Sell junk while you can

Riskier credits are missing their window to print bonds. Rates are plumbing ever lower and investors are forced to seek out yield ever further along the credit spectrum. It won’t last forever, but now is the time for ambitious deals.

  • By Lewis McLellan
  • 01 Aug 2019
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The gathering swell of central bank easing has fuelled a frantic search for anything bearing a positive yield. But despite the fact that emerging market funds are bursting with cash, it has mainly been the higher quality, well established credits that have taken advantage of the inflows.

Now, they’re not paying enough spread to sate the yield-starved either. Order books in primary deals swell quickly, meaning a couple of rounds of price tightening during execution are the norm. Limit your order and you will end up with nothing at all — better to take the meagre spread remaining.

With complaints starting to ring about the yields on offer at the top end of emerging markets, the question must be asked: where are the riskier names? GEMS Education, a single–B rated Dubai headquartered education provider, showed there was plenty of appetite for sub-investment grade names, but deals from the lower end of the credit spectrum are still rare.

Chances for lower rated credits to access the market at favourable costs don’t come along often. Wednesday’s rate cut may have been the US Federal Reserve’s first in 10 years, but chairman Jerome Powell already seems reluctant to keep pumping up risk appetite with cheap cash. 

There is no time for complacency among EM borrowers. Investors need yield and they will interrupt summer holidays to get it. But only while the macroeconomic conditions shine favourably upon the bond market. And that is not a given.

Flagging global growth and a stubbornly inverted US yield curve indicate trouble to come. And when it does, opportunities for the risky names will disappear.

  • By Lewis McLellan
  • 01 Aug 2019

All International Bonds

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Citi 29.61 88 8.60%
2 JPMorgan 23.76 85 6.90%
3 Barclays 20.64 81 5.99%
4 BofA Securities 19.82 71 5.76%
5 BNP Paribas 16.27 62 4.73%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 60.84 264 7.99%
2 Credit Agricole CIB 47.68 243 6.26%
3 JPMorgan 35.73 111 4.69%
4 SG Corporate & Investment Banking 34.28 171 4.50%
5 UniCredit 33.71 188 4.43%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Barclays 0.75 7 12.00%
2 Morgan Stanley 0.70 5 11.15%
3 JPMorgan 0.58 5 9.31%
4 Citi 0.48 4 7.75%
5 Goldman Sachs 0.43 3 6.92%