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High-yield investor appetite for coronavirus-impacted M&A risk is set to be tested with Italian gambling company Gamenet's planned €640m financing for its take-private by private equity group Apollo.

Global coordinators Credit Suisse (lead-left), Barclays and UniCredit are marketing the dual-tranche deal, which is split between a €340m floating-rate senior secured 5NC1 bond and €300m fixed-rate senior secured 5NC2 notes.

The notes will be supplemented by a €100m RCF, said the company via a press release.

The glocos, along with joint bookrunners Banca IMI and BNP Paribas, are holding investor calls on Monday, followed by virtual meetings until Wednesday.

The bond is expected to price later this week, according to a source familiar with the deal.

Proceeds from the deal will repay the bridge loan for Apollo's purchase of Gamenet and will also refinance Gamenet's two outstanding floating-rate notes, both of which are €225m senior secured 2023s, one...

TenneT is maintaining a five-year run of purely green bond market funding, announcing a hybrid mandate and kicking off a week that is expected to see very light high-grade corporate supply in Europe.

Estimates for issuance this week are dramatically down on the €10bn-€15bn the market became accustomed to during the second quarter.

"We think closer to €5bn this week and next," said one syndicate banker.

"I also think we will see much more normalised levels of issuance than we saw in Q2, unless there is a global economic shutdown again due to Covid-19, which will cause companies to panic."

However, a market mostly void of new issues presents an opportunity for those issuers that have projects to fund.

The Dutch electricity transmission operator TenneT (A3/A-) has a large capital expenditure plan for the years ahead tied to developing its network and is now taking advantage of stable conditions and limited supply.

TenneT opted for subordinated...

Barclays said its capital strength has been boosted by a number of regulatory issues in recent months to lift its common equity Tier 1 ratio to about 14% at the end of June, up from 13.1% at the end of March and far above expectations.

That is even after extra provisions the bank might have to take in the second quarter due to the coronavirus crisis and lockdown.

In an unusual and unscheduled release on Monday, Barclays cited several positive regulatory factors that could lift hopes the bank will increase its dividend payouts. Its shares were up 2% in early afternoon trading, outperforming a 1% rise in the European bank index.

The positive factors include amendments to the EU's Capital Requirements Regulation that came into effect in June, including transitional relief relating to IFRS9 impairment, Barclays said. It also benefited from revised rules for the calculation of the prudential valuation adjustment to capital.

The bank said its risk-weighted...

Trading in ESG-friendly credit derivatives has got off to a slow start, with only a handful of contracts of the iTraxx MSCI ESG Screened Europe index changing hands since its launch in late June.

There is no volume or position data on the new index in the Depository Trust & Clearing Corp’s Trade Information Warehouse, a central repository that collects data on the credit-default swap market. That indicates there were fewer than 10 contracts outstanding across the entire market after the first two weeks of trading.

Funds focused on investing in companies that meet certain environmental, social and governance standards have grown markedly in recent years to almost US$790bn, according to Morningstar. Bond traders believe IHS Markit’s ESG-friendly CDS index, the first widely available sustainable CDS product, can serve as a useful tool for such investors.

But the muted take-up so far underlines the challenges facing new products in gaining traction – even in...

More investors bid for a second round of loans from the Federal Reserve's Term Asset-Backed Securities Loan Facility this week to buy ABS and CMBS than the initial round last month, according to Citi.

Bids for TALF loans on July 6 totaled US$723.16m, close to tripling the US$252.16m in the first round on June 17, Citi said.

"Higher-spread sectors dominated the first two TALF subscription dates, while auto, credit card, equipment, floorplan and leveraged loans were not part of the first two subscriptions," Citi analysts said in a research note on Thursday.

Still, current TALF usage remains well below the level seen more than 11 years ago when the program was first established to counter the meltdown in the securitization market due to the sub-prime mortgage crisis.

Demand for TALF loans right now has been low as spreads on many eligible ABS, CMBS and collateralized loan obligations have tightened to levels that made them not profitable for investors to...

US corporates have issued record-breaking amounts of debt in recent months to help weather the financial impact of the coronavirus pandemic, but investors remain largely upbeat on the long-term outlook for credit quality as the market heads into what is expected to be a bleak second-quarter earnings season.

Investment-grade companies have taken on a record-setting US$1.22trn of debt in the first half of this year, but credit analysts and bankers believe borrowers have a sufficient number of levers to pull to begin paying it off next year.

For example, companies are putting off acquisitions and cutting buyback programmes in a sign they will use the cash for debt reduction, according to asset management firm Columbia Threadneedle's analysis of 170 US-based companies.

The firm estimates that group of companies will spend US$180bn on buyback programmes this year, down from expectations of US$270bn at the start of the year. Additionally, those companies are...

