Harian Metro

JANUARY 16 2021 ISSUE 2366 www.ifre.com

Europe rewrites rule book for January IPOs:
region hoping for busiest ever start to year

Europcar flop raises awkward questions for
CDS, as traders miss out on free money

Investors throw hissy fit as Spain sells 10-year:
book falls by €75bn as DMO gets tough

BONDS PEOPLE & MARKETS EMERGING MARKETS EMERGING MARKETS

T-Mobile US Sustainability- Singapore Air Oman bounces
returns to high- linked loans adds US route back to land
yield market amid to copy bond with US$500m US$3.25bn from
spectrum frenzy market model 5.5-year bonds triple-trancher
06 07 08 08

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Upfront „ OPINION INTERNATIONAL FINANCING REVIEW

Political damage That is good news for Hong Kong and Shanghai, which are
ALREADYûBENElTINGûFROMûAûWAVEûOFûHOMECOMINGûLISTINGSûFROMû
Clear and consistent regulation is the bedrock of the US US-traded Chinese stocks.
capital markets. The latest anti-China edicts from
Washington are undermining those foundations. 5NLESSûTHEû"IDENûADMINISTRATIONûRESTORESûCONlDENCEûINûTHEû
regulatory framework, it is the US capital markets that will
Less than a week before the US inaugurates a new lose out.
president, American institutions are scrambling to react to a
string of unclear and unpredictable policy moves by the Ringing the changes
outgoing administration.
A mURRYûOFû)0/ûLAUNCHESûINû%UROPEûINûTHEûlRSTûTWOûWEEKSûOFû
The latest salvo of executive orders and blacklistings aim to January are the latest consequence of the coronavirus
ramp up the political pressure on Beijing by punishing some pandemic.
of China’s biggest companies, now including smartphone
maker Xiaomi. Using the capital markets to do so, however, With the very rare exception of 2015 (when there were 20
ISûAûmAWEDûSTRATEGYûTHATûRISKSûDOINGûSERIOUSûLONG
TERMû )0/SûINû%UROPEûTHATûRAISEDû53 BNûINûTHEûlRSTûTWOûMONTHSû
damage to the US’s own competitiveness. of the year, nearly double the next most active start over the
past decade) the beginning of the year is usually a near-
The events of the past week have made it clear just how moribund period in European ECM.
much of a headache the anti-China measures are for US
institutions. 4HEûPROFESSEDûVIEWûWASûTHATûINVESTORSûWILLûNOTûBUYû)0/Sû
using third-quarter calendar-year accounts and that it was
The New York Stock Exchange underlined the sense of wisest to wait for everyone to see full-year numbers.
confusion with its stop-start delisting of three Chinese
telecoms companies, twice changing its mind and taking a But not this January.
big hit to its reputation in the process. 4HISû*ANUARYûWE VEûALREADYûSEENûSIXû)0/SûGETûUNDERûWAYûTOû
RAISEû53 BNûnûANDûTHEûOMENSûAREûGOODûFORûAûRECORDûlRSTû
State Street, which manages Hong Kong’s biggest ETF, also quarter.
struggled with its own interpretation, suspending the Why the change? Because the pandemic has thrown
Tracker Fund’s purchases of sanctioned stocks before everything up in the air and made market participants
reversing that decision two days later. Having managed the question the old certainties and the traditional way of doing
fund for 21 years, its contract is now at risk. things.
!NDûTHATûMEANTûTHATûBANKERSûlNALLYûACKNOWLEDGEDûTHATû
US index providers have removed a total of 15 Chinese fourth-quarter numbers are only meaningful for a few
companies from various equity indices, forcing tracking sectors.
funds to liquidate their positions. Other investors are Other pandemic-induced casualties (if that is the right
wondering how seriously to treat actions taken in the dying word) are the summer break (more or less non-existent in
days of the Trump presidency, knowing that they could be ûANDûLONGûDRAWNûOUTû)0/ûTIMETABLES
REVERSEDûONCEûTHEûNEWûADMINISTRATIONûTAKESûOFlCE û Deals are being done in as little as two weeks now.
Other things that may fall by the wayside include the break
!ûlLINGûLASTûWEEKûSHOWEDû"LACK2OCKûSOLDû MûSHARESûINû at Easter, and there are other practices that at the very least
Hong Kong-listed China Telecom last week for US$203m. NEEDûTOûBEûEXAMINEDûTOûSEEûIFûTHEYûAREûSTILLûlTûFORûPURPOSE
)NVESTORSûHOLDINGû"LACK2OCK SûFUNDSûTOOKûAûHITûONûTHEûSALE û For instance, what is the value of a one-year lock-up that
THATûSAMEûSTAKEûISûNOWûWORTHû53 M û3OûMUCHûFORû can be suspended after three months – as with THG last week
protecting American interests. – or a covered message when the book is so full of spivs that
it isn’t covered in a meaningful sense. Why a 15% greenshoe
The plain fact is that restrictions on US investors will hurt and what is it for – an upsize or to spare investors early
US savers far more than Chinese companies. Issuers such as losses?
China Telecom do not need a US listing, and Chinese There are many more examples and while some may be
companies are increasingly able to rely on local investors for entirely sensible practices, the Covid-19 crisis is an
support. opportunity to explore the wisdom of market conventions.
When European equity markets look increasingly stale
Some US policymakers clearly understand that, hence the versus the US and Asia this chance should not be missed.
decision not to push for a ban on trading shares in China tech
giants Alibaba or Tencent – a move that would have savaged
millions of American retirement plans.

But the more unpredictable policies are that come out
from the US, the more issuers and investors will shift their
activity elsewhere.

International Financing Review January 16 2021 1

Top news

Spain gets tough 04 Supras, agencies in big books league 06 T-Mobile returns to high-yield 06

Europe rewrites January IPO rule book

„ Equities More than US$7bn of European floats launch so far in January as strong run continues

BY ROBERT VENES As with much of ECM in the company MOONPIG, as well as hot themes are Europe-focused
past nine months, that has now OBVIOUSû#OVID
ûBENElCIARIESû but US-listed SPAC EUROPEAN
European ECM is set to witness changed. such as online delivery group SUSTAINABLE ENERGY ACQUISITION and
its busiest January for IPO INPOST of Poland and German a London listing for ESG-focused
launches in six years – and )NûJUSTûTHEûlRSTûTWOûWEEKSûOFû online used car retailer AUTO1 investment company FORESIGHT
possibly ever – with US$7bn January, six IPOs have launched GROUP, all of which began listing GROUP.
of deals already in the and one Oslo Euronext Growth processes last week. Also
market so far as Covid-19 one-day IPO has already been launched and following current “There were some reasonably
continues to rewrite the rule completed – by MPC Energy unique circumstances that lent
book. Solutions. Bankers, particularly
THOSEûATû53ûlRMS ûSAIDûTHEYûHAVEû EARLY START FOR EUROPEAN IPOs 24
For years, bankers have AROUNDûAûDOZENûMOREûmOATSû JANUARY AND FEBRUARY PROCEEDS, LIVE IPOs FOR 2021
argued that investors do not slated to launch or price within
want to look at IPOs in THEûlRSTûQUARTER US$bn
January, saying that they
prefer to wait until full-year BEST SINCE 2015 16
numbers are ready. Likened to That puts 2021 on track to see at
the turning speed of an oil least the second busiest start to the 14 21
tanker, IPOs have in the past year in the past decade – behind
taken several months of only 2015 when 20 IPOs had raised 12 18
preparation, leaving advisers US$13.7bn by the end of February.
uncertain as to the environment 10 15
they will launch into, Those already launched
particularly at the start of the include UK IPOs for brand names 8 12
year. such as bootmaker DR MARTENS
and online greetings card 69

46

23

00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Proceeds (lhs) Number of issues (rhs)
Source: Refinitiv

Europcar flop raises awkward questions
for credit derivatives market

„ People & Markets No payouts for protection holders as debt sellers turn down free money

BY CHRISTOPHER WHITTALL selling Europcar debt at well- the basic economics were all counting on someone
above market prices in the underpinning supply and else to provide liquidity.”
Credit derivatives contracts on auction used to determine CDS DEMANDûINûlNANCIALûMARKETSû
struggling car rental company payouts. failed to produce results. CDS contracts are designed to
EUROPCAR proved worthless when allow traders to bet on how
they failed to provide any payout The result reverberated across In the end, banks’ inability to likely companies are to default
to protection holders on the wider market, prompting the source about €7.4m-worth of without necessarily having to
Wednesday, raising once again iTraxx Crossover index tracking Europcar debt for the auction – hold any of their debt. When a
QUESTIONSûABOUTûTHEûEFlCIENCYûOFû European high-yield CDS to despite the prospect of people COMPANYûlLESûFORûBANKRUPTCYûORû
credit-default swaps as well as narrow by 10bp to 250bp on being able to sell well-above doesn’t repay what it owes, CDS
corporate bond markets more Wednesday, according to IHS market prices – led to the CDS contracts are supposed to
broadly. Markit. It also contrasted markedly contracts not being worth the compensate for the losses
with other CDS events of late, paper they were written on. creditors would have sustained.
The lack of payout on Europcar following a period in which
CDS is highly unusual even in protection holders on average have “Protection buyers were In reality, though, it doesn’t
this often bewildering corner of secured record high payouts. asleep at the wheel,” said always work out that way given
lNANCIALûMARKETS ûNOTûLEASTû Athanassios Diplas, principal at the intricacies of credit markets.
because the company’s bonds Critics of CDS are apt to Diplas Advisors, and one of the And while lawyers have
had been trading at knock-down suspect foul play whenever architects of the CDS market. REDRAFTEDûTHEûlNEûPRINTûINû#$3û
prices just hours before. It meant something odd occurs in this contracts over the years in an
that bondholders had missed out complex world. But, so far at “That was always our worst attempt to keep track with
on a golden opportunity to least, experts are offering a more fear: inertia, or people not evolving market norms, credit
effectively make free money by mundane theory: investors and paying attention. The [€7.4m derivatives still produce
traders got caught napping and shortfall] is so small it really unpredictable results.
looks like neglect almost – they

2 International Financing Review January 16 2021

@ For daily news stories
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Singapore Air adds US route 08 Oman proves magnet for buyers 08 BPM AT1 caught out 10

this window a bit more of a is buoyant and the investor work-from-home environment, markets. But the price public
tailwind, with businesses in appetite for growth is very deep.” the acceleration of digitalisation investors are now willing to pay
recovery phase and having a good ASûWELLûASû#OVID
ûBENElCIARIES has increased and that has
quarter-on-quarter progression Watkins said that with a BENElTEDûTHEûPIPELINE
that can mean you don’t need to strong market “January is a “Look at the post-summer
see full-year number to prove that great time to be presenting pipeline, when there was The “Growth is the theme and in
out,” said Martin Thorneycroft, investors with new ideas”. Hut Group, Kaspi, Nordnet, particular we should continue
head of EMEA ECM at Morgan Allegro – all in that e-commerce TOûSEEûNAMESûTHATûBENElTûFROMû
Stanley. “And the successes like The January sales are also a arena,” said a syndicate head at the speedy digitalisation seen
The Hut Group and Allegro [in result of playing catch-up, said a US bank. “There is a strong bid over the last year,” said Maislish.
late 2020] showed that the Mark Maislish, head of EMEA for those types of names. People
window was open and prompted ECM syndicate at Goldman Sachs. have spent time with Market conditions, investor
OTHERSûTOûTHINKûABOUTûmOATING û “After last year, there was also a management teams and they demand and the shift to virtual
some of which had already been backlog from the lack of IPOs in want to take advantage of the processes could also rip up other
worked on for some time and THEûlRSTûHALF ûWITHûAûNUMBERûOFû opportunity.” typical calendar obstacles such
were ready to go.” high-quality assets waiting to go as the Easter break.
and investors are willing and able Even a decades old cobbler
Alex Watkins, co-head of to deploy capital.” like Dr Martens is experiencing “If the secondary market
EMEA ECM at JP Morgan, said: rapid growth through its holds up, there will be issuance
“The reason January is normally &ORûTHOSEûHOPINGûTHATûlNALLYû e-commerce channel. every week up to the summer,”
quieter for IPOs is the the fear of launching IPOs at the said Watkins. “I expect this will
convention around period ends start of the year may be The syndicate head said be a market that is very active in
ONûlNANCIALûREPORTING ûANDûSOû shrugged off, Thorneycroft that the appetite is strong each and every quarter, market
many companies will decide to warned that this year “doesn’t enough for names that have conditions permitting.”
wait for full-year numbers and necessarily permanently change performed over time and
that pushes you into a later THEûVIABILITYûOFûTHEûlRSTûQUARTER û SOûFULL
YEARûlNANCIALSûAREûNOTû A number of bankers noted
window. This year will be which will always be slightly needed in the same way as running across Easter is not
different and you will likely see more niche”. before. unprecedented with Glencore
strong volumes throughout the famously doing so in 2011, with
year as the market environment FOCUS ON GROWTH Watkins said that in recent one senior banker adding that
The 2021 pipeline is dominated years, there was a sense that the “the natural pauses can’t
BYûNAMESûTHATûBENElTûFROMûTHEû bid from private equity was necessarily be relied upon this
better than from public year”. „

HARD SELL that still left more than enough That was despite the price of the no one selling bonds into the
The CDS credit event following debt to cover the US$91m of net bonds rising steadily from 71 cents auction.”
Europcar’s failure last year to CDS positions on Europcar ONûTHEûEUROûUPûTOûAûlNALûOFFERûOFû û
make interest payments on its IDENTIlEDûBYû$4##ûDATA cents to lure more sellers into this One working theory among
bonds is the latest such part of the auction. With still not traders and investors is that credit
example. But rather than some Banks participating in the CDS enough bonds to be found to meet MARKETSûWEREûSIMPLYûCAUGHTûmAT

contractual quirk or unexpected auction – which act on behalf of the earlier buy requests, the footed. “Maybe working from
DEBTûRESHUFmINGûCAUSINGûTHEû CLIENTSûINûTHISûPROCESSûnûHADûTOûlLLû auction automatically settled at home and this early in the year,
issue, this time it was the CDS €43.3m of requests to buy 100, providing no payouts to CDS people didn’t get the alert that
auction that was at fault. %UROPCARûBONDS û"UTûINûTHEûlNALû holders at all. this was happening and didn’t
round of the auction, they made participate,” said one seasoned
This process uses a company’s offers to sell just €35.9m, leaving It was “a missed opportunity investor.
debt to determine the level of a €7.4m shortfall. for market participants given
compensation CDS holders RECENT CORPORATE CDS PAYOUTS that anybody can participate” in Mishaps in CDS can
should receive. If a defaulter’s CENTS ON THE DOLLAR/EURO this part of the auction and sometimes prompt a rethink of
bonds are trading at a certain could have secured “an elevated how certain features of the
percentage of face value – 73% 100 price” for their Europcar bonds, market work, though few are
was the average level that bank strategists at JP Morgan wrote in calling for that just yet in this
TRADERSûESTABLISHEDûINûTHEûlRSTû 80 a note to clients. instance. Diplas notes that the
round of the Europcar auction – process that led to the Europcar
CDS holders would normally 60 ANOMALY result is a “feature, not a bug” of
expect to receive a payout for the JP Morgan was the most active how the auction was designed.
remainder of face value – €27 for 40 in the CDS auction, offering to
every €100 of protection they sell €13m of bonds in total. “We warned people from the
owned in the case of Europcar. 20 Other banks such as Bank of beginning to be aware that
America, BNP Paribas, Deutsche these things can happen if they
The terms of Europcar’s debt 0 Bank, Morgan Stanley and don’t provide liquidity,” said
restructuring meant that there Societe Generale offered just Diplas. “You need enough
were restrictions on trading a Source: creditfixings.com €1m of debt each. people to participate actively in
large portion – over 80%, JC Penney the auction to have proper
according to some estimates – of HERTZ “It’s a bit of an anomaly,” a settlement. If people don’t come
its roughly €1bn in bonds. Even so, credit strategist said. “There was in, that’s what you end up
CA RES CORP with.” „
Wirecard

Chesapeake Energy
HEMA BondCo
Noble Corp
MATALAN
Pizza Express
Selecta Group
Europcar

International Financing Review January 16 2021 3

Top news

Investors throw hissy fit as Spain
takes juice out of spread

„ Bonds Spain sees record drop in orders after sharp price tightening

BY HELENE DURAND walked away from a suddenly crisis, the desperation for assets “We had a decision to make:
tightly priced deal. has grown, with the primary have a high quality order of
Orders for the KINGDOM OF SPAIN’s market providing a rare way for €55bn with a tight price or a
lRSTû ûSYNDICATIONûFELLûBYûAûJAW
As the European Central Bank investors to pick up a modicum of strong headline order book at
dropping €75bn last week after has unleashed liquidity to try and spread. That desperation has, €130bn with an additional
the sovereign squeezed pricing to stem the fallout from the Covid-19 however, led to order books concession,” said Pablo de
such an extent that little to no getting bigger and bigger. Ramon-Laca, director general of
value was left on the table. NOT TOO SHABBY THEûTREASURYûANDûlNANCIALûPOLICYû
SPAIN ORDER BOOKS “You have accounts who put for Spain.
5NTILûTHEûlNALûTERMSûWEREû €bn in orders for 20%, 30% of the deal
announced, the €10bn 10-year size; we know these orders are “In the end, we obtained an
looked like it would follow the 100 not rational,” a banker said. “It’s exceptional result. We’re in very
same script as most SSA deals of not what they want and if they different market conditions
the last nine months: 80 have a bit of a doubt, that would compared to last year when we
astonishing levels of explain why they got cold feet. It did our seven-year in March, for
oversubscription. 60 might be hedge funds, bank example, and were maybe less
trading accounts, those who sensitive to the last basis point.
Books hit over €130bn, a record 40 were hoping to pass the bonds We are getting back to more
for the issuer, following IoIs of on quickly.” normal conditions and with that
MOREûTHANûõ BNûATûTHEûlRSTû 20 we have to get used to the size of
update for the April 2031s via While shedding orders is not the order book to be
BBVA, Citigroup, HSBC, JP Morgan, 0 unheard of for sovereign SIGNIlCANTLYûALTEREDûDURINGûTHEû
Santander and Societe Generale. But syndications when pricing is price-discovery process.”
in an unexpected twist – and what Source: IFR tightened, the SSA market had
looked initially like a typo – books Jan 18 never seen a drop of such Still, while the drop in orders
closed at “just” €55bn as investors Jun 18 magnitude. WASûSIGNIlCANT ûTHEûBOOKûWASû
Jan 19
Jun 19
Jan 20
Apr 20
Jan 21

Pandemic scars undermine veneer of
health at European banks

„ People & Markets EBA data indicate banks may be under-reporting likely impact of pandemic

BY GARETH GORE, CHRISTOPHER SPINK performing loans has halved over be allowed to partially resume chief economist Carmen Reinhart
the past four years after huge from September. – an academic famed for her work
European banks begin reporting regulatory and bank efforts. on banking crises – warning in an
their 2020 results in coming days PREMATURE RELAXATION opinion column of the “quiet
following a year of economic “There hasn’t really been a But could that move be premature? lNANCIALûCRISISvûTHATûMAYûRESULTû
contraction, disruption and a disaster,” said Marco Troiano, an Privately, European market from the ongoing pandemic.
system-wide stress test on a scale analyst at Scope Ratings. “If you participants are deeply concerned
rarely if ever seen before outside had been watching the markets about the real extent of eventual h3OMEûlNANCIALûCRISESûDOûNOTû
of wartime. around March, you would have scarring from the pandemic, which involve the drama of Lehman
expected a massive banking crisis.” continues to ravage the continent. moments,” she wrote. “Asset
But despite all of that, the Economic output fell by 7% in the QUALITYûCANûDETERIORATEûSIGNIlCANTLYû
industry enters the new year in The absence of disaster is, of eurozone last year and a rebound is as economic downturns persist . . .
seemingly robust health. Capital course, largely down to the help unlikely for months. Although these crises may not
buffers are the highest on banks have received. Capital rules always include panics and runs,
record, having doubled over the have been eased and governments “There is a lot of concern they still impose multiple costs.”
last decade to an average of have offered guarantees to among investors, among
almost 16%, while liquidity is so prevent mass bankruptcies. The regulators, among supervisors Bill Coen, chair of the
abundant that banks have ECB has also lent banks almost that there is actually a mountain International Financial
€500bn parked at the ECB. €1.7trn at zero interest rates. of NPLs coming,” said Troiano, Reporting Standards advisory
adding that his team has trebled council, has also said that, while
Insolvencies have fallen, and A ban on dividends has also the number of European banks regulators helped avert a crisis
progress continues on tackling bad helped, forcing banks to hold on with a negative credit outlook. by giving banks more leeway
loans racked up during the global TOûPROlTSûANDûBOOSTINGûCAPITALû around capital and forbearance,
lNANCIALûCRISISûANDûSUBSEQUENTû ratios. Such has been the The World Bank has voiced its the risk is that problems could
eurozone crisis. The stock of non- resilience of banks that regulators concern in recent days, with its be left to build up in the system.
have signalled that dividends will

4 International Financing Review January 16 2021

@ For daily news stories
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still the third largest gathered BECOMING UGLY relief the challenges faced by sovereigns were paying last
by Spain for a syndication – and Still, some bankers away from the the SSA sector. Investors across year,” said Philip Brown, a
a result that would have been deal were critical of the execution. THEûBOARDûAREûlGHTINGûFORû managing director in the DCM
considered an excellent allocations in primary where team at Citigroup.
outcome less than two years “If you put out a bit of a NIP, then issuers typically offer new issue
ago, especially given the tight there are good trades to be done – concessions as secondary offers “But I think the message from
print. just look at EFSF, Belgium, EIB. But have dried up, with the price- Spain was clear: don’t expect us
if you push too hard, it becomes insensitive ECB buying up paper to pay a big concession, we’re
At 4bp over Spain’s October ugly, things become more in secondary. back to business as usual. More
2030 – 4bp tighter than the 8bp DIFlCULT vûAûSECONDûBANKERûSAID û broadly, I wonder if we will see
area initial price thoughts – the adding that he did not think that h,ASTûYEAR ûINVESTORSûBENElTEDû the same scale of frothy,
notes offered 1bp of concession the deal would perform. “I don’t from the elevated concession exaggerated oversubscription in
at most, with some bankers think you can do €10bn in good levels that were required to order books in 2021 as we saw
saying the deal was in fact 1bp conditions with a €55bn book.” fund the sudden increased last year, given the very different
through fair value – a far cry BORROWINGûNEEDEDûTOûlNANCEû bond market conditions today.”
from the 12bp offered on The bonds were quoted just the sovereign response to the
Spain’s record breaking €15bn over 1bp wider a day after Covid pandemic,” said Alex Price sensitivity was also in
10-year in April. pricing, though the leads said Barnes, head of SSA syndicate at evidence in the case of L-BANK’s
political noise coming out of Citigroup. “We’re basically back €1bn 10-year that failed to cross
“My job is to obtain value for Italy was to blame rather than to pre-Covid concessions though the line with books over €800m
the Spanish taxpayer, place the the execution. now, which are much smaller, at the last update.
bonds with high quality and in this case, just 1bp.”
investors and make it as smooth Another banker called the For de Ramon-Laca, it is a shot
a transaction as possible,” de execution “shambolic”. “You could In the case of Spain, its early across the bows of investors
Ramon-Laca said. “Because of argue that they were too cheap to bird strategy, which sees investors who may not be as essential to
the exceptional market start and too expensive at the end. put orders in before they know order books are they think they
conditions, we were able to They pushed too far; you’re not what the guidance will be, could are.
extract a smaller premium on moving from 100bp to 104bp, have played a part as well.
behalf of the taxpayer. 4bp was you’re going from 8bp to 4bp; they “One some occasions, DMOs
too tight for some investors, should have been more thoughtful “The book was €88bn before can be intimidated by hedge
predominantly faster money around execution,” he said. we put out any price guidance funds but we have to be
ones that are focused on and I think many investors prepared to see books
harvesting new issue CHALLENGES came into the book early with mUCTUATE vûHEûSAID ûh7EûWEREû
concessions in primary.” Whatever the truth, the deal’s vivid memories of the double- CONlDENTûWEûCOULDûPLACEûõ BNû
execution throws into sharp digit concessions which solidly to a high-quality and
diverse investor base.” „

“Such measures do provide How much of that will be TAKING ACTION problem that could drag on for
breathing space but perhaps at the repaid when the moratoria are European policymakers have years.
expense of disguising the true lifted remains to be seen. taken note of the potential
level of losses,” he said at a Insolvency rates are expected to problems ahead. Last month, “We’re spending a lot of time
Peterson Institute for rise dramatically once banks start the European Commission with regulators working
International Economics seminar. demanding loan repayments. outlined a plan to develop through technical standards and
“Forbearance is a double-edged Fiscal stimulus and pent-up secondary markets for bad how you manage to get
sword. It can bide time for a crisis demand will help, but many loans, reform insolvency laws, SIGNIlCANTûRISKûTRANSFER ûHOWû
to pass but temporary measures borrowers are now carrying support the creation of national you smooth things over years as
can become permanent and unsustainable levels of debt. bad banks, and to offer direct opposed to months,” said one
possibly become hard to unwind.” support. banker who has structured a
What is perhaps worrying in number of big NPL transactions
MASS MORATORIA terms of bank health is just how “History shows us that it is over recent years.
Recent data offer a small glimpse little most lenders seem to have best to tackle non-performing
into some of the problems lurking prepared for what is to come. loans early and decisively, Another problem banks will
within European bank balance EBA data show that the vast especially if we want banks have to grapple with is low
sheets. Last month, the European majority of banks haven’t to continue supporting LEVELSûOFûPROlTABILITY û4HATûLOOKSû
Banking Authority published data mAGGEDûANYûOFûTHEIRûLOANSûUNDERû businesses and households,” like something that is unlikely
showing that €870bn of loans – moratoria as unlikely to pay, a said EC commissioner to go away, not least because
about 7.5% of outstanding lending category that would require Valdis Dombrovskis in a central banks will be keen to
– was under some kind of provisioning. statement. “We are taking keep rates lower for longer to
moratorium at the end of June. preventive and coordinated spur on the economy and
Clearly, with record levels of action now.” prevent any funding issues for
Given the continued contraction capital being reported, the sovereigns.
in the economy, and a dramatic system as a whole should be in The EC plan is a watered-
spike in infections and restrictions good shape to increase down version of a pan-Europe “What we have had for a few
at the end of the year, the total provisioning and write off loans. bad bank pushed by some. YEARSûISûAûmATûYIELDûCURVE vûSAIDû
stock of loans not being paid back But not all banks are in good There are concerns that leaving Troiano. “And I’m afraid that
is today likely to be higher. Banks shape and, worryingly, the the bad loan problem to Covid-19 prolongs this situation
heavily exposed to hospitality will countries worst hit by the national politicians will result in because of the massive amounts
be worst hit. In Cyprus, 50% of all pandemic could well be the a piecemeal approach. It is also of public debt that has been
loans are in moratoria. ones that already had high becoming clear that there is added to government’s balance
levels of NPLs. little urgency, so this is a sheets . . . Monetary authorities
will need to remain very active. „

International Financing Review January 16 2021 5

Top news

Supras and agencies join big books league

„ Bonds Supras and agencies attract huge demand driven by ECB buying and the changing landscape since EU SURE

BY DAVID CHEETHAM issuers offering little to no new- offering despite an all-time low and EIB both set demand records
issue concessions. yield for both maturities, while for euros in the tenor.
Gravity-defying order books that the EUROPEAN INVESTMENT BANK’s
have been a feature of the European The European Union’s €1.5bn sustainability-awareness “The EU and the SURE
sovereign market for some time pandemic emergency purchase benchmark was 15-times programme have acted as a
have crept into the supranational programme is one reason for that oversubscribed. catalyst for the supra and agency
and agency space, with demand for change. “The ECB PEPP is having MARKETûASûAûWHOLE vûTHEûlRSTû
some of last week’s transactions a big impact on the market. “It’s a huge step forward for banker said. “The spectrum of
reaching unprecedented levels Secondary offers have totally them and investors are investors has broadened
despite record low yields and barely dried out,” said a DCM banker. desperate for yield,” said a senior SIGNIlCANTLY ûTHEûBREADTHûISû
QUANTIlABLEûNEW
ISSUEûCONCESSIONS û DCM banker on the EFSF trade. impressive and the real-money
“Investors know that in many component has gone up. The
Investors with a clean slate and cases, the ECB will buy 50% or “This is getting on for books market was already turbo-
plenty of money usually mean more of the size of a deal, so you get with peripherals. These charged but it’s really moved to
that SSA transactions are well having this type of price- sort of books have been there for another level because of the EU.”
received in January. Spreads tend insensitive buyer clearly has an a while now for sovereigns, then
to drift wider into year-end, while impact on the market. Also, for the EU showed they could PRICING TIGHT
issuers often err on the side of those investors that don’t have a capture this sort of interest. So For the EFSF, the spread was set at
caution early in the year by choice, that are trapped in their the question was, why not EFSF mid-swaps less 11bp for a €3bn no-
giving up attractive concessions – bond market mandates, they or EIB – and you’re now seeing grow January 2031 note tranche
meaning value is usually on offer. need the allocations.” that happen.” and plus 9bp for €2bn of January
2052s. Both tranches tightened by
However, the start of 2021 has Last Monday, the EUROPEAN Bumper order books are a 2bp from guidance via Barclays,
been different, with spreads FINANCIAL STABILITY FACILITY drew a continuation of the theme from Deutsche Bank and JP Morgan. The
holding tight over the break and record combined order book of the previous week, when €5bn
€70bn for a €5bn dual-tranche 10-year transactions from KFW

T-Mobile returns to high-yield market
amid spectrum bidding frenzy

„ Bonds Bond investors show faith in rising star’s bid for 5G spectrum

BY DAVID BELL “T-Mobile is a unique story in “It was a tough pill to swallow, telcos is always a question, but I
that they have publicly but it’s one of those names think they have to spend, they
T-MOBILE priced a US$3bn high- committed to trying to become where you’re picking up 100bp need to stay relevant.”
yield bond offering on Monday an investment-grade rated over a Triple B name, and it’s a
at the lowest coupons ever seen company,” said Alexandra Barth, company that is well-capitalised, )TûWASûTHEûCOMPANY SûlRSTûTRIPû
in the US junk bond market, as CO
HEADûOFûLEVERAGEDûlNANCEû with a decent business model. It back to the US high-yield market
investors welcomed the capital markets at Deutsche Bank. makes sense to me,” said Adam since closing the acquisition of
company’s performance and “It is one of the few upgrade Coons, a portfolio manager at Sprint in April 2020. T-Mobile
investment-grade ambitions. stories that investors can buy Winthrop Capital Management. has issued US$31.75bn of
where the company has “Capex spending from these secured investment-grade bonds
The bond offering will be used committed to achieving that since then.
partly to fund T-Mobile’s goal.”
participation in the Federal SPREAD ON T-MOBILE'S 4.50% 2050 SECURED NOTES
Communication Commission’s Strong demand allowed leads
auction of C-band spectrum, to upsize the deal to US$3bn bp
where wireless carriers such as from an initial US$2bn total size, 325
AT&T, Verizon and Dish are ANDûPRICEûAû53 BNûlVE
YEARû
competing for a slice of airwave non-call two senior unsecured 285
space that is crucial to the roll- tranche at 2.25%, a US$1bn
out of 5G networks. eight-year non-call three at 245
2.625% and a US$1bn 10-year
Investors showed little sign of NON
CALLûlVEûATû û!LLû 205
concern over how deep T-Mobile’s tranches moved 12.5bp tighter
funding needs will be in the auction from price talk. 165
and poured US$12bn of orders into
a Ba3/BB/BB+ rated three-part Those coupons are the lowest 125
unsecured trade, banking on the seen for callable debt with high- Apr May Jun Jul Aug Sep Oct Nov Dec Jan
company’s intention to become an yield ratings at each of those
investment-grade credit. tenors, according to IFR data. 2020 2021

Source: Refinitiv

6 International Financing Review January 16 2021

@ For daily news stories
visit www.ifre.com

bonds each offered around 1bp Pricing was through the Sustainability-linked
new issue concessions, according conventional curve and offered a loans to copy bonds
to a lead banker. limited concession versus the
sustainable curve, according to the „ People & Markets SLL lenders to up their game
The deal took a big chunk out lead banker. Another person
OFûTHEûISSUER SûlRST
QUARTERû involved put the concession at 2bp. BY TESSA WALSH “The previous guidance was
funding target of €5bn. The pretty light touch; it didn’t feel
EFSF and related entity ESM are “The sustainable format has The world’s three loan trade like you were moving the needle
due to raise €24.5bn this year, brought us some very solid and associations are working to greatly. There’s a level of rigour
split between €16.5bn for EFSF large orders,” said the lead bring sustainability-linked loans that we can go to, to give this
and €8bn for ESM. banker. “We ended the year in line with more detailed and whole topic a little bit more
with a very strong green and rigorous principles designed by credibility ,” a senior loan
The EIB, meanwhile, sustainable market and I think ICMA for sustainability-linked syndicator said.
continued its busy start to the this just demonstrates that we bonds, potentially bringing
year with a second outing in are opening the year with the more transparency to ESG The creation of the SLB
euros, building on the success of same strength and appetite lending and making it easier to market in late 2019 with bonds
the previous week’s 10-year from clients for this.” RElNANCEûINûEITHERûFORMAT for Italian utility Enel forced the
EARN transaction. pace of change as KPI targets
The trade came on the same The Loan Market Association were exposed to the harsh court
A €1.5bn May 2041 day as the One Planet Summit in Europe, the Loan Syndications of public opinion. Sustainability
sustainability-awareness bond on Biodiversity in Paris. and Trading Association in the performance targets were also
offering was upsized by €500m 53 ûANDûTHEû!SIAû0ACIlCû,OANû developed to calibrate KPIs.
from guidance due to high “EIB likes to support what is Market Association are seeking
LEVELSûOFûDEMAND ûWITHûlNALû going on at the political level for to align SLL principles with “By clearly distinguishing
order books peaking in excess of sustainable and green [issues] ICMA’s SLB principles, which between KPIs and SPTs, ICMA
€22.5bn. with trades to show there is real were launched in June. have provided an additional
attention from market level of clarity that our
Similar to the previous week’s participants,” said the lead “We’re looking to align with PRINCIPLESûCOULDûBENElTûFROM vû
offering (and the EFSF trade), banker. “I think it’s a very ICMA’s SLBPs to ensure as much Lawrence-Pardew said.
pricing tightened by 2bp, landing strong communication tool coherence and integration
at less 7bp via leads Bank of America, again from EIB.” „ between the markets as possible, Although loan documents and
Credit Agricole, LBBW and Santander. and we believe that is the best +0)ûDETAILSûWILLûREMAINûCONlDENTIALû
deployments,” the rating agency path for promoting ESG as a (other than broad details that
Despite the recent back up in analysts said. whole,” said Gemma Lawrence- borrowers may disclose), the
the 10-year Treasury rate, order Pardew, senior associate director improved standards should still
books were said to be skewed to Analysts at CreditSights said for legal at the LMA. help loan bankers push clients
the 10-year tranche due to the they expected T-Mobile to spend harder on targets, in a market
HIGHERûCONVEXITY ûWHILEûTHEûlVE
US$14bn in the auction. The three loan associations where the balance of power has
year notes also drew heavy will send out updated drafting been tilted to borrowers that often
demand as a shorter duration “It could be implied from the this week and are aiming to dictate terms to relationship
play with lower interest rate risk. debt raise that perhaps they update the SLL principles by lenders in self-arranged deals.
were quite active in the C-band March, before turning attention
Deutsche was left lead on the auction,” said Davis Hebert, a to their main 2021 project of “It will make things so much
bond sale, with Citigroup, Credit senior analyst at CreditSights. producing social loan principles, simpler to aim for best practice
Suisse, Goldman Sachs, Barclays, JP which will also be based on when we push some corporate
Morgan, Morgan Stanley and RBC T-Mobile also came to the ICMA’s social bond principles. clients on SLL discussions,” said
as bookrunners. MARKETûINûPARTûTOûRElNANCEû Cecile Moitry, co-head of
existing debt, depending on Sustainability-linked lending SUSTAINABLEûlNANCEûMARKETSûATû
COMPETITIVE ADVANTAGE how large its spectrum was developed in the private BNP Paribas.
Like T-Mobile, wireless carriers participation is. loan market, which came up
such as Verizon and Dish have with the concept of linking Adding clarity will also help
been raising debt in recent About 70% of T-Mobile’s margins to progress against key WITHûRElNANCINGSûBYûELIMINATINGû
MONTHSûTOûlNANCEûWHATûHASû US$8.3bn outstanding unsecured performance indicator targets, POTENTIALûDIFlCULTIESûDUEûTOû
become a highly competitive debt is callable in the coming but the lack of visibility led to different standards between bonds
auction for C-band spectrum. months, according to CreditSights. concerns that the KPIs set were and loans. The SLB market only
NOTûSUFlCIENTLYûSTRETCHING took off in the second half of 2020,
S&P analysts noted that Hebert said he also expected so few have been seen to-date, but
bidding has surpassed their Verizon and AT&T to return to 4HEû3,,ûPRINCIPLESûWEREûlRSTû the market is already considering a
expectations, with more than THEûBONDûMARKETûSOONûTOûlNANCEû published in 2019 to provide a bridge loan to an SLB.
US$80bn of gross payments to their spectrum bids. framework for the new product,
the FCC as of the latest results. and were followed by guidance “Framework alignment of
While those companies on the SLL principles in May product is going to be key, as it’s
“Accumulating spectrum in would tap the investment-grade 2020 to address some of these preferable to have an issuer or
this auction would enable market, T-Mobile demonstrated concerns, but problems lenders on the same reporting
T-Mobile to maintain its the strength of demand on show remained as borrowers systems for SLLs and SLBs.
competitive advantage over for high-yield debt. continued to set their own Greater convergence between
AT&T and Verizon with mid- targets with little the products is essential and we
band spectrum following its “The market is very robust,” benchmarking. more than welcome this
acquisition of Sprint’s 2.5 GHz said Barth. “The combination of approach,” Moitry said. „
licences, which we view as low rates – even though the 10-
crucial for 5G wireless network year has backed up – and equity
markets at all-time highs is very
attractive for high-yield
investors.” „

International Financing Review January 16 2021 7

Top news

Singapore Air adds US route

„ Emerging Markets National carrier turns to new funding channel after raising billions in home market

BY DANIEL STANTON (US$6.6bn) rights offering for the the end landing about 225bp RECOVERY STORY
airline last year, while wide. The airline had received reverse
SINGAPORE AIRLINES made a Singapore’s Ministry of Finance enquiries in mid-2020 from
successful debut in the US dollar owns one special share in the Other Singapore Inc reference investors interested in a US
bond market on Wednesday, airline, giving it veto power on points came from PSA dollar bond, but was well served
achieving tight pricing even certain matters. International’s 2030s, rated Aa1 by waiting a few months for
though it is operating at a by Moody’s, at Treasuries plus market sentiment and its own
fraction of its pre-pandemic Nomura’s sales and trading 60bp, and Singtel’s 2030s, rated prospects to improve. In the six
capacity. desk pointed out that the A1/A (Moody’s/S&P), at plus months ended September 30,
bonds lack a change of control 67bp. SIA reported a net loss of
The airline sold US$500m of clause to protect holders in S$3.5bn and an 80% year-on-year
3% 5.5-year senior bonds at case Temasek cut its SIA’s Singapore dollar- drop in revenues.
99.573 to yield 3.085%, or shareholding, but investors denominated 2030s were
Treasuries plus 260bp, inside expect the government to trading at a yield of 3.425%, SIA said on Monday that it
initial guidance of 300bp area. support SIA if necessary, given which translated to Treasuries expects its total passenger
its strategic importance to the plus 286bp in US dollar terms, capacity to rise to around 25% of
The issuer is unrated, which country and Singapore’s implying that the airline pre-Covid levels at the end of
ordinarily would require bonds ambitions as a global aviation achieved a lower cost of funding -ARCH ûBYûWHICHûTIMEûITûWILLûmYû
to be marketed on a yield basis, hub. in the deeper US dollar market. to 45% of its usual destinations.
but sole-global coordinator Its cargo network has begun to
Citigroup and joint bookrunners As a result, bookrunners Despite the apparently tight expand again, and the airline
Bank of America and HSBC pointed guided investors to reference pricing, the bonds jumped in now visits 61 cities, as of
to its majority ownership by points from Singaporean early trading and were around September 30, up from 26 on
state-owned investment holding government-linked companies. 40bp tighter on Thursday. April 1.
company TEMASEK HOLDINGS to Temasek’s 2030 bonds, rated
justify the investment-grade Aaa/AAA (Moody’s/S&P), were Final books were over The airline maintained access
approach. seen at Treasuries plus 35bp US$2.85bn from 150 accounts, to capital markets last year, even
when bookbuilding began, and with Asia taking 76% of the Reg S as its revenues dried up.
Triple A rated Temasek SIA was expected to come bonds and EMEA 24%. Asset
owns a 55.75% stake in SIA and 200bp–250bp back of that – in managers and fund managers In addition to the June 2020
underwrote a S$8.8bn took 83%, banks 8%, insurers 4%, rights issue, comprising S$5.3bn
and private banks and others 5%.

