IFR Magazine

JUNE 5 2021 ISSUE 2386 www.ifre.com

Everyone welcome: European Union selects 39
primary dealers for €800bn NGEU programme

AMC makes hay while shares soar: ‘meme
stock’ raises US$818m from equity sales

Booming credit market prompts US Fed to
begin unwinding corporate bond purchases

BONDS EQUITIES PEOPLE & MARKETS PEOPLE & MARKETS

Eni leaves out HSBC and JPM BIS says banks JVs and alliances
Scope 3 emissions land meaty role are underpricing in vogue as rising
KPI in upcoming on pig farmer’s carbon risk in costs hit second-
SLB China IPO syndicated loans tier banks
02 04 08 10

FRONTIER DEBT CAPITAL MARKETS

ROUNDTABLE WEBCAST

DATE

IFR Asia’s Frontier Debt Capital Markets Roundtable will provide JUNE 15 2021
an update on the region’s less-developed capital markets, with
a focus on cross-border financing and investment opportunities. TIME
3:00PM SGT/HKT
Hosted by IFR Asia Editor, Steve Garton, the webcast - titled
Expanding the boundaries of Asia’s emerging markets - will FORMAT

bring together a diverse panel from across the capital markets WEBCAST

spectrum to discuss the next steps for Asia’s frontier markets. FREE TO ATTEND!

Discussion topics will include:

• Managing the risks that come with international funding

• The biggest challenges facing potential first-time issuers

• Why has the take-up of the Debt Service Suspension Initiative (DSSI) and its

successor, the G20 Common Framework, been so low?

• To what extent has China replaced the IMF as the lender of last resort?

• How can frontier markets engage with rating agencies?

• The role of the IMF and other multilateral institutions in supporting capital markets

• How can a sustainability agenda help issuers connect with investors?

• The challenges for corporate issuers from countries where the sovereign has not

sold bonds

• What transparency concerns do investors have about frontier market issuers,

and how can these be overcome?

• Why do similarly rated frontier markets trade at such different yields?

The event is free to attend. To register, visit https://bit.ly/2RiwoCR

Sponsored by:

Upfront „ OPINION INTERNATIONAL FINANCING REVIEW

Capital markets courtship A slice of success

T here’s been a rise in the number of joint ventures, T he Shanghai IPO of CP Group’s China pork business is a
partnerships and outsourcing efforts by second-tier rare chance for international banks to bring home some
investment banks, and that’s only likely to accelerate. bacon in the domestic Chinese market.

Many national and regional banks lack the scale to CP Group, the Thai food and retail giant, has named
compete with the big banks in capital markets, and that gap JP Morgan and HSBC as two of the three lead bookrunners
is widening as the big US institutions outspend everyone else FORûTHEû3HANGHAIûmOATûOFûITSû#HIAû4AIû#HINESEûPORKû
on technology in a way that locks in and extends their business. With JP Morgan applying to take its stake
advantage. in its start-up onshore securities venture to 100% and
HSBC selling assets elsewhere as it doubles down on
JVs, partnerships and outsourcing provide a way to a pivot to Asia, the news will provide a welcome boost
compete for those not sitting at the top table. to both.

And although JVs continue to spring up in advisory, such The gradual liberalisation of China’s capital markets is
as UBS’s recent deal with Banco do Brasil, they are even creating more opportunities for international players, both
MOREûSENSIBLEûINûmOWûPRODUCTSûWHEREûTHEûELECTRONIlCATIONû on the sellside and buyside. Global underwriters, however,
of trading means scale is everything. cannot expect this to turn into a feast.

A partnership makes particular sense if a bank is outside !Nû)0/ûINû#HINAûSTILLûREQUIRESûBUSINESSûOWNERSûTOû
the top 10 in a market, and possibly even for those outside effectively ringfence their onshore Chinese assets, given
THEûTOPûlVE û$EUTSCHEû"ANK SûEXITûFROMûEQUITIESûTRADINGûTWOû China’s strict capital controls. That puts the idea off limits
years ago showed even relatively big players can’t make to many – including many Chinese entrepreneurs who still
some trading businesses work. prefer to go public in the US.

McKinsey estimates that a “typical challenged” FX trading IPOs in China are also cumbersome. The introduction of
unit that generates US$200m of revenues, for example, could registration-based listing reforms on the Shanghai Star
PRODUCEûAûPROlTûOFû53 MûONûTHEûBACKûOFûAûFULLûPARTNERSHIPû board and Shenzhen Chi-Next has helped, but mainland
arrangement, rather than US$30m on a standalone basis. regulators remain heavily involved in the process. Closer
Costs could be cut across sales, trading, market data, scrutiny of technology listings this year has led to
operations, risk and technology to ramp up the bottom line. unexpected delays, pushing some Chinese companies such
as MicroPort MedBot to switch their listing plans to Hong
It’s understandable banks don’t want to give up on potentially +ONG û#0û'ROUPûHASûBEENûCONSIDERINGûAû3HANGHAIûmOATûFORûATû
lucrative capital markets activities, especially if they are a national least three years.
or regional power. But by teaming up with a scale player, a smaller
bank can remove much of the burden and cost of execution, front Global banks do have an important role to play in
and back-end services, and still retain the client relationship. connecting China’s domestic markets with international
participants, and in helping implement international
All this provides an opportunity for the big banks, too. standards onshore. There is certainly room for
They can look to create a “trading as a service” model – improvement in the pricing process, for example.
potentially adding even greater scale, bringing in revenues,
and not adding much in costs. McKinsey says offering that An onshore underwriting licence may also become more
service alongside their own business would help shift the big important if the US follows through on threats to ban
banks’ business model to a more stable one and provide an Chinese companies from its own exchanges.
opportunity to generate revenues from skills in operations,
RISKûANDûlNANCE ûWHICHûHAVEûHISTORICALLYûBEENûCOSTûCENTRES But global investment banks are not ramping up in
China with the goal of unseating Citic Securities from
So expect to see more such deals. Structural challenges in the top of the A-share underwriting league table (at least
capital markets for smaller banks are not going to disappear and not anytime soon). They are doing it so they can offer
that means trading is likely to continue to consolidate with the the full range of services to their biggest clients – both in
BIGGESTûBANKSûINûTHEûNEXTûlVEûTOû ûYEARS û3MALLERûPLAYERSûWOULDû China and beyond.
do better to accept the inevitable and use it to their advantage.

International Financing Review June 5 2021 1

Top news

AMC makes hay 04 HSBC and JPM’s meaty role 04 Fed unwinds corporate bond progamme 06

EU picks 39 to help with NGEU

„ Bonds Supranational ready to embark on next stage of funding for eurozone recovery fund

BY HELENE DURAND, DAVID CHEETHAM network. An impressive 39 by an EU-competent authority. It securities. Once this hurdle is
banks made the list with not a also needs to be a primary dealer for cleared, eligible banks will be
The EUROPEAN UNION moved a step single applicant turned down, another European sovereign, assessed on a combination of
closer to its debut deal under the according to an EU source. supranational or agency issuer. quantitative (70%) and
NextGenerationEU programme Institutions also have to commit to qualitative (30%) characteristics.
when it unveiled the primary The number of banks chosen buy a minimum of 0.05 % of the Quantitative criteria include
dealers that will help it raise up is greater than that for the volume of bonds to be auctioned. participation in auctions, league
to €800bn by the end of 2026 to primary dealer networks of the table position, number of
lNANCEûTHEûBLOC SûRECOVERYûFROMû European Stability Mechanism FIERCE COMPETITION primary dealerships and activity
the Covid-19 pandemic. (37) and Germany (35), and more However, while the bar for entry in the secondary market. The
than double that of France (15), to the primary dealer network is qualitative criteria involve deal
With almost €90bn printed Italy (16) and Spain (19). low, that does not mean those on execution, quality of coverage
under the nearly completed SURE the list automatically qualify to be and a judgement about the
programme, the supranational is “You have two models: either awarded sought-after (and much quality of advice.
now setting its sights on the much you have the German/ESM model more lucrative) mandates to
bigger task of funding NGEU. It is where there are very few ARRANGEûTHEû%5 SûSYNDICATEDûDEALS 4HEûlNALûSTEPûWILLûBEûANû
aiming to issue an estimated constraints and the entry bar [for assessment on the quality of the
€80bn of long-term bonds in 2021 banks to become primary dealers] The competition to be lead recommendation banks provide
ALONE ûWITHûTHEûlRSTûSYNDICATEDû is very low; or you have the manager on syndications and REGARDINGûTHEûSPECIlCû
transaction expected later this primary dealerships like France therefore recipient of the transaction, including views on
month. The issuer sent out a where there are a lot of criteria, ASSOCIATEDûFEESûWILLûBEûlERCE ûWITHû maturity, volume, pricing and
request for proposals on June 4 for lLTERSûANDûOBLIGATIONSûTHATûBANKSû ONLYûFOURûORûlVEûBANKSûEXPECTEDû timing. There will also be a
a €11bn minimum transaction NEEDûTOûFULlL vûSAIDûAûGLOBALûHEADû to be on each transaction. rotation mechanism.
with responses due on June 7, a OFû33!û$#- ûh#LEARLY ûIT SûAûLOTû
much shorter timeline than the cheaper to be a primary dealer in û3OURCESûFAMILIARûWITHûTHEû%5 Sû Bankers expect more details
one typically adopted under the 'ERMANYûTHANûITûISûINû&RANCE v plans say it will follow a three- to emerge during a conference
SURE programme. step approach. call with all the primary dealers
According to the European on Monday. A call with investors
A demonstration of just how #OMMISSION SûWEBSITE ûTOûBEûAû 4HEûlRSTûREQUIRESûAûBANKûTOû is scheduled for Tuesday.
prized an issuer the EU has primary dealer, a bank needs to be a have bought a minimum
become is the long list of banks LEGALûENTITYûWITHûITSûHEADûOFlCEûINû of 2% of issuance at the last “What will be interesting will
that applied to be part of the the EU or in a European Economic three auctions and have a be how many of these 39 banks
BORROWER SûPRIMARYûDEALERû Area country; or a credit institution secondary market share of at are really ... capable [to be] in the
authorised in the EU and supervised least 2% in EU and Euratom debt group being mandated as lead

Eni SLB leaves out Scope 3 KPIs

„ Bonds Oil major to issue landmark sustainability-linked bond but KPIs limited to Scope 1 and 2

BY ED CLARK left out its Scope 3 targets from Several investors pointed to greenhouse gas emissions
the two key performance Scope 3 emissions as a key factor should embrace Scope 1, 2 and 3.
Italian oil major ENI has decided indicators linked to the bond. in analysing the frameworks of
to exclude any Scope 3 carbon the most emissions-intensive However, according to a banker
emissions-related targets from This comes after Eni earned companies. involved in the deal, the new issue
its debut sustainability-linked praise by including Scope 3 – is expected to be linked to two of
bond issue just weeks after it set which, although indirect, “When looking at an oil THEûFOURû+0)SûFEATUREDûINû%NI Sû
a new benchmark for high typically account for the company I would want to framework, excluding Scope 3
emitters by incorporating them MAJORITYûOFûAûCOMPANY Sû#/ û understand how the full Scope 1, emissions. He said their inclusion
in its new framework. emissions – in two of its four 2 and 3 emissions are captured in this deal was impractical given
KPIs in its new sustainability- in their KPIs and the role of that this bond issue matures in
Eni is poised to become the LINKEDûlNANCINGûFRAMEWORKûINû [carbon capture and storage] in ûANDûTHATûTHEûlRSTûOBSERVATIONû
lRSTûOILûCOMPANYûTOûISSUEûANû May. Scope 1 and 2 emissions are THESEûMEASURES vûSAIDû2HYSû date for the Scope 3-related KPIs is
SLB after it held calls last week those that a company is directly Petheram, head of in 2030.
with investors ahead of a responsible for. environmental solutions at
seven-year euro deal in the Jupiter Asset Management. 3OûWHILEûTHEûlRSTû+0)ûONûTHEû
format. The framework is designed to bond is tied to a reduction in
SUPPORTû%NI SûLONG
TERMûPLANûTOû Isobel Edwards, a green bond carbon emissions, its reach is
The deal is expected to go reach net-zero CO2 emissions by analyst at NN IP, agreed that any limited to Scope 1 and 2 targets,
well, even though the company 2050. BOND Sû+0)SûLINKEDûTOûCUTSûINû WHICHûCOVERûTHEûCOMPANY SûOWNû

2 International Financing Review June 5 2021

@ For daily news stories
visit www.ifre.com

Banks underprice carbon risk 08 Rift over Libor replacement 08 JVs in vogue 10

MANAGERS vûSAIDûANOTHERûBANKER û will be topped up by tens of €1.8bn under the Macro- Management. “It is a further
h4AKEûTHEû%3-ûGROUP û) DûSAYûAû billions of short-term EU bills to Financial Assistance programme ENHANCEMENTûOFûlSCALûCOHESIONû
maximum of half of the banks COVERûITSûREMAININGûlNANCINGû by the end of 2021. Once the within the EU, boosting real GDP
are actually in the primary REQUIREMENTS û4HEûlRSTû%5ûBILLSû auctioning system is in place for growth in the years ahead as well
dealer network to lead-manage will be issued in September, NGEU, the borrower intends to as supporting sentiment now. The
syndications. I would expect when the EU auction platform do one syndication and one ongoing establishment of the EU
something very similar in the becomes operational. auction per month. curve enhances the liquidity in this
%5 v name and its high credit rating
RELENTLESS PACE Most market participants are means further provision of Triple
The global head of SSA DCM Following the NGEU debut in CONlDENTûTHATûTHEûSTRONGû assets – at a spread to Germany –
agreed. “With ESM, the quality June, the EU is planning to do demand that has become a FORû%UROPEANûlXED
INCOMEû
of advice is very important; you two more syndicated deals by feature of the SURE deals will INVESTORS v
HAVEûTOûMAKEûSUREûYOUûDON TûGETû the end of July. It also plans to continue for some time yet.
ITûWRONGûINûTHEû2&0 vûHEûSAID û issue €5bn more under the Others, however, strike a
European Financial Stabilisation “We view this as positive for MOREûCAUTIOUSûNOTE ûh9OU VEûGOTû
The meticulous selection Mechanism in July and another %UROPEANûASSETS vûWROTEû0ETERû!LLENû all that supply coming through
process for what will be the most 'OVES ûAûlXED
INCOMEûRESEARCHû when the ECB will be potentially
lucrative aspect of NGEU funding analyst at MFS Investment tapering [its pandemic-related
for banks – and the scarcity of BOND
BUYINGûPROGRAMME= vûSAIDû
spots on each deal – raises the EU OUTSTANDING AMOUNTS OF BENCHMARK BONDS a senior DCM banker.
question of why so many have €bn
applied to be part of the network, 15 h4HEY VEûGOTûAWAYûWITHûITûSOûFARû
especially when the reduction in 14 but you sense they will hit a wall
fees compared with the SURE 13 at some point. They are asking
programme is taken into account. 12 the same investors [who bought
11 352%=ûFORûMOREûLINES û4HISûISN Tû
“For many institutions, I 10 RElNANCING û!TûSOMEûPOINTûDOûYOUû
think it is politically motivated. 9 TESTûTHEûLIMITSûONûTHAT v
If you put yourself in some 8
PEOPLE SûSHOES ûWHENûAûNEWû 7 He acknowledged, though,
primary dealership is being 6 that the EU had expanded its
established, not being in it is a 5 investor base since adopting its
STATEMENTûINûITSELF vûSAIDûTHEû 4 enhanced funding role in the
second banker. “For anyone 3 aftermath of the pandemic. “If it
wanting to be a player in the EU 2 was a pure SSA investor base
capital markets, they will feel 1 THERE SûNOûWAYûTHEYûCOULDûDOû
THEYûNEEDûTOûBEûINûTHEûNETWORK v 0 SIGNIlCANTûSIZE ûSOûTHEY VEûHADû
2021 some success in getting into
As well as the syndications, 2022 GOVVIEûPORTFOLIOS v „
THEû%5 SûFUNDINGûPROGRAMMEû 2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052

„ SURE „ EFSM „ MFA
Note: Repayment of the €4.75bn bond maturing on 4/6/2021 is already ensured with the recent
EFSM lengthening operation (new loan maturity: 4/2036). Each segment represents an individual bond.

Source: European Commission

operations only. The KPI investors are homing in on, Eni still has some ambitious PROFESSORûOFûlNANCEûATû%$(%#û
requires Eni to reduce the Scope especially for oil companies. targets in its framework. The Business School in France.
1 and 2 net carbon footprint of company plans to achieve
its upstream operations to 7.4 Frameworks that include 60GW of installed renewables Some argue that oil
MtCO2eq by the end of 2024. In renewable energy capacity capacity by 2050, a huge companies would make bigger
ûTHISûlGUREûSTOODûATû û should demonstrate a clear increase on the 0.3GW in place STRIDESûTHROUGHûSPECIlCûGREENû
MtCO2eq. transition path so that at the end 2020. projects – and so-called use-of-
renewables become the major proceeds bonds rather than
The second KPI is linked to source of energy generation for %NI SûFRAMEWORKûANDûTARGETSû general corporate purpose KPI-
renewable energy. Eni must the company, said Edwards. go beyond what other major oil linked securities.
have 5GW of installed majors have in place, although
renewable capacity by the end 4HEREûIS ûHOWEVER ûNOûSPECIlCû FORûCRITICSûTHEûFRAMEWORK Sû+0)Sû “Green bonds can be
of 2025. At the end of 2020, it commitment that renewables STILLûDON TûGOûFARûENOUGH compatible with oil sector
had 0.3GW in place. will become the leading source names. Oil sector names should
of energy generation for Eni. “The landmark ruling of a already be building up their
As is standard in the The company did not respond to $UTCHûCOURTûONû3HELL Sû eligible asset pool substantially
investment-grade corporate a request for further comment. emissions reduction target, the if they are going to be carbon
market, Eni is proposing a 4HEûFRAMEWORK SûSTRUCTURINGû successful activist battle at NEUTRALûBYû vûSAIDû%DWARDS
coupon step-up of 25bp if either advisers either declined to %XXON-OBIL SûSHAREHOLDERSû
of the targets is not met, comment or did not respond to meeting, and the report issued Credit Agricole, Goldman Sachs
according to the banker. requests for comment. by IEA on the need to stop now and UniCredit are the
all new oil projects, suggest that sustainability structuring
TRANSITION PATH (OWEVER ûEVENûIFûIT SûUNCLEARû %NI SûTARGETSûMIGHTûENDûUPûBEINGû AGENTSûONû%NI SûDEAL ûASûWELLûASû
A commitment to renewable whether renewables will TOOûLITTLEûTOOûLATE vûSAIDû bookrunners alongside BNP
energy is something that eventually become the main Gianfranco Gianfrate, a Paribas, Bank of America, JP
source of its energy generation, Morgan and Morgan Stanley. „

International Financing Review June 5 2021 3

Top news

AMC makes hay while stock soars

„ Equities Movie theatre chain rushes to raise capital amid social media and options-driven volatility

BY ANTHONY HUGHES squeeze and heavy options a US$230.5m private share sale Still, the company was able to
trading drove the price beyond to hedge fund Mudrick Capital issue fresh equity with ease on
AMC ENTERTAINMENT has fully any sensible reading of the Management earlier in the Thursday in a session that saw
embraced its status as US retail fundamentals. week, though both were struck nearly 600m shares change
INVESTORS ûFAVOURITEûhMEMEû at much lower prices. hands (typically ATM issuance is
STOCKvûANDûSHORTûSQUEEZEûTARGETû /Nû4HURSDAY û!-# SûSALESû limited to less than 10% of daily
by raising US$587.4m from at- agents B Riley Securities and AMC also completed four volume though in this case the
the-market offering to accelerate Citigroup launched and within smaller ATMs last year and 11.55m shares were well below
THEûREPAIRûOFûTHEûCOMPANY Sû hours completed the dribble-out another earlier this year, helping that threshold).
PANDEMIC
BRUISEDûlNANCES sale of 11.5m new shares at an to bolster its liquidity and bring
average price of US$50.85 per down its net debt from about Massive volumes also enabled
4HEûWORLD SûLARGESTûCINEMAû SHARE û)TûWASûTHEûCOMPANY Sû US$5bn in the middle of the #HINA Sû7ANDAû'ROUP ûWHICHû
chain has gone from the brink of biggest equity offering since the Covid lockdowns last year to an took AMC public on the NYSE in
bankruptcy last year as Covid-19 pandemic struck. estimated US$3.5bn. 2013, to last month sell its
emptied its theatres to now remaining stake through
carrying high levels of liquidity “If we are not armed !ûlLINGûALONGSIDEûTHEûLATESTû on-market trades.
thanks to a relentless series of with this tool then you’re ATM warned investors that the
equity offerings that have tying our hands behind stock had experienced and OFFENSIVE
INCREASEDûITSûSHAREûCOUNTûlVEFOLDû our back and you’ll might continue to experience “With our increased liquidity, an
in the past year. make it just that much hEXTREMEûVOLATILITYvûUNRELATEDûTOû increasingly vaccinated
harder for us to land its underlying business and that population and the imminent
Though at odds with any some of these attractive this could result in substantial release of blockbuster new
conventional investing logic, opportunities” losses for investors. movie titles, it is time for AMC to
!-# SûSHAREûPRICEûHASûBEENû GOûONûTHEûOFFENSEûAGAIN vû!-#û
rising even faster, surging The ATM proceeds add to AMC said last month its CEO Adam Aron said in a
ûTHISûYEARûBYû4HURSDAY Sû US$658.4m already raised this ATTENDANCEûlGURESûINûTHEûlRSTû statement.
close. quarter from an earlier ATM and quarter of 2021 were still down
nearly 90% versus the same AMC also said late on Thursday
The stock nearly doubled in period last year, while it also it was seeking shareholder
7EDNESDAY SûSESSIONûALONEûASûAû burned US$120m of cash a approval to increase its
social media-driven short month during the period.

Global banks win meaty China IPO

„ Equities HSBC and JP Morgan secure leading roles in jumbo Shanghai IPO for CP Group unit

BY FIONA LAU, KAREN TIAN Arawana last October, the run several convertible bonds equity offerings for international
largest IPO on the Shenzhen and private placements but has and Chinese clients as it now has
A Rmb15bn (US$2.35bn) start-up board, was arranged by not yet led an IPO. a full licence, said a person
Shanghai IPO of the animal feed sponsor China Securities and familiar with the situation. As
and pig breeding unit of joint bookrunner CICC even JP Morgan Securities (China) more international investors
4HAILAND SûCHAROEN POKPHAND though the agricultural and food opened for business in March participate in the A-share market,
GROUP has given a boost to foreign processing company is owned by 2020. The US parent has already the bank sees an opportunity to
BANKS ûAMBITIONSûINû#HINA Sû Singaporean agribusiness raised its stake in the fully work with companies – especially
onshore equity capital markets. Wilmar International. licensed venture to 71% and has those with an international
recently applied to increase it to background – that would like to
CHIA TAI INVESTMENT, wholly 4HEû#HIAû4AIûmOATûISûAû 100%. bring overseas investors and
owned by family-backed agro- landmark onshore mandate for sophisticated institutions that
industrial conglomerate CP both HSBC and JP Morgan, and Both HSBC and JP Morgan can understand their real value,
Group, has picked JP Morgan and comes at a time when global have a long relationship with said a second person.
HSBC Qianhai as bookrunners for banks are ramping up their the CP Group. In 2013, HSBC
THEûPLANNEDûmOATûALONGSIDEû INVESTMENTûINû#HINA SûDOMESTICû lNANCEDû#0û!LL Sû53 BNû HSBC is also keen to expand
sponsor Citic Securities. capital markets. purchase of Thai wholesaler its role in the onshore IPO
Siam Makro. Last year, JP market and build on the CP
The combination is rare for an HSBC Qianhai, the securities -ORGANûACTEDûASûlNANCIALû mandate.
A-share IPO of such size, which joint venture between HSBC and adviser and committed
is normally led entirely by top- Qianhai Financial Holdings, lNANCINGûTOû#0û'ROUP û#0û!LLû h(3"#ûISûDElNITELYûEXCITEDû
tier Chinese investment banks opened its doors in December and CP Foods on its US$10.6bn about this opportunity. The bank
such as Citic, CICC and China ûAFTERû(3"#ûBECAMEûTHEûlRSTû ACQUISITIONûOFû4ESCO Sû4HAILANDû is keen to kick off its IPO
Securities. foreign bank to receive approval and Malaysia businesses. FRANCHISEûWITHûSUCHûAûBIGûDEAL vû
for a majority-owned joint said a person with knowledge of
For instance, the Rmb13.9bn venture on the mainland. It has JP Morgan is eager to take a the matter.
ChiNext IPO of Yihai Kerry leading position in domestic

4 International Financing Review June 5 2021

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authorised shares by 25m after Shareholders will vote on the Music IPO finds
its heavy stock issuance in the proposal at the end of next believers
past year lifted its share count to month after AMC earlier
more than 500m from 100m postponed its annual meeting „ Equities Believe rewarded for dialogue with investors
before the pandemic, leaving it scheduled for early May because
29/12/20UNABLEûTOûISSUEûANYûSIGNIlCANTû it failed to get enough support BY LUCY RAITANO investors are more comfortable
29/01/21number of additional shares. for its plans for a larger increase with a smaller capital raising
29/02/21 and to “provide additional time French digital music company now followed by another one
29/03/21AMC also said it had no plansfor its millions of current BELIEVE has found backers for its later, rather than leaving the
29/04/21to split its stock (which wouldindividual shareholders to haveõ MûALL
PRIMARYû0ARISûmOAT ûcompany with extra cash sitting
29/05/21not raise any capital) andtheir voices heard and morehaving invested three weeks inon its balance sheet for several
conceded “considerable trading time to cast ballots on pre-marketing to institutions years.
INûDERIVATIVESûONûTHEûCOMPANY Sû important shareholder and cutting target proceeds
stock, including both put and MATTERSv from €500m. “They have listened to
CALLûOPTIONSvûMAYûHAVEû the market and I think
increased the volatility of its Aron said in a YouTube Countering concerns about sized it right”
share price. interview on Thursday: “If we THEûDEAL SûSMALLERûSIZEûANDûSLOWû
are not armed with this tool [the progress, Fonds Strategique de Its tech platform is highly
AMC’S SURGING SHARES ability to issue new stock] then Participations came on board scalable, so while cash will be
US$ YOU REûTYINGûOURûHANDSûBEHINDû with a €60m cornerstone order. poured into marketing for
70 OURûBACKûANDûYOU LLûMAKEûITûJUSTû A secondary tranche was a international expansion, the
that much harder for us to land possibility when pre-marketing company could quickly turn
60 some of these attractive began, but shareholders have PROlTABLEûINûTHEûNEARûFUTURE ûTHEû
OPPORTUNITIESûTHATûCOULDûBENElTû opted to hold on to their stakes SECONDûBANKERûSAID û4HEûlRSTû
50 USûALL v for now. BANKERûSAIDûPROlTABILITYûREMAINSû
a long way off and the company
40 In a whirlwind week of Bankers involved pointed to lacks any listed peers, so the IPO
news from the company, it competition among IPOs would be likely to rely on some
30 also said it would cater to its making investors more cautious true believers.
now huge base of at least on valuation and quality.
20 3.2 million retail shareholders The range represents 2.2–2.4
with special offers, starting with h7E VEûGOTûAROUNDû û)0/Sû times sales for 2022, on
10 free (large) popcorn if they visit LIVEûRIGHTûNOWûANDûSOMEûWON Tû consensus. The implied market
one of the cinemas in the make it. This is a great asset and cap is €1.87bn–€2.11bn, and the
0 summer. „ REALLYûDIFFERENTIATED vûSAIDûAû FREE
mOATûWILLûBEûAROUNDû ûONû
banker involved in the Believe the base deal. There is a 10%
Source: Refinitiv hitting an all-time high in deal. “They have listened to the greenshoe.
February. Shares in Jiangxi market and I think sized it
FALLING PRICES Zhengbang Technology, the RIGHT v Citigroup, JP Morgan and Societe
#0û'ROUPûESTABLISHEDûTHEûlRSTû COUNTRY SûSECOND
BIGGESTû Generale are joint global
foreign-funded feed company in breeder, have fallen 24% REASSURING coordinators, and joint
#HINAûBACKûINû û#HIAû4AI Sû this year while shares in New Books opened on Tuesday with a bookrunners with BNP Paribas,
main businesses include animal Hope Liuhe, another major price range of €19.50–€22.50 Goldman Sachs, HSBC and UBS.
feed production, pig breeding feedstock producer, have and up to 15.4m shares offered Rothschild is advising.
and pig slaughter products. dropped 32%. in the base deal. The following
day French car parts distributor Existing shareholders include
#HINA SûHOGûHERDûWASû Chia Tai Investment said in PARTS HOLDING EUROPE cancelled its Technology Crossover Ventures
devastated by African swine THEû)0/ûlLINGSûTHATûITûWASû €450m IPO, having failed to with a 49.6% stake, Ventech with
fever in 2018 but has recovered seeking a listing to expand the ATTRACTûSUFlCIENTûDEMAND ûANDûTHEûCOMPANY Sû
since. The average price of live fundraising channels for its pig founder and CEO Denis
pigs surged from Rmb10– breeding and feed production While the two companies Ladegaillerie, who owns 15%.
Rmb15/kg in 2018 to over business beyond its own have little in common they were Xange Venture holds 8.1% of
Rmb40/kg in 2019 before falling resources and bank loans. both seeking to list on Euronext Believe.
back to Rmb30/kg in 2020. 0ARIS ûSOûBOOKSûONû"ELIEVE Sû)0/û
At the end of 2020, Chia Tai being covered by Friday Believe and major
!SûAûRESULT û#HIAû4AI SûNETû had 90 feed factories, 97 pig morning was reassuring. shareholders will be locked up
PROlTûALMOSTûQUADRUPLEDûTOû breeding farms, and nearly for 180 days. The founder will be
Rmb7.8bn in 2020 on revenue 1,800 large commercial pig- Believe signs independent locked up for 365 days.
up 43% to Rmb45.7bn. fattening farms in 29 Chinese artists and labels and develops
provinces. It plans to use the them, using its digital platform A retail offering in France will
However, slower demand, proceeds from the IPO for pig to distribute and promote their close on June 8, and the
increased imports and panic breeding in 17 Chinese cities MUSIC û4HEûCOMPANY Sû4UNE#OREû international offering will close
selling by farmers after fresh (Rmb10.8bn) and working brand provides automated on June 9 when pricing will be
outbreaks of African swine fever capital (Rmb4.2bn). services for artists and labels. set. Trading will begin the
have dragged wholesale pork following day. „
prices down more than 40% The company plans to offer up Proceeds will go towards
since mid-January. to 567.1m shares, or 12% of the "ELIEVE SûGROWTHûPLANûTHATûRUNSû
enlarged capital, in the IPO. „ to 2025, less €90m to repay debt.
As of Thursday, shares in A second banker said that
-UYUANû&OODS û#HINA SûBIGGESTû
pig breeder, had lost 29% since

International Financing Review June 5 2021 5

Top news

Market strength prompts Fed
to begin corporate bond unwind

„ Bonds Crisis contained: selling off of assets triggers renewed tapering talk

BY WILLIAM HOFFMAN The Secondary Market plenty of liquidity for every IG MOVE ûh4HISûISûSIGNIlCANTûINûTHATû
Corporate Credit Facility and NAME vûONEûSYNDICATEûBANKERû it essentially opens the door to
A little over a year after the Primary Market Corporate said. “I view it as a positive in THEûDISCUSSIONûONûTAPERING vû
US Federal Reserve began Credit Facility were massively EVERYûWAY v Duffy said.
buying corporate bonds and successful from a messaging
ETFs in the secondary market standpoint as they gave issuers Spreads are pinned at historic 3PECIlCALLY ûITûRAISESûTWOû
to help stabilise debt markets ANDûINVESTORSûCONlDENCEûTHATû tights, the economy is growing questions. BMO analysts in a
hit by the Covid-19 pandemic, there would be access to capital at 6% or higher and the labour Thursday report asked whether
the central bank has decided it through a buyer of last resort. market is continuing to get THEû&ED SûMOVEûMEANSûTHATû
will begin selling off those better as each day goes by, said future interventions in credit
assets. But in terms of actual Peter Duffy, CIO of Credit at markets are less likely – and
purchases, the programme did Penn Capital. whether it alters the timing,
The Fed was expected to hold very little as it bought shares in PACEûORûCOMPOSITIONûOFûTHEû&ED Sû
the bonds until maturity, but just 16 ETFs and 1,204 bonds “Basically, we are in a de tapering plans?
announced on Wednesday it will from 531 issuers comprising just minimis default environment
begin selling off its US$13.7bn 0.2% of the broad investment- and to that you have to say “In our view, the answer to
corporate bond holdings grade index. Indeed, the @MISSIONûACCOMPLISHED ûTOûTHEû both of the above questions is
gradually, starting on June 7 secondary market facility was &EDûBECAUSEûTHAT SûEXACTLYûWHATû NO vûTHEû"-/ûANALYSTSûSAIDûINûTHEû
with its ETF portfolio. The shut down on December 31, THEYûWEREûTRYINGûTOûDO vû$UFFYû report. “The Fed has already
holdings include some US$5.2bn while the primary facility never said. taken the step of explicitly
of individual investment-grade bought a single bond. messaging that the decision to
bonds issued by companies such TWO QUESTIONS sell corporate bonds is not a
as AT&T, Comcast and Verizon as “I think this announcement 4HATûDOESN TûMEANûTHEûMOVEûISû signal of monetary policy, and
well as U$8.6bn of high-grade sends a strong message that the INSIGNIlCANT ûHOWEVER û)TSû went out of its way in the
and high-yield ETFs. Fed is no longer needed as a importance lies in what it announcement itself to say that
buyer of last resort, and there is SIGNALSûABOUTûTHEû&ED SûNEXTû the SMCCF ‘proved vital in

Credit spreads maintain tight trading trend

„ Bonds The US investment-grade credit market is on a hot streak, but will it last?

BY WILLIAM HOFFMAN By contrast, spreads this year is US$81bn ahead of the pace set grade corporate bond index,
have been in the 90bp–95bp in 2017 when bondholders set a which is now 51.8% Triple B
Conditions in the US credit range for six weeks running. In record for supply in a non- credits with an effective
markets are superb and have addition, 10-year Treasury rates pandemic affected year. duration of 8.2 years, according
remained that way for longer have remained remarkably to ICE BofA data.
than for any period in the last steady at the 1.5%–1.7% range TIME TO WORRY?
decade. Not surprisingly, for the last three months. The For investors, however, this "-/ SûDIRECTORûOFûlXED
INCOMEû
therefore, some market last time spreads were this environment is less clear. strategy Daniel Krieter argues that
watchers are bracing tight the 10-year Treasury rate spreads have room to tighten to
themselves for a reversion was more than 100bp wider at Former periods of extremely around 50bp over Treasuries or
to the mean. 2.84%. tight spreads have preceded lower, but that that scenario is
recessions and were times when highly unlikely. Spreads should
One of the clearest indicators h4HEûMARKETûISûHOTûASûEVER vû companies engaged in risky late- remain rangebound through June
OFûTHEûCORPORATEûBONDûMARKET Sû SAIDû4OMû'RAFF ûHEADûOFûlXEDû cycle behaviour. but could experience some
strength is that average ICE BofA INCOMEûATûINVESTMENTûlRMû volatility at the tail end of
investment-grade credit spreads Brown Advisory. “We are not Now, though, the risks are less summer, he said.
AREûATûPOST
lNANCIALûCRISISûLOWSû seeing spreads ripping tighter, obvious. Investors are grappling
of 90bp over Treasuries. but they are so tight and I think with an array of competing “At some point, either the
we are at a place where pressures such as the economic recovery is likely going to
The last time spreads were CONlDENCEûISûHIGHûANDû recovery, a hot job market, PROVEûEITHERûTOOûHOTû INmATIONû
this low was in February 2018 room for spread tightening is INmATIONûRISKSûANDûSPECULATIONû fears are fanned once again) or
and they only stayed that MILD vû over the US Federal Reserve too cold (GDP/employment
way for two days and then considering tapering its support GAINSûFAILûTOûMEETûEXPECTATIONS vû
remained in a range of 90bp– This environment has proven for the economy. Krieter wrote in a report.
95bp for just four weeks before irresistible for corporate bond “Either environment will
breaking 10bp wider later that issuers, with US$734bn of US Further complicating the likely result in a bout of credit
month and 59bp wider on the dollar investment-grade bond picture, average spreads have spread weakness, at least
year. supply in the year to-date, which tightened despite greater ratings TEMPORARILY vû
and duration risk in the high-

6 International Financing Review June 5 2021

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visit www.ifre.com

restoring market functioning corporate bond sales in June Lenders profit from
LASTûYEAR û)TûSTANDSûTOûREASONûTHATû probably opens the door for a take-private deals
IT SûSOMETHINGûTHEû&EDûWILLûBEû bigger discussion on tapering at
WILLINGûTOûDOûAGAINûINûTHEûFUTURE v the Fed meeting in Jackson Hole „ Loans Buyout of UDG backed by £2.3bn financing
in August, Duffy said.
SMALL STEP BY ALASDAIR REILLY, CLAIRE RUCKIN “So while these companies
However, not everyone sees it Jim Paulsen, chief investment might be unloved by the public
that way in a market that is strategist at the Leuthold Group, Private equity sponsors are markets these are companies
highly sensitive and reactive to agreed, saying: “The thing they targeting UK-listed companies that are fertile hunting grounds
any move the Fed makes. want to do is start with one that continue to carry a for private equity. They are not
small segment of the market: valuation discount relative to necessarily high growth or super
“This is a symptom of the stop buying non-government their global peers, prompting a exciting companies but
post-coronavirus reality of assets. You might not want to number of public-to-private relatively steady. That makes
getting back to normal much call it tapering, but it would be acquisitions that have resulted THEMûLEVERAGABLE vûTHEûSYNDICATEû
earlier than expected, THEûlRSTûSTEPûTOWARDûNORMALITY û in around US$20bn of loan head said.
suggesting a much faster rate- )TûISûTHEûlRSTûACTIONABLEûSTEP û lNANCINGûSOûFARûTHISûYEAR
hiking cycle than currently ALBEITûAûSMALLûONE vû FRESH MEAT
PRICEDûINûTHEûMARKET vûSAIDû(ANSû As economies emerge from the P2P activity has been mainly
Mikkelsen, a credit strategist at Another driver is the simple worst of the Covid-19 pandemic, concentrated in the UK, where the
Bank of America. “Sales will be a fact that the facility is managed sponsors are eager to put money valuation differential has been
drop in the bucket . . . but as it externally, which comes with to work in P2P transactions such more pronounced on the back of
took very little Fed buying to fees to maintain the assets, the ASû#LAYTON û$UBILIERû û2ICE Sû the pandemic, uncertainty over
stabilise the market last year, it "-/ûANALYSTSûNOTED ûh4HEû&ED Sû £2.6bn buyout of London-listed Brexit and a more predictable and
should take very little selling to decision to sell corporate bonds is UDG HEALTHCARE, which is backed mEXIBLEûACQUISITIONûPROCESS
convince investors the likely simply an acknowledgment by a £2.06bn-equivalent term loan
TIGHTENINGûCYCLEûISûUNDERûWAY v that the costs of the SMCCF now and a US$350m revolving credit h&INANCIALûSPONSORSûAREûlNDINGû
OUTWEIGHûTHEûBENElTS vûTHEYûSAID û facility. attractive valuations in UK PLC,
-UCHûMOREûSIGNIlCANTûTHANû “With spreads across the credit where there is a lot more
THEûENDûOFûTHEû&ED SûINTERVENTIONû spectrum currently at or very Private equity sponsors are experience in how to execute
in the corporate bond market is NEARûHISTORICALûLOWS ûIT SûDIFlCULTû identifying lower growth these kinds of deals than there is
the US$100bn a month it is to argue that the US$13.7bn in companies that have not yet INûOTHERû%UROPEANûCOUNTRIES vûAû
buying in Treasuries and FOMC holdings of corporate debt recovered from the Covid-19 crisis, second syndicate head said.
mortgages, but the fact that the was necessary any longer to keep taking advantage of their cheaper
Fed has announced the BORROWINGûCOSTSûCONTAINED v „ valuations to snap them up with The P2P process is more
the aim of making cost savings, mEXIBLEûANDûLESSûCOMPLEXûINûTHEû
FANNING THE FLAMES Additionally, fallen angel debt fostering expansion or reshaping UK than in other jurisdictions
Non-farm payroll numbers are is on pace for a record low with the businesses over the long term. with the scheme of arrangement
being released on June 4 (after just US$5.3bn of debt process providing greater
IFR goes to press). Those downgraded to high-yield Investors in listed companies, certainty of obtaining 100%
numbers could show THROUGHûTHEûlRSTûlVEûMONTHSûOFû on the other hand, are more control of a target company.
extraordinary job gains and fan the year for a fallen angel rate of focused on acquiring higher
THEûmAMESûOFûINmATIONûWORRIES û 0.3% compared with an average growth assets and are willing to “In some cases, equity
but the majority of market of 6.1% over the last 20-years, pay up for them. valuations are a lot less than they
participants are on board with according to BMO. were pre-Covid. Things are
THEû&ED SûLINEûTHATûANYûINmATIONû “The public market has gone CHEAPERûTOûBUY vûAûSENIORûBANKERû
will be temporary. Those factors have led to a from focusing on defensive said. “In addition, after a relatively
US$258.6bn year-to-date stocks that can ride out the storm quiet 2020, private equity has
h4HEREûISûAûLOTûOFûINmATIONARYû increase in the IG corporate TOûTHOSEûTHATûAREûGOINGûTOûBENElTû built up a lot of cash, which they
pressure but if it is transitory, bond index, with US$203.7bn or the most when the tide of AREûNOWûLOOKINGûTOûUSE v
which is a more consensus view 78% of that attributed to growth spending gets unleashed and so
now than it was a month ago, in Triple B debt, Krieter noted. the equity markets have Aside from the buyout of UDG
THENûMAYBEûYOUûWON TûHAVEûTHEû That is despite the fact that suddenly become much more Healthcare, other P2P deals
big backup in rates that was Triple B rated debt makes up forward-looking, factoring in a INCLUDEû++2 Sûa BNûACQUISITIONû
EXPECTED vûSAIDû4ERENCEû7HEAT û just 46.6% of total US dollar IG much higher premium on future of UK infrastructure investor
senior portfolio manager on the primary supply – the lowest in PROlTSûTHANûRELIABILITYûOFûEXISTINGû JOHN LAING, which is backed by
investment-grade corporate desk lVEûYEARS û PROlTS vûAûSYNDICATEûHEADûSAID £1.1bn of interim term loans;
at PGIM. “Spreads have tightened 3IRISû#APITAL Sûa MûBUYOUTûOFû
in quite a bit and we think it can “If participants continue to “This leaves plenty of 5+ûlNANCIALûTECHNOLOGYû
GOûAûBITûTIGHTERûFROMûHERE v VIEWûINmATIONûASûTRANSITORY ûWEû opportunities for private equity company EQUINITI, supported by a
see considerable narrowing to come in and buy at a £495m one-year bridge loan and
Wheat highlights that Triple pressure for credit spreads in VALUATIONûTHATûWORKSûFORûTHEM v a £100m super-senior RCF; and
B spreads have room to THEûSUMMERûMONTHS vû+RIETERû 4HEû#ARLYLEû'ROUP Sûa Mû
compress as those credits said. “On the other hand, if This value differential acquisition of pharmaceuticals
continue their deleveraging CURRENTûINmATIONARYûFEARSû between higher growth and company VECTURA ûlNANCEDûBYûAû
strategies and more Single A continue and ultimately result other assets has encouraged £300m term loan B and a £60m
credits take on debt-funded INûAûREVITALISEDûREmATIONûTRADE û sponsors to make moves on multi-currency revolving credit
M&A and get downgraded to the higher credit spreads are nearly listed companies as well as facility. „
Triple B sphere. CERTAIN v „ buying out non-core, lower
growth units of companies.

