AUGUST 25 2018 ISSUE 2248 www.ifre.

com

Aramco’s US$100bn IPO put on hold as Saudi

eyes other sources of cash for Vision 2030

Fast and furious: German banks open senior

preferred market with a flurry of issuance

World Bank delivers world first with public

offering of blockchain Kangaroo bond

BONDS EQUITIES PEOPLE & MARKETS PEOPLE & MARKETS

Intesa’s “brave San Miguel Mexican Popular US banks plan
trade” reopens follow-on targets shareholders bond syndication
Italian bond Philippines ECM sue Spain over PLATFORMûlTûFORû
market record resolution the 21st century
05 07 09 10
BELT & ROAD ROUNDTABLE
8:30 – 11am | Wednesday September 12 2018 | Hong Kong
Sponsored by:

China’s Belt & Road Initiative has the potential to transform growth across a long line of emerging economies along the
expanded trading route. President Xi Jinping’s signature scheme has already triggered massive infrastructure developments
to improve connectivity between China, South-East Asia and Europe, as governments and contractors step up cross-border
investments.

Financing, however, is another story. Many projects are based in frontier countries with underdeveloped capital markets,
and investors need to be comfortable taking long-term exposure to often unpredictable political regimes – not to mention
the potential fallout from a worsening Sino-US trade dispute. The dominance of Chinese investors has also raised
questions, especially as China has made it clear that it is not prepared to shoulder all the risks itself.

IFR will bring together a panel of experts to debate these challenges, as well as potential opportunities for capital
markets participants as the BRI gathers pace. Titled “Connecting issuers and investors with regional investment
opportunities”, the Roundtable will discuss:

• Is the Belt & Road Initiative commercially viable? What is the investment case?
• What funding options are open to businesses and sponsors looking at BRI investments?
• How can investors gain exposure to “Belt & Road” assets?
• Do the international capital markets have a role to play?
• How can issuers navigate China’s financial markets? What kinds of approvals are needed?
• Are there any risks that are unique to BRI investments?
• How can institutional investors mitigate these risks?
• What is the impact of the US-China trade war?

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Upfront
Blocked pipeline
S audi Arabia certainly grabbed the headlines when it
announced plans, in early 2016, to IPO its state oil
company and cash cow Aramco. The deal, at a projected
US$100bn, would be four times bigger than anything seen
before. A valuation of US$2trn would be double that of Apple.
The prospect of working on the biggest listing in history
certainly got the banking world excited. Riyadh suddenly
became a priority in the travel plans of bank and stock
„ OPINION INTERNATIONAL FINANCING REVIEW
at IPO – only allowing limited exemptions for companies
already valued at over US$1.3bn.
US biotech listings tend to be smaller, but issuers also give up
smaller stakes. Rubius Therapeutics, the biggest US biotech listing
of the year, sold a 13% stake in its IPO, versus 20% for Ascletis.
4HEûMOREûmEXIBLEû53ûAPPROACHûALLOWSûCOMPANIESûTOûRAISEû
the money they need for research and development and then
return to the market for more when they enter the
commercial stage. Smaller IPO sizes also suit a small, patient
base of expert investors, often including early-stage backers.
EXCHANGEû#%/Sû.EWûOFlCESûWEREûOPENEDûBANKINGûLICENCESû
applied for, and the headcount and balance sheet dedicated
to the country rapidly expanded.
Perhaps more importantly, the deal gave some credibility
to Crown Prince Mohammed bin Salman’s Vision 2030
programme to massively overhaul the Saudi economy. Such
promises had been made before, but the IPO made it sound
like this was the real deal.
In contrast, the Hong Kong rules force biotech issuers to give
up more of their companies when they list, thus incentivising
issuers to raise as much as they can at the highest possible
price. With the native biotech investor base still in its infancy,
that brings into play hedge funds, which will quickly dump
the stock if it doesn’t live up to expectations.
If Hong Kong is serious about developing a sophisticated
investor base for biotech listings, it may want to consider
.OWûTHEûDEALûHASûBEENûDELAYEDûINDElNITELYû4HEû3AUDISû
have sought to downplay the delay, stating that they still
plan to list the oil giant – just not yet.
Is it a coincidence that the news came out during Eid, a
major holiday across the Islamic world, when most people are
away on holiday or busy spending time with friends? The
timing may have helped save some face domestically for MBS.
But how will the banks that have lavished time and money
on the kingdom save face? The loss of the Aramco IPO
reduces the potential fee pool from Vision 2030 substantially.
Many are already starting to question the investments they
have made in the country.
3OMEûWILLûSAYûTHATûBANKSûWEREûFOOLISHûINûTHEûlRSTûPLACEû
Many had doubts right from the start about whether the IPO
would ever happen. The deal was always riddled with
hurdles. Still, they had to try. The upside was just too big.
But the way banks went about seeking to win business in
3AUDIûSEEMSûTOûHAVEûBACKlREDû%VERYONEûHASûTHROWNûMONEYûATû
Riyadh, lending tens of billions of dollars at next to nothing.
The government rapidly realised it could fund Vision 2030 by
borrowing, without the pain of listing Aramco.
Biotech bust
O ne disastrous debut has not stopped other biotech companies
from attempting a Hong Kong listing. But those planning to go
public under the city’s new rules should be aware that the regime
itself may be putting pressure on their stock price.
Hong Kong’s stock exchange operator will no doubt be
relieved that its pipeline of biotech IPOs remains intact,
DESPITEûTHEûBLOW
UPûINû!SCLETISû0HARMAû4HEûlRSTûCOMPANYûTOû Commerzbank with a chunky dual-trancher, before
mOATûUNDERûNEWûRULESûWELCOMINGûPRE
PROlTûISSUERSûFROMûTHEû Deutsche Bank waded in towards the end of the week.
fast-growing sector is down 40% from its IPO price.
For Hua Medicine and other potential issuers, the appeal of
a Hong Kong listing is clearly the amount of money on the
table: Beigene’s US$903m offering, for example, is more than
three times the biggest US biotech IPO this year.
LOWERINGûTHEûFREEûmOATûRULESû/THERWISEûFUTUREûLISTINGSûMAYû
again end up hostage to fast-money buyers.
Unseasonal senior
I t’s the dog days of summer in the bond market. Well, that’s
the theory.
.OTûONLYûDIDûTHEûREGIONSûlNANCIALûINSTITUTIONSûmOODûTHEû
market with fresh supply last week, they did so across a number
of different asset classes and currencies. In all, they priced more
than €15bn-equivalent of paper. To put this in context, that is 10
times as much as in the corresponding week last year.
The bulk of the paper came in the form of senior debt – in
one guise or another. Once upon a time, such a deluge would
have exercised little grey matter, such was the largely
homogeneous nature of the asset class.
But this is no longer the case, given the various regulatory
hoops that have to be jumped through. We now have
straightforward senior debt, senior non-preferred debt,
senior at the holdco level, senior at the opco level – to name
but a few.
And just when you thought we might have enough
variations up sprang the Germans, with three banks taking
advantage of recently passed legislation to issue senior
preferred bonds.
The Germans, of course, used to have senior preferred
debt, until some three years ago, when that existing stock
became subordinated. So, now they’ve introduced a new
structure to do what the old structure did – until it didn’t.
Road-tested by Berlin Hyp, it was taken a stage further by
Demand had begun to wane towards the end of the week.
From Rabobank’s debut senior non-preferred, to Bank of
)RELANDSûlRSTûSENIORûHOLDCOûDEALûANDûEVENûAûBITûOFûPERIPHERALû
action from Intesa Sanpaolo, there was something for
everyone.
!SCLETISûHOWEVERûPOINTSûTOûTHEûmAWûINû(ONGû+ONGSû If this is what happens while it’s still meant to be quiet,
framework, which requires all companies to sell a 25% stake hold onto your hats for the post-summer rush.

International Financing Review August 25 2018 1

2018 US ECM ROUNDTABLE
3pm | Thursday September 13 | 3 Times Square, New York

Sponsored by:

The IFR US ECM Roundtable will take place on the afternoon of Thursday September 13 2018 at
the Thomson Reuters Building, New York.

Now in its seventh year, the event will bring together a panel of the most senior ECM practitioners
to assess the current state of the market, discuss the latest trends and developments and provide
an outlook for the remainder of the year and beyond.

Joining IFR’s US Editor, Stephen Lacey will be:

• Craig Dedomenico – Stifel, MD ECM origination
• Anna Pinedo – Mayer Brown, Partner
• James Dunning – J. Goldman & Co, Director of Capital Markets
• Carolyn Saacke – NYSE, COO Capital Markets
• Matthew Sperling – Rothschild, Head of North American Equity Strategy
• Steven Tuch – BMO Capital Markets, MD ECM origination
• Akram Zaman – Bank of America Merrill Lynch, MD Head of Americas Equity Syndicate

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Contents
INTERNATIONAL FINANCING REVIEW
AUGUST 25 2018 ISSUE 2248

TOP NEWS 04
EQUITIES Mothballed Aramco IPO put on hold as Saudi eyes other sources of cash for
Vision 2030 programme. Sabic deal seen as preferred way to raise funds. 04
BONDS Cashing in German banks Berlin Hypo, Commerzbank and Deutsche, eager to
access cheap funding, wasted little time in raising senior preferred debt. 04
BONDS Brave trade Intesa’s €1bn five-year senior secured bond issue was the first in this
format from an Italian bank since April, yet attracted more than €1.7bn in orders. 05
BONDS Blockchain first The World Bank has successfully issued the first public
offering of blockchain bonds with a A$110m two-year Kangaroo. 06
Ambitious San Miguel targets Philippines ECM record with Ps124bn SMFB follow-on in October. 07
Nadir Turkish bank loans dive in secondary market. Prices hit a six-year low. 08
Unpopular Former Banco Popular shareholders seek redress from Spanish government for losses. 09
Bonds Syndication moves into the 21st century. US banks join forces to disrupt new issuance model. 10

PEOPLE & In a fix Issuers of £312bn of FRNs due to mature in 2021 have been warned 11
MARKETS they could become fixed if nothing is done to address their references to Libor.
Capital breach Credit Agricole has been fined €4.8m by the ECB for failing
to keep to procedures on how some unspecified instruments should be classified. 12
Jumping ship M&A banker Philip Noblet, who advised Cineworld on its
US$5.8bn acquisition of Regal Entertainment, is to leave HSBC to join Jefferies. 13
Balancing act Deal-hungry investment bankers walk Tesla tightrope. 17
Expansion Moody’s and S&P have published detailed applications for rating licences in China. 18
Looking East New breed of brokers eye Chinese advisory business. 18

BONDS Blockbuster Rabobank’s senior non-preferred debut blows the doors off. 19
Bounceback NAB excels on return to euros. 27 UK RMBS Santander skips sterling, goes for dollar. 33

EMERGING Dialogue Angola opens talks with IMF. Move meets with bondholder approval. 43
MARKETS Rosy glow SingTel basks in Temasek’s halo. 43 Survival Turkey stabilises but outlook rocky. 46

LOANS Unsettling Italian bank funding costs rise on the back of political uncertainty. 49
China Dalian Wanda revives loan plan. 51 Japan More lenders sought for SoftBank refi. 53

EQUITIES LatAm Brazil, Mexico lead issuance pipeline but politics could limit execution. 61
Comeback KBS Realty plans return to SGX. 61 Results Post-IPO interims a mixed bag in Europe. 66

STRUCTURED Argentina MercadoLibre goes long with 10-year convertible bond. 72

EQUITY Growth plans Cree raises US$500m in convertible bonds to fund expansion of Wolfspeed unit. 72

International Financing Review August 25 2018 3

Top news
First blockchain bond 06 HK biotech IPOs keep coming 06 Turkish bank loans dive 08

Saudi puts Aramco IPO on hold

„ Equities Sabic deal seen as preferred way to fund Vision 2030 programme

BY GARETH GORE deal has come to a complete Falih in a statement, referring to disentangling Aramco from the
HALTûINûRECENTûMONTHSûASû2IYADHû Aramco’s plan to buy a US$70bn state proving complex, another
The eagerly awaited IPO of SAUDI focuses on other sources of stake in Saudi Arabia Basic plan was sought.
ARAMCO, billed as the biggest raising cash. Industries Corporation. Sabic is the solution: PIF owns
STOCKûmOTATIONûINûHISTORYûHASû
been kicked into the long grass
as the kingdom focuses on
raising cash for its Vision 2030
goals by other means.
First announced in early 2016,
the listing was a central tenet of
Crown Prince Mohammed bin
Salman’s plans to overhaul the
ECONOMYûANDûlLLûAûGAPINGûHOLEû
INûSTATEûlNANCESû4HEûSALEûOFûAûû
stake was expected to raise
around US$100bn, four times
more than any previous IPO.
JP Morgan, Morgan Stanley,
HSBC, Moelis and Evercore were
mandated to prepare for the
listing. Bankers on the deal
Aramco chairman Khalid Al
&ALIHûSAIDûhSPECULATIONvûTHATûTHEû
IPO had been cancelled was
wrong, adding that “the
government remains committed
to the IPO of Saudi Aramco at a
time of its own choosing when
CONDITIONSûAREûOPTIMUMv
It initially said the listing
would happen in 2018. In recent
months it indicated the deal
would more likely come in 2019.
But now the deal has been
DELAYEDûINDElNITELY
“This timing will depend on
multiple factors, including
favourable market conditions,
and a downstream acquisition
PREFERRED OPTION
Bankers say the Sabic deal has
fast become the preferred way
FORû2IYADHûTOûRAISEûFUNDINGûFORû
its vast Vision 2030 programme,
which will see the country’s
Public Investment Fund invest
heavily to develop new
INDUSTRIESûANDûJOBSûTOûHELPû
diversify away from its current
dependence on oil.
The PIF, Saudi’s sovereign
wealth fund, was to be the
recipient of any money raised
from an Aramco listing. But,
WITHûAûPROJECTEDûVALUATIONû
falling well short of the crown
70% of the petrochemical
manufacturer, and Aramco’s
purchase of that stake will
provide the sovereign wealth
fund with much of the funding
it needs without having to list
the oil giant.
In recent days, PIF has also
signed a deal to borrow US$11bn
from banks - almost double the
US$6bn that it had been seeking
WHENûTALKSûlRSTûBEGANû)TûISûTHEû
lRSTûEVERûCOMMERCIALûLOANûFORû
PIF. It is extremely rare for a
sovereign wealth fund to take
out a syndicated loan.
“In that triangle of Sabic-
Aramco-PIF, there is a lot going
say that, while ties have not which the company will pursue prince’s publicly stated target of ONvûSAIDûONEûBANKERûCLOSEûTOûTHEû
been formally severed, the INûTHEûNEXTûFEWûMONTHSvûSAIDû US$2trn and the process of Aramco IPO, who said that some

German senior preferred market opens

„ Bonds Three German banks pioneer new class of instrument

BY HELENE DURAND including €40m of lead manager “No other German issuer PRICE DISCOVERY
interest. had issued anything like it. Also, "UTûWHILEû"((ûISSUEDûTHEûlRSTû
German banks, eager to access “As one of Germany’s most unlike other European trade, Commerzbank faced the
cheap funding, wasted little expensive credits, it was very JURISDICTIONSûWHEREûTHEYûBUILTû task of establishing the right
time in raising senior preferred
debt last week, with BERLIN HYPO
(BHH), COMMERZBANK and DEUTSCHE
BANK all setting out their stalls in
the market.
PREFERREDû7EûHADûTOûlNDû
Unlike other European
countries where legislators
ensured their banks had the
option of issuing senior
preferred alongside costlier
senior non-preferred, German
GOODûTOûBEûTHEûlRSTvûSAIDû"ODOû
Winkler, Berlin Hypo’s head of
funding and investor relations.
As a member of Germany’s
saving banks group, BHH
and SNP offered an obvious
BENElTSûFROMûAûJOINTûLIABILITYû
scheme, and its covered and
senior unsecured debt is 0% risk-
weighted.
“It could have been
challenging to come directly
their senior non-preferred
curve on top of their senior
preferred, our outstanding
senior legacy bonds are senior
NON
the right pricing between senior
non-preferred and covered
BONDSv
The paper ended up with
pricing closer to the issuer’s
senior non-preferred levels
clearing level for the country’s
larger lenders.
7HILEûJURISDICTIONSûWITHû
outstanding senior preferred
yardstick for the differential
between the two, German
banks already have a stack
of SNP whereas other
lenders are still building
that layer.
banks only had the option of AFTERûAûCHEAPERûTRANSACTIONvûSAIDû than its covered bonds, !ûLEADûONûTHEû!!n!nûRATEDû
raising SNP until recently. Winkler which were quoted between trade put fair value on a new
Belatedly, Germany At the 13bp over mid-swaps 11.2bp and 15.6bp through lVE
YEARû3.0ûINûTHEûHIGHûSû
implemented legislation that
effectively introduced a two-
track senior market last month,
teeing up the opening trades in
this new asset class.
YEARûANDûõMû
lNALûPRICINGûTHEû!A.2!nû
rated deal was one of tightest
senior preferred deals priced in
2018.
h4HEûDIFlCULTYûWASûOFûCOURSEû
mid-swaps when the deal was
announced.
“While we will want to keep a
decent layer of SNP in the
future, our focus for the time
over mid-swaps and a new 10-
YEARûATûBPnBP
)TûMEANTûTHATûATûTHEûlNALûBPû
and 65bp over mid-swaps prints,
THEûõBNûlVE
"((ûlREDûTHEûOPENINGûSALVOû BEINGûTHEûlRSTûASûTHEREûWASûNOû being will be on senior preferred and 10-year were priced at a
pricing a €300m 0.375% August BLUEPRINTûFORûTHISûTYPEûOFûTRADEvû when it comes to benchmark similar spread differential to
2023 issue on books of €375m, said Winkler. ISSUANCEvûSAIDû7INKLER other countries.

4 International Financing Review August 25 2018

 @ For daily news stories
visit www.ifre.com

F&R ready for launch 08 Spain sued over Popular 09 21st century bond syndication 10

banks working on the listing

had been diverting resources to
the PIF loan in recent weeks, in
2IYADHûHASûINDICATEDûITûMIGHTû
privatise more than a hundred
state-owned entities.
Intesa reopens Italian
RESPONSEûTOû2IYADHSûCHANGEDû
priorities.
)RONICALLYûTHATûmOODûOFûCAPITALû
into Saudi - mostly via bank
bank bond market
More debt deals are expected, loans - has lessened the need to „ Bonds Lender pays up with “brave trade”
with Aramco expected to fund tap capital markets.
its purchase of the Sabic stake in The latest hiccup could lead BY ALICE GLEDHILL the right product, what is the
international bond markets. It to some banks reconsidering RIGHTûNAMEûSOMEBODYûJUSTûHADû
has already been testing out THEIRûCOMMITMENTûnûESPECIALLYû INTESA SANPAOLOSûõBNûlVE
YEARû to [issue] and it’s good Intesa did,
appetite: last year, it sold
32BNû53BN ûOFûSUKUKûINû
a private placement.
ANGRY BANKERS
given the opportunity cost, not
least regarding lost business in
Qatar, which is engaged in a
diplomatic rift with Saudi
Arabia that has seen the two
senior unsecured bond issue was
THEûlRSTûINûTHISûFORMATûFROMûANû
Italian bank since April, yet
attracted more than €1.7bn in
orders and was priced inside the
ASûTHEYREûTHEûBETTERûOFûTHEûTWOvû
a second banker said.
“It is a good bank; the only
problem is it’s Italian. I also
think it’s good it was senior
3TILLûWHILEûFULlLLINGû0)&Sû countries sever ties. sovereign. PREFERREDûANDûNOTûJUSTûCOVEREDû
funding needs, the prioritisation “Many people had given up It has proved a challenging because it shows people that it
of the Sabic acquisition over on Qatar - where there is a year for Italian lenders after the CANûBEûDONEv
an IPO of Aramco has angered WALLETvûSAIDûONEûSENIORûBANKERû election of a Eurosceptic Intesa is not under the same
many banks that have lavished in the region. “Given the Saudis populist government in March PRESSUREûTOûISSUEûASû5NI#REDITûnû
Saudi Arabia with attention ever keep taking things off the table pushed bank funding costs to which has only completed 32%
since it unveiled its Vision 2030 that they said they were going unpalatable levels. of its 2018 funding plan - though
programme.
Banks have diverted resources
towards the company and
increased lending, in the hope
of cementing relationships that
TOûDOûTHEYûNEEDûTOûBEûCAREFULv
Things are getting delayed,
things are getting cancelled. The
monetisable wallet that was
considered to be on offer two
"UTûTHEûDEALûRATEDû"AA""""""û
demonstrates there are willing
buyers at the right price despite
looming and potentially fractious
negotiations over the country’s
it has some €6bn of bonds
maturing in the second half.
It has already raised US$2.5bn
and €1.25bn in the Yankee and
euro senior markets, respectively,
might one day lead to sizeable YEARSûAGOûISûGETTINGûREDElNEDvû contentious 2019 budget. as well as a €1bn covered and
fees on large transactions. he said. „ h)TSûAûBRAVEûTRADEvûAûBANKERûOFFû ¥46.6bn Pro-Bond. CEO Carlo
the deal said. “They’re starting Messina said on the recent
Leads Barclays, BNP Paribas, LONGERûENDûWHILEûTHEûlVE
YEARSû INSIDEû"40SûnûTHEûMARKETûSHOULDû earnings call that the bank would
Commerzbank, Deutsche Bank and appealed to bank treasuries that be able to disentangle between “look at opportunities, but with
UBS were able to leverage on the took 22% of those notes. the bank and the sovereign, no constraint to make any kind of
deal’s strong demand to tighten Deutsche Bank swiftly although it’s still a psychological ISSUEv
the 50bp area and 80bp area FOLLOWEDûPRICINGûAûõBNûlVE
HURDLEûFORûSOMEûINVESTORSv Improved performance of BTPs
IPTs. year transaction on Thursday. Initial price thoughts, at 200bp was a catalyst for the deal, helped
Orders exceeded €5.3bn, a “For us, it’s quite important area over mid-swaps, were around by the Moody’s decision last
much larger book than the because it’s a cheaper funding 5bp tighter than mid-market swap Tuesday to extend the deadline
€775m-plus gathered by source for German banks, quotes on the 0.95% March 2023 for its review of the country’s
Commerzbank for its €500m 10- WHICHûISûNOWûlNALLYûAVAILABLEvû Italian government benchmark. rating. Ten-year yields dropped
year SNP in February, rated a banker on the deal said. On the other hand, 200bp over 8bp to 2.96%, dipping below 3%
"AA"""""" Deutsche opened books on swaps for preferred senior looks FORûTHEûlRSTûTIMEûSINCEû!UGUSTû
“German names are not THEûSELF
LEDûDEALûRATEDû! attractive on an absolute basis, Intesa’s 4% October 2023s were
always the easiest but the A1 """!nûATûINITIALûPRICEû ANDûISûJUSTûBPûORûSOûINSIDEû bid at swaps plus 166bp at
rating helped dragged in more thoughts of 95bp area over mid- where UniCredit’s lower-rated Thursday’s open, according to
GUYSvûTHEûLEADûSAID
“For many insurance
companies, they need a Single A
rating in order to be able to
invest, and unlike the very tight
covered bonds, this is
something they can get excited
ABOUTv
Bankers off the deal applauded
swaps.
It landed at plus 90bp on
books over €1.6bn, a relatively
lacklustre response in
comparison with
Commerzbank, but the deal
came at the tail end of a heavy
week for senior unsecured
lNANCIALûSUPPLY
€1.5bn 1% non-preferred January
û"AA"""n""" ûISûTRADING
Orders had passed €1.7bn
WHENûTHEûSPREADûWASûlXEDûATû
swaps plus 188bp. It was spotted
6bp wider in the grey market as
signs of broader weakness crept
in following heavy supply, but
was better bid by Friday.
Tradeweb prices, but had widened
14bp by mid-afternoon. They
started the year at 40bp over
swaps. Its June 2022s opened at
147bp before widening to 157bp.
“[At 15bp] it was probably a
bigger new issue premium than
what core issuers have paid, but
in the context of the risks ahead
Commerzbank’s decision to use h)TûWASûAûVERYûGOODûRESULTvû in Italy and the volatility we’ve
the dual-tranche approach the banker said. MILLE GRAZIE had, they were extremely
meaning that it was able to
establish its curve in one go.
It also meant that it could tap
different investors types.
Insurers were prominent at the
“It’s a 55bp differential
between this and our senior
non-preferred, it looks
reasonable. €1bn was exactly
THEûSIZEûWEûWANTEDûTOûDOv „
The outcome is encouraging not
JUSTûFORû)NTESAûBUTûALSOûFORû
UniCredit.
“There was huge debate in
)TALYûAROUNDûWHATûTOûDOûnûWHATûISû
PLEASEDûTOûGETûSOMETHINGûDONEvû
a second lead said.
Banca IMI, Deutsche Bank, JP
Morgan, Societe Generale and UBS
were bookrunners. „

International Financing Review August 25 2018 5

Top news
World Bank delivers blockchain first
„ Bonds Distributed ledger technology passes key test with inaugural public issue
BY JOHN WEAVERS
The World Bank has successfully
ISSUEDûTHEûlRSTûPUBLICûOFFERINGûOFû
blockchain bonds with a
A$110m (US$82m) two-year
Kangaroo, arranged by sole lead
manager Commonwealth Bank of
Australia.
The INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT’s
2.2% August 28 2020s were
priced last Thursday at 99.901
CURRENCY
LINKEDûTOKENS
for a yield of 2.251%, 23bp wide
of asset swaps and in line with
standard Kangaroo bonds issued
by Triple A rated supranationals.
The Blockchain Operated New
Debt Instrument, or Bondi for
Andrea Dore, the World
Bank’s head of funding, said the
groundbreaking deal had been
hANûEXCELLENTûEXPERIENCEv
“All the investors who showed
interest during the marketing
stage participated in the
TRANSACTIONûANDûAûFEWûMOREûJOINEDû
us later in the process. We hope to
learn more about this technology
by being engaged through the life
CYCLEûOFûTHISûBONDv
“We hope to learn
more about this
technology by being
engaged through the
life cycle of this bond”
James Wall, executive general
manager of institutional
banking and markets
international at CBA, said:
“Since announcing the mandate,
the interest we’ve received for
Bondi has been overwhelming. It
is clear the market is ready and
open to the uptake of emerging
technologies and sees the
potential evolution of the capital
MARKETSv
4HISûISûTHEûlRSTûTIMEûGLOBALLYû
that a legally binding bond issue
is being created, allocated,
transferred and managed
through its life cycle solely using
distributed ledger technology.
The bond’s blockchain
cryptobond for Queensland
Treasury Corp in January 2017
using the bank’s capital markets
blockchain platform.
QUICKER SETTLEMENT
The new bond issue does not
fully embrace blockchain
technology as payments will still
be made via the existing SWIFT
system to avoid the 10%
Australian goods and services tax
ONûlAT
“We are yet to work out the
BENElTSûINûTERMSûOFûCOSTûUSINGû
the blockchain platform for this
bond but we have demonstrated
the principle that this
technology could be used to
short, was issued from the
)"2$SûEXISTINGûGLOBALûDEBTû
issuance facility. It will be traded
on a consortium blockchain
platform operated by the World
Bank and CBA.
HK biotech bandwagon rolls on
„ Equities Potential issuers shrug off Ascletis 40% share price collapse since IPO
BY FIONA LAU
LISTEDû#HINESEûBIOTECHûlRMû
Chinese biotech issuers are
pushing ahead with Hong Kong
IPO plans despite the dismal
PERFORMANCEûOFûTHEûCITYSûlRSTû
listing under new rules for the
fast-growing sector.
Last Monday, HUA MEDICINE,
which focuses on diabetes
treatment, started pre-
Participating investors include
CBA, First State Super, NSW
Treasury Corporation, Northern
Trust, QBE, SAFA, and Treasury
Corporation of Victoria.
Aû53
BIOTECH and US-based cancer-
after BeiGene.
The growing pipeline shows
that the drastic drop in Ascletis
Pharma’s share price has not
deterred other biotech issuers
from going public in the city.
Ascletis raised HK$3.1bn
53M ûINûTHEûlRSTûLISTINGû
since Hong Kong eased its rules
TOûWELCOMEûBIOTECHûlRMSûWITHû
platform was built and developed
by the CBA Blockchain Centre of
Excellence, housed in the Sydney
Innovation Lab.
CBA previously established an
experimental non-tradeable
liver-disease treatments. It started
detection start-up GRAIL are
eyeing US$500m offerings each
early next year.
SPECIAL CASE
Industry executives see Ascletis
as a one-off, rather than a sign of
things to come.
“Ascletis is a special case.
Different from other early-stage
EFlCIENTLYûSETTLEûTRANSACTIONSvû
said Paul Snaith, the World
Bank’s treasury head of capital
markets operations.
“The settlement was done at
4ûDAYSûBUTûITûCOULDûHAVEûBEENû
to commercialise a hepatitis C
virus drug candidate in June.
“You can’t create
a biotech sector
overnight. You can’t
really put too much
weight in one company
MARKETINGûAûmOATûOFûABOUTû
US$200m. ASCENTAGE PHARMA and
MABPHARMûALSOûlLEDûFORû
respective US$300m and
US$200m IPOs last week.
Ascentage develops
NOûPROlTSûORûREVENUESûBUTûHASû
tumbled since its August 1
listing. The stock closed at
HK$8.46 last Friday, 40% below
the IPO price of HK$14.
Nine mostly Chinese biotech
biotech companies, Ascletis has
a drug in the market already and
its drug is facing intense
competition given some other
companies are selling similar
drugs in the market at lower
in one month or even
one year”
“We will go ahead with our
Hong Kong IPO plans, and I
think other biotech issuers will
treatments for cancer, hepatitis companies so far, including Hua, PRICESvûSAIDûAûSENIORûMANAGERûATû do the same as the fundraising
B and age-related diseases, while Ascentage and Mabpharm, have Aû#HINESEûBIOTECHûlRMûTHATûISû size, and probably valuation, of
Mabpharm produces lLEDûFORûAû(ONGû+ONGû)0/û!NDû planning a Hong Kong listing BIOTECHûmOATSûHEREûISûHIGHERû
monoclonal antibody drugs for the pipeline continues to build
cancers and autoimmune WITHûSOMEûHIGH
PROlLEûNAMESû “So Ascletis is not really a real manager.
diseases. set to follow suit.
Nasdaq-listed ZAI LAB is also TASLY BIOPHARMACEUTICAL is
CONSIDERINGûAû(ONGû+ONGûmOATû PLANNINGûTOûlLEûAûLISTINGû
next year. THANûINûTHEû53vûSAIDûTHEûSENIORû
test of investor appetite for Ascletis and Nasdaq-listed
early-stage biotech companies BeiGene, which raised
which develop novel medical HK$7.08bn from a dual primary
next year, people familiar with APPLICATIONûFORûAû53BNûmOATûASû TREATMENTSvûHEûSAID listing in Hong Kong, both
the situation said last week, in early as next month, while Founded in 2013, Ascletis comfortably beat the biggest US
what would be the second from Fosun-backed SHANGHAI HENLIUS specialises in anti-viral, cancer and BIOTECHûmOATûTHISûYEARûINûWHICHû

6 International Financing Review August 25 2018

 For daily news stories
@ visit www.ifre.com

faster if we took digital currency

PAYMENTSvûHEûSAID
The World Bank at one point
considered tokenisation,
whereby an entity would issue
digital tokens equivalent in
value to dollars. That process,
however, would have been
expensive because of Australia’s
GST on such instruments, and
would have complicated the
process without leading to any
such as land administration,
supply chain management,
San Miguel targets
health, education, cross-border
payments, and carbon market
trading.
Philippines ECM record
„ Equities F&B unit files for Ps124bn follow-on in October
“We are yet to work
BY S ANURADHA Philippines. The indicative price
out the benefits in
TRANSLATESûINTOûAûû0%û
terms of cost using San Miguel Corp is preparing to multiple of 40 while other
the blockchain launch the Philippines’ biggest consumer plays in the
platform for this share sale in October after 0HILIPPINESûTRADEûATûnûTIMES
MAJORûTECHNICALûDISCOVERYûSAIDû
Snaith.
Service providers include TD
Securities as market-maker, IHS
Markit as independent valuation
provider, Microsoft as independent
code reviewer, and King & Wood
Mallesons as deal counsel.
The bond issue is part of a
broader strategic focus of the
World Bank to harness the
potential of disruptive
technologies for development.
In June 2017, the World Bank
launched a Blockchain
Innovation Lab to understand the
impact of blockchain and other
bond but we have
demonstrated the
principle that this
technology could be
used to efficiently
settle transactions”
The World Bank hopes to
discover new ways to adapt the
blockchain technology to meet
the needs of the poor, said
Snaith.
“We are considering using the
technology for areas such as
maintaining land registry
records and lowering the cost of
setting an ambitious target of
Ps124bn (US$2.3bn) for a
follow-on offering in subsidiary
SAN MIGUEL FOOD AND BEVERAGE.
SMFB’s preliminary
prospectus shows the parent
company is planning to sell
887m existing SMFB shares,
equal to 15% of the current share
capital, at an indicative price of
Ps140 per share. There is an
overallotment option of 133m
shares.
The indicative price is 75%
higher than last Wednesday’s
close of Ps80, implying that
SMFB believes investors will be
The indicative price is
75% higher than last
Wednesday’s close of
Ps80
Bankers said an Asian
consumer story would normally
be an easy sell to global
investors but warned that the
current market weakness may
force the management to trim
its valuation expectations. The
Philippine stock market is one
of the weakest in Asia this year,
emerging technologies in areas REMITTANCEvûHEûSAID „ prepared to pay a premium to with the benchmark PSEI Index
take a sizeable position in its down 8.8% in the year to-date.
expanded business. Market conditions have
2UBIUSû4HERAPEUTICSûRAISEDû Kong Stock Exchange and six 3-&"SûFREE
mOATûFELLûBELOWûû ALREADYûWEIGHEDûONûOTHERûMAJORû
US$277m in July. Beigene has ONû.ASDAQûnûINCLUDINGû"EI'ENEû earlier this year after San Miguel share sales. Del Monte
also failed to impress, with its Ascletis, Genscript and Zai merged its beverages business, Philippines had to defer its
shares closing at HK$101.60 on Lab. INCLUDINGûITSûmAGSHIPûBEERûUNITû Ps13.5bn IPO earlier this year,
Friday, down 5.9% from a listing “The implication [of the INTOû3-&"ûnûFORMERLYûKNOWNûASû while property developer DM
price of HK$108. Ascletis IPO] is beyond the stock Pure Foods. Before Thursday Wenceslao shares are trading
2UBIUSûWHICHûDEVELOPSûREDû market. This is going to create morning’s announcement, below the IPO price of Ps12.
blood cellular therapies, closed an entire biotech culture and average daily turnover in the A banker away from the SMFB
12% above the IPO price last biotech ecosystem there … I stock this year was around deal said the lack of liquidity in
Thursday. don’t think it’s concerning. It’s Ps30m, equal to around the stockmarket was a cause of
SOPHISTICATED INVESTORS
Biotech specialists say Hong
Kong needs to develop a
sophisticated investor base to
support its ambitions of
JUSTûNORMALûBIOTECHûVOLATILITYvû
said Loncar.
While healthcare-focused
funds in the region are still
interested in looking at high-
QUALITYûBIOTECHûmOATSûDESPITEû
US$600,000, making it
impossible for institutional
investors to build any
meaningful exposure.
“Investors have got
concern, although the
Philippines’ economic growth
story remained intact.
“Liquidity dries up very fast in
the Philippines and that is the
biggest nightmare for global
BECOMINGûAûlNANCINGûHUBûFORû
the sector.
“Some people said the biotech
sector is over before it even gets
the Ascletis disappointment,
HEDGEûFUNDSûnûSOMEûOFûTHEûKEYû
players in Hong Kong’s IPO
MARKETûnûAREûVERYûCAUTIOUSûONû
INVESTORSvûHEûSAID
trapped in many “Investors have got trapped in
markets and are now many markets and are now
looking for substantial looking for substantial
started. That’s such a wrong way such deals, according to the discounts” DISCOUNTSvûANOTHERû%#-ûBANKERû
TOûLOOKûATûITvûSAIDû"RADû,ONCARû
who launched an ETF in the US
in mid-August investing in
Chinese biotech stocks.
“You can’t create a biotech
sector overnight. You can’t
bankers.
“The healthcare investor base
here is not big enough yet and
hence this marginal demand
[from hedge funds] is crucial for
THEûBIOTECHûmOATSûUNDERûVOLATILEû
The stock price raced up 20%
in two days to Ps96 as investors
reassessed their growth
expectations for the enlarged
said.
SMFB’s institutional book is
expected to open in early
October and the public offer will
be open between October 22 and
October 29.
really put too much weight in
one company in one month or
EVENûONEûYEARv
The Loncar China BioPharma
ETF invests in 28 companies, 22
of which are listed on the Hong
MARKETSvûSAIDûONEûOFûTHEû
bankers.
Hua Medicine is planning to
start bookbuilding for the deal
this week. CLSA and Goldman
SachsûAREûTHEûJOINTûSPONSORS „
business.
Bankers working on the
TRANSACTIONûSAIDûTHEûlNALûOFFERû
price was likely to be lower than
THEû0SûINûTHEûlLINGûnûASûISû
usually the case in the
JP Morgan, Morgan Stanley and
UBS AREûJOINTûGLOBALûCOORDINATORSû
with Deutsche Bank and Goldman
Sachs also on board as
bookrunners. BDO Capital and
BPI are the local underwriters. „

International Financing Review August 25 2018 7

Top news
Turkish bank loans dive in secondary
„ Loans Prices hit a six-year low in wake of financial crisis

BY SANDRINE BRADLEY with potentially further negative loans for TURK EKONOMI BANKASI NOTûBEûSUFlCIENTûTOûOVERCOMEû
implications for Turkish banks and TURK EXIMBANK. GARANTI BANK lenders’ fears of increased risk
Turkish banks’ secondary loan and corporates that have large and YAPI VE KREDI BANKASI were and systemic problems in
prices have hit their lowest point EXTERNALûFUNDINGûNEEDSvû talking to banks about Turkey’s banking sector.
since early 2012, further Moody’s said. RElNANCINGûLOANS The biggest drop in secondary
complicating their efforts to h!KBANKûISûDElNITELYûONûHOLDû pricing was a 2.4 percentage
RElNANCEûBILLIONSûOFûDOLLARSûOFû “The market has seized the client itself suggested to wait point fall for a €498.5m loan for
LOANSûASûTHEûCOUNTRYSûlNANCIALû
crisis shows no signs of easing.
Average secondary bids for
Turkish bank loans hit 97.94 on
August 20, 114bp lower than
99.08 on August 1, according to
LPC data. This is the lowest level
since January 2012 when loans
touched 97.89 after Turkish troops
were killed on the Iraqi border.
Turkey’s banks have to
RElNANCEû53BNûOFûTHEû
US$7bn of Turkish loans that are
due to mature by the end of the
YEARûnûAûTASKûMADEûMOREûDIFlCULTû
by Turkey’s sovereign
downgrade earlier this month.
30ûDOWNGRADEDû4URKEYûTOû"û
FROMû""nûANDû-OODYSûFOLLOWEDû
up, it’s now showing
quite wide offers, but
I’m not sure how real
they are”
Political volatility, a 37% drop
in the value of the lira and
Turkey’s deteriorating relations
with the US have shaken the
market and several Turkish bank
loans that were in the market in
August are now on hold.
Lenders are assessing the
situation, with the Eid holiday
last week providing an
OPPORTUNITYûFORûREmECTION
“We will have to wait to see
when the market reopens after
TILLûAFTERû%IDvûAûSECONDûBANKERû ING BANK AS, which was signed in
said. THEûlRSTûBIANNUALûRElNANCINGû
round earlier this year, to 96.3
MORE EXPENSIVE on August 20.
Falling secondary prices suggest Loans signed between March
that Turkish banks will have to and May for Garanti Bank,
pay higher interest margins to Isbank, Yapi Kredi, Ziraat Katilim
access the loan market. This may Bankasi and Turk Eximbank are
TURKISH BANKS’ SECONDARY LOAN PRICES
Average bid
(% of par)
100.0
99.5
99.0
98.5
98.0
97.5

with a downgrade to Ba3 from THEûHOLIDAYûINû4URKEYvûAûSENIORû 97.0

Ba2. Moody’s downgraded 17 banker said. Eid ran from August
96.5
Turkish banks in June. 21 to 25.
2010

2011

2012

2013

2014

2015

2016

2017

2018
“The risk of continued !û53MûRElNANCINGûFORû
lNANCIALûSTRESSûISûSIGNIlCANTû AKBANK is on hold along with Source: Thomson Reuters LPC

F&R buyout debt readied for launch

„ Loans Thomson Reuters syndication will overlap with Akzo Nobel’s €7.3bn LBO financing

BY MAX BOWER equivalent debt deal, which backs LAUNCHEDû4HOMSONû2EUTERSû buyout of German energy
Syndication of the US$13.5bn
debt package backing
Blackstone’s buyout of THOMSON
REUTERSû&INANCIALûANDû2ISKû
division is expected to launch in
Carlyle’s and GIC’s carve-out of the
company’s chemicals business, but
arranging banks believe that there
ISûSUFlCIENTûLIQUIDITYûINûTHEû
European and US markets to
ABSORBûTHEûTWOûJUMBOûDEALS
lNANCINGûWHICHûCOMPRISESûAû
US$8bn Term Loan B and a
US$5.5bn bridge loan, to large
institutional investors in late
June. BAML is leading the loans
and JP Morgan the bonds.
metering business TECHEM, closed
at 375bp in July. Pricing was
ADJUSTEDûHIGHERûONû4ECHEMSû
loan from initial guidance of
350bp.
%BITDAûADJUSTMENTSûANDû
THEûlRSTûWEEKûOFû3EPTEMBERûATû “The market can take it; LEVERAGEûFORû4HOMSONû2EUTERSû
the same time as a €7.3bn debt there’s a huge amount of TOUGHER LINE &2ûDIVISIONû
ûTOûBEûREBRANDEDû
lNANCINGûBACKINGûTHEûBUYOUTûOFû LIQUIDITYûOUTûTHEREvûAûSENIORû 4HEûlNANCINGûPACKAGEûISûLARGELYû 2ElNITIVûATûCLOSEû
ûHAVEûNOTû
AKZO NOBEL’s chemicals business.
4HOMSONû2EUTERSûLOANûANDû
bond package is expected to
launch in Europe on September 3
and in the US on September 4 after
the Labor day holiday. The deal is
THEûLARGESTûBUYOUTûlNANCINGûSINCEû
the crisis and its launch has been
LEVERAGEDûlNANCEûBANKERûSAIDû
adding that the workload on
investors will be spread among
analysts as the deals are in
different sectors.
“The analysts on the buyside
looking at these two deals are
going to be different people so it
unchanged, bankers said,
despite a softening in the market
in the early summer in Europe
as investors took a tougher line
with arranging banks amid a
surge in supply.
Indicative pricing on
4HOMSONû2EUTERSûTERMûLOANSûISû
undergone any material changes
from the previously reported
numbers of US$650m and
roughly six times respectively,
which takes the business’s
Ebitda from the US$1.7bn
reported number to near
US$2.4bn, the senior leveraged
eagerly awaited since the deal was SHOULDNTûBEûAûPROBLEMvûTHEû 400bp, of which US$2.5bn- lNANCEûBANKERûSAID
underwritten in January. banker said. equivalent is expected in euros. “The deal has a lot of the
Syndication is likely to overlap Lead banks JP Morgan, Bank of Several buyout loans, including classic features of a leveraged
with Akzo Nobel’s €7.3bn- America Merrill Lynch and Citigroup a €2.6bn deal backing the buyout; there are a lot of

8 International Financing Review August 25 2018


NOWûQUOTEDûnûPERCENTAGEû
points lower at around 97, the
data show, although little
trading is taking place.
“The market has seized up, it’s
now showing quite wide offers,
but I’m not sure how real they
are and they have not been
fears about the country’s
economy mount.
Akbank had already increased
PRICINGûBYûBPûTOûBPnBPû
on its US$940m loan, which is
on hold and has not had further
price revisions as yet.
For daily news stories
@ visit www.ifre.com
Spain sued over
Popular resolution
„ People & Markets Former bank shareholders seek redress
from government for losses
TRANSACTEDvûTHEûlRSTûBANKERûSAID
Turkey’s Finance Minister
Berat Albayrak held a
conference call on August 16 in
a bid to reassure investors,
which was followed by a
STATEMENTûFROMûTHEûlNANCEû
ministry the following day.
The statement said that the
lNANCEûMINISTRYûWOULDû
continue to seek foreign
lNANCINGûINûINTERNATIONALû
“Turkish banks may
have to be more
realistic, there may not
be enough appetite to
take the deals that are
out there”
“There are deals out there in
the market. Nothing has
changed on those deals since
launch, other than the currency
BY CHRISTOPHER SPINK
Mexican billionaire Antonio del
Valle has launched actions
against the Spanish government
for its role in the process of
putting BANCO POPULAR into
resolution and subsequent sale
for €1 to Santander.
Valle was the largest
shareholder in Popular but
existing investors were wiped out
the drastic resolution of the bank
and cut-price sale to Santander.
The documents state that
Santander had told authorities it
would be prepared to buy the
bank out of resolution but not in
a conventional private sale.
Santander declined to comment.
The Mexican group states this
prevented other investors,
including existing holders of
securities, from making their
markets, and from foreign
direct investments to underpin
the economy. Qatar pledged to
invest up to US$15bn in Turkey
two weeks ago.
4URKEYSûlVE
YEARûCREDITû or even repay the loans.
default swaps were at 473.6bp
on Thursday, down from
487.5bp on August 17 and a high
SITUATIONvûAûTHIRDûBANKERûSAID in the resolution and sale. He and own proposals, in violation of
Bankers say that Turkish banks a group of other Mexican the applicable international law.
could have to settle for smaller investors, who in aggregate The Mexican investor group said
deals if some lenders choose not owned 4% of Popular, will argue they had already been approached
to roll over their commitments, that the government’s role about possible measures such as a
breached the bilateral investment rights issue underwritten partially
“Turkish banks may have to treaty between Mexico and Spain. by Deutsche Bank and Barclays,
be more realistic, there may not They claim Spanish but these were ignored.
be enough appetite to take the government bodies exacerbated “Spain denied investors fair
of 574.5bp on August 13.
SETTLE FOR LESS?
Although many Turkish banks
are part-owned by international
banks, lenders’ support for their
DEALSûTHATûAREûOUTûTHEREvûAû
fourth banker said.
S&P said it expected a recession
next year while Moody’s said a
weakening of Turkey’s public
institutions had made
the situation which led to them
incurring losses of €470m.
4HEûGROUPûHASûlLEDûTWOû
international arbitrations
simultaneously against Spain.
These allege that by various
and equitable treatment, a
stable and predictable legal and
regulatory environment,
protection against arbitrary and
non-transparent measures
affecting their investments, and
bank loans is not guaranteed as policymaking less predictable. „ actions, Spain did not guarantee AGAINSTûUNLAWFULûEXPROPRIATIONvû
that investors were given “fair SAIDû*AVIERû2UBINSTEINûPARTNERûATû
ANDûEQUITABLEûTREATMENTvû LAWûlRMû+IRKLANDûû%LLISûWHICHû
opportunities for cost cuts. If existing equity, based on the leading to the expropriation of is representing the investors.
anything the leverage may be &2ûUNITSû53BNûVALUATIONû their investments without The group has already brought
lower than before but there’s not that will be rolled over. adequate compensation. actions against the European
MUCHûCHANGEûTHEREvûHEûSAID
“The analysts on the
buyside looking at
these two deals are
going to be different
Blackstone’s carve-out is still
awaiting regulatory approvals,
including the US, having
secured EU approval on July 23,
but this is unlikely to delay the
debt syndication. Loan investors
will earn a commitment fee on
4HEIRûMAJORûCOMPLAINTûISûTHATû
then economy minister Luis de
'UINDOSûnûVICEûPRESIDENTûOFûTHEû
European Central Bank since
THISû*UNEûnûANDûGOVERNMENTû
agencies, such as the Bank of
Spain and bank rescue fund the
#OMMISSIONûANDû3INGLEû2ESOLUTIONû
Board at the European Court of
Justice. In addition in the New
York courts it has also sought from
Santander further information
about what the bank knew ahead
of its agreement to buy Popular.
people so it shouldn’t
be a problem”
Leverage was previously
expected to be around 4.5 times
through the secured debt and
the bridge loan and a ticking fee
on the Term Loan B before the
deal closes.
“With any leveraged buyout
you don’t want to waste
investors’ time if the deal isn’t
sure to happen but Thomson
&2/"ûFAILEDûTOûTAKEûAPPROPRIATEû
measures to prevent the
effective bank run in the weeks
leading up to Popular’s
resolution on June 7 2017.
4HEûARBITRATIONûlLINGSûCLAIMû
Spanish state bodies themselves
With regard to this action
against Spain itself, the investors
had already informed the
government it wanted to lodge a
claim under the bilateral
investment treaty on January 22
this year. Spain has not responded
5.6 times total debt after Ebitda 2EUTERSûISûVERYûWELLûADVANCEDvû took money out of the bank to that initial approach.
ADJUSTMENTSûWHICHûCOULDûBEûASû the banker added. during this period. This, together Under the treaty, after six
much as 30%, as the transaction Blackstone announced on with the refusal to grant €6bn of months a claimant can then
is a carve-out and involves January 30 that it was buying a emergency liquidity assistance commence arbitration proceedings.
reallocating costs. ûMAJORITYûSTAKEûINû4HOMSONû “to overcome the liquidity crisis Mexico’s new membership of
The deal also includes US$1bn 2EUTERSû&2ûUNITûWHICHû that Spain itself had substantially the International Centre for
of preferred equity - with a INCLUDESû)&2 CAUSEDvûTHENûhCAUSEDûDEPOSITORSû Settlement of Investment Disputes,
14.5% payment-in-kind coupon - !û4HOMSONû2EUTERSû TOûPANICv from the beginning of August,
US$3bn of cash equity from spokesperson declined to The investors say this was then means the artiration will be heard
Blackstone and US$2.5bn of comment. „ USEDûASûAûJUSTIlCATIONûTOûCARRYûOUTû by this arm of the World Bank. „

International Financing Review August 25 2018 9

Top news
Bond syndication moves into the 21st century
„ People & Markets US banks join together to disrupt new issuance model

BY ELEANOR DUNCAN,
DAVIDE SCIGLIUZZO
Try as it might, Wall Street has
not been able to get it right
when it comes to creating a
sophisticated and technically
savvy system to distribute new
corporate bond issues.
Over the past few years, banks
and investors have tinkered with
OLD PIPES
The call for modernisation
resonates well with the buyside,
given that traders at some of the
LARGERûlRMSûAREûINUNDATEDûWITHûAû
mURRYûOFûCALLSûANDûMESSAGESûFROMû
each of the bookrunners on every
bond deal that hits the market.
“When a deal is announced
usually you end up getting a chat
message, an email and a call from
squeeze out the banks and
become an exclusive provider at
the top end - a single,
MONOPOLISTICûVENDORv
The decision by Blackstone
and Goldman to sell Ipreo to
data provider IHS Markit in May
for US$1.86bn helped soothe
some of those fears.
“Markit is a better place for
them than being owned by two
After some initial talks,
however, the initiative stalled.
Etrading Software is now
working with the three US
banks on the development of
their platform, which is still
known informally by the same
nickname, the two people said.
BAML, Citigroup and JP
Morgan declined to comment
on their relationship with
a handful of ideas on how to THEûSAMEûBANKvûSAIDûONEûTRADER VAMPIREûSQUIDSvûTHEûBANKERûSAID Etrading Software and the name
improve the archaic and If they decide to put in an Blackstone declined to address of the initiative. Etrading
INEFlCIENTûPROCESSûFORûSELLINGûANDû order for the bonds, investors the concerns about its ownership Software also declined to
distributing new issues. respond separately to each of the of Ipreo. In a statement provided comment.
/NEûPLATFORMûRUNûBYûlNANCIALû banks running the trade in a TOû)&2ûITSûSENIORûMANAGINGû “The platform was born out
software provider Ipreo, is thriving multi-dimensional ping-pong director Martin Brand said Ipreo’s OFûSIGNIlCANTûFEEDBACKûTHATûEACHû
in Europe. But reticence to work that continues until investors Investor Access has garnered of us had received from the
with rivals and power struggles receive their allocations and the hSIGNIlCANTûPARTICIPATIONvûWITHINû buyside at various points in
HAVEûSOûFARûSTImEDûCHANGEûINûTHEû53 deal is priced. the market. TIMEvû0ETERû!HERNEûHEADûOFû
Faced with the prospect of Until the very end, the system Sources familiar with the North America capital markets,
inevitable disruption, three of is frustratingly error-prone. MATTERûTOLDû)&2ûTHATû)PREOûISûSTILLû syndicate and new products at
the largest US banks - Bank of “The number of times two planning to launch Investor #ITIûTOLDû)&2
America Merrill Lynch, banks have given us two Access into the US later this Over the past few months,
Citigroup and JP Morgan - are different allocations - I would say year. BNP Paribas, Deutsche Bank,
giving the idea another go. ITSûAûDOZENûTIMESûEVERYûYEARvû But it remains to be seen Goldman Sachs and Wells Fargo
one portfolio manager said. whether the product could gain HAVEûALLûJOINEDûTHEûINITIATIVEû
GETTING THE MESSAGE meaningful traction now that They all declined to comment
!TûlRSTûSIGHTûTHEûNEWûPLATFORMû MISSION CREEP top US banks are pursuing their for this story.
the three banks are working on The most successful attempt to own initiative. A number of other banks with
seems little more than a simple
messaging system.
Expected to launch later this
year or early in 2019, it would
allow banks to communicate
terms of new bond issues to
investors and collect orders in a
centralised fashion.
Bankers and investors
generally agree the current set up
shake things around has so far
come from Europe, where at the
start of 2017 Ipreo and 11
partnering banks launched
Investor Access.
In less than two years, the
service has brought on board 37
banks and 236 investors. Last
year, 90% of euro and sterling-
denominated bond deals were
PROJECT MARS
Even in Europe, some bankers
have complaints with Ipreo as
the sole vendor in the market,
CITINGûHIGHûFEESûANDûJAMSûONû
busy deal days.
They argue that a consortium
model where all banks invest
into the development of a
AûMAJORûPRESENCEûINûTHEûMARKETû
however, have felt the process
has left them out in the cold.
"ANKERSûFROMûlRMSûINCLUDINGû
Morgan Stanley, MUFG, UBS and
HSBC said as recently as a
month ago that they had yet to
BEûINVITEDûTOûJOINûTHEûGROUP
“We’ve been kept in the dark
and a lot of other banks have -
- which relies on a hodgepodge of
Excel spreadsheets, phone calls
and emails - is due for a drastic
make over.
h4HEREûAREûINEFlCIENCIESûINû
the current process for all
syndicated using Investor Access.
Goldman Sachs - whose
merchant banking division
partnered with private equity
giant Blackstone in 2014 to
acquire Ipreo - is the only US bank
platform might be preferable to
relying on a third-party
provider.
About two years ago, for
example, Swiss bank UBS
assigned an internal team to
WITHûWHATEVERûTHEYREûDOINGvû
one of the bankers said.
BAML’s Karp said the platform
will be open to any and all
banks who want to use it.
“Our focus is improving
PARTIESvû!NDREWû+ARPûHEADûOFû that took part in the initiative. study the creation of a utility- WORKmOWûANDûSOLVINGû
global investment-grade capital Bankers say Ipreo’s type platform for new issues communication issues between
markets at Bank of America ownership was one of the main with diffused ownership, a banks and investors by creating
-ERRILLû,YNCHûTOLDû)&2 reasons that discouraged other person familiar with the matter an inclusive platform for the
!GREEINGûONûAûlXûHOWEVERû 53ûBANKSûTOûJOINû)NVESTORû!CCESS TOLDû)&2 BENElTûOFûTHEûINDUSTRYûAVAILABLEû
has proved challenging. “There was a concern of mission UBS discussed the initiative, TOûALLûWHOûWISHûTOûUSEûITvûHEû
The same three banks leading CREEPûFROMû)PREOvûONEû,ONDON
KNOWNûASû0ROJECTû-ARSûWITHû TOLDû)&2
the latest effort, for example,
have refused to sign up to Ipreo’s
Investor Access, an existing
solution that has been widely
successful in Europe but was -
until recently - partly owned by
rival Goldman Sachs.
BASEDûSYNDICATEûBANKERûTOLDû)&2
“There was a fear that
Blackstone and Goldman would
try and displace the current
syndication model with a
product distribution model
where they would try and
%TRADINGû3OFTWAREûAû5+ûlNANCIALû
TECHNOLOGYûlRMûTHATûHADûALREADYû
rolled out a system that
facilitates secondary trading
called Neptune, the same person
and another source familiar with
the discussions said.
A source familiar with the
platform declined to comment
on its potential fee structure but
said that the seven initial
members will not have a
competitive advantage over
BANKSûWHOûMIGHTûJOINûLATER „

10 International Financing Review August 25 2018

 People

12
&
Royal Bank
of Canada
Markets
13 HSBC
dealmaker 17 Tesla
US$72bn
beats expectations Philip Noblet and two tentative take-private
thanks to strong colleagues become brings out flock of
performance in latest recruits for investment bankers
capital markets Jefferies seeking mandates

„ FRONT STORY MARKETS

Floating-rate notes in a fix
Issuers need to confront post Libor risk
Legal advisers to a Bank of England working
group have warned that over £312bn of
OUTSTANDINGûSTERLING
DENOMINATEDûmOATING
RATEû 3UCHûEXERCISESûCOULDûPROPOSEûTOûBONDHOLDERSû
notes that are due to mature after 2021 could
EFFECTIVELYûBECOMEûlXEDûIFûNOTHINGûISûDONEûTOû
address their references to Libor.
RATEûNOTESûTOûISSUERSû
The widely used benchmark is being
phased out and will no longer be calculated
from the beginning of 2022. That means
potentially all notes referring to Libor may
be stuck at the last rate at which it was
calculated, December 31 2021.
h4HEûMAJORITYûOFûmOATING
RATEûBONDSûALSOû it is not so simple a process,” said one legal
provide that, as an ultimate fallback…then the
LIABILITYûMANAGEMENTûEXERCISESûFORûALLûBONDû create a disincentive to the parties’
issues affected. proposing or agreeing to any changes to the
terms of the bonds. Therefore there is no
that references to Libor should be changed to guarantee that any proposed amendments
the recommended replacement Sonia, for will be accepted,” said the paper.
instance. But that could be an immensely "ANKSûWHOûSELLûmOATING
complicated task, with over 775 individual could also be potentially sued if the bonds no
issues according to Thomson Reuters data. longer hedge the issuers against rates as was
“With the derivatives market it is easier to promised, because Libor is no longer calculated.
confront these issues, because the protocol h)FûAûSWITCHûFROMûmOATINGûTOûlXEDûRATEû
that the market uses could simply be results in a loss to investors, this could
changed from Libor to Sonia, but with bonds EXPOSEûTHEûISSUERûANDûARRANGINGûBANKS ûTOû
litigation risk,” said the paper. “There could
source. “It will not be quick nor easy.” be a risk that an investor might claim that it
rate defaults to the most recently calculated !NDREWû"AILEYûCHIEFûEXECUTIVEûOFûTHEû&INANCIALû has been mis-sold the product.”
rate, for an earlier interest period,” said a Conduct Authority, said in a speech last year that A second legal source said: “The best way
recent paper by the working group. banks and other major users of the sterling would be to transition to an alternative
h)NûTHEûCONTEXTûOFûAûPERMANENTû mOATING
RATEûBONDûMARKETSûNEEDEDûTOûBEûAWAREû benchmark well ahead of the end of 2021. In
discontinuation of Libor, this would that Libor would not be used after 2021. the meantime bond prospectuses should
EFFECTIVELYûRESULTûINûTHEûmOATING
RATEûBONDSû Last month Bailey said neither should include risk warnings regarding the switch
BECOMINGûlXEDûRATEûBONDSûBECAUSEûTHEûLASTû issuers rely on a “synthetic” version of Libor from Libor.”
determined rate would be applied for the to assist them with the problem. The source said there could potentially be a
remainder of the life of the bond.” He said: “The biggest obstacle to a smooth way to make the transition for outstanding
Thomson Reuters data shows that at transition is inertia – a hope that Libor will long-maturity notes without needing to carry
PRESENTûOVERûaBNûmOATING
RATEûNOTESûINû continue, or that work on transition can be OUTûFULLûSCALEûLIABILITYûMANAGEMENTûEXERCISESûASû
sterling with maturities beyond 2021 are in DELAYEDûORûIGNOREDû-ISPLACEDûCONlDENCEûISûAû WELLûBUTûTHISûNEEDEDûTOûBEûCLARIlED
issue and could be affected by this situation. RISKûTOûlNANCIALûSTABILITYûASûWELLûASûTOûINDIVIDUALû Christopher Spink
The largest issuers are LLOYDS BANKING GROUP lRMSv
and SANTANDER, both of which have large The legal source agreed. “Issuers need to STERLING FRNs OUTSTANDING AS OF 23/08/2018
mOATING
RATEûMORTGAGEûBOOKS move away before then. As fewer banks Issuer Proceeds (£m) Issues
Lloyds, together with its subsidiary HBOS, submit rates, Libor will increasingly become Lloyds Banking Group 16,499.7 23
have around £30bn outstanding and in reality the rate at which other banks will Banco Santander 13,647.0 24
Santander has £19bn of such bonds (see not lend to each other as it will be based on HBOS 13,610.8 18
table). It is assumed that the majority of very few interbank transactions.” Barclays 11,761.0 15
these notes are linked to Libor, by far the The working group’s paper also highlighted Investec Holdings 8,565.7 24
most commonly used sterling benchmark. that issuers could face litigation risks from UK Asset Resolution 8,431.0 3
investors who might prefer to stick with Libor General Motors 7,236.8 22
LIABILITY MANAGEMENT ATûITSûLASTûhlXEDvûPRICEûRATHERûTHANûMOVEûITûTOûAû Royal Bank of Scotland Group 6,888.6 11
In the paper, the working group, which was new benchmark that is less economically Porsche Automobil Holding 6,773.5 10
formed by the Bank of England but does not advantageous for them. Lehman Brothers Holdings 6,201.6 20
REmECTûITSûVIEWSûSAIDûTHEREûWEREûWAYSûTOû “Depending on the prevalent interest rate Industry total 312,421.2 775
mitigate this risk by potentially carrying out ENVIRONMENTûTHEûSWITCHûTOûAûlXEDûRATEûMAYû Source: Thomson Reuters

International Financing Review August 25 2018 11

“There are quite a few Chinese high-yield companies
that will require some liability management”
PATRICK LIU, PARTNER, ADMIRALTY HARBOUR CAPITAL, P18

RBC boosts risk-weighted assets and profits

ROYAL BANK OF CANADA kicked off Canada’s 53BNûDEBTûlNANCINGûFORûITSûACQUISITIONûOFû The bank said earnings per share rose by
third quarter bank earnings by easily STû#ENTURYû&OXûASSETS ûTOû#ûINûTHEûQUARTERûENDEDû*ULYûû
BEATINGûEXPECTATIONSûTHANKSûINûSOMEûPARTûTOû The bank reported capital markets %XCLUDINGûONE
TIMEûITEMSûTHEûBANKûREPORTEDû
strong performance in capital markets INCOMEûOFû53MûUPûûCOMPAREDûWITHû %03ûOFû#ûBEATINGûONûTHATûBASISûTHEû
where the bank had its second best quarter last year on the strength in equity trading AVERAGEûANALYSTSûFORECASTûOFû#û
ever. A boost to risk-weighted assets also “underpinned by strong client engagement according to Thomson Reuters I/B/E/S.
helped the lender during the three months INûAûCONSTRUCTIVEûENVIRONMENTvûSAIDû-C+AYû .ETûINCOMEûINCREASEDûBYûûFROMûAûYEARûAGOû
to the end of July.
“We’ve been hiring top calibre bankers to
EXPANDûOURûPRESENCEûINûTHEû53ûANDûINû
Europe while leveraging past investments,”
SAIDûCHIEFûEXECUTIVEû$AVIDû-C+AYûONûAûCALLû
with analysts.
That has led to more relationships with
larger global investment-grade clients, he
said, including roles on Vodafone’s
53BNûBONDûOFFERINGûANDû7ALTû$ISNEYSû
ECB fines Credit Agricole for capital breach
CREDIT AGRICOLEûHASûBEENûlNEDûAûTOTALûOFûõMû
by the supervisory arm of the European
Central Bank for breaching procedures on
HOWûCERTAINûUNSPECIlEDûINSTRUMENTSûSHOULDû
BEûCLASSIlEDûINûAûBANKSûCAPITALûSTRUCTURE
“The penalty has been imposed in respect of
the bank classifying capital instruments as CET1
instruments during three consecutive quarterly
That follows strong equity trading results
FROMû53ûANDû%UROPEANûBANKS
RBC also saw higher loan syndication in
THEû53ûANDûHIGHERûVOLUMESûANDûHIGHERû
equity origination activity in North America
despite a decline in the global fee pool, said
CHIEFûlNANCIALûOFlCERû2ODû"OLGER
He said that there was also moderate growth
in the bank’s North America corporate loan
book after a period of portfolio optimisation.
Authority that this was considered a
“preferential distribution” and was not
compliant with regulations. The ECB has
since agreed and asked that the “loyalty
dividend” be removed from this September,
said the bank.
However, the ECB declined to comment
ONûWHETHERûTHEûlNESûRELATEDûTOûTHISûPROCESSû
TOû#BNûINCLUDINGûANûûINCREASEûINûNETû
income at its Canadian retail business, which
was driven by higher interest rates. Canadian
BANKSûHAVEûBENElTEDûFROMûFOURûINTERESTûRATEû
hikes by the Bank of Canada since July 2017.
RBC also boosted its total capital risk-
weighted assets in the quarter by roughly
#BNûSINCEûTHEûENDûOFûTHEûSECONDûQUARTERû
with capital markets driving most of the
INCREASEûANDûSPECIlCALLYûINûUNDERWRITING
RATIOSûTHROUGHûTHEIRûEXPOSUREûTOûSTATEûFUNDû
Caisse des Depots et Consignations.
CET1 QUESTIONS
There have been several cases of investors
QUESTIONINGûTHEûCLASSIlCATIONûOFûBANKû
securities in recent months. Hedge fund
Caius Capital wrote to the EBA in May
reporting periods and two consecutive public 4HEûGROUPûWASûlNEDûõMûWITHûITSû ASKINGûFORûCLARIlCATIONûOFû5NI#REDITSû
DISCLOSURESûINûûANDûûWITHOUTûHAVINGû CORPORATEûANDûINVESTMENTûBANKûlNEDû capital, claiming that the Italian bank’s
obtained the prior permission of the competent õûANDûTHEûCONSUMERûlNANCEûARMû shares were incorrectly ranked.
authority,” said the ECB in a statement.
)TûISûUNDERSTOODûTHATûTHEûlNESûRELATEûTOû
ordinary shares issued by the bank.
Earlier this year, Credit Agricole changed
the terms of some of these shares. Since May
2011 it had paid those who held such
instruments for longer than two years a
lNEûAûFURTHERûõ
There was only limited disclosure by the
ECB about the precise nature of the breach.
Credit Agricole said it was considering
appealing the decision. Last month it, and
compatriot BNP Paribas, in a joint action
won an appeal against the ECB on a separate
#AIUSûSAIDûõBNûOFûCONVERTIBLEûBONDSûISSUEDû
INûûWEREûMOREûJUNIORûTHANû5NI#REDITSû
shares. Caius is reported to have shorted these
instruments, called CASHES - or convertible and
subordinated hybrid equity-linked securities.
The EBA has since said there had been no
BREACHûOFû%UROPEANû5NIONûLAWûINûCOUNTINGû
GREATERûDIVIDENDûUPûTOûûABOVEûTHEû matter. THEûõBNûOFûNOTESûASû#%4û4HEREFOREûITû
payment to shorter-term shareholders. The supervisor had previously refused to WOULDûNOTûOPENûAûSPECIlCûINVESTIGATIONûINTOû
However, the bank said that in 2017 it had ALLOWûTHEû&RENCHûBANKSûTOûBENElTûFROMûANû the matter. The regulator is carrying out a
been told by the European Banking EXEMPTIONûTOûTHEûCALCULATIONûOFûTHEIRûLEVERAGEû wider review of crisis-era instruments.