Adds NY Fed's Singh comment

The Federal Reserve added US$710m to its holdings of corporate securities in the week ended July 8, marking the smallest weekly increase since Fed started buying these securities in May, Fed data released on Thursday showed.

The latest weekly purchases lifted the Fed's combined holdings of corporate bond exchange-traded funds and individual corporate bond issues to US$10.72bn.

The smaller purchase came after comments from a senior official at the New York Federal Reserve who said on Wednesday the central bank has slowed its corporate purchases for its secondary market program, Secondary Market Corporate Credit Facility, as credit conditions have improved.

Since the SMCCF's launch, the Fed has slowed the pace of purchases from about US$300m a day to "a bit under" US$200m a day, said Daleep Singh, head of the markets group at the New York Fed.

"If market conditions continue to improve, Fed purchases could slow further,...

The primary market for Latin American dollar bond deals is on a roll as a string of issuers out of the region seek to raise cheap funding in a market still buoyed by monetary easing worldwide.

Bankers focused on the region are finding themselves particularly busy this month as corporates from Chile to Mexico dive into a largely receptive bond market.

In the first eight days of July alone, Latin American borrowers have raised close to US$4bn with deals from miner Vale, energy company Raizen, state-owned utility EPM, telco ColTel and El Salvador.

And on Thursday, Colombian pipeline Ocensa and Mexican bank Banorte were also hitting the market.

This does not include a possible deal from Chilean financial services firm Tanner and debt exchanges from Argentine oil firm YPF and Telecom Argentina as they look to attend upcoming maturities.

"We're seeing a good mix of sovereigns and corporates. It mostly has to do with the timing of the market, interest...

(Reuters) Chinese state lenders are revamping contingency plans in anticipation of U.S. legislation that could penalise banks for serving officials who implement the new national security law for Hong Kong, sources at five state financial institutions said.

In worst-case scenarios under consideration by the Bank of China and Industrial and Commercial Bank of China, the lenders are looking at the possibility of being cut off from U.S. dollars or losing access to U.S. dollar settlements, two sources said.

The dollar is the dominant global currency for international payments and central bank reserves.

“We are hoping for the best, but preparing for the worst. You never know how things will turn out,” one of the sources said.

Reflecting concern over the erosion of the former British colony’s autonomy, the U.S. House and Senate unanimously passed the bill last week. It has yet to be signed into law by President Donald Trump.

The bill calls for sanctions...

The European Bank for Reconstruction and Development is scaling up its presence in climate and environmental finance, with the view to becoming a majority green bank by 2025.

The bank unveiled a new Green Economy Transition plan (GET 2.1) on July 8.

As part of the scheme, EBRD will gear more than half of its annual investments towards the green economy by 2025 and will fully align its projects with the Paris Climate Agreement.

EBRD also aims to reduce cumulative greenhouse gas emissions by 25 million to 40 million tonnes a year over the next five years.

The new plan builds on the success of a previous GET programme EBRD established in 2015 and under which it increased its average green finance ratio from 25% to 40%.

To date, the bank has signed €34bn in green investments and financed over 1,900 green projects which are expected to reduce carbon emissions by 102 million tonnes a year.

Furthermore, EBRD says it financed over 2.2GW of new...

Evidence is suggesting that European corporates have been sitting on much of the record breaking levels of liquidity raised during the first half of the year, implying that perhaps the outlook for credit quality may not be as dark as first thought.

The €450bn of net borrowing that European corporates engaged in during March-May 2020 via bonds and loans marked a near three times increase compared to the €158bn issued during the same period in 2019, according to Citigroup analysts.

It also indicated a 5% increase in just three months, of the debt that European companies have outstanding relative to the €9.2trn total.

"In the first stage of a crisis you tend to see that dash for liquidity as companies essentially fund to ensure their survival," said one DCM banker.

Despite this recorded level of borrowing as companies sought to ensure they could cover costs during lockdowns, Citigroup analysts suggest that much of this liquidity is still being held by the...

The Republic of France breathed life into the linker market on Wednesday, bringing a rare syndication linked to the domestic index despite an anaemic outlook for growth and inflation.

European sovereigns have focused on printing large benchmarks in recent months as they look to chip away at their increased Covid-19 related funding needs.

However, with its two conventional 20-year and 30-year benchmarks now out of the way, France was keen to bring to fruition what was a longstanding project.

It had indicated in its 2020 financing programme that it would issue a new 10 to 15-year OAT indexed to the French consumer price index (OATi).

"We started having conversations with real money investors last year," said Anthony Requin, AFT's chief executive.

"The domestic linker market responds to a specific demand, in particular from banks that are distributing the Livret A savings books which are very popular in France. Despite what you could consider a low...

