The UK is taking steps to extend the recognition of securitisations designated as simple, transparent and standardised in the EU for two more years as it works on an equivalence regime for deals from around the world.

The proposed extension was included in a draft law that was published on July 5 and recently picked up by lawyers at Morgan Lewis, who wrote in an update on August 9 that it would be welcomed by market participants.

Securitisations that qualify as STS benefit from favourable capital treatment on bank and insurance company balance sheets, boosting demand for the bonds. The rules were finalised by the EU in 2019, after years of debate.

The framework was copied into UK law when the nation left the EU and has gone through several amendments since the end of the Brexit transition period, including one to allow transactions designated as STS in Europe to qualify automatically as STS in the UK for the entire lifespan of the deal.

Originally, this...

Ukraine has won some breathing space for its battered fiscal accounts after creditors approved its request to suspend its debt payments for two years on Wednesday.

But with state-owned Naftogaz's debt standstill request still outstanding, and big doubts that it will pass, Ukraine still faces the prospect of a messy situation in the coming days if the gas company's bondholders seek better terms. Naftogaz's bonds are not government guaranteed and Naftogaz is an independent issuer. But as a vital cog in Ukraine's economy, especially given current circumstances, a second failed attempt by Naftogaz to get an offer over the line would be far from ideal for both itself and the government. Voting on its offer closes on Friday, with the outcome to be made public next Wednesday.

In the meantime, the sovereign and two other state-owned companies, Ukravtodor and Ukrenergo, that do have government-guaranteed bonds and also got backing from investors for their debt standstill...

The Securities and Exchange Commission on Wednesday said it fined mortgage firm Angel Oak Capital Advisors for misleading investors about its "fix-and-flip" loan securitization's delinquency rates.

The Atlanta-based firm and its portfolio manager Ashish Negandhi agreed to settle charges and pay penalties of US$1.75m and US$75,000, respectively. Angel Oak and Negandhi improperly diverted funds to cover up rising delinquencies on loans in a US$90m securitization issued in 2018, according to the SEC's order.

“Angel Oak and Negandhi failed to disclose the firm’s improper use of funds while continuing to issue larger securitizations, which painted a misleading picture for investors,” Osman Nawaz, chief of the division of enforcement’s complex financial instruments unit at the SEC, said in a statement.

The deal in question was a first-of-its-kind securitization of loans originated by an Angel Oak unit and extended to buy, renovate and sell – or fix and flip –...

Mexico priced its first US dollar sustainable bond on Monday, a U$2.2bn deal that allowed the Latin American sovereign to manage its liabilities and burnish its ESG credentials.

The 4.875% global notes due 2033 printed at 98.123 to yield 5.105% or 235bp over US Treasuries. Bookrunners BBVA, Goldman Sachs, JP Morgan and Natixis opened price talk 265bp area over US Treasuries, set guidance at 235bp–240bp and launched at the tight end.

The pricing momentum benefited from the year's longest rally in emerging markets bonds – one that also encouraged Guatemala to price an unexpected deal last week. The JPMorgan Global Emerging Market Bond Index has risen about 6.5% since July 14, the date it hit its lowest point in 2022 (following an 18% decline).

Proceeds from the offering are earmarked for refinancing, including concurrent bond tender offers. However, Mexico said it would invest a sum equal to the proceeds on programs included in its 2022 fiscal year budget that...

Faced with growing recession fears, European CLO managers have imported a new concept from the US as they seek to avoid being outmanoeuvred in a wave of restructurings.

The new language, which is designed to prevent rival creditors from cutting CLOs out of favourable distressed debt exchanges, will make its first appearance on this side of the Atlantic in Bain Capital Euro CLO 2022-2, which was priced in the last week of July.

The idea is to allow CLO managers to participate in the so-called priming transactions that companies have been known to strike with groups of creditors, to the detriment of others, by either shifting collateral into unrestricted subsidiaries – a technique known as asset drop-down priming – or layering in super senior debt ahead of existing loans, which is called uptier priming.

Such tactics have so far largely been confined to US borrowers such as J. Crew, Travelport, Revlon, Boardriders, TriMark and Serta Simmons Bedding. But as...

Asian Development Bank injected life into the sterling public sector market with a £350m long two-year on Thursday, though the changeable market is still a long way from its highs, with the £335m-plus books failing to cover the final size.

Leads HSBC, NatWest Markets and TD Securities priced the bond at 64bp over the 2.75% September 2024 Gilt, 1bp in from guidance and around 10bp back of secondaries, according to a lead. He said that spread did not constitute a new issue concession, citing dislocation between secondary prices and clearing levels in primary. The deal emerged after a successful transaction from DNB Bank the previous day that showed the market was in good shape.

Sterling offered ADB low single-digit arbitrage versus US dollar funding, the lead said, adding that the short tenor was where the deeper pockets of demand lay – central banks were the main accounts found there.

Commenting on timing, the lead said: “The view, in the end, was that the...

