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GC Asia
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UK inflation, what has helped emerging markets, Google does insurance
This week in Keeping Tabs: the prospect of financial repression in the UK, an easier passage for emerging market central banks, and Alphabet partnering up with Swiss Re.
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Private capital should play a role in development finance
Railing against the inflow of private capital into developing markets is idealistic at best and lethal at worst. Critics should be careful what they wish for.
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Don’t let activist hedge funds trample ESG’s roses
If investors were a family, the activist hedge fund would be the brattish 20-something rich kid with libertarian opinions who relishes annoying everyone else. You wouldn’t expect this character to get on with the woke, vegan responsible investor who loves to hold forth on moral values.
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Okuda starts efficiency drive at Nomura
Nomura has cut jobs in its investment banking business in Europe over the summer, following losses in leveraged finance, as its new chief executive eyes up other regions for growth, writes David Rothnie.
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Mixed blessings of working from home
The Covid-19 coronavirus has thrown up many challenges for bankers forced to work from home. But perhaps none is tougher than trying their very best to pretend they’re getting anything done.
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EM leaders bullying central bank governors are harming their countries
Political interference in central bank business is rarely a smart move, especially for emerging market countries trying to win the respect of international markets. But it’s an even more reckless endeavour in the midst of a global crisis, especially for a debt-ridden country like Zambia.
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SSD establishment must encourage a secondary market
Any investor in a market as international and broad as the Schuldschein deserves a healthy secondary market. This is emerging, but certain market grandees are resistant. They should embrace it.
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For corporate bond investors, autumn offers an ECB rock and a hard place
Europe’s corporate bond market is back in action this week with new deals. But it will be no picnic for investors. The market is awash with cash and new issues in the months ahead will be painfully expensive.
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Green finance supervision: let’s not obsess over data
Financial supervisors and regulators are too preoccupied with collecting research and data on environmental threats to finance and the economy, rather than simply using their own judgement and other tools at their disposal.
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China’s take-privates: no panacea for Asia’s loan market
Leveraged finance bankers in Asia are counting on the possible delisting of a host of Chinese companies from the US to give a fillip to the region’s dollar loan market this year. But bankers should temper their expectations.
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Protecting nature, boosting happiness, and not paying down debts
This week in Keeping Tabs: does sustainable finance need to rethink environmental threats, did monetary policy after the last crisis increase well-being, and do we need to worry about sovereign debt levels in developed countries?
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CACs – a welcome look at the fine print
The agreement on collective action clauses (CACs) reached by Argentina, Ecuador and their creditors is highly complex. But it is hugely encouraging that major investors are actively participating on an issue that is crucial to the health of the market.
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UBS hits stride after rocky road to collaboration
UBS reckons it has a hit upon a ‘unique formula’ for growth as it expands its investment banking offering to its high net worth clients, writes David Rothnie.
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Renewables’ alpha status lifts transition hopes
Renewable energy has finally arrived as one of the premier sectors in equity capital markets. All it took was a global pandemic.
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Teaching ABCs with the birds and the bees
Truly selling a product is about putting your money where your mouth is.
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ESG investors: be careful with supply chains
Environmental, social and governance investors are taking an interest in companies' supply chains at last. It is important they do this in a sophisticated way and think deeply about the potential repercussions. Getting supply chains wrong could have devastating consequences.
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Why Avis won't go bankrupt like Hertz
It’s amazing how quickly the conversation around Avis has changed over the last few months. In April, investors worried that Avis would follow Hertz, its car rental rival, into bankruptcy by the end of 2020. But Avis’s performance in the second quarter and its recent success in the ABS market suggest it is in a much better position than its competitors to weather the recession.
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€STR's foundations quiver as volume drops
The Euro Short Term Rate may be running into the first real problem of its short life. The benchmark was designed to provide a reflection of wholesale euro overnight borrowing costs based on real transaction data. But what if there aren’t enough transactions?
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Get ready for a mortgage holiday fight
UK politicians should prepare for mortgage holidays becoming a political hot potato after borrowers who took payment holidays just-in-case realise that their financial well-being may not be as unscathed as they first anticipated.
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Rights issues cannot cure broken business models
A wave of companies from some of the most distressed industries will test risk appetite with rights issues this autumn, such as shopping mall landlord Hammerson and International Airlines Group, the parent of British Airways. These firms may raise the money they need and survive, but investors would be well advised to exercise extreme caution, for the future is not bright.
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India should hurry bond debut – with a Covid twist
Will India ever come to the international bond market? Fears of foreign currency exposure and dissenting voices in the government derailed a planned deal last year. Now is the perfect time to try again.
