Romania has returned for a second international bond in a little over a month, though this time in US dollars.

After raising €3.3bn in May, the sovereign is marketing Feb 2031 and Feb 2051 US dollar benchmarks at 265bp area over swaps and 4.25% area respectively.

Given the two-tranche nature of the deal, one investor expects Romania (Baa3/BBB-/BBB-, all negative) to raise between US$2.5bn and US$3bn.

Pricing has begun about 30bp back of fair value, according to a lead. He put fair value at 235bp for the long 10-year and at 3.97% for the long 30-year tranche.

Others think the starting concessions are bigger. "The long 10-year seems about 45bp cheap to fair value, while the long 30-year is about 40bp cheap," said an investor.

A banker away thought both notes began 35bp-40bp wide of fair value.

Although Romania is a well-known issuer in the US dollar market, it doesn't have a close reference point at the 10-year part of its curve. It has Jan...

The European Leveraged Finance Association is stepping up its drive to improve weak covenants in leveraged finance by categorising it as an ESG governance issue as it launches a public consultation on best practice for covenant transparency and disclosure.

The trade association's Insights report said that increased transparency on covenants is essential to good governance by leveraged finance borrowers, which are typically owned by private equity firms.

Investors are struggling to assess risks after a drastic increase in covenant complexity has given borrowers’ unfettered ability to pay dividends, incur additional debt, dilute security and transfer capital.

The financial strain on companies due to the coronavirus crisis is also expected to refocus attention on covenants as companies try to use aggressive provisions that have been built into their documentation in coming months.

“Transparency with all financial stakeholders is central to good governance...

Lloyds Banking Group chief executive Antonio Horta-Osorio is to step down next year after 10 years in charge that has seen him turn around its fortunes to take it out of government ownership, after former UBS investment banker Robin Budenberg joins the UK bank as chairman.

Lloyds said on Monday Budenberg will join on October 1 and take over as chair in early 2021. The bank said in October that current chair Norman Blackwell intended to retire before its 2021 AGM.

Lloyds said Horta-Osorio told the bank of his plans to leave at the end of June 2021 now it has fixed its chairman succession.

Portuguese Horta-Osorio, 56, took over at Lloyds in March 2011 and led the bank's revival after it had struggled in the wake of the 2008-09 financial crisis. Lloyds had bought HBOS to become the biggest UK retail bank, but had to take a £21bn government bailout, which left the government with a 41% stake.

Horta-Osorio sold assets, narrowed the bank's focus and slashed...

Barclays has appointed Chris Turner as chairman of global leveraged finance as part of several changes in its leveraged finance and financial sponsors business.

Turner has been head of leveraged finance and financial sponsors for Europe and Middle East for the past three years and will relocate to New York from London for the new role. He will report to Jean-Francois Astier, global head of capital markets.

Barclays appointed Susana Leith-Smith as head of EME leveraged finance, based in London. Leith-Smith has been leading the leveraged finance technology, media and technology team in EME for several years. She will report to Astier and Reid Marsh, head of banking for Europe, Middle East and Asia-Pacific.

Andrew Richards has been appointed as head of EME financial sponsor coverage. Richards has helped to grow the EME financial sponsors business since 2014 and is responsible for some major clients, after previously heading financial sponsors coverage in Asia. He...

Rare Austrian issuer Uniqa Insurance Group raised financing for a "transformational" acquisition with an inaugural senior issue and simultaneously sold its first green bond in a dual-pronged offering on Thursday.

The deal, which comprised a €600m 10-year senior unsecured tranche and a €200m October 2035 non-call 2025 green Tier 2 tranche, was Uniqa's first appearance in the primary market since 2015.

The senior unsecured was marketed with initial price thoughts of mid-swaps plus 200bp area, before guidance was set at 170bp area. The spread was subsequently set at 160bp upon a book in excess of €3.3bn (pre-rec).

The green Tier 2 tranche was marketed with IPTs of mid-swaps plus 435bp area, before guidance was set at 390bp.

It was ultimately launched at 370bp, with the book in excess of €2bn (pre-rec) via leads - HSBC, JP Morgan and Raiffeisen Bank International.

Bankers said demand was boosted by Uniqa's rarity in the market, and the fact it offers a...

Ukraine has pulled the bond deal it priced on Wednesday following the resignation of central bank governor Yakiv Smoliy.

The sovereign had priced a US$1.75bn March 2033 note at a yield of 7.3% that had signalled investors' confidence in the new US$5bn IMF agreement, in the nation's economic outlook, and ultimately in the governing class's ability to keep moving in a reformist direction.

But Smoliy's resignation, citing "systematic political pressure" on the bank's activities and attempts to curb its independence, meant the writing was on the wall for the deal.

"In light of the recent headlines, Ukraine is cancelling the new US$1.75bn March 2033 offering as well as the associated switch transactions," read an official statement on Thursday morning.

