APRIL 11 2020 ISSUE 2328 www.ifre.

com

Germany turns to bond syndication as

projected 2020 borrowing tops €400bn

Grim tidings: coronavirus deaths likely to

trigger margin calls on longevity swaps

From whatever it takes to whatever it rates:

US Fed commits to buy fallen angel bonds

BONDS EMERGING MARKETS LOANS/EQUITIES PEOPLE & MARKETS

Virus takes shine Bifurcated EM Luckin Coffee Tech innovation
off Ally’s US$750m poses quandary margin loan at banks
investment-grade for investors and debacle snares fast-tracked by
debut issuers more banks corona crisis
02 06 08 08
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Upfront
„ OPINION INTERNATIONAL FINANCING REVIEW

Seeking certainty Luckin’s sudden fall from grace has triggered much soul-
searching at the banks that underwrote its US IPO in May

A lot of people (not all of them self-interested DCM

bankers) have been saying for a long time that Germany
really should think about embracing the syndication market
ûANDûITSû*ANUARYûûFOLLOW
ONûBUTûITûHASûPROVOKEDû
when it comes to selling government bonds.
Germany is not a regular user of syndications, and has only
gone down that particular path on a handful of occasions (for
hSPECIALûSITUATIONSv ûANDûNOTûFORûlVEûYEARS
But extraordinary times lead to extraordinary measures,
and the Finanzagentur last week announced it would
appoint bookrunners to lead-manage a new 15-year Bund
issue in May and a 30-year tap in June, with other syndicated
deals potentially to come in the second half of the year.
Having already announced an increased second-quarter
funding requirement as recently as March 23, Germany
upped its target again last week as it seeks to fund the extra
costs arising from the coronavirus pandemic. On Citigroup’s
lGURESûITûNOWûNEEDSûTOûRAISEûõBNûVERSUSûTHEûINITIALûTARGETû
OFûõBNûEXCLUDINGûSYNDICATIONSûANDûLINKERS 
When faced with such mounting needs at such a crucial
juncture, certainty of execution is critical, and the auction
system has a history – especially recently – of technical
failures, where bids do not cover the nominal.
!ûCASEûINûPOINTûCAMEûONû-ARCHûûWHENûTHEûõBNûONûOFFERû
OFûAû
decidedly little gloating from rival bankers.
There’s a good reason for that: they know this kind of
misadventure could happen to them too – if it hasn’t already.
When it comes to banking fast-growing new economy
companies, Asia presents both enormous opportunities and
massive challenges. Few start-ups ever move beyond their
founder’s control, and the region’s family-dominated
corporate landscape means the banking model has evolved
to focus more on the individual than the company.
Investment banks are often happier to take securities as
collateral for a loan than corporate assets, especially in the
asset-light technology sector. China’s foreign exchange
restrictions also increase demand for share-backed loans
from entrepreneurs looking to move money overseas.
Competition for private banking clients compounds that
exposure as global banks offer up their balance sheet in
order to grow the business.
Asia is littered with examples where banks have taken a hit
on overly aggressive entrepreneurs, from the boss of Chinese
solar panel company Hanergy to Anil Ambani, founder of
failed Indian telco Reliance Communications. Standard
#HARTEREDSû53BNûlNANCINGûOFûANû)NDONESIANûTYCOONSûSTAKEû
YEARû"UNDûISSUEûATTRACTEDûDEMANDûOFûJUSTûõBNû
leaving the Finanzagentur forced to retain 30%.
Such a result is not uncommon, and it’s clear the auction
process cannot be relied on to deliver a precise number.
"UTûGUESSûWHATûHAPPENEDûINûANOTHERûõBNûAUCTIONûOFûTHEû
same Bund last Wednesday, the day after it became clear
BOOKRUNNINGûFEESûWEREûINûTHEûOFlNGûFROMûTHEûPROPOSEDû
syndication mandates. Surprise, surprise, bids came in at
õBNûASûBANKSûRUSHEDûTOûPRESENTûTHEIRûCREDENTIALSûASûGOODû
citizens and loyal supporters of the sovereign’s funding efforts.
While the difference in yield between the two (–0.77% in
-ARCHûnûLASTûWEEK ûMIGHTûHAVEûHADûSOMETHINGûTOûDOû
with it, chances are that the Finanzagentur making quite
clear that dealers’ support for the auction would count in
banks’ favour might have helped the uptake.
And perhaps therein lies the answer. Maybe an approach
that still relies heavily on auctions but mixes in the carrot of
in ill-fated Bakrie vehicle Bumi PLC is the stuff of legend.
The default of a US$500m-plus share-backed loan to Luckin
Coffee’s chairman is only the latest in a long line of
casualties. But the severity of the sell-off in Luckin shares
FOLLOWINGûTHEûREVELATIONûOFûFABRICATEDûSALESûINûûSHOWSûTHEû
risks involved with share-backed lending.
That is a particular problem for banks such as Credit
Suisse, which has used its above-average tolerance for risk to
gain market share among Asia’s entrepreneurial set – and
has considerable exposure to the Luckin debacle.
The scandal will cost the Swiss bank dearly, but it’s far from
the only bank to blur the lines between investment banking
and wealth management in search of higher returns.
The knee-jerk response for most banks will be –
understandably – to cut risk and avoid any similar situations
in the future. The current crisis will certainly force
underwriters to think twice before bringing another
syndicated deals is the way forward. Out of adversity and UNPROlTABLEûUNICORNûTOûTHEûPUBLICûMARKETSûANDûNOTûJUSTû
NECESSITYûMIGHTûCOMEûEFlCIENCY from China.
Banking Asia without banking its entrepreneurs, however,
would be like trying to make coffee without the beans.
Magic beans In retrospect (and for some at the time), Luckin’s growth
really was too good to be true. Investment banks can still do

N ews of a massive accounting scandal at China-based

Luckin Coffee lays bare a truism of the Asian capital
markets: banking entrepreneurs is a risky business.
well in Asia’s new economy, but they will need to increase
their focus on due diligence to ensure that the rewards – for
themselves and their investing clients – outweigh the risks.

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International Financing Review April 11 2020 1

Top news
Virus deaths to trigger margin calls 04 Fed lends a hand 05 Bifurcated EM poses quandry 06

Germany turns to syndication

as virus-related costs add up
„ Bonds Introduction of 15-year Bund is a “special situation” that requires change of strategy

BY HELENE DURAND
The escalating cost of dealing
with the coronavirus fallout was
underlined last week when
GERMANY announced it was
revising upwards its funding
needs for the rest of 2020 less
than three weeks after the
previous revision and said it was
PLANNINGûITSûlRSTûSYNDICATEDû
BONDûDEALûINûlVEûYEARS
“This is a complete novelty
that they would do a syndication
for something that already
exists,” a DCM banker said.
“They’ve used syndications
before for their linker, which
was uncharted territory, or US
dollars but never for points on
the curve that already exist.
That’s very much their bread
and butter business in auctions.”
But faced with rapidly
give them an update on who’s
buying, they just don’t have the
same transparency because they
don’t do syndications.”
Writing on Wednesday,
Citigroup analysts said: “The
German Finanzagentur yesterday
(again) announced an intra-year
increase of €109.5bn for its 2020
funding (excluding syndications),
after a €119.5bn increase on
March 23. Total supply target
NOT SO RARE ANY MORE
The surge in funding means that
German debt, which had in recent
years become increasingly scarce
as a result of the ECB’s Asset
Purchase Programme, is losing
some of that scarcity value, which
bankers say has encouraged the
sovereign to consider syndication.
“The increase in funding plans
is having a direct impact on the
availability of Bunds and their
Spain, Portugal, Austria, Ireland
and Belgium have all raised billions
in recent weeks via syndications to
tackle the additional funding needs
stemming from the crisis. But
unlike Germany, these issuers
regularly use syndications to
market bonds. The Finanzagentur,
expanding needs, the sovereign
has said it is planning the sale
of a new 15-year via syndication
in May.
“This says it all, if they’re
having to deviate from their
usual methods,” another DCM
banker said.
across bonds and bills now
amounts to €439bn versus the
initial target of €210bn (excluding
syndications and linkers).”
Analysts at Commerzbank
made the obvious link with the
corona crisis. “The latest funding
announcement from the
SCARCITYûVALUEvûTHEûlRSTû$#-û
banker said.
“It means that some of the
premium in the Bund is going
away a little bit and they are
aware of that.”
The increased funding
requirement also has
'ERMANYSûlNANCEûAGENCYûONûTHEû
other hand, normally sells standard
Bunds via an auction process
handled by primary dealers.
Virus takes shine off Ally’s IG debut
„ Bonds Former GM lender forced to issue at junk spreads despite improved ratings
BY WILLIAM HOFFMAN
Coming into the year ALLY
FINANCIAL was looking forward to
YEARûNOTESûATû the company formerly known as
a triumphant debut in the US
investment-grade bond market,
but with credit markets roiled
by the global pandemic the
company ended up pricing wide
of levels it used to accept as a
junk issuer.
!LLYû&INANCIALSû53MûlVE
which focuses heavily on auto
“The problem they have is that
they don’t really know who buys
their bonds as they only do auctions
and while the primary dealers will
Ally was last in the bond
market in May when it carried
high-yield ratings and sold
53MûOFûlVE
through price progression but
192bp over Treasuries for a
3.875% coupon.
While spreads have blown out
across all corners of the
investment-grade market in
recent weeks, investors worry
that the rising trajectory of Ally,
discovery, which is why
German Finance Agency is
confronting markets with the
brutal reality of the corona
costs,” they wrote.
HIGH-GRADE DEBUT
This was Ally’s debut
investment-grade issuance since
General Motors Acceptance Corp
was forced to split off from the
auto maker as part of a bailout
package during the previous
lNANCIALûCRISIS
As an infrequent issuer, the
deal required a fair bit of price
considering where Ally
RAMIlCATIONSûFORû'ERMANYSû
ability and willingness to retain
the unsold Bunds from its
auctions.
average bank spreads at 271bp
over.
Spreads tightened by 37.5bp
still landed well above average
high-yield bank sector spreads
that trade around 508bp over
Treasuries, according to ICE
BofA data.
Yet some investors considered
the compensation paltry
year note issue on Monday was
ITSûlRSTûSINCEûBEINGûUPGRADEDûINTOû
the lowest rungs of investment
grade by both S&P and Fitch over
the last six months. Moody’s still
rates Ally at Ba1.
The deal was priced at 562.5bp
over Treasuries for a 5.8%
coupon.
2 International Financing Review April 11 2020
lNANCEûCOULDûNOWûTAKEûAûTURNû
for the worse.
“It’s unfortunate timing.
What should have been a
celebratory debut has turned
into the issuer coming to the
market with their beggar cup,”
said David Knutson, head of
credit research at Schroders.
bookrunners Citigroup, Deutsche
Bank, JP Morgan and RBC started
spreads at high-yield levels in the
area of 600bp over Treasuries.
That was an eye-popping level
in the investment-grade space,
where ICE BofA data places
average Triple B credit spreads at
401bp over Treasuries and
currently trades in the
secondary market, with its
5.75% 2025s changing hands at
around 584bp over Treasuries
the prior week, according to
MarketAxess data.
A syndicate banker close to
the deal placed concessions at
about 5bp but noted that

Indonesia’s global lifeline 06 Luckin fallout snares more 08 BP nets US$10bn loan 09
“This is a strategy you can use
if you have a lot of scarcity
value,” the banker added.
“If the auction doesn’t go
well, they can retain some and
push back into the market at a
later stage. With higher
issuance, it can’t be in their
interest to keep a high portion
“According to current
estimates, the introduction of a 15-
year bond and the large-volume
increase of a bond in the 30-year
segment represent such a special
situation,” the spokeswoman said.
As well as the two syndications,
the Finanzagentur will put a new
seven-year point on the curve via
and long-term sectors,” said Lee
Cumbes, head of public sector
DCM for EMEA at Barclays
“So far, it’s been received
impressively by a market that’s
largely working from home, a
market that was under severe
stress a few weeks ago. The
numbers required for this working
@ For daily news stories
visit www.ifre.com
execution and subsequent
performance has been enough to
keep investor sentiment strong.”
RISING YIELDS
Still, the surge in volumes is not
without consequences, some of
which have already started to
play out with yields rising across
of Bunds. They’re becoming
more realistic that their ability
to raise large size is easier in
syndicated form in one shot.”
As well as the new 15-year, the
Finanzagentur is also planning a
syndicated tap of the 0% August
2050 in June. Further syndications
“are possible in the second half of
the year”, a spokeswoman for the
Finanzagentur said.
“Placements via syndicates
have so far only been carried out
in special situations: the US
auction on May 12.
The spokeswoman said that
the reason for choosing the
maturities was that Germany saw
good demand in the seven-year
maturity segment and that it was
closing a gap in the maturity
PROlLEûOFûTHEûFEDERALûGOVERNMENTû
with the new 15-year Bund.
STRONG SENTIMENT
Despite the rapidly escalating
funding needs across the board,
market participants are sanguine
SOLUTIONûTOûTHEûCRISISûAREûSIGNIlCANTû the curve.
but so is the reception. Quality of Germany’s 30-year
benchmark, for example, was
quoted at 0.077% on Friday, up
MAKING A COMEBACK
THE YIELD ON GERMANY'S from –0.25% in the middle of
BENCHMARK 15-YEAR BOND last month. The 10-year
% benchmark has followed a
0.0
similar pattern, moving from
–0.1 –0.84% to –0.32% .
“We think there will be
–0.2
pressure on the long-end of the
–0.3
yield curve and while it’s true that
the ECB is buying and will buy
–0.4 more, this Bund funding will
DOLLARûBONDûTHEûlRSTûISSUEûOFûANû about public issuers’ prospects in substantially increase,” said Mauro
–0.5
INmATION
LINKEDûBONDûTHEûlRSTû the primary market. 6ITTORANGELIû#)/ûFORûlXEDûINCOMEû
ISSUEûOFûAû
YEARûINmATION
“The public sector is going to –0.6 at Allianz Global Investors.
linked bond, the Bund-Lander expand very quickly in places. “While central banks can
bond,” the spokeswoman said. Amongst the eurozone –0.7 contain the movement upward
Germany’s last syndicated governments, the early signs in in yields and make the long
–0.8
30/1/20

20/2/20
27/2/20

12/3/20
19/3/20

2/4/20
2/1/20
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transaction was in 2015, when it a developing picture were that term increase in yields smooth,
PRICEDûAûõBNûINmATION LINKEDû we expected another €400bn to they cannot change the
bond issue. come in 2020 across short-term Source: Refinitiv direction of the move.” „

secondary levels are quite “It wasn’t in our view a huge changes, Ally could be one of the Some, however, believe Ally
erratic for the company. initial concession and one I lRSTûCREDITSûTOûTURNû"RUZZOûSAID may be better positioned to
In fact, by some calculations, thought might price wide of “On days where the market capitalise on growth opportunities
THEûNEWûlVE
YEARûNOTESûWEREû the initial talk level, but that didn’t mood sours, a lot of these deals coming out of the crisis than its
priced 20bp inside Ally’s existing
curve, according to Dan Bruzzo,
MANAGINGûDIRECTORûOFûBANKûlNANCEû
at Amherst Pierpont Securities.
HAPPENvû"RUZZOûSAIDûh)ûlNDûITûHARDû
to justify the launch level.”
ATTRACTIVE
CreditSights on the other hand
AREûTRADINGûSIGNIlCANTLYûWIDEûOFû
their launch levels,” he said.
“The Ally deal feels like one of
those deals where it could be
trading wide of 600bp over in a
captive auto lending peers Ford
Credit and GM Financial,
CreditSights noted in a report.
Ally tends to focus on
lNANCINGûLOWER
COSTûUSEDûCARSû
ALLY FINANCIAL US$750m argued that the premium for heartbeat.” which could be more in demand
3.875% 2024s the credit was attractive to as consumers look for savings
BID YIELD
%
investors considering high-yield SIGNIFICANT NUMBER through a recession, Knutson
12 peer CIT Bank trades in the Ally’s portfolio remains noted.
565bp area. concentrated in the legacy auto But there are risks in Ally’s
10 Clearly, many investors lNANCEûBUSINESSûWHICHûISû OTHERûDIVERSIlEDûLINESûOFû
agreed as order books grew to a coming to a grinding halt. business as well, such as its
SUFlCIENTû53BNûFORûû In March, US new vehicle recent purchase of sub-prime
8
times coverage. sales declined by an estimated consumer lending company
On the break, the bonds 40% and April sales are expected CardWorks in a US$2.65bn deal.
6
continued to tighten quickly, to decline 80% year-on-year, “As far as bad timing goes it’s
reaching around 545bp over according to a JD Power report. not catastrophic for them, but
4 Treasuries, according to Additionally, just last week certainly it’s a negative to lock
MarketAxess. !LLYûDISCLOSEDûTHATûAûhSIGNIlCANTû in another portion of sub-prime
2 Ally caught a positive day in number” of auto borrowers had lending at a time when the US
Jun Sep Dec Mar
2019 2020
the market as equities closed up enrolled in a 120-day payment consumers are handicapped for
Source: Refinitiv over 7%, but if that sentiment relief programme. a period of time,” Bruzzo said. „

International Financing Review April 11 2020 3

Top news
Virus deaths to trigger margin calls
on longevity swaps
„ People & Markets Pension schemes face collateral calls as deaths accelerate

BY CHRISTOPHER WHITTALL to post more collateral to the re- Longevity swaps emerged over automatically adjust to take
insurers that provide these a decade ago as one way for these additional deaths into
Mounting deaths from the swaps if mortalities increase COMPANIESûTOûOFmOADûTHEûRISKûOFû ACCOUNTûANDûTOûREmECTûANYû
coronavirus could soon trigger faster than models pensioners living longer than implied acceleration in
margin calls for corporate underpinning the transactions expected and saddling them mortality rates. That would
pension schemes from a little- had predicted. with expensive unexpected trigger collateral calls for the
known source: the more than “Naturally if we have a lot of payments. pension scheme to cover the
£80bn of swaps contracts many deaths coming through, there anticipated rise in net payments
hold to hedge against their will be an increase in [the] “We’re saying to it would face in the future.
pensioners living longer than amount of collateral that schemes with “We expect unfortunately
expected. schemes will need to place to [Covid-19] will lead to a higher
existing longevity
UK companies have found so- reinsurers,” said Baljit Khatra, a mortality compared to the
called longevity swaps to be a senior risk transfer consultant at
swaps: make sure original pricing assumptions
useful tool over the past decade Hymans Robertson. you have enough supporting the transactions,”
to pass on some of the risk of “We’re saying to schemes liquidity to answer said Cedric Fetiveau, co-founder
their pension scheme members with existing longevity swaps: any collateral calls” OFû$EDOMAINIAûAûlNANCIALû
beating assumptions on life make sure you have enough technology company focused on
expectancy. Now, as markets liquidity to answer any collateral BRINGINGûGREATERûEFlCIENCYûTOûTHEû
reel from the impact of the calls.” longevity risk transfer market.
extraordinary spread of Covid- “This experience will be
19, there is perhaps no corner of MARGIN CALLS Today, there are about captured by the model
lNANCEûAFFECTEDûMOREûDIRECTLYûBYû The UK is at the forefront of £81.5bn of existing pension fund supporting the valuation of the
the thousands of deaths coming longevity swap activity thanks longevity swaps outstanding, trades and will generate some
as a result of the virus. to the large number of according to Hymans Robertson, collateral movement between
Actuaries say there is still a COMPANIESûWITHûDElNEDûBENElTû with AstraZeneca, British parties,” he added.
good deal of uncertainty over pension plans. These schemes, Airways, BT, ITV and Rolls-Royce
the longer-term impact of Covid- where employers provide among the companies to have TIME TO REVIEW?
19 on mortality expectations. In RETIREDûSTAFFûWITHûAûSPECIlEDû used these products. Despite the shifting outlook,
the nearer term, though, level of payout, are mostly In a typical structure a consultants believe pension
consultants say the virus is closed to new members now. pension scheme makes regular schemes and re-insurers are
encouraging pension trustees to But there are still around 10.5m lXEDûPAYMENTSûTOûAûSWAPû unlikely to demand a so-called
shelve new longevity swap deals. members of such schemes provider based on mortality mortality basis review just yet
As for the billions of longevity spread across about 14,000 assumptions about its members for these swaps. That action
swaps already in existence, the employers handling roughly – essentially how much it is involves asking for a
uptick in UK deaths means £1.5trn in assets, according to a expected to pay out to reassessment of the models
pension schemes will likely have 2018 UK government report. pensioners over the course of underlying the swaps if there is
the swap. thought to be a permanent
The swap provider (usually a change in assumptions around
WEEKLY DEATHS REGISTERED
IN ENGLAND AND WALES re-insurer) pays the scheme a life expectancy of scheme
15,000 regular variable amount in members.
return, based on members who +HATRAûSAIDûHISûlRMûWASû
are alive at that time. That advising pension schemes to
12,000
means if pensioners live longer start thinking about reviews,
than expected, the re-insurer though it’s probably too early for
9,000 has to make up the shortfall. SPECIlCûACTION
These regular payments are “There’s no point doing a
6,000 usually settled on a net basis mortality review without
every month or quarter, while knowing the facts. At the
collateral – typically cash or moment, there are a lot of
3,000
investment-grade bonds – is also unknowns and a very mixed bag
exchanged to provide security of views,” he said.
0 against the risk of default on any
10/1/20

17/1/20

24/1/20

31/1/20

14/2/20

21/2/20

28/2/20

20/3/20

27/3/20
7/2/20
3/1/20

6/3/20

13/3/20

future net payments. NORMAL VARIATION

If Covid-19 results in scheme Longevity swaps typically
2020 Covid-19 related
Average of corresponding week members dying faster than involve people receiving
during previous five years models underlying these swaps pensions for 15 to 20 years,
Source: ONS had predicted, the models would limiting the impact one year of

4 International Financing Review April 11 2020


mortality data can have. Around
600,000 die in the UK every
year, with a normal annual
variation of plus or minus
10,000 and sometimes even
higher, according to Tim
Gordon, a partner in the risk
transfer group at AON. For
instance, the difference
between 2014 and 2015 (after
adjusting for trend) was around
25,000 deaths.
“A one-off year with excess
UK deaths of, say, 20,000, does
not move the dial much in this
context,” he said.
Gordon says they are
currently predicting fewer than
30,000 deaths in the UK in 2020
from Covid-19, some of whom
would have died anyway
because of underlying
conditions.
“It’s also worth bearing in
mind that, until the crisis, 2020
had been a light mortality year
to date. There is a lot of
uncertainty, but it’s possible
that 2020 overall could be a
relatively ‘normal’ mortality
year,” said Gordon.
“More extreme scenarios are
also possible, although in those
circumstances we expect the
government to take measures to
address that,” he added.
LONGER-TERM IMPACT
Gauging the longer-term impact
that Covid-19 will have on life
expectancy is trickier still. It is
very hard to predict, for
instance, what second-order
effects such as the economic
fallout from the crisis will mean
for mortality rates.
PENSION SCHEME LONGEVITY
SWAP VOLUMES
£bn
30
25
20
15
10
5
0
2010
2011
2012
2013
2014
2009
Source: Hymans Robertson
“A severe recession could
impact health and social
welfare spending, which is
negative for longevity,” said
Gordon. “That said, the
frontline role of the NHS in the
crisis and greater social
cohesion could see strong
support for higher health and
social welfare spending, which
is positive for longevity.”
“There is a lot of
uncertainty, but it’s
possible that 2020
overall could be a
relatively ‘normal’
mortality year”
Pension trustees will most
likely hit pause on new longevity
swap transactions given the
considerable uncertainty,
consultants say. This could lead
to a wave of deal-making next
year if things have settled down.
Wider credit spreads, potentially
HIGHERûINmATIONûANDûHIGHERû
mortality rates could create
market conditions that
encourage pension schemes to
enter longevity swaps.
“It will be more affordable for
pension schemes to enter into
de-risking transactions. That
could lead to a lot of deals in
2021. The question is whether
the market can absorb all of
them. There was already a bit of
a bottleneck before the crisis,”
said Fetiveau. „
2015
2016
2017
2018
2019
Q1 2020
International Financing Review April 11 2020
Fed’s promise lends
an invisible hand
„ Bonds Whatever it takes replaced by whatever it rates
BY WILLIAM HOFFMAN
The US Federal Reserve has not yet
spent a cent on corporate bonds
but the possibility that it might has
nonetheless sparked a massive
turnaround in US credit markets.
The positive sentiment sparked
by the Fed’s announcement of
primary and secondary corporate
bond purchase programmes on
March 23 has helped bring more
than US$263bn of new issuance
to the US investment-grade bond
market since then, according to
IFR data.
And support for corporate
bonds continued on Friday as the
Fed released expanded criteria for
the primary and secondary credit
facilities to include companies
that have been downgraded to
Double B since March 22.
The announcement sent spreads
racing tighter in the secondary
market, especially for credits such
as US automaker Ford, which was
downgraded to high-yield in recent
weeks and is now eligible to receive
funding from the Fed.
“This is similar to when Mario
Draghi said ‘whatever it takes’.
This time it’s ‘whatever it’s
rated’,” said David Knutson, head
of credit research at Schroders.
h9OUûDOûNOTûlGHTûTHEû&EDûYOULLû
lose a lot of money doing that.”
Market participants have for
weeks wondered whether the Fed
would buy bonds directly as the
sole buyer or whether it would
participate in the syndication of
bonds in the public market like a
regular investor.
It turns out, it will do both.
The primary facility – through
the Fed’s purchasing partner
BlackRock – may buy no more
than 25% of any publicly
syndicated primary bond issuance
and all eligible bonds must have a
maturity of four years or less,
according to the Friday release.
But in order to take advantage
of the programme, issuers will
have to pay a 100bp fee, which
means the primary programme
will be a worst-case scenario-
For daily news stories
@ visit www.ifre.com
play for only the most distressed
issuers that cannot access the
market otherwise.
“If you can access the public
markets and it’s not punitive,
that would be your preference,”
said Jeff Glenn, co-head of
portfolio management at
Breckinridge Capital Advisors.
And credit markets are very
open as average new issue
concessions came in at just
1.9bp last week and order books
had average subscription levels
of 7.6 times, according to a BMO
Capital Markets report.
“Nobody wants to go into that
[the Fed’s primary credit facility]
if they can avoid it,” one investor
said, noting that even struggling
cruise liner Carnival chose to
access public markets with an
11.5% coupon rather than wait
for the Fed’s primary
programme to start.
NEGATIVE NEWS
Yet there is still a sense that the
Fed’s backstop is needed in case
more negative news shuts the
market down to new issuance
again.
Concerns of a prolonged
credit crunch are evident when
high quality names are taking
size out of the market to shore
up already plump cash reserves.
Banks are encouraging issuers
not to draw down credit lines,
yet nearly 100 companies have
done just that since mid-March,
according to a Bank of America
research note.
Thirteen of them – including
Dell, McDonald’s and Anheuser-
Busch InBev – have
double-dipped by taking out
debt from the bond market
while drawing on credit lines.
“People are thinking,
depending on how this plays
out, there may be no new issue
markets in a month’s time,” the
investor said.
“The lesson they’ve learned
from the past is, when you can
get funding take it and worry
about the cost later.” „
5
Top news
Bifurcated EM poses quandary
for investors and issuers
„ Emerging Markets Asset class splits between issuers with market access and those without
BY SUDIP ROY
Two of the Gulf’s powerhouses
proved their capital markets
credentials last week as QATAR
and ABU DHABI raised US$17bn
between them to support their
balance sheets in the wake of
h7EûAREûTRYINGûTOûlGUREûOUTû
who sits in each camp across the
asset class. But it’s slightly more
DIFlCULTûASûWEûNEEDûTOûFEEDûINû
[the potential actions of ] China,
the IMF, the World Bank and so
on into this analysis,” said one
emerging markets investor.
A few other sovereigns from
the CEEMEA region have issued
over the past couple of weeks,
including Israel, which sold a
century bond as part of a US$5bn
triple-trancher on March 31.
But Qatar decided to go with a
more conventional format of
The next day Abu Dhabi went
with the same tenors, the only
difference being that the 30-year
tranche wasn’t a Formosa.
Leads began this deal also
with a 75bp premium before
revising by 45bp after also
getting US$44bn of orders.
the novel coronavirus pandemic $ElNITELYûINûONEûCAMPûAREû lVEûûANDû
YEARûBONDSûWITHû At US$7bn, however, Abu Dhabi
and slump in oil prices.
But countries lower down the
ratings spectrum are in a much
tougher position and are staring
at a very different predicament.
Several African nations have
even called for debt relief.
The contrast illustrates a
potential split within the
emerging markets asset class
between those with primary
markets access and those that
blue-chip issuers, such as Qatar
and Abu Dhabi. Despite a more
than 50% fall in the oil price over
the past month, as well as the
global spread of Covid-19,
investors were more than happy
to get involved in two of the
safest credits in the emerging
markets – especially given the
concessions on offer.
FIRST OUT
the longest tranche structured as
a Formosa (facilitating its sale to
Taiwanese investors). Pricing
began generously with a 75bp
new issue premium. But a book
of US$44bn enabled leads to
knock 35bp of each tranche.
Qatar (Aa3/AA–/AA–) sold a
US$2bn April 2025 issue at
300bp over Treasuries, a US$3bn
April 2030 at plus 305bp and a
US$5bn April 2050 at 4.4%,
(Aa2/AA/AA) raised less than Qatar.
It issued US$2bn of April 2025s at
220bp over Treasuries, US$2bn of
April 2030s at plus 240bp and
US$3bn of April 2050s at 4.10%.
For investors, both deals were
enticing given the repricing of
risk assets and the concessions
on offer.
“Qatar looked particularly
attractive to us, and we
participated in the new issue.
are scrambling for funds as the
global economy heads into a
deep recession.
Indonesia seals global lifeline
„ Emerging Markets Government’s largest and longest US dollar offering funds virus relief measures
BY JIHYE HWANG
The REPUBLIC OF INDONESIA turned
to the global bond markets to
fund its response to the
coronavirus crisis, raising
US$4.3bn from its largest US
dollar bond issue.
The US$4.3bn triple-tranche
SEC-registered deal comprised
tenors of 10.5, 30.5 and 50 years
– the longest maturity for any US
dollar bond issue from Asia since
1997.
Indonesia’s new senior
unsecured notes, with expected
ratings of Baa2/BBB/BBB,
received orders of over US$11bn
ATûlNALûGUIDANCEûWITHûSTRONGû
support from real-money funds.
“We were looking at a
minimum US$3bn issue size but
THEûlNALûSIZEûCAMEûINûATû
US$4.3bn on the back of the
oversubcription,” said a banker
on the deal.
6 International Financing Review April 11 2020
1ATARûWASûlRSTûOUTûONû4UESDAYû REmECTINGûTHEûBIDûFORûDURATIONû We see some very compelling
with a US$10bn triple-tranche that has been evident in other opportunities in the higher
deal. high-grade markets. quality segment of the EM
The US$1bn 4.45% 50-year While pricing tightened Bankers saw the new issue
piece was priced at 99.009 to around 25bp–40bp from initial premium at 40bp–55bp over
yield 4.50%, while the US$1.65bn guidance, the absolute yields Indonesia’s existing bonds with
3.85% 10.5-year tranche was were higher than in January similar tenors and a hypothetical
priced at 99.573 to yield 3.9% when Indonesia last printed 50-year point on the curve.
and the US$1.65bn 4.2% 30.5- global bonds. The sovereign then “There is a new issue
year portion at 99.150 to yield sold a 10-year note tranche at premium of 62.5bp for slightly
4.25%. 2.88% and a 30-year piece at 3.55%. higher rated Single A sovereigns,
so the premium Indonesia paid
INDONESIA US$1bn 3.7% 2049s this time is something that the
BID YIELD government will feel
% comfortable with,” said the
5
banker on the deal.
Another banker involved in
the transaction added that
Indonesia’s new bonds were
priced competitively compared
4 with Tuesday’s US$10bn jumbo
from Qatar, rated Aa3/AA–/AA–.
Qatar’s 10-year and 30-year
tranches were priced at 305bp
and 308bp over Treasuries, while
Indonesia’s 10.5-year and 30.5-
3
Nov Jan Mar year bonds came at around
2019 2020 297bp and 322bp over the
Source: Refinitiv benchmark.

universe at the moment,” said
Joanna Woods, emerging
markets portfolio manager at
First State Investments.
With INDONESIA and GAZPROM also
issuing last week, the best credits
are forging ahead with fundraising
to combat the economic damage
caused by the coronavirus.
ASKING FOR HELP
However, many other emerging
markets credits are struggling.
Last month, the head of the IMF
said nearly 80 countries had
approached the multilateral for
help.
With US$730bn of foreign
currency debt needed to be
RElNANCEDûBYû%-ûPUBLICûANDû
private-sector borrowers by the
end of the year, according to the
Institute of International
Finance, the stakes are high.
ARGENTINA and LEBANON are
already in talks with creditors,
while ZAMBIA, which has a
coupon payment due on April
14 on its US$1bn of 8.5% 2024
For daily news stories
@ visit www.ifre.com
The topic of debt relief and concessional loans made to low- China, commercial banks,
standstills has also been raised income countries. commodity traders and
despite several packages of Separately, with African bondholders – means efforts to
lNANCIALûHELPûFROMûMULTILATERALSû Eurobond spreads on average ease the region’s debt burden
to the poorest regions. around the 1,000bp mark, will be complicated.
Both the World Bank and IMF, lNANCEûMINISTERSûFROMûTHEû Moreover, any waiving of debt
which are leading the rescue region want support for owed to private creditors could
packages, have made calls for bilateral, multilateral and be construed as a distressed debt
bilateral loan repayments made commercial debt relief. exchange, warned Fitch and
to IDA countries to be However, the presence of so Moody’s, triggering a move to
suspended. These are many different creditors – restrictive default.
For their part, bondholders
aren’t that keen on the idea,
YIKES
BLENDED SPREAD OF AFRICA EMBI GD INDEX though didn’t reject it entirely.
bp “Clearly, as a bondholder, I am
1,200 not keen on accepting a
haircut,” said Uday Patnaik,
head of EM debt at LGIM.
1,000 “I think the situation varies
country-to-country. From a
longer-term perspective, if a
800 country can afford to pay, it
should.”
4HEûlRSTûBONDHOLDERûSAIDûh)Fû
600 it’s across the board and well co-
ordinated, then maybe people
would be reluctantly willing to
400
stomach it but I fear it won’t be
23/01/2020
20/02/2020
05/03/2020
19/03/2020
09/01/2020
26/03/2020
30/01/2020
16/01/2020
27/02/2020
06/02/2020
13/02/2020
12/03/2020
02/01/2020
02/04/2020 and some will be able to better
BONDSûISûLOOKINGûFORûlNANCIALû
advisers to help ensure the
sustainability of its debt.
HALF A CENTURY
)NDONESIASûlNANCEûMINISTRYû
said the 50-year note tranche
was the result of strong demand
from global investors at the long
end of the curve. The
government also wanted to
balance its maturities and set a
benchmark for other
Indonesian issuers.
No Asian issuer has sold US
dollar bonds beyond the
40-year mark since the
Philippines and Reliance
Industries sold century bonds in
1997, following a similar deal
from China in 1996.
Interest in long tenors,
however, is growing as interest
rates decline. Indonesian state-
owned energy company
Pertamina sold 40-year bonds in
February, as did Thailand’s PTT
Exploration and Production in
November last year.
Citigroup, Deutsche Bank (B&D),
Goldman Sachs, HSBC and
Standard Chartered Bank were
joint bookrunners. Danareksa
Sekuritas and Trimegah Sekuritas
Indonesia were co-managers.
go down this route than others.”
Additional reporting by Robert
Source: Refinitiv Hogg „
The 2030s traded slightly impact of the fallout from the In a press release, Indonesia’s
higher on April 9 at coronavirus pandemic,” said the central bank partly attributed
99.679/100.104, while the 2050s second banker on the deal. the drop to its rupiah
were trading a touch lower at stabilisation efforts amid the
98.850/99.508, according to “Indonesia has done GLOBALûlNANCIALûMELTDOWNûANDû
Tradeweb. The 2070s, which are EMERGINGûMARKETûOUTmOWSû
a market-leading
most sensitive to rate triggered by the pandemic. The
movements, were trading much
funding that indicates rupiah is down 15% against the
lower at 95.500/96.375 for a what there is to come US dollar this year.
yield of 4.794%/4.694%. for Asian SSA issuers Indonesia will increase its
to stem the impact of 2020 bond issuance target by
VIRUS RELIEF the fallout from the Rp160.2trn (US$9.68bn) to cover
Proceeds will be used for the expected widening of the
general purposes, including
coronavirus pandemic” ûlSCALûDElCITûTOûûOFû
funding the country’s GDP, Reuters reported on
coronavirus relief and recovery Monday, quoting a government
efforts by supporting document presented to
healthcare, providing a social Outside Asia, a wave of Covid- parliament.
safety net and supporting small 19 social bonds were printed by On top of that, it listed a plan
and mid-sized businesses. institutions such as Nordic for sales of Rp449.9trn of
Though not labelled as a Investment Bank and Council of “pandemic bonds” to cover
social bond, this is thought to be Europe Development Bank, additional spending on the
THEûlRSTûSOVEREIGNû53ûDOLLARû while Portugal sold euro Covid-19 response.
bond issue to explicitly state currency bonds as part of its Indonesia reported 2,956
that the proceeds will be used to response to the pandemic. infections from the coronavirus
FUNDûTHEûlGHTûAGAINSTûTHEû The new bonds will also help as of April 8 and 240 deaths,
pandemic. BUTTRESSûOFlCIALûFOREIGNû the highest number in Asia
“Indonesia has done a exchange reserves, which after China, but limited
market-leading funding that dropped to US$121bn as of the testing so far means the
indicates what there is to come end of March from US$130.4bn ACTUALûlGURESûAREûTHOUGHTûTOû
for Asian SSA issuers to stem the a month earlier. be much higher. „
International Financing Review April 11 2020 7
Top news
Luckin fallout snares more banks
„ Loans/Equities Default on share-backed loan could cost lenders close to US$200m

BY ANTHONY HUGHES, FIONA LAU
The woes of Nasdaq-listed LUCKIN
COFFEE deepened last week with
revelations of a default on a
US$518m margin loan secured
against shares in the fraud-
racked Chinese coffee chain.
As if the disclosure of
fabricated sales on April 2 was
not bad enough, Luckin
chairman Lu Zhengyao and CEO
Qian Zhiya last Monday were
FORCEDûTOûSURRENDERûAûSIGNIlCANTû
economic stake in Luckin after
margin lenders seized the
equivalent of 76.35m Luckin
ADSs, or about 30% of the
outstanding.
The margin lenders are Credit
and a US$1bn follow-on/
convertible bond issue in
January.
The shares pledged were
worth about US$2bn before
Luckin said an internal probe
had found that its chief
OPERATINGûOFlCERûANDûOTHERû
employees had fabricated sales
totalling Rmb2.2bn (US$310m)
INûTHEûlNALûNINEûMONTHSûOFû
As of last Wednesday, those
shares had lost 83% of their value
since the April 2 announcement
and were worth only US$335m.
As well as their share of a
near-US$200m hit on the margin
loan, the bookrunners on
Luckin’s deals are facing
potential lawsuits as investors
“The risk of lawsuits over US
IPOs is kind of expected but the
loss from the margin loan could
really hurt the bottom line of
the banks,” said a banker away
from the Luckin deals.
“The risk of lawsuits
over US IPOs is kind
of expected but the
loss from the margin
loan could really hurt
the bottom line of the
banks”
A statement from Goldman
(OWEVERû1IANSûBENElCIALûANDû
voting interests would fall
SIGNIlCANTLY
That is because Lu will retain
a bigger percentage of
supervoting Class B shares
after the sale, even though
his economic interest will
fall. Luckin’s Class B shares
lose their 10:1 voting power
upon conversion to ordinary A
shares, a precursor to the
disposal.
The prospectus for the
January follow-on showed that
Lu had pledged 30% of his Class B
shares as security for a loan,
while Qian had pledged 47% of
her Class B stock.
A company controlled by
Suisse, Morgan Stanley, CICC, question whether they Sachs, which is acting as the 3UNYINGû7ONGûIDENTIlEDû
Haitong International, Goldman PERFORMEDûSUFlCIENTûDUEû disposal agent for the seized elsewhere as Lu’s sister, had
Sachs and Barclays, according to diligence ahead of the IPO and shares, said that if all the pledged 100% of its Class B stock.
people with knowledge of the FOLLOW
ONû3EVERALûLAWûlRMSûAREû shares pledged under the Additional shares were to be
matter. preparing class action suits on margin loan were sold, Lu’s pledged automatically in the
4HEûlRSTûFOURûBANKSûARRANGEDû behalf of disgruntled voting interest in Luckin event of a margin call, according
Luckin’s US$645m IPO last May shareholders. Coffee would not decrease. TOûTHEûlLING

Tech gets fast-tracked by corona crisis

„ People & Markets Bright spot from crisis is overhaul of industry’s digital ecosystem

BY STEVE SLATER as a whole,” said Ying Cao, lockdowns and social distancing Symphony was founded in
director of digital strategy and rules put in place across the ûBYûAûGROUPûOFûûlNANCIALû
Remote working and a new digital head of digital product for WORLDûINCLUDINGûINûlNANCIALû lRMSûLEDûBYû'OLDMANû3ACHSûINû
ecosystem have been rolled out at Barclays’ Markets division. hubs like New York and London. an effort to change the way
breakneck speed across the Cao said Barclays had adapted traders communicated. Its
lNANCIALûINDUSTRYûINûRECENTûWEEKSû well. “In essence, you learn as SYMPHONY IN CONCERT take-up had been slower than
– often kickstarting new
technology into use in weeks,
rather than years.
“We’ve had to do in two weeks
what many industries have taken
10 years, to enable work from
home effectively,” Atte Lahtiranta,
Goldman Sachs’ chief technology
you are doing,” she said.
Bankers said platforms across
THEûINDUSTRYûWEREûBENElTINGû
from a shift by banks three or
four years ago to pursue a more
agile and adaptable approach to
technology, similar to big tech
lRMSû4HATûHASûCREATEDûANû
Banks are running remote
desktop systems, backed up by
having some traders and critical
STAFFûINûOFlCESû&IRMSûAREûUNLIKELYû
to have introduced new systems
– but have ramped up existing
platforms on to mobile devices
and rolled them out more widely
EXPECTEDûBUTûCOULDûBENElTûFROMû
the remote working shift and
demand for secure encryption to
address compliance issues. It
raised US$165m in new capital
in June, and its investors (and
users) include Goldman, BNP
Paribas, MUFG, HSBC and JP
OFlCERûSAIDûONûAûVIDEOûFORûSTAFFû
and clients last week.
"ANKERSûATûRIVALûlRMSûAGREEDû
Indeed, some say the change has
been so profound that a new
infrastructure will remain in
place when social and work
conditions return to normal.
“It’s been uncharted territory
for all of us. There’s been such a
quick and rapid change to the
operating model for the industry
8 International Financing Review April 11 2020
environment more able to
change quickly in days or weeks
– aided by the removal of layers
of bureaucracy.
That has meant traders,
capital markets desks and the
WIDERûlNANCEûINDUSTRYûAPPEARûTOû
have adapted well to working
from home. That has been a
cornerstone of contingency
plans that were suddenly
implemented following
across staff. The use of
communications platforms such
as Symphony, Zoom or Cisco’s
*ABBERûHASûINCREASEDûSIGNIlCANTLY
Barclays has extensively used
Symphony and been allowed to
add new licences quicker than
usual, adding about 1,000 in
recent weeks, to about 14,000. In
the past month, the bank’s
activity on the platform has
more than doubled.
Morgan.
JP Morgan has more than
180,000 staff working from
home and said last week it had
nearly 150,000 virtual sessions
RUNNINGûATûTHEûSAMEûTIMEûnûlVEû
times its average before the
crisis.
“It’s amazing how quickly we
have mobilised and
implemented work-from-home
and other resiliency measures –

LOST MANDATE
For the banks involved, the
fallout from the scandal does
not end with losses on the
share-backed loan.
Shares in Chinese car rental
company CAR INC, also controlled
by Lu, have also slumped 50%
since April 2. Moody’s cut CAR’s
rating to Caa1 on Thursday,
warning of a possible change of
control and default after CAR
said its major shareholder had
been forced to sell part of its
stake.
CAR’s liabilities include two
US$100m loans, both arranged
by Bank of China (Hong Kong),
as well as US$500m of US dollar
bonds.
At least one of Luckin’s
underwriters has lost business
as a direct result of the scandal.
Tencent-backed online
healthcare site WEDOCTOR quickly
dropped Credit Suisse as one of
the sponsors for its Hong Kong
IPO of about US$1bn.
The Swiss bank had led both
Luckin’s IPO and follow-on/CB
issue and has the closest
relationship with the company.
in weeks instead of months or
years. There are great lessons to
be learned from this
experience,” JP Morgan boss
Jamie Dimon said in his annual
letter to shareholders last week.
Barry Donlon, UBS’s head of
debt capital markets for EMEA,
said the new digital ecosystem
was faring well.
“It’s been impressive how
well the infrastructure has held
up. Different banks have
different approaches, but I’m
not aware of anything that
needed to be done to close the
gap between where we were
lVEûORûSIXûWEEKSûAGOûINûTHEû
“It’s about perception,” said
one source close to the company.
“The company wants to distance
itself from anything that could
potentially affect the IPO.”
Credit Suisse declined to
comment.
Just two weeks ago, WeDoctor
picked CMB International, Credit
Suisse and JP Morgan as sponsors
for a planned Hong Kong IPO of
about US$1bn, IFR reported on
March 27. Citigroup has since
replaced Credit Suisse.
The scandal has also
emboldened short-sellers
including Muddy Waters, which
revealed a short position on
Luckin on January 31 saying it
had received a “credible”
anonymous report outlining
allegations of fraud.
Muddy Waters and Wolfpack
Research last week accused
Nasdaq-listed video-streaming
PLATFORMûI1IYIûOFûINmATINGûITSû
2019 revenues, prompting a
swift denial from the company.
TAL Education, a Muddy Waters
target in 2018, said last week an
EMPLOYEEûMAYûHAVEûINmATEDû
sales data. „
NOTûINûANûOFlCEûENVIRONMENTûnû
but that is behavioural, not due
to systems, they said.
FINTECH HAS BIGTECH’S TOOLS
Goldman’s Lahtiranta is well
PLACEDûTOûASSESSûHOWûlNANCEûISû
adapting: he only joined the
7ALLû3TREETûlRMûlVEûMONTHSûAGOû
from Verizon, where he was
CHIEFûTECHNOLOGYûOFlCERûSINCEû
2017, and is based in Silicon
Valley.
He said he had not been
AWAREûHOWûFASTûTHEûlNANCEû
industry would be able to adapt,
but it had done so rapidly,
helped by its adoption of public
BP nets US$10bn loan
to bolster liquidity
„ Loans Underwriting alive and well in IG market
BY ALASDAIR REILLY,
CHRISTOPHER MANGHAM
Britain’s BP has agreed a
US$10bn two-year credit facility
to provide additional liquidity
headroom in the wake of the
Covid-19 pandemic and
disruption in the oil market,
illustrating how lenders are
stepping up to underwrite
syndicated loans for investment-
grade borrowers.
The revolving credit facility
was solely underwritten by BNP
Paribas and was syndicated to 20
banks. The transaction, which
was oversubscribed, shows that
the loan market remains open
for high-quality corporates.
“Those borrowers with good
banking relationships can access
the market,” a banker said.
The move came after BP
secured a US$10bn facility in
March in addition to its existing
US$7.625bn of undrawn standby
facilities.
h"0ûISûALREADYûLIQUIDûTHISûGIVESû
the borrower some additional
headroom,” the banker said.
The company said previously
that it manages its cash position
to have adequate cover to
respond to potential short-term
market illiquidity and short-
term price volatility.
BP is one of an increasingly
long list of highly rated European
borrowers that have put in place
short-term liquidity facilities
over the past few weeks.
“With elevated pricing in the
bond market, the logic follows
that there is elevated pricing in
@ For daily news stories
visit www.ifre.com
to major clients facing
uncertainty over the impact of
the pandemic on their
businesses.
“The loan market is always
there, through thick and thin.
5NDERWRITINGûISûDElNITELYûTHEREû
for solid, investment-grade
names,” a second banker said.
“Some banks have ramped up
their underwriting activity
quickly and aggressively in
response to this crisis.”
The facilities are being put in
place by companies that already
have large undrawn facilities
and robust liquidity as a
precautionary measure to deal
with the Covid-19 crisis.
“The main point of these
facilities is to directly cover and
provide headroom on the
current risks we know about.
The existing longer-term
backstop remains in place for
the unexpected,” the second
banker said.
In the last week, ROLLS-ROYCE
has agreed an additional £1.5bn
RCF with its relationship banks
to boost its liquidity and also
fully drew its existing £2.5bn
RCF, while French aerospace
and defence group THALES signed
a €2bn short-term RCF with its
banks to bolster its liquidity on
top of its existing undrawn
€1.5bn RCF.
While a lot of banks are very
busy at the moment on bilateral
and club loans, which is keeping
credit committees busy, the type
of borrowers being seen on the
large underwritten deals can be
prioritised and risk is being
OFlCEûANDûHOWûWEVEûWORKEDûINû
the last two or three weeks,”
Donlon said.
7ORKmOWûANDûKITSûHAVEûBEENû
seriously tested during volatile
and active markets, including
record levels of corporate debt
issuance. Bankers have said the
bookbuild process can be
cloud-type technology in recent
years, which had given it a
versatile technology base.
“There’s nothing for the
lNANCEûINDUSTRYûTOûLOOKûATû
BigTech and say ‘Oh my, I wish
we had that’. We have all of the
same things,” Lahtiranta said.
“It’s been a massive
other markets, including the
loan market,” the banker said.
ROYAL DUTCH SHELL agreed a
US$12bn RCF in March to boost
its liquidity as commodity
markets were hit by uncertainty,
increasing the oil giant’s available
liquidity to more than US$40bn.
cleared very quickly.
“Banks are more geared up
than they were even two weeks
ago. A lot of banks have changed
systems on approving deals,
with some credit committees
now meeting every day as
opposed to once or twice a week,
in a bid to deal with requests
slower, because more phone undertaking, and at the same LIQUID GOLD FROMûBORROWERSvûTHEûlRSTû
calls need to be made, and time we’ve been hit by very Banks are focusing heavily on banker said.
people may be more cautious unpredictable market the swift delivery of these kinds Additional reporting by Claire
about taking risk when they are volatility.” „ of short-term liquidity facilities Ruckin „

