEDSû
On May 13, DIP FILO lender Great American by the decline in demand for coal. OFûATûLEASTû53MûTOûSTRENGTHENûITSû
Capital Partners filed a court order requesting to Sasha Padbidri balance sheet and to avoid the issuance of
warrants and incurrence of PIK interest
payable to the banks.
The company will also receive an ASSETûMANAGERSû"LUE-OUNTAINû#APITALû The company was last in the syndicated
ADDITIONALûBASKETûFORûTHIRD OUTûDEBTûWHICHû Sound Point Capital Management and LOANûMARKETûINû*ANUARYûûWHENûITû
CANûBEûUSEDûFORûFUTUREûEXCHANGESûOFûlRSTû OTHERSûHOLDSûNEARLYûTHREE QUARTERSûOFû extended the maturity of a loan that was
and second-lien loans. Cirque du Soleil’s debt. ORIGINALLYûARRANGEDûINû.OVEMBERû
Serta was acquired by private equity Cirque du Soleil started exploring debt 4HEûMATURITYûOFûTHEûlNANCINGûWASû
lRMû!DVENTû)NTERNATIONALûINû/CTOBERû RESTRUCTURINGûOPTIONSûINCLUDINGûAûPOSSIBLEû EXTENDEDûBYûTWOûYEARSûTOûûWITHû
The acquisition package included a BANKRUPTCYûINû-ARCHûAFTERûITûWASûFORCEDûTOû scheduled loan repayments reduced by
53BNûlRST LIENûTERMûLOANûPRICEDû cancel shows because of the coronavirus TWO THIRDSûINûûANDû
ATûBPûOVERû,IBORûANDûAû53Mû outbreak. 4HEûSIX YEARûLOANûSIGNEDûINû.OVEMBERû
SECOND LIENûTERMûLOANûPRICEDûATûBPû 4HEûCOMPANYûFAMOUSûFORûITSûSHOWSûINû ûCOMBINEDû)SLAMICûANDûCONVENTIONALû
over Libor. ,ASû6EGASûANDûGLOBALûTOURSûHADûTOû lNANCINGûCOMPRISINGûAû53MûTERMû
4HEûlRST LIENûDEBTûWASûLATERûREPRICEDûINû temporarily lay off most of its staff after LOANûAû53MûCOMMITTEDûCAPITALû
!PRILû nationwide coronavirus shutdowns nixed EXPENDITUREûFACILITYûANDû53MûFORû
its performances. GENERALûWORKINGûCAPITALûWITHûAûFURTHERû
CREDITORS VIE FOR CIRQUE DU SOLEIL Bids for Cirque du Soleil were due on 53MûUNCOMMITTEDûFACILITY
Monday. !BUû$HABIû)SLAMICû"ANKûCOORDINATEDûTHEû
Creditors of CIRQUE DU SOLEIL ENTERTAINMENT !NYûDEALûWILLûLIKELYûBEûCOMPLETEDû lNANCINGûASûBOOKRUNNERûANDûMANDATEDû
LEDûBYûPRIVATEûEQUITYûlRMû#ATALYSTû#APITALû through a court restructuring in Canada. LEADûARRANGERûALONGSIDEû.ATIONALû"ANKûOFû
Group made an offer on Monday to take The timing of any court restructuring !BUû$HABIû!BUû$HABIû#OMMERCIALû"ANKû
control of the circus company through a REMAINSûINûmUXûASû#IRQUEûDUû3OLEILû and HSBC Bank Middle East as mandated
debt restructuring in Canada. prepares to review bids. lead arrangers.
The group of creditors is proposing to It is unclear if the creditor group’s bid GMS is listed on the London Stock
INVESTû53MûINû-ONTREAL BASEDû#IRQUEû will be accepted. But as Cirque du Soleil’s %XCHANGEû4HEûCOMPANYûSERVESûTHEûOILûGASû
ANDûREDUCEûITSû53BNûDEBTûBYû53Mû CREDITORSûTHEûGROUPûWILLûHAVEûAûSAYûOVERû and renewable energy industries from its
4HEûCREDITORûGROUPûWHICHûALSOûINCLUDESû the company’s restructuring. OFlCESûINûTHEû5!%û3AUDIû!RABIAûANDûTHEû5+

EQUITIES
Australia 90 China 90 India 93 New Zealand 93 Singapore 93 Belgium 94 Germany 95 Netherlands 96
Sweden 97 UK 97 United States 99 Structured Equity 104
FRONT STORY CHINA
Chinese listings draw crowds

JD.com draws strong demand while Burning Rock prices above range
JD.COM raised HK$30bn (US$3.88bn) from its More than 390,000 investors participated coronavirus infections and the US Federal
Hong Kong secondary listing last Thursday in the retail tranche, which was close to 180 Reserve’s pledge to keep rates steady
INûTHEûWORLDSûSECOND LARGESTûmOTATIONûSOûFARû times subscribed. In total, retail investors through to 2022, which implied it may take
this year, after the Rmb30.7bn (US$4.3bn) bet HK$282bn on the deal, making it the longer than previously expected for the
Shanghai IPO of Beijing-Shanghai High most popular Hong Kong IPO this year economy to recover.
Speed Railway in January. among retail investors in terms of total Despite the sell-off, Burning Rock, which
The deal, Hong Kong’s largest equity subscriptions. specialises in cancer diagnostics, sold 13.5m
offering in the year to-date, drew There is a 15% greenshoe and shares start American depositary shares at US$16.50
overwhelming demand from both trading on June 18. each, above the US$13.50–$15.50 range.
institutional and retail investors despite the Bank of America, CLSA and UBS were “US investors have made good money
Hang Seng Index dropping 2.27% on sponsors. from recent biotech IPOs and they believe
Thursday, the day when JD.com closed the A stellar debut for NETEASE‘s shares in Hong Chinese companies would actually recover
retail portion of its offering. Kong last Thursday also helped drive faster than their Western peers given the
The Nasdaq-listed Chinese e-commerce momentum for JD.com. The stock rose as pandemic seems under control in this part
GIANTûSOLDûMûSHARESûFORûAûûFREE mOATûATû much as 10% before ending the day at HK$130, of the world,” said a banker on the deal.
HK$226 per share. The price represents a 3.9% still up 5.7% from the issue price of HK$123. On June 4, China’s Legend Biotech raised
discount to last Wednesday’s US close, when The Nasdaq-listed Chinese online gaming 53MûFROMûANûUPSIZEDû.ASDAQûmOATû4HEû
JD.com’s ADRs rose 3.2% to close at US$60.70. and entertainment company raised stock fell 4.7% to close at US$36.25 last
One ADR represents two common shares. HK$21bn from the secondary listing. Thursday, but still 58% above the IPO price.
“There is strong interest from Chinese CICC, Credit Suisse and JP Morgan were Several existing shareholders and their
investors as well as global funds. There are sponsors. AFlLIATESûHAVEûINDICATEDûTHEIRûINTERESTûINûINVESTINGû
Chinese funds that want to trade the stock in a total of US$79m in the Burning Rock IPO.
Asia hours, and global funds that already MARKET SLUMP Alongside the IPO, the Lake Bleu Prime
own the stock and are looking to top up their In the US, BURNING ROCK BIOTECH last Thursday Healthcare Master Fund has agreed to
position in Asia,” said a banker on the deal. priced a US$223m Nasdaq IPO above the purchase US$25m of the company’s shares
Books were more than 10 times covered, with price range despite a 6.9% slide in the Dow in a concurrent placement.
more than 460 investors participating including Jones Industrial Average. Morgan Stanley, Bank of America and Cowen
long-only funds, sovereign wealth funds and The US stock market plummeted on LEDûTHEûmOAT
hedge funds. Around 30% of orders were zeroed. investor concerns about a resurgence of Fiona Lau
D&B preps US$1bn NYSE IPO after sponsor overhaul

Commercial data provider eyes quick return to public markets
Seasoned dealmakers Bill Foley and Chinh Chu Goldman Sachs, Bank of America (which Cost-cutting measures have saved
are planning to bring DUN & BRADSTREET back to HELPEDûlNANCEûTHEûBUYOUT ûJP Morgan and US$200m, helping to boost D&B’s adjusted
the public markets via a US$1bn NYSE IPO less Barclays will lead the IPO. %BITDAûMARGINSûTOûûINûTHEûlRSTûQUARTERû
than 18 months after they took the commercial The proceeds will be used to redeem Series from 23.3% a year ago.
data and analytics provider private for US$6.9bn. A preferred stock, delivering some quick &OLEYûWASûABLEûTOûCAPITALISEûONû$"SûlLINGû
Only a month ago, Foley conceded that the gains to the sponsor group led by Chu’s CC in another way on Wednesday by
)0/ûlRSTûlLEDûCONlDENTIALLYûINû&EBRUARYûHADû Capital, Foley’s publicly traded CANNAE and opportunistically raising US$400m for
been delayed from its original May target PRIVATEûEQUITYûlRMû4HOMASû(û,EEû0ARTNERSû Cannae via an overnight stock sale.
and might have to wait until the end of the They closed their take-private of D&B in &OLEYûHASûOTHERûIRONSûINûTHEûlREûHAVINGû
year or early next year. February last year, layering US$4bn of debt RAISEDû53MûTHROUGHûHISûlRSTû30!#û&OLEYû
However, a string of strong debuts, onto the company in the process. Trasimene Acquisition) in May with a second
including by business intelligence rival The sponsors have also collected SPAC (Trebia Acquisition) raising US$375m
ZoomInfo Technologies (up 120% since its June US$128.1m of dividends since taking control set to debut as early as this month too.
4 debut), has put D&B’s listing plans back on. and expect to get another US$32m dividend Foley has an enviable investing track
“Though they do compete, D&B is more of later this month. record, having brought several other
a legacy player that isn’t growing as fast,” Under Anthony Jabbour, the former CEO technology companies public in recent years,
one banker said. of Black Knight, D&B has cut 850 staff among them Ceridian HCM and Black Knight.
"YûlLINGûPUBLICLYûONû4UESDAYû*UNEûû$"û representing 17% of its workforce, pushed Chu, a former senior managing director at
may even be able to price its IPO and debut customers to sign longer-term contracts and Blackstone, has also been active in the SPAC arena.
before the July 4 holiday. made several acquisitions. Anthony Hughes

WEEK IN NUMBERS 4HEû#HINESEûLENDERûPOSTEDûAûNETûPROlTûOFû
Rmb6.5bn (US$920m) for the nine months
ASIA-PACIFIC
25 times
ONLINE USED CAR SELLER
ended September 30, up 16% year-on-year.
Its total assets stood at Rmb1.1trn as of
September 30, while its non-performing
VROOM CHALKED UP A SERIES OF AUSTRALIA loan ratio and Core Tier 1 capital adequacy
NOTEWORTHY MOMENTS ON ITS IPO. ratio were 1.77% and 8.17%, respectively.
PRICING CAME AT US$22 FROM AN KOGAN.COM EYES EXPANSION
INITIAL RANGE OF US$15–$17, UPPED NEW ORIENTAL AND TAL WEIGH HK
TO US$18–$20. THE BOOK CLOSED Online retailer KOGAN.COM has raised A$100m LISTINGS
TWO DAYS EARLY YET THE DEAL (US$68m) through a share placement to
WAS STILL 25 TIMES COVERED. ON fund expansion opportunities. NYSE-listed NEW ORIENTAL EDUCATION &
DEBUT SHARES CLOSED AT US$47.90, It issued 8.7m new shares, or 9.2% of its TECHNOLOGY GROUP and TAL EDUCATION are
UP 117.7% existing capital, at A$11.45 each, or a 7.5% talking to banks about potential secondary
discount to the pre-deal close of A$12.38 on listings in Hong Kong, joining the queue of
June 9. US-listed Chinese companies seeking to list
The deal received support from existing closer to home amid rising US-China
HK$30bn
NASDAQ-LISTED JD.COM RAISED
and new shareholders.
Kogan is also looking to raise up to A$15m
through a share purchase plan.
tensions.
The two Chinese education companies
are discussing the possibility of selling
HK$30bn (US$3.9bn) FROM ITS HONG Proceeds will be used to offer more shares in Hong Kong with internal
KONG SECONDARY LISTING, MAKING products to more customers and to enhance stakeholders and external advisers, said
IT THE SECOND-LARGEST FLOAT THIS its operating model when opportunities arise. people familiar with the matter, adding that
YEAR BEHIND BEIJING-SHANGHAI Canaccord Genuity and Royal Bank of Canada no decision has yet been made.
HIGH SPEED RAILWAY’S Rmb30.7bn were the lead managers for the placement. The companies have not yet picked banks
(US4.3bn) SHANGHAI IPO for the transactions, which could come as
early as this year, said two of the people.
CHINA It is unclear how much the two
companies are looking to raise. At current
15 months
DUN & BRADSTREET FILED FOR
BOHAI BANK WINS IPO APPROVAL
CHINA BOHAI BANK won listing approval last

VALUATIONSûAûûmOATûINû(ONGû+ONGûnûINûLINEû
with other secondary listing candidates –
would raise about US$1bn in each case.
A US$1bn IPO LAST WEEK, JUST 15 Tuesday for a Hong Kong IPO of about As of last Tuesday, shares of TAL are up
MONTHS AFTER BILL FOLEY, CHINH US$2bn, people close to the deal said. 36% this year at US$65.73, giving it a
CHU AND THOMAS H LEE PARTNERS The national joint-stock commercial market capitalisation of US$25bn. New
TOOK IT PRIVATE IN A US$7bn BUYOUT bank, which counts Standard Chartered as Oriental, meanwhile, has seen its shares
its second-largest shareholder, will start pre- rise 7% this year. The stock closed at
marketing in mid-June. US$129.66 last Tuesday with a market cap
ABC International, CCB International, CLSA of US$20bn.
US$10bn
APOLLO’S US$1.75bn CONVERTIBLE
and Haitong International are the joint
sponsors.
Founded in 2005, Bohai Bank also counts
New Oriental declined to comment while
TAL did not reply to requests for comment.
Investors have raised concerns over TAL’s
PREFERRED INVESTMENT IN Tianjin TEDA Investment, China Shipping corporate governance standards after the
ALBERTSONS VALUED THE GROCER Investment and State Development & tutoring services provider said in early April
AT US$10bn, AND DOES NOT INCLUDE Investment as shareholders. StanChart that it had caught one employee allegedly
AN IPO RATCHET, SETTING A CLEAR owns a 19.99% stake, behind TEDA, which FABRICATINGûSALESûlGURESûINûITSûNEWLYû
BENCHMARK FOR THE FLOAT holds 25%. introduced “Light Class” business.
EXPECTED IN JULY
ASIA-PACIFIC EQUITIES ASIA-PACIFIC EQUITIES (EX-JAPAN)
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share Managing No of Total Share
Rmb8.65– bank or group

1 Morgan Stanley
issues
42
US$(m) (%)
10,419.25 9.9
bank or group
1 Morgan Stanley
issues
38
US$(m) (%)
10,207.62 10.2
Rmb8.95
SHANGHAI FUDAN-ZHANGJIANG
2 Goldman Sachs
3 JP Morgan
40
26
8,260.18
6,250.31
7.8
5.9
2 Goldman Sachs
3 JP Morgan
38
26
6,728.53
6,250.31
6.7
6.3
4 China Secs 18 5,410.81 5.1 4 China Secs 18 5,410.81 5.4
BIO-PHARMACEUTICAL BECAME THE 5 UBS 38 5,097.36 4.8 5 UBS 38 5,097.36 5.1
FIRST COMPANY TO PRICE AN IPO ON 6 CICC 32 5,095.07 4.8 6 CICC 32 5,095.07 5.1
THE SHANGHAI STAR BOARD USING 7 Credit Suisse 21 4,499.30 4.3 7 Citigroup 21 4,179.78 4.2
AN INDICATIVE PRICE RANGE. THE 8 Citigroup 21 4,179.78 4.0 8 Macquarie Group 20 3,770.62 3.8
Rmb1.07bn (US$151m) FLOAT PRICED 9 Macquarie Group 20 3,770.62 3.6 9 Citic 17 3,693.83 3.7
AT THE TOP OF THE Rmb8.65–Rmb8.95 10 Citic 17 3,693.83 3.5 10 HSBC 16 3,660.17 3.7
RANGE AND RETAIL DEMAND WAS AS Total 906 105,574.99 Total 848 99,829.06
STRONG AS EVER, WITH THE TRANCHE Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues
3,100 TIMES COVERED Source: Refinitiv SDC code: C4a1 Source: Refinitiv SDC code: C4a2