Oman proves magnet for cash-rich buyers

„ Emerging Markets/Loans Bond with yield proves hit with investors flush with money, but lenders play hard to get

BY ROBERT HOGG, SANDRINE BRADLEY of about US$2bn over the past bond’s success, with investors US$8.4bn, with US$1bn
six weeks. seeing the measures as credible. REmECTINGûTHEûINTRODUCTIONûOFû
OMAN showed on Thursday that VAT from April. Total spending,
yield was just the tonic for “We might have seen some of “It’s been taken positively that meanwhile, is projected to fall to
investors swamped with cash, the stronger, better rated MENA there is a plan and commitment US$28.2bn this year from
with the Gulf sovereign issuing a SOVEREIGNSûCOMEûlRST ûBUTûGETûINû to it from the highest levels,” US$32.9bn in 2020, with the
jumbo bond deal to brighten its there while there is cash and said the second lead banker. bulk of the cuts coming from a
credit outlook. appetite, I guess. It remains a “Last year was the worst in decline in oil and gas spending,
challenging story but one that is terms of oil prices and Covid-19, according to Ehsan Khoman,
Oman beat initial size hopes under-owned by many.” and you might have expected head of emerging markets
as accounts threw in more than worse results, but what Oman research for EMEA at MUFG.
US$15bn of orders. That enabled A banker at one of the leads was able to deliver gave comfort
the sovereign to raise US$3.25bn said the offering started around that it is on the right track.” “Despite previously being one
through a triple-tranche 37.5bp–50bp back of fair value. of the most vulnerable countries
offering, bigger than the US$2bn But price revisions meant Oman The sovereign is one of the in the region, the most pressing
or so it was initially hoping for. arguably paid no premium, weakest economies in the oil-rich challenges have eased and there
The ebullience wiped away selling a US$1.75bn 10-year Gulf with all three major rating are signs that Oman has turned
lingering memories over a tepid tranche at 6.25%, a US$1bn 30- agencies downgrading it last year. the corner towards a more
response to its last benchmark year at 7.25%, and a US$500m It is now rated Ba3/B+/BB–. sustainable footing,” said
trade in October. tap of its 2025s at 4.45%. Khoman.
But Sultan Haitham’s 2021
“It shows you how much “Give the people what they budget plans to reduce Oman’s ON THE UP
cash is out there looking for a want – yield,” said a banker away DElCITûFROMû53 BNûINû û Other positives for Oman
home,” said an investor, from the deal. to an estimated US$5.8bn are include a recovery in the oil
pointing out that EM debt has seen as increasingly positive. price, with Brent futures bid at
SEENûAVERAGEûWEEKLYûNETûINmOWSû A second lead banker said the
publication of Oman’s medium- Non-oil revenues are projected
TERMûlSCALûPLANûWASûKEYûTOûTHEû to rise by 34% year on year to

8 International Financing Review January 16 2021

@ For daily news stories
visit www.ifre.com

of shares and S$3.5bn of US dollar bond market was Lev loan arranger
mandatory convertible zero- Hainan Airlines, part of the groups expand
coupon bonds, it sold an highly indebted HNA Group,
3 MûlVE
YEARûCONVERTIBLEû which sold a US$100m „ Loans Sponsors aim to appease relationship banks
bond offering in November two-year non-put one unrated
at a yield of 1.625% and issue in October 2018 at a BY CLAIRE RUCKIN need to call on them again for
45.77% conversion premium, yield to maturity of 13.17%. In liquidity purposes amid still
followed by S$500m of 2020, it renegotiated with Sponsors raising leveraged loans considerable uncertainty caused
10-year bonds at 3.5% the same bondholders to extend the in the European market are by the Covid-19 pandemic.
month. maturity by a year. appointing larger arranging
bank groups in order to keep as Given the vast number of
The MCBs have a 10-year life Since then, Virgin Australia many banks as possible happy banks on these current loans, a
and will either convert to shares has collapsed into following a disappointing 2020 number of investment banks
at maturity or the issuer can ADMINISTRATIONûANDûINmICTEDûAû WHENûDEALûmOWûPLUMMETED û"UTû that would typically be seen on
redeem them earlier at a price haircut on bondholders, the move is also leading to the left of a deal are now playing
that gives a 4%–6% annual yield Garuda Indonesia was forced to frustration for the few banks on the right and accepting these
to investors. It has approval to extend the maturity of its doing the legwork on the loans, roles for relationship reasons in
sell up to S$6.2bn more MCBs US$500m sukuk issue by three as they are facing lower fees as a a bid to keep up-to-date
on the same terms. years because it could not repay result of there being more information on a company and
them on schedule, and Thai bookrunners. gain a more prominent role on
Nomura’s sales and trading Airways has restructured its ANYûFUTUREûlNANCINGS
desk estimated that SIA is debt. An incredible 23 lenders are
burning through S$415m per leading a €2.6bn loan for INEOS “Three banks broadly
month. Based on the company’s #ATHAYû0ACIlCûWASûTHEûLASTû QUATTRO, while 14 banks do most of the work on
cash of S$7.1bn at the end of Asian airline to announce plans provided a €2bn loan for a typical deal, but then
September, it wouldn’t run out for a new US dollar bond Swedish alarm company random banks get the
of cash after 17 months even offering, but investors pushed VERISURE, nine banks are running fees and league table
with no revenues and that back at its proposed pricing a €1.3bn buyout loan for credit”
would rise to 43 months if it level and the plan was dropped. mechanical drives business
draws on its available credit The unrated Hong Kong airline FLENDER and seven banks are on a Banks to the left of a deal tend
facilities and issues the held investor roadshows in €465m buyout loan for French to lead the sell-down process
additional MCBs. September 2019, at a time when food retailer EURO ETHNIC FOODS. and do the majority of the work,
Hong Kong’s protests had compared with those on the
Airline bonds have often been already dampened demand for Sponsors in general are keen right.
challenging propositions. The mIGHTSûTHERE „ to service relationships after
last Asian airline to come to the European leveraged loan volume “Sponsors are servicing
has the option to extend up to fell to its lowest annual level last relationships. For banks on the
US$56, and a thawing of US$2bn. year since 2012 – at US$161.9bn right it is not just about what
relations in the Middle East – and many borrowers called on THEYûDOûONûTHATûSPECIlCûDEALûBUTû
between Saudi Arabia and 4HEûSOVEREIGNûlRSTûAPPROACHEDû relationship banks during that about the wider relationship,” a
Qatar. Francesc Balcells, lenders last November but period for extra liquidity and second syndicate head said.
CIO of FIM Partners, take-up has only been from a revolving credit facilities.
anticipates the detente could group of predominately regional Those banks actively leading
usher in more support from the and local banks, alongside HSBC. “A lot of sponsors and issuers the loans are left feeling
region. are aware that they called on the frustrated by a dilution of fees. It
These banks launched the banks to fund RCFs through the will be all the more painful
“We see favourably the loan into wider syndication on dark days of initial Covid and given how under-budget a
realignment going on in the January 7, hoping that more now is a chance to pay back number of banks were last year,
GCC region – lifting of the Qatar international lenders would some of that support. They are FOLLOWINGûTHEûLACKûOFûDEALûmOW
blockade is one, but also the join. Many, however, have had effectively clearing the slate so
overtures towards the Biden their Omani country limits cut. when they eventually do come “The bank groups are big,
administration, recognition of back to the market they will as much as it frustrates us
)SRAELûnûANDûWEûlNDû/MANûAû “We have to wait and see if have free choice of who to go to because we do all the work.
good high-beta expression to we can put even a token amount without ‘owing’ anyone. This is Three banks broadly do most
manifest that view,” said in,” said one loan banker. paying back favours,” a of the work on a typical deal,
Balcells. “Normally we could have done a syndicate head said. but then random banks get
bit with insurance but with the the fees and league table
The success of the bond deal impact of the pandemic that At 23 banks, INEOS Quattro credit,” the second syndicate
is expected to push insurance is not available.” has the largest bank group on a head said. „
international banks to provide leveraged loan since 25 banks
extra liquidity for the loan, It is expected that those appeared on a US$6.4bn loan
which Oman’s Ministry of international banks involved in backing the acquisition of AKZO
Finance launched earlier this the bond, in compensation for NOBEL’s chemicals business by
month. the mandate, will now provide Carlyle Group and Singaporean
at least a small sum, according wealth fund GIC, in 2018.
International banks – bar to a second loan banker.
HSBC – have so far shunned the Sponsors are also keen to
ministry’s request for the 27- Citigroup, HSBC, JP Morgan and keep banks happy in case they
month US$1.1bn facility, which Standard Chartered were the
leads. „

International Financing Review January 16 2021 9

Top news

Banco BPM AT1 caught out
by market moves

„ Bonds Trade is a reminder that the market is “not a one-way street” amid political noise

BY TOM REVELL highly sought after in 2021, as at €625m-plus. Demand “I would have expected any
investors look for yield and eye subsequently fell and the AT1, especially one with a 6.5%
BANCO BPM fell foul of a softening potential compression of AT1s coupon was set at 6.5% and the STARTûPOINT ûTOûlNDûMOREû
market as it brought forward an towards lower beta products. size at €400m on the back of traction,” said a DCM banker
Additional Tier 1 offering last But, caught out by market more than €560m of orders. away from the leads.
Tuesday amid renewed political moves, BPM was unable to
turmoil in Italy, ultimately capitalise on that view. Bankers deemed the outcome The muted demand was
launching the €400m deal in disappointing, noting it blamed partly on a softening
line with initial price thoughts, Leads Banca Akros, Barclays, BNP contrasted sharply with a in the broader market
but at the lower end of its size Paribas, Citigroup, Goldman Sachs, €375m AT1 sold by Spain’s backdrop over the course
target. Mediobanca and UBS opened Abanca against a better of the morning. Rising
books for the perpetual non-call backdrop on January 7. Abanca’s coronavirus cases and a focus
While euro-denominated sub lVE
YEARûDEALûWITHûINITIALûPRICEû deal, the only other euro AT1 of on political developments
debt has been in short supply so thoughts of the 6.5% area for an the year so far, attracted more in the US weighed on stock
far this year, market participants expected size of €400m–€500m. than €1.8bn of orders at a price markets, also affecting credit
have been almost unanimous in OFû ûnûmATûTO ûIFûNOTûINSIDE ûFAIRû and causing the AT1 market
predicting that AT1s will be Guidance was later set at value. to widen.
6.375%–6.5% (WPIR) with books

Verisure dividend recap funds game
of don’t pass the parcel

„ Bonds Valuation questions as €4.4bn deal sees Verisure stay with the same owners

BY ELEANOR DUNCAN Fund-to-fund sales are largely Verisure’s equity valuation lXEDûANDû3WEDISHûKRONAûmOATING

CONDUCTEDûBYû0%ûlRMSûnûTHEû from the transaction is over rate eight-year non-call three
Swedish security company existing owners – that want to €14bn, implying an equity bonds (both Caa1/CCC+). The
VERISURE landed a €4.4bn list companies or sell them but cushion of more than 50%, bonds were accompanied by a
dividend recap package last have seen valuations distorted according to market sources. €2bn Term Loan B, which was
WEEKûTHATûWILLûHELPûlNANCEûITSû by Covid-19. They would rather There doesn’t seem to be any launched on January 8.
sale from one of its private sell their companies to third-party validation of the
equity owner’s funds to another. themselves (often from one fund lGURE û(OWEVER ûMANAGEMENTû The bonds were priced on
to a newly-raised fund) than to a has rolled over 90% of its equity Friday: the €1.15bn six-year non-
Bankers said that several third party – and keep the into the transaction, despite call two senior-secured euro bond
similar fund-to-fund transfers upside potential for themselves. having a cash option to exit the landed at 3.25%, the €1.175m
AREûSETûTOûBEûlNANCEDûINûTHEû position, noted bankers. EIGHT
YEARûNON
CALLûTHREEûlXED

LEVERAGEDûlNANCEûMARKETûOVERû However, such transactions rate senior notes were priced at
the next couple of weeks – a can raise questions over “The reason why there aren’t 5.25% and the SKr1.5bn eight-year
somewhat unusual variant of valuations and the way that the [market] comps is that Verisure non-call three at three-month
M&A activity. PE sponsor has calculated them. ISûlVEûTIMESûTHEûSIZEûOFûTHEûNEXTû Stibor plus 525bp. That compared
largest player in the market – no with IPTs of 3.5%–3.75% for the
“These deals are indicative of One high-yield investor said that one is doing remotely the same 6NC2 bond, 5.5%–5.75% for the
a market in recovery from Covid- the valuation of Verisure, whose scale,” said a banker familiar .# ûlXED
RATEûEUROûBONDûANDû
19, where you’re seeing gaps sponsor is Hellman and Friedman, with the deal. plus 575bp–600bp for the krona
between what an owner thinks a was a bigger sticking point for him mOATER û&INALûTERMSûONûTHEûLOANû
business is worth and the view than the fact that the debt raising Sponsors have nonetheless were set at 350bp over Euribor
of a third-party buyer,” said Ben would fund a €1.6bn dividend recently sold minority stakes in WITHûAû ûmOORûANDûANû/)$ûOFû
Thompson, head of leveraged recap – something that has similar businesses at valuations 99.75.
lNANCEûCAPITALûMARKETSûATû*0û previously been controversial. that imply a similar multiple to
Morgan, before the Verisure Verisure, he said. Proceeds from the bonds,
announcement. “In this instance, the company along with the TLB, will help
is being passed between two Verisure’s total bond raising redeem Verisure’s 5.75% euro
“If the owner sees a Covid-19 funds owned by the sponsor, so was split between a €1.15bn six- SûANDûITSûmOATING
RATEûKRONAû
recovery story in the business the validation of the overall year non-call two senior-secured 2023s, repay drawings in full
and a good upside, it would valuation – that’s the bigger lXED
RATEûBONDûTRANCHEû " " ûVIAû under the 2015 senior term
rather sell it to itself and then go issue for me,” said the investor. issuer Verisure Holding AB, and loans and pay a dividend to
back to the market in around 18 h)ûCAN TûlNDûANYûCOMPSûINûTHEû the €1.27bn-equivalent via issuer shareholders.
months.” sector that are as high.” Verisure Midholding across euro

10 International Financing Review January 16 2021

@ For daily news stories
visit www.ifre.com

Even Standard Chartered’s demand, but said it nevertheless to hurt,” said a second debut sold in April 2019 and a
recent successful US dollar AT1 showed not every subordinated syndicate banker away from €400m 6.125% perp non-call
TYPIlEDûTHEûWEAKNESSûINûTHEû issuance will be straightforward the leads. January 2025 issue sold in
secondary market, with bankers this year. January 2020.
saying the deal was around 75bp “You have to say it is a bit
wider on Tuesday. “The market needs to be unfortunate. Whenever The deals were bid at 5.9% and
reminded it’s not a one-way politicians start having an 6.1%, respectively, at Tuesday’s
“Looking at the broader street,” said a syndicate banker INmUENCEûINûOURûWORLD ûIT Sû open, but those yields rose by
market, asset valuations are away from the leads. usually negative.” around 20bp as the market
super high across the board softened.
ANDûLOWûBETAûISûGOINGûlNE ûBUTû HEADLINES HURT Other observers were more
not massively oversubscribed,” Some bankers also pointed the critical. Interpretations of the price
said a banker at one of lNGERûATûHEIGHTENEDûPOLITICALû for BPM’s new deal varied, but
Banco BPM’s leads. “AT1s uncertainty in Italy, as prime “It was the wrong day to most bankers said the initial
from Southern Europe were minister Giuseppe Conte faced a execute given the political IPTs seemed fair, before the
not massively oversubscribed. cabinet showdown on Tuesday noise,” said one. market turned.
It feels like maybe the sweet with a coalition partner that
spot is Tier 2 or AT1s from the could bring down the Bankers close to the deal “It didn’t look unreasonable.
likes of Standard Chartered – government. nevertheless noted the size of But if people are seeing Italian
high-yielding, top quality the book was comparable Tier 1s off by a point, it doesn’t
banks.” “When you’re an issuer at the to the type of books Banco matter,” said the second
lower end of the quality BPM has garnered historically syndicate banker away from the
Observers considered the spectrum – not a national and said the issuer had still deal.
result more as an isolated champion – issuing the most got a deal done on attractive
incident rather than a cause for deeply subordinated product, terms. Banco BPM’s deal struggled to
wider concern over AT1 headlines like that are going perform on the secondary
The new issue is Banco BPM’s market and was bid at a yield of
third AT1, following an €300m 6.7% on Friday. „
8.75% perp non-call June 2024

Physical bookrunners on the sentiment also buoyed by on January 11). Unlike Verisure, evenly between loans and
bond were JP Morgan, Goldman government support of the this is a more straightforward bonds, is expected to hit the
Sachs and Nordea. credit markets, bankers are jumbo M&A deal as the German MARKETûINûTHEûlRSTûCOUPLEûOFû
hopeful of beating last year’s COMPANYûSEEKSûTOûlNANCEûITSû months of 2021.
HOPING FOR MORE volume. US$5bn acquisition of BP’s
%UROPEANûLEVERAGEDûlNANCEû aromatics and acetyls business. “We were sitting here a year
bankers are optimistic that the “What we’re seeing is buyers ago looking at a great market in
Verisure bond offering is the and sellers more engaged in Ineos Quattro (BB/Ba3/BB) is terms of liquidity with the
lRSTûOFûSEVERALû- !
RELATEDû transacting with more stability planning a €2bn-equivalent supply/demand balance in
transactions this year after on the macro front and hopes of four-part bond issue, consisting favour of issuers – and out of
supply fell last year. recovery on the vaccine and OFûõ BN
EQUIVALENTûOFûlVE
YEARû nowhere came one of the
virus side,” said Eduardo Trocha, non-call two senior secured and biggest shocks that ever hit the
There was US$270bn in EMEA EMEA head of leveraged loans €1bn-equivalent of 5.5-year non- market,” said Thompson.
- !ûlNANCINGûRAISEDûACROSSû and high-yield syndicate at call two senior unsecured notes,
leveraged loans and high-yield Credit Suisse. “Everyone is both split into US dollar and “So it makes sense to be
bonds in 2020, according to compelled to deal-make – it euro tranches. telling clients that they should
2ElNITIV ûDOWNûFROMû53 BNû DElNITELYûFEELSûMOREûACTIVE v go to market now, even if it
the year before. Another deal expected shortly could theoretically get a little
INEOS QUATTRO followed is the €4.15bn debt package bit tighter from here. The
But with the rollout of Covid- Verisure into the bond market backing the buyout of Asda. potential downside from this
19 vaccines bringing some hope on Friday (having launched a point is much greater than the
of economic recovery and with €2.6bn-equivalent jumbo loan In total, about €20bn of gross upside.” „
LEVERAGEDûlNANCEûSUPPLY ûSPLITû

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please contact: Europe & USA: Leonie Welss, [email protected], tel: +44 7766 478537
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International Financing Review January 16 2021

Top news

DocuSign spikes on US$600m CB

„ Structured Equity Short-covering of stock super-charges conversion premium

BY STEPHEN LACEY convertible that is eligible to required of the underlying stock Morgan Stanley, Goldman Sachs
convert at share prices above [to close shorts].” and JP Morgan were the active of
In a tricky balancing act, US$71.50, a combined seven bookrunners on the CB.
electronic signature pioneer acquisition cost of US$2.7bn. Settling the residual value of
DOCUSIGN repurchased an existing the 0.5% in stock (the principal The outcome highlights the
convertible bond that is deeply in When bonds are trading so was paid in cash) was designed current strength of the new-issue
the money last week through the deep in the money the price to minimise that volatility, market. The bonds were upsized
sale of a new CB, enjoying a 9% moves in lockstep with the according to a second banker. from US$500m, and there is also a
spike in its share price on Tuesday underlying equity, so holders, Obviously that supply was US$90m greenshoe that could be
while it was negotiating both legs especially hedge funds, have INSUFlCIENTûTOûOFFSETûTHEûUNWINDû exercised, with a premium of
of the deal. large short positions to offset of hedges, resulting in a higher nearly 75% to the pre-launch close.
this. This can be advantageous conversion price on the new CB
Despite the dramatic run-up when a company combines a than otherwise would have For DocuSign, there is no
in the stock, DocuSign was able new issue with a tender as been the case. doubt this an outstanding
to secure US$600m of new holders of the outstanding bonds result. To prove its own bullish
funding on the sale of the three- look to close out their shorts, That elevated reference price outlook, the company spent
year convertible at extremely though it is unpredictable. can make placing the new bonds US$27.3m on derivatives to
attractive terms where it will trickier so another tactic used to offset dilution up to prices of
pay zero coupon and conversion “These exchanges are always offset volatility is to employ a US$525.30, a 100% premium.
is only possible if its shares rise tricky, depending on whether the full-day VWAP to set both the
by 60% to US$420.24, a massive [existing holders] are hedge fund reference price on the new deal DocuSign also closed a new
premium for short-dated paper. or long only,” said one equity- and the repurchased bonds. In 53 MûlVE
YEARûREVOLVINGû
linked banker involved in the this case, though, pricing came credit facility that it expects to
The company spent US$460m negotiations. “Investors are from the day’s close, ensuring remain undrawn at closing and
of the proceeds and issued 4.7m speculating on the quantum of the the company captured all of the features an accordion feature to
shares to repurchase the 0.5% buyback and quantum of buying run-up in its share price that day. expand borrowing capacity by
an additional US$250m. „

Flender links €1.3bn buyout loan to ESG

„ Loans Financing is largest ESG-linked loan in the syndicated Term Loan B market

BY PRUDENCE HO donate half of the margin down by 5.0bp–7.5bp, depending Also in 2019, Spanish telecoms
savings to charity. ONûTHEûlRM SûIMPLEMENTATIONûOFû operator MASMOVIL BECAMEûTHEûlRSTû
Mechanical drives business FLENDER systems for collecting and European issuer of leveraged debt
has introduced a green element to “The business of Flender recycling empty packaging from to incorporate an ESG rating. The
Aûõ BNûBUYOUTûlNANCINGûBACKINGû obviously has a green angle by customers; its share of green ESG rating was only linked to a
its acquisition by Carlyle, meaning PRODUCINGûWINDûPOWERûINûTHEûlRSTû products; and the percentage of €250m revolving credit facility
the deal is set to be the largest ESG- place, so having a green ratchet on employees given the opportunity and capex line, rather than
linked loan in the syndicated Term top makes a lot of sense,” said a to become shareholders of the incorporating the term loan too.
Loan B market, and underlining syndicated loan head. group.
the growing use of sustainability DEAL STRUCTURE
criteria in leveraged deal Leveraged loan investors are Carlyle has also previously &LENDER SûlNANCINGûALSOûINCLUDESû
structures. increasingly open to ESG-linked introduced ESG into the a €125m 6.5-year senior secured
pricing structures, due to the leveraged loan market. In June, guarantee facility and a €150m
A sustainability-linked increasing awareness of ESG from Carlyle-backed plastic packaging 6.5-year revolving credit facility.
margin ratchet applies to a their own investor base. The company LOGOPLASTE amended a 4HEûALL
SENIORûSECUREDûlNANCINGû
€1.045bn seven-year covenant- economic impact of the margin õ MûLEVERAGEDûLOANûlNANCINGû will have leverage of around 4.5
lite TLB, which is offered to pay ratchet is still narrow and therefore TOûBECOMEûTHEûlRSTû%3'
LINKEDû times.
375bp over Euribor, with a 0% unlikely to act as a deterrent. loan to test Europe’s institutional
mOORûATû n û/)$ investor base. Margins went up or 4HEûLOAN ûWHICHûISûTHEûlRSTû
“I think 10bp is tolerable. down by around 5bp–10bp, leveraged buyout out of the
It will see margins going up or Almost all CLO managers are depending on the reduction of blocks this year, is offered with
down by 10bp depending on the focusing on ESG generally,” the CO2 emissions. 101 soft call for six months.
company’s installed amount of syndicated loan head said.
wind power. If the performance Another Carlyle-owned Expected ratings are B+/B1/
lGUREûGROWSûBYû ûORûMORE û INCREASING ADOPTION business, JEANOLOGIA, a Spanish BB–, with a stable outlook.
Flender will get a 10bp margin The deal is the latest maker of denim manufacturing
reduction, and vice versa. sustainability-linked TLB after equipment, in 2019 linked the Bank of America, Deutsche Bank
French food safety provider KERSIA margin of its buyout loan to and UniCredit are physical
)FûITûBENElTSûFROMûAûREDUCTION û bundled ESG elements into its water savings, though that was bookrunners, while RBC,
Flender, which supplies well-received €520m leveraged a club deal held by a handful of Commerzbank and Goldman Sachs
gearboxes, generators and buyout loan in November. The commercial banks. are bookrunners and mandated
services for wind turbines, will margins of that deal will go up or lead arrangers. „

12 International Financing Review January 16 2021

People

&Markets

14Profits at Wells 17Michael Haize 20Italy’s Monte
Fargo’s CIB is appointed dei Paschi is
unit fall 22% as the head of global set to open its books
San Francisco-based markets at Natixis to potential buyers
bank shines a light on as part of a raft of as the rescue of the
the newly formed unit changes in investment world’s oldest bank
for the first time bank leadership drags on

„ FRONT STORY RESULTS

JP Morgan closes record year on a roll

US Bank continues strength in trading and ECM

JP MORGAN capped a record year in trading “For the remaining quarters of this year and h7EûEXPECTû- !ûTOûREMAINûACTIVEûONû
and investment banking with its best fourth the full year, the comparisons will be IMPROVEDûOVERALLû#%/ûCONlDENCE ûANDûTHEû
quarter ever as it showed little sign of particularly challenging given the momentum in equity capital markets is
slowing down in 2021, although it warned EXTRAORDINARYûPERFORMANCEûOFûMARKETSûINû EXPECTEDûTOûCONTINUE ûOFûCOURSE ûDEPENDENTû
its performance would be hard to match. v ONûTHEûSUCCESSFULûCONTAINMENTûOFû#OVID vû
Piepszak said.
2EVENUEûFROMûlXEDûINCOME ûCURRENCIESû Revenue for the corporate and investment
and commodities trading of nearly US$4bn bank in Q4 rose 17% to US$11.4bn, and net CITI EQUITIES RECOVERY
in the October-December quarter was up PROlTûWASûUPû ûTOû53 BN While JP Morgan drove home its dominance
15% from a year ago. FICC rose 45% in 2020 at the end of the year, CITIGROUP appears to
to US$20.1bn. Equity underwriting was the star of the have missed an opportunity in investment
show, as it had been on Wall Street in the banking. Its Q4 revenues for advisory and
Revenue from equity trading in Q4 of third quarter. ECM revenue in Q4 jumped underwriting dipped 5% from a year ago to
nearly US$2bn was up 32% over the year-ago 88% from a year ago to US$718m, capping a US$1.3bn, although revenue for the year
quarter and rose 33% for the year to record year on the back of a strong was up 11%.
US$8.6bn. performance in follow-ons and IPOs.
Citi reported a 38% decline in advisory
JP Morgan CEO Jamie Dimon said several JP Morgan’s revenue from debt revenue and a 16% decline in DCM in Q4,
factors drove the record FICC performance, underwriting rose 23% to US$1bn in Q4. outweighing an 83% surge in revenue from
including the shifting of US$350trn in global Revenue from advisory rose 19% from the equity underwriting to US$438m in the
ASSETSûANDûTHEûEXPANSIONûOFûCENTRALûBANKû YEAR
AGOûQUARTERûTOû53 M ûREmECTINGûTHEû quarter.
balance sheets around the world. REBOUNDûINû- !ûACTIVITYûSINCEûTHEûHALTûINû
DEALMAKINGûAFTERûTHEûPANDEMIC û!DVISORYû Citi showed a slowdown in FICC in the
“People have to buy and sell to hedge, revenue nearly doubled from the third fourth quarter, relative to the pace set in
lNANCE ûMOVEûMONEYûAROUNDûTHEûWORLD vû quarter. previous quarters, with revenue rising a
Dimon said. “Companies have a lot of modest 7% to US$3.1bn. For the year, Citi’s
lNANCINGûTOûDO û!NDûOFûCOURSE ûWHENûYOUû STRONG FINISH TO A STELLAR 2020: FICC revenue rose 34% to US$17.3bn.
have higher DCM and higher ECM and REVENUES % CHANGE VS YEAR EARLIER
HIGHERû- !ûTHATûALSOûDRIVESûAûLOTûOFûTRADING û The bright spot for the bank in Q4 was a
!NDûSOûYOUûGOTûTOûKINDûOFûPUTûTHATûALLûINûTHEû 100 turnaround in equity trading, which
MIX v revamped leadership last year. Revenue
80 from equity trading jumped 57% from a year
)NûTHEûlNALûQUARTERûOFûTHEûYEARû*0û-ORGANû ago to US$810m, and rose 25% to US$3.6bn
said FICC was driven by good client activity 60 for the year.
across businesses, particularly in spread
products, as well as a favourable trading 40 JP Morgan reported a 42% jump in Q4
environment in currencies and emerging PROlTûASûITûBEGANûTOûRELEASEûRESERVESûITûBUILTû
markets, credit and commodities. The 20 up throughout the year. The bank’s net
strength in equities was driven by strong income hit US$12.1bn, or US$3.79 per share,
client activity and equity derivatives and 0 BEATINGûANALYSTS ûEXPECTATIONSûOFû53 ûAû
CASHûACROSSûBOTHûmOWûTRAININGûANDûhLARGEû SHARE ûACCORDINGûTOû2ElNITIV
EPISODICûTRANSACTIONSv -20
Citi earned US$4.63bn in the quarter, or
h7EûEXPECTûMARKETSûTOûREMAINûACTIVEûINû -40 53 ûAûSHAREûnûBEATINGûEXPECTATIONSûOFû
THEûlRSTûQUARTER ûANDûWEûHAVEûSEENûSTRONGû US$1.34 – after it too released a portion of its
PERFORMANCEûSINCEûTHEûSTARTûOFû*ANUARY vûSAIDû FICC credit reserves.
*0û-ORGANûCHIEFûlNANCIALûOFlCERû*ENNIFERû Equities Philip Scipio
Piepszak. But she added a note of caution: Advisory/
underwriting

DCM
ECM
M&A

JPM Q4 JPM 2020 Citi Q4 Citi 2020

Source: Bank results

International Financing Review January 16 2021 13

“He has a Wall Street background but in no way can you
VIEWûHIMûASûINûTHEûPOCKETûOFûTHEûBUSINESSûORûlNANCIALûLOBBYv

REGULATORY LAWYER ASHLEY EBERSOLE ON GARY GENSLER, P20

Wells Fargo shines rare light on CIB, trading

WELLS FARGO’s corporate and investment research, as well as corporate banking, ago at US$889m. FICC revenues were+15%
BANKINGûPROlTSûFELLû ûINûTHEûFOURTHû treasury management, commercial real US$4.31bn for the full year, up 15% from -13%
quarter from a year earlier with revenues estate lending and servicing. 2019. -16%
squeezed by the impact of low interest
rates, as the US bank on Friday split out Wells Fargo’s investment bank had a Revenues from equities trading in Q4+12%
results for its newly formed CIB unit for STRONGûlRST
HALFûOFû ûLIFTINGûHOPESûITû fell 25% from a year earlier to US$194m+6%
THEûlRSTûTIME was recovering after a tough few years and totalled US$1.2bn for 2020, up 12%
when the consumer banking scandal from 2019.
Wells said CIB’s net income was DOMINATEDûEXECUTIVES ûATTENTIONûANDûCASTûAû
US$841m in the three months to shadow over all the bank’s operations. DEBUT ISSUANCE: WELLS FARGO CIB REVENUES
December 31, down from US$1.07bn a US$m
year earlier. Its revenues dipped 7% to 4HEû3ANû&RANCISCO
BASEDûBANKûBENElTEDû
US$3.11bn. from a surge in US corporate debt issuance 5,000
last year as companies raced to strengthen
It was hurt by lower Treasury balance sheets after the coronavirus 4,000
Management and Payments revenues, pandemic erupted in March. US debt
which the bank blamed on the impact of capital markets has always been a strong 3,000
lower interest rates and lower deposit suit for the bank, so it reaped the reward
balances, as it has to manage a cap on its from record levels of issuance in March, 2,000
assets imposed by US regulators following !PRILûANDû-AY ûINûPARTICULAR
a scandal in its consumer bank in 2016. 1,000
"UTûTHEûlNALûQUARTERûOFûTHEûYEARûWASûLESSû
For full-year 2020, CIB’s net income was impressive. Wells’ revenues from 0
US$842m, down 83% from US$4.97bn in investment banking were US$348m in the FICC
2019 – mostly due to US$4.95bn in fourth quarter, down 3% from a year trading
provisions for loan losses. CIB’s revenues earlier. For 2020, investment banking Equities
were US$13.82bn in 2020, down 3% from revenues were US$1.45bn, up 6% from trading
US$14.23bn in 2019. 2019. Investment
banking
The new CIB unit includes investment )NûMARKETS ûREVENUESûFROMûlXEDûINCOME û Commercial
BANKING ûEQUITYûANDûlXEDûINCOMEûCAPITALû currencies and commodities trading in the Real Estate
markets activities, and sales, trading and fourth quarter were down 1% from a year Other CIB

2019 2020

Source: Wells Fargo results

JPM makes financial sponsor tech push

JP MORGAN has appointed Sidharth Punshi to a SPONSORûCLIENTS ûPLUSûFAMILYûOFlCESûANDû TECHNOLOGYvûTOû3)'ûCLIENTSûANDûSAIDû0UNSHIû
new role in its strategic investor group in sovereign wealth, infrastructure and will work closely with the technology
%UROPE ûTHEû-IDDLEû%ASTûANDû!FRICAûTOû venture capital funds. investment banking team.
increase its focus on the technology sector for
lNANCIALûSPONSORûANDûVENTUREûCAPITALûCLIENTS He will relocate to London from Hong “In addition to his direct client coverage
Kong and report to Ina De and Klaus role, Sid will also help drive our Tech IB
Punshi has been appointed client (ESSBERGER ûWHOûHEADû3)'ûINû%-%! û origination agenda with the technology
EXECUTIVEûFORûVENTUREûCAPITALûANDûGROWTHû according to a memo to staff seen by IFR. TEAMSûWITHINûOURûEXISTINGûlNANCIALûSPONSORû
FUNDSûINû%-%!ûWITHINûTHEû3)'ûTEAM ûWHICHû CLIENTS ûINCLUDINGûWITHûTHEû'ROWTHû%QUITYû
COVERSûPRIVATEûEQUITYûANDûOTHERûlNANCIALû 4HEûMEMOûSAIDûTHEûAPPOINTMENTûREmECTEDû FUNDS vûTHEûMEMOûSAID
“the ever-increasing importance of

Who’s moving where…

LAZARD has hired and private equity Marie Freier has joined research products,
James Orozco as a relationships in the BARCLAYS from with ESG analysts
managing director capital markets group. Sanford Bernstein working alongside
covering financial He began his career at to head research for credit and equity
sponsors. He will work Robertson Stephens environmental, social analysts to assess
from San Francisco. in the capital markets and governance financial risks and
Orozco joined from group in 2001. issues, based in valuations. Freier had
GCA Advisors, where London. She will been with Bernstein
he established and led report to Rupert since 2007, including
its financial sponsors Jones, head of as head of European
practice in the US and European equity product management
managed a portion research, and lead the and global head of
of its venture capital integration of ESG into ESG.