International Financing Review June 5 2021 7

Top news

Banks are underpricing carbon risk
in syndicated loans

„ People & Markets Small premium for CO2 emissions will not cover cost of carbon taxes, says BIS report

BY TESSA WALSH less, but that that premium is lNANCIALûSTABILITYûFORûBANKSû carbon tax) could knock one
relatively small and would not exposed to borrowers with high percentage point off their
Banks are massively cover the hit to company emissions. revenue margins. Around 10% of
underestimating the carbon revenues if a carbon tax is companies have ultra-high
risk in syndicated loans as they introduced. The analysis calculates that emissions intensity, and the
only consider direct Scope 1 CO2 banks have priced in a carbon same level of carbon pricing
emissions rather than looking “It’s dangerous to risk premium of 3bp–4bp since could account for at least 10% of
ACROSSûCOMPANIES ûWHOLEûCARBONû draw conclusions as 2016, rising to 7bp for high- their total revenues (possibly
footprint, according to research investment-grade emitting companies (those with much more), which is unlikely
from the Bank for International pricing in Europe now a carbon intensity of more than to be covered by the current 7bp
Settlements. is almost opaque” 1,000 tonnes of CO2 per US$1m premium.
of revenue).
Scope 1 and 2 emissions cover h"ANKS ûVIEWûONûCARBONûRISKûISû 4HEûREPORTûALSOûlNDSûTHATû
assets that companies own or STILLûRELATIVELYûNARROW vûTHEû “The price of carbon risk in banks that describe themselves
control directly plus their own report said. the syndicated loan market since as green do not yet appear to be
energy consumption and are a 2016 is low relative to the pricing risk differently from
FRACTIONûOFûEACHûCOMPANY Sû 4HEûREPORTûDOESN TûSAYûSOû MATERIALûRISKS vûTHEûREPORTûSAID other banks, although there is
totals. Most emissions come directly but implies that a move some evidence that they are
from indirect Scope 3 emissions to price-in broader CO2 PRESSING ISSUE screening out companies with
ARISINGûFROMûCOMPANIES ûVALUEû emissions to more accurately The most pressing risk is the high carbon exposure.
chains and how customers use REmECTûREALITYûCOULDûFURTHERû potential introduction of carbon
their products. affect the availability and cost of TAXES û4HEûREPORTûlNDSûTHATû The research measures carbon
credit – and even create issues of carbon emissions are material, intensity – carbon emissions
4HEûRESEARCHûlNDSûTHATûBANKSû or even severe, for around 30% of relative to revenue as a proxy for
have been including a “carbon companies with high carbon carbon risk – and has combined
PREMIUMvûINûLOANSûSINCEûTHEû intensity, and a carbon price of annual emissions carbon data
2015 Paris Agreement to limit US$100 per tonne of CO2 (as a with syndicated loan data from
global warming to 2 degrees or result of the introduction of a 2005–2018.

Rift emerges over Libor replacement

„ Loans Retailer Duluth opts for BSBY base rate, throwing SOFR plans awry

BY MICHELLE SIERRA, RHYS ADAMS included SOFR language Duluth has shown there is will have learned how to deal
necessary for the transition to scope for more alternative base with it, and it will not be as
The adoption of a Bloomberg- occur and an adjustment rate rates. DAUNTINGûASûITûMIGHTûBEûNOW v
developed index as an between SOFR and Libor. The
alternative base rate in a new Fed has determined no US Libor- $ULUTH SûPRICINGûWASû h)T SûAûFUNDAMENTALûCHANGE û
loan for US retailer DULUTH has based loans should be issued leveraged-based, ranging BUTûIT SûAûCHANGEûWEûHAVEû
marked a seismic shift in a years- after December 31 2021. between BSBY plus 125bp and PREPAREDûFOR v
long plan to move away from BSBY plus 200bp, and 15bp–
Libor, highlighting that the “I think we’re going 30bp undrawn. Opening Duluth and Bank of America
SECUREDûOVERNIGHTûlNANCINGûRATEû to have a multi-rate pricing was BSBY plus did not provide comment by the
recommended by regulators is environment for a 175bp/25bp. time of publication. The ARRC
not the only option open to while” did not immediately return a
lenders and borrowers. h)T SûUNAVOIDABLEûTHATûWE LLûBEû request for comment.
However, the Bloomberg in a multi-rate world until June
The Alternative Reference Short Term Bank Yield Index 2023 because there will be, at a MULTI-RATE WORLD?
Rates Committee, a group of (BSBY) on a Bank of America-led minimum, Libor on legacy loans The prospect of the multi-rate
private-market participants 53 MûlVE
YEARûLOANûFORû and at least one replacement world became more concrete in
convened by the US Federal RATEûONûNEWûLOANS vûAûLOANû November 2020 when regulators
Reserve and the New York Fed to market banker said. “After June said the cessation of US dollar
help ensure a successful 2023, we might move into a Libor originations would be at
transition to a new reference world that has one rate, or we the end of 2021, but pushed the
rate, have recommended a move might not. But people are deadline to transition existing
to SOFR. Since 2017, the group lGURINGûOUTûHOWûTOûEXISTûINûAû Libor portfolios to an alternative
has created a transition plan that multi-rate world because they reference rate to the middle of
have to now. By June 2023, they 2023.

8 International Financing Review June 5 2021

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The data set covers US$1.4trn credit provision, collateral investment-grade loan pricing is they want to bank those
of loans from 567 companies in policies or asset purchases. usually not disclosed. industries and sectors, rather
ûCOUNTRIESûTHATûlNANCEûNEWû than analysing individual
investments or projects and “Regulators and supervisors They also said that COMPANIES ûFOOTPRINTSûDIRECTLY û
EXCLUDESûLOANSûFORûRElNANCINGû OFûlNANCIALûINSTITUTIONSûSHOULDû investment-grade loan pricing in part due to a lack of
and buyouts. It analyses all-in design incentives to ensure DOESûNOTûDIRECTLYûREmECTûCREDITûASû information.
pricing, including fees, on loans regulated participants fully banks effectively use
with maturities of more than a internalise the environmental relationship lending as a loss- “I don’t see anyone
YEAR ûEXCLUDINGûlNANCIALû IMPACTûOFûTHEIRûACTIVITIES vûTHEû leader to win more lucrative going to credit and
institutions. report said. business. asking what the
carbon footprint of a
The report calls on regulators OPAQUE PRICING h) MûAûBITûNERVOUSûOFûHOWûTHISû credit is”
to redouble their efforts to Loan bankers IFR talked to ISûEXTRAPOLATED ûIT SûDANGEROUSûTOû
ensure institutions are prepared about the report questioned draw conclusions as investment- That conversation is just
for the higher levels of carbon whether the pricing data used grade pricing in Europe now is beginning, but is expected to
pricing implied by the Paris could be skewed by a relatively ALMOSTûOPAQUE û) MûJUSTûAûBITû accelerate as banks and
emission reduction goals, and high proportion of emerging CAUTIOUS vûAûSENIORûLOANûBANKERû companies are forced to disclose
central banks to take the risks markets borrowers (which have said. more information, which will
into account in their own higher loan pricing), make banks pay greater
monetary operations, such as particularly as lower European Bankers point to a general attention to environmental
tightening of bank capital rules considerations.
DISTRIBUTION OF CARBON INTENSITY - SINCEûTHEûlNANCIALûCRISISûOFû
BY TOTAL LOAN AMOUNTS 2007–08 and questioned h4ODAY û)ûDON TûSEEûANYONEû
whether the post-2015 effect going to credit and asking
US$ billions could be attributed more to the what the carbon footprint of a
oil price crash of 2014–16 rather CREDITûIS û7EûDON TûKNOWûAû
700 than the Paris Agreement, COMPANY Sû#/ ûFOOTPRINTûANDû
although the BIS research says it whether to charge 5bp more –
600 has ruled that out. “The main YET vûTHEûSENIORûLOANûBANKERû
results did not change when said. „
500 CONTROLLINGûFORûOILûPRICES vûTHEû
report said.
400
Most banks are currently
300 assessing prospective lending
clients from a more general
200 sustainability point of view, and
are asking internally whether
100

0 >1,000
0-1 >1-10 >10-100 >100-250 >250-500 >500-1,000
Borrower carbon intensity (CO2 tonnes/US$ million revenue)

Source: S&P Trucost, Dealogic, report author’s calculations

The infrastructure, h!ûMULTI
RATEûWORLDûWON Tû Bloomberg launched BSBY in The Bloomberg index has the
conventions, and CREATEûCHAOSûASûLONGûASûYOU REû January to meet market demand support of Bank of America and
documentation for BSBY or READYûFORûIT vûTHEûLOANûMARKETû for a credit-sensitive index to other US regional banks,
another credit-sensitive rates BANKERûSAID ûh)T SûIMPORTANTûTHATû supplement SOFR. The index is bankers said.
such as the American interbank there are conventions and ALSOûAVAILABLEûFORûlVEûTENORS
offered rate, already exist as an documentation for each type of But if it walks like Libor and
extension of what has evolved rate, that lenders have systems “The choice BSBY gives in talks like Libor, is it too close for
for Libor. in place that understand which term funding needs and its comfort?
reference rate a loan is in and closer resemblance to Libor are
That is not to say the growing that CLOs have tools to manage COMPELLINGûFEATURES vûSAIDûTHEû “BSBY seems to track Libor
interest in BSBY has not spurred basis. If you have those, you are senior banker. quite closely, which is some
questions among those in the just getting a total return from comfort, but also raises the
market. the amalgamation of different “BSBY seems to track question of is it too close? Libor
TYPESûOFûLOANS v Libor quite closely, is, after all, a rate that regulators
h)ûTHINKûWE REûGOINGûTOûHAVEûAû which is some comfort, DECIDEDûTOûDOûAWAYûWITH vûSAIDû
multi-rate environment for a IS SOFR OVER? but also raises the THEûlRSTûSENIORûBANKER
while. That would give a choice The new rate has brought question of is it too
TOûPEOPLE ûWHICHûISûBENElCIAL û attention to perceived SOFR close?” If nothing else, with the loan
but sometimes that can be too DElCIENCIES ûINûPARTICULARûTHEûLACKû market racing against the clock
much of a good thing too in of a term option and the fact that A second senior banker to include alternative rate
terms of optionality and trying 3/&2ûDOESûNOTûREmECTûBANKS ûCOSTû agreed: “A borrower says, ‘If the language in new contracts, the
to forecast borrowing costs on of funds. Borrowers additionally MARKETûCAN TûOFFERûMEûAûTERMû BSBY priced deals have pushed
the one hand and then tracking perceive that given the current 3/&2ûRATE û) MûGOINGûTOûLOOKûATû the topic forward, and lenders
rates and what that might mean low-interest-rate environment, other options that have term that had set their eyes on SOFR
FORûFUNDINGûCOSTSûONûTHEûOTHER vû the agreed 11bp adjustment COMPONENTSûTOûTHEM v are now looking at the new
said a senior banker. between one-month Libor and alternative rate more closely.
3/&2ûISûINSUFlCIENTûANDûINCREASESû
Nonetheless, with proper their borrowing costs. “We were all ready for SOFR,
systems in place, a unitary and now all of a sudden BSBY is
approach to pricing loans might here, so people are starting to look
be a thing of the past. ATûITûHERE vûAûTHIRDûBANKERûSAID û
h4HEY REûGIVINGûITûAûCHANCE v „

International Financing Review June 5 2021 9

Top news

JVs and alliances in vogue as rising
costs hit second-tier banks

„ People & Markets Partnerships spring up as banks struggle to match the scale of top five

BY CHRISTOPHER SPINK, STEVE SLATER .EWû:EALAND SûJARDEN. UBS, McKinsey estimated that a CREDIT AGRICOLE, UNICREDIT,
meanwhile, has struck a pair of hTYPICALûCHALLENGEDû&8ûBUSINESSvû RABOBANK and MACQUARIE, to
Mid-sized banks unable to match deals in the Americas, including that generates US$200m of provide equities trading.
the scale of their bulge-bracket an investment banking JV with revenues, for example, could
brethren are increasingly striking state-controlled BANCO DO BRASIL. PRODUCEûAûPROlTûOFû53 MûONû BNP PARIBAS has gone the other
joint ventures, partnerships or the back of a full partnership way and taken over its equities
looking to outsource some capital Some of those partnerships arrangement, rather than JV partner of 17 years EXANE, to
markets activities as they struggle are based on banks sharing US$30m on a standalone basis. bring equities trading fully in-
to match the spending on advisory expertise with local Costs could be cut across sales, house, but the rationale is the
technology needed to keep pace. knowledge, and keeping costs trading, market data, same – achieving scale. And
down in exchange for providing operations, risk and technology FURTHERûAlELD û".00ûHASûAû
The trend is accelerating as access to a bigger balance sheet. to ramp up the bottom line. partnership to source the bulk of
megabanks invest heavily in IT, ITSû!SIA
0ACIlCûEQUITYûRESEARCHû
widening the gap with second- But the equities trading “THEY STILL BELIEVE...” FROMûRESEARCHûlRMûMORNINGSTAR.
TIERûlRMSûUNDERûPRESSUREûTOûKEEPû alliances could be more typical The biggest challenge is
a lid on costs. That has seen many of the trend – and provide the potentially for banks just ADVISORY TOO
banks, including big national and best opportunities. Moon said it OUTSIDEûTHEûTOPûlVEûBANKS ûWHOû Partnerships in M&A and
regional players, look for WASûINûmOWûPRODUCTSûSUCHûASû still have aspirations to advisory are less about scale –
alternative ways to stay relevant. equities, foreign exchange, rates compete. but are still about cutting costs
and swaps trading where scale and trying to get reach and local
h#APITALûMARKETSûlRMSûAREû matters most, and where “They still believe they are knowledge.
increasingly recognising that ANYONEûOUTSIDEûTHEûTOPûlVEûINû full-service investment banks,
scale is a critical differentiator an area can struggle. they still compete for many of 3OUTHû!FRICA SûINVESTEC said it
ANDûlRMSûTHATûAREûSUB
SCALEûAREû the same clients, and it would needed to offer clients access to
GOINGûTOûHAVEûDIFlCULTYûTOû He estimated the top 20 BEûDIFlCULTûIFûTHEYûWEREûWHITE
geographies and products
compete, so they are looking to banks spend between 10% and LABELLINGûmOWûFROMûONEûOFûTHEIRû where it was not present and
ADDûSCALEûINûONEûWAYûORûANOTHER vû 20% of revenues in capital COMPETITORS vû-OONûSAID recently invested in European
said Jared Moon, a senior partner markets on technology. That M&A partner CAPITALMIND. It
for McKinsey in London. means tech spending by, for DEUTSCHE BANK SûEXITûFROMûMOSTû already had an advisory
instance, JP Morgan or Goldman equities trading in 2019 showed partnership with REGIONS-
h)T SûABSOLUTELYûACCELERATED û Sachs can dwarf spending at that even banks with heft in BLACKARCH in North America.
7E VEûPROBABLYûHADû ûTIMESûTHEû rivals trying to narrow the gap. mOWûTRADINGûCANûSTRUGGLE
number of conversations about “If we were to set up on our
this over the last couple of years Smaller banks are trying Its move may have helped own it would require immense
THANûWEûDIDûPREVIOUSLY vûHEûTOLDû different options, including the domestic rival Commerzbank opt investment to go in big and
)&2 ûh)T SûAûRECOGNITIONûTHATûTHEû white-label execution of deals, to team up with Oddo for equities IMMEDIATELY vûSAIDû#HARLESû
economics of the industry where a large bank acts as a trading, while keeping its ability Barlow, head of cross-border
overall are more challenging and liquidity provider in FX, equities, to advise and underwrite ECM CORPORATEûlNANCEûATû)NVESTEC
therefore the need is becoming and US Treasuries. It makes sense transactions for corporate clients.
more acute, particularly for the in an area like emerging market Bigger banks are also keen to
NATIONALûlRMS v currency pairs, where it would “I would expect more avoid mistakes of the past by
otherwise be too costly for a small cooperation in the future. I expanding their geographic
Europe is the hotbed for deals, bank to participate. There have think this will increase in the footprint without adding massive
where fragmented markets add also been alliances for back-end sector, not just on the equities costs – maybe why Nomura and
costs and many banks are SERVICES ûWHEREûAûLARGERûlRMûORû SIDE vûSAIDû-ICHAELû+OTZBAUER û Barclays have struck deals for
UNPROlTABLE û)NûRECENTûMONTHS û technology provider provides head of corporate clients at investment banking services and
COMMERZBANK has paired up with back-end platforms and services Commerzbank. collaboration in Australia.
equities trading specialist ODDO to slash costs. Many of the deals
BHF, adding to similar deals the are not publicly announced. Kotzbauer said tough UBS, meanwhile, has shrugged
latter had with NATIXIS and ABN decisions were needed for banks off scars from a past partnership
AMRO, while SANTANDER agreed a Moon said a better option was to recognise what their unique in Brazil and has high hopes for a
partnership with UK mid-market the concept of trading as a selling points were. “A USP is JV with Banco do Brasil to create
investment bank PEEL HUNT, which service, whereby larger banks only one when others see it in UBS BB Investment Bank. The
has a strong equities trading and in-source the execution, you. We are the market leader business covers M&A and
capital markets presence but a operational, and technology INû'ERMANûCORPORATEûBANKING vû advisory, debt and equity capital
small balance sheet. parts of trading, while smaller he told IFR. markets, brokerage and research,
banks preserve the relationship and is targeting Brazil, Argentina,
But the trend is global. In with the client. It substantially For Oddo, the deal adds to Chile, Peru, Paraguay and
Australia, BARCLAYS has teamed reduces the cost for smaller partnerships it already had, and Uruguay.
up with start-up BARRENJOEY and banks, and gives the bigger is similar to the way KEPLER
NOMURA has struck a deal with bank even greater scale. CHEUVREUX has also teamed up Additional reporting by Thomas
with several banks, including Blott „

10 International Financing Review June 5 2021

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&Markets

12Banks are 15Chuck Adams 17More bankers
ramping up is leaving are returning
wealth management Goldman Sachs to join to offices in New York,
businesses in Hong Citigroup to head a and Deutsche Bank
Kong and the rest of “supergroup” covering staff have been told
Asia, attracted by the healthcare, consumer they should be back
tide of new millionaires and retail businesses by early September

„ FRONT STORY REGULATION

Action urged on Libor switch

Regulators extend deadline for US dollar benchmark

Regulators have urged issuers of rate- new products beyond the end of this The FSB said it backed the International
linked products to cease using new year. Swaps and Derivatives Association’s
instruments referencing Libor now that initiative to set out fallback options for
clear timelines have been set out for h)NûLIGHTûOFûTHEûSIGNIlCANTûUSEûOFû53û when Libor ceased being used so that key
when that rate will stop being calculated. dollar Libor globally, including in more markets such as interest rate swaps could
Most will stop at the end of this year but than 100 emerging markets and across a continue to function smoothly. This
some US dollar Libors will continue until WIDEûRANGEûOFûPRODUCTSûANDûlNANCINGû fallback protocol, to make use of
the end of June 2023. purposes, IOSCO is cognisant of the overnight risk-free reference rates such as
importance of reinforcing the transition Sonia or SOFR, was published by ISDA in
“Clear timelines for the cessation of all message and timeline on a global scale,” it January, to help the transfer of legacy
,IBORûPANELSûHAVEûNOWûBEENûCONlRMEDû said. derivative contracts.
and all new use of these benchmarks and
others derived from them should cease as Claude Brown, partner at Reed Smith, Brown said the situation could become
soon as practicable,” said the Financial said the announcements showed an critical for markets if institutions did not
Stability Board in a statement. urgency to get issuers and users to switch start to address their US dollar positions.
from the products they were familiar
The International Organisation of with. “If too few institutions make the
Securities Commissions said the switch, we’ll be left with a US dollar risk-
transition away from Libor remained “a “In dollar markets, there has been a free rate lacking the necessary liquidity,
SIGNIlCANTûREGULATORYûPRIORITYvûANDûTHATû pronounced reluctance to switch over to and that will in turn discourage
participants should “take steps to stop SOFR, the FSB’s preferred rate, with credit institutions from adopting SOFR and
issuance of new products linked to Libor” sensitive and term rates being widely hoping for the emergence (of) a
and deal with legacy contracts. preferred. What we’re hearing is the patchwork of credit sensitive rates,” he
regulators becoming increasingly strident said.
With the deadline for most rates as their exhortations . . . continue to fall
looming it means rates based on a six- on deaf ears.” “The regulators are facing something of
month tenor in affected currencies should a chicken and egg dilemma, but in this
not be used as a reference rate beyond the “EGG ON FACES?” case everyone will be left with egg on
end of this month. Brown said unless the FSB took the their face if the problem isn’t solved, and
unprecedented step of prescribing the use fast.”
IOSCO said issuers should also avoid of SOFR, which he thought unlikely, this
using US dollar Libors too, even though was “as close to a shot across the bow as He said London-based institutions in
they will keep being calculated for we’re likely to see”. particular would face a dilemma, since
another two years. they would have to cope with two
The FSB said it would be setting out different deadlines. “There is a risk of
h#ONTINUEDûRELIANCEûOFûGLOBALûlNANCIALû expectations to members to ensure something of a fragmentation in the
markets on Libor benchmarks, REGULATEDûlRMSûINûTHEIRûJURISDICTIONSû global banking markets,” he said.
particularly the most widely used US SUPPORTEDûITSûOBJECTIVE
dollar Libor settings, poses risks to “The loan markets, which are often
lNANCIALûSTABILITY ûMARKETûINTEGRITYûANDû "YûTHEûENDûOFûTHISûMONTH ûlRMSûSHOULDû multi-currency by nature, look set for
investor protection,” said IOSCO. have assessed their stock of legacy SIGNIlCANTûDIFlCULTYûTRYINGûTOûNAVIGATEûTHEû
contracts and worked out which could be existence of at least two different rates,
The body said the extension of the US amended by the end of this year and one risk-free and the other’s liquidity
dollar Libors should be seen as a backstop established formal plans to do so where uncertain. The knot is only tightening
for “some limited exceptional use to counterparties have to agree with such around a rate that markets are already
support an orderly transition” and that, PROPOSALS ûSUCHûASûlNDINGûALTERNATIVEû struggling to unpick.”
as US banking supervisors had already rates. Christopher Spink
said, should not encourage issuance of

International Financing Review June 5 2021 11

h&IRMSûTHATûAREûSUB
SCALEûAREûGOINGûTOûHAVEûDIFlCULTYûTOûCOMPETE û
so they are looking to add scale in one way or another”

MCKINSEY SENIOR PARTNER JARED MOON, P10

Banks target Asian wealth gold mine

The number of banks looking to grow their with only around 15%–20% of the region’s assets between US$1m and US$30m) and mass
market share in wealth management in Asia is wealth under formal management, according AFmUENTû THOSEûWITHûASSETSûBETWEENû53 û
INCREASING ûDESPITEûPASTûEFFORTSûBYûGLOBALûlRMSûTOû to McKinsey & Company. and US$1m), those sources said.
increase their share of wallet in the region being
followed soon afterwards by retrenchment. “For a lot of banks, the decision to expand Several international banks see HNW clients
into wealth management is a straightforward as the sweet spot, given that the AUM for mass
Last month, CITIGROUP became the latest bank ONEûJUSTûGIVENûTHEûHUGEûAMOUNTûOFûWEALTHû AFmUENTûCLIENTSûISûOFTENûNOTûHIGHûENOUGHûTOû
to detail its expansion plans, outlining its goal to creation that’s taking place in this part of the JUSTIFYûTHEûCOSTSûINVOLVEDûWITHûCOVERINGûTHEMû
hire 1,000 wealth staff in Hong Kong, including world,” said Peter Stein, managing director at comprehensively, while UHNW clients tend to
more than 550 new relationship managers and Hong Kong-based industry association the HAVEûTHEIRûOWNûFAMILYûOFlCESûANDûAREûTHEREFOREû
PRIVATEûBANKERSûOVERûTHEûNEXTûlVEûYEARS Private Wealth Management Association. more adept at driving down margins.

That forms part of its plans to add more “Furthermore, it’s an area where banks can Citi’s decision to align its private bank
than 2,300 in wealth management across PUTûCAPITALûTOûWORKûMOREûEFlCIENTLYûTHAN ûLET Sû and consumer wealth business under the
the region including 1,100 RMs and private SAY ûlXEDûINCOMEûORûEVENûEQUITIESûBECAUSEûTHEû umbrella of Citi Global Wealth was in part
bankers. Citi wants to grow its assets under regulations around capital are generally less aimed at strengthening its offering to HNW
management in Asia by US$150bn by 2025, onerous and it’s also a good source of fee clients, a source familiar with the bank said.
from US$310bn currently. income in a low interest rate environment.”
UBS is the undisputed industry leader,
For Citi and other global banks such as HSBC, JP QUESTION OF SCALE followed by Credit Suisse and Citigroup in
MORGAN and STANDARD CHARTERED that have been 4HEûMAJORITYûOFûWEALTHûINû!SIAûISûSTILLû second and third, in either order, according
scaling up their wealth management offering, CONCENTRATEDûINûTHEûMAJORûOFFSHOREûlNANCIALû to industry sources.
the opportunities are potentially enormous. centres of Hong Kong and Singapore,
according to industry sources. Asian Private Banker, a trade publication,
Asia continues to mint new millionaires and RANKEDû5"3ûlRSTûINû ûTHEûLASTûYEARûFORûWHICHû
billionaires at such a rate that it is due to Growth is fairly evenly split across the data are available, with US$450bn in AUM,
overtake Western Europe as the second different client segments – ultra-high-net-worth followed by Credit Suisse with US$227bn. It
wealthiest region in the world by next year, (generally those with investable assets of estimated that the top 20 private banks’
according to Boston Consulting Group. Yet the US$30m or above), high-net-worth (those with COMBINEDû!5-ûJUMPEDûMOREûTHANû ûINûTHEû
investment industry remains underpenetrated, year to nearly US$2trn, underscoring the

IB costs barely change despite decade of promised cuts

Costs across investment banks have remained same as the US$286bn made in 2010. However, The average return across the nine biggest
virtually unchanged over the last decade, despite revenues had steadily declined in the nine years investment banks has rarely exceeded 10%
chief executives’ pledges to focus on their TOû ûBYûANûAVERAGEûOFû ûANNUALLY ûITûSAID in any year in the past decade, Accenture
expenses as revenues have remained stagnant, estimated. It said that even in 2020, the
according to research from consultant Accenture. “We do not believe this is some secular AVERAGEû2O%ûFORûTHEûNINEûBANKSûWASûONLYûJUSTû
reversion. It is more a response to the ABOVEû ûANDûEXCLUDINGûTHEûlVEûMAJORû53û
The report said that while 2020 was a strong pandemic and does not fundamentally alter banks it was barely 4%.
year for banks, the industry’s cost/income ratio the overall direction of travel for the
of 61% was only one percentage point lower industry,” said the report. “Group returns on equity have almost
than the 62% level it stood at in 2010. CONSISTENTLYûFAILEDûTOûBEATûlRMS ûCOSTûOFû
Accenture said US banks had handled equity capital, which we assume to be 10%,”
Revenues in 2020 across 16 leading their costs more effectively than European said Accenture.
investment banks were US$285bn, roughly the or Asia counterparts.

Who’s moving where…

JP MORGAN has been with JP Morgan SANTANDER has Hennebry, global head
appointed Jared Kaye, for almost 20 years. hired Abraham Douek of DCM. Douek joined
Laurent Nevi and John Nevi was previously in from Citigroup to head Citi in 2010 and was a
Purcell as global co- charge of FIG debt capital markets director in FIG DCM.
heads of its financial international, covering FIG and SSA
institutions group. All EMEA, Asia and Latin businesses, sources
three are long-term JP America. said. It is the latest in a
Morgan executives. string of hires made by
Kaye and Purcell were the bank across DCM
previously co-heads of and the investment
the North America FIG bank. Douek will be
group. Kaye is based in based in Madrid and
New York and has report to Conor

12 International Financing Review June 5 2021

People

&Markets

extent to which more private wealth is falling JP Morgan leads China charge
under formal management and also the
increasing concentration in the industry JP MORGAN is poised to increase its *0û-ORGANûWASûTHEûlRSTûFOREIGNûBANKûTOû
among the top players. SHAREHOLDINGûINûITSû#HINESEûSECURITIESûlRMû raise its stake above 51% having bought out
to 100% after submitting an application to the 20% stake of its erstwhile partner
“It’s true that you do have a lot of niche the regulators to take full ownership of the Shanghai Waigaoqiao Free Trade Zone
players that are able to operate successfully in entity, a spokesman for the bank said. Group in October.
this part of the world, but like a lot of other
businesses, it’s increasingly becoming a The US bank has struck agreements A week earlier, MORGAN STANLEY’s partner,
question of scale,” said Andrew Hardie, partner with its partners on the acquisition, Huaxin Securities, said it had agreed to sell a
at Boston Consulting Group. “Whereas Bloomberg reported, citing a TV interview ûSTAKEûTOûTHEû7ALLû3TREETûBANKûFORû
previously you may have needed around with the bank’s China chief executive 2MB Mû 53 M û4HEûACQUISITIONû
53 BNûINû!5-ûTOûBEûPROlTABLE ûTHATûlGUREûISû Mark Leung. will increase Morgan Stanley’s stake in the
now probably closer to US$20bn–$25bn.” *6ûTOû ûASSUMINGûITûGOESûAHEAD
JP Morgan joins Goldman Sachs
RISING COMPETITION in having tabled an application The race to increase ownership comes
The need for scale has led to a number of banks to acquire 100% of its Chinese despite a backdrop of increasing friction
exiting wealth management in Asia in the past. securities business between the world’s two superpowers. On
Thursday, President Joe Biden signed an
Barclays sold its wealth management *0û-ORGANûOWNSû ûOFûITSûSECURITIESûJOINTû executive order that bans US entities from
business in Hong Kong and Singapore to venture, JP Morgan Securities. The other investing in dozens of Chinese companies
/#"#û"ANKûlVEûYEARSûAGO û shareholders are Shenzhen Mailande Equity with alleged ties to defence or surveillance
)NVESTMENTû-ANAGEMENTû û8INJIANGû technology sectors, putting paid to the
DBS Bank has also beefed up its wealth :HONGWEIû%QUITYû)NVESTMENTû û notion that his presidency would see a de-
offering at the expense of retreating global Shanghai Binhe Investment Management escalation of tension between the two
banks, notably Societe Generale and ANZ Bank. #ENTREû ûANDû"EIJINGû,ANGXINû countries.
Other banks that have retreated include ABN )NVESTMENTû
AMRO, which sold its private banking business Despite the friction, most market
in Hong Kong, Singapore and Dubai to LGT, and *0û-ORGANûJOINSû'OLDMANû3ACHSûINûHAVINGû observers do not expect China to backslide
RBS, which sold its international private banking tabled an application to acquire 100% of its over its promises to liberalise foreign access
business to UBP as part of a wider global retreat. Chinese securities business. Goldman said in to its securities industry, in part due to its
Thomas Blott December it had struck an agreement to buy desire to attract more foreign capital and
OUTûITSûLONG
TIMEûPARTNERû"EIJINGû'AOû(UAû also its aim to improve the standing of its
Adam Markson, head of capital markets at Securities and was seeking regulatory DOMESTICûSECURITIESûlRMSûBYûBOOSTINGû
!CCENTUREû5+ûANDû)RELAND ûSAIDûlRMSûSHOULDû approval. competition.
consider achieving cost cuts by making
more of their operations digital. RACE IS ON Despite much fanfare, the JVs have
International banks have been racing to overwhelmingly disappointed to date as
h.OWûISûTHEûTIMEûFORûlRMSûTOûMOVEû increase their shareholdings in their JVs previous rules left Chinese partners in
aggressively towards digitising their after Chinese regulators allowed foreign CHARGEûOFûMAJORûDECISIONSûASûWELLûAS ûINûSOMEû
operations, from customer interaction BANKSûTOûACQUIREûMAJORITYûSTAKESûINû instances, holding key licences. Goldman
POINTSûALLûTHEûWAYûTOûTHEûBACKûOFlCE vûHEû SECURITIESûlRMSûFORûTHEûlRSTûTIMEûINû!PRILû Sachs Gao Hua Securities was the most
said. 2018 and scrapped ownership caps PROlTABLEû3INO
FOREIGNûSECURITIESû*6ûINû û
altogether two years later. the last year for which data are available,
The report also said reorganising property RECORDINGûAûNETûPROlTûOFûJUSTû2MB M
needs as a result of the pandemic could cut
costs for banks as well. JP Morgan Securities and Morgan Stanley
Christopher Spink Huaxin Securities recorded losses of
2MB MûANDû2MB MûRESPECTIVELY
Thomas Blott

Please contact us if you have information about job moves: [email protected]

Frank Engels has joined was previously head of BNP PARIBAS has the French bank’s
asset manager DWS asset allocation hired Myriam Zapata SSA business. She
GROUP as head of strategy at Barclays to work in its joined Credit Agricole
fixed income from Capital and an sovereign, from Credit Suisse in
October 1. Engels will economist at the supranational and 2014.
join from Union European Central Bank agency debt capital
Investment, which he and the International markets business, a 13
joined in 2012 and has Monetary Fund. Joern source said. She will
led the asset Wasmund previously work in Jamie
manager’s portfolio head of fixed income, Stirling’s team.
management and will become regional Zapata joined from
multi-asset division investment head for Credit Agricole,
since January 2018. He EMEA. where she worked in

International Financing Review June 5 2021

Bellwether predicting that Belgium will win the tournament after
beating Italy in extra time. That’s a remarkably precise
Bellwether: n. From the practice of placing a bell around the prediction, suggesting they know their stuff.

neck of a castrated ram so that it might lead its flock But wait. The model also predicts that Germany will
lose to England at Wembley during the round of 16. “It is
CITIGROUP HAS FORMED a “super group”. Bellwether got DIFlCULTûTOûASSESSûHOWûMUCHûFAITHûONEûSHOULDûHAVEûINûTHESEû
excited when it saw the announcement, hoping this would predictions,” the duo said.
be the banking equivalent of Frankie Valli and the Four
Seasons – think Jane Fraser & the Four CEOs. Most England fans would agree. Even Schnittker and
Stehn admitted that, as Germans, they “checked this
Mike Corbat would be on drums, Vikram Pandit on lead prediction a number of times”.
guitar and Chuck “still dancing” Prince could shake maracas
like Bez from the Happy Mondays. As a US bank, Goldman should receive some recognition for
not referring to “soccer” at all during the 11-page report. There
With Covid restrictions easing, maybe they could even go out are, however, several references to the tournament as the
on the road and recreate the glory years when “Citi never slept”. “European Cup”, which was a club knock-out tournament that
WASûREPLACEDûINû ûBYûTHEûMODERN
DAYû#HAMPIONSû,EAGUE û
Alas, the super group in question is a 150-strong bunch of Still, at least they didn’t mention the European super league.
sector bankers specialising in global healthcare, consumer
and wellness. This clean-cut set-up, which is more ESG than BACK IN THE distant past when face-to-face meetings
ELO, is led by Chuck Adams, who presumably is the Frankie COULDûTAKEûPLACE ûITûWOULDN TûBEûUNCOMMONûFORûlNANCIALû
Valli of the venture. JOURNALISTSûTOûINFORMALLYûGRADEûBANKSûONûTHEûQUALITYûOFû
biscuits provided at meetings.
Citigroup has a thing about mashing up industry groups.
It recently formed a “super sector” team bringing together It turns out this isn’t such a trivial idea, with the CEO
natural resources and energy transition. of US cinema chain AMC pledging free tubs of popcorn to
retail investors after the meme stock craze turbo-charged its
The idea is that the bank will capture more business shares by 127%.
from emerging industry trends, but if it’s anything like its
MUSIC
INDUSTRYûEQUIVALENT û!DAMSûCOULDûHAVEûAûJOBûONûHISû With AMC’s cinemas having been closed due to the
HANDS û!û ûARTICLEûBYû4IMEû-AGAZINEûDESCRIBEDûMUSICû pandemic, perhaps it’s the best investors can hope for if
“super groups” as an “amalgam formed by the talented dividends are off the table.
malcontents of other bands . . . fuelled by egos”, before
warning that “break-ups are inevitable”. Maybe these cheap gimmicks could catch on with
certain troubled names in the banking sector. Credit Suisse
If you see laptops being launched from the windows of could consider handing out bars of Toblerone chocolate
Citi’s HQ, you’ll know not all’s well in the wellness team. as a “sweetener” to angry shareholders and disgruntled
employees after the collapse of Archegos led to the
WITH EURO 2020ûlNALLYûSETûTOûSTARTûAFTERûBEINGûDELAYEDûBYûTHEû EVAPORATIONûOFûGROUPûPROlTSûANDûSTAFFûBONUSûPOOLûALIKE „
pandemic, Goldman Sachs’ team of analysts has crunched
the numbers and come up with a winner. The bank’s own
front two of Christian Schnittker and Sven Jari Stehn are

Who’s moving where…

„ John Young has previously head of „ Three NATWEST borrowers group in „ CREDIT SUISSE has on July 1. Young, based
been appointed head credit risk and treasury MARKETS roles have Paris by Max appointed Warren in New York, is
of commodities for the at Citadel Investments been moved to the Fitzpatrick, who has Young and Elodie Blanc currently operating
Americas at and also worked at Continent to be closer joined from Societe as co-chief operating chief for capital
CITIGROUP. He will America Electric Power to their client base, Generale and will officers for the markets and advisory
retain his current role and Koch Industries. including two new begin in July. NatWest investment bank to and head of strategy
as global head of hires, a source said. has also hired Matteo succeed Amy Hudson, for the investment
business development Kerr Finlayson, head of Segnalini from SG for who is taking a newly bank. Blanc, who will
for commodities. frequent borrowers the financial created role as head of remain in London, is
Young joined Citi in group syndicate, is institutions syndicate business development, deputy head of capital
2006 in Europe, before moving to Paris this desk, based in Paris. Bloomberg reported. markets and advisory
moving to Houston in summer. He will be Young and Blanc will for Europe, Bloomberg
2012. He was joined in the frequent begin their new roles said.

14 International Financing Review June 5 2021

People

&Markets

HSBC hires McLane from Citi in global banking and markets, effectively
its investment bank. It is also moving
HSBC has hired Will McLane from Citigroup as REPORTûDIRECTLYûTOûCHIEFûlNANCIALûOFlCERû several top executives, including GBM
head of global corporate development, Ewen Stevenson. co-head Greg Guyett, to Hong Kong from
according to a source. London as part of its pivot to the region.
In April, HSBC CEO Noel Quinn said the
McLane is due to start towards the end of bank was looking at bolt-on acquisitions -C,ANEûJOINEDû#ITIGROUPûINû ûFROMû
the summer and will focus on acquisition to expand the business in Asia. The bank Morgan Stanley and was most recently its
targets and developing the bank’s has made growing its footprint in Asia a !SIA
0ACIlCûVICE
CHAIRMANûOFûTECHNOLOGYûANDû
technology partnerships as part of his core part of its strategy including VICE
CHAIRMANûOFûTHEûGLOBALûlNANCIALû
broader focus on bank strategy. He will investing roughly US$800m in the region institutions group.
Thomas Blott

Citi hires Adams to lead healthcare/consumer

CITIGROUP has hired Chuck Adams from continue to lead them and report to Adams. was most recently head of West Coast
Goldman Sachs to head a new group Citi said those sectors are converging, linked healthcare and head of investment banking
covering healthcare, consumer and retail to technology and consumer trends. INûITSû,OSû!NGELESûOFlCE û(EûPREVIOUSLYû
businesses across its investment bank. worked at Morgan Stanley for 10 years,
“Healthcare, consumer and wellness will focused on healthcare investment banking.
!DAMSûWILLûJOINûINû$ECEMBER ûBASEDûINû be one of our largest groups in BCMA and
New York. He will be vice-chairman in its represents one of the greatest opportunities Goldman is not expected to replace him –
banking, capital markets and advisory for growth,” Tyler Dickson and Manolo it is one of the leading banks in healthcare
business and head of a wide group spanning Falco, heads of BCMA, said in a memo to and has 10 other partners in the business in
healthcare, consumer and wellness, which staff, seen by IFR. the US and Europe, including three who
covers traditional healthcare, consumer and were made partner last year.
retail sectors The heads of those sectors will Adams had been at Goldman for 16 years Steve Slater
and a partner for more than 10 years, and

CS rejigs EMEA ECM to Nick Koemtzopoulos, head of EMEA ECM
origination.
CREDIT SUISSE has appointed Antonio Limones as director with more than a decade alongside
head of equity syndicate for EMEA. Gruffat on syndicate. Credit Suisse has endured a tough start to
the year, losing the heads of its investment
He succeeds Stephane Gruffat, who left Limones will report to Felipe Portillo, who bank, Brian Chin, and group risk, Lara
LASTûMONTHûTOûJOINû$EUTSCHEû"ANKûASûHEADûOFû has been appointed head of EMEA risk Warner, after a series of mishaps, which saw
equity syndicate for EMEA and co-head of within the equity team. Portillo is already it take a SFr4.4bn (US$4.7bn) charge after
EMEA ECM. Gruffat had been head of equity head of Americas risk for equity too and has incurring losses from prime broking client
syndicate at Credit Suisse for nine years. been based in New York since 2012. He will Archegos Capital Management.
move to Madrid and report to Anthony
Limones has been with Credit Suisse since Kontoleon, global head of ECM syndicate. That had implications for its ECM team,
2003 and worked in ECM for 16 years in both since it was forced to sell down positions built
origination and syndicate. He moved to Madrid Paolo Celesia, current head of ECM for Italy, up by Archegos. The debacle also prompted the
INû ûTOûHEADûSYNDICATEûRESPONSIBILITIESûINûTHEû has been appointed head of Southern bank to raise SFr1.7bn of capital.
European Union. He has also been head of ECM Europe ECM, taking on responsibility for
origination for Iberia. Limones was seen as a Iberia. He has been with the group since Chief executive Thomas Gottstein, deemed
natural successor by his peers as a managing 2007. He will be based in Madrid and report the losses unacceptable and said new chairman
Antonio Horta-Osorio would lead a review.
Christopher Spink

Please contact us if you have information about job moves: [email protected]

„ CITIGROUP has set „ CREDIT AGRICOLE „ Armando Rubio- „ MOELIS & CO has „ CREDIT AGRICOLE „ Tim Pinchen, a vice-
up an investment has appointed Antoine Alvarez is leaving Credit hired Melissa has appointed Ravi president in
banking advisory service Rose as head of Suisse, where he Mariaschin to head Nichani as head of BARCLAYS‘ SSA DCM
for its wealth sustainable banking headed FIG for EMEA, distribution of public acquisition finance and team, has left the
management clients, for Asia-Pacific, based to join JEFFERIES, equity and private advisory for Asia- bank, sources said.
led by Sandy Kaul, in Hong Kong. Rose sources told Reuters. structured equity Pacific, as well as head Pinchen joined the UK
global head of business joined CA’s corporate They said Rubio-Alvarez products, a newly of leveraged and bank in 2012 in Sydney
advisory services in Citi’s social responsibility will take on European created position. telecoms finance and moved to UK in
markets business. Kaul department in 2010 responsibilities at Mariaschin joined from group for Asia, 2014 as a corporate
will keep her current and moved to the Jefferies in addition to Barclays, where she replacing Jean-Yves analyst in UK DCM.
markets role. sustainable banking leading coverage of spent 14 years in its Korenian who is
team in 2014. some of its biggest equity syndicate group relocating to Paris in a
financial clients. global role.