Investors said the finance ministry had little other option. "The Ukrainian MOF did the right thing, even though it leaves a hole in their pocket," said Tim Ash, senior EM sovereign debt strategist at...

KfW has slashed its annual funding target by €10bn after the German development bank took advantage of ultra-cheap funding offered by the European Central Bank.

In its mid-year announcement, the issuer said it had revised its annual funding target down to €65bn from the previously announced €75bn after it "expanded its sources of funding in an extraordinary year."

KfW participated in the targeted long-term refinancing of the Eurosystem through TLTRO III for the first time in June with a volume of €13.4bn.

The German government guaranteed issuer joined banks across the eurozone that borrowed a record €1.31trn last month under the generous liquidity scheme.

It was the first tender for the loans which were offered at even more generous terms than before, with three-year loans offered as low as minus 1%.

"When we saw this big task was coming up with regards to the coronavirus, we looked at what it meant for KfW, and we teamed up with the Bund," said...

Ukraine has pulled the bond deal it priced on Wednesday following the resignation of central bank governor Yakiv Smoliy.

The sovereign had priced a US$1.75bn March 2033 note at a yield of 7.3% that had signalled investors' confidence in the new US$5bn IMF agreement, in the nation's economic outlook, and ultimately in the governing class's ability to keep moving in a reformist direction.

But Smoliy's resignation, citing "systematic political pressure" on the bank's activities and attempts to curb its independence, meant the writing was on the wall for the deal.

"In light of the recent headlines, Ukraine is cancelling the new US$1.75bn March 2033 offering as well as the associated switch transactions," read an official statement on Thursday morning.

Investors said the finance ministry had little other option. "The Ukrainian MOF did the right thing, even though it leaves a hole in their pocket," said Tim Ash, senior EM sovereign debt strategist at...

ThyssenKrupp Elevator has made substantial tweaks to the covenants for its leveraged buyout bond, making the deal much more investor-friendly.

The changes mean the bond is now far more in line with market precedent for large sponsor transactions, said analysts at high-yield analytics firm 9fin.

On Wednesday it launched its €4.05bn-equivalent bond section of the financing package for the €17.2bn buyout of its elevator business - one of the biggest LBOs in the past decade.

The company is also marketing a €3.05bn-equivalent loan for the buyout.

Analysts and investors last week slammed the legal terms of the bond that will help finance ThyssenKrupp Elevator's buyout by a private equity consortium led by Cinven and Advent, but sources close to the deal said investor demand was still very strong.

One source close to the deal said it was in very strong shape, and that it was debatable whether the covenant changes were necessary.

"[Leads] are just...

Once a reluctant user of the syndication method, the Federal Republic of Germany has said it will use it for the third time in 2020, this time to issue a debut green bond. This represents a change of tack for the issuer, given that it had initially said it would sell the paper via auction.

In a statement released on Monday, the sovereign said it was planning to issue a twin green bond in September through a syndicate. The bond will have an identical maturity and coupon to Germany's plain vanilla 0% August 15 2030.

The adoption of the syndication method for the offering marks a change of approach for the sovereign.

It had previously said that "on the primary market, a new green federal security will be sold through the federal government's well-established tender process at a date and at a volume initially designated for increasing the conventional twin".

It will be the third time this year that Germany has strayed from its previous use of the auction...

The UK has set out legislation to ensure that regulators will be able to police the closure of Libor at the end of 2021 in as orderly a fashion as possible.

For the first time, authorities recognised that not all contracts mentioning the interest rate may be changed to an alternative reference rate, such as Sonia, in time.

Sonia is based on actual overnight rates rather than a survey of lending banks’ expectations.

Those referencing the rate in derivatives contracts are relatively simple to change to a replacement benchmark, but some in existing loan or bond contracts may require approval from creditors.

“The government recognises ... that legislative steps could help deal with this narrow pool of 'tough legacy' contracts that cannot transition from Libor,” said chancellor Rishi Sunak in a statement to Parliament.

He said the new legislation to be introduced could ensure the Financial Conduct Authority has “the appropriate regulatory powers to...

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High-yield analysts last week slammed the terms of the bond that will help finance ThyssenKrupp Elevator's buyout by a private equity consortium led by Cinven and Advent, but sources close to the deal say investor reception is very strong.

TKE on Wednesday launched the €4.05bn-equivalent bond section of the financing package for the €17.2bn buyout of ThyssenKrupp's elevator business – one of the biggest LBOs in the past decade.

Despite investor hopes that the market slump over the past few months might give them a leg-up in deal protections, high-yield analytics company 9fin and credit research firm Covenant Review said TKE's bond includes terms that do a disservice to investors.

"With a notably aggressive covenant package riddled with sponsor-friendly features, the offering dashes hopes for a coronavirus-driven market shift to tighter terms," wrote Covenant Review analysts.

TKE's bond includes some of the weakest covenants seen in the market, said 9fin...

