IFR Magazine April 25 2020 PDF

APRIL 25 2020 ISSUE 2330 www.ifre.
com
US oil producers braced for bankruptcy as

demand dries up and banks cut exposure
€110bn tidal wave of demand allows Italy

to grab €16bn from two-tranche trade
United Airlines lands US$1bn from stock

sale as it gets ahead of competition
PEOPLE & MARKETS BONDS EQUITIES LOANS

UK companies Phoenix and Kingsoft Cloud Corona crisis
rush for ratings Legal & General IPO tests US to hit demand
to tap rescue lREûSUB DEBTû BIDûFORû#HINAû FORûSUSTAINABLEû
funds starting gun equities loans
06 06 08 12
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Upfront
OPINION INTERNATIONAL FINANCING REVIEW
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International Financing Review April 25 2020 1

Top news
Slippery slope for Asia lenders 04 Italy grabs €16bn 04 Tier 2 returns in UK 06
US oil producers braced for

bankruptcy as demand dries up
People & Markets Chapter 11 filings expected to surpass 2016 oil crisis
BY GARETH GORE THEûENDûOFûûMANYûAREûSIMPLYû INDUSTRY UNDER WATER stands at 438, according to Baker
economically unviable in their The question for many will be how Hughes, compared with 1,609 at
Bankruptcy is fast becoming an current state. Bankruptcies are long they can delay the inevitable. THEûINDUSTRYSûPEAKûINûLATEû
inevitability for many US oil EXPECTEDûTOûSOONûECLIPSEûTHEûû 7HILEûFEWûFACEûBIGûMATURITIESûINû Others are buying themselves
producers, as extensive RATEûSEENûDURINGûTHEûûOILûCRISIS the months ahead – only a handful time in other ways: DIAMOND
shutdowns across the world of bonds and loans come due this OFFSHORE chose not to make a
because of the global pandemic year – such has been the drop in scheduled bond coupon payment
US OIL PRODUCERS TAP MARKETS
lead to a collapse in demand, AMOUNT RAISED, US$BN prices that many will struggle to as it weighs its options, while
adding a fatal blow to an even stay current with overheads OCCIDENTAL PETROLEUM opted to pay
200
industry that was already reeling and coupon payments. Berkshire Hathaway, which
from an open price war between “At these prices, the entire bought US$10bn of preferred
Saudi Arabia and Russia. industry is under water,” said stock last year, its dividend in
Four companies have already 150 $AVIDû7INANSûAûCREDITûANALYSTûATû common shares instead of cash.
lLEDûFORû#HAPTERûûPROTECTIONû 0')-ûh4HEûFOCUSûISûENTIRELYûONû
in recent weeks, including liquidity. The focus will likely be BANKS EXPOSED
WHITING PETROLEUM, one of the to what level companies can cut And while some still have
100
biggest producers in the Bakken capital spending without seeing undrawn revolving credit facilities
lELDûCHESAPEAKE ENERGY and production go into a tailspin. nûABOUTû53BNûAMONGûTHEû
GULFPORT ENERGY have meanwhile There may be some painful biggest players, according to
hired debt restructuring 50 choices ahead.” Morgan Stanley – the ability to
advisers, with many others Some have chosen to simply access money from banks is likely
expected to follow suit. stop producing. Operations have to become severely constrained in
7ITHûOILûFUTURESûINDICATINGûTHATû 0
been halted at about a third of all coming weeks as lenders review
2019
2018
2015
2014
2016
2017
2012
2013
2010
2011
prices won’t recover to US$40 a the oil rigs in the US in the last how much money they want to
barrel – the bare minimum that Bonds Equity Loans month alone. The total number lend to the sector – via so-called
most need to stay in business – until Source: Refinitiv of oil rigs in operation now borrowing-base redeterminations.
Banks rush to rein in financing for oil firms

Loans Lenders grapple with cutting borrowing bases without killing borrowers
BY KRISTEN HAUNSS could be lowered by 30% or more +EMPFûSAIDûh7EûAREûSTARTINGûTOû TIGHTENING BORROWING

INûTHEûlRSTûHALFûOFû see production come down, not BASES
The twice-a-year evaluation of “In a recovery, banks want to get as fast as it needs to, but we are Twice a year banks conduct a
energy borrowers’ reserve-based back 100% of the money they lend starting to see it come down.” redetermination of oil and gas
loans has taken on more out,” said John Kempf, a senior Fitch expects the energy loan companies’ RBL borrowing
SIGNIlCANCEûTHANûEVERûASûBANKSû director at Fitch. “This time around default rate to rise to 18% by the bases, reworking the amount of
seek to cut their exposure to oil they will probably be a bit tougher end of the year. debt borrowers can draw upon.
and gas companies amid the on [oil exploration and production] The average bid of US oil and 4HEûADJUSTMENTSûTAKEûINTOû
global Covid-19 pandemic that companies in determining their GASûLOANSûTRACKEDûBYû2ElNITIVû,0#û account oil and gas prices and
has caused demand for oil to borrowing bases.” fell to as low as 71.95 cents on the forecasts, as well as current and
plummet and a price war Oil and gas companies are DOLLARûONû-ARCHûûALMOSTûû PROJECTEDûPRODUCTION
between Russia and Saudi Arabia feeling the pressure as a result of down since the start of the year. CENTENNIAL RESOURCE DEVELOPMENT
THATûHASûmOODEDûTHEûMARKETûWITHû the historic turmoil in the oil It had rebounded to 75.15 cents said on Thursday that its agent
crude. markets. ONû7EDNESDAYû4HATûTRAJECTORYû bank recommended the oil
Lenders are grappling with “There has been a huge followed the overall market – the producer’s borrowing base be cut
how best to cut energy decline in demand – no one is ,0#ûûAûCOHORTûOFûTHEûûMOSTû BYûALMOSTû%.
companies’ borrowing bases driving cars, no one is liquid loans in the US, fell more EARTHSTONE ENERGY, which
while ensuring they still have commuting to work, no one is THANûûTHISûYEARûTOûANûALMOSTû develops oil and gas properties
some access to capital. Some mYINGû7EûNEEDûTOûCUTûSUPPLYûTOû 11-year low of 77.87 cents on in Texas, said its borrowing base
estimates say borrowing bases synchronise with demand,” -ARCHûûBEFOREûREBOUNDING WASûCUTûBYûû ûTOû53Mû
2 International Financing Review April 25 2020

@ For daily news stories
visit www.ifre.com
Banks shun direct lenders 07 Kingsoft tests US bid 08 Forbearance or kicking the can? 10
“Liquidity levels in the form Lenders are certainly facing GOVERNMENT HELP? process in better shape. The US
of cash on hand and revolver big losses. Credit Suisse took a 7ITHûLUCKûnûANDûANûINCREASEûINû BECAMEûNEARûSELF SUFlCIENTûINûOILû
availability are generally strong US$1bn writedown on loans in oil prices – the industry may – and the biggest oil producer in
for investment-grade players THEûlRSTûQUARTERûMAINLYûONû well come out of this in a better the world – and breakeven oil
but are likely to get tighter for exposure to oil and gas clients. POSITIONû"ETWEENûûANDû price fell from US$75 to US$40 a
the high-yield group with bank 7ITHûTHEûOUTLOOKûFORûOILûPRICESû ûSOMEûûOILûPRODUCERSû barrel as a result.
borrowing-base so weak, borrowers are likely to with almost US$96bn of debt One last hope is that the
redetermination currently adopt an aggressive approach in lLEDûFORû#HAPTERûûPROTECTIONû government may step in to help.
UNDERûWAYvûSAIDû"RIANû'IBBONSû any restructuring talks, from creditors, according to 53û0RESIDENTû$ONALDû4RUMPûHASû
a credit analyst at Morgan meaning recoveries are likely to DATAûCOLLECTEDûBYûLAWûlRMû hinted as much, but details are
Stanley. be low. Haynes Boone. SCANTû%XTENDINGûLIQUIDITYûMAYû
Once cash runs out, many 7HILEûTHEûRESULTSûWEREû buy the industry time, but it will
are likely to be out of options, CHANCE OF SURVIVAL? extremely costly for equity still be at the mercy of oil prices,
making bankruptcy or debt 7HILEûBANKRUPTCYûMIGHTûOFFERû holders and almost as painful and global supply dynamics,
restructuring inevitable. the best chance of survival for for creditors, many oil over which the US has limited
h7EûSEEûLIMITEDûPROSPECTSû many companies, the process producers came out of the control.
of new capital coming can be long, arduous and costly. Indeed, with near-term futures
into the market given the Some producers are opting for a CRUDE OIL PRICE COLLAPSES CONTRACTSûTRADINGûATû53ûANDû
POSTû ûEXPERIENCEû different tack through buybacks JUNE FUTURES, US$ PER BARREL below, even restructuring may not
whereby reorganised equity and distressed exchanges with 70 be enough to save some. Much
performed so poorly and bondholders, and through NOWûDEPENDSûONûTHEûTRAJECTORYûOFû
with many companies renegotiating debt facilities 60 the pandemic and its impact on
defaulting a second time,” with lenders. demand. Some believe that 40% of
50
SAIDû'IBBONS CENTENNIAL RESOURCE PRODUCTION oil demand has disappeared as a
Banks are likely to have a on Thursday proposed a debt 40 result of the lockdowns.
big say in any debt talks, given exchange for up to US$900m of “The demand shock from
30
their outsized exposure to oil. bonds, with existing Covid-19 is overwhelming
Of the US$500bn of capital bondholders being asked to 20
EVERYTHINGvûSAIDû7INANSû
raised by US producers since accept new bonds at 50% of the “Ultimately, the path for oil
ûABOUTûTWO THIRDSûWASûINû face value of their current 10 prices is going to follow the
the form of loans. Bond holdings. The bonds had been path of this virus. Until demand
0
investors provided another TRADINGûATûJUSTûûCENTSûONûTHEû shows some sign of life, oil
Jan
Feb
Mar
Apr
53BNûTOûTHEûINDUSTRYûOVERû dollar before the prices will likely remain on life

that same period. announcement. Source: Refinitiv support.”
FROMû53Mû)TûHADû53Mû Banks are also using this interest rate they charge and reduce their risk, they do not
outstanding as of March 31. redetermination period to include so-called “anti-cash want to push companies into
h7EûDIDûGOûAûBITûEARLIERûINûTHEû tighten covenants in credit hoarding” provisions, which default and hurt recoveries if
cycle and we did that because agreements, increase the stop companies from drawing there is a chance borrowers’
we saw some signs of volatility,” the full amount of their health may improve.
said Mark Lumpkin, chief revolvers and holding it as cash. “Banks are going to take any
ASSET BASED LOANS –
lNANCIALûOFlCERûATû%ARTHSTONEûh)û ESTIMATED MATURING VOLUME “Banks are very focused on kind of default seriously,”
think going earlier was US$bn putting anti-cash hoarding 'RAHMANNûSAIDûh4HEIRûGOALûISû
absolutely to our advantage.” 30 language back into credit REALLYûJUSTûTOûACHIEVEûTHEû
Oil and natural gas producer FACILITIESvûSAIDû+RAIGû'RAHMANNû outcome that maximises
CHAPARRAL ENERGY said it had a 25 HEADûOFûTHEûENERGYûlNANCEû recovery rather than looking for
BORROWINGûBASEûOFû53Mû PRACTICEûATûLAWûlRMû(AYNESûANDû full control of the borrower.”
with US$160m outstanding as of Boone. Decreased demand for oil due
20
-ARCHûû/Nû!PRILûûITûNOTIlEDû %XPLORATIONûANDûPRODUCTIONû to the coronavirus and stressed oil
its lenders it wanted to borrow company ULTRA PETROLEUM CORP prices will continue to affect what
US$90m to increase its cash 15 said that in addition to its can be done in the RBL market,
position. Later that day, borrowing base being reduced, its SAIDû%ARTHSTONESû,UMPKIN
Chaparral’s lenders made an anti-cash hoarding amount was “[RBLs] are no doubt creating
10
interim redetermination of the ALSOûCUTûTOû53MûFROMû53Mû a lot of stress at the banks on
borrowing base, decreasing it to for all times there are borrowings their loan portfolios and the bar
US$175m, creating a “borrowing 5 outstanding under the RCF. to get internal approval of any
BASEûDElCIENCYvûOFû53M type of borrowing base is
$ElCIENCIESûAREûOFTENû 0 FINE LINE exceptionally high and at some
2Q20
4Q20
2Q21
4Q21
2Q22
4Q22
2Q23
4Q23
2Q24
4Q24
required to be remedied within "UTûBANKSûMUSTûWALKûAûlNEûLINEû BANKSûJUSTûAûNON STARTERvûHEû

six months. Source: Refinitiv LPC because while they seek to said.

Top news
Asia’s oil lenders on slippery slope
Loans Plunge in crude prices threatens commodity-sector borrowers
BY CHIEN MI WONG The collapse of HIN LEONG Borrowers across Asia’s oil and reaching a stunning minus
TRADING, a Singaporean oil trader gas industry are facing a US$37.63 a barrel as desperate
Any hopes that Asia’s oil and gas with bank debts totalling over liquidity squeeze arising from traders paid not to take physical
industry would escape the worst US$3.5bn, underlined the extent the coronavirus pandemic and delivery as the May contract
of the Covid-19 shock of the problem. falling oil prices. Meanwhile, expired.
evaporated last week as an HLT sought protection from lenders have cooled on the Brent oil prices, the
unprecedented plunge in oil its creditors on April 17 after it sector, leading to loan international benchmark, have
prices reverberated around the was caught out by the slump in syndications being hastily collapsed by around 70% since
globe. demand for oil and failed to revised, scrapped or extended. the start of the year with the
Lenders in Asia are hurriedly secure new credit lines. It “There will be a lot of next-month contract last quoted
reassessing their exposure after also admitted to hiding increased scrutiny from banks ATû53ûAûBARRELûLEADINGûTOû
US oil prices turned negative for US$800m in futures losses over for oil and gas names,” said a drilling halts and drastic
THEûlRSTûTIMEûINûHISTORYûANDû several years and said it had Singapore-based syndications spending cuts. Analysts do not
more signs emerged of stress in already sold a lot of its inventory, banker. expect the downward pressure
the corporate sector. ACCORDINGûTOûCOURTûlLINGSû “Any deals in the market will on oil prices to ease any time
#HINESEûOILûRElNERûSHANDONG LEAVINGûITSûûLENDERSûATûRISKûOFû need a rethink in terms of soon.
QINGYUAN GROUP has asked banks heavy losses. pricing, risk and whether [the Mark Lacey, head of
TOûDEFERûTHEûlRSTûPRINCIPALû (,4SûTOPûlVEûLENDERSûnû(3"#û borrowers] want to raise it now.” commodities at Schroders,
payment on a US$955m three- ABN AMRO, DBS Bank, Societe said the oil shock was far
YEARûLOANûBYûAûYEARûTOû*UNEûû 'ENERALEûANDû/#"#û"ANKûnû BLEAK OUTLOOK GREATERûTHANûTHEûûSELL OFFû
Its request comes only seven account for nearly 50% of its Last Monday, US crude oil which triggered about 80
months after it signed the debt, with HSBC top of the list at futures collapsed below zero for bankruptcies in the oil and gas
lNANCINGûLASTû3EPTEMBER around US$600m. THEûlRSTûTIMEûINûHISTORYû sector.
Tidal wave of demand allows Italy

to grab €16bn from dual-tranche trade
Bonds ECB’s helping hand and generous spreads attract more than €110bn of orders for Italian return
BY HELENE DURAND €15bn 10-year that pulled in America, Deutsche Bank, JP Morgan, when they need to fund these
demand of more than €96.5bn. Nomura and Societe Generale for the massive holes in their budgets.”
The sovereign funding surge, Still, Italy’s move was dual-tranche transaction, split Italy offered 19bp concession
that has become a familiar sight arguably the most audacious BETWEENûAûNEWûlVE YEARûLINEûANDû on both tranches at initial price
since the outbreak of the given the recent sell-off in the AûTAPûOFûITSûû3EPTEMBERû THOUGHTSûnûTHEûBPûAREAûOVERû
coronavirus, ramped up a notch sovereign’s debt as investors THEû"40û&EBRUARYûûINûTHEû
last week as both the ITALIAN worried about the failure to NO MORE RULES CASEûOFûTHEûõBNûlVE YEARûANDû
REPUBLIC and the KINGDOM OF SPAIN come up with pan-eurozone Sovereigns debt management the 15bp area over the
landed record-breaking trades, funding to pay for the response OFlCESûTYPICALLYûTRYûTOûPRICEûASû 3EPTEMBERûûINûTHEûCASEûOFû
propelled by the seemingly to the coronavirus crisis. aggressively as possible when it THEûõBNûûTAPûnûONûTOPûOFûTHEû
unstoppable investor demand h7EûWEREûADAMANTûTHATûITûHADû comes to syndications, but with recent sell-off. That helped
for public sector assets. to be a convincing trade – needs increasing almost by the propel demand to levels not seen
$EMANDûFORûTHEû)TALYSûlRSTû something to be remembered,” a day, they are adopting a different before for a eurozone
syndication since the country was banker at one of the leads said. approach at the moment. syndication.
hit hard by the coronavirus in late The yield on Italy’s 10-year “No sovereign is going to be “There’s no doubt that there
February passed the €110bn leapt from 1.49% in early April to lNE TUNINGûPRICINGûLEVELSûWHENû was some fast money in there
mark, emphatically crushing ûONû!PRILûûWHENûTHEûDEALû there’s so much more supply to but the level of oversubscription
previous eurozone sovereign was executed, while its gap come,” a DCM banker away from meant that we could allocate
syndication records despite the VERSUSû'ERMANYûWIDENEDûTOû the deal said. real-money investors and avoid
RECENTûVOLATILITYûINû"40Sû4HEûDEALû BPûFROMûBPûOVERûTHEû “As an issuer, you have to allocating hedge funds,” the lead
CAMEûASûAûõBNûlVE YEARûANDûAû same period, according to make a gesture towards banker said.
õBNûTAPûOFûTHEûS 2ElNITIVûDATA investors to make them buy into “Big concessions are the name
Italy did not hold on to the Fresh from updating its debt a trade. The rule book for DMOs of the game right now. Issuers
record for long, however, at least MANAGEMENTûGUIDELINESûFORûû to deliver the best possible value are shooting for size given these
for a single tranche issue, as the previous week, the sovereign for money for taxpayers has unprecedented funding
Spain followed a day later with a mandated Banca IMI, Bank of gone out of the window really requirements.”

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“Many, many companies are US$400m reserve-based lending DEALS OFF shipping industry,” said a
going to go bankrupt,” said FACILITYûWHICHûPARTIALLYûlNANCESû Meanwhile, the volatile market Singapore-based head of loans
Lacey. “These bankruptcies will its purchase of a stake in the conditions have taken a further syndication.
not be limited to the US, but will COUNTRYSûLARGESTûGASûlELD toll on the already-slow market “I would be surprised if the
also likely occur in Asia, Latin ASX-listed oil company FAR FORûEVENT DRIVENûlNANCINGSûINû oil glut doesn’t result in
!MERICAûANDû%UROPEv announced on March 30 that its !SIA 0ACIlCûWITHû#ANADASû further corporate casualties.
%ARLIERûTHISûMONTHû#HINESEû US$300m senior secured RBL ALIMENTATION COUCHE-TARD 7EûAREûMONITORINGûTHISûSECTORû
oil and gas company MIE HOLDINGS BACKINGûITSûOFFSHOREûOILûlELDûPROJECTû deciding to pull its takeover bid closely.”
started discussions with in Senegal cannot be completed in for petrol station operator CALTEX %ARLIERûTHISûMONTHû!USTRALIASû
bondholders on a potential the current environment. AUSTRALIA due to economic WOODSIDE PETROLEUM put in place
restructuring after missing a FAR cited the coronavirus uncertainties. 53BNûINûLOANSûTAKINGûSTEPSû
coupon payment. Rating agency PANDEMICûANDûSIGNIlCANTûFALLûINû The Canadian convenience to deal with the fallout of Covid-
Fitch said the company was Brent oil prices as having store chain, which had funding 19. The lenders participating in
facing a severe liquidity crunch adversely impacted the global commitments for the deal, THEûLATESTûlNANCINGûAREûNOTû
ANDûITûBELIEVEDû-)%ûDIDûNOTûHAVEû availability of credit. raised its offer to A$8.8bn known.
the funds to cure the defaulted Malaysia-listed YINSON HOLDINGS (US$5.6bn) in mid-February, OIL SEARCH, another Australian
interest as access to new capital has still not closed a US$100m while privately owned UK company, is seeking an
was limited. THREE YEARûlNANCINGûLAUNCHEDû convenience store retailer EG extension of bilateral loans
earlier this year, while the fate GROUP made a rival offer of totalling US$300m by nine
RESERVE-BASED LOSSES OFûANOTHERûSIMILAR SIZEDûlVE A$3.9bn in cash for Caltex’s MONTHSûTOû*UNEû
Among the deals in syndication, year borrowing launched last convenience stores plus shares ,ASTûWEEKû0HILIPPINEûOILû
loans secured against physical September is unclear. in a spin-off company made up RElNERûPETRON closed a ¥15bn
oil and gas reserves are %ARLIERûTHISûMONTHûTHEû OFûITSûRElNINGûANDûFUELû (US$139m) debut Samurai loan.
especially at risk from the the company, which constructs and distribution assets. Although it was increased from
spectacular plunge in prices. LEASESûmOATINGûPRODUCTIONûASSETSû “There is a whole ecosystem an original US$100m-equivalent
0HILIPPINEûOILûANDûSHIPPINGû for the oil and gas sector, drew around oil companies from the target, the borrower failed to
group UDENNAûHASûINDElNITELYû DOWNûONûAû53Mû YEARû RElNERSûAROMATICSûTOûTHEû attract any lenders to a US dollar
extended the syndication of a loan signed last November. transportation, such as the tranche.
The spreads were set at plus would go well, we didn’t expect “Investors’ willingness to buy extraordinary monetary policy
BPûANDûPLUSûBPûRESPECTIVELYû that the split in demand would has more or less been measures implemented by
when the deal priced. almost be even, which sends a GUARANTEEDûBYûTHEû%#"û0%00vû multiple central banks.
Demand was almost equally very strong signal for Italy.” the second lead banker said. “The impact of this ECB decision
distributed among the two The longer part of the curve h4HEûMARKETûHASûCONlDENCEû was particularly important for the
tranches. had not been tested in size by that there is the invisible hand %UROPEANûGOVERNMENTûBONDû
Another banker on the deal SSA issuers since the OFûTHEû%#"ûWHICHûSHOULDûHELPû market,” the Tesoro said.
called the move “pragmatic”. coronavirus started impacting performance of the bonds and h%SPECIALLYûFORûTHEûmEXIBILITYû
“If you’re aiming for size, you global markets at the end of GIVESûINVESTORSûCONlDENCEûTHATû that makes this programme
cannot be a penny pincher,” he February. there is a buyer of last resort. different from those already in
said. “They need to have the 7ITHOUTûTHEû0%00ûLEVELSûWOULDû place.”
breathing room as they can’t do INVISIBLE HAND BEûSIGNIlCANTLYûWIDERv The country was given
auctions every day. They needed Italy has been one of the main This is something Italy’s debt ANOTHERûlLLIPûLASTûWEEKûWHENû
to pay to make it work. You have BENElCIARIESûOFûTHEû%UROPEANû OFlCEûACKNOWLEDGEDûSAYINGûTHATû THEû%#"ûANNOUNCEDûTEMPORARYû
to think of the bigger picture.” #ENTRALû"ANKSû0ANDEMICû THEûVULNERABILITYûOFûlNANCIALû measures that will allow it to
Just like other sovereigns %MERGENCYû0URCHASEû markets had partly been accept non-investment-grade
across the globe, the Italian 0ROGRAMME mitigated by the important and rated bonds as collateral.
DMO is funding the The central bank’s decision
implementation of ITALY 10-YEAR YIELD lessens any immediate impact
extraordinary measures to stem % from a potential downgrade of
the fallout from the 3.0 Italian sovereign debt to non-
coronavirus. investment grade on banks’
2.5
The dual-tranche tactic balance sheets – the so-called
proved successful as it allowed 2.0 bank-sovereign doom loop that
the sovereign to maximise size became so threatening during
1.5
without cannibalising demand. the eurozone crisis.
“This was about being 1.0 Italy is rated Baa3/BBB/BBB/
strategic,” the second lead BBB (high) by the four main
BANKERûSAIDûh7EûKNEWûTHEûlVE 0.5 agencies with its ratings from
year would work well given the 0
30ûANDû&ITCHûONûNEGATIVEû
recent sovereign syndications in OUTLOOKû30ûWASûSETûTOûREVIEWû
02/03/2020
02/01/2020
02/02/2020
02/04/2020
that part of the curve but the )TALYSûRATINGûONû!PRILûû

tap was more uncharted Moody’s and DBRS are scheduled
TERRITORYû7HILEûWEûTHOUGHTûITû Source: Refinitiv to follow on May 8.

Top news
UK companies rush for ratings
People & Markets Raters provide credit assessments for free to allow UK companies to access rescue funds
BY ELEANOR DUNCAN themselves needing to prove companies that were struggling when it said all companies with
their credit quality in order to prior to the March 1 cut-off date revenue of more than £45m
Unrated companies have been bridge the unprecedented are unlikely to be able to access would be able to apply for the
scrambling to get access to UK economic shock caused by the the lifeline. Coronavirus Large Business
government funding by UK government’s lockdown. An investor speaking to IFR Interruption Loan Scheme when
approaching ratings agencies or At the beginning of April, SAIDûITûWASûDIFlCULTûTOûTELLûWHICHû it launches on Monday.
banks to vouch for their credit BAKERû'REGGSûWHICHûDOESûNOTû COMPANIESûWOULDûBENElTûFROMû But bankers say that large
quality. carry a rating, said that it had the government scheme. Double B and Single B
Ratings agencies, including TAPPEDûGOVERNMENTûlNANCINGû “John Lewis doesn’t have an companies are still shut out
&ITCHûANDû30ûHAVEûBEENûTRYINGû via the CCFF by selling £150m of investment-grade rating, but it’s from government help.
to help companies without MONTHû#0 a solid business and probably
ratings to get funding from the About 50 unrated companies WOULDûCARRYûANû)'ûRATINGû$OESû VOUCHING FOR CREDITS
UK’s government’s Covid HAVEûAPPROACHEDû30ûFORûAûCREDITû that mean an equivalent 30ûHASûBEENûOFFERINGû
Corporate Financing Facility by ASSESSMENTûACCORDINGûTOû%-%!û company like Next can get companies no-cost “credit
providing one-off, short-term head of commercial, Lynn government funding but John assessments”, which are being
ratings or credit assessments. -AXWELLû!SûOFû!PRILûûû Lewis can’t?” he asked. TREATEDûBYûTHEû"ANKûOFû%NGLANDû
The CCFF, which is run and companies in total had applied “There are lots of little as equivalent to an investment-
FUNDEDûBYûTHEû"ANKûOFû%NGLANDûWASû to the CCFF scheme, according NUANCESû)TSûDIFlCULTûTOûTELLû grade rating for the purposes of
set up to support larger companies TOû"ANKûOFû%NGLANDûDATA which companies would fall its CCFF.
through the coronavirus crisis. It Meanwhile, investment banks through the cracks because !ROUNDûAûTHIRDûOFûTHEû&43%ûû
will buy commercial paper with a have been providing the Bank of they’re either too big or not big is already rated, leaving some
MATURITYûOFûUPûTOûûMONTHSû ûBUTû %NGLANDûWITHûWRITTENû enough.” ûCORPORATESûTHATûAREûNOTûnûBUTû
only from businesses which had an ASSESSMENTSûOFûTHEûCREDITûPROlLEû As recently as mid-April, there potentially could be – eligible for
investment-grade credit rating or of unrated clients, and setting was no clear guidance, said one the CCFF.
similar before the coronavirus crisis UPûlRST TIMEûCOMMERCIALûPAPERû banker. “Of that group, we’ve had
began. programmes for borrowers. “Clients were asking banks if about 50 of them come to us. But
That meant that some of the they could use internal credit THEûVASTûMAJORITYûAREûNOTûLIKELYû
UK’s most recognisable THROUGH THE CRACKS metrics.” to get an investment-grade
companies – and large (OWEVERûTHEûmOORûONûCREDITû The UK government looked to rating,” said Maxwell.
employers – have found quality also means large plug part of the gap last week, 30ûWASûINûDISCUSSIONSûWITHû
UK duo fire sub-debt starting gun

Bonds Insurers’ Tier 2 bonds demonstrate that investors are ready for risk
BY TOM REVELL have come back in from their 2E!SSUREû'ROUPû3WISSû2ESû5+û $ECEMBERûSûTIGHTENINGû
RECENTûLOWSûNEWûlNANCIALû SUBSIDIARYû0HOENIXûAGREEDûTOû from 441bp at Thursday’s open
UK insurers PHOENIX GROUP issuance had until now been BUYû2E!SSUREû'ROUPûLASTû TOûBPûBYûLATEûAFTERNOONû
HOLDINGS and LEGAL & GENERAL limited to covered bonds and $ECEMBERûINûAûaBNû ACCORDINGûTOû4RADEWEBûlGURES
GROUP reopened the senior notes. acquisition that is expected to “That’s a really strong
subordinated market after Sole lead NatWest Markets CLOSEûINûMID message that there is demand
almost two months without MARKETEDû0HOENIXSû YEARû h7EûSAWûEXCEPTIONALûDEMANDû for sub debt and people want to
supply last week, with an deal, expected to be rated BBB by for this deal, which exceeded buy,” said a banker close to the
emphatic investor response Fitch, with initial price thoughts our expectations,” said the deal.
boding well for a backlog of OFû'ILTSûPLUSûTHEûBPûAREA 0HOENIXûSPOKESPERSONûh!SûAû
transactions. A £500m deal was ultimately result, the transaction was ANOTHER LEG UP
0HOENIXSû4IERûûDEALûWASûTHEû launched at 540bp, with books upsized to £500m to provide ,EGALûû'ENERALûWASûQUICKûTOû
lRSTûMAJORûCURRENCYû peaking at £3.4bn. additional resilience in the build on the reopening of the
subordinated benchmark from a h7EûBROUGHTûTHISûTRANSACTIONû volatile markets.” subordinated debt market with a
lNANCIALûINSTITUTIONûSINCEûTHEû to market opportunistically after "ASEDûONû0HOENIXSû £500m 30.5-year non-call 10.5 Tier
SPREADûOFûTHEûCORONAVIRUSûlRSTû a reverse enquiry from a small secondaries at the start of the ûTRANSACTIONûTHATûWASûMOREûTHANû
rocked global markets. number of investors, who day, bankers said the initial price 10 times subscribed on Friday.
The last such deal came on provided us with a good deal of thoughts offered a new-issue ,'SûDEALûnûEXPECTEDûTOûBEû
&EBRUARYûûWHENû).'ûSOLDûAû CONlDENCEûTOûEXECUTEûINûTHESEû premium of about 55bp, RATEDû!"""ûBYû-OODYS30ûnû
US$750m 4.875% Additional Tier DIFlCULTûMARKETSvûSAIDûAû IMPLYINGûAûlNALûCONCESSIONûOFû attracted even greater demand
ûJUSTûASûTHEûSELL OFFûBEGAN SPOKESPERSONûFORû0HOENIX around 10bp. ATûAûSIGNIlCANTLYûTIGHTERûSPREAD
!MIDûTHEûGLOBALûmIGHTûTOû 7ITHûTHEûTRANSACTIONû0HOENIXû The new issue triggered a “After a bout of volatility you
safety, subordinated debt was hit completed the fundraising TIGHTENINGûOFû0HOENIXSû never know if investors are going
HARDû7HILEûSECONDARYûLEVELSû required for its acquisition of SECONDARIESûWITHûITSûû to be there for high beta products,

For daily news stories
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THEû"ANKûOFû%NGLANDûBEFOREûTHEû
launch of the CCFF.
required by the Bank of
%NGLAND Banks shun direct
“The key challenge to the A spokesperson for Moody’s
programme was that
HISTORICALLYûTHEû"ANKûOFû%NGLANDû
declined to comment on
whether it was working with
lenders’ offer
only relied on public ratings unrated companies for the Loans Underwriters opt not to sell – yet
when they looked at eligibility purpose of the CCFF.
FORûlNANCINGûFACILITIESûANDûTHEû But a banker who has been BY CLAIRE RUCKIN 6.5% at 97 OID. If a bank sells
Bank wanted to provide access working with unrated OUTSIDEûmEXûPROTECTIONûITûLOSESû
TOûALLû)'ûCORPORATESûIMPORTANTûTOû COMPANIESûSAIDûALLûTHREEûMAJORû Banks that underwrote large money.
the UK economy but which ratings agencies had been %UROPEANûLEVERAGEDûLOANSûPRIORû “Direct lenders want an
might not have an existing offering similar short-term to the market closing last month enormous discount. Banks
public rating,” Maxwell said. ratings either at low cost or for have rebuffed offers from direct underwrote the deals as they
h7HENûWEûSPOKEûTOûTHEMû free. lenders to buy portions of the were viewed as good credits, so
they wanted to effectively be “The reality is that a huge lNANCINGSûANDûALLEVIATEûBANKû they don’t want to engage as it’s
able to look at the credit quality swathe of the UK does not have risk, preferring to hold the not the right time to sell as its
of a company on March 1, and to Aû#0ûPROGRAMMEûANDûISûNOTû paper as the private money is too expensive and through the
remove the impact of Covid. rated,” said the banker. “Huge too expensive. mEXvûTHEûSYNDICATEûHEADûSAID
That’s not something a rating swathes of businesses effectively A number of banks are
can do, as a credit rating is not a seemed to be shut out.” holding around 10 buyout “There is a belief the
‘point in time’ analysis and it is In these cases, banks have lNANCINGSûTOTALLINGûINûEXCESSûOFû market will come back
forward looking by nature.” been teaming up to attest to €10bn, which they are unable to
and credits will survive
)NSTEADû30ûSUGGESTEDûTHATû their unrated clients’ credit sell after Covid-19 banished any
THEû"ANKûOFû%NGLANDûUSEûITSû quality with their internal hopes of lenders being able to
this crisis, so no one is
credit assessments. grading models. launch syndication processes. sitting there thinking
%LSEWHEREû&ITCHûHASûBEENû h7EREûSEEINGûAûHUGEûAMOUNTû The leveraged loan market all they need to sell now”
helping unrated companies gain of interest,” said the banker. but shut for new issuance in
access to the CCFF by offering “The money can be pretty mid-March once the pandemic POSITIVE SIGNS
them short-term credit ratings. meaningful for companies. If took its toll. 7HILEû%UROPESûLEVERAGEDûLOANû
The agency has seen “huge you’re broadly investment 7ITHûNOûIMMINENTûWAYûTOûSELLû market is still shut to primary
interest from unrated grade-like, have a good balance down risk, the underwriting issuance, there are positive signs
companies”, a spokesperson sheet and you’re important to banks were approached by that denote the market could
said. He added that half of all the UK economy at some level, direct lenders to take chunks of open for business in the coming
requests did not meet the you have a good chance of THEûlNANCINGSûBUTûTHEIRûOFFERSû weeks for the right credit.
investment-grade standard getting it.” were rebuffed. 4HEûSUCCESSFULûõMûISSUEûOFû
7HILEûBANKSûTYPICALLYûTRYûTOû SENIORûSECUREDûmOATING RATEû
sell any underwritten deals notes by Single B rated Swedish
which can swing quite violently in with deals as soon as this week, within three months, they are alarm company VERISURE earlier
these sell-offs,” said a DCM banker potentially in other currencies. holding onto the paper for now this month has increased hopes
ATûONEûOFû,'SûLEADS h4HISûSHOWSûTHATû4IERûûFROMû in the hope they will be able to of a revival of the leveraged loan
h7EûLEARNEDûYESTERDAYûTHATû the right name and sensibly launch syndication processes market.
the sterling community wants priced, will be snapped up,” said down the line to mainstream “There is a belief the market
good household names in a DCM banker. investors. will come back and credits will
SUBORDINATEDûPRODUCTSû0HOENIXû Tier 1 products could also h$IRECTûLENDERSûAREûSNIFlNGû survive this crisis, so no one is
went better than anyone could follow, bankers said, but may around like optimistic hyenas sitting there thinking they need
HAVEûEXPECTEDûANDû,'ûASûAû come later, potentially after trying to get a bit of meat. The to sell now,” the syndicate head
better-rated name, is another %UROPEANûBANKSûHAVEûRELEASEDû herd of underwritten loans don’t said.
leg up in terms of the book and THEIRûlRST QUARTERûRESULTS contain the sick or old and However, if the market hiatus
pricing leverage.” Bankers said there remained therefore won’t be isolated and continues for too much longer,
Bookrunners Bank of America, a backlog of bank Additional left prey to them,” a syndicate there will come a point when
Barclays, HSBC and NatWest Markets Tier 1 transactions that were head said. banks will need to de-risk from
MARKETEDûTHEû.OVEMBERûû initially scheduled to be situations, even if that means
NON CALLû.OVEMBERûûDEALûWITHû LAUNCHEDûBEFOREû%ASTER AGGRESSIVE TERMS taking a hit.
)04SûOFû'ILTSûPLUSûTHEûBPûAREA “If we see further As many of the outstanding h%VERYONEûISûSORTûOFû
The size was subsequently set performance in AT1, I think loans were underwritten before sympathetic right now, there is
at £500m and guidance at the we’ll see that pipeline come Covid-19, they contain quite a sense that we are all in this
435bp area, before the spread through,” said the DCM banker. competitive terms from the together as no one saw this
WASûlXEDûATûBPûUPONûMOREû “Some people are taking the banks, both economically and coming and it is
than £5bn demand (pre-rec). view that the second half of from a documentation unprecedented,” a second
,'ûPAIDûAûSLIMûNEW ISSUEû ûCOULDûBEûWORSEûASûTHEûFULLû standpoint. syndicate head said.
PREMIUMûOFûJUSTûBPûBASEDûONû economic aftermath of the Direct lenders charge a “There is a little space and
its secondary curve. pandemic comes to the fore, premium to CLOs and credit goodwill to get through the
Bankers said other insurers and and we potentially get a second funds and are likely to want a shutdown. Three months later,
banks were also monitoring the wave of cases ... so May could be price that is outside of a bank’s if there are still issues, people
4IERûûMARKETûANDûCOULDûEMERGEû quite lively.” mEXûPROTECTIONûINûEXCESSûOFûn will be less lenient.”

Top news
United lands US$1bn from stock
sale as it gets ahead of rivals
Equities Airlines weigh capital markets options
BY ANTHONY HUGHES In an overnight block trade United shares fell below the conceded it will have to lay off
late on Tuesday, Morgan Stanley OFFERINGûPRICEûTOû53ûINû staff in October as soon as the
UNITED AIRLINESûBECAMEûTHEûlRSTû and Barclays priced the sale of 7EDNESDAYSûSESSIONûINûPARTûASû six-month ban on redundancies
US carrier to resort to selling Mû5NITEDûSHARESûûOFû rival Delta Air Lines warned it that is part of the bailout
stock during the Covid-19 crisis, expanded capital, at the top of would take two to three years to expires.
raising US$1bn from investors as THEû53 ûRANGEûAû recover from the crisis. Yet with the equity raise,
the industry faces the prospect tight 5% discount to last sale. US$6bn in current liquidity, the
of an extended and painful BATTLE FOR SURVIVAL proceeds of an aircraft sale and
downturn. United CEO Oscar US airlines are racing to cut leaseback deal and up to
For the second-largest carrier Munoz warned earlier capacity and operating costs US$9.5bn in government aid on
in the US, while it was an amid the collapse in passenger its way, United expects to have
this month the airline
ignominious trip to equity demand due to the virus. enough cash to last at least 30
capital markets, there may have
faced the biggest 5NITEDû#%/û/SCARû-UNOZû months, covering both the
been some sense in tapping challenge of its warned earlier this month the current lockdown and the
investors before its rivals do the 94-year history airline faced the biggest expected slow recovery in the
same. challenge of its 94-year history. travel sector.
5NITEDûSOLDûSTOCKûATûJUSTûONE A single investor took 40% of Munoz pointed to a 97% fall in 3OMEû%#-ûPARTICIPANTSûWEREû
third of the average price it paid the offering, a banker close to mYINGûPASSENGERSûINûTHEûlRSTûTWOû surprised Morgan Stanley and
INûAû53BNûBUYBACKûINûû the deal said. WEEKSûOFû!PRILûûVERSUSû Barclays, who shared a
after a brutal 70% price decline “Investors like the idea of six million in the same period 53MûUNDERWRITINGûFEEû
this year. PLAYINGûTHEûlRSTûONEvûTHEû last year) and said the airline for the deal, were willing to
The airline opted to raise banker said, though he conceded WOULDûmYûFEWERûPEOPLEûDURINGû undertake a risk trade at a
equity at the same time as it is existing investors were “not the entire month of May than it relatively tight discount
poised to collect as much as thrilled” with the dilution. mEWûONûAûSINGLEûDAYûDURINGûTHATû and that United did not opt
US$9.5bn of grants and loans h7EûALLûREMEMBERûFROMûTHEû month last year. for a wall-crossed bookbuild
from the US government’s lNANCIALûCRISISûTHEREûWASûTHISû The airline has already cut or a less dilutionary CB
bailout programmes. element of one after the other.” 80% of its capacity in April and offering.
Kingsoft tests US bid for China

Equities Cloud services spin-off is first China-to-US listing since Luckin scandal
BY FIONA LAU companies and affect the corporate governance issue is In an investor call after the
pipeline of those planning to list much less of a concern,” said the results announcement, Ng Yuk-
KINGSOFT CLOUD HOLDINGS last week in the US. banker. KEUNGûCHIEFûlNANCIALûOFlCERûOFû
received a warm response Investors, though, did not Kingsoft Corp owns 53.8% of Kingsoft Corp, said the
during pre-marketing for a US turn their back on Kingsoft Kingsoft Cloud. Chinese pandemic has positively
)0/ûOFûABOUTû53MûINûANû Cloud thanks to the solid track smartphone maker Xiaomi Corp impacted the cloud business as
early sign that the US market record of its Hong Kong-listed is the second-largest shareholder more people work online and
remains open for certain parent, software company with a 15.8% stake. demand for online education
Chinese issuers despite the latest Kingsoft Corp, and the Shares of Kingsoft Corp have and entertainment is on the rise.
accounting scandal involving a increasing demand for cloud risen 15% since it reported a He expects Kingsoft Cloud’s
US-listed Chinese company. services as a result of the Covid- FORECAST BEATINGûOPERATINGûPROlTû revenues to grow at least 70% in
+INGSOFTSûPROPOSEDûmOATûISûTHEû 19 pandemic. FORûTHEûFOURTHûQUARTERûOFûûONû ûANDûTOûACHIEVEûTHEû%BITDAû
lRSTûSIZEABLEû#HINA TO 53û)0/û h7EûHAVENTûREALLYûHADûMUCHû -ARCHû breakeven point by the end of
since Luckin Coffee, widely PUSHBACKûSURPRISINGLYû7EûHAVEû “Investors also like the fact the year.
billed as China’s answer to prepared for such [Luckin- that Kingsoft Cloud is in one of Kingsoft Cloud made a loss of
Starbucks, revealed last month it related] questions but it has not the few industries that are 2MBBNû53M ûINûû
had reported some fabricated come up at all,” said a banker on BENElTINGûFROMûTHEûVIRUSû ANDûAûLOSSûOFû2MBBNûINû
sales numbers. the deal. outbreak. There’s interest, 0ARENTû+INGSOFTû#ORPûRAISEDû
Bankers have been worried “In terms of corporate DElNITELYûBUTûMARKETSûAREû HK$3.1bn (US$400m) from a
that the subsequent collapse of governance, Kingsoft does have volatile so the big question is the lVE YEARûPUT THREEûCONVERTIBLEû
Luckin’s stock would dent a listed parent and this gives valuation,” said another banker bond issue on Thursday,
CONlDENCEûINû#HINESEû INVESTORSûCONlDENCEûû4HISû on the deal. WRAPPINGûUPûTHEûlRSTû

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The banker said United

examined a range of options,
Delta, which lost US$534m in
THEûlRSTûQUARTERûANDûPREDICTSûAû Shake Shack rustles
up US$150m
but a wall-cross was 90% second-quarter revenue
unnecessary because investors decline, expects to end the
knew United well and had current quarter with US$10bn
anticipated that airlines might of liquidity versus its current Equities Restaurants ease squeeze with stock sales
raise capital. daily cash burn of US$50m.
The presence of short-sellers BY ANTHONY HUGHES ATMs usually take weeks or
in airline stocks may complicate months to reach their funding
a CB because arbitrage funds
“We’re looking at US publicly traded restaurant target because they are designed
would have found it hard to all options [but] chains are employing to raise capital without disturbing
borrow stock to hedge their we have no plan unorthodox tactics to raise market prices by comprising only
positions. for [equity] at the equity and ensure they have a small fraction of daily volumes.
moment” enough cash to cover the dining However, they can be viewed
NEXT UP downturn. as a sign of weakness, one
Meanwhile, DELTA left open the SHAKE SHACK, DARDEN RESTAURANTS, banker said.
possibility of raising equity The airline expects to get up CHEESECAKE FACTORY and DAVE & "YûINSTEADûmIPPINGûINTOûAû
before on Thursday opting for a to US$10bn of relief from the US BUSTER’S ENTERTAINMENT have all sold larger block, Shake Shack was
53BNûBONDûSALEû ûITSûlRSTûSINCEû government, including US$5bn stock to investors in recent weeks ALSOûABLEûTOûSOLVEûAû02ûPROBLEM
becoming a “fallen angel” last of payroll support of which it at the same time as they scramble It and other large chains took
month. HASûALREADYûRECEIVEDû53BNû to limit sales declines by switching MEDIAûmAKûFORûRECEIVINGûFUNDSû
$ELTAû#%/û%Dû"ASTIANûSAIDûTHEû and up to US$4.6bn of to take-out menus. FROMûTHEû53û'OVERNMENTSû
airline was not taking any additional government loans. Shake Shack, the premium 0AYCHECKû0ROTECTIONû0ROGRAMûFORû
funding options off the table US airlines have been roundly burger chain founded by high- SMALLûBUSINESSESû7ITHûTHEû
until it had a better idea of the criticised for failing to prepare PROlLEûRESTAURATEURû$ANNYû additional funds from the equity
length of the downturn. for an external shock and using Meyer, raised nearly US$140m raise, Shake Shack opted to return
h7EREûLOOKINGûATûALLûOPTIONSû THEIRûFREEûCASHmOWûINûPRIORû from a rare Friday afternoon the US$10m it had been allocated.
[but] we have no plan for years to buy back stock rather block trade on April 17. The chain, whose shares were
[equity] at the moment,” Bastian than build up rainy day funds. This marked a sudden change down 18% year-to-date by the
told analysts on the company’s !CCORDINGûTOûlLINGSû$ELTAûLASTû in plans after earlier that close on Thursday, has fared
earnings call. year repurchased and retired morning it announced a better than many others during
h7EVEûGOTûAûPRETTYûGOODûLISTû MûSHARESûATûAûCOSTûOFû53BNû US$75m at-the-market offering. the crisis.
of opportunities to raise or about US$53.00 a share, more Aided by reverse enquiry, JP (OWEVERûITSûlRST QUARTERû
liquidity from before executing than double Thursday’s closing Morgan, Bank of America and Wells SAME STOREûSALESûFELLûûANDûITû
that option.” PRICEûOFû53 Fargo BOUGHTûMûSHARESûFROMû is burning about US$1.3m-$1.5m
Shake Shack at US$39.77 each, of cash a week as it deals with
an 8.6% discount to Friday’s the temporary closure of 17 of
close. its company-owned sites.
international equity-linked deal chairman of the Securities and Shake Shack also raised Not everyone has the luxury
INû!SIA 0ACIlCûEX *APANûSINCEûTHEû %XCHANGEû#OMMISSIONû another US$10m of equity from of being able to access capital
coronavirus outbreak. mentioned China repeatedly dribbling out stock under the markets.
in a warning to investors over ATM in the same session. %ARLIERûTHISûMONTHû2UTHSû
BEST CANDIDATE the accounting standards of Matthews South, an (OSPITALITYû53M ûANDû
Kingsoft Cloud may be the best foreign companies listed in the independent adviser known for 0OTBELLYû53M ûACCESSEDû000û
candidate to revive US interest in US. its convertible bond expertise, to help pay their labour costs, but
Chinese issuers after a run of “In many emerging markets, and ICR acted as advisers to exposing them to criticism this
RECENTûPOORLYûPERFORMINGû)0/Sû including China, there is Shake Shack. money should have gone to small
due to a combination of US-China substantially greater risk that businesses. The US Treasury has
trade tensions, the pandemic and disclosures will be incomplete FLIPPING BURGERS now asked public companies to
the Luckin scandal. or misleading and, in the event 1UICKLYûmIPPINGûANû!4-ûTOûAû return the money, throwing
“From a fundamental point of of investor harm, substantially public offering is shaping up as a their future into further doubt.
view, the deal ticks all the less access to recourse, in USEFULû%#-ûSTRATEGYûFORûSMALL û Meanwhile, Darden
boxes,” said a third banker on comparison to US domestic and mid-sized companies during Restaurants, operator of Olive
the deal. companies,” he said. the current crisis. In Shake 'ARDENûANDûOTHERûRESTAURANTû
0OLITICALûTENSIONSûHOWEVERû The statement underlined 3HACKSûCASEûTHEûRAPID lREû brands, took a more conventional
remain high, and US regulators again that the main US funding eased investor fears, route by raising an upsized
have turned increasingly hostile accounting watchdog cannot sending its shares surging above US$458m from a wall-crossed
TOWARDSû#HINESEûlRMS inspect the work that Chinese US$49 later in the week. overnight offering via Goldman
The head of the US securities auditors do for companies listed Dave & Buster’s earlier this Sachs and Bank of America.
watchdog last Tuesday in the US. month launched a US$75m ATM Also in the past week, The
SPECIlCALLYûWARNEDûINVESTORSûOFû Kingsoft Cloud plans to open but rather than this taking Cheesecake Factory, which has
the risks of investing in Chinese BOOKSûFORûTHEû)0/ûONûORûAFTERû weeks to execute it was nearly 300 restaurants, sealed a
companies. May 4. CICC, Credit Suisse, JP completed in one day when 53MûCONVERTIBLEûPREFERREDû
In a strongly worded Morgan and UBS are leading the Jefferies priced several large investment from private equity
statement, Jay Clayton, transaction. trades. lRMû2OARKû#APITAL

Top news
Forbearance or kicking the can?
Banks braced for provisions
People & Markets Easing rules to help economy may hurt European banks long-term – just like 2008
BY STEVE SLATER h7EûSEEûTHEû%UROPEANûAPPROACHû WASûTHEû%UROPEANûBANKINGû 7HETHERûOTHERSûWILLûALSOûBEû

of regulatory relaxation as the industry’s biggest problem. prudent, given the regulatory
%UROPESûBANKSûAREûUNLIKELYûTOû right thing to do for the economy dispensation, remains to be
match US rivals in building to encourage lending, but from an PRESSURE ON? seen.
massive reserves to shield equity shareholder point of view, To be fair to both banks that “This move now puts pressure
themselves from coronavirus this approach of prolonging and REPORTEDûlRST QUARTERûRESULTSûLASTû on peers to follow suit despite
LOSSESûWHICHûMAYûHELPû%UROPESû delaying the pain would put week, both took what appear to THEû%#"ûAFFORDINGûBANKSû
economy in the short term but %UROPEANûBANKSûBEHINDûTHEûCURVEû be relatively realistic provisions. REGULATORYûmEXIBILITYûTOûAVOIDû
risks repeating the mistakes of a once again in terms of cleaning up Credit Suisse’s provisions set excessive pro-cyclical impacts in
decade ago and kicking banking asset quality,” said Kian aside SFr568m (up from SFr81m a MODELSvûSAIDû"ENJIEû#REELAN
problems down the road. !BOUHOSSEINû%UROPEANûBANKINGû year ago), which analysts said Sandford, an analyst at Jefferies.
%UROPESûBANKSûAREûCERTAINûTOû ANALYSTûATû*0û-ORGAN appeared prudent. The bank said
have taken additional provisions Abouhossein said that modest SFr376m of the provisions was due HIGHER BAR
INûTHEûlRSTûQUARTERûnûASûUNICREDIT provisioning will ease the burden to “current expected credit loss” US banks have certainly set a far
and CREDIT SUISSE announced last ONûBANKSûPROlTSûINûTHEûSHORT rules, which Credit Suisse is the higher bar, with the six big
week that they had – but increases TERMûBUTûWITHû%UROPEANûBANKSû ONLYûMAJORû%UROPEANûBANKûTOûUSE BANKSûSETTINGûASIDEû53BNûTOû
are expected to be modest, and facing an estimated €395bn of And UniCredit set aside an cope with future losses from the
weaker eurozone banks will have loan losses over the next three ADDITIONALûõMûINûITSûlRST CORONAVIRUSûINûlRST QUARTERû
kept provisions to a minimum. years it will add to investor QUARTERûlGURESûFORûLOSSESûRELATEDû results. That was in addition to
That has only been possible concerns about their true book to the coronavirus and the about US$6bn of credit losses
BECAUSEû%UROPEANûBANKSûHAVEû values and potentially leave their resulting downturn. The Italian taken for the quarter, and was
been given considerable leeway by cost of equity “higher for longer”. bank said that was based on the far higher than analysts had
regulators to not fully implement And of course, any increase in IFRS 9 accounting rules expected.
some rules, including the provisions will further depress calculation of generic loan loss The banks also warned they
accounting treatment of losses, BANKSûPROlTABILITYûANû provisions. It said total may set aside more this quarter
due to the coronavirus crisis. important consideration when provisions could stay at a similar and beyond.
-OSTû%UROPEANûBANKSûREPORTû regulators have said the chronic LEVELûTHROUGHûTOûû*EFFERIESû Andrew Coombs, a banks
lRST QUARTERûRESULTSûINûTHEûNEXTû LACKûOFûPROlTABILITYûASûAûRESULTûOFû thinks UniCredit’s full-year analyst at Citigroup, said
three weeks. low interest rates and high costs provisions could reach €5.3bn. investors should not read across
Is a ‘perfect storm’ brewing in euro funding markets?

People & Markets Short-term bank borrowing costs on the rise in Europe
BY CHRISTOPHER WHITTALL in short-term eurozone funding h7EûTHINKûEUROûFRONT ENDû aggregated bank lending rates
rates is likely to cause disquiet rates could be heading towards a such as the infamous London
A closely-watched gauge of stress among policymakers and traders PERFECTûSTORMvûSAIDû3UBHRAJITû Interbank Offered Rate, or Libor,
in short-term euro funding who monitor these numbers "ANERJEEûAûlXED INCOMEû ANDûITSûEUROûEQUIVALENTû%URIBOR û
MARKETSûHASûJUMPEDûTOûITSûHIGHESTû closely for clues about the health strategist at HSBC in a recent typically are not much higher
level since the eurozone debt OFûTHEûWIDERûlNANCIALûSYSTEM research note. than overnight lending rates.
crisis eight years ago, worrying Analysts identify a number of “There are strong structural But that changes when people
analysts who fret that funding forces behind the move, including factors at play in the euro area, are concerned about rising
conditions might get even tighter general credit concerns stemming which can exacerbate the defaults, forcing banks to pay far
in the coming months. from the novel coronavirus’s funding problem as we move more to borrow money for
The gap between the rate at impact on the economy and a through the rest of the year.” longer periods.
which banks can borrow euros dislocation between US and “This massive shock to the real
for three months and where they %UROPEANûMONEYûMARKETS BASIS BLOW-OUT economy [from Covid-19] created
lend the currency overnight has But they are divided on how A sustained rise in interbank THEûRISKûOFûAûMAJORûCREDITûEVENTvû
increased roughly sevenfold long the stress could persist, lending rates has certainly acted SAIDû&ABIOû"ASSIûHEADûOFû%UROPEANû
since mid-February – to 0.31 of a with some warning that the as a canary in the coalmine for RATESûSTRATEGYûATû*0û-ORGAN
percentage point on Thursday, additional hundreds of billions previous market crises. The gap between overnight
ACCORDINGûTOû2ElNITIVûDATA of euros eurozone governments 7HENûSTRESSûINûTHEûSYSTEMûISû and three-month borrowing rates
7HILEûSTILLûFARûBELOWûTHEûRECORDû will borrow this year as a result low, people have little concern peaked in the US in late March at
of nearly two percentage points of the coronavirus crisis could over the ability of a sound bank 1.4 percentage points and has
REACHEDûDURINGûTHEûû fuel further dysfunction in these to repay money it has borrowed since started to narrow as
lNANCIALûCRISISûANYûSUSTAINEDûRISEû markets. for a few months. As a result, lNANCIALûMARKETSûHAVEûCALMEDû

visit www.ifre.com
such large reserve builds at The IFRS 9 rules used by And it is here that there are 4HATûCOULDûKEEPû%UROPEANû
%UROPEANûBANKSûDUEûTOûDIFFERENTû %UROPEANûBANKSûAREûMOREû ECHOESûOFûnûWHENû53û bank share prices depressed.
accounting standards, different STRINGENTûBUTûTHEû%UROPEANû banks were forced to increase 4HEû%UROPEANûBANKûINDEXûHASû
government support measures, #ENTRALû"ANKû"ANKûOFû%NGLANDû capital – even those who didn’t FALLENûûTHISûYEARûSIMILARûTOûAûû
fewer unsecured loans held by and other regulators have said need to. That allowed them to drop by the US bank index. That
%UROPEANûBANKSûANDûLOWERû BANKSûCANûUSEûTHEIRûJUDGEMENTû recover quicker and gain an has left DEUTSCHE BANK, BARCLAYS and
exposure to oil and gas among and also make use of advantage over rivals elsewhere SOCIETE GENERALE trading at less than
%UROPEANûLENDERS transitional rules. in the world, which they have ONE THIRDûOFûTHEIRûBOOKûVALUEû*0û
Accounting treatment is US banks appeared to adhere been extending since. Morgan still commands a small
CERTAINLYûAûSIGNIlCANTûFACTORûINû STRICTLYûTOû#%#,ûRULESûh4HESEûUS h7EûHAVEûALREADYûSEENûTHISûûûû premium to book value, but its
explaining the difference. US reserve builds were almost AûLARGEûPORTIONûOFû%UROPEANû peers trade at a discount and
BANKSûBEGANûUSINGû#%#,ûRULESûATû entirely based upon forward- banks continued to struggle Citigroup is near half its book
the start of the year, forcing looking assessment,” Coombs with dilutive capital increases VALUEûACCORDINGûTOû2ElNITIVûDATA
them to provision for losses that said in a research note. ANDûLOWûPROlTABILITYûFORûSEVERALû
are expected during the lifetime Indeed, JP MORGAN estimated YEARSûPOSTûTHEûGLOBALûlNANCIALû INVESTMENT BANK CHEER
of a loan. that US$4.3bn of its US$6.8bn crisis,” Abouhossein said. Still, there was a bright spot for
RESERVEûBUILDûWASûDUEûTOû#%#,û The looming recession will banks in the US results that is
rules. CITIGROUPûSAIDû#%#,û MAKEûITûEVENûMOREûDIFlCULTûFORû expected to be repeated in
DEPRESSED EUROPEANS:
PRICE TO BOOK VALUATIONS accounted for US$4.1bn of banks to improve returns. Median %UROPEûnûINVESTMENTûBANKû
FOR US AND EUROPEAN BANKS its US$4.9bn reserve build, or 84%. return on equity across the revenues surged on the back of
Price/book eurozone’s large banks was 5.1% buoyant trading activity.
1.2 BECAUSE WE CAN INûûDOWNûFROMûûINûû 2EVENUESûFORûlXEDûINCOMEû
4HATûRESERVEûBUILDûALSOûREmECTSû53û /XFORDû%CONOMICSûESTIMATEDû)Fû currency and commodities trading
1.0 banks’ ability to set aside huge non-performing loans reach the SOAREDûûATûTHEûBIGûlVEû53û
amounts thanks to the strength ûOFûLOANSûITûDIDûINûûTHENûû investment banks, equities
0.8 of their earnings generation. The of the large eurozone banks will REVENUESûJUMPEDûûANDû
reserve build accounted for about HAVEûAûNEGATIVEû2O%ûANDûTHEû investment banking fees rose 5% in
0.6
TWO THIRDSûOFûTHEIRûPROlTSûINûTHEû MEDIANûWILLûDROPûTOûJUSTûBELOWûû aggregate, as strong underwriting
lRSTûQUARTER /XFORDû%CONOMICSûSAID fees offset a drop in M&A advisory.
0.4
4HATûISûAûLUXURYûFEWû%UROPEANû “It’s clear that in the short Analysts at Berenberg forecast
banks have. The industry may term, over the next two or three %UROPEANûBANKSûINVESTMENTû
0.2
have far higher capital and quarters, with Covid-19 and the bank revenues will be up 19%
LIQUIDITYûPOSITIONSûTHANûINûû impact of it, [returns] are going from a year earlier. Credit Suisse
0
M Stanley
Barclays
Goldman
Citigroup
JPM
BofA
HSBC
UBS
C Suisse
BNPP
SG
Deutsche
BUTûITSûPROlTABILITYûISûSTILLûPOORû to be challenged,” said new REPORTEDûAûûJUMPûINû&)##û

That limits banks’ ability to “earn” #REDITû3UISSEû#%/û4HOMASû REVENUESûANDûAûûRISEûINû
their way through losses, so taking 'OTTSTEINûONûHISûBANKSûlRST equities, but advisory and
Source: Refinitiv data on April 23 provisions eats into capital rapidly. quarter results analyst call. underwriting slumped 38%.
down, helped by unprecedented "ASSIûEXPECTSûTHEû%URIBORû “The market is already pricing 4HATûCOULDûDRIVEû%URIBORû

stimulus measures from the increase to be temporary, noting in a degree of normalisation,” he higher if euro money market
Federal Reserve. that the Fed’s purchases of said, referring to forward funds – which are far smaller
)Nû%UROPEûTHOUGHûTHEûBASISû commercial paper is likely to derivatives prices. than their US counterparts –
has continued to climb. ease pressure on US money Strategists at Bank of America buy these safe assets instead of
markets and so reduce the cross- said “further upside pressure on short-dated bank paper.
CROSS CURRENTS currency arbitrage. %URIBORûCOULDûBEûLIMITEDvûINûAû h7EûTHINKûTHEû;EURO=ûFUNDINGû
Analysts say that the dynamic of report in which they noted that market is heading towards an
dollar money markets reacting INTERBANK LENDING RATES ELIGIBLEû%URIBORûVOLUMESûHAVEû extended period of uncertainty,
faster and harder is a large ARE RISING IN THE EURO AREA been low lately. In such exacerbated by domestic fault
THREE-MONTH EURIBOR-OIS BASIS
driver behind the recent rise in situations, banks may have to lines, and the market seems to
% points
euro borrowings costs, as it led USEûTHEIRûJUDGEMENTûASûWELLûASû be under-pricing this,” said
2.0
to a big shift in the Libor cross- inputs from other markets "ANERJEE
currency basis between the two 1.8 when submitting the rates that -AREKû3ASURAûAûlXED INCOMEû
currencies. 1.6 AREûUSEDûTOûFORMULATEû%URIBOR strategist at UBS, said the basis
“That encouraged global 1.4 BETWEENûTHEûTHREE MONTHû%URIBORû
INSTITUTIONSûANDû%UROPEANûBANKSû 1.2 FAULT LINES and overnight rate could widen by
to issue commercial paper in 1.0
But others think the market another 0.4 of a percentage point
euros and convert them into stress is likely to deepen in the over several months before the
0.8
dollars, because it was cheaper” coming months. HSBC’s situation normalises, based on the
0.6
than borrowing dollars directly "ANERJEEûHIGHLIGHTSûTHEûNEARLYû experience of previous crises in
in US commercial paper 0.4 õBNûOFûEXTRAûHIGH RATEDû ûANDû
markets, said Bassi. 0.2 treasury bills they expect “There are clouds gathering
“That issuance, although 0.0 %UROPEANûGOVERNMENTSûTOûISSUEû for a possible further increase in
1/1/08
1/1/09
1/1/10
1/1/11
1/1/12
1/1/13
1/1/14
1/1/15
1/1/16
1/1/17
1/1/18
1/1/19
1/1/20
limited in quantity, created this year to plug gaps in their ;THEûBASIS=ûWITHûOVERûõBNûOFû

UPWARDSûPRESSUREûONû%URIBORû lNANCESûASûAûRESULTûOFûTHEû#OVID sovereign bills to be issued this
lXINGSvûHEûSAID Source: Refinitiv 19 pandemic. year,” Sasura said.

Top news
Sustainability-linked loans to slow
Loans Not quite as intended: global slowdown means companies will hit CO2 reduction targets
BY TESSA WALSH INCLUDEû%3'ûLANGUAGEûASûTHEYûAREû THATSûAûBITûMOREûDIFlCULTûANDû quarter, which showed a

being assembled rapidly to cover expensive or involves giving slowdown on US$59bn in the
The rapid growth in new THEûCRISISûANDûWILLûBEûRElNANCEDû money to charity is an issue. The BUSYûFOURTHûQUARTERûOFû
sustainability-linked loans is within two years, so are less sustainability component can Second-quarter deals include a
expected to slow as crisis-hit relevant to long-term corporate quite quickly be viewed as a €5bn two-year SLL for Italian
companies turn to conventional sustainability strategies. hindrance rather than an asset.” UTILITYû%NELûONû!PRILûûANDûAûõBNû
short-term liquidity loans to 2EGULARûRElNANCINGûACTIVITYû About US$13.3bn of SLLs have SLL with a three-year maturity
survive the Covid-19 pandemic. At has ground to a halt as been completed in the second and two extension options signed
the same time, the unexpected conventional loan pricing climbs quarter so far, compared to by Norwegian telecoms group
DROPûINûGLOBALû#/ûEMISSIONSûANDû along with banks’ increased 53BNûOFûDEALSûINûTHEûlRSTû Telenor on April 8.
COMPANIESûTRADINGûDIFlCULTIESûAREû funding costs, and the
creating problems with targets conversion of revolving credits GLOBAL GREEN AND ESG LOANS KPI PROBLEMS
that set pricing on existing deals. into SLLs is slowing as a result. LINKED VOLUME The unforeseen circumstances
US$bn
SLLs have been one of the big Discussions around key of the crisis are also expected to
GROWTHûAREASûOFû%3'ûlNANCEû performance indicators are also 80 CREATEûPROBLEMSûWITHûTHEû+0)û
along with green bonds, but are getting harder as treasury teams 70 targets that tie companies’
temporarily on the backburner focus on immediate priorities in 60 sustainability performance to
as companies focus on drawing the battle for survival and try to 50 their loan pricing, which will
existing loans and securing limit borrowing costs amid 40 trigger interesting conversations
expensive additional liquidity tough bank talks. 30 with lenders about whether
lines. “In some cases, discussion on 20 companies hit or miss targets,
“Certainly SLLs have dried up. +0)SûISûONûHOLDûASûCOMPANIESû 10 depending on their
4HEYûWILLûCOMEûBACKûBUTûmOWûISû have other priorities,” said 0
performance.
reduced compared to overall Cecile Moitry, co-head of 2Q20TD “Kickers in loans could be
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
market volumes,” a loan banker SUSTAINABLEûlNANCEûMARKETSûATû DIFlCULTûIFûCOMPANIESûAREûHAVINGû

said. ".0û0ARIBAS Green Loans ESG Loans tough times – how do banks
These conventional short- A sustainability loan banker Note: Includes Schuldscheine cope with that?” asked the
term liquidity loans do not was more blunt: “Anything Source: Refinitiv LPC. sustainability loan banker.
Ford spreads fallen angel wings

Bonds Auto company sees huge demand but secondary slump disappoints investors
BY DAVID BELL Joint bookrunners Citigroup, high-yield portfolio manager. And that cash-burn
Bank of America, Goldman Sachs, JP h0EOPLEûPADDEDûTHEIRûORDERSûTOOû calculation was a key concern
FORD MOTOR raised US$8bn on Morgan and Morgan Stanley were much and got a lot more than they for investors.
!PRILûûWITHûITSûlRSTûBONDû able to bring pricing tighter at EXPECTEDû%VERYONEûISûJUSTû h7EûTHINKû&ORDûHASûTHEû
offering since being downgraded GUIDANCEûnûTOûûAREAûû dumping it. It’s good for Ford, bad liquidity position necessary to
into the high-yield universe last area and 10.00% area. for investors,” said a bond investor. WITHSTANDûTHISûDOWNTURNû7Eû
month, drawing huge demand And with heavy demand on A source close to the deal noted think the longer debt is even
for a deal that disappointed in SHOWûlNALûPRICINGûWASû that the Covid-19 environment more attractive because it’s at a
the secondary market as tightened again, with Ford HASûMADEûITûMOREûDIFlCULTûFORû SIGNIlCANTûDISCOUNTvûSAIDû3COTTû
investors unloaded bigger than launching a US$3.5bn three-year borrowers to gauge demand with +IMBALLûlXED INCOMEûPORTFOLIOû
expected allocations. tranche at 8.50%, US$3.5bn of precision, leading to changes in manager at BMO Asset
The carmaker priced a lVE YEARSûATûûANDû53BNû size such as this becoming more Management.
three-part deal totalling US$8bn OFû YEARSûATû commonplace. Investors also have Ford said in March it would
after drawing demand that the Investors saw those as healthy every right to drop their draw down US$15.4bn across two
leads pegged at more than yields for the ratings, allocations, the source added. credit lines and that it would
US$40bn. notwithstanding the broader suspend dividend payments to
Demand was supported by pressures facing the auto sector. CASH BURN help offset the working capital
large reverse enquiries, But investors hoping to make The new debt added to several impact of the spread of the Covid-
according to two investors. a quick buck on a secondary other steps Ford has taken in 19 pandemic.
The so-called fallen angel market pop – like recent deals recent weeks to shore up its It also suspended its stock
OFFEREDûTHREEûlVEûANDû YEARû from Marriott and Carnival have LIQUIDITYûPROlLE buyback programme and is taking
senior unsecured paper with delivered – were disappointed as Analysts at CreditSights other cost-cutting approaches
initial price thoughts of 9.5% the bonds dropped to cash prices estimated the company would such as lowering operating
area, 10% area and 11% area, of around 95–96 after the bigger- burn around US$5bn of cash per expenses, cutting back on capital
respectively. The notes carry than-expected deal was priced. month while its production expenditure and deferring
"A"""""nûRATINGS h%VERYONEûGOTûSTUFFEDvûSAIDûAû plants remain shut. portions of executive pay.

visit www.ifre.com
The sudden drop in global

#/ûEMISSIONSûASûECONOMICû
(ITTINGû+0)ûTARGETSûCANûGIVEû
companies discounts of 5bp–15bp Bond prices neglect
activity subsided could help on interest costs, and missing them
MOREûCOMPANIESûTOûHITû#/û
targets and get loan discounts.
could trigger payouts to banks or
CHARITYû-ISSINGû+0)SûANDûTARGETSûORû
risks of slow recovery
h7EûHAVEûAûSITUATIONûNOWûTHATû resetting them could require Bonds A potential ‘new normal’ is not being priced in
was not foreseen that is going to waivers requiring unanimous bank
CAUSEûISSUESûWITHû#/û+0)Sûnû consent as they affect loan pricing. BY WILLIAM HOFFMAN STRUGGLING
DElNITELYûTHISûYEARûPOSSIBLYû “If either party wants to Likewise, the auto industry is
next year – and some companies CHANGEû+0)ûTARGETSûITûHASûTOûBEûAû Market participants are beginning struggling, with new vehicle
MAYûBENElTûASûAûRESULTvûSAIDû mutual conversation on to worry that not enough risk is sales in the US down 55% from
Tim Rennie, a partner in rebasing them,” Rennie said. being priced into US corporate pre-pandemic forecasts through
Ashurst’s banking practice. bonds, where a wave of optimism THEûlRSTûHALFûOFû!PRILûACCORDINGû
Reductions in accident rates TIGHTER KPIS about a sharp economic TOûAû*$û0OWERûREPORT
and absenteeism as employees +0)SûHADûBEENûTIGHTENINGûBEFOREû turnaround combined with a Nonetheless, fallen angel Ford
stay at home during lockdown the Covid-19 crisis, as more belief in the Federal Reserve’s managed to price a US$8bn three-
could also help borrowers hit BANKSûSETûUPû%3'ûADVISORYûTEAMSû near-miraculous powers have part bond with ease on April 17
their targets. to set more appropriate metrics tightened spreads and allowed while investment-grade
On the other hand, the drop and targets after early deals risky credits to access the market. automakers Hyundai and Toyota
COULDûMAKEû#/ûTARGETSûHARDERû were accused of baking in Investors are backing have also taken out sizeable slugs.
to hit next year as economic UNCHALLENGINGû+0)S companies struggling with
activity resumes and emissions The Loan Market Association CLOSURESûANDûSIGNIlCANTLYûREDUCEDû DON’T FIGHT THE FED
CLIMBûANDûOTHERû+0)SûCOULDûALSOû is aiming to issue new guidance CASHmOWûnûSUCHûASû-ARRIOTTû Before spreads began to tighten,
be tripped if companies cannot that will focus on the ambition International and Ford Motor – in investors were receiving Single
trade or present audited of the targets that companies the apparent belief that they B returns for strong Double A
accounts. are setting for themselves. simply need a bridge to the other rated companies that have
Much will depend on how &INNISHûFORESTRYûGROUPû50-Sû side of the pandemic and, once excellent franchises across the
MANYû+0)SûWEREûSETûANDû €750m SLL in March is a recent the economy reopens, business cycle, said Steve Repoff,
documented and how companies EXAMPLEûOFûTIGHTû+0)SûASûITSû#/û will return to normal. PORTFOLIOûMANAGERûATû'7+û
perform. Loans can have three to reduction target aligned with a However, if those Investment Management. And
lVEû+0)SûWHICHûAREûNOTûLEGALû 1.5 increase in global assumptions are wrong and the those prices were hard to resist.
covenants and missing them does temperature and it included the economy faces a slower recovery “It’s easy to talk yourself into it,”
not prompt an event of default. lRSTûBIODIVERSITYû+0) – or a second wave of Covid-19 2EPOFFûSAIDûh)TûFEELSûINEFlCIENTLYû
infections – cash-strapped priced if you feel the market has a
Still, the company expects to include companies that have companies could face more reasonable shot at getting back to
REPORTûAû53BNûLOSSûWHENûITû recently been downgraded into DIFlCULTûTIMESûANDûFURTHERû normal any time soon.”
ANNOUNCESûlRST QUARTERûRESULTSû the high-yield universe – aka ratings downgrades. Now, as investors bet on the
ONû!PRILûûTHEûCOMPANYûSAIDû fallen angels – such as Ford. “There is still an unknown Fed doing whatever it takes to
on April 17. h7ITHûTHEûTHREEûANDûlVE YEARû around what the credit stories foster a recovery – via its primary
#URRENTLYûONLYû&ORDSûJOINTû parts of the curve I think look like in a number of cases,” and secondary corporate credit
ventures in China, where the investors are taking a bit of one DCM syndicate banker said. facilities – those apparent
virus outbreak is now comfort with the potential Fed “The willingness to buy a bargains have disappeared, with
moderating, are operational. backstop,” said John McClain, credit like Marriott is a strong )#%û"OF!ûDATAûSHOWINGûAVERAGEû
And the Covid-19 pandemic is portfolio manager at Diamond signal of investor’s forward- investment-grade spreads having
expected to have a severe Hill Capital Management. looking view that these are tightened more than 160bp from
impact on vehicle sales, with “In the 10-year part of the short-lived consequences. But their wides last month.
analysts at Moody’s predicting a curve, if Ford survives – which we how long does it take to get back “Should we really be buying
30% drop in global demand in think it will – that presents a on our feet? Those timelines are back at these all-time tight
the second quarter. pretty attractive total return, as it still very unclear.” coupons with that uncertainty
Ford was issuing from its Ford is a non-call for life rather than For example, 80% of hotel still outstanding?” the syndicate
Motor level – rather than the being a callable bond,” he said. rooms in the US are currently banker asked.
Ford Motor Credit arm – but In addition to potential Fed empty, according to industry And what happens if there is
CreditSights analysts noted the support, the downgrade makes research group STR, and it’s not another surge of infections in
new debt offered concessions of Ford the largest issuer in the clear that consumer tastes for the US?
BPûBPûANDûBPûTOû&ORDû high-yield index and that travel will snap back quickly, even “If we start for whatever reason
Motor Credit’s existing curve. provided a degree of technical if governments allow reopening. – political or otherwise – to reopen
demand for the new issue. h*USTûBECAUSEû'OVERNORû aspects of the economy and the
FED RALLY h4HISûISNTûJUSTûPURELYûANûAUTOû Andrew Cuomo says we’re infection curve steepens again,
The new deal followed a sharp ANALYSISvûSAIDû'REGû:APPINû reopening New York doesn’t you could see a slight unravelling
rally in the company’s bonds since PORTFOLIOûMANAGERûOFû0ENNû-UTUALû mean I want to go riding the of this recent recovery,” another
!PRILûûnûSOMEûHAVEûRISENûABOUTûû Asset Management. “You have to subway right away,” said Jim DCM syndicate banker said.
points in the secondary market – consider it is the biggest issuer in Caron, head of global macro “If we get another blip in the
after the Federal Reserve said it THEûHIGH YIELDûINDEXûANDûITûQUALIlESû STRATEGIESûANDûGLOBALûlXEDû curve where the virus isn’t
would extend its corporate bond ASûAûFORMERû)'ûCREDITûTHATûWILLûBEû income at Morgan Stanley under control we could move
purchasing programmes to eligible for Fed purchases.” Investment Management. wider again.”