Who’s moving where…

CITIGROUP named in 2011 and was BMO CAPITAL Capital Markets. He will
Deirdre Dunn head of promoted to the US MARKETS hired former be joined in the new
North America markets head of rates sales in Royal Bank of Canada group by Andrew
and securities services 2013. She was most banker Paul McNutt to Rosenbaum, who will be
where she will take on recently responsible for run its newly formed US a managing director in
all regional markets running North America power, utilities and the group and Andriy
responsibilities in G10 rates including infrastructure Falenchuk, who will be a
addition to her duties as sales, trading and investment banking managing director in
head of North America structuring. Prior to group. McNutt was mergers & acquisitions
G10 rates. She replaces joining Citi, Dunn held previously managing focusing on power,
Lee Waite, who is now several roles in Barclays, director and co-head US utilities and
Citi’s country head for Lehman Brothers, and power, utilities & infrastructure.
Japan. Dunn joined Citi Goldman Sachs. infrastructure at RBC

12 International Financing Review August 25 2018

 People
& Markets
h)NûOURû53ûBUSINESSûWEVEûBEENûQUITEû
active as the markets have been very active,
both on the M&A side and the buyout side,”
said Douglas McGregor, RBC group head of
CAPITALûMARKETSûh/URûLEVERAGEûlNANCEû
business has a number of mandates where
we have put on underwriting risk and will
SELLûDOWNûOVERûTHEûNEXTûCOUPLEûOFûQUARTERSv
PROlLEû as the quartet from HSBC, it has also
Meanwhile, rival CANADIAN IMPERIAL BANK OF
COMMERCEûREPORTEDûEARNINGSûOFû#BNûANDû
EARNINGSûPERûSHAREûOFû#ûFORûTHEûTHIRDû
quarter.
Revenue from capital markets was
HSBC’s Noblet to join Jefferies
M&A banker Philip Noblet, who advised
#INEWORLDûONûITSû53BNûACQUISITIONûOFû
Regal Entertainment earlier this year, is to
leave HSBC with several colleagues and join
JEFFERIES.
.OBLETûISûTHEûLATESTûHIGH
dealmaker to leave HSBC since a series of
senior leadership changes since the end of
last year.
4HATûSAWûRETAILûBANKûBOSSû*OHNû&LINTû
APPOINTEDûASûCHIEFûEXECUTIVEûINûSUCCESSIONû
HSBC’s activist shareholder practice, will be
a director. He also advised Cineworld on the
Regal transaction.
/VERûTHEûLASTûYEARû*EFFERIESûHASûHIREDûû
managing directors across EMEA. As well
APPOINTEDû+ASPERûVANû'RIENSVENûANDû
3ERGEû&IELMICHûFROMû$EUTSCHEû"ANKûTOû
HEADûINVESTMENTûBANKINGûINû"ENELUXû
and Graham Davidson from Perella
Weinberg to become co-head of
#MûUPûûFROMûTHEûPRIORûYEARû
REmECTINGûHIGHERûEQUITYûDERIVATIVESûANDû
FOREIGNûEXCHANGEûTRADINGûREVENUEûASûWELLûASû
higher advisory revenue and higher
corporate banking revenue on higher
commitments, the bank said.
Philip Scipio
to Stuart Gulliver and co-head of global
banking Matthew Westerman leave less
than two years after joining from Goldman
Sachs.
That left Robin Phillips in sole charge of
global banking, reporting to Samir Assaf,
CHIEFûEXECUTIVEûOFûGLOBALûBANKINGûANDû
markets.
By June, 10 other senior bankers had left
%UROPEANû&)'
It has also hired Christopher Dickinson
ANDû-ATTû2OSEDALEûFROMû*0û-ORGANû-ARCû
Potel from Nomura as European head of
GENERALûINDUSTRIALSû2AJû+HATRIûFROMû
Macquarie as European head of metals and
MININGû%Dû-ATTHEWSûFROMû3HOREû#APITALû
and Dai Clement and Lorna Shearin from
RBC in senior roles in power, utilities and
“While the alleged breach could have a THEûBANKûMAINLYûINû%UROPEû&LINTûSAIDûHISû infrastructure.
SIGNIlCANTûDIRECTûIMPACTûONûTHEû%"!Sû new plan was to concentrate more on Asian HSBC has itself appointed several senior
objectives, in particular as regards achieving a
sound, effective and consistent level of
regulation and supervision … the EBA Procedure
sets out some important factors which weigh
HEADûOFûPRIVATEûEQUITYû5MBERTOû
against the commencement of an investigation,”
it wrote in a letter to Caius Capital.
The EBA said it had based its assessment
OFûTHEû#!3(%3ûPLACEûINû5NI#REDITSûCAPITALû
and Chinese business in particular.
Norbert Reis, head of global banking in
Germany, left that month and in May the
CO
Greenhill as vice chairman of global
Giacometti together with Patrick Philion,
director of consumer and retail, left to join
Nomura.
That followed the departure of global
lGURESûTHISûYEARûTOOûINCLUDINGû+AMALû*ABREû
from Morgan Stanley as global head of
advisory and Anthony Parsons from
banking.
)TûHASûALSOûMADEû!LEXIû#HANûANDû2AYû
Doody co-heads of a new capital markets
group. Chan has been with the bank for 13
structure in 2012 “on a one-off basis”, PRIVATEûEQUITYûHEADû!LEXISû-ASKELLûWHOû years and Doody joined from JP Morgan last
arguing that the bulk of the instruments, moved to Citigroup in March, and Bala year.
ISSUEDûINûûCOULDûNOTûBEûDISTINGUISHEDû
from ordinary reserves when assessing the
bank’s share premium under Italian law.
HEADûOFû%UROPEANûLEVERAGEDûlNANCE
Caius successfully forced West Bromwich
Ramesh, director in leveraged credit
syndicate, who joined Jefferies in January as
CO
Previously he had been co-head of global
Noblet, vice chairman of global banking
As part of these moves Noblet was also
named vice chairman of global banking.
BANKINGûINûTHEû5+ûWITHû2OBû2ITCHIE
Building Society to clean up legacy hybrid INûTHEû5+ûISûFOLLOWINGû2AMESHûANDûWILLûJOINû Noblet joined HSBC in March 2015 from
securities last year on the grounds that these THEû53ûlRMûWITHûPaul Bundred and James Bank of America Merrill Lynch, where he
were ineligible as CET1. Thomlinson, by the end of this year, according was chairman of EMEA M&A and before
5NI#REDITûWELCOMEDûTHEû%"!SûDECISIONû
ANDûSAIDûITûHADûNOTIlEDûTHEûCOMPETENTû
market authorities of Caius Capital’s actions
in light of possible market abuse.
Christopher Spink
to a person with knowledge of the matter. that co-head of banks EMEA M&A. While at
HSBC declined to comment. the bank Noblet advised Schneider Electric
Noblet and Bundred will join as ONûITSû53BNûPURCHASEûOFû)NVENSYS
managing directors. Thomlinson, who led Christopher Spink

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

BARCLAYS has Stecher, chief innovation Chris Munro is moving finance alongside
appointed Justin officer, and work closely back to New York after Sarang Gadkari, who
Brickwood to a new with Nas Al-Khudairi, becoming sole global was made co-head of
position as head of global head of electronic head of leveraged global capital markets
markets innovation from equities and co-head of finance at BANK OF in May. Munro joined
September. He joins from cash equities, as well as AMERICA MERRILL BAML as co-head of
Goldman Sachs, where Asita Anche, head of LYNCH earlier this year. leveraged finance
he was worked for 23 markets quantitative He will be based in New EMEA after nearly 20
years and was most eTrading and data York from September, years at JP Morgan in
recently head of EMEA science and another banking sources 2015. Joe Bishay is now
equities electronic former Goldman banker confirmed. Munro was head of European
trading engineering. He Brett Tejpaul, head of previously global co- leveraged finance at
will report to John digital and client strategy. head of leveraged BAML.

International Financing Review August 25 2018 13

Bellwether
Bellwether: n. From the practice of placing a bell around the
neck of a castrated ram so that it might lead its flock
GOLDMAN SACHS IS brave. The bank is rolling out its Marcus
CONSUMERûLENDINGûOPERATIONûINûTHEû5+ûhOVERûTHEûCOMINGû
weeks”, which means it will probably coincide with the
tenth anniversary of the Lehman Brothers bankruptcy.
acknowledging how far they have come in improving their
conduct. So far, that doesn’t appear to be the case.
4HEû5+Sû#OMPETITIONûANDû-ARKETSû!UTHORITYûANDûTHEû&#!û
have just published their inaugural “popularity ranking of
banks”. Royal Bank of Scotland has emerged as the least
popular in retail and business banking, which according to
ONEûWAGûhISûTHEûlRSTûLEAGUEûTABLEûTHEYVEûTOPPEDûINûYEARSv
%XPECTûTABLOIDûOUTRAGEû3TILLûALLûPUBLICITYûISûGOODûPUBLICITY Maybe its investment bankers will be pleased that they are
Some politicians are already whipping up a populist now under the NatWest Markets umbrella, so they can avoid
storm ahead of the anniversary, after it emerged that any brand contamination from those awful retail bankers.
former Lehman Brothers bankers were planning to meet
up for a celebration, a notion that shadow chancellor John 5"3û)3û"/22/7).' from Amazon and
McDonnell called “sickening.”
If they really .ETmIXûBYûUSINGûANûALGORITHMûTOû
Alastair Darling, who was chancellor at the time of wanted to recommend bond issues. It is adapting a
Lehman’s collapse, provided some welcome reason, saying repeat history, classic algo of the online retailer, which
that “of all the problems we face today, a bunch of people they should suggests related products to customers
having a glass of wine is the least of them”. Hear, hear. hang out based on their previous buying
It’s hard to see what has got McDonnell’s goat. Maybe PREFERENCESû&ORûEXAMPLEûFANSûOFûCOFFEEû
with the Labour party riven with internecine rivalry, and
in Canary might be offered cups, and so on.
THEû4ORIESûINûAûSIMILARûSTATEûOVERû"REXITûHEûSIMPLYûCANTû Wharf with But as adults with children know,
get his head around the notion that a bunch of former cardboard this can result in a dizzying array of
colleagues would want to socialise with each other. boxes before seemingly unrelated recommendations,
The event was originally to be held at a members’ club in being taken as the algos scramble the preferences
Mayfair but has been combined with another Lehman reunion in taxis to of grown-ups and youngsters, the
and has moved to another location. That’s what happens when result being a confusing mismash
you put too many bankers in a room – they strike a merger.
Nomura’s similar to the middle aisle of a discount
The new location is a secret, although if they really headquarters supermarket where globes sit cheek-by-
wanted to repeat history, they should hang out in Canary off Lower jowl with Monster Munch.
7HARFûWITHûCARDBOARDûBOXESûBEFOREûBEINGûTAKENûINûTAXISûTOû Thames Street (OPEFULLYû5"3SûALGORITHMûWILLûBEû
Nomura’s headquarters off Lower Thames Street. slightly more targeted, and it won’t
copy some of the other clickbait tricks
WITH THE NATIONAL press preparing to dig out their fat-cat of the net, which invite readers to see
headlines in time for the anniversary, banks should be HOWûCHILDûSTARSûHAVEûAGEDûh2EMEMBERû&ORDSûûBONDû
able to rely on supportive noises from regulatory bodies in issue? See where it’s trading now.” „

Who’s moving where…

„ SANTANDER UK „ MIZUHO „ BNP PARIBAS has „ Victoria Clarke, „ BNP PARIBAS has „ JP MORGAN has
has hired Colm AMERICAS hired Jan- bolstered its sovereign, HSBC’s previous head appointed Lewis Burnett hired Tony Sciarrino to
Corcoran to run its Erik Andersen as a supranational and of sustainable bonds and Andrew Forrester as lead its middle market
European ABS trading managing director in agency desk with for Europe, the Middle co-heads of UK banking and
business. Corcoran its global transaction Marium Zaidi, who has East and Africa, is corporate broking, a specialised industries
recently quit Societe banking group. He will moved across from the joining BARCLAYS. newly created venture business in California.
Generale, where he report to Takeshi French bank’s eCredit Clarke has worked at for the French bank. The Sciarrino joins from
was head of European Ohashi, general sales team. She will fill HSBC since June 2015. duo join from Credit Bank of America
ABS trading. He will manager of global the gap left by Shade She was responsible Suisse, where Forrester Merrill Lynch, where he
begin at the UK lender transaction banking. Sharaka who left for Green/Social/ was head of UK advisory. was global client
in January. Corcoran Andersen joins from earlier this year to work Sustainability bond They will report to acquisition executive
joined SG in 2009. Seattle-based on HSBC’s SSA structuring advisory Andreas Bernstorff, head across the US and
boutique Exvere. syndicate. and deal origination. of ECM for EMEA. Canada.

14 International Financing Review August 25 2018

 People
& Markets
Banks see success in fostering “post settlement calm”, the
banker said. When there is an actual
settlement or the activist wins and takes

declining activism cases

The rush to beef up activism defence People have got better at it, said Chris
board seats it’s hard to shift being to allies
on a board from being adversaries, but it’s
important, the banker said.
groups appears to be paying off for $AVISûPARTNERûATû+LEINBERGû+APLANû7OLFûû A recent case saw activist Teleios Capital
investment banks – by one measure, at Cohen, which represents activists. take a seat on the board of its target
least, which shows the number of activism “When a company is represented by 3ODASTREAMûINûû4HEûCOMPANYûWASûSOLDû
campaigns falling. advisers that are knowledgeable and TOû0EPSI#OûFORû53BNû4HATûPRICEû
)NûTHEûlRSTûHALFûOFûTHEûYEARûTHEûNUMBERûOFû EXPERIENCEDûITûREALLYûDOESûMAKEûTHEûPROCESSû REPRESENTEDûAûûPREMIUMûTOûTHEûPRICEû
CAMPAIGNSûFELLûTOûûDOWNûûFROMûû more fruitful for everyone involved.” paid by Teleios.
according to data compiled by Thomson The activist defence groups have been The Sodastream case checks a lot of the
Reuters. The demand for shareholders’
RIGHTSûWASûDOWNûûFROMû
That may be the impact of well-managed
response to activists by companies, which
are increasingly working with investment
bankers on plans even before the activist
show up, at least according to investment
bankers.
“We are getting amicable
results from engagements
HANGINGû
without the public battle”
trying for years to get into boardrooms to
tell them that the activists will come calling
– it’s not a question of if. They have been
gaining traction with the mantra “be your
own activist”, Davis said.
“The worst situation from my
perspective is when you are representing
an activist you reach out to a company to
have a serious discussion and the company
doesn’t know what it’s doing, or wastes
time taking dumb positions,” Davis said.
INSTANT CREDIBILITY
“A top notch defence banker, someone like Chris
Young at JEFFERIES, can bring instant credibility
and an advantage to an issuer,” he said.
Young took the helm of Jefferies’
BOXESûFORûTRENDSûINûACTIVISMûACCORDINGûTOû
another banker. While the number of
activism cases was down, the number of
BOARDûSEATSûWONûBYûACTIVISTSûINûTHEûlRSTûHALFû
ATûûISûUPûûCOMPAREDûWITHûLASTûYEARû
according to data compiled by Lazard.
Israel-based Sodastream also shows that
activism is gaining steam globally.
One of the reasons we are seeing a shift
in the number of campaigns is because
companies have got better at it, Davis said.
"UTûASûITûGETSûHARDERûTOûlNDûLOW
fruit in the American markets, activists are
looking elsewhere as legal regimes permit,
he said.
Last year the aggregate market value of
new activist positions in Europe hit a record
activism defence group this month after 53BNûACCORDINGûTOû,AZARDûANDûITSûONû
“We have had success getting into leaving Credit Suisse, where he was head track to match that level this year.
boardrooms earlier and helping to of contested situations in its M&A group. It Philip Scipio
strengthen defences,” said one banker WASûTHEûLATESTûINûAûSERIESûOFûHIGHûPROlLEû
MANAGINGûTHEûACTIVISMûGROUPûATûAû53û moves in the activism defence as SHAREHOLDER ACTIVISM TARGET ADVISERS H1 2018
investment bank. That includes independent shops like Jefferies, LAZARD Adviser H1 2018 deals H1 2017 deals
understanding weaknesses and and EVERCORE beef up their offerings. A Goldman Sachs 10 3
formulating plans to remedy them and couple of years ago Evercore poached Morgan Stanley 8 14
coming up with settlement proposals even William Anderson from GOLDMAN SACHS. Lazard 8 8
before activists have a chance to make 'OLDMANûMAYûHAVEûlNALLYûRECOVEREDû Raymond James 4 8
demands. from that blow as it reclaimed the top spot Citigroup 3 0
“A lot of engagements are also done for banks advising companies facing UBS 2 4
behind the scenes,” he said. “We are getting ACTIVISTSûINûTHEûlRSTûHALF Credit Suisse 1 2
amicable results from engagements )FûBANKERSûHELPûWITHûSPEEDûANDûEFlCIENCYû Moelis 1 0
without the public battle.” in activism campaigns they are also Source: Thomson Reuters

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

„ Hei Man Leung, a „ Wendy Mok has „ MORGAN STANLEY „ Ashish Sharma has „ Beryl Bai has joined „ AMP, Australia’s
former loans banker joined CHINA has appointed Alex started work in HSBC’s SHANGHAI PUDONG biggest listed wealth
with China Minsheng EVERBRIGHT BANK Abagian as co-head of Asia Pacific leveraged DEVELOPMENT manager, has named
Banking Corp Hong Hong Kong branch as equity capital markets and acquisition finance BANK Hong Kong Credit Suisse veteran
Kong branch, has joined a vice president in the for Asia-Pacific, loan syndication team. branch as a senior Francesco De Ferrari its
financial services group syndicated finance alongside Mille Cheng. He reports to Phil Lipton, associate in the loan new CEO. AMP’s
FORTUNE FOUNTAIN team. She reports to Hong Kong-based head of loan syndication syndication team. She former CEO, Craig
CAPITAL. Leung has Ka-ming Mak, who Abagian will continue for Asia Pacific, and will reports to Yorkie Wong, Meller, stepped down
responsibility for debt joined as general to head equity work closely with James general manager of in April following
and equity capital manager of structured syndication for Asia- Horsburgh, head of the structured revelations of the firm’s
market fundraising. He finance at the Chinese Pacific in addition to leveraged and products department. misconduct during
will report to Foster Lee. bank last month. his new acquisition finance for She joins from Wing Australia’s Royal
responsibilities. Asia Pacific. Lung Bank. Commission enquiry.

International Financing Review August 25 2018 15

“The biggest obstacle to a smooth transition is
inertia – a hope that Libor will continue”
ANDREW BAILEY, CHIEF EXECUTIVE, FINANCIAL CONDUCT AUTHORITY, P11

Rocket Internet’s Kimpel heads to Barclays

BARCLAYS has appointed Peter Kimpel as head +IMPELûWILLûBEûINûCHARGEûOFûBANKINGû and head of banking coverage for Continental
of banking for Germany. He joins from activities for Barclays in Germany, Austria Europe as well as Central and Eastern Europe,
Rocket Internet, the German technology and Switzerland, working closely with the Middle East and North Africa.
INVESTMENTûCOMPANYûWHICHûmOATEDûINûû EXISTINGûCLIENTûHEADSû$OMINIKû(UHLEûANDû #ALABRIAûSINGLEDûOUTû+IMPELSûhDEEPû
WHEREûHEûWASûCHIEFûlNANCIALûOFlCER Martin Gueldenberg. knowledge and understanding of
+IMPELûWHOûWILLûALSOûBEûCOUNTRYû
manager for Barclays in Germany, joined
Rocket Internet from Goldman Sachs
where he had worked for over 20 years
PRIMARILYûADVISINGûlNANCIALûINSTITUTIONSû
He will also be responsible for risk and
control oversight of all Barclays’ activities in
Germany, including cards and payments as
well as corporate and investment banking.
In the latter capacity he will report to
technology” as an increasingly important
facet for investment bankers.
+IMPELûISûTHEûTHûMANAGINGûDIRECTORûTOû
be appointed to the banking division of
Barclays this year in Europe and the Middle
across Europe. +EVINû7ALLûCHIEFûEXECUTIVEûFORû"ARCLAYSû East. He starts at the bank in October.
At Rocket Internet he helped carry out the Bank Ireland, which is to be the group’s 2OCKETû)NTERNETûSAIDûTHATûCHIEFûEXECUTIVEû
IPOs of several portfolio companies %UROPEANû5NIONûHUBûPOST
"REXIT /LIVERû3AMWERûWILLûTAKEûONû+IMPELSû
INCLUDINGû$ELIVERYû(EROû(ELLO&RESHûANDû
(OMEû
FROM THE ARCHIVE: 10 years ago this week
THE FINANCIAL CRISIS
From August 23 2008 issue
Against all odds
It was tough going right to the end, but
Ferrovial last week finally completed
the massive £13.3bn refinancing of
its seven UK airport assets, which
are operated by BAA. Closing came
not a moment too soon, as the UK’s
Competition Commission ruled just
two days later that BAA should sell two
of its three London airports.
BAA chief executive Colin Matthews
said that the completion of the
landmark transaction amid challenging
credit markets was a “testament to
the strength of the business and the
confidence of the financial markets in
BAA and its airports”.
But it was also a testament
to the tenacity of Citi and RBS,
which were co-lead arrangers of
the bond programme and joint
dealer managers for the consent
solicitation process.
16
In the former role he will report to Carlo
Calabria, head of banking at the Ireland unit
David Basra, head of EMEA
securitised and real estate markets
at Citi, also attributed the success to
BAA’s new owner. “Ferrovial has a very
strong bank consortium, that’s key; but
it’s also the asset itself,” he said. “If you
had anything that was not stable and
core, as the airports are, then maybe it
would have been more challenging.”
And with various hedge funds such
as Polygon holding out for better
terms, just as the liability management
exercise was being undertaken, nothing
could be taken for granted. At times
the deal was hanging on a thread, with
some in the market speculating that
BAA might put it off.
“Bondholders were jockeying
for position during the liability
management process. The market
has been holding its breath around
this credit and spread volatility has
been enormous,” said Basra.
Under the terms of the deal,
£12.1bn of senior debt facilities
were migrated or raised against
the Designated Airports (Heathrow,
Stansted and Gatwick) to repay
acquisition facilities that were put
in place in 2006. This sum includes
a provision of £3bn in new financing
for BAA’s investment programme.
Focus on supply
Financials were back in focus
last week, mainly due to news
International Financing Review August 25 2018
responsibilities for the moment.
Christopher Spink
emanating from across the Atlantic.
Market participants were defensively
poised as concerns deepened over
the ability of the two major US
government supported enterprises,
Fannie Mae and Freddie Mac, to roll
debt by the end of this quarter.
Besides, the growing possibility
of another round of write-downs
from broker/dealers, and fears
surrounding the reportedly
unsuccessful balance sheet repair
attempts by Lehman Brothers to
shore up its capital base ahead of
its mid-September third-quarter
earnings announcement, all
spooked participants towards the
back end of last week.
Though the week started on a
strong note, some softness crept
in as it approached the finish line.
However, market participants were
hopeful of a pick-up in supply from
this week onwards. It is believed
that many Scandinavian borrowers,
for example, are exploring issuance
possibilities in the near term.
Pricing scepticism mars Fosse
Joint leads RBS and Goldman
Sachs last week priced a rare
publicly-placed European RMBS,
the £400m Fosse 2008-1, for
Alliance and Leicester.
The deal is notable for being
only the second RMBS to be sold
by a UK originator in 2008. It is
also the first European RMBS deal
with a US dollar tranche to be sold
since the credit crunch began. The
deal follows in the steps of 18 or so
other securitisations so far this year
where public placement in Europe
has been claimed.
The deal was pre-placed with
a small number of investors on
reverse enquiry, with average life,
currency, size and settlement date
all structured in response to investor
demand. The rather odd mid-August
pricing reflected the fact that the
deal had been effectively placed six
weeks earlier, with all documentary
and structuring work taking place
thereafter.
Bankers did not go so far as to
suggest that completion of the
deal would open the market up to
a flurry of others. But according
to Jeff Stolz, head of European
mortgage origination at Goldman
Sachs, “there is no question this is
another positive step in the right
direction”.
The kudos earned from the
public placement of the deal
was, however, marred by nagging
questions over pricing. The stated
coupon was a massive 120bp inside
secondary levels for the US$150m
A1 Class and 85bp inside secondary
levels for the €400m A2 Class.
 People
& Markets
Deal-hungry investment TOû53MûINûFEESûWHILEûADVISERSûTOû-USKSû
INVESTORûGROUPûWOULDûEARNû53MûTOû

bankers walk Tesla tightrope 53MûANDûDEBTûlNANCINGûFEESûCOULDû

REACHû53MûACCORDINGûTOûESTIMATESû
FROMûlNANCIALûADVISORYûlRMû&REEMANûû#O
TESLAûCHIEFûEXECUTIVEû%LONû-USKSû committee that will independently consider However, if the Tesla deal is done with
CONTEMPLATEDû53BNûTAKE
PRIVATEûDEALûISû THEûMERITSûOFû-USKSûEXPECTEDûOFFER equity partners and little debt, as Musk
presenting investment bankers with a Working for Musk could also come with envisages, the fees would be substantially
dilemma: overlook concerns about how
feasible it is or risk missing out on what
could be this year’s biggest and most high-
PROlLEûACQUISITION
Musk did not just catch investors and
analysts off guard earlier this month by
announcing on Twitter he was considering
TAKINGûTHEû53ûELECTRICûCARûMAKERûPRIVATEû(Eû
also sent shockwaves throughout the
investment banking world, which reacted to
THEûNEWSûWITHûBOTHûEXCITEMENTûANDû
REPUTATIONALûRISKûGIVENûTHATûTHEû53û
3ECURITIESûANDû%XCHANGEû#OMMISSIONûISû
investigating the factual accuracy of his
assertion on Twitter that funding for the
deal was secured, sources have said.
However, many bankers said this would
not be a deterrent given the magnitude of
the potential deal.
“That’s likely not enough to colour a
banker’s view on whether or not there is an
opportunity,” said Ted Smith, a co-founder
LOWERûACCORDINGûTOû&REEMANûMAKINGûITû
more of a trophy rather than a lucrative
assignment for bankers.
Last week, bankers at Goldman Sachs
decided to take the plunge by offering to
advise Musk. Goldman bankers have had
close ties with him for more than a decade,
leading Tesla’s initial public offering in
2010. Goldman Sachs declined to comment.
Morgan Stanley equity research analysts
said on Tuesday they had ceased coverage of
bewilderment. ANDûPARTNERûOFû5NIONû3QUAREû!DVISORSûAû 4ESLAûANDûSOURCESûCONlRMEDûTHATûTHEûBANKû
This is because no company of Tesla’s size technology boutique investment bank. was also close to being hired by Musk.
HASûEVERûBEENûTAKENûPRIVATEûBYûlNANCIALû 5NIONû3QUAREûISûNOTûTRYINGûTOûWINûAûROLEûINû Bloomberg reported that the bank had been
investors as Musk has suggested, as opposed the Tesla deal. retained by Musk as his adviser for a
to being acquired by a bigger company.
Moreover, the standard method of doing so,
saddling the company with debt in a so-
called leveraged buyout, is not an option for
Tesla given that is already servicing a debt
-USKûWHOûOWNSûABOUTûAûlFTHûOFû4ESLAû
said in a blog post last week that the
effective size of the deal would be much
SMALLERûTHANûTHEû53BNûEQUITYû
valuation of his offer, because, according
privatisation attempt.
Tesla has declined to comment on the
matter.
This is despite Morgan Stanley currently
advising aspiring Tesla rival Lucid Motors on
MOUNTAINûOFûSOMEû53BNûANDûISûNOTû to his estimate, two-thirds of the ATTRACTINGûAûPOTENTIALûINVESTMENTûFROMû0)&û
making any money. It reported an operating company’s shareholders would choose sources told Reuters. Morgan Stanley has
LOSSûINûûOFû53BN the option he will offer them of “rolling” BEENûAûTOPûlNANCIERûOFû4ESLAûOVERûTHEûYEARSû
Debate over the deal’s feasibility has their stakes and continue to be investors making it a prime candidate to arrange any
polarised bankers. During one conference in a private company, rather than cash DEBTûlNANCINGûNEEDEDûTHEûSOURCESûSAID
call at an investment bank last week, out. Morgan Stanley declined to comment.
discussion on whether the deal represented -USKûALSOûSAIDûTHATû3AUDIû!RABIASû0)&û 3TILLûUPûFORûGRABSûISûTHEûlNANCIALûADVISORYû
a major opportunity or a fools’ errand which became a Tesla shareholder earlier mandate to be awarded by Tesla’s special
degenerated into a shouting match,
according to one of the bankers who
provided the details on condition that
neither he nor the bank, which decided not
to pursue a role, are disclosed.
“Given the size of a deal, the company’s
THISûYEARûWITHûAûSTAKEûOFûJUSTûUNDERûûCOULDû
help him fund the cash portion of the deal,
though sources close to the secretive
sovereign wealth fund have played down
that prospect.
committee. Evercore, which advised Tesla
TWOûYEARSûAGOûINûITSû53BNûACQUISITIONûOFû
renewable energy company SolarCity and is
ALSOûADVISINGû0)&ûONûITSûPOTENTIALûINVESTMENTû
in Lucid Motors, is one of the banks vying to
advise Tesla’s special committee, according
DEBTûCAPACITYûANDûCASHmOWûBANKERSûSEEMû TROPHY DEAL to the sources. Evercore declined to
similarly chary about this deal happening There is no precedent for major institutional comment.
any time soon,” said Stefan Selig, a former shareholders and thousands of mom-and- Other investment banks vying for the
top Bank of America banker who is the pop investors rolling their stakes in a 4ESLAûSPECIALûCOMMITTEEûlNANCIALûADVISORYû
FOUNDERûOFûlNANCIALûANDûSTRATEGICûADVISORYû TRANSACTIONûOFûTHISûSIZEûANDûLEGALûEXPERTSû role include Centerview Partners, Lazard,
lRMû"RIDGE0ARKû!DVISORSûWHICHûISûNOTû have warned that carrying this out would Moelis, and Perella Weinberg, according to
involved in the deal. REQUIREûNAVIGATINGûAûREGULATORYûMINElELD the sources. The banks did not respond to
Bankers aspiring to advise on the deal are If the deal was structured like a leveraged requests for comment.
courting Musk and Tesla’s special board BUYOUTûADVISERSûTOû4ESLAûCOULDûEARNû53Mû Liana Baker, Carl O’Donnell

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International Financing Review August 25 2018 17

“When a company is represented by advisers that are knowledgeable
ANDûEXPERIENCEDûITûREALLYûDOESûMAKEûTHEûPROCESSûMOREûFRUITFULv
CHRIS DAVIS, PARTNER, KLEINBERG KAPLAN WOLF & COHEN, P15

Global raters outline China plans robust and transparent criteria, processes and
methodology,” the agency said.
Two of the world’s biggest credit rating reached. Therefore we believe that localised
agencies have outlined contrasting plans for RATINGûMETHODOLOGYûlTSûTHEûDOMESTICûMARKETû LOCAL HURDLES
their onshore China businesses as they seek BESTvûSAIDû30ûINûTHEû#HINESE
LANGUAGEûlLING Market participants said S&P’s localised
long-elusive licences in the world’s third- h4HEREûISûNOûDElNEDûMAPPINGûRELATIONSHIPû approach might be more practical given the
biggest bond market. between the ratings we assign [in China] and regulatory landscape in China.
Moody’s and S&P have recently published those S&P Global Ratings assigns based on One industry source at a Chinese rating
detailed applications for rating licences in its global rating system,” said S&P. agency pointed out that it was hard to
China’s interbank bond market. The two rating agencies declined to challenge the current regulatory
"OTHûlRMSûSETûUPûWHOLLYûOWNEDûCREDITûRATINGû comment on their onshore rating framework, under which every public bond
UNITSûINû"EIJINGûINû*UNEûlLINGSûSHOWûANDûAREû METHODOLOGIESûWHENûCONTACTEDûBYû)&2û30û offering must have at least one domestic
applying for licences to rate all categories of debt referred to an earlier statement that it rating in order to win regulatory approvals.
instruments in the interbank bond market, would build its local operation “organically”, “If Moody’s applies a global rating
INCLUDINGûlNANCIALûANDûNON
lNANCIALûNOTESû WHILEû-OODYSûSAIDûITûWASûhEXPLORINGûWAYSûTOû methodology, that suggests it will produce
Panda bonds and asset-backed securities. better serve our customers and contribute to global ratings for onshore bonds rather than
The proposed strategies, however, are the development of the Chinese market”. a domestic rating based on the PBoC scale,”
very different. The applications to the National Association said the source.
Moody’s (China) Credit Rating plans to use OFû&INANCIALû-ARKETû)NSTITUTIONALû)NVESTORSû “As such, it will present a big question to
its parent company’s rating methodology, come about one year after the People’s Bank regulators whether they will allow a global
RATINGûSYMBOLSûANDûDElNITIONSû30û
meanwhile, said its standalone business in
China would apply a customised rating
system and methodology, although it said it
would use its global methodology as a
reference when conducting rating analysis.
“China should have an independent rating
system, which develops along with its
domestic capital market, given the
development stage the capital market has
New breed of brokers eye China DCM
of China published formal guidelines allowing
foreign rating agencies to provide credit
OPINIONSûONSHOREûFORûTHEûlRSTûTIME
&ITCHûhISûINûTHEûPROCESSûOFûAPPLYINGûFORûAû
licence from Chinese regulators to operate
independently in the country”, it said in an
EMAILûTOû)&2
h&ITCHSûAPPROACHûISûTOûENSUREûTHATûWEûWORKû
to our own standards consistent with
international best practice, and with rigorous,
rating as a reference for bond approvals. This is
something regulators have not addressed yet.”
Moody’s rates China A1 on its global scale,
implying that even the top domestic issuers
will be limited to a high Single A rating. In
China’s domestic bond market, it is
generally accepted that issuers need at least
a Double A grade to attract investors to a
public offering.
Ina Zhou
The offshore Chinese bond markets continue
TOûATTRACTûNEWûlRMSûLOOKINGûFORûAûSLICEûOFû
underwriting fees, even as more established
PLAYERSûCOMPLAINûTHATûFALLINGûPROlTûMARGINSû
are threatening their business.
Among the latest new entrants is
ARMSûOFû#HINESEûlNANCIALûINSTITUTIONSûLOOKINGûTOû
leverage their onshore relationships to win
more offshore business.
COMPETITIVE PRESSURE
More established underwriters say the arrival
(UARONGû)NTERNATIONALû&INANCIALû(OLDINGSû
which won a series of bookrunner roles on
overseas Chinese bonds in 2015–17, warned
THISûMONTHûTHATûITûEXPECTEDûTOûRECORDûAû
hMATERIALûNETûLOSSvûFORûTHEûlRSTûSIXûMONTHSûOFû
this year, due to substantial provisions needed
ADMIRALTY HARBOUR CAPITALûAûlXED
INCOMEû OFûNEWûlRMSûWILLûONLYûADDûMOREûPRESSUREûONû to cover losses in debt investments.
boutique backed by Chinese consumer revenues in an industry where the number of The offshore arm of China Huarong Asset
electronics conglomerate TCL Corporation. bookrunners on Chinese bond issues has Management had pursued “aggressive
Rather than targeting bookrunner mandates, been steadily increasing, but underwriting growth in risky investments” amid a weak
however, Admiralty Harbour aims to provide fees have stayed the same. market backdrop, particularly in Chinese
liability management and debt restructuring “Competition is heavy. Chinese high-yield high-yield, said a Nomura report. Its only
advice for Chinese issuers and investors, an area trades easily have seven to nine bookrunners overseas mandate this year was on a deal for
THATûTHEûlRMûSAYSûREQUIRESûEXPERTISEûINûCREDITû
work, local knowledge and connections.
h4HEREûISûAûWALLûOFûMATURITIESûDUEûNEXTû
YIELDûISSUANCEû
year, and there are quite a few Chinese high-
NOWûSOûTHEûFEEûFORûEACHûINDIVIDUALûlRMûISû its parent company in June.
much smaller than it used to be last year,” said The total underwriting fee pool is also down
a senior Chinese bond banker, who ONûLASTûYEARû!SIANû53ûDOLLARûHIGH
complained that new entrants were HASûDROPPEDûBYûûINûTHEûYEARûTO
DATEûAFTERû
yield companies that will require some sort
of liability management or restructuring
advisory,” said Patrick Liu, one of
Admiralty’s founding partners.
4HEûFOCUSûONûADVISORYûSERVICESûREmECTSûTHEû
challenges of making ends meet from
underwriting fees alone in a market overrun
with competition. International arrangers have
been hit over about the past two years by an
INmUXûOFû#HINESEûSECURITIESûlRMSûANDûOFFSHOREû
18
undercutting the typical 100bp–200bp high-
yield underwriting fee to win business.
“I just heard one bank has pitched to do a
high-yield deal for 15bp. It’s pretty tough
out there,” said the banker.
3OMEû#HINESEûlRMSûHAVEûALSOûTAKENûAûHITû
from the sharp underperformance in high-
yield bonds, especially after receiving
pressure to bring in lead orders to win
mandates.
International Financing Review August 25 2018
HITTINGûANûANNUALûRECORDûOFû53BNûINûû
according to Thomson Reuters data.
Overall, new G3 issues from China have
TUMBLEDûûINûTHEûPASTûEIGHTûMONTHSûFROMû
the same period in 2017. Bank of China, HSBC
and Credit Suisse, which top the league tables
for offshore Chinese bonds, have all seen their
proceeds drop by a similar percentage,
according to the data.
Frances Yoon
 BONDS
SSAR  Corporates 23 FIG 26 Covered Bonds  High-Yield  Structured Finance 33

„ FRONT STORY FINANCIALS

Rabobank SNP debut blows the doors off

Wave of demand for Dutch bank’s first transaction
Bank of Ireland tackles MREL shortfall with inaugural senior
RABOBANK took a crucial step down the road DOUBLE DEBUT “We’re delighted with the outcome,” said
to MREL compliance last Wednesday, when The deal will serve as a benchmark off which Darach O’Leary, head of wholesale funding
the Dutch bank’s inaugural senior non- to price further SNP issuance, expected to be ATû"ANKûOFû)RELAND
preferred bond drew in one of the largest õBN
õBNûANNUALLYû4HEûINTRODUCTIONûOFû “The quality of the order book was
BOOKSûFORûAûEUROûlNANCIALûDEALûYEAR
TO
DATE SNP could gradually diminish the role of Tier fantastic, and really is testament to the
Investors showered the A3/A-/AA- rated 2 as a key instrument to meet MREL, ongoing investor engagement we have
lVE
YEARûWITHûõBNûINûORDERSûENABLINGû although Rabo intends to maintain a layer of MAINTAINEDûTHROUGHOUTûTHEûYEARv
leads BNP Paribas, Credit Suisse, HSBC, Morgan
Stanley and Rabobank to tighten the spread
FROMûANûINITIALûMID
SWAPSûPLUSûLOWûSûTOûAû INSTRUMENTS
lNALûBP
Those orders were obtained despite Rabo
pricing inside the best-in-class SNP deal from
4IERûûDEBTûTOûPROTECTû3.0ûHOLDERSû)Tû 4HEûBANKûFOLLOWEDû!)"û'ROUPûWHICHû
CURRENTLYûHASûAûCHUNKYûõBNûOFû4IERûû ALREADYûHASûTWOûHOLDCOûSENIORSûOUTSTANDINGû
)TSûõMû-ARCHûSûWEREûBIDûATûBPû
“It’s something that banks should be OVERûSWAPSûLASTû7EDNESDAY
rewarded for, but we never really saw the
market think that way,” said the second
“The quality of the order book
.ORDEAû!CCORDINGûTOû4RADEWEBûITSûû BANKERûh2ABOûHASûVERYûHIGHûTOTALûCAPITALû
*UNEûû"AA!!!
ûWASûBIDûAûTOUCHûINSIDEû ANDûTHISûISûTHEûASSETûCLASSûTHATûSHOULDûBENElTû
was fantastic, and really is
SWAPSûPLUSûBPûWHEREûITûPRICEDûINû*UNE
4HEûBPûORûSOûPREMIUMûOVERûITSûPREFERREDû
curve also looked to be smaller compared
with France, for example, where the spread
between preferred and non-preferred senior
ISûCLOSERûTOûBP
“It’s a classic Rabo transaction,” said a lead
ONûTHEûDEAL
4HEûOUTCOMEûREmECTEDûAûHIGHûLEVELûOFû
GRADEûRATINGSû"ANKûOFû
FROMûTHATv testament to the ongoing
Rabobank was not the only lender to investor engagement we have
break into a new asset class last week, which maintained throughout the
also saw BANK OF IRELANDûBRINGûTHEûlRSTûSENIORû year”
TRANSACTIONûFROMûITSûHOLDINGûCOMPANY
4HATûTRADEûWASûNOTABLEûFORûBEINGûTHEûlRSTû
senior unsecured Irish bank bond to have a 4HATûBONDûRALLIEDûMOREûTHANûBPûWHENûAû
full complement of investment-grade ratings -OODYSûUPGRADEûTOû"AAûFROMû"AûGAVEû!)"û
since funding in the sector was reliant on 'ROUPûTWOûINVESTMENT
anticipation around the trade after GOVERNMENTûGUARANTEES )RELANDû'ROUPûISûALREADYû)'ûATû"AA"""
û
Rabobank clearly set out its target in its 4HEûõMûlVE
YEARûMARKETEDûBYûJP -OODYS30 
SECONDûQUARTERûEARNINGS Morgan, NatWest Markets, Nomura and UBS,
LANDEDûBPûINSIDEûBPûAREAû)04SûAFTERû CHANGING DYNAMIC
PULLINGûINûORDERSûOFûOVERûõBNû'UIDANCEû 0RIORûTOû!)"û'ROUPSûSENIORûTRADESûTHISûYEARû
“They’re reasserting themselves CAMEûATûSWAPSûPLUSûBP
BP Irish banks had not issued public senior
with this trade as the tightest UNSECUREDûBENCHMARKSûSINCEûEARLYûû
name in Europe, at least on this NEW CHAPTER WHENû"ANKûOFû)RELANDûSOLDûAûõMûû
The outcome - in a week when banks priced !PRILûûRATEDû"A"""""ûANDû!)"ûAû
deal” õBNûOFûSENIORûINûJUSTûFOURûDAYSû
ûREmECTEDû õMûû-ARCHûû"A""""" 
pent-up demand for the credit after an “I believe this dynamic, coupled with the
absence of three years from the euro market, ongoing progress we are making in improving
There have been limited opportunities to and took it one step closer to meeting its the credit fundamentals of the bank, resulted
buy the bank’s unsecured paper in euros - it MODESTûõBN
õBNû-2%,ûTARGET in the strong support received for our
had only issued covered paper in the single 4HEûLENDERSûõMûûPERPETUALûNON
INAUGURALûHOLDCOûSENIORûBONDvûSAIDû/,EARY
CURRENCYûUNTILûNOWûINûû
ûANDûISûALSOûONEû CALLûû!DDITIONALû4IERûûWASûITSûLASTû The bond on Friday morning was bid
of the few banks with SNP debt rated in the transaction in the single currency, though WIDERûONû4RADEWEBûATûSWAPSûPLUSûBPû
!ûTOû!!ûRANGE that was raised at the operating company though a handful of other new issues had
“That’s really good for Rabo, as in my LEVELû,IKEûCOUNTRYûPEERû!)"û"ANKûOFû)RELANDû ALSOûEDGEDûOUTûONûTHEûWEIGHTûOFûSUPPLYû
mind they have not been an issuer who must meet its MREL loss-absorbing target #OMMERZBANKSûõBNûlVE
YEARûWASûMOREû
trades through Nordea in years, in any asset MINIMUMûREQUIREMENTûFORûOWNûFUNDSûANDû THANûBPûWIDERûTHANûITSûPLUSûBPûREOFFERû
CLASSvûSAIDûAûSECONDûBANKER ELIGIBLEûLIABILITIES ûTHROUGHûTHEûISSUANCEûOFû LEVELûFORûEXAMPLE
“They’re reasserting themselves with this STRUCTURALLYûSUBORDINATEDûBONDS “It was a decent deal,” said a banker away
trade as the tightest name in Europe, at least )TSûlRSTûHOLDCOûTRADEûEMERGEDûLASTûYEARûAû FROMûTHEûTRADEûh)TûHADûDECENTûMOMENTUMû
ONûTHISûDEALû7HETHERûTHATûWILLûEXTENDûTOû dual-tranche Tier 2 in sterling and US dollars, ANDûISûPOSITIVEûFORû)RELANDûGIVENûTHEû!)"û
other asset classes remains to be seen, but BUTûLASTû7EDNESDAYSûDEALûWASûTHEûlRSTû 'ROUPûSEVEN
YEARûDIDNTûGOûASûWELLv
THISûISûAûPRETTYûNICEûSTATEMENTûTOûMAKEv SENIORûANDûlRSTûEUROûISSUEDûFROMûTHISûENTITY Alice Gledhill

International Financing Review August 25 2018 19

WEEK IN NUMBERS 4HATûõBNûû-ARCHûûWASûBIDûATû
BPûTHROUGHûSWAPSûBPûTIGHTERûTHANûITSû
SSAR
89.40
„ LOW HIT BY AUTOSTRADE’S 1.75%
PRICINGûLEVEL
For a third banker, ESM will manage to
attract demand and replicate the success of
FEBRUARY 2027 BOND. IT WAS CLOSE TO EUROS THEû*ULYûlVE YEARûASûTHEûMARKETûISûOPENû
PAR PRIOR TO THE GENOA BRIDGE ACROSSûTHEûCURVEûh4HEûCONDITIONSûAREû
COLLAPSE EURO ISSUERS PUSH DEALS AHEAD OF FAVOURABLEvûHEûSAID
BUSY PIPELINE Demand for covered bonds, the closest
Autostrade 1.75% Feb 27s asset class to SSA, has so far proved solid,
100
KOMMUNEKREDITûWASûTHEûlRSTû33!ûISSUERûTOû and transactions in most cases have ended
98 JUMPûINTOûTHEûEUROûMARKETûAHEADûOFûWHATûISû UPûWELLûSUBSCRIBED
96
expected to be an even busier week, with “As long as issuers are careful with the
FINLAND set to bring a benchmark bond to NIP, deals should go well,” one of
94
MARKET +OMMUNE+REDITSûLEADûSAIDû(EûSAIDûTHEû
92 The Danish local government funding Danish agency did not offer an immense
90 AGENCYûPRICEDûAûõMûNO GROWûlVE YEARûATû concession but was helped by being a less
AûRELATIVELYûTIGHTûLEVELû"OOKSûOPENEDûONû active name in volume terms than some of
88
7EDNESDAYûMORNINGûATûSWAPSûLESSûBPû ITSûPEERS
10/8/18

13/8/18

14/8/18

15/8/18

16/8/18

20/8/18

21/8/18

22/8/18

23/8/18

area, although the spread was revised The deal is KommuneKredit’s second euro
TIGHTERûTOûAûlNALûLESSûBPûAFTERûORDERSû OUTINGûATûTHISûPARTûOFûTHEûCURVEûINûû4HEû
PASSEDûõM previous issue in March attracted over

3
„ NUMBER OF GERMAN BANKS TAKING
While recent euro issuance has been at
best sporadic, the traditional post-summer
PICK UPûISûEXPECTEDûTHISûWEEKû4HEûEUROPEAN
õBNûOFûDEMANDû)TûCAMEûATûBPûTHROUGHû
SWAPSûANDûWASûQUOTEDûATûBPûTHROUGHûONû
7EDNESDAYûACCORDINGûTOû4RADEWEBûPRICES
ADVANTAGE OF NEW LEGISLATION TO STABILITY MECHANISM will be among the BNP Paribas, LBBW and Societe Generale were
ISSUE SENIOR PREFERRED DEBT IN THE CROWDSûHAVINGûSENTûANû2&0 JOINTûLEADûMANAGERS
PUBLIC MARKET "ANKERSûSAIDû%3-ûCOULDûCOVERûTHEûENTIRETYû
OFûITSûREMAININGûõBNûFUNDINGûNEEDSûFORûTHEû ALL US DOLLAR FIXED-RATE GLOBALS
QUARTERûEITHERûVIAûAûSINGLEûISSUEûORûAûõBNû BOOKRUNNERS: 1/1/2018 TO DATE
BONDûCOMBINEDûWITHûAûTAP Managing No of Total Share
bank or group issues US$(m) (%)
€4.7bn
„ SIZE OF THE ORDER BOOK FOR
h7EûMADEûTWOûSUGGESTIONSûTHEûlRSTûONEû
BEINGûAûNEWû YEARûBONDûCOMBINEDûWITHûAû
LONGER DATEDûTAPûOFûPERHAPSû YEARSûORûAû
1 BAML
2 JP Morgan
137
136
52,521.05 11.7
49,299.39 11.0
RABOBANK’S DEBUT NON-PREFERRED NEWûLINEûOFûEITHERûûORû YEARSvûSAIDûAû 3 Citigroup 119 42,573.88 9.5
SENIOR BOND, A €1bn FIVE-YEAR BANKER 4 Barclays 81 40,680.44 9.1
4HEû%3-û!A.2!!!ûLASTûVISITEDûTHEû 5 Goldman Sachs 81 33,253.75 7.4
MARKETûINû*ULYûSELLINGûAûõBNûlVE YEARûONû 6 Wells Fargo 86 27,628.30 6.2
OVERûõBNûOFûDEMANDû)TûWASûBIDûATûBPû 7 Morgan Stanley 79 24,501.30 5.5

11bp
„ FALL IN YIELD ON ITALY’S 10-YEAR BTP
through mid-swaps on Thursday, 2bp
THROUGHûREOFFER
h3EVEN YEARSûMIGHTûBEûTOOûCLOSEûTOûlVE
8 Deutsche Bank
9 HSBC
10 RBC
51
45
58
23,530.98 5.2
22,249.99 5.0
20,604.28 4.6
AS MOODY’S ANNOUNCED AN EXTENSION YEARSûWHICHûTHEYVEûJUSTûDONEvûAûSECONDû Total 275 448,258.93
TO THE DEADLINE FOR ITS REVIEW OF THE BANKERûSAIDûh4HEYVEûNOTûDONEûAû YEARûSINCEû Excluding equity-related debt, ABS/MBS.

COUNTRY’S RATING last year but it might make sense for them to Source: Thomson Reuters SDC code: O5
LOOKûATûAûMATURITYûFURTHERûOUTvûHEûSAID
10yr BTP yield on August 21
3.06
ALL BONDS IN EUROS ALL INTERNATIONAL BONDS (ALL CURRENCIES)
3.04 BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
3.02 Managing No of Total Share Managing No of Total Share
bank or group issues €(m) (%) bank or group issues US$(m) (%)
3.00
1 BNP Paribas 235 56,183.02 7.3 1 JP Morgan 694 189,209.34 7.5
2.98
2 Deutsche Bank 214 46,835.59 6.1 2 Citigroup 659 175,934.64 7.0
2.96 3 SG 192 45,878.45 6.0 3 Barclays 501 153,821.29 6.1

2.94
4 HSBC 225 44,086.23 5.7 4 HSBC 639 149,102.54 5.9
Open High Low Close 5 Credit Agricole 178 43,588.84 5.7 5 BAML 541 142,849.98 5.6
6 JP Morgan 165 40,706.09 5.3 6 Goldman Sachs 399 130,266.67 5.2
7 Barclays 144 38,424.28 5.0 7 Deutsche Bank 515 124,680.78 4.9
8 UniCredit 194 37,301.24 4.9 8 BNP Paribas 423 101,919.96 4.0

€188m
„ THE AMOUNT THE ECB BOUGHT
9 Citigroup
10 Goldman Sachs
Total
134
106
1,118
32,704.68 4.3
32,349.27 4.2
767,846.84
9 Morgan Stanley
10 Credit Suisse
Total
405
372
3,783
101,442.93 4.0
71,426.05 2.8
2,528,847.68
THROUGH ITS CSPP IN TRADES SETTLED Including Euro-preferreds. Excluding equity-related debt, Including Euro, foreign, global issues. Excluding equity-related debt,
US Global ABS/MBS. US Global ABS/MBS.
IN THE WEEK UP TO AUGUST 17
In total, it has bought €165.891bn Source: Thomson Reuters SDC code: N1 Source: Thomson Reuters SDC code: J1

20 International Financing Review August 25 2018

 BONDS SSAR

BERLIN BLOW OUT WAITING FOR DOLLARS The Federal State of SCHLESWIG-HOLSTEIN
The warm reception given by investors to The ESM could also decide not to raise its JOINEDûTHEûEUROûTEAMûOFûISSUERSûPRINTINGûAû
BERLINSûõMû YEARûLASTûWEEKûCOULDû full Q3 target and leave something for the õMûNO GROWû YEARûONû&RIDAYû,EADSû
ENCOURAGEû%3-ûTOûLOOKûFURTHERûTHANûTHEû 53ûDOLLARûMARKET Commerzbank, DZ Bank, HSBC, LBBW and Nord/
YEARûMARK It has committed to raise funds in dollars LBûPRICEDûATûBPûTHROUGHûMID SWAPSûINûLINEû
4HEû'ERMANûSTATEûATTRACTEDûOVERûõBNû aside from its usual euro transactions but WITHûLESSûBPûAREAûGUIDANCEûALTHOUGHû
of orders and priced 2bp inside initial talk, HASûYETûTOûAPPEARûINûTHEûCURRENCYûTHISûYEAR THEREûWEREûNOûBOOKûUPDATESûRELEASED
ATûBPûTHROUGHûSWAPSû)TûHASûSINCEûHELDûINû )TSûINAUGURALûDEALûAû53BNûlVE YEARûSOLDû 3CHLESWIG (OLSTEINûLASTûCAMEûTOûTHEûPUBLICû
BIDûATûLESSûBPûONû4RADEWEB LASTû/CTOBERûWASûQUOTEDûATûBPûOVERûSWAPSû MARKETûINû-AYûBRINGINGûAûõMûlVE YEARû
“There are some parts of the investor BPûTIGHTERûTHANûWHEREûITûPRICED DEALûATûLESSûBP
COMMUNITYûTHATûAREûCONSTRAINEDûTOûlNDû (OWEVERûBANKERSûDOûNOTûSEEûAûWINDOWû 4HEûLATESTûINSTITUTIONûTOûJOINûTHEûEUROûFRAYû
longer-dated assets, they have to invest in OPENûFORûDOLLARSûGIVENûTHEûCURRENTûCONDITIONS is AGENCE FRANCAISE DE DEVELOPPEMENTû4HEû
something long-dated,” the second banker “They have indeed made the commitment Double A rated issuer is planning a
SAID to issue in dollars before the end of the year, roadshow for a Climate bond, commencing
“So, a transaction with a bit more but the basis has moved so much that it has ONû3EPTEMBERûûTHATûWOULDûLASTûFORûATûLEASTû
CONCESSIONûTHANû"ERLINûWOULDûWORKûWELLû BECOMEûEXPENSIVEvûSAIDûAûFOURTHûBANKER TWOûDAYSûACCORDINGûTOûAûLEAD
While the investor base for longer-dated 4HEûlVE YEARûEURO53ûDOLLARûBASISûSWAPû !&$ûLASTûISSUEDûAû'REENû#LIMATEûBONDûINû
deals is relatively small, they can buy in has been shifting less negative for most of .OVEMBERûûVIAûCredit Agricole, HSBC,
large sizes, and if you can unearth interest ûANDûWASûQUOTEDûATûLESSûBPûONû Natixis and Societe Generaleû4HEûõMûû
from them, it can be a deciding factor for Thursday, from less 36bp at the beginning .OVEMBERûûPRICEDûATû/!4SûPLUSûBPû
THEûSUCCESSûOFûAûDEALv OFûTHEûYEAR The same four leads are involved this time
around, with the addition of BNP Paribas
ALL INTERNATIONAL US$ BONDS ALL SOVEREIGN BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE ITALY CATCHES SHORT-LIVED BID AFTER
Managing No of Total Share Managing No of Total Share RATING REVIEW EXTENSION
bank or group issues US$(m) (%) bank or group issues €(m) (%)
1 JP Morgan 470 131,694.98 9.7 1 Barclays 15 11,552.98 12.0 Moody’s announcement that it would
2 Citigroup 476 129,197.26 9.5 2 Citigroup 16 9,560.05 9.9 extend ITALYSû"AAûRATINGûREVIEWûFORû
3 BAML 396 105,981.36 7.8 3 JP Morgan 13 9,541.35 9.9 downgrade until the end of October gave the
4 Barclays 290 94,715.01 7.0 4 BNP Paribas 12 7,660.47 7.9 GOVERNMENTûDEBTûAûlLLIPûLASTûWEEKûTHOUGHû
5 Goldman Sachs 275 85,909.12 6.3 5 HSBC 11 7,339.59 7.6 the rally proved to be short-lived as volatility
6 HSBC 271 71,790.26 5.3 6 NatWest Markets 6 6,826.39 7.1 CAUGHTûUPûWITHûTHEûSOVEREIGN
7 Morgan Stanley 264 71,427.92 5.3 7 SG 11 5,984.29 6.2 The ratings agency’s decision to wait for
8 Wells Fargo 255 63,482.56 4.7 8 Santander Global  5 4,589.15 4.8 GREATERûCLARITYûONûTHEûGOVERNMENTSûlSCALû
9 Deutsche Bank 252 60,387.16 4.5 9 BBVA 3 3,813.65 4.0 path and reform agenda sent yields lower
10 Credit Suisse 249 49,126.77 3.6 10 Goldman Sachs 7 3,723.50 3.9 LASTû4UESDAY
Total 1,629 1,353,626.17 Total 34 96,391.70 4HEû YEARû"40ûTHATûWASûBIDûATûûATû
Including Euro, foreign and global issues. Excluding equity-related debt, Excluding ABS/MBS. THEûOPENûDROPPEDûTOûûWHILEûTHEûSPREADû
US Global ABS/MBS.
AGAINSTû'ERMANYûTIGHTENEDûBYûBPûTOû
Source: Thomson Reuters SDC code: O1 Source: Thomson Reuters SDC code: N4 BPûACCORDINGûTOû4RADEWEBûPRICES

ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 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 Credit Agricole 18 6,288.80 8.7 1 Credit Agricole 18 6,255.84 9.9 1 UniCredit 31 4,748.13 14.5
2 Goldman Sachs 12 6,238.70 8.7 2 UniCredit 9 5,231.32 8.3 2 DGZ-DekaBank 25 3,416.61 10.5
3 JP Morgan 17 6,106.07 8.5 3 Commerzbank 11 5,180.45 8.2 3 HSBC 20 3,227.37 9.9
4 Commerzbank 19 5,647.22 7.8 4 Barclays 8 5,099.94 8.0 4 LBBW 23 2,726.80 8.3
5 HSBC 21 5,140.58 7.1 5 SG 8 4,176.26 6.6 5 Deutsche Bank 17 2,127.49 6.5
6 Deutsche Bank 14 4,452.45 6.2 6 HSBC 13 4,123.10 6.5 6 JP Morgan 12 2,026.97 6.2
7 BNP Paribas 13 4,304.21 6.0 7 Deutsche Bank 11 4,067.59 6.4 7 Nord/LB 18 1,902.22 5.8
8 SG 18 4,280.63 5.9 8 JP Morgan 8 3,775.22 6.0 8 Credit Agricole 6 1,233.27 3.8
9 UniCredit 9 3,784.17 5.3 9 DZ Bank 9 3,509.88 5.5 9 DZ Bank 13 1,145.93 3.5
10 LBBW 10 2,953.85 4.1 10 Goldman Sachs 6 3,120.03 4.9 10 BBVA 5 950.36 2.9
Total 114 71,993.80 Total 58 63,371.71 Total 91 32,662.15
Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS. Excluding ABS/MBS.