International Financing Review June 5 2021 15

“We have a strong conviction that digital assets are here to stay and will
be adopted by the institutional market as a highly relevant asset class”

ALEX MANSON, HEAD OF SC VENTURES, P18

Capital markets week ahead:
NextGenerationEU, Eni, Vonovia

TALKIN’ BOUT NEXTGENERATION The THATûTYPICALLYûACCOUNTûFORûTHEûMAJORITYûOFûAû tranche bond issue that looks set to span
European Union is set to launch its debut company’s CO2 output. long three, six, long eight, 12 and 20-year
deal under the NextGenerationEU maturities. The euro transaction will take
programme this week. The issuer sent out a JOB DONE The New York Fed will begin to out a bridge facility only two weeks after it
request for proposals on Friday for an €11bn unwind its holdings of corporate bonds on was put in place to back the €18bn
minimum transaction with responses due Monday, selling some of its corporate ETFs. As acquisition of Deutsche Wohnen. The
on Monday, a much shorter timeframe than part of its Secondary Market Corporate Credit €22.4bn bridge is the biggest European loan
typically adopted under the SURE Facility emergency lending package the Fed SINCEû"AYER Sû53 BNûBRIDGEûLOANûINû
programme. A deal of €11bn–€15bn is holds US$5.2bn of investment-grade corporate /CTOBERû û"ONDSûWILLûRElNANCEûõ BNn
expected. bonds and US$8.6bn of high-grade and high- €8bn of the bridge, with another €8bn from
yield ETFs. Sales of corporate bonds will begin a rights issue and the remainder from
4HEûMOVEûFOLLOWSûTHEû%5 SûSELECTIONûOFû û this summer, with the Fed to disclose timing disposals.
banks for its primary dealer network last before they begin. The Fed had been expected
week. All applications were accepted so this to hold bonds until maturity. SMCCF and the I’M A BELIEVER When pre-marketing for
is not an exclusive club and membership primary market programme were massively Believe’s IPO extended to three weeks,
DOESûNOTûMEANûQUALIlCATIONûTOûLEADûAû SUCCESSFULûINûGIVINGûTHEûMARKETûCONlDENCE û expectations were that the deal would fade
syndicated deal. Bankers expect more details but did very little. The primary programme away. Yet it looks set to complete its €300m
on the process of awarding mandates on a didn’t buy a single bond and the SMCCF IPO on Wednesday, succeeding in listing on
call with primary dealers on Monday. A call wrapped up at the end of 2020 holding bonds Euronext Paris where Parts Holding Europe
with investors is lined up for Tuesday. FROMû ûISSUERS ûJUSTû ûOFûTHEûINVESTMENT
failed last Wednesday. The music promoter
grade index. cut its fundraising ambition from €500m
RECORD BREAKER Also expected early this but also attracted a €60m cornerstone.
week is the second sustainable bond from BOSSING IT Tencent-backed Chinese online
Agence Francaise de Developpement that JOBûLISTINGSûCOMPANYû+ANZHUNûISûSETûTOûlLEû HOT FOR MARQETA Card-issuing platform
was mandated on Friday. The agency’s TERMSûFORûANû53 Mn Mû.ASDAQû)0/û Marqeta heads a wave of ultra-high-growth
funding team held calls with investors on even as other Chinese issuers put their IPOs technology companies expected to go public
Friday, smoothing the way for the long on hold for a better market window. The IPO on US exchanges in the coming weeks as
SEVEN
YEARûBENCHMARK û)TSûlRSTûSUSTAINABLEû is expected to value the company at ECM bankers seek to reignite the new issue
bond last October raised €2bn and was 53 BNn BNûANDûTHEûDEALûCOULDûRAISEûUPûTOû MARKETûFOLLOWINGûRECENTûMISlRES û4HEû
nearly three times subscribed, a record level US$1bn post-greenshoe. payments company is set to price its up to
of subscription and attracted a record US$1.1bn Nasdaq IPO on Tuesday night.
number of accounts at over 150. The agency The company’s core product, Boss Zhipin, Bankers expect the deal to be hot so are
is committed to issue at least one SDG bond is a mobile app that allows direct chats using a hybrid auction instead of a
per year, the head of funding said in BETWEENûJOBûSEEKERSûANDûENTERPRISEûCLIENTS û traditional bookbuild, as a result
October. 2EVENUEûHITû2MB Mû 53 M ûFORûTHEû pricing could easily come above the wide
lRSTûTHREEûMONTHSûOFû ûUPû ûOVERûTHEû US$20–$24 per share range.
OUT OF SCOPE )TALIANûOILûMAJORû%NIûISûPOISEDû same period of 2020. Its net loss was
TOûBECOMEûTHEûlRSTûOILûCOMPANYûTOûISSUEûAû Rmb176m, compared with a loss of LAST WEEK IN NUMBERS
sustainability-linked bond this week, 2MB MûINû1 û
following calls with investors last week US$587.4m – Amount cinema chain
ahead of a seven-year euro deal. Eni has SUCKING UP DEMAND Thursday is the AMC Entertainment raised through an
decided to exclude any Scope 3 carbon deadline for commitments to the €850m at-the-market programme on Thursday
emissions-related targets from the debut seven-year term loan B backing China’s 39 – The EU’s primary dealer network is
JUSTûWEEKSûAFTERûITûSETûAûPRECEDENTûFORûHIGHû Hillhouse Capital’s €3.7bn acquisition of larger than that of the ESM (37) and
emitters by incorporating them in its new Philips’ domestic appliance division, a maker Germany (35)
framework. Scope 3 are indirect emissions of vacuum cleaners and coffee machines. The Rmb15bn – Target proceeds for the
TLB is guided to pay 350bp over Euribor, with Shanghai IPO of Chia Tai Investment
Aû ûmOORûATû û/)$ û)TûISûOFFEREDûWITHû û where JP Morgan and HSBC Qianhai are
soft call protection for six months. JP Morgan, bookrunners alongside sponsor Citic
(3"#ûANDû$EUTSCHEû"ANKûAREûJOINTûPHYSICALû Securities
bookrunners with Bank of America and ING BSBY plus 125bp–200bp – Pricing on a
ASûJOINTûBOOKRUNNERS û$EUTSCHEû"ANKûISû 53 MûlVE
YEARûLOANûFORû$ULUTHû
admin agent. referenced the Bloomberg Short Term
Bank Yield Index (BSBY)
REAL QUICK German residential real estate
company Vonovia will hold investor calls on
Monday and Tuesday ahead of a multi-

16 International Financing Review June 5 2021

People

&Markets

Deutsche NY bankers due back in
offices by September

DEUTSCHE BANK’s investment bankers in New “Given it is important that you are able to Banks have achieved near record trading
York and the rest of the Americas are plan for the remainder of the year, please and investment banking revenues during
EXPECTEDûTOûBEûBACKûWORKINGûFROMûOFlCESûBYû plan for all our teams to resume operating the past year, but most say they are keen for
early September, although there has already FROMûTHEûOFlCEûNOûLATERûTHANû,ABORû$AY vûTHEû STAFFûTOûRETURNûTOûOFlCESûASûITûBENElTSû
been a pick-up in the number of staff memo said. Labor Day is on September 6. collaboration and culture. That is
returning after mostly working from home PARTICULARLYûTRUEûFORûMOREûJUNIORûSTAFFûANDû
DURINGûTHEû#OVID
ûPANDEMICûANDû REMOTE WORKING . . . OR NOT INTERNSûWHOûWILLûJOINûTHISûSUMMER
lockdown. Earlier last week, Deutsche set out a hybrid
working model for its investment bank that $EUTSCHEûSAIDû ûOFûITSûSUMMERûINTERNSû
The pace that bankers are returning to it plans to implement later this year. How HADûOPTEDûTOûWORKûFROMûONEûOFûITSûOFlCESû
OFlCESûAPPEARSûTOûBEûMOREûGRADUALûATû much staff will be able to work remotely over the summer.
European banks than at some US rivals, will depend on roles, staff were told in a
including at Goldman Sachs and JP Morgan. memo from investment bank chiefs Mark $EUTSCHE SûRETURNûTOûOFlCEûPLANSûHAVEûALSOû
It also varies by geography and the pace of Fedorcik and Ram Nayak. BEENûAFFECTEDûBYûITSûMOVEûTOûAûNEWûOFlCEûINû
vaccine rollouts, which has been faster in New York this year. It is moving to a
the US and UK. Staff in risk-taking roles, involved those marquee building in Colombus Circle, in the
committing capital and undertaking a old Time Warner building, which was last
Some Deutsche Bank traders and SIGNIlCANTûVOLUMEûOFûTRANSACTIONS ûAREûLIKELYû month renamed Deutsche Bank Center.
origination and advisory bankers worked TOûREMAINûFULL
TIMEûINûTHEûOFlCE
FROMûITSû7ALLû3TREETûOFlCEûTHROUGHOUTûTHEû Goldman Sachs staff in the US are due to
lockdown, and many staff have resumed Bankers and traders focused on client RETURNûTOûTHEûOFlCEûFROMû*UNEû ûANDûTHOSEû
WORKINGûFROMûOFlCESûRECENTLY ûMEANINGûTHEREû relationships, where in-person contact is in the UK a week later, the bank announced
has been a “rapid increase of in-person client key, are likely to be able to work remotely last month. JP Morgan staff have also
meetings”, according to a memo to staff from one day a week, the memo said. Staff in RETURNEDûTOûOFlCESûINûGREATERûNUMBERSûINûTHEû
Drew Goldman, head of investment banking SUPPORTINGûROLESûWILLûHAVEûMOREûmEXIBILITY û last two months, and it expects that by July
coverage and advisory, and James Davies, and remote working is likely to be ALLûPERSONNELûWILLûBEûBACKûINûOFlCESûONûAû
head of its US investment bank. available. rotating schedule.
Steve Slater

Nomura sets up committee to strengthen
sustainability platform

NOMURA is creating a new seven-strong syndicate; Jeff McDermott, head of Nomura sustainability-linked derivatives, credit
wholesale sustainability executive Greentech in the US; Vinod Mukani, head of notes and other structured products.
committee to strengthen its sustainability INFRASTRUCTUREûANDûPOWERûlNANCEûINûTHEû53 û
platform, which will provide advisory Yosuke Inaida, senior corporate managing It is also aiming to develop analysis of its
services as the Japanese bank positions for director of Nomura Securities in Japan; balance sheet to gain a greater
climate-related economic change. 'ORDONû9OUL ûJOINTûHEADûOFûTHEû%3'ûSOLUTIONSû understanding of the carbon footprint of its
group for Asia; and Kevin Connors, global lNANCEDûINDIRECTû3COPEû ûEMISSIONSûFROMû
The committee will bring seven business head of foreign exchange and emerging clients. It will initially look at the size and
heads together to give greater accountability markets sales in EMEA. composition of Nomura’s balance sheet for
for measuring and building Nomura’s energy intensive industries and related
sustainability approach for it and its clients, The new committee will focus on how a renewable energy.
and will focus on building metrics and broader wholesale sustainability forum
credentials in addition to setting targets and reports up into the group sustainability This is expected to develop into analysis
thresholds and planning. committee and how to embed sustainability of Scope 3 emissions for relationship clients,
across the bank. but this is currently challenging, as a
“In terms of strategy, this takes us from considerable amount of Nomura’s exposure
broad strategising to seeing what part of our Nomura currently has three main areas of is in unlisted companies via structured loans
business model needs to be shifted and strength in its ESG business: Nomura ANDûOTHERûlNANCIALûPRODUCTSûANDûLITTLEû
adapted and to what degree, and how we are Greentech, which specialises in sustainable information is currently available.
going to measure and report on that,” said technology and infrastructure investment;
Andrew Bowley, Nomura’s wholesale the debt capital markets team, which is “This is the work that people need to do
GOVERNANCEûOFlCERûANDûAûMEMBERûOFûTHEû issuing ESG transactions; and its US-based around net zero targeting. It’s easier to say
new committee. INFRASTRUCTUREûANDûPOWERûlNANCINGûBUSINESS net zero 2050 than it is to actually have the
FRAMEWORKûTOûTAKEûTHATûJOURNEYûANDûHAVEû
The other six members of the new The bank is now seeking to develop ESG intermediate targets,” Bowley said.
committee are Nick Dent, head of EMEA INûITSûJOINTûMARKETSûBUSINESS ûINûAREASûSUCHûASû Tessa Walsh

International Financing Review June 5 2021 17

“What we’re hearing is the regulators becoming increasingly
strident as their exhortations…continue to fall on deaf ears”

REED SMITH LAWYER CLAUDE BROWN ON THE LIBOR SWITCH, P11

StanChart to trade crypto in JV

STANDARD CHARTERED has agreed to set up a “We have a strong conviction that digital dedicated trading desk nor offer
cryptocurrency trading desk for European and assets are here to stay and will be adopted by the cryptocurrencies as investments for clients.
5+ûCLIENTSûTHROUGHûAûJOINTûVENTUREûWITHûBC GROUP, institutional market as a highly relevant asset
which owns OSL, a digital asset platform. class,” said Alex Manson, head of SC Ventures. Bitcoin has been hugely volatile, halving
in price this year after a spurt when
Usman Ahmad ûCHIEFûINFORMATIONûOFlCERûOFû Investment banks have taken different electric carmaker said it would
BC Group, will be chief executive of the approaches to trading cryptocurrencies. temporarily accept bitcoin as payment for
venture, with Nick Philpott, who works for Tesla’s vehicles.
StanChart’s ventures arm, will be chief ,ASTûMONTH û'OLDMANû3ACHSûCONlRMEDûITû
OPERATINGûOFlCER would buy and sell bitcoin futures on CME StanChart said the total market
Group. Morgan Stanley has also offered capitalisation of digital assets now stood at
The venture will be based in the UK and will access to bitcoin funds for its wealth over US$1trn and the value of such assets
trade bitcoin, ethereum and other management clients. traded daily on exchanges was over US$4bn
CRYPTOCURRENCIES û3UBJECTûTOûREGULATORYû on average.
approvals it will launch in the fourth quarter. But HSBC’s chief executive, Noel Quinn, Christopher Spink
has said his bank will neither set up a

UK restructurings in spotlight post-Amigo

Last month’s decision by a London High Under this plan, existing shareholders scheme documentation does not open the
#OURTûJUDGEûTOûREJECTûAûSCHEMEûOFû would be massively diluted as holders of door to criticism by bumpitraging
arrangement to cap compensation US$230m of convertible bonds received activists.”
liabilities at UK consumer lender AMIGO shares in exchange for amending the
has thrown up questions about how UK terms of their bonds. CVA SCRUTINY
courts will treat other restructuring deals. Company voluntary arrangements, which
Hurricane’s second largest shareholder, have been regularly used by companies to
The ruling came even after the affected #RYSTALû!MBER ûHASûOBJECTEDûTOûTHEûPLANû lower the rents owed to their landlords,
creditors had voted in favour of the and is prepared to lodge a challenge at have also been challenged in increasing
SCHEMEûINûSUFlCIENTûNUMBERS û0REVIOUSLY û any court hearing to approve the plan. If numbers recently. Most of these
most schemes had been waived through if THEûJUDGEûFOLLOWSûPRECEDENTS ûTHISûSHOULDû challenges have failed, but one by a
backed by creditors and other not derail the plan since the value lies landlord of Caffe Nero is to be heard next
stakeholders. “It is very rare for the court with the convertible bonds. month.
to decline to sanction a scheme,” said Kate
3TEPHENSON ûPARTNERûATûLAWûlRMû+IRKLANDû But post-Amigo, advisers are being The landlord that is challenging
& Ellis. extra careful to avoid any challenges on Caffe Nero’s CVA is supported by EG
procedural grounds succeeding. This is 'ROUP ûWHICHûJUSTûBEFOREûTHEû#6!ûWASû
Some reckon the Amigo decision is a where most schemes, when used to approved launched a bid for the
one-off since the company faced strong carry out acquisitions, have been chain. EG, which is one of the biggest
opposition in court from the Financial challenged in the past, generally by operators of petrol stations in the UK,
Conduct Authority. activists holding a target’s shares and was set up by the Issa Brothers and
keen to extract a higher bid price from recently bought UK supermarket
“Restructuring has got a lot more acquirers. Asda.
contentious over the years. But Amigo is a
real one-off. It is very unusual for a “One of the tactics undertaken by Under EG’s offer, which is likely to
business to put forward a proposal to bumpitraging activists in UK bids proceed if the CVA is overturned, Caffe
settle regulatory-driven issues without the implemented by scheme of arrangement Nero’s current landlords will not suffer
regulator being on board,” said Andrew is to seek to exploit the minority the cuts in rents proposed by the CVA. The
Wilkinson, senior European restructuring protections in schemes in an attempt to landlord said the company had not given
PARTNERûATûLAWûlRMû7EIL force the bidder into increasing its bid SUFlCIENTûTIMEûFORûTHEûALTERNATIVEû
price,” said Sam Bagot, a partner at law proposal to be considered.
But the other main point, that lRMû#LEARYû'OTTLIEB
shareholders under the scheme were “It is clear that the courts are being
GETTINGûAûhDISPROPORTIONATEûBENElTvû 4HISûCANûBEûDONEûBYûMAKINGûOBJECTIONSû asked to scrutinise CVAs and the processes
compared with other stakeholders, will at court hearings for scheme approvals, as leading to their approval,” said Mark
hDElNITELYûCOMEûUPûAGAINvûHEûTOLDû)&2 the FCA did with Amigo. &ENNESSY ûAûPARTNERûATûLAWûlRMû
McDermott Will & Emery.
“BUMPITRAGING” “Disgruntled shareholder activists
The question of how any surplus should frequently attack bids implemented by “All these cases are being closely
be distributed in a restructuring will be scheme of arrangement at the court monitored by commercial landlords and
tested at a meeting of investors in hearing at the end of the scheme process companies contemplating restructuring
HURRICANE ENERGY on June 11. The oil on the basis that the disclosure was their leasehold portfolios, and will
explorer has convened a meeting to inadequate and the scheme unfairly provide the template for the use of CVAs
propose a restructuring plan, using new undervalued the target,” said Bagot. going forward,” he said.
UK insolvency laws. Christopher Spink
“Particular care does therefore need to
be taken to ensure that the disclosure in

18 International Financing Review June 5 2021

BONDS

SSAR 21 Corporates 26 FIG 30 Covered Bonds 33 High-Yield 34 Structured Finance 37

„ FRONT STORY EUROPEAN HIGH-YIELD

Game, set and match for David Lloyd

Leisure company prints debut bond with euro and sterling tranches
Bankers position credit as recovery trade as economies reopen

The European high-yield bond market AREûSEEINGûISûSUSTAINABLE vûSAIDûTHEûINVESTOR û WELL vûSAIDûTHEûBANKER ûh9OUûNEEDûTHEûRIGHTû
clicked back into gear after more than a )T SûNOTûCLEARûWHETHERûTHEûMEMBERSHIPû price to position the credit in the right
week’s pause with DAVID LLOYD LEISURE increase is a secular change in behaviour WAY ûANDûHAVEûTHEûRIGHTûCREDIT v
pricing its debut issuance and TRANSCOM ORûAûPOST
LOCKDOWNûPHASE ûHEûSAID
EMERGINGûWITHûAûRElNANCING Even borrowers that do approach the
“They are clearly coming at a good time market with a chunky yield can get caught
TDR-owned and Covid-19 impacted for them, but there is no reason why the SHORTûBYûAûCAUTIOUSûINVESTORûBASE û&ORû
David Lloyd approached investors with a company won’t trade steadily for the next EXAMPLE ûGAMINGûCOMPANYû)NSPIREDû
dual-tranche senior secured trade, split few quarters barring new lockdown and so Entertainment approached investors with
between a £645m six-year non-call two )ûFEELûITûWOULDûBEûlNE v )04SûOFû n ûFORûa MûOFûlVE
YEARû
lXEDûRATEûSTERLINGûBONDûTRANCHE ûANDû non-call two senior secured notes in mid-
€300m of six-year non-call one euro 4HEûRElNANCINGûISûBEINGûSUPPORTEDûBYûAû -AY û,EADSûWEREûUNABLEûTOûTIGHTENûINSIDEû
mOATING
RATEûBONDS ûBOTHûTOûBEûISSUEDûVIAû a MûEQUITYûINJECTIONûFROMûSPONSORû4$2 that range and landed the deal at the mid-
$EUCEû&IN#O POINT ûATû
“That’s a big tick in the box,” said the
Barclays (B&D), as sole bookrunner, INVESTOR h)T SûVERYûCLEARûTHATûPRICEûDOESN TûSOLVEûITû
kicked off three days of marketing on for everybody but that’s what it took to get
Tuesday before completing the trade on Proceeds from the deal will repay debt a high-quality book,” said the banker of the
&RIDAY as well as for working capital DEAL û
requirements, capital expenditure and
Bankers were positioning the credit as a STRATEGICûACQUISITIONS û David Lloyd, however, had no problems,
way for investors to take advantage of the not did Swedish outsourcing company
REOPENINGûOFûECONOMIES û4HEûCOMPANYû There were not any obvious comps for Transcom, which priced a €315m
DECIDEDûTOûGOûOUTûWITHûBOTHûlXED
RATEûANDû the deal, although bankers said investors $ECEMBERû ûmOATING
RATEûNOTEûISSUEû
mOATING
RATEûTRANCHES ûINûBOTHûEUROSûANDû would be likely to look towards Center ALSOûONû&RIDAY
sterling, in order to broaden its investor Parcs and PureGym – and then any other
BASEûFROMûTHEûGET
GO û REOPENINGûTRADESûSUCHûASû3TONEGATE û3OMEû With these deals done, bankers are
investors said they would require a GEARINGûUPûFORûANOTHERûRUSHûOFûSUPPLY û!Tû
“The credit is very strong, and is tapping PREMIUMûTOû0URE'YM LEASTûTWOû- !ûlNANCINGSûAREûEXPECTEDûFORû
into investors’ desire for reopening trades, June, which is expected to see around
with a greater degree of visibility – the #ENTERû0ARCSûHASûAûa Mû û!UGUSTû õ BNnõ BNûWORTHûOFûISSUANCE
company is returning to its pre-Covid ûISSUEûSEENûBIDûLASTûWEEKûATû û
levels very rapidly,” said a banker, talking ACCORDINGûTOû4RADEWEB û0URE'YMûHASûAû HILLHOUSE CAPITAL is set to raise debt to
JUSTûAFTERûTHEûDEALûWASûANNOUNCED ûh)T SûAû û&EBRUARYû ûSTERLINGûBONDû FUNDûITSûõ BNûPURCHASEûOFûKONINKLIJKE
lifestyle business, so it’s playing into that OFFERINGûSEENûBIDûATû û PHILIPS‘s domestic appliance business,
post-Covid 19 world of health, while CROWN HOLDINGS‘ carve-out of its
STAYCATIONINGûANDûWORKINGûFROMûHOME v )NITIALûPRICEûTHOUGHTSûONû$AVIDû,LOYDû European tinplate business to private
WEREû n ûFORûTHEûSTERLINGûSENIORû EQUITYûlRMûKPS is also expected to be
David Lloyd’s facilities operate on a SECUREDûlXED
RATEûNOTES ûANDû% BPûWITHû FUNDEDûINûTHEûDEBTûMARKETSûSOON û
subscription model, so investors have Aû ûmOORûANDûANû/)$ûOFû ûFORûTHEûEUROû
VISIBILITYûONûMEMBERSHIPûLEVELS û)Nû SENIORûSECUREDûmOATING
RATEûBONDS Philips’s bond issue may come as soon as
addition, bankers say the company has a THISûWEEK û"ANKSûONû4UESDAYûLAUNCHEDûAû
fairly differentiated proposition, with 0RICEûTALKûFOLLOWEDûONû4HURSDAYûATû n õ MûSEVEN
YEARûTERMûLOANû"ûTHATûWILLû
QUITEûAûHIGHûBARRIERûTOûENTRY û4HEûCOMPANYû ûANDû% BPn BPûANDûANû/)$ûOFû BACKûTHEûCOMPANY SûACQUISITION û%QUITYû
offers gym complexes, spas, outdoor and ûRESPECTIVELY and other secured debt will also be used to
indoor tennis courts, classes, restaurant FUNDûTHEûPURCHASE û
AREASûANDûWORKûFACILITIES 4HEûSTERLINGûNOTESûWEREûPRICEDûATû û
ANDûTHEûEUROûmOATERSûCAMEûATû BPûOVERû Payment processor PAYSAFE is also
One high-yield investor said that, while %URIBOR expected to issue bonds this week as part
he didn’t see the borrower as a growth story OFûAû53 BN
EQUIVALENTûRElNANCING ûSPLITû
per se – demographics and locations are a The high-yield market has seen some BETWEENûDOLLARSûANDûEUROS
limitation – he liked that David Lloyd is a credits stumble on price – most recently,
well-known brand and has sticky !DLER Sûõ MûTAP ûWHICHûTOOKûOVERû ûDAYSû 4HEûCOMPANYûLAUNCHEDûAû53 BNû
MEMBERSHIPûAMONGûTHOSEûWHOûCANûAFFORDûIT û to complete after struggles over the dual-currency leveraged loan last week,
PRICINGûLEVEL û!NDû0ICARDûPULLEDûAûõ BNû WHICHûTOGETHERûWITHû53 BNûOFûOTHERû
h)ûDON TûBELIEVEûTHEûGROWTHûNARRATIVEûISû sustainability-linked bond issue after the senior secured debt – likely high-yield
ASûCOMPELLINGûASûTHEYûSAYûANDû)ûAMûNOTû issuer proved unwilling to compromise on BONDSûnûWILLûRElNANCEû53 BNûOFû
convinced the bounce in membership they PRICING û CREDITûFACILITIES û
Eleanor Duncan
h4HEûWAYû)ûDESCRIBEûITûTOûPEOPLEûISûTHATû
IT SûNOTûONE
WAYûTRAFlCûnûYOUûCAN TûEXPECTû
that everything will get priced and go

International Financing Review June 5 2021 19

Kensington plans green UK WEEK IN NUMBERS

RMBS with Finsbury deal 39

Green issuance to get a boost but still very early days „ THE NUMBER OF PRIMARY DEALERS
CHOSEN BY THE EU FOR ITS NEXTGEN
PROGRAMME, BIGGER THAN THE
NETWORKS FOR ESM AND GERMANY

!FTERûISSUINGûTHEûlRSTûSOCIALû5+û2-"3û GREENIUM STILL A WAY OFF No of PDs ESM Germany Spain Italy France
earlier this year, KENSINGTON MORTGAGE $ESPITEûLAGGINGûBEHINDûOTHERûlXED
INCOMEû
COMPANY has set its sights on green markets, RMBS has been building ESG 45
issuance, as the market slowly builds ESG MOMENTUMûTHISûYEAR û3INCEû'EMGARTO û 40
MOMENTUM 9ORKSHIREû"UILDINGû3OCIETYûHASûSOLDûITSûOWNû 35
SOCIALû2-"3 û)NûTHEû.ETHERLANDS û/BVIONû 30
The originator broke new ground in won praise and tight pricing of 15bp over 25
February when it priced Gemgarto 2021-1, three-month Euribor for Green Storm 20
AûlRSTû%3'ûTRANSACTIONûFORû5+û2-"3 û7ITHû ûITSûGREENû2-"3ûINû-ARCH 15
FINSBURY SQUARE 2021-1 GREEN, it is putting 10
forward a template for green product in But with the market in such a nascent
the market – one that could overcome the stage of adoption, the much-desired 5
limitations of low green housing stock in BENElTSûOFû%3'ûnûEXTRAûDEMANDûANDûTIGHTERû 0
THEû5+ û0ROPERTIESûNEEDûTOûHAVEûANû!ûORû"û PRICINGûnûHAVEûBEENûHARDûTOûGAUGE
EPC rating to qualify as an eligible green EU
PROJECTûUNDERû)#-!ûGREENûSTANDARDSûANDû On pricing, the picture has been
THEûPROPORTIONûOFûSUCHûCOLLATERALûINû5+û muddled by the undersupplied markets €800bn
MORTGAGESûISûRELATIVELYûLOW ESG originators have sold into this year,
with favourable technicals a more obvious „ THE POTENTIAL AMOUNT OF BONDS
This has led to a structure that will EXPLAINERûOFûTIGHTûSPREADS THE EU PLANS TO ISSUE BY THE END
SECURITISEû+ENSINGTON
ORIGINATEDû OF 2026, WITH MOST MARKET PLAYERS
mortgages but also allow for additional But on demand, some sign of an ESG bid EXPECTING AT LEAST €750bn. ABOUT
purchases of green eligible mortgages ISûEMERGING û#RUNCHINGûNUMBERSûISûNOTû 30% OF THE OVERALL AMOUNT WILL
DURINGûAûlVE
YEARûREVOLVINGûPERIOD û4HEû STRAIGHTFORWARD ûGIVENûTHEû!"3ûMARKET Sû BE IN GREEN FORMAT
DEALûCOULDûREACHûASûHIGHûASûa M LACKûOFûDEDICATEDû%3'ûFUNDS û"UTûEXTRAû
ORDERSûFROMûLARGERûlRMSûWITHûSTRUCTUREDû £11.3bn
h)TûSTARTEDûWHENûWEûWEREûTALKINGûWITHû lNANCEûANDûWELL
DEVELOPEDû%3'û
investors and they were asking about green capabilities have been noticed on deals this „ THE NET AMOUNT OF GILTS BOUGHT
BONDSûINû5+û2-"3 vûSAIDû#AMILLEû"OILEAU û YEAR û3OMEûGEOGRAPHICALûVARIATIONûHASûALSOû BY FOREIGN INVESTORS IN APRIL,
senior vice-president, capital markets at BEENûNOTICEABLE ADDING TO THE £12.4bn INFLOW IN
+ENSINGTON ûh7EûKNEWûTHATûIFûWEûHADûTOûFULLYû THE FIRST QUARTER, ACCORDING TO
collateralise the deal with green properties “ESG interest in our social bond was very BANK OF AMERICA
there would never be a green RMBS from a dependent on geography, the most advanced
challenger bank or non-bank lender as our investors were Dutch – you could really see €3.15bn
BALANCEûSHEETSûAREûJUSTûNOTûBIGûENOUGH v they had almost doubled their orders
because the bond was social and some used „ THE AMOUNT NESTLE RAISED ACROSS
%VENûWITHûGREATERûSTRUCTURALûmEXIBILITY ûAû DEDICATEDû%3'ûFUNDSûTOûBUY vûSAIDû"OILEAU FOUR TRANCHES LAST WEEK, INCLUDING
green RMBS boom still seems far off A 20-YEAR NOTE, TAKING ADVANTAGE OF
THOUGH “We also had some additional demand A MORE SETTLED RATES BACKDROP
from French investors but not much from
h9OUûNEEDûTOûBEûAûRELATIVELYûBIGûLENDERû 5+ûACCOUNTS û%VERYONEûGAVEûPOSITIVEû €68m
because if you’re not then the commitment feedback but you could not tell from the
to originate in the future is a little bit numbers that those guys came in because „ THE AMOUNT OF CORPORATE BONDS
HOLLOW vûSAIDû!LEXû-ADDOX ûCAPITALûMARKETSû OFû%3' v THE ECB SOLD (NET) IN THE WEEK TO MAY
ANDûDIGITALûDIRECTORûATû+ENSINGTON 28 AS PART OF ITS CSPP COMPARED WITH
Boileau said that ESG initiatives may €1.506bn IT BOUGHT THE WEEK EARLIER
“Our current run rate is over £2bn a year need more regulatory impetus to stoke up In total, it has bought €103.393bn
of origination, so there is capacity for us to DEMANDûFASTERûINû!"3ûMARKETS
ORIGINATEûTHEûREQUIREDûAMOUNT €bn May 21 May 14 May 7
“There is not preferential capital 2.5
h$Oû)ûTHINKûWEûWILLûBEûABLEûTOûDOûLOTSûOFû TREATMENTûFORûTHISûTYPEûOFû%3'ûTRADEûANDû)û
DEALSûINûTHEûFUTURE û.O ûBECAUSEûWEûHAVEûTOû don’t really see it happening soon,” she 2.0
use the funding from this deal for green SAID ûh'EMGARTOûWASûHELPEDûMOREûBYûTHEû
LENDING û/NCEûWE VEûDONEûTHATûTHENûWEûCANû STS label than the social in a sense, with 1.5
do another green bond but unfortunately some banks coming in because of the
there will be quite a lot of spacing between capital treatment they get if they put STS 1.0
THEûGREENûDEALS PAPERûONûBALANCEûSHEET û3OûBETTERûCAPITALû 0.5
treatment would be a good thing to do for
“But we are looking at other new %3'ûPAPER v 0.0
products and once this new funding comes
it will encourage us to go and develop lots BNP Paribas is arranger and joint lead -0.5
of products for new build products that manager on the trade with Lloyds and May 28
tend to have a higher rating or go and National Australia Bank û!LLûTHREEûAREû%3'û 2021
TARGETûSPECIlCALLYû!ûANDû"ûRATEDû STRUCTURINGûBANKSûTOO û
PROPERTIES v Ross Lancaster

20 International Financing Review June 5 2021

BONDS SSAR

SSAR For the seven-year, the lead referenced World CEB PRINTS SECOND DOLLAR SIB
"ANK Sû53 BNû û!PRILû ûSUSTAINABLEû AGAINST STRONG BACKDROP
US DOLLARS DEVELOPMENTûBONDûFROMûEARLYû!PRIL û
COUNCIL OF EUROPE DEVELOPMENT BANK seized a
ADB EXCELS WITH DUAL-TRANCHE DOLLAR h)T SûAûPRETTYûRAREûISSUANCEûTENORûTHISûYEAR û favourable window in the US dollar market
so it’s best to compare it to the recent World to launch its second social inclusion bond in
ASIAN DEVELOPMENT BANK saw impressive demand "ANKûDEAL vûHEûSAID the currency, a tightly priced US$500m
FORûITSû53 BNûTWO
PARTûBENCHMARKûLASTû three-year note that came close to being
Wednesday, even after pricing was tightened “Swap spreads have moved around, so it’s TWICEûSUBSCRIBEDûONû4HURSDAY
SIGNIlCANTLYûTOûLEAVEûMINIMALûCONCESSIONS û NOTûTHEûEASIESTûTOûCOMPAREûTHEûPRICING û"UTûONû
THEû4REASURYûSPREADû)ûTHINKûIT SûGOINGûTOûBEû ALL INTERNATIONAL GREEN BONDS
h4HEY VEûGOTûAûFANTASTICûRESULT û)FûYOUûLOOKû VERYûCOMPARABLE ûMAYBEûEVENûSLIGHTLYûLOWER v BOOKRUNNERS: 1/1/2021 TO DATE
at book size, absolute pricing, pricing
relative to comps and pricing relative to World Bank came at 7bp over swaps or Managing No of Total Share
WHEREûOTHERSûHAVEûISSUED û)ûTHINKûTHEYûHAVEû BPûOVERû4REASURIES û!$"ûCAMEûATû BPû bank or group issues US$(m) (%)
really come out right at the top on all of OVERûSWAPSûANDû BPûOVERû4REASURIES
THOSEûMEASURES vûSAIDûAûLEADûMANAGER 1 BNP Paribas 55 12,096.38 7.3
!$"ûHADûALREADYûRAISEDûDOLLARSûONûTHREEû 2 JP Morgan 70 11,765.91 7.1
4HEû33!ûDOLLARûMARKETûHADûBEENûDORMANTû OCCASIONSûTHISûYEAR ûTWICEûTARGETINGûlVEû 3 Citigroup 56 11,165.50 6.8
for the previous fortnight but the backdrop YEARS ûTHEûMOSTûRECENTûOUTINGûAû53 BNû û 4 Credit Agricole 44 9,921.91 6.0
remained supportive despite heavy Treasury !PRILû ûJUSTûUNDERûTWOûMONTHSûAGO 5 HSBC 55 9,370.13 5.7
SUPPLY 6 Deutsche Bank 60 8,729.96 5.3
“They saw there was opportunity at both 7 Bank of America 49 7,903.47 4.8
“Timing-wise, we’ve all been impressed with tenors and are looking to balance the sizing 8 NatWest Markets 19 6,581.65 4.0
how stable the Treasury market has been, which between the two and not coming back and 9 Barclays 39 6,347.37 3.9
then helps swap spreads and in turn helps JUSTûPRESSURINGûINVESTORSûATûlVEûYEARSûTOOû 10 Danske Bank 22 4,586.07 2.8
CONlDENCEûAROUNDû33!ûISSUANCE vûSAIDûTHEûLEAD MUCH vûSAIDûTHEûLEAD 252 164,587.32
Total
“On both fronts, stability and lack of “They have some nice benchmarks out
COMPETITION û)ûTHINKûTHEYûHAVEûACTUALLYû THERE û4HISûWASûREALLYûlTTINGûINûANDûBUILDINGû Excludes social bonds and mixed use of proceeds. SDC code: JG1
JUMPEDûINTOûAûVERYûSMARTûWINDOWûHERE û!NDû OUTûTHEûCURVE v Source: Refinitiv
the result, book size, pricing shows it has
PLAYEDûOUTûEXACTLYûTHATûWAY v Barclays, Citigroup, JP Morgan and TD
securitiesûWEREûBOOKRUNNERS
The US$4bn June 2024 tranche priced at
BPûTHROUGHûSWAPS û BPûTIGHTERûTHANû)04S û ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS
WITHûBOOKSûOVERû53 BN û BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE

4HEû53 BNû*UNEû ûLEGûPRICEDûATû Managing No of Total Share Managing No of Total Share
BPûOVER û BPûINSIDEû)04S ûONûTHEûBACKûOFû bank or group issues US$(m) (%) bank or group issues €(m) (%)
MOREûTHANû53 BNûOFûORDERS û
1 JP Morgan 869 203,503.00 8.6 1 BNP Paribas 252 59,093.06 8.0
The bonds, which are in SEC-exempt 2 Citigroup 637 161,093.28 6.8
Global format, offered 1bp concessions at 3 Bank of America 636 160,464.04 6.8 2 JP Morgan 209 50,226.77 6.8
LANDING ûACCORDINGûTOûTHEûLEAD 4 Barclays 535 131,032.84 5.6
5 Goldman Sachs 472 119,822.15 5.1 3 Barclays 162 45,519.73 6.2
The three-year came at the joint tightest 6 Deutsche Bank 484 115,681.38 4.9
spread versus swaps at the tenor in 2021, 7 Morgan Stanley 386 115,508.56 4.9 4 Deutsche Bank 178 44,237.75 6.0
MATCHINGûTHEû%UROPEANû)NVESTMENTû"ANK Sû 8 BNP Paribas 494 113,229.14 4.8
53 BNû û*ULYû ûFROMû!PRIL 9 HSBC 495 100,555.83 4.3 5 SG 135 38,311.03 5.2
10 Credit Agricole 321 64,893.62 2.8
2,949 2,356,935.21 6 UniCredit 165 36,212.62 4.9
Total
7 Citigroup 142 35,807.29 4.9

8 HSBC 161 34,659.80 4.7

9 Credit Agricole 164 34,117.60 4.6

10 Goldman Sachs 136 32,200.71 4.4
Total 873 737,258.42

Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt,
US Global ABS/MBS. US Global ABS/MBS.