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People
17
&
HSBC rejigs
leadership of
Markets
19 Former JP
Morgan and 21 Ken Moelis
plans to
its investment bank Goldman Sachs poach top talent
again and sets up a banker Jana Hecker from big investment
new unit to “sharpen” joins UniCredit as bank rivals, just as
its focus on clients hit global head of equity he did following the
by the coronavirus capital markets 2008/09 financial
crisis
FRONT STORY CORONAVIRUS
Ventilator firm goes for speed

Sweden’s Getinge opts for quick Covid-19 CP issue for US$100m
Swedish ventilator manufacturer GETINGE‘s LESS THAN AN HOUR instrument can either be issued using
swift SKr1bn (US$100m) Covid-19 Getinge raised the money in less than an ICMA’s Green Bond Principles, or using ESG
commercial paper issue could set a hour in another show of support for the ratings from an external opinion provider.
precedent for companies that need to company, which is also receiving assistance
rapidly increase production of urgent with sourcing materials from other CLARITY REQUIRED
medical supplies during the coronavirus industries and multinational companies. Clarity and documentation around the use
crisis. h4HEûBOOKBUILDINGûPROCESSûWASûONEûOFûTHEû of proceeds helped Getinge to raise the deal
4HEûlNANCINGûISûTHOUGHTûTOûBEûTHEûlRSTû FASTESTû)VEûEVERûSEENvûSAIDû-ATTSON QUICKLYûUNDERWRITERûANDûFRAMEWORKû
corporate Covid-19 labelled deal, and its The CP issue will mature on October 21, structuring adviser SEB said.
structure could help healthcare and unrated Getinge described the cost of 4HEûCOMPANYSû#OVID ûlNANCINGû
organisations to ramp up production of CAPITALûASûhGOODvû)TûWASûISSUEDûUNDERûTHEû FRAMEWORKûCOVERSûTHEûISSUANCEûOFûSHORTûANDû
specialised medical equipment, and be used COMPANYSû#OVID ûlNANCINGûFRAMEWORKû long-term debt, and will include allocation
in other sectors. which was developed in line with ICMA’s reporting that outlines what Getinge has spent
h)ûDElNITELYûTHINKûTHISûISûTHEûWAYûTOûGOûFORû Social Bond Principles. the money on. It will provide impact reporting
other companies in this industry and other Getinge is one of several companies to if possible, detailing the number of ventilators
INDUSTRIESûIFûYOUûNEEDûTOûRAMPûUPûQUICKLYvû raise ESG CP after Swedish property PROVIDEDûANDûPATIENTSûTHATûHAVEûBENElTED
said Lars Mattson, head of investor relations COMPANYû6ASAKRONANûOPENEDûTHEûMARKETûINû The one-off report will be provided after
at Getinge. September 2018 with a green CP deal. full allocation on the six-month maturity of
The company needed to put a sustainable 4HEûSUSTAINABLEû#0ûMARKETûHASûNOTûSEENû the CP or after nine months at the latest.
FRAMEWORKûINûPLACEûQUICKLYûTOûlNANCEûTHEû the same rapid development so far as its h4HISûDEALûISûTHEûlRSTûOFûITSûKINDûINûTHEû
jump in production and increased shifts bond counterpart. The short-term WORLDûTOûOURûKNOWLEDGEvûSAIDû-ATSû
after announcing a near three-fold Olausson, a senior adviser in climate and
production increase to 26,000 of its SUSTAINABLEûlNANCEûATû3%"
GETINGE ON THE RISE; SHARE PRICE OF SWEDISH
advanced intensive care ventilators at the VENTILATOR MAKER IN THE PAST YEAR “I’m sure there are many other companies
end of March, from 10,000 in 2019. SKr WHOûCOULDûCONSIDERûlNANCINGûTHEMSELVESûWITHû
The company chose a Covid-19 deal to 200 AûLABELLEDû#0ûORûBONDûTHEûTRICKûISûTOûRINGFENCEû
MINIMISEûITSûTIMEûTOûMARKETûANDûAVOIDûTYINGû the use of proceeds in a way that is relevant for
up capital, after demand and orders for its the current crisis, that can be clearly described
180
products, including advanced ventilators, ANDûMAKESûSENSEûFORûINVESTORSvûHEûSAID
life support equipment and advanced The deal also meets the UN’s third
monitoring for intensive care units, 160 sustainable development goal relating to
ROCKETEDûINûTHEûlRSTûQUARTERûASûTHEûCRISISû good health and wellbeing, which is
INTENSIlED ATTRACTIVEûFORûINVESTORSûTHATûAREûSEEKINGûTOû
“CP was the best option for speed; 140 mitigate the effects of the crisis and have
patients are waiting for these ventilators portfolios mapped to the SDGs.
NOWvû-ATTSONûSAIDûh)FûYOUûPUTûOUTûAûBONDû Ramsbury Invest, Familjen Erling-Perssons
120
YOUûNEEDûAûPROSPECTUSûANDûITûTAKESûLONGERv 3TIFTELSEû,+!"û3PILTANû&ONDERû3VENSKTû
Getinge also chose not to get a second- .ARINGSLIVû.ORDKINNû!SSETû-ANAGEMENTûANDû
party opinion to avoid a further two to 100 3WEDBANKû2OBURûINVESTEDûINûTHEûDEAL
23/4/19
23/5/19
23/6/19
23/7/19
23/8/19
23/9/19
23/10/19
23/11/19
23/12/19
23/4/20
23/1/20
23/2/20
23/3/20
THREE WEEKûDELAYûANDûGAVEûTHEûDEALûAû#OVID The ventilators will be manufactured at

19 label rather than a social transaction as a 'ETINGESûPRODUCTIONûFACILITYûINû3TOCKHOLM
result. Source: Eikon Tessa Walsh

“Lawyers won’t allow me to say this
ISûPRUDENTûBUTûITûISûAPPROPRIATEv
CREDIT SUISSE CEO THOMAS GOTTSTEIN ON RESERVES, P22
Fire sale risk of fallen angels is overblown

As rating agencies sharpen their axes, cutting RECORD DOWNGRADES? are typically not worth it. It’s easier to sell and
a larger swathe of investment grade Still, that may be tested going forward. buy higher grade bonds, Helwege said.
COMPANIESûTOûJUNKûFASTERûTHANûATûANYûPOINTûINû Under S&P current hypothetical scenario In this downgrade cycle, however, there
nearly two decades, those cuts may not scare RELEASEDûLASTûWEEKûTHEûAGENCYûESTIMATESû are new factors to consider even for
investors into selling bonds of fallen angels. that some US$640bn of corporate non- insurance companies.
At least, that will be the case if history is lNANCIALû4RIPLEû"ûRATEDûLONG TERMûDEBTûISû
any indication. vulnerable to fallen angel status in 2020 in CAPITAL CALLS
$URINGûTHEûLASTûlNANCIALûCRISISûINûû the US and Europe, Middle East and Africa. 4HEûCAPITALûREQUIREMENTSûTHATûAREûTHEûKEYû
when Standard & Poor’s, Moody’s and Fitch At Moody’s a record-high 96 companies motivation for selling may not be enforced
began cutting credit ratings, mutual funds, worldwide are now on the line between very strongly, according to several managers
pension funds and insurance companies speculative grade and investment grade. who said they are not under pressure to sell.
were slow to sell their bonds, according to 4HEûMOSTûLIKELYûSELLERSûOFûFALLENûANGELSûWILLû The NIAC is urging insurers to be lenient
research by Jean Helwege, a professor at the probably be insurance companies. While ONûCUSTOMERSûASKINGûFORûFORBEARANCEû)Tû
School of Business at University of California mutual funds have leeway to hold some would be odd for the NIAC to be pushing
Riverside. She expects that will be the case fallen angel bonds, insurance companies are forbearance in most areas except capital,
this time around as well. subject to capital requirements. Once Helwege said.
h.OBODYûISûMANDATEDûTOûSELLvûSAIDû investments fall below investment grade, “If they are not going to pressure insurance
Helwege who is also a member of Standard INSURANCEûCOMPANIESûAREûLIKELYûTOûHITûAûWALLû companies to actually have the minimum
and Poor’s academic council. where they will be pushed to rebalance CAPITALû)ûDONTûSEEûWHYûTHEYûWOULDûTAKEûTHISû
While conventional wisdom suggests that portfolios or hold additional capital against OPPORTUNITYûTOûSELLûBONDSvûSHEûSAIDûh)FûTHEYûDOû
mutual funds that invest in investment grade freshly rated speculative grade bonds. TAKEûTHEûOPPORTUNITYûTOûSELLûTHEûBONDSûITûWILLû
bonds will be forced to sell when there are The National Association of Insurance LIKELYûBEûBECAUSEûTHEYûEXPECTûAûBADûRETURNûANDû
downgrades, they do not necessarily need to Companies sets strict rules about how much NOTûBECAUSEûTHEYûAREûBEINGûFORCEDûTOûSELLv
sell. Typically, they only need to be at 80% of capital insurers have to hold. The capital The Federal Reserve may have made the
the objective to be consistent with REQUIREMENTSûAREûlXEDûANDûFORûTHEûAMOUNTûOFû decision to hold fallen angels a little easier
REGULATIONSû4HATûLEAVESûAûSIGNIlCANTûAMOUNTû money an insurance company will have to put as well. In an unprecedented move, the US
of wiggle room to hold on to fallen angels. UPûINûCAPITALûAGAINSTûJUNKûBONDSûTHEûRETURNSû CENTRALûBANKûSAIDûITûWOULDûBUYû$OUBLE "û
BlackRock launches ESG total return bond fund

BLACKROCKûHASûLAUNCHEDûITSûlRSTûGLOBALû under management more than tenfold this in companies that help to advance the UN’s
unconstrained ESG total return bond fund, decade to more than US$1trn. sustainable development goals.
which will use exclusion criteria and balanced 4HEûlRMSû!5-ûDIPPEDûTOû53TRNûINû The ESG FIGO fund will be denominated in
weighting to meet objectives as the investment THEûVOLATILEûlRSTûQUARTERûFROMûAûRECORDû euros to help mitigate hedging costs and will
POWERHOUSEûCONTINUESûITSûDRIVEûTOûMAKEû US$7.43trn at the end of December. be managed by the same team as its non-ESG
sustainability a standard across its platform. Other recent ESG initiatives have included COUNTERPARTû"LACK2OCKSû53BNûNON %3'û
BGF ESG Fixed Income Global Opportunities launching three new products from its lXEDûINCOMEûGLOBALûUNCONSTRAINEDûFUND
Fund (ESG FIGO) is one of several recent iShares family of ETFs to combine ESG issues )TûISûAIMINGûTOûDELIVERûRISK ADJUSTEDûRETURNSû
SUSTAINABLEûINITIATIVESûASû"LACK2OCKûEMBEDSû with demand for minimum volatility factor ACROSSûAûMARKETûCYCLEûWHILEûBALANCINGû%3'û
SUSTAINABILITYûACROSSûTHEûlRMû)TûSAIDûINû*ANUARYû strategies. CONSIDERATIONSûWITHINûlXEDûINCOMEûSECTORS
it wanted to be a leader in sustainable "LACK2OCKûALSOûLAUNCHEDûITSûlRSTûIMPACTû The fund will exclude industries such as
investing and increase its sustainable assets mutual fund on April 15, which will invest tobacco, weapons and tar sands, and use
Who’s moving where…

Raj Imtaez has for origination in tech, LAZARD has rehired legal officer, but
joined capital natural resources George Bilicic for his resigned on March 30.
markets adviser and real estate. old job as global head Bilicic originally joined
MATTHEWS SOUTH Matthews South is a of power, energy and Lazard in 2002, after
as head of technology data-driven capital infrastructure after previously working at
origination, based markets adviser a stint as president Merrill Lynch and was
on the east coast founded in 2014 by of Sempra Energy. a partner at law firm
of the US. Imtaez former Goldman Bilicic will also be an of Cravath, Swaine &
joined after a 15-year Sachs’ equity-linked investment banking Moore.
stint at Barclays, bankers Vijay Kulas, vice-chairman. Bilicic
where he was an Kevin Castellano and joined Sempra last
MD of equity-linked Vahagn Minasian. year from Lazard as
solutions responsible president and chief

People
& Markets
rated bonds that were investment grade
before March 22.
HSBC scraps regional heads for
There have been other changes that could
increase the potential sell-off, however.
GBM in restructuring
Investment grade corporate bond mutual HSBC has made more changes to leadership In a separate memo, Guyett made changes
FUNDSûHAVEûSIGNIlCANTLYûINCREASEDûTHEûSHAREû ANDûSTRUCTUREûOFûITSûINVESTMENTûBANKûTHATû TOûLEADERSHIPûANDûSTRUCTUREûINûGLOBALûBANKINGû
of BBB bonds in their portfolios since the includes the axing of regional head roles, aimed to “tighten our leadership focus in
ûlNANCIALûCRISISûSAIDû,YDIAû"OUSSOURû and also reorganised its advisory, supporting our people and clients through
senior economist with Oxford Economics. underwriting and restructuring unit to THEû#OVID ûCRISISvûANDûhSHARPENûEXECUTIONvû
“In a worst-case scenario where a broad- hSHARPENvûFOCUSûONûCLIENTSûHITûBYû of its strategic priorities.
based downgrade of BBB debt occur, I coronavirus.
BELIEVEûTHEREûISûSTILLûAûRISKûTOûSEEûSOMEû As part of the changes, Gordon French, head CORONAVIRUS CLIENTS
SIGNIlCANTûMARKETûMOVESûASûBONDûMANAGERSû OFûGLOBALûBANKINGûANDûMARKETSû'"- ûINû!SIA He named regional leaders for global
try to rebalance their IG portfolios by 0ACIlCûANDûONEûOFû(3"#SûMOSTûSENIORû BANKINGû!SIA 0ACIlCûWILLûBEûLEDûBYûDavid Liao,
OFmOADINGûTHESEûBONDSvûSHEûSAID BANKERSûHASûTAKENûAûSIX MONTHûSABBATICALû the former CEO of HSBC in China, based in
It’s not clear cut that institutions must according to one of a trio of memos to staff Hong Kong; EMEA will be led by Philippe
purge lower-quality bonds, said Brent detailing organisational changes and seen by Henry, based in London; and the Americas will
!MBROSEûPROFESSORûOFûRISKûMANAGEMENTûATû IFR. be led on a temporary basis by Brandao.
Penn State. He co-wrote the research on French’s sabbatical started on April 15. Guyett appointed Patrick Nolan to a new role as
2009 with Helwege. 4HEûMEMOûSAIDû&RENCHûWILLûTHENûSEEKûhOTHERû HEADûOFûCLIENTûLEADERSHIPûTOûFRONTûAûTEAMûWORKINGû
There was additional selling during the OPPORTUNITIESvûWITHINûTHEûBANK with clients affected by coronavirus and the
lNANCIALûCRISISûASûRATINGûAGENCIESûBEGANû Andre Brandao, head of GBM in the hINEVITABLEûCORPORATEûRESTRUCTURINGSvûTHATûWILLû
slashing ratings, but not on the order and Americas, will stay on until the end of the follow, the memo said. Nolan will remain a
magnitude one would expect, he said. YEARûTOûHELPûTHEûBANKûRESHAPEûITSûBUSINESSûINû SENIORûCOVERAGEûBANKERûFORûSOMEûCLIENTS
“I would expect that we will see something the US, the memo said. An announcement 'UYETTûSETûUPûAûNEWûCAPITALûlNANCINGûANDû
SIMILARûTOûWHATûWEûSAWûINûTHEûLASTûCRISISvû regarding GBM Americas regional leadership INVESTMENTûBANKINGûCOVERAGEû#&)"# ûUNIT
Ambrose said. “I’m not sure there is an incentive will be made at the end of the year. CFIBC will include advisory and investment
TOûTAKEûAûlREûSALEûPRICEûBECAUSEûOFûAûDOWNGRADEû Thierry Roland, head of GBM in Europe, will BANKINGûCOVERAGEûnûLEDûBYûHugo Heath, global
ESPECIALLYûWHENûEVERYONEûISûBEINGûDOWNGRADEDv step down from that role to focus on leading BANKINGûVICE CHAIRûONûANûINTERIMûBASISûANDû0ETERû
Philip Scipio THEûDISPOSINGûOFûUNWANTEDûASSETSûKNOWNûASû %NNSû4HEûBANKûHASûMOVEDûITSûGLOBALûMERGERSû
the RWA Optimisation Unit. and acquisitions team into the unit, led by Kamal
The memo was sent by Greg Guyett, head Jabre. Lex Malas, currently head of global
other ESG screening methods, and will have OFûGLOBALûBANKINGûANDû'EORGESû%LHEDERYû BANKINGûFORû.ORTHû!MERICAûWILLûBECOMEûHEADûOFû
a bias towards companies with higher ESG WHOûRUNSûGLOBALûMARKETSû4HEYûTOOKûOVERûASû INVESTMENTûBANKINGûCOVERAGEûFORûTHEû!MERICAS
ratings while avoiding names that are co-heads of GBM in March and implemented #&)"#ûWILLûALSOûINCLUDEû#APITALû-ARKETSû
controversial. other changes at that time, including pulling which will continue to be led by Alexi Chan,
It will target structural allocations to the securities services business together based in London, and Ray Doody, who is in
green, social and sustainable bonds with WITHûMARKETSûINTOûAûSINGLEûUNITûCALLEDû .EWû9ORK
hSUSTAINABLEûIMPACTvûANDûSELECTûSOVEREIGNû MARKETSûANDûSECURITIESûSERVICES Katia Bouazza, currently head of global
quasi-sovereigns and securitisations 'LOBALûBANKINGûINCLUDESû-!ûADVISORYû BANKINGûFORû,ATINû!MERICAûWILLûBEûVICE CHAIRû
using extra sustainability criteria, while and debt and equity underwriting, and OFûCAPITALûMARKETSûFORûTHEû!MERICAS
engaging with issuers that are transitioning GLOBALûMARKETSûINCLUDESûTRADINGûOFûlXEDû 2EALûASSETSûANDûSTRUCTUREDûlNANCEûWILLûALSOû
businesses towards a lower carbon income, currencies, equities and other be part of CFIBC and be led by Stuart Lea
economy. products. The latest changes separate the from London.
Tessa Walsh two units more clearly. Steve Slater
Please contact us if you have information about job moves: peoplemarkets@refinitiv.com
Andrea Ferrari has previously worked CLSA has hired Ant Financial to
been appointed head at Merrill Lynch and former Vanguard Asia provide investment
of equity capital UniCredit. Equita CEO Charles Lin as advisory service to
markets at EQUITA. wants to grow its ECM vice-chairman. Lin retail customers
He will start at the activities. It is already left Vanguard earlier in China. He was
Italian investment an active player in this year after more previously head
bank on June 1. He the Italian secondary than eight years with of Greater China
joins from Morgan equities market. the investment firm, at Banco Itau Asia
Stanley, where he including as CEO and also worked
spent 10 years and of Asia since 2018. at Deutsche Asset
was head of ECM Under his leadership, Management.
for Italy and the Vanguard established
Netherlands. Ferrari a joint venture with

Bellwether
Bellwether: n. From the practice of placing a bell around the 'OLDMANSûMONEYûnûTHINGSûLIKEûSUMMERûHOLIDAYSû
neck of a castrated ram so that it might lead its flock (remember them?).
7ITHûTHEûMARKETINGûINCLUDINGûAûPHOTOûOFûAûBOATûSAILINGû
THOMAS GOTTSTEIN HASûJUSTûCOMPLETEDûHISûlRSTûFULLû off an idyllic beach along with the tag line “Life doesn’t
quarter as CEO of Credit Suisse, so fair play to him HAVEûTOûWAITû%XCITINGûEXPERIENCESûAREûONûTHEûHORIZONvû
FORûEVENûBOTHERINGûTOûTURNûUPûFORûTHEûBANKSûRESULTSû "ELLWETHERûISûFORCEDûTOûASKûAREûTHEYûSIMPLYûTAKINGûTHEû
presentation, rather than hiding behind his sofa. piss?
)NûTHESEûREMOTE WORKINGûTIMESûHEûCOULDûHAVEûGIVENû Because, yes it does. And no they’re not.
ANYûMANNERûOFûEXCUSEûnûTHEûDOGûATEûTHEûSPREADSHEETûTHEû If Goldman actually wants to persuade people to
7I &ISûDOWNûTHEûKIDSûNEEDûHELPûWITHûTHEIRûHOMEWORKûnû TAKEûTHEMûUPûONûITSûOFFERûITûWILLûNEEDûTOûDRIVEûTHEMûTOû
BUTûNOûHEûSTEPPEDûUPûPLAYEDûAûSTRAIGHTûBATûANDûTURNEDû THEûAIRPORTûITSELFûTHENûmYûTHEûPLANEûASûWELLû!NDûIFûITSû
IMMEDIATELYûTOûTHEû#ûWORDûnûhCHALLENGINGv LOOKINGûTOûGETûINTOûTHEûAIRLINEûBUSINESSû2ICHARDû"RANSONû
It’s a word that will be heard again and again in the is apparently open to offers.
COMINGûWEEKSûASûOTHERû%UROPEANûBANKSûFOLLOWûSUIT
'OTTSTEINûWASûKEENûTOûUNDERLINEûTHEûBANKSûSTRATEGYû A WARM WELCOME to Nathan
is safe in his hands, reiterating that Credit Suisse is the
If Goldman Piper, who has joined Investec’s
h"ANKûFORû%NTREPRENEURSvûWHICHûWASûVERYûGRACIOUSûOFû wants to oil and gas equity research team,
HIMûGIVENûTHATûTWOûSUCHûhENTREPRENEURSvûnûTHEûFOUNDERSû persuade heading up coverage of E&P
OFû,UCKINû#OFFEEûORûFUCKINûCOFFEEûASûONEûBANKERû people to take companies.
REFERREDûTOûIT ûnûAREûALLEGEDûTOûHAVEûFABRICATEDûSALESû them up on Harold Hutchinson, Investec’s
lGURESûLEAVINGû#REDITû3UISSEûNURSINGûHEFTYûLOSSES head of research, said “Nathan
)FûWEREûALLûSTILLûINûLOCKDOWNûATûTHEûTIMEûOFûlRST HALFû
its offer, it will joins our research team at a
results, let’s hope Gottstein is still upbeat and hasn’t need to drive CRITICALûTIMEvû(EûMOSTûCERTAINLYû
had more reasons to describe his clients by other less them to the DIDûTHEûPRESSûRELEASEûPINGEDûINTOû
mATTERINGûTERMS airport itself, Bellwether’s inbox just as the price
then fly the of oil turned negative.
SAY WHAT YOUûLIKEûABOUTû'OLDMANû3ACHSûANDûPEOPLEûDO û
plane
THEûBANKûHASûDEVELOPEDûAûREPUTATIONûFORûBEINGûlRSTûTOû 2%0/243û/&ûh://-"/-").'vû
THEûMARKETûWITHûINNOVATIVEûPRODUCTS HAVEûLEDûSOMEûBANKSûTOûBANû
But its latest wheeze is particularly bold. With vast the video conferencing platform Zoom. Calls have
SWATHESûOFûTHEûWORLDûINûLOCKDOWNû'OLDMANûDECIDEDû been interrupted by nude intruders and terrorist
now is the time to launch MarcusPay, a point of organisations, leading one wag to suggest it reminded
SALEûlNANCINGûPRODUCTûTHATûENABLESûPEOPLEûTOûPAYû him of client meetings in certain parts of Latin America
for expensive stuff they can’t afford by borrowing before the SEC’s clampdown on money laundering.
Who’s moving where…

UBS has promoted Stefan Hafke has GOLDMAN SACHS as a managing INVESTEC‘s at Amerisur.
Henri Mills to head been appointed has snapped up Bank director looking investment bank Piper will lead
of global markets CITIGROUP‘s chief of America dealmaker after industrials has hired Nathan Investec’s coverage
distribution for France, country officer for Diego Fortunati to M&A across EMEA. Piper for its oil and of exploration
the Benelux region Germany, making build up its industrials Fortunati will join gas equity research and production
and the Nordics, a permanent the interim team as it seeks to Goldman’s M&A team team, as part of an companies, focusing
newly created role, role he has had since win more business in London in June expansion of coverage mainly on UK-listed
based in Paris. Mills February when Stefan in one of the sectors and work with Clare of mid-market UK oil firms. He previously
will lead a team of Wintels moved to hardest hit by the Scherrer, co-head for and gas companies. covered the sector at
more than 30 staff in co-head the global coronavirus outbreak, industrials investment Piper joined from Royal Bank of Canada
Paris, Amsterdam and financial institutions Reuters reported. banking. Amerisur Resources. and Bridgewell
Stockholm. group. Hafke joined It said Goldman He was head of Securities.
Citi in 2001. hired Fortunati business development

People
& Markets
Hecker heads UniCredit ECM
UNICREDIT has hired former JP Morgan and Kepler Cheuvreux around research and UniCredit made other leadership changes to
'OLDMANû3ACHSûBANKERûJana Hecker as distribution services. ITSû%#-ûTEAMûWITHûIMMEDIATEûEFFECTûINCLUDING
GLOBALûHEADûOFûEQUITYûCAPITALûMARKETSûTAKINGû (ECKERûMOVEDûTOû5NI#REDITûLASTûMONTHû • Matthias Janssen appointed head of equity-
over from Stefania Godoli, who was named FROMû$EUTSCHEû"ANKûWHICHûSHEûJOINEDûINû LINKEDûPRODUCTS
HEADûOFûITSûINVESTMENTûBANKINGûANDû 2014 and was co-head of equity cash and • Alexander Vart appointed head of ECM for
CORPORATEûBANKûJOINTûVENTUREûFORû)TALYûINû strategic derivatives business for the Germany and Austria;
January. Germany, Austria and Switzerland region. • Paolo Garzarelli appointed head of ECM for
(ECKERûISûBASEDûINû-UNICHûANDûREPORTSûTOû She started her career at JP Morgan in New Italy; and
Luca Falco, head of global syndicate and 9ORKûINûCROSS ASSETûCLASSûSTRUCTURINGûANDû • Luca Domina, formerly co-head of ECM Italy,
CAPITALûMARKETSû3HEûWILLûLEADûGLOBALû%#-û joined Goldman Sachs in 2010, where she appointed to a new role in the industry team
origination and execution activities and was part of the ECM team for Western covering consumer goods.
UniCredit’s strategic partnership with European clients, before moving to Deutsche. Steve Slater
Deutsche sets up sustainable finance team

DEUTSCHE BANK has created a sustainable (CS&SF) group, headed by Boris Kopp. (ENRIKEû0FANNENBERGûWILLûCONTINUEûINûANDû
lNANCEûTEAMûWITHINûCAPITALûMARKETSûTOûTAPû Kopp continues to report to Frazer Ross, expand on her previous role within the
into demand for environmental, social and head of EMEA investment-grade syndicate. Institutional Client Group (ICG) group,
governance products. !SûPARTûOFûITSûINCREASEDûFOCUSûTHEûBANKûHASû SPECIlCALLYûFOCUSEDûONûHOWûINVESTORSûDRIVEû
4HEûNEWûTEAMûWHICHûLOOKSûTOûRESPONDûTOû hired Trisha Taneja from Sustainalytics to head the ESG topic.
the increased focus on ESG as it relates to THEûSUSTAINABLEûlNANCEûTEAMûREPORTINGûTOû+OPP Tamara Atanasova and Kevin Laubach will
corporate strategy, the cost of capital and Federica Calvetti will add responsibility for remain within capital solutions and
LONG TERMûRISKûMANAGEMENTûFORûTHEûBANKSû ESG DCM dialogue, while retaining her continue to cover the ESG dialogue with
clients, will operate within the existing current DCM coverage responsibilities for CLIENTSûSUBJECTûTOûlNANCIALûREGULATION
CAPITALûSOLUTIONSûANDûSUSTAINABLEûlNANCINGû corporates in Greece and Italy. Helene Durand
Barclays chiefs freeze pay until 2021 ANYûPROBLEMSûANDûTHEû5+ûBANKSûBOARDûSAIDû

ITûWOULDûBACKûTHEûPROPOSALû4HEûBOARDûHADû
BARCLAYS@ûCHIEFûEXECUTIVEûANDûlNANCEû it had “pay-for-performance misalignment proposed to lift CEO Jes Staley’s basic pay by
DIRECTORûHAVEûASKEDûTOûFREEZEûTHEIRûBASICûPAYû CONCERNSvûREGARDINGû'OLDMANûLEADERSû ûTOûaMûANDûlNANCEûDIRECTORû4USHARû
at least until 2021 as the coronavirus bites including CEO David Solomon. Goldman’s Morzaria’s by 4.5% to £1.725m. It would
the global economy. annual shareholder meeting is on April 30. HAVEûBEENû3TALEYSûlRSTûRISEûSINCEûHEûWASû
4HEûMOVEûCAMEûASûOTHERûBANKûCHIEFSûCAMEû Technically, the pay award is for appointed in December 2015.
under pressure over their pay levels at a time Goldman’s performance in 2019, when Staley and Morzaria had already said they
when millions are losing their jobs and Solomon’s compensation rose 19% to WILLûCONTRIBUTEûONE THIRDûOFûTHEIRûlXEDûPAYû
economies around the world head for recession. US$24.7m, including a US$7.65m bonus. But for the next six months to charity, including
)NmUENTIALûPROXYûADVISERû)NSTITUTIONALû in practice many investors will also evaluate those supporting vulnerable people affected
Shareholder Services has recommended the pay in the context of the economic crisis by the coronavirus.
investors vote against the pay of top GOLDMAN stemming from the pandemic. Christopher Spink
SACHS leaders. In a report on April 9, ISS said Barclays’ chiefs have sought to head off Additional reporting by Ross Kerber at Reuters
Please contact us if you have information about job moves: peoplemarkets@refinitiv.com
UBS has hired Cai, global executive Alex Cartel has M&A and ECM banker CITIGROUP has Sudeep Sarma,
former China vice-chairman, and joined CITIGROUP by background, promoted Rob BARCLAYS‘ head
Merchants Securities John Lee, head from Deutsche Bank recently worked on Jahrling and Hamish of Asia research in
International chief of Greater China, to head its investment the A$2.65bn IPO of Whitehead to co- Singapore, has left
executive Yang Fan before shifting her banking for Australia Viva Energy. Deutsche heads of Australia and the UK bank to join
as chairman of global focus towards the and New Zealand. appointed Hugh New Zealand ECM. Startup-O, a vehicle
banking for Asia. Yang integration of the Cartel is due to start Macdonald, who was Whitehead joined for people to invest
will join UBS in early China business with in July and will report co-head of investment Citi in 2015 and is in start-ups in South-
May in Hong Kong. the rest of the bank. to Tony Osmond, head banking coverage based in Melbourne. East Asia. Sarma was
Her initial focus will Yang worked at CMS of banking, capital alongside Cartel, as Jahrling joined the with Barclays for 15
be to grow the China International since markets and advisory sole head. bank in 2010 and leads years.
business, working 2013 and was CEO for in Australia and New ECM origination and
closely with Catherine the past five years. Zealand. Cartel, an execution from Sydney.

“CP was the best option for speed; patients
AREûWAITINGûFORûTHESEûVENTILATORSûNOWv
GETINGE’S LARS MATTSON, AFTER RAISING US$100M, P15
Capital markets week ahead:

Continental Resources, France,
Central China New Life
CRUDE AWAKENING Continental Resources is Shares of listed rivals have held up well in GREEN FINGERS The regional government of
THEûlRSTûOFûTHEûBIGû53ûSHALEûOILûPRODUCERSûTOû RECENTûWEEKSûASûINVESTORSûSEEKûAûSTABLEû -ADRIDûISûEXPECTEDûTOûLAUNCHûITSûlRSTûGREENû
release earnings on Monday, offering an INCOMEûSTREAMûnûASûWELLûASûEXPOSUREûTOûOTHERû BONDûOFFERINGûFOLLOWINGûPOSITIVEûFEEDBACKû
insight into just how badly the industry has services such companies offer, such as food from investors during a three-day online
been affected by the collapse in crude prices. delivery. ROADSHOWûLASTûWEEKû)TûWILLûBEûTHEûlRSTûGREENû
&OURûPRODUCERSûHAVEûALREADYûlLEDûFORû bond from a Spanish government entity,
#HAPTERûûBANKRUPTCYûPROTECTIONûINûTHEû with the region even beating the sovereign
PASTûFEWûWEEKSûWITHûMANYûMOREûPREDICTEDû A BAD RESULT The European investment TOûMARKETûWHICHûISûEXPECTEDûTOûFOLLOWûWITHû
to follow. Expectations are high that BANKINGûREPORTINGûSEASONûCONTINUESûWITHû a green bond of its own later this year.
BANKRUPTCIESûWILLûQUICKLYûECLIPSEûTHOSEûSEENû UBS and HSBC due to release earnings on
during the 2016 oil crisis. 4UESDAYûFOLLOWEDûBYû$EUTSCHEû"ANKû
Many have simply stopped drilling to Standard Chartered and Barclays on
CONSERVEûCASHûnûINCLUDINGû#ONTINENTALû Wednesday. Credit Suisse, the only one to
which has halted almost all operations. REPORTûSOûFARûSTRUCKûAûNEGATIVEûTONEûLASTû
"UTûWITHûLIQUIDITYûRUNNINGûLOWûANDûBANKSû WEEKûAFTERûITûTOOKûAûHITûONûAûBUNCHûOFûBONDû
set to cut loan facilities as part of the deals gone wrong as well as loans made to
upcoming redeterminations season, the struggling oil sector.
many are expected to run out of cash
soon. CNX Resources reports on Tuesday,
followed by Range Resources, Southwestern
Energy and Concho Resources on
Thursday.
BIG DEAL Intesa Sanpaolo holds a

shareholder meeting on Monday, at which
INVESTORSûWILLûBEûASKEDûTOûAPPROVEûTHEû
issuance of new shares to pay for the Italian
BANKSûACQUISITIONûOFûSMALLERûRIVALû5")û4HEû
deal has met some resistance from
SHAREHOLDERSû4HEûTARGETûBANKûISûALSOûHUGELYû
exposed to the fallout from the coronavirus
CHINESE MEDICINE Two Chinese OUTBREAKûBEINGûFOCUSEDûONû,OMBARDYûTHEû
PHARMACEUTICALûlRMSûAREûSETûTOûSTARTûPRE worst-hit region in the country.
MARKETINGûFORûTHEIRû(ONGû+ONGûLISTINGSû
0EIJIAû-EDICALûWHICHûMAKESûVALVESûFORû
CATHETERSûBUTûWHICHûISûALSOûLOSS MAKINGû
APRIL IN PARIS France is expected to launch hopes to raise US$300m. Kintor
AûSYNDICATEDûBONDûSALEûASûITûSEEKSûTOû Pharmaceutical, which has a pipeline
capitalise on some of the blowout demand OFûlVEûDRUGûCANDIDATESûTARGETINGûMAJORû
for deals from other eurozone countries in CANCERSûISûLOOKINGûTOûRAISEûMOREûTHANû LAST WEEK IN NUMBERS
RECENTûWEEKSû7HETHERûTHEûDEALûISûHITûBYû US$200m. -US$40.32 – Record low on Monday for
NEGATIVEûSENTIMENTûFOLLOWINGûLASTûWEEKSû WTI crude oil futures contract for May
LACKLUSTREûMEETINGûBETWEENûEUROZONEû delivery
leaders, where they failed to agree the AT THE CHECKOUTû3UPERMARKETû)NCOMEû €110bn – Demand for Italy’s €16bn
DETAILSûOFûAûPANDEMICûSTIMULUSûPACKAGEû REIT hopes to complete a £100m follow-on dual-tranche issue on Tuesday, the most
remains to be seen. on Monday. The investment trust upped for any SSA deal ever
the size of the deal from the previous 18 years – Time since the last bond sale
aMûLATEûLASTûWEEKûAFTERûGETTINGûSTRONGû FROMû%STONIAûWHICHûHIREDûBANKSûLASTû
SAFE AS HOUSES Central China New Life is support from investors. It is raising money WEEKûFORûAûDEAL
DUEûTOûSTARTûPRE MARKETINGûFORûAû53Mû TOûBUYûANOTHERûTWOûSUPERMARKETûSITESû US$1bn – Equity raised by United
Hong Kong IPO, with the property to add to the 10 it already owns across the !IRLINESûTHEûlRSTû53ûCARRIERûTOûINCREASEû
management company tentatively set to 5+ûnûlVEû4ESCOûFOURû3AINSBURYSûANDûAû capital amid virus fallout
OPENûBOOKSûONûTHEûLISTINGûONûû-AYû Morrisons.

People
& Markets
Moelis on the prowl for talent
$URINGûTHEûLASTûlNANCIALûCRISISû+ENû-OELISû RESTRUCTURING BOOM and restructuring and debt and equity capital
was able to poach top talent from nearly Where Moelis is seeing an opportunity is in MARKETSûGROUPSûAREûRUNNINGûhmATûOUTv
EVERYûINVESTMENTûBANKûONû7ALLû3TREETû(ESû restructuring. As its M&A business slows due -OELISûSAIDûTHEûBANKSûRESTRUCTURINGû
hopeful he can do it again if this crisis TOûTHEûPANDEMICûTHEûBANKûHASûSHIFTEDûFOCUSû business could easily double during the
PUSHESûLARGEûBANKSûTOûGETûLEAN to helping distressed companies, and the current cycle and grow substantially larger
His eponymous shop, MOELIS & CO., easily BANKûHASûEXPERIENCEDûAûhTREMENDOUSvû THANûITûDIDûINûTHEûnûCYCLEû4HEûBANKûISû
BEATûANALYSTSûlRST QUARTERûEXPECTATIONSûWITHû increase in mandates. able to expand to meet the challenge
earnings of US$25m, or 45 cents a share, on “The world has completely changed during BECAUSEû-!ûBANKERSûWHOûCURRENTLYûHAVEûAû
revenue of US$154m. Analysts were THEûlRSTûQUARTERûOFûvû-OELISûSAIDûh&ROMûTHEû lot more time on their hands, are doubling
expecting 34 cents a share. moment it became clear that the virus would ASûRESTRUCTURINGûBANKERSûJUSTûASûTHEYûDIDû
Still, Moelis cut its quarterly dividend by radically impact the global economy, we shifted during the last big restructuring wave.
half to 25 cents, a move it said would our focus to advising clients on the importance “Every one of our MDs, except one,
preserve capital not just to maintain OFûBALANCEûSHEETSûANDûTHEIRûBUSINESSûMODELSv TRANSITIONEDûFROMûWORKINGûONû-!ûANDû
operating liquidity, but also to build a "ANKSûWITHûRESTRUCTURINGûGROUPSûHAVEû advice to restructuring in the last cycle. In
RESERVEûTHATûCOULDûALLOWûTHEûlRMûTOûEXPAND BEENûlELDINGûCALLSûFROMûDISTRESSEDû THISûCYCLEûWEREûCOMMITTEDûTOûlNDINGûTHATû
h&IVEûYEARSûAGOûPEOPLEûUSEDûTOûASKûMEûWHATSû companies in energy, retail, leisure, real ONEûGUYûANDûMAKINGûSUREûHEûGETSûTOûWORKû
the one thing I regretted. And I said that we estate and restaurants. TOOvû-OELISûSAID
ONLYûHIREDûûPEOPLEûAûYEARvû-OELISûSAIDûONûAû -OELISû*ANUARYn-ARCHûREVENUEûROSEûû While Moelis outpaced expectations in
call after the results. “It was the greatest largely driven by M&A, but as M&A revenue THEûlRSTûQUARTERûTHEûDECLINEûINû-!ûACTIVITYû
moment we could ever have to acquire A-plus SLOWSûRESTRUCTURINGûREVENUESûWILLûPICKûUP ISûLIKELYûTOûHURTûGOINGûFORWARD
TALENTûTHATûNEVERûBECOMESûAVAILABLEv At rival EVERCOREûREVENUESûFORûTHEûlRSTû h"ANKERSûAREûSTILLûHAVINGûSIGNIlCANTû-!û
Cutting the dividend was not about building a quarter rose 3% from a year ago to US$427m. dialogues, but most transactions will probably
buffer, he said. “It’s an offensive move so that we Evercore’s advisory fees rose 10% to BEûONûHIATUSûINûTHISûENVIRONMENTvû-OELISûSAID
CANûBEûAGGRESSIVEûIFûWEûHAVEûTHEûOPPORTUNITYv US$359m, easily outperforming advisory #OMPANIESûSTILLûLOOKINGûTOûMAKEûDEALSûINû
Immediately, however, there may not be REVENUEûACROSSûTHEûlVEûLARGESTû53ûBANKSû this environment need to be liquid, he said.
MUCHûOFûANûOPPORTUNITYûFORû-OELISûTOûTAKEû WHEREûREVENUESûFELLûûINûTHEûlRSTûQUARTER They will need to be able to underwrite the
-!ûTALENTûFROMûLARGEûBANKS But Evercore warned that it expects M&A next 12 months of operations and maybe 12
5NLIKEûûWHENûBANKERSûFROMû,EHMANû advisory to be negatively affected “for some months more after that. You cannot buy a
Brothers, Bear Stearns and Merrill Lynch PERIODvûASûTHEûCONDITIONSûTYPICALLYûREQUIREDû company if you can’t underwrite to some
WEREûINûTHEûMARKETPLACEûMOSTûLARGEûBANKSû for strong activity currently are not present. level of certainty the next year of
have made commitments to retain staff and operations, or the year after that.
all are well positioned to weather the “FLAT OUT” h2IGHTûNOWûYOUûCOULDNTûDOûEITHERvû
lNANCIALûFALLOUTûFROMûTHEû#OVID û As with Moelis, Evercore said the current Moelis said.
pandemic from a capital perspective. environment had created other opportunities Philip Scipio
Pressure mounts on EM debt

0RESSUREûISûMOUNTINGûONûPOLICYMAKERSûTOû )NûAûPAPERûPUBLISHEDûLASTûWEEKûSOMEû CANûBEûUSEDûTOûlGHTûTHEûPANDEMICûBUTûTHENûBEû
tighten the terms of the debt standstill for the sovereign debt restructuring advisers, passed on to creditors when the crisis is over.
world’s poorer countries, agreed by the G20 including Lee Buchheit, the former adviser to The group urged the G20 to support such
group of leading economies, to prevent private Greece, Argentina and other distressed nations, a scheme as a way of ensuring the debt
BONDHOLDERSûPROlTINGûFROMûTHEûFORBEARANCEû URGEDûTHEûOFlCIALûSECTORûTOûCLOSEûTHISûLOOPHOLE holiday applies to as wide a constituency of
PROVIDEDûBYûOFlCIALûSECTORûCREDITORS “In the absence of private-sector creditors as possible.
The G20 has said it will allow up to 77 PARTICIPATIONûANYûOFlCIALûDEBTûRELIEFûINûMIDDLE The Institute of International Finance,
countries to delay paying what is owed to them income countries may simply be used to service REPRESENTINGûBANKSûINVESTORSûANDûOTHERû
for eight months from the end of April. private-sector debt. It would be pointless for the PRIVATEûSECTORûlNANCIALûINSTITUTIONSûBACKEDû
However, private sector creditors only had to OFlCIALûSECTORûTOûLIGHTENûTHEûDEBTûBURDENûOFû the G20’s standstill plans but said it was up
volunteer not to receive payments due this year. poor countries if all that is achieved is a transfer to individual investors whether to agree to
4HATûISûSEENûASûAûSIGNIlCANTûGAPûSINCEûMANYû TOûPRIVATEûCREDITORSvûTHEYûWROTE them.
such creditors might not agree to offer relief or “If participation is voluntary, any relief -ARKû7ALKERûSENIORûMANAGINGûDIRECTORûATû
ELSEûBLOCKûANYûSTANDSTILLûTHROUGHûLEGALûACTION provided by private creditors that Guggenheim Securities who is acting for a
If that happens the money saved from paying participate will simply subsidise the non- group of Venezuela’s creditors, and Chris
bilateral sovereign creditors or multilaterals PARTICIPANTSvûTHEYûSAID Canavan, partner at Lion’s Head Global
would simply be used to pay bondholders and The group has suggested that credit facilities Partners, were hopeful a voluntary approach
other commercial creditors, rather than be BEûSETûUPûATûTHEû7ORLDû"ANKûORûSIMILARû could still succeed in getting private-sector
directed at healthcare or reducing the impact of multilateral lenders for each affected country to investors to fall into line.
the coronavirus pandemic. deposit any stayed interest or maturities so they Christopher Spink

“It was the greatest moment we could ever have to
ACQUIREû! PLUSûTALENTûTHATûNEVERûBECOMESûAVAILABLEv
KEN MOELIS PLANS TO REPEAT HIS FIRM’S POST-2008 HIRING SPREE, P21
CS builds coronavirus provisions after DCM loss

CREDIT SUISSE lost SFr24m (US$24.6m) in its PROVISIONS UP OIL PAIN, TRADING GAIN
core debt underwriting business during the Credit Suisse made provisions of SFr568m !ûSIGNIlCANTûPROPORTIONûOFû#REDITû3UISSESû
lRSTûQUARTERûPARTLYûDUEûTOû3&RMûOFûLOSSESû for credit losses in the quarter, up from provisions stemmed from the energy sector,
BELIEVEDûTOûBEûFROMû,UCKINû#OFFEEûANDûOTHERû SFr146m in the fourth quarter, and had ASûWEAKENEDûCOMPANIESûDREWûONûCREDITûLINESû
COMMITMENTSûASûTHEû3WISSûBANKûBUILTû built reserves of SFr1.03bn. The Q1 as the oil price collapsed.
reserves ahead of an expected slowdown provision included SFr376m of current !NALYSTSûSAIDûTHATû#REDITû3UISSEûHADûTAKENû
CAUSEDûBYûTHEûCORONAVIRUSûOUTBREAK expected credit losses (CECL), the new a conservative approach to provisioning.
0ARTûOFûTHEûLOSSESûWEREûBOOKEDûINûTHEûlXEDû MEASUREMENTûTHATûBANKSûREPORTINGû “While the company has guided to further
income trading side of the business, where a under US GAAP accounting rules are reserve build in future quarters we believe
hSINGLEûNAMEûCOUNTERPARTYvûWASûLARGELYûHELDû using. the application of CECL and conservative
responsible for the hit to its leveraged Credit Suisse chief executive Thomas economic assumptions should mitigate the
lNANCEûBOOK Gottstein, who started in the role in FUTUREûIMPACTvûSAIDû#ITIGROUPûANALYSTû
,UCKINû#OFFEEûmOATEDûONû.ASDAQûINû*ULYûANDû February, said this was in line with the Andrew Coombs.
#REDITû3UISSEûWASûONEûOFûTHEûBANKSûTOûPROVIDEû RESERVESûBOOKEDûBYû53ûBANKSûEARLIERûTHISû The volatile environment helped
US$518m of margin loans to its chairman and month and could even be considered SECONDARYûMARKETûTRADINGû%QUITIESûREVENUESû
chief executive before the Chinese coffee shop conservative after a better than expected surged 24% from a year ago to US$922m,
CHAINûADMITTEDûMAKINGûUPûSALESûlGURESû4HEû April in the high-yield and leveraged loan INCLUDINGû!SIAûANDûALLûBUSINESSûLINESûTHANKSû
shares have since fallen nearly 90%. MARKETS to higher volumes across all products.
4HEûBANKûALSOûSAIDûITûMADEûLOSSESûOFû “Lawyers won’t allow me to say this is Fixed income, currency and commodities
SFr71m from corporate derivatives PRUDENTûBUTûITûISûAPPROPRIATEvûHEûSAIDû revenues rose 26% to US$1.24bn, driven by
exposure, offsetting other gains and leading (OWEVERûHEûCAUTIONEDûTHATûTHEûBANKûMIGHTû more active macro and global credit trading.
to a net loss of SFr49m from this activity, HAVEûTOûTAKEûFURTHERûHITSûASûTHEûECONOMICû 4HEREûWASûLESSûACTIVITYûINûEMERGINGûMARKETSû
which is included in the debt underwriting downturn from the coronavirus pandemic and securitised products.
result. In the same period a year earlier debt develops. "UTûTHEûBANKûWASûCAUTIOUSûABOUTûITSûFUTUREû
underwriting earned SFr186m. “The scale of the impact from the Covid- performance, given the uncertainty of the
The collapse was offset somewhat by ûCRISISûISûSTILLûDIFlCULTûTOûASSESSûANDûWEûWILLû PANDEMICûANDûITSûEFFECTSûONûlNANCIALû
more resilient equity underwriting, where continue to see reserve building particularly services.
revenues rose 5% to SFr61m, and advisory, OUTSIDEû3WITZERLANDvûHEûSAID “If these conditions persist or worsen,
where fees rose 9% to SFr152m. 4HEûBIGûSIXû53ûBANKSûSETûASIDEû53BNû THEYûAREûLIKELYûTOûCONTINUEûTOûRESULTûINûLOWERû
'ROUPûINVESTMENTûBANKINGûFEESûINCLUDINGû in reserves in their Q1 results for INVESTMENTûBANKINGûCLIENTûACTIVITYû
THOSEûINûTHEû3WISSûUNIVERSALûBANKûANDû!SIA coronavirus and an economic downturn. ADVERSELYûIMPACTINGûOURûlNANCIALûADVISORYû
0ACIlCûFELLûûTOû53MûDRAGGEDûDOWNû %UROPEANûBANKSûAREûEXPECTEDûTOûMAKEûFARû and underwriting fees, together with our
by an 86% collapse in overall debt more modest provisions (see Top News CREDITûEXPOSURESv
underwriting to just US$65m. story). Christopher Spink
India’s revamped TLTRO falls flat

India’s efforts to bolster its stalled economy FROMûTHEûCENTRALûBANKûASûLONGûASûTHEYûINVESTû Some analysts said that regulators needed
THROUGHûEASINGûACCESSûTOûCAPITALûMARKETSû THEûPROCEEDSûINûTHEûBONDûMARKETû5NLIKEûTHEû to do more to channel funding to those
have drawn scepticism after the central lRSTûPHASEûPROCEEDSûFROMûTHEûSECONDûROUNDû entities that are being squeezed by the
BANKSûSECONDûTARGETEDûLONG TERMûREPOû must be used exclusively to buy securities LOCKDOWNûANDûPOINTEDûTOûTHEûDEFAULTSûBYû
OPERATIONû4,42/ ûFELLûmATûANDûNEWûRULESû ISSUEDûBYûNON BANKûlNANCIALûCOMPANIESû Dewan Housing Finance Corp and Altico
designed to expedite capital raisings were with half set aside for small and medium- Capital after the IL&FS crisis began as
DEEMEDûINSUFlCIENTûBYûMARKETûOBSERVERS SIZEDû."&#SûANDûMICROlNANCEûINSTITUTIONS EXAMPLESûOFûTHEûRISKûOFûCONTAGIONûINûTHEûSECTOR
On Wednesday, the Securities and 4HEû2")ûRELEASEDûTHEûlRSTûTRANCHEûOFû “The carve-out for small and medium-
Exchange Board of India relaxed rules for Rs250bn on Thursday and received an SIZEDû."&#SûISûDElNITELYûTOûBEûWELCOMEDûBUTû
equity issuers, granting them more UNDERWHELMINGûRESPONSEûWITHûûBANKSû ULTIMATELYûTHEûEFlCACYûOFûTHEûPROGRAMMEû
mEXIBILITYûOVERûTHEûSIZEûANDûTIMINGûOFû)0/Sû putting in bids totalling just Rs128.5bn. This HINGESûONûTHEûWILLINGNESSûOFûBANKSûTOû
and rights issues. WASûINûSTARKûCONTRASTûTOûTHEûlRSTû4,42/û PARTICIPATEvûSAIDûONEû)NDIANûBANKINGûSECTORû
4HISûCAMEûAFTERûTHEû2ESERVEû"ANKûOFû)NDIAû when the four Rs250bn tranches were 2.4, analyst.
unveiled a slew of easing measures on April 3.99, 4.5 and 2.46 times subscribed. ."&#SûFACEûANûACCENTUATEDûLIQUIDITYûRISKû
17, including a 25bp lowering of the reverse Analysts attributed the disappointing as their debt collections have all but dried
repo rate to 3.75%, a reduction in the OUTCOMEûTOûTHEûUNWILLINGNESSûOFûBANKSûTOû up after the RBI introduced a three-month
liquidity coverage ratio for commercial invest in securities of lower-rated, smaller moratorium on loan repayments on March
BANKSûANDûAûSECONDû4,42/ûFACILITYûFORûUPûTOû NBFCs, which have struggled to access credit ûALTHOUGHûMANYûBANKSûHAVEûNOTûEXTENDEDû
Rs500bn (US$6.5bn). ever since Infrastructure Leasing & Financial this to NBFCs in turn.
4HEû4,42/ûALLOWSûBANKSûTOûACCESSûFUNDSû Services defaulted in September 2018. Thomas Blott

BONDS
SSAR 25 Corporates 32 FIG 38 Covered Bonds 40 High-Yield 42 Structured Finance 46
FRONT STORY US HIGH-YIELD
Junk bond primary on fire

Issuers out in force despite oil price crash
Fed plans and inflows spur confidence
Eighteen issuers raised US$12bn of high- In a sign the market is opening up .ETmIXûALSOûSOLDûAûõMûlVE YEARûBONDûATûû
yield bonds through Thursday last week as further, four of Thursday’s deals were nûAROUNDûHALFûTHEûLEVELûATûWHEREûEUROûJUNKûBONDSû
investors took heart from more promising UNSECUREDû.ETmIXû%NTEGRISû80/û,OGISTICSû AREûTRADINGûONûAVERAGEûSEEûSECTIONûFORûMORE
news on the Covid-19 pandemic, Federal and MGM Resorts Other names such as Gap (Ba2/BB) paid
Reserve bond buying plans and strong retail ,ONGERûTENORSûWEREûALSOûBEINGûTESTEDûnû relatively high coupons for the ratings and
FUNDûmOWS manufacturing company Entegris offered an had to secure their notes on real estate and
4HEûISSUANCEûmURRYûCAMEûDESPITEûAûWEEKû eight-year non-call three unsecured note, OTHERûCOLLATERAL
that saw the benchmark for US oil prices WHILEû'APûPRICEDûAûSEVEN YEARûTRANCHEû-OSTû The retailer initially approached investors with
collapse, highlighting how the primary DEALSûINûRECENTûWEEKSûHAVEûCARRIEDûlVE YEARû Aû53MûTHREE YEARûBULLETûAû53BNûlVE YEARû
market is taking its lead from other MATURITIESûANDûHAVEûTENDEDûTOûBEûSECURED non-call two and a US$500m seven-year non-call
INmUENCES “The guys that have unencumbered assets THREEûWITHûTALKûONûTHEûlVE YEARûBEINGûHEARDûINû
Market access broadened last week to with real value can access the markets,” said THEûLOWûSûANDûTHEûTHREE YEARûBPûTIGHTûTOûTHAT
allow more unsecured offerings and longer- ONEûHIGH YIELDûBONDûINVESTORûh4HEûGUYSû ,EADSûHOWEVERûWEREûABLEûTOûTIGHTENûFROMû
dated maturities, following on from the 18 with high leverage and private equity THEREûBEFOREûPRICINGûATûYIELDSûOFûû
tranches sold for more than US$15bn the SPONSORSHIPûnûTHOSEûAREûTHEûONESûTHATûWILLû ûANDûûRESPECTIVELYû3IZESûWEREûALSOû
WEEKûBEFORE STRUGGLEv REJIGGEDûWITHûTHEûlVE YEARûDROPPINGûTOû
On Thursday, six issuers were in the US$750m and the long-dated bond being
market: GAP, NETFLIX, ENTEGRIS, XPO LOGISTICS, COUPON BONUS INCREASEDûTOû53BNûSEEûSECTIONûFORûMORE
MGM RESORTS and US FOODS 3OMEûISSUERSûSUCHûASû.ETmIXûWEREûABLEûTOû Similarly, MGM Resorts, which generates
And at least one deal was expected to raise unsecured debt at their cheapest ever AROUNDûûOFûITSûBUSINESSûINûTHEû53ûWHEREû
price on Friday, as chemicals company COUPONSûnûALBEITûSHORTERûDATEDûANDûINû casinos are all closed, was offering a new
TRONOXûWASûLOOKINGûTOûISSUEûAû53MûlVE SMALLERûSIZEûTHANûTHEIRûUSUALûISSUANCES issue concession of around 50bp on its new
YEARûNON CALLûTWOûSENIORûSECUREDûNOTE The streaming service provider raised US$750m 2025 unsecured notes, according
There was strong demand throughout the US$1bn-equivalent through two tranches, TOû#REDIT3IGHTSûWHICHûWEREûPRICEDûATûû
week, with some 13 deals increased in size ONEûINû53ûDOLLARSûTHEûOTHERûINûEUROS ATûTHEûTIGHTûENDûOFûnûPRICEûTALK
DESPITEûTHEûCROWDEDûCALENDAR 4HEûCOMPANYûRATEDû"A""nûSOLDûAû Even before Thursday, year-to-date high-
(IGH YIELDûFUNDSûSAWû53BNûOFû 53MûlVE YEARûUNSECUREDûBULLETûNOTEûATû yield issuance was already well ahead of
INmOWSûLASTûWEEKûACCORDINGûTOû,IPPERû ûlGURESûWITHû53BNûSOLDû
adding to several successive weeks of That is the lowest coupon it has been able COMPAREDûWITHû53BNûLASTûYEAR
INmOWSûTHATûNEEDûTOûBEûPUTûTOûWORK TOûACHIEVEûINûTHEûDOLLARûMARKETûnûALBEITûWITHû The US high-yield market has recovered
Average high-yield spreads had moved a shorter tenor than the 10-year notes it has some ground from the Covid-19-inspired sell-
96bp tighter in the 10 days to Thursday to TRADITIONALLYûPRICEDûINûRECENTûYEARS off thanks to the Fed’s announcement on April
785bp, although they were as low as 731bp 9 that it would extend its corporate bond
ONû-ONDAY purchasing programmes to include companies
RECOVERING SOME GROUND
“The rally in risk assets points to investors ICE BofA US HIGH-YIELD INDEX SPREAD that have recently been downgraded into the
looking past death tolls and lockdowns and bp
high-yield universe, or fallen angels, such as
paints a hopeful picture,” wrote 950 &ORDû4HEûCARMAKERûRAISEDû53BNûTHROUGHûAû
CreditSights analysts on Monday, referring THREE PARTûDEALûONû!PRILû
to the devastating impact of the Covid-19 850 And even though oil prices experienced
PANDEMIC their two wildest days of trading last Monday
750
Steve Repoff, portfolio manager at GW&K and Tuesday, with the May delivery contract
Investment Management, divided the high- 650 FORû74)ûFALLINGûTOûASûLOWûASûn53ûATûONEû
YIELDûMARKETûINTOûISSUERSûTHATûAREûlNDINGûITû point, thanks to a slump in demand and fears
550
easy to get more money but do not need it, that storage space capacity is about to run
cuspier names that are paying up but can 450
OUTûISSUERSûWEREûSTILLûOUTûINûFORCE
still issue, and those that are shut out of the Ten borrowers raised funds over those two
market entirely where investors can “smell 350 DAYSûWITHû4UESDAYûnûWHENûEIGHTûISSUERSûWEREû
BLOODv ONûSCREENSûnûBEINGûTHEûBUSIESTûDAYûFORûTHEû
250
“It seems that if you don’t need the Jan Feb Mar Apr JUNKûBONDûMARKETûSINCEûACTIVITYûRESUMEDûONû
money, it’s pretty easy to get some more,” 2020 !PRILûûAFTERûALMOSTûAûMONTH LONGûPAUSE
HEûSAID Source: Refinitiv David Bell

WEEK IN NUMBERS
ECB acts to reduce collateral
damage from Covid-19 –US$40.32
THE PRICE THAT THE MAY FUTURES
Ratings criteria relaxed CONTRACT FOR WTI FELL TO LAST
WEEK AS IT COLLAPSED INTO NEGATIVE
The Eurozpean Central Bank has alleviated programmes until September 2021, said TERRITORY FOR THE FIRST TIME. A
any immediate concerns about a potential "ARCLAYSûANALYSTS SLUMP IN DEMAND THANKS TO COVID-19,
sovereign bank doom loop and has also Even after that date, there is the STORAGE FACILITIES GUMMING UP, AS
provided some support to vulnerable Triple possibility of a waiver to ensure the bonds WELL AS TECHNICAL FACTORS AROUND
B rated corporates after it announced remain eligible, as is the case of Greek THE CONTRACT ITSELF WERE TO BLAME
temporary measures last Wednesday that GOVERNMENTûBONDS 70
will allow it to accept non-investment-grade
50
RATEDûBONDSûASûCOLLATERAL CATCHING FALLEN ANGELS
The central bank stopped short of saying it The ECB’s announcement also has potentially 30
would buy new issues from fallen angels but BIGûIMPLICATIONSûFORûCREDITûMARKETS 10

analysts think there is a strong chance it will Although the central bank stopped short -10
soon broaden its bond-buying programme of announcing it would buy new issues from
-30
ANDûINCLUDEûHIGH YIELDûSECURITIES FALLENûANGELSûnûINûCONTRASTûTOûTHEû53û&EDERALû
“It’s not a game-changer but it’s helpful,” 2ESERVEûnûSOMEûANALYSTSûBELIEVEûTHEREûISûAû -50
2 Jan 2 Feb 2 Mar 2 Apr
said one senior banker about the STRONGûCHANCEûITûWILLûDOûSO 2020
ANNOUNCEMENT “We now think there is a two-thirds

The ECB said that any non-ABS assets that probability that BB fallen angel bonds that
WEREûRATEDû"""nûASûOFû!PRILûûWILLûCONTINUEûTOû
remain eligible as collateral until September
respect the collateral rules will be included
ASûELIGIBLEûPAPERûFORûBOTHûTHEû#300ûANDûTHEû
10
THE NUMBER OF US HIGH-YIELD DEALS
ûEVENûIFûTHEYûAREûDOWNGRADEDûTOûJUNKûASû 0%00ûPOSSIBLYûASûEARLYûASûNEXTûWEEKSû%#"û ON MONDAY AND TUESDAY DESPITE THEM
LONGûASûTHEYûAREûATû""ûORûABOVE MEETINGvûSAIDû".0û0ARIBASûANALYSTS BEING THE TWO WILDEST DAYS OF TRADING
Asset-backed securities that had a rating An ECB spokesman said that while IN THE OIL MARKET’S HISTORY. FAITH IN
OFûATûLEASTû!nûASûOFû!PRILûûWILLûALSOûREMAINû Wednesday’s “decision is only applicable to CENTRAL BANK SUPPORT HAS SHIFTED
ELIGIBLEûASûLONGûASûTHEYûREMAINûATû""û credit operations and use of collateral in MOMENTUM IN THE JUNK MARKET
!PPROPRIATEûHAIRCUTSûWILLûBEûAPPLIED THEMûNOTûTOûTHEûPURCHASEûPROGRAMMESûûWEû
The moves are primarily aimed at stand ready to take further measures if
ensuring eurozone banks retain access to
liquidity as the Covid-19 pandemic wreaks
NECESSARYv
Analysts at Bank of America said opening
€110bn
THE BOOK FOR ITALY’S €16bn DUAL-
HAVOCûONûECONOMIES up the purchase programme to fallen angels TRANCHE ISSUE ON TUESDAY, THE BIGGEST
“Importantly, this complements our would especially alleviate “extreme FOR ANY SSA DEAL IN HISTORY. THE NEXT
LIQUIDITY PROVIDINGûMEASURESûnûINCLUDINGûOURû indigestion risk” in the consumer, utility, DAY, SPAIN GOT €97bn OF ORDERS FOR ITS
targeted and non-targeted longer-term energy and real estate sectors in high-yield, €15bn 10-YEAR ISSUE, THE BIGGEST FOR A
RElNANCINGûOPERATIONSû4,42/ )))ûANDû,42/ û ANDûWOULDûSUPPORTûTHESEûISSUERSûSPREADS SINGLE-TRANCHE SSA DEAL
nûBYûINCREASINGûTHEûAMOUNTûOFûCOLLATERALû 4HEYûNOTEDûTHATûûOFûEUROûHIGH GRADEû
120
AVAILABLEûTOûOURûCOUNTERPARTIESvûSAIDûTHEû%#" CREDITûORûSOMEûõTRNûISû4RIPLEû"ûRATEDû
“In combination with our other monetary while the size of the Double B rated market 100
policy instruments, the revised collateral ISûJUSTûõBN 80

framework thus creates a supportive “We maintain our view that the Covid-19 60
environment for banks to continue lending crisis will see incremental European fallen angel
40
TOûTHEûREALûECONOMYv VOLUMESûOFûõBNnõBNûBUTûWITHûUPSIDEûTOûTHISû
In particular, the ECB’s decision lessens number especially if there are downgrades to 20
any immediate impact from a downgrade of PERIPHERALûSOVEREIGNûRATINGSûINû%UROPEv 0

Italy Spain Belgium
Italian sovereign debt to non-investment- One reason holding back the ECB, however,
GRADEûONûBANKSûBALANCEûSHEETSûnûTHEûSO CALLEDû COULDûBEûTHEûPROBABILITYûOFûHIGHERûLOSSES
sovereign bank doom loop that became so “Unlike repo operations, no haircut
THREATENINGûDURINGûTHEûEUROZONEûCRISIS
Italy is rated Baa3/BBB/BBB/BBB (high) by
protects the Eurosystem from potential
LOSSESû4HISûMIGHTûEXPLAINûWHYûTHEû%#"ûDIDû
18 years
THE LENGTH OF TIME SINCE ESTONIA
the four main agencies with its ratings from not announce the inclusion of fallen angels LAST ISSUED AN INTERNATIONAL BOND.
30ûANDû&ITCHûONûNEGATIVEûOUTLOOK as eligible bonds of its QE programmes,” said THE BALTIC SOVEREIGN HAS HIRED BANKS
30ûWASûSETûTOûREVIEWû)TALYSûRATINGûONû THEû".0û0ARIBASûANALYSTS FOR A RETURN, ACCORDING TO SOURCES
April 24, while Moody’s and DBRS are (ANSû,ORENZENûHEADûOFû%UROPEANû
SCHEDULEDûTOûFOLLOWûONû-AYû investment-grade credit strategy at
In the event that all of Italy’s sovereign
ratings were downgraded below investment-
Citigroup, said if fallen angels remain off the
menu for asset purchases, it will “lead to a
€1.381bn
THE AMOUNT OF CORPORATE BONDS
grade, the ECB would continue to accept more abrupt credit cliff between investment- THE ECB BOUGHT (NET) IN THE WEEK TO
Italian sovereign securities as collateral, grade and high-yield”, which would be APRIL 17 AS PART OF ITS CSPP COMPARED
although at higher haircuts, as well as NEGATIVEûFORûBOTHû4RIPLEû"ûANDû$OUBLEû"ûDEBT WITH €1.573bn THE WEEK EARLIER
continue to buy them in the purchase Tom Revell In total, it has bought €23.743bn

BONDS SSAR
The deal’s reception “demonstrates the “Nearly every trade recently has moved by
resilience of AFD’s franchise on the dollar 3bp to 5bp, but many of the supras have
SSAR market”, Cherif said, noting the “heavy” UPSIZEDûINTOûTHEûMOVEvûSAIDûAûBANKER
participation of central banks within a “very “The Bank of England announced US$2bn and
GOOD QUALITYvûORDERûBOOK could have done more than a 6bp move but this
US DOLLARS With its liquidity buffers now back to seemed an appropriate balance between what
their normal levels (some 10 months of THEYûCOULDûHAVEûDONEûANDûWHATûTHEYûDIDûDOv
ADB LEADS DOLLAR DELUGE lending), AFD is likely to pause benchmark The banker said that central banks, which
ACTIVITYûhFORûAûWHILEvû#HERIFûSAIDûnûTHOUGHûITû were not playing in size when issuance
International public sector credits powered will remain active in private placements, for spreads were in the low single digits over
into the US dollar primary market on which it continues to publish a weekly Treasuries, have returned as spreads have
Tuesday, attracting over US$14bn of PRICINGûSHEET WIDENEDûWHILEûBANKûTREASURIESûAREûmUSHûWITHû
demand for a series of shorter-dated bonds 4HEûAGENCYûnûWHICHûREMAINSûINû LIQUIDITYûTHATûTHEYûCANûPUTûTOûWORKûINûDEALS
to help fund regional and national responses negotiations with the French state over an “Central banks have been taking two-thirds
TOûTHEûCORONAVIRUSûCRISIS INCREASEDûûFUNDINGûREQUIREMENTûnûWILLû of recent trades and the [bank] treasuries have
The ASIAN DEVELOPMENT BANKûLEDûTHEûCHARGE use a portion of the new issue’s proceeds “to been bigger buyers week on week, which is
)NûITSûSECONDûJUMBOûOFFERINGûINûQUICKû PROVIDEûSUPPORTûTOûTHEûGLOBALûlGHTûAGAINSTû WHYûWEREûSEEINGûRECORDSûBROKENvûHEûSAID
SUCCESSIONûFOLLOWINGûAû53BNûTWO YEARû #OVID vûITûSAID
at the end of March, the Triple A On the same day, NRW issued a ALL INTERNATIONAL GREEN BONDS
SUPRANATIONALûGOTûAWAYûAûlVE YEARûOFûTHEû 53BNûTHREE YEARûSEEûSEPARATEûSTORY BOOKRUNNERS: 1/1/2020 TO DATE
SAMEûHEFTYûSIZEûATûBPûOVERûMID SWAPSûnû Managing No of Total Share
2bp tighter than initial price thoughts and DEMAND HOOVERS UP NEW SSA DOLLAR bank or group issues US$(m) (%)
only 3bp back from where ADB printed its SUPPLY 1 BNP Paribas 19 4,628.96 10.0
much shorter 2022 bond three weeks 2 Credit Agricole 18 3,554.90 7.7
EARLIER A trio of SSA issuers converged on the short 3 JP Morgan 18 3,418.80 7.4
This pricing level represented a spread of end of the US dollar market on Thursday, 4 Barclays 15 3,265.47 7.0
BPûOVERûTHEûlVE YEARû53û4REASURY scoring oversubscribed deals and marked 5 SG 12 3,132.66 6.8
Excluding interest from lead managers PRICEûTIGHTENING 6 HSBC 20 2,282.64 4.9
Bank of America, Citigroup, HSBC and TD, the The BANK OF ENGLAND saw the greatest 7 BofA Securities 16 1,955.34 4.2
NEWûDEALûDREWûOVERû53BNûOFûDEMAND demand on the day, as it placed its annual 8 Santander 10 1,919.43 4.1
“They were clearly going for size,” said 53BNûTHREE YEARûTOûlNANCEûITSûFOREIGNû 9 Natixis 5 1,764.86 3.8
one syndicate manager away from the EXCHANGEûRESERVES 10 Citigroup 13 1,703.75 3.7
TRANSACTIONû7HILEûHEûCONSIDEREDû)04SûhQUITEû 4HEûORDERûBOOKûlNISHEDûATû53BNûANDû Total 78 46,371.38
generous in the context of the performance the issuer was able to move pricing by 6bp Excludes social bonds and mixed use of proceeds.
OFûLASTûWEEKSûDEALSûûTHEYûGOTûANû TOûLANDûATû4REASURIESûPLUSûBP Source: Refinitiv SDC code: JG1
IMPRESSIVEûSIZEûWITHûAPLOMBûnûNOûMEANû
ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS
FEATv
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
0ROCEEDSûWILLûCONTRIBUTEûTOû!$"Sû
Managing No of Total Share Managing No of Total Share
53BNû2ESPONSEû0ACKAGEûhTOûHELPû
bank or group issues US$(m) (%) bank or group issues €(m) (%)
developing member countries counter the
severe macroeconomic and health impacts 1 JP Morgan 547 165,201.87 9.3 1 JP Morgan 140 50,696.31 8.1
CAUSEDûBYûTHEû#OVID ûPANDEMICv 2 BofA Securities 420 131,058.45 7.4 2 BNP Paribas 160 47,293.78 7.6
AGENCE FRANCAISE DE DEVELOPPEMENT built its 3 Citigroup 409 126,717.35 7.2 3 Barclays 144 43,761.54 7.0
ANNUALûNEWûISSUEûINûTHEû53ûCURRENCYûnûAû 4 Barclays 374 115,525.48 6.5 4 HSBC 144 41,860.57 6.7
53BNûTHREE YEARûTHISûTIMEûnûONûOVERû 5 Goldman Sachs 290 99,003.80 5.6 5 Credit Agricole 130 40,643.75 6.5
53BNûOFûORDERSûBarclays, BNP Paribas, 6 HSBC 346 91,422.51 5.2 6 SG 104 34,988.38 5.6
Bank of America, Citigroup and Daiwa were lead 7 Deutsche Bank 277 75,678.07 4.3 7 Deutsche Bank 115 32,359.70 5.2
MANAGERS 8 BNP Paribas 260 75,120.89 4.2 8 BofA Securities 96 29,684.19 4.8
9 Morgan Stanley 213 71,124.46 4.0 9 UniCredit 108 29,439.01 4.7
“A smooth US$2bn deal in this market,
10 Credit Agricole 219 62,634.00 3.5 10 Citigroup 86 25,045.68 4.0
on a French name in the current
Total 1,902 1,768,787.87 Total 601 623,898.51
environment, is truly an achievement,”
Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt,
said Bokar Cherif, head of treasury and US Global ABS/MBS. US Global ABS/MBS.
CAPITALûMARKETSûATû!&$ Source: Refinitiv SDC code: J1 Source: Refinitiv SDC code: N1
EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING APRIL 24 2020

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Apr 20 2020 Belgium €909m 2.150 Jun 22 2066 0.910 2.05
Apr 21 2020 Germany €4.0852bn 0.000 Nov 3 2022 –0.680 2.79
Apr 21 2020 UK £3.25bn 0.625 Jun 7 2025 0.168 2.83
Apr 21 2020 UK £1.5bn 1.625 Oct 22 2054 0.584 2.53
Apr 22 2020 UK £3.25bn 1.000 Apr 22 2024 0.123 2.55
Apr 22 2020 UK £3bn 1.250 Jul 22 2027 0.160 2.37
Apr 24 2020 Italy (CTZ) €2.75bn 0.000 Nov 29 2021 1.001 1.63
Apr 24 2020 Italy (€i) €1bn 0.400 May 15 2030 1.770 1.52
Source: IFR

4HEûISSUERûPRINTEDûITSûINAUGURALûlVE YEARû
NRW leans on Libor 53MûINû3EPTEMBERû3INCEûTHENûITûHASû

METûACCOUNTSûINû!SIAûTHEû53û,ATINû!MERICAû
ANDû%UROPE
SSAR Issuer cracks dollar record “Fifty percent of orders came from new
investors, most of which we had met in the
The FEDERAL STATE OF NORTH RHINE-WESTPHALIA head of treasury and investor relations at the last two months, so it was a great
made its largest appearance in the US currency state ministry of finance. CONlRMATIONûANDûSATISFACTIONûTOûUSûTOûSEEû
yet on Tuesday – and its first since disclosing that “US dollars is very interesting because short tenors THATûRESPONSEvûSAIDû'ARRE
its annual funding requirement could reach an are key for these additional needs, with an eye on the )$"û)NVESTûSETûTHEûSPREADûINûLINEûWITHû)04Sû
unprecedented €40bn this year in response to yield,” he said. “We want to do the additional funding ATûSWAPSûPLUSûBP
the coronavirus crisis. at economic levels, to get low or negative yields, and The lead put the premium at about 8bp,
The Aa1/AA/AAA sub-sovereign issued a that is what you get in the short tenors – particularly in based on where a new Inter-American
US$1.75bn three-year at 28bp over mid-swaps, in US dollars, where there is a very broad investor base.” Development Bank line with the same
line with guidance, while tightening a US$1.2bn NRW is now considering a 2020 funding MATURITYûWOULDûPRICE
18-month FRN 1bp to three-month Libor plus programme of up to €40.2bn – the upper limit of Some bankers had put the new IDB Invest
18bp. Demand totalled over US$3.5bn, with the what its budget would allow. issue’s pick-up to IADB at as much as 30bp
longer bond drawing over US$2.15bn of interest. “Given the additional needs, we will try to pull over where a new two-year from the Triple
An increasing presence “in the process of all the levers and get funding where we can find !ûISSUERûWOULDûBEûLIKELYûTOûPRICEû4HATû
building their recognition in dollars” – though a deep and broad investor base,” Bendiek said. REmECTEDû)$"û)NVESTSûLESSûDEVELOPEDûINVESTORû
still less frequent than its own agency, NRW. The state will focus on short to intermediate BASEûITSûWEAKERûRATINGSûnû!A!!!!!ûnûANDû
Bank – NRW is “a very sought-after credit by tenors while seeking to meet its additional the deal’s Reg S format, as well as the
central banks”, a lead manager said. funding requirement. It sees good scope to issue UNSETTLEDûMARKETûENVIRONMENTûTHEYûSAID
Its deal attracted “good support” from “the at the shorter end as historically it has focused In time, the borrower’s premium over its
usual dollar investors” despite the unusual on longer tenors, he added. sister issuer is likely to narrow, however,
packaging of fixed and floating-rate tranches. “We see very good demand in those [shorter] with one banker expecting the spread to
The FRN was notable for its indexing to US tenors and we feel there are still more deals that NARROWûTOûBPnBP
dollar Libor. Recent floaters in the currency would be possible and would draw attention and BMO, Citigroup, HSBC and JP Morgan were
have tended to reference the US Fed’s Secured allow for decent deal sizes.” LEADS
Overnight Financing Rate, which will replace “Our core concern is to keep the interest
Libor by the end of 2021. burden that we take on as low as possible, to KOMMUNINVEST CUTS
But there remains residual demand for Libor fund ourselves at very economic levels. It is Sweden’s KOMMUNINVESTûMADEûAûSIGNIlCANTûCUTû
products, the lead added. With money markets early days and we don’t know exactly how much FROMû)04SûWITHûITSû53BNûNO GROWûTWO YEAR
“a bit all over the place, in reality”, the issuer money we will need,” said Bendiek. Kommuninvest was able to move the
opted for the more traditional benchmark. Lead managers were Bank of America, spread by 5bp to set it at swaps plus 15bp,
The fixed-rate tranche gave NRW cheaper Commerzbank, JP Morgan, Scotiabank and helped along by interest that topped
funding than it could have achieved on a Societe Generale. 53BNûWITHûMOREûTHANûûACCOUNTSû
comparable euro transaction, said Axel Bendiek, Julian Lewis PARTICIPATING
#ENTRALûBANKSûANDûOFlCIALûINSTITUTIONSû
TOOKûûOFûALLOCATIONSû4HEûlNALûCONCESSIONû
The deal, led by Bank of America, HSBC, RBC 0ROCEEDSûWILLûHELPûFUNDûUPûTOû53BNûTHATû WASûSEENûATûBPnBP
and TD,ûEMERGEDûRELATIVELYûLATEûTHISûYEARû)Tû the borrower has earmarked for companies The local government funding agency
HASûBEENûISSUEDûINû&EBRUARYûORûTHEûlRSTûHALFû AFFECTEDûBYûTHEûPANDEMICû)TûFORMSûPARTûOFû revised its funding forecast for 2020 on April
OFû-ARCHûSINCEûATûLEASTûû)&2ûDATAûSHOW IDB Group’s US$12bn package of 9, increasing its long-term funding plans by
CORONAVIRUSûlNANCINGûFORûITSûMEMBERûSTATESû 3+RBNû53M ûTOû3+RBNn3+RBNû
EXTRACTING SIZE INû,ATINû!MERICA The revision was in response to strong
INTER-AMERICAN INVESTMENT CORP, which is the "ESIDESûITSûMAINû53BNûPROGRAMMEûFORû demand from municipalities and regions since
private sector lending arm of the Inter- companies affected by the crisis, IDB Invest THEûBEGINNINGûOFûTHEûNOVELûCORONAVIRUSûCRISIS
American Development Bank and known as is launching a US$500m Crisis Mitigation +OMMUNINVESTûHASûNOWûISSUEDû3+RBNû
IDB Invest, made a rare entry into the capital &ACILITYûFORûHEALTHûANDûHEALTH RELATEDûSECTORS OFûITSûFUNDINGûPROGRAMME
markets as part of its coronavirus response IDB Invest has a funding programme of Barclays, Bank of America, SEB and TD were
FUNDING 53BNûFORûTHISûYEARûALTHOUGHûTHATûCOULDû LEADS
Books for the two-year deal passed increase if the board grants its approval to
53BNûEXCLUDINGûLEADûMANAGERSû increase the programme for affected
enabling the issuer to surpass a minimum COMPANIES EUROS
target size of US$500m and land a US$1bn “We are aiming to do more and that
TRANSACTION would require more funding, although it is LUXEMBOURG DUAL, FINLAND PPS
h/RDERSûKEPTûCOMINGûINû4HEûQUESTIONû pending approval,” said Orlando Ferreira, EXTEND SOVEREIGN SPREE
became how big do we want to go?” said CHIEFûSTRATEGYûOFlCERûANDûCHIEFûlNANCEû
%USEBIOû'ARREûHEADûOFûFUNDINGûATû)$"û)NVEST OFlCERûATû)$"û)NVEST The sovereign charge for coronavirus
h)TûREALLYûlTTEDûALLûOURûGOALSûTOûGETûTOû A lead said it was IDB Invest’s biggest response funding swept on to one of
US$1bn: advance the funding programme, DOLLARûTRADE %UROPESûLOWER PROlLEûNAMESûASûLUXEMBOURG
satisfy new investors with allocations and h)TSûAûGREATûRESULTûFORûTHEMvûHEûSAIDû made only its third appearance in
make a bold statement about the Covid “They’ve done a lot of investor work and it’s international capital markets in nearly six
;PROGRAMME=v PAYINGûOFFv YEARS

BONDS SSAR
4HEû4RIPLEû!SûõBNûDUAL TRANCHEû Sammallahti attributed the taps’ strong He put the starting concession at around
offering attracted substantial support from take-up to “uncertainty affecting market BPûFORûTHEû YEARûANDûBPûFORûTHEûTHREE YEARû
INVESTORSû7ITHûTHEûTOTALûORDERûBOOKû liquidity at the same time when levels and Another lead put the concession tighter,
EXCEEDINGûõBNûLEADûMANAGERSûBCEE, BGL spreads become more attractive to ATûBPûANDûBPûRESPECTIVELYû
BNP Paribas, BIL, Deutsche Bank and Societe INVESTORSv Several basis points were shaved off
Generale TIGHTENEDûTHEûlVEûANDû YEARûISSUESû Finland is not disclosing the banks behind during the process, however, and the three-
by 4bp and 5bp to mid-swaps plus 3bp and the taps “due to the private nature of the year landed at 4bp over and the tap at 15bp
BPûRESPECTIVELY TRANSACTIONSv OVERû4HEûSECONDûLEADûPUTûTHEûlNALû
The Grand Duchy was last in the market According to market rumour, they CONCESSIONSûATûBPûONûBOTHûTRANCHESû
WITHûAûõBNûSEVEN YEARûINû.OVEMBERû INCLUDEûATûLEASTûTWOû5+ûANDûTWOû53ûDEALERS “If you look at where they priced deals in
Before that, its only cross-border offering the past, it doesn’t look so expensive,” a
SINCEû3EPTEMBERûûWASûAûõBNû YEARûINû EFSF COMPLETES Q2 FUNDING WITH SECONDûBANKERûAWAYûFROMûTHEûDEALûSAIDû
*ANUARYûûACCORDINGûTOû)&2ûDATA TIME TO SPARE “Given the books, you would say the
Although “not a very frequent borrower, MARKETûISûWORKINGûANDûOPENûFORû33!ûSUPPLYû
THEYûCAMEûINûANDûPRINTEDûAûlNEûTRANSACTIONvû The EUROPEAN FINANCIAL STABILITY FACILITY 7EûAREûSEEINGûGOODûmOWSûWHICHûAREû
one lead manager said, terming it a “pretty completed its second-quarter funding with SUPPORTINGûTHEûSPREADûLEVELSû9OUûLOOKûATû
POSITIVEûOUTCOMEv PLENTYûOFûTIMEûTOûSPAREûPRINTINGûõBNûINû +F7ûPAYINGûBPnPûASûTHEûCRISISûBROKEû
Investors took some time to “factor in the one fell swoop last Monday, leaving its sister NOWADAYSûITSûAûTOTALLYûDIFFERENTûPICTUREv
LEVELSvûANDûCONlRMûCREDITûLINESûAFTERûTHEû ORGANISATIONû%3-ûWITHûAûMEREûõBNûLEFTûTOû The borrower more or less had the euro
DEALSûANNOUNCEMENTûTHEûPREVIOUSûDAYû"UTû RAISEûBEFOREû*ULYû market all to itself and surfaced ahead of bumper
ONCEûTHISûWASûCOMPLETEDûTHEûDEALûBENElTEDû 4HEû,UXEMBOURG BASEDûSUPRANATIONALû TRADESûFROMû)TALYûANDû3PAINû/NLYûTWOû'ERMANû
FROMûhGOODûMOMENTUMvûTHEûLEADûSAID made swift work of the dual-tranche issuers, the STATE OF BRANDENBURG and LOWER SAXONY
Its “very high-quality and pretty OFFERINGûAûõBNûTHREE YEARûANDûõBNûTAPûOFû EMERGEDûWITHûSMALLûISSUESûLASTû-ONDAYû
DIVERSIlEDvûORDERûBOOKûINCLUDEDûAûNUMBERû ITSûû/CTOBERûûGATHERINGûBOOKSûINû "RANDENBURGûPRICEDûAûõMûSEVEN YEARû
OFûREAL MONEYûACCOUNTS EXCESSûOFûõBNûVIAûLEADSûHSBC, Nomura and at 14bp over mid-swaps, 1bp tighter than
While the deal was somewhat Societe Generale GUIDANCEûONûBOOKSûTOPPINGûõMûTHROUGHû
overshadowed by Italy’s far larger and cheaper “The rates market has been underwritten BayernLB, DekaBank and Helaba, while Saxony
dual-trancher, it was “quite sizeable” by by the central banks for the foreseeable ADDEDûõMûTOûITSûû*ULYûûATûBPûOVERû
,UXEMBOURGSûSTANDARDSûTHEûLEADûADDEDû future and, while we’ve seen some strain mid-swaps through sole lead NordLBû
h4HEREûWILLûBEûSOMEûLIQUIDITYûINûTHEûBONDv between sovereigns, it’s largely been
ALL INTERNATIONAL US$ BONDS
contained by central bank action,” said a
BOOKRUNNERS: 1/1/2020 TO DATE
FINLAND FINDS PP DEMAND LEADû
Managing No of Total Share
FINLANDûHASûISSUEDûNEARLYûõBNûINûMOSTLYû “So, my expectations are that the market
bank or group issues US$(m) (%)
intermediate maturity private placements will remain strong, especially while
ASûITûSEEKSûADDITIONALûFUNDING PREMIUMSûANDûSPREADSûREMAINûATTRACTIVEv 1 JP Morgan 346 103,592.33 10.7
Having previously only sold private debt ,EADSûSTARTEDûMARKETINGûAûõBNû 2 BofA Securities 303 94,310.10 9.8
under its MTN programme, the AA+/Aa1/ maximum trade at guidance of the swaps 3 Citigroup 303 93,639.69 9.7
AA+ rated sovereign recently began adding plus 6bp area for the three-year and 18bp 4 Goldman Sachs 214 71,794.93 7.4
TOûITSûBENCHMARKûBONDSûTHROUGHû00S AREAûFORûAûõBNûMINIMUMûTAPûOFûTHEû/CTOBERû 5 Barclays 193 57,867.33 6.0
!FTERûAUCTIONINGûAûõMûINCREASEûTOûITSû Sû 6 Morgan Stanley 156 53,317.00 5.5
September 2024 bond last month, the “Concessions that issuers are having to 7 Wells Fargo 166 51,693.18 5.4
republic has added volume to as many as pay are normalising, they were arguably still 8 Deutsche Bank 148 35,393.85 3.7
EIGHTûOTHERûLINES elevated for MuniFin last week but it’s 9 HSBC 135 35,235.19 3.6
The bulk of activity has been in its improving,” a banker away from the 10 RBC 113 29,042.76 3.0
September 2025, April 2026 and September TRANSACTIONûSAIDûh!LSOûWHENûWASûTHEûLASTû Total 884 966,124.12
Including Euro, foreign and global issues. Excluding equity-related debt,
2027 bonds, though it has also tapped deals time you could buy EFSF in 10-year in the US Global ABS/MBS.
as short as the September 2022 and as long mid-teens?” Source: Refinitiv SDC code: O1
ASûTHEû!PRILû
Its private taps, which number more than ALL US DOLLAR FIXED-RATE GLOBALS ALL SOVEREIGN BONDS IN EUROS
ûCARRYûSIZESûOFûUPûTOûõM BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
“This is something new to us, as Managing No of Total Share Managing No of Total Share
previously we have only issued bonds under bank or group issues US$(m) (%) bank or group issues €(m) (%)
our MTN programme in private 1 JP Morgan 134 54,149.81 12.4 1 JP Morgan 23 20,651.22 12.8
placements,” said Anu Sammallahti, deputy 2 BofA Securities 136 53,743.68 12.3 2 BNP Paribas 19 14,313.44 8.9
director, funding, liquidity and investor 3 Citigroup 115 49,985.36 11.5 3 SG 14 12,312.22 7.6
RELATIONSûATûTHEûSTATEûTREASURY 4 Goldman Sachs 72 35,146.05 8.1 4 Barclays 17 11,873.26 7.4
4HEûDEALSûnûWHICHûhWORKEDûREASONABLYû 5 Morgan Stanley 56 25,223.56 5.8 5 HSBC 11 10,912.88 6.8
WELLûFORûUSvûnûREmECTûTWOûFACTORSû 6 Wells Fargo 74 24,778.97 5.7 6 Citigroup 12 10,196.50 6.3
3AMMALLAHTIûSAIDû4HESEûWEREûhTHEû 7 Barclays 56 24,101.77 5.5 7 Credit Agricole 10 9,583.09 6.0
increasing funding requirement of the 8 HSBC 27 15,187.49 3.5 8 BofA Securities 12 8,279.89 5.1
central government on the one hand and 9 TD Securities 37 14,839.22 3.4 9 Goldman Sachs 11 7,740.01 4.8
INVESTORûnûANDûSUBSEQUENTLYûALSOûDEALERûnû 10 Deutsche Bank 41 14,582.25 3.3 10 Nomura 6 7,564.88 4.7
demand in the middle part of the yield Total 231 435,758.87 Total 44 160,953.44
curve, predominantly four to seven years, Excluding equity-related debt, ABS/MBS. Excluding ABS/MBS.
ONûTHEûOTHERv Source: Refinitiv SDC code: O5 Source: Refinitiv SDC code: N4

The second banker away from the 4HEûMOSTûRECENTûWASûAûõBNû YEARû 4HISûISûONEûOFûTHEûlRSTûPUREûGREENûBONDSû
transaction saw the level on Brandenburg as paper which priced at Bonos plus 14bp in launched since the onset of the coronavirus
being through fair value, which he put at &EBRUARYûANDûDREWûõBNûINûORDERS pandemic, with issuers focusing instead on
AROUNDûBPnBPûOVERû So far, Spanish regional governments SOCIALûANDû#OVID ûRESPONSEûBONDS
The FREE HANSEATIC CITY OF BREMEN picked up have mostly executed sustainable “The investors that have dedicated
the baton later on in the week, pricing a TRANSACTIONSûBUTû,Aû4ONAûEXPECTSûTHEû-ADRIDû mandates to buy green bonds have not been
õMû YEARûONûBOOKSûEXCEEDINGûõBNû debut will encourage them down the green able to participate in these [social and
through DekaBank, DZ Bank, Helaba, JP Morgan, ISSUANCEûPATH response issues] and that’s why we’ve seen
NatWest Markets and UniCredit 0ROCEEDSûFROMû-ADRIDSûGREENûNOTESûWILLû such an interest in this transaction,” a
go towards funding clean transportation, BANKERûAWAYûFROMûTHEûDEALûSAID
MADRID GOES GREEN IN 2020 environmental protection and biodiversity, NIB started marketing the new NEB at the
ANDûWASTEû-ANAGEMENT mid-swaps plus 6bp area through Bank of
The regional government of MADRID is ING has been appointed green structuring America, Credit Agricole and Nordeaû7ITHû
gearing up for the launch of its last foray of adviser and will be a bookrunner alongside ORDERSûPASSINGûõBNûTHEûISSUERûRElNEDû
the year, an inaugural green debt offering BBVA GUIDANCEûTOûTHEûPLUSûBPûAREA
that will beat the sovereign to the market in In the end, NIB was able to print the
THEûFORMAT L-BANK BROADENS ESTR APPEAL seven-year at plus 2bp, its books closing in
4HISûWILLûBEûTHEûlRSTûEVERûGREENûBONDûTOû EXCESSûOFûõBNû4HISûWASûTHEûLARGESTûORDERû
come from a Spanish government and LANDESKREDITBANK BADEN-WUERTTEMBERG – book ever achieved by NIB for a benchmark
REGIONALûENTITY FOERDERBANK on Thursday added to the ENVIRONMENTALûBONDû-OREûTHANûû
Madrid is Spain’s leading issuer of socially public pool of FRNs linked to ESTR, with its investors took part, with sizable orders
responsible debt and pips the Kingdom to the lRSTûWIDELYûDISTRIBUTEDûTRADEûINûTHEûEUROSû coming from high-quality real money
POSTû4HEûSOVEREIGNûHASûHADûITSûOWNûGREENûDEBUTû NEWûRISK FREEûRATE ACCOUNTSûANDûFROMû%3'ûFUNDS
in the works since January and is expected to )Nû3EPTEMBERû, "ANKûSOLDûAûõMûTWO A person close to the trade said the new
EXECUTEûITûINûTHEûSECONDûHALFûOFû year FRN with a coupon of ESTR plus 200bp, ISSUEûCONCESSIONûWASûDIFlCULTûTOûESTIMATEû
Madrid is eyeing the intermediate part of but that was considered to be closer to a SINCEû.)"ûDOESûNOTûHAVEûAûLONGûCURVEûh"ASEDû
the curve and has opted for a euro- PRIVATEûPLACEMENTûINûNATUREû3INCEûTHENûTHEû ONûPEERSû)ûTHINKûITSûABOUTûBPnBPû
DENOMINATEDû2EGû3ûlXEDûRATEûSENIORû LIKESûOFû%)"ûANDû+F7ûHAVEûISSUEDûõBNû%342 PROBABLYûCLOSERûTOûBPvûHEûSAID
UNSECUREDûBENCHMARK LINKEDû&2.SûINûTHEûPUBLICûSPHERE NIB’s most recent euro-denominated
Its three-day series of investor calls, which “It’s great that this issuer is looking at this NEBs are its September 2026 and November
concluded on Wednesday, generated great kind of product and that more and more 2025 notes, which date back to 2019 and
INTEREST investors are open to it and ready to invest,” ûRESPECTIVELY
“We’ve had many calls from a really high SAIDûAûBANKERûFAMILIARûWITHûTHEûMATTERûh,ASTû Before the mandate announcement on
quality number of investors, which is good year, not everyone was ready to buy, but now Wednesday, the 2026 and 2025 notes were
news,” said Rodrigo Robledo Tobar, Madrid’s YOUûHAVEûANûEVERûBROADENINGûBASEûOFûINVESTORSv both quoted at around mid-swaps plus 2bp
DIRECTORûGENERALûFORûlNANCIALûPOLICYûANDûTREASURY , "ANKûBROUGHTûTHEûõMûNO GROWûTHREE ONû4RADEWEB
The pandemic crisis and subsequent year note through JP Morgan, RBC and For comparison, NIB issued its September
widening of Spanish government spreads UniCredit, at ESTR plus 42bp, 1bp inside 2026 NEB with a negative concession of 2bp
may have an impact on pricing for the GUIDANCEû,IKEûTHEûPREVIOUSûTWO YEARûTHEû and garnered an order book exceeding
maiden trade, though there clearly is ample COUPONûISû%342ûPLUSûBP õM
APPETITEûFORû3PANISHûDEBTû!ûõBNû YEARû h)TSûVERYûDIFlCULTûANDûACADEMICûTOûPINûDOWNû The banker away from the transaction
bond for the sovereign last week attracted AûNEWûISSUEûPREMIUMvûSAIDûTHEûBANKER said the pricing level for the new NEB was
õBNûOFûORDERS “But we were well prepared in terms of EXTREMELYûTIGHT
“Under normal conditions we would be lead interest and it was a good day with not “It looks like a fantastic outcome in terms
ABLEûTOûPRICEûTHISûDEALûWITHOUTûAûPROBLEMû TOOûMUCHûHAPPENINGû7EûWEREûQUITEû of what we have seen from supranational
7ELLûJUSTûHAVEûTOûGETûSOMEûSTABILITYûINûTHEû defensive in terms of tenor, which is the ISSUERSûOVERûTHEûPASTûWEEKSû7ORLDû"ANKSû
market and to pay a premium over the SWEETûSPOTûFORûTHISûPRODUCTv eight-year SDB came at mid-swaps plus 17bp
secondary market to generate momentum,” "OOKSûREACHEDûOVERûõMûTHEûBANKERû ANDûISûNOWûTRADINGûATûPLUSûBPvûHEûSAID
2OBLEDOûSAID SAIDûWITHûBANKûTREASURIESûANDûOFlCIALû The banker away from the deal added the
h7EûAREûVERYûCONlDENTûTHATû-ADRIDSû INSTITUTIONSûDRIVINGûDEMAND ECB eligibility factor also helped the trade,
name and credit quality, the green factor, Euro bonds linked to the Eonia overnight THOUGHûTOûAûLIMITEDûEXTENT
and the fact that it is our last foray for the RATEûHAVEûTRADEDûOCCASIONALLYû"UTûTHISû NIB tends to favour the US dollar for its
YEARûWILLûHELPûCOUNTERûALLûTHATvûHEûSAID interbank rate is to be discontinued by the issuance, but has not ventured into there
The dark green element will be key in ENDûOFûûANDûREPLACEDûBYû%342 THISûYEAR
mitigating the effects of a still tricky 4HEûCOUPONûONû, "ANKSûNOTEûWILLûBEû The banker away from the deal said it
MARKETûACCORDINGûTOû#ARLAû,Aû4ONAûAûGREENû COMPOUNDEDûDAILYûWITHûAûlVE DAYû made sense for NIB to pick euros over
structurer within ING’s DCM sustainable OBSERVATIONûLAG dollars given the strength of the euro
MARKETSûTEAM MARKETûANDûTHEûTENORûOFûTHEûNEWû.%"
She said the feedback has been extremely NIB SECURES BLOWOUT FOR TIGHTLY He added that the US dollar market had
positive and shows investors strongly PRICED GREEN BOND MAINLYûSEENûMATURITIESûOFûUPûTOûlVEûYEARS
APPRECIATEûTHEûGREENûANGLE “If this had been a three-year, then dollars
Madrid is seen as a trusted name and a Nordic Investment Bank (NIB) quenched would have been a better choice but when
MARKETûPIONEERû4HEûREGIONûHASûBEENûISSUINGû investors’ thirst for green debt and drew you get out to seven-years and longer, euro
sustainable bonds since 2017 and has four STRONGûDEMANDûWITHûAûTIGHTLY PRICEDûõMû is more advantageous,” the person close to
SUCHûNOTESûTOûITSûNAME NO GROWû!PRILûûENVIRONMENTALûBOND THEûTRADEûSAID

