• Sustainability-linked #bonds were billed as the next big thing when the first one was sold in 2019 but expected 2020 volume of up to €20bn has so far failed to materialise. Read more: Link https://t.co/lPgSAJDzXA
    IFR Fri 29 May 2020 20:09

    Sustainability-linked bonds were billed as the next big thing when the first one was sold in 2019 but expected 2020 volume of up to €20bn has so far failed to materialise and deals remain in the wings as work continues on resolving technical issues.

    The coronavirus pandemic has been the obvious impediment to the asset class taking off. But there are other obstacles that issuers are having to navigate.

    Bankers nonetheless counsel against writing off sustainability-linked bonds and say that the market could see its second transaction before the end of summer as interest and enquiries remain high.

    "In the coming months we expect to see more innovation in the sustainability-linked space and different structures in this format," said Cristina Lacaci, Morgan Stanley’s head of green and sustainability bonds in EMEA.

    Sustainability-linked bonds, also known as KPI-linked or SDG-linked bonds, are tied to companies' ESG strategies and the UN's Sustainable...

  • RT @AndrewHedlund: Top notch stuff again from @KristenHaunss Link
    IFR Fri 29 May 2020 18:54

    You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

  • Citigroup leapt from seventh to first in #EMEA ECM league tables last week thanks to Tuesday evening's SFr2.55bn (US$2.64bn) sale of Saint-Gobain's stake in Sika, but there was no fanfare. Read more: Link https://t.co/Krb5Q1nxhH
    IFR Fri 29 May 2020 18:34

    Citigroup leapt from seventh to first in EMEA ECM league tables last week thanks to Tuesday evening's SFr2.55bn (US$2.64bn) sale of Saint-Gobain's stake in Sika, but there was no fanfare: the deal was not covered and the proceeds secured by the seller implied that the lead had given up at least some of its fee in the process.

    Some rivals inevitably enjoyed the US bank's misfortune with wild speculation about how much of the 10.75% stake it was left with and how losses could quickly add up if the stock dropped –

    shares on Friday remained below where Citigroup had bought them.

    However, there was also genuine frustration and no little surprise that the accelerated bookbuild had fallen short as it was hotly anticipated. Some institutions had approached French construction materials company Saint-Gobain directly in recent weeks to express interest in buying the shares, when normally their interest would be conveyed via banks. Multiple banks had also pitched prices...

  • The premier annual conference for the US structured #finance industry in 2021 has been postponed by two months in the wake of the #Covid-19 pandemic. Read more: Link by @RichardLeong2 https://t.co/l2M3Rcorzk
    IFR Fri 29 May 2020 17:14

    The premier annual conference for the US structured finance industry in 2021 has been postponed by two months in the wake of the Covid-19 pandemic.

    The Structured Finance Association said Friday that its yearly gathering will now take place at the Aria resort and casino in Las Vegas from May 2 to 5, 2021 - a move from the original dates of February 28 to March 3, 2021.

    Earlier this year, the industry group canceled its SFCanada 2020 due to the virus outbreak.

    "We are grateful for the support of our sponsors, board, and member institutions and look forward to seeing everyone in Las Vegas in person next year,” SFA chief executive Michael Bright said in a statement.

    “However, out of an abundance of caution and with the safety of our members, attendees, and staff in mind, we felt it best to adjust the dates of SFVegas 2021 to help ensure a successful event," he said.

    SFA held its annual conference at the Aria back in February with more than 8,200...

  • Western Asset Management earlier this month launched a new sustainable #bond fund called #ESG Core Plus that seeks to invest in companies that eliminate risk through strong environmental, social and governance criteria. Read more: Link by @Wilbur_Hoffman https://t.co/yrb7yOh92Y
    IFR Fri 29 May 2020 16:04

    Western Asset Management earlier this month launched a new sustainable bond fund called ESG Core Plus that seeks to invest in companies that eliminate risk through strong environmental, social and governance criteria.

    The fund will support issuers who offer new ESG-linked bonds in the primary market and has already been involved in recent green and social bond pricings from Citigroup, Bank of America and Royal Bank of Scotland.

    "It is similar in many respects to one of our flagship strategies our US Core Plus product," said Bonnie Wongtrakool, global head of ESG investments at Western Asset Management.

    "It's drawing from those same teams and going through that same general investment process, but the difference is really this added emphasis on ESG."