EQUITIES ASIA-PACIFIC
4HEûINCIDENTûBRIEmYûWEIGHEDûONûTHEû Boyu Capital was founded in 2010 and as other working capital needs. Nio China
stock, which bounced back on signs counts as partners former TPG Capital plans to invest in research and development,
the company is recovering from the senior executive Mary Ma and Alvin Jiang, manufacturing facilities, improve its supply
CORONAVIRUSûIMPACTû)TSûOFmINEûBUSINESSû also known by his Chinese name Jiang chain and enhance its sales and service
is expected to maintain high growth Zhicheng, who is the grandson of former network.
while the online business is also Chinese president Jiang Zemin. Nio’s shares fell 5.7% on Wednesday and
expanding. 4HEûCOMPANYûPOSTEDûAûNETûPROlTûOFû 6.2% on Thursday, to US$5.91, but are still
New Oriental, a private education Rmb2.44bn in 2019, up from Rmb726m in up 47% year-to-date.
provider, saw its net income increase 41% 2018, on revenue of Rmb8.35bn.
year on year to US$138m in the three GF Securities is the sponsor. SHENZEN, REDSUN AND ZHENRO SEEK
months to February 29 2020. IPO APPROVALS
TRIO PRE-MARKET FLOATS
SMOORE GETS READY TO IGNITE SHENZHEN HEPALINK PHARMACEUTICAL, Redsun
Three companies from the healthcare sector Services and Zhenro Services Group sought
SMOORE INTERNATIONAL, one of the world’s started pre-marketing last Monday for Hong listing approvals last week for their
largest e-cigarette makers, sought listing Kong IPOs of a combined US$800m. respective US$300m–$400m, US$70m–$80m
approval last week for a Hong Kong IPO of Chinese medical equipment maker KANGJI and US$150m Hong Kong IPOs.
US$600m–$900m. MEDICAL is planning to raise about US$400m Pre-marketing of the deals will start this
Pre-marketing will start this week once FROMûITSûmOATûBank of America, CLSA and week if approvals are granted.
approval is granted. Goldman Sachs are sponsors. Shenzhen-listed Hepalink has a portfolio of
CLSA is the sponsor. Kangji, which makes equipment for drugs to treat blood clots and immune system
IFR reported last August the company minimally invasive surgery, posted a net DISORDERSû&ORûTHEûlRSTûNINEûMONTHSûOFûûITû
planned to raise about US$400m from the PROlTûOFû2MBMû53M ûFORûûUPû POSTEDûAûPROlTûOFû2MBMû53M ûUPû
mOATûINûTHEûlRSTûHALFûOFûû4HEûDEALûSIZEû 46% from 2018. 60% from the same period a year earlier.
has since become much bigger as investors HYGEIA HEALTHCARE, a Warburg Pincus- Goldman Sachs and Morgan Stanley are the
have shown strong interest, said people backed Chinese hospital operator and joint sponsors.
close to the deal. radiotherapy equipment maker, intends to Redsun, a Chinese property management
Smoore was listed on the China National raise about US$300m from its listing. COMPANYûPOSTEDûAûNETûPROlTûOFû2MBMûFORû
Equities Exchange and Quotations and Books are tentatively scheduled to open 2019, up 73% from 2018.
delisted from the over-the-counter on June 16 and close on June 19 ahead of the The company is wholly owned by Zeng
exchange in June last year. listing on June 29. Huansha, the chairman of Hong Kong-listed
3MOOREûPOSTEDûPROlTûANDûTOTALû The company posted an adjusted net Redsun Properties.
comprehensive income of Rmb921m PROlTûOFû2MBMûFORûTHEûûMONTHSûENDEDû ABC International is the sponsor.
53M ûFORûTHEûlRSTûHALFûOFûûMOREû October 31 2019, up 82% from the same Zhenro Services, which provides property
THANûlVEûTIMESûTHEû2MBMûEARNEDûINû period in 2018. management services to Hong Kong-listed
the same period of 2018. Warburg Pincus owns a 17.2% stake in the :HENROû0ROPERTIESû'ROUPûPOSTEDûAûNETûPROlTû
Its clients include Japan Tobacco, company. of Rmb74m for the nine months to
2EYNOLDSû!SIA 0ACIlCû"RITISHû!MERICANû Haitong International and Morgan Stanley are September 30 2019, up 160% from the same
Tobacco, RELX and NJOY. joint sponsors. period of 2018.
IMMUNOTECH BIOPHARM is working with joint Zonrong Ou, the controlling shareholder
SICHUAN LANGJIU SAYS CHEERS TO IPO sponsors CCB International and Guosen of Zhenro Properties Group, owns 87.3% of
SecuritiesûONûAûmOATûOFûATûLEASTû53M Zhenro Services.
Clear spirits producer SICHUAN LANGJIU has Books are scheduled to open in the second CCB International is the sponsor.
lLEDûTOûTHEû#HINAû3ECURITIESû2EGULATORYû half of June and the deal will price in late
Commission for a Rmb7.45bn (US$1.05bn) June. TRINA SOLAR SOARS 136% ON DEBUT
Shenzhen IPO. The biopharmaceutical company has a
The company plans to offer up to 70m portfolio of 10 drug candidates focusing on TRINA SOLAR‘s A-shares soared as high as 136%
SHARESûFORûANûûFREE mOAT cancer treatment. It posted a loss of above their IPO price when they made their
It will use Rmb6.32bn of the proceeds to Rmb109m for 2019, wider than a Rmb35m trading debut on June 10. The stock climbed
upgrade and build four production bases, loss for 2018. to Rmb19.26 from the Rmb8.16 issue price
and fund warehousing, packing and liquor before closing at Rmb17.21, up 110.9%.
fermentation bacteria projects. The rest of NIO UPSIZES FOLLOW-ON The photovoltaic equipment producer,
the proceeds will be used for IT services, to which was delisted in the US in 2017, raised
build an R&D centre, and for working Electric-vehicle maker NIO has upsized a Rmb2.53bn (US$357m) from its Star IPO of
capital. primary follow-on to raise US$428m after MûSHARESûORûAûûFREE mOATû)TûINITIALLYû
The company’s chairman, Wang Junlin, pricing the deal at US$5.95 per share. planned to issue 439m shares with a
holds a 76.7% stake directly and indirectly The New York-listed company sold 72m fundraising target of Rmb3bn.
through biggest shareholder, Sichuan American depository shares, instead of 60m Proceeds will be used to fund a
Langjiu Group. at launch, at a 5.5% discount to last photovoltaic power generation project, to
Crystal Glitter, which was registered in Wednesday’s close of US$6.30. upgrade photovoltaic modules and a
Hong Kong in 2016 and is 100% held by PE There is a 15% greenshoe. research and development centre, and to
lRMû"OYUû#APITALûBOUGHTûAûSTRATEGICûSTAKEû Morgan Stanley, Credit Suisse and CICC are replenish working capital.
of 11.2% in 2017. the bookrunners. Sole sponsor Huatai United Securities is
The chairman’s brother, Wang Jungang, The company plans to use the proceeds to charging Rmb158m as a service fee and
holds a 5% stake. fund cash investments in Nio China, as well investing Rmb75.8m, or 3% of the offering.

GAN & LEE PHARMA KICKS OFF IPO SINOCELLTECH GROUP PRICES STAR IPO KAISA PROSPERITY BUILDS WAR CHEST
GAN & LEE PHARMACEUTICALS was due to price a SINOCELLTECH GROUP has set the issue price at KAISA PROSPERITY HOLDINGS has raised HK$456m
Rmb2.54bn (US$359m) Shanghai IPO on Rmb25.64 per share for a Shanghai Star (US$59m) from a top-up share placement.
June 12. IPO of Rmb1.28bn (US$181m), downsized The Chinese property management
Books will open for a day on June 16. from a proposed Rmb1.98bn. company sold 14m shares or 9.09% of its
The biopharmaceutical company plans to 4HEûPRE PROlTûCOMPANYûPLANSûTOûOFFERû enlarged share capital at HK$32.55 each, near
offer 40.2m A-shares, or 10% of the enlarged 50m shares, or 11.5% of the enlarged the bottom of a HK$32.50–$33.45 range. The
capital. capital. It is selling 4% of the shares to the lNALûPRICEûREPRESENTSûAûDISCOUNTûOFûûTOûLASTû
The insulin manufacturer will use the sponsor, with the remainder of the deal Monday’s closing price of HK$36.15.
proceeds for insulin mass production, split 80.2%/19.8% between institutional and The books were well oversubscribed with
research, marketing, and working capital, retail investors. about 20 investors participating, including
to register insulin products in the US and to The implied market capitalisation of long-only funds, sovereign wealth funds and
build an R&D centre. Rmb11.2bn meets the minimum Rmb4bn HEDGEûFUNDSû4HEûTOPûlVEûINVESTORSûTOOKû
)TûPOSTEDûAûNETûPROlTûOFû2MBBNûONû REQUIREMENTûFORûPRE PROlTûCANDIDATESûONû about 80% of the deal.
revenue of Rmb2.89bn in 2019. the Star market. The company plans to use the proceeds
Citic Securities is the sponsor and joint Companies in the pharmaceutical for future M&A, strategic investments,
bookrunner with Orient Securities. industry must have at least one core working capital and general corporate
product at the Phase II clinical trial stage. purposes.
SIMCERE FILES FOR HONG KONG IPO Sinocelltech, which manufactures There is a 90-day lock-up period.
recombinant proteins, monoclonal ABC International and Haitong International
SIMCERE PHARMACEUTICAL GROUP is looking to antibodies and vaccines, will use the were the bookrunners.
raise around US$500m through a Hong proceeds for clinical research and working
Kong IPO, according to people close to the capital. RUBYMAB LEADS ALPHAMAB SALE
deal. Its net loss widened to Rmb798m in
4HEûCOMPANYûlLEDûFORûTHEûPROPOSEDû 2019 from Rmb459m in 2018, on revenue Three shareholders have raised a combined
listing on June 10. of Rmb2.6m and Rmb2.9m respectively. HK$440m (US$57m) through a sell-down in
Simcere listed on the NYSE in 2007 and CICC is the sponsor, and Citic Securities is ALPHAMAB ONCOLOGY.
delisted in 2013. THEûlNANCIALûADVISER The block trade of 26.7m shares, or 2.9%
It has a range of 50 product candidates in of outstanding, was priced at the top of the
different stages of development to treat YONGDA AUTO SELL SHARES VIA TOP-UP HK$16.28–$16.50 range, representing a 4.1%
cancer as well as central nervous system and discount to the pre-deal close of HK$17.20
autoimmune-related diseases. CHINA YONGDA AUTOMOBILES SERVICES has raised on Thursday.
)TûPOSTEDûANûANNUALûPROlTûOFû2MBBNû HK$995m (US$128m) through a top-up Controlling shareholder Rubymab sold
(US$141m) last year, up 37% from Rmb734m placement at HK$8.29 per share, or a 7.5% 14.5m shares, according to a company
a year earlier. discount to the pre-deal close. announcement and faces a 12-month
CICC and Morgan Stanley are the joint The company marketed 120m shares, lock-up.
sponsors. representing 6.1% of the enlarged share The other vendors are PAG Growth and
capital, at an indicative range of HK$8.22– Classic Insight Project Company, which
ESR CAYMAN SHARE SALE TOTALS $8.42 each. have a 90-day lock-up.
HK$1.95bn Proceeds are for general corporate Morgan Stanley was the bookrunner.
purposes. There is a 90-day lock-up.
Three institutional shareholders have raised Goldman Sachs, HSBC and Morgan Stanley SHANXI SEC PRICES RIGHTS ISSUE
a combined HK$1.95bn (US$251m) from a were the bookrunners.
sell-down in ESR CAYMAN. Shenzhen-listed SHANXI SECURITIES has set the
The block was upsized to 116m shares, WEIGAO GROUP READIES STAR issue price at Rmb5.00 each for a Rmb4.24bn
from 80.7m shares at launch, and priced at SPIN-OFF (US$600m) rights issue, lower than the
the bottom of the HK$16.80–$17 marketed proposed Rmb6bn sizing.
price range, or a 4.3% discount to the pre- Hong Kong-listed Shangdong Weigao The brokerage will offer 849m shares on
deal close of HK$17.56 on June 5. Group Medical Polymer plans to spin off June 16 on a 3-for-10 basis. Trading in its
The selling shareholders are WP OCIM subsidiary SHANDONG WEIGAO ORTHOPEDIC shares will be halted from June 17–24.
One, a Warburg Pincus unit, Montsoreau DEVICE on the Shanghai Star market. Shanxi Financial Investment Holdings,
Investment and Mercer Investments Weigao Ortho will sell 5%–20% of the the biggest shareholder in the company
(Singapore). enlarged capital in the IPO. with a 30.6% stake and which is owned by
There is a 90-day lock-up for WP OCIM The spin-off manufactures orthopaedic Shanxi Provincial Finance Department, has
One and Montsoreau Investment. Mercer medical implants including spinal, trauma committed to take up its full entitlement.
sold its entire stake. and joints products. It also produces Proceeds will be used to expand the
Concurrently, certain ESR employees surgical instruments and tools for BROKERSûINTERMEDIARYûCAPITALûlXEDûINCOMEû
exercised stock options and sold 8.7m implant surgery. and bill investment businesses and increase
shares at the same price in an off-market The parent company holds around 80.5% the capital of a subsidiary.
transaction. of Weigao Ortho. Its shares changed hands The company posted revenue of
WP OCIM One now owns about 16.1% of at HK$16.36 in the morning of June 12, Rmb5.08bn in 2019, down 26%. It is the
ESR’s enlarged share capital. up 2.3%. biggest shareholder in the Zhong De
CLSA, Goldman Sachs and Morgan Stanley The proposal still needs approval from Securities JV with Deutsche Bank with a
handled the sale. shareholders and regulators. 66.7% stake.

EQUITIES ASIA-PACIFIC
Citic Securities is the sponsor and joint DCB BANK PLANS QIP SHARE SALE
bookrunner with Zhong De securities. SINGAPORE
DCB BANKûISûPLANNINGûAûQUALIlEDûINSTITUTIONALû
placement of up to Rs5bn (US$66m), subject SEMBCORP MARINE LAUNCHES
INDIA to shareholder approval. RIGHTS ISSUE
Details on the timing and syndicate will
MAHINDRA FINANCE HIRES BANKS be disclosed later. Loss-making Singaporean rig builder
The private sector bank is raising the SEMBCORP MARINE is launching a S$2.1bn
MAHINDRA & MAHINDRA FINANCIAL SERVICES has hired funds to strengthen its balance sheet. DCB (US$1.5bn) rights issue backed by parent
Axis Bank, BNP Paribas, HDFC Securities, HSBC, "ANKSûNETûPROlTûFELLûTOû2SMûINûTHEû company Sembcorp Industries and state-
ICICI Securities, Kotak, Nomura and SBI Capital quarter to March 31, down 29% from OWNEDûINVESTMENTûlRMû4EMASEKû(OLDINGS
Markets to work on an up to Rs35bn (US$463m) Rs963m a year earlier. The 5-for-1 issue is priced at S$0.20 per
rights issue targeted for next month. The bank raised Rs3.78bn via a QIP in share, representing a 76% discount to the
Details on the record date, timing, 2017. pre-deal close of S$0.85 and a 35% discount
entitlement ratio and pricing will be DCB Bank shares are down 57% year-to-date. to the theoretical ex-rights price, based on
provided later. IFR calculations.
It is raising capital to strengthen its Sembcorp Industries will subscribe to its
balance sheet as the Covid-19 pandemic is MALAYSIA S$1.27bn entitlement and an additional
likely to increase loan defaults by S$230m in case of undersubscription.
customers. IGB COMMERCIAL REIT PLANS LISTING Temasek is sub-underwriting S$600m of the
Mahindra Finance shares are down 52% rights with no fee.
year-to-date. IGB COMMERCIAL REIT will list 1.23bn new The issuer has seen its business hit by the
units on Bursa Malaysia at an illustrative oil price crash and the Covid-19 pandemic.
SHRIRAM TRANSPORT PLANS price of M$1 each to raise M$1.23bn This is the second time Temasek is
RIGHTS ISSUE (US$289m), parent IGB said in a stock stepping up to back a local rights issue since
EXCHANGEûlLING the coronavirus outbreak, following the
#OMMERCIALûVEHICLEûlNANCIERûSHRIRAM The IPO will be completed by the fourth S$15bn rights issue of Singapore Airlines.
TRANSPORT FINANCE is planning a rights issue quarter. In order to subscribe to the rights,
of up to Rs20bn (US$264m) in the second Up to 945m units will be reserved for Sembcorp Industries will convert a S$1.5bn
half of the year, people with knowledge of IGB shareholders and 282m will be sold to subordinated loan extended to Sembcorp
the transaction said. institutional and retail investors. Marine in June 2019 into equity.
The company is raising funds to Existing shareholders are entitled to two Subsequent to these transactions,
strengthen its balance sheet amid the Covid- shares of IGB Commercial REIT for every Sembcorp Industries proposes to demerge
19 pandemic and India’s nationwide lVEû)'"ûSHARES Sembcorp Marine through a special share
lockdown since March. 4ENûOFlCEûBLOCKSûANDûRETAILûSPACEûWORTHû distribution in order to focus on its energy
ICICI Securities is working on the M$3.15bn will be injected into the REIT. and urban development businesses.
transaction and other banks are likely to Most of these properties are located in Sembcorp Industries shareholders will
join. Kuala Lumpur’s Mid Valley City. receive between 427 and 491 Sembcorp
The company last raised Rs5.84bn Hong Leong is the adviser to the listing. Marine shares for every 100 Sembcorp
THROUGHûAûQUALIlEDûINSTITUTIONALûPLACEMENTû Industries shares held, with no cash outlay.
in 2010. Following the rights and share dividend
Shriram Transport shares are down 47% NEW ZEALAND issues, Temasek will hold over 29% of Sembcorp
year-to-date. Marine and 49.3% of Sembcorp Industries.
INFRATIL COMPLETES SHARE Both companies will convene shareholder
HAPPIEST MINDS SEEKS US$100m IPO PLACEMENT meetings in August or September to seek
approval.
HAPPIEST MINDS TECHNOLOGIESûHASûlLEDûAûDRAFTû INFRATIL has raised NZ$250m (US$161m) DBS BankûISûTHEûSOLEûlNANCIALûADVISERûTOû
prospectus for an IPO of around US$100m from a share placement priced at NZ$4.76 Sembcorp Marine for the rights issue and to
and is targeting a launch in the fourth per share. Sembcorp Industries for the proposed share
quarter. The infrastructure investment company dividend distribution. Credit Suisse is sole
Primary shares totalling Rs1.1bn and sold 52.5m new shares, or 8% of existing adviser to Temasek.
35.7m secondary shares will be sold in the issued capital, at a discount of 8% to the Sembcorp Marine shares closed at S$0.585 on
IPO. Controlling shareholder Ashok Soota pre-deal close of NZ$5.175. Thursday and Sembcorp Industries at S$1.98.
and JP Morgan Asset Management are the The placement was supported by existing
sellers. and new institutional investors in local and EAGLE HOSPITALITY TRUST FACES PROBE
Institutional buyers will be allocated 75% offshore markets, as well as clients of
of the offer, high-net-worth investors 15% BROKERAGEûlRMS Singapore’s central bank and police force
and retail investors 10%. Infratil is raising an extra NZ$50m from have opened a joint investigation into EAGLE
ICICI Securities and Nomura are the lead retail investors through a share purchase HOSPITALITY TRUST for alleged breaches of
managers. plan. disclosure requirements.
Happiest Minds provides information Proceeds will provide additional balance The embattled US-focused REIT said its
technology services for clients in the retail, SHEETûmEXIBILITYûTOûFUNDûGROWTHûINVESTMENTSû current directors had attended interviews
consumer packaged goods, e-commerce, across Infratil’s portfolio companies and with the Monetary Authority of Singapore as
banking, insurance, transportation and take advantage of new opportunities. part of the joint investigation. It did not
hospitality sectors. UBS is the bookrunner. provide further details.