Credit Agricole CIB has arranged what it believes is the industry's first green ABCP note to finance electric vehicles in client auto loan and lease pools.

The US$25m note was issued from the bank's La Fayette Asset Securitisation multi-seller ABCP programme. CA says the US trade is the first green note issuance from any of its three ABCP programmes (the other two are called Atlantic and LMA) but it expects numerous green note issues from the programmes to follow in the future.

"We look forward to developing further green structured financing opportunities for ESG investors within our ABCP and ABS platforms by expanding the flow of EV and hybrid electric vehicle financing," said Michael Guarda, regional head of financing and funding solutions Americas at Credit Agricole.

Just over three months ago, European high-yield syndicate bankers were finding it near-impossible to usher borrowers to the primary market, as panicked companies looked instead to shore up their liquidity with bank and government-backed loans.

As economies around the world reopen from state-imposed lockdowns, bankers say their job has become much easier.

Highlighting the shift, Swiss alarm-maker Verisure, the borrower which in April reopened a euro high-yield market that had passed two months without a deal, returned this week with a debt package that will refinance €1bn of senior credit facilities.

The company announced €500m-€700m of six-year non-call two senior secured notes on Wednesday, alongside an earlier-announced €300m-€500m six-year Term Loan B.

Proceeds from both instruments (B1/B, S&P/Moody's), will repay drawings in full under its term loans.

As the market has recovered, bankers have been able to convince many of the healthier...

Kookmin Bank made its entrance in the euro covered bond market with a €500m sustainability bond on Wednesday, paying a pick-up versus a recent deal from a Korean peer but attracting a substantially bigger book.

Leads BNP Paribas, Citigroup, Credit Agricole, JP Morgan, HSBC and Societe Generale opened books for Kookmin's €500m (no-grow) five-year deal with initial price thoughts in the high 40s over mid-swaps.

Guidance was set at 45bp area before the deal was launched at 40bp. Books closed at over €2.2bn (including €75m JLM interest).

The deal, marketed in investor calls from last Wednesday, is the first covered bond issued under Kookmin's sustainability bond framework. Kookmin has previously issued sustainability bonds in other formats across the capital structure.

The framework facilitates the financing of a range of green or social assets, and the bank added that part of the proceeds of the new issue may be used to mitigate adverse effects of the...

Rabobank made an early move to refinance an Additional Tier 1 not due to be called for another year, preferring to lock in attractive funding costs rather than take the risk of waiting and seeing levels deteriorate.

The Dutch issuer emerged on a bumper day for subordinated issuance, with competing supply coming from BBVA, which priced a debut green AT1, and Credit Agricole Assurances, which was bringing its first trade in over two and a half years with a Tier 2.

"There's an ongoing debate for issuers that have decent reset refis: when do you access the market on a carry basis and when do you look at how the market could evolve over time?" a lead said.

"If you look at BBVA today, they have an AT1 callable in April 2021 with a 918bp reset, while Rabobank has a June 2021 call which is by far its biggest reset at 670bp."

A helping factor in issuers' decision-making is the retracement in levels since the peak of the Covid crisis. Bank of America's CoCo index...

Deutsche Bank has agreed to pay US$150m in penalties to settle charges by a New York regulator that the bank made "significant" compliance failings in its relationships with the late financier Jeffrey Epstein.

New York State Department of Financial Services said on Tuesday the agreement marks the first regulatory enforcement action against a financial institution for dealings with Epstein, the registered sex offender who committed suicide last August.

"For years, Epstein's criminal, abusive behaviour was widely known, yet big institutions continued to excuse that history and lend their credibility or services for financial gain," New York governor Andrew Cuomo said in a statement.

New York said Deutsche Bank failed to properly monitor Epstein's transactions despite "ample" publicly available information about his sexual misconduct.

It said this led to the bank processing hundreds of transactions for Epstein that should have prompted more scrutiny,...

CEE shopping mall owner and operator NEPI Rockcastle paid a 20bp concession on its debut green bond on Tuesday, which was in line with the size of premium that Western European property companies are issuing with.

Syndicates began marketing the Johannesburg-listed real estate company's €500m July 2027s with a 45bp premium at a spread of 420bp over swaps, in part to help accommodate investor concerns around a sector that has been severely impacted by lockdowns.

Accounts focusing on western investment-grade corporates as well as EM funds showed interest in the deal, according to leads.

Romania accounts for the largest share of NEPI's portfolio by property value, at 38%. The next largest exposure, at 23%, is Poland.

With a book of over €1.1bn, including €75m of lead interest, NEPI was able to set the spread at 395bp. A lead put fair value at 375bp.

"All in all a good outcome. A 20bp NIP, landing through 400bp. Seven-year money when Merlin yesterday...