As deteriorating market conditions and rising rates have increased the level of extension risk in the Additional Tier 1 market, speculation has mounted around a series of call decisions approaching in the coming months.

Much of the discussion has centred on UBS Group's US$2bn 5% AT1, callable on January 31 2023. The bond stands out, as its 243.2bp reset spread is the tightest ever achieved on a European US dollar-denominated AT1.

The deal has traded below par for most of its life, reflecting investors’ expectation that it would be extended because UBS would be highly unlikely to refinance it on similar terms. The deal was bid at a cash price of 94.40 on Wednesday.

The bond came to be seen as the bellwether of a generation of AT1s issued during a period of relatively low yields and tight spreads. When it was issued late in January 2018, the yield of the Bank of America CoCo index hit what was then a record low of 4.35%, a far cry from its current...

Mexican non-bank financial institution Unifin announced on Monday it would stop making interest and principal payments on its debt, effective immediately.

Attributing its decision to the "global economic environment" affecting Mexico's non-bank financial sector, the company said it plans to move forward with a "strategic restructuring."

Unifin's dollar-denominated bond debt totals US$2.4bn, according to Refinitiv data.

The Mexico City-based company said it intended to negotiate standstill agreements for the short-term with its creditors. Rothschild, AlixPartners, Sainz Abogados and Skadden Arps are advising Unifin on the restructuring.

On Unifin's second-quarter earnings conference call, bondholders raised concerns about the company's ability to meet its obligations for bonds maturing in 2023 and 2024.

In response, CEO Sergio Camacho outlined plans for the company to issue a Ps4bn (US$196m) local long-term bond in the third quarter which he said...

Portillo’s late Monday launched a US$227.5m "synthetic" secondary to allow sponsor Berkshire Partners to pare its stake, a deal that follows a 45% surge in the Chicago-style hot dog chain's stock price in the past two weeks.

Jefferies, Morgan Stanley, Bank of America and Piper Sandler are leading the two-day marketed sale of 8m Class A shares or about 11% of outstanding A and B shares versus Monday's US$28.44 close.

Portillo's shares fell 9.1% to US$25.84 early in Tuesday's session after soaring to as high as US$28.93 on Monday, up sharply from US$19.61 on July 26 and now back above the chain's US$20.00 IPO price set in October last year.

Marking its first follow-on since the US$405.4m IPO, Portillo's is using proceeds to buy LLC units mostly from Berkshire (the "synthetic secondary" nature of the deal). Berkshire, which is reducing its stake to 54.3% from 65.6%, and other major holders have agreed not to sell more shares for 75 days.

The secondary stock...

DNB Bank stirred the dormant sterling bank senior unsecured market with the first new issue in two months on Tuesday, landing its inaugural senior non-preferred note in the currency, a £750m five-year non-call four transaction.

The deal is the first new bank senior unsecured bond denominated in sterling since June 7, when Royal Bank of Canada and OP Corporate Bank both tapped the market.

Some bankers said it came as a surprise to see a sterling trade so early in August, having expected the primary market to remain idle for another week at least.

"It demonstrates that you can still get an inaugural asset class done in sterling even in the peak summer months, which tells you that the nuances of the senior non-preferred security are viewed as being extremely vanilla in the sterling market these days and that you don't necessarily need to worry about a high level of marketing for an individual credit," said a banker away from the leads. "They are in part...

Credit Suisse has printed a US$6.25bn Yankee bond deal as the Swiss lender contends with a raft of issues and developments.

The bank is going through its second strategic review within a year, a second-quarter loss driven by its embattled investment banking division and credit rating downgrades.

In the midst of all this, the Swiss lender issued a three-part fixed-to-float senior unsecured note on Monday, and to attract investors it offered plenty of spread for the SEC-registered trade. The Baa2/BBB/BBB rated offering priced at Treasuries plus 325bp for the US$1.5bn four-year non-call three, 355bp for the US$1.75bn six-year non-call five and 380bp for the US$3bn 11-year non-call 10, tightening 20bp in each portion. Credit Suisse declined to comment.

Credit Suisse and other issuers that dived into the bond market on Monday may have been trying to get ahead of the July CPI reading on Wednesday. A higher-than-expected inflation number could spark a sharp jump in...

SoftBank Group founder Masayoshi Son, the man sometimes dubbed "Mr 10 Times", told investors and reporters on Monday that he had learned many lessons from a massive ¥3.1627trn (US$23bn) loss his company racked up in the past quarter.

Son admitted he had invested in too many companies and paid too much for them, conceding valuations had formed a bubble.

The loss, Son said, was largely due to the global stock market turmoil and rapid fall in the yen. The former resulted in ¥2.33trn of losses in Vision Funds, while the latter led to an ¥820bn loss on foreign currency debts.

The Japanese investment conglomerate has been in monetisation mode, as Son flagged six months ago.

According to SoftBank’s earnings report, for the April-June quarter, US$10.49bn was raised through pre-paid forward contracts using Alibaba Group Holding shares. In the January to March quarter, it raised US$13.17bn from such contracts.