BONDS SSAR
The banker also pointed out that it was

part of NIB’s funding strategy to issue
conventional debt in dollars and green €15bn Spain picks up Italian gauntlet
BENCHMARKSûINûEURO
.)"ûBROUGHTûAûõBNûTHREE YEARû SSAR Kingdom dazzles with record-breaking syndication
coronavirus response-bond to fruition on
-ARCHû The KINGDOM OF SPAIN responded in style to the but has accelerated its programme to finance
gauntlet thrown down by the Italian Republic a increased healthcare and social security
BPIFRANCE’S RESPONSE BOND day earlier (see Top News story). spending in response to the crisis. It has raised
DRAWS HEALTHY INTEREST After its Mediterranean peer’s five-year some €40bn in bonds and bills in recent weeks.
and 30-year dual-trancher amassed a record As the benchmark issuer of the eurozone
BPIFRANCE launched a maiden Covid-19 €110bn-plus order book, Spain followed a similar periphery, Spain has benefited from “ever greater
response bond off a framework it set up in playbook to regain the largest single-tranche diversification” of its investor base as buyers
TWOûWEEKSûANDûTHEûõBNûSEVEN YEARûDREWû sovereign syndication crown with a new 10-year have spurned negative yields in core markets,
SOLIDûDEMAND Bono that drew more than €96.5bn in orders. the lead said. The new issue benefited from very
4HISûWASûTHEûISSUERSûlRSTûSUCHûTHEMATICû It was the largest book for any issuer and in substantial Asian orders, including some first-
BONDû!ûBANKERûAWAYûFROMûTHEûDEALûSAIDûTHATû any currency for a single-tranche transaction. time buying.
by historical standards this transaction Even adjusting for as much as €10.5bn of Asia accounted for nearly 3% of the new
probably ranked among the best trades ever interest from lead managers Barclays, BNP issue’s allocations. This compared with a minimal
EXECUTEDûBYû"PIFRANCE Paribas, Citigroup, HSBC, JP Morgan and involvement in Spain’s €5bn 30-year in February,
h4HEYûHADûAûPRETTYûDECENTûORDERûBOOKû)Nû Santander, this far exceeded the €57.5bn that though the region took a larger share of the
terms of pricing it was a little bit less the Kingdom of Belgium attracted for a seven- sovereign’s €10bn seven-year late last month.
GENEROUSûTHANûTHEûPREVIOUSûlVE YEARûBUTû year OLO at the end of March.
THEYûDIDûMANAGEûTOûGOûTIGHTERvûHEûSAID “It’s a positive story – very similar to Italy EARLY BIRD SPECIAL
Marketing got under way for a yesterday, with a very good concession and a Investors were ‘incentivised to show rapid
benchmark deal with guidance of the plus very large book,” said one co-lead manager, who support for the new deal. Under an “Early Bird
BPûAREAûOVERûINTERPOLATEDû/!4Sû7ITHû added that “the bond is due to perform”. Special”, the Tesoro offered an undisclosed
ORDERSûEXCEEDINGûõBNû"PIFRANCEûSETûTHEû “Pretty incredible!” agreed another. “It’s very “incremental allocation larger than zero” to
SPREADûATûBP impressive to see record-breaking transactions at a indications of interest made before guidance was
“At guidance we had a new issue time when so many people are working from home.” released on Wednesday morning.
PREMIUMûOFûABOUTûBPû4HEû.)0ûWASû Like Italy, Spain’s approach to the new This was in line with the sovereign’s normal
around 10bp at pricing,” said Maxime issue was to offer a significant concession to approach in recent years, the lead manager
#LAUDELûlXEDûINCOMEûORIGINATIONûATû its outstanding debt while pricing against a insisted.
.AT7ESTû-ARKETS comparable bond (the April 2030 Bono, in its “The challenge with very large syndications
4HEûlNALûORDERûBOOKûWENTûPASTûõBNû case) to shield the transaction from volatility in is completing them while the market is open,”
which enabled the agency to print a deal swaps. At initial guidance of the 22bp area, the he said.
SIZEûOFûõBN new issue premium was some 17bp to fair value. With its considerable experience of jumbo
Bpifrance is one of the very few issuers to The unprecedented order book featured deals, Spain seeks to accelerate the process
have an explicit Covid-19 response bond 560 line items. It allowed Spain to narrow its through measures such as the early bird benefit.
FRAMEWORKûONEûOTHERûBEINGû.)" concession to 12bp while tightening its spread by Secondary Bonos suffered as holders sold
Bipfrance’s framework aims to mitigate 5bp to 17bp for the €15bn trade, Spain’s largest older bonds to buy into the new issue.
the economic impact of the coronavirus syndicated tranche in euro history. Italy managed “There is so much concession on the new deal
outbreak on French companies and to tighten both its tranches by 6bp. the Spanish market is getting a bit crushed,” said
SUBSEQUENTûSOCIALûCONSEQUENCES “They’re not really looking at the last basis one banker.
0ROCEEDSûFROMûTHEûBONDûWILLûGOûTOWARDSû point, though,” noted the first lead co-lead. The lead countered that European periphery
lNANCINGûSTATE GUARANTEEDûLOANSûWHICHûWILLû “They just want people to stay in the deal.” bond markets had been anticipating “significant”
mainly assist French companies with “These two transactions [Spain and Italy] supply from Spain and Italy for some time.
CASHmOWûFORûTHEIRûOPERATIONSûANDû have tightened the most in recent weeks, but “There was something of a concession built into
EMPLOYEES premiums in the low teens are not abnormally yields,” he said.
There was a very positive reception with big for them lately,” said the second co-lead. The new issue’s double-digit concession and
regard to the Covid-19 structure, according unmet demand “hopefully ensures the best
to Caroline Haas, NatWest Market’s head of “SEVERE” ALLOCATION secondary performance”, the lead added. “The
SUSTAINABLEûlNANCEû&)SûANDû33!S The deal represents “additional financing issuer wants to encourage investors to come
“Investors feel very strongly that they not envisaged at the start of the year” by the back.”
would also like to participate in supporting sovereign, the lead manager noted. While Spain has yet to clarify its additional
the solution to the crisis and there’s no Spain’s strategy has been to accelerate the execution funding requirements, its regular auction
better way to do that than actually putting of its 2020 funding programme to respond swiftly to programme continues. This, too, should benefit
THEIRûLIQUIDITYûTOûWORKvûSHEûSAID the challenges posed by the Covid-19 pandemic. from the new issue’s oversubscription, the lead
The trade attracted strong demand from Spain has suffered one of the worst said.
CENTRALûBANKS coronavirus outbreaks anywhere in the world, The sovereign also emphasised in an interview
“Some of the liquidity asset buffers have with nearly 22,000 reported deaths. The country with IFR after last month’s seven-year that it
explicit ESG strategy or policy associated has been in lockdown for five weeks. remains open to accessing new pools of investor
WITHûTHEMû7EûSAWûINCREASINGûORDERSûFROMû It has yet to announce a revised 2020 demand through foreign currency borrowing.
asset managers who showed great borrowing requirement in light of the pandemic Julian Lewis
APPRECIATIONûFORûTHEû%3'ûANGLEû)FûTHEREûHADû

been a little more time, there would have 4HEûUPWARDûREVISIONûFOLLOWSûAûõBNû In regard to SURE, the Commission will issue
been even more participation from them,” increase in the government’s exchequer BONDSûENJOYINGûTHEûSAMEûSTATUSûASûTHOSEûISSUEDû
SAIDû(AAS BORROWINGûREQUIREMENTû(OWEVERûBECAUSEûOFû for existing loan programmes, on behalf of the
The pandemic crisis has seen Bpifrance Ireland’s strong cash position, the increase in European Union and on-lend amounts based on
increase its long-term funding target for the bond funding range is lower than the the loan agreements concluded with the
ûFROMûõBNûTOûõBNûANDûITûHASûALREADYû INCREASEûINûTHEûBORROWINGûREQUIREMENT BENElCIARYûMEMBERûSTATES
DISPERSEDûõMûTOûTARGETûCOMPANIESû )RELANDûHASûALREADYûISSUEDûOVERûõBNûOFû For the SURE instrument, member states
AFFECTEDûBYûTHEûCORONAVIRUS BONDSûTHISûYEARûACROSSûõBNûû-AYûû WILLûPROVIDEûADDITIONALûGUARANTEESûOFûõBNû
Haas expects that other public sector ANDûõBNûû-AYûûSYNDICATIONSûANDûANû ORûûOFûTHEûOVERALLûAMOUNT
borrowers will look to highlight the socio- AUCTIONûOFûBONDSûMATURINGûINûû4HEREû The European Commission already
economic aspects of their crisis response, are further bond auctions scheduled for May operates three capital markets-funded loan
although not all will choose to create ANDû*UNEûû4HEûISSUERûHASûNOûBONDû PROGRAMMESû"ALANCEûOFû0AYMENTSû
EXPLICITûFRAMEWORKS RElNANCINGûREQUIREMENTSûFORû European Financial Stabilisation Mechanism
,EADûMANAGERSûWEREûBNP Paribas, Credit Short-term issuance is also expected to ANDû-ACROû&INANCIALû!SSISTANCEû352%ûWILLû
Agricole, Goldman Sachs, JP Morgan and NatWest INCREASEûBYûõBNûTOûREACHûõBNûBYûTHEûENDû BECOMEûTHEûFOURTH
Markets of 2020, with an increase in treasury bill and In 2019, the EU issued two bonds: a
COMMERCIALûPAPERûISSUANCE õMûû$ECEMBERûûSYNDICATIONûANDû
IRELAND ANNOUNCES ADDITIONAL 2020 AûûõMû.OVEMBERûûPLACEDûSOLELYû
BOND FUNDING EU SURELY NEEDS MORE FUNDING BYû5NI#REDIT
IRELAND‘s National Treasury Management The EUROPEAN COMMISSION has begun laying PRIVATE PLACEMENTS SERVE
Agency revised its bond funding for 2020 up the groundwork to issue bonds to fund a SOARING PUBLIC FUNDING NEEDS
BYûõBNûTOûõBNnõBNûDUEûTOûTHEû new loan programme, ‘Support to mitigate
additional funding required for measures Unemployment Risks in an Emergency’, or Soaring funding requirements and widening
related to the effects of the novel 352% spreads have proved to be the perfect
CORONAVIRUS SURE was proposed on April 2 as a means cocktail for a dramatic growth in sovereign
It replaces the original bond funding of meeting the demands of member states ANDûQUASI SOVEREIGNûPRIVATEûPLACEMENTS
range, announced in December 2019, of to cope with increased public expenditure As the funding needs of sovereign and
õBNnõBN to preserve employment in the wake of the regional borrowers have rapidly expanded to
SPREADûOFûTHEûNOVELûCORONAVIRUSû4HEûNEWû meet the needs of aid packages targeted at
MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
LENDINGûPROGRAMMEûHASûAûCEILINGûOFûõBN supporting coronavirus measures, stricken
4HEûlNANCEûMINISTERSûOFûTHEûEUROûGROUPû economies’ issuers have become increasingly
have signalled their political agreement to RECEPTIVEûTOûREVERSEûENQUIRIESûBANKERSûSAY
bank or group issues €(m) (%)
THEûPROGRAMMEû4HEûLEGISLATIVEûPROCESSûANDû Not only do private placements give
1 UniCredit 21 8,331.85 18.7 adoption will follow, after which funding issuers a capital markets funding source
2 Barclays 15 3,999.58 9.0 OPERATIONSûWILLûCOMMENCE outside of benchmark issuance, but often
3 JP Morgan 13 3,724.48 8.3 The EU has announced its previously borrowers are able to attain more attractive
4 DGZ-DekaBank 19 3,281.76 7.4 PUBLISHEDûFUNDINGûPLANSûAREûNOWûSUBJECTûTOû pricing when compared with public
5 BayernLB 11 2,890.37 6.5 SIGNIlCANTûUPSIDEûREVISIONSûINûLIGHTûOFûTHEû ISSUANCE
6 Nord/LB 16 2,586.48 5.8 POLITICALûAGREEMENTûONû352% One issuer that has utilised private
7 HSBC 14 2,336.68 5.2 The additional funding is expected to demand to support increased government
8 Deutsche Bank 12 2,162.38 4.8 BEGINûINûTHEûTHIRDûQUARTERûOFûTHISûYEARû spending is FINLAND, having issued nearly
9 NatWest Markets 9 1,996.69 4.5 0REVIOUSLYûTHEûISSUERûHADûANNOUNCEDûõMû õBNûPRIVATEûPLACEMENTSûSINCEûMID -ARCHû
10 TD Securities 8 1,530.41 3.4 OFûFUNDINGûFORûûANDûõBNûFORû REmECTINGûTHEûGREATERûFUNDINGûNEEDSûOFûTHEû
Total 64 44,635.25 In a separate note, the EU has signalled it GOVERNMENT
Excluding ABS/MBS. COULDûBORROWûUPûTOûõBNûFROMûMARKETSûTOû For investors, sovereign and regional
Source: Refinitiv SDC code: N7 FUNDûLENDINGûTOûMEMBERûGOVERNMENTS borrowers have become more attractive
PROPOSITIONSûASûISSUEûSPREADSûHAVEûWIDENEDû
ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS
Some on the buyside that previously showed
little or no interest in the asset class are now
LOOKINGûATûNEWûDEALS
bank or group issues €(m) (%) bank or group issues €(m) (%)
While many accounts opt for benchmark
1 HSBC 22 7,877.63 13.5 1 JP Morgan 10 5,124.00 12.0 markets, some are now turning to private
2 JP Morgan 15 6,517.03 11.2 2 Goldman Sachs 7 4,685.00 11.0 placements, as they can obtain tailored
3 Barclays 13 4,607.44 7.9 3 HSBC 6 4,275.84 10.0 INVESTMENTSûTOûMEETûTHEIRûSPECIlCûNEEDS
4 Credit Agricole 19 4,229.08 7.2 4 SG 6 3,786.53 8.9 When AUSTRIAûSOLDûAû53Mûû!PRILû
5 BofA Securities 9 3,957.70 6.8 5 Deutsche Bank 7 3,752.16 8.8 2025 through UniCredit this month, the
6 Deutsche Bank 6 3,371.36 5.8 6 BNP Paribas 7 3,286.44 7.7 sovereign was responding to reverse interest
7 BNP Paribas 13 3,053.02 5.2 7 UniCredit 4 3,252.91 7.6 FROMûAû%UROPEANûINVESTOR
8 SG 12 2,798.14 4.8 8 BofA Securities 4 2,785.23 6.5 “For some reason, some investors have
9 Commerzbank 9 2,686.73 4.6 9 Credit Agricole 5 2,712.02 6.3 some additional investment needs in other
10 Natixis 11 2,531.72 4.3 10 Nomura 3 1,884.02 4.4
currencies, like for this US dollar deal for
Total 62 58,361.58 Total 25 42,726.81
Austria,” said a banker “As the republic
Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS. hasn’t raised a US dollar benchmark so far,
Source: Refinitiv SDC code: N6 Source: Refinitiv SDC code: N5 THEYûHAVEûTOûLOOKûATûPRIVATEûPLACEMENTSv

BONDS SSAR
AGILE FUNDING IN VOLATILE TIMES The UK DEBT MANAGEMENT OFFICE said last The shortfall is likely to be revised up as
&ORûISSUERSûTHISûFORMûOFûlNANCINGûCANûALSOû Thursday it planned to issue the bonds the impact of the coronavirus becomes
HAVEûTHEûADDITIONALûBENElTSûOFûSPEEDûANDû BETWEENû-AYûANDû*ULYû0REVIOUSLYûTHEû$-/û CLEARERûTHEû/FlCEûFORû"UDGETû2ESPONSIBILITYû
mEXIBILITYûGIVINGûTHEMûACCESSûTOûINVESTORSû HADûBEENûPLANNINGûTOûSELLûaBNûOFûBONDSû SAID
FASTERûTHANûBENCHMARKûTRANSACTIONS OVERûTHEûûMONTHSûFROMû!PRIL Borrowing in the 12 months ended in
“It can also be a way to attract quick “This higher volume of issuance is not -ARCHûSTOODûATûaBNûABOVEûTHEûMOSTû
funding solutions,” said spokesperson from expected to be required across the RECENTûESTIMATEûOFûaBNûBYûTHEûCOUNTRYSû
Israel’s Ministry of Finance REMAINDERûOFûTHEûlNANCIALûYEARvûTHEû5+Sû BUDGETûFORECASTERS
h%SPECIALLYûINûVOLATILEûMARKETSûASû00ûDEALSû 4REASURYûSAID 4HATûWASûaBNûHIGHERûTHANûINûTHEû
TYPICALLYûAREûMOREûmEXIBLEûANDûCANûMOVEû With the pandemic expected to trigger the ûlNANCIALûYEARûTHEûLARGESTûINCREASEû
FASTERûTHANûLARGERûBENCHMARKûDEALSv biggest fall in economic output in three SINCEûû4HEûSHORTFALLûWASûEQUIVALENTûTOû
ISRAEL has issued multiple private centuries, the government has taken a string ûOFûGROSSûDOMESTICûPRODUCT
placement this year, most recently feeding of unprecedented measures to avert a total 4HEû5+SûOFlCIALûECONOMICûFORECASTERSû
appetite for intermediate paper with a COLLAPSEûINCLUDINGûAûPLEDGEûTOûPAYûûOFûTHEû SAIDûTHEûBUDGETûDElCITûCOULDûSURGEûTOûûOFû
õMûTAPûOFûITSûû*ANUARYûS WAGESûOFûWORKERSûWHOûAREûTEMPORARILYûLAIDûOFF '$0ûINûTHEûûlNANCIALûYEARûDUEûTOûTHEû
The spokesperson also highlighted a number UK government bond yields, which are CORONAVIRUSûSHUTDOWN
OFûOTHERûBENElTSûTHEYûSEEûINûTHEûPRIVATEû CLOSEûTOûALL TIMEûLOWSûROSEûONLYûSLIGHTLYûnûAû The DMO has said it will syndicate a 10-
placement market, including being able to sign that investors were not spooked by the year due October 22 2030 for launch on May
access investors who would not normally DETAILSûOFûTHEûDEBTûISSUANCEûSURGE û!ûSECONDûSYNDICATIONûISûSCHEDULEDûFORû
PARTICIPATEûINûBENCHMARKûTRANSACTIONS “It is eye-watering and unprecedented on May 19 for a conventional Gilt with a
/THERûNON EUROZONEûISSUERSûTOûBEûlELDINGû the one hand, but unsurprising given all the MATURITYûOFûûYEARSûORûLONGER
euro enquiries in recent weeks include NEW spending measures to combat Covid-19,” Further details of both will be announced
SOUTH WALES TREASURY CORPûWHICHûSOLDûAûõMû said Marc Ostwald, chief economist at ADM ATûTHEûENDûOFû!PRILûORûINûEARLYû-AYû&URTHERû
TAPûOFûITSûû&EBRUARYûûANû-4.û Investor Services, referring to the syndications may be scheduled for June and/
ORIGINALLYûISSUEDûINû&EBRUARY RESPIRATORYûDISEASEûTHEûVIRUSûCAUSES ORû*ULY
4HOMASû0UGHûANûECONOMISTûATû#APITALû
APPETITE FOR DURATION Economics, said the Bank of England would CPPIB IMPRESSES WITH
As borrowers have become more receptive be watching the market reaction closely as it 10-YEAR STERLING FORAY
to bespoke transactions, investor demand considers whether to expand further its
for duration has also seen borrowers print purchases of government bonds to help CANADA PENSION PLAN INVESTMENT BOARD is
ULTRAûLONG DATEDûTRADES AVOIDûAûRISEûINûBORROWINGûCOSTS building up its sterling curve and has made
Belgian issuers appear particularly well The BoE’s next monetary policy its mark by picking a rarely seen tenor for
REPRESENTEDûATûTHEûLONG END Deutsche Bank ANNOUNCEMENTûISûDUEûONû-AYû ITSûSECONDûFORAYûINûTHEûCURRENCY
RECENTLYûARRANGEDûAûõMûû YEARû The central bank has increased the There has been a dearth of longer-dated
private placement for WALLONIA, while government’s overdraft in case it struggles PUBLICûSECTORûDEBTûINûTHEûSTERLINGûMARKETû!û
BRUSSELS-CAPITAL REGIONûSOLDûAûõMûû TOûRAISEûCASHûINûTHEûDEBTûMARKET bookrunner said the trade tapped into
June 2066 note through BNP Paribas 3OûFARûTHEû5+ûHASûSOLDûaBNûOFû'ILTSûINû investor demand and was pretty impressive
'ERMANû,AENDERûAREûANOTHERûISSUERûGROUPû !PRILûAûRECORDû!UCTIONSûDUEûTHISûWEEKûWILLû GIVENûTHEûUNUSUALûMATURITY
that have rapidly expanded their presence PROBABLYûRAISEûANOTHERûaBN “To be able to print in 10 years is
in private placements in line with their SOMETHINGûTHEûVASTûMAJORITYûOFû33!Sû
INCREASEDûBORROWINGûNEEDS NEEDS MAY GROW have not been able to do due to the lack
The FEDERAL STATE OF BADEN-WUERTTEMBERG Adding in the extra £180bn for May to July, of pricing references,” a second
RECENTLYûISSUEDûAûõMû!PRILûûmOATERûPAYINGû THEûISSUANCEûREMITûFORûTHEûûlNANCIALû BOOKRUNNERûSAIDûh)TûISûINûAûMOMENTûLIKEû
90bp over through UniCredit, while other year is already on course to hit an all-time this that you remind other issuers what
borrowers such as BAVARIA, BERLIN, RHINELAND- HIGHûOFûaBNûnûANDûTHATûASSUMESûTHEû5+û ISûPOSSIBLEv
PALATINATE and HESSE have all been active, privately sells no more Gilts for the remaining nine In terms of comparables for the December
ISSUINGûNEWûNOTESûORûTAPPINGûEXISTINGûBONDS MONTHSûOFûTHEûYEAR 2029 benchmark, bankers looked at EIB and
“As a source of funding, especially for “The £225bn of Gilts that will be issued 7ORLDû"ANKûnûTWOûKEYûSTERLINGûISSUERS
issuers that don’t often do big benchmarks [from April to July] shows the scale of cash EIB has June 2029 and World Bank
but now have more needs and might need to the government needs, and that need may December 2029 notes, which were quoted
issue speedily, private placements are a grow if economic activity continues to be on Eikon at Gilts plus 59bp and 56bp,
GOODûOPTIONvûSAIDûAûBANKER SIGNIlCANTLYûDEPRESSEDûFORûOVERûTHREEû RESPECTIVELYûONû!PRILûûWHENû#00)"û
months,” said Richard Hughes, associate at ANNOUNCEDûITSûMANDATE
THEû2ESOLUTIONû&OUNDATIONûTHINKûTANK The second lead estimated fair value at
STERLING A Reuters survey of 11 primary dealers AROUNDûBPûALTHOUGHûTHEûlRSTûSAWûITû
had predicted the DMO would announce WITHINûAûRANGEûOFûBPnBP
UK RUSHES OUT £180bn SALE TO FUND Gilt issuance of around £300bn for the #00)"ûRELEASEDû)04SûONû-ONDAYûATûTHEûLOWû
PANDEMIC SPENDING SURGE ûlNANCIALûYEARûASûAûWHOLE SûAREAûOVERûTHEûû/CTOBERûû'ILTû
The Treasury said a further update to the ANDûTHENûlXEDûTHEûSPREADûATûBPûONûTHEû
The UK government plans to sell £180bn of DMO’s debt sales plan would be announced lRSTûUPDATEûWITHûINDICATIONSûOFûINTERESTû
bonds in the next three months, more than ONû*UNEû NORTHûOFûaM
it had recently pencilled in for the entire /FlCIALûSTATISTICSûRELEASEDûONû4HURSDAYû That suggested a concession of anything
lSCALûYEARûASûITûRUSHESûTOûFUNDûAûSURGEûINû showed the government went slightly over FROMûBPûTOûBP
spending to soften the effects of a ITSûBUDGETûDElCITûTARGETûFORûTHEûRECENTLYû Books went on to close at over £875m,
CORONAVIRUSûRECESSION ENDEDûûlNANCIALûYEAR ENOUGHûFORûAûDEALûSIZEûOFûaM

4HEûSECONDûLEADûSAIDû#00)"ûHADûACHIEVEDû
GENUINEûDIVERSIlCATIONûWITHûTHEûTRADEûANDû NON-CORE CURRENCIES
accessed an investor base that would not CORPORATES
BEûACTIVEûINûTHEûOTHERûPRODUCTSûITûSELLS QUEENSLAND GOES LONG AGAIN
“We had more than 50 buyers, mostly
UK-based and some from other parts of the QUEENSLAND TREASURY CORP (Aa1/AA+/AA) US DOLLARS
CONTINENTvûSAIDûTOû*AMESû,OGUSHû extended the run of state government
MANAGINGûDIRECTORûlNANCINGûCOLLATERALû issuance last Tuesday with a A$500m HYATT PRICES US$900m BOND DESPITE
ANDûTRADINGûATû#00)" 53M ûSALEûOFûû.OVEMBERûûS FALLEN ANGEL RISK
4HEûlRSTûBANKERûSAIDûITûWASûAûGOODû 4HEûNEWûBONDSûWEREûPRICEDûATûûFORûAû
OUTCOMEûGIVENûTHEûMATURITY YIELDûOFûûEQUIVALENTûTOûBPûOVERûTHEû HYATT HOTELS became the third US hotel chain
“Issuing at that tenor is not -AYûû!#'"ûANDûBPûWIDEûOFû%&0û to come to market in recent weeks, building
STRAIGHTFORWARDû4HEûINVESTORûBASEûTENDSûTOû YEARûFUTURES on the success of its peers with a US$900m
consist of insurers, pension funds and Citigroup was sole lead manager for the TWO PARTûTRADE
ASSETûMANAGERSû4HESEûAREûGENERALLYûPRETTYû trade, as it was for QTC’s previous under- Spreads started considerably wide of the
picky in terms of what they want to do,” THE RADARûSALEûONû!PRILûûAû!Mûû company’s outstanding curve and did not move
HEûSAID 20-year bond offering, priced 65bp and far from initial price thoughts as investors
#00)"ûVENTUREDûINTOûSTERLINGûFORûTHEûlRSTû BPûWIDEûOFûTHEû*UNEûû!#'"ûANDû sought compensation for the heightened risk
time in January, printing a £500m %&0 in the travel and leisure sector, which has taken
December 2024 at Gilts plus 50bp on a In a recent research note, RBC Capital a pounding amid travel restrictions due to the
BOOKûOFûSOMEûaBN Markets noted at least A$50bn of slippage in #OVID ûPANDEMIC
,EADSûFORûTHEûNEWûSûWEREûBarclays, STATEûBUDGETSûOVERûTHEûBACKûENDûOFûlSCALûYEARû Average leisure spreads are the widest of
Bank of America, Citigroup, NatWest Markets 2019/20 and full-year 2020/21, due to the any sector in the high-grade universe, at
and TD. 4HEûlRSTûTHREEûALSOûRANûTHEûDEBUTû CORONAVIRUSûBUSHlRESûANDûSLOWINGûDOMESTICû around 491bp over Treasuries at the start of
ISSUE DEMAND LASTûWEEKûACCORDINGûTOû)#%û"OF!ûDATA
This would result in net issuance from the “It’s a tough deal because it’s a tough
DBJ STERLING DEBUT PIQUES INVESTOR lVEûLARGESTûSTATESûBEFOREû*UNEûûûMOREû sector,” one syndicate banker away from the
INTEREST than doubling from about A$43bn to about TRANSACTIONûSAID
A$93bn as gross issuance climbs to A$140bn “Hospitality is struggling at best and
The DEVELOPMENT BANK OF JAPAN attracted VERSUSûPRE CRISISûPROJECTIONSûOFûAROUNDû hotels are empty, so I’m not surprised it
robust demand with an inaugural !BN DIDNTûMOVEûAûHUGEûAMOUNTv
£250m no-grow April 2023 bond that RBC expects most states to publish their Hyatt comes with considerable fallen
DOESûNOTûBENElTûFROMûAûGOVERNMENTû new budgets after the delayed ANGELûRISKûGIVENûTHATû-OODYSûANDû30û
GUARANTEE Commonwealth budget is delivered on REAFlRMEDûTHEIRû"AAûANDû"""nûRATINGSû
Three years is the sweet spot in sterling /CTOBERû while placing it on watch negative earlier
and with a generous double-digit new-issue THISûMONTH
premium, DBJ ended up being four times HOUSING NZ PRINTS LONG LINKER Management even included coupon step-
SUBSCRIBED ups to compensate investors for the
The agency began marketing on Tuesday HOUSING NEW ZEALAND, rated Aaa/AA+ DOWNGRADEûRISK
ATûTHEûBPûAREAûOVERûTHEû*ULYûû'ILTûnû -OODYS30 ûRAISEDû.:Mû53M û h4HEûCONlRMATIONûREmECTSû-OODYSû
a level a banker away from the deal said FROMûAûLONGû YEARûINmATION INDEXEDû expectation that despite material earnings
was highly attractive as fair value was in wellbeing bond issue via institutional DECLINEûANDûNEGATIVEûFREEûCASHmOWûINûû
THEûHIGHûSûTOûBPûRANGEû PRIVATEûPLACEMENT related to global travel restrictions around
Bookrunners used recent Canadian 4HEûû3EPTEMBERûûSûWEREûPRICEDû the spread of Covid-19, Hyatt’s liquidity is
issuance for price discovery, since there LASTû4HURSDAYûATûûTOûYIELDûû SUFlCIENTûTOûGETûTHROUGHûTHISûUNPRECEDENTEDû
were no outstanding sterling bonds from at a margin of 175bp over the September TIMEûFORûTHEûLODGINGûINDUSTRYvû0ETEû
ANYûOFûTHEûOTHERû*APANESEûAGENCIES û.EWû:EALANDûGOVERNMENTûINmATION Trombetta, Moody’s lodging and cruise
With indications of interest passing the LINKEDûBOND ANALYSTûSAIDûINûITSûREPORT
aMûMARKû$"*ûRElNEDûGUIDANCEûTOûPLUSû ANZ was sole lead manager for the Bookrunners Bank of America, Goldman
BPûAREAûONû7EDNESDAY TRANSACTION Sachs and JP Morgan started initial price
In the end, books closed above )NûLATEû*ANUARYû(OUSINGû.EWû:EALANDû THOUGHTSûINûTHEûûAREAûONûAûlVE YEARû
aBNûANDû$"*ûWASûABLEûTOûPRINTûITSû delayed a proposed increase to its ANDûûAREAûONûAû YEAR
maiden bond at plus 105bp, 15bp tighter .:Mûû*UNEûûûNOMINALû At those levels, Hyatt started with a nearly
THANûINITIALûTALKû4HISûSUGGESTEDûTHEûAGENCYû wellbeing bonds alongside a new 2030 100bp premium over where its outstanding
CONCEDEDûAûlNALûNEWûISSUEûPREMIUMûOFû wellbeing bond issue as market conditions ûûBONDûWASûYIELDINGûONûAVERAGEûINû
BPnBP BECAMEûVOLATILE the secondary market, according to
DBJ usually opts for US dollars and, to a Wellbeing bonds are a type of -ARKET!XESSûDATA
lesser extent, euros for its overseas sustainability bonds aligned with the New Through price progression, spreads
BORROWINGû :EALANDû4REASURYSû,IVINGû3TANDARDSû TIGHTENEDûINûTOûûONûTHEûlVE YEARûANDû
“They will have some sterling needs &RAMEWORK ûONûTHEû YEARûFORûSOMEûBPnBPûOFû
over the next couple of years and are very (.:ûAûCROWNûAGENCYûTHATûPROVIDESû new issue concessions, the banker away
much committed to building a sterling HOUSINGûSERVICESûFORû.EWû:EALANDERSûINû FROMûTHEûDEALûESTIMATED
CURVEvûAûBOOKRUNNERûSAID NEEDûBENElTSûFROMûBEINGûAûRAREûHIGHû “We have seen execution metrics on deals
The deal was arranged by Barclays, HSBC, Double A/Triple A rated domestic issuer that become more disparate recently,” said a
Mizuho and Nomura OFFERSûAûPICK UPûOVERûTHEûSOVEREIGNûCURVE SECONDûBANKERûAWAYûFROMûTHEûTRANSACTION

BONDS CORPORATES
“While some deals in sectors more While smaller hotel organisations are from the whole month of March 2019,
exposed to the current crisis are still expected to receive Congressional stimulus REPRESENTINGûAûûYEAR OVER YEARûGAINûFORû
requiring upwards of 50bp of premium to money under the CARES Act that would make THEûWEEKûACCORDINGûTOû#REDIT3IGHTS
get trades over the line, others at the lower- them ineligible for Fed funding in the capital h#AMPBELLûISûONEûOFûTHEûMAINûBENElCIARIESû
beta counter-cyclical end of the spectrum markets, Hyatt and Marriott are not expected from the pantry stocking behaviour during
AREûPRICINGûDEALSûMUCHûCLOSERûTOûFAIRûVALUEv to receive those funds and should have access the Covid-19 pandemic, with retail sales
Despite the large concession, the TOûTHEû&EDSû#ORPORATEû#REDITû&ACILITY SURGINGûTHROUGHûTHEûlRSTûTHREEûWEEKSûOFû
company did manage to take more out of March,” James Dunn, senior consumer goods
the market with a US$100m upsize from CAMPBELL SOUP OFFERS TWO-PART ANALYSTûATû#REDIT3IGHTSûWROTEûINûAûREPORT
INITIALûTALK BOND AMID PANTRY SALES SURGE “The company disclosed that sales have
Hyatt was also offering a substantial remained strong in recent weeks, and
premium over recent deals from Marriott CAMPBELL SOUP@SûCREDITûSTORYûISûBENElTINGû despite higher costs from employee
)NTERNATIONALû"AA"""n ûANDû(ILTONû from increased pantry stocking amid the compensation and safety protocols, it still
$OMESTICû/PERATINGû"A"" Covid-19 pandemic, and management took EXPECTSûAûNETûBENElTûFROMûTHEûPANDEMICv
Marriott received more than US$20bn in that opportunity to offer a US$1bn two-part Initial price thoughts on the 10-year and
DEMANDûEARLIERûTHISûMONTHûFORûAû53BNû BONDûDEALûLASTû-ONDAY 30-year bonds started at 210bp and 215bp
lVE YEARûTHATûPRICEDûATûû&OLLOW ONû The 10-year and 30-year tranches come at OVERû4REASURESûRESPECTIVELY
demand remained strong and it has since a time when Campbell’s sales are surging At those levels, bookrunners Bank of
tightened more than 100bp to a yield of and opening a new path to meet its America, Barclays, Citigroup and JP Morgan were
ûACCORDINGûTOû-ARKET!XESSûDATA DELEVERAGINGûTARGETS STARTINGûWITHûSOMEûBPnBPûOFûNEWûISSUEû
,IKEWISEû(ILTONûWENTûTOûTHEûHIGH YIELDû The company completed the largest slug concession over Campbell’s outstanding 2028
MARKETûANDûPRICEDûAû53MûlVE YEARûNON of its deleveraging plan in December ANDûSûACCORDINGûTOû#REDIT3IGHTS
CALLûTWOûATûûANDûAû53MûEIGHT YEARû through the sale of its Australian Arnott’s 4HEûûSûWEREûTRADINGûATûAû
NONûCALLûTHREEûATûû4HEûlVE YEARûHASû biscuits brand and other parts of its G-spread of 170bp at the end of the previous
RALLIEDûSLIGHTLYûTOûAûYIELDûOFû. INTERNATIONALûOPERATIONSûTOûINVESTMENTûlRMû WEEKûWHILEûTHEûûSûWEREûAROUNDû
“Although we expect Hyatt to maintain ++2ûFORû53BN BPûACCORDINGûTOû-ARKET!XESSûDATAû
ACCESSûTOûSUFlCIENTûLIQUIDITYûTOûWITHSTANDû Those proceeds were used to delever However, the 2048s widened by as much as
the pandemic, the company’s higher owned THROUGHûAû53BNûTENDERûOFFERûEARLIERûTHISû BPûONû-ONDAYûMORNING
asset exposure relative to Marriott leaves it year but leverage remains elevated at mid-
more levered to the near-term impacts of THREEûTIMESûDEBTûTOû%BITDA ALL SWISS FRANC BONDS INCLUDING
the pandemic and the expected subsequent Sales were stagnant at the start of the year SECURITISATIONS
RECESSIONvû#REDIT3IGHTSûWROTEûINûAûREPORT and it looked as though Campbell would have BOOKRUNNERS: 1/1/2020 TO DATE
to resort to M&A to stimulate growth before it Managing No of Total Share
FREEING UP LIQUIDITY COULDûREACHûITSûTHREEûTIMESûLEVERAGEûTARGET bank or group issues SFr(m) (%)
Hyatt plans to use the proceeds to pay down But with social distancing guidelines 1 Credit Suisse 53 7,422.9 35.3
THEûOUTSTANDINGûBALANCEûUNDERûITSû53BNû BEINGûENFORCEDûCONSUMERSûHAVEûmOCKEDûTOû 2 UBS 37 4,355.2 20.7
revolving credit facility, which should free buy non-perishable foods that can last 3 Verband 10 3,117.3 14.8
up more liquidity to help the company DURINGûTHEûLOCKDOWN 4 ZKB 23 2,406.8 11.4
WEATHERûTHEûCURRENTûCRISIS 4HISûHASûRESULTEDûINûAûûINCREASEûINû 5 Raiffeisen Schweiz 16 1,473.1 7.0
Additionally, Hyatt’s unsecured revolving #AMPBELLSû3OUPûSALESûAûûINCREASEûINû 6 Deutsche Bank 7 1,132.6 5.4
credit facility will become secured and the 0REGOûPASTAûSAUCEûSALESûANDûûGROWTHûINû 7 Commerzbank 3 305.2 1.5
new proceeds will allow it to cancel its 'OLDlSHûCRACKERSûINû-ARCHûACCORDINGûTOû 8 BNP Paribas 3 279.6 1.3
US$500m 364-day bridge facility, according GUIDANCEûGIVENûBYûTHEûCOMPANY 9 Basler KB 2 220.4 1.1
TOûANû30ûREPORT Orders in the meals and beverages 10 Luzerner KB 1 180.0 0.9
The added cash reserves come amid a slew SEGMENTûWHICHûMAKESûUPûAROUNDûûOFû Total 87 21,059.8
of cost-cutting measures, including total sales for Campbell, for only the week Including preferreds. Excluding equity-related debt.
FURLOUGHINGûTHEûMAJORITYûOFûITSûCORPORATEû ended March 21 exceeded the total orders Source: Refinitiv
employees, cutting salaries for those still
working and halting chairman and CEO ALL CORPORATE BONDS IN EUROS ALL US INVESTMENT GRADE CORPORATE DEBT
cash salaries through May, according to BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
#REDIT3IGHTS Managing No of Total Share Managing No of Total Share
“We have assumed the company will bank or group issues €(m) (%) bank or group issues US$(m) (%)
EXPERIENCEûMATERIALûNEGATIVEûCASHmOWûWHILEû 1 BNP Paribas 81 16,098.89 9.5 1 JP Morgan 244 89,547.79 14.0
hotels are closed or running at very low 2 HSBC 59 11,485.13 6.7 2 BofA Securities 222 84,323.21 13.2
occupancy, but it will have adequate 3 Deutsche Bank 52 11,082.65 6.5 3 Citigroup 178 63,281.11 9.9
liquidity assuming recovery in the second 4 Barclays 42 10,765.60 6.3 4 Goldman Sachs 129 51,801.29 8.1
half of 2020 to address its notes maturity in 5 BofA Securities 49 10,417.45 6.1 5 Morgan Stanley 123 45,613.74 7.1
vû30ûSAID 6 Credit Agricole 46 9,179.43 5.4 6 Wells Fargo 128 38,871.79 6.1
(YATTûHASûJUSTûONEû53MûNOTEû 7 SG 49 8,980.55 5.3 7 Barclays 87 27,798.16 4.3
maturing in 2021 and no maturities this 8 JP Morgan 46 8,542.53 5.0 8 RBC 76 19,252.47 3.0
YEARûORûINûûACCORDINGûTOû2ElNITIVûDATA 9 Citigroup 44 7,913.01 4.6 9 Deutsche Bank 61 18,758.46 2.9
Unlike Hilton, Hyatt will also have access 10 ING 35 5,850.74 3.4 10 HSBC 54 18,174.31 2.8
to the Federal Reserve’s primary market Total 180 170,323.38 Total 429 640,353.92
corporate credit facility because it held Excluding equity-related debt. FIGs, ABS/MBS.
INVESTMENT GRADEûRATINGSûASûOFû-ARCHû Source: Refinitiv SDC code: N8 Source: Refinitiv SDC code: F9

The new bonds priced at Treasuries plus unanswered in the Fed’s efforts to answer “For example, in a syndicated bond
175bp and 190bp, respectively, each in a FREQUENTLYûASKEDûQUESTIONS ISSUANCEûOFû53BNûINûWHICHûTHEû0RIMARYû
53MûSIZE However, other details released on Friday Market Corporate Credit Facility purchases
Moody’s rates Campbell Baa2, while Fitch April 17 were starting to give focus to the û53M ûTHEûISSUERûMUSTûPAYûAû
AFlRMEDûITSûPRIORû"""ûRATINGûWITHûAûNEGATIVEû &EDSûACTIONS FACILITYûFEEûOFû53MûATûCLOSINGvûTHEû&EDû
OUTLOOKû30ûALSOûREAFlRMEDûITSû"""nûRATINGû “At this point we’re one month into this DETAILEDûINûTHEû&!1
noting that the transaction should be thing, and look at all the stuff we’ve done so Finally, while it was thought that the Fed
LEVERAGEûNEUTRAL FARûnûTHISûTOOKûQUARTERSûMONTHSûANDûYEARSû WOULDûONLYûSUPPORTûBONDSûRElNANCINGûNOTESû
0ROCEEDSûWILLûBEûUSEDûTOûREPAYû53Mû DURINGûTHEûlNANCIALûCRISISûTOûGETûTOûWHEREûWEû three months ahead of maturity, the
in borrowings it drew down from a are right now,” said Jim Caron, head of language is now expanded to include
53BNûREVOLVINGûCREDITûFACILITYû!NYû GLOBALûMACROûSTRATEGIESûANDûGLOBALûlXEDû ELIGIBLEûADDITIONALûDEBT
additional funds will be used to help pay income at Morgan Stanley Investment “While the wording remains a bit clunky,
DOWNû53BNûINûCOMMERCIALûPAPERû -ANAGEMENT it does seem that issuers can approach the
OUTSTANDING “There is some impatience with these &EDûTOûEITHERûRElûMATURINGûBONDSûORûISSUEû
Campbell has no bonds coming due in things but the reality is the biggest hurdles new bonds,” CreditSights noted in the
2020 but does have four notes maturing in HAVEûBEENûCLEAREDûANDûNOWûITSûJUSTûDOWNûTOû REPORTû
ûTOTALLINGûJUSTû53MûACCORDINGûTOû THEûMECHANICSvû
2ElNITIVûDATA Most importantly, the Fed said it will NASDAQ MAKES RARE DOLLAR BOND
h0RIORûTOûTHEûOUTBREAKûOFûTHEûCORONAVIRUSû publicly disclose participants, transaction FORAY TO ADDRESS SHORT-TERM DEBT
in the US, Campbell’s meals and beverages amounts, costs, revenues and other fees
segment was showing some signs of associated with the corporate credit NASDAQ made a rare foray into the US dollar
improvement and its snack business had FACILITIESûWEEKLYûINûTHEû(ûSTATISTICALû bond market on Thursday, in an effort to
continued to generate good performance,” release that breaks down factors affecting further reduce short-term debt and extend
30ûNOTED THEûITSûBALANCEûSHEETû maturities with a new US$500m 30-year
h#URRENTLYûTHEûCOMPANYûISûBENElTINGû Other details include that the Fed will not BOND
FROMûTHEûSIGNIlCANTûINCREASEûINûAT HOMEû PURCHASEûmOATING RATEûNOTESûINûTHEûPRIMARYû If price progression was any indication,
consumption because of widespread MARKETûITûWILLûPURCHASEûmOATERSûINû THEûDEALûRATEDû"AA"""ûENJOYEDûSTRONGû
GOVERNMENTûSHELTER IN PLACEûMANDATESv SECONDARYûEVENûIFûTHEYûUSEû,IBORûONLYû30û demand, after pricing at Treasuries plus
Moody’s and Fitch ratings will be used for 215bp, or some 85bp tighter to initial price
FED TO MAKE WEEKLY CORPORATE DETERMININGûELIGIBILITYûANDûHIGH YIELDû THOUGHTSûOFûTHEûBPûAREA
CREDIT FACILITY DISCLOSURES companies (determined by ratings prior to 4HEûlNALûSPREADûWASûJUSTûBPûWIDEûOFûTHEû
March 22) cannot become eligible for the 205bp it achieved on a 10-year issue in 2016,
The Federal Reserve recently detailed how it programme by securing debt up into the last time it tapped the US dollar bond
will disclose bond purchases made through INVESTMENT GRADEû MARKET
its primary and secondary corporate credit 4HEû&EDûALSOûCLARIlEDûTHATûITSûPRIMARYû !NDûWITHûAûYIELDûOFûûONû4HURSDAYSû
FACILITIESûALONGSIDEûOTHERûCLARIlCATIONSûTHATû CREDITûFACILITYûWILLûlRSTûFOCUSûONûPURCHASINGû TRADEû.ASDAQûCAMEûINSIDEûTHEûûITû
have been nagging away at eager market UPûTOûûOFûPUBLICLYûSYNDICATEDûBONDSûRATHERû garnered on the shorter-dated offering some
PARTICIPANTSû THANûSERVINGûASûTHEûSOLEûINVESTORûONûDEALS FOURûYEARSûAGO
While the programme has yet to buy a “We still do not know how this works, as ,IKEûOTHERûCREDITSûTHEûSTOCKûEXCHANGEûHASû
bond, it has spurred a supply surge in SOMEONEûHASûTOûBUYûTHEûOTHERûûOFûAûDEALvû BEENûSCRAMBLINGûTOûADJUSTûTOûTHEûSHARPû
corporate credit on the view that the Fed will #REDIT3IGHTSûNOTEDûINûAûREPORTûh$OESûTHEû&EDû economic downturn caused by the Covid-19
CONTINUEûTOûSUPPORTûISSUANCEû4HEREûWEREû get the tap if a deal isn’t going well?” pandemic, though it is seen in better shape
several details still to work out before the Fed Issuers will also have to pay an additional THANûOTHERûSECTORS
STARTSûINJECTINGûREALûFUNDSûINTOûTHEûSYSTEMû 100bp concession on the Fed’s portion of the h)TûlTSûINTOûAûWORLDûTHATûOPERATESûWELLû
4HEûBIGGESTûOUTSTANDINGûQUESTIONûnûWHENû order on top of what other investors are electronically,” said Scott Kimball, portfolio
WILLûITûBEGINûPURCHASINGûBONDSûnûHASûGONEû PAYING MANAGERûATû"-/û'LOBALû!SSETû-ANAGEMENTû
“It is a tech company that is positioned well
ALL INV-GRADE US CORPORATE BONDS ALL INTERNATIONAL STERLING BONDS INûTHISûENVIRONMENTû4HEYûDONTûTAKEûDIRECTû
BOOKRUNNERS: 1/1/2020 TO DATE EXCLUDING SECURITISATIONS CREDITûRISKûANDûHAVEûBENElTEDûFROMûSIZEABLEû
Managing No of Total Share BOOKRUNNERS: 1/1/2020 TO DATE TRADING ûVOLUMESv
bank or group issues US$(m) (%) Indeed, its Market Services business saw
1 JP Morgan 44 11,547.61 14.1 bank or group issues £(m) (%) REVENUESûRISEûûINûTHEûlRSTûQUARTERûTHANKSû
2 BofA Securities 41 10,538.87 12.9 1 Barclays 38 6,772.89 14.6 to historic trading volumes, according to an
3 Wells Fargo 29 5,887.57 7.2 2 HSBC 34 5,553.62 11.9 3%#ûlLING
4 Morgan Stanley 20 4,899.23 6.0 3 NatWest Markets 30 5,094.29 10.9 Even so, there is no guarantee those
5 Citigroup 23 4,887.40 6.0 4 RBC 23 4,711.73 10.1 volumes will continue, and listings of
6 Barclays 22 4,569.58 5.6 5 Citigroup 14 2,675.51 5.8 companies in the equity market have
7 Goldman Sachs 20 4,330.68 5.3 6 TD Securities 12 2,605.69 5.6 slowed as uncertainty over the fallout from
8 US Bancorp 15 3,281.97 4.0 7 Lloyds Bank 13 2,477.95 5.3 the pandemic impacts that segment of the
9 RBC 17 2,822.54 3.5 8 JP Morgan 10 2,452.10 5.3 MARKETûITûSAID
10 Mizuho 16 2,806.57 3.4 9 Deutsche Bank 12 2,334.09 5.0 Thursday’s bond carried a safety net for
Total 83 81,653.22 10 BNP Paribas 11 1,850.38 4.0 investors, with coupon step-ups of 25bp
Excluding equity-related debt, ABS/MBS, all foreign issues, global issues Total 80 46,524.97 for every per agency notch it falls below
and non corporates.
Including preferreds. Excluding equity-related debt.
investment grade for a maximum of
Source: Refinitiv SDC code: F6a Source: Refinitiv SDC code: K05a BP

BONDS CORPORATES
,IKEûCREDITSûTHEûWORLDûOVERû.ASDAQûHASû """ûRATINGSûFROMû-OODYSûANDû30ûAREûONû printing through fair value because new

rushed to address the impact of Covid-19 review for downgrade and credit watch issues have been performing so strongly in
and the uncertainty it brings, though, unlike NEGATIVEûATûTHEûRESPECTIVEûAGENCIES the secondary market, said several bankers
MANYûITûRECENTLYûANNOUNCEDûAûûINCREASEû h,ASTûWEEKûWEûWOULDûHAVEûEXPECTEDû AWAYûFROMû%LIA
INûQUARTERLYûDIVIDENDûPAYMENTS them to come 80bp back from fair value, 4ELSTRAûFORûEXAMPLEûISSUEDûAûõMûû
In Nasdaq’s case, Covid-19 actions have TODAYûTHEYûAREûABOUTûBPûBACKvûSAIDûAûLEAD !PRILûûONû!PRILûûATûBPûFORûAû.)0ûOFû
mostly revolved around addressing The outdoor advertising company around minus 10bp and was last week bid at
lNANCINGûCOSTSûANDûSHORT TERMûMATURITIES MARKETEDûAûõMû/CTOBERûûANDûõMû BPûONû4RADEWEB
In February, it tapped the euro market, April 2028 at the 270bp area over swaps and Elia also saw demand driven by the
WHEREûITûRAISEDûõMûTHROUGHûAû YEARû plus 310bp area, but was able to land at DEFENSIVEûNATUREûOFûTHEûSECTORû4HEûSPREADû
BONDûTHATûCARRIESûAûCOUPONûOFûJUSTûû 235bp and 275bp for premiums of around CAMEûINûFROMû)04SûOFûBPûTOûLANDûATûBPû
RElNANCINGûûSûANDûCOMFORTABLYû BPnBP WITHûFAIRûVALUEûSEENûAROUNDûBPû4HEûISSUEû
EXTENDINGûMATURITIESûINûTHATûMARKET BNP Paribas, Credit Agricole and HSBC were WASûSIZEDûATûõM
The company also drew down US$800m global co-ordinators and MUFG, Natixis and 0ROCEEDSûWILLûBEûUSEDûFORûRElNANCINGûAû
under its revolving credit facility to pay Societe GeneraleûWEREûACTIVEûBOOKRUNNERS shareholders’ loan, alongside general
around US$400m in commercial paper, a The issuer was able to shrug off concerns CORPORATEûPURPOSESû4HEûSHAREHOLDERû
market that has come under considerable around a potential downgrade, with REIMBURSEMENTûAMOUNTûISûFORûõMû
stress, and Thursday’s proceeds will also investors accepting a healthy premium for according to one of the leads, and is part of
TAKEûOUTûSHORT TERMûDEBT the fact that some sectors are particularly THEûREORGANISATIONûOFûTHEûGROUPSûSTRUCTURE
$EBTûTOû%BITDAûJUMPEDûTOûAROUNDûTHREEû VULNERABLEûTOûREDUCEDûREVENUES BNP Paribas, ING, KBC and Rabobank were
TIMESûINûTHEûlRSTûQUARTERûASûRESULTûOFûTHOSEû “Downgrades are not the end of the BOOKRUNNERS
BORROWINGSûUPûFROMûûTIMESûLASTûYEARû WORLDvûSAIDûTHEûLEADûh)NûAûLOTûOFûCASESûTHISûISû
ACCORDINGûAûROADSHOWûPRESENTATION to be expected given current conditions, and AUCHAN OFFERS UP SPREAD FOR
The company’s net debt stood at they are still offering a good amount of HIGH-GRADE MARKET ACCESS
53BNûASûOFû$ECEMBERûûANDûASûOFû PREMIUMv
March it still had US$510m authorised for The facilities management company AUCHAN, a French retailer teetering on the
share repurchases, it said in the bond SODEXOû!n ûANDûELECTRICITYûTRANSMISSIONû edge of investment-grade, offered an eye-
PROSPECTUS system operator ELIA TRANSMISSION BELGIUM catching initial spread last Wednesday to
h$URINGûTHEûlRSTûQUARTERûOFûûTHEû (BBB+) also brought out new deals last GAINûBONDûMARKETûACCESS
company strengthened its balance sheet by -ONDAY Since 2014, the issuer’s credit rating has
increasing cash reserves to address any The former offered April 2025s and April DROPPEDûFROMû!nûTOûBEûAFlRMEDûATûTHEûENDû
potential short-term funding risks due to the Sû)NûKEEPINGûWITHûTHEûTHEMEûOFûSTARTINGû OFû-ARCHûATû"""nûOUTLOOKûNEGATIVE ûBYû30û
EFFECTSûOFû#OVID vûITûSAID TIGHTERûITûONLYûOFFEREDûCONCESSIONSûOFûBPn citing the execution risk associated with its
BPûATû)04SûOFûBPnBPûANDû TRANSFORMATIONûPLANûFORûITSûBUSINESSû
BPnBP CreditSights has described it as a “fallen
EUROS 3IZESûWEREûSETûATûõMûANDûõMûANDû ANGELûCANDIDATEv
pricing landed at 100bp and 120bp, leaving ,EADSûSAWûTHEûTRAJECTORYûOFûTHEûISSUERSû
HIGH-GRADE CORPORATES CUT AROUNDûBPûOFûNEWûISSUEûPREMIUMûBNP credit rating as cause enough to announce a
PREMIUMS, INITIAL SPREADS Paribas, Citigroup, HSBC and Societe Generale *ANUARYûûTRADEûSOMEûBPnBPûBACKûOFû
RANûTHEûDEAL where bankers estimated fair value,
Three investment-grade corporate marketing the bond at the 370bp area over
borrowers last Monday were able to offer ELIA PUSHES PAST FV SWAPS
tighter spreads at initial price thoughts Elia managed to cut the pricing on its April “Auchan is very close to becoming high-
compared with recent weeks, underpinned ûTOûLANDûBPûINSIDEûOFûFAIRûVALUEû4HEû yield, looking at their ratings, and has no
by falling new issue premiums as BOOKûPEAKEDûATûAROUNDûõBNûBEFOREû step-up language in the deal,” said a
CONlDENCEûCONTINUEDûTOûBUILDûINûTHEûEUROû DROPPINGûTOûõBN SYNDICATEûBANKERûAWAYûFROMûTHEûDEALûh;)TS=û
PRIMARYûMARKET Investors have been putting in sizeable one of the more challenged companies in
Corporate issuers have approached the orders for some deals even though they are THATûSECTORv
MARKETûWITHûCONCESSIONSûOFûBPnBPûATû
ALL INVESTMENT-GRADE BONDS IN EUROS ALL CORPORATE BONDS IN STERLING
)04SûINûWEEKSûPRIORûANDûSOMEûHADûGONEûONûTOû
tighten spreads by more than 60bp, but
syndicate desks are now comfortable
bank or group issues €(m) (%) bank or group issues £(m) (%)
STARTINGûWITHûSMALLERûCONCESSIONS
1 JP Morgan 113 46,606.52 8.5 1 Barclays 12 1,455.16 14.8
“I think the Street has created a rod for its
2 BNP Paribas 127 42,099.98 7.6 2 HSBC 11 1,177.54 12.0
OWNûBACKvûSAIDûONEûBANKERûh7HATSûTHEû
3 Barclays 111 38,820.09 7.0 3 NatWest Markets 9 984.47 10.0
BENElTûOFûBPûORûBPûREVISIONSv
4 HSBC 120 38,524.00 7.0 4 JP Morgan 6 910.00 9.3
Still, deal managers were able to bring in
5 Credit Agricole 115 36,780.75 6.7 5 BNP Paribas 9 905.06 9.2
pricing substantially last Monday, even with
6 SG 94 33,735.45 6.1 6 RBC 7 682.53 6.9
THEûREDUCTIONûINûTHEûSPREADûOFFEREDûATû)04S
7 Deutsche Bank 93 29,551.50 5.4 7 Lloyds Bank 5 569.93 5.8
h%VENûTHOUGHûWEûSTARTEDûONLYûBPnBPû
8 UniCredit 86 26,344.17 4.8 8 Citigroup 4 551.34 5.6
back, it won’t stop us from moving hard
9 BofA Securities 78 25,332.84 4.6 9 Deutsche Bank 2 297.89 3.0
given the quality and size of book,” said a
10 Citigroup 62 21,243.85 3.9 10 BofA Securities 3 241.02 2.5
lead on one of Monday’s deals
Total 491 550,749.21 Total 22 9,823.77
One issuer to offer a little less spread at
Excluding ABS/MBS, equity-related debt.
)04SûLASTû-ONDAYûWASûJC DECAUX, whose Baa2/ Source: Refinitiv SDC code: N9
Source: Refinitiv SDC code: N8a
35
International Financing Review April 25 2020
!SûWELLûASûANNOUNCINGû)04SûOVERûMID LISTEDû&IRMENICHû0RODUCTIONSû0ARTICIPATIONSû WITHûAûõMûLONGû YEARûPRINTûVIAûJOINTû
swaps, the issuer borrowed from high-yield announced a dual-tranche October 2026 and lead managers BNP Paribas, Citigroup, HSBC
marketing tactics, also indicating a yield of !PRILû and JP Morgan
THEûûAREA Not only does this give a borrower access Despite not qualifying for the ECB’s bond
h4HEREûISûAûREASONûYOUûTALKûABOUTûYIELDûnû to the European Central Bank’s bond buying BUYINGûPROGRAMMESû!0!Sû*ULYûûSû
because it looks big and it is eye-catching,” PROGRAMMESû3WISSûNAMESûlNDûITûBENElCIALû ATTRACTEDûMOREûTHANûõBNûOFûORDERS
said a second syndicate banker away from because tax laws prevent domestic This enabled the leads to upsize the deal
THEûTRANSACTION corporates from issuing euro-denominated FROMûõMûANDûPRICEûITûWELLûINSIDEûBPn
!LTHOUGHûTHEûWIDEûSPREADûOFFEREDûmIESûINû bonds directly from the country in an 260bp initial guidance at mid-swaps plus
the face of recent trades that have seen new EFlCIENTûMANNER 210bp, though this still represented a new
issue spreads ratcheted in as market 4HEûISSUERûTOOKûANûEVENLYûSPLITûõBNû issue premium of about 25bp, according to
CONlDENCEûHASûCONTINUEDûTOûBUILDûITûWASû WITHûITSûlRSTûFORAYûINTOûEUROSûANDûRAISEDûAû BANKERS
considered the right approach given the COMBINEDûBOOKûINûEXCESSûOFûõBNûWITHûAû 4HEûBONDûOFFERINGûVIAûSUBSIDIARYû!04û
ISSUERSûCREDITûPROlLE SLIGHTûSKEWûTOWARDSûTHEûLONGERûTRANCHEû 0IPELINESûADDEDûTHREEûYEARSûTOûTHEûISSUERSû
“It is still the case that in this 3PREADSûWEREûTAKENûINûBPûANDûBPnBPû EUROûCURVE
environment a high-spread name needs that LANDINGûATûBPûANDûBPûCitigroup and
EXTRAûJUICEvûSAIDûAû$#-ûBANKERûh)TSûRATINGû UBSûSOLDûTHEûBONDS DEUTSCHE WOHNEN BUILDS CHUNKY
has been falling and its business is under Given the lack of an existing curve, BOOK ON QUALITY AND RARITY
PRESSUREûFROMûTHEûLIKESûOFû!MAZONv bankers looked to issuers such as Givaudan
Although the spread of the novel !n ûANDû,ONZAû""" ûBOTHûOFûWHICHûHAVEû DEUTSCHE WOHNEN‘s strong credit rating and
coronavirus has been a boon for many food SOLDûBONDSûRECENTLYûFORûCOMPARABLES relative scarcity in the benchmark market
retailers, Auchan’s business was under “Actually, a lot of issuers have curves that HELPEDûITûLANDûAûNEARûõBNûPEAKûORDERûBOOKû
pressure before the outbreak and it is DONTûREALLYûREmECTûREALITYûATûTHEûMOMENTûSOû on its return to primary market funding last
UNLIKELYûTOûFEELûMUCHûBENElT not having one at all isn’t too much of an &RIDAY
“Some exceptional costs are likely to ISSUEvûSAIDûAûSECONDûBANKER Having an issuer that has little
MITIGATEûTHEûTOPûLINEûBENElTSûINCLUDINGûANû “It’s more useful to be looking at where outstanding debt but a very strong rating is
extraordinary bonus to employees granted RECENTûISSUESûHAVEûCOMEv a recipe for robust demand in a market that
INû-ARCHvûSAIDû30 0ROCEEDSûFROMûTHEûNEWûISSUEûWILLûBEûUSEDû still shows a preference for more highly
“Furthermore, we believe Ceetrus’ TOûlNANCEûTHEûACQUISITIONûOFû$24û RATEDûNAMESûSAIDûAûLEAD
(Auchan Group’s real estate subsidiary) announced on March 6, and for general Signs of strong investor interest for the
earnings are likely to be affected in 2020, CORPORATEûPURPOSES TWOûõMûNO GROWû!PRILûSûANDû!PRILû
since it has already agreed to delay some “Our inaugural bond placement 2030s came quickly when leads announced
RENTûPAYMENTSv represents an important moment in AûBOOKûOFûOVERûõBNûINûTHEûEARLYûMORNING
Auchan was looking to access the bond &IRMENICHSû YEARûHISTORYû7EûAREû “Having a really decent order book so
market as part of its liquidity management, extremely happy with the support received early on is a good sign,” said a banker away
ACCORDINGûTOûTHEûBORROWER from a wide range of institutional FROMûTHEûDEAL
Starting wide appeared to work as an INVESTORSvûSAIDû0ATRICKû&IRMENICHûCHAIRMANû Although the German property company
execution strategy, with bankers able to cut OFûTHEûBOARD !!n ûREGULARLYûFUNDSûVIAûPRIVATEû
THEûSPREADûTOûAûlNALûBPûWITHûAûBOOKûOFû “This funding will enable us to continue placements it has not been active in senior
õBNûANDûSIZEûTHEûDEALûATûõBN investing in strategic growth and business BENCHMARKSûSINCEû
Natixis was global coordinator and Credit development opportunities,” said CEO h4HEû00ûMARKETûHASûBEENûAûGREATûSOURCEûOFû
Agricole, Commerzbank, HSBC, Societe Generale 'ILBERTû'HOSTINE funding for them, but the public market has
and UniCreditûWEREûBOOKRUNNERS ,ASTû4HURSDAYSûBONDûWASûNOTûONLYû the advantage of providing size in one
&IRMENICHSûlRSTûAPPEARANCEûINûTHEûEUROû transaction,” said a second banker involved
FIRST-TIME FIRMENICH FINDS TRACTION market but also only its second ever public INûTHEûDEAL
IN EURO IG PRIMARY issue, following a Swiss franc transaction on “They could have issued in public format
!PRILû over the [preceding] years if they had
The warm reception encountered by 2AISINGû3&RMû53M ûWITHûAûû WANTEDûTOûHAVEûGREATERûLIQUIDITYv
FIRMENICH‘s inaugural euro benchmark, May 2023, that deal marked the largest The book kept growing to eventually
LAUNCHEDûONLYûAûDAYûAFTERûITSûlRSTûEVERûPUBLICû single-tranche Swiss franc corporate new REACHûõBNûWHICHûALLOWEDûLEADûMANAGERSû
issue in the Swiss market, was seen as ISSUEûSINCEûûACCORDINGûTOûAûLEADûBANKER TOûlXûTHEûSPREADSûATûSWAPSûPLUSûBPûANDû
further proof of the investment-grade The company chose the 2023 maturity in BPûDOWNûFROMû)04SûOFûTHEûBPûAREAû
MARKETSûGROWINGûSTRENGTH order to avoid the euro maturities and have ANDûTHEûBPûAREA
h7HENûYOUûCONSIDERûWEûAREûHAVINGûlRST AûSMOOTHûCURVEûBETWEENûCURRENCIESûHEûSAID 4HEûlNALûCOMBINEDûBOOKûWASûCLOSEûTOû
time names coming to the market, it does õBNûWITHûAûSLIGHTûSKEWûTOûTHEûLONGERû
show you that actually we are in quite good APA PAYS UP FOR EURO EXTENSION BOND
shape,” said a banker away from Thursday’s Given the lack of an established curve, the
TRADE Australian energy infrastructure company leads based pricing on investor feedback,
“Access isn’t an issue at the moment, it APA GROUPûRATEDû"AA"""û-OODYS30 û FOLLOWINGûTWOûDAYSûOFûCALLSûEARLIERûLASTûWEEKû
seems, and trades have performed in the returned to the euro market last Thursday 4HEYûUSEDûBONDSûFROMû,%'ûANDû6ONOVIAûASû
SECONDARYûASûWELLv AFTERûAûlVE YEARûABSENCEûANDûPAIDûAûCHUNKYû COMPARABLES
Broadening the list of foreign borrowers CONCESSIONûFORûTHEûPRIVILEGE The upcoming maturity of the issuer’s
issuing through eurozone-domiciled !0!ûFOLLOWEDûBENCHMARKûEUROûISSUANCEû ONLYûSENIORûBENCHMARKûAûõMûû
ENTITIESû3WISSûFRAGRANCEûANDûmAVOURûMAKERû from compatriot corporates Transurban, July 2020 issued in 2015, is part of the
&IRMENICHû"""û30 ûFUNDINGûVIAû&RANCE Toyota Australia and Telstra earlier in April, reason behind its return to the market,

BONDS CORPORATES
said leads, as well as general corporate

PURPOSES
Deutsche Bank, Goldman Sachs, JP Morgan
ACTEDûASûGLOBALûCOORDINATORSûANDûWEREûJOINEDû
Yen bond pipeline runs dry
by BNP Paribas and UniCreditûASûBOOKRUNNERS CORPORATES/FINANCIALS Asset managers stay cautious and bankers struggle
Investors’ preference for highly rated to adapt to home working
credits was also born out by the execution
for HOLDING D’INFRASTRUCTURES DE TRANSPORT Yen bond bankers are hoping for a rebound in and Chubu Electric Power were especially
"""n""" ûWHICHûATTRACTEDûAûMUCHûSMALLERû cross-border issuance after the looming Golden popular, according to DealWatch, IFR’s sister
BOOKûATûAûMUCHûWIDERûSPREAD Week holidays, amid signs that Japanese publication.
The French toll road operator comes from investors have begun to return to new domestic Asset management companies prefer the
a sector that is experiencing declining deals. three-year tenor as it receives support from the
revenues as the number of road users Only four foreign issuers have sold yen Bank of Japan, which last month said it would
DWINDLESûUNDERûLOCKDOWN bonds since the start of 2020, in stark contrast buy an additional ¥1trn of corporate bonds with
“Moody’s current base case assumption is to the first quarter last year, when global up to three years to maturity to support the
that the coronavirus pandemic will lead to a banks flocked to the yen market to top up their market.
PERIODûOFûSEVEREûCUTSûINûTRAFlCûOVERûTHEû loss-absorbing issuance before a rule change A third banker is focusing more on regional
UPCOMINGûWEEKSûREmECTINGûTHEûSIGNIlCANTû capped Japanese buying in the format. investors, such as specialised shinkin banks
restrictions on travel, but that there will be Huge swings in rates and credit spreads and regional lenders. Unlike asset managers
AûRECOVERYûINûTRAFlCûVOLUMESûINûTHEûSECONDû in the wake of the coronavirus outbreak have who look at relative values compared with
half of 2020,” said the ratings agency in a forced some overseas issuers to reconsider their dollar/euro bonds and hence often ask for
RECENTûSECTORûOVERVIEW yen funding plans. US medical device company extra spreads over issuers’ dollar/euro curves,
Despite worries surrounding the sector, MEDTRONIC, which held non-deal roadshows regional investors focus on relative value
the borrower offered enough spread to in Tokyo in January and was rumoured to be compared with domestic bonds.
BRINGûINûAûBOOKûOFûõBNûANDûTIGHTENû targeting a deal in March, has not yet launched “Medium-term senior non-preferred bonds
PRICINGûBYûBPûTOûLANDûATûBP an offering. recently priced by French banks in euros are
4HEû-AYûûBONDûWASûSIZEDûATûõMû BNP Paribas and BPCE, both frequent equivalent to near 100bp over yen offer-side
and sold by BNP Paribas, Credit Agricole, HSBC, Samurai issuers, have recently sold bonds in swaps, so I believe regional investors are happy
Natixis and Societe Generale euros. to buy,” he said.
“European banks can rely on the targeted
long-term refinancing operations [TLTROs], so REMOTE WORKING
STERLING perhaps they are not so keen to issue bonds in One potential problem foreign issuers may
yen now,” said a syndicate banker in Tokyo. face comes from remote working. Japanese
TESCO EASES THROUGH FAIR VALUE financial institutions have had to change their
ASSET MANAGERS ABSENT way of working after the government declared
The lower end of the Triple B sector in the Japanese investors have also reined in their a state of emergency in a bid to curb the spread
STERLINGûMARKETûEASILYûPASSEDûITSûlRSTûTESTû risk appetite. Sources said asset managers had of Covid-19, but many have yet to comfortably
with a 10-year deal from TESCO pricing inside suffered unrealised losses in credit products adapt.
FAIRûVALUE – especially subordinated bonds – and are yet “Even some big accounts are not ready for
!ûRELATIVEûLACKûOFûSUPPLYûINûTHEûMARKETûnû to fully return to the market. Banks, insurers remote working, which was a bit surprising to
especially compared with its euro and other investors, too, are reluctant to me,” said a fourth banker.
COUNTERPARTûnûMEANTûINVESTORSûWEREûMOREû add to their positions while the extent of the With the state of emergency now extended
than happy to put in orders for the retailer, coronavirus impact remains unclear. to the entire country since April 17, regional
whose business has performed well during According to the Japan Securities Dealers investors too may need to adopt remote
THEû#OVID ûPANDEMIC Association’s latest data tracking secondary working.
Tesco took out its maximum target size markets, trust banks sold a net ¥10.3bn “I am a bit worried that some investors
with the £450m April 2030 note after books (US$95m) of Samurai bonds in March. Foreign might not be able to get internal approval in
WEREûNEARLYûûTIMESûSUBSCRIBED accounts logged an even bigger ¥26.3bn of net time, so it is a nerve-racking question whether
“It was good timing,” said a banker away sales in Samurai bonds. to shorten the marketing period.”
FROMûTHEûTRANSACTIONûh)TSûAûBUSINESSûTHATû There were some signs of interest in high- The number of deals so far this year is less
has defensive properties and there are good rated global credits: Aflac sold yen bonds in than it was in the same four-month period
numbers out there in terms of supermarket March, as did Berkshire Hathaway in April. in 2018, when seven issuers tapped the yen
SALESûlGURESû4HEûRECENTûSTERLINGû Syndicate bankers, however, believe more asset market.
transactions from National Grid, Guinness managers need to resume investing in order to First-time issuers and lower-rated names
and Thames Water all went well, so it was bring foreign issuers back to the yen market. are also off the cards while investors work from
the right time for someone a bit lower down “To be honest, without asset managers, it’s home. The fourth banker said lesser-known
THEûRATINGûSCALEûTOûCOMEv hard for us to give potential issuers an idea how issuers may find it hard to raise a large amount
4ESCOûSAWûSALESûSOARûûINûTHEûTHREEû much they would be able to raise by selling yen until investors become more comfortable
weeks before the country went into bonds,” a second banker said. working from home.
lockdown to contain the spread of the However, some do see the light at the end of “As investors are still struggling to adapt to
CORONAVIRUS the tunnel. In the domestic market, the biggest remote working, it may be difficult to do a huge
Its share price has also remained relatively asset management firms have cautiously deal in yen now, and it also depends on an
STABLEû)Nû&EBRUARYûITûWASûQUOTEDûATûPûPERû resumed purchases. The three-year tranches of issuer’s name recognition.”
SHAREûBEFOREûDROPPINGûTOûPûINûMID -ARCHû recent domestic deals from East Japan Railway Takahiro Okamoto
)TûHASûSINCEûRECOVEREDûTOûP

The issuer began marketing the bond at The pricing put the bond around 10bp the issuer printed NKr1bn for each, at plus
THEûBPûAREAûOVERû'ILTS INSIDEû&LUGHAFENû:URICHSû3WISSûFRANCûCURVEû BPûANDû
,EADSûCIRCULATEDûCOMPARABLESûINCLUDINGû WITHûITSûûSûQUOTEDûATûBPûOVERû 4HEûLEADûSAIDûTHEûlNALûLEVELSûWEREûWIDERû
Tesco’s May 2025s, seen at 214bp, and mid-swaps ahead of the announcement and than what they would have been before the
Morrisons’ July 2029s and October 2031s, ALLOWINGûFORûAûCURVEûOFûBPûPERûANNUM #OVID ûPANDEMIC
SEENûATûBPûANDûBPûRESPECTIVELY More than 100 accounts took part, half of However, he said, the tremendous
Morrisons is rated a notch higher by them asset managers, with private banks demand proved investors still perceive
Moody’s at Baa2, compared with Tesco’s TAKINGûJUSTûOVERûûANDûPENSIONûFUNDû Avinor as vital infrastructure for Norway
"AA"""n"""nûRATINGS It is likely that proceeds will go towards ANDûAREûCONlDENTûTHEûIMPACTûOFûTHEû
The banker away from the deal saw fair RElNANCINGûAûMATURINGû3&RMûû PANDEMICûWILLûBEûTEMPORARY
value for Tesco’s new issue around 260bp, eight-year from 2012 that comes due in “Norway will open soon and Avinor will
WHILEû#REDIT3IGHTSûANALYSTSûPUTûITûATûBP EARLYû*ULY BEûBACKûUPûANDûRUNNINGvûHEûSAID
4HEûlNALûSPREADûLANDEDûBPûINSIDEû)04Sû Credit Suisse and ZKB WEREûJOINTûLEADSûONû The dual-tranche deal covers the issuer’s
at 245bp, which marked the tight end of THEûLATESTûDEALûRATEDû!!nûBYû30 IMMEDIATEûNEEDSû4HATûSAIDûTHEREûISûAûGOODû
lNALûGUIDANCEû0RE RECONCILEDûBOOKSûREACHEDû chance Avinor could be back again in kroner
OVERûaBN or euros, depending on the depth of the
Tesco issued twice last year, placing the NON-CORE CURRENCIES #OVID ûCRISIS
aMûû-AYûSûINû!PRILûANDûAûõMû Airports have felt the full brunt of the
û-AYûûBONDûINû.OVEMBER EASY LANDING FOR AVINOR’S KRONE UNPRECEDENTEDûDECLINEûINûAIRûTRAFlCûTHEû
The positive result for the new issue came RETURN CORONAVIRUSûCRISISûHASûTRIGGEREDûGLOBALLYû
after Tesco moved to defend its decision to Ratings agencies expect European airports
pay investors a £635m dividend while AVINOR refreshed its domestic curve with its WILLûHAVEûMATERIALLYûWEAKERûCASHmOWSûANDû
accepting business tax relief from the UK lRSTû.ORWEGIANûKRONEûISSUANCEûINûSEVENû CREDITûRATIOSûASûAûRESULT
government aimed at helping distressed YEARSûONû7EDNESDAYû4HEûSTATE OWNEDû In March, Moody’s placed Avinor’s A1
RETAILERSûTHROUGHûTHEûCORONAVIRUSûCRISIS airport operator raised NKr2bn (US$186m) (stable) long-term issuer rating on review for
Tesco said on April 8 that if trading through a new senior unsecured dual- DOWNGRADEûWHILEû30ûLOWEREDûITSûLONG TERMû
returned to normal by August, it was likely tranche transaction split across six-year and RATINGûBYûONEûNOTCHûTOû!ûNEGATIVE
THEûEXTRAûEXPENSESûFORûITSûRETAILûOPERATIONSûnû YEARûMATURITIES Danske Bank, DNB Markets, Nordea and SEB
mainly staff, store and distribution costs Before this deal, Avinor only had two WEREûTHEûBOOKRUNNERSû
nûWOULDûBEûOFFSETûBYûHIGHERûFOODûSALESûANDû outstanding bonds denominated in its
£585m of business rates relief from the DOMESTICûCURRENCYû)TSûRETURNûCAMEûAHEADûOFû
GOVERNMENT THEûREDEMPTIONûOFûITSû.+RMûûONû
#%/û$AVEû,EWISûSAIDû4ESCOûhTHOUGHTûLONGû -AYû
and hard about our responsibilities” and Ever since it sold those two deals in 2013, FIG
DECIDEDûITûWASûJUSTIlEDûINûPAYINGûAûPûlNALû !VINORûHASûFAVOUREDûEUROSû)TûWASûLASTûSEENû
dividend to shareholders while being in INûTHEûSINGLEûCURRENCYûINû
RECEIPTûOFûTAXPAYERSûMONEY A bookrunner said the choice of kroner US DOLLARS
He said investors, both large and small, made sense, given the size of the transaction
relied on the dividend income, which was and the fact that the pricing Avinor could NATIONWIDE MUTUAL PULLS SURPLUS
for the year ended February 29 and so pre- achieve in its domestic market is tighter NOTE AS INVESTORS BALK
DATEDûTHEûCRISIS THANûEUROûLEVELS
$ESPITEûTHEûPANDEMICû,EWISûSAIDû4ESCOû “At the moment the euro market has NATIONWIDE MUTUAL pulled a 40-year non-call
STILLûEXPECTEDûTOûCOMPLETEûTHEûaBNûSALEûOFû done really well, but at substantially higher 30 surplus bond it was marketing in the US
its Asian business in the second half of the spreads and new-issue premiums, whereas high-grade primary market last Monday, as
YEAR within the domestic market Avinor is seen INVESTORSûWEREûUNSATISlEDûWITHûTHEû
Citigroup, Commerzbank, HSBC and NatWest ASûAûLOCALûCHAMPIONvûHEûSAID PREMIUMûOFFEREDûATûINITIALûPRICEûTHOUGHTS
MarketsûWEREûBOOKRUNNERSûFORûTHEûBOND “The trust and belief that the government Bookrunners Bank of America, JP Morgan
will be there for Avinor is a little higher and Wells Fargo started price talk in the area
AMONGûDOMESTICûISSUERSv OFûBPûOVERû4REASURIESû
SWISS FRANCS Avinor indicated minimum sizes of That represented an 85bp premium over
.KRMûEACHûFORûTHEûmOATERûANDûlXED RATEû WHEREûPEERSû.9û,IFEû!A!!n!! ûANDû-ASSû
FLUGHAFEN ZURICH’S LATEST DEAL FLIES note, with initial price thoughts at plus -UTUALû!!!n!!n ûPRICEDûINûRECENTûWEEKSû
140bp area over three-month Nibor for the but it was not enough to account for
FLUGHAFEN ZURICH launched its latest bond on SIX YEARûANDûATûûAREAûFORûTHEû YEAR possible downgrade risks at Nationwide,
Tuesday after an investor call the previous The bookrunner said these initial levels INVESTORSûSAIDû
DAYûPRICINGûINSIDEûITSûCURVEûTOûRElNANCEûANû REmECTEDûFAIRûVALUEûFORûBOTHûTRANCHESû .ATIONWIDEûISûRATEDû!!nûBYû-OODYSûANDû
UPCOMINGûMATURITY notwithstanding the lack of krone 30ûRESPECTIVELYûBUTûINVESTORSûAREû
!ûFOUR YEARûDEALûWASûINDICATEDûATû)04SûOFû COMPARABLES SPECULATINGûITûCOULDûFALLûTOû4RIPLEû"
MID SWAPSûPLUSûBPnBPûBEFOREûBOOKSû With combined books soaring north of h4HEûPRICINGûDIDûNOTûREmECTûTHEûLOWERû
OPENEDûTIGHTERûATûBPnBPûFORûAû .+RBNûnû.+RBNûFORûTHEû&2.ûnû!VINORûWASû credit quality versus other deals from New
MINIMUMû3&RMû53M û&INALû ABLEûTOûTIGHTENûPRICINGûWITHûlNALûGUIDANCEû 9ORKû,IFEûANDû-ASSû-UTUALvûONEûINVESTORû
GUIDANCEûWASûRELEASEDûATûBPnBPûWITHû OFûBPnBPûANDûn SAID
a SFr300m transaction priced at the tight 4HEûTRANCHESûPROJECTEDûSIZESûWEREûPUTûATû Additionally, surplus notes and an
ENDûEQUIVALENTûTOûBPûOVERûGOVERNMENTû .+RBNn.+RBNûFORûTHEû&2.ûANDû unusual call option added complexity to the
BONDSûWITHûAûûCOUPONûANDûYIELD .+RMn.+RBNûFORûTHEûlXEDû)NûTHEûENDû DEALû3OMEûINVESTORSûALSOûCOMPLAINEDûTHATû

BONDS FIG
THEûCOMPANYûHASûNOTûHOSTEDûlXEDûINCOMEû "ANKûOFû!MERICAûGAVEûUPûJUSTûBPûOFûNEW “The 20-year part of the credit spectrum is

calls since its last deal in November, which issue concession, with the spread landing at very technical,” said David Knutson, head of
COULDûHELPûEXPLAINûTHEûSTRUCTUREû BPûOVERû4REASURIESû&OLLOW ONûDEMANDû CREDITûRESEARCHûATû3CHRODERS
Initial price talk was probably based off saw this tighten to 188bp over in early “I see some grabby moves tighter today in
comparable surplus notes outstanding, but TRADINGûACCORDINGûTOû-ARKET!XESSûDATA THATûTERMûFORû*0û-ORGANûANDû"ANKûOFû
investors viewed that market as highly At that level, Bank of America was trading !MERICAv
ILLIQUIDûMARKETûPARTICIPANTSûSAIDû ONLYûSLIGHTLYûWIDEûOFû*0û-ORGANûWHICHûJUSTû
Instead, investors were pricing off of the week prior priced a record-breaking
Nationwide’s outstanding senior 2049s, 53BNûFOUR PARTûDEAL EUROS
which were trading in the 250bp context, 4HEû*0û-ORGANûTRANSACTIONûINCLUDEDûAû
ACCORDINGûTOû-ARKET!XESSûDATAû 53BNû YEARûNON CALLûûTRANCHEûTHATû SWEDBANK LEVERAGES PRICE WHILE
Adding the surplus notes and a non-call priced at 190bp over but has since tightened WELLS FARGO TAKES SIZE
option would typically cost the issuer at TOûBPûACCORDINGûTOû-ARKET!XESSûDATA
least an additional 15bp each over a regular MORGAN STANLEY and WELLS FARGO followed SWEDBANK secured a tightly priced senior
senior bullet in a good market, one BofA on Thursday, with a US$3bn bond and preferred transaction on Friday, while WELLS
SYNDICATEûBANKERûAWAYûFROMûTHEûDEALûSAID Aû53BNûTWO PARTûTRANSACTIONû FARGOûGUNNEDûFORûSIZEûPRINTINGûAûõBNû
Before even accounting for the lower RESPECTIVELY SENIORûDUOûJUSTûAûDAYûAFTERûHITTINGûITSû
credit quality, investors felt the bond was Both banks launched US$3bn six-year DOMESTICûMARKET
BEINGûMARKETEDûESSENTIALLYûmATûTOû NON CALLûlVEûlXED TO mOATûNOTESûATûBPû Swedbank’s leads Bank of America,
Nationwide’s existing curve given the OVERû4REASURIES Deutsche Bank, JP Morgan, Natixis, Swedbank
ADDITIONALûRISKSûINVOLVED Wells Fargo’s second tranche was a and UBS OPENEDûBOOKSûFORûTHEûõBNû
“Combining what I would call lower 53BNû YEARûNON CALLûûTHATûWASûPRICEDû lVE YEARûTRANSACTIONûWITHûINITIALû
demand for that sort of credit with a less- ATûBPûOVERû4REASURIES price thoughts of mid-swaps plus
loved structure was always going to be a 3PREADSûTIGHTENEDûBPnBPûACROSSûALLû BPnBP
tougher sell than the bullet offerings from the tranches, limiting what initially looked 'UIDANCEûWASûSETûATûBPnBPûFORûAû
.9û,IFEûANDû-ASSû-UTUALvûTHEûBANKERûAWAYû LIKEûLARGEûCONCESSIONSûTOûJUSTûBPnBPûOVERû MAXIMUMûSIZEûOFûõBNûBEFOREûTHEûSPREADû
FROMûTHEûTRANSACTIONûSAID THEIRûRESPECTIVEûSECONDARYûCURVES WASûlXEDûATûBPû"OOKSûWEREûREPORTEDûATû
Books built to around US$750m before 7ELLSû&ARGOûMAINTAINEDûAûRELATIVELYûmATûCURVEû ABOVEûõBNûWHENûTERMSûWEREûSET
the deal was pulled, according the banker ATûJUSTûBPûDIFFERENCEûBETWEENûTHEûSIX YEARûANDû Some bankers argued Swedbank paid no
AWAYûFROMûTHEûOFFERINGû.ATIONWIDEûDIDûNOTû YEARûBONDSûTHROUGHûPRICEûPROGRESSION NEWûISSUEûCONCESSIONû4HEYûSAWûFAIRûVALUEû
specify a size it was looking for, but all of its h)TûUNDERSCORESûHOWûmATûISSUERûCREDITû for the new bond at around 100bp, citing
previous surplus notes have been between curves remain, but there has been some 3WEDBANKSûû!UGUSTûSûINûTHEûLOWûTOû
53MûANDû53MûINûSIZEû modest steepening and we’re no longer MIDûS
Had it priced, this would have been the seeing the depths of the March inversion,” )TûWOULDûBEûTHEûlRSTûBANKûTOûPRINTûAûEUROû
lRSTûSURPLUSûBONDûWITHûAû YEARûCALLûOPTIONû #REDIT3IGHTSûNOTEDûINûAûREPORT benchmark inside fair value since the
SINCEû30ûCHANGEDûITSûMETHODOLOGYûINû*ULYû Compared to similar recent 20-year bonds reopening of the primary market after the
ûACCORDINGûTOûTHEûSYNDICATEûBANKER from JP MORGAN and BANK OF AMERICA, Wells CORONAVIRUSûCRISIS
4HATûCHANGEûATû30ûALLOWSûûEQUITYû &ARGOSûOFFEREDûSOMEûPICK UPûFORûINVESTORS Deals landing inside fair value were
credit up until the last 10 years before &ORûEXAMPLEû*0û-ORGANSûûû relatively commonplace in the more
maturity, whereas the prior rules dropped from the previous week was trading at in accommodating market conditions that
EQUITYûCREDITûûYEARSûTOûMATURITY THEûBPûCONTEXTûWHILEû"OF!Sûûû ISSUERSûENJOYEDûLASTûYEARûANDûEARLYûTHISûYEARû
“In truth, it’s not a bad idea to try that was trading around 185bp over prior to but to do so now is a notable achievement,
STRUCTUREûBUTûITSûJUSTûAûHARDERûSELLûINûTHISûKINDû 4HURSDAYûACCORDINGûTOû-ARKET!XESSûDATA BANKERSûSAID
OFûMARKETûFORûTHATûNAMEvûTHEûBANKERûADDEDû 7ELLSû&ARGOûLANDEDûWIDEûOFû*0û-ORGANûANDû However, other bankers saw fair value
Bank of America as expected but there was slightly tighter, arguing Swedbank paid a
LARGE US BANKS TAKE SIZE not a lot of daylight between them at the CONCESSIONûOFûBPnBPûREFERENCINGûMOREû
LONGûENDû#REDIT3IGHTSûADDED RECENTûNEWûISSUES
The big six US banks have not been shy in
ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
their efforts to raise money in the capital
BOOKRUNNERS: 1/1/2020 TO DATE BONDS (ALL CURRENCIES)
markets amid the Covid-19 pandemic,
Managing No of Total Share BOOKRUNNERS: 1/1/2020 TO DATE
ADDINGû53BNûINûSUPPLYûLASTûWEEK
bank or group issues €(m) (%) Managing No of Total Share
The group of six have raised US$85bn in
1 Credit Agricole 24 8,801.63 12.1 bank or group issues US$(m) (%)
the IG market so far this year, which is a
2 SG 17 5,762.25 7.9 1 Citigroup 9 1,871.16 13.5
ûINCREASEûYEAR OVER YEARûCOMPAREDûWITHû
3 BNP Paribas 18 5,389.29 7.4 2 Credit Agricole 4 1,760.17 12.7
THEû53BNûTHATûWASûPRICEDûOVERûTHEû
4 Natixis 10 5,024.03 6.9 3 HSBC 6 1,117.15 8.1
SAMEûPERIODûLASTûYEARûACCORDINGûTOû)&2ûDATA
5 Deutsche Bank 19 4,583.89 6.3 4 Goldman Sachs 5 901.78 6.5
BANK OF AMERICA priced a US$3bn 11-year
6 Barclays 18 4,508.21 6.2 5 BofA Securities 4 892.89 6.4
non-call 10 bond last Wednesday, adding
7 JP Morgan 23 4,387.42 6.0 6 BNP Paribas 4 776.99 5.6
more liquidity to its balance sheet to
8 HSBC 17 2,837.08 3.9 7 JP Morgan 4 773.59 5.6
weather the Covid-19 pandemic’s effects on
9 Lloyds Bank 4 2,640.45 3.6 8 Barclays 5 690.53 5.0
THEûECONOMY
10 Santander 16 2,514.69 3.5 9 Morgan Stanley 4 651.08 4.7
)TûWASû"ANKûOFû!MERICASûlFTHûTIMEû
Total 109 72,560.23 10 Santander 3 541.89 3.9
coming to the US high-grade bond market
THISûYEARûHAVINGûALREADYûRAISEDû53BNû Including banks, insurance companies and finance companies. Excluding Total 16 13,867.55
equity-related and covered bonds. Excluding publicly owned institutions.
YEAR TO DATEûACCORDINGûTOû)&2ûDATA Source: Refinitiv SDC code: N11 Source: Refinitiv SDC code: J3a