The resilience of ESG-related capital markets activity through the Covid-19 crisis shows that ESG finance is not a bull-market product that will disappear in a downturn, according to Mitch Reznick, head of research and sustainable fixed income at investment manager Federated Hermes.

"If you look at every corner of the capital markets, there's a green finance revolution. It's one of the largest upheavals in the capital markets in 10 years – if not ever – and that speaks volumes about the momentum of green finance," said Reznick.

"I was really impressed to see that companies and banks were pushing ahead with plans they'd already laid out through profound uncertainty."

Despite the volatility of the first quarter, about 100 sustainable funds were launched, up from 80 at the same point a year earlier, according to Morningstar. And while active equity funds saw overall outflows of 4% from early 2019, such funds dedicated to ESG have seen inflows of more than...

United Airlines used an innovative structure that ring-fences the intellectual property and cashflows of its highly regarded loyalty programme, MileagePlus, in a bankruptcy-remote vehicle to raise US$6.8bn in the US high-yield bond and loan markets last week.

The airline took to debt markets to take out US$5bn of committed bank financing that was part of a plan to shore up its liquidity as it continues to burn around US$40m of cash per day.

It came after the airline abandoned a US$2.25bn bond offering on May 8 that was secured against a fleet of aircraft.

MileagePlus has over 100 million members and generated US$1.83bn of earnings in 2019 – accounting for 26% of United's overall earnings that year, the company said.

"The mileage programmes for airlines are effectively their cash cow," said Parmi Chadha, high-yield portfolio manager at Newton Investment Management.

"If United Airlines exists in any form – pre or post-bankruptcy – this business is...

Vitamin and supplement retailer GNC Holdings is seeking court approval for US$475m of debtor-in-possession financing, after the company filed for bankruptcy protection.

GNC's biggest shareholder, Chinese state-owned Harbin Pharmaceutical Group, and a group of its secured lenders also offered to buy the business for US$760m as part of an auction process.

The DIP includes a US$200m term facility and a US$275m asset-based lending first in, last out facility consisting of rolled-up pre-petition debt. The term facility comprises a US$100m new money delayed-draw term loan facility and US$100m in rolled-up pre-petition debt.

GLAS Trust is the administrative agent for the term facility and JP Morgan is the administrative agent for the ABL.

The term loan is priced at 1,300bp over Libor with a 96 OID. On interim court approval, US$30m of the new money DIP will be available to the company.

The retailer’s US$903.4m outstanding pre-petition debt included US$60m...

American Airlines' newly issued US$2.5bn high-yield bond dropped more than five points in the secondary market on Thursday after leads upsized the deal twice during marketing and as some states impose new quarantines on travelers from certain areas.

The 11.75% 2025 secured notes traded as low as 93.5 on Thursday morning, according to MarketAxess, after being priced at 99 on Wednesday.

The bond was upsized from an initial US$1.5bn to US$2.5bn, with leads dropping a planned US$500m term loan in favor of boosting the bond.

The deal was priced as part of a US$4bn liquidity package for the struggling airline, with leads leaning on a strong bond market that has been supported by strong inflows and Federal Reserve buying.

But with books only reaching around US$3bn-$4bn, according to two investors, the buyside does not appear to have been overly receptive of the additional size.

In addition, New York, Connecticut and New Jersey imposed new quarantines and...

US corporate bond trading volumes have reached a new quarterly record with several days to spare, after the Federal Reserve’s unprecedented intervention in credit markets and a deluge of new debt sales sparked a frenzy of activity.

Investment-grade trading volumes are approaching US$2trn for the second quarter, according to data from bond-trading platform MarketAxess, a 29% rise on the same period in 2019 and already above the previous record of US$1.75trn set in the first quarter this year.

That has come amid a flurry of new debt sales from US companies, with issuance this year already topping 2019's full-year total of US$1.12trn following several record-busting months.

The Fed stepping in to calm credit markets following the coronavirus-induced slump in March - first through buying exchange-traded funds focused on corporate debt and more recently purchasing bonds directly - has been pivotal to that revival.

That backstop paved the way for a sharp rally...

Auto service franchiser Driven Brands is preparing a US$175m whole business securitization for next week, marking the first transaction in this battered ABS sector since the Covid-19 pandemic was declared in March.

The Charlotte, North Carolina-based company hired Barclays as the sole structurer and bookrunner for its latest asset-backed securities issue, HONK 2020-1.

North America's biggest vehicle repair and maintenance company is expected to offer a single class of note with a weighted average life of 6.8 years.

The paper is expected to fetch a BBB- rating from S&P and BBB from Fitch. nL8N2E05SC

This is also intended to be a de-leveraging transaction.

Leads said that pro-forma for the deal, and by adding additional assets into the securitization, the company senior leverage ratio will drop to 6.1x from 6.6x as of its April quarterly payment date.

The borrower is adding two recently acquired businesses and a new Canadian co-issuer to...