Review of the Year 2016 and Outlook 2017

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  • Betting on a risky year

    Toby Fildes looks ahead to an even bumpier ride in 2017 when Fed rate rises might be the least of the global capital market’s worries.

  • Eating London’s lunch. The battle for Europe’s financial centre

    Toby Fildes looks ahead to an even bumpier ride in 2017 when Fed rate rises might be the least of the global capital market’s worries.

  • The battle for infrastructure — and how to finance it

    Toby Fildes looks ahead to an even bumpier ride in 2017 when Fed rate rises might be the least of the global capital market’s worries.

  • The GlobalCapital DCM poll

    GlobalCapital’s Toby Fildes interviewed the heads of debt capital markets at 20 of the top 25 banks in late November and December, to ask their views on how the market will evolve in 2017. Here are their thoughts. Information design Jon Hay, Sam Medway.

  • Populist wave threatens peace and the gains of globalisation

    Once upon a time the worst thing investors had to think about at new year was what surprises the Fed might spring. Now there’s a maverick US president who talks of picking fights with China, allies, you name it. The UK is leaving the EU, the far right might win power in France and trade is ailing. Oh, and then there’s the Fed. Jon Hay reports.

  • Brexit: a regulatory triumph?

    The Brexit vote and the election of Donald Trump laid bare the poor predictive power of the massed ranks of financial analysts and traders. But when these political cataclysms hit the screens, nothing broke. Everyone from the IMF down to the lowest financial scribbler has warned that markets are less resilient thanks to regulation — but in the turmoil following these votes, prices moved but institutions stayed solid. Owen Sanderson reports.

  • Regulation turning syndicate into an art rather than science

    New issue bonds have been going from strength to strength, with some of the largest ever issues priced in the last two years. But the way they are executed has hardly changed for years. That is, until 2016, when sweeping regulatory change arrived in the form of new market abuse rules, along with new technology platforms and new market guidelines. Owen Sanderson reports.

  • Link still missing in blockchain's capital markets drive

    In 2016, blockchain went from a buzzword to a ‘must have’ in financial markets, as seemingly every bank and exchange invested in projects and proofs-of-concept. But with so many asset classes having been promised big gains, 2017 begins with a dose of realism about the limits of the technology — and the challenges it poses for regulators. Dan Alderson reports.

  • Corporate brokers aim for returns over glory

    The land-grab for blue-chip accounts has been replaced by a more targeted approach as corporate brokers look to forge relationships that will be both long-term and highly remunerative. David Rothnie reports.

  • P2P disruptors looks to join the establishment

    As European marketplace lending grows and matures, the sector is becoming increasingly embedded in the financial systems that it once looked to disrupt. David Bell reports.

  • Legacy assets: the future of dealing with the past

    Sales of legacy and non-core loans have soared to new heights in the last two years. But making a dent in the €2.3tr still on bank’s balance sheets will only get more difficult in 2017, writes Graham Bippart.

  • Sovereigns, supranationals and agencies deals of the year

    As a year where political upsets became the norm drew to a close, GlobalCapital picks the standout trades from a turbulent 2016.

  • A hawkish Fed may allow SSAs to spread wings in dollars

    The world’s major central banks were already on divergent paths early in 2016, but the election of Donald Trump as US president could see the Federal Reserve become even more hawkish in 2017 than had previously been expected. Such a shift in policy could re-open some funding avenues to public sector borrowers, Craig McGlashan finds.

  • Call in the builders: a new fiscal focus for government bond markets

    In the West a shift in focus towards fiscal stimulus and away from austerity was already underway before the shock result in the US presidential election. That shift will accelerate in 2017, with more government borrowing and a deterioration of sovereign creditworthiness. Bad news for fixed income? Not all investors think so. Craig McGlashan reports.

  • Post-QE world will not be easier for liquidity

    As the use of unconventional monetary policy comes under increasing scrutiny, investors are examining the consequences for liquidity in a world without the European Central Bank’s asset purchase programme, writes Lewis McLellan.

  • Dollar and euro angst opens space for non-core bond plays

    For public sector bond issuers, 2017 will be a year to hunt down arbitrage plays. Political uncertaintly looks set to rock core currency markets, leaving non-core markets to offer useful funding havens, writes Silas Brown.

  • Conservative Swiss hunt down positives among the negatives

    In the looking-glass world of Swiss franc bonds, unrated companies and Austrian banks have issued at negative yields, writes Silas Brown. Starved of return, Swiss investors will look at a broader range of foreign and even high yield paper than ever before.

  • Money market fund reform arrives in time for rough 2017

    US money market fund reform is finally here, after eight years in the making. A volatile and testing 2017 will show us whether the wait has been worth it. Lewis McLellan reports.