International Financing Review April 11 2020 9

Top news
Slack sizes up growth
with US$750m convertible bond
„ Structured Equity Work place messaging platform benefits from surge in usage

BY STEPHEN LACEY 25%–30% conversion premium. and US$7.9bn pulled from all 7HILEûNOTûTHEûlRSTû#"ûSINCEû
The offering size was increased equity and high-yield funds over the start of the coronavirus
The convertible bond market is to US$750m late in the the same period, according to pandemic, Slack’s deal is the
functioning and, not bookbuild and pricing was Lipper. lRSTûTRULYûOPPORTUNISTICû
surprisingly, it was work-from-
HOMEûBENElCIARYûSLACK
TECHNOLOGIES that highlighted the
product’s resilience as a source
of growth capital.
Slack, which went public via a
direct listing last June and whose
cash balance stood at US$768.6m
on January 31, landed US$750m
on Monday from the one-day
MARKETEDûSALEûOFûANûUPSIZEDûlVE
were heavy [fund] redemptions,
year CB.
Against a constructive market
backdrop, shares of Slack were
EFFECTIVELYûmATûONû-ONDAYûnûUPû
YEARû#"SûATûCOUPONSûOFû
0.2% at US$24.31 – as the
offering was pitched to
investors.
Morgan Stanley and Goldman
Sachs launched that morning a
lNALISEDûATûûUPûûnû
towards the aggressive end of
talk.
While there was no pre-
marketing of the Slack CB in
particular, investment banks
have sounded out CB buyers in
recent weeks on a no-names
basis about potential terms.
“Unlike 2008, when there
the CB market is open for
business,” said one banker close
to the transaction. “This proves
that money can get raised for a
company with the right
opportunity, and that there is
still interest in growth capital.”
Long-only CB funds have seen
US$671.2m withdrawn over the
“The terms are
certainly less
aggressive than
we saw two months
ago, but are still
pretty attractive
from a historical
perspective”
consumer or healthcare CBs.”
The CB market is much
smaller than those for equities
or high-yield, though – CB funds
tracked by Lipper manage
US$9.8bn of assets, compared
with US$5.9trn for all equities,
for instance, but the appetite for
lNANCING
“The terms are certainly less
aggressive than we saw two
months ago, but are still pretty
attractive from a historical
perspective,” said a second
banker involved in the
underwriting. “They are
certainly better than what we
have seen on some of the
In late February/early March,
RingCentral and Square both
secured US$1bn from the sale of
lVE
0.125% and 0%, respectively, and
50% conversion premiums,
among the most aggressive
terms ever achieved.
Cruise ship operator Carnival
US$600m convertible bond PASTûlVEûWEEKSûTHROUGHû!PRILûû the deal showed investor and Nevro, a medtech company,
offering a 0.5%–1% coupon and compared with the US$62.5bn resilience. sold CBs late last month at

Anchor investors lead US ECM recovery

„ Equities Public equity investors in the US remain hesitant when it comes to rescue financings

BY ANTHONY HUGHES
US companies are leaning
heavily on anchor investors and
TO
OFFERûDISCOUNTûANDûTRADEDû
private offerings to raise equity
capital while visibility on the
length of the coronavirus crisis
remains poor.
Most common stock sales by
US companies in the past two
weeks have come in the form of
private investments in public
equity (aka PIPEs) or public
offerings with private
placements to anchor investors,
including existing shareholders
that have already conducted
the importance of having an
anchor investor to reduce the
risk of offerings being poorly
received.
Online furniture retailer
“The public market is still
pretty twitchy and not ready to
put in the volume of capital
needed to bail out these
companies,” one ECM banker
said.
“But if you can draw a line in
the sand in terms of how much
capital you need and have an
anchor investor, others will
buy the story and that can
work.”
downsized to US$500m from
US$1.25bn at launch.
The offering came at a 37.5%
lLE
poorly in the immediate
aftermath, though the stock has
rebounded in recent sessions.
In contrast, real estate
developer Howard Hughes late
last month priced a US$600m
offering comprising a US$500m
private placement to hedge fund
investor and long-time supporter
Bill Ackman plus a US$100m
public stock sale.
In the past two weeks,
Carvana (US$600m), EVO
EQUITY-LINKED TOO
This activity has also extended to
equity-linked offerings.
Wayfair raised US$535m last week
from the sale of a convertible bond
with a 2.5% coupon to two private
equity investors and an existing
shareholder.
h0)0%SûHAVEûALWAYSûlLLEDûTHEû
gap when markets are volatile
and companies need to raise
capital and they want to do a
transaction that receives less
publicity, that is targeted, or
they need to do a deal that is
more structured,” said Anna
extensive due diligence.
Bankers say public market
investors remain reluctant to be
wall crossed for long periods
given volatile market conditions
and the murky outlook for
corporate earnings, highlighting
CARNIVAL LESSON
Cruise operator Carnival’s stock
sale earlier this month was
marketed for two days – a
relative eternity in current
market conditions – and lacked
an anchor order before being
0AYMENTSû53M û2EDlNû
(US$110m), Ares Management
(US$384m) and Velocity Financial
(US$45m) have all opted for PIPEs
or direct offerings to existing
shareholders and/or strategic
investors.
Pinedo, capital markets partner
ATûLAWûlRMû-AYERû"ROWN
The trend of companies using
PIPEs to raise capital is likely to
continue over the next few
weeks and months, Pinedo said,
particularly while it remains

10 International Financing Review April 11 2020


coupons of 5.75% and 2.75%,
respectively, and with 25%
conversion premiums in both
cases.
SPIKE IN USERS
Slack earmarked the proceeds
for general corporate purposes,
including potential acquisitions.
In a further sign of its
opportunism, Slack spent
US$91.8m of the proceeds raised
on a call spread to offset
economic dilution from the CB
to share prices above US$41.62,
a 100% premium to the
reference price.
Slack’s workplace messaging
software is experiencing a surge
in user growth as workers
shelter at home.
3LACKû#%/û3TEWARTû"UTTERlELDû
last month said that the number
of users on its platform had
increased from 10 million on
March 10 to 12.5 million on
March 25, including growth in
countries hit hard by Covid-19
such as Italy, Japan and South
Korea.
There is debate about
whether Slack will be able to
translate user growth into
revenue growth, however. Nine
DIFlCULTûTOûDElNITIVELYûCALLûAû
bottom in stocks.
“PIPEs are quicker and
cheaper,” Pinedo said. “The
placement agent fees are lower
of the 19 sell-side analysts
TRACKEDûBYû2ElNITIVûRATEû3LACKûAû
hold or sell.
Credit Suisse analyst Brad
Zelnick is among those on the
fence, rating Slack neutral with
a US$21 price target and arguing
the recent spike in users due to
people working from home
hWILLûLIKELYûTAKEûTIMEûTOûREmECTû
INûlNANCIALSv
Slack trades at 14 times EV-to-
forward sales.
On Monday, Zelnick
downgraded ZOOM VIDEO
COMMUNICATIONS to
“underperform”, citing its ultra-
premium valuation of 40 times
EV-to-forward sales which he
called the “richest in software”.
The Slack rival had a rare down
day on Monday, falling 4.1% to
US$121.94 to pare year to-date
gains to 80.7%.
Video collaboration is an
increasingly competitive space –
Microsoft’s Teams and Skype,
Cisco WebEx, Google,
RingCentral and Paylocity are
all looking to carve out a
position in the market. With
nearly US$1.5bn of cash in the
bank, Slack now has the war
chest to compete. „
offered (thereby affecting other
lNANCINGûPLANS 
History suggests public
investors have reason not to
rush to support stock sales in
Aussie ECM spree
continues
„ Equities Investors willing to provide fresh capital
BY CANDY CHAN
Investors are throwing a lifeline
TOûAûmOODûOFûEMERGENCYûEQUITYû
raisings in Australasia, as
companies race to secure funds
to withstand the impact of the
coronavirus pandemic.
Last week, 10 ASX and NZX-
listed issuers launched follow-on
share sales totalling US$2.7bn,
including companies in
vulnerable sectors such as retail
travel agency FLIGHT CENTRE TRAVEL
GROUP and oil and gas
exploration company OIL SEARCH.
Others such as retail REIT SCA
PROPERTY and MEGAPORT, a
bandwidth provider, have also
raised equity to take advantage
of the opportunities Covid-19
may create for them.
The glut of deals adds to a
bumper crop in the week of
March 30 from the likes of
outdoor kit retailer Kathmandu
Holdings and data centre
operator NEXTDC.
“Investors are generally very
supportive towards companies
that had a reputable brand name
and a strong balance sheet before
the pandemic hit, but are now
seeking funds to sail through
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quality stocks, as we aim to hold
these stocks for years,” said Liu.
Another investor said the
performance of companies that
had raised equity last month
supported demand for the latest
wave of follow-on issuance.
Shares of online travel agency
WEBJET and student placement and
TESTINGûlRMûIDP EDUCATION were up
64% and 27% last Wednesday from
their respective placement prices
of A$1.70 and A$10.65.
Shares of supermarket
operator COLES GROUP were quoted
at A$16.13, or 4.8% above the
A$15.39 at which conglomerate
Wesfarmers sold down a
A$1.07bn stake on March 30.
"ANKERSûAREûCONlDENTûTHATû
investor demand will meet
supply, as existing shareholders
are keen to see companies
taking bold steps to safeguard
their future.
Last week’s entitlement offers
generally met a strong response.
Flight Centre Travel Group’s rights
offer had a 96% take-up even
though major shareholders the
Turner, Harris and James families
committed to take up only a
portion of their entitlements up to
a combined A$25m.
than the fees on a public deal
and with PIPEs you don’t need a
comfort letter from auditors.
That’s a saving.”
The main limiting factor on
PIPEs is that companies must get
shareholder approval if the
offering is at a discount to
market prices and constitutes
more than 20% of shares
outstanding prior to the offering.
Pinedo expects REITs to
constitute a large source of PIPEs.
Meanwhile, the jury remains
out on whether sectors that are
explicitly getting US government
aid, such as airlines, will instead
SEEKûRESCUEûlNANCINGûFROMûDEBTû
and equity capital markets.
Bankers say airlines are
waiting for greater clarity on
the strings attached, including
whether they will have to offer
security for any low-cost loans
the initial phase of a crisis.
In 2008, the early response to
THEûlNANCIALûCRISISûINCLUDEDû
public equity offerings by
Goldman Sachs and General
Electric alongside preferred
stock investments by Warren
Buffett’s Berkshire Hathaway.
Investors watched the share
prices of Goldman and GE
struggle until the US equity
market bottomed out almost six
months later. GE’s long-term
woes mean its shares now trade
at about one-third of the price
paid in that offering.
In early 2016, many US oil
exploration and production
companies recapitalised via
equity raises at initially attractive
discounts for investors, but
many now trade below those
marks amid renewed pressure
on oil prices. „
International Financing Review April 11 2020
THESEûDIFlCULTûTIMESvûSAIDû*UNû"EIû
Liu, lead portfolio manager for
the Tribeca Alpha Plus Fund.
“A lot of these raisings have
been done at a steep discount
and valuations are depressed.”
Tribeca Investment Partners,
an Australia-based boutique
fund manager, has participated
in a number of recent follow-
ons, according to Liu, including
Flight Centre Travel Group’s
A$701m (US$422m) equity
raising last week, comprising a
A$282m institutional placement
and a A$419m 1-for-7.14
entitlement offer, priced at
A$7.20 per share, or a discount
of 27.3% to the pre-deal close.
“Retailers are seen by analysts
TOûBEûTHEûlRSTûTOûBOUNCEûBACKû
from the turmoil, but our
strategy remains looking across
the board for good pricings and
Oil Search, SOUTHERN CROSS
MEDIA and bathroom and
plumbing products supplier
REECE also saw good demand for
their 1-for-8, 1-for-1.75 and 3-for-
55 institutional entitlement
offers with take-up rates of 95%,
92% and 99%, respectively.
Issuers have also taken care to
favour existing shareholders,
GIVINGûTHEMûlRSTûLOOKûATûANYû
discounted capital raising.
Alongside the rights offer, Oil
Search has fully allocated a
A$400m oversubscribed
placement to existing
institutional shareholders.
“For the recapitalisation story
in Australia, there is a chance of a
decent window in the next few
weeks if virus numbers are
considered to stabilise, and
issuance of this kind will
continue,” said an ECM banker. „
11
Top news
Buchheit: it’s time for
‘senior coronabonds’
„ People & Markets Eurozone talks over rescue financing struggle to find agreement
BY CHRISTOPHER SPINK
ITALY should issue a new type of
bond that is senior to its
outstanding instruments if it
needs emergency funds to
weather the coronavirus crisis,
according to Lee Buchheit, the
sovereign debt restructuring
lawyer who has advised Greece,
Argentina and many others.
Italy is one of the world’s most
heavily indebted countries, with
a debt-to-GDP ratio of around
135% before the crisis. And
with the country’s economy
virtually shut down and
questions about whether the
country’s debts are
unsustainable, there has been
considerable discussion over
how Italy should be helped.
Some have suggested that it
should follow the example of
Greece, which was bailed out
eight years ago in part by other
Golden Nugget takes a chance in lev market
„ Loans Fertitta pays eye-watering spread for loan as virus closes casinos
BY DAVID BROOKE, AARON WEINMAN
Texas businessman Tilman
members of the currency bloc
via the European Stability
Mechanism – although that may
be impractical given the size of
Italy’s debt, with €250bn
maturing this year.
Others, including a group of
lNANCEûMINISTERSûFROMûSOUTHERNû
eurozone states, including
France, Spain and Italy, have
called for the bloc to issue euro
or coronabonds collectively to
lLLûlSCALûGAPSû'ERMANYûANDûTHEû
Netherlands have resisted such
proposals.
Another option is for mutual
bodies such as the European
Investment Bank to be the
issuing entity for jointly
guaranteed bonds.
A Eurogroup conference call
that discussed the issue on
Tuesday broke up without
agreement. Ministers joined
another call on Thursday to
continue deliberations.
over Libor and an OID of 96.
Prior to closing, the margin was
cut to 1,200bp over Libor with a
“There are no easy answers,”
said Ugo Panizza, professor of
international economics at the
Graduate Institute, Geneva. “If
[Italian GDP] is down by 10%,
then the debt still goes crazy.
There may either be a massive
exercise of European solidarity –
some sort of mutualisation – or
it may be time to call the
lawyers.”
EMERGENCY BONDS
Buchheit said that Italy and
potentially other eurozone
countries should issue
emergency bonds that are
deemed senior to outstanding
instruments to ensure take-up.
“Let’s call them ‘senior
coronabonds’,” he said.
Because Italy and most other
major members of the eurozone
issue bonds governed by their
own law, it would be legally
possible to do this.
restaurant operator Del Frisco’s
has closed in-house dining and his
National Basketball Association
“The change would involve
giving senior coronabonds a
statutory seniority – in effect, a
lRSTûCLAIMûONûTHEûPUBLICû
exchequer – over other
sovereign obligations governed
by the country’s own law,”
Buchheit said.
The move would echo the tool
Buchheit advised Greece to
employ when restructuring its
€206bn of debt in 2012. Most
was written under Greek law,
allowing parliament to vote
through a clause imposing a
change of terms on the debt
retroactively.
One problem may be that the
European Central Bank, via the
Bank of Italy, is already a major
owner of Italian government
bonds. It might resist being
subordinated, as it did in 2012
when it refused to include its
Greek holdings in any
restructuring.
Despite relief among market
participants that a new transaction
has emerged, some were quick to
Fertitta has offered huge
investor-friendly incentives in a
bid to raise a leveraged loan to
shore up liquidity at a time
when the coronavirus has forced
the hospitality magnate to cease
LIENûTERMûLOANûTOû"ûFROMû"Aû
operations at his casinos and
restaurants.
The gamble paid off, as the
incremental loan was increased
to US$300m from US$250m. The
debt is being attached to an
existing term loan that will
mature in 2023 for Fertitta’s
restaurant and gaming company
GOLDEN NUGGET, growing the
outstanding facility to more
û,IBORûmOORûWHILEûTHEû/)$ûWASû
unchanged.
The new debt broke for
trading at a bid of 99–102 on
Wednesday.
The incremental loan, which
harbinger of the loan market re-
was open to both new and
existing Golden Nugget lenders,
is structured with two years of
call protection – an investor-
friendly feature typically found
in the high-yield bond market
and less so in leveraged loans –
before kicking in at 107 for six
months and par thereafter.
Fertitta offered lenders some
hefty concessions in exchange
franchise, The Houston Rockets, is
benched after the NBA suspended
the season.
Moody’s downgraded Golden
Nugget to B3 from B2 and cut its
lRST
due to the expectation that
earnings will deteriorate from the
closed restaurants and casinos.
“Never did I think this would
be the issuer to kick off the loan
market, but here we are,” said
one investor.
ONE-OFF
The transaction, under the
borrower LANDRY’S FINANCE
downplay the idea that Landry’s
incremental deal was a sign that
the US syndicated lev loan market
was once again open for business.
“[Landry’s deal] will not be a
opening. With secondary levels
still, on average, in the mid-80s,
accounts will likely continue to
focus their attention on buying
names that they know at
historically attractive levels,”
said a loan syndication manager.
The outstanding term loan for
Golden Nugget was quoted at an
average bid of 74–76 cents on
the dollar in secondary trading
than US$2.5bn.
Jefferies, a long-standing lender
to Fertitta’s businesses, pitched
the transaction to investors at an
eye-watering spread of 1,400bp
for their participation in a loan
for a business that is suffering
FROMûDECREASEDûCASHmOWû
The businessman’s Golden
Nugget casino is shut, steakhouse
ACQUISITION COûISûTHEûlRSTû
leveraged loan to hit the broadly
syndicated market since March
11, when SERVICE LOGIC raised
US$140m.
on April 6, up from 60–62 cents
on March 23, according to three
sources.
And the LPC 100, a cohort of
the 100 most liquid US leveraged

12 International Financing Review April 11 2020


"UCHHEITûSAIDûOFlCIALûSECTORû
holders of Italian obligations
SHOULDûlRSTûBEûASKEDûTOû
voluntarily agree to
subordination and pledge not to
receive payment if the senior
coronabonds were in default,
and pass on any money received
to senior coronabond holders.
“This subordination would
not involve a forgiveness of
CLAIMSûBYûTHEûOFlCIALûSECTORû
institutions, only an
acknowledgment that senior
on senior debt in any case, he
said, since the ESM, like the
International Monetary Fund,
claims “preferred creditor”
status and must be repaid before
other creditors.
“The difference is that
European taxpayers ultimately
stand behind an ESM loan. Only
the debtor country’s credit is on
the line for a senior
coronabond,” Buchheit said.
This would get around the
objections of some eurozone
Covid-19 raises
ESG’s profile
„ People & Markets Pandemic underlines “S” in ESG
BY TESSA WALSH
The impact of the Covid-19
pandemic on sustainable
lNANCEûISûPUSHINGûSOCIALûANDû
governance issues to the fore
and intensifying the overall
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@ visit www.ifre.com
and markets to the top of the list
of concerns as businesses adapt
to change and focus on ESG.
Investors and agencies are
also looking at preparedness as a
measure of companies’ ability to
adapt to change and manage
coronabonds are entitled to
priority payment,” said
Buchheit.
He said this idea will only
work if it was made clear that
the senior notes were issued
simply to cover a funding gap
for a limited period.
“Senior coronabond issuance
for any particular country must
be kept to a tightly prescribed,
manageable aggregate size,”
Buchheit said. “Legal
subordination is effective only if
it is implemented on a targeted,
transparent basis.”
PREFERRED CREDITOR
Receiving emergency funding
from the ESM is akin to taking
members as taxpayers’ money
would not be funding another
country, as long as all agreed
that debt held by the ECB was
subordinated only temporarily.
Others have argued that the
ECB’s €750bn pandemic
emergency purchase
programme is so extensive that
it would allow it to step in and
keep funding any eurozone
country in distress.
“ECB purchases of
government bonds in 2020 will
be huge, and probably will be
able to absorb all the new debt
issuance for 2020. This can keep
Italy’s cost of funding
contained,” Citigroup said in a
note. „
focus on ESG, according to RISKûANDûAREûlNDINGûTHATû
research, as the issuance of companies that have already
social bonds targeted at virus considered ESG risks are
response continues to rise. showing leadership in the
Three main points are pandemic.
EMERGINGûTHATûREmECTûMARKETSû
new priorities as the “S” of ESG “Covid-19 is disclosing
becomes more dominant,
social inequalities
according to research by UBS.
“Investors now appreciate
that we’ve known
how substantial a social risk can about for a long time;
be to value creation and the the crisis is bringing it
response of companies to Covid- to the fore”
19 is very similar to what we’re
seeing on climate change,” said
John Streur, president and CEO
of Calvert Research and
Management.
Governments, multilateral
AGENCIESûANDûlNANCIALû S&P’s ESG Evaluations score
institutions are raising also measures companies’
loans, was averaging 87.8 cents
on April 6, up from a low of 77.9
cents on March 23, according to
2ElNITIVûDATA
At the revised margin of
1,200bp over Libor, the yield to
maturity has tightened to
approximately 14.3% from
about 18% for a margin of
SUSTAINABLEûlNANCINGûPRIMARILYû
for social purposes such as
healthcare and employment, to
MITIGATEûTHEûlNANCIALûFALLOUTûOFû
the pandemic.
preparedness and risk
management. A Covid-19
review left the scores
unchanged, as rated
companies have responded
JUICY YIELD
With lenders already on the hook
for roughly US$2.5bn in debt
under this Golden Nugget loan,
bankers said the addition would
mainly be sold to existing holders
of the loan. And despite the facility
trading in stressed territory, the
call protection and small size of
the add-on is palatable enough to
an investor base familiar with the
credit history of Fertitta’s
companies and his solid track
record as a business owner.
“If anybody can operate
around the headwinds facing
the restaurant industry, my
money would be on Tilman,”
said a second investor. “He
knows every little detail about
his business to make sure his
EMPIREûSTAYSûAmOATû(EûHASû
operated in many economic
cycles, so I think there is
comfort there.”
BPûACCORDINGûTOû2ElNITIVû
LPC data.
The US$250m transaction is
the third incremental deal
attached to this loan in the past
seven months.
In February, Golden Nugget
wrapped up a US$200m deal
to fund a shareholder dividend.
The casino operator offered
the debt at just 250bp over
Libor with no discount and
at the same time, it repriced
the existing US$2.39bn it
had outstanding on the
loan to 250bp from 275bp
over Libor.
Last October, Golden Nugget
again appointed Jefferies to
complete a US$300m loan to
support its acquisition of Del
Frisco’s Double Eagle
Steakhouses and Del Frisco’s
'RILLESûFROMûINVESTMENTûlRMû,û
Catterton. „
International Financing Review April 11 2020
“Covid-19 is disclosing social
inequalities that we’ve known
ABOUTûFORûAûLONGûTIMEûTHEûCRISISû
is bringing it to the fore,” said
Julie Hudson, global head of ESG
research at UBS.
“Climate change is framed as
an environmental issue around
carbon, but it’s a social issue
with inequality consequences. I
hope this will make the
environmental debate more
rounded and not separate from
social issues. The crisis has
thrown a clear light on what
ESG is here for and reinforces
ESG and sustainable investing as
an approach. Several people
have been saying that ESG is a
‘nice to have’ and will disappear
in a crisis, but I don’t think it
could be more relevant,” Hudson
said.
The crisis is also pushing the
concept of resilience in society
quickly to the crisis.
Investors and analysts are
monitoring companies’
responses to the crisis and
what their performance
relative to peers could
mean in terms of governance,
and for markets and access to
capital.
Capital allocation to
dividends, pay and
remuneration, tax and a
company’s purpose will
all be under scrutiny,
according to a report by
Morgan Stanley.
“We’ll all look back on this
period and understand how
SPECIlCûCOMPANIESûDEALTûWITHû
the situation. This will impact
our purchase decisions and
impact people’s decisions on
where they want to work for
many, many years to come,”
Streur said. „
13
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 People

16
&
JP Morgan
boss Jamie
Markets
19 US boutique
Centerview is 21 The Republic
of Congo
Dimon warns earnings ramping up in Paris is one of the few
will drop meaningfully and hires Lazard’s countries where
this year due to the former France boss China has agreed to
coronavirus pandemic Matthieu Pigasse to restructure debt, but
lead the charge more sovereigns may
look for relief

„ FRONT STORY STRATEGY

Activism wave may follow crisis slowdown

Activist investors may pause during crisis, but ramp up after
Companies facing activist investors may be
getting a reprieve during the coronavirus
pandemic, but pressure is already building
for later this year or 2021.
The coronavirus pandemic has given
companies a built-in defence for building
up strong cash positions, ending share
buybacks and even cutting dividends. But
if history is any guide, while activists may
be calling off campaigns this season, they
will probably be back with a vengeance in
2021, according to bankers and lawyers
involved in activism defence and M&A
advisory.
“This season is over,” one M&A banker
said. “Campaigns have been abandoned or
put on hold. There may be some still out
OFFûORûAû
there, but fewer than normal.”
What happened coming out of the last
recession, however, was that there was a
big uptick in activity. The banker said it
resulted in “one of the biggest years ever”
for activism, because buying stocks so far
off their highs gave investors cover.
“When activists buy stakes in targets
they are looking to come in at a price
where the downside risk is low and
CATALYSTSûCANûCAUSEûSIGNIlCANTûUPSIDEûPRICEû
movements. The downturn in equity
markets on broader economic concerns in
March and April created that opportunity
in spades,” the banker said.
In the current environment it’s probably
EASIERûFORûlRMSûTOûDEFENDûAGAINSTû
campaigns focused on capital allocation
and governance, said Jason Frankl, who
leads FTI Consulting’s activism and M&A
solutions practice.
“It will be interesting to see if boards are
less patient going forward with certain
because of the nature of changes they need
to make due to Covid-19,” Frankl said.
It may also be easier to rebuff M&A
strategies in the face of a pandemic.
Companies are getting more defensive
in their strategies and budgets as they are
concerned about preservation of capital.
They are less inclined to take on the risk of
M&A, Frankl said, especially without
STRONGûlNANCIALSûTOûBACKûTHEMûUP
As a result, the near-term environment
is helpful to companies defending against
activists, but over time there will be a reset
and a whole new round of shareholder
activism, Frankl said.
“I think we will see some funds stand
down near-term, perhaps saving their
energy for the future, but activists may
also be biding their time and building
positions in new targets where they have
been waiting for value for some time,” he
said.
US S&P 500 INDEX 2015-2020; SLUMPS IN
MARCH, THEN STABILISES
3,500
3,000
2,500
2,000
1,500
2015
“Already we are seeing a number of
funds prospecting in the market,” Frankl
said.
CATALYST FOR CHANGE?
Activists see value on some names that are
currently out of favour. They have some
targets that have been on their wish lists
and they are now trading at discount
prices, Frankl said. Ultimately, that may
translate into future campaigns.
“Some activists will use this crisis as a
catalyst to push for change,” said Nestor
Paz-Galindo, head of M&A for Europe,
Middle East and Africa at UBS.
“They are usually looking for something
SPECIlCûûMAYBEû-!ûnûAûSPIN
carve out or a certain thing. Or a change of
management if a management has not
been delivering independent of the crisis.”
This crisis is likely to put increased
scrutiny on management ability to steer
STRATEGYûANDûEXECUTEûITûINûDIFlCULTû
conditions.
“They [activists] are looking across
different sectors. These investors have a
dashboard and know what companies they
want to target and will assess their
vulnerability post-Covid crisis,” Paz-
'ALINDOûSAIDû5"3ûHASûBEENûlELDINGû
increased calls from clients, including
boards, looking to discuss activism and if
they were vulnerable as a target.
But while the pandemic may present
activists with an opportunity, they will
have to be careful, Paz-Galindo said.
“They [activists] will have to be careful
how to do this, they don’t want to be seen
as opportunistic and take advantage of the
situation to force things,” he said.

2016

2017

2018

2019

2020

ideas, especially in industries where Philip Scipio

companies need to be defensive just Source: Eikon Additional reporting by Steve Slater

International Financing Review April 11 2020 15

h!TûAûTIMEûTHEûWORLDûECONOMYûISûATûAûSTANDSTILLûOFlCIALûBILATERALûCREDITORSû
could make a major contribution by offering a debt standstill”
IMF MANAGING DIRECTOR KRISTALINA GEORGIEVA, P21

JP Morgan prepares for real life stress test

JP MORGAN chief executive Jamie Dimon last
week warned that the US bank’s earnings
“will be down meaningfully in 2020” as a
result of the coronavirus pandemic,
following a record year for revenue in 2019.
JP Morgan, as well as its large rivals, is
currently undergoing the Federal Reserve’s
annual stress test to see how well they can
withstand a severe economic downturn.
They are also preparing for a real life stress
test in response to the pandemic and the
consider suspending the dividend, Dimon
said.
“If the board suspended the dividend, it
would be out of extreme prudence and
based upon continued uncertainty over
what the next few years will bring,” he said
in his annual letter to shareholders, released
last week.
“Halting buybacks was simply a
Europe. The Fed, however, said it was not
considering such a move.
JP Morgan and other major US banks
halted their stock buyback programmes in
March, but left their dividends intact.
“Halting buybacks was simply a very
PRUDENTûACTIONûnûWEûDONTûKNOWûEXACTLYû
WHATûTHEûFUTUREûWILLûHOLDûnûBUTûATûAû
minimum, we assume that it will include a
bad recession combined with some kind of
lNANCIALûSTRESSûSIMILARûTOûTHEûGLOBALû
recession it has caused using inputs more
aggressive than even the Fed’s most severe
scenario.
Dimon said JP Morgan was well prepared
for global recession, but if the severity of the
downturn reached critical levels, the bank
may be forced to take actions to defend its
capital, including cutting its dividend.
Running stress tests for an extremely
ADVERSEûSCENARIOûnûASSUMINGûAûCONTRACTIONûOFû
gross domestic product of 35% and US
unemployment peaking at 14% in the fourth
QUARTERûnû*0û-ORGANSûBOARDûWOULDûLIKELYû
very prudent action – we don’t
know exactly what the future
will hold – but at a minimum,
we assume that it will include a
bad recession”
The reluctance of US banks to cut
dividends until they are faced with dire
circumstance pushed former Federal
Reserve chairman Janet Yellen to call for
regulators to perhaps step in and force
banks to cut dividends, as was done in
lNANCIALûCRISISûOFûvû$IMONûSAID
Even under the adverse stress scenario, JP
Morgan said it would still end the year with
strong liquidity and Common Equity Tier 1
capital of US$170bn, giving it a CET1 ratio of
about 9.5%.
US banks will provide further insight on
the impact of the coronavirus and the
lockdown of countries across the world
WHENûTHEYûRELEASEûRESULTSûFORûTHEûlRSTû
quarter this week. JP Morgan kicks off
earnings season on April 14 and Citigroup
and Bank of America follow the next day.

UBS gives Vasan, Donlon new roles in EMEA DCM

Vinod Vasan has been appointed UBS‘s vice-
chairman of debt capital markets for
Europe, Middle East and Africa and his role
running debt coverage for the region will be
taken by Barry Donlon.
Donlon becomes head of DCM for EMEA
from head of DCM capital solutions for the
region, and now has responsibility for both
coverage and syndicate.
Vasan took the EMEA DCM job in 2016
after he left his role as co-head of global debt
origination at Deutsche Bank. But both he
and Donlon are stalwarts of the Swiss bank’s
FIG debt business, with Donlon holding a
series of FIG syndicate roles before moving
to lead capital solutions in 2013.
Vasan spent 10 years at UBS until he left
in 2010 and spent six years at Deutsche.
Although he is shifting into a purely client-
facing role, this will not be a completely
new operating environment for Vasan, who
held a series of product and client-facing
roles at UBS running capital solutions and
THENû&)'ûDEBTûORIGINATIONûnûINCLUDINGûWHENû
THEûBANKûSTRUCTUREDûTHEûlRSTû,LOYDSû
CONTINGENTûCAPITALûTRADEûnûBEFOREûJOININGû
Deutsche.
Vasan “will maintain his client base and
continue to have senior coverage
responsibilities for a number of our most
critical clients”, according to a memo seen
by IFR.
Vasan and Donlon report to David Slade,
who became EMEA head of leveraged debt
capital markets a year ago, when the bank
MERGEDûLEVERAGEDûlNANCEûWITHûITSû
investment-grade bond business. That saw
the departure of Amir Hoveyda as global
head of DCM.

Who’s moving where…

WELLS FARGO has in EMEA. Ritchie was Sean Murphy has firm’s deal advisory
hired former senior previously global co- joined HOULIHAN group with oversight
HSBC and Goldman head of UK banking at LOKEY from KPMG to of both global and
Sachs banker Robert HSBC from July 2017 lead the transaction domestic transaction-
Ritchie as head of until October 2019. advisory services related engagements
banking and capital Before that, he spent practice in its financial in connection with
markets for EMEA. 10 years at Goldman and valuation advisory mergers, acquisitions,
Ritchie will be based Sachs, including as group in Dallas. and dispositions.
in London and joins head of debt capital Murphy worked at
in May. He will report markets for Europe, KPMG for more than
to John Langley, head and nine years at UBS. two decades. He
of commercial and was most recently
investment banking a principal in the

16 International Financing Review April 11 2020


“OPPORTUNITY LOST”
Dimon said the closer the extremely adverse
scenario in the economy gets, the more likely
current regulatory constraints would limit
additional actions the bank can take to help
CLIENTSûnûINûSPITEûOFûTHEûEXTRAORDINARYûAMOUNTû
of capital and liquidity it could deploy.
“Some rules can improperly
prevent healthy, well-
capitalized banks from lending
freely in times of stress”
Dimon said while JP Morgan had not
requested any regulatory relief during the
current crisis it did not mean the
government shouldn’t change some rules
and regulations.
“Some rules can improperly prevent
healthy, well-capitalized banks from lending
freely in times of stress,” he said. “This can
hurt customers as the crisis deepens.
,EAVINGûHIGH
UK eases rules to aid and speed
up capital raising
The UK has eased rules related to capital
raising to allow companies to raise
MONEYûQUICKERûANDûMOREûEFlCIENTLYûTHANû
usual due to the coronavirus pandemic.
The UK’s FINANCIAL CONDUCT AUTHORITY
last week said many companies were
likely to turn to capital markets to raise
money if they need it during the
EXPECTEDûlNANCIALûDOWNTURNûCAUSEDûBYû
the virus and lockdown of the country,
and it wants to smooth the process and
support economic recovery.
“Our aim is to help companies to raise
money quickly and effectively, while
ensuring they respect the needs of
investors, both current and future. We
think this package strikes that balance,”
said Christopher Woolard, interim chief
of the FCA.
People
& Markets
more profound problems,” the watchdog
said.
It also wants to speed up the approval
process for capital raisings and avoid
meetings of shareholders, and said
premium listed companies could apply to
waive the need for a general meeting of
shareholders for certain transactions.
“The notice period for general
meetings adds to transaction
timetables and might also
jeopardise an issuer’s ability to
complete critical fundraising”
“The notice period for general
QUALITYûAVAILABLEûLIQUIDITYû
undeployed in times of need is an
opportunity forever lost.”
Philip Scipio
Armin Peter continues as global head of
syndicate, DCM, and will continue to report
to Slade and Brendan Dillon on a global
basis, and to Donlon for EMEA business.
UBS also appointed Nigel Howells as head of
FIG DCM EMEA, reporting to Donlon.
Howells also has leadership of the capital
solutions business and will report directly to
Slade for that product offering.
Manuel Gadient will continue to lead
Swiss DCM, incorporating coverage and
meetings adds to transaction timetables
WORKING CAPITAL WORKAROUND
4HEû&#!ûWILLûALLOWûlRMSûAûWORKAROUNDû
for working capital statements they must
make as part of a capital raising, showing
THEûISSUERûHASûSUFlCIENTûWORKINGûCAPITALû
for at least 12 months.
The working capital statements are
usually supported by extensive due
DILIGENCEûANDûDETAILEDûlNANCIALû
modelling from advisers. But as many
lRMSûAREûUNABLEûTOûMODELûAûREASONABLEû
worst-case scenario, the FCA said it
would relax the modelling assumptions
they disclose in relation to coronavirus
issues.
“Investors should be provided with the
necessary information to distinguish, for
and might also jeopardise an issuer’s
ability to complete critical fundraising
transactions quickly,” the FCA said.
The FCA said it also welcomed new
guidance from the industry Pre-Emption
Group saying investors should support
companies seeking to raise up to 20% of
their issued share capital, rather than the
usual 5% limit.
It said that agreement was important
for companies, giving them the
OPPORTUNITYûTOûRAISEûSIGNIlCANTûAMOUNTSû
of new capital quickly.
The regulator also encouraged eligible
companies to make use of a new
SIMPLIlEDûANDûSHORTERûPROSPECTUSû4HATû
has been allowed since July for secondary
syndicate. He reports to Reinout Boettcher EXAMPLEûOTHERWISEûlNANCIALLYûSOUNDû issuances.
in respect of Switzerland and Barry and companies that need to repair their The FCA said the measures would
Slade in respect of DCM. balance sheet due to coronavirus-related apply until further notice.
Alex Chambers disruption and those companies with Steve Slater

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

THE CARLYLE GROUP and TMT sectors. Last SCHRODERS has country head, to co-
has hired the former month, Carlyle raised appointed Lily Choh head of Asia-Pacific.
Japan CEO of GE ¥258bn (US$2.37bn) to the newly created Choh will continue to
Healthcare as senior for its fourth Japanese position of Singapore lead the distribution
adviser in its Japan buyout fund, more deputy CEO. The teams in Singapore,
advisory team. Carlyle than double the size UK-based asset Malaysia and Thailand
said Jun Kawakami of its predecessor manager said Choh and retain her role as
will primarily advise fund. Kawakami will have day-to-day head of institutional
on investment was most recently management of the for Asia-Pacific. She
opportunities in the president and CEO South-East Asia continues to report
healthcare sector and, of telecoms company business following the to Soh.
to a lesser extent, in Arteria Networks. recent appointment of
the general industries Susan Soh, Singapore

International Financing Review April 11 2020 17

Bellwether
Bellwether: n. From the practice of placing a bell around the
neck of a castrated ram so that it might lead its flock
AFTER THE UK’s health secretary Matt Hancock called on
But it’s important to point out that RBS is giving some
leeway to departing staff, including extending their notice
PERIODû.EVERûMINDûTHATûTHOUGHû!SûLONGûASûTHEûBANKûlRESû
them while obeying social distancing guidelines, then under
0REMIERû,EAGUEûFOOTBALLERSûTOûhTAKEûAûPAYûCUTûANDûPLAYûTHEIRû 7ALKERSû,AWûNOûONEûWILLûBATûANûEYELID
PARTvûINûlGHTINGûTHEûCORONAVIRUSûCRISISûITûFELTûLIKEûITûWASû
only a matter of time before he switched his attention to
THEûSECONDûEASIESTûTARGETûnûTHEûlNANCEûSECTOR
3OûHATSûOFFûTOûBANKûBOSSESûFORûADOPTINGûTHEû$IRTYû,EEDSû
5NITEDûADAGEûOFûGETTINGûYOURûREVENGEûINûlRSTûANDûPRE
Frankfurt football club”.
empting Hancock. First out of the blocks was HSBC, with
chairman Mark Tucker, CEO Noel Quinn and CFO Ewen
Stevenson voluntarily giving up their bonuses for 2020,
ON THE SUBJECT of banking and football, on April 1 Deutsche
Bank announced that it has signed a multi-year agreement
“to expand and deepen its partnership with the Eintracht
Eintracht currently occupies 12th position in the Bundesliga
nûOUTûOFûûnûWHILEû$EUTSCHEûlNISHEDûTHEûlRSTûQUARTERûINûEIGHTHû
POSITIONûnûOUTûOFûûnûINûTHEûGLOBALûINVESTMENTûBANKINGûFEEû
while Tucker donated his entire fee to charity.
Bosses at RBS and Standard Chartered then sprang into
action with similar measures, so presumably it’s only a
matter of time before Barclays follows suit.
Unless that is, it wants to be compared to Manchester
City defender Kyle Walker, who was censured by the club
for breaking rules on social distancing by hosting female
ESCORTSûATûHISûmATûNEARû-ANCHESTER
It’s a measure of how much the world has changed in
TIMEûHOTûDOGûSECURITISATION
RECENTûWEEKSûTHATûTHEûlRSTûPARTûOFûTHATûSENTENCEûBROUGHTû
Walker more shame than the second.
3#(//,).' parents want their six-year old to be
RBS MIGHT WANT to take note of this ethical shift. The bank
knows it is under particular scrutiny given the partial
MINUTEûANIMATEDûVIDEOSûLASTûYEARûnûhTHEû0RINCIPLESûFORû
taxpayer ownership brought about by its investment bank’s
STARRINGûROLEûINûTHEûLASTûlNANCIALûCRISIS
LEAGUEûTABLESûPLACINGûITûlRMLYûINûTHEûRELEGATIONûZONEû-AYBEû
Deutsche is keen to get some tips on how to achieve mid-table
respectability as it re-invents itself as a plucky underdog.
Deutsche said the partnership goes beyond “mere
sports sponsorship” and is about jointly “developing new
business models” and “products that transcend the stadium
experience of today and make their way into people’s
EVERYDAYûLIVESvû4HISûSOUNDSûOMINOUSûnûWATCHûOUTûFORûTHEû
lRSTûHALF
)&û!.9û(/-%
a future master of the universe, then fortunately Ray Dalio
is here to help. The chairman of Bridgewater posted two

3UCCESSvûANDûh(OWûTHEû%CONOMICû-ACHINEû7ORKSvûnûTHATû
may help his followers through the current crisis.
Torn between a) doing the right thing by its staff,
and b) removing its investment bank from the public
consciousness, RBS is going with b) and pressing ahead
WITHûûJOBûCUTSûATûTHEû,ONDONûOPERATIONSûOFû.AT7ESTû
Markets.
EGOûINDEXû„
#OMMENTINGûONû,INKED)Nû$ALIOûMODESTLYûPOINTEDûOUTû
that together they have been watched more than 17 million
times and “have a 36:1 ratio of likes to dislikes”. Typical that
AûHEDGEûFUNDûMANAGERûWOULDûlNDûAûNEWûMEASUREûOFûSOCIALû
MEDIAûPOPULARITYûnûCALLûITûTHEû$AL

Who’s moving where…

„ US-based law practice. Reed Smith „ RAYMOND JAMES and UBS. Rogers „ Daniel Zubler is „ Richard Taylor, head
firm REED SMITH said Gelpi will advise FINANCIAL has will report to Steve leaving ZUERCHER of ASEAN and India
has hired Baptiste clients on DCM and appointed Alastair Hufford, co-head of KANTONALBANK investment banking at
Gelpi as a partner in structured finance Rogers as managing European investment after more than two CLSA, has left the firm
its financial industry products, including director of diversified banking and chief decades at the bank. after 24 years, sources
team in Paris, to domestic and cross- industrials. Rogers operating officer, and He joined ZKB in said. Taylor was based
bolster its European border securitisations, joined from Canaccord Allan Bertie, fellow December 1999 and in Hong Kong, and
structured finance disintermediated Genuity, where he was co-head of European has been head of held roles including
and debt capital financings, public and head of the European investment banking. bond syndicate there head of equity capital
markets expertise. private debt issuance sustainability, services Raymond James for the past 15 years. markets and head of
Gelpi joined from and derivatives. and industrials focuses on mid- He will leave this corporate finance and
Hogan Lovells, where practice. He previously market deals. summer. capital markets.
he led its French DCM worked at Hawkpoint

18 International Financing Review April 11 2020


Pigasse to lead Centerview in Paris
US investment bank boutique CENTERVIEW has
People
& Markets
and the pipeline ahead is expected to be
dominated by rescue deals, restructurings
planning to open for business in spring, and nationalisations.
HIREDû,AZARDSûFORMERû&RANCEûBOSSûMatthieu luring French bankers including Pigasse, Pigasse, 51, is known for his restructuring
Pigasse, to lead its newly launched Paris WHOûQUITû,AZARDûINû/CTOBER skills, having advised governments around
OFlCEûANDûDRIVEûEXPANSIONûACROSSû%UROPE “Despite current challenges, we are the world in their efforts to restructure
Centerview, which operates in Europe from CONlDENTûTHATûBUSINESSESûINû&RANCEûANDûACROSSû sovereign debt.
ITSû,ONDONûOFlCEûHASûALSOûHIREDûFORMERû,AZARDû
bankers Nicolas Constant and Pierre Pascal.
Twelve other bankers are also set to join
THEû0ARISûOFlCE
Centerview has rented space in Paris on
Europe are resilient and will be essential
contributors to the global economic recovery,”
said Centerview’s co-founder Blair Effron.
Global mergers and acquisitions activity
PLUNGEDûINûTHEûlRSTûQUARTERûTOûITSûLOWESTû
“Matthieu’s experience building long-term
client relationships and mentoring younger
bankers aligns perfectly with Centerview’s
philosophy and culture,” said Robert Pruzan,
who co-founded Centerview with Effron in 2006.
the upmarket Avenue Matignon and was LEVELûSINCEûûACCORDINGûTOû2ElNITIVûDATAû Gwenaelle Barzic

Swiss banks trim dividends in response

to regulatory pressure
The two major Swiss banks have become the
latest to amend their dividend policies in the
wake of the coronavirus crisis, after
3WITZERLANDSûlNANCIALûREGULATORûURGEDû
them to do so.
Unlike British and eurozone peers they
stopped short of suspending or cancelling all
their 2019 payouts, however. Pressure has
built on banks around the world in recent
weeks to halt payouts to preserve cash so
they can lend more to customers and aid
economic recovery.
CREDIT SUISSE said it will propose a
3&Rû53 ûTOTALûDIVIDENDûPERûSHAREû
for 2019 at its annual general meeting on
April 30, half the original SFr0.2776
payment, which would have amounted to a
3&RMûPAYOUTû4HEûOTHERûHALFûWILLûBEû
retained and proposed at an extraordinary
general meeting later this year, subject to
market and economic conditions.
“We believe that this ... is a prudent and
responsible step to preserving capital in the
face of the challenges posed by the Covid-19
LISTEDûBANK
pandemic,” said the bank.
UBS set out a similar change in policy to
pay its original 2019 dividend in two
instalments of US$0.365 a share, with the
second subject to a vote at an EGM in the
fourth quarter.
The bank said it expected to make a
53BNûNETûPROlTûINûTHEûlRSTûQUARTERûhWITHû
strong operating performance in all
business divisions”.
UBS said if the second dividend was not
ultimately paid then all the cash parts of its
group executive board incentive scheme
would not be made either and instead be put
into its deferred equity-based and
contingent capital compensation plans.
It said it would take further measures on
compensation for 2020 as the year unfolded.
AUSSIE GUIDANCE
In Australia, the banking regulator has
exhorted banks to consider deferring
dividend payouts, but it stopped short of
banning payouts.
The Australian Prudential Regulation
Authority said all authorised deposit-taking
institutions should “limit discretionary
capital distributions in the months ahead to
ensure that they instead use buffers and
maintain capacity to continue to lend”.
APRA said banks would need to carry out
stress tests over the next couple of months
and any dividends paid out prior to stress
testing and without the regulator’s approval
would need to be at a “materially reduced
level”.
The Reserve Bank of New Zealand has
ordered banks to stop paying dividends or
redeeming capital securities.
South Africa’s central bank last week
asked lenders to put dividends on hold due
to the coronavirus outbreak. Dividends
already declared must legally be paid,
however, and STANDARD BANK and others said
THEYûWOULDûPAYûTHEIRûlNALûûDIVIDENDS
HSBCûAXEDûITSûlNALûûDIVIDENDûAFTERûTHEû
Bank of England told it to do so. Some
shareholders in Hong Kong are mulling
taking possible legal action against the
,ONDON
Christopher Spink, Thomas Blott

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

„ NOMURA has hired head of investment „ CLIFFORD of Clifford Capital „ Malaysia’s AFFIN as chief financial
Sarab Bhutani from banking in Asia CAPITAL HOLDINGS Holdings. Audra BANK has appointed officer, succeeding
Standard Chartered ex-Japan. Bhutani has started operations Low, previously head Wan Razly Abdullah as Ramanathan Rajoo.
as head of South- worked at StanChart with Clive Kerner of origination and chief executive. Wan Lee has worked at
East Asia investment for more than a appointed as CEO. structuring, replaced Razly, 48, succeeds Affin Bank and its
banking. Bhutani decade and was Kerner was previously Kerner as CEO of Kamarul Ariffin Mohd various affiliates since
replaces Kelvin Ho, most recently head chief executive of Clifford Capital. Jamil. Wan Razly has 1991.
who was recently of general industries Clifford Capital, the 24 years’ banking
appointed Nomura’s and regional head of Singapore-based experience after
head of Singapore. financial sponsors. He infrastructure finance previously working
Bhutani is based in previously worked at company that was set at CIMB Group and
Singapore and reports Lehman Brothers. up in 2012 and is now PwC. Affin Bank also
to Kenji Teshima, one of the subsidiaries named Lee Yoke Kiow

International Financing Review April 11 2020 19

“Activists may also be biding their time and building positions in
new targets where they have been waiting for value for some time”
JASON FRANKL, WHO LEADS FTI CONSULTING’S ACTIVISM AND M&A SOLUTIONS PRACTICE, P15

Capital markets week ahead:

US banks, IMF meetings, GM
EARNING THEIR CRUST JP Morgan kicks off ONE FOR THE ROAD Banks are expected to PETROL PUMP Malaysian state oil producer
THEûlRST QUARTERûREPORTINGûSEASONûFORû lNALISEûTHEûEXTENSIONûOFûMATURITIESûONû Petronas is set to hit the US dollar bond
investment banks on Tuesday, offering the US$6bn of loans to General Motors. The MARKETûFORûTHEûlRSTûTIMEûINûlVEûYEARSû4HEû
lRSTûLOOKûINTOûHOWûTHEûINDUSTRYûHASû carmaker had initially asked lenders JP company seems to have a penchant for
weathered one of the most volatile three- Morgan and Citigroup to extend a ISSUINGûDURINGûTIMESûOFûCRISISûnûITSûLASTûVISITûTOû
month periods in history. Huge price US$16.5bn credit facility, but that idea was market was in the 2015 oil crisis. It will be
swings, pockets of illiquidity and a mass eventually ditched in favour of tweaking the hoping for better luck this time round,
dash for safety will doubtlessly have left a smaller loans. Commitments from banks though: last time it only managed to sell
few casualties along the way, which should were received on April 3, and the extended US$5bn of paper, less than the US$7bn it
become apparent over coming days. loan should price later this week. hoped for.
On the underwriting and advisory side,
earnings season should also give some
indication as to just how much dealmaking
has been impacted by the coronavirus
pandemic. While some parts of the market
HAVEûHELDûUPûnûBONDûISSUANCEûFROMûHIGHLYû
RATEDûISSUERSûFORûEXAMPLEûnûOTHERûAREASûHAVEû
collapsed. Bank of America, Citigroup,
Goldman Sachs and Morgan Stanley report
on Wednesday.