The MAS and the police force’s WHICHûWASûFULLYûSUBSCRIBEDûONûITSûlRSTûDAYûOFû A total of 526,000 shares were sold at €121
Commercial Affairs Department announced bookbuilding last Wednesday. each, representing a 3.8% discount to last
the probe on June 5 following a referral by “Demand has been strong and way Tuesday’s close of €125.80.
Singapore Exchange Regulation (SGX exceeded the offer size,” said a person close BNP Paribas was bookrunner.
RegCo). In April, MAS and SGX RegCo said to the deal. “With some of its drug products The placing was launched alongside an
they were looking into possible breaches of having received approvals from FDA, ANNOUNCEMENTûTHATû#OlNIMMOûHADûSIGNEDû
laws, regulations and listing rules by EHT. investors are able to gauge some visibility of an agreement on Wednesday to acquire six
EHT is a stapled trust comprising EH-Real the company’s prospects.” healthcare sites in Belgium through
Estate Investment Trust and Eagle SK Biopharm last year received regulatory contributions in kind.
Hospitality Business Trust, which was listed approval from the US Food and Drug 3HARESûINû#OlNIMMOûCLOSEDûLASTû4HURSDAYû
on SGX on May 24 2019 following a Administration for two drugs that treat down 3.65% at €121.40.
US$566m IPO at US$0.78 per unit. It last sleep disorders and epilepsy.
traded at US$0.137 on March 19. The development of anti-epileptic drugs is
Trading of EHT units was voluntarily a niche area with limited players, according FINLAND
suspended on March 24 after EH-REIT TOûTHEûPERSONû!NOTHERûPLAYERûINûTHEûlELDûISû
defaulted on a loan of US$341m. US-based Belgian biopharma company UCB. FINNAIR SETS TERMS FOR STATE-BACKED
Urban Commons, the master lessee of EHT’s Another person close to deal said the offer RIGHTS ISSUE
properties, failed to place security deposits was expected to draw strong domestic
and make rental payments since December demand as investors are looking to a FINNAIR set terms on Wednesday for its
2019, according to a statement from MAS. potential rebound in the country’s €511.7m fully underwritten rights issue,
Separately, EHT said MAS is reviewing a lacklustre capital markets following the having received shareholder backing for
proposal from Hong Kong-based Far East coronavirus crisis. South Korea’s benchmark the cash call at the beginning of the
Consortium International to take over as EH- Kospi 200 stock index has regained more month.
REIT’s manager. than a third of its value since March. The fundraise will be complemented by
Far East has also been planning a S$500m !ûSUCCESSFULû)0/ûWILLûGIVEûCONlDENCEûTOû amendments to its revolving credit facility
(US$359m) hospitality REIT IPO on SGX, other companies seeking to go public this and hybrid notes, a €600m pension loan
comprising hospitality assets in Australia, year, including Big Hit Entertainment, the agreement with Ilmarinen Mutual Pension
Singapore, Malaysia and the UK. music label behind boy band BTS, and Insurance, and potential sale and
DBS, HSBC and JP Morgan are working on Hyundai Card, the credit card unit of leaseback of aircraft. The state is
that IPO. Hyundai Motor Group. guaranteeing 90% of the pension loan,
The international bookbuild runs until with Nordea guaranteeing 10%.
June 18, while the domestic offer will take The Finnish carrier said that the cash
SOUTH KOREA place on the last two days of a roadshow would allow it to continue its long-term
from June 17–18. growth strategy in a post-crisis environment,
SK PEPS UP SOUTH KOREAN IPOs About 60% of the deal will be allocated but the reality is that the company is coping
to institutional investors, split between with a collapse in income.
South Korea’s SK BIOPHARMACEUTICALS last international and domestic accounts, In May, Finnair carried 26,700 passengers,
week launched the country’s largest IPO in while the rest will go to domestic retail 97.9% fewer than in May 2019 though the
three years, seeking up to W959bn buyers and an employee stock ownership company said it was an improvement on
(US$800m) and playing on the popularity of plan. !PRILûWHENûTRAFlCûWASûDOWNûûFROMûAû
the biotech and healthcare sectors with Proceeds will be used to develop SK YEARûEARLIERû4HEûCOMPANYûDIDûNOTûmYûATûALLû
investors amid the coronavirus pandemic. Biopharm’s pipeline of products and for on Asian or North Atlantic routes in May.
The drugmaking unit of conglomerate SK drug discovery, hiring additional The capital increase is backed by the
Group is selling 19.6m shares, comprising personnel, funding future growth Finnish state, which has irrevocably
68% primary and 32% secondary, for a 25% initiatives and general corporate purposes. committed for its 55.9% stake, with the
FREE mOATû4HEûINDICATIVEûPRICEûRANGEûOFû The deal will price on June 19, and the balance underwritten by Citigroup and
W36,000–W49,000 gives the company a shares are set to be listed on July 2. Nordea. The state got the go-ahead on June 9
potential market capitalisation of W2.8trn– Citigroup, Morgan Stanley and NH Investment from the EU to participate in the rights
W3.8trn. & Securities are the joint bookrunners. issue.
If it prices at the top of range, the deal The capital raise involves a near-doubling
WOULDûBEûTHEûLARGESTûmOATûINû3OUTHû+OREAû of its €521m market cap, with 1.27bn new
since biopharmaceutical distributor shares offered on a heavy 10-for-1 basis at
Celltrion Healthcare’s W1trn KRX listing in €0.40, a 45.5% discount to TERP of €0.73
July 2017. EUROPE/MIDDLE according to IFR calculations, based on the
This long-awaited deal caused a 10% spike EAST/AFRICA €4.078 Tuesday close.
in shares of its parent company SK Holdings The record date is June 12, with
on May 20, the day after the listing plan was subscription running from June 17–July 1,
OFlCIALLYûANNOUNCED BELGIUM rights trading wrapping up on June 25, and a
SK Holdings, a subsidiary of the result due on July 7.
conglomerate that focuses on energy and COFINIMMO RAISES €63.6m IN ABB Finnair shares closed down 4.4% on
chemicals, telecommunications and Wednesday at €3.90.
trading, is the selling shareholder in the Trading in real estate group COFINIMMO shares Citigroup and Nordea are bookrunners,
IPO. was suspended last Wednesday while the with OP Corporate Bank, SEB and
The popularity of biotech stocks has company tapped the market for new cash, Swedbank/Kepler Cheuvreux as co-lead
driven investor interest in the offering, eventually raising €63.6m. managers.

EQUITIES EMEA
Having closed on debut at €12.74 from GVS is being compared to three main peer
GERMANY €9.50 pricing, the shares pushed up to a groups.
closing high of €14 on the second day of 4HEûlRSTûGROUPûINCLUDESûINDUSTRIALûlLTRATIONû
PHARMASGP COVERED AFTER FOUR DAYS trading and closed at €13.20 before the peers which trade at around 15.7–16.9 EV/Ebitda
OF VIRTUAL IPO greenshoe was exercised, a near 39% for 2020, which includes the US’s Donaldson.
premium. Life science companies such as Germany’s
"OOKSûWEREûOFlCIALLYûCOVEREDûONûTHEûBASEû The shares had come off a little on Sartorius comprise the second group and
deal size for the €207.9m–€240.9m IPO of Monday, opening at €13.08 and closing at trade between 17.8 and 24 EV/Ebitda.
PHARMASGP last Thursday, four days into õûlNISHINGûLASTûWEEKûATûõ The third group includes Italian
bookbuilding. On full exercise of the greenshoe, the deal corporates such as Interpump and Carel,
Books opened last Monday following a SIZEûRISESûTOûõMûANDûTHEûFREE mOATûTOû trading around 13–15 EV/Ebitda.
pre-marketing process in which two 41.3%. Investor feedback was positive on Tuesday
analysts virtually met more than 170 Hauck & Aufhauser was bookrunner. with investors said to be particularly
investors in just eight days. INTERESTEDûINûTHEûCOMPANYSûGROWTHûPROlLEû
PharmaSGP focuses on over-the-counter and the long history of its management team.
pharmaceuticals based on natural active ITALY The expectation is that UK investors will
ingredients and other healthcare products. dominate the book for GVS followed by US
The chemical-free approach has attracted GVS LAUNCHES SPEEDY BOOKBUILD WITH accounts, with domestic investors expected
ESG-focused investors, as well as healthcare, CORNERSTONE-BACKING to be around a sixth of demand.
consumer and generalist names.
A price range was published on Monday Filter company GVS opened books on its IPO
morning, and books opened in the afternoon last Thursday after gaining approval from MONACO
once the prospectus was approved. the Italian regulator following publication
PharmaSGP has been able to keep to its of a price range last Monday. SCORPIO BULKS UP
aim of an early summer IPO, with the IPO The Milan IPO is set to raise between €427m
market quickly reopening following the and €506.3m and follows the pattern of other Stretched by Covid-19, SCORPIO BULKERS
coronavirus shutdown and the company European IPOs during the coronavirus sapped some of the momentum out of its
still on track to achieve projected pandemic of including cornerstones and a recent stock rebound by raising US$75.7m
PERFORMANCEûlGURESûFORûTHEûYEARûAûBANKERû speedy bookbuild of just four days. from an overnight stock sale.
involved said. Capital Research and Management has The owner of 55 vessels used to ship
The range of €31.50–€36.50 per share committed to buy 9.3% of the offering, commodities such as grain, coal and
comes at an around 20% discount at the corresponding to 3.26% of GVS post-money. fertiliser was able to increase the size of the
bottom to main peer Dermapharm, which In the past month most European listings offering from US$60m at launch.
Berenberg brought to market in a 2018 IPO, included cornerstone tranches, including A syndicate led by Bank of America, BTIG
on an Ebit 2021 basis. those by JDE Peet’s, Nanoform and Pexip. and Clarksons Platou found takers for 4.1m
The base deal of 6.6m shares will raise up Bookbuilding for GVS will run until June NEWûSHARESûINûTHEûSHIPPERûATûAûlXEDû
to €240.9m and an upsize option of 1.8m 16, with eliminated travel time allowing marketing price of US$18.46, a 10% discount
shares could take it to €306.6m at the top of bankers to shorten the process. General to the previous close for the equivalent of
the range. There is also a maximum 15% consensus that volatility remains high also 57% of outstanding.
greenshoe. All of the offering is secondary. contributed to the shortened timetable. The stock held above the offering price to
4HEûSELLERSûAREûTHEûlRMSûTWOûFOUNDERSû Goldman Sachs and Mediobanca are joint close at US$18.67 in Wednesday’s
Clemens Fischer and Madlena Hohlefelder, bookrunners. Lazard is advising. aftermarket but slumped to US$17.77
who own 90% and 10% of the company, A price range of €7.00–€8.30 has been set. during Thursday’s broader market sell-off.
respectively. The base deal comprises 10m primary While up 40% in the past three weeks
If the upsize option and greenshoe are shares and 51m from GVS Group. There is ahead of pricing, shares of Scorpio Bulkers
exercised in full, their combined holding also a 15% secondary greenshoe. are still down 70% this year as Covid-19 has
will be reduced to 19.5%. Keeping their 4HEûFREE mOATûWILLûBEûûIFûTHEûGREENSHOEû hurt global trade and the dry bulk market.
respective positions as head and deputy is fully exercised.
head of PharmaSGP’s supervisory board, '63ûMANUFACTURESûlLTERSûFORûTHEû EMEA EQUITIES
THEYûWILLûRETAINûSIGNIlCANTûINmUENCEûOVERû healthcare and life sciences, energy and BOOKRUNNERS: 1/1/2020 TO DATE
PharmaSGP. mobility and health and safety sectors. Managing No of Total Share
The company said that its CEO and the It has seen an uptick in its safety business bank or group issues US$(m) (%)
CFO would become shareholders following during the coronavirus pandemic, owing to 1 Goldman Sachs 33 5,903.94 9.2
completion of the IPO. The company and its product line of masks. GVS’s safety 2 Citigroup 28 5,877.95 9.2
existing shareholders are locked up for six business line kept the IPO on track while 3 Morgan Stanley 22 5,265.69 8.2
months. other planned Italian listings fell by the 4 BofA Securities 28 5,211.75 8.1
Berenberg is bookrunner. Total fees are up wayside due to the pandemic. 5 JP Morgan 38 5,061.88 7.9
to 3%, including a discretionary portion. GVS recorded adjusted Ebitda of €62m for 6 Credit Suisse 15 4,254.62 6.6
the year ending December 31 2019. The 7 Barclays 24 3,236.09 5.1
FULL EXERCISE FOR EXASOL company said it expected this to rise to 8 UBS 15 2,825.76 4.4
between €88.2m and €100.8m in 2020 based 9 HSBC 18 1,960.08 3.1
Database software business EXASOL has fully on estimated revenues. 10 BNP Paribas 18 1,697.98 2.7
exercised the 1.07m secondary greenshoe Pricing is based on EV/Ebitda at 12.8 at the Total 423 64,053.44
for its Frankfurt IPO, with the stock still bottom of the range for 2020 and 15 at the Including all domestic and international deals and rights issues
trading well above pricing. top of the range. Source: Refinitiv SDC code: C4cr