14 International Financing Review January 16 2021

People

&Markets

Wells’ Q4 performance lagged behind JP European banks set for deeper
Morgan and Citigroup, which on Friday coronavirus provisions
both reported higher revenues than a year
earlier in FICC and equities trading. %UROPEANûBANKSûAREûEXPECTEDûTOûINCREASEûTHEû EXPECTEDûLASTû!PRIL ûBUTûADMITTEDûITûWASû
provisions they make for loans to companies lower than some US banks.
ALL CHANGE and individuals affected by the continued
Wells last year reorganised into four restrictions imposed due to Covid-19. “Both NPL inflows and the
operating segments, including CIB, which outlook for existing NPLs are
brought the bank more in line with US “In recent weeks we have seen a return to highly uncertain given the
peers and was encouraged by regulators tougher lockdowns in some geographies, unpredictable course of the
who wanted more transparency to potentially pressuring asset quality. pandemic”
improve risk assessment. Management teams may choose to ‘top up’
RESERVESûATûYEAR
END vûSAIDûANALYSTSûATû h/URûLOWERûlGUREûISûBECAUSEû'ERMANYûISû
The new structure is likely to shine a Barclays in a note. (see Top News story.) economically pretty stable and we did not
brighter light on its investment banking grant many consumer loans, which are the
and trading operations. COMMERZBANK this month said it would take lRSTûTYPEûTOûDEFAULTûINûSUCHûAûSITUATION vûHEû
an additional €500m charge in its results for said. But he said more insolvencies could be
Charles Scharf took over as CEO in the fourth quarter, due out in February. The EXPECTEDûONCEûGOVERNMENTûSUPPORTû
October 2019 and the former Bank of New EXTRAûPROVISIONûISûEXPLICITLYûhFORû#ORONAû measures ceased.
9ORKû-ELLONûBOSSûHASûSETûABOUTûlXINGû RELATEDûEFFECTSûEXPECTEDûINû v
relationships with regulators, repairing 3ABINEû"AUER ûGROUPûCREDITûOFlCERûFORû
reputations, and has made several senior 4HEû'ERMANûBANKûSAIDûITûWOULDûINûTOTALû %-%!ûlNANCIALûINSTITUTIONSûATû&ITCHû2ATINGS û
leadership changes. write off €1.7bn from its book for the whole said government interventions, such as
of 2020. “With the higher risk result, the providing guarantees for loans made to
“Our results continued to be impacted BANKûANTICIPATESûTHEûCURRENTLYûEXPECTEDû riskier credits, may delay provisioning,
by the unprecedented operating IMPACTûOFûTHEûSECONDûLOCK
DOWN vûITûSAID û particularly in Europe.
environment and the required work to put !NALYSTSûATû#ITIGROUPûSAIDûTHEûCHARGEûWASû
OURûSUBSTANTIALûLEGACYûISSUESûBEHINDûUS vû HIGHERûTHANûEXPECTED “It may take longer as government support
Scharf said on Friday. But he said progress SCHEMESûCOULDûBEûEXTENDED vûSHEûSAID û&ITCHû
was being made to improve its risk and “In recent weeks we have seen a NEVERTHELESSûEXPECTSûAûPICK
UPûINûLOANSûBEINGû
control functions, and the bank was return to tougher lockdowns in declared non-performing over 2021,
hEXITINGûCERTAINûNON
STRATEGICûBUSINESSESvû some geographies, potentially particularly in the second half of the year.
TOûIMPROVEûlNANCIALûPERFORMANCE pressuring asset quality”
Steve Slater h7EûEXPECTûINCREASINGûINmOWSûOFû.0,SûASû
“We are responding to the ongoing support measures for borrowers are
Punshi has been with JP Morgan for 10 Corona pandemic and feel well prepared for gradually withdrawn, which could mean a
YEARSûANDûMOSTûRECENTLYûRANûITSûlNANCIALû FURTHERûDEVELOPMENTSûTHISûYEAR vûSAIDû"ETTINAû strong supply of NPLs for banks to sell to
SPONSORûANDûFAMILYûOFlCEûCOVERAGEûACROSSû /RLOPP ûCHIEFûlNANCIALûOFlCER û DEBTûPURCHASERS vûSAIDûTHEûRATINGSûAGENCY
!SIA
0ACIlC ûBASEDûINû(ONGû+ONG û"EFOREû #OMMERZBANK SûNEWûCHIEFûEXECUTIVEû
joining the bank in December 2010 he was Manfred Knof has said he will outline a new h(OWEVER ûBOTHû.0,ûINmOWSûANDûTHEû
at Jefferies for two years, according to his strategy this quarter. OUTLOOKûFORûEXISTINGû.0,SûAREûHIGHLYû
PROlLEûONû,INKED)N ûANDûPREVIOUSLYûSPENTû uncertain given the unpredictable course of
THREEûYEARSûATû'OLDMANû3ACHSûANDûNINEûYEARSû DEUTSCHE BANK has also said total provisions the pandemic, with fresh lockdowns across
at Citigroup in London, mainly in for 2020 relating to coronavirus will be Europe and the possibility of borrower
technology investment banking. õ BN û#HIEFûlNANCIALûOFlCERû*AMESûVONû SUPPORTûMEASURESûBEINGûEXTENDEDûFORû
Steve Slater Moltke said in an interview with Die Zeit SEVERALûMOREûMONTHS v
THATûTHEûlGUREûWASûWITHINûTHEûRANGEû Christopher Spink

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

CITIGROUP has treasury and trade Sadia Ricke has been May 2018. Ricke’s
named Shahmir services, and before appointed group chief two deputies in the
Khaliq as global that was global head risk officer for SOCIETE risk unit will be Jean-
head of its treasury of direct custody GENERALE, replacing Francois Despoux and
and trade solutions and clearing within Sylvie Remond, who Stephane Landon. At
group. He succeeds markets and securities will become an adviser SG Ricke has worked in
Naveed Sultan, who services. He joined Citi to the management structured finance and
will become chairman in 1991 in Pakistan. team of the risk was head of global
of Citi’s institutional unit. Ricke has been finance for Asia-Pacific
clients group. Khaliq deputy to Remond and UK country head
was previously since September before moving to the
head of operations 2019. Remond had risk unit.
and technology for been in her role since

International Financing Review January 16 2021 15

Bellwether in the FT said investment banking boss Simon Cooper is the
favoured internal candidate after it emerged that he had
Bellwether: n. From the practice of placing a bell around the BEENûGIVENûhEMPATHYûTRAININGv
neck of a castrated ram so that it might lead its flock
It sounds like some sort of rehabilitation programme, but
7(%.û*%!.û0)%22% Mustier resigned as CEO of UniCredit last APPARENTLYûIT SûGIVENûTOûHIGH
mYERSûWHOûAREûBEINGûLINEDûUPûFORû
year, incoming chairman Pier Carlo Padoan promised to a public-facing role so they don’t burst out laughing in public
UNDERTAKEûAûWIDE
RANGINGûINTERNALûANDûEXTERNALûSEARCH û3Oû when they announce job cuts or sit stony-faced while a stand-up
was that why he pitched up at the Vatican last week? comedian takes the piss out of them at an IFR awards event.

Were Padoan and outgoing chairman Cesare Bisoni But if empathy training is such common practice, then
seeking divine inspiration when they met with His Holiness there are a few CEOs out there entitled to a refund.
Pope Francis – or perhaps papal blessing for UniCredit’s
proposed acquisition of Monte dei Paschi di Siena? IN THESE UNPRECEDENTEDûTIMES û53ûlNANCIALûSERVICESûlRMSû
NEEDûTOûLEANûONûAûBREADTHûOFûEXPERTISE û"LACKSTONEûHASûHIREDû
Or now that we know that popes can retire, might they 'ENERALû$AVIDû,û'OLDFEIN ûTHEû STû#HIEFûOFû3TAFFûOFûTHEû
have in fact been offering the CEO job to the Holy Father? 5NITEDû3TATESû!IRû&ORCE ûASûAûSENIORûADVISER

Two days after the meeting, 84-year old Pope Francis h!Sû#HIEFûOFû3TAFF û'ENERALû'OLDFEINûWASûRESPONSIBLEûFORûOVERû
ANNOUNCEDûHEûHADûRECEIVEDûTHEû0lZERûVACCINE ûSOûHEûHASû 693,000 men and women serving around the world, managing
effectively passed the medical. Watch out for white smoke an annual operating budget of over US$168bn and the
coming from the UniCredit Tower. That will leave Barclays READINESSûOFûALLû53ûAIRûANDûSPACEûPOWER vûAûPRESSûRELEASEûSAID
FREEûTOûMAKEûAûMOVEûFORûTHEû!RCHBISHOPûOFû#ANTERBURY
Following the storming of Capitol Hill, Blackstone clearly
ONE PUBLICITY SHOT showed Bisoni and Pope Francis shaking isn’t taking any chances.
hands, a long-forgotten form of greeting since the Covid-19
pandemic. In other words, while most of us are stuck indoors and 4(%û-534
(!6%ûEXECUTIVEûACCESSORIESûINû ûAREûAû#OVID

limited to meeting over Zoom, UniCredit’s top brass have just 19 vaccination and a special purpose acquisition company.
developed one of the world’s most impressive support bubbles. Everywhere you look, there’s a former bank CEO heading
UPûAû30!#
Of course, the slightly more mundane truth is that the
MEETINGûWASûPARTûOFûTHEû!RT &UTUREûPROJECT ûWHICHûINVOLVESû Tidjane Thiam has become the latest to jump on the
the sale of selected artworks belonging to UniCredit. The blank-cheque bandwagon with a remit to buy companies
bank is allocating proceeds of the sale of three paintings INûTHEûlNANCIALûSERVICESûSECTOR û)TûLOOKSûSENSIBLEûFORû4HIAMû
TOûSPECIlCûCHARITYûINITIATIVESûCHOSENûBYûTHEû0OPEûANDûTHEû GIVENûHISûEXTENSIVEûKNOWLEDGEûOFûTHEûINDUSTRY û"UTûDON Tû
intrepid duo were in town for that reason. EXPECTûHIMûTOûKICKûOFFûBANKINGûCONSOLIDATIONûANYûTIMEûSOON

Or perhaps that’s just what they want us to believe. Speaking in 2016, Thiam described European banks as
hUNINVESTABLEv û!FTERûBEINGûSUBSEQUENTLYûlREDûBYû#REDITû
34!.$!2$û#(!24%2%$û)3 one bank not looking to the heavens Suisse, he’s unlikely to have changed his mind. „
ASûITûWORKSûOUTûWHOûTOûPICKûTOûSUCCEEDû"ILLû7INTERS û!ûREPORTû

Who’s moving where…

„ Latifa Tefridj- Tefridj-Gaillard was „ Nick Melton has Lazard, principally as „ ROTHSCHILD & CO Verizon on its
Gaillard has joined Goldman’s head joined RUBICON a telecoms banker. has appointed M&A acquisition in 2014 of
digital infrastructure of UK institutions Rubicon, founded in lawyer Charles Martin Vodafone’s 45% stake
investment firm solution sales from CAPITAL ADVISORS 2011, advises clients as a senior adviser. in Verizon Wireless
2010, overseeing the as head of North on strategic deals Martin joined from for US$130bn. He
DIGITAL COLONY implementation of America from as well as capital law firm Macfarlanes, will advise clients
from Goldman investment strategies Greenhill, where he markets. It also makes where he has been in both the global
Sachs to head and risk management was head of telecom principal investments senior partner for advisory and wealth
Europe Capital solutions for UK and infrastructure of its own. The firm, the last 12 years. management parts
Formation to help private and public corporate advisory. based in Ireland, Martin has acted of the firm. He
its effort to expand sector pension funds, Before Greenhill, wants to expand in for corporates and will also remain a
its infrastructure their consultants and Melton spent eight North America, led by financial sponsors, senior adviser to
investment business endowments. years at Rothschild Melton. including advising Macfarlanes.
in the region. and 13 years at

16 International Financing Review January 16 2021

People

&Markets

Natixis promotes Gallois and Haize in CIB rejig

NATIXIS has appointed Michael Haize as head of ACQUISITIONûANDûSTRATEGICûlNANCEûSINCEû û Damien Cleris, new head business
global markets and Alain Gallois as chief HAVINGûJOINEDûTHEûSTRUCTUREDûlNANCEû development with corporates and the
EXECUTIVEûFORûTHEûCORPORATEûANDûINVESTMENTû division in 2005. He is a former journalist 'ROUPEû"0#%ûNETWORKS ûWILLûREPORTû
BANKûINû%UROPE û-IDDLEû%ASTûANDû!FRICA û who spent a year as deputy editor of The REPORTINGûTOû'ALLOIS û$Eû3AINT
3EINEûWASû
EXCLUDINGû&RANCE ûASûPARTûOFûAûSWATHEûOFû European in 1991. previously global head of coverage and
changes in CIB leadership. Cleris was global co-head of coverage.
HaizeûHASûWORKEDûATû.ATIXISûSINCEû û
The changes follow the departure of starting as global head of debt capital markets Arie Boleslawski is in charge of equity
3TEPHANEû!BOUT ûHEADûOFû#)"ûFORû%-%! ûFORû before becoming global head of rates and derivatives worldwide as deputy head of
3OCIETEû'ENERALEûATûTHEûBEGINNINGûOFûTHEûYEAR currencies trading last June. He has previously global markets. He will report to Haize as
held senior derivatives and DCM roles in will Emmanuel Issanchou, also appointed
Gallois has been named global head of France for JP Morgan and Deutsche Bank. deputy head of global markets but in charge
COVERAGEûASûWELLûASûHEADûOFû#)"û%-%! û(EûHASû OFû!MERICASûANDûCREDITûWORLDWIDE û
been at the bank for more than 20 years, 'LOBALûHEADûOFûINFRASTRUCTUREûANDûENERGYû Issanchou will report locally to Olivier
STARTINGûHISûCAREERûINûlXED
INCOMEûORIGINATIONû lNANCEûBenedicte de Giafferri becomes global $ELAY ûCHIEFûEXECUTIVEûOFû#)"û!MERICAS
BEFOREûBECOMINGûCHIEFûEXECUTIVEûOFû#)"û!SIAûINû HEADûOFûREALûASSETS û!LLûFOURûREPORTûTOû!NNE

2016. In May 2020 he was appointed global Christine Champion and Mohamed Kallala, The French bank this month has also
head of investment banking. co-heads of CIB. APPOINTEDûCO
HEADSûFORûITSûlNANCIALûANDûANDû
sovereign, supranational and agency businesses.
2EPLACINGû'ALLOISûINûTHATûPOSITIONûISûFabrice In addition Guillaume de Saint-Seine, new
Croppi. He has been global head of GLOBALûHEADûOFûlNANCIALûINSTITUTIONS ûANDû Christopher Spink

Citi sets up new wealth unit Luchetti, who led the consumer bank in
%UROPEûANDû!SIA ûBECOMINGû53ûCONSUMERû
CITIGROUP said it had created a single wealth clients group, will be led by Jim O’Donnell and BANKûHEADûFROMûNEXTûMONTH û)Nû-AY ûHEADûOFû
MANAGEMENTûBUSINESS û#ITIû'LOBALû7EALTH û will include the Citi private bank and Citi US retail banking David Chubak will switch
to deliver products and services to clients personal wealth management. O’Donnell positions with US retail services head Craig
FROMûTHEûAFmUENTûSEGMENT ûASûWELLûASûULTRA
joined Citi in July 1999 and was previously Vallorano.
high net worth individuals. global head of investor sales and
relationship management. #ITIûWILLûGETûAûNEWûCHIEFûEXECUTIVEûOFlCERû
The new unit, formed by combining in February when Jane Fraser will take over
wealth management teams in global #ITIûLASTûWEEKûALSOûRESHUFmEDûLEADERSHIPû from Michael Corbat.
consumer banking and the institutional in its US consumer bank, with Gonzalo
Arundhati Sarkar

Fitch buys CreditSights $#û!DVISORYûWASûlNANCIALûADVISERûTOû
CreditSights on the deal.
Financial information provider FITCH GROUP is and it is awaiting regulatory approval.
buying CREDITSIGHTS ûAûCREDITûRESEARCHûlRM û The core products provided by CreditSights will join Fitch’s portfolio of
for an undisclosed sum. products, which encompasses legal analysis
CreditSights to more than 1,200 users are its ANDûlXED
INCOMEûNEWSûFROMû&ITCHû3OLUTIONSû
#REDIT3IGHTSûWILLûJOINû&ITCHû'ROUP Sû subscription-based independent credit Leveraged Finance Intelligence, through its
solutions division and is being bought research and risk tools. The company was Covenant Review, Capital Structure, LevFin
directly from the founders, shareholders founded in 2000 and has more than 200 Insights and PacerMonitor brands, as well as
and other investors. The terms of the staff in its headquarters in New York and credit ratings and research from Fitch Ratings.
acquisition have not been made public OFlCESûINû,ONDON û3INGAPOREûANDû$ENVER û Fitch is owned by media group Hearst.

Ed Clark

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

„ Nabil Benjelloun „ Russian investment „ Sanjay Shah has investment banking „ UBS has rehired „ Sabrina Kensy
Touimi has taken bank BCS GLOBAL been appointed for India. Yadav was Axel Granger as head has been appointed
up the position of MARKETS has hired country head of head of TMT for India of M&A and head of head of corporate
head of investment- former Alfa Bank MORGAN STANLEY‘s and Wagle headed financial sponsors clients for the central
grade corporate executive Vladimir India business. Shah global capital markets for South-East Asia. and eastern regions
bond trading at BNP Samokhvalov to was made co-country in India. Samarth Granger is due to of Germany at
PARIBAS, a source run its foreign head of India with Jagnani will take over rejoin in March from COMMERZBANK.
said. The position is a exchange business. Aisha de Sequeira as the head of GCM Standard Chartered, Kensy is based in
newly created role and Samokhvalov will in 2013. Sequeira for India. where he worked in Berlin and has been at
is based in London. be tasked with died last month. M&A in Singapore. the bank since 2001.
Benjelloun Touimi developing FX Kamal Yadav and He previously worked
joined from HSBC in strategy domestically Sachin Wagle will at Evercore, Bank of
2018. and internationally. become co-heads of America and UBS.

International Financing Review January 16 2021 17

“Solving affordable housing and unemployment issues
INûTHEûBLACKûCOMMUNITYûISûKEYûFORû!MERICAv

PRIVATE DEBT SPECIALIST DAMIEN DWIN, P21

Capital markets week ahead:
Kuaishou, American Tower, Flender

CASH IN HAND Kuaishou is gearing up to be key tenet of its €800bn pandemic response. the development of new products and
THEûlRSTûJUMBOû)0/ûOFûTHEûYEAR ûASûITûBEGINSû Demand for such paper has been strong of improvements in its supply chain.
meeting investors on Monday to convince late – although Spain’s deal last week, when
them to buy into its US$5bn Hong Kong €75bn of orders suddenly disappeared, GROUNDEDû.ORWEGIANû!IRû3HUTTLEûPRESENTSûITSû
listing. The Chinese social media platform, INDICATESûIRRATIONALûEXUBERANCEûISûSTARTINGû latest business plan to an Irish restructuring
WHICHûMEANSûhFASTûHANDvûINû-ANDARIN ûALLOWSû to ebb. court on Friday. The courts have already
users to upload short videos for followers and granted the struggling carrier bankruptcy
has around 300 million daily active users that LEFT WITH THE NEIGHBOURS Polish parcel protection from around US$8bn of debts while
spend an average of an hour a day on the app. delivery business InPost opens books on its ITûGETSûITSûAFFAIRSûBACKûINûORDER û!FTERûBREAKNECKû
€3bn IPO, safe in the knowledge that it EXPANSIONûOVERûRECENTûYEARS û.ORWEGIANûHASû
The deal already has one achievement already has €1bn of orders in the bag – the said it will cut its long-haul network and raise
under its belt – getting out ahead of big rival largest cornerstone for a European IPO in a fresh equity to see it through the pandemic.
ByteDance, the owner of TikTok, which is decade. Hopes were high of a Warsaw listing
also working on an IPO. Kuaishou is looking AFTERûTHEûSUCCESSûOFû!LLEGROûINû/CTOBER ûBUTû GIVEMEABREAK Subscription continues on a
for another triumph on the valuation front InPost has opted to shun its home country – õ MûRIGHTSûISSUEûFROMû'ERMANûTRAVELûOPERATORû
too, with the deal set to value the company ANDûTHEû5+ ûWHEREûISûHASûEXPANDEDûnûFORû 45) ûPARTûOFûAûõ BNûRESCUEûOFûTHEûlRMûFOLLOWINGû
at almost US$50bn, almost twice the price !MSTERDAM travel restrictions and a collapse in bookings due
tag placed on it during a private fundraising TOûTHEûPANDEMIC û'ERMANY SûECONOMICû
less than a year ago. stabilisation fund WSF will inject €420m into
TUI through a silent participation convertible.
4HEûRIGHTSûISSUEûISûDUEûTOûWRAPûUPûNEXTûWEEK

NAIL COLOURS TO THE MASTû!ûõ BNûLOANû BOOT SALE Dr Martens begins meeting with OUT OF FASHION Mytheresa is targeting
BACKINGû!MERICANû4OWER SûPURCHASEûOFû investors on Monday ahead of its £1bn London US$280m from its NYSE listing on
thousands of phone masts belonging to )0/ û0RIVATEûEQUITYûlRMû0ERMIRA ûWHICHû 7EDNESDAY û4HEû'ERMANûFASHIONûBRANDûWASû
4ELEFONICA û++2ûANDû)NDITEX
FOUNDERû BOUGHTûTHEûBOOTMAKERûMOREûTHANûSIXûYEARSû BOUGHTûBYû.EIMANû-ARCUSûSIXûYEARSûAGOûANDû
!MANCIOû/RTEGAûGOESûTOûSYNDICATION û"ANKûOFû ago for £300m, is using the deal to sell down is now being spun off by the US department
!MERICAûISûCURRENTLYûONûTHEûHOOKûFORûTHEû its investment. Rival Carlyle was rumoured to store operators, now under new ownership
whole bridge, with other banks likely be interested in buying the company last year, and keen to raise cash after a bankruptcy
attracted by fees on the proposed equity, but those talks appear to have collapsed. process last year. Mytheresa has taken on
revolving credit and term loans the US$200m of debt to pay a dividend to the
company is planning to use to pay it off. CAPITAL PUNISHMENT Monte dei Paschi di new owners.
Siena board members convene on Tuesday to
COMING TO TERMS Banks have until SIGNûOFFûONûTHEû)TALIANûBANK SûLATESTûPLANûTOûlLLû LAST WEEK IN NUMBERS
Thursday to participate in a €1.3bn a €2.5bn shortfall in its capital. It comes just
leveraged loan being taken out to fund The three-and-a-half years after the Italian €55bn – Final demand for Spain’s €10bn
#ARLYLEû'ROUP SûACQUISITIONûOFû&LENDER û4HEû government had to bail out the bank after bond sale after more than half the orders
business, which makes gears and couplings THEûIDENTIlCATIONûOFûAûSIMILARûSHORTFALL û dropped out
for cranes, ships and wind turbines, is being UniCredit is considering buying its smaller 23 – Banks on the latest leveraged loan
spun off from Siemens. Banks have added a rival in a move that has divided management. from Ineos, the largest syndicate in the
green tinge to the loan in recent days, space in two years
SETTINGûITûUPûTOûBEûTHEûLARGESTû%3'
LINKEDû SMOKE SIGNALS Chinese e-cigarette maker 7% – Coupon on Oman’s 30-year bond
syndicated Term Loan B ever. RLX Technology continues bookbuilding on sale, a signal of investors’ concern about
its US$1.5bn NYSE IPO. Founded in 2018, the the sovereign
MAKING SURE The European Union is set to Beijing-based company has doubled
LAUNCHûTHEûlRSTûBONDûSALEûOFûTHEûYEARûUNDERû revenues over the past year. The deal
its support to mitigate unemployment risks followed the IPO of rival Smoore
in an emergency – or SURE – programme, a International in July, whose shares have
RISENûSIXFOLDûSINCEûTHEN û0ROCEEDSûWILLûFUNDû

18 International Financing Review January 16 2021

People

&Markets

US sows confusion with China blacklist

The Trump administration has added MESS vûSAIDûONEû7ASHINGTON û$#
BASEDû instruments, meaning, theoretically, that
another nine companies, including LAWYER ûh4HEûEXECUTIVEûORDERûMAKESûCLEARû banks could still be able to underwrite share
smartphone maker XIAOMI, to a blacklist that that US investors cannot purchase the or bond offerings.
blocks US investment in companies with securities of companies that appear on the
alleged links to the Chinese military, adding blacklist but for investment banks that act Several sources said this was likely to be
TOûAûSCRAMBLEûBYû53ûBANKSûANDûOTHERûlNANCEû as the intermediaries, a lot of this will challenging as they would be unable to market
lRMSûTOûMAKEûSENSEûOFûRESTRICTIONSûTHATû DEPENDûONûGUIDANCEûFROMû/&!#û;THEû/FlCEû the securities to US investors and would also be
came into force last week. OFû&OREIGNû!SSETSû#ONTROL= ûWHICHûSOûFARûHASû prohibited from taking risk on their balance
NOTûBEENûFORTHCOMING v sheet, preventing them from carrying out
4HEûBANûBUILDSûONûANûEXECUTIVEûORDERûISSUEDû STABILISATIONûFOLLOWINGûANû)0/ ûFORûEXAMPLE
by US President Donald Trump in November Xiaomi’s Hong Kong-listed shares slumped
that prohibits US investors from purchasing the 10% on Friday and its US dollar bonds due One precedent is MEGVII TECHNOLOGY, which
securities of companies designated by the 2030 widened 40bp as traders reacted to the was one of eight companies placed on a
Department of Defense as owned or controlled surprise move. While analysts saw little separate blacklist by the US Department of
by the Chinese military. Once a company is immediate impact on the company’s Commerce in October 2019 over its alleged
added to the list, US investors will be banned operations, they are concerned that Xiaomi involvement in human rights violations related
from dealing in its securities after 60 days and will face further restrictions, as has been the to China’s clampdown on Muslim Uighurs.
HAVEû ûDAYSûTOûDIVESTûTHEIRûEXPOSURE û case with telecoms peer Huawei.
The facial recognition company’s
4HEûBANûONûTHEûlRSTû ûCOMPANIESûTOûBEû PLUGGING HOLES US$500m–$1bn Hong Kong IPO, which was
blacklisted came into effect on January 11, The White House was busy last week set to be sponsored by three US banks –
with bankers and lawyers still struggling to plugging holes created by the original #ITIGROUP û'OLDMANûANDû*0û-ORGANûnûWASû
get to grips with the implications of the EXECUTIVEûORDER û4RUMPûISSUEDûAûNEWû subsequently shelved. It has since kicked off
EXECUTIVEûORDER EXECUTIVEûORDERûTHATûFORCESû53ûINVESTORSûTOû ANû!
SHAREû)0/ûTUTORIALûWITHû#ITICû3ECURITIESû
completely divest their holdings in the 31 ahead of a listing on Shanghai’s Star board.
4HISûDIFlCULTYûWASûILLUSTRATEDûBYûTHEû companies that appeared on the original
ANNOUNCEMENTûFROMû'OLDMANû3ACHS û*0û blacklist by November 11 2021. One crumb of comfort for US banks is that
Morgan and Morgan Stanley on January 10 ALIBABA GROUP HOLDING, BAIDU and TENCENT
that they would delist 500 Hong Kong-listed 4HEûWORDINGûOFû.OVEMBER SûEXECUTIVEû HOLDINGS were not added to the blacklist
structured products linked to three sanctioned order appeared to suggest that investors after Treasury Secretary Steve Mnuchin,
companies – CHINA MOBILE, CHINA TELECOM and who owned such securities before January who is viewed as more dovish towards China
CHINA UNICOM (HONG KONG) – as well as the Hang 11 2021 could continue to hold them than other members of Trump’s inner circle,
3ENGû)NDEX ûOFûWHICHûTHEûTHREEû#HINESEû INDElNITELYûPROVIDEDûTHEYûDIDûNOTûMAKEûANYû had pushed back against those plans,
telecoms companies are constituents. trades after the November 11 deadline. Reuters reported.

Citigroup took a slightly different tack as The implications for US investment banks But the decision to add Xiaomi will come as
it opted not to delist its structured products. AREûSTILLûUNCLEAR û4HEûEXECUTIVEûORDERûONLYû a blow to US banks. Last month, the Chinese
!CCORDINGûTOûAûSOURCE ûTHISûISûBECAUSEûITSû prohibits transactions involving blacklisted smartphone maker raised US$3.9bn from a
Hong Kong-listed structured products are COMPANIES ûWHICHûISûDElNEDûASûTHEûPURCHASEû top-up placement and convertible bond.
issued by a European entity. ORûSALEûOFûSECURITIESûANDûOTHERûlNANCIALû 'OLDMAN û*0û-ORGANûANDû-ORGANû3TANLEYûWEREû
joint bookrunners alongside Credit Suisse.
“This whole thing has been a bit of a
Thomas Blott

UBS aims to double China IB staff

UBS aims to double staff at its investment and other support staff – and aims to double 1,300, UBS will continue to make “strategic
BANKINGûBUSINESSûINû#HINAûINûTHREEûTOûlVEû that number. HIRINGSv û1IANûSAID
years to capture growth opportunities
unleashed by capital market reforms, a “No global investor can ignore China. If 'LOBALûBANKSûANDûASSETûMANAGERSûINCLUDINGû
SENIORûEXECUTIVEûSAID you don’t invest in China, you would UBS, JP Morgan and BlackRock ramped up
UNDERPERFORMûTHOSEûWHOûDO vûHEûSAIDûINûANû investment in China as the country opened
Eugene Qian, chairman of UBS’s China interview on the sidelines of the UBS UPûITSûlNANCIALûSECTORûLASTûYEARûASûPARTûOFûAû
brokerage venture, said there is a price to 'REATERû#HINAû#ONFERENCEûINû3HANGHAI trade deal with the US. Foreign capital is also
pay for not investing in China, describing pouring into Chinese stocks and bonds.
the Trump administration’s measures to $AVIDû#HIN û5"3 SûHEADûOFû!SIA
0ACIlCû
restrict investment toward China as investment banking, told IFR in December But in the latest move against China,
hUNNECESSARYv 2019 the Swiss bank planned to double its outgoing US President Donald Trump
overall headcount at the JV – including back banned US investment in Chinese
h!Sû#HINAûCONTINUESûTOûOPENûUPûITSûCAPITALû ANDûMIDDLEûOFlCEûROLESûnûFROMû ûOVERûTHEû companies allegedly owned or controlled by
markets, more foreign capital is coming in, NEXTûTHREEûTOûFOURûYEARS the military. Such restrictions are
MAKINGûTALENTSûINû#HINAûSCARCE vûSAIDû1IAN û hUNNECESSARYv û1IANûSAID ûADDINGûTHATûHEû
chairman of UBS Securities. In addition to investment banking, UBS EXPECTSûTHEûRELATIONSHIPûTOûIMPROVEûUNDERû
ALSOûPLANSûTOûAGGRESSIVELYûEXPANDûITSûWEALTHû President Joe Biden, though a quick reversal
The venture currently employs over 200 management and asset management of Trump’s policies is not likely.
people in investment banking, brokerage business in China. Having more than
ANDûRESEARCHûROLESûnûEXCLUDINGûBACKûOFlCEû doubled total staff there since 2015 to nearly Samuel Shen, Scott Murdoch

International Financing Review January 16 2021 19

h7EûEXPECTûINCREASINGûINmOWSûOFû.0,SûASûSUPPORTû
MEASURESûFORûBORROWERSûAREûGRADUALLYûWITHDRAWNv

SABINE BAUER, CREDIT OFFICER FOR EMEA FINANCIAL INSTITUTIONS AT FITCH RATINGS, P15

Biden signals left turn with
Gensler nomination

With US President-elect Joe Biden’s That could have a dramatic impact on lobbyists have been railing against ever
Democrat allies poised to take control of the regulations regarding corporate disclosures SINCE û'ENSLERûALSOûOVERSAWûTHEûPROSECUTIONû
53û3ENATE ûHEûISûEXPECTEDûTOûNAMEûAûSLATEûOFû on climate change related-risks, political of big banks for rigging Libor.
left-leaning nominees to head regulatory spending, capital requirements, lending,
AGENCIESûnûINCLUDINGûTAPPINGû'ARYû'ENSLERûTOû investor protections and shareholder rights. His CFTC tenure is probably the best
HEADûTHEû3ECURITIESûANDû%XCHANGEû indicator of how he will perform as SEC
Commission. "IDENûWILLûPUTû'ENSLER SûNAMEûFORWARDûINû CHAIRMAN ûSAIDû!SHLEYû%BERSOLE ûAûPARTNERû
THEûNEXTûCOUPLEûOFûWEEKSûASûCHAIRMANûOFûTHEû with Bryan Cave Leighton Paisner in
Before surprise victories in two Senate SEC along with a slate of other nominees for Washington and former SEC enforcement
RACESûTHISûMONTHûINûTHEû53ûSTATEûOFû'EORGIA û other regulatory agencies. attorney.
"IDENûWASûEXPECTEDûTOûNAMEûCONSENSUSû
candidates to most posts, from members of 'ENSLERûISûAûFORMERû'OLDMANû3ACHSû “He has a Wall Street background but in
his cabinet requiring Senate approval to banker who was chair of the CFTC from no way can you view him as in the pocket of
heads of agencies like the SEC, Commodity 2009 to 2014, and has led Biden’s planning THEûBUSINESSûORûlNANCIALûLOBBY vû%BERSOLEû
Futures Trade Commission, Federal Deposit FORûlNANCIALûINDUSTRYûOVERSIGHTûDURINGûTHEû said. “You could see him making changes to
)NSURANCEû#OMMISSIONûANDû/FlCEûOFûTHEû transition. The Democrat sweep of Senate some of the recent SEC actions that
Comptroller of the Currency. races cleared a lane for Biden to push progressives have bemoaned, including an
'ENSLER SûNOMINATIONûFORWARD ûWHENûITûWASû acceleration towards corporate disclosure in
h4HEûBIGGESTûIMPACTûFROMû'EORGIAûANDûTHEû previously considered too risky. THEû%3'ûAREA h
mIPPINGûOFûTHEû3ENATEûWILLûBEûEASIERû
CONlRMATIONSûOFû"IDENûADMINISTRATIONû ESG DISCLOSURES 'ENSLER SûHISTORYûOFûIMPOSINGûREGULATIONûONû
nominees which, unlike legislation, require 'ENSLERûWASûONCEûHERALDEDûBYûPROGRESSIVEû areas that were previously unregulated or
ONLYûAûSIMPLEûMAJORITY vûSAIDû3TIFELûPOLITICALû Congressman Barney Frank – of the Dodd- underregulated may point him in the
ANALYSTû"RIANû'ARDNER ûh4HISûCOULDûMAKEûITû &RANKûREGULATORYûREFORMû!CTûnûASûhONEûOFûTHEû direction of more oversight for digital assets,
EASIERûTOûCONlRMûSOMEûPROGRESSIVESûTOû BESTûREGULATORSvûHE SûEVERûSEEN Ebersole said. “If you look at his actions to
agencies like the Environmental Protection regulate swaps when he was at the CFTC, that
!GENCY ûTHEû3%# ûANDûTHEû#ONSUMERû 5NDERû'ENSLER SûLEADERSHIP ûTHEû#&4#û might be a good analog for what could happen
&INANCIALû0ROTECTIONû"UREAU ûTOûNAMEûAûFEW v implemented swap market reforms WITHûTHEû3%# SûREGULATIONûOFûDIGITALûASSETS v
CONTAINEDûINûTHEû$ODD
&RANKû!CTûTHATûBANKû Philip Scipio