Source: Thomson Reuters SDC code: N6 Source: Thomson Reuters SDC code: N5 Source: Thomson Reuters SDC code: N7

EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING AUGUST 22 2018

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Aug 21 2018 Germany €3.18575bn 0.00 Sep 11 2020 -0.61 1.59
Aug 21 2018 UK (i) £1.1bn 0.125 Aug 10 2028 -1.79 2.29
Aug 22 2018 Germany €2.42375bn 0.25 Aug 15 2028 0.33 1.23
Source: IFR

International Financing Review August 25 2018 21

 “If Moody’s had downgraded now and
again after the budget, there would be the
risk of Italy losing its investment grade,
which is unlikely as the budget will be in
practice more pragmatic than the current
rating on October 26, while Fitch’s revision
ISûSCHEDULEDûFORû!UGUSTû
STERLING
h7EûFELTûITûWOULDûBEûENOUGHûTOûDOûaMû
so anything above was a bonus, and getting
a bigger size really sends a strong message,”
AûBANKERûCLOSEûTOûTHEûDEALûTOLDû)&2ûh4HISûHASû
already captured the imagination of a few
GOVERNMENTSûRHETORICvû"LUE"AYûCHIEFû ISSUERSv
INVESTMENTûSTRATEGISTû$AVIDû2ILEYûTOLDû)&2 PERFECT STORM DRIVES SUMMER’S SSA The leads were Barclays, Bank of America
2ILEYûSAIDûTHATûWITHûTHEûCURRENTûlSCALû STERLING SUPPLY Merrill Lynch and RBC
DElCITû)TALYûHASûROOMûFORûMANOEUVREûTOû (OWEVERûASûTHEûWEEKûPROGRESSEDûTHEû
make progress towards election An attractive cross-currency basis swap has demand for sterling bonds started to run out
commitments without a fully blown seen a material pick-up in sterling- OFûSTEAM
CONFRONTATIONûWITHû"RUSSELSûORûMOREû denominated paper from public sector The INTER-AMERICAN DEVELOPMENT BANK on
IMPORTANTLYûTHEûMARKET ISSUERSûTHISûSUMMERûWITHûSOMEûaBNûOFû 4HURSDAYûPRICEDûAûaMûSIX
YEARû'LOBALûATû
“A potential downgrade could have put SUPPLYûSINCEû*UNEûCOMPAREDûWITHûaBNûFORû 'ILTSûPLUSûBPûINûLINEûWITHûINITIALûGUIDANCE
some volatility in the market at the start of THEûSAMEûPERIODûINû The trade, according to a third banker
3EPTEMBERûBUTûNOWûTHISûISûNOTûONûTHEûRADARû 4HEûLATESTûISSUERûTOûJOINûTHEûFRAYûWASûFMS away from the deal, was not fully
All eyes are on the budget as the credit WERTMANAGEMENTûTHEû'ERMANûAGENCYûHAVINGû SUBSCRIBEDûh4HEûDEALûWASûONLYûOKAYû4HEREû
OUTLOOKûSTILLûREMAINSûNEGATIVEvûSAIDû!".û mandated Bank of America Merrill Lynch, JP were no updates on the books during the
!-2/û"ANKûlXEDûINCOMEûSTRATEGISTû4OMû Morgan, NatWestMarkets and RBC for a pricing and they weren’t in a hurry to close
+INMONTH BENCHMARKû-ARCHûûBOND BOOKSvûHEûADDED
(OWEVERûWHILEûANûIMMEDIATEû-OODYSû For US dollar funders, and to a certain )$"SûPREVIOUSûSTERLINGûDEALûAûaMû
downgrade is not on the cards, volatility is extent euro issuers opting to print in û$ECEMBERûûINû*UNEûCAMEûATûBPû
LIKELYûTOûCONTINUEûTOûPLAGUEûTHEûSOVEREIGN sterling, the cross-currency basis swap is OVERû'ILTSûANDûWASûQUOTEDûATûPLUSûBPûONû
"Yû&RIDAYûTHEûEARLIERûRALLYûHADûRECEDEDûASû generating what one banker called a 4HURSDAYûTHEûDAYûOFûPRICING ûACCORDINGûTOû
CONCERNSûOVERûTHEûBUDGETûDElCITûINCREASEDû “perfect storm”, where investors also 4RADEWEBûPRICES
SENDINGûTHEû
YEARûYIELDûTOûûITSû BENElT Barclays, HSBC and JP MorganûWEREûJOINTû
HIGHESTûLEVELûINûAûWEEK “On top of that, there were a lot of LEADûMANAGERSûONûTHEûTRANSACTION
redemptions at the beginning of the year,” RENTENBANK came to a similar conclusion
WAITING GAME HEûSAID in terms of maturity on Wednesday, issuing
Moody’s said in the rating release late on This dynamic has been at play for quite a AûaMûû3EPTEMBERûûONûORDERû
Monday that it is waiting on the publication few months now, with issuers opting to BOOKSûOFûaMûATû'ILTSûPLUSûBP
of Italy’s economic forecasts and policy PRINTûlVE
YEARûBONDSûADDINGûSUPPLYûTOûTHATû The ASIAN DEVELOPMENT BANK closed the
guidelines for the next three years in the PARTûOFûTHEûCURVE WEEKûONû&RIDAYûPRICINGûAûaMû-ARCHû
annual Economic and Financial Document %ARLIERûINûTHEûYEARûTHEû7ORLDû"ANKûANDû û'LOBALûATûPLUSûBPûVIAûBarclays,
$%& ûONû3EPTEMBERû %XPORTû$EVELOPMENTû#ANADAûISSUEDûlVE
Citigroup and RBC
h)TûISûUPûTOûTHEûPOLITICIANSû)FûONEûDOESûNOTû year sterling FRNs, focusing on the “Are all the deals fully sold? The fact that
KNOWûTHEûFULLûlNALISEDûVERSIONûOFûTHEû $ECEMBERûûMATURITYûANDûOTHERûISSUERSû you’ve seen follow-on supply tells me that
budget, the rating agencies cannot make a then accessed it, according to a second none of the deals are a disaster and banks
decision on the outlook of the nation,” said BANKER are still willing to do the trades,” said the
+INMONTH “They were still able to get good funding SECONDûBANKER
&ORû*ACKû-C)NTYREûGLOBALûlXEDûINCOMEû versus Libor based on the cross-currency
MANAGERûFORû,EGGYû-ASONûAFlLIATEû BASISûSWAPvûSAIDûTHEûBANKERûh)NûTHEû
"RANDYWINEû'LOBALûTHEûEXTENSIONûOFûTHEû
review has given Italy more time to come up
WITHûAûCREDIBLEûPLAN
h"UTûTHEYVEûHADûAûLONGûTIMEûTOûDOûTHATû
ALREADYû4HISûDOESûNOTûGETûAWAYûFROMûTHEû
meantime, we’ve had a drop in US dollar YEN
supply and we’ve seen swap spreads tighten
while sterling moved sub Libor, meaning JASSO SOCIAL BOND MEETS STRONG
THATûASSETûSWAPûLEVELSûBECAMEûLESSûATTRACTIVEv DEMAND
fundamental problem that Italy has too NEXT STEP JAPAN STUDENT SERVICES ORGANIZATIONû*ASSO ûANû
much debt and not enough growth to According to him, the next step for issuers independent body under the ministry of
SUPPORTûTHATûDEBTvûHEûSAID was then to look at seven-years, especially as education that offers scholarship
The DEF publication might reverse the bank treasuries are willing to extend and get programmes, drew strong demand for its
RISKûOFûlSCALûWEAKENINGûANDûTHEûPOSSIBILITYû AûPICK
UPûOFûAROUNDûBPnBP INAUGURALû3OCIALûBONDûOFFERING
that structural reforms such as pensions “Issuers decided to take advantage of that Jasso is the second Social bond issuer in
might stall, which are the key drivers and, as is usual, we saw others follow,” he Japan after Japan International Cooperation
BEHINDûAûPOTENTIALûDOWNGRADEûBYû-OODYS SAID Agency, but, in contrast to JICA, Jasso will
“To get out of that situation you have got The INTERNATIONAL FINANCE CORPORATION led USEûTHEûPROCEEDSûFORûDOMESTICûPURPOSES
TOûREDUCEûYOURûDEBTûPROlLEûnûANDû)ûCANTûSEEû THEûWAYû/Nû4UESDAYûITûBROUGHTûAûSIZEABLEû Prior to the transaction priced last Friday,
THATûHAPPENINGûnûORûACHIEVEûBETTERûGROWTHû sterling trade as an invitation for bank Jasso obtained a second-party opinion from
which is challenging,” said Kinmonth TREASURIESûTOûREACHûOUTûBEYONDûTHEûlVE
YEARû Vigeo Eiris in June that the new bond issue
“Since the budget does not have to be POINTûANDûWASûMETûWITHûSTRONGûDEMAND ISûALIGNEDûWITHû3OCIALû"ONDû0RINCIPLESû
CONlRMEDûUNTILû3EPTEMBERû-OODYSû The Triple A rated issuer, which is a DElNEDûBYû)#-!û4HEû&RENCHûREVIEWERûALSOû
decision makes sense to wait until clarity on MEMBERûOFûTHEû7ORLDû"ANKû'ROUPûATTRACTEDû assessed Jasso as an issuer with a good
THISûDIRECTIONv MOREûTHANûaMûOFûORDERSûONûITSûWAYûTOû OVERALLû%3'ûPERFORMANCE
)TALYûISûRATEDû"""ûBYû30ûANDû&ITCHûBOTHû PRINTINGûAûaMû'LOBALû3%#
EXEMPTû-ARCHû The Social label, however, did not make
WITHûSTABLEûOUTLOOKSû30ûWILLûREVIEWûITSû ûNOTEûBPûINSIDEû)04SûATû'ILTSûPLUSûBP THEûPRICINGûMOREûFAVOURABLEûTOûTHEûISSUERû!û

22 International Financing Review August 25 2018

 BONDS CORPORATES

cBNû53M ûTWO YEARûNOTEûWITHûAû “A lot of investors are thin on the ground

ûCOUPONûPRICEDûATûûIDENTICALû EUROS at the moment, so from that perspective, it
to eight previous issues because of strong needs to be a name that the market knows
resistance from Japanese investors to CARMAKERS KEEP MARKET ON ITS TOES well so they can make a quick decision
NEGATIVEûYIELDSû4HEûPAPERûYIELDSûVIRTUALLYû without having to do the in-depth analysis,”
ZEROûORû BMW and DAIMLER came to market last SAIDûTHEûlRSTûLEAD
(OWEVERûTHEûNEWûTRADEûDREWûMUCHû 4HURSDAYûCONlRMINGûONGOINGûFUNDINGû “So it’s more a function of that rather
STRONGERûDEMANDû"ANKERSûONûTHEûDEALûSAIDû opportunities for well-known and frequent than the market tone, which has been
THEûBOOKûBUILTûUPûTOûcBNûBECAUSEûOFûGOODû ISSUERSûDESPITEûTHEûSUMMERûLULL RELATIVELYûCONSTRUCTIVEv
participation from a wide variety of Less than three weeks after tapping the Ongoing noise around trade wars did not
investors including foreigners, much larger 53ûDOLLARûMARKETûFORûAû53BNûlVE
PARTERû have an impact on execution, with the
THANûcBNûINûTHEûPREVIOUSûTRADEûANDû
bankers pointing to the muted reaction in
cBNûINûTHEûONEûBEFOREûTHATû4HEû3OCIALû
feature also made it possible for Jasso to
DRAWûNOTûJUSTûNEWûINVESTORSûBUTûTHOSEûWHOû
"-7ûWASûBACKûINûEUROSûWITHûAûõBNû
year and seven-year outing that found over BOTHûEQUITYûANDûCREDITûMARKETS
õBNûOFûDEMAND "UTû#REDIT3IGHTSûANALYSTSûSAIDûTHEûNEWû
Investor appetite enabled leads BNP ISSUESûCOMEûRIGHTûBEFOREûTHEû3EPTEMBERûû
USEDûTOûBUYûITSûBONDS Paribas, Credit Suisseû"$ ûING, MUFG and
Mitsubishi UFJ Morgan Stanley, Mizuho and SEBûTOûBRINGûSPREADSûINûBYûBPûFROMûTHEû
Nomura were the leads on the deal rated AA/ tight end of IPTs on both tranches,
!!!ûBYû2)*#2 LAUNCHINGûATûBPûANDûBPûOVERûSWAPSû
RESPECTIVELY
!ûLEADûBANKERûSAWûFAIRûVALUEûATûBPûANDû
BP
deadline for vehicles to conform to the new
worldwide harmonised light vehicles test
PROCEDUREûSTANDARDS
“The [original equipment manufacturers]
have spoken about the new regulations and
the headwind it will pose over the near
BPûBUTûSAIDûCALCULATIONSûWEREûTRICKYû term, especially for Daimler,” the analysts
in particular at the short end, which is WROTE
CORPORATES TRADINGûTIGHTû"-7ûHASû*ANUARYûSûATûBPû Goldman Sachs and HSBCû"$ ûWEREûACTIVEû
ANDû!PRILûSûATûBPûACCORDINGûTOû BOOKRUNNERS
4RADEWEBûPRE
ANNOUNCEMENTûPRICES
US DOLLARS Meanwhile, Daimler grabbed some CITYCON WAKES CORPORATE MARKET
STERLINGûLAUNCHINGûAûaMû3EPTEMBERû WITHOUT FANFARE
CENTRAL JAPAN RAILWAY MANDATES ûBENCHMARKûONûPRE
RECONCILIATIONû
BOOKSûOFûOVERûaBN CITYCON ended a two-week issuance break in
CENTRAL JAPAN RAILWAY has mandated Morgan 4HEûLANDINGûLEVELûCAMEûBPûINSIDEû)04SûOFû the corporate market last Wednesday but its
Stanley, Mizuho Securities, Bank of America 'ILTSûPLUSûBPûAREAûANDûWASûBPûBACKûOFû õMûNO
GROWûLONGûEIGHT
YEARûDIDûNOTû
Merrill Lynch and Nomura for a US dollar- FAIRûVALUEûACCORDINGûTOûAûLEADû)TûWASûSOMEû progress from the IPT range despite the lack
DENOMINATEDûlVE
YEARûSENIORûUNSECUREDû BPûBACKûOFû$AIMLERSû-AYûûEUROûPAPER OFûSUPPLY
BONDûOFFERINGû&IXEDûINCOMEûINVESTORû Daimler last printed as recently as August "OOKSûWEREûREPORTEDLYûOVERSUBSCRIBEDû
MEETINGSûWILLûSTARTûINû3INGAPOREûANDû(ONGû ûRAISINGû2MBBNû53M ûFROMûAûDUAL
ALTHOUGHûONLYûAFTERûINCLUDINGûJOINTûLEADû
+ONGûONû4UESDAY TRANCHEû0ANDAûPRIVATEûPLACEMENT MANAGERûINTEREST
4HEûPROPOSEDûlXED
RATEû2EGû3ûNOTESû It came in euros at the end of July, pricing A banker away from the deal had
WHICHûAREûEXPECTEDûTOûBEûRATEDû!A!!nû AûõBNûTHREE
PARTERûONûBOOKSûOFûAROUNDû expected it to go well given the “decent”
-OODYS30 ûSHOULDûPRICEûINûTHEûNEARû õBNû4HATûWASûJUSTûAûWEEKûBEFOREû starting level, pegging fair value around
FUTUREûSUBJECTûTOûMARKETûCONDITIONS 6OLKSWAGENû,EASINGûLAUNCHEDûAûõBNû BPûINSIDEûBPnBPû)04S
#ENTRALû*APANû2AILWAYûRAISEDû53MûINû TRIPLE
TRANCHER (EûLATERûSAIDûHEûWASûSURPRISEDûBYûTHEû
&EBRUARYûûFROMûANûOFFERINGûOFû2EGû3ûlVE
Ongoing supply from the auto sector landing level and could not pinpoint a
year senior bonds, which priced at while most other issuers have opted to stay SPECIlCûREASONûFORûIT
4REASURIESûPLUSûBPûAFTERûDRAWINGûORDERSûINû on the sidelines this summer is not “Maybe some people thought it’s not
EXCESSûOFû53BN SURPRISINGûACCORDINGûTOûBANKERS something they needed to buy because they

ALL INV-GRADE US CORPORATE BONDS ALL US INVESTMENT GRADE CORPORATE DEBT ALL CORPORATE BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE (EXCLUDING SOLE SELF FUNDED DEALS) BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share
bank or group issues US$(m) (%) Managing No of Total Share bank or group issues €(m) (%)
1 BAML 57 10,084.73 10.7 bank or group issues US$(m) (%) 1 BNP Paribas 108 18,361.91 8.7
2 JP Morgan 52 8,279.56 8.8 1 JP Morgan 279 78,848.53 11.0 2 Deutsche Bank 84 16,377.16 7.8
3 Morgan Stanley 35 6,860.03 7.3 2 BAML 255 77,808.33 10.8 3 SG 81 14,992.11 7.1
4 Wells Fargo 48 6,811.61 7.2 3 Citigroup 239 66,497.70 9.3 4 HSBC 80 11,455.42 5.4
5 Citigroup 38 6,522.08 6.9 4 Goldman Sachs 160 56,166.56 7.8 5 Goldman Sachs 45 11,399.25 5.4
6 Mizuho 28 4,944.18 5.3 5 Morgan Stanley 204 51,154.34 7.1 6 JP Morgan 74 11,391.00 5.4
7 Barclays 31 4,768.71 5.1 6 Barclays 132 47,377.84 6.6 7 Credit Agricole 65 11,264.95 5.3
8 Goldman Sachs 23 4,577.64 4.9 7 Wells Fargo 178 43,717.71 6.1 8 UniCredit 62 10,980.56 5.2
9 MUFG 24 3,979.75 4.2 8 RBC 108 27,765.36 3.9 9 ING 51 9,412.46 4.5
10 RBC 25 3,274.96 3.5 9 HSBC 83 27,001.06 3.8 10 Barclays 51 8,923.59 4.2
Total 145 94,094.12 10 Deutsche Bank 84 23,251.12 3.2 Total 321 210,624.31
Excluding equity-related debt, ABS/MBS, all foreign issues, global issues Total 649 718,175.23 Excluding equity-related debt. FIGs, ABS/MBS.
and non corporates.

Source: Thomson Reuters SDC code: F6a Source: Thomson Reuters SDC code: F09a Source: Thomson Reuters SDC code: N8

International Financing Review August 25 2018 23

wouldn’t get a big allocation given the size &OLLOWINGûTHEûPURCHASEû%LIAûOWNEDûû CONlDENTûTHATûTHISûSTRONGERûNATIONALû
ANDûITûWOULDNTûBEûINûTHEûINDEXûANYWAYû ANDû)&-ûûOFû%UROGRIDûnûTHEûHOLDCOûFORû anchorage will inspire us to continue
There’s also been a lot of real estate supply 'ERMANûTRANSMISSIONûSYSTEMSûOPERATORû building the infrastructure to realise the
this year, although this seemed to have been (ERTZû"UTûSHORTLYûAFTERûTHEûROADSHOWû ENERGYûTRANSITIONûINû'ERMANYv
PRICEDûINvûTHEûBANKERûAWAYûSAID ENDEDûONû-AYûû)&-ûSAIDûITûWOULDûBEû
h"UTû)ûWOULDNTûPUTûITûASûAûBELLWETHERûFORû SELLINGûITSûREMAININGûûSTAKEûONûWHICHû FIRST HYBRID IN TWO MONTHS
the rest of the market either, given it’s a bit %LIAûHADûAûPRE
EMPTIONûRIGHT A number of bond issues mandated in May,
OFFûTHEûRUNv ”Elia therefore decided to postpone the around the time the Italian political crisis
4HEû&INNISHûSHOPPINGûCENTREûOWNERû"AA deal to give investors the clarity they needed started to unfold, are still in the pipeline,
"""ûBOTHûNEGATIVE ûBYû-OODYS30ûWASû
last in the market two years ago, when it
BROUGHTûõMû3EPTEMBERûSûATûPLUSû
BP
TERMûREVOLVERûINSTEAD
regarding the preemption right,” said a INCLUDINGûAûHYBRIDûFROMû,AFARGE(OLCIM
PERSONûFAMILIARûWITHûTHEûSITUATION Dutch REIT Wereldhave was also looking
“It is true that a few other bonds were also to go down the hybrid route but in July
postponed at the time because of the Italian SIGNEDûAûõMûSHORT
Pre-announcement, the paper was quoted SITUATIONûWHICHûWOULDNTûHAVEûHELPEDû%LIAû 4HEûMOSTûRECENTûHYBRIDûCAMEûONû*ULYûû
ATûBPûBEFOREûWIDENINGûTOûBPû "UTûTHEûMAINûREASONûFORûTHEûDELAYûWASû COURTESYûOFûUNRATEDû/TTOSûõMûPERPETUALû
ACCORDINGûTOû4RADEWEBûPRICESû4HEûCOMPANYû %UROGRIDv NON
CALLûSEVEN
YEARû4HEûBONDSûWEREûBIDûONû
HASûANOTHERûFOURûBONDSûINCLUDINGûõMû In late July, Elia said it had exercised its &RIDAYûWITHûAûMID
ûHANDLEûACCORDINGûTOû
/CTOBERûSûATûBPûPRE
MANDATE pre-emption right but that it would Tradeweb prices, having been priced at
In June, Moody’s downgraded Citycon to immediately sell the stake, at the same price, 
"AAûNEGATIVEûFROMû"AAûSAYINGûITSûLEVERAGEû TOûSTATE
OWNEDû+F7û4HEûPURCHASEûBYû+F7û The hybrid market overall is displaying
hHASûBEENûSUSTAINABLYûABOVEûûFORûTHEûPASTû FENDEDûOFFûAûBIDûFROMû#HINASû3TATEû'RIDû SOMEûRESILIENCEûWITHûTHEûI"OXXûEUROûNON

THREEûYEARSvû"EFOREûTHATûINû&EBRUARYû30û ACCORDINGûTOûAû2EUTERSûREPORTûATûTHEûTIME lNANCIALSûSUBORDINATEDûINDEXûATûûONû
AFlRMEDûITSû"""ûRATINGûBUTûREVISEDûITSû “As a leading company in the energy 4HURSDAYûWELLûOFFûTHEûûYIELDûHIGHûOFû
outlook to negative, citing weakness in the SECTORû(ERTZûISûVERYûCLOSELYûCONNECTEDûTOû ûINûEARLYû*ULY
company’s operating performance in THEû'ERMANûSOCIETYûTHATûITûSERVESvû%LIAû#%/û “People are looking for yield and for
&INLAND #HRISû0EETERSûSAIDûINû*ULY additional corporate supply,” a banker on
0ROCEEDSûWILLûBEûUSEDûTOûRElNANCEûEXISTINGû ”Elia, as main shareholder, looks forward %LIAûSAIDûh4HISûCOMPANYûISûINûAûQUITEûSOLIDû
debt, including a concurrent tender offer for to having KfW as our new partner and feels regulated sector so I don’t see any kind of
ITSûûõMûNOTESûDUEûû4HEûTENDERû
ENDSûONû!UGUSTû ALL INVESTMENT-GRADE BONDS IN EUROS ALL CORPORATE BONDS IN STERLING
The banker away said a large number of BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
trades could come this week, ahead of Managing No of Total Share Managing No of Total Share
September, which he expects to be quite bank or group issues €(m) (%) bank or group issues £(m) (%)
hTRICKYvûFROMûAûMACROûPERSPECTIVE 1 BNP Paribas 157 42,988.90 7.4 1 HSBC 11 1,448.53 16.8
“People are starting to get a little 2 HSBC 173 37,191.62 6.4 2 Barclays 10 1,135.43 13.2
concerned given the known deadlines such 3 SG 145 37,167.12 6.4 3 Lloyds Bank 7 731.65 8.5
ASûTHEû%#"ûANDû"REXITûOVERûTHEûNEXTûTHREEûTOû 4 Deutsche Bank 147 36,008.08 6.2 4 RBC 4 662.72 7.7
SIXûMONTHSû)FûTHEûTONEûHOLDSû)ûWOULDNTûBEû 5 Credit Agricole 134 35,907.90 6.2 5 BNP Paribas 7 566.63 6.6
surprised if more people came back into the 6 JP Morgan 119 34,636.50 5.9 6 Morgan Stanley 4 538.57 6.2
MARKETûVERYûSOONvûHEûSAID 7 Barclays 101 31,549.15 5.4 7 NatWest Markets 5 421.45 4.9
Already, credit spreads have started to 8 UniCredit 129 28,197.45 4.8 8 Goldman Sachs 3 412.83 4.8
widen in the past couple of weeks with 9 Goldman Sachs 76 27,862.01 4.8 9 MUFG 4 328.21 3.8
bankers and investors pointing to geo- 10 Citigroup 88 23,467.90 4.0 10 Santander Global  3 254.66 2.9
POLITICALûHEADLINESû4HEûI"OXXûEUROû Total 805 583,196.88 Total 29 8,633.33
NON
lNANCIALSûSENIORûINDEXûCLOSEDûATûSWAPSû Excluding ABS/MBS, equity-related debt.

PLUSûBPûLASTû4HURSDAYûFROMûBPûONû Source: Thomson Reuters SDC code: N9 Source: Thomson Reuters SDC code: N8a
!UGUSTû
Active bookrunners were Citigroup, ALL INTERNATIONAL STERLING BONDS ALL SWISS FRANC BONDS EXCLUDING
Deutsche Bankû"$ ûNordea and OP Corporate EXCLUDING SECURITISATIONS SECURITISATIONS
Bank BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share
ELIA TO RESURFACE FOLLOWING UNIT bank or group issues £(m) (%) bank or group issues SFr(m) (%)
STAKE SALE TO KFW 1 HSBC 69 10,884.90 13.9 1 UBS 82 9,783.75 28.5
2 NatWest Markets 63 9,432.26 12.1 2 Credit Suisse 85 9,445.79 27.5
ELIA SYSTEM OPERATOR is gearing up for a dual- 3 Barclays 57 7,545.17 9.7 3 Verband Schweizerischer 9 3,788.82 11.0
tranche deal, reviving the long-awaited 4 RBC 46 6,290.84 8.1 4 ZKB 37 3,719.94 10.8
TRADEûAFTERûCOMPLETINGûTHEûSALEûOFûAûû 5 Lloyds Bank 35 5,126.27 6.6 5 Raiffeisen Schweiz 25 2,173.30 6.3
STAKEûINû'ERMANYSû%UROGRIDûTOû+F7 6 BAML 24 3,814.29 4.9 6 BNP Paribas 14 1,387.35 4.0
4HEû"ELGIANûPOWERûTRANSMISSIONûCOMPANYû 7 Goldman Sachs 12 3,329.33 4.3 7 Deutsche Bank 9 955.33 2.8
lRSTûANNOUNCEDûTHEûõMûPERPETUALûANDû 8 Santander Global  17 3,309.28 4.2 8 Commerzbank 9 749.25 2.2
õMûSENIORûMANDATEûINûMID -AYû 9 JP Morgan 16 3,299.77 4.2 9 HSBC 7 735.63 2.1
EARMARKINGûPROCEEDSûTOûRElNANCEûAû 10 Nomura 26 3,206.24 4.1 10 Bank Vontobel  1 225.00 0.7
õMûBRIDGEûLOANûBACKINGûITSûACQUISITIONû Total 200 78,137.60 Total 160 34,381.70
OFûAûSEPARATEûûSTAKEûINû%UROGRIDûFROMû Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt.

!USTRALIASû)&-û'LOBALû)NFRASTRUCTUREû&UND Source: Thomson Reuters SDC code: K05a Source: Thomson Reuters SDC code: K06b

24 International Financing Review August 25 2018

 BONDS CORPORATES

ISSUESû4HATûWASûALSOûTHEûCASEûBEFOREûTHEû ANYûPOTENTIALûlNESûANDûCOMPENSATIONûTHATû The QE tapering that started in January is

SUMMERv the company would need to pay if it is found not necessarily to blame for the July primary
4HEûPERPETUALû.#ûTRANCHEûEXPECTEDû TOûHAVEûBEENûNEGLIGENTûORûGROSSLYûNEGLIGENTv DROPûONEûBANKERûSAID
TOûBEû"""nûBYû30ûMEANSû%LIAûWILLûBEûABLEûTOû Moody’s last week placed Autostrade per h7HENûTHEû#300ûSTARTEDûTHEû%#"ûWOULDûBEû
MAINTAINûITSû"""ûSTABLE ûSENIORûRATING L)TALIASû"AAûANDûPARENTû!TLANTIASû"AAû PUTTINGûORDERSûOFûûOFûTHEûTOTALûISSUEû
An investor said he expects a fair amount ratings on review for downgrade, citing amount, but in the last few trades we’ve seen
of support for the trade given the regulated
BUSINESSûNATUREûOFûTHEûCOMPANY
“Also, the call date is fairly short in
context of the hybrid universe so it probably
lTSûWITHûQUITEûAûFEWûINVESTORSû)TSûFAIRLYû
heightened downside risks to their credit
PROlLE
It said that additional costs will put more
strain on credit metrics, “at a time when
!TLANTIASûCREDITûPROlLEûISûALREADYûSTRETCHEDû
THATûPERCENTAGEûDECLINEûAûBITvûSAIDûTHEûBANKER
h)TSûNORMALûTOûANTICIPATEûTHEû%#"ûTOûBEû
smaller in primary buying as we head
towards the end of QE but I don’t think
they’re necessarily making the decision
DEFENSIVEvûTHEûINVESTORûSAID due to the ongoing acquisition of the toll from one month to the next to step down on
4HEûSENIORûWILLûHAVEûAû
YEARûTENORûTHEû ROADûOPERATORû!BERTISv PRIMARYûANDûBUYûMOREûINûSECONDARYv
SHORTûENDûOFûTHEûûTOû
YEARûRANGEû In early July, Atlantia turned to the loan
stipulated with the original announcement MARKETûTOûlNANCEûTHEû!BERTISûDEALûAFTERû
INû-AY giving up on its bond plans as the Italian NON-CORE CURRENCIES
Leads organised an investor call last POLITICALûCRISISûSTARTEDûTOûUNFOLDûINûMID
-AY
Thursday and said the deal would come after -OODYSûFOLLOWSûINû30SûFOOTSTEPSûWHICHû VW AUSTRALIA PARKS LATEST DEAL
-ONDAYSûBANKûHOLIDAYûINûTHEû5+ THEûWEEKûPRIORûPUTûTHEûCOMPANIESû"""û
Bank of America Merrill Lynch and BNP Paribas ratings on CreditWatch negative, citing the VOLKSWAGEN FINANCIAL SERVICES AUSTRALIA, rated
AREûGLOBALûCOORDINATORSûJOINEDûBYûING and POSSIBILITYûOFûlNESûORûREVOCATIONûOFû !"""û-OODYS30 ûRAISEDû!Mû
NatWest MarketsûASûACTIVEûJOINTûBOOKRUNNERS CONCESSIONSûASûWELLûASûLITIGATIONûRISK 53M ûFROMûLASTû4UESDAYSûSALEûOFû

&ITCHûSAIDûONû!UGUSTûûITûWASûTOOûEARLYûTOû YEARû-4.SûVIAûJOINTûLEADûMANAGERSûRBC
AUTOSTRADE, ATLANTIA SLIP AS ITALY ASSESSûTHEûCONSEQUENCESûOFûTHEûCOLLAPSE Capital Markets and Standard Chartered Bank
SEEKS TO REVOKE CONCESSIONS -OODYSûHASûALSOûPLACEDûTHEû"AAûRATINGûOFû 4HEûû&EBRUARYûûSûWEREûPRICEDûATû
AEROPORTI DI ROMA, one of Atlantia’s ûFORûAûYIELDûOFûûINûLINEûWITHû
AUTOSTRADE PER L’ITALIA and ATLANTIA bonds subsidiaries, on review for downgrade, ASSETûSWAPSûPLUSûBPûAREAûGUIDANCE
dropped further at the start of last week, SAYINGûTHEûDECISIONûREmECTSûTHEûLINKAGESû )Nû!PRILûûTHEûREGULARûISSUERûSOLDû
after the Italian government said it had between the company’s credit quality and !MûOFûûTHREE
YEARûNOTESûPRICEDû
launched a formal procedure to revoke the
former’s concessions to operate toll
HIGHWAYS
The decision came after the collapse on
!UGUSTûûOFûAûBRIDGEûINû'ENOAû
ûPARTûOFûAûTOLLû
road operated by Autostrade - which killed
THATûOFûTHEûWIDERûGROUP BPûWIDEûOFûASSETûSWAPS
CSPP PRIMARY HOLDINGS DROP FOR Z ENERGY NETS NZ$125m
FIRST TIME
Z ENERGYûRAISEDûTHEûMAXIMUMû.:Mû
4HEû%#"SûPRIMARYûHOLDINGSûOFûCORPORATEû 53M ûITûWASûSEEKINGûFROMûANûUNRATEDû
ûPEOPLEû4HEûCOMPANYûHASûûDAYSûFROMû bonds fell in July compared with the ûSIX
YEARûRETAILûNOTEûOFFERûTHATûWASûPRICEDû
!UGUSTûûTOûPRESENTûITSûCOUNTER
ARGUMENTS PREVIOUSûMONTHûTHEûlRSTûTIMEûSINCEûTHEû last Friday at the wide end of mid-swaps plus
!UTOSTRADEûõMû&EBRUARYûSûANDû corporate purchase programme was BPnBPûGUIDANCE
õMû3EPTEMBERûSûWEREûBIDûATûû INTRODUCEDûOVERûTWOûYEARSûAGO Deutsche Craigs, Forsyth Barr and Westpac
ANDûûRESPECTIVELYûONû-ONDAYû !SûOFûTHEûENDûOFû*ULYûTHEû%#"ûHADûõBNû New ZealandûWEREûJOINTûLEADûMANAGERSûFORûTHEû
MORNINGûHAVINGûOPENEDûATûûANDûû of paper that had been bought in the primary NZX-listed offer, which was open to New
ONû!UGUSTû MARKETûFROMûõBNûATûTHEûENDûOFû*UNEû :EALANDûINSTITUTIONALûANDûRETAILûINVESTORS
4HEYûWEREûBIDûATûûANDûûONû WITHû).'ûANALYSTSûCITINGûEITHERûBOOKûVALUEû The fuel distributor, which runs the network
&RIDAY ADJUSTMENTSûORûREDEMPTIONSûFORûTHEûDECLINE of former Shell petrol stations, has three retail
!TLANTIAûHASûALSOûBEENûHITûITSûõBNû*ULYû They said the bank did not subscribe to BONDûISSUEûOUTSTANDINGûANDûAû.:Mûû
SûATûûTOUCHINGûASûLOWûASûûONû any of the new supply last month - some NOTEûOFFERINGûTHATûMATUREDûONû!UGUSTû
!UGUSTûûAFTERûTHEûHOLDINGûCOMPANYû õBNûINûALLûACCORDINGûTOû)&2ûDATAû!SûAû
warned that potential government penalties
COULDûIMPACTûINVESTORS
)TSûSHARESûWEREûTRADINGûMOREûTHANûû
lower last Monday, having plummeted
ûTHEûWEEKûPRIOR
RESULTûSECONDARYûHOLDINGSûWEREûûOFû
total CSPP holdings in July, the highest
PERCENTAGEûSINCEû&EBRUARYSû
“We have often highlighted CSPP as being
erratic in total volumes and primary/
SPARK RECONNECTS WITH LOCAL
MARKET
SPARK FINANCE, the borrowing arm of Spark
.EWû:EALANDûFORMERLYû4ELECOMû.EWû
CreditSights analysts said a loss of the SECONDARYûSPLITûANDûTHISûJUSTûSOLIDIlESûTHATû :EALAND ûRATEDû!nû30 ûISûPLANNINGûTOûOPENû
concessions would mean investors are able VIEWvûTHEûANALYSTSûWROTE Aû
YEARû.EWû:EALANDûDOLLARûRETAILûNOTEû
to exercise a put option on Autostrade’s “On the other hand, the fact that during OFFERûONû!UGUSTû
%-4.ûBONDSû"UTûITûWOULDûNOTûCROSS
DEFAULTû THEûQUIETûSUMMERû;THEû%#"=ûELECTSûTOû WestpacûISûARRANGERûANDûJOINTûLEADû
INTOû!TLANTIA concentrate on secondary in a relatively manager with ANZ
“For bondholders, at both Atlantia and volatile time period can be construed as a Spark last visited the local market in
particularly at Autostrade, the situation is positive, although most of their secondary 3EPTEMBERûûWITHûAû.:Mûû

shrouded in complexity and remains buying happened before the trade war and year retail note issue, having raised
UNCERTAINvûTHEûANALYSTSûWROTE 4URKEYûSTARTEDûTOûPUSHûSPREADSûWIDERv .:MûFROMûTHEûSALEûOFûû-ARCHûû
“The big uncertainty for us is not so much Overall in both primary and secondary, SûINû$ECEMBERû
the loss of the concession, which while it THEû#300ûPORTFOLIOûGREWûBYûLESSûTHANûõMû )Nû/CTOBERûû3PARKûCROSSEDûTHEû
would be damaging, would likely receive INûTHEûWEEKûENDINGû!UGUSTûûDOWNûFROMû 4ASMANû3EAûFORûAûDEBUTû!Mûû

some compensation, but is more the size of õMûTHEûWEEKûBEFORE YEARû+ANGAROOûBONDûISSUE

International Financing Review August 25 2018 25

 SCANDIS ON THE ROAD
Norwegian school operator
LÆRINGSVERKSTEDET last week picked DNB
Markets to arrange investor meetings on
!UGUSTûûANDûûFORûAûTAPûOFûITSû.ORWEGIANû
YEARûlXEDûANDû
KRONEûBONDSûDUEû*UNEû
bank bond that usually trades slightly wider
to other Yankee banks,” said the second
BANKERûh)TûISûALSOûNOTûAûPROLIlCûISSUERv
!".û!-2/ûTYPICALLYûTAPSûTHEû53ûDOLLARû
market twice a year, and it had already
RAISEDû53BNûINûTHREE
"ANKERSûSAIDûTHEûRESPONSEûTOû9ANKEEûBANKû
mOATERSûINû*ANUARY
FORûOWNûFUNDSûANDûELIGIBLEûLIABILITIESû-2%, û
SETûBYû%UROPESû3INGLEû2ESOLUTIONû"OARD
Nordea aims to use its funds and SNP to
cover the minimum TLAC requirement
WHICHûHASûTOûBEûMETûSTARTINGû*ANUARYûû
deals in the last few days of summer showed
Also in Norway, WALLENIUS WILHELMSEN will /Nû!UGUSTûûTHEûBANKûSIGNALLEDûITûWILLû the continued strength in appetite for high-
BEûONûTHEûROADûONû!UGUSTûûANDûûFORûAû return more cash to shareholders after GRADEûBONDSûMOREûBROADLY
three-year krone-denominated senior announcing plans to shrink its international “Nordea could have done more if they
unsecured bond issue via Danske Bank, DNB CORPORATEûBANKINGûACTIVITIES wanted but they didn’t,” said one senior
Markets, Nordea and SEB
The shipping company plans to use the
PROCEEDSûTOûRElNANCEûOUTSTANDINGûBONDû
DEBTûANDûFORûGENERALûCORPORATEûPURPOSES
YEARûlXEDûPRICEDû
)TûWILLûCUTûUPûTOûûOFûTHEûûJOBSûINûITSû BANKERûh4HEûRESPONSEûTOûTHATûTRADEûANDû
#ORPORATEûû)NSTITUTIONALû"ANKûDIVISIONûTOû others in the market today was very strong
REDUCEûCOSTSûBYûõM SOûCONDITIONSûAREûVERYûCONSTRUCTIVEv
!".ûSAIDûTHEûIMPACTûOFûNEWû"ASELû)6û .ORDEASû53MûlVE
Separately, Denmark’s ORSTED will hold a capital rules had prompted it to scale back ATû4REASURIESûPLUSûBPûORûBPûINSIDEû
non-deal roadshow, via Goldman Sachs, from #)"SûINTERNATIONALûACTIVITIESûASûSTRICTERû INITIALûPRICEûTALK
3EPTEMBERûûTOû3EPTEMBERû CAPITALûREQUIREMENTSûLIMITûPROlTABILITYû)Tû The response could spur Nordea’s Nordic
The energy company, previously known WILLûFOCUSû#)"ûONûHIGHER
YIELDINGûACTIVITIESû PEERSûTOûCONSIDERûTHEûDOLLARûROUTE
ASû$ONGûISûRATEDû"AA""""""ûALLûSTABLE  such as lending to Dutch corporations, Moody’s expects Norwegian banks to convert
CLEARINGûANDûPRIVATEûEQUITY APPROXIMATELYû.+RBNûAROUNDûõBN

EQUIVALENT ûOFûOUTSTANDINGûSENIORûDEBTûINTOû3.0û
NORDEA SNP BONDS NEARLY FIVE TIMES OVERûTHEûNEXTûlVEûYEARSûTOûCOMPLYûWITHû-2%,
COVERED In an investor presentation weeks before
FIG Wednesday’s trade, Nordea said it had about
NORDEA BANK became the latest Yankee bank õBNûOFûSENIORûUNSECUREDûBONDSûAVAILABLEû
to tap a still-active US dollar high-grade FORûPOTENTIALûRElNANCINGûINû3.0ûFORMAT
US DOLLARS MARKETûANDûFOUNDûAûDECENTûRECEPTION Non-preferred senior is subordinated to
.ORDEAûRATEDû"AA!!!
ûRAISEDû53BNûINû preferred senior and counts towards MREL,
ABN AMRO GETS HUGE RESPONSE TO AûTWO
PARTûlVE
YEARûlXEDûANDûmOATING
RATEû which aims to mitigate the impact of future
NEW BONDS SENIORûNON
PREFERREDû3.0 ûNOTESûISSUEûWHICHû
ABN AMRO BANK’s US$2bn two-part senior
UNSECUREDûBONDûSALEûENJOYEDûANû
overwhelming reception on Monday, with
YEARû3.0ûTARGETûASûITû
BANKûFAILURES
ended up pricing much tighter than initial “It looks like the market will remain
PRICEûTALKûONûAûBOOKûTHATûPEAKEDûATû53BN active with Yankee issuance even next week
The deal helped the bank make a decent because many issuers are trying to avoid
DENTûINûITSûõBNûFOUR
what is expected to be a huge September
ORDERûBOOKSûREACHINGûAûWHOPPINGû53BN looks to ensure Total Loss-Absorbing RUSHûOFûDEALSvûSAIDûANOTHERûBANKER
Strong demand for the deal, comprising #APACITYû4,!# ûCOMPLIANCEûBYû
THREE
YEARûlXEDûmOATING
RATEûTRANCHESûCAMEû !SûOFû*UNEûTHEûBANKûHADûRAISEDûõBNûINû
on the heels of stronger-than-expected 3.0ûSOûTHISû53BNûDEALûTAKESûTHEûTALLYûTOû EUROS
second-quarter results and restructuring 53BN
EQUIVALENTûTHISûYEAR
PLANSûATûTHEû$UTCHûBANK Nordea is moving from the Swedish FSA SWEDBANK’S MARKET REOPENER
Even so, the size of the book took many TOûTHEû%#"ûCAPITALûREQUIREMENTûFRAMEWORKû STEALS THE SHOW
BYûSURPRISEûANDûWASûSEENûASûAûREmECTIONûOFû as part of a so-called redomiciliation process
the continued strength of investor appetite TOû&INLANDûFROMû3WEDEN SWEDBANK took centre stage of the market for
FORûHIGH
GRADEûBONDS The bank said the SNP requirement could European senior issuance last Monday, kick-
“The market is wide open,” said one change based on the minimum requirement starting what turned out to be one of the
SENIORûSYNDICATEûBANKERûh)TûISûPROBABLYûONEû
of the best order books on a Yankee bank ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
trade in a while in terms of quality and BOOKRUNNERS: 1/1/2018 TO DATE BONDS (ALL CURRENCIES)
INTERESTv Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE
4HEûHEFTYûORDERûBOOKûENSUREDûTHATû!".û bank or group issues €(m) (%) Managing No of Total Share
AMRO paid little to no new issue concession 1 BNP Paribas 52 13,668.15 10.1 bank or group issues US$(m) (%)
AFTERûTIGHTENINGûSPREADSûBYûBPûFROMûINITIALû 2 UBS 30 12,940.40 9.6 1 Barclays 11 4,367.11 8.7
PRICEûTALKûTOûLAUNCH 3 Deutsche Bank 39 9,533.58 7.1 2 JP Morgan 19 3,228.70 6.4
!TûAûlNALûSPREADûOFû4REASURIESûPLUSûBPû 4 SG 31 7,930.81 5.9 3 BNP Paribas 15 3,108.26 6.2
THEûNEWûûTHREE
YEARûlXED
RATEûBONDû 5 HSBC 43 7,923.36 5.9 4 SG 9 3,106.55 6.2
CAMEûmATûTOûFAIRûVALUEûANDûJUSTûWIDEûTOû!".Sû 6 Credit Agricole 23 6,695.95 5.0 5 HSBC 19 2,757.73 5.5
OUTSTANDINGûûSûWHICHûWEREû 7 Natixis 19 6,135.48 4.6 6 BAML 15 2,589.60 5.2
TRADINGûATûAû'
SPREADûOFûAROUNDûBP 8 JP Morgan 30 5,572.41 4.1 7 Morgan Stanley 14 2,334.61 4.7
Lack of supply over the summer months 9 Morgan Stanley 24 5,341.97 4.0 8 UBS 12 2,295.96 4.6
ANDû!".SûRARITYûVALUEûINûTHEû53ûMARKETSû 10 Goldman Sachs 23 4,848.50 3.6 9 Citigroup 14 2,271.01 4.5
only increased buyside enthusiasm for the Total 218 134,687.55 10 Goldman Sachs 11 2,133.17 4.3
DEALûRATEDû!!! Including banks, insurance companies and finance companies. Excluding Total 77 50,082.58
equity-related and covered bonds. Excluding publicly owned institutions.
“People are looking to buy, but it has been
very quiet and this is a high-quality Yankee Source: Thomson Reuters SDC code: N11 Source: Thomson Reuters SDC code: J3a

26 International Financing Review August 25 2018


NAB excels on return to euros
„ FINANCIALS Strong demand for dual-trancher allays fears of investor push-back
NATIONAL AUSTRALIA BANK (Aa3/AA–/AA–)
made a successful return to the euro market
last Wednesday with a €2bn dual-tranche
Eurobond issue that helped allay remaining
fears of a European investor push-back related
to Australia’s banking scandals.
A capped €750m five-year Green bond
offering attracted an impressive €2.4bn of
demand, which enabled joint lead managers
BNP Paribas, Citigroup, NAB and UBS to price
the 0.625% August 30 2023s well inside 50bp
area initial price thoughts at mid-swaps plus
35bp for a 5bp new issue concession.
An additional 10-year standard issue secured
€1.8bn of orders for an unusually large €1.25bn
print. The 1.375% August 30 2028s were priced
at mid-swaps plus 53bp, versus 65bp area IPTs.
“They got a good window, but I’d also say it’s
the best Aussie trade I’ve done in three years,”
said a banker on the deal.
A syndication manager away from the
transaction concurred. He described the
outcome as “fantastic”, noting the extremely
strong interest for the five-year Green offering
and one of the largest 10-year issues by an
Aussie major in recent years.
The syndication manager suggested the Royal
Commission into banking practices and other
financial scandals was having little detrimental
impact on investor sentiment in primary
markets.
“Investors have seen a lot of this before and
worse in other jurisdictions, while it can be
argued that the resultant increased regulations
that have been and will be imposed on
Australian banks are credit positive,” he said.
RELATIVE VALUE
Relative-value investors were clearly attracted
by the pick-up NAB offered over its European
peers.
“They [Aussie majors] used to be quite tight
but have widened out quite a bit this year. So
you have Swedbank that came at 18bp but NAB
printed at 35bp, in line with Commerzbank’s
senior preferred. That relative-value piece has
shifted this year and that’s taken some guys off
the sidelines,” said the banker on the trade.
“We were capped on the five-year but we
could have easily doubled the size. They also
have a strong following within the insurance
community because of their ratings.”
BONDS FIG
NAB raised €500m more than identically
rated Westpac for its two-piece trade on July
9, €650m of 0.75% 5.25-years and €850m of
1.45% 10-year Eurobonds that were priced at
mid-swaps plus 50bp and 62bp, respectively.
Both Westpac and NAB were encouraged
to tap the euro market by this year’s shifts in
currency basis swaps. The five-year euro/US
dollar cross-currency basis swap has improved
to negative 17bp versus negative 34bp at the
start of the year, while the 10-year basis swap
has made a similar move, to negative 17bp from
negative 35bp on January 1.
The NAB five-year came basically flat to
where a new US dollar five-year would print
while the 10-year came about 10bp–15bp tighter
than a US dollar 10-year, according to a DCM
banker.
NAB’s strong result will encourage other
Antipodean financials to access the euro market,
including WESTPAC NEW ZEALAND (A1/AA–/AA),
which held a European roadshow in late May
and early June with BNP Paribas, HSBC and
Westpac for a euro-denominated five to seven-
year note offering.
John Weavers, Helene Durand, Alice Gledhill

BUSIESTûWEEKSûFORûSENIORûISSUANCEûINûû There is no shortage of hurdles in the õMûVIAû"ANKûOFû!MERICAû-ERRILLû,YNCHû"ELlUSû

PRINTINGûAûõMûlVE YEARûONûAûõBNûBOOK second half, however, with Italy’s budget Bank, BNP Paribas, Commerzbank and Lloyds.
7HILEû#REDITû3UISSEû"ARCLAYSû".0û0ARIBASû negotiations, a potential escalation in trade 4HEYûPRICEDûTHEûDEALûATûBPûOVERûMID
and Lloyds have visited the Yankee market wars and European bank stress test results SWAPSûOFFERINGûAROUNDûBPûOFûNEWûISSUEû
in recent weeks, euro benchmark issuance LYINGûAHEAD PREMIUM
ALLûBUTûDRIEDûUPûAFTERû'OLDMANû3ACHSûõBNû “Syndicate will always tell issuers there is h4HEREûAREûTWOûBIGûFATûJUICYûDEALSûINûTHEû
.OVEMBERûûSENIORûONû*ULYû AûlRST MOVERûADVANTAGEûBUTû)ûTHINKû market right now, so we’re probably third on
Swedbank’s outcome gave the market a genuinely in this window there will be,” said people’s priority list and people can afford to
MUCHûNEEDEDûSHOTûOFûCONlDENCEûSHOWINGû THEûSECONDûBANKER PASSvûAûLEADûSAIDûDURINGûMARKETINGûh7EûAREû
there was little merit for borrowers in INûCOMPETITIONûWITHûHIGHER SPREADûPRODUCTv
waiting much longer after a quiet summer LOST IN THE CROWD 4HISûWASûTHEûlRSTûPUBLICûSENIORûFORAYûFROMû
FORûISSUANCE 4HATûINDEEDûTURNEDûOUTûTOûBEûTHEûCASEû!SûTHEû THEû"ELGIANûBANKûINûûHAVINGûPREVIOUSLYû
“Swedbank is the gold standard name for week progressed, competition for investors’ FOCUSEDûONûCAPITALûANDûCOVEREDûBONDSû)Nû
THEûWHOLEûMARKETûANDûITSûõMûNO GROWû ATTENTIONûPROVEDûAûDIFlCULTûONEûTOûWINû ûITûFOCUSEDûONûSENIORûNON PREFERREDû
it’s very safe and easy to buy; it was always especially for the more run-of-the-mill PRINTINGûTWOûBONDSûINûTHEûFORMAT
going to be a success,” said one syndicate TRANSACTIONSûCOMINGûATûTIGHTûLEVELS “I think OP got lost in the wave of supply
OFlCIAL "OOKSûONû&INLANDSûOP CORPORATE BANK’s ANDû"ELlUSûSUFFEREDûFROMûTHEû/0ûEFFECTvûAû
h"UTûSTILLûITûWASûFOURûTIMESûOVERSUBSCRIBEDû õMûlVE YEARûVIAûBank of America Merrill FOURTHûBANKERûSAID
ANDûMOVEDûBPû ûITûMAKESûYOUûTHINKûDOû Lynch, DZ Bank and OP Corporate were last “It’s an easy one to miss when you have
you have to wait till next week? Do you HEARDûTOûBEûAPPROACHINGûõM Deutsche or Intesa out, as well as
bring things forward? Those are the “Swedbank is one of those names that can ATTRACTIVELYûPRICEDûCORPORATESûLIKEû"-7û
CONVERSATIONSûWEREûHAVINGv PRICEûSUPER TIGHTvûAûTHIRDûBANKERûSAID Credit funds have a lot more to focus on
4HEû!A!! !! ûRATEDûDEALûPRICEDûATûBPû “With those deals, it’s always good to be THANûAûõMûlVE YEARûNO GROWûTHATSûNOTû
OVERûSWAPSûBPûINSIDEûBPûAREAû)04SûVIAû THEûlRSTû/0ûWASûUPûAGAINSTûAûLOTûWHICHû THATûEXCITINGû)TSûNOTûREALLYûAûMUSTûBUYv
leads Bank of America Merrill Lynch, Citigroup, probably didn’t help, and they maybe
Goldman Sachs, HSBCûANDû3WEDBANK STRUGGLEDûBECAUSEûOFûVALUATIONv BARCLAYS FINDS FEW TAKERS AFTER
h)TûDElNITELYûHELPSûTHATû4URKEYûASIDEû Still, it priced at 22bp over mid-swaps, SENIOR GLUT
we’ve had a pretty constructive summer with BPûTIGHTERûTHANû)04S
no supply and a pretty good squeeze in most BELFIUS BANK also found the going relatively BARCLAYS PLCûHADûTOûMAKEûDOûWITHûJUSTûõMû
asset classes and names, except those most SLOWûFORûITSûlVE YEARûSENIORûPREFERREDûRATEDû ASûITûBROUGHTûAûlVE YEARûNOTEûISSUEûLASTû
EXPOSEDûTOû4URKEYvûSAIDûAûSECONDûBANKER !! û"OOKSûFORûTHEûõMûISSUEûREACHEDû Friday, raising questions over its decision to

International Financing Review August 25 2018 27

 Bank Australia taps Sustainable demand
„ FINANCIALS First-time investors boost size and pricing in fast-growing market
The Australian market for socially responsible
investments moved up a gear last week with a
Sustainability bond offering from BANK AUSTRALIA
that connected a debut issuer with a group of
first-time buyers.
The Victoria-based mutual bank, rated Baa1/
BBB (Moody’s/S&P), sold A$125m (US$92m) of
three-year floating-rate notes last Monday after
strong demand helped it beat both its size and
price targets.
Notably, the deal attracted demand from
investors that had not previously participated in
three-year FRN offerings from other Australian
mutual banks.
In particular, local councils and religious
entities bought 14% and 6% of the bonds,
respectively.
“The rare Sustainability bond offering
attracted support from a diverse range of
investors who were keen to participate in an
issue originated by a bank which is viewed as
socially aware in respect to their sustainable
lending activities,” said Adam Gaydon,
syndication manager at sole lead ANZ.
Asset managers took 48%, banks 27% and
others 5%. Australian accounts were allotted
95% and offshore 5%.
First-time investors pushed the order book
above A$250m, which enabled the note offering
to be enlarged from an indicative A$100m
minimum issue size and to be priced inside
133bp area guidance at three-month BBSW plus
130bp.
PROCEEDûAFTERûõBNûOFûSENIORûSUPPLYûOVERû
THEûPREVIOUSûFOURûDAYS
The bonds will fund loans that meet three of
the United Nations’ 17 sustainable development
goals (SDGs), to reduce inequality, to build safe
and sustainable cities and communities, and to
restore and sustain terrestrial ecosystems.
Bank Australia, which has posted annual
growth rates of around 13% for lending assets and
deposits in recent years, is looking to become a
regular/annual issuer in the bond market.
TIGHT PRICING
This is only the second Sustainability bond
issue to hit the domestic market following
Australian Catholic University’s A$200m 3.7%
10-year note offering in July 2017.
ACU, rated Aa2 (Moody’s), priced its offering
around 5bp tighter than an equivalent standard
university 10-year bond issue, according to
bankers at the time, who cited a sticky investor
pool with fewer marginal investors than normal
pulling orders as guidance tightened.
ACU’s offering was the first Australian dollar
senior unsecured Green, Social or Sustainability
bond issue to come with only a slight premium to
standard levels, having benefited from the huge
expansion in demand for responsible investments
and a lack of suitable bond offerings.
The recently released Responsible Investment
Benchmark Report 2018 showed responsible
investments under management had grown to
A$866bn, for a 55% share of all professionally
managed assets in Australia, a 39% increase
from A$622bn in 2016.
h)ûTHOUGHTûYESTERDAYûWASûDElNITELYû
starting to get a little bit saturated; you saw
Core responsible investments include positive
screening for sustainability investing, community
finance and corporate engagement, and
negative screening away from tobacco, weapons
and gambling, among other things.
Bank Australia markets itself as a 100%
customer-owned bank with a pledge to support
social and environmental causes and avoid
lending to the fossil-fuel industry. It runs a
conservation reserve and has been carbon-
neutral since 2011.
“The strong demand and tight pricing
levels achieved by Bank Australia can only
encourage other issuers contemplating a
Sustainability bond to come to market,” Gaydon
said.
MACQUARIE UNIVERSITY, rated Aa2 (Moody’s),
is set to follow ACU with a debut Sustainability
bond issue, after beginning Asian and Australian
investor meetings on August 16 via HSBC and
NAB.
In the state government sector Triple A rated
NEW SOUTH WALES TREASURY CORP plans to issue its
first Sustainability bonds, expected in the second
half of 2018, while other banks, universities
and corporates are working towards inaugural
offerings.
Offshore, Australia and New Zealand
Banking Group (A3/AA–/AA–) printed €750m
(US$868m) of five-year Sustainable Eurobond
sin February 2018 that created an alternative to
the major bank’s Green bond template.
John Weavers
from the European Union - possibly on a no-
DEALûBASIS
%UROûSENIORûANDûCOVEREDûlNANCIALû
issuance increased eight-fold last week
compared with the same period last year as
banks seized on the decent backdrop, which
HASûBEENûSOMEWHATûOFûAûRARITYûINû
ITûINûSECONDARIESûASûWELLvûTHEûBANKERûSAID
h%VENûTHEû.!"ûTHATûWASûBPûTIGHTERûONûTHEû
BREAKûCAMEûBACKûTOûREOFFERû%VERYTHINGû
BACKEDûOUTû7EûHADûAûCOUPLEûOFûISSUERûCALLSû
yesterday when we told them not to go
“I think for them it was a trade-off
between competing with any UK supply
coming next week, and trying to take
something off the table now,” said a second
BANKER
"UTûWHILEûTHEûWEEKSûINITIALûTRADESû
generated multi-billion books, enabling
chunky revisions in spreads, demand started
to sag on Thursday and new issues edged
WIDERûINûSECONDARYûTRADING
A banker away from the deal said
today, and wait for next week as the market 2OYALû"ANKûOFû3COTLANDûFORûEXAMPLEûISû
NEEDSûAûBITûOFûAûRESTv thought to be looking at the market, while
Lloyds has already taken advantage of this
DEJA VU window to bring a dual-tranche Yankee deal
)TûPERHAPSûDIDûNOTûHELPûTHATûITûWASûTHûEUROû EARLIERûINû!UGUST
SENIORûlVE
YEARûFROMûAûBANKûLASTûWEEKû “Are spreads going to widen as soon as
investors had voiced frustration at seeing PARTLYûAûREmECTIONûOFûNUMEROUSûINAUGURALû "REXITûSTARTSûHITTINGûTHEûTAPEû/FûCOURSEûTHEYû
yet another bond issue on screens, TRADES WILLû"UTû)ûDONTûTHINKûITSûJUSTûTHEû5+ûGUYSû
particularly ahead of the UK’s long holiday "ANKûOFû)RELANDûWASûAMONGûTHOSEû being caught up in that,” said a third
WEEKEND ATTRACTINGûAûõBNûBOOKûFORûITSûDEBUTûHOLDCOû BANKER
Sole bookrunner Barclays managed to SENIORû"AA"""n ûTHATûWASûPRICEDûATûBPû Despite the modest response, bankers
MOVEû)04SûOFûBPûAREAûOVERûSWAPSûTOûAû BPûINSIDEû"ARCLAYSû)TûWASûBIDûNEARLYûBPû reckoned the starting level looked
lNALûBPûBUTûTHEûõBNûBOOKûMEANTûITû WIDERûONû&RIDAY REASONABLEûOFFERINGûAûBPûNEWûISSUEû
SIZEDûTHEûDEALûRATEDû"AA"""! ûATûõMû And while bankers are bearish about the CONCESSIONûATû)04Sû)TSûDECISIONûTOûPICKûAû
That will be its smallest outstanding holdco direction of spreads in general, life is BULLETûOVERûAûCALLABLEûSTRUCTUREûnûLIKEû,LOYDSû
BONDûISSUEûWITHûTHEûEXCEPTIONûOFûITSû'REENû particularly tough for UK issuers given the nûMADEûTHEûBANKûAûROUGHLYûBPûCOSTûSAVING
OFFERINGûACCORDINGûTOû4RADEWEB fast-approaching deadline for the UK’s exit h)ûTHINKûTHEûCALLûPREMIUMûISûJUSTûELEVATEDû

