Pre-migration untagged articles
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As EuroWeek was going to press, it looked like the UK government was in pole position to win the top trumps of the bailout game, market participants said. The UK solution, seen as the most comprehensive and clever so far, is expected to get money flowing again in the system having addressed the capital and liquidity issues.
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UniCredit intends to make deep cuts in its structured finance business and its Austrian operations as part of its plan to reduce its investment bank’s workforce by 700 people.
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US Congress passed the Emergency Economic Stabilisation Act last Friday, and Treasury secretary Paulson has moved quickly to implement it, but already it seems to have been overtaken by the market’s momentum.
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A splash of dollar MTN issuance emerged mid-week as high quality issuers took advantage of the wide euro-dollar basis swap and investor demand for their names.
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What will happen to some of Fortis’s debt holders was still uncertain this week as the complicated group structure made it difficult to assess who the winners and the losers would be, at least as far as some of the more deeply subordinated instruments were concerned.
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As interbank rates continue to spiral and fear grows about the state of European banks, financial names are increasingly being blocked from issuing anything other than overnight paper in the European commercial paper market. Outstandings in the ECP market, which had been growing consistently throughout the year until last month, continue to drop.
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Government interventions in the banking sector across Europe and the US have the potential to stop the financial crisis in its tracks, and have in many cases transformed the equity and debt capital markets for the foreseeable future.
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The SSA community is obtaining better funding costs in the dollar market than they have ever achieved even as the situation in financial markets deteriorates by the minute. In a slew of three year issuance, European Investment Bank issued $4bn of global debt at mid-swaps less 40bp, Denmark $1.5bn at less 37bp and Export Development Canada $1bn at less 40bp. For those swapping back to euros, the cost improves by around another 40bp to 45bp, which is why the Spain, Italy, Rentenbank and L-Bank are said to be looking closely at their dollar options. EIB was a blow-out with a book of over $5.5bn but Denmark attracted just $1.7bn of orders showing that track record of performance in this market is everything while EDC was barely covered being too tightly priced. And yes the euro market is also seeing some action. OeBB Infrastruktur has launched a Eu1bn three year at less 16bp and becomes the first benchmark issuer to tap the sector since September 11.
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HSBC, the best capitalised of the major UK banks, has hurriedly issued a statement saying its UK subsidiary, HSBC Bank plc, has “no current plans” to raise capital under the government’s recapitalisation scheme. Standard Chartered has followed suit, claiming it also does not need the capital, thanks to its healthy tier one ratio of 8.6%.
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Currency plays have fallen victim to the global financial rout, but there have still been several niche currency bonds issued to domestic investors this week. ICO took Norwegian crown this morning and the Kauri market is alive, with New Zealand dollar issues from Kommunalbanken Norway and Rentenbank. Also on Friday (October 3) there was a rare high yield Romanian leu issue from the World Bank. Read EuroWeek on Friday to see how the market digests these trades and whether other issuers find another chance to dart through a window.
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SoCal Edison launched a $500m note due 2014 on Tuesday despite the rout in equity markets. Of course, the new issue premium looked horrendous — about 100bp — but this has become pretty meaningless these days as secondary market liquidity is so poor. In fact, the yield was only 5.86%, which doesn't look so bad.