The deal follows the release of “The market was okay today but not “We could take further negative rating
3WEDBANKSûlRST QUARTERûRESULTSûONû exactly brilliant, so it is a great outcome,” actions if we expect the cyclical economic
4HURSDAY SAIDûAûSYNDICATEûBANKERûAWAYûFROMûTHEûDEAL recovery to be substantially weaker or
7ELLSû&ARGOûMEANWHILEûBECAMEûTHEûlRSTû “It shows the senior preferred market is a delayed, as this would imply a far more
REVERSEû9ANKEEûISSUERûTOûCOMEûTOûTHEûEUROû GOODûMARKETûFORûBUYERSûATûTHEûMOMENTûûITû negative effect on bank credit strength,”
MARKETûFOLLOWINGûTHEûRELEASEûOFûlRST QUARTERû ISûTHEûEASIESTûPRODUCTûTOûGOûFORv WROTEû30
RESULTS “Actions could also follow idiosyncratic
!ûõBNûlVE YEARûNON CALLûFOURûTRANCHEû COMMERZBANK HEADLINES S&P NEGATIVEûDEVELOPMENTSûATûINDIVIDUALûBANKSû
was launched at mid-swaps plus 160bp, BANK RATING CUTS While far from being the only factor, bank
inside initial price thoughts of the plus asset quality is the key unknown and will be
BPûAREAûANDûGUIDANCEûOFûBPûAREAûn 30ûHASûTAKENûNEGATIVEûRATINGûACTIONSûONû central to our view of the resilience of
BPû70)2 û"OOKSûWEREûREPORTEDûABOVEûõBNû multiple banks in various European %UROPEANûBANKSv
ATûLAUNCH JURISDICTIONSûWITHûCOMMERZBANK standing out 4HEûMAJORITYûOFûTHEûBANKSûAFFECTEDûINûTHEû
!ûõBNû YEARûNON CALLûNINEûTRANCHEû ASûTHEûMOSTûGRAVELYûAFFECTED update saw their outlooks shifted to
LANDEDûATûBPûINSIDEûBPûAREAû)04SûANDû The ratings agency shifted its position on NEGATIVEûFROMûSTABLE
GUIDANCEûOFûTHEûBPûAREAûnBPû70)2 û BANKSûINûNOTûJUSTû'ERMANYûBUTûALSOû"ELGIUMû
ONûMOREûTHANûõBNûOFûORDERS France, Malta, the Netherlands and the UK,
4HEûõBNûEUROûTRANSACTIONûCAMEûJUSTûAûDAYû as it assessed the deterioration of economic
AFTERû7ELLSû&ARGOûPRINTEDûAû53BNûDUAL conditions in the face of the Covid-19
tranche offering comprising a six-year PANDEMIC COVERED BONDS
NON CALLûlVEûANDûAû YEARûNON CALLû The biggest casualty of the changes was
Bankers said that in order to access euros Commerzbank, as while other banks saw
ANDûACHIEVEûDIVERSIlCATIONûTHEûISSUERûPAIDû their outlooks downgraded, the German EUROS
UPûBPnBPûRELATIVEûTOûWHATûITûWOULDûHAVEû LENDERSûRATINGSûWEREûCUT
achieved with an equivalent US dollar Commerzbank saw its long-term issuer CRH BREAKS SILENCE BUT HOPES
TRANSACTION credit rating shunted down one notch to LOW FOR COVERED SUPPLY
“That’s a pretty modest premium to what """ûWITHûAûNEGATIVEûOUTLOOKû4HEûSAMEû
they’d pay in their home market,” said a level of downgrade was applied to CAISSE DE REFINANCEMENT DE L’HABITAT broke the
LEADûBANKER Commerzbank’s senior preferred, senior silence in the covered bond market last
Barclays, ING, Lloyds, Societe Generale and non-preferred, subordinated and hybrid WEEKûWITHûAûõBNûSEVEN YEARûISSUEûBUTû
Wells FargoûWEREûTHEûBOOKRUNNERS INSTRUMENTS expectations for supply remain low despite
The only other senior benchmark in the “The main event is the downgrade of a convergence of primary and secondary
euro market last week came from French Commerzbank, which could translate into SPREADS
ISSUERû"0#%ûONû-ONDAY PRESSUREûONû#OMMERZBANKû4IERûûSPECIlCALLYû CRH’s deal was the only euro benchmark
Sole bookrunner Natixis marketed the now rated Baa3/BB+/BB+ and therefore at risk COVEREDûTHATûWASûSOLDûLASTûWEEKûANDûTHEûlRSTû
lVE YEARûDEALûWITHûINITIALûPRICEûTHOUGHTSûOFû of exclusion from investment-grade indexes,” SINCEû!PRILû
THEûMID SWAPSûPLUSûBPûAREAû'UIDANCEû WROTEû".0ûANALYSTS The deal came after a stabilisation in euro
WASûREVISEDûTOûBPûnBPû70)2 ûFORûANû 30SûBASEûCASEûISûTHATûTHEûECONOMICû covered spreads, in what has been hailed an
EXPECTEDûSIZEûOFûõBN recovery will start in the third quarter of important step towards a healthier market,
!ûõBNûDEALûWASûSUBSEQUENTLYûLAUNCHEDû 2020, but even so it expects bank earnings, meaning the secondary market has caught
ATûBPûWITHûBOOKSûTOPPINGûõBNûWITHûû asset quality, and in some cases, UPûWITHûPRIMARY
ACCOUNTSûINûPRE RECONCILIATION capitalisation, to weaken materially through The reopening of the covered bond
Bankers said that to print a more than THEûENDûOFûTHEûYEARûANDûINTOû market last month, in the wake of
twice subscribed deal with a 30bp move Downside risks are substantial, although coronavirus-inspired volatility, saw new
FROMû)04SûTOûREOFFERûWASûANûIMPRESSIVEûRESULTû 30ûISûOBSERVINGûDIFFERENTIATEDûIMPLICATIONSû issues price more than 30bp wide of issuers’
on a morning when European stocks fell for banks within and across banking illiquid secondaries, which bankers said did
BACKûINTOûTHEûRED SYSTEMS NOTûREmECTûREALûDEMAND
Covered curves widened substantially
ALL GLOBAL AND EUROMARKET YEN BONDS ALL INTERNATIONAL YEN BONDS
over the course of March, gradually catching
up with the primary market, and have now
steadied, thanks in part to increased ECB
bank or group issues ¥(m) (%) bank or group issues ¥(m) (%)
PURCHASES
1 Mizuho 4 83,608.33 25.4 1 Mizuho 4 83,608.33 21.4 The iBoxx EUR Covered Index held at
2 Goldman Sachs 2 60,275.00 18.3 2 Sumitomo Mitsui 5 80,633.33 20.7 33bp around last week, a spread much
3 BofA Securities 1 48,875.00 14.8 3 Goldman Sachs 2 60,275.00 15.4 CLOSERûTOûPRIMARYûMARKETûCLEARINGûLEVELS
4 JP Morgan 1 48,875.00 14.8 4 JP Morgan 1 48,875.00 12.5 #2(SûLEADSûnûBarclays, Credit Agricole,
5 Mitsubishi UFJ MS 2 19,733.33 6.0 5 BofA Securities 1 48,875.00 12.5 LBBW, Natixis and Societe Generale nûMARKETEDû
6 Sumitomo Mitsui 2 19,733.33 6.0 6 Mitsubishi UFJ MS 2 19,733.33 5.1 the deal with initial guidance of mid-swaps
7 Credit Agricole 2 11,750.00 3.6 7 Credit Agricole 2 11,750.00 3.0 PLUSûTHEûBPûAREA
8 Wells Fargo 1 11,400.00 3.5 8 Wells Fargo 1 11,400.00 2.9
The spread was subsequently set at 31bp
9 Daiwa Securities 1 8,333.33 2.5 9 Daiwa Securities 1 8,333.33 2.1
ANDûTHEûSIZEûATûõBNûWITHûTHEûlNALûBOOKû
10 Nomura 1 8,333.33 2.5 10 Nomura 1 8,333.33 2.1 STANDINGûATûõBN PLUSûINCLUDINGûõMû
Total 6 329,250.00 Total 9 390,150.00 *,-ûINTEREST
Excluding equity-related debt. Including preferreds. Including all Euro, foreign and global issues. Excluding equity-related
debt. The bridging of primary and secondary
Source: Refinitiv SDC code: K10 Source: Refinitiv SDC code: K12 markets is a positive sign, bankers said, as is

BONDS COVERED BONDS
the fact that most deals priced since the SYNDICATEûBANKERûh3OMEûOFûTHESEû FORûOTHERûlNANCIALSûANDûCORPORATESûINûTHEû
markets’ reopening have begun to perform DIFFERENTIALSûDONTûMAKEûSENSEv SENIORûUNSECUREDûSECTOR
ANDûAREûNOWûQUOTEDûINSIDEûREOFFER A third syndicate banker said that at current One Sydney-based DCM manager detects
“Now the secondary market will gain differentials, covered bonds remained the no great desire among the Big Four to access
MOREûCREDIBILITYvûSAIDûAûSYNDICATEûBANKER cheapest to deliver funding instrument for wholesale bond markets in the near term,
“We’ll see more people referencing banks, even taking into account encumbrance however, given the availability of cheap
SECONDARYûLEVELSûFORûPRIMARYûRATHERûTHANûJUSTû COSTSû"UTûMOSTûBANKSûAREûLIKELYûTOûWAITûFORû ALTERNATIVEûSOURCESûOFûFUNDING
PRICINGûNEWûISSUESûONûTOPûOFûEACHûOTHERû)TSû SPREADSûTOûCOMEûINûHEûSAID “Deposits have been pouring in, while
a recalibration and a step towards a more they can borrow from the Reserve Bank of
HEALTHYûMARKETv WORTH THE WAIT? Australia’s A$90bn Term Funding Facility
However, bankers expect relatively few Many market participants expect covered FORûTHREEûYEARSûATûAûlXEDûINTERESTûRATEûOFûJUSTû
ISSUERSûTOûTAKEûADVANTAGE spreads to tighten further over the medium vûHEûSAID
to longer term, as the ECB’s ramped-up The DCM manager also pointed to
ALTERNATIVES AVAILABLE PURCHASEûPROGRAMMEûTAKESûEFFECTû4HEûLACKû UPCOMINGûHALF YEARûRESULTSûFROMû!.:ûONû
4HEûLACKûOFûSUPPLYûINûRECENTûWEEKSûREmECTSû of supply is also expected to further alleviate April 30 and National Australia Bank and
not only the onset of blackout periods, but ANYûWIDENINGûPRESSURE Westpac the following week as another
also that banks now have access to h$EALSûAREûDElNITELYûTHEREûTOûBEûDONEûû reason against imminent supply, alongside a
expanded, cheap funding programmes BUTûITSûQUITEûDIFlCULTûTOûRECOMMENDûTOûANû DESIREûTOûSEEûPRICINGûLEVELSûSETTLEûDOWN
from central banks, such as the ECB’s issuer they should be accessing this h!.:ûSOLDûAû53BNû YEARûNON CALLû
4,42/S MARKETvûSAIDûTHEûTHIRDûSYNDICATEûBANKER û4IERûûNOTEû9ANKEEûONû*ANUARYûûATû
In recent weeks, many banks have h)TSûDIFlCULTûTOûSAYûTHEREûWONTûBEûBETTERû 4REASURIESûPLUSûBPûWHEREASûAûNEWûMAJORû
focused on issuing retained covereds to use issuance conditions, whether that’s on an bank Tier 2 would have to pay around
ASûCOLLATERALûFORûSUCHûPROGRAMMESû3OMEû intraday basis or in terms of the overall BPvûHEûNOTED
õBNûOFûRETAINEDûCOVEREDûBONDSûWEREû spread picture, in the medium to longer 4HEûMAJORSûAREûREQUIREDûBYûREGULATORSûTOû
PLACEDûWITHûTHEû%#"ûINûTHEûlRSTûQUARTERû TERMv raise a net A$50bn in expensive
ACCORDINGûTOû#ITIGROUPûRESEARCH And while a stable secondary market subordinated Tier 2 notes, but they can
3YNDICATEûOFlCIALSûSAIDûMANYûBANKSûWEREû provides a stronger basis for new issues, afford to hold out having gotten well ahead
still assessing the impact of central banks’ there is little discernible advantage for a of the run rate over the last 10 months and
loan offerings on their funding needs, and BANKûINûBEINGûTHEûlRSTûMOVER with plenty of time to top up before the
some will press ahead with new issues if “If you’re the second or third issuer from ûDEADLINE
only to demonstrate their market access, AûJURISDICTIONûTHATûHASNTûYETûISSUEDûATûTHESEû
THEYûSAID higher spreads, you’re probably going to COVERED BENEFITS
Notably, all of the benchmark euro have better execution metrics,” said the Given elevated spread levels and tumbling
covereds issued out of Europe since the THIRDûSYNDICATEûBANKER PROlTûPROJECTIONSûITûWOULDûMAKEûSENSEûFORû
market’s reopening have come from French h4HEûlRSTûTRADEûPROBABLYûPAYSûUPûANDûTHENû THEûMAJORSûTOûTAPûTHEûCHEAPESTûBONDûMARKETû
BANKS THEûSECONDûANDûTHIRDûPROBABLYûBENElTûFROMû available to them, namely the local covered
Bankers said French banks were typically TIGHTENINGûONûTHEûBACKûOFûITû.OûONEûWANTSûTOû MARKET
more keen than some of their counterparts BEûTHEûlRSTûTOûREOPENûTHESEûMARKETSv Covered bond margins are typically
to maintain their market access and engage AROUNDûûOFûSENIORûUNSECUREDûLEVELSûANDû
WITHûINVESTORSûTHROUGHûREGULARûTRANSACTIONS thus become most cost-effective during
“We have two particularities in France: NON-CORE CURRENCIES PERIODSûOFûDISLOCATIONûLIKEûTHEûCURRENTûONE
lRSTLYûBANKSûPLAYûAûCENTRALûROLEûINû 4HEûMAJORSûLARGELYûABANDONEDûLOCALû
supporting the economy and the SUNCORP EXTENDS AUSSIE REVIVAL COVEREDûBONDSûAFTERûAûmURRYûOFûTHREEûANDû
government expects them being a driving lVE YEARûSUPPLYûINûLATEûûANDûEARLYûû
FORCEûDURINGû#OVID vûSAIDûAû$#-ûBANKERû The Australian bond market reopened a as global yields tumbled and Australian
h#!3!û"0#%ûANDû#-ûHAVEûLARGEûNETWORKSû little further last Monday when SUNCORP- investors, who know the credits inside out,
which require additional liquidity to serve METWAYûBECAMEûTHEûlRSTûDOMESTICûBANKû PREFERREDûTHEûEXTRAûJUICEûAVAILABLEûINûSENIORû
THEIRûEND CLIENTS ISSUERûINûMOREûTHANûTWOûMONTHS UNSECUREDûFORMAT
“Secondly, French banks do of course take Given the current appetite for high-
4,42/ûBUTûPAYûAûLOTûOFûATTENTIONûTOûREGULARLYû quality, defensive assets it was no surprise ALL COVERED BONDS (ALL CURRENCIES)
FUNDûTHEMSELVESûINûCAPITALûMARKETSv to see Suncorp opt for a covered offering, BOOKRUNNERS: 1/1/2020 TO DATE
CRH is a credit institution set up by the following a run of Commonwealth and state Managing No of Total Share
&RENCHûGOVERNMENTûTOûRElNANCEûRESIDENTIALû government supply and four covered note bank or group issues US$(m) (%)
mortgage home loans granted by its ISSUESûBACKEDûBYûPRIMEû#ANADIANûMORTGAGES 1 Credit Suisse 16 7,183.16 8.2
SHAREHOLDERSûTHEûMAJORû&RENCHûBANKS Suncorp raised A$750m (US$476m) from a 2 Barclays 33 7,067.05 8.1
It therefore issues covered bonds on lVE YEARûmOATING RATEûNOTEûOFFERINGûTHATûWASû 3 HSBC 24 5,411.01 6.2
behalf of those shareholders: Credit PRICEDûINSIDEûBPnBPûAREAûGUIDANCEûATû 4 Credit Agricole 18 4,061.02 4.6
!GRICOLEû#REDITû-UTUELû3OCIETEû'ENERALEû THREE MONTHû""37ûPLUSûBPûVIAûJOINTûLEADû 5 Natixis 18 4,048.73 4.6
".0û0ARIBASûANDû"0#% managers ANZ, RBC Capital Markets and 6 Commerzbank 16 3,895.31 4.4
For many banks, the economic Westpac 7 Santander 15 3,663.91 4.2
considerations are expected to be ,OCALûSYNDICATIONûDESKSûWOULDûWELCOMEûAû 8 BNP Paribas 16 3,651.75 4.2
PROHIBITIVEûHOWEVER REAPPEARANCEûFROMû!USTRALIASûMAJORûBANKSû 9 UniCredit 18 3,134.50 3.6
“Some of the UK banks, for example, are nûABSENTûFROMûTHEûDOMESTICûMARKETûSINCEû 10 ING 14 3,092.68 3.5
trading at around 35bp in covered and *ANUARYûûnûWHICHûWOULDûENCOURAGEûAû Total 97 87,660.91
around 70bp in senior,” said a second broader revival by setting reference points Source: Refinitiv SDC code: J15a

They instead focused on the more the yield enhancement environment is the hedge fund said in an April 16 letter to
expensive US and Europe covered markets, peaking back up,” said Scott Kimball, THEûCOMPANY
where they can tap strong demand from portfolio manager at BMO Global Asset 4HEûCOMPANYûJOINSûOTHERûRETAILERSûTHATû
much deeper pools of investors seeking -ANAGEMENT have opted to skip interest payments
4RIPLEû!ûRATEDûPAPER But the buyside is being pickier and RECENTLYû4HEûWEEKûBEFOREûLASTûDEPARTMENTû
.!"ûWASûTHEûLASTûMAJORûTOûVISITûTHEû asking for protections, as evidenced by the store JC PENNEY said that it had opted not to
DOMESTICûCOVEREDûMARKETûWITHûAû!BNû COLLATERALûBACKINGû'!0SûDEALûSAIDû+IMBALL make the US$12m interest payment due on
THREE TRANCHEûlVE YEARûANDû YEARûTRADEûINû h9ESûWEûAREûLOOKINGûFORûYIELDû ITSûûSENIORûNOTESûDUEû
-ARCHûûnûONLYûITSûSECONDûVISITûFOLLOWINGû enhancement, but the market is still focused Some retailers have been able to access
AûFOUR YEARûHIATUS ONûCREDITûPROTECTIONûANDûCOVENANTSv the capital markets to fund the cash burn
3UNCORPûTHEûCOUNTRYSûlFTHûLARGESTûBANKû Already under pressure from online giant being driven by social distancing measures,
has been the most consistent Australian Amazon, the retail sector has only seen its such as NORDSTROM, which issued a bond
issuer in the domestic covered sector since fortunes worsen as lockdowns in the wake backed by real estate assets, and BURLINGTON
local legislation was passed in November OFûTHEû#OVID ûPANDEMICûTAKEûTHEIRûTOLL COAT FACTORY
2011, while ING Australia made its debut in '!0ûWHOSEûBRANDSûINCLUDEûTHEû"ANANAû But Neiman Marcus had already been
!UGUSTû 2EPUBLICûISûNOûEXCEPTIONû30ûDOWNGRADEDû STRUGGLINGûlNANCIALLYûBEFOREûTHEû#OVID û
/THERûNON MAJORSû-ACQUARIEû"ANKûANDû the credit in November to BB from BB+, pandemic forced it to shutter stores in
Bank of Queensland, have sold euro- amid a “torrent of competitive headwinds” -ARCH
denominated covered bonds, though and the planned spin-off of its Old Navy ,ASTûYEARûTHEûCOMPANYûPRICEDû53Mû
NOTHINGûATûHOMEûINûTHEûFORMAT BRAND OFûNEWûlVE YEARûNON CALLûTWOûSECONDû
And in late March, Moody’s dropped the lien notes that included payment-in-kind
'!0SûSENIORûUNSECUREDûRATINGûTOû"AûFROMû INTERESTûANDûAûSTEEPûûCOUPONûPARTû
Baa3 ahead of what is likely to be a material of a debt exchange that cleared the
DROPûINûEARNINGSûTHISûYEAR company’s bond maturities through 2024
HIGH-YIELD The retailer, which has furloughed staff and but did not bring down its overall levels of
closed all its stores in North America and DEBT
Europe, drew down in March its entire 4HEûlRMûHASûBEENûSTRUGGLINGûFROMûHEAVYû
UNITED STATES US$500m from its revolver, deferred dividend leverage brought on by its US$6bn leveraged
PAYMENTSûANDûCUTûCAPEXûFORûlSCALû BUYOUTûBYû!RESûANDû#ANADAû0ENSIONû0LANû
GAP TESTS APPETITE FOR RETAIL It has also stopped paying rent on leases )NVESTMENTû"OARDûINû
WITH US$2bn SECURED JUNK BOND in North America stores, which comes to 4HEûlRMûDREWûlREûINûûAFTERûITSûPRIVATEû
about US$115m a month, as it tries to equity owners transferred the equity in
GAP INCûTOOKûAûRUNûATûTHEû53ûJUNKûBONDû renegotiate terms with landlords, according MyTheresa, its valuable and fast growing
market on Thursday, the clothes store TOûANû3%#ûlLING online unit, to a unit outside of the reach of
RAISINGû53BNûTOûPAYûLOOMINGûDEBTû The company’s cash position, including SECUREDûBONDûINVESTORS
maturities in a three-part bond that was short-term investments, is expected to fall 4HEûSPONSORSûOFFEREDûINVESTORSûINûTHEûû
increased in size despite concerns of more DRAMATICALLYûFROMû53BNûONû&EBRUARYûû notes a US$200m claim on the unit in the
TROUBLEûINûTHEûBATTEREDûRETAILûSECTOR TOû53MnMûBYûTHEûlSCALûQUARTERû DEBTûEXCHANGEûLASTûYEARû"UTûTHEûTRANSFERûSTILLû
The borrower initially approached ENDINGû-AYûûTHEûlLINGûSAID RANKLESûWITHûSOME
investors with a US$500m three-year bullet, “We will need to take additional actions “By enabling and allowing the improper
Aû53BNûlVE YEARûNON CALLûTWOûANDûAû to both preserve existing liquidity and seek TRANSFERûOFûTHEûCOMPANYSûCROWN JEWELû
US$500m seven-year non-call three, with additional sources of liquidity, beyond our billion-dollar MyTheresa asset to the out-of-
TALKûONûTHEûlVE YEARûHEARDûINûTHEûLOWûSûANDû currently available cash and credit facilities money sponsors for no consideration, you
THEûTHREE YEARûBPûTIGHTûTOûTHAT within the next 12 months, as existing cash have left a carcass of a company for the
,EADSûHOWEVERûWEREûABLEûTOûTIGHTENûFROMû and cash expected to be generated from remaining stakeholders and have put both
THEREûBEFOREûPRICINGûATûYIELDSûOFûû OPERATIONSûMAYûNOTûBEûSUFlCIENTûTOûFUNDûOURû Neiman’s storied franchise and thousands of
ûANDûûRESPECTIVELYû3IZESûWEREûALSOû OPERATIONSvûITûSAID JOBSûATûRISKvû-ARBLEû2IDGEûTOLDûTHEûCOMPANYû
REJIGGEDûWITHûTHEûlVE YEARûDROPPINGûTOû 7ITHûSOMEû53BNûOFûUNENCUMBEREDû ONû!PRILû
US$750m and the long-dated bond being INVENTORYûANDûADDITIONALûREALûESTATEû'!0û 30ûLOWEREDûTHEûlRMSûCORPORATEûCREDITû
INCREASINGûTOû53BN has been looking to raise secured debt to rating from CCC to CCC- on April 14, saying
4HEûNOTESûAREûSECUREDûBYûAûlRSTûLIENû ATTENDûTOûSOMEû53BNûINûDEBTûDUEû!PRILû it expected Neiman Marcus to undertake a
priority interest on real estate and 21 and replace its US$500m unsecured restructuring this year, possibly in the next
intellectual property as well as an equity REVOLVERûACCORDINGûTOû-OODYS SIXûMONTHS
INTERESTûINûDOMESTICûSUBSIDIARIESû4HEYûALSOû The company’s capital structure includes
carry a second lien interest on asset-based NEIMAN MARCUS UNDER PRESSURE 53MûûlRSTûLIENûNOTESûDUEûû
LENDINGûCOLLATERAL AFTER MISSING BOND PAYMENT 53MûûSECONDûLIENûNOTESûDUEû
The deal came amid a busy week for the û53MûûTHIRDûLIENûNOTESûDUEû
JUNKûBONDûMARKETûWHICHûHASûBEENûENJOYINGû Hedge fund investor Marble Ridge said ûANDû53MûOFûûTHIRDûLIENû
RENEWEDûINmOWSûOFûLATEû)NVESTORSûBOLSTEREDû struggling retailer NEIMAN MARCUS was in NOTESûDUEûûACCORDINGûTOûAû&ITCHûNOTE
by recent measures by the Federal Reserve default after the company opted not to 4HEûlRMSûBONDSûAREûTRADINGûATûDEEPLYû
to extend its support to certain parts of the make interest payments due on several DISTRESSEDûLEVELSûWITHûTHEûûSûATûAû
asset class, are back on the hunt for BONDSûONû!PRILû CASHûPRICEûASûLOWûASûJUSTûûLASTûWEEKû
BARGAINSûBUTûNOTûATûANYûPRICE “Neiman Marcus is now in default on its ACCORDINGûTOû-ARKET!XESSû
“With government benchmark yields payment obligations and can no longer hide 4HEûCOMPANYûALSOûHASûOUTSTANDINGûlRSTû
likely to remain where they are, you can feel behind its protestations to the contrary,” lien secured loans, including US$524m

BONDS HIGH-YIELD
UNDERûITSû,IBORûPLUSûBPûASSET BASEDû
REVOLVERûDUEûû53BNûTERMûLOANû
PRICEDûATû,IBORûPLUSûBPûDUEûûANDûAû
PAYMENT IN KINDûTERMûLOANûPRICEDûATû,IBORû
Netflix storms through
PLUSûBPûWITHû53BNûOUTSTANDINGûDUEû
û&ITCHûSAID
primary
FALLEN ANGEL DELTA ADDS LIQUIDITY HIGH-YIELD Streaming service benefits from lockdowns
WITH HIGH-YIELD BOND
NETFLIX raised around US$1bn equivalent in Netflix’s €1.3bn 3.625% May 2027s
DELTA AIR LINES was in the market on the US dollar and euro high-yield markets on are trading around 3%, according to
4HURSDAYûSHOPPINGûAûNEWûBONDûFORûTHEûlRSTû Thursday, with the company’s strong first- Tradeweb. They were seen trading as high
time since being downgraded to high-yield quarter performance and positive technicals as 5% on March 19, but since then the
LASTûMONTH proving a draw for investors. company’s curve has recovered as has the
30ûDOWNGRADEDû$ELTASûUNSECUREDûRATINGû The streaming service, rated Ba3/BB–, broader market.
TWOûNOTCHESûTOû""ûFROMû"""nûASûDEMANDûFORû priced a US$500m five-year unsecured bullet The lead managers Morgan Stanley (left
AIRûTRAVELûHASûCOLLAPSEDûDUEûTOû#OVID û note at 3.625% on Thursday. lead), Goldman Sachs, JP Morgan, Deutsche
Moody’s is reviewing its Baa3 unsecured That is the lowest coupon it has been able Bank and Wells Fargo showed some caution
rating for a possible downgrade, while Fitch to achieve in the dollar market – albeit with with the deal, halving both the tenor and size
ASSIGNEDûAû""ûRATINGûTOûTHEûNEWûBOND a shorter tenor than the 10-year notes it has of Netflix’s usual visits.
“Moody’s continues to assess the extent to traditionally priced in recent years. The company last came to market in
which the company’s liquidity, including The issue was tight to the firm’s curve, given October, when it priced US$1bn and €1.1bn
government support programmes, can fund its 5.875% 2025 notes were trading at a yield 10.7-year bonds.
its cash needs during the period of little to no of around 3.6%–3.7% before the new deal was
mYINGûTHEûDURATIONûOFûTHISûPERIODûOFûLIMITEDû announced. PLAYING IT SAFE
mIGHTûACTIVITYûANDûLIMITEDûCASHûRECEIPTSûANDû The company set the yield for a €470m This time around, Netflix played it relatively
its estimates of the timeframe Delta will five-year bond at 3% – around half the level at safe with a smaller size and the five-year
need to restore its balance sheet and credit where euro junk bonds have been trading on maturity.
METRICSvû-OODYSûWROTEûINûITSûREPORT average. “That’s good banking if you believe markets
Still, given the overall weakness in the The streaming service announced the deal will recover and high-yield goes tighter in the
airline sector, Delta is better positioned on Wednesday after global lockdown measures next 12 months,” said an analyst of the five-year
than its peers to weather the storm, caused a spike in subscriber numbers in the maturity.
INVESTORSûSAID first quarter. Netflix has an annual funding plan that
“Delta is so well run as an airline it is hard “It’s a premier, really well-liked name and typically includes one to two capital markets
to imagine it can’t manage its way through it’s not at all affected by coronavirus – in fact raises, said the lead banker.
this,” said Scott Kimball, senior portfolio it’s benefiting,” said a banker familiar with the But social distancing measures being
MANAGERûATû"-/û'LOBALû!SSETû-ANAGEMENT deal. introduced across the world means all filming
“Airlines are a systematically important Talk on the euro bond was in the 3.25% is now on pause, leading the company to delay
part of the US economy and the big ones area. The company set price talk on the dollar some of its content spending.
HAVEûBIGûLIFEûLINESû$ELTAûISûINûTHEûTOPûINû tranche at 3.75%. Leads said the bond was “Given the reduction in production spend
TERMSûOFûITSûlNANCIALûPROlLEûANDûTHEYûAREû likely to be priced at 3.625%. right now, they have less of a need to raise
STRONGERûTHANûTHEIRûCOMPETITORSv The dual-currency deal was split equally capital, which is why we’re doing a smaller total
The company is expected to raise US$3bn, in size, giving London-based leads hope that raise than we typically would,” said the banker.
SPLITûEVENLYûBETWEENûAûPRIVATEûlVE YEARûNON the euro high-yield market is ready for more Proceeds from the bond will be used
call for life senior secured note and a issuance to come. for content acquisitions, production and
THREE YEARû4ERMû"ûLOAN “Hopefully this will be a positive indication to development and other capital expenditures.
The secured paper is backed by landing corporates that the market is very vibrant and Netflix had US$5.2bn of cash sitting on its
SLOTSûATû*&+û,A'UARDIAû2EAGANû.ATIONALûANDû ready for primary issues,” said the banker. balance sheet at the end of the first quarter,
Heathrow airports, as well as various “Netflix should incentivise other names to but remains committed to using debt to
international routes, according to come to the market. Given where we’re likely finance its investment in new content, it said in
#REDIT3IGHTS to end up here and how strong the momentum a first-quarter earnings note on Tuesday.
Initial price talk started the secured note has been has been in the deal I think it’s great The company more than doubled its own
INûTHEûûAREAûAûSUBSTANTIALûCONCESSIONûOVERû evidence that the European high-yield market projections for new customers as quarantined
THEûûAREAû#REDIT3IGHTSûESTIMATEDûTOûBEûFAIRû is wide open for business.” audiences binged on series such as “Tiger
VALUEûINûAûRECENTûREPORT Netflix’s euro bond was only the second King”.
“Short-term secured paper should be in to come to high-yield market since the The streaming service added 15.8m paying
demand in this market, the only coronavirus crash. In the past two months, the customers from January through March,
complication being the airline sector and only other print was a €200m five-year FRN bringing its global total to 182.9m. Netflix had
COLLATERALûPACKAGEvûACCORDINGûTOûTHEûREPORT from Verisure (B2/B). predicted it would add 7m during the period.
Sure enough, MERLIN ENTERTAINMENTS Moody’s put the company’s Ba3 corporate
LIQUIDITY announced a €400m five-year deal on Friday. rating on positive watch on Wednesday – a rare
Delta is in the midst of adding some Average yields for euro junk bonds are now sight among high-yield borrowers recently.
US$20bn in liquidity through Thursday’s just over 6%, according to iBoxx data. They Netflix is also rated BB– by S&P.
ISSUANCEûLEASEBACKûAIRCRAFTûlNANCINGSûANDûAû were around 3% in January. Eleanor Duncan, David Bell
BAILOUTûSALARYûGRANT

Tapping the Congressional bailout money UPûTOû53MûOFûûSENIORûSECUREDûSECONDû However, Merlin’s base case is that
makes Delta ineligible for the Federal LIENûNOTESûANDûUPûTOû53MûOFûûSENIORû restrictions are eased after mid-May and that
2ESERVESûPRIMARYûCORPORATEûCREDITûFACILITY SECUREDûTHIRDûLIENûNOTES it would see revenue recovering to more
The fallen angel airline could add more It is offering an early tender offer of THANûûOFûNORMALûLEVELSûTWOûMONTHSûAFTERû
liquidity by tapping more of the bailout loan US$500 of principal in new notes for every ATTRACTIONSûREOPEN
package, issuing a senior unsecured bond 53ûOFûOLDûBONDSûTENDEREDû4HEû One investor said Germany had responded
down the line and an equity issuance, the EXCHANGEûOFFERûEXPIRESûONû-AYû strongly to the coronavirus threat and was
COMPANYûDETAILEDûINûITSûlRST QUARTERû As part of the exchange, the company is seen as most ready to resume normal levels
EARNINGSûREPORT looking to amend its bond indenture to of activity, but has still cancelled all large
Delta’s earnings report last week was, as remove “substantially all of the restrictive GATHERINGSûnûINCLUDINGû/KTOBERFESTûDUEûTOû
expected, dismal given the near grounding covenants and certain of the default TAKEûPLACEûINûTHEûAUTUMN
OFûALLûmIGHTSûWORLDWIDEûANDûTHEûSECONDû PROVISIONSûCONTAINEDûTHEREINv Two investors and an analyst expressed
QUARTERûSHOULDûBEûASûDISMALûORûWORSE Moody’s noted on March 20 that the astonishment that Merlin had not made any
Nearly all results were down year-over- COMPANYûHASûTWOûlNANCIALûCOVENANTSû amendments to the covenants included in
YEARûONûTHEûQUARTERûINCLUDINGûANûûDROPû including debt/Ebitda and current ratio, the October trade, issued to fund its buyout
INûREVENUEûONûTHEûWAYûTOûANûEXPECTEDûn which it may breach in the second half of BYûAûCONSORTIUMûINCLUDINGû,EGOSûFOUNDINGû
ûCUTûINûTHEûSECONDûQUARTER 2020 in the absence of a recovery in oil FAMILYûANDû"LACKSTONE
“Given the combined effects of the PRICES “Merlin’s 2019 deal was incredibly
PANDEMICûANDûASSOCIATEDûlNANCIALûIMPACTû As of year-end 2019, Centennial had aggressive [perhaps the worst in the
on the global economy, we believe that it US$624m available under its US$800m asset- MARKET=vûWROTEûANALYSTSûFROMûlNTECHûDATAû
could be up to three years before we see a BASEDûLOANûFACILITY PROVIDERûlN
sustainable recovery, and to succeed The ratings agency noted it had limited “The bottom line is essentially none of
throughout that environment we will likely alternative liquidity options as a large share these aggressive terms have been rolled
need to resize our business in the near term OFûITSûASSETSûAREûENCUMBERED BACKûORûREVISEDûINûTHISûPROPOSEDûISSUANCEv
to protect it in the long term,” chief Moody’s downgraded the company’s h)ûlNDûITûSHOCKINGûTHATûTHEYREûISSUINGû
executive Ed Bastian said on the earnings unsecured rating from B3 to Caa2 on March using the exact same terms as the existing
CALL û30ûDOWNGRADEDûITSûCORPORATEûCREDITû NOTESvûSAIDûTHEûlRSTûINVESTOR
Given the uncertainty, it is a speculative RATINGûFROMû"ûTOû###ûONû-ARCHû He called the terms the “weakest
buy, according to the CreditSights report, covenants in the history of the high-yield
but the company should have ample MARKETv
liquidity to weather the storm a while EUROPE/MIDDLE EAST/ “The covenants were dreadful and that
LONGER AFRICA stopped us playing before,” said the second
“Delta has an overabundance of liquidity INVESTOR
FORûAûBESTûCASEûONE YEARûRECOVERYûANDûJUSTû BLACKSTONE-OWNED MERLIN ASKS “If a company needs help, they should put
enough for a worst case two-year recovery INVESTORS TO TAKE LEAP OF FAITH in better covenants, put in a short call and
not utilising the second bailout loan,” THENûRElûWITHOUTûTHEMûAGAINûWHENûTHINGSû
ACCORDINGûTOûTHEûREPORT Tourist attraction provider MERLIN NORMALISEv
JP MorganûISûLEAD LEFTûONûTHEûTRADE ENTERTAINMENTS tested investor mettle on Both investors said talk was that the latest
Friday by marketing a high-yield bond while bond was being essentially “backstopped”
CENTENNIAL LOOKS TO STRIP THEûMAJORITYûOFûITSûSITESûAREûSHUTûDOWN BYûAûLARGEûREVERSEûENQUIRY
COVENANTS WITH DEBT EXCHANGE The deal is a strong test of how willing 4HEûlRSTûINVESTORûSAIDû-ERLINûWASûBANKINGû
investors are to provide companies with on bondholders’ willingness to save their
Texas-based independent oil producer capital to tide them over the coronavirus INITIALûINVESTMENTS
CENTENNIAL RESOURCE DEVELOPMENT announced crisis when it is unknown when lockdowns “I suppose you invest in Merlin on the
plans on Thursday to offer a debt exchange WILLûBEûLIFTED BASISûTHATûYOUûANTICIPATEûAû6 SHAPEDû
and remove restrictive covenants, as the Deutsche Bank (lead-left), Bank of America, RECOVERYvûHEûSAID
drop in oil prices puts the company at risk Barclays, HSBC, Mizuho and UniCredit AREûJOINTû h9OUREûESSENTIALLYûBRIDGINGûTHEMûYOUREû
OFûBREACHINGûLENDINGûAGREEMENTS BOOKRUNNERS giving them additional capital on the basis
The sharp drop in oil prices is hitting all 7HISPERSûFORûTHEûAPPROXIMATELYûõMû that this will cover their cash needs when
oil producers hard, but especially those that (£350m-equivalent) 5NC2 senior secured THEûMARKETûRETURNSûTOûNORMALITYû4HEû
did not hedge their oil production when WEREûHEARDûATûnûACCORDINGûTOûTWOû problem is that Merlin will return to
PRICESûWEREûHIGHER INVESTORSûAHEADûOFûPRICEûTALKûATûnûFORû normality with a lot more leverage on its
Centennial falls into that camp having ANûUPSIZEDûõMûTRADEû4HOSEûLEVELSûAREû balance sheet than investors originally
“essentially no favourably priced hedging in MUCHûHIGHERûTHANûTHEûûTHEûCOMPANYû BOUGHTûINûFORv
PLACEvûACCORDINGûTOû30ûINû-ARCHûMEANINGû PAIDûFORûAûõMû.#ûINû/CTOBER 30ûCUTû-ERLINûAûNOTCHûTOû"ûASûTHEûDEALû
the recent drop in prices will cause a The bond had not priced by the time of was being marketed, citing the company’s
MATERIALûDROPûINûCASHmOW PUBLICATION leverage and coronavirus-related
This deterioration is expected to put Only nine of Merlin’s 130 attractions are UNCERTAINTIESû!LLûITSûRATINGSûAREûONû
PRESSUREûONûTHEûCOMPANYSûlNANCIALû still open, according to deal documents, and #REDIT7ATCHûNEGATIVE
COVENANTSûnûWHICHûITûISûNOWûLOOKINGûTOûSTRIPû ûOFûSTAFFûHAVEûBEENûFURLOUGHED “We could lower the rating if the trading
OUTûASûPARTûOFûTHEûDEBTûEXCHANGE 4HEûCOMPANYûSAIDûITSûDOWNSIDEûSCENARIOûnû INûTHEûCOMINGûMONTHSû;IS=ûSIGNIlCANTLYû
The company is looking to swap any and all a four-month shutdown lasting until weaker than our base case, depleting the
OFûTHEû53MûOUTSTANDINGûûSENIORû MID *ULYûWITHûAûSLOWûRECOVERYûPROlLEûANDû company’s cash cushion, or it cannot raise
notes due 2026 and US$500m outstanding NOûNEWûSOURCESûOFûFUNDSûnûWOULDûSEEûITûRUNû FRESHûlNANCINGûTOûMANAGEûITSûONGOINGû
ûSENIORûNOTESûDUEûûINûEXCHANGEûFORû OUTûOFûLIQUIDITYûINûTHEûTHIRDûQUARTER LIQUIDITYvûWROTEû30ûANALYSTS

BONDS HIGH-YIELD
Merlin said it may look to raise further Double Bs are outperforming,” said a third They point out that record volumes
debt or credit facilities, potentially for INVESTORûh)ûTHINKûTHATûHASûMOREûTOûDOûWITHû were raised in March’s investment-grade
liability management purposes, according to SEEKINGûBETTERûQUALITYûINûAûDIFlCULTû PRIMARYûMARKETûnûWHENûBONDûBUYERSûHADû
THEûDEALûDOCUMENTS ECONOMICûENVIRONMENTv not yet seen the true impact of the new
The company now has debt of £4bn and is 9IELDSûFORû$OUBLEû"ûEUROûBONDSûHAVEû CORONAVIRUSûCRISISûINûCOMPANYûRESULTS
BURNINGûaMûOFûCASHûPERûMONTHûSAIDû30 already seen a squeeze, thanks in part to “The risk for all of us is that the right call
$EUTSCHEû"ANKûDECLINEDûTOûCOMMENT THEûLACKûOFûISSUANCEûINûPRIMARYû)NûTHEûPASTû should be to own risk at bad prices simply
TWOûMONTHSûTOûLASTûWEEKûONLYûAûõMû because you’ve got a backstop buyer of risk,”
HIGH-YIELD BOND INVESTORS GEAR lVE YEARû&2.ûFROMû6ERISUREû"" ûHASû SAIDûTHEûSECONDûINVESTOR
UP FOR ECB PURCHASES PRICEDûINûTHEûEUROûHIGH YIELDûMARKET “It can be a foolish game saying that
/Nû7EDNESDAYû.ETmIXû"A""nû THEûMARKETûISûWRONGû)FûTHEû&EDûISûTHEû
Market participants say the European -OODYS30 ûOFFEREDûEUROûHIGH YIELDûBONDû marginal buyer, you can complain all day
Central Bank took a step closer last week to hunters a glimmer of hope when it that they’re wrong and supporting the
buying high-yield bonds, with some announced a US$1bn-equivalent offering market at bad levels, but you’ll be left
investors adding risk in Double B credits in that included a tranche in the single BEHINDv
ADVANCEûOFûTHEûPOTENTIALûMOVE CURRENCY Central bank asset purchases will likely
The ECB announced temporary measures Average yields for Double B bonds were mitigate corporate default rates by
on Wednesday that will allow it to accept ATûûASûOFû!PRILûûDOWNûFROMûûATû allowing companies to access liquidity at
non-investment-grade-rated bonds as the peak of the crisis, according to iBoxx RELATIVELYûLOWûYIELDSûnûBUTûTHEREûISûLITTLEû
COLLATERAL DATA they’ll be able to do about unemployment
Unlike the US’s Federal Reserve, the ECB “We could see a further leg higher for rates resetting at a higher level, said the
stopped short of saying it would buy new Double Bs on the back of this,” said the SECONDûINVESTOR
issues from so-called fallen angels but SECONDûINVESTOR h9OUVEûGOTûTOûTHINKûABOUTûTHEûLONGER
analysts think there’s a strong chance it will “The Double B euro bond market term consequences about what happens
soon broaden its bond buying programme already responded to the Fed’s move IFûDEFAULTûRATESûAREûSUPPRESSEDû)Fû
ANDûINCLUDEûHIGH YIELDûSECURITIES REGARDINGûFALLENûANGELSû0ARTûOFûTHATûWASûAû businesses are performing but continue
“We have been a touch underweight read-across to the ECB following the Fed’s to survive, you get to a vicious circle
%UROPEûnûANDûWEREûNOWûmATTENINGûVIAûSOMEû LEADvûHEûSAID where the more you support the market
large employer Double B names, which we But while central bank activity has the more you perpetuate low-growth
would be okay owning anyway,” said one arguably prevented a credit crunch, some OUTCOMESv
,ONDON BASEDûHIGH YIELDûINVESTOR investors are wary of the ECB’s potential
If the ECB does decide to buy Double B ENTRYûINTOûTHEûHIGH YIELDûMARKET
bonds, it would provide an anchor to a huge “The ECB is giving a lot of support and ASIA-PACIFIC
SECTORûOFûTHEûMARKET CONlDENCEûINûFUNDINGûINVESTMENT GRADEû
Since 2011, Triple B euro debt has corporates in primary, whereas funding VIRGIN SEEKS NEW PILOTS
BALLOONEDûFROMûõBNûTOûõBNûWHILEû in high-yield primary tends to be much
Double B rated high-yield debt has only more uncertain,” said Andrey Kuznetsov, VIRGIN AUSTRALIA has entered voluntary
INCREASEDûFROMûõBNûTOûõBNûACCORDINGû senior portfolio manager at Federated administration after failing to secure a
TOû5"3ûANALYSTS (ERMES !BNû53M ûFEDERALûGOVERNMENTû
As large listed companies and big “The one silver lining of the ECB not LOANûPAVINGûTHEûWAYûFORûTHEûlRSTûDEFAULTûINû
employers look to be on the brink of a buying fallen angels is that it gives Australia’s institutional bond market in 19
downgrade from Triple B to Double B, companies much more incentive not to YEARS
the distinction between investment-grade go down that route, and to use every Australia’s second-largest carrier owes
ANDûJUNKûHASûBECOMEûINCREASINGLYû tool in their box to stay investment- OVERû!BNûTOûMOREûTHANûûCREDITORSû
arbitrary for central banks, said a second GRADEv WELLûABOVEûTHEû!BNûOFûDEBTûDISCLOSEDûATû
INVESTOR Investors are also worried that markets the end of last year, according to its
“If Double B corporate debt becomes AREûGETTINGûAHEADûOFûTHEMSELVES ADMINISTRATOR
eligible collateral for funding operations
THENûWEûTHINKûITûWOULDûALSOûBECOMEû#300 ALL US$ DENOMINATED HIGH-YIELD BONDS ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS
ELIGIBLEvûSAIDû#ITIGROUPûANALYSTS BOOKRUNNERS – 1/1/2020 TO DATE 1/1/2020 TO DATE
Investors say that the US Federal Reserve’s Managing No of Total Share Managing No of Total Share
recent move to buy fallen angels has also bank or group issues US$(m) (%) bank or group issues €(m) (%)
upped the ante on the ECB to do something 1 JP Morgan 83 11,967.43 10.6 1 JP Morgan 18 2,013.22 9.7
SIMILAR 2 BofA Securities 77 11,593.70 10.3 2 Deutsche Bank 13 1,723.64 8.3
The ECB’s primary purpose in entering 3 Citigroup 64 9,081.08 8.1 3 Citigroup 13 1,335.14 6.5
the high-yield market could be to support 4 Goldman Sachs 59 8,131.09 7.2 4 BNP Paribas 13 1,222.00 5.9
)TALIANûSOVEREIGNûDEBTûSAIDûANALYSTSû)TALYûISû 5 Barclays 61 7,789.19 6.9 5 Barclays 11 1,154.94 5.6
currently rated Baa3/BBB/BBB/BBBH (stable/ 6 Morgan Stanley 41 7,592.96 6.7 6 ING 10 1,110.34 5.4
NEGATIVENEGATIVESTABLE 7 Credit Suisse 46 5,457.04 4.8 7 HSBC 13 1,019.70 4.9
If so, the ECB is likely to only buy bonds 8 Wells Fargo 48 5,449.82 4.8 8 Credit Agricole 7 994.41 4.8
DOWNûTOû""nûORûEVENû""ûRATHERûTHANûLEAVINGû 9 Deutsche Bank 49 4,982.95 4.4 9 Credit Suisse 7 978.24 4.7
itself at a real risk of incurring defaults, said 10 RBC 37 4,354.52 3.9 10 UniCredit 9 904.62 4.4
#ITIGROUP Total 167 112,534.21 Total 39 20,663.64
“I don’t think that high-yield investors are Including US domestics, Euro, foreign, globals. Excluding equity-related debt. Excluding equity-related debt.
buying [potential ECB purchases] yet, but Source: Refinitiv SDC code: B5 Source: Refinitiv SDC code: B6

4HEûNEWûTOTALûCOMPRISESûABOUTû!BNûOFû institutional bond sales while UBS arranged would be more than paying stepped-up
secured debt, around A$2bn of unsecured the retail note offer, largely through its COUPONS
BONDSû!BNûOFûAIRCRAFTûLEASESû!Mû broker network, and has no doubt been That could muddy the waters for any
owed to employees, A$167m to trade DEALINGûWITHûAûSURGEûOFûANGRYûCLIENTûCALLS ISSUERûWANTINGûTOûREOPENûTHEûSECTOR
creditors and A$71m to landlords, Deloitte’s The previous default in the Australian And non-bank lenders in particular could
6AUGHANû3TRAWBRIDGEûREVEALED institutional market was in 2001, when HIH be hit hardest by the payment holidays
h6IRGINSû;VOLUNTARYûADMINISTRATION=û Insurance, then the country’s second largest European governments have introduced to
ANNOUNCEMENTûûISûINûLINEûWITHûOURûBASEû general insurance company, went into protect consumers during the coronavirus
case assumption that any future steps taken LIQUIDATION PANDEMIC
to ensure the airline’s ongoing viability will According to Fitch, those borrowing from
result in economic loss to creditors, and in non-banks are more prone to economic
particular to unsecured creditors,” said shocks than bank clients, and are therefore
-OODYSûVICE PRESIDENTû)ANû#HITTERER more likely to be eligible for payment
&ITCHûSUBSEQUENTLYûDOWNGRADEDû6IRGINû STRUCTURED FINANCE HOLIDAYS
Australia’s issuer default rating to D from Still, if predictions are correct that
###n the coronavirus crisis will begin to ease
6IRGINSûOUTSTANDINGûSENIORûUNSECUREDû EMEA MBS and market conditions pick up, bankers
bonds include US private placements, a generally expect plenty of non-bank
53Mû/CTOBERûû9ANKEEû!MûOFû UK SECURITISATION FILINGS CONTINUE supply to emerge in the second half of the
û-AYûûANDû!MûOFûû BUT MARKET STILL SHUT YEAR
March 2024 local wholesale bonds, and a Some, though, predict another issuance
!Mûû.OVEMBERûûRETAILûNOTEû A trickle of UK securitisation special purpose slump at the start of next year if too few
ISSUE VEHICLESûCONTINUEûTOûBEûlLEDûWITHû new assets are generated in the second half
Trading in the local listed notes is Companies House despite the public of the year, given the long lead-in time
suspended, while there have been no recent primary market showing no signs of life typically required to get deals ready for
bids on the two bond issues in the domestic SINCEûITûSHUTûDOWNûMOREûTHANûSIXûWEEKSûAGO MARKET
OTC market, according to one high-yield Banks and building societies with prime “If you look at non-bank institutions,
BANKER RMBS programmes could potentially bring ONEûOFûTHEûlRSTûSTEPSûTHEYûTOOKûWASûTOû
4HEûPUBLICû9ANKEEûBONDûOFFERINGûWASû successful deals to market, but have no need turn the taps off new origination or at
quoted at around 20 cents last week, which to pay up to do so when the Bank of England least materially reduce the number of
the banker suggested might offer some OFFERSûCHEAPERûFUNDINGûSOURCES products they offer,” the securitisation
value because, with more than 10 parties 9ORKSHIREû"UILDINGû3OCIETYûRECENTLYûlLEDûAû BANKERûSAID
expressing interest in the collapsed airline, 306ûFORûAûNINTHûISSUEûOFFûITSû"RASSû And the same applies to consumer ABS, if
bondholders could get back 25 to 30 cents PROGRAMMEû!NûOFlCIALûSAIDûTHEûDEALûWOULDû consumer spending remains muted through
ONûTHEûDOLLAR probably be fully retained and pre- THEûYEAR
Strawbridge, who is leading efforts to positioned as eligible collateral with the “There is support across the globe from
recapitalise the business, said his team was "ANKûOFû%NGLAND central banks or governments so assets
reaching out to bondholders to discuss 4WOûOTHERûRECENTû306ûlLINGSûHOWEVERû [which have already been originated] should
OPTIONSû!ûlRSTûCREDITORûMEETINGûISûSCHEDULEDû Finsbury Square 2020-2 and Twin Bridges BEûSAFEvûSAIDûAûSYNDICATEûBANKER
FORû!PRILû 2020-1, are from non-bank issuers Those assets could come to market later
+ENSINGTONû-ORTGAGESûANDû0ARATUS INû
RETAIL PAIN !NûOFlCIALûATû0ARATUSûSAIDûWORKûHADû “The problem will be more the pipeline at
$EFAULTûWOULDûPROVIDEûAûHIGH PROlLEûREALITYû already begun on the Twin Bridges deal THEûBEGINNINGûOFûNEXTûYEARûnûWHEREûYOUûNEEDû
CHECKûFORû!USTRALIASûmEDGLINGûNON BEFOREûMARKETSûSHUTûANDûTHEûlRMûWANTEDûTOû to get the assets ready this year,” the
investment grade bond market and retail be ready to go with a new issue once SYNDICATEûBANKERûSAID
SEGMENTûINûPARTICULAR MARKETSûREOPEN
6IRGINSûRETAILûNOTEûHOLDERSûFACEûSEVEREû It is typically the non-bank issuers rather FITCH PUTS 140 UK RMBS TRANCHES ON
CAPITALûLOSSESûJUSTûAûFEWûMONTHSûAFTERû THANûTHEûBANKSûTHATûNEEDûWHOLESALEûFUNDINGû RATING WATCH NEGATIVE
.OVEMBERSû!MûlVE YEARûOFFERINGûONEû "UTûTHEYûCOULDûSTRUGGLEûTOûlNDûITûINûTODAYSû
of the few deals to make use of the simple public market, with new-issue spreads likely Fitch has put 140 UK RMBS tranches on
corporate prospectus system introduced in TOûBEûPAINFULLYûWIDEû4RIPLEû!ûBUY TO LETûANDû Rating Watch Negative, saying there is a
THEû#ORPORATIONSû!MENDMENTû!CTûOFû non-conforming tranches are seen in the high probability of downgrades as a result of
This system was designed to encourage MID SûINûSECONDARY THEûCORONAVIRUSûPANDEMIC
retail bond issues from listed companies, “There is scope for deals to get done but The tranches are from 54 of the 171 UK
BUTûITûHADûFEWûTAKERSûEVENûBEFOREû6IRGINû THEûDIFlCULTYûISûTHEûCLEARINGûLEVELvûSAIDûAû 2-"3ûTHATû&ITCHûCURRENTLYûRATES
provided a dramatic reminder of the risk SECURITISATIONûBANKERûh4HEREûAREûSOMEû &ITCHûTESTEDûFORûAûûINCREASEûINûLIFETIMEû
component of the risk-return credit investors who would certainly entertain the defaults for each underlying portfolio and
EQUATION discussion, but it will come down to ISOLATEDûTHEûTRANCHESûPOTENTIALLYûAFFECTEDû)Tû
Default also exposes the bonds’ lead whether levels being discussed will work for ALSOûANALYSEDûMOREûTRANSACTION SPECIlCûRISKû
managers and brokers to reputational ANûISSUERv drivers such as liquidity, self-employment
damage, particularly among those local There is also concern among investors LEVELSûANDûRElNANCINGûRISK
investors with no previous experience of that they will be exposed to extension risk The ratings agency expects to resolve
DEFAULTSûORûRESTRUCTURINGS on existing deals from non-bank lenders if the RWN within six months, with
!.:û(3"#ûANDû5"3ûWEREûJOINTûLEADSûFORû those companies choose not to call multi-notch downgrades possible
BOTHûOFû6IRGINû!USTRALIASûDOMESTICû TRANSACTIONSûWHEREûTHEûCOSTûOFûRElNANCINGû DEPENDINGûONûTHEûTRAJECTORYûOFûTHEû

STRUCTURED FINANCE
coronavirus crisis and the take-up rate of amount required to back outstanding note INSPECTIONSûANDûAUCTIONSû)TûHASûALSOûCAUSEDû
PAYMENTûHOLIDAYSû ISSUANCE economic disruption and damaged investor
Its overall economic base-case scenario If that is not enough, it has set up a loan SENTIMENTû-OODYSûSAIDû7EAKERûSENTIMENTû
is for a sharp contraction followed by FACILITYûTOûPROVIDEûADDITIONALûFUNDING LEADSûTOûLOWERûRETURNSûFROMûASSETûSALES
recovery starting in the third quarter this “It would be easy to be cynical here and Market participants are also braced for a
YEAR suggest that as the existing protections are JUMPûINûTHEûNUMBERûOFûNON PERFORMINGû
Five of the affected tranches are currently already robust for RMBS bondholders, it is loans on banks’ balance sheets as a result of
rated Triple A - these are from three deals virtually a free option for the issuer to give,” THEûCRISIS
issued in 2007 or 2008: EMF-UK 2008-1, said TwentyFour Asset Management Still, Moody’s says reserves in the affected
LUDGATE FUNDING 2007 FF1 and MORTGAGE FUNDING portfolio manager Douglas Charleston in a securitisations are on target, and it expects
2008-1 NOTEûTOûCLIENTS available liquidity in the deals should be
Three much more recent deals, all from TwentyFour says payment holidays do not enough to cover over one year of senior
Charter Court, are among trades with pose a threat to UK RMBS credit quality and COSTS
$OUBLEû!ûTRANCHESûPUTûONû27.û EVENûIFûûOFûBORROWERSûASKEDûFORûRELIEFû The 11 deals are POPOLARE BARI NPLS 2016,
Fitch says that when it tested transactions’ DEALSûWOULDûREMAINûSAFE POPOLARE BARI NPLS 2017, BELVEDERE SPV, POP NPLS
liquidity under the unlikely scenario of no “[But] it again shows a strength and a 2018, AQUI SPV, BCC NPLS 2018, BCC NPLS 2019, PRISMA
mortgage payments being collected for nine commitment to the market from Santander SPV, MAGGESE, SIENA NPL 2018 and RIVIERA NPL
months, those tranches’ ratings came under and will help underpin the coveted AAA Meanwhile, Italian consumer
THREATû ratings all bonds within Holmes carry,” securitisations could also be hit by ratings
Deals with large buckets of self-employed #HARLESTONûSAID ACTIONûFROMû30ûWHICHûWASûSETûTOûREVIEWû
borrowers are also under scrutiny, up to and “It also sits well with bondholders like us, the country’s sovereign rating on Friday last
INCLUDINGûTHEû3INGLEû!ûRATINGû&ITCHûSAYSûSELF particularly as a positive contributor to the WEEK
employed borrowers may not receive %3'ûCOMPONENTûOFûOURûINVESTMENTûPROCESSv Barclays said in a research note that
enough income support, or not be eligible, Research analysts at Barclays noted any downgrade would likely translate to
and some will not be able to recover lost Holmes’ high Seller’s share, which stands at all 34 placed and 20 retained outstanding
INCOME û4HISûSHOULDûMAKEûRECOURSEûTOûTHEûLOANû RMBS and ABS bonds currently rated
Two deals from the Charter Court’s FACILITYûUNLIKELY AA - the maximum achievable rating
Charter Mortgage Funding series and six Barclays said Seller’s shares of the other of six notches above the sovereign’s
from Kensington’s Finsbury Square series 5+û2-"3ûMASTERûTRUSTSûWHICHûWEREûûFORû """ûRATING
AREûAFFECTED .ATIONWIDESû3ILVERSTONEûûFORû,LOYDSû
Fitch also put on RWN tranches, up to 0ERMANENTûANDûûFORû#LYDESDALEû"ANKSû SLIGHT CONTRACTION TO ECB’S ABS
3INGLEû!ûFROMûDEALSûWHEREûAûSIGNIlCANTû ,ANARKûWEREûALSOûHIGHûENOUGHûTOûWITHSTANDû PURCHASE PROGRAMME
proportion of mortgages are due to revert disruption, were those banks to make
from their introductory rates by the end of SIMILARûCHANGESûTOûTHEIRûVEHICLES !FTERûRAMPINGûUPûTHEû!"3û0URCHASEû
2020, and where there are large portions of 0ROGRAMMEûBYûANûUNPRECEDENTEDûõBNûINû
mortgages that are either less affordable or JUSTûFOURûWEEKSûATûTHEûSTARTûOFûTHEû
WITHû,46SûOVERû EMEA ABS coronavirus crisis, data from the last to
3UCHûDEALSûHAVEûAûHIGHûRElNANCINGûRISKû weeks available show the ECB has since
particularly since many lenders no longer MOODY’S PUTS 11 ITALIAN NPL ABS TAILEDûOFFûITSûPURCHASESû
OFFERûHIGHERû,46ûPRODUCTSûANDûHAVEûREDUCEDû ON REVIEW FOR DOWNGRADE ûh4HISûREmECTSûTHATûTHEûCENTRALûBANKûWASû
the opportunity for borrowers to switch unable to reinvest maturing principals fully
PRODUCTSûORûREMORTGAGE Moody’s has put on review for downgrade last week for these programmes, also
h,OANSûTHATûAREûDUEûTOûMOVEûTOûHIGHERû tranches from 11 of the 18 Italian non- suggesting that it had to reinvest large
reversionary rates will place an increased performing loan securitisations it rates, amounts,” according to a research note from
strain on affordability at the same time as a WITHûûMAINLYûSENIORûTRANCHESûAFFECTED !".û!-2/û
deteriorating economic backdrop,” Fitch The ratings agency also downgraded two However it remains unclear how much
SAYS of the tranches - senior notes from POPOLARE ABS the ECB has bought under an
h4HEûINABILITYûTOûRElNANCEûTOûAûLOWERûRATEû BARI NPLS 2016 and POPOLARE BARI NPLS 2017,
ALL EUROPEAN ISSUERS
could lead to increased arrears and defaults CITINGûLOWER THAN EXPECTEDûCASHmOWS
having a greater-than-expected impact on û4HEûûDEALûWASûTHEûlRSTûTOûUSEûTHEû
TRANSACTIONûPERFORMANCEv Italian government’s GACS scheme, under
0ARAGONSûPARAGON MORTGAGES (NO.26) as well which banks can pay a fee to receive a
1 BofA Securities 9 2,780.18 15.4
as certain deals from Kensington and government guarantee on the senior notes,
2 Lloyds Bank 9 2,073.91 11.5
#HARTERû#OURTûAREûAFFECTED PROVIDINGûTHEYûSELLûMOREûTHANûûOFûTHEû
3 Citigroup 7 1,603.64 8.9
LOWER RATEDûNOTESû4HEûGUARANTEEûCONFERSû
4 Credit Agricole 2 1,514.09 8.4
HOLMES ADDS HOLIDAY PROTECTION zero risk weighting on the seniors, which
5 BNP Paribas 4 1,122.23 6.2
THEûBANKSûHAVEûTYPICALLYûRETAINED
6 JP Morgan 4 1,091.33 6.0
SANTANDER UKûHASûBECOMEûTHEûlRSTû5+û2-"3û .0,ûSECURITISATIONSûAREûPARTICULARLYû
7 Goldman Sachs 3 972.04 5.4
master trust issuer to protect bondholders exposed to disruptions in the timing and
8 Morgan Stanley 3 850.78 4.7
against borrowers taking payment holidays amount of collections, and Moody’s says
9 Barclays 5 790.89 4.4
BECAUSEûOFûTHEûCORONAVIRUSûPANDEMIC non-performing deals are, along with SME
10 ING 1 576.20 3.2
Changes to its HOLMES master trust mean securitisations, the most vulnerable to
Total 32 18,080.44
any interest shortfalls will be made up by CORONAVIRUSûFALLOUT
Includes securitisations, credit-linked notes (Euro, foreign, global and
THEûVEHICLESû3ELLERSûSHAREûnûEFFECTIVELYûTHEû The coronavirus outbreak has closed domestics) and excludes CDOs.
portion of mortgages over and above the some courts in Italy and prevented property Source: Refinitiv SDC code: B16n

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 24/4/2020
Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
Carmax Auto Owner Trust 2020–2 US$223 0.24 1.252 Wells Fargo/Barclays/BofA Secs NR/A1+/F–1+ ABS
Carmax Auto Owner Trust 2020–2 US$258.385 0.94 1.750 Wells Fargo/Barclays/BofA Secs NR/AAA/AAA ABS
Carmax Auto Owner Trust 2020–2 US$65 0.94 1mUSL+130bp Wells Fargo/Barclays/BofA Secs NR/AAA/AAA ABS
Carmax Auto Owner Trust 2020–2 US$37.6 3.88 2.900 Wells Fargo/Barclays/BofA Secs NR/AA/AA ABS
Carmax Auto Owner Trust 2020–2 US$31.82 3.88 4.230 Wells Fargo/Barclays/BofA Secs NR/A/A ABS
Carmax Auto Owner Trust 2020–2 US$39.33 3.88 5.750 Wells Fargo/Barclays/BofA Secs NR/BBB/BBB ABS
Dell Financial Services 2020–1 US$378 0.39 Intl+95bp Barclays/Mizuho/RBC CM/Scotia Capital P1/NR/F–1+ ABS
Dell Financial Services 2020–1 US$432 1.30 EDSF+185bp Barclays/Mizuho/RBC CM/Scotia Capital Aaa/NR/AAA ABS
Dell Financial Services 2020–1 US$188.645 2.18 IntS+185bp Barclays/Mizuho/RBC CM/Scotia Capital Aaa/NR/AAA ABS
Dell Financial Services 2020–1 US$26.492 2.48 IntS+260bp Barclays/Mizuho/RBC CM/Scotia Capital Aa2/NR/AA ABS
Dell Financial Services 2020–1 US$31.1 2.48 IntS+390bp Barclays/Mizuho/RBC CM/Scotia Capital A1/NR/A ABS
Dell Financial Services 2020–1 US$42.618 2.48 IntS+560bp Barclays/Mizuho/RBC CM/Scotia Capital Baa2/NR/BBB ABS
HART 2020–A US$229.586 0.25 ILIB+10bp BofA Secs/Credit Agricole/JPM/Mizuho/MUFG NR/A1+/F–1+ ABS
HART 2020–A US$384.294 1.09 1.510 BofA Secs/Credit Agricole/JPM/Mizuho/MUFG NR/AAA/AAA ABS
HART 2020–A US$20.225 3.93 N/A BofA Secs/Credit Agricole/JPM/Mizuho/MUFG NR/AA+/AA ABS
HART 2020–A US$33.715 4.11 N/A BofA Secs/Credit Agricole/JPM/Mizuho/MUFG NR/A+/A ABS
Nissan Auto Receivables US$162 0.20 0.978 Wells Fargo/BofA/Lloyds/Societe Generale P1/A1+/NR ABS
Nissan Auto Receivables US$352 0.91 1.450 Wells Fargo/BofA/Lloyds/Societe Generale Aaa/AAA/NR ABS
Sabey Data Center Issuer US$550 4.98 3.812 Guggenheim/TD Secs NR/NR/NR ABS
Sabey Data Center Issuer US$200 7.48 4.419 Guggenheim/TD Secs NR/NR/NR ABS
Toyota Auto Receivables US$228 0.22 N/A BofA Secs/RBC CM/Societe Generale P1/A1+/NR ABS
Toyota Auto Receivables US$427.5 0.96 1.380 BofA Secs/RBC CM/Societe Generale Aaa/AAA/NR ABS
ALTERNATIVEûPROGRAMMEûTHEûNEWû0ANDEMICû Market sources say other managers

%MERGENCYû0URCHASEû0ROGRAMMEû0%00 û EMEA CLO RUMOUREDûTOûBEûEXPLORINGûNEWû#,/ûISSUANCEû
WHICHûNOWûSTANDSûATûõBNû ûAûõBNû EARLIERûTHISûMONTHûnûSUCHûASû/AKTREEûORû!XAû
INCREASEûONûTHEûPREVIOUSûWEEKû4HEREûISûNOû MANAGERS TRY MODIFIED STRUCTURES )NVESTMENTû-ANAGERSûnûMAYûHAVEûBEENû
data released to show whether that total TO REOPEN EUROPEAN CLOS HOPINGûTOûFOLLOWûAûSIMILARûSTRATEGY
includes ABS alongside the covered bonds, But prices for many loans have since
public sector debt and corporates that are 4HEû%UROPEANû#,/ûMARKETûHASûREMAINEDû RECOVEREDûMUCHûOFûTHEûGROUNDûTHEYûHADûLOST
ALSOûELIGIBLE closed to new issues since the coronavirus “Some managers probably took the
pandemic struck, but managers have been view that they could buy performing
INVENTORY MONETISATION FIRM exploring remodelled structures with good quality names in the 80s or 90s
READIES NEW ABS PLATFORM investors, and market participants said one ANDûRUNûTHEû#,/ûTHATûWAYvûSAIDûONEû
deal was targeted to be priced at the end of INVESTOR
)NVENTORYûMONETISATIONûlRMûSUPPLY@ME LASTûWEEK “But if you’re now buying those loans at
CAPITAL is setting up a securitisation Sources say PERMIRA DEBT MANAGERS was ûORûHIGHERûTHATûBECOMESûPROBLEMATIC
programme with StormHarbour Securities, EYEINGûTHEûSALEûOFûTHEûFOURTHû#,/ûFROMûITSû “And if you’re buying troubled names in,
BACKEDûBYûINVENTORYûCONTRACTS 0ROVIDUSûPLATFORMûONû&RIDAYûREOPENINGûTHEû say, the 70s, I don’t think there are many
Supply@ME lends to manufacturing and market, via arranger Citigroupû debt investors that will give you money for
trading companies, against the value of 0ERMIRAûANDû#ITIGROUPûCOULDûNOTûBEû THATvûTHEûINVESTORûSAID
THEIRûINVENTORYû)TûSAYSûTHEûlNANCINGûISûNOTû contacted for comment, and as IFR was Investors say deals they have been shown
treated as debt, but instead as a true sale of going to press late on Friday no pricing were structured with one-year reinvestment
INVENTORYû DETAILSûHADûBEENûSEEN periods, a much greater limit on manager
4HEûlNTECHûlRMûSAIDûONû-ONDAYûITûHADû One source away from the deal said mEXIBILITYûTHANûTHEûûYEARSûTYPICALûPRE
entered into an agreement with it appeared to have been downsized VIRUSû.ON CALLûPERIODSûAREûATûONEûYEARû
StormHarbour for the issue, distribution FROMûANûINITIALûõMûTOûAROUNDûõMû COMPAREDûTOûTWOûYEARSûPREVIOUSLY
and placement of a series of asset-backed 4HATûMAYûINDICATEûTHATû0ERMIRAûINITIALLYû 30ûSAYSûMANAGERSûAREûALSOûCONSIDERINGû
SECURITIESû)TûEXPECTSûTHEûSECURITISATIONû wanted to issue a lot more debt than it static deals, or passively managed variants
programme will cover its whole portfolio of had assets, allowing it to use the extra where limited reinvestment of unscheduled
originated inventory contracts within 12 funding to buy loans trading at principal proceeds, or the sale of credit risk
MONTHS DISCOUNTEDûPRICES ASSETSûISûPERMITTED

STRUCTURED FINANCE
30ûSAYSûITûEXPECTSûLESSûISSUANCEûOFû""ûORû That is because GM and Santander pooled

LOWERûTRANCHESûBECAUSEû#,/ûSPREADSûAREû US ABS more used car loans in their latest
SIGNIlCANTLYûWIDERûANDûBECAUSEûTHESEû securitisations, which the rating agencies
tranches may be under-collateralised on a US AUTO ABS ISSUERS RAISE CREDIT expect to fare worse than those on new
MARK TO MARKETûBASISû PROTECTION IN RETURN TO MARKET VEHICLES
4HEûRATINGSûAGENCYûEXPECTSûALLûNEWû#,/û Fitch set a base forecast on the cumulated
tranches will be issued below par, rather US auto lenders slowly returning to the NETûLOSSûFORûTHEûLATESTû'-ûDEALûATûû
THANûJUSTûTHEûSUB INVESTMENT GRADEûONESû asset-backed market are increasing credit versus the previous GM securitisation in late
That reduces the amount of cash available to enhancement to bondholders who fear that ûATûûANDûTHEûHIGHESTûPROJECTEDûLOSSû
Aû#,/ûBUTûCOULDûSPURûDEMANDûIFûINVESTORSû a protracted recession caused by the Covid- SINCEûAû'-ûDEALûITûRATEDûINû
expect to get paid back at par after the one- 19 pandemic will result in a surge of The total, or “hard,” credit enhancement
YEARûNON CALLûPERIODûENDS DEFAULTS LEVELSûFORûTHEûLATESTû'-ûTRANCHESûWEREûû
Managers are not thought to be under urgent GENERAL MOTOR and SANTANDER priced the ûûANDûûCOMPAREDûWITHûTHEû
pressure to term out warehouses, since the lRSTûAUTOû!"3ûDEALSûINûAûMONTHûONû!PRILûû AVERAGEûûûûANDûûFORû
funding facilities they have with banks have to solid demand but only after adding a the class A, B, C and D notes, respectively,
PLENTYûOFûTIMEûLEFTûTOûRUNû&EWûAREûSTRUCTUREDû thicker layer of protective cushions in the &ITCHûSAID
with mark-to-market triggers that would STRUCTURES h4HEûCREDITûENHANCEMENTûPROlLEûPROVIDESû
prompt immediate liquidation, although there And more such credit enhancements are high levels of loss coverage over Fitch’s base
are restrictions which could prevent new loans LIKELYûONûOTHERûDEALSûASû30ûANDû&ITCHûBUMPû case loss proxy,” the rating agency said in a
BEINGûADDEDûTOûAûWAREHOUSE UPûTHEIRûNETûLOSSûPROJECTIONSûONûTHEûAUTOû PRE SALEûREPORTûONûTHEû'-ûDEAL
However, the banks providing the loans in the wake of nearly 23 million Santander also increased the total credit
WAREHOUSEûlNANCINGûAREûLIKELYûTOûWANTûTHEû domestic workers seeking unemployment PROTECTIONûFORûITSû53BNûSUB PRIMEûDEAL
LOANSûOFFûBALANCEûSHEETûIFûPOSSIBLE BENElTSûSINCEûMID -ARCH 30ûFORECASTûAûCUMULATIVEûLOSSûOFû
“Managers have been prudent and have “Rating agencies are requiring higher ûFORû3$!24û û4HISûCOMPAREDû
two to three-year warehouse periods,” said credit enhancements,” said Jake Remley, WITHûINITIALûFORECASTûLOSSESûOFû û
ONEûMARKETûSOURCEûh"UTûTHEûBESTûOPTIONûISûTOû senior portfolio manager at Income ONû3ANTANDERûSUB PRIMEûDEALSû30ûHADûRATED
TERMûOUTûINTOûAû#,/ûBECAUSEûYOUûDONTû 2ESEARCHûANDû-ANAGEMENT 3ANTANDERûSETûENHANCEMENTSûATûû
KNOWûHOWûLONGûTHISûPANDEMICûWILLûLASTv Credit enhancements include establishing ûûANDûûFORûITSûLATESTû#LASSû
RESERVEûACCOUNTSûPRIORITISINGûCASHmOWSûANDû !û"û#ûANDû$û!"3ûNOTESûRESPECTIVELYû4HEYû
MOODY’S JOINS FITCH WITH MOREûOVER COLLATERALISATION COMPAREDûWITHûûûûANDû
EUROPEAN CLO RATINGS ACTION An increased credit cushion on ûINû3ANTANDERSûPREVIOUSû3$!24û
securitisation deals since the virus breakout TRANSACTIONûINûûACCORDINGûTOû30
Moody’s put 117 tranches from 39 European is seen as appealing to investors who GM and Santander also raised the levels of
LEVERAGEDûLOANû#,/SûONûREVIEWûFORû witnessed a plunge in yields on short-dated reserve accounts, which are used to absorb
downgrade on Monday, after doing the bonds like ABS after the Federal Reserve LOSSES
SAMEûFORûûTRANCHESûFROMûû53û#,/SûTHEû dropped key short-term interest rates to GM lifted its latest deal’s reserve level to
PREVIOUSû&RIDAY near zero to counter the economic fallout ûFROMûûFORûITSûPREVIOUSûONEûWHILEû
&ITCHûHADûACTEDûONû%UROPEANû#,/SûTHATû FROMû#OVID 3ANTANDERûINCREASEDûITûTOûûFROMû
Friday, putting 114 tranches from 53 With yields having fallen so low, investors “That’s what it’s all about - more credit
European deals on Negative Watch or are asking for substantially higher spreads ENHANCEMENTSûINûPLACEû9OUûWANTûTHATû
/UTLOOKû&ITCHûHADûALREADYûPUTûûTRANCHESû THANûEARLIERûTHISûYEAR insurance because there’s still a lot of
from 54 European deals on Negative Watch For example, the Triple A class A-3 notes UNCERTAINTYvûSAIDû36"û!SSETû-ANAGEMENTû
THEûPREVIOUSûWEEK INûTHEû53Mû'-ûPRIMEûDEALû'-#!2û SENIORûPORTFOLIOûMANAGERû%RICû3OUZA
30ûHASûYETûTOûREPORTûANYûSWATHEûOFû 2020-2, cleared at a spread of swaps plus
%UROPEANû#,/ûRATINGSûACTIONûRELATEDûTOûTHEû BPûFORûAûYIELDûOFû DELL REOPENS EQUIPMENT LEASE ABS
CORONAVIRUSûPANDEMIC This compared with a similar tranche in a
Moody’s analysed all 285 European GM deal in January, which fetched a spread DELL FINANCIAL SERVICESlast Tuesday raised
LEVERAGEDûLOANû#,/SûITûRATESûANDûACTEDûONû OFûBPûFORûAûYIELDûOFû 53BNûINûTHEûASSET BACKEDûSECURITIESû
THEûûDEALSûnûORûûnûWHEREûITûFOUNDû In the latest Santander sub-prime auto MARKETûWITHûTHEûlRSTûEQUIPMENTûLEASEûDEALû
EXPECTEDûLOSSESûHADûINCREASEDûMATERIALLY deal, SDART 2020-1, which was upsized to SINCEûTHEû#OVID ûPANDEMIC
It put the Triple B, Double B and Single B US$1bn from US$750m, its Triple A Class Final spreads on DEFT 2020-1 cleared at the
tranches from all 39 on review for A-3 tranche was sold at a spread of 105bp tight end of its guidance and 15bp narrower
DOWNGRADE OVERû%$3&ûFORûAûYIELDûOFû THANûINITIALûPRICEûTALK
!NDû-OODYSûSAYSûSIGNIlCANTûUNCERTAINTYû This compared with a spread of 44bp and Even so, pricing came wider than Dell’s
over the breadth and depth of the AûYIELDûOFûûFORûAûSIMILARûTRANCHEûINûTHEû previous deal in October, both on a spread
coronavirus credit shock means it is possible PRIORû3$!24ûDEALûPRICEDûLASTû!UGUST ANDûYIELDûBASIS
MOREû#,/ûTRANCHESûCOULDûGETûPUTûONûREVIEWû h9IELDSûHAVEûDROPPEDûSOûMUCHvû2EMLEYû Spreads on the senior Triple A rated
FORûDOWNGRADEûTOO NOTEDûh"UYERSûAREûENFORCINGûWIDERûSPREADSvû tranches of DEFT 2019-2 were 92bp to 145bp
Its analysis found the average reported ONûSOMEûDEALS tighter than the ones in the latest offering,
weighted average rating factor (WARF) had while those on lower investment-grade
fallen to 2982 on April 10 from 3215 on RISING RISKS NOTESûWEREûBPûTOûBPûNARROWER
-ARCHûûnûAûFALLûOFûûORûûPOINTS The overall credit quality in the GM and 4HEûYIELDSûWEREûALSOûSLIGHTLYûWIDERû4HEû
Triple A tranches are well protected from Santander transactions are somewhat !ûNOTESûWEREûPRICEDûATûAûYIELDûOFûû
the negative WARF movements seen to weaker than previous deals, according to HIGHERûTHANûTHEûûSEENûINûAûSIMILARû
DATEû-OODYSûSAYS &ITCHûANDû30ûPRE SALEûREPORTSûONûTHEûDEALS TRANCHEûINûTHEûPREVIOUSû ûDEAL

And the latest Dell transaction also fell Dell’s transaction which is expected to settle lower-rated securities remain at historically
short of the spreads seen in recent prime ONû!PRILû wide levels on worries about a spike in
auto deals, with the senior two-year delinquencies if there were a deep,
coming 90bp wide to a similarly rated AMERICAN CAR LURES ABS INVESTORS PROLONGEDûRECESSION
TRANCHEûINû4OYOTASû53BNûPRIMEûAUTOû WITH HEFTY YIELDS !MERICANû#ARû#ENTERSû53MûJUNIORû
DEALûWHICHûPRICEDûONû-ONDAY note, with a BB- rating from Kroll and a
“It’s a smaller subsection for the ABS AMERICAN CAR CENTER on April 17 priced a weighted average life of two years, cleared
market,” income and research senior US$116m asset-backed securitisation that ATûAûûYIELDûCredit Suisse was the deal’s
portfolio manager Jake Remley said of OFFEREDûAûJUICYûDOUBLE DIGITûYIELDûONûITSû SOLEûBOOKRUNNER
EQUIPMENTûLEASEûPAPERûh4HERESûLESSû JUNIORûNOTEûCAPPINGûAûWEEKûWHEREûTHEû!"3û In November, American Car Center priced
history, and recession is hurting small SECTORûSAWûITSûlRSTûAUTOûDEALSûINûAûMONTH Aû53MûCARûLEASEûDEALûWHEREûTHEû
BUSINESSESûHARDv The day before, GENERAL MOTORS sold a $OUBLEû"ûCLASSûFETCHEDûAûYIELDûOFûû
Most of the leases in the latest Dell deal 53MûPRIMEûAUTOûSECURITISATIONûANDû Meanwhile, the senior note of the
are short-term ones to large companies, Santander cleared a US$1bn subprime auto company’s latest offering, totalling
WHICHûAREûSEENûHAVINGûMOREûlNANCIALû DEALûTOûSOLIDûINVESTORûDEMAND 53MûWITHûAû""" ûRATINGûANDû
resources to ride out a deep economic 4HEûUSEDûCARûDEALERûBROUGHTûTHEûlRSTû!û YEARû7!,ûWASûSOLDûATûAûYIELDûOFûû
DOWNTURN auto-lease ABS deal with a non-investment-
,ONG TERMûLEASESûMAKEûUPûûOFûTHEû grade tranche to market in the aftermath of HYUNDAI KEEPS PACE IN US AUTO
lease portfolio, while the 20 biggest lessors the market turmoil caused by the Covid-19 ABS SUPPLY REBOUND
INûTHEûDEALûMAKEûUPûûOFûTHEû PANDEMIC
SECURITISATIONûACCORDINGûTOû&ITCH Spreads on Triple A ABS paper have HYUNDAI@Sû53ûlNANCEûUNITûLASTû-ONDAYû
Barclays, Societe Generale, SunTrust and TD narrowed in recent weeks as credit PRICEDû53BNûINûASSET BACKEDûSECURITIESû
SecuritiesûWEREûTHEûJOINTûBOOKRUNNERSûFORû conditions have improved, but those on supported by prime auto loans at spreads
GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 24/4/2020

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
SSAR
US DOLLARS
Apr 21 2020 ADB US$4.5bn Apr 29 2025 0.625 99.818 MS+23 / T+34.35 0.662
Apr 21 2020 AFD US$2bn Apr 28 2023 0.75 99.942 MS+40 / T+53.9 0.768
Apr 21 2020 NRW US$1.2bn Oct 28 2021 3mL 100 DM+18 -
Apr 21 2020 NRW US$1.75bn Apr 28 2023 0.625 99.914 MS+28 / T+42.1 0.654
Apr 23 2020 IDB Invest US$1bn May 4 2022 0.75 99.997 MS+38 / T+53.5 0.751
Apr 23 2020 Kommuninvest US$1bn Feb 2 2022 0.5 99.906 MS+15 / T+33.5 0.554
EUROS
Apr 20 2020 Brandenburg €250m Apr 27 2027 0.01 100.32 MS+14 / B+58.6 -0.04
Apr 20 2020 EFSF €3bn Apr 24 2023 0 100.68 MS+4 / B+45.3 -0.23
Apr 20 2020 EFSF €1.5bn incr Oct 17 2029 0.05 99.651 MS+15 / B+56.7 0.087
(€5bn)
Apr 20 2020 Lower Saxony €250m incr Jul 10 2026 0 100.5 MS+12 / B+56.2 -0.08
(€1.25bn)
Apr 22 2020 Bremen €750m Apr 29 2030 0.125 99.613 MS+18 / B+61.1 0.164
Apr 21 2020 Italy €10bn Jul 1 2025 1.85 99.663 BTP+21 1.928
Apr 21 2020 Italy €6bn incr Sep 1 2050 2.45 87.186 BTP+9 3.129
(€7bn)
Apr 21 2020 Luxembourg €1.5bn Apr 28 2025 0 100.93 MS+3 / B+47.3 -0.19
Apr 21 2020 Luxembourg €1bn Apr 28 2030 0 99.223 MS+13 m/ B+55 0.078

STRUCTURED FINANCE
similar to those cleared by GENERAL MOTORS The Hyundai transaction marked a near zero to counter the economic toll
the week before, supporting the view of strong start for other auto deals set to price from Covid-19-related stay-at-home
further stabilisation in this part of the last week, including issues from TOYOTA, MEASURES
MARKET NISSAN and CARMAXûMARKETûSOURCESûSAID Rating agencies have increased their
ABS primary activity picked up in h9OUûWILLûDElNITELYûCONTINUEûTOûSEEûTHISû forecast losses on auto deals due to a
earnest last Thursday with GM’s where deals are getting priced tighter than PROJECTEDûSURGEûINûUNEMPLOYMENTûTOûLEVELSû
53MûTRANSACTION their guidance,” said Eric Souza, senior seen during the global recession 12 years
The ABS market recorded three PORTFOLIOûMANAGERûATû36"û!SSETû AGO
auto issues two weeks earlier, raising -ANAGEMENT Fitch Ratings said it expects a credit loss
nearly US$2bn, ending nearly a To be sure, all the ABS deals so far since OFûûFORû(YUNDAISûLATESTûTRANSACTIONû
month-long supply drought caused by the Thursday fetched much wider spreads UPûFROMûûFORûTHEûCAR MAKERSûTWOû
market fallout from the Covid-19 THANûONESûSOLDûBEFOREûTHEûVIRUSûOUTBREAK DEALSûINû
PANDEMIC 4HEû4RIPLEû!ûNOTESûWITHûAû YEARû “Unemployment pressure on the
,IKEûTHEû'-ûOFFERINGûTHEûSENIORû weighted average life in the Hyundai deal consumer base may result in sharp
tranches of Hyundai’s HART 2020-A deal on Monday cleared at swaps plus 100bp for declines in prepayments and increases in
came in tighter, or at the tight end of their AûYIELDûOFû delinquencies,” Fitch analysts wrote in a
INITIALûPRICEûGUIDANCE This compared with a similar tranche in pre-sale report on the Hyundai deal last
They matched or ended 5bp to 10bp Hyundai’s previous prime auto deal, which WEEKû)
tighter than comparable tranches in the was priced in October at a spread of 30bp Auto issuers such as Hyundai have
'-ûDEAL ABOVEûSWAPSûFORûAûYIELDûOFû increased the credit protection on their
Bank of America, Credit Agricole, JP Morgan But outright yields on ABS have fallen in deals to appeal to investors who are
and MUFGûWEREûTHEûJOINTûBOOKûMANAGERSû the aftermath of the Federal Reserve worried about a spike in overdue loan
FORûTHEûLATESTû(YUNDAIûTRADE reducing key short-term interest rates to PAYMENTS
Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution
MS+28 area, MS+25 - >US$8bn Aaa/AAA/AAA BofA / Citi / HSBC / TD Asia 35%, EMEA 34%, Amers 31%. CB/OI
area 56%, Bks 26%, FM 17%, Other 1%.
MS+40 area, MS+40 - US$2.451bn, >60acs -/AA/AA Barc / BNPP / BofA / Citi / Daiwa Asia 37%, EMEA 36%, Amers 27%. CB/
area OI 73%, FM 17%, Bks 9%, Other 1%.
DM+19 area, DM+18 - US$1.3bn Aa1/AA/AAA BofA / CMZ / JPM / Scotia / SG EMEA 63%, Amers 37%. Bks/PB 53%,
CB/OI 38%, AM/FM/Ins 6%, Other 3%.
MS+28 area, MS+28 - US$2.15bn Aa1/AA/AAA BofA / CMZ / JPM / Scotia / SG EMEA 64%, Amers 24%, APAC 13%.
Bks/PB 51%, CB/OI 34%, AM/FM 12%,
Other 3%.
MS+38 area, MS+38 - US$1.1bn Aa1/AA/AAA BMO / Citi / HSBC / JPM -
MS+20 area, MS+15 2.5 US$3.5bn, 85acs Aaa/AAA Barc / BofA / SEB / TD EMEA 40%, Amers 38%, Asia 22%. CB/
OI 53%, Tsy 36%, AM 8%, PF/Corp/
Other 3%.
MS+15 area - >€500m Aaa BLB / Deka / Helaba Ger 78.2%, Nordics 14.4%, UK/Ire 4.4%,
Benelux 3.%. Bks 86.4%, AM 9.2%, CB/
OI 4.%, Other 0.4%.
MS+6 area, MS+5 3 >€7.7bn Aa1/AA/AA HSBC / Nomura / SG EZ 65%, UK/Switz 11%, RoEur 13%, Asia
(+/-1) 10%, Amers 1%. Bks 50%, FM 28%, CB/
OI 18%, Ins/PF 3%, Other 1%.
MS+18 area, MS+16 3 >€7.5bn Aa1/AA/AA HSBC / Nomura / SG -EZ 48%, UK/Switz 7%, RoEur 15%, Asia
(+/-1) 30%. CB/OI 50%, Bks 29%, FM 18%,
Ins/PF 2%, Other 1%.
MS+12(#) - - -/-/AAA NordLB / TD -
MS+20 area - €1.4bn -/-/AAA Deka / DZ / Helaba / JPM / NatWest Ger/Aus 70%, Fr 7.1%, Benelux 6.1%,
/ Uni Nordics 4.8%, UK 4.2%, MENA 2.3%,
Asia 2%, Other 3.5%. Bks/PB 58.1%,
AM 16.8%, CB/OI 13.9%, Ins/PF 10.9%,
Other 0.3%.
BTP +27 area, 13 ~€55bn, ~360acs Baa3/BBB/BBB/ BcaIMI / BofA / DB / JPM / Nomura UK 33%, It 24%, Sp 11%, Ger 9%, Fr 5%,
BTP+24 area combined BB(high) / SG N.Amer 2.5%, Asia 1%, Other 14.5%. FM
51%, Bks 33%, CB/OI 6%, Ins/PF 3%,
HF 7%.
BTP +15 area, 13 ~€55bn, ~360acs Baa3/BBB/BBB/ BcaIMI / BofA / DB / JPM / Nomura UK 42%, It 19%, Ger 12%, Sp 6%, Fr 6%,
BTP+12 area combined BB(high) / SG N.Amer 1.5%, Asia 1.5%, Other 12%.
FM 53%, Bks 29%, CB/OI 7.5%, Ins/PF
3.5%, HF 7%.
MS+5 area - €4bn Aaa/AAA/AAA BCEE / BGL-BNP / BIL -
/ DB / SG
MS+18 area, MS+16 - €5bn Aaa/AAA/AAA BCEE / BGL-BNP / BIL -
area / DB / SG

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 24/4/2020 (CONTINUED)
Apr 22 2020 Spain €15bn Oct 31 2030 1.25 99.456 SPGB+17 1.306
Apr 24 2020 Bpifrance €1.5bn Feb 26 2027 0.125 99.197 OATs+40 99.2
STERLING
Apr 17 2020 CPPIB £750m Dec 14 2029 1.125 99.527 G+90 1.174
Apr 21 2020 DBJ £250m Apr 28 2023 1.125 99.932 G+105 1.148
NON CORE
Apr 21 2020 Queensland A$500m Nov 20 2041 2.25 98.315 EFP+148 / 2.35
ACGB+71
Apr 21 2020 EIB SKr3bn Apr 25 2022 0.125 99.774 - -
Apr 23 2020 New Zealand Housing IL NZ$300m Sep 20 2041 2.5 101.951 NZGB+175 2.413
CORPORATES
US DOLLARS
Apr 20 2020 Campbell Soup US$500m Apr 24 2030 2.375 99.991 T+175 2.376
Apr 20 2020 Campbell Soup US$500m Apr 24 2050 3.125 99.729 T+190 3.139
Apr 20 2020 Cargill US$750m Apr 23 2023 1.375 99.896 T+115 1.408
Apr 20 2020 Cargill US$750m Apr 23 2030 2.125 99.884 T+150 2.138
Apr 20 2020 Kansas City Southern US$550m May 1 2050 3.5 99.208 T+230 3.543
Apr 20 2020 Sonoco Products US$600m May 1 2030 3.125 99.888 T+250 3.138
Apr 21 2020 Hyatt Hotels US$450m Apr 23 2025 5.375 100 5.375 5.375
Apr 21 2020 Hyatt Hotels US$450m Apr 23 2030 5.75 100 5.75 5.75
Apr 21 2020 Micron Technology US$1.25bn Apr 24 2023 2.497 100 T+225 2.497
Apr 21 2020 Kroger US$500m May 1 2030 2.2 99.786 T+165 2.224
Apr 21 2020 VF US$1bn Apr 23 2022 2.05 99.982 T+185 2.059
Apr 21 2020 VF US$750m Apr 23 2025 2.4 99.827 T+210 2.437
Apr 21 2020 VF US$500m Apr 23 2027 2.8 99.836 T+235 2.826
Apr 21 2020 VF US$750m Apr 23 2030 2.95 99.785 T+240 2.975
Apr 22 2020 Equifax Inc US$400m Dec 15 2025 2.6 99.888 T+225 2.621
Apr 22 2020 Equifax Inc US$600m Dec 15 2030 3.1 99.81 T+250 3.122
Apr 22 2020 HowMet Aerospace US$1.2bn May 1 2025 6.875 100 T+651 6.875
Apr 23 2020 Constellation Brands Inc US$600m May 1 2030 2.875 99.801 T+230 2.898
Apr 23 2020 Constellation Brands Inc US$600m May 1 2050 3.75 99.286 T+260 3.79
Apr 23 2020 Expedia Group US$2bn May 1 2025 6.25 100 6.25 6.25
Apr 23 2020 Expedia Group US$750m May 1 2025 7 100 7 7
Apr 23 2020 Marathon Petroleum US$1.25bn May 1 2023 4.5 99.941 T+425 4.521
Apr 23 2020 Marathon Petroleum US$1.25bn May 1 2025 4.7 99.805 T+437.5 4.744
Apr 23 2020 Nasdaq US$500m Apr 28 2050 3.25 98.098 T+215 3.351
Apr 23 2020 Travelers Cos US$500m Apr 27 2050 2.55 99.231 T+140 2.587
EUROS
Apr 20 2020 Elia Transmission Belgium €800m Apr 28 2030 0.875 98.731 MS+105 / B+145.2 1.009
Apr 20 2020 JCDecaux €500m Apr 24 2028 2.625 100 MS+275 / B+317.3 2.625