The company has taken several other Once books opened on an offering of
recent steps to bolster liquidity, including 5.33m new shares with reference to the POLAND
the sale of about half of its stake in sister €25.35 Monday close, formal coverage came
stock Scorpio Tankers (2.25m shares for inside of 15 minutes. LARGEST SHAREHOLDER IN
proceeds of US$42.7m to leave it with Co-founder and CEO Rene Moos, via his BUDIMEX SELLS 5%
2.16m shares) and the deferral of capex. AM Holding vehicle, committed at launch to
As at May 8 or shortly before reporting invest €5m for a post-money position of Ferrovial sold around 5% of construction
ITSûlRST QUARTERûNUMBERSû3CORPIOû"ULKERSû 15.2%. The company, Moos and key engineering company BUDIMEX for Z255m
carried US$100.8m of cash. shareholder 3i with a 14.85% stake are (US$65m) last Tuesday evening, in an
It also sold several vessels in March and locked up for 90 days. unexpected sell-down that was mostly
conducted a one-for-10 reverse share split Pricing came at €25 for a tight 1.4% snapped up by local investors.
in April, further highlighting its struggles. discount. The stock had risen more than 11% Ferrovial remains the largest shareholder
The company is still paying dividends, since the previous Monday’s close and was with 50.14%.
THEûLATESTûAûlVEûCENTSûAûSHAREûPAYOUTûFORû up 133% since mid-March lows. In the year Around 1.3m shares were sold at Z200
the current quarter to shareholders of to-date, the stock was down more than 25% each, representing an 11.9% discount to
record on June 15 (including investors in by Monday’s close. Tuesday’s close of Z227. The deal initially
the offering). A book of around 85 lines was several launched with a Z200–Z210 range.
The offering was buttressed by a times covered and all accounts seen during Strong domestic demand saw 75% of the
US$17.5m indication of interest (950,000 the wall-cross came into the trade. There DEALûGOINGûTOûLOCALûINVESTORSûREmECTINGûTHEû
or nearly a quarter of the shares in the was some new money, but the book was COMPANYSûSHAREHOLDERûREGISTERû4HEûTOPûlVEû
offering) from Scorpio Services, a related dominated by shareholders putting in for orders took 70% of the transaction.
party and 20% shareholder. Scorpio more than their pro rata sizing, with the top The heavy discount was attributed to the
Services also purchased 50,000 shares at 10 orders securing more than 75% of bounce in shares since March lows, and
US$17.15 last month. allocations. illiquidity.
Basic-Fit shares opened higher on Tuesday Budimex shares had risen 32% in 2020 to
but within a couple of hours had dropped last Tuesday’s close and around 53% since
NETHERLANDS below the placing price and closed at €24.35. late March. The placing represented
4HEYûlNISHEDûLOWERûONû4HURSDAYûATûõ approximately 56 days’ trading.
BASIC-FIT LOOKS TO EXPANSION AS ABN AMRO and Rabobank/Kepler Cheuvreux Societe Generale was bookrunner.
CLUBS REOPEN were joint bookrunners, with Lazard Ferrovial is locked up for 90 days.
advising. The shares closed last Wednesday at
Gym chain BASIC-FIT raised €133.3m in a Z216.50, well above the placing price but
9.8% accelerated capital increase on down 4.6% for the day.
Monday, the day it reopened nearly 200 of NORWAY By last Friday just before 3pm in London
its clubs in Belgium and Spain. shares were around Z217.5 each.
The majority of its clubs are now open KAHOOT CARRIES OUT US$89M PRIMARY
and proceeds will fund its growth strategy AND SECONDARY ABB
through the opening of new clubs and SAUDI ARABIA
acquisitions. Games platform KAHOOT raised NKr852m
On Monday, all 188 gyms in Belgium (US$89m) in an ABB last Wednesday RETAIL SECURES ARAMCO BONUS
reopened and six in Spain, with the evening, comprising a primary raise and SHARES
remaining 32 in the country to open later secondary offering.
this month. All 10 clubs in Luxembourg Strong demand from local and Retail shareholders that have held on to the
opened on May 29 and 316 in France on international names saw the deal upsized to stock received in SAUDI ARAMCO‘s SR110.4bn
June 2, with 74 more to open on June 22. 24m shares from an initial target of 21m. 53BN ûRECORD BREAKINGûmOATûAREûNOWû
As it stands over 60% of Basic-Fit clubs Around NKr266m was raised through the eligible for promised bonus shares.
are open and by the end of the month that sale of 7.5m new shares to fund Kahoot’s Those who held shares for 180 days after
will rise to 75%, with only Dutch clubs still growth, including M&A opportunities. trading began will receive one bonus share
closed. A further 3.7m shares were sold for every 10 held, up to a maximum of 100
The preliminary date for reopening all following the exercise of fully vested bonus shares, as of June 7.
the 202 clubs in the Netherlands is July 1, employee options and the remaining When shares began trading on the Saudi
but discussions are ongoing with the 12.8m shares were sold by existing Tadawul exchange in early December there
Dutch government to open earlier. shareholders. was an expectation that Aramco’s shares
Club reopenings and, perhaps more The shares were sold at NKr35.50 each, a WOULDûlNDûSUPPORTûNATURALûORûOTHERWISEûTOû
importantly, reassurances that members 4.1% discount to last Wednesday’s close of ensure they did not drop below the SR32 IPO
are returning, were a key part of a one-day NKr37. Shares closed last Thursday below price.
wall-crossing process that focused on the placing price at NKr34.50, a 6.8% fall The coronavirus pandemic and falling out
large, key shareholders and meant the for the day. with Russia over crude production saw oil
book was covered with indications at By last Friday at 3pm they were back up prices collapse, though Aramco’s shares
launch. at NKr36.50 each. have proven to be remarkably resilient, if
“It was key for investors to see a way The top 10 orders took 60% of the deal. not untouched.
beyond lockdown, that members are using Kahoot is a web and app-based learning When shares around the world
the gyms again and there is some sense of tool that uses multiple-choice quizzes. plummeted in the month to mid-March,
coming back to normal,” said a banker ABG Sundal Collier, Arctic Securities and !RAMCOSûDROPPEDûBYûLESSûTHANûAûlFTHûTOûAû
involved. Goldman Sachs were joint bookrunners. low close of SR27.80, while WTI oil prices

EQUITIES EMEA
were down around 60% in the same period Investment AB Spiltan, Lerit Forvaltning IMMOFONDS PLANS SFr100m
to just over US$20 per barrel. Oil prices fell and Dalex sold shares at SKr190 each. The RIGHTS ISSUE
further in April but have now recovered to three sellers were pre-IPO investors in
around US$40 per barrel for WTI and Brent Paradox. REIT IMMOFONDS IMMOBILIEN is planning a
crude. Pricing was a 10.4% discount to last SFr100m (US$105.7m) rights issue in
Having pushed above SR33 in late May, Wednesday’s close of SKr212. autumn for targeted investments, reducing
the shares were down slightly at SR32.40 Spiltan retains 17.2% of Paradox while debt and acquiring new properties.
ONû3UNDAYûANDûlNISHEDûATû32ûONû Lerit and Dalex hold 8.6% and 2.9%, At last Wednesday’s close the fund’s
Monday. So while the aftermarket respectively, locked up for 180 days. market cap was around SFr162.6m.
performance has been disappointing, The 70-line book was multiple times Shares in Immofonds Immobilien fell
retail investors can at least now mark a oversubscribed with long only, wall-crossed 2.13% last Wednesday to close at SFr505
10% return in six months. accounts dominating. Anchor orders came each.
By Thursday’s close, the stock was still at from Nordic and international investors. )TûWILLûBEûTHEûlRSTûFUNDRAISINGûBYûTHEû
SR32.35. The top 10 orders took 70% of the company since 2013.
There was no indication as to how many transaction. Immofonds Immobilien invests in
retail investors are eligible for the bonus Paradox shares were subdued last residential properties in urban centres
shares or how many bonus shares will be Thursday only trading around the SKr190 throughout Switzerland with a focus on
issued. PLACINGûPRICEûINûTHEûlRSTûHOURûBEFOREû Zurich.
dropping off and closing down 15.3% at
SKr179.50, 5.5% below the ABB price.
SWEDEN By Friday just before 3pm shares were up UAE
at around SKr186.30 each but still below
BURE EQUITY RAISES SKr1bn pricing. GMS TARGETS AT LEAST US$75m AFTER
DEBT RESTRUCTURING
Investment company BURE EQUITY raised
SKr1bn (US$108.5m) last Wednesday SWITZERLAND UK-listed GULF MARINE SERVICES will seek
evening, the upper end of the SKr800m– shareholder approval for an at least US$75m
SKr1bn target in an accelerated bookbuild INA FLAT FOLLOWING US$122m SPIN-OFF capital increase before the end of 2020,
run by SEB. having agreed with banks to restructure its
A total of 5.175m shares were sold at Swiss property spin-off INA INVEST debuted on debt facilities.
SKr193 each, representing a 6.1% discount SIX Swiss Exchange on Friday more than 8% GMS has renewed term loans totalling
to last Wednesday’s close of SKr205.60. above pricing on its SFr116m (US$122m) at- US$391m with an extended maturity to June
A number of Swedish institutional market rights issue. 30 2025, replaced working capital facilities
investors, including Ramsbury Invest, The IPO for Ina Invest was completed with a US$50m facility also extended to June
Swedish national pension fund AP4, SEB- through a rights issue directed to the 30 2025, and increased headroom on
stiftelsen, Formica Capital and Lottie Tham parent’s shareholders. As there was no lNANCIALûCOVENANTS
and family, took part in the placing. market price the pricing was determined by The oil services company must raise at
Bure said it saw good opportunities to demand gathered through a concurrent least US$75m from an equity capital raise or
expand its investment portfolio and will bookbuild to institutions. additional costs through PIK interest and
diversify and strengthen its shareholder Pricing was set at SFr22.42 per share, the contingent warrants will become due.
base through the ABB. maximum price given during bookbuilding A date for shareholders to vote on the
The Tigerschiold and Bjorkman families, ANDûmATûTOûNETûASSETûVALUEû)NAû)NVESTûSHARESû capital increase will be announced in due
Bure’s two largest shareholders with opened at SFr24.30 on Friday morning but course.
around 11.2% and 9%, respectively, said at were trading around strike by around 11am Bank of America and Investec are corporate
launch that they intended to remain long- and was still at the same level a couple of brokers to GMS, BofA having co-led the
term shareholders. hours later. £179m 2014 IPO.
Shares closed last Thursday at SKr200, The straight line on the chart at SFr22.42, GMS shares closed on Wednesday up
down 2.7% and above the fundraising level. which ordinarily would be the seen as a 0.36% at £13.80.
By Friday at 3pm in London shares had clear sign of active stabilisation, was entirely
risen to SKr202.60 each. natural as there is no greenshoe.
Shareholders of former parent Implenia UK
TRIO SELLS 4.7% OF PARADOX were offered up to 5.17m new shares on the
INTERACTIVE basis of seven new Ina shares for every 25 WHITBREAD STUMBLES FOLLOWING £1bn
Implenia shares held. FUNDRAISING
A trio of shareholders in game developer Take-up from Implenia shareholders was
PARADOX INTERACTIVE sold 4.7% of the 59.2%, with the concurrent bookbuild Hotel and restaurants group WHITBREAD
company last Wednesday evening, raising closing on Thursday and pricing announced completed its capital increase of just over
SKr940.5m (US$101.7m) in a trade run by ahead of the trading debut on Friday. £1bn last week, with 91.34% take-up of
Carnegie and Goldman Sachs. A banker involved said that the bookbuild rights and the rump placing of remaining
A total of 4.95m secondary shares were was very niche, and saw demand from mid- shares dealt with swiftly on Wednesday
sold after the deal was upsized by 10% due cap investors. morning.
to a strategic long-term investor coming Pricing at SFr22.42 represents a market There were acceptances for 61.45m shares
into the book. CAPITALISATIONûOFû3&RMûANDûTHEûFREE mOATû out of 67.27m offered on a 1-for-2 basis at
A wall-cross prior to launch led to demand is 58.33%. £15. The low 90s take-up was said to be in
in excess of the full launch deal size. Credit Suisse was bookrunner. line with expectations given retail

ownership was in the high teens pre-money, Bank of America and UBS were bookrunners, HSBC and Numis were bookrunners with
with institutional take-up estimated to be the same syndicate when Segro raised Rothschild advising.
around 97%. £451m in fresh capital in February 2019, A number of investors were wall-crossed,
A rump of 5.82m shares, representing selling shares at 635p each. WITHûTHEûlNALûTRANSACTIONûSHAREHOLDER
2.9% of expanded share capital, closed Segro shares closed down 0.5% last driven.
before 10am in London when shares were Wednesday at 854.6p, well above pricing. By Management was keen to ensure informal
trading at just above £26. Pricing of £25.50 Friday just before 3pm shares were up at pre-emption, with shareholders prioritised
was a 3.9% discount to Tuesday’s £26.53 880.8p each. during allocations.
close. 4HEûTOPûlVEûACCOUNTSûTOOKûMOREûTHANûû
A book of more than 75 lines was multiple LANCASHIRE HOLDINGS FUNDS and the top 10 accounts took around 75% of
times covered, with the top 20 accounts FOR GROWTH the deal.
taking 80% of the deal. A total of 49.3m shares were sold to
A banker involved said there had been Bermuda-based and UK-listed insurer institutions at 200p each, with a further
SIGNIlCANTûREVERSEûENQUIRYûAHEADûOFûTHEû LANCASHIRE HOLDINGS raised £277m in a 520,776 sold to retail investors via
rump and the strong take-up from long-only heavily oversubscribed 19.5% capital PrimaryBid.com and 140,000 to the board
institutions in the rights issue gave room to increase on Tuesday evening to fund organic and management at the same price, a 5%
allocate that portion of the deal to growth and take advantage of rate rises, discount to Thursday’s close of 210.5p.
fundamental hedge funds. with the company expecting to deploy more 4HEûPOTENTIALûPLACINGûWASûmAGGEDûONû*UNEû
7HITBREADûSHARESûSTRUGGLEDûTOûlNDûAûLEVELû capital into a “hardening” market. 5 in Biffa’s full-year results for the year to
on Wednesday, bouncing around from a Lancashire took the decision at the March 27, which showed Ebitda up 15.5% to
£27.11 high to a £25.13 low. Having fallen beginning of 2020 to retain most of its 2019 £174m.
below rump pricing in late morning, shares PROlTSûANDûNOTûPAYûAûSPECIALûDIVIDEND Shares closed on Friday at 205p, splitting
moved back to positive territory only to drop The company said that notwithstanding the difference between Thursday’s close and
back again and close at £25.01. The stock fell an expected provisional loss estimate of the placing price.
further on Thursday, closing at £23.03. US$35m for Covid-19, it is trading in line
JP Morgan and Morgan Stanley were global with or better than expectations outlined in HELIOS TOWERS SHAREHOLDERS SELL AT
coordinators. ITSûTRADINGûUPDATEûFORûTHEûlRSTûQUARTER DEEP DISCOUNT
A banker involved said the company was
SEGRO RAISES £680m IN UPSIZED ABB “putting itself on the front foot”. Millicom Holding and the World Bank’s IFC
The deal was wall-crossed and covered on sold a collective 4% of London-listed African
Warehouse REIT SEGRO raised £680m in an indications of interest, with major telecoms infrastructure company HELIOS
upsized accelerated bookbuild and retail shareholders sounded out. All accounts in TOWERS for £60m on Thursday evening, the
offering last Tuesday evening to fund its the wall-cross came into the deal. lRSTûOFFERINGûINûTHEûSTOCKûSINCEûITSûaMû
expansion across the UK and Continental Formal coverage took around 20 minutes IPO in October.
Europe. and investors were guided to 700p per share Millicom sold 3.3%, leaving it with 12.85% of
The company initially targeted £650m but after two hours for a 3.6% discount to the Helios, and IFC sold 0.7% to leave it with 2.75%.
increased it to £680m on strong demand. 726p Tuesday close. Jefferies was global coordinator with
The offer represents a capital increase of A book of more than 120 lines was more Standard Bank as bookrunner.
7.8% and was completed without pre- THANûlVEûTIMESûCOVEREDûANDûHADûAûCOUPLEûOFû A total of 40m shares were sold at 150p
emption for shareholders. anchor orders, with management playing a each, an 18.5% discount to Thursday’s 184p
Its expansion includes investing in mostly SIGNIlCANTûROLEûINûALLOCATIONSûTHATûWEREû close.
pre-let development projects and heavily focused on existing shareholders. The deep discount can be viewed against
acquisition of land. Those holding disclosable stakes took about the 45% rise in Helios shares since the start
Segro said it would invest more than £1bn 80% of the transaction, rising to around 90% of May to Thursday’s close that left shares
in 2020 and 2021. when including shareholders with stakes up 30% for the year so far.
In a trading update posted when the deal below the disclosable threshold. Investors were more focused on the
launched, Segro said it expected demand for The top 10 orders took around half of the company’s fundamentals than pricing, with
warehouses to increase as technology and book and the top 20 around three-quarters. the ABB price representing on consensus
e-commerce adoption has grown as a result Lancashire Holdings rose above 800p in 11.5x Ebitda for 2020 against 8.5x Ebitda
of the coronavirus pandemic and supply early trading on Wednesday before coming pricing on the IPO, which priced at 115p.
chains have changed. off slightly to close at 789.5p. The stock is also illiquid with the placing
A total of 82.1m shares were placed at Citigroup and Morgan Stanley were representing around 90 days’ trading.
820p each, a 4.5% discount to last Tuesday’s bookrunners. Nevertheless the deal was covered at
close of 858.8p. LAUNCHûFROMûAûWALL CROSSûANDûANûOFlCIALû
The deal was launched with reference to BIFFA RAISES £100m TO STRENGTHEN covered message arrived just after 5pm,
market. BALANCE SHEET with books closing at around 7pm.
A banker involved said the book was Around 50% went to new investors and
multiple times oversubscribed with UK waste management company BIFFA raised there were three new investors in particular
investors viewing the stock as a best-in-class £100m on Thursday evening through an WHOûPLACEDûSIGNIlCANTûORDERS
UK real-estate story with good exposure, accelerated bookbuild, including a retail There was a good split between orders
scale and liquidity. tranche. from the US, the UK and Continental
Several orders were around £10m–£15m. It increased the company’s share capital Europe.
Individual retail investors subscribed for by 19.99% and the fresh capital will The top 10 orders took 75% of the deal.
865,435 shares through PrimaryBid.com for strengthen the company’s balance sheet to Shares closed on Friday at 160p, heavily
an additional £7.1m. allow it to continue growing. down but comfortably clear of pricing.

