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GC Asia
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Come on UK, get with the programme
The UK is in many ways a green leader. Starting to issue green Gilts would be peripheral to that, and not necessary to environmental progress. But for a country that desperately needs to buff up its image, it is low-hanging fruit.
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UK’s non-banks deserve a saviour too
The UK government allowed the growth of the non-bank sector after the global financial crisis, but during the coronavirus pandemic, it has left it to fend for itself.
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Supply chain shift will disrupt Asian banks
Asian supply chains are facing unprecedented disruption. Banks in the region should take notice.
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TKE underlines the toxicity of the covenant wars
ThyssenKrupp Elevator (TKE) is a deal of superlatives: the largest European high yield debut, the largest European LBO in over a decade, the last LBO before coronavirus, the most levered debut industrial, and the worst-ever covenant package — or at least, it was at first. Three days after launching the bond leg of the deal, the sponsors and leads capitulated, erasing almost every controversial term in the docs — perhaps the largest ever retreat and the biggest investor victory in the long-running war over bond covenants. But it’s too soon for investors to celebrate, as the episode only highlights how damaging this conflict has become.
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Keeping Tabs — office return, economists relearn, vol strats burn
Each week, Keeping Tabs brings you the very best of what we in the GlobalCapital newsroom have found most useful, interesting and informative from around the web. This week: remote working challenges and opportunities, rethinking discrimination in economics, and how volatility strategies fell apart in the market crash.
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EIB might give banks the jolt they need on climate
The weakness of communication along the capital markets chain is one reason why so little progress has been made on greening the economy.
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ESG aspirations go mainstream as IBs emerge from Covid
The Covid-19 outbreak has spurred at least one change for the better. Five banks have established dedicated ESG teams since the start of the pandemic to meet demand from clients committed to being more conscientious, writes David Rothnie.
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Private credit's struggle to regain swagger
Private debt blossomed after the last financial crisis, as European companies grew more sophisticated and sought to diversify their funding strategies away from bank loans and bond markets. But the coronavirus has highlighted its shortcomings, particularly around speed of execution. It may be hard to regain the momentum.
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Of capital markets and soul
This week, my thoughts are with friends in Beijing, who are once again reliving one of their worst nightmares. No, not the second wave of Covid-19 infections, but having to take the test to see if they had the virus.
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Capital markets and transition bonds: a good fit for Asia
Castle Peak Power Co’s latest energy transition bond shows the potential of the product in Asia — and the big role capital markets can play in moving towards a greener future.
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Renewables need some benign financial engineering
Clean, green energy exists; it is more or less unlimited and it is increasingly cheap to harvest through solar and wind farms. Why are we not converting to renewables wholesale — especially in poor countries, which tend to have abundant sunshine? A significant part of this market failure is financial, and capital markets must solve it.
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UK crisis response: it ain’t over yet
The UK may be loosening social restrictions as the rate of coronavirus infections abates, but the Bank of England and the government cannot let up the fight against the economic and market impact of the virus.
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Insurance companies are playing it safe — and doing it well
The repeated presence of European issuers in the bond market of late is testament to the prudence with which they are building up capital for what could be tough times ahead.
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Coronavirus may prove a decisive moment for active managers
The Covid-19 crisis, and particularly the equity rally since the bottom of the sell-off in March, should cause deep reflection for active fund managers at risk of underperforming if they stick to their principles.
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Green hybrids are a company's new best friend
Green hybrids are still a niche part of the corporate treasurer’s arsenal, but with balance sheets battered by the coronavirus pandemic and investors clamouring for both sustainability-linked and higher yielding debt, now is the time for more borrowers to take the plunge.
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It should not have been left to journalists and short sellers to expose Wirecard
Healthy financial systems should not rely on short sellers and journalists to expose accounting scandals at large, publicly listed companies. Regulators and auditors should have been the heroes of the Wirecard story but their inability to see what others saw plainly paints them as the villains in this edition of German corporate noir.
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Keeping Tabs — mind the banks, boomers and ESG, US housing discrimination
Each week, Keeping Tabs brings you the very best of what we in the GlobalCapital newsroom have found most useful, interesting and informative from around the web. This week: the challenges facing European bank supervisors, attitudes to ethical investing by generation and gender, and how racial inequality rears its head in the US housing market.
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Outcome-based financing is here to stay
It has been a long time coming. Social impact bonds, in which the investor's return is based on the outcome of a social project, were invented 10 years ago. This week, one was issued for the first time by an organisation recognised as a full member of the mainstream European capital markets.
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A golden opportunity awaits corporates
Oil major BP printed its debut hybrids this week, defending its balance sheet from the huge slump in oil prices and the ravages of global lockdown. The company lured €20bn of orders a day after writing off up to $17.5bn of assets, proving that if you’re a company with something unusual to bring to capital markets, now is the time to do it.
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Barclays alums look to breathe new life into Panmure
The success of Rich Ricci’s banking comeback depends on getting a revered old broking brand back on its feet.
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Drinking to our health
Spare a thought for your colleagues in London or New York. Most of them are still working from home, juggling over-crowded, pointless conference calls with parental oversight and even the odd bit of real work. Those of us in Hong Kong are back to normal.
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Get funding done: it’s a windows market
Recent events have neatly illustrated the fickle state of market sentiment and suggest that a broad spectrum of borrowers in the corporate and bank finance markets should not waste time in getting their most difficult or important deals done while the window remains open.