DEFAULT POSITION Argentina is set to update CASH WITHDRAWAL Banks have until
the market on whether or not it will make Tuesday to participate in a US$125m loan for
US$500m of coupon payments due to holders %VERIû0AYMENTSûAû,ASû6EGASûCOMPANYûTHATû
of bonds issued under foreign law that are makes and runs ATMs. The loan is being
due April 22. The bonds have rallied in recent arranged by Jefferies, and is being offered at
CALLING A HALT The International Monetary
Fund and World Bank hold their spring
meetings virtually, amid growing calls for a
moratorium on more than US$100bn of debt
owed by African countries. Former Credit
Suisse chief Tidjane Thiam is leading calls for
the debt relief, as countries struggle to keep
up repayments due the global slowdown and
new pressures on their budgets.
FILLING THE TANKû!STONû-ARTINû,AGONDAû
wraps up subscription for its £365m rights
issue on Friday. The cash call is the
days after the government delayed payments
on some local law bonds, fuelling hope that it
was doing so to prioritise its foreign law debt.
COPPER BOTTOM Zambia is due to pay a
coupon on Tuesday on US$1bn of
outstanding bonds. It is unclear whether the
country will pay, after it put out a request
for advisers to help it manage its debts,
which have ballooned in recent years.
Demand for copper, its main source of hard
currency, has plummeted, and a 30% drop in
the kwacha against the dollar has left it
struggling to pay foreign currency debts.
DOUBLE OR QUITO Bondholders have until
BPûOVERû,IBORûWITHûAûûmOORû4HEûBANKû
is on a roll, having just closed a US$300m
facility last week for Golden Nugget, which
operates casinos and steak restaurants
across the US.
LAST WEEK IN NUMBERS
US$4.3bn – Sum raised in a three-part
bond sale from Indonesia, the biggest
ever from the country
Five – Years since Germany’s last
syndicated bond deal, the latest of which
has just been announced
5.80% – Coupon on Ally Financial’s latest
lVE
YEARûBONDûALMOSTûBPûHIGHERû
centerpiece of a £536m rescue that the
luxury carmaker, which was already
struggling before the crisis hit, hopes will
help it turn around its fortunes. Banks will
be hoping the rights issue fares better than
the one they did recently for sensor maker
AMS, which left them stuck with millions of
unsold shares.
20
Friday to respond to a consent solicitation
from Ecuador, which wants to defer interest
payments on more than US$19bn of dollar
bonds. The country is asking bondholders to
defer interest due between March 27 and
July 15 until August and reduce interest due
after March 27 by US$0.50 on each US$1,000
of principal.
International Financing Review April 11 2020
than deal last May
US$10bn – Two-year loan facility for BP,
which it hopes will help it navigate
through crisis
130 – Jobs cut at NatWest Markets, as
its parent RBS presses on with
restructuring

China urged to join IMF debt relief plan
Plans by the INTERNATIONAL MONETARY FUND to
offer its poorer members relief from their
debts during the coronavirus crisis may end
up leaving them at the mercy of less
“I support the G20 to urgently work on
further easing the debt burden of our
poorest members,” she said.
“At a time the world economy is at a
People
& Markets
Irmgard Erasmus, senior economist at
NKC African Economics, agreed. “The lack of
debt transparency presents a tremendous
impediment to debt relief efforts
sympathetic creditors, such as China.
Over the past decade China has become a
SIGNIlCANTûLENDERûTOûEMERGINGûMARKETû
countries and has rarely agreed to
restructure its exposures to such borrowers.
,ASTûYEARûITûDIDûAGREEûTOûEXTENDûITSû
STANDSTILLûOFlCIALûBILATERALûCREDITORSûCOULDû
make a major contribution by offering a
debt standstill to eligible countries.” That
would include China.
She urged private creditors “to do their
part” as well.
championed by multilateral organisations.”
Fitch has calculated that only US$4bn of
an estimated US$14bn of bilateral debts
owed by African countries was to Paris Club
countries, with the remainder accounted for
largely by China.
US$2.2bn loans to the Republic of Congo as /NûTHEûDEBTORSûSIDEû!FRICANûlNANCEû
part of that country’s wider debt “STRETCHED THIN” ministers have this month called for US$100bn
restructuring, but indicated it would not /NEûRESTRUCTURINGûADVISERûSAIDûTHEûOFlCIALû OFûEMERGENCYûlNANCINGûORûDEBTûRELIEF
want to go as far as writing off outstanding
liabilities.
That could mean the good intention of the
IMF and its principal supporters may instead
leave nations even more reliant on Chinese
goodwill.
4HEû)-&ûHASûRECEIVEDûNEARLYûûREQUESTSû
for assistance from members, almost half of
its membership. To meet this demand
managing director Kristalina Georgieva has
persuaded members to bolster its credit
sector’s resource would still be “stretched
thin” and mean others would have to
contribute.
“Many emerging market countries will
lNDûITûDIFlCULTûTOûRElNANCEûTHEIRûMATURINGû
debt. Some may need to spend money on
economic stimulus. This is a global virus and
a global problem,” he said.
There is less unanimity among bilateral
creditors. In previous crises most sovereign
debtors were members of the Paris Club,
3OMEûPRIVATEûSECTORûlGURESûLEDûBYûFORMERû
Credit Suisse chief executive and Ivorian
national Tidjane Thiam, have also said
private sector bondholders should grant
African sovereigns a two-year moratorium
on these US$115bn of debts.
Thiam said such a standstill would also
have to be backed by China.
3MITHûHASûIDENTIlEDûû!FRICANûSOVEREIGNSûASû
particularly vulnerable, including Angola,
Ghana, Kenya, Ivory Coast and Zambia. All have
lines.
At the G20 teleconference of leading
economies at the end of last month she
announced fresh commitments from
bilateral lenders that were due to expire at
the end of this year, to maintain the fund’s
lending capacity at US$1trn.
These are on top of quotas each member
has to pay and a separate “new
arrangements to borrow” scheme, which
was doubled in January.
DEBT STANDSTILL
Georgieva told G20 members that, in
addition to the fund’s own efforts, other
lenders should play their part in offering
help during the crisis, principally by offering
debt relief to the poorest countries.
NatWest Markets axes structured finance staff, others
4WOûSTRUCTUREDûlNANCEûTRADERSûANDûFOURû
allowing deals to be thrashed out at that forum.
But China is not a member and could
dissent from being bound by Paris Club
decisions. The restructuring of its Congo
debt also took two years to negotiate.
Decisions will need to be made far faster to
relieve countries now.
!û#HINESEûOFlCIALûTOLDû2EUTERSûLASTûWEEKû
that it was willing to work on a bilateral
basis with low-income countries, and may
approve delays in some debt service
payments.
“Debt relief would need to be provided at
unprecedented speed, at a time when
African debt stocks have become more
complex following the growing diversity of
creditors,” said Gregory Smith, emerging
markets strategist at fund manager M&G.
liquidity for securitisations where it acts as
SIGNIlCANTû#HINESEûLIABILITIESûUNLIKEûOTHERSû
such as South Africa, Egypt and Morocco.
“There is a risk that, for some of these
frontier countries, the health and economic
crisis also becomes a debt one,” said Smith.
Zambia is already in the process of
appointing advisers to seek suitable
solutions.
Goldman Sachs analysts Dylan Smith and
Andrew Matheny said IMF meetings next
week would offer more clarity on how the
crisis would be tackled in Africa.
“For most countries, the choice lies
between diverting much-needed resources
to crisis response, and avoiding triggering
defaults that would limit market access in
the future,” they said.
Christopher Spink
MARKET
MAKINGûOFFERINGûINûmOWû!"3û2-"3û
salespeople have left NATWEST MARKETS following arranger or lead manager. ANDû#,/ûANDûWILLûNOûLONGERûMAKEûMARKETSûINû
the bank’s decision to cut back market-making Such new issues are typically more off-the- THIRD
PARTYûLEDûmOWûPROGRAMMESv
INû!"3û2-"3ûANDû#,/SûMARKETûSOURCESûSAID run trades such as UK non-conforming RMBS, NatWest Markets cut about 130 jobs last
The two traders are Antoine Dulucq, who or peripheral Europe, as well as a small week as part of the wider restructuring, the
TRADEDû#,/SûANDûEric Huang, who traded NUMBERûOFû#,/Sû4HOSEûPRIMARYûDEALSûWILLû Financial Times reported.
RMBS and ABS. continue to be supported by the structured The state-backed British lender has paused
NatWest Markets is the investment bank lNANCEûTRADINGûDESKûWHICHûISûACTIVEûTOOûINû much of its cost-cutting and restructuring
arm of ROYAL BANK OF SCOTLAND. It has little WAREHOUSEûPROVISIONûANDûREPOûlNANCING initiatives to deal with the fallout from the
primary market presence in bulge-bracket A spokesperson said NatWest remained coronavirus pandemic, but has decided to press
mOWûSECURITISATIONSûANDûWILLûNOûLONGERûMAKEû committed to its securitised products ahead with cuts to its loss-making NWM unit.
MARKETSûINûTHIRD
PARTYûmOWûPROGRAMMESû"UTû lNANCINGûANDûSOLUTIONSûBUSINESSûh&OLLOWINGû Chris Moore
it will continue to provide secondary market this announcement, we are reducing our Additional reporting by Iain Withers at Reuters

International Financing Review April 11 2020 21

“Our aim is to help companies to raise money quickly and
effectively, while ensuring they respect the needs of investors”
FCA INTERIM CHIEF CHRISTOPHER WOOLARD, P17

First-quarter sustainable financing nears US$100bn

4HEûVOLUMEûOFûSUSTAINABLEûlNANCINGûRAISEDûINû monetary policy response from countries Sustainability-linked loans made up
THEûlRSTûQUARTERûWASû53BNûACCORDINGûTOû affected by the crisis. US$23.2bn of the total, and green loans
2ElNITIVûDATAûASûTHEûMARKETûCONTINUEDûTOû “We should see a continuation of the totalled US$5.1bn.
grow despite feeling the impact of the growth of the last two years and the effects Sustainability-linked loans were up 19% in
coronavirus at the end of the quarter. of the crisis may even give the green bond THEûlRSTûQUARTERûFROMûAûYEARûEARLIERûANDû
&IRST
QUARTERûVOLUMEûOFû53BNûINû market an additional boost,” said Bram Bos, green loans were 42% higher. But green and
GREENûBONDSûANDû53BNûFORûGREENûANDû lead portfolio manager for green bonds at sustainability-linked loans showed a 60%
SUSTAINABILITY
LINKEDûLOANSû3,,S ûWEREûBOTHû NN Investment Partners. decrease from the fourth quarter, when
HIGHERûTHANûTHEûlRSTûTHREEûMONTHSûOFûû VOLUMEûWASû53BNûANDû53BNû
although levels were down from the fourth EMEA TOP respectively.
quarter of 2019. The biggest regional green bond volume was An €5bn loan for Danish container
3OCIALûBONDûVOLUMEûINû*ANUARYn-ARCHûOFû
53BNûANDûSUSTAINABILITYûBONDSûTOTALLINGû
53BNûROUNDEDûOUTûTHEûTOTAL
Green and ESG bond volume was 3% higher
INûTHEûlRSTûTHREEûMONTHSûOFûûTHANûAûYEARû
YEARû
earlier, but activity was 30% lower than the
INû%UROPEû-IDDLEû%ASTûANDû!FRICAûINûTHEûlRSTû
quarter, reaching US$22.2bn, higher than
the Americas volume of US$10.4bn and Asia-
0ACIlCûVOLUMEûOFû53BNû6OLUMEûWASû
down in all regions compared to the fourth
quarter of last year.
logistics shipping company AP Moeller
Maersk, which was signed in late February,
WASûTHEûBIGGESTû3,,ûOFûTHEûQUARTER
4HEûDEALûRElNANCEDûTHEûCOMPANYSû
EXISTINGû53BNûREVOLVERûWITHûAûlVE
maturity, plus two one-year extension
FOURTHûQUARTERûOFûû2ElNITIVûDATAûSHOWED The US was the biggest issuer of green options, and will form part of the company’s
The coronavirus crisis has not been fully BONDSûINûTHEûlRSTûQUARTERûWITHûVOLUMESû liquidity reserve.
REmECTEDûINûTHEûNUMBERSûASûTHEûPANDEMICû reaching US$7bn, followed by France, where The margin on the loan will be adjusted
INTENSIlEDûINû%UROPEûANDûTHEû53ûTHROUGHû VOLUMEûWASû53BNû'ERMANYû53BN û based on Maersk’s progress in meeting its
March. But social bond volumes are ANDû3PAINû53BN û4HEû5+ûRANKEDûSIXTHû target of reducing CO2 emissions per cargo
expected to rise in the second quarter as with volumes of US$2.1bn. MOVEDûBYûûBYûûBASEDûONûAûû
supranationals launched deals targeted at EMEA continues to lead the regional baseline, to help the company’s aim of
healthcare and employment. SUSTAINABLEûlNANCINGûMARKETûINûGREENû carbon neutrality by 2050.
NN Investment Partners said the current
environment was supportive for the green
bond sector, which is seeing continued
INmOWSûANDûINVESTORûDEMANDûANDûCOULDûALSOû
BENElTûFROMûUNPRECEDENTEDûPOLICYûSPENDING
The sovereign green bond market could
ALSOûBENElTûFROMûTHEûLEVELûOFûlSCALûANDû
Banks braced for crisis writedowns
"ANKSûCOULDûBENElTûINûTHEûSHORTûTERMûFROMû
LAUNDERINGû ratios by 30bp on average, as more loans
clients drawing down revolving credit
facilities, but their earnings may face a
challenging period after that if the loans
“broadly manageable”, but warned the long-
sour and need to be written down, according
to analysis by Berenberg.
Berenberg estimated the use of RCFs by
CORPORATEûCUSTOMERSûHADûGONEûFROMûûATûTHEû
end of last year to as much as 50% now as
businesses raced to shore up their cash levels
in the wake of the economic slowdown.
“While higher loan volumes may support
revenues in the near term, the long-term
consequences of our analysis are far more
important. There are clear negative
implications for asset quality and corporate
CORPORATEûBONDûVOLUMEû53BN ûGREENû
33!ûVOLUMEû53BN ûANDûGREENûlNANCIALû
INSTITUTIONûVOLUMEû53BN 
MAERSK LEADS LOANS
Green and ESG loans rose 22% from a year
AGOûTOûREACHû53BNûINûTHEûlRSTûQUARTERû
53M ûlNEûFORûANTIûMONEY
failings, but the Swedish bank also booked a
SKr2.2bn charge for credit impairments.
h4HEûlNANCIALûSTRAINSûCAUSEDûBYûTHEû#OVID
19 pandemic will be extensive in our home
markets,” Swedbank said. “Deteriorating
macroeconomic forecasts ... led to an
increase in our credit impairments.”
,OWEûANDû#HRISTODOULOUûSAIDûDATAûFROMû
the US Federal Reserve showed there had
been a 20% rise in RCF utilisation in the two
weeks to March 25, as US$400bn was drawn
down by corporates in that period alone.
4HATûlTSûWITHûWHATû*0û-ORGANûSAIDûINûITSû
letter to shareholders. Chief executive Jamie
Dimon said US$50bn had been drawn down
Sustainability-linked loan volume could
dip as a result of the pandemic, bankers
said, as companies focus on ensuring
liquidity and survival, and the discussion
around setting KPIs to monitor the deals has
grown more challenging as a result.
Tessa Walsh
were recognised as levels of capital
remained consistent. They called this
term implications were negative.
“Banks may be left holding exposure to
weaker corporates, amplifying asset quality
concerns,” they wrote. In addition, many
BORROWERSûMIGHTûCHOOSEûTOûRElNANCEûBYû
using the bond markets, which are
supported by government bond-buying
programmes, reducing bank loan use longer
term.
The analysts said Italian banks were most
exposed to the reduction in capital ratios,
with three of the worst affected from Italy.
LOANûDEMANDvûBANKûANALYSTSû!NDREWû,OWEû by its clients, “dramatically exceeding” what “With Italy at the epicentre of the Covid-
and Michael Christodoulou wrote in a note. HAPPENEDûDURINGûTHEûlNANCIALûCRISISûINû 19 crisis in Europe, it may be reasonable to
SWEDBANKûLASTûWEEKûBECAMEûONEûOFûTHEûlRSTû assume that corporate drawdowns may be
BANKSûTOûHIGHLIGHTûDIFlCULTIESûWARNINGûITû ITALIAN EPICENTRE greater than the average across Europe,”
WOULDûREPORTûITSûlRSTûQUARTERLYûLOSSûFORûAû The Berenberg analysts said this could lead they said.
decade. This was largely because of a SKr4bn to a reduction in common equity Tier 1 Christopher Spink

22 International Financing Review April 11 2020


Asia economic shock to
surpass 2008 crisis
Economists are warning that the shock from
the coronavirus pandemic will outstrip even
THEûFALLOUTûFROMûTHEûûGLOBALûlNANCIALû
crisis in Asia, adding to the strain on a
number of borrowers in the region that
fund in US dollars.
Several economists in recent weeks have
downgraded their expectations for a
U-shaped, rather than a V-shaped recovery,
with the downturn peaking in China during
THEûlRSTûQUARTERûANDûINûTHEûSECONDûQUARTERûINû
the rest of Asia.
The Asian Development Bank has lowered
its growth forecast for 2020 in developing
Asia, a group of 45 economies that includes
China and India, to 2.2% from a previous
forecast of 5.2%, its lowest since the Asian
lNANCIALûCRISIS
LARGEûCURRENTûACCOUNTûDElCITSûORûHIGHû
external borrowing levels.”
INDONESIAN EXCEPTION
Although Chinese issuers account for by far
the largest share of US dollar debt in the
region, most analysts do not expect them to
face major funding pressures because of the
size of the country’s local currency bond
market, which overtook Japan last year to
become the world’s second-largest bond
market after the US.
Chinese developers, the most active high-
yield issuers in Asia’s US dollar bond market,
have been stepping up their fundraisings
onshore in recent weeks given the lower
funding costs now available there and the
introduction of a new registration-based
People
& Markets
„ IN BRIEF
PAY CUTS
Top executives at UK banks HSBC, STANDARD
CHARTERED and NATWEST said they would take
salary cuts after pressure on bankers to show
solidarity with customers struggling to make
ends meet during the coronavirus crisis. LLOYDS
said all its executives – including CEO Antonio
Horta-Osorio – had asked not to be considered
for bonuses for 2020, but none took pay cuts or
donated some of their salary to charity, unlike
directors at the other three banks.
HSBC said its CEO Noel Quinn and CFO
Ewen Stevenson would donate 25% of their
salary for the next six months to charity and
forgo their cash bonuses, totalling £1.4m and
£800,000, respectively. Chairman Mark Tucker
will also donate his entire director’s fee for 2020,
amounting to £1.5m.
Standard Chartered said its CEO Bill Winters
and CFO Andy Halford would waive their cash
bonuses for this year and make “significant”
The World Bank also said recently that
under its base case scenario growth in
developing Asia would fall to 2.1% this year
with the possibility of a contraction of 0.5% if
the effects of the virus spilled over into 2021.
China, India and Indonesia were among
the countries that avoided a recession
DURINGûTHEûGLOBALûlNANCIALûCRISISûANDûMANYû
countries, particularly in South-East Asia,
last experienced a downturn during the
!SIANûlNANCIALûCRISIS
SYSTEMûPROVIDINGûISSUERSûWITHûMOREûmEXIBILITY
According to research compiled by Natixis,
total foreign currency-denominated debt in
China as a percentage of GDP stands at 14.9%,
among the lowest in developing Asia, and
THISûHASûBEENûFALLINGûOVERûTHEûPASTûlVEûYEARS
In other major economies in the region,
FOREIGNûCURRENCYûDEBTûISûBELOWûûOFû'$0ûnû
in India, Malaysia, the Philippines, South
Korea and Thailand it is 15.3%, 23.7%, 46.1%,
30.4% and 31.3%, respectively.
personal donations to the lender’s Covid-19
Assistance fund. Winters has donated £825,000,
a source familiar with the matter told Reuters.
ACCOUNTING SHIFT
A global committee of banking regulators has
offered lenders breathing space from topping up
capital buffers to cover losses on loans to borrowers
struggling to stay afloat in the coronavirus pandemic.
The BASEL COMMITTEE of banking regulators said it
had agreed to amend its transitional arrangements
The 1997 crisis, which was triggered by a
sharp depreciation in a number of emerging
markets currencies in the region, led to a
large drop in asset prices and a number of
borrowers, particularly those that had
borrowed heavily in US dollars, defaulting
on debt repayments.
Market observers said most countries
have reduced their exposure to foreign
currency debt and increased their FX
reserves since then, so the economic impact
of the coronavirus is likely to be less severe.
Still, there are growing concerns that the
recent strengthening of the US dollar as well
as the spike in dollar borrowing costs, as
investors globally liquidate their risk
positions, could add to pressure on a
number of Asian borrowers.
“As of right now, the situation isn’t as bleak
as it was back in 1997,” said one analyst.
“Most countries in Asia no longer operate
lXEDûEXCHANGEûRATESûANDûEXTERNALûBORROWINGû
levels are a lot more manageable today.
“Having said that, the Fed still doesn’t
have swap lines in place with most central
banks in the region and any pressure on
dollar liquidity is likely to have a knock-on
effect, particularly for those countries with
)NDONESIAûATûûISûTHEûONLYûCOUNTRYû
whose foreign currency debt ratio is more than
half of its GDP, and along with Malaysia is the
only country that has increased its issuance of
53ûDOLLARûDEBTûINûTHEûPASTûlVEûYEARS
The Indonesian rupiah is also the worst
performing emerging Asian currency this
year, having lost 16% of its value against the
US dollar, which is likely to increase the
strain on Indonesia borrowers.
Roughly two dozen Indonesian issuers
have US dollar bonds maturing in the next
two years totalling an aggregate US$6bn,
according to research from S&P.
Moody’s recently downgraded the long-
term ratings of property developer ALAM
SUTERA REALTY and GAJAH TUNGGAL, South-East
Asia’s largest tyre manufacturer, both to
Caa1, because of their foreign debt exposure.
Under central bank rules introduced in
2014, companies are only required to hedge a
minimum 25% of their liabilities in foreign
currency three to six months before they
come due, although the central bank has
repeatedly urged borrowers to hedge their FX
exposure beyond the regulatory minimum, in
ANûEFFORTûTOûSTAVEûOFFûFOREIGNûCAPITALûOUTmOWS
Thomas Blott
International Financing Review April 11 2020
for deciding how much capital must be set aside to
cover expected losses on loans.
It said this was in light of governments offering
loan repayment holidays during a crisis. Normally,
banks are required to step up provisioning when
repayments are missed, but the committee said
this did not have to be the case with a temporary
payment holiday introduced by governments.
CHINA MINI-IPOs
One unforeseen outcome from the coronavirus
outbreak in China is that the country’s regulators
are speeding up capital markets reforms even
as economic activity is hampered by restrictions
to contain the virus’s spread. Authorities are
stepping up plans for a new “mini-IPO” market to
help the next generation of innovative technology
companies access capital quickly, including
artificial intelligence and fifth-generation
telecommunications firms.
The reforms to the moribund New Third Board
to turn it into a feeder for the bigger exchanges
have been designed to help reduce the reliance
of start-ups on foreign capital, as was the case in
the past with internet giants Alibaba and Tencent.
The changes could be rolled out by July to help
small and medium-sized enterprises that have
been hit hard by the coronavirus crisis.
23
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THE MORE
YOU SEE.
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 BONDS
SSAR 27 Corporates 33 FIG 38 Covered Bonds 40 High-Yield 41 Structured Finance 45

„ FRONT STORY CORPORATES

Corporates sustain supply but danger still lurks

Push for funding continues ahead of blackouts “A lot of companies want short-dated
funding. They want liquidity but don’t want to
Bankers wary, though, of further sell-offs pay for, say, a 10-year,” said a lead on Toyota.
The short end got particularly badly
It was another busy week in the euro Last week accounted for about €16bn of that dislocated as investors sought to prop up
investment-grade corporate market with supply – a slower pace than the record week their funds by selling those assets that could
bankers expecting the push to increase cash before when nearly €40bn was issued – but still be most easily monetised. But the ECB’s
buffers to continue once the Easter holiday a healthy amount for a truncated week. actions, such as broadening the range of
and earnings blackouts end. Spreads remain elevated – the euro iBoxx assets it can buy to include commercial
However, some are warning that the market NON
lNANCIALSûINDEXûISûBIDûATûANûASSETûSWAPû paper, has brought a sense of stability.
is moving too fast and, while the natural pause spread of 191bp, 125bp wider than on While the longer-dated tranches for both
in supply will provide some respite, there is a February 20. But the index is only a handful Toyota and Capgemini got bigger demand,
danger that a continuation of government of basis points wider than on March 23. the two-year notes worked well too.
lockdowns and further data showing the global One sign of how the tone is improving was Both corporates raised €500m through
economy is in a deep recession will eventually the return of a couple of borrowers not long the tenor, for Toyota as part of a €1.75bn
knock the market down again. after they were last in the primary market. three-part trade while for Capgemini it was
“I hope I am wrong but I feel like we need &RENCHûPHARMACEUTICALSûlRMûSANOFI (A1/ one of four-tranches on a €3.5bn deal.
to take another leg lower and the optimism AA/AA) reopened two notes it placed on There have been some more subtle
is a bit overdone,” said one senior banker. March 24, taking advantage of the strong developments too over the past week. “We
Borrowers cannot be blamed, however, spread tightening since they were sold. are seeing more limits on order books,” said
for raising funds while the opportunity is The issuer bolted a further €250m on to the second banker. “Investors are either
there. Three weeks ago, it appeared that the both its €750m April 2025s and €750m April scaling back or dropping out.”
primary market was more or less shut as 2030s. The 2025s were originally issued at That is affecting book sizes on certain
investors were scrambling for cash and swaps plus 120bp and the 2030s at plus 150bp. deals. “Books in general are maybe not as
corporates were exploring emergency lines In a demonstration of the spread moves large [as the week before] but we have been
from their relationship banks. SINCEûTHEûSALEûTHEûTAPûOFûTHEûlVE
YEARûPRICEDû moving deals by larger amounts, sometimes
But, following a stepping up in support at 73bp and on the 10-year at 83bp. They
from the ECB, funding channels have eased, were bid at 77bp and 89bp, respectively,
LIQUIDITYûHASûRETURNEDûANDûPRIMARYûmOWûHASû ahead of the reopenings.
roared back to such an extent that more than DEUTSCHE BAHN (Aa1/AA) was another issuer
€75bn of bonds has priced since March 23. making a quick return. This was not
“It’s pretty staggering what we’ve seen. through a tap but a separate line that was
The market is truly delivering on all fronts,” also another demonstration of how the
said a second banker. market is continuing to make strides.
The state-owned railway operator printed
an upsized €750m 20-year note on Tuesday off
DRAMATIC TURNAROUND
EURO IG CORP VOLUMES SINCE MARCH 9 a €5.2bn book. Pricing moved from the 150bp
€bn area over swaps to 115bp and the size was
40 increased from an initial target of €500m.
35
4HISûWASûISûTHEûlRSTûSINGLEûTRANCHEû
YEARû agribusiness SYNGENTA (Ba2/BBB–/BBB–). This
benchmark from a corporate since the novel
30 coronavirus-inspired volatility gripped markets.
25 Anhueser-Busch InBev did sell a €1.75bn
20-year note on March 30 but that was part
20
of a three-tranche deal.
15 The issue was Deutsche Bahn’s second
benchmark in less than a week. It sold a €900m
10
seven-year on April 1 at 75bp over mid-swaps.
5 While the difference in demand cannot
SHORT-END RENAISSANCE
0
16/3/20-20/3/20
6/4/20-9/4/20
23/3/20-27/3/20
30/3/20-3/4/20
9/3/20-13/3/20
Another sign of how the market is progressing
CAMEûTHROUGHûTWOûMULTI
BPnBPvûSAIDûTHEûlRSTûBANKER
At times, it has been by even more. Pricing
on a €750m 10-year bond from AKZO NOBEL
(Baa1/BBB+) on Tuesday was tightened by 60bp
as it landed at 165bp over swaps. That meant it
priced inside fair value. Books were €4.9bn.
Swiss biotech LONZA (BBB+) was also able to
revise pricing sharply. It landed a €500m seven-
year note 55bp inside IPTs, at 180bp over swaps,
for a 10bp concession. Demand was €5.6bn.
Lonza was a debut issuer – another strong
signal for the market. As was the success of a
€500m April 2026 bond for Swiss
WASûTHEûlRSTûCROSSOVERûBONDûDEALûSINCEûTHEû
crisis began. Pricing on this moved by 35bp
off a €1.9bn book.
Syngenta’s deal was not ECB-eligible even
though it was issued by a Dutch entity
because of coupon step-ups. However,
Lonza’s deal was eligible, with the bonds
sold by a Belgian entity.
be pinned to one reason, the presence of the
ECB matters – as has been proven ever since
TRANCHEûDEALSûTHEûlRSTû the supply taps were reopened.
from TOYOTA AUSTRALIA (A1/AA–) and the next “The ECB is absolutely driving the
from CAPGEMINI (BBB), which included two-year MARKETvûSAIDûTHEûlRSTûBANKER
Source: IFR NOTESûTHEûlRSTûSINCEûTHEûBEGINNINGûOFû&EBRUARY Sudip Roy

International Financing Review April 11 2020 25

Prudential makes billion
dollar reintroduction
Insurer takes bow as Asia-led institution
PRUDENTIAL PLC sold a US$1bn senior
unsecured offering last Wednesday,
reintroducing itself to the market after
shedding its UK business and becoming
subject to a new regulatory framework.
4HISûDEALûISû0RUDENTIALSûlRSTûSINCEûTHEû
insurer completed the demerger of M&G, its
UK business.
It comes as the insurance industry faces
up to the impact of the coronavirus crisis,
and while Prudential prepares for a minority
IPO of its US business, Jackson.
Leads Bank of America, Barclays, Citigroup,
Credit Agricole and MUFG opened books for
the 10-year SEC-registered benchmark with
initial price thoughts of Treasuries plus the
312.5bp area.
“There are a lot of moving parts
around Prudential, in terms of
their structure and regulatory
regime, the impact of Covid on
the asset side of their book”
They ultimately launched the US$1bn
WEEK IN NUMBERS
191bp
„ THE ASSET-SWAP SPREAD OF THE
IBOXX EURO NON-FINANCIALS INDEX,
THE HIGHEST IT HAS BEEN SINCE THE
EUROZONE DEBT CRISIS. THAT HASN’T
NEW RULES STOPPED RECORD CORPORATE ISSUANCE
Prudential, which now refers to itself as an VOLUMES IN THE IG MARKET
Asia-led portfolio of businesses, has left the bp
oversight of the UK Prudential Regulatory 210
190
Authority and falls under the supervision of
170
the Hong Kong Insurance Authority. 150
Having left Solvency II rules behind, 130
Prudential’s regulatory capital needs are for 110
90
now determined by a framework specially
70
agreed with the HKIA known as the Local 50
Capital Summation Method (LCSM). 30
3/1/11
3/1/12
3/1/13
3/1/14
3/1/15
3/1/16
3/1/17
3/1/18
3/1/19
3/1/20
Investors said the change and unfamiliar
regime was a complication when looking at
the new issue.
Adding to the uncertainty, the question of
regulation is not yet settled. Prudential will
ultimately become subject to a wider
US$87trn
„ THE RISE IN GLOBAL DEBT LEVELS
supervision regime being developed by the BETWEEN THE START OF THE 2008
(+)!û)TûISûEXPECTEDûTOûBEûlNALISEDûINûTHEû FINANCIAL CRISIS AND NOW, ACCORDING
second half of 2020. TO THE IIF. BY THE END OF 2019, GLOBAL
At the end of 2019, the Prudential group’s DEBT STOOD AT US$255trn OR 322%
LCSM surplus over its minimum capital OF GDP
requirement was estimated at US$9.5bn on a
shareholder basis, equivalent to a solvency
ratio of 309%.
deal at 250bp. Books were in excess of
US$9.5bn with more than 390 investors
participating.
“There are a lot of moving parts around
Prudential, in terms of their structure and
regulatory regime, the impact of Covid-19
on the asset side of their book ... and what
it means practically in terms of insurance
sales in Asia, which haven’t kept up the
pace of Q4 2019 in Q1,” said a DCM banker
at one of the leads.
“But despite all of those questions and
potential headwinds, it’s shown the
strength of the issuer and the brand to get
such a strong response.”
A recent US$1bn 10-year senior issue for
)NVESTORSûNOTEDûHOWEVERûTHATûTHISûlGUREû
relates to before the coronavirus crisis and
5
„ THE NUMBER OF YEARS SINCE
subsequent lockdowns hit. GERMANY RAISED FUNDS THROUGH A
PUBLICLY SYNDICATED BOND. IT PLANS
TO DO SO AGAIN IN MAY THROUGH A
“It’s shown the strength of the 15-YEAR NOTE
issuer and the brand to get such
a strong response”
“That said, US$9.5bn is a large sum for
them to have to burn through, so they will
47.51
„ THE LEVEL THE VIX ‘FEAR GAUGE’ INDEX
remain safe,” said Simon Prior, assistant IS BACK TO HAVING HIT A RECORD HIGH
portfolio manager at Merian Global OF 85.47 ON MARCH 18
Investors. “But I imagine it is a lot closer to 90
200% than 300% now.” 80
Prior said it was a shame Prudential had 70
not advanced the Jackson IPO, but said it 60
50
remained one of the stronger insurance
40
AIA Group was deemed the closest
comparable. That 3.375% paper, which was
priced at 275bp over Treasuries on March
31, was bid at around 244bp on
Wednesday.
Investors and analysts said before the
deal was launched Prudential should price
SLIGHTLYûBACKûOFû!)!ûTOûREmECTûTHEû
uncertainty over the US business.
But the lead banker said the deal –
0RUDENTIALSûlRSTûSENIORûINû3%#
REGISTEREDû $#-ûBANKERûh"UTûAûSENIORûNOTEûTHATûQUALIlESû
FORMATûnûWASûPRICEDûROUGHLYûmATûTOûWHEREûAû
new issue from AIA would have priced on
the day.
26
COMPANIESûWITHûSIGNIlCANTûFEESûFROMû
30
insurance and asset management products
20
to support the business to some degree in 10
2/2/20
2/4/20
2/1/20
2/3/20
the downturn.
According to bankers close to the deal,
Prudential may ultimately be able to count
the senior unsecured deal as regulatory
capital under its new regime.
“We haven’t seen any hybrid capital supply
yet due to the elevated levels,” said the lead
€1.955bn
„ THE AMOUNT OF CORPORATE BONDS
THE ECB BOUGHT (NET) IN THE WEEK TO
as regulatory capital in Asia is obviously the APRIL 3 AS PART OF ITS CSPP COMPARED
next step as the market unfurls.” WITH €1.285bn THE WEEK EARLIER
Tom Revell In total, it has bought €20.789bn
International Financing Review April 11 2020
 BONDS SSAR

SSAR
US DOLLARS
BNG, CANADIANS BEAT BIG NAMES
TO THE PUNCH
With expected bonds from heavyweights
EIB and KfW waiting in the wings, a trio of
smaller borrowers jumped into the
international US dollar primary market last
Tuesday.
Canada’s CDP FINANCIAL (guaranteed by
Caisse de depot et placement du Quebec)
and ONTARIO TEACHERS’ FINANCE TRUST followed
compatriot CPPIB Capital. The crown
“With a few more accounts back online with
the start of the new quarter, the pool of SSA
investors has continued to grow. That’s why
you’re seeing larger and larger order books.”
".'SûORDERûBOOKûREmECTEDûTHEûAGENCYSû
spread over recent supranational issuers and
what the lead argued was uncontroversial
pricing of swaps plus 32bp, which translated
to 44.9bp over the three-year Treasury.
“That was a very strong following wind
and captured investors’ minds,” said the
lead manager.
Neither BNG nor CDPQ followed the
recent 5bp spread tightenings seen lately on
a number of shorter-dated SSA deals in the
currency.
“It’s not a sea change, but issuers are
making sensible decisions and investors
appreciate that,” the lead said.
especially with the 2025 maturity less popular
with investors than shorter tenors.
“I don’t expect them to go head-to-head,”
said one, who noted that price discovery will
be aided by the US market being open on
Monday despite Easter Monday bank
holidays in Europe.
“Everyone else will stand out of the way –
that’s why this week is busy – and that’ll
leave it quieter for them. The market is
going to take those names down easily,” he
added, emphasising that US dollar SSA
volume is up less this year than euros (5%–
10% versus 20%-plus), while 2020 will also
see very high SSA redemptions in the US
currency.
ALL INTERNATIONAL GREEN BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
corporation upped its two-year to US$1.25bn )NûCONTRASTûTHEûLOWER
PROlLEû/4&4ûSAWûITSû Managing No of Total Share
from an initial US$1bn on books of nearly order book peak at US$1.25bn and bank or group issues US$(m) (%)
US$3.5bn the previous Thursday. eventually fall back to US$1.15bn. It was 1 BNP Paribas 15 3,123.61 7.2
The provincial names opted for different priced in line with guidance at mid-swaps 2 JP Morgan 16 3,074.71 7.1
maturities, however – both from CPPIB and plus 80bp. 3 HSBC 19 2,837.87 6.5
each other. Having paused its earlier pursuit Even so, bankers were not highly critical 4 Credit Agricole 15 2,818.60 6.5
of a euro trade, OTFT picked Bank of America, of the issue’s reception. “It’s still a good deal 5 Barclays 14 2,796.60 6.4
Citigroup, HSBC and Scotiabank FORûAûlVE
YEARû but slower than the others,” commented 6 SG 10 2,511.72 5.8
while CDP mandated Goldman Sachs, JP one banker away from the transaction. 7 Goldman Sachs 7 2,233.53 5.1
Morgan, RBC and TD for a three-year. 8 Citigroup 11 2,139.33 4.9
The latter competed for investors’ HEAVYWEIGHTS AHEAD 9 Deutsche Bank 7 2,070.44 4.8
attention with a new 2023 Reg S/144A bond While both EIB and KfW have been rumoured 10 Santander 10 1,919.43 4.4
from fellow Triple A BNG BANK via Bank of TOûBEûPLANNINGûlVE
YEARû53ûDOLLARûOFFERINGSû Total 69 43,504.69
America, Barclays, Goldman Sachs and RBC. this week, bankers doubt that the Triple As Excludes social bonds and mixed use of proceeds.
will compete directly in the currency – Source: Refinitiv SDC code: JG1
SWEET THREES
ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS
Investors responded more warmly to the
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
shorter-dated pair. Each issuer managed to
Managing No of Total Share Managing No of Total Share
tighten their US$2bn deal 3bp, with BNG bank or group issues €(m) (%)
bank or group issues US$(m) (%)
achieving a US$2bn size after attracting
orders of more than US$4.1bn. CDPQ, 1 JP Morgan 450 129,317.68 9.1 1 JP Morgan 131 43,909.98 8.1
2 BofA Securities 325 96,187.73 6.8 2 BNP Paribas 143 39,581.76 7.3
meanwhile, drew interest of more than
3 Barclays 317 94,172.14 6.6 3 Barclays 133 37,513.21 6.9
US$3bn.
4 Citigroup 321 93,528.14 6.6 4 HSBC 129 35,435.44 6.5
h4WOûWEEKSûAGOûTWOûYEARSûWASûONûlREû
5 Goldman Sachs 234 80,006.28 5.6 5 Credit Agricole 114 34,522.35 6.4
but now we’re moving to threes,” said a lead
6 HSBC 295 70,961.26 5.0 6 Deutsche Bank 107 27,996.06 5.1
manager. While central banks were the key
7 BNP Paribas 219 61,351.81 4.3 7 UniCredit 99 27,287.33 5.0
initial buyers – attracted back to SSAs by the
8 Deutsche Bank 240 60,967.94 4.3 8 SG 89 27,079.18 5.0
greater spreads to Treasuries available after
9 Morgan Stanley 168 60,907.76 4.3 9 BofA Securities 90 26,350.15 4.8
the crisis period’s widening – bank
10 Credit Agricole 187 50,407.04 3.5 10 Goldman Sachs 60 21,134.10 3.9
treasuries have grown more active too.
Total 1,632 1,420,592.40 Total 544 543,622.82
Some real-money institutions have also
Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt,
begun buying in the sector as well, the lead US Global ABS/MBS. US Global ABS/MBS.

reported. Source: Refinitiv SDC code: J1 Source: Refinitiv SDC code: N1

EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING APRIL 10 2020

Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Apr 7 2020 UK £3.25bn 0.125 Jan 31 2023 0.204 3.05
Apr 7 2020 UK £1.25bn 1.750 Jul 22 2057 0.719 3.13
Apr 8 2020 Germany €3.2558bn 0.000 Feb 15 2030 -0.340 1.80
Apr 8 2020 UK £2bn 4.750 Dec 7 2030 0.376 3.85
Apr 8 2020 UK £2.75bn 2.000 Sep 7 2025 0.119 2.67
Apr 9 2020 Italy €4.5bn 0.600 Jun 15 2023 0.86 1.50
Apr 9 2020 Italy €3bn 0.850 Jan 15 2027 1.370 1.36
Apr 9 2020 Italy €1.25bn 1.450 Mar 1 2036 2.060 1.62
Apr 9 2020 Italy €750m 4.750 Sep 1 2044 2.490 1.90
Source: IFR

International Financing Review April 11 2020 27

 OMERS RETURNS WITH note at swaps plus 26bp, with interest in In terms of comparables, the leads looked
QUIETER FOLLOW-UP TRADE excess of US$2.6bn. at existing SNCF bonds but also at other
OMERS (Aa1/AA+/AAA/AAA) has board French agencies such as Cades and
Ontario’s pension fund OMERS followed up a approval to raise up to US$5bn in various Bpifrance.
successful debut from 12 months ago with a currencies, and has previously said that it SNCF Reseau sold €500m of 10-year green
new three-year that made a more modest expects to raise debt at a rate of US$1bn– paper at 35bp over interpolated OATs in
impact on the size and demand front. $2bn a year. The size of the annual issuance January 2019, while, more recently,
The issuer followed recent moves from plan is roughly in line with OTFT’s. "PIFRANCEûPRICEDûõBNûOFûlVE YEARûPAPERûATû
compatriots CPPIB Capital and Ontario BMO, HSBC, RBC and TD were bookrunners. plus 45bp.
Teachers’ Finance Trust into the greenback “The plan was to remain pretty close to
with its own three-year offering. where other French agencies stood versus
“We’ve had a fair amount of Canadian EUROS government spread,” de Forton said.
supply, they’re popular names from a 'UIDANCEûWASûRElNEDûTOûTHEûPLUSûBPû
popular jurisdiction,” said a banker familiar EPIC-LESS SNCF DRAWS DECENT area on Tuesday morning. Books passed
with the matter. DEMAND WITH GREEN DEBUT õBNûANDûENABLEDûTHEûISSUERûTOûlXûTHEûlNALû
“OMERS got built, and it went. Very spread 1bp tighter, at plus 57bp.
similar to OTFT.” SNCF SA took a maiden step in the ESG sector “It is certainly a strong achievement in
OMERS launched its US$1bn April 2023s on Tuesday with a €1.25bn April 2030 green terms of pricing, as the issuer’s change of
in line with IPTs at Treasuries plus 80bp. bond and received decent demand despite status to a societe anonyme did not really
Books for the offering closed above the absence of an EPIC label. affect the pricing,” a banker away from the
US$1.17bn. “It went really well, but bringing what is trade said.
The reception for OMERS was similar to in a way a new name was not an easy /RDERSûACCRUEDûFURTHERûANDûlNALûBOOKSû
that for OTFT on Tuesday. OTFT (Aa1/AA+/ exercise in this environment. It has been a closed north of €1.55bn. This allowed SNCF
!!! ûHADûPLACEDûAû53BNûlVE YEARûINûLINEû long process because of the Covid to print a deal size of €1.25bn.
with guidance at swaps plus 80bp, outbreak,” said Benjamin de Forton, public
equivalent to Treasuries plus 92.05bp. SECTORû$#-ûOFlCIALûATû".0û0ARIBAS RELATIVE VALUE
/4&4SûlNALûORDERûBOOKûWASû53BN The green debut had been in the works $Eû&ORTONûSAIDûITûWASûVERYûDIFlCULTûTOû
OMERS made an upsized debut in April since February, when the leads kick-started estimate what the new issue premium was
2019, when it placed a US$1.25bn May 2024 a European tour. since this was a debut transaction but noted
“This was challenging, as the market that SNCF came 12bp wider than where
ALL INTERNATIONAL US$ BONDS
wasn’t ready then. The roadshow concluded Bpifrance priced.
BOOKRUNNERS: 1/1/2020 TO DATE
successfully on March 11,” de Forton said. “Investors demonstrated it was a fair
Managing No of Total Share
“It was pretty complicated to identify trade between the two names, considering
bank or group issues US$(m) (%)
where the sweet spot and spread were in Bpifrance is still an EPIC, while SNCF has
1 JP Morgan 262 75,804.56 10.5 this Covid-19 environment but we LOSTûTHEû%0)#û;STATUS=ûBUTûCONTINUESûTOûBENElTû
2 Citigroup 230 66,433.20 9.2 succeeded in the end,” said Nicolas from a very strong commitment from the
3 BofA Securities 219 63,801.14 8.9 Marchessaux, SNCF’s head of capital French state,” he said.
4 Goldman Sachs 165 54,110.36 7.5 markets and investor relations. “I would expect that over time – and we
5 Morgan Stanley 120 44,933.98 6.2 On Monday, IPTs were announced at plus will see that with secondary trading – that
6 Barclays 152 44,076.33 6.1 high 50bp over interpolated OATs for a the delta between SNCF and other core
7 Wells Fargo 118 33,552.74 4.7 benchmark-sized trade. De Forton said there French agencies is probably tighter than
8 Deutsche Bank 121 25,817.47 3.6 was value in announcing the trade early, that.”
9 RBC 89 23,761.57 3.3 since there was a bit of pricing discovery 4HEûGREENûELEMENTûDElNITELYûHELPEDûTHEû
10 HSBC 111 23,703.94 3.3 required. trade, according to de Forton and
Total 719 719,427.90 “Markets remain volatile and it was an Marchessaux. The latter said SNCF was
Including Euro, foreign and global issues. Excluding equity-related debt,
US Global ABS/MBS. opportunity to engage with investors early aiming at a €1bn transaction and that the
Source: Refinitiv SDC code: O1 on,” he said. larger size at which it ended up printing was
clearly due to the green criteria.
ALL US DOLLAR FIXED-RATE GLOBALS ALL SOVEREIGN BONDS IN EUROS About a third of participants were SRI
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE investors, either light green or dark green.
Managing No of Total Share Managing No of Total Share “There were a lot of small dark green
bank or group issues US$(m) (%) bank or group issues €(m) (%) portfolio managers with little tickets, which
1 JP Morgan 90 35,571.80 12.5 1 JP Morgan 21 15,631.91 12.7 made up close to 40% of the total number of
2 BofA Securities 90 33,104.99 11.6 2 BNP Paribas 15 10,688.07 8.7 accounts. They brought some granularity
3 Citigroup 78 33,046.24 11.6 3 Credit Agricole 9 9,148.59 7.4 and additional liquidity to the transaction,”
4 Goldman Sachs 54 26,155.05 9.2 4 Barclays 15 8,952.36 7.3 Marchessaux said.
5 Morgan Stanley 37 18,999.71 6.7 5 SG 10 8,510.52 6.9 “I think we will witness additional
6 Wells Fargo 49 14,644.39 5.1 6 HSBC 10 8,426.48 6.9 performance in the secondary market,
7 Barclays 38 14,027.71 4.9 7 Goldman Sachs 11 7,740.01 6.3 partly thanks to the presence of those green
8 Deutsche Bank 30 10,814.23 3.8 8 Citigroup 9 6,838.46 5.6 accounts.”
9 RBC 30 10,084.49 3.5 9 BofA Securities 11 5,746.98 4.7 Overall, de Forton said that the vast
10 HSBC 19 9,779.15 3.4 10 Morgan Stanley 5 5,320.11 4.3 majority of investors remain comfortable
Total 160 285,512.82 Total 37 122,984.25 with the name, while only few see the loss
Excluding equity-related debt, ABS/MBS. Excluding ABS/MBS. of the EPIC status as a potential issue for
Source: Refinitiv SDC code: O5 Source: Refinitiv SDC code: N4 their investment mandates.