28 International Financing Review August 25 2018

 BONDS COVERED BONDS

ALL GLOBAL AND EUROMARKET YEN BONDS ALL SAMURAI BONDS ALL INTERNATIONAL YEN BONDS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 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 Sumitomo Mitsui Finl 7 71,650.03 18.1 1 Sumitomo Mitsui Finl 31 309,241.67 21.7 1 Sumitomo Mitsui Finl 38 380,891.69 20.9
2 Nomura 10 60,233.33 15.2 2 Mizuho 35 278,228.33 19.6 2 Mizuho 45 333,661.69 18.3
3 Mizuho 10 55,433.36 14.0 3 Mitsubishi UFJ MS 34 267,095.00 18.8 3 Mitsubishi UFJ MS 37 283,761.67 15.6
4 Daiwa Securities 8 31,916.67 8.0 4 Daiwa Securities 30 222,686.67 15.7 4 Nomura 40 280,203.33 15.4
5 BAML 2 31,833.33 8.0 5 Nomura 30 219,970.00 15.5 5 Daiwa Securities 38 254,603.33 14.0
6 MUFG 2 29,833.33 7.5 6 Natixis 11 47,120.00 3.3 6 BAML 4 61,833.33 3.4
7 Goldman Sachs 2 18,000.00 4.5 7 BAML 2 30,000.00 2.1 7 Natixis 11 47,120.00 2.6
8 Mitsubishi UFJ MS 3 16,666.67 4.2 8 Citigroup 5 17,333.33 1.2 8 MUFG 2 29,833.33 1.6
9 HSBC 2 15,000.00 3.8 9 BNP Paribas 3 16,125.00 1.1 9 Citigroup 6 22,819.58 1.3
10 Barclays 4 11,650.00 2.9 10 Credit Agricole 4 14,500.00 1.0 10 Goldman Sachs 2 18,000.00 1.0
Total 31 396,610.30 Total 46 1,422,300.00 Total 77 1,818,910.30
Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Including all Euro, foreign and global issues. Excluding equity-related
debt.
Source: Thomson Reuters SDC code: K10 Source: Thomson Reuters SDC code: K11
Source: Thomson Reuters SDC code: K12
TOûTHEûEXTENTûWHEREûITûJUSTûDOESNTûLOOKûASû Three days earlier, COMMERZBANK printed
attractive as it has done in the past,” said the its inaugural Australian dollar Tier 2 !USTRALIANûDOLLARûmOATING
RATEûNOTEûISSUE
lRSTûBANKER subordinated Reg S note issue, under the CUA previously sold local three-year
"ARCLAYSûISSUEDûaBN
EQUIVALENTûOFû-2%,û 'ERMANûBANKSû%-4.ûPROGRAMME mOATERSûINû-ARCHûûWITHûAû!MûDEALû
INûTHEûlRSTûHALFûALLûINûSENIORûFORMATû)TûHASû 4HEû!Mûû
YEARûBULLETûOFFERINGû PRICEDûBPûWIDEûOFûTHREE
MONTHû""37
GUIDEDûINVESTORSûTOWARDSûaBNûOFûISSUANCEû WITHûEXPECTEDûRATINGSûOFû"AA"""n""""""û
for the full year to meet its MREL -OODYS30&ITCH3COPE ûWASûPRICEDûATû
requirements, and allow for an MREL PARûINûLINEûWITHûûAREAûGUIDANCE
MANAGEMENTûBUFFER Commerzbank, Deutsche Bank, NAB and TD
The bank has issued one other euro senior SecuritiesûWEREûJOINTûLEADûMANAGERSûONûTHEû COVERED BONDS
OFFERINGûTHISûYEARûAûõBNûû*ANUARYû TRANSACTION
ûTHATûCLOSEDûATûSWAPSûPLUSûBPûONû /Nû!UGUSTûû'ERMANYSûBIGGESTûSTATE

4HURSDAYû)TûWIDENEDûBYûBPûONû&RIDAY backed Landesbank, LANDESBANK EUROS
2OYALû"ANKûOFû3COTLANDSûPAPERûALSOûTOOKûAû BADEN-WUERTTEMBERGûORû,""7ûTAPPEDûITSû
HITûnûFORûEXAMPLEûITSûõBNûOFûûûNON
û-AYûûû4IERûûBULLETû%UROBONDSû RUSH FOR SENIOR OVERSHADOWS
CALLûSû"AA"""n""" ûWIDENEDûMOREû FORû!MûATûAûYIELDûOFûû,""7Sû2EGû3û COVERED BONDS
THANûBPûONû&RIDAYûACCORDINGûTOû4RADEWEB subordinated Luxembourg-listed notes are
h)ûFEELûFORû;"ARCLAYS=vûSAIDûAûFOURTHûBANKERû RATEDû"AA"""û-OODYS&ITCH  Covered bond issuance took a back seat last
h"UTûTHEYLLûLOOKûBACKûINûAûCOUPLEûOFûWEEKSû HSBC, LBBW, Standard Chartered and TD week as banks made the most of better
ANDûSAYû@WEVEûGOTûOURûFUNDINGv SecuritiesûWEREûJOINTûLEADûMANAGERSûFORûTHEû market conditions to raise senior debt ahead
TAPûHAVINGûALSOûARRANGEDûTHEûORIGINALûSALE of what many expect to be a volatile
,""7ûPREVIOUSLYûRAISEDû!MûFROMûAû 3EPTEMBER
NON-CORE CURRENCIES û
YEARûBULLETû4IERûû%UROBONDûISSUEûINû Covereds have been the go-to instrument
*UNEû FORûLARGEûPARTSûOFûûASûBANKSûLOOKEDûTOû
TIER 2 TRIO TEMPT AUSSIE YIELD- carry on funding against a tricky backdrop
HUNTERS CBA BUYS BACK A$1.2bn of trade wars, political uncertainty and end
OFû1%
Three international banks issued
subordinated Australian dollar Eurobonds
over a seven-day period, raising a combined
!Mû53M ûFORûTHEIRû4IERûûFUNDINGû
REQUIREMENTS
COMMONWEALTH BANK OF AUSTRALIA has
REPURCHASEDûMOREûTHANû!BNûOFûlVEû
short-term bond lines and may consider
further buyback opportunities through
open-market purchases or other means,
(OWEVERûAûBETTERûTONEûTHISûWEEKûMEANTû
THATûONLYûlVEûISSUERSûPRINTEDûINûTHEûFORMATû
VERSUSûûINûSENIOR
“Covered bonds are not necessarily the
primary focus right now,” a syndicate
The banks were looking to access mainly THOUGHûNOTûOFûTHEû/CTOBERûûBONDûISSUEû BANKERûSAID
Asian demand for Australian dollar paper WHICHûISûAPPROACHINGûMATURITY “A lot of issuers are well ahead of where
YIELDINGûAROUNDûnûACCORDINGûTOûAû 4HUSûFARû#"!ûHASûREPURCHASEDû!Mû they thought they would be given that it’s
3YDNEY
BASEDû$#-ûMANAGER !Mû!Mû!MûANDû been the favoured asset class when the
Such transactions tend to increase in !MûOFûTHEû!BNû/CTOBERûSû market has taken a turn, most of them are
!UGUSTûWHENûMAJORûNORTHERNûHEMISPHEREû !BNû!PRILûSû!BNû*ULYûSû OVERWEIGHTûCOVEREDSv
markets are quiet for the US and European !BNû/CTOBERûSûANDû!BNû*ULYû "EFOREûTHEûPICK
UPûINûSENIORûISSUANCEûTHISû
SUMMERûHOLIDAYS SûRESPECTIVELY week, covered bond volumes were running
Last Thursday, South Korea’s SHINHAN BANK AHEADûOFûSENIORûATûJUSTûOVERûõBNûAGAINSTû
SOLDûAû!Mûû
YEARûBULLETû4IERûû2EGû3û CUA MARKETS THREE-YEAR FRNS õBNûALTHOUGHûSENIORûISûNOWûAHEADûATû
note issue, which was priced at par through ALMOSTûõBNûVERSUSûõBN
JOINTûLEADûMANAGERSûANZ and BNP Paribas CREDIT UNION AUSTRALIAûRATEDû"AA"""û EIKA BOLIGKREDITT and AAREAL BANK restarted
The subordinated offering has expected -OODYS30 ûHASûMANDATEDûANZ, CBA and ISSUANCEûAFTERûAûHIATUSûOFûJUSTûOVERûAûMONTHû
RATINGSûOFû"AA"""û-OODYS30 ûVERSUSû NAB to arrange investor meetings in Sydney with the decision to go early in the week
3HINHANSûSENIORûRATINGSûOFû!A! and Melbourne this week for a three-year PROVINGûTOûBEûAûSHREWDûONE

International Financing Review August 25 2018 29

 4HEû.ORWEGIANûLENDERûPRICEDûAûõMû “These were two quite off-the-run names, “In the current market environment,
seven-year via Commerzbank, Deutsche Bank, so it’s probably not really a surprise that the covered bonds are considered to be safe,
ING, Santander and UBS at 3bp over mid- going was quite slow, but generally, the even though there’s a risk of negative price
SWAPSû"OOKSûATûTHEûLASTûUPDATEûHADûREACHEDû MARKETûFEELSûQUITEûGOODvûTHEûlRSTûBANKERû action over the course of the next six
OVERûõBN SAID MONTHSvûTHEûTHIRDûBANKERûSAID
“The world is a choppy place, and if you h)SSUERSûJUSTûNEEDûTOûBEûSENSIBLEûANDûNOû “It’s interesting that the two deals that
have a low-beta, low-risk name, there is ONEûISûGOINGûFORûGANGBUSTERûLEVELSv WEREûSLIGHTLYûLONGERûDIDNTûREALLYûWORKû
plenty of cash out there,” said another "OOKSûFORû0""SûõMûNO
GROWû!UGUSTû Despite the rally over the summer, we are
SYNDICATEûBANKER ûENDEDûOVERûõMûWHILEûDEMANDûFORû hearing anecdotally that investors want to
“We’ve seen that covered bonds have 2,"û.OE
7IENSûõMû!UGUSTûûCLOSEDû STAYûSHORTûDURATIONv
been very resilient through the volatility, in OVERûõMûAûFARûCRYûFROMûTHEûMULTI
BILLIONû One factor that has worked in favour of
contrast with sub debt, which has been a lot order books seen on Rabobank’s inaugural covered bonds is that spreads have drifted
MOREûVOLATILEv SENIORûNON
PREFERREDûFORûEXAMPLE wider over the course of the year, with
At 3bp over, the deal offered around 3bp h7HENûYOUûHAVEûAû2ABOBANKûlVE
YEARû cheaper valuations drawing more investors
OFûNEWûISSUEûPREMIUM BEINGûMARKETEDûINûTHEûLOWûSûOVERûMID
IN
!AREALû"ANKûALSOûDREWûSTRONGûDEMANDûFORû swaps, it’s always going to hurt paper that Aareal’s previous deal didn’t really go
AûõMû*ULYûûVIAûDZ Bank, LBBW, Natixis,
Nord/LB and Societe GeneraleûTHATûPRICEDûATûBPû
through mid-swaps, the tight end of the less
BPûAREAû)04Sû"OOKSûCLOSEDûABOVEûõBN
OFF-THE-RUN
offers little or no pick-up,” a DCM banker
SAID
“This is the type of supply that can hurt
COVEREDûBONDSû)ûTHINKûITSûTOOûEARLYûTOûDRAWû
any broad conclusion about the health of
THEûMARKETv
WELLvûTHEû$#-ûBANKERûSAIDûh4HEYûCAMEûATûAû
time when the market started to feel heavy
and investors didn’t really want to buy at the
TIGHTûSPREADSû4HEûMARKETûHASûWIDENEDûSINCEû
THENv
4HEû'ERMANûBANKSûLATESTûõMû*ULYû
(OWEVERûDEMANDûFORûTHEûCOVEREDûBONDSûOFû 2,"û.OE
7IENSûPUBLICûSECTORûMORTGAGEû ûPRICEDûATûBPûTHROUGHûMID
SWAPSû
DEUTSCHE PFANDBRIEFBANK and POOLûCOULDûHAVEûALSOûBEENûTOûBLAMEû)TûWASû WHILEûITSûõMû*ULYûûTHATûPRICEDûINû
RAIFFEISENLANDESBANK NIEDEROESTERREICH-WIEN THEûlRSTûBENCHMARKûINûTHEûFORMATûFORûTHEû -ARCHûCAMEûATûBPûTHROUGHûTHOUGHûITûHASû
was slow to come by last Wednesday in the ISSUER SINCEûWIDENEDûTOûLESSûBPûACCORDINGûTOû
face of more attractively priced senior h2,"ûDIDNTûGETûTOûTHEûTIGHTûENDû)MûNOTû 4RADEWEB
SUPPLY
ALL COVERED BONDS (ALL CURRENCIES)
BOOKRUNNERS: 1/1/2018 TO DATE
Managing
SUREûWHYvûAûTHIRDûSYNDICATEûBANKERûSAID
“Maybe you can blame the fact that it’s a
public sector-backed covered but then
there’s not that much difference between
No of Total Share public and mortgage-backed covereds in
BERLIN HYPO rounded off the week for
covered bonds, pricing an increase of its
û-AYûûh*UBILEEvûBONDûATûBPû
through mid-swaps via Credit Agricole,
Commerzbank, DZ Bank, LBBW and UniCredit,
bank or group issues US$(m) (%) SECONDARYû4HEYûPAIDûAûDECENTûPREMIUMû)Dû TAKINGûTHEûNEWûTOTALûTOûõM
1 LBBW 52 8,920.31 5.9 SAYûAROUNDûBP
2 UniCredit 53 8,878.15 5.9 )TûPRICEDûATûBPûOVERûMID
SWAPSûFROMûBPû
3 Natixis 40 8,432.47 5.6 AREAûGUIDANCE
4 HSBC 45 8,421.43 5.6 Commerzbank, DZ Bank, Helaba, RBI and
5 Commerzbank 47 8,122.45 5.4 Societe GeneraleûLEDû2,"û.OE
7IEN HIGH-YIELD
6 Deutsche Bank 36 6,987.85 4.7
7 Credit Agricole 34 6,435.82 4.3 QE QUESTION MARK
8 Credit Suisse 31 6,370.65 4.2 (OWûTHEûCOVEREDûBONDûMARKETûWILLûFAREûASû UNITED STATES
9 SG 32 6,137.75 4.1 THEû%#"ûWITHDRAWSûITSûMULTI
YEARûBONDû
10 Barclays 30 5,657.36 3.8 buying programme is likely to remain at the DELAWARE LOOPHOLE FAVOURS DEBT
Total 205 150,055.61 forefront of participants’ minds as the ISSUERS AT EXPENSE OF INVESTORS
Source: Thomson Reuters SDC code: J15a central bank further reduces its purchases
NEXTûMONTHûTOûõBNûFROMûõBN An amendment to Delaware’s corporate law
that makes it easier for companies to
ALL US$ DENOMINATED HIGH-YIELD BONDS ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS restructure themselves could have costly
BOOKRUNNERS – 1/1/2018 TO DATE 1/1/2018 TO DATE consequences for debt investors if not
Managing No of Total Share Managing No of Total Share addressed in new bond and loan documents,
bank or group issues US$(m) (%) bank or group issues €(m) (%) LEGALûEXPERTSûHAVEûWARNED
1 JP Morgan 111 17,813.69 11.8 1 JP Morgan 35 3,408.38 7.9 The new provision, signed into law as an
2 Goldman Sachs 84 10,767.78 7.2 2 Deutsche Bank 31 3,353.92 7.8 amendment to the Delaware Limited
3 Credit Suisse 78 9,803.47 6.5 3 BNP Paribas 37 2,884.13 6.7 Liability Company Act, essentially allows a
4 Barclays 76 9,790.04 6.5 4 Credit Suisse 28 2,355.46 5.5 company to divide itself into two or more
5 BAML 96 9,747.72 6.5 5 Citigroup 22 2,304.01 5.4 pieces and freely distribute assets and
6 Deutsche Bank 82 9,485.89 6.3 6 HSBC 28 2,265.39 5.3 LIABILITIESûACROSSûTHEM
7 Wells Fargo 72 9,421.09 6.3 7 BAML 20 2,249.84 5.2 That could potentially allow companies to
8 Citigroup 77 8,467.58 5.6 8 Goldman Sachs 24 2,123.31 4.9 transfer valuable assets outside of creditors’
9 Morgan Stanley 69 8,178.20 5.4 9 Barclays 21 2,010.25 4.7 reach without triggering restrictions around
10 RBC 50 5,712.01 3.8 10 Morgan Stanley 12 1,463.43 3.4 asset sales and dividends that are typically
Total 288 150,521.77 Total 99 43,049.80 included in bond and loan documents, the
Including US domestics, Euro, foreign, globals. Excluding equity-related Excluding equity-related debt. EXPERTSûSAID
debt.
“It is a risk bondholders should not have
Source: Thomson Reuters SDC code: B5 Source: Thomson Reuters SDC code: B6 TOûTAKEvûSAIDû2OSSû(ALLOCKûANûANALYSTûATû

30 International Financing Review August 25 2018

 BONDS HIGH-YIELD

INDEPENDENTûRESEARCHûlRMû#OVENANTû ALL EUROPEAN HIGH-YIELD ISSUERS ALL ASIAN HIGH-YIELD ISSUERS

2EVIEWûh"ONDHOLDERSûSHOULDûASKûFORûAû 1/1/2018 TO DATE 1/1/2018 TO DATE
CATEGORICALûPROHIBITIONv Managing No of Total Share Managing No of Total Share
)NûANûALERTûTOûCLIENTSûONû4UESDAYûLAWûlRMû bank or group issues US$(m) (%) bank or group issues US$(m) (%)
Kramer Levin called the new provision a 1 JP Morgan 39 5,430.79 8.7 1 Haitong Securities  35 1,768.47 6.8
“potentially dangerous loophole” and 2 Deutsche Bank 35 4,778.08 7.6 2 Citic 23 1,565.37 6.1
argued that new debt agreements should 3 BNP Paribas 40 3,858.53 6.2 3 Deutsche Bank 18 1,439.18 5.6
INCLUDEûSPECIlCûLANGUAGEûTOûEITHERûPROHIBITû 4 Goldman Sachs 29 3,854.20 6.2 4 Guotai Junan Securities 34 1,431.68 5.5
ORûDISCIPLINEûSUCHûTRANSACTIONS 5 Barclays 26 3,710.51 5.9 5 Bank of China  18 1,354.25 5.2
Richard Farley, chair of Kramer Levin’s 6 Credit Suisse 28 3,614.22 5.8 6 JP Morgan 7 1,275.24 4.9
LEVERAGEDûlNANCEûGROUPûSAIDûAûMEASUREDû 7 Citigroup 26 3,411.10 5.5 7 Morgan Stanley 12 1,176.84 4.6
APPROACHûMIGHTûULTIMATELYûPREVAIL 8 BAML 19 2,803.62 4.5 8 Credit Suisse 16 1,102.27 4.3
“The way this may shake out is that the 9 HSBC 27 2,676.64 4.3 9 HSBC 22 1,080.19 4.2
new entities would give guarantees or pledge 10 Morgan Stanley 17 2,335.59 3.7 10 BAML 12 1,054.30 4.1
the appropriate collateral to make sure debt Total 111 62,566.47 Total 77 25,853.34
HOLDERSûAREûNOTûWORSEûOFFvûHEûTOLDû)&2 Excluding equity-related debt. Excluding equity-related debt.

“I think that the loophole will be shut Source: Thomson Reuters SDC code: B06c Source: Thomson Reuters SDC code: B06d
VERYûQUICKLYû)TûISûMOREûOFûAûTRAPûFORûTHEû
UNAWAREv BYû"LACKSTONEûANDû!KZOû.OBELSûCHEMICALû THINGSûLIKEû&LORAvûSAIDûAûFUNDûMANAGER
Radio broadcaster CUMULUS MEDIA is among BUSINESSûBYû#ARLYLEû'ROUPûANDû')# 4HEûõMûûûNOTEûBACKINGûPARTû
THEûlRSTûCOMPANIESûKNOWNûTOûHAVEû h)TûWILLûBEûVERYûCONCENTRATEDû4HEû OFûTHEûBUYOUTûBYû++2ûOFû&LORAû&OODû'ROUPû
addressed the issue in a recent debt headline number will look big, but Akzo and the spreads business of Unilever, has spent
DOCUMENTûACCORDINGûTOû(ALLOCK Thomson Reuters will make a big chunk of most of its life below reoffer after pricing at
)NûITSûLATESTûCREDITûAGREEMENTûlLEDûWITHû THATvûONEûBANKERûSAID PARûINû!PRILû)NVESTORSûSAIDûITûCAMEûTOOûTIGHTû
the SEC, Cumulus and its lenders agreed The Financial and Risk unit, which will be ANDûTHEûPAPERûISûNOWûBIDûAROUNDûûFORûAû
that division transactions such as those RENAMEDû2ElNITIVûANDûINCLUDESû)&2ûISû YIELDûOFûûACCORDINGûTOû4RADEWEBûDATA
described in Delaware’s new law are expected to sell a total US$3bn of secured After August’s lull, when only two deals
OUTRIGHTûPROHIBITED bonds, split between US$2bn in dollars and printed, supply is expected to pick up in the
Only debt agreements entered into on 53BN EQUIVALENTûINûEUROSûANDû53BNû lRSTûWEEKûOFû3EPTEMBERûAûSECONDûBANKERû
!UGUSTûûORûLATERûAREûVULNERABLEûTOûTHEû OFûUNSECUREDûCONSISTINGûOFû53BNûDOLLARSû SAID
LOOPHOLEûACCORDINGûTOû+RAMERû,EVIN ANDû53M EQUIVALENTûEUROS Investors will pay particular attention to
The Akzo Nobel deal is expected to bring THEûlRSTûDEALSûLAUNCHED
õBN EQUIVALENTûOFûSUBORDINATEDûHIGH “September is one of those months that is
EUROPE/MIDDLE EAST/ YIELDûBONDS a test of the market in terms of discipline
AFRICA An investor said the nature of supply ANDûPRICEû$EPENDINGûONûHOWûTHESEûDEALSû
would offer different challenges from the come, if they price at the wide end or don’t
CONCENTRATED SUPPLY SET FOR norm: “You used to see a smothering of a go well, they tend to reprice the market,”
SEPTEMBER whole bunch of deals with a lot of issuers SAIDûTHEûlRSTûINVESTOR
DOINGûõM õMûTRADESvûHEûSAID 4HEûlRSTûBANKERûSAIDûTHEûMARKETûWOULDûBEû
"ANKERSûAREûFORECASTINGûSOMEûõBNûOFûHIGH Investor resistance to aggressive deals, LESSûDRIVENûBYûRElNANCINGûGIVENûTHEû
yield issuance in Europe this September and which resulted in terms being amended on UNDERLYINGûMOVEûINûRATES
supply is likely to be dominated once again THEûMAJORITYûOFûBONDSûBACKINGûBUYOUTSûPRE “At the same time, there’s recognition
BYû3INGLEû"ûPAPERûASûSEENûINûTHEûPRE SUMMERûISûEXPECTEDûTOûCONTINUE that rates are likely going higher, so you
SUMMERûWINDOW “The key thing is, generally in Europe, want to get something done sooner rather
4HEûMAJORûDEALSûEXPECTEDûAREûBONDû there isn’t a huge amount of cash around, so THANûLATERvûHEûADDED
COMPONENTSûOFûlNANCINGSûFORûTHEûBUYOUTSûOFû it would be interesting to see how well these “Some issuers are debating whether to go
Thomson Reuters’ Financial and Risk unit THINGSûPRICEû0EOPLEûAREûGOINGûTOûREMEMBERû right away or wait for a call step-down, but

ALL INTL SWEDISH KRONA BONDS ALL INTL NORWEGIAN KRONE BONDS ALL INTERNATIONAL MEXICAN PESO BONDS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues SKr(m) (%) bank or group issues NKr(m) (%) bank or group issues Ps(m) (%)
1 Danske Bank 35 21,479.86 28.6 1 Danske Bank 16 9,879.95 28.3 1 JP Morgan 7 7,490.93 30.5
2 Swedbank 21 14,740.86 19.6 2 Nordea 9 7,352.36 21.1 2 RBC 7 2,944.42 12.0
3 SEB 6 9,259.81 12.3 3 SEB 2 3,994.59 11.4 3 TD Securities 3 2,407.84 9.8
4 Handelsbanken CM 9 7,550.53 10.0 4 DNB 2 3,209.53 9.2 4 Barclays 1 989.82 4.0
5 Nordea 10 6,575.42 8.7 5 Swedbank 8 2,662.50 7.6 5 BNP Paribas 1 988.44 4.0
6 DNB 4 2,396.23 3.2 6 HSBC 3 1,800.00 5.2 6 Citigroup 1 750.00 3.1
7 Credit Agricole 9 2,305.25 3.1 7 Deutsche Bank 3 1,378.48 3.9 7 Nordea 1 500.00 2.0
8 BNP Paribas 1 991.15 1.3 8 Barclays 1 1,000.00 2.9 8 HSBC 1 491.62 2.0
9 TD Securities 1 750.00 1.0 9 JP Morgan 1 750.00 2.1 Total 30 24,551.32
10 JP Morgan 2 688.43 0.9 10 TD Securities 2 624.21 1.8 Including preferreds. Excluding equity-related debt.

Total 97 75,209.56 Total 43 34,899.51

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

Source: Thomson Reuters SDC code: K16 Source: Thomson Reuters SDC code: K13 Source: Thomson Reuters SDC code: K18

International Financing Review August 25 2018 31

ITSûISSUER SPECIlCû"UTûTHOSEûDEBATESûHAVEû REPORTEDûlNANCIALûDEBTûISûINCONSISTENTûWITHû LOSTûûFROMû4UESDAYSûCLOSEûACCORDINGûTOû
become a little bit more intense since rates the level of interest that the company pays, 4HOMSONû2EUTERSûDATA
CLEARLYûLOOKûUPWARDv ANDûTHATûONLYûAûSIGNIlCANTûHIGHERûLEVELûOFû Nyrstar’s debt has time and time again
September’s volumes are unlikely to [intra-period or off balance-sheet] debt can COMEûUNDERûPRESSUREûONûRElNANCINGûCONCERNSû
MATCHûTHOSEûFROMûûWHENûõBNû explain the current levels of interest ANDûHADûTRADEDûPOORLYûINûRECENTûMONTHS
printed in the high-yield euro market, PAYMENTSvûANALYSTSû0HILIPû(GOTHOûANDû (ALF YEARûRESULTSûRELEASEDûONû!UGUSTûû
ACCORDINGûTOû)&2ûDATA -UTLUû'UNDOGANûSAIDûINûAûRESEARCHûNOTE exceeded market expectations however, and
Year-to-date euro volumes stand at "ASEDûONûITSûINTERESTûPAYMENTSûTHEû MANAGEMENTûSAIDûITûPLANSûTOûRElNANCEûTHEû
õBNûCOMPAREDûWITHûõBNûBYûTHISû analysts estimate that Nyrstar’s true gross bonds, sources said, which offset some of
POINTûINûû7HOLE YEARûVOLUMESûINûû DEBTûLEVELûISûõBNnõBNûRATHERûTHANûTHEû THEûLOSSES
WEREûõBN ADJUSTEDûõBNûLEVELûINCLUDINGûDEFERREDû "UTû!".û!-2/ûANALYSTSûAREûQUESTIONINGû
INCOMEûTHEYûCALCULATEDûUSINGûlGURESûFROMû whether the company would be able to
NYRSTAR’S BONDS DROP ON ABN .YRSTARSûHALF YEARûREPORT RElNANCEûITSûûBONDSûGIVENûTHEûYIELDûONû
AMRO REPORT “We suspect that during the quarters, THEûS
Nyrstar has been drawing heavily on its
NYRSTAR’s bonds dropped on Wednesday working capital facilities and that towards ALL INTERNATIONAL RAND BONDS
AFTERû!".û!-2/ûANALYSTSûCLAIMEDûTHEû quarter-end, Nyrstar temporary delays BOOKRUNNERS: 1/1/2018 TO DATE
metals and mining company’s true debt payments to its suppliers, or draws more on Managing No of Total Share
level is higher than disclosed and raised its letters or credit lines, in order to preserve bank or group issues R(m) (%)
QUESTIONSûABOUTûITSûABILITYûTOûRElNANCEûAû cash within the company,” the analysts 1 JP Morgan 2 3,244.00 43.9
ûBONDûMATURITY WROTE 2 Rand Merchant Bank 1 560.00 7.6
!ûõMûûSENIORûUNSECUREDûû In the results, Nyrstar appeared to have 3 TD Securities 1 500.00 6.8
note issue lost some three points to around õMûAVAILABLEûINûWORKINGûCAPITALûFACILITIESû =3 Nordea 1 500.00 6.8
ûBIDûWHILEûTHEûõMûOFûûSûFELLûAû with two of three facilities undrawn, but 5 NatWest Markets 1 280.00 3.8
POINTûTOûBELOWûûACCORDINGûTOû4RADEWEBû analysts suggested that it must have drawn 6 Barclays 1 246.98 3.3
DATAû4HEûSûFELLûFURTHERûDURINGûTHEûWEEKû on all three given the transactions it 7 Mizuho 1 150.00 2.0
ANDûWEREûBIDûAROUNDûûONû&RIDAYû DISCLOSED 8 Goldman Sachs 1 120.00 1.6
AFTERNOONûASû)&2ûWENTûTOûTHEûPRESS The bond market reaction was muted Total 12 7,394.96
“Our analysis shows that Nyrstar’s level of compared with the equity, however, which Including preferreds. Excluding equity-related debt.

Source: Thomson Reuters SDC code: K7

ALL INTL AUSTRALIAN DOLLAR BONDS ALL INTL NEW ZEALAND DOLLAR BONDS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE AUSTRALIAN DOMESTIC BONDS
Managing No of Total Share Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE
bank or group issues A$(m) (%) bank or group issues NZ$(m) (%) Managing No of Total Share
1 TD Securities 57 3,882.90 15.7 1 ANZ 7 1,394.49 27.8 bank or group issues A$(m) (%)
2 Nomura 35 2,730.95 11.0 2 NAB 5 843.21 16.8 1 National Australia Bank 62 16,891.89 20.7
3 RBC 39 2,575.72 10.4 3 Daiwa Securities 4 648.40 12.9 2 ANZ 45 15,514.65 19.0
4 Deutsche Bank 25 1,982.24 8.0 4 CBA 5 565.30 11.3 3 CBA 35 14,146.47 17.3
5 Mizuho 15 1,833.86 7.4 5 TD Securities 5 507.47 10.1 4 Westpac 43 10,288.72 12.6
6 ANZ 13 1,733.68 7.0 6 Deutsche Bank 1 500.00 10.0 5 UBS 19 5,894.13 7.2
7 JP Morgan 10 1,435.73 5.8 7 Credit Agricole 5 200.00 4.0 6 Deutsche Bank 10 4,475.24 5.5
8 NAB 10 1,156.53 4.7 8 Sumitomo Mitsui Finl 2 100.70 2.0 7 Citigroup 10 3,708.94 4.5
9 Daiwa Securities 14 1,086.74 4.4 9 HSBC 1 45.00 0.9 8 BAML 6 1,414.40 1.7
10 CBA 10 796.73 3.2 10 Cooperatieve Rabobank  1 33.21 0.7 9 Macquarie 7 1,276.46 1.6
Total 170 24,751.75 Total 28 5,017.16 10 JP Morgan 5 1,211.10 1.5
Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Total 112 81,792.69
Source: Thomson Reuters SDC code: K1 Source: Thomson Reuters SDC code: K4 Source: Thomson Reuters SDC code: AJ02

ALL INTERNATIONAL TURKISH LIRA BONDS ALL INTL CANADIAN DOLLAR BONDS GLOBAL DIM SUM BONDS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues TL(m) (%) bank or group issues C$(m) (%) bank or group issues Rmb(m) (%)
1 Sumitomo Mitsui Finl 1 816.50 24.1 1 TD Securities 24 6,766.05 24.2 1 HSBC 51 15,994.02 32.5
2 Nordea 8 689.87 20.3 2 RBC 23 4,954.77 17.7 2 Standard Chartered  35 14,947.15 30.4
3 JP Morgan 4 350.12 10.3 3 BMO 16 4,946.51 17.7 3 Credit Agricole 21 5,475.80 11.1
4 Citigroup 4 264.57 7.8 4 CIBC 20 3,495.21 12.5 4 Bank of China  4 2,005.77 4.1
5 TD Securities 4 211.77 6.2 5 Scotiabank 18 3,074.61 11.0 5 Citic 4 1,903.34 3.9
6 RBC 2 197.09 5.8 6 Natl Bank of Canada Finl 10 1,730.84 6.2 6 BNP Paribas 4 1,241.00 2.5
7 BAML 1 119.71 3.5 7 HSBC 8 1,597.83 5.7 7 Goldman Sachs 2 1,075.00 2.2
8 Credit Agricole 1 107.00 3.2 8 BAML 5 1,278.93 4.6 8 DBS 1 1,000.00 2.0
9 RBC Europe  1 43.43 1.3 9 Goldman Sachs 1 150.00 0.5 =8 KGI Financial Services 1 1,000.00 2.0
Total 31 3,392.07 Total 36 27,994.76 10 China Merchants Bank 1 750.00 1.5
Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Total 118 49,188.66
Including preferreds. Excluding equity-related debt.

Source: Thomson Reuters SDC code: K17 Source: Thomson Reuters SDC code: K2 Source: Thomson Reuters SDC code: AS24a

32 International Financing Review August 25 2018


Santander skips sterling with dollar-only Holmes
„ RMBS Banks raises over
SANTANDER UK sold the first UK RMBS since the
break on Thursday but chose to avoid a sterling
market which had widened sharply before the
summer lull and instead raised over US$1bn
from two US dollar tranches.
The deal is its second of 2018, following
a March new issue which included a sterling
tranche alongside two dollar ones.
Before the summer break a glut of sterling
supply spooked investors. Widening spreads
prompted another UK issuer, Barclays, to drop
the sterling tranche from its Gracechurch credit
card deal and sell only dollars, despite earlier
publishing IPTs for both currencies.
And by the end of July Capital Home Loans
had to pay a 100bp discount margin, a full 25bp
more than a comparable deal from five weeks
earlier, when it printed Triple As backed by a
well-regarded pool of buy-to-let UK mortgages.
Syndicates have been flagging a heavy
sterling pipeline for September with a full
range of asset classes expected. On Friday
“They have very little room to
Virgin Money mandated banks for US and UK
roadshows ahead of a UK RMBS off its Gosforth
Funding vehicle, without indicating what
currencies it plans to sell.
Santander announced HOLMES 2018-2 on
Monday with two dollar tranches on offer: a
short-dated 2a7 piece with a 0.63-year average
life and a longer 1.93-year Class A2. IPTs
were already shown, at high 30s and mid 40s
respectively.
Guidance for the two tranches on Wednesday
was 36bp-38bp and 43bp-45bp before the leads
announced a one-time test tighter on Thursday
morning at 35bp and 42bp. That test was
successful, with final pricing one-month Libor plus
35bp on the US$210m Class A1 and three-month
Libor plus 42bp for the US$800m Class A2.
Holmes 2018-1 in March sold its US$200m
0.63-year tranche at 37bp over one-month Libor
and the US$750m 1.99-year note at 36bp over
three-month Libor. That deal’s £300m 4.88-year
came at 36bp over three-month Libor.
BONDS STRUCTURED FINANCE
More recent comparables are June deals from
Lloyds and Clydesdale Bank which both sold
dollar-denominated UK RMBS, off Permanent
2018-1 and Lanark 2018-2.
Permanent included a US$1bn 1.95-year
tranche at 38bp, while Lanark - coming a week
later on June 28 in a weakening market - sold its
US$400m 1.93-year at 42bp.
The Class A1 from Holmes 2018-2 was four
times covered and the A2 was 1.7 times done,
indicating around US$2.2bn of orders across the
two tranches.
US investors bought 94% of the Class A1, with
UK accounts taking 6%. Asset managers bought
83%, official institutions 11%, and banks 6%.
On the Class A2, US investors accounted
for 82% and UK buyers 18%. Asset managers/
insurance bought 74%, official institutions 16%,
and banks 10%.
BAML, Citigroup, Credit Suisse, Lloyds and
Santander were joint leads.
Chris Moore
Fitch caps ratings below Double A where
MANOEUVREvûSAIDûANûINVESTORûh4HEYû ASSETSûMAKEûUPûhAûSIGNIlCANTûSHAREûOFû
DONTûHAVEûTOûRElNANCEûTHEûBONDûINûTHEû STRUCTURED FINANCE collateral value without being prime
bond market, if they get some extra quality”, meaning it could not give Triple or
SUPPORTûFROMû4RAlGURAûWHICHûISû $OUBLEû!ûRATINGSûTOûTHEû#-"3
HOWûTHEYûSURVIVEDûOVERûTHEûLASTûlVEû EMEA MBS Fitch’s unsolicited comment also warns
YEARSv THATûTHEû@-AROONûLOANûWHILEûBENElTINGû
#OMMODITYûTRADERû4RAlGURAûISû.YRSTARSû FITCH FIGHTS OVER ELIZABETH FINANCE from diversity, is backed by shopping
largest shareholder and has supported it UK CMBS centres “exposed to the mounting
through capital raises, loans and zinc and CHALLENGESûAFmICTINGûTHEû5+ûHIGHûSTREETû
SILVERûPRE
PAYMENTS &ITCHû2ATINGSûSAIDûLASTûWEEKûTHEûSMALLû5+û#-"3û ESPECIALLYûFORûSECONDARY
QUALITYûSTOCKv
h)Fû4RAlGURAûDOESNTûSUPPORTûTHEMûTHEYû ELIZABETH FINANCE 2018, which was quietly priced h3OûEVENûSETTINGûASIDEûTHEû#-"3ûPRO
RATAû
COULDûBYûAûWHISPERûRElNANCEûITûBYûDRAWINGû
on their revolving credit facility, but they
have no room for error in the next six
months,” he said, also pointing to volatility
AROUNDûCOMMODITYûPRICES
4HEûCOMPANYûREPORTEDûõMûINûCASHûANDû
mid-August by Goldman Sachs, could not support
&ITCHSûOWNû4RIPLEû!ûORû$OUBLEû!ûRATINGS
&ITCHûDIDNTûRATEûTHEûaMûDEALû
3TANDARDûû0OORSûANDû$"23ûRATEDûITSûlVEû
TRANCHESûFROMû4RIPLEû!ûTOû$OUBLEû"
The deal securitises two loans from
STRUCTUREvû&ITCHûSAYSûhTHEûCREDITûPROlLEûOFû
THEû-AROONûLOANûPOSESûITSûOWNûSETûOFûRISKSv
“It’s not a bad thing that rating agencies have
different points of view, and it’s good for
investors to understand what those differences
actually are,” said Rob Ford, portfolio manager
CASHûEQUIVALENTSûINûITSûRESULTSû)NûADDITIONûTOû GOLDMAN SACHSûTHEûaûMILLIONû@-AROONû ATû4WENTY&OURû!SSETû-ANAGEMENT
THEûûBONDSûITûOWESû4RAlGURAûõMû loan secured on three shopping centres in The deal, which was not seen publicly
ANDûHASûAûõMûCONVERTIBLEûBONDûISSUEûDUEû %NGLANDûANDû3COTLANDûANDûTHEûaMû@-#2û MARKETEDûSOLDûITSûaMû
YEARû4RIPLEû
TOûMATUREûONû3EPTEMBERû LOANûSECUREDûONûAûCAMPUS
STYLEûOFlCEû !SûATûTHREE
MONTHû,IBORûPLUSûBPû4HISûISû
4HEû!".û!-2/ûANALYSTSûSAIDûMARKETû BUILDINGûINû-ANCHESTER WELLûWIDEûOFûTHEûMOSTûRECENTû5+û#-"3ûNEWû
DOUBTSûABOUTûTHEûCOMPANYSûlNANCIALûHEALTHû &ITCHûCITINGû$"23SûPRE
SALEûREPORTûPOINTSû ISSUEû4AURUSû
ûFROMû"ANKûOFû!MERICAû
could lead to its liquidity headroom OUTûTHATûIFûAûLOANûISûRElNANCEDûREPAYMENTSû -ERRILLû,YNCHûWHICHûSOLDûAûaMû

deteriorating quickly, which would make to noteholders will be applied on a pro-rata YEARû4RIPLEû!ûATûPLUSûBP
banks less likely to provide letters of credit BASIS &URTHERûDOWNûTHEû%LIZABETHû&INANCEûû
under uncommitted facilities and impact )FûTHEûLARGERûLOANûISûRElNANCEDûTHEû STACKûTHEûaMû!!!!LOW ûCAMEûATûPLUSû
MATERIALûSHIPMENTSûTOû.YRSTAR
Such a scenario, they said, could lead
Nyrstar to draw on its working capital
facility at quarter-end, which would impact
ITSûHEADLINEûNETûDEBTûlGURE
portion of Class A notes still outstanding
WOULDûBEûBACKEDûSOLELYûBYûTHEû-#2ûLOANû
"ASEDûONûINFORMATIONûFROMûTHEûVALUATIONû
report, Fitch describes the MCR loan as
hSECONDARY
BPûTHEûaMû!!LOW ûATûPLUSûBPû
THEûaMû""""""LOW ûATûPLUSûBPûANDû
THEûaMû""""ûATûPLUSûBP
Fitch says its own credit opinions
QUALITYûOFlCEvûhHIGHLYû CONVERGEûMOREûCLOSELYûWITHûTHEû$"23û
.YRSTARûDECLINEDûTOûCOMMENT CONCENTRATEDûANDûIDIOSYNCRATICv RATINGSûFORû#LASSESû#ûTOû%

International Financing Review August 25 2018 33

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 24/8/2018
Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type
HOLMES 2018-2 US$210 0.63 1mUSL+35bp BAML/Citi/Credit Suisse/Lloyds/Santander Aaa/AAA/AAA RMBS
HOLMES 2018-2 US$800 1.93 3mUSL+42bp BAML/Citi/Credit Suisse/Lloyds/Santander Aaa/AAA/AAA RMBS
VOLT 2018-NPL5 US$397.1 1.42 4.213 Credit Suisse/Nomura NR/NR/NR RMBS
VOLT 2018-NPL5 US$96.9 2.96 4.704 Credit Suisse/Nomura NR/NR/NR RMBS
VOLT 2018-NPL5 US$98.8 3.01 5.804 Credit Suisse/Nomura NR/NR/NR RMBS

ONESAVINGS BANK EYES Q4 RMBS non-conforming mortgages originated by dollars since the launch of the Term
RETURN '-!#û!DVANTAGEûANDû0RECISE &UNDINGû3CHEMEûINû!UGUSTû
“We remain committed to funding our loan 4HOSEûDOLLARSûATû53MûFORûAû
ONESAVINGS BANK expects to return to the book using retail savings and funding additional YEARûAVERAGEûLIFEûWEREûPRICEDûATûBPûOVERû
securitisation market in the fourth quarter liquidity requirements through wholesale ,IBORû)NûSTERLINGûAû YEARûaMûNOTEû
with a new residential mortgage-backed MARKETSvûTHEûBANKûSAIDûONû4HURSDAY CAMEûATûBPûOVER
securitisation programme, according to its )Nû*UNEûTHISûYEARû#9"'ûOWNERûOFû
HALF YEARûREPORTûONû4HURSDAY VIRGIN MONEY READIES GOSFORTH RMBS #LYDESDALEû"ANKûANDû9ORKSHIREû"ANKûAGREEDû
4HEûBANKûHASûaBNûOFûOUTSTANDINGû TOûBUYû6IRGINû-ONEYûFORûaBN
drawings under the government Term VIRGIN MONEY mandated Bank of America Merrill
&UNDINGû3CHEMEûWHICHûCLOSEDûINû&EBRUARYû Lynch, BNP Paribas, Citigroup and Lloyds for a
)SSUINGû2-"3ûISûONEûWAYûTOûREPLACEûTHATû series of investor meetings in the US and UK EMEA ABS
FUNDINGûTHEûBANKûSAID AHEADûOFûAûPOSSIBLEû2EGû3AûISSUEûOFFûITSû
/NE3AVINGSû"ANKûSOLDûANû2-"3û GOSFORTH FUNDINGû5+û2-"3ûPROGRAMME EURO EYES ON VW NEW ISSUE DUE
2OCHESTERû&UNDINGû.OûINûû4HATûDEALû The originator last came to market with WEDNESDAY
did not securitise the bank’s own 'OSFORTHû&UNDINGû ûINû3EPTEMBERûLASTû
origination, but was backed by pre-crisis YEARû4HATûDEALûWASûTHEûlRSTû5+û2-"3ûTOûSELLû VOLKSWAGEN BANK is set to reopen the euro-
denominated securitisation market this
GLOBAL SECURITISATIONS IN STERLING SECURITISATIONS – ALL EUROPEAN RMBS WEEKûWHENûITûPRICESû'ERMANûAUTOûLOANû!"3û
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE DRIVER FIFTEENûONû7EDNESDAY
Managing No of Total Share Managing No of Total Share %VENûTHEûEVERGREENû'ERMANûAUTOû!"3û
bank or group issues £(m) (%) bank or group issues €(m) (%) sector has not been immune to the spread
1 Lloyds Bank 14 2,087.35 16.6 1 BAML 16 3,117.99 14.6 widening that took hold in the run up to the
2 BAML 14 1,789.68 14.3 2 Lloyds Bank 10 2,349.46 11.0 SUMMERûBREAK
3 Citigroup 8 1,112.41 8.9 3 Morgan Stanley 8 1,775.38 8.3 At the start of the year benchmark Triple
4 MUFG 1 1,006.20 8.0 4 Citigroup 9 1,726.58 8.1 As were coming at discount margins of
5 HSBC 6 904.47 7.2 5 BNP Paribas 7 1,590.44 7.4 BPûINCLUDINGû67SûOWNû$RIVERûFOURTEENû
6 BNP Paribas 8 857.92 6.8 6 JP Morgan 4 1,393.88 6.5 INû&EBRUARY
7 Barclays 6 838.66 6.7 7 Cooperatieve Rabobank  2 1,355.98 6.3 7IDENINGûWHENûITûARRIVEDûWASûMODESTû)Nû
8 Natixis 5 662.92 5.3 8 SG 1 1,074.57 5.0 *UNEû3ANTANDERSû3#û'ERMANYû!UTOû û
9 Morgan Stanley 4 636.76 5.1 9 Credit Agricole 1 1,015.28 4.7 CAMEûATûBPû-ERCEDES "ENZû"ANKSû3ILVERû
10 Deutsche Bank 3 532.57 4.2 10 Barclays 4 806.22 3.8 !RROWûûFOLLOWEDûINû*ULYûWITHûAûBPûPRINT
Total 36 12,541.85 Total 39 21,406.21 At the time market participants said the
Including Euro, foreign, global and domestics, excluding CDOs. Including Euro, foreign, global and domestics, excluding CDOs. Silver Arrow pricing was, unusually, well
inside softening secondary levels for the
Source: Thomson Reuters SDC code: B16i Source: Thomson Reuters SDC code: B10a ASSETûCLASSû"ANKERSûALSOûPOINTEDûTOûAûSTRONGû

ALL EUROPEAN ISSUERS GLOBAL STRUCTURED FINANCE IN EUROS ALL INTL ISSUERS (EXCLUDING SELF-FUNDED)
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues €(m) (%) bank or group issues US$(m) (%)
1 BAML 18 4,806.19 9.2 1 SG 6 2,906.52 11.5 1 JP Morgan 77 18,780.00 9.7
2 Lloyds Bank 15 4,108.37 7.9 2 Credit Agricole 7 2,748.36 10.8 2 Citigroup 81 17,356.65 9.0
3 SG 7 3,644.36 7.0 3 UniCredit 8 1,874.41 7.4 3 Credit Suisse 77 16,732.69 8.6
4 BNP Paribas 15 3,471.38 6.6 4 BNP Paribas 7 1,740.61 6.9 4 BAML 69 15,203.51 7.8
5 Credit Agricole 7 3,365.76 6.4 5 Commerzbank 3 1,648.06 6.5 5 Wells Fargo 59 14,158.99 7.3
6 Citigroup 14 3,314.50 6.3 6 BAML 4 1,461.65 5.8 6 Deutsche Bank 58 11,238.12 5.8
7 UniCredit 8 2,254.29 4.3 7 Cooperatieve Rabobank  2 1,355.98 5.3 7 Barclays 44 10,212.07 5.3
8 Morgan Stanley 8 2,137.35 4.1 8 Morgan Stanley 4 1,052.00 4.1 8 Goldman Sachs 36 9,204.16 4.8
9 Barclays 7 2,136.84 4.1 9 JP Morgan 2 1,013.91 4.0 9 Morgan Stanley 29 7,018.97 3.6
10 Commerzbank 3 1,996.65 3.8 10 Citigroup 4 992.76 3.9 10 RBC 23 5,229.70 2.7
Total 81 52,233.79 Total 41 25,383.49 Total 363 193,716.16
Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, PFI bonds and credit-linked notes. Excludes US
domestics) and excludes CDOs. domestics) and excludes CDOs. global ABS/MBS, CDOs and self funded issues.

Source: Thomson Reuters SDC code: B16n Source: Thomson Reuters SDC code: B16g Source: Thomson Reuters SDC code: J10d

34 International Financing Review August 25 2018

 BONDS STRUCTURED FINANCE

US ASSET-BACKED SECURITIES GLOBAL STRUCTURED FINANCE IN US$ STRUCTURED FINANCE – ALL INTL ISSUERS
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues US$(m) (%) bank or group issues US$(m) (%)
1 Citigroup 129 47,479.86 17.4 1 Citigroup 204 73,953.82 16.2 1 JP Morgan 77 18,780.00 8.9
2 JP Morgan 78 19,508.32 7.2 2 JP Morgan 165 52,288.94 11.4 2 Citigroup 83 17,849.77 8.4
3 BAML 67 18,197.70 6.7 3 Wells Fargo 146 45,556.63 10.0 3 BAML 75 17,089.48 8.1
4 Deutsche Bank 66 15,058.32 5.5 4 Credit Suisse 140 44,297.31 9.7 4 Credit Suisse 77 16,732.69 7.9
5 Barclays 60 13,908.67 5.1 5 BAML 129 40,917.39 8.9 5 Wells Fargo 63 15,322.37 7.2
6 RBC 49 13,606.18 5.0 6 Goldman Sachs 85 29,173.38 6.4 6 Barclays 50 12,037.34 5.7
7 Wells Fargo 63 12,586.48 4.6 7 Morgan Stanley 71 23,603.07 5.2 7 Deutsche Bank 60 11,951.38 5.6
8 Mizuho 35 9,542.72 3.5 8 Barclays 87 22,255.41 4.9 8 Goldman Sachs 38 9,689.42 4.6
9 Credit Suisse 44 8,301.78 3.0 9 Deutsche Bank 90 21,056.38 4.6 9 Morgan Stanley 33 8,125.19 3.8
10 Goldman Sachs 36 7,647.37 2.8 10 RBC 58 16,758.06 3.7 10 RBC 25 6,279.69 3.0
Total 484 272,551.54 Total 847 457,422.49 Total 395 211,549.07
Excludes MBS. Including securitisations (Euro, foreign, global and domestics, excluding Includes securitisations, PFI bonds, self-funded issues and credit-linked
CDOs) and PFI bonds. notes. Excludes US global ABS/MBS and CDOs.

Source: Thomson Reuters SDC code: F14 Source: Thomson Reuters SDC code: B16b Source: Thomson Reuters SDC code: J10c

%#"ûBIDûFORûTHEûDEALû ûGOVERNMENTûANDû /NEûTRANCHEû#LASSû!û53Mû ,ARGESTûTRANCHEû#LASSû! !û53Mû

AGENCYûBUYERSûBOUGHTûûOFûTHEûTRANCHEû year WAL; AAA-rated; priced at swaps plus  YEARû7!,ûNOTûRATEDûPRICEDûATûAûû
DISTRIBUTIONûSTATISTICSûSHOWED BP YIELD
/NEûSECONDARYûTRADERûSAIDû'ERMANûPAPERû
ISûNOWûBIDûAROUNDûTHEûHIGH TEENSûORûûAREAû RMBS PRICED
but in a very thin market which would be SANTANDER UKûHASûPRICEDûAû53BNû(OLMESû US ABS
LOOKINGûTOûTHEûNEWûISSUEûFORûDIRECTION -ASTERû)SSUERû3ERIESû û5+û2-"3û
$RIVERûlFTEENûISûOFFERINGûAûõMû Santander UKûSOLEûARRANGERûANDûJOINTûLEADSû RISING STUDENT DEBT BURDEN COULD
year with Bank of America Merrill Lynch, Citigroup, FALL TO THE US GOVERNMENT
4RIPLEû!ûANDûAûõMû!!! ûMEZZANINEû Credit SuisseûANDû,LOYDS
TRANCHEû*OINTûLEADSûLloyds and LBBW say the #OLLATERALû!ûPORTFOLIOûOFû5+ûPRIMEûlRST 2EPAYMENTûOFûTHEû53TRNû53ûSTUDENTûLOANû
DEALûSIZEûWILLûNOTûGROW lien, owner occupied properties, residential burden will mostly fall to the government
A roadshow started on Thursday and is mortgage loans unless new plans are designed that help
scheduled to end on Monday with pricing 4WOûTRANCHESû#LASSû!û53Mû YEARû BORROWERSûCHIPûAWAYûATûTHEIRûDEBTSû30ûSAIDû
EXPECTEDûONû7EDNESDAY 7!,ûRATEDû0 ! &ûPRICEDûATûONE MONTHû INûAûREPORT
,IBORûPLUSûBPû'UIDANCEûWASû BPûAREAû The US government has promised to
ANDûINITIALûPRICEûTHOUGHTSûWEREûMIDûS backstop principal and interest payments on
US MBS #LASSû!û53Mû YEARû7!,ûRATEDû NEARLYû53TRNûOFûSTUDENTûDEBTûTHROUGHû
Aaa/AAA/AAA; priced at three-month Libor FEDERALûSTUDENTûLOANûPROGRAMMES
US MBS DEALINGS PLUSûBPû'UIDANCEûWASû BPûAREAûANDû "UTûSTUDENTSûSTILLûOWEûMOREûTHANûTHEYûDIDû
INITIALûPRICEûTHOUGHTSûWEREûMIDûS six years ago, even though the economy has
CMBS PRICED expanded and the volume of new
!ûNEWû53Mû#-"3û3!3" ûSECURITISATIONû VOLT EDUCATIONALûLOANSûHAVEûDROPPED
called BAMLL 2018-PARKûPRICEDû4HEû STORYû CALIBERûPRICEDûAû53MûlXED RATEDûNON “This is a telltale sign that the payment
OFlCEûPROPERTYûATûû0ARKû!VENUEûINûTHEû PERFORMINGûLOANû2-"3ûCALLEDû6/,4û PLANSûCURRENTLYûINûPLACEûnûMOSTûOFûWHICHû
heart of Manhattan is owned by real estate  .0, Credit Suisse structured the deal were designed to provide immediate relief
DEVELOPERû0ETERû+ALIKOWûBank of America Merrill ANDûWASûAûJOINTûBOOKRUNNERûWITHûNomura. FORûBORROWERSûDURINGûAûDIFlCULTûECONOMICû
Lynch ISûTHEûUNDERWRITERûANDûSOLEûBOOKûRUNER #OLLATERALû0OOLûOFûSEASONEDûlRSTûLIENSû PERIODûnûAREûNOTûHELPINGûTOûREDUCEûTHEû
#OLLATERALû YEARûINTEREST ONLYûlRSTû WITHûlXED ûANDûADJUSTABLE RATEûTERMSûWITHû OUTSTANDINGûDEBTvû30ûWROTE
MORTGAGEûONûAûûMILLIONûSFû#LASSû!ûOFlCEû current status of non-performing or re- The Department of Education rolled out
BUILDINGûINû.EWû9ORKû#ITY PERFORMING new income-driven repayment plans after

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International Financing Review August 25 2018 35

GLOBAL CDOs ALL EUROMARKET CDOs THE VOID
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE In terms of the bond market, most
Managing No of Total Share Managing No of Total Share OUTSTANDINGûSTUDENTûLOANû!"3ûISûALSOû&&%,0û
bank or group issues US$(m) (%) bank or group issues US$(m) (%) paper that comes with a government
1 Citigroup 68 33,906.82 27.2 1 Citigroup 18 8,183.82 14.0 BACKSTOP
2 Morgan Stanley 10 5,276.91 4.2 2 Morgan Stanley 7 3,641.61 6.2 !ûTOTALûOFû53BNûOFûPUBLICûSTUDENTûLOANû
3 BAML 11 3,976.65 3.2 3 BAML 9 3,451.70 5.9 !"3ûWASûOUTSTANDINGûASûOFûTHEûSECONDû
4 Deutsche Bank 7 3,573.68 2.9 4 Credit Suisse 7 2,907.72 5.0 QUARTERûVERSUSûJUSTû53BNûOFûPRIVATEû
5 Credit Suisse 8 3,514.72 2.8
6 BNP Paribas 8 2,611.23 2.1
7 JP Morgan 6 1,997.23 1.6
8 Goldman Sachs 6 1,956.60 1.6
9 Barclays 7 1,573.24 1.3
10 Greensledge CM 4 1,505.13 1.2
5 BNP Paribas 8 2,611.23 4.5
6 Deutsche Bank 4 2,207.16 3.8
7 Goldman Sachs 5 1,947.13 3.3
8 Barclays 7 1,573.24 2.7
9 JP Morgan 4 1,179.58 2.0
10 Wells Fargo 4 899.24 1.5
!"3ûPAPERûACCORDINGûTOû3)&-!ûDATA
Online lenders such as SOCIAL FINANCE have
BEENûlLLINGûTHEûVOIDûLEFTûBYûAûLACKûOFûAûPUBLICû
RElNANCINGûOPTIONûFORûSTUDENTS
SOFI has been a pioneer in this area and
HASûPACKAGEDûABOUTû53BNûOFûITSûPRIVATEû
Total 250
Including Euro, foreign, global, US domestics.
Source: Thomson Reuters
THEûlNANCIALûCRISISûTOûKEEPûSTRUGGLINGû
BORROWERSûFROMûDEFAULTING
"UTûMANYûREPAYMENTûOPTIONSûONLYû
REQUIREDûREDUCEDûnûORûZEROûnûMONTHLYû
124,674.22 Total 121 58,366.70 STUDENTûLOANSûINTOûBONDûDEALSûSINCEûû
Excludes global and domestic. ACCORDINGûTOû)&2ûDATA
"UTûITûnûANDûOTHERûONLINEûLENDERSûnûTARGETû
SDC code: B12 Source: Thomson Reuters SDC code: J11 mostly young and high-earning graduates, a
practice that can leave the government
Navient, the nation’s largest student loan saddled mostly with the debts of less
servicer, has faced claims by the Consumer lNANCIALLYûSUCCESSFULûBORROWERS
&INANCIALû0ROTECTIONû"UREAUûTHATûITûCHEATEDû What’s more, older borrowers have
struggling borrowers by steering them into become a bigger part of the student loan
PAYMENTSûFORûnûYEARSûAFTERûWHICHû HIGHER
COSTûREPAYMENTûOPTIONS LANDSCAPE
time any remaining balance would be 4HEû#&0"ûWASûSETûUPûUNDERûTHEû/BAMAû "ORROWERSûûYEARSûANDûOLDERûMADEûUPû
FORGIVEN ADMINISTRATIONûASûAûCONSUMERûWATCHDOGû"UTû ûOFûTHEûTOTALûSTUDENTûDEBTûBURDENûASûOFû
h"UTûTHESEûPLANSûWHICHûREDUCEûMINIMUMû in May, its current acting director under the ûANûINCREASEûFROMûûINû
payment requirements without lowering 4RUMPûADMINISTRATIONûSAIDûTHEû#&0"Sû “Legislators would be prudent to begin
interest rates, aren’t helping borrowers STUDENTûLENDINGûOFlCEûWOULDûBEûSHUTTERED redesigning federal student loan repayment
PAYûDOWNûTHEIRûLOANSûANYûFASTERvû30û !ûPULLBACKûBYûTHEû#&0"ûCOULDûLEAVEû plans now, during a period of low
WROTE BORROWERSûWITHOUTûAûMAJORûADVOCATEûTOû unemployment levels and a relatively strong
Student servicers have also been criticised help them navigate the complex servicing economy; otherwise, the government will
for practices that make it hard for borrowers landscape for both private and public be left holding a very large bag for years
TOûREPAYûPRINCIPAL LOANS DOWNûTHEûROADvû30ûWROTE

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 24/8/2018

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

SSAR
EUROS
Aug 20 2018 Berlin, State of €500m Aug 27 2038 1.375 99.913 MS-1 / B+68.7 1.38

Aug 21 2018 Municipality Finance €250m incr Oct 15 2021 0.1 100.983 MS-21 -0.213
(€1.5bn)
Aug 22 2018 Lower Saxony, State of €100m incr Jun 13 2025 0.5 101.112 MS-17 / B+43.4 0.334
(€600m)
Aug 22 2018 KommuneKredit €500m Aug 28 2023 0.125 99.881 MS-12 / B+48 0.149

Aug 22 2018 Hessen, State of €250m incr Jan 25 2024 0.125 100.07 MS-22 / B+32.5 0.112
(€750m)
Aug 24 2018 Schleswig-Holstein, State of €500m Aug 31 2928 0.625 98.905 MS-14 / B+39.4 0.739
STERLING
Aug 21 2018 International Finance Corp £500m Mar 7 2025 1.375 99.78 G+32 1.406

Aug 22 2018 Oesterreichische £100m incr Dec 15 2022 1.125 99.328 G+38 1.283
Kontrollbank (£350m)
Aug 22 2018 Rentenbank £250m Sep 8 2025 1.375 99.521 G+33 1.442
Aug 23 2018 Inter-American Development £250m Dec 15 2024 1.375 99.848 G+32 1.396
Bank
Aug 24 2018 Asian Development Bank £250m Mar 7 2025 1.375 99.588 G+33 1.437

36 International Financing Review August 25 2018


US ABS DEAL PRICINGS
0RIMARYû!"3ûSPREADSûINCHEDûTIGHTERûLASTû
week as investors snapped up the limited
NEWûPAPERûONûOFFER
HONDA bumped up the size of its prime
AUTOûDEALûTOû53BNûFROMû53BNû
ANDûSHAVEDûOFFûAûFEWûBASISûPOINTSû)TSûLARGESTû

YEARû4RIPLEû!ûCLASSûCLEAREDûATûBPûOVERû
û53Mû
COMMERCIAL CREDIT GROUP
CCGûPRICEDûAû53MûEQUIPMENTû!"3û
called CCG RECEIVABLES TRUST 2018-2 (CCG 2018-2)û
BMO STRUCTUREDûTHEûDEALûANDûWASûAûJOINTû
bookrunner with JP Morgan and Wells Fargo.
Collateral: Fixed-rate commercial
equipment loans and leases originated by
#OMMERCIALû#REDITû'ROUP
,ARGESTûTRANCHEû#LASSû!
BONDS SUMMARY DETAILS
PROSPER MARKETPLACE ISSUANCE TRUST (PMIT) SERIES
2018-2ûCredit Suisse structured
the deal and
WASûAûJOINTûBOOKRUNNERûWITH Jefferies.
#OLLATERALû5NSECUREDûCONSUMERûLOANS
,ARGESTûTRANCHEû#LASSû!û53MûONE
YEARû7!,ûRATEDû!!ûPRICEDûATû%$3&ûPLUSû
BP
%$3&ûTIGHTERûTHANûTALKûINûTHEûBPnBPû
YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû
RANGE
COMMERCIAL CREDIT GROUP cleared the biggest
SLICEûOFûITSû53MûEQUIPMENTû
securitisation deal at EDSF plus 33bp versus
GUIDANCEûOFûBPnBP
PROSPERûPRICEDûITSû53MûPERSONALû
loan securitisation near record lows
CONFORMINGû2-"3û
FORûITSû0-)4ûISSUANCEûPLATFORMû)TSû