BONDS SUMMARY DETAILS
SPGB+22 area, 12 >€96.5bn, 560acs Baa1/A/A-/A Barc / BNPP / Citi / HSBC / JPM UK/Ire 33.3%, Fr/It 15.6%, Ger/Aus/
SPGB+20 area Switz 11.8%, RoEU 5.1%, Nordics 5.2%,
Asia 2.6%, ME 2.6%, N.Amer 2.5%,
RoW 0.5%.FM 41.3%, Tsy 19.5%. Ins/
PF 12.1%, Bks 10%, CB/OI 7%, HF 6.3%,
Other 3.8%.
OATs +42 area - >€3.3bn Aa2/-/AA BNPP / NatWest / CA-CIB / GS / JPM -
G+low 90s, G+90(#) - >£875m Aaa/AAA/AAA Barc / BofA / Citi / NatWest / TD -

G+120 area, G+115 - >£370m A1/A Barc / HSBC / Miz / Nomura -
area
- - - Aa1/AA+/AA Citi -
- - - Aaa/AAA/AAA SEB -
Aaa/AA+ ANZ -
T+210 area 1 US$3.3bn Baa2/BBB-/BBB Bofa/Barc/Citi/JPM -

T+180 (+/-5)
T+215 area 9 US$2bn Baa2/BBB-/BBB Bofa/Barc/Citi/JPM -
T+195 (+/-5)
T+160 area 0 US$3.5bn A2/A/A Bofa/BNPP/Citi/DB/JPM -
T+195 area 0 US$4.1bn A2/A/A Bofa/BNPP/Citi/DB/JPM -
T+255 area 13 US$2bn Baa2/BBB/BBB BofA/JPM/MS -
T+280 area n/a n/a Baa2/BBB BofA/JPM(a)/USB/WFS(p) -
5.875% area 47.5 US$3.25bn Baa3/BBB- BofA/GS/JPM -
6.25 area 50 US$3.35bn Baa3/BBB- BofA/GS/JPM -
T+300 area 0 US$5.8bn Baa3/BBB- Citi/CS/MS -
T+237.5 (+/-12.5)
T+215 area -5 US$2.3bn Baa1/BBB BofA/Citi/USB -
T+195 area 25 US$1.7bn A3/A BofA/Barc/JPM/MS(a)/HSBC/ING/ -
USB/WFS(p)
USB/WFS(p)
USB/WFS(p)
USB/WFS(p)
T+275 area 10 US$4.3bn Baa2/BBB BofA/JPM/WFS(a)/Mizuho/STRH(p) -
T+300 area 10 US$4.4bn Baa2/BBB BofA/JPM/WFS(a)/Mizuho/STRH(p) -
7.75% area, 97.5 US$3.6bn Ba3/BBB-/BBB- JPM -
7% (+/- 12.5)
T+280 area, -7 US$8.2bn Baa3/BBB BofA/GS/JPM -
-
T+305 area, -10 US$7bn Baa3/BBB BofA/GS/JPM -
-
low 7’s 40 US$11bn Baa3/BBB/BBB- BofA/BNP/HSBC/JPM/Miz -
6.25%/6.50%
high 7’s 40 Baa3/BBB/BBB- BofA/BNPP/HSBC/JPM/Miz -
T+75 area,
T+500 area, 25 US$3.5bn Baa2/BBB-/BBB Citi/JPM/Miz -
T+437.5 area (+/-
12.5)
T+500 area, 27.5 US$4.5bn Baa2/BBB-/BBB Citi/JPM/Miz -
T+437.5 area (+/-
12.5)
T+300 area, 10 US$6.75bn Baa3/BBB BofA/GS/JPM/Miz/MS -
T+230 area (+/-5)
T+180 area, 1 US$5bn A2/A/A Citi/HSBC/JPM/WFS -
T+145 area (+/-5)
MS+165 area, - ~€6.3bn -/BBB+ BNPP / ING / KBC / Rabo -

MS+120 area
MS+310 area, - >€1.5bn Baa2/BBB BNPP / CA-CIB / HSBC / MUFG / -
MS+280 area Natx / SG / Barc / CIC / StCh

Apr 20 2020 JCDecaux €500m Oct 24 2024 2 99.516 MS+235 / B+276.1 2.115
Apr 20 2020 Sodexo €700m Apr 27 2025 0.75 99.829 MS+100 / B+141.1 0.785
Apr 20 2020 Sodexo €800m Apr 27 2029 1 98.953 MS+120 / B+162.4 1.123
Apr 21 2020 PVH Corp €150m incr Jul 15 2024 3.625 99.5 - 3.753
(€525m)
Apr 22 2020 Auchan Holding €1bn Jan 29 2026 2.875 99.139 MS+320 / B+366.6 3.042
Apr 23 2020 APA Group €600m Jul 15 2030 2 99.32 MS+210 / B+250.5 2.075
Apr 23 2020 Firmenich €750m Oct 30 2026 1.375 99.86 MS+155 / B+199.7 1.398
Apr 23 2020 Firmenich €750m Apr 30 2030 1.75 99.356 MS+185 / B+224.9 -
Apr 24 2020 Deutsche Wohnen €500m Apr 30 2025 1 98.91 MS+145 / B+187.9 1.226
Apr 24 2020 Deutsche Wohnen €500m Apr 30 2030 1.5 98.211 MS+175 / B+215.3 1.696
Apr 24 2020 Holding d’Infrastructures de €600m May 4 2027 2.5 99.141 MS+280 / B+323.9 2.636
Transport
Apr 24 2020 Syngenta €100m Apr 16 2026 3.375 101.995 - -
STERLING
Apr 20 2020 Tesco £450m Apr 27 2030 2.75 99.592 G+245 2.778
Apr 24 2020 Sovereign Housing £125m Nov 4 2048 2.375 108.71 G+135 1.974
Association (sale of retianed)
SWISS FRANCS
Apr 21 2020 Flughafen Zurich SFr300m May 22 2024 0.7 100 MS+130 / 0.7
Eidg+144.2
Apr 22 2020 Firmenich SFr425m Dec 19 2023 1 100.33 MS+150 / 0.905

Eidg+161.5
NON CORE
Apr 22 2020 Avinor NKr1bn Apr 29 2026 3mN+120 100 3mN+120 -
Apr 22 2020 Avinor NKr1bn Apr 29 2031 2.38 100 - 2.38
FINANCIALS
US DOLLARS
Apr 17 2020 Bank of New York Mellon US$1.25bn Apr 24 2025 1.6 99.962 T+125 1.608
Apr 22 2020 Bank of America US$3bn Apr 29 2031 2.592 100 T+197 2.592
Apr 22 2020 Bank of Montreal US$1.5bn May 1 2025 1.85 99.924 T+150 1.866
Apr 23 2020 First Horizon Bank US$450m May 1 2030 5.75 100 5.75 5.75
Apr 23 2020 Morgan Stanley US$3bn Apr 28 2026 2.188 100 T+183 2.188
Apr 23 2020 Wells Fargo & Co US$3bn Apr 30 2026 2.188 100 T+183 2.188
Apr 23 2020 Wells Fargo & Co US$3.5bn Apr 30 2041 3.068 100 T+190 3.068
EUROS
Apr 20 2020 BPCE €1.5bn Apr 28 2025 0.625 99.52 MS+95 / B+136.5 0.723
Apr 24 2020 Swedbank €1bn May 5 2025 0.75 99.966 MS+98 / B+140.6 0.757
Apr 24 2020 Wells Fargo €1.5bn May 1 2025 (May 2024) 1.338 100 MS+160 / B+202 1.338
Apr 24 2020 Wells Fargo €1.5bn May 1 2030 (May 2029) 1.741 100 MS+185 / B+227.7 1.741

MS+270 area, - >€1.4bn Baa2/BBB BNPP / CA-CIB / HSBC / MUFG / -

MS+240 area Natx / SG / Barc / CIC / StCh
MS+135/+140, 5 >€1.8bn, 119acs -/A- BNPP / Citi / HSBC / SG Fr 52%, Benelux 16%, Ger/Aus 12%, UK/
MS+100/+105 Ire 9%, S.Eur 8%, Other 3%. AM 61%, OI
17%, Bks 14%, Ins/PF 6%, Other 2%.
MS+155/+160, 5 >€2.5bn, 124acs -/A- BNPP / Citi / HSBC / SG Fr 62%, Benelux 5%, Ger/Aus 18%, UK/
MS+120/+125 Ire 7%, S.Eur 4%, Other 4%. AM 68%, OI
14%, Bks 7%, Ins/PF 8%, Other 3%.
99.50-100.00 price - - Baa3/BBB- Barc / Citi -
MS+370 area, 15 ~€4bn -/BBB- Natx / CA-CIB / CMZ / HSBC / SG Fr 33%, Ger/Aus 25%, UK/Ire 18%, S.Eur
MS+330 area / Uni 9%, Switz 6%, Nordics 3%, Benelux 3%,
Other 3%. AM 70%, OI 12%, Ins/PF 7%,
Bks/PB 5%, Other 6%.
MS+250/+260, 25 >€4.1bn Baa2/BBB BNPP / Citi / HSBC / JPM -
MS+220 area
MS+195 area, - >€3.5bn -/BBB Citi / UBS -
MS+160 area
MS+230/+235, - >€3.6bn -/BBB Citi / UBS -
MS+195 area
MS+200 area, - >€5.5bn A3/A- DB / GS / JPM / BNPP / Uni -
MS+155 area (+/-5)
MS+230 area, - >€6.2bn A3/A- DB / GS / JPM / BNPP / Uni -
MS+185 area (+/-5)
MS+330 area, - ~€2.7bn -/BBB-/BBB BNPP / CA-CIB / HSBC / Natx / SG -
MS+290 area
- - - Ba2/BBB-/BBB - -
G+295 area, -15 £3.55bn Baa3/BBB-/BBB- Citi / CMZ / HSBC / NatWest UK 86%, Eur 11%, Asia 2%, Other 1%. AM
G+245/+250 WPIR 86%, Ins/PF 5%, Corp 5%, Bks/CB 3%,
Other 1%.
- - - A2/A+ Barc / Santan -
MS+135/+150, 10 >SFr300m, 106acs -/AA- CS / ZKB Switz 100%. AM 50%, PB 21.5%, PF 13%,
MS+130/+140, Ins 8%, Tsy 7.5%.
MS+130/+135
(WPIR)
MS+150/+165, 7.5 SFr425m, 125acs -/BBB CS / ZKB Switz 100%. AM 44%, PB 32%, Ins 16%,
MS+150/+155 WPIR PF 8%.
3mN+140 area, - NKr5bn A1 Danske / DNB / Nordea / SEB -

3mN+120/+130
2.5% area, - NKr3bn A1 Danske / DNB / Nordea / SEB -
2.38%/2.4% WPIR
T+155 area 5 US$4bn A1/A/AA- BNYM/Citi/CS/GS -

T+225 area, 2 US$9.5bn A2/A-/A+ BofA -
T+200 (the #)
T+175 area, 10 US$2.4bn A2/A-/AA- BMO/Citi/GS/JPM/MS -
T+150 (the #)
6% area, n/a US$800m Baa3/NR/BBB- GS/JPM/MS -
5.75% (the #)
T+215 area, 5 US$9bn A3/BBB+/A MS -
-
T+215 area, 5 US$6.5bn A2/A-/A+ WFS -
T+183 (the #)
T+220 area, 5 US$6.5bn A2/A-/A+ WFS -
T+190 (the #)
MS+125 area, - >€3.1bn, 140acs A1/A+/A+ Natx -

MS+100 (+/-5 WPIR)
MS+130/+135, - >€3.5bn Aa3/A+/AA- BofA / DB / JPM / Natx / Swed / UBS -
MS+100/+105
MS+200 area, - >€4bn A2/A-/A+/AAL Barc / ING / Lloyds / SG / WFS -
MS+165 area (+/-5
WPIR)
MS+225 area, - >€4.5bn A2/A-/A+/AAL Barc / ING / Lloyds / SG / WFS -
MS+190 area (+/-5
WPIR)

STERLING
Apr 23 2020 Phoenix Group Holdings T2 £500m Apr 28 2031 5.625 98.844 G+540 5.689
Apr 24 2020 Legal & General T2 £500m Nov 1 2050 (Nov 2030) 4.5 99.661 G+425 4.541
COVERED BONDS
EUROS
Apr 23 2020 CRH €1.25bn Apr 30 2027 0.125 99.694 MS+31 / B+75.4 0.169
NON CORE
Apr 20 2020 Suncorp A$750m Apr 27 2025 3mBBSW+112 100 3mBBSW+112 -
Apr 21 2020 Bluestep Bank SKr1.7bn Apr 27 2023 3mS+100 101.259 - -
HIGH YIELD
US DOLLARS
Apr 17 2020 AMC Entertainment US$500m Apr 15 2025 10.5 98 T+1067 11.031
(Apr 2022)
Apr 17 2020 Ford Motor US$3.5bn Apr 21 2023 8.5 100 - 8.5
(Apr 2022)
Apr 17 2020 Ford Motor US$3.5bn Apr 22 2025 9 100 - 9
(Apr 2022)
Apr 17 2020 Ford Motor US$1bn Apr 22 2030 9.625 100 - 9.625
(Apr 2022)
Apr 20 2020 ADIENT US US$600m Apr 15 2025 9 100 T+865 9%
(Apr 2022)
Apr 20 2020 Cedar Fair US$1bn May 1 2025 5.5 100 T+515 5.5
(May 2022)
Apr 21 2020 Alliant Holdings US$300m Oct 15 2027 6.75 100 T+630 6.75
Apr 21 2020 Builders FirstSource US$350m (Oct 2022) 6.75 98.75 T+650.4 6.974
Apr 21 2020 Kaiser Aluminium US$300m May 1 2025 6.5 100 T+616 6.5
(May 2022)
Apr 21 2020 Navistar International US$600m May 1 2025 9.5 100 T+916 9.5
(May 2022)
Apr 21 2020 Performance Food Group US$275m May 1 2025 6.875 100 T+652 6.875
(May 2022)
Apr 21 2020 Sally Holdings US$300m Apr 30 2025 8.75 100 T+843 8.75
(Apr 2022)
Apr 21 2020 SeaWorld Parks & US$228m May 1 2025 8.75 100 T+841 8.75
Entertainment
Apr 21 2020 Univision US$370m May 1 2025 9.75 99.026 T+916 9.75
(May 2022)
Apr 22 2020 Aramark US$1.5bn May 1 2025 6.375 100 T+599 6.375
(May 2022)
Apr 22 2020 GFL Environmental US$500m Jun 1 2025 4.25 100 T+385 4.25
(Jun 2022)
Apr 23 2020 Gap US$500m May 15 2023 8.375 100 T+811 8.375
Apr 23 2020 Gap US$750m May 15 2025 8.625 100 T+824 8.625
(May 2022)
Apr 23 2020 Gap US$1bn May 15 2027 8.875 100 T+839 8.875
(May 2023)
Apr 23 2020 Entergis US$400m May 15 2028 4.375 100 T+385 4.375
(May 2022)
Apr 23 2020 MGM Resorts US$750m May 1 2025 6.75 100 T+639 6.75
(May 2022)
Apr 23 2020 Netflix US$500m Jun 15 2025 3.625 100 T+323 3.625
(Jun 2022)
Apr 23 2020 XPO Logistics US$850m May 1 2025 6.25 100 T+568 6.25
(May 2022)
Apr 23 2020 US Foods US$1bn Apr 15 2025 6.25 100 T+589 6.25
(Apr 2022)
EUROS
Apr 23 2020 Netflix €470m Jun 15 2025 3 100 B+362 3

G+585 area, - - -/-/BBB NatWest -

G+475 area, G+435 - >£4.75bn A3/BBB+ BofA / Barc / HSBC / NatWest / MS -
area / Nomura
MS+36 area - >€4.5bn, 137acs Aaa/-/AAA Barc / CA-CIB / LBBW / Natx / SG Ger/Aus 39%, Fr 20%, Nordics 13%,
Benelux 8%, S.Eur 7%, Switz 7%, UK/Ire
4%, Other 2%. Bks 53%, FM 24%, CB/OI
21%, Ins 2%.
3mBBSW+115/+120 - - Aaa/-/AAA ANZ/RBC/WBC -

- - - Aa1 Nordea / Danske / SEB -
10.5%/11% Cpn at - - Ba3/CCC+ Citi/Barc/BofA/CS/GS -

98%
9.5% area, - - Ba2/BB+/BBB- Citi/BofA/GS/JPM/MS -
8.75% area
10% area, - - Ba2/BB+/BBB- Citi/BofA/GS/JPM/MS -
9% area
11% area, - - Ba2/BB+/BBB- Citi/BofA/GS/JPM/MS -
10% area
9.25% area - - Ba3/B+ Citi/BofA/CA/JPM -
5.5%/5.75%, - - Ba2/BB JPM/Key/WFS/UBS -

5.50%
100% area - - Caa2/CCC+ MS(Left)/ STONEP/BofA/Capone/ -
FTSEC/GS/Jeff/KKR/MQB/Nomura/
RBC/STRH
98.50%/98.75% - - B1/BB+ CS/Citi/BofA/WFS/Sun -
6.5%/6.75% - - Ba3/BB+ Barc/JPM/WFS -
9.5%/9.75% - - B2/B JPM/BAML/Citi/DB -
7% area - - B2/B CS/WFC/BofA/BMO/CAPFIN/JPM/ -

Rabo
8.75% area - - Ba2/BB- BofA/STRH/JPM -
8.75%/9% - - B3/B- JPM/GS/DB/Barc/Citi/Citizens/FITB -
9.75%/10% area, - - B2/B DB/JPM/BofA/Barc/Citi/GS/MS -

9.5% at 99.03%
6.5% area - - B1/BB- GS/JPM/BofA/PNC/WFS/CS/ -
CapOne/Barc
4.25% at par - - Ba3/BB- Barc/BMO/GS/RBC/Scotia/TD -
8.5% area - - Ba2/BB MS/Bofa/JPM/Citi/GS -

8.75% area - - Ba2/BB MS/Bofa/JPM/Citi/GS -
9% area - - Ba2/BB MS/Bofa/JPM/Citi/GS -
4.5% area - - Ba2/BB MS/BofA/Citi/GS/PNC/STRH/WFS -
6.75%/7% - - Ba3/BB- JPM/BofA/Barc/Citi/BNP/Citizens/ -

FITB/SMB/Scotia
3.75% area - - Ba3/BB- MS/GS/JPM/DB/WFS -
- - - Ba3/BB- GS/CA-CIB/Barc/BNPP/Citi/CS/ -
DB/MS
6.25%/6.50% - - Ba3/BB Citi/BofA/FITB/STRH/WFS/KKR -
3.25% area - - Ba3/BB- MS / GS / JPM / DB / WFS -

GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (24/4/2020)
Moody’s S&P Fitch Moody’s S&P Fitch
Sovereign 1 2 3 4 5 6 Sovereign 1 2 3 4 5 6
Abu Dhabi Aa2 – AA AA+ AA AA+ Kyrgyzstan B2 Ba3 – – – –

Albania B1 Ba2 B+ BB – – Latvia A3 Aaa A AAA A– AAA
Andorra – Ba2 BBB AAA BBB+ A+ Lebanon Caa2 Caa1 CCC n CCC CC CCC
Angola B3 B2 B– n B– Bn B Lesotho – – – – B B+
Argentina Caa2 Caa1 CC n B– Cd CCC Liechtenstein – Aaa AAA AAA – –
Armenia Ba3 Ba1 – – BB– BB Lithuania A3 p Aaa A AAA A– p AAA
Aruba – – BBB+ n BBB+ BBB– n BBB Luxembourg Aaa Aaa AAA AAA AAA AAA
Australia Aaa Aaa AAA AAA AAA AAA Macau Aa3 Aa2 – – AA n AAA
Austria Aa1 Aaa AA+ AAA AA+ p AAA Macedonia (FYR) – – BB– BB BB+ BBB–
Azerbaijan Ba2 Ba2 BB+ BB+ BB+ n BB+ Malaysia A3 A1 A– A+ A– A
Bahamas Baa3 Baa1 BBn d BB+ d – – Maldives B2 n Ba3 – – B+ BB–
Bahrain B2 Ba3 B+ p BB– BB– BBB– Malta A2 Aaa A– p AAA A+* AAA
Bangladesh Ba3 Ba2 BB– BB– BB– BB– Mauritius Baa1 A2 – – – –
Barbados Caa1 B2 B– B– – – Mexico Baa1 n d A2 d BBB+ n A+ BBB– d BBB+ d
Belarus B3 B3 B B B B Moldova B3 B2 – – – –
Belgium Aa3 Aaa AA AAA AA– AAA Mongolia B3 B1 B B+ B B+
Belize B3 B1 CCC n d CCC+ d – – Montenegro B1 p Ba1 B+ AAA – –
Bermuda A2 Aa3 A+ * AA+ – – Montserrat – – BBB– BBB– – –
Morocco Ba1 Baa2 BBB– BBB+ BBB– BBB
Bolivia Ba3 Ba2 B+ d B+ d B+ B+
Mozambique Caa2 Caa1 CCC+ CCC+ CCC B–
Bosnia Herzegovina B3 B3 Bp BB– – –
Namibia Ba2 Baa3 – – BB BB+
Botswana A2 Aa3 A– A+ – –
Netherlands Aaa Aaa AAA AAA AAA AAA
Brazil Ba2 Ba1 BB– BB+ BB– BB
New Zealand Aaa Aaa AA p AAA AA AAA
Bulgaria Baa2 A3 BBB A BBB p A–
Nicaragua B2n B1 B– B– B– B–
Cambodia B2 B1 – – – –
Nigeria B2 n B1 B B+ B+ n B+
Cameroon B2 Ba2 Bn BBB– B nd B+
Norway Aaa Aaa AAA AAA AAA AAA
Canada Aaa Aaa AAA AAA AAA AAA
Oman Ba1 n Baa3 BB n BB+ BB+ BBB–
Cape Verde – – B BB– B– d Bd
Pakistan B3 B2 B– B– B– B–
Cayman Islands Aa3 Aa2 – – – –
Panama Baa1 A2 BBB+ AAA BBB A
Chile A1 Aa2 A+ – A AA
Papua New Guinea B2 B1 B B – –
China A1 Aa3 A+ A+ A+ A+
Paraguay Ba1 Baa3 BB BB+ BB+ BB+
Colombia Baa2 A3 BBB– BBB+ BBB n BBB+
Peru A3 A1 BBB+ A BBB+ A–
Congo (DR) B3 n B3 CCC+ CCC+ – –
Philippines Baa2 A3 BBB+ A– BBB BBB+
Congo (Rep) Caa2 n B2 B– BBB– CCC B+
Poland A2 Aa3 A– A A– AA–
Cook Islands – – B+ AAA – –
Portugal Baa3 p Aa3 BBB p AAA BBB* AA
Costa Rica B1n Ba2 B+n BB B+n BB–
Qatar Aa3 Aa3 AA– AA AA– AA
Cote d’Ivoire Ba3 Baa3 – – B+ p BBB–
Ras al–Khaimah A AA+ A AA+
Croatia Ba2 p Baa3 BBB BBB+ BBB– p BBB+
Romania Baa3 A3 BBB– A– BBB– n d BBB+
Cuba Caa2 Caa2 – – – –
Russia Baa3 Baa2 BBB– BBB BBB BBB
Curacao – – BBB+ BBB+ – –
Rwanda B2 B1 B+ B B+ B+
Cyprus Ba2 p A2 BBB– AAA BBB– p A
St Vincent & Gren B3 Ba3 – – – –
Czech Rep Aa3 Aa1 up AA– AA+ AA– AAA
San Marino – – – – BBB– n BBB+
Denmark Aaa Aaa AAA AAA AAA AAA
Saudi Arabia A1 A1 A– A A A+
Dominican Rep Ba3 Ba1 BB– n d BB+ BB– BB–
Senegal Ba3 Baa1 B+ BBB– – –
Ecuador B3 n B2 B– B– RD d CCC
Serbia Ba3 Ba1 BBp BB+ BB+ BBB–
Egypt B2 B1 B B B+ B+ Seychelles – – – – BB BBB–
El Salvador B3 B1 B– AAA B– B Singapore Aaa Aaa AAA AAA AAA AAA
Estonia A1 Aaa AA– AAA AA– AAA Slovakia A2 Aaa A+ AAA A+ AAA
Ethiopia B1 n B1 B B Bn B Slovenia Baa1 p Aa1 AA– AAA A AAA
Fiji Ba3 Ba3 BB– BB– – – Solomon Islands B3 B2 – – – –
Finland Aa1 Aaa AA+ AAA AA+ p AAA South Africa Baa3 n A3 BB n BBB– BB+ n BBB–
France Aa2 p Aaa AA AAA AA AAA South Korea Aa2 Aa1 AA AAA AA– AA+
Gabon Caa1 p B1 B BB+ Spain Baa1 Aa1 A AAA A– AAA
Georgia Ba2 Baa3 BB BBB– BB BBB– Sri Lanka B2 Ba3 Bn B B B
Germany Aaa Aaa AAA AAA AAA AAA Suriname B2 Ba3 B B+ CCC B–
Ghana B3* B1 B B+ B B Sweden Aaa Aaa AAA AAA AAA AAA
Greece B1 Baa1 BB– AAA BB* BBB+ Switzerland Aaa Aaa AAA AAA AAA AAA
Guatemala Ba1 Baa3 BB– BB+ BB n BB+ Tanzania B1n Ba3 – – – –
Honduras B1 Ba2 BB– BB – – Taiwan Aa3 Aa2 AA– AA+ AA– AA+
Hong Kong Aa2 n Aaa AA+ AAA AA– d AAA Thailand Baa1* A2 BBB+ A BBB+ p A–
Hungary Baa3 Baa1 BBB A– BBB A Trinidad & Tobago Ba1 Baa3 BBB BBB+ – –
Iceland A3 p A3 A A A A+ Tunisia B2 n Ba3 – – B+ n BB–
India Baa2 Baa1 BBB– BBB+ BBB– BBB– Turkey B1n B1 B+ BB– BB– BB–
Indonesia Baa2 A3 BBB n d BBB+ BBB BBB Turks & Caicos – – BBB+ AAA – –
Iraq Caa1 B3 B– AAA B– n d B– Uganda B2 Ba3 BB A– B+ B+
Ireland A2 Aaa AA– AAA A+ AAA Ukraine Caa1p B3 B B B* B
Israel A1 p Aa3 AA– AA+ A+ AA UAE Aa2 Aa2 – – – –
Italy Baa3 Aa3 BBB n AAA BBB n AA UK Aa2 Aaa AA + AAA AA n AAA
Jamaica B2 Ba3 B+ n d BB– B+ BB– USA Aaa Aaa AA+ AAA AAA AAA
Japan A1 p Aaa A+ p AA+ A AAA Uruguay Baa2 A2 BBB A– BBB– n BBB+
Jordan B1 Ba1 B+ BB BB– BB Venezuela C Ca SD CC – –
Kazakhstan Baa3 p Baa2 BBB– BBB BBB BBB+ Vietnam Ba3 Ba1 BB BB BB p BB
Kenya B2 Ba3 B+ BB– B+ BB– Zambia Caa2 n B3 CCC+ CCC+ CC d B–
Kuwait Aa2 Aa2 AA AA+ AA AA+
1 Moody’s Government Bonds 5 Fitch Government Bonds n Negative outlook/on watch * Taken off positive watch/ c Improvement in ratings,
2 Moody’s Country Ceilings 6 Fitch Country Ceilings for downgrade outlook outlook or watch status
3 S&P Government Bonds p Positive outlook/on watch N New rating ** Taken off negative watch/ d Deterioration in ratings,
4 S&P Transfer and for upgrade W Rating withdrawn outlook outlook or watch status
Convertibility Assessments SD Selective default
EMERGING MARKETS
China India Singapore South Korea Bulgaria Estonia Russia
Turkey û UAE Argentina Colombia Ecuador Guatemala
FRONT STORY MIDDLE EAST
Gulf faces up to AT1 extension risk

Omani bank decides to take up option not to call
Others may follow given refinancing costs
Bondholders of Gulf bank capital are FAMOUS FIVE &!"û!A!!n!!n ûFORûEXAMPLEû
FACINGûTHEIRûlRSTûTESTûAFTERû/MANSûBANK )NûTHEû'ULFûlVEûBANKSûINCLUDINGû$HOFARû REPORTEDûAûPOST DIVIDENDû#%4ûRATIOûOFû
DHOFAR said it would not exercise an option ANDû&!"ûHAVEû!4ûBONDSûCALLABLEûTHISûYEARû ûFORûTHEûûlNANCIALûYEARû
to call its Additional Tier 1 securities next TOTALLINGû53BN. COMFORTABLYûABOVEûTHEû5!%ûCENTRALûBANKSû
MONTH EMIRATES NBDûHASûAû53MûûBONDû REGULATORYûMINIMUMûREQUIREMENTûOFû
"ANKû$HOFARûHASûAû53Mûû CALLABLEûINû3EPTEMBER 2ATHERûTHEûQUESTIONûISûONEûOFûOPTICSûANDû
perpetual bond due for a call on May 27 "AHRAINSûAHLI UNITED BANK has a call due THEûIMPACTûOFûAûNON CALLûONûINVESTORS
but last Thursday it said that it had taken INû/CTOBERûONûITSû53MûûNOTEû h2IGHTûNOWûITSûONLYûABOUTûEXTENSIONû
THEûDECISIONûNOTûTOûREDEEMûTHEûNOTEûATûTHEû 4HATûWASûDUEûTOûBEûTHEûlRSTû!4ûFROMûTHEû RISKvûSAIDû!BDULû+ADIRû(USSAINûHEADûOFû
lRSTûOPPORTUNITYû)TûSAIDûTHEûDECISIONû REGIONûTOûCOMEûDUEûFORûAûCALLûWITHûTHEûlRSTû lXED INCOMEûASSETûMANAGEMENTûATû
REmECTEDûTHEûBANKSûSTRATEGYûOFûEVALUATINGû DEADLINEûORIGINALLYûSCHEDULEDûFORû!PRILû"UTû !RQAAMû#APITAL
all call decisions, in particular taking into ITûWASûPUSHEDûBACKûBYûSIXûMONTHSûASû h7EûDONTûTHINKûTHEREûISûAûLOTûOFûCOUPONû
ACCOUNTûTHEûEFFECTSûOFûTHEûCORONAVIRUSûONû +UWAITû&INANCEû(OUSEûPURSUEDûANû DEFERRALûORûWRITEDOWNûRISKûATûTHISûPOINTû
MARKETûCONDITIONSûANDûTHEûECONOMICû ACQUISITIONûOFûTHEûBANK -OSTûBANKSû#%4ûRATIOSûSTILLûHAVEûPLENTYûOFû
ASPECTSûOFûMANAGINGûITSûCOSTûOFûCAPITAL NATIONAL BANK OF OMANûHASûAû53Mû BUFFERû/FûCOURSEûITûBECOMESûAûVICIOUSûCYCLEû
)NVESTORSûHADûAPPEAREDûSCEPTICALûTHATûITû û!4ûBONDûCALLABLEûINû.OVEMBER THEûMOREûPROVISIONINGûTHEYûHAVEûTOûTAKEû
would call the bond in the run up to the !ûSPOKESPERSONûFORû%."$ûSAIDûTHEû ANDûTHEûMOREûEQUITYûBUFFERSûAREûIMPACTEDv
ANNOUNCEMENTû)TûWASûQUOTEDûATûn BANKûWOULDûMAKEûAûDECISIONûCLOSERûTOû 4HEûPOTENTIALûREPUTATIONALûDAMAGEûDONEû
ûACCORDINGûTOû2ElNITIV the call date as to what action it will BYûNOTûCALLINGûTHEûBONDSûISûSOMETHINGûTHATû
“Dhofar will not call that AT1, unless TAKEû&!"ûDECLINEDûTOûCOMMENTû."/ûANDû BANKSûWILLûHAVEûTOûCONSIDERûINûTHEIRû
THEYREûBONKERSvûSAIDûAûBANKERûBEFOREûTHEû !5"ûDIDûNOTûRESPONDûTOûAûREQUESTûFORû DECISIONûALTHOUGHû3ANTANDERûFORûEXAMPLEû
ANNOUNCEMENTûh2ElNANCINGûITûWILLûBEûSOû COMMENT CONTINUEDûTOûENJOYûMARKETûACCESSûWHILEûITSû
MUCHûMOREûEXPENSIVEûANDûPROBABLYû .OTûALLûAREûCONVINCEDûOFûTHEûNEEDûFORû !4ûREMAINEDûOUTSTANDING
IMPOSSIBLEûANYWAYûINûTHISûMARKETv NOTESûTOûBEûCALLEDûATûTHEûlRSTûINSTANCE h4HEûREPUTATIONALûDAMAGEûWILLûBEûHIGHûIFû
4HEûûCOUPONûWILLûBEûRESETûTOûTHEû53û h4OûBENDûOVERûBACKWARDSûTOûRElNANCEû BONDSûDONTûGETûCALLEDûnûSOMETHINGûWHICHû
DOLLARûlVE YEARûMID SWAPûRATEûCURRENTLYûATû ANû!4ûûJUSTûBECAUSEûYOUûHAVEûSAYû BANKSûWILLûNOTûRISKûINûMYûVIEWvûSAIDû&AISALû
%ûPLUSûûnûAûLEVELûFARûLOWERûTHANû 53MûOUTûTHEREûWITHûINVESTORSû)ûDONTû !LIûSENIORûPORTFOLIOûMANAGERûATûASSETû
THEûCOSTûOFûTRYINGûTOûRElNANCEûITûTHROUGHûAû KNOWûIFûITSûECONOMICALLYûVIABLEvûSAIDûTHEû MANAGERû!ZIMUT
NEWûISSUE second banker, noting that it was a !LIûSAYSûTHEûBANKSûHAVEûENOUGHûLIQUIDITYû
Bank Dhofar is not the only Gulf bank JUDGEMENTûCALLûFORûBANKSûASûTOûWHETHERû TOûCALLûTHEûBONDSûATûTHEIRûlRSTûOPPORTUNITYû
WITHûAûCALLûDUEûSOONûONûANû!4ûBONDû&IRSTû CONDITIONSûWILLûDETERIORATEûFURTHERûOVERûTHEû ANDûHEûENVISAGESûGREATERûVOLUMESûOFû
Abu Dhabi Bank, a far bigger bank by COMINGûMONTHS ISSUANCEûFROMû'ULFûLENDERSûDOWNûTHEûLINEû
ASSETSûTHANû$HOFARûHASûAû53Mûû !LAAû"USHEHRIûHEADûOFûEMERGINGûMARKETû WHICHûWILLûFURTHERûBOOSTûLIQUIDITYûLEVELS
!4ûCALLABLEûONû*UNEû CORPORATEûDEBTûATû".0û0ARIBASû!SSETû (EûPUTûTHEûDEPRESSEDûPRICESûOFûTHEû!4û
4HEûBONDûISûQUOTEDûATûnû -ANAGEMENTûCALCULATESûTHATûTHEREûAREûû BONDSûDOWNûTOûINVESTORSûDEMANDINGû
ACCORDINGûTOû2ElNITIV !4SûOUTSTANDINGûFROMûTHEûREGIONû HIGHERûPREMIUMSûTOûHOLDûTHEûNOTESûANDû
h)TûISûALREADYûPRICINGûINûNOTûTOûBEûCALLEDvû TOTALLINGû53BN THEûDAMAGEûDONEûTOûSENTIMENTûBYûTHEû
SAIDûAûSECONDûBANKERûh4HEûTRICKûISûTOûSEEûIFû Bushehri said that with both issuers and DECLINEûINûOILûPRICES
&!"ûORû;FELLOWû5!%ûBANK=û%."$ûDONTûCALLû INVESTORSûTRYINGûTOûNAVIGATEûAûDIFlCULTû 7HATûTHEûREGIONSûCENTRALûBANKSûTHINKû
BECAUSEûTHATûWILLûOPENûUPûAû0ANDORASûBOXû ENVIRONMENTûSHEûWOULDûEXPECTûISSUERSûTOû ABOUTûTHEûISSUEûISûUNCLEARû!NALYSTSûSAYûTHATû
FORûEVERYBODYû4HISûTYPEûOFûMESSAGEûPUTSû MANAGEûTHEIRûlNANCESûRESPONSIBLY THEû5!%ûCENTRALûBANKûFORûEXAMPLEûHASûYETû
pressure on the other ones to do the h3OMEûMIGHTûDECIDEûTOûPUSHûTHEûCALLû TOûPROVIDEûGUIDANCEûONûCALLSûWHILEû
SAMEv LATERûWHENûITûWOULDûMAKEûMOREûECONOMICû RELEVANTûNATIONALûREGULATORSûMIGHTûASKû
)Nû%UROPEû3ANTANDERû$EUTSCHEû"ANKû SENSEûFORûTHEMûANDûTHEYûWILLûBEûABLEûTOû THEIRûRESPECTIVEûINSTITUTIONSûTOûCONSERVEû
ANDû!AREALûHAVEûALLûSKIPPEDûCALLûDATESûANDû CONTINUEûACCOUNTINGûFORûTHEûFULLûAMOUNTûINû CAPITAL
extended AT1s (though Santander did 4IERûûCAPITALûINûTHEûEVENTûTHEYûDOûNOTûCALLû h)FûYOUûCANTûREPLACEûCAPITALûYOUûHAVEûTOû
EVENTUALLYûREDEEMûTHEûBONDûONûAû THEMv KEEPûITûGIVENûREGULATORYûREQUIREMENTSvû
SUBSEQUENTûCALLûDATE û!LTHOUGHûOTHERû SAIDûAûTHIRDûBANKERûh!LSOûITSûNOTûLIKEûTHEû
BANKSûHAVEûCALLEDûTHEIRûINSTRUMENTSû FEW CONCERNS future is looking rosy and that you can do
EXTENSIONSûAREûEXPECTEDûTOûBECOMEûMOREû 4HEûSTRENGTHûOFûMANYûOFûTHEûBANKSûMEANSû WITHOUTûCAPITALv
FREQUENT THEREûAREûFEWûSHORT TERMûCAPITALûCONCERNS Robert Hogg

30ûONû-ARCHûûREVISEDûITSûOUTLOOKûONû CROSS BORDERû53ûDOLLARûSTANDBYûFACILITYû
"/#û!VIATIONSû!nûRATINGûTOûNEGATIVEûFROMû AGREEMENTûISSUEDûBYû1INGDAOû#ITYû
ASIA-PACIFIC STABLEûTOûREmECTûHIGHûUNCERTAINTYûREGARDINGû #ONSTRUCTION
THEûMAGNITUDEûANDûDURATIONûOFûTHEûEARNINGSû 4HEûPROPOSEDûBONDSûHAVEûEXPECTEDû
SLUMPûFORûAIRLINESûGLOBALLYûASûAûRESULTûOFûTHEû RATINGSûOFû"""!nû&ITCHû,IANHE ûINûLINEûWITHû
CHINA PANDEMICû THEûKEEPWELLûDEEDûPROVIDER
The ratings agency said this could affect 0ROCEEDSûWILLûBEûUSEDûTOûRElNANCEû
BOC AVIATION PAYS UP FOR SIZE LEASEûCOLLECTIONSûINûTHEûNEXTûFEWûMONTHSû OFFSHOREûDEBTSûMATURINGûWITHINûONEûYEAR
3UBSTANTIALûCOMMITTEDûINVESTMENTSûCOULDû &ITCHûSAIDûMOSTû,'&6SûWILLûBENElTûFROMû
BOC AVIATIONûDREWûOVERû53BNûlNALûORDERSû ALSOûADDûPRESSUREûONûTHEûCOMPANYSûCREDITû THEIRûPRIMARYûROLEûINûFULlLLINGûTHEû
FORûAû53BNû!2EGû3ûSENIORûUNSECUREDû METRICS GOVERNMENTSûMANDATEûTOûCONTROLûTHEû
BONDûOFFERINGûEVENûTHOUGHûAIRCRAFTûLEASINGû CORONAVIRUSûOUTBREAKûANDûEXECUTEûlSCALû
ISûAûSECTORûHEAVILYûIMPACTEDûBYûTHEû#OVID û QINGDAO LGFV RELIES ON ANCHORS STIMULUSûPLANS
PANDEMIC h7EûBELIEVEûTHEû,'&6ûSECTORûISûINûAûGOODû
4HEûlVE YEARûûBONDSûWEREûPRICEDûATû QINGDAO CITY CONSTRUCTION INVESTMENT (GROUP) POSITIONûTOûRESUMEûOPERATIONSûANDûISû
ûTOûYIELDûûORû4REASURIESûPLUSû RELIEDûHEAVILYûONûANCHORûORDERSûFORûLASTû PROTECTEDûFROMûTHEûPANDEMICûDUEûTOûITSû
300bp, inside initial guidance of the 330bp 7EDNESDAYSû53MûTHREE YEARû2EGû3û MINIMALûEXPOSUREûTOûINTERNATIONALû
AREAû BONDûISSUEûPRICEDûATûPARûTOûYIELDûû ECONOMIESvûTHEûRATINGûAGENCYûWROTEûONû
7ITHûAûLARGEûDEALûSIZEûTHEûNEWLYûPRICEDû INSIDEûINITIALûGUIDANCEûOFûûAREA !PRILû
BONDSûTRADEDûABOUTûBPûWIDERûEARLYûONû !BOUTûnûOFûORDERSûWEREûSECUREDû h!NYûIMPACTûWILLûBEûMOSTLYûDRIVENûBYû
Thursday but were back inside reoffer by BEFOREûTHEûLOCALûGOVERNMENTûlNANCINGû DOMESTICûISSUESûANDûRELATEûTOûNEWûPROJECTû
LUNCHTIMEûANDûWEREûQUOTEDûATûBPn VEHICLEûFORMALLYûANNOUNCEDûTHEûDEALûONû DELAYSûWHICHûWILLûLEADûTOûDELAYEDûREVENUEû
BPûWIDEûOFû4REASURIESûBYûLATEûAFTERNOON 7EDNESDAYûMORNINGûACCORDINGûTOûAûLEADû ANDûTHEûLOSSûONûUSER BASEDûREVENUEûDUEûTOû
&INALûPRICINGûWASûMOREûGENEROUSûTHANû BANKER LOWERûDEMANDv
.OMURASûFAIRûVALUEûESTIMATEûOFû4REASURIESû h'IVENûTHEûVOLATILEûMARKETûTHEûSTRONGû
PLUSûBPûANDû#REDIT3IGHTSûBPûESTIMATE ANCHORûPORTIONûENSUREDûTHEûSMOOTHûPRICINGû LENOVO DRAWS STRONG BOOK
.OMURAûSAIDûITûPLACEDûFAIRûVALUEûFORûTHEû OFûTHEûDEALû)ûTHINKûOTHERû,'&6SûWILLûALSOû FOR REG S RETURN
NEWûBONDSûOUTSIDEûALLûOTHERûlVE YEARûSENIORû FOLLOWûSUITûWHENûTHEYûLAUNCHûDEALSûLATERvû
BONDSûOFûOTHERû#HINESEûLEASINGûCOMPANIESû SAIDûTHEûBANKER Unrated LENOVO GROUPûRETURNEDûTOûTHEû2EGû
PARTLYûBECAUSEû"/#û!VIATIONûISûFOCUSEDû h)NûITSûLASTûTWOûOFFSHOREûPRINTSûACTUALLYûITû 3 ONLYûDOLLARûBONDûMARKETûTHEûWEEKûBEFOREû
ENTIRELYûONûAIRCRAFTûLEASINGûAMIDûANû ALSOûUSEDûSUCHûAûTACTICvûSHEûADDED LASTûAFTERûAûTWO YEARûABSENCEûANDûWASûABLEûTOû
unprecedented downturn in the global 3TATISTICSûWEREûNOTûAVAILABLEûFORûTHEûDEALû UPSIZEûTHEûDEALûONûSTRONGûDEMANDûDESPITEûAû
AVIATIONûINDUSTRYûWHEREASûOTHERûLEASINGû BUTûTHEûBANKERûSAIDûDEMANDûCAMEûMAINLYû STILLûRELATIVELYûSLUGGISHûPRIMARYûMARKET
COMPANIESûAREûMOREûDIVERSIlED FROMûBANKSûASSETûMANAGERSûANDûBROKERAGES 4HEû53MûOFûlVE YEARûSENIORûNOTESû
(OWEVERûITûTHINKSûTHEûISSUERSûCREDITû 1INGDAOû#ONSTRUCTIONû)NVESTMENTûISûTHEû WEREûPRICEDûATûPARûTOûYIELDûûONû!PRILû
PROlLEûCONTINUESûTOûBEûUNDERPINNEDûBYûTHEû INVESTMENTûANDûlNANCINGûARMûOFûTHEûEASTERNû ûEQUALûTOûBPûOVERû4REASURIESûANDû
VERYûHIGHûLEVELûOFûSUPPORTûITûISûEXPECTEDûTOû #HINESEûCOASTALûCITYûOFû1INGDAOû)TûLASTû INSIDEûINITIALûGUIDANCEûOFûûAREA
RECEIVEûFROMûMAJORITYûSHAREHOLDERû"ANKûOFû TAPPEDûTHEûDOLLARûBONDûMARKETûWITHûAû 4HEûDEALûDREWûAûlNALûORDERûBOOKûOFûMOREû
#HINAûANDûTHEûGOVERNMENT 53MûTHREE YEARûBONDûISSUEûPRICEDûATûPARû THANû53BNûINCLUDINGû53MûFROMûTHEû
4HEûBONDSûTOûBEûISSUEDûOFFûAû53BNû TOûYIELDûûLASTû.OVEMBER LEADSû4HISûALLOWEDûTHEûISSUERûTOûEXCEEDûITSû
GLOBALû-4.ûPROGRAMMEûAREûRATEDû!nûBYû 4HEûLATESTûISSUANCEûWASûPRICEDûFAIRLYûmATûTOû INITIALûSIZEûTARGETûOFû53MnMû
BOTHû30ûANDû&ITCHûONûPARûWITHûTHEûISSUER ITSûOWNûCURVE ACCORDINGûTOûAûBANKERûONûTHEûDEAL
4HEûAIRCRAFTûLEASINGûlRMûPLANSûTOûUSEû (ONGKONGû)NTERNATIONALû1INGDAO ûWILLû ,ENOVOûSTILLûHASûAû53MûOFFSHOREûDEBTû
proceeds for new capital expenditure, ISSUEûTHEûBONDSûWITHûTHEûBENElTûOFûAû ISSUANCEûQUOTAûFOLLOWINGûTHEûTRANSACTION
general corporate purposes and possibly to KEEPWELLûDEEDûAûDEEDûOFûEQUITYûINTERESTû Another banker on the deal said the
RElNANCEûBORROWINGS PURCHASEûUNDERTAKINGûANDûANûIRREVOCABLEû OFFERINGûWASûTHEûBIGGESTû2EGû3ûPUBLICûDEALû
FROMûANûUNRATEDûISSUERûSINCEû.EWû7ORLDû
ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS $EVELOPMENTSû53MûOFûû YEARû
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE BONDSûLASTû*ULY
Asia-Pacific Managing No of Total Share (OWEVERûWITHûAû2EGû3ûMARKETûSTILLûVOLATILEû
Managing No of Total Share bank or group issues US$(m) (%) ANDûINûRECOVERYûMODEû,ENOVOûHADûTOûPAYûUPû
bank or group issues US$(m) (%) LIKEûOTHERûRECENTûISSUERS
1 Citigroup 81 22,205.14 8.7
1 HSBC 92 10,857.09 9.0 ,ENOVOûLASTûTAPPEDûTHEûINTERNATIONALûBONDû
2 HSBC 113 18,216.65 7.2
2 Citigroup 49 8,006.59 6.7 MARKETûINû-ARCHûûWITHûAû53Mû
3 JP Morgan 82 17,674.81 6.9
3 Standard Chartered 51 6,597.66 5.5 ûlVE YEARûBONDûISSUEûPRICEDûATû
4 Standard Chartered 67 16,227.79 6.4
4 UBS 39 5,019.61 4.2
5 Goldman Sachs 47 13,759.10 5.4
4REASURIESûPLUSûBP
5 Credit Suisse 43 4,630.60 3.8
h)TSûHARDûTOûSAYûEXACTLYûHOWûMUCHûNEWû
7 Deutsche Bank 43 12,395.09 4.9
ISSUEûPREMIUMûITûHASûPAIDûASûITSûEXISTINGû
7 Bank of China 54 4,363.94 3.6
8 BNP Paribas 46 9,796.42 3.8
BONDSûAREûILLIQUIDûANDûQUOTESûFORûITSûSû
9 Barclays 55 9,305.20 3.7 WEREûALLûOVERûTHEûPLACEûFROMûAû' SPREADûOFû
9 Goldman Sachs 21 3,664.06 3.0 BPûTOûBPnBPûORûEVENûBPvûSAIDû
10 Deutsche Bank 28 3,617.30 3.0 THEûSECONDûBANKER
Total 391 254,451.15
Total 255 120,319.48 h,ENOVOûISûNOTûAûFREQUENTûISSUERûANDûGIVENû
Excluding equity-related debt.
Excluding equity-related debt. its unrated nature and the low price
Source: Refinitiv SDC code: L4 Source: Refinitiv SDC code: L1 TRANSPARENCYûOFûITSûSECONDARYûCURVEû

EMERGING MARKETS ASIA-PACIFIC
INVESTORSûNEEDEDûMOREûTIMEûTOûDOûTHEûCREDITû
ANALYSISûANDûFEEDBACKûALSOûCAMEûWITHINûAû
WIDEûRANGEûFROMûûTOûvûHEûSAID
&INALûPRICINGûWASûWITHINûFAIRûVALUEû
Xiaomi debuts amid
ESTIMATESûOFûnûACCORDINGûTOû
.OMURAûBUTûWASûWIDERûTHANû$EUTSCHEû
China buzz
"ANKSûVIEWSûOFûn
.OMURAûVIEWSû,ENOVOûASûAû""""ûCREDITû CHINA Smartphone maker prices first Asian 144A/Reg S debut since
ANDûCOMPAREDûITûWITHûSTRONGERûSECTORûPEERSû early February
SUCHûASû!!#û4ECHNOLOGIESûANDû(UAWEIûASû
WELLûASû""""ûNAMESûSUCHûASû9ANZHOUû#OALû Smartphone maker XIAOMI last Wednesday premium over the curve of e-commerce firm
ANDû#OUNTRYû'ARDENû$EUTSCHEû"ANKû made a successful debut in the 144A/Reg S JD.com and a 35bp premium over ChemChina.
COMPAREDûITûWITHû(UAWEIûALONGûWITHûWEAKû bond market, on the busiest day for offshore Deutsche Bank, on the other hand, had put
"""STRONGû""ûNAMESûSUCHûASû3HIMAOû Chinese issuers in almost two months. fair value at a G spread of 300bp–310bp and
0ROPERTYûANDû',0û#HINA The Baa2/BBB–/BBB rated company priced said Xiaomi’s new bond did “not look cheap”.
4HEûNEWLYûISSUEDûBONDSûTRADEDûUPûMOREû a US$600m 10-year 3.375% senior unsecured Deutsche wrote in a note that Xiaomi is
THANûONEûPOINTûTOûnûEARLYûONû bond at 98.745 to yield 3.525%, or Treasuries fundamentally strong with global brand
!PRILûûBUTûLOSTûSOMEûOFûTHEûGAINSûAFTERû plus 290bp, the tight end of final guidance of recognition, a leading smartphone market
SOMEûPROlT TAKINGû4HEYûWEREûQUOTEDûATû 290bp–295bp and 50bp tighter than initial position and solid net cash position, but
nûINûLATEûMORNINGûTHATûDAY guidance of the 340bp area. that these strengths are “tempered by fierce
"OTHûBANKERSûHOWEVERûSAIDû,ENOVOSû The transaction came on the most active competition and rapid technology evolution in
successful deal does not necessary signal the day in eight weeks for Chinese issuers, with the smartphone market, relatively short track
REOPENINGûOFûTHEû2EGû3ûMARKETûFORûUNRATEDû BOC AVIATION, QINGDAO CITY CONSTRUCTION record of stable profitability, working capital
ISSUERSûORûEVENûHIGH YIELDûISSUERS INVESTMENT (GROUP) and XINHU ZHONGBAO also volatility and risks associated with its financial
h4HEûMARKETûISûSTILLûVOLATILEûANDûTHERESû raising funds. The last time four Chinese issuers arm”.
INCREASINGûCREDITûDIFFERENTIATIONû)NVESTORSû were in the market on a single day was on The bookrunners pointed to JD.com, rated
WILLûONLYûPARKûTHEIRûMONEYûONûGOODûNAMESû February 27, according to Refinitiv data. Baa2/BBB (Moody’s/S&P), and internet
(IGH QUALITYûUNRATEDûNAMESûSUCHûASû,ENOVOû Xiaomi played on its unique business model, portal Baidu, rated A3/A (Moody’s/Fitch), as
AREûRAREvûTHEûlRSTûBANKERûSAID leading market position and investment-grade comparables for the new issue.
The second banker said that despite the credit profile to woo investors. Orders were JD.com’s 3.375% 2030s were quoted at a G
RECENTûRECOVERYûPRICINGûLEVELSûFORûHIGH YIELDû said to be over US$5.5bn at final guidance spread of 235bp and Baidu’s 3.425% 2030s
AREûSTILLûDEMANDINGûANDûHEûEXPECTSûTHEREû and final books came to over US$4.7bn from at a G spread of 233bp ahead of the release of
WILLûBEûNOûQUICKûRETURNûOFûHIGH YIELDûDEALS 281 accounts with European and US investors initial guidance. JD.com has the tightest Triple
h4HEû2EGû3ûMARKETûFORû#HINESEûISSUERSûJUSTû accounting for half of the orders, including B spread among Chinese TMT names.
REOPENEDûLASTûWEEKûANDûPUBLICûDEALSûFROMû US$555m from the leads. “We expected this to pay a new-issue
HIGH YIELDûISSUERSûMAYûNEEDûAûFEWûWEEKSûTOû The strong response allowed the issuer to concession over JD.com since it’s a new issuer
HAPPENvûHEûSAID compress pricing by 50bp from initial guidance and also a consumer manufacturer, rather than
!SIA 0ACIlCûINVESTORSûTOOKûûOFû,ENOVOSû and upsize the deal to US$600m from an JD.com which is e-commerce,” said a banker on
NEWûBONDSûANDû%-%!ûBUYERSû initial target of around US$500m. the deal, without giving an exact number.
4HEû#HINESEûPERSONALûCOMPUTERûANDû The Beijing-headquartered, Cayman Islands- She said Xiaomi had overseas expansion
HANDHELDûDEVICEûMAKERûPLANSûTOûUSEûTHEû incorporated company listed in Hong Kong plans and saw favourable conditions in dollars,
PROCEEDSûFORûRElNANCINGûANDûGENERALû in July 2018 and priced its maiden onshore prompting it to come to market.
CORPORATEûPURPOSES renminbi bond earlier this month with a private The company was open to issuing 30-year
h)NûOURûVIEWûTHEûSUCCESSFULûPRICINGû placement of Rmb1bn (US$141m) of 365- bonds if there were reverse enquiries but this
DISPLAYSûTHEûCOMPANYSûSTRONGûACCESSûTOûTHEû day Panda notes at 2.78%. The new offshore did not materialise. A second banker on the
CAPITALûMARKETûALTHOUGHûTHEûBORROWINGûCOSTû bond marks a further expansion of its funding deal said orders for the 30-year tranche were
ISûSLIGHTLYûHIGHERûTHANûINûRECENTûTIMESvû channels. sufficient for a small trade, but as the overall
4RUNGû.GUYENûSENIORûCREDITûANALYSTûATû The deal is also Asia’s first 144A/Reg S market is still not very strong or stable, the
,UCRORû!NALYTICSûWROTEûINûAûNOTE debut since Adani Electricity Mumbai on issuer was advised to drop the 30-year and
,UCRORû!NALYTICSûFUNDAMENTALûCREDITûBIASû February 5, when physical roadshows were still concentrate on the 10-year.
ONû,ENOVOûISûhSTABLEvûINûVIEWûOFûTHEû viable. Since then, travel restrictions due to the “We persuaded investors interested in the
COMPANYSûROBUSTûFUNDAMENTALSûANDûASûTHEû Covid-19 pandemic have made face-to-face 30-year to shift their orders to the 10-year,”
RESEARCHûlRMûEXPECTSûTHEûIMPACTûOFû#OVID û investor meetings impossible. she said.
ONûITûTOûBEûLIMITED Xiaomi held 16 rounds of investor calls in Asia-Pacific investors took 50% of the bonds,
total, ranging from a large Asian conference EMEA 11% and the US 39%. Asset managers
GEMDALE CAUSES STIR WITH call to smaller group calls and even one-to-one and fund managers bought 71%, banks and
COUPON CUT chats. financial institutions 17%, central banks and
Thanks to the recent slide in Treasury yields, governments 6%, and insurance 6%.
!ûPLANûBYû#HINESEûPROPERTYûDEVELOPERû the new bond was also priced at the lowest The newly priced bonds traded slightly tighter
GEMDALE to slash the coupon of one of its coupon and yield for any debut 10-year note in the aftermarket and were quoted at around
ONSHOREûBONDûISSUESûHASûRAISEDûOBJECTIONSû from a Triple B rated Chinese issuer. 289bp–287bp late on Thursday morning, but
FROMûINVESTORSûANDûCAUGHTûTHEûATTENTIONûOFû Still, pricing was on the generous side turned slightly wider to around 293bp–291bp in
REGULATORS compared with ANZ’s fair value estimate of late afternoon, according to a trader.
)NûANû!PRILûûlLINGûTHEû3HANGHAI LISTEDû Treasuries plus 270bp, which implied a 45bp Carol Chan
COMPANYûSAIDûITûPLANNEDûTOûADJUSTûTHEû

GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 24/4/2020
Apr 17 2020 SATS S$100m Apr 24 2025 2.6 100 - -

Apr 20 2020 Kexim US$700m Apr 27 2023 3mL+120 100 3mL+120 -
Apr 20 2020 Kexim €700m Apr 27 2025 0.829 100 MS+105 / B+146.1 0.829
Apr 22 2020 KDB SFr300m May 8 2025 0.445 100 MS+98 / Eidg+109 0.445
Apr 22 2020 Singapore Technologies US$750m Apr 29 2025 (Jan 2025) 1.5 99.77 T+120 1.548
Engineering
Apr 22 2020 BOC Aviation US$1bn Apr 29 2025 3.25 99.47 T+300bp 3.366
Apr 22 2020 Qingdao City Construction US$300m Apr 27 2023 3.99 100 - 3.99
Investment
Apr 22 2020 Xiaomi US$600m Apr 29 2030 3.375 98.745 T+290bp 3.525
Apr 22 2020 Xinhu Zhongbao US$87m Mar 27 2023 4.3 99.732 - 4.4
Apr 23 2020 Kookmin Bank US$500m May 4 2025 1.75 99.42 T+150 1.872
Apr 23 2020 Pingdu State-owned Assets US$200m Apr 28 2023 5.75 100 - 5.75
Management
Apr 23 2020 PSA Intl US$650m Apr 30 2030 2.25 99.822 T+165 2.27
Apr 23 2020 Hungary €1bn Apr 28 2026 1.125 99.116 MS+145 / B+188.1 1.279
Apr 23 2020 Hungary €1bn Apr 28 2026 1.625 97.757 MS+180 / B+226.4 1.835
Apr 21 2020 Guatemala US$500m Apr 24 2032 5.375 100 - 5.375

Apr 21 2020 Guatemala US$700m Jun 1 2050 6.125 99.992 - 6.125
Apr 22 2020 Mexico US$1bn Apr 27 2025 3.9 98.993 - 4.125
Apr 22 2020 Mexico US$2.5bn Apr 27 2032 4.75 97.764 - 5
Apr 22 2020 Mexico US$2.5bn Apr 27 2051 5 92.6 - 5.5
COUPONûOFûITSû2MBBNû53M ûTHREE YEARû MARKETSû/Nû!PRILûûITûISSUEDû2MBBNûOFû PEKING FOUNDER SEEKS WHITE KNIGHT
NON PUTûTWOûNOTESûISSUEDûINûûTOûû ûTHREE YEARûBONDSûANDû2MBMûOFû
FROMûûFORûTHEûREMAININGûYEARûEFFECTIVEû lVE YEARûûBONDSûINûTHEûINTERBANKû %MBATTLEDûPEKING UNIVERSITY FOUNDER GROUP is
ONû-AYû MARKET PLANNINGûTOûINTRODUCEûAûSTRATEGICûINVESTORûASû
)FûBONDHOLDERSûDOûNOTûACCEPTûTHEû 'EMDALEûALSOûHASû53ûDOLLARûBONDSûISSUEDû PARTûOFûITSûCOURT SUPERVISEDûRESTRUCTURING
ADJUSTMENTûTHEYûCANûEXERCISEûTHEIRûPUTû OFFSHOREûTHROUGHûSUBSIDIARIES 4HEûSTRATEGICûINVESTORûSHOULDûHAVEûATûLEASTû
OPTIONûTOûSELLûBACKûTHEû3HANGHAIûEXCHANGE 4HEREûAREûSOMEûPRECEDENTSûFORûCUTSûINû 2MBBNû53BN ûOFûTOTALûASSETSûORû
LISTEDûBONDSûTOûTHEûISSUER onshore coupons recently, though not as 2MBBNûOFûNETûASSETSûACCORDINGûTOûAûPUBLICû
The proposed coupon is lower than the STEEP lLINGû)NTERESTEDûENTITIESûSHOULDûSUBMITû
ONE YEARû3HIBORûRATEûOFûûANDû#HINASû /Nû-ARCHûûBBMG said it would lower the THEIRûAPPLICATIONûTOûTHEûCOURT APPOINTEDû
ONE YEARûLOANûPRIMEûRATEûOFûûONû!PRILû COUPONûOFûITSû2MBBNûlVE YEARûNON PUTû ADMINISTRATORSûBEFOREû-AYûû
THREEûBONDSûDUEû-AYûûTOûûFROMûû 4HEû&IRSTû)NTERMEDIATEû0EOPLESû#OURTûOFû
'EMDALEûSAIDûTHEûMOVEûISûCONSISTENTûWITHû EFFECTIVEûFROMû-AYû "EIJINGûONû&EBRUARYûûAPPOINTEDûAû
THEûBONDSûTERMSûWHICHûALLOWûITûTOûCHANGEû )NûRESPONSEûBONDHOLDERSûACCOUNTINGûFORû LIQUIDATIONûTEAMûASûADMINISTRATORSûTOûLEADû
THEûCOUPONûATûTHEûENDûOFûTHEûSECONDûYEAR ûOFûTHEûPRINCIPALûAMOUNTûOFûTHEûBONDSû 0EKINGû&OUNDERSûRESTRUCTURINGû4HEûTEAMû
Predictably, the proposal has sparked exercised their put option to sell back the INCLUDESûOFlCIALSûFROMûTHEû0EOPLESû"ANKûOFû
OBJECTIONSûFROMûINVESTORSûWHOûACCEPTûTHATû PAPERûTOûTHEûISSUER #HINAûTHEû-INISTRYûOFû%DUCATIONûlNANCIALû
THEûTERMSûALLOWûTHEûISSUERûTOûMODIFYûTHEû CHINA RAILWAY GROUP on March 10 said REGULATORSûANDûRELEVANTûDEPARTMENTSûOFûTHEû
COUPONûBUTûSAYûTHATûTHEûADJUSTMENTûSHOULDû it planned to change the coupon of "EIJINGûMUNICIPALûGOVERNMENT
be based on the current coupon plus an 2MBBNûOFûTHREE YEARûBONDSûDUEû!PRILû 4HEûUNIVERSITY LINKEDûCONGLOMERATEûINû
EXTRAûRETURNûNOTûAûDOWNWARDûREVISION ûTOûûFROMûûEFFECTIVEûFROMû LATEû&EBRUARYûCONlRMEDûTHATûITSûFAILUREûTOû
4HEû3HANGHAIû3TOCKû%XCHANGEûHASûWRITTENû !PRILû REPAYûANûONSHOREûBONDûHADûLEDûTOûAûCROSS
TOû'EMDALEûTOûASKûFORûLEGALûCLARIlCATIONûONû 4HEûBONDûTERMSûALLOWûTHEûISSUERûTOûADJUSTû DEFAULTûONû53BNûOFûOFFSHOREûBONDSû)TûHASû
THEûISSUEû4HEûBONDSûHAVEûALSOûBEENû THEûCOUPONûWHILEûINVESTORSûHAVEûPUTûOPTIONSû NOTûMADEûREPAYMENTSûTOûINDIVIDUALûCREDITORSû
SUSPENDEDûFROMûTRADINGûSINCEûTHEûAFTERNOONû ATûTHEûENDûOFûYEARûONEûANDûYEARûTWOû.OTû UNDERûTHEûTERMSûOFûTHEûCOURT SUPERVISEDû
OFû!PRILû SURPRISINGLYûMOSTûOFûTHEûBONDHOLDERSû restructuring and has asked creditors to
'EMDALEûISûANûACTIVEûISSUERûINû#HINASû ACCOUNTINGûFORûûOFûTHEûPRINCIPALûAMOUNTû DECLAREûTHEIRûCLAIMSûWITHûTHEûCOMPANYû
EXCHANGE TRADEDûANDûINTERBANKûBONDû EXERCISEDûTHEIRûPUTûOPTION BEFOREû!PRILû

EMERGING MARKETS ASIA-PACIFIC
- - - -/AAA/- DBS / UOB -

3mL+160 area, - US$5.1bn, 240acs Aa2/AA/AA- UBS / Citi / SG / BNPP / HSBC Asia 56%, EMEA 44%. AM/FM 21%,
3mL+120 Banks 44%, PF/Insurance 13%, Public
Sectors 20%, PB/Others 2%
MS+140 area - >€3.2bn, 224acs Aa2/AA/AA- HSBC / Citi / UBS / BNPP / SG Ger 21%, UK 16%, Switz 9%, Lux 8%,
Fr 7%, Denmark 6%, Other EMEA 22%,
Asia 11%. FM 45%, CB/OI/Supra 24%,
Ins/PF 12%, Bks 11%, PB/Others 8%.
MS+105 area, 6 56acs Aa2/AA CS / UBS Switz 100%. Tsy 37.5%, AM 36.5%, PB
MS+98/+100 WPIR 15%, Ins 9%, PF 2%.
T+160 area, T+120 - US$4.1bn -/AAA/- DBS / JPM / CA-CIB / Miz / StCh -
(the #)
T+330 area, T+300 - US$4bn, 230acs -/A-/A- BOCI Asia 75%, EMEA 10%, US 15% | FM/AM
(the #) / Citi / DBS / HSBC / JPM / MS / 58%, Bank Treasury 27%, Ins & Pen 8%,
MUFG / WBC PB/Corp/Other 7%
4.4% area - - -/-/BBB/A- (Lianhe Industrial / CMBCHK / BoC / -
Global) Zhongtai / Cinda Intl / SPDB
T+340 area, - US$4.7bn, 281acs Baa2/BBB-/BBB GS / JPM / MS / CICC / AMTD / BoC / APAC 50%; EMEA 11%; US 39% | AM/FM
T+290/295 Barc / HSBC / ICBCI / CCBI 71%; Banks/FIs 17%; CBs & Governments
6%; Insurance: 6%
4.5% area - - - Guotai Junan / CNCB HK / Guoyuan -
T+195 area - US$3.9bn, 181acs Aa3/A+ BofA / Citi / CMZ / HSBC / SG / StCh Asia 70% US 19% Europe 11%/ FM 64%
Bank/FI 23% Ins/PF 11% PB 2%
6.2% area - - - Zhongtai / Industrial / Central -
T+210 area - US$4.2bn, 223acs Aa1/-/- DBS / HSBC Asia 83%, EMEA 17% | Fund 62%, Bank
19%, INS/SWF 17%, PB 2%
MS+160 area, - €1.6bn Baa3/BBB/BBB Citi / ING / JPM -
MS+145/+150 WPIR
MS+195 area, - €1.55bn Baa3/BBB/BBB Citi / ING / JPM -
MS+180/+185 WPIR
5.875% area - - Ba1/BB-/BB- BofA -
6.625% area - - Ba1/BB-/BB- BofA -
high 4% area, - - Baa1/BBB/BBB- Citi / GS / JPM / Santander -
mid-to-high 5% - - Baa1/BBB/BBB- Citi / GS / JPM / Santander -
area,
6% area, - - Baa1/BBB/BBB- Citi / GS / JPM / Santander -
)NûAûSEPARATEûlLINGû0EKINGû&OUNDERûSAIDû 9IDAûSAIDûITûHASûBEENûACTIVELYû 4%$!û)NVESTMENTûHASûALSOûAGREEDûTOûSELLû

ûCREDITORSûDUEûAûTOTALû2MBBNûHADû COMMUNICATINGûANDûNEGOTIATINGûWITHûLENDERSû MûEXISTINGûSHARESûTOû3INOPECû'ROUPû
DECLAREDûTHEIRûCLAIMSûWITHûTHEû TOûOBTAINûWAIVERSûONûTHEûONSHOREûLOANSû!SûOFû ALSOûATû(+ûEACHû
ADMINISTRATORSûASûATû!PRILû 4HURSDAYûLUNCHTIMEûITûHADûNOTûOBTAINEDûANYû The shares will cost Sinopec Group about
0EKINGû&OUNDERûWILLûHOLDûITSûlRSTûMEETINGû WAIVERûNORûRECEIVEDûANYûNOTICEûFROMûLENDERSû (+Mû53M ûINûTOTALû5PONûCOMPLETIONû
WITHûCREDITORSûONû!PRILû TOûASKûFORûACCELERATEDûPAYMENTSûORûANYûOTHERû 3INOPECû'ROUPûWILLûULTIMATELYûOWNûûINû
ENFORCEMENTûACTIONSûUNDERûANYûOFûTHEûLOANS "INHAIû)NVESTMENTûWHILEû4%$!SûSTAKEûWILLûBEû
YIDA FACES NEW CRISIS !CCORDINGûTOûTHEûCOMPANYSûLEGALûADVISERû REDUCEDûTOûûFROMûû
INûTHEû02#ûLENDERSûAREûENTITLEDûTOûDEMANDû 5NDERûTHEûTERMSûANDûCONDITIONSûOFûTHEû
YIDA CHINA HOLDINGS has failed to repay IMMEDIATEûREPAYMENTûOFûTHEûOUTSTANDINGû ûBONDSûIFû4%$!ûCEASESûDIRECTLYûORû
53MûûBONDSûDUEû!PRILûû loans, accrued interest and all other INDIRECTLYûTOûHOLDûORûOWNûATûLEASTûûOFûTHEû
TRIGGERINGûAûCROSS DEFAULTûONûLOANSûOFûUPûTOû AMOUNTSûACCRUEDûORûOUTSTANDING ISSUERSûOUTSTANDINGûSHARESûTHEû#O#ûWILLûBEû
2MBBNû53BN û TRIGGEREDûANDûTHEûISSUERûWILLûNEEDûTOûREDEEMû
)NûAûSTOCKûEXCHANGEûlLINGûTHEû(ONGû+ONG BINHAI SEEKS TO AVOID COC TRIGGER THEûBONDSûATûûOFûTHEûPRINCIPALûAMOUNTû
LISTEDû#HINESEûREALûESTATEûCOMPANYûSAIDûONû PLUSûACCRUEDûINTEREST
!PRILûûITûHELDûTHEûNECESSARYûFUNDSûTOûMAKEû BINHAI INVESTMENT kicked off a consent 4HEû(ONGû+ONG LISTEDûCOMPANYûPROPOSESûTOû
THEûBONDûPAYMENTûINûMAINLANDû#HINAûBUTû SOLICITATIONûONû!PRILûûTOûAMENDûTHEû LOWERûTHEûSHAREHOLDINGûTHRESHOLDûTOûûFROMû
was still in the process of transferring the CHANGE OF CONTROLûCLAUSESûOFûITSû53Mû ûANDûTOûAMENDûTHEûWORDINGûOFûTHEûREFERENCEû
MONEYûOFFSHOREûWHICHûITûEXPECTSûTOûHAPPENû û.OVEMBERûûBONDSûASûITûLOOKSûTOû TOûTHEûISSUERûFROMûhSUBSIDIARYvûTOûhCONSOLIDATEDû
ONû!PRILûûATûTHEûLATESTû BRINGûINû#HINAû0ETROCHEMICALû#ORPû3INOPECû SUBSIDIARYvûTOûPREVENTûANYûBREACHûOFûTHEûORIGINALû
There was no update on the bond 'ROUP ûASûITSûSECOND LARGESTûSHAREHOLDER LETTERûOFûSUPPORTûPROVIDEDûBYû4%$!û
REPAYMENTûATûTHEûTIMEûOFûWRITING 4HEû#HINA BASEDûCITY GASûOPERATORûWANTSûTOû "INHAIû)NVESTMENTûWILLûPAYû53ûPERû
4HEûûNOTESûWEREûLEFTûOVERûFROMûANû AVOIDûTHEûTRIGGERINGûOFûTHEû#O#ûBONDHOLDERû 53ûINûPRINCIPALûAMOUNTûASûCONSENTûFEEû
EXCHANGEûOFFERûTHATûWASûCOMPLETEDûINû-ARCHû PUTûOPTIONûASûAûRESULTûOFûTHEûMOVEû IFûBONDHOLDERSûAGREEûTOûTHEûAMENDMENTSû
9IDAûSAIDûTHEûBONDûDEFAULTûANDûCROSS DEFAULTûONû "INHAIû)NVESTMENTûHASûAGREEDûTOûISSUEû 4HEûVOTINGûDEADLINEûISû-AYû
THEûLOANSûWOULDûNOTûLEADûTOûANYûEVENTûOFûDEFAULTû MûNEWûSHARESûATû(+ûEACHûTOûAû Guotai Junan International is solicitation
ONûTHEû53Mû-ARCHûûûBONDSûTHATû SUBSIDIARYûOFû3INOPECû'ROUPû!TûTHEûSAMEû AGENTûDF KingûISûINFORMATIONûANDûTABULATIONû
WEREûISSUEDûUNDERûTHEûEXCHANGEûOFFER TIMEûTHEûCOMPANYSûBIGGESTûSHAREHOLDERû AGENT

Korean issuers join virus fight LIQUIDATIONû4HEûPRIVATELYûOWNEDû#HINESEû
power producer failed to pay the coupon
WITHINûAû DAYûGRACEûPERIODûHAVINGû
SOUTH KOREA Kookmin Bank deepens social bond market with Covid-19 debut PREVIOUSLYûDEFAULTEDûONûAûDOMESTICûBANKû
LOANûINû.OVEMBERû
South Korean issuers have turned to global Kookmin’s 1.75% five-year 144A/Reg S notes 4HEûBONDSûWEREûRATEDû"ûWHENû(UACHENû
bond markets to fund their response to the new priced at 99.420 to yield 1.872%, or Treasuries ISSUEDûTHEMûINû-AYûûBUTû-OODYSû
coronavirus crisis, joining government efforts to plus 150bp, inside initial guidance of 195bp area. WITHDREWûITSûCOMPANYûANDûBONDûRATINGSûINû
shore up the country’s ailing economy. The bonds received final orders of more than &EBRUARYûBYûWHICHûTIMEûTHEYûHADûBOTHûBEENû
KOOKMIN BANK, rated Aa3/A+, raised US$3.9bn from 181 accounts and paid no new-issue CUTûTOû#A
US$500m from the country’s first Covid-19 concession, according to bankers on the deal. (UACHENSûPARENTûCOMPANYû7INTIMEû
sustainability bond in the international public “The deal priced 5bp inside of where we saw %NERGYûDEFAULTEDûONûRENMINBIûBONDSûINû*ULYû
market, while EXPORT-IMPORT BANK OF KOREA, fair value after receiving strong orders from ûADDINGûTOûLIQUIDITYûPRESSUREûATûTHEû
rated Aa2/AA/AA–, printed a US$1.45bn- Asia that were enough to support the whole SUBSIDIARY
equivalent dual-tranche bond to support Korean transaction,” said a banker on the deal.
exporters. The Korean bank’s 2023s and like-rated
All three tranches across the two deals priced Kexim’s 2025s provided pricing references and INDIA
inside initial guidance by 35bp or more and were trading around Treasuries plus 137bp and
traded tighter in the aftermarket, underlining the plus 90bp. Asia took 70% of the bonds. FUTURE RETAIL AT RISK OF
appeal of their high-grade pedigree. The bonds MISSING COUPON
were also oversubscribed, with Kookmin’s social SWEET SPOTS
bond covered almost eight times. Kexim’s three-year floating-rate note priced at FUTURE RETAILûISûATûRISKûOFûMISSINGûTHEûlRSTû
Sean McNelis, global co-head of debt capital par to yield three-month Libor plus 120bp, inside COUPONûPAYMENTûONûITSûDEBUTû53ûDOLLARû
markets at HSBC, a bookrunner on both deals, initial guidance of plus 160bp area. BONDûACCORDINGûTOûCREDITûANALYSTS
said the Kookmin transaction showed strong The deal received orders of over US$5.1bn &UTUREû2ETAILûHASûAû2SBNû53M û
investor interest in the Covid-19 alleviation from 240 accounts, indicating a clear preference PAYMENTûONûTHEû53MûûûBONDSû
format, particularly when it met social bond among investors for FRNs, according to a DUEûONû*ULYûûBUTûITSûBUSINESSûHASûSLUMPEDû
eligibility criteria. different banker on the deal. SINCEûTHEûDEALûWASûPRICEDûINû*ANUARYû!Nû
“We expect other issuers to follow a similar The 0.829% five-year green bond priced at EXTENDEDûLOCKDOWNûREMAINSûINûPLACEûINû
issuance format in the coming months,” he said. par to yield 105bp over mid-swaps, again inside )NDIAûUNTILû-AYûûTOûSTEMûTHEûNEWû
Kookmin intends to use about 90% of the initial guidance of 140bp area. Orders exceeded CORONAVIRUSûOUTBREAKûCRIPPLINGûRETAILûSALES
proceeds to extend loans to virus-hit SMEs, small €3.2bn from 224 investors, excluding those from h4HEûCOUPONûPAYMENTûITSELFûISûNOTûSIZEABLEû
offices and home businesses. The rest will be the lead managers. INûAûNORMALûBUSINESSûSCENARIOûBUTûSALESûAREû
used for ESG-related projects. “Just like other Korean issuers that came out RECOVERINGûFROMûDEPRESSEDûLEVELSûANDû
Though not formally labelled as a social bond, earlier this month, Kexim was quick to realise NORMALISATIONûOFûBUSINESSûANDûlNANCINGû
Kexim’s new US$700m three-year floater came that the market has moved and accept the new CONDITIONSûWOULDûBEûNEEDEDûOVERûTHEûNEXTû
alongside a €700m five-year green tranche, the reality after the pandemic,” the banker said. TWOûMONTHSûFORûSERVICINGûDEBTûCOMFORTABLYvû
biggest offering in euros from Asia ex-Japan ex- Fellow policy lender Korea Development Bank SAIDû3HRUTIû:ATAKIAûANALYSTûATû30
Australia since January. priced a US$500m three-year floater on April 7 S&P has downgraded the retailer as well as
The two new issues come at a difficult time for at 145bp over Libor, followed by a five-year from ITSû53ûDOLLARûBONDSûBYûTHREEûNOTCHESûTOû###nû
South Korean companies enduring the economic Shinhan Bank at 170bp a day later. ANDûPLACEDûTHEûRATINGSûONûNEGATIVEûWATCH
fallout from the pandemic, and as the South Korean Kexim’s latest benchmark continued the 4HEûDOWNGRADEûMARKSûAûCUTûOFûSIXûNOTCHESû
government has drawn up a financial support recovery in spreads, but still paid much more than COMPAREDûTOûWHENûTHEûCOMPANYûlRSTûTAPPEDû
package worth more than W200trn (US$162bn). earlier this year. Before the Covid-19 pandemic THEûINTERNATIONALûBONDûMARKETûINû*ANUARYû
“It is encouraging to see capital markets savaged credit spreads, KDB, with an identical 4HEûBONDSûHADûAûRATINGûOFû""n""û30
playing a key role in the delivery of economic rating, priced a US$750m three-year floater in &ITCH ûINûLINEûWITHûTHEûISSUERûATûTHEûTIME
support to people, businesses and societies February at three-month Libor plus 35bp. h2ECENTûMEDIAûREPORTSûSHOWûTHATû&UTUREû
affected by this crisis,” said HSBC’s McNelis. Bankers on the deal and away put new- 2ETAILûISûEVENûDELAYINGûEMPLOYEEûSALARIESû
Bank of China’s Macau branch sold Covid-19 bonds issue concessions at negligible levels with one INDICATINGûHOWûTHINûTHEûCOMPANYûISûINûTERMSû
in Hong Kong dollars and Macau patacas in February, estimating just 2bp for the FRN and 5bp for the OFûLIQUIDITYûWHILEûADDITIONALûWORKINGûCAPITALû
but other issuers have chosen not to use the label. green bond. LINESûTHATûWEREûTOûBEûMADEûAVAILABLEûINû!PRILû
Indonesia said it would use part of the proceeds Asia took 56% of the FRN while the rest went HAVEûBEENûDELAYEDûTOû-AYûATûLEASTû'IVENû
of a recent US$4.3bn bond offering to fund its to EMEA. Asia took only 11% of the green bond, THOSEûCIRCUMSTANCESûCOUPONûPAYMENTû
virus response and fellow Korean lender Shinhan which was bought predominantly by European POSSIBILITIESûAREûVERYûLOWvûSAIDû6ISHALû
Bank raised US$50m from a private placement to investors. +ULKARNIûCREDITûANALYSTûATû.OMURA
offer support to virus-hit small shops. Jihye Hwang 30ûALSOûNOTEDûTHEûDISBURSEMENTûOFû
working capital will be crucial for the
COMPANYSûIMMEDIATEûFUNDINGûREQUIREMENTSû
HUACHEN ENERGY HIRES PWC NOTESûDUEûûHADûlLEDûTOûENFORCEûAûDEFAULTû BUTûITûWILLûHAVEûTOûPLAYûOUTûBEFOREû*ULY
ANDûACCELERATEûPAYMENTûAFTERûTHEûISSUERû &UTUREû2ETAILûHASûREPORTEDLYûBEENûWORKINGû
HUACHEN ENERGY has hired PricewaterhouseCoopers MISSEDûAûCOUPONûPAYMENTûINû.OVEMBER WITHûAûlNANCIALûADVISERûFORûAûPOTENTIALûDEBTû
ASûlNANCIALûADVISERûFORûAûPROPOSEDûDEBTû (OLDERSûOFûATûLEASTûûOFûTHEûPRINCIPALû RESTRUCTURINGûTHATûCOULDûPROMPTûAûCROSS
RESTRUCTURINGû)Nû&EBRUARYûITûSAIDûHOLDERSûOFû AMOUNTûNEEDûTOûDEMANDûPAYMENTûINûORDERû DEFAULTûONûTHEûCOMPANYSûDOLLARûNOTESû
MOREûTHANûûOFûITSû53MûûSENIORû to begin legal action and take steps towards ACCORDINGûTOû30

EMERGING MARKETS EUROPE/AFRICA
.OMURAûEXPECTSûTHEûPOTENTIALûRECOVERYû 34û%NGINEERINGû2(1û4EMASEKûHASûAûû
VALUEûOFûTHEûBONDSûTOûBEûûORûLOWERû STAKEûINû34û%NGINEERINGûANDû3INGAPORESû SOUTH KOREA
REFERRINGûTOûDEBTûRESTRUCTURINGûEXAMPLESûINû -INISTRYûOFû&INANCEûHOLDSûONEûSPECIALûSHAREû
)NDIAûSUCHûASû*ETû!IRWAYSûANDû+INGlSHER GIVINGûITûVETOûRIGHTS KOREA EAST-WEST POWER DIALS IN
S&P said the restructuring could also "ONDSûFROMû#LIFFORDû#APITALûWHICHûCARRYûAû
trigger the change of control clause on the 3INGAPOREûGOVERNMENTûGUARANTEEûANDû KOREA EAST-WEST POWERûRATEDû!A!!ûBEGANû
DOLLARûBONDSûTHATûREQUIRESû&UTUREû2ETAILSû 4EMASEKûWEREûUSEDûASûPRICINGûREFERENCESû INVESTORûCALLSûONû4HURSDAYûAHEADûOFûAû
CONTROLLINGûSHAREHOLDERSûnû&UTUREû#ORPORATEû since Singapore does not issue offshore POTENTIALû53ûDOLLARûBONDûOFFERING
2ESOURCESûANDû&UTUREû#OUPONSûnûTOûMAINTAINû SOVEREIGNûBONDS BNP Paribas, Bank of America, Citigroup,
AûCOMBINEDûûSTAKE 4HEûLEADSûHADûEXPECTEDû34û%NGINEERINGûTOû Credit Agricole and HSBC are bookrunners, as
&UTUREû2ETAILûHADûALREADYûBEENûFACINGû PRICEûBPnBPûBACKûOFûPARENTû4EMASEKû REPORTEDûBYû)&2ûEARLIERûTHISûMONTH
CHANGEûOFûCONTROLûRISKSûDUEûTOûTHEûHIGHûLEVELû WHICHûHADûDOLLARûBONDSûDUEûûANDûû !NûOFFERINGûOFûSENIORûUNSECUREDû!2EGû
of share pledges taken by its controlling QUOTEDûATû4REASURIESûPLUSûBPûANDûBPû 3ûBONDSûWITHûAûSHORTûTOûINTERMEDIATEû
SHAREHOLDERSûANDûTHEûDRAMATICûDROPûINûITSû RESPECTIVELYû!CCOUNTINGûFORûMARKETû MATURITYûMAYûFOLLOW
SHAREûPRICEûLASTûMONTHû#ITINGûSUCHû conditions, the leads expected a new The South Korean power producer has a
UNCERTAINTIESû&ITCHûALSOûCUTûTHEûRATINGSûOFû 4EMASEKûlVE YEARûTOûPAYû4REASURIESûPLUSû 53MûûBONDûISSUEûDUEûINû*UNEû)TûISûONEû
&UTUREû2ETAILûANDûITSûBONDSûTOû"nûFROMû""û BPûSOû34û%NGINEERINGûWASûJUSTûBPû OFûSIXûREGIONALûPOWERûCOMPANIESûOWNEDûBYû
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PRICEûOFûûONû!PRILûûACCORDINGûTOû DEALûATûBP
2ElNITIVûDATAûDOWNûûPOINTSûSINCEûTHEûSTARTû Despite the tight pricing, the bonds
OFû-ARCH tightened 10bp in early trading on
&UTUREû2ETAILSû53ûDOLLARûDEBUTûRECEIVEDû Thursday, before easing back to Treasuries
ORDERSûTOTALLINGûMOREûTHANû53BNûINûMUCHû PLUSûBP EUROPE/AFRICA
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detailed due diligence when buying it, PLUSûBPûSOûTHEûNEWûISSUEûLEDûBYûDBS and Paribas and UniCredit to lead a bond sale on
ESPECIALLYûIFûITûISûAûNEWûISSUERvûSAIDû+ULKARNI HSBCûPRICEDûmATûTOûFAIRûVALUE GLOBALûMARKETSûTHATûCOULDûBEûMOREûTHANû
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!SIAûFORûlVEûMONTHS THEûCOMPANYSûWEAPONSûBUSINESSûWITHûlNALû Europe/Africa
4HEûSTRONGûRESPONSEûANDûAFTERMARKETû ORDERSûOVERû53BNûFROMûûACCOUNTSû!SIAû Managing No of Total Share
PERFORMANCEûBUOYEDûANûOFFERINGûBYûPORTû TOOKûûOFûTHEûBONDSûANDû%UROPEû bank or group issues US$(m) (%)
operator PSA INTERNATIONALûTHEûFOLLOWINGûDAY h0EOPLEûFOCUSEDûONûWHATûKINDSûOFûMILITARYû
1 JP Morgan 17 5,551.77 17.8
3TATEûINVESTMENTûHOLDINGûCOMPANYû BUSINESSûTHEYûAREûINVOLVEDûINûWHICHûISûNOTû
2 BNP Paribas 7 2,433.85 7.8
4EMASEKû(OLDINGSûISûAûMAJORûINVESTORûINû INûMOSTûINVESTORSûNEGATIVEûLISTSvûSAIDûAû 3 SG 6 2,358.93 7.6
BOTHûCOMPANIESûGIVINGûINVESTORSûCONlDENCEû SOURCEûCLOSEûTOûTHEûDEAL 4 Citigroup 6 2,345.74 7.5
INûTHEIRûSTRATEGICûIMPORTANCEûTOû3INGAPORE 34û%NGINEERINGûDOESûNOTûDESIGNûPRODUCEû 5 Deutsche Bank 4 2,234.10 7.2
34û%NGINEERINGûRATEDû!AA!!!ûPRICEDûAû ORûSELLûANTI PERSONNELûMINESûCLUSTERû 6 Barclays 7 2,101.29 6.8
53MûûlVE YEARû2EGû3ûBONDûATûû MUNITIONSûWHITEûPHOSPHORUSûMUNITIONSûORû 7 UniCredit 4 1,969.78 6.3
TOûYIELDûû4HISûWASûEQUIVALENTûTOû THEIRûCOMPONENTSûACCORDINGûTOûITSûû 8 Morgan Stanley 2 1,345.85 4.3
Treasuries plus 120bp, inside initial ANNUALûREPORT 9 Raiffeisen Bank Intl 3 1,250.17 4.0
GUIDANCEûOFûBPûAREA 4HEûNEWûISSUEûWASûTHEûlRSTû4RIPLEû!ûSENIORû 10 Indl & Comm Bk China 4 1,160.74 3.7
The technology, defence and engineering CORPORATEû53ûDOLLARûBONDûFROMû!SIAûSINCEû Total 29 31,118.09
group issued the notes, which are expected 4EMASEKûSOLDûõBNûOFûSENIORûBONDSûINûAûDUAL Excluding equity-related debt.
to be rated AAA by S&P, through subsidiary TRANCHEûOFFERINGûINû.OVEMBERû Source: Refinitiv SDC code: L2