28 International Financing Review April 11 2020


3.#&û3!ûISûRESPONSIBLEûFORûTHEûlNANCINGû
of the fully integrated SNCF Group and is
100% owned by the French state.
ûANDûSAIDûITûWASû
BNP Paribas, Credit Agricole, HSBC, JP Morgan
and Societe Generale were joint lead
managers.
AFD 10-YEAR FINDS THE MIDDLE GROUND
AGENCE FRANCAISE DE DEVELOPPEMENT accelerated
the French public sector’s return to primary
markets with a modestly oversubscribed 10-
year benchmark.
The Double A name issued its €1.5bn May
2030 bond in line with guidance at 42bp
over interpolated 2029 and 2031 OATs. The
deal, lead managed by BNP Paribas, Credit
Agricole, Goldman Sachs, JP Morgan and Natixis,
drew orders of some €1.7bn (including JLM
interest).
Pricing was tighter than some recent
public sector new issues from the country.
One day earlier, SNCF SA issued a debut
green bond of €1.25bn in the same maturity
at 57bp over the interpolation, though this
LEVELûREmECTEDûTHEûSTATE
OWNEDûCREDITû larger transactions across the curve, it was
lacking the ‘etablissement public a caractere
industriel et commercial’ (“public
establishment of an administrative nature”
– EPIC) status of other French public
entities.
YEARû
In late March, Bpifrance issued a €2bn
lVE
BONDS SSAR
top of that in the case of AFD and it starts AFD said the issue would contribute to its
to look interesting,” said a second lead commitment to provide support to the
manager. GLOBALûlGHTûAGAINSTû#OVID
The deal drew on alternative sources of implementing a number of measures to
demand to recent short-dated offerings. help developing countries, emergency credit
“AFD is not HQLA, so you’re looking at a LINESûTOûLOCALûlNANCIALûINSTITUTIONSûINûORDERû
different investor base. Ten years also to support SMEs lending activity and better
means that you’re looking at a different set support states efforts related to healthcare,
of investors and you can feel that in the social and economic measures.
book,” the second lead said. “We will probably do something else
“It’s really hard to predict what books before the end of the semester,” Cherif said.
are going to look like at the moment, Having raised €3bn this year, it has not
unlike in February when you broadly knew yet reached the halfway stage of its
in advance who was going to buy.” announced €7.5bn programme. AFD
normally aims to have funded 50%–60% of
MORE TO COME its annual requirement before the summer
The deal’s outcome was “a very great result, break, said Thibaut Makarovsky, its head of
given the shape of the market”, according to funding and market operations.
Bokar Cherif, head of treasury and capital
markets at AFD. CURRENCY COMMITMENT
7ITHûVERYûLIMITEDûmOWSûINûITSûSECONDARYû Having issued a US dollar benchmark every
paper, the agency sought to price between year for the past decade, the agency
two peer references – the recent offerings DElNITELYûEXPECTSûTOûRETURNûTOûTHEû53û
from Bpifrance and Unedic, Cherif said. As a currency this year, he said.
somewhat more established name issuing “We have a strong commitment towards
the market and investors.”
able to command a tighter price than Bpi. Cherif emphasised that arbitrage back to
It opted for a 10-year as a “more euros is not the key driver of AFD’s US dollar
conservative tenor” that also served its asset/ borrowing.
liability management needs.
MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
$ISTRIBUTIONûDIFFEREDûFROMû!&$SûlVE
BOOKRUNNERS: 1/1/2020 TO DATE
in February. While the split between
Managing No of Total Share
YEARûATûBPûOVERûnûLIKEû!&$ûINûLINEû domestic and international placement was
bank or group issues €(m) (%)
with guidance. little changed, the overall number of buyers
However, explicitly guaranteed names halved and some accounts’ participation 1 UniCredit 19 7,707.34 18.2
have been achieving narrower spreads. Last was “quite smaller”, Cherif noted. 2 Barclays 14 3,899.82 9.2
Monday, Caisse Centrale du Credit A number of potential buyers could not 3 JP Morgan 12 3,624.90 8.5
)MMOBILIERûDEû&RANCEûISSUEDûAûSHORTûlVE
PARTICIPATEûASûTHEYûFAILEDûTOûlNDûBIDSûFORû 4 DGZ-DekaBank 17 3,073.65 7.2
year at 34bp over. Days earlier Unedic had bonds they sought to switch out of. Some 5 BayernLB 10 2,831.72 6.7
tapped its May 2028 bond for €750m at 28bp also held back in expectation of French 6 HSBC 13 2,276.68 5.4
over. spreads widening. 7 Nord/LB 14 2,227.24 5.2
In February, before the coronavirus crisis The agency is reviewing its funding 8 Deutsche Bank 12 2,162.38 5.1
all but halted primary market activity for requirements with the French state 9 NatWest Markets 8 1,897.12 4.5
SOMEûTIMEû!&$ûGOTûAûlVE
YEARûCLIMATEûBONDû currently. While it is unable to say whether 10 TD Securities 7 1,404.78 3.3

away at 23bp over. these will rise in response to the coronavirus Total 56 42,443.19

While AFD’s 2029 and 2031 bonds were CRISISûITûISûLIKELYûTOûISSUEûAGAINûINûTHEûlRSTû Excluding ABS/MBS.
shown at around 31bp over recently, trading half of 2020. Source: Refinitiv SDC code: N7
in them was very limited, noted a lead
ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS
manager. He saw Bpi, now at around 37bp BOOKRUNNERS: 1/1/2020 TO DATE
BOOKRUNNERS: 1/1/2020 TO DATE
over, as the most relevant reference.
Managing No of Total Share Managing No of Total Share
“Pricing was not tight, but it doesn’t look bank or group issues €(m) (%)
bank or group issues €(m) (%)
as wide in that context.”
More generally, he described the deal as 1 HSBC 20 7,401.02 14.1 1 Goldman Sachs 7 4,685.00 13.4
2 JP Morgan 13 6,095.25 11.6 2 JP Morgan 9 4,375.56 12.5
“a good balance – taking the middle ground
3 Barclays 12 4,356.25 8.3 3 UniCredit 4 3,252.91 9.3
between price and size” and characterised it
4 BofA Securities 9 3,957.70 7.5 4 Deutsche Bank 6 3,003.72 8.6
as “a solid trade”.
5 Credit Agricole 16 3,495.39 6.7 5 BofA Securities 4 2,785.23 8.0
While a high proportion of orders were
6 Deutsche Bank 6 3,371.36 6.4 6 HSBC 5 2,770.78 7.9
ALLOCATEDûBONDSûTHISûREmECTEDûTHEûQUALITYûOFû
7 Commerzbank 9 2,686.73 5.1 7 Credit Agricole 5 2,712.02 7.8
investors participating, he added.
8 BNP Paribas 10 2,523.56 4.8 8 BNP Paribas 6 2,538.00 7.3
Higher French government yields are
9 NatWest Markets 5 2,487.02 4.7 9 SG 5 2,281.46 6.5
supporting SSA offerings from the country,
10 Natixis 10 2,284.65 4.4 10 DZ Bank 4 1,831.22 5.2
bankers noted.
Total 54 52,463.71 Total 22 34,933.44
“It helps for these guys that OATs have
underperformed. You’ve gone from Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS.

negative to plus 15bp, so you add 42bp on Source: Refinitiv SDC code: N6 Source: Refinitiv SDC code: N5

International Financing Review April 11 2020 29

 “We need volume from that market to
achieve our programme,” he said, noting
that it contributed 30% of AFD’s volume in
2019.
The agency also taps other currencies
opportunistically – often through private
placements. It will relaunch its weekly
pricing grid for these shortly, Makarovsky
said.
3CIF FIVE-YEAR OFFERS
MODEST CONCESSION
CAISSE CENTRALE DU CREDIT IMMOBILIER DE FRANCE
drew robust demand for a €500m March
2025 Reg S bond despite offering little in
the way of a new-issue premium.
3CIF announced guidance at 38bp over
/!4SûFORûTHEûSHORTûlVE
YEARûBENCHMARK represented a change of strategy for Ireland,
The issuer’s own €1bn January 2024s,
placed at the beginning of the year at 24bp
over interpolated OATs, were cited by one
bookrunner as a comparable for the new
issue. They were indicated around plus
33bp and 3CIF landed its fresh €500m
trade at 34bp over.
A banker away said the right sort of
PRICEûFORû#)&ûlVE
YEARûPAPERûWASûINûTHEû Belgium, Spain and Portugal, Ireland too tapped
mid to high 30s, considering Bpifrance
PLACEDûAûõBNûlVE
YEARûATû/!4SûPLUSûBPû its €6bn jumbo. Of recent sovereign syndications
on March 26, just as the ECB began to
ramp up its Pandemic Emergency
Purchase Programme.
The bookrunner said perhaps the new
notes looked a little bit tight compared to
the 2024s but he felt the price was right.
“In terms of relative value, obviously the
spread versus the underlying government
benchmark has increased, but in reality
the spread versus all the other agencies
has probably tightened,” he said.
A second bookrunner said 3CIF paid a
BPnBPû.)0ûFORûTHEûlVE
Irish powerplay pushes
Cyprus to back burner
„ SSAR Ireland underlines rehabilitation while Cyprus goes long
IRELAND replicated the syndication playbook in the single currency, only Austria’s three and 31-
established by its sovereign peers lately, amassing year package has deviated from 2027 new issues.
more than €33bn of demand for a new jumbo The sector saw the record non-EM SSA order
bond to help fund its coronavirus response. book (€57bn-plus) for Belgium just weeks earlier,
In contrast, the REPUBLIC OF CYPRUS saw far as well as Portugal’s largest single-tranche bond
smaller order books, but became only the second (€5bn) recently.
issuer in the recent sovereign charge to achieve
30-year funding. WELL POSITIONED
Both borrowers offered seven-year debt. This Ireland’s National Treasury Management Agency
reported “strong demand from a broad and
whose debt portfolio now has the second-longest diversified investor base for today’s transaction”.
weighted maturity of any EU state (10.3 years, It “demonstrates the ongoing strong demand
just below Austria’s 10.4) after an aggressive among investors for Irish sovereign debt”, said
programme of extending its tenors. Conor O’Kelly, NTMA chief executive.
Still, the sovereign was able to tighten its €6bn “This highlights the progress Ireland has
May 2027 issue 3bp in marketing. The hefty order made in recent years to improve its sovereign
book had more than 250 accounts participating. credit rating and its debt sustainability. The
After recent blockbuster deals from peers accommodative stance of the ECB and in
particular its newly announced PEPP programme
the seven-year tenor’s rich seam of demand for has helped keep interest rates low, and this has
been supportive for European sovereign issuers.”
issuers, though, will remain below the 10- “They believed in their spread and were
year point, until the market sees further rewarded with a very good book.”
signs of stabilisation. But despite the optically attractive level
BNP Paribas, Credit Agricole, HSBC, Natixis on offer, the level of oversubscription was
and Societe Generale were bookrunners. modest with books closing over €1.3bn.
“The Canadians have done an awful lot
ALBERTA ADDS TO CANADIAN of funding but clearly, it’s much more of a
EURO FLURRY struggle if you’re not PEPP eligible,” a DCM
banker said.
The PROVINCE OF ALBERTA added its name to “These non-PEPP names are also having
YEARûTRADEûWHICHû THEûmURRYûOFû#ANADIANûISSUERSûTAPPINGûTHEû
is the type of product that prices with a
relatively tight concession.
“The NIP is towards the low end of what
we’ve seen, which you would except for a
rare issuer, especially one that is
government guaranteed,” he said.
The banker away noted that 3CIF paid a
lower concession than Bpifrance, which he
put down to the market stabilising.
4HEûlRSTûBOOKRUNNERûALSOûATTRIBUTEDûTHEû
success of 3CIF’s trade to the recent moves
in French treasuries, with OATs
cheapening up a touch.
The order book reached €1.2bn, with the
second bookrunner saying there was a
good diversity of investor type. January’s
offering attracted more than €4.9bn of
SWAPSûFROMûTHEûOUTSETûFORûTHEûlVE
YEARû where it priced on April 1, bid just below
demand.
SWAPSûmAT
Looking at upcoming debt issuance from
French agencies, the second banker said
some demand was starting to be seen a bit
further along the curve. The main focus for
30
to pay a hefty premium in euros. We’ve
international markets for funding, but
similar to its peers, demand was lacklustre
despite the appealing spread on offer.
Since the European primary market
restarted in earnest and heading into the
Alberta trade, a series of Canadian issuers
raised €3.6bn in quick succession. It is an
unusually quick pace of supply for these
borrowers which tend to do a large part of
their funding in the domestic market.
But borrowers such as Alberta are
having to look beyond a home market that
remains tricky to access.
Leads Barclays, Bank of America, JP Morgan
and RBC cut to the chase at the marketing
stage, setting the pricing level at 70bp over
MID
paper. The Aa2/A+/AA rated province
launched a €1.1bn trade.
h7ITHûSOûMANYûPEOPLEûOUTûOFûTHEûOFlCEû
and the big time difference for the issuer,
the idea was to keep it simple,” a lead said.
International Financing Review April 11 2020
been talking to some supras about doing
euros but because the premiums are so
high, the numbers don’t stack up.”
The ECB PEPP and APP programmes do
not extend to the Canadian provinces,
which have struggled to capture the
demand seen for core European names,
while aftermarket performance has also
been markedly different.
The provinces of Ontario and Quebec,
which both tapped euros recently, have
seen their deals widen by 1.6bp and 3.6bp
respectively when Alberta executed its
trade.
In contrast, a €5bn three-year for KfW
had tightened by more than 4bp than
MID
“Central activity has been a key part in
getting market liquidity back on track and
getting dislocation unwound,” another
lead said.

The deal takes Ireland within the €10bn–€14bn
funding range it had originally targeted for
this year. Although the sovereign emphasises
that it enjoys large cash balances and has no
redemptions due in 2021, the NTMA’s new
investor presentation acknowledges that the
earlier total “will be exceeded”.
“While the economic challenges arising
from Covid-19 are significant, Ireland is well
positioned to meet any additional borrowing
requirements,” O’Kelly said.
Bankers applauded the new issue. “It’s
a phenomenal trade,” said one syndicate
manager away.
“They’re a poster child for how sovereigns
can recover from a crisis. They’ve gone through
a dramatic recovery in the last couple of
years and investors love Ireland. Also, the
composition of their economy makes them
relatively okay, given that it’s services-based
compared to others.”
At 32bp over mid-swaps, the deal offered
value against recent secondary levels for Irish
debt, the syndicate manager away said. “They
had been trading extremely tight, so this was
a great opportunity for investors to buy them
wider.”
Ireland’s last syndication, a €4bn May 2035
was priced at 6bp over mid-swaps.
“When it comes to the euro market, QE
is a big part of this. So seeing non QE-
Moreover, its relative value included positive
spreads of 30bp–76bp versus Euribor, Eonia, OATs
and Bunds, according to one lead manager’s analysis
of potential asset swaps and bond switches.
Leads were BNP Paribas, Bank of America,
Cantor Fitzgerald, Danske Bank, Goldman Sachs
and JP Morgan.
SELECTIVE INVESTORS
In contrast, Cyprus drew some €1.8bn for its
€1.25bn April 2027 offering. The order book
shrank by around €400m after the sovereign
tightened the deal 5bp from an initial 170bp area
over mid-swaps.
The Mediterranean credit – Ba2/BBB–BBB–/
BBBL (positive) by DBRS, compared to Ireland’s
A2/AA–/A+ - also issued a new €500m 30-year.
After tightening the April 2050 bond 5bp too,
it saw orders decline to some €775m from an
earlier €1.1bn-plus.
Although Cyprus achieved a rather larger
order book of over €13.5bn for its €1.75bn 10 and
20-year package in January’s stronger market,
bankers away from the new deal were not
surprised by its more meagre cover.
“They’re not the most popular name at the
best of times, so in what is still a tricky market it’s
not surprising, really,” said one. “While investors
are engaged, they’re also being selective.”
Some Laender, such as the populous
North Rhine-Westphalia, face very
BONDS SSAR
A lead manager countered that “when you
have smaller markets, smaller issuers, smaller
deals that are not traded often, with every
deal you’re going through a much bigger price
discovery process, which is what Cyprus has
done today successfully”.
While the deals “probably didn’t get 100% of
investors’ attention in a very, very busy market
today”, a second lead manager described them
as “a pretty honourable, good result for an
issuer with a slightly lower rating in a market
that is still quite risk averse”.
He emphasised the sovereign becoming only
the second after Austria in the current wave to
pull off a 30-year new issue.
“At the end of the day, the way the
transaction was brought was pretty assertive.
They had a cash buffer already and they’ve built
it further.”
Distribution was “solid and diversified”, with
a higher international take-up than on previous
Cypriot deals, the second lead believed. Bank
treasuries took a smaller share of the 30-year
than the shorter tranche.
Noting that the new issue is eligible for
European Central Bank asset purchase
schemes, he expected that “the bonds will
perform positively”.
Julian Lewis
One characterised the coming sales as
“another Laender bonanza”.
eligible names printing at different levels SIGNIlCANTûINCREASESûTOûTHEIRûBORROWINGû
and getting different receptions is to be bankers noted. SAXON SUPPLEMENT
expected. There’s also been a queue of
Canadian issuers as well.”
He added that it was positive that the
market had been open to non ECB-eligible
names.
“They have a much higher need, more
or less at the KfW level, and will need to be
active again,” said one.
.27ûHASûANNOUNCEDûAûhlSCALûRESPONSEû
package” of €25bn for the crisis. This is in
-EANWHILEû3AXONYûDOUBLEDûITSûRECENTûlVE
year in a no-grow transaction through
BayernLB and DekaBank. It issued the new
debt at mid-swaps plus 10bp.
Sole lead DekaBank disclosed no spread
“There could have been a scenario
where QE names dominated completely
and it could have taken a lot longer for the
next layer of issuers of credit quality,” he
said.
“To see these trades coming in quick
succession and then see non-QE names
goes to show that we have a healthy
functioning market.”
SAXONY TAPS AHEAD OF NEW
LAENDER DELUGE
The FREE STATE OF SAXONY added €250m to a
recent bond ahead of a new wave of
German sub-sovereign funding.
with expensive taps”, which it shares with
!SûMANYûASûlVEûNEWûISSUESûANDû
taps are in prospect this week as the
country’s regional states – a sector that
has been notably prominent in the
reopening of public sector primary
markets in recent weeks – look to
fund local responses to the
coronavirus crisis.
addition to its existing €15bn borrowing
programme for the year.
Federal agency KfW has an existing
programme of €75bn prior to any increase
for the crisis.
NEW NAME
Supply in prospect for the shortened week
is headed by two to three new bonds. One
of these is for a federal state that has not
been active in the recent wave of activity
from the sector. The borrower is seeking
€500m, according to bankers in Germany.
Another name that has been active
lately is also considering a new issue, while
AûSOUTHERNûSTATEûISûLIKELYûTOûISSUEûAûmOATING
rate note as well – an untypical product in
the sector. Some bankers believe this is
Baden-Wuerttemberg, though this could
NOTûBEûCONlRMEDûIMMEDIATELY
In addition, at least one northern state
is seeking a tap of €250m–€300m. A
second tap may also emerge, bankers
reported.
International Financing Review April 11 2020
ONûTHEûlRSTûTRANCHEûAûWEEKûEARLIERûALSOûFORû
€250m.
Saxony issued a €250m three-year
through UniCredit around the same time
at mid-swaps less 10bp.
Banks away from the transaction viewed
it as expensive. “Price-wise we thought this
one was a bit tricky,” said one.
“It looks like the right price. But when
you see where spreads are going with
more and more states coming to the
market next week it was a bit pricey.”
The state offers some rarity value, the
banker away from the deal acknowledged.
"UTûITSûSTRATEGYûOFûhTRYINGûTOûlLLûITSûNEEDSû
a number of other Laender, was out of step
with the latest “institutional repricing”.
A lead manager declined to comment on
rumours that the tap was not fully
subscribed. While he acknowledged that it
was “maybe a basis point too tight”, he
viewed it as a “good deal” that brought
“more liquidity to that bond”.
31

STERLING
NIB UPS STERLING EFFORT
NORDIC INVESTMENT BANK responded to strong
demand for its sterling foray on Thursday by
taking out a bigger chunk of funding than
originally planned.
Sterling SSA supply has been thin in
recent weeks, with activity restricted to taps
from the likes of KfW and Rentenbank. NIB
(Aaa/AAA), though, spotted an opportunity
to add to its £250m 1.125% December 2022
benchmark.
h7EûIDENTIlEDûSOMEûDEMANDûAFTERûAûLONGû
period of limited supply, so we were happy
to go ahead with a minimum £250m trade,”
said Jens Hellerup, head of funding and
RATEûNOTEûHAVINGûSOLDûAûNEWû!BNû indicative NZ$2bn minimum and hit the
investor relations at NIB.
Demand passed £375m and the tap size
was increased by £100m. The offering takes
the outstanding – a June 2018 original – up
to £600m.
“The reception from the market has been
very positive and we have upsized it to
£350m,” said Hellerup. “The pricing is in
line with what we see in other larger public
markets.”
The reopening came in line with IPTs at
Gilts plus 48bp.
NIB’s funding plan for 2020 is €8bn–€9bn,
with benchmark issues coming in euros and
dollars.
By the end of March 2020, NIB had raised
€1.7bn through 10 issues in a variety of
currencies, although none of it in sterling. It
last raised money in sterling when it added
£100m to its March 2022s in September.
HSBC and RBC (B&D) were bookrunners.
NON-CORE CURRENCIES
SAFA TAPS SIX BONDS FOR A$1.5bn
2032s netted A$467m, A$628m, A$290m,
A$40m, A$15m and A$60m, respectively.
Pricing margins were three-year EFP
(futures contract) plus 45bp, 66.5bp and
95bp and 10-year EFP plus 65bp, 88bp and
107bp, respectively, equivalent to 48.25bp,
59.75bp, 69bp, 76.25bp, 86.3bp and 96.05bp
over the ACGB benchmark bond in
corresponding years.
This compares with initial guidance of
three-year EFP plus 42bp–45bp, 63.5bp–
66.5bp and 92bp–95bp and 10-year EFP plus
63bp–66bp, 86bp–89bp and 105bp–108bp.
The new outstanding sizes of the six
bonds are A$2.467bn, A$2.628bn, A$2.54bn,
A$2.04bn, A$1.765bn and A$1.06bn.
The previous week SAFA raised A$560m
from its third one-year Aonia-linked
mOATING
1.75% May 24 2032 bond on February 13.
The state funding arm is not expected to
issue any bonds via syndication for the rest
on April and May, and possibly June.
AOFM TO OPEN 2024 BOND LINE
The AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT
has mandated ANZ, Deutsche Bank, UBS and
Westpac for a syndicated sale of new
November 21 2024 Treasury bonds to be
issued this week.
The AOFM previously sold bonds via
syndication in February 2020 with a A$2bn
(A$1.245bn) tap of its 2.75% May 21 2041
line. This was the Commonwealth
GOVERNMENTSûlRSTûSYNDICATEDûTRANSACTIONûINû
18 months.
The issuer will be hoping the new bond
yields close to 0.25% – the target set by the
Reserve Bank of Australia for three-year
Australian Commonwealth government
bond yields when announcing its
programme of open-ended secondary
market purchases.
Last Thursday, the benchmark ACGB
cost is an important offset,” according to
ANZ.
On March 31, ANZ Research said it
expects the AOFM to front-load its increased
funding requirement with more mid-curve
issuance likely as the ultra-long sector looks
set to underperform.
NEW ZEALAND BREAKS LOCAL RECORD
The NEW ZEALAND TREASURY broke its own
domestic issuance record last Tuesday with
a NZ$3.5bn (US$2.08bn) tap of the 1.5% May
15 2031 nominal bond offering, which took
the size of the line up to NZ$6.4bn.
An order book in excess of NZ$5bn
enabled joint lead managers ANZ, BNZ, CBA
and UBS to upsize the reopening from an
tight end of the April 20 2029 nominal
government bond plus 32bp–37bp guidance
range.
The addition was priced at 100.997 for a
yield of 1.4025%, which was attractive to
relative value investors on a day when
Australian, US, UK, Japanese and German
10-year sovereign bonds were yielding
0.90%, 0.71%, 0.34%, 0.01% and minus 0.43%,
respectively.
The Treasury said it was pleased by the
breadth of demand by investor type and
geography. The offshore allocation was in
line with non-residents’ holdings in the
secondary market, which represented 53.9%
of outstanding nominal New Zealand
government bonds in February 2020.
The funds raised will help the New
Zealand Treasury (Aaa/AA+/AA+) meet its
ELEVATEDûBONDûISSUANCEûFORECASTûFORûlSCALû
year 2019/20 of NZ$25bn, a 150% increase
from the NZ$10bn projection before the
coronavirus pandemic unravelled previous
lSCALûASSUMPTIONS
Another syndication offering may take
PLACEûBEFOREûTHEûlSCALûYEAR
ENDûONû*UNEûû
THREE
YEARûANDûlVE
YEARûBENCHMARKûBONDSû either via a new nominal bond issue or a tap
In a busy week for the semi-government the April 2023s and April 2025s, were of an existing bond line, while weekly
fraternity, SOUTH AUSTRALIAN GOVERNMENT yielding 0.29% and 0.46% on the bid side, tender operations have been stepped up to
FINANCING AUTHORITY raised the maximum respectively. help meet the government’s new borrowing
A$1.5bn (US$917m) it was seeking from six On Wednesday, ANZ Research said the requirements.
TAPSûOFûITSûlXED
RATEûBENCHMARKûBONDûLINES contraction in economic activity and NZGB prices are supported by the Reserve
CBA, Citigroup, NAB and UBS were joint extensive new government policies may Bank of New Zealand’s Large Scale Asset
lead managers for last Tuesday’s multi- lead to an underlying Australian Purchase programme, which has earmarked
tranche additions from SAFA, rated Aa1/AA+ GOVERNMENTûCASHûDElCITûOFûAROUNDûûOFû purchases of up to NZ$30bn across a range
(Moody’s/S&P), which attracted total orders GDP in 2020-21. of maturities in the secondary market over
of A$1.89bn, heavily skewed towards the “Australian Government securities on 12 months.
three shorter-dated offerings. issue will increase by an estimated A$268bn
Local bank balance sheet demand was to A$850bn or 44% of GDP by June 2021, in LGFA RAKES IN NZ$1.1bn
STRONGûBUTûTHEREûWASûALSOûSIGNIlCANTû
interest from other investors types,
including a surprisingly large offshore bid,
according to a banker close to the deal.
Increases to the 1.5% September 2022s,
2.25% August 2024s, 3.0% July 2026s, 3.0%
May 2028s, 2.75% May 2030s and 1.75% May
32
our view,” the report said.
“The associated interest costs, however,
will be small and manageable due mainly to
low yields across the curve, which the
Reserve Bank is managing with extensive
bond purchases. The interest savings on
maturing debt issued previously at a higher
International Financing Review April 11 2020
The NEW ZEALAND LOCAL GOVERNMENT FUNDING
AGENCY, rated AA+/AA+ (S&P/Fitch), raised
NZ$1.1bn (US$660m) from last Thursday’s
sale of senior unsecured six-year bonds, the
largest domestic issue outside of the federal
government.
 BONDS CORPORATES

The 1.50% April 15 2026s were priced at The supply surge was brought on by the As earnings are released and the market
100.228990 for a yield of 1.46%, at the tight Federal Reserve’s corporate bond purchase receives more data on the size of the
end of revised 78bp–80bp mid-swaps
guidance, which was revised down from an
initial 78bp–83bp range.
ANZ, BNZ, CBA and Westpac were joint lead
managers for the offer, which had an
indicative maximum issue size of NZ$300m
and was open to institutional and New
Zealand retail investors.
LGFA previously issued NZ$500m of 1.5%
short 10-year retail notes last August, priced
at mid-swaps plus 48bp.
It made its debut in the domestic bond
market in March 2019 with a non-sovereign
RECORDû.:BNûSALEûOFûûlVE
YEARû!PRILû US$4.5bn three-part BMW US CAPITAL bond that
15 2024) notes.
PROGRAMMEûWHICHûPROVIDEDûTHEûCONlDENCEû
issuers needed to bring US$263bn to the
market in the three weeks since its
announcement on March 23.
Deals last week were remarkably well
received, averaging 7.6 times oversubscribed
books and new-issue concessions of just
1.9bp, BMO Capital Markets noted in a report.
Follow-on performance was exceptional
as well. New issues traded 8.8bp tighter on
average from pricing, according to Bank of
America research.
The largest deal of the week was a
The acquisitive semiconductor company
was priced at 350bp over Treasuries across
downturn, the market tone could shift.
“The outlooks for second-quarter 2020 and
the rest of the year are likely to be among the
weakest that many have experienced in
decades,” JP Morgan wrote in a recent report.
BROADCOM SHORES UP LIQUIDITY AMID
COVID-19 PRESSURES
Semiconductor company BROADCOM priced a
two-part bond last Monday, even as the Covid-
19 pandemic placed additional pressures on
its already cuspy low Triple B ratings.
has long been under the microscope for
The agency, which provides cheap debt THREEûlVEûANDû
YEARûMATURITIESû potential fallen angel risk, especially after
lNANCINGûTOûPARTICIPATINGûLOCALûCOUNCILSû Those bonds tightened considerably in the announcement of a US$10.7bn
previously focused on small, regular tender the secondary market, with the 4.15% 2030s acquisition of Symantec’s enterprise
issues, which are allocated on a sliding scale trading at 303bp over Treasuries late on business last year.
based on the councils’ size and credit Wednesday, according to MarketAxess data. While Moody’s and S&P have since
ratings. Additionally, semiconductor company resolved to keep the company at Baa3/BBB–
The New Zealand government owns 20% BROADCOM tested demand for cuspy Triple B with a stable outlook, Fitch maintains a
of LGFA, while 30 regional and territorial paper last week, while ALLY FINANCIAL priced negative outlook on its BBB– rating.
councils, including Auckland Council, its debut investment-grade bond since it was An expected slowdown in phone sales and
Christchurch City and Wellington City, hold spun off from GENERAL MOTORS during the other tech products that use chips and
the remaining 80%. lNANCIALûCRISIS antennas made by Broadcom could place
LGFA has identical S&P and Fitch ratings With bond markets closing for Good Friday, further pressure on the company’s high
to New Zealand sovereign bonds, but has no the pace slowed. But despite earnings blackout leverage.
rating from Moody’s (which rates the periods approaching, issuers are expected to
ALL US INVESTMENT GRADE CORPORATE DEBT
sovereign Aaa) and no government come out of Easter weekend in force.
BOOKRUNNERS: 1/1/2020 TO DATE
guarantee. “Despite holidays spilling over into next
On April 7, the Reserve Bank of New week in Europe, we expect primary market Managing No of Total Share
bank or group issues US$(m) (%)
Zealand added NZ$3bn of LGFA debt to its supply to come roaring back given the very
Large Scale Asset Purchase programme, supportive market tone,” BMO Capital 1 JP Morgan 198 77,876.53 13.9
approximately 30% of the (then) total LGFA Markets wrote in a report. 2 BofA Securities 185 75,859.43 13.6
debt on issue. %ARNINGSûSEASONûKICKSûOFFûINûTHEûlNANCIALSû 3 Citigroup 149 55,225.53 9.9
This took the total size of the LSAP to sector with JP Morgan and Wells Fargo 4 Goldman Sachs 108 48,250.18 8.6
NZ$33bn over 12 months, with NZ$30bn reporting on Tuesday. 5 Morgan Stanley 105 40,551.43 7.3
already earmarked for central government US banks have already brought a huge 6 Wells Fargo 107 35,819.54 6.4
bond purchases in the secondary market. slug of issuance to the market but could 7 Barclays 75 25,282.36 4.5
come back for more after earnings, 8 RBC 66 17,592.29 3.1
especially considering that nearly 100 9 Deutsche Bank 47 15,825.79 2.8

investment-grade companies have drawn 10 MUFG 64 13,326.68 2.4

down credit lines since mid-March, Total 377 559,015.26

CORPORATES according to a Bank of America report. Source: Refinitiv SDC code: F9

ALL INV-GRADE US CORPORATE BONDS ALL CORPORATE BONDS IN EUROS

BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
US DOLLARS
Managing No of Total Share Managing No of Total Share
bank or group issues US$(m) (%) bank or group issues €(m) (%)
FRANTIC SUPPLY FINALLY SLOWS
1 BofA Securities 54 22,165.73 15.9 1 BNP Paribas 74 14,778.60 9.4
WITH EARNINGS AHEAD
2 JP Morgan 53 20,756.41 14.9 2 Deutsche Bank 48 10,751.12 6.9
3 Wells Fargo 35 12,549.27 9.0 3 Barclays 39 10,316.65 6.6
The US high-grade primary market slowed
4 Goldman Sachs 26 11,403.51 8.2 4 BofA Securities 46 10,038.56 6.4
into a much needed holiday weekend break,
5 Citigroup 35 10,008.06 7.2 5 HSBC 49 9,588.09 6.1
but is expected to pick up after Easter.
6 Barclays 26 7,642.17 5.5 6 JP Morgan 44 8,378.64 5.3
Seven issuers priced US$9.075bn in the
7 Morgan Stanley 27 7,195.89 5.2 7 SG 44 7,795.87 5.0
market last Wednesday, marking a considerable
8 Bk of New York Mellon 4 5,264.70 3.8 8 Credit Agricole 38 6,974.88 4.4
slowdown from the breakneck pace of issuance
9 Deutsche Bank 11 4,400.03 3.1 9 Citigroup 38 6,792.42 4.3
that characterised recent weeks.
10 MUFG 19 3,458.41 2.5 10 ING 32 5,309.00 3.4
Through Wednesday, 27 borrowers priced
Total 112 139,705.88 Total 164 156,931.39
US$37.15bn, down from a record-setting
Excluding equity-related debt, ABS/MBS, all foreign issues, global issues Excluding equity-related debt. FIGs, ABS/MBS.
pace the week prior, when 49 issuers priced and non corporates.
US$117.15bn. Source: Refinitiv SDC code: F6a Source: Refinitiv SDC code: N8

International Financing Review April 11 2020 33

 “The semiconductor sector has been one
of the sectors affected by the shock given its
sensitivity to consumer and enterprise
demand and sentiment,” Moody’s wrote in
ITSûREPORTûAFlRMINGûAû"AAûSTABLEûRATINGSûFORû
the new notes.
smaller rival Altran Technologies and also
redeem €675.6m of July 2020 notes.
It follows Thermo Fisher’s €1.2bn M&A
deal for Qiagen and LVMH’s €1.5bn issue to
HELPûlNANCEûTHEû4IFFANYûACQUISITION
Capgemini’s deal was split between four
TOYOTA GETS TWO-YEAR AWAY BUT LONG
END STILL SHINES
Issuance in the two-year part of the curve
PASSEDûITSûlRSTûTESTûSINCEûTHEûLOCKDOWNSûINû
Europe began, with TOYOTA FINANCE AUSTRALIA
h-OREûSPECIlCALLYûTHEûWEAKNESSESûINû tranches: a €500m two-year, an €800m selling an April 2022 note on Tuesday as part
"ROADCOMSûCREDITûPROlLEûINCLUDINGûITSû
exposure to a global supply chain, have left it
vulnerable to shifts in market sentiment in
these unprecedented operating conditions
and Broadcom remains vulnerable to the
PLUSûlNALû
outbreak continuing to spread.”
Initial price thoughts started wide, in the
BPûAREAûOVERû4REASURIESûONûAûlVE
YEARû according to the company’s website.
and 487.5bp over on a 10-year.
At those levels, CreditSights estimated an
87.5bp new-issue concession over secondary
levels, but expected spreads could tighten in
just wide of VMware’s similar notes from
April 2.
6-WAREûPRICEDû53MûlVEûANDû
YEARû Until recently, Capgemini had been in a
YEARûISûTHEûlRSTûATûTHEûTENORûSINCEû
tranches both at 412.5bp over Treasuries but
they subsequently widened to around
415bp–420bp over, according to
MarketAxess data.
six-year, a €1bn nine-year and a €1.2bn
12-year.
Unusually, none of the tranches included
an M&A call.
The M&A is nearly complete. After a so-
called “friendly tender offer”, Capgemini
now holds 98% of Altran’s share capital,
duration since global central banks stepped
“[We wanted to] avoid ‘noise’ and to signal
STRONGûCONlDENCEûABOUTûTHEûDEALûGOINGû
ahead without a glitch,” said a lead
syndicate banker.
The acquisition has had its fair share of
noise.
4HEûTWO
match of wills with US hedge fund Elliott,
which had been holding out for Capgemini
to make a higher bid, arguing its offer
undervalued Altran.
of a €1.75bn three-part trade.
The carmaker sold a €750m two-year to go
with €500m 4.5-year and €500m 7.5-year
tranches.
!LTHOUGHûTHEûCOMBINEDûõBN
book was skewed towards the October 2027
– in line with investors’ evident desire for
up efforts to support credit markets last
month – Toyota decided to raise more cash
through the April 2022 leg.
“A lot of companies want short-dated
funding. They want liquidity but don’t want
to pay for, say, a 10-year,” said a lead.
,6-(ûSOLDûAûmOATERûONû&EBRUARYûûANDûTHEû
lRSTûINûlXEDûFORMATûSINCEû0ROLOGISûONû
January 28.
After the coronavirus-inspired volatility
Sure enough, at guidance spreads on
"ROADCOMSûNEWûlVEûANDû
YEARûNOTESû US$4.1bn takeover on March 18, saying the
tightened to Treasuries plus the 425bp and
437.5bp area, receptively.
Proceeds will be used to pay down
outstanding notes coming due in 2021
and 2022, which makes the transaction
leverage neutral, Moody’s noted in its
report.
Still, Covid-19 pressures are expected to
increase Broadcom’s already elevated
leverage, which was last at 4.4 times debt to
Ebitda, according to the report.
But Elliott ended its resistance to the
the short end got particularly badly
recent worldwide stock market slump
meant it was now prepared to sell its Altran
shares to Capgemini.
After a big dislocation at the short end
following the huge sell-off in risk assets,
Capgemini followed Toyota with a two-year
tranche – only the second in euro IG since
the coronavirus-inspired volatility.
“Toyota showed yesterday there is
demand [for a two-year], so [it’s a] nice way
to add size at a reduced cost,” said a second
lRSTûSTRUCKûCREDITûMARKETSûINûLATEû&EBRUARYû
dislocated as investors sought to prop up
their funds by selling those assets that could
be most easily monetised.
But since the ECB announced its €750bn
Pandemic Emergency Purchase Programme
on March 18, which broadened the range of
assets it could buy to include commercial
paper, the short end has stabilised.
Both Volkswagen and Saint Gobain sold
three-year tranches over the past fortnight,
while a number of issuers have targeted four
4HEûCOMPANYûWALKSûAûlNEûLINEûBUTûWASû
YEARûTENORS
SUPPORTEDûBYûSTRONGûFREEûCASHmOWûOFûAROUNDû
US$4.9bn last year and has around US$6.4bn
of cash on hand, Moody’s reported.
“The issuance seems intended to boost
liquidity which was already solid given
macro uncertainty, similar to what many
other tech companies have done recently,”
CreditSights noted.
“The debt repayment, including the cash
tender offers, gives management credibility
that it is prioritising its IG rating.”
YEARûDEALSûATû
EUROS
CAPGEMINI STORMS AHEAD WITH
M&A FINANCING
CAPGEMINI last week landed the largest M&A
lNANCINGûINûEUROSûSINCEûTHEûCORONAVIRUSû
crisis, helped along by an order book of
€16bn.
Wednesday’s €3.5bn bond, increased in
sized from an initial €2.75bn, will fund the
French consulting company’s purchase of
34
lead syndicate banker.
“The objective was to keep duration
consistent with the company’s objective,”
SAIDûTHEûlRSTûLEADûh4OYOTAûCONlRMEDûTHEû
SPACEûISûOPENûANDûTHEûCOMPANYû;mAGGED=ûTHEû
two-year as the smallest tranche among the
four.”
Most demand was seen for the 12-year,
which pulled in €4.7bn of orders (pre-
reconciliation at guidance). Least interest
was in the two-year, although the book was
still around €3.2bn.
Like others in the market, Capgemini had
to offer a large premium to coax interest.
Both leads saw the deal starting with an
80bp premium at IPTs. But leads were able
to tighten the six-year by 50bp and all the
others by 45bp.
Launch spreads were 160bp over swaps,
plus 185p, plus 210bp and plus 235bp.
Capgemini is rated BBB (stable) by S&P. It
was downgraded one notch on March 24
with analysts citing increased leverage after
the Altran acquisition.
Global coordinators were BNP Paribas,
Credit Agricole, HSBC and Morgan Stanley.
International Financing Review April 11 2020
TOûlVE
Toyota Australia, rated A1/AA– (under
review for downgrade/watch negative)
started out with IPTs on the April 2022s at
the 225bp area over swaps, on the October
2024s at the 245bp area, and on the October
2027s at the 285bp area.
“The pricing is so much cheaper [for
investors] than before and there’s a
concession on top as well,” said the lead.
Almost a year ago to the day, Toyota
!USTRALIAûPRICEDûTWOûANDûlVE
13bp and 23bp over swaps, respectively. The
two-year came with a negative yield.
Now, the company started with a
concession of 65bp–85bp.
However, that was inside the starting
premium for Daimler’s trade the previous
week and, at the tight end of the range,
inside the initial concession for Volkswagen
Financial Services too.
At IPTs, Volkswagen was offering an
80bp–90bp premium and Daimler 100bp–
110bp.
The auto industry is one of the more
vulnerable to an economic downturn and

was already under pressure before the
coronavirus pandemic spread.
In addition, Toyota’s deal – like VW’s – is
not eligible for the ECB’s bond-buying
programme. So, relatively big concessions
are necessary and, as Daimler showed, that
is true even for deals the central bank can
BUYûIFûTHEûSECTORûISûMOREûEXPOSEDûTOûlNANCIALû
risks.
But the book – bigger than that attained
by either VW or Daimler, which is partly a
REmECTIONûOFûAûBETTERûMARKETûTONEûBUTûALSOû
the fact that Toyota is higher rated than the
two German companies – enabled leads to
Plans were revived on Monday and IPTs
were announced at the mid-swaps plus
235bp area, following two days of investor
calls.
A bookrunner said fair value was hard to
evaluate for a debut offering but gauged it at
around 170bp, having looked at 2027 notes
from similarly rated entities Akelius and
Thermo Fisher, which were quoted at plus
145bp and 189bp, respectively.
Books soared north of €4.5bn and enabled
THEûISSUERûTOûRElNEûGUIDANCEûTOûTHEûPLUSû
200bp area.
With further orders pouring in, books
BONDS CORPORATES
comfortable with the numbers and the
criteria around it.”
A second bookrunner added that the deal
was structured in a way that makes it
eligible for ECB purchases and that this
factor also supported demand for the trade.
“We’ve seen that deals that are ECB
eligible get some traction, in both primary
and secondary markets,” he said, pointing to
forays on Tuesday from utilities.
He highlighted the rampant demand for
ECB-eligible new issues from Veolia and
EnBW, in contrast to the take up of SSE’s new
bonds, which, he said, were not eligible.
tighten in on all three tranches. PEAKEDûABOVEûõBNûBEFOREûlNISHINGûATûOVERû “SSE ... clearly struggled more,” said the
However, the April 2022s and October õBNû4HATûALLOWEDû,ONZAûTOûlXûTHEûlNALû second bookrunner. “They paid more NIP
2027s were revised much more sharply than spread at plus 180bp, 55bp tighter than and had smaller books.”
the October 2024s. initial talk. Both bankers expect the Lonza trade will
4HEûTWO
YEARûPRICEDûATûBPûOFFûAûlNALû A bookrunner said that accounts from encourage further inaugural issuers to head
€2bn book, signalling a 40p revision; the 4.5- Continental Europe led the demand, and he into the market, with the second
year was issued at 220bp off €1.7bn of orders attributed the success of the trade to the bookrunner citing LUNDBECK as one of the
with a 25bp cut; and the 7.5-year came at quality of the issuer’s name and the efforts issuers that could take advantage of the
235bp off €4.5bn of demand with a 50bp made with the investor calls. current window of opportunity.
tightening. “We knew investors would need to spend The pharmaceuticals company set the ball
a bit more time with it, so we didn’t rush it,” rolling for a roadshow in late February for a
CANNIBALISATION he said. “It’s a very solid credit and investor EURO
DENOMINATEDûlVE
YEARûMAIDENûBONDû
A second lead acknowledged the two-year feedback was very strong from the but put it on ice as the pandemic began to
cannibalised demand for the 4.5-year note to beginning, which showed they were affect market conditions.
a degree.
“I think there was an element of investors ALL INVESTMENT-GRADE BONDS IN EUROS ALL CORPORATE BONDS IN STERLING
not having had the ability to buy [much BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
short-dated paper], which has created a Managing No of Total Share Managing No of Total Share
slight skew,” said the lead. bank or group issues €(m) (%) bank or group issues £(m) (%)
4HEûlNALûSPREADSûSUGGESTEDûTHATûWHILEûTHEû 1 JP Morgan 105 39,860.00 8.4 1 Barclays 12 1,455.16 16.9
new issue premium on the 2022s was 2 BNP Paribas 110 34,387.97 7.3 2 HSBC 9 934.06 10.8
roughly 25bp, on the 2024s it was more like 3 Barclays 100 32,571.76 6.9 3 JP Morgan 6 910.00 10.5
60bp – that part of the Toyota’s secondary 4 HSBC 105 32,098.87 6.8 4 BNP Paribas 8 818.18 9.5
CURVEûWASûmATûBEFOREû/NûTHEûSûTHEû 5 Credit Agricole 99 30,659.35 6.5 5 NatWest Markets 6 654.12 7.6
concession was about 35bp. 6 SG 80 26,159.31 5.5 6 Lloyds Bank 5 569.93 6.6
VW and Daimler both had premiums 7 Deutsche Bank 86 25,227.66 5.3 7 RBC 5 464.22 5.4
north of 50bp. 8 UniCredit 77 24,192.50 5.1 8 Citigroup 3 439.30 5.1
The deal suffered no ill effects from 9 BofA Securities 73 22,371.04 4.7 9 Deutsche Bank 2 297.89 3.5
overnight headlines that Toyota Australia is 10 Goldman Sachs 41 17,640.66 3.7 10 BofA Securities 3 241.02 2.8
recalling more than 45,000 cars because of Total 437 473,043.09 Total 19 8,633.80
fuel pump issues. Excluding ABS/MBS, equity-related debt.
Barclays, BNP Paribas, Citigroup, Credit Source: Refinitiv SDC code: N9 Source: Refinitiv SDC code: N8a
Agricole and Societe Generale were the leads.
ALL INTERNATIONAL STERLING BONDS ALL SWISS FRANC BONDS INCLUDING
LONZA EURO DEBUT DRAWS EXCLUDING SECURITISATIONS SECURITISATIONS
EYE-POPPING DEMAND BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share Managing No of Total Share
LONZA brought its long-awaited maiden euro bank or group issues £(m) (%) bank or group issues SFr(m) (%)
bond to fruition on Wednesday, a €500m 1 Barclays 34 6,253.61 14.6 1 Credit Suisse 48 6,662.7 36.7
no-grow seven-year, recording eye-popping 2 HSBC 29 4,818.79 11.3 2 UBS 32 3,697.7 20.4
demand in the process. 3 NatWest Markets 24 4,307.11 10.1 3 Verband 10 3,117.3 17.2
4HISûWASûTHEûlRSTûINAUGURALûEUROûTRADEû 4 RBC 19 4,064.52 9.5 4 ZKB 18 1,596.2 8.8
executed in the corporate sector since the 5 Lloyds Bank 13 2,477.95 5.8 5 Raiffeisen 15 1,393.0 7.7
onset of the Covid-19 crisis. 6 JP Morgan 10 2,452.10 5.7 6 Deutsche Bank 6 802.6 4.4
The seven-year had been in the works 7 Deutsche Bank 12 2,334.09 5.5 7 Commerzbank 3 305.2 1.7
since November when Lonza (BBB+, S&P)), 8 TD Securities 10 2,281.40 5.3 8 BNP Paribas 3 279.6 1.5
which has businesses in pharmaceuticals 9 Citigroup 11 2,162.89 5.1 9 Basler KB 1 140.4 .8
and biotech, convened investor meetings. 10 BNP Paribas 10 1,763.50 4.1 10 VTB Capital 1 83.3 .5
However, the offering was postponed after Total 71 42,754.49 Total 78 18,161.4
Lonza’s chief executive announced his Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt.
departure. Source: Refinitiv SDC code: K05a Source: Refinitiv