ASIA-PACIFIC MBS
EDSF plus 33bp versus guidance at EDSF
PLUSûBPnBP
HONDA
HONDAûPRICEDûANûUPSIZEDû53BNûPRIMEû
auto loan transaction, HONDA AUTO RECEIVABLES
2018-3 OWNER TRUST (HAROT 2019-3) Bank of America
Merrill Lynch structured the deal and was a
BLUESTONE SETS RMBS GUIDANCE
Specialist residential mortgage lender
BLUESTONE GROUP has released price guidance
FORûlVEûTRANCHESûOFûTHEû!USTRALIANûDOLLARû
SAPPHIRE XIX 2018-2ûNON
OFFERING
RISKIESTû3INGLEû"ûPLUSûCLASSûPRICEDûATû JOINTûBOOKRUNNERûWITHûSMBC and Wells Fargo. &ORûTHEû!MûOFû#LASSû!û!MûOFû
BPûOVERûSWAPSûORûBPûTIGHTERû #OLLATERALû.EWûANDûUSEDû(ONDAûANDû #LASSû!AûANDû!MûOFû#LASSû!BûNOTESû
than similar PMIT bonds debuted in Acura automobiles, light-truck and utility WITHûRESPECTIVEû7!,SûOFûûûANDûû
-AYû vehicle loans originated and serviced by YEARSûGUIDANCEûISûONE
MONTHû""37ûPLUSû
!MERICANû(ONDAû&INANCEû#ORPORATION BPûAREAûBPûAREAûANDûBPnBP
CAZENOVIA CREEK ,ARGESTûTRANCHEû#LASSû!û53Mû
&ORûTHEû!MûOFû#LASSû%SûANDû!MûOFû
CAZENOVIA CREEKûPRICEDûAû53MûPROPERTYû year WAL; rated Triple A; priced at EDSF #LASSû&SûWITHû7!,SûOFûûANDûûYEARSû
tax liens called CAZENOVIA CREEK FUNDING II PLUSûBPûVERSUSûGUIDANCEûATû%$3&ûPLUSû GUIDANCEûISûLOWûSûANDûLOWûSûOVERûONE

SERIES 2018-1ûHunt Financial is the sole BPnBP MONTHû""37
STRUCTURINGûADVISERû.OûPRICINGûDETAILSûAREû $IRECTûCOMPû(!2/4û
û û 4HEû#LASSû"û#ûANDû$ûNOTESûHAVEûBEENûPRE

AVAILABLE #LASSû!û53Mû
YEARû7!,ûRATEDû PLACEDûWHILEûTHEû'ûNOTESûWILLûBEûRETAINED
Collateral: The initial portfolio consists 4RIPLEû!ûPRICEDûATû%$3&ûPLUSûBP Macquarie and CBAûAREûJOINTûLEADû
ENTIRELYûOFûPROPERTYûTAXûLIENSûINûûSEPARATEû MANAGERS
STATESûSECUREDûBYûûINDIVIDUALû PROSPER )Nû&EBRUARYû"LUESTONEû'ROUPûISSUEDûAû
properties; according to a pre-sale from PROSPERûPRICEDûAû53MûTOTAL û !MûNON
CONFORMINGû2-"3ûTHROUGHû
+"2! UNSECUREDûCONSUMERûLOANû!"3ûCALLEDû 3APPHIREû86)))û


Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+1, - >€1.25bn Aa1/-/AAA/AAA BLB/CMZ/Deka/DZ/JPM Ger 60%, Fr 15%, Switz 10%, Asia 5%,
MS flat (+/-1) UK 4%, Other 6%, AM/Ins 58%, Bks
21%, CB/OI 14%, Other 7%
MS-21 area - - Aa1/AA+ BAML/Citi -

- - - -/-/AAA BLB -

MS-10 area, - €990m Aaa/AA+ BNPP/LBBW/SG Nordics 39.6%, UK/Ire 21.9%, Ger/Aut/
MS-11 area Switz 17.5%, Fra 8.8%, Benelux 7.2%,
Asia 4.8%, Other 0.2%, Bks/PB 33.3%,
CB/OI 23%, FM 21.7%, Ins/Pens 17%,
Other 5%
- - - -/AA+ Deka/DZ/Helaba/HSH/JPM -

MS-14 area - - -/-/AAA CMZ/DZ/HSBC/NordLB/LBBW -

G+33 area - - Aaa/AAA Barc/BAML/RBC UK 63%, EMEA 37%, Bks 73%, CB/OI
17%, AM 10%
G+38 area - - Aa1/AA+ HSBC/RBC -

G+33 area - >£215m Aaa/AAA/AAA BAML/Barc/NatWest -

G+32 area - - Aaa/AAA/AAA Barc/HSBC/JPM -

G+33 area - - Aaa/AAA/AAA Barc/Citi/RBC -

International Financing Review August 25 2018 37

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 24/8/2018 (CONTINUED)
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

SWISS FRANCS
Aug 23 2018 Banque Cantonale SFr160m Sep 14 2026 0.35 100.177 MS+12 -
Neuchateloise
NON CORE
Aug 22 2018 Stockholms Lans Landsting SKr500m Aug 30 2021 0.06 Undisclosed - -
Aug 23 2018 World Bank A$110m Aug 28 2020 2.2 99.901 ASW+23 2.251
Aug 23 2018 Nederlandse A$25m incr Jul 17 2028 3.45 102.485 ASW+56 / 3.155
Waterschapsbank (A$965m) ACGB+63
Aug 24 2018 KfW A$100m incr Mar 15 2028 3.2 Undisclosed ASW+38 / -
(A$600m) ACGB+42.75
Aug 24 2018 IFC A$100m incr Apr 3 2025 4 107.408 ASW+40 / 2.763
(A$1.175bn) ACGB+40
CORPORATES
US DOLLARS
Aug 21 2018 Fluor Corporation US$600m Sep 15 2028 4.25 99.787 T+145 4.276

Aug 21 2018 Northwest Pipeline US$250m incr Apr 1 2027 4 99.558 T+135 4.201
Aug 22 2018 Timken Co US$400m Dec 15 2028 4.5 99.868 T+170 4.517

EUROS
Aug 22 2018 Citycon Treasury €300m Jan 15 2027 2.375 99.096 MS+180 / B+240.9 2.497
Aug 23 2018 BMW Finance €1bn Nov 29 2021 0.125 99.751 MS+18 / B+69.6 0.202

Aug 23 2018 BMW Finance €750m Aug 29 2025 1 99.859 MS+48 / B+104.2 1.021

STERLING
Aug 23 2018 Daimler International £500m Sep 4 2023 2 99.796 G+103 2.033
Finance

SWISS FRANCS
Aug 21 2018 Luzerner Kantonsspital SFr150m Sep 25 2028 0.625 100.557 MS+19 -

NON CORE
Aug 21 2018 VW Financial Services A$350m Feb 28 2022 3.3 99.762 ASW+120 3.373
Australia
Aug 23 2018 Vasakronan (Green) SKr550m Jun 30 2021 3mSt+75 101.122 3mSt+36 -
Aug 23 2018 Fabege (Green) SKr700m Aug 30 3023 3mSt+113 100 3mSt+113 -
Aug 23 2018 Fabege (Green) SKr300m Aug 30 3023 1.5 Undisclosed - -
Aug 24 2018 Z Energy NZ$125m Sep 3 3024 4 100 MS+150 4
FINANCIALS
US DOLLARS
Aug 20 2018 Pricoa Global Funding US$500m Sep 1 2023 3.45 99.991 T+75 3.452

Aug 21 2018 ABN AMRO US$1bn Aug 27 2021 3.4 99.927 T+75 3.426
Aug 21 2018 ABN AMRO US$1bn Aug 27 2021 3mL+57 100 3mL+57 -
Aug 22 2018 Bank of America NA US$1.75bn Aug 28 2020 (2019) 3mL+25 100 3mL+25 -

Aug 22 2018 ZB NA US$500m Aug 27 2021 3.5 99.749 T+93 3.589

Aug 22 2018 Nordea Bank (SNP) US$750m Aug 30 2023 3.75 99.865 T+108 3.78
Aug 22 2018 Nordea Bank (SNP) US$250m Aug 30 2023 3mL+94 100 3mL+94 -
Aug 23 2018 JP Morgan Chase Bank NA US$1.25bn Sep 1 2020 (Sep 2019) 3mL+23 100 3mL+23 3mL+23

EUROS
Aug 20 2018 Berlin Hyp (SP) €300m Aug 28 2023 0.375 99.926 MS+13 / B+73.6 0.39

Aug 20 2018 Swedbank €500m Aug 29 2023 0.4 99.822 MS+18 / B+76.2 0.436

38 International Financing Review August 25 2018

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

- - - A+ (ZKB) ZKB/BCV -

- - - -/AA+ Danske -
ASW+23 - - Aaa/AAA CBA -
- - - Aaa/AAA TD -

ASW+38 - - Aaa/AAA Citi/Nom -

ASW+40 - - Aaa/AAA TD

T+162.5 area, 13 US$1.55bn Baa1/A- BAML/BNPP/Citi/MUFG -

T+150 (+/-5)
T+140 9+/-5) -5 US$400m Baa2/BBB/BBB CS/STRH/USB -
T+187.5 area, 3 US$1.4bn Baa3/BBB/BBB BAML/MS -
T+175 (+/-3)

MS+180/185 30 >€300m Baa2/BBB Citi/DB/Nordea/OP -

MS+30/35, 5 €1.65bn A1/A+ BNPP/CS/ING/MUFG/SEB -
MS+20 (+/-2)
MS+60/65, 12 €1.4bn A1/A+ BNPP/CS/ING/MUFG/SEB -
MS+50 (+/-2)

G+115 area, 16 £1bn A2/A/A- GS/HSBC UK 88%, Ger/Aut 4%, Benelux 3%, Spain
G+105 area 2%, Asia 2%, Other 1%, AM 62%, Ins
22%, Pens 5%, Bks/PBs 4%, Sov/CB 4%,
Corp 2%, Other 1%

- - - AA/Aa- (ZKB/ ZKB -

fedafin)

ASW+120 area - - A3/BBB+ RBC/StCh -

- - - A3 HCM -
- - - Baa3 HCM/Swed -
- - - Baa3 HCM/Swed -
MS+140-150 - - Unrated Deutsche Craigs/Forsyth/WBC -

T+85 area, -2 US$900m A1/AA-/AA- DB/HSBC/USB -

T+75 (+/-3)
T+low 90s -1 US$3.3bn A1/A/A+ BNPP/GS/JPM/NatWest/ABN -
- - US$3.8bn A1/A/A+ BNPP/GS/JPM/NatWest/ABN -
3mL+35 area, - - Aa3/A+/AA- BAML -
3mL+25
T+110 area, - US$1.75bn -/BBB+/BBB GS/MS -
T+95 (+/-2)
T+110 (+/-2) - US$2.3bn Baa1/A/AA- BAML/GS/MS/UBS -
- - US$1.9bn Baa1/A/AA- BAML/GS/MS/UBS -
3mL+30 area, - Undisclosed Aa3/A+ JPM -
3mL+25 area

MS+15 area - .€375m Aa2/-/A+ CMZ/DZ/LBBW Ger 98%, Fr 1%, UK 1%, Bks 84%, Ins
10%, FM 6%
MS+30 area, - ~€2bn Aa2/AA-/AA- BAML/Citi/GS/HSBC/Swed Ger/Aut 50%, UK 15%, Benelux 14%, Fr
MS+20 area 10%, Nordics 8%, Other 3%, FM 46%,
Ins/Pens 22%, Bks/PB 19%, CB/OI 11%,
Corps 2%

International Financing Review August 25 2018 39

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 24/8/2018 (CONTINUED)
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Aug 21 2018 Commerzbank (SP) €1.25bn Aug 28 2023 0.5 99.435 MS+35 / B+94.3 0.615

Aug 21 2018 Commerzbank (SP) €500m Aug 28 2028 1.5 99.825 MS+65 / B+119.4 1.519

Aug 22 2018 Bank of Ireland Group €750m Aug 29 2023 1.375 99.808 MS+115 / B+173.2 1.415

Aug 22 2018 OP Corporate Bank €500m Aug 29 2023 0.375 99.453 MS+22 / B+78.1 0.486

Aug 22 2018 Rabobank (SNP) €1bn Aug 29 2023 0.75 99.663 MS+55 / B+112 0.819

Aug 22 2018 National Australia Bank €750m Aug 30 2023 0.625 99.995 MS+35 / B+89.5 0.626
(Green)

Aug 22 2018 National Australia Bank €1.25bn Aug 30 2028 1.375 99.731 MS+53 / B+105.4 1.404

Aug 23 2018 Deutsche Bank (SP) €1bn Aug 30 2023 1.125 99.773 MS+90 / B+147.4 1.172

Aug 23 2018 Belfius Bank €500m Aug 30 2023 0.625 99.75 MS+40 / B+95.2 0.676

Aug 23 2018 Intesa Sanpaolo €1bn Aug 30 2023 2.125 99.869 MS+188 / B+244.4 2.153

Aug 24 2018 Barclays plc €750m Sep 3 2023 1.5 99.599 MS+130 / B+186.4 1.584
SWISS FRANCS
Aug 20 2018 Banco Santander SFr150m Dec 10 2024 1 100.005 MS+100 / 0.999
Eidg+133.4
Aug 22 2018 Credit Suisse Group SFr250m Perpetual (Sep 2024) 3.5 100 MS+354 3.5
NON CORE
Aug 20 2018 Bank Australia A$125m Aug 30 2021 3mBBSW+130 100 3mBBSW+130 -
(Sustainability)

Aug 20 2018 Commerzbank (T2) A$225m Oct 29 2028 5.5 100 - 5.5

COVERED BONDS
EUROS
Aug 21 2018 Aareal Bank €500m Jul 15 2025 0.375 99.561 MS-8 0.44

Aug 21 2018 Eika Boligkreditt €500m Aug 28 2025 0.5 99.582 MS+3 / B+61.1 0.561

Aug 22 2018 Deutsche Pfandbriefbank €500m Aug 30 2027 0.625 98.933 MS-2 0.748

Aug 22 2018 RLB Niederoesterreich-Wien €500m Aug 28 2026 0.625 99.527 MS+3 / B+59.7 0.686

Aug 23 2018 Berlin Hyp €250m incr May 30 2023 0.25 100.506 MS-10 / B+43.3 0.143
(€750m)
SWISS FRANCS
Aug 22 2018 PSHypo SFr100m incr Apr 26 2024 0.125 101.284 MS-2 / Eidg+29.9 -0.102
(SFr675m)
Aug 22 2018 PSHypo SFr351m Jul 10 2028 0.375 100.141 MS-1 / Eidg+49.1 0.36
Aug 22 2018 PSHypo SFr265m Jan 23 2043 1 102.036 MS-2 / Eidg+45.2 0.907
HIGH YIELD
EUROS
Aug 22 2018 Teekay LNG Partners NKr850m Aug 29 2023 3mN+460 100 3mN+460 -

40 International Financing Review August 25 2018

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+50 area, - €2.9bn A1/A-/A- Barc/BNPP/CMZ/DB/UBS Ger 37%, UK 24%, Fr 16%, Aut/Switz 10%,
MS+40 (+/-5) Benelux 5%, Sth Eur 4%, Scandi 2%, Other
2%, Funds/AM 61%, Bks 22%, Govt/Agency
6%, Ins/Pens 4%, PB 3%, Other 4%
MS+80 area, - €2.4bn A1/A-/A- Barc/BNPP/CMZ/DB/UBS Ger 30%, UK 26%, Fr 17%, Scandi 10%,
MS+70 (+/-5) Benelux 8%, Aut/Switz 7%, Asia 1%,
Other 1%, Funds/AM 61%, Ins/Pens 25%,
Bks 6%, Govt/Agency 5%, Other 3%
MS+130 area. - €2bn Baa3/BBB-/BBB JPM/NatWest/Nom/UBS UK/Ire 31%, Ger/Aut/Switz 28%, Nordics
MS+115/120 26%, Sth Eur 6%, Fr 4%, Benelux 4%,
Other 1%, FM 81%, Bks 8%, Ins Pens 7%,
Other 4%
MS+30 area, - €800m Aa3/AA- BAML/DZ/OP Nordics 36%, Ger/Aut 26%, UK 15%,
MS+25 (+/-3) Sp 10%, Benelux 7%, Fr 5%, Other 1%,
Bks/PB 40%, OI/22%, AM 20%, Ins/
Pens 18%
MS+low 70s, - €4.7bn A3/A-/AA- BNPP/CS/HSBC/MS/Rabo Fr 21%, UK/Ire 20%, Ger/Aut 18%,
MS+57 (+/-2) Benelux 12%, Nordics 9%, Switz 7%, Asia
5%, Sth Eur 4%, North Amer 3%, Other
1%, AM 62%, Ins/Pens 16%, CB/OI 12%,
Bank/PB 9%, Other 1%
MS+50 area, - €2.4bn Aa3/AA- BNPP/Citi/NAB/UBS Ger/Aut 25%, UK/Ire 22%, Benelux 18%,
MS+35/40) Fr 13%, Nordics 6%, Other Eur 6%, Switz
5%, Asia 4%, Other 1%, AM 51%, Ins/Pens
20%, Bks/FI 15%, CB/OI 12%, Other 2%
MS+65 area, - €1.8bn Aa3/AA- BNPP/Citi/NAB/UBS Fr 40%, Ger/Aut 35%, UK/Ire 8%, Asia
MS+55 area 6%, Othe Eur 5%, Benelux 2%, Nordics
2%, Switz 2%, AM 41%, Ins/Pens 40%,
Bks/FI 14%, CB/OI 4%, Other 1%
MS+95 area, - €1.6bn A3/BBB+/A- DB -
MS+90
MS+50 area, - €825m A2/A- BAML/Belfius/BNPP/CMZ/Lloyds Ger/Aut/Switz 34%, Benelux 23%, Fr
MS+40/42 23%, UK 13%, Italy/Iberia 7%, AM 50%,
Bks 38%, Ins/Pens 11%, CB/OI 1%
MS+200 area, - €1.7bn Baa1/BBB/BBB IMI/DB/JPM/SG/UBS -
MS+190 (+/-2)
MS+135 area - €1.1bn Baa3/BBB/A Barc -

MS+97/102 - - Baa1/A-/A- CS/UBS -

3.375%/3.625% - - -/BB-/BB CS -

3mBBSW+133 area - >A$250m Baa1/BBB ANZ Aust 95%, Offshore 5%, AM 48%, Bks
27%, Local Councils 14%, Religious
Entities 6%, Other 5%
5.5% area - - Baa3/BBB-/BBB/ CMZ/DB/NAB/TD -
BBB

MS-5 area 2 <€900m Aaa DZ/LBBW/Nat/NordLB/SG Ger 83%, Nordics 11%, Asia 2%, UK 1%,
Aut/Switz 1%, Other 2%, Bks 36%, CB/
OI 22%, FM 21%, Ins 20%, Other 1%
MS+7 area, 3 >€1.3bn Aaa CMZ/DB/ING/Sant/UBS Ger/Aut 60%, Nordics 14%, Ben 13%, UK/
MS+4 (+/-1) Ire 6%, Switz 4%, Asia 2%, Other 1%, Bks/
PB 75%, AM 14%, CB/OI 8%, Pens/Ins 3%
MS flat area 3 >€720m Aa1 Barc/BLB/DZ/SG/Uni Ger 88%, Switz 5%, UK 3%, Other 2%,
Asia 1%, Fra 1%, Bks 44%, AM 42%, Ins
8%, CB/OI 6%
MS+4 area. 4 >€650m Aaa CMZ/DZ/Helaba/RBI/SG Ger 41%, Aut 32%, Nordics 10%, It 6%,
MS+3 area Benelux 4%, Switz 3%, UK 2%, Other
2%, Bks 60%, FM 22%, CB/OI 18%
MS-10 area - >€400m Aaa CA/CMZ/DZ/LBBW/Uni Ger 67%, Asia 13%, Nordics 11%, UK 9%,
Bks 40%, FM 30%, CB/OI 29%, Ins 1%

- - - Aaa CS/UBS/SVR -

- - - Aaa CS/UBS/SVR -
- - - Aaa CS/UBS/SVR -

3mN+475 area, - - Unrated DNB/Nordea/Danske/Swed -

3mN+460/475

International Financing Review August 25 2018 41

GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (24/8/2018)
Moody’s S&P Fitch Moody’s S&P Fitch
Sovereign 1 2 3 4 5 6 Sovereign 1 2 3 4 5 6

Abu Dhabi Aa2 AA AA+ AA AA+ Kyrgyzstan B2 Ba3

Albania B1 Ba2 B+ BB Latvia A3 Aaa A– p AAA A– AAA
Andorra W BBB AAA BBB p A– Lebanon B3 B1 B– B+ B– B–
Angola B3 B1 B– B– B B Lesotho B+ BB+
Argentina B2 B1 B+ BB– B B Liechtenstein Aaa AAA AAA
Armenia B1 p Ba2 B+ p BB– Lithuania A3 Aaa A AAA A– p AAA
Aruba BBB+ BBB+ BBB– n BBB Luxembourg Aaa Aaa AAA AAA AAA AAA
Australia Aaa Aaa AAA n AAA AAA Macau Aa3 Aa2 AA AAA
Austria Aa1 Aaa AA+ AAA AA+ p AAA Macedonia (FYR) BB– BB BB p BB+
Azerbaijan Ba2 Ba2 BB+ BB+ BB+ BB+ Malaysia A3 A1 A– A+ A– A
Bahamas Baa3 n Baa1 BB+ BBB– Maldives B2 Ba3 B+ BB–
Bahrain B2 n Ba3 B+ BB– BB– BBB– Malta A3 p Aaa A– p AAA A+ AAA
Bangladesh Ba3 Ba2 BB– BB– BB– BB Mauritius Baa1 A2
Barbados Caa3 Caa2 SD CC Mexico A3 A1 BBB+ A+ BBB+ A
Belarus B3 B3 B B B B Moldova B3 B2
Belgium Aa3 Aaa AA AAA AA– AAA Mongolia B3 B1 B– B B B+
Belize B3 B1 B– B– Montenegro B1 Ba1 B+ AAA
Bermuda A2 Aa3 A+ p AA+ Montserrat BBB– BBB–
Bolivia Ba3 Ba2 BB– BB– BB– BB– Morocco Ba1 p Baa2 BBB– BBB+ BBB– BBB
Bosnia Herzegovina B3 B3 B BB– Mozambique Caa3 n Caa2 SD CCC RD B–
Botswana A2 Aa3 A– A+ Namibia Ba1 n Baa2 BB+ BBB–
Brazil Ba2 Ba1 BB– BB+ BB– BB Netherlands Aaa Aaa AAA AAA AAA AAA
Bulgaria Baa2 A3 BBB– A– BBB A– New Zealand Aaa Aaa AA AAA AA AAA
Cambodia B2 B1 Nicaragua B2 p B1 B BB– Bn B
Cameroon B2 Ba2 B BBB– B BB+ Nigeria B2 B1 B B B+ n B+
Canada Aaa Aaa AAA AAA AAA AAA Norway Aaa Aaa AAA AAA AAA AAA
Cape Verde B BB– B B+ Oman Baa3 n Baa2 BB BB+ BBB– n BBB
Cayman Islands Aa3 Aa2 Pakistan B3 n B2 B B Bn B
Chile A1 Aa1 A+ AA A AA Panama Baa2 p A3 BBB p AAA BBB A
China A1 Aa3 A+ A+ A+ A+ Papua New Guinea B2 n B1 B BB–
Colombia Baa2 A3 BBB– BBB+ BBB BBB+ Paraguay Ba1 Baa3 BB BB+ BB p BB+
Congo (DR) B3 n B3 CCC+ CCC+ Peru A3 A1 BBB+ A BBB+ A–
Congo (Rep) Caa2 n B2 CCC+ BBB– CC B+ Philippines Baa2 A3 BBB p BBB+ BBB BBB+
Cook Islands B+ AAA Poland A2 Aa3 BBB+ p A A– AA–
Costa Rica Ba2 n Baa3 BB– n BB+ BB n BB+ Portugal Ba1 p A1 BBB– AAA BBB AA
Cote d’Ivoire Ba3 Baa3 B+ BBB– Qatar Aa3 n Aa3 AA– n AA AA– AA
Croatia Ba2 Baa3 BB + BBB+ BB + p BBB Ras al–Khaimah A AA+ A AA+
Cuba Caa2 Caa2 Romania Baa3 A3 BBB– A– BBB– BBB+
Curacao A– A– Russia Ba1 p Baa3 BBB– BBB BBB– p BBB–
Cyprus Ba3 p A3 BB+ p AAA BB+ p BBB+ Rwanda B2 B1 Bp B B+ B+
Czech Rep A1 Aa2 AA– AA+ AA– AAA St Vincent & Gren B3 Ba3
Denmark Aaa Aaa AAA AAA AAA AAA San Marino BBB– BBB+
Dominican Rep Ba3 Ba1 BB– BB+ BB– BB– Saudi Arabia A1 A1 A– A A+ AA
Ecuador B3 B2 B– B– B– d B– d Senegal Ba3 Baa1 B+ p BBB–
Egypt B3 B2 B B Bp B Serbia Ba3 Ba1 BB BB+ BB BB+
El Salvador B3 B1 CCC+ p AAA B– B Seychelles BB– BB
Estonia A1 Aaa AA– AAA A+ p AAA Singapore Aaa Aaa AAA AAA AAA AAA
Ethiopia B1 B1 B B B B Slovakia A2 p Aaa A+ AAA A+ AAA
Fiji Ba3 Ba3 B+ B+ Slovenia Baa1 Aa1 A+ p AAA A– AAA
Finland Aa1 Aaa AA+ AAA AA+ p AAA Solomon Islands B3 B2
France Aa2 p Aaa AA AAA AA AAA South Africa Baa3 A3 BB BBB– BB+ BBB–
Gabon B3 n Ba3 Bn BB+ South Korea Aa2 Aa1 AA AAA AA– AA+
Georgia Ba2 Baa3 BB– BB+ BB– p BB Spain Baa1 Aa1 A– AAA A– AAA
Germany Aaa Aaa AAA AAA AAA AAA Sri Lanka B1 n Ba2 B+ B+ B+ B+
Ghana B3 B1 B– p B B B Suriname B2 n Ba3 B B+ B–
Greece B3 p Ba2 B+ p AAA BB– BBB– Sweden Aaa Aaa AAA AAA AAA AAA
Guatemala Ba1 Baa3 BB– BB+ BB BB+ Switzerland Aaa Aaa AAA AAA AAA AAA
Honduras B1 Ba2 BB– BB Tanzania B1n Ba3 B1 n
Hong Kong Aa2 Aaa AA+ AAA AA+ AAA Taiwan Aa3 Aa2 AA– AA+ AA–
Hungary Baa3 Baa1 BBB– p BBB+ BBB– p A– Thailand Baa1 A2 BBB+ A BBB+ A–
Iceland A3 A3 A A A A Trinidad & Tobago Ba1 Baa3 BBB+ n A
India Baa2 Baa1 BBB– BBB+ BBB– BBB– Tunisia B2 Ba2 B+ BB–
Indonesia Baa2 A3 BBB– BBB BBB BBB Turkey Ba3n d Ba2 d B+ d BB–d BBn BB+
Iraq Caa1 B3 B– B– B– B– Turks & Caicos BBB+ AAA
Ireland A2 Aaa A+ AAA A+ AAA Uganda B2 Ba3 B B B+ B+
Israel A1 Aa3 AA– AA+ A+ AA Ukraine Caa2 p Caa1 B– B– B– B–
Italy Baa2 n Aa2 BBB AAA BBB AA UAE Aa2 Aa2
Jamaica B3 Ba3 B B+ B B UK Aa2 Aaa AA n AAA AA n AAA
Japan A1 Aaa A+ p AA+ A AA USA Aaa Aaa AA+ AAA AAA AAA
Jordan B1 Ba1 B+ BB Uruguay Baa2 A2 BBB A– BBB– BBB+
Kazakhstan Baa3 Baa2 BBB– BBB– BBB BBB+ Venezuela C Ca SD CC RD CC
Kenya B2 Ba3 B+ BB– B+ BB– Vietnam Ba3 Ba2 BB– BB– BB BB
Kuwait Aa2 Aa2 AA AA+ AA AA+ Zambia B3 B1 B B Bn B+
1 Moody’s Government Bonds 5 Fitch Government Bonds n Negative outlook/on watch * Taken off positive watch/ c Improvement in ratings,
2 Moody’s Country Ceilings 6 Fitch Country Ceilings for downgrade outlook outlook or watch status
3 S&P Government Bonds p Positive outlook/on watch N New rating ** Taken off negative watch/ d Deterioration in ratings,
4 S&P Transfer and for upgrade W Rating withdrawn outlook outlook or watch status
Convertibility Assessments SD Selective default

42 International Financing Review August 25 2018

 EMERGING MARKETS China 44 India 45 Indonesia 45 Philippines 45 South Korea 45
Poland 46 Turkey 46 Venezuela 48

„ FRONT STORY AFRICA

Angola opens dialogue with IMF

Discussions greeted positively by bondholders
ANGOLA’s bonds rode high on the back of
news of engagement with the IMF, with the
SOVEREIGNSûPAPERûlNISHINGûTHEûWEEKûTWOû
points higher at the long end.
The moves followed the IMF announcing it
would begin talks with Angola over providing
lNANCIALûSUPPORTûAFTERûTHEûOILûPRODUCINGû
country’s economic growth was weaker than
expected this year, Reuters reported.
Carmen Altenkirch, EM sovereign analyst at
Aviva Investors, praised the move, saying that
other countries would do well to follow in
Angola’s footsteps by getting ahead of troubles
and pre-emptively approaching the IMF.
“It highlights that the Angolans probably
REALISEûTHATûlNANCINGûISûGOINGûTOûBEûHARDERû
to come by next year, and locking in a
funded programme will give them access to
not need any more money, but nevertheless
welcomed the engagement with the IMF.
“IMF money is cheap,” he said. “Call me an
optimist, but all in all I see this as glass half full.”
Angola’s 2028s responded positively to the
news. Having opened on Monday bid at just
under 99, according to Tradeweb, they
subsequently rose to 100.901. The 2048s
moved from 100.627 to 102.865.
“IMF cash is meant for BOP support, and
technically it is given to the central bank
rather than the Finance Ministry of a country,
so it should go to the right place, but then
also there is nothing preventing the central
BANKûPROVIDINGûTHEû&8ûTOûTHEûlNANCEûMINISTRYû
to allow it to pay back loans or whatever
else,” said a trader. “For now, Angola is
ENJOYINGûTHEûBENElTûOFûTHISû)-&ûENGAGEMENTv
SOONûASûFEASIBLEvû$EPUTYû-ANAGINGû$IRECTORûOFû
the IMF Tao Zhang said in a statement which
CONlRMEDûTHEû&UNDûHADûRECEIVEDûAûLETTERûFROMû
the Angolan authorities to start talks.
The request came after the IMF was
invited to Luanda in October to negotiate the
programme, which would last for two years
and then be extendable for one more.
“The IMF stands ready to help the
authorities address Angola’s economic
challenges by supporting their economic
policies and reforms based on the
government’s macroeconomic stabilisation
programme and in the national development
plan for 2018–22,” Zhang said.
Angola’s economy has struggled due to lower
oil prices, a situation made worse by declining
production. Output is expected to fall to 1.5
CHEAPERûMULTILATERALûlNANCINGvûSAIDû
Altenkirch. “Given that they did a sneaky
tap of US$500m recently, I don’t think
they’ll be back this year. But, certainly,
they’ll need to access the market next
year.”
Angola issued US$1.75bn 8.25% May 2028s
and US$1.25bn 9.375% May 2048s earlier this
year, then followed up with a US$500m tap of
the 2048s in July.
A second investor said that after the initial
bond deal his impression was that Angola did
SingTel basks in Temasek’s halo
Overwhelming interest in parent’s recent offering spills over into 10-year print
SINGAPORE TELECOMMUNICATIONS took advantage
of parent Temasek Holdings’ blowout trade
last month with a swiftly executed US$500m
10-year bond.
SingTel, which is 52% owned by the
Singapore investment fund, priced its latest
benchmark at Treasuries plus 105bp, 20bp
inside initial guidance.
The telecoms operator soaked up residual
demand from Temasek’s US$1.35bn 10-year
bond, which attracted an order book that
Africa’s second largest oil producer has
been hit by lower oil prices, which have
caused a dollar liquidity squeeze that has
MADEûITûDIFlCULTûFORûFOREIGNûCOMPANIESûTOû
REPATRIATEûPROlTSûANDûDISCOURAGEDûMANYû
from investing.
Angola’s Finance Ministry said on Monday
ITûHADûSOUGHTûlNANCIALûSUPPORTûFROMûTHEû)-&û
but did not provide further detail on how
much money was involved.
“We expect to initiate programme
discussions with the Angolan authorities as
deal. “It’s also a market that has become
much more receptive to 10-year tenors.”
Safe-haven demand had driven Temasek’s
orders as high as US$6.5bn. Interest has
persisted despite Turkey-induced jitters,
with the bonds 6bp tighter since issue.
SingTel’s deal points to pent-up demand for
10-year corporate bonds in Asia’s IG market.
Issuance has dropped since May because of
rising interest rates, with most issuers favouring
THEûlVE
million barrels per day in 2018, down from 1.6
million last year and 1.9 million a decade ago.
The IMF expects the country’s economy to
grow 2.2% this year, well below an original
government forecast of 4.9%.
President Joao Lourenco, who took over
last September after 38 years of rule by Jose
Eduardo dos Santos, has said he wants to
bring about an economic miracle in Angola
by opening up to foreign investment and
diversifying away from oil.
Robert Hogg
spotted at a G-spread of 100bp. Adding a
curve extension put fair value at around
Treasuries plus 110bp.
To give pricing a further nudge,
Temasek’s latest issue was also cited as a
reference. The 2028s were spotted at a
G-spread of 66bp, and about 35bp was added
to account for the historical average spread
between Temasek and Singtel’s secondary
bonds.
YEARûTENORû$EMANDûHOWEVERûHASû
peaked at US$3.2bn.
h4HEYûWEREûABLEûTOûmIPûTHEûTAILWINDûFROMû
their parent Temasek and utilise good
follow-on sentiment from successful
aftermarket trading,” said a banker on the
SingTel managed to attract hefty orders
slowly improved since July, with Sands China,
Temasek and Power Finance Corp among the
few that managed to issue long tenors.
SingTel’s pricing was competitive relative
to its US$500m 2.375% 2026s, which were
International Financing Review August 25 2018
even without a roadshow or earlier mandate
announcement. At reoffer, orders exceeded
US$2.85bn from more than 170 accounts.
Citigroup, DBS and HSBC ran the deal.
Frances Yoon
43

ASIA-PACIFIC
CHINA
FUFENG GROUP GETS ORDERS OF US$1bn
FUFENG GROUP, rated BBB–/BB+ (S&P/Fitch),
priced a US$350m three-year bond last
Tuesday at Treasuries plus 325bp. Orders
exceeded US$1bn.
Asia accounted for 82% of the Reg S notes,
while the remainder was allocated to
Europe. By investor type, fund and asset
managers took 76% of the deal, insurers 17%,
banks 5% and private banks 2%.
Hong Kong-listed Fufeng, which makes
food additives including MSG and xanthan
gum, began marketing the notes on Tuesday
morning at the Treasuries plus 345bp area.
REDCO PROPERTIES PRICES TWO-YEAR
PAPER
REDCO PROPERTIES GROUP, rated B/B (S&P/Fitch),
has priced a US$200m two-year bond at 11%.
0RICINGûWASûUNCHANGEDûFROMûlNALûGUIDANCE
4HEûPROCEEDSûWILLûBEûUSEDûTOûRElNANCEû
Redco’s US$250m senior notes maturing in
November.
Expected ratings are on par with the issuer.
Credit Suisse was joint global coordinator.
CS was also joint bookrunner and joint lead
manager with BOC International (B&D), Orient
Securities (Hong Kong), Tensant Securities and
VTB Capital.
HANGZHOU LGFV NAILS US$200m
HANGZHOU JIANGGAN DISTRICT URBAN CONSTRUCTION &
COMPREHENSIVE DEVELOPMENT priced a US$200m
three-year US dollar bond at 6.8%.
The unrated Reg S senior notes had
Kong, Singapore and London starting on
August 21 ahead of a proposed offering of
Reg S US dollar notes.
Guotai Junan International and Goldman Sachs
(Asia) are joint global coordinators, joint
bookrunners and joint lead managers.
A proposed offering of US dollar senior
unsecured notes may follow.
The notes will be issued by Lingang Wings, a
wholly owned subsidiary of Shanghai Lingang,
and guaranteed by the parent company.
The notes, if issued, are expected to be
rated Baa1/BBB+/A–.
Shanghai Lingang, which develops and
operates industrial parks, is directly held by
the Shanghai State-owned Assets Supervision
and Administration Commission.
CHINA PING AN PLANS REG S DEAL
CHINA PING AN INSURANCE OVERSEAS (HOLDINGS), rated
Baa2 by Moody’s, has hired banks to arrange
0ROCEEDSûWILLûBEûUSEDûFORûRElNANCINGûANDû RECEIVEDûSIGNIlCANTûANCHORûINTERESTû lXED
INCOMEûINVESTORûMEETINGSûINû(ONGû+ONGû
business development.
The notes have an expected rating of
BBB–/BB+, in line with the company.
The coupon will step up by 50bp if Fufeng
loses its investment-grade rating.
according to an initial deal announcement.
Guotai Junan International was sole global
coordinator, sole bookrunner and sole lead
manager.
4HEû#HINESEûLOCALûGOVERNMENTûlNANCIALû
Singapore and London, starting on August 27.
HSBC is sole global coordinator, as well as
joint bookrunner with Bank of China (Hong
Kong), Mizuho Securities, MUFG and Standard
Chartered Bank.
Deutsche Bank "$ ûHSBC and UBS were joint
global coordinators, and also joint bookrunners
and joint lead managers with Bank of China (Hong
Kong), China Minsheng Banking Corp Hong Kong
Branch, Guotai Junan International, Mason Securities
and Mizuho Securities.
LOGAN PROPERTY PRICED AT 7.75%
LOGAN PROPERTY HOLDINGS (Ba3/BB–/BB–), has
priced a US$300m three-year non-call two
bond at 7.75%. Orders at reoffer exceeded
US$590m from 42 accounts.
The majority of the notes were allocated
to Asia, which accounted for 92% of the deal,
while EMEA took 8%.
Asset and fund managers received 58%,
followed by banks at 32% and private banks at
10%.
Initial price guidance was announced on
ALL INTL EMERGING MARKETS BONDS
Tuesday morning at the high 7% area,
drawing books in excess of US$700m
including interest from the joint lead
managers. The pricing was subsequently
REVISEDûTOûAûlNALû
The Reg S notes are expected to be rated
"ûBYû30û0ROCEEDSûWILLûBEûUSEDûTOûRElNANCEû
debt.
vehicle will issue the notes through wholly A proposed offering of US dollar-denominated
owned offshore subsidiary Zhejiang Baron Reg S senior notes under the US$3bn medium-
(BVI) and they will be unconditionally and term note programme of Vigorous Champion
irrevocably guaranteed by Hangzhou International, a wholly owned British Virgin
*IANGGANû$ISTRICTû5RBANû#ONSTRUCTION Islands subsidiary of China Ping An Insurance
Overseas (Holdings), may follow.
CHINA NUCLEAR POWER HEADS OFFSHORE The notes, with an expected Baa2 rating
from Moody’s, will be unconditionally and
CHINA GENERAL NUCLEAR POWER CORPORATION (A3/ irrevocably guaranteed by China Ping An
!n! ûHASûHIREDûBANKSûTOûARRANGEûlXEDû Insurance Overseas (Holdings).
income investor meetings in Asia and Europe
starting on August 28 ahead of a potential ANHUI TRANSPORTATION PICKS BANKS
bond offering in US dollars and euros. FOR DOLLARS
Bank of China, BNP Paribas, Credit Agricole CIB
and ICBC are joint global coordinators. The ANHUI TRANSPORTATION HOLDING GROUP, rated Baa1/
four banks are also joint lead managers and BBB+ (Moody’s/Fitch), has mandated BNP
joint bookrunners with Agricultural Bank of Paribas, ICBC (Asia) and Wing Lung Bank as joint
China, China Construction Bank (Asia), OCBC global coordinators for a US dollar bond.
Bank and Standard Chartered Bank.
!ûPROPOSEDûBENCHMARKûOFFERINGûOFûlVE
year or ten-year US dollar-denominated BOOKRUNNERS: 1/1/2018 TO DATE
senior unsecured bonds and a proposed Asia-Pacific
benchmark offering of seven-year or 10-year Managing No of Total Share
euro-denominated senior unsecured Green bank or group issues US$(m) (%)
bonds may follow. 1 HSBC 143 15,536.45 7.9
The notes will be issued by CGNPC 2 Citigroup 78 10,002.21 5.1
International and guaranteed by China 3 Bank of China  100 8,945.69 4.6
General Nuclear Power Corporation. Credit 4 Standard Chartered 86 8,347.15 4.3
Guotai Junan Internationalû"$ ûDeutsche Agricole CIB and BNP Paribas are acting as 5 Morgan Stanley 46 8,080.84 4.1
Bank, HSBC and Shanghai Pudong Development the green structuring advisers for the euro- 6 BAML 48 7,298.75 3.7
Bank Hong Kong branch were joint global denominated Green tranche. 7 BNP Paribas 62 7,247.90 3.7
coordinators, and joint bookrunners and 8 Goldman Sachs 34 6,158.58 3.1
lead managers with China Minsheng Banking SHANGHAI LINGANG HIRES FOR DOLLARS 9 Credit Suisse 47 6,020.75 3.1
Corp Hong Kong branch. 10 UBS 62 5,767.85 2.9
The Chinese property developer tapped its State-owned SHANGHAI LINGANG ECONOMIC Total 431 195,537.93
US$300m 6.875% 2021 senior notes this May DEVELOPMENT (GROUP) (Baa1/BBB+/A–) has hired Excluding equity-related debt.

to issue an additional US$100m. banks to arrange investor meetings in Hong Source: Thomson Reuters SDC code: L4

44 International Financing Review August 25 2018


The JGCs are also joint lead managers and
joint bookrunners with Guotai Junan
International.
Fixed-income investor meetings in Hong
Kong and Europe will start on Monday for a
proposed Reg S-only senior unsecured bond.
The notes will be issued by Anhui
Transportation Holding Group (HK) and will
be unconditionally and irrevocably
guaranteed by the company.
Expected ratings are on par with the
issuer.
CHINESE FIRMS LINE UP FOR OFFSHORE
BONDS
Thirteen Chinese issuers have registered
plans to sell offshore bonds with the state
RCom was holding a bondholder
meeting on Friday August 24 to vote on
WAIVERSûANDûMODIlCATIONSûTOû53Mû
6.5% senior secured notes due in 2020 as
part of a restructuring scheme.
The bondholder meeting was originally
scheduled for August 10 but the company
failed to reach a quorum. The voting on
Friday needed participation from holders
of only 25% of the bonds to form a quorum.
The vote is a key step in RCom’s bid to
avoid bankruptcy by selling assets and
slashing its debt burden.
Under the restructuring proposal,
bondholders can exchange existing bonds
at a discount for either cash or their share
of a total of US$45m zero-coupon unrated
senior unsecured notes due August 27 2023
EMERGING MARKETS ASIA-PACIFIC
Deutsche Bank, HSBC and JP Morgan as joint
bookrunners.
The notes are expected to be rated Baa2 by
Moody’s.
The issue will constitute a drawdown
under BPI’s MTN programme established in
June.
SOUTH KOREA
KDB SET TO RETURN TO SAMURAI MARKET
KOREA DEVELOPMENT BANK will return to the
Samurai market this week after a slew of
South Korean yen deals took advantage of
improved geopolitical tensions following the
MEETINGûBETWEENû53û0RESIDENTû$ONALDû
PLANNINGûAGENCYûTHEû.ATIONALû$EVELOPMENTû
and Reform Commission.
4HEû.$2#ûHASûANNOUNCEDûINûTHEûPASTûTWOû
RUNû+$"ûOFlCIALLYûSTARTEDûMARKETINGû
weeks that the new registrants were
YANGZHOU SLENDER WEST LAKE TOURIST DEVELOPMENT
GROUP, SHANGHAI LINGANG ECONOMIC DEVELOPMENT
(GROUP),NANJING HONG KONG SOURCE INVESTMENT
ADVISORY, CHINA SOUTHERN POWER GRID, POWER
CONSTRUCTION CORPORATIONOF CHINA, SHANDONG
GOLD GROUP, WUHAN FINANCIAL HOLDING (GROUP),
FANTASIA GROUP (CHINA), GANSU PROVINCE ELECTRIC
POWER INVESTMENT GROUP, LANGFANG HONGTAI
INDUSTRIAL TOWN INVESTMENT, MACROLINK HOLDING,
FUYU DEVELOPMENT GROUP and TSINGHUA HOLDINGS.
4HEû.$2#ûDIDûNOTûSAYûWHENûTHEû
registrations were approved.
$#-ûBANKERSûNOTEDûTHATûTHEûAGENCYûHADû
recently accelerated the pace of approvals
for offshore bonds across sectors and said
they expected supply from Chinese issuers
to rise sharply in September.
to be issued by RCom’s wholly owned
subsidiary Global Cloud Xchange.
The amount in cash has yet to be
determined, but it will be at least 3.5% of
face value.
In May, RCom said it was expected to sell
assets totalling Rs181bn to Reliance Jio and
#ANADASû"ROOKlELDûAFTERû)NDIASû
bankruptcy appeals court stopped
insolvency proceedings against the
company.
INDONESIA
MODERNLAND REALTY SWOOPS IN FOR
US$150m
MODERNLAND REALTY has priced a US$150m
three-year non-call one bond at 10.75%.
The Indonesian real estate developer
Trump and North Korean leader Kim Jong
Un in June.
3TATE
a three-year bond last Thursday. Price
guidance was 10bp or 11bp over yen offer-
side swaps on Thursday and remained the
same on Friday, well inside the 15bp spread
at which a three-year tranche by Kexim
priced in June. KT and Hyundai Capital
Services have also come to the Samurai
market.
The aggressive pricing is being made
possible partly because the size of the
transaction will be somewhat smaller than
the Kexim deal, according to bankers on the
transaction. That bond was a ¥120bn
(US$1.09bn) dual-trancher, the second-
largest Asian Samurai after the ¥154.2bn
triple-tranche Samurai printed by the
Republic of the Philippines earlier this
month. The eased tension on the Korean
Separately, Shenzhen-listed Tus-Sound MOVEDûQUICKLYûANNOUNCINGûlNALûGUIDANCEû 0ENINSULAûISûALSOûHELPINGû+$"ûTRYûAûTIGHTERû
%NVIRONMENTALû2ESOURCESûSAIDûINûAûlLINGûLASTû at 10.5%–10.75% last Tuesday morning, a day spread.
week it had registered to issue up to
53MûOFûOFFSHOREûBONDSûWITHûTHEû.$2#
It said its offshore bond quota of US$300m
WOULDûBEûEFFECTIVEûTILLûTHEûENDûOFû$ECEMBER
The issuer of the notes will be Sound
Environment (Hong Kong), it said.
Tus-Sound is principally engaged in solid
waste treatment, municipal water supply
and waste water treatment.
INDIA
RCOM SELLS Rs20bn OF ASSETS
RELIANCE COMMUNICATIONS has completed asset
sales of Rs20bn (US$285m) to Reliance Jio
ahead of a bondholder meeting on
elements of the company’s restructuring
plan, according to a release on India’s
exchanges.
after holding investor calls.
JGC Ventures will issue the Reg S notes,
which have expected ratings of B2/B/B.
Proceeds will be used to redeem bonds
maturing in 2019 at a cash price of 102.438
plus accrued and unpaid interest, repay
outstanding debt and bank facilities, buy
land and for general corporate purposes.
Standard Chartered and UBSû"$ ûWEREû
joint bookrunners.
PHILIPPINES
BPI STARTS INVESTOR MEETINGS
BANK OF THE PHILIPPINE ISLANDS started
investor
meetings in Singapore and Hong Kong
from August 24 for a potential Reg S dollar
bond offering, subject to market
conditions, according to an exchange
+$"ûRATEDû!A!!!û-OODYS302) û
last tapped the Samurai market in 2014 with
¥10.1bn of two-year notes and ¥24.8bn of
three-year paper.
Mitsubishi UFJ Morgan Stanley, Mizuho and
Merrill Lynch are the leads on the deal that
will price on August 28.
(See Bonds for coverage of Shinhan’s
Australian dollar Tier 2 note.)
MIRAE ASSET DAEWOO EYES DOLLAR
FIRST
MIRAE ASSET DAEWOO has appointed BNP Paribas,
Citigroup, Daiwa, HSBC and Mirae Asset
Securities HK for a debut Reg S US dollar bond
some time this year.
4HISûISûTHEûlRSTûTIMEûAû3OUTHû+OREANû
SECURITIESûlRMûISûSETûTOûISSUEû53ûDOLLARûBONDSû
in public debt markets, according to
Thomson Reuters data.
The assets include 248 media lLING -IRAEû!SSETû$AEWOOûRATEDû"AAûBYû
convergence facilities covering 5m square It has mandated BPI Capital as sole global -OODYSûISûTHEûLARGESTûBROKERAGEûlRMûINû
feet. coordinator and joint bookrunner, with South Korea, with businesses in trading,

International Financing Review August 25 2018 45

wholesale and investment banking and
wealth management.
It was established after Mirae Asset
3ECURITIESûBOUGHTûAûûSTAKEûINû$AEWOOû
Securities from state-run Korea
$EVELOPMENTû"ANKûINûû4HEûSALEûWASû
PARTûOFû+$"SûDIVESTMENTûDRIVE
The company will use the proceeds for
general corporate purposes and to fund its
global expansion. Its website says it has set eyes
on becoming a top-tier Asian investment bank
by 2020.
KOREA EXPRESSWAY MANDATES THREE,
K-WATER IN SWISS
KOREA EXPRESSWAY, rated Aa2/AA
(Moody’s/S&P), has mandated Citigroup, JP
Morgan and Societe Generale for a US dollar
bond offering.
The transaction is expected to launch in
October, a month after the Republic of
Korea’s planned sovereign offering,
according to people familiar with the
matter.
Korea Expressway last sold US dollar
EUROPE/AFRICA
POLAND
MBANK INJECTS LIFE INTO PRIMARY
Poland’s MBANK broke the August trance in the
CEEMEA primary market with its
announcement of a senior unsecured euro trade.
The lender, which is rated BBB+ by S&P
and BBB by Fitch, will meet investors in
Germany and London early this week.
“It’s going to be most appealing to IG
investors,” said a lead. “Maybe you’ll have
some EM play but frankly this is a subsidiary
of Commerzbank, so many people will look
at it as Commerzbank plus.”
mBank Hipoteczny, 100% owned by
mBank, sold a €300m covered bond in April.
mBank was also active in the Swiss market
in May, upsizing a four-year deal from
SFr100m to SFr150m (US$152m). That was the
lRSTûINûTHEû3WISSûMARKETûISSUEDûBYûM"ANKSû
Commerzbank, HSBC, JP Morgan, Morgan
Stanley and UBS are leading the trade.
TURKEY
TURKEY STABILISES BUT OUTLOOK ROCKY
It was another tough few days for Turkey as
the country toiled under a barrage of more
negative headlines, but assets managed to
survive the week without incurring further
losses.
2HETORICûCONTINUEDûTOûmYûBETWEENû
representatives from Turkey and the US. The
fate of American Christian pastor Andrew
Brunson, held under house arrest, has led to
the spectre of further economic sanctions
from the US on Turkey dominating the
landscape.
“Fundamentally, the row between Turkey
and the US has to come to a conclusion in
some way, and it doesn’t seem to be close to
doing so,” said a banker, who added that the
PRIMARYûBONDûMARKETûWASûlRMLYûSHUT
$URINGûTHEûSELL
OFFûTHEû4URKISHû
bonds in April 2017 with a 144A/Reg S parent entity. Its previous transactions had sovereign’s benchmark 10-year US dollar
53MûTHREE
YEARûmOATERû4HATûDEALûPRICEDû been issued via its French subsidiary mFinance bond had peaked at a yield of mid-9%. It
at three-month Libor plus 70bp. France, guaranteed by mBank. moved down during the week to 8.180%,
The highway operator also sold a “There’s been a change in legislation ALTHOUGHûTHATûlGUREûWASûSTILLûHIGHERûTHANû
Rmb1.3bn (US$206m) three-year Formosa at which means from a tax perspective it’s more the yield of 7.382% at the beginning of
par to yield 4.73% in March through Societe appropriate to issue directly,” said the lead. August.
Generale. mFinance France issued in euros when The lira had begun the month quoted at
The only corporate supply from the it sold a €500m four-year in September 4.99 against the dollar, before hitting a
country last week came from KOREA WATER 2016. record low at 7.12% on August 13. It spent
RESOURCES, which priced a SFr200m The September 2020s are bid at 102.127 to last week hovering around the 6.10 mark.
53M ûlVE
YEARûBONDûATûPARûTOûYIELDû yield 0.371%, according to Tradeweb, while
mid-swaps plus 30bp. The coupon is the issuer also has November 2021s trading BANKS STALL
0.15%. at 104.470 to yield 0.606%. A full turnaround, however, appears some
The bonds are expected to be rated on par Other comparables could include fellow way off, and prices of Turkish bank debt
with the issuer at AA from S&P. UBS was sole Polish bank PKO, or adding a spread to the have stagnated. One trader said that buyers
bookrunner. Commerzbank curve. were cautious about getting involved.

GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 24/8/2018

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

Aug 20 2018 China Construction Bank NZ$35m incr Jun 19 2023 4.005 101.445 MS+130 3.673
(NZ) (NZ$135m)
Aug 20 2018 Korea Water Resources SFr200m Sep 20 2023 0.15 100 MS+30 0.15
Aug 20 2018 Perennial Real Estate S$170m Aug 28 2020 5.95 100 SOR+403 5.95
Aug 20 2018 Zhejiang Baron (Hangzhou US200m Aug 27 2021 6.8 100 6.8
Jianggan District
Urban Construction
& Comprehensive
Development)
Aug 20 2018 Singapore US$500m Aug 28 2028 3.875 99.885 T+105 3.889
Telecommunications
Aug 21 2018 Modernland Realty US$150m Aug 30 2021 (2019) 10.75 100 - 10.75
Aug 21 2018 Fufeng Group US$350m Aug 28 2021 5.875 99.886 T+325 5.917

Aug 21 2018 Logan Property US$300m Aug 27 2021 (2020) 7.5 99.342 - 7.75

Aug 23 2018 Mapletree Treasury Services S$300m Aug 30 2026 3.4 100 SOR+105 3.4

Aug 23 2018 Redco Properties Group US$200m Aug 29 2020 11 100 - 11

Aug 24 2018 Shinhan Bank (T2) A$400m Aug 30 2028 5 100 - 5

46 International Financing Review August 25 2018


“When you look at the levels where some
banks are trading, it’s still distressed,” he said.
“After the big sell-off and subsequent
TERMûMATURITYûPROlLESû remain vulnerable, given the Brunson
bounce, it’s just treading water at levels where
you thought you might have seen more
buying. It shows people are spooked and they
aren’t going to be increasing their Turkish
exposures. This is going to go on for a while.”
Most of the country’s short-term
external debt of US$180bn is within the
INTENSIlESûFURTHERûANDûTHEûIMPACTûONû
4URKISHûBANKSûINTENSIlES
4HEûRELATIVELYûSHORT
of corporate debt could also increase
pressure on the ratings.
“The recent announcement by the Turkish
Finance Ministry limiting national banks’
ability to cut credit availability to corporates is
positive for the corporate sector in the short
term in terms of availability, but, in the long
EMERGING MARKETS EMEA
LIRA OUTLOOK
UniCredit analysts said that the lira would
situation and the need for further hikes
from the Turkish central bank.
They also think that although actions
from the Turkish regulator such as
restricting trading in the offshore market
will inhibit short-selling, they send the
wrong message to investors.
PRIVATEûSECTORûWITHûlNANCIALSûACCOUNTINGû term, could potentially increase risks for the h3PECIlCALLYûBYûRESTRICTINGûAûHEDGINGûTOOLû
for US$83bn and corporates US$65bn, banking sector,” said Fitch analysts. investors may ultimately have to cut their
according to Societe Generale analysts. “Past experience would suggest that whilst portfolio holdings,” said UniCredit analysts.
However 90% of that short-term debt short-term availability might be assured, “Ultimately, the correct policy measures,
comes in the form of instruments other pricing for corporates will likely increase. In INCLUDINGûlSCALûANDûMONETARYûTIGHTENINGû
than bonds, according to SG calculations, the longer term, weakness in the banking would be a prerequisite for any lira recovery,
such as bank loans and trade credits. system would impact the corporates relying EVENûWITHûANûEXTERNALûlNANCINGûhANCHORvû
Indeed, there’s only US$3.8bn of foreign on banking credit or deposits placed with coming from funding from Qatar. Ideally, a
currency-denominated bonds maturing by banks for their liquidity needs and also MOREûSUBSTANTIALûEXTERNALûlNANCINGûSUPPORTû
the end of the year. increase the macro risks in the country.” that comes on the condition of undertaking
“The banks are very well capitalised and The ratings agency has downgraded food correct macro policies (such as an IMF
well managed,” said the banker. “The view is group Yasar (B–) and retailer Migros (A+) by programme) may be required to turn the
they can withstand the current situation but one notch. fortunes of the currency.”
another big loss in the lira and things will
look uglier. Then it moves from a capital ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS
issue to one of NPLs.” BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Europe/Africa Managing No of Total Share
FITCH ON CORPORATES Managing No of Total Share bank or group issues US$(m) (%)
Fitch published a report stating that bank or group issues US$(m) (%) 1 Citigroup 159 37,172.12 9.5
currency mismatches and a reliance on 1 Citigroup 30 9,612.07 14.5 2 HSBC 195 30,960.12 7.9
short-term borrowing were exacerbating the 2 JP Morgan 27 7,051.85 10.6 3 JP Morgan 98 23,500.30 6.0
pressure on Turkish corporate ratings that 3 Deutsche Bank 16 5,703.42 8.6 4 Standard Chartered 128 20,554.01 5.3
were coming from a depreciating lira and a 4 VTB Capital 11 5,157.69 7.8 5 Deutsche Bank 76 20,529.84 5.3
deteriorating operating environment. 5 HSBC 14 4,033.64 6.1 6 BNP Paribas 93 14,509.45 3.7
The ratings agency said that the liquidity 6 Standard Chartered 9 4,004.97 6.0 7 BAML 73 13,553.90 3.5
PROlLESûFORûCORPORATESûBECOMEûINCREASINGLYû 7 BNP Paribas 14 3,142.45 4.7 8 Goldman Sachs 46 11,898.54 3.0
SIGNIlCANTûIFûVOLATILEûCONDITIONSûPERSISTûOVERûTIME 8 Goldman Sachs 7 2,709.87 4.1 9 Morgan Stanley 60 11,284.60 2.9
Turkish corporates rely on uncommitted 9 SG 13 2,578.20 3.9 10 Barclays 50 11,146.35 2.9
bank credit lines, and although Fitch says 10 Barclays 5 1,868.96 2.8 Total 654 390,999.00
that to date the companies have been able to Total 70 66,251.74 Excluding equity-related debt.

regularly renew these lines, availability may Excluding equity-related debt.

become more restricted if the currency crisis Source: Thomson Reuters SDC code: L2 Source: Thomson Reuters SDC code: L1

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

- - - A1/A CBA -

- - - -/AA UBS -
6% area - - Unrated DBS/OBCB/UOB -
6.8% (#) - - unrated Guotai Junan -

T+125 area - >US$2.85bn A1/A+ DBS/Citi/HSBC Asia 88%, Europe 12%, FM 56%, Bks
30%, Ins 10%, PB 4%
10.5%/10.75% - - B2/B/B StCh/UBS -
T+345 area - >US1bn -/BBB- DB/HSBC/UBS/BOC HK/China Asia 82%, Eur 8%, AM/FM 76%, Ins 17%,
Minsheng HK/Guotai Junan Haitong/ Bks 5%, PB 2%
Mason Secs/Miz
High 7% area - US$590m -/B+ Guotai Junan/DB/HSBC/SPDB/ Asia 92%, EMEA 8%, AM/FM 58%, Bks
CMBC 32%, PB 10%
3.45% area - - Unrated DBS Sing 99.9%, HK 0.1%, FM/Ins 70%, Bks/
Agency 15%, PB 15%
11% (#) - -/B/B CS/BOCI/Orient/VTB/Tensant -
- - - Baa1/BBB+/BBB+ ANZ/BNPP -