    The fund intends to outperform the Bloomberg Barclays US Aggregate US Unhedged Index while targeting 20% of allocations to issuers aligned with the UN Sustainable Development Goals.

    ESG bond issuance is...

  • Asia’s capital markets are helping fund the response to #Covid-19 through a rapid growth in social #bond issuance. Read more: Link @HSBC https://t.co/Gohh85S6W4
    IFR Fri 29 May 2020 15:18

    Asia’s capital markets are helping fund the response to Covid-19 through a rapid growth in social bond issuance

    Food delivery companies in China are giving doctors free rides. Distilleries in India are making hand sanitiser. Banks in Hong Kong are allowing customers to pause loan repayments. Across Asia Pacific, businesses are re-tooling their operations to meet new needs arising from the Covid-19 pandemic, closing the gap between business and social responsibility.

    Capital markets, too, are showing their ability to support the response to the crisis through the issuance of social bonds, which finance positive social outcomes. According to data from HSBC, social bonds accounted for 5% of total Asia Pacific issuance of Green, Social and Sustainability (GSS) bonds in the whole of 2019, but this had risen to 41% by April 2020 because of the market’s response to Covid-19.

    Having lagged behind Europe and the US in the early days of the green bond market,...

  • The Federal Reserve bought US$1.177bn of exchange-traded fund shares for its secondary corporate #bond facility this week, one of the tools to improve conditions in #credit markets that were disrupted by #Covid-19. Read more: Link by @RichardLeong2 https://t.co/bM905tZuHW
    IFR Fri 29 May 2020 15:08

    Corrects weekly purchase, total purchase figures, clarifies total of SMCCF from Treasury's equity invesment

    The Federal Reserve bought US$1.177bn of exchange-traded fund shares for its secondary corporate bond facility this week, one of the tools it created in March to improve conditions in credit markets that were disrupted by the Covid-19 pandemic.

    The central bank bought US$1.177bn in exchange-traded funds for its Secondary Market Corporate Credit Facility in the week ended May 27, bringing its total ETF holdings for the program to US$2.978bn, Fed data released on Thursday showed.

    The Fed's latest figures showed a huge overall jump in net portfolio holdings in its corporate bond programs to US$34.853bn from prior week's US$1.801bn.

    But the increase largely related to a transaction on May 22 that used 85% of the US Treasury's US$37.5bn equity investment in the facility to add nonmarketable Treasuries to the facility.

    Excluding that US$31.875bn...

  • Hedge fund AKO Capital sold its 5.2% holding in UK aero engine maker Rolls-Royce on Wednesday night, triggering what is believed to be the first #ECM trade in the name since a rights issue in 1995. Read more: Link https://t.co/jNCQwiN7Js
    IFR Thu 28 May 2020 20:13

    Hedge fund AKO Capital sold its 5.2% holding in UK aero engine maker Rolls-Royce on Wednesday night, triggering what is believed to be the first ECM trade in the name since a rights issue in 1995. It is also understood to be the first European risk trade since the coronavirus pandemic began where there was no wall-crossing exercise.

    There was no auction but bookrunner Morgan Stanley was on risk for the secondary sale of 96.69m shares, representing AKO Capital's entire holding and four days' trading.

    Launched with guidance of 318p to the 346.1p close, books were covered after around 20 minutes, with pricing coming at the bottom for a deal size of £307m and an 8.1% discount. That appears wide but followed a 10% rise in the stock that day, with the shares up more than 40% since mid-May. That said, the stock is down nearly 50% since January.

    A book of around 70 lines was multiple times covered and highly concentrated, with the top 10 accounts taking more than half...

  • ICMA has released new analysis of the impact of the #coronavirus crisis on the European secondary corporate #bond market, and in particular the significant effects on #liquidity. Read more: Link https://t.co/3as3E6Nna9
    IFR Thu 28 May 2020 18:28

    ICMA has released new analysis of the impact of the coronavirus crisis on the European secondary corporate bond market, and in particular the significant effects on liquidity.

    Hugely widening bid-offer spreads highlighted the deterioration in market liquidity, which had reached a nadir by March 18 when participants reported that the market had become dysfunctional, ICMA said.

    The report indicates one critical factor was the breakdown of electronic trading during the crisis.

    "It would have been funny if it was not so serious, but we heard trades were getting done, it's just that the prices had nothing to do with what was on the screens," said a syndicate banker.