International Financing Review April 11 2020 35

 4HEûlRSTûBOOKRUNNERûSAIDûTHEûONLYûFACTORû
that could discourage inaugural issuers
was that the pandemic had ruled out
traditional methods of working with
investors, such as physical roadshows.
SYNGENTA REOPENS CROSSOVER
3WISSûAGRIBUSINESSûlRMûSYNGENTA has sold
%UROPESûlRSTûCROSSOVERûNEWûISSUEûSINCEû
coronavirus volatility hit markets, printing
a €500m six-year on Tuesday at mid-swaps
plus 365bp.
The expected issue ratings of Ba2/BBB–/
"""ûALSOûMAKEû3YNGENTASûBONDûTHEûlRSTû
European issue with any high-yield rating
to come to market in six weeks.
4HEûTRADEûWASûTHEûCOMPANYSûlRSTûINû
EUROSûFORûlVEûYEARSû)TûLASTûISSUEDû53ûDOLLARSû
The notes were issued by Syngenta
Finance and guaranteed by Syngenta AG.
BNP Paribas, Bank of America, Credit Suisse,
HSBC and UniCredit were joint
bookrunners.
Given the issuer’s absence in euros, the
leads spent Monday marketing the deal to
investors – a process conducted over the
phone rather than face-to-face because of
the coronavirus.
UTILITY BONDS SOAKED UP IN
WELCOMING PRIMARY
Utilities surged through the euro
investment-grade primary market on
Tuesday, as investors backed defensive
names despite subdued power demand in
the electricity sector.
Of the four new deals, CreditSights
analysts picked out EDP’s green bond as
the preferred buy, with Veolia the least
preferred, given its energy services
exposure.
They saw estimated concessions at IPTs
stretching from 45bp for EnBW to 70bp for
the longer of SSE’s two offered tranches.
The issuers were able to call on
substantial interest despite falling
electricity demand across Europe.
Morgan Stanley economists wrote on
April 6 that UK electricity consumption is
down by 16% compared to last year.
In Europe, weekday power demand had
remained relatively stable over the week
leading up to the economists’ report, with
Italy seeing numbers down around 20%–
ûVERSUSûTHEûlVE
YEARûAVERAGEûBUTûWITHû
INûûWHENûITûRElNANCEDûPARTûOFûTHEûDEBTû
taken out the previous year when the
company was bought by Chinese state-
owned ChemChina for US$43bn.
Proceeds from the new issue will be
USEDûTOûRElNANCEûAû53MûNOTEûCOMINGû
due in April. And the new deal follows a
Swiss franc trade in February in which
Syngenta sold SFr200m (US$206m) of 2.75-
GROWûlVE
YEARûPEAKûATûMOREû power production for 2020. SSE’s business
year paper at mid-swaps plus 90bp and
SFr140m of 6.75-year paper at 130bp.
“They wanted to come to market for
some time and have a need for euros,” said
one of the leads.
He suggested the new issue premium
was in the high single digits and noted that
the coupon step-ups in the structure
meant the bond was not eligible for the
ECB’s Corporate Sector Purchase
Programme.
“But there was still good traction
from accounts and lots of investors
In a sign of the market’s continued
ability to digest large amounts of supply
with apparent ease, UK energy company
SSE, German electricity utility ENBW and
Portuguese utility EDP all raised funds,
alongside French water management
company VEOLIA with a €700m eight-year.
EnBW (A3/A–/BBB+) saw the books for its
õMûNO
than eight times covered, while EDP could
boast of subscription levels which were
more than 10 times the original size target
for its seven-year green bond.
4HEûBOOKSûFORû%N"7ûlNISHEDûATûOVERû
€3.3bn.
EDP (Baa3/BBB–/BBB–) increased the size
of its offering to €750m from the original
expected €500m as demand grew to over
€5.7bn.
SSE similarly increased one of its
tranches, adding €100m to the expected
SIZEûFORûITSûlVE
numbers less than 5% down in Germany.
SSE was the subject of a report from S&P
published on Tuesday, with the ratings
agency saying an expected reduction in
electricity demand could undermine SSE’s
merchant generation business supply
activities.
But SSE, S&P noted, fully hedged its
supply operations are only a small
contributor to the group’s Ebitda, its
renewable generation is protected by long-
TERMûlXEDûTARIFFSûANDûTHEûNETWORKû
operations are protected by the UK
regulatory framework.
S&P said that SSE had decided not to
curb its dividend distribution yet, although
it will be reviewing its OpEx and CapEx
plans.
JAB EMERGES AFTER DOWNGRADE
YEARûTAKINGûITûTOûõMû)Tû
already followed the name in dollars,”
he said.
According to high-yield research
provider Lucror Analytics, Syngenta’s
management said demand for its products
was largely unaffected by Covid-19, since
agriculture and the company’s other
related industries are considered essential
sectors.
Syngenta reiterated a commitment to
keeping investment-grade ratings from at
least two of the three main agencies,
Lucror said.
Books opened on Tuesday morning with
initial price thoughts at the 400bp area
and the size expected at €500m. With pre-
YEARûBYûBPûFORûAû JAB recently said it would repay the
reconciliation books exceeding €1.8bn,
guidance was set at the 375bp area and the
clean-up call was removed from the
structure.
"OOKSûCLOSEDûAROUNDûõBNûATûTHEûlNALû
pricing of 365bp. The coupon steps up by
25bp per downgrade notch for each ratings
agency, capped at 2%.
36
also launched a €500m 10-year. Demand
for the offering was €2.7bn.
“The ECB can buy the likes of EDP and
EnBW in primary or secondary, but that
isn’t the case for SSE,” said one banker.
“ECB-eligibility is of course supportive,
and you see that in conservative sectors
issuers can achieve very low new-issue
premiums.”
EnBW, EDP and Veolia were able to gain
more traction on the pricing front than
SSE, with all three issuers moving the
spread by 50bp from initial price thoughts,
landing their respective deals at swaps
plus 90bp, 180bp and 130bp.
33%ûTIGHTENEDûITSûlVE
print at 150bp, and a move of 25bp on the
longer note saw it land at 180bp.
“The ECB is certainly on the mind of
investors,” said a second banker.
h9OUûSEEûTHEûBENElTûlRSTûINûTHEû
primary, then in the secondary, and it
results in a marked difference with the
premiums.”
International Financing Review April 11 2020
JAB HOLDINGûTHEûFAMILYûOFlCEûOFûTHEû
billionaire Reimann family and owner of
the Pret a Manger coffee chain, raised €1bn
on Wednesday, split between two €500m
tranches of seven and 15-year tenors.
The deal saw orders of €2.3bn and price
progression of 20bp from IPTs, launching
at 270bp over swaps and 325bp,
respectively. Leads started out with a 75bp
premium.
JAB is rated Baa2 (stable) by Moody’s and
A– (positive) by S&P.
Moody’s recently downgraded JAB one
notch, citing the company’s exposure to
coronavirus risk.
Term Loan B that funded its purchase of
make-up company Coty. The repayment of
the loan, to avoid triggering an LTV
covenant, will increase JAB’s net debt by
almost 40% to around €5.8bn, according to
Moody’s.
“The increase in net debt is
accompanied by pressure on asset values

due to the outbreak of the coronavirus,”
wrote analysts. “The combination will lead
GROWûLONGûlVE
YEARûAFTERûBOOKSû February 2031 placement from its gas-
to a deterioration in market value
leverage.”
BNP Paribas, Bank of America, Citigroup,
Deutsche Bank, MUFG and Santander ran the
trade.
DEFENSIVE FUNDING STRATEGY STILL
THE NORM FOR CORPORATES
banker away from the deal, for a new
õMûNO
opened at the plus 300bp area.
The Switzerland-headquartered
multinational, which manufactures
building materials, moved pricing by 35bp
and set the spread at 265bp. Pre-reconciled
books reached more than €2.1bn.
CreditSights has run a stress test on the
BUILDINGûMATERIALSûSECTORSûlNANCIALSû4HEû
BONDS CORPORATES
followed up with a £300m no-grow
focused subsidiary National Grid Gas plc
that came at Gilts plus 87bp.
“Even though the spreads have moved
higher, the coupon is 2%, which is exactly
the same as the 19-year printed in
September. Even after the crash, the shock
and the widening, UK corporates can still
print at levels comparable with 2019.”
Borrowers continued to take a
conservative approach to pricing last
week, especially if they are from a more
vulnerable sector.
That was the case with REPSOL after it
became the latest oil and gas corporate to
enter the market.
The Spanish company priced a €1.5bn
dual-trancher off demand of €4bn,
following €11bn of supply from the sector
the week before from Total, Shell, BP and
OMV.
Repsol took a two-pronged approach to
its new issue, opening books on a
December 2025 note at the swaps plus
245bp area and an April 2030 tranche at
plus 295bp area. A banker away put the
NIP at IPTs at around 85bp.
Pricing was tightened by 25bp on the
LONGûlVE
YEARûFORûAûLAUNCHûATûBPûANDûBYû Gilts on Wednesday, wiping out any new
30bp on the 10-year to 265bp. The sizes
were evenly split at €750m.
While getting cash on board to make
their balance sheets more solid is the
priority, some corporates are also
fundraising to cover dividend payments.
That is one of the rationales behind these
oil-related deals, said a banker.
This is in stark contrast to the banking
sector. Many eurozone banks, and their UK
counterparts, have scrapped or suspended
dividends following pressure from their
respective regulators.
2EPSOLûCONlRMEDûINûLATEû-ARCHûTHATû
shareholders can expect to receive a
dividend of €1 a share for the full year,
although the company has scrapped a plan
to reduce the number of shares by 5%.
The company said that it would slash
investments by 26% this year. It is cutting
planned capex in 2020 by more than €1bn
and opex by more than €350m.
For its part, compatriot utility NATURGY,
which is also committed to paying a
dividend, printed a €1bn January 2026
bond.
Marketing began at the plus 195bp area
but a book that reached €3.3bn at guidance
enabled leads to tighten by 40bp. That left
AûlNALûCONCESSIONûOFûABOUTûBPû.ATURGYû
was also able to upsize the bond from an
initial target of €750m.
LAFARGEHOLCIM offered an initial
concession of about 75bp, according to a
RESEARCHûlRMûSAIDûTHATûBYûANDûLARGEûTHEû
six investment-grade credits they analysed
had very powerful liquidity cushions.
LafargeHolcim, alongside CRH, retained
the largest surpluses in the analysis.
HeidelbergCement (Baa3/BBB–/BBB–)
was the weakest performer in the
CreditSights stress test. HeidelbergCement
printed an October 2024 the week before
at 285bp over swaps, giving a 50bp
premium
STERLING
NATIONAL GRID WIPES OUT
CONCESSION
NATIONAL GRID ELECTRICITY TRANSMISSION
launched a £400m 20-year at 135bp over
coronavirus on the construction industry
issue premium on offer in the process.
The bond was originally marketed at the
plus 170bp area but strong demand
allowed the issuer to ratchet in pricing by
35bp as pre-reconciled books topped
£2.35bn.
“The sterling market has been slowly
coming back to life, really helped by the
Bank of England commencing its
corporate bond-buying scheme,” said a
lead.
“We’ve seen some very supportive
moves in pricing dynamics, and National
Grid was very quick to take advantage of
that. Putting a 20-year into the market was
also exactly what investors were looking
for.”
NGET (A3/A–/A) has a £440m 2038 note
that was placed in September alongside a
£300m 2026 bond. The 2038s, which were
increased in January, were bid at 128bp,
according to MarketAxess prices.
A second lead said that taking into
account price movements in secondary, it
RESULTEDûINûTHEûNEWûTRADEûCOMINGûmATûTOû
the issuer’s curve.
“Spreads have clearly moved out
compared with the beginning of the year,”
he said. “The utility space has felt well
supported, though, as has duration, and
you have the Bank of England providing a
SMALLûTECHNICALûBENElTûTOûTHEûMARKETv
NGET issued a €500m January 2025
green bond at the start of the year. It then
International Financing Review April 11 2020
Utilities were the prevalent issuers in
the euro IG space last week, with Naturgy,
SSE and EDP raising €2.85bn between
them.
HSBC, NatWest Markets and RBC were
bookrunners on NGET’s deal.
SWISS FRANCS
DOMESTIC CORPORATES FILL
SWISS WEEK
Swiss plumbing supplies maker GEBERIT
shook off any fears over an industry
slowdown to print an oversubscribed and
upsized 2.5-year deal on Monday.
The company had warned the markets
in an investor call and trading statement
that morning about the impact of the new
as building site and showroom shutdowns
hit demand in March.
Given the situation, it said it would be
raising SFr150m (US$155m) to help with
costs, including paying about SFr400m in
dividends.
IPTs were announced in the immediate
wake of the call at mid-swaps plus 100bp–
110bp, before books opened 10bp tighter
for a SFr300m no-grow size.
4HEûTRANSACTIONSûPOPULARITYûCONlRMEDû
Geberit’s strong name recognition and
scarcity value among the Swiss investor
base. It was last in the market more than a
year ago, with a SFr125m 0.61% 9.5-year
due October 2028.
That deal was priced at mid-swaps plus
50bp in March 2019, neatly showcasing
how the market has changed in the wake
of the pandemic, with Geberit paying 40bp
more for a much shorter trade.
Despite that, the bonds came at the
tightest relative level for a pure corporate
issuer since the crisis began, paying a new
issue premium of just 17bp.
Asset managers and treasury accounts
took a little over three-quarters of the
paper, drawn by the positive yield for a
Single A rated credit in a short tenor.
Geberit is rated A+ (stable) by S&P.
Swiss supermarket chain COOP-GRUPPE
followed the next morning with another
upsized deal, a SFr320m three-year priced
in the middle of guidance at 130bp over
37
mid-swaps, having started marketing a TRANCHESûINCLUDINGûITSûlRSTû
YEARû can get deals done, albeit at higher
minimum SFr200m at 125bp–135bp. offering in yen. concessions than their US counterparts.
Asset managers took nearly half at two The deal comprised a ¥56.3bn three- “US banks are done hitting the market
of the four bookrunners, the rest split YEARûAûcBNûlVE
YEARûAûcBNû and they hit it hard,” said David Knutson,
mainly among private banks, insurers and seven-year, a ¥18.3bn 10-year, a ¥25.8bn head of credit research for Schroders.
pension funds. 20-year, a ¥18.5bn 30-year, and a ¥6.0bn “Now you have a window of a few weeks
)TûWASûTHEûlRSTûTIMEûINûYEARSûTHATûTHEû 40-year. where you’ll see some Yankees come to
banks have made any money on the 4HEûTHREEûlVEûSEVENûûûANDû
YEARû TOWNûESPECIALLYûIFûINFECTIONûCURVESûmATTENû
issuer’s deals, as they used to post tranches were priced at mid-swaps plus in Europe.”
competitive bids that tended to squeeze 70bp, 90bp, 100bp, 105bp, 140bp and The expected return of Yankee
THEûPROlTûMARGINûFORûTHEûBANKSûFAIRLYûDRYû
according to one banker away from the
deal.
Both corporate deals saw very granular
demand, with 71 accounts taking part in
the Coop’s and over 60 in Geberit’s, for
YEARûWASûMARKETEDûATûAûlXEDû Czech Republic all announced steps to
average ticket sizes under SFr5m.
Credit Suisse and Commerzbank were joint
lead managers and joint bookrunners on
Geberit’s issue, while Coop-Gruppe, rated
#3û,OWû!FEDAlNû"AA5"3û""":+"û
BBB+, had BKB, Credit Suisse, Raiffeisen
Schweiz and UBS running its deal.
155bp, respectively. These spreads were at
the mid-points of respective guidance of
65bp–75bp, 85bp–95p, 95bp–105bp,
100bp–110bp, 135bp–145bp, and 150bp–
160bp.
4HEû
yield of 2.00%.
The issuer decided not to go ahead with
a 15-year tranche, which was indicated at
mid-swaps plus 125bp, the mid-point of
120bp–130bp guidance, having told
investors that it might drop some of the
tranches depending on feedback.
lNANCIALSûISûNOûDOUBTûHELPEDûBYûSLIGHTLYû
more positive news from Europe, where
some experts are predicting some easing
in the rate of Covid-19 cases.
Norway, Austria, Denmark and the
reopen their economies in the next two
weeks in a sign that social distancing is
working, Bank of America said in a report.
Investors have been worried that severe
Covid-19 outbreaks in Italy and Spain in
particular could cause major disruptions in
the sector, but now, high-quality names
Rounding off proceedings was EUROFIMA, Last September, Berkshire Hathaway AREûlNDINGûSUPPORTûSAIDû$ANû"RUZZOû
closer to a supranational than a corporate raised ¥430bn in six tranches, ranging MANAGINGûDIRECTORûOFûBANKûlNANCEûATû
with its Aa2/AA+ ratings, which printed its FROMûlVEûTOûûYEARSûINûITSûDEBUTûYENû Amherst Pierpont Securities.
lRSTû3WISSûFRANCûTRANSACTIONûINûSIXûYEARSûnûAû trade, which was the largest deal in the “The Swiss banks from a capitalisation
3&RMûSEVEN
YEARû0RICINGûCAMEûINûmATûTOû currency from a foreign issuer since 1995. perspective are well positioned and their
its Swiss franc curve at 40bp over mid-
swaps, the tight end of 40bp–43bp
guidance.
As the paper is expected to be repo-
eligible at the SNB, it appealed mainly to
bank treasuries, which took almost 90%.
UBS and ZKB were lead managers.
YEN
BERKSHIRE HATHAWAY RETURNS
TO YEN
BERKSHIRE HATHAWAY returned to the yen
market with a Global offering that
YEARûTHATûWEREûBOTHûPRICEDûATûBPû
extended its curve in the currency, even as
measures to curb the spread of the
coronavirus made face-to-face meetings
impossible.
Japan last Tuesday announced a state of
emergency in Tokyo and some other
prefectures after a rise in the number of
coronavirus cases. The government is
encouraging people to stay at home where
possible, but not forcing them to comply.
That has meant a limited impact on the
primary bond market, although physical
roadshows have stopped for both
QUARTERûEARNINGS
international and domestic yen deals.
That did not stop investors turning out
FORûTHEûlRSTûINTERNATIONALûYENûDEALûOFûTHEû
It paid 0.17% for the shortest tranche and
1.108%, or mid-swaps plus 95bp, for the
longest.
Back then, spreads were so slender that
the short tranches were marketed in yield
terms, but this time the new deal was
shown with spread guidance.
The SEC-registered senior unsecured
bonds have expected ratings of Aa2/AA
(Moody’s/S&P).
Bank of America, Goldman Sachs, JP Morgan
and Mizuho were joint bookrunners under
the pot method.
FIG
US DOLLARS
YANKEE FINANCIAL ISSUANCE PRIMED
FOR A RESURGENCE
Foreign banks are starting to issue in the
US market and more are expected to come
as US banks step aside in the lead up to
lRST
“Between the exceptionally strong order
Non-US banks have priced just
US$12.8bn in the last three weeks since
the credit rally began, compared with
RATINGSûREmECTûITvûHEûSAID
“The performance of the Credit Suisse
bonds speak to that because they are in a
higher quality category than some of the
other banks that have come to market in
recent weeks.”
HIGH-QUALITY BANKS
Credit Suisse priced a US$3bn two-part
bond last Monday that was upsized by
some US$1bn after seeing its order book
climb to US$10.2bn.
Issuing from the operating company
with A1/A+ ratings, Credit Suisse came
with two US$1.5bn tranches – a two and
lVE
over Treasuries.
While the lead thought the deal came
mATûTOûTHEûEXISTINGûûSûANDûû
2024s, market participants away from the
deal and IFR calculated new-issue
concessions closer to 32bp or higher.
Regardless, the notes received follow-on
demand as they tightened as much as 35bp
in the secondary market in a strong sign
for short-dated paper, where price
dislocation has run rampant in recent
weeks.
bookbuild and the follow-on demand in
the secondary, you could say this has
done the important job of helping to
NEWû*APANESEûlNANCIALûYEARûALTHOUGHûTHEû
transaction fell short of the size of
Berkshire Hathaway’s debut.
The Warren Buffett-led US conglomerate
priced ¥195.5bn (US$1.8bn) across seven
38
some US$30bn priced by US banks,
according to IFR data.
Yet while Yankee FIG issuance has been
slow, a second bond from CREDIT SUISSE in a
matter of weeks is proving foreign banks
International Financing Review April 11 2020
OPENûTHEûFRONTûENDûTOûlNANCIALûANDû
corporate issuers going forward,” a lead
banker said.
“It’s a deal that will provide a healthy
benchmark for others in the space.”

The new notes also landed nearly 100bp
tighter than Credit Suisse’s US$3bn 11-year
non-call 10 holdco notes (rated Baa2/
BBB+/A–) that was priced at 350bp over
Treasuries on March 27.
THE OTHER BANKS:
HSBC, LLOYDS, STANDARD CHARTERED and
MITSUBISHI UFJ have also accessed the US
bond market in recent weeks to varying
degrees of success.
For example, HSBC paid up with a 4.95%
coupon on a US$2.5bn 10-year bond, but
the spread has compressed to around
280bp over Treasuries from 415bp over
when it was priced on March 25, according
to MarketAxess data.
Likewise, Lloyds priced its US$1.5bn
3.87% 2025 at 350bp over on April 2 and it
has since tightened to about 300bp over.
“It is a good sign that Yankee banks are
able to tap the markets because obviously
there has been more concern on credit
fundamentals for European banks than
there are with US banks,” said Jeff Glenn,
co-head of portfolio management at
Breckinridge Capital Advisors.
EUROS
NEW ISSUE PREMIUMS HEAD LOWER
ON HANDELSBANKEN’S BLOWOUT
SVENSKA HANDELSBANKEN highlighted the
downward trajectory of new issue
concessions in the senior market with a
BLOWOUTûõBNûlVE
YEARûSENIORûPREFERREDû €300m, less the US dollar notes.
deal, while the regulator moved to ease the
pressure on Swedish banks to issue riskier
paper.
The Swedish lender paid a much smaller
concession than the handful of mostly UK
and US banks that have tapped the senior
market recently. It was nevertheless
Market moves tee up legacy
capital tenders
„ FINANCIALS Banks target old instruments as prices fall
Recent market moves are set to accelerate a
push from banks to repurchase legacy capital
instruments, with others expected to follow
LLOYDS and CREDIT AGRICOLE in taking out such
securities.
The collapse in price of some legacy
instruments, during a wide and deep market sell-
off, has made them attractive targets for tender
offers from banks.
The move has echoes of the great
financial crisis when banks bought billions of
subordinated debt at deep discounts to par in
order to bolster their balance sheets.
However, this time around, the move has been
a lot more opportunistic given banks’ strong
capital positions and quick central bank actions.
Lloyds Bank announced on Tuesday that it is
repurchasing US$137.432m of its US$2bn 12%
fixed-to-floating perpetual securities following a
tender offer.
Credit Agricole was also out with a tender
offer, closing on Wednesday afternoon, for its US
dollar and euro legacy Tier 1s.
It is seeking to repurchase any and all of its
6.637% perpetual non-call May 2017s, of which
US$105m remains outstanding. The bank’s euro
tender of the perpetual non-call February 2018
FRNs, of which €251m remains, is capped at
Lloyds another compelling reason to repurchase
“I think we are going to see more of these
transactions,” said Cecile Bidet, head of DCM
solutions at Credit Agricole CIB.
“The EBA and the regulators have pushed for
issuers to deal with their legacy instruments, and
now there is a window for issuers to tackle that at
an interesting economic cost.”
BONDS FINANCIALS
Credit Agricole’s tender offer was capped
at €300m. In general, such transactions will
represent a very small percentage of banks’ total
capital.
“But because the prices have deteriorated, the
gain is worth the effort,” said Bidet.
An investor said he too expected market
movements to accelerate the uptake of such
tender offers and exchanges.
“This is a fantastic investment window for
legacy securities,” he said.
LOSING VALUE
Both Lloyds’ and Credit Agricole’s deals are
grandfathered as Tier 1 capital until the end of
2021.
In some cases, such deals will continue to
have value as MREL/TLAC instruments beyond
2021.
However, regulators and supervisors have
encouraged banks to take out such legacy
instruments before the end of the grandfathering
period because they view them as impediments
to resolution.
In Lloyds’ case, the deal was issued at
opco level. Its positioning means the deal
will not qualify as MREL/TLAC beyond the
grandfathering period, and the high coupon gave
the bonds, bankers said.
Bidet added that it is a sign of banks’ strength
that regulators are confident in authorising them
to repurchase capital securities in the current
environment.
Banks are also taking the opportunity to target
old senior unsecured bonds that do not qualify
mOODEDûWITHûORDERSûDEMONSTRATINGû
INCREASINGûCONlDENCEûINûTHEûRESILIENCEûOFû
the bank credit space.
The leads, Goldman Sachs, Nomura, Svenska
Handelsbanken and UBS, marketed the deal
with initial price thoughts of mid-swaps
plus 175bp area last Monday.
Guidance was revised to the 140bp area
(+/–5bp to price in range), before a €1.25bn
deal was launched at 135bp.
“It’s gone exceptionally well,” said a
syndicate banker. “It’s a useful reference
point for premiums, which now appear to
Credit Agricole’s offer exemplifies the
newfound appeal of such exercises for banks.
The French bank’s euro notes were bid at a cash
price of 70 before the tender offer was announced
and its US dollar notes at around 84, down from
around 87 and 97, respectively, in late February.
The tender offer prices were set at 78 and 87,
respectively.
senior preferred, the closest comparable,
bid at around 115bp whereas others saw it
wider, at around 123bp.
as MREL/TLAC-eligible debt.
Lloyds Bank announced on Tuesday that is has
accepted for repurchase US$333.641m of four
short dated senior unsecured bonds.
On Wednesday, PKO BANK POLSKI announced
a tender offer for its €750m 0.75% 2021 and
US$1bn 4.63% 2022 seniors.
Tom Revell
when printing a €1bn opco senior at 270bp
on April 2.
Three weeks ago, Credit Suisse and
be on a downward trajectory, for any
issuers looking at the senior preferred or
senior non-preferred markets in the
coming weeks.”
Bankers’ views on fair value ranged
from 120bp to 130bp. Some cited
Handelsbanken’s €1bn 0.125% June 2024
7HICHEVERûINTERPRETATIONûISûUSEDûTHEûlNALû
concession of 5bp to 15bp – and the outright
SPREADûnûISûSIGNIlCANTLYûLOWERûTHANûOTHERû
banks had paid to access the euro senior
market since its reopening three weeks ago.
Lloyds Bank Corporate Markets, for
example, paid some 50bp over its curve
International Financing Review April 11 2020
Barclays were deemed to have paid new
issue premiums of some 30bp versus their
secondaries when printing holdco senior
transactions at 350bp and 370bp,
respectively.
Bankers attributed the result to the
strength and popularity of the Svenska
39
Handelsbanken name and its relatively secondary market as spreads continued to 4HEûDEBTûOFlCEûSAIDûTHEûEXTENSIONûMEANSû
high senior preferred ratings of Aa2/AA–/ tighten. banks will not have to issue subordinated
AA+ (Moody’s/S&P/Fitch). liabilities while the uncertainty from the
4HEYûSAIDûTHEûDEALûALSOûBENElTEDûFROMûAû MREL EXTENSION novel coronavirus remains.
lRMERûMARKETûTONEûAFTERûDECENTû The day after Handelsbanken’s deal, the Swedish banks are relatively less
performance in credit over the preceding 3WEDISHû.ATIONALû$EBTû/FlCEûANNOUNCEDûITû progressed in issuing MREL-eligible debt
week, which continued in spite of was extending the phase-in period for than many of their Nordic and European
volatility in equities. Swedish banks to meet their MREL targets peers. Swedish regulation enabling banks to
Handelsbanken’s senior preferred by two years, from 2022 to 2024, to sell SNP entered into force in December
spreads had tightened by some 10bp in the alleviate pressure amid the coronavirus 2018 and banks did not start issuing until
two weeks to last Monday, since the crisis. last summer.
widening trend reversed on March 25. As demonstrated by the recent UK and
That performance was roughly in line US deals, higher beta paper has been hard- SRB FLEXIBLE
with the market. The iBoxx EUR Banks hit and banks have had to pay high prices Within the European Union, the Single
Senior Preferred index tightened 16bp to access the market. Resolution Board (SRB) has indicated it could
over the same period, to trade at 159bp as The iBoxx EUR Senior Bail-in index ALSOûBEûmEXIBLEûONû-2%,ûTRANSITIONûPERIODS
of April 3. widened from 66bp in late February to The SRB said in a letter to banks that it
European banks have been notably peak at 269bp on March 25, although it has will carefully monitor market conditions in
under-represented in the senior market since tightened to 194bp. the coming months and, if necessary, may
since its reopening, with only UK, US and 4HEû3WEDISHû.ATIONALû$EBTû/FlCEû adapt the transition periods and interim
Swiss banks active until now. has therefore moved to alleviate the targets applied to banking groups.
Handelsbanken’s success raised hopes lNANCINGûPRESSUREûONûBANKSûINûAûMEASUREû It said it could also adjust MREL targets in
that other issuers could follow, but the it says will also support banks’ ability to line with capital requirements, with
onset of earnings blackout periods limits KEEPûCREDITûmOWINGûTOûBUSINESSESûANDû particular reference to capital buffers, and
the range of prospective issuers. households. will postpone less urgent information or
Most banks are expected to wait for Sweden’s banks will now have until data requests related to the upcoming 2020
spreads to tighten further. January 1 2024 to meet MREL resolution planning cycle.
Indeed, Handelsbanken’s deal quickly requirements in full with own funds and “In light of the challenges posed by
tightened by more than 30bp on the subordinated liabilities. resource constraints and adverse market
conditions, we are ready to address any
ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION
ISSUESûINûRELATIONûTOûSPECIlCûREQUIREMENTSû
BOOKRUNNERS: 1/1/2020 TO DATE BONDS (ALL CURRENCIES) with the banks under our remit on an
Managing No of Total Share BOOKRUNNERS: 1/1/2020 TO DATE
individual basis,” said SRB chair Elke Konig,
bank or group issues €(m) (%) Managing No of Total Share in a statement published on April 1.
1 Credit Agricole 21 6,302.50 10.1 bank or group issues US$(m) (%)
2 SG 15 4,873.96 7.8 1 Citigroup 9 1,871.16 13.5
3 Deutsche Bank 19 4,583.89 7.4 2 Credit Agricole 4 1,760.17 12.7
4 JP Morgan 23 4,387.42 7.1 3 HSBC 6 1,117.15 8.1
5 BNP Paribas
6 Natixis
17
9
4,150.37
3,531.23
6.7
5.7
4 Goldman Sachs 5 901.78 6.5 COVERED BONDS
5 BofA Securities 4 892.89 6.4
7 HSBC 17 2,837.08 4.6 6 BNP Paribas 4 776.99 5.6
8 Lloyds Bank 4 2,640.45 4.2
9 Santander 16 2,514.69 4.0
7 JP Morgan 4 773.59 5.6 EUROS
8 Barclays 5 690.53 5.0
10 Barclays 16 2,372.42 3.8 9 Morgan Stanley 4 651.08 4.7 COFF DEMONSTRATES COVERED
Total 98 62,153.92 10 Santander 3 541.89 3.9 PRICING LEVERAGE
Including banks, insurance companies and finance companies. Excluding Total 16 13,867.55
equity-related and covered bonds. Excluding publicly owned institutions.
Source: Refinitiv SDC code: N11 Source: Refinitiv SDC code: J3a COMPAGNIE DE FINANCEMENT FONCIER provided
another sign of normalisation in the
ALL GLOBAL AND EUROMARKET YEN BONDS ALL INTERNATIONAL YEN BONDS covered bond market as it successfully
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE leveraged pricing momentum on a €1bn
Managing No of Total Share Managing No of Total Share four-year issue last Monday.
bank or group issues ¥(m) (%) bank or group issues ¥(m) (%) Unlike most recent covered bond
1 Mizuho 3 34,733.33 26.0 1 Sumitomo Mitsui 5 80,633.33 41.4 issuers, CoFF was able to tighten the
2 Mitsubishi UFJ MS 2 19,733.33 14.8 2 Mizuho 3 34,733.33 17.8 spread from initial guidance, aided by the
3 Sumitomo Mitsui 2 19,733.33 14.8 3 Mitsubishi UFJ MS 2 19,733.33 10.1 fact it took a smaller size than its peers
4 Credit Agricole 2 11,750.00 8.8 4 Credit Agricole 2 11,750.00 6.0 that tapped the market the previous week.
5 Goldman Sachs 1 11,400.00 8.5 5 Wells Fargo 1 11,400.00 5.9 Leads Citigroup, Commerzbank, LBBW,
6 Wells Fargo 1 11,400.00 8.5 6 Goldman Sachs 1 11,400.00 5.9 Natixis, Rabobank, Swedbank and UBS opened
7 SG 1 8,333.33 6.2 7 SG 1 8,333.33 4.3 books with guidance of mid-swaps plus 38bp
8 Nomura 1 8,333.33 6.2 8 Nomura 1 8,333.33 4.3 area.
9 Daiwa Securities 1 8,333.33 6.2 9 Daiwa Securities 1 8,333.33 4.3 The size was subsequently set at €1bn,
Total 5 133,750.00 Total 8 194,650.00 before guidance was revised to the 36bp
area (+/–1bp) and the spread ultimately set
Excluding equity-related debt. Including preferreds. Including all Euro, foreign and global issues. Excluding equity-related
debt. ATûBPûWITHûTHEûlNALûBOOKûSTANDINGû
Source: Refinitiv SDC code: K10 Source: Refinitiv SDC code: K12 above €2.2bn from some 80 accounts.

40 International Financing Review April 11 2020


“CFF obviously didn’t want anything
more than €1bn, so they’ve proven you can
move pricing tighter [in covereds],” said a
syndicate banker.
In the previous week, fellow French
issuers Credit Agricole and Credit Mutuel
SOLDûõBNûLONGûFOUR
YEARûANDûõBNûlVE
present in the primary market than in
year covereds, respectively. Both were
priced at 40bp and quoted 1bp–2bp tighter
last Monday.
“We see French issuers doing big deals,
but if you were to take the ECB element out,
most of these issuers would have got their
order books where BNS had theirs today,”
the second lead said.
4HEûlRSTûLEADûADDEDûTHATûTHEûGAPûWASûMOREû
much needed cash, as well as companies
secondary.
“For now, the French are quite busy
printing new ECB-eligible deals at tighter
BONDS HIGH-YIELD
OUTBREAKûHAVEûHELPEDûlRMûUPûCREDITûMARKETû
conditions, encouraging riskier names to
take a run at the high-yield primary market
last week.
Issuers from troubled sectors such as
casino gaming and retail were able to lock in
SEENûTOûBEûINûlNANCIALûDISTRESSûnûMARKINGûAû
shift from the way that corporate treasurers
have largely used the high-yield market for
Bankers cited CoFF’s ability to move the
CUTTINGûRElNANCINGû
needle on pricing another positive sign for
the restoration of the covered bond
primary market amid the coronavirus
crisis.
BNS TAKES REOPENING ROUTE
BANK OF NOVA SCOTIA executed a €1.25bn
reopening of its 0.375% March 2023
mortgage-backed covered bond, as it kept
its options open on price and size on
Thursday.
BNS’s choice to reopen an existing note
rather than place a new benchmark
REmECTEDûTHEûHEIGHTENEDûACTIVITYûOFûLATEûOFû
YEARû but that is seen as a secondary concern.
Canadian issuers in the covered bond
sector.
“We thought going down the reopening
RATEû+ANGAROOûVIAûJOINTûLEADû expensive compared with historical levels,”
ROUTEûWOULDûGIVEûUSûMOREûmEXIBILITYûINû
terms of pricing and size,” said a lead.
“That proved to be true. We were able to
tighten the spread and print a decent size.”
Guidance was announced at mid-swaps
plus the 60bp area for a benchmark size
reopening.
The outstanding bond was quoted at
levels in primary but I think over time you
will see more investors looking for extra
pick-up and you will see that differential
narrow,” he added.
The tap takes the new total issue size of
BNS’s March 2023s to €2bn.
BNP Paribas, Credit Suisse, NatWest Markets,
Scotiabank and Societe Generale were leads.
NON-CORE CURRENCIES
BMO COMPLETES CANADIAN HAT TRICK
BANK OF MONTREAL became the third Canadian
lNANCIALûINûEIGHTûDAYSûTOûISSUEûTHREE
Australian dollar covered bonds with last
Wednesday’s A$2bn (US$1.245bn)
mOATING
managers BMO, CBA, NAB, UBS and Westpac.
The notes were priced inside 125bp area
guidance at three-month BBSW plus 120bp,
5bp tighter than the 125bp margin paid by
CANADIAN IMPERIAL BANK OF COMMERCE, Sydney
branch, for its A$600m domestic three-year
covered note issue on April 2.
TORONTO-DOMINION BANK also paid a 125bp
STRAIGHTFORWARDûCOUPON
purposes over the past couple of years.
Bonds from Wynn Resorts, NCR
Corporation, Ferrellgas and Nordstrom all
got strong receptions from investors as they
looked to add cash to their balance sheets.
“Companies are bulking up on cash
balances and hoping they can fund the burn
for as long as they need to and get to the
other side intact,” said Peter Schwab, high-
yield portfolio manager of the Pax High
Yield Fund, which is advised by Impax Asset
Management.
For the most part, issuers were seen to
pay up compared with their existing bonds,
“If you can tap the market, it is expensive
to do so right now but it is not that
said Schwab.
CASINOS
WYNN RESORTS, for example, paid up to help
weather the total shutdown of US casinos
and minimal activity at its Macau outpost.
!SûWELLûASûBEINGûTHEûlRSTûBONDûFROMûTHEû
gaming sector since the Covid-19 pandemic
plus 38bp on Tradeweb, prior to the tap
announcement. However, the lead said
recent issues from Bank of Montreal and
Toronto-Dominion gave more accurate
REmECTIONSûOFûPRICES
YEARûNON
CALLûTWOûUNSECUREDû
spread for its A$1.25bn covered Kangaroo
issued a day before CIBC.
Canadian major banks have been the
most active participants in the Australian
covered bond market in recent years.
FORCEDûCASINOûCLOSURESûITûWASûTHEûlRSTû
unsecured bond seen in high-yield since the
primary market reopened the previous week.
With price talk of the 8% area on the
53MûlVE
March saw BMO place a €1.25bn three- "EYONDûTHEûlVEû#ANADIANûLENDERSûnû#)"#û NOTEûRATEDû"""n ûTHEûlRMûDANGLEDûAûBIGû
year covered at swaps plus 45bp, while TD Bank of Nova Scotia, Bank of Monteal, Royal concession to investors, compared with the
sold a €1bn four-year at plus 50bp. The Bank of Canada and Toronto-Dominion – 2029 notes issued by the same Wynn Resorts
notes were quoted at 46bp and 53bp, the only other covered Kangaroo issuers Finance entity which were trading at a yield
respectively. SINCEûTHEûlNANCIALûCRISISûHAVEûBEENû3WEDISHû of 6.70% in the secondary market on
Orders for the BNS tap topped €1.7bn, mortgage lender Stadshypotek, Bank of New Tuesday, according to MarketAxess.
which enabled the issuer to tighten pricing Zealand, Norway’s DNB Boligkreditt and
BYûBPû4HEûlNALûSPREADûWASûSETûATûBP Singapore’s DBS Bank. ALL COVERED BONDS (ALL CURRENCIES)
A second lead manager said the pricing BOOKRUNNERS: 1/1/2020 TO DATE
level showed it was still cost effective for Managing No of Total Share
BNS to print in euros. bank or group issues US$(m) (%)
“The Canadian banks have been really 1 Barclays 32 6,797.88 8.4
active in euros, US and Aussie dollars. If HIGH-YIELD 2 HSBC 24 5,411.01 6.7
you were to compare this against what 3 Natixis 18 4,048.73 5.0
they could achieve in these currencies, it 4 Commerzbank 16 3,895.31 4.8
was inside that,” he said. UNITED STATES 5 Credit Agricole 17 3,791.85 4.7
Both bankers acknowledged that the 6 Santander 15 3,663.91 4.5
spread here was wider than that seen for RISKIER FIRMS FIND SUPPORT IN JUNK 7 Credit Suisse 13 3,544.52 4.4
THEûRECENTûmURRYûOFû&RENCHûCOVEREDûBONDSûnû BOND MARKET 8 BNP Paribas 15 3,382.58 4.2
which have sported spreads ranging from 9 UniCredit 18 3,134.50 3.9
35bp to 40bp – and attributed the gap Federal Reserve market interventions, a 10 ING 14 3,092.68 3.8
principally to the latter’s eligibility for ECB MASSIVEûlSCALûSTIMULUSûPACKAGEûANDûSOMEû Total 92 80,994.53
purchases. more encouraging headlines on the virus Source: Refinitiv SDC code: J15a

International Financing Review April 11 2020 41

 But heavy demand allowed the company
to upsize the deal to US$600m and bring
pricing to 7.75%. The notes then traded up
to 101.65, according to MarketAxess.
The cash adds to the around US$1.1bn of
liquidity the company has in its US entity,
h9OUûCANûALWAYSûlNDûDEMANDûFORûAûBONDû
that is structured at the right way and the
right price,” said Schwab.
DEBT EXCHANGE
The Ferrellgas deal followed an
Those notes last traded at a cash price of
69.5 to yield around 9%, according to
MarketAxess.
LIQUIDITY TOOLKIT
Retail store sales are expected to take a hit
ACCORDINGûTOû#REDIT3IGHTSûSUFlCIENTûTOû
survive 11.2 months of property closures.
TRANSACTION SOFTWARE
Adding to the unsecured supply, NCR
CORPORATIONûSOLDûAûlVE
YEARûNON
CALLûTWOû TOûSWAPû53MûOFûTHEûBONDSûFORûNEWûlRSTû
note on Tuesday (rated B2/BB) after
WITHDRAWINGûlNANCIALûGUIDANCEûFORûû
on March 31.
4HEûlRMûPROVIDESûPOINT
OF
SALEûCHECKOUTû mature on April 15. Mallinkrodt will use cash
services for retail stores, as well as
restaurants, which are being badly
impacted by closures.
Half of its revenue, however, is driven
by ATM services and online banking,
which continue to see strong demand.
The notes started with price talk of
8.50% which also indicated a healthy
concession to its existing 2029 notes,
which were trading at a yield of 7.20% on
Tuesday.
"UTûTHEûlRMûWASûABLEûTOûLANDûTHEûDEALûATû
par with an 8.125% coupon.
TOPPING UP THE TANK
Troubled propane distributor FERRELLGAS
PARTNERS, meanwhile, was able to price a
"###ûRATEDû53MûlVE
YEARûNON
CALLû property company with US$1bn–$1.1bn of
TWOûSENIORûSECUREDûlRST
LIENûNOTEûONû real estate assets.
Wednesday despite the overlevered
PROPANEûlRMûBEINGûSEENûASûONûTHEûVERGEûOFû
a debt restructuring.
The deal was priced at par with a 10%
coupon.
The company has a looming US$357m
LEFTûONûTHEûlVE
September.
maturity on its 8.625% notes falling due in
June 2020 which ratings agencies and
analysts expect the company to have
trouble meeting.
Unusually, the new debt was not being
raised to pay that maturity but to pay
down its secured term loan debt.
The new bond does not meaningfully
CHANGEûTHEûlRMSûLIQUIDITYûORûADDRESSû
unsecured bond maturities, Moody’s said.
While the timing is odd, CreditSights
said this was likely part of a plan to try and
avoid a default on its 2020 maturity.
“It seems likely that management is
going to try to craft an exchange and/or a
announcement on Tuesday by troubled
PHARMACEUTICALûlRMûMALLINCKRODT that it had
agreed a debt exchange with Aurelius
Capital, Franklin Advisers and Capital
Research - holders of its 4.875% 2020 notes -
Nordstrom consolidated sales, according to a
lien senior secured notes due 2025, which
carry a 10% coupon.
The US$615m 2020 notes were set to
costs offset by payroll and commission
on hand to pay off the rest of the balance.
While the debt exchange was smaller
than earlier plans, the agreement and the
Ferrellgas offering suggest that even
struggling companies still have some level
of access to the market.
“Ferrellgas and Malinkrodt are two
distressed issuers, so those are really good
data points if they can get deals done,” said a
third investor.
NORDSTROM PUTS REAL ESTATE ON THE
LINE TO SECURE FINANCING
Retailer NORDSTROM raised US$600m on
Wednesday as bolstered liquidity through a
bond secured against a newly established
targeting a US$500m reduction in
operational and capital expenditure and
The new bond offering was the latest step
being taken by company management to
shore up liquidity as social distancing
measures batter retail sales and consumer
demand.
Morgan Stanley wasûLEAD
year non-call two senior secured note.
The deal was launched at a yield of 8.75%,
after being upsized from an initial US$500m
and tightened from price talk of 9.00%–
9.25%.
“It was a blowout,” said one investor. “It
still has IG ratings and has hard collateral.”
Nordstrom carries Baa2/BBB– ratings from
Moody’s and S&P but the deal was being run
by high-yield desks.
The bond is secured on all of Nordstrom’s
equity holdings in Nordstrom Real Estate
Holdings, a new entity that comprises a
portfolio of real estate assets, including
Nordstrom’s corporate headquarters and
from social distancing measures and a drop
in consumer demand, but ratings agencies
noted the company has invested heavily in
its online offering in recent years.
Digital sales now account for one third of
JP Morgan report on Wednesday.
Online sales are now margin neutral,
according to the bank, with higher shipping
savings.
And while demand for higher-end goods
may decline, the retailer expects consumers
to increasingly favour off-price items, which
bodes well for the company’s discount
Nordstrom Rack outlets.
The bond sale represents the latest step in
the company’s plan to preserve liquidity.
4HEûCOMPANYûEXITEDûTHEûûlSCALûYEARû
ending February 1 with US$853m of cash on
the balance sheet.
Since then, it has used most of the tools in
the corporate treasury play-book to improve
liquidity.
It has drawn US$800m on a revolving line
of credit, suspended quarterly cash dividend
in 2020, suspended share repurchases, is
working capital, is negotiating payment
terms with vendors and has halted store
employee pay from April 5.
The executive leadership group are also
forgoing parts or all of their salaries through
)NûAûlRESIDEûCHATûWITHû*0û-ORGANûANALYSTSû
on April 2, CFO Anne Bramman described
the company’s balance sheet actions to date
as being based on “pretty draconian scenario
planning”.
LIFEPOINT BOLSTERS LIQUIDITY
WITH NEW DEBT OFFERINGS
Apollo-owned hospital operator LIFEPOINT
HEALTH got a strong reception in the high-yield
market on Monday as it raised liquidity to
offset the revenue impact of delayed
procedures because of the spread of Covid-19.
Privately owned LifePoint upsized an
restricted payment to holdco using opco mAGSHIPûSTOREûINû3EATTLEûSIXûDISTRIBUTIONû INITIALû53MûlVE
YEARûNON
CALLûTWOû
assets to extend the company’s runway
until the May 2021 6.5% opco senior notes
maturity,” according to the CreditSights
note.
But the new deal was well collateralised
GIVENûITSûlRST
CENTRESûANDûlVEûHIGHûVALUEûRETAILûLOCATIONS
The portfolio has a combined value of
US$1bn–$1.1bn, according to a lead.
CreditSights noted that the portfolio
valuation was generous to the company.
secured note to US$600m, launching the
B1/B rated note at 6.75% inside price talk of
the 7% area.
4HEûDEALûFOLLOWEDûlVEûOTHERûISSUERSûLASTû
week opting to sell new junk debt in the
LIENûSECURITYûANDûTHEûLARGEû Nordstrom was last in the market in April lVE
YEARûNON
CALLûTWOûSECUREDûFORMAT
coupon gave comfort to investors despite 2019, when it sold a 10-year bond with a And pricing was tight to where one of
the risk. 4.375% coupon. THOSEûlVEûnûFELLOWûHOSPITALûOPERATORûTENET

42 International Financing Review April 11 2020


HEALTHCARE – was able to price, despite
LifePoint’s coming with slightly lower
ratings.
Tenet priced an upsized US$700m B1/BB–
RATEDûlVE
YEARûSECUREDûNOTEûATûûTHEû
previous Thursday. Those notes were
The euro high-yield corporate market
has now been shut for six straight weeks,
its longest stretch since the 2011-12
eurozone crisis, according to JP Morgan,
but market participants say it’s just a
“matter of time” before there’s a deal.
BONDS HIGH-YIELD
CSPP-eligible, and they’re from big
companies that have a lot of liquidity and
easy access to markets.”
Bankers are hopeful that the euro high-
yield market has turned a corner, with
SOMEûINmOWSûRETURNINGûTOûTHEûASSETûCLASS
trading at 102.50 to yield 6.70% as of
Wednesday, according to MarketAxess.
LifePoint was last in the market in
February, when it sold a US$600m seven-
year non-call two bond at 4.375% that last
traded at 91.49 to yield 5.90%, according to
Trace data.
LIQUIDITY BOOST
The spread of Covid-19 is causing hospitals
to delay many elective procedures, which
will impact revenues across the sector.
LifePoint was also in the market with an
53MûASSET
BASEDûlRST
They are hopeful that the lack of !NDûLASTûWEEKû3WISSûAGRIBUSINESSûlRMû
liquidity in the secondary market will SYNGENTAû"A"""n""" ûSOLDû%UROPESûlRSTû
provide the tail-wind for new issue crossover new issue since novel
interest. coronavirus volatility hit markets, printing
“We’re seeing investors on the sidelines a €500m six-year at mid-swaps plus 365bp.
that have been waiting for an opportunity
to deploy capital, especially now assets are CARNIVAL IN DOLLARS
deeply discounted,” said a source familiar The US high-yield market reopened on
with Carnival’s deal. March 30 after a month-long hiatus with
“But the reality is that liquidity in 9UM
û"RANDSûlRSTûOUTûONûSCREENS
secondary is pretty thin, and everyone is But when Carnival then announced
trying to bid for the same 25 names. If you ITSû53BNûlNANCEûPACKAGEûTHEûFOLLOWINGû
have lots of money to deploy, the only day, it seemed the drought in euros
INûLAST
OUTûTERMû option available is the primary market.” would also be broken. Although the
loan on Monday. /NEûHIGH
YIELDûINVESTORûWITHûAûmEXIBLEû issuer is still rated investment-grade in
It warned the spread of Covid-19 will have mandate told IFR he had been buying every other sense this was a high-yield
ANûADVERSEûIMPACTûONûlNANCIALûRESULTSûTHATû investment-grade bonds in primary for a lNANCING
THEûlRMûISûhNOTûCURRENTLYûABLEûTOûQUANTIFYv lack of opportunities in high-yield The package included a minimum
Against this backdrop, JP Morgan analysts secondary. €300m component as part of a US$3bn-
wrote in a note on Monday that they expect “Liquidity has gone out of the door,” said EQUIVALENTûTHREE
YEARûNON
CALLûlRSTûPRIORITYû
to continue to see hospital operators the investor. senior secured note as Carnival sought
SUSPENDINGûlNANCIALûGUIDANCEûANDûTAKINGû “Investment-grade is coming at lNANCINGûTOûKEEPûITSELFûAmOATûFORûTHEûNEXTû
steps to shore up liquidity, estimating relatively attractive spreads, the bonds are year.
double-digit percentage reductions of
normal volume. ALL US$ DENOMINATED HIGH-YIELD BONDS ALL ASIAN HIGH-YIELD ISSUERS
LifePoint is seen by ratings agencies as BOOKRUNNERS – 1/1/2020 TO DATE 1/1/2020 TO DATE
having a strong liquidity position and is also Managing No of Total Share Managing No of Total Share
EXPECTEDûTOûBENElTûFROMûSUPPORTûFROMûTHEû bank or group issues US$(m) (%) bank or group issues US$(m) (%)
recently passed CARES Act. 1 BofA Securities 56 7,908.47 8.8 1 Credit Suisse 18 2,362.97 11.2
LifePoint said it had around US$895m of 2 JP Morgan 61 7,875.07 8.8 2 UBS 12 1,672.49 7.9
liquidity as of March 31, consisting of 3 Barclays 47 6,695.29 7.5 3 BofA Securities 5 1,531.66 7.2
US$325m cash and cash equivalents and 4 Citigroup 50 6,369.87 7.1 4 Tianfeng Securities 4 1,320.00 6.2
US$570m of capacity on its asset-based 5 Goldman Sachs 43 4,984.98 5.6 5 Goldman Sachs 10 1,235.42 5.8
lending facility. 6 Credit Suisse 39 4,952.15 5.5 6 Citic 17 974.90 4.6
The company is also seeking accelerated 7 Morgan Stanley 29 4,857.61 5.4 7 Haitong Secs 25 947.56 4.5
Medicare payments and direct grant aid 8 Deutsche Bank 42 4,450.85 5.0 8 Barclays 13 790.45 3.7
under the CARES Act. 9 Wells Fargo 35 4,221.39 4.7 9 Standard Chartered 7 677.20 3.2
It has also been taking steps this year, 10 RBC 31 4,021.96 4.5 10 Deutsche Bank 13 666.69 3.2
INCLUDINGûRElNANCINGSûANDûTENDERûOFFERSûTOû Total 136 89,453.68 Total 47 21,135.57
clean its balance sheet of expensive legacy debt. Including US domestics, Euro, foreign, globals. Excluding equity-related debt. Excluding equity-related debt.
Moody’s said it expected the company’s Source: Refinitiv SDC code: B5 Source: Refinitiv SDC code: B06d
good liquidity and anticipated relief from
the recently signed CARES Act will enable it ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS ALL EUROPEAN HIGH-YIELD ISSUERS
TOûWEATHERûSIGNIlCANTûSHORT
TERMûEARNINGSû 1/1/2020 TO DATE 1/1/2020 TO DATE
headwinds related to the Covid-19. Managing No of Total Share Managing No of Total Share
bank or group issues €(m) (%) bank or group issues US$(m) (%)

1 JP Morgan 17 1,973.42 9.6 1 Citigroup 15 2,464.32 9.5

EUROPE/MIDDLE EAST/ 2 Deutsche Bank 12 1,683.84 8.2 2 JP Morgan 19 2,461.13 9.5
AFRICA 3 Citigroup 13 1,335.14 6.5 3 Deutsche Bank 11 2,129.37 8.2
4 BNP Paribas 13 1,222.00 6.0 4 BNP Paribas 13 1,626.43 6.2
WILL ILLIQUIDITY IN EURO HIGH-YIELD 5 Barclays 11 1,154.94 5.6 5 ING 9 1,326.58 5.1
SECONDARY SPUR PRIMARY? 6 ING 10 1,110.34 5.4 6 Credit Suisse 7 1,277.19 4.9
7 HSBC 13 1,019.70 5.0 7 Barclays 9 1,274.13 4.9
Syndicate bankers say the euro high-yield 8 Credit Agricole 7 994.41 4.9 8 Credit Agricole 6 1,203.41 4.6
market is open for business, but some 9 Credit Suisse 7 978.24 4.8 9 SG 7 1,125.88 4.3
scepticism remains after both cruise ship 10 UniCredit 9 904.62 4.4 10 HSBC 12 1,124.68 4.3
company Carnival and Irish packaging Total 38 20,464.64 Total 40 26,028.65
group Ardagh opted to raise debt in the US Excluding equity-related debt. Excluding equity-related debt.
dollar market. Source: Refinitiv SDC code: B6 Source: Refinitiv SDC code: B06c

International Financing Review April 11 2020 43

 But leads decided to raise the entire “Euro high-yield is a natural place for at spreads equal to or wider than
eventually upsized US$4bn in the dollar supply,” said the banker. “I’m just not sure comparable BB-rated bonds, said the
market to keep things simple in what was who wants to validate the current levels.” company.
a complex deal that also included an A second banker away from the Still, some high-yield investors are
EQUITYûlNANCINGûSAIDûTHEûSOURCEûFAMILIARû transaction said his impression was that looking at the likelihood of a wave of
with the deal. Ardagh decided it would be “safer” to issue fallen angels as an investment
“It became apparent that the in US dollars. opportunity, albeit with caution. They are
management of three different A natural market-opener would be a wary in particular of zombie companies
transactions from the company name in the TMT sector, high-yield that have been surviving on low interest
perspective would be easier with just bankers said. RATESûANDûAûLACKûOFûlNANCIALûTRIGGERSûTOû
having a dollar tranche,” said the source Telecom Italia (Ba1/BB+/BB+) reopened push them over the edge. They warn that
familiar with the transaction. primary in February 2016 and January not all of these will survive the downturn.
By the end of March 31, Carnival already 2019 when the market was rebounding “For high-yield the bigger factor is not
had a US dollar investor book that was from post-lows, said the banker. fallen angels, because names from IG will
supportive of doing the full US$4bn in Fresenius, a German a kidney dialysis make it a stronger index,” said one high-
dollars, said the source. provider, reopened the high-yield market yield investor.
There was, however, also enough in 2009 and 2011, he said. That company “But high-yield should remain worried
appetite from investors to support a now carries an investment-grade rating of about the massive dispersion between
€500m–€750m three-year bond, he said. Baa3/BBB/BBB– and was in the primary credits and the rising risk of defaults on
The euro bond would probably have priced market on March 31 with a €750m October some of the lower-rated names if we head
75bp–100bp inside the US dollar’s landing 2027 bond. into a more recessionary environment and
levels of 11.5% at an OID of 99. oil prices head lower.”
“But the fact that we knew the dollar INVESTOR EXCITEMENT OVER FALLEN The spread of the coronavirus has
book was there to support the full US$4bn ANGELS TEMPERED BY ZOMBIE FEARS transformed the landscape and now
meant that the company ultimately companies already under stress will begin
decided to manage the complexity of the There are widespread fears that forced to fail, restructuring advisers say.
transaction and issue solely in dollars.” selling following mass downgrades out of “As we move through this crisis, more
The dollar book ended up as “one of the investment-grade territory could lead to ZOMBIESûWILLûBEûmUSHEDûOUTûANDûMARKETû
largest books that I can remember seeing unprecedented price dislocation in the stresses will begin to dissipate,” said
in my entire career”, said the source. high-yield market, putting overleveraged Martin Dropkin, global head of research,
A second source familiar with the deal companies, which have been relying on lXEDûINCOMEûATû&IDELITYû)NTERNATIONAL
said the biggest piece of Carnival’s
business was US dollar-denominated, so
that market was always the focus.
ARDAGH
Irish packaging company Ardagh also
plumped for US dollars. The company
raised US$500m on April 3 to pay down a
US$300m term loan facility.
Sole bookrunner Citigroup priced the
lVE
YEARûNON
CALLûTWOûBONDûATû
A London-based high-yield syndicate
banker away from the deal said Ardagh
COULDûhDElNITELYûHAVEûDONEvûTHEûDEALûINû
euros. An equivalent euro bond would have
come in the mid-to-high 4% range, he said.
CHEAPûCREDITûTOûSTAYûAmOATûATûRISKûOFû
default.
Roughly US$215bn of US debt and
€100bn of European debt is expected to be
downgraded to high-yield this year,
according to Fidelity International, after
the global spread of the novel coronavirus
stopped economies in their tracks.
Price dislocations are possible because
downgrade risks are not properly baked
into the price or yield of assets.
In the US, the amount of bonds rated on
the cusp of investment-grade, now equals
around 70% of the entire US high-yield
market, said Fidelity. Yet only around 5% of
the US investment grade index is trading
Dropkin said investors should run a
detailed liquidity and covenant analysis on
weaker companies to determine how long
they can survive without additional
funding while access to liquidity remains
limited.
“A high degree of caution is also
necessary at the riskier end of the high-
yield spectrum B/CCC. Credit selection
here is paramount,” he said.
A second high-yield investor said he was
“optimistic” about the fallen angel wave.
“A lot of investors out there are ratings
constrained, and so will sell bonds when
they are downgraded – and that will
empirically offer you value,” he said.