International Financing Review August 25 2018 47

 due between 2019 and 2025, according to its 2OSNEFTûITSELFûHADûAûhPERFECTEDûlRSTûPRIORITYû
website. security interest” in the shares of Citgo
AMERICAS
BRAZIL
MARFRIG BONDS JUMP ON
DELEVERAGING PROSPECTS, UPGRADE
MARFRIG bonds rallied last week amid the
prospect of further deleveraging, liability
management and an upgrade at the
Brazilian beef company following its sale of
Keystone Foods to Tyson Foods.
Marfrig’s 8% 2023 and 6.875% 2025 - one the
most highly traded corporate EM bonds on
Monday - reached as high as 103.70 last week,
or some three points over where it was trading
in June, according to MarketAxess data.
This followed Tyson’s announcement
earlier in the day that it had reached an
agreement to buy Keystone from Marfrig for
US$2.16bn in cash.
The proceeds will help Marfrig bring
leverage down to 2.6x from 4.2x after cutting
its debt by over half from R$16.3bn (US$4.2bn)
to R$7.9bn, said CFO Eduardo Miron.
Ultimately, Miron hopes to reach a
leverage ratio of between 2.2x and 2.5x as
revenues from both US and Latin American
“The liability management we plan to put
INûMOTIONûWILLûBEûBASEDûONûAûDIFFERENTûPROlLEû
of the company,” said Miron.
“By having leverage of 2.5x and maybe
less … we will be able to have a robust
liability management process.”
Barring any pre or post-election volatility
in Brazil, or a further retreat from emerging
markets during the second half, Marfrig
should be able to achieve improved terms.
!NOTHERûUPGRADEûTOû$OUBLEû"ûTERRITORYû
will also likely help after S&P upgraded the
company to BB- from B+ last week, citing an
improvement in the company’s leverage
ratios.
The company now carries BB- ratings
from S&P and Fitch, and a B1 from Moody’s.
VENEZUELA
ROSNEFT VOICES POSITION IN PDVSA
COURT CASE
Russia’s ROSNEFT TRADING voiced its position
last week in a court case that could further
complicate creditors’ efforts to claw back
claims from VENEZUELAûANDûITSûOILûlRMûPDVSA.
!û$ELAWAREû$ISTRICTûCOURTSûDECISIONûEARLIERû
(OLDINGSûWHICHûAREûOWNEDûBYû0$6û(OLDINGS
This follows similar arguments by at least
one holder of the 2020 bonds, who told IFR
earlier this month that the “collateral is safe
because it is already pledged”.
"UTûUNLESSû0$63!ûCANûAPPEALûTHEûRULINGûORû
reach a settlement with Crystallex, it will
EFFECTIVELYûLOSEû0$6û(OLDINGûANDûITSûOWNERSHIPû
stake in Citgo Petroleum held though Citgo
Holding, Francisco Rodriguez, chief economist
at Torino Capital, wrote this month.
“The core asset that would be sold as part
OFûANYûPOTENTIALûSALEûOFû0$6(ûISûû
encumbered,” Rosneft Trading said in the
letter, adding that it was not seeking to
intervene in the case at this time.
The court case has drawn particular
attention of holders of Venezuela debt, much
of which is already in default, and highlights
the complications faced by various creditors
lGHTINGûTOûCLAWûBACKûCLAIMSûOWEDûTOûTHEM
0$63!ûNOWûHASûLITTLEûINCENTIVEûTOûPAYûTHEû
bonds, as it has effectively lost control of
Citgo, said Rodriguez in a note this month.
There is also the threat that Crystallex
could gain access to the full value of Citgo if
it gets a court to deem the pledge of Citgo
(OLDINGSûSHARESûBACKINGû0$63!ûSûASûAû
fraudulent transfer and thus void it under
operations pick up in the second half.
Marfrig said all Keystone assets are being
sold except for a beef patty processing plant,
a move that is in keeping with its new
strategy of refocusing on its beef business.
this month to grant a motion by Canadian
MINERû#RYSTALLEXûTOûATTACHûSHARESûOFû0$6û
Holdings has already upended the only
Venezuela bond that had been trading above
par.
$ELAWAREûLAWûHEûSAID
An appeals court left open that possibility
IFû#RYSTALLEXûCOULDûESTABLISHûTHATû0$63!ûISûANû
alter ego of Venezuela - something that the
recent court decision possibly does.
The restructuring will soon make Marfrig 4HEû0$63!ûûûWHICHûISûBACKEDûBYû If the court issues a writ for attachment of
just one of two pure Brazilian beef plays in Citgo Holding shares, fell in the aftermath 0$6û(OLDINGSû2OSNEFTûSAIDûTHATûALONGûWITHû
the credit market, along with Minerva. of the ruling amid concerns that the value of bondholders it would have “a suite of rights
“Keystone - a global producer of poultry, the collateral could be damaged. and remedies available with respect to the
BEEFûlSHûANDûPORKûANDûAûLEADINGûSUPPLIERûTOû Some 50.1% of Citgo Holding shares owned CITGO Holding, Inc. shares”.
-C$ONALDSû
ûWASûONCEûSEENûASûAûSTABILISINGû BYû0$6û(OLDINGSûBACKûTHEûSûANDûTHEû Rosneft asked the court to conduct a
credit factor for Marfrig,” said Roger Horn, EM balance 49.9% of these shares back a loan hearing on the sale process should a writ be
desk analyst at SMBC Nikko Securities America. EXTENDEDûBYûTHEû2USSIANûENERGYûlRMû2OSNEFT issued given “the multitude of parties and
“But in the end it was limited in terms of In a letter to chief judge Stark last week, interests potentially affected by the sale of
margin upside and impeded the group’s Rosneft said holders of the 2020 bonds and 0$6(v
goal of deleveraging.”
Earlier this year, Marfrig bought control ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS
of US-based National Beef Packing for BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
US$969m with the help of a secured bridge Middle East Latin America
loan from Rabobank - debt that is expected Managing No of Total Share Managing No of Total Share
to be paid down with proceeds from the bank or group issues US$(m) (%) bank or group issues US$(m) (%)
Keystone sale. 1 Standard Chartered 31 8,146.50 13.4 1 Citigroup 32 11,431.65 17.2
All this should sit well with the buyside 2 Citigroup 15 5,800.56 9.6 2 JP Morgan 25 7,598.59 11.4
and put Marfrig in a better position to 3 HSBC 24 5,610.43 9.3 3 Deutsche Bank 6 5,832.61 8.8
extend upcoming maturities and lower 4 Deutsche Bank 7 4,152.37 6.9 4 HSBC 13 5,699.13 8.6
interest costs on its bonds, some of which 5 JP Morgan 8 3,544.32 5.8 5 BAML 17 4,294.39 6.5
carry high coupons. 6 Barclays 11 3,162.96 5.2 6 Morgan Stanley 10 4,079.35 6.1
With the Keystone and the National Beef 7 Credit Suisse 7 2,571.38 4.2 7 BBVA 4 2,811.40 4.2
transactions behind it, Marfrig can now 8 Al Khaliji Commercial Bank2 2,082.76 3.4 8 BNP Paribas 8 2,741.03 4.1
focus on attending to lingering liability 9 Goldman Sachs 3 1,930.39 3.2 9 Santander Global  13 2,653.79 4.0
management needs, said Miron. 10 Credit Agricole 9 1,882.72 3.1 10 Itau Unibanco 13 2,254.02 3.4
While the company has made efforts to Total 71 60,602.37 Total 71 66,439.75
reduce its immediate amortisation hump, it Excluding equity-related debt. Excluding equity-related debt.

still has some US$2.3bn of principal falling Source: Thomson Reuters SDC code: L5 Source: Thomson Reuters SDC code: L3

48 International Financing Review August 25 2018

 Australia 50 China 50 India 52 Taiwan 54 Vietnam 54 Denmark 54 Germany 55 Oman 55 Saudi Arabia 55
LOANS
UK 56 United States 56 Canada 57 Leveraged Loans 58

„ FRONT STORY EUROPEAN MARKET

Italian pricing under pressure

Italian bank funding costs have risen on back of political uncertainty
Higher rated credits may eventually be affected as lenders seek higher yields
Pricing on syndicated loans made to Italy’s top lenders have risen dramatically, Italian banks, then there will be an increase
Italian companies is under pressure as making it more expensive for domestic in pricing.”
Italian bank funding costs rise on the back banks to make loans. Market volatility saw a number of
of the political uncertainty that has Five-year CDS rates for UniCredit were at Italian investment-grade corporates
affected the country since the installation 171.89bp, Intesa Sanpaolo at 169.92bp, decide to step away from the bond
of an EU-sceptic coalition government in while Mediobanca stood at 180.98bp. This market and IPOs were abandoned or
June. compares with rates on top EMEA regional sidelined. Meanwhile, a number of
During the European sovereign debt crisis lenders BNP Paribas at 44.49bp, JP Morgan at Italian loans over the summer met with a
in 2011-2012, many Italian companies were 42.9bp and Credit Agricole at 42.73bp. mixed reception.
forced to pay hefty premiums on their loans “If their funding costs are up, Italian
to cover peripheral risk and overcome the banks will want a better return; it’s costing “If their funding costs are up,
reluctance of international banks to lend. more so they need to earn more,” a
Italian banks will want a better
As Italian banks recapitalised and syndicate head said.
problematic concentrations of risk were “The extent of the rise depends on the
return; it’s costing more so they
ring-fenced, the growing intensity of deal - for a BB+ maybe up by 25bp, on a need to earn more”
competition between banks saw these
premiums shrink and, in some cases, a
return to pre-crisis levels of pricing and
maturities.
This encouraged many investment-grade
Italian corporates back to the loan market to
take advantage of the improved terms on
offer.
BETTERûCREDITûQUALITYûANDûAûBIGûNAMEûITû
might not be up at all as it will be
absorbable.”
WARNING
Although the initial impact from rising
Italian bank funding costs is expected to be
seen in smaller mid-market, lower rated or One of the companies sidestepping the
Italian loan market volume of US$43bn so
far this year has been buoyed by a number
OFûLATEûCYCLEûRElNANCINGSûANDûACQUISITIONû
loans.
Big hitters such as TELECOM ITALIA, FIAT
CHRYSLER, insurance provider GENERALI,
AEROSPACEûANDûDEFENCEûTECHNOLOGYûlRMû
UNRATEDûLOCALLYûlNANCEDûDEALSûBANKERSû bond market was ATLANTIA, the holding
warn that higher rated credits may company of toll road operator AUTOSTRADE PER
eventually be affected as Italian banks seek L’ITALIA.
higher yields to cover spiralling costs while Baa2/BBB+ rated Atlantia gave up on a
international banks look to factor in planned bond to replace a €2.5bn bridge-to-
increased risks. bond loan backing its part of part of its joint
“Other banks have not started to increase takeover - with Hochtief - of Spanish toll-
LEONARDO, state-owned railway company
FERROVIE DELLO STATO and energy and telecoms
cable maker PRYSMIAN have all come to the
YEARûTERMû
MARKETûFORûMULTIBILLIONûlNANCINGSûFROMû
bank groups of international and Italian
lenders.
Meanwhile there has also been a
steady stream of smaller deals for Italian
lRMSûINCLUDINGûFORûINDUSTRIALûANDû
packaging group COESIA, scooter maker
PIAGGIO and steelmaker ARVEDI, which
YEARûREVOLVINGûCREDITû
WEREûPREDOMINANTLYûlNANCEDûBYû)TALIANû
banks.
However, market conditions have changed
since the political crisis in mid-May that led
to the installation of a populist coalition of
the League and the 5-Star Movement at the
THEIRûRETURNûREQUIREMENTSûFORû)TALYûnûYETvû road operator Abertis.
the syndicate head said. Instead, the company turned to the loan
“It depends how tricky Italy gets. If there MARKETûINû*ULYûFORûAûõBNûlVE
ISûLESSûLIQUIDITYûFROMûINTERNATIONALûANDû loan via Banco BPM, BNP Paribas, CDP,
Intesa Sanpaolo, Mediobanca and UniCredit.
ITALY SYNDICATED LOAN VOLUME The new loan, which completed the
US$bn RElNANCINGûOFûTHEû!TLANTIASûPARTûOFûTHEû
takeover, pays an initial margin of 90bp over
120 Euribor depending on rating.
100 At the same time, the company also put in
PLACEûAûõBNûlVE
80
facility.
60 However, the collapse of an Autostrade
40
operated bridge in Genoa on August 14,
tragically killing 43 people, sent Atlantia’s
20
CDS rates rocketing up to 277.98bp from
0 101.5bp.
2007

2017
2010

2011

2015
2009
2008

2014

2016

2018 ytd
2013
2012

beginning of June. Italian bond yields spiked, Moody’s has placed Atlantia on review for
eroding banks’ capital buffers. downgrade, while S&P put the ratings on
Credit Default Swaps rates – which are a CreditWatch negative.
proxy for banks internal funding costs – for Source: Thomson Reuters LPC Alasdair Reilly

International Financing Review August 25 2018 49

ASIA-PACIFIC
AUSTRALIA
SANTOS NETS US$1.2bn FOR QUADRANT
Oil and gas producer SANTOS is borrowing
53BNûINûAûDUAL
TRANCHEûLOANûTOûlNANCEû ENERGY and Australian private equity firm EMR
ITSûPROPOSEDûACQUISITIONûOFûPRIVATELYûHELDû
Quadrant Energy.
4HEûLOANûISûSPLITûEQUALLYûBETWEENûAû
with 14 lenders participating in the senior debt
year portion and a two-year bridge facility
that will be taken out upon completion of
THEûACQUISITION
Santos said the purchase of Quadrant for
at least US$2.15bn will also be funded by
cash along with the US$1.2bn loan. Santos
had US$1.5bn in cash on hand as at June 30.
Santos said it intends to maintain a strong
lNANCIALûPROlLEûCONSISTENTûWITHûANû
investment-grade rating. Net gearing is
expected to be around 34% at year-end 2018
and to decline to less than 30% by the end of
2019. Santos also intends to maintain
AVAILABLEûLIQUIDITYûINûEXCESSûOFû53BN
4HEûACQUISITIONûISûALSOûSUBJECTûTOûPOTENTIALû
additional contingent payments.
The deal comes soon after Quadrant and
junior joint venture partner Carnarvon
Petroleum reported what the latter called a
“truly incredible” oil discovery, sending
Carnarvon’s shares rocketing to a nine-year
high.
Santos said the deal could potentially
boost its annual production by about
32%.
"ROOKlELDû!SSETû-ANAGEMENTûOWNSûAûû
Kestrel coal M&A loan
closes at reduced size
„ AUSTRALIA/INDONESIA Smaller funding required as Mitsui retains 20% stake
The acquisition financing for Indonesia’s ADARO
MUFG and StanChart had committed to
Capital’s purchase of Rio Tinto’s Kestrel coal
mine has closed at a reduced size of US$1.69bn,
underwritten the US$1.05bn term loan. Four of
portion and a South Korean financial institution
providing the mezzanine piece.
The financing has a US$1.364bn five-year
senior loan and a US$325m subordinated
piece. The senior debt is split into a US$1.16bn
amortising term loan, a US$150m revolving
credit facility and a US$54m bonding facility
comprising unfunded environmental bonds.
ANZ, CIMB Bank, DBS Bank, MUFG, OCBC
Bank, Standard Chartered and SMBC were the
mandated lead arrangers and bookrunners of
the senior loan, which pays an interest margin
of 375bp over Libor. Bank Mandiri, BNP Paribas,
HSBC, ING Bank and National Australia Bank
joined as MLAs, while CTBC Bank and Westpac
came in as lead arrangers.
South Korea’s Meritz Securities provided the
US$325m mezz loan, which also has a five-year
maturity and pays an interest rate of around 12%.
The overall financing is significantly smaller
than the US$2.1bn borrowing the acquirers eyed
a few months ago. Adaro and EMR agreed in late
March to buy an 80% stake in Rio Tinto’s Kestrel
coking coal mine for A$2.25bn (US$1.64bn)
and had looked at a combination of senior and
mezz loans for up to US$2.1bn. At the time,
US$250m revolver and a US$400m mezz piece.
provide the US$400m bridge, while ANZ, CIMB,
DBS, MUFG, OCBC, StanChart and SMBC had
the seven lenders on the term loan were also
providing the US$250m revolver. Nomura and
Varde Partners were committed to provide the
US$400m junior loan at the holding-company
level. The mezz portion was structured as a pay-
in-kind note issue, yielding well over 10%.
MITSUI CHANGES TACK
As the acquisition progressed, Japanese trading
house Mitsui & Co decided to retain its 20%
stake in the Kestrel coal mine, thereby reducing
the funding need for Adaro and EMR. Moreover,
strong demand from Asian lenders saw the more
expensive bridge being cancelled and the term
loan, revolver and the mezz piece being cut in size.
The acquisition of Rio Tinto’s stake was
completed earlier this month, with the senior
loan being signed on July 19.
With the sale of its stake in the Kestrel mine, Rio
Tinto has now exited the coal industry. The deal
marks Adaro’s biggest overseas investment and the
biggest mining investment for Australia-based EMR.
The Kestrel mine, located in the Bowen Basin
region, produces high-quality coking coal for
steel manufacturing. It has significant reserves
of 146m tons and is in the lowest-cost quartile of
STAKEûINû1UADRANTûWHILEû-ACQUARIEû'ROUPû
retail conglomerate Wesfarmers and mining
heiress Angela Bennett are also
shareholders, Reuters reported.
Wesfarmers said in a separate statement
on Wednesday that it would be selling its
13.2% stake in Quadrant for US$170m.
Earlier in the year, Santos was the target
of a leveraged buyout after receiving a
US$10.4bn takeover bid from US private
EQUITYûlRMû(ARBOURû%NERGYû*0û-ORGANûANDû
Morgan Stanley had underwritten a
EQUIVALENTûTHREE
YEARûTERMûLOAN
53BNûDEBTûlNANCINGûBACKINGûTHEû
buyout. However, in late May Santos
rebuffed Harbour Energy’s sixth offer in
YEARûFACILITYûTHATûBACKEDûITSû
nine months, worth up to A$7.00 (US$5.13)
a share.
ALINTA SEEKS SEVEN-YEAR MONEY
ALINTA ENERGYis in the market for a A$200m
(US$147m) seven-year loan mandated to
EQUIVALENTûORûABOVEûFORûALL
INûPRICINGû
MUFG.
Funds are for general corporate
purposes.
50
the financing included a US$1.05bn term loan,
a US$400m bridge-to-high-yield bond, a
The bullet loan is the second sole
mandate for MUFG from an Australian
utility company.
In late July, MUFG launched a A$250m
seven-year facility for ENDEAVOUR ENERGY.
That bullet loan offers top-level all-in
pricing of 132.86bp based on an interest
margin of 120bp over BBSY.
Alinta Energy last tapped the loan
market in late 2017 for a A$715m
lVE
which comprises a Rmb513m (US$75m)
ACQUISITIONûOFûTHEû,OYû9ANGû"ûPOWERû
plant in Australia from Engie SA and
Mitsui & Co. That deal comprised a
A$50m revolving credit tranche for
capital expenditure, a A$15m revolving
working capital tranche and a
A$650m term loan tranche. The
margin is 235bp over BBSY and
the commitment fee is 40% of the
margin.
International Financing Review August 25 2018
comparable mines.
Prakash Chakravarti
CHINA
CIRO’S PLAZA BUILDS US$325m REFI
Ciro’s Plaza, a commercial complex in
Shanghai’s Huangpu district, is seeking a
53M
Standard Chartered is the mandated lead
arranger and bookrunner of the transaction,
onshore tranche and a US$250m offshore
portion.
The interest margins are 121% of the PBoC
rate on the onshore piece and 205bp over
Libor on the offshore portion.
Banks are being invited to join as MLAs with
53M
of 127% of the PBoC rate or 240bp over Libor
via participation fees of 90bp or 105bp for the
onshore and offshore tranches, respectively.
 LOANS ASIA-PACIFIC

Lead arrangers coming in with US$25m–

M EQUIVALENTûRECEIVEûALL INûPRICINGûOFû
126% of the PBoC rate or 233bp over Libor
via participation fees of 70bp or 85bp,
Dalian Wanda revives loan plan
respectively. Arrangers coming in with „ CHINA Conglomerate returns to offshore market following regulatory scrutiny
COMMITMENTSûBELOWû53M EQUIVALENTû
receive all-in pricing of 125% of the PBoC Conglomerate DALIAN WANDA GROUP is looking FOSUN INTERNATIONAL, which owns majority
rate or 225bp over Libor via participation to borrow up to US$800m in its first visit to stakes in French resorts company Club Med and
fees of 50bp or 60bp, respectively. the offshore loan market since it came under English football club Wolverhampton Wanderers,
Shanghai CIRO’S REAL ESTATE is the borrower regulatory scrutiny nearly two years ago. among other overseas assets, managed to
on the onshore piece, while TRUE PARTNER The Beijing-based property-to-entertainment increase a three-year senior loan this month to
INVESTMENTS is the borrower on the offshore group is seeking a three-year club loan US$600m from US$550m.
portion. for refinancing and working capital and The Fosun Industrial facility attracted 18 non-
&UNDSûAREûFORûRElNANCINGûANDûFORûCAPITALû has obtained approval from the National Chinese lenders – including six leads. Proceeds
expenditure on Ciro’s Plaza. Development and Reform Commission, the refinanced a US$800m one-year bridge loan
In December 2015, a consortium led by top regulator with oversight of offshore debt that backed the purchase of a 74% stake in
INVESTMENTûlRMû0!'û2EALû%STATEû0ARTNERSû fundraisings for Chinese companies. India’s Gland Pharma.
and Broad Street Principal Investments, a Wanda’s access to offshore funding has That loan was Fosun’s second borrowing in
subsidiary of Goldman Sachs, raised a been restricted since mid-2016, when Chinese as many months. In May, Fosun International
53M EQUIVALENTûTHREE YEARûTERMûLOANû authorities cracked down on “irrational” overseas increased a three-year loan to US$743.27m-
to back its purchase of Ciro’s Plaza. acquisitions and tightened capital controls to equivalent from an original target of US$500m.
StanChart was the MLAB on that deal, shore up the renminbi. Major domestic lenders Of the 15 lenders participating, two were
which comprises a Rmb664m amortising were ordered to monitor their exposures to large Chinese.
onshore tranche and a US$210m bullet acquisitive conglomerates, such as Wanda, On the other hand, aviation-to-financial
offshore portion. The margins were 108% of Anbang Insurance Group, Fosun Group and HNA services conglomerate HNA GROUP is struggling
the PBoC rate on the onshore piece and Group. to attract lenders for a HK$5bn (US$643m) four-
315bp over Libor on the offshore portion. The resultant funding squeeze and year term loan. DBS Bank is the facility agent
downgrades to its credit ratings forced Wanda’s and has attracted Shanghai Commercial Bank to
FOSUN ALLOCATES BRIDGE-TAKEOUT LOAN property arm, Dalian Wanda Commercial the transaction. Proceeds will refinance a bridge
Properties, to pre-pay in full four loans totalling facility and fund development of a land parcel in
A unit of Chinese conglomerate Fosun US$1.7bn by late April of this year. Hong Kong’s Kowloon district.
International has allocated its US$600m The parent is timing its return to the
THREE YEARûSENIORûLOANûTOûRElNANCEûAûBRIDGEû offshore loan market at a potentially RISING BOND YIELDS
facility that backed the parent company’s awkward moment when the escalating trade Wanda’s offshore financing has been in the
ACQUISITIONûLASTûYEARûOFû)NDIASû'LANDû war between the US and China is putting works for some time. Citing the company’s
Pharma. downward pressure on the renminbi. This management, Fitch said in a report on June 8
FOSUN INDUSTRIAL is the borrower, while its could raise the risk of another regulatory that Wanda intended to “tap offshore capital
immediate parent Shanghai Fosun onslaught against capital outflows. markets from time to time via syndicated loans
Pharmaceutical Group is the guarantor of “Under the current circumstances, it will or bond issuance to maintain diverse funding
the bullet transaction, which was increased be hard for Wanda and many other Chinese options, even if it has disposed of a majority of its
from a US$550m target. companies to move money across the border,” overseas projects”.
ANZ, BNP Paribas, First Abu Dhabi Bank, said a Hong Kong-based banker. “That means Late last year, it obtained approval from
Natixis, Standard Chartered and Westpac they will be under heavy refinancing pressure” to NDRC for a US$1.5bn offshore borrowing quota
Banking Corp were the mandated lead repay maturing offshore debt. and eyed a bond offering, but rising interest
arrangers and bookrunners of the Wanda has an outstanding US$800m three- rates quashed its hopes and the NDRC approval
borrowing, which has a two-year extension year offshore club loan signed in October 2016, lapsed after six months.
which pays an interest margin of 240bp over Refinancing conditions for Chinese developers
ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY Libor. It also has US$600m senior notes issued have worsened quickly both onshore and
SYNDICATED VOLUME (INCLUDING JAPAN) via Wanda Properties Overseas that are due in offshore, amid growing defaults this year
BOOKRUNNERS: 1/1/2018 TO DATE November. by Chinese issuers, including state-owned
Managing No of Total Share Wanda has sold US$18bn of assets over the enterprises.
bank or group issues US$(m) (%) past year, including one real estate project in That has pushed up bond yields. Logan
1 Mizuho 297 54,736.28 16.1 London and two in Australia. Projects in the US Property Holdings (Ba3/BB–/BB–) last week
2 Sumitomo Mitsui Finl 351 36,465.28 10.7 are also on the block. priced a US$300m three-year non-call two bond
3 MUFG 447 35,303.25 10.4 “Wanda will gradually clear up all interest- issue at 7.75%. That was richer than the 7.5%
4 Bank of China  174 32,445.10 9.5 bearing debts offshore,” group founder and yield Logan offered on a US$100m tap in May.
5 ANZ 69 14,217.54 4.2 chairman Wang Jianlin said in January. “I shall The tap itself had paid a premium compared
6 HSBC 54 11,333.55 3.3 shoulder the full responsibility to say that Wanda with the 7% yield on a US$300m 6.875% three-
7 Standard Chartered  52 8,971.52 2.6 will not have any credit default.” year non-call two bond issue priced in mid-April.
8 BNP Paribas 33 8,182.89 2.4 Wanda’s 4.875% November 2018 bonds
9 Credit Agricole 25 7,907.43 2.3 PEER INDICATORS traded at a bid/ask range of 99.500–99.875
10 ING 17 6,304.26 1.9 Other conglomerates that have attempted on Wednesday, indicating a yield of 5.348%,
Total 1,711 340,531.09 offshore fundraisings have had mixed according to Tradeweb.
Proportional credit results. Yan Jiang
Source: Thomson Reuters SDC code: S3a

International Financing Review August 25 2018 51

option and pays an interest margin of 150bp
over Libor. Lenders were offered top-level
all-in pricing of 175bp via a 75bp
participation fee.
Mandated lead arrangers are Bank of East
Asia and ING. Lead arrangers are Credit
Industriel et Commercial, MUFG and Siemens
LISTEDûBROKERAGEûlRMû
Bank. Arrangers are Bank of Taiwan, KDB Asia,
Mega International Commercial Bank, Sumitomo
Mitsui Trust Bank, Taishin International Bank, E.
Sun Commercial Bank and Taiwan Cooperative
Bank.
&UNDSûWILLûRElNANCEûTHEû53MûONE
106bp.
year bridge loan that backed Fosun’s
purchase of a stake of about 74% in Gland
Pharma. Shanghai Fosun Pharmaceutical
said last October the stake cost US$1.09bn.
Separately, Hong Kong-listed Fosun
International has closed its three-year term
loan that has been increased to US$553m-
YEARûCLUBûFROMûFOURû#HINESEûLENDERS
EQUIVALENTûFROMûTHEû53MûTARGET
That deal now has a US$500m tranche
and a €45m (US$53m) portion. The facility
pays a margin of 200bp over Libor and
170bp over Euribor. Lenders were offered
top-level all-in pricing of 236.67bp for US
dollars or 206.67bp for euros via a 110bp
upfront fee.
CDB FINANCIAL INCREASES LOAN
CDB FINANCIAL LEASING has wrapped up a
YEARûTERMûLOANûANDûAû53MûREVOLVINGû
US$315m three-year term loan, which was
increased from the US$250m target.
FUNDEDûTHEûlNANCINGûONû
Mandated lead arrangers and
bookrunners HSBC, Mizuho Bank (China) and
WestpacûEACHûTOOKûAûlNALûHOLDûOFû53Mû
Mizuho was the facility agent.
Credit Agricole, Mega International
Commercial Bank and Bank Mandiri joined as
MLAs with US$30m each.
The onshore deal offered top-level all-in
pricing of 120bp based on an interest
margin of 110bp over Libor and an average
Standard Chartered was joined by lead
arrangers Export-Import Bank of China, State
Bank of India, China Construction Bank, Shanghai
Rural Commercial Bank and Bank of East Asia;
and by arrangers Bank of Taiwan, BNP Paribas,
Cathay Bank, Cathay United Bank, Chang Hwa
Commercial Bank, Ping An Bank Shanghai Pilot
Free Trade Zone, Taishin International Bank,
Taiwan Cooperative Bank, Taiwan Shin Kong
Commercial Bank and Tokyo Star Bank.
Lenders were offered top-level all-in
pricing of 205bp via a participation fee of
lead arrangers and bookrunners China
&UNDSûAREûFORûRElNANCINGûANDûWORKINGû
capital.
The borrower is Hengtong Optic-Electric
International, a fully owned unit of
Hengtong Optic-Electric. The parent is the
guarantor.
The Shanghai-listed parent makes optical
communication network products.
HONG KONG
HUARONG UNITS SEEK SHORT-TERM FUNDS
HUARONG INVESTMENT STOCK CORP, a unit of state-
owned China Huarong Asset Management,
has pushed the deadline of a HK$3bn
(US$382m) 364-day loan until later this
month, while HUARONG INTERNATIONAL FINANCIAL
HOLDINGS is seeking a return to the market.
Sole mandated lead arranger and
bookrunner Credit Suisse launched the
HK$3bn deal in mid-July.
Excluding the ongoing transaction, Hong
Kong-listed Huarong Investment Stock has
so far borrowed a combined US$380m-
EQUIVALENTûVIAûFOURûBILATERALûFACILITIESûWITHû
one-year or even shorter tenors, according
TOûITSûSTOCKûEXCHANGEûlLINGS
Funds from the new syndicated loan will be
USEDûTOûRElNANCEûAû(+BNû
The lenders are China Everbright BankHong
Kong branch and ICBC (Macau), with the
former acting as the facility agent.
Funds are for general corporate purposes.
Beijing-based China Everbright Group is
the full owner of the borrower, via Hong
+ONGûANDû3HANGHAI
Everbright Securities.
Last September, Sun Hung Kai Financial,
in which the borrower holds a 70% stake,
obtained a HK$4.5bn three-year bullet term
loan from 17 lenders, including mandated
Everbright Bank Hong Kong branch and
Standard Chartered. That deal paid top-level
all-in pricing of 166bp via an interest margin
of 138bp over Hibor.
Meanwhile, another unit of China
Everbright Group is also raising a HK$4bn
lVE
INDIA
JSW STEEL FORGES M&A FACILITY
JSW STEEL is tapping a US$140m dual-tranche
LOANûTOûFUNDûITSûACQUISITIONûOFûAûSTEELMAKERû
in the US.
Axis Bank is the sole bookrunner of the
borrowing, which comprises a US$125m
lVE
credit facility.
4HEûBANKûPRE
Monday. Drawdown of the term loan has
already taken place and launch into general
syndication is expected shortly.
0ROCEEDSûWILLûRElNANCEûDEBTûATû53
based Acero Junction Holdings, in which
THEû)NDIANûSTEELMAKERûACQUIREDûANûû
stake earlier this year and is in the
process of buying the remaining 17%. The
deal gives Acero Junction an enterprise
DAYûFACILITYû VALUEûOFû53MûWITHûANûEQUITYû
life of 2.875 years. it signed last November. The latest deal pays value of US$80.85m and liabilities of
The transaction follows the borrower’s top-level all-in pricing of 260bp via an interest US$101.56m.
US$265m three-year term loan signed in margin of 220bp over Hibor/Libor, the same On June 22, JSW Steel announced a
September 2017 with eight banks. Mizuho pricing as that on the maturing deal. proposed investment of up to US$500m to
was the sole original MLAB of that deal, Meanwhile, Huarong International ACQUIREûENHANCEûANDûUPGRADEû/HIO
BASEDû
which offered top-level all-in pricing of Financial, another Huarong Asset Acero Junction, a steel manufacturing unit
116bp. Management unit, is sounding the market with a potential capacity of three million
The Shenzhen-based, Hong Kong-listed FORûAûPLANNEDû(+BNûRElNANCINGûTOûREPAYûAû tonnes per annum.
BORROWERûISûTHEûlNANCIALûLEASINGûARMûOFû (+BN
EQUIVALENTû
DAYûLOANûITûRAISEDû Acero Junction has been renamed JSW
China Development Bank, the country’s top last October. Steel USA Ohio, which is the borrower
policy lender. Last year, various entities under the on the loan. Its assets will form the
Beijing-based asset management company security on the loan, with JSW Steel as
HENGTONG UPS DEBUT TO US$180m BORROWEDûAûTOTALûOFû(+BN
EQUIVALENTûVIAû guarantor.
six transactions, which mostly had short- The Mumbai-based company has been on
HENGTONG OPTIC-ELECTRIC has increased a three-
year debut loan loan to US$180m from the
US$100m target.
Standard Chartered was the mandated lead
arranger and bookrunner of the transaction,
which pays an interest margin of 165bp over
Libor and has an average life of 2.65 years.
52
term tenors.
EVERBRIGHTSEC FINANCIAL CLOSES CLUB
EVERBRIGHT SECURITIES FINANCIAL HOLDINGS has
wrapped up a HK$1.5bn three-year club deal
with two banks.
International Financing Review August 25 2018
ANûACQUISITIONûSPREEûINûTHEûPASTûFEWûMONTHSû
targeting smaller deals after missing out on
LARGEûACQUISITIONS
It is expected to bid for ArcelorMittal’s
Galati plant in Romania, the largest of six
European assets up for sale with an estimated
combined value of US$752m–$940m. In May,
 LOANS ASIA-PACIFIC

*37û3TEELûACQUIREDû)TALYSû!FERPIûFORMERLYû
known as Lucchini, for €55m.
Last week, it emerged as the highest
among three bidders with a bid of Rs195bn
(US$2.8bn) for bankrupt Bhushan Power &
Steel. In March, it lost out to Tata Steel in the
race for bankrupt steelmaker Bhushan Steel
RIL REFI LAUNCH IMMINENT
Conglomerate RELIANCE INDUSTRIES’
53BNûRElNANCINGûISûEXPECTEDûTOûBEû
HEADQUARTEREDû2),ûHASû The interest margin is 200bp over Libor.
launched imminently, as it returns to the
markets for its second borrowing since
December.
ANZ, Bank of America Merrill Lynch, Barclays,
BNP Paribas, Citigroup, Credit Agricole CIB, DBS
Bank, First Abu Dhabi Bank, HSBC, MUFG,
Mizuho Bank, Scotiabank, Societe Generale,
Standard Chartered, Sumitomo Mitsui Banking
Corp, UOB Bank and Westpac Banking Corp are
the mandated lead arrangers and
bookrunners of the deal, which will have
three tranches.
ARRANGEDûTWO
YEARûlNANCINGûWITHûOVERûAû greenshoe option. Credit Suisse and
Roadshows are slated for September.
&UNDSûWILLûRElNANCEûPORTIONSûOFûTHEûLOANSû
RIL signed in 2012, 2014 and 2015.
The leads on the latest loan were also the
SENIORû-,!"SûONûTHEû53BNûlNANCINGû2),û
signed in December. That facility comprises
a 2.5-year loan of US$815m and €150m
(US$185m) (Facility 1) for RIL, and separate
US$1bn 4.75-year (Facility 2) and US$500m
5.58-year (Facility 3) portions for RIL’s
telecom unit RELIANCE JIO INFOCOMM.
RIL’s US dollar and euro tranches paid top-
level all-in pricing of 76bp and 46bp based
on interest margins of 56bp and 37bp over
Libor and Euribor, respectively. Jio’s Facility
2 and Facility 3 offered top-level all-in
More lenders sought for SoftBank’s ¥1.6trn refi
„ JAPAN Mobile operator approaches existing lenders for jumbo borrowing
SOFTBANK CORP is inviting existing lenders to its
latest ¥1.6trn (US$14.37bn) six-year senior term
loan.
The loan already has five banks at the
top, with Sumitomo Mitsui Trust Bank also a
mandated lead arranger along with Credit
Agricole, Mizuho Bank, MUFG and SMBC.
The loan, which was signed on Thursday, is to
partially refinance a mammoth financing raised
last November for the mobile phone operator’s
parent company. Drawdown is slated to take
place on August 31.
The latest loan refinances part of SoftBank
Group’s ¥2.65trn four-tranche financing, which
comprises a ¥650bn three-year term loan, a
¥600bn five-year term loan, a ¥1.1trn seven-year
term loan and a ¥250bn seven-year working
capital facility. They pay interest margins of
pricing of 105bp and 110bp based on
margins of 84bp and 92.5bp over Libor,
respectively. Facilities 1, 2 and 3 had
remaining average lives of 2.375, 4.33 and
5.42 years, respectively.
Meanwhile, Jio is also in the market for a
¥53.5bn (US$498m) seven-year Samurai
bullet term loan, which pays top-level
all-in pricing of 65bp based on a margin of
51bp over Tibor and has a guarantee from
RIL.
-UMBAI
businesses across India in the energy,
petrochemicals, textiles, natural resources,
retail and telecoms sectors.
INDONESIA
ADARO UNIT SIGNS US$350m CLUB
Coal mining contractor SAPTAINDRA SEJATI, a
unit of Adaro Energy, has signed a US$350m
SELF
dozen banks.
The lenders of the club deal are: ANZ, Bank
Mandiri, Bank of China, CIMB, Citigroup, CTBC
Bank, DBS Bank, HSBC, Korea Development Bank,
MUFG, Mizuho Bank, OCBC, Sumitomo Mitsui
Banking Corp and United Overseas Bank.
Adaro Energy is the guarantor of the
transaction, which will be used for general
corporate purposes.
The borrower last raised a US$200m six-
YEARûRElNANCINGûINûûWITHûAûDOZENû
banks.
SIS provides services including
exploration, drilling, contract mining and
logistical support to Indonesia’s coal mining
industry.
80bp, 125bp, 160bp and 175bp over Tibor,
respectively. The margins were tied to SoftBank
Group’s Ba1/BB+ (Moody’s/S&P) ratings, which
remain unchanged.
Mizuho was the original MLA and bookrunner,
while Credit Agricole, MUFG and SMBC joined
on a take-and-hold basis. Another 21 lenders
joined the deal in senior syndication.
The 2017 loan had refinanced a ¥1trn two-
year bridge facility signed in September 2016
for SoftBank Group’s £24.3bn (US$32bn
then) purchase of UK chip designer ARM
Holdings, an acquisition financing that
backed SoftBank Group’s US$1.26bn
purchase of a 57% stake in US cellphone
distributor Brightstar Corp in 2013, and
part of a ¥1.98trn financing completed in
September 2013.
International Financing Review August 25 2018
PAKISTAN
PAKISTAN MAKES QUICK RETURN
The ISLAMIC REPUBLIC OF PAKISTAN is back with a
US$200m one-year bullet loan, one month
after completing a larger borrowing.
Credit Suisse is the mandated lead arranger
and bookrunner of the deal, which has an
UNSPECIlEDûGREENSHOEûOPTION
Banks are being invited to join as MLAs
with commitments of US$30m or above
for fees of 60bp, translating to top-level
all-in pricing of 260bp. Lead arrangers
coming in for US$20m–$29m receive 55bp
for an all-in of 255bp, while arrangers
taking US$10m–$19m earn 50bp for an
all-in of 250bp.
The pricing on the latest loan is the same
as that on a US$565m one-year loan Pakistan
wrapped up last month after it exercised a
Industrial and Commercial Bank of China
were the MLABs on that deal, which also
paid top-level all-in pricing of 260bp based
on the margin of 200bp over Libor.
Since March 2016, Pakistan has raised a
combined US$3.27bn via six syndicated
loans.
SINGAPORE
LOUIS DREYFUS SIGNS US$600m RCF
has signed a US$600m
LOUIS DREYFUS CO ASIA
three-year revolving credit facility, with 20
banks joining in general syndication.
LISTING ON CARDS
In May, SoftBank Group won approval from
lenders on its ¥2.65trn loan to release the
guarantee from its mobile phone unit as the
latter prepared to list its shares. SoftBank
Corp made a preliminary application last
month to list its shares on the Tokyo Stock
Exchange.
The consent from lenders will become effective
if the TSE approves the listing of SoftBank Corp.
SoftBank Group said that all other guarantees
from SoftBank Corp to the parent’s other
loans and unsecured straight corporate bonds,
including yen and foreign currency-denominated
bonds, will also be released successively. As a
result, all of SoftBank Group’s liabilities will not
have guarantees.
Wakako Sato
53
 Agricultural Bank of China Singapore, ANZ, Taipei Fubon Commercial Bank. Participants
DBS Bank, United Overseas Bank and Westpac are Land Bank of Taiwan, Shin Kong
are the mandated lead arrangers and Commercial Bank and CTBC Bank. EUROPE/MIDDLE
BOOKRUNNERSûOFûTHEûlNANCINGûWHICHûWASû
increased from the US$500m target size.
Mandated lead arrangers are Bank of
TAXûNETûPROlTû
China, ABN AMRO, BNP Paribas, CIMB Bank,
Commerzbank, HSBC, Mizuho Bank, OCBC and
Standard Chartered. Lead arrangers are Bank
of Communications, National Australia Bank
and UniCredit Bank.
Arrangers are Taipei Fubon Commercial
Bank, Mega International Commercial Bank,
SMBC, Sumitomo Mitsui Trust Bank, Bank of
America, Deutsche Bank, Hua Nan Commercial
Bank and Korea Development Bank.
Louis Dreyfus Co BV is the guarantor of
the facility, which offers top-level all-in
pricing of 147bp based on an interest
margin of 90bp over Libor.
Banks will get a 10bp utilisation fee if
less than a third of funds are drawn, a
20bp utilisation fee if 33%–66% of funds
are drawn, and a 40bp utilisation fee if
more than two-thirds of funds are drawn.
Proceeds are for investments,
The deal offered an interest margin
ranging from 160bp to 230bp over Libor
BASEDûONûTHEûBORROWERSûPRE
It will pay any excess interest rate beyond
a 35bp difference between TAIFX and
Libor. Banks were offered a top-level
upfront fee of 30bp. Signing was last
Friday.
&UNDSûAREûTOûRElNANCEûAû53Mû
three-year loan completed in January
2016. Mega also led that deal, which
offered a margin ranging between 235bp
and 275bp over three or six-month Libor.
The borrower will also pay any excess
interest rate beyond a 35bp difference
between TAIFX and Libor.
Taiwan Glass Industrial indirectly owns
a 38% stake in the Hong Kong-based
borrower, which is a soda ash
manufacturer.
VIETNAM
EAST/AFRICA
DENMARK
NKT LINES UP €450m REFI
Electrical cable company NKT GROUP is lining
UPûAûõMûRElNANCINGûOFûITSûEXISTINGûBANKû
facilities.
4HEûRElNANCINGûINCLUDESûAûõMûFOUR
year revolving credit facility from Danske
Bank, Nordea and Nykredit that will come into
force after the issuance of an up to €150m
1,000-year hybrid bond.
Nordea is structuring adviser, and Danske
Bank, Nordea and Nykredit are joint
bookrunners on the hybrid bond which has
AûlRSTûCALLûDATEûAFTERûFOURûYEARS
An investor roadshow for the bond will
STARTûONû!UGUSTûû4HEûlNALûSIZEûANDûPRICINGû
of the bond will be determined through a
bookbuilding process.
RElNANCINGûCAPITALûEXPENDITUREûWORKINGû
capital and general corporate purposes.
The signing was on August 6.
The borrower, formerly called Louis
Dreyfus Commodities Asia, last raised a
VIETTEL INCREASES LOAN TO US$135m
VIETTEL GLOBAL INVESTMENT, a subsidiary of
Vietnam’s largest communications
.+4SûNEWûlNANCINGûSTRUCTUREûWILLû
replace all existing committed bank
facilities.
.+4ûBACKEDûITSûõMûACQUISITIONûOFû!""û
HV Cables, which was completed in March
US$500m three-year revolver in company Viettel Group, has increased its ûWITHûAûõM
EQUIVALENTûBRIDGEûLOANû
û
September. That facility was increased six-year amortising loan to US$135m from convertible to longer term debt - arranged
from the US$400m target size. ABN the US$100m target. by Danske Bank and Nordea Bank.
AMRO, HSBC, OCBC Bank and Societe Maybank was the sole mandated lead
Generale were the MLABs of the deal, arranger and bookrunner of the deal,
which attracted 24 other lenders in which offered top-level all-in pricing of FRANCE
general syndication. The loan paid top- 350.64bp based on an interest margin of
level all-in pricing of 152bp based on a 325bp over Libor and an average life of 3.9 A65 REFIS WITH €825.5m LOAN
margin of 95bp over Libor. years.
.ETHERLANDS
HEADQUARTEREDû,OUISû Maybank was joined by mandated lead EIFFAGE and SANEF-owned motorway
Dreyfus is a commodities trading and arranger OCBC and lead arrangers Cathay concession company A’LIENOR, which
processing company with businesses in United Bank, CTBC Bank, Shanghai operates the A65 Pau-Langon motorway, has
grains, oilseeds, sugar, coffee, cotton, Commercial & Savings Bank and Taishin closed a €825.5m 10-year syndicated loan to
juice, rice and logistics. International Bank. RElNANCEûEXISTINGûLOANSûTHATûWEREûDUEûTOû
The borrowing has a letter of comfort mature in January 2020.
from Viettel Group, which is wholly owned
TAIWAN by Vietnam’s Ministry of Defence. Viettel EMEA LOANS BOOKRUNNERS – FULLY
Group owns a 99% stake in Viettel Global. SYNDICATED VOLUME
SHIHLIEN UPS LOAN TO US$330m 4HEûLOANûHASûlNANCIALûANDûOWNERSHIPû BOOKRUNNERS: 1/1/2018 TO DATE
covenants. Managing No of Total Share
SHIHLIEN CHINA HOLDING has increased a three- Funds are for Viettel Global’s capital bank or group issues US$(m) (%)
year term loan to US$330m from the expenditure and investments in South-East 1 BNP Paribas 131 39,938.09 9.0
US$300m target. Asia. 2 JP Morgan 50 29,036.94 6.6
Mega International Commercial Bank was Viettel Global has not borrowed 3 SG 97 26,751.81 6.0
the original mandated lead arranger and previously in its own name, although it had 4 Credit Agricole 115 24,421.66 5.5
bookrunner of the transaction, while EYEDûAûlVE
YEARûLOANûOFûAROUNDû53MûFORû 5 UniCredit 102 21,259.60 4.8
Chang Hwa Commercial Bank and Hua Nan ANûACQUISITIONûINû4ANZANIAûINûû4HEû 6 Deutsche Bank 73 20,870.36 4.7
Commercial Bank came in with the same group’s Cambodian unit, Viettel Cambodia, 7 Citigroup 61 20,073.55 4.5
title. completed a debut US$50m two-year 8 HSBC 84 17,751.12 4.0
Co-arrangers are Shanghai Commercial & offshore term loan in April 2016. ANZ was 9 ING 91 17,641.42 4.0
Savings Bank, Taiwan Cooperative Bank and the sole MLAB of that deal, which offered 10 BAML 49 15,531.43 3.5
Taiwan Business Bank. Managers are Taishin top-level all-in pricing of 265bp based on a Total 521 442,863.81
International Bank, Yuanta Commercial Bank, margin of 230bp over Libor and a two-year Proportional credit

Bank Sinopac, Jih Sun International Bank and average life. Source: Thomson Reuters SDC code: R17

54 International Financing Review August 25 2018


BBVA, Banco de Sabadell, Banco Santander,
Bankia, BNP Paribas, CaixaBank, Commbank
Europe, Credit Agricole CIB, KfW IPEX-Bank, La
Banque Postale and Societe Generale are
providing the loan, which is also planned to
be sold to institutional investors in the
secondary market.
The loan closed oversubscribed.
4HEûRElNANCINGûALSOûINCLUDEDûTHEûTRANSFERû
and restructuring of existing hedging
contracts - interest rate swaps - to optimise
THEûALL
NORWAY
SHEARWATER TAPS FOR SCHLUMBERGER
UNIT
Seismic exploration company SHEARWATER
GEOSERVICES, jointly owned by GC Rieber
Shipping and Rasmussengruppen, is
BACKINGûITSû53MûACQUISITIONûOFû
Schlumberger’s marine seismic business
LOANS EMEA
The borrower, rated Baa3/BB+/BBB–
(Moody’s/Fitch/Capital Intelligence), is a
corporate and retail bank, Oman’s fourth-
largest in terms of assets.
SAUDI ARABIA
PIF RAISES US$11bn LOAN
SAUDI ARABIA’s sovereign wealth fund has
INûCOSTûOFûTHEûRElNANCINGûSAIDû#LIFFORDû WITHûAû53MûDEBTûlNANCING raised an US$11bn loan from banks, Reuters
Chance, legal adviser to the borrower.
Eiffage owns 65% and Sanef 35% of A’lienor,
which holds the A65 concession until 2067.
ûWHICHûALSOûINCLUDESûANû transformation plans.
GERMANY
SIXT BAGS DIGITAL SCHULDSCHEIN
4HEûlNANCINGûWILLûBEûPROVIDEDûBYûDNB
Bank and Sparebank 1 SR-Bank.
4HEûACQUISITIONû
additional US$50m cash injection into
Shearwater for working capital - will also be
funded through US$325m of new cash
EQUITYûTHATûHASûBEENûFULLYûUNDERWRITTENûBYû
Rasmussengruppen.
GC Rieber Shipping intends to subscribe to
REPORTEDûASûITûSEEKSûTOûBOOSTûITSûlREPOWERûTOû
lNANCEûTHEûKINGDOMSûECONOMICû
News of the loan, which was increased
from an initial guide size of US$6bn to
US$8bn, comes after Saudi Arabia
INDElNITELYûPOSTPONEDûPLANSûTOûLISTûSTATEûOILû
giant ARAMCO.
4HISûISûTHEûlRSTûCOMMERCIALûLOANûFORûTHEû
6EHICLEûLEASINGûlRMûSIXT has placed a €200m AROUNDû53MûOFûTHEûEQUITYûINITIALLYûFUNDINGû PUBLIC INVESTMENT FUND, which has been
Schuldscheindarlehen via the digital, the subscription through a shareholder loan charged with helping to deliver the Vision
blockchain-capable VC Trade platform. provided by GC Rieber, its largest shareholder. 2030 reform plan announced by the
0ROCEEDSûWILLûBEûUSEDûTOûlNANCEûGROWTHûINû !FTERûTHEûCLOSINGûOFûTHEûACQUISITIONû'#û government in 2016, an ambitious
Sixt’s rental business. Rieber Shipping intends to carry out a rights economic programme designed to free the
4HEûlNANCINGûCOMPRISESûTWOûlVE
YEARû ISSUEûTOûRElNANCEûTHEûSHAREHOLDERûLOAN kingdom from dependence on oil exports.
TRANCHESûWITHûlXEDûANDûVARIABLEûRATESûOFû 3HEARWATERûISûACQUIRINGûTHEûMARINEû The PIF has also made substantial
INTERESTûANDûAûSEVEN
YEARûlXED
RATEûTRANCHE seismic assets and operations of commitments to technology companies or
4HEû33$ûWASûPLACEDûINûJUSTûlVEûWEEKSûWITHû WesternGeco, the geophysical services investments, including a US$45bn agreement
high demand from investors and pricing was product line of Schlumberger, including to invest in a giant tech fund led by Japan’s
at the lower end of marketing, Sixt said. marine seismic vessels, proprietary Softbank.
Helaba and DZ Bank ARRANGEDûTHEûlNANCING ACQUISITIONûTECHNOLOGYûANDûFACILITIES On top of that, it has tentatively
Schlumberger will receive US$600m in committed US$20bn to an infrastructure
CASHûPLUSûAûûPOST
CLOSINGûEQUITYûINTERESTû investment planned with Blackstone.
IRELAND in Shearwater. Schlumberger will also be The sovereign fund will pay a margin of
entitled to earn-out payments linked to 75bp over Libor for the loan, the same as
CAIRN HOMES COMPLETES €350m REFI future vessel usage for a limited period. that which the Saudi government secured
4HEûACQUISITIONûISûEXPECTEDûTOûCLOSEûINûTHEû when it raised a syndicated loan earlier this
CAIRN HOMES has completed a €350m FOURTHûQUARTER year, a source told Reuters.
RElNANCINGûREPLACINGûITSûEXISTINGûõMû
senior secured bank facility.
4HEûlNANCINGûINCLUDESûAûõMûFOUR
OMAN
year term loan and revolving credit facility
with Allied Irish Banks, Ulster Bank and Barclays
Bank. There is also a €72.5m private
placement from Pricoa Capital maturing
between 2024 and 2026.
4HEûRElNANCINGûISûSECUREDûBYûAûCORPORATE
syndication.
level debenture.
“The new facilities will support the
continued growth of our business as well as
REDUCINGûOURûlNANCEûCOSTSûANDûEXTENDINGû
Saudi Arabian borrower, according to LPC data.
BANK SOHAR CLOSES US$250m LOAN
BANK SOHAR has closed a US$250m three-year
loan with nine banks joining in general
The fund is expected to receive tens of
Arab Banking Corp and Emirates NBD were
the mandated lead arrangers and
bookrunners of the transaction, which paid
a top-level all-in pricing of 216bp based on
An US$11bn deal would be the largest
syndicated or clubbed loan on record for a
4HEûDEBTûRAISINGûDIVERSIlESû0)&SûSOURCESû
of funding, which in the past were capital
injections and asset transfers from the
government as well as earnings from
existing investments.
billions of dollars from the sale of part or all
of its stake in petrochemical company Saudi
Basic Industries Corp to Saudi Aramco.
Riyadh-listed SABIC, the world’s fourth-
THEûMATURITYûPROlLEûOFûOURûDEBTvûSAIDû4IMû an interest margin of 190bp over Libor and a biggest petrochemicals company, is 70%
+ENNYû#AIRNSûGROUPûlNANCEûDIRECTOR
Cairn originally agreed its previous bank
facility for €150m in 2015 via Allied Irish Banks.
4HEûlNANCINGûWASûINCREASEDûTOûõMûINû
March 2016 after Ulster Bank joined the
facility with a commitment of €68m.
#AIRNûACQUIRESûGREENlELDûORûBROWNlELDû
sites in Ireland that are suitable for residential
development, with a focus on Dublin and the
Dublin commuter belt, as well as in Cork and
Galway and other major urban centres.
remaining life of two years and 11 months.
Abu Dhabi Commercial Bank, DenizBank, ICICI
Bank and Arab Investment Co joined the deal as
MLAs, while Banque Misr, Misr Bank Europe,
State Bank of India Bahrain, Tunis International
Bank and UniCredit came in as arrangers.
Funds are for general corporate purposes.
In March, the bank raised a US$300m
three-year term loan. That deal offered a top-
level all-in pricing of 225bp via a margin of
200bp over Libor and an upfront fee of 75bp.
International Financing Review August 25 2018
owned by the PIF. It has a market
capitalisation of US$98bn.
TURKEY
ALTERNATIFBANK RAISES US$134m
ALTERNATIFBANK has raised a US$134m
syndicated loan with 11 banks from 11
different countries.
55
 That facility was split between US$62m and
€62m and comprised one and two-year tranches.
The one-year facility paid 205bp over
Libor for dollars and 195bp over Euribor for
euros, while the two-year facility paid 270bp
over Libor.
There is a commitment fee of 40% of
the applicable margin on undrawn funds.
A ticking fee of 15% of the applicable
margin is payable for the period beginning 31
days after the facilities agreement to 90 days,
rising to 30% for the period from 90 days after
The company said in May that it was
RElNANCINGûITSûEXISTINGû53MûRESERVEû
based lending facility, extending and
increasing the facility amount to US$350m,
allowing Ithaca to retire an existing
US$140m term loan.
The loan will replace a US$225m- THEûFACILITIESûAGREEMENTûTOûTHEûlRSTûCLOSINGû !SûPARTûOFûTHEûRElNANCINGûANûEXISTINGû
EQUIVALENTûDUAL
CURRENCYûSYNDICATEDûLOANû date or the last day of the certain funds period. US$100m parent loan from Delek will be
signed with a group of 17 banks last July. In the medium term, CareTech said it replaced with a US$100m subordinated
That loan was split between US$123m and
€89m and comprised one and two-year loans.
YEARûTERMû
The one-year facility paid 185bp over Libor for
dollars and 175bp over Euribor for euros, while
remains committed to maintaining leverage SHAREHOLDERûLOANûWHICHûRANKSûWITHûEQUITY
at between approximately 3-4 times net debt )THACAûAGREEDûAû53MûlVE
to Ebitda. loan with an international bank in July. The
CareTech, which is looking to bolster its term loan, which is expected to be approved
the two-year facility paid 250bp over Libor.
Alternatifbank’s deal was the last of the
lRSTûWAVEûOFû4URKISHûBANKSûANNUALû
RElNANCINGSûANDûCLOSEDûBEFOREûTHEûLATESTû
downgrades of Turkish debt by ratings
agencies S&P and Moody’s on August 17.
child care business and has been in talks
with Cambian since July, is offering cash and
stock or all cash in the deal that could be
valued at up to £372m. The latest terms are
lower than the initial offers.
#ARE4ECHûSAIDûTHEûPROPOSEDûACQUISITIONû
INûTHEûTHIRDûQUARTERûWILLûBEûUSEDûTOûREPAYû
Ithaca’s existing US$300m senior unsecured
bond due to mature in July 2019.
The loan is secured by a guarantee from
Delek Group.
)SRAELSû$ELEKû'ROUPûACQUIREDû)THACAûINû
S&P downgraded Turkey’s sovereign
rating to B+ from BB- while Moody’s
downgraded Turkey’s long-term issuer
rating to Ba3 from Ba2.
Any new loans for Turkish bank borrowers
are on hold as the country continues to
STRUGGLEûWITHûITSûlNANCIALûCRISISûSEEû4OPû.EWS HASûCLOSEDûAûaMûlVE
YEARûSYNDICATEDû NORTH AMERICA
UK
RATEûMORTGAGEûLOANSûONûTHEûû
CARETECH DETAILS CAMBIAN DEAL
Details have emerged on social care services
lRMûCARETECH HOLDINGS’ £439m loan
YEARû
lNANCINGûBACKINGûITSûACQUISITIONûOFûRIVALû
Cambian Group.
CareTech has agreed new banking
facilities with Lloyds Bank and National
Westminster Bank as mandated lead
RATEûDEBTûANDû PERMITTEDûACQUISITIONSûANDûFORûGENERALû
arrangers, bookrunners and underwriters to
BACKûTHEûACQUISITIONûANDûFORûRElNANCING
National Westminster Bank is facility
agent and security agent.
The facilities include a £167m 3.5-year
term loan paying an initial margin of 300bp
OVERû,IBORûANDûAûaMûlVE
YEARûTERMûLOANû Mandated lead arranger Lloyds Bank led the
paying 325bp.
There is a £79.66m six-month bridge loan
paying 150bp that will be used to facilitate
CASHûCONlRMATIONûAHEADûOFûUTILISINGû
Cambian’s net cash position, which will be
repayable shortly following completion.
4HEREûISûALSOûAûaMûlVE
YEARûREVOLVINGû
credit facility paying 325bp.
Margins on the term loans ratchet on an
adjusted leverage grid.
For 4.5 times or more the 3.5-year term
LOANûPAYSûBPûOVERû,IBORûANDûTHEûlVE
YEARû through an increased and extended reserve
pays 325bp; for 4-4.5 times the margins are
250bp and 275bp; for 3.5-4 times the
margins are 225bp and 250bp; for 3-3.5
times the margins are 200bp and 225bp; for
2.5-3 times the margins are 175bp and
will expand its presence in education and
behavioural health services for children.
GNL REFINANCES
Real estate investment trust GLOBAL NET LEASE
LOANûTOûRElNANCEûDEBTûONûû5+ûPROPERTIES
The loan, which is secured on 43 assets in
the UK, replaces around £209m of individual
lXED
RElNANCEDûPROPERTIES
4HEûlNANCINGûCOMPRISESûAûaMûFACILITYû
and a £130m facility.
The loan pays a margin of 197.5bp over
three-month sterling Libor, with the interest
RATEûONûûOFûTHEûLOANûAMOUNTûlXEDû
through swaps to 3.299%.
h4HEûNEWûlNANCINGûPROVIDESûUSûWITHûAû
BALANCEûOFûlXEDûANDûmOATING
lowers our cost of debt on the UK assets to
an estimated 3.20% all-in weighted average
interest rate,” James Nelson, GNL’s chief
EXECUTIVEûOFlCERûSAID
4HEûRElNANCINGûALSOûEXTENDSû'.,SûAVERAGEû
debt maturity to 3.9 years from 3.3 years.
For A- the margin is 112.5bp over Libor
lNANCINGûWHILEûPrudential Insurance Co of
America also participated.
CBRE Capital Advisors advised and arranged
THEûlNANCING
ITHACA UPS RBL
Fargo are joint lead arrangers and joint
North Sea oil and gas operator ITHACA ENERGY
WILLûFUNDûITSûACQUISITIONûOFû'REATERû3TELLAû
Area (GSA) licences and associated
infrastructure interests of Dyas and Petrofac
SunTrust Bank, JP Morgan and HSBC each
based lending facility.
Ithaca will pay an initial US$130m for the
ACQUISITIONûPLUSûDEFERREDûPAYMENTSûOFû
US$120m payable over 2020 to 2023.
Dependent on the future performance of
*UNEûûFUNDINGûTHEûACQUISITIONûTHROUGHû
EXISTINGûCASHûANDûCASHûEQUIVALENTûRESOURCES
UNITED STATES
ENSTAR AGREES US$600m REFI
Bermuda-based insurance company ENSTAR
GROUPûHASûAGREEDûAû53MûlVE
unsecured revolving credit facility, replacing
its existing RCF that was due to mature in
September 2019.
4HEûlNANCINGûISûAVAILABLEûTOûFUNDû
corporate purposes.
Enstar has the option to increase the
lNANCINGûBYûUPûTOû53MûTHROUGHûEXISTINGû
lenders or through the addition of new lenders.
4HEûlNANCINGûPAYSûAûMARGINûANDûAû
commitment fee on a ratings based grid.
with a 20bp commitment fee; for BBB+ it is
137.5bp and 25bp; for BBB it is 162.5bp and
30bp; for BBB- it is 187.5bp and 32.5bp; and
for BB+ it is 212.5bp and 35bp.
Enstar is rated BBB by S&P and Fitch.
National Australia Bank, Barclays and Wells
bookrunners each committing US$105m.
National Australia Bank is administrative
agent and documentation agent, while Barclays
and Wells Fargo are syndication agents.
committed US$70m while ING and Lloyds
Bank each committed US$37.5m.
The previous facility, which was last
amended in March 2017 to increase the facility
to US$831.25m from US$665m previously, paid
200bp; and for lower than 2.5 times the THEû3TELLAûANDû(ARRIERûlELDSû0ETROFACûMAYû a margin ranging between 190bp to 265bp over
margins are 150bp and 175bp. earn up to an additional US$28m by 2023. Libor. That facility has been terminated.