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Green Biden hopes, bond/loan decoupling, crypto app on the ropes
This week in Keeping Tabs: whether investors are prepared for the impact of a Joe Biden win on environmental policy, how bond and syndicated loan markets diverged in the crisis, and a crypto app that tanked.
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Crisis forces hard choices on European banks
The coronavirus crisis has reshaped many aspects of finance, but not the line-up of top investment banks. It does appear to have pressed some firms into sharp decisions, though.
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What’s next for Société Générale and Natixis?
Société Générale and Natixis have purged their senior ranks following second-quarter losses and to prepare for strategic revamps, but David Rothnie thinks the future will remain challenging for both.
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Pandemic means market can handle IPO wave
European equity capital markets are gearing up for a wave of autumn IPOs and are worrying that they will struggle for investor attention. But one of the few good things to have emerged from the coronavirus pandemic — the use of technology to accelerate deal calendars — should alleviate fears of congestion.
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Of mice and men: returning to the office
After months of lockdown in countries across the world, a few of my banker friends are now slowly heading back to their offices. It is not easy.
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Rep risk of sov restructuring is worth it for real money investors
Real money investors have historically avoided the reputational risk involved in participating in sovereign debt restructurings. But a truly socially responsible investor should embrace these situations — for the sake of both their clients and troubled emerging nations.
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WFH has brought fintech to the core of capital markets
Some argue that innovation has taken a backward step in the pandemic with the loss of people working in close proximity bouncing ideas off each other. But that’s not the case in the capital markets. In fact, working remotely in such a vast but archaic business has brought the use of technology to the centre of discussions.
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Convertibles thrive in pandemic but are no financial panacea
The convertible bond market has played a vital role during the Covid-19 global pandemic in funding corporates that were in urgent need of liquidity as the crisis took hold. Deals have performed for investors too, although they should be concerned about the potential for rising defaults.
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Trump sends a message via WeChat. Don’t ignore it.
US president Donald Trump’s sudden targeting of Tencent Holdings and its flagship app WeChat last week was vague in the extreme. But what is clear is the Trump administration’s increasing willingness to go after China’s tech darlings. That should not be ignored.
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Dollar drop, Beirut shock, credit top
This week in Keeping Tabs: confronting dollar bears, Lebanon’s crisis, the power of debt in Ireland, and funding equity research.
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Bank capital: more than meets the eye
The coronavirus crisis is a further reminder that fundamentals are not the only thing that matters when investing in bank capital.
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Cost cuts central to Gottstein's Credit Suisse shake-up
Credit Suisse chief executive Thomas Gottstein has brought its investment bank back together but threatens to leave it with a diminished corporate finance business, David Rothnie reports.
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Now is a good time to dump old friends
Social distancing, wearing masks in public, bars and restaurants shutting down en masse: the coronavirus is a gift to those trying to avoid people.
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The right time for rights issues
Equity capital markets are preparing for a busy autumn, with companies looking to raise cash to survive and thrive through the Covid-19 pandemic. But the window for raking in money may well be small, with a number of factors, of which a rising infection rate is only one, threatening turbulence for some time to come.
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Ukraine shows the difficulties of reform
Less than a year ago, international investor optimism about Ukraine was high but the journey to western style reform since then has shown just how hard a road it can be to travel.
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Lack of CLO ratings transparency damages credibility
Rating agency reviews of CLOs are not resulting in mass downgrades in Europe. That has caused some to question what is going on given the damage the coronavirus pandemic and lockdowns must surely have had on certain sectors of the economy that some CLOs are exposed to. Some transparency around ratings metrics would help soothe the angst.
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Is Monzo at risk of a capital crunch?
The auditor for digital bank Monzo warned that a slower than expected recovery could lead it to breach its capital requirements, even though at the end of February it had a much better capital ratio than traditional banks. So what’s going on? GlobalCapital wonders if the risk is more about investors’ appetite to continue funding an unprofitable business than the bank breaching the requirements in the next few months.
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Social revolvers are the feelgood hit of the summer; more firms should get involved
Canny loans bankers have devised a social revolving credit facility structure that links a portion of a borrower’s debt directly to Covid-19 era relief spending. It’s a structure that won’t take the markets by storm on what is likely the eve of global recession but ESG-minded investors should still push hard for the companies they own to consider this new type of funding.
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Luckin Coffee: a crackdown or a sideshow?
China’s hands-on approach into investigating Luckin Coffee signals that the regulators are serious about cracking down on financial crimes by corporations. But the full extent of their commitment will only be revealed by how they tackle similar problems in the future.