ALL EUROPEAN ISSUERS GLOBAL STRUCTURED FINANCE IN EUROS ALL INTL ISSUERS (EXCLUDING SELF-FUNDED)
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 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 BofA Securities 8 2,360.10 14.5 1 Credit Agricole 2 1,352.56 17.3 1 Goldman Sachs 26 6,365.95 10.0
2 Lloyds Bank 9 2,073.91 12.7 2 Goldman Sachs 3 1,202.69 15.4 2 Citigroup 25 5,211.39 8.2
3 Citigroup 7 1,603.64 9.8 3 BofA Securities 2 942.53 12.1 3 JP Morgan 27 5,138.14 8.1
4 Credit Agricole 2 1,514.09 9.3 4 JP Morgan 2 574.63 7.4 4 Wells Fargo 20 4,887.03 7.7
5 BNP Paribas 4 1,122.23 6.9 5 Morgan Stanley 2 547.58 7.0 5 Credit Suisse 24 4,758.41 7.5
6 JP Morgan 4 1,091.33 6.7 6 Commerzbank 1 521.35 6.7 6 BofA Securities 23 4,637.85 7.3
7 Goldman Sachs 3 972.04 6.0 7 ING 1 521.35 6.7 7 Barclays 26 4,573.60 7.2
8 Morgan Stanley 3 850.78 5.2 8 Coop Rabobank 1 500.00 6.4 8 Morgan Stanley 15 3,397.01 5.4
9 Barclays 5 790.89 4.8 9 BNP Paribas 1 327.17 4.2 9 Deutsche Bank 21 3,174.66 5.0
10 ING 1 576.20 3.5 10 UniCredit 1 321.93 4.1 10 Nomura 18 2,933.04 4.6
Total 30 16,313.40 Total 14 7,803.71 Total 128 63,343.91
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: Refinitiv SDC code: B16n Source: Refinitiv SDC code: B16g Source: Refinitiv SDC code: J10d

44 International Financing Review April 11 2020

 STRUCTURED FINANCE

“Net sellers mean in those names you
will be overcompensated for the
underlying risk. You can use the
irrationality and ratings-driven nature of
markets to your advantage – as long as the
company survives.”
ENERGY AND AUTO
The energy and auto sectors are most at
risk of mass downgrades to junk, thanks to
the respective threats of the oil glut and
production shutdown.
US car company Ford recently became
the largest fallen angel ever after being
downgraded to junk at the end of March. It
has US$77.7bn-equivalent in bonds,
ACCORDINGûTOû2ElNITIVû%IKON
Moody’s said after the downgrade: “The
rapid and widening spread of the
coronavirus outbreak, deteriorating global
economic outlook, falling oil prices, and
asset price declines are creating a severe
and extensive credit shock across many
sectors, regions and markets.”
“The combined credit effects of these
developments are unprecedented.”
Most European carmakers are likely to
end up as fallen angels thanks to
production shutdowns, according to
analysts at Bank of America.
Triple B rated autos such as CNH,
OFlCEûMAYûENDûUPûWITHûTHEûTRANCHEûGIVENû
the CIO’s previous willingness to absorb
senior securitised risk from the UK.
The £1.7bn UK RMBS is backed by
mortgages originated by Northern Rock
BEFOREûTHEûûlNANCIALûCRISISû4HEYûMAKEû
up one of three portfolios acquired in a
£4.9bn deal last year from UK “bad bank” UK
Asset Resolution. Citi was sponsor and
0IMCOûPROVIDEDûTHEûMAJORITYûOFûlNANCING
The 1.98-year Class A from Chester B1,
sized at £1.29bn and rated Triple A by
Moody’s and S&P, was priced at par with a
coupon of Sonia plus 95bp.
Classes B, C D, and E, rated Aa3/AA, A1/A,
Baa3/BBB and Ba3/BB, came at cash prices of
93.7, 90.5, 89 and 87.9, with respective
margins of 130bp, 160bp, 200bp and 250bp.
The unrated Class Z had a cash price of
75.5, and the Caa3/CCC+ Class Z was at 98.5.
EUROPEAN RETAIL, HOTEL CMBS
HIT BY RATINGS AGENCIES
S&P and Fitch downgraded or put on
negative review tranches from several
European CMBS this week, as a range of sub-
asset classes within CMBS come under
pressure with the coronavirus keeping
consumers locked down.
One notable exception is warehouse
In the UK, Fitch downgraded bonds from
three shopping centre CMBS. The deals are
INTU METROCENTRE FINANCE, TRAFFORD CENTRE
FINANCE and MEADOWHALL FINANCE, which
securitise loans backed by regional shopping
centres in Newcastle, Manchester and
3HEFlELDûRESPECTIVELY
Intu had already been downgraded to BBB
from A at the end of last year, as its
collateral value fell and LTV rose. Fitch has
now downgraded the bond to BB.
Fitch also put on Rating Watch Negative
the £750m Triple A senior secured notes
issued by quasi-CMBS WESTFIELD STRATFORD CITY
FINANCE NO.2.
4HEûDEALûISûBACKEDûBYûAûLOANûONûmAGSHIPû
,ONDONûSHOPPINGûCENTREû7ESTlELDû3TRATFORDû
City. Although Fitch expects the business to
suffer because of the coronavirus, the
substantial equity position of sponsor
Unibail-Rodamco is enough to keep the
notes at Triple A.
But it put the notes on watch because of
the possibility that containment measures
in the UK last longer than its base case
assumption, which relies on a solid recovery
in the UK starting in the third quarter this
year.
S&P put three tranches from two UK hotel
CMBS on CreditWatch Negative on Tuesday.
“The hotel and lodging sector is facing an
0EUGEOTû6ALEOûANDû3CHAEFmERûAREûALLûONû
the brink of junk, and have cumulatively
issued more than €12bn in Eurobonds,
noted analysts. RCI Banque (Baa1/BBB,
both neg) has around €15.6bn outstanding.
“In the context of a European HY market
with a face value of around €333bn, these
logistics CMBS, an asset class which found
popularity with investors in late 2017 and in
2018, although last year market participants
started to question whether the sector was
overdone.
That was before lockdowns put a
premium on businesses which provide
unprecedented freefall in passenger
numbers due to the rapid escalation of the
Covid-19 pandemic,” S&P said.
“In addition, our economists are now
pointing to a global recession in 2020, which
COULDûTRANSLATEûTOûSIGNIlCANTûlNANCIALûSTRAINû
for some operators within the sector.”
AREûSIGNIlCANTûAMOUNTSvûWROTEû"!-,û
analysts. “The bulk of European auto
issuers will be high-yield from 2020 for the
foreseeable future.”
STRUCTURED FINANCE
EMEA MBS
ISSUE PRICES SHOWN FOR
CHESTER B1 RMBS
A prospectus for UK RMBS CHESTER B1,
which was pre-placed on March 30, shows
the issue prices for Classes A to X.
The prospectus says the notes were
initially taken down by the lead managers,
BNP Paribas and Citigroup on all tranches,
and JP Morgan on the Class A. It says they
intended to sell the notes to investors after
the closing date.
JP Morgan’s presence on the seniors
suggests that the bank’s chief investment
home delivery services.
“Now [logistics CMBS] is the best thing
since sliced bread again – the warehouses
literally contain sliced bread,” said one
investor.
But other parts of the CMBS market –
retail and hotels in particular, as well as
leisure and student housing – are under
pressure.
Fitch has downgraded notes from three
Italian CMBS and put the deals on Rating
Watch Negative, because of the impact of
containment measures on retail businesses.
It downgraded all tranches of PIETRA NERA
UNO, which is sponsored by Blackstone and
backed by loans on three retail properties.
It downgraded all tranches of Kildare
Partners’ EMERALD ITALY 2019, backed by
Northern Italian retail centres.
And it downgraded the mezzanine
tranches from Deco 2019 – Vivaldi, which is
backed by two fashion outlets in Northern
Italy.
Two weeks ago DBRS Morningstar put
tranches from those three Italian CMBS on
Negative trend, and did the same for a
fourth Italian trade, TAURUS 2018-1 IT.
International Financing Review April 11 2020
One of the deals, MAGENTA 2020, was closed
just one month ago. It securitises a loan
from Goldman Sachs to Thai conglomerate
DTGO, backed by a portfolio of 17 hotels.
Classes D and E are on CreditWatch
Negative.
And S&P put the Class E from Morgan
Stanley’s 2019 CMBS Helios (ELoC 37) on
CreditWatch Negative, for the same reasons
as Magenta.
The ratings agency has also downgraded
UK shopping centre CMBS ELIZABETH FINANCE
2018; not because of the coronavirus, but
because one of the loans in the deal received
a lowered market valuation in January.
EMEA ABS
ECB ADDS €700m TO ABSPP,
FIRES UP PEPP
The ECB bought €700m for its ABS
Purchase Programme in the week ended
April 3, down from €1bn the previous
week. Netting out €100m of redemptions
leaves the programme standing at €31.7bn.
45
NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 9/4/2020
Issuer
Freddie Mac multi-family SPC SK-F78
Freddie Mac multi-family SPC SK-F78
But the ECB may have bought more ABS
under its new Pandemic Emergency
Purchase Programme (PEPP) too. Figures
released on Wednesday showed the
programme bought €30.2bn of securities
INûITSûlRSTûWEEKûOFûOPERATIONS
All assets eligible under the ECB’s
existing Asset Purchase Programme – ABS,
covered bonds, public sector debt and
corporates – are eligible under PEPP,
which has a maximum size of €750bn.
But the ECB has not broken down the
PEPP asset purchases by type, meaning in
theory its purchases under PEPP could
include additional ABS too. A spokesperson
for the ECB told IFR a decision about
whether to reveal the types of assets
bought for the PEPP still needs to be taken.
As well as the €700m ABS purchases
under APP, the programme in the week
ended April 3 bought an extra €1.8bn of
covered bonds, €13.2bn of public sector
assets and €2.7bn of corporate debt.
The ECB has already announced it has
an extra €120bn to spend on APP-eligible
assets.
“We cannot stress enough the
importance of the PEPP of €750bn and
extra QE of €120bn for 2020 to be spent
in purchases of assets eligible under the
APP ... without timing or quantitative
limits,” BofA Securities research said last
week.
Market participants say the expectation
Amount (m) WAL Coupon (%)
US$697.7 9.54 USL+80bp
US$155.5 9.54 SOFR+100bp
Data show that the ECB bought more
under APP in March than in any previous
month, with €2.8bn (as of March 27)
recorded, versus the next highest €2.26bn
in January 2016,
“We will need a few more data points before
we can determine whether this is a historical
aberration or a new trend,” BofA said.
AMAG LEASING MANDATES SWISS
AUTO LEASE ABS
Regular Swiss issuer AMAG LEASING has
MANDATEDûWHATûCOULDûBEû%UROPESûlRSTû
public securitisation since volatility caused
by the coronavirus pandemic shut primary
markets.
Europe’s last public trade was French
RMBS Harmony French Home Loans
2020-1 on March 11.
Spreads have since widened too far for
most issuers to consider bringing a new
issue to market. And central bank
willingness to accept senior securitisation
paper as repo collateral offers a more
economic route for bank issuers, while
deals from some non-bank issuers might
struggle to get traction with investors
nervous about extension risk.
AMAG said on Tuesday it had mandated
GreensLedge Capital Markets and Zuercher
Kantonalbank as joint arrangers for a
potential SFr-denominated auto-lease ABS.
The deal, SWISS CAR ABS 2020-1, will offer
Bookrunner(s) Rating Asset type
Morgan Stanley/JP Morgan NR/NR/NR CMBS
Morgan Stanley/JP Morgan NR/NR/NR CMBS
AMAG Leasing was last in the auto ABS
market in 2018 when it sold two
transactions from its Swiss Car shelf. The
second, Swiss Car 2018-2, sold SFr250m
Triple As due November 2021 at mid-swaps
plus 58.25bp.
As with many Swiss securitisations, the
deal was sold only to Swiss accounts.
FCA READIES SUPPORT FOR
AUTO FINANCE BORROWERS
The UK’s FINANCIAL CONDUCT AUTHORITY will
announce measures this week to support
MOTORûlNANCEûBORROWERSûAFTERûITû
introduced payment freezes for mortgages
and unsecured consumer debt.
“We know there is still more work to be
done, and we will be announcing further
measures to support consumers in other
parts of the credit market in the future,
INCLUDINGûINûTHEûMOTORûlNANCEûSECTORûNEXTû
week,” interim FCA chief executive
Christopher Woolard said on Thursday.
In March the FCA told mortgage lenders
they should allow borrowers payment
holidays of up to three months if they
struggle to meet repayments because of
the coronavirus pandemic.
On Thursday the FCA extended the
provision of payment holidays to
borrowers with consumer loans, credit
CARDSûANDûOVERDRAFTSû"UTûAUTOûlNANCEû
loans were excluded from those measures.
of a bid from the ECB in the secondary only Class As, rated Triple A by Fitch. )NûTHEûABSENCEûOFûANYûOFlCIALûGUIDANCEû
market has helped spreads of eligible There is a revolving period to February AUTOûlNANCEûPROVIDERSûHAVEûALREADYûSTARTEDû
ASSETSûlRMûUPû!NDûHAVINGûTHEû%#"û 2022. introducing their own additional
behind a new issue could be crucial Zuercher Kantonalbank will be sole forbearance measures.
when the euro primary markets eventually bookrunner, and will be a joint lead Volkswagen Financial Services is
reopen. manager alongside UBS. offering UK customers “breathing space” -
a 60-day period when customers in
GLOBAL SECURITISATIONS IN STERLING SECURITISATIONS – ALL EUROPEAN RMBS lNANCIALûDIFlCULTIESûBECAUSEûOFûTHEû
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE coronavirus will not be contacted or
Managing No of Total Share Managing No of Total Share chased for payment.
bank or group issues £(m) (%) bank or group issues €(m) (%) It could also agree payment extensions
1 Lloyds Bank 9 1,594.20 27.0 1 Credit Agricole 2 1,352.56 15.0 for borrowers and allow them to keep
2 Citigroup 6 1,120.61 19.0 2 Lloyds Bank 6 1,301.83 14.5 their vehicles for as long as possible.
3 BofA Securities 6 970.48 16.4 3 Citigroup 6 1,203.26 13.4 According to Moody’s, VWFS UK’s offer
4 BNP Paribas 3 531.92 9.0 4 BofA Securities 5 1,027.14 11.4 of extensions to personal contract
5 JP Morgan 2 348.32 5.9 5 JP Morgan 3 914.82 10.2 purchase (PCP) of up to six months will
6 Barclays 2 325.00 5.5 6 BNP Paribas 3 717.01 8.0 help reduce residual value losses on the
7 NAB 2 305.23 5.2 7 Barclays 4 639.43 7.1 lRMSûOUTSTANDINGû5+ûAUTOû!"3
8 Goldman Sachs 1 242.30 4.1 8 Coop Rabobank 1 500.00 5.6 PCP contracts, which now dominate
9 Morgan Stanley 1 183.19 3.1 9 Morgan Stanley 2 480.40 5.3 NEWûCARûlNANCINGûINûTHEû5+ûAREûSTRUCTUREDû
10 Wells Fargo 1 183.19 3.1 10 NAB 2 359.30 4.0 WITHûAûlNALûBALLOONûPAYMENTûAFTERûAûSERIESû
Total 15 5,904.43 Total 16 9,007.75 of smaller monthly payments.
Including Euro, foreign, global and domestics, excluding CDOs. Including Euro, foreign, global and domestics, excluding CDOs Borrowers can choose to return the
Source: Refinitiv SDC code: B16i Source: Refinitiv SDC code: B10a VEHICLEûINSTEADûOFûMAKINGûTHEûlNALûBALLOONû

46 International Financing Review April 11 2020


payment, exposing the lender to the risk
that the residual value of the returned
vehicle is less than it would have received
FROMûTHATûlNALûPAYMENT
Also protecting ABS investors, Moody’s
said VWFS UK will repurchase any loans
subject to coronavirus extensions at a price
equal to the principal amount outstanding,
together with any arrears.
EMEA CLO
MARKET DISRUPTION CREATES “PRINT
AND SPRINT” CLOs
A number of CLO managers are printing
TERMû a group of organisations representing
short-dated CLOs to take account of
current market disruption caused by
Covid-19 and buy bargain trades in the
secondary loan market following a massive
sell-off in loan pricing.
Oaktree and Permira are marketing
CLOs in Europe totalling around €375m
and €300m, respectively with a focus on
ramping up a pool of leveraged loans in a
short period of time via the secondary loan
market, banking sources said.
The so-called “print and sprint” deals
differ to typical CLOs which spend months
ramping up warehouse portfolios from both
the primary and secondary loan markets.
With no primary issuance due to the
coronavirus, managers have been forced to
adapt CLO structures and buying habits.
In addition, these deals have shorter
one-year non-call periods rather than two-
US secondary loan trading volume was
US$742.29bn in 2019, compared to just
US$78.5bn in Europe during the same
period, LPC data showed.
SHORT TURNAROUND
However, the short-dated CLOs does not
appeal to every investor.
“The static deals aren’t necessarily what
we look for to tackle current challenges,”
Andrew Lennox, ABS portfolio manager
International at Federated Hermes said.
“We prefer managers who actively manage
their portfolios and know how to manage
loans during the tough times.”
“The whole point of CLOs is to give
MANAGERSûmEXIBILITYûWITHûLONG
funding to back the right horses and do
ongoing due diligence,” Stephan Michel,
senior portfolio manager International at
Federated Hermes added.
In addition, a pick-up in the secondary
CLO market which offers an attractive
discount and yield on existing CLO
vehicles themselves could dampen the
demand for new CLOs.
“Most secondary offers in different CLO
tranches now are at least 95% of face
value,” said the debt fund manager. “It’s
better to buy in secondary.”
As such, the CLO market has been
largely shut since mid-March when
lockdown measures started being imposed
across Europe and the US.
Year-to-date European CLO volume was
down 28% to €5.8bn on the same period
last year, while the US market dropped
STRUCTURED FINANCE
come up with at least US$75bn to pay
bondholders.
That total could climb above US$100bn,
according to the Mortgage Bankers
Association, an industry trade group.
Hence, the mortgage industry has been
scrambling to convince the US Treasury
Department and the Federal Reserve to
launch a lending programme for mortgage
servicers so they have a backstop if they
have to advance payments to bondholders
for months.
“While some servicers will not need
assistance, many others will require
temporary support to deliver forbearance
at the scale and for the duration required,”
lNANCIALûINDUSTRYûANDûAFFORDABLEûHOUSINGû
advocates wrote in a letter to regulators on
April 5.
The number of mortgages in
forbearance is rising and is likely to
accelerate in the coming weeks as millions
of workers have been laid off or
furloughed.
The percentage of home loans in
forbearance increased to 2.66% on April 1
from 0.25% on March 2, MBA said last
Tuesday.
“It is expected that requests will
continue to skyrocket at an unsustainable
pace in the coming weeks, putting
INSURMOUNTABLEûCASHmOWûCONSTRAINTSûONû
many servicers,” MBA chief economist
Mike Fratantoni said in a statement.
PRIVATE VS AGENCY MBS
years, while the re-investment period is
AROUNDûONEûTOûTWOûYEARSûINSTEADûOFûTHEûlVE
LPC.
year periods typically seen on CLOs.
“These are opportunistic transactions
because prices in the secondary loan
market are depressed at the moment,” a
debt fund manager said.
The average prices of European
leveraged loans in the secondary market
fell to under 80% of face value in March –
levels not seen since 2009 – before clawing
back some ground to 87.48 on April 7,
ACCORDINGûTOû2ElNITIVû,0#ûDATA
In the US last week, Blackstone/GSO sold
a US$476.7m “print and sprint” CLO, while
Palmer Square is looking to raise around
US$200m for a similar-type CLO, sources
said.
Executing this short-term strategy will
be easier for US managers than European
managers, because the US is a much larger,
more liquid market, several bankers and
fund managers noted.
“The US market is a different ball game.
The secondary market is more active and
liquid,” said Alexander Ohl, head of
structured credit at Union Investment in
Germany.
ûTOû53BNûACCORDINGûTOû2ElNITIVû
servicers is expected to affect the two types
US MBS
US MORTGAGE INVESTORS WARY AS
SERVICERS FRET ABOUT CASH
Investors in US mortgage bonds are
becoming wary about the stress put on
mortgage servicers by potentially millions
of homeowners, who, facing economic
hardship from the impact of the Covid-19
pandemic, are expected to seek mortgage
loan relief in the coming months.
Mortgage servicers, who collect and
process loan interest and principal
payments, are obligated to pay
bondholders every month even when they
record collection shortfalls.
“There is an elevated risk now, but it’s
too early to tell,” said John Bastoni, a
trader at Breckinridge Capital Advisors.
If about a quarter of all US
borrowers reduce or stop making their
mortgage payments for six months,
mortgage servicers are on the hook to
International Financing Review April 11 2020
4HISûPOTENTIALûlNANCIALûSQUEEZEûONû
of mortgage-backed securities differently.
Privately issued MBS are expected to feel
the brunt of the fallout, less so agency
MBS, guaranteed by the federal
government like GINNIE MAE or backed by US
mortgage agencies FANNIE MAE and FREDDIE
MAC.
Servicers for private MBS often have the
right to be repaid on payments they make
to bondholders. In most cases, they either
HAVEûTOûADVANCEûAûlXEDûNUMBERûOFû
payments or until they view advances as
unrecoverable.
“If servicers start to recover advances,
THATûCOULDûCUTûINTOûCASHmOWSûGOINGûTOû
bonds. That would hurt bond value,” said
Steve Abrahams, head of securitisation and
investment strategy at Amherst Pierpont.
On the other hand, investors who own
agency MBS should not lose too much
sleep over their monthly income,
Abrahams said.
“Servicers could come under pressure,
but Fannie Mae, Freddie Mac and Ginnie
Mae MBS insulate investors from that,”
Abrahams said.
47
 Ginnie Mae on Tuesday allowed an Most agency CMBS spreads tightened DELINQUENCY WORRIES
existing lending facility where Ginnie Mae anywhere from 15bp to 35bp from a week Last month’s US$2.2trn federal rescue
MBS servicers with collection shortfalls ago, according to Wells Fargo, bolstered by package, together with debt relief
can get cash by securitising their advances Fed purchases which total about US$5.5bn measures, are expected to hold down loan
to bondholders. since March 27. delinquencies in the short term.
However, the head of Fannie and Those spreads remain between 19bp But analysts expect a potential surge of
Freddie’s regulator told the Wall Street and 300bp wider than a month ago, missed loan payments if government
Journal on Tuesday that he does not see prior to the virus-induced sell-off that assistance runs out and forbearance
the need for the two government- rattled all parts of the credit market in measures are lifted.
sponsored enterprises right now to provide March. “I don’t see CMBS delinquencies spiking
liquidity support for mortgage servicers. And on April 2, FREDDIE MACûSOLDûTHEûlRSTû initially. Over the next 12 months,
Mark Calabria, director of the Federal CMBS deal in more than two weeks in a delinquencies will hinge on how long the
Housing Finance Agency, said industry sign of investor demand for agency-backed economic shutdown lasts,” said Brean
concerns about servicers facing a possible BONDSû)TûPRICEDûANOTHERûOFFERINGûlVEûDAYSû #APITALûHEADûOFûlXED
INCOMEûSTRATEGYû3COTTû
cash crunch as “spin”. later to solid demand. Buchta.
The MBA President and chief executive Top-rated private label CMBS bonds Overall CMBS delinquencies ticked up
Robert Broeksmit said on Tuesday that had been excluded from the Fed’s Term BPûTOûûINû-ARCHûDATAûlRMû4REPPû
Calabria’s remarks reinforced the need for Asset-Backed Securities Loan Facility when said on April 2, but it warned: “A deluge is
the Fed and the US Treasury to launch a it was announced in March. The central coming.”
lending facility for mortgage servicers. bank decided to allow existing Triple A
private label CMBS for TALF loans last REIT ANWORTH PARES BORROWINGS
AGENCY CMBS RALLIES AS RISKY Thursday. ON MBS, MAY DEFER DIVIDEND
PRIVATE BONDS SUFFER Most Triple A conduit spreads widened
by 20bp to 30bp from a week earlier, ANWORTH MORTGAGE ASSET CORP said on April 3
The US commercial mortgage-backed reversing a 35bp-100bp tightening the that it had pared its repurchase
securities market has become bifurcated week before, according to Wells Fargo. borrowings for its non-agency mortgage
between the agency CMBS paper eligible Riskier private label bonds are securities by selling these bonds in an
for purchase by the Federal Reserve and struggling even more. effort to increase its liquidity amid market
private label bonds excluded from the Triple B minus conduit spreads widened volatility due to the Covid-19 pandemic.
central bank’s scheme. further by 50bp to 1,150bp, which are Anworth is one of several US real estate
levels often seen among Double B junk investment trusts that invest in agency
US ASSET-BACKED SECURITIES
bonds. and non-agency mortgage-backed
BOOKRUNNERS: 1/1/2020 TO DATE
And spreads on Triple AAA standalone securities, which have been roiled by wild
Managing No of Total Share
CMBS backed by hotels and shopping price swings and margin calls.
bank or group issues US$(m) (%)
malls were quoted at least 15bp wider than A number of mortgage REITS have
1 JP Morgan 22 7,680.46 11.7
their conduit counterparts. slashed their dividends and repo
2 Citigroup 21 4,682.17 7.2
Market participants blame the borrowings in response.
3 Wells Fargo 21 4,654.39 7.1
exclusion of private label securities from Anworth said it lowered its repo loans
4 Barclays 15 3,720.03 5.7
TALF for the underperformance. Many on non-agency MBS to US$270m on March
5 RBC 14 3,566.27 5.5
hoped senior private-label CMBS would be 31 following the asset sales, down from
6 Credit Suisse 15 3,334.89 5.1
eligible, as they were when the scheme US$428m at the end of 2019.
7 BofA Securities 14 3,187.98 4.9
WASûlRSTûINTRODUCEDûDURINGûTHEûLASTû The REIT said it expected to further
8 MUFG 12 2,880.11 4.4
lNANCIALûCRISIS reduce its non-agency repo borrowings to
9 Deutsche Bank 15 2,876.67 4.4
“If you can’t resolve funding for lower- US$180m.
10 TD Securities 10 2,615.93 4.0
rated tranches, it’s almost useless for Moreover, agency MBS sales and
Total 114 65,398.47
private-label CMBS,” a fund manager said principal payments resulted in its agency
Excludes MBS.
Source: Refinitiv SDC code: F14
of the current version of TALF. MBS repo borrowings falling to about
US$2.2bn on March 31, Anworth said.
GLOBAL STRUCTURED FINANCE IN US$ STRUCTURED FINANCE – ALL INTL ISSUERS
It also said it would announce a decision
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
LATERûINû!PRILûABOUTûITSûlRST
QUARTERû
Managing No of Total Share Managing No of Total Share dividend, which it expects to delay.
bank or group issues US$(m) (%) bank or group issues US$(m) (%)
“We do anticipate that the payment date
1 JP Morgan 52 22,927.31 13.9 1 Goldman Sachs 26 6,365.95 9.7
for such a dividend will be later than April
2 Wells Fargo 47 18,377.34 11.1 2 JP Morgan 28 5,694.14 8.7
29, 2020, which would have been its
3 Credit Suisse 45 18,065.10 11.0 3 BofA Securities 24 5,322.07 8.1
routine payment date,” it said in a
4 BofA Securities 42 14,240.43 8.6 4 Citigroup 25 5,211.39 8.0
statement.
5 Morgan Stanley 33 13,930.66 8.4 5 Wells Fargo 21 5,134.42 7.8
It said it met all margin calls from its
6 Citigroup 44 13,661.23 8.3 6 Credit Suisse 24 4,758.41 7.3
lenders and counterparties on Friday.
7 Goldman Sachs 45 11,455.90 6.9 7 Barclays 26 4,573.60 7.0
The Federal Reserve’s unprecedented
8 Barclays 31 8,501.93 5.2 8 Morgan Stanley 15 3,397.01 5.2
purchases of agency MBS in recent weeks
9 Nomura 28 7,646.65 4.6 9 Deutsche Bank 21 3,174.66 4.8
have helped stabilise the market.
10 Deutsche Bank 32 6,268.89 3.8 10 Nomura 18 2,933.04 4.5
“Non-agency MBS prices have moved
Total 280 164,892.04 Total 132 65,485.01
SIGNIlCANTLYûLOWERûRECENTLYûBUTûHAVEû
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.
stabilised over this past week,” the
Source: Refinitiv SDC code: B16b Source: Refinitiv SDC code: J10c company said in a statement.

48 International Financing Review April 11 2020


NEW YORK MORTGAGE REIT
SELLS MORE BONDS
NEW YORK MORTGAGE TRUST, a mortgage real
estate investment trust, said last Tuesday
that it had been selling bonds since late
March in a bid to raise cash and is seeking
LONGER
TERMûlNANCINGûFORûSOMEûSECURITIESû Monday.
in its investment portfolio.
The mortgage REIT sector was roiled in
March as market volatility due to a Covid-
19 pandemic touched off a wave of margin
calls from their lenders. Many of these
mortgage funds unloaded assets to raise
cash in order to meet margin calls on their
repurchase agreements.
Since March 30, the company “is current
with its repurchase agreement payment
obligations, including margin
requirements, and is no longer in a
position to need forebearance agreements
FROMûITSûREPURCHASEûAGREEMENTûlNANCINGû
counterparties”, the REIT’s chairman and
CHIEFûEXECUTIVEûOFlCERû3TEVENû-UMMAûSAIDû
in a statement released on Tuesday.
Since March 27, New York Mortgage said
it had sold US$291m in mortgage-backed
securities. This was on top of the US$1.7bn
in proceeds from MBS sales it reported on
March 30.
Meanwhile, it said it secured U$250m in
repurchase agreements by using its
residential home loans as collateral, bring
ITSûTOTALûREPOûlNANCINGûTOû53BN
It said it was looking at term funding for
about US$859m in securities in investment
portfolio.
Its US$3bn investment portfolio
includes US$554m of non-agency
residential mortgage-backed securities,
US$276m of commercial mortgage-backed
securities, US$272m of residential
mortgages and about US$200m in cash.
“To the extent we are successful in
STRUCTURED FINANCE
and other industries have essentially shut TWO HARBORS TO PAY INTERIM
due to government measures to curb the DIVIDENDS
transmission of Covid-19.
“The deterioration in the US economy TWO HARBORS INVESTMENT CORP, a mortgage
has caused us to become increasingly real-estate investment trust, said last
concerned about consumer credit,” they Monday it would pay interim stock
wrote in a research note released last dividends after suspending regular
dividends to conserve cash amid
Bank of America forecast between 16 turbulence in the mortgage market
and 20 million US workers could lose their stemming from the Covid-19
jobs, sending the unemployment rate to pandemic.
15.6% in the second quarter. US mortgage REITs have been roiled by
On April 3, the Labour Department said wild price swings and margin calls, forcing
the jobless rate rose to 4.4% in March from a number of them to sell assets and/or to
3.5% the month before. slash their dividends.
“We expect deterioration in credit Two Harbors said it will pay an interim
performance could reach or exceed the COMMONûSTOCKûDIVIDENDûOFûlVEûCENTSûPERû
2008–09 recession experience,” BofA share on April 29. It will also pay dividends
added. on its preferred shares.
ABS issuance has been nearly non- For the fourth quarter of 2019, it
existent for more than three weeks as paid 40 cents in dividend on its common
market participants await for details on stock.
the Federal Reserve’s Term Asset-Backed “The declaration of this interim
3ECURITIESû,OANû&ACILITYûTHATûCANûlNANCEû DIVIDENDûREmECTSûOURûCOMMITMENTûTOû
US$100bn in ABS supply. STOCKHOLDERSûANDûOURûABILITYûTOûBEûmEXIBLEû
Bank of America analysts expected this and make real-time decisions, informed by
Fed lending programme to launch in the current and expected market conditions,”
second quarter. Two Harbors’ President and Chief
They now see consumer ABS issuance %XECUTIVEû/FlCERû4HOMASû3IERINGûSAIDûINûAû
totalling US$140bn, down from their statement.
earlier forecast of US$170bn, which would The REIT had US$1.2bn in unrestricted
mean US$100bn is to still come to market. cash on March 31 following the sale of
Much of the consumer ABS supply nearly all its non-agency mortgage-backed
would come from the auto sector. The securities.
Bank of America analysts said this ABS On March 24, it said it suspended
category would total US$105.5bn from DIVIDENDSûFORûTHEûlRSTûQUARTER
their earlier forecast of US$120bn. “As the global health pandemic
For commercial ABS, the analysts said continues to play out, we will be in a
they now expected supply for this segment better position to evaluate the future
at US$40bn from their initial projection of earnings power of our portfolio
US$68bn with US$29bn remaining to be and determine an appropriate level
issued. for a sustainable dividend,” Siering
“The stresses in the travel (aircraft and said.
rental), shipping (container, railcar, Prices on Two Harbors’ common shares
OBTAININGûTERMûlNANCINGûFORûTHISûPORTFOLIOû trucking) and in-store dining (franchise) have nearly doubled this week. They were
WEûBELIEVEûSUCHûlNANCINGûCOULDûENHANCEû sectors will likely create challenges for at US$4.76 in midday afternoon trading
our liquidity position and provide new deals, in our view,” they wrote. last Wednesday.
opportunities to invest in this new
operating landscape,” Mumma said. GLOBAL CDOs ALL EUROMARKET CDOs
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share Managing No of Total Share
US ABS bank or group issues US$(m) (%) bank or group issues US$(m) (%)
1 JP Morgan 2 2,700.68 14.2 1 BofA Securities 2 876.75 15.8
US ABS SUPPLY SEEN DOWN TO 2 BNP Paribas 4 1,448.73 7.6 2 BNP Paribas 2 863.46 15.5
US$180bn IN 2020: BOFA 3 Citigroup 3 1,329.44 7.0 3 Citigroup 2 811.18 14.6
4 Barclays 3 1,315.31 6.9 4 Jefferies 1 507.90 9.1
Bank of America analysts slashed their 5 Jefferies 3 1,039.90 5.4 5 Credit Suisse 1 461.02 8.3
forecast for issuance of US asset-backed 6 BofA Securities 2 876.75 4.6 6 Natixis 1 452.14 8.1
securities in 2020 to US$180bn from their 7 Natixis 2 713.44 3.7 7 Goldman Sachs 1 417.01 7.5
earlier forecast of US$238bn, prompted by 8 Credit Suisse 1 461.02 2.4 8 Morgan Stanley 1 399.06 7.2
an expected deterioration in consumer 9 RBC 1 438.50 2.3 9 Barclays 1 359.94 6.5
credits due to the economy contracting. 10 Goldman Sachs 1 417.01 2.2 Total 13 5,554.18
&IRST
TIMEû53ûlLINGSûFORûUNEMPLOYMENTû Total 43 19,084.94 Excludes global and domestic.
BENElTSûHAVEûSOAREDûTOûOVERûûMILLIONû Including Euro, foreign, global, US domestics.
since mid-March, as hotels, restaurants Source: Refinitiv SDC code: B12 Source: Refinitiv SDC code: J11

International Financing Review April 11 2020 49

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 9/4/2020
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

SSAR
US DOLLARS
Apr 7 2020 BNG US$2bn Apr 17 2023 0.75 99.811 MS+32 / T+44.9 0.814

Apr 7 2020 ONTTFT US$1bn Apr 15 2025 1.375 99.731 MS+80 / T+92.05 1.431

Apr 7 2020 CDP Financial US$2bn Apr 17 2023 1 99.849 T+67 1.051

Apr 8 2020 OMERS US$1bn Apr 14 2023 1.125 99.959 T+80 1.139
EUROS
Apr 6 2020 CCCI €500m Mar 25 2025 0.05 99.941 OAT+34 0.062

Apr 6 2020 Lower Saxony €250m incr Aug 2 2024 0 100.574 MS+11 -0.133
(€1.5bn)
Apr 7 2020 Alberta €1.1bn Apr 16 2025 0.5 99.838 MS+70 / B+106.9 0.533
Apr 7 2020 Cyprus €1.25bn Apr 16 2027 1.5 99.579 MS+165 / B+204 1.564

Apr 7 2020 Cyprus €500m Apr 16 2050 2.25 98.097 MS+215 / B+225.6 2.339

Apr 7 2020 Ireland NTMA €6bn May 15 2027 0.2 99.706 MS+32 / B+74.2 0.242

Apr 7 2020 SNCF green €1.25bn Apr 17 2030 0.625 99.23 OATs+57 0.705

Apr 8 2020 AFD €1.5bn May 25 2030 0.5 98.828 OATs+42 0.62

Apr 8 2020 Saxony €250m incr Apr 17 2025 0.01 100.424 MS+10 / B+47.3 -0.075
(€500m)
STERLING
Apr 9 2020 NIB £350m incr Dec 15 2022 1.125 101.494 G+48 0.555
(£600m)
SWISS FRANCS
Apr 7 2020 Eurofima SFr150m Apr 28 2027 0.125 100.489 MS+40 / Eidg+52 0.055

NON CORE
Apr 6 2020 Akademiska Hus SKr600m Apr 11 2023 0.5 99.851 - -
Apr 6 2020 Linkopings Stadshus SKr500m Apr 14 2002 3mS+75 101.129 3mS+19 -
Apr 6 2020 IFC social A$200m Apr 15 2035 1.5 99.906 ASW+54 / 1.507
ACGB+37.95
Apr 7 2020 South Australia A$467m incr Sep 22 2022 1.5 101.942 EFP+45 / 0.695
(A$2.467bn) ACGB+48.25
Apr 7 2020 South Australia A$628m incr Aug 15 2024 2.25 105.686 EFP+66.5 / 0.91
(A$2.628bn) ACGB+59.75
Apr 7 2020 South Australia A$290m incr Jul 20 2026 3 110.865 EFP+95 / 1.195
(A$2.54bn) ACGB+69
Apr 7 2020 South Australia A$40m incr May 24 2028 3 111.697 EFP+65 / 1.465
(A$2.04bn) ACGB+76.25
Apr 7 2020 South Australia A$15m incr May 24 2030 2.75 109.763 EFP+86.3 / 1.695
(A$1.765bn) ACGB+86.3
Apr 7 2020 South Australia A$60m incr May 24 2032 1.75 98.543 EFP+107 / 1.885
(A$1.06bn) ACGB+96.05
Apr 7 2020 Queensland A$300m Apr 16 2040 2.25 99.84 EFP+137.5 / 2.26
ACGB+65
Apr 7 2020 New Zealand NZ$3.5bn incr May 15 2031 1.5 100.997 NZGB 2039+32 1.403
(NZ$6.4bn)
Apr 8 2020 ACT A$1.1bn Apr 17 2023 1 100.414 EFP+60 / 0.86
ACGB+60

50 International Financing Review April 11 2020

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+35 area, MS+32 - >US$4.1bn Aaa/AAA/AAA Barc / BofA / GS / RBC EMEA 51%, US/Can 27%, APAC 14%,
LATAM 9%. CB/OI 63%, Bks 21%, AM/
Ins/PF 13%, Other 3%.
MS+80 area, MS+80 - >US$1.15bn Aa1/AA+/-/AAA BofA / Citi / HSBC / Scotia Amers 51%, EMEA 45%, Asia 4%. Bks
35%, CB/OI 28%, AM 28%, Ins/PF 9%.
T+70 area, T+67 - US$2.9bn Aaa/AAA/AAA/AAA GS / JPM / RBC / TD EMEA 45%, Amers 44%, APAC 11%. CB/
OI 70, Bks 21%, AM 7%, Ins/PF/Other
2%.
T+80 area, T+80 (#) - US$1.17bn Aa1/AA+/AAA/AAA BMO / HSBC / RBC / TD -

OAT +38 area 4 >€1.2bn, 35acs Aa2/-/AA BNPP / CA-CIB / HSBC / Natx / SG Fr 27%, UK/Ire 23%, Nordics 17%, Asia
17%, Ger/Aus 6%, S.Eur 5%, Benelux
5%. AM 40%, Bks/PB 38%, CB/OI 17%,
Ins/PF 4%, HF 1%.
- - - -/-/AAA Uni -

MS+70 (the #) - >€1.3bn Aa2/A+/AA Barc / BofA / JPM / RBC -

MS+170 area, 30 >€1.8bn Ba2/BBB-/BBB-/ Barc / JPM / MS / SG UK 34%, It/Gr 29%, Ger/Aus/Switz 10%,
MS+170 area BBB(low) Iberia 7%, Fr 2%, Nordics 7%, RoEur 1%,
Cyp 2%, US O/S 7%, Asia 1%. FM 36%,
Ins/PF 10%, HF 20%, Bks/PB 30%, CB/
OI 3%, Other 1%.
MS+220 area, 35 >€775m Ba2/BBB-/BBB-/ Barc / JPM / MS / SG UK 36%, It/Gr 28%, Ger/Aus/Switz 18%,
MS+220 area BBB(low) Iberia 6%, Fr 3%, Nordics 2%, Cyprus
1%, RoEur 1%, Asia 3%, US O/S 2%. FM
49%, Ins/PF 27%, HF 14%, Bks/PB 7%,
CB/OI 2%, Other 1%.
MS+35 area, MS+33 7 €33bn, 250acs A2/AA-/A+ BNPP / BofA / Cantor / Danske / GS Ire 16%, UK 25%, Nordics 13%, Fr 12%,
area / JPM Ger 7%, US 6%, Sp 6%, It 5%, RoEur 8%,
RoW 2%. AM 36%, Bks/Intermediaries
36%, Ins/PF 10%, CB/OI 10%, HF 8%.
OATs+high 50s, - >€1.55bn Aa3/AA-/A+ BNPP / CA-CIB / HSBC / JPM / SG Fr 28%, Ger/Aus/Switz 25%, Asia 19%,
OATs +58 area UK 17%, Benelux 5%, S.Eur 4%, Nordics
2%. FM 45%, Ins/PF 21%, CB 16%, Bks/
PB 14%, HF 2%, Corp 2%.
OATs +42 area - >€1.7bn -/AA/AA BNPP / CA-CIB / GS / JPM / Natx -
/ SG
MS+10 - - -/AAA BLB / Deka -

G+48 area, G+48 - £375m Aaa/AAA HSBC / RBC -

MS+40/43, MS+40 - 40acs Aa2/AA+ UBS / ZKB Switz 100%. Tsy 87.5%, AM 7%, Ins
area 4.5%, PF 0.5%, PB 0.5%.