56 International Financing Review August 25 2018

 LOANS AMERICAS

TRAILSTONE SIGNS US$125m REFI The loan pays a margin based on the A 50bp fee on outstanding loans is due 90
Canadian dollar offered rate or the Canadian days after closing, 75bp is due 180 days after
Commodity trading company TRAILSTONE GROUP prime rate. closing and 100bp is due 270 days after
has signed a US$125m one-year European For a rating of A-/A3 it pays 87.5bp/0.0bp closing.
BORROWINGûBASEûFACILITYûRElNANCINGûITSû
existing US$232m European credit facility
which was agreed in August 2017.
4HEûFACILITYûISûUSEDûTOûlNANCEû4RAIL3TONESû
working capital in its European gas and
power business.
4HEûlNANCINGûWASûARRANGEDûBYûING as
bookrunning mandated lead arranger and BNP
Paribas as mandated lead arranger. Societe
Generale was lead arranger, while Citigroup,
Credit Suisse, GarantiBank and Natixis were
arrangers.
ING is also facility agent.
TrailStone’s debut US$200m, one-year
European facility was arranged in August 2016
and was replaced in August 2017 with a
US$232m facility, also coordinated by ING Bank.
4HATûlNANCINGûWASûFORû4RAIL3TONEû5+ûANDû
TrailStone GmbH, guaranteed by TrailStone
(Cayman) LP and TrailStone LP.
BNP Paribas, Citigroup, HSBC, Natixis,
2ABOBANKûANDû3OCIETEû'ENERALEûRElNANCEDû
their existing participation, while
GarantiBank joined as a new lender.
ING Bank was security agent and fronting
bank, while Rabobank was facility agent.
over the Canadian dollar offered rate/ There is also an 11bp ticking fee on
Canadian prime rate for up to 89 days, unfunded commitments.
112.5bp/12.5bp for 90-179 days, Constellation’s increased investment in
137.5bp/37.5bp for 180-269 days and Canopy Growth, which is expected to close
162.5bp/62.5bp thereafter. by the end of October, will bring
For BBB+/Baa1 it pays 100bp/0.0bp for up Constellation’s ownership up to around 38%.
to 89 days, 125bp/25bp for 90-179 days,
150bp/50bp for 180-269 days and
175bp/75bp thereafter.
For BBB/Baa2 it pays 112.5bp/12.5bp for up
to 89 days, 137.5bp/37.5bp for 90-179 days, LATIN AMERICA
162.5bp/62.5bp for 180-269 days and
187.5bp/87.5bp thereafter.
For BBB-/Baa3 it pays 125bp/25bp for up to 89 CHILE
days, 150bp/50bp for 90-179 days, 175bp/75bp
for 180-269 days and 200bp/100bp thereafter. LATAM AIRLINES WRAPS US$302m DEAL
For BB+/Ba1 it pays 150bp/50bp for up to
89 days, 175bp/75bp for 90-179 days, LATAM AIRLINES GROUP has closed a US$302m
200bp/100bp for 180-269 days and syndicated loan backing a portfolio of 32
225bp/125bp thereafter. aircraft.
Comcast partially repays
4RAIL3TONEûHASûOFlCESûINû!USTINû.EWû9ORKû
£16bn bridge
London and Berlin. „ US Media giant extends acceptance period for Sky’s bid

US media group COMCAST has refinanced a FEES

CANADA portion of its £16bn bridge loan backing the Comcast paid BAML a structuring fee of 6bp on
acquisition of Sky Plc with a new £6bn term loan, the aggregate amount of the bank’s term facility
CONSTELLATION DETAILS C$5bn BRIDGE as it offers Sky shareholders more time to accept commitments. Meanwhile, Wells received 2bp for
its bid to buy the British pay TV group. structuring the deal.
Details have emerged on Corona beer maker The £6bn term loan, led by Bank of America Comcast also paid a 5bp upfront fee to
CONSTELLATION BRANDS’ C$5.078bn (US$3.9bn) Merrill Lynch and Wells Fargo, repays the £3.1bn lenders that also participated in the April credit
364-day bridge loan backing its US$4bn portion of the 364-day unsecured bridge loan the facilities.
investment into Canada’s top cannabis company announced on April 25 to back its bid for The company additionally paid 5bp to new
producer Canopy Growth. Sky, along with up to £7bn in unsecured term loans. lenders with commitments of £500m or above,
4HEûUNSECUREDûlNANCINGûISûBEINGûARRANGEDû The repayment of the bridge loan was 4bp to commitments under £500m and above
by Bank of America Merrill Lynch as sole lead announced on Wednesday as Comcast extended £250m, and 3bp for commitments under
arranger and bookrunning manager. to September 12 the acceptance period for its £250m.
£25.9bn cash offer for Sky. The company will pay an additional fee upon
AMERICAS LOANS BOOKRUNNERS – FULLY The term loans carry an interest rate of 75bp funding.
SYNDICATED VOLUME to 125bp over Libor based on ratings. If new commitments are added the company
BOOKRUNNERS: 1/1/2018 TO DATE The loan pays a commitment fee ranging from will pay additional commitment fees of: 62.5bp
Managing No of Total Share 9bp to 11bp also based on ratings. to existing lenders in the April credit facilities;
bank or group issues US$(m) (%) The new term loan agreement contains a 6.25bp to new lenders with commitments of
1 BAML 801 236,038.99 11.9 maximum net debt to Ebitda covenant that caps £500m or above, 5bp to commitments under
2 JP Morgan 719 222,143.91 11.2 leverage at 5.75 times. £500m and above £250m, and 3.75bp for
3 Wells Fargo 572 161,505.66 8.2 Besides affirmative covenants and events of commitment under £250m.
4 Citigroup 393 131,466.20 6.6 default, the new term loan also contains negative Comcast’s April bid formalised an offer first
5 RBC 320 82,085.46 4.1 covenants that restrict Comcast’s ability to create made in February and put pressure on Rupert
6 Goldman Sachs 261 78,457.65 4.0 security over assets, allow certain subsidiaries Murdoch’s Twenty-First Century Fox, which
7 Barclays 298 78,365.94 4.0 that do not guarantee the term loan to incur already owned a 39% stake in Sky, to raise a cash
8 Morgan Stanley 193 69,021.54 3.5 additional debt, and merge or consolidate. offer made in December 2016.
9 MUFG 202 67,237.24 3.4 The loan may be voluntarily prepaid or Comcast said it has received acceptances for
10 Deutsche Bank 243 57,585.19 2.9 cancelled by Comcast without penalty. about 3.84 million of Sky’s shares, or 0.21% of its
Total 2,951 1,980,013.84 The terms of the bridge facility remain share capital.
Proportional credit unchanged. Michelle Sierra
Source: Thomson Reuters SDC code: R7

International Financing Review August 25 2018 57

 4HEûlNANCINGûWASûLEDûBYûDVB Bank and set at 99 versus the initially proposed
BNP Paribas as joint lead arrangers and 99.5. EUROPE/MIDDLE EAST/
underwriters. The second-lien debt also priced in line AFRICA
Airbus Bank, SMBC and Korea Development with expectations at 775bp over Libor with a
Bank were co-arrangers and underwriters. ûmOORûWHILEûTHEûDISCOUNTûWASûlRMEDûATûû WEATHERFORD AMENDS LOANS
DVB also acted as structuring agent and which was on the tight end of guidance of
facility agent. 98.5 to 99. 3WISSûOILûlELDûSERVICESûGROUPûWEATHERFORD
4HEûLOANûlNANCESûû!IRBUSû!
ûû The company altered the ticking fees on
Airbus A320-200, four Boeing 767-300ERF
and one Boeing 767-300ER.
LATAM offers air services to around 140
destinations in 25 countries, and is
present in six domestic markets:
Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, in addition to its
international operations in Latin America,
Europe, the US, the Caribbean, Oceania
and Africa.
LIENû second lien facility.
LEVERAGED LOANS
UNITED STATES
LIENû non-extending lenders comprising MUFG,
BAY CLUB TWEAKS LBO LOANS
Active lifestyle and hospitality company BAY
LIENûTERMûLOANûISûBPû
CLUB made changes to US$765m of loans
BACKINGûITSûBUYOUTûBYûPRIVATEûEQUITYûlRMû
KKR.
4HEûDEALûCOMPRISESûAû53MûlRST
LIENû launch.
term loan, a US$125m second-lien term
LIENûTRANCHEûHASûûSOFTûCALLû
INTERNATIONAL has amended its existing
the delayed-draw portions so that the debt
will now pay lenders half the margin after
30 days and the full margin after 60 days.
The ticking fee was originally scheduled to
pay half the margin after 60 days and the
full margin after 120 days.
Morgan Stanley led the transaction
alongside Bank of America Merrill Lynch, Jefferies
and KKR.
KKR has agreed to purchase Bay Club
from York Capital Management and
minority investors, including JMA
Ventures and Roxborough Group.
4HEûBORROWERûISûRATEDû"û"û4HEûlRST
debt is rated B2/B+, while the second-lien
loans are rated Caa2/CCC+.
Outsourced customer care provider 24-7
INTOUCHûHASûWRAPPEDûPRICINGûONûTHEûlRST
portion of a US$370m credit facility at the
wide end of guidance and deepened the
discount.
0RICINGûONûTHEûlRST
-ARGINSûONûTHEûlNANCINGûAREûBASEDûONûAû
OVERû,IBORûWITHûAûûmOORûVERSUSûGUIDANCEûINû
the 400bp-425bp range. The loan was issued
at a discount of 98 compared with 99 at
leverage of under 1.0 times; 355bp and 40bp
4HEûlRST
for 1.0-2.0 times; 395bp and 50bp for 2.0-2.5
US$900m revolving credit facility.
4HEûAMENDEDûlNANCINGûNOWûCOMPRISESûAû
US$583m senior unsecured revolving credit
facility and a new US$317m 364-day senior
secured second lien revolving credit facility.
Existing lenders comprising JP Morgan,
Deutsche Bank, Morgan Stanley, Wells Fargo,
Citigroup, SEB, TD Bank, RBC, Nordea and
Standard Chartered have agreed to extended
commitments totalling US$674m of the
lNANCINGûWITHû53MûSETûTOûMATUREûINû
June 2020 as part of the unsecured facility
and the remainder making up the new
In November the extended unsecured
facility will be reduced by US$54m.
Commitments totalling US$226m from
Barclays, UniCredit, BBVA, Goldman Sachs and
Bank of America Merrill Lynch will mature in
July 2019.
leverage ratio grid.
The extended commitments pay 267.5bp
over Libor with a 32.5bp facility fee for
LOANûAû53MûDELAYEDûDRAWûlRST
LIENû protection for 12 months and includes MFN times; and 445bp and 75bp for over 2.5 times.
term loan, a US$65m delayed draw second- protection of 50bp for life. The non-extended commitments pay
lien term loan and a US$50m revolving The funding comprises a US$45m 192.5bp over Libor with a 32.5bp facility fee for
credit facility. REVOLVINGûCREDITûAû53MûlRST
LIENûTERMû leverage of under 1.0 times; 280bp and 40bp for
4HEûlRST
LIENûTERMûLOANûDEBTûISû loan and an US$80m second-lien term loan 1.0-2.0 times; 320bp and 50bp for 2.0-2.5 times;
scheduled to mature in seven years while that priced at 775bp over Libor and matures and 370bp and 50bp for over 2.5 times.
the second-lien loans will mature in eight in August 2026. The new second lien facility pays 217.5bp
years. RBC Capital Markets and Credit Suisse over Libor with a 32.5bp facility fee for
0RICINGûONûTHEûlRST
LIENûLOANSûISûINû were joint lead arrangers. Ontario leverage of under 1.0 times; 305bp and 40bp
line with guidance at 375bp over Libor 4EACHERSû0ENSIONû0LANûISûTHEûlNANCIALû for 1.0-2.0 times; 345bp and 50bp for 2.0-2.5
WITHûAûûmOORûBUTûTHEûDISCOUNTûWASû sponsor. times; and 395bp and 75bp for over 2.5 times.

US LEVERAGED LOANS EUROPEAN LEVERAGED LOANS EMEA SPONSORED LOAN BOOKRUNNERS

BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BY VOLUME: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Europe, Middle East, Africa
bank or group issues US$(m) (%) bank or group issues US$(m) (%) Managing No of Total Share
1 JP Morgan 405 90,534.57 10.1 1 BNP Paribas 45 9,168.45 8.0 bank or group issues US$(m) (%)
2 BAML 449 89,866.88 10.0 2 Deutsche Bank 36 8,140.62 7.1 1 Deutsche Bank 22 5,199.67 8.3
3 Wells Fargo 313 70,577.05 7.9 3 Credit Agricole 41 7,877.44 6.9 2 BNP Paribas 27 5,103.42 8.1
4 Barclays 226 52,940.91 5.9 4 HSBC 31 6,150.71 5.4 3 JP Morgan 16 3,741.86 6.0
5 Goldman Sachs 217 47,780.19 5.3 5 JP Morgan 24 6,059.24 5.3 4 HSBC 19 3,699.74 5.9
6 Credit Suisse 219 47,513.09 5.3 6 Goldman Sachs 27 5,999.11 5.2 5 Goldman Sachs 20 3,603.86 5.8
7 Deutsche Bank 211 42,661.58 4.8 7 SG 31 5,837.02 5.1 6 Credit Agricole 26 3,534.15 5.6
8 Citigroup 192 41,246.42 4.6 8 Barclays 25 5,400.47 4.7 7 SG 21 3,526.03 5.6
9 Morgan Stanley 153 34,464.45 3.8 9 Citigroup 18 5,148.31 4.5 8 Barclays 16 3,270.67 5.2
10 RBC 187 32,999.46 3.7 10 Natixis 26 4,734.28 4.1 9 Natixis 20 3,261.30 5.2
Total 1,563 895,447.16 Total 142 114,583.67 10 Credit Suisse 11 2,702.39 4.3
Excluding Project Finance. Excluding project finance. Western Europe only included. Total 91 62,676.36
Excluding project finance.

Source: Thomson Reuters SDC code: P2 Source: Thomson Reuters SDC code: P10 Source: Thomson Reuters SDC code: P13

58 International Financing Review August 25 2018


Mid-market to stay competitive after Labor Day
„ US Lenders have held the line at 400bp, but pricing could fall
The competitive dynamics that have defined US
middle market lending this year are expected
to persist after Labor Day, as the market gears
up and lenders and investors battle to win
mandates and hold on to existing portfolio
assets.
Middle market lenders are optimistic that deal
flow will pick up again in September after a lull
in the second half of August, when few deals
launched. Lenders and investors are preparing to
work aggressively to win those deals and protect
existing assets and incumbent arranging positions.
“Everybody wants to be a lead. That’s how
you control your destiny and make your shop
significant and relevant to sponsors,” a middle
market investor said, adding that the ability to
commit capital and hold in size is critical.
Intensifying competition amid an influx of
capital has seen middle market lending move
away from syndicated deals towards club deals
that only require a handful of investors, which
means that capital providers need to be the first
call for sponsors.
In the first half of this year, twice as many
middle market buyouts were financed by direct
lenders as traditional syndicated loans, LPC data
show.
“If a sponsor takes three lenders to the dance,
you want to be in that rotation,” a second middle
market investor said.
This dynamic, combined with a borrowers’
market where demand exceeds supply, naturally
benefits larger, more established platforms
that can compete more aggressively on price or
Weatherford agreed a US$1.65bn loan
RElNANCINGûINû-AYûûVIAûBOOKRUNNERSû*0û
Morgan, Citigroup, Deutsche Bank, Morgan
Stanley, MUFG, and Wells Fargo.
Participants were SEB, Toronto Dominion
Bank, Royal Bank of Canada, Standard
Chartered Bank, Barclays Bank, Nordea
Bank, UniCredit Bank, BBVA and Arab
Banking Corp.
leverage in order to hold on to mandates and
portfolio assets.
One incumbent lender inked an all-senior
deal with 7.25 times total leverage at pricing
of 525bp over Libor recently, the first investor
said. Existing lenders were unable to join the
new deal at that price, but the lender held the
entire transaction and brought in only one
participant.
“If you know a business and know it well, you
are willing to defend your portfolio,” the first
investor said.
Existing platforms are also continuing to build
out teams to expand direct lending offerings and
new platforms still being formed, which means
appetite is not waning as yet.
Earlier this summer, Alcentra, an alternative
fixed income specialist for BNY Mellon
Investment Management, announced the
expansion of its US direct lending team, bringing
on board Suhail Shaikh and Peter Glaser as
managing directors and co-heads of US direct
lending based in New York.
OUTLOOK BRIGHT
Middle market sponsored volume for syndicated
and direct lending of US$95.5bn in the first half
of 2018 is on track to top 2017’s combined tally
of US$151bn, the data show.
Optimistic market participants expect a
steady flow of deals in September, as a benign
macroeconomic environment and solid demand
from private equity buyers contribute to healthy
pipelines.
The company’s €348m Term Loan B was
bid at an average of 85.25 on Thursday, after
dropping below 90 on July 4.
This is 14.89% off the loan’s highest
secondary price of 100.19 on January 24. The
loan fell below par or face value on February 9.
The decline has brought mark to market
losses for some investors, although one
investor viewed the current price as
LOANS LEVERAGED LOANS
M&A activity is expected to dominate, as
many of the deals that could be refinanced and
repriced were done earlier in the year.
There is plenty of sponsor capital to invest and
sellers are trying to evaluate those opportunities,
a third middle market lender said. “Generally
speaking there is a clear runway for the back
third of the year.”
There could be a pause in supply around the
November mid-term elections as sponsors and
issuers wait to see what a possible change in
control in the House of Representatives could
mean from a policy perspective.
Demand is expected to remain strong as
excess capital seeks high quality paper. “High
quality deals remain highly sought after,” the
second lender said.
Pricing has mostly stabilised compared
with earlier in the year, as traditional middle
market lenders have held the line at 400bp over
Libor for a first-lien institutional term loan, but
spreads could potentially go lower if demand
ramps up even further.
Middle market institutional term loans
are yielding 7.06% so far in the third quarter,
up from 6.64% in the second quarter and
significantly higher than the 5.95% seen in the
third period of last year.
Despite improving yields, market participants
would not object to some volatility to take the
heat out of the market.
“The market is waiting for a speedbump,” the
second lender said, “though not a pothole.”
Leela Parker Deo
Parfuemerie Akzente generated net sales
of around €75m in 2017.
ASIA-PACIFIC
NATURE’S CARE CLOSES A$280m LBO
LOAN
4HEûlNANCINGûCOMPRISEDûAû53BNû
YEARûAMORTISINGûLOANû
three-year revolving credit facility and a
US$500m, four-year secured term loan.
DOUGLAS TO RELEASE DELAYED RESULTS
German beauty retailer DOUGLAS will release
oversold.
“The problem is that investors obviously
don’t want to try and catch a falling knife,”
he said.
Douglas reported Ebitda of €199m for the
six months to March 31. CVC bought Douglas
from Advent in 2015 for around €3bn.
4HEû!MûlVE
backing a Chinese state-backed
consortium’s buyout of Australia’s NATURE’S
CARE MANUFACTURE has closed after attracting
10 banks in general syndication.
Standard Chartered and UOB Bank were the
mandated lead arrangers and bookrunners
ITSûlNANCIALûRESULTSûONû!UGUSTûûAFTERûAû
previous delay hit the secondary prices of its
loans and bonds in early July.
)NVESTORSûSAIDûTHATûQUESTIONSûREMAINûOVERû
the retailer’s domestic performance, as
European retailers continue to face stiff
COMMERCEûBUSINESSûANDûWILLûBEûlNANCEDû
online competition.
4HEûCOMPANYûCOMPLETEDûTHEûACQUISITIONû
of a majority stake in Parfuemerie Akzente
on August 16, which owns the online shop
parfumdreams.
4HEûACQUISITIONûEXPANDSû$OUGLASSû
E
include a maximum net leverage covenant
BYû$OUGLASûFROMûOPERATINGûCASHmOW
International Financing Review August 25 2018
on the facility, which has an interest
margin of 330bp over BBSY calculated on
an average life of 4.55 years. The loan
amortises by 5% every year with a bullet
repayment at maturity and covenants
of 5 times earnings.
59
 Mandated lead arrangers are Bank of China
Sydney, China Everbright Bank, Bank of
Communications Sydney, China Minsheng Banking
Corp, KDB Asia and KDB Singapore. Lead
arrangers are MUFG, Taishin International Bank,
E. Sun Commercial Bank, Shinhan Bank and
Rabobank.
Lenders were offered a top-level upfront
fee of 136.5bp.
The borrowing entity is a special-purpose
vehicle to be set up in Australia.
China Jianyin Investment (JIC) – one of
China’s largest state-owned funds – and
PRIVATEûEQUITYûFUNDû4AMARû!LLIANCEûAREû
buying a majority stake in the family-owned
vitamin company valued at A$800m. Its
founders and current owners, the Sydney-
based Wu family, will retain the remaining
minority stake in the 28-year-old company,
Reuters reported.
Nature’s Care, the country’s third-largest
vitamin company, also makes supplements
and skin care products.
4HEûACQUISITIONûISûEXPECTEDûTOûCLOSEûINûTHEû
second half of the year. UBS is advising
Nature’s Care, while Deutsche Bank is the
buy-side adviser.
JIC’s investments include medical care,
ARTIlCIAL
Investors eye higher private
debt commitments in H2
„ EUROPE Private debt favoured by investors due to reliable income stream
More than three quarters of institutional
investors committed to private debt are planning
to increase their allocation in the second half of
2018, according to a survey from research firm
Preqin.
Some 76% of respondents said they will
invest this year, while 15% expect to commit
further capital in 2019. 9% said they were
looking beyond 2020 to invest further in the
asset class.
Institutional investors continue to increase
their allocations to alternative asset classes. This
is despite concerns about asset pricing in the
market and a sense that equity markets have
peaked.
Half of those surveyed by Preqin are now
invested in more than three alternative asset
classes, compared with 39% in 2015.
Private debt is favoured by investors due to its
reliable income stream and high-risk adjusted
Over the last 12 months, 78% of respondents
said private debt met their expectations, which
was more than all the other alternative asset
classes, and just 9% believe it had fallen short,
equal to real estate as the best performer.
Last year was a record year for fundraising in
the European private debt market, but there is
expected to be a drop in 2018’s overall figure as
funds busy themselves with deploying capital.
Despite this, Ares recorded a record breaking
€6.5bn fundraise, which becomes €10bn when
leverage is accounted for, and ICG hit €3.7bn on
its seventh fund.
BlackRock and Albacore both raised €1.8bn
and €1.5bn respectively for debut platforms this
year.
But with record amounts of capital pouring
into the market, the returns on the asset class are
compressing. A recent report from Willis Towers
Watson found that the illiquidity premium is
INTELLIGENCEûCHIPSûANDûBOOKûSTORESû returns, according to Preqin. Of those surveyed, being eroded as lending standards deteriorate in
while Tamar Alliance is owned by Citic average allocations to the space is 5.1%, up from the wake of increasing competition for deals.
0ACIlCûANDû(ONGû+ONG
LISTEDûMOTORûVEHICLEû 4.3% in 2015. David Brooke
distributor Dah Chong Hong Holdings. Dah
Chong’s other business lines include food
and consumer products as well as logistics KKR is making the proposed investment In a restructuring update this month
services. from its Asian Fund III. The take-private Steinhoff announced that the restructuring
transaction is expected to close in the fourth talks between Steinhoff Europe (SEAG),
TAIWANESE BANKS BACK LCY LBO
Six Taiwanese banks are coming together to
LEADûAû53BN
EQUIVALENTûLOANûTOûBACKû++2Sû
leveraged buyout of Taipei-listed speciality
chemicals maker LCY CHEMICAL.
The arranger group is expected to include
Bank Sinopac, Cathay United Bank, CTBC Bank,
E. Sun Commercial Bank, Mega International
Commercial Bank and Taishin International Bank.
Goldman Sachs, the buy-side adviser, is
underwriting and arranging the debt
lNANCING
The loan, which is likely to be
QUARTERûOFûûSUBJECTûTOûAPPROVALûFROMû Steinhoff Finance Holding (SFH) and Stripes US
shareholders and regulators in Taiwan and Holding (SUSHI) were also progressing well.
China. /Nû*ULYûû3TEINHOFFûOFlCIALLYûENTEREDûINTOûAû
lock-up agreement with the creditors of SEAG,
3&(ûANDû353()ûREGARDINGûAûlNANCIALû
restructuring of the debt related to these
RESTRUCTURING entities.
Steinhoff aims to implement the
restructuring of these units within three
EUROPE/MIDDLE EAST/ months and the terms of the restructuring -
AFRICA as set out under the lock up agreement - will
remain in place for three years until
STEINHOFF’S HEMISPHERE NEARS DEAL December 31 2021, subject to any extension.
As of 17 August 2018, 92.12% of the
denominated in US and Taiwanese dollars, is
expected to be launched at the end of this
year.
4HEûPRIVATEûEQUITYûlRMûISûLEADINGûAû
consortium of investors, including
employees and family members of LCY’s
founders, for the buyout, which values the
target at NT$47.8bn (US$1.56bn).
The consortium will pay NT$56 per share,
a 17.3% premium to LCY’s closing price on
July 20.
Upon completion, KKR will hold a
majority and controlling interest in LCY,
which will be delisted from the Taiwan
Stock Exchange.
60
HEMISPHERE INTERNATIONAL PROPERTIES, the
property portfolio of troubled South African
retailer STEINHOFF that holds about 140
property assets, is due to implement its debt
restructuring imminently.
Hemisphere entered into a lock-up
agreement with 90% of the creditors behind
its €750m revolving credit facility on July 26
in order to implement an agreed debt
restructuring. By August 6, 100% in value of
the creditors had entered into the lock-up.
Under the terms of the restructuring a
new facility will be put in place with a
maturity date of three years from the
implementation of the restructuring.
International Financing Review August 25 2018
lNANCIALûCREDITORSûOFû3%!'ûûOFûTHEû
lNANCIALûCREDITORSûOFû353()ûANDûûOFûTHEû
lNANCIALûCREDITORSûOFû3&(ûHAVEûENTEREDûINTOû
the lock up agreement. In addition both
SEAG and SFH will each relocate their
principal place of business to the UK from
Austria.
3TEINHOFFû!SIAû0ACIlCûISûALSOûNEGOTIATINGû
the terms of a new multi-year secured
A$200m and A$250m senior debt facility
WITHûLOCALûBANKSûTOûRElNANCEûITSûEXISTINGû
WORKINGûCAPITALûFACILITIESû!ûlNANCIALû
creditors’ meeting will be held in London in
the coming weeks with key members of the
operating companies’ management.
 EQUITIES
Australia  China  Hong Kong  India  Japan  Macau  Cyprus  Sweden 
UK  United States  Structured Equity 72

„ FRONT STORY LATIN AMERICA

Politics weighs on LatAm plans

Brazil and Mexico lead pipeline but politics could limit execution
ECM bankers are pinning their hopes on a Bolsonaro and ex president Luiz Inacio Lula da have to give it a break and think about a late
surge of issuance from Latin America for the Silva, who is in prison serving a sentence for 2019 market.”
rest of 2018 despite the raft of uncertainties MONEYûLAUNDERINGûANDûCORRUPTION
rattling the region. !NDûWHILEûAûWEAKERûCURRENCYûCOULDûMAKEû ANDEAN ACTIVITY
Issuers across the board are gearing up to new issues look cheap to foreign accounts, Andean nations, however, such as Colombia
sell stock, with some big IPOs in Brazil, INVESTORSûMAYûBEûWARYûABOUTûCATCHINGûWHATû and Chile, where economies are strengthening
Mexico and Colombia as well as follow-ons could be a falling knife. UNDERûNEWûMARKETûFRIENDLYûGOVERNMENTSûAREû
ONûTHEûROSTERûFORûTHEûlNALûSTRETCHûOFûTHEûYEAR 0OLITICALûUNCERTAINTYûINû-EXICOûALSOûMAKESû EXPECTEDûTOûBEûAûSOURCEûOFûPRIMARYûACTIVITY
“There is going to be a lot of stuff DEALûEXECUTIONûTRICKY Earlier this month, the Colombian
HAPPENINGûnûALLûCOUNTRIESûANDûALLûTYPESûOFû While hopes of a resolution to NAFTA talks government said it would sell a 32.5% stake in
deals,” a senior banker told IFR.
h)ûAMûSURPRISEDûABOUTûTHEûLEVELûOFûACTIVITYûOUTû
of Brazil given the election coming up, and even
INû-EXICOûWHEREûTHEYûELECTEDûWHATûWASû
EQUIVALENTûCAPITALûINCREASEûINCLUDINGû
CONSIDEREDûAûMARKETûUNFRIENDLYûPRESIDENTv
AREûONûTHEûRISEûANDûBUOYINGûASSETûPRICESû
INVESTORSûAREûSTILLûCASTINGûAûWARYûEYEûONûNEWû
leftist president Andres Manuel Lopez
/BRADORûANDûANYûPOTENTIALûPOLICYûUPSETS
“Mexico is in the best position at this
TELECOMSûlRMûCOLTEL – a deal that is expected
to raise about US$795m equivalent.
And Chilean retailer FALABELLA approved a
53M
Aû!2EGû3ûOFFERûTOû53ûINVESTORSû4HEûMONEYû
In Brazil, credit card processor STONE POINTûBUTûCORPORATESûAREûSTILLûTRYINGûTOûlGUREû RAISEDûWILLûHELPûlNANCEûITSûACQUISITIONûOFû
PAGAMENTOSûISûALREADYûGEARINGûUPûFORûITSû)0/û out what the new regime will look like,” regional online retailer Linio. Inversiones Los
ANDûBANKERSûSAYûSEVERALûOTHERûTRANSACTIONSû said the second banker. /LIVOSûWHICHûISûRUNûBYûTHEû#UNEOûFAMILYûANDû
are in the works. Conglomerate GRUPO COPPEL intends to push part of Falabella’s controlling group, is also
“The big question is on politics,” said a out its IPO of up to US$2bn in November, but LOOKINGûTOûCARRYûOUTûAûSECONDARYûOFFERINGûOFû
second ECM banker. “But I think regardless COULDûWELLûWAITûUNTILûNEXTûYEARûPOTENTIALLYû 21m shares alongside the capital raise.
of the political outcome it is going to be DELAYINGûOTHERûISSUERSûWAITINGûONûITSûLEADûHEûSAID 3OMEûBANKERSûTHINKûTHATûMOREûFAMILYû
STRONGûINTOûTHEûLASTûQUARTERûOFûTHEûYEARv “A lot of issuers are waiting to see how OWNERSûWILLûSEEKûTOûDIVERSIFYûTHEIRûHOLDINGSû
Despite bankers’ optimism, however, a Coppel goes,” he said. into dollar assets at a time of rising US rates
deteriorating political landscape in Brazil !RGENTINAûMEANWHILEûISûLIKELYûTOûTAKEûAû ANDû%-û&8ûVOLATILITY
COULDûEASILYûTHROWûAûSPANNERûINûTHEûWORKSû BACKûSEATûFORûAûWHILEûASûTHEûCOUNTRYûUNDERGOESû !NûALL
SECONDARYû53M
EQUIVALENTû
ANDûDELAYûDEALSûINûTHEûPIPELINE BELT
TIGHTENINGûANDûAûLIKELYûRECESSIONûTHISûYEAR IPO from Chilean mall operator Mallplaza in
4HEûCOUNTRYSûCURRENCYûTHEû2EALûBROKEûPASTû Argentina-based e-commerce platform *ULYûWASûONEûSUCHûEXAMPLE
R$4 to the US dollar this week, reaching its MERCADOLIBREûDIDûPRINTûAûRAREû
YEARû h4HEREûAREûAûLOTûOFûBLOCKSûTHATûMAYûHAPPENvû
WEAKESTûPOINTûSINCEûEARLYûûASûINVESTORSûFRETû convertible bond this week, but that deal is said the second banker. “There are a lot of
about the outcome of the October election. not seen as indicative of broader appetite for controlling holdings on the IPSA [Chile’s local
Market favourite candidate Geraldo EQUITYûISSUESûOUTûOFûTHEûCOUNTRY STOCKûINDEX=ûANDûAûLOTûOFûFAMILIESûAREûTRYINGûTOû
Alckmin continues to lag behind less popular “The FX is one of the worst performing of take some chips off the table.”
candidates such as far-right politician Jair
KBS Realty plans return to SGX
US REIT now to list smaller assets
Singapore Exchange has found favour with
53
BASEDûCOMMERCIALûPROPERTYûOWNERû+"3û
ONûOFFERINGSû
THEûYEARvûSAIDûTHEûSECONDûBANKERûh7EûMAYû
will comprise US commercial properties. It is
NOTûCLEARûIFû+"3ûWILLûLOOKûFORûAûLOCALûPARTNER
Paul Kilby
+"3ûISûTHEûSECONDûSPONSORûAFTERû-ANULIFEû
TOûLISTûPURELYû53ûASSETSûTHROUGHûAû3INGAPOREû
trust. Manulife US REIT raised US$470m
FROMûAû3'8û)0/ûINû
7HILEûTHEREûHASûBEENûONLYûONEû2%)4û)0/ûSOû
FARûTHISûYEARûONû3'8ûnûTHEû3Mû53M û
mOATûOFû3ASSEURû2%)4ûnûFOLLOW
2EALTYû!DVISORSûWHICHûISûREADYINGûAûSECONDû Bank of America Merrill Lynch and DBS are leading from other real estate trusts have helped lift
COMMERCIALû2%)4ûINûASûMANYûYEARS the transaction while OCBC Bank, Maybank and THEûCOUNTRYSû%#-ûVOLUMESûTOû53BNûASûOFû
KBS US PRIME REIT plans to raise about US$1bn MizuhoûAREûLIKELYûTOûJOINûINûJUNIORûROLES END
*ULYûAGAINSTû53BNûAûYEARûEARLIER
INûAû3INGAPOREû)0/ûASûEARLYûASû/CTOBERûMOREû "ANKERSûSAYûAû3INGAPOREû2%)4ûALLOWSû+"3û h/VERûTHEûYEARSûWEûHAVEûSEENûDIMINISHINGû
THANûTWICEûTHEû53Mû+EPPEL
+"3û53û2%)4û TOûMONETISEûRELATIVELYûSMALLûPORTFOLIOSû institutional interest and limited private
AûJOINTûVENTUREûBETWEENû+"3û2EALTYûANDû compared with its home market. banking demand for REIT IPOs. A US$1bn
3INGAPORESû+EPPELû#APITALûPULLEDûINûLASTûYEARû “In the US, institutional investors prefer deal will need a lot of work,” an ECM banker
WHENûITûLISTEDûINûTHEûCITYûSTATE REITs with a market capitalisation above SAIDûh4HEû+EPPELûNAMEûHELPEDûTHEûLASTû
+"3ûISûCURRENTLYûlRMINGûUPûCORNERSTONEû 53BNû!û53BNû2%)4ûWILLûHARDLYûTRADEvû time.”
INVESTORSûFORûTHEû+"3û53û0RIMEûDEALûWHICHû AûBANKERûAWAYûFROMûTHEûDEALûSAID S Anuradha

International Financing Review August 25 2018 61

WEEK IN NUMBERS
US$100bn
„ SAUDI ARAMCO’S IPO HAS BEEN SHELVED
SO IT WILL HAVE TO WAIT BEFORE LAYING
A CLAIM TO BE THE WORLD’S LARGEST IPO.
an underwritten institutional placement to
fund global expansion.
ASIA-PACIFIC
4HEûRETAILûPAYMENTûTECHNOLOGYûCOMPANYû
ISûSELLINGûMûNEWûSHARESûATûAûmOORûPRICEû
of A$15.75 per share, representing a
AUSTRALIA discount of 15.1% to the pre-deal spot of
A$18.55 each.
THE STATE REMAINS COMMITTED TO AN IPO BINGO COMPLETES FIRST STAGE OF !FTERPAYûHASûATTRACTEDûMOREûTHANûû
“AT A TIME OF ITS OWN CHOOSING WHEN RIGHTS ISSUE CUSTOMERSûANDûOVERûûRETAILûMERCHANTSû
CONDITIONS ARE OPTIMUM”, KHALID AL
FALIH, MINISTER OF ENERGY, INDUSTRY
AND MINERAL RESOURCES AND CHAIRMAN
OF SAUDI ARAMCO, SAID IN A STATEMENT.
THE STATE HAD HOPED TO SECURE
US$100bn FROM THE IPO OF 5% OF THE
COMPANY BASED ON A US$2trn VALUATION
€623
„ SHARES IN DUTCH PAYMENTS FIRM
ADYEN CLIMBED MORE THAN 10% OVER
TWO DAYS FOLLOWING THE RELEASE
OF DEBUT RESULTS, HITTING A NEW
INTRADAY HIGH OF €623 ON THURSDAY
AND CLOSING ABOVE €600 FOR THE FIRST
TIME THE SAME DAY AT €607.20. THE IPO
BINGO INDUSTRIES has raised A$352m
53M ûFROMûANûINSTITUTIONALûTRANCHEûOFû
an entitlement offer of about A$425m.
Eligible shareholders took up 97% of their
entitlement, and the shortfall received
strong bids from existing and new
shareholders.
CEO of the waste management and
RECYCLINGûCOMPANYû$ANIELû4ARTAKûHASû
committed to take up all of his entitlement
OFû!Mû"INGOûFOUNDERû4ONYû4ARTAKûANDû
Mark Tartak each took up A$9m of the offer.
4HEûWASTEûMANAGEMENTûANDûRECYCLINGû
COMPANYûEXPECTSûTOûRAISEûABOUTû!Mû
through the underwritten retail portion of
the offering, which runs from August 28 to
TOûITSûPLATFORMûACCORDINGûTOûTHEûCOMPANYSû
website.
Proceeds will be used for global expansion
and to fund cornerstone international debt
facilities.
!FTERPAYSûSHARESûWEREûSUSPENDEDûFROMû
TRADINGûLASTû4HURSDAY
"OOKSûCLOSEDûLASTû&RIDAYû.EWûSHARESû
under the placement will be settled on
August 30.
CitigroupûISûTHEûLEADûMANAGERûOFûTHEûmOAT
PHC SECURES STRONG BACKING
PRIMARY HEALTH CARE has raised A$157m
53M ûFROMûTHEûINSTITUTIONALûTRANCHEûOFû
AûROUGHLYû!MûENTITLEMENTûOFFER
PRICED AT €240 PER SHARE, WITH BUYERS 3EPTEMBERûûACCORDINGûTOûAûCOMPANYû Eligible shareholders took up 99% of their
IN THE FLOAT NOW SITTING ON OVER 150% statement. entitlements, and the shortfall from
PROFIT IN A LITTLE OVER TWO MONTHS 4HEûCOMPANYûLAUNCHEDûTHEûENTITLEMENTû ineligible investors and renounced rights
OFFERûOFûMûNEWûSHARESûATû!ûEACHûONûAû received strong demand from both existing

989
„ UK LUXURY FASHION WEBSITE
FARFETCH BRINGS TOGETHER 989
BASEDû$IALûAû$UMPû
SELLERS ON ITS PLATFORM TO SERVE 2.3m
CUSTOMERS. FOR ITS US IPO, THE LOSS-
MAKING COMPANY IS PITCHING ITSELF
AS A TECHNOLOGY INVESTMENT RATHER
THAN A RETAILER. GROSS PROFITS ARE
GROWING QUICKLY BUT SO ARE NET CASH
OUTFLOWS AND IN THE FIRST HALF IT
RECORDED AN EBITDA LOSS OF US$49.1m
1-for-2.48 basis. The price represents an 11.4%
discount to the pre-deal spot of A$2.87.
Most of the proceeds will be used to fund
THEûACQUISITIONûOFû3YDNEY
through the retail portion of the offering,
Industries, and the remainder for the
purchase of two properties in Melbourne
ANDû3YDNEY
Bingo will acquire DADI for A$577.5m,
with A$377.5m paid in cash and A$200m in
Bingo shares.
Goldman Sachs and UBS are the
underwriters of the entitlement offer.
shareholders and other institutional
investors.
0RIMARYûEXPECTSûTOûRAISEûABOUTû!Mû
which runs from August 27 to September 7.
4HEûCOMPANYûLAUNCHEDûTHEûENTITLEMENTû
offer of 100m new shares at A$2.50 each on
a 1-for-5.21 basis. The price represents a
17.8% discount to the pre-deal spot.
The proceeds will be used to expand the
COMPANYSûMEDICALûCENTRESûWITHûADDITIONALû
services and new staff, as well as to develop
PATHOLOGYûINFRASTRUCTURE

21.5%
„ US IPOs FOR THE YEAR TO-DATE, AS OF
AFTERPAY TOUCH LAUNCHES PLACEMENT

Australia’s AFTERPAY TOUCH GROUP has opened

0RIMARYû(EALTHû#AREûISûALSOûAIMINGûTOû
acquire a hospital operator that runs a
NUMBERûOFûDAYûHOSPITALSûACROSSûSTATESûINû
AUGUST 20, HAD RETURNED 21.5%, VERSUS BOOKSûTOûRAISEû!Mû53M ûFROMû Australia.
THE 6.9% OFFERED BY THE S&P 500 AND 13.3%
RALLY IN THE NASDAQ COMPOSITE INDEX. ASIA-PACIFIC EQUITIES ASIA-PACIFIC EQUITIES (EX-JAPAN)
THE BEST IPO SO FAR THIS YEAR IS SLEEP BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
APNEA DEVICE MAKER INSPIRE MEDICAL Managing No of Total Share Managing No of Total Share
SYSTEMS, WHOSE SHARES ARE UP 211.2% bank or group issues US$(m) (%) bank or group issues US$(m) (%)
AFTER ITS MAY IPO. ARMO BIOSCIENCES HAS 1 Morgan Stanley 63 13,008.88 8.2 1 Morgan Stanley 44 10,931.24 7.7
ALREADY BEEN BOUGHT SINCE ITS JANUARY 2 Goldman Sachs 56 10,266.63 6.5 2 Goldman Sachs 55 10,214.06 7.2
IPO AT NEARLY THREE TIMES THE IPO PRICE 3 Citigroup 61 9,806.49 6.2 3 Citigroup 55 9,277.02 6.6
4 UBS 45 8,367.57 5.3 4 UBS 42 8,094.79 5.7

Two weeks
„ MORGAN STANLEY SOLD SHARES IN
5 BAML
6 CICC
7 Credit Suisse
19
19
33
7,374.32
7,208.32 4.6
5,478.89 3.5
4.7 5 CICC
6 BAML
7 Citic
19
16
36
7,208.32
6,780.17 4.8
5,407.09 3.8
5.1

CLINICAL RESEARCH ORGANISATION 8 Citic 36 5,407.09 3.4 8 Credit Suisse 32 5,305.76 3.8
MEDPACE LAST WEEK AT US$55.50 APIECE 9 JP Morgan 34 5,347.69 3.4 9 JP Morgan 30 4,577.75 3.2
MARKING THE EXIT OF SPONSOR CINVEN. 10 Sumitomo Mitsui Finl 48 3,543.74 2.2 10 Guotai Junan Securities 23 3,442.53 2.4
JUST TWO WEEKS EARLIER MORGAN Total 1,574 158,052.71 Total 1,433 141,426.33
STANLEY SOLD SHARES IN THE COMPANY Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues

ON BEHALF OF THE SAME SELLER Source: Thomson Reuters SDC code: C4a1 Source: Thomson Reuters SDC code: C4a2

62 International Financing Review August 25 2018

 EQUITIES ASIA-PACIFIC

Its shares were trading at A$2.83 last application with the Stock Exchange of US$300m, according to three people with
7EDNESDAYûMORNINGûDOWNûû4HEûSTOCKû (ONGû+ONGûBYûTHEûENDûOFûTHISûMONTHûFORûANû direct knowledge of the matter.
ISûDOWNûûSOûFARûTHISûYEAR IPO that could raise about US$800m–$1bn, CMIG FUTURELIFEûTHEûPROPERTYûMANAGEMENTû
Morgan Stanley and UBS are the joint according to people close to the deal. UNITûHASûRECENTLYûMETûWITHûBANKSûTOûDISCUSSû
underwriters for the deal. Bank of America Merrill Lynch and Morgan a potential listing, said the people.
Stanley are leading the transaction. #-)'û&UTURELIFEûSAIDûWHENûCONTACTEDûBYû
-AOYANûWASûVALUEDûATû2MBBNû )&2ûTHATûITûCURRENTLYûDOESûNOTûHAVEûPLANSûTOû
CHINA 53BN ûLASTû.OVEMBERûWHENûINTERNETû LISTûINû(ONGû+ONG
GIANTû4ENCENTû(OLDINGSûMADEûAû2MBBNû CMIG Futurelife would be joining a wave
MEITUAN DIANPING TO PRE-MARKET IPO INVESTMENTûINûTHEûCOMPANYûACCORDINGûTOûAû OFû#HINESEûPROPERTYûMANAGEMENTûCOMPANYû
Reuters report. LISTINGSûINûTHEûCITY
MEITUAN DIANPING, one of China’s most 4HEûINVESTMENTûCAMEûAFTERû-AOYANûANDû !
,IVINGû3ERVICESûTHEûPROPERTYû
valuable internet companies, is planning to 4ENCENT
BACKEDû"EIJINGû7EIYINGû4ECHNOLOGYû management unit of developer Agile, raised
STARTûPRE
MARKETINGûAûPROPOSEDûmOATûOFûATû struck a merger deal in September to create (+BNû53M ûFROMûANû)0/ûINû
least US$4bn this week. AûlLMûTICKETINGûGIANT &EBRUARYû)Nû*UNEû#OUNTRYû'ARDENûALSOû
Books are scheduled to open on -AOYANû7EYINGSûOTHERûBACKERSûINCLUDEû LISTEDû#OUNTRYû'ARDENû3ERVICESûINû(ONGû
September 3 ahead of a listing on 3HENZHEN
LISTEDûlLMûPRODUCERû"EIJINGû +ONGûBYûINTRODUCTION
September 20, according to people close to Enlight Media and Meituan Dianping, +AISAû'ROUPûINû*UNEûANNOUNCEDûPLANSûTOû
the deal. Pricing is set for September 12. China’s largest provider of on-demand SPINûOFFûITSûPROPERTYûMANAGEMENTûUNITû+AISAû
%ARLYûFEEDBACKûFROMûINVESTORSûVALUEDûTHEû online services, which is about to launch its 0ROPERTYûINû(ONGû+ONGû4HEûDEALûISûEXPECTEDû
COMPANYûATûAROUNDû53BNnBNûTHEûPEOPLEû own IPO. to raise about US$100m, said people close to
SAIDû$EPENDINGûONûlNALûPRICINGûANDûTHEûSIZEûOFû China is the world’s second-largest the plan.
THEûmOATû-EITUANSû)0/ûCOULDûRIVALû8IAOMISû CINEMAûMARKETûANDûNEARLYûûOFûlLM
GOERSû
53BNû*ULYûLISTINGûASûTHEûWORLDSûBIGGESTûTECHû BUYûTICKETSûONLINEû2EUTERSûHASûREPORTEDû QUTOUTIAO FILES FOR NASDAQ IPO
mOATûSINCEû!LIBABAûWENTûPUBLICûINû citing Big Data Research.
-EITUANû$IANPINGûBACKEDûBYû#HINESEû Chinese news aggregator QUTOUTIAO, which
TECHûGIANTû4ENCENTû(OLDINGSûRUNSûAûRANGEûOFû TIANQI FILES FOR HONG KONG FLOAT COUNTSûINTERNETûGIANTû4ENCENTû(OLDINGSûASûAû
ONLINEûBUSINESSESûSPANNINGûFOODûDELIVERYûTOû SHAREHOLDERûHASûlLEDûFORûAû53Mû.ASDAQû
ticketing services in China. Shenzhen-listed TIANQI LITHIUMûHASûlLEDûANû IPO.
Bank of America Merrill Lynch, Goldman Sachs APPLICATIONûFORûAû(ONGû+ONGû)0/ûTHATûCOULDû 0RE
MARKETINGûSTARTEDûLASTû-ONDAYû
and Morgan Stanley are joint sponsors for the
deal. China RenaissanceûISûTHEûlNANCIALû
adviser.
TENCENT MUSIC AIMS FOR OCTOBER IPO
LISTEDû'ANFENGû,ITHIUMû FROMûTHIRD
raise up to US$1bn.
The world’s second-largest lithium
PRODUCERûBYûSALESûISûSETûTOûBEûTHEûCITYSû
second listing of a lithium producer this
YEARûASû3HENZHEN
according to a person close to the deal.
Qutoutiao, which means “fun headlines”
in Chinese, allows users to create
customised feeds of articles and short videos
PARTYûSOURCESû!SûOFû*ULYûITûHADû
ALSOûPLANSûAûmOATûOFûUPûTOû53BNûINû MûMONTHLYûACTIVEûUSERSûANDûMûDAILYû
TENCENT MUSIC ENTERTAINMENT, China’s largest September. active users who spent 55 minutes on
MUSIC
STREAMINGûCOMPANYûPLANSûTOûSTARTûPRE
4HEûlNALûDEALûSIZEûOFû4IANQIûCOULDûBEû AVERAGEûONûTHEûAPPûPERûDAY
marketing a US IPO of about US$3bn–$4bn in smaller than US$1bn because of a steep drop ,AUNCHEDûINû*UNEûû1UTOUTIAOûHASû
late September ahead of a listing in October, in lithium carbonate prices, people close to TRIEDûTOûSTANDûOUTûFROMûTHEûCROWDûBYûOFFERINGû
according to people close to the deal. the deal said. DIGITALûCOINSûTOûUSERSûWHENûTHEYûREGISTERû
!Tû53BNû4ENCENTû-USICSûmOATûISûSETûTOû
be the biggest Chinese listing in the US
since the US$25bn IPO of Chinese
e-commerce giant Alibaba in September
2014. It will also be the biggest US IPO this
CLSA and Morgan Stanley are joint sponsors
of the listing.
Tianqi’s proposed listing comes after its
BLOCKBUSTERû53BNûDEALûINû-AYûTOûBUYûAû
ûSTAKEûINû#HILESû3OCIEDADû1UIMICAûYû
check in, invite friends and read and share
news. The coins are convertible into
RENMINBIûATûAûRATEûTHATûmUCTUATESûACCORDINGû
to the level of advertising revenues.
4HEûCOMPANYûPOSTEDûAûNETûLOSSûOFû
YEARûSURPASSINGûTHEû53BNû)0/ûOFû!8!û Minera. 2MBMû53M ûFORûTHEûlRSTûSIXûMONTHSû
%QUITABLEûINû-AY 4HEûMAJORITYûOFû4IANQISûLISTINGûPROCEEDSû THISûYEARû)TûLOSTû2MBMûDURINGûTHEûWHOLEû
)Nû*ULYû(ONGû+ONG
LISTEDû4ENCENTû WILLûBEûUSEDûFORûRElNANCINGûTHEû31-ûSTAKEû OFûûANDû2MBMûINû
(OLDINGSûSAIDûITûHADûRECEIVEDûAPPROVALûFROMû purchase, according to the draft prospectus. Co-founders Eric Siliang Tan and Lei Li
THEû3TOCKû%XCHANGEûOFû(ONGû+ONGûTOûSPINûOFFû 4HEûCOMPANYûPOSTEDûAûûJUMPûINû RESPECTIVELYûOWNûûANDûûINûTHEû
its online music entertainment business and annual revenues in 2017 to Rmb5.47bn COMPANYû4ENCENTûWHICHûINVESTEDûVIAûAû
would list Tencent Music in the US. 53M û)TûREPORTEDû2MBBNûINûPROlTû venture capital round, has a 7.8% stake.
Bank of America Merrill Lynch, Deutsche Bank, ALMOSTûDOUBLEûTHATûOFû Citigroup, CMS, Deutsche Bank and UBS are
Goldman Sachs, JP Morgan and Morgan Stanley Tianqi, whose shares have almost halved THEûLEADSûOFûTHEûmOAT
will lead the IPO. from a peak of Rmb73.39 in September last
Tencent Music was valued at around YEARûMAKESûAûVARIETYûOFûRAWûMATERIALSûFORû ASIAINFO FILES US$400m HK IPO
53BNûINûLATEûûWHENû3POTIFYûSWAPPEDû THEûBATTERYûINDUSTRY
AûSTAKEûWITHûITû)TûISûCURRENTLYûVALUEDûATûABOUTû ASIAINFO HOLDINGS,
a Chinese provider of
US$25bn–$30bn in the private markets. CMIG TO LIST UNIT IN HONG KONG TELECOMSûSOFTWAREûSERVICESûHASûlLEDûFORûAû
(ONGû+ONGû)0/ûOFûABOUTû53MnMûAû
MAOYAN WEYING GETS CLOSER China Minsheng Investment Group, one of PERSONûWITHûKNOWLEDGEûOFûTHEûmOATûHASûSAID
China’s largest private investment funds, is 4HEûCOMPANYûLISTEDûONû.ASDAQûINûû
MAOYAN WEYING, China’s biggest online seller PLANNINGûTOûLISTûITSûPROPERTYûMANAGEMENTû ANDûWASûTAKENûPRIVATEûBYûAû#ITICû#APITAL
LEDû
OFûlLMûTICKETSûPLANSûTOûlLEûAûLISTINGû UNITûNEXTûYEARûINû(ONGû+ONGûTOûRAISEûUPûTOû consortium in 2014.

International Financing Review August 25 2018 63

 Customers include telecoms operators YEARLYûPROlTSûOFû2MBBNûINûûANDû AGS had planned a Rs13.5bn IPO in 2015
including China Mobile, China Unicom and 2MBBNûINû but did not go ahead as it did not get the
China Telecom. Changsha Municipal Finance Bureau is desired valuation. The cash crunch after the
Citic Capital is the controlling the largest shareholder in the bank with a ûDEMONETISATIONûSUBSEQUENTLYûAFFECTEDû
SHAREHOLDERûWITHûAûûSTAKEûFOLLOWEDû 21.4% stake. its business.
BYû#!û3OFTWAREû)NVESTMENTû û%LLINGTONû The proceeds will be used to improve the !'3ûSAIDûTHEûPRIMARYûSHARESûAREûBEINGû
)NVESTMENTSû ûANDû!Lû'HARRAFAû BANKSûlNANCIALûANDûCAPITALûSTRENGTH SOLDûTOûREPAYûLOANS
)NVESTMENTû  Citic SecuritiesûISûTHEûSOLEûSPONSORûOFûTHEûmOAT 4HEûREVIVEDû)0/ûCOMESûAFTERû'OYALûBOUGHTû
4HEûCOMPANYûMADEûAûPROlTûOFû2MBMû out the combined 42% stake of private
53M ûINûTHEûlRSTûTHREEûMONTHSûOFûTHISû EQUITYûFUNDSû40'ûANDû/RIOLEûANûARMûOFû!CTISû
YEARû)TûRECORDEDûAûPROlTûOFû2MBMûINû HONG KONG Capital, for an undisclosed amount earlier
ûUPûFROMû2MBMûINû
Citigroup and CLSA are joint sponsors for
THEûmOAT
ASCENTAGE AND MABPHARM FILE FOR
LI & FUNG PLANS LOGISTICS SPIN-OFF
,Iûû&UNGûISûPLANNINGûTOûSPINûOFFûANDûLISTûITSû
LOGISTICSûARMûINûAû(ONGû+ONGû)0/ûASûEARLYûASû
THISûYEARû4HEûFUNDSûHADûBEENûSLATEDûTOûSELLû
shares in the earlier IPO attempt.
AGS reported revenue of Rs13.2bn in the
lNANCIALûYEARûTOû-ARCHûûûAGAINSTû
2SBNûAûYEARûEARLIERû0ROlTûAFTERûTAXûROSEû
HK IPOs THEûlRSTûHALFûOFûûTHEûCOMPANYûSAIDûINûITSû to Rs192m from Rs55.7m.
HALF
YEARûRESULTSûANNOUNCEMENTûLASTû Axis Capital, HDFC Bank and ICICI Securities,
Biotechs ASCENTAGE PHARMA and MABPHARM 7EDNESDAY WHOûWEREûPARTûOFûTHEûû)0/ûSYNDICATEûAREû
HAVEûlLEDûFORû(ONGû+ONGû)0/Sû According to people familiar with the bookrunners alongside IIFL, IndusInd and
Ascentage is a clinical-stage biotech
looking to raise about US$300m. It focuses
on treatments for cancer, hepatitis B and
LISTEDûGLOBALûCONSUMERû
age-related diseases and has seven products
in clinical development and 20 ongoing
trials in the pipeline.
Ascentage’s founders, Dajun Yang and
situation, the deal is expected to raise about
US$300m–$500m.
4HEû(ONGû+ONG
goods exporter said LF LOGISTICS had posted
double-digit growth on an annualised basis
for both its top and bottom line since it
BECAMEûPARTûOFû,Iûû&UNGûATûTHEûENDûOFûû
Nomuraû#ITIGROUPûANDû+OTAKûWHOûWEREûPARTû
of the earlier team, are no longer involved.
ROUTE MOBILE PLANS IPO IN OCTOBER
ROUTE MOBILEûPLANSûTOûLAUNCHûANûUPûTOû2SBNû
53M û)0/ûINû/CTOBERûHAVINGûOBTAINEDû
3HAOMENGû7ANGûOWNûûANDûûOFû A separate listing will unlock its value and REGULATORYûAPPROVALûLASTûWEEK
THEûCOMPANYûRESPECTIVELY accelerate its growth, while further 0RIMARYûSHARESûOFû2SBNûANDûMû
Bank of America Merrill Lynch and Citigroup ENHANCINGû,Iûû&UNGSûCAPITALûSTRUCTUREûANDû SECONDARYûSHARESûWILLûBEûSOLDûINûTHEû)0/û
AREûJOINTûSPONSORSûOFûTHEûmOAT lNANCIALûmEXIBILITY #ONTROLLINGûSHAREHOLDERSû3ANDIPû+UMARû
-ABPHARMûANûEARLY
STAGEûCOMPANYûISû LF Logistics posted turnover of US$543m in 'UPTAûANDû2AJDIPû+UMARû'UPTAûAREûTHEû
planning to raise about US$200m from its THEûlRSTûHALFûOFûûUPûûFROMûAûYEARû sellers.
)0/û4HEûCOMPANYûFOCUSESûONû2$ûANDûTHEû EARLIERû)TûHADûAûCOREûOPERATINGûPROlTûOFû53Mû Route Mobile provides cloud
PRODUCTIONûOFûMONOCLONALûANTIBODYûDRUGSû INûTHEûlRSTûHALFûUPûûYEAR
ON
YEAR communication services to the banking,
for cancers and autoimmune diseases. Of 4HEûLOGISTICSûUNITSûlRST
HALFûREVENUEûANDû lNANCIALûSERVICESûRETAILûANDûAVIATIONû
THEûNINEûANTIBODYûDRUGûCANDIDATESûINûTHEû COREûOPERATINGûPROlTûACCOUNTEDûFORûûANDû industries.
DEVELOPMENTûPIPELINEûTHREEûAREûCURRENTLYû ûOFû,Iûû&UNGSûOWNûTURNOVERûANDûCOREû 4HEûCOMPANYûEARNEDûTOTALûREVENUESûOFû
under clinical trials. OPERATINGûPROlTûOVERûTHEûSAMEûPERIOD 2SBNûINûTHEûlNANCIALûYEARûTHATûENDEDûONû
'UOû*IANJUNûANDûHISûFAMILYûTRUSTEEûWITHûAû ,Iûû&UNGûWILLûREMAINûTHEûCONTROLLINGû -ARCHûûûAGAINSTû2SBNûINûû
ûINTERESTûAREûTHEûCONTROLLINGû shareholder of LF Logistics after the listing. 0ROlTûAFTERûTAXûROSEûTOû2SMûFROMû2SMû
shareholders of Mabpharm. ,&û,OGISTICSûOPERATESûNEARLYûûMILLIONû during the same period.
CICCûISûTHEûSOLEûSPONSORûOFûTHEûmOATû3EEû square feet of warehouse space serving IDBI Capital, Motilal Securities and Yes
4OPû.EWSûFORûFURTHERûCOVERAGEûOFû(ONGû customers across sectors such as footwear Securities are the bookrunners.
+ONGûmOATSûOFûBIOTECHûCOMPANIES and apparel, fast-moving consumer goods,
food and beverage and healthcare. Apart BAJAJ GROUP PLANS POWER IPO
BANK OF CHANGSHA PLANS A-SHARE IPO FROMûSTORAGEûSERVICESûTHEûCOMPANYûALSOû
offers regional and hub management, Conglomerate BAJAJ GROUP is planning an IPO
BANK OF CHANGSHA, a Chinese lender based in reverse logistics and other related services. OFûUPûTOû2SBNû53M ûOFûITSûPOWERû
(UNANûPROVINCEûPLANSûTOûRAISEû2MBBNû
53M ûFROMûAû3HANGHAIû)0/ûNEXTû
month.
The lender will sell not more than 342m
A-shares, or 10% of its enlarged share
capital, at Rmb7.99 each. The offer price
GENERATIONûBUSINESSûLATERûTHISûYEARûPEOPLEû
with knowledge of the transaction have said.
INDIA Edelweiss, IIFL Holdings and UBS are the
banks on the transaction.
AGS TRANSACT REVIVES IPO PLAN 4HEûPRIMARYûANDûSECONDARYûSHAREû
COMBINATIONûOFûTHEû)0/ûISûNOTûYETûKNOWN
REPRESENTSûAûHISTORICALû0%ûOFûû ATM operator AGS TRANSACT TECHNOLOGIES has Bajaj Group’s power business includes Bajaj
representing a premium of 5.8% to the
average valuation of the bank’s listed peers.
In pricing consultations, the institutional
book was covered 813 times.
Bookbuilding has been postponed to
3EPTEMBERûûFORûREGULATORYûREASONSûAFTERûTHEû
lLEDûTHEûDRAFTûPROSPECTUSûFORûAû2SBNû
53M û)0/ûAFTERûITSûCONTROLLINGû
SHAREHOLDERûBOUGHTûOUTûTHEûCOMPANYSû
PRIVATEûEQUITYûINVESTORS
0RIMARYûSHARESûFORû2SBNûANDûSECONDARYû
SHARESûFORû2SBNûWILLûBEûOFFEREDû#ONTROLLINGû
%NERGYûWHICHûOWNSû-7ûOFûCAPACITYûANDû
Lalitpur Power Generation with 1,980MW.
Bajaj Group also has interests in sugar,
personal care products and real estate
businesses.
Other Indian power companies planning
price was set above the valuation of listed peers. SHAREHOLDERûANDûFOUNDERû2AVIû"û'OYALûANDû )0/SûAREû2E.EWû0OWERû53BNnBN û
"ANKûOFû#HANGSHAûPOSTEDûPROlTûOFû other individual shareholders will sell the 3EMBCORPû%NERGYû2SBN ûANDû!CMEû3OLARû
2MBBNûINûTHEûlRSTûHALFûOFûû)TûHADû SECONDARYûSHARES (OLDINGSû2SBN 

64 International Financing Review August 25 2018

 EQUITIES ASIA-PACIFIC

SHELL INDIA SELLS MAHANAGAR GAS OFûUPûTOûcBNû53M û4HOMSONû

SHARES Reuters DealWatch reported last TAIWAN
7EDNESDAY
"'û!SIAû0ACIlCûAûUNITûOFû3HELLû)NDIAûHASû Nomura is the global coordinator for the UMC APPROVES SHANGHAI SPIN-OFF
RAISEDû2SBNû53M ûTHROUGHûTHEûSALEû
of a 14% stake in MAHANAGAR GAS.
4HEûMûSECONDARYûSHARESûWEREûSOLDûATû
Rs851, which represents a discount of 5.7%
to the pre-deal spot.
mOATûWHICHûISûSCHEDULEDûFORûTHEûENDûOFû
September.
4HEûCOMPANYûISûSELLINGûMûPRIMARYû
shares and existing shareholders are
OFFERINGûMûSECONDARYûSHARESûATûANûISSUEû
UNITED MICROELECTRONICS CORP,
listed in both
Taiwan and New York, is planning to list its
#HINESEûSUBSIDIARYûINû3HANGHAIûAFTERû
WINNINGûSHAREHOLDERûAPPROVALûLASTû-ONDAY
Around 25 accounts participated in the PRICEûOFûcûEACH 3EMICONDUCTORûFOUNDRYûCOMPANYû(EJIANû
transaction and the investors were a mix of
INTERNATIONALûLONGûONLYûINSTITUTIONSûANDû
domestic funds.
Shell India’s residual 10% stake in
Mahanagar Gas will be subject to a
REGULATORYûLOCK
There is an overallotment option of 1.8m
shares.
World Co delisted in 2005 when it was
TAKENûPRIVATEûINûAû53BNûMANAGEMENTû
BUYOUT
4ECHNOLOGYû3UZHOUûACQUIREDûBYû5-#ûINû
2012, is to sell 400m new shares in an IPO
planned for 2019.
4HEûSHAREHOLDERûAPPROVALûPASSEDûAûKEYû
HURDLEûREQUIREDûBYû4AIWANESEûREGULATORSû
UPûUNTILû*UNEûû &OUNDEDûINûûTHEû+OBE
under tighter rules enforced in the wake of a
Citigroup was the placement agent. HEADQUARTEREDûFASHIONûCLOTHINGûCOMPANYû landmark Shanghai listing from Taiwan-
ADOPTEDûAûHOLDINGûCOMPANYûSTRUCTUREûLASTû based Foxconn.
INDIA INVITES BIDS FOR HUDCO, NBCC YEARûTOûSPINûOFFûBRANDSûINTOûSEPARATEû Foxconn Industrial Internet, the
COMPANIESûALIGNEDûBYûBUSINESSûMODELûANDû 3HENZHEN
BASEDûSUBSIDIARYûOFû&OXCONNû
The Indian government is seeking arrangers marketing channels. RAISEDû2MBBNû53BN ûFROMûANû
for the sell-downs of 10% stakes in HOUSING )TûHASûALSOûEXPANDEDûINTERNATIONALLYûINû !
SHAREû)0/ûATûTHEûENDûOFû-AYûINûTHEûBIGGESTû
AND URBAN DEVELOPMENT COMPANY and NBCC INDIA
OWNEDûTECHNOLOGYû
VALUEDûATûAûCOMBINEDû2SBNû53M ûATû
current prices.
Ministers plan to hire up to three banks
RECENTûYEARSûFORûEXAMPLEûESTABLISHINGûAû DEALûFROMûAûFOREIGN
JOINTûVENTUREûWITHû4HAIûCONGLOMERATEû3!(!û COMPANY
'ROUPûINû
7ORLDû#OûPOSTEDûREVENUEûOFûcBNûINû
FORûEACHûSALEû"IDSûAREûDUEûBYû3EPTEMBERû THEûYEARûTOû-ARCHûûDOWNûFROMûcBNû THAILAND
4HEûGOVERNMENTûOWNSûûOFû(UDCOû AûYEARûEARLIERûACCORDINGûTOûTHEûCOMPANYSû
and 73.75% of NBCC. WEBSITEû(OWEVERûOPERATINGûINCOMEûROSEûTOû OSOTSPA PRE-MARKETS IPO
At current prices the NBCC share sale will ¥15.9bn from ¥14.5bn over the same period.
FETCHûAûMAXIMUMûOFû2SBNûANDû(UDCOûUPû OSOTSPA plans to start pre-marketing a
to Rs11bn. 53MnMû)0/ûTHISûWEEKûINûWHATû
."##ûSHARESûAREûDOWNûûINûTHEûYEAR
TO
MACAU could be the largest IPO in Thailand this
DATEûANDû(UDCOûISûDOWNû
BARING FETCHES Rs11bn FROM BLOCK
!SIA
FOCUSEDû"ARINGû0RIVATEû%QUITYûHASûRAISEDû
STUDIO CITY READIES US IPO
STUDIO CITY INTERNATIONAL, the Macau
GAMINGûRESORTûOFû,AWRENCEû(OSû-ELCOû
YEARûPEOPLEûWITHûKNOWLEDGEûOFûTHEû
transaction said.
Osotspa sells drinks and personal care
products.
!ROUNDûMûPRIMARYûSHARESûANDûMû
2SBNû53M ûTHROUGHûAûBLOCKûSALEûOFû
shares in Indian IT service provider HEXAWARE
TECHNOLOGIES.
(EXAWAREûSHARESûPLUNGEDûASûMUCHûASû
ûINTRADAYûLASTû&RIDAYûTOû2SûAFTERû
THEûOVERNIGHTûDEALûBYûCitigroup. Baring is the
controlling shareholder with a 71.19% stake
before the sale.
The block of 25m shares, representing an
2ESORTSûû%NTERTAINMENTûISûCLOSEûTOû
MAKINGûAûPUBLICûlLINGûFORûITSûPROPOSEDû53û
IPO, according to people familiar with the
situation.
The deal is expected to raise about
US$300m–$400m, said the people. Credit
Suisse, Deutsche Bank and Morgan Stanley are
WORKINGûONûTHEûmOAT
Nasdaq-listed Melco Resorts announced in
SECONDARYûSHARESûWILLûBEûSOLDûINûTHEû)0/û
/RIZONû(OLDINGûANDû9û)NVESTMENTûAREûTHEû
VENDORSûOFûTHEûSECONDARYûSHARES
4HEûCOMPANYûHASûBEENûWORKINGûONûITSû)0/û
since 2015. The deal will be the biggest Thai
)0/ûTHISûYEARûIFûITûGOESûTHROUGH
Bank of America Merrill Lynch, Bualuang
Securities, JP Morgan and Phatra Securities are
LEADSûONûTHEûmOAT
ûSTAKEûINû(EXAWAREûWASûPRICEDûATû !UGUSTûûTHATû3TUDIOû#ITYûHADûlLEDû
Rs447.50 each, or a 10% discount to the pre- CONlDENTIALLYûFORûAû53û)0/
deal spot of Rs497.70 each. /Nû-ONDAYû-ELCOûSAIDû3TUDIOû#ITYûHADû
The deal received demand from about been continuing its preparations for the
TWOûDOZENûINVESTORSûPARTICULARLYûHEDGEû
funds. There was also interest from long-
ONLYûANDûDOMESTICûMUTUALûFUNDû
investors, according to a person close to
the deal.
"ARINGûISûNOWûSUBJECTûTOûAû
DAYûLOCK
proposed IPO, which is expected to launch EUROPE/MIDDLE
when market conditions permit and EAST/AFRICA
remains subject to the US Securities and
Exchange Commission declaring the
registration statement effective. CYPRUS
UP 3TUDIOû#ITYûWHICHûOPERATESûANû
entertainment, retail and gaming resort at HELLENIC BANK SECURES BACKING FOR
#OTAIûINû-ACAUûISûAû
OWNEDûSUBSIDIARYûOFû €100m RIGHTS ISSUE
JAPAN Melco Resorts, which, in turn, is a 51.2%-
OWNEDûUNITûOFû(ONGû+ONG
LISTEDû-ELCOû 3HAREHOLDERSûINû#YPRUS
BASEDûHELLENIC BANK
WORLD CO’S IPO TO RAISE ¥67.1bn International Development. have approved a rights issue to raise up to
New Cotai, a US joint venture of Silver €100m to strengthen its capital after the
Clothing maker WORLD CO is set to relist on Point and Oaktree Capital, controls the BANKSûPROPOSEDûACQUISITIONûOFû#YPRUSû
THEû4OKYOû3TOCKû%XCHANGEûTHROUGHûANû)0/û REMAININGûûOFû3TUDIOû#ITY Cooperative Bank assets.