The contracts are a type of derivative that...

Credit Suisse is shopping around a US$6.25bn Yankee bond deal as the Swiss lender contends with a raft of issues and developments.

The bank is going through its second strategic review within a year, a second-quarter loss driven by its embattled investment banking division and credit rating downgrades.

In the midst of all this, the Swiss lender is issuing a three-part fixed-to-float senior unsecured note on Monday, and to attract investors it is offering plenty of spread for the SEC-registered trade. The Baa2/BBB/BBB rated offering launched at Treasuries plus 325bp for the US$1.5bn four-year non-call three, 355bp for the US$1.75bn six-year non-call five and 380bp for the US$3bn 11-year non-call 10, tightening 20bp in each portion. Credit Suisse declined to comment.

Credit Suisse and other issuers that dived into the bond market on Monday may be trying to get ahead of the July CPI reading on Wednesday. A higher-than-expected inflation number could spark a sharp...

The recently found popularity of floating-rate notes is set to continue into the second half of the year as European high-yield issuers seek to maximise liquidity amid dire market conditions.

While FRNs are typically a more attractive product in a rising interest rate environment, strong issuance this year has also been driven by liquidity constrains.

“FRNs are allowing companies to maximise the amount of liquidity in the market by tapping a wider pool of investors,” said a leveraged finance expert. Issuers are trying to tap institutional loan investors, CLO managers, as well as the traditional high-yield community to raise cash, he said.

An investor said that FRNs are an easier product to pitch at the moment, as traditional investors like himself have had very little appetite for fixed-rate high-yield bonds, and CLO buyers have been happy to step in.

“[Issuers] will want to open up as many doors as they can by issuing different flavours of bonds,” he...

Asian Infrastructure Investment Bank took an unexpected step into the bond market on Monday, opening books for a US dollar five-year FRN as the supranational's major shareholder China announced fresh military drills in the seas and airspace around Taiwan.

Tensions between the two countries have escalated since last week's visit to the island by US House Speaker Nancy Pelosi, leading some bankers away to question the deal's timing, especially given that its last trade had already been a difficult one.

"I would not have gone this week, after nonfarm [payrolls] and the Fed; it's a very quiet week, that's why nobody else is coming," a syndicate banker said. "Also, I don't know who can buy it. Having said that, what's their downside? Their funding isn't exactly going to get any cheaper. You've got Russia and now China, so that's probably why they have to get it done, take what you can."

Volatile markets have made life more difficult for SSA issuers across the...

A touch of softness in the market did not deter BNP Paribas from extending the spree of Yankee bank supply on Monday morning, with a perpetual non-call seven Additional Tier 1 transaction.

The French bank's foray into the US dollar market comes after Barclays and Standard Chartered sold US$2bn 8% and US$1.25bn 7.75% AT1s, respectively, last week, in the busiest week for Yankee bank supply since January 2017.

The two UK trades were highly sought-after – in particular Barclays', which attracted final demand of US$7.25bn on Monday, versus Standard Chartered's US$3.1bn book on Thursday, according to sources familiar with the transactions. But confidence in the strength of the AT1 market was knocked slightly by moves seen after Friday's US non-farm payrolls, which proved better than expected.

While Barclays' transaction held firm above par and was quoted at a cash price of 100.20 on Monday morning, Standard Chartered's deal was quoted at 98.30.

"That is...

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Chinese property developer Logan Group has suspended interest payments on five US dollar bonds as it simultaneously works on a restructuring plan.

The five bonds are a US$400m 6.5% July 2023 note, a US$300m 5.75% January 2025, a US$300m 4.25% July 2025, a US$300m 4.7% July 2026 and a US$300m 4.5% 2028.

The company has a total of 13 US dollar bonds outstanding, according to Refinitiv data. Logan said in the stock exchange filing on August 7 that the suspension of interest payments was to facilitate a liability management solution and treat all creditors fairly, but it did not disclose additional details. One market analyst speculated that the company only suspended the imminent payments in order to buy more time to roll out a full restructuring plan.

Logan said in its filing that it has appointed Haitong International Securities as financial adviser and Sidley Austin as legal adviser for its liability management solution.

Logan has been struggling to...

The sleepy financial centre of Stockholm seems like an unlikely place for one of the biggest – if not the biggest – market innovations of the 21st Century. But in 2008, a confluence of factors came together that saw the Swedish capital give birth to the first-ever green bond. After a slow start, that one deal would eventually grow into an asset class that today generates US$1trn of issuance a year, raising vital funds to tackle climate change and create a more sustainable future.

It was born into an almost feverish world of financial innovation. This was just before the global financial crisis, the era of the quant, those mathematical prodigies lured into banking by the fat salaries on offer, who were becoming increasingly confident in their ability to structure ever-more complicated products. Banks were cooking up new varieties of alphabet soup on a regular basis – this was the era of the CDO, the CDO-squared and CPDOs.

It was also a time of...