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The Fed has done its bit to help EM bond markets. In May it smashed the euphoria of investing in EM like a rotten piñata. Last week it glued it back together keeping only the best bits — sustainable yield levels and investors with a long term interest in the asset class. It is now up to banks to ensure the recovering primary market party piece holds together enough to release a steadier stream of better quality treats over the next few months.
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Emerging market loan volumes staged a record comeback in the first quarter of 2013. But in their drive to jump-start the market, banks have let borrowers get away with too much.
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Five years ago this week, Lehman Brothers fell. The hubris of an investment banking industry that saw itself as master of the universe met a tragic reckoning.
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Credit Suisse is no longer giving out book sizes on its emerging market bond deals, either before or after they are priced. It is a compliance move that might be applauded in a non-competitive world. In banking, however, it means the firm is risking other desks poaching its investors and clients.
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From “morning refreshments and networking break” through “afternoon refreshments and networking break” to, finally, “chairperson’s closing remarks followed by drinks reception”, a lot can happen at a conference.
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Jumbo leveraged buyouts are no longer cool. That at least was the view of private equity executives attending the Euromoney LevInvest conference. -
BNP Paribas’s recent deployment of securitisation techniques in the trade finance world is another useful showcase of how banks can offset increasingly expensive trade finance capital requirements. For this type of deal to become more commonplace, however, investors will need to become comfortable with securitization and trade finance — both of which require enormous amounts of expertise.
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EM debt bankers should not berate issuers for piling into the market in their post-summer rush. Co-ordination is impossible and issuers have every incentive to seek the best terms at the expense of others.
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Emerging market borrowers should be lining up to tap the loan market. Not only is there plenty of liquidity as this year's volumes scrape the record lows of 2012, but lenders have repeatedly shown their hands by letting clients get away with the sorts of terms treasurers usually can only dream about.