International Financing Review August 25 2018 65

 Post-IPO interim results are a mixed
bag in Europe
„ EUROPE First results help drive Adyen even higher as Avast still sits below issue price
The first snapshot of a company’s financial
health after a flotation is highly anticipated by
new and old shareholders alike. But one thing
they probably don’t want to hear much about
is IPO fees, which can be a convenient way for
companies to distract from a less-than-stellar
financial performance.
Wednesday marked the first set of results
from four recent IPOs that have experienced
mixed fortunes.
Swiss sensor technology firm SENSIRION saw
strong demand when it floated in March. Despite
top-of-the-range pricing of SFr36, its share
price has never dropped below SFr40 in five
months of trading activity and shares closed on
Wednesday at SFr55.50.
But its confident debut on the SIX came at
a cost. Sensirion’s H1 financial results show
that fees associated with its flotation led to a
SFr0.8m operating loss and a net loss of SFr2m.
In total it forked out SFr8.8m in IPO-related
costs, including an IPO loyalty share programme
for employees. The one-off expense was partly
to blame for Ebitda falling to SFr6.1m this year
from SFr10.1m in the first half of last year.
However when adjusted for the IPO costs, Ebitda
increased by 32.7% to SFr15m in the first half of 2018
on a 29.6% increase in revenues to SFr90.2m.
Investors reacted positively to Sensirion’s first
post-IPO financials, with shares rising 7% within
an hour of the open on Wednesday. By the close
on Thursday shares priced at SFr57.50, 60% up
from the IPO.
MEDARTIS SHARES CLIMB BUT PROFITS
ARE FLAT
Just a day after Sensirion’s premiere, fellow
Swiss company and medical device provider
MEDARTIS started trading, and its shares have
The rights issue will involve 142.9m new
followed a similar upward path. Its second day
of trading closed at SFr62, 29% above its SFr48
pricing level. Shares closed on August 21 at
SFr72.20.
Although it dodged losses, Medartis’ interim
results show a 64.8% fall in operating profit
in the first six months of the year compared
to last, with IPO costs bringing profit down to
SFr1.8m.
But unlike Sensirion’s otherwise robust
performance, Medartis’ IPO-adjusted results
show minimal year-on-year changes in operating
profit and Ebitda. When adjusted for IPO costs,
operating profit dropped 2% from H1 2017,
coming in at SFr5m. Ebitda, adjusted to exclude
IPO costs, was SFr9m, 5% higher than the
SFr8.6m recorded last year.
Shares reflected this neutral performance,
and were more or less flat at around SFr72 at
the close on Friday.
AVAST SHARES FLOUNDER BUT HACKERS
BOOST SALES
On May 10, Czech cybersecurity firm AVAST
disappointed on the first day of its £602m float
on the London Stock Exchange, with shares
opening a penny below the bottom-end pricing
of 250p. More bad news followed as shares
sank to 210.8p by June 1, 16% less than investors
had paid out less than a month earlier. Shares
climbed back up but never truly recovered,
persisting at sub-240p levels throughout
summer.
But Avast’s IPO costs are barely noticeable in
its strong half-year results, shaving just US$19m
off its underlying US$201.6m in operating
profits.
Avast’s IPO fees shrink in comparison to year-
on-year profit jump of over two-thirds.
(ALFûOFûTHEûTARGETEDûRIGHTSûISSUEûPROCEEDSû
Chief executive Vincent Steckler is one of the
few executives to welcome the rise of high-level
cyber breaches.
“Legislation and high-profile data breaches
have led to an increased focus on privacy
concerns and security risks amongst both
consumer and business customers,” he said in
a statement, “Avast is set to capitalise on these
opportunities.”
Shares rose 3.2% on Wednesday following
the results and climbed throughout the week.
By Friday’s close the share price had climbed to
245.65p, 1.7% shy of its IPO price.
THE PARTY CONTINUES FOR ADYEN
Dutch payments firm ADYEN, which boasts a
cohort of high-profile clients such as Netflix and
Facebook, delivered one of the most exciting
European IPOs seen in years in June. Investor
enthusiasm was palpable straight off the bat,
with shares in the €849m IPO opening at €400
each on its June 13 debut, two-thirds higher than
its IPO price of €240.
But that was just the start. Values continued to
rise, and the release of a glittering set of mid-year
financials on Wednesday pushed shares to an
all-time high of €623 on Thursday. The Thursday
close was slightly softer than trading through the
day, ending at €607.20, but still dwarfing its IPO
price and the first close above €600.
First-half net income rose 75% to €48.2m,
with the addition of new all-star clients such as
eBay and Dunkin’ Donuts helping earnings.
Adyen’s IPO costs barely got a mention in its
results, save its impact on operating expenses
which grew to €5.9m compared with €2.2m
last year. Irrespective of IPO costs, Ebitda was
€70.3m, up 83.1% from €38.4m a year earlier.
Lucy Raitano
and the European Bank for Reconstruction
shares offered on an 18-for-25 basis at €0.70 AREûUNDERWRITTENûBYûSHAREHOLDERû$EMETRAû and Development with 5.4%. Other
each. Pricing offers a negligible discount to WHICHûOWNSûûOFû(ELLENICû"ANKûANDûWILLû international investors own 17.5% while
(ELLENICû"ANKSûCURRENTûSHAREûPRICEûWHICHû invest up to €50m if needed, ending with a domestic investors own 15.9%.
CLOSEDû7EDNESDAYûATûõ 20.09% stake if its underwriting is called on. (ELLENICû"ANKûISûACQUIRINGûSTATE
OWNEDû
A private placing to raise a further €50m 4HEûREMAININGûõMûISûGUARANTEEDûBYû #YPRUSû#OOPERATIVEû"ANKSûASSETSûANDû
for the acquisition will run alongside the %MMAû!LPHAûAû#ZECHûPRIVATEûEQUITYûFUNDû LIABILITIESûINCLUDINGûõBNûINûNETûLOANSû
RIGHTSûISSUEûASû(ELLENICûSELLSûMûSHARESûTOû
0IMCO
OWNEDû0OPPYû3ARLûATûTHEûSAMEûõû
per share. The private placing is conditional
on raising the full €100m through the rights
issue.
If the total €150m is raised through the
which is not a shareholder and is being paid
a fee of 4.5% for its commitment. Emma’s
shareholding will be zero to 17.3%
depending on the extent to which its
backing is required.
/THERûMAJORûSHAREHOLDERSûINû(ELLENICûAREû
õBNûINû#YPRUSûGOVERNMENTûBONDSûõBNû
in cash and €9.7bn in customer deposits.
(ELLENICûHASûPAIDûõMûINûCASHûFORûTHEû
assets, which have a net asset value of
€247m.
4HEûTRANSACTIONûWILLûSTRENGTHENû(ELLENICû
RIGHTSûISSUEûANDûPLACINGû(ELLENICû"ANKSû 4HIRDû0OINTû(ELLENICû2ECOVERYû&UNDûWHICHû "ANKSûPOSITIONûINûTHEû#YPRIOTûBANKINGû
SHAREûCAPITALûWILLûINCREASEûBYû OWNSûû7ARGAMINGû'ROUPûWITHûû sector, bumping it up to second place after

66 International Financing Review August 25 2018

 EQUITIES EMEA

"ANKûOFû#YPRUSûBYûPERFORMINGûLOANûMARKETû 4HEû$HBNûRIGHTSûISSUEûCONSISTSûOFûMû 4HEûCOMPANYûREPORTEDûGROSSûPROlTSûOFû

share of 22% and deposits market share of SHARESûREPRESENTINGûûOFûEXISTINGû 53MûINûTHEûlRSTûHALFûOFûûVERSUSû
32%. SHAREûCAPITALûPRICEDûATû$HûEACHû!$)"Sû
SHARESûCLOSEDûONû3UNDAYûATû$H
Details regarding the timetable of the
SWEDEN rights issue are still to be released, and
REGULATORYûAPPROVALûISûPENDINGû4HEûCASHû
MEKONOMEN LINES UP FUNDING FOR WILLûGOûTOWARDSûTHEûBANKSûGROWTHûSTRATEGY
ACQUISITIONS “ADIB has experienced a period of strong
expansion and we expect this growth
3WEDISHûAUTOPARTSûCOMPANYûMEKONOMEN will TRAJECTORYûTOûCONTINUEû4HEûBOARDûBELIEVESû
RAISEû3+RBNû53M ûINûAûFULLYû that the decision to raise capital through a
underwritten rights issue in October to rights issue will position us well to take
PARTIALLYûFUNDûITSûõMû3+RBN û advantage of the UAE’s economic
POCKETEDû
ACQUISITIONûOFû$ANISHûAUTOPARTSûCOMPANYû development,” ADIB vice-chairman and
&4:ûANDû0OLISHûPARTSûCOMPANYû)NTER
4EAMû ACTINGû#%/û+HAMISû"UHAROONûSAIDûINûAû Milner’s DST Global.
FROMû(ELLA statement earlier this month.
The capital increase represents around The bank will focus on expanding its
US$94.3m in the same period of 2017, up
around 45%. Gross merchandise value, or
the dollar value of orders processed, is set to
TOPû53BNûTHISûYEAR
Farfetch is another cash-burner,
SOMETHINGûTHATûISûMAYBEûMOREûACCEPTABLEûINû
the US than Europe.
.ETûCASHûOUTmOWSûFROMûOPERATIONSûINûTHEû
LATESTûHALFûWEREû53Mû4HEûCOMPANYû
recorded an adjusted Ebitda loss of
US$49.1m in the same period.
,UCKILYû&ARFETCHûHASûSOMEûDEEP
investors such as China’s JD.com and Yuri
JD.com invested about $400m in Farfetch
LASTûYEAR
29% of Mekonomen’s current market cap of retail business, digital banking services and #URIOUSLYû*$COMûALSOûRECENTLYûINVESTEDûAû
APPROXIMATELYû3+RBN also opportunities across corporate, large sum in similar sounding Nasdaq-listed
-AJORITYûSHAREHOLDERû,+1ûHASûCOMMITTEDû transaction and correspondent banking. #HINESEûONLINEûLUXURYûRETAILERû3ECOOû
TOûEXERCISEûALLûITSûRIGHTSûTOûMAINTAINûAûû !$)"ûREPORTEDûNETûPROlTûOFû$HBNûFORû BREATHINGûLIFEûINTOûWHATûWASûAûVERYû
stake. The remaining shares are THEûlRSTûHALFûOFûûUPûûFROMûAûYEARûEARLIER disappointing 2017 IPO.
UNDERWRITTENûBYûNordea and SEB. The banks working on the rights issue Goldman Sachs, JP Morgan, Deutsche Bank,
Other shareholders holding 25.1% of the HAVEûNOTûBEENûCONlRMEDû(3"#ûANDû*0û UBS, Credit Suisse, Wells Fargo, Allen & Company
COMPANYûHAVEûPROMISEDûTOûVOTEûINûFAVOURûOFû Morgan were hired earlier this month as and BNP Paribas will lead the Farfetch
the rights issue. coordinators for the issuance of the OFFERINGû)TûWASûlRSTûlLEDûCONlDENTIALLYûONû
The subscription period will run from US$750m sukuk deal. -AYûûSOûSHOULDûBEûREADYûTOûGOûRIGHTûAFTERû
October 3 to October 18 and the rights issue ,ABORû$AYûONû3EPTEMBERûûIFûTHEûCOMPANYûSOû
is conditional on shareholder approval at an chooses.
%'-ûPLANNEDûFORû3EPTEMBERû UK
FUTURE WRAPS UP £105.7m RIGHTS ISSUE
UK ONLINE RETAILER FARFETCH OPTS AND SELLS RUMP
UAE FOR NEW YORK LISTING
Media group FUTURE achieved 91.2% take-up
ADIB SHAREHOLDERS GIVE GREEN LIGHT Online fashion retailer FARFETCH has opted ONûITSûaMûRIGHTSûISSUEûANDûSWIFTLYûSOLDû
TO DH1bn RIGHTS ISSUE
Shareholders in ABU DHABI ISLAMIC BANK have
approved a rights issue targeting Dh1bn
53M ûANDûTHEûISSUANCEûOFû53Mû
FORûAû53ûLISTINGûOVERûSTAYINGûONûHOMEûTURFûINû
AûDECISIONûTHATûLOOKSûTOûBEûDRIVENûBYû
TECHNOLOGYûRATHERûTHANûFASHION
Farfetch runs an online store selling
LUXURYûCLOTHESûANDûACCESSORIESû0ERHAPSû
OFFûTHEûRUMPûTOOûONû4UESDAYûPAVINGûTHEûWAYû
for its planned acquisition of US digital
media publisher Purch.
Shareholders snapped up 31.81m of the
34.88m shares up for grabs in the rights
of Tier 1 sukuk in a bid to boost growth.
The capital increases were approved at an
ûAûDIFFERENTûBUSINESSûASûAûFASHIONû
EGM on August 19, during which

shareholders also backed a proposed
REPAYMENTûOFû!$)"Sû53BNûHYBRIDû4IERûû
EYEINGûTHEûSUCCESSûOFû3TITCHû&IXSû)0/ûLASTû
YEARû
3-for-4 basis, and subscription ran August
subscription site, but one that has doubled
from its IPO price - it has opted for a New
York Stock Exchange listing. It leaves
ISSUEûRAISINGûaMû0RICINGûWASûPûONûAû

New shares were discounted 30% to the
theoretical ex-rights price of 432.7p based
sukuk issued in 2012. behind major European-listed peers such as ONûTHEû*ULYûûCLOSEûTHEûDAYûBEFOREûTHEû
Boohoo, ASOS and Zalando.
EMEA EQUITIES &ARFETCHûNOûDOUBTûlGURESûITSûTECHNOLOGY
US EQUITIES
BOOKRUNNERS: 1/1/2018 TO DATE enabled business model will resonate better BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share with US investors. Managing No of Total Share
bank or group issues US$(m) (%) h7EûAREûAûTECHNOLOGYûCOMPANYûATûOURû bank or group issues US$(m) (%)
1 Goldman Sachs 44 9,928.30 9.8 core and have created a purpose-built 1 Morgan Stanley 111 17,034.68 13.6
2 JP Morgan 38 8,779.31 8.6 PLATFORMûFORûTHEûLUXURYûFASHIONûINDUSTRYvû 2 Goldman Sachs 97 15,155.07 12.1
3 Citigroup 37 6,319.09 6.2 THEûCOMPANYûSAIDûINûITSûlLINGûh/URûPLATFORMû 3 JP Morgan 126 13,510.21 10.8
4 Credit Suisse 26 5,057.49 5.0 consists of three main components: 4 Citigroup 87 10,961.74 8.7
5 Morgan Stanley 38 4,912.93 4.8 applications, services and data.” 5 Barclays 59 9,071.59 7.2
6 BAML 20 4,615.80 4.5 &ARFETCHûISûNOTûAûTYPICALûONLINEûRETAILERû 6 BAML 87 8,670.17 6.9
7 UBS 21 4,343.52 4.3 with 90% of its revenues originating from its 7 Credit Suisse 62 6,513.67 5.2
8 Deutsche Bank 28 3,945.79 3.9 Farfetch Marketplace application, a platform 8 Wells Fargo 50 5,506.19 4.4
9 Barclays 26 3,819.89 3.8 that connects consumers with the often 9 Jefferies 75 4,357.50 3.5
10 Berenberg Bank 32 2,710.42 2.7 HIGHLYûFRAGMENTEDûMARKETûOFûLUXURYûSELLERS 10 RBC 48 4,348.82 3.5
Total 639 101,727.75 As of June 30, the marketplace application Total 551 125,296.37
Including all domestic and international deals and rights issues connected over 2.3m consumers to over 980 Including all domestic and international deals and rights issues

Source: Thomson Reuters SDC code: C4cr LUXURYûSELLERSûTHEûPROSPECTUSûSAID Source: Thomson Reuters SDC code: C3r

International Financing Review August 25 2018 67

rights issue was announced. Future’s shares HAVEûALSOûlLEDûINûRECENTûWEEKSûSEEKINGû53û 3TILLûLIKEûMANYûRECENTûBLOCKSû-EDPACEû
CLOSEDû-ONDAYûATûPûEACHûANDûWEREûUPûû listings. SHARESûCAMEûUNDERûPRESSUREûINû4HURSDAYSû
TOûPûBYûTHEû4HURSDAYûCLOSE
!ûGENEROUSûTHREEûDAYSûWEREûFREEDûUPûFORû
joint bookrunners N+1 Singer Capital Markets
and Numis to sell off the 3.07m shares
LEFTOVERûINûTHEûFULLYûUNDERWRITTENûDEAL
4HEûEXTENDEDûDEADLINEûWASûULTIMATELYû
/NEûTHATûISûYETûTOûlLEûPUBLICLYû4ENCENTû
Music Entertainment, is said to be planning
a US$4bn US IPO that could rank as the
BIGGESTû)0/ûONûAû53ûEXCHANGEûTHISûYEAR
One calendar complication for IPO
ASPIRANTSûWILLûBEûSEVERALû*EWISHûHOLIDAYSûTHATû
aftermarket, trading as low as US$54.54.
Cinven has made short work of its
-EDPACEûPOSITIONûSINCEûBUYINGûTHEûBUSINESSû
FROMû##-0û#APITALû!DVISORSûINûEARLYûû
for about US$915m and then taking it public
INûAû53Mû)0/ûINû!UGUSTûûPRICEDûATû
UNNECESSARYûWITHûTHEûBOOKBUILDûWRAPPEDû fall mid-week during September. US$23.
UPûINûTHEûMORNINGûONû4UESDAYûASûNORMALûFORû Of bigger concern is whether the looming The latest offering was the fourth block
a rump placing. The rump was placed at mid-term congressional elections, escalating TRADEûINûTHEûNAMEûTHISûYEARûALONEû4HEûlRSTû
PûAûûDISCOUNTûTOû-ONDAYSûCLOSE political strife for the Trump administration, WASûEXECUTEDûBYû*EFFERIESûANDûTHEûlNALûTHREEû
The additional funds minus fees rising interest rates and general concern BYû-ORGANû3TANLEY
associated with selling off the rump will be ABOUTûCURRENTûLOFTYûMARKETûVALUATIONSûWILLû The CRO space has proved rich pickings
returned to shareholders who chose not to weigh on the market to frustrate capital- FORû-ORGANû3TANLEYûINûTHEûPASTûMONTH
exercise their rights during the rights issue. raising ambitions. Earlier this month the bank executed
Future, which generates revenues from a 4HEûPASTûWEEKûWASûPREDICTABLYûLIGHTûWITHû BOTHûAû53MûBLOCKûOFû3YNEOSû(EALTHû
mixture of digital ads and other publishing NOû)0/SûANDûONLYûTWOûFOLLOW
ONûSTOCKûSALESû ANDûAû53MûBLOCKûWITHû'OLDMANû
services, is gathering funds to purchase of note, block trades of stakes in MEDPACE for 3ACHS ûOFû02!û(EALTHû3CIENCESûSOMEû
5TAH
BASEDû0URCHûAû"#ûCOMPANY US$290m, and APPIAN for US$70.3m. consolation after the shock cancellation of a
The rights issue is not conditional on the Banks will be reluctant to take on risk this 53BN
PLUSûBLOCKûOFû)16)!ûINû-AY
acquisition going ahead, and if the Purch week but with stocks hitting new highs
deal falls through, the new funds will go
towards reducing Future’s debt in the short
term while directors weigh up alternative
CODEvûSOFTWAREûDEVELOPMENTûCOMPANYû
avenues for the cash.
The Purch acquisition is aimed at
increasing Future’s reach in the US market,
DURINGûTHEûWEEKûANDûVOLATILITYûAGAINûEASINGû APPIAN GETS FRESH EQUITY
this would otherwise be an ideal time to sell
stock. h,OW
APPIAN switched to the block format to bring
CINVEN CUTS OUT OF MEDPACE its second follow-on since it went public last
YEAR
and follows a similar deal in April when 4HISûYEARSûMOSTûACTIVEûBLOCKûPURCHASERû Barclays bested its rivals including Morgan
&UTUREûSPENTû53MûTOûBUYû.EWû9ORK
Morgan Stanley, showed no qualms about 3TANLEYûANDû'OLDMANû3ACHSûTHEûTWOûBANKSû
based information and events business bringing a risk trade during the summer ahead of it on the cover of Appian’s IPO
.EW"AY DOLDRUMSûEXECUTINGûTHEûlNALûBLOCKûFORû prospectus, to score a sole books role on the
Cinven in clinical research organisation US$70.3m overnight block.
MEDPACE. ,ATEû-ONDAYûTHEûBANKûREOFFEREDûMû
)NûONEûOFûJUSTûTWOûBLOCKSûINûAûSEASONALLYû Appian shares or just 3% of outstanding at
slow week for ECM, the bank late on US$35.15, the bottom of a US$35.15-$35.85
AMERICAS 7EDNESDAYûSOLDûMû-EDPACEûSHARESûATûAû marketing range and a 3% discount to last
lXEDûREOFFERûPRICEûOFû53ûAûû
discount to last sale.
UNITED STATES “It has been more active in August than
most Augusts, at least from a risk
US ECM TAKES ANOTHER REST standpoint,” one banker said. “This shows
close.
This proved too tight, the shares slumping
ûTOû53ûINû4UESDAYSûSESSIONûINûTHEû
wake of the deal.
4HEûBLOCKûWASûûPRIMARYûMû
it’s possible to do a deal and that people are SHARES ûTHEûPROCEEDSûADDINGûTOûTHEûSTILLûCASH

53û%#-ûACTIVITYûISûEXPECTEDûTOûCOMEûTOûANû still looking for opportunities.” BURNINGûCOMPANYSû53MûPILEûATûTHEû
almost complete standstill in the coming -ORGANû3TANLEYûMADEûSHORTûWORKûOFûTHEû end of the second quarter.
week as investors and bankers take summer 53MûOFFERINGûLAUNCHINGûTHENûQUICKLYû 3ELLINGûSTOCKHOLDERSûOFmOADEDûTHEûSMALLû
HOLIDAYS pricing the deal after the close. balance of 325,000 shares, including 200,000
But in the absence of actual dealmaking, &ACILITATEDûBYûANûEARLYûLOCK
UPûRELEASEûANDû from CEO and founder Matthew Calkins to
THEû)0/ûPIPELINEûCONTINUESûTOûBUILDûNICELYû DIRECTûNEGOTIATIONûTHEREûWASûNOûAUCTION û pare his holding to a little less than 7m
POINTINGûTOûAûBUSYûPOST
,ABORû$AYûNEWûISSUEû the surprise sale represented the clean-up of SHARESûORûûOFûTHEûCOMPANY
market. Cinven Capital Management’s remaining The deal priced well above the US$12.00
%XPECTATIONSûAREûTYPICALLYûHIGHûFORûTHEû 14.7% stake. level at which Appian raised US$75m from
,ABORû$AYûTOû4HANKSGIVINGûWINDOWûASûTHEû The block came just two weeks after ITSû-AYûû)0/ûANDûTHEû53ûMARKûONû
last meaningful chance to get deals done -ORGANû3TANLEYûMOVEDûMû-EDPACEû .OVEMBERSûALL
SECONDARYûANDûMARKETEDû
ANDûTHISûYEARûISûAûGOLDENûONEûWITHûTHEû shares at US$55.00 apiece on Cinven’s lRST
TIMEûFOLLOW
ONûTHATûRAISEDû53M
average 2018 US IPO having delivered a 20%- BEHALFûAûTRADEûTHATûCAMEûWITHûAû
DAYû The latest offering followed a solid second
plus aftermarket return. lock-up on further sales. quarter earnings print earlier this month
)NCLUDINGûJUSTûTHOSEûDEALSûTHATûHAVEûlLEDû -ORGANû3TANLEYûRETAINEDûTHEûDISCRETIONûTOû THATûBEATûEXPECTATIONSûTHANKSûLARGELYûTOûAû
in the past month or so, there are at least RELEASEû#INVENûEARLYûFROMûTHATûLOCK
UPûANDû software deal with the US Air Force.
15-20 companies planning to go public in this often occurs where the stock has (OWEVERûTHEûCOMPANYûREPORTEDû53Mû
September. continued to rise and there is demonstrable OFûNEGATIVEûOPERATINGûCASHûmOWûAûLITTLEûMOREû
!MONGûTHEûNOTABLEûlLERSûDURINGûTHEûPASTû market demand for another stock sale. The THANûTHEûYEARûAGOûPERIOD
WEEKûWASû%VENTBRITEûWHICHûISûLIKELYûTOûLEADû STOCKûHADûRISENûONLYûBYûFOURûCENTSûBETWEENû Appian is forecasting subscription
THEûRETURNûOFûTECHû)0/SûAFTERûAûSTELLARûYEARûFORû the two trades, it was the discount that REVENUESûTOûGROWûABOUTûûTHISûYEARûTOû
the sector. At least seven Chinese companies narrowed from 2.3% a fortnight earlier. US$110.5m-$110.9m, though total revenues

68 International Financing Review August 25 2018

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are expected to grow at a slower pace of 21%- 4HEREûISûTALKûITûISûALSOûEYEINGûTHEûENDûOFû In the past these crossover investors have
22% to US$213.8m-$215.3m. YEARûWINDOWûFORûAûFRESHûATTEMPTûTOûGOûPUBLIC BEENûPREPAREDûTOûINVESTûPRIVATELYûFORûUPûFORûAû
3OMEûANALYSTSûHAVEûEXPRESSEDû The big question for Zekelman and steel YEARûBEFOREûANû)0/ûHOWEVERûTHEûRESILIENTû
RESERVATIONSûABOUTûTHEûCOMPANYSûHIGHû STOCKSûGENERALLYûISûWHETHERûTHEû4RUMPû biotech IPO market, the source of about 40
proportion of non-subscription revenue,
raising question marks about its
SUSTAINABILITY
Software companies enriching their
valuation through a shift from services
revenues to subscriptions have been the big
administration’s efforts to boost the US steel
INDUSTRYûWILLûREALLYûLEADûTOûAûLASTINGûREVIVALû
of the sector.
4HEûlLINGûNOTESûTHATûFOREIGNûCOMPETITIONû
represented 45% of standard pipe volumes
ANDûûOFûENERGYûTUBINGûSOLDûINûTHEû53ûINû
53û)0/SûTHISûYEARûAPPEARSûTOûHAVEûSHORTENEDû
the wait.
Crossover rounds allow these investors to
ACCUMULATEûAûLARGERûPOSITIONûTHANûTHEYû
MIGHTûOTHERWISEûBEûABLEûTOûBYûJUSTû
participating in the IPO.
theme in the 2018 software IPO market, but the past 12 months. !CCORDINGûTOû3ILICONû6ALLEYû"ANKûTHEû
THEûSECTORSûAMAZINGûGAINSûHAVEûINEVITABLYû “We also believe that recent average wait for a biotech crossover investor
prompted concerns that valuations have run DEVELOPMENTSûPARTICULARLYûTHEû FROMûTHEûlNALûPRIVATEûROUNDûTOûTHEû)0/ûWASû
too hard, too fast. implementation of trade sanctions against SEVENûANDûHALFûMONTHSûINûTHEûlRSTûHALFûOFû
!PPIANûSTOCKûTRADESûATûAûHEFTYûFORWARDû%6 UNFAIRLYûTRADEDûSTEELûANDûSTEELûPRODUCTSûINû 2018.
sales multiple of around 10 times and has connection with Section 232 of the Trade 0RINCIPIAûCARRIEDû53MûOFûCASHûASûOFû
run ahead of the valuations of even some of %XPANSIONû!CTûOFûûMEANINGFULLYû June 30, or less than 12 months’ funding
THEûANALYSTSûWHOSEûlRMSûUNDERWROTEûTHEû enhance our competitive positioning based on its current burn rate.
IPO. RELATIVEûTOûFOREIGNûSOURCESûOFûSUPPLYvûTHEû 4HEûCOMPANYûPLANSûTOûUSEûTHEû)0/û
!Nû3%#ûlLINGûLATERûINûTHEûWEEKûREVEALEDû lLINGûSTATES proceeds to fund a Phase II trial of its own
"ARCLAYSûCOLLECTEDûANûUNDERWRITINGûFEEûOFû “In particular, we believe that the "4+ûINHIBITORûINûPATIENTSûWITHûAûRAREûANDû
ûCENTSûORû53ûTOûEXECUTEûTHEû
block.
STEEL RECOVERY SPURS ZEKELMAN IPO
implementation of trade relief in
CONNECTIONûWITHû3ECTIONûûANDûTRADEû
DEALSûNEGOTIATEDûINûCONNECTIONûTHEREWITH û
will cause foreign production to account for
a lesser share of total volumes sold in the
chronic skin disorder called pemphigus.
In a similar vein to Principia,
personalized medicine specialist GRITSTONE
ONCOLOGYûlLEDûFORûAû53Mû)0/ûONû
4HURSDAYûRIGHTûALONGSIDEûAûFRESHûPRIVATEû
ZEKELMAN INDUSTRIESûAûFAMILYûOWNEDûMAKERûOFû
industrial steel tube and pipe products,
PUBLICLYûlLEDûONû!UGUSTûûFORûAû.93%438û
IPO.
Marking a departure from the diet of
biotechs, software companies and Chinese
deals that have dominated the 2018 deal
mix, Zekelman has hired Goldman Sachs and
Bank of America Merrill LynchûTOûHEADûAû
lRMû shows no signs of slowing.
UNDERWRITINGûSYNDICATE
:EKELMANûLASTûYEARûGENERATEDû53Mû
of net income from US$2.1bn in net sales,
FRONTûPAYMENTûFORû
THEûLATTERûUPûûFROMûTHEûYEAR
AGOûPERIODû crossover round, or a private funding round
thanks to higher selling prices but also
HELPEDûBYûTHEûACQUISITIONSûOFû7ESTERNû4UBEû
and American Tube.
4HEû)0/ûWASûlRSTûlLEDûCONlDENTIALLYûONû
United States for the foreseeable future.”
BIOTECHS CROSS INTO IPO
The waiting period between crossover
FUNDINGûROUNDSûANDûPUBLICû)0/ûlLINGSûFORû
biotechs is getting even shorter as the
sector’s stream of new issue candidates
anchoring a US$21m private alongside
Autoimmune specialist PRINCIPIA BIOPHARMA
PUBLICLYûlLEDûFORûANû53Mû)0/ûONû
!UGUSTûûWITHûTHEûINKûBARELYûDRYûONûAû
RIGHTSûTOû'RITSTONESûARTIlCIALûINTELLIGENCEû
WHEREûPUBLICûEQUITYûINVESTORSûPARTICIPATEûINû
ANTICIPATIONûOFûAûCOMPANYûGOINGûPUBLIC
Bank of America Merrill Lynch, Leerink Partners
and Wells Fargo are slated to lead the
funding round.
Goldman Sachs, Cowen and Barclays will lead
the Gritstone IPO, which is also expected to
price in September.
4HEûlLINGûCAMEûHOURSûAFTERû'RITSTONEû
announced a new collaboration with cell
ANDûGENEûTHERAPYûSPECIALISTû"LUEBIRDûBIO
Alongside the collaboration, Bluebird is
HEALTHCAREûINVESTMENTûlRMû2EDMILE
Bluebird’s US$10m investment formed
PARTûOFûAû53MûUP
platform.
Gritstone will provide Bluebird up to 10
CANCERûTARGETSûFORûITSûCELLûTHERAPYûPLATFORM
Bluebird also paid Gritstone US$20m in
*UNEûûMEANINGûITûCOULDûCONCEIVABLYûLAUNCHû
RIGHTûAFTERû,ABORû$AYûFOLLOWINGûTHEûREQUIREDû

DAYûPUBLICûVIEWINGûPERIOD
4HEûCOMPANYSûMAINûCOMPETITIONû
Principia IPO, which could launch right CASHûANDû'RITSTONEûCANûEARNûROYALTIESûONûANYû
AFTERû,ABORû$AYûANDûPRICEûBYûTHEûMIDDLEûOFû approved therapies that result from the
September. collaboration.
4HEûlLINGûALSOûREVEALEDûTHEûCOMPANYû Redmile invested US$2m in Gritstone’s
INCLUDESû!TKOREû)NTERNATIONALûAûû)0/ û raised US$50m from a Series C funding LATESTûPRIVATEûPLACEMENTûTOûPRESERVEûITSûû
Nucor and IPSCO Tubular, a steel pipe round earlier this month. stake. Versant Ventures and The Column
MAKERûALREADYûONûlLEûTOûGOûPUBLIC Cormorant Asset Management, a Boston- Group are the largest existing shareholders
IPSCO failed to price its IPO earlier this BASEDûHEALTHCAREûINVESTMENTûlRMûANCHOREDû with 14% of Gritstone each.
YEARûHIGHLIGHTINGûTHEûLINGERINGûDIFlCULTYûINû THEûROUNDûWITHûAû53MûINVESTMENTû 'RITSTONEûRECENTLYûCOMPLETEDûANIMALû
selling steel stocks to investors, but has kept alongside existing investors including Baker trials of its personalized cancer
ITSûlLINGûUPDATED Brothers Advisors. IMMUNOTHERAPYûANDûWILLûBEGINûDOSINGû

ECM DEALS: WEEK ENDING 24/8/2018

Stock Country Date Amount Price Deal type Bookrunner(s)
Mahanagar Gas India 21/08/2018 Rs11.7bn Rs851 Follow-on (secondary) Citigroup
Future United Kingdom 21/08/2018 £105.7m 303p Rights issue (primary) N+1 Singer Capital Markets, Numis
Countrywide United Kingdom 21/08/2018 £140m 10p Firm placing, placing & open offer Barclays, Jefferies
Appian US 20/08/2018 US$70.3m US$36.15 Accelerated bookbuild (primary and secondary) Barclays
Tenzing Acquisition US 21/08/2018 US$50.0m US$10.00 IPO (primary) Maxim
MedPace US 22/08/2018 US$290.0m US$55.50 Accelerated bookbuild (secondary) Morgan Stanley
Megalith Financial Acquisition US 23/08/2018 US$150.0m US$10.00 IPO (primary) Chardan Capital Markets

70 International Financing Review August 25 2018

 EQUITIES AMERICAS

human patients in a Phase I trial in the Entasis has since raised another US$82m Each unit consists of one share of
SECONDûHALFûOFûTHISûYEAR PRIVATELYûFROMûINVESTORSûINCLUDINGû#LARUSû common stock and a warrant to purchase a
,IFEû3CIENCESû.OVOû(OLDINGSû&RAZIERû,IFEû whole share of common stock at US$11.50
ENTASIS FILES FOR IPO Sciences, Pivotal bioVenture Partners, each. Most SPAC units consist of a share of
3OlNNOVAû6ENTUREû0ARTNERSûANDû40'û common and a warrant that represents a
ENTASIS THERAPEUTICS, an antibiotics platform that "IOTECHNOLOGY fraction of a share.
WASûSPUNûOUTûOFû!STRA:ENECAûTHREEûYEARSûAGOû Though there is an indication of interest 4ENZINGSûSPONSORSûALSOûPUTûINû53Mû
lLEDûONû!UGUSTûûFORûANûUPûTOû53Mû)0/ from existing investors on the prospectus via a private placement at the offer price.
Credit Suisse and BMO Capital Markets are
listed as joint book runners.
Entasis is looking to fund a Phase III trial
of its intravenous antibiotic treatment for
multiple drug-resistant bacteria.
The Phase III trial is expected to begin
EARLYûNEXTûYEARûWITHûDATAûEXPECTEDûINûû
%NTASISSûEXISTINGûCASHûPILEûOFû53MûASû
BASEDû transactions.
OFû*UNEûûISûENOUGHûTOûFUNDûOPERATIONSûONLYû
through March 2019, meaning it will
MONTHû the private placement, are being held in a
QUICKLYûNEEDûMOREûFUNDING
cover, the expected level of insider
PARTICIPATIONûHASûNOTûYETûBEENûSET
SPACS GO ON SALE
3PECIALûPURPOSEûACQUISITIONûCOMPANYûTENZING
ACQUISITION raised US$50m from its IPO in
ANTICIPATIONûOFûTYINGûUPûWITHûANû)NDIA
TECHNOLOGYûCOMPANYûWITHINûûMONTHS
4HISûISûSHORTERûTHANûTHEûTYPICALû
time frame that SPACs have to complete an
4HEû30!#ûISûCHAIREDûBYû0ARAGû3AXENAûAû
veteran tech investor and an advisor to the
Prime Minister of India on foreign direct
investments.
#%/û2AHULû.AYARûHASûWORKEDûINûCAPITALû
MARKETSûFORûOVERûûYEARSûANDûWITHû53û30!#û
management teams to source Indian
All of the proceeds, including funds from
trust. The proceeds will be rebated back to
!STRA:ENECAûWHICHûSTILLûOWNSûAûû
stake, invested US$23.3m in Entasis when it
was spun out in 2015.
GLOBAL CONVERTIBLE OFFERINGS
initial business combination.
Underwriter Maxim priced 15m Tenzing
UNITSûATû53ûAFTERûTHEûCLOSEûLASTû-ONDAY
ALL INTERNATIONAL US CONVERTIBLES
the public investors if an acquisition does
not materialize in 18 months.
In the meantime, Tenzing will be looking
to complete an initial business combination
WITHûANû)NDIA
BASEDûCOMPANYûPREFERABLYûANû
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE OPERATORûINûTHEûTECHNOLOGYûSPACEûORûANOTHERû
Managing No of Total Share Managing No of Total Share fast growing sector.
bank or group issues US$(m) (%) bank or group issues US$(m) (%) MEGALITH FINANCIAL ACQUISITION closed the
1 Goldman Sachs 44 9,847.83 14.0 1 Goldman Sachs 31 5,106.31 16.1 SUMMERû)0/ûWINDOWûBYûPRICINGûAû53Mû
2 JP Morgan 45 7,004.04 9.9 2 Morgan Stanley 31 4,734.26 14.9 30!#ûOFFERINGûONû4HURSDAY
3 Morgan Stanley 40 6,094.08 8.6 3 JP Morgan 33 4,486.37 14.2 Chardan Capital Markets priced 15m units
4 BAML 31 5,070.70 7.2 4 BAML 26 4,338.01 13.7 at US$10 each. Each unit consists of one
5 Citigroup 22 3,697.67 5.2 5 Citigroup 15 2,569.35 8.1 common share and a full warrant to
6 Credit Suisse 19 2,640.65 3.7 6 Barclays 11 1,763.30 5.6 purchase another share at US$11.50.
7 Deutsche Bank 14 2,576.35 3.7 7 Wells Fargo 12 1,636.13 5.2 -EGALITHûISûLEDûBYû*AYû3IDHUûTHEûFORMERû
8 UBS 7 2,268.82 3.2 8 Deutsche Bank 7 969.83 3.1 head of Sovereign Bancorp.
9 Barclays 14 2,066.55 2.9 9 RBC 7 958.45 3.0 4HEûTRUSTûPROCEEDSûINCLUDEû53Mû
10 Wells Fargo 12 1,636.13 2.3 10 Credit Suisse 9 778.00 2.5 FROMûAûPRIVATEûPLACEMENTûOFûMûWARRANTSû
Total 254 70,536.47 Total 84 31,683.12 at US$1.00 a share with Sidhu and his
Including exchangeables. associates.
Source: Thomson Reuters SDC code: C9 Source: Thomson Reuters SDC code: C9a
ALL INTERNATIONAL ASIAN CONVERTIBLES
GLOBAL CONVERTIBLE OFFERINGS – EMEA ALL INTERNATIONAL ASIAN CONVERTIBLES (EXCLUDING JAPAN)
BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues US$(m) (%) bank or group issues US$(m) (%)
1 UBS 3 1,849.73 18.4 1 Goldman Sachs 3 2,289.76 23.4 1 Goldman Sachs 2 2,136.01 28.8
2 SG 7 1,072.57 10.6 2 Credit Suisse 7 1,443.85 14.7 2 Credit Suisse 7 1,443.85 19.5
3 JP Morgan 6 1,069.08 10.6 3 Nomura 8 1,044.82 10.7 3 JP Morgan 3 730.92 9.9
4 Deutsche Bank 4 1,022.29 10.1 4 JP Morgan 3 730.92 7.5 4 BNP Paribas 3 581.83 7.8
5 Citigroup 5 792.52 7.9 5 BNP Paribas 3 581.83 5.9 5 China Merchants Secs  1 333.33 4.5
6 BNP Paribas 6 673.63 6.7 6 Sumitomo Mitsui Finl 3 566.61 5.8 =5 Citic 1 333.33 4.5
7 Goldman Sachs 5 632.75 6.3 7 Daiwa Securities 3 524.29 5.4 7 Morgan Stanley 2 318.89 4.3
8 Morgan Stanley 3 399.50 4.0 8 Morgan Stanley 4 460.32 4.7 8 Deutsche Bank 2 312.49 4.2
9 BAML 3 385.75 3.8 9 China Merchants Secs  1 333.33 3.4 9 Nomura 2 248.49 3.4
10 HSBC 3 343.25 3.4 =9 Citic 1 333.33 3.4 10 Citigroup 1 235.80 3.2
Total 30 10,072.17 Total 34 9,792.25 Total 22 7,416.92
Including exchangeables. Including exchangeables. Including exchangeables.

Source: Thomson Reuters SDC code: C09d Source: Thomson Reuters SDC code: M10 Source: Thomson Reuters SDC code: M11

EQUITY-LINKED DEALS WEEK ENDING: 24/8/2018

Issuer Country Date Amount Greenshoe Tenor Coupon (%) Premium (%) Bookrunner(s)
Cree US 21/08/18 US$500.0m US$75.0m 5y 0.88 31.0 BAML, Wells Fargo, BMO CM,
SunTrust Robinson Humphrey, Citigroup
MercadoLibre Argentina 21/08/18 US$800.0m US$120.0m 10y 2.00 35.0 Goldman Sachs, JP Morgan

International Financing Review August 25 2018 71

 This is in addition to the US$25m of %VENTBRITEûOFFEREDûhAûlNANCIALû The stock is well down from a high of
founder shares that Megalith’s backers accommodation” to address the US$417.91 on March 12, though the
ALREADYûOWNûGIVINGûTHEMûAûûSTAKE INCONVENIENCEûSUFFEREDûBYûCREATORSûANDûhTOû COMPANYûCONTINUESûTOûDOûWELLûDESPITEû
The cash will be rebated to public encourage them to continue doing business VARIOUSûCHALLENGESûINCLUDINGû&8û
investors if an acquisition does not WITHû%VENTBRITEvûTHEûlLINGûSTATES UNCERTAINTY ûINûKEYûMARKETSûSUCHûASû"RAZIL
materialise in the next 24 months, 4HEûCOMPANYûALSOûHASûSOMEûSTRONGû (AVINGûAûLONGERûDATEDûSECURITYûONûTHEû
PREFERABLYûINûTHEûlNANCIALûSERVICESûSECTOR
EVENTBRITE LEADS OUT NEXT TECH IPO
ROUND
BACKERSûWITHû4IGERû'LOBALû û3EQUOIAû
#APITALû ûANDû4û2OWEû0RICEû û
among its biggest shareholders.
The last private raise was in August last
YEARûWHENû4û2OWEûANDû3EQUOIAûLEDûAû
balance sheet ensures that MercadoLibre
will remain well funded, regardless of
macroeconomic conditions in the region.
EVENTBRITEûSHOWEDûITSûHANDû4HURSDAYûBYû
PUBLICLYûlLINGûFORûAû53Mû.93%û)0/
The deal from the event planning
PLATFORMûPROMISESûTOûBEûTHEûHIGHESTûPROlLEû
tech offering seeking to launch and price in
THEûlRSTûFEWûWEEKSûAFTERû,ABORû$AY
Goldman Sachs, JP Morgan, Allen & Co, RBC,
SunTrust Robinson Humphrey and Stifel lead the
UNDERWRITINGûSYNDICATE
4HEûPUBLICûlLINGûSETSû%VENTBRITEûUPûFORûAû
LIKELYûROADSHOWûLAUNCHûONû3EPTEMBERûû
AFTERûSATISFYINGûTHEûREQUIREDû
DAYûPUBLICû
VIEWINGûPERIODûFORûITSûlLING
4HEû3ANû&RANCISCO
53Mû3ERIESû'ûROUNDûATû53ûAûSHAREû
THOUGHûNOTABLYû3EQUOIAûWASûABLEûTOûBUYûMOREû
SHARESû53MûWORTH ûATûTHEûLOWERûPRICEûOFû
53ûAûSHAREûINû-AYûTHISûYEAR
%VENTBRITEûlRSTûlLEDûCONlDENTIALLYûONû
June 15.
STRUCTURED EQUITY
BONDûISSUEûONû4UESDAYûSPECIlCALLYûTOûFUNDû
UNITED STATES
CREE REVS GROWTH ENGINE WITH CB
3EMICONDUCTORûANDû,%$ûCOMPANYûCREE has
committed to expanding its Wolfspeed
power and wireless equipment business
after an outright sale of the business to
'ERMANûCHIPMAKERû)NlNEONûWASûBLOCKEDûBYû
THEû53ûGOVERNMENTûLASTûYEAR
Cree raised US$500m in a convertible
the expansion of the business.
BASEDûCOMPANYûWHICHû ARGENTINA Bank of America Merrill Lynch, Wells Fargo,
collects a per-ticket fee from event creators BMO Capital Markets, SunTrust Robinson
that use its platform to plan, promote and MERCADOLIBRE GOES LONG WITH 10Y CB Humphrey and Citigroup priced the
produce fundraisers, seminars, musical offering with a 0.375% coupon and 31%
festivals and other events, boasts strong top- Argentine-based and Nasdaq-listed premium, versus talk of 0.375%-0.875%,
line growth. e-commerce platform MERCADOLIBRE took the up 30%-35%.
While it continues to report GAAP losses, OPPORTUNITYûTOûADDRESSûITSûLONG
TERMûFUNDINGû 4HEûNOTESûCANNOTûBEûCALLEDûFORûTHREEûYEARSû
THEûCOMPANYûISûBOTHûOPERATINGûANDûFREEûCASHû NEEDSûVIAûAûRAREû53Mû
YEARû#" and are then subject to a hurdle of 130%
mOWûPOSITIVEûAûSTRONGûSELLINGûPOINTûVERSUSû !FTERûAûDAYûOFûMARKETINGûGoldman Sachs ABOVEûTHEûCONVERSIONûPRICEûOFû53ûORû
MANYûOTHERûTECHû)0/S and JP Morgan priced the CB with a 2% US$80.34.
.ETûREVENUESûJUMPEDûûTOû53Mû coupon and 35% conversion premium, the Wolfspeed makes equipment that is used
INûTHEûlRSTûHALFûOFûûACCELERATINGûFROMû INVESTOR
FRIENDLYûENDSûOFûTALKûATû
ûUPû in charging stations and electric cars, and
GROWTHûOFûûINûTHEûûCALENDARûYEARû 35%-40%. RADIOûFREQUENCYûPRODUCTSûTHATûAREûUSEDûINû
period. h9OUûDONTûSEEûAû
YEARûMATURITYûINûTHEû broadband and telecoms equipment.
Gross margins for the same period were CONVERTIBLEûBONDûMARKETûVERYûOFTENû
ûlVE
The US government was concerned that
ûSLIGHTLYûWEAKERûTHANûTHEûYEAR
AGOû YEARûDEALSûAREûMOREûCOMMONvûANû%#-û the gallium nitride in its telecoms
period. source told IFR. “Management wanted to do EQUIPMENTûHASûMILITARYûAPPLICATIONS
.ETûLOSSESûRANûTOû53MûINûTHEûLATESTû something long-term and put that capital to Instead of selling Wolfspeed, Cree bought
HALFûBUTûINVESTORSûAREûLIKELYûTOûLOOKûMOREûATû work over time.” )NlNEONSûPOWERûANDûWIRELESSûEQUIPMENTû
Eventbrite’s adjusted Ebitda of US$10m and 4HEûSECURITYûWASûALSOûTHEûBIGGESTûTECHû#"û business for US$492m in March, an
FREEûCASHûmOWûOFû53MûOVERûTHEûSAMEû since Palo Alto Networks raised US$1.5bn impressive turnaround from its original
period. FROMûAûlVE
YEARû#"ûLASTûMONTHûANDûWASûONEû PLANûTOûSELLû7OLFSPEEDûTOû)NlNEONûFORû
Paid tickets, or the number of tickets that OFûVERYûFEWû#"SûFROMûAû,AT!MûISSUERûINû US$850m.
GENERATEDûTICKETûFEESûFORûTHEûCOMPANYûROSEû RECENTûYEARS Wolfspeed is now Cree’s fastest growing
ûTOûMûINûTHEûHALF 4HEûSECURITYûISûPROVISIONALLYûCALLABLEûAFTERû unit.
4HEûCOMPANYSûRETENTIONûRATEûWASûAû lVEûYEARSûATûûABOVEûTHEûCONVERSIONû Its US$110m contribution to the
RESPECTABLEûûLASTûYEARûTHOUGHûITûDOESûNOTû price. US$409m total revenues during the second
PROVIDEûAûlGUREûFORûTHEûLATESTûHALF
YEAR MercadoLibre is using some proceeds to quarter was up 34% from the previous
/NûAûLINKEDûQUARTERLYûBASISûREVENUESûFELLû purchase a capped call to offset economic QUARTERûANDûûYEAR
ON
YEARû,%$ûSALESû
9.4% in the June quarter versus the March dilution at even higher share prices. ACCOUNTûFORûTHEûBALANCEûOFûSALESûWITHûONLYû
QUARTERûTHEûONLYûSTEPûDOWNûOFûTHEûEIGHTû
ON
QUARTERSûDISCLOSEDûINûTHEûlLING
This decline was due to “the contra
REVENUEûAMOUNTûOFû53MûWHICHûWEû
RECOGNIZEDûRELATEDûTOûTHEû4ICKETmYû
It is negotiating the repurchase of
US$330m outstanding on its 2.25% CB that
MATURESûNEXTûYEARûANDûISûDEEPûINûTHEûMONEY
Investors that choose to sell out of that
SECURITYûWILLûBEûMADEûWHOLE
ûGROWTHûBOTHûSEQUENTIALLYûANDûYEAR
YEAR
Cree expects Wolfspeed to become its
largest unit with up to US$850m of revenues
BYûû0ROCEEDSûFROMûTHEû#"ûWILLûHELPû
INCIDENTvûTHEûlLINGûSTATES MercadoLibre runs the largest Cree hit this target.
%VENTBRITEûBOUGHTû4ICKETmYûAûCONCERTû e-commerce platform in Latin America. 4HEûCOMPANYûISûUSINGûTHEûFUNDSûTOûREPAYû
TICKETINGûSERVICEûFORû53MûLASTûYEARû
but in June suffered a data breach that
FUNDû
leaked users’ personal information and
disrupted services at live music venues.
72
Though its shares rose 5% to US$344.93 after
the CB priced, the stock is still below a recent
high of US$394.92 reached prior to reporting
second quarter earnings on August 9.
International Financing Review August 25 2018
some of the US$292m outstanding on a
REVOLVINGûCREDITûFACILITYûANDûTOûPRE
Wolfspeed’s 2019 capex budget of
US$220m.
 THE FIRST STEP IN CLO ANALYSIS:
DETAILED, ACCURATE, AND TRANSPARENT
LPC COLLATERAL
LPC COLLATERAL OFFERS CLO INVESTORS, MANAGERS & TRADERS A COMPETITIVE EDGE

CLO market professionals use LPC Collateral to run market value coverage analysis on CLO
tranches and to compare holdings, asset breakdowns and overlap across CLOs.

LPC Collateral also includes Thomson Reuters LPC’s loan market news and data, enabling
users to dive into the underlying collateral of CLOs. The historical performance of CLOs can be
analysed using LPC Collateral’s charting function, then benchmarked against other deals and
market segments.

CONNECT TO THE GLOBAL SYNDICATED LOAN MARKET WITH THOMSON REUTERS LPC

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74 International Financing Review August 25 2018

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 INTERNATIONAL FINANCING REVIEW INDEX

24-7 Intouch 58 European Stability Mechanism 20 New South Wales Treasury Corp 28
Aareal Bank 29 Eventbrite 72 NKT Group 54
ABN AMRO Bank 26 Everbright Securities Financial Holdings 52 Nordea Bank 26
Abu Dhabi Islamic Bank 67 Evercore 15 Nyrstar 32
Adaro Energy 50 Falabella 61 OneSavings Bank 34
Admiralty Harbour Capital 18 Fantasia Group (China) 45 OP Corporate Bank 27
Adyen 66 Farfetch 67 Orsted 26
Aeroporti di Roma 25 Ferrovie dello Stato 49 Osotspa 65
Afterpay Touch Group 62 Fiat Chrysler 49 PDVSA 48
Agence Francais e de Developpement 21 Finland 20 Piaggio 49
AGS Transact Technologies 64 FMS Wertmanagement 22 Power Construction Corporationof China 45
Akbank 8 Fosun Industrial 51 Primary Health Care 62
Akzo Nobel 8 Fosun International 51 Principia Biopharma 70
A’lienor 54 Fufeng Group 44 Prosper 37
Alinta Energy 50 Fuyu Development Group 45 Prysmian 49
Alternatifbank 55 Gansu Province Electric Power Investment Group 45 Public Investment Fund 55
Angola 43 Garanti Bank 8 Qutoutiao 63
Anhui Transportation Holding Group 44 Generali 49 Rabobank 19
Appian 68 Global Net Lease 56 Raiffeisenlandesbank Niederoesterreich-Wien 30
Aramco 55 Goldman Sachs 15, 33 Redco Properties Group 44
Arvedi 49 Gosforth Funding 34 Reliance Communications 45
Ascentage Pharma 6, 64 Grail 6 Reliance Industries 53
AsiaInfo Holdings 63 Gritstone Oncology 70 Reliance Jio Infocomm 53
Asian Development Bank 22 Grupo Coppel 61 Rentenbank 22
Atlantia 25, 49 Hellenic Bank 65 Rosneft Trading 48
Autostrade per l’Italia 25, 49 Hemisphere International Properties 60 Route Mobile 64
Avast 66 Hengtong Optic-Electric 52 Royal Bank of Canada 12
Bajaj Group 64 Hexaware Technologies 65 Sanef 54
Banco Popular 9 HNA Group 51 San Miguel Food and Beverage 7
Bank Australia 28 Honda 37 Santander 11
Bank of Changsha 64 Housing and Urban Development Company 65 Santander UK 33, 35
Bank of Ireland 19 Hua Medicine 6 Santos 50
Bank of the Philippine Islands 45 Huarong International Financial Holdings 52 Saptaindra Sejati 53
Bank Sohar 55 Huarong Investment Stock Corp 52 Saudi Arabia 55
Barclays plc 16, 27 ING Bank AS 8 Saudi Aramco 4
Bay Club 58 Inter-American Development Bank 22 Schleswig-Holstein 21
Belfius Bank 27 International Bank for Reconstruction and Development 6 Sensirion 66
Berlin 21 International Finance Corporation 22 Shandong Gold Group 45
Berlin Hypo 4, 30 Intesa Sanpaolo 5 Shanghai Henlius Biotech 6
Bingo Industries 62 Islamic Republic of Pakistan 53 Shanghai Lingang Economic Development (Group) 44, 45
Bluestone Group 37 Italy 21 Shearwater GeoServices 55
BMW 23 Ithaca Energy 56 Shihlien China Holding 54
Cairn Homes 55 Japan Student Services Organization 22 Shinhan Bank 29
Caliber 35 Jefferies 13, 15 Singapore Telecommunications 43
Canadian Imperial Bank of Commerce 13 JSW Steel 52 Sixt 55
CareTech Holdings 56 KBS US Prime REIT 61 Social Finance 36
Cazenovia Creek 37 KommuneKredit 20 SoftBank Corp 53
CCG 37 Korea Development Bank 45 Spark Finance 25
CDB Financial Leasing 52 Korea Expressway 46 Steinhoff 60
Central Japan Railway 23 Korea Water Resources 46 Stone Pagamentos 61
China General Nuclear Power Corporation 44 Læringsverkstedet 26 Studio City International 65
China Ping An Insurance Overseas (Holdings) 44 Landesbank Baden-Wuerttemberg 29 Swedbank 26
China Southern Power Grid 45 Langfang Hongtai Industrial Town Investment 45 Tasly Biopharmaceutical 6
Ciro’s Real Estate 51 LATAM Airlines Group 57 Techem 8
Citycon 23 Lazard 15 Telecom Italia 49
CMIG Futurelife 63 LCY Chemical 60 Tencent Music Entertainment 63
Coesia 49 Leonardo 49 Tenzing Acquisition 71
Coltel 61 LF Logistics 64 Tesla 17
Comcast 57 Lloyds Banking Group 11 Thomson Reuters 8
Commercial Credit Group 37 Logan Property Holdings 44 Tianqi Lithium 63
Commerzbank 4, 29 Louis Dreyfus Co Asia 53 TrailStone Group 57
Commonwealth Bank of Australia 29 Mabpharm 6, 64 True Partner Investments 51
Constellation Brands 57 Macquarie University 28 Tsinghua Holdings 45
Credit Agricole 12 Macrolink Holding 45 Turk Ekonomi Bankasi 8
Credit Union Australia 29 Mahanagar Gas 65 Turk Eximbank 8
Cree 72 Maoyan Weying 63 United Microelectronics Corp 65
Cumulus Media 31 Marfrig 48 Viettel Global Investment 54
Daimler 23 mBank 46 Virgin Money 34
Dalian Wanda Group 51 Medartis 66 Volkswagen Bank 34
Deutsche Bank 4 Medpace 68 Volkswagen Financial Services Australia 25
Deutsche Pfandbriefbank 30 Megalith Financial Acquisition 71 Wallenius Wilhelmsen 26
Douglas 59 Meituan Dianping 63 Weatherford International 58
Driver fifteen 34 Mekonomen 67 Westpac New Zealand 27
Eiffage 54 MercadoLibre 61, 72 World Co 65
Eika Boligkreditt 29 Mirae Asset Daewoo 45 Wuhan Financial Holding (Group) 45
Elia System Operator 24 Modernland Realty 45 Yangzhou Slender West Lake Tourist Development Group 45
Elizabeth Finance 2018 33 Nanjing Hong Kong Source Investment Advisory 45 Yapi ve Kredi Bankasi 8
Endeavour Energy 50 National Australia Bank 27 Zai Lab 6
Enstar Group 56 Nature’s Care Manufacture 59 Zekelman Industries 70
Entasis Therapeutics 71 NBCC India 65 Z Energy 25

76 International Financing Review August 25 2018

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