Accessing Capital 2012
Between the highs of the LTRO and the lows of the Greek elections, and with regulatory changes sprinkled on top, threats and opportunities abound in equal measure for FIG borrowers and investors. Katie Llanos-Small asks how they are preparing for a second half that is set to be as surprising as the first.
German state development banks faced myriad challenges going into 2012 — including a more crowded issuance landscape as winding-up agencies got into their stride, as well as the problem of how to catch investors’ eyes given tiny Bund yields. Tessa Wilkie reports on how they have fared.
As the enthusiasm for SSA debt following the European Central Bank’s LTRO operations dissipates, the landscape has once again become volatile. Those that were able to front-load their borrowing programmes are sitting pretty. But those unable to are under greater pressure than ever before. Michael Winfield reports.
Companies, in general, are in good health, and investors know it, showering them with cheap debt. But the spasms of Europe’s ailing sovereigns still govern whether corporates can issue bonds successfully — and for firms classed as weaker, government woes can spell serious funding problems. Jon Hay reports.
Canadian banks have issued five benchmark covered bond deals so far this year with a total value of $11.75bn, reinforcing their position as the dominant issuers of US dollar covered bonds. Demand for Canadian covered bonds has remained robust and recently valuations have improved on expectations of diminishing supply. This fundamental value is a function of the strong credit worthiness of Canadian banks and the underlying mortgage collateral which is largely insured by the Canadian Mortgage and Housing Corporation (CMHC), Canada’s national housing agency. The high quality collateral, along with CMHC insurance, gives US investors a lot of comfort and an ability to view these bonds as having minimal credit risk, almost as quasi agency bonds. And with US domestic market supply of agency bonds contracting, investors have had considerable cash to put to work.
Who would be a senior unsecured bank bondholder? A bewildering cocktail of higher funding costs, reduced access to liquidity, balance sheet constraints and regulatory uncertainty is combining to make the outlook for European banks more opaque than it has been for decades. And that is leaving aside the storm clouds gathering more menacingly by the day over the euro.
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