EQUITIES AMERICAS
HYVE POSTS 98.87% RIGHTS ISSUE

TAKE-UP
UK exhibitions and conference organiser

ESG-friendly Azek raises
HYVE GROUP secured 98.87% take-up on Friday
for its £127m fully underwritten rights US$765m
issue.
The company received valid acceptances US Outdoor decking maker prices US$2 above range but discount to Trex
for 181.5m shares during the subscription
period. A small rump of 2.1m shares was AZEK staged a robust debut on Friday after Trex is one of the most richly valued building
then quickly sold in the market, with a pricing an upsized US$765m IPO pitched at a products names in the market, though it sells its
result following just after 10:30am. substantial discount to its direct comp. products more through retail channels than Azek
Shares were offered on a 9-for-40 basis at Late on Thursday, the Ares Management- currently does.
69p each, representing a 39% discount to backed maker of outdoor decking products made The two companies have similar growth
TERP of 113.1p. from recyclable materials sold 33.3m shares profiles.
The rump priced at 115p, a small discount or about 23% of the company at US$23 each, Azek’s residential business (82% of net sales last
to Thursday’s 115.6p close. up from the launch terms of 31.3m shares at year) grew at a 12.5% CAGR in the past three years,
The cash will strengthen Hyve’s balance US$19–$21. whereas Trex grew sales 12% in the first quarter.
sheet amid event delays and cancellations Debuting on the NYSE on Friday, the shares Azek’s filing included audited numbers for the
due to the coronavirus pandemic. opened at US$27.50 for a 19.6% gain. Covid-affected two-month period ending May 31
Barclays, HSBC and Numis were Barclays, Bank of America, Goldman Sachs and showing sales fell only 5% and adjusted Ebitda
underwriters. Jefferies led a 14-firm syndicate that drew heavy grew 10% because its costs are highly variable.
Following a 10-to-1 share consolidation oversubscription. Like other sponsor-backed companies, Azek
that was approved at Hyve’s general The roadshow saw Azek emphasise its ESG took evasive action during Covid-19 by drawing
meeting on May 27, the rights issue credentials both in terms of use of recycled down on its revolver, in its case to take in
represented a 225% increase in Hyve’s share materials and in term of corporate governance. US$129m of proceeds.
capital. “We make the world a better place by It was also able to access debt markets to sell
Shares in Hyve closed Friday at 120.7p, up converting an increasing amount of waste into US$350m of five-year bonds (at a 9.5% coupon)
4.4% on the day. our products,” CEO Jesse Singh said in the online to repay 8% bonds due next year.
roadshow presentation. The IPO proceeds will take out the new notes
The company has a separate CEO and and repay some term debt, leaving Azek with
chairman and 30% gender/ethnic diversity on its about US$600m of net debt versus LTM adjusted
board, though it is still in the process of ticking Ebitda of US$195m.
AMERICAS the boxes to get third-party ESG accreditation. Ares and co-sponsor Ontario Teachers did not
sell in the offering, but are likely to look to start
VALUATION monetising their stake once lock-ups roll off.
UNITED STATES The final terms valued Azek at about US$3.3bn, Though Azek’s four-day roadshow is becoming
or nearly US$4bn on an enterprise value basis a post-Covid-19 norm even for larger deals
ECM TO FORGE THROUGH VOLATILITY and a high-teen multiple to run-rate adjusted outside biotech, investors have had some time to
Ebitda. become familiar with Azek.
Thursday’s market sell-off and the return of Azek benefited from having a very close comp The company was one of several sponsor-
elevated volatility contributed to some in the form of NYSE-listed Trex, a rival that is backed IPOs that hoped to debut in February
unsatisfying ECM outcomes in the past slightly smaller revenue-wise, but has better and March before Covid-19 disrupted their plans.
week, potentially slowing the hectic pace of margins and recently traded at a lofty 2021 Azek first filed confidentially in August last year
deal activity in the weeks ahead but far from Ebitda multiple of 30, thanks in part to a 40% and publicly on February 7 this year.
bringing capital raising to a halt. stock price jump in 2020. Anthony Hughes
The DJIA’s 6.9% fall was a reality check for
investors after an extraordinary 50% rally
from its March 23 lows, but bankers were impressively in the aftermarket. Vroom was double in spectacular fashion on its Nasdaq
still able to rule off a week that saw a highlight, surging by 117.7% on its debut debut Tuesday.
US$15.2bn raised from US IPOs, follow-on on Tuesday despite being priced US$2 above In one of the strongest IPO outcomes in
sales and convertible offerings. an upwardly revised pricing range. recent times, the fast-growing used car
US ECM remains on track for a record Though the current window is closing, e-commerce platform’s discount to high-
quarter of proceeds raised. Bankers say speculation of a fresh wave of IPOs in the third mYINGûPEERû#ARVANAûANDûPOTENTIALûTOûGRABûAû
there are also several large follow-ons that quarter is becoming frenetic. The past week SIGNIlCANTûSLICEûOFûTHEû53BNûAûYEARûUSEDû
could be priced before June 30. SAWûlLINGSûBYû$UNûû"RADSTREETûANDû,EMONADEû car market enabled it to raise US$467.5m of
9ETûFORûTHEûlRSTûTIMEûINûMANYûWEEKSûSOMEû and talk that companies such as Albertsons, primary capital.
FOLLOW ONûISSUERSûTOOKûWIDEûlLE TO OFFERû Palantir Technologies and Quicken Loans This was well up from its initial target of
discounts and/or fared poorly in the continue to prepare for near-term IPOs. about US$300m.
aftermarket, though the rebuilding IPO market The base deal was 25 times
largely dodged those wider market gyrations VROOM REVS UP IPO MARKET oversubscribed.
and continues to generate easy alpha. Vroom priced 21.25m primary shares or
In a week that saw US$2.5bn raised from Heavy oversubscription allowed VROOM to about 18% of the company at US$22.00,
EIGHTû)0/SûMOSTûDREWûOVERmOWINGûDEMANDû accelerate and upsize its IPO as well as price above the US$18–$20 range earlier upped
were priced strongly and traded the deal above range before going on to from US$15–$17 at launch.

Two-thirds of the stock went to the top 25 The offering equated to 40 days’ trading Barclays and SVB Leerink placed 3.67m
accounts, an ECM banker said. volume and just seven institutions own 70% shares at US$34, within the US$33–$35
Tuesday’s debut saw the shares motor of Replimune. marketing range and an 11.4% discount to
ahead to US$47.90, a day-one gain of Of the 4.35m shares sold, 1.5m came in the US$38.38 last sale.
117.7%. Vroom’s early gains meant it the form of pre-funded warrants, a common The offering puts US$225m of cash on
joined the ranks of 10 other 2020 IPOs that tool to keep ownership below the 10% Cardiovascular Systems’ balance sheet for
are trading at more than double their IPO threshold that imposes restrictions on general corporate purposes such as
price. future purchases and sales of stock. expanding its sales and marketing efforts
“Even at the increased price, it was a still Replimune has been in focus since it and developing new products.
a big discount to Carvana and these types reported interim results from a Phase II trial CAREDX, a maker of diagnostic tests for
of deals have worked,” the banker said. of its skin cancer drug as part of an investor measuring the risk of organ rejection in
Unusually, leads Goldman Sachs, Bank of day on June 3. transplant patients, raised US$125m from
America, Allen & Co and Wells Fargo Seven patients that took Replimune’s skin a follow-on sale on Wednesday.
accelerated the offering by two days, cancer drug in combination with the FDA- Goldman Sachs and Jefferies placed 3.9m
LIMITINGûTHEûROADSHOWûTOûlVEûDAYSûINSTEADû approved drug Opdivo are responding to the shares at US$32 apiece after a one-day
of seven as planned. combination therapy. marketing effort.
Vroom’s day-one close attributed the The drugs have been well tolerated and Transplant patients have a suppressed
company a market cap of about US$5.5bn four of the seven patients treated for immune system and are at high risk of Covid-
versus run-rate sales of US$1.5bn (based on melanoma, the most common type of skin 19 infection. CareDx responded to the need
lRSTûQUARTERûNUMBERS ûWHILEû#ARVANAûSPORTSû cancer, are in remission. for at-home testing kits that allow doctors to
a US$19bn market cap versus north of RETROPHIN dipped 2.5% on Tuesday to monitor their transplant patients remotely.
US$4bn in expected sales this year. US$15.10 on light trading volume after a CareDx has US$150m to support the
US$100m placing of 6.5m shares at US$15.50 sales and marketing of its new at-home
FATE TEMPTS INVESTORS Monday night. test as well as its existing products.
Jefferies, Barclays and Bank of America were
Cancer drug developer FATE THERAPEUTICS targeting US$75m of proceeds from BILL.COM FOLLOW-ON FINDS
responded to overwhelming investor demand OVERNIGHTûMARKETINGûATûAûlXEDûOFFERûPRICEû PENT-UP DEMAND
by massively upsizing an overnight stock sale when the deal launched.
to US$175m from US$80m at launch. Retrophin is using the proceeds to BILL.COM@Sû53MûlRST TIMEûFOLLOW ONû
Jefferies, SVB Leerink, Barclays and complete Phase III trials of its treatment for offering delivered what was easily the
Guggenheim Securities placed 6.18m shares a rare kidney disease by early next year. strongest pricing outcome of the week
OVERNIGHTûONû-ONDAYûATû53ûmATûTOû Retrophin’s management team thinks the among the procession of secondary sales.
the close. interim data it presented at the Jefferies event The fast-growing billing software
Fate’s shares soared 15.6% to US$32.72 on are enough to support early FDA-approval. PROVIDERûDREWûlVEûTIMESûOVERSUBSCRIPTIONû
Tuesday after touching a high of US$35.77 for the upsized sale of 7.2m shares or 9.5%
early in the session. MEDTECHS RAISE COVID CASH OFûTHEûCOMPANYûATû53ûAûûlLE TO
Partner Johnson & Johnson invested offer premium.
US$50m in a concurrent private placement. The Covid-19 outbreak has created a backlog After two days of marketing, a syndicate
Exercise of the 15% greenshoe will boost the of elective medical procedures at hospitals led by Goldman Sachs, Bank of America,
OVERALLûSIZEûOFûTHEûlNANCINGûTOûNORTHûOFû and caused some biotechs to press pause on Jefferies, KeyBanc Capital Markets and Wells
US$250m. their clinical trials. Fargo found no lack of interest in the sale
As part of the collaborative agreement Last week saw a trio of medical of 3.25m primary shares and 3.95m
inked in April, J&J invested US$100m technology specialists put some cash on secondary shares from early backers
upfront for the rights to use Fate’s gene their balance sheets as the US healthcare including DCM and August Capital.
editing technology to develop four new industry begins the process of getting back The offering was increased in size from
cancer drugs. to normal operations. 6m shares at launch with all of the upsize
Fate is developing four of its own drugs MESA LABORATORIES, a company that makes coming from additional secondary selling.
outside of the collaboration, all of which are monitoring and quality control devices for The stock jumped on the marketing but
in Phase I trials. It outlined progress on drug developers, raised US$135m on eased back to US$72.31 in Thursday’s
those drugs at the Jefferies healthcare Tuesday from an upsized follow-on offering DIFlCULTûAFTERMARKET
conference this month. that targeted US$100m at launch. )TûWASû"ILLCOMSûlRSTû%#-ûOUTINGûSINCEû
Mesa dipped 4% to US$235.99 after a day going public in December at US$22.00 in
BIOTECHS SINK ON UPSIZED OFFERINGS of marketing on Tuesday. Jefferies, JP Morgan one of last year’s hottest and most heavily
and Evercore priced 600,000 shares at OVERSUBSCRIBEDû)0/SûINûPARTûREmECTINGûTHEû
REPLIMUNE, a rare disease specialist, saw its US$225.00 each, taking the all-in discount company’s high revenue growth rate (46% in
shares plunge 15.9% on Tuesday to to 8.5% for 12% of Mesa shares outstanding. THEûlRSTûQUARTERûOFûTHISûYEAR
US$20.06, despite raising an upsized Mesa now has US$208m of cash to plug “People have been looking for ways to get
US$100m on a stock sale that priced on an estimated six-to-12 month lag in future INVOLVEDûINûTHISûONEûBUTûITûHASûBEENûDIFlCULTû
Monday night at the high end of the range growth attributed to Covid-19, according to build a position,” one banker said.
after overnight marketing. to a Jefferies research note to clients. The marketing coincided with the six-
JP Morgan, SVB Leerink and BMO Capital CARDIOVASCULAR SYSTEMS raised US$125m month anniversary of Bill.com’s IPO, though
Markets had placed 4.35m shares at overnight on Tuesday as surgeries lock-ups had already expired early because
US$23.00, versus a US$22.50–$23.00 involving its stent treatments for clogged of provisions allowing for early release if the
marketing range and boosting proceeds arteries and other cardiovascular anniversary coincided with or was near an
from the US$80m launched. blockages resumed at some US hospitals. earnings blackout period.

EQUITIES AMERICAS
However, with the secondary sale, selling

shareholders are now subject to a fresh 90-
day selling restriction. Business as usual for
INSIGHT CUTS PLURALSIGHT STAKE
biotech IPOs
A US$228.4m insider sell-down at
technology learning software provider US Early-stage biotechs defy tough market conditions
PLURALSIGHT weighed heavily on the
company’s share price in what proved a AVIDITY BIOSCIENCES, GENERATION BIO and VAXCYTE Investments, the latter gaining a board seat as
poor week to bring the deal. scored strong outcomes from their IPOs last week part of the investment.
After a day of marketing, active as the sector’s key ETF slid 5.5% ahead of pricing. Eli Lilly, a collaborative partner, also
bookrunner Morgan Stanley late Tuesday Biotechs are in constant dialogue with participated.
priced the all-secondary sale of 11.7m investors, even if there is not much to say. What Generation Bio, a gene therapy specialist
Pluralsight shares or 8.2% of outstanding at has changed with Covid-19 is that those investors focused on inherited liver and retinal diseases,
53ûANûûlLE TO OFFERûDISCOUNT are only a Zoom video-conference call away. followed a similar progression, raising US$111m
VC backer Insight Venture Partners sold “Investors have grown accustomed to working from on its Series C in January at US$14.22 per share
8.75m of the shares offered. home,” said the head of healthcare ECM at one US valuation, and extending that momentum into a
The sale was poorly received by investors, bank. “It’s business as usual, without having to travel.” US$200m IPO.
who marked the stock down to US$17.99 by As has become customary since the onset JP Morgan, Jefferies and Cowen placed 10.53m
Thursday’s close. of work-from-home at the beginning of March, shares at US$19, valuing the preclinical stage
Taking advantage of a sharp rally from a Avidity, Generation and Vaxcyte all marketed biotech above US$800m. The banks hiked
low of US$6.59 during March’s Covid-19 sell- their offerings through virtual meetings over four the range to US$18–$19 from US$16–$18 on
off, Insight sold at a premium to days, and all executed on Thursday night. Thursday morning and upped the size from 7.4m.
Pluralsight’s US$15 IPO price set in May Each is still more than a year away from Fidelity Investment and T Rowe Price, which
2018 but below the US$29.25 price of the launching clinical trials of their experimental owned 14.8% and 8.9% stakes ahead of the
COMPANYSûlRSTûSECONDARYûINû-ARCHû drugs, giving the issuers incentive to raise as IPO, anchored the Series C round, providing
Insight, which is now left with 10.4m much cash as possible from their IPOs. momentum for the IPO.
shares, was also the main seller on that Avidity, a developer of new muscular Vaxcyte, which is developing vaccines for
OCCASIONû4HEû6#ûlRMûlRSTûINVESTEDûINû dystrophy therapies, raised US$259m from a pneumonia, made an even quicker progression from
Pluralsight in late 2012. twice upsized IPO. late-stage private to collecting US$250m from its IPO.
Disappointing results for the second Cowen, SVB Leerink, Credit Suisse and Wells In March, Vaxcyte raised US$110m on a Series
quarter of 2019 weighed on Pluralsight Fargo ultimately placed 14.4m shares at US$18. D round at a US$13.38 per share valuation.
stock in the months after that earlier sale. This was after the biotech upped the offer Bank of America, Jefferies and Evercore padded that
However, the company grew its top-line at a size to 12m shares, from 10m, and the asking funding with an upsized placement of 15.6m shares at
ûPACEûINûTHEûlRSTûQUARTERûOFûTHISûYEARûANDûISû price from US$14–$16 to US$17–$18, valuing it at US$16 apiece, nearly a US$900m valuation.
AûPOTENTIALûBENElCIARYûFROMû#OVID ûASû roughly US$680m. Vaxcyte was formed in 2013 to develop
people look to improve their technology skills. Of the US$160m targeted on the Monday vaccines for infectious diseases using Sutro
morning launch, US$100m was spoken for by a Biopharma’s drug discovery engine.
TRIPLE-NET SPIRITS AWAY GAINS single institution from earlier testing the waters. The lead drug is still a year away from
In November, Avidity raised US$100m on a launching Phase I trials of a potential rival to
Triple-net retail REIT SPIRIT REALTY CAPITAL was Series C private financing at $9.03 per share Pfizer’s FDA-approved blockbuster pneumonia
able to take full advantage of a sharp valuation supported by Cormorant Asset vaccine Prevnar 13.
rebound in its stock price in the prior week Management, Perceptive Advisors and RTW Robert Sherwood
to raise nearly US$300m via an overnight
forward sale of equity late Monday.
In a highly opportunistic capital-raising, a The stock struggled in the session after the shares or 6.8% of the expanded capital
syndicate led by JP Morgan and SunTrust offering was priced, falling by 8.3% on Tuesday at US$28.20, the bottom of a US$28.20–
Robinson Humphrey priced the sale of 8m and further to US$32.34 by Thursday’s close, $28.80 range and a 3.5% discount to
borrowed shares at US$37.35, the bottom of leaving the shares 13.4% below the offer price. last sale.
the US$37.35–$39.25 range and a 6.5% The REIT currently trades on a yield of The stock’s move from below US$24.00 a
discount to last sale. more than 7%, attractive in a zero interest- week earlier to US$29.23 just prior to the
The forward sale allows Spirit to defer rate world and some consolation for those launch of the offering meant Blackstone
dilution from the issuance of stock until it nursing losses from the offering. Mortgage was able to price the offering
physically settles the sale within the next 18 above its reported March 31 book value
months (JP Morgan is the forward BLACKSTONE MORTGAGE per share of US$26.92.
purchaser). RAISES US$282m However, Blackstone Mortgage shares
Barely a week before the offering the slumped 7.6% to US$27.01 in Tuesday’s
stock was trading as low as US$28.40. Commercial mortgage REIT BLACKSTONE after-market.
This was before management told the MORTGAGE TRUST was able to exploit a 22% The REIT plans to use the net proceeds
virtual Nareit REITweek conference it had STOCKûPRICEûSURGEûINûTHEûPRIORûlVEûSESSIONSûTOû of the offering for working capital and
collected 65% of its May base rent as of May raise US$282m from a well-timed overnight other general corporate purposes,
28, and most of the balance was deferred stock sale last Monday. including increasing its liquidity and
rather than abated as its tenants try to Citigroup, Bank of America, Barclays, Morgan supporting origination of commercial
manage their way through Covid-19. Stanley and Wells Fargo led the sale of 10m mortgage loans and other target assets.