Italy’s MPS to open data room –
but needs time

Italian state-owned bank MONTE DEI PASCHI is and counted on winning more time from Credit Suisse CEO Thiam has not decided
EXPECTEDûTOûGRANTûACCESSûTOûCONlDENTIALûDATAû the ECB. whether to pursue the role.
to potential merger partners within days,
three sources familiar with the matter told To secure a lasting solution to the bank’s MPS is being advised by Mediobanca and
Reuters last week. woes, the Treasury is keen to strike a merger #REDITû3UISSEûANDûTHEYûWILLûEXPLOREûOPTIONSûINû
deal for MPS and has been focusing on light of the opening of the data room. In
The opening of the data room, which UniCredit as the ideal partner. But UniCredit addition to UniCredit, Banco BPM, BPER Banca,
marks the formal start of the Tuscan bank’s CEO Jean Pierre Mustier resigned at the end #REDITû!GRICOLEû)TALIAûANDû".,
".0û0ARIBASûWILLû
re-privatisation process, comes as Italy faces of November in a disagreement over be sounded out, two of the sources said.
a government crisis after a junior coalition STRATEGY ûANDûWILLûLEAVEûBYûMID
!PRIL
party withdrew its ministers from the Rome has been working on a package of
cabinet. UNICREDIT, a potential suitor for Last week the FT said UniCredit had measures that would ensure a deal would
Monte dei Paschi, is also in the process of approached some of Europe’s top available not harm a buyer’s capital reserves, a key
TRYINGûTOûCHOOSEûAûNEWûCHIEFûEXECUTIVE BANKERSûFORûTHEûROLE ûINCLUDINGû!NDREAû condition set by UniCredit that, according to
Orcel, Tidjane Thiam and Martin Blessing. a fourth source familiar with the matter,
MPS has unveiled an up to €2.5bn The board has been sounding out candidates would also apply to any other bank.
(US$3bn) capital shortfall and is due to ANDûWILLûMAKEûAûDECISIONûWITHINûTHEûNEXTû
PRESENTûAûPLANûTOûlLLûITûTOûTHEû%UROPEANû four weeks, the newspaper said. But the main hurdle to a sale is about
Central Bank by the end of the month. €10bn in damage claims facing MPS after
Orcel, the former head of UBS’s decades of mismanagement. The
While the Treasury presses on with efforts investment bank, is one of the frontrunners, &ONDAZIONEû-03ûINû*ULYûlLEDûõ BNûINûEXTRA

to meet pledges made to Brussels when it BUTûHEûWOULDûPROBABLYûlRSTûHAVEûTOû judicial claims against the bank, which the
rescued MPS in 2017, the people said, Rome disentangle himself from a €112m lawsuit Treasury is hoping could be dropped as part
would only be able to present a broad against Santander, the FT said, citing people of a settlement deal.
outline of planned measures for the bank familiar with the process. It said former Giuseppe Fonte, Valentina Za

20 International Financing Review January 16 2021

People

&Markets

Dwin launches US social impact
investment firm Lafayette Square

Private debt specialist Damien Dwin demand imbalance for affordable housing h7EûNEEDûTOûESTABLISHûAûSIGNIlCANTLYû
LAUNCHEDûSOCIALûIMPACTûINVESTMENTûlRMû and small business lending in the US that is larger cohort of middle-market
LAFAYETTE SQUARE HOLDING COMPANY to address most acute in communities that have entrepreneurs in the black community.
social inequality in the US, backed by TRADITIONALLYûBEENûNEGLECTEDûBYûlSCALûANDû We want to inspire and capitalise the
53 MûOFûlNANCINGûFROMû-ORGANû3TANLEY monetary policy and are trapped in cycles of NEXTûGENERATIONûOFûFEMALEûANDûPERSONSûOFû
poverty. COLOURûLEADERSûWITHINûASSETûMANAGEMENT vû
4HEûlRM ûWHICHûISûMOSTLYûOWNEDûBYûITSû Dwin said.
employees, will provide capital and services Lafayette will invest in real estate for
INûHOUSINGûANDûlNANCIALûINCLUSIONûFORû affordable housing and provide credit funds “We need to establish a
disadvantaged communities across the US, that focus on mid-market businesses with significantly larger cohort of
ANDûWILLûPROMOTEûDIVERSITYûINûlNANCIALû Ebitda of less than US$100m to SMEs with middle-market entrepreneurs in
SERVICESûBYûlNANCINGûFEMALEûENTREPRENEURSû hundreds of thousands of dollars of revenue, the black community”
and those from minority backgrounds. to create regional and local jobs and also
provide services to portfolio companies and Employees own more than 90% of
“Solving affordable housing and employees. Lafayette’s equity, along with the Capricorn
unemployment issues in the black community )NVESTMENTû'ROUP Sû3USTAINABLEû)NVESTORSû
ISûKEYûFORû!MERICA vûSAIDû$WIN ûAûBLACKû 3TRONGûUNSATISlEDûDEMANDûFORûCAPITALûISû Fund and Schusterman Family Investments.
!MERICANûBUSINESSMANûANDûVETERANûINVESTOR making socially oriented private debt an
attractive and low-risk proposition as it is Dwin has 23 years of investment
“Credit is the largest asset possible to maintain conservative EXPERIENCEûANDûHEADEDû.ORTHû!MERICANû
class and we believe it to be underwriting standards due to high levels of special opportunities at Credit Suisse before
the most impactful asset class DEALmOW û$WINûSAID û becoming co-founder and co-CEO of
for supporting underserved "RIGHTWOODû#APITALû!DVISORS ûWHICHû
communities” “Credit is the largest asset class and we provides debt and minority equity to US
believe it to be the most impactful asset companies.
The economic fallout of Covid-19 and class for supporting underserved
social justice movement of 2020 sparked by communities. Credit is a critical tool in the “We are committed to supporting
THEûDEATHûOFû'EORGEû&LOYDûINûTHEû53ûISûMAKINGû IMPACTûINVESTINGûCONVERSATION vû$WINûSAID inclusion and diversity in underserved
a case for a more inclusive and sustainable communities, and we have strong
investment model, according to Dwin, who ,AFAYETTEûISûSEEKINGûTOûlNANCEû conviction in Lafayette Square’s innovative
FOUNDEDû,AFAYETTEûINû û4HEûlRMûEXPECTSû entrepreneurs that have previously been APPROACHûTOûENACTûMEANINGFULûCHANGE vûSAIDû
TOûEXPANDûTOû ûEMPLOYEESûBYû OVERLOOKEDûBYûPRIVATEûEQUITYûlRMS û Thomas R. Nides, vice-chairman of Morgan
primarily those run by women and Stanley.
!ûGENERALûSHORTAGEûOFûCAPITALûINûTHEû minorities who have lacked access to Tessa Walsh
middle market has created a huge supply/ capital, which will also create a more diverse
POOLûOFûTALENTûINûlNANCIALûSERVICESûINûTHEû
future.

Thailand paves way for insurance capital bonds

Thai insurance companies have a new way can sell subordinated insurance capital Commission must be obtained before an
of meeting their capital requirements after bonds, with the rules taking effect on application is made to the SEC.
the government cleared the way for them to January 8.
issue subordinated bonds that will qualify as The SEC said the regulations on the
Tier 1 or Tier 2 capital. Under the terms, only life and non-life insurance capital bonds are in line with
insurance companies incorporated in guidelines for subordinated bonds used by
h!NûOFFERûFORûSALEûOFûINSURANCEûBONDSûWILLû Thailand can offer such bonds, which means commercial banks to meet regulatory
provide insurance companies with more that branches of foreign insurers are capital requirements under the Basel III
FUNDRAISINGûCHOICESûTOûBUILDûTHEIRûlNANCIALû EXCLUDED û4HEûBONDSûMUSTûBEûSOLDûVIAûPRIVATEû framework.
stability in line with regulatory capital placements to institutional investors or to a
requirements,” said a spokeswoman from group of up to 10 high-net-worth investors. Thai insurance companies have always
4HAILAND Sû3ECURITIESûANDû%XCHANGEû relied on equity markets or organic growth
Commission. !û"AKERûANDû-C+ENZIEûREPORTûALSOûLISTEDû to boost their capital funds and none have
other terms to be met – the bonds have to be ever issued subordinated bonds that qualify
!TûLEASTûTWOûINSURANCEûCOMPANIES û denominated in baht and must not have any as Tier 1 or 2 capital.
including one life insurer, are in talks with embedded derivative features other than a
the SEC on possible issuance, said the call option. The loss-absorbing features may But conditions have become unfavourable
spokeswoman. either be a conversion of the notes into in equity markets roiled by the Covid-19
shares or a writedown. crisis, while the pandemic has also raised
The regulatory agency this month issued concerns over the effect on Thai insurers’
RULESûTHATûFORûTHEûlRSTûTIMEûSPELLEDûOUTûTHEû !PPROVALSûFROMûANûISSUER SûBOARDûOFû capital positions.
conditions and terms under which insurers DIRECTORSûANDû4HAILAND Sû/FlCEûOFû)NSURANCEû Kit Yin Boey

International Financing Review January 16 2021 21

h!Sû#HINAûCONTINUESûTOûOPENûUPûITSûCAPITALûMARKETS ûMOREû
FOREIGNûCAPITALûISûCOMINGûIN ûMAKINGûTALENTSûINû#HINAûSCARCEv

UBS CHINA BROKERAGE CHAIRMAN EUGENE QIAN, P19

Transparency rules for yen bonds take effect

New rules requiring Japanese bond from this month on deals of over ¥10bn issuers separately in order to keep their
underwriters to share investor information 53 M ûEXCLUDINGûMUNICIPALûBONDS EXCLUSIVEûORDERSûSECRET
with their issuer clients went into effect in
THEûYENûBONDûMARKETûWITHûTHEûlRSTûNEWû New issues from Development Bank of “This method will probably become
issues of the year on January 8. *APANûANDû*APANû(OUSINGû&INANCEû!GENCYû COMMON vûONEûSOURCEûTOLDû$EAL7ATCH û)&2 Sû
WEREûTHEûlRSTûTOûADOPTûTHEûNEWûRULES Japanese language sister publication. “If
Both issuers and investors said they were investor information is shared among lead
happy with the new system, which In both cases, underwriters shared more managers, that would make no difference
represents a marked departure from detailed investor information than required FROMûTHEûPOTûMETHOD v
standard practice in the Japanese primary under the new rules as the issuers wanted
market. more information before making a pricing The rules were introduced following calls
decision. Underwriters must compile from issuers for more transparency.
4HEûIMPACTûONûEXECUTIONûWASûMUTED û investors’ names and their investment
Pricing levels were not directly affected, and ACTIVITYûDURINGûTHEûMARKETINGûPERIODûANDûlLEû Individual investor information is not
market participants said the real test would a report to an issuer after marketing is typically shared with issuers in the Japanese
be whether underwriters are set up to cope completed, but the lead managers on both domestic market and underwriting
with the additional workload in a busier deals reported this information for each syndicates favour the retention method,
period for bond issuance. business day of the marketing period. In where each underwriter is responsible for
addition, all investor names were shared, placing a pre-determined amount of bonds
4HEûRULES ûlNALISEDûBYûTHEû*APANû3ECURITIESû not just investors buying ¥1bn or more as ANDûDOESûNOTûSHAREûINFORMATIONûONûTHEûlNALû
$EALERSû!SSOCIATIONûINû.OVEMBER ûREQUIREû required under the rules. buyers with other syndicate members.
underwriters to share investors’ names and
order sizes with issuers, both for deals run Furthermore, while lead managers are While the new rules will improve
under the pot method and the traditional allowed to appoint a documentation transparency, they do not require the same
retention method – which remains popular manager to compile the information and level of information disclosure as bond
in Japan’s domestic market. Full enforcement then make a report to the issuer, the offerings under the pot method, which has
will start in July, but the rules are in force underwriters on these deals reported to the been the international standard for 20 years.
Takahiro Okamoto

Deutsche settles with US prosecutors
in bribery case

DEUTSCHE BANK will pay nearly US$125m to !LMOSTûALLûOFûTHEûPAYOUTûRELATESûTOû scheme to conceal payments to so-called
avoid US prosecution on charges it charges Deutsche violated the federal consultants worldwide who served as
engaged in foreign bribery schemes and &OREIGNû#ORRUPTû0RACTICESû!CTûOVERûITSû CONDUITSûFORûBRIBESûTOûFOREIGNûOFlCIALSûANDû
manipulated precious metals markets, DEALINGSûINû3AUDIû!RABIA û!BUû$HABI û OTHERS vûINûORDERûTOûWINûANDûRETAINû
THEûLATESTûBLOWûFORûTHEû'ERMANûBANKûASûITû China and Italy, court papers show. Nearly lucrative business projects, acting US
tries to rebound from a series of scandals. TWO
THIRDSûOFûTHEûPAYOUTûISûAûCRIMINALûlNE û !TTORNEYû3ETHû$U#HARMEûINû"ROOKLYNûSAID

Deutsche agreed to the payout as it !MONGûTHEûALLEGATIONS ûTHEû3%#û !ûBANKûSPOKESMANûSAIDûITûTOOKû
entered a three-year deferred accused Deutsche of making improper responsibility for its past actions, which
prosecution agreement with the US payments to a consultant to help occurred from 2008 to 2017, and had
Department of Justice, and a related civil establish a clean energy investment fund made thorough internal investigations
settlement with the US Securities and with a Chinese government entity. and fully cooperated with authorities.
%XCHANGEû#OMMISSION Thomas Blott
“Deutsche Bank engaged in a criminal

Please contact us if you have
information about job moves at
your firm or within the market

Call +44 7990 565 436
or email [email protected]

22 International Financing Review January 16 2021

BONDS

SSAR 25 Corporates 29 FIG 33 Covered Bonds 36 High-Yield 37 Structured Finance 40

„ FRONT STORY CORPORATES

Building on a buoyant market

Real estate issuance gathers pace in accommodating euro primary market

Real estate issuers have rapidly exploited “Property is something we have become French investor and developer ICADE
the strong conditions in the European more cautious about,” said one fund (BBB+), which combines exposure to both
primary market at the start of 2021, having manager. “Not only are they likely to face OFlCEûANDûHEALTHCAREûPROPERTIES ûRAISEDû
already raised €6.85bn, and a number of headwinds because of possible rising €600m of 10-year funding at a spread of
borrowers last week demonstrated the interest rates but, maybe more 85bp, representing a negative new issue
strength of investor demand for new paper, SIGNIlCANTLY ûTHEREûMIGHTûNEEDûTOûBEûLARGEû premium of 5bp.
especially from those sectors most insulated adjustments post-Covid for those that
from the pandemic. concentrate on commercial or retail.” The borrower had taken the decision to
come to market in order to use the
"YûTHEûTIMEûTHATûlVEûlRMSûHADûTAPPEDûTHEû A second investor echoed these favourable market environment to help
MARKETûLASTûWEEK ûWITHûlVEûTRANCHESû thoughts. manage upcoming maturities, using the
totalling €2.85bn, real estate issuers NEWûFUNDSûTOûPARTIALLYûlNANCEûTHEûEARLYû
accounted for some 25% of all the euro “Post-Covid, the world of property is repayment of bonds due in 2022.
corporate new issues seen this year, something we are thinking a lot about
according to IFR data. BECAUSE ûLET SûSAYûYOUûOWNûOFlCES û7ELL ûIFû FINNISH FIRSTS
working habits change, you might have a Two Nordic property companies last week
“It’s been relatively busy. I don’t think it is lot of capex coming up if you need to alter issued bonds through Finnish subsidiaries
anything that calculated, but conditions are your properties to turn them into FORûTHEûlRSTûTIME ûMAKINGûTHEIRûBONDSû
very good and I think some issuers were communal workspaces rather than ones eligible for the ECB’s asset purchase
looking at Q4 last year but then for various rented by single companies,” he said. programmes.
reasons around documentation had to wait,”
said one syndicate banker. 4HISûVIEWûWILLûPROBABLYûBENElTûTHOSEû “In this market I think it is fair to say that
issuers that focus on residential property, WEûHAVEûSEENûAûDElNITEûBENElTûTOûISSUINGû
Several other bankers agreed that while ORûATûLEASTûHAVEûDIVERSIlEDûPORTFOLIOS eligible bonds and it wouldn’t be surprising
there was unlikely to be one all for issuers to be taking advantage of that,”
encompassing reason why property sector German residential property player said a third banker.
issuers have been so active at the start of the AROUNDTOWN (BBB+) pushed its €600m
year, the clear appetite on the buyside for perpetual non-call July 2026 hybrid note The Finnish subsidiary of Swedish social
new deals, combined with impending (BBB–) well inside the average 200bp sub/ property investor Hemso Fastighets, HEMSO
blackouts towards the end of January, have SENIORûPREMIUM û!TûAûlNALûYIELDûOFû û TREASURY (A–/A), came to the market last
compressed a large amount of supply into a 50bp inside IPTs, the bond came roughly Tuesday to grab what a lead described as an
relatively slim number of market days. 165bp back of its senior curve. It had a opportunistic €500m, with a no-grow eight-
€600m 1.5% May 2026 bond bid at 0.34%. YEARûLAUNCHEDûATûAûSPREADûOFû BP û4HEûlNALû
Tying together all the names that tapped book was €1.6bn.
the market last week is their focus on Pricing was also aggressive relative to fair
sectors that have not been heavily impacted value, with bankers on the deal saying it Hemso has a natural need for the
by the Covid-19 pandemic. LOGICOR (BBB), came with a negative concession of 12.5bp. currency, given it has operations in both
ONEûOFûTHEûBUSINESSESûTHATûHASûBENElTEDû Finland and Germany.
from the lockdowns as it owns and manages LOGICOR SWAP SPREAD PERFORMANCE
logistics assets, received a solid response to €600m 3.25% NOVEMBER 2028 BALDER FINLAND (BBB), the Finnish subsidiary
its latest deal. of Swedish residential property company
bp Fastighets AB Balder, issued a €500m eight-
“It is one of those prime examples of an 450 year note at mid-swaps plus 133bp, after leads
issuer that makes sense right now. Given cut the spread from IPTs of the 165bp area.
everyone is locked away, logistics, 400
warehouses, that type of thing is very Although the book peaked at €1.65bn,
important and there is a good story there,” 350 orders did fall as the spread was ratcheted
said a second banker. IN û4HEûlNALûBOOKûSTOODûATûõ BN
300
The issuer was able to lure a chunky book More issuers from the real estate sector are
in excess of €3.1bn to its €650m 10-year 250 lining up to get deals done. S IMMO looks set to test
NOTE û$EMANDûWASûSUCHûTHATûLEADSûCOULDûlXû demand for unrated paper, having announced
the spread at a deeply negative concession 200 the mandate for a green euro seven-year sub-
of as much as 15bp, according to some benchmark sole led by Erste Group Bank.
estimates, with the deal pricing at 120bp 150
versus swaps. !CROSSûSECTORS ûTHEûDEALûWILLûMARKûTHEûlRSTû
100 euro unrated corporate of 2021 to issue in the
Investors are becoming increasingly primary market. The company invests in and
sensitive to the areas in which real estate 50 develops residential and commercial real
companies are active. estate in Austria, Germany and CEE countries.
0 Ed Clark

Source: Refinitiv
1/1/20
1/2/20
1/3/20
1/4/20
1/5/20
1/6/20
1/7/20
1/8/20
1/9/20
1/10/20
1/11/20
1/12/20
1/1/21

International Financing Review January 16 2021 23

Euphoric euro mood fades WEEK IN NUMBERS

as week wears on 1.18%

Fatigue and push-back creeping in as market looks to settle „ THE YIELD THAT 10-YEAR TREASURIES
PEAKED AT LAST WEEK AS THE SELL-OFF
,ASTû7EDNESDAYûMARKEDûAûDISTINCTûSHIFTûINû PUSHING THE BOUNDARIES IN RATES CONTINUED BEFORE REVERSING
sentiment for the euro SSA market as the There has been uncharacteristically small BACK TO 1.08% AND THEN BACK UP TO
collapse in demand for SPAIN’s 10-year deal new issue concessions for the start of a new 1.10% AFTER NEWS THAT JOE BIDEN IS
signalled an end to the ebullient mood that year as issuers look to push prices in, PLANNING A US$2trn STIMULUS AND
DOMINATEDûTHEûlRSTûHALFûOFûTHEûWEEK û according to a third banker. THOUGHTS TURN TO FED TAPERING

On another busy day of issuance in the h7EûHAVEûSEENûSOMEûISSUERSûREALLYûTRYû % Closing levels
single currency, Spain lost €75bn of and push the price, Council of Europe 1.20
demand after tightening by 4bp and one springs to mind, having managed to print 1.15 1/12/2020
DEALûFAILEDûTOûCROSSûTHEûlNISHINGûLINE ûWITHû so far through secondaries,” he said. 1.10 3/12/2020
books for L-BANK’s €1bn 10-year reaching 1.05 7/12/2020
€800m at the last update. The deal priced The COUNCIL OF EUROPE DEVELOPMENT BANK 1.00 9/12/2020
at the wide end of the less 6bp–7bp priced a no-grow €1bn 10-year note on 0.95 11/12/2020
guidance, a level deemed highly aggressive Tuesday, 5bp–6bp through its own 0.90 15/12/2020
by bankers. secondary curve, providing the best 17/12/2020
example of the recent trend of the primary 0.85 21/12/2020
“If it’s marginal or if you push a little bit market repricing secondaries, according to 23/12/2020
too hard, it’s amazing how quick things a lead. 28/12/2020
can turn around,” said a DCM banker. 30/12/2020
“If it’s marginal or if you push a
After a strong run of tightening little bit too hard, it’s amazing 4/1/2021
accompanied by heavily oversubscribed how quick things can turn 6/1/2021
DEALS ûTHEûTRADESûWEREûTHEûlRSTûREALûSIGNSûOFû around” 8/1/2021
possible fatigue in the market. 12/1/2021
“Not only is it a fantastic result given 14/1/2021
“I think there is a sense there has been a where EFSF just priced and where EIB
lot of supply and the market is just trying priced last week, it’s massively through €75bn
to settle down and assess where it is,” said those but it’s also massively through their
a syndicate banker. own secondary,” he said. „ THE AMOUNT OF ORDERS THAT SPAIN
LOST FROM THE PEAK FOR ITS €10bn
“I don’t think anything has gone really The recent 10-year trades from the EFSF 10-YEAR BOND ON WEDNESDAY. THE
badly, I just think the market is trying see and EIB both priced at less 11bp, tightening DEAL STILL MANAGED TO END WITH
where the new reference levels really do by 2bp from guidance. They were quoted €55bn OF DEMAND SO WAS
SETTLEûDOWN û7E VEûHADûSOMEûBIGûMOVESû on Tuesday afternoon bid around less 15bp COMFORTABLY SUBSCRIBED
and the Street has built up a bit of and 18bp, respectively, according to
inventory and probably needs the ECB to Tradeweb. 38%
suck some of that out before we can reload
again.” h)T SûBONKERS ûJUSTûBONKERS vûSAIDûTHEûlRSTû „ THE SIZE OF THE FED’S BALANCE SHEET
banker. “The secondary markets aren’t AS A PERCENTAGE OF GDP AT THE END OF
Deals are still working well at the right really relevant, everything is pricing off the 2021 AS FORECAST BY BANK OF AMERICA.
levels, with the WORLD BANK successfully primary market but with some of these IT IS CURRENTLY 34%
bringing its longest euro deal, a €2bn 40- deals, it’s just bonkers books. People just
year sustainable development bond that need paper.” Central banks' balance sheets as % of GDP
attracted demand in excess of €3.6bn 150
(€125m JLM) The KINGDOM OF BELGIUM kept up its run of
bringing a 10-year transaction every 120
h)TûLOOKEDûLIKEûAûSTANDARDûlVEûORû
YEARû January, attracting €50bn (€3.2bn JLM) in
trade,” said Andrea Dore, head of funding orders for last Tuesday’s €6bn deal and 90
ATûTHEû7ORLDû"ANK ûh4HEûDEPTHûOFûTHEû setting a new record for a 10-year
investor base for 40-years, with over 110 syndicated OLO. 60
accounts in the book despite the fact that
interest rates are still very low, was an RENTENBANK increased the size of its long 30
amazing response. seven-year due to keen levels of interest
and SNCF found it easy when it ventured 0
“One of our strategies is to extend further out the curve with a 40-year Fed ECB BoE BoJ RBA
duration, and you also have some investors offering.
who are naturally looking for duration 2020 year end 2021 year end forecast
given the deep negative rate environment On Monday, CPPIB CAPITAL’s €1bn 10-year
in euros, so it’s a win-win situation for smashed the issuer’s record for demand in Source: Bank of America
ourselves and the investor.” any currency, which had stood at over
õ BN ûWITHûTHEûlNALûORDERûBOOKûCLOSINGû €400m
On the same day, DEXIA CREDIT LOCAL’s above €8.1bn, excluding lead orders.
€1.5bn January 2028 note was more than David Cheetham „ THE SIZE OF AN AT1 FROM ITALY’S
four times subscribed, while BNG and the BANCO BPM, THE LOW END OF THE
state of BERLIN received solid responses for €400m TO €500m RANGE WITH PRICING
10-year deals. COMING IN LINE WITH IPTs, AT 6.5%,
IN A SIGN THAT DEAL-MAKING ISN’T
STRAIGHTFORWARD

24 International Financing Review January 16 2021

BONDS SSAR

SSAR “Historically, 10-year is a maturity that’s not MUNICIPALITY FINANCE targeted a similar part
been on the table consistently in dollars, of the curve with its March 2026 Reg S/144A
US DOLLARS especially for the most cost-conscious issuers, paper, raising US$1.5bn on books in excess
the economics don’t always work. But here they of US$3.1bn, excluding lead orders. Demand
CADES 10-YEAR TIES DOLLAR RECORD have the opportunity to beat their euro levels.” grew from IoIs of US$1.8bn.

Three European names ventured into US The spread was set at mid-swaps plus The deal was priced at plus 8bp,
dollars last Tuesday, with CADES matching 23bp, 3bp inside IPTs, via Bank of America, tightening by 2bp from IPTs via Bank of
the record deal size by a European agency HSBC, JP Morgan and Societe Generale. 4HEûlNALû America, Goldman Sachs, JP Morgan and TD.
for a 10-year in the currency and KFW spread offered 2bp new-issue concession,
BRINGINGûAû53 BNûlVE
YEARûDEALûONûWHATû according to the lead, who noted it priced Even though supply has picked up, the
was the busiest day so far in 2021 for the through the issuer’s euro curve. pipeline is still not as busy as expected,
market. according to a third banker.
7HENû)04SûWEREûANNOUNCEDûONû-ONDAY û
There had not been much European the level was already equivalent to roughly ALL INTERNATIONAL GREEN BONDS
SUPPLYûINûDOLLARSûINûTHEûlRSTûWEEKûOFûTHEû 2bp inside Cades’ November 2030 euro BOOKRUNNERS: 1/1/2021 TO DATE
year, with central bank policies meaning paper, according to IFR calculations.
levels are more attractive for many in euros, Managing No of Total Share
according to a senior DCM banker, who bank or group issues US$(m) (%)
noted that the European Investment Bank’s
March 2026 paper the previous week came REPEAT FIVE-YEAR 1 Bank of America 7 1,480.71 16.4
at a level which was around 3bp wider than +F7 Sû53 BNû*ANUARYû û'LOBALûNOTEûWASû 2 Deutsche Bank 5 1,119.72 12.4
the issuer’s equivalent note in euros. THEûFOURTHûTIMEûINûTHEûLASTûlVEûOUTINGSûATû 3 BMO 1 994.73 11.0
this maturity the issuer has raised US$5bn, 4 TD Securities 1 994.73 11.0
“The ECB might not have a direct impact on once more matching the largest deal size for 5 Credit Agricole 5 443.22 4.9
dollars but it does have an indirect impact,” he AûlVE
YEARûINû53ûDOLLARSûBYûTHEûISSUER 6 BNP Paribas 5 334.87 3.7
said. “For European issuers that are in the 7 JP Morgan 5 330.79 3.7
scope of the ECB, levels in dollars are not that The trade was priced at plus 3bp, 2bp 8 HSBC 6 286.63 3.2
great, so they tap the market less.” inside guidance and also 2bp tighter than 9 Credit Suisse 4 286.46 3.2
where EIB’s US$5bn March 2026 came the 10 Citigroup 4 283.13 3.1
Cades’ US$5bn January 2031 Reg S/144A previous week. 12 9,024.70
3(c)(7) social bond was comfortably covered, Total
WITHûlNALûBOOKSûCLOSINGûOVERû53 BN û 4HEûlNALûUPDATEûFROMûBOOKRUNNERS BMO,
including US$200m of lead manager Citigroup and Morgan Stanley had demand in Excludes social bonds and mixed use of proceeds. SDC code: JG1
interest. There were over 130 investors in excess of US$9.1bn, excluding lead orders. Source: Refinitiv
the book, 40% of which comprised ESG
investors. ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
The agency’s decision to move further out
along the curve made the funding costs Managing No of Total Share Managing No of Total Share
more attractive in US dollars relative to bank or group issues US$(m) (%) bank or group issues €(m) (%)
euros, according to a lead.
1 JP Morgan 73 19,743.72 7.6 1 Barclays 20 8,874.10 9.0
“Ten-year US dollar is offering better 2 Deutsche Bank 54 17,579.09 6.7
value than euros, so it makes sense for them 3 Barclays 48 15,933.69 6.1 2 Deutsche Bank 19 8,011.81 8.2
to look at that maturity and they’re keen to 4 HSBC 52 15,838.34 6.1
take advantage of that. Also, the euro 5 Bank of America 53 15,168.44 5.8 3 BNP Paribas 26 7,874.80 8.0
market is congested, so it makes sense to 6 BNP Paribas 56 15,072.20 5.8
look at other options, “ he said. 7 Citigroup 56 14,773.72 5.7 4 JP Morgan 16 7,589.19 7.7
8 SG 21 10,845.16 4.2
9 Morgan Stanley 42 10,550.60 4.0 5 HSBC 17 7,449.91 7.6
10 Goldman Sachs 40 10,037.91 3.9
223 260,702.97 6 UniCredit 14 7,238.93 7.4
Total
7 SG 14 6,759.69 6.9

8 Natixis 11 5,047.23 5.1

9 Citigroup 13 4,660.30 4.7

10 Morgan Stanley 10 4,199.81 4.3

Total 72 98,260.13

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 JANUARY 14 2021

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Feb 20 2030 -0.399 2.16
Jan 12 2021 Austria €650m 0 Mar 20 2051 0.159 2.14
Jan 15 2052 -0.027 -
Jan 12 2021 Austria €550m 0.75 Jan 31 2028 0.176 2.75
Oct 22 2054 0.889 2.89
Jan 12 2021 Netherlands €1.885bn 0 Apr 15 2030 -1.55 1.82
Apr 15 2046 -1.48 1.9
Jan 12 2021 UK £3bn 0.125 Apr 10 2026 -0.7 1.29
Oct 18 2030 -0.012 3.02
Jan 12 2021 UK £1.25bn 1.625 Oct 12 2035 0.319 2.55
Nov 22 2065 -1.981 2.35
Jan 12 2021 Germany (€i) €330m 0.5 Jan 15 2024 -0.23 1.44
Mar 15 2028 0.3 1.43
Jan 12 2021 Germany (€i) €113m 0.1 Sep 1 2051 1.47 1.37

Jan 13 2021 Germany €4.0658bn 0

Jan 13 2021 Portugal €500m 0.475

Jan 13 2021 Portugal €750m 0.9

Jan 13 2021 UK (i) £300m 0.125

Jan 14 2021 Italy €2.75bn 0

Jan 14 2021 Italy €4.5bn 0.25

Jan 14 2021 Italy €2bn 1.7

Source: IFR

International Financing Review January 16 2021 25

“I’m surprised there hasn’t been more validated a bit more before we push on, h7HILEûTHEûMARKETûISûCLEARLYûINûGOODû
dollars to be honest, but for euro-based especially looking at the euro market,” he shape, I think there is something to be said
funders it’s not that straightforward,” he said. for deals which take a safer approach
said. “There are a couple of small pieces in because if the market does turn south at
the pipeline but no one is really champing “The dollar market is a bit of a different least you’ve got the momentum behind you
ATûTHEûBIT û7EûAREûNOTûSCRAMBLINGûFORû dynamic, as you have yields going up, which and it’s just a bit more of a pragmatic
windows and trying to get on the screens we haven’t seen for 12 months, and you’ve approach to the market.”
before somebody else, like we have in got enough diverse investors involved in
previous years.” that both globally and domestically. I’m NIB’s US$1.25bn January 2026 Global note
quite happy with where the dollar market landed at mid-swaps plus 3bp, tightening by
DOLLAR MARKET ROARS ON AS EURO is, the euro market is the one that seems to 1bp from IPTs via Barclays, HSBC, JP Morgan
FALTERS have got a bit frothy.” and Nomura. Pricing offered minimal new-
issue concession, according to a lead.
A trio of issuers raised dollars last JBIC’s US$1.5bn January 2031 Global
7EDNESDAY ûWITHûAû
YEARûFROMûJBIC and PAPERûHADûAûlNALûORDERûBOOKûOFûOVERû The last update on the order book came as
lVE
YEARûDEALSûFROMûTHEûPROVINCE OF ONTARIO US$4.75bn (US$150 JLM interest). The spread the spread was set and was over US$1.7bn.
and NORDIC INVESTMENT BANK all comfortably was tightened 4bp from IPTs to land at mid-
covered. swaps plus 25bp via Barclays, Daiwa, Citigroup “NIB have got what they wanted, they’ve
and Goldman Sachs. GOTûAûTIGHTLYûPRICEDûDEALûCOMINGûmATûTOû+F7û
“I think the markets are all pretty good,” with a decent order book and they have a
said a syndicate banker, “although we do “I think JBIC is the most impressive very good real money following,” said the
seem to be approaching tights in valuation pricing I’ve seen so far this year,” said the lRSTûBANKER ûh!LLûINûALL û)ûGUESSûITûDIDûWHATûITû
here.” DCM banker. “I thought it was tight but said on the tin.”
they’ve done well, especially following on
7HILEûALLûTHREEûTRADESûWENTûWELL ûTHEREû from Cades which took everything it could The deals came the day after KFW brought a
were possible signs of a push-back for some out of the market.” US$5bn deal in the same tenor which also
SSA deals in euros, which will hopefully priced at plus 3bp.
serve as a healthy wake-up call for the Cades raised US$5bn on Tuesday with a
market, according to a DCM banker. January 2031 social bond. Final books closed AFD MATCHES RECORD SIZE IN DOLLARS
over US$10bn (US$200m JLM interest).
“There is a bit of caution as we are AGENCE FRANCAISE DE DEVELOPPEMENT matched its
reaching levels that need to probably be IMPRESSIVE FIVE-YEARS record deal size in US dollars with a well-
Ontario’s US$3.5bn January 2026 Global RECEIVEDûlVE
YEARûTRANSACTIONûONû4HURSDAYû
ALL INTERNATIONAL US$ BONDS NOTEûCAMEûWITHûAûlNALûORDERûBOOKûOVERû while the EUROPEAN INVESTMENT BANK
BOOKRUNNERS: 1/1/2021 TO DATE US$7.3bn by the last update, rising from continued its busy start to 2021 with a
US$4.5bn at IoIs and setting a new record for mOATERûINûTHEûCURRENCYûANDûAûCLIMATEû
Managing No of Total Share the largest US dollar order book for this awareness bond in Canadian dollars.
bank or group issues US$(m) (%) issuer.
AFD’s US$2bn January 2026 Reg S
1 JP Morgan 56 10,248.47 8.5 The demand for bonds was particularly benchmark attracted orders in excess of
strong from EMEA, with 54% of allocations US$3.5bn, including US$250m from leads.
2 Bank of America 42 8,941.59 7.4 going to investors in this region, followed by
those in the Americas (35%) and Asia (11%). “It’s a great outcome for AFD,” said a DCM
3 Citigroup 43 8,568.26 7.1 banker. “In the past, they have always had a
Pricing tightened by 3bp from IPTs, with LITTLEûBITûOFûDIFlCULTYûWITHûTHEûlVE
YEARû
4 Deutsche Bank 30 6,591.81 5.5 the spread set at mid-swaps plus 17bp via dollar. They’ve had some good three-year
Bank of America, Citigroup, RBC and TD. Pricing TRADESûBUTûlVE
YEARûISûSOMETHINGûTHATûHASû
5 Goldman Sachs 27 5,723.61 4.7 offered zero new-issue concession, been a bit elusive to them, but this is an
according to a lead. excellent outcome.”
6 TD Securities 13 5,458.17 4.5
“I think they got it bang on right, to get it 4HEûISSUERûHADûNOTûBROUGHTûAûlVE
YEARû
7 Morgan Stanley 32 5,398.06 4.5 at plus 17bp was a great result, but to get trade in dollars since 2015, concentrating its
there with a big book is a better result,” said efforts on shorter-dated offerings.
8 HSBC 29 5,260.65 4.4 the DCM banker.
Leads Barclays, Bank of America, BNP Paribas,
9 BNP Paribas 28 3,986.29 3.3 HSBC and JP Morgan set the spread for the
new deal at mid-swaps plus 19bp, 1bp inside
10 Credit Suisse 31 3,968.34 3.3 IPTs. Pricing offered 2bp-3bp of new issue
concession, according to a lead.
Total 115 120,650.47
“They were probably minded towards
Including Euro, foreign and global issues. Excluding equity-related debt, being a little bit more conservative on the
US Global ABS/MBS. LEVELûBECAUSEûOFûTHEûDIFlCULTIESûTHEYûHAVEûHADû
before and also they were fairly sure they
Source: Refinitiv SDC code: O1 wanted US$2bn from the outset, so it was
priced accordingly,” said the DCM banker.
ALL US DOLLAR FIXED-RATE GLOBALS ALL SOVEREIGN BONDS IN EUROS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE The deals came at the same point on the
CURVEûASû7EDNESDAY SûDOLLARûOFFERINGSûFROMû
Managing No of Total Share Managing No of Total Share NIB and Ontario and the market is starting
bank or group issues US$(m) (%) bank or group issues €(m) (%) to resemble a story of two spreads,
ACCORDINGûTOûTHEûlRSTûBANKER û
1 Deutsche Bank 4 3,995.99 14.8 1 SG 3 3,702.90 14.3
2 Citigroup 5 3,342.48 12.4 2 Morgan Stanley 2 2,930.60 11.3 “Yes, NIB managed to get an extremely
3 TD Securities 3 3,250.80 12.0 3 Barclays 2 2,325.60 9.0 TIGHTLYûPRICEDûlVE
YEARûDONEûBUTûITûCERTAINLYû
4 Goldman Sachs 5 1,964.91 7.3 4 HSBC 2 2,325.60 9.0 wasn’t a blowout,” he said.
5 Bank of America 4 1,595.14 5.9 5 UniCredit 2 2,191.69 8.5
6 Morgan Stanley 3 1,473.69 5.5 6 JP Morgan 2 2,170.65 8.4
7 Standard Chartered 3 1,408.94 5.2 7 BNP Paribas 2 1,565.65 6.0
8 JP Morgan 5 1,368.62 5.1 8 Deutsche Bank 3 1,478.16 5.7
9 Barclays 3 1,282.40 4.8 9 Citigroup 2 1,426.57 5.5
10 HSBC 3 1,184.87 4.4 10 Natixis 1 1,228.24 4.7
11 26,985.81 7 25,929.21
Total Total