    This was not caused by any technological failure, but rather the market had become too volatile and too illiquid for dealers to provide pricing across electronic platforms. In the end market participants resorted to voice trading to find a solution, and algorithmic trading all but...

  • It was a day of #ESG firsts in the European corporate market on Thursday with Pearson printing an education-focused social bond and BASF selling an inaugural green #bond from the chemicals sector. Read more: Link https://t.co/rnh3G2tS6w
    IFR Thu 28 May 2020 16:33

    It was a day of ESG firsts in the European corporate market on Thursday with Pearson printing an education-focused social bond and BASF selling an inaugural green bond from the chemicals sector.

    Green and social bonds from corporate issuers are in high demand as the investor pool expands and supply is yet to fully recover from the onset of the Covid-19 crisis.

    "The demand for corporate green bonds remains as high as in the past, if not higher, as new green bond funds continue to be created and need to invest, and corporates provide diversification and some yield pickup," said one DCM banker.

    "It is obvious that a few green projects have been postponed due to the crisis, but this will eventually catch up in H2, as corporate finance teams can refocus."

    PEARSON PIONEERS EDUCATION

    The new sterling bond from UK publisher Pearson (Baa2/BBB-) marks the first corporate social bond to announce use of proceeds focusing on educational...

  • Chinese tech giant Tencent Holdings extended its curve to 40 years with a US$6bn four-tranche 144A/Reg S #bond issue that drew strong support from US #investors despite heightened political tensions between the two superpowers. Read more: Link https://t.co/0vfb9jCvVT
    IFR Thu 28 May 2020 15:22

    Chinese tech giant Tencent Holdings extended its curve to 40 years with a US$6bn four-tranche 144A/Reg S bond issue that drew strong support from US investors despite heightened political tensions between the two superpowers.

    A US$1bn 1.81% long five-year January 2026 tranche priced at Treasuries plus 145bp, while US$2.25bn 2.39% 10-year, US$2bn 3.24% 30-year and US$750m 3.29% 40-year tranches came at spreads of 170bp, 180bp and 185bp, respectively.

    The transaction came on a busy day in Asia, with a total of seven issuers raising US$10bn from US dollar bonds, and as US-China relations plumbed new lows over a new national security law for Hong Kong. US Secretary of State Mike Pompeo said on Wednesday that Hong Kong no longer warranted special treatment under US law because of the growing Chinese influence on the city.

    Hong Kong-listed Tencent attracted orders totalling US$36bn at final guidance, including US$1.51bn from the leads, and bankers on the deal said...

  • Let IFR be your eyes on the Rates Markets. Email us at ifr.clientsupport@refinitiv.com for more information https://t.co/WZgzENcT19
    IFR Thu 28 May 2020 13:17
  • #Bankers working from their kitchens or bedrooms may raise new risks around handling sensitive information, which has been heightened by the prospect of big #debt and #equity fundraisings from companies. Read more: Link https://t.co/ovPLaSL2xK
    IFR Wed 27 May 2020 18:26

    Bankers working from their kitchens or bedrooms may raise new risks around handling sensitive information, which has been heightened by the prospect of big debt and equity fundraisings from companies, Britain's financial watchdog said.

    As a result, financial firms need to be on watch to prevent any misconduct or sharing of insider information.

    "In response to the crisis, we anticipate many issuers will need to seek additional capital, leading to an increase in primary market activity. This, coupled with alternative working arrangements, will make it as important as ever that the right controls around market abuse, conduct, and managing conflicts of interest are in place," the Financial Conduct Authority said in its latest market newsletter, issued on Wednesday.

    "Given market uncertainties and changed working arrangements, issuers need to be extra vigilant about the possibility of leaks and rumours, and identify whether there has been a breach of...

  • The new #ECM funding window that runs through July 4 opened with a renewed frenzy this week. For further information or to arrange a trial contact client support at ifr.clientsupport@refinitiv.com https://t.co/mhH5NhXTYX
    IFR Wed 27 May 2020 16:21
  • Blackstone has bought back a large chunk of PIK toggle bonds issued by its portfolio company, Spanish gaming company Cirsa, causing the price of the #bonds to surge in secondary. Read more: Link https://t.co/2s3NulvT2b
    IFR Wed 27 May 2020 16:16

    Blackstone has bought back a large chunk of PIK toggle bonds issued by its portfolio company, Spanish gaming company Cirsa, causing the price of the bonds to surge in secondary.