ECM DEALS: WEEK ENDING 12/6/2020
Stock Country Date Amount Price Deal type Bookrunner(s)
Alliance Aviation Services Australia 06/11/2020 A$92m A$2.95 Follow-on (primary) Ord Minnett
Infratil Australia 06/10/2020 NZ$250m NZ$4.76 Follow-on (primary) UBS
Kogan.com Australia 06/11/2020 A$100m A$11.45 Follow-on (primary) Canaccord Genuity, RBC
Cofinimmo Belgium 06/10/2020 €63.6m €121 Accelerated bookbuild (primary) BNP Paribas
Alphamab Oncology China 06/11/2020 HK$440m HK$16.50 Follow-on (secondary) MS
Burning Rock Biotech China 06/11/2020 US$222.8m US$16.50 IPO (primary) MS, BofA, Cowen
China Yongda Automobiles Servs China 06/10/2020 HK$995m HK$8.29 Follow-on (primary) GS, HSBC, MS
CIFI Holdings (Group) Co China 06/08/2020 HK$1.16bn HK$6.28 Follow-on (primary) CS
ESR Cayman China 06/08/2020 HK$1.95bn HK$16.80 Follow-on (secondary) CLSA, GS, MS
JD.com China 06/11/2020 HK$30bn HK$226 IPO (primary) BofA, CLSA, UBS
Kaisa Prosperity Holdings China 06/09/2020 HK$456m HK$32.55 Follow-on (primary) ABC International, Haitong International
Nio China 06/10/2020 US$428.4m US$5.95 Follow-on (primary) MS, CS, CICC
Topsports International China 06/11/2020 HK$2.9bn HK$10.50 Follow-on (secondary) BofA
Cathay Pacific Airways Hong Kong 06/09/2020 HK$11.7bn HK$4.68 Follow-on (primary) MS, BNP Paribas, BOC International, HSBC
JM Financial India 06/09/2020 Rs7.7bn Rs70 Follow-on (primary) ICICI Secs, IDFC Secs
Aptiv Ireland 06/09/2020 US$1bn US$75.91 Follow-on (primary) GS, Citigroup, Barc, BofA, DB, JPM
Scorpio Bulkers Monaco 06/09/2020 US$75.7m US$18.46 Accelerated bookbuild (primary) BofA, BTIG, Clarksons Platou
Basic-Fit Netherlands 06/08/2020 €133.3m €25 Accelerated bookbuild (primary) ABN AMRO, Rabobank/Kepler Cheuvreux
Kahoot Norway 06/10/2020 NKr852m NKr35.50 Accelerated bookbuild (primary) ABG Sundal Collier, Arctic Secs, GS
Budimex Poland 06/09/2020 Z255m Z200 Accelerated bookbuild (secondary) Societe Generale
Paradox Interactive Sweden 06/10/2020 SKr940.5m SKr190 Accelerated bookbuild (secondary) Carnegie, GS
Ina Invest Switzerland 06/11/2020 SFr100m SFr22.42 Rights issue CS
Biffa UK 06/11/2020 £100m 200p Accelerated bookbuild (primary) HSBC, Numis
Bure Equity UK 06/10/2020 SKr1bn SKr193 Accelerated bookbuild (primary) SEB
Helios Towers UK 06/11/2020 £60m 150p Accelerated bookbuild (primary) Jefferies, Standard Bank
Hyve UK 06/11/2020 £127m 69p Rights issue Barc, HSBC, Numis
Lancashire Holdings UK 06/09/2020 £277m 700p Accelerated bookbuild (primary) Citigroup, MS
Ocado UK 06/10/2020 £650m £19.60 Accelerated bookbuild (primary) GS, JPM, Numis
Segro UK 06/09/2020 £680m 820p Accelerated bookbuild (primary) BofA, UBS
Whitbread UK 06/09/2020 £1bn £15 Rights issue JPM, MS
Avidity Biosciences US 06/11/2020 US$259.2m US$18 IPO (primary) Cowen, SVB Leerink, CS, Wells Fargo
Azek US 06/11/2020 US$764.8m US$23 IPO (primary) Barc, BofA, GS, Jefferies, Citigroup, CS, DB, RBC
Bill.com US 06/10/2020 US$534.6m US$74.25 Follow-on (primary, secondary) GS, BofA, Jefferies, KeyBanc CM, Wells Fargo
Blackstone Mortgage Trust US 06/08/2020 US$282m US$28.20 Accelerated bookbuild (primary) Citigroup, BofA, Barc, MS, Wells Fargo
Brigham Minerals US 06/09/2020 US$90.8m US$13.75 Block (secondary) CS
BrightView Holdings US 06/10/2020 US$134m US$13.40 Accelerated bookbuild (secondary) GS
Cannae Holdings US 06/10/2020 US$412.5m US$37.50 Follow-on (primary) BofA, Stephens
Cardiovascular Systems US 06/09/2020 US$125m US$34 Accelerated bookbuild (primary) Barc, SVB Leerink
CareDx US 06/10/2020 US$125m US$32 Follow-on (primary) GS, Jefferies
Catalent US 06/10/2020 US$550m US$71.25 Follow-on (primary) RBC CM
ChemoCentryx US 06/10/2020 US$301.6m US$58 Accelerated bookbuild (primary) SVB Leerink, Piper Sandler
Construction Partners US 06/10/2020 US$95m US$16.50 Accelerated bookbuild (secondary) Baird, Raymond James
Eversource Energy US 06/10/2020 US$517.6m US$86.26 Block (primary) GS, Barc, Citigroup
Fate Therapeutics US 06/08/2020 US$175m US$28.31 Accelerated bookbuild (primary) Jefferies, SVB Leerink, Barc, Guggenheim Secs
Generation Bio US 06/11/2020 US$200m US$19 IPO (primary) JPM, Jefferies, Cowen
Hudson Executive Investment US 06/08/2020 US$360m US$10 IPO (primary) Citigroup, JPM
Mesa Laboratories US 06/09/2020 US$135m US$225 Follow-on (primary) Jefferies, JPM, Evercore
Oneok US 06/11/2020 US$832m US$32 Follow-on (primary) Barc, JPM, Citigroup, BofA, CS, Wells Fargo
PluralSight US 06/09/2020 US$228.4m US$19.50 Follow-on (secondary) MS, Barc, BofA, SunTrust Robinson Humphrey
Replimune US 06/08/2020 US$100m US$23 Accelerated bookbuild (primary) JPM, SVB Leerink, BMO CM
SiTime US 06/11/2020 US$112m US$32 Follow-on (primary, secondary) Barc, Stifel
Spirit Realty Capital US 06/08/2020 US$298.8m US$37.35 Accelerated bookbuild (primary) JPM, SunTrust Robinson, Regions Sec,
Fifth Third Sec, MS, Wells Fargo
Vaxcyte US 06/11/2020 US$250m US$16 IPO (primary) BofA, Jefferies, Evercore
Vicor US 06/10/2020 US$100m US$65 Follow-on (primary) Needham
Vroom US 06/08/2020 US$467.5m US$22 IPO (primary) GS, BofA, Allen & Co, Wells Fargo
EVERSOURCE FUNDS GAS PURCHASE natural gas assets of Columbia Gas from each, the top of the US$85.85-$86.26 reoffer
NiSource announced in February. range and no discount to last sale.
EVERSOURCE ENERGY moved fast in Thursday’s A syndicate led by Goldman Sachs, Barclays Though the deal was small relative to
pre-open to raise US$517.6m to help fund its and Citigroup reoffered 6m Eversource shares, Eversource’s US$29bn market cap, the shares fell
US$1.1bn purchase of the Massachusetts or less than 2% of the company, at US$86.26 to $84.35 in Thursday’s broader market carnage.

EQUITIES AMERICAS
In February, when the stock was trading

at about US$90, Eversource said it would
fund the Columbia Gas purchase with a
balance of equity and debt to maintain its
Royalty Pharma drawing a
credit ratings.
The utility has other capital needs and crowd for Nasdaq IPO
plans to spend US$3bn this year to upgrade
its assets. UK Royalty Pharma is potentially the largest IPO of 2020
Eversource also raised US$1.2bn in the
lRSTûQUARTERûFROMûTHEûSALEûOFû YEARûNOTESû ROYALTY PHARMA, the world’s largest purchaser of The IPO comprises 60m primary shares, while
and green bonds and by closing the forward royalties on future sales of leading prescription selling shareholders, including a Canadian pension
element of last year’s US$1.3bn block equity drugs, is quickly generating investor attention for fund, account for the remaining 10m shares.
deal that priced at US$71.48 a share. a near US$2bn Nasdaq IPO. Pablo Legorreta, Royalty’s billionaire founder,
JP Morgan, Morgan Stanley, Bank of America, CEO and sole shareholder of the vehicle’s external
KKR TOP-TICKS BRIGHTVIEW Goldman Sachs, Citigroup and UBS bullishly manager, is not listed among the sellers. Last
accelerated the expected pricing by one day after year he was paid US$28.5m reflecting fees (after
KKR & Co cut its stake in landscaper a few days of marketing. expenses) paid by Royalty to the manager.
BRIGHTVIEW as the main seller in a US$134m The syndicate of 13 banks is marketing 70m shares Since then, the vehicle has deployed US$18bn
lRST TIMEûFOLLOW ONûSTOCKûSALEûPRICEDû at a range of US$25–$28 each for pricing post-close of cash to purchase royalties on 45 marketed
overnight on Wednesday. on Monday, June 15, after originally slotting the deal drugs and three in late-stage development.
4HEûPRIVATEûEQUITYûlRMûSOLDûMûOFûTHEû for pricing on Tuesday, June 16. The terms attribute The portfolio includes seven blockbuster
10m shares reoffered to investors at Royalty an enterprise value of up to US$22bn. drugs, including Lyrica (Pfizer), Imbruvica
US$13.40, the bottom of the US$13.40– “Royalty Pharma operates completely behind (AbbVie/Johnson & Johnson) and Truvada
$13.70 marketing range and an 8.8% the scenes but it’s staggeringly big,” said an ECM (Gilead Sciences), with end-market sales of more
discount to last sale. banker away from the deal. than $3bn annually.
Goldman Sachs was sole bookrunner on the If priced at the top of the range, the offering Royalty has a lot of debt, nearly US$6bn as of
sale, which represented 9.5% of the will eclipse Warner Music Group’s US$1.93bn March 31, which probably explains the massive
OUTSTANDINGûANDûWASû++2SûlRSTûSELL DOWNû raise this month as this year’s largest US IPO. syndicate.
since BrightView went public at the much Just as Warner collects royalties from users of Royalty realised US$1.6bn of free cashflow
higher price of US$22.00 a share in June 2018. its music library, Royalty gets royalties on sales from US$1.8bn of cash royalties it received last
The timing was opportunistic considering of blockbuster drugs it helped finance. year. New investors will see a return of capital
BrightView shares slumped to a low of US$6.85 The similarities end there because Royalty through a 15 cents quarterly distribution, a 2.1%–
as recently as March, only to rebound to is raising growth capital, not cashing out its 2.3% yield based on the IPO range.
US$14.70 ahead of the launch of the offering. billionaire owner like Warner Music did. Robert Sherwood
However, investors took a dim view of the
deal, not helped by poor aftermarket
conditions as stocks slumped during The timing of the US$112m offering /Nû*UNEûû,EMONADEûPUBLICLYûlLEDûFORûAû
Thursday’s session. alongside a market sell-off weighed on the US$100m placeholder for a NYSE IPO, listing
BrightView shares plunged 18.8% to pricing outcome, though the stock Goldman Sachs, Morgan Stanley, Allen & Co and
US$11.94, implying big losses for buyers in rebounded 10% in early trading on Friday as Barclays as bookrunners.
the offering. the broader market recovered. 4HEûlLINGûPUTSû,EMONADEûONûTRACKûTOûGOû
KKR’s stake falls to 48.3% from 55.7% The offering enabled MegaChips to cut its public just before July 4 if market conditions
previously, leaving it with 50.6m shares stake to 46.7% from 66.4% previously, ALLOWûPOTENTIALLYûBECOMINGûTHEûlRSTû
now subject to a 90-day lock-up. leaving it with 7.5m shares. It can sell more “unicorn” IPO since Casper Sleep’s
Co-sponsor MSD Partners sold 1.8m shares after 90 days. disappointing debut in February. On Thursday
in the offering to shave its stake to 11.3%. SiTime makes silicon timing solutions for Casper was down 37% from its offering price.
BrightView’s commercial landscaping companies such as Apple and Samsung. ,EMONADEûlRSTûlLEDûTOûGOûPUBLICû
operations have in the main been deemed VICOR, a maker of power systems for CONlDENTIALLYûLASTû*UNEûSINCEûLOBBINGûFOURû
essential services during Covid-19, helping specialised electronic devices, took out a day amendments before showing its hand publicly.
to limit earnings pressure. of marketing on Wednesday before raising 4HEûORIGINALûCONlDENTIALûlLINGûPUTûITûONûAû
US$100m from the follow-on sale of 1.54m SIMILARûTRAJECTORYûTOûmEXIBLEûOFlCEûSPACEû
SITIME REBOUNDS FROM STOCK SALE shares or about 5% of the company at US$65, provider WeWork, another SoftBank-backed
a 2.5% discount to last sale. Vicor plans to IPO hopeful.
SITIME overcame the onset of tougher market use the funds to expand its factories. Valuation concerns and widespread
CONDITIONSûTOûPRICEûITSûlRSTûFOLLOW ONûSINCEû Needham acted as sole bookrunner. The criticism of its business model saw WeWork
its highly successful debut late last year. shares closed at US$67.05 in Thursday’s fail to go public, also a blow for the ambitions
The US$112m follow-on was an aftermarket. of other unicorns or loss-making private tech
opportunity for major shareholder companies valued at more than US$1bn.
MegaChips to pare its stake after the near LEMONADE A TEST OF UNICORN APPEAL Lemonade is now looking to come to
tripling of SiTime’s share price since it went market in the slipstream of last month’s
public at US$13.00 in November. 3OFT"ANK BACKEDûDIGITALûINSURANCEûlNTECHû successful SelectQuote IPO. The latter is
Barclays and Stifel took out two days of LEMONADE, whose bot named Maya can write more of a healthcare insurance distribution
marketing to sell 3.5m SiTime shares, including a home insurance policy in a matter of platform, whereas Lemonade exclusively
1m primary shares and 2.5m from MegaChips, minutes, could be about to make a long- underwrites renters, homeowners and pet
ATû53ûORûAûûlLE TO OFFERûDISCOUNT awaited stockmarket debut. insurance.