Source: Refinitiv SDC code: J1 Source: Refinitiv SDC code: N1

EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING JUNE 4 2021

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Jun 22 2025 -0.539 2.21
May 31 2021 Belgium €980m 0.8 Oct 22 2031 0.144 1.70
Jun 22 2050 0.949 1.58
May 31 2021 Belgium €1.477bn 0 Apr 15 2030 -1.690 1.89
Apr 15 2033 -1.510 1.32
May 31 2021 Belgium €945m 1.700 Jul 31 2031 0.941 2.64
Apr 10 2026 -0.570 1.21
Jun 1 2021 Germany (€i) €355m 0.500 Jan 31 2046 1.359 2.40
Jan 31 2026 -0.247 1.60
Jun 1 2021 Germany (€i) €310m 0.100 Oct 31 2027 -0.025 1.76
Nov 30 2027 -1.383 1.74
Jun 2 2021 UK £2.75bn 0.250 Oct 31 2040 1.144 1.68
Nov 25 2031 0.160 1.98
Jun 2 2021 Germany €3.317bn 0.000 Jun 25 2044 0.740 1.79
Apr 25 2055 0.950 1.68
Jun 2 2021 UK £2bn 0.875 May 25 2072 1.110 1.87

Jun 3 2021 Spain €1.826bn 0.000

Jun 3 2021 Spain €1.55bn 1.450

Jun 3 2021 Spain (€i) €510.5m 0.650

Jun 3 2021 Spain €1.587bn 1.200

Jun 3 2021 France €6.27bn 0.000

Jun 3 2021 France €1.803bn 0.500

Jun 3 2021 France €1.612bn 4.000

Jun 3 2021 France €1.308bn 0.500

Source: IFR

International Financing Review June 5 2021 21

h)TûISûTHEûTIGHTESTûTHREE
YEARû53ûDOLLARû much negatively compared to Libor, so education and vocational training, social
BENCHMARKûTRANSACTIONûINûTHEû33!SûSECTORû around minus 5bp–6bp,” the lead said, housing for low-income people, and
SINCEû û4HATûTHISûHAPPENEDûWITHûAûSOCIALû before indicating he saw fair value around lNANCINGûRELATEDûTOûTHEûHEALTHûSECTOR
bond is a very nice signal,” said Felix Grote, MINUSû BP
the head of long-term funding operations at For second party opinion provider
#%" û “There was rather quickly a positive Sustainalytics, the development bank’s
RESPONSEûWHENûWEûWENTûOUT û û4HISûWASû 3OCIALû)NCLUSIONû"ONDû&RAMEWORKûISûROBUST û
h)T SûGONEûWELLûFORûAû53 MûDEAL û4HEû CONlRMEDûOVERNIGHTûWITHûDEMANDûFROMû!SIA û transparent and aligned with the core
backdrop is pretty strong, we saw that THEûCENTRALûBANKûCOMMUNITYûINûPARTICULAR û û components of the Social Bond Principles
YESTERDAYûWITHûTHEû!SIANû$EVELOPMENTû"ANKû With the quantity and quality of orders we
DEAL û4HISûONEûISûSMALLERûANDûAûSOCIALûBOND û RECEIVED ûWEûFELTûCONlDENTûENOUGHûTOûTIGHTENû
)T SûATTRACTEDûSTRONGûINTERESTûFROMûDIFFERENTû THEûSPREADûFURTHER vû'ROTEûSAID Social bonds now account for one-sixth of
JURISDICTIONS vûSAIDûONEûOFûTHEûLEADS CEB’s outstanding bonds, including the new
'UIDANCEûWASûRElNEDûTOûMINUSû BPûAREAû TRANSACTION û)TûHASûAûBORROWINGûAUTHORISATIONû
CEB had been monitoring the market for with indications of interest standing above OFûõ BNûFORû ûANDûHASûNOWûMETûTWO

AûCOUPLEûOFûWEEKSûANDûTHEûlNALûOUTCOMEûOFû 53 M û)NûTHEûEND ûTHEûLEADSûWEREûABLEûTOû THIRDSûOFûTHISûTARGET
!$" SûTHREE
YEARûTRANCHEûGAVEûTHEûISSUERûTHEû set the spread at minus 4bp with books over
CONlDENCEûTOûGOûAHEAD û 53 M “What is next in terms of strategic
TRANSACTIONûFORûTHISûYEARûISûAûlVE
YEARûDOLLARû
Citigroup, Deutsche Bank, Nomura and Societe h)TûWASûTHEûRIGHTûLEVEL ûAûVERYûGOODûPRICINGû CONVENTIONALûBENCHMARK vû'ROTEûSAID
Generale began marketing the SEC-registered OUTCOME vûSAIDûAûBANKERûAWAYûFROMûTHEûTRADE û
June 2024 no-grow bond on Wednesday at h)TûISûPRICINGûWITHûPRETTYûMUCHûNOûNEWûISSUEû IDB GOES LONG FOR LATEST SOFR FRN
)04SûOFû BPûAREAûTHROUGHûMID
SWAPS PREMIUM ûCONSIDERINGû!$"ûPRICEDûATûMINUSû
BPûANDûWEûSAWûTHEû%UROPEANû)NVESTMENTû The INTER-AMERICAN DEVELOPMENT BANK tapped
#%"ûEXECUTEDûITSûlRSTû53ûDOLLAR
"ANKûTRADINGûAROUNDûMINUSû BP v into emergent demand for long-dated US
DENOMINATEDû3)"ûAûYEARûAGO ûAû53 Mû DOLLARûmOATING
RATEûPAPERûLASTû4HURSDAYûWITHû
û*UNEû û#OVIDûRESPONSEûBONDûTHATû SOCIAL CLIMBING AûRAREû3/&2
LINKEDû
YEARûBENCHMARK
WASûQUOTEDûATûPLUSû BPûONû4RADEWEB û)TûALSOû Market participants said the social bond
HASûAû53 BNû û/CTOBERû û label was an added incentive for investors to The only other recorded instance of a
conventional Global bond that was around BUYûTHEûPAPER û dollar FRN coming with a 10-year term was
BPûTHROUGH ûACCORDINGû4RADEWEB when the World Bank raised US$600m with
h!SûAûRESULTûOFûTHEûSOCIALûBONDûNATUREûOFû a February 2031, placed in February 2021
h&AIRûVALUEûISûAûLITTLEûBITûTOUGHûTOûSAY û!LLû the transaction, some of the orders we ANDûPAYINGûAûCOUPONûOFû3/&2ûPLUSû BP
the three-year bonds are trading pretty received were much larger than we would
normally expect for a US$500m size )$"û !AA !!! ûANNOUNCEDû)04SûFORûAû
ALL INTERNATIONAL US$ BONDS CONVENTIONALûBOND vû'ROTEûSAID ûh4HIRTYû MINIMUMû53 Mû*UNEû ûmOATERûONû
BOOKRUNNERS: 1/1/2021 TO DATE investors participated, a good chunk of Wednesday at compounded SOFR plus 36bp
central bank demand, a testament to our area through Bank of Montreal and Wells Fargo
Managing No of Total Share STRATEGY v
bank or group issues US$(m) (%) )NûAûSIGNûTHATûDEMANDûFORûTHEûPRODUCTû
&ORûCOMPARISON û#%" Sû û*UNEû û perhaps remains niche, leads were unable to
1 JP Morgan 583 130,949.96 10.2 ATTRACTEDûOVERû53 BNûOFûORDERSûFROMû û BUDGEûONûPRICINGûANDûSETûTHEûSPREADûATû BP û
ACCOUNTS However, interest in the deal was strong
2 Bank of America 487 114,570.33 8.9 enough for the supra to upsize the
7HILEûPROCEEDSûFROMûTHEûISSUER SûlRSTû transaction to US$600m, off a book of
3 Citigroup 476 113,214.32 8.8 DOLLARû3)"ûWEREûAIMEDûATû#OVIDûRESPONSES ûAû 53 M
broader adaptation of the use of proceeds
4 Morgan Stanley 279 79,231.87 6.2 WILLûAPPLYûTOûITSûNEWûSOCIALûNOTES û Given the rarity of such a long-dated
mOATER ûTHOSEûINVOLVEDûWEREûSATISlEDûWITHû
5 Goldman Sachs 333 77,400.08 6.0 CEB has an exclusively social mandate THEûRESULT
and proceeds from its social inclusion bonds
6 Barclays 313 64,249.98 5.0 HAVEûBEENûEARMARKEDûTOûlNANCEûORû h)T SûAûBLOODYûGREATûRESULTûGIVENûIT SûNOTû
RElNANCEûLOANSûTHATûBACKû-3-%SûFORûTHEû NORMALûTOûSEEûmOATERSûGOûPASTûlVEûYEARS vû
7 Deutsche Bank 276 54,343.25 4.2 creation and preservation of viable jobs, SAIDûAûSYNDICATEûBANKER ûh)$"ûISûAûQUALITYû
credit, and with rates where they are
8 Wells Fargo 284 50,905.67 4.0 investors are looking to push out the
MATURITYûSPECTRUM v
9 Credit Suisse 292 49,509.25 3.9
)$"ûHADûALREADYûVENTUREDûBEYONDûTHEû
10 HSBC 247 42,085.63 3.3 MOREûTYPICALûlVE
YEARû3/&2ûmOATERûWHEN ûINû
-ARCH ûITûISSUEDûAû53 Mû-ARCHû ûATû
Total 1,490 1,281,758.28 BPûOVERû3/&2

Including Euro, foreign and global issues. Excluding equity-related debt, “We were looking to extend our SOFR
US Global ABS/MBS. curve out to 10 years,” said Laura Fan, head
OFûFUNDINGûATû)$" ûh7EûISSUEDûAûSEVEN
YEARû
Source: Refinitiv SDC code: O1 SOFR bond in March and since then, we
have been looking for an opportunity to
ALL US DOLLAR FIXED-RATE GLOBALS ALL SOVEREIGN BONDS IN EUROS ISSUEûINûTHEû
YEARûPARTûOFûTHEûCURVE v
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
!PPETITEûFORûLONGER
DATEDû33!ûPAPERûHASû
Managing No of Total Share Managing No of Total Share grown this year as investors that cannot or
bank or group issues US$(m) (%) bank or group issues €(m) (%) do not want to up their credit risk have
sought to pick up spread with longer
1 Citigroup 100 40,571.40 11.3 1 JP Morgan 23 18,278.69 10.8 MATURITIES û4HISûINITIALLYûPLAYEDûOUTûINûTHEû
2 JP Morgan 111 38,421.30 10.7 2 BNP Paribas 23 14,604.88 8.6 lXED
RATEûMARKET
3 Bank of America 106 34,373.41 9.6 3 Citigroup 18 13,398.14 7.9
4 Morgan Stanley 73 30,335.07 8.5 4 SG 12 11,778.74 7.0
5 Deutsche Bank 34 21,912.54 6.1 5 Barclays 14 10,813.29 6.4
6 Barclays 52 21,399.65 6.0 6 UniCredit 12 10,726.61 6.3
7 Goldman Sachs 52 20,199.32 5.6 7 Deutsche Bank 13 9,829.80 5.8
8 Wells Fargo 71 15,039.31 4.2 8 Nomura 12 9,668.75 5.7
9 TD Securities 35 15,022.05 4.2 9 HSBC 10 8,903.16 5.3
10 RBC 40 11,956.41 3.3 10 Morgan Stanley 11 8,284.26 4.9
54 169,414.60
Total 209 357,633.14 Total

Excluding equity-related debt, ABS/MBS. SDC code: O5 Excluding ABS/MBS. SDC code: N4
Source: Refinitiv Source: Refinitiv

22 International Financing Review June 5 2021

BONDS SSAR

“Earlier, we saw great volumes of [US (ESSEN Sûõ MûNO
GROWû û*UNEû û “The differential between PEPP and non-
DOLLAR=û
YEARûlXED
RATEûTRADES ûWHEREûBANKû NOTEûISSUEûWASûALMOSTûlVEûTIMESûSUBSCRIBED û PEPP names has moved a lot over the last 12
treasuries have been active and swapped WITHûBOOKSûINûEXCESSûOFûõ BNû INCLUDINGû MONTHS û!TûTHEûWIDESTûWEûWEREûPROBABLYû
THEM vûSAIDûAûSECONDûBANKER ûh"UTûWITHûTHEû €300m of JLM interest), rising substantially TRACKINGûANû BPn BPûDIFFERENTIALûBETWEEN û
developments around SOFR, some bank from €1bn (including €200m of JLM interest) FORûINSTANCE û7ORLDû"ANKûANDû%)"ûORû+F7 vû
treasuries are taking the view that they will ATûTHEûlRSTûUPDATE û SAIDûTHEûSECONDûBANKER û
BUYûmOATING
RATE v
“The book in the end was amazing but it did “Now, given the widening we’ve seen in
Banks and private banks accounted for seem like a lot of the investors weren’t that keen recent weeks, which has predominantly
ûOFûTHEûINVESTORûMIXûFORû)$" SûNEWûISSUE ONûPARTICIPATINGûATûTHEûSTART vûSAIDûAûLEADûMANAGER û been in the PEPP names due to the tapering
DISCUSSIONS ûITûHASûNARROWEDûTOûAROUNDû BP v
)SSUANCEûOFûDOLLARû
YEARû33!ûPAPERû The spread was set at mid-swaps less 6bp,
SURGEDûATûTHEûSTARTûOFû ûWITHû)&2û tightening by 1bp from guidance, via LCFB LANDS INAUGURAL SOCIAL DEAL
RECORDINGû53 BNûINû*ANUARYûANDû Commerzbank, DekaBank, DZ Bank, JP Morgan
53 BNûINû&EBRUARY û3UPPLYûHASûSINCEû and LBBW. Pricing offered a 1bp new issue COMMUNAUTE FRANCAISE DE BELGIQUE issued its
BEENûMOREûMUTED û)Nû-AY ûJUSTûAûSINGLEû CONCESSION ûACCORDINGûTOûTHEûLEAD û lRSTûDEALûUNDERûAûNEWûSOCIALûlNANCEû
53 BNû û-AYû ûFROMû%)"ûWASû framework last Wednesday, with the
PLACED ûACCORDINGû)&2ûDATA Castilla y Leon also amassed plentiful proceeds targeting a broader range of
demand for a €500m no-grow deal, with initiatives than most public-sector ESG
!SûMENTIONED ûTHEûVASTûMAJORITYûHAVEû BOOKSûINûEXCESSûOFûõ BNû EXCLUDINGû*,-û FUNDRAISINGS
BEENûlXED
RATEûDEALS û7HETHERûORûNOTûTHEû INTEREST ûWHENûlNALûTERMSûWEREûANNOUNCED û
market will see greater sales of long-dated The municipality launched a €500m no-
mOATING
RATEûDOLLARûPAPERûISûDEPENDENTûONû 4HEûSPREADûFORûTHEû û!PRILû ûNOTESû grow 14-year bond offering that was nearly
DEMAND WASûSETûATû BPûOVERû3PAIN Sû û!PRILû û three times subscribed, with the book in
tightening by 4bp from guidance, via BBVA, EXCESSûOFûõ BN
“Sure, these trades will capture the CaixaBank, Deutsche Bank, HSBC and Santander.
ATTENTIONûOFûBANKSûANDûISSUERS vûSAIDûTHEûlRSTû That allowed pricing to be set at 31bp over
banker, “but there is still some discovery ECB EFFECT interpolated OLOs via "ELlUSû"ANK û$EUTSCHEû
HAPPENINGûAROUNDûDEPTHûOFûDEMAND v The clear shift concerning market Bank, Morgan Stanley and NatWest Markets, 3bp
expectations for the June ECB meeting INSIDEûGUIDANCE û!TûLANDING ûTHEREûWASû BPn
EUROS compared with a few weeks ago could 2bp new issue concession on offer,
explain the divergent demand for the latest ACCORDINGûTOûAûLEAD
SSA DEALS SENSITIVE TO ECB deals, with those eligible for ECB buying
EXPECTATIONS ATTRACTINGûMOREûINTEREST ALL AGENCY BONDS IN EUROS
BOOKRUNNERS: 1/1/2021 TO DATE
Three borrowers from three different “The non-PEPP names aren’t as sensitive
COUNTRIESûVENTUREDûINTOûTHEûEUROû33!û TOûEXPECTATIONSûONû%#"ûPOLICY û4HEYûHAVEû Managing No of Total Share
market last Tuesday, with the German STATE more of a natural investor base,” said the bank or group issues €(m) (%)
OF HESSEN and the Spanish autonomous (ESSENûLEAD û
community of CASTILLA Y LEON achieving 1 BNP Paribas 16 8,112.92 10.8
impressive results but Canada’s PROVINCE OF With the Province of Ontario not eligible 2 Barclays 16 5,684.58 7.6
ONTARIOûlNDINGûITûHARDERûGOING û for the central bank’s asset purchase 3 Natixis 13 5,472.09 7.3
programmes, it received the smallest 4 Credit Agricole 17 5,469.41 7.3
The European issuers seem to have amount of demand out of the three deals, 5 Bank of America 9 5,348.26 7.1
BENElTEDûFROMûSHIFTINGûEXPECTATIONSû WITHûITSûTRADEûONLYûJUSTûCOVERED û 6 Deutsche Bank 14 5,087.42 6.8
surrounding ECB policy, helping them 7 JP Morgan 22 5,078.35 6.8
amass a greater level of demand than 4HEûõ BNûDEALûATTRACTEDûlNALûBOOKSûOFû 8 Goldman Sachs 12 4,191.69 5.6
Ontario, which is not eligible for the central õ BNû EXCLUDINGû*,-ûINTEREST ûRISINGûFROMû 9 HSBC 12 3,471.19 4.6
BANK SûBONDûBUYINGûPROGRAMMES û õ BNû EXCLUDINGû*,-ûINTEREST ûONûTHEûlRSTû 10 Citigroup 12 3,216.21 4.3
UPDATE û 123 74,817.44
h)T SûAûLOTûSTRONGERûTHANûITûWASûTWO ûTHREEû Total
WEEKSûAGO vûSAIDûAûSENIORûBANKER ûh)T SûBEENûAû 4HEûSPREADûFORûTHEû û*UNEû ûNOTESû
little bit quieter on the supply front and also failed to tighten from guidance, with lead Excluding equity-related debt. Including publicly owned institutions.
THAT SûHELPED û!LSO ûTHEû%#"ûHASûBEENûACTIVEû managers Barclays, Bank of America, HSBC and TD
in relatively large clips and the deals that SETTINGûTHEûSPREADûATû BPûOVERûMID
SWAPS û Source: Refinitiv SDC code: N6
HAVEûCOMEûHAVEûGONEûWELL v
ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
The market tone has clearly improved, with BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
expectations of a hawkish move from the
European Central Bank falling after recent Managing No of Total Share Managing No of Total Share
COMMENTSûFROMûGOVERNINGûCOUNCILûMEMBERS bank or group issues €(m) (%) bank or group issues €(m) (%)

h9OUûCANûSEEûTODAYûWITHûTHEûDEALSûOUTûTHATû 1 Deutsche Bank 9 8,801.84 9.2 1 HSBC 20 3,404.67 14.0
TONE
WISEûEVERYTHINGûFEELSûlNE û4HEû 2 Barclays 8 8,308.38 8.7 2 JP Morgan 16 2,836.50 11.6
expectations around tapering have reduced, 3 Morgan Stanley 3 6,204.52 6.5 3 Deutsche Bank 13 2,099.12 8.6
BUTûTHINGSûCANûCHANGE vûSAIDûAûSECONDûBANKER 4 Goldman Sachs 7 5,975.88 6.2 4 Nord/LB 9 1,432.01 5.9
5 Bank of America 8 5,911.46 6.2 5 UniCredit 11 1,429.36 5.9
h4HEûMARKETûDOESûFEELûGOOD û.EXTû 6 BNP Paribas 6 5,779.85 6.0 6 Natixis 6 1,207.48 5.0
Wednesday and obviously Thursday activity 7 SG 7 5,465.31 5.7 7 LBBW 8 1,128.08 4.6
WILLûDECREASE û)FûTHEREûISûTALKûAROUNDû 8 DZ Bank 5 5,373.89 5.6 8 Barclays 5 936.07 3.8
tapering, volatility will no doubt pick up in 9 UniCredit 6 5,359.66 5.6 9 DGZ-DekaBank 6 818.78 3.4
the days that follow while the market 10 JP Morgan 10 4,874.36 5.1 10 TD Securities 2 759.39 3.1
DIGESTSûIT v 35 95,791.87 54 24,391.63
Total Total

Excluding ABS/MBS. SDC code: N5 Excluding ABS/MBS. SDC code: N7
Source: Refinitiv Source: Refinitiv

International Financing Review June 5 2021 23

KfW completes the set Municipalities are being increasingly
with Sonia debut tasked with carrying out a sovereign’s
BROADERû%3'ûAGENDAûBUTûINûAûTARGETEDûWAY û
„ SSAR First floater over new risk-free rate proves a hit
h)TûWILLûPROVIDEûAûMOREûTARGETEDûAPPROACHû
KFW ventured into the sterling market with its Books were in excess of £1bn (excluding JLM to each region since each region will be
first Sonia-linked FRN last Wednesday, and in interest) when the spread was set, with demand QUITEûDIFFERENT û"ELGIUMûISûAûCLASSICûEXAMPLEû
doing so has now raised funds priced against for the transaction strong from the outset, of that given the regional languages and
the new floating-rate benchmarks in sterling, US according to Wehlert. GOVERNMENTSûTHATûEXIST û4HEYûAREûMUCHû
dollars and euros. better placed to undertake the desired
“We announced yesterday afternoon and by CHANGES vûSHEûSAID û
“It took us a while but with this first Sonia the evening had £700m demand at plus 11bp.
trade we have completed the family of new risk- The trade was definitely above expectations. The h!SûAûRESULTûALLûTHESE ûMUNICIPALITIESûAREû
free rate benchmarks,” said Petra Wehlert, head spread was very tight if you look at the range of becoming very aware of ESG and how their
of capital markets at KfW. products we’ve seen here,” she said. FUNDINGûMIXûANDûPROlLEûWILLûCHANGEûOVERû
time, to accommodate not just the green
“We have done ESTR, SOFR and Sonia, so Some 84% of the allocation went to UK agenda but also the social agenda, which
we have the full range now. We put the highest accounts, with the remainder going to EMEA. OBVIOUSLYûGOûHANDûINûHAND v
priority on the euro market, which is strategically Banks and bank treasuries received the lion’s
most important for us, and followed up with share of the distribution by investor type with EU THE ONLY TALK IN TOWN, EFSF A
SOFR and then Sonia. In some ways it reflects 61%. Central banks and official institutions FOREGONE CONCLUSION
the relative strategic importance of the markets received 23% and fund managers, pension funds
to us.” and insurers 11%, with 5% going to others. The EUROPEAN UNION’s upcoming debut trade
under the NextGenerationEU programme
The borrower brought its inaugural SOFR An undersupplied Sonia market and the fact was the only talk of the market after the
trade in February, after making its ESTR debut in the trade was a debut transaction contributed to issuer sent out a request for proposal on
November 2019. the strong level of interest, according to the lead. &RIDAYûMORNING û

The spread for the £500m no-grow June 2024 “A combination of a lack high-quality supply While not unusual for the borrower to
floater was set at 10bp over the Sonia index, 1bp in Sonia and a certain amount of interest given send RFPs at the end of a week, the timeline
inside IPTs, via NatWest Markets, RBC and TD that it’s their inaugural one have pushed it on,” has caught banks off-guard with responses
Securities. he said. due on June 7 ahead of a global investor call
THEûFOLLOWINGûDAY û&ORû352%ûDEALS ûBANKSû
“It’s a beauty – it’s their inaugural deal and it’s “There’s probably 90% in there that you would TYPICALLYûHADûAûMUCHûLONGERûLEADûTIME û
gone really well,” said a lead. “It’s on the tighter expect to be in a Sonia book and it’s kind of a
end of what you normally get for a Sonia trade. who’s who of bank treasuries and really money h)T SûTHEûONLYûTHINGûPEOPLEûAREûTALKINGû
You’re getting pretty close to where a bank can accounts.” ABOUT vûSAIDûAû33!ûSYNDICATEûBANKER ûh7ITHû
put the money at the Bank of England.” David Cheetham õ BNûTOûDOû;THISûYEAR=ûTHEYûCAN TûBEûASLEEPûATû
THEûWHEEL ûTHEYûNEEDûTOûGETûONûWITHûIT v
h)T SûGONEûALONGûNICELYûANDûHASûBEENûAû that will help the social matrix of their
FAIRLYûBUSYûCOUPLEûOFûDAYSûINûEUROS û4HEû REGION vûSHEûSAID û The issuer has asked for feedback on a
market is in decent shape and people are minimum €11bn trade, with bankers
trying to get deals done before the ECB [next “We speak to many issuers and one does expecting a deal size in the region of €11bn–
WEEK= vûHEûSAID get quite a clear sense about whether they €15bn (see Top News for more details on
are really passionate about that, and LCFB .'%5
Beyond the pricing, though, the most DElNITELYûFELLûINTOûTHATûCATEGORY û4HEYûALSOû
interesting aspect of the deal is the use of have the respective data behind it to prove “Banks have had plenty of practice in
PROCEEDS û THATûTHISûWASûCOREûTOûTHEIRûEXPENDITURES v recent years and have got a lot better at the
2&0ûPROCESS vûSAIDûANOTHERûSYNDICATEûBANKER û
h)FûYOUûCOMPAREûITûTOûOTHERûMUNICIPALITIES û MARKET DEVELOPMENT h7ITHû%5 û%3- %&3& ûIT SûMOREûORûLESSû
it is very much more focused on education LCFB’s framework is an example of a become a bi-monthly process, so it’s pretty
ANDûSPORT û)T SûNOTûAFFORDABLEûHOUSINGûANDû growing trend in which European STRAIGHTFORWARD v
general building like you see elsewhere, it is municipalities are highlighting the ESG
VERYûSPECIlCûAROUNDûEDUCATION ûSPORTSûANDû ASPECTûOFûTHEIRûPUBLICûSPENDING û !ûDEALûINûTHEûõ BNnõ BNûRANGEûWOULDû
HOWûTHATûTHENûHASûITSûBENElTûONûSOCIALû be slightly smaller than the €17bn dual-
inclusion,” said Caroline Haas, head of “What we are generally seeing in the tranche debut placed by the EU under its
SUSTAINABLEûlNANCEûFORûlNANCIALûINSTITUTIONSû MARKETûISûTHATûTHEREûISûAûRECLASSIlCATIONûOFû 352%ûPROGRAMME û
ATû.AT7EST projects and lending that is already doing a
COMMONûGOOD û)FûTHISûISûTHEûCASEûTHENûIT SûAû h352%ûWASûAûBITûDIFFERENT vûTHEûlRSTû
Work on the new framework began in very viable alternative to be packaged in a BANKERûSAID ûh4HEYûHADûAûMUCHûSHORTERûTIMEû
!PRIL ûWITHûTHEûAREASûITûFOCUSESûONûDIFFERINGû GREENûORûSOCIALûBONDûFRAMEWORK vûSAIDû(AAS û HORIZON v
FROMûITSûPEERS ûACCORDINGûTOû(AAS
h4HISûTHENûHIGHLIGHTSûTHEûBENElTSûANDû !û$#-ûBANKERûSAIDûAû
YEARûWOULDûBEûTHEû
“What was very evident when we were IMPACTûOFûTHEûEXPENDITURES û4HEûMAJORITYûOFû most likely tenor given the depth of demand
approached by LCFB was that the education the educational lending that LCFB offers is ATûTHATûPARTûOFûTHEûCURVE û4HEû%5ûPICKEDûTHEû
ASPECTûWASûVERYûSUBSTANTIVE û4HEYûPUTûAûLOTû grants that do not need to be paid back, and maturity for its SURE debut, bringing a
of effort into ensuring that their population that has an enormous impact on social õ BNû û/CTOBERû ûATû BPûOVERûMID

is receiving the right education along their MOBILITY v SWAPS û"ONDSûWEREûBIDûATû BPûTHROUGHûONû
LIFEûJOURNEY û4HEYûREALLYûDOûBELIEVEûSTRONGLYû &RIDAY ûACCORDINGûTOû4RADEWEB û

The focus on the EU is unlikely to derail
the EUROPEAN FINANCIAL STABILITY FACILITY, which
ALSOûSENTûANû2&0ûLASTûWEEK û!ûFOURTHûBANKERû
said he expected the supranational to pick a
SEVEN
YEARûMATURITY û

24 International Financing Review June 5 2021

BONDS SSAR

“Seven-year is very much the sweet spot – 4HEREûISûONLYûONEû#ANADIANû33!ûNAMEûWITHû CORONAVIRUSûOUTBREAK û/Nû&EBRUARYû û3 0û
ANYTHINGûATûTHATûTENORûWILLûmY vûHEûSAID û Sonia-linked bonds – EDC, which has tapped LIFTEDûITSûCOUNTRYûRATINGûTOû!! ûWITHûAûSTABLEû
the structure three times over the past two OUTLOOKûFROMû!!ûWITHûAûPOSITIVEûOUTLOOK
With a mere €2bn to raise, the deal is YEARSûWITHûTHREE
YEARûANDûlVE
YEARû&2.S
expected to launch intraday on Monday, -OODY SûRATESû.EWû:EALANDû!AAûWITHûAû
leaving the stage clear with the NGEU call For the lead, the most viable marker for STABLEûOUTLOOK ûWHILEû&ITCHûHASûITûATû!!ûWITHû
THEûFOLLOWINGûMORNING û #00)"ûISûTHEûINAUGURALûa Mû*UNEû û AûPOSITIVEûOUTLOOK
3ONIAû&2.û+F7ûPRICEDûATû3ONIAûPLUSû BPûONû
AGENCE FRANCAISE DE DEVELOPPEMENT has Wednesday, after garnering in excess of KBN EXTENDS KAURI RUSH
mandated Barclays, BNP Paribas, Credit a BNûINûORDERSûFROMûMOREûTHANû û
Agricole, HSBC and Societe Generale for a long ACCOUNTS 4HEû+AURIûMARKETûREMAINSûONûCOURSEûTOûSETû
seven-year deal, its second sustainable an annual supply record after Norwegian
BENCHMARK û /THERûMARKETûPARTICIPANTSûINDICATEDû%)"û local government funding agency
ANDû7ORLDû"ANKûASûCOMPARABLEûISSUERS û KOMMUNALBANKENûTAPPEDûITSû û!PRILû û
4HEû!! !!ûRATEDûAGENCYûMADEûITSûDEBUTûINû SûFORû.: Mû 53 M ûTOûINCREASEû
the format at the end of last year, pricing a 4HISûWILLûBEû#00)" SûlRSTûSTERLINGûFORAYûOFû THEûSIZEûOFûTHEûBONDûTOû.: BN
õ BNûSEVEN
YEARûATû BPûOVERû/!4S û4HEû û)TûTOOKûITSûlRSTûSTEPSûINûTHATûMARKETûINû
bond was quoted around 10bp tighter January 2020 and has since built a curve 4HEûREOPENINGûTAKESûYEAR
TO
DATEû+AURIû
ACCORDINGûTOû%IKONûDATA û4HEû!&$ûTEAMûHELDû COMPRISINGûTHREEûlXED
RATEûBONDSûWITHû ISSUANCEûUPûTOû.: BNûFROMûNINEûTRADESû
CALLSûONû*UNEû û maturities ranging from July 2023 to by six supranationals and agencies, well
$ECEMBERû ABOVEûTHEû.: BNûRAISEDûINûTHEûSAMEû
4HEûPROCEEDSûWILLûBEûUSEDûTOûlNANCEûAND period in 2020 which ended with a record
ORûRElNANCEûELIGIBLEûSUSTAINABLEû NON-CORE CURRENCIES .: BNûOFûSUPPLY
expenditures as set out in the SDG Bond
&RAMEWORK û NZ TREASURY TO OPEN 2032 LINE !CTIVITYûHASûBEENûBOOSTEDûBYûAûSURGEûINû
environmental, social and governance
STERLING The NEW ZEALAND TREASURYû !AA !! !! ûHASû offerings with four trades, from the World
mandated ANZ, BNZ, CBA and JP Morgan for a "ANK û!SIANû$EVELOPMENTû"ANK û!SIANû
CPPIB PREPARES FIRST SONIA FRN .: BNn BNû 53 BNn BN û )NFRASTRUCTUREû"ANKûANDû%UROPEANû
syndicated sale of new May 15 2032 nominal )NVESTMENTû"ANK ûTOTALLINGû.: BN
CPPIB CAPITAL is gearing up for the launch of BONDS ûEXPECTEDûTOûLAUNCHûTHISûWEEK
ITSûlRSTû3ONIA
LINKEDûmOATING
RATEû These bonds fund sustainability, gender
TRANSACTION û4HEû#ANADIANûAGENCYûISû Last month, the Treasury said it also equality and climate awareness projects and
READYINGûAûlVE
YEARû2EGû3ûBENCHMARKû expected to issue two more new include the biggest ESG issue to date in New
format and has picked Bank of America, HSBC, benchmarks via syndication in 2021–22, Zealand dollars, the World Bank’s NZ$1bn
NatWest Markets, RBC and TD to act as beginning with a curve-extending 2051 ûSEVEN
YEARûSUSTAINABLEûDEVELOPMENTû
BOOKRUNNERS nominal bond offering by December 31 to NOTEûONû!PRILû
help meet its revised 2022–23 gross NZGB
“Sonia is one of many products in our multi- issuance forecast of NZ$25bn (previously ANZûWASûSOLEûLEADûMANAGERûFORû+". Sû
PRODUCT ûMULTI
CURRENCYûOFFERINGûSUITE û7Eû .: BN û increase, which priced on Wednesday at
have made a commitment to being a regular ûTOûYIELDû ûmATûTOûMID
SWAPSû
ISSUERûINûTHEûSTERLINGûSPACE û4HEûCURRENTû 4HEû4REASURYûHADûNOûDIFlCULTYûINû ANDû BPûOVERûTHEû!PRILû û.:'"
demand dynamic for Sonia presents a good executing six jumbo sovereign issues
opportunity for a strong transaction,” said FOLLOWINGûTHEûPANDEMICûOUTBREAK û4HESEû +".ûRAISEDû.: MûFROMûTHEûINITIALûSALEû
*AMESû,OGUSH ûMANAGINGûDIRECTOR ûlNANCING û RAISEDûAûCOMBINEDû.: BNûBETWEENû-AYû OFûTHEûBONDûONû!PRILû ûWHICHûPRICEDûATû
COLLATERALûANDûTRADING û#00û)NVESTMENTS û 15 2020 and February 4 2021 with mid-swaps plus 1bp and 21bp wide of the
maturities ranging from May 2024 to May !PRILû û.:'"
“We do not view sterling as an arbitrage
MARKET û.ORûDOûWEûTAP û)TûISûAûCOREûISSUANCEû SWEDEN TO EXTEND CURVE AS
MARKETûFORûUS û#URRENTûLEVELSûFORû3ONIAûAREû )NVESTORûCONlDENCEûWASûFORTIlEDûBYû.EWû BORROWING REQUIREMENT DROPS
favourable relative to all our issuance Zealand’s successful handling of the
OPPORTUNITIESûALONGûTHEûSTERLINGûCURVE v PANDEMICûANDûHUGEûMONETARYûANDûlSCALû The KINGDOM OF SWEDEN is planning to extend
SUPPORT ûINCLUDINGûTHEû,ARGE
3CALEû!SSETû its curve with a 50-year benchmark issue
One of the leads pointed out that the 0URCHASEû0ROGRAMME despite a drop in its borrowing
sterling market has had a tough ride this REQUIREMENTS û
YEAR 5NDERûTHEû,3!0ûTHEû2ESERVEû"ANKûCANûBUYû
up to NZ$100bn of sovereign and local 4HEûSOVEREIGNû !AA !!! !!! ûHASû
“There hasn’t been the same level of government paper in the secondary market mandated Barclays, Danske Bank, NatWest
demand that we saw last year – spreads have by June 2022 – freeing up funds to Markets, Nordea, SEB, Svenska Handelsbanken
tightened quite a lot from last year, there’s PARTICIPATEûINûNEWûBENCHMARKS and Swedbank to lead the June 23 2071
been quite a lot of paper on the street, and benchmark offering, which is expected to be
there’s been limited performance in the Offshore investors were comforted by LAUNCHEDûANDûPRICEDûFROMû*UNEû û
SPACE vûHEûSAID New Zealand’s still strong relative credit
position and greater liquidity thanks to the 4HEûEXPECTEDû3+R BNû 53 BN ûTRADEû
He added that some investors, such as country’s inclusion in Citigroup’s nominal will emerge despite a drop in the sovereign’s
bank treasuries, have lesser need for sterling 7ORLDû'OVERNMENTû"ONDû)NDEXûANDûANû FUNDINGûNEEDS û
paper and have become more price increase in the maximum size of individual
SENSITIVE .:'"ûTRANCHESûTOû.: BN h4HEûDEBTûOFlCE SûOVERALLûASSESSMENTûISû
that the long bond can reduce the risk in the
“One of the positives has been the New Zealand was rewarded for its central government debt, at a low cost from
CONTINUEDûDEMANDûFORû&2.S û)TûMAKESûSENSEû successful containment of Covid-19 and a historical perspective,” Sweden’s national
– at some point we’re going to go into a rate resultant economic revival with the world’s DEBTûOFlCEûWROTE
hiking environment and the FRN product is lRSTûSOVEREIGNûUPGRADEûSINCEûTHEû
GREATûFORûTHAT vûTHEûLEADûSAID The country’s GDP growth is expected to be
back to its pre-crisis level by around mid-year and

International Financing Review June 5 2021 25

GROWûBYû ûTHISûYEAR ûJUSTûOVERû ûPERCENTAGEû The new notes, which typically receive 6ODAFONE SûSENIORû û S ûISSUEDûBACKû
POINTûHIGHERûTHANûTHEûPREVIOUSûFORECAST ûEQUITYûCREDITûFROMûRATINGSûAGENCIES ûAREû in 2019, were trading in the secondary
EARMARKEDûFORûRElNANCINGûITSûa BNû û MARKET û!TûTHATûLEVEL ûINVESTORSûWEREûONLYû
“The Swedish economy is recovering convertible, for which Vodafone initially being offered a modest spread pick-up over
increasingly faster after last year’s drop resulting sought equity credit back in 2019 but which THEûSHORTERûCALLûPERIODS û
FROMûTHEûPANDEMIC vûTHEûDEBTûOFlCEûSAID WASûTREATEDûASû ûDEBTûBYûTHEûAGENCIES û
“The long call makes this a unique
“The higher economic growth leads to Vodafone issued into a very strong market security, and we would want compensation
increased income from taxes for the central INûWHICHûAVERAGEû)#%û"OF!ûCREDITûSPREADSû for this at new issue,” CreditSights noted in
government and thereby a stronger budget WEREûATûORûNEARûTHEIRûPOST
lNANCIALûCRISISû THEûREPORT
balance, lower borrowing requirement and lows and Treasury rates remained range-
LOWERûDEBT v BOUNDûATû n ûTHROUGHûTHEûMONTHûOFû “Though we recognise hybrids price off
-AY û4HEûCOMPANYûWASûALSOûACCESSINGûTHEû THEûSENIORûCURVE ûANDû;6ODAFONE S=ûISûmAT û
The DMO had previously forecast to raise little-used US dollar corporate hybrid which arguably makes the case for the lack
3+R BNûINûNOMINALûGOVERNMENTûBONDSûBUTû market for this debt raise, a sector that of pick-up, these are still deeply
THISûHASûNOWûDROPPEDûTOû3+R BN û COMESûWITHûHIGHERûYIELDSûFORûINVESTORS û subordinated securities with equity-like
FEATURESûANDû ûYEARSûISûAûLONGûTIME v
CORPORATES Vodafone mandated Bank of America as
global coordinator for its 60-year non-call One investor noted that there was little
US DOLLARS û
YEARûNON
CALLû ûANDû
YEARûNON
push-back on the equity credit portion of
CALLû ûHYBRIDûBONDSûTHATûPRICEDûATû û this deal stemming from the 2019 deal and
VODAFONE RETURNS TO US DOLLARS ûANDû ûRESPECTIVELY û4HOSEû that the yields were very enticing,
WITH RARE 30-YEAR HYBRID yields were tight to initial price talk set at especially compared with recent senior
û ûANDû TELECOMSûOFFERINGSûFROMû6ERIZONûANDû!4 4 û
5+ûTELECOMMUNICATIONSûCOMPANYûVODAFONE
returned to the US dollar bond market on WHERE ELSE? Vodafone, like its US telecoms
4UESDAYûFORûTHEûlRSTûTIMEûSINCEû û )NVESTORSûWOULDûTYPICALLYûHAVEûTOûBUYûPAPERû COMPETITORS ûHASûBENElTEDûFROMûAûGREATERû
offering investors enticing yields on a FROMûAû3INGLEû"ûRATEDûCREDITûTOûlNDûYIELDSû NEEDûFORûAT
HOMEû)NTERNETûSERVICEûAMIDûTHEû
53 BNûTHREE
PARTûHYBRIDûDEAL û SIMILARûTOûTHEû ûONûOFFERûINûTHEû
YEARû PANDEMICûANDûREMAINSûAûVERYûSTABLEûCREDIT û
NON
CALLûBONDS ûRESEARCHûlRMû#REDIT3IGHTSû !NDûTHEûCOMPANY SûSCARCITYûINû53ûDOLLARSû
ALL CORPORATE BONDS IN STERLING NOTEDûINûAûREPORT û4HEûNEWûOFFERINGûFROMû only added further to the tightening
BOOKRUNNERS: 1/1/2021 TO DATE 6ODAFONEûISûEXPECTEDûTOûBEûRATEDû"A "" THROUGHûPRICEûPROGRESSION û
"" ûANDûTHEûTELECOMSûCOMPANYûISûRATEDû
Managing No of Total Share "AA """ """ûATûTHEûSENIORûUNSECUREDûLEVEL û “We welcome this deal, as we think this
bank or group issues £(m) (%) ISûGOODûINûTERMSûOFûCURRENCYûDIVERSIlCATIONû
The subordinated bonds sit low in for the hybrid market, which is still largely
1 Barclays 15 1,290.44 14.4 Vodafone’s capital stack and also come with DENOMINATEDûINûEUROS vû6OONû+IATû,AIûSAID
2 HSBC 11 1,109.01 12.4 duration risk as the longest hybrid offered in
3 NatWest Markets 12 1,075.81 12.0 THEû53ûDOLLARûMARKET û “We think that, hopefully, this may also
4 Lloyds Bank 10 836.09 9.3 encourage other issuers that currently
5 BNP Paribas 6 619.97 6.9 “We think the Vodafone 30-year tranche only have euro-denominated hybrids to
6 MUFG 5 507.20 5.7 could be interesting, as it would be by far issue in other currencies, which we think
7 Santander 5 488.11 5.4 the longest-dated call in the corporate ISûWELCOMEDûBYûTHEûINVESTORûBASE v
8 RBC 6 462.34 5.2 HYBRIDSûMARKET vûSAIDû6OONû+IATû,AI ûSENIORû
9 Bank of America 3 277.05 3.1 PORTFOLIOûMANAGERûATû5+ûASSETûMANAGERû EUROS
10 JP Morgan 3 242.75 2.7 2EDHEDGE ûh7EûTHINKûTHEREûCOULDûBEûSTRONGû
31 8,975.61 global demand for these long-dated hybrids, NESTLE UNWRAPS LONG-END DEMAND
Total especially from duration-hungry investors
FROMû!SIA v NESTLE waded into the primary to raise
Source: Refinitiv SDC code: N8a õ BNûACROSSûFOURûTRANCHESûLASTû
CreditSights estimates the 60NC30 Wednesday, and with solid demand and a
tranche started some 190bp back of where limited or zero premium on the 20-year
part, the deal demonstrated that investors
ALL INVESTMENT-GRADE BONDS IN EUROS ALL INV-GRADE US CORPORATE BONDS are once again developing an appetite for
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE LONGER
DATEDûCORPORATEûEUROûISSUES