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

26 International Financing Review January 16 2021

BONDS SSAR

h7HENûYOUûLOOKûATûTHEûOTHERûENDûOFûTHEû Final order books closed at more than bit of a reminder that you can’t just do any
spread spectrum, Ontario, JBIC and AFD, US$1.2bn, excluding joint lead manager trade at any level in any window alongside a
THEYûAREûALLûmYINGûOUTûTHEûDOOR û-EANINGûTHEû interest. number of other transactions.”
inevitable has come probably sooner than
we thought, where investors are saying at “It shows there is good demand at the Spain’s 10-year was priced at 4bp over the
4REASURIESûPLUSû BP û@)ûlNDûTHATûHARDûTOû short end,” said a syndicate banker. “I guess government curve, 4bp inside guidance, but
SWALLOWûBUTûIFû)ûCANûlNDûSOMETHINGûHIGHLYû there’s not too many new issue alternatives was seen around 1bp wider on Thursday.
rated that offers a better spread then that’s in the shorter maturities.” Despite the big fall in demand it still got
more attractive’.” more than €55bn of orders, while the reoffer
)NûTHEûlRSTûTWOûWEEKSûOFû ûDOLLARû yield of 0.114% was the lowest the sovereign
.)"ûRAISEDû53 BNûWITHûITSûlVE
YEARû ISSUANCEûHASûBEENûFOCUSEDûAROUNDûTHEûlVE
has achieved for a 10-year syndication.
WITHûAûlNALûBOOKûOFûMOREûTHANû53 BNûATû year to 10-year maturities, with only a WORLD
a spread of swaps plus 3bp. Ontario, on the BANKûmOATERûANDûSWEDISH EXPORT CREDIT 4HEûCHALLENGEûFORûSYNDICATESûISûlNDINGûTHEû
other hand, saw demand of more than CORPORATION targeting the short end. balance between managing a market with
US$7.3bn for a US$3.5bn trade of the same too much cash and pushing pricing too far,
maturity that came at swaps plus 17bp. SEK’s US$500m of July 2023 notes issued ASûPARADOXICALûASûTHATûSEEMS û7ITHûYIELDSûSOû
on January 8 came with no update on order low, it can quickly become a slippery slope
EIB AT THE DOUBLE book size and the spread set unchanged for a deal if it is tightened by even a basis
EIB returned to the US dollar market less from guidance at plus 5bp. point or two too much despite the
than two weeks after its previous outing, abundance of liquidity.
bringing a no-grow US$1bn January h)T SûDElNITELYûlLLEDûAûBITûOFûAûGAP vûSAIDû
2026 Reg S/144A FRN pricing at 20bp over the banker. ”Even [in] three-years there PRICING TIGHT
SOFR. HASN TûBEENûAûLOT ûTHEREûHASûBEENûlVESûANDû Despite also tightening by 4bp, there was
10s.” solid demand for AGENCE FRANCE LOCALE’s
Leads BMO, CIBC, RBC and TD tightened the €500m no-grow March 2031 paper, which
spread by 2bp from IPTs. The reoffer price .7"ûWASûONEûOFûTHEûLASTû33!ûISSUERSûTOû landed at 31bp over interpolated OATs via
was 104.025, while the coupon is SOFR plus raise dollars in 2020, bringing a US$1bn BNP Paribas, Deutsche Bank and JP Morgan.
100bp. The last update came as the spread December 2025 note offering at the end of
was set and showed demand of more than November. The last book update showed more than
US$1.5bn. €2.2bn of demand, up from €1.6bn when
The issuer has brought one other deal so pricing was revised to plus 33bp area.
The issuer also ventured into Canadian far in 2021, a £200m tap of its December
dollars with a C$1bn (US$790m) climate 2025 paper, taking the total amount “It offered 1bp concession at the end,” said
awareness bond. outstanding to £500m. a lead. “Moving 4bp is one of the biggest
moves we’ve seen this year. It’s €500m no-
Leads BMO, CIBC, National Bank Financial, EUROS grow, so a bit of a shame they couldn’t do
Scotiabank and TD set the spread at swaps less any more, but it’s a nice trade.”
8bp, 1bp inside IPTs. The order book stood at TRIO RAISES EUROS AFTER MARKET
C$1.46bnwhen the deal was launched, with RECEIVES REALITY CHECK Two German federal states added to
C$75m from leads. recent Laender supply, with RHINELAND-
A sense of calm returned to the euro SSA PALATINATE and BERLIN bringing tightly priced
“In the past it’s been just Canadian bank market last Thursday, with three borrowers deals.
orders plus maybe 10 or 15 others, but moving to raise funds a day after the most
there’s been more interest in this one,” said tumultuous session of 2021. Berlin sold a €500m no-grow two-year,
a lead. which priced unchanged from guidance at
The dramatic drop in orders for Spain’s less 7bp via Deutsche Bank and UniCredit.
4HEûPREVIOUSûWEEK ûTHEû7ORLDû"ANK Sû
YEARûLASTû7EDNESDAY ûANDûTOûAûLESSERû There was no update on order book size.
C$1.5bn January 2026 Global sustainable extent a tight L-Bank trade that was not fully
development bond landed 1bp inside IPTs at SUBSCRIBED ûWEREûTHEûlRSTûREALûSIGNSûOFû Rhineland Palatinate’s €600m January
swaps less 13bp. Books for the benchmark possible fatigue in a market that has 2031 note had up to €200m retained by the
were more than C$1.7bn at launch. enjoyed an exuberant start to the year with issuer and came with no update on order
SIGNIlCANTûSPREADûTIGHTENINGûANDûHEAVILYû book size.
h7ORLDû"ANKûCOMINGûANDûTHENûTHISû oversubscribed deals.
coming, often there isn’t enough room for Leads HSBC, LBBW, NatWest Markets and
two large issuers to come,” said the lead on “The market is a little bit heavy, I think UniCredit went out with the spread at mid-
EIB. “It’s shown there’s plenty of money to because we have seen a lot of supply,” said a swaps less 5bp, the number. Pricing offered
put to work.” syndicate banker. “It’s still an amazing start zero new-issue concession, according to a
and the quality is strong but I think lead.
NWB RAISES SHORT DOLLARS yesterday was a reality check for issuers that
you can’t get too cute or too greedy.” STERLING
The sole SSA deal on the screens last Friday
came from NWB BANK, the Dutch agency 7HILEû7EDNESDAYûWASûTHEûlRSTûDAYûOFûTHEû EIB SETS NEW SONIA INDEX RECORD
venturing into the short end of the US dollar year that was a bit trickier it should not be
curve at the end of a steady week of issuance seen as too much of a cause for concern, The EUROPEAN INVESTMENT BANK returned to
in the currency. according to a DCM banker. sterling for its second outing of 2021 in the
CURRENCY ûBRINGINGûAûSIX
YEARûmOATERûWHICHû
The spread for the US$1bn of February h7EûWEREûALWAYSûGOINGûTOûHAVEûAûBITûOFûAû at £1.5bn set a size record for a trade linked
2023 notes was set at mid-swaps plus 2bp, blip and there comes a point where there to the Sonia index.
tightening by 2bp from IPTs via BMO and was a little bit of indigestion from the
RBC. Fair value was hard to determine given amount of supply we have seen,” he said. EIB reopened the sterling SSA market at
the lack of recent comparables but pricing the start of the new year with a £1.5bn six-
offered a minimal new issue concession, “At the same time, all the trades from YEARûlXED
RATEûBENCHMARK û4HEûTRADEûWASû
according to a lead. yesterday haven’t traded particularly poorly one of six to emerge last week in sterling
today, so it’s not as if everything is falling
apart. I think it is good that we have had a

International Financing Review January 16 2021 27

Australia lags offshore 104.885, while the coupon is Sonia plus
bond surge 100bp.

„ AUSTRALIAN DOLLARS Bank drought and overseas pricing levels exacerbate “By having 100bp on the coupon it’s less
January lull   likely it will go negative,” said a second
banker, who pointed to a concern on the
The Australian bond market’s traditionally slow Corporates tend to be inactive during pre- IMPLIEDûCOSTûOFûCOUPONûmOORS ûh.OTûEVERYû
start to the calendar year, a reflection of the long results blackouts before March, while new deals issuer was comfortable with that and also a
summer holiday period Down Under, has been from the ABS sector, which is dominated by lot of issuers had to update their
exacerbated by the continuing absence of senior non-bank mortgage originators, require longer documentation.”
bank supply and competitive pricing outcomes marketing periods and so typically do not come
available in booming offshore markets. on stream before February. Book were over £1.3bn when the spread
was set but grew to end in excess of £1.8bn,
So far in 2021 there has been just one Meanwhile the Kangaroo market has been hit excluding joint lead manager interest.
transaction by a domestic issuer, an under- by the compelling pricing outcomes in deeper
the-radar A$150m (US$116m) 10-year MTN offshore markets, fuelled by the contraction in h9OUûLOSEûSOMEûCRITICALûMASSûPASTûTHEûlVE

placement from the UNIVERSITY OF MELBOURNE. cross-currency basis swap levels over the last year point, as banks tend to go up to
seven months or so. lVE
YEARûANDûMONEYûMARKETûFUNDSûWANTûTOû
Australia’s four major banks continue to steer PARKûTHEIRûCASHûINûTHREEûTOûlVE
YEAR ûSOûTOûGETû
clear of the senior market, both at home and For example, the five-year US dollar/ that amount of demand for a six-year was
abroad, following the central bank’s introduction Australian dollar cross-currency basis swap has great,” he said.
of the Term Funding Facility which now provides fallen from around 20bp in June 2020 to under
A$200bn of funding to local banks for three five, while the 10-year has dropped from over DEVELOPMENT CONTINUES
years at a fixed interest rate of just 0.10% 25bp to 14.5bp in that time. FRN issuance volumes in SSA were down
(formerly 0.25%) until June 30 2021. year-on-year in 2020, with rates lower for
The lower the basis, the less attractive it is for longer dimming the appeal, according to a
“Since the TFF was introduced last March foreign companies to issue in Australian dollars third banker.
there has been no real need for banks to access and swap back into home currencies.
the senior market, so we won’t have any repeat of h7EûSAWûTHEûINVESTORûBASEûSHIFTûAûBITûASû
the January benchmark deals from one or two of The lack of Kangaroo supply over recent well in 2020, and whereas in 2019 a lot of
the major banks we have seen in previous years,” months has boosted scarcity demand from the demand was driven by bank treasuries,
said a local syndication manager. investors looking for a pick-up over lower- in 2020 the mix was real money and central
yielding Australian government paper. banks too, who tend to be more prevalent in
Government issuance is also slowing. lXED
RATEûBOOKS v
Following last year’s glut of jumbo sovereign This strong bid helped the EUROPEAN
issues the Treasury plans only a single syndicated INVESTMENT BANK raise a hefty A$1.25bn from its "ECAUSEûOFûTHIS ûSPREADSûFORûmOATERSûDIDû
sale before June 30 via a new November 2032 6.5-year climate awareness Kangaroo bond on NOTûEXPERIENCEûTHEûSAMEûTIGHTENINGûASûlXED

benchmark, though one or more state offerings January 5, well above the indicative minimum rate deals, according to the second banker.
could be seen this month, the manager said. size of A$300m.
John Weavers h4HEûlXED
RATEûMARKETûHADûAûBITûMOREûGOINGû
for it,” he said. “Also, there’s a bigger spectrum
and issuers seem keen to tap pent-up The pricing offered zero new-issue OFûNAMESûTHATûCANûBEûBOUGHTûINûlXED
RATEûTHANû
demand. concession, according to a banker away THEREûISûINûmOATINGûANDû&2.SûTENDûTOûDOûBETTERû
from the deal’s leads, BMO, Deutsche Bank, when markets are more stable.”
“Sterling hadn’t had any supply in ages,” RBC, Standard Chartered and TD. They set the
said a DCM banker. “Not all the spread for the January 2027 note at Sonia “The market is still developing, though
uncertainties are out of the way with Brexit plus 18bp, 1bp inside IPTs. The reoffer was about 90% of investors can now buy Sonia-
but there is now at least more clarity.” linked bonds with index shift. But last year
it was still developing, and that makes it a
bit harder. It’s the same for the SOFR
market, though we’re getting over the
hurdles in that market. Look at the book for
the WORLD BANK last week, it was a much
bigger book than we’ve seen in the past.”

ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE

Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues €(m) (%) bank or group issues €(m) (%) bank or group issues €(m) (%)

1 JP Morgan 5 2,123.57 15.8 1 Goldman Sachs 3 2,051.97 13.9 1 JP Morgan 2 649.26 20.0
2 Bank of America 2 1,544.77 11.5 2 Deutsche Bank 3 1,942.01 13.2 2 HSBC 2 649.26 20.0
3 Deutsche Bank 1 1,297.44 9.6 3 Barclays 2 1,683.55 11.4 3 Barclays 1 400.00 12.3
4 HSBC 1 1,297.44 9.6 4 JP Morgan 2 1,683.55 11.4 4 Deutsche Bank 1 400.00 12.3
5 Commerzbank 2 1,286.07 9.6 5 BNP Paribas 2 1,552.54 10.5 5 Nomura 1 400.00 12.3
6 BNP Paribas 4 1,090.79 8.1 6 Citigroup 1 1,294.09 8.8 6 LBBW 1 249.26 7.7
7 Barclays 3 809.86 6.0 7 UniCredit 1 1,294.09 8.8 7 DGZ-DekaBank 1 249.26 7.7
8 SG 2 599.86 4.5 8 Bank of America 2 875.42 5.9 8 Hessen-Thueringnen 1 249.26 7.7
9 Credit Agricole 2 599.86 4.5 9 HSBC 2 757.88 5.1 2 3,246.30
10 Morgan Stanley 2 548.82 4.1 10 Natixis 1 499.42 3.4 Total
13 13,460.85 6 14,762.49
Total Total Excluding ABS/MBS.

Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS.
Source: Refinitiv
Source: Refinitiv SDC code: N6 SDC code: N5 Source: Refinitiv SDC code: N7

28 International Financing Review January 16 2021

BONDS CORPORATES

4HEûPREVIOUSûWEEK ûTHEû7ORLDû"ANKûRAISEDû The future was so uncertain that the sector The airline industry is still under a lot of
53 BNûWITHûAûDUAL
TRANCHEûmOATINGû was one of the last to regain regular access stress, and even with additional stimulus
offering that attracted over US$3.65bn in to funding in the capital markets. from a new Democratic administration, the
total orders. hope for widespread vaccine distribution
But over the course of the year the script and a quick economic recovery, airlines are
NON-CORE CURRENCIES BEGANûTOûmIPûASûINVESTORSûBOUGHTûINTOûTHEû likely to lean on these leasing contracts well
sector’s recovery story, which envisions cash into the future.
AOFM PLANS NOVEMBER 2032 LINE strapped airlines selling their glut of
existing aircraft and relying more on “A lot of really high-quality airlines like
The AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT cheaper leasing contracts. Southwest, Delta and United have big order
plans to open a new November 2032 books and they are constrained on their
Treasury bond line via syndication before “These companies experienced a lNANCESûTRYINGûTOûMAINTAINûLIQUIDITY ûSOûIFû
June 30, as part of its 2020-21 issuance challenging 2020, but as the economy they are having to buy these planes and put
programme update released on Friday. recovers investors are realising these are up some capital it hurts them,” said Roger
STRONGûINVESTMENTS vûSAIDû2ICHARDû7OLFF û +ING ûAIRCRAFTûlNANCEûANALYSTûATûRESEARCHû
The AOFM still expects Treasury bond head of US bond syndicate for Societe lRMû#REDIT3IGHTS û
supply to be A$230bn (US$179bn) in the Generale.
CURRENTûlSCALûYEARûENDINGûINû*UNE ûHAVINGû “The leasing companies that can raise
cut its forecast by A$10bn last December to AERCAP IRELAND, rated Baa3/BBB/BBB–, set money, which is most of the big ones, will
REmECTûANûIMPROVINGûECONOMICûOUTLOOK THEûTONEûWITHûAû53 BNû ûlVE
YEARûONû continue to be able to take advantage of the
January 6 that will be used to acquire, invest RESTRICTEDûlNANCIALûCONDITIONSûOFûBASICALLYûALLû
Around two-thirds (A$153.5bn) of this total IN ûlNANCEûORûRElNANCEûAIRCRAFTûASSETS û the airlines in the world.”
has already been completed with most of the ACCORDINGûTOûTHEû3%#ûlLING û
remainder to be raised through tender offers PIONEER REFINANCES PARSLEY M&A DEBT
of around A$2bn–$3bn in most weeks. The deal garnered a US$3.3bn order book
and priced at 155bp over Treasuries, which Days after PIONEER NATURAL RESOURCES lNALISEDû
A$1.8bn and A$700m tenders of the 1.5% was seen as 2bp inside of fair value. a US$7.6bn acquisition for PARSLEY ENERGY,
June 2031s and 3.25% April 2025s are the oil and gas production and exploration
PLANNEDûFORûTHISû7EDNESDAYûANDû&RIDAY û By comparison, when AerCap reopened company returned to the high-grade
respectively. the market in June last year with a PRIMARYûMARKETûTOûRElNANCEûDEBTûITû
53 BNûlVE
YEARûITûPRICEDûATûAûYIELDûOFû acquired from the deal.
Planned Treasury indexed bond issuance 6.75%, and since then the 6.5% 2025s have
remains at A$2bn–$2.5bn, A$1.25bn of rallied to a yield of 1.93% at a dollar price of ALL INV-GRADE US CORPORATE BONDS
which has already been sold, with two 119, according to MarketAxess data. BOOKRUNNERS: 1/1/2021 TO DATE
tenders of A$100m–$200m each to be held
in most months, beginning in February AVIATION CAPITAL, rated Baa2/BBB–, also Managing No of Total Share
sought to purchase aircraft using a US$750m bank or group issues US$(m) (%)
The AOFM has encountered no lVE
YEARûITûPRICEDûONû4UESDAYûATû BPûOVERû
indigestion problems thus far, having Treasuries. AVOLON HOLDINGS FUNDING raised 1 Bank of America 8 2,614.02 13.1
attracted huge offshore and onshore order US$1.5bn in a two-part deal that will be used 2 Citigroup 6 2,193.50 11.0
books for seven jumbo syndicated nominal for general corporate purposes. Both issuers 3 JP Morgan 5 1,687.07 8.5
Treasury bond sales in the last calendar year. performed exceedingly, well with US$10bn 4 Morgan Stanley 3 1,507.80 7.6
of demand between the two and each 5 Sumitomo Mitsui 5 1,478.41 7.4
These have raised a combined A$116bn, achieving double-digit negative new issue 6 Deutsche Bank 3 1,301.67 6.5
including the record-smashing A$25bn issue concessions. 7 Barclays 5 1,140.35 5.7
of new 0.5% September 21 2026s in 8 BNP Paribas 2 1,036.73 5.2
September. Additionally, DUBAI AEROSPACE ENTERPRISE made 9 Wells Fargo 7 951.88 4.8
its debut in the US dollar high-grade space with 10 TD Securities 1 624.24 3.1
CORPORATES a US$1.25bn two-part trade last week. 15 19,942.57
Total
“Air leasing companies are coming to
market with large negative new-issue Excluding equity-related debt, ABS/MBS, all foreign issues, global issues
CONCESSIONS vûSAIDû7OLFF ûh4HESEûCOMPANIESû and non corporates.
are recovering well and are pricing bonds
aggressively in this low-rate environment.” Source: Refinitiv SDC code: F6a

US DOLLARS ALL US INVESTMENT GRADE CORPORATE DEBT ALL CORPORATE BONDS IN EUROS
BOOKRUNNERS: 1/1/2021 TO DATE BOOKRUNNERS: 1/1/2021 TO DATE
AIRCRAFT LEASING COMPANIES RAISE
LIQUIDITY FOR NEW AIRCRAFT Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues €(m) (%)
Aircraft leasing companies have collectively
priced US$4bn in the US high-grade primary 1 Bank of America 26 7,649.93 10.0 1 Barclays 5 2,181.48 10.5
INûTHEûlRSTûTWOûWEEKSûOFûTHEûYEARûINûAû 2 JP Morgan 27 7,376.08 9.6 2 HSBC 6 2,012.88 9.7
preview of what could be a busy year for the 3 Citigroup 19 5,765.29 7.5 3 BNP Paribas 10 1,812.11 8.7
sector amid a rush to raise liquidity for the 4 Morgan Stanley 18 4,876.79 6.4 4 Santander 2 1,436.27 6.9
purchase of used aircraft. 5 Goldman Sachs 15 3,620.36 4.7 5 ING 6 1,148.94 5.5
6 Wells Fargo 19 3,443.88 4.5 6 Citigroup 4 963.98 4.6
The niche sector, which buys aircraft and 7 BNP Paribas 11 3,185.45 4.2 7 Credit Agricole 5 776.65 3.7
leases them back to major airlines 8 Sumitomo Mitsui 9 2,978.35 3.9 8 Deutsche Bank 5 758.48 3.7
worldwide, was under tremendous stress 9 RBC 12 2,946.93 3.9 9 UniCredit 5 740.51 3.6
LASTûYEARûASûmIGHTSûWEREûGROUNDEDû 10 Deutsche Bank 9 2,774.01 3.6 10 Mizuho 2 689.80 3.3
worldwide due to the Covid-19 pandemic. 50 76,463.51 19 20,733.06
Total Total

Source: Refinitiv SDC code: F9 Excluding equity-related debt. FIGs, ABS/MBS. SDC code: N8
Source: Refinitiv

International Financing Review January 16 2021 29

Pioneer, rated Baa2/BBB/BBB, priced a 7ITHûOILûPRICESûRISING ûENERGYûCOMPANIESû November it would cease the publication
US$2.5bn three-part deal on Thursday, will have less need to issue new bonds of one-week and two-month US dollar
which will be used to fund redemptions and this year, and the lack of supply drives Libor tenors on December 31 2021 and US
tenders of Parsley’s outstanding high-yield demand, one banker away said. regulators are urging companies not to
debt, rated Ba3/BB, and replace it with new Additionally, fallen angels and M&A issue new Libor securities after that point.
high-grade bonds. activity in the space will limit the number
of companies issuing. Yet the announcement also extended
The oil production company priced a the publication of three-month Libor until
US$750m three-year non-call one at 55bp “I’d expect consolidation to continue,” June 30 2023 in order to support the
OVERû4REASURIES ûAû53 MûlVE
YEARûATû BPû the banker said. “If you have a reduction in smooth transition of outstanding
over and a US$1bn 10-year at 105bp over in supply of issuance, then you should see securities away from Libor, creating a
from initial price thoughts in the area of strong demand continue, and I’d view that window of opportunity for issuers to price
Treasuries plus 85bp, 95bp and 135bp, as a very positive leading indicator for new securities this year.
respectively. energy spreads.”
Last Monday, AMERICAN HONDA FINANCE
At those levels, the new notes landed well Average energy spreads have tightened PRICEDûAû53 Mû
YEARûmOATING
RATEû
inside its outstanding curve, where its latest BYû BPûTOû BPûOVERûINûTHEûlRSTûTWOûWEEKSû note at three-month Libor plus 28bp, and
offering, a 1.90% 2030 that priced in August of the year, the largest tightening of any INûTHEûlRSTûWEEKûOFûTHEûYEARûRETIREMENTû
2020, was trading at a G-spread of 112bp sector tracked by ICE BofA data over that services company ATHENE priced a US$250m
prior to the trade, according to MarketAxess period. THREE
YEARûmOATERûATûTHREE
MONTHû,IBORû
data. plus 73bp.
7ITHû4HURSDAY SûISSUANCEûGOINGûTOWARDû
However, there are few outstanding RElNANCINGûDEBT ûTHEûCOMPANY SûLEVERAGEû h7ITHûTHEûANNOUNCEMENTûLATEûLASTûYEARû
bonds to price off, given the company’s will go largely unchanged at 1.3 times, that Libor will be continued to be
infrequency in the primary market. according to CreditSights. published through mid-2023 we saw an
Thursday’s deal is just its second issuance in opportunity to issue in Libor,” said Grant
THEûPASTûlVEûYEARS ûACCORDINGûTOû)&2ûDATA û 4HEûRElNANCINGûEFFORTûINCLUDESûTHEû Kvalheim, chief executive and president of
redemption of all outstanding Parsley !THENEû53! ûh7EûDON TûWANTûTOûTAKEûTHEû
Looking out at the competition, Pioneer 5.375% and 5.25% 2025s totalling some risk [of an alternative reference rate] so
landed tight to similarly rated low Triple B US$1.13bn, as well as the US$515.8m LONGûASûOURûmOATING
RATEûASSETSûAREûSTILLûINû
bonds from Marathon Oil (Baa3/BBB–/BBB– ), 5.875% 2026s issued by Parsley’s subsidiary ,IBOR û7EûWANTûTOûISSUEûINû,IBORûFORûASûLONGû
and Cimarex Energy (Baa3/BBB–), according Jagged Peak Energy. as possible.”
TOûRESEARCHûlRMû#REDIT3IGHTS û
Pioneer’s transaction also includes a !THENE SûTHREE
YEARûmOATERûMATURESûINû
h7HYûWOULDû)ûBUYûLOW
GRADEû4RIPLEû"û previously announced tender offer from January 2024, which is six months after
energy bonds at plus 60bp? There is just no which it has already accepted an aggregate the three-month Libor reference rate is set
compensation for the risk embedded in of US$843.7m from Parsley’s 2027s and to end. However, companies increasingly
energy,” said Adam Coons, portfolio 2028s. include fallback language on such notes
MANAGERûATû7INTHROPû#APITALû-ANAGEMENT ANDûWILLûHAVEûOPTIONSûTOûRElNANCEûANDûCALLû
Bank of America, Citigroup, JP Morgan and the notes before Libor publication is set to
Yet, the deal drew US$11.6bn in demand TD were lead bookrunners on the trade. expire.
on a view that rising oil prices make
exploration and production a particularly LIBOR DEADLINE EXTENSION BRINGS In the US high-grade bond space,
defensive part of the oil sector when ISSUERS TO MARKET borrowers priced more than US$25bn of
compared to integrated and mid-stream ,IBOR
LINKEDûmOATING
RATEûNOTESûLASTûYEAR û
names, one credit analyst said. The extension of the publication of key compared with US$13.2bn of high-grade
Libor tenors until 2023 has given some bonds linked to the Federal Reserve’s
)NDEED ûTHEû7ESTû4EXASû)NTERMEDIATEûISû BORROWERSûCONlDENCEûTOûSTICKûWITHûTHEû alternative rate the Secured Overnight
consistently trading above US$50 a barrel scandal-ridden reference rate during the Financing Rate, according to IFR data.
FORûTHEûlRSTûTIMEûSINCEûTHEû#OVID
û lRSTûWAVEûOFûmOATING
RATEûSUPPLYûTHISûYEAR
pandemic shook the market, and the "UTûSOûFARûINûTHEûlRSTûSEVENûTRADINGûDAYSû
majority of Pioneers business is in the The administrator of Libor, ICE of the year, SOFR has been more popular,
Permian basin in Texas. Benchmark Administration, said in with US$2.725bn of issuance on US$4.3bn
of total demand, compared with just
ALL INVESTMENT-GRADE BONDS IN EUROS ALL INTERNATIONAL STERLING BONDS US$550m of Libor issuance backed by
BOOKRUNNERS: 1/1/2021 TO DATE US$900m of investor demand.
EXCLUDING SECURITISATIONS
Managing No of Total Share BOOKRUNNERS: 1/1/2021 TO DATE Floating-rate paper, no matter what
bank or group issues €(m) (%) reference rate is used, could see a surge in
Managing No of Total Share popularity this year if vaccine distribution
1 Barclays 18 8,324.47 9.1 bank or group issues £(m) (%) and additional stimulus helps the economy
2 BNP Paribas 22 7,534.41 8.2 recover faster and lead to a rising rate
3 Deutsche Bank 17 7,409.25 8.1 1 RBC 8 1,941.42 17.3 environment.
4 HSBC 15 7,317.31 8.0 2 Bank of America 3 1,287.61 11.5
5 JP Morgan 15 7,096.71 7.7 3 TD Securities 4 1,243.76 11.1 h7EûHADN TûDONEûAûmOATERûINûTWOûORû
6 UniCredit 11 6,905.02 7.5 4 HSBC 7 1,022.80 9.1 three years going back to 2017, so we got
7 SG 13 6,273.20 6.8 5 BNP Paribas 1 995.22 8.9 SOMEûNEWûNAMESûFROMûDEDICATEDûmOATERû
8 Natixis 10 4,923.36 5.4 6 NatWest Markets 6 978.03 8.7 accounts that hadn’t bought our securities
9 Citigroup 11 4,519.86 4.9 7 Barclays 5 846.30 7.5 ANDûWEREûINTERESTEDûINûmOATERS ûSOûTHATûWASû
10 Morgan Stanley 8 4,026.64 4.4 8 Deutsche Bank 3 601.79 5.4 nice to see,” Kvalheim said. “But in terms
64 91,836.85 9 BMO 2 464.38 4.1 of issuing in alternatives to Libor, we don’t
Total 10 Citigroup 1 374.09 3.3 feel the need to be a trailblazer there in
17 11,212.44 any form.”
Excluding ABS/MBS, equity-related debt. Total

Including preferreds. Excluding equity-related debt.