Launched in 2016, Lemonade grew ARYA SCIENCES ACQUISITION II, a life sciences- US$35.33, down 14.9%. As recently as
revenues (mainly net earned premium) by focused SPAC backed by Perceptive Monday, the stock fetched US$48.36.
ûTOû53MûINûTHEûlRSTûQUARTERûOFûû Advisors, closed its debut session on Friday “It’s really poor timing,” said one buy-
putting the company on track to break *UNEûûATû53ûTHEûBESTûlRST DAYû sider. “They certainly weren’t helped by
US$100m of revenue this year. performance ever by a SPAC, according to the oil inventory report. But the messaging
Lemonade reported a net loss of SPAC specialist SPACInsider. was not good.”
US$36.5m in the quarter, or more than its Private placements concurrent with an The US Energy Information
revenue. IPO and forward purchase agreements to Administration Wednesday reported that
The insurer cut its loss ratio to 72%, but help fund an acquisition contributed to the US crude inventories rose by 5.7m barrels
spent more on sales and marketing than it outcomes of Hudson Executive and Arya to a record-high 538.1m barrels.
paid out in claims. Sciences. Barclays, JP Morgan and Citigroup placed
At the end of the quarter, Lemonade For Hudson Executive, Citigroup and JP 26m new Oneok shares, equating to 5.9%
carried US$304m of cash and short-term Morgan placed 36m units at US$10.00 apiece, of the enlarged company and four days’
investments, thanks in part to a US$300m with each unit structured as one share, one- trading volume, Thursday night at just
3ERIESû$ûlNANCINGûROUNDûCOMPLETEDûLASTû half warrant. 53ûAûûlLE TO OFFERûDISCOUNT
year. Hudson Executive Capital, the vehicle’s
3OFT"ANKûLEDûTHATûlNANCINGûWHICHû sponsor, invested an additional US$9.2m
reportedly valued Lemonade at US$2.1bn. through the purchase of private placement
warrants. The value-oriented, event-driven
NO LET-UP FROM BIOTECH IPOS fund manager also committed to invest STRUCTURED EQUITY
US$50m through a forward purchase
ARCHERDX, a VC-backed developer of in vitro agreement.
ANDûINûVIVOûDIAGNOSTICûSUBSTANCESûlLEDû The Hudson Executive SPAC is chaired by GERMANY
publicly on June 5 for a US$100m Nasdaq Douglas Braunstein, HEC’s founder and
IPO that could be priced later this month. former JP Morgan CFO (2010–2012), and RAG-STIFTUNG RAISES €500m FROM
ArcherDX sells commercial research-use Douglas Bergeron, the former CEO of EVONIK EB
only products and services that laboratories Verifone, who joined HEC as a managing
use to conduct genomic analysis to optimise partner in February 2020. RAG-STIFTUNG raised €500m on Wednesday
therapy and monitor cancer. HEC’s CEO Network, a network of more from another zero percent coupon six-year
JP Morgan, Bank of America, Stifel and than 30 current and former public company exchangeable bond into German speciality
Evercore ISI WILLûLEADûTHEû)0/ûWHICHûWASûlRSTû #%/SûINûlNTECHHEALTHCAREûISûTOUTEDûASûAû chemicals group EVONIK, as it did in
lLEDûCONlDENTIALLYûINû-ARCH differentiating factor in identifying an September 2018.
AKOUOS, a pre-clinical developer of gene acquisition. The previous paper came alongside
therapies with the potential to restore Recycling of capital from acquisitions is a 3.4% equity raise, but this trade was
HEARINGûLOSSûALSOûlLEDûPUBLICLYûONû*UNEûûFORû also factoring into the SPAC revival. solely equity-linked, with proceeds to be
a US$100m Nasdaq IPO. On Monday, HL ACQUISITIONS announced an used to buy back one of its three
Bank of America, Cowen, Piper Sandler and agreement to merge with FUSION WELCOME- outstanding EBs.
BTIG are listed as bookrunners. FUEL SA and OPES ACQUISITIONS signed an The bonds were launched at 100%-103%
!KOUOSûWHICHûlRSTûlLEDûCONlDENTIALLYûINû agreement to merge with fast-casual burger of principal, to be redeemed at 100%,
March, counts 5AM Ventures and New chain BURGERFI. making for a yield to maturity of negative
Enterprise Associates among its largest Bill Foley is preparing for the impending 0.49% to 0% and premium of 20%-25%, to be
shareholders. launch of the US$375m IPO of TREBIA set over the VWAP from launch to pricing.
Israel-based biotech POLYPIDûlLEDûONû*UNEûû ACQUISITIONûWHICHûHASûBEENûCONlDENTIALLYû There is a call from four years subject to a
for a US$57.5m Nasdaq IPO. marketing and will launch publicly this 130% trigger.
PolyPid is a late-stage developer of week, according to bankers involved in that Based on outstanding CBs, the credit
prolonged-release drugs designed to treat process. assumption was 150bp for a 17.5%-23%
localised medical conditions, including implied vol.
surgical site infections, cancer, ONEOK US$832m EQUITY RAISE The bonds were issued at 100.25% of
INmAMMATIONûANDûPAIN PROVES COSTLY EXERCISE principal for a negative 0.04% yield-to-
Barclays and BMO Capital Markets are listed maturity. The reference price was
as joint bookrunners. ONEOK, a once habitual ECM issuer, stumbled €24.0494 and the premium 20% for a
0OLY0IDûRE lLEDûCONlDENTIALLYûINû&EBRUARYû last week in its attempt to walk the õûEXCHANGEûPRICEû4HEûBONDûmOORûWASû
this year after abandoning efforts to go tightrope between preserving credit ratings 92.5%.
public in 2018–19. and maintaining its stock dividend by The bulk of the bonds were bought by
seeking a US$832m equity injection. very engaged long-only accounts drawn to
HUDSON EXECUTIVE UPSIZES TO Oneok, which transports oil and natural the high equity sensitivity.
US$360m ON SPAC REVIVAL gas production out of all the major US There was a concurrent tender for 0%
basins, did itself no favours by pulling EBs due 2021 at par. The tender closed
HUDSON EXECUTIVE INVESTMENTûAûlNTECH second-quarter and full-year 2020 earnings with €363.8m repurchased, or 80.8% of the
healthcare-focused SPAC vehicle, on guidance alongside the launch of the deal in €450m outstanding, leaving €86.2m.
Monday raised an upsized US$360m on its the pre-open Thursday, unnerving investors Pricing came after the market close,
IPO, far above the US$300m it was targeting. from the get-go. WHEREû%VONIKûSHARESûlNISHEDûTHEûDAYû
Hudson Executive opened Tuesday trading Oneok plunged 12.7% at the open and down 2.32% at €24.
at US$10.19 and closed the session at US$10.25, continued its descent throughout the Goldman Sachs, JP Morgan and UBS were
a solid debut relative to other recent deals. session before closing down 15.8% to bookrunners.

STRUCTURED EQUITY
EQUITY-LINKED DEALS WEEK ENDING: 12/6/2020
Issuer Country Date Amount Greenshoe Tenor Coupon/YTM % Premium (%) Bookrunner(s)
RAG-Stiftung/Evonik Germany 10/06/2020 €500m – 6y 0.000/–0.400 20.0 GS, JPM, UBS
Aptiv Ireland 09/06/2020 US$1.0bn US$15m 3y 5.500 22.5 GS, Citigroup, Barclays, BofA, DB, JPM
Jazz Pharmaceuticals Ireland 08/06/2020 US$85m US$15m 6y 2.000 40.0 JPM, BofA, GS
LivaNova UK 11/06/2020 US$25m US$37.5m 5.5y 3.000 30.0 Barclays, BofA, GS
Ocado UK 10/06/2020 £350m – 7y 0.750 35.0 GS, JPM
Coupa Software US 10/06/2020 US$1.2bn US$18m 6y 0.375 32.5 GS, Barclays, BofA, JPM
Eventbrite US 10/06/2020 US$13m US$2m 5y 5.000 18.0 Morgan Stanley
Glaukos US 08/06/2020 US$25m US$37.5m 7y 2.750 30.0 JPM
Okta US 09/06/2020 US$1.0bn US$15m 6y 0.375 32.5 GS, JPM, Morgan Stanley
TheRealReal US 10/06/2020 US$15m US$22.5m 5y 3.000 27.5 Morgan Stanley, Credit Suisse, BofA
WisdomTree Investments US 09/06/2020 US$15m US$22.5m 3y 4.250 60.0 Oppenheimer
Zendesk US 11/06/2020 US$1.0bn US$15m 5y 0.625 32.5 GS, Morgan Stanley
coupon to achieve a higher conversion

IRELAND premium on a US$850m six-year CB it UK
issued on Monday.
APTIV SKIDS ON TWO-PART, JP Morgan, Bank of America and Goldman OCADO RAISES OVER £1bn FROM
US$2bn RAISE Sachs priced the CB at a 2% coupon and 40% EQUITY AND 2027 CB
conversion premium, after one day of
Having drawn down on its credit facility and marketing that saw Jazz’s Nasdaq-listed With OCADO shares up nearly two-thirds
with its credit ratings under pressure, shares fall 7.8% to US$111.29. They had since the start of the year, there was little
Dublin-headquartered auto parts company marketed the CB at a 1.5%–2% coupon and surprise when the UK online supermarket
APTIV followed through with a two-part, 40%–45% premium. and technology company took advantage
US$2bn equity recapitalisation last Tuesday For LivaNova, the CB was part of a larger with an equity raising.
to further shore up liquidity. RElNANCINGûTOûPROVIDEûITûMOREûmEXIBILITY In total, £1.007bn was raised on Wednesday
4HEûlNANCINGûMARKETEDûFORûONEûDAYûWASû Ahead of the CB launch, the medical across an institutional equity offering, a retail
structured as evenly sized equity and DEVICEûMAKERûINKEDûAûNEWû53MûlVE offer and a £350m convertible bond issue due
mandatory convertible preferred, year covenant-lite loan that carries a rate of January 2027. The company’s market cap pre-
maximising equity content while partially L+650bp, with the combined proceeds used money was £14.61bn.
blunting earnings dilution. to repay borrowings on certain credit Remarkably, Ocado is one of the few
Shares of Aptiv, the former Delphi facilities – it had US$345.1m drawn on one STOCKSûTOûHAVEûDElEDûTHEûCORONAVIRUSûGLOBALû
Automotive, tanked 13.2% to US$75.91 while facility at March 31 that obligated equity market collapse in March, with the
the deal was being marketed on Tuesday. repayment semi-annually through March grocer’s shares surging more than 37% in a
Goldman Sachs, Citigroup, Barclays, Bank of 2022. week at the height of market dislocation.
America, Deutsche Bank and JP Morgan Goldman Sachs acted as exclusive adviser The stock was up more than 65% in the year
managed to halt the bloodletting in placing on the new loan facility. to-date as of Wednesday’s £20.79 close, having
13.17m shares at the US$75.91 last sale for begun the year at £12.59 and hitting an all-time
US$1bn proceeds. closing high of £22.29 at the beginning of June.
Using that same price as reference, they THAILAND “It’s quite extraordinary,” said a banker
priced the US$1bn three-year mandatory at INVOLVEDûh7EûHAVEûSEENûAûmIGHTûTOûQUALITYû
a 5.5% dividend and 22.5% conversion CP FOODS EB RAISES US$275m and Ocado is the perfect Covid-19 stock.”
premium, the latter the high end of the Ocado issued convertibles just over six
17.5%–22.5% range marketed. CP Foods Capital has raised US$275m from months ago in early December, raising
Aptiv, as a direct supplier to the auto industry, the sale of a bond exchangeable into shares £600m from an upsized six-year CB issue,
has been hard hit by Covid-19, with plant of CHAROEN POKPHAND FOODS. but that was of no concern considering
closures in US, China and EMEA prompting it to 4HEûlVE YEARûNON PUTûTWOû%"ûWASûPRICEDû those bonds are already in the money with a
eliminate its common stock dividend and fully at investor-friendly terms. The coupon was conversion price of £17.9308.
draw down on its US$2bn revolver. set at the top of the 0%–0.5% range, the yield- Wall-crossing for the £650m equity raising
,ASTûWEEKSûEQUITYûlNANCINGûALLOWSûITûTOû to-maturity at the top of 1.5%–2.5% range and a £350m CB issue due January 2027 was
fully repay borrowings on the revolver. and the exchange premium at the bottom of focused on large shareholders and existing
Aptiv, rated Baa3/BBB, on the cusp of the 15%–25% range. bondholders, as well as some new money.
INVESTMENTûGRADEûSAWûlRST QUARTERûOPERATINGû There was a same-day upsize option of Both processes were wrapped up with
income decline 26% year-over-year to US$219m US$25m, but it was not exercised. indications of interest in excess of the shares
on a 9.8% drop in revenue to US$3.23bn. The The EB will be issued at par, with a put and bonds on offer.
company has warned that operations will be price of 104.08 and a redemption price of An offering of 33.16m shares,
disrupted for the rest of 2020 and beyond. 110.58. representing 4.7% of the share capital, was
Long-only investors took almost half of priced at £19.60, a 5.72% discount. Delta
JAZZ RAISES US$850m FROM SIX-YEAR CB the deal. There was also support from placing of up to £100m was offered but just
existing shareholders and European £35m (1.7m shares) was used, highlighting
Irish-domiciled biotech JAZZ convertible bond funds. the participation of outright investors and
PHARMACEUTICALS opted to pay a higher UBS was the sole bookrunner. hedge funds operating on an outright basis.

Ocado is rated B2 (stable) by Moody’s and
Okta, Coupa, Zendesk lead B+ (negative) by Fitch. A credit assumption

of around 450bp was based in part on the
rating and December’s six-year paper.
tech CB revival Implied vol was in the low 30s on pricing