Managing No of Total Share Managing No of Total Share 4HEû3WISSûFOODûANDûDRINKûMAKERû !A
bank or group issues €(m) (%) bank or group issues US$(m) (%) !!n ûDECIDEDûTOûTAKEûONûFRESHûFUNDINGû
while conditions are supportive and
1 BNP Paribas 181 50,565.66 8.2 1 JP Morgan 54 12,545.12 13.8 COMPETINGûSUPPLYûLOW
2 JP Morgan 147 42,866.95 6.9 2 Bank of America 44 10,315.25 11.4
3 Barclays 114 37,599.57 6.1 3 Wells Fargo 36 6,904.96 7.6 “The market is open, they were looking
4 Deutsche Bank 115 34,629.52 5.6 4 Citigroup 27 6,675.83 7.4 for a window and the pricing that they
5 SG 108 34,619.10 5.6 5 Morgan Stanley 26 5,998.23 6.6 wanted was available to them,” said a
6 Credit Agricole 122 30,761.23 5.0 6 Goldman Sachs 23 5,763.32 6.4 SYNDICATEûBANKER
7 HSBC 123 30,560.04 4.9 7 Deutsche Bank 16 4,547.55 5.0
8 UniCredit 112 30,396.91 4.9 8 RBC 23 3,548.72 3.9 .ESTLEûISSUEDûõ BNû*UNEû S û
9 Citigroup 98 28,973.10 4.7 9 TD Securities 15 3,500.29 3.9 €750m June 2029s, €500m February 2034s
10 Bank of America 84 27,466.07 4.4 10 Barclays 20 3,400.64 3.8 and €650m June 2041, with spreads set at
673 620,153.19 98 90,608.73 22bp, 32bp, 40bp and 50bp over mid-
Total Total SWAPS

Excluding ABS/MBS, equity-related debt. Excluding equity-related debt, ABS/MBS, all foreign issues, global issues One banker involved in the transaction
and non corporates. PLACEDûFAIRûVALUEûATû BP û BP û BPûANDû

Source: Refinitiv SDC code: N9 Source: Refinitiv SDC code: F6a

26 International Financing Review June 5 2021

BONDS CORPORATES

BP ûWHILEûAûSYNDICATEûOFlCIALûOFFûTHEûDEALû Worley opens SLB door for peers
plumped for around 25bp, 30bp–35bp,
BPûANDû BP „ CORPORATES Australian engineering services group taps soaring
European ESG demand
BNP Paribas, Deutsche Bank, HSBC, ING, JP
Morgan and MizuhoûRANûTHEûDEAL Australian engineering company WORLEY, rated as the most relevant comp having made a debut
BBB (S&P), broke important new ground on €600m seven-year senior unsecured Eurobond
)NûKEEPINGûWITHûWHATûHASûBEENûSEENûINûTHEû Tuesday with a well-oversubscribed €500m five- issue, also at 125bp over mid-swaps, on May 21.
high-grade market of late, leads gave plenty year sustainability-linked Eurobond issue.
OFûLEEWAYûINûTERMSûOFûPREMIUMûATû)04SûONû BNP Paribas and HSBC were active
the 20-year tranche, with bankers on and Not only is this Worley’s debut public bond bookrunners on the transaction while Bank of
away from the deal seeing a concession of offering, it is the first public SLB from an Australian China, Standard Chartered Bank and Wells
AROUNDû BPn BP ûBASEDûONûTHEû BPn BPû company, the largest issue size and lowest coupon Fargo were co-bookrunners and passive JLMs.
STARTINGûPOINT for any five-year euro issue from a BBB rated Aussie
corporate and the first time any issuer anywhere GOOD FIT
)04SûFORûTHEûOTHERûBONDSûWEREû BPûAREA û has printed its inaugural deal in this format. Worley (formerly known as WorleyParsons) is a
BPn BPûANDû BPn BP global provider of project and asset services to the
The structure of the SLB means that, rather energy, chemical and resources sectors and the 15th
Last month’s volatility in rates caused than a coupon step-up, the company faces a one- issuer of SLBs, making the format look a good fit
some investors to become wary of longer- off premium payment of 25bp at maturity or an for other Australian corporates that lack sufficient
DATEDûBONDS earlier optional redemption date if it fails to slash green assets to package into green bonds.
its absolute Scope 1 and 2 CO2 emissions by at
“The spread on a shorter-dated lower least 50% by October 2025 from a 2020 baseline. Several Australian companies, including
Triple B is pretty insulating against moves in Wesfarmers, Adelaide Airport, Queensland
RATES vûSAIDûONEûFUNDûMANAGER ûh)T SûWHENû “Choosing an SLB was an easy decision as it Airport, Port of Newcastle, Frasers, AGL, Downer
you look at high-quality longer-dated bonds, aligns our financing with group sustainability and G8 Education have taken out bilateral or
they are the ones that are much more ambitions across our technically complex syndicated sustainability-linked loans.
sensitive to the moves in government bond projects,” said Craig Busch, senior group director
YIELDS v of treasury. “It is a natural progression for corporates like
these to access the sustainability-linked bond
The previous week, Dutch utility Tennet “We have historically accessed the US private market given how effective KPI targets can be
! !n ûPRINTEDûAûõ Mû û*UNEû ûASû placement market but the purchase of Jacobs to communicate commitment to ESG goals,
part of a triple-tranche exercise, that was a ECR in 2019 boosted our European operations without raising funds for specific projects,” said
GREENûBONDûANDûHADûITSûOWNûDYNAMICS û4HEû and provided an opportunity to enter the euro Brad Scott, managing director and head of DCM
tranche carried the highest premium and market as the first drawdown of our US$2bn at Bank of China in Sydney.
ATTRACTEDûTHEûSMALLESTûBOOK EMTN programme at an appealing, sub 1%
interest rate for five years.” Scott described the Worley trade as a
Bankers, however, said that they were “watershed” development in the broadening of
seeing this attitude beginning to ease and Europe is the vanguard of the SLB market, ESG funding frontiers for APAC corporates.
appetite for longer-dated issues from which has taken off this year, contributing 16% of
CORPORATESûGRADUALLYûRETURNING all European ESG-labelled bonds so far in 2021. The SLB underpins Worley’s intention to slash
its carbon footprint, with Sustainalytics reporting
“Certainly last month the interest in Unlike green bonds, which tend to be sold that the new bonds align with the Sustainability-
DURATIONûWASûLIMITEDûBUTû)ûGETûTHEûSENSEûTHATû by issuers with heavy green expenditure, such Linked Bond Principles 2020 released by the
that attitude is disappearing slightly now,” as renewable energy, utilities and sustainable International Capital Market Association in June
SAIDûAûSECONDûSYNDICATEûOFlCIAL ûh4HEREûISûANû construction firms, sustainability-linked bonds last year.
acceptance that the new rates paradigm will are forward-looking, performance-based
LIKELYûPERSIST v instruments. “Worley is committed to achieving net zero
Scope 1 and Scope 2 greenhouse gas emissions
This seemed to be borne out by the books The latter are increasingly favoured by many by 2030 and to proactively support our
OFû.ESTLE SûTRANSACTION û!LTHOUGHûTHEû green investors who are seeking to measure customers to reduce emissions on their projects
shortest tranche achieved the largest book, the impact of their investments, or may be and assets,” said company CEO Chris Ashton.
WITHûTHEûlNALûBOOKûAROUNDûõ BN ûASûWELLûASûAû concerned by a lack of accountability in the “use
negative new issue premium, it was the 20- of proceeds” model used for most green bonds. The one-way penalty structure, if the KPIs are
year that mustered the second-largest missed, contrasts with Australian sustainability-
VOLUMEûOFûORDERS ûREACHINGûOVERûõ BN An impressively large and sticky order book in linked loans, which typically come with two-way
excess of €1.7bn provided sufficient traction to pricing to incentivise issuers to reach more
The books for the two intermediate price Worley’s 0.875% June 9 2026s at a yield ambitious targets and penalise those that fall
TRANCHESûWEREûõ BNûANDûõ BN of 0.99%, 15bp below 140bp area initial price below a baseline.
thoughts at mid-swaps plus 125bp.
The stated use of proceeds for the new “We are still at the stage of market
ISSUEûISûGENERALûCORPORATEûPURPOSES û4HEû Asset managers bought 79.9%, banks and development where we are finding out what
issuer has €1bn of bonds falling due in the financial institutions 10.6%, insurance and structures work best,” said a European DCM
SECONDûHALFûOFûTHISûYEARûANDûINû!PRILûITûWASû pension funds 3.1%, central banks and official banker.
announced that Nestle was expanding its institutions 2.6%, and others 3.7%.
portfolio of health and nutrition products “But that is one of the attractions of the SLB
WITHûTHEû53 BNûACQUISITIONûOFû4HEû German and Austrian accounts were allotted format, that there is flexibility, and if you want to
"OUNTIFULû#OMPANY SûCOREûBRANDS 35%, UK and Ireland 30.3%, Switzerland 6.1%, have a short maturity, but a meaningfully distant
France 4.6%, Nordic 3.6%, Benelux 3.5%, other target then a premium might be better suited
ESG CORPORATE CASCADE Europe 12.7%, Asia 3.4% and others 0.9%. than a coupon step.”
GROWS WITH EWE, RWE John Weavers
French liquid gas specialist Technip Energies,
ESG issuance dominated the euro high- with an identical BBB (S&P) rating, was identified
grade market last Tuesday, with German
utilities EWE and RWE issuing their inaugural
GREENûBONDS

International Financing Review June 5 2021 27

!SûTHEûYEARûHASûWORNûON ûCORPORATESû With orders growing to about €2bn, the h)TûISûRELATIVELYûQUICKûBUTûIT SûAûWAYûTOû
have increasingly turned to ESG LEADSûlXEDûTHEûSPREADûATû BP show they want to derisk and it’s a
FUNDRAISING ûWITHûALMOSTûõ BNûOFûSUPPLYû STATEMENTûOFûCONlDENCE vûSAIDûAûBANKERûATû
in the investment-grade market in May, RWE lacks an outstanding senior ONEûOFûTHEûLEADS ûh4HEûDEALûSHOULDû
ACCORDINGûTOû)&2ûDATA ûCOMPAREDûWITHû benchmark curve to determine fair value, encounter few anti-trust issues and
õ BNûINû!PRIL but one lead said that investor feedback 6ONOVIA Sû#%/ûHASûSAIDûHEûISûCONlDENTûTHATû
SUGGESTEDûITûWASûINûTHEûLOWûTOûMID
S Deutsche Wohnen’s shareholders will
h)T SûNOTûTHATûLONGûAFTERûAûLOTûOFû ACCEPTûTHEIRûOFFER v
companies have announced their results RWE established its green bond
ANDûSUSTAINABLEûlNANCINGûISûANOTHERûWAYû FRAMEWORKûINû!PRILû ûBUTûNOTûBEINGûAû Just a week before the mandate
of cementing the [ESG] commitments that regular borrower has not tapped the market announcement, Vonovia had said it would
a large number of corporates are now UNTILûNOW û4HEûCOMPANYûWILLûUSEûTHEû acquire its rival Deutsche Wohnen for
MAKING vûSAIDûAû$#-ûBANKER PROCEEDSûFROMûGREENûBONDSûTOûlNANCEûORû AROUNDûõ BN û6ONOVIAûHASûOFFEREDûTOûSELLû
RElNANCEûRENEWABLEûENERGYûPROJECTS û about 20,000 apartments to the state of
%7%û "AA ûANDû27%û "AA n """ ûWENTû focusing on the development and Berlin for €2bn, as part of discussions
head-to-head with their green bonds, and construction of wind and solar power around affordable housing in the city and
although that could have led to either taking GENERATIONûASSETS TOûFACILITATEûTHEûMERGER
demand away from the other, both ended up
WITHûDEALSûINûLINEûWITHûFAIRûVALUE Last year, RWE became one of the largest Vonovia is offering Deutsche Wohnen
renewable energy providers in the world SHAREHOLDERSûõ ûAûSHAREûANDûTHEû
EWE offered the shorter duration of the after it took over the renewable energy transaction is expected to close by the end
two, testing interest for €500m of no-grow BUSINESSûOFû% /.ûANDû)NNOGYûINûANûASSETû OFû!UGUST
SEVEN
YEARûNOTES û-ARKETINGûBEGANûATû BPn SWAP
65bp over swaps via BNP Paribas and ING, The entire bridge facility for the
which was about 20bp–25bp back of fair The company, however, still has several ACQUISITIONûTOTALSûõ BN ûOFûWHICHûõ BNn
VALUE ûACCORDINGûTOûONEûSYNDICATEûBANKER coal generation assets, including Germany’s õ BNûWILLûBEûRElNANCEDûWITHûBONDS û
LARGESTûLIGNITEûmEET ûACCORDINGûTOû ACCORDINGûTOûTHEûMERGERûPRESENTATION û
!ûBOOKûOFûMOREûTHANûõ BNûENABLEDûLEADSû #REDIT3IGHTS û27%ûEXTRACTSûABOUTû û !NOTHERûõ BNûISûLIKELYûTOûBEûFUNDEDûVIAûAû
to revise guidance to 40bp–45bp, before million tonnes of lignite a year, according its RIGHTSûISSUEûANDûTHEûREMAINDERûRElNANCEDû
LAUNCHINGûATûTHEûTIGHTûEND û4HEûBOOKûFELLû WEBSITE THROUGHûDISPOSALS
SLIGHTLYûTOûAROUNDûõ BN
CLEAR PATH TO ACQUISITION SUPPORTS )NûLIGHTûOFûTHEûACQUISITION û3 0ûHASû
%7%ûPUBLISHEDûITSûGREENûlNANCEû SPEEDY VONOVIA BRIDGE TAKEOUT AFlRMEDû6ONOVIA Sû""" ûRATINGS ûOUTLOOKû
framework in May and the funding it raises STABLE û-OODY SûHASûALSOûHANDEDûTHEûISSUERû
under the framework will be channeled into German residential real estate company AûRATINGûOFû! û STABLE ûANDû3COPEûRATESûTHEû
projects related to three categories – VONOVIA announced last Friday the mandate CREDITû!nû STABLE
RENEWABLEûENERGY ûENERGYûEFlCIENCYûANDû for the bond takeout of the bridge facility it
CLEANûTRANSPORTATION used to back its acquisition of Deutsche )TûITSûINAUGURALûRATINGSûOFûTHEûCOMPANY û
Wohnen, which itself was only reported at Moody’s highlighted Vonovia’s focus on
3PECIlCALLY ûTHESEûCOULDûINCLUDEûTHEû THEûENDûOFûLASTûMONTH regulated residential rental markets that
construction of wind or solar power are resilient in economic downturns, the
generation facilities, switching the Bank of America, Morgan Stanley and Societe company’s scale and its moderate leverage,
BROADBANDûNETWORKûTOûOPTICûlBREûFROMû Generale have been tapped to run the euro adequate liquidity, excellent access to
copper, and the development and multi-tranche senior unsecured transaction, capital, a good level of unencumbered
construction of electric vehicle charging which will potentially span long three, six, ASSETSûANDûDIVERSIlEDûFUNDINGûSOURCES
STATIONS LONGûEIGHT û ûANDû
YEARûMATURITIES
!LSOûONûTHEûHORIZONûFORûTHISûWEEK û
RWE went for a €500m no-grow 10-year )NVESTORûCALLSûTAKEûPLACEûONû*UNEû ûANDû Finnish electricity distributor CARUNA
note issue via BBVA, Citigroup, Deutsche Bank The turnaround following the acquisition NETWORKSû """ û3 0 ûISûLININGûUPûANû
and Societe Generale û)NITIALûPRICINGûTHOUGHTSû ANNOUNCEMENTûISûQUICK û(OWEVER ûITûAPPEARSû inaugural green bond, with calls starting
WEREû BPn BPûBUTûBOOKSûOFûMOREûTHANû JUSTIlEDûCONSIDERINGûTHEûLACKûOFûOBSTACLESûINû ONû*UNEû
õ BNûALLOWEDûTHEûLEADSûTOûMOVEûTOû THEûWAYûOFûTHEûACQUISITION
GUIDANCEûOFû BPn BP The borrower is targeting a €300m
seven-year issue, arranged by NatWest
ALL INTERNATIONAL STERLING BONDS ALL SWISS FRANC BONDS INCLUDING Markets and SEB

EXCLUDING SECURITISATIONS SECURITISATIONS With bonds issued under its newly
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE ESTABLISHEDûGREENûlNANCEûFRAMEWORK û
#ARUNAûWILLûFUNDûENERGYûEFlCIENCYûPROJECTSû
Managing No of Total Share Managing No of Total Share such as the expansion of its network’s
bank or group issues £(m) (%) bank or group issues SFr(m) (%) capacity, upgrading of cables and overhead
lines and the development of energy storage
1 HSBC 41 8,006.54 11.8 1 Credit Suisse 56 5,961.53 25.3 ANDûRECOVERYûSYSTEMS
2 NatWest Markets 39 7,470.39 11.0 2 UBS 43 3,978.77 16.9
3 Barclays 50 7,029.86 10.3 3 Verband Schweiz 11 3,929.33 16.7 STERLING
4 JP Morgan 19 5,280.67 7.8 4 ZKB 28 2,370.11 10.1
5 RBC 30 4,961.44 7.3 5 Deutsche Bank 18 1,809.55 7.7 SALTAIRE ACHIEVES Aa3 RATING AHEAD
6 Nomura 10 4,668.86 6.9 6 Raiffeisen SG 22 1,758.73 7.5 OF DEBUT AUTUMN BOND
7 BNP Paribas 18 3,976.39 5.8 7 BNP Paribas
8 Deutsche Bank 13 3,689.63 5.4 8 Commerzbank 8 1,046.17 4.4 SALTAIRE FINANCE ûAûlNANCINGûVEHICLEûTHATûWILLû
9 Lloyds Bank 26 3,583.21 5.3 9 Basler KB 9 825.40 3.5 RAISEûFUNDINGûFORûTHEû5+ Sû!FFORDABLEû(OMESû
10 Bank of America 16 2,705.46 4.0 10 Credit Agricole 6 450.67 1.9 'UARANTEEû3CHEMEû !('3 ûWILLûLOOKûTOû
118 68,009.89 3 402.71 1.7
Total Total 110 23,566.41

Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt.

Source: Refinitiv SDC code: K05a Source: Refinitiv SDC code: K06c

28 International Financing Review June 5 2021

BONDS CORPORATES

MAKEûITSûlRSTûBENCHMARKûBONDûISSUEûTHISû BOOK ûWITHûPRIVATEûBANKSûTAKINGû û The holding company led by Masayoshi
autumn, having received its debut credit PENSIONûFUNDSû ûANDûINSURERSû 3ONûWILLûUSEûTHEûPROCEEDSûTOûHELPûRElNANCEû
RATINGûFROMû-OODY SûLASTûWEEK THEûOUTSTANDINGûc BNû
YEARûNON
CALLûlVEû
)NTERSHOPûISûRATEDûMIDû"""ûBYû#REDITû retail bond issue made in 2016 and the
h7EûEXPECTûOURûlRSTûBONDSûTOûBEûISSUEDûINû 3UISSE û"AA ûBYûFEDAlNûANDû"""nûBYû:+" ûALLû ¥361bn of seven-year subordinated retail
THEûAUTUMN vûSAIDûAûSOURCEûATû3ALTAIRE ûh7Eû WITHûAûSTABLEûOUTLOOK û BONDSûTHATûMATUREûINû$ECEMBER
have just begun the credit approval process
ONûTHEûlRSTûLOANSûTHATûITûWILLûBEûUSEDûTOû YEN Daiwa, SMBC Nikko, Mitsubishi UFJ Morgan
FUND v Stanley, Mizuho, Nomura and SBI Securities were
SOFTBANK PRICES JUMBO joint lead managers for the bonds, rated BBB
Moody’s announced that it had awarded RETAIL HYBRID BOND BYû*#2
Saltaire Finance’s £3bn senior secured MTN
PROGRAMMEûANû!A û STABLE ûRATINGûLASTûWEEK û SOFTBANK GROUPûRAISEDûc BNû 53 BN û NON-CORE CURRENCIES
based solely on the guarantee from the FROMûAû
YEARûNON
CALLûlVEûSUBORDINATEDû
Secretary of State for Housing, Communities RETAILûBONDûISSUEûTOûRElNANCEûSUBORDINATEDû BMW PLANS PUBLIC PANDA BOND
ANDû,OCALû'OVERNMENT bonds that can be called or will mature
LATERûTHISûYEAR BMW, which has been an active issuer of
Saltaire Finance forms a component of Panda bonds through private placements, is
THEû!('3 ûAûSCHEMEûSETûUPûBYûTHEû5+û The hybrid bond offering has a coupon of planning its inaugural public offering of the
government to provide long-term and lower- ûFORûTHEûlRSTûlVEûYEARS û4HEûCOUPONû bonds in two tranches in China’s interbank
cost debt to registered housing providers from June 2026 to June 2041 will be the one- MARKETûINûTHEûWEEKûOFû*UNEû
that will allow them to create more YEARû*'"ûRATEûPLUSû BP û&ROMû*UNEû ûTOû
AFFORDABLEûHOMES June 2046, it will be the one-year JGB rate 4HEû'ERMANûCARMAKER ûRATEDû! û STABLE û
PLUSû BP û4HEREAFTER ûTHEûCOUPONûWILLûBEû BYû-OODY SûANDû!û NEGATIVE ûBYû3 0 ûISû
Saltaire Housing, for which Saltaire THEûONE
YEARû*'"ûRATEûPLUSû BP aiming to issue one-year commercial paper
&INANCEûISûTHEûlNANCINGû306 ûISûAûWHOLLY
under a Rmb10bn (US$156m) CP issuance
OWNEDûSUBSIDIARYûOFû!2!û6ENNûANDûTHEû When the amendment to its shelf programme and three-year medium term
BENElCIARYûOFûTHEûCONCESSIONûGRANTEDûBYûTHEû REGISTRATIONûSTATEMENTûWASûlLEDûTOûTHEû+ANTOû notes with a tenor of up to three years under
GOVERNMENTûTOûMANAGEûTHEû!('3 Local Finance Bureau in mid-May, the Aû2MB BNû-4.ûISSUANCEûPROGRAMME
company said the initial coupon would be
The lending activities will be entirely BETWEENû ûANDû û The CP and MTNs will be issued through
lNANCEDûTHROUGHûGOVERNMENT
GUARANTEEDû wholly owned European subsidiary BMW
BONDSûISSUEDûBYûTHEûlNANCINGû306 ûTHEû Japanese market participants were paying Finance NV and guaranteed by parent
maturities of which are likely to be matched close attention to the company’s COMPANYû"-7û!'
TOûTHOSEûOFûTHEûLOANSûANDûUPûTOû ûYEARS RElNANCING ûWITHûSOMEûEVENûCITINGûTHISûASû
one of the main themes for the domestic Offshore institutional investors can also
SWISS FRANCS MARKETûTHISûYEAR participate in the deal through Bond
#ONNECT
INTERSHOP GOES GREEN WITH )Nû û3OFT"ANKûSOLDûAû
YEARûNON
CALLû
LATEST SWISSIE lVEûHYBRIDûBONDûISSUE ûALLOCATINGûc BNûTOû Bank of China is the lead underwriter and lead
institutional investors and ¥400bn to retail BOOKRUNNERûFORûTHEû#0ûANDû-4.S ûHSBC Bank
Swiss real estate developer INTERSHOP HOLDING INVESTORS û*APANESEûAUTHORITIESûWEREûSAIDûTOû (China) is the joint lead underwriter and joint
made an appearance in its domestic market be wary of the idea of selling such a risky bookrunner for the CP and Industrial and
on Wednesday with a SFr100m (US$111m) PRODUCTûTOûINDIVIDUALûINVESTORS û0ARTICIPANTSû Commercial Bank of China is joint lead underwriter
NO
GROWûlVE
YEARûSENIORûUNSECUREDûPUBLICû hence believed that the company would ANDûJOINTûBOOKRUNNERûFORûTHEû-4.S
GREENûBOND NEEDûTOûRElNANCEûONLYûWITHûWHOLESALEû
HYBRIDûBONDS The other syndicate members for the
)TûWASûTHEûCOMPANY SûSEVENTHûISSUEûSINCEû MTNs and CP are China Construction Bank, Citic
ûWITHûONLYûONEûnûTHEû3&R Mû û )Nû*ANUARYûTHISûYEAR ûITûDIDûTAKEûAûlRSTûSTEPû Securities, Deutsche Bank (China), MUFG Bank
!PRILû ûnûREMAININGûOUTSTANDING ûASûALLû INûITSûRElNANCINGûPROJECTûBYûSELLINGûAûc BNû (China) and Standard Chartered Bank (China)
THEûOTHERSûHAVEûMATURED
YEARûNON
CALLûlVEûHYBRIDûOFFERINGûATû ûTOû
INSTITUTIONALûINVESTORS BMW made its debut Panda bond issue in
Joint leads Credit Suisse and ZKB opened -ARCHû
BOOKSûATûMID
SWAPSûPLUSû BPn BP û4HISû
was revised to 65bp–70bp, with pricing ALL CORPORATE BONDS IN EUROS ALL US INVESTMENT GRADE CORPORATE DEBT
coming at the tight end, equivalent to Saron BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
PLUSû BPûORû3WISSûGOVERNMENTSûPLUSû
BP ûATûAû ûYIELD Managing No of Total Share Managing No of Total Share
bank or group issues €(m) (%) bank or group issues US$(m) (%)
The bonds came some 10bp inside
)NTERSHOP SûCURVE ûACCORDINGûTOûONEûLEADû 1 BNP Paribas 119 16,259.24 8.4 1 JP Morgan 277 97,457.61 13.7
OFlCIAL ûWHOûSAIDûFAIRûVALUEûBASEDûONû 2 JP Morgan 82 10,775.42 5.6 2 Bank of America 258 87,709.64 12.3
comparables for a normal issue was plus 3 Citigroup 69 10,481.94 5.4 3 Citigroup 222 70,659.39 9.9
BPûANDû BPûFORûAûGREENûBOND 4 Deutsche Bank 77 10,006.40 5.2 4 Morgan Stanley 152 53,978.35 7.6
5 HSBC 67 8,633.21 4.5 5 Goldman Sachs 141 53,013.03 7.4
“The bonds have an inverse curve due to 6 Bank of America 57 8,521.10 4.4 6 Wells Fargo 166 38,813.46 5.4
the negative yield on the front end, a feature 7 Credit Agricole 72 8,473.08 4.4 7 Barclays 100 26,152.46 3.7
SEENûONûOTHERûREALûESTATEûBONDS û)TûISûALMOSTû 8 Goldman Sachs 70 8,282.13 4.3 8 Deutsche Bank 24,123.84 3.4
a V-shaped spread curve to compensate for 9 Barclays 53 7,584.76 3.9 9 Mizuho 67 22,089.92
the deeply negative swap spreads on the 10 SG 55 7,288.40 3.8 10 Credit Suisse 97 19,212.95 3.1
FRONTûEND vûHEûSAID 269 192,973.81 58 713,172.03 2.7
Total Total 540
!NûALL
3WISSûCONTINGENTûOFû ûINVESTORSû
WASûLEDûBYûASSETûMANAGERSûWITHû ûOFûTHEû Excluding equity-related debt. FIGs, ABS/MBS. SDC code: N8 Source: Refinitiv SDC code: F9
Source: Refinitiv

International Financing Review June 5 2021 29

FIG THISûYEARûINûTHEûASSETûCLASS û%LEVENûBORROWERSû THREE
MONTHû"3"9 û)Nû!PRILû"ANKûOFû!MERICAû
HAVEûPRICEDû53 BNûOFûTHISûLONGER
DEBUTEDûAû53 BNûSIX
MONTHûmOATERûTHATû
US DOLLARS DURATIONûmOATING
RATEûPAPERûSOûFARûTHISûYEAR û PRICEDûATû BPûOVERûONE
MONTHû"3"9 û
WHICHûISûJUSTûUNDERûTHEû53 BNûRAISEDû
BANKS PRICE FLOATERS AS INVESTORS over the previous two years combined from Meanwhile, French bank SOCIETE GENERALE
BRACE FOR RISING RATES NINEûBORROWERS ûACCORDINGûTOû)&2ûDATA AVOIDEDûmOATING
RATEûPAPERûWHENûITû
LAUNCHEDûAû53 BNûTWO
PARTûBONDûONû
Financial issuers continue to access the 4HEûWEEKûBEFOREûLAST û!USTRALIANûBANKû 7EDNESDAY ûBRINGINGûTHEûTOTALû9ANKEEûBANKû
primary market, with four banks 7ESTPACûPRICEDûAû53 MûlVE
YEARûmOATERû SUPPLYûSINCEûTHEûSTARTûOFû-AYûTOû53 BN û
announcing new deals on Wednesday that and on Tuesday Toronto-Dominion Bank ACCORDINGûTOû)&2ûDATA û
highlighted the growing demand for OFFEREDûBUTûDROPPEDûAûlVE
YEARûmOATERûASû
mOATING
RATEûPAPER part of what ended up being a US$3bn three- 3'ûEVENLYûSPLITûTHEûNOTESûINTOû53 BNû
PARTûBONDûPACKAGE SIX
YEARûNON
CALLûlVEûANDû
YEARûNON
CALLû
CITIGROUP and TRUIST FINANCIAL led the way ûSENIORûNON
PREFERREDûlXED
TO
lXEDû
for the domestic banks with two-part senior TOO LONG? notes at spreads of 100bp and 130bp over
BONDûDEALSûTHATûEACHûCONTAINEDûmOATERS û )NmATIONûCONCERNSûAREûCERTAINLYûDRIVINGû 4REASURIES û4HOSEûWEREûTIGHTûTOûINITIALûPRICEû
while US BANK surprised with a privately DEMANDûFORûmOATERSûRIGHTûNOWûASûINVESTORSû thoughts of 125bp–130bp and 160bp area,
PLACEDû53 BNûmOATERûTHATûWASûANNOUNCEDû expect rates to rise in the coming months RESPECTIVELY û
and priced in the late afternoon, making it ANDûYEARS ûONEûINVESTORûSAID û(OWEVER û
just the second issuer to price off the three- investors are less enthusiastic about EUROS
MONTHû"LOOMBERGû3HORT
4ERMû"ANKû9IELDû DURATIONûINûmOATING
RATEûPRODUCTS û
"3"9 ûRATE û ING LEVERAGES TIER 2’S PRICING POWER
h)NûTHEûSECONDARYûMARKET ûMOSTûOFûTHEû
Floating-rate supply in the broader high- DEMANDûWE REûSEEINGûFORûmOATING
RATEû Concurrent green bonds from ING GROEP and
grade bond market has more than doubled product seems to be more concentrated in DANSKE BANK last Wednesday demonstrated
TOû53 BNûYEARûTOûDATEûASûISSUERSûCATERû the four years and in duration buckets,” one the pricing power available to issuers of Tier
to investor expectations that interest rates DEALERûBROKERûSAID ûh;3ECONDARYûDEMAND=û 2 bonds relative to other markets as the
WILLûRISEûINûTHEûCOMINGûMONTHSûANDûYEARS doesn’t really coincide with what the issuers former priced a €500m Tier 2 inside fair
AREûBRINGINGûINûTHEûPRIMARY v value while the latter still had to pay a
Overall, banks have been well supported concession for its senior non-preferred
in the bond market as they have priced 4RUIST SûmOATING
RATEûOFFERINGûPLAYEDûMOREû OFFERING û
53 BNûOFûlXEDûANDûmOATING
RATEûSUPPLYû closely to investor demand as it launched a
THISûYEAR ûACCORDINGûTOû2ElNITIVûDATA US$1bn four-year non-call three that will ).'ûWASûOFFERINGûITSûlRSTûGREENûBONDûINû
mOATûATû BPûOVERû3/&2 û4HEûBANKûALSOû Tier 2 format, following in the footsteps of
That is down from the US$245bn raised launched a US$1bn eight-year non-call seven country peer De Volksbank and issuers
over the same period in an exceptionally lXEDûTRANCHEûATû BPûOVERû4REASURIES û INCLUDINGû!)"û'ROUP û"ANKûOFû)RELANDûANDû
BUSYû ûACCORDINGûTOû2ElNITIVûDATA ûBUTûISû CaixaBank by attaching an environmental,
outpacing previous years when bank supply "ORROWERSûHAVEûPRICEDû53 BNûOFû3/&2û social and governance label to the
from January to May totalled US$124bn in paper this year as bank and corporate SUBORDINATEDûPRODUCT û
ûANDû53 BNûINû issuers alike move away from Libor,
ACCORDINGûTOû)&2ûDATA û"UTûTHEû"3"9ûRATEûISû h)NûGENERAL û4IERû ûFEELSûVERYûWELLûSOUGHT

Citigroup launched a US$400m six-year gaining momentum as an alternative to after, and if you put a green overlay on top
NON
CALLûlVEûmOATERûOVERûTHEûSECUREDû SOFR because it can offer issuers a credit- of that it creates a very nice positive
OVERNIGHTûlNANCINGûRATEûANDûAû53 BNû SENSITIVEûTERMûRATE feedback loop,” said a banker at one of the
lXED
TO
mOATûNOTEûOFûTHEûSAMEûMATURITYûATû LEADS
67bp over Treasuries in from initial price US Bank is the latest to use the rate
THOUGHTSûSETûINûTHEûAREAûOFû BPûOVER pricing a US$1bn two-year non-call one The €500m no-grow 11-year non-call six
SENIORûmOATERûTOûAûHANDFULûOFûINVESTORSûATû transaction was marketed with initial price
4HEûmOATING
RATEûNOTEûISûTHEûLATESTûINûAû BPûOVERûTHREE
MONTHû"3"9 û4HEûDEALû THOUGHTSûOFûMID
SWAPSûPLUSû BPûAREA
SERIESûOFûlVE
YEARûORûLONGERûmOATERSûOFFEREDû FOLLOWSû"ANKûOFû!MERICA SûSECONDû"3"9û
mOATERûFROMûLASTûMONTHûnûAû53 BNûTHREE
Leads Bank of America, BNP Paribas, Credit
year non-call two that priced at 43bp over Agricole, ING and UniCredit launched the deal
ATû BP ûWITHûTHEûBOOKûCLOSINGûATûõ BN û
ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
BOOKRUNNERS: 1/1/2021 TO DATE “The €500m size also gives you price
BONDS (ALL CURRENCIES) TENSIONûANDûLEVERAGEûOVERûTHEûlNALûPRICE vû
Managing No of Total Share BOOKRUNNERS: 1/1/2021 TO DATE SAIDûTHEûLEADûBANKER û
bank or group issues €(m) (%)
Managing No of Total Share The deal was priced inside fair value based
1 BNP Paribas 46 7,685.66 7.3 bank or group issues US$(m) (%) ONû).' SûCONVENTIONALû4IERû ûCURVE û4HEû
2 SG 34 7,518.45 7.2 BANK Sû ûõ BNû-AYû ûNON
CALLû
3 Goldman Sachs 30 7,287.78 6.9 1 HSBC 21 5,705.34 11.9 2026s were bid at 113bp on Wednesday,
4 Credit Agricole 36 6,120.47 5.8 2 Citigroup 22 4,473.40 9.3 ACCORDINGûTOû4RADEWEB û
5 UniCredit 40 6,024.25 5.7 3 Bank of America 17 3,592.73 7.5
6 JP Morgan 39 5,898.32 5.6 4 JP Morgan 19 3,364.00 7.0 4HEûDEALûISû).' SûlRSTû4IERû ûSINCEû-AYû
7 Barclays 32 5,896.30 5.6 5 SG 11 2,978.89 6.2 ûWHENûITûSOLDûTHEû û .# S û
8 Natixis 25 5,286.10 5.0 6 Goldman Sachs 15 2,779.09 5.8
9 Deutsche Bank 30 4,609.83 4.4 7 Barclays 13 2,555.79 5.3 h).'ûUSEDûTOûBEûQUITEûAûVOLUMEûISSUERûOFû
10 HSBC 33 4,303.12 4.1 8 NatWest Markets Tier 2 over recent years but that’s not the
190 105,016.03 9 Deutsche Bank 6 2,511.31 5.2 case anymore,” said a syndicate banker away
Total 10 Credit Agricole 7 2,510.76 5.2 FROMûTHEûDEAL ûh4HEYûHAVEûGONEûTHROUGHûAû
4 1,914.72 4.0 period of needing the volumes and needing
Including banks, insurance companies and finance companies. Excluding Total 65 48,129.48 TOûPAYû ûSOû) MûPLEASEDûFORûTHEMûTHATûTHEYû
equity-related and covered bonds. Excluding publicly owned institutions. COULDûGETûQUITEûAûNICEûPRICE vû

Source: Refinitiv SDC code: N11 Source: Refinitiv SDC code: J3a

30 International Financing Review June 5 2021

BONDS FIG

SNP NOT IN VOGUE Bankers said Tuesday’s deals showed that the tight outright level and lack of new issue
Danske Bank, meanwhile, drew more attractive terms are within issuers’ reach, CONCESSIONûLIMITEDûINVESTORS ûINTEREST û
modest demand despite paying a premium, even though investor enthusiasm for
though bankers said it had still achieved a tighter-trading SNP and holdco senior trades h)NVESTORSûAREûLOOKINGûFORûTHATûLITTLEûBITûOFû
SOLIDûRESULT û REMAINSûMUTED û extra relative value or yield if they can get
IT vûSAIDûAû$#-ûBANKERûAWAYûFROMûTHEûDEAL û
7ITHû3.0 HOLDCOûSPREADSûATûHISTORICALLYû “Everything is going well again, although h)FûNOT ûTHATûISûAUTOMATICALLYûANDû
tight levels, investors see little room for a lot of the MREL-based, bail-in-able deals are IMMEDIATELYûREmECTEDûINûTHEûSIZEûOFûTICKETSû
performance and are requiring struggling to gain attention,” said a PEOPLEûPUTûIN vû
compensation in the form of new issue SYNDICATEûBANKERûAWAYûFROMûTHEûTRADES û
CONCESSIONS û -5&' Sûõ MûSIX
YEARûNON
CALLûlVEû
“Outright spreads are tight and the transaction was meanwhile launched at
“There is an open question around value premium versus senior preferreds is quite BPûOVERûMID
SWAPS ûINSIDEû)04SûOFû BPn
on the investor side for holdco and SNP,” TIGHTûASûWELL û4HATûPARTûOFûTHEûCAPITALûSTACKûISû BP ûONûTHEûBACKûOFûõ BNûOFûORDERS û
SAIDûAûBANKERûATûONEûOFû$ANSKE SûLEADS ûh;4HEû NOTûSEEINGûMUCHûLOVEûATûTHEûMOMENT v Morgan Stanley and MUFG WEREûTHEûLEADS û
PRODUCT=ûISûNOTûNECESSARILYûINûVOGUE v
"ELlUS SûDEAL ûITSûlRSTûGREENûBOND û Bankers away from the deal said a three-
The Danish lender’s €500m no-grow followed three days of investor calls the times-subscribed order book represented a
eight-year non-call seven transaction was PREVIOUSûWEEK û GOODûRESULT ûREmECTINGûTHATûTHEûPAPERûOFFEREDû
MARKETEDûWITHû)04SûOFûMID
SWAPSûPLUSû SOMEûCONCESSION û
105bp–110bp area via BNP Paribas, The €500m no-grow offering was
Commerzbank, Danske Bank, ING and UniCredit. marketed on Tuesday morning with initial The transaction was deemed to have
PRICEûTHOUGHTSûOFûTHEûMID
SWAPSûPLUSû BPû OFFEREDûAûlNALûNEWûISSUEûCONCESSIONûOFû BPn
The deal, which is expected to be rated AREA BP ûBASEDûONû-5&' SûCURVE û
"AA """ ! ûWASûLAUNCHEDûATû BP
Leads !".û!-2/ û"ELlUS û#REDITû!GRICOLE û STERLING
The book was last reported above €1bn NatWest Markets and UniCredit ultimately
(excluding JLMs), which bankers noted was lXEDûTHEûSPREADûATû BP ûWITHûTHEûlNALûBOOKû MUSIC KEEPS PLAYING IN STERLING
LARGERûTHANûTHOSEûRECEIVEDûBYûRECENTûHOLDCO STANDINGûATûõ Mû EXCLUDINGû*,-S TIER 2 MARKET
3.0ûTRANSACTIONSûFROMû"ELlUSû"ANKûANDû
+"# û4HATûPARTLYûREmECTEDûTHEûWIDERûOUTRIGHTû Bankers said the deal offered a minimal 5+ûMERCHANTûBANKûCLOSE BROTHERS GROUP and
SPREADûANDûTHEûCHOICEûOFûTENOR ûBANKERSûSAID û new issue concession at most, extrapolating France’s CREDIT AGRICOLE kept the sterling Tier
FROMû"ELlUS SûCURVE û 2 market’s stellar run going last week, with
“For holdco this is the right tenor bucket – both deals surpassing expectations by being
anything between a six-year and an “Fair value is at 60bp, or you can maybe priced impressively tight versus recent
eight-year is the sweet spot currently,” said argue in the high 50s – so that’s a good SUPPLY û
THEûTHIRDûBANKER û result,” said a second banker away from the
TRANSACTION û ALL SAMURAI BONDS
"ANKERSûSAWûFAIRûVALUEûINûTHEûLOWû SûTOû BPû BOOKRUNNERS: 1/1/2021 TO DATE
CONTEXT ûEXTRAPOLATINGûFROMû$ANSKE SûCURVE û The deal follows a €500m 10-year holdco
SENIORûFROMû"ELGIUM Sû+"#û'ROUPûTHATûHASû Managing No of Total Share
Bankers at the leads estimated the green underperformed in the secondary market bank or group issues ¥(m) (%)
element of the deal shaved 3bp off the after drawing relatively modest demand of
spread compared to what it would have paid õ M
PLUSûLASTûWEEK 1 Sumitomo Mitsui 12 127,770.67 43.7
FORûAûCONVENTIONALûISSUE û 2 Daiwa Securities 9 46,866.67 16.0
Bankers said the slightly higher demand 3 Mizuho 8 41,866.67 14.3
“That [premium] is what you’d expect in FORû"ELlUS SûDEALûREmECTEDûTHEûTENORûnûWITHû =3 Nomura 8 41,866.67 14.3
this market segment, as opposed to Tier 2, 10-year deals out of favour with some 5 Morgan Stanley 2 16,866.67 5.8
where if you do a small size or a green deal, investors due to the relatively low yields =5 Credit Agricole 2 16,866.67 5.8
then you can expect zero concession or even they offer – and the relative attractiveness of 13 292,104.00
AûNEGATIVEûCONCESSION vûSAIDûTHEûTHIRDûBANKER û THEûSPREAD û+"# SûLONGERûDEALûWASûPRICEDûJUSTû Total
5bp wider at 65bp and had been marketed
The deal is Danske’s second green bond, WITHûSIMILARû)04SûOFû BPn BP Excluding equity-related debt. SDC code: K11
ANDûITSûLONGESTûEUROû3.0ûISSUANCEûTOûDATE û Source: Refinitiv
The green element should also have
Elsewhere on Wednesday, RAIFFEISENBANK pulled in additional demand from specialist
priced a €350m seven-year non-call six green 32)ûACCOUNTS ûSAIDûBANKERS û.EVERTHELESS û
3.0ûATû BPûOVERûMID
SWAPS ûINSIDEû)04SûOFû
BPûAREA û ALL GLOBAL AND EUROMARKET YEN BONDS ALL INTERNATIONAL YEN BONDS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
Barclays, Credit Agricole and Raiffeisen Bank
International WEREûTHEûLEADS û Managing No of Total Share Managing No of Total Share
bank or group issues ¥(m) (%) bank or group issues ¥(m) (%)
BELFIUS, MUFG HIT FLEETING EURO
WINDOW 1 Mizuho 7 110,816.67 21.3 1 Sumitomo Mitsui 20 215,295.67 26.5
2 Sumitomo Mitsui 8 87,525.00 16.9 2 Mizuho 15 152,683.33 18.8
BELFIUS BANK and MITSUBISHI UFJ FINANCIAL GROUP 3 Bank of America 2 63,333.33 12.2 3 Daiwa Securities 12 84,616.67 10.4
SEIZEDûONûAûmEETINGûISSUANCEûWINDOWûLASTû 4 JP Morgan 2 60,500.00 11.7 4 Bank of America 2 63,333.33 7.8
Tuesday, the former securing a tightly priced 5 Daiwa Securities 3 37,750.00 7.3 5 JP Morgan 2 60,500.00 7.5
inaugural €500m green senior non-preferred 6 NatWest Markets 3 26,500.00 5.1 6 Nomura 10 57,491.67 7.1
bond as the latter landed a three-times- 7 Mitsubishi UFJ MS 2 23,566.67 4.5 7 Mitsubishi UFJ MS 4 40,433.33 5.0
SUBSCRIBEDûõ MûHOLDCOûSENIOR û 8 BNP Paribas 1 22,125.00 4.3 8 NatWest Markets 3 26,500.00 3.3
9 MUFG 1 22,125.00 4.3 9 BNP Paribas
The window for euro issuance was 10 Goldman Sachs 1 16,400.00 3.2 10 MUFG 1 22,125.00 2.7
narrowed last week by public holidays 15 519,300.00 1 22,125.00 2.7
ACROSSûTHEû5+ûANDû%UROPE ûWHICHûLEFTû Total Total 28 811,404.00
prospective issuers with only Tuesday and
7EDNESDAYûTOûWORKûWITH Excluding equity-related debt. Including preferreds. Including all Euro, foreign and global issues. Excluding equity-related
debt.