  • Public Sector Borrowers Infographics

    In a year where the unexpected became the norm, one of the few constants was the ECB’s presence in the eurozone sovereign bond market — you can see the monthly pace of Mario Draghi’s purchases. Elsewhere, the shock election of Donald Trump as US president and the Brexit vote took its toll on government bond yields and sterling’s level against the dollar.

  • Canada’s borrowers enjoy solid demand in volatile world

    Canada’s low debt to GDP ratio and stable politics have made it a haven in a turbulent era in global politics. But, with fears of a wave of protectionism growing, the trade-focused country faces problems ahead. However, with its fiscal stimulus programme an example to other nations wishing to promote growth, Canada’s borrowers are confident they can adapt and prosper in the new political reality. GlobalCapital hosted this roundtable in early December.

  • Financial institutions bond awards

    FIG issuers had a tough time navigating the primary markets in 2016, which was speckled with periods of intense volatility.

  • Covered bonds play key role with regulatory funding in focus

    Covered bonds will continue to be a crucial instrument in any bank treasurer’s funding tool kit in 2017. However, the more necessary focus will be on bail-inable senior unsecured funding. Bill Thornhill reports.

  • Financial Institutions Infographics

    The creation of senior non-preferred debt in France means the country’s financial institutions can really start to build their loss-absorbing debt levels towards their requirements for total loss-absorbing capacity (TLAC) rules and Europe’s minimum requirement for own funds and eligible liabilities. But how much does each bank need to issue over the coming years? Since October 2014 the European Central Bank has been steadily buying more securities eligible for its covered bond purchase programme, helping issuers command much tighter pricing for new transactions. The resulting change in distribution by covered bond investor type has been stark. Real money investors — including asset managers and investors — have been squeezed out in the new pricing environment, while central banks have ramped up their purchases.

  • Tier three’s a crowd as Europe’s banks prepare for action

    Tier three will become the new face of senior debt in 2017. The stage is finally set for the largest French banks to make their push into the new asset class, but issuers all over Europe will be looking to optimise their senior stacks for regulatory capital standards. Tyler Davies reports.

  • AT1: building a house on rock

    Additional tier one (AT1) went through the most turbulent period of its young life in 2016, and the experience was nothing if not formative. This year banks will benefit from the market’s new-found maturity. Tyler Davies reports.

  • Insurers weigh up capital opportunities under Solvency II

    There is plenty of room for innovation among insurers in the capital markets in 2017 as new products show their first signs of life. But bringing these new tools to market will be a stern challenge, writes Tyler Davies.

  • Esoteric ABS set to clear political and policy hurdles in 2017

    Esoteric ABS was a focus for investors hunting for yield in 2016. The market for these assets blossomed, as issuers were lured by attractive relative value in comparison to other sources of financing. But rising interest rates, the potential for trade wars under a new US president and fits of capital markets volatility top the list of concerns for market players this year. Max Adams reports.

  • Push and pull: levloan tensions to drive CLO dynamics in 2017

    Leveraged loans are likely to be a prized commodity in 2017 as demand will continue to outstrip supply, leaving CLO managers scrounging around for whatever they can find to ramp up their portfolios. Sam Kerr reports.

  • BofE stimulus drives diversity in UK RMBS

    The arrival of the Bank of England’s Term Funding Scheme sparked fears that it would be the death of the UK mortgage-backed securities market. But while some bank issuers may scale back public bond plans in 2017, a sharp rally in spreads has brought new sellers into play, changing the nature of the market. David Bell reports.

  • Green ABS ready to blossom, despite looming policy threats

    The renewable energy ABS sector had a year of sharp growth in 2016. Property Assessed Clean Energy (PACE) ABS was a strong source of bonds backed by green assets. Market players hope for a similarly successful 2017, but industry fragmentation and a new US administration may hinder growth. Sasha Padbidri reports.

  • Corporate and high yield bond deals of the year

    It was a record breaking year for investment grade corporate bond issuance in 2016, both in overall volumes and individual deal sizes. Not only was a diverse base of issuers able to access the euro market, many were also able to do so in size and at attractive prices, in large part due to the ECB and its accommodative policies, with investors comfortable buying multi-tranche jumbo deals from both domestic and US borrowers.

  • The 14th Syndicated Loan, Leveraged Finance and Private Placement Awards: nominations

    In November GlobalCapital polled loan market participants for the 14th Syndicated Loan, Leveraged Finance and Private Placement Awards. The nominations are listed below in alphabetical order. We will reveal the winners at the awards dinner, to be held on February 8, 2017 at the Guildhall in London.

  • Corporate bond investors try to eke out a living in yield desert

    The one-way bet on spreads that has made investors rich in the European corporate bond market over the last year will be replaced by trickier but potentially more lucrative gambles in the financial, high yield and hybrid sectors. Ross Lancaster reports.