“Bulgaria has chosen four banks to lead
MANAGEûAûNEWûBONDûISSUEûTHEûSAMEûWHOû
MANAGEDûITSûLASTûGLOBALûBONDûSALEûINûvû
SAIDûONEûPERSON
Hungary switches focus to
h4HEûBONDûSALEûMAYûTAKEûPLACEûASûEARLYû
ASû;-AY=ûANDûFORûTHEûTIMEûBEINGûCOULDûBEû
foreign shores
SOMETHINGûAROUNDûPLUSûõBNûBUTûTHEûSIZEû CEE Sovereign raises €2bn but book size underwhelms
MATURITYûANDûTHEûTIMEûWILLûBEûPENDINGû
MARKETûCONDITIONSvûANOTHERûPERSONû HUNGARY returned to the public bond market on The €1bn six-year bond was also tightened by
FAMILIARûWITHûTHEûPLANûSAID Thursday for the first time in 18 months with a 15bp to a final spread of plus 145bp.
4HEûlNANCEûMINISTRYûDECLINEDûTOû €2bn dual-tranche offering, although less than Leads saw the final concession closer to 35bp.
COMMENT stellar demand suggested the size was pushed Hungary’s October 2025s was bid at 116bp
&INANCEûMINISTERû6LADISLAVû'ORNANOVûSAIDû hard. at Wednesday’s close, which was 20bp wider
THEûINCREASEDûLIMITûONûTHEûNEWûPUBLICûDEBTû The book closed at over €3.1bn, equally split than where they were 24 hours earlier, before the
WASûMEANTûTOûENSUREû"ULGARIAûCOULDûTAPû between six and 12-year tranches. mandate was announced.
MARKETSûWHENûCONDITIONSûWEREûFAVOURABLEû “Perhaps investors were hoping for bigger The bonds also widened a further 15bp as the
ANDûBEûPREPAREDûFORûEVENûAûWORSE THAN order books given you are talking about orders new issue was being executed.
PROJECTEDûIMPACTûFROMûTHEûCRISISû of €100bn for Italy and Spain, but that’s not the “The books don’t sound too big. I think the
"ULGARIAûWHICHûHOPESûTOûJOINûTHEû right comparison,” said a lead. problem was the secondaries widened during
EUROZONESûhWAITINGûROOMvûTHISûSPRINGûHASû “We had some people dropping late on but the day, which probably put pressure on moving
RAISEDû,VBNûBONDSûONûTHEûLOCALûMARKETûSINCEû then we had good interest come in from offshore tighter,” said a banker away.
*ANUARYû)TûPLANSûTOûSELLûANOTHERû,VMûINû US. We tried to find a balance between the deal Both new tranches traded down by around 1pt
lVE YEARûTREASURYûBONDSûONû!PRILû size and the order book.” in the aftermarket, or about 10bp wide of reoffer.
30ûANDû&ITCHûRATEû"ULGARIAûATû The modest oversubscription for Hungary Leads attributed the widening to a generally
INVESTMENTûGRADEû"""ûWITHûAûPOSITIVEû came despite what bankers away saw as healthy soft market.
outlook and said that entry into the concessions. “It’s not traded amazingly well, but when you
EUROZONESûWAITINGûROOMûMAYûTRIGGERû They saw a starting premium of anywhere think of a €2bn deal on a €3.1bn book, it could be
FURTHERûUPGRADES from 65bp–75bp on the €1bn 12-year bond, worse,” said the banker away.
which was priced 15bp inside IPTs at 180bp over The mandate appeared despite Zoltan Kurali,
swaps. chief executive of Hungary’s government debt
ESTONIA
COUNTRY RETURNS AFTER NEAR 4HEûlNANCEûMINISTRYûHASûALREADYûSETû said last week that the exit of foreigners
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PRODUCTûnûORûNEARLYû2BSTRNû53BN ûnûTOû 6YSHKOVSKYûSAIDûFOREIGNERSûWEREûSELLINGû
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h!ûTRACKûRECORDûOFûlSCALûDISCIPLINEûANDû TRYûTOûFULlLûTHESEûNEEDSûASûMUCHûASûTHEû TO BUY MORE BONDS
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MOSCOW TO RAISE AS MUCH DEBT AS ENDv 4HEûCOUNTRYSû YEARûBENCHMARKûBONDû
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NEEDSûAMIDûTHEûCORONAVIRUSûCRISISûBUTûNOTû STATEûBORROWINGûLEVELûTHISûYEAR watchdog said that as of May it would set a
ATûANYûPRICEûSAIDû+ONSTANTINû6YSHKOVSKYû &OREIGNERSûSHAREûAMONGû/&:ûHOLDERSû MINIMUMûLEVELûFORûBANKSûLOANûRATIOSûTOû
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MINISTRY ûINûEARLYû-ARCHûBUTûTHEûCENTRALûBANKû FROMûTHEûFALLOUTûOFûTHEûPANDEMIC

EMERGING MARKETS EUROPE/AFRICA
management agency, AKK, saying the previous Viktor Szabo, a portfolio manager at Aberdeen BNP Paribas economists say that Hungary is
week that although a Eurobond issuance could Standard Investments, said that the increase one of the countries where potential financing
not be discounted, the preference was for in Hungary’s external funding plans roughly needs look large relative to reserves, alongside
Hungary (Baa3/BBB/BBB) to finance itself in the matched the likely drop in domestic retail bond South Africa, Egypt, Mexico, Chile, Colombia and
forint market. issuance. Turkey, as well as Argentina.
“A sudden change of heart probably due to “It makes sense because people will probably Hungary has become an increasingly controversial
the fact the locals’ demand for local bonds has save more and many will lose part of their state within the EU. Orban has assumed emergency
dropped recently,” said a second banker away, income, although the government has introduced powers to combat the coronavirus outbreak, which
noting that Hungary’s bonds had been trading wage subsidy schemes,” he said. risk upending democracy.
at tight levels given the lack of expected new “You can’t, though, continue to expect Orban has secured an open-ended right to
foreign currency notes. households to pile in. The market in euros is open rule by executive decree. Also, under a new law
The lead said calls with investors had helped for high-grade issuers.” anybody deemed to be hindering measures to
to give a more realistic assessment of levels than The AKK on Wednesday said that the funding curb the spread of the virus or spreading false
those seen on screens. requirement of the 2020 budget had more than information about it faces up to five years in jail.
“It’s not the most liquid name, and it was quadrupled to Ft1.6trn (€4.5bn). More than a dozen EU member states
extremely tight given its scarcity value and how The agency said its medium-term goal including, Germany, Italy, Spain and France have
good the credit is,” he said. of increasing the stock of debt held by expressed concern that the new law could be
“When we announced, those levels were households to Ft11trn by the end of 2023 used to muzzle journalists critical of Orban.
essentially dead and we needed to check the remained intact. Hungary’s bond mandate announcement was
reality.” Hungary has announced a Ft9.2trn stimulus the first of what are expected to be several from
The new issue accounts for half of a €4bn package in the face of the economic impact of the CEE sovereigns, including Bulgaria and Estonia
foreign currency bond issuance plan, increased pandemic, equivalent to 19.6% of GDP. (see separate stories).
this year from an original target of €1bn as the “The package is huge but most of it is not “It was very smart of Hungary to take a large
budget deficit grows along with the economic coming this year and is not in the budget,” said size ahead of the queue, and pay a 35bp NIP in
fallout from the coronavirus crisis. Szabo. “They are still maintaining a sub-3% line with recent eurozone and EM sovereigns,”
Prime Minister Viktor Orban’s government deficit target despite the fact you could get away said a second lead.
had been curbing a reliance on foreign investors with a much higher deficit.” Citigroup, ING and JP Morgan were the lead
and boosting government debt sold to retail Hungary has set a 2.7% deficit target for 2020, managers.
investors. which is based on GDP shrinking by 3%. Robert Hogg
4HEûGOVERNMENTûANDûCENTRALûBANKûHAVEû ADEQUACYûRATIOSûHAVEûLINGEREDûBELOWûTHOSEû The steps announced so far are

TAKENûSTEPSûTOûKEEPûCREDITûmOWINGûTHROUGHû OFûPRIVATEûPEERS EQUIVALENTûTOûAROUNDûûOFû'$0û
what is expected to be a recession brought h)TûDOESNTûWORKûBYûTELLINGûSTATEûBANKSûTOû HEûSAID
ONûBYûMEASURESûTOûCONTAINûTHEûOUTBREAKû grow without their capital increases and at h7EûDElNITELYûTHINKûTHERESûMOREûlSCALû
INCLUDINGûROLLINGûSTAY AT HOMEûORDERSûANDû THEûSAMEûTIMEûGIVEûOUTûLOANSvûSAIDûAû SPACEûTHANûTHEREûISûMONETARYûPOLICYûSPACEû
SHUTTEREDûBUSINESSES BANKINGûANALYSTûh4HATûISûWHYûCAPITALû WHICHûISûAûKEYûFOCUSûFORûTHEû""nûCREDITû
4URKISHû0RESIDENTû4AYYIPû%RDOGANûANDûHISû INCREASESûAREûNEEDEDû4HEûSTATEûWILLû RATINGvûSAIDû7INSLOWûADDINGû4URKEYSû
SON IN LAWû&INANCEû-INISTERû"ERATû!LBAYRAKû PROBABLYûGIVEûTHISûMONEYv NEXTûSCHEDULEDûRATINGûREVIEWûWASûSLATEDû
HAVEûPUBLICLYûCRITICISEDûPRIVATEûBANKSûFORûNOTû 4URKEYûTHOUGHûHASûROOMûFORûFURTHERû FORû!UGUST
DOINGûENOUGHûTOûSUPPORTûTHEûECONOMY lSCALûSTIMULUSûTOûCOMBATûTHEûECONOMICû /NûTHEûMONETARYûPOLICYûPOLICYûSIDEûTHEû
!NALYSTSûSAIDûPRIVATEûBANKSûnûWHICHûHAVEû IMPACTûOFûTHEûCORONAVIRUSûOUTBREAKûASûITSû CENTRALûBANKûCUTûTHEûBENCHMARKûONE WEEKû
HIGHERûCAPITALûRATIOSûTHANûSTATEûBANKSûnû RESPONSEûSOûFARûHASûBEENûhPRETTYûMODERATEvû REPOûRATEûAGAINûLASTûWEEKûTOûûRISKINGû
WOULDûNEEDûTOûRAMPûUPûLENDINGûANDûDEBTû COMPAREDûWITHûOTHERûCOUNTRIESûINûSIMILARû FURTHERûLIRAûWEAKNESSûAFTERûAûBIGGER THAN
buying so that their total loans, securities positions, said Douglas Winslow, director, EXPECTEDûMOVE
and swap balances exceed their lira deposits %UROPEANûSOVEREIGNûRATINGSûATû&ITCH
UNDERûTHEûNEWûRULE ALL INTL EMERGING MARKETS BONDS
INTERNATIONAL ISLAMIC FINANCE DEBT
3ADRETTINû"AGCIûANALYSTûATû$ENIZû)NVESTû BOOKRUNNERS: 1/1/2020 TO DATE
said banks could also reduce rates on forex Middle East
deposits and shed deposits in order to lower Managing No of Total Share
THEûDENOMINATORûOFûTHEIRûASSETûRATIOS bank or group issues US$(m) (%)
h"ANKSûMAYûACCELERATEûLOCALûBONDû 1 Standard Chartered 8 1,544.12 22.2 1 Standard Chartered 13 8,870.89 17.3
ACCUMULATIONvû"AGCIûSAIDûADDINGûTHATû 2 HSBC 5 775.86 11.2 2 Citigroup 13 8,714.83 17.0
PRIVATEûBANKSûINûPARTICULARûMAYûACCELERATEû 3 Natixis 2 618.86 8.9 3 HSBC 9 4,582.84 8.9
LENDINGûANDûTAPûEXTERNALûMARKETSûFORû 4 First Abu Dhabi 3 438.82 6.3 4 Goldman Sachs 3 4,550.87 8.9
FOREIGNûFUNDINGûTHATûCOULDûBEûCOSTLYûGIVENû 5 Islamic Dev Bank 3 424.54 6.1 5 BofA Securities 3 3,375.41 6.6
AûMOREûTHANûûDROPûINûTHEûLIRAûTHISûYEAR 6 Citigroup 3 412.44 5.9 6 Credit Agricole 7 3,122.61 6.1
!CCORDINGûTOû"$$+ûDATAûSTATE OWNEDû 7 Dubai Islamic Bank 3 385.34 5.5 7 Deutsche Bank 5 2,643.39 5.2
BANKSûAVERAGEDûNEARLYûûLOANûGROWTHûINû 8 Riyadh Bank 1 300.00 4.3 8 Morgan Stanley 3 2,433.06 4.7
each of the preceding two weeks, while 9 JP Morgan 1 300.00 4.3 9 JP Morgan 9 2,388.20 4.7
PRIVATEûBANKSûAVERAGEDûûANDû 10 Landesbanken 1 285.71 4.1 10 Barclays 4 2,307.60 4.5
"UTûWHILEûSTATEûBANKSûHAVEûDRIVENû Total 10 6,949.54 Total 45 51,277.06
lending in recent weeks and also on the Excluding equity-related debt. Excluding equity-related debt.
HEELSûOFûAûûCURRENCYûCRISISûTHEIRûCAPITALû Source: Refinitiv SDC code: J27 Source: Refinitiv SDC code: L5

While the central bank acknowledged the ,ASTû-ONDAYûTHEûPRICEûFORûDELIVERINGû53û BONDSûISSUEDûUNDERûITSûûINDENTUREû
depreciating currency it stressed the need to 7ESTû4EXASû)NTERMEDIATEûINû-AYûWENTû MATURINGûBETWEENûûANDûûASûWELLû
KEEPûCREDITûmOWINGûANDûTOûRESPONDûTOûSLIDINGû NEGATIVEûFORûTHEûlRSTûTIMEûINûITSûHISTORYû BONDSûSOLDûUNDERûTHEûûINDENTUREûDUEû
OILûPRICESûASûITûCUTûINTERESTûRATESûBYûBP DROPPINGûASûLOWûASû 53ûASûPRODUCERSû BETWEENûûANDû
Marking its eighth straight rate cut, were willing to pay buyers to take the oil )NûEXCHANGEû!RGENTINAûISûOFFERINGû
4URKEYSûCENTRALûBANKûEXTENDEDûANû OFFûTHEIRûHANDS AMORTISINGûBONDSûINûBOTHûEUROSûANDûDOLLARSû
AGGRESSIVEûEASINGûCYCLEûTHATûHASûSEENûTHEû While there were technical reasons THATûHAVEûSTEP UPûCOUPONSûSTARTINGûASûLOWû
REPOûRATEûFALLûBPûINûLESSûTHANûAûYEARû BEHINDûTHEûPRICEûCRASHû ûTHEû-AYûCONTRACTû ASûûANDûCLIMBINGûTOûASûHIGHûASûû
BEYONDûMOSTûANALYSTûFORECASTS EXPIREDûONû4UESDAYû ûITûWASûANOTHERûSIGNûOFû WITHûMATURITIESûBETWEENûûANDû
4HEûRATEûCUTûSHOWEDûTHATûTHEûBANKSû the deep dislocations taking place because !ûGROUPûREPRESENTINGûCOLLECTIVELYûMOREû
hOVERRIDINGûOBJECTIVEûISûTOûSUPPORTûECONOMICû OFûTHEûNEWûCORONAVIRUS THANûûOFû!RGENTINASûPOST ûBONDSûANDû
GROWTHûANDûITûISûWILLINGûTOûMAKEûSACRIlCESûONû /ILûPRICESûHAVEûSKIDDEDûASûTRAVELû MOREûTHANûûOFûBONDSûISSUEDûDURINGûITû
THEû4URKISHûLIRAûASûWELLûASûONûlNANCIALû restrictions and lockdowns to contain the prior restructuring said on Monday that the
STABILITYûANDûPRICEûSTABILITYûCONSIDERATIONSvû SPREADûOFûTHEûVIRUSûCURBEDûGLOBALûFUELûUSEû proposal was not one it “can or will
SAIDû0HOENIXû+ALENûDIRECTORûOFûEMERGINGû WITHûDEMANDûDOWNûûWORLDWIDEû4HATû SUPPORTv
MARKETûSTRATEGYûATû3OCIETEû'ENERALE has resulted in growing crude stockpiles 4HEûGROUPûCOMPRISESûSOMEûOFûTHEû
&ALLINGûGLOBALûENERGYûPRICESûAREûLOWERINGû ANDûSTORAGEûBECOMINGûHARDERûTOûlND WORLDSûLARGESTûASSETûMANAGERSûINCLUDINGû
INmATIONûEXPECTATIONSûINû4URKEYûnûITûALMOSTû Brent, which is the international !LLIANCE"ERNSTEINû!MUNDIû!SSETû
COMPLETELYûDEPENDSûONûIMPORTSûTOûMEETûITSû BENCHMARKûWASûNOTûHITûNEARLYûASûHARDû -ANAGEMENTû!SHMOREû"LACK2OCKû
ENERGYûNEEDSûITûADDED ALTHOUGHûITûHASûSHEDûMOREûTHANû53ûSINCEû "LUE"AYû&IDELITYû4û2OWEû0RICEû7ESTERNû
/ILûPRICESûHAVEûTUMBLEDûTOûNEARûTWO April 17, dipping below the late March !SSETû-ANAGEMENTûANDû7ELLINGTON
DECADEûLOWSûDUEûTOûTHEûECONOMICûFALLOUTû LOWSûTOû53 Argentina seeks “to place a
FROMûTHEûPANDEMIC !PICORPSû3EPTEMBERûSûAREûBIDûATû DISPROPORTIONATEûSHAREûOFû;ITS=ûLONGER TERMû
4URKISHûAUTHORITIESûHADûEXHAUSTEDûROOMû ûORûBPûOVERûSWAPSûACCORDINGûTOû ADJUSTMENTûEFFORTSûONûTHEûSHOULDERSûOFû
FORûMONETARYûEASINGûPROVIDEDûBYûTHEû 2ElNITIV INTERNATIONALûBONDHOLDERSvûTHEûGROUPûSAID
DISINmATIONARYûIMPACTûFROMûOILû+ALENûSAIDû 4HEûISSUERûRATEDû!AûBYû-OODYSûWITHûAû 4HEû!RGENTINAû#REDITORû#OMMITTEEû
ADDINGûTHATûSURVEYSûSHOWEDûLONGER TERMû STABLEûOUTLOOKûMANDATEDûCitigroup, EXPRESSEDûSIMILARûSENTIMENTSûONû!PRILûû
INmATIONûFORECASTSûWEREûINCREASING Goldman Sachs and Standard Chartered to SAYINGûhTHEû!##ûHASûREVIEWEDû!RGENTINASû
h4URKEYûlNDSûITSELFûAGAINûINûAûBINDûFROMû ARRANGEûINVESTORûCALLS PROPOSALûANDûCANNOTûSUPPORTûITv
DEEPLYûNEGATIVEûREALûPOLICYûRATESûDEPLETEDûNETû !##ûREPRESENTSûAûVARIETYûOFûFOREIGNû
RESERVESûANDûSHORT TERMûEXTERNALûDEBTû INVESTORSûINCLUDINGûDISTRESSEDûDEBTûSPECIALû
OBLIGATIONSûAMOUNTINGûTOû53BNvûSHEûSAID 'REYLOCKû#APITALû-ANAGEMENTûASûWELLûASû
MUTUALûFUNDSûASSETûMANAGERSûANDû
AMERICAS INSURANCEûlRMS
!NDûINVESTORSûHOLDINGûOVERû53BNûOFû
BONDSûISSUEDûDURINGû!RGENTINASûLASTû
MIDDLE EAST ARGENTINA RESTRUCTURINGSûINûûANDûûALSOû
BACKEDûTHEûCHORUSûOFûVOICESûPROTESTINGûTHEû
POSSIBLE SHOWDOWN BETWEEN TERMSûOFûTHISûOFFER
UAE SOVEREIGN AND CREDITORS LOOMS -ONARCHû!LTERNATIVEû#APITALû("+û
#APITALû-ANAGEMENTû#YRUSû#APITALû
AJMAN BANK GETS NOD FOR SUKUK A showdown between ARGENTINA and its 0ARTNERSûANDû62û#APITALû'ROUPûAREûPARTûOFû
bondholders could be on the cards after THEûSTEERINGûCOMMITTEEûONûTHATûPARTICULARû
AJMAN BANK@SûSHAREHOLDERSûHAVEûAPPROVEDûAû THEûGOVERNMENTûMOVEDûFORWARDûWITHûAû GROUP
53Mû4IERûûSUKUKûTRANSACTION RESTRUCTURINGûPROPOSALûROUNDLYûREJECTEDûBYû )NVESTORSûHADûBEENûEXPECTEDûTOûPUSHû
!JMANû"ANKûISûANû)SLAMICûBANKûFOUNDEDû CREDITORSûANDûSKIPPEDûPAYMENTSûONûFOREIGNû back against the plan, which the
INûûANDûLISTEDûONûTHEû$UBAIû&INANCIALû LAWûBONDSûTOûUSEûTHEûGRACEûPERIOD GOVERNMENTûSAIDûWOULDûINVOLVEûAûû
-ARKETûINûû4HEûGOVERNMENTûOFû!JMANû Three creditor groups, representing big HAIRCUTûINûINTERESTûAûTHREE YEARûGRACEû
HOLDSûAûûSTAKEûWHILEûOTHERûFOUNDINGû NAMEûFOREIGNûINVESTORSûWHOûHOLDûLARGEû PERIODûANDûANûAVERAGEûCOUPONûOFû
SHAREHOLDERSûINCLUDEûlNANCIALûINSTITUTIONSû CHUNKSûOFû!RGENTINASûBONDSûLASTû-ONDAYû 4OûREACHûANûAGREEMENTûWITHûITSû
ANDûINDIVIDUALSûFROMûTHEû5!% SAIDûNOûTOûAûRESTRUCTURINGûPROPOSALûFROMû BONDHOLDERSû!RGENTINAûWILLûHAVEûTOûGETûALLû
the country, which is seeking to swap three groups on board, which will not be
SOMEû53BNûOFûBONDSûINTOûNEWû ANûEASYûTASK
REGIONAL SECURITIES h4HEûTHREEûGROUPSûHAVEûDIFFERENTûPRICEû
4HEûMOVEûWASûSEENûASûAûCOORDINATEDû POINTSûTHEYûCANûLIVEûWITHvûSAIDûTHEû
APICORP APPEARS AMID PLUNGING EFFORTûBYûTHEûMAJORûCREDITORûGROUPSûTOû BONDHOLDER
OIL PRICES show Argentina that they were all on the "UTûSOûFARûTHEûGOVERNMENTûAPPEARSûTOû
SAMEûPAGEûASûINVESTORSûPREPAREûFORûWHATû HAVEûSHOWNûLITTLEûPUBLICûINTERESTûINû
ARAB PETROLEUM INVESTMENTS CORP is planning COULDûBEûBRUISINGûDEBTûTALKS COMPROMISINGûONûITSûOFFERûAFTERûLAUNCHINGû
a US dollar bond with a tenor of three or h4HEûSTATEMENTSûWEREûALLûCOORDINATEDû THEûSAMEûPROPOSALûONûTHEû,UXEMBOURGû
lVEûYEARSûATûAûTIMEûWHENûTHEûPRICEûOFûOILûISû and shared with other groups and all three 3TOCKû%XCHANGEûONû4UESDAYûANDûTHENûONû
UNDERûINTENSEûPRESSURE INVITEDûCOMMENTSvûSAIDûAûBONDHOLDERû 7EDNESDAYûSAYINGûITûWOULDûMAKEûUSEûOFû
!PICORPûISûAûMULTILATERALûDEVELOPMENTûBANKû h4HEYûWEREûTRYINGûTOûBEûALIGNEDv THEûGRACEûPERIODûFORûABOUTû53MûOFû
OWNEDûBYûTHEûûMEMBERSûOFûTHEû/RGANISATIONû !RGENTINASûPROPOSALûWHICHûWASûRELEASEDû PAYMENTSûDUEûONûAûSERIESûOFûFOREIGNûLAWû
OFû!RABû0ETROLEUMû%XPORTINGû#OUNTRIES the week before targets foreign currency BONDSûDUEûTHATûDAY

EMERGING MARKETS AMERICAS
4HEûOFFERûEXPIRESûONû-AYûûBUTûANALYSTSû 7ITHûSOMEûOFû%COPETROLSûCREDITûMETRICSû DUEûûûûûûANDû

are seeing the end of the grace period in expected to decline, the new transaction
late May as perhaps the true deadline, as a COULDûSERVEûASûAûSTOPûGUARD )TûHADûALREADYûLOWEREDûTHEûISSUEûRATINGSû
MISSEDûPAYMENTûTHENûWOULDûCONSTITUTEûAû &ITCHûEXPECTSûTHEûOILûCOMPANYSûCREDITû TOû$ûONû%CUADORSûGLOBALûBONDSûDUEûû
HARDûDEFAULTûONûFOREIGNûLAWûDEBT METRICSûTOûMATERIALLYûDETERIORATEûINûû ûANDûûBASEDûONûTHEûVIEWûTHATû
h4HEREûAREûONLYûTWOûWAYSûTOûAVOIDû ANDûûWITHûANûINCREASEûINûLEVERAGEûTOû hTHEûGOVERNMENTûWOULDûNOTûMAKEûTHEû
default; either launch a consent MOREûTHANûXûINûûFROMûXûASûOFûYEAR PAYMENTSûINûTHEûSTATEDû; DAY=ûGRACEû
SOLICITATIONûFORûAûTEMPORARYûSTANDSTILLûTOû ENDûINû PERIODûREGARDLESSûOFûTHEûAGREEMENTûWITHû
negotiate in good faith or unilaterally Goldman Sachs, Scotiabank, and JP Morgan BONDHOLDERSv
IMPROVEûTHEûTERMSûSUFlCIENTLYûFORû were the leads. 30ûSAIDûITSûMOVESûWEREûhINûLINEûWITHû
BONDHOLDERSûTOûACCEPTvûWROTEû3IOBHANû OURûCRITERIAûFORûEXCHANGEûOFFERSûANDûSIMILARû
-ORDENûHEADûOFû,ATINû!MERICAû RESTRUCTURINGSv
lXED INCOMEûSTRATEGYûATû!MHERSTû0IERPONT ECUADOR
REPRIEVE AS INVESTORS AGREE GUATEMALA
COLOMBIA TO BOND CONSENT
ROBUST DEMAND FOR NEW
ECOPETROL RETURNS TO DOLLAR ECUADORûRECEIVEDûAûTEMPORARYûREPRIEVEûTHISû SOCIAL BONDS
MARKET DESPITE OIL VOLATILITY MONTHûWHENûTHEûGOVERNMENTûSAIDûTHATûAû
SUFlCIENTûNUMBERûOFûINVESTORSûHADûAGREEDû GUATEMALAûHITûTHEûMARKETûLASTû4UESDAYûASû
#OLOMBIANûSTATE OWNEDûOILûANDûGASûCOMPANYû to a consent solicitation to defer interest THEûREGIONSûGOVERNMENTSûRUSHEDûTOûRAISEû
ECOPETROLûENTEREDûTHEûMARKETûONû&RIDAYû PAYMENTS FUNDINGûTOûlGHTûTHEû#OVID ûPANDEMIC
ANNOUNCINGûAûNEWûBENCHMARK SIZEDûDOLLARûBOND 4HEûCONSENTûTARGETINGûSOMEû53BNûOFû 4HEûSOVEREIGNûRAISEDû53BNûTHROUGHû
4HEûQUASI SOVEREIGNûHITûTHEûSCREENSû BONDSûWASûLAUNCHEDûEARLIERûTHISûMONTHûASû AûDUAL TRANCHEûBONDûCOMPRISINGûAû
DESPITEûONEûOFûTHEûTOUGHESTûWEEKSûEVERûFORû THEûEMBATTLEDûSOVEREIGNûSOUGHTûSOMEû 53Mû YEARûSOCIALûBONDûTOûCOUNTERACTû
THEûOILûMARKETûTHATûSAWûBENCHMARKûPRICESû SHORT TERMûDEBTûRELIEFûANDûTIMEûTOûADDRESSû THEûIMPACTûOFûTHEûVIRUSûANDûAû53MûTAPû
HITûTWO DECADEûLOWS ITSûSHAKYûPUBLICûlNANCES OFûITSûûS
%COPETROLû"AA""n""n ûBEGANû 4HEûSOVEREIGNûHADûASKEDûBONDHOLDERSûTOû 'UATEMALASûDEALûPROVEDûAûHITûWITHû
MARKETINGûAû YEARûNOTEûATûTHEûûAREA defer interest due between March 27 and INVESTORSûTHATûUPûTOûTHENûHADûSEENûONLYûAû
!ûBANKERûFAMILIARûWITHûTHEûDEALûSAIDûTHEû *ULYûûUNTILû!UGUSTûANDûREDUCEûINTERESTû FEWûDEALSûAFTERûWEEKSûOFûNOûISSUANCEû"OOKSû
CONCESSIONûATûTHATûPOINTûWASûBPnBPû DUEûAFTERû-ARCHûûBYû53ûPERû SWELLEDûTOû53BN
REmECTINGûTHEûTOUGHûBACKDROPûFORûOILûCREDITS 53ûOFûPRINCIPAL 4HATûDEMANDûALLOWEDûSOLEûLEADûBank of
3TILLûHEûSAIDûTHEûMARKETûWASûOPENûANDû /VERûTHATûPERIODûITûALSOûWANTSûTOûEXCLUDEû America TOûTIGHTENûPRICINGûAûGOODûBPû
THATû%COPETROLûWANTEDûTOûRAISEûFUNDSûAHEADû CROSS DEFAULTûCLAUSESûONûCERTAINûDEBTû FROMûSTARTûTOûlNISHûBEFOREûLANDINGûTHEû
OFûEARNINGSûBLACKOUT INSTRUMENTSûINCLUDINGûSOCIALûBONDSûISSUEDû YEARûATûûANDûTHEûTAPûATû
4HEûCOMPANYûWHICHûISûMOREûTHANûû EARLIERûTHISûYEARûANDûSOVEREIGN GUARANTEEDû 7ITHû'UATEMALASûûûNOTESû
OWNEDûBYûTHEûSOVEREIGNûRECEIVEDû ûBONDSûISSUEDûBYû0ETROAMAZONAS TRADINGûATûAROUNDûû).4,û&#û3TONEû
AUTHORISATIONûBACKûINû&EBRUARYûTOûRAISEûUPûTOû 4HEûADMINISTRATIONûOFûPRESIDENTû,ENINû ANALYSTû2AFAELû%LIASûTHOUGHTûlNALûPRICINGû
53BNûINûTHEûBONDûMARKETûACCORDINGûTOûANû Moreno has been seen taking the right ATTRACTIVE
3%#ûlLINGûATûTHEûTIME actions but has been hit by a series of 4HEûTAPûALSOûCAMEûWITHûAûPREMIUMûTOûTHEû
5PûUNTILûNOWû%COPETROLûHASûHADûLITTLEûNEEDû RECENTûEVENTSû ûNAMELYûTHEûCORONAVIRUSû SECONDARYûMARKETûWHEREûTHEûSûWEREû
TOûTAPûTHEûINTERNATIONALûBONDûMARKET PANDEMICûANDûPLUMMETINGûCRUDEûPRICESû û BEINGûBIDûLASTû-ONDAYûATûAROUNDûû
)TSûLASTûDEALûINûTHEûDOLLARûMARKETûWASûINû THATûHAVEûFURTHERûHURTûTHEûlNANCESûOFûTHEû ACCORDINGûTOûAûBANKERûAWAYûFROMûTHEûDEAL
ûWHENûITûTAPPEDûITSûûSûFORû CASH STRAPPEDûOILûEXPORTER )NVESTORSûALSOûSAWûTHEûSOVEREIGNSûlSCALû
53MûTHROUGHû"ANKûOFû!MERICAûANDû h$EBTûHOLDERSûTRUSTûINû%CUADORvû-ORENOû POSITIONûASûCOMPARATIVELYûSTRONGûAûBUFFERû
(3"#ûPRICINGûTHEûDEALûATûûTOûYIELDû TWEETED that should help it weather the health
h4HEYûHAVEûACCEPTEDûTOûRENEGOTIATEû;THEû CRISIS
With part of the proceeds going towards DEBT=û7EûHAVEûJUSTûSAVEDû53MûTHATû
ALL INTL EMERGING MARKETS BONDS
QUELLINGû#OVID ûIMPACTûTHEûRAISEûCOULDûBEû WILLûSERVEûTOûHELPûINûTHEûNATIONALû
ANûOPPORTUNISTICûPLAYûTOûINCREASEûLIQUIDITY EMERGENCYûTHATûTHEûCOUNTRYûISûGOINGû
Latin America
h)TSûAûSTRONGûCREDITûLIQUIDITYûWASûGOODû)û THROUGHv
DONTûTHINKûTHEYûWEREûFORCEDûTOûCOMEûTOû )NVESTORSûHOLDINGûSOMEûûOFû bank or group issues US$(m) (%)
MARKETvûSAIDûANûEMERGINGûMARKETSû PRINCIPALûONûMOREûTHANû53BNûOFûBONDSû
CORPORATEûANALYST AGREEDûTOûTHEûCONSENTûWHILEûûOFûTHEû 1 JP Morgan 19 5,500.69 11.8
h4HEYûHAVEûENOUGHûLIQUIDITYûWITHOUTûTHEû HOLDERSûOFûTHEûûSûCAMEûONûBOARD 2 BofA Securities 18 4,694.85 10.1
NEWûISSUEûTOûMEETûTHEûNEEDSûFORûTHISûYEARvû The buyside had been expected to agree 3 Goldman Sachs 18 4,622.40 9.9
4 Deutsche Bank 6 3,900.29 8.4
HEûADDED TOû%CUADORSûREQUESTûINûTHEûHOPEûTHATû
5 BNP Paribas 8 3,852.17 8.3
5NDOUBTEDLYûMANYûGOVERNMENTSû GIVINGûTHEûGOVERNMENTûSOMEûBREATHINGû
6 Credit Suisse 7 2,473.39 5.3
CORPORATESûANDûQUASI SOVEREIGNSûHAVEûBEENû SPACEûWOULDûHELPûITûAVOIDûAûHARDûDEFAULTû
7 Citigroup 8 2,450.93 5.3
LOOKINGûTOûBOOSTûLIQUIDITYûTOûDEALûWITHû ANDûMESSIERûRESTRUCTURINGûTALKS
8 BBVA 6 2,335.53 5.0
FALLOUTûOFûTHEûWORLDWIDEû#OVID ûCRISIS As a result of the consent, S&P said it
9 Scotiabank 9 2,262.22 4.9
#OUNTRIESûLIKEû0ANAMAû0ERUû0ARAGUAYû WASûAFlRMINGûITSûSELECTIVEûDEFAULTûRATINGû
10 Santander 9 2,054.72 4.4
'UATEMALAûANDû-EXICOûHAVEûmOCKEDûTOûTHEû ONûTHEûSOVEREIGNûBUTûLOWERINGûTHEûRATINGSû
Total 55 46,554.80
DOLLARûMARKETûTOûRAISEûFUNDSûTOûSTIMULATEû on the global bonds included in the
Excluding equity-related debt.
THEIRûRESPECTIVEûSTIMULUSûPLANS AGREEMENTûTOû$ûFROMû##û4HOSEûBONDSûAREû Source: Refinitiv SDC code: L3

h'UATEMALAûISûAûPRETTYûSOLIDûCREDITûANDû 4HEûDEALûCOMPRISINGûûûANDû OFûDOMESTICûANDûEXTERNALûDEBTûACCORDINGû
HASûIMPORTANTûBUFFERSvûSAIDûAû.EWû9ORK ûMATURITIESûWASûPRICEDû53BNûATû TOûANû3%#ûlLING
BASEDûINVESTOR ûONûTHEûlVE YEARûBONDû53BNûATû “The yields at which Mexico is selling
4HEûCOUNTRYûHASûENJOYEDûAûCURRENTû ûONûTHEû YEARûTRANCHEûANDû53BNûATû AREûMUCHûHIGHERûCOMPAREDûTOûPASTû
ACCOUNTûSURPLUSûOFûABOUTûûOFû'$0ûSAIDû ûONûTHEû YEARûNOTE ISSUANCEû"UTûITûISûAûVERYûSPECIlCûANDû
Aû,ONDON BASEDûINVESTORûPROVIDINGûAûBOOSTû 0RICESûTIGHTENEDûFROMûINITIALûTALKûOFûTHEû COMPLICATEDûSITUATIONû*USTûTHEûFACTûTHATû
OFûCONlDENCEûINûTHEûCREDIT HIGHûûAREAûMID TO HIGHûûAREAûANDûLOWû ANYûCOUNTRYûISûSELLINGûISûGOODûNEWSvûSAIDû
h3OûEVENûIFûITû;ACCOUNTûSURPLUSES=ûSWINGSû ûAREAûRESPECTIVELY THEû%-ûSTRATEGIST
INTOûDElCITûITûWONTûBEûHUGEvûHEûSAIDû h4HEYûHADûTOûPAYûUPûAûBITûTHEYREûPAYINGû -EXICOûFOLLOWEDûAûHANDFULûOFûSOVEREIGNû
“That helps to explain the stability of the UPûAûHEFTIERûPREMIUMûTHANûSOMEûOFûTHEû TRANSACTIONSûINûTHEûPRIMARYûMARKETûINûTHEû
CURRENCYv DEALSûWEVEûBEENûSEEING” said a senior PASTûFEWûWEEKSûINCLUDINGû0ANAMAû0ERUû
%VENûSOûTHEûDEALûCOMESûAFTERû&ITCHû BANKERûFOLLOWINGûTHEûTRANSACTION ANDû'UATEMALAû0ARAGUAYûCAMEûAFTERWARDS
DOWNGRADEDû'UATEMALAûTOû""nûFROMû""û -EXICOSûûûBONDûWASûTRADINGûATû Citigroup, Goldman Sachs, JP Morgan and
EARLIERûTHISûMONTHûASûTHEû#OVID û AROUNDûnûFORûAûYIELD TO WORSTûOFû SantanderûWEREûBOOKRUNNERSûONûTHEûDEAL
OUTBREAKûSTRETCHESûTHEûCOUNTRYSûlNANCESû AROUNDûûLASTû7EDNESDAYûMORNINGûSAIDû
AMIDûPOLITICALûGRIDLOCKûANDûLOWERûTAXû ).,4û&#û3TONEûANALYSTû2AFAELû%LIASûINûAûREPORT
REVENUES h5SINGûTHISûBONDûASûAûCOMPARABLEûTOûTHEû PARAGUAY
The ratings agency sees GDP growth NEWûBONDûWEûWOULDûEXPECTûTHEûlVE YEARû
GRINDINGûTOûAûHALTûTHISûYEARûAFTERûAûû TRANCHEûTOûPRICEûATûAROUNDûvûHEûSAID THIRD LATIN AMERICAN SOVEREIGN
EXPANSIONûINûûANDûTHEûlSCALûDElCITû 4HEûSOVEREIGNSûûSûWEREûSEENû OF THE WEEK
RISINGûTOûûOFû'$0ûINûûUPûFROMûû TRADINGûATûAROUNDûnûTOûYIELDûû
LASTûYEAR WELLûBELOWûTHEûNEWûNOTESûûLAUNCHû PARAGUAY priced a US$1bn bond offering on
“The health crisis is likely to increase PRICE 4HURSDAYûTHEûTHIRDû,ATINû!MERICANû
GOVERNMENTûEXPENDITURESûADDINGû 4HEûSTEEPûDECLINEûINûTHEûOILûMARKETûTHEû SOVEREIGNûINûTHEûINTERNATIONALûMARKETûLASTû
PRESSUREûONûANûALREADY GROWINGûDElCITvû SOVEREIGNSûRECENTûDOWNGRADEûANDûSTATE WEEK
&ITCHûSAID OWNEDû0EMEXSûCUTûTOûJUNKûBYû-OODYSûTOû The issuer tightened pricing on its April
2EMITTANCESûWHICHûHELPûOFFSETûTHEûTRADEû FOLLOWû&ITCHSûMOVEûLASTûYEAR ûWEREûALLû ûNOTEûWHICHûHASûAû YEARûWEIGHTEDû
DElCITûHAVEûALSOûBEENûONûTHEûRADARûASûTHEû being cited as reasons behind the high AVERAGEûLIFEûTOûûFROMûINITIALûTALKûSETûINû
RECENTûGROWTHûINûSUCHûmOWSûAREûLIKELYûTOû PREMIUMS THEûMIDûûAREAû
SLOW h)ûDONTûTHINKûTHATûITûISûDUEûTOûANYTHINGû h)ûLOOKEDûTHEûDEALûOVERûBUTûGIVENûWHEREû
h;'UATEMALAS=ûEXPECTATIONûTHATû DIRECTûTOûTHEûSOVEREIGNû)ûTHINKûTHATSûMOREû THEûINITIALûGUIDANCEûCAMEûINûnûANDûLATERû
REMITTANCESûWOULDûGROWûûTHISû OFûAûFUNCTIONûOFûOILûSPREADINGûAûNEGATIVEû PRICINGûCAMEûnûITûWASûTOOûRICHûFORûUSvûSAIDû
YEARûSEEMSûTOûBEûFRAUGHTûWITHûAûDECENTû BACKDROPûFORûSOMEûOFûTHEûCOUNTRIESûTHATû 3EBASTIANû,EMAûANûANALYSTûWITHûASSETû
AMOUNTûOFûDOWNSIDEûRISKvûSAIDûTHEû5+û HAVEûAûDIRECTûCORRELATIONvûSAIDûTHEûBANKER MANAGERû.OCTUAû0ARTNERS
INVESTOR 4HOUGHûOILûRECOUPEDûSOMEûLOSSESûONû 0ARAGUAYûRATEDû"A""""ûISûAMONGû
2EMITTANCESûGREWûTOûûINûûANDû 7EDNESDAYû74)ûFORû*UNEûDELIVERYûTRADEDû ONEûOFûTHEûlRSTûHIGH YIELDûSOVEREIGNSûTOû
are a strong part of the reason why the ATûAROUNDû53ûAûBARRELûINûTHEû RAISEûDOLLARSû'UATEMALAûRATEDû"A""n
country runs a current account surplus, he AFTERNOONû%ARLIERûINûTHEûDAYûITûHADûTRADEDû ""nûALSOûSOLDûDOLLARûBONDSûLASTûWEEKû
ADDED ATûLOWSûOFûAROUNDû53 !NDû-EXICOûWHICHûISûINVESTMENTûGRADEû
'UATEMALAûWASûLASTûINûTHEûMARKETûABOUTû “Mexico is going to be a huge casualty of ALSOûCAMEûTOûMARKETûLASTûWEEK
AûYEARûAGOûINû-AYûû!TûTHEûTIMEûITûSOLDû #OVIDvûSAIDûAû-IAMI BASEDûCHIEFûEMERGINGû /THERûCOUNTRIESûWHICHûHAVEûRECENTLYû
53BNûINûAûTWO PARTûDEALûCOMPRISINGû MARKETSûSTRATEGIST ISSUEDûINCLUDEû0ANAMAûANDû0ERUû
THEûûûBONDûANDûAûûû “The lockdown in the US is going to û4HEûVOLATILEûNATUREûOFûTHEûMARKETûPAIREDû
NOTE MATERIALLYûAFFECTûTHEûCAPACITYûOFû-EXICOûTOû WITHû0ARAGUAYSûABANDONMENTûOFûITSûlSCALû
0ROCEEDSûFROMûTHISûLATESTûISSUEûWILLû MAINTAINûEMPLOYMENTvûHEûADDED RULEûEARLIERûTHISûMONTHûWEREûREASONSûSOMEû
lNANCEûELIGIBLEûSOCIALûINVESTMENTSûDIRECTLYû 4HEûSOVEREIGNûWASûDOWNGRADEDûEARLIERû MARKETûOBSERVERSûTHOUGHTûTHEûDEALûWOULDû
ORûINDIRECTLYûRELATEDûTOû#OVID û THISûMONTHûBYûTWOûRATINGSûAGENCIESûTOû"""û COMEûWIDER
PREVENTIONûCONTAINMENTûANDûMITIGATIONû BYû30ûANDûTOû"""nûBYû&ITCHû"OTHûAGENCIESû h)ûWASûSURPRISEDûWHENûITûCAMEûATûvû
EFFORTS CITEDûTHEûCOUNTRYSûEXPECTEDûECONOMICû SAIDûANûEMERGINGûMARKETSûSTRATEGISTû
4HEû!2EGû3ûSENIORûUNSECUREDûBONDSû CONTRACTIONûASûONEûOFûTHEûDRIVERSûFORûITSû saying he calculated fair pricing at around
AREûRATEDû"A""n""n RESPECTIVEûDOWNGRADESû-OODYSûRATESû
-EXICOû"AA 0ARAGUAYSûûûNOTEûWASûTRADINGûATû
9ETûWHILEûTHEûHEADWINDSûFORû-EXICOû AûûYIELDûASûOFûLASTû7EDNESDAYûHEû
MEXICO ABOUNDûAûLOTûOFûINVESTORSûWANTEDûTOûBUYû ADDED
THEûNEWûISSUE 2OBUSTûDEMANDûATûABOVEû53BNûMAYû
SOVEREIGN PAYS UP ON NEW BONDS h4HEYûAREûPRINTINGû53BNûSOûDEMANDû HAVEûSQUEEZEDûPRICINGûTIGHTERûACCORDINGû
MUSTûHAVEûBEENûPRETTYûCHUNKYvûSAIDûTHEû TOûTWOûPEOPLEûFOLLOWINGûTHEûTRANSACTION
MEXICOûPRICEDûAû53BNûTHREE PARTûBONDû senior banker. Paraguay, which usually dips into
OFFERINGûINûTHEûPRIMARYûMARKETûATûHIGHû h$EMANDûWASûAûVERYûGOODûBOTHûINû INTERNATIONALûMARKETSûONLYûONCEûAûYEARû
PREMIUMSûLASTû7EDNESDAYûLEVELSû QUANTITYûANDûQUALITYvûSAIDûAûSOURCEû LASTûRAISEDûDOLLARSûVIAûAûTAPûOFûITSûûû
ATTRACTIVEûENOUGHûTOûSPURûROBUSTûINVESTORû INVOLVEDûINûTHEûDEALûACKNOWLEDGINGûHEAVYû BONDûINûEARLYû*ANUARYû
PARTICIPATION PARTICIPATION !TûLEASTûPARTûOFûTHEûPROCEEDSûFROMûTHEû
"OOKSûONûTHEûDEALûWEREûOVERû53BNû 0ROCEEDSûOFûTHEû3%# REGISTEREDûSENIORû transaction could be used to fund the
ACCORDINGûTOûPEOPLEûFAMILIARûWITHûTHEû unsecured deal will go towards the COUNTRYSû#OVID ûRESPONSEûSAIDûAûMARKETû
OFFERING RElNANCINGûREPURCHASINGûORûRETIREMENTû SOURCE

EMERGING MARKETS AMERICAS
Investors bet on state support after

Pemex drops to junk
LATIN AMERICA Oil company becomes biggest EM fallen angel
Investors are viewing PEMEX more and more as a the same day Fitch announced a further cut to While that debt load makes it one of the
sovereign play as state support is all but assured its rating, to BB– from BB). biggest fallen angels ever, the event had widely
for the troubled, but strategically important But some think that S&P’s rating, which still been priced in by the market, making it much less
Mexican oil firm, after it became the biggest has Pemex at BBB, could bring it under the dramatic than such superlatives would suggest.
fallen angel in emerging markets history this central bank’s remit. Funds either exited the credit earlier or simply
month amid a dramatic rout in crude prices. “I think with Pemex there is scope here started putting Pemex in a high-yield basket,
While President Andres Manuel Lopez Obrador because of their S&P rating,” said Moewes. leaving only passive funds or ETFs to pull the
said he would provide some US$2.6bn in tax Either way, the state is seen having little trigger at the last moment.
relief to the company earlier in April, Pemex will choice but to rescue a company that brings vital “Everybody who followed the credit knew the
certainly need more help and it remains unclear tax receipts and is of strategic and historical downgrade was coming and the market had
what other forms state support might take. importance to the country. already priced it in,” said Alberto Bernal, chief of
But some in the market think that the next This comes after Mexico raised a hefty strategy at XP Investments.
step could involve the sovereign, or even the US$6bn in the US dollar bond market last week, “If you work in this market and you were
central bank, directly or indirectly buying Pemex a size that made some think proceeds might be surprised by that decision, I don’t know what to
bonds on the cheap, providing some relief to a slated to lend Pemex a helping hand. tell you.”
balance sheet weighed down by some US$105bn “If you are going to fund a fiscal deficit you The ratings action kicked Pemex off
of debt. can do that in local currency. You don’t need high-grade indices such as ICE/BAML and
Not only had the oil company’s bonds slid in to raise dollars,” said Roger Horn, a senior Bloomberg/Barclays but it will not fall into the
the run-up to a widely telegraphed downgrade emerging markets strategist at SMBC Nikko US high-yield indices because of its emerging-
to junk by Moody’s on April 17 – Pemex already Securities America. market status, according to CreditSights.
had a non-investment-grade rating from Fitch “There is a lot of speculation that somehow The research firm notes that liquidity raising
last year – but plunging crude prices last week this [sovereign bond issue] could be used to options typically used by other companies such
put further pressure on secondary levels. support Pemex, where it might be given a capital as stopping dividend payments or asset sales
Dollar prices in the belly of Pemex’s curve injection to tender for debt at a discount.” are unavailable to Pemex. Nor is the issuance
were in the high 60s or low 70s late last week, Indeed, as Pemex comes under more stress, it of secured debt “owing to its reticence to grant
while the long end was trading in the low 60s. will be viewed increasingly as a sovereign entity. liens to foreign investors”, it said.
“What better situation than now to buy back As of December, Pemex had about US$3.2bn
bonds cheaply,” said Till Moewes, a Mexico- BUYING OPPORTUNITY of cash on hand and access to close to US$9bn
based credit analyst at Schroders, noting that That has made it a buying opportunity for some in an unused committed revolver to cover over
Pemex bonds could possibly qualify under the who think the sovereign support will became US$8bn in debt maturities falling due this year
central bank’s new liquidity facility. even stronger. and next, according to Moody’s.
Like the Federal Reserve, Banco de Mexico has “It is a buying opportunity. The weaker it That may be enough to tide it over for the next
also announced measures to bolster the credit becomes as a standalone credit, the more it year, but Pemex will struggle without substantial
markets, including expanding a liquidity programme becomes sovereign debt,” said Moewes. government aid, say analysts.
known under the Spanish acronym FLAO. “We see that the sovereign can tap the market With the company rated junk, “borrowing
Banxico widened FLAO’s use this month to and know there will be money available no costs are going to increase”, said one analyst.
encompass foreign currency securities with matter where oil prices go.” “And at today’s [oil] prices the company is free
the equivalent of BB+ ratings by two ratings Indeed, many in the market had been waiting cashflow negative in its operations. So they will
agencies. for the second junk rating from Moody’s to take have to find more government injections or raise
That could well disqualify Pemex after it was on more exposure to the credit, which saw close financing. I don’t know how they will do that.”
downgraded to Ba2 from Baa3 by Moody’s (on to US$60bn of bonds fall fully into junk territory. Paul Kilby
h4HEûCONCEPTûOFû#OVID ûRESPONSEû !PPROVALûOFûTHEû)-&SûDISBURSEMENTû h4HEûMEDIUM TERMûlSCALûPOLICYû

BONDSûISûSOMETHINGûTHATûWEûWILLûCONTINUEû package announced on April 21 was STANCEûANDûFRAMEWORKûINCLUDINGû
to see as issuers seek to respond to the IMMEDIATEûANDûWASûTARGETEDûTOWARDSû ûPROBABLEûCHANGESûTOûTHEû&ISCALû
ISSUESûTHEYREûHAVINGûATûHOMEvûSAIDû HELPINGûTHEûCOUNTRYûMEETûURGENTûBALANCEû 2ESPONSIBILITYû,AWûWILLûBEûANûIMPORTANTû
.OCTUASû,EMA OFûPAYMENTSûSTEMMINGûFROMûTHEûOUTBREAKû COMPONENTûOFûOURûSOVEREIGNûRATINGû
4HEû)-&ûANNOUNCEDûTHEûAPPROVALûOFûAû THEûFUNDûSAIDûINûAûRELEASE ASSESSMENTûTHROUGHûTHEûCRISISûANDûITSû
53MûSUPPORTûPACKAGEûTOûTHEûCOUNTRYû 4HEûCOUNTRYûANNOUNCEDûAûlSCALûPACKAGEû AFTERMATHvûITûSAIDûINûAûREPORTûPUBLISHEDû
LASTûWEEK WORTHûAROUNDûûOFûITSû'$0ûTOûCOMBATûTHEûCRISISû LASTû7EDNESDAY
h4HEûISSUANCEûDOESNTûREALLYûLEAVEûROOMû Along with the package, the &ITCHûESTIMATESûTHEûCOUNTRYSûDElCITûTOû
FORûFURTHERûTIGHTENINGû"UTû)ûIMAGINEûTHEû GOVERNMENTûALSOûSUSPENDEDûITSûlSCALû WIDENûFURTHERûTOûûOFû'$0ûINûûITû
PARTICIPANTSûINûTHEûDEALûTAKEûCOMFORTûINû RESPONSIBILITYûLAWûWHICHûSETûAûDElCITûLIMITû SAIDû
SUPPORTûFROMûAûMULTILATERALûLIKEûTHEû)-&vû OFûûOFû'$0ûAûMOVEûWHICHû&ITCHûWASû Citigroup, Itau, Goldman Sachs, and
ADDEDûTHEû%-ûSTRATEGIST EXAMININGûCLOSELY Santander WEREûTHEûLEADS

BEFORE THE
MARKETS MOVE,
MAKE YOURS.
Stay ahead of the commodities markets with
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LOANS
Australia 74 China 75 India 76 Vietnam 77 Austria 77 France 78 Ireland 79 Russia 81 Spain 81
UK 82 United States 83 Leveraged Loans 87 Restructuring 88
FRONT STORY EUROPEAN LEVERAGED MARKET
Loose loan docs to be put to the test

Added debt raises leverage, dilutes senior lenders’ position
Exceptionally aggressive documentation further bank borrowings or potentially As a result of the transfer, the assets no
gained by sponsors on portfolio companies looking to provide senior debts themselves,” longer served as collateral for the secured
OVERûTHEûPASTûFEWûYEARSûISûlNALLYûSETûTOûBEûPUTûTOû said David Gillmor, sector lead, European loans and instead the transferred assets
the test as borrowers seek to bolster liquidity in LEVERAGEûlNANCEûATû30û'LOBALû2ATINGS were used to collateralise new debt issuance
the wake of the Covid-19 pandemic. While additional liquidity is positive for and buy back bonds.
Loan documentation became looser as banks many borrowers, it could prove a negative In Europe, security packages have also
and investors competed for deals amid a supply for many lenders as leverage increases and eroded over the past few years. Most of them
and demand imbalance that has dominated recovery rates lower. have a limited scope of assets as collateral and
Europe’s leveraged loan market for the past few “The additional debt would inevitably boost the documentation provides sponsors with
years. This has given private equity sponsors a the company’s leverage ratio and dilute the mEXIBILITYûOVERûTHEûCONTROLûOFûTHOSEûASSETS
GREATûDEALûOFûmEXIBILITYûTOûINCURûADDITIONALûDEBTû position of the senior lenders,” said Gillmor. “There are a long list of baskets, carve-outs
and gifted them a greater control over assets. Analysts believe the loan holders would and provisions buried in 500-page long legal
Investors are concerned sponsors will use recover far less in this current economic documents. Lenders probably aren’t even aware
everything in their armoury as companies face downturn than they have historically. of how many loopholes there are,” said a lawyer.
liquidity issues, caused by the lockdown. 30ûESTIMATESûTHEûAVERAGEûlRST LIENûRECOVERYû However, analysts think sponsors are
“The problem is the loose documentation rate in Europe’s leveraged loan market will be unlikely to strip out assets for liquidity
has never been tested,” a debt investor said. around 60% of face value, compared to the 70%– purposes, due to reputational risk.
“Everybody should assume that sponsors will 75% recovery rate during the last two cycles. “It might be seen by the market as a nuclear
take advantage of all baskets and loose However, one of the situations that OPTIONûASûNOûINDIVIDUALûPRIVATEûEQUITYûlRMû
documentation points if they need to inject HORRIlESûINVESTORSûTHEûMOSTûISûAûBORROWERSû WANTSûTOûBEûTHEûlRSTûONEûTOûBEûLABELLEDûASûTHEû*û
MONEYûORûlNDûSECURITIESûTOûBACKûNEWûMONEYv ability to pledge or transfer valuable assets Crew equivalent in Europe,” said Gillmor.
Under “freebie baskets” in most loan in a bid to lock in extra liquidity. )NûADDITIONûINVESTORSûSAIDûTHEûmEXIBILITYûTHATû
agreements, borrowers are allowed to incur One of the alarming examples was J CREW lNANCIALûSPONSORSûHADûENJOYEDûOVERûTHEûYEARSû
equally ranked additional debt, without an ATûTHEûENDûOFûû0RIVATEûEQUITYûlRMû40'û was based on trust and breaking that trust could
approval from existing lenders. TOOKûADVANTAGEûOFûAûLOOPHOLEûINûTHEû53û cost sponsors severely in the future when they
“We are seeing sponsors begin to use it. apparel retailer’s debt terms to move certain return to the capital markets for fundraising.
They are either looking to use it through intellectual property rights into a subsidiary. Prudence Ho
Opportunistic trades dominate secondary

The secondary loan market saw prices rebound “Loans plummeted and people thought it SAIDûh)TûDOESûDEMONSTRATEûTHEûSIGNIlCANTû
from an 11-year low after hedge funds and par was silly,” a senior banker said. amount of capital available looking for a good
BUYERSûPROlTEDûFROMûANûOVERSELLûWHILEûSOMEû “A lot of names that were marked lower are risk return.”
opportunistic portfolio sales also hit screens. now up 10-20 points. While it was hard to get While buying took place on a vast number
Loan pricing plummeted in mid-March, hold of anything in any meaningful size, there of leveraged loans, other loans remained at
driven by the coronavirus pandemic and were enough trades to make the prices go up.” DEmATEDûLEVELSûESPECIALLYûFORûBORROWERSûORû
plunging oil prices, knocking millions of dollars While some money came from more obvious sectors that were either struggling before the
off portfolios and halting primary loan issuance. BUYERSûSUCHûASû!POLLOû#ENTERBRIDGEû360ûANDû coronavirus or as a result of the pandemic.
Average pricing on leveraged loans has risen Angelo Gordon, some funds surfaced that were Credit asset management boutique Capital
dramatically over the past few weeks, however, relatively unknown in Europe, including Cross Four sold the majority of a €113m portfolio of
after the market was viewed to have oversold on /CEANû0ARTNERSûANDû3EARCHLIGHTû#APITALû0ARTNERS loans via a Bids Wanted In Competition process
a vast range of credits, attracting a swathe of “There were a few names I’d never heard of last week, It came after bids went in on April 17
buyers looking for value. surfacing and buying,” a senior investor said. for a €30m BWIC from asset manager Chenavari.
Europe’s top 40 leveraged loans were quoted “Now our paths have crossed and this is what Capital Four’s BWIC contained 30 names
at 92.25% of face value on April 20, up from an hedge funds do; it’s not really a surprise.” across a number of tranches, and had an
11-year low of 78.76% on March 19. With secondary market prices adjusted average bid of 76.7% of face value.
In mid-March, opportunistic hedge funds led higher, the opportunistic trade appears to be It is the second BWIC issued by Capital
the way on the buying spree and bought a wide over. The market has regulated itself. Four in the past few weeks.
variety of credits in the 60s and 70s, pushing h0EOPLEûBUYINGûINûTHEûLOWûSûAREûNOTûGOINGû “Cap4 tried to sell a bunch of stuff before,
pricing up to the 80s. More mainstream investors to buy in the low 90s as the pull to par is not about four weeks ago, and not much of it traded
followed suit and focused on buying in the 70s as spectacular - there is an extent to which but then it re-emerged,” the investor said.
and 80s to push those credits up into the 90s. that trade has happened,” the senior banker Claire Ruckin

whenever collateral is added or removed currency revolver Tranche D (in Australia,
leading to pricing and/or collateral 53û.EWû:EALANDûANDû3INGAPOREûDOLLARS ûANDû
ASIA-PACIFIC adjustments. a A$200m 2.25-year amortising Tranche E.
The interest margins are 175bp, 160bp The latest deal is offering initial interest
ANDûBPûOVERû""39ûFORû,46ûRATIOSûOFûn margins of 290bp, 310bp and 330bp over
AUSTRALIA 80%, 65%–75% and less than 65%, base rates for the 2.25, 3.25 and 4.25-year
respectively. tranches respectively, based on net leverage
QANTAS BRAVES TURBULENCE between 2.75x and 3.00x.
AIRPORT LANDS A$850m LOAN The Australian telecommunications
QANTAS AIRWAYS has mandated four banks on company is paying more than for its
a 10-year amortising loan of about A$300m SYDNEY AIRPORT has put in place A$850m PREVIOUSûLOANûCOMPLETEDûINû*ULYûûWHENû
53M ûITSûSECONDûLONG TENORûLOANû 53M ûOFûTWOûANDûTHREE YEARûBANKûDEBTû ITûRAISEDûAû!BN EQUIVALENTûRElNANCINGû
within a month. to support its balance sheet as it copes with with 12 banks joining in general
ANZ, BNP Paribas, MUFG and SMBC are the the fallout of the coronavirus pandemic. syndication.
mandated lead arrangers and bookrunners The company now has combined liquidity The 2018 transaction comprises a
on the loan, commitments for which are of A$2.8bn comprising A$430m in cash, A$510m-equivalent 4.25-year bullet revolver
due by mid-May. A$1.75bn in undrawn bank loans and about Tranche A, a A$510m-equivalent 3.25-year
0LANESûFORMûTHEûSECURITYûFORûTHEûLATESTû !MûINûNEWû53ûPRIVATEûPLACEMENTûNOTESû bullet revolver Tranche B, a NZ$150m 3.25-
borrowing – similar to a A$1.05bn long- THATûWILLûBEûFUNDEDûINû*UNE year bullet revolver Tranche C, a
tenor loan Qantas completed in March to This is in excess of the A$1.3bn of debt A$75m-equivalent 2.25-year bank guarantee
manage the impact of the coronavirus maturing and the A$150m–$200m of and letter of credit Tranche D and a A$175m
outbreak on its business. expected capital expenditure in the next 12 2.25-year amortising Tranche E.
That loan has a tenor of up to 10 years, months. Tranches D and E mature in August, while
pays an interest rate of 2.75% and carries no 3YDNEYû!IRPORTûEXPECTSûTOûREMAINû Tranche B and C come due in August 2021
lNANCIALûCOVENANTSû1ANTASûHASûPLEDGEDû compliant with its covenant requirements and Tranche A in August 2022.
seven out of 11 Boeing 787-0 aircraft as and does not see the need to raise equity. The initial interest margins were 230bp,
security for the loan. The planes were The company will not declare an interim 215bp and 200bp for tranches A, B and C,
purchased with cash in recent years. distribution for the half-year period ending and E, respectively, based on the then net
The loan completed in March was not *UNEûûGIVENûTHEûIMPORTANCEûOFûLIQUIDITYû leverage of 2.5x–3.0x. Tranche D offered a
syndicated and was closed soon after the current impact of Covid-19 and the MARGINûOFûBPûOVERû""39"+"-,IBOR
Moody’s placed the airline’s Baa2 rating uncertain near-term trading outlook, it said. 3IBORûFORûALLûLEVELS
under review for a possible downgrade due 3YDNEYû!IRPORTûISûTARGETINGûATûLEASTûAûû
to the unprecedented disruption in the reduction in operating costs for the next 12 ICHTHYS LNG POSTPONED
aviation industry. months from April 1, and is cutting pay for
!ûPREVIOUSûSECUREDûSYNDICATEDûlNANCINGû its CEO by 20%. French oil and gas giant TOTALûANDû*APANSû
for Qantas was a A$450m 10-year asset- 3YDNEYû!IRPORTSûPREVIOUSûVISITûTOûTHEûLOANû INPEX have put on hold a proposed
backed loan in October 2018. market was in May 2019, when it raised RElNANCINGûANDûREPRICINGûOFûLOANSûFORûTHEû
".0û0ARIBASû.ATIONALû!USTRALIAû"ANKûANDû A$1.4bn through a multi-tranche ICHTHYS LIQUEFIED NATURAL GAS PROJECT in
3TANDARDû#HARTEREDûWEREûTHEû-,!"SûOFûTHEû sustainability-linked loan, the largest such Western Australia until market conditions
lNANCINGûWHICHûATTRACTEDûAûDOZENûLENDERSû SYNDICATEDûlNANCINGûFORûTHEûAIRPORTûSECTORû improve.
in general syndication and was increased globally. The sponsors had appointed Citigroup as
from a A$300m initial target. %ARLIERûTHISûYEARû3YDNEYû!IRPORTûRAISEDû adviser and were considering a 8.5-year loan
4HATûLOANûnûSECUREDûOVERûAûPOOLûOFûlXEDû !M EQUIVALENTûFROMûAûMULTI TRANCHEû53û FROMûCOMMERCIALûBANKSûFORûRElNANCINGûASû
assets, including aircraft engines – pays PRIVATEûPLACEMENTûTHATûINCLUDEDûTHEûlRSTû well as a repricing of a loan from export
interest margins tied to the loan-to-value sustainability-linked bond issued outside of credit agencies.
RATIOSû)TûGIVESûTHEûBORROWERûMOREûmEXIBILITYû Europe. 3OMEûLENDERSûFOUNDûTHEûPRICEûTALKûOFû
140bp over Libor for the interest margin on
ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY VOCUS SEEKS A$1.4bn the commercial tranche too tight given the
SYNDICATED VOLUME (INCLUDING JAPAN) market volatility arising from the
BOOKRUNNERS: 1/1/2020 TO DATE VOCUS GROUP has launched a A$1.38bn- coronavirus pandemic.
Managing No of Total Share equivalent multi-tranche loan into general )Nû!UGUSTûû4OTALûRAISEDûAû53BNû
bank or group issues US$(m) (%) syndication, paying higher pricing on its sponsor loan for the LNG project, after
1 Mizuho 183 27,135.91 20.2 return to the market after nearly two years. COMPLETINGûAûREPRICINGûINû*UNEûOFûTHATûYEARû
2 MUFG 339 24,282.49 18.0 ANZ, Commonwealth Bank of Australia, HSBC FORû53BNûINûPROJECT LEVELûDEBT
3 Sumitomo Mitsui 217 18,178.68 13.5 and National Australia Bank are the mandated !.:ûANDû".0û0ARIBASûCOORDINATEDûTHEû
4 Bank of China 60 8,255.79 6.1 lead arrangers and bookrunners. REPRICINGûOFûTHEû53BNûFACILITYûWITHûMOSTû
5 China Merchants Bk 10 4,869.03 3.6 The facility is split into six parts – a of the existing lenders stepping up to
6 HSBC 20 2,838.15 2.1 A$232.5m 4.25-year multi-currency bullet increase their commitments.
7 Ag Bank of China 6 2,334.69 1.7 revolving credit Tranche A1 (in Australian That facility matures in December 2028
8 Citigroup 10 2,195.59 1.6 ANDû53ûDOLLARS ûAû!Mû YEARûBULLETû and offers a margin of 95bp over Libor.
9 ANZ 14 2,171.58 1.6 term loan Tranche A2, a A$465m-equivalent Mandated lead arrangers and bookrunners
10 Credit Agricole 7 2,162.14 1.6 3.25-year multi-currency bullet revolver were paid a 60bp fee, MLAs received 55bp
Total 970 134,577.31 4RANCHEû"ûINû!USTRALIANûANDû53ûDOLLARS ûAû and lead arrangers earned 50bp.
Proportional credit NZ$135m 3.25-year bullet revolver Tranche )Nû*UNEûû4OTALûALSOûRElNANCEDûAû
Source: Refinitiv SDC code: S3a C, a A$125m-equivalent 3.25-year multi- 53Mû YEARûLOANû4RANCHEû ûANDû

LOANS ASIA-PACIFIC
RESETûTHEûMARGINSûFORûAû53BNû YEARû The outstanding borrowing includes a Metro operates 97 stores across China, a
LOANû4RANCHEû ûANDûAû53BNû NZ$100m term loan due May 29, a NZ$25m SIGNIlCANTûPORTIONûOFûWHICHûAREûOWNEDû
SUBORDINATEDûPIECEû4RANCHEû û4HEû TERMûLOANûMATURINGû*ULYûûAû.:Mû properties. Beijing-headquartered Wumei
TRANCHESûWEREûPARTûOFûAû53BNûPROJECTû term loan due May 2021, a A$50m term loan operates more than 1,000 stores across the
lNANCINGûCLOSEDûINû$ECEMBERû DUEû*ULYûûANDûAû!MûTERMûLOANû country.
The Ichthys LNG project commenced maturing May 2023.
PRODUCTIONûINû*ULYûûANDûISûLOCATEDûINûTHEû %"/3ûISûAûDIVERSIlEDû!USTRALASIANû CHEMCHINA SEEKS WAIVER
Browse Basin, 220km offshore Western marketer, wholesaler and distributor of
Australia and 820km south-east of Darwin. healthcare, medical and pharmaceutical China National Chemical Corp is seeking a
products. temporary waiver from lenders on a
METCASH RAISES A$180m 53BNûLOANûSIGNEDûINûûOVERûTHEû
RAMSAY WINS COVENANT CONSENT registration process relating to a change in
Grocery wholesaler METCASH is raising the borrowing entity.
A$330m of equity and A$180m of one-year 0RIVATEûHOSPITALûOPERATORûRAMSAY HEALTH CARE The company is required to register the
debt facilities to increase its liquidity buffer has won consent from lenders to amend NEWûBORROWINGûENTITYûWITHûTHEû3TATEû
and capitalise on potential opportunities that and/or waive its net debt-to-Ebitda ratio Administration of Foreign Exchange.
may arise from the coronavirus pandemic. COVENANTûATûTHEûUPCOMINGû*UNEûANDû However, the process has hit a snag
0ROCEEDSûFROMûTHEûEQUITYûRAISINGûWILLûBEû December testing dates. FOLLOWINGûANûEXTENDEDû,UNARû.EWû9EARû
used to repay bank debt. The company disclosed the news last holiday and the lockdown and closure of
As of March 29, the company had up to Wednesday as it launched an equity businesses in China to tackle the
A$860m of gross debt, of which A$345m fundraising of up to A$1.4bn to partially coronavirus pandemic.
was drawn. repay its revolving debt facilities. ChemChina now expects to complete the
In March 2019, Metcash’s wholly owned !Tû$ECEMBERûû2AMSAYûFUNDINGûGROUPûnû REGISTRATIONûBYû*UNEû-AJORITYûCONSENTûFROMû
subsidiary Metcash Trading raised a A$450m comprising its wholly owned subsidiaries LENDERSûBYûVALUE ûISûREQUIREDûFORûTHEûWAIVERû
revolving credit facility with 15 lenders. BUTûEXCLUDINGû2AMSAYû3ANTEûANDûITSû and no fees are on offer.
The interest margins are tied to a senior covenant-lite debt – had committed debt Late last year, the state-owned chemical
leverage grid and the initial margins were facilities totalling A$3.06bn, of which company obtained consent from lenders to
BPûBPûANDûBPûOVERû""39ûFORû A$3.054bn was drawn. change the borrower from CNAC Century
Tranches A, B and C, respectively. Following the equity raising, as at (+ ûTOûAûNEWLYûINCORPORATEDûENTITYû
$ECEMBERûû2AMSAYSûPROûFORMAûLEVERAGEû CHEMCHINA HK RED BRIDGE.
ACCIONA UNIT ON HOLD will be 2.2 times, and funding group Lenders had also agreed to the removal of
LEVERAGEûWILLûBEûATûûTIMESû0ROûFORMAû AûGUARANTEEûFROMû#.!#û3ATURNû(+ ûASûWELLû
!ûSUBSIDIARYûOFû3PANISHûCONGLOMERATEû liquidity for the funding group will be at as a removal of a pledge on the guarantor’s
Acciona has put on hold the syndication of a !BNûANDûTOTALûLIQUIDITYûFORû2AMSAYû shares and assignment of the guarantor’s
!MûlVE YEARûTERMûLOANûUNTILûMARKETû 3ANT¶ûATû!MûASûATû$ECEMBERû inter-company loans as collateral for the
volatility stemming from the coronavirus 2AMSAYûHASûNOûDEBTûMATURINGûUNTILû loan.
pandemic subsides. October 2022. ChemChina had launched the
3OLEûMANDATEDûLEADûARRANGERûANDû It is also temporary suspending ordinary AMENDMENTûEXERCISEûFORûTHEû53BNûDUAL
bookrunner ING had launched the bullet share dividends, while it continues to limit tranche loan in the middle of last year.
loan into general syndication in early March or defer discretionary and capital The bullet loan, signed in March 2018, is
with a commitment deadline of April 27. expenditure. SPLITûINTOûAû53BNûTHREE YEARû4RANCHEû!û
The loan pays an opening interest margin ANDûAû53BNûlVE YEARû4RANCHEû"
OFûBPûOVERû""39 A total of 39 banks, including 15
MLAs were offered a participation fee of CHINA mandated lead arrangers, bookrunners and
55bp for commitments of A$75m and equal underwriters, participated in the loan.
above, while lead arrangers were to earn a WUMEI TAPS FOR METRO BUY 0ROCEEDSûRElNANCEDûAû53BNûBRIDGEû
fee of 45bp for tickets of A$50m–$74m. LOANûTHATûHADûFUNDEDû#HEM#HINASû3&RBNû
Arrangers were offered 35bp for tickets of 2ETAILERûWUMEI TECHNOLOGY GROUP and its joint 53BN ûACQUISITIONûOFû3WISSûSEEDSûANDû
A$25m–$49m. venture with Metro have obtained loans for PESTICIDESûMAKERû3YNGENTA
ACCIONA FINANCIACION FILIALES AUSTRALIA is the more than €1bn for the acquisition of a
BORROWERû0ROCEEDSûAREûFORûGENERALûCORPORATEû majority stake in the German retailer’s COUNTRY GARDEN BORROWS
purposes. China business.
China Minsheng Bank is the sole mandated (ONGû+ONG LISTEDûPROPERTYûDEVELOPERû
EBOS DRAWS A$250m lead arranger, bookrunner and underwriter COUNTRY GARDEN HOLDINGS is seeking a
OFûTHEûlNANCINGûWHICHûHASûBEENûFULLYûDRAWN 53MûTHREE YEARûLOANûBACKEDûBYûITSû
EBOS GROUP has obtained a A$250m loan to Limited syndication is expected to follow. shares in two start-ups.
RElNANCEûITSûBANKûDEBTû4HEûDEBTûANDû Metro announced it has completed the BNP Paribas is the mandated lead arranger
working capital facilities that were sale of a 80% stake in Metro China in ANDûBOOKRUNNERûOFûTHEûlNANCINGûWHICHû
RElNANCEDûTOTALLEDûABOUTû!M exchange for net cash proceeds of more offers top-level all-in pricing of 350bp over
4HEûRElNANCINGûFOLLOWSûTHEûGROUPSû than €1.5bn. Metro retains a 20% stake in Libor.
.:Mû53M ûEQUITYûRAISINGûINû the resulting joint venture. Country Garden’s shares in the two start-
)Nû-AYûû%"/3ûCOMPLETEDûANû The acquisition represented an implied ups – online healthcare platform Tencent
amendment and extension to lengthen its total enterprise value of €1.9bn for Metro Trusted Doctor and online real estate
debt maturities, which now fall between China and a multiple of 0.7 times based on brokerage Beike Zhaofang – will serve as
May this year and May 2023. its 2017–18 annual sales. SECURITYûFORûTHEûlNANCING

Tencent Trusted Doctor was formed such as face masks and medical jumpsuits,
through a merger between Tencent INDONESIA should offset the declines in fashion apparel
Doctorwork and Trusted Doctors in 2018. In sales.
!PRILûLASTûYEARûTHEûDIGITALûHEALTHûSERVICEûlRMû PAN BROTHERS IN SPOTLIGHT !.:û(3"#ûANDû).'ûWEREûTHEûMANDATEDû
RAISEDû53MûINûANûEQUITYûFUNDRAISINGû lead arrangers, bookrunners and
round led by Country Garden, Tencent and Garment manufacturer PAN BROTHERS‘ new UNDERWRITERSûOFûTHEû53MûREVOLVERû
Gaw Capital. LOANûOFûUPûTOû53MûISûINûTHEûSPOTLIGHTû raised in April 2018. The deal paid a top-level
Last November, Beike Zhaofang raised following a downgrade of the company’s ALL INûPRICINGûOFûBPûOFFSHORE ûORû
53BNûINûEQUITYûFROMûINVESTORSûINCLUDINGû credit rating on Monday. BPûONSHORE ûBASEDûONûINTERESTûMARGINSû
3OFT"ANKû4ENCENTû(ILLHOUSEû#APITALûANDû 4HEû*AKARTA LISTEDûBORROWERûISûEXPECTEDûTOû OFûBPûOFFSHORE ûORûBPûONSHORE ûOVERû
3EQUOIAû#APITALû#HINA FACEûINCREASINGûRElNANCINGûRISKûINûTHEû Libor, and a remaining life of 2.83 years.
Guangdong-based Country Garden’s coming months, according to Moody’s,
PREVIOUSûVISITûTOûTHEûMARKETûWASûINû*ULYûLASTû which cut its rating to B1 from B2. SMI MANDATES FIVE
YEARûWITHûAû53BNûFOUR YEARûTERMûLOANû The company, a supplier to global
FORûRElNANCING clothing brands such as Nike, Adidas, Hugo SARANA MULTI INFRASTRUKTURûHASûMANDATEDûlVEû
That facility offered top-level all-in pricing "OSSû#ALVINû+LEINûANDû(-ûHASûAû LENDERSûONûAûlVE YEARûTERMûlNANCINGûOFûUPû
of 365.13bp based on an interest margin of 53MûREVOLVINGûCREDITûFACILITYûDUEû TOû53MûRETURNINGûFORûITSûLARGESTû
295bp over Libor or Hibor and an average February 2021. syndicated loan after a four-year hiatus.
life of 3.75 years. h7EûEXPECTû0ANû"ROTHERSûWILLûHAVEûLITTLEû The banks are Bank of China, CTBC Bank,
Country Garden is rated Ba1/BB+/BBB–. liquidity buffer to withstand any MUFG, Standard Chartered Bank and United
deterioration in earnings or unexpected Overseas Bank. MUFG is the coordinating
stretches in its working capital, and this bank.
INDIA PRESENTSûAûSIGNIlCANTûCHALLENGEûEVENûUNDERû The borrower had sent out a request for
ITSûNEWû"ûRATINGvûSAIDû3TEPHANIEû#HEONGû proposals in December.
THREE JOIN NTPC an analyst at Moody’s. 3-)SûLASTûLOANûMARKETûVISITûINû*UNEûû
It is not clear if the downgrade will affect was a blockbuster, with 29 banks joining its
Three banks have joined NTPC‘s dual-tranche THEû53MûLOANûWHICHûISûLARGELYûFORû 53Mû YEARûRElNANCINGûINûGENERALû
YENûLOANûOFûUPûTOûcBNû53M ûINûSENIORû RElNANCING syndication.
syndication. The three-year borrowing includes a new- 3TAN#HARTûWASûTHEûSOLEûMANDATEDûLEADû
CTBC Bank and Norinchukin Bank have money portion, and is expected to carry an arranger and bookrunner of the transaction,
COMMITTEDûUPûTOû53M EQUIVALENTûWHILEû ACCORDIONûPIECEûOFû53Mû)TûISûUNCLEARû which offered top level all-in pricing of
Sumitomo Mitsui Trust Bank will provide the whether any banks have been mandated 138.2bp based on an interest margin of
EQUIVALENTûOFû53M yet. 110bp over Libor and a remaining life of
India’s largest power utility had /NEûBANKERûSAIDûTHATû0ANû"ROTHERSûHASû 1.33 years.
mandated Bank of India, State Bank of India and time on its side as the existing revolver is The government-owned borrower,
SMBC INû*ANUARYûONûITSûBIGGESTûFOREIGNû not due until February next year. established in 2009 to support infrastructure
CURRENCYûlNANCINGûTO DATE !SûATû3EPTEMBERûû0ANû"ROTHERSûHADûAû DEVELOPMENTûPROJECTSûISûRATEDû"""û&ITCH
The borrowing is split into a seven-year CASHûBALANCEûOFû53MûANDû53Mû
tranche for 75% of the total size and a 10- available under the revolver, which the
year portion for the remainder. rating agency believes has been largely JAPAN
0ROCEEDSûFROMûTHEûLOANûWILLûlNANCEû drawn as of the end of March.
CAPITALûEXPENDITUREûFORûNEWûCOAL lREDû Moody’s pointed to the seasonal nature of SHOWA DENKO TAPS ¥275bn
stations as well as operating power plants the business and its exposure to the retail
and repayment of Indian rupee loans SECTORûWHICHûHASûBEENûSIGNIlCANTLYûAFFECTEDû SHOWA DENKO is set to raise a ¥275bn
borrowed onshore previously for the by the fallout of the coronavirus pandemic. 53BN ûSUBORDINATEDûLOANûASûPARTûOFûAû
existing projects. It noted that working capital tends to lNANCINGûPACKAGEûBACKINGûITSûACQUISITIONûOFû
.40#ûISûALSOûSEEKINGûAûMAIDENûcBNû PEAKûINûTHEûlRSTûHALFûOFûTHEûYEARûLEADINGûTOû Hitachi Chemical, it said in a stock exchange
YEARûGREENûlNANCINGûFROMû*APANESEûLENDERSû negative cash from operations and increased lLINGûONû4UESDAY
*APANû"ANKûFORû)NTERNATIONALû#OOPERATIONûISû dependence on its revolver, which has less Mizuho Bank and Development Bank of Japan
funding half of the green loan and providing than a year of remaining maturity. are the lenders on the 35-year subordinated
a partial guarantee on the remaining Delays in orders or customer receivables, loan to fund the Tokyo-listed electronics
commercial portion that will be syndicated exacerbated by the coronavirus crisis, will materials maker’s subscription of common
TOûDOMESTICû*APANESEûLENDERSû-IZUHOû"ANKû LIKELYûREQUIREû0ANû"ROTHERSûTOûFULLYûDRAWû shares from special purpose company HC
is the arranger. down its revolver and eat into its cash Holdings as part of the acquisition of Hitachi
In April last year, the borrower closed a cushion, putting further stress on its Chemical.
53M EQUIVALENTû YEARû3AMURAIûLOANû liquidity, the rating agency said. The subordinated loan has an availability
with only Aozora Bank joining in general Higher debt levels as a result of increased PERIODûOFûlVEûYEARSûANDûCANûBEûREPAIDûAFTERû
syndication. working capital needs will weaken debt-to- lVEûYEARS
-IZUHOû-5&'ûANDû3-"#ûWEREûTHEû Ebitda and Ebitda/interest expense to 5.1 3HOWAû$ENKOûISûALSOûBORROWINGûcBNû
mandated lead arrangers and bookrunners times and 1.9 times respectively in 2020, the through a seven-year bilateral loan from
OFûTHATûlNANCINGûWHICHûOFFEREDûTOP LEVELû report said. Mizuho to fund the acquisition.
all-in pricing of 114.5bp based on an Despite the headwinds, Moody’s expects HC Holdings, currently a wholly owned
interest margin of 102bp over Tibor and a 0ANû"ROTHERSûREVENUESûINûûTOûREMAINû SUBSIDIARYûOFû3HOWAû$ENKOûISûRAISINGûAû
weighted average remaining life of 10 RELATIVELYûmATûASûTHEûCOMPANYSûABILITYûTOû ¥490bn senior loan and ¥275bn in preferred
years. switch production to items in high demand, shares.

LOANS EMEA
Mizuho is sole lender for the ¥490bn loan, 0OKPHANDû'ROUPSûPURCHASEûOFû4ESCOSû!SIANû Shin Kong Commercial Bank, Hua Nan
WHICHûISûNON RECOURSEûTOû3HOWAû$ENKOûANDû business has attracted nine lenders in senior Commercial Bank OBU and Hua Nan Commercial
ISûSPLITûINTOûAûcBNûlVE YEARûAMORTISINGû syndication. Bank Singapore branch.
TERMûLOANûAûcBNûlVE YEARûBULLETûFACILITYû %IGHTûOFûTHEûBANKSûJOININGûCOMMITTEDûINû53û Arrangers are Bank of Taiwan, E Sun
and a ¥90bn commitment line for up to six DOLLARSûWHILEû+ASIKORNû"ANKûCOMMITTEDûINûBAHT Commercial Bank, KGI Bank, Taichung
months. JP Morgan, Siam Commercial Bank and UBS Commercial Bank, Sunny Bank, Bank of Panhsin,
HC Holdings is also issuing preference are the original mandated lead arrangers, Export-Import Bank of the Republic of China,
shares totalling ¥275bn, of which Mizuho is bookrunners and underwriters of the Shanghai Commercial & Savings Bank, Taiwan
SUBSCRIBINGûTOûcBNûWORTHûANDû$"*ûTOû borrowing, which is the largest on record Cooperative Bank and Yuanta Commercial Bank.
¥90bn. from Thailand. The deal offered top-level all-in pricing of
Drawdowns of the senior loans and /NûTHEû53ûDOLLARûTRANCHEûMANDATEDûLEADû 163bp based on an interest margin of 150bp
preferred shares are slated for April 27. arrangers, bookrunners and underwriters are JP over Libor.
4HEûENTIREûlNANCINGûPACKAGEûINCLUDINGû Morgan, UBS, BNP Paribas, China Construction Bank, Techcombank is one of the biggest private-
ALLûLOANSûFORû3HOWAû$ENKOûANDû(#û(OLDINGSû Maybank, OCBC and Mizuho. Mandated lead SECTORûLENDERSûINû6IETNAMûWITHûMOREûTHANû
as well as the latter’s preference shares arranger and bookrunner is United Overseas Bank, 5.4m customers and 314 branches.
issue, totals ¥1.335trn. while mandated lead arranger is Rabobank and
4HEûACQUISITIONûINVOLVESû3HOWAû$ENKOû lead arranger is China Minsheng Bank.
and HC Holdings buying a total of ¥964bn in For the baht tranche, mandated lead
shares in Hitachi Chemical from the latter’s arrangers, bookrunners and underwriters
PARENTûANDû*APANESEûINDUSTRIALû are Siam Commercial Bank and Kasikornbank. EUROPE/MIDDLE
conglomerate Hitachi as well as the market. #0û'ROUPSûLISTEDûSUBSIDIARYûCP ALL is the EAST/AFRICA
Hitachi owns a 51.2% stake in the BORROWERûONûAû53BN EQUIVALENTû
chemicals unit. month Tranche A, while a special purpose
A ¥4,630 per Hitachi Chemical share offer VEHICLEûISûTHEûBORROWERûONûAû53BN AUSTRIA
closed on Monday. The acquisition is equivalent 18-month Tranche B.
EXPECTEDûTOûBEûCOMPLETEDûINû*UNE 4HEû306ûISûALSOûTHEûACQUIRINGûENTITYûFORû#0û WIENERBERGER BEEFS UP
Hitachi Chemical is a supplier of materials 'ROUPSûSUCCESSFULû53BNûBIDûFORû4ESCOSû
for semiconductors, displays and lithium- 1,965 stores in Thailand and 74 outlets in Brick maker WIENERBERGER has increased its
ion batteries. Malaysia. liquidity through €380m of bank loans, as it
The opening interest margin for both looks to manage the impact of the
tranches is 150bp over Libor before a step-up coronavirus pandemic on its business.
PHILIPPINES kicks in after six months from signing. The company redeemed a €300m 4% bond in
Thai billionaire Dhanin Chearavanont’s line with its scheduled maturity on April 17.
PETRON CLOSES DEBUT SAMURAI group operates 12,000 7-Eleven convenience After the bond repayment, Wienerberger
STORESûTHROUGHû#0û!LLûANDûABOUTûûCASH AND has more than €450m of immediately
/ILûRElNERûPETRON has signed a ¥15bn CARRYûSTORESûUNDERû3IAMû-AKRO available liquidity.
53M ûDEBUTû3AMURAIûLOANûINCREASEDû #0û'ROUPûWILLûGAINûCONTROLûOFû4ESCOSû With many countries in protracted
FROMûANûORIGINALû53M EQUIVALENTûTARGET operations in Thailand including 200 Tesco lockdown, Wienerberger expects the second
Development Bank of Japan came in to share Lotus hypermarkets and 1,600 Tesco Lotus quarter to be the period most severely
the mandated lead arranger title with Express convenience stores. affected by the pandemic.
Mizuho Bank, MUFG and SMBC, while Shinsei 4HEûBRIDGEûLOANûFORû#0û'ROUPûISûTHEûLARGESTû The company is focusing on cash
Bank joined as lead arranger. FROMû4HAILANDûECLIPSINGûAû53BN GENERATIONûCOSTûOPTIMISATIONûmEXIBLEû
4HEûlVE YEARûLOANûWASûORIGINALLYûAVAILABLEû EQUIVALENTûlNANCINGûINû-ARCHûûFORû"ERLIû capacity adjustments and postponement of
INûBOTHû53ûDOLLARSûANDûYENûWITHûINTERESTû *UCKERûWHENûITûPURCHASEDûAûûSTAKEûINû non-essential investment.
margins of 110bp over Libor and 75bp over Thai hypermarket operator Big C The bond repayment was partially funded
yen Libor, respectively. 3UPERCENTERûFROMû&RANCESû#ASINOû'ROUP through a €170m eight-year sustainability-
(OWEVERûNOûBANKûJOINEDûTHEû53ûDOLLARû linked loan arranged in December.
tranche due to rising funding costs, as a result 4HATûlNANCINGûWHICHûWASûAGREEDûWITHûAû
OFûWHICHûTHEûDEALûISûNOWûAû3AMURAIûLOAN VIETNAM group of relationship banks coordinated by
9EN DENOMINATEDûDEALSûSYNDICATEDûINû UniCredit, pays a margin of less than 1%,
*APANûFORûOVERSEASûBORROWERSûAREûCLASSIlEDû TECHCOMBANK UPS DEBUT helping to reduce Wienerberger’s annual
ASû3AMURAIûLOANSû.INJAûDEALSûINCLUDEû COSTûOFûlNANCINGûBYûAROUNDûõM
3AMURAIûLOANSûANDûCANûBEûDENOMINATEDûINû VIETNAM TECHNOLOGICAL & COMMERCIAL JOINT STOCK The company also has a €400m revolving
any currency. BANK 4ECHCOMBANK ûHASûINCREASEDûITSûTHREE credit facility that was arranged in
0ETRONSûDEALûSIGNEDûATûTHEûENDûOFû-ARCHû YEARûDEBUTûLOANûTOû53MûFROMûAû53Mû .OVEMBERûûWITHûAûlVE YEARûMATURITYû
has an average life of 3.5 years. target after attracting 19 banks in syndication. and two one-year extension options.
&UNDSûAREûFORûRElNANCINGûPURPOSES ANZ, CTBC Bank, First Abu Dhabi Bank,
Taishin International Bank and United Overseas EVN PLACES €100m GREEN SSD
Bank were the mandated lead arrangers,
THAILAND underwriters and bookrunners. Mega 0OWERûCOMPANYûEVN has placed a €100m 10-
International Commercial Bank joined as MLA YEARûGREENû3CHULDSCHEINDARLEHENûTHATûWILLûBEû
TESCO ASIA DRAWS NINE prior to the launch into general syndication. used to develop wind farm projects in Austria.
Lead arrangers are State Bank of India, ICBC, 4HEû33$ûCLOSEDûSEVERALûTIMESû
A dual-tranche bridge loan of about Bank SinoPac, Bank of Communications, Chang oversubscribed and was increased from
53BN EQUIVALENTûBACKINGû#HAROENû Hwa Commercial Bank, China Construction Bank, €50m at launch.

