Each week, Keeping Tabs brings you the very best of what we have found most useful, interesting and informative from around the web. This week: liquidity in the age of central banks, making bank capital green, and US fiscal stimulus.
FMO may lower its 2020 funding target when it reviews its borrowing plan after the summer, which could lead to a postponement of a planned dollar benchmark to next year. The Dutch development bank made a strong return to the issuance of subordinated debt this week ahead of a call date in December of its previous deal in the format.
After striking a remarkably swift restructuring deal with creditors, Ecuador’s government deserves praise. But it is unrealistic to expect such smooth discussions elsewhere, as emerging market sovereign defaults inevitably rise.
Amid warnings about a looming debt crisis in emerging markets, bond investors this week hailed Ecuador as an example to follow in sovereign restructurings, while continuing their showdown with Argentina. Ecuador’s market-friendly philosophy appears to be paying dividends over Argentina’s more confrontational approach, but not every issuer is likely to follow its precedent, writes Oliver West.
Momentum is growing for the economic recovery from the coronavirus pandemic to have a strong green thrust, as the UK’s mini-Budget and comments by European Central Bank president Christine Lagarde made clear this week. Capital market participants are enthusiastic about the prospect and expect it to further green the markets — but how far the drive goes will ultimately depend on politics, write Mike Turner, Jon Hay and Jasper Cox.
Following the sale of its third syndication of the year this week — a €3bn inflation-linked bond — France does not expect to bring any more public benchmarks in 2020.
Unédic came to the market for its third social bond on Thursday after making its debut in the format less than two months ago. The deal extends the French agency’s social curve out to 15 years and completes its €10bn explicitly guaranteed funding allowance for 2020.
Studio City Finance restructured its debt portfolio with a $1bn bond sale on Wednesday.
Argentina’s largest bondholders on Wednesday evening dashed hopes that the government’s new improved restructuring offer would achieve mass take-up. But some investors took hope from the tone of the creditors’ statement.
El Salvador, the highest yielding Latin American sovereign not to have already announced a debt restructuring, sold $1bn of 32 year bonds on Wednesday but at a hefty concession to its inverted curve.
Two Colombian companies kept corporate issuance from Latin America ticking with aggressive deals on Wednesday even as bankers reported softer conditions in US investment grade bond markets
TwentyFour Asset Management has mandated Santander as arranger for Oat Hill 2, a £485m buy-to-let (BTL) RMBS deal, rolling the portfolio of Oat Hill 1 into the new deal after the coronavirus outbreak left the issuer unable to call it at the first optional redemption date (FORD).
The New Zealand treasury has appointed the banks to lead the syndication of a May 2041 nominal bond, which is expected to take place next week.
The European Financial Stability Facility kicked off its third quarter funding in style as it raised 80% of its borrowing needs for the quarter flat to its sister issuer’s curve. Elsewhere in the euro market on Tuesday, Cyprus saw decent demand as it tapped its 2024s and 2040s.
Investors piled into KfW’s first dollar benchmark in six months on Tuesday, allowing the issuer to break the order book record for SSA dollar benchmarks.
France hit screens on Tuesday to announce a new long-dated inflation-linked benchmark at a time when market participants are bracing for the return of inflation due to the vast amount of monetary stimulus and spending by governments in response to the coronavirus pandemic.
Zam Khan is a managing director in Houlihan Lokey’s Financial Institutions Group, where he leads the portfolio and capital advisory practice. He told GlobalCapital how banks should use financial data to deal with new NPL formations, or risk being engulfed by losses over the next few months.
Noteholder payments have been deferred in a tranche of UK CMBS backed by university halls of residence after the accommodation operator refunded student’s their rent, putting the loan sponsor in the position of having to speculate on demand recovery following the coronavirus outbreak which saw universities shuttered.
Crédit Agricole Assurances (CAA) added to the subordinated deal flow in the FIG bond market on Tuesday by launching a tier two bond. The French insurer benefitted from the rarity of its appearances in primary markets, and the large deal size meant that although the issuer paid some premium, it "did not leave much value on the table", according to a lead manager.
Conditions in the primary FIG bond market have improved of late, tempting European issuers to bring subordinated trades. Rabobank made an appearance this week, adding to a flurry of trades in the format.
The UK has been at the forefront of Europe’s equity capital raising wave, as companies respond to the Covid-19 pandemic. De La Rue, which makes passports and banknotes, became the latest UK firm to do so with a £100m raise on Monday — and sources believe there is plenty more to come.
Chinese issuers hoping to put the pandemic behind them should not abandon coronavirus-linked bonds.
Tahoe Group Co was unable to repay a Rmb1.5bn ($213.4m) onshore bond on Monday, as it struggles with tight liquidity, limited market access and poor corporate governance.
While Argentina’s back-and-forth attitude to debt negotiations means it still has not reached a deal more than three months after the deadline it had set itself to wrap up the process, Ecuador’s decision to keep investor relations as cordial as possible could see it rewarded with a remarkably swift restructuring of its bonds.
Argentine bonds rallied on Monday after the government surpassed expectations with a new debt restructuring offer. But markets are still waiting on the reaction of the largest bondholders, as Argentina had abandoned negotiations ahead of its updated offer.
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