Source: Refinitiv SDC code: N9 Source: Refinitiv SDC code: K05a

30 International Financing Review January 16 2021

BONDS CORPORATES

EUROS Motability dual-tranche debut
social finds good traction
EURO HYBRID MARKET GETS OFF TO
CHOPPY START „ CORPORATES UK charity issuer breathes life back into social sterling issuance

4HREEûISSUERSûBROUGHTûTHEûlRSTûEUROûHYBRIDSû MOTABILITY OPERATIONS brought its debut social popularity of the deal down to not only the social
of 2021 last week, although demand was bond to market last Wednesday and demand label, but also the issuer’s high investment-grade
mixed, and while some were able to build – across both sterling and euro tranches – ratings and relative rarity in the primary market.
strong momentum behind their new deals demonstrated that ESG-themed deals continue
others struggled to push pricing as some to command extra interest from investors. Although MO is no newcomer to capital
investors say the asset class is starting to markets and has previously sold 10 sterling
look expensive. ESG issuance may now be commonplace in bonds and five in euros across tenors of 6.5 to
the euro market and projected to rise rapidly 20 years, the most recent was in 2019. All the
After the bank capital market got going throughout 2021, but sterling has seen less previous bonds were conventional rather than
the week prior it was only a matter of time activity, and the 20-year leg of Motability’s new ESG-related notes.
before the corporate hybrid market saw issue marked the first social corporate sterling
issuance given investors’ desire for high- bond sold in the primary market since publisher It was following an update to the ICMA Social
beta products. Pearson issued in May 2020. Bond Principals in 2020 and based on investor
feedback that the issuer made the decision to
German real estate company AROUNDTOWN “There is always a bit of additional interest for put a social bond framework in place.
WASûTHEûlRSTûOUT ûSEIZINGûONûTHEûLOWûYIELDSû these types of deal, and we tend not to see that
available to issuers to fund a tender offer for much purely social issuance because from an Barclays Bank, HSBC Bank, Lloyds Bank and
a more expensive hybrid note that will not assets perspective a lot corporates would find it Royal Bank of Scotland are the shareholders of
reach its call date until 2023. easier to look at green, or sustainable, which can MO and Barclays, HSBC, Lloyds Bank Corporate
include green and social,” said a banker. Markets and NatWest Markets were bookrunners
As yields in the investment-grade on the new issues.
corporate market became less appealing as MO was set up to deliver the Motability Scheme,
2020 wore on, hybrids remained one of the a charity that provides affordable personal transport The scheme that MO runs can be accessed
few ways for investors to pick up some for disabled people. The A1/A (Moody’s/S&P) rated by recipients of the highest rate of UK mobility
spread. issuer found good traction with its dual-tranche allowance. When an individual joins the scheme
deal, selling a £350m 20-year off a book of around their allowance is used to lease a new car,
“There is still room for compression, in £1bn and a €500m 7.5-year that saw orders exceed scooter, powered wheelchair or wheelchair-
my view, so hybrids remain attractive,” said €2.2bn. Spreads were set, respectively, at 75bp accessible vehicle. The cost of leasing is over
one investor. “In fact, it is probably one of versus Gilts and 53bp over swaps. 45% cheaper than what is available to customers
the few remaining areas where there is in the market.
room for compression.” Those final landing levels marked a
considerable reduction, as leads began As a business, MO posted a post-tax profit
And the relative value over issuers’ curves marketing the sterling notes at the 90bp area of £149.8m during its full financial year 2020,
is still reasonable in many cases. “You’re still and the euros at 75bp–80bp. Bankers put the according to an investor presentation.
getting about 200bp for the subordination Ed Clark
risk,” said one banker.
this isn’t so obvious now,” said a second &IRST
TIMEûHYBRIDûISSUERû7INTERSHALLû$EAû
However, Aroundtown (BBB+, S&P) fund manager. had no such troubles with its dual-tranche
pushed its €600m perpetual non-call July bond.
2026 note (BBB–) well inside that sub/senior “Last year, they made up a big proportion
PREMIUM û!TûAûlNALûYIELDûOFû û BPûINSIDEû of some of our portfolios, now we see more As an exploration and production
IPTs, the bond came roughly 165bp back of opportunities in bank capital.” company carrying senior investment-grade
its senior curve. It has a €600m 1.5% May RATINGS û7INTERSHALLû$EA ûAûGASûANDûOILûJOINTû
2026 bond bid at 0.34%. This sort of view may partially explain venture created by a merger in 2019, posed a
why toll road operator ABERTIS (BBB–/BBB) unique proposition for investors, as the
Pricing was also aggressive relative to fair was unable to shift the yield on its €600m majority of its peers fund in the high-yield
value, with bankers on the deal saying it perpetual non-call 6.25-year, rated BB/BB+, market, said the banker.
came with a negative concession of 12.5bp. from IPTs of the 2.875% area. The last book
The other prong of the transaction is a update showed orders of around €925m. ALL CORPORATE BONDS IN STERLING
buyback offer for its €600m 3.75% non-call BOOKRUNNERS: 1/1/2021 TO DATE
January 2023s. That WINTERSHALL DEA was in the market on
the same day was also a contributing factor Managing No of Total Share
Books for the new issue fell to €1.35bn to the slow progression of the deal, said bank or group issues £(m) (%)
after peaking at more than €2bn, perhaps the bankers, as was the fact Abertis had issued a
lRSTûSIGNûTHATûEVENûINVESTORSûINûCORPORATEûSUBû hybrid – its debut – just in November. 1 HSBC 4 402.61 24.6
debt are willing to pull out orders if 2 NatWest Markets 3 350.59 21.4
syndicates push too hard on pricing. Abertis was hoping to raise €750m, which 3 RBC 2 230.13 14.1
would have completed the €2bn of hybrid 4 Santander 1 199.03 12.2
GETTING EXPENSIVE funding that was approved by their board last 5 Barclays 2 185.08 11.3
And although the allure of hybrids and the year to demonstrate their commitment to a 6 Mizuho 1 165.51 10.1
additional yield they offer compared with STRONGûBALANCEûSHEET û7ITHûTHEûINAUGURALûDEALûTHEû 7 Lloyds Bank 2 104.92 6.4
senior is still obvious to some investors, not issuer raised €1.25bn through a 3.248% perpetual 6 1,637.89
all are as keen on the instrument as they non-call February 2026. That trade is now bid at a Total
were last year. yield of 2.37%, having been issued at 3.25%.
Source: Refinitiv SDC code: N8a
“To be frank, some hybrids have become
QUITEûEXPENSIVE û7EûAREûNOTûSAYINGûGOODBYEû
to them, but last year they looked cheap,

International Financing Review January 16 2021 31

After slashing 50bp on the €650m IG CORPORATES OFFER NO CONCESSIONS The company was in the market following
perpetual non-call 5.5-year and the €850m the announcement that it is acquiring
non-call eight-year, the notes landed at 2.5% Investment-grade corporate issuers were able Firestone Building Products from
and 3%. At the last update combined books to hurl fresh paper into the euro market last Bridgestone Americas. Although the
were around €3.2bn. week and watch spreads evaporate, the acquisition is being funded through cash it
majority having to pay no premium for the already has on the balance sheet and the use
h4HEREûISûOFTENûGOODûDEMANDûFORûAûlRST
funding. However, some books are beginning of proceeds for the new bond are “general
time [hybrid] issuer because as investors to look weaker as investors start to become corporate purposes”, the new issue and the
look more at hybrids they are going to want more sensitive around pricing. acquisition are related, said bankers.
a bit more diversity in terms of what they
can buy, so something that expands the “Pricing is aggressive, new-issue EXOR (BBB+, S&P), the holding company
universe is good,” said a second banker. premiums are negligible to negative and, controlled by the Agnelli family, saw good
yes, on the corporate side, we are seeing uptake for its €500m no-grow 10-year and,
!SûAûlRST
TIMEûISSUERûOFûSUBORDINATEDû smaller order books than in the fourth perhaps unsurprisingly, was the issuer to
bonds, leads would not be drawn on fair quarter,” said one syndicate banker. OFFERûTHEûMOSTûSPREAD û7ITHûBOOKSûOVERû
value, but comparables used for the trade €2.6bn, the spread was set 115bp, from IPTs
included notes from sub-IG hybrid issuer And some macro-economic weakness of 150bp–155bp.
Repsol, whose hybrids carry Ba1/BB+/BB+ could cause a widening in spreads and a
ratings. greater need for borrowers to offer Solid price progression was also seen on
premiums, he added. PSA BANQUE’s (A3/BBB+) €500m no-grow four-
Repsol’s 3.75% non-call June 2026 and year, which opened books at 85bp area and
4.247% non-call December 2028 bonds were “Credit markets have quickly priced in landed at 47bp. The book at one point
spotted at 1.99% and 2.36%, respectively, for the end of the pandemic as soon as the exceeded €3.25bn but fell to €3bn.
sub/senior spreads 198bp and 221bp in vaccine news was announced, but we think
spreads terms. further lockdowns or delays to the vaccine A €500m seven-year, NATIONAL GRID (Baa1/
rollout will cause some further earnings BBB+/BBB+) saw good spread reduction,
Bankers on the deal also looked at high- volatility in certain sectors if things don’t offering the bonds at the 80bp area, but was
grade oil hybrids from the likes of BP, OMV open up as expected,” said James Vokins, able to set the spread at 52bp on books
and Total, as well sub-investment-grade head of UK investment-grade credit at Aviva around €1.4bn. The progression was notable
hybrids from issuers such as Abertis, EDP Investors. for an issuer whose bonds are not eligible
and Firmenich. Sub/senior spreads ranged for the ECB’s bond buying programme.
from 115bp to 199bp. But, on the whole, last week’s borrowers Estimates of fair value ranged from the mid-
got away new deals without having to offer 40s to the low 50s.
7INTERSHALLû$EAûCARRIESû"AA û NEGATIVE û up any concession.
and BBB (stable) senior ratings from Moody’s Not all borrowers, however, were able to
and Fitch and its hybrids are expected to be “Having cash is expensive. A lot of people get in new issues without either having pay
rated Ba1/–/BB+ and receive 50% equity don’t like the valuations but, on the other up some premium or see a material
credit. hand, they will have to invest at some point, dropping off in orders.
and in spread terms, we are not at the tights
)NûITSûRATINGûOFû7INTERSHALLû$EA SûHYBRIDS û of where the market has been,” said Maria One was E.ON (Baa2/BBB). The issuer
Moody’s noted that the bonds will not have Staeheli, senior portfolio manager at Fisch approached the market with short eight-
a material impact on the company’s Asset Management. year note at IPTs of the 65bp area and leads
adjusted leverage and interest coverage on a had to set the spread at 42bp, for a
pro forma basis, and therefore does not “Additionally, if you account for the concession of around 2bp, according to
affect its overall Baa2 rating. central bank liquidity pumped into markets, bankers. The bonds were sized at €600m on
I believe we can set new tights.” a book of €1.1bn from a peak of about
The agency also holds a negative outlook €1.4bn.
for the issuer, which it attributes to its high Some issues gathered a larger following
DEBTûLEVELSûANDûWEAKûCASHmOW
BASEDûCREDITû than others. ABB FINANCE (A3/A–), the issuing And while VEOLIA (Baa1/BBB) offered no
metrics for its current rating, as well as the entity through which Swedish-Swiss premium, it did see orders fall €700m when
lack of clarity around the economic recovery technology company ABB funds, saw orders it landed a €700m six-year note at 38bp
from the Covid-19 crisis and any subsequent for its €800m nine-year exceed €4.2bn. versus swaps for a negative yield.
rebound in gas and oil prices.
4HISûGAVEûLEADSûONûTHEûDEALûTHEûCONlDENCEû STERLING
ALL SWISS FRANC BONDS INCLUDING to set the spread at 35bp over mid-swaps,
halving the 70bp area IPTs with which it VW FS KICKS OFF INTERNATIONAL
SECURITISATIONS initially approached the market. STERLING SUPPLY
BOOKRUNNERS: 1/1/2021 TO DATE
LA POSTE RINGS TWICE VOLKSWAGEN FINANCIAL SERVICES (A3/BBB+)
Managing No of Total Share LA POSTE (A/A+) was able to remove any new- BECAMEûTHEûlRSTûNON
5+ûISSUERûTOûTAPûTHEû
bank or group issues SFr(m) (%) issue premium by the time spreads were set sterling market in 2021, mustering strong
on its €750m 8.5-year and €1bn 15-year SUPPORTûFROMûINVESTORSûANDûSIGNIlCANTLYû
1 Credit Suisse 13 1,190.57 31.4 bonds. At 40bp and 65bp, each tranche came reducing the spread on the new issue.
2 UBS 10 820.87 21.6 around 5bp through the borrower’s
3 Raiffeisen Schweiz 7 606.42 16.0 secondary levels, according to bankers. At The borrower was the latest among a
4 Deutsche Bank 3 318.86 8.4 their peak, combined books exceeded number of auto issuers to appear in
5 Basler KB 3 241.87 6.4 €6.5bn. European bond markets, although it opted
6 ZKB 2 150.27 4.0 to fund in sterling following recent euro
7 Verband Schweiz 3WISSûBUILDINGSûMATERIALûlRMûHOLCIM ISSUANCEûFROMû"-7 û"ANQUEû03!ûANDû
8 Credit Agricole 1 115.02 3.0 (Baa2/BBB) launched both a €500m 6.5-year Volkswagen Leasing, a wholly owned
9 Commerzbank 1 101.30 2.7 and €650m 12-year (upsized from €500m) a SUBSIDIARYûOFû67û&3
10 Valiant Bank 1 91.60 2.4 couple of basis points inside fair value, with
1 91.60 2.4 the spreads set at 53bp and 75bp,
Total 17 3,795.14 respectively.

Including preferreds. Excluding equity-related debt.

Source: Refinitiv SDC code: K06c

32 International Financing Review January 16 2021

BONDS FIG

4HEûLATESTûISSUEûFROMûTHEû'ERMANûlRM Sû 4HEû+7/ûBONDûLOOKEDûTOûBEûABOUTû BPû NON-CORE CURRENCIES
lNANCIALûSERVICESûARMûRAISEDûa MûOFû inside where its 2025s and 2026s were
funding with a long four-year term at 103bp spotted, albeit they are illiquid notes. It UOM EXTENDS UNIVERSITY REVIVAL
over Gilts, paying no concession, and well came also a few basis points inside its
inside the 115bp–120bp IPTs. Books at one PARENTûCOMPANY û"+7 S ûSLIGHTLYûMOREû The UNIVERSITY OF MELBOURNE, rated AA+ (S&P),
point exceed £900m, before dropping to liquid SFr200m July 2027 green bond, issued its third domestic bond on Tuesday, a
over £750m. which was spotted at a Z-spread of 38bp. A$150m (US$116m) 1.97% 10-year MTN
offering that was placed, under the radar, at
The new deals from Motability and UBS was sole lead and structuring par via sole lead manager CBA.
Volkswagen Financial Services last week adviser on the deal, with Raiffeisen Schweiz
were only the third and fourth sterling and ZKB as co-managers. The bonds are UOM debuted in June 2014 with a A$250m
trades from investment-grade corporates in rated A+ by UBS and Credit Suisse and A by 4.25% seven-year note that matures on June
2021, with previous issues coming from FEDAlNûANDû:+" 30, before selling a A$100m 25-year bond in
7ESSEXû7ATERû3ERVICESûANDû.ATIONALû'RIDû December 2017.
Gas. GREEN SPS OPENS WEEK, DEUTSCHE
BAHN, AMAG FOLLOW Tuesday’s sale was the latest from the
This relatively low level of issuance is revived university sector which has been hit
potentially another factor underpinning the SWISS PRIME SITE opened the Swiss franc hard by a slump in the number of overseas
success of the new deals. “Investors still week with a seven-year green bond on students, particularly from China, as a result
have a lot of cash,” said a second banker of Monday, paying a negative “greenium” for of the pandemic.
the sterling market. an upsized deal.
5NIVERSITYûOFû7OLLONGONGûSOLDûAû! Mû
SWISS FRANCS Books opened on a minimum SFr200m 1.746% eight-year MTN on December 8,
(US$225m) senior unsecured benchmark at which was only the second public issue of
KWO PRINTS TIGHT GREEN 10S mid-swaps plus 80bp–85bp, slightly tighter university bonds in Australia in 2020
than IPTs of 82bp–87bp. The spread was set following a A$200m seven-year issue from
Hydroelectric energy company KRAFTWERKE at 80bp for a maximum SFr300m, where it 7ESTERNû3YDNEYû5NIVERSITYûAûWEEKûEARLIER
OBERHASLI made a rare appearance in the came. Fair value for the tenor looked to be
Swiss franc market on Tuesday with a 10- about 83bp, so the bonds paid a negative On November 19, Australian Catholic
year senior unsecured green bond that came 3bp premium. University, rated Aa2 (Moody’s), privately
well inside its admittedly illiquid curve. placed a A$50m 20-year MTN, six months
Some 64 accounts took part, all Swiss, after Macquarie University placed a A$150m
After the mandate was announced on with asset managers taking just over half 3.05% 20-year bond on May 13.
Monday, investors received the company’s and bank treasuries almost a quarter.
UPDATEDûlNANCIALS ûASûWELLûASûDETAILSûONûITSû FIG
green framework and second party opinion Leads were BKB, Credit Suisse and ZKB. The
from ISS ESG. That led to accounts bonds were issued by Swiss Prime Site US DOLLARS
expressing strong interest, according to a Finance AG and guaranteed by Swiss Prime
LEADûOFlCIAL ûDESPITEûAûQUESTIONûMARKûONûTHEû 3ITEû!' û303ûISûRATEDû"AAûBYûFEDAlN û(IGHû DEUTSCHE RETURNS WITH MORE
potential tenor. BBB by CS and BBB+ by ZKB, all stable. SUCCESSFUL TIER 2

The big question was whether investors DEUTSCHE BAHN FINANCE, rated Aa1/AA–, DEUTSCHE BANK came to the US dollar market
would prefer a zero or negative-yielding followed with a minimum SFr300m 15- last Monday with its second Tier 2 offering
shorter bond of around six years or a slightly year via Credit Suisse and Deutsche Bank at in the last seven months and received a
positive yield on a 10-year note. mid-swaps plus 18bp–20bp, ultimately much better reception from the market
pricing SFr400m at 18bp. than the last time around.
The yield option won out, and books
opened at 35bp–40bp over swaps for a )TûPAIDûmATûTOûNEGATIVEû BPû.)0 ûANDûWASû The German bank priced a US$1.25bn 11-
SFr100m (US$113m) no-grow February 2031 sold mainly to asset managers with just year non-call 10 Tier 2 note, rated Ba2/BB+/
note. over a half, while insurers took 22%, banks BB+, at 260bp over Treasuries, in from initial
15% and pension funds 10%. price thoughts of 300bp.
The book immediately jumped to more
than SFr300m, enabling leads to put out AMAG LEASING followed on Tuesday with a At that level, Deutsche found investors
revised guidance of plus 30bp–35bp, before new 2.75-year due October 2023. IPTs more receptive to this offering than its last,
launching at the tight end. There was a started at mid-swaps plus 97bp–102bp and when the bank sold a US$500m 5.882% 2031
small drop in the book from its peak of books opened for a minimum SFr200m bond that failed to move off of initial price
SFr430m to SFr380m, but the coverage ratio 5bp tighter at 92bp–97bp, before terms thoughts in July 2020 to price at 525bp over.
was still high for a Swiss franc deal. were set at SFr230m at the tight end.
Last summer, investors forced the troubled
Over 40 all-Swiss accounts took part, with !TûTHEûlNALû BPûSPREAD ûITûCAMEûATû3WISSû BANKûTOûPAYûUPûTOûPRINTûITSûlRSTû53ûDOLLARû
banks getting 35%, asset managers 21%, governments plus 103.5bp for a 0.244% subordinated paper in years. Since then, the
insurers 21%, pension funds 20% and bank yield. That was some 5bp inside AMAG’s outstanding Tier 2 2031s have rallied
treasuries 3%. The lead estimated some secondary curve. SIGNIlCANTLYûTOûTHEû BPûAREAûANDûAû ûDOLLARû
SFr50m–SFr100m of orders was pure green price, according to one syndicate banker away.
interest with minimal price sensitivity. A total of 69 all-Swiss investors took part
in the deal, with asset managers taking the 7HILEûTHEûNEWû4IERû ûDIDûTIGHTENûFROMû)04Sû
The spread was the tightest for a utility largest portion at 63% and insurers taking and come in at a larger size, bankers said it
since the start of Covid-19, tighter even than 17% and private banks 14.5%. Pension still landed some 20bp wide of fair value.
Swisscom, historically the tightest Single A funds and corporates took the remaining
utility-like name in the Swiss market. 5.5%.
Swisscom had printed a SFr100m 11-year
note in September at plus 36bp. AMAG Leasing is rated Mid BBB by
#REDITû3UISSE û"AAûBYûFEDAlNûANDû"""nûBYû
ZKB, all stable. Credit Suisse and ZKB were
joint leads.

International Financing Review January 16 2021 33

“DB has been performing well in the RBC was unable to match that, but still “The bid out of Asia looked very strong at
market of late, so I expect this deal to do priced with ultra-low coupons of 0.425% on the beginning of last week, when we saw a
pretty well,” said Dan Bruzzo, managing THEûTHREE
YEARûANDû ûONûTHEûlVE
YEARû LOTûOFûLOCALûDEMAND ûANDûTHISûISûTHEûlRSTû
DIRECTORûOFûBANKûlNANCEûATûBROKER
DEALERû while attracting US$4.67bn of investor European issuer to target that Reg S dollar
Amherst Pierpont. “Appetite for this type of demand in the order book, according to one bid. Zurich is a well-known name there with
structure was well demonstrated last week, lead banker. very good ratings, and their last US dollar
and I think investors have been increasingly deal was in 2018, so there was certainly
comfortable with the DB name recently.” 7HILEû4REASURYûCURVESûAREûSTEEPENINGûATû some pent-up demand.”
the long end, debt funding remains
The Tier 2 market got off to a hot start in particularly accommodating at the short The bonds are expected to be rated A2/A
THEûlRSTûWEEKûOFûTHEûYEAR ûWITHû.ATIONALû end. by Moody’s/S&P.
Australia Bank, rated Aa3/AA–/A+, and
Credit Agricole, rated Baa1/BBB+/A–, pricing Since early December, the 30-year 4HEûlNALûCOUPONûOFFEREDûAûCONCESSIONûOFû
US$1.25bn and US$1.5bn 20-year Tier 2s, Treasury curve has widened by 18bp to up to 12.5bp versus Zurich’s US dollar
respectively, garnering US$8.1bn in total 1.88% but the three-year has remained secondaries, bankers said.
orders between the two. steady at 0.23%, making short-dated issuance
attractive for borrowers lately. Zurich announced in December that its
Deutsche Bank is particularly attractive to subsidiary Farmers Group had agreed to
investors seeking higher yields, as the &AIRûVALUEûONû2"# SûNEWûlXED
RATEûlVE
acquire MetLife’s US P&C business, together
senior-to-subordinated premium sits at year was talked at 40bp over Treasuries, with Farmers Exchanges, in a US$3.94bn
around 90bp, according to the banker away. which was around where TD’s 0.75% 2026s deal.
from the previous week were trading on
By comparison, other European peers 7EDNESDAYûMORNING Zurich said its contribution of US$2.43bn
such as Barclays and Standard Chartered would be funded roughly equally through
have subordinated paper trading “Given tight trading levels across the internal resources and new issuance of
respectively 50bp and 60bp above their Canadian banks and lack of spread pick-up hybrid debt.
senior curves. for stepping down in quality, we generally
prefer to take the step-up in quality into RBC 7ITHûTHEûSIZEûOFûTHEûNEWûISSUEûFARû
RBC RETURNS WITH TIGHT SPREADS ANDû4$ vûRESEARCHûlRMû#REDIT3IGHTSûNOTEDûINû exceeding the hybrid target of around
AûREPORT ûh2"#ûINûPARTICULARûHASûBENElTEDû US$1.2bn, bankers said the proceeds could
ROYAL BANK OF CANADA came to the US primary from the industry-wide boom in capital also help the insurer manage upcoming
MARKETûONû7EDNESDAYûFORûITSûlRSTûDOLLARû markets, and we view it as one of the best redemptions.
bond of the year and managed to price a positioned to manage through the
US$3.25bn four-part bond at exceptionally remainder of the pandemic.” EFG READIES AT1 WITH EYE ON CAPITAL
low spreads. ENHANCEMENT
Bank of America, RBC, Truist, US Bank and
The Canadian bank, rated A2/A/AA–, Wells Fargo were active bookrunners on the Swiss private bank EFG INTERNATIONAL is set
priced US$1bn three-year and US$1.25bn three-year tranche, while Bank of America, to upgrade its capital structure by bringing
lVE
YEARûlXED
RATEûNOTESûATû4REASURIESûPLUSû RBC, Santander, Societe Generale and Wells Fargo to market a US dollar Reg S Additional Tier
22bp and 42bp, respectively, in from initial WEREûACTIVEûBOOKRUNNERSûONûTHEûlVE
YEAR 1, alongside a tender offer for its Tier 2
price thoughts in the high 30bp and high notes.
50bp range. It also sold US$700m three-year ZURICH WARMLY WELCOMED BACK
ANDû53 MûlVE
YEARûmOATING
RATEûNOTESûATû INTO DOLLARS The perpetual non-call seven-year deal is
30bp and 52.5bp over SOFR. expected to be launched this week via Bank
ZURICH INSURANCE capitalised on pent-up of America, DBS Bank and UBS. The issuer
At those levels, RBC landed the three-year demand to land a US$1.75bn subordinated began investor calls for the transaction,
just wide of where Toronto-Dominion Bank, issue on its return to the US dollar market which is expected to be rated BBB– by
rated Aa3/A, priced a US$1.15bn two-year on Tuesday, raising more than its stated Fitch, immediately after announcing it last
the previous week at 18bp over Treasuries, hybrid issuance target to fund its acquisition Monday.
which set a new record low spread and of MetLife’s US property and casualty
coupon for the asset class at 0.25%. business. The AT1 is being launched in conjunction
with an any-and-all tender offer for EFG’s
TD’s note has continued to rally in the Leads Citigroup, Deutsche Bank, HSBC, Mizuho US$400m 5% Tier 2 notes, which mature in
secondary market, tightening to an average of and UBS opened books for the Reg S April 2027 and are callable in April 2022. The
14bp over, according to MarketAxess data. At 2051 non-call 2031 transaction with initial tender price is set at 103.25 and the offer
the same time, average high-grade credit price thoughts of the 3.375% area. After expires on January 19.
spreads tightened to 101bp over in from 105bp receiving more than US$4bn of orders, the
over the prior week, ICE BofA data show. leads launched the deal at 3%. EFG said it was launching the transaction
to take a proactive approach to capital
One banker away pegged fair value on the Observers deemed it an impressive management, ahead of the Tier 2’s call date,
new RBC three-year note in the low 20s, just outcome, noting that plentiful demand had to upgrade its capital structure, strengthen
wide of TD’s recent issuance because of the allowed Zurich to optimise both the size and its leverage ratio and support its credit
added year of duration. the price. rating metrics. Issuing now means it can
also take advantage of a favourable market
h4HEûTWOûNAMESûSHOULDûTRADEûmATûTOûEACHû Bankers attributed the deal’s success in backdrop, it said.
other,” the banker said. “I’d be very part to a bid from Asian accounts that has
surprised if they priced inside of 20bp over.” been on show in many of the deals launched Bankers at EFG’s leads cited a range of
so far this year. AT1 comparables, including a 4.875%
In the last two months of 2020, Bank of US$350m perp non-call October 2026 from
New York Mellon, rated A1/A/AA–, and “It is a really good high-quality book, with Julius Baer at a yield-to-call of 4.08%, a
Consumers Energy, rated Aa3/A/A+, set new a combination of good demand out of Asia 5.125% US$750m perp non-call July 2026
all-time lows at the three-year part of the and from the core European insurance from UBS at 3.75% and a 5.25% US$1.5bn
curve with 0.35% coupons at spreads of 20bp paper investors,” said a banker at one of the perp non-call August 2027 from Credit
over Treasuries. leads. Suisse at 4.21%.

34 International Financing Review January 16 2021

BONDS FIG

EFG’s 5% 2027NC2022 Tier 2 was bid at BFCM’s €1bn long seven-year attracted "ANKERSûREmECTEDûTHATûDEMANDûFORûNEWû
2.82% on Friday, according to Tradeweb. õ BNûOFûORDERSûATûAûlNALûSPREADûOFû BPû issues has mostly been solid, if not
over mid-swaps. SPECTACULAR ûREmECTINGûTHATûSPREADSûANDû
Zurich Insurance Company sold 2021’s yields are at historically tight levels, having
lRSTû2EGû3û53ûDOLLARûSUBORDINATEDû h7EûHADûAûVERYûHIGH
QUALITYûORDERûBOOKûFORû erased the widening since the coronavirus-
TRANSACTIONûFROMûAû%UROPEANûlNANCIALû the trade, a testament to how much the inspired sell-off in March 2020.
institution last Tuesday and scooped up CREDITûANDûRISKûPROlLEûOFûTHEûISSUERûAREû
ample demand. Bankers said the format was appreciated by investors. The concession for Bankers added that the FIG market could
well suited to garnering strong interest from the deal was limited compared with other suffer more than the corporate or SSA
Asian accounts, which are awash with issuers in the market on the day,” said markets because, apart from covered bonds,
liquidity and have been prominent in Thibault Archeray, global co-head of FIG DCM ITûDOESûNOTûBENElTûDIRECTLYûFROMûCENTRALû
European deals since the turn of the year. at Natixis, adding that the French lender had bank purchases.
paid between 2bp and 4bp of concession.
The Swiss issuer ultimately printed a “The market is to some degree pricing for
US$1.75bn 30.25-year non-call 10.25 Tier 2 at ,""7ûWASûISSUINGûTHEûlRSTû%3'ûBANKûBONDû perfection,” said a third syndicate banker.
3%, on the back of more than US$3.6bn of of 2021 in euros, a long 10-year social SNP.
orders (see separate story). The €750m February 2031 issue was “Some deals have been coming with zero
launched at 63bp over mid-swaps, inside to negative concessions and big sizes, which
EUROS IPTs of 80bp area. The book closed at suggests the economic outlook and the
€1.15bn. POLITICALûRISKûENVIRONMENTûAREûALLûTERRIlC û
BANKERS HOPE FOR BLACKOUT BOOST when the reality is they’re not. So I’m not
FOR SENIOR SPREADS h7EûSTARTEDûTHEûWEEKûWITHûSPREADSûATûPRE
surprised there’s a little bit of hesitancy,
Covid levels, at least on the intermediate particularly in the secondary market.
The bank senior unsecured market is part of the curve, so the scope for There’s always some comfort in being in the
struggling to drum up investor enthusiasm performance looks fairly limited from that crowd when buying a new issue, whereas
as historically tight new issues offer little point of view,” said a syndicate banker at when it comes to lifting secondary market
room for performance, prompting one of the leads. transactions people are much more
participants to look with hope to a further hesitant.”
slowdown as blackout periods take hold. h7EûSTILLûHAVEûAûLOTûOFûINVESTORSûINTERESTEDû
Some, however, question how material that in putting cash to work in a market that I’m The iBoxx EUR Banks Senior index
slowdown will be. not sure is going to perform extremely well widened from 56.8bp as of Monday’s close to
from where we are now, in terms of spread 59.1bp by Thursday’s close – the same level
All of last week’s euro-denominated compression, but at least the level of it was trading at in late February 2020.
senior unsecured issuance was front-loaded liquidity is really abundant.”
into Monday and Tuesday, with covered Investors are not willing to push the
bonds taking centre stage thereafter. BNP PARIBAS and UNICREDIT followed on market tighter, bankers said.
7EDNESDAY ûWITHûAûõ BNû .# û3.0ûANDûAû
“It is very rare to have three days in the €2bn dual-tranche senior preferred offering, “Especially in senior preferred and senior
second week of January without [unsecured] respectively. non-preferred, how much performance can
supply,” said a syndicate banker. “I don’t we see? That has affected the size of orders
think the market is weak enough to warrant The deals lifted euro benchmark senior and the number of fast money accounts in
that. The market is effectively regulating issuance to €14.25bn year-to-date, well short ORDERûBOOKS vûSAIDûTHEûlRSTûSYNDICATEûBANKER û
itself.” OFûTHEûõ BNûINûTHEûlRSTûHALFûOFû*ANUARYû
“At the beginning we had deals pricing
Among last week’s deals were a number PRICED FOR PERFECTION mATûORûWITHûSMALLûNEWûISSUEûCONCESSIONSûnû
of successes, nevertheless. CREDIT SUISSE took Secondary market activity has also been not enough to warrant decent performance.
the lion’s share of demand on a busy subdued, bankers said, with the recent 7EûSAWûNEW
ISSUEûCONCESSIONSûGOINGûHIGHER û
-ONDAYûWITHûAûõ BNûlXEDûANDû&2.ûDUAL
senior deals mostly hovering around reoffer then execution and the pipeline was
tranche offering that attracted more than or quoted wider. UniCredit’s deal was the affected.”
€6.2bn of orders. BIGGESTûUNDERPERFORMER ûWITHûAûõ BNûlVE

year tranche bid 7bp wide of reoffer on The coming days could offer a reprieve
Sole bookrunner Credit Suisse lXEDûTHEû Friday while a €1bn 10-year bond was 10bp and an opportunity for better performance,
spread of the €1.5bn 12-year tranche at 83bp wider, amid political uncertainty in Italy. as European banks enter blackouts. If supply
over mid-swaps, 27bp inside initial price remains light, the technical backdrop will
thoughts of the 110bp area, on the back of only grow more supportive, bankers said.
more than €3.9bn of orders.
ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
4HEûõ BNûlVE
YEARûNON
CALLûFOURû&2.û BOOKRUNNERS: 1/1/2021 TO DATE
was launched at 68bp over three-month BONDS (ALL CURRENCIES)
%URIBOR ûINSIDEû)04SûOFû BPn BP û4HEûlNALû Managing No of Total Share BOOKRUNNERS: 1/1/2021 TO DATE
book stood above €2.3bn. bank or group issues €(m) (%)
Managing No of Total Share
Bankers credited the success of the trade 1 Natixis 4 2,513.33 17.7 bank or group issues US$(m) (%)
to the choice of tenors and, in the case of 2 UniCredit 2 2,246.33 15.8
the shorter tranche, the rarity of FRN 3 BNP Paribas 5 1,577.48 11.1 1 Credit Agricole 1 1,500.00 24.6
issuance. 4 SG 2 1,244.30 8.7 2 Bank of America 3 900.00 14.8
5 Deutsche Bank 4 1,016.61 7.1 3 Goldman Sachs 3 719.75 11.8
LIQUIDITY ABUNDANT 4 Citigroup 3 719.75 11.8
Demand was less eye-catching for two SNP 6 Barclays 5 998.10 7.0 5 JP Morgan 2 650.00 10.7
offerings at the tighter end of the spectrum, 6 BNP Paribas 2 319.75 5.3
from BFCM and LANDESBANK BADEN- 7 JP Morgan 2 567.93 4.0 7 UBS 2 319.75 5.3
8 Standard Chartered 1 250.00 4.1
WUERTTEMBERG. 8 ING 3 472.89 3.3 9 Morgan Stanley 1 250.00 4.1
10 NAB 1 250.00 4.1
9 Goldman Sachs 4 465.17 3.3 5 6,088.28
Total
10 Credit Agricole 4 383.07 2.7
Total 17 14,235.82

Including banks, insurance companies and finance companies. Excluding
equity-related and covered bonds. Excluding publicly owned institutions.

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

International Financing Review January 16 2021 35

However, bankers said US banks could BMPS must report to the European 4HEûmOODGATESûTHENûOPENEDûONû
target the euro market as they themselves Central Bank by the end of January on how 7EDNESDAY ûWITHûlVEûCOVEREDûISSUESûHITTINGû
emerge from reporting periods. it plans to plug its capital shortfall, while the the market.
)TALIANûGOVERNMENTûCONTINUESûTOûTRYûTOûlNDûAû
“I expect we will see a bit of reverse buyer for the long-troubled state-owned “Some of these issuers were already
Yankee supply,” said the third syndicate lender. eyeing the market at the end of last year but
banker. “That sense of lighter supply in the December was not particularly the best
European market will perhaps not be as BMPS is expected to grant access to MONTH vûSAIDûAûBANKER ûh4HEû#AFlLûTRADE û
pronounced as you would expect.” CONlDENTIALûDATAûTOûPOTENTIALûMERGERû with its book peaking above €3bn, showed
partners within days, formally starting the issuers that there is a very strong bid for
BMPS GETS SENIOR NON-PREFERRED privatisation process, according to a Reuters covereds.”
RATING report.
Among them was MEDIOBANCA,which
BANCA MONTE DEI PASCHI DI SIENA’s €50bn EMTN The Italian government has reportedly achieved a couple of notable highlights with
programme has been assigned a B– senior IDENTIlEDû5NI#REDITûASûTHEûIDEALûMERGERû ITSûlRSTûMORTGAGE
BACKEDû/"'ûSINCEû*UNEû
non-preferred rating by Fitch, as the Italian partner, but the latter is prioritising its 2019 despite having to brave a backdrop of
lender’s privatisation saga continues. search for a new chief executive after Jean political instability in Italy.
Pierre Mustier announced his exit last year,
The Italian lender has not issued according to reports. h)TûISûTHEûlRSTûEVERû)TALIANûCOVEREDûBONDû
benchmark SNP debt to-date. The bank with a negative yield [at pricing] and also the
declined to comment on whether it has At the same time, Italy faces political lowest spread paid by Mediobanca on a
plans to issue in the format. turmoil after former premier Matteo Renzi covered bond,” a lead manager said. “It was
pulled his party out of government on a great achievement despite all the political
4HEûRATING ûANNOUNCEDûONû7EDNESDAY ûISû 7EDNESDAY ûSTRIPPINGûTHEûRULINGûCOALITIONûOFû noise. Yesterday BTPs widened by about
one notch below BMPS’s Issuer Default its parliamentary majority. 10bp, it is a bit more stable today.”
2ATINGûOFû" ûREmECTINGûTHEûRISKûOFûBELOW

average recovery prospects. COVERED BONDS Books opened for the 10-year OBG at 17bp
AREA û7ITHûBOOKSûCLOSINGûAROUNDûõ BN û
“Below-average recovery prospects arise EUROS Mediobanca was able to print €750m of
from the use of more senior debt to meet notes at 13bp, with a reoffer yield of –0.077%
resolution buffer requirements and from CAFFIL SUCCESS PROMPTS PICK-UP IN and around 70bp inside BTPs.
the combined buffer of Additional Tier 1, COVERED BOND SUPPLY
Tier 2 and SNP debt being unlikely to In spread terms, bankers away from the
exceed 10% of risk-weighted assets,” said 3UPPLY
STARVEDûINVESTORSûWEREûlNALLYû deal estimated fair value was in the low 10s.
Fitch. DELIVEREDûTHEIRûlLLûOFûCOVEREDûBONDSûLASTû
WEEK ûASûISSUERSûTOOKûCONlDENCEûFROMûAûHITû UNICREDIT BANK AG (HVB) launched a €500m
The agency added that the rating is CAFFIL trade to bring a spectrum of paper. 15-year Hypothekenpfandbrief issue that
assigned to the programme and not to notes bankers said was priced 0.5bp–1bp through
issued under it, specifying that it is not Only one covered bond issue emerged in fair value.
assured notes issued under the programme THEûlRSTûWEEKûOFû ûAûõ MûSEVEN
YEARû
that will be assigned a rating, or that any from Aareal Bank, as a dearth of issuance Marketing began at 7bp area for the no-
RATINGûOFûAûSPECIlCûISSUEûWOULDûMATCHûTHATû continued from 2020, with banks turning GROWûTRADE ûWITHûTHEûlNALûSPREADûlXEDûATû
assigned to the programme. instead to cheap central bank loans for their 3bp as orders surged past €2.1bn. The reoffer
funding. yield was 0.013%.
4HEûNEWûRATINGûISûONû2ATINGû7ATCHû
.EGATIVE ûASûISûTHEû)$2 ûREmECTINGûTHEûBANK Sû "UTû#AFlLûCHANGEDûTHEûTONEûWITHûAûõ BNû “To me it makes sense that a name like
expectation that its capital will fall below trade on Monday that was priced 4bp inside that delivers in the very long end,” a third
requirements from March 2021. initial guidance at 3bp over mid-swaps, banker, away from the trade, said.
having garnered over €3.25bn from 75
h4HEû27.ûALSOûREmECTSûTHEûRISKûOFûAû investors. “Insurers and pension funds still have
downgrade if we consider the capital- needs to lock in levels that are with
strengthening actions taken by the bank to h)TûWASûAûRATHERûBIGûDEALûSIZEûFORû#AFlL û minimally negative or even slightly positive
BEûINSUFlCIENTûANDûVIEWûITSûUPCOMINGû which is mainly reliant on covered bonds – yields. It looked like it was bang on the
strategy to have high execution risks,” said we do not issue senior preferred, senior money from where I’m sitting.”
Fitch. non-preferred or other instruments. It was
ALSOûTHEûLARGESTûBOOKûONûRECORDûFORûAû#AFlLû OUTSIDE THE FLOW
ALL COVERED BONDS (ALL CURRENCIES)
YEARûBOND vûSAIDû3AMIû'OTRANE û#AFlL Sû JYSKE REALKREDIT also managed to price
BOOKRUNNERS: 1/1/2021 TO DATE HEADûOFûTREASURYûANDûlNANCIALûMARKETS through the curve, selling a €500m October
2027 issue covered with a negative
Managing No of Total Share h7EûHADûAûVERYûGOODûSUCCESSûWITHûLARGEû concession of 1bp.
bank or group issues US$(m) (%) bank treasuries, with roughly 10 lead orders
1 SG INûTHEûBOOKSûPLACINGûVERYûLARGEûORDERS û7Eû h)TûISûDElNITELYûNICEûTOûSEEûSOMETHINGûTHATû
2 Commerzbank 2 332.51 10.9 have been pleased by the demand and to see isn’t directly supported by the Eurosystem,”
3 UniCredit 2 310.53 10.1 the most important bank treasuries in said a fourth banker.
4 Credit Agricole 2 248.09 8.1 Europe supporting the transaction at a price
5 JP Morgan 2 235.97 7.7 WHICHûISûmATûFROMûSECONDARYûnûINûLINEûWITHû “The effects from within the eurozone are
6 Barclays 1 205.94 6.7 market conditions for the most liquid spilling over to the rest of the world and
7 Natixis 1 205.94 6.7 covered bonds since last year.” EVERYONEûSTANDSûAûGOODûCHANCEûOFûPROlTINGû
8 Raiffeisen Bank Intl 1 183.95 6.0 from the fact that spreads are disappearing
9 Banca IMI 1 183.95 6.0 in the ECB zone. The game remains pretty
10 Mediobanca 1 183.95 6.0 much in the hand of issuers. Good for them,
Total 1 183.95 6.0 bad for investors.”
7 3,062.96
The long six-year was marketed at plus
Source: Refinitiv SDC code: J15a 10bp area for a no-grow trade. The Danish
bank saw orders peak at over €2bn and was
able to print at a spread of plus 6bp.