%6.ûTAPPEDûTHEûSYNDICATEDûLOANûMARKETûINû 3AFRANûSAIDûATûTHEûENDûOFû-ARCHûITûWASû If the objective is achieved, the margin
-AYûûFORûAûõMû2#&û4HATûFACILITYû lining up a €3bn facility to increase liquidity. remains unchanged but if the target is
which serves as a liquidity backup line, The loan will be used for general corporate exceeded the margin reduces. If the target
matures in May 2024. purposes and for additional liquidity and is not achieved the margin increases with
5NI#REDITûCOORDINATEDûTHEû2#&ûALONGSIDEû underscores how Europe’s loan market the additional costs to be paid to an
3%"ûASûBOOKRUNNERûANDûMANDATEDûLEADû remains open for high quality issuers. institution having a positive impact on the
arranger. ,ENDERSûLINEDûUPûTOûSUPPORTû3AFRANûWITHû environment, chosen by Icade and the
more orders than the €3bn it was looking lender.
for within a short two-week timeframe. 4HEûlNANCINGûSTRENGTHENSû)CADESû
FINLAND h4HEûLOANûWASûSIGNIlCANTLYû portfolio of fully available credit lines,
oversubscribed,” a senior banker said. which stands at €1.75bn, covering nearly
ANTILOOPPI UPS LOAN FOR BUY BNP Paribas led the deal alongside 11 four years of debt interest and principal
relationship banks. repayments.
2EALûESTATEûINVESTMENTûCOMPANYûANTILOOPPI Mandated lead arrangers were Santander, )CADEûHASûNOTûDRAWNûONûANYûOFûITSû2#&S
has backed its acquisition of a portfolio of Bank of America, Credit Agricole, Deutsche
properties with a €250m increase to its loans. Bank, HSBC, MUFG, Natixis and Societe VINCI PUMPS UP LIQUIDITY
4HEûCOMPANYSûlNANCINGûNOWûCOMPRISESû Generale.
a €635m term loan, up from €385m, with a CIC, Standard Chartered and SMBC were Construction and transport concession
€15m overdraft facility and a €50m lead arrangers. group VINCI has arranged an additional
uncommitted term loan facility. The loan has a two-year maturity €2.4bn syndicated credit facility to
4HEûlNANCINGûMATURESûINû$ECEMBERû structured as a 12-month facility with two increase liquidity after its business was
Nordea arranged the amendment as six-month extension options that can be impacted by the coronavirus pandemic.
coordinator and facility agent along with OP exercised a fee, which is typical of how 4HEûlNANCINGûFROMûAûSYNDICATEûOFûSIXû
Corporate Bank as bookrunner and mandated liquidity facilities are being arranged in banks, is expected to be increased to
lead arranger. THEûCURRENTûCLIMATEûTOûREmECTûTHEûFACTûTHEYû õBNûINûEARLYû-AYûWHENûANOTHERûlVEû
SEB was a mandated lead arranger, while are short-term lines. banks join the syndicate.
Danske Bank and Handelsbanken were lead “It is more economical for the client to !TûTHEûENDûOFû-ARCHû6INCIûHADûNETûCASHû
arrangers. do it this way,” the senior banker said. of €5.5bn and €1.6bn of commercial paper
Antilooppi is acquiring a portfolio of nine 4HEûFACILITYûISûINûADDITIONûTOû3AFRANSû issued in late March. The company also has
PROPERTIESûINû2UOHOLAHTIûFROMûPROPERTYû UNDRAWNûõBNû2#&ûTHATûMATURESûINû access to an undrawn €8bn revolving
MANAGEMENTûCOMPANYû3PONDAû4HEû December 2022. credit facility that matures in November
portfolio has a lettable area of around Its cash and cash equivalents total 2024.
100,000 square metres and includes more €3.1bn, of which €2.8bn is available When the new credit facility is
than 1,650 parking places. immediately or within 90 days, the INCREASEDû6INCIûWILLûHAVEûACCESSûTOûMOREû
After the acquisition Antilooppi’s portfolio company said. than €18bn.
has a market value of around €1.4bn. 3AFRANûHASûAûõBNûCOMMERCIALûPAPERû Net debt was €22bn at the end of March.
programme and €419m maturing at the 6INCISûBUSINESSûHASûBEENûSERIOUSLYû
end of April to mid-May 2020. affected by the measures introduced
FRANCE )TûALSOûHASûTWOûBONDSûMATURINGûINû*ULYû around the world to stem the spread of the
COMPRISINGûõMûmOATING RATEûNOTESûANDû virus, particularly in France after
SAFRAN SECURES €3bn AûõMûlXED RATEûBOND lockdown measures were introduced on
3AFRANûHASûREACTEDûTOûTHEûVIRUSûCRISISûBYû March 17.
!EROSPACEûANDûDEFENCEûTECHNOLOGYûlRMû ramping up measures taken since
SAFRAN has raised a €3bn term loan from 12 December in response to Boeing’s decision BOLLORE EXTENDS RCF
banks in the wake of the coronavirus to shut down the plane maker’s 737 MAX
pandemic. assembly line. Conglomerate BOLLORE has extended the
The company has paused its capital maturity of its €1.3bn revolving credit
EMEA LOANS BOOKRUNNERS – FULLY EXPENDITUREûDElNEDûNEWûRESEARCHûANDû facility by two years to 2025.
SYNDICATED VOLUME development objectives and reduced direct 4HEûlNANCINGûWASûORIGINALLYûPUTûINûPLACEû
BOOKRUNNERS: 1/1/2020 TO DATE and indirect costs. INû-AYûûVIAû"ANKûOFû#HINAû".0û
Managing No of Total Share 0ARIBASû#REDITû!GRICOLEû#)"û#)#û.ATIXISû
bank or group issues US$(m) (%) ICADE SIGNS €300m SLL ANDû3OCIETEû'ENERALEûASûBOOKRUNNINGû
1 UniCredit 38 10,725.60 6.6 mandated lead arrangers.
2 BNP Paribas 44 10,463.65 6.4 0ROPERTYûDEVELOPERûICADE has signed a 4HEûlNANCINGûHADûAûLEVERAGEûCOVENANTû
3 Credit Agricole 35 9,419.21 5.8 €300m seven-year revolving credit facility of a maximum 1.75 times net debt to
4 HSBC 33 8,917.86 5.4 with a margin linked to the company’s equity.
5 Santander 33 8,590.25 5.2 performance on reducing carbon dioxide Bollore has liquid assets, undrawn
6 SG 22 8,122.34 5.0 intensity. CONlRMEDûCREDITûLINESûANDûLIQUIDû
7 Deutsche Bank 30 8,001.53 4.9 4HEû2#&ûREPLACESûCREDITûLINESûOFûõMû investments of €2.5bn, and €9.6bn
8 BofA Securities 24 7,353.47 4.5 that were due to mature this year. INCLUDINGûMEDIAûGIANTû6IVENDIûINûWHICHû
9 JP Morgan 23 6,324.02 3.9 The terms of the facility require a 45% Bollore has a 26% holding.
10 Commerzbank 28 6,302.84 3.9 reduction in the carbon intensity of Icade’s Bollore holds positions in companies
Total 202 163,687.81 OFlCEûPROPERTYûINVESTMENTûDIVISIONû across three sectors: transportation and
Proportional credit between 2015 and 2025, measured against logistics; communication; and electricity
Source: Refinitiv SDC code: R17 annual targets. storage and systems.

LOANS EMEA
sheet, net debt was €2.294bn and leverage
Fnac leads way on €300bn was 2.7 times.

4HEûCOMPANYSûDEBTûHASûNOûlNANCIALû
covenants.
loan guarantee scheme 0RO3IEBEN3ATûAMENDEDûANDûEXTENDEDûITSû

€2.85bn syndicated loan in April 2017 via
COORDINATINGûBANKSû".0û0ARIBASûANDû
FRANCE State guaranteed loans can be bilateral, syndicated or clubs UniCredit.
4HEûlNANCINGûCOMPRISEDûAûõBNûTERMû
Books, music and electrical retailer FNAC revolving credit facility to increase liquidity LOANûANDûTHEûõMû2#&
DARTY became one of the first borrowers to during the crisis. In April 2019, the company extended
take advantage of the €300bn French state Meanwhile, carmaker RENAULT is in talks with the maturity of most of the loan to April
guarantee scheme after agreeing a term loan to the French government to secure several billion 2024.
improve its liquidity during the coronavirus crisis. euros to shore up its finances.
Fnac’s €500m loan carries a 70% guarantee LEONI AGREES STATE BACKING
from the French state, with an initial one-year SPECIFICS
maturity and extension options for up to five Loans granted under the scheme can be in the Wiring systems company LEONI has agreed
years through to April 2026. form of bilateral, syndicated or club deal loans a state guarantee on a €330m syndicated
For the first year of the loan, Fnac will only pay and rank pari passu with senior debt. loan that ensures the continuation of the
a 50bp guarantee fee, or €2.5m. Civil real estate companies, credit institutions BUSINESSûANDûFULLYûlNANCESûTHEûCOMPANY
If Fnac extends the loan, then the cost of the and financing companies, and distressed The move comes after most of Leoni’s
loan will comprise each bank’s cost of funding, companies that have filed for insolvency, are key customers temporarily limited
without margin, plus a state guarantee fee starting excluded from the scheme. production due to the coronavirus
at 100bp for the first two years of the extension The size of the loan is capped to 25% of 2019 pandemic, meaning the company is
period, rising to 200bp for the final three years. revenues, or in specific cases twice the total payroll EXPERIENCINGûAûTEMPORARYûSIGNIlCANTû
The combined extended guarantee fee is payable in France in 2019, if it is more favourable than the decline in sales.
upfront at the start of the extension period. general cap. Under these rules, Fnac could have The guarantee from the German federal
Credit Agricole CIB coordinated the loan, which applied for a loan of up to €1.2bn-€1.3bn. government and the state governments of
was supported by all the company’s main French The state guarantee covers 90% of the loan for "AVARIAû,OWERû3AXONYûANDû.ORTHû2HINE
banking partners including Arkea, BNP Paribas, borrowers with fewer than 5,000 employees and Westphalia covers 90% of the loan, which
BRED, CIC, La Banque Postale, LCL, Natixis and total revenue of less than €1.5bn; 80% of the loan for is being provided by Leoni’s core banks
Societe Generale. borrowers with total revenue of more than€1.5bn but and runs until December 2022.
As part of the conditions for guaranteed loan, lower than €5bn; and 70% for other borrowers. The terms of the loan commit Leoni to
Fnac has withdrawn its proposed dividend of No principal repayments will be made on the RETAININGûANNUALûNETûPROlTSûANDûTHEû
€1.50 per share for 2019 and cancelled its share loan in the first year, but a guarantee fee ranging company has suspended dividend
buyback programmes in 2020. from 25bp to 200bp is payable to the French payments.
The move follows Fnac’s full drawdown of its state, depending on borrower and maturity. Leoni launched a restructuring plan in
€400m revolving credit facility in mid-March after the Interest charged on the loans will be equal to 2019 to increase its available liquidity,
sudden shutdown of the company’s in-store activities. the funding cost of the relevant lender. including an expansion of factoring
The cash remained available at the end of March. The loans include an option at the end of the programmes, the sale and lease back of
In addition, lenders on the existing facility first year to amortise the loan over an additional assets in Germany and China, as well as
have agreed to waive financial covenants for the period of one to five years in return for a higher restructuring bilateral loans into a new
months of June and December. guarantee fee. syndicated credit facility giving the
More companies are expected to follow Fnac Loans under the scheme cannot be secured COMPANYûCOMMITTEDûlNANCINGûUNTILûTHEû
in tapping the scheme to bolster liquidity amid by any other security interests or guarantees. end of 2022.
the disruption caused by the pandemic, including For larger borrowers, where the guarantee only The company repaid an around €166m
aeronautics firm LATECOERE, which has secured a applies up to 70% or 80% of the loan, the non- 3CHULDSCHEINûTRANCHEûONû-ARCHûû4HEû
€60m loan under the scheme. guaranteed portion of the loan may be secured. COMPANYûHASûAûõMû3CHULDSCHEINûDUEûINû
Equipment rental company LOXAM is also If loans are transferred from an original 3EPTEMBER
in talks with its banks over a potential €230m lending entity, the guarantee on that part of the The onset of the pandemic saw Leoni
state-guaranteed loan. The company recently loan will be terminated. apply for state aid.
drew €175m of bilateral loans and its €75m Alasdair Reilly Leoni tapped the syndicated loan market
INû*UNEûFORûAûDEBUTûõMûlNANCINGûVIAû
BayernLB, Citigroup, Commerzbank,
The company expects trading across all $EUTSCHEû"ANKû(3"#û,""7û3OCIETEû
GERMANY its segments to be heavily impacted by the Generale and UniCredit.
CRISISûWITHû46ûCOREûADVERTISINGûREVENUESû
PROSIEBENSAT BOLSTERS LIQUIDITY substantially down and its production
company subsidiaries hit by the IRELAND
Media group PROSIEBENSAT.1 drew €350m of postponement of shows.
its existing €750m revolving credit facility 0RO3IEBEN3ATûSAIDûITûWOULDûNOTûPAYûAû KINGSTON TECH TAPS TAIWAN
at the beginning of April to bolster its dividend for 2019, securing a further
liquidity during the Covid-19 crisis. €192m of liquidity. KINGSTON TECHNOLOGY INTERNATIONAL has
raised
4HEûREMAININGûõMûOFûTHEû2#&ûISû "EFOREûTHEûDRAWDOWNû0RO3IEBEN3ATû Aû53MûTHREE YEARûDEBUTûREVOLVINGû
available to be drawn at any time. already had cash of €898m on its balance credit from six Taiwanese lenders.

Firms eye extra liquidity as coronavirus hits
RUSSIA Pricing expected to move higher
Russian corporate borrowers are following As in the West, extra liquidity facilities will This might cause borrowers to take longer to
their Western counterparts to the international almost exclusively be for banks’ core clients. come to a decision, but they have been warned
syndicated loan market to lock in extra liquidity However, deals are expected to be smaller. that pricing is likely to increase further, the
as a result of losses caused by the coronavirus. “Companies will have to be realistic about bankers said.
The loan market in Russia performed strongly what they can get, and not every deal will get “For some borrowers it would be better to
in the first quarter, with volumes up sharply done,” the second banker said. “Banks have to come now and pay a premium rather than in two
to US$5.6bn from US$860m in the first three be selective - some have been lending billions months’ time when it is even more expensive.
months of 2019, according to Refinitiv LPC data. across Europe in the last month and it’s the The smarter borrowers will see that,” the second
Banks’ appetite to lend to Russian companies same pool of liquidity the money is coming from. banker said.
has increased significantly over the last year for The club of banks for each deal will be smaller, For banks that use credit insurance to extend
the first time since economic sanctions were which means sizes will be smaller.” their country limits, getting loans through their
imposed on Russia by the West in 2014. Another contrast with the western European credit committees could become more difficult
And that lender appetite remains strong, market is that revolving credit facilities will not as the crisis plays out.
despite the coronavirus outbreak and depressed be available to Russian borrowers. “The world for Russian borrowers is much
oil prices. And a pipeline of deals for companies “We won’t see RCFs. They use up country stricter than it used to be in general and credit
looking to lock in liquidity is beginning to grow. limits and they are not profitable. Only the insurance providers will be more concerned
“It’s an evolving situation in Russia. It is a few commitment fee is guaranteed and that it only about where the money is going. Will certain
weeks behind the West on the virus,” said one 30% of the margin,” a third banker said. “One borrowers face delays in their production cycle
banker. “The loan market is getting very busy.” client was discussing an RCF with us but it has (because of the pandemic)? Will goods be able
Companies had been exploring the possibility now turned into a term loan.” to be delivered?” said the third banker.
of raising bilateral loans to shore up their He said that he is working on two loans that
liquidity, but many are now looking to agree PRICE POINTS have been in process since autumn and have not
larger syndicated facilities. Pricing discussions between borrowers and been derailed by the virus. Indeed, appetite from
“We have been asking borrowers for some lenders are proving challenging, with some lenders for the loans remains strong, he said.
time if they wanted more cash – now they do,” bankers expecting methods to possibly return to “These companies - metals and mining and
a second banker said. “Deals will start to be how they were directly after the financial crisis fertiliser businesses - have strong balance sheets
launched to the market in the next week or in 2008, when spreads were only decided once and they are in a good position,” he said.
two.” companies were ready to sign. Sandrine Bradley
Chang Hwa Commercial Bank, CTBC Bank, First enough to meet all maturing debt That facility, which has an initial 12-
Commercial Bank, Land Bank of Taiwan and obligations for the next 4.5 years. month maturity and six-month extension
Taiwan Cooperative Bank are mandated lead #2(SûDEBTûHASûNOûlNANCIALûCOVENANTS option, remains undrawn.
arrangers and bookrunners on the Net debt to Ebitda at the end of 2019 was 4HEûõBNû2#&ûWASûORIGINALLYû
transaction. CTBC was also the facility agent. 1.7 times. arranged in 2015 and amended and
Bank of Taiwan is mandated lead arranger. 4HEû2#&ûWASûAMENDEDûANDûEXTENDEDûINû extended in March 2019 via a group of 26
The deal offers a margin of 100bp over April 2019 via a group of 23 banks, removing banks.
Libor. The borrower will pay any excess ALLûlNANCIALûCOVENANTSûONûTHEûFACILITYûANDû The virus outbreak has seen FCA close
interest rate beyond a 30bp difference RENEWINGûTHEûMATURITYûBYûlVEûYEARS production in parts of Europe and North
between TAIFX and Libor. The deal also has The company’s activities and markets America.
a commitment fee of 10bp. have been hit by government restrictions
53 HEADQUARTEREDû+INGSTONû4ECHNOLOGYû in Europe and North America
Corp is providing a guarantee. implemented to tackle the pandemic. NETHERLANDS
Funds are for general working capital
purposes. WERELDHAVE GOES GREEN
+INGSTONûISûONEûOFûTHEûWORLDSûLARGESTû ITALY
independent manufacturers of memory 0ROPERTYûCOMPANYûWERELDHAVE has agreed a
products with manufacturing and logistics FIAT CHRYSLER DRAWS RCF €100m two-year green revolving credit
FACILITIESûINû#HINAû)RELANDû4AIWANûTHEû5+û FACILITYûTHEûlRSTûlNANCINGûCLOSEDûUNDERûTHEû
ANDûTHEû53 FIAT CHRYSLER AUTOMOBILES has drawn its COMPANYSûGREENûlNANCINGûFRAMEWORK
€6.25bn revolving credit facility amid 4HEû2#&ûWHICHûWASûAGREEDûWITHûABN
CRH DRAWS RCF continuing uncertainty over the impact of AMROûWILLûBEûUSEDûTOûlNANCEû7ERELDHAVESû
the coronavirus pandemic. ,IFE#ENTRALûSTRATEGYûTOûTRANSFORMûIDENTIlEDû
Building materials group CRH has drawn its The drawdown is in addition to €1.5bn shopping centres into sustainable and
€3.5bn revolving credit facility as a drawn from other bilateral credit facilities. ENERGY EFlCIENTûFULLûSERVICEûCENTRESûASû
precautionary measure during the Earlier in April, FCA completed DElNEDûWITHINûTHEûFRAMEWORK
coronavirus crisis. SYNDICATIONûOFûAûSEPARATEûõBNû2#&ûTOû Wereldhave developed the green
!FTERûTHEûDRAWDOWNû#2(ûHASûCASHûANDû support its access to capital markets lNANCINGûFRAMEWORKûTOûANCHORû
CASHûEQUIVALENTSûOFûMOREûTHANû53BNû during the pandemic. SUSTAINABILITYûINTOûITSûlNANCINGûACTIVITIES

LOANS EMEA
The framework aims to attract funding to cut capital spending because of the virus credit facility into a single tranche €900m
that will be allocated to sustainable and outbreak after it posted a 21% decline in net facility.
ENERGYûEFlCIENTûREALûESTATEûASSETSûTHATû PROlTûFORûLASTûYEAR 0REVIOUSLYûTHEûlNANCINGûCOMPRISEDû
contribute to social and sustainable Despite the drop in income, Aramco paid a õMûANDû53Mû4HEû2#&ûHASûALSOû
engagement in local communities. DIVIDENDûOFû53BNûINûûANDûPLANSûTOû BEENûEXTENDEDûBYûONEûYEARûTOû*UNEû
The company can issue a variety of green DECLAREûAûCASHûDIVIDENDûOFû53BNûINû SEB coordinated the transaction with
lNANCEûINSTRUMENTSûINCLUDINGûBONDSû existing relationship banks BNP Paribas,
private placements, syndicated and bilateral Danske Bank, Handelsbanken, HSBC, ING,
loan facilities, and other debt instruments. SPAIN Nordea with Standard Chartered joining as a
The framework, which is aligned with new lender.
Wereldhave’s corporate social responsibility EDREAMS GETS WAIVER Alfa Laval supplies heat transfer,
PROGRAMMEûFORûûHASûBEENûCERTIlEDûBYû CENTRIFUGALûSEPARATIONûANDûmUIDûHANDLINGû
SUSTAINABLEûINVESTMENTûRATINGSûAGENCYû)33û Travel company EDREAMS ODIGEO has secured a products to a wide range of industries.
%3' waiver of the covenant on its €175m super
!".û!-2/ûALSOûADVISEDûONûTHEû senior revolving credit facility after seeing SCA AGREES ADDITIONAL RCF
development of the framework. bookings plummet by around 70% in March
due to the coronavirus. 0APERûPRODUCTSûCOMPANYûSVENSKA CELLULOSA
The gross leverage ratio covenant of a HASûAGREEDûAû3+RBNû53M û
RUSSIA maximum 6.0 times will be waived for 2021. additional revolving credit facility to
)NTERESTûONûTHEû332#&ûANDûTHEûCOMPANYSû increase its liquidity during the
CBM NETS UP TO US$350m €425m bonds due in 2023 will continue to coronavirus pandemic.
be paid as normal. 4HEûlNANCINGûWHICHûWASûAGREEDûWILLûALLû
CREDIT BANK OF MOSCOW has signed an up to 4HEû332#&ûWASûARRANGEDûINû3EPTEMBERû EXISTINGûLENDERSûINû3#!SûUNDRAWNû3+RBNû
53MûONE YEARûSYNDICATEDûLOANûTHATû 2018 via a club syndicate of Deutsche Bank, 2#&ûHASûANûINITIALû MONTHûMATURITYûWITHû
RElNANCESûTHEû53MûONE YEARûTRANCHEûOFû 3OCIETEû'ENERALEû""6!û"ANCOû3ANTANDERû a six-month extension option.
Aû53MûFACILITYûAGREEDûINû "ARCLAYSû"ANKû#AIXABANKû-ORGANû3TANLEYû 3#!ûALSOûAGREEDûAû3+RBNûLOANûFROMûTHEû
Citibank, ING and Saudi National Commercial *0û-ORGANûANDû#)# 3WEDISHû%XPORTû#REDITû!GENCYûTOûREPAYû
Bank were mandated lead arrangers and Margins range from 200bp to 300bp over commercial paper in April.
bookrunners. They were joined by Raiffeisen %URIBORû4HEûlNANCINGûMATURESûINû Including unutilised credit facilities and
Bank International, Rosbank and Credit Suisse as 3EPTEMBERû CASHû3#!SûLIQUIDITYûRESERVESûNOWûTOTALû
lead arrangers. ING was the facility agent. eDreams has taken action to conserve AROUNDû3+RBN
0ROCEEDSûWILLûBEûUSEDûFORûlNANCINGûTHEû cash during the crisis, including reductions 4HEREûAREûNOûlNANCIALûCOVENANTSûONû
trade-related operations of the bank’s in personnel and IT costs, external fees and 3#!SûDEBT
customers. travel expenses. 3#!ûAGREEDûTHEûORIGINALû2#&ûINû*UNEûVIAû
CBM said this latest loan broadens its pool The company is also taking advantage of COORDINATORû3%"û4HEû2#&ûHASûAûlVE YEARû
of lenders, especially in the Middle East. government support, with staff payroll costs maturity with two one-year extension
The 2019 loan was coordinated by ING temporarily reduced by 20% for most non- options.
ANDûRElNANCEDûAû53MûLOANûSIGNEDûINû customer facing staff.
û)TûWASûDIVIDEDûBETWEENûAû53Mû All capital and operating expenditure, and
ONE YEARûTRANCHEûANDûAû53MûTWO YEARû external costs have been reviewed and talks SWITZERLAND
tranche. have been successfully been held with
suppliers, the company said. DUFRY LINES UP EXTRA
SAUDI ARABIA EUSKALTEL DRAWS RCF Travel retailer DUFRY has secured
COMMITMENTSûONûAûROUGHLYû3&RMû
ARAMCO PICKS TWO Telecoms company EUSKALTEL has drawn the 53M ûLOANûTOûSTRENGTHENûLIQUIDITYû
remaining €150m of its €300m revolving and help the company weather the
SAUDI ARAMCO has mandated HSBC and SMBC credit facility to increase its liquidity during coronavirus pandemic that has seen by
TOûCOORDINATEûAûLOANûOFûABOUTû53BN the coronavirus pandemic. travel restrictions and airport closures
0ROCEEDSûOFûTHEûLOANûCOULDûBEûUSEDûTOûBACKû The liquidity is on top of €98m of severely hit sales.
ITSû53BNûACQUISITIONûOFûAûûSTAKEûINû available cash the company had at the end 4HEûlNANCINGûWILLûBEûPROVIDEDûBYû
3ABICûFROMû3AUDISû0UBLICû)NVESTMENTû&UNDû of March. certain relationship banks and has a 12-
that was agreed last year. In 2019, Euskaltel amended and extended month maturity with two six-month
The world’s largest oil producer loans totalling €1.625bn including a €255m extension options. Dufry is working with
approached a group of its core relationship TERMûLOANûMATURINGûINû*UNEûûAûõBNû THEûBANKSûTOûlNALISEûTHEûFULLû
banks for the loan, which could be clubbed term loan maturing in November 2024 and the documentation.
or more widely syndicated. õMû2#&ûWHICHûMATURESûATûTHEûENDûOFû Dufry has also secured a waiver of
The fundraising coincides with historic lNANCIALûCOVENANTSûONûITSûEXISTINGû
turmoil in the global oil market. Brent crude SYNDICATEDûLOANûUNTILûTHEûENDûOFû*UNEû
hit its lowest price last week since 1999 in SWEDEN A net debt to adjusted operating
response to a glut caused by the coronavirus CASHmOWûCOVENANTûHASûBEENûINCREASEDûTOû
outbreak, which has destroyed demand for ALFA LAVAL AMENDS 5.0 times instead of 4.5 times for testing in
fuel. 3EPTEMBERûANDû$ECEMBERû
Aramco, which is more than 98% owned Industrial processing product company ALFA A minimum liquidity covenant of
BYû3AUDIû!RABIAûSAIDûLASTûMONTHûITûPLANNEDû LAVAL has converted its existing revolving 3&RMûHASûALSOûBEENûADDEDûALONGûWITHû

restrictions on dividends, share buybacks income for employees no longer working
and acquisitions during the covenant UK and preserve their continued employment.
waiver period. The company’s food businesses have
Dufry is also planning a share placing COMPASS BOLSTERS LIQUIDITY continued to operate and have seen a
ANDûAû3&RMûSENIORûUNSECUREDû SIGNIlCANTûINCREASEûINûDEMANDûOVERûRECENTû
guaranteed convertible bond to help Foodservice company COMPASS GROUP has weeks.
strengthen its capital base. agreed an additional £800m revolving credit Furniture company DFS has received credit
The company has implemented cost facility as it moves to strengthen its liquidity approval for a £70m 12-month bank facility
SAVINGSûANDûCASHmOWûMANAGEMENTû amid the coronavirus pandemic. from its bank syndicate to strengthen its
measures to allow it to reduce its cash 4HEûADDITIONALûLIQUIDITYûHASûNOûlNANCIALû balance sheet and help it through the crisis.
burn and to continue operations for a covenants and was agreed with the The loan is on top of a £250m revolving
prolonged period of disruption. company’s relationship banks. It is in credit facility and will cover a near-term
Dufry is making use of several ADDITIONûTOûAûaBNû2#&ûOFûWHICHûTHEû working capital unwind until sofa deliveries
government employment support company has drawn £200m. can resume.
SCHEMESûINCLUDINGûINû3WITZERLANDû'REECEû The company also drew £600m from the %XISTINGûlNANCIALûCOVENANTSûWILLûDROPû
3PAINû)TALYûTHEû5+ûANDû'ERMANY Bank of England’s Covid Corporate away while the new facility is in place and
The company also plans to scrap its 2020 Financing Facility in March. for the six months following. However, new
dividend. Net debt was around £4.9bn at the end of lNANCIALûCOVENANTSûOFûMINIMUMûROLLINGû
Dufry’s loans, which were put in place March with a net-debt-to-Ebitda ratio of quarterly Ebitda and cash covenants will
INû.OVEMBERûûINCLUDEûAû53Mû between 1.6 times and 1.7 times, or around apply.
lVE YEARûTERMûLOANûAûõMûlVE YEARû ûTIMESûONûANû)&23ûûBASIS 5NDERûTHEûADDITIONALûFACILITYû$&3ûWILLûNOTû
TERMûLOANûANDûAûõBNûlVE YEARû !LTHOUGHû#OMPASSûHASûSIGNIlCANTû pay dividends or conduct any acquisitions
multicurrency revolving credit facility, headroom against a 4.0 times net-debt-to- until either six months after the repayment
which had two one-year extension %BITDAûCOVENANTûINûITSû53ûPRIVATEûPLACEMENTû of the incremental facility, or following the
options. agreements, the company is in talks with RElNANCINGûOFûTHEû2#&
).'û"ANKûCOORDINATEDûTHEûlNANCING investors over a waiver of the covenant 4HEûNEWûlNANCINGûWASûCONDITIONALûONûANû
tests. equity placing of up to 19.9% of its issued
The company has implemented share capital, which the company
TURKEY SIGNIlCANTûMITIGATIONûPLANSûTOûPROTECTû completed on Wednesday raising £64m.
CASHmOWûANDûMANAGEûCAPITALûEXPENDITUREû
GARANTI SEEKS DEBUT ESG LOAN and working capital. TECHNIPFMC TURNS TO RCF
!!ûRATEDû#OMPASSûAGREEDûTHEûaBNûlVE
GARANTI BBVA BANK has launched a one-year YEARû2#&ûINû!UGUST Global energy services company TECHNIPFMC
RElNANCINGûFACILITYûTHATûISûLINKEDûTOû "ANKûOFû!MERICAû"ARCLAYSû".0û0ARIBASû HASûDRAWNû53MûOFûITSû53BNû
environmental, social and governance #ITIGROUPû(3"#û).'û*0û-ORGANû-IZUHOû revolving credit facility as the cost of issuing
TARGETSûTHEûlRSTûLOANûOFûITSûKINDûBYûAû .AT7ESTû3OCIETEû'ENERALEûANDû7ELLSû&ARGOû commercial paper spirals amid the
Turkish bank. were bookrunning mandated lead coronavirus pandemic.
The facility is being coordinated by Bank arrangers. 4HEû2#&ûBACKSTOPSûTHEûCOMPANYSû
of AmericaûWHICHûISûALSOû%3'ûCOORDINATORû commercial paper issuance, with the
and Standard Chartered. AB FOODS DRAWS RCF available capacity under the facility reduced
The loan is linked to two sustainability by outstanding commercial paper.
key performance indicators. ASSOCIATED BRITISH FOODS, owner of clothing 4ECHNIP&-#ûHADû53BNûOFû
'ARANTISûNEWûPROJECTûlNANCEû RETAILERû0RIMARKûHASûFULLYûDRAWNûITSû commercial paper outstanding at the end of
COMMITMENTSûFORûGREENlELDûELECTRICITYû £1.088bn revolving credit facility as a March.
production power plants will not include precaution to avoid any possible illiquidity 4HEû2#&ûWASûARRANGEDûINû*ANUARYûûVIAû
any coal power plants. Garanti also has a during the coronavirus crisis. *0û-ORGANû3'û!MERICASû"ANKûOFû!MERICAû
target to source 80% of all energy from Although the company saw no need to ".0û0ARIBASû#REDITû!GRICOLEû#)"û3-"#û
renewable generation. seek a waiver for the covenant test for MUFG, Wells Fargo, Barclays, Citigroup,
4HEû+0)SûAREûSUBJECTûTOûSECOND PARTYû 3EPTEMBERûITûHASûAGREEDûAûWAIVERûFORûTHEû $EUTSCHEû"ANKû(3"#û&RANCEû3%"û3TANDARDû
opinion or limited assurance opinion. February 2021 test. #HARTEREDû"ANCOû3ANTANDERû#)#ûANDû
û4HEûLOANûRElNANCESûAû53M 4HEû2#&ûISûDUEûTOûMATUREûINû*ULYû Northern Trust.
equivalent dual-currency syndicated loan AB Foods’ liquidity has increased further 4HEûlNANCINGûWHICHûMATURESûINû*ANUARYû
which was signed in May last year. THROUGHûCONlRMATIONûONû!PRILûûOFûITSû 2023, pays a margin ranging of 82bp-130bp
That 367-day loan comprised two eligibility to access the Bank of England’s over Libor/Euribor with a facility fee ranging
TRANCHESûnûAû53MûTRANCHEûANDûAû Covid Corporate Financing Facility. from 8bp-20bp, depending on ratings.
€408.8m tranche paying an all-in cost of The company now has available central TechnipFMC, rated BBB+/Baa2, has
250bp over Libor and 240bp over Euribor, cash on hand of £1.5bn. headquarters in London with operational
respectively. !LLû0RIMARKûSTORESûHAVEûBEENûCLOSEDûUNTILû HEADQUARTERSûINû(OUSTONûANDû0ARIS
Garanti was last in the market in further notice. While payments for all stock
.OVEMBERûWHENûITûSIGNEDûAû53M in transit have been made to suppliers, all PREMIER FOODS DRAWS
equivalent 367-day syndicated loan future orders have been cancelled to
COMPRISINGûAû53MûTRANCHEûANDûAû PREVENTûFURTHERûCASHûOUTmOWS PREMIER FOODS has drawn £85m of its £176.6m
€518.5m tranche paying all-in costs of The company intends to access senior secured revolving credit facility as the
225bp over Libor and 210bp over Euribor, government programmes in countries company looks to builds its cash reserves
respectively. WHEREû0RIMARKûOPERATESûFORûFUNDSûTOûPROVIDEû amid the ongoing coronavirus pandemic.

LOANS NORTH AMERICA
0REMIERûSAWûAûDRAMATICûPEAKûINûVOLUMESû 53BNûREVOLVINGûCREDITûFACILITYûTOûBOOSTû The reduced size is a testimony to a

across many of its categories during March its access to liquidity. changing bank landscape where lenders
and expects higher-than-average demand as Citigroup is the administrative agent on seek better compensation for the risk they
more meals are being eaten at home during the deal, which will mature on December 31 take as volatility rattles the markets during
THEû5+SûNATIONWIDEûLOCKDOWN 2020. Citigroup, Bank of America, JP Morgan the coronavirus pandemic.
!FTERûTHEûDRAWDOWNû0REMIERûEXPECTSûTOû and Societe Generale are joint lead arrangers On the new loan, JP Morgan is the
report year-end cash on deposit of more and joint bookrunners. ADMINISTRATIVEûAGENTû*0û-ORGANûBank of
than £175m with another £91.6m of Caterpillar is required to maintain a America, Citigroup, BNP Paribas, Goldman Sachs
committed facilities available. CONSOLIDATEDûNETûWORTHûOFûATûLEASTû53BN and Morgan Stanley are joint bookrunners
4HEû2#&ûWHICHûWASûAGREEDûINû-AYûû The company is also required to maintain and joint lead arrangers.
VIAû"ANCOû3ABADELLû"ARCLAYSû".0û0ARIBASû an interest coverage ratio above 1.15 times 0RICINGûONûTHEûLOANûISûBPûOVERû,IBORû
#REDITû3UISSEû(3"#û*EFFERIESûANDû,LOYDSû and a leverage ratio not greater than 10 with a 15bp undrawn fee.
matures in December 2022. times calculated on a monthly basis. 'ENERALû%LECTRICûISûRATEDû"""ûBYû30ûANDû
Margins range from 225bp to 375bp over 0RICINGûISûBASEDûONûTHEûCOMPANYSûCREDITû Baa1 by Moody’s.
Libor, depending on leverage. ratings. For AA–/Aa3 the margin is 100bp
Covenants in full-year 2020-21 are over Libor with a 20bp commitment fee; for MACY’S SHOPS FOR US$5bn
maximum net debt to Ebitda 4.25 times and A+/A1 it is 112.5bp and 25bp; for A/A2 it is
minimum Ebitda to interest of 2.85 times. 125bp and 30bp; for A–/A3 it is 150bp and Department store chain MACY’S is targeting
HARBOURVEST GLOBAL PRIVATE EQUITY has 35bp; and for lower than A–/A3 it is 175bp UPûTOû53BNûINûDEBTûlNANCINGûVIAûBank of
DRAWNû53MûOFûITSû53Mû and 40bp. America.
MULTICURRENCYû2#&ûTOûMANAGEûCASHmOWSûANDû 0RICINGûFORûTHEûLOANûOPENSûATûBPûOVERû 4HEûlNANCINGûPACKAGEûCOULDûCOMPRISEû
support its portfolio companies. Libor with a 30bp undrawn fee. CASHmOWûANDûASSET BASEDûCOMPONENTSûINCLUDINGû
4HEûREMAININGû53MûOFûTHEûFACILITYû #ATERPILLARûHASûAû53BNû2#&ûSETûTOû debt secured by real estate assets. It may also
REMAINSûAVAILABLEûGIVINGû(60%ûmEXIBILITYûASû MATUREûINû3EPTEMBERûûAû53BNû2#&û ENCOMPASSûAûRElNANCINGûOFû-ACYSûDEBTû
the pandemic evolves. SETûTOûMATUREûINûûANDûAû53BNû2#&û 2ETAILERSûHAVEûBEENûFORCEDûTOûSHUTTERûTHEIRû
4HEû2#&ûWHICHûWASûARRANGEDûINû*ANUARYû set to mature in 2024. stores on government orders as consumers
ûVIAû#REDITû3UISSEûANDû-5&'ûWASû 4HEûCOMPANYûISSUEDû53BNûINûBONDSûTHISû remain indoors and avoid large public
STRUCTUREDûASûAûlVE YEARûEVERGREENûFACILITYû month. gatherings to limit the spread of the
with a two-year initial no-notice provision, #ATERPILLARûISûRATEDû!ûBYû30ûANDû!ûBYû coronavirus.
giving a guaranteed initial term of seven Moody’s. All of Macy’s stores, including the
years. Bloomingdales, and Bluemercury brands,
Drawn pricing ranges from 250bp over GM EXTENDS RCF have been closed since March 18. Although
,IBORûFORûDRAWINGSûOFûLESSûTHANû53Mû the retailer has lost the majority of its sales
increasing by 40bp for drawings over that GENERAL MOTORS has amended and extended a due to the closures, it said the stores will
amount. There is a 95bp commitment fee on 53BNû DAYûREVOLVINGûCREDITû remain shuttered until it is safe to reopen.
undrawn funds. agreement. Measures the company has taken to
Leisure travel and logistics company DART The loan matures on April 13 2021. JP MAINTAINûlNANCIALûmEXIBILITYûINCLUDEû
has fully drawn its £100m revolving credit Morgan is the administrative agent and suspending its dividend, drawing down on
facility and has begun the process to Citigroup is the syndication agent. The ITSû53BNûREVOLVINGûCREDITûFREEZINGû
CONlRMûELIGIBILITYûANDûACCESSûTOûTHEû"ANKûOFû previous credit agreement was set to mature hiring and spending, and putting the
England’s Covid Corporate Financing earlier in April. majority of its employees on furlough.
Facility. 0ROCEEDSûWILLûBEûUSEDûFORûWORKINGûCAPITALû The company said it is evaluating
4HEûCOMPANYûAGREEDûTHEûlVE YEARû2#&ûINû and general corporate purposes. lNANCINGûOPTIONSû
$ECEMBERûû4HEûlNANCINGûINCLUDEDûAû The facility requires GM to maintain at -ACYSûHIREDûlNANCIALûADVISORYûlRMû
£40m accordion facility. LEASTû53BNûINûGLOBALûLIQUIDITYûANDû53BNû ,AZARDûANDûLAWûlRMû+IRKLANDûû%LLISûEARLIERû
$ARTSûBANKSûINCLUDEû"ARCLAYSû(3"#ûANDû INû53ûLIQUIDITYû this month to explore options that could
Lloyds. It pays 175bp over Libor with a 25bp INCLUDEûNEWûlNANCING
With its aircraft grounded, around 80% of undrawn fee. Lenders were offered 30bp for Last month the company announced
$ARTSû5+ûSTAFFûHAVEûBEENûFURLOUGHEDûTOû ROLLINGûOVERûTHEûCOMMITMENTSû0REVIOUSLYû PLANSûTOûDRAWûDOWNûTHEûENTIREû53BNû
make full use of the grants available under the loan paid 125bp over Libor with a 12.5bp from its revolving credit facility to preserve
THEû5+ûGOVERNMENTSû#ORONAVIRUSû*OBû undrawn fee. lNANCIALûmEXIBILITY
2ETENTIONû3CHEME /Nû-ARCHûû'-ûDREWûDOWNû53BNû
from its credit lines to shore up liquidity due BOSTON SCIENTIFIC NETS US$1.25bn
to the impact of the coronavirus on its
business. Medical equipment company BOSTON
The company approached lenders to extend SCIENTIFICûHASûSIGNEDûAû53BNû DAYû
NORTH AMERICA the maturity on the 364-day revolver and a TERMûLOANûTOûRElNANCEûBORROWINGSûFROMûITSû
53BNûTHREE YEARûLOANûRATHERûTHANûRElNANCEû revolver to increase available liquidity.
THEûENTIREû53BNûCREDITûFACILITY The company also amended its credit
UNITED STATES '-ûISûRATEDû"""ûBYû30ûANDû"AAûBYû agreements to modify the leverage covenant
Moody’s. TOûINCREASEûlNANCIALûmEXIBILITYûINûLIGHTûOFûTHEû
CATERPILLAR NETS RCF GENERAL ELECTRICûHASûAGREEDûAû53BNû coronavirus pandemic.
THREE YEARû2#&ûTHATûWILLûRElNANCEûTHEû Scotiabank is the administrative agent on
Construction machinery and equipment COMPANYSû53BNû2#&ûTHATûWASûSCHEDULEDû the term loan, while Wells Fargo is
company CATERPILLAR has signed a to mature in May 2021. syndication agent.

The term loan includes an accordion 4HEûlNANCINGûCOMPRISESûAû53BNû 4HEûTWO YEARû2#&ûWASûSIGNEDûONû-ARCHûû
feature that allows the company to borrow DELAYED DRAWûTERMûLOANûANDûAû53BNû ANDûTHEûCOMPANYûDREWû53MûONû!PRILûû
UPûTOû53MûMOREûONûTHEûSAMEûTERMSûASû revolving credit facility. ANDû53MûONû!PRILû
the term loan. $U0ONTûWILLûUSEûTHEû53BNû$$4,ûTOû Citigroup was the administrative agent
The term loan is priced at 187.5bp over REDEEMû53BNûINûlXED RATEûBONDSûANDû and Wilmington Trust was the collateral
Libor based on the company’s credit ratings. 53MûINûmOATING RATEûNOTESûTHATûAREûDUEû agent.
The maximum leverage ratio is 4.75 times in November. 4HEû2#&ûPAYSûBPûOVERû,IBORûWITHûAûû
FORûTHEûQUARTERSûENDINGû*UNEûû3EPTEMBERû The funds will be available from mOORû)TûINCLUDESûTHEûOPTIONûTOûINCREASEûTHEû
30 and December 31, and is 4.5 times for the November 1 until March 1 2021. OVERALLûCOMMITMENTûUPûTOû53MûWITHû
quarter ending March 31 2021. 0RICINGûISûTIEDûTOûRATINGSû&ORû!!!ûITûISû the consent of any increasing lenders.
4HEûCOMPANYûALSOûAMENDEDûITSû53BNû 150bp over Libor; for A3/A-/A- it is 175bp; for 3PIRITûISûRATEDû"ûBYû30ûANDû"" ûBYû&ITCH
364-day term loan agreement, adopting the Baa1/BBB+/BBB+ it is 200bp; for Baa2/BBB/BBB it The company plans to apply for additional
same maximum leverage ratio requirements is 225bp; and for Baa3/BBB-/BBB- it is 250bp. funds from the Treasury loan programme
as the new term loan until the quarter $U0ONTûRATEDû"AA"""ûWILLûALSOûPAYûAû ANDûISûEXPECTEDûTOûHAVEû53MûAVAILABLE
ending December 31. 30bp ticking fee based on the daily average
3COTIABANKûANDû7ELLSû&ARGOûALSOûLEDûTHISû amount of undrawn commitments. OFFICE DEPOT REFINANCES
TERMûLOANû0RICINGûWASûAMENDEDûTOûBPû The DDTL will be repaid with proceeds
over Libor based on credit ratings. from debt or equity issuance. OFFICE DEPOTûHASûSIGNEDûAû53BNûASSET
For BBB/Baa2 it is 85bp; for BBB-/Baa3 it is $U0ONTSû53BNûREVOLVERûWILLûREPLACEûAû BASEDûCREDITûFACILITYûTHATûWILLûRElNANCEûITSû
110bp; and for BB+/Ba1 it is 150bp. 53Mû DAYûCREDITûFACILITYûTHATûWASû asset-based loans and retire its term loan.
"OSTONû3CIENTIlCûALSOûAMENDEDûITSû DUEûTOûEXPIREûINû*UNE 4HEûlVE YEARûFACILITYûCOMPRISESûAû
53BNûlVE YEARû2#&ûLEDûBYû7ELLSû&ARGOû JP Morgan is administrative agent and lead 53BNûREVOLVINGûCREDITûLINEûWHICHû
and Bank of America. arranger and bookrunner on the 364-day INCLUDESûUPûTOû53BNûFORûAû53ûBORROWERû
4HEû2#&ûWHICHûMATURESûINû$ECEMBERû deal. BNP Paribas, Bank of America, Citigroup, ANDûUPûTOû53MûFORûAû#ANADIANûBORROWERû
2023, was amended to adopt the same Credit Suisse, Goldman Sachs, Mizuho, MUFG and ANDûAû53MûlRSTûINûLASTûOUTûTERMûLOAN
maximum leverage ratio requirements as SMBC are lead arrangers and bookrunners. 4HEûlNANCINGûWILLûREPLACEûDEBTûTHATûWASû
the new term loan until the quarter ending to mature in 2021.
March 31 2021, and then has a maximum HYATT HOTELS RESERVES BRIDGE /FlCEû$EPOTûHASûDRAWNûDOWNû53Mû
leverage ratio of 4.25 times for the quarter FROMûTHEûCREDITûAGREEMENTû0ROCEEDSûALONGû
ENDINGû*UNEûûûANDûûTIMESûFORûTHEû HYATT HOTELSûHASûSIGNEDûAû53Mû DAYû with cash on hand, repaid the outstanding
QUARTERûENDINGû3EPTEMBERûûûANDûû delayed-draw bridge facility to enhance the 53MûONûITSûTERMûLOANûANDû
times for the quarter ending December 31 company’s cash position and to address APPROXIMATELYû53MûINûOTHERûDEBT
2021 and thereafter. working capital requirements during the JP Morgan is administrative agent and lead
0RICINGûFORûTHEû2#&ûISûLINKEDûTOûRATINGSû&ORû! coronavirus outbreak. arranger and bookrunner with Wells Fargo,
A3 it is 79.5bp with a 8bp facility fee; for BBB+/ Goldman Sachs is the administrative agent Bank of America and Truist Bank, which are
Baa1 it is 91bp and 9bp; for BBB/Baa2 it is101.5bp for the facility. syndication agents.
and 11bp; for BBB-/Baa3 it is 110bp and 15bp; 4HEûCOMPANYûALSOûAMENDEDûITSû53BNû Citizens Bank, Fifth Third Bank, PNC Bank, TD
and for BB+/Ba1 it is 140bp and 22.5bp. lVE YEARûREVOLVINGûCREDITûAGREEMENTûWHICHû Bank, New York Community Bancorp Specialty
"OSTONû3CIENTIlCûISûRATEDû""" ûBYû30ûANDû MATURESûONû*ANUARYûû Finance and US Bank are documentation
Baa2 by Moody’s. The amendment suspends the testing of agents.
the leverage ratio covenant until April 1 4HEû2#&ûANDû&),/ûTERMûLOANûAREûPRICEDû
DUPONT GETS US$3bn 2021. It also adds a minimum daily liquidity against the quarterly availability of debt as a
COVENANTûOFûNOûLESSûTHANû53M percentage of the loan cap.
Chemicals company DUPONT DE NEMOURS has The applicable interest rate for the loan &ORûûORûMOREûTHEû2#&ûPAYSûBPûANDû
SIGNEDû53BNûINûCREDITûAGREEMENTSûTOû has been amended until October 1 2021, or the term loan pays 350bp; for 33.3%-66.6% it
RElNANCEûDEBTûANDûREPLACEûFACILITIES until the company’s bridge facility is 225bp and 375bp; and for under 33.3% it is
terminates, whichever is the latest. 250bp and 400bp.
AMERICAS LOANS BOOKRUNNERS – FULLY 4HEûAMENDEDûPRICINGûHASûAû,IBORûmOORûOFû 4HEû2#&ûALSOûHASûAûBPûCOMMITMENTûFEE
SYNDICATED VOLUME 75bp. /FlCEû$EPOTûISûRATEDû"ûBYû30ûANDû"AûBYû
BOOKRUNNERS: 1/1/2020 TO DATE The pricing for the revolver is based on Moody’s.
Managing No of Total Share the company’s credit ratings.
bank or group issues US$(m) (%) For A-/A3 the margin is 90bp over Libor DANA NETS US$500m BRIDGE
1 BofA Securities 333 95,516.00 13.1 with a 10bp facility fee; for BBB+/Baa1 it is
2 JP Morgan 272 89,129.21 12.2 97.5bp and 12.5bp; for BBB/Baa2 it is 105bp Automotive engineering company DANA has
3 Citigroup 185 62,430.53 8.5 and 15bp; for BBB-/Baa3 it is 130bp and SIGNEDûAû53MûBRIDGEûLOANûTHATûCANûBEû
4 Wells Fargo 214 50,555.38 6.9 20bp; and for lower than BBB-/Baa3 or not drawn down in three tranches.
5 Morgan Stanley 66 27,733.93 3.8 rated it is 150bp and 25bp. The 364-day bridge loan will pay 450bp
6 Credit Suisse 83 26,303.79 3.6 On March 18, the company borrowed over Libor plus a 50bp commitment fee
7 RBC 112 25,537.82 3.5 53MûUNDERûITSûCREDITûFACILITYûINû on the undrawn portion of the facility per
8 Goldman Sachs 112 23,833.70 3.3 response to the outbreak and repaid year.
9 Barclays 114 23,497.29 3.2 53MûONû-ARCHû Lenders will also receive an upfront fee at
10 Deutsche Bank 75 18,553.10 2.5 (YATTûISûRATEDû""" ûBYû30ûANDû"AAûBYû the closing of the loan and a funding fee
Total 1,063 730,618.63 Moody’s. each time Dana draws on the transaction.
Proportional credit Low-cost airline SPIRIT has drawn down The facility is guaranteed against some of
Source: Refinitiv SDC code: R7 THEûENTIREû53MûUNDERûAûREVOLVER the company’s domestic subsidiaries.

LOANS NORTH AMERICA
Dana’s bridge loan contains restrictive *0û-ORGANûISûADMINISTRATIVEûAGENTûONûTHEû Bank of America is the administrative agent,
covenants, including not being able to take LOANûWHICHûMATURESûINû*ANUARYû Goldman Sachs is the documentation agent, and
on additional debt, pay dividends or make !MPHENOLûISûRATEDû"""ûBYû30ûANDû"AAû Citigroup and US Bank are syndication agents.
other restricted payments, create or permit by Moody’s. As the coronavirus pandemic has evolved,
certain liens, and merge or sell a substantial Food company CAMPBELL’S SOUP has drawn 4ARGETûHASûSEENûSTRONGûTRAFlCûANDûSALESû
amount of its assets. DOWNû53MûFROMûITSû2#&ûTOûBOLSTERûITSû particularly in its stores and same-day
4HEûCOMPANYûMUSTûALSOûMAINTAINûAûlRST cash position and repay commercial paper. services, the company said.
lien debt-to-Ebitda ratio of no more than 2.5 Campbell’s drew the funds from its 4HEûBORROWERûRATEDû!ûBYû30ûANDû!ûBYû
times by the end of the second quarter, 3.0 53BNûREVOLVERûWHICHûMATURESûINû -OODYSûHASûAû53BNûCOMMITTEDû
times by the end of the third quarter and 4.0 December 2021. revolving credit facility due in October 2023.
times thereafter. Campbell’s meals, beverages, and snack
Citigroup is the administrative agent on segments have experienced a sharp rise in VF AMENDS COVENANTS
the bridge loan. sales from retail chains and large grocery
The additional liquidity is in response to supermarkets as consumers increase their Clothing company VF CORP has amended its
the coronavirus, which has lowered food purchases in the coronavirus 53BNûlVE YEARûREVOLVINGûCREDITû
customer demand and led the company to pandemic. agreement that matures in December 2023.
eliminate discretionary spending and The company said the increase in retail 6&ûMAYûNOWûINCREASEûITSûCONSOLIDATEDûDEBTû
implement salary cuts. sales had offset declines in its foodservice to up to 70% of the total capitalisation of the
Dana has also amended its senior credit business. company until March 31 2022, from 60% of
FACILITYûWHICHûINCLUDESûANû2#&ûANDûTERMûLOAN Campbell’s is also paying higher costs for the company’s total capitalisation
4HEû53BNûREVOLVERûISûNOWûGOVERNEDûBYûAû transport, distribution, front-line employee previously.
lRST LIENûNETûLEVERAGEûRATIOûCOVENANTûOFûUPûTOû compensation and incremental costs such as The amended credit agreement also
4.0 times for each upcoming quarter until newly added health screenings and ENABLESû6&ûTOûCALCULATEûCONSOLIDATEDûDEBTû
THEûENDûOFûû4HEûlRST LIENûNETûLEVERAGEû temperature checks. net of unrestricted cash.
ratio covenant will fall to a 2.0 times at the 4HEû53BNûlVE YEARûREVOLVINGûCREDITû 4ESTSûOFûTHISûlNANCIALûCOVENANTûWILLûBEû
end of the third quarter 2022. LINEûWASûSIGNEDûINû$ECEMBERûû*0û-ORGANû CONDUCTEDûONûTHEûLASTûDAYûOFûEACHûlSCALû
was administrative agent and lead arranger quarter until March 31 2022.
IDEXX EXTENDS DEBT and bookrunner on the transaction. 6&ûMUSTûALSOûMAINTAINûATûLEASTû53Mû
Campbell’s is rated Baa2/BBB-. INûUNRESTRICTEDûCASHûANDûUNUSEDûlNANCINGû
IDEXX LABORATORIESûHASûSIGNEDûAû53BNû Clothing retailer AMERICAN EAGLE OUTFITTERS commitments until the end of March 2022.
revolving credit facility that will replace a HASûDRAWNûDOWNû53MûFROMûAû53Mû *0û-ORGANûISûADMINISTRATIVEûAGENTûANDû
53MûCREDITûLINE 2#&ûTOûBOLSTERûITSûCASH lead arranger and bookrunner on the deal.
4HEûTHREE YEARûFACILITYûREPLACESûTHEûlVE American Eagle has approximately The company drew down twice on the
YEARû2#&ûTHATû)$%88ûSIGNEDûINû$ECEMBERû 53MûINûCASHûWHICHûINCLUDESûPROCEEDSû REVOLVINGûCREDITûLINEûlRSTûINû-ARCHûASûAû
2015. The company also has the option to from the revolver drawdown. “proactive, precautionary measure” in light
INCREASEûTHEûNEWû2#&ûTOû53BN The company, which is also aiming to of the coronavirus pandemic, it said, and
JP Morgan is bookrunner, lead arranger RAISEû53MûINûBONDSûSAIDûITûWILLûHAVEû AGAINûINûEARLYû!PRILûTOûPRESERVEûlNANCIALû
and administrative agent on the deal. enough liquidity to operate beyond the liquidity.
Bank of America, Keybank, MUFG, US Bank ûlSCALûYEARûTHATûENDSûONû*ANUARYû The facility is priced according to ratings.
and Wells Fargo are lead arrangers and co- In response to the coronavirus pandemic, For AA-/Aa3 the margin is 58bp over Libor
syndication agents. Citigroup, HSBC, PNC American Eagle has suspended a share with a 4.5bp facility fee; for A+/A1 it is
Bank, TD Bank and Truist Bank are co- repurchase programme, furloughed retail 69.5bp and 5.5bp; for A/A2 it is 81bp and
documentation agents. and corporate staff, delayed bonuses, 6.5bp; for A-/A3 it is 91bp and 9bp; and for
4HEûTHREE YEARû2#&ûISûPRICEDûAGAINSTûAû implemented a hiring freeze and cut BBB+/Baa1 it is 101.5bp and 11bp.
leverage-based grid. For a consolidated INVENTORYûRECEIPTSûTOûREmECTûLOWERûDEMANDû 6&û#ORPûISûRATEDû!ûBYû30ûANDû!ûBYû
leverage ratio of 1.0 times the margin is due to store closures. Moody’s.
137.5bp with a 20bp commitment fee; for American Eagle also intends to reduce
1.0-1.5 times it is 150bp and 25bp; for 1.5-2.0 CAPITALûEXPENDITURESûBYû53MûFROMûTHEû PPG SIGNS, DRAWS DOWN
times it is 162.5bp and 30bp; for 2.0-3.0 PLANNEDû53M MûTHISûYEAR
times it is 175bp and 35bp; an over 5.0 times )Nû*ANUARYûû!MERICANû%AGLEûSIGNEDûAû Industrial coatings company PPG INDUSTRIES
it is 200bp and 37.5bp. 53MûlVE YEARûASSET BACKEDûCREDITû HASûSIGNEDûANDûDRAWNûDOWNûAû53BNû
The facility will be unconditionally facility that replaced an agreement signed in day term loan.
guaranteed by subsidiaries IDEXX $ECEMBERûû0.#û"ANKûWASûTHEû PNC Bank is administrative agent, and co-
$ISTRIBUTIONû)$%88û/PERATIONSûANDû/04)û administrative agent. syndication agent and co-lead arranger and
-EDICALû3YSTEMS The asset-backed revolver is priced against bookrunner with BBVA, Mizuho, SMBC, TD
IDEXX manufactures and distributes the amount of the facility available to be Bank and US Bank. Santander is
products and services for animal veterinary, drawn upon. For 66% of aggregate documentation agent.
livestock, poultry and dairy markets. commitments the margin is 112.5bp over 0ROCEEDSûAREûFORûGENERALûCORPORATEû
Libor; for 33%-66% it is 125bp; and for lower purposes.
AMPHENOL DRAWS HALF than 33% it is 137.5bp. 0RICINGûISûTIEDûTOûAûRATINGS BASEDûGRIDû&ORû
A/A2 the margin is 125bp over Libor; for A-/
Cable products company AMPHENOL has TARGET HITS US$900m DEAL A3 it is 150bp; for BBB+/Baa1 it is 175bp; and
DRAWNûHALFûOFûITSû53BNûlVE YEARû for BBB/Baa2 it is 200bp.
revolving credit facility due to the economic 2ETAILERûTARGETûHASûSIGNEDûAû53Mû 00'ûISûRATEDû"""ûBYû30ûANDû!ûBYû
impact of the coronavirus pandemic. day revolving credit facility. Moody’s.

The credit agreement is governed by a The company also said that it expects to JP Morgan was administrative agent, Bank
lNANCIALûMAINTENANCEûCOVENANTû4OTALûDEBTû delay certain capital expenditure plans of America was documentation agent and
must not exceed 60% of the total intended for 2020 among other actions to Citigroup was the syndication agent.
capitalisation of the company. reduce operating expenses across the
00'ûALSOûHASûAû53BNûlVE YEARû business.
revolving credit facility that matures in In August 2018, the company signed a CANADA
August 2024. 53BNûlVE YEARû2#&ûTHATûWASûPARTûOFûAû
lNANCINGûPACKAGEûSUPPORTINGû-ARATHONSû FIRST QUANTUM ADJUSTS COVENANTS
GUESS SIGNS ABL TAKEOVERûOFûPEERû!NDEAVORû*0û-ORGANûWASû
the administrative agent. Global mining company FIRST QUANTUM
Fashion company GUESS has signed a 0RICINGûONûTHEûlVE YEARû2#&ûISûTIEDûTOû MINERALSûHASûAMENDEDûlNANCIALûCOVENANTSû
53MûASSET BASEDûREVOLVINGûCREDITû ratings. For A3/A- the margin is 100bp over ONûITSû53BNûTERMûLOANûANDûREVOLVINGû
facility that will replace a similar loan that Libor with a 10bp commitment fee; for Baa1/ credit facility to give the company
MATURESûINû*UNE BBB+ it is 112.5bp and 12.5bp; for Baa2/BBB headroom during the uncertainty caused by
4HEûREVOLVERûCOMPRISESû53MûINû53û it is 125bp and 15bp; for Baa3/BBB- it is the coronavirus.
DOLLARSûANDû53M EQUIVALENTûINû#ANADIANû 150bp and 20bp; and for Ba1/BB+ it is 175bp The net-debt-to-Ebitda ratio has increased
dollars. and 25bp. from 4.75 times to 5.0 times for the third
The four-year facility is priced against the and fourth quarters of 2020, reducing to
average daily availability of funds. For up to WWE DRAWS RCF ûTIMESûINûTHEûlRSTûANDûSECONDûQUARTERSûOFû
33% of the aggregate borrowing base the 2021 and to 4.5 times in the third and fourth
margin is 225bp over Libor; for 33%-66% it is Media and entertainment company WORLD quarters.
200bp; and for over 66% it is 175bp. WRESTLING ENTERTAINMENT has drawn down its The debt service ratio has been decreased
Bank of America is lead arranger and 53MûREVOLVINGûCREDITûFACILITYûTOû to 1.0 times for the second, third and fourth
bookrunner, joined by HSBC and Bank of the improve liquidity and for general corporate quarters of 2020; increasing to 1.1 times in
West. purposes. 2021.
The asset-based loan is guaranteed WWE said it has implemented The covenants will revert to the original
AGAINSTûCERTAINû'UESSûSUBSIDIARIESûINûTHEû53û executive salary cuts, decreased operating ratios of 3.5 times net debt to Ebitda and 1.1
and Canada. expenses and lowered employee numbers times debt service from 2022.
0ROCEEDSûWILLûGOûTOWARDûWORKINGûCAPITALû through staff furloughs due to the 4HEûDElNITIONSûOFû%BITDAûANDûCASHû
needs and general corporate purposes. coronavirus. available for debt service have also been
'UESSûSTORESûINûTHEû53ûANDû#ANADAûAREû WWE also reduced its capital expenditure AMENDEDûTOûEXCLUDEû%BITDAûANDûNETûCASHmOWû
closed due to the coronavirus. FORûûBYû53MûANDûTEMPORARILYû FROMûTHEûCOMPANYSû2AVENSTHORPEûMINEûUPû
suspended repurchasing shares under its to and including the second quarter of 2020,
MARATHON IN TALKS FOR US$1bn 53MûBUYBACKûPROGRAMME while the company brings the mine out of
The entertainment company recorded care and maintenance and into commercial
/ILûRElNINGûANDûTRANSPORTûCOMPANYû 53MûINûREVENUESûFORûTHEûlRSTûQUARTERû levels of production.
MARATHON PETROLEUM is negotiating a 60% higher than 2019. 2AVENSTHORPEûWASûPLACEDûINTOûCAREûANDû
53BNû DAYûCREDITûFACILITYûTOûBOLSTERû /PERATINGûINCOMEûWASû53MûFROMûAû maintenance in October 2017 due to
liquidity in the face of a dramatic drop in LOSSûOFû53MûINû persistently low nickel prices.
demand that has put the price of oil under 77%ûSIGNEDûAû53MûlVE YEARû2#&ûINû 4HEû53BNûSYNDICATEDûLOANûWASûSIGNEDû
pressure. May 2019 with pricing tied to a leverage- in February 2019 via underwriters and
-ARATHONûHASûALSOûDRAWNû53BNûFROMû based grid. BOOKRUNNERSû".0û0ARIBASû).'û"ANKûANDû
ITSûlVE YEARûREVOLVINGûCREDITûFACILITY For 3.0 times the margin is 175bp over 3OCIETEû'ENERALE
Last week, Brent crude dropped to a two- Libor with a 25bp commitment fee; for 2.0- 4HEûlNANCINGûMATURESûINû$ECEMBERûû
DECADEûLOWûANDûTHEû53û74)ûFRONT MONTHû 3.0 times it is 150bp and 20bp; for 1.0-2.0 ANDûCOMPRISESûAû53BNûTERMûLOANûANDûAû
contract settled in negative territory for the times it is 125bp and 17.5bp; and for under 53BNûREVOLVINGûCREDITûFACILITYûWHICHûCANû
lRSTûTIMEûINûHISTORY 1.0 times it is 100bp and 15bp.
EMEA SPONSORED LOAN BOOKRUNNERS
US LEVERAGED LOANS EUROPEAN LEVERAGED LOANS
BY VOLUME: 1/1/2020 TO DATE
Europe, Middle East, Africa
bank or group issues US$(m) (%) bank or group issues US$(m) (%) Managing No of Total Share
1 BofA Securities 183 32,001.94 10.9 1 Barclays 18 3,923.64 8.8
1 HSBC 9 2,403.18 7.6
2 JP Morgan 130 25,976.61 8.8 2 HSBC 12 2,863.03 6.4
2 BNP Paribas 11 1,978.90 6.3
3 Citigroup 87 21,667.64 7.4 3 JP Morgan 17 2,758.50 6.2
3 SG 7 1,955.99 6.2
4 Wells Fargo 105 18,349.03 6.2 4 Deutsche Bank 18 2,740.76 6.2
4 Deutsche Bank 12 1,836.03 5.8
5 Credit Suisse 70 17,917.39 6.1 5 BNP Paribas 15 2,649.10 5.9
6 Goldman Sachs 97 17,502.82 5.9 6 SG 8 2,118.60 4.8
6 Morgan Stanley 7 1,734.58 5.5
7 Barclays 84 14,835.67 5.0 7 BofA Securities 11 2,108.05 4.7
7 Barclays 11 1,722.40 5.5
8 Morgan Stanley 50 12,917.30 4.4 8 Goldman Sachs 14 2,056.77 4.6
9 Jefferies 44 10,869.42 3.7 9 NatWest Markets 13 1,941.84 4.4
9 Sumitomo Mitsui 6 1,552.90 4.9
10 RBC 59 10,088.40 3.4 10 Sumitomo Mitsui 7 1,872.06 4.2
10 UniCredit 6 1,477.18 4.7
Total 533 294,423.35 Total 64 44,560.72
Total 40 31,431.25
Excluding Project Finance. Excluding project finance. Western Europe only included.
Excluding project finance.
Source: Refinitiv SDC code: P2 Source: Refinitiv SDC code: P10 Source: Refinitiv SDC code: P13

LOANS LEVERAGED LOANS
SeaWorld joins host of firms to amend provisions

US Theme park upped its RCF to US$332.5m last month
Theme park operator SEAWORLD ENTERTAINMENT quarters of 2020 as its earnings have dried up. April 1 2021. It also added a new minimum daily
has agreed to amend certain provisions to its The coronavirus has forced the company to close liquidity covenant of US$300m.
revolving credit facility, one of a number of travel its theme parks, furlough approximately 95% of Spanish travel company EDREAMS ODIGEO
and leisure companies to take measures to its staff and reduce executive employees’ base agreed a waiver of the covenant on its €175m
reduce the risk of defaulting on debt. salary by 20%. revolver. The gross leverage ratio covenant
Banks are reluctant to let too many borrowers SeaWorld also increased its RCF by for a maximum of 6.0 times will be waived
default on their credit lines because this would US$122.5m to US$332.5m last month. for 2021. And Swiss travel retailer DUFRY said
swell a lender’s loan losses, a source at a private To determine financial maintenance it had agreed a waiver of financial covenants
lender said. covenants from the first quarter of 2021, on its syndicated loan until the end of June
“We are going to work with these (borrowers). SeaWorld will use the adjusted Ebitda numbers 2021.
It’s not about tearing up deals due to the company calculated for the second, third On April 13, ticketing and concert company
circumstances that are out of these companies’ and fourth quarters of 2019. LIVE NATION signed a US$120m incremental RCF
control,” the lender said. “To the extent that and amended its credit agreement to suspend a
things will get better, we can’t just back out of TIME OUT debt-to-Ebitda leverage test.
these facilities if they breach a covenant.” Companies in the travel, tourism, and leisure Similar to SeaWorld, Live Nation was
Financial maintenance covenants include sectors are feeling the economic pain of the also permitted by its lenders to calculate its
companies’ commitment to upholding certain coronavirus as consumers remain indoors consolidated Ebitda from the second and third
debt-to-Ebitda leverage ratios, but as firms and avoid large public gatherings. To bolster quarters of 2020 using figures from the second
struggle to increase cashflow as the pandemic liquidity, several companies have signed new and third quarters of 2019.
leaves the economy closed, borrowers are at risk bank loans and negotiated amended terms on In exchange, the ticketing company’s
of default. credit agreements. incremental revolver was priced at 250bp
SeaWorld will be exempt from complying with Last week, HYATT HOTELS amended its over Libor, a 25bp increase on Live Nation’s
financial maintenance covenants attached to its US$1.5bn five-year RCF, with lenders suspending US$500m RCF.
credit agreement for the second, third and fourth the testing of the leverage ratio covenant until Aaron Weinman
BEûINCREASEDûTOû53BNûTHROUGHûANû European and Latin American routes that PLAYAGS FINALISES ADD-ON
ACCORDIONûBEFOREûTHEûENDûOFû*UNEû Delta operates.
Last month, Delta’s rating was PLAYAGSûHASûlNALISEDûANDûUPSIZEDûITSû
DOWNGRADEDûTOû""ûFROMû""" ûBYû30ûASûTHEû INCREMENTALûTERMûLOANûTOû53MûFROMû
impact of the coronavirus led to a dramatic 53MûTOûBOLSTERûLIQUIDITYûJefferies arranged
drop in demand for air travel. the transaction.
LEVERAGED LOANS The airline’s rating remains on negative 4HEûlRST LIENûLOANûPRICEDûATûBPûOVERû
watch and its credit metrics are expected to ,IBORûWITHûAûûmOORûANDûû/)$ûUNCHANGEDû
WEAKENûSHARPLYûTHISûYEARû30ûSAID from guidance.
UNITED STATES Disruptions to travel and leisure The incremental debt will be non-callable
companies due to the coronavirus have for two years and then callable at 101 for six
DELTA SEEKS US$1.5bn TLB caused multiple companies in the last months thereafter.
month to draw on credit lines to shore The new loan will be attached to a
Carrier DELTA AIR LINES has outlined terms for up liquidity in light of decreased transaction maturing in February 2024,
Aû53BNû4ERMû,OANû"ûLEDûBYûBarclays. demand. WHICHûHASûAPPROXIMATELYû53Mû
The TLB is being offered at 500bp over On March 20, Delta said it had obtained a outstanding.
,IBORûWITHûAûûmOORûANDûû/)$ 53BNûCREDITûFACILITYûTOûENHANCEûTHEû #ORPORATEûANDûlRST LIENûRATINGSûAREû""
There will be no call protection for the company’s liquidity. The airline also drew The transaction also involves
lRSTûYEARûOFûTHEûLOANûANDûPRE PAYABLEûATûPARû DOWNû53BNûFROMûITSûREVOLVINGûCREDITû AMENDMENTSûTOûTHEûCOMPANYSûlNANCIALû
thereafter. facilities. covenants and other provisions to the
The TLB matures in 2023 and will be Online travel group EXPEDIA said it was existing credit agreement.
RAISEDûALONGSIDEûUPûTOû53BNûSENIORû RAISINGû53BNûINûFRESHûCAPITALûINCLUDINGû 0LAY!'3ûDESIGNSûANDûMANUFACTURESûSLOTû
secured bonds led by JP Morgan. ABOUTû53BNûINûNEWûDEBTûTOûIMPROVEû machines and casino products. Due to the
0ROCEEDSûWILLûSTRENGTHENûTHEûCOMPANYSû liquidity in an effort to ride out the collapse coronavirus pandemic and government
liquidity and go toward general corporate in travel demand. actions to prevent large gatherings,
purposes. The company also said it will abandon its 0LAY!'3ûCUSTOMERSûHAVEûCLOSEDûTHEIRûDOORS
The bonds and the loan will rank pari dividend, implement furloughs and reduce The company has implemented short-
PASSUûONûAûlRST PRIORITYûBASIS work-week programmes to save cash. term staff furloughs, reduced salaries and
Delta will secure the debt against its %XPEDIAûSAIDûPRIVATEûEQUITYûlRMSû3ILVERû cut its workforce by approximately 10%.
LANDINGûSLOTSûATû.EWû9ORKSû*&+û)NTERNATIONALû ,AKEû0ARTNERSûANDû!POLLOû'LOBALû On March 19, the company said it drew
and La Guardia airports, against slots at the -ANAGEMENTûWILLûINVESTûABOUTû53BNûINû DOWNûITSûENTIREû53MûREVOLVINGûCREDITû
2EAGANû.ATIONALû!IRPORTûINû7ASHINGTONû the company and have board representation facility as a precaution to increase cash
slots at London’s Heathrow, and other upon the closing of the deal in May. during the pandemic.

Pioneer seeks refi, new buyer
AUSTRALIA Company terminates LBO by Carlyle
PIONEER CREDIT has terminated a proposed indicative timetable would have seen the deal payable. Carlyle has calculated this amount at
leveraged buyout by Carlyle Group and started completed during April, the filing said. approximately A$165.81m.
exploring alternative proposals with other Pioneer has commenced legal proceedings The loan was originally due in September
parties as well as lenders to refinance debt, with Carlyle after the latter refused to withdraw and pays an interest rate of 20% per annum
including A$141.6m (US$89m) borrowed from a default notice on the A$141.6m syndicated currently. It includes a make-whole payment,
the private equity giant. loan, which was signed on December 20. which requires the company to pay a minimum
The alternative transaction may include Pioneer received a letter on April 13 from of nine months of interest.
a control transaction and/or the potential Robin BidCo, part of the group of entities of Besides the debt refinancing, Pioneer is also
refinancing of Pioneer’s debt. Carlyle, alleging a number of breaches under the looking to raise growth funding from lenders for
Pioneer also received unsolicited approaches scheme, including material adverse changes and the medium term.
from some parties, the company said. regulated events. Pioneer and Robin BidCo had signed the
It is not required to pay a reimbursement or Robin BidCo intended to terminate the scheme under which the latter was to acquire
break fee to Carlyle and disputes claims from scheme if the relevant circumstances continued 100% of Pioneer’s fully diluted shares outstanding
the private equity firm for loss of the latter have to exist after five business days from the date of for A$1.82 per share. In December, Carlyle was
suffered. the notice. also in discussions to replace Pioneer’s senior
The Australian financial services provider On Tuesday, Carlyle issued a notice to debt facilities as part of proposed LBO, which
sent the termination notice for the scheme Pioneer stating that the outstanding amount valued the latter at A$288m.
of implementation on April 19. The original on the facility was immediately due and Mariko Ishikawa
Water treatment company CULLIGAN has Bank of America and Wells Fargo arranged 53MûREVOLVINGûCREDITûFACILITYûTOûLIMITû
WRAPPEDûUPûAû53MûINCREMENTALûTERMû the transaction. the company’s risk of defaulting on its debt
loan B. ,UMBERûNOWûHASû53MûINûLOANSûANDû during the coronavirus outbreak.
The non-fungible debt is being offered at letters of credit outstanding under the The lockdown has severely affected the
BPûOVERû,IBORûWITHûAûûmOORûANDûûSOFTû REVOLVERû53MûOUTSTANDINGûUNDERûTHEû commercial foodservice industry and
call protection for six months. &),/ûLOANûANDû53MûINûCASHûONûITSûBALANCEû lowered demand for Welbilt’s products.
Culligan will attach the debt alongside its sheet. Welbilt and its lenders have agreed to
term loan maturing in December 2023. Lumber said it has experienced suspend tests relating to the company’s
The loan will amortise at 1% per year. hSIGNIlCANTvûDISRUPTIONSûTOûITSûOPERATIONSû debt-to-Ebitda leverage ratio and its interest
#ORPORATEûRATINGSûAREû""ûANDûTHEûlRST due to the coronavirus and the measures coverage for four quarters starting at the
lien loan is rated B2/B. taken by state and federal governments to end of the second quarter of 2020.
Morgan Stanley is admin agent, and lead limit the spread of the pandemic. The debt will be governed instead by a
arranger and bookrunner with RBC Capital 0LANT BASEDûMEATûSUBSTITUTEûPRODUCERû minimum consolidated Ebitda requirement,
Markets, Bank of America, Credit Suisse, BMO BEYOND MEATûHASûSIGNEDûAû53Mû2#&ûTHATû minimum liquidity and maximum capital
Capital Markets and Golub Capital. WILLûBEûUSEDûTOûRElNANCEûDEBT expenditure tests.
#ULLIGANûlNALISEDûAû53MûINCREMENTALû "EYONDû-EATSûlVE YEARûSECUREDûFACILITYû Leverage ratio and interest coverage tests
loan in October. The debt was added to the will pay 250bp over Libor until the company will be reinstated in the second quarter of
same loan maturing in December 2023 at PROVIDESûITSûlNANCIALûRESULTSûFORûTHEûENDûOFû ûATûMODIlEDûLEVELS
BPûOVERû,IBORûWITHûAûûmOOR THEûTHIRDûQUARTERûONû3EPTEMBERû Covenant levels in place before this week’s
Thereafter, the facility will be priced amendment will be reinstated to the credit
LUMBER LIQUIDATORS AMENDS against the total leverage ratio. agreement by the fourth quarter of 2021.
For 2.0 times it is 275bp over Libor with a 7ELBILTûRAISEDûAû53MûREVOLVERûINû
(ARDWOODûmOORINGûRETAILERûLUMBER 37.5bp commitment fee; for 1.0-2.0 times it /CTOBERûû4HEûlVE YEARûFACILITYûPAYSû
LIQUIDATORS has amended a credit agreement is 275bp over Libor.
ANDûINCREASEDûITûTOû53MûFROMû 250bp and 37.5bp and for lower than 1.0 *0û-ORGANûWASûTHEûLEADûBOOKRUNNERûANDû
53M times it is 225bp and 37.5bp. administrative agent.
The revolving credit facility has been The credit agreement also includes an
INCREASEDûTOû53MûFROMû53MûANDû accordion feature to increase the loan by up
Aû53MûlRSTûINûLASTûOUTûTERMûLOANûWASû TOû53M
added to the facility. 0ROCEEDSûWILLûALSOûGOûTOWARDûWORKINGû
4HEû53MûINCREASEûINûFUNDINGûTOûTHEû capital and general corporate purposes. RESTRUCTURING
revolver will be available until August 30. JP Morgan and Silicon Valley Bank are
0RICINGûONûTHEûREVOLVERûISûBP BPû bookrunners and lead arrangers on the deal.
over Libor and the FILO term loan will pay Credit Suisse and Bank of America are lenders. UNITED STATES
375bp-450bp over Libor.
The unused commitments will pay a WELBILT AMENDS COVENANTS NEIMAN MARCUS PREPS BANKRUPTCY
25bp-50bp fee per year based on the average
unused amount on the facility, which Foodservice equipment maker WELBILT has Department store chain NEIMAN MARCUS is
matures in March 2024. amended some of the covenants on its preparing to seek bankruptcy protection,

LOANS LEVERAGED LOANS
succumbing to the economic fallout from Tapstone, which started restructuring APPROVALûANDûTHEûREMAININGû53MûONû
the coronavirus outbreak. discussions in November, had a debt stack lNALûCOURTûAPPROVAL
The debt-laden company has been left COMPRISINGû53MûUNDERûITSûSENIORû Credit Suisse ISûTHEû$)0ûAGENT
with few options after the pandemic forced secured revolving credit facility and 3PEEDCASTûHASûAPPROXIMATELYû53Mû
it to temporarily shut its stores. APPROXIMATELYû53MûINûûSENIORû INûPRE PETITIONûDEBTûCOMPRISINGû53Mû
.EIMANû-ARCUSûISûINûTHEûlNALûSTAGESûOFû unsecured notes due 2022. OFûBORROWINGSûUNDERûITSûREVOLVERû53Mû
negotiating a loan with its creditors totalling Under the restructuring plan, the credit INûLETTERSûOFûCREDITûANDû53MûINûTERMû
hundreds of millions of dollars. facility lenders have agreed to swap debt for loans.
Neiman Marcus skipped millions of AûNEWû53MûFOUR YEARûSECUREDûTERMûLOANû The pre-petition term loans comprise a
dollars in debt payments this month, and a portion of the equity in the loan issued in May 2018 originally sized at
including one that only gave the company a reorganised company. 53MûANDûAû53MûINCREMENTALûLOANû
few days to avoid a default. The bondholders will exchange their debt ISSUEDûINû3EPTEMBERû
Neiman Marcus’ borrowings total about FORûAû53MûFOUR YEARûUNSECUREDûTERMûLOANû #HIEFûRESTRUCTURINGûOFlCERû-ICHAELû(EALYû
53BNûACCORDINGû30û3OMEûOFûTHATûDEBTû and a portion of equity. SAIDûTHATû3PEEDCASTûREQUIRESûIMMEDIATEû
ISûTHEûLEGACYûOFûITSû53BNûLEVERAGEDûBUYOUTû 4APSTONEûWILLûALSOûRECEIVEû53MûOFûNEWû ACCESSûTOûITSû$)0ûFUNDSû!SûOFûITSûPETITIONûDATEû
INûûBYûITSûOWNERSûPRIVATEûEQUITYûlRMû MONEYûFROMû+ENNEDYû,EWISû)NVESTMENTû THEûCOMPANYûHADû53MûCASHûONûHANDûOFû
!RESû-ANAGEMENTû#ORPûANDû#ANADAû0ENSIONû Management. WHICHû53MûISûCASHûCOLLATERALûPLEDGEDûTOû
0LANû)NVESTMENTû"OARD pre-petition lenders.
Neiman Marcus pushed out due dates on 3PEEDCASTûALSOûHASûANûUPCOMINGû!PRILûû
ITSûlNANCIALûOBLIGATIONSûLASTûYEARûINûAû ASIA-PACIFIC DEADLINEûTOûPAYûDOWNû53MûOWEDûTOû
restructuring deal with some creditors, Intelsat, a Luxembourg-based satellite
though the transactions added to Neiman SPEEDCAST SEEKS DIP DEAL company providing bandwidth-related
Marcus’ interest expenses. services to the company, in order to keep
/NCEûITûlLESûFORûBANKRUPTCYûPROTECTIONû SPEEDCAST INTERNATIONAL is seeking approval receiving those services.
Neiman Marcus could attract interest from FORûDEBTOR IN POSSESSIONûlNANCINGûAFTERû !USTRALIA BASEDû3PEEDCASTûOPTEDûFORûAû53û
potential suitors seeking to pick up the lLINGûFORû#HAPTERûûBANKRUPTCYûPROTECTION BANKRUPTCYûlLINGûGIVENûTHEûCOMPANYSû
company or some of its assets on the cheap, 4HEû53Mû$)0ûFORûTHEû!USTRALIANû URGENCYûTOûOBTAINûlNANCINGûANDûPRESERVEû
sources said. communications satellite company includes a recovery value, Healy said.
53MûNEWûMONEYûMULTI DRAWûLOANûFACILITYû 3PEEDCASTûSIGNEDûAûFORBEARANCEû
TAPSTONE LENDERS AGREE DEBT SWAP ANDûAû53MûROLL UPûOFûPRE PETITIONûDEBT agreement on April 1 with lenders after it
4HEû$)0ûWILLûBEûPROVIDEDûBYûANû skipped interest and principal payments
Oil and gas company TAPSTONE ENERGY has undisclosed group of pre-petition lenders. due March 31. The deadline was then
completed its out-of-court restructuring 4HEûCOMPANYûWILLûRECEIVEû53MûFROMû EXTENDEDûTOû!PRILûûTOûNEGOTIATEûTHEû$)0û
with its lenders. the multi-draw facility upon interim court lNANCING
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EQUITIES
Australia 92 China 92 India 95 Singapore 95 Belgium 95 France 96 Germany 96
Italy 97 UK 97 United States 98 Canada 101
FRONT STORY INDIA
Kotak eyes massive share sales

Kotak Mahindra Bank forced into fundraising but has better chance than others at raising funds
India’s beleaguered capital markets have to Owners are allowed to reduce their stake shares at a wafer-thin discount of 0.1%.
absorb share sales totalling up to Rs140bn in a company either through an offer for Morgan Stanley said at current prices a
(US$1.8bn) in KOTAK MAHINDRA BANK as sale of secondary shares or through a QIP of 65m share sale will improve Kotak’s
billionaire founder Uday Kotak prepares to primary shares. ESTIMATEDû4IERûûCAPITALûRATIOûFORûTHEûlSCALû
lower his stake to meet local requirements Although the outlook for Indian stocks year ending next March to 21.4% from
and the bank braces itself for a spike in bad and the banking sector remains cautious 18.5%. That will give it enough capital to
loans. in light of the Covid-19 pandemic, market make provisions if 23% of loans become
Last week, the bank’s board approved participants feel Kotak Mahindra Bank non-performing, up from 17% before the
a plan to sell 65m primary shares, worth has a better chance than any other bank share sale. Its current gross non-
Rs75bn at current prices, through a of raising such a large sum. This is despite performing loan ratio stands at 2.5%,
QUALIlEDûINSTITUTIONALûPLACEMENTû the slight underperformance of the although the Covid-19 pandemic is
private placement or public offering. private sector lender’s shares, which are expected to push that higher across the
The follow-on represents 3.4% of the down 26% so far this year against 23% for industry.
bank’s existing capital and will dilute the S&P BSE Sensex. Although the bank’s Tier 1 capital ratio is
Uday Kotak’s stake to 29%. “HDFC Bank and Kotak Bank are the two much higher than the 6% regulatory
Separately, Kotak is expected to sell a 3% shining stars in the Indian banking universe. minimum, a nationwide lockdown since
stake, worth around Rs65bn, from his There is some nervousness over HDFC Bank March 25 is slowing the economy and
existing holding, most likely through an on its impending change in leadership while raising the risk that some customers will
offer for sale. Kotak Bank has no such issues,” an ECM default. Traditionally, Kotak Mahindra has
Kotak agreed in January to reduce his banker said. lent to retail investors via home,
stake to 26% from 30% by August, ending a Aditya Puri, HDFC Bank’s CEO since it was automobile, consumer goods and credit card
court battle between the bank and the established in 1994, is due to retire in loans.
regulator. /CTOBERû4HEûBANKûISûYETûTOûCONlRMûAû “All banks will have non-performing
The central bank requires private replacement and there is a question mark loans but where Kotak Bank stands out is its
bank owners to lower their holding to over the continuation of its rapid growth conservative underwriting practices and
40% within three years of getting a under new leadership. early warning systems,” the ECM banker
banking licence, 20% within 10 years said.
and to 15% within 15 years. Uday Kotak LOWER RETURN ON EQUITY Some analysts point out that the bank can
has won an exemption to those rules by It remains to be seen what discount Kotak also use the fresh capital for mergers and
capping his voting rights at 15% from Mahindra Bank is willing to give this time acquisitions.
April 1. on the shares. In 2017, it sold Rs58bn of new Anuradha Subramanyan
Discount grocer finds outlet for H&F

Twice upsized follow-on marks return of PE secondaries
GROCERY OUTLET, one of 2019’s best- A syndicate led by Morgan Stanley, Bank of The offering was multiple times
performing IPOs and one of a select group America, Deutsche Bank, Jefferies, Barclays, oversubscribed early in the marketing
OFûBENElCIARIESûFROMûTHEû#OVID û Goldman Sachs, Guggenheim Securities, UBS and effort, allowing underwriters to up the
PANDEMICûPRICEDûTHEûlRSTûSPONSORûSELL Cowen priced the offering at US$34 or a slim original deal size from 10m shares to 12.5m
down of the crisis, a twice-upsized ûlLE TO OFFERûDISCOUNT and then to 15m just ahead of pricing.
US$510m secondary offering that allowed Grocery Outlet shares rose during both H&F can sell its remaining 12m shares
sponsor Hellman & Friedman to reduce its days of marketing, underscoring its status as after a 30-day lock-up and is likely to only
stake for the third time since last June’s a “misery” stock. need one more offering to fully monetise its
IPO. The discount grocer saw comparable position.
H&F sold 14.5m shares out of a total of STOREûSALESûSURGEûBYûûINûTHEûlRSTûQUARTERû Grocery Outlet went public at US$22 in
15m shares in the two-day marketed sell- ASûCONSUMERûHOARDINGûBENElTEDûMOSTû *UNEûLASTûYEARûBEFOREûTHEûCOMPANYSûlRSTû
DOWNûALLOWINGûTHEûPRIVATEûEQUITYûlRMûTOû grocery stores, while sales were also up in follow-on in October priced at US$33.75 and
reduce its stake to 13.3% from 29.5% the high single-digits in the early part of a second deal in January struck at US$33.
previously. April. Anthony Hughes

WEEK IN NUMBERS amend or waive key banking covenants
tests up to the December 31 2020 testing
ASIA-PACIFIC
US$50.25
WHEN SELLERS FILED TO SELL
DATEû2AMSAYSûlRSTûDEBTûFACILITYûMATURITYûISû
not until October 2022.
STOCK IN TRADEWEB MARKETS IN AUSTRALIA METCASH RESTOCKS ITS CAPITAL

FEBRUARY SHARES WERE AROUND
THE US$50 MARK. BY MID-MARCH THE RAMSAY HEALTH CARE SEALS Grocery wholesaler and distributor METCASH has
OPPORTUNITY TO SELL AT AN ELEVATED PLACEMENT completed a A$300m (US$190m) placement to
SHARE PRICE LOOKED LOST AS THE STOCK keep the business well capitalised.
SANK TO THE LOW-30s. THE SURGE IN Private hospital operator RAMSAY HEALTH CARE It issued 107m shares, or 11.8% of the
BOND TRADING AMID EXTREME MARKET has raised A$1.2bn (US$755m) via an existing shares, at A$2.80 apiece,
VOLATILITY SAW LAST WEEK’S ABB PRICE institutional placement to strengthen its representing a 7.9% discount to the pre-deal
AT US$50.25 PER SHARE balance sheet as most elective surgeries close of A$3.04 on April 17.
have been suspended during the Covid-19 The placement generated demand from
60 pandemic. both existing shareholders and other
Draft Filing The placement drew strong support from institutional investors. About 95% of the
55
50 domestic and offshore institutional shares were allocated to existing
45
investors, with a mix of existing and new institutional shareholders.
40
investors. Other existing shareholders will be able
Ramsay issued 21.4m new shares, a 10.6% to purchase up to A$30m of primary shares
35
capital increase, at A$56 apiece. Pricing was from April 27 to May 15.
30
a 12.9% discount to the previous close of The placement, together with the
25
13 Jan 28 Jan 11 Feb 26 Feb 11 Mar 25 Mar 8 Apr A$64.29 on April 21. additional liquidity obtained through short-
2020 It is also raising A$200m through a share term debt facilities of A$180m from
purchase plan for existing eligible existing lenders, will provide the company
12
A DOZEN BANKS ARE PITCHING
shareholders from April 29 to May 20.
The coronavirus pandemic has resulted
in the suspension of non-urgent elective
with A$852m of pro forma headroom
versus the historical average gross debt of
A$480m over the 11 months ended March
TO LEAD THE RS150bn (US$1.95bn) surgery in Ramsay’s major operating 29 2020.
CAPITAL INCREASE BY YES BANK. THE regions. Government support and capital Macquarie is the underwriter of the
FUNDRAISING FOLLOWS THE RS60.5bn management initiatives will allow the placement.
INJECTED BY THE STATE BANK OF INDIA company to maintain its hospital network
AND RS39.5bn FROM SEVEN OTHER INDIA and position it to handle deferred surgeries
BANKS LAST MONTH once the operating environment CHINA
normalises, Ramsay said. It has 72 hospital
across Australia. HANSOH PHARMA RAISES US$450m
Six years
CAUGHT IN A VICIOUS CYCLE OF
Ramsay will temporarily suspend
ordinary share dividend payments.
Proceeds from the equity raisings will be
HANSOH PHARMACEUTICAL has raised HK$3.49bn
(US$450m) from an underwritten primary
CREDIT DOWNGRADES, NATURAL used to partially repay Ramsay Funding share placement.
GAS-FOCUSED E&P EQT HOLDINGS Group’s revolving debt facilities, which will The deal was launched with a base size of
BROKE A MULTI-YEAR EQUITY-LINKED remain available for redraw. 100m shares and an upsize option of 28.5m
DROUGHT FROM THE ENERGY SECTOR JP Morgan is the underwriter of the shares in an indicative price range of
WITH A US$440m SIX-YEAR placement. HK$26.75–$27.45 per share.
CONVERTIBLE BOND Meanwhile, lenders to the Ramsay The transaction was upsized to 130.4m
Funding Group have provided consent to shares, representing about 2.2% of the
40
THE CBOE’S VOLATILITY INDEX REMAINS
ASIA-PACIFIC EQUITIES
ASIA-PACIFIC EQUITIES (EX-JAPAN)
ABOVE 40 WITH ONLY OCCASIONAL BRIEF bank or group issues US$(m) (%) bank or group issues US$(m) (%)
VISITS INTO THE 30s, LIMITING MARKETED 1 Morgan Stanley 24 5,049.57 9.8 1 Morgan Stanley 20 4,837.94 9.9
ECM ACTIVITY 2 Citigroup 17 3,339.16 6.5 2 Citigroup 17 3,339.16 6.8
3 China Secs 10 3,276.47 6.3 3 China Secs 10 3,276.47 6.7
90 4 CICC 21 3,175.61 6.1 4 CICC 21 3,175.61 6.5
80 5 UBS 20 2,801.28 5.4 5 UBS 20 2,801.28 5.7
70
6 Goldman Sachs 19 2,774.65 5.4 6 Goldman Sachs 18 2,715.02 5.5
60
7 Citic 8 2,135.89 4.1 7 Citic 8 2,135.89 4.4
50
40 8 JP Morgan 13 1,572.21 3.0 8 JP Morgan 13 1,572.21 3.2
30 9 Macquarie Group 12 1,507.41 2.9 9 Macquarie Group 12 1,507.41 3.1
20 10 Credit Suisse 9 1,493.86 2.9 10 Credit Suisse 8 1,462.50 3.0
10 Total 587 51,666.93 Total 531 48,972.14
0
6 Feb 21 Feb 6 Mar 20 Mar 3 Apr 20 Apr Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues
2020 Source: Refinitiv SDC code: C4a1 Source: Refinitiv SDC code: C4a2

EQUITIES ASIA-PACIFIC
REIT probe deals blow to SGX

SINGAPORE Eagle Hospitality Trust casts a shadow over lesser-known foreign sponsors
The downfall of EAGLE HOSPITALITY TRUST less EHT requested a trading halt on March “In recent years there has been a race to
than a year after its Singapore Exchange IPO is 24 after EH-REIT defaulted on a US$341m attract listings on SGX. Bankers have vested
threatening to reverse the growth of the city’s loan, putting a block on dividend payments to interests and can get slack in the due diligence.
REIT market. unitholders. It said the default was caused by It is time for the regulators to do more rigorous
The Monetary Authority of Singapore and SGX the inability of Urban Commons to pay security gatekeeping,” the banker said.
stepped in last week to order the manager and deposits and rents. An SGX spokesperson said SGX Regco
trustee of the underlying REIT, respectively Eagle Although EHT blamed the Covid-19 pandemic expects issuers to provide adequate information
REIT Hospitality Management and DBS Trustee, for the reduced income at its 18 hotels, it never in compliance with prospectus disclosure
to take steps to protect the rights and interests seemed to be in good shape. Bookbuilding requirements.
of unitholders. for the IPO had to be extended, and the retail “In the case of EHT, according to forecasts
MAS and Singapore Exchange Regulation tranche closed undersubscribed – a rare event in the IPO prospectus, the underlying assets
have also opened a probe into the 2019 IPO. for a SGX REIT. generate sufficient income to support the
EHT said on Friday that FTI Consulting had The units have performed badly, falling distribution to unit holders.”
been hired to lead a restructuring process. to US$0.44 last November because of The spokesperson said SGX Regco has
“EHT may be one in a dozen REIT listings maintenance issues at the Queen Mary. The increased its accountability requirement for IPO
that does not do well on the SGX but it will turn stock remained under pressure on selling by due diligence as of this January. “Should issue
investors away from smaller foreign sponsors,” substantial shareholders Compass Cove Assets managers fall short of our requirements, we will
an ECM banker said. and Claydon Hill Investments. not hesitate to take action.”
REITs and business trusts form the backbone Finally, the Covid-19 pandemic and loan DBS, the issue manager of the IPO, declined
of Singapore’s equity capital market, accounting default led to a collapse in the units. They last to comment. DBS, Bank of America, BNP Paribas
for over 90% of mainboard IPOs in recent years. traded at US$0.137. and UBS were the joint global coordinators and
REITs from US-based sponsors have been well bookrunners with Deutsche Bank and Jefferies on
received by investors until recently because of GATEKEEPING GAP the 2019 IPO.
the positive outlook for the US economy. Another ECM banker said the problems in the MAS has directed Eagle REIT Hospitality
EHT, technically a stapled trust comprising sector put the spotlight on value-boosting Management to obtain the approval of the
EH-REIT and Eagle Hospitality Business Trust, financial engineering ahead of REIT listings. trustee before making any payments or transfers
was listed on SGX on May 24 2019 following a For example, sponsors may forgo dividends of EH-REIT’s funds. MAS has also directed the
US$566m IPO at US$0.78 per unit. Its portfolio for the first couple of years, which enables a REIT manager to restore EH-REIT’s minimum base
comprises 18 freehold hotel properties in the US, to issue a higher dividend to other shareholders capital and financial resources to comply with
including the former Queen Mary ocean liner while the sponsor as master tenant of a property MAS’s requirements. The manager has been in
in Long Beach, the Holiday Inn Resort Orlando agrees to pay higher rent during that time. breach of these requirements since December
Suites and the Holiday Inn Resort and Suites Although sponsors are also the master 2019.
Anaheim. tenants in some other hospitality REITs, Urban MAS has also directed DBS Trustee to set
The sponsor, Los Angeles-based property Commons’ inability to pay some of the rent since out the actions that it will take to protect the
investor Urban Commons, is also the master 2019 raises questions on the rental forecasts interests of unitholders.
tenant of EHT’s properties. made at the time of the IPO. Anuradha Subramanyan
enlarged share capital, and priced at the SHIMAO BUILDS WAR CHEST TIGERMED THINKS BIG
bottom of the price range.
The issue price represents a 6% discount SHIMAO PROPERTY raised HK$2.3bn (US$300m) Shenzhen-listed HANGZHOU TIGERMED
to the closing price of HK$28.45 last from a top-up share placement last Wednesday. CONSULTING plans to raise about US$1bn from
Tuesday. The Chinese property developer sold a Hong Kong IPO this year, according to
The deal was multiple times 78.2m shares, equal to 2.2% of its enlarged people close to the deal.
oversubscribed with almost 70 investors share capital, at HK$29.73 per share, a The Chinese clinical research service
participating. More than 90% of the discount of 2.2% to the pre-deal close. PROVIDERûlLEDûAûLISTINGûAPPLICATIONûONû
allocations went to long-only investors, Goldman Sachs was the placing agent. Thursday with Bank of America, CICC, CLSA
mostly existing investors. There was also The company plans to use the proceeds for and Haitong International as sponsors. No
strong support from sovereign wealth project development, to repay debt and for fundraising size or timetable was
funds. general working capital. There is a 90-day lock-up. mentioned.
There is a 90-day lock-up on the Shares of Shimao gained 2% last Tigermed had a market capitalisation of
company. Wednesday after it said that it is considering Rmb57bn (US$8bn) last Thursday, with the
Hansoh plans to use the proceeds for a spin-off and Hong Kong listing of its stock up around 20% this year.
investment in R&D activities, including property management service unit.
drug development programmes in China IFR reported in January that Shimao is TRIO TO PRE-MARKET HK IPOS
and overseas, expansion of the R&D team planning to spin off its property
and general working capital. management service unit in a Hong Kong Three companies are planning to start pre-
Morgan Stanley was the lead underwriter IPO to raise about US$500m–$600m this marketing Hong Kong IPOs to raise a
and joint placing agent with Citigroup. year. CICC is working on the transaction. combined US$900m this week.