- - - -/AA Danske -
- - - -/AA+ HCM -
- - - Aaa/AAA/AAA Daiwa -

EFP+42/45 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

EFP+63.5/66.5 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

EFP+92/95 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

EFP+63/66 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

EFP+86/89 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

EFP+105/108 - - Aa1/AA+/AA Citi/CBA/NAB/UBS -

- - Aa1/AA+/AA Citi -

NZGB 2039+32/37 - NZ$5bn Aaa/AA+/AA+ ANZ/BNZ/CBA/UBS -

EFP+56/60 - - -/AAA ANZ/DB/UBS/WBC -

International Financing Review April 11 2020 51

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 9/4/2020 (CONTINUED)
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Apr 8 2020 ACT A$225m incr May 22 2029 2.25 103.887 EFP+84 / 1.785
(A$900m) ACGB+89.5
Apr 8 2020 SEK green SKr500m Apr 14 2025 0.625 99.863 - 0.653
Apr 9 2020 KfW A$100m incr Feb 9 2022 5.5 108.48 ASW+48 / 0.76
(A$2.65bn) ACGB+53.5
Apr 9 2020 LGFA NZ$1.1bn Apr 15 2026 1.5 100.229 MS+78 1.46

Apr 9 2020 KfW A$100m incr Feb 9 2022 5.5 108.48 ASW+48bp, 0.76
(A$2.65bn) ACGB+53.5bp
CORPORATES
US DOLLARS
Apr 3 2020 Dell International Corp/EMC US$1bn Jul 15 2025 5.85 99.863 T+550 5.883
Apr 3 2020 Dell International Corp/EMC US$500m Jul 15 2027 6.1 99.762 T+562.5 6.143

Apr 3 2020 Dell International Corp/EMC US$750m Jul 15 2030 6.2 99.817 T+562.5 6.226
Apr 3 2020 FedEx US$1bn May 15 2025 3.8 99.724 T+350 3.859

Apr 3 2020 FedEx US$750m May 15 2030 4.25 99.758 T+370 4.279

Apr 3 2020 FedEx US$1.25bn May 15 2040 5.25 99.05 T+410 5.313

Apr 3 2020 Metropolitan Life Global US$1bn Apr 13 2030 2.95 99.794 T+240 2.974
Funding
Apr 6 2020 Ally Financial US$750m May 1 2025 5.8 98.828 T+562.5 6.071

Apr 6 2020 Analog Devices US$400m Apr 1 2025 2.95 99.496 T+262.5 3.06
Apr 6 2020 BMW US Capital US$1.5bn Apr 6 2023 3.8 99.897 T+350 3.837

Apr 6 2020 BMW US Capital US$1.5bn Apr 9 2025 3.9 99.829 T+350 3.938

Apr 6 2020 BMW US Capital US$1bn Apr 9 2030 4.15 99.854 T+350 4.168

Apr 6 2020 Broadcom US$2.25bn Apr 15 2025 4.7 99.99 T+425 4.702

Apr 6 2020 Broadcom US$2.25bn Apr 15 2030 5 99.555 T+437.5 5.057

Apr 6 2020 Burlington Northern Santa US$575m Feb 15 2051 3.05 99.171 T+180 3.092
Fe
Apr 6 2020 Caterpillar US$800m Apr 9 2030 2.6 99.459 T+200 2.662

Apr 6 2020 Caterpillar US$1.2bn Apr 9 2050 3.25 99.601 T+200 3.271

Apr 6 2020 Hewlett Packard Enterprise US$1.25bn Oct 2 2023 3.45 99.956 T+412.5 4.464

Apr 6 2020 Hewlett Packard Enterprise US$1bn Oct 1 2024 4.65 99.817 T+425 4.696

Apr 6 2020 Pacificorp US$400m Sep 15 2030 2.7 99.82 T+205 2.72

Apr 6 2020 Pacificorp US$600m Mar 15 2051 3.3 99.176 T+205 3.343

Apr 6 2020 Tucson Electric Power US$350m Jun 16 2050 4 99.138 T+275 4.05
Apr 7 2020 Avangrid US$750m Apr 15 2025 3.2 99.871 T+275 3.228

Apr 7 2020 BAE Systems US$1.3bn Apr 17 2030 3.4 99.296 T+275 3.484
Apr 7 2020 Brookfield Finance US$600m Apr 15 2030 4.35 99.903 T+362.5 4.362

Apr 7 2020 Estee Lauder US$700m Apr 15 2030 2.6 99.816 T+185 2.621
Apr 7 2020 Keurig Dr.Pepper US$750m May 1 2030 3.2 99.743 T+250 3.23
Apr 7 2020 Keurig Dr.Pepper US$750m May 1 2050 3.8 99.448 T+250 3.831
Apr 7 2020 Mondelez International US$500m Apr 13 2023 2.125 99.769 T+185 2.205
Apr 7 2020 Mondelez International US$500m Apr 13 2030 2.75 99.032 T+212.5 2.862
Apr 7 2020 Narrangasett Electric US$600m Apr 9 2030 3.395 100 T+265 3.395

Apr 7 2020 NiSource US$1bn May 1 2030 3.6 99.631 T+290 3.644
Apr 7 2020 Phillips 66 US$500m Apr 6 2023 3.7 99.885 T+337.5 3.741

52 International Financing Review April 11 2020

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

EFP+80/84 - - -/AAA ANZ/DB/UBS/WBC -

- - - Aa1/AA+/- SEB -
- - - Aaa/AAA/-/Scope Nomura -
AAA
MS+78/83, - - -/AA+/AA+ ANZ/BNZ/CBA/WBC -
MS+78/80
- - - Aaa/AAA/-/AAA Nomura -
Scope

T+612.5 area 65.5 US$6.5bn Baa3/BBB-/BBB- BofA/Barc/Citi/CS/GS/JPM

T+612.5 area 65.5 US$2.5bn Baa3/BBB-/BBB- BofA/Barc/Citi/CS/GS/JPM

T+612.5 area 70.5 US$3.9bn Baa3/BBB-/BBB- BofA/Barc/Citi/CS/GS/JPM

T+390 area 47 US$4.4bn Baa2/BBB BofA/GS/JPM/WFS(a)/Citi/MS/
Scotia(p)
T+400 area 46 US$2.4bn Baa2/BBB BofA/GS/JPM/WFS(a)/Citi/MS/
Scotia(p)
T+450 area 35 US$4.3bn Baa2/BBB BofA/GS/JPM/WFS(a)/Citi/MS/
Scotia(p)
T+287.5 area 28 US$3.4bn Aa3/AA-/AA- BofA/CS/GS/JPM
T+240 (the #)
T+600 area, 7.5 US$2.75bn Ba1/BBB-/BBB- Citi/DB/JPM/RBC -
T+562.5 (the #)
T+325 area 1.5 US$3.2bn Baa1/BBB Citi/JPM -
T+387.5 area, 60 US$2.7bn A2/A BAML/CITI/GS/JPM/WFS -
T+350 (the #)
T+387.5 area, 60 US$2.8bn A2/A BAML/CITI/GS/JPM/WFS -
T+350 (the #)
T+387.5 area, 70 US$3.6bn A2/A BAML/CITI/GS/JPM/WFS -
T+350 (the #)
T+475 area, 27 US$9.1bn Baa3/BBB-/BBB- Barc/Citi/JPM/MS/MUFG/WFS -
T+425 (the #)\
T+487.5 area, 32.5 US$7.6bn Baa3/BBB-/BBB- Barc/Citi/JPM/MS/MUFG/WFS -
T+437.5 (the #)
T+210 area, 4 US$2.6bn A3/A+ JPM/MS/WFS -
T+185 area
T+245 area, -3 US$3.8bn A3/A BofA/Citi/JPM/MUFG/SG -
T+205 (+/-5)
T+245 area, 3 US$5.8bn A3/A BofA/Citi/JPM/MUFG/SG -
T+205 (+/-5)
T+462.5 area, 32.5 US$3.4bn Baa2/BBB/BBB+ BNPP/Citi/JPM -
T+425 (+/-12.5)
T+475 area, 32.5 US$3.5bn Baa2/BBB/BBB+ BNPP/Citi/JPM -
T+437.5 (+/-12.5)
T+250 area, 3 US$2.6bn A1/A+ SMBC/BMO/MUFG/TD/USB -
T+205 (the #)
T+250 area, 2 US$3.2bn A1/A+ SMBC/BMO/MUFG/TD/USB -
T+205 (the #)
T+300 area 5 US$1.2bn A3/A BBVA/BNY/STRH/WFS -
T+325 area, 11 US$2.1bn Baa1/BBB/BBB+ BofA/BBVA/BNPP/MUFG(a)/CIBC/ -
T+287.5 (+/-12.5) CMZ/NatWest/Scotia(p)
T+312.5 area -1 US$6.7bn Baa2/BBB/BBB DB/GS/MS/NatWest -
T+375-387.5 34.5 US$900m Baa1/A-/A- DB/HSBC -
T+362.5 (the #)
T+237.5 area -1 US$6.1bn A1/A+ BofA/Citi/JPM -
T+300 area -2 US$6.5bn Baa2/BBB BofA/GS/JPM -
T+300 area -5 US$5.63bn Baa2/BBB BofA/GS/JPM -
T+237.5 area -10 US$5bn Baa1/BBB BofA/Barc/JPM/WFS -
T+275 area -9.5 US$7.4bn Baa1/BBB BofA/Barc/JPM/WFS -
T+300-312.5 5 US$2.9bn A3/A- Citi/JPM/MUFG/SMBC/SMBC Nikko/ -
T+270 (+/-5) TD
T+350 area 3 US$4.8bn Baa2/BBB+/BBB Barc/JPM/MUFG/PNC -
T+450 area, -2.5 US$5.1bn A3/BBB+ BofA/Citi/Miz/TD -
T+362.5 (+/-12.5)

International Financing Review April 11 2020 53

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 9/4/2020 (CONTINUED)
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Apr 7 2020 Phillips 66 US$500m Apr 9 2025 3.885 99.946 T+337.5 3.862

Apr 8 2020 American Water Capital US$500m May 1 2030 2.8 99.591 T+210 2.847

Apr 8 2020 American Water Capital US$500m May 1 2050 3.45 99.794 T+210 3.461

Apr 8 2020 Booking Holdings US$1bn Apr 13 2025 4.1 99.982 T+362.5 4.104

Apr 8 2020 Booking Holdings US$750m Apr 13 2027 4.5 99.78 T+387.5 4.537

Apr 8 2020 Booking Holdings US$1.5bn Apr 13 2030 4.625 99.834 T+387.5 4.646

Apr 8 2020 EOG Resources US$750m Apr 15 2030 4.375 99.96 T+362.5 4.38

Apr 8 2020 EOG Resources US$750m Apr 15 2050 4.95 99.412 T+362.5 4.988

Apr 8 2020 IPALCO Enterprises US$475m May 1 2030 4.25 99.909 T+350 4.261

Apr 8 2020 Nordstrom US$600m May 15 2025 8.75 100 8.75 8.75
EUROS
Apr 6 2020 Holcim Finance €500m Apr 9 2025 2.375 99.739 MS+265 / B+306.3 -

Apr 6 2020 Naturgy Finance €1bn Jan 15 2026 1.25 99.413 MS+155 / B+196.8 1.357

Apr 6 2020 Repsol International Finance €750m Apr 15 2030 2.625 99.896 MS+265 / B+305.7 2.637

Apr 6 2020 Repsol International Finance €750m Dec 15 2025 2 99.967 MS+220 / B+262.1 2.007

Apr 6 2020 Sanofi €250m incr Apr 1 2025 1 102.427 MS+73 / B+113.5 0.505
(€1bn)
Apr 6 2020 Sanofi €250m incr Apr 1 2030 1.5 106.539 MS+83 / B+123.7 0.815
(€1bn)
Apr 7 2020 Akzo Nobel €750m Apr 14 2030 1.625 99.397 MS+165 / B+202.6 1.691

Apr 7 2020 Bouygues €1bn Jul 24 2028 1.125 99.277 MS+125 / B+165.4 -

Apr 7 2020 Deutsche Bahn €750m Apr 16 2040 1.375 99.342 MS+115 / B+152 1.413

Apr 7 2020 EDP green €750m Apr 15 2027 1.625 99.385 MS+180 / B+219.4 1.719

Apr 7 2020 EnBW €500m Apr 17 2025 0.625 99.52 MS+90 / B+126.7 0.723

Apr 7 2020 SSE €600m Apr 16 2025 1.25 99.62 MS+150 / B+189.5 -

Apr 7 2020 SSE €500m Apr 16 2030 1.75 99.149 MS+180 / B+216.4 -

Apr 7 2020 Syngenta €500m Apr 16 2026 3.375 99.201 MS+365 / B+404.5 3.525

Apr 7 2020 Toyota Finance Australia €750m Apr 21 2022 1.584 100 MS+185 / B+220.9 1.584

Apr 7 2020 Toyota Finance Australia €500m Oct 21 2024 2.004 100 MS+220 / B+257.2 2.004

Apr 7 2020 Toyota Finance Australia €500m Oct 21 2027 2.28 100 MS+235 / B+274.9 2.28

Apr 7 2020 Veolia Environnement €700m Apr 15 2028 1.25 100 MS+130 / B+170.8 1.25

Apr 8 2020 Capgemini €500m Apr 15 2022 1.25 99.794 MS+160 / / B+195 1.355

54 International Financing Review April 11 2020

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

T+450 area, -2.5 US$6.bn A3/BBB+ BofA/Citi/Miz/TD -

T+362.5 (+/-12.5)
T+275 area, -10 US$3.9bn Baa1/A BofA/Miz/RBC(a)/USB/WFS/JPM/ -
T+215 (+/-5) MUFG/PNC/TD
T+275 area, -10 US$4.1bn Baa1/A BofA/Miz/RBC(a)/USB/WFS/JPM/ -
T+215 (+/-5) MUFG/PNC/TD
T+412.5 area 67.5 US$6.7bn A3/A- BofA/DB/GS/JPM(a)/BNPP/Citi/TD/ -
USB/WFS
T+425 area 72.5 US$3.9bn A3/A- BofA/DB/GS/JPM(a)/BNPP/Citi/TD/ -
USB/WFS
T+425 area 72.5 US$5.5bn A3/A- BofA/DB/GS/JPM(a)/BNPP/Citi/TD/ -
USB/WFS
T+450 area, 68.5 US$6.8bn A3/A- Citi/JPM -
T+387.5 (+/-12.5)
T+450 area, 68.5 US$6.8bn A3/A- Citi/JPM -
T+387.5 (+/-12.5)
T+400 area, 50 - Baa3/BBB-/BBB- BofA/JPM/PNC/USB -
T+360 (+/-5)
9%/9.25% - - Ba2/BBB MS/BofA/USB/WFS/JPM/GS -

MS+300 area, 40 >€2.1bn Baa2/BBB/- BBVA / BNPP / CA-CIB / CM-CIC -

MS+270 area / MS / Santan / SG / Uni
MS+195 area, 25 ~€3.1bn -/BBB/BBB+ BcaIMI / Caixa / Citi / ING / JPM / -
MS+160 area (+/-5) Natx / Santan / SG / Barc / BNPP
/ Uni
MS+295 area, 55 >€1.8bn Baa2/BBB/BBB BBVA / BNPP / BofA / Citi / Bankia / -
MS+275 area (+/-5) Barc / Caixa / DB / NatWest / Santan
/ SG / UBS
MS+245 area, 60 >€1.7bn Baa2/BBB/BBB BBVA / BNPP / BofA / Citi / Bankia / -
MS+225 area (+/-5) Barc / Caixa / DB / NatWest / Santan
/ SG / UBS
MS+100/105, -4 €1bn A1/AA/AA BofA / CA-CIB / HSBC / SG -
MS+80 area
MS+115/+120, -6 €1.15bn A1/AA/AA BofA / CA-CIB / HSBC / SG -
MS+90/+95
MS+225 area, -5 >€4.9bn Baa1/BBB+ Citi / BNPP / BofA / ING / Santan -
MS+180 area
MS+175 area, 30 >€4.9bn A3/A- BNPP / CA-CIB / HSBC / Natx / SG -
MS+135 area
MS+150 area, 10 >€5.2bn Aa1/AA Barc / BNPP / DB / Miz -
MS+120/+125
MS+230 area, 10 >€5.4bn, >340acs Baa3/BBB-/BBB- Barc / BBVA / BofA / Citi / CMZ / UK/Ire 29%, Fr 19%, Ger/Aus 15%,
MS+190 area HSBC / ICBC / ING / JPM / SG Iberia 12%, Benelux 7%, It 7%, Switz 6%,
Nordics 3%, Other 2%. AM 74%, Ins/
PF 11%, Bks/PB 10%, CB/OI 3%, HF 1%,
Other 1%. Green >40%.
MS+140 area, 0 >€3.3bn A3/A-/A- CMZ / BNPP / DB / HSBC / Uni Fr 17%, Ger/Aus 31%, Benelux 13%, UK/
MS+100/+105 Ire 12%, S.Eur 13%, Asia 8%, Switz 5%,
Other 1%. FM 67%, Ins/PF 12%, OI/Agcy
8%, Bks/PWM 12%, Other 1%.
MS+180 area, 30 ~€1.4bn Baa1/BBB+ Barc / BBVA / Lloyds / NatWest / -
RBC
MS+205 area, 35 ~€1.3bn Baa1/BBB+ Barc / BBVA / Lloyds / NatWest / -
RBC
MS+400 area, 120 ~€1.9bn Ba2/BBB-/BBB BNPP / BofA / CS / HSBC / Uni -
MS+375 area
MS+225 area, 25 >€2bn A1/AA- Barc / BNPP / Citi / CA-CIB / SG Fr 35%, Ger/Aus 21%, UK/Ire 10%, Sp
MS+190 area 10%, Benelux 7%, It 4%, Switz 4%, Other
9%. AM 73%, Ins/PF 17%, Bks/FI 6%,
CB/OI 3%, Other 1%.
MS+245 area, 60 >€1.7bn A1/AA- Barc / BNPP / Citi / CA-CIB / SG Fr 35%, Ger/Aus 22%, UK/Ire 14%, Spain
MS+225 area 7%, Benelux 11%, It 4%, Switz 2%, Other
5%. AM 74%, Ins/PF 17%, Bks/FI 7%,
CB/OI 2%.
MS+285 area, 35 >€4.5bn A1/AA- Barc / BNPP / Citi / CA-CIB / SG Fr 25%, Ger/Aus 24%, UK/Ire 25%, Sp 2%,
MS+245 area Benelux 8%, It 4%, Switz 5%, Other 7%. AM
77%, Ins/PF 13%, Bks/FI 3%, CB/OI 7%.
MS+180 area, 15 - Baa1/BBB CA-CIB / CM-CIC -
/ DB / JPM / SMBC Nikko
MS+205 area, - ~€3.2bn -/BBB BNPP / CA-CIB / HSBC / MS / Barc / -
MS+170 area GS / Natx / SG / ANZNB / CIC / ING

International Financing Review April 11 2020 55

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 9/4/2020 (CONTINUED)
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Apr 8 2020 Capgemini €800m Apr 15 2026 1.625 99.412 MS+185 / B+223.9 1.729

Apr 8 2020 Capgemini €1bn Apr 15 2029 2 99.163 MS+210 / B+247 2.103

Apr 8 2020 Capgemini €1.2bn Apr 15 2032 2.375 99.003 MS+235 / B+276.5 2.472

Apr 8 2020 Lonza Finance International €500m Apr 21 2027 1.125 99.424 MS+180 / B+219.6 1.713

Apr 8 2020 JAB Holdings €500m Apr 17 2027 2.5 99.267 MS+270 / B+308.1 2.616

Apr 8 2020 JAB Holdings €500m Apr 17 2035 3.375 99.007 MS+325 / B+364.4 3.461

JAPANESE YEN
Apr 9 2020 Berkshire Hathaway Inc ¥56.3bn Apr 14 2023 0.674 100 MS+70 0.674

Apr 9 2020 Berkshire Hathaway Inc ¥41.6bn Apr 16 2025 0.879 100 MS+90 0.879

Apr 9 2020 Berkshire Hathaway Inc ¥29bn Apr 16 2027 1.002 100 MS+100 1.002

Apr 9 2020 Berkshire Hathaway Inc ¥18.3bn Apr 16 2030 1.1 100 MS+105 1.1

Apr 9 2020 Berkshire Hathaway Inc ¥25.8bn Apr 16 2040 1.585 100 MS+140 1.585

Apr 9 2020 Berkshire Hathaway Inc ¥18.5bn Apr 15 2050 1.779 100 MS+155bp 1.779

Apr 9 2020 Berkshire Hathaway Inc ¥6bn Apr 15 2060 2 100 - 2

STERLING
Apr 8 2020 National Grid £400m Apr 17 2040 2 98.577 G+135 2.077
SWISS FRANCS
Apr 6 2020 Geberit SFr300m Oct 20 2022 0.35 100.093 MS+90 / Eidg+89.1 0.312

Apr 7 2020 Coop-Gruppe SFr320m May 5 2023 0.75 100.067 MS+130 / Eidg+133 0.728

NON CORE
Apr 6 2020 Telia NKr400m incr Apr 8 2030 2.9 99.999 - 2.9
(NKr1bn)
Apr 9 2020 Volvofinans Bank SKr500m Oct 20 2022 3mS+175 100 3mS+175 -
FINANCIALS
US DOLLARS
Apr 6 2020 Credit Suisse US$1.5bn Apr 8 2022 2.8 99.996 T+255 2.802

Apr 6 2020 Credit Suisse US$1.5bn Apr 9 2025 2.95 99.829 T+255 2.987

Apr 6 2020 Mitsubishi UFJ Lease & US$450m Apr 13 2025 3.637 100 T+320 3.637
Finance
Apr 6 2020 Mitsubishi UFJ Lease & US$350m Apr 13 2030 3.967 100 T+330 3.967
Finance
Apr 8 2020 New York Life Insurance US$1.25bn May 15 2050 3.75 99.938 T+240 3.784
Company
Apr 8 2020 Prudential Financial Inc US$1bn Apr 14 2030 3.125 99.058 T+250 3.236
EUROS
Apr 6 2020 Svenska Handelsbanken €1.25bn Apr 15 2025 1 99.386 MS+135 / B+173.1 1.127

COVERED BONDS
EUROS
Apr 6 2020 CFF €1bn Apr 16 2024 0.05 99.824 MS+35 / B+73.6 0.094

Apr 9 2020 Bank of Nova Scotia €1.25bn incr Mar 10 2023 0.375 100.227 MS+55 / B+90.4 0.296
(€2bn)
NON CORE
Apr 8 2020 Bank of Montreal A$2bn Apr 17 2023 3mBBSW+120 100 3mBBSW+120 -
HIGH YIELD
US DOLLARS
Apr 8 2020 Ferrellgas US$575m Apr 15 2025 (Apr 2022) 10 100 - 10

56 International Financing Review April 11 2020

 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+235 area, - ~€4.5bn -/BBB BNPP / CA-CIB / HSBC / MS / Barc / -

MS+195 area GS / Natx / SG / ANZNB
/ CIC / ING
MS+255 area, 45 ~€3.9bn -/BBB BNPP / CA-CIB / HSBC / MS / Barc / -
MS+220 area GS / Natx / SG / ANZNB / CIC / ING
MS+280 area, 50 ~€4.7bn -/BBB BNPP / CA-CIB / HSBC / MS / Barc / -
MS+245 area GS / Natx / SG / ANZNB
/ CIC / ING
MS+235 area, 30 >€5.6bn -/BBB+ BofA / Citi / CS / HSBC / ING -
MS+200 area
MS+290 area, 50 >€1.1bn Baa2/A- BNPP / BofA / Citi / DB / MUFG / -
MS+270/+275 Santan
MS+345 area, 55 >€1.2bn Baa2/A- BNPP / BofA / Citi / DB / MUFG / -
MS+325/+330 Santan

MS+65/+75, - - Aa2/AA BofA / GS / JPM / Miz -

MS+70/+75
MS+85/+95, - - Aa2/AA BofA / GS / JPM / Miz -
MS+90/+95
MS+95/+105, - - Aa2/AA BofA / GS / JPM / Miz -
MS+100/+105
MS+100/+110, - - Aa2/AA BofA / GS / JPM / Miz -
MS+105/+110
MS+135/+145, - - Aa2/AA BofA / GS / JPM / Miz -
MS+140/+145
MS+150/+160, - - Aa2/AA BofA / GS / JPM / Miz -
MS+155/+160
2% (the #) - - Aa2/AA BofA / GS / JPM / Miz -

G+170 area, - >>£2.35bn A3/A-/A HSBC / NatWest / RBC -

MS+100/+110, 17 >SFr300m, >60acs -/A+/- CS / CMZ Switz 100%. AM 42.5%, Tsy 33%, Ins
MS+90/+100 WPIR 10.5%, PB 9%, PF 5%.
MS+125/135, 35 SFr320m, 71acs CS Low A/fedafin BKB (2/4 leads) Switz 100%. AM 45%, PB
MS+130 (#) Baa+/UBS BBB+/ / CS / Raiff / UBS 20%, PF 16%, Ins 11%, Tsy 8%.
ZKB BBB+

- - - Baa1/BBB+ SEB -

- - - A3 Danske / DNB -

T+300 area, 32 US$4.1bn A1/A+ CS -

T+255 (the #)
T+300 area, 32 US$5.1bn A1/A+ CS -
T+255 (the #)
T+325 area 40 US$900m A3/A- BofA/Citi/MS/JPM -

T+337.5 area 40 US$800m A3/A- BofA/Citi/MS/JPM -

T+287.5area, -5 US$7.8bn Aa2/AA-/AA- DB/Barc/CS/JPM -

T+240 (the #)
T+312.5 area 20 US$6.4bn A2/A BofA/Barc/Citi/CA-CIB/MUFG -

MS+175 area, 5 €8.5bn, 330acs Aa2/AA-/AA+ GS / Nomura / Sven / UBS -

MS+140 area (+/-5)

MS+36 area (+/-1 14 €2.2bn Aaa/AAA/-/AAA Citi / CMZ / LBBW / Natx / Rabo / -
WPIR) Scope Swed / UBS
MS+60 area - >€1.7bn Aaa/-/AAA/AAA BNPP / CS / NatWest / SG / Scotia -

3mBBSW+125 area - - Aaa/-/AAA CBA/NAB/UBS/WBC -

10%/10.25% - - B3/CCC JPM -

International Financing Review April 11 2020 57

GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (9/4/2020)
Moody’s S&P Fitch Moody’s S&P Fitch
Sovereign 1 2 3 4 5 6 Sovereign 1 2 3 4 5 6

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

Albania B1 Ba2 B+ BB – – Latvia A3 Aaa A+ AAA A– AAA
Andorra – Ba2 BBB AAA BBB+ A+ Lebanon Caa2 Caa1 CC n CC RD CCC
Angola B3 B2 CCC+ CCC+ B– B– Lesotho – – – – B B+
Argentina Ca d Caa3 d SD d B– CC c CCC Liechtenstein – Aaa AAA AAA – –
Armenia Ba3 Ba1 – – BB– n d BB Lithuania A3 p Aaa A+ AAA A– p AAA
Aruba – – BBB+ n BBB+ BB n d BB+ d Luxembourg Aaa Aaa AAA AAA AAA AAA
Australia Aaa Aaa AAA AAA AAA AAA Macau Aa3 Aa2 – – AA n AAA
Austria Aa1 Aaa AA+ AAA AA+ p AAA Macedonia (FYR) – – BB– BB BB+ BBB–
Azerbaijan Ba2 Ba2 BB+ BB+ BB+ BB+ Malaysia A3 A1 A– A+ A– A
Bahamas Baa3 Baa1 BB+ n BBB– – – Maldives B2 n Ba3 – – Bn B
Bahrain B2 Ba3 B+ BB– BB– BBB– Malta A2 Aaa A– AAA A+ p AAA
Bangladesh Ba3 Ba2 BB– BB– BB– BB– Mauritius Baa1 A2 – – – –
Barbados Caa1 B2 B– B– – – Mexico A3 n A1 BBB n A BBB A–
Belarus B3 B3 B B B B Moldova B3 B2 – – – –
Belgium Aa3 Aaa AA AAA AA– n d AAA Mongolia B3 B1 B B+ B B+
Belize B3 B1 B– B– – – Montenegro B1 p Ba1 B+ AAA – –
Bermuda A2 Aa3 A+ p AA+ – – Montserrat – – BBB– BBB– – –
Morocco Ba1 Baa2 BBB– BBB+ BBB– BBB
Bolivia Ba3 Ba2 BB– n BB– B+ B+
Mozambique Caa2 Caa1 CCC+ CCC+ CCC B–
Bosnia Herzegovina B3 B3 Bp BB– – –
Namibia Ba2 Baa3 – – BB BB+
Botswana A2 Aa3 BBB+ A – –
Netherlands Aaa Aaa AAA AAA AAA AAA
Brazil Ba2 Ba1 BB– BB+ BB– BB
New Zealand Aaa Aaa AA p AAA AA p AAA
Bulgaria Baa2 A3 BBB A BBB p A–
Nicaragua B3 B2 B– B– B– B–
Cambodia B2 B1 – – – –
Nigeria B2 n B1 B– B– Bnd Bd
Cameroon B2 Ba2 Bn BBB– B BB+
Norway Aaa Aaa AAA AAA AAA AAA
Canada Aaa Aaa AAA AAA AAA AAA
Oman Ba2 Baa3 BB–n BB BB n BB+
Cape Verde – – B BB– B B+
Pakistan B3 B2 B– B– B– B–
Cayman Islands Aa3 Aa2 – – – –
Panama Baa1 A2 BBB+ AAA BBB n A
Chile A1 Aa2 A+ – A AA
Papua New Guinea B2 B1 B B – –
China A1 Aa3 A+ A+ A+ A+
Paraguay Ba1 Baa3 BB BB+ BB+ BB+
Colombia Baa2 A3 BBB– n BBB+ BBB– n BBB
Peru A3 A1 BBB+ A BBB+ A–
Congo (DR) B3 n B3 CCC+ CCC+ – –
Philippines Baa2 A3 BBB+ A– BBB p BBB+
Congo (Rep) Caa2 n B2 B– n d BBB– CCC B+
Poland A2 Aa3 A– A A– AA–
Cook Islands – – B+ AAA – –
Portugal Baa3 p Aa3 BBB p AAA BBB p AA
Costa Rica B2 Ba3 B+n BB B+n BB–
Qatar Aa3 Aa3 AA– AA AA– AA
Cote d’Ivoire Ba3 Baa3 – – B+ p BBB–
Ras al–Khaimah A AA+ A AA+
Croatia Ba2 p Baa3 BBB BBB+ BBB– BBB+
Romania Baa3 A3 BBB– A– BBB– BBB+
Cuba Caa2 Caa2 – – – –
Russia Baa3 Baa2 BBB– BBB BBB BBB
Curacao – – BBB+ BBB+ – –
Rwanda B2 B1 B+ B B+ B+
Cyprus Ba2 p A2 BBB– AAA BBB– * A
St Vincent & Gren B3 Ba3 – – – –
Czech Rep Aa3 Aa1 c AA– AA+ AA– AAA
San Marino – – – – BBB– n BBB+
Denmark Aaa Aaa AAA AAA AAA AAA
Saudi Arabia A1 A1 A– A A A+
Dominican Rep Ba3 Ba1 BB– BB+ BB– BB–
Senegal Ba3 Baa1 B+ BBB– – –
Ecuador Caa3 n d Caa2 d CCC– n CCC– CC CCC
Serbia Ba3 Ba1 BBp BB+ BB+ BBB–
Egypt B2 B1 B B B+ B+ Seychelles – – – – BB BBB–
El Salvador B3 p B1 B– AAA B– B Singapore Aaa Aaa AAA AAA AAA AAA
Estonia A1 Aaa AA– p AAA AA– AAA Slovakia A2 Aaa A+ AAA A+ AAA
Ethiopia B1 n B1 B B Bn B Slovenia Baa1 p Aa1 AA– AAA A AAA
Fiji Ba3 Ba3 BB– BB– – – Solomon Islands B3 B2 – – – –
Finland Aa1 Aaa AA+ AAA AA+ p AAA South Africa Ba1 n A3 BB n BBB– BB nd BB+ d
France Aa2 p Aaa AA AAA AA AAA
South Korea Aa2 Aa1 AA AAA AA– AA+
Gabon Caa1 p B1 CCC d B– d Spain Baa1 Aa1 A AAA A– AAA
Georgia Ba2 Baa3 BB BBB– BB BBB– Sri Lanka B2 Ba3 Bn B B B
Germany Aaa Aaa AAA AAA AAA AAA Suriname B2 Ba3 CCC+ n CCC+ n CCC B–
Ghana B3 B1 B B+ B B Sweden Aaa Aaa AAA AAA AAA AAA
Greece B1 Baa1 BB– AAA BB– BBB– Switzerland Aaa Aaa AAA AAA AAA AAA
Guatemala Ba1 Baa3 BB– BB+ BB– d BB d Tanzania B1n Ba3 – – – –
Honduras B1 Ba2 BB– BB – – Taiwan Aa3 Aa2 AA– AA+ AA– AA+
Hong Kong Aa3 Aaa AA+ AAA AA n AAA Thailand Baa1 p A2 BBB+ A BBB+ A–
Hungary Baa3 Baa1 BBB A– BBB A Trinidad & Tobago Ba1 Baa3 BBB– BBB – –
Iceland A3 p A3 A A A A+ Tunisia B2 Ba3 – – B+ n BB–
India Baa2 Baa1 BBB– BBB+ BBB– BBB– Turkey B1n B1 B+ BB– BB– BB–
Indonesia Baa2 A3 BBB BBB+ BBB BBB Turks & Caicos – – BBB+ AAA – –
Iraq Caa1 B3 B– AAA B– B– Uganda B2 Ba3 BB A– B+ B+
Ireland A2 Aaa AA– AAA A+ AAA Ukraine Caa1p B3 B B Bp B
Israel A1 p Aa3 AA– AA+ A+ AA UAE Aa2 Aa2 – – – –
Italy Baa3 Aa3 BBB n AAA BBB n AA UK Aa2 Aaa AA + AAA AA– AAA
Jamaica B2 Ba3 B+ BB– B+ p BB– USA Aaa Aaa AA+ AAA AAA AAA
Japan A1 p Aaa A+ p AA+ A AAA Uruguay Baa2 A2 BBB A– BBB– n BBB+
Jordan B1 Ba1 B+ BB BB– BB Venezuela C Ca SD CC – –
Kazakhstan Baa3 p Baa2 BBB– BBB BBB BBB+ Vietnam Ba3 Ba1 BB BB BB* BB
Kenya B2 Ba3 B+ BB– B+ BB– Zambia Caa2 n B3 CCC+ CCC+ CCC B–
Kuwait Aa2 Aa2 AA– AA AA AA+
1 Moody’s Government Bonds 5 Fitch Government Bonds n Negative outlook/on watch * Taken off positive watch/ c Improvement in ratings,
2 Moody’s Country Ceilings 6 Fitch Country Ceilings for downgrade outlook outlook or watch status
3 S&P Government Bonds p Positive outlook/on watch N New rating ** Taken off negative watch/ d Deterioration in ratings,
4 S&P Transfer and for upgrade W Rating withdrawn outlook outlook or watch status
Convertibility Assessments SD Selective default

58 International Financing Review April 11 2020

 EMERGING MARKETS
China 60 Malaysia 61 South Korea 61 Russia 63 South Africa 63 Lebanon 64 Argentina 65 Mexico 65

„ FRONT STORY RUSSIA

Gazprom gets the corporate ball rolling

Blue-chip corporate paves the way ahead with market opener
GAZPROM made light work of a visit to the h7EûTHINKûTHEûlNALû.)0ûWASûBPûORû Gazprom intends to raise US$6bn this
primary market after getting the ball rolling 50bp, depending on whether you look at year, according to Sberbank, and has now
WITHûANûENTICINGûOPENINGûFORûAûlVE
YEARû Gazprom’s 2025s or interpolate between ENTEREDûTHEûMARKETûTWICEû)TSûOTHERûISSUEû
DOLLARûBOND the 2024s and 2026s,” said another banker CAMEûINû&EBRUARYûWHENûITûSOLDûAû53BNû

The Russian state-owned entity became the OFFûTHEûTRADE YEARûATû
lRSTû#%%-%!ûCORPORATEûTOûRETURNûTOûTHEû h)TSûûAûBITûOFûAûMESSED
UPûCURVEû4HEû Despite its pedigree in the bond market,
primary market since the global spread of the 2025s have a price of 107, but the rest are some investors are cautious about the
CORONAVIRUSûWITHûAûõBNûDUEû!PRILûûNOTE CLOSEûTOûv company’s credit outlook, especially if
Gazprom (Baa2/BBB–/BBB) has a track 4HEûlRSTûLEADûSAIDûITûWASûEXTREMELYû Russia’s economy comes under severe
record of issuing during periods of DIFlCULTûTOûPINPOINTûFAIRûVALUEûALTHOUGHû pressure from the coronavirus and slump in
HEIGHTENEDûVOLATILITY HEûHIGHLIGHTEDûTHEûmATNESSûOFû OILûPRICES X
“They reopened the market with a dollar
BONDûAFTERû,EHMANûCOLLAPSEDû4HISûCRISISûISûAû
different animal but it had to be a name like
Gazprom to reopen again, and oil price
discussions have been a nice tailwind,” said
a lead, referring to stories that a deal could
BEûBROKEREDûTOûSTOPûTHEûSLUMPûINûOILûPRICES
Leads opened books on Wednesday with
INITIALûPRICEûTHOUGHTSûOFûTHEûûAREAû!û
YEARû THUSû'AZPROMv
book of €3bn enabled pricing to tighten to a
lNALûYIELDûOFû
The deal began with a big premium
although the exact size was a matter of
'AZPROMSûCURVEû!NOTHERûLEADûSAIDû
THEûlNALûPREMIUMûWASûBPûONûANû
ADJUSTEDûBASIS
The Sberbank analysts expected that
holders of Gazprom’s euro-denominated
bonds, and to an extent its dollar-
denominated bonds, could switch into the
NEWûISSUE
h4HEûCOMPANYûOPTEDûFORûAûlVE
placement, which points at that the
company [being] rather sensitive to the
coupon rate, but [that] is debatable in our
view – investors looking to add risk seem
h)ûDOûNOTûEXCLUDEûSOMEûRATINGûPRESSUREû
but it all ultimately depends on how much
2USSIAûWOULDûWANTûTOûCOMMITûTOûTHEûlSCALû
stimulus of the economy,” said said Olga
Budovnits, portfolio manager at Main
0ARTNER
“So far, numbers are quite low, which
supports the ratings of the sovereign and
Goldman Sachs economists said Russia
had indicated that it will supply Rbs300bn
53BN ûINûDIRECTûSPENDINGûANDûLOANû
guarantees to combat the economic effects
DEBATEû3BERBANKûANALYSTSûSAWûITûANYWHEREû TOûBEûWILLINGûTOûADDûDURATIONû)NDONESIAû OFûTHEûSPREADûOFû#OVID
ûEQUIVALENTûTOûû
from 50bp to 75bp, while one banker away Qatar) or credit risk (Chinese properties),” OFû'$0
SAIDûITûWASûBP THEYûSAID Robert Hogg

Ecuador launches consent offer on dollar bonds

Sovereign puts out offer to get short-term debt relief
ECUADOR launched a consent solicitation last The market had been expecting some sort Ecuador also said it was looking to reach a
week on more than US$19bn of dollar bonds as OFûLARGERûDEBTûREPROlLINGûAFTERûlNANCEû NEWûAGREEMENTûWITHûTHEû)NTERNATIONALû
it sought some short-term debt relief and time minister Richard Martinez said last month -ONETARYûFUNDûBYû!UGUSTû
TOûADDRESSûTHEûCOUNTRYSûPUBLICûlNANCES that the country would make a US$325m 4HISûISûhAûlRSTûSTEPûINTENDEDûTOûALLOWû
The sovereign is asking bondholders to amortisation payment on the 2020 bond, but Ecuador and the holders of the securities as
defer interest due between March 27 and WOULDûUSEûTHEûGRACEûPERIODûONûOTHERûBONDSû WELLûASûOTHERûCREDITORSûINCLUDINGûTHEû)-&û
July 15 until August, and reduce interest due “The test will be whether Ecuador ANDûOTHERûOFlCIALûSECTORûCREDITORSûTOûENGAGEû
AFTERû-ARCHûûBYû53ûONûEACHû53û
OFûPRINCIPALû
Over that period it also wants to exclude
cross-default clauses on certain debt
instruments, including social bonds issued
earlier this year and sovereign-guaranteed
convinces bondholders to provide
temporary relief through August while
they draft a more thorough proposal on
REPROlLINGûDEBTûANDûNEGOTIATEûANOTHERû)-&û
programme,” said Siobhan Morden, head
OFû,ATINû!MERICANûlXEDûINCOMEûSTRATEGYûATû
PROACTIVELYûûINûAûNEGOTIATIONûINTENDEDûTOû
create new and appropriate conditions of
sustainability for Ecuador’s debt burden”,
THEûGOVERNMENTûSAIDû
Holders who agree to the deferral will
RECEIVEûAûCONSENTûPAYMENTûOFû53ûPERû
ûBONDSûISSUEDûBYû0ETROAMAZONAS
The Covid-19 pandemic and lower crude
prices have exacerbated problems in the oil
exporting nation, which had already been
STRUGGLINGûTOûMAKEûPAYMENTSûONûITSûDEBT
!MHERSTû0IERPONTû
“The consent solicitation is basically a few
months of coupon deferral so that Ecuador
can avoid default and come up with a more
SERIOUSûRESTRUCTURINGûPLANv
International Financing Review April 11 2020
53ûINûPRINCIPALû4HEûCONSENTû
SOLICITATIONûEXPIRESûONû!PRILûû
Citigroup is consent solicitation agent, while
Lazard Freres ISûlNANCIALûADVISERûTOû%CUADOR
Paul Kilby
59
 #!2ûONû!PRILûûSAIDû5#!2ûSOLDûAûû
stake in the company on April 3 at the
ASIA-PACIFIC request of certain lenders and is “in ongoing
discussions with various parties in relation
to its remaining shareholding in the
CHINA COMPANYv
lNANCIALûINSTITUTIONSûANDûITSûOPERATIONSû
REMAINEDûNORMALû
But the shares slumped again on Thursday
AFTERûNEWSûOFû5#!2SûDISPOSALû4HEYûCLOSEDû
DOWNûûTOû(+û
#!2SûûSûWEREûUNCHANGEDûATû
&OLLOWINGûTHEûDISPOSALûWHICHûTOOKûPLACEû ûANDûITSûûSûATû
ûONû
DOWNGRADES PILE UP FOR CAR INC UNDERûTHEûTERMSûOFûANûUNDERLYINGûlNANCINGû 4HURSDAYûACCORDINGûTOû2ElNITIVûDATA
Ratings agencies last week slashed CAR INC‘s
credit ratings, citing the impact of an
accounting scandal at Luckin Coffee on its
ACCESSûTOûCAPITALûMARKETSûANDûOPERATIONS
Moody’s on April 6 cut the Chinese car
rental company and its bonds to B2 from B1,
AGREEMENTû5#!2ûSTILLûHOLDSûûOFûTHEû
TOTALûISSUEDûSHAREûCAPITALûOFû#!2
Moody’s said its downgrade to Caa1
REmECTEDûTHEûBREADTHûANDûSEVERITYûOFûTHEû
shock on CAR, and the broad deterioration
in credit quality and shifts in market
SENTIMENTûITûHASûTRIGGERED
CHINA ISSUERS BUY BACK BONDS
Chinese companies have been buying back
their offshore bonds in the past month,
taking advantage of low cash prices at a time
OFûECONOMICûUNCERTAINTYû
before downgrading its rating again to Caa1
ONû4HURSDAYûWITHûAûNEGATIVEûOUTLOOKû30û
on Tuesday lowered CAR and its US dollar
bonds to B– from B+ and placed the ratings
ONûNEGATIVEûWATCH
CAR and coffee chain Luckin are separate
companies but the market sees them as
related because both are controlled by
Chinese billionaire Lu Zhengyao, who
FOUNDEDû#!2ûANDûCHAIRSû,UCKINû#!2SûSHARESû
)TûSAIDûTHEûCHALLENGESûFACINGû#!2Sû
substantial shareholder, UCAR, along with
the alleged misconduct at Luckin, are
elevating the company’s risks in terms of
funding access, change of control and
DEFAULTû
CAR’s debt maturities over the 12 months
to March 31 2021 are Rmb5bn–Rmb6bn,
including Rmb1bn Panda bonds puttable in
April 2020 and US$300m notes due in
!CCORDINGûTOû)&2ûCALCULATIONSûû#HINESEû
ISSUERSûWITHûBONDSûLISTEDûINû(ONGû+ONGûORû
Singapore have announced bond
repurchases totalling over US$540m in face
VALUEûSINCEûTHEûBEGINNINGûOFû-ARCHû4HEû
deals took place in the open market or
through private negotiation, but exclude
TENDERûANDûEXCHANGEûOFFERS
Opportunistic buybacks allow issuers to
save on their funding costs and can help
ANDûBONDSûSLUMPEDûONûTHEû,UCKINûNEWS &EBRUARYûûACCORDINGûTOû30 stabilise bond prices, giving investors some
30ûSAIDû#!2SûACCESSûTOûCAPITALûMARKETSû US-listed Luckin on April 2 said it had COMFORTûINûTIMESûOFûSEVEREûMARKETûSTRESSû
has been reduced dramatically following SUSPENDEDûCHIEFûOPERATINGûOFlCERû*IANû,IUû &ORûEXAMPLEûSUNAC CHINA HOLDINGS saw its
SIGNIlCANTûDECLINESûINûITSûSHAREûANDûBONDû and employees reporting to him after an bonds gain more than a point on March 20,
PRICESû-OREOVERûTHEûCOMPANYSû
relationship with banks may be tested,
while its capacity to sell used cars is subject
TOûMARKETûDEMANDû
)TûSAIDûTHATû#!2ûALSOûRISKSûTRIGGERINGûAû
change-of-control clause on its dollar notes
should UCAR, also controlled by Lu
internal investigation found that he may
have fabricated sales totalling about
2MBBNûFROMûTHEûSECONDûQUARTERûOFûû
TOûTHEûFOURTHû,IUûHELDûPOSITIONSûATû#!2û
BEFOREûHEûJOINEDû,UCKIN
CAR’s shares were suspended from
trading on April 3 after they plunged as
outperforming the market, after it
ANNOUNCEDûAû53MûBONDûBUYBACKû
A banker said he had encouraged issuers
who have bought bonds to make similar
ANNOUNCEMENTSû
Most of the issuers making bond
repurchases have come from the property
Zhengyao, lose control of 505m CAR shares MUCHûASûûINûMORNINGûTRADINGûWHILEûTHEû sector, which relies heavily on offshore
PLEDGEDûASûCOLLATERALûFORûBANKûLOANSû cash price of its two dollar bonds fell more FUNDINGû)NûADDITIONûTOû3UNACûLANDSEA GREEN
4HEûPLEDGEDûSHARESûEQUALûAROUNDûAûû THANûûPOINTSû PROPERTIES, RONSHINE CHINA HOLDINGS, JINGRUI
stake in CAR and served as collateral for The shares resumed trading on April 7 HOLDINGS, XINHU ZHONGBAO, GOLDEN WHEEL TIANDI
2MBBNû53M ûOFûBANKûLOANSûASûOFû ANDûJUMPEDûûTOûCLOSEûATû(+ûAFTERû HOLDINGS, BEIJING PROPERTIES (HOLDINGS) and
*UNEûûACCORDINGûTOû30 #!2ûSAIDûINûAûSTOCKûEXCHANGEûlLINGûTHATûITû XINYUAN REAL ESTATE have all announced
The change-of-control clause could be does not hold any Luckin shares or engage BUYBACKSû/THERûISSUERSûINCLUDEûJIUDING GROUP
triggered if the combined holding of UCAR INûANYûBUSINESSûWITHûTHEûCOMPANYû)TûALSOû FINANCE, FUFENG GROUP and CHINA SINGYES SOLAR
ANDû,EGENDû(OLDINGSû#ORPû ûDROPSûTOû SAIDûITSûlNANCIALûSTATEMENTSûWEREûINûhFULLû TECHNOLOGIES HOLDINGS
BELOWûûFROMûûACCORDINGûTOû30 compliance” and that its relationships with Buying back bonds below par allows
ISSUERSûTOûCUTûTHEIRûlNANCEûCOSTSû4HEYûMAYû
ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS EVENûBOOKûCAPITALûGAINSûINûSOMEûCASES
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE &OODûADDITIVESûPRODUCERû&UFENGûSAIDûTHEû
Asia-Pacific Managing No of Total Share purpose of its bond repurchases was to cut
Managing No of Total Share bank or group issues US$(m) (%) lNANCIALûEXPENSESûANDûGEARINGû
bank or group issues US$(m) (%) Although none of the issuers disclosed the
1 Citigroup 65 15,043.69 7.3
1 HSBC 78 8,242.42 8.2 repurchase prices, the secondary market has
2 JP Morgan 74 14,290.81 6.9
2 Standard Chartered 47 5,585.00 5.5 PROVIDEDûGOODûREFERENCES
3 HSBC 97 12,139.80 5.9
3 Citigroup 37 5,314.64 5.3 Between March 6 and March 13, Xinhu
4 Standard Chartered 61 11,692.51 5.7
4 Credit Suisse 40 4,319.08 4.3 :HONGBAOûBOUGHTûBACKû53MûOFûITSûû
5 Deutsche Bank 41 9,965.84 4.8
5 UBS 34 4,010.16 4.0 NOTESûDUEû-ARCHûûû4HEûBONDSûWEREû
6 Goldman Sachs 39 9,942.73 4.8
6 Deutsche Bank 28 3,617.30 3.6 BIDûATûAûRANGEûOFûnûDURINGûTHEû
7 BofA Securities 38 9,297.20 4.5
7 Credit Agricole 30 3,475.11 3.4 PERIODûACCORDINGûTOû2ElNITIVûDATA
8 BNP Paribas 39 8,617.89 4.2
8 Bank of China 46 3,430.72 3.4 The Shanghai-listed developer was also
9 Barclays 52 8,435.37 4.1
9 BofA Securities 17 3,259.86 3.2 able to print a US$200m bond in a club deal
10 Credit Suisse 48 7,253.49 3.5
10 Goldman Sachs 17 3,198.11 3.2 on March 24, even though the offshore bond
Total 346 206,109.51
Total 219 101,037.26 market remained largely closed for Chinese
Excluding equity-related debt.
Excluding equity-related debt. developers and despite a downgrade by
Source: Refinitiv SDC code: L4 Source: Refinitiv SDC code: L1 -OODYSûAûWEEKûBEFOREûPRICING

