US private placement investors, who have long held firm on covenant structures, have started to notice early signs that their ranks may be breaking, and that 2020 may be a year when weaker covenant packages become more commonplace.
GlobalCapital understands distressed debt buyers are seeking advice on how to target debt issued by intu Properties, especially its 2022 convertible bonds, now trading below 70, as the shopping centre company reels from the wave of restructurings and rent reductions by some of UK’s largest retailers.
The Conservative Party’s lead in the opinion polls is giving rise to expectations that risk assets will rally, Gilts will sell off and primary markets will remain open after the UK general election on December 12.
As a nascent feature of the Schuldschein market, secondary trading still hasn’t developed market norms and many remain unclear about the process.
High grade corporate bond bankers have warned of near-pandemonium in the UK market if the Conservative Party fails to form a government after the general election on December 12. They fear rocketing spreads and constricted market access during the busy January issuance window.
Company managements are becoming more alert to climate change and developing policies on it, new research on the transport sector shows. But the range is huge, and having a board that recognises the climate problem does not necessarily mean the company is decarbonising fast enough.
Certain US private placement (PP) investors are beginning to fear a turn in the famously prudent market, towards a world with looser financial covenants. Let us hope this remains a fear and does not become reality.
The US high-grade market corporate bond market shrugged off volatility this week, as borrowers dashed to print trades in the last full week for supply before the year’s end.
Corporate bond investors in Europe have enjoyed an “exceptional” year, according to analysts at one bank, with significant spread tightening in all sectors, even though negative yields have become increasingly common again.
E.On, the German power company, hit the short end of its bond curve on Tuesday, launching a €500m no-grow 2.8 year deal on a tricky day for the wider markets.
Italgas, the Italian gas distributor, issued a €500m 12 year bond on Monday, although syndicate bankers said they expected deal flow to diminish to a trickle over the week.
Power company Electricité de France issued its third bond in quick succession on Monday, and investors piled into the book, seemingly little fazed by its heavy recent issuance.
Houlihan Lokey’s European corporate finance land grab has made its fifth acquisition since 2014, writes David Rothnie, at a time when the fluctuations of the credit cycle may be about to lead to more restructurings.
French equipment leasing firm Kiloutou locked in an opportunistic refinancing of its loans with a new dual tranche €820m high yield bond on Thursday, easing its covenant constraints at the expense of adding call protection. At initial talk, the deal appeared to have little pricing rationale, but the market proved keen to support it, and the company added an extra €40m and priced through guidance.
Gewobag, the A2/A+ rated German housing company, launched the first Schuldschein with a Euribor floor set below zero in November and the transaction has closed at €650m, according to a source close to the deal. The success of this deal will encourage arrangers to bring more companies to market with negative floors in 2020.
Fixed income investors are eager to close the books on a strong year for returns in high beta credit, and are sitting on their hands, hoping to avoid a repeat of the ugly end to 2018. But still the debut borrowers come.
CVC-backed financial technology firm Sisal Pay is marketing a €530m issue of senior floating-rate notes to finance a merger with Intesa Sanpaolo-owned Banca 5’s payments business. The new venture is aiming to be the next Nexi, another Italian fintech star that listed recently and has had success in the high yield bond market too.
The takeover fight for online food delivery company Just Eat took a vitriolic turn this week, with merger frontrunner Takeaway.com accusing debt-backed hostile bidder Prosus of “scaremongering”.
Oil and Natural Gas Corp’s (ONGC) failed attempt to loosen change of control covenants for its dollar bond is a prime example of why investors in Indian state-owned enterprises need to keep their eyes wide open when approaching new deals.
Danske Bank has appointed two senior bankers to lead its reorganised global debt capital business.
Ellaktor is looking to tempt international investors with a carefully designed green bond that excludes a shaky construction business. The Greek company is looking to replace most of its long-term capital structure, currently heavy on local bank loans.
Several sources in the US private placement market have told GlobalCapital that Indian power grid company Adani Transmission’s inaugural US private placement has not been placed, and the arrangers will return to the project in the first quarter of 2020.
GN Store Nord, the unrated Danish maker of hearing aids and headsets, launched a €200m-€250m four year bond today under its newly established Euro-MTN programme.
Companies surprised the European bond market this week by issuing nearly €8bn of bonds that sailed through the market, obtaining big orderbooks and requiring minimal price concessions. Bankers had thought the market was starting to look worn down for the year, and were not expecting as much supply. When it did come, they thought some of the deals would struggle.
Crédit Agricole CIB has issued the first transition bond to be structured according to Axa Investment Management’s guidelines for this embryonic product, published in June. The €100m private placement, bought by Axa Group, was designed to demonstrate how the market could work.
The mandatory buy-in regime under the EU’s regulation for central securities depositories (CSDR) is expected to cause bid-ask spreads across bond markets to widen significantly, according to a warning from the International Capital Markets Association. The lobby group would like the rules changed.
Central bank money is flooding into bonds, making the European high yield market a bizarre place where a double-B rated issuer can pay a coupons of less than 1%. That is attracting first-time issuers with risky, opaque businesses who are getting away with offering scant investor protection.
Amid signs of progress, BNP Paribas faces challenges to deliver on its radical transformation plan, writes David Rothnie.
Houlihan Lokey’s European corporate finance land grab has made its fifth acquisition since 2014, writes David Rothnie, at a time when the fluctuations of the credit cycle may be about to lead to more restructurings.
The European Union has reached preliminary political agreement on the law that will introduce its Taxonomy of Sustainable Economic Activities. The news was hailed as a triumph by green finance specialists, though there is still a risk of battles to come.
Houlihan Lokey’s European corporate finance land grab has made its fifth acquisition since 2014, writes David Rothnie, at a time when the fluctuations of the credit cycle may be about to lead to more restructurings.
Certain US private placement (PP) investors are beginning to fear a turn in the famously prudent market, towards a world with looser financial covenants. Let us hope this remains a fear and does not become reality.
Phoenix Group Holdings, the UK life insurer, has stuck a deal to acquire ReAssure, the UK closed book life insurance division of Swiss Re, for £3.2bn in cash and shares.
Companies surprised the European bond market this week by issuing nearly €8bn of bonds that sailed through the market, obtaining big orderbooks and requiring minimal price concessions. Bankers had thought the market was starting to look worn down for the year, and were not expecting as much supply. When it did come, they thought some of the deals would struggle.
| Rank | Lead Manager | Amount $bn | No of issues | Share % |
|---|---|---|---|---|
| 1 | JPMorgan | 144.13 | 755 | 6.01% |
| 2 | Bank of America Merrill Lynch | 132.30 | 668 | 5.52% |
| 3 | Citi | 126.73 | 682 | 5.28% |
| 4 | Barclays | 107.42 | 478 | 4.48% |
| 5 | Morgan Stanley | 100.57 | 606 | 4.19% |
| Rank | Lead Manager | Amount $bn | No of issues | Share % |
|---|---|---|---|---|
| 1 | BNP Paribas | 30.50 | 172 | 6.51% |
| 2 | JPMorgan | 25.52 | 118 | 5.44% |
| 3 | Barclays | 24.36 | 104 | 5.20% |
| 4 | Citi | 23.15 | 121 | 4.94% |
| 5 | SG Corporate & Investment Banking | 21.72 | 114 | 4.63% |