Chinese property management service Rmb708m in the same period, accounting lLEDûTOûTHEû#HINAû3ECURITIESû2EGULATORYû
provider CENTRAL CHINA NEW LIFE plans to raise for 9.7% of revenue. Commission for a proposed Rmb1.24bn
up to US$300m and books are tentatively Soochow Securities is the sponsor and joint (US$175m) Shenzhen ChiNext IPO.
scheduled to open on May 4. bookrunner with Essence Securities, GF The company plans to offer up to 75.5m
BNP Paribas is the sole sponsor. Securities and Western Securities. shares, or 10% of the enlarged capital.
#ENTRALû#HINAû.EWû,IFEûPOSTEDûNETûPROlTû 0ROCEEDSûWILLûBEûUSEDûTOûRENTûNEWûOFlCESû
OFû2MBMû53M ûFORûTHEûlRSTûSIXû COMBA TELECOM COMPLETES FOLLOW-ON and servers in Xi’an city, build a R&D centre,
months of 2019, compared with a Rmb1.8m and replenish working capital.
PROlTûOVERûTHEûSAMEûPERIODûINû A primary and secondary follow-on offering 4HEûTOPûlVEûPROPERTIESûONûWHICHû
As of June 30 2019, the company served in COMBA TELECOM SYSTEMS HOLDINGS has raised Yeahmobi marketed its services last year
more than one million property owners and HK$860m (US$110m). were Google, Cheetah Mobile, Yino
residents in 269 properties. The deal, comprising 230m primary and (Hongkong) Digital Technology, Bytedance,
Central China New Life is controlled by 52m secondary shares, or 10.3% of the enlarged and BlueFocus International.
Henan-based Central China Group, which share capital, was priced at HK$3.05 apiece Jinxing Investment, owned by Xiaomi, has
also owns Hong Kong-listed developer following marketing in a HK$3.00–$3.15 range. a a 3.8% stake in Easy Click.
Central China Real Estate. The issue price offered an 11.6% discount to the Citic Securities is the sponsor.
PEIJIA MEDICAL, meanwhile, intends to raise pre-deal close of HK$3.45 on April 23. Separately, automation accessories
about US$300m. Huatai International and The books were multiple times covered manufacturer DONGGUAN YIHEDA AUTOMATION
Morgan Stanley are the sponsors of the with concentrated allocations. HASûALSOûlLEDûFORûAû2MBBNû#HI.EXTû)0/û
MEDICALûDEVICESûMAKERSûmOAT Selling shareholders Prime Choice with Dongguan Securities as sponsor.
Peijia posted a loss of Rmb242m for the Investments and Wise Logic Investments
nine months ended September 30 2019, face a 90-day lock-up. THREE FILE FOR STAR LISTINGS
compared with a loss of Rmb51m over the The company plans to use the proceeds to
same period in 2018. invest in 5G R&D and capacity expansion. BESTECHNIC (SHANGHAI), an audio chip
KINTOR PHARMACEUTICAL plans to raise CICC was the lead placing agent together manufacturer backed by Alibaba and
US$200m–$300m. The Chinese clinical-stage with DBS. 8IAOMIûHASûlLEDûWITHûTHEû3HANGHAIû3TOCKû
DRUGûDEVELOPERûHASûAûPIPELINEûOFûlVEûCANDIDATES Exchange for a proposed Rmb1.81bn
Co-founders Tong Youzhi and Guo NATIONAL SILICON SURGES 180% ON (US$256m) Shanghai Star IPO.
Chuangxing own a combined 36.8% stake. DEBUT The company plans to offer up to 30m
Legend Holdings holds a 10.1% stake. shares, or 25% of the enlarged capital. There
Huatai International is the sponsor. UBS is NATIONAL SILICON INDUSTRY GROUP‘s A-shares is a 15% greenshoe.
the joint global coordinator. surged on their Shanghai Star debut on Proceeds will be used to upgrade and
April 20 to close at Rmb10.91, up 180% from research smart audio chips used in wireless
CHUNLIZHENGDA MEDICAL MULLS LISTING the issue price of Rmb3.89 in the company’s and noise-cancelling headphones, build an
Rmb2.41bn (US$341m) IPO. R&D centre, and for reserves.
Hong Kong-listed BEIJING CHUNLIZHENGDA The deal comprised 620m A-shares or 25% China Securities is the sponsor.
MEDICAL INSTRUMENTS is considering a of the enlarged capital. Proceeds will be SHANGHAI ALLIST PHARMACEUTICALSûHASûlLEDû
secondary listing on China’s A-share market. used to expand the production capacity of for a Rmb1.5bn Star IPO.
The orthopaedic implant manufacturer silicon wafers. The cancer drug maker plans to offer 90m
has hired Huatai United Securities as IPO tutor, Haitong Securities was the sponsor. new shares, or 10% of the enlarged capital.
but the listing venue has not been There is a 15% greenshoe.
CONlRMED JINTIAN COPPER SURGES 44% ON DEBUT It posted a net loss of Rmb397m in 2019,
Its current market capitalisation is wider than its net loss of Rmb97.4m a year
HK$16.8bn (US$2.2bn), based on an H-share NINGBO JINTIAN COPPER (GROUP)‘s A-shares surged earlier.
price of HK$46.80 on April 23, down 3.5%. by 44% – the daily trading limit – to Rmb9.43 Citic Securities is the sponsor.
The IPO proposal still needs approval on their debut on April 22, against the CHENGDU EASTON BIOPHARMACEUTICALS has also
from shareholders and regulators in China Rmb6.55 issue price of its Rmb1.59bn lLEDûFORûAû2MBBNû3TARû)0/ûCitic Securities
and Hong Kong. (US$224m) Shanghai IPO. is the sponsor.
Trading in the stock was halted until the
ZHONGTAI SECURITIES KICKS OFF IPO next morning, but shares did not continue
to hit limit-up and rose just 5.5% to close at HONG KONG
ZHONGTAI SECURITIES conducted price Rmb9.95 on April 23.
consultations for a Shanghai IPO on April 23. The copper processing manufacturer sold CEO CUTS STAKE IN SINO BIOPHARMA
The Chinese brokerage plans to offer 242m A-shares, or 10% of its enlarged
Mû! SHARESûFORûAûûFREE mOATûDOWNû capital. Its original target was to raise Founder and CEO Tse Ping has raised
two-thirds from the proposed 2.09bn shares. Rmb2.36bn by selling 400m shares. HK$2.27bn (US$293m) through the sale of
Given a net asset value per share of It will use the proceeds on four copper 200m SINO BIOPHARMACEUTICAL shares at
Rmb4.37 last year, the brokerage may raise processing projects, to upgrade production HK$11.35 apiece, according to a term sheet.
2MBBNû53M ûFROMûTHEûmOAT lines, and repay loans from banks. The shares were marketed in a HK$11.17–
It will price the deal on April 27 and Caitong Securities is the sponsor. $11.52 range and were priced at a 4.5%
books will open for a day on April 29. discount to the Monday close of HK$11.88.
4HEûCOMPANYûPOSTEDûAûNETûPROlTûOFû DUO FILE FOR CHINEXT IPOS Ping sold the 1.6% stake from his 10.99%
2MBBNûFORûTHEûlRSTûNINEûMONTHSûOFû holding. There is a lock-up of 90 days for the
2019, on revenue of Rmb7.31bn, up 41%. EASY CLICK WORLDWIDE NETWORK TECHNOLOGY,
a remaining stake.
The income from investment banking was Chinese marketing service provider, has HSBC and UBS were bookrunners.

EQUITIES EMEA
ratio at S$3 each to raise S$5.3bn. The issue

INDIA MALAYSIA price is at a 54% discount to the pre-deal
announcement close of S$6.50. SIA shares
YES BANK SHARE SALE DRAWS 12 BIDS KHAZANAH SELLS ENLARGED TENAGA closed at S$6.06 on Wednesday.
BLOCK SIA also plans to raise up to S$9.7bn from
A dozen banks have shown interest in the issue of mandatory convertible bonds.
working on YES BANK‘s capital increase of 3TATE OWNEDûINVESTMENTûlRMû+HAZANAHûHASû Around 295 zero-coupon 10-year mandatory
up to Rs150bn (US$1.95bn), people with raised M$1bn (US$231m) through the sale 85m convertible bonds will be issued per 100
knowledge of the transaction said. TENAGA NASIONAL shares at M$11.87 apiece. shares. If not redeemed before the maturity
The 12 are Axis Bank, Bank of America, The shares were marketed in a M$11.83– date in 10 years, the MCBs will be converted
Citigroup, Goldman Sachs, HSBC, ICICI ûRANGEûANDûTHEûlNALûDISCOUNTûOFûû into new shares based on a conversion price
Securities, JM Financial, Kotak, Motilal Oswal, is one of the tightest in Asia (ex Japan) so far of S$4.84.
Nomura, SBI Capital and UBS. this year. The offer is the largest rights issue in the
5PûTOûlVEûWILLûBEûHIRED The deal was upsized from 74m shares, island state, beating the previous record –
Last month the bank’s board approved a and represented a 1.5% stake. DBS Bank’s S$2.7bn issue in 2007.
plan to raise up to Rs150bn through a rights Books were well covered with demand The proceeds will be used to fund capital
ISSUEûPUBLICûOFFERûORûQUALIlEDûINSTITUTIONALû from local long-only institutions who made EXPENDITUREûANDûOPERATINGûCASHmOWûATûAû
placement in one or more tranches. up 60% of the investors. The top 10 accounts time when the Covid-19 pandemic has
The bank was previously planning a were allocated 80% of the deal. forced the airline to ground most of its
Rs50bn rights issue, but may now Tenaga shares have fallen 5% year-to-date. mIGHTS
consider a QIP as it wants to attract There is a 60-day lock-up on the vendor. Sovereign wealth fund Temasek, which
foreign anchor investors, said an ECM CLIMB and Credit Suisse were the joint has a 55.46% shareholding in SIA, is
source with knowledge of the bookrunners. underwriting the whole transaction.
transaction. DBS Bank is the sole adviser and manager
Last month, State Bank of India SERBA DINAMIK UPSIZES SHARE SALE of the rights issue.
acquired a 48.2% stake in the loss-making
bank for Rs60.5bn. In addition a SERBA DINAMIK HOLDINGS has raised M$457m
combined Rs39.5bn at Rs10 per share is (US$105m) from an upsized primary share
coming from peers Housing placement that was priced at the bottom of
Development Finance Corp (for an 8% a M$1.49–$1.52 range. Strong demand EUROPE/MIDDLE
stake), ICICI Bank (8%), Axis Bank (4.8%), encouraged the oil and gas engineering EAST/AFRICA
Kotak Mahindra Bank (4%), Federal Bank company to upsize the deal to 306.5m
(2.4%), Bandhan Bank (2.4%) and IDFC shares (10% of the share capital) from the
Bank (2%). original 153.3m. BELGIUM
SBI must maintain a stake of at least Books were covered 1.5 times with over
26% for the next three years, while all 30 accounts participating. The top 10 were VGP PICKS UP €200m INTRADAY
others must keep at least three-quarters allocated two-thirds of the deal. Foreigners
of their stakes for the same period. accounted for 40% of the investors. Property group VGP launched an intraday
Analysts believe Yes Bank needs a The issue price offered an 8% discount to primary accelerated bookbuild on Tuesday
further Rs90bn–Rs130bn over the next the pre-deal close of M$1.62. Serba Dinamik with a target of €200m and commitments
two years to restore its capital ratios. shares have slipped 30% year-to-date. from shareholders for more than €110m.
The bank reported a net loss of There is a 90-day lock-up on the company, “[The commitments] were very helpful,”
Rs185bn in the October–December which is raising the funds to reduce debt. said a banker involved in the trade, which
QUARTERûAGAINSTûAûNETûPROlTûOFû2SBNûAû !FlNû(WANG, CIMB and Credit Suisse were was priced shortly after the London close
year earlier. the joint placement agents. with sizing at €200m. Pricing came at €100
Yes Bank shares are down 37% year-to- In 2017, Serba Dinamik raised M$584m per share, a 4.58% discount to the €104.80
date. through an IPO priced at M$1.50. level at which shares were suspended for
the transaction at 12:40pm in London.
BANK OF BARODA CONSIDERS The capital increase involved 2m shares, a
FUNDRAISING SINGAPORE 10.8% capital increase. Proceeds will be used
for VGP’s development pipeline.
The board of state-owned BANK OF BARODA SIA ANNOUNCES RIGHTS RECORD DATE CEO Jan Van Geet and chairman Bart Van
was scheduled to meet on Friday to Malderen irrevocably committed at launch
consider raising funds through equity or Shareholders on SINGAPORE AIRLINES‘ books as to subscribe for up to €70m and €40.3m,
debt. of May 8 will be eligible for the S$15bn respectively, for pro rata allocations to their
No further details were provided. (US$10.5bn) rights offer of shares and pre-money stakes of 33.81% and 20.16%.
BoB planned a Rs30bn–Rs50bn convertible bonds announced last month. A book of more than 100 lines was
(US$391m–$652m) share sale in early In a stock exchange announcement the multiple times covered and had strong
2018 but put it on hold after the airline said it would seek shareholder support from real estate specialists.
government announced a three-way approval for the rights offer on April 30. JP Morgan and KBC were global
merger with Vijaya Bank and Dena Bank. 4HEûRIGHTSûOFFERûSHARESûANDûTHEûlRSTû coordinators, and bookrunners with "ELlUS.
Axis, BoB Capital Markets, Citigroup, tranche of the CB are likely to be issued over That replicates the top line on VGP’s €285m
Credit Suisse, JM Financial and Kotak were the next three to four months. ûRE )0/ûWITHû"ELlUSûMOVINGûUPûFROMûAû
hired to manage the share sale. Last month, SIA announced that up to co-lead slot and now-absent co-manager
BoB shares are down 53% year to date. 1.78bn rights shares will be sold in a 3-for-2 ING.

AEDIFICA RAISES €206.6m IN INTRADAY !EDIlCAûISûLOCKEDûUPûFORûûDAYSû4HEû The consortium has the option of
ABB company owns senior housing across acquiring another 10% until January 15 2021
Belgium, Germany, the Netherlands, the UK, at the same valuation and there is a separate
Belgian REIT AEDIFICA raised €206.6m last Finland and Sweden. Its portfolio is valued agreement allowing Tencent Music
Wednesday evening and expanded its share at more than €3bn. Entertainment to acquire a minority share
capital by 10% in an intraday primary ABB. The shares closed up 1% at €92 last of UMG’s China subsidiary.
The capital raising followed a trading Thursday. By Friday at midday in London Vivendi said it will also pursue the
statement from the company last Tuesday that they were about €88.60 each. possible sale of other minority interests in
said the coronavirus crisis was not expected to JP Morgan, BNP Paribas and ING were global UMG, assisted by several mandated banks.
have any material impact on its NAV. coordinators with "ELlUSû.ATIXISûand KBC as Proceeds from the IPO are intended for
Trading in the care homes REIT’s shares bookrunners. substantial share buybacks and acquisitions.
was halted at around 12:30pm local time on
Wednesday after a wall-cross that began last
Tuesday afternoon. FRANCE GERMANY
After launching with reference to market,
the book was covered in 30 minutes. Final VIVENDI CONSIDERS 2023 UMG FLOAT VENTILATOR MAKER DRAEGERWERK
pricing was €84 per share with 2.46m units RAISES €76.5m
sold. Vivendi said last Monday that it intends to
Pricing represents a 4.46% discount to last mOATûITSûUNIVERSAL MUSIC GROUP business in Medical and safety equipment maker
Tuesday’s close of €90.40, adjusted for the early 2023 at the latest as the French media DRAEGERWERK raised €76.5m on Monday
2020 dividend, which will now be detached GROUPûREPORTEDûlRST QUARTERûRESULTSûSHOWINGû evening, partly for a planned funding of the
as of April 24. UMG had strong growth in the period, termination of some of its participation
A mix of long-only accounts, including helping lift Vivendi’s revenues by 11.9% to CERTIlCATESûBUTûALSOûTOûHELPûITûMEETûHIGHû
real estate specialists, and hedge funds built €3.87bn. demand for its products in light of the
a 120-line book. The top 10 orders took 50% 5-'SûREVENUESûINûTHEûlRSTûQUARTERû coronavirus pandemic.
and the top 20 took 70%. Around three- were €1.77bn, up 12.7% from a year !LONGSIDEûAûPRELIMINARYûlRST QUARTERû
quarters went to long-only names. earlier. update in mid-April, Draegerwerk had said it
UK investors took just under a third of the Vivendi sold a 10% stake in UMG to a might issue new shares to fund the
DEALûWHILEûTHEû53ûACCOUNTEDûFORûAûlFTHûOFû Tencent-led consortium at the end of March termination of its Series A and K
allocations. Belgian accounts were also which, based on an enterprise value of PARTICIPATIONûCERTIlCATES
favoured, receiving just under 20% of the õBNûFORû5-'ûRESULTEDûINûAûCASHûINmOWûOFû “It has seen massive order intake recently
offering. €2.8bn. so had additional working capital
ECM DEALS: WEEK ENDING 24/4/2020

Stock Country Date Amount Price Deal type Bookrunner(s)
Metcash Australia 21/04/2020 A$300m A$2.80 Follow-on (Primary) Macquarie
Ramsay Health Care Australia 23/04/2020 A$1.2bn A$56 Follow-on (Primary) JP Morgan
Aedifica Belgium 22/04/2020 €206.6m €84 Accelerated Bookbuild (Primary) JP Morgan, BNP Paribas, ING, Belfius, Natixis, KBC
VGP Belgium 21/04/2020 €200m €100 Accelerated Bookbuild (Primary) JP Morgan
Bluestone Resources Canada 22/04/2020 C$80m C$1.75 Accelerated bookbuild (Primary) Canaccord Genuity
Comba Telecom Systems China 24/04/2020 HK$806m HK$3.05 Follow-on (Primary/ Secondary) CICC, DBS
Hansoh Pharmaceutical China 22/04/2020 HK$3.49bn HK$26.75 Follow-on (Primary) Morgan Stanley, Citigroup
Shimao Property China 23/04/2020 HK$2.3bn HK$29.73 Follow-on (Primary) Goldman Sachs
Draegerwerk Germany 20/04/2020 €76.5m €76.50 Accelerated Bookbuild (Primary) Deutsche Bank, BNP Paribas, HSBC
Sino Biopharmaceutical Hong Kong 20/04/2020 HK$2.27bn HK$11.35 Accelerated Bookbuild (Secondary) HSBC, UBS
Inwit Italy 22/04/2020 €800m €9.60 Accelerated Bookbuild (Secondary) BofA, Banca IMI, Goldman Sachs, UBS
Serba Dinamik Malaysia 23/04/2020 M$457m M$1.49 Follow-on (Primary) Affin Hwang, CIMB, Credit Suisse
enaga Nasional Malaysia 23/04/2020 M$1bn M$11.87 Follow-on (Secondary) CIMB, Credit Suisse
Just Eat Takeaway.com Netherlands 22/04/2020 €400m €87 Accelerated Bookbuild (Primary) ABN AMRO, BofA, ING
Dufry Switzerland 23/04/2020 SFr151.3m SFr27.50 Accelerated Bookbuild (Primary) UBS, BNP Paribas, Credit Suisse, GS, BofA, HSBC
Aston Martin Lagonda UK 20/04/2020 £365m 30p Rights issue Morgan Stanley, Deutsche Bank, JP Morgan
Big Yellow Group UK 20/04/2020 £89.1m 983p Accelerated Bookbuild (Primary) JP Morgan
Blue Prism Group UK 20/04/2020 £100m £11 Accelerated Bookbuild (Primary) Investec
DFS UK 22/04/2020 £64m 150p Accelerated Bookbuild (Primary) Barclays, BNP Paribas, Jefferies, Peel Hunt
Agree Realty US 20/04/2020 US$370m US$60 Accelerated bookbuild (Primary w/fwd sale) Citigroup
CC Neuberger Principal Holdings I US 23/04/2020 US$360.0m US$10 IPO (Primary) Goldman Sachs, BofA, UBS
Darden Restaurants US 20/04/2020 US$458.1m US$58.50 Accelerated bookbuild (Primary) Goldman Sachs, BofA
Grocery Outlet US 22/04/2020 US$510m US$34 Follow-on (Secondary) Morgan Stanley, BofA, Deutsche Bank, Jefferies,
Barclays, Goldman Sachs, Guggenheim, UBS, Cowen
Oric Pharmaceuticals US 23/04/2020 US$120m US$16 IPO (Primary) JP Morgan, Citigroup, Jefferies, Guggenheim
Social Capital Hedosophia III US 20/04/2020 US$720m US$10 IPO (Primary) Credit Suisse
Tradeweb US 22/04/2020 US$560.2m US$50.25 Follow-on (Secondary) JP Morgan, Barclays, Citigroup, GS, Morgan Stanley
United Airlines US 21/04/2020 US$1.04bn US$26.50 Accelerated bookbuild (Primary) Morgan Stanley, Barclays
VBI Vaccines US 21/04/2020 US$50.0m US$1.10 Accelerated bookbuild (Primary) Raymond James, Oppenheimer

EQUITIES EMEA
requirements as well as the planned The company said termination of all of its Banca IMI, Bank of America, Goldman Sachs
CANCELLATIONûOFûPARTICIPATIONûCERTIlCATESû PARTICIPATIONûCERTIlCATESûWILLûRESULTûINûANû and UBS were bookrunners.
which have been on the balance sheet for increase in earnings per ordinary share of
some time,” said a banker working on the approximately 36% and a rise in earnings
trade. per preference share of approximately 35%. UK
Key shareholders, including the Draeger &ULLûlRST QUARTERûRESULTSûAREûDUEûONû!PRILû
family and hedge funds, were wall-crossed Global coordinators were Deutsche Bank SHAREHOLDERS BACK ASTON MARTIN
during the day on Monday regarding a and Exane BNP Paribas, and they were WITH NEAR FULL TAKE-UP
fundraising of about €80m. The process was bookrunners with HSBC, with Bankhaus
wrapped up with indications of interest well Lampe as co-manager. ASTON MARTIN LAGONDA was rewarded for
in excess of that amount. moving quickly to restructure its
Pricing of 1m preference shares at €76.50 fundraising when things went awry as the
was a discount of 4.85%, inside the 5% limit ITALY luxury carmaker’s £365m rights issue
for German primary, versus the prefs secured a take-up of 98%.
closing at €80.40 on Monday. BPER SHAREHOLDERS APPROVE UP TO There were acceptances for 1.19bn shares
A book of about 60 lines had the top 15 €1bn RIGHTS ISSUE out of the 1.21bn offered on a 4-for-1 basis at
accounts take around two-thirds of the 30p.
transaction, including the Draeger family, Shareholders in Italian bank BPER BANCA have The high take-up meant the rump of
with support from European small/mid-cap approved an up to €1bn rights issue to bank- 24.2m shares had been placed at 58p shortly
funds. roll its acquisition of 500 Intesa Sanpaolo before 9am on Monday. Pricing of the rump
A second banker involved said that hedge branches. was at a negligible discount to Friday April
funds have been very responsive of late to Mediobanca provided a volume 17’s close of 58.1p, though the shares
accelerated capital increases, including this underwriting for the rights issue and opened on Monday at 68p.
one, in terms of ticket size and swiftness to Rothschild is advising the company. An ECM By 10am the shares had fallen below 60p
put in orders. Guidance was limited to one banker away from the deal said banks are and closed on Monday at 58.65p, up 0.95%
price rather than a range for simplicity. still vying for possible bookrunner roles. on the day. On Thursday, the stock closed at
In mid-April, Draegerwerk said that BPER’s purchase of 500 Intesa branches is 53.75p.
because of the spread of the coronavirus, part of Intesa’s larger €4.86bn takeover of AML was forced to junk a planned
lRST QUARTERûORDERSûHADûRISENûSHARPLYûTOû UBI Banca and addresses antitrust issues £317.2m rights issue that formed a major
€1.39bn, more than double the €648m from RESULTINGûFROMûWHATûISûTHEûlRSTûMAJORûSTEPû part of a £500m equity fundraising after the
Q1 2019. Of this, more than €1bn was forward in a wider consolidation of Italy’s stock began trading below the rights issue
booked in the company’s medical division, banking system. price before subscription began. The revised
for which orders surged 177%. The company £365m rights issue was part of a larger
said that there had been a strong increase in TIM AND VODAFONE TRIM INWIT STAKES £536m recapitalisation, with the
demand for ventilators, patient monitors underwritten portion of the rights issue
and masks. Telecom Italia and Vodafone trimmed their increasing to £152m from £93.6m.
In March, Draegerwerk said it would build stakes in Italian telecom towers business As part of his investment in the business,
a factory on the US East Coast within INWIT on Wednesday evening, printing only as of Monday, Canadian billionaire
MONTHSûTOûFULlLûAûGOVERNMENTûORDERûFORû the second sell-down in Europe this month. Lawrence Stroll took up the role as
millions of respiratory masks and was in The sellers worked in tandem, as per a executive chair, with Penny Hughes
talks with other governments over similar shareholder agreement, each selling 41.7m stepping down. A Stroll-led consortium
projects. It also won a German government shares representing 8.6% of Inwit in invested £262m for a 25% stake.
order for 10,000 ventilators for use in aggregate. The sale was a substantial event, Deutsche Bank, JP Morgan and Morgan Stanley
intensive care units. representing about 100 days’ trading were bookrunners. The banks earned £8.4m
Draegerwerk will pay €157m to terminate VOLUMEûANDûINCREASINGûTHEûFREE mOATûBYû for their underwriting, a rate of 5.5%, up
THEû3ERIESû!ûANDû+ûCERTIlCATESûANDûõMû more than a third. from 2.75% in the original structure.
for Series D. The trade was covered on indications
from a wall-cross, though formal coverage INVESTORS BACK £64m PREMIUM PRICED
EMEA EQUITIES took just over an hour. DFS SALE
BOOKRUNNERS: 1/1/2020 TO DATE The trade was launched with reference to
Managing No of Total Share the €10.73 close, with investors given Furniture retailer DFS raised £64m in a
bank or group issues US$(m) (%) guidance of €9.60–€9.70 that was covered primary accelerated bookbuild last
1 Credit Suisse 7 3,089.87 9.9 throughout at around 7:30pm in London. Wednesday evening, with pricing coming at
2 Goldman Sachs 17 2,575.82 8.2 Books closed at 8pm with pricing at €9.60 a hefty 16.3% premium to the close.
3 JP Morgan 21 2,469.62 7.9 for a 10.5% discount. The cash-box placing increased the share
4 BofA Securities 12 2,294.77 7.3 Vodafone’s and TIM’s ownership falls to capital of DFS by 19.99%, and the sale
5 Citigroup 16 2,269.04 7.3 33.2% each from 37.5%. They retain joint proceeds will strengthen its balance sheet
6 Morgan Stanley 13 2,210.27 7.1 control and hold equal stakes in Inwit, during the coronavirus crisis, which has led
7 UBS 8 1,845.10 5.9 subject to a 90-day lock-up. to the closure of all its UK stores.
8 Barclays 15 1,698.56 5.4 A book of more than 100 lines had strong Barclays, BNP Paribas, Jefferies and Peel Hunt
9 Jefferies 7 981.08 3.1 support from existing shareholders and new were bookrunners on the deal.
10 HSBC 9 942.33 3.0 money, including infrastructure specialists. Shares closed on Wednesday at 129p
Total 249 31,265.69 Inwit stock opened at €9.35 on Thursday each, prior to launch of the deal. Crucially,
Including all domestic and international deals and rights issues and pushed to a close of €9.80, or 2.1% above the close was below the 150p nominal value
Source: Refinitiv SDC code: C4cr pricing. so that was the target for pricing, and any

lower would have required a shareholder year, increasing the group’s rentable space It is raising cash to part-fund its
meeting to approve a share split. by 19%. The total development cost of acquisition of two supermarket properties.
A banker involved said that existing £235m implies an 8.8% net operating It announced the increased target size on
shareholders and some new names threw income return on cost. &RIDAYûANDûSAIDûITûREmECTSûTHEûPOSSIBILITYûOFû
THEIRûWEIGHTûBEHINDûTHEûPLACINGûATûTHEûlXEDû Big Yellow said the placing will fund acquiring additional assets.
150p price level, paying a 16.3% premium development for the next few years. Supermarket Income REIT is at an
and avoiding the extra layer of risk and Big Yellow said that trading remains in advanced stage in the acquisition of two
complication a share split would cause. line with its Q4 update from last week, supermarkets for around £115m. It also has
A two-day wall-cross garnered enough which said like-for-like revenue increased by a pipeline totalling £180m.
interest to cover the deal. 3.8% in the quarter. The group has cash and Stifel ISûlNANCIALûADVISERûANDûBOOKRUNNERû
UK accounts made up about 80% of the undrawn bank facilities of £76m. The and placing agent with Goodbody.
lNALûBOOKûANDûTHEû53ûTOOKûJUSTûUNDERûû dividend policy is to distribute 80% of full- As of the end of 2019, the fund’s portfolio
The top 10 orders took 70% of the deal. year adjusted earnings per share. consisted of 10 supermarket sites
DFS also said on Wednesday it had Big Yellow shares opened below pricing at COMPRISINGûlVEû4ESCOûSTORESûFOURû
secured an extra £70m facility from lenders, 979.5p on Tuesday and ended the day 1.7% Sainsbury’s stores and a Morrisons.
to add to its £250m bank facilities. It said it above the Monday close at £10.10.
will not pay out dividends or conduct any
acquisitions until either six months after the BLUE PRISM SHARES SOAR AFTER
repayment of the incremental facility, or £100m ABB
FOLLOWINGûTHEûRElNANCINGûOFûBANKûFACILITIES AMERICAS
It said the placing proceeds, various cost- Shares in software company BLUE PRISM rose
cutting measures and extra debt will provide more than 10% last Tuesday after the
enough liquidity to see the company company raised £100m in an ABB on UNITED STATES
through a worst-case scenario of lockdown Monday evening.
until December followed by a weak sofa Investec ran the trade, which increased the COVID-19 RAISES START TO INFECT ECM
market. share capital by 10.9%.
DFS shares rose 17.8% last Thursday Blue Prism is strengthening its balance A near-total lack of earnings visibility and the
following the capital increase, closing at sheet in case of “prolonged disruption” amid prospect of unlimited amounts of government
152p each. By last Friday at midday they had the coronavirus pandemic, and also to bailout money crowding out capital markets is
fallen slightly to 149.8p. PROGRESSûTOWARDSûCASHmOWûBREAK EVENûANDû not stopping ECM bankers from doing deals.
to position itself for future opportunities. The past week provided more evidence
BIG YELLOW RAISES £81.9m FOR The automation software company sold companies hard hit by Covid-19 are now
DEVELOPMENT PIPELINE MûSHARESûATûlXEDûPRICINGûOFûaûEACHû resorting to the unpalatable option of
representing a 4.4% discount to last selling common stock at depressed prices.
Self-storage business BIG YELLOW GROUP Monday’s close of £11.51. The share sale There were also signs of a return of
achieved slightly more than targeted with a corresponds to around 23 days’ trading regular-way issuance from the minority of
£81.9m equity fundraising on Monday VOLUMEûACCORDINGûTOû2ElNITIVûDATA companies prospering during the crisis.
evening, with proceeds to fund the Four of the company’s directors For both types of issuers, the ECM
acquisition of land to expand its participated in the placing, buying an window remains wide open even at a time
development pipeline. aggregate 115,909 shares. of elevated volatility.
The focus was on top existing Launch of the capital increase came 3EVERALûCRISISûlRSTSûPROVIDEDûTHEûPASTû
shareholders for a wall-crossing process that alongside news that Blue Prism’s CEO and week’s highlights.
had very strong support and completed with co-founder Alastair Bathgate will step down On the rescue side, UNITED AIRLINES became
indications of interest in excess of the deal on April 30, to be replaced by executive THEûlRSTû53ûCARRIERûTOûFORTIFYûFUNDINGûWITHûAû
size. The sale represented 4.99% of existing chairman Jason Kingdon. US$1bn block, while the restaurant sector
share capital. Bathgate led Blue Prism to its IPO in 2016, saw issuance from both DARDEN RESTAURANTS
Pricing came at 983p for a tight 1% when it raised £22.1m at 78p per share and and SHAKE SHACK.
discount to Monday’s close of 993p. A had a market cap of about £48.5m.
banker involved said that support was Its shares closed last Tuesday up 10.3% at US EQUITIES
strong enough for what was seen as a £12.70, giving a market value of £1.2bn post- BOOKRUNNERS: 1/1/2020 TO DATE
conservative “business as usual” raise that it money. By last Friday at midday the shares Managing No of Total Share
COULDûHAVEûPRICEDûmATûTOûTHEûCLOSE were £13.14 each. bank or group issues US$(m) (%)
The company said that members of the The company last raised cash in a near- 1 Morgan Stanley 31 5,403.98 17.2
board will invest up to £300,000 in the identical deal in January 2019, raising 2 Goldman Sachs 32 4,492.52 14.3
placing and that, while the equity raise aMûINûANû!""ûWITHûlXEDûPRICINGûOFûaû 3 JP Morgan 34 3,223.33 10.3
would be earnings dilutive in the short also led by Investec. 4 BofA Securities 30 3,163.66 10.1
term, that would be more than offset by the 5 Citigroup 21 2,135.13 6.8
anticipated medium to long-term accretion. SUPERMARKET INCOME REIT UPS 6 Barclays 16 1,829.78 5.8
The top 10 accounts took more than 60% PLACING TARGET 7 Jefferies 24 1,458.96 4.7
of the book, with existing shareholders 8 Cowen & Co 19 1,158.59 3.7
representing more than 80% and there was SUPERMARKET INCOME REIT has increased the target 9 Credit Suisse 10 1,029.68 3.3
good support from US money. JP Morgan was of its placing to at least £100m from £75m. 10 Wells Fargo 17 991.95 3.2
bookrunner. The placing launched on April 9 and is Total 166 31,370.27
The development pipeline comprises 13 due to wrap up on Monday, with a result due Including all domestic and international deals and rights issues
sites, with three stores due to open this the following day. Source: Refinitiv SDC code: C3r

EQUITIES AMERICAS
Palihapitiya loads up with US$720m payload

US Tech entrepreneur takes flight on second IPO launch
Having failed to close a deal a month ago, unit structure, after last month restructuring conceded “we kind of whiffed the first time
serial entrepreneur and vocal bailout opponent from the more issuer-friendly one-share, one- around”.
Chamath Palihapitiya finally got part of the quarter structure. Credit Suisse last month postponed the
money he was seeking through the US$720m Social Capital III closed its NYSE debut on twin IPO pricings from March 16 after the Dow
SPAC IPO of SOCIAL CAPITAL HEDOSOPHIA III, one of Wednesday at US$10.07. suffered its largest-ever one-day point decline of
two tech-focused SPACs he had been planning 2,997 (12.9%) on the same day.
to list concurrently. PALIHAPITIYA CREDITS, CRITICISES Institutions that had committed started
Credit Suisse, which was forced to pull an Social Capital III is in elephant-hunting territory, pulling orders as their investors redeemed
earlier attempt at pricing on March 16 as the particularly after the 20% upsize and an money, causing concern among the Credit
market sell-off began in earnest, launched a additional 15% possible from the greenshoe Suisse team about risks of underwriting over the
one-day bookbuild on Tuesday morning for taking proceeds to US$828m. The vehicle has a two-day settlement period.
Social Capital Hedosophia III at the original global mandate. What has changed since mid-March? Quite a
US$600m base deal size, while keeping the “I picked and approved every single line item lot, obviously.
smaller US$300m Social Capital Hedosophia II before we priced this deal,” said Palihapitiya in a Within SPACs specifically, vehicles that went
IPO on the shelf for the time being. CNBC interview on Wednesday. “And that’s what public early in the year have recovered toward
Credit Suisse, acting as sole bookrunner, on you’re supposed to do, pick long-term partners.” cash levels, after forced investor liquidations on
Tuesday evening placed 72m units at $10.00 How many came from the hedge fund levered investments saw some trade below the
apiece. community he has so roundly criticised remains redemption level.
“We were covered at launch,” said one banker unclear. Churchill Capital II, the Michael Klein-backed
involved in the underwriting. “We didn’t want “The credit goes to my bankers at Credit SPAC, traded as low as US$9.25 on March 19. It
to take the risk of having the two deals in the Suisse,” he added, specifically calling out global has since recovered to US$10.40.
market at the same time. In retrospect, there ECM head David Hermer and Niron Stabinsky, Once white-hot, the asset class seems poised
clearly was support.” who heads up SPAC origination. for a comeback and apparently well before
Social Capital III, the global vehicle, retained Not often are ECM bankers outed publicly traditional IPO product gets going again.
its one-share common and one-third warrant but it is well deserved, though Palihapitiya Stephen Lacey
Clothing retailer AMERICAN EAGLE OUTFITTERS DELTA AIR LINES did not rule out an equity They launched bookbuilding on Tuesday
lLLEDûAûSIMILARûNEEDûWITHûAû53MûlVE raise when it reported Wednesday but morning on 5m shares, before yesterday
year CB. instead raised US$3bn from a new bond bumping the offering size to 6.25m, and
4HEûhHAVESvûOFûTHEûCRISISûALLOWEDûlNANCIALû later in the week. lNALLYûTOûTHEûMûSOLDûTOûNEWûINVESTORSûONû
sponsors to exit Grocery Outlet and AMERICAN AIRLINES (April 30) and SOUTHWEST the base deal.
Tradeweb Markets with US$500m-plus AIRLINES (April 28) report earnings in the The underwriters hold a greenshoe option
secondary stock sales. coming week, giving them an opportunity on another 1.125m shares, which if fully
There were also signs of life in the IPO to elaborate on their funding plans even as exercised, as seems likely, would bump
market, which bankers expect to be the the industry collects billions of government gross proceeds from the offering to
slowest ECM product to return to normalcy. aid. US$135m.
ORIC PHARMACEUTICALS priced an upsized As for Darden and Shake Shack, their Oric soared 54.3% to US$24.68 on debut on
US$120m Nasdaq IPO while two SPACs, stock prices bounced impressively in the Friday.
SOCIAL CAPITAL HEDOSOPHIA III (US$720m) and CC aftermath of their equity offerings, in The outcome continues an impressive run
NEUBERGER PRINCIPAL HOLDINGS I (US$360m) contrast to United which struggled to hold for biotech IPOs during the Covid-19
brought upsized IPOs after abbreviated its offering price. pandemic.
marketing efforts. !ûmOODûOFûEARNINGSûRELEASESûINûTHEûNEXTû Oric followed the same path as ZENTALIS
The forward pricing calendar has no few weeks is one issue that could curb PHARMACEUTICALS (US$190m)and KEROS
deals, though it is highly likely that at the issuance, though companies are pre- THERAPEUTICS (US$110m), which were similarly
very least more SPACs will look to price in announcing earnings where necessary accelerated public marketing schedule that
the coming weeks. ahead of stock sales. saw both upsized, though just once.
The product’s rebound relates to its Zentalis and Keros are up 58% and 88%,
improved share prices from existing SPACs ORIC PHARMACEUTICALS DOUBLE respectively, from offer.
and renewed appetite from hedge funds UPSIZES IPO And like Zentalis and Keros, Oric preceded
attracted to the combined stock and warrant its IPO by raising US$55.7m privately last
structure’s technical trading opportunities. Quick to market but not lacking in support, July in a Series D round at US$13.20 a share.
United’s block trade was the surprise of ORIC PHARMACEUTICALS soared on debut after Oric is using the IPO proceeds to complete
the week, though the shares traded poorly taking in an upsized US$120m from its IPO Phase I/II trials of its lead drug in combination
in the aftermarket. The airline sold stock at on Thursday. with two types of chemotherapy in patients
US$26.50, less than one-third of the price it JP Morgan, Citigroup, Jefferies and with prostate cancer.
repurchased US$1.6bn of stock last year. Guggenheim Securities set pricing on an The drug attacks cancer cell defences,
Bankers expect more ECM offerings from enlarged 7.5m shares at US$16.00, the top of which should make the chemotherapy a
airlines, retailers and restaurant chains. a US$14–$16 marketing range. more potent and durable treatment.

backstop up to three Chu-Neuberger-
Darden Restaurants opens sponsored SPACs, highlighting the

long-term nature of the tie-up.
“The FPA provides certainty of capital,”
doors to equity said a second banker. “The sponsors have

planned ahead to accommodate any
DIFlCULTIESûCLOSINGûANûACQUISITIONû4HATû
US Olive Garden parent gains liquidity runway should make them more attractive to any
potential target.”
Retail is in the eye of the financial storm created before broader marketing overnight on Monday In addition to SPAC veteran Chinh Chu,
by the coronavirus pandemic. Even investment- of a US$400m fixed-size raising. CC Neuberger features CC Capital partner
grade companies are resorting to using equity, The banks placed 7.83m shares at US$58.50, and PE exec Douglas Newton as its CFO and
their most precious resource, to help them ride out the high end of the US$57.50–$58.50 marketing Charles Kantor, a 20-year veteran of
the storm. range. They exercised their 15% greenshoe option Neuberger Berman, on its board.
DARDEN RESTAURANTS, the IG-rated parent of to take total gross proceeds raised to US$526m. Chu, a former Blackstone exec, and
the Olive Garden, Longhorn Steakhouse and Darden executives led by CEO Gene Lee Newton teamed up on the US$2.5bn
other restaurant chains, cured any doubts over its were among those that invested with a US$4m acquisition of annuities provider FG
long-term viability by raising US$525m-plus last commitment. Holdings (Fidelity & Guaranty Life) through
week from an overnight stock sale. By week’s end, Darden shares were trading at the CF Corporation SPAC.
The financing is the latest in a series of moves US$67.50. Chu is also CEO of Collier Creek, a SPAC
by the restaurant operator to help it survive Darden now has US$1.6bn of cash. That that raised US$440m on its IPO in
Covid-19. includes a full draw down on a US$750m 3EPTEMBERûûBUTûHASûYETûTOûlNDûANû
Darden, rated Baa3/BBB–, one notch above revolver and a new US$270m term loan it acquisition. Collier Creek, despite not
IG, has enough money to fund operations well recently inked. having found an acquisition, trades at an
beyond the end of the year, assuming no return The restaurant operator was burning through elevated US$10.80 per unit, highlighting
to normalised operations. US$25m of cash weekly, but has now managed Chu’s pull.
“We estimate Darden has the liquidity to to slow that to US$20m. It has benefited from CC Neuberger, like Collier Creek, has two
withstand approximately 70 weeks of lost rising take-out and delivery orders. YEARSûTOûlNDûANûACQUISITIONû4HEûVEHICLEûWILLû
operating cashflow at the current burn rate,” said Darden hopefully will soon be able to reopen FOCUSûONûTHEûlNANCIALûTECHNOLOGYûANDû
Cowen analyst Andrew Charles in a note to clients. the 1,800-plus restaurants it operates across the business services sectors.
To firm up demand, Goldman Sachs and US and Canada. But, if not, it has plenty of cash h9OUûAREûGOINGûTOûSEEûAûLOTûMOREû)0/ûlLINGSû
Bank of America confidentially discussed the to tide it over. coming through,” said the banker. “A lot of
planned stock sale with select institutions Robert Sherwood that has to do with dislocation in the
traditional IPO market and potential
OPPORTUNITIESûFORû30!#SûTHATûlLLûTHATûVOIDv
Oncology is a prevailing theme for attractive acquisition. Investors are looking DIAMOND EAGLE ACQUISITION shareholders on
biotech IPOs this year. for IPO-like returns.” Thursday approved the US$2.7bn
Cancer drug developers Black Diamond Goldman Sachs and Bank of America, along acquisition of DraftKings, setting the stage
Therapeutics (up 100%) and Revolution with newly added UBS, marketed the deal for the online gambling site’s Nasdaq debut,
-EDICINESûUPû ûRANKûAMONGûTHEûTOPûlVEû CONlDENTIALLYûAHEADûOFûTHEûPUBLICûLAUNCHûTOû pending any potential redemptions by the
performing IPOs this year. lRMûUPûORDERSûONûTHEûMûUNITSûBEINGûSOLDû SPAC’s public shareholders.
Oric’s management team was a key at US$10.00 apiece. They bumped the
selling point. offering size to 36m units priced on BANKS CASH IN US$560.8m OF
CEO Dr Jacob Chacko helped run cancer- 4HURSDAYûATûTHEûlXEDû53ûOFFER TRADEWEB SHARES
drug developer Ignyta through its sale to )NûONEûSIGNIlCANTûSTRUCTURALûTWEAKû##û
Roche two years ago for US$1.7bn. Neuberger altered its unit structure to one- Bank shareholders of TRADEWEB MARKETS took
share, one-third warrant, from the more advantage of the bond trading platform’s
CHINH CHU, NEUBERGER SOLIDIFY issuer-friendly one-quarter structure record volumes amid the Covid-19 crisis to
SPAC TIES ORIGINALLYûlLEDû3OCIALû#APITALû(EDOSOPHIAû)))û cut their holdings for a second time since
made a similar concession to investors last year’s IPO.
CC NEUBERGER PRINCIPAL HOLDINGS I, a vehicle before landing US$720m from its IPO priced In a two-day marketed synthetic
jointly sponsored by Neuberger Berman and late Tuesday. secondary that raised US$560m, a syndicate
Chinh Chu’s CC Capital, greenlighted a one- The one-third structure, while still led by JP Morgan, Barclays, Citigroup, Goldman
day bookbuild last Thursday for its aggressive, makes it easier to close an Sachs and Morgan Stanley sold 11.16m
US$300m IPO that comes amid a nascent acquisition because of lower dilution to a 4RADEWEBûSHARESûATû53ûAûûlLE TO
revival in SPAC IPO activity. target. offer discount.
The SPAC ended up raising US$360m, the CC Neuberger also has a forward purchase The offering was multiple times
maximum upsize allowable. agreement (FPA) for US$200m from a oversubscribed and upsized modestly, from
“The highest quality investors are selective Neuberger Berman fund, increasing its 10.95m shares at launch, and traded
because they can be,” said a banker involved. ACQUISITIONûlREPOWER comfortably above the offering price in the
“Let’s face it, there is something like US$20bn Equally important (and innovative) is a aftermarket.
of SPACs looking for an acquisition, across the US$100m–$600m commitment from The deal also priced well above the US$42
spectrum of quality management teams. Neuberger Berman to extend the credit LEVELûOFû4RADEWEBSûlRSTûFOLLOW ONûINû
“Chu has a loyal following that has required to fund any redemptions by public October last year and its US$27 IPO price in
CONlDENCEûHEûWILLûBEûABLEûTOûlNDûANû shareholders. That facility is meant to early April last year.

EQUITIES AMERICAS
Tradeweb will use the proceeds to buy raised US$170m of equity in late March via 6")ûHASûHADûSOMEûSUCCESSûINûITSûlELD
equity interests from its bank shareholders. another public offering at the slightly Its hepatitis-B vaccine is approved in Israel
Goldman and Barclays together were set higher price of US$61.00. and is in Phase III trials in the US and
to collect more than half the offering “It was really a reopening of the last deal,” Canada. VBI is also working with
proceeds under the original terms. Agree CEO Joey Agree said on an earnings GlaxoSmithKline on a potential brain cancer
The deal will broaden Tradeweb’s public conference call on Tuesday. vaccine.
mOATûASûTHEûBANKSûHOLDINGSûFALLûFROMûûTOû “It was double the amount of the last deal. The coronavirus vaccine candidate
about 10% after the offering. We weren’t actively looking, [but] given the employs the same synthetic approach as
2ElNITIVû)&2SûPARENTûDIDûNOTûSELLûANYû opportunity set, we thought it was the right VBI’s brain cancer vaccine, which has
shares, leaving its 53% stake unchanged, but thing to do. already proven to be safe for human patients
handing it tighter voting control. “It was a tighter discount [than the in a Phase I trial.
!ûTHEN CONlDENTIALû&EBRUARYûûDRAFTû marketed deal] with higher net proceeds to VBI and its Canadian partners are working
lLINGûSUGGESTSûTHEûBANKSûWEREûHOPINGûTOûSELLû the company. And so we thought that made ONûlLINGûANûINVESTIGATIONALûNEWûDRUGû
earlier this year when the stock was also sense for all constituents, which we’re APPLICATIONûWITHûTHEû&$!ûTHEûlRSTûSTEPûINû
trading at around the US$50 mark, but those taking into account.” launching clinical trials, by the end of this
plans were scotched when it fell sharply to Alongside the offering, the REIT disclosed year.
the low-30s in the mid-March swoon before it had collected rents from 87% of its
recouping all of its losses in recent weeks. portfolio for April, a key issue for analysts
4RADEWEBûREPORTSûlRST QUARTERûRESULTSûONû across the REIT sector. CANADA
May 7 but already pre-announced earnings Agree said 81% of stores in its portfolio
ahead of consensus (37 cents a share versus were currently open (though a quarter of BLUESTONE DIGS UP C$80m
35 cents). these were open on only a limited basis).
Earlier this month, it also revealed March The REIT is about to collect another TSX Venture Exchange-listed gold miner
volumes through its platform rose 41.5% US$267m because Citigroup is settling the BLUESTONE RESOURCES raised C$80m
year-on-year to a record US$1trn. REIT’s existing forward sale over 4m shares. (US$56.9m) from an overnight stock sale last
"LACKSTONEû2ElNITIVSûSPONSORûACTEDûASû week to help advance its Cerro Gold project
an adviser on the follow-on, having already VBI FUNDS COVID-19 VACCINE in Guatemala.
RECEIVEDû53MûINûlNANCIALûCONSULTINGû A syndicate led by Canaccord Genuity priced
fees for the IPO and earlier follow-on. VBI VACCINES, a biotech working on a potential the all-primary offering of 45.7m shares at
vaccine for the coronavirus, on Tuesday C$1.75, a 3.8% discount to last sale. The
REIT INVESTOR STEERS US$370m INTO raised a relatively hefty US$50m from an shares were trading at C$1.85 early in
AGREE overnight stock sale. Friday’s session.
!FTERûCONlDENTIALLYûMARKETINGûRaymond Bluestone is developing both the Cerro
2%)4 FOCUSEDûINVESTMENTûMANAGEMENTûlRMû James and Oppenheimer placed 45.4m shares Blanco gold and Mita geothermal projects in
Cohen & Steers invested US$370m in a at US$1.10 each, the bottom of the US$1.10– Guatemala.
forward sale of stock by net lease retail REIT $1.15 range marketed overnight and a hefty Purchased from Goldcorp in 2017, Cerro
AGREE REALTY, betting the current challenges 30% discount the US$1.58 last sale. Blanco is a permitted, high-grade
facing both retail tenants and landlords VBI, which sported a pre-offer market cap underground gold project, while Mita is an
during Covid-19 will be resolved of just US$200m, had targeted US$40m advanced-stage, renewable energy project
satisfactorily in the coming months. when the deal was launched overnight on licensed to produce up to 50 megawatts of
In a registered offering priced in Tuesday. power.
Monday’s pre-open, Agree sold 6.17m shares The biotech is working with the Canadian A feasibility study projects Cerro Blanco
at US$60.00 each, a 3.7% discount to last government on a coronavirus vaccine. could produce 146,000 ounces a year over
sale. Citigroup was sole bookrunner and the Their collaboration is trying to create a THEûlRSTûTHREEûYEARSûATûAûCOSTûOFû53ûANû
forward purchaser. synthetic copy of the coronavirus that would ounce.
The deal, equating to about 10.3% of elicit an immune system response in the form On Monday, Bluestone engaged G Mining
expanded capital assuming settlement of of new antibodies against all coronaviruses, Services to begin detailed engineering in the
the forward, was a surprise given Agree including Covid-19 as well as MERS and SARS. fourth quarter of this year.
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JET raises €700m as merger closes

Strong demand delivers €400m equity and €300m six-year CB
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STRUCTURED EQUITY CONVERTIBLES
Dufry moves to cope with 90% drop in sales

SWITZERLAND Hedge funds operating long back travel retailer combo fundraise
DUFRY last week joined the travel-dependent The banker said that there was significant few were able to participate in the end, but that’s
companies to tap the market over liquidity anchor demand for a “fairly vanilla trade”, why there was such strong momentum.”
concerns in the face of the coronavirus enough that they had to manage demand and A credit assumption of 700bp was derived in
pandemic, raising just over SFr500m (US$513m) stress that there would not be enough stock part from two straight bonds in the name with
from a combination of short-dated convertible to go around. Anchors took the majority of a maturities of 2024 and 2027, with no pushback.
bonds and a capital increase just shy of 10% of book of around 120 lines, with the rest going Dufry is rated Ba3 by Moody’s and BB- by S&P,
existing capital. to existing shareholders and wall-crossed with negative outlooks.
Dufry neatly illustrates the coronavirus accounts. There was significant scale back and Implied vol was 27%, from 21%-27% guidance
experience of many global companies in the zeroing of orders. and the bond floor was 85.3%.
first quarter. It was “characterised by completely Pricing on the equity set the reference price There is a call at two years subject to a 130%
different developments in each of the three for the three-year bonds, a rare tenor for a non- trigger.
months”, the company said in a trading update. mandatory CB. An equity-linked banker said The final CB book was led by hedge funds,
Performance was slightly positive in January, that the short dated maturity was a reflection of with around a quarter going to long-only funds,
hurt by a slowdown in Asia in February, and then the issuer wanting to keep both the coupon and with the UK and US dominating.
calamitous in March when year-on-year sales premium low, with bonds offered at 1%-1.5%, up Approval to issue the shares underlying
fell 55.9%. April sales so far are just 10% of last 15%-20%. the convertible bonds will be sought at a
year’s numbers. Dufry stock began the year just below €100 shareholder meeting on May 18.
The company had already spoken to and fell more than 77% in the space of a month In addition to raising equity and CBs, the
investors before the fundraising was confirmed to just above €20 in mid-March. company is also increasing its loans. The retailer
on Thursday morning and it launched after In order to provide flexibility for hedge funds, had SFr685.9m of available committed facilities as
the close. A wall-cross over a couple of days a delta placing of up to 3m shares was available of March 31, which it is topping up with SFr425m of
provided indications of interest more than from the banks, but the majority of hedge funds commitments from some of its lenders.
covering the sale of 5.5m shares, of which 0.5m participating did so on an outright basis, with a It also has covenant waivers on borrowing
were treasuries and the rest primary stock, and number stating that intention in the wall-cross. until June 2021 and looser covenants for the
a SFr300m three-year convertible bond, later As a result, the delta size was small at just subsequent two testing periods in 2021.
upsized to SFr350m on strong demand. under 400,000 shares. An equity-linked banker The latest steps, which also include axing its
Shares reacted well to the news of the combo on the trade said that this was similar to other dividend, are in addition to cutting spending,
fundraising on Thursday and closed up 5.5% at recent delta placings with CBs, such as Amadeus including using government schemes to reduce
SFr27.70. The company capitalised on the gain IT and Nexi. personnel costs and voluntary salary cuts, which
by pricing the equity fundraising at SFr27.50, a Pricing came on best terms for the issuer, was announced on March 12.
tight 0.72% discount. with a 1% coupon and 20% premium over the Dufry shares were trading at SFr26.60 at 4pm
A banker involved on the equity leg said SFr27.50 reference price for a SFr33 conversion in London on Friday.
that the capital increase was easily digested, price. Global coordinators were UBS, BNP Paribas,
especially as the name and sector had been on “Given the response from the pre-sounding, Credit Suisse and Goldman Sachs. They were
investors’ radars for some time, the extensive pricing at the tight end had been expected,” said joined as bookrunners by Bank of America and
wall-cross and the pre-announcement on the EQL banker. “We knew the transaction was HSBC. Co-lead managers were ING, Raiffeisen
Thursday morning had accelerated momentum attractive to a wide range of investors, not just in International and UniCredit.
and investor interest. equity-linked but also high-yield, although very Robert Venes
DOUBLEûTHEûREFERENCEûPRICEûANDûCOMPAREDû !NYûSLOWDOWNûOFûDOLLARSûCOMINGûINûTHEû TOûRIGHT SIZEûFUNDINGûTOûTHEûTECHNICALSûANDû

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CONVERTIBLEûATû53ûANDûHASûAûDELTAûINû 53MnMûBOTHûABOVEûTHEûPRIORû THROUGHûPLANNEDûASSETûSALESûITûHADûEXPECTEDû
THEûHIGH S 53MûANDû53MûMID POINTû TOûDELEVERAGE
)DEALLYûBUYINGûOFûTHEûUNDERLYINGûREQUIREDû GUIDANCE JP MorganûCredit SuisseûANDûBarclays
TOûCLOSEûOUTûSHORTûPOSITIONSûONûTHEûSû 4HEûCOMPANYûSAWûSTRONGûDEMANDûFORûITSû MARKETEDûAû53Mû#"ûONû4HURSDAYûATûAû
BEINGûREPURCHASEDûWOULDûBEûMATCHEDûBYû CLOUDûPRODUCTSûASûTELECOMûCUSTOMERSûRUSHûTOû COUPONûANDûCONVERSIONûPREMIUMûOFûn
SHORTûSELLINGûNEEDEDûTOûHEDGEûTHEûNEWû#"û UPGRADEûNETWORKSûTOûSUPPORTûINCREASEDû ûANDûnû4HEYûlNALISEDû
ANDûTHEûUNDERLYINGûSTOCKûPRICEûWOULDûBEû BANDWIDTH PRICINGûTHATûEVENINGûONûANûUPSIZEDû
UNAFFECTED 53MûOFFERINGûATûûUPû
)NPHIûADDEDûTOûTHEûBULLISHûlNANCINGûBYû EQT DILUTES COMMODITY EXPOSURE h4HEûDEALûWENTûVERYûWELLvûSAIDûAûBANKERû
SPENDINGû53MûOFûTHEûPROCEEDSûRAISEDûONû WITH NEW CB INVOLVEDûh)ûTHINKûTHISûDEALûCOULDûBEûAûBITûOFûAû
AûCALLûSPREADûTOûOFFSETûDILUTIONûTOûPRICESû TRAILBLAZERû%0ûTENDSûTOûBEûAûBITûOFûAûFOLLOW
ABOVEû53ûAûûPREMIUMûTOû #AUGHTûINûAûVICIOUSûCYCLEûOFûCREDITû THE LEADERûSECTORv
REFERENCE DOWNGRADESûNATURALûGAS FOCUSEDû%0ûEQT %14ûWHOSEûOPERATIONSûAREûFOCUSEDûONûTHEû
!HEADûOFûTHEûDEALûLAUNCHû)NPHIûPRE CORPûPUTûTHEûBRAKESûONûPLANNEDûDELEVERAGINGû -ARCELLUSû3HALEûEXPOSINGûITûHEAVILYûTOû
ANNOUNCEDûPOSITIVEûlRST QUARTERûRESULTSûTHATû TARGETSûBYûISSUINGûMOREûDEBTûINûTHEûFORMûOFûAû NATURALûGASûISûTHEûlRSTû%0ûTOûISSUEûAû#"û
CALLûFORûAûNON '!!0ûOPERATINGûPROlTûANDû 53MûSIX YEARûCONVERTIBLEûBOND SINCEû#HESAPEAKEû%NERGYûINûûACCORDINGû
TOû)&2ûDATA
GLOBAL CONVERTIBLE OFFERINGS GLOBAL CONVERTIBLE OFFERINGS – EMEA %14SûCREDITûRATINGûWASûDOUBLE DOWNGRADEDû
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE BYûBOTHû-OODYSûANDû30ûEARLIERûTHISûYEARûTOû
Managing No of Total Share Managing No of Total Share "A""nûONûCONCERNSûTHATûLOWûCOMMODITYû
bank or group issues US$(m) (%) bank or group issues US$(m) (%) PRICESûCOULDûLEADûTOûELEVATEDûLEVERAGE
1 BofA Securities 20 5,177.28 13.9 1 JP Morgan 6 1,248.09 22.4 4HEûDOWNGRADESûTRIGGEREDûAûCOUPONû
2 JP Morgan 24 4,990.65 13.4 2 Morgan Stanley 3 751.80 13.5 STEP UPûPROVISIONûONû53BNûOFûDEBTû
3 Goldman Sachs 21 4,816.69 12.9 3 Citigroup 2 548.58 9.8 MATURINGûINûûFROMûûTOûû
4 Morgan Stanley 19 3,440.56 9.2 4 BNP Paribas 2 501.80 9.0 %14ûHASû53BNûOFûDEBTûOUTSTANDINGû
5 Citigroup 12 1,786.33 4.8 5 UBS 3 341.51 6.1 INCLUDINGûABOUTû53MûTHATûCOMESûDUEû
6 Citic 10 1,333.70 3.6 6 HSBC 2 338.80 6.1 BEFOREûTHEûENDûOFûNEXTûYEAR
7 Wells Fargo 5 1,217.82 3.3 7 UniCredit 2 338.80 6.1 %14ûHADûCOMMITTEDûTOûRElNANCEûTHOSEû
8 Barclays 5 1,171.71 3.1 8 Goldman Sachs 2 310.42 5.6 ûMATURITIESûBYûTHEûMIDDLEûOFûTHISûYEARû
9 Credit Suisse 8 1,009.86 2.7 9 Barclays 1 278.38 5.0 BUTûHASûNOWûPUSHEDûTHATûTIMELINEûBACKûTOû
10 BNP Paribas 4 797.63 2.1 10 Credit Agricole 1 270.20 4.8 THEûENDûOFû
Total 114 37,369.14 Total 9 5,573.92 h4HEû#"ûBOLSTERSûLIQUIDITYûANDûGIVESûTHEMû
Including exchangeables and domestic offerings. Including exchangeables. MOREûmEXIBILITYûAROUNDûTHEûTIMINGûOFû
Source: Refinitiv SDC code: C9 Source: Refinitiv SDC code: C09d DELEVERAGINGvûSAIDûTHEûBANKER
ALL INTERNATIONAL ASIAN CONVERTIBLES %14Sû53BNûPRINCIPALûûNOTESûDUEû
GLOBAL CONVERTIBLE OFFERINGS – US
BOOKRUNNERS: 1/1/2020 TO DATE ûONEûYEARûAFTERûTHEû#"ûRALLIEDûTHREEû
Managing No of Total Share POINTSû4HURSDAYûTOûûAûû94-
Managing No of Total Share 4HEûLEADSûUSEDûTHEûSûASûAûREFERENCEûINû
1 Citigroup 3 737.81 17.6 GUIDINGûACCOUNTSûTOûAû,IBORûPLUSûBPûCREDITû
2 Morgan Stanley 2 487.03 11.6 SPREADûANDûûIMPLIEDûVOLûINûMODELLINGûTHEû#"û
2 Goldman Sachs 17 4,140.49 20.9
3 JP Morgan 3 425.78 10.2 3OMEûINVESTORSûUSEDûAûWIDERû,BPûSPREADû
3 JP Morgan 15 3,316.78 16.7
4 BofA Securities 1 372.03 8.9 WHICHûWHENûPAIREDûWITHûAûûVOLûRESULTEDûINû
4 Morgan Stanley 14 2,201.74 11.1
5 Goldman Sachs 2 365.78 8.7 SIMILARûTHEORETICALûVALUATIONS
5 Wells Fargo 5 1,217.82 6.1
6 Credit Suisse 4 359.48 8.6 4HEûRELATIVEûCOSTûADVANTAGEûISûOFFSETûBYû
6 Barclays 3 693.33 3.5
7 UBS 2 315.78 7.5 DILUTIONû%14ûSHARESûPLUNGEDûûTOû
7 Credit Suisse 4 650.38 3.3
8 HSBC 2 225.78 5.4 53ûTHOUGHûTHEYûHAVEûRALLIEDûFROMûTHEû
8 Citigroup 6 461.74 2.3
9 Barclays 1 200.00 4.8 LOWûSûEARLIERûTHISûMONTHûSOûSOMEûSELL OFFû
9 RBC 2 337.50 1.7
10 BNP Paribas 1 200.00 4.8 WASûEXPECTED
10 Jefferies 3 314.75 1.6
Total 10 4,187.99 %14ûSPENTûAûPORTIONûOFûTHEûPROCEEDSûONûAû
Total 35 19,823.12
Including exchangeables.
CALLûSPREADûTOûOFFSETûDILUTIONûTOû53ûAû
Source: Refinitiv SDC code: C9a Source: Refinitiv SDC code: M10 ûPREMIUMûTOûREFERENCE
EQUITY-LINKED DEALS WEEK ENDING: 24/4/2020
Issuer Country Date Amount Greenshoe Tenor Coupon/YTM % Premium (%) Bookrunner(s)
Kingsoft China 23/04/2020 HK$3.1bn - 5 yrs 0.625/1.75 27.5 JP Morgan, Morgan Stanley
Just Eat Takeaway.com Netherlands 22/04/2020 €300m - 6 yrs 1.25 40 BofA, Societe Generale, UBS, ABN AMRO, ING
Dufry Switzerland 23/04/2020 SFr350m - 3 yrs 1 20 UBS, BNP Paribas, CS, GS, BofA, HSBC
2U US 20/04/2020 US$330m US$50m 5yrs 2.3 27.5 Morgan Stanley, GS, Citigroup, CS, Jefferies
American Eagle Outfitters US 22/04/2020 US$400m US$60m 5yrs 3.8 30 BofA, JP Morgan
EQT US 23/04/2020 US$440m US$60m 6yrs 1.8 20 JP Morgan, Credit Suisse, Barclays
Inphi US 21/04/2020 US$440m US$66m 5yrs 1 32.5 Morgan Stanley, JP Morgan
Snap US 23/04/2020 US$850m US$150m 5yrs 0.25 35 GS, JP Morgan, Morgan Stanley

INTERNATIONAL FINANCING REVIEW CONTACTS
EDITOR SENIOR REPORTERS: LONDON NEWS EDITORS TOKYO

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INTERNATIONAL FINANCING REVIEW INDEX
2U 104 Culligan 88 Inter-American Investment Corp 26 Renault 79

Acciona Financiacion Filiales Australia 75 Dana 84 Inwit 97 Rhineland-Palatinate 31
Aedifica 96 Darden Restaurants 9, 98, 100 Ireland 30 Riviera NPL 47
Agence Francaise de Developpement 25 Dart 83 Israel 31 Russia 66
Agree Realty 101 Dave & Buster’s Entertainment 9 Italian Republic 4 Safran 78
Ahli United Bank 59 Dell Financial Services 49 JC Decaux 35 Santander 49
Ajman Bank 68 Delta 9 JC Penney 42 Santander UK 47
Alfa Laval 81 Delta Air Lines 43, 87, 99 J Crew 73 Sarana Multi Infrastruktur 76
Alimentation Couche-Tard 5 Deutsche Bank 11, 19 JP Morgan 11, 39 Saudi Aramco 81
America Movil 104 Deutsche Wohnen 36 Just Eat Takeaway.com 103 SeaWorld Entertainment 87
American Airlines 99 Development Bank of Japan 32 Keros Therapeutics 99 Serba Dinamik Holdings 95
American Car Center 50 DFS 82, 97 Kingsoft 104 Shake Shack 9, 98
American Eagle Outfitters 85, 99, 103 Diamond Eagle Acquisition 100 Kingsoft Cloud Holdings 8 Shandong Qingyuan Group 4
Amphenol 85 Diamond Offshore 2 Kingston Technology International 79 Shanghai Allist Pharmaceuticals 94
Antilooppi 78 Dongguan Yiheda Automation 94 Kintor Pharmaceutical 94 Shimao Property 93
APA Group 36 Draegerwerk 96 Kommuninvest 26 Showa Denko 76
Aqui SPV 47 Dufry 81, 87, 105 Kookmin Bank 64 Singapore Airlines 95
Arab Petroleum Investments Corp 68 DuPont de Nemours 84 Korea East-West Power 65 Singapore Technologies Engineering 65
Argentina 68 Eagle Hospitality Trust 93 Kotak Mahindra Bank 91 Sino Biopharmaceutical 94
Asian Development Bank 25 Earthstone Energy 2 KPN 104 Snap 104
Associated British Foods 82 EBOS Group 75 Latecoere 79 Social Capital Hedosophia III 99
Aston Martin Lagonda 97 Ecopetrol 69 Legal & General Group 6 Societe Generale 11
Auchan 35 Ecuador 69 Lenovo Group 60 Sodexo 35
Austria 30 eDreams Odigeo 81, 87 Leoni 79 Southwest Airlines 99
Avinor 38 EG Group 5 Live Nation 87 Speedcast International 89
Baden-Wuerttemberg 31 Elia Transmission Belgium 35 Lower Saxony 27 Spirit 84
Bank Dhofar 59 Emirates NBD 59 Loxam 79 State of Brandenburg 27
Bank of America 39 Entegris 23 Lumber Liquidators 88 Suncorp-Metway 41
Bank of Baroda 95 EQT Corp 106 Luxembourg 26 Supermarket Income REIT 98
Bank of England 25 Estonia 66 Macy’s 83 Supply@ME Capital 48
Barclays 11, 19 European Commission 30 Madrid 28 Svenska Cellulosa 81
Bavaria 31 European Financial Stability Facility 27 Maggese 47 Swedbank 39
BBMG 62 Euskaltel 81 Marathon Petroleum 86 Sydney Airport 74
Beijing Chunlizhengda Medical Instruments 94 Evercore 21 Medtronic 37 Tapstone Energy 89
Belvedere SPV 47 EVN 77 Merlin Entertainments 43 Target 85
Berlin 31 Expedia 87 Metcash 75, 92 TechnipFMC 82
Bestechnic (Shanghai) 94 Export-Import Bank of Korea 64 Mexico 70 Tenaga Nasional 95
Beyond Meat 88 FAR 5 MGM Resorts 23 Tesco 37
Big Yellow Group 98 Fiat Chrysler Automobiles 80 MIE Holdings 5 Total 74
Binhai Investment 63 Finland 27, 30 Moelis & Co. 21 Toyota 51
BlackRock 16 Firmenich 36 Morgan Stanley 39 Tradeweb Markets 100
Blue Prism 98 First Quantum Minerals 86 North Rhine-Westphalia 26 Tronox 23
Bluestone Resources 101 Flughafen Zurich 38 Nasdaq 34 Udenna 5
BOC Aviation 60, 61 Fnac Darty 79 National Bank of Oman 59 UK Debt Management Office 31
Bohai Ferry Group 104 Ford Motor 12 National Silicon Industry Group 94 Ultra Petroleum Corp 3
Bollore 78 Free Hanseatic City of Bremen 28 Nationwide Mutual 38 UniCredit 10, 19
Boston Scientific 83 Future Retail 64 Neiman Marcus 42, 88 United Airlines 8, 98
BPER Banca 97 Gap 23 Netflix 23, 43 Universal Music Group 96
Bpifrance 29 GAP Inc 42 New South Wales Treasury Corp 31 US Foods 23
Brussels-Capital Region 31 Garanti BBVA Bank 82 NIB 28 VBI Vaccines 101
Bulgaria 65 Gemdale 61 Ningbo Jintian Copper (Group) 94 Verisure 7
Burlington Coat Factory 42 General Electric 83 Nissan 51 VF Corp 85
Caisse de Refinancement de l’Habitat 40 General Motors 50, 83 Nordstrom 42 VGP 95
Caltex Australia 5 Getinge 15 NTPC 76 Vinci 78
Campbell’s Soup 33, 85 Goldman Sachs 19 Occidental Petroleum 2 Virgin Australia 45
Canada Pension Plan Investment Board 31 Grocery Outlet 91 Office Depot 84 Vocus Group 74
CarMax 51 Guatemala 69 Oil Search 5 Wallonia 31
Caterpillar 83 Guess 86 Oric Pharmaceuticals 99 Welbilt 88
CC Neuberger Principal Holdings I 100 Gulfport Energy 2 Pan Brothers 76 Wells Fargo 39
Centennial Resource Development 2, 44 Hangzhou Tigermed Consulting 93 Paragon Mortgages (No.26) 47 Wereldhave 80
Centennial Resource Production 3 Hansoh Pharmaceutical 92 Paraguay 70 Whiting Petroleum 2
Central China New Life 94 HarbourVest Global Private Equity 83 Peijia Medical 94 Wienerberger 77
Chaparral Energy 3 Hesse 31 Peking University Founder Group 62 Woodside Petroleum 5
Cheesecake Factory 9 Hin Leong Trading 4 Pemex 71 World Wrestling Entertainment 86
ChemChina HK Red Bridge 75 Holding d’Infrastructures de Transport 37 Permira Debt Managers 48 Wumei Technology Group 75
Chengdu Easton Biopharmaceuticals 94 Holmes 47 Petron 5, 77 Xiaomi 61
Chesapeake Energy 2 Housing New Zealand 32 Phoenix Group Holdings 6 Xinhu Zhongbao 61
China Railway Group 62 HSBC 17 Pioneer Credit 88 XPO Logistics 23
Citigroup 11 Huachen Energy 64 PlayAGS 87 Yes Bank 95
Comba Telecom Systems Holdings 94 Hungary 66 PPG Industries 85 Yida China Holdings 63
Commerzbank 40 Hyatt Hotels 32, 84, 87 Premier Foods 82 Yinson Holdings 5
Compass Group 82 Hyundai 50 Prisma SPV 47 Zentalis Pharmaceuticals 99
Country Garden Holdings 75 Icade 78 ProSiebenSat.1 79 Zhongtai Securities 94
CP All 77 Ichthys Liquefied Natural Gas project 74 PSA International 65
Credit Bank of Moscow 81 IDEXX Laboratories 85 Qantas Airways 74
Credit Suisse 10, 22 Inpex 74 Queensland Treasury Corp 32
CRH 80 Inphi 105 Ramsay Health Care 75, 92

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APRIL 25 2020 ISSUE 2330 www.ifre.

US oil producers braced for bankruptcy as

€110bn tidal wave of demand allows Italy

United Airlines lands US$1bn from stock

PEOPLE & MARKETS BONDS EQUITIES LOANS

The longest-running event of its kind in the syndicated loan

LPC’s annual conference covers topics including Sustainability/

Sponsorship opportunities are available. Contact us to discuss

5NFORTUNATELY ûTHEû#OVID ûPANDEMICûISûWHIPPINGûUPûAû

International Financing Review April 25 2020 1

US oil producers braced for

Banks rush to rein in ﬁnancing for oil ﬁrms

BY KRISTEN HAUNSS could be lowered by 30% or more +EMPFûSAIDûh7EûAREûSTARTINGûTOû TIGHTENING BORROWING

2 International Financing Review April 25 2020

53BNûTOûTHEûINDUSTRYûOVERû dollar before the prices will likely remain on life

required to be remedied within "UTûBANKSûMUSTûWALKûAûlNEûLINEû BANKSûJUSTûAûNON STARTER vûHEû

International Financing Review April 25 2020 3

Tidal wave of demand allows Italy

4 International Financing Review April 25 2020

that part of the curve but the )TALYSûRATINGûONû!PRILûû

International Financing Review April 25 2020 5

UK duo ﬁre sub-debt starting gun

6 International Financing Review April 25 2020

International Financing Review April 25 2020 7

Kingsoft tests US bid for China

8 International Financing Review April 25 2020

The banker said United

International Financing Review April 25 2020 9

BY STEVE SLATER h7EûSEEûTHEû%UROPEANûAPPROACHû WASûTHEû%UROPEANûBANKINGû 7HETHERûOTHERSûWILLûALSOûBEû

Is a ‘perfect storm’ brewing in euro funding markets?

10 International Financing Review April 25 2020

BUTûITSûPROlTABILITYûISûSTILLûPOORû to be challenged,” said new REPORTEDûAûûJUMPûINû&)##û

down, helped by unprecedented "ASSIûEXPECTSûTHEû%URIBORû “The market is already pricing 4HATûCOULDûDRIVEû%URIBORû

limited in quantity, created this year to plug gaps in their ;THEûBASIS=ûWITHûOVERûõBNûOFû

International Financing Review April 25 2020 11

BY TESSA WALSH INCLUDEû%3'ûLANGUAGEûASûTHEYûAREû THATSûAûBITûMOREûDIFlCULTûANDû quarter, which showed a

market volumes,” a loan banker SUSTAINABLEûlNANCEûMARKETSûATû DIFlCULTûIFûCOMPANIESûAREûHAVINGû

Ford spreads fallen angel wings

12 International Financing Review April 25 2020

The sudden drop in global

International Financing Review April 25 2020 13

REPLICA TROPHIES ARTICLE REPRINTS

For more information, email paul.holliday@reﬁnitiv.com

 FRONT STORY CORONAVIRUS

Ventilator ﬁrm goes for speed

THREE WEEKûDELAY ûANDûGAVEûTHEûDEALûAû#OVID The ventilators will be manufactured at

International Financing Review April 25 2020 15

Fire sale risk of fallen angels is overblown

BlackRock launches ESG total return bond fund

Who’s moving where…

16 International Financing Review April 25 2020

Please contact us if you have information about job moves: peoplemarkets@refinitiv.com

International Financing Review April 25 2020 17

Who’s moving where…

18 International Financing Review April 25 2020

Deutsche sets up sustainable ﬁnance team

Barclays chiefs freeze pay until 2021 ANYûPROBLEMSûANDûTHEû5+ûBANKSûBOARDûSAIDû

Please contact us if you have information about job moves: peoplemarkets@refinitiv.com

International Financing Review April 25 2020 19

Capital markets week ahead:

BIG DEAL Intesa Sanpaolo holds a

20 International Financing Review April 25 2020

Pressure mounts on EM debt

5NFORTUNATELYûTHEû#OVID ûPANDEMICûISûWHIPPINGûUPûAû

BY KRISTEN HAUNSS could be lowered by 30% or more +EMPFûSAIDûh7EûAREûSTARTINGûTOû TIGHTENING BORROWING

53BNûTOûTHEûINDUSTRYûOVERû dollar before the prices will likely remain on life

required to be remedied within "UTûBANKSûMUSTûWALKûAûlNEûLINEû BANKSûJUSTûAûNON STARTERvûHEû

that part of the curve but the )TALYSûRATINGûONû!PRILûû

BUTûITSûPROlTABILITYûISûSTILLûPOORû to be challenged,” said new REPORTEDûAûûJUMPûINû&)##û

limited in quantity, created this year to plug gaps in their ;THEûBASIS=ûWITHûOVERûõBNûOFû

BY TESSA WALSH INCLUDEû%3'ûLANGUAGEûASûTHEYûAREû THATSûAûBITûMOREûDIFlCULTûANDû quarter, which showed a

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