Source: Refinitiv SDC code: K10 Source: Refinitiv SDC code: K12

International Financing Review June 5 2021 31

Close Brothers’ deal is the latest in a series a BNû
YEARûNON
CALLûlVEû".0û0ARIBASû4IERû û SNP deals also getting good demand but
of sterling Tier 2 issues that includes highly issue on May 17, even though there has been slightly smaller books, and that probably
successful deals from country peers Virgin a steady stream of sterling supply in the leaves you with a smaller pocket of demand
-ONEYû5+ûANDû.AT7ESTû'ROUP û INTERIM FORûTIGHTER ûHIGHER
RATEDû3.0 HOLDCOûANDû
senior preferreds,” said a syndicate banker
)NVESTORûENTHUSIASMûHASûBEENûMAINTAINEDû “BNP Paribas did a sterling Tier 2 a couple AWAYûFROMûTHEûLEADS
while deals have performed strongly over of weeks ago that went extremely well and
recent weeks, as evidenced by Virgin Money NOWû#REDITû!GRICOLEûAREûFOLLOWINGûTHATûWITHû “The sterling market has its own nuances
5+ SûDEAL û4HEûBANKûPRICEDûAûa Mû!UGUSTû a phenomenal trade, albeit taking a much for where people want to buy risk, and the
2031 non-call 2026 Tier 2 issue at 225bp on MOREûMODESTûSIZE vûSAIDûTHEûlRSTûBANKER general feedback we’re receiving, at least in
-AYû û4HEûDEALûHASûSINCEûTIGHTENEDûTOû 3.0 HOLDCO ûISûTHATûPEOPLEûCAREûFORûANYTHINGû
BP ûBID ûACCORDINGûTOû4RADEWEB With BNP Paribas’ deal bid at 150bp on INûTHEûLOWûTRIPLEûDIGITS v
7EDNESDAY ûBANKERSûSAIDû#REDITû!GRICOLE Sû
NatWest Group priced a £1bn November OFFERINGûLANDEDûmATûTOûFAIRûVALUE Leads NatWest Markets and Nomura opened
2031 non-call 2026 Tier 2 offering at 175bp books for the December 2027 non-call 2026
ONû-AYû û4HEûDEALûWASûBIDûATû BPûONû 4HEûTRADEûISûEXPECTEDûTOûBEûRATEDû"AA transaction with initial price thoughts of
4HURSDAY """ !n ûWHILEû".0û0ARIBAS ûWASûRATEDû"AA 'ILTSûPLUSû BPn BP û
""" !n !û -OODY S 3 0 &ITCH $"23
Close Brothers’ deal surprised bankers as 4HEûSPREADûWASûLATERûlXEDûATû BPûANDû
the rare issuer was able to land its deal DIMINISHING RETURNS? the size at £350m, with books in excess of
INSIDEûTHEûLATTER SûMUCHûLARGERûTRANSACTION û !FTERûAûPERIODûOFûSUSTAINEDûSTERLINGûSUPPLY û a Mû PRE
REC û
including senior issuance from the likes of
Close Brothers and its leads – HSBC, Swedbank (see separate article), market For comparison, Spain’s CaixaBank priced
NatWest Markets and UBS – held investor calls participants are watching for any hint of a £500m December 2026 non-call 2025
on Wednesday to market what was initially liquidity running short or investor appetite green SNP at 132bp on May 26, attracting
EXPECTEDûTOûBEûAûa MûTRANSACTION WANING û"UTûBANKERSûSAIDûTHEûIMPRESSIVEû MOREûTHANûa BNûOFûORDERS û
level of demand for Close Brother’s sub-
The leads then opened books on Thursday BENCHMARKûWASûAûPOSITIVEûSIGN û “The difference between CaixaBank and
morning with initial price thoughts of Gilts Swedbank is the spread – there is still plenty
PLUSû BPûAREAûFORûAûa MûNO
GROWûDEAL û “We’ve all been here before,” said the of liquidity in the sterling market,” said a
4HEûSPREADûWASûULTIMATELYûlXEDûATû BP SYNDICATEûBANKER ûh4HEûOLDûRULEûOFûTHUMBûINû second syndicate banker away from the deal
sterling was that you didn’t want to be the
h)ûFELTûTHEY DûBEûSTARTINGûINûANDûAROUNDû THIRDû;DEAL=ûINûAûROWûONûSCREENSû û û ûIT SûTHEû “[Swedbank’s deal] is more akin to opco
6IRGINû-ONEYû5+ûANDûLOOKINGûTOûCLOSEûTHEû law of diminishing returns, but in terms of SENIORûINûTERMSûOFûTHEûOUTRIGHTûLANDINGûLEVEL û
gap to NatWest Group, but it seems they the Tier 2 space it doesn’t seem to be the The pricing has probably outperformed, as
have been able to bring it tighter because it CASEûRIGHTûNOW you can make the argument that fair value
is better rated and they have done some ISûCLOSEûTOû BPûONûAûCROSS
CURRENCYûBASIS v
work with accounts,” said a syndicate “The music will stop at some point, you
BANKERûAWAYûFROMûTHEûLEADS ûh)T SûAûCRACKINGû just don’t want to be on the deal when it Looking instead to sterling deals from
RESULT û)T SûREMARKABLEûFORûTHISûSORTûOFûNAME û DOES v non-domestic issuers such as BNP Paribas,
ANDûFORûAûSMALLûTRADE v 2ABOBANKûANDû).'ûPOINTEDûTOûFAIRûVALUEûINû
Until then, bankers said the market THEûLOWûTOûMID
S ûBANKERSûSAID û
Close Brothers’ deal is expected to be rated continues to look a tempting proposition for
! """û -OODY S &ITCH ûWHEREASû6IRGINû-ONEYû 5+ûANDûNON
5+ûNAMESûALIKE û Bankers away from the deal disagreed on
5+ SûWASûRATEDû"AA """nûANDû.AT7EST Sû"AA whether it was priced either slightly inside
"" """ û -OODY S 3 0 &ITCH h)FûYOU VEûDONEûREASONABLEûVOLUMESûINû or slightly wide of the price Swedbank
your core currencies and there’s something would have been able to achieve with an
The deal was launched in conjunction available in sterling at a marginal premium EQUIVALENTûEUROûDEAL û
WITHûAûTENDERûOFû#LOSEû"ROTHERS û û or even slightly inside your domestic
£175m January 2027 non-call 2022 Tier 2 currency, why wouldn’t you look?” said the “Deals are probably not coming at zero
notes, with the liquidity freed up by the SECONDûBANKER ûh%XECUTIONûCERTAINTYûISû premium in the euro market at the
TENDERûSUPPORTINGûDEMAND û"ANKERSûSAIDûTHEû probably higher than it has been all year, so moment, so it is a pretty negligible cost,”
issuer’s rarity in the capital markets and the why not?” SAIDûAûTHIRDûBANKER û
attractive outright spread were also
IMPORTANTûDRIVERS û SWEDBANK TESTS TIGHTER END 4HEûlRSTûBANKERûSAIDûTHATûWHILEûDEMANDû
OF STERLING SENIOR SPECTRUM for Swedbank’s deal was more limited than
3INCEûISSUINGûITSû û .# û4IERû û for the previous sterling trades, it still
notes in January 2017, the group has sold just two SWEDBANK tested the sterling market’s REPRESENTEDûAûGOODûOUTCOME û
PUBLICûDEALSûnûAûa Mû ûlVE
YEARûHOLDCOû appetite for tighter-trading bank credits last
SENIORûTRANSACTIONûINû!PRILû ûANDûAûa Mû
4UESDAYûWITHûITSûlRSTûGREENûBONDûINûTHEû h7HENûYOUûHAVEûAûa BNûBOOK ûTHAT SûANû
YEARûOPCOûSENIORûISSUEûINû.OVEMBERû û currency, a £350m senior non-preferred that ABNORMALITYûINûTHEûSTERLINGûMARKET vûHEûSAID û
WASûULTIMATELYûPRICEDûATû BPûOVERû'ILTS û “This is the norm, this should be considered
#REDITû!GRICOLEûhPHENOMENALv GOOD û4HISûISûWHATûTHEûSTERLINGûMARKETû
Close Brothers’ deal followed hot on the Swedbank’s deal follows a string of highly SHOULDûBEûLIKE v
HEELSûOFû#REDITû!GRICOLE Sû$ECEMBERû û SOUGHT
AFTERûSTERLINGûISSUESûFROMûBOTHû5+ûANDû
NON
CALLû û4IERû ûOFFERING û NON
DOMESTICûBANKSûINûRECENTûWEEKS û"UTûTHEû Bankers suggested the deal’s green nature
4HEûDEALûWASûMARKETEDûWITHû)04SûOFû'ILTSû Swedish lender was offering a materially will have drawn less additional dedicated
plus 175bp area on Wednesday, via Credit tighter spread than those that came before, 32)ûDEMANDûTHANûAûEURO
DENOMINATEDû
Agricole, NatWest Markets, Nomura and RBC REmECTINGûTHEûISSUER SûQUALITYûANDûRELATIVELYû offering would have enjoyed but said it
4HEûLEADSûULTIMATELYûlXEDûTHEûSPREADûATû HIGHû3.0ûRATINGSûOFû"AA !n ! likely supported the quality of the order
150bp and the size at £500m, on the back of BOOK û
MOREûTHANûa BNûOFûDEMAND h9OUûCANûDElNITELYûTELLûTHERE SûAûSLIDINGû
Bankers away from the deal said the 25bp scale of demand, with Tier 2 deals grabbing h4HATûSHOULDûALSOûASSISTûSIGNIlCANTLYûINû
MOVEûFROMû)04SûTOûREOFFERûSURPASSEDûTHEIRû the biggest books, the spreadier holdco and THEûSECONDARYûMARKETû ûMAYBEûTHEYûDIDûNOTû
expectations, matching that achieved by a GETûANûIMMEDIATEûPRICINGûBENElTûBUTûTHEYû
WILLûGETûTHEûFOLLOW
ONûBENElTûOFûITûOVERû
time,” said a DCM banker away from the
DEAL û

32 International Financing Review June 5 2021

BONDS COVERED BONDS

4HEûDEALûISûTHEûlRSTûPUBLICûSTERLINGûISSUEû With CaixaBank having no outstanding !ûFEWûSOURCESûFAMILIARûWITHûTHEûDEALûSAIDû
from a Swedish bank since Svenska SNP paper in the currency, fair value was the lead managers were called in on May
Handelsbanken sold a £300m December estimated around mid-swaps plus 90bp using ûANDûTHEûISSUERûPICKEDûTHEû%UROYENû
ûSENIORûNOTEûINû!PRILû comparable names, according to a lead FORMATûFORûTHEûlRSTûTIMEûTOûDOûTHEûDEALû
OFlCIAL ûPUTTINGûTHEûNEWûBONDSû BPûINSIDEûTHEû QUICKLY û)TûTAKESûAûMONTHûORûLONGERûTOû
Swedbank’s last foray into the sterling CURVE û4HEûBANKûALSOûACHIEVEDûANûARBITRAGEû complete the documentation for the
MARKETûCAMEûINû*UNEû ûWHENûITûSOLDûAû versus a new euro-denominated SNP in the Samurai format that it used previously in
a Mû$ECEMBERû ûSENIOR LOWûTOûMID
SINGLEûDIGITS ûSAIDûTHEûOFlCIAL PUBLICûDEALS û

NATIONWIDE TARGETS PIBS IN LME Books peaked at SFr250m with SFr235m The decision paid off as it was able to
GOODûATûTHEûREOFFERûLEVEL ûWHILEûALLû û RAISEûMOREûTHANûINITIALLYûEXPECTED û"ANKERSû
NATIONWIDE BUILDING SOCIETY has launched a ACCOUNTSûINVOLVEDûWEREû3WISS û4HEYûWEREûLEDû on the deal said it had been looking to
tender offer and consent solicitation on BYûASSETûMANAGERSûWITHû ûOFûTHEûBOOK û RAISEûc BNûTOûc BN
SOMEûOFûITSûLEGACYû0ERMANENTû)NTERESTû FOLLOWEDûBYûINSURANCEûCOMPANIESûWITHû û
"EARINGû3HARES PRIVATEûBANKSû ûANDûPENSIONûFUNDSû The two-part holdco deal comprised a
c BNûSIX
YEARûNON
CALLûlVEûTRANCHEûANDûAû
The exercise targets Nationwide’s £10m Credit Suisse WASûSOLEûLEADûONûTHEûDEAL û capped ¥10bn 10-year non-call nine
mOATING
RATEû0)"3 ûWHICHûWEREûISSUEDûBYû CaixaBank is rated Baa1 (stable) by Moody’s, PORTION û!SûWASûTHEûCASEûWITHûTHEû&RENCHû
Cheshire Building Society in March 1994, """ û STABLE ûBYû3 0ûANDû""" û NEGATIVE ûBYû&ITCHû BANKS ûTRADES ûTHEû5+ûLENDERûISûUSINGû*'"Sû
BEFOREûITûMERGEDûWITHû.ATIONWIDEûINû û on a senior preferred basis, while expected ASûAûREFERENCEûFORûTHEûCOUPONûRESETS û
RATINGSûONûTHEû3.0ûPAPERûAREû"AA """ """ û
The perpetual securities – which bankers The shorter tranche was priced at 65bp
said are partly held by retail investors – were BFCM BACK WITH MINIMAL PREMIUM OVERûMID
SWAPS û4HEûCOUPONûISû ûFORû
historically used to supplement THEûlRSTûlVEûYEARSûANDûWILLûBEûATûTHEûONE
YEARû
Nationwide’s capital base, as a precursor to BANQUE FEDERATIVE DU CREDIT MUTUEL returned *'"ûRATEûPLUSû BPûIFûNOTûCALLED û4HEûLONGERû
ITSû#OREû#APITALû$EFERREDû3HARES to the Swiss franc market after more than a TRANCHEûWASûPRICEDûATû BPûOVERûMID
SWAPS û
YEAR ûPRICINGûANûUPSIZEDû3&R Mû 53 M û 4HEûCOUPONûISû ûFORûTHEûlRSTûNINEûYEARSû
.ATIONWIDEûHASûSAIDûTHATûASûITSû0)"3ûNOû eight-year senior preferred deal at a slim and will be at the one-year JGB rate plus
longer meet regulatory requirements they PREMIUMûTOûITSûCURVE BPûIFûNOTûCALLED û
will gradually be phased out under the
grandfathering regime introduced by CRD Leads Deutsche Bank and UBS went straight !TûTHEûSTARTûOFûMARKETINGûONû4UESDAYû
)6 into bookbuilding for a minimum SFr100m morning, initial price guidance was shown
at mid-swaps plus 34bp area, before pricing at yen mid-swaps plus 63bp–65bp for the
The building society is offering holders a THEûLARGERûSIZEûAûPIPûTIGHTERûATûPLUSû BP û shorter tranche and yen mid-swaps plus
price of 104 in the any-and-all tender offer, 4HISûWASûEQUIVALENTûTOû3ARONûPLUSû BPûORû BPn BPûFORûTHEûLONGERûPIECE û4HEû
WHICHûEXPIRESûONû*ULYû û 3WISSûGOVERNMENTSûPLUSû BP ûWITHûAû û guidance was revised later that day to the
YIELD lNALûPRICINGûLEVELS
!TûTHEûSAMEûTIME û.ATIONWIDEûISû
proposing to change the terms of the notes !TûTHEûREOFFERûLEVEL û"&#-ûPAIDûAû BPû The issuer went ahead with the longer
so that its interest rate references Sonia PREMIUMûOVERûITSû3WISSûFRANCûCURVE TRANCHEûAFTERûCONSIDERINGûWHETHERûTOûDROPûIT
rather than six-month sterling Libor, while
also introducing an adjustment margin of With a granular total of 54 accounts 4HEû5+ûBANKûATTRACTEDûSOLIDûDEMANDûFROMû
ûAûYEARûTOûCOMPENSATEûFORûTHEû GIVINGûANûAVERAGEûTICKETûOFû3&R M ûTHEû pension funds, as was the case with the
DIFFERENCESûBETWEENûTHEûTWOûRATES û BOOKûWASûLEDûBYûASSETûMANAGERSûWITHû û &RENCHûLENDERS û4HEûNON
CALLûlVEûWASûALSOû
WHILEûINSURERSûTOOKû ûBANKSûANDûPRIVATEû distributed to insurers, specialised banks
)NûAûSECONDûRESOLUTION û.ATIONWIDEûISû BANKSû ûTREASURIESû ûANDûPENSIONûFUNDSû ANDûOTHERSûINCLUDINGûFOREIGNûACCOUNTS û4HEû
seeking to introduce an option to redeem û'EOGRAPHICALLY ûMOSTû ûWEREû3WISS û non-call nine was also bought by life
ANDûREPAYûTHEû0)"3ûATûITSûDISCRETIONûONûTHEû WITHûTHEûREMAININGû ûGOINGûTOûOTHERû insurers, regional accounts and others
interest payment date falling in September %UROPEANûNATIONS INCLUDINGûFOREIGNûACCOUNTS
2030 or any subsequent interest payment
DATE û4HEûRESOLUTIONûALSOûPROPOSESûANû BFCM was last in the Swiss market in The Reg S registered notes have expected
INCREASEûINûEACHûRATEûOFûINTERESTûONûTHEû0)"3û *ANUARYû ûWITHûAû3&R Mû.OVEMBERû RATINGSûOFû"AA """ ! !nû -OODY S 3 0
for each interest period from September û
YEAR û)TSûSENIORûPREFERREDûPAPERûISû &ITCH 2 )
ûBYûANûADDITIONALûMARGINûOFû ûAûYEAR û RATEDû!A ! !!n û
Barclays Bank, Mizuho, MUFG, Nomura and
SWISS FRANCS SMBC NikkoûWEREûTHEûJOINTûBOOKRUNNERS û

CAIXABANK DEBUTS SWISS SNP YEN COVERED BONDS

CAIXABANKûBROUGHTûITSûlRSTûSENIORûNON
PREFERREDû BARCLAYS DRAWS SOLID DEMAND EUROS
bond in the Swiss franc market on Wednesday, FOR EUROYEN NOTES
coming inside its theoretical curve with an AEGON 15-YEAR SOFT BULLET
OVERSUBSCRIBEDûANDûUPSIZEDûDEAL BARCLAYS followed in the footsteps of French REOPENS LONG-DATED SUPPLY
banks in the yen market with a dual-tranche
Books opened for a minimum SFr150m callable Euroyen notes offering on Thursday, AEGON BANK reopened long-dated supply in
53 M ûSIXûNON
CALLûlVE
YEARûATûMID
RAISINGûAûSOLIDûc BNû 53 M the euro covered market on Wednesday
swaps plus 90bp area, with SFr200m then with a debut €500m 15-year soft bullet
PRINTINGû BPûTIGHTER û4HEû BPûMID
SWAPSû 4HEû5+ûBANKûRETURNEDûTOûTHEûMARKETûFORû mortgage-backed bond that was just over
spread was equivalent to Swiss governments THEûlRSTûTIMEûSINCEû ûAFTERûSEEINGûTHEû TWICEûSUBSCRIBED û
PLUSû BPûORû3ARONûPLUSû BP ûTHEûBONDSû reception for senior non-preferred yen deals
COMINGûWITHûAû ûCOUPONûANDûYIELDûATû FROMû".0û0ARIBASûANDû#REDITû!GRICOLEûLASTû
THEûPARûREOFFERûPRICE month, which drew strong participation
FROMûPENSIONûFUNDS

International Financing Review June 5 2021 33

h)TûISûNOTûAûBLOWOUTûTRADE ûBUTûCLEARLYûTHEû h)ûWASûEXPECTINGûAûLITTLEûBITûMOREû area, a level that implied an initial new issue
MARKETûISûOPENûFORûLONGERûTENORSû û û û;)T S=û ;DEMAND= ûESPECIALLYûATûTHISûSPREAD û4HERE Sû premium of 5bp, according to a banker away
BASICALLYûTHEûlRSTûTIMEûSINCEûTHEû!USTRIANû quite some performance here versus some FROMûTHEûTRADE
deal [RLB Steiermark] went really badly that the other soft bullet ECB-eligible trades that
we have seen a long tenor in the covered are also out,” a second banker away from the !ûlNALûBOOKûINûEXCESSûOFûõ BNû INCLUDINGû
SPACE vûAûBANKERûWAYûFROMûTHEûTRADEûSAID TRADEûSAID õ MûFROMûLEADS ûSUPPORTEDûlNALûPRICINGûATû
BP ûORûAûYIELDûOFû û/RDERSûHADûPEAKEDû
“We’ve [since] seen more stability in rates “The more defensive maturities – after 10 ATûMOREûTHANûõ BN
and the EU SURE transaction has performed years – are the ones for which investors are
quite nicely, so the market is a bit more ASKINGûFORûEXTRA û)FûYOUûLOOKûATû4UESDAY Sû h"-/ûCHOSEûTHEûRIGHTûTENOR ûTHEûlRSTûTENORû
RECEPTIVEûTOûLONG
DATEDûISSUANCEûINûCOVEREDS û BMO trade, you need to pay up a bit if you THATûOFFERSûPOSITIVEûYIELD û&ROMûTHATû
7EûHAVEûALSOûSEENûSOMEûmOWSûONûTHEû WANTûTOûDOûLONGERûTENORS vûHEûSAID PERSPECTIVE ûITûREALLYûISûAûTEXTBOOKûEXECUTION û
secondary market from buyers coming back )TûLOOKSûPRETTYûGOODûANDûISûAûTESTAMENTûTHATû
to longer-dated deals, especially in the !EGONûLEFTûMOREûONûTHEûTABLEûTHANû..ûDIDû the market is stabilising after the volatility
French 10-year space, so it seems a bit more FORûITSûõ Mû û3EPTEMBERû ûBONDû we saw a few weeks back,” said the banker
CONSTRUCTIVE vûHEûSAID LASTûYEAR ûWHICHûPRICEDûINSIDEûFAIRûVALUE û AWAYûFROMûTHEûDEAL

"EFOREûTHISûDEAL û!EGON SûCOVEREDûBONDû h)T SûNOûGREATûSHOCKûWE VEûGOTûTHISûINVESTORû The lead indicated that BMO drew high-
curve was populated by four conditional behaviour given the severity of moves we’ve quality accounts and observed that it left
pass-through bonds with maturities ranging SEEN ûANDûWE REûSEEINGûPRETTYûSIGNIlCANTû less on the table than CBPP3-eligible BPCE
from May 2023 to June 2027, according to INmATIONûDATA ûWHICHûFORûTHEûLIFETIMEûOFûAû
DIDûTHEûWEEKûBEFORE
4RADEWEBûDATA û"UTûTHEû$UTCHûLIFEûINSURERû year bond tells you investors want some
established a new soft bullet covered bond buffer and protection in that part of the The institution tested the market on May
PROGRAMMEûLASTûWEEK CURVE vûAûLEADûSAID ûWITHûAûõ BNû û$ECEMBERû û
GREENû/&(ûTHATûPAIDûAûCONCESSIONûOFû BP û
Echoing NN Bank’s move to bullet “Given the severity of the volatility, this is That bond issue has marginally tightened
STRUCTURESûLASTûYEAR û!EGONûISûDIVERSIFYINGûITSû a very strong outcome and it’s good a new FROMûITSûPLUSû BPûREOFFERûSPREAD
investor base, aligning itself with the ECB’s name can even open the 15-year and we
bond buying criteria, and gaining the didn’t need a more frequent Dutch major to h9OU VEûGOTûTOûACKNOWLEDGEûTHATûSPREADSû
mEXIBILITYûTOûPRINTûATûTHEûVERYûLONGûENDûOFûTHEû open the bucket for other issuers to come have widened out, we’re clearly in a bit of a
CURVE in,” he said WIDENINGûCYCLEûORûATûLEASTûAREûOFFûTHEûTIGHTS û
But it’s encouraging to see a decent level of
The ability to tap longer tenors is !CHMEAû"ANKûCOULDûBECOMEûTHEûNEXTû oversubscription return to transactions
becoming key for Dutch covered issuers as $UTCHûISSUERûTOûSHIFTûAWAYûFROMû#04S û)Tû here,” said a second lead, comparing the
THEIRûMORTGAGEûLOANûBOOKSûGROW û!ROUNDû announced plans to establish a new covered BMO trade to recent non-European issues
ûOFû$UTCHûHOUSEHOLDSûTENDûTOûlXûTHEIRû bond programme with a soft bullet structure FROMû!3"û&INANCE û7ESTPACûANDû5/"
mortgage interest rates for 15 years or INû&EBRUARY
LONGER ûACCORDINGûTOû!".û!-2/ûANALYSTS h4HISûISûHELPFULûFORûSHORINGûUPûCONlDENCEû
BMO EIGHT-YEAR COVERED PUTS in the covered bond market for other
..ûWASûTHEûBESTûCOMPARABLE û)TSû MARKER IN THE SAND ISSUERS vûHEûSAID
September 2035 and March 2041 bonds
were quoted at around mid-swaps plus 2bp BANK OF MONTREAL returned to the euro HIGH-YIELD
ANDû BP ûRESPECTIVELY ûONû4RADEWEB covered bond market on Tuesday, refreshing
ITSûCURVEûWITHûAûõ BNûEIGHT
YEARûTHATû UNITED STATES
Barclays, Citigroup, Credit Agricole, HSBC and ACHIEVEDûEFlCIENTûPRICINGûANDûDURATION
RabobankûBEGANûMARKETINGû!EGON SûTHEûNO
BOMBARDIER REFIS AFTER
GROWûNOTEûATûTHEûMID
SWAPSûPLUSû BPûAREA “They haven’t been in the [euro covered INVESTOR QUARREL
BOND=ûMARKETûFORûAûYEARûORûSO ûITûWASûGOODûFORû
4HEûSTARTINGûLEVELûLOOKEDûGENEROUSûTOû!".û them to put a marker in the sand,” said a Canadian jet maker BOMBARDIER hit the high-
!-2/ûANALYSTS ûTHEûGUIDANCE ûINûTHEIRûVIEW û LEAD yield primary market with a new bond deal
implied an initial new issue premium of 9bp on Thursday to push out some of its looming
and offered a double-digit pick up versus EU “Their timing and execution has been debt maturities, only weeks after its fracas
BONDS VERYûGOOD û4HEûTRADEûSHOWSûTHEûMARKETûISû with an investor that alleged the company
very open for high-quality credit and had breached its bond covenants by
7ITHûBOOKSûCLOSINGûATûOVERûõ BN ûLEADSû INTERNATIONALûNAMES vûHEûSAID UNDERTAKINGûAûSERIESûOFûRECENTûASSETûSALES
lXEDûTHEûSPREADûATûPLUSû BP
The June 2029 note offering was "OMBARDIERû #AA ### ûPRICEDûAû53 BNû
ALL COVERED BONDS (ALL CURRENCIES) announced on Monday to ensure that all lVE
YEARûNON
CALLûTWOûSENIORûUNSECUREDûNOTEû
BOOKRUNNERS: 1/1/2021 TO DATE international investors could consider the TOûlNANCEûAûTENDERûOFFERûFORûALLûOFûITSû û
transaction, and this contributed to the S ûANDûSOMEûOFûTHEûOUTSTANDINGû û
Managing No of Total Share briskness of the execution on Tuesday, SûANDû û S
bank or group issues US$(m) (%) ACCORDINGûTOûTHEûLEAD
1 Barclays 3,066.74 6.0 “We have long thought that the company
2 Commerzbank 17 2,716.64 5.3 With a dearth of bonds between its 2024s WOULDûBEûINûAûPOSITIONûTOûRElNANCE û/NEûOFû
3 LBBW 16 2,656.48 5.2 and 2035s, leads turned to recent Canadian the reasons we liked the short end of the
4 UniCredit 16 2,378.99 4.7 COVEREDûBONDSûFORûCOMPARABLES company’s bond curve is the bonds are
5 BNP Paribas 16 2,276.99 4.5 bullets, so you need to pay a tender
6 SG 13 2,222.29 4.4 )Nû-ARCH û."#ûISSUEDûõ MûOFû û PREMIUMûTOûRElNANCEûUS û)T SûAûRElNANCINGû
7 DZ Bank 10 2,155.22 4.2 S ûWITHû#)"#ûFOLLOWINGûINû!PRILûWITHû transaction, so you can expect a lot of
8 Natixis 13 2,105.41 4.1 õ BNûOFû û!PRILû S û"OTHûWEREûQUOTEDû
9 NatWest Markets 13 2,056.97 4.0 WITHû)
SPREADSûOFûAROUNDûPLUSû BPûONû
10 Credit Agricole 12 2,056.62 4.0 4RADEWEB
Total 13 50,819.60
71 Barclays, BMO, BNP Paribas, Commerzbank,
HSBC and LBBW began marketing BMO’s
Source: Refinitiv SDC code: J15a benchmark trade at mid-swaps plus 12bp

34 International Financing Review June 5 2021

BONDS HIGH-YIELD

current holders to put in an order on the “Given the value of things – equity h)NmATIONûISûFRONTûOFûMINDûFORûINVESTORS û
NEWûBONDS vûSAIDû0ETERû$UFFY û#)/ûOFûCREDITû markets, real estate, commodities, wherever )T SûNOTûSOMETHINGûYOUûWANTûTOûIGNORE vûSAIDû
ATû0ENNû#APITAL you look – it suggests there is an abundance 'AUTAMû+HANNA ûSENIORûPORTFOLIOûMANAGERû
OFûNETûWORTHûAMONGûTHATûRARElEDûPRIVATEûJETû ATû)NSIGHTû)NVESTMENT
"UTûUNLIKEûMOSTûRElNANCINGûDEALS û CLIENTELE û)ûDON TûTHINKûCONDITIONSû;FORûTHEû
Bombardier’s new issue will add to its private jet industry] are worse than pre- 3TILL û+HANNAûSAIDûHEûWASûNOTûTWEAKINGûHISû
interest expenses, as the coupon on the new Covid, and on the margins may be better,” portfolio over fears of intensifying price
bonds was higher than on those it is SAIDûONEûHIGH
YIELDûFUNDûMANAGER PRESSURES
RElNANCING
The deal was led by JP Morgan, Deutsche CINEMARK ISSUES AFTER BIG
The deal was upsized by US$200m and Bank, National Bank of Canada and UBS. BOX OFFICE NUMBERS
PRICEDûATû ûTIGHTERûTHANûINITIALû
GUIDANCEûOFûTHEûMIDûTOûHIGHû û4HEûPRICINGû NEW ISSUES WHISTLE PAST Movie theatre chain CINEMARK tapped the
puts the new debt closer to where similar INFLATION CONCERNS high-yield bond market for a second time
tranches from Bombardier traded in the this year on Tuesday to provide the Texas-
CORPORATEûBONDûMARKET û"OMBARDIER Sû %VENûASûCONCERNSûAROUNDûINmATIONûKEEPû BASEDûCOMPANYûWITHûSOMEûMOREûlNANCIALû
û SûWEREûLASTûSEENûTRADINGûATû û heating up, high-yield primary deals have RUNWAYûASûITûSTANDSûPOISEDûTOûBENElTûFROMû
ACCORDINGûTOû-ARKET!XESSûDATA û4HEûAVERAGEû had little trouble in churning out longer- the return of moviegoers in the face of an
yield for a Triple C and lower junk-rated DATEDûDEALSûTOûRECEPTIVEûBONDûBUYERS EBBINGû53ûPANDEMIC
DEBTûSTOODûATû ûONû7EDNESDAY û
ACCORDINGûTOû)#%û"OF! The stability in the 10-year benchmark #INEMARK ûRATEDû#AA " " ûOFFEREDû
Treasury note has helped investors get US$765m of seven-year non-call three senior
COVENANT CHALLENGE comfortable around the idea of taking down NOTESûTOûRElNANCEûTHEûCOMPANY Sû û
Bombardier announced in May a consent longer-dated issuance despite the din from ûNOTES û4HEûBONDSûWEREûPRICEDûATû û
solicitation to tweak its bond indentures MONEYûMANAGERSûGROUSINGûOVERûTHEûINmATIONû INûLINEûWITHûINITIALûPRICEûTHOUGHTS
AFTERûAûHOLDERûOFûITSû û ûNOTESûALLEGEDû SPECTRE û4HEû
YEARûWASûATû ûONû
the company had breached its merger 4HURSDAY Since last year, the cinema chain has
COVENANTûBYûSELLINGûASSETS come to the high-yield primary market
“Before it was hard to get razor sharp on twice to raise funds to help it ride out the
Bombardier fended off that challenge after $OUBLEû"ûPRICING û"UTûNOWûITûFEELSû;INmATION=û shuttering of movie theatres due to the
ITûSOLDûANûADDITIONALû53 MûOFûITSû û is a phenomenon investors have moved PANDEMIC û4HEûMOSTûRECENTûDEALûWASûAû
2034s to a majority holder of those notes, BEYOND vûSAIDûONEûLEVERAGEDûlNANCEûBANKER û û ûOFFERINGûINû-ARCHû ûTOû
WHOûAGREEDûTOûAPPROVEûTHEûCOVENANTûCHANGES h)NVESTORSûSEEMûTOûHAVEûGOTTENûMOREû RElNANCEûITSû û ûSENIORûNOTES
COMFORTABLEûMOVINGûFURTHERûOUTûTHEûCURVE v
The company has been shedding parts of #INEMARK Sû"A ""nûRATEDû û û
its business to double down on its private jet Still, many are cognisant of the risks of a secured notes, issued at the heart of the
division, focusing on its high-end Global JUMPûINmATIONûGIVENûTHEûGROWINGûSENSITIVITYû PANDEMIC ûWEREûLASTûTRADINGûATû û
ûAIRCRAFT of the high-yield corporate bond market to ACCORDINGûTOû-ARKET!XESS û4HATûISûEXACTLYûINû
THEûRISKûOFûRISINGûINTERESTûRATES LINEûWITHûTHEû ûAVERAGEûONû$OUBLEû"û
Earlier this year, Bombardier sold its rail RATEDûBONDS ûACCORDINGûTOû)#%û"OF!ûDATA
MANUFACTURINGûBUSINESSûTOû!LSTOMûANDûINû The large share of Double B rated issuers
2020 sold its commercial regional jet that fell into junk after losing their The company turned to the capital markets
BUSINESSûTOû-ITSUBISHIû(EAVYû)NDUSTRIES investment-grade ratings during the depths of AFTERûAûSTRONGûWEEKENDûATûTHEûBOXûOFlCE û
the pandemic has seen the average maturity Moviegoers are returning to theatres in force
Moody’s and S&P both have negative OFûTHEûBROADERûHIGH
YIELDûINDEXûCREEPûUP as mass vaccination distribution programmes
outlooks on the company’s ratings because of PUSHûDOWNû#OVIDûCASESûACROSSûTHEû53
ITSûHIGHûLEVERAGEûnûAROUNDû ûTIMESûINûTHEûlRSTû The average maturity for a bond in the
QUARTERûOFû ûACCORDINGûTOû-OODY S û)TûALSOû "LOOMBERGû"ARCLAYSû(IGHû9IELDûINDEXûSTANDSûATû 4HRILLERû1UIETû0LACEû0ARTû))ûTOOKûINû53 Mû
has large debt maturities from 2022 through ûYEARS ûAROUNDûITSûLONGESTûSINCEû ûUPû BETWEENû-AYû ûANDû-AYû ûMARKINGûTHEû
ûANDûWEAKûPROlTABILITY û3 0ûSAID FROMûITSûRECENTûLOWûOFûAROUNDû ûYEARSûINû BIGGESTûOPENINGûWEEKENDûBOXûOFlCEûHAULû
DURINGûTHEûPANDEMIC û4HATûHANDILYûBEATûTHEû
Because the company is offering a higher Junk-rated companies have been able to previous pandemic record of US$32m earned
COUPONûTOûRElNANCEûEXISTINGûBONDSûhSHOWSû push out deals in the eight and 10-year FROMû'ODZILLAûVS û+ONGûINû-ARCH
that investors are still cautious on the tenors in recent weeks even as those bonds
company and the amount of debt and were in theory the most vulnerable to ALL US$ DENOMINATED HIGH-YIELD BONDS
LEVERAGEûTHEYûHAVEv ûSAIDû$UFFY ûh4HEYûHAVEû INmATIONûRISKS BOOKRUNNERS – 1/1/2021 TO DATE
done asset sales but investors are still
CAUTIOUS vû High-yield issuers sold over US$30bn of Managing No of Total Share
bonds ranging in the eight to 10-year tenors bank or group issues US$(m) (%)
The company has been under pressure to in a busy May, representing more than half
punt out some of its sizeable debts coming of the overall issuance for the asset class 1 JP Morgan 224 29,403.09 10.5
DUEûINûTHEûNEXTûFEWûYEARS û4HEûCOMPANYûHASû THATûMONTH ûACCORDINGûTOû)&2ûDATA 2 Bank of America 199 23,491.62 8.4
AROUNDû53 BNûOFûBONDSûMATURINGû 3 Citigroup 142 16,096.63 5.8
BETWEENû/CTOBERû ûANDû-ARCHû h)TûSPEAKSûTOûALLûTHEûRElNANCINGSûTHATûHAVEû 4 Goldman Sachs 127 15,748.78 5.6
been done,” said Garrett Olson at Smith 5 Credit Suisse 149 15,416.92 5.5
!NDû-OODY SûEXPECTSû"OMBARDIERûTOûBURNû #APITALû)NVESTORS 6 Wells Fargo 133 15,332.58 5.5
through US$400m of cash over the next four 7 Barclays 129 14,291.80 5.1
quarters, adding to the worries around a !NDûINmATIONûFEARSûAREûNOTûLIKELYûTOûGOû 8 Deutsche Bank 137 14,201.27 5.1
HIGHLYûLEVEREDûBALANCEûSHEET away anytime soon as the labour market 9 Morgan Stanley 96 13,403.48 4.8
gains strength, commodity prices move 10 RBC 99 11,371.32 4.1
But some investors said the strong HIGHERûANDûSUPPLYûCHAINSûREMAINûCLOGGED 431 279,032.90
prospects for private jet travel as the US and Total
global economy recovered from the 4HEû,ABORû$EPARTMENTûREPORTEDûlRST
TIMEû
pandemic helped to offset some of the CLAIMSûFORûUNEMPLOYMENTûBENElTSûINûTHEû53û Including US domestics, Euro, foreign, globals. Excluding equity-related debt.
COMPANY SûINDIVIDUALûTROUBLES slipped below 400,000 the week before last
FORûTHEûlRSTûTIMEûDURINGûTHEûPANDEMIC Source: Refinitiv SDC code: B5