36 International Financing Review January 16 2021

BONDS HIGH-YIELD

!FTERû7EDNESDAY SûmURRY ûFURTHERû.ORDICû spurring hopes that a wave of smaller low- targets but achieves the other, or 3.875% if
supply arrived on Thursday from DNB rated companies will be able to follow. the company misses both. It remains at
BOLIGKREDITT ûWITHûTHEûlRSTûGREENûCOVEREDû 3.75% if both targets are achieved.
benchmark of 2021. 4HEûISSUER ûPARTûOFûTHEûlBREûANDû
technology company, formerly known as Stephen Liberatore, portfolio manager of
The leads were able to move 4bp from CenturyLink, raised US$900m with the Ba3/ the TIAA-CREF Core Impact Bond Fund, did
INITIALûGUIDANCEûTOûAûlNALûSPREADûOFû BP ûWITHû BB rated senior notes. The bonds were not participate in the bond offering as it did
the book closing in excess of €3.2bn, priced at 3.75%, inside price talk of 3.875%. not meet the fund’s impact framework,
enabling the issuer to print €1.5bn. Morgan Stanley was lead-left. which is based on how bond proceeds are
used, but he welcomed the broader
A lead manager indicated that fair value The coupon on the bonds will increase if implications of the deal.
for a non-green DNB covered issue would be Level 3 fails to meet targets for the reduction
around 7bp and around 6bp for a green one. of greenhouse gases. According to Moody’s, “It shows that issuers are all starting to
the company has a target to reduce its take a deeper, more expansive look into how
“It’s unbelievable, really strong. You annualised absolute Scope 1 and Scope 2 they impact the environment, which is a
couldn’t ask for more,” the lead said. greenhouse gas emissions by at least 18%, positive development and good for the
and reduce its annualised Scope 3 market as a whole,” he said.
LUKEWARM DEMAND greenhouse gas emissions by at least 10% by
MUENCHENER HYPOTHEKENBANK rounded off the 2025, from 2018 levels. JUNK INVESTORS CHASE RETURNS FROM
week with a trade that met lukewarm HARDEST HIT SECTORS
demand, as books for the tightly priced 5TILITYûCOMPANYû.2'ûBECAMEûTHEûlRSTû53

€500m October 2039 covered bond issue based company to issue a Covid-impacted businesses in the leisure,
ended up less than twice subscribed. sustainability-linked note in November gaming and energy sectors are getting a
when it raised US$500m with an strong reception in the US high-yield bond
“MunHyp has this reputation of being investment-grade-rated seven-year bond tied market, as investors chase yield in sectors
stingy and richly priced, which they proved to reducing greenhouse gas emissions. they think offer the highest potential for
once again. This was not as exuberantly returns as the economy recovers.
PLACEDûASû(6" û$."ûORû#AFlLûBUTûTHISûISûNOTûAû The sustainability-linked bond approach,
surprise, given that this was a pretty which is tied to performance metrics rather Among the primary supply last week were
expensive trade,” the fourth banker said. than a requirement to allocate bond three oil and gas exploration companies, two
PROCEEDSûTOûSPECIlCûGREENûORûENVIRONMENTALû casino businesses, an events hospitality
The €500m no-grow trade was marketed projects, may allow more companies to issue company and a gym operator – all sectors
at 4bp area. Bankers were in agreement on debt tied to ESG concerns. that were hardest hit by the Covid-19
FAIRûVALUEûBEINGûAROUNDûPLUSû BP û7ITHû pandemic and still face uncertain futures.
orders peaking at €1bn, the deal landed on “I think it may open the door to a lot of
top of fair value at 1bp, offering a minimal other high-yield issuers who were thinking “There’s a reach for yield in Covid-
positive yield of 0.033%. their only option was a labelled green impacted sectors and a risk on mentality,”
bond,” said Peter Schwab, a high-yield said one high-yield banker involved in some
However, the tight level led some PORTFOLIOûMANAGERûATû0AXû7ORLD û of the trades.
accounts to drop out and the books ended “Unfortunately, the use of proceeds
up in excess of €875m. requirement can be a constraint and a lot of For example, LEGENDS HOSPITALITY, which
high-yield companies do not have runs concessions and merchandising for
“Plus 1bp was the issuer’s target, which US$300m–$500m to allocate to green sports and entertainment venues, raised
meant zero new issue premium. The issuer projects.” 53 MûWITHûAûNEWûlVE
YEARûNON
CALLûTWOû
ISûSATISlEDûANDûHASûENDEDûITSûWEEKûONûAûHIGHû senior secured note on Thursday, upsizing
note,” said the fourth banker. Schwab said the company’s commitment the deal from US$350m and pricing at 5%, at
to science-based targets and use of third- the tight end of 5%–5.25% price talk.
Away from the single currency, DEUTSCHE PARTYûVERIlCATIONûWASûENCOURAGING
PFANDBRIEFBANK SOLDûTHEûlRSTû53ûDOLLAR
Oil and gas exploration company
denominated covered bonds of the year on “The fact they are willing to spend the CALIFORNIA RESOURCES, which emerged from
7EDNESDAY MONEYûANDûHAVEûITûVERIlEDûISûAûSIGNûOFû bankruptcy only in October, priced a
progress in our minds,” he said. US$600m 2026 senior unsecured at 7.125%,
Arranged through Citigroup, Credit Suisse, inside price talk of 7.25%–7.5%.
Goldman Sachs and NatWest Markets, the From July 16 2026, the coupon increases
US$750m three-year Hypothekenpfandbrief either to 3.8125% if Level 3 misses one of the
issue was priced 3bp tighter than guidance
at mid-swaps plus 23bp and drew over ALL US$ DENOMINATED HIGH-YIELD BONDS ALL EUROPEAN HIGH-YIELD ISSUERS
US$1.25bn in orders. BOOKRUNNERS – 1/1/2021 TO DATE 1/1/2021 TO DATE

HIGH-YIELD Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues US$(m) (%)
UNITED STATES
1 Jefferies 2 1,625.00 8.4 1 Deutsche Bank 2 738.01 17.5
LEVEL 3 BRINGS FIRST JUNK-RATED 2 JP Morgan 19 1,513.86 7.8 2 Barclays 1 604.27 14.3
SUSTAINABILITY-LINKED NOTE 3 Deutsche Bank 17 1,108.51 5.7 3 JP Morgan 1 604.27 14.3
4 Citigroup 12 1,083.97 5.6 4 UniCredit 2 284.95 6.7
LEVEL 3 FINANCING, a subsidiary of Lumen 5 Credit Suisse 17 1,074.32 5.6 5 Banca IMI 2 284.95 6.7
4ECHNOLOGIES ûBECAMEûTHEûlRSTûHIGH
YIELD
6 Barclays 12 1,070.47 5.5 6 BNP Paribas 2 284.95 6.7
rated US company to issue a 7 Morgan Stanley 12 931.94 4.8 7 Banca Akros 2 284.95 6.7
sustainability-linked note last Monday, 8 Bank of America 15 890.18 4.6 8 Morgan Stanley 1 151.21 3.6
9 RBC 7 830.68 4.3 9 Natixis 1 151.21 3.6
10 Goldman Sachs 7 667.39 3.5 10 Mediobanca 1 151.21 3.6
36 19,294.69 3 4,226.17
Total Total
SDC code: B06c
Including US domestics, Euro, foreign, globals. Excluding equity-related debt. Excluding equity-related debt.
Source: Refinitiv
Source: Refinitiv SDC code: B5

International Financing Review January 16 2021 37

Gym operator LIFE TIME meanwhile, on all do things – it has accelerated a lot of Moody’s and S&P said they did not expect
4HURSDAYûPRICEDûAû53 MûlVE
YEARûNON
behaviours and those aren’t going to go the company to undertake major
call two secured note at 5.75%, upsized from backwards,” he said. acquisitions, with S&P expecting similarly
US$750m and priced inside talk of the 6% sized deals to its US$96m acquisition of
area. Life Time, for example, is in a sector Preempt Security in September 2020 that
where many consumers have pivoted to was funded with balance sheet cash.
In a low-yielding environment – where exercising at home during the pandemic,
even average US junk yields are around all behaviours that may become entrenched Bookrunners were JP Morgan, Barclays,
time lows of just 4.41%, according to ICE the longer gyms remain closed. Bank of America, Citigroup, Goldman Sachs,
BofA – investors are being drawn to high- Credit Suisse, Wells Fargo, HSBC, Mizuho, Truist
coupon debt from sectors still being “At 6%, while that number sounds great, I and SVB.
impacted by Covid, which may rally if the don’t feel you’re being compensated for the
economy recovers and consumer activity risks there,” said Coons. EUROPE/MIDDLE EAST/
returns to normal. AFRICA
“Issuers are being opportunistic in a
Brian Kennedy, portfolio manager at market where yields are generically low – TELECOM ITALIA LANDS DEBUT
Loomis Sayles, said he was looking to invest but high relative to everything else. They are SUSTAINABILITY BOND
in Covid-sensitive sectors such as airlines, picking off investors that are hungry for any
restaurants, gaming and cruise lines. yield they can get.” TELECOM ITALIA stormed through last week’s
market with a debut sustainability bond
“Those activities will start in earnest once CROWDSTRIKE MAKES SUCCESSFUL BOND issue that attracted a bumper book as
we see more advances on the vaccine front,” DEBUT investment-grade buyers dip into junk to
he said. “Some of the Covid-sensitive sectors pick up yield.
AREûOFFERINGûAûSIGNIlCANTûPREMIUMûTHANû CROWDSTRIKE ûAûCYBERûSECURITYûlRMûTHATûWENTû
those which are less sensitive to Covid. public in 2019, made an impressive Leads opened the books last Monday on a
Those should continue to recover.” entrance to the US bond market on Tuesday benchmark eight-year bond issue at 2.25%
with a US$750m debut high-yield deal. area (mid-swaps plus 255bp–260bp) –
HOPING FOR REPEAT SIGNIlCANTLYûWIDEûOFûFAIRûVALUE û!FTERûORDERSû
This was a strategy that paid off in 2020. 4HEûlRST
TIMEûISSUERûLANDEDûTHEûEIGHT
YEARû peaked past €3.9bn, those levels were
non-call three unsecured notes at 3%, and cranked in to launch a €1bn bond offering at
Investors in cruise line CARNIVAL’s 11.5% watched them climb as high as 102 in the 1.75%. Guidance was 1.875% area.
2023 secured note in April, for example, secondary market, according to
WEREûABLEûTOûBOOKûPROlTSûASûAûBONDûISSUEDûATû MarketAxess, as investors jumped on a h7EûSTARTEDûTHREE
EIGHTHSûBACKûOFûFAIRû
99 cents on the dollar climbed above 114 for brand new name with strong ratings, a high- value, which I think is pretty standard for a
a yield of around 3.80% as of Thursday, growth and topical business, and lofty stock high-yield name looking for size,” said a
according to MarketAxess. market valuation. banker familiar with TIM’s deal. “Obviously,
it proved successful and we managed to
It has continued to pay off even recently Cyber security has become a hot topic in print an eighth through.”
as low rated, high-coupon new issues software, particularly with the recent news
outperform the market. surrounding a hack at US network 4HEûBANKERûSAIDûITûWASûDIFlCULTûTOûPROVIDEû
MANAGEMENTûCOMPANYû3OLAR7INDSûTHATûISû an exact split between investment-grade
Oil and gas exploration company RANGE said to have compromised scores of other and high-yield investors, but said the
RESOURCES‘ new 8.25% 2029 and radio companies and government agencies. “investor base has clearly migrated more
broadcasting company URBAN ONE’s new towards high-yield with [TIM’s] deal”.
7.375% 2028, priced on January 5 and 8, The trend has driven surging revenue
RESPECTIVELY ûHAVEûEACHûCLIMBEDûAROUNDûlVEû growth at CrowdStrike, with the company Proceeds from the deal will go towards
to six points in secondary trading, according posting US$232.5m of revenues in the third eligible green and social projects in
to MarketAxess data. QUARTERûOFûlSCALû ûUPû ûONûTHEûPRIORû accordance with Telecom Italia’s (TIM’s)
year. It has also driven an equity market SUSTAINABILITYûlNANCINGûFRAMEWORK û
Yet even as investors pile into deals from capitalisation of nearly US$50bn despite the introduced at the end of 2020. The company
these troubled sectors, it is not clear that company posting a net loss of US$24.5m in is aiming to be carbon neutral by 2030,
there is enough remaining upside for a the third quarter. according to that framework.
repeat of 2020.
That growth is expected to continue, with “They have strong social projects in
“Initially when the market reopened after Moody’s predicting revenues will grow by addition to green objectives, so decided to
Covid in April and May, investors were NEARLYû ûINûTHEûlSCALûYEARûENDINGû*ANUARYû combine both in one single issue,” said the
sceptical or charging a lot of additional 2021 and to then double over the following lead banker.
spread for Covid-impacted businesses – now two years.
it seems that many Covid-impacted names IG TINGE
are trading like they have already priced in That growth story, as well as the equity 4HEûDEALûISûITSûlRSTûINûALMOSTûTWOûYEARSûnû4)-û
much of the recovery,” said the high-yield cushion and strong Ba3/BB bond ratings, last issued in April 2019 – and comes after the
banker. supported investor demand for the debut company was downgraded to Ba2 by Moody’s
offering, according to a high-yield banker in December. It also carries BB+ ratings from
It also assumes that consumer behaviour away from the trade. S&P and Fitch. However, like the previous
will return to normal when vaccines are week’s Adler Group bond, TIM’s deal was
widespread. “The market gets excited when they see largely run from banks’ IG desks.
new opportunities and it is in a sector that is
Yet the longer Covid restrictions are in pretty bullet proof, in software,” said the “Telecom Italia didn’t issue last year, so [it]
place, the less likely it seems people will go banker. “Fifty billion dollars is very large for avoided the big widening,” said a second
back to visiting gyms, movie theatres and a sub-investment-grade issuer and I think lead banker. “[It’s] being sold mainly to IG
casinos at the same level they did before the they had scarcity value for a US$750m deal.” buyers, as you’d expect.”
pandemic, said Adam Coons, a portfolio
MANAGERûATû7INTHROPû#APITALû-ANAGEMENT CrowdStrike will use the cash for general
corporate purposes, including acquisitions,
“This environment is not a short-term capital spending and working capital.
thing. This is a dynamic change in how we

38 International Financing Review January 16 2021

BONDS HIGH-YIELD

Bankers were using three TIM bonds as sole global coordinator and sole active Global coordinators and joint bookrunners
comparables for the new bond issue: its bookrunner Morgan Stanley. were Citigroup (B&D) and Goldman Sachs. Joint
2.875% January 2026s seen at 197bp; its bookrunners were Barclays, Credit Suisse, HSBC
3.625% May 2026s quoted at 202bp; and its Books of over €2bn allowed the company and JP Morgan. Leads kicked off two days of
2.375% October 2027s at 205bp. to cut pricing to launch at plus 235bp. A INVESTORûCALLSûONû7EDNESDAY
banker away saw fair value at 220bp.
Telecom Italia, like many other credits, The company last tapped this market in
gave bondholders a rollercoaster ride last The bond marked only the company’s January 2020, when it priced a £435m 6NC2
year – its 2.875% 2026s were seen bid as high second deal since the 2018 Genoa bridge senior secured note at 4.875%. That bond is now
as 5.20% on March 23 2020, up from around disaster. The credit became a fallen angel seen bid at 5.10%, according to Tradeweb data.
1.80% in January, according to Tradeweb. last year, after S&P followed Moody’s in
They are now around 1.50% in secondary downgrading it to junk. ODFJELL FLOATS FIRST NORDIC SLB
trading.
Autostrade last tapped the market in Shipping company ODFJELL achieved a
Instead of tapping the corporate bond December, when it raised €1.25bn via 2% NUMBERûOFûBONDûMARKETûlRSTSûLASTûWEEK û
market, Telecom Italia strengthened its 2028s in what was also an IG-style execution. selling the inaugural sustainability-linked
liquidity position by signing a €1.7bn 12- That bond was seen bid at 1.865%, according BONDûFROMûTHEû.ORDICSûASûWELLûASûTHEûlRSTû
month credit line in May, structured as a to Tradeweb. from this industry sector.
bridge-to-bond facility.
%ACHûOFûTHEûlRSTûTHREEûDEALSûTOûHITûTHEû A high-yield company that, among other
“Telecom Italia didn’t come to the market European high-yield market in 2021 have things, transports acids, animal fats and
in 2020 as they have been focusing on been junk rated but have largely been run petroleum products by sea may not be the
deleveraging but are taking advantage of off of banks’ investment-grade desks. lRSTûlRMûTHATûCOMESûTOûMINDûINûTERMSûOFû
both market conditions and a framework Autostrade tapped the market a day after ESG bond issuance. However, the new issue
NOWûINûPLACE vûSAIDûTHEûlRSTûBANKER û(Eû Telecom Italia (Ba2/BB+/BB+), another underscores the potential of SLBs for
pointed out that there was no negative Double B name which also hit the market in “browner” corporates to use capital markets
reaction to spreads following the company’s size. to align their funding strategies with wider
downgrade on December 10. environmental goals.
German real estate company Adler Group
The 2.875% 2026s showed a slight reaction LANDEDûTHEûlRSTû%UROPEANûHIGH
YIELDûBONDû “It is part of that wider trend of sectors that
– they were seen at 1.67% on December 11, issue of the year on January 7, with a €1.5bn are not that ESG friendly moving in the right
out from 1.57% the previous day. OFFERINGûSPLITûBETWEENûlVEûANDûEIGHT
YEARû direction,” said a banker involved. “Rather
tenors. than a green bond, this type of instrument
Moody’s downgraded Telecom Italia by makes sense because it is part of their
one notch to Ba2 from Ba1, citing the STERLING HIGH-YIELD GETS TOGETHER structural shift to being more sustainable.”
expectation that TIM would remain FOR 2021
adversely affected by a “very competitive DNB, Nordea and SEB were sustainability
operating environment in Italy” that would UK mortgage lender TOGETHER (BB–/BB– by structuring advisers and bookrunners, and
further constrain the company’s ability to S&P/Fitch) landed an upsized £500m senior undertook investor meetings for the
reduce leverage. Moody’s said it expected secured bond last week – a positive result Norwegian krone four-year bond from
net adjusted leverage to peak at 4.2x in 2020 FORûTHEûlRSTûSTERLINGûBONDûINûTHEûHIGH
YIELDû Monday and the trade hit screens on
and improve towards 3.7x by 2022. market since the UK’s transition period with Thursday. Approaching the market at a
the European Union came to an end on spread over three-month Nibor of 575bp–
“In addition, we expect further December 31. BP ûPRICINGûONûTHEûmOATERûWASûSETûATûTHEû
investments in Brazil together with the tight end of guidance. The deal was sized at
restored dividend policy and the increasing Together focuses on borrowers NKr850m (US$100m)
complexity of the group structure to underserved by High Street banks,
TRANSLATEûINTOûHIGHERûBUSINESSûANDûlNANCIALû PROVIDINGûAUCTIONûANDûBRIDGINGûlNANCEûFORû The redemption price is linked to the
risks,” Moody’s said in December. TIME
SENSITIVEûBUYERSûASûWELLûASûlRSTûANDû company’s ability to reduce the carbon
second charge loans. INTENSITYûOFûITSûmEETûBYû ûBYû û
Banca Akros, BBVA, BNP Paribas (B&D), Credit compared with the 2008 level. Although, as
Agricole, Credit Suisse, Deutsche Bank, Santander, Proceeds from the deal – to be issued out a base level, 2008 may appear a relatively
UBI Banca and UniCredit were bookrunners. OFû*ERROLDû&INCOûnûAREûSETûTOûRElNANCEûTHEû unambitious target, it is based on the
BNP Paribas and Credit Agricole were company’s 2024 notes, and to reduce drawn industry standard.
sustainability structuring advisers. balances under its CABS securitisation – or
Charles Street Conduit Asset Backed “The reason why we used 2008 is because
AUTOSTRADE LATEST IN RUN OF Securitisation. this is the year IMO (International Maritime
CROSSOVER DEALS Organisation) has decided as the benchmark
Lead bankers opened books on £450m six- year for their greenhouse gases strategy,”
AUTOSTRADE PER L’ITALIA landed a €1bn nine- year non-call two senior secured notes, said a source at the issuer. “The IMO targets
year bond issue on Tuesday – the latest in a followed by initial price thoughts of 5.5%– refer to performance and improvement in
run of successful crossover deals in the 5.75%. Price talk followed at 5.25%–5.5%. the period 2008 to 2030/2050.”
European corporate bond market. Demand allowed the deal to be increased in
size by £50m, with leads landing the deal on 4HEûlRMûHASûCHOSENûFORûITSû+0)ûFORûTHEû
The Italian motorway concession operator Thursday at the tight end of price talk at 5.25%. NEWûBONDûANûANNUALûEFlCIENCYûRATIOû !%2 û
is rated Ba3/BB–/BB+ by Moody’s/S&P/Fitch, FORûITSûmEETûOFû ûORûLOWER ûWHICHûMUSTûBEû
meaning that it sits in the sweet spot for Prior to Together Mortgage’s deal, the last reached by June 2024 for the bond to
both high-yield buyers and investment- bond in the sterling high-yield market was redeem at par. If the target is not reached,
grade investors looking to add some extra "OPARAN Sûa MûlVE
YEARûNON
CALLûTWOû then the notes will redeem at 101.50.
yield. senior secured bond, which priced on Odjfell’s AER was 8.56 at the end of 2020
November 19. Sterling borrowers then and the company is aiming to reduce this to
Autostrade approached accounts with a steered clear of primary while the UK was 5.89 by 2030.
nine-year bond issue, going straight to hashing out a last-minute Brexit deal with
guidance of mid-swaps plus 250bp area via the European Union.

International Financing Review January 16 2021 39

In addition to the AER target, an external “Given the large number of notes with late on Friday, at levels and interest that
reviewer must have reviewed the company’s exposure to Libor in Fitch rated UK RMBS, bode well for another buy-to-let
mEETûTRANSITIONûPLANûANDûCONlRMEDûTHATûITûISû we expect the next 12 months to pose securitisation which joined the pipeline a
viable for the bond to redeem at par. logistical challenges. Involved parties, such few hours earlier.
as trustees, legal counsels and noteholders,
AER is a widely used metric within the have limited resources, which could delay A £332.6m Class A Tranche was priced at
SHIPPINGûINDUSTRYûFORûSHIPûEFlCIENCY û an orderly transition.” Sonia +95bp on a 3.4 subscribed book, £26m
according to third party opinion provider of Class B notes at Sonia+160bp, (6.7 times
DNV GL, and in this instance is calculated as The volume of UK RMBS and CMBS covered), £18m of Class Cs at Sonia plus
the product of fuel consumption and the sterling notes that Fitch deems to have no 185bp (6.1 times), while its £11.4m of Class
carbon factor of the fuel, divided by the active sponsor totals about £2.7bn, Ds printed at Sonia plus 235bp. Orders for
product of weight and distance travelled. according to Bank of America analyst the Class D notes fell from an 8.2 times
Altynay Davletova. The majority of these subscribed level earlier in the afternoon to
h7EûHADûGOODûENGAGEMENTûWITHûTHEû have outstanding amounts in the tens of 7.2 times.
investors and no one has said that they are millions. But there are some heftier
out purely because of the sector and actually transactions still out there, the largest being An £8.4m X Tranche and £20m Z Tranche,
the traction the deal has got is one of the the £286m outstanding under MORTGAGE both unrated and retained, completed the
best I have seen in Nordic high-yield,” said FUNDING 2008-1, originated by ALLIANCE & deal. The X notes were priced at 450bp over
the banker during the marketing phase. LEICESTER (now merged into Santander). Sonia.

STRUCTURED FINANCE Fitch also highlighted dollar tranches of 7ITHûEXPECTATIONSûFORûPRIMEû2-"3ûISSUANCEû
5+û2-"3ûASûAûSIGNIlCANTûTRANSITIONûRISKû dimmed because of central bank programmes
EMEA MBS factor, as most of those notes are governed like TLTRO and TFSME, supply hopes for 2021
by English law. This means that any are pinned on non-bank vehicles and
RATINGS AGENCIES FLAG LIBOR legislative solution to smoothen the portfolios of buy-to-let mortgages.
LEGACY RMBS RISK transition of US securities would not be
applicable to these notes and a consensual On Friday, another such deal was
One in four UK RMBS transactions are at risk amendment needed. US delays in the announced. LENDCO LTD, a mortgage provider
of disorderly transition from Libor, according transition to SOFR may also lead to an specialising in buy-to-let loans and bridging
TOû&ITCH ûWITHûRATINGSûAGENCIESûmAGGINGûLEGACYû uneven transition for these issuers. lNANCE ûRELEASEDûAûPROPOSEDûCAPITALû
transactions’ continued risk for the structure for its debut securitisation, ATLAS
SECURITISATIONûMARKETûASûTHEûlNANCIALûINDUSTRYû But issuers may be able to manage dollar FUNDING 2021-1. The deal’s provisional portfolio
moves to new money market reference rates. risk through the simple passage of time. size is £303.5m. All the portfolio’s loans
repay on an interest-only basis and all are
Fitch and S&P last week both highlighted “Some bigger UK issuers have shifted performing. None are subject to Covid-19
legacy deals as the biggest challenge for the their programmes to allow them to issue related payment holidays.
market in moving away from referencing SOFR if needed,” said Salim Nathoo, partner
Libor. S&P analysts noted this in an outlook at Allen & Overy in London. “But what they Joint lead arrangers BNP Paribas and HSBC,
BRIElNGûONû7EDNESDAYûWHILEûINûRESEARCHû haven’t done is run positive consent joined as joint lead managers by NatWest
published on Monday, Fitch put legacy processes to switch over from US Libor. Markets, released a capital structure including
transactions with no active sponsors as the Class A, B, C, D and E notes, which are publicly
most at-risk segment of the UK RMBS market. “But for the most part, these bigger UK offered. The deal also includes Class Z1, X and
issuers are the ones who have issued into Z2 tranches. The Z1s and Z2s are being
Less than a year remains for most Libor the US, and have either matured all their retained, while potential investors in the X
referencing products to move on to another dollar bonds anyway or will have done by note are invited to call the syndicate desk.
rate. In the sterling market, while new end of year. If not, then they will mostly
issues have successfully shifted to have AFME negative consent provision in Moody’s and S&P are expected to rate the
referencing Sonia the clock is ticking for their documents because the dollar bond Class As at Aaa/AAA, the Class Bs at Aa1/AA,
outstanding structures. The Association for tranches of UK RMBS have tended to be at the Class Cs A1/A, the Class Ds Baa1/BBB and
Financial Markets in Europe made a call to the shorter dated end of the spectrum, the Class Es Ba1/BB. The Z2 notes will be
ARMSûINûTHEûlRSTûWEEKûOFû*ANUARYûFORûMARKETû mainly in the one to three year range. So it is unrated and the Z1 and X tranches are
participants to get moving with changes. less of an issue than may otherwise have expected to carry CCC and Caa1 ratings
been the case.” respectively.
&ORûLEGACYûDEALS ûQUICKûlXESûSUCHûASû
negative consent processes, which provide a S&P also reminded market participants to The healthy demand for Hops Hill No.1
route around bondholder meetings, are submit any reference rate changes in a should set a good tone for non-bank RMBS
hard to execute. timely manner. It added that a negative issuance in the pipeline. Given the broad
ratings action could result from any rally in credit markets that has kick-started
“Typically, the minimum notice period amendments. the year, demand is already crushing
for noteholder meetings is 21 days for ‘basic relative value in more vanilla assets.
TERMSûMODIlCATIONS ûWITHûAûQUORUMû Fitch said that most transactions had active
requirement of 75% of the senior class note sponsors who would ensure a “smooth “At the top of the capital stack we feel like
balance,” said Fitch. “Should the initial transition”. But it warned that if parties do we can get very comfortable with non-prime
quorum not be reached, the timeline would not take timely action on the transition, or RMBS if you are constructive on housing,
be delayed by a further period for an appear that they will not do so, negative which we are,” said one US investor, with
adjourned meeting with a lower quorum outlooks or ratings watches could follow. strategies including UK assets. “They do tend
threshold. TOûTRADEûCHEAPERûTHANûSOMEûOFûTHEûmOWû
HOPS HILL GETS UK RMBS ROLLING products as there is little bit of an illiquidity
premium there.”
UK Mortgages Ltd’s HOPS HILL NO.1 vehicle got
the UK RMBS market off to a strong start to Hops Hill had set the spreads at guidance
the year as it priced a £416.4m transaction for the Class As, Class Bs, Cs and Ds, at the
100bp area, 175bp area, 200bp area and
250bp area, respectively.

40 International Financing Review January 16 2021

STRUCTURED FINANCE

Initial price thoughts came out on “One thing that cropped up during the demand, the technical backdrop is ripe for
7EDNESDAYûVIAûCO
ARRANGERSûNational process was in respect of the pricing RElNANCINGSûANDûRESETS
Australia Bank and Santander in the 110bp adjustment in the extension period for ABS
area over Sonia for a £332.6m Class A BONDSûnûSOMEûINVESTORSûmAGGEDûTHATû A Morgan Stanley research note published
Tranche, a high 100bp range for £26m of although the market consensus in this case on Monday predicted such activity to reach
Class Bs, a low 200bp range for £18m of is that the bonds are expected to be called, about €15bn–€20bn this year in the
Class Cs and a mid to high 200bp range for in the event there was any maturity European CLO market.
£11.4m Class Ds. extension they wanted to ensure that the
BASISûADJUSTMENTûREmECTEDûTHEûLONGERû One CLO trader said that expectations of a
NAB and Santander (B&D) were also joint maturity in that scenario,” said Millward. RElNANCING RESETûWAVEûWEREûDRIVINGûUPûANû
lead managers on the deal, alongside already well-bid market, especially in the
Standard Chartered. “It’s not so much of a problem for Double B part of the capital stack.
Yorkshire as people don’t expect extension
The Class As are rated Aaa/AAA, the Bs to be a high probability event, but it served h$OUBLEû"SûAREûBENElTINGûFROMûTHEû
Aa1/AA+, the Cs Aa3/AA– and the Ds A2/ as a point of principle for the broader ABS POTENTIALûFORûAûLARGEûAMOUNTûOFûRElSûANDû
BBB+. market methodology, which in terms of resets , so anything below par is getting
trying to drive uniformity Yorkshire were snapped up in expectation of that
Hops Hill securitises buy-to-let mortgages happy to address. This is why the proposal happening,” he added.
originated by KEYSTONE PROPERTY FINANCE. was withdrawn and re-released and we
Keystone built the portfolio under a think this serves as a very good template for CLOs issued in 2020 are prime candidates
FORWARD
mOWûAGREEMENTûWITHû5+-, ûAû other ABS deals.” FORûRElNANCING ûSAIDûTHEûBANKERS û3OMEû
TwentyFour Asset Management managed managers and bankers also have an eye on
fund. In drawing up a pricing methodology, 2019 product.
Yorkshire married the adjustment
PASS FOR BRASS ON SONIA SWITCH METHODOLOGIESûFORûBOTHûVANILLAûmOATINGûRATEû Another CLO banker said that while the
NOTESûANDûCALLABLEûlXEDûRATEûBONDSûTHATûRESETû PIPELINEûFORûRElNANCINGSûANDûRESETSûWASûBIG û
After negotiating on an appropriate pricing onto a Libor reference. it could vary depending on how Triple-A
methodology, noteholders in the Brass No.6 tranches perform in the coming weeks.
and Brass No.7 UK RMBS transactions have “In terms of logic we thought it makes
made the switch from holding bonds sense to use the FRN style approach to “If Triple As stay at 100bp or north of
referencing Libor to Sonia. adjustment pre-call, which keeps it as 100bp, that pipeline becomes much, much
standardised as possible versus other vanilla lower,” he added. “If they get to 90bp and
BRASS NO.6 AND BRASS NO.7 are securitisations FRNs eg covered bonds,” added Millward. inside, then the pipeline picks up pretty
from originator ACCORD MORTGAGES, a SIGNIlCANTLY û3OûITûISûPROBABLYûFAIRLYûBINARYû
Yorkshire Building Society subsidiary. “Then after the call date we took a similar on where AAAs are in determining how big
Noteholders in the £2.3bn of Class A notes APPROACHûUSEDûFORûCALLABLEûlXEDûRATEû that pipeline is on the reset side.”
and £500m of Class Z notes in Brass No.6 INSTRUMENTSûTHATûRESETûONTOû,IBOR û7EûSEEû
and the £2.8bn of Class A notes and $500m this as a very clear and logical way of Initial price thoughts are 40bp area for
of Class Z notes in Brass No.7 were alerted to approaching the issue of callability in ABS Penta’s Class X notes, 98bp–00bp for its
the change in December. while maintaining consistency with the Class As, 155bp–165bp for its Class B-1s,
other two types of scenario, being FRNs and 1.85bp–1.95bp for its Class B-2s, 255bp–
The issuers ran a negative consent process lXEDûRATEûRESETTABLEûINSTRUMENTS v 265bp for its Class Cs and 350bp–360bp for
to make the switch, which allows for avoiding its Class Ds. Class E notes are indicated in
bondholder meetings when enacting certain EMEA CLO the 600 to low 600s and Class F notes in the
administrative changes, if no more than 10% mid to high 800s.
of investors formally object. PENTA CLO 5 TO RESET, MARKET BRACES
FOR WAVE The manager is also seeking to extend
7ITHûTHATûCONDITIONûMET ûTHEûPROCESSû Penta CLO 5’s non-call period, reinvestment
CLOSEDûONû*ANUARYû û0RICINGûWASûlNALISEDûONû European CLO market participants expect a period and maturity date.
the afternoon of January 8. HSBC was SIGNIlCANTûCHUNKûOFûACTIVITYûINûTHEû
solicitation agent for the process. BEGINNINGûOFû ûTOûBEûRElNANCINGSûANDû The non-call would be extended by about 1.5
resets, and that activity kicked off on years and the reinvestment period by about 4
For those who have not already done so, Tuesday with PENTA CLO 5. YEARS û4HEûLEGALûlNALûMATURITYûWOULDûMOVEûOUTû
securitisation issuers have less than 12 by about 14 years, from October 20 2032.
months to change their bonds from Libor to PARTNERS GROUP MANAGEMENT announced a
a regulator-approved reference rate. Many reset of the CLO on Tuesday. BNP Paribas is The deal is expected to be priced next
ABS issuers face a pricing challenge in arranger and lead manager on the transaction, week.
switching from Libor, given that their bonds which originally printed in late 2018.
are callable. US ABS
0ARTNERSûISûSEEKINGûGREATERûmEXIBILITYûINû
“One theme that has come through from the vehicle’s structure as well as a reset of KKR SETS POST-CRISIS SPREAD RECORD
investors is that while they do want to see notes. WITH INDUSTRIAL CMBS
these transactions getting done, they want
to see them being broadly standardised as "ANKERSûAREûPREPARINGûTOûPUSHûRElNANCINGSû Private equity giant KKR delivered a
much as possible,” said John Millward, TOûMARKETûINûTHEûCOMINGûMONTHS û7AREHOUSEû 53 MûmOATING
RATEû#-"3ûBACKEDûBYû
managing director in HSBC’s structured openings have been slower than last year and industrial assets to eager investors last
lNANCEûGROUP those that have opened are relatively week, fetching some of the tightest spreads
undersupplied, said two. SEENûSINCEûTHEû ûlNANCIALûCRISIS
Back in December, the issuers withdrew
the initial consent solicitation to re-release 7ITHûNEWûISSUANCEûTILTINGûTOûUNDERSUPPLY û The single-asset, single-borrower issue,
it a few days later. This was because of some tightening credit conditions and increased KIND 2021-KDIP, was multiple times
investor objections to the proposed pricing investor interest in the asset class stoking oversubscribed, extending the hot streak
methodology and how step ups were that this type of securitised US real estate
applied to it. debt has been riding on since the pandemic,
two buy-side sources said.