60 International Financing Review April 11 2020


)SSUERSûWITHûLOOMINGûMATURITIESûCANûMAKEû
substantial savings by buying back their
BONDSûATûAûDISCOUNT
A case in point is Jiuding, which already
bought back nearly two-thirds of its
53MûûGUARANTEEDûBONDSûDUEû*ULYûû
2020 since it began to make repurchases in
*ANUARY
The company disclosed on January 23 that
ITûHADûREPURCHASEDû53MûOFûTHEûBONDSû
INûPRINCIPALûAMOUNTû4HENûONû-ARCHûûITû
SAIDûITûHADûBOUGHTûAûFURTHERû53MûANDû
on March 25 it disclosed the purchase of an
Asian perps face non-call risk
„ PERPETUALS Secondary trading suggests at least three issuers may not redeem bonds
Investors received a pleasant surprise when
FULLERTON HEALTHCARE exercised the call option
on US$175m perpetual bonds on Monday,
but some other Asian issuers are expected to
struggle when their first call dates come due
later this year.
The Asia Pacific-focused healthcare network
EMERGING MARKETS ASIA-PACIFIC
Car dealer CHINA GRAND AUTOMOTIVE SERVICES
has US$400m 5.625% perps callable on
October 30 that are quoted at a cash price of
73. If not called, the distribution rate will reset
to the initial spread of 390.9bp over three-year
Treasuries, plus a 500bp step-up.
Chinese investment bank AMTD GROUP has a
ADDITIONALû53Mû*USTûLASTûWEEKûITûSAIDûITû operator’s bonds were bid at a cash price in the US$123m 7.625% perp that is callable on June 15
BOUGHTûAûFURTHERû53MûDURINGûTHEû low 90s, implying a yield to call in the high teens, and would step up to three-year Treasuries plus
PERIODûFROMû-ARCHûûTOû!PRILûû before it announced the redemption. 616.1bp, as well as a 500bp step-up, if not called.
&OLLOWINGûTHEûLATESTûREPURCHASEûTHEûSIZEû The senior notes came with a reset to AMTD repurchased US$77m of the original
of the bonds has been reduced to Treasuries plus 548.8bp and a 500bp step-up if US$200m principal on December 19, and the
53Mû4HEûBONDSûWEREûQUOTEDûATû the bonds were not called on April 6, raising the bonds are now trading at a cash price of around
nûONû!PRILûûACCORDINGûTOû
2ElNITIVûDATA
On the other hand, issuers could imperil
their ratings if they buy back a lot of bonds
FARûBELOWûPAR
-OODYSûANDû30ûINû-ARCHûDOWNGRADEDû
GEO ENERGY RESOURCES after concluding that
THEû)NDONESIANûCOALûPRODUCERSûREPURCHASESû
of US$111m of bonds in principal amount at
a steep discount constituted a distressed
EXCHANGEû
MALAYSIA
PETRONAS PLANS DOLLAR
BOND OFFERING
State-owned oil company PETRONAS has hired
banks for a proposed US dollar multi-
tranche offering and held investor calls for
coupon to around 11%.
Given that clear incentive to call the perps,
the secondary price suggested that investors
were worried not only about call risk but
also the company’s ability to keep up with its
payments.
Fullerton had been hoping to complete a
Singapore IPO by the time of the call date, but
said it repaid the bonds with a combination of
internal and external funding.
Trading prices suggest that investors do not
expect some other Asian issuers to redeem their
bonds when they turn callable in the coming
months.
“The negative sentiment will reverberate if
they don’t call,” said a DCM banker. “A lot of
these perps have not been priced as though they
are really perpetual.”
HONG KONG AIRLINES, part of the highly
indebted HNA GROUP, has US$683m of 7.125%
perps callable on July 26. The bonds, bid at a
88. All three rank as senior debt.
With the three-year Treasury yielding around
0.35%, that would mean those issuers will see
coupons increase to between 9.25% and 11.50%
if they decide not to call.
A series of skipped call options might help
change the mindset of some Asian investors who
tend to expect issuers to redeem their bonds at
the first opportunity.
“Perps have sold like hotcakes through private
banks with the understanding that they will be
called, otherwise there will be reputational risk
[for the issuers],” said a bond investor.
The investor noted that a growing number of
issuers in recent years opted not to call perps or
capital notes when it did not make economic sense.
In 2018, Chinese property developer Agile
Group Holdings did not call a US$700m
subordinated perp at the first call date, even
though it meant the coupon stepped up to
10.215% from 8.25%.
!SIAû%UROPEûANDûTHEû53ûLASTûWEEK
Bank of America and Citigroup are global
coordinators, and bookrunners with HSBC,
Maybank and MUFG
The proposed notes, to be issued off
0ETRONASSû53BNûGLOBALû-4.û
programme, will have medium to long-term
MATURITIESû3UBSIDIARYû0ETRONASû#APITALûISû
THEûISSUERûANDûTHEûPARENTûISûTHEûGUARANTOR
cash price in the low 50s according to Refinitiv
data, reset to three-year Treasuries plus 558.8bp
plus a 500bp step-up if not called.
OFûlNALûGUIDANCEûOFûPLUSûBPnBPûANDû
WELLûINSIDEûINITIALûGUIDANCEûOFûTHEûPLUSûBPû
AREA
The deal was upsized from US$300m after
“In this environment there will be more
failures to call,” said the investor.
Daniel Stanton
offered new-issue concessions of 20bp–25bp
OVERûTHEIRûCURVES
h4HEûTWOûDEALSûFROMû+OREAûOUTûTHISûWEEKû
have traded well in secondary, which is
Petronas is rated A2/A–/A– and the notes ATTRACTINGûORDERSûOFûOVERû53BNûFROMûû ABSOLUTELYûCRITICALûINûAûDIFlCULTûMARKETvûSAIDû
have expected ratings of A2/A– ACCOUNTSûMAINLYûFROMûBANKSûINû!SIAû/RDERSû
-OODYS30  WEREûALREADYûMOREûTHANû53BNûWHENû
!SIAûBOOKSûWEREûCLOSED
4HEûNEWûISSUEûFROMûTHEû+OREANûPOLICYû
SOUTH KOREA bank, rated Aa2/AA/AA–, was said to have
tightened around 20bp in the aftermarket
SOVEREIGN REVIVES OFFSHORE DEALS LIFTINGûCONlDENCEûTHATûTHEûMARKETûCANû
ABSORBûFURTHERûSUPPLY
THEûBANKER
“The deals are setting the new price and
show that investors are being compensated
for the risks they take, which is a win-win
FORûBOTHûISSUERSûANDûINVESTORSû4HEYûAREûALSOû
INûLINEûWITHûHOWû+OREANûISSUERSûHAVEû
operated over time as sophisticated
INTERNATIONALûNAMESv
KOREA DEVELOPMENT BANK has reopened the !ûDAYûAFTERû+$"SûRETURNûSHINHAN BANK, The last public US dollar offering from
INTERNATIONALûBONDûMARKETûFORû3OUTHû+OREANû which had hired banks for an international 3OUTHû+OREAûWASûALMOSTûTWOûMONTHSûAGOû
issuers after a break of almost two months OFFERINGûPRICEDûAûlVE
YEARû53Mû WHENû+$"ûPRICEDûAû53BNûDUAL
TRANCHERû
WITHûAû53MûTHREE
YEARûmOATING
RATEû mOATING
RATEûBONDûINû4AIWANSû&ORMOSAû ONû&EBRUARYûû4HATû3%#
REGISTEREDûDEALû
NOTE MARKETû4HEûNOTESûTIGHTENEDûAROUNDûBPûONû INCLUDEDûAû53MûTHREE
YEARûmOATING
RATEû
The Reg S bond priced at par to yield THEIRûlRSTûDAYûOFûTRADINGûACCORDINGûTOûAû note that priced at par to yield three-month
three-month Libor plus 145bp, the tight end BANKERûONûTHEûDEALû+$"ûANDû3HINHANû ,IBORûPLUSûBPû

International Financing Review April 11 2020 61

GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 9/4/2020
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Apr 6 2020 Republic of Indonesia US$1bn Apr 15 2070 4.45 99.009 T+321.8bp 4.5
Apr 6 2020 Republic of Indonesia US$1.65bn Oct 15 2030 3.85 99.573 T+323.2bp 3.9
Apr 6 2020 Republic of Indonesia US$1.65bn Oct 15 2050 4.2 99.15 T+296.8bps 4.25
Apr 7 2020 KDB US$500m Apr 16 2023 3mL+145 100 3mL+145 -
Apr 8 2020 Shinhan Bank formosa US$500m Apr 24 2025 3mL+170 100 3mL+170 -

Apr 6 2020 Latvia €1bn Apr 14 2023 0.125 99.749 MS+49 / B+86.3 0.209

Apr 7 2020 Slovenia €100m incr Aug 7 2045 3.125 133.337 MS+130 / B+156.9 1.527
(€1.35bn)
Apr 7 2020 Slovenia €1bn Jul 15 2030 0.875 99.745 MS+85 / B+123.9 0.901
Apr 7 2020 Slovenia €1.15bn incr Mar 31 2023 0.2 99.853 MS+50 / B+86.9 0.25
(€2bn)
Apr 7 2020 Qatar US$2bn Apr 16 2025 3.4 99.69 T+300 3.468

Apr 7 2020 Qatar US$3bn Apr 16 2030 3.75 99.81 T+305 3.773

Apr 7 2020 Qatar US$5bn Apr 16 2050 4.4 100 - 4.4

Apr 8 2020 Gazprom €1bn incr Apr 15 2025 2.95 100 MS+311 / B+346 2.95
(€0m)
Apr 8 2020 Abu Dhabi US$2bn Apr 16 2025 2.5 99.205 T+220 2.671

Apr 8 2020 Abu Dhabi US$2bn Apr 16 2030 3.125 99.6 T+240 3.172

Apr 8 2020 Abu Dhabi US$3bn Apr 16 2050 3.875 96.136 - 4.1

“Our primary intention for the issue this ,ATEûLASTûMONTHû+EXIMûRAISEDû53Mû Citibank Taiwan, Credit Agricole Taipei branch
TIMEûWASûTOûREOPENûTHEû+OREANûMARKETûASû FROMûAûPRIVATEûPLACEMENTûOFûûNOTESû and HSBC Taiwan were bookrunners of the
we were not necessarily facing needs to DUEûûWHILEû+./#ûSOLDûAû3&RMû 3HINHANû"ANKûDEAL
PRINTû53ûDOLLARSvûSAIDûAû+$"ûOFlCIALû
YEARûBONDûTOû3WISSû
“The spread is higher compared to our
offering a few months ago, but it’s still
encouraging in that there were no major
53M ûûlVE
INVESTORSûONû!PRILûû SHINHAN PRICES BIG FORMOSA BOND
Last week’s new issues are raising
expectations that other investment-grade SHINHAN BANK has raised US$500m from its
US banks that have priced a deal with a 3OUTHû+OREANûISSUERSûWILLûRETURNûTOûTHEû lRSTû&ORMOSAûBONDûTHEûLARGESTûFORûAû3OUTHû
SPREADûUNDERûBPûRECENTLYvû international bond market. +OREANûISSUERûINûTHEû4AIWANESEûMARKETû
Bank credit spreads blew out in the US +EXIMûALSOûRATEDû!A!!!!nûHASû 4HEûDEALûALSOûTHEûlRSTû!2EGû3û
market in March, reaching up to 407bp mandated UBS, Citigroup, Societe Generale, BNP &ORMOSAûFROMû3OUTHû+OREAûANDûTHEûlRSTû
OVERû4REASURIESûACCORDINGûTOû)#%û"OF!û Paribas and HSBCûFORûAû'LOBALûBONDûOFFERINGû FROMûAû+OREANûNAMEûINûMOREûTHANûFOURû
DATAû The format of the deal as well as its currency MONTHSûDREWûlNALûORDERSûOFûOVERû53BNû
Volatility has subsided in the past 10 and tenor will depend on market conditions, FROMûûACCOUNTSû
days, allowing Citigroup to print a ACCORDINGûTOûAû+EXIMûOFlCIAL 4HEûlVE
YEARûmOATINGûRATEûBONDSûWEREû
53BNûlXED
TO
mOATINGûSIX
YEARûNON
CALLû KOREA EAST-WEST POWER, rated Aa2/AA priced at three-month Libor plus 170bp, the
lVEûATûBPûOVERû4REASURIESûONû!PRILûû!û -OODYS30 ûHASûALSOûMANDATED Bank of TIGHTûENDûOFûlNALûGUIDANCEûOFûBPnBPû
WEEKûEARLIERû7ELLSû&ARGOûPAIDûBPûFORûAû America, BNP Paribas, Citigroup, Credit Agricole and well inside initial guidance of the 210bp
53BNû
YEARûNON
CALLûû and HSBCûFORûAû53ûDOLLARûBONDû4HEû3OUTHû AREA
/FFSHOREûNEWûISSUESûFROMû3OUTHû+OREAû +OREANûPOWERûPRODUCERûHASûAû53Mûû The new bonds traded tighter in the
AREûGENERALLYûRAREûINûLATEû&EBRUARYûTOûEARLYû bond due this June and aims to price the aftermarket and were 155bp–151bp over
March, as many borrowers need to update DEALûTHISûMONTH THREE
MONTHû,IBORû
THEIRûlNANCIALûSTATEMENTSûTOûMEETûTHEû
h4HEûMARKETûISûOPENûSOû+OREANûISSUERSûWILLû 4AIWANESEûINVESTORSûTOOKûûOFûTHEû
DAYûRULEûBEFOREûACCESSINGûTHEû!ûMARKETû follow suit after those in the US in printing BONDSûTHEûRESTûOFû!SIAûû%-%!ûûANDû
This year, however, the spread of the bonds as an insurance policy against market !MERICAûû"ANKSûGOTûûFUNDûMANAGERSû
coronavirus and the ensuing global market conditions potentially deteriorating even INSURERSûANDûPENSIONûFUNDSûûANDûPRIVATEû
turmoil put deals on hold even in late further in the next month or two,” said a BANKSûANDûCORPORATESûû
-ARCH BANKERûONûSOMEûDEALSûINûTHEûPIPELINE Shinhan had originally planned to raise
As a result, the international bond Other issuers in the G3 bond pipeline funds in the global market, before opting for
PIPELINEûFROMû3OUTHû+OREAûHASûBUILTû
despite some state agencies and
enterprises like EXPORT-IMPORT BANK OF KOREA
and KOREA NATIONAL OIL CORPORATION turning
to private placements or different
CURRENCIESûTOûRAISEûFUNDS
62
during the second quarter include KOREA THEû4AIWANESEûFORMATû
RESOURCES The senior unsecured bonds have
+$"SûNEWûSENIORûUNSECUREDûNOTESûHAVEû expected ratings of Aa3/A+/A, in line with
EXPECTEDûRATINGSûOFû!A!!û-OODYS30  THEûISSUER
Standard Chartered was the sole lead manager The bonds will be listed in Singapore and
ANDûBOOKRUNNER 4AIPEI
International Financing Review April 11 2020
 EMERGING MARKETS EMEA

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

4.9% area - - Baa2/BBB/BBB Citi / DB / GS / HSBC / StCh -

4.15% area - - Baa2/BBB/BBB Citi / DB / GS / HSBC / StCh -
4.55% area - - Baa2/BBB/BBB Citi / DB / GS / HSBC / StCh -
3mL+180 area - - Aa2/AA StCh -
3mL+210 area, - US$2.1bn, 104acs Aa3/A+/A Citi / CA-CIB / HSBC TW 57%, Rest of Asia 36%, EMEA 1%,
3mL+170/+175 WPIR Amers 6%. Bks 80%, FM/Ins/PF 19%,
PB/Corp 1%.
MS+50 area (+/-1 -7 €1.35bn A3/A+/A- Barc / JPM / SG Ger/Aus 19%, Benelux 16%, Nordics 14%,
WPIR) UK 13%, Baltics/CEE 12%, Fr 12%, Switz
6%, Other 9%. FM 46%, Bks/PB 31%,
CB/Supras 16%, Ins/PF 4%, Corp 3%.
MS+130 (the #) 12 €800m Baa1/AA-/A Barc / BNPP / CA-CIB / DB / JPM -

MS+85/+90 5 €3.8bn Baa1/AA-/A Barc / BNPP / CA-CIB / DB / JPM -

MS+50 (the #) 16 €3.5bn Baa1/AA-/A Barc / BNPP / CA-CIB / DB / JPM -

T+335a, - - Aa3/AA-/AA- Barc / CA-CIB / JPM / DB / QNB -

/ StCh / UBS
T+340a, - - Aa3/AA-/AA- Barc / CA-CIB / JPM / DB / QNB -
/ StCh / UBS
4.75% area, 4.4% - - Aa3/AA-/AA- CA-CIB / DB / StChTaiwan -
yld
3.375% area, 3.125% - €3bn Baa2/BBB-/BBB Gaz / JPM / Uni -
area
T+265 area, T+220 - - -/AA/AA BofA / Citi / 1ADB / HSBC / JPM / -
(#) StCh
T+285 area, T+240 - - -/AA/AA BofA / Citi / 1ADB / HSBC / JPM / -
(#) StCh
4.55% area, 4.1% yld - - -/AA/AA BofA / Citi / 1ADB / HSBC / JPM / -
StCh

Citibank Taiwan, Credit Agricole Taipei and The Sovcombank offer expires on April )NSTITUTIONSûLOCALûISSUANCEûEXPORTûCREDITû
HSBC Bank TaiwanûWEREûBOOKRUNNERS
3HINHANûISûTHEûlRSTû3OUTHû+OREANûISSUERûTOû
SELLû&ORMOSAûBONDSûSINCEû+OREAû2AILROADû
raised US$150m in a Reg S offering in
.OVEMBERû
EUROPE/AFRICA
RUSSIA
SOVCOM LAUNCHES BUYBACK OFFER
ûRenaissance CapitalûISûDEALERûMANAGER
SOUTH AFRICA
ESKOM MAKES CONTACT
WITH INVESTORS
South Africa’s state-owned power utility
ESKOM held a call last week as the troubled
company kept up the lines of
COMMUNICATIONûWITHûINVESTORS
One analyst who listened in to the call
said the company made no comment on
HOWûITûINTENDEDûTOûCOVERûAû53BNû
MATURITYûDUEûINû*ANUARYû
AGENCYûSUPPORTûHEûSAID
ABSA/Barclays, HSBC and Standard Bank
ORGANISEDûTHEûCALL
REGIONAL
CEE PAIR DOUBLE DOWN ON BONDS
LATVIA and SLOVENIA added another slice of
funding to borrowing plans that have
increased in the face of the Covid-19
pandemic, as the sovereigns visited the bond
markets for the second time in a matter of
WEEKS
Latvia on Monday raised €1bn with an
SOVCOMBANK has launched an offer to buy h4HATSûALLû)ûREALLYûCAREûABOUTvûTHEûANALYSTû !PRILûûOFFERINGûATûSWAPSûPLUSûBP
BACKûUPûTOû53MûOFûITSû53Mûû SAID The spread landed at the tight end of
PERPETUALûBONDSûANDû53MûSû 4HEûBONDûISûQUOTEDûATûûONû-ARKET!XESSû guidance, after Latvia initially marketed the
4HEûTENDERûOFFERûISûBEINGûRUNûBYûMODIlEDû PRICES note at plus 50b area, plus or minus 1bp,
Dutch auction, with a minimum purchase 4HEûCOMPANYûWHICHûGENERATESûûOFû ANDûEXPECTEDûTOûPRICEûINûRANGE
price of US$750 per US$1,000 in principal of South Africa’s electricity, has been hit in “With guidance of ‘will price in range’,
THEûPERPûANDû53ûFORûTHEûS recent years by a deterioration of its they are giving the investor base some
“The minimum buyback prices set out in generators due to a lack of maintenance and certainty over where it will come,” said a
the offer are close to the indicative market
prices as of [Tuesday’s] close, so the bank
seems to be looking to provide some
liquidity to those who are being forced to
liquidate positions in the market,” wrote
by coal shortages, leading to electricity
shortages that has left it unable to generate
SUFlCIENTûCASHûTOûMEETûITSûOPERATINGûCOSTSû
ANDûSERVICEûITSûDEBT
Eskom (Caa1/CCC+/CCC+) needs to raise
BANKERûAWAYûATûTHEûTIMEûOFûTHEûlRSTûUPDATEû
WHENûBOOKSûHADûPASSEDûõM
h0RETTYûSLOWûBOOKBUILDûFORûSUCHûAû.)0û4HEû
problem with the Baltic states is the deals
are all small and ‘illiquid’, so many accounts
3BERBANKûANALYSTS 2BNû53BN ûINûTHEûûlSCALûYEARûTHEû don’t care, especially now when ‘liquidity’ is
Credit Bank of Moscow conducted a similar analyst said, with R56bn of that coming KINGv
exercise in March, accepting for purchase just FROMûAû.ATIONALû4REASURYûEQUITYûINJECTION )NVESTORSûTHOUGHûULTIMATELYûPUSHEDû
over US$52m of its dollar bonds and a touch The remainder will mostly be funded by a MOREûTHANûõBNûOFûORDERSûTHROUGHûTHEû
UNDERûõMûOFûITSûEUROûNOTES COMBINATIONûOFû$EVELOPMENTû&INANCEû DOORû4HEûALLOCATIONSûWENTûTOû'ERMANYûANDû

International Financing Review April 11 2020 63

!USTRIAû û"ENELUXû ûTHEû.ORDICSû 4HEûSûSAWûõBNûADDEDûATûSWAPSûPLUSû Lebanon has yet to decide whether it will
 ûTHEû5+û ûTHEû"ALTICSûANDû#%%û û 50bp, and €100m was added to the 2045s at GOûTHEû)-&ûTHOUGHûANALYSTSûSEEûTHISûASûTHEû
ANDû&RANCEû  BP ONLYûWAYûITûCANûGETûAID
The amount of concession on offer Spreads were set at the outset for the two The plan, which a source said was drafted
divided views, with a second banker away
putting it at an “aggressive 20bp” while a
THIRDûBANKERûSAWûITûATûBP
4HEûYIELDûOFûûWASûTHEûLOWESTûACHIEVEDû
BPûFROMû-ONDAYûTOû4UESDAY
BYû,ATVIAûINûANûINTERNATIONALûBONDûSALE
Barclays, JP Morgan and Societe Generale WEREûLEADS
The trade followed an effort from late
REOPENINGSû4HEûSECONDûBANKERûSAWûTHEû.)0Sû
at 5bp and 12bp, respectively, after
secondary levels on the bonds widened by
BP
lNANCING
The fourth banker said that the taps of the
SûANDûSûWILLûADDûLIQUIDITYûTOûTHEûNOTES
4HEû
BYû,EBANONSûlNANCIALûADVISERû,AZARDûNOTEDû
INVESTORSûWEREûEXPECTINGû"EIRUTûTOûSEEKû)-&û
support which would unlock other
7HILEûMAPPINGûOUTûLOSSESûOFû53BNûINû
the economy, the plan noted that a “full
YEARûLANDEDûATûBPûWHICHûWASû BAILOUTûOFûTHEûlNANCIALûSECTORûISûNOTûANû
March when Latvia (A3/A+/A-) reopened its the tight end of initial guidance, resulting in OPTIONv
€950m October 2026s for a €550m tap at Aû.)0ûOFûJUSTûOVERûBP )TûSETSûOUTûAûRESTRUCTURINGûOFûTHEûCENTRALû
PLUSûBPû Barclays, BNP Paribas, Credit Agricole, Deutsche bank and commercial banks to include “a
)NûTHEûSAMEûWEEKû3LOVENIAûHADûRAISEDû
õBNûTHROUGHûõMû-ARCHûSûANDûAû
õMûTAPûOFûITSûõBNûû-ARCHûS
Slovenia returned on Tuesday, and drew
ample demand for a transaction split across a
õBNû
YEARûANDûTAPSûOFûITSûSûANDûS
Bank and JP Morgan WEREûLEADSûFORû3LOVENIA
TDB TALKS TO INVESTORS
African multilateral development bank TDB,
formerly known as PTA Bank, held an
transitory exceptional contribution from
large depositors” and outlines a special fund
to compensate depositors’ losses resulting
FROMûRESTRUCTURING
“As stated by the prime minister, the plan
WILLûMAKEûSUREûTHEûASSETSûOFûûOFûTHEû
The combined books closed at more than INVESTORûUPDATEûCALLûONû7EDNESDAY DEPOSITORSûAREûPRESERVEDvûITûSAID
õBNûWITHûTHEûSHORT
DATEDûTAPûANDûFRESHû TDB (Baa3/-/BB+) sold a US$500m May 2024 0ARLIAMENTû3PEAKERû.ABIHû"ERRIûHASûCOMEû
BENCHMARKûDRAWINGûTHEûMAJORITYûOFûTHEûORDERS NOTEûLASTûYEARûATûû!ûFURTHERû53MûWASû out strongly against any haircut on bank
“The three-tranche approach worked ADDEDûINû*ULYûATûAûPRICEûOFû DEPOSITSûCALLINGûTHEMûSACRED
WELLvûSAIDûAûFOURTHûBANKERûh)FûTHEYûHADû
done a single tranche, they would have had
YEARûFREEZEûINû
TOûPAYûAûBIGGERûPREMIUMû/URûADVICEûWASûNOTû
TOûGOûWITHûAûLARGEûCONCESSIONv
INTERNATIONAL ISLAMIC FINANCE DEBT
BOOKRUNNERS: 1/1/2020 TO DATE
4HEûBONDûHASûSINCEûSUNKûTOûûACCORDINGû
TOû-ARKET!XESSûPRICES
The plan includes other politically
DIFlCULTûSTEPSûSUCHûASûAûlVE
state salaries – the value of which is being
ERODEDûBYûINmATIONûnûANDûREFORMINGûTHEû
COSTLYûSTATEûPENSIONûSYSTEM
“Lebanese people are faced with several
MIDDLE EAST YEARSûOFûECONOMICûHARDSHIPSvûITûSAID
Managing No of Total Share The plan is based on assumptions that
bank or group issues US$(m) (%)
INCLUDEûPROMPTûEXTERNALûlNANCIALûSUPPORTû
1 Standard Chartered 8 1,544.12 22.2 LEBANON and successful implementation of reforms –
2 HSBC 5 775.86 11.2 SOMETHINGû,EBANONûHASûLONGûFAILEDûTOûDO
3 Natixis 2 618.86 8.9 SOVEREIGN DRAFTS CRISIS PLAN )TûSEESûTHEûOVERALLûGOVERNMENTûDElCITû
4 First Abu Dhabi 3 438.82 6.3 NARROWINGûFROMûûOFû'$0ûINûûTOû
5 Islamic Dev Bank 3 424.54 6.1 LEBANONûREQUIRESûNETûEXTERNALûlNANCINGûOFû ûBYûûANDûPUBLICûDEBTûBEINGûCUTûTOû
6 Citigroup 3 412.44 5.9 53BNnBNûOVERûTHEûNEXTûlVEûYEARSûTOû ûOFû'$0ûBYûûFROMûûLASTûYEAR
7 Dubai Islamic Bank 3 385.34 5.5 HELPûITûTHROUGHûITSûlNANCIALûCRISISûACCORDINGû Lebanon’s crisis is rooted in decades of
8 Riyadh Bank 1 300.00 4.3 TOûAûDRAFTûGOVERNMENTûPLANûSEENûBYû2EUTERS STATEûCORRUPTIONû,ASTûMONTHû,EBANONû
9 JP Morgan 1 300.00 4.3 The draft plan, which is being discussed DEFAULTEDûONûITSûHEFTYûFOREIGN
CURRENCYûDEBTû
10 Landesbanken 1 285.71 4.1 by cabinet, marks the most comprehensive A coronavirus lockdown has compounded
Total 10 6,949.54 BLUEPRINTûYETûONûTACKLINGûTHEûCRISISû)NûITûTHEû economic problems which include a
Excluding equity-related debt. plan is described as a “good basis” in case of weakening currency and capital controls
Source: Refinitiv SDC code: J27 NEGOTIATIONSûWITHûTHEû)-& that have denied savers access to dollar
SAVINGS
ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS .AFEZû:OUKûEMERGINGûMARKETSûSTRATEGISTû
BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE at Oxford Economics, said it was
Europe/Africa Middle East encouraging the plan acknowledged the size
Managing No of Total Share Managing No of Total Share OFûTHEûPROBLEMûh4HERESûAûREFORMû
bank or group issues US$(m) (%) bank or group issues US$(m) (%) programme which sounds like something
1 Standard Chartered 11 5,348.27 20.1 THEû)-&ûWOULDûWANTûTOûSEEûANDûTHERESûAû
1 JP Morgan 16 5,189.91 17.3
2 Citigroup 10 4,657.71 17.5 recognition of the need for consolidation of
2 BNP Paribas 7 2,433.85 8.1
3 Morgan Stanley 3 2,433.06 9.1 THEûBANKINGûSYSTEMvûHEûSAID
3 SG 6 2,358.93 7.9
4 Citigroup 6 2,345.74 7.8 4 BofA Securities 2 2,232.04 8.4
5 Deutsche Bank 4 2,234.10 7.4 5 Goldman Sachs 2 2,232.04 8.4 EXCHANGE RATE TO WEAKEN
6 Barclays 7 2,101.29 7.0 6 Barclays 3 1,595.01 6.0 The plan indicated the exchange rate
7 UniCredit 3 1,607.91 5.4 7 HSBC 7 1,120.65 4.2 weakening to L£2,607 to the US dollar in
8 Morgan Stanley 2 1,345.85 4.5 8 Credit Agricole 6 743.36 2.8 2021, and to L£2,979 in 2024 from the
9 Raiffeisen Bank Intl 3 1,250.17 4.2 9 SG 5 598.66 2.2 CURRENTûPEGûOFû,aû4HEû,EBANESEû
10 Indl & Comm Bk China 4 1,160.74 3.9 10 First Abu Dhabi 4 579.21 2.2 POUNDûHASûLOSTûMOREûTHANûûOFûITSûVALUEû
Total 28 30,032.49 Total 40 26,653.23 SINCEû/CTOBERûONûAûPARALLELûMARKET
Excluding equity-related debt. Excluding equity-related debt. 4HEû53BNûLOSSESûSTEMûFROMûTHEû
Source: Refinitiv SDC code: L2 Source: Refinitiv SDC code: L5 impairment of assets held by the central

64 International Financing Review April 11 2020

 EMERGING MARKETS AMERICAS

bank, the impairment of banks’ loans raise the ratings should Argentina complete The local government is calling for grace
portfolio and government debt a successful and comprehensive PERIODSûOFûhSUFlCIENTûMAGNITUDEvûTOûALLOWûITû
RESTRUCTURING RESTRUCTURINGûWITHûCREDITORSû return to a sustainable growth path, as well
The plan estimated US$40bn in embedded “We believe the likelihood of another as a reduction in the cost of debt, maturity
losses at the central bank, the result of foreign currency default is virtually certain, EXTENSIONSûANDûPOSSIBLYûPRINCIPALûHAIRCUTSû
hYEARSûOFûLOSS
MAKINGûlNANCIALûTRANSACTIONSvû given the timing and advanced nature of the The province meanwhile said it would
TOûACCUMULATEû&8ûRESERVESûTOûDEFENDûTHEûPEGû comprehensive foreign law restructuring CONTINUEûTOûRElNANCEû53MûINûDOMESTICû
and cover a balance of payments funding PROCESSvû30ûSAIDû DEBTûIFûMARKETûRATESûREMAINEDûhACCESSIBLEv
GAP “Hence, we will not raise the foreign )TûISûPROJECTINGûTHATûITSûECONOMYûWILLû
A phased restructuring of commercial currency sovereign credit ratings from ‘SD/ SHRINKûBETWEENûnûTHISûYEARûWITHûAû
bank balance sheets would include a full 3$ûUNTILûTHATûPROCESSûHASûCONCLUDEDv PRIMARYûBALANCEûOFûnûOFû'$0ûBUTûWARNSû
bail-in of existing shareholders estimated at Even so, the Covid-19 pandemic has that such estimates do not take into account
53BNûINûCAPITALûWRITE
OFFSûWITHûTHEû further complicated talks over restructuring THEûIMPACTûOFûTHEû#OVID
ûPANDEMIC
REMAININGû53BNûCOVEREDûBYûTHEû SOMEû53BNûINûELIGIBLEûFOREIGNûANDûLOCALû Bank of America and Citigroup have been
“transitory exceptional contribution from law debt as the government attends to the mandated to advise Buenos Aires on the
LARGEûDEPOSITORSv HEALTHûCRISISû UPCOMINGûDEBTûRESTRUCTURINGû
“The exact parameters of the contribution And several creditors have expressed Earlier this year, Buenos Aires asked for
WILLûBEûDElNEDûWITHûTHEûASSISTANCEûOFû frustration with the government’s an extension on amortisation payments for
external advisers and in the context of a restructuring plans, which they think have its 2021s, but was forced to back down when
broad and good-faith dialogue with the BEENûONE
SIDED HOLDERSûREFUSEDûTOûAGREEûTOûTHEûTERMS
COMMERCIALûBANKSv
A special fund would compensate
depositors’ losses, with the proceeds coming
from a programme that will track and
RECOVERûILL
GOTTENûASSETS OFû%CONOMYûDECIDEDûOTHERWISEû
)NûITSûOFlCIALûNEWSLETTERûTHEûGOVERNMENTû
said that it will defer payments on US dollar-
denominated securities under Argentine
law until December 31, or until the Ministry
With its restructuring being delayed,
markets had been wondering whether
!RGENTINAûWOULDûMAKEûAû53BNûPAYMENTû
due on May 7 on dollar-denominated local
"ETWEENûûANDûûTHEûPROVINCEû
Argentina’s most populous, raised over
53BNûEQUIVALENTûTHROUGHûlVEûBONDûDEALSû
DENOMINATEDûINûDOLLARSûANDûEUROSû
MEXICO
GRUPO POSADAS BONDS UNDER
AMERICAS LAWûû"ONARûûNOTESûWHICHûAREûALSOû PRESSURE AFTER HOTEL CLOSURES
HELDûBYûFOREIGNûINVESTORSû
4HATûBONDûWASûBIDûATûûONû-ONDAYû Analysts expect the bonds of one of Mexico’s
ARGENTINA following the announcement of the delayed largest hotel operators GRUPO POSADAS to
PAYMENTSûDOWNûFROMûûSEENûONû!PRILû come under further pressure, after Covid-19
SOVEREIGN DELAYS US DOLLAR ûACCORDINGûTOû2ElNITIVûDATA forced the company to close 151 of its
PAYMENTS ON LOCAL LAW BONDS The question now is whether the HOTELSû
government will continue to distinguish Posadas will close the hotel properties
ARGENTINA‘s decision last week to delay some between upcoming payments on local law UNTILûATûLEASTû-AYûûACCORDINGûTOûREPORTS
US$10bn in dollar payments on local law ANDûFOREIGNûLAWûBONDS (OWEVERû2AFAELû%LIASûANûANALYSTûATû).4,û
bonds left market participants split on what The country faces about US$500m in &#3TONEû&INANCIALûEXPECTSûCLOSURESûCOULDûGOû
might come next for securities issued under foreign law bond payments on April 22 on beyond the projected date, extending the
FOREIGNûJURISDICTIONû its 2021s, 2026s and 2046s, according to COMPANYSûLOSSES
4HEûSOVEREIGNSû.EWû9ORKûLAWûû -ORDENû “We are waiting for a response from
SûJUMPEDûABOUTûûPOINTSûONûTHEû h4HATûWILLûBEûTHEûNEXTûSIGNûPOSTvûSHEûSAIDû management to assess the company’s
NEWSûTOûTRADEûATûûWHILEûTHEûLONGER
h"UTû)ûDONTûTHINKûTHEYûWILLûDEFAULTû;ONû current situation and to discuss any
DATEDûûSûWEREûUPûALMOSTûTWOû foreign law bonds] until they run out of potential contingency plans if the closures
POINTSûATûûACCORDINGûTOû-ARKET!XESSû OPTIONSv
But whether the rally could be ALL INTL EMERGING MARKETS BONDS
attributed to the delayed local law PROVINCE OF BA TARGETS OVER BOOKRUNNERS: 1/1/2020 TO DATE
payments - which potentially frees up US$7bn IN BONDS FOR RESTRUCTURING Latin America
money for payments elsewhere - or to the Managing No of Total Share
market’s more upbeat mood last week as !BOUTû53BNûINûFOREIGNûLAWûBONDSû bank or group issues US$(m) (%)
Covid-19 infections appeared to peak in issued by the PROVINCE OF BUENOS AIRES will be
1 JP Morgan 19 5,500.69 12.2
SOMEûCOUNTRIESûISûANYONESûGUESS eligible for its upcoming debt restructuring,
2 Deutsche Bank 6 3,900.29 8.7
h)TûISûAûRISK
ONûDAYûSOûYOUûWOULDûEXPECTû according to a presentation posted last week 3 BNP Paribas 8 3,852.17 8.6
EM to be up,” said Siobhan Morden, head ONûTHEûPROVINCIALûGOVERNMENTSûWEBSITE 4 Goldman Sachs 15 3,590.81 8.0
OFû,ATINû!MERICAûlXED
INCOMEûSTRATEGYûATû Much like the federal government, the 5 BofA Securities 16 3,082.47 6.9
!MHERSTû0IERPONT province said that its public debt was 6 Credit Suisse 7 2,473.39 5.5
“Or you could say [the delayed unsustainable given the amount of sizeable 7 BBVA 6 2,335.53 5.2
payments] takes pressure off external debt short-term maturities and high interest 8 Scotiabank 9 2,262.22 5.0
ASûTHEREûISûMOREûMONEYûTOûPAYû.EWû9ORKû COSTSûITûFACES 9 Santander 9 2,054.72 4.6
LAWûBONDSv h#URRENTûRElNANCINGûPROJECTIONSûWOULDû 10 Citigroup 7 2,038.55 4.5
30ûRESPONDEDûBYûCUTTINGûTHEûSOVEREIGNSû lead to an explosive debt path,” the Total 53 44,954.80
long-term foreign currency rating to province’s ministry of economy said in the Excluding equity-related debt.
selective default from CCC-, but said it could PRESENTATION Source: Refinitiv SDC code: L3

International Financing Review April 11 2020 65

go beyond the expected date of May 1,” said “[Covid-19] will create much larger The 2049s, meanwhile, were being quoted
%LIASûINûAûREPORT lNANCINGûNEEDSûFORûTHEûGOVERNMENTSûANDû ASûHIGHûASûûUPûSEVERALûPOINTSûONûTHEû
As of last Wednesday, the B2/CCC+ rated the international capital markets will be one week, as the market turned risk-on amid
COMPANYSûû*UNEûûBONDûWASû OFûTHEûSOURCESv hopes that the Covid-19 infections had
TRADINGûATûAROUNDûûACCORDINGûTOû%LIAS
The bonds had dropped from the low 60s
AREAûAFTERû&ITCHûDOWNGRADEDûTHEûCOMPANYû
TWOûNOTCHESûTOû###ûFROMû"ûONû-ARCHûû
The agency cited an expectation of weaker
Even so, bankers are encouraging
borrowers to move sooner rather than later
as uncertainty over the impact of the virus
looms and as the US high-grade – and to a
lesser extent high-yield – markets swing
REACHEDûTHEIRûPEAKûINûSOMEûCOUNTRIES
Uruguay, which typically comes to market
in the beginning of the year, is also
monitoring issuance possibilities, according
TOûBANKERS
operational results for the year and has a OPENûWITHûRECORDûVOLUMESûLASTûMONTH The country has yet to make its annual
NEGATIVEûOUTLOOKûONûTHEûRATING And while average sovereign spreads visit after last coming to market in
The company reported fourth-quarter across Latin American have widened 3EPTEMBERûWHENûITûTAPPEDûITûûûATû
%BITDAûOFû0SMûORûABOUTû53MûINû
THEûTHREEûMONTHSûTOûTHEûENDûOFûû
The bulk of the company’s debt is
vulnerable to depreciation of the peso
AGAINSTûTHEû53ûDOLLARû
considerably year to date, the region has
enjoyed some tightening over the past week
or so, opening what could be a small
WINDOWûFORûSOMEûBORROWERS
“We don’t know how bad things are going
ûTOûYIELDûûORûBPûOVERû
4REASURIESûANDûREOPENEDûITSûûûATû
ûTOûYIELDûûORûBPûOVERû
4REASURIES
Those bonds are also substantially off
!CCORDINGûTOû&ITCHûûOFûITSû53M
TOûGETûINû,AT!Mû)TSûJUSTûGETTINGûOVERûTHEREû their recent lows with the 2055 trading on
equivalent debt is held in dollars yet only so why not [issue] now,” the senior banker 4UESDAYûATûAûDOLLARûPRICEûOFûûUPûFROMû
ABOUTûûIFûITSûREVENUESûAREûGENERATEDûINû SAID ûONû-ARCHû
HARDûCURRENCYûACCORDINGûTOû&ITCHû!TûTHEûENDû
OFûûAROUNDûûOFûTHEûCOMPANYSûCASHû
BALANCEûWASûDENOMINATEDûINûDOLLARS
Posadas was already facing headwinds in
2019 from a cut in tourism promotion from
the Mexican government, paired with fuel
shortages in the country which have
CURTAILEDûDOMESTICûTRAVEL
REGIONAL
EXPLORING OPTIONS
Public credit heads are exploring different
options amid heightened nervousness about
emerging markets, which have seen record
PORTFOLIOûOUTmOWS
$URINGûANû80û)NVESTMENTSûWEBINARûLASTû
Monday, Colombia’s public credit director
Cesar Arias said the country would like to
rely on domestic issuance, but is open to “all
OPTIONSûIFûNECESSARYv
Brazil is also seen as a possible candidate,
although much of the investor enthusiasm
for the credit has softened recently as the
Covid-19 pandemic takes its toll on politics
and President Jair Bolsonaro’s reform
AGENDA
30ûREVISEDûLASTû-ONDAYûITSûOUTLOOKûONû
Brazil’s BB– to stable from positive, citing
among other things slower-than-expected
progress to pass legislation to reduce
STRUCTURALûlSCALûVULNERABILITIES
)NDEEDû#OLOMBIAûISûNOWûTEETERINGûABOVEû $ESPITEûTHATûûûWHICHû"RAZILû
BANKERS SEE SOVEREIGNS SPURRING JUNKûTERRITORYûAFTERû&ITCHûRECENTLYûFOLLOWEDû TAPPEDûINû.OVEMBERûWASûUPûABOUTûAûGOODû
ACTIVITY IN LATAM PRIMARIES 30SûLEADûANDûDOWNGRADEDûTHEûSOVEREIGNûTOû POINTûLASTû4UESDAYûATûAROUNDûûUPûFROMû
BBB–, and it may want to raise funding ûONû-ARCHû
Latin America primary bond market could WHILEûITûISûSTILLûAûHIGH
GRADEûCREDIT h)MûSURPRISEDû"RAZILûHASNTûISSUEDûATûALLû
soon be set for some activity as sovereigns h)ûCOULDûSEEû#OLOMBIAûTRYINGûTOûISSUEû THISûYEARû4OûBEûHONESTûRATESûAREûHIGHERû
prepare to seek funding to bolster before they go to high yield, that would SPREADSûAREûHIGHERû"UTûTHEYûCOULDûISSUEûIFû
economies starting to feel the impact of the probably be smart,” said a second LatAm they wanted to right now,” added the
#OVID
ûHEALTHûCRISIS FOCUSEDûBANKER SECONDû,AT!MûBANKER
Countries from URUGUAY to COLOMBIA to Colombia was in the dollar bond market !NDûWHILEû0ANAMAûWASûTHEûlRSTûTOûSTEPû
BRAZILûAREûALLûSEENûASûPOTENTIALûCANDIDATESû!NDû INû*ANUARYûWHENûITûISSUEDûAûûûATû forward last month, any other sovereigns
WITHûlNANCINGûNEEDSûEXPECTEDûTOûGROWûASû ûTOûYIELDûûORû4REASURIESûPLUSû stepping into the market will likely come at
GOVERNMENTSûUNFURLûlSCALûSTIMULUSûPACKAGESû BPûANDûTAPPEDûITSûûûATûûTOû ELEVATEDûCONCESSIONSûSAYûBANKERS
to battle economic downturns, international YIELDûûORûPLUSûBP “All of these are very good and likely
BONDSûCOULDûBEûONEûSOURCEûOFûFUNDING While those 2030 bonds were trading candidates,” said the senior syndicate
“All the governments in Latin America LOWERûATûTHEûENDûOFûLASTûWEEKûûFORûAû BANKER
have holes that they need to cover because YIELDûOFûAROUNDûûTHEYûWEREûOFFûTHEûRECENTû “These guys will be starting with elevated
OFûTHEûCORONAVIRUSvûSAIDûAû.EWû9ORK
BASEDû LOWûOFûûSEENûONû-ARCHûûACCORDINGûTOû price talks and that’s a big pill to swallow
SENIORûSYNDICATEûBANKER -ARKET!XESSûDATA RIGHTûNOWv

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66 International Financing Review April 11 2020

 LOANS
Australia  China  India  New Zealand  Belgium  France  Germany  Sweden û Turkey û
UK  United States  Brazil  Leveraged Loans û Restructuring 

„ FRONT STORY ASIA MARKETS

Double whammy hits Taiwan banks

Lower domestic rates and rising offshore costs will squeeze net interest margins
Lending in Taiwan fell 21% in the first quarter to US$8.34bn
Taiwanese banks, already facing a “There will be very few capex lending GLOBALûDASHûFORû53ûDOLLARSûHASûPUSHEDûUPû
slowdown in lending opportunities in the opportunities from those manufacturing their cost of funding overseas.
wake of the coronavirus pandemic, are lRMSûINûTHEûlRSTûHALFûANDûWEûHOPEûTHEREû 4HREE
MONTHû4!)&8û4AIWANSûINTERBANKû
braced for a revenue squeeze after a cut in will be a turnaround in our traditional 53ûDOLLARûLENDINGûRATEûHASûJUMPEDûTOû
interest rates at home and a jump in industry in the second half after the AROUNDûBPûAûNINE
MONTHûHIGHûANDû
overseas funding costs. CORONAVIRUSûPANDEMICûISûOVERvûSAIDûONEû more than double the 115bp seen in early
Taiwan’s central bank cut the loan banker at a domestic bank in March.
benchmark interest rate by 25bp to 1.125% Taipei.
ONû-ARCHûûITSûlRSTûRATEûCUTûINû
ûYEARSû /NEûBIG
TICKETûOPPORTUNITYûHASûALREADYû
and major banks have slashed their
deposit rates in response, with the
BENCHMARKûONE
YEARûTIMEûDEPOSITûRATEû LOANûOFûUPûTOû.4BNû53M ûFORûTHEû
falling below 1%.
“Obviously, our earnings will be further
hit as we already face shrinking margins,
and we expect the local banking industry
will see its interest income fall
OWNEDû
become a casualty. Taiwanese
“It’s difficult to lend to state-
conglomerate CLEVO decided to postpone a owned entities from India and
Indonesia now as we see the
construction of two skyscrapers in the overall direction of loan pricing
island’s capital. remains downward”
#LEVOûHADûSOUNDEDûTHEûMARKETûINû
January, but has now put the plan on hold
until the second half in response to the h)TSûDIFlCULTûTOûLENDûTOûSTATE
SIGNIlCANTLYûTHISûYEARvûSAIDûAûSENIORûLOANû pandemic and the sluggish economy. entities from India and Indonesia now as
banker in Taipei. Bankers expect borrowers to take we see the overall direction of loan pricing
He cited a research report from Taiwan
Academy of Banking and Finance, which
COSTûDEBT banker.
stated that interest income for Taiwanese
BANKSûWOULDûFALLûBYû.4BNû53M û
this year. According to Taiwan’s Financial
advantage of declining interest rates to
RElNANCEûHIGHER
For example, electronic products
distributor WORLD PEACE INDUSTRIAL is
SOUNDINGûTHEûMARKETûFORûAûRElNANCINGûOFû
REMAINSûDOWNWARDvûSAIDûAûTHIRDûLOANû
“We are looking to book assets from
other emerging markets such as Vietnam
ANDû#AMBODIAûTOûMEETûOURûTARGETûRETURNû
3UPERVISORYû#OMMISSIONûTHEûBANKINGû
INDUSTRYûEARNEDû.4BNûINû
“We have been asked to provide
REWARDûPROPOSITIONSûWHILEû
favourable interest rates and
subsidies to the clients, and
TRANCHEûLOANûWITHû
hopefully we can see more
refinancings”
LEVELûALL
INûPRICINGûOFûBPûORû
4HEû#ENTRALû"ANKûOFûTHEû2EPUBLICûOFû
YEARû
ABOUTû.4BN
3OMEûOFûTHEûOPPORTUNITIESûWILLûCOMEû
from struggling borrowers and
industries, and banks will have to weigh
THEûRISK
liquidity.
helping the domestic economy in a time
of crisis.
“We have been asked to provide
favourable interest rates and subsidies to
the clients, and hopefully we can see more
RElNANCINGSûCOMINGûTOûTHEûMARKETûTOûGIVEû
us some compensation despite low
LEVELSûANDûDIVERSIFYûOURûPORTFOLIOSv
4WOûLOANSûFORû#AMBODIANûMICROlNANCEû
companies that offer relatively high
returns are targeting Taiwanese bank
In March, PRASAC MICROFINANCE INSTITUTION
LAUNCHEDûAû53MûDUAL
Taishin International Bank as the mandated
lead arranger and bookrunner. The deal
OFFERSûTOP
BPûVIAûINTERESTûMARGINSûOFûBPûANDû
BPûOVERû,IBORûFORûTHREEûANDûlVE
#HINAûALSOûREDUCEDûITSûGROWTHûFORECASTûFORû PRICINGvûSAIDûTHEûBANKER tranches, respectively.
4AIWANSûEXPORT
ORIENTEDûECONOMYûTOûû Lending in Taiwan has already suffered AMRETûISûALSOûRAISINGûAû53MûTHREE

THISûYEARûFROMûAûûFORECASTûINû$ECEMBERû THISûYEARû)NûTHEûlRSTûQUARTERûVOLUMESû year maiden loan with Cathay United Bank
TOûREmECTûGLOBALûECONOMICûUNCERTAINTYû PLUNGEDûTOû53BNûûLOWERûTHANûTHEû ASûTHEû-,!"û4HEûDEALûOFFERSûTOP
LEVELûALL
INû
STEMMINGûFROMûTHEû#OVID
ûPANDEMIC 53BNûRAISEDûAûYEARûEARLIER PRICINGûOFûBPûBASEDûONûAûMARGINûOFû
Lending activity is expected to suffer, as BPûOVERû,IBOR
DISRUPTIONSûTOûMANUFACTURINGûINû#HINAûANDû NO RESPITE OVERSEAS “Few international banks have country
slowing demand for electronics have hit Overseas opportunities are shrinking too, LIMITSûFORû#AMBODIAûBUTûWEûAREûINTERESTEDû
Taiwanese manufacturers – a key part of WITHûEVERYûLOANûMARKETûINû!SIA
0ACIlCû INûGAININGûEXPOSUREûTOû#AMBODIASû
the technology industry global supply RECORDINGûLOWERûYEAR
ON
YEARûVOLUMESûINû economic growth. We welcome the
chain. THEûlRSTûQUARTER prospect of new opportunities in the
These developments do not bode well &ALLINGûDEALûmOWûPUTSûPRESSUREûONû emerging market as the loan carries much
