UK

The merger of the UK’s largest mobile phone operator, O2, with cable company Virgin Media, agreed on Thursday, will generate a £6bn financing need which the parties want to complete before the deal closes, expected to be in 2021 — and later on, it could lead to an IPO, say sources close to the deal.

Costain Group, the London-listed construction and engineering firm, has completed the first leg of a heavily discounted £100m capital increase that it originally announced in March following poor 2019 results.

The Bank of England said on Thursday that it would be changing the way it looks at Pillar 2 capital targets, giving UK lenders more room to breathe during the coronavirus pandemic.

Equity investors remain fully committed to backing capital raised for companies wishing to repair their balance sheets but they are far more discerning when being asked to look at secondary sell-downs, given worries that equity markets are overinflated and their desire to save capital for primary deals.

The UK Debt Management Office has picked the banks to lead the sale of its new October 2061 conventional Gilt, which will be its second of an unprecedented two syndications in a single calendar month.

National Express has become the latest London-listed company to tap equity investors for emergency funding, with a £235m capital raising.

Royal Bank of Scotland has become the first European bank to issue subordinated debt in more than two months. It took advantage of strong demand in the sterling market this week, with investors confident that the UK lender will be well placed to withstand the economic impact of the coronavirus pandemic.

Hiscox, the London-listed insurance and reinsurance company, has raised £375m through a sale of 57.6m new shares. Sources said that a strong showing by the management team persuaded them to back the share offering during challenging times for the company as it faces the impact of the coronavirus pandemic.

US insurance companies that buy private placements are concerned the damaging effects of coronavirus on corporate earnings may prompt a flood of credit downgrades by the National Association of Insurance Commissioners (NAIC), the regulatory body which imposes upon them risk-based capital charges.

Martin McKinney, senior manager of medium-term funding at Santander UK, speaks to GlobalCapital about the impact the UK’s lockdown on the bank’s balance sheet, central bank liquidity, and the bank’s changing mix of regulatory and pure funding.

LondonMetric Property, the UK real estate development company, has completed a £120m ($149m) capital raising to fund the acquisition of new properties as part of its pivot into urban logistics.

The economic devastation has made an absolute mockery of predicting corporate earnings and therefore, equity valuation. Companies have given up on providing forward guidance leaving equity investors in the strange position of having to pick stocks without the earnings estimates that they have come to depend upon. Undoubtedly, this makes their work harder but it will also mean they must add to their repertoire of techniques for analysing companies. Many will flounder but a few are bound to shine.