    The notes, the 7.25% October 2025s, jumped 10 points in secondary to 50 bid on Wednesday, up from 40 the previous day, according to MarketAxess data. The bond was seen bid as low as 30 on May 22.

    Funds managed or advised by Blackstone acquired around €120m of the outstanding €400m senior secured PIK toggle bonds due 2025, issued by Cirsa subsidiary LHMC Finco 2, through "open market purchases and individually negotiated transactions", according to a quarterly report.

    One high-yield investor said the note repurchase was a sign that Blackstone was "massively supporting" its portfolio company Cirsa.

    "It's very good signalling," said the investor. "They are effectively increasing their equity ownership."

    A source familiar with Blackstone said the private equity company is...

  • Hong Kong Exchanges and Clearing announced plans today to launch derivatives contracts tracking MSCI's Asia and emerging markets indices as Singapore Exchange said its licensing agreement with the US index provider would come to an end. Read more: Link https://t.co/endetTJQu0
    IFR Wed 27 May 2020 15:56

    Hong Kong Exchanges and Clearing announced plans today to launch derivatives contracts tracking MSCI's Asia and emerging markets indices as Singapore Exchange said its licensing agreement with the US index provider would come to an end.

    Under a 10-year agreement, HKEx unit Hong Kong Futures Exchange will receive a suite of MSCI equity indexes on which it will base an initial 37 futures and options contracts.

    The agreement adds to pressure on SGX, which already found itself in direct competition with HKEx last year as a derivatives trading hub for Chinese A-shares after the Hong Kong bourse announced plans to launch futures contracts on the MSCI China A index, putting it in direct competition with SGX's FTSE China A50 contracts.

    The Singaporean bourse, which makes around half of its revenues from derivatives, said today its licensing agreement with MSCI would not be renewed from February 2021 with the exception of the MSCI Singapore index. It estimated that...

  • Chinese tech giant Tencent Holdings is marketing a multi-billion 144A/Reg S offering of US dollar senior unsecured notes in four tranches. Read more: Link https://t.co/M9OMGSJbxr
    IFR Wed 27 May 2020 15:41

    adds books and fair value estimates

    Chinese tech giant Tencent Holdings is marketing a multi-billion 144A/Reg S offering of US dollar senior unsecured notes in four tranches.

    Initial price guidance for a long five-year January 2026 tranche is Treasuries plus 175bp area. Guidance for 10-year, 30-year and 40-year tranches is Treasuries plus 200bp area, 220bp area and 240bp area, respectively.

    Books topped US$10bn across the four tranches before noon, including US$1.14bn from the leads.

    The bonds have expected ratings of A1/A+/A+, on par with the issuer.

    The bonds will be issued off the company's US$20bn global MTN programme and will price as early as today during New York hours.

    The size of the deal is likely to be up to US$6bn, matching the issuer's offshore debt issuance quota and making it the largest dollar bond deal from a Chinese issuer this year.

    Research firm CreditSights sees fair value for the four tranches at 142bp, 152bp,...

  • Commerzbank has announced plans to establish a dedicated Additional Tier 1 issuance programme, in order to increase its flexibility amid volatile markets and take advantage of eased #capital requirements. Read more: Link https://t.co/7LmVZp3wDT
    IFR Wed 27 May 2020 14:56

    Commerzbank has announced plans to establish a dedicated Additional Tier 1 issuance programme, in order to increase its flexibility amid volatile markets and take advantage of eased capital requirements.

    The German lender said on Tuesday its board has decided to launch a programme that will ultimately allow it to issue up to €3bn of AT1. The timing of the first issuance under the programme will be decided at a later date.

    Commerzbank issued its first AT1 last July. That US$1bn deal was issued using standalone documentation.

    Bankers said the main advantage of having an established framework versus using standalone documentation is that it allows banks to prepare deals more quickly and enter the market more nimbly.

    Such flexibility is likely to be useful in the coming months. Market participants say issuance windows for subordinated debt could be interrupted by bouts of volatility due to the coronavirus pandemic and will be harder to spot.

    The AT1...

  • RT @Chris_Whittall: ICYM: Our exclusive w/ Pimco's credit chief on the "once in a decade" opportunity to buy US corporate bonds "The pendu…
    IFR Wed 27 May 2020 13:06
  • RT @Chris_Whittall: Spanish gaming company Cirsa's PIK toggle bonds are trading up 10 points at 50 cents after Blackstone bought back over…
    IFR Wed 27 May 2020 13:06
  • Hertz Chapter 11 bankruptcy protection filing is bringing attention to risks in this sector of the ABS market. Read more: Link https://t.co/d2XNxJ9WIU
    IFR Tue 26 May 2020 18:50

    Adds investor quotes, background on ABS

    Hertz Chapter 11 bankruptcy protection filing is bringing attention to risks in this sector of the ABS market.