International Financing Review June 5 2021 35

!NOTHERûTAILWINDûFORû#INEMARKûAREûRECENTû impressive rally despite reports that the last week, included a €300m six-year non-
deals it struck with movie studios to keep hedge fund had sold the entire position CALLûONEûEUROûmOATING
RATEûBONDûASûPARTûOFûITSû
BLOCKBUSTERûlLMSûEXCLUSIVELYûINûTHEATRESûFORû BEFOREûTHEûENDûOFûTHEûDAY a M
EQUIVALENTûRElNANCINGûTRADE ûWHICHû
longer before they could be shown in WASûANNOUNCEDûONû4UESDAY û
STREAMINGûPLATFORMS !-# SûBONDûSECURITIESûHAVEûTRADEDûUPûASû
the stock rally has progressed, with debt 4RANSCOMûHASûBEENûOWNEDûBYû!LTORûFORû
)NûONEûDEALûWITHû5NIVERSALûPICTURESûINû investors hopeful the company would take around four years, after the Swedish private
November, the studio agreed that if any of ADVANTAGEûTOûRAISEûLIQUIDITY EQUITYûlRMûTOOKûTHEûCOMPANYûPRIVATEûINû
Universal’s movies earned more than
US$50m in opening weekend receipts they 3TILL û!-# SûCREDITûRATINGSûANDûBONDûPRICESû
would stay in theatres for at least 31 days, reinforce the view of many investors that While the sponsor is under no pressure to
COMPAREDûWITHûTHEû ûDAYSûFORûOTHERûTITLES #INEMARKûISûAûMUCHûSTRONGERûCREDIT û!-# Sû exit, it is focused on reducing costs and the
û S ûRATEDû#A # ûWEREûLASTûTRADINGûATû shorter call period and structure would save
!NDûINûANûEMBATTLEDûMOVIEûTHEATREû ûMUCHûWIDERûTHANû#INEMARK SûBONDS û ITûSIGNIlCANTûMONEYûIFûITûWEREûTOûEVENTUALLYû
industry, investors said Cinemark’s balance ACCORDINGûTOû-ARKET!XESS DOûSO ûSAIDûAûBANKERûFAMILIARûWITHûTHEûDEAL û
SHEETûWASûONûTHEûSTRONGERûSIDE "UTûLEADSûALSOûHOPEDûTHEûmOATERûWOULDû
h!-#ûISûBLOATEDûWITHûDEBT ûWHILEû#INEMARKû APPEALûTOûAûWIDEûGROUPûOFûBUYERS û
Monthly cash burn stood at around ISûAûHIGHER
QUALITYûOPERATOR û)T SûlLLEDûWITHû
53 MûEVERYûMONTH ûANûIMPRESSIVEûlGUREû more renovated theatres, so if you want the “Floaters are appealing to traditional term
for a company that had seen revenues tail experience of the theatre – reclined chairs, loan buyers and the CLO universe – and it
off sharply during the pandemic, according good food and whatever – they have a leg-up helps to cast the net as wide as possible in
TOûONEûHIGH
YIELDûFUNDûMANAGER ûh4HINGSûAREû INûTHATûSITUATION vûSAIDûTHEûFUNDûMANAGER terms of potential investor demand and
fundamentally moving in the right INTEREST vûSAIDûTHEûBANKER ûh)T SûALLûABOUTû
DIRECTION vûHEûSAID The Cinemark bond issue was led by Wells maximising the pool of capital that you’re
Fargo (lead-left), Barclays, JP Morgan, and RBC. APPROACHINGûTOûPLAYûTHEûDEAL v
EYES ON AMC
Cinemark’s competition was also catching EUROPE/MIDDLE EAST/ European high-yield borrowers have
THEûEYEûINûMARKETSûONû4UESDAY ûASû!-#û AFRICA PRICEDûNEARLYûõ BNûINûmOATING
RATEûNOTESûSOû
%NTERTAINMENTûSAIDûITûHADûSOLDû MûINû FARûTHISûYEAR ûVERSUSûõ BNûINû ûANDû
shares to hedge fund Mudrick Capital TRANSCOM MARKETS FLOATER AS BANKS õ BNûINû ûACCORDINGûTOû)&2ûDATA û
-ANAGEMENTûTOûRAISEû53 MûONû4UESDAY û GEAR UP FOR BUSY JUNE
The company’s stock extended its 4HEûHIGHERûTOTALûISûALSOûAûRESULTûOFû)TALIANû
TRANSCOMûLANDEDûITSûlRSTûBENCHMARK
SIZEDûHIGH
junk borrowers being able to access the
ALL ASIAN HIGH-YIELD ISSUERS yield bond last week – one of only two deals in MARKETûTHISûYEARûnû)TALIANûCOMPANIESûAREû
1/1/2021 TO DATE ANûOTHERWISEûQUIETûSTRETCHûINûTHEûPRIMARYûARENA restricted from issuing leveraged loans and
so tend to mimic the structure as closely as
Managing No of Total Share The private equity-owned outsourcing POSSIBLEûVIAûmOATING
RATEûBONDS
bank or group issues US$(m) (%) company, which provides customer care,
sales and technical support, opted for a Over in the US, an increasing number of
1 Deutsche Bank 45 2,014.59 6.8 mOATING
RATEûBONDûnûAûõ Mû
YEARûNON
borrowers, including banks, are opting for
2 Citic 51 1,940.81 6.6 call one senior secured note, marketed mOATING
RATEûNOTESûASûINVESTORSûBRACEû
3 Credit Suisse 42 1,939.51 6.6 through JP Morgan (lead-left and B&D), THEMSELVESûFORûRISINGûRATES û
4 Guotai Junan Secs 59 1,749.52 5.9 alongside joint global coordinators and
5 HSBC 36 1,534.41 5.2 bookrunners Danske Bank and Nordea. 4RANSCOM SûBONDûWILLûRElNANCEûITSûõ Mû
6 Haitong Secs 56 1,524.74 5.2 ûlXED
RATEû-ARCHû S ûASûWELLûASûBANKû
7 JP Morgan 18 1,378.44 4.7 4HEûmOATERûWASûONEûOFûMANYûSEENûINûTHEû debt and its drawn senior secured revolving
8 UBS 44 1,365.20 4.6 market this year as sponsors in particular CREDITûFACILITY û)NITIALûPRICEûTHOUGHTSûWEREû
9 Morgan Stanley 16 1,106.91 3.8 LOOKûFORûEXITûmEXIBILITYûANDûBANKERSûLOOKûTOû sent out on Tuesday at Euribor plus 550bp–
10 Citigroup 14 1,102.48 3.7 tap into a larger buyer universe, which BPûWITHûAû ûmOORûANDûAû û/)$ û,EADSû
97 29,417.93 INCLUDESûDEEP
POCKETEDû#,/ûFUNDS û SENTûOUTûPRICEûTALKûOFû% BPn BPûONû
Total 4HURSDAY û
SDC code: B06d David Lloyd, the only other borrower in
Excluding equity-related debt. the European junk bond primary market The deal priced on Friday at coupon of
Source: Refinitiv % BP û4HEûOFFERINGûPRICEûWASû ûANDû
the issuer was able to up the size to €315m
ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS ALL EUROPEAN HIGH-YIELD ISSUERS FROMûõ M
1/1/2021 TO DATE 1/1/2021 TO DATE
The transaction was given a boost after
Managing No of Total Share Managing No of Total Share S&P recently upgraded Transcom to B– with
bank or group issues €(m) (%) bank or group issues US$(m) (%) AûPOSITIVEûOUTLOOK ûFROMû### û-OODY Sû
RATESûTHEûCOMPANYû" ûWITHûAûSTABLEûOUTLOOK
1 Deutsche Bank 43 4,516.48 7.6 1 JP Morgan 60 8,183.76 8.7
2 Goldman Sachs 50 4,489.82 7.5 2 Deutsche Bank 48 6,837.35 7.3 S&P essentially reversed its downgrade of
3 JP Morgan 45 4,445.08 7.5 3 Goldman Sachs 57 6,430.97 6.9 the company, which it executed at the
4 BNP Paribas 47 3,901.55 6.6 4 BNP Paribas 51 5,624.09 6.0 HEIGHTûOFû#OVID
ûINû!PRILû ûNOTEDûTHEû
5 Barclays 35 3,882.05 6.5 5 Barclays 41 5,603.99 6.0 BANKER û4RANSCOMûHASûBEENûAûRELATIVEû
6 HSBC 37 3,328.79 5.6 6 Credit Suisse 43 4,636.46 5.0 BENElCIARYûOFûTHEûPANDEMICûANDûHASû
7 UniCredit 35 3,008.88 5.1 7 Bank of America 31 4,505.19 4.8 IMPROVEDûITSûMARGINSûANDû%BITDA ûHEûSAID
8 Bank of America 25 2,939.77 4.9 8 Morgan Stanley 27 4,090.53 4.4
9 Morgan Stanley 25 2,677.08 4.5 9 Citigroup 36 4,055.00 4.3 “This new deal helps the company with
10 Credit Suisse 35 2,401.09 4.0 10 HSBC 36 3,861.77 4.1 LIQUIDITY vûSAIDûTHEûBANKER ûh)T SûAûBUSINESSû
105 59,517.03 127 93,597.93 that has shown good resilience and an
Total Total improved trajectory, and that improvement
SDC code: B6 SDC code: B06c HASûNOTûONLYûBEENûREmECTEDûINûTHEûINVESTORû
Excluding equity-related debt. Excluding equity-related debt. sentiment towards the deal but also from
Source: Refinitiv Source: Refinitiv THEûRATINGûAGENCIES v

36 International Financing Review June 5 2021

STRUCTURED FINANCE

ASIA-PACIFIC The orderly resolution process had put !RRANGERûABN AMRO, also joint lead
some investors off buying into earlier manager with Societe Generale, whittled the
AVANTI MAKES KANGAROO RETURN ISSUES ûBUTûAûTRACKûRECORDûBUILTûSINCEû#)&$û SPREADûONûANûUPSIZEDûõ Mû#LASSû!û
began tapping the public RMBS market in TRANCHEûTOû BPûOVERûTHREE
MONTHû%URIBOR û
New Zealand non-bank lender AVANTI FINANCE, 2019 has assured some of the initial 4HEûTRANCHEûWASûINITIALLYûmAGGEDûASûAû
rated BB (S&P), marked a further revival in SCEPTICS û7EDNESDAY SûISSUEûBROUGHTûMOREû õ MûDEAL
THEû!USTRALIANûBONDûMARKETûONû4UESDAYûWITHû than 10 new investors into the vehicle’s
AûSMOOTHLYûEXECUTEDû! Mû 53 M ûFROMû #LASSû!ûNOTESû h)T SûAûKNOWNûBRANDûWITHûAûFAIRLYûlXEDû
a four-year non-call two senior secured AUDIENCE vûSAIDûAûBANKERûONûTHEûDEAL
mOATING
RATEû+ANGAROOûSALE ûPRICEDûATûTHREE
h) VEûPASSEDûONûTHEMûINûTHEûPAST ûASû
MONTHû""37ûPLUSû BP you’re never sure what performance is Demand was probably helped by a year’s
going to be like,” said one, before pricing, absence from the market, with no Green
!NûORDERûBOOKûOFûAROUNDû! MûWASû hBUTû)ûMIGHTûHAVEûAûLOOKûATûTHEMûTHISûTIMEû !PPLEûSUPPLYûINû û
secured within 90 minutes of the offer ROUND v
opening with new accounts among the “We didn’t issue RMBS last year,
dozen or so, mainly institutional, “Many investors with us from the very although we had initially intended to do
PARTICIPATINGûINVESTORS beginning are still coming into recent so,” said Christian Lambrechts, director,
ISSUANCES vûSAIDû&RACHOT ûh3OMEûINVESTORSû lNANCIALûMANAGEMENTûATû!RGENTAû
,IKEûTHEûPREVIOUSûWEEK Sû! MûLONGûlVE
WHOûREFUSEDûTOûCOMEûINTOûTHEûlRSTûISSUANCEû 3PAARBANK ûh$URINGû#OVID
ûWEû
YEARûWHOLESALEûmOATING
RATEûNOTEûFROMû AREûNOWûlGHTINGûTOûBUYûOURûBONDS v experienced a very high increase in retail
UNRATEDû!USTRALIANûREALûESTATEûDEVELOPMENTû SAVINGSûANDûINûTHEûlRSTûHALFûOFûTHEûYEARûHADû
COMPANYû0EET û!VANTIûBENElTEDûFROMû )NûAûSIGNûOFûTHEûTIGHTNESSûOFûEUROû!"3û much lower mortgage origination than
favourable technicals as a lack of high-yield conditions, initial price thoughts of low to NORMAL û"UTûASûRETAILûSAVINGSûANDû
supply and recent redemptions mid-30s were already too expensive for origination normalised it became a good
UNDERPINNEDûDEMAND û ANOTHERûINVESTORûCONSIDERINGûTHEûDEAL MOMENTûTOûCOMEûTOûMARKET v

NAB was sole lead manager for the But the trade had other draws, being Some asset managers have seen the euro
TRANSACTION ûASûITûWASûFORû!VANTI SûDEBUTû structured for STS and LCR treatment, as market as uncomfortably tight for some
! Mû ûSENIORûSECUREDûFOUR
YEARûNON
WELLûASû%UROSYSTEMûELIGIBILITY TIMEûANDûSTEPPEDûAWAY û/NEû!"3ûSYNDICATEû
CALLûTWOû+ANGAROOûSALEûLASTû$ECEMBER. banker said that even some of the cash-
The issuer did not move pricing too rich bank treasuries that have supported
!VANTIû&INANCEûHASûSOLDûTHREEû2-"3û MUCHûFROMû)04SûOFûLOWûTOûMID
SûFORûTHEû many of the tight prints this year are
totalling NZ$650m (US$471m) in the local #LASSû!ûNOTES ûSETTLINGûONûAû BPûSPREADûFORû lNDINGûRECENTûLEVELSûTOOûDEAR
securitisation market, but targets the greater THEûõ MûTRANCHE û4HEûSPREADûWASûSETûATû
DEPTHûOFûTHEû!USTRALIANûSUB
INVESTMENT
GRADEû BPûFORûõ MûOFû#LASSû"ûNOTES But plenty of accounts are still willing to
MARKETSûFORûITSûSENIORûBONDûOFFERINGS û take down the paper on offer, as Green
Demand grew throughout the !PPLEûSHOWEDûWITHûANûORDERûBOOKûTHATûHADû
STRUCTURED FINANCE bookbuild, moving from about €550m at REACHEDûABOUTûõ BNûATûTHEûLASTûUPDATEûnû
lRSTûUPDATEûTOûõ BNûATûlNAL û4HEû#LASSû"û with the number of accounts participating
EMEA MBS ORDERûBOOKûGREWûFROMûABOUTûõ MûATûlRSTû INûTHEûHIGHû S û4HEûBOOKûHADûGROWNûSINCEû
UPDATEûTOûABOUTûõ MûATûlNAL û INITIALûPRICEûTHOUGHTSûOFû BPûAREAûWENTû
HARMONY CEMENTS PRESENCE OUTûnûRISINGûFROMûABOUTûõ MûATûlRSTû
WITH FOURTH RMBS BNP Paribas and Credit Agricole were co- UPDATE û
arrangers and joint lead managers on the
French RMBS HARMONY FRENCH HOME LOANS FCT DEAL û “We wanted to price the deal on
2021-1 priced on Wednesday, marking the Wednesday so gave initial price thoughts
fourth public RMBS from CREDIT IMMOBILIER GREEN APPLE CRANKS DUTCH on Monday, despite it being a public
DE FRANCE DEVELOPPEMENT, an originator RMBS TIGHTER HOLIDAYûINûTHEû5+ vûSAIDû%RWINû$Eû3MET û
winning growing popularity in the MANAGERûFUNDINGûATû!RGENTAû3PAARBANK û
STRUCTUREDûlNANCEûMARKET û ARGENTA SPAARBANK’s GREEN APPLE 2021-1 was “The books were stable throughout the
priced on Wednesday, bringing Dutch process, increasing as some large investors
h)TûWASûAûBIGûSUCCESS ûWEûHAVEûSEENûINVESTORSû RMBS to ever tighter levels as the print CAMEûINTOûTHEûBOOKSûATûlNALûGUIDANCE v
WHOûWEREûHESITANTûCOMINGûINTOûOURûlRSTû beat the 14bp spread achieved by Saecure
transactions now understanding the portfolio, ûINû-ARCH 3AECUREû ûHADûTAKENûAûPOST
ûRECORDû
that it is well seasoned and has demonstrated
STRONGûPERFORMANCE vûSAIDû!RZUû9ILMAZ ûGROUPû ALL EUROPEAN ISSUERS ALL INTL ISSUERS (EXCLUDING SELF-FUNDED)
CHIEFûlNANCIALûOFlCERûATû#)&$ BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE

#)&$ûHASûBEENûINûORDERLYûRESOLUTIONû Managing No of Total Share Managing No of Total Share
since 2013, a process that began when it bank or group issues US$(m) (%) bank or group issues US$(m) (%)
RANûINTOûLIQUIDITYûDIFlCULTIES ûANDûHASûAû
STATEûGUARANTEEûLASTINGûUNTILû 1 BNP Paribas 16 3,829.86 15.5 1 Credit Suisse 77 15,520.14 11.5
2 Citigroup 9 2,512.00 10.2 2 Barclays 59 14,011.58 10.4
“The Harmony programme is a way for 3 Barclays 9 1,832.66 7.4 3 Bank of America 51 11,813.58 8.7
us to use the state guarantee at the lowest 4 UniCredit 5 1,763.02 7.1 4 Goldman Sachs 56 10,152.54 7.5
POSSIBLEûLEVEL vûSAIDû!NTOINEû&RACHOT û 5 Santander 5 1,646.92 6.7 5 JP Morgan 42 10,038.02 7.4
DEPUTYû#%/ûATû#)&$ û 6 Bank of America 6 1,630.27 6.6 6 Wells Fargo 43 9,841.65 7.3
7 Deutsche Bank 5 1,228.94 5.0 7 Citigroup 44 8,716.24 6.4
8 SG 5 955.26 3.9 8 Deutsche Bank 49 7,836.68 5.8
9 Morgan Stanley 2 921.60 3.7 9 Morgan Stanley 28 5,288.75 3.9
10 ING 2 803.39 3.3 10 BNP Paribas 22 4,913.16 3.6
46 24,667.76 265 135,286.96
Total Total

Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, PFI bonds and credit-linked notes. Excludes US
domestics) and excludes CDOs. global ABS/MBS, CDOs and self funded issues.

Source: Refinitiv SDC code: B16n Source: Refinitiv SDC code: J10d

International Financing Review June 5 2021 37

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 4/6/2021

Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
3mE+50bp Morgan Stanley Aaa/AAA/NR CLO
Bain Capital Euro CLO 2021–1 €2 1.70 3mE+88bp Morgan Stanley Aaa/AAA/NR CLO
3mE+160bp Morgan Stanley Aa2/AA/NR CLO
Bain Capital Euro CLO 2021–1 €248 5.90 Morgan Stanley Aa2/AA/NR CLO
1.950 Morgan Stanley A2/A/NR CLO
Bain Capital Euro CLO 2021–1 €30 7.60 3mE+210bp Morgan Stanley Baa3/BBB/NR CLO
3mE+330bp Morgan Stanley Ba3/BB–/NR CLO
Bain Capital Euro CLO 2021–1 €10 7.60 3mE+620bp Morgan Stanley B3/B–/NR CLO
3mE+882bp Morgan Stanley NR/NR/NR CLO
Bain Capital Euro CLO 2021–1 €28 8.30 Morgan Stanley NR/NR/NR CLO
– Barclays/BofA NR/NR/NR CMBS
Bain Capital Euro CLO 2021–1 €24.8 9.00 – ABN AMRO/Societe Generale Aaa/NR/NR RMBS
SOFR+23bp BNP Paribas/Credit Agricole A1/NR/A– RMBS
Bain Capital Euro CLO 2021–1 €20 9.70 3mE+70bp BNP Paribas/Credit Agricole A1/NR/A– RMBS
3mE+70bp BofA Aaa/AAA/NR CLO
Bain Capital Euro CLO 2021–1 €12 10.30 3mE BofA Aaa/AAA/NR CLO
E+88bp BofA Aa2/AA/NR CLO
Bain Capital Euro CLO 2021–1 €30.6 – E+88bp BofA Aa2/AA/NR CLO
E+160bp BofA A2/A/NR CLO
Bain Capital Euro CLO 2021–1 €0.5 – 2.000 BofA Baa3/BBB–/NR CLO
E+210bp BofA Ba3/BB–/NR CLO
Freddie Mac SPC Series K–F113 US$994.569 6.58 E+310bp BofA B3/B–/NR CLO
E+617bp BofA NR/NR/NR CLO
Green Apple 2021–I B.V. €650 4.91 E+879bp Credit Suisse/ZKB NR/Aaa/AAA ABS
– Credit Suisse/ZKB NR/A+/A+ ABS
Harmony French Home Loans Fct 2021–1 €577.8 3.30 0.350 Credit Suisse/ZKB NR/BBB+/BBB+ ABS
1.625 Citigroup NR/AAA/NR ABS
Harmony French Home Loans Fct 2021–1 €25.4 4.90 2.375 Citigroup NR/AA/NR ABS
SONIA+150bp Citigroup NR/AA–/NR ABS
Sculptor European CLO VIII DAC €93 5.90 SONIA+205bp Citigroup NR/A/NR ABS
SONIA+245bp Citigroup NR/BBB–/NR ABS
Sculptor European CLO VIII DAC €91.50 5.90 SONIA+315bp
SONIA+425bp
Sculptor European CLO VIII DAC €18.50 7.50

Sculptor European CLO VIII DAC €10 7.50

Sculptor European CLO VIII DAC €24 8.20

Sculptor European CLO VIII DAC €18.75 8.90

Sculptor European CLO VIII DAC €15 9.50

Sculptor European CLO VIII DAC €9 10.00

Sculptor European CLO VIII DAC €24.90 –

Swiss Credit Card Issuance 2021–1 SFr190 –

Swiss Credit Card Issuance 2021–1 SFr6 –

Swiss Credit Card Issuance 2021–1 SFr4 –

Together Asset Backed Securitisation 2021 CRE2 £198.678 –

Together Asset Backed Securitisation 2021 CRE2 £13.701 4.70

Together Asset Backed Securitisation 2021 CRE2 £10.587 4.70

Together Asset Backed Securitisation 2021 CRE2 £9.715 4.70

Together Asset Backed Securitisation 2021 CRE2 £8.968 4.70

for Dutch RMBS with its March spread, BPn BPûAREAûFORûa MûOFû#LASSû!û WEREû ûTIMESûSUBSCRIBEDûATûTHEûMOSTû
ACCORDINGûTOû!".û!-2/ûANALYSIS û7ITHû NOTES ûOneSavings Bank and Bank of America RECENTûUPDATE û4HEûDEALûALSOûINCLUDEDû
this year already throwing up post-crisis are co-arrangers and the latter is sole lead a MûOFû#LASSû"ûNOTES ûPRICEDûATû BP û
TIGHTSûFORû'ERMANûAUTOû!"3 ûMARKETû MANAGER a MûOFû#LASSû#ûNOTES ûPRICEDûATû BP û
participants are again asking how much a MûOFû#LASSû$ûNOTES ûPRICEDûATû BP û
BETTERûCONDITIONSûCANûGET STRATTON TAKES PUBLIC ROUTE a MûOFû#LASSû%ûNOTES ûPRICEDûATû BP û
WITH THIRD 2021 RMBS ANDûa MûOFû#LASSû&ûNOTES ûPRICEDûATû
h)TûFEELSûLIKEûWEûAREûNEARINGûTHEûLIMIT vû BP
SAIDûTHEûBANKERûONûTHEûDEAL ûv7EûAREûSEEINGû STRATTON MORTGAGE FUNDING 2021-3 on
MOREûSUPPLYûCOMINGûANDû)ûWOULDûBEû 7EDNESDAYûPRICEDûTHEûlRSTûPUBLICûISSUANCEû TOGETHER TAKES PRE-PLACED ROUTE
SURPRISEDûIFûITûDOESûGOûTIGHTERûFROMûHERE v of the year from a shelf that has
TRADITIONALLYûFAVOUREDûPRE
PLACEMENT û TOGETHER COMMERCIAL FINANCE took the pre-
LENDINVEST LANDS BTL RMBS placed route for its second MBS of the year
4HEû5+û2-"3ûDEALûWASûSOLDûTHROUGHû on Thursday, pricing TOGETHER ASSET BACKED
LENDINVEST priced MORTIMER BTL 2021-1 on ERTOW HOLDINGS VIII, with Burlington Loan SECURITISATION 2021- CRE2
&RIDAY ûASû5+û2-"3ûKICKEDûBACKûINTOûGEAR -ANAGEMENTûRETENTIONûHOLDER ûBank of
AmericaûARRANGEDûTHEûTRANSACTION 4HEû5+ûNON
BANKûLENDERûTAPPEDûPUBLICû
-ORTIMER ûAû5+ûBUY
TO
LETû2-"3 ûLANDEDû markets earlier this year, when it sold
WITHûa MûOFû#LASSû!ûNOTESûPRICEDûATû BPû Previous Stratton issuances this year, 4OGETHERû!SSETû"ACKEDû3ECURITISATIONû

OVERû3ONIAûONû&RIDAY ûCitigroup was sole Stratton Mortgage Funding 2021-1 and CRE1 – a deal that mixed elements of
arranger and joint lead manager with Stratton Mortgage Funding 2021-2, have 2-"3ûANDû#-"3
HSBC, National Australia Bank and Standard gone for pre-placement instead of public
Chartered SALES û4HEûa BNûOFû#LASSû!ûNOTESûINûTHEû On Thursday, it priced a second such
2021-2 issuance, from February 26, priced deal, backed by small balance commercial
4HEûDEALûPRICEDûASû5+û2-"3ûACTIVITYû ATûANûINITIALûMARGINûOFû BPûOVERû3ONIA û4HEû ASSETS û"UTûTHISûTIMEûITûOPTEDûFORûFULLûPRE

heated up following a lull in recent a MûOFû#LASSû!ûNOTESûINûTHEû&EBRUARYû placement of the capital stack – with three
WEEKS û+ENSINGTONûENTEREDûTHEûPIPELINEû ûSALEûOFû
ûPRICEDûATûANû BPûDISCOUNTû RETAINEDûTRANCHESûnûSELLINGûa MûOFû
last week with Finsbury Square 2021-1 MARGIN #LASSû!ûNOTESûWITHûAûCOUPONûOFû BPûOVERû
Green, alongside Citi-led CANADA SQUARE 3ONIA
FUNDING 2021-2 Stratton Mortgage Funding 2021-3,
PRICEDûONû7EDNESDAY ûLANDEDûa MûOFû Citigroup was sole arranger and sole lead
ROCHESTER FINANCING NO.3 is also in market, #LASSû!SûATû BPûOVERû3ONIA û4HEûNOTESû MANAGER û
with initial price thoughts of the high

38 International Financing Review June 5 2021

STRUCTURED FINANCE

GOLDMAN MIXES OFFICE, Ten accounts came into the book, putting value is included in the pool, making the
HOTEL AND RETAIL WITH NEW CMBS INûABOUTû3&R MûOFûORDERS DEALûINELIGIBLEûFORû%UROSYSTEMûELIGIBLITY û4HISû
creates a yield pick-up for investors
Goldman Sachs has announced a new CMBS, “Reception of the mandate announcement COMPAREDûTOû%#"
ELIGIBLEûTRADES û)NûTHEû
BRUEGEL 2021, a single-loan securitisation WASûVERYûPOSITIVEûANDûGENERATEDûAûLOTûOFû)O)S û TIGHTLYûCOMPRESSEDû!"3ûMARKETSûOFû û
BACKEDûBYû$UTCHûOFlCE ûRETAILûANDûHOTELû SO ûYES ûWEûWEREûCONlDENTûTOûPRICEûINSIDEû THATûMAYûPROVEûAûDRAW û
PROPERTIES !-!' 3WISSû#ARû!"3 vûSAIDûTHEûSECONDû
BANKER ûh"UTûASûTHEûINVESTORûBASEûISûQUITEû EMEA CLO
The loan, originated by GOLDMAN SACHS BANK small, we had to be cautious on how
EUROPE ûCOMPRISESûõ MûOFû#LASSû!ûNOTES û AGGRESSIVEûWEûSHOULDûBEûnû n û70)2û CLO TRIPLE AS WIDEN TO 88bp
õ MûOFû#LASSû"ûNOTES ûõ MûOFû#LASSû#û DIDûTHEûTRICKûTOûLANDûATûTHEûTIGHTûEND
NOTESûANDûõ MûOFû#LASSû$ûNOTES BAIN CAPITAL CREDIT US CLO MANAGER priced BAIN
h7EûCURRENTLYûONLYûHAVEûONEûCREDITûCARDû!"3û CAPITAL EURO 2021-1ûWITHûõ MûOFû#LASSû!ûNOTESû
Goldman Sachs is sole arranger, lead issuer in Swiss francs and investors always seem ATûANû BPûDISCOUNTûMARGINûONû4UESDAY ûASû
MANAGERûANDûBOOKRUNNER û TOûFAVOURûTHEMûSLIGHTLYûINûTERMSûOFûPRICING v 4RIPLEû!ûPRINTSûPUSHEDûFURTHERûOUT û

EMEA ABS The deal’s SFr6m of Class B and SFr4m of The deal, priced via Morgan Stanley, printed
#LASSû#ûNOTESûWEREûBOTHûPRE
PLACED û4HEû"û ASûWIDENINGûINû4RIPLEû!SûCONTINUED û/Nû
SWISSCARD TAKES ABS MARKET TIGHTER NOTESûHADûAû ûCOUPONûANDûTHEû#ûNOTESûAû Tuesday, SCULPTOR EUROPE LOAN MANAGEMENT also
ûCOUPON priced its new issue CLO, SCULPTOR EUROPEAN
3WISSû!"3ûMOVEDûTIGHTERûONû4HURSDAYûASû CLO VIII ûWITHû4RIPLEû!ûNOTESûATû BPû$-S ûBank
SWISSCARD AECS priced the market’s second )NSURANCEûCOMPANIESûTOOKû ûOFûTHEû of America ARRANGEDûTHEûTRANSACTION
primary transaction of the year, SWISS CREDIT BONDS ûBANKSû ûASSETûMANAGERSû û
CARD ISSUANCE 2021-1 ûINSIDEû!-!'û,EASING Sû TREASURIESû ûANDûPENSIONûFUNDSû Managers are having to work harder to
OPENINGûTRADE place this part of the capital stack and
BNPP RETAINS FCT LAFFITTE spreads have gapped out from the 77bp tight
Following a Wednesday mandate, sole set by Sound Point Euro CLO V earlier this
arranger Credit Suisse – also joint lead BNP PARIBAS has issued and retained a €4bn YEAR û!MIDûAûFRANTICûYEAR ûFULLûOFûRElNANCINGû
manager with ZKB – swiftly priced the securitisation of French consumer loan ANDûRESETûACTIVITY ûSOMEû4RIPLEû!ûINVESTORSû
3&R Mû 53 M ûOFû#LASSû!ûNOTESûATû receivables, FCT LAFFITTE 2021 have realised the leverage they have on deals
ûONû4HURSDAYûMORNING û4HEûCONSUMERû ANDûSTARTEDûTOûDEMANDûMOREûPREMIUM û
credit card-backed notes’ scheduled The deal, which BNP Paribas arranged,
REDEMPTIONûDATEûISû*UNEû û û4HEYûAREû COMPRISESûAûõ BNû#LASSû!ûTRANCHEûANDûAû On Wednesday, CELF ADVISORS priced a
REPLACINGû3WISSû#REDITû#ARDû)SSUANCEû
û õ Mû#LASSû"ûTRANCHE û4HEû4RIPLEû!ûRATEDû PARTIALûRElNANCINGûOFûCARLYLE EURO CLO 2017-3 û
WHICHûMATURESûONû*UNEû #LASSû!ûNOTESûHAVEûAû ûCOUPON ûWHILEûTHEû 4HEûTRADE Sûõ MûOFû! 2ûNOTESûWEREûPRICEDû
UNRATEDû"ûNOTESûHAVEûAûZEROûCOUPON ATûAû BPû$- ûJP MorganûARRANGEDûTHEûDEAL û
4HEû#LASSû!ûTRANCHEûHADûBEENûGUIDEDûATû
n ûSETûTOûPRICEûINûRANGEûnûALREADYû The collateral includes general purpose personal US ABS
putting it inside the SFr200m three-year loans such as debt consolidation, student and
3WISSû#ARû!"3û
ûTHEû3WISSûMARKET SûlRSTû PROPERTYûIMPROVEMENTûLOANS û-OODY SûNOTEDûTHEû TOYOTA BRINGING FIRST GREEN
!"3ûOFû ûWHICHûPRICEDûATû ûINû-ARCH POOL SûGRANULARITY û".00 SûlNANCIALûSTRENGTHûANDû DOLLAR AUTO ABS SINCE 2016
STRONGûCREDITûENHANCEMENTû ûFORûTHEû!ûNOTES ûINû
h4HEûLASTû!"3ûTRANSACTIONûWASûSOMEû ITSûRATINGSûREPORT û Toyota last week announced plans to issue
months ago, and if you are looking at the ITSûlRSTûGREENûDOLLARûAUTOûLOANû
very low rates in Swiss francs, what else can FRENCH AUTO ABS IN THE PIPELINE securitisation since 2016, in an effort to
YOUûBUYûASûAû4RIPLEû!ûRATEDûPRODUCTûTHATûHASû fund loans and leases on its electric, hybrid
protection from B, C and equity tranches, CREDIPAR ûAû03!û"ANQUEû&RANCEûSUBSIDIARY û ANDûALTERNATIVE
FUELLEDûVEHICLES
where you can invest for three years and announced AUTO ABS FRENCH LEASES 2021 on
still get a positive yield?” said a banker on 7EDNESDAY ûSociete Generale is arranger and
THEûDEAL joint lead manager with Santander and ING

3WISSûFRANCû!"3ûINVESTORSûAREûGENERALLYû The collateral is French auto lease
buy-and-hold accounts and secondary CONTRACTSûORIGINATEDûBYû#REDIPAR û2ESIDUALû
market liquidity is very limited, a situation
EXACERBATEDûBYûTRADINGûDESKûRISKûLIMITS û GLOBAL STRUCTURED FINANCE IN EUROS SECURITISATIONS – ALL EUROPEAN RMBS
Primary execution has to use recent BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
transactions as comparables, making Swiss
Car the most obvious reference point, Managing No of Total Share Managing No of Total Share
despite being backed by a very different bank or group issues €(m) (%) bank or group issues €(m) (%)
COLLATERALûPOOL û4HEûTIGHTERûPRINTûALSOûEDGESû
THEûMARKETûTOWARDSûAû ûYIELDûTHATûBANKERSû 1 BNP Paribas 10 1,988.95 14.0 1 Citigroup 6 1,486.91 18.8
HOPEûTHEû!"3ûMARKETûCANûRETURNûTO ûIFû 2 UniCredit 5 1,458.63 10.3 2 BNP Paribas 8 999.14 12.6
ENOUGHûSUPPLYûISûFORTHCOMING 3 Citigroup 4 1,051.05 7.4 3 Barclays 5 802.24 10.1
4 Deutsche Bank 5 1,024.71 7.2 4 NAB 3 455.57 5.7
“Last year saw quite a distortion of the 5 Bank of America 3 984.17 6.9 5 Rabobank 2 445.06 5.6
!"3û3WISSûFRANCûMARKETûATûTHEûPEAKûOFûTHEû 6 Barclays 5 890.45 6.3 6 Natixis 3 423.72 5.3
CRISIS vûSAIDûANOTHERûBANKERûONûTHEûDEAL û 7 Santander 2 881.50 6.2 7 Morgan Stanley 1 396.94 5.0
“Now it seems the market is healing on the 8 Morgan Stanley 2 770.34 5.4 8 Lloyds Bank 2 359.72 4.5
back of high cash holdings from 9 ING 2 659.23 4.6 9 Santander 2 338.84 4.3
institutional and private investors and 10 SG 3 613.56 4.3 10 ABN AMRO 2 322.61 4.1
MISSINGûALTERNATIVES v 29 14,204.69 20 7,928.55
Total Total

Includes securitisations, credit-linked notes (Euro, foreign, global and Including Euro, foreign, global and domestics, excluding CDOs
domestics) and excludes CDOs.

Source: Refinitiv SDC code: B16g Source: Refinitiv SDC code: B10a

International Financing Review June 5 2021 39

The carmaker on Wednesday mandated “While ESG factors are a part of our AG RESOURCE IN MARKET WITH CROP
Citigroup, Credit Agricole, SMBC Nikko Securities investment process, we believe that the LOAN ISSUE
and TD Securities as the joint lead asset must have merit on its own
bookrunners for SEC-registered TOYOTA AUTO regardless of the green aspect,” one senior AG RESOURCE MANAGEMENT was preparing a
RECEIVABLES OWNER TRUST 2021-B. Citigroup and PORTFOLIOûMANAGERûSAID ûh7EûHAVEN TûBEENû US$225m securitisation of crop loans last
#REDITû!GRICOLEûAREûTHEûJOINTûGREENûBONDû BUYERSûOFûREGULARû4OYOTAû!"3ûDUEûTOû WEEK ûMARKINGûTHEûlRSTûPUBLICLYûRATEDû
STRUCTURINGûADVISERS VALUATION vû TRANSACTIONûOFûITSûKINDûINûTHEû!"3ûMARKET

4HEûTRANSACTIONûFEATURESû53 BNûOFû Toyota’s previous prime auto issue in 4HEûPRIVATEûSPECIALITYûlNANCEûCOMPANYûHASû
OFFEREDûNOTESûBACKEDûBYû53 BNûOFûLOANSû &EBRUARY ûTHEû53 BNû4OYOTAû!UTOû securitised loans in the private placement
ANDûLEASES û4HEûDEALûCOULDûBEûINCREASEDûINû 2ECEIVABLESû/WNERû4RUSTû
! ûCLEAREDûATû MARKETûPRIORûTOûTHISû A 2EGû3ûTRANSACTION ûAû
SIZEûTOû53 BNûINûOFFEREDûNOTES û AûWEIGHTEDûAVERAGEûALL
INûYIELDûOFû ûnû SOURCEûFAMILIARûWITHûTHEûDEALûSAID
SUPPORTEDûBYû53 BNûOFûCOLLATERAL û the lowest for all retail auto loan
ACCORDINGûTOûTHEûLEADS TRANSACTIONSûSINCEû û !Gû2ESOURCE ûWHICHûWASûFOUNDEDûINû
ûANDûHASûLENTû53 BN ûONû
Toyota plans to offer four classes of notes: a 4HEûCARMAKERûISSUEDûTHEûlRSTûGREENûAUTOû Wednesday hired Guggenheim as the sole
53 Mû#LASSû!
ûNOTEûWITHûAûWEIGHTEDû !"3ûTRANSACTIONûINû ûWHICHûWASû STRUCTURINGûADVISERûANDûBOOKRUNNER û4HISû
AVERAGEûLIFEûOFû ûYEARûANDûEXPECTEDû& !
FOLLOWEDûBYûTWOûMOREûISSUES û4HEûTHREEû DEALûWASûEXPECTEDûTOûPRICEûLASTû&RIDAY
ûRATINGSûFROMû&ITCHûANDû3 0 ûAû4RIPLEû!û !"3ûOFFERINGSûRAISEDûAûCOMBINEDû
RATEDû53 Mû!
ûTRANCHEûWITHûAû
YEARû 53 BN The offering, ARM MASTER TRUST 2021-T1 and
7!, ûAû4RIPLEû!ûRATEDû53 Mû!
ûCLASSû 2021-T2, comes at a time the lender has been
WITHûAû
YEARû7!,ûANDûAû4RIPLEû!ûRATEDû )TûALSOûISSUEDûTWOûUNSECUREDûGREENû GEARINGûUPûITSûCAPITALûMARKETûACTIVITIES
53 Mû!
ûNOTEûWITHûAû
YEARû7!, bonds: a €600m issue in 2017 and a
53 MûDEALûINû )Nû&EBRUARYû ûITûINKEDûAûDEALûWITHû
There is an unrated US$30m B class, !RESû-ANAGEMENTû#ORPORATIONûTOûPROVIDEû
WHICHûISûNOTûOFFERED 4HEû!"3ûTRANSACTIONûCOMESûAFTERû%3'û a US$450m revolving asset-backed credit
CONSULTINGûlRMû3USTAINALYTICSûASSESSEDû FACILITYûTOûHELPûFUNDûITSûLOANûORIGINATION
Toyota’s top-tier credit status and the Toyota’s green bond framework as
deal’s ESG feature will probably generate meeting with its overall sustainability ,ASTû*ULY ûITûHIREDûSTRUCTUREDûlNANCEû
ample demand for the deal, market sources strategy and that the use of proceeds will VETERANû2ASOOLû!LIZADEHûASûITSûCHIEFû
SAID û"UTûINVESTORSûWHOûSEEKûJUICIERûYIELDSû help achieve UN’s Sustainable lNANCIALûOFlCERûANDûPRESIDENTûOFûCAPITALû
THANûWHATûISûAVAILABLEûINûPRIMEûAUTOû!"3û Development Goal to provide “access to MARKETS û2ASOOLûJOINEDûFROMû0!#%ûLENDERû
MAYûGIVEûITûAûPASS safe, affordable, accessible and sustainable 9GRENEû%NERGYû&UND ûWHEREûHEûWASûHEADûOFû
TRANSPORTûSYSTEMSv CAPITALûMARKETSûANDûTREASURY û0REVIOUSLY û
US ASSET-BACKED SECURITIES HEûWASûAûSENIORû!"3ûBANKERûATû3-"#û.IKKOû
BOOKRUNNERS: 1/1/2021 TO DATE “[Toyota] has adequate measures to 3ECURITIESû!MERICA
identify, manage and mitigate
Managing No of Total Share environmental and social risks commonly Moreover, the agricultural market has
bank or group issues US$(m) (%) associated with the eligible projects funded roared back from its plunge at the start of
by the use of proceeds,” Sustainalytics said THEûPANDEMICûLASTûYEAR û0RICESûONûCORN û
1 Wells Fargo 44 10,115.43 8.4 in its opinion issued in May of the soybean and other crops have shot higher
2 Barclays 35 9,838.01 8.2 COMPANY SûGREENûBONDûFRAMEWORK ONûSURGINGûDEMAND û
3 Bank of America 37 9,691.45 8.0
4 Credit Suisse 41 9,648.52 8.0 )NûAûPRESENTATIONûINû&EBRUARY û4OYOTAû 4HEû!"3ûOFFERINGûFEATURESûFOURûTRANCHESû
5 JP Morgan 36 9,230.53 7.6 said proceeds from all its green bonds of revolving notes, divided into two
6 Deutsche Bank 45 8,444.92 7.0 lNANCEDû ûELIGIBLEû4OYOTAûANDû,EXUSû GROUPS û4HEû4 ûGROUPûISûEXPECTEDûTOûHAVEûAû
7 Citigroup 34 8,438.19 7.0 vehicles, which it estimated would cut WEIGHTED
AVERAGEûLIFEûOFû ûYEARS ûWHILEû
8 RBC 27 6,821.80 5.7 GASOLINEûUSAGEûBYû ûMILLIONûGALLONSûANDû the T2 group is expected to have a longer
9 MUFG 20 5,331.40 4.4 CARBONûDIOXIDEûEMISSIONSûBYû ûTONSû
YEARû7!,
10 Mizuho 17 5,222.05 4.3 OVERûTHEIRûLIFETIME
190 120,684.16 %ACHûSETûOFûSECURITIESûFEATUREûAûSENIORû!û
Total Toyota Financial Services, the company’s note, to which DBRS Morningstar plans to
US division that oversees its green bond ASSIGNûANû!ûRATING ûANDûAûSUBORDINATEû"û
Excludes MBS. SDC code: F14 PROGRAMME ûDECLINEDûTOûCOMMENT note, which is expected to receive a BBB
Source: Refinitiv RATING û"OTHû!ûNOTESûWILLûHAVEûMINIMUMû
INITIALûBALANCESûOFû53 M û
GLOBAL STRUCTURED FINANCE IN US$ STRUCTURED FINANCE – ALL INTL ISSUERS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE The offering is expected to attract
investors who may want to diversify away
Managing No of Total Share Managing No of Total Share from traditional agriculture lending on
bank or group issues US$(m) (%) bank or group issues US$(m) (%) LANDûANDûEQUIPMENT û)TSûLOANSûAREûSECUREDû
by crops, crop insurance, and government
1 JP Morgan 98 49,510.46 13.1 1 Credit Suisse 78 15,655.04 10.8 subsidies and payments, which have low
2 Credit Suisse 117 45,453.39 12.0 2 Barclays 62 14,802.91 10.2 LOSSûRATES
3 Wells Fargo 104 39,184.98 10.4 3 Goldman Sachs 61 12,335.00 8.5
4 Citigroup 89 35,358.72 9.3 4 Bank of America 51 11,813.58 8.2 Crop loans are different from other
5 Bank of America 93 31,840.99 8.4 5 Wells Fargo 45 10,457.73 7.2 consumer and business loans because their
6 Goldman Sachs 108 30,735.66 8.1 6 JP Morgan 42 10,038.02 6.9 payment terms are typically structured
7 Morgan Stanley 64 28,349.83 7.5 7 Citigroup 45 8,908.32 6.2 AROUNDûTHEûHARVESTûSEASONûFORûEACHûCROP û
8 Barclays 78 20,057.44 5.3 8 Deutsche Bank 50 8,347.19 5.8 There are no periodic interest payment or
9 Deutsche Bank 66 13,707.59 3.6 9 Morgan Stanley 31 6,303.06 4.4 principal payment due until the loan
10 Nomura 48 13,641.62 3.6 10 BNP Paribas 24 5,339.19 3.7 MATURITY
573 378,217.93 282 144,660.58
Total Total !SûAûDEFAULTûPROTECTION ûCROPûINSURERSû
will cover any shortfall when the loans
Including securitisations (Euro, foreign, global and domestics, excluding Includes securitisations, PFI bonds, self-funded issues and credit-linked COMEûDUE û
CDOs) and PFI bonds. notes. Excludes US global ABS/MBS and CDOs.