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Who eats the losses from SME loan schemes?
Government-guaranteed loan schemes for SMEs have been rolled out across many developed economies, and now the most pressing part of the coronavirus crisis appears to be passing, policy makers are turning to the tricky question of who wears the losses. Securitization schemes could be deployed in the UK and elsewhere in Europe — but that can only tranche the risk, not make it disappear.
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Where will Fed’s support for equities end?
The US Federal Reserve deployed another tool from its arsenal yesterday: the ability to purchase individual corporate bonds. There is a strong belief in the markets that the central bank is acting, at least in part, to support equity markets, so why doesn’t it do so openly?
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CP Group’s loan response will be hard to replicate
The strong response from banks to Charoen Pokphand Group’s acquisition-related loan is not a true reflection of conditions in Asia’s syndications market — despite what some may say.
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Keeping tabs — Chinese lending, tech spending, CLO crisis pending?
Each week, Keeping Tabs brings you the very best of what we in the GlobalCapital newsroom have found most useful, interesting and informative from around the web. This week: a debate about the riskiness of CLOs to US banks, the role of the euro and more.
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Banks must be held to high standards in public
The green bond market lets investors scrutinise the way issuers use their money, promoting good behaviour. Now, the focus is turning to the middle men: the banks. It is a welcome iteration, given their importance in financing either a green or brown future, but we must push them further.
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BNPP’s big investment bank test lies ahead
BNP Paribas has provided €40bn of loans to corporate clients in the eye of the Covid-19 storm, amid claims that rivals are retrenching. David Rothnie asks if balance sheet support will result in bigger corporate finance fees.
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Banking, booze and cigarettes
There are many reasons to like Hong Kong, despite the goings-on in the city these days. I should know, having lived here for many decades.
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EM rally makes a mockery of debt relief calls, for now
The US Federal Reserve’s whatever-it-takes approach to stabilising markets has had an unintended victim: serious discussions about debt relief in the emerging markets.
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US securitization sentiment could shatter at next sign of uncertainty
Investor optimism in US securitization is growing as the global economy comes back to life. But the market is failing to price in the possibility that we will see another wave of Covid-19 infections and that government stimulus will eventually come to an end.
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Italy's focus on retail is a smart move
Italy is launching a new retail product, the BTP Futura, turning to its impressive stock of domestic savings to help finance its recovery. It’s an excellent move, and could be even more valuable to Italy’s recovery from the ravages of the coronavirus pandemic than the external support of the European Stability Mechanism.
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Printing ESG frameworks after the bonds is too risky
Sustainability bond bankers are batting around the idea of subverting usual practice by letting issuers price themed deals and then follow up with their green or social bond framework document after issuance. The idea is to hasten market access for issuers battling the effects of the coronavirus. But it could weaken sustainability standards.
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Chinese coupon cuts: A dangerous game
Chinese issuers have been slashing the coupons on their onshore puttable bonds in an attempt to save money. They are playing with fire.
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Keeping Tabs — human rights, high yield, the herd... and Rip Van Winkle
Each week, GlobalCapital journalists share some of the most interesting things they have been reading, from the profound to the quirky. This week has been marked by widespread protests across the US and the wider world, in reaction to an unarmed African-American man, George Floyd, dying while a policeman knelt on his neck in Minneapolis.
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Markets lose touch with reality — thank goodness
Financial market participants have watched in disbelief this week as asset prices have kept rising, while US cities burn, unemployment breaks records, a global depression becomes more likely and the coronavirus pandemic still rages.
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M&A shows resilience but still far from resurgent
A $5bn take-private of Spanish telecoms operator MasMovil is the first sign of the return of M&A deal-making. But as bankers work frantically behind the scenes to rebuild the market, the big, integrated houses look set to dominate, writes David Rothnie.
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Hidden depths: a sampling of Hong Kong bars
Hong Kong’s bar scene caters to a broad range of clientele. Boorish expats drink in Lan Kwai Fong, huddling on street corners over cigarettes and pints of lager. Posh chancers turn to The Captain’s Bar, the Chinnery or Sevva. Creative types end up in temples of self-congratulation like Piqniq, Woobar or Feather Boa. But only the finest Bacchanalians find their way into one of Hong Kong’s hidden bars.
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Racial injustice: investors have power
Capital markets players love to talk about being socially responsible. The death of George Floyd shows talk has got society nowhere. It is time for action.
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Social bonds boom but don’t forget about green
One of the silver linings of the coronavirus crisis for the capital markets has been the impressive surge in the growth of the social bond market, which has lagged far behind the development of green finance. While it makes perfect sense for the immediate focus to be on social concerns, it should not be to the detriment of the environmental crisis we also face.
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Pandemic has forced European IPOs to become more efficient
The coronavirus pandemic is causing many unintended consequences for working practices in the capital markets. One welcome development could be a shake-up in the way European IPOs are run and managed, which is long overdue.
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Covid-19 can’t excuse corporate mismanagement
For a failing business, the coronavirus pandemic has offered the perfect excuse. With so many well-managed companies forced to close their doors during lockdowns, record unemployment across several countries and a severe global recession on the cards, who can blame a management team or its backers when a corporate is on the edge of collapse?
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China’s green bond market notches new win
China’s green market has taken a big leap forward with plans to cut clean coal from the list of projects eligible for green bond financing. The move is notable — but only if the country follows it up with more measures.