    Last Friday, the car rental company filed after a slump in used car prices combined with a drop in demand for car rentals squeezed the ABS structures the firm used to finance its vehicles.

    The combination of those two negative trends in a bankruptcy scenario is drawing concerns over the legal and financial protections of a financing structure that has traditionally served both borrowers and investors well.

    "It has been a sector we've always been wary of," said John Kerschner, head of US securitized products at Janus Henderson. Rental car ABS do not have "good risk/return metrics even at the AAA level."

    Like other car rental companies, Hertz has used asset-backed securities as a cheap line of funding to help finance its fleet of vehicles.

    The firm had over US$6bn outstanding ABS, according to...

  • RT @IFRsteves: "It is a fabulous good news story if you don't want to look at the downside risks..." Link
    IFR Tue 26 May 2020 16:35

    You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more

  • Mitsubishi UFJ Financial Group used the JGB yield curve as a benchmark in its latest dual-tranche subordinated #bond offering, as it prepares for the planned end to the London interbank benchmark rate at the end of 2021. Read more: Link https://t.co/BvS8l95yer
    IFR Tue 26 May 2020 16:30

    Mitsubishi UFJ Financial Group used the JGB yield curve as a benchmark in its latest dual-tranche subordinated bond offering, as it prepares for the planned end to the London interbank benchmark rate at the end of 2021.

    The end of Libor will not have a big impact on the Japanese credit market, where there are not many floating rate bond deals and most domestic fixed-rate bonds price over a specific Japanese government bond. However, Japanese issuers may need an alternative benchmark as hybrid bonds, which usually have a floating-rate coupon after a first call date, have become increasingly popular on the back of robust demand from investors.

    Usually in the domestic market, a Japanese bank uses a specific JGB as a pricing benchmark for a fixed-rate subordinated bond and mid swaps for a callable sub bond. The coupon on a callable bond is generally a fixed rate based on mid swaps until a first call date and switches to a floating rate based on Libor if not...

  • European sovereigns are again converging on the euro primary market with EU heavyweight France at the fore of a new wave of financing for national #coronavirus responses getting under way. Read more: Link https://t.co/7i9v1gPyP0
    IFR Tue 26 May 2020 15:15

    European sovereigns are again converging on the euro primary market with EU heavyweight France at the fore of a new wave of financing for national coronavirus responses getting under way.

    France has mandated banks for its first syndicated offering since hiking its 2020 funding requirement. An all-European quintet of Barclays, BNP Paribas, Deutsche Bank, Natwest and Societe Generale will lead manage the new May 2040 offering.

    In addition, both Estonia and Iceland have announced new benchmarks in the single currency. The former's deal, which is set for launch next week, would mark its first international bond in nearly two decades.

    Meanwhile, Denmark has upped its financing requirement and expected bond volume for the year. Although not in the eurozone, the country's krone is a euro proxy.

    The Triple A sovereign also said that it may issue in foreign currencies this year.

    As reported, Agence France Tresor (AFT) was assigned a €309.1bn short and...

  • Moderna followed up an announcement that its efforts to develop a #Covid-19 vaccine are making decent progress by raising US$1.34bn from a block sale of primary #stock. Read more: Link https://t.co/7UnwnK7F4e
    IFR Tue 26 May 2020 14:00

    Moderna, a biotech notable (so far) for its expertise in the funding markets as much as its ability to develop successful treatments, followed up an announcement that its efforts to develop a Covid-19 vaccine are making decent progress by raising US$1.34bn from a block sale of primary stock.

    That the revelation was more for disclosure reasons than proof of success was of little immediate consequence.

    Moderna shares soared 30% – to a high of US$87 before closing the day at US$80 (up 20%) – following the release on Monday morning of interim Phase I results that seemed to suggest that the vaccine had generated an immune response in test subjects. At the close, Moderna's market cap was US$29.6bn – remarkable for a company with no approved products – while US stocks added some US$1trn on prospects for re-opening of the global economy.

    Moderna seized on that momentum to launch the block sale that evening.

    The money raised gives it the ability to manufacture...

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