  • As CSPP magic fades, corporate bond market faces life on its own

    The European Central Bank will be a focal point for the euro investment grade corporate bond market this year but the Corporate Sector Purchase Programme party is over. In a world of rising US interest rates and political risk, participants are wondering how to avoid a hangover when the ECB eventually leaves their market. Ross Lancaster reports.

  • Tired of waiting, loan bankers pile into Schuldscheine

    The loan market will always be there if favoured clients want large sums — the trouble is, hardly any do. Banks are improvising, finding mid-caps more receptive — especially in the Schuldschein market. Elly Whittaker reports.

  • HY and leveraged loans vie for business as buy-outs languish

    Will 2017 be a year for new conquests in the European leveraged finance markets? No one believes so. Rather, there will be a tug of war between high yield bonds and loans for issuance, better funding costs and investors’ cash. Victor Jimenez and Max Bower report.

  • UK corporate funding picture surprisingly sanguine

    The UK’s decision to leave the European Union cast extreme uncertainty over the economy, the values and even the unity of the country. Its ramifications for domestic companies’ financing capabilities has been both more obvious and more benign, however. Max Bower reports.

  • Emerging markets bond awards

    For CEEMEA bonds, 2016 was a boom year punctuated by large, volatility-inducing shock events that culminated with a game-changing US election. But such events did little to dampen enthusiasm for EM debt from issuers and investors alike. CEEMEA corporates and sovereigns issued almost double the debt raised in 2015, printing $152.4bn up to the second week in December.

  • Stellar year for EM comes to an abrupt halt, thanks to Trump

    After a slow start to 2016, emerging market debt enjoyed one of the biggest rallies in recent memory. The hunt for yield drove billions of dollars into the asset class and issuers were quick to take advantage of the booming bull market. But the election of Donald Trump as US President in November put a stop to the good times and brought back uncertainty and volatility.

  • Trump kills EM bull, issuers to fight for funding in next round

    2017 will suffer periods of extreme volatility meaning EM borrowers will need to be more nimble than ever before. Virginia Furness reports.

  • Russia’s bond market revival ready to roll on into 2017

    In late 2016 a clutch of Russian borrowers shrugged off Western sanctions and domestic stagnation to return to the global bond markets. But will investors’ returning appetite for Russian risk survive a global repricing? Lucy Fitzgeorge-Parker reports

  • Oil be back: GCC to dominate in 2017

    Strong credit fundaments and a supportive technical bid from local investors should help the GCC’s borrowers to weather any volatility thrown at them in 2017. But analysts warn of political threats putting negative pressure on the region’s bond prices. Virginia Furness reports.

  • Tide turns for Turkish loan pricing

    The global rise in dollar funding, combined with political upheaval and the heavy depreciation of the lira are destroying some of the historically borrower-friendly terms available in the Turkish loan market. Elly Whittaker reports.

  • Africa feels a funding chill: first in loans, now bonds too

    While some cash-strapped borrowers in Africa will bite the bullet and pay up to access international bond markets in 2017, others will have to return to the loan market for support. Virginia Furness and Elly Whittaker report.

  • LatAm braces for Trump impact amid higher rates reality

    Donald Trump’s election as US president has shaken up expectations for this year. But although Latin American borrowers are getting used to higher funding costs, 2017 could be a year of steady progression for the market, writes Olly West.

  • Equities jump on Trump reflation train — expect a bumpy ride

    Equity investors have something new to believe in: fiscal largesse in the US kickstarting global growth. That’s good news for the many companies and banks with capital to raise in 2017 — the trouble is, markets are likely to be as volatile as Donald Trump’s temper. By Jon Hay, additional reporting by Aidan Gregory

  • ECM banks work harder for less, stressed investors get picky

    On the surface, equity capital markets are a well-oiled machine, built to run over the rocky ground of unpredictable stockmarkets. Beneath the surface, there is a lot of sweat. Banks are having to staff their teams with less money, but do just as many deals. Investors are under the cosh, too, squeezed by weak performance and the march of passive funds. Jon Hay reports.

  • CBs: back to basics as rate hikes tempt weaker credits

    Europe’s convertible market is no longer dripping with superlatives as 2017 begins — middling performance and mild outflows have taken out some of the heat. That may be a good thing, as investors may get more of the deals they like: for companies whose credit needs some looking at, but with interesting equity stories. Aidan Gregory and Jon Hay report.

  • Derivs trading reinvented as investors look to trump event risk

    The upending of global financial markets in the second half of 2016, driven by shocks from the UK’s Brexit vote and US presidential election, has caused a breakdown in previously dominant cross-asset correlations and a sharp resizing of event risk in 2017. Dan Alderson reports on a wave of structured product innovation aimed at navigating this new and more volatile universe.

  • Tensions high as cross-currency swaps face testing 2017

    Cross-currency swap markets face a rough start to 2017. Traders fear that diverging central bank policy, a shift in corporate borrowing dynamics and a repatriation of US money will all upset the basis at different parts of the curve. Dan Alderson reports.

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