Source: Refinitiv SDC code: B16b Source: Refinitiv SDC code: J10c

40 International Financing Review June 5 2021

STRCUTURED FINANCE

h)NûTERMSûOFûTHEIRûRISKûPROlLEûCOMPAREDû “The Melody assets complement !-0û"ANKûPREVIOUSLYûACCESSEDûTHEû
with any other asset types, it is actually Diamond’s existing portfolio and positions securitisation market in September with an
lower because of the insurance and Diamond to drive long-term organic UPSIZEDû! BNûFUNDINGûANDûCAPITALûRELIEFû
government subsidies that will always GROWTHûANDûSIGNIlCANTLYûENHANCEûOURû PRIMEû2-"3ûOFFERING û!-0û0ROGRESSû

MAKEûTHEûLENDERûWHOLE vûSAIDû(AKSUNû+IM û customer relationships,” said Diamond’s
SENIORûVICE
PRESIDENTûINûTHEû53û!"3ûTEAMûATû CHIEFûEXECUTIVEûOFlCERû%Dû&ARSCHTûINûAû-AYû ASIA-PACIFIC ABS
$"23 ûSTATEMENTûONûTHEûACQUISITION
MTF PRINTS TIGHTEST AUTO ABS
DIAMOND, SCULPTOR READY CELL TOWER Melody owns about 2,300 tenanted
ABS ISSUE TO FUND MELODY ACQUISITION wireless communication properties MTF FINANCE priced its sixth and tightest auto
including rooftop installations, receivables securitisation on Thursday, the
Telecoms infrastructure company COMMUNICATIONûTOWERSûANDûGROUNDûLEASES û .: Mû 53 M ûMTF PANTERA TRUST 2021
DIAMOND COMMUNICATIONS and hedge The acquisition will double Diamond’s own ABS, via joint arrangers and joint lead
fund SCULPTOR CAPITAL MANAGEMENT are PORTFOLIOûOFûMOREûTHANû ûTENANTEDûSITES managers CBA and Westpac
preparing a US$665m securitisation of cell
tower assets to help fund its proposed Sculptor is a founding shareholder of 4HEû.: MûOFû#LASSû!ûNOTESûWITHûAû

53 BNûACQUISITIONûOFûCOMPETINGû THEûPRIVATELYûHELDû$IAMOND year weighted-average life priced at
infrastructure operator Melody Wireless ONE
MONTHû"+"-ûPLUSû BP
)NFRASTRUCTURE ûWHICHûWASûANNOUNCEDû !û3CULPTORûSPOKESMANûDECLINEDûTOû
LASTûMONTH comment on the deal, while Diamond 4HEû.: MûOFû#LASSû" û.: MûOFû#LASSû
could not immediately be reached for # û.: MûOFû#LASSû$ û.: MûOFû#LASSû%û
4HEûTHREE
PARTû!"3ûTRANSACTION ûDIAMOND COMMENT ANDû.: Mû#LASSû&ûNOTES ûALLûWITHû

INFRASTRUCTURE FUNDING LLC 2021-1, is expected YEARû7!,S ûPRICEDû BP û BP û BP û
to price soon, according to a source ASIA-PACIFIC MBS BPûANDû BPûWIDEûOFûONE
MONTHû"+"-
FAMILIARûWITHûTHEûDEAL û)TûWOULDûBEûTHEû
SECONDûCELLûTOWERû!"3ûOFûTHEûYEAR û AMP MAKES RMBS PROGRESS 2ESPECTIVEûCREDITûSUPPORTûFORûTHEû#LASSû!û
FOLLOWINGûTHEûSTRONGûRECEPTIONûFORû3"!û TOû&ûNOTESûISû û û û û
#OMMUNICATIONS û53 BN SBATOW 2021-1 AMP BANK has released guidance for the ûANDû
ONû!PRILû INDICATIVEû! Mû 53 M ûPROGRESS
2021-1 TRUST prime funding and capital relief 0RICINGûWASûNOTûDISCLOSEDûFORûTHEû.: Mû
Barclays provided committed debt 2-"3ûOFFERINGûWHICHûMAYûBEûUPSIZED û OFûSELLERûNOTES
lNANCINGûFORûTHEûACQUISITIONûANDûISûTHEûSOLEû
LEAD û!LLûTHREEûTRANCHESûAREûEXPECTEDûTOû NAB is arranger and joint lead manager The SPVs used by MTF, which offers
HAVEûWEIGHTEDûAVERAGEûLIVESûOFû ûYEARS û with CBA, Deutsche Bank, MUFG, Standard vehicle loan, car leasing, insurance and
Chartered and Westpac for the transaction, OTHERûlNANCINGûSERVICESûINû.EWû:EALAND ûAREû
)NITIALûPRICEûTHOUGHTSûONûTHEû53 Mû EXPECTEDûTOûLAUNCHûTHISûWEEK NAMEDûAFTERûMODELSûOFûCARS
#LASSû!ûNOTEûISûINûTHEûLOWû BPûAREAûOVERû
4REASURIES û4HEû53 Mû#LASSû"ûPAPERûHASû 'UIDANCEûFORûTHEû! MûOFû#LASSû!ûNOTESû )TSûPREVIOUSûAUTOû!"3 ûTHEû.: MûMTF
price thoughts in the high 100s area over WITHûAû
YEARûWEIGHTED
AVERAGEûLIFEûOFû û RAMBLER TRUST 2019 ûWASûISSUEDûINû!UGUSTû
Treasuries, while the US$100m Class C YEARSûISûONE
MONTHû""37ûPLUSû BPûAREA
debt is indicated in the low to mid-300s
RANGE ûTWOûBUYSIDEûSOURCESûSAID &ORûTHEû! MûOFû#LASSû!" û! MûOFû 4HEû2AMBLERû û#LASSû! û" û# û$ûANDû%û
#LASSû" û! MûOFû#LASSû# û! MûOFû#LASSû NOTESûPRICEDûATûONE
MONTHû"+"-ûPLUSû
&ITCHûISûEXPECTEDûTOûASSIGNû! û"""nûANDû $ûANDû! MûOFû#LASSû%ûNOTES ûALLûWITHû
120bp, 210bp, 270bp, 360bp and 550bp, or
""nûRATINGSûTOûTHEû#LASSû! û"ûANDû#û YEARû7!,S ûISû BPûAREA û BPûAREA û BPû 35bp, 35bp, 40bp, 35bp and 50bp wider than
TRANCHES ûRESPECTIVELY area, 250bp area and 470bp area over one- THEûLATESTûEQUIVALENTûTRANCHES û
MONTHû""37
The collateral consists of two pools of NOW MARKETS CONSUMER LOANS ABS
WIRELESSûTOWERûSITES ûTOTALLINGû ûSITES û 4HEû! MûOFû#LASSû&ûNOTESûHAVEûBEENû
secured by the ground beneath towers, PREPLACED Non-bank lender NOW FINANCE has mandated NAB
which are governed by long-term master to arrange investor meetings starting on June 7
agreements to investment-grade 2ESPECTIVEûCREDITûSUPPORTûFORûTHEû#LASSû!û FORûAûPOTENTIALû!USTRALIANûDOLLARûCONSUMERû
counterparties on substantial terms, with a TOû%ûNOTESûISû û û û û û PERSONALûLOANSû!"3ûOFFERING ûNOW 2021-1
lXEDûRENTûPAYMENTûTHROUGHûLATEû ûTHEû ANDû
RATINGSûAGENCYûSAIDûINûAûPRE
SALEûREPORT
GLOBAL CDOs ALL EUROMARKET CDOs
)NûTHEûSINGLE
CLASSû3"!ûDEAL ûTHEû BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
53 BNû3INGLEû!ûRATEDûNOTE ûWITHûAû

YEARû7!, ûPRICEDûATûAûSPREADûOFû BPû Managing No of Total Share Managing No of Total Share
OVERû4REASURIESûFORûAû ûYIELD û bank or group issues US$(m) (%) bank or group issues US$(m) (%)
ACCORDINGûTOû)&2 1 Barclays 3,277.28 17.9
1 Barclays 9 3,277.28 16.2 2 Jefferies 9 2,360.29 12.9
4HEû$IAMOND
3CULPTORû!"3ûISSUEû 2 Jefferies 7 2,360.29 11.7 3 Deutsche Bank 7 2,302.69 12.6
arrives at a time as wireless providers such 3 Deutsche Bank 6 2,302.69 11.4 4 Citigroup 6 2,255.57 12.3
ASû6ERIZON û!4 4ûANDû4
-OBILEûAREû 4 Citigroup 5 2,255.57 11.2 5 Morgan Stanley 5 1,814.98 9.9
competing to develop the best and fastest 5 Wells Fargo 5 2,202.09 10.9 6 Goldman Sachs 5 1,633.98 8.9
5G network, which is expected to drive 6 Morgan Stanley 6 1,965.49 9.7 7 BNP Paribas 4 1,105.45 6.0
HEAVIERûUSAGEûOFûCELLûTOWERS û4HEû 'ûPUSHû 7 Goldman Sachs 4 1,633.98 8.1 8 Wells Fargo 3 908.80 5.0
adds to existing demand for cell towers 8 BNP Paribas 3 1,105.45 5.5 9 JP Morgan 2 907.05 4.9
from increased data consumption from 9 JP Morgan 3 907.05 4.5 10 Bank of America 3 495.00 2.7
people working at home during the 10 Bank of America 1 495.00 2.4 Total 1 18,341.38
PANDEMIC 48 20,220.18 43
Total

Including Euro, foreign, global, US domestics. SDC code: B12 Excludes global and domestic. SDC code: J11
Source: Refinitiv Source: Refinitiv

International Financing Review June 5 2021 41

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 4/6/2021

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
Jun 11 2024
SSAR Asian Development Bank US$4bn 0.375 99.94 MS-3/T+9.75 0.395
US DOLLARS 1.25 99.414 MS+10/T+8.8 1.338
Jun 2 2021 0.375 99.923 MS-4/T+8.2 0.401
SOFR+36 100 SOFR+36 -
Jun 2 2021 Asian Development Bank US$1.5bn Jun 9 2028
0.425 99.367
Jun 3 2021 CoE SIB US$500m Jun 10 2024
101.626
Jun 3 2021 IADB US$600m Jun 10 2031 -
99.283
EUROS Castilla y Leon €500m Apr 30 2030 SPGB+17 0.498
Jun 1 2021 99.6

Jun 1 2021 Hessen €500m Jun 10 2026 0 102.697 MS-6/B+24.3 -0.322
Jun 1 2021 Lower Saxony Apr 8 2027 0.125 - -
€175m incr 99.727
Jun 1 2021 Ontario (€1.5bn) Jun 9 2031 0.25 99.946 MS+20/B+50.3 0.323

€1bn 99.509
99.706
Jun 2 2021 Communaute Francaise €500m Jun 11 2035 0.625 100 OLOs+31 0.655
social £500m Jun 14 2024 SONIA+100 100
STERLING 0.375 100 SONIA+10 -
Jun 2 2021 KfW 0.375 99.948
99.941
NON CORE KBN NZ$550m incr Apr 14 2023 99.534 MS flat /NZGB+25 0.525
Jun 2 2021 Kommuninvest green (NZ$1bn) 98.73
100
Jun 3 2021 SKr5bn Jun 10 2026 99.752 MS flat 0.386
99.599
CORPORATES Pacific Gas & Electric Co US$800m Jun 15 2028 3 99.707 T+180 3.078
US DOLLARS
Jun 1 2021 Public Service Company of US$350m Jun 15 2031 2.2 99.661 T+62 2.233
New Hampshire 99.711
Jun 1 2021 Vodafone hybrid US$1bn Jun 4 2081 (Jun 2031) 4.125 99.447 T+251.7 4.125
Vodafone hybrid US$950m Jun 4 2081 (Jun 2051) 5.125 T+282.3 5.125
Jun 1 2021 Vodafone hybrid US$500m Jun 4 2081 (Sep 2026) 3.25 T+244.7 3.25
Jun 1 2021 CI Financial US$900m Jun 15 2051 4.1 T+180 4.103
Jun 1 2021 NextEra Energy Capital US$1.5bn Jun 15 2028 1.9 T+65 1.909
Jun 2 2021 Holdings green
Jun 2 2021 Ares Capital Corporation US$850m Jun 15 2028 2.875 T+165 2.949

Jun 3 2021 Blue Owl Capital US$700m Jun 10 2031 3.125 T+165 3.275

Jun 3 2021 Puget Energy US$500m Jun 15 2028 2.379 T+108 2.379

Jun 3 2021 Con Edison US$750m Jun 15 2031 2.4 T+80 2.428

Jun 3 2021 Con Edison green US$750m Jun 15 2061 3.6 T+130 3.619

Jun 3 2021 The Travelers Companies US$750m Jun 8 2051 3.05 T+75 3.065

Jun 3 2021 EWE green €500m Jun 8 2028 0.25 MS+40/B+73.8 0.299
RWE green €500m Jun 11 2031 0.625 MS+53/B+83.5 0.655
EUROS Worley SLB €500m Jun 9 2026 0.875 MS+125/B+155.1 0.989
Jun 1 2021

Jun 1 2021

Jun 1 2021

42 International Financing Review June 5 2021

BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS flat area, MS-1 - US$8.1bn Aaa/AAA/AAA Barc/Citi/JPM/TD -
area - US$4.6bn Aaa/AAA/AAA Barc/Citi/JPM/TD
- US$925m, 30acs Aa1/AAA/AA+ Citi/DB/Nomura/SG -
MS+12 area, MS+11 - US$630m Aaa/AAA BMO/WFS
area Amers 51%, Asia 35%, EMEA 14%. CB/OI
€1.6bn 63%, Bks/Tsy 20%, FM/Ins 17%.
MS-2 area, MS-3 Amers 77%, Eur 23%. Bks/PB 98%,
area €2.4bn FMCorp 2%.
-
SOFR+36 area, €1.2bn, 45acs -
SOFR+36 area
€1.4bn -
SPGB+21 area, - Baa1 BBVA/Caixa/DB/HSBC/Santan -
SPGB+19 (+/-2 £1.1bn, 30acs
WPIR) 0 NR/AA+/NR CMZ/Deka/DZ/JPM/LBBW Ger/Aus 31%, Fr 30%, Benelux 19%, UK/
MS-5 area - - NR/NR/AAA LBBW/NordLB Ire 7%, RoEur 10%, Other 3%. Bks 41%,
- - SKr6bn Aa3/A+/AA- Barc/BofA/HSBC/TD FM 23%, Ins/PF 20%, CB/OI 16%.
-
MS+20 area US$2.4bn A1 Belfius/DB/MS/NatWest
US$1.1bn
OLOs+34 area, - - Aaa/AAA/-/Scope NatWest/RBC/TD UK 84%, EMEA 16%. Bks/Tsy 61%, CB/
OLOs+33 area 0 - AAA OI 23%, FM/Ins/PF 11%, Other 5%.
- -
SONIA+11 area, - US$2.5bn Aaa/AAA ANZ -
SONIA+10 area US$4.7bn
US$1.7bn Aaa/AAA/-/Cicero Danske/Nordea/SEB -
MS flat US$1.1bn (Medium Green)
US$2.3bn 2PO
MS flat/+1 US$1.7bn
-
T+215 area, T+185 -1 US$1.9bn Baa3/BBB-/BBB- BofA/Barc/GS/JPM -
(+/-5) -
-2 €1.1bn A1/A+/A+ JPM/Miz/MS/USB -
T+80/+85, T+65 €1.6bn -
(+/-3) - €1.7bn Ba1/BB+/BB+ Barc/BofA/JPM/Miz/StCh -
- Ba1/BB+/BB+ Barc/BofA/JPM/Miz/StCh -
4.5% area - Ba1/BB+/BB+ Barc/BofA/JPM/Miz/StCh -
1 Baa2/BBB BofA -
5.5% area -2 Baa1/BBB+/A- BofA/Barc/CS/MS/JPM -
-
3.875% area 1 Baa3/BBB- BofA/JPM/SMBC/WFS -
-
T+205 area - NR/BBB/BBB BofA/GS/JPM -

T+90 area, T+70 -2 Baa3/BBB- BofA/Scotia/USB -
(+/-5) -
-3 Baa1/A- Barc/BofA/JPM/WFS -
T+190 area, T+170
(+/-5) 1 Baa1/A- Barc/BofA/JPM/WFS

T+187.5 area, T+165 -3 A2/A BofA/Barc/CS/USB
(the #)

T+130 area, T+110
(+/-2)

T+105 area, T+85
(+/-5)

T+150 area, T+130
(the #)

T+100 area, T+80
(+/-5)

MS+60/+65, 0 Baa1 BNPP/ING/DZ/Helaba/LBBW
MS+40/+45 0 Baa2/-/BBB+ BBVA/Citi/DB/SG
- NR/BBB BNPP/HSBC/BoC/StCh/WFS
MS+80/+85,
MS+55/+60

MS+140 area,
MS+125/+130

International Financing Review June 5 2021 43

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 4/6/2021 (CONTINUED)

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
0.625 99.48 MS+40/B+86.5 0.668
Jun 2 2021 Nestle €500m Feb 14 2034 0 100.27
0.25 99.731
Jun 2 2021 Nestle €1.25bn Jun 14 2026 0.875 97.887 MS+22/B+52.5 -0.054
5 99
Jun 2 2021 Nestle €750m Jun 14 2029 1.5 98.734 MS+32/B+86.6 0.284
100.198
Jun 2 2021 Nestle €650m Jun 14 2041 0.3 MS+50/B+88.8 0.992
100
Jun 4 2021 Ghelamco green €50.1m Jun 14 2025 101.9 - 5.284
Jun 4 2021 Suominen Corporation €50m Jun 11 2027 100 MS+190/B+225.3 1.724
SWISS FRANCS -
Jun 2 2021 Intershop green SFr100m Jun 29 2026 MS+65/ 0.26
100 SARON+71.3/
99.896 Eidg+80
99.946
NON CORE Specialfastigheter SKr500m Dec 8 2025 0.435 100 - 0.435
May 31 2021 Bonava green Mar 11 2024 (Sep 2023) 3mS+350 99.995 - -
Jun 3 2021 SKr200m incr 100
Getinge social (SKr1.2bn) Jun 10 2024 3mS+70 100 3mS+70 -
Jun 3 2021 Humlegarden green Sep 22 2027 3mS+145 100 - -
Jun 4 2021 SKr570m 100
100
FINANCIALS SKr130m incr 100
US DOLLARS (SKr430m) 99.903
Jun 2 2021 100
Jun 1 2021 US Bank NA/Cincinnati OH US$1bn Jun 2 2023 (Jun 2022) 3mBSBY+17 100 3mBSBY+17 -
US$500m Jun 7 2024 0.55 100 T+28 0.585
Jun 1 2021 Metropolitan Life Global Jun 2 2023 0.3 T+18 0.327
Funding I US$900m Jun 2 2023 SOFR+22 99.746 SOFR+22 -
Jun 1 2021 Jun 3 2026 1.2 100 T+40 1.201
Toronto-Dominion Bank Jun 7 2031 2.673 99.891 T+108 2.673
Jun 1 2021 Jun 7 2029 (Jun 2028) 1.887 T+63 1.887
Toronto-Dominion Bank US$800m Jun 9 2025 (Jun 2024) SOFR+40 SOFR+40 -
Jun 2 2021 Jun 9 2027 (Jun 2026) 1.462 T+67 1.462
Toronto-Dominion Bank US$1.3bn Jun 9 2027 (Jun 2026) SOFR+77 SOFR+77 -
Jun 2 2021 Jun 9 2026 SOFR+48 SOFR+48 -
Jun 2 2021 Athene Global Funding US$500m Jun 9 2026 1.15 T+37 1.17
Jun 2 2021 Jun 9 2027 (Jun 2026) 1.792 T+100 1.792
BB&T/ Truist US$1bn Jun 9 2032 (Jun 2031) 2.889 T+130 2.889
Jun 2 2021 BB&T/ Truist US$1bn Jun 15 2031 (Jun 2026) 3 T+137 3
Citigroup US$2.75bn
Jun 2 2021
Citigroup US$400m
Jun 2 2021
New York Life Global US$350m
Jun 2 2021 Funding US$400m
US$1.25bn
Jun 2 2021 New York Life Global
Funding
Jun 3 2021
Societe Generale SNP
EUROS
Jun 1 2021 Societe Generale SNP US$1.25bn

Jun 1 2021 Western Alliance US$600m
Bancorporation T2
Jun 2 2021
Belfius Bank green SNP €500m Jun 8 2027 0.375 MS+60/B+93.4 0.418
MUFG holdco snr €500m Jun 8 2027 (Jun 2026) 0.337 MS+60/B+90.3 0.337
Danske Bank green SNP €500m Jun 9 2029 (Jun 2028) 0.75 MS+88/B+122 0.766

Jun 2 2021 ING Groep green T2 €500m Jun 9 2032 (Jun 2027) 0.875 99.524 MS+115/B+144.9 0.957

44 International Financing Review June 5 2021

BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution
€1.4bn Aa3/AA- BNPP/DB/HSBC/ING/JPM/Miz -
MS+60/+65, MS+45 4 €2bn Aa3/AA- BNPP/DB/HSBC/ING/JPM/Miz
area €1.65bn Aa3/AA- BNPP/DB/HSBC/ING/JPM/Miz -
€1.7bn Aa3/AA- BNPP/DB/HSBC/ING/JPM/Miz
MS+45 area, -3 - NR/-/- Belfius/BNPPFortis/KBC/SG -
MS+25/+30 - NR/-/- Danske
-
MS+50/+55, MS+35 4 55acs
area -
- -
MS+75/+80, MS+55 5 -
area - Switz 100%. AM 56.5%, PB 25%, PF 9%,
- Ins 4.5%.
5% area cpn, 5% cpn -
-
0- -

MS+70/+80, -10 NR/NR/NR/CS mid CS/ZKB -
MS+65/+70 BBB/fedafin Baa+/ -
ZKB BBB-

-- NR/AA+ Danske
-- NR/NR/- Danske/SEB

-- NR/NR/- HCM/SEB
-- Baa2 Danske

- - - A1/AA-/AA- USB -
T+45 area -1 US$1.3bn Aa3/AA-/AA- Academy/JPM/Misch/Ramirez/ -
US$1.5bn Aa3/A RSeelaus GP -
T+35 area, T+20 1 US$1.2bn Aa3/A Citi/CS/GS/TD/WFS -
(+/-2) - US$2.3bn Aa3/A -
4 US$1.3bn -/A+/A Citi/CS/GS/TD/WFS -
SOFR+Equiv, -1 US$2.7bn A3/A- -
SOFR+Equiv -2 US$1.4bn A3/A- Citi/CS/GS/TD/WFS -
- US$4.75bn A3/BBB+/A -
T+60 area, T+40 -2 US$1bn A3/BBB+/A DB/Citi/CS/MS -
(the #) - US$600m Aaa/AA+/AAA -
- US$900m Aaa/AA+/AAA Truist/BofA/UBS -
T+130 area, T+110 -4 US$4.9bn Baa2/BBB/A- Truist/BofA/UBS -
(+/-2) -1 US$5.3bn Baa2/BBB/A- Citi -
-1 - Baa2 -
T+85/+90 - Citi
€900m
SOFR+Equiv €1.5bn Barc/DB/GS/JPM
€1bn, 85acs
T+85 area, T+67 Barc/DB/GS/JPM
(the #) €3bn
Barc/RBC/SGAS/UBS/WFS
SOFR+Equiv,
SOFR+Equiv Barc/RBC/SGAS/UBS/WFS

SOFR+Equiv, JPM/PPR
SOFR+Equiv

T+55 area, T+40
(+/-3)

T+125/+130, T+105
(+/-5)

T+160 area, T+135
(+/-5)

3.25% area

MS+80 area, MS+62 0 Baa2/BBB+ CA-CIB/Belfius/ABN/NatWest/Uni -
(+/-2)

MS+80/+85, 10 A1/A-/A- MS/MUFG -
MS+60/+65

MS+105/+110, 5 Baa3/BBB+/A BNPP/CMZ/Danske/ING/Uni Ger/Aus 38%, Benelux 14%, UK/Ire 12%,
MS+90 (+/-2) Fr 11%, Nordics 7%, Iberia 6%, Switz 6%,
Other 6%. FM 60%, Ins/PF 22%, Bks
MS+140 area, -1 Baa2/BBB/A-/ BofA/BNPP/CA-CIB/ING/Uni 11%, CB/OI 7%.
MS+115/+120 Sustainalytics
(Medium risk), MSCI Fr 31%, Ger/Aus/Switz 28%, UK/Ire 14%,
(AA), S&P Global Nordics 9%, Benelux 7%, S.Eur 7%, Asia
(Strong: 83/100) 4%. AM 69%, Ins/PF 15%, CB/OI 9%,
Bks 4%, Other 3%.

International Financing Review June 5 2021 45

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 4/6/2021 (CONTINUED)

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
1.375 99.925
STERLING Swedbank green SNP £350m Dec 8 2027 (Dec 2026) 100 G+100 1.385
Jun 1 2021 99.531 G+150 1.874
G+170 2.095
Jun 2 2021 Credit Agricole T2 £500m Dec 9 2031 (Dec 2026) 1.874 100.297

Jun 3 2021 Close Brothers T2 £200m Sep 11 2031 (Jun 2026) 2

SWISS FRANCS BFCM SFr160m Jun 21 2029 0.25 MS+33/ 0.213
Jun 1 2021 SARON+39.5/ 0.477
Eidg+52
Jun 1 2021 CaixaBank SNP SFr200m Jul 1 2027 (Jul 2026) 0.744 100
MS+87/Eidg+98/
SARON+93.3

JAPANESE YEN Barclays PLC ¥67bn incr Jun 9 2027 (Jun 2026) 0.654 100 --
Jun 3 2021 (¥77bn) Jun 9 2031 (Jun 2030) 0.842 100 --

Jun 3 2021 Barclays PLC ¥10bn incr 100
(¥77bn) 100.291
102.016
NON CORE BNZ NZ$550m incr Jun 8 2026 1.884 100 MS+60 1.884
Jun 2 2021 (NZ$0m) Apr 8 2024 3mS+65 3mS+65 -
Jan 15 2024 3mS+100 3mS+24 -
May 31 2021 Bluestep Bank SKr250m incr Dec 11 2031 (Dec 2026) 3mBBSW+155 3mBBSW+155 -
(SKr750m)
Jun 1 2021 SBAB
SKr450m incr
Jun 4 2021 BNP Paribas T2 (SKr1.55bn)

A$250m

COVERED BONDS

EUROS

Jun 1 2021 Bank of Montreal €1.25bn Jun 8 2029 0.05 99.952 MS+8/B+41.5 0.056
€500m Jun 9 2036 0.375 98.828 MS+8/B+35.1 0.456
Jun 2 2021 Aegon Bank
0.138 0
NON CORE Landshypotek SKr550m incr May 20 2024 --
Jun 2 2021 (SKr3.25bn) 100
100
HIGH YIELD Cinemark USA US$765m Jul 15 2028 (Jul 2024) 5.25 100 T+398 5.25
US DOLLARS Energy Transfer Equity US$900m Perpetual (Nov 2026) 6.5 100 - -
Jun 1 2021 100
Jun 1 2021 US$750m 99.253 T+334 4.75
US$500m 100 T+273 4.125
Jun 1 2021 GFL Environmental US$1bn Jun 15 2029 (Jun 2024) 4.75 100 - 5.375
Jun 1 2021 Switch US$400m Jun 15 2029 (Jun 2024) 4.125 100 T+564.8 7
Jun 2 2021 CenturyLink US$1.2bn Jun 15 2029 (Jun 2024) 5.375 T+629 7.125
Jun 2 2021 Precision Drilling Jan 15 2029 (Jan 2026) 6.875 100
Jun 3 2021 Bombardier US$400m 6/15/2026 7.125 T+257.5 3.875
US$500m (Jun 2023) T+220 3.625
Jun 3 2021 CareTrust REIT Jun 2028 3.875
Jun 3 2021 Videotron €300m 6/15/2029 3.625 E+475 -
(Jun 2024)
- -
EUROS David Lloyd Leisure Jun 15 2027 (Jun 2022) E+475
Jun 4 2021

Jun 4 2021 Transcom Holding AB €315m Dec 15 2026 (Jun 2022) E+525 99.5

STERLING David Lloyd Leisure £645m Jun 15 2027 (Jun 2023) 5.5 100 G+499 5.5
Jun 4 2021
Avanti Finance A$70m Jun 8 2025 (Jun 2023) 3mBBSW+475 100 3mBBSW+475 -
NON CORE Videotron C$750m 3.625 100 GOC+240.1 3.625
Jun 1 2021 6/15/2028
Jun 3 2021 (Jun 2024)

46 International Financing Review June 5 2021

BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution
£585m
G+115/+120, - £2.4bn Baa1/A-/A+ NatWest/Nomura -
G+100/+105 - £1.35bn Baa1/BBB+/A- CA-CIB/NatWest/Nomura/RBC -
- A3/NR/BBB HSBC/NatWest/UBS -
G+175 area, G+150 SFr160m, 54acs
(the #) SFr235m, 48acs

G+200 area, -
G+175/+180 -

MS+34 area 2 - Aa3/A/AA- DB/UBS Switz 93%, RoEur 7%. AM 60.3%, Ins
- 19.5%, Bks/PB 9.7%, Tsy 7%, PF 3.5%.
MS+90 area -3 - Baa1/BBB+/BBB+ CS
- Switz 100%. AM 79.1%, Ins 9.7%, PB
7.8%, PF 3.4%.
€1.5bn
MS+65 - €1.1bn Baa2/BBB/A/A- by Barc/Miz/MUMSS/Nomura/SMBC -
MS+75 - R&I Nikko -
-
Baa2/BBB/A/A- by Barc/Miz/MUMSS/Nomura/SMBC
R&I Nikko

MS+57/+62 - A1/AA-/A+ BNZ -
-
-- - SEB -
-
-- A1/A SEB

3mBBSW+155/+160, - Baa2/BBB+/A-/AH BNPP/ANZ/WBC/Nomura
3mBBSW+155 area

MS+12 area - Aaa/NR/AAA/AAA Barc/BMO/BNPP/CMZ/HSBC/LBBW -
-
MS+12 area, MS+9 NR/AAA Barc/Citi/CA-CIB/HSBC/Rabo -
(+/-1)

-- NR/AAA Danske -

5.25% area - - Caa1/B/B WFS/Barc/JPM/RBC -
- Ba2/BB/BB JPM/Miz/PNC/Truist -
6.75% area, 6.5% - -
the# - B3/B- Barc/BMO/CIBC/RBC/Scotia -
- B1/BB JPM/GS/WFS/BMO -
4.75%/5%, 4.75% - - B2/BB- BofA -
- B3/B RBC/CS/TD -
4.125% - - Caa2/CCC+ JPM/DB/NBC/UBS -
-
5.375% area - Ba2/BB+ Barc/BMO/Key/Southcoast/RJ -
- NR/BB Bofa/NBF -
7.25% area, 7% -
- B3/NR/B+
7.25%/7.5%, 7.125%, -
Mid to high 7s -

4% area, 3.875% - -
-
3.75% area -

E+500/0% - Barc -
floor/99.50, -
E+475/+500/0% B3/B- JPM/Danske/Nordea -
floor/99.50

E+550/+575,
0% floor, 99 OID,
E+550/+575,
0% floor, 99
OID, E+525/0%
floor/99.00-99.50

5.75%/6%, - B3/NR/B+ Barc -

5.5%/5.75%, 5.5% NR/BB NAB -
NR/BB BofA/NBC -
3mBBSW+475 -
3.625%/3.75% -

International Financing Review June 5 2021 47

GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (4/6/2021)

Sovereign Moody’s S&P Fitch Sovereign Moody’s S&P Fitch
12 34 56 12 34 56

Sovereign 1 2 3 4 5 6 Kyrgyzstan B2 n Ba3 ––– –
Abu Dhabi Caa2 n Caa1 – – CCC B–
Albania Aa2 – AA AA+ AA AA+ Laos A3 Aaa A AAA A– AAA
Andorra C Ca D CC RD CCC
Angola B1 Ba2 B+ BB – – Latvia – – – – Bn B+
Argentina – Aaa AAA AAA – –
Armenia – – BBB AAA BBB+ A+ Lebanon A2 Aaa A AAA A AAA
Aruba Aaa Aaa AAA AAA AAA AAA
Australia Caa1 B3 B– n B– CCC B Lesotho Aa3 Aa2 – – AA AAA

Ca Caa1 CCC+ CCC+ CCC B– Liechtenstein

Ba3 Ba1 – – B+ BB– Lithuania

– – BBB BBB BB BB+ Luxembourg

Aaa Aaa AAA AAA AAA n AAA Macau

Austria Aa1 Aaa AA+ AAA AA+ AAA Macedonia (FYR) – – BB– BB BB+ n BBB-
Azerbaijan Ba2 p A+ BBB+ A
Bahamas Ba2 n Ba2 BB+ BB+ BB+ BB+ Malaysia A3 A1 A– n – CCC B-
Bahrain B2 n
Baa1 BB+ n BB – – Maldives B3 B1 –
BB+ Mali Caa1 B1 –
Ba3 B+ n d BB– B+ –– –
AAA A+ AAA
Bangladesh Ba3 Ba2 BB– BB– BB– BB- Malta A2 Aaa A– p –– –
Barbados Caa1
Belarus B3 B2 B– B- – – Mauritius Baa2 n A1 –
Belgium Aa3
Belize Caa3 n B3 B n B B n B Mexico Baa1 n A2 BBB+ n A+ BBB – BBB+

Aaa AA AAA AA– n AAA Moldova B3 B2 – –– –

Caa1 SD CC – – Mongolia B3 B1 B B+ B B+

Benin B1 Ba1 B+ B B+ B+ Montenegro B1 p Ba1 B AAA – –
Aa3 A+ AA+ – – Montserrat – – BBB– BBB– – –
Bermuda A2 B1 B+ B+ B B Morocco Ba1 Baa2 BB+ BBB BB+ BB+
B3 B BB– – – Mozambique Caa2 Caa1 CCC+
Bolivia B2 A1 BBB+ n A – – Namibia Ba2 n Baa3 –
Ba1 BB– BB+ BB – n BB Netherlands Aaa Aaa AAA
Bosnia Herzegovina B3 A1 BBB A BBB p A– New Zealand Aaa Aaa AA+ CCC+ CCC B–
B1 – – – – Nicaragua B3 B2 B- – BB n BB+
Botswana A3 n Ba2 Bn BBB– Bn B+ Nigeria B2 n B1 B AAA AAA AAA
Aaa AAA AAA AA+ AAA Norway Aaa Aaa AAA
Brazil Ba2 – B– B+ B– B Oman Ba3 n Baa1 B+
Aa2 – – – – Pakistan B3 B2 B–
Bulgaria Baa1 Aa2 A AA – A– A+ Panama Baa2 A2 BBB AAA AA AAA
Aa1 A+ A+ A+ A+ Papua New Guinea B2 n B1 B– B- B- n B-
Cambodia B2 A3 BB+ BBB BBB – n BBB Paraguay Ba1 Baa3 BB B+ B B
B2 CCC+ CCC+ – – Peru A3 n A1 BBB+
Cameroon B2 B2 CCC+ BBB- CCC B+ Philippines Baa2 A3 BBB+
– B+ AAA – – Poland A2 Aa3 A–
Canada Aaa Ba3 B– n BB– Bn B+ Portugal Baa3 p Aa3 BBB AAA AAA AAA
Baa3 – – B+ p BB– Qatar Aa3 Aa3 AA–
Cape Verde – Baa1 BBB BBB+ BBB- p BBB+ Ras al–Khaimah A BB– BB– n B+
Caa2 – – – – Romania Baa3 n A3 BBB–
Cayman Islands Aa3 – BBB–n BBB– – – Russia Baa3 Baa2 BBB- B– B– B–
A2 BBB- AAA BBB – A Rwanda B2 n B1 B+ n
Chile A1 n Aa1 AA– AA+ AA- AAA St Vincent & Gren B3 Ba3 – AAA BBB – n A
Aaa AAA AAA AAA AAA San Marino – – – B– – –
China A1 Ba1 BB– n BB+ BB– n BB– Saudi Arabia A1 n A1 A– BB+ BB+ BB+
Caa2 B– B– B– B– Senegal Ba3 Baa1 B+ A BBB+ n A–
Colombia Baa2 n B1 B B B+ B+ Serbia Ba2 Baa1 BB+ A- BBB BBB+
B1 B- AAA B– n B Seychelles – – – A A– AA–
Congo (DR) Caa1 Aaa AA– AAA AA- AAA Singapore Aaa Aaa AAA AAA BBB AA
B1 – – – – Slovakia A2 Aaa A+ AA AA– AA
Congo (Rep) Caa2 Caa1 B– B– CCC B Slovenia A3 Aaa AA– AA+ A AA+
B1 BB– BB– – – Solomon Islands B3 B2 – A– BBB– n BBB+
Cook Islands – Aaa AA+ AAA AA+ p AAA South Africa Ba2 A3 BB–
Aaa AA AAA AA n AAA South Korea Aa2 Aa1 AA
Costa Rica B2 n B1 – – CCC B– Spain Baa1 Aa1 An
Baa3 BB n BBB– BB n BBB– Sri Lanka Caa1 Ba3 CCC+
Cote d’Ivoire Ba3 Aaa AAA AAA AAA AAA Suriname Caa3 n Ba3 SD
B1 B– B B B Sweden Aaa Aaa AAA
Croatia Ba1 A3 BB AAA BB BBB+ Switzerland Aaa Aaa AAA
Baa3 BB– BB+ BB– BB Tanzania B2 Ba3 –
Cuba Caa2 Ba2 BB– BB – – Taiwan Aa3 p Aa2 AA p
Aaa AA+ AAA AA– AAA Thailand Baa1 A2 BBB+
Curacao – Baa1 BBB A– BBB A Trinidad & Tobago Ba1 n Baa3 BBB BBB BBB BBB
A1 A A A– A+ Tunisia B3 Ba3 – B B+ B+
Cyprus Ba2 p Baa2 BBB– BBB+ BBB– n BBB– Turkey B2 n B2 B+ –– –
A3 BBB n BBB+ BBB BBB Turks & Caicos – – BBB+
Czech Rep Aa3 B3 B– AAA B– B– Uganda B2 Ba3 BB
Aaa AA– AAA A+ AAA Ukraine B3 B2 B
Denmark Aaa Aa3 AA– AA+ A+ AA UAE Aa2 Aa2 – – BB+n BBB
Aa3 BBB AAA BBB– AA– UK Aa3 Aaa AA + A An A+
Dominican Rep Ba3 Ba3 B+ n BB– B+ BB- USA Aaa Aaa AA+ BBB– – –
Aaa A+ AA+ An AAA Uruguay Baa2 A2 BBB
Ecuador Caa3 Ba1 B+ BB BB– n BB Uzbekistan B1 B1 BB– n
Baa2 BBB– BBB BBB BBB+ Venezuela C Ca SD
Egypt B2 Ba3 B BB– B+ n B+ Vietnam Ba3 p Ba1 BB n BBB– BB+ BBB–
Aa3 AA– n AA AA n AA+ Zambia Ca Caa3 SD – B BB
El Salvador B3 AAA AAA AAA

Estonia A1

Eswatini B3 AAA A n AAA
AAA A AAA
Ethiopia Caa1 –– –

Fiji B1 n

Finland Aa1 BB+ BB– n BB

France Aa2 p AAA AA– AA+

Gabon Caa1 AAA A– AAA

Georgia Ba2 CCC+ CCC + CCC+
CCC C CCC
Germany Aaa AAA AAA AAA

Ghana B3 n

Greece Ba3 AAA AAA AAA
–– –
Guatemala Ba1 n AAA AA– AA+

Honduras B1

Hong Kong Aa2 n A BBB+ A–
BBB+ – –
Hungary Baa3 p – Bn B+
BB- BB– n BB–
Iceland A2 AAA – –
A– B+ n B+
India Baa3 n B B B
– AA– AA+
Indonesia Baa2 AAA AA– AAA
AAA AAA n AAA
Iraq Caa1 A– BBB– n BBB+
BB– BB BB
Ireland A2 CC – –

Israel A1

Italy Baa3

Jamaica B2

Japan A1 p

Jordan B1

Kazakhstan Baa3 p

Kenya B2 n BB BB BB
CCC– CCC B–
Kuwait A1

1 Moody’s Government Bonds 5 Fitch Government Bonds n Negative outlook/on watch RD Rating default c Improvement in ratings,
2 Moody’s Country Ceilings 6 Fitch Country Ceilings for downgrade * Taken off positive watch/ outlook or watch status
3 S&P Government Bonds p Positive outlook/on watch
4 S&P Transfer and N New rating outlook d Deterioration in ratings,
for upgrade W Rating withdrawn ** Taken off negative watch/
Convertibility Assessments outlook or watch status

SD Selective default outlook

48 International Financing Review June 5 2021