International Financing Review January 16 2021 41

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 15/1/2021

Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
JPM/Cantor NR/NR/NR ABS
ARIVO ACCEPTANCE AUTO LOAN US$165.719 1.55 EDSF+100bp

RECEIVABLES TRUST 2021–1

ARIVO ACCEPTANCE AUTO LOAN US$12.523 3.71 IntS+165bp JPM/Cantor NR/NR/NR ABS

RECEIVABLES TRUST 2021–1

ARIVO ACCEPTANCE AUTO LOAN US$6.123 3.82 IntS+340bp JPM/Cantor NR/NR/NR ABS

RECEIVABLES TRUST 2021–1

ARIVO ACCEPTANCE AUTO LOAN US$8.543 3.82 IntS+550bp JPM/Cantor NR/NR/NR ABS

RECEIVABLES TRUST 2021–1

FIAOT 2021–1 US$170.36 1.31 0.45 Wells Fargo/DB NR/AAA/NR ABS
Wells Fargo/DB NR/AA/NR ABS
FIAOT 2021–1 US$17.33 3.15 0.89 Wells Fargo/DB NR/A/NR ABS
Wells Fargo/DB NR/BBB/NR ABS
FIAOT 2021–1 US$20.21 3.68 1.17 Wells Fargo/DB NR/BB–/NR ABS
Wells Fargo/DB NR/B/NR ABS
FIAOT 2021–1 US$8.09 4.06 1.62 MS/BofA NR/NR/NR CMBS
MS/BofA NR/NR/NR CMBS
FIAOT 2021–1 US$8.66 4.07 3.35 BofA/Wells Fargo NR/NR/NR CMBS

FIAOT 2021–1 US$6.35 4.07 5.37

Freddie Mac SPC Series K–1519 US$142.500 9.28 1.32

Freddie Mac SPC Series K–1519 US$654.250 14.8 2.01

Freddie Mac Multifamily Structured US$69.143 5.33 SOFR+200bp

Credit Risk Notes Series 2021–MN1

Freddie Mac Multifamily Structured US161.334 9.54 SOFR+375bp BofA/Wells Fargo NR/NR/NR CMBS

Credit Risk Notes Series 2021–MN1

Freddie Mac Multifamily Structured US$46.095 11.40 SOFR+775bp BofA/Wells Fargo NR/NR/NR CMBS

Credit Risk Notes Series 2021–MN1

FRESB 2021–SB82 Mortgage Trust US$89.659 4.05 0.67 Wells Fargo/JPM NR/NR/NR CMBS
Wells Fargo/JPM NR/NR/NR CMBS
FRESB 2021–SB82 Mortgage Trust US$55.319 5.46 0.86 Wells Fargo/JPM NR/NR/NR CMBS
Wells Fargo/JPM NR/NR/NR CMBS
FRESB 2021–SB82 Mortgage Trust US$95.011 5.37 0.95 DB/BofA/Credit Agricole/Nikko SMBC P–1/A–1+/NR ABS
DB/BofA/Credit Agricole/Nikko SMBC Aaa/AAA/NR ABS
FRESB 2021–SB82 Mortgage Trust US$165.139 7.20 1.18 DB/BofA/Credit Agricole/Nikko SMBC Aaa/AAA/NR ABS
DB/BofA/Credit Agricole/Nikko SMBC Aaa/AAA/NR ABS
GMCAR 2021–1 US$251 0.18 – DB/BofA/Credit Agricole/Nikko SMBC Aa2/AA/NR ABS
DB/BofA/Credit Agricole/Nikko SMBC A2/A/NR ABS
GMCAR 2021–1 US$578.070 0.95 0.23 SG/Citigroup/HSBC/Santander/TD Securities P–1/A–1+/NR ABS
SG/Citigroup/HSBC/Santander/TD Securities Aaa/AAA/NR ABS
GMCAR 2021–1 US$578.070 2.37 0.35 SG/Citigroup/HSBC/Santander/TD Securities Aaa/AAA/NR ABS
SG/Citigroup/HSBC/Santander/TD Securities Aaa/AAA/NR ABS
GMCAR 2021–1 US$139.690 3.62 0.54 SG/Citigroup/HSBC/Santander/TD Securities Aa3/AA+/NR ABS
NAB/Santander/Standard Chartered Aaa/AAA/NR RMBS
GMCAR 2021–1 US$26.290 3.74 0.75 NAB/Santander/Standard Chartered Aa1/AA+/NR RMBS

GMCAR 2021–1 US$24.640 3.74 1.04

HALST 2021–A US$128.100 0.21 –

HALST 2021–A US$415 1.04 0.25

HALST 2021–A US$415 1.85 0.33

HALST 2021–A US$88.770 2.31 0.42

HALST 2021–A US$69.790 2.45 0.61

HOPS HILL NO.1 £332.6 3.09 SONIA+95bp

HOPS HILL NO.1 £26 3.36 SONIA+160bp

“It is an in demand property type with shopping malls where revenues have been cold storage assets spurred the tighter
strong fundamental support, good hammered during the pandemic. spreads for the KKR issue, the senior
institutional support, which results in portfolio manager said.
strong investor demand,” said Alan Todd, “Everything solid is tight and seemingly
head of CMBS research at Bank of America. going tighter,” a senior portfolio manager As more industrial CMBS are expected to
said of industrial and multi-family SASB come to market, their tight spreads have
The deal, for which Barclays was the sole issues. given pause among some investors.
lead manager, is secured by many of the 98
INDUSTRIALûPROPERTIESûTHEûINVESTMENTûlRMû KKR’s US$324.4m Triple A rated note was “I like the asset class, but not at these
acquired late last year. priced at one-month Libor plus 55bp, levels,” said a second fund manager.
marking the tightest level for the most
On December 11, KKR bought 9.7 million SENIORûTRANCHEûINûAûmOATING
RATEûINDUSTRIALû NAVIENT PREPS ABS AS INVESTORS LEAN
square feet of industrial properties from SASB transaction since the global credit TO PRIVATE STUDENT LOANS
High Street Logistics Properties for crisis, according to BofA’s Todd.
US$835m. A month prior, it acquired 1.6 Investor preference for private student loan
million square feet of distribution space in The spread was sharply tighter than the ABS is expected to see a warm welcome for
Atlanta for US$136m from four different 90bp spread on the Triple A, two-year tranche THEûlRSTûSUCHûDEALûOFûTHEûYEARûFROMûNAVIENT
sellers and another distribution facility in in the US$1.32bn industrial SASB deal from this week, amid concerns over risks to deals
Phoenix from Cohen Asset Management for LINEAGE LOGISTICS which priced in October, backed by government supported loans.
US$32m. COLD 2020-ICE5, which was the last
standalone industrial CMBS issue, is secured Student loan provider NAVIENT last Monday
There has been plenty of interest in by 14 cold storage facilities across 19 states. mandated Barclays, Bank of America, JP Morgan
lNANCINGûTHESEûDEALSûFROMû#-"3ûINVESTORS û and RBC as joint bookrunners on a
who have stayed away from hotels and Investors’ greater familiarity with US$817.7m securitisation of private student
warehouse and distribution facilities than

42 International Financing Review January 16 2021

STRUCTURED FINANCE

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 15/1/2021 (CONTINUED)

Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
Aa3/AA-.NR RMBS
HOPS HILL NO.1 £18 3.36 SONIA+185bp NAB/Santander/Standard Chartered A2//BBB+/NR RMBS
NR/NR/NR RMBS
HOPS HILL NO.1 £11.4 3.36 SONIA+235bp NAB/Santander/Standard Chartered Aaa/NR/NR CMBS
Aa3/NR/NR CMBS
HOPS HILL NO.1 £8.4 — — NAB/Santander/Standard Chartered A3/NR/NR CMBS
Baa3/NR/NR CMBS
KIND 2021–KDIP US$324.400 1.88 1mUSL+55bp Barclays NR/NR/NR CMBS
NR/NR/NR CMBS
KIND 2021–KDIP US$50.100 1.88 1mUSL+80bp Barclays NR/NR/NR CMBS
NR/NR/NR CMBS
KIND 2021–KDIP US$45.400 1.88 1mUSL+100bp Barclays P–1/F1+/NR ABS

KIND 2021–KDIP US$55.100 1.88 1mUSL+125bp Barclays

KIND 2021–KDIP US$76.400 1.88 1mUSL+155bp Barclays

KIND 2021–KDIP US$58.300 1.88 1mUSL+205bp Barclays

KIND 2021–KDIP US$50.300 1.88 – Barclays

KIND 2021–KDIP US$35 1.88 – Barclays

Santander Consumer Auto US$102 0.23 0.18 Citigroup/BNP Paribas/Santander

Receivables Trust 2021–A

Santander Consumer Auto US$210 0.95 0.23 Citigroup/BNP Paribas/Santander Aaa/NR/AAA ABS

Receivables Trust 2021–A

Santander Consumer Auto US$210 2.12 0.33 Citigroup/BNP Paribas/Santander Aaa/NR/AAA ABS

Receivables Trust 2021–A

Santander Consumer Auto US$66.420 3.20 0.48 Citigroup/BNP Paribas/Santander Aaa/NR/AAA ABS

Receivables Trust 2021–A

Santander Consumer Auto US$21.330 3.70 0.72 Citigroup/BNP Paribas/Santander Aa2/NR/AA ABS

Receivables Trust 2021–A

Santander Consumer Auto US$19.580 3.98 1.04 Citigroup/BNP Paribas/Santander A2/NR/A ABS

Receivables Trust 2021–A

Santander Consumer Auto US$19.580 4.30 1.58 Citigroup/BNP Paribas/Santander Baa3/NR/BBB ABS

Receivables Trust 2021–A

Santander Consumer Auto US$13.980 4.49 3.31 Citigroup/BNP Paribas/Santander NR/NR/NR ABS

Receivables Trust 2021–A

Santander Consumer Auto US$15.390 4.49 5.86 Citigroup/BNP Paribas/Santander NR/NR/B ABS

Receivables Trust 2021–A

Verus Securitization Trust 2021–R1 US$462.812 2.14 0.82 Credit Suisse/Barclays/Nomura NR/NR/NR RMBS
NR/NR/NR RMBS
Verus Securitization Trust 2021–R1 US$38.226 2.14 1.06 Credit Suisse/Barclays/Nomura NR/NR/NR RMBS
NR/NR/NR RMBS
Verus Securitization Trust 2021–R1 US$58.128 2.14 1.26 Credit Suisse/Barclays/Nomura NR/NR/NR RMBS
NR/NR/NR RMBS
Verus Securitization Trust 2021–R1 US$31.275 4.00 2.34 Credit Suisse/Barclays/Nomura NR/NR/NR RMBS
NR/NR/NR RMBS
Verus Securitization Trust 2021–R1 US$18.639 4.00 3.20 Credit Suisse/Barclays/Nomura

Verus Securitization Trust 2021–R1 US$13.269 4.00 4.20 Credit Suisse/Barclays/Nomura

VWH Capital VCAT 2021–NPL1 US$246 1.31 2.29 Credit Suisse

VWH Capital VCAT 2021–NPL1 US$25 2.91 4.83 Credit Suisse

LOANûRElNANCINGS ûNAVSL 2021-A, which is pandemic with market expectations that 4HISûPREFERENCEûISûREmECTEDûINûSECONDARYû
expected to be announced this week. deferment on interest accrual and collection trading where private loan deals have traded
would continue beyond this month. inside FFELP since the pandemic took hold.
The deal leads US$13bn of private student
loan ABS supply expected by JP Morgan this Moreover, speculation whether the Biden Before the health crisis, government-
year, up from US$12.1bn in 2020. administration may forgive government- backed student loan ABS had traded tighter
guaranteed loans has also reduced the than private loan deals due to their federal
-OREûGOVERNMENTûlNANCEûAIDûANDûRELIEFû appeal of FFELP secured ABS, investors said. guarantee.
measures will probably avert a renewed
jump in defaults and delinquencies, which Given these risks, Chen sees deals backed Average secondary spreads on three-year
investors say will underpin demand. BYûPRIVATEûRElNANCINGûOFûSTUDENTûLOANSûASû Triple A private student loan paper have
the more attractive option. They tend to narrowed to 60bp over Libor from a multi-
In contrast, investors remain cautious on feature loans lent to borrowers who work in year wide of 310bp in late March, while
government supported student loan ABS high-income jobs such as doctors and those on three-year Triple A government-
due to forbearance measures and policy lawyers, rather than FFELP deals secured by backed ABS moved to Libor plus 75bp,
risks under a new administration, loans to undergraduate students who have which is inside the 225bp seen last year,
often no steady income. according to Bank of America.
h7EûONLYûINVESTûINûPRIVATEûRElûLOANS û
which is a pure credit play without policy “These deals are actually [backed by] Bank of America analysts however see this
uncertainty,” said Tracy Chen, head of underwritten loans from private issuers where as a buying opportunity for FFELP bonds.
STRUCTUREDûlNANCEûATû"RANDYWINEû'LOBAL they are high-quality loans from borrowers with
HIGHûCASHmOWSûANDûHIGHûINCOME û4HESEûPOOLSû h7EûPREFERû&&%,0û!"3ûOVERûPRIVATEû
In December, the Department of will continue to do well,” said Phil Armstrong, student loan ABS,” they wrote in a research
Education extended relief on US$1.5trn in senior portfolio manager at Invesco. note on Friday. “Both sectors face a number
federally-held student loans to January 31 in of uncertainties this year and beyond, but
a bid to counter hardship due to the

International Financing Review January 16 2021 43

FFELP ABS provide incremental spread and Demand for the US$1.117bn issue, HALST The most junior tranche, a US$69.8m AA+
THEûBENElTûOFûTHEûFEDERALûGOVERNMENT Sû 2021-A was “extremely robust”, even as it rated B tranche with a 2.45-year weighted
ultimate guarantee.” competed with two other auto ABS offerings average life, was the most oversubscribed,
on the same day, a source close to the deal fetching nearly US$700m in orders.
HYUNDAI AUTO LEASE DEAL ACHIEVES said.
RECORD LOW YIELD “In terms of market reception, it was a
7ITHûTIGHTûCREDITûSPREADSûANDûLOWû carry-over from what we saw in the latter
HYUNDAI racked up huge investor orders for Treasury yields the deal achieved an all-in half of 2020,” the source said. Societe Generale
ITSûlRSTû53û!"3ûTRANSACTIONûOFû ûLASTû BLENDEDûYIELDûOFû ûACROSSûlVEûRATEDû was the structuring lead while Citigroup,
Tuesday, resulting in the lowest yield ever tranches, which is an all-time low for an HSBC and Santander were joint leads.
for an auto lease securitisation. auto lease ABS, according to the same
source. Hyundai was joined in the market last
Tuesday by two other auto issuers. GENERAL

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/1/2021

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

SSAR Cades social US$5bn Jan 20 2031 1.375 99.72 MS+23/T+23.8 1.405
US DOLLARS
Jan 12 2021

Jan 12 2021 KfW US$5bn Jan 22 2026 0.625 99.98 MS+3/T+10.475 0.628
Jan 12 2021 MuniFin US$1.5bn Mar 20 2026 0.625 99.62 MS+8/T+17.78 0.7
Jan 13 2021 JBIC US$1.5bn Jan 21 2031 1.25 98.99 MS+25/T+26.1 1.358

Jan 13 2021 NIB US$1.25bn Jan 21 2026 0.5 99.58 MS+3/T+10.625 0.586

Jan 13 2021 Ontario US$3.5bn Jan 21 2026 0.625 99.47 MS+17/T+26.4 0.733

Jan 14 2021 AFD US$2bn Jan 22 2026 0.625 99.45 MS+19/T+26.6 0.737
Jan 14 2021 EIB Sofr+100 104
Jan 15 2021 NWB US$1bn Jan 21 2026 0.125 99.799 Sofr+20 -
EUROS Austria US$1bn Feb 15 2023 0 101.8 MS+2/T+8.8 0.223
Jan 11 2021 CPPIB 0.25 98.93
Jan 11 2021 EFSF €200m incr Jul 15 2023 0 103.2 - -
Jan 11 2021 (€9.78875bn)
EFSF Jan 18 2041 0.05 97.69 MS+24/B+61 0.305
Jan 11 2021 EIB SAB €1bn Jan 20 2031 0.01 100.3 MS -11/B+18.1 -0.317
Jan 11 2021
€3bn 0 102.4

€2bn Jan 18 2052 MS +9/B+24.2/ 0.126
€1.5bn May 15 2041 OAT-20.4 -0.003

MS-7/B+30.6/
OAT-6.3

Jan 12 2021 Belgium €6bn Oct 22 2031 MS-7/B+25.95 -0.216

Jan 12 2021 CoE €1bn Jan 20 2031 0 103.4 MS-14/B+14.6 -0.332

Jan 12 2021 LRP €1bn Jan 16 2023 0.01 101.2 MS-7 -0.587
Jan 12 2021 Rentenbank 0 103.3 MS-12/B+18.6 -0.429
Jan 12 2021 SNCF €850m Jul 19 2028 1 98.21 OATs+56 1.055
Jan 13 2021 Austria 0.5 107.8 - -
€1.5bn Jan 19 2061
Jan 13 2021 Berlin 0.1 99.7 MS+4/B+41.6 0.115
€150m incr Feb 20 2029
Jan 13 2021 BNG (€11.429077bn) 0 102.5 MS-3/B+26 -0.245

Jan 13 2021 Dexia CL €1.25bn Jan 18 2041 0 101.7
Jan 13 2021 L-Bank 0.01 102.9
€1bn Jan 20 2031

€1.5bn Jan 21 2028 MS+11 -0.246
€1bn Jan 20 2031 MS-6/B+23.5 -0.278

44 International Financing Review January 16 2021

BONDS SUMMARY DETAILS

MOTORS priced a US$1.598bn prime auto loan HIGHERûTHANû'- Sû4RIPLEû!û
YEARû7!,û from a record high of 163.7 recorded in
deal, GMCAR 2021-1, which was upsized from notes priced at a yield of 0.357%. August.
US$1.298bn, while SANTANDER raised
US$699.261m with its own prime auto Still, secondary spreads on three-year “Despite lease ABS having both credit
transaction, SCART 2021-A. Triple A auto lease bonds have recovered to and residual value risk, the market
an average of 22bp over swaps, down from appreciates the strong credit protection,
Auto lease ABS issues typically offer 130bp last March, amid a relative shortage the back-ended residual risk and strong
higher yields than prime auto paper as they of securitised debt, low delinquencies and residual value performance over time,”
carry residual value risks on the underlying low interest rates. Citigroup analysts wrote in a recent
collateral. research note.FORD MOTOR and MERCEDES-BENZ
The Manheim Used Vehicle Value Index, are next in line for auto lease issuance,
Hyundai’s A-4 tranche with a 2.31-year which is widely used to gauge residual ACCORDINGûTOû 'ûlLINGS
7!,ûCLEAREDûATûAû ûYIELD ûWHICHûISû value, stood at 161.1 in December, retreating

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+26 area, MS+25 - US$10bn, 130acs Aa2/NR/AA BofA/HSBC/JPM/SG Asia 47%, RoEur 22%, EZ 20%, Amers
area 11%. CB/OI 45%, Bks 33%, AM/Ins/PF
US$9.1bn, 120acs 19%, Other 3%. ESG 40%, Conventional
MS+5 area - US$3.1bn Aaa/AAA/-/Scope BMO/Citi/MS 60%.
US$4.7bn AAA BofA/GS/JPM/TD Eur 43%, Amers 31%, Asia 26%. Tsy 52%,
MS+10 area, MS+9 - CB/OI 33%, AM 11%, Other 4%.
area 1 US$1.55bn, 35acs Aa1/AA+ -

MS+29 area, MS+26 US$7.3bn, 140acs A1/A+ Daiwa/Barc/Citi/GS Asia 44.6%, EMEA 42.8%, Amers 12.6%.
area AM/HF 17.4%, Bks 47.5%, CB/OI 26.8%,
US$3.5bn Ins/PF 7.7%, Other 0.6%.
MS+4 area, MS+4 0 US$1.5bn Aaa/AAA Barc/HSBC/JPM/Nomura Asia 37%, Amers 33%, EMEA 30%. Bks
area US$1.2bn 46%, CB/OI 42%, Ins/PF/Corp 7%, FM
- 5%.
MS+20 area, MS+17 - €8.1bn Aa3/A+/AA-/AAL BofA/Citi/RBC/TD EMEA 54%, Amers 35%, Asia 11%. Bks
(the #) €38.5bn 34%, CB/OI 33%, AM 23%, Ins/PF/Corp
7%, Other 3%.
MS+20 area, MS+20 - €31.5bn NR/AA/AA Barc/BofA/BNPP/HSBC/JPM -
area €22bn
Aaa/AAA/AAA BMO/CIBC/RBC/TD -
Sofr+22 area - €50bn Aaa/AAA BMO/RBC -

MS+4 area, MS+2 - €6bn, 120acs

-- - Aa1/AA+/AA+/AAA Uni -
€2.55bn
MS+25 (+/-1 WPIR) 0 €3.3bn Aaa/AAA/AAA Barc/BNPP/BofA/GS -
- Aa1/AA/AA Barc/DB/JPM
MS-9 area 1 €2.2bn EZ 45%, UK/Switz 36%, RoEur 15%, Asia
€2.1bn, 60acs 4%. FM 48%, Bks 31%, CB/OI 14%, Ins/
MS+11 area 1 Aa1/AA/AA Barc/DB/JPM PF 6%, Other 1%.
MS-5 area - €6.2bn Aaa/AAA/AAA BofA/CA-CIB/LBBW/Santan
€800m EZ 49%, UK/Switz 39%, RoEur 12%. FM
MS-5 area 1.5 Aa3/AA/AA- BNPPFortis/Citi/JPM/Natx/SG 59%, Bks 22%, Ins/PF 13%, CB/OI 6%.

MS-11 area, MS-13 0 Aa1/AAA/AA+ BNPP/DB/GS/HSBC Ger/Aus/Switz 21%, Fr 19%, Nordics
area 15%, UK/Ire 15%, Benelux 3%, RoEur
26%, Amers 1%. FM/Ins/PF 55%, Bks/
- - NR/NR/AAA Uni ALM 36%, CB/OI 6%, Other 3%.
MS-10 area - Aaa/AAA/AAA BNPP/JPM/MS
OATs+59 area - Aa3/AA-/A+ BNPP/CA-CIB/GS/RBC/SG UK 30%, Scandi 12%, It 9%, Fr 9%, Neth
- - Aa1/AA+/AA+/AAA BofA 9%, Ger 8%, RoEur 16%, RoW 7%. Tsy
34%, FM 33%, CB/OI 11%, HF 7%, PF 7%,
MS+5 area -1 Bks 6%, Ins 2%.

MS-2 area - Ger/Aus/Switz 27%, Fr 17%, Nordics
11%, It 10%, Benelux 5%, UK 7%, Sp
MS+13 area - 7%, RoEur 13%, Other 3%. Bks 47%,
MS-6/-7 - AM 35%, CB/OI 10%, Ins/PF/Corp 5%,
Other 3%.

-

-

-

-

Aa1/-/AAA/Scope Deka/Helaba/HSBC/JPM/LBBW/TD -
AAA
Aaa/AAA/AAA BNPP/JPM/MS/TD Asia 33%, Fr 19%, RoEur 17%, UK/Switz
15%, Ger 10%, Amers 6%. AM 43.7%,
Aa3/AA/AA- Barc/Citi/CA-CIB/Natx/SG CB/OI 38.5%, Bks 17.2%, Other 0.6%.
Aaa/AA+/-/Scope Barc/CMZ/JPM/Uni
AAA -

-

International Financing Review January 16 2021 45

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/1/2021 (CONTINUED)

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
0.1 99.86 SPGB+4 0.114
Jan 13 2021 Spain €10bn Apr 30 2031

Jan 13 2021 World Bank SDB €2bn Jan 21 2061 0.2 99.89 MS+23/B+31.5 0.203

Jan 14 2021 Agence France Locale €500m Mar 20 2031 0 100.1 OATs+31 -0.009
0.01 101.7
Jan 14 2021 Berlin €500m Nov 21 2023 0.01 103 MS-7/B+18.2 -0.582
Jan 14 2021 LRP 0.5 107.1 MS-5/B+30.1 -0.282
Jan 15 2021 Austria €600m Jan 21 2031 - -
Sonia+100 104.9
€250m incr Apr 20 2027
0 102.1
(€10.559028bn)
1.25 98.95
STERLING EIB £1.5bn Jan 18 2027 3mN+150 107.4 Sonia+18 -
Jan 11 2021 3mN+125 105
0.123 100
SWISS FRANCS CDC SFr100m Jun 26 2028 3mS+75 - MS+9/Eidg+35.6 -0.285
Jan 12 2021 1.25 98.92
1.5 97.08
NON CORE IFC A$50m incr Feb 6 2031 1 99.98 ASW+30/ 1.363
Jan 11 2021 (A$300m) 3mS+100 105.1 ACGB+29.15
Jan 13 2026 4.25 115.8 -
Jan 11 2021 MuniFin NKr2bn Jan 10 2025 1.3 99.51 ~3mN+3 -
Jan 11 2021 MuniFin
NKr2.1bn incr Jan 18 2024 3mN flat
(NKr4.1bn) Jan 19 2026
Jan 11 2021 Akademiska Hus Feb 6 2031 - 0.123
Jan 12 2021 Vasteras SKr1bn - -
Jan 13 2021 IFC Apr 15 2035 ASW+30/ 1.365
SKr250m ACGB+29.4
Jan 13 2021 IFC social Jan 28 2028 ASW+34/ 1.732
A$50m incr Jan 21 2026 ACGB+28.25
Jan 14 2021 EIB CAB (A$350m) Jan 9 2025 MS-8/CAN+47.3 1.003
Jan 14 2021 Orebro Kommun green - -
Jan 14 2021 Rentenbank A$20m incr Jan 27 2031 ASW+1/ACGB-2.1 0.25
(A$645m)
Jan 15 2021 Asian Development Bank ASW+31/ 1.353
C$1bn ACGB+30.85

SKr500m

A$70m incr
(A$1.57bn)

A$200m

CORPORATES GA Global Funding Trust US$650m Jan 15 2026 1.625 99.885 T+117 1.649
US DOLLARS
Jan 8 2021 US$900m Jul 12 2024 0.55 99.93 T+35 0.569

Jan 11 2021 American Honda Finance US$550m Jan 13 2031 1.8 99.74 T+70 1.829

Jan 11 2021 American Honda Finance US$300m Jan 12 2024 3ml+28 100 3ml+28 3ml+28
US$800m Feb 15 2024 0.95 99.87 T+77 0.992
Jan 11 2021 American Honda Finance
Jan 11 2021 Berry Global US$450m Feb 1 2031 1.75 99.25 T+70 1.832

Jan 11 2021 Duke Realty green US$700m Feb 1 2031 2.2 99.66 T+110 2.238

Jan 11 2021 Simon Property Group US$800m Feb 1 2028 1.75 99.76 T+95 1.786

Jan 11 2021 Simon Property Group US$750m Jan 30 2026 1.95 99.04 T+165 2.151

Jan 12 2021 Aviation Capital Group US$300m Jul 14 2026 3 99 T+270 3.199
US$750m Feb 21 2028 2.75 98.75 T+215 2.946
Jan 12 2021 Main Street Capital
Jan 13 2021 Avolon Holdings Funding US$750m Feb 21 2026 2.125 98.8 T+190 2.377

Jan 13 2021 Avolon Holdings Funding US$260m Dec 17 2030 3.2 100.9 T+200 3.09
US$500m Feb 1 2031 3.375 98.935 T+237.5 3.502
Jan 13 2021 CI Financial US$500m Feb 15 2026 0.875 99.817 T+43 0.912
Jan 14 2021 American Assets
Jan 14 2021 Public Storage

46 International Financing Review January 16 2021

BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution
SPGB+8 area 1 €55bn, 290acs Baa1/A/A-/A BBVA/Citi/HSBC/Santan/SG/JPM
Sp 20.6%, UK/Ire 15.4%, Fr/It 14.7%,
MS+25 area, MS+24 - €3.6bn, 110acs Aaa/AAA BofA/GS/HSBC/Natx RoEU 13.6%, Asia 11.5%, Ger/Aus/Switz
area 9.0%, Nordics 8.5%, ME 4.3%, US/
€2.2bn Canada 2.1%, RoW 0.3%. FM 44.6%, Tsy
OATs+35 area, - - Aa3/AA- BNPP/DB/JPM 20.8%, Ins/PF 15.8%, CB/OI 6.3%, Bks
OATs+33 area - 6.3%, HF 5.5%, Other 0.7%.
MS-7 area - - Aa1/AAA/AAA DB/Uni Ger 42%, Fra 22%, UK 10%, RoE 25%,
MS-5 - -/-/AAA HSBC/LBBW/NatWest/Uni Other 1%. AM/Ins/PF 87%, Bk/Tsy/Corp
0 - £1.8bn Aa1/AA+/AA+/AAA Erste/Uni 11%, CB/OI 2%.
-
>12acs
-
- -
- -
-
Sonia+19 area, - - Aaa/AAA/AAA BMO/DB/RBC/StCh/TD -
Sonia+18 -5 -
- Aa2/AA CS/DB (1 lead) Switz 100%. Tsy 46.58%, Ins
MS+9 area - 31.06%, AM 19.25%, PF 3.11%.
C$1.46bn
ASW+30 - - Aaa/AAA TD/Nomura -
-
- - - Aa1/AA+ SEB -
- - Aa1/AA+ Nordea -
US$2.9bn
- - US$1.3bn -/AA Danske -
- - US$1bn NR/AAA Danske -
- - US$600m Aaa/AAA TD/Nomura -
US$3.2bn
- - US$1.6bn Aaa/AAA TD -
US$2bn
MS-7 area - US$2.5bn Aaa/AAA/AAA BMO/CIBC/NBF/Scotia/TD -
- - US$4.5bn -/AA+ Danske/HCM -
- - US$600m Aaa/AAA/AAA JPM -
US$2.3bn
ASW+31 area - US$2.2bn Aaa/AAA/AAA Nomura/RBC/JPM -
-
T+145 area Debut US$2.3bn A3/A-/A JPM/RBC/USB/WFS
T+120 (+/-3) US$1.5bn
3 A3/A- Barc/BNPP/Citi/SMBC -
T+ 50 area, T+35
(the #) -1 A3/A- Barc/BNPP/Citi/SMBC -

T+87.5 area, T+75 - A3/A- Barc/BNPP/Citi/SMBC -
(+/-5) -3 NR/BBB-/BBB- Citi/JPM -

3ml+ Equiv, 3ml+28 -4 Baa1/BBB+ Barc/JPM/RBC/WFS -

T+105-110, T+85 -1 A3/A DB/Barc/SMBC/WFS -
(+/-5)
-2 A3/A DB/Barc/SMBC/WFS -
T+95 area, T+75
(+/-5) -28 Baa2/BBB- DB/BNPP/Citi/Miz/RBC -

T+130 area, T+115 4 NR/BBB- RBC/SMBC/Truist -
(+/-5) -17 Baa3/BBB-/BBB- JPM/BNPP/Miz/MUFG/Truist -

T+115 area, T+100 -18 Baa3/BBB-/BBB- JPM/BNPP/Miz/MUFG/Truist -
(+/-5)
2 -/BBB BofA -
T+212.5 area, T+180 - Baa3/BBB-/BBB- BofA/MS/WFS -
(+/-5) -2 A2/A Bofa/JPM/WFS -

T+287.5

T+255 area, T+225
(+/-5)

T+230 area, T+200
(+/-5)

T+225 area

T+Mid-High 200s

T+60 area, T+45
(+/-3)

International Financing Review January 16 2021 47

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/1/2021 (CONTINUED)

Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)
0.75 99.959 T+55 0.764
Jan 14 2021 Pioneer Natural Resources US$750m Jan 15 2024 (Jan 2022) 99.981 T+65 1.129
99.742 T+105 2.179
Jan 14 2021 Pioneer Natural Resources US$750m Jan 15 2026 1.125 98.76 T+350 3.982

Jan 14 2021 Pioneer Natural Resources US$1bn Jan 15 2030 2.15 99.2
98.07
Jan 14 2021 Prospect Capital US$325m Jan 22 2026 3.706 99.86

EUROS ABB Finance BV €800m Jan 19 2030 0 99 MS+35/B+66.8 0.089
Jan 11 2021 99.86 B+271.8 2
98.9 MS+85/B+116.8 0.639
Jan 11 2021 Aroundtown hybrid €600m Perpetual (Jul 2026) 1.625 99.07
100.1
Jan 11 2021 Icade €600m Jan 18 2031 0.625 99.1
99.68
Jan 11 2021 La Poste €750m Jul 18 2029 0 99.09 MS+40/B+72.9/ 0.118
Jan 11 2021 La Poste €1bn Jan 18 2036 0.625 OAT+52.7 0.635
Jan 11 2021 Logicor €650m Jan 14 2031 0.875 0.991
Jan 11 2021 TIM SpA Sustainable €1bn Jan 18 2029 1.625 MS+65/B+96.2/
Jan 11 2021 Veolia Environnement €700m Jan 14 2027 0 OAT+75.1
Jan 12 2021 Autostrade €1bn Jan 15 2030 2
Jan 12 2021 E.ON €600m Jan 19 2028 0.1 MS+120/B+151.5
Jan 12 2021 Exor €500m Jan 19 2031 0.875
MS+205.6/ 1.75
B+238.9 -0.021

MS+38/B+69.1

MS+235/B+267.6 2.111

MS+43/B+74.3 0.141

MS+115/B+146.5 0.971

Jan 12 2021 Hemso Treasury €500m Jan 19 2028 0 99.17 MS+45/B+75 0.119
Jan 12 2021 Holcim €500m Jul 19 2027 0.125 99.64
Jan 12 2021 Holcim €650m Jan 19 2033 0.625 99.56 MS+53/B+84.6 0.181
Jan 12 2021 PSA Banque €500m Jan 22 2025 0 99.95
Jan 13 2021 Abertis hybrid €600m Perpetual (Apr 2027) 2.625 98.6 MS+75/B+115.6 0.663

99.92 MS+47/B+72.5 0.013

100 MS+ 326.9/ 2.875
100 B+359.5
100
Jan 13 2021 Balder Finland €500m Jan 20 2029 1 100 MS+133/B+166.4 1.011

Jan 13 2021 National Grid €500m Jan 20 2028 0.163 129.2 MS+52/B+81.8 0.163
€650m Perpetual (Jul 2026) 2.5 98.77
Jan 13 2021 Wintershall Dea hybrid €850m Perpetual (Jan 2029) 3 99.52 MS+292.4/ 2.5
€550m Jan 22 2031 0.905 B+322.5
100.5
Jan 13 2021 Wintershall Dea hybrid 100.1 MS+331.9/B+365.5 3

Jan 14 2021 NorteGas Energia MS+115/B+148.7 0.905

STERLING Clarion Housing £50m incr Apr 19 2048 3.125 G+88 1.768
Jan 11 2021 (£450m) Jan 20 2041 1.5 G+75 1.572
£350m Feb 20 2025 0.875 G+103 -
Jan 13 2021 Motability social
£400m
Jan 13 2021 VW FS

SWISS FRANCS Deutsche Bahn SFr400m Jan 28 2036 0.1 MS+18/Eidg+40.9 0.065
Jan 11 2021 SFr300m Feb 11 2028 0.375 MS+80/Eidg+100.1 0.357

Jan 11 2021 Swiss Prime Site green

48 International Financing Review January 16 2021