WITHûAûBONDûmOORûOFû
Realised vol for 30 and 90 days are both
US Software companies upgrade on new US$1bn-plus deals above 50% and 47% over 200 days, while the
spread implied on the December 2025s, not
The surging CB new-issue market is returning to Coupa, whose software helps companies adjusted to the new tenor, is 260bp on
its roots as the preferred funding vehicle for high- manage expenses, also bought back a portion 2ElNITIVSûMODEL
growth technology companies. of its US$134m principal 0.375% CB due 2023, There were more than 100 lines in a book
OKTA, COUPA SOFTWARE and ZENDESK, all which is convertible at US$44.51, in conjunction heavily skewed to outrights, with good
software-as-a-service providers and all familiar to with its new US$1.2bn six-year CB. European support.
the market, last week funded in quick succession Coupa’s underlying shares fell just 0.4% to Proceeds will be used to take advantage of
with US$1bn-plus CBs printed at sub-1% coupons US$223.74 while the new deal was marketed on OPPORTUNITIESûRISINGûFROMûTHEûSIGNIlCANTû
and employing derivatives to offset dilution at a Wednesday by Goldman Sachs, Barclays, Bank of acceleration of online adoption and to grow
premium to already sky-high valuations. America and JP Morgan. faster over the medium term.
Okta sold its US$1bn six-year CB after the The new CB is convertible at US$296.45, Ocado shares moved above and below
close on Tuesday at 0.375%, up 32.5%; Coupa an though Coupa also purchased a derivative to pricing during the day on Thursday, and
upsized US$1.2bn CB, also six years, on Wednesday offset dilution consideration to share prices up to ENDEDûTHEûDAYûmATûTOûPRICINGûATûa
at 0.375%, up 32.5%; and Zendesk a US$1bn five- US$503.42, a 125% premium to reference. Goldman Sachs, JP Morgan and Numis were
year CB last Thursday at 0.625%, up 32.5%. Zendesk, a provider of software development bookrunners on the equity, with Goldman
The three transactions are remarkably similar tools, repurchased US$425.8m principal of Sachs and JP Morgan running the CB.
in almost every way – all were marketed at US$440m of a 0.25% CB due 2023, convertible at
0.125%–0.625% coupons, both Okta and Zendesk US$63.07, with a portion of the US$1bn it raised LIVANOVA ADAPTS CALL SPREAD
at 32.5%–37.5% conversion premiums (Coupa at from the sale of its new five-year CB last Thursday. ON US$250m CB
30%–35%), and all funded the repurchase of deep- Zendesk spent US$617.6m, entirely in cash,
in-the-money CBs, and all used call spreads. to cash out the 2023s, or about 145 of par, to LIVANOVA, a UK-domiciled medical device
The deals attracted demand from crossover eliminate all dilution from the underlying shares. maker, raised US$250m from a 5.5-year
credit and equity income funds, as well as Taken together with new deals on Wednesday convertible bond it sold last Thursday
traditional long-only CB investors and arbs. from online fashion retailer THEREALREAL through a US subsidiary, LivaNova USA.
Okta’s CB, managed by joint bookrunners (US$150m) and event-planner EVENTBRITE Barclays, Bank of America and Goldman Sachs
Goldman Sachs, JP Morgan and Morgan Stanley, (US$130m), and CBs are growing as an asset placed the CB at a 3% coupon and 30%
is convertible into the underlying at prices above class. conversion premium, the investor-friendly
US$238.59. “The market does seem to have taken a turn ends of price talk, after marketing for one
Okta’s 0.125% CB maturing in September toward more regular-way tech issuers,” said a day on Thursday, amid an extreme market
2025 is convertible at prices above US$188.71. second equity-linked banker. “If you take a step sell-off.
“There wasn’t a lot of overlap between the 25s back, tech and healthcare have driven returns “High-quality orders came from several
and the new CB,” said a banker involved. “It was historically. long-only institutions that have conviction
dedicated convert funds that no longer had exposure “What’s different is that there is more money in the name,” said a banker involved. “But,
to the name along with new, crossover investors.” coming into converts.” honestly, a little less fundamental
Overall, 10 companies raised US$6bn from orientation than we would have liked.”
UPGRADE CYCLE CBs last week. LivaNova’s Nasdaq-listed shares on
Okta, a provider of cloud identity management Year-to-date US CB issuance stands at Thursday fell 11.8% to US$46.91.
software, repurchased US$70m principal of its US$56.3bn, putting the asset class on pace this Buyers of LivaNova’s CB are able to
0.25% CB due 2023, which are convertible at year for US$154.5bn, which would be an all-time convert into the underlying at prices above
US$48.36, for roughly US$250m, almost entirely high. US$60.98.
in 1.4m shares issued to holders. “You have to remember this is, what, a The medical device maker purchased a
It also spent US$116.5m on a derivative to US$330bn asset class,” said one of the EQL call spread to offset dilution to share prices
offset dilution consideration to prices above bankers. “It is going to continue to be busy.” up to US$100.00, a 113.17% premium to
US$360.14, a 100% premium to reference. Stephen Lacey reference.
The CB and call spread are settleable
entirely in cash – typically, US CBs are net-
The top 10 accounts took more than half the 4HEûlRSTûBANKERûSAIDûTHATûTHEREûWASû share settled, the principal settled in cash
equity from a book of more than 150 lines, with capacity to price the deal higher. and any residual value in stock. In the case
the top 20 taking around 75%. Most of those Another £7m was raised through a of LivaNova, it could fund any excess
seen in the wall-cross came into a book that PrimaryBid.com retail offer, with 362,000 payment from proceeds it would receive
was heavily supported by existing shareholders. shares sold at the same £19.60 price. from the call spread.
A second banker said the top 10 in the The bonds have a call from February 8 2025 “They will receive some or all of the cash
book were almost exclusively US and UK at a 130% trigger and were offered at 0.5%–1% settlement costs via the call spread,”
accounts, with several big orders coming on the coupon with a premium range of 30%– explained the banker.
FROMûTHEû53û4HEû53ûINTERESTûREmECTSû/CADOSû 35%. Pricing came towards the better end for 4HEûANTI DILUTIONARYûBENElTûOFûTHEûCALLû
transformation from a low-margin online Ocado at a 0.75% coupon, up 35% from the spread kicks in at US$60.98 and extends up
retailer to a tech company, he said. equity pricing for a £26.46 conversion price. to US$100.00.

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INTERNATIONAL FINANCING REVIEW INDEX
58.com 87 Duke Energy Florida 35 Korea Electric Power 35, 66 Sands China 67
ABN AMRO 3, 39 Dun & Bradstreet 89 Korean Air Lines 13 Santander 10, 53
Achmea Bank 43 Eagle Hospitality Trust 93 La Banque Postale 41 Sarana Multi Infrastruktur 77
ACS 36 eBay 35 Lancashire Holdings 98 Saudi Aramco 96
Aditya Birla Fashion & Retail 13 Ecuador 73 L-Bank 32 Scorpio Bulkers 95
ADNOC 80 Edenred 37 LBBW 42 SEB 3, 38
Africa Finance Corp 3 Egypt 80 Lebanon 71 Segro 13, 98
Airbus 10, 75 Enexis 36 Lei Shing Hong Credit 78 Sembcorp Marine 13, 93
Akouos 104 EQT 81 Lemonade 103 Serta Simmons Bedding 87
Albania 70 Equinix 35 Liberty Financial 53 Shandong Weigao Orthopedic Device 92
Albertsons 13 ESR Cayman 92 Liberty Global 82 Shanxi Securities 92
Alphamab Oncology 92 Estaleiro Jurong Aracruz 79 Link Finance 78 Sharjah Islamic Bank 72
Alstom 10 Eventbrite 106 LivaNova 106 Shenzhen Hepalink Pharmaceutical, 91
American Axle & Manufacturing 44 Eversource Energy 102 Loanpal 52 Shriram Transport Finance 13, 93
Aptiv 105 Evonik 104 Lower Saxony 31, 32 Sichuan Langjiu 91
ArcherDX 104 Exasol 95 Lummus Technology 85 Siemens 75
Arcland Sakamoto 79 Fannie Mae 51 LVMH 83 SIG Combibloc 46, 82
Arya Sciences Acquisition II 104 Far East Consortium International 76 Macy’s 87 Simcere Pharmaceutical Group 92
Asian Infrastructure Investment Bank 33 Far East Horizon 78 Magna International 35 Sinclair Broadcast Group 45
Athene Global Funding 42 Fate Therapeutics 100 Mahindra and Mahindra Financial Services 13 Sinic Holdings (Group) 65
Avidity Biosciences 101 FEC May22 76 MasMovil 9 Sinocelltech Group 92
Aviva Investors 17 Finland 4, 30 McDermott International 85 SiTime 103
Azek 99 Finnair 94 Medicover 81 SK Biopharmaceuticals 94
Banco de Credito Del Peru 73 FKS Food & Agri 77, 79 Mercedes-Benz 53 Smoore International 91
Bank11 fur Privatkunden und Handel 50 Fletcher Building 79 Mesa Laboratories 100 Snam 36
Bank of Japan 39 Florida Gas Transmission 35 MetLife Global Funding 42 Societe Generale 41
Bank Rakyat Indonesia 77 Ford Motor 53 MGM China 67 Societe Nationale SNCF SA 31
BASF 75 Fortune Brands 84 Midea International 78 Solar Mosaic 52
Basic-Fit 96 Freddie Mac 51 Mitchells & Butlers 83 Southwest Airlines 84
BBVA 48 Freeport Indonesia 77 Mohawk Industries 37 Spain 4
Biffa 13, 98 Fusion Welcome-Fuel SA 104 Molina Healthcare 83 Spirit Realty Capital 101
Bill.com 100 Galp Energia 3, 38 Morgan Stanley Principal Funding 5 Standard Chartered 17
Blackstone 51 Gan & Lee Pharmaceuticals 92 Murray Energy 88 State Bank of India 11
Blackstone Mortgage Trust 51, 101 Garrett Motion 87 Nationwide Building Society 3, 27 Straumann Holding 39
Boels 86 Garuda Indonesia 66 NatWest Markets 21, 42 Sunnova Energy Corp 52
Bosch 10 GE 35 NetEase 89 Sweden 30
BP 10, 75 General Motors 52, 84 New Development Bank 29 TAL Education 90
BPER Banca 3, 41 Generation Bio 101 Nexans 80 Telefonica 82
BrightView 103 Geo Energy Resources 65 Nio 91 ThaiOil 2
Brixmor 35 Germany 4, 30 Nord Anglia 86 Thales 75
Budimex 96 Gestamp 81 Northern Powergrid 36 TheRealReal 106
Bure Equity 97 GFH 71 Northern States Power 35 Thermo Fisher Scientific 84
BurgerFi 104 Ginnie Mae 51 North Rhine-Westphalia 31 ThyssenKrupp 8
Burning Rock Biotech 89 Goldman Sachs 25 Ocado 13, 105 Tiffany & Co 83
Canada Pension Plan Investment Board 33 Greece 4 Okta 106 Tiphone Mobile Indonesia 77
Cannae 89 Greenland Holding Group 65 Oman 80 Tokyo Metro 39
Cardiovascular Systems 100 Grieg Seafood 47 OMV 35 Tom Tailor Holding SE 80
CareDx 100 Gulf Marine Services 88, 97 Oneok 104 Toronto-Dominion Bank 35
Cathay Pacific Airways 12 GVS 95 Opes Acquisitions 104 Total 75
CBL & Associates 50 Hamilton Projects Acquiror 85 OQ 80 TPG Telecom 76
Central China Real Estate 65 Happiest Minds Technologies 93 Pacific Investment Management Co 51 Trane Technologies 84
Cerberus 19 Helios Towers 3, 63, 83, 98 Paradox Interactive 97 Travelodge 25
Chailease Holding 78 Help/Systems Holdings 85 PayPal 84 Trebia Acquisition 104
Chailease International Leasing 78 Hertz Global 24 Pepper 52 Trina Solar 91
Champion REIT 64 Hilong Holding 64 PepsiCo 84 UBS 21
Charoen Pokphand Foods 105 HL Acquisitions 104 Perusahaan Listrik Negara 77 Uganda 81
Chef’s Warehouse 86 HP 35, 84 PG&E 15 UK 4
China Bohai Bank 90 HSBC 17 PharmaSGP 95 UK DMO 32
China Fortune Land Development 65 Hudson Executive Investment 104 Phillips 66 35 Ultimate Fighting Championship 86
China Mengniu Dairy 64 Hurtigruten 86 Plains All American 35 Unedic 30
China Yongda Automobiles Services 92 Hygeia Healthcare 91 Pluralsight 101 UniCredit 41
Chr Hansen 79 Hyve Group 99 PolyPid 104 Univision Communications 86
Cirque du Soleil Entertainment 88 Iceland Foods 47 Ports and Free Zone World FZE 82 UPL Corp 10
Cofinimmo 94 IGB Commercial REIT 93 Power Finance Corp 11, 65 UPM-Kymmene 10
Commerzbank 3, 19, 39 Iliad 3, 39 Powerlong Real Estate Holdings 65 Vale 72
Coty 9 Immofonds Immobilien 97 PPF Telecom 71 Vaxcyte 101
Coupa Software 106 Immunotech Biopharm 91 Prasac Microfinance Institution 76 Veolia 37
Credicorp 73 Ina Invest 97 Pretium Credit Management 51 VEON 71
Credit Agricole 42 Indofood Sukses Makmur 77 Prosil Acquisition 48 Vicor 103
Credit Suisse 25, 43 Indomobil Finance Indonesia 77 Province of Cordoba 72 Virgin Media 3, 45
Croatia 70 Infratil 93 Qander Consumer Finance 50 Vodafone Hutchison Australia 76
CSN 72 Inter-American Development Bank 29, 33 Radiance Group 65 Volkswagen 37
Daimler 10, 75 International Container Terminal Services 67 RAG-Stiftung 104 Vroom 99
Danaher 83 Internet Brands 85 Raiffeisen Bank International 41 VW 3
Danske Bank 42 Iqvia 46 Raiffeisen Schweiz Genossenschaft 42 Westlake 53
DCB Bank 93 Ireland 4 Replimune 100 Whitbread 97
Delta Air Lines 28 Japan Airlines 79 Retrophin 100 World Bank 29
Democratic People’s Republic of Korea 14 Jazz Pharmaceuticals 105 Ronshine China Holdings 65 World Omni 53
Deutsche Bank 25 JD.com 89 Roper Technologies 35 Wynn Macau 67
Deutsche Boerse 3, 37 JetBlue Airways 85 Roundstone Securities No. 1 48 Yanlord Land Group 76
Diamond Sports 45 Kahoot 96 Royal Bank of Scotland 21 Zendesk 106
Dilosk RMBS No.2 48 Kaisa Prosperity Holdings 92 Royal Dutch Shell 10, 75 Zheneng Jinjiang Environment Holding 77
DP World 82 Kangji Medical 91 Royalty Pharma 103 Z Holdings 39
DSM 80 KBC Group 41 Ryman Healthcare 79 Zurich Insurance Company 41
Dubai Islamic Bank 72 Kogan.com 90 Safran 75
Duff & Phelps 85 Kommunalbanken 29 Saint-Gobain 75

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OUTLOOK FOR ESG CAPITAL MARKETS
Social bond issuance has flourished as a range of predominantly supranational,
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• Sandrine Enguehard, Head of Impact Structuring, Societe Generale
• Frank Richter, Investor Relations, NRW.Bank
• Felix Grote, Senior Funding Officer, Council of Europe Development Bank
• Théo Kotula, ESG Analyst, Responsible Investment, AXA Investment Managers
Topics covered will include:
• An update on current ESG capital markets activity.
• Social finance themes have come to the fore as the Covid-19 crisis has deepened. How will the
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• Reviewing Covid-19 response bonds
• Latest trends in green bonds
• How are investors influencing the behaviour and performance of issuers in the environmental/
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• How are issuers rising to the challenges of disclosure, reporting and transparency? Are the
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• Is there sufficient transparency and disclosure around social impact measurement in particular?
• Is the Green Bond market playing its part in helping move the needle on governments’
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JUNE 13 2020 ISSUE 2337 www.ifre.

Too much, too soon for frenzied credit market:

In demand: six European sovereigns raise

Lift-off for €10bn buyout ﬁnancing for

STRUCTURED FINANCE PEOPLE & MARKETS LOANS LOANS

To subscribe or learn more, e-mail

The coming storm Secondary education

F inancial markets got a dose of reality last week. They

International Financing Review June 13 2020 1

Too much, too soon for frenzied

2 International Financing Review June 13 2020

syndicate banker. Additional reporting by Eleanor

International Financing Review June 13 2020 3

Technicals overwhelm fundamentals

4 International Financing Review June 13 2020

driving force in terms of spread

International Financing Review June 13 2020 5

6 International Financing Review June 13 2020

International Financing Review June 13 2020 7

ICMA principles to help sustainable push

8 International Financing Review June 13 2020

expensive for the arranging

International Financing Review June 13 2020 9

UPL bond ﬁnds fertile ground

10 International Financing Review June 13 2020

217bp on May 12 – a long way dealer-managers for the tender

International Financing Review June 13 2020 11

Banks step up for Cathay rights

12 International Financing Review June 13 2020

of providing Covid-19 tests,

International Financing Review June 13 2020 13

J.Crew blockers take fashionable turn

14 International Financing Review June 13 2020

“After the programme was

International Financing Review June 13 2020 15

 FRONT STORY POLITICS

HSBC, StanChart under ﬁre for HK stance

Standard Chartered released a short

International Financing Review June 13 2020 17

“The stresses that even our most senior

Germany loss drags down EU bank returns to 6%

Who’s moving where…

18 International Financing Review June 13 2020

Please contact us if you have information about job moves: peoplemarkets@refinitiv.com

Daiwa Securities in Guggenheim’s UNICREDIT has hired Marracino replaces

International Financing Review June 13 2020 19

Who’s moving where…

20 International Financing Review June 13 2020

Please contact us if you have information about job moves: peoplemarkets@refinitiv.com

International Financing Review June 13 2020 21

Capital markets week ahead:

FILTER TIPS GVS hopes to raise more than

22 International Financing Review June 13 2020

HK activist Webb takes step back

International Financing Review June 13 2020 23

Ratings agencies wary of corporate credit rebound

Bankrupt Hertz asks to sell US$1bn in stock

24 International Financing Review June 13 2020

Travelodge uses new law for relief

FRONT STORY POLITICS

FRONT STORY FINANCIALS

"OOKSûOPENEDûATûBPûAREAûOVERûTHEû PARTûOFûTHEûCURVEûWITHûAû YEARûDEALûTHATû expect it to receive a good level of support

ONûTHEûLOWûENDûOFûITSû ûTIMESûDEBTûTOû TREMENDOUSûMARKETûRALLYvû"RIANû+ENNEDYû ABOUTû53BNûFORûITSû53BNû

MOHAWK DITCHES CP FOR BONDS h5TILITIESûWEREûTHEûlRSTûWINNERSûAFTERûTHEû SAYûSOMETHINGûINûTHEûTRAVELûINDUSTRYvûSAIDûAû

Iqvia’s share price was last week at ACCORDINGûTOûBANKERSûSPEAKINGûTOû)&2ûATûTHEû )Nû&EBRUARYûûTHEû%UROPEANû

DISCOUNTûINûHOPESûTHEYûCANûPROlTûFROMû "UTûTHEûYIELDSûWEREûABOVEûTHEûûYIELDû matching what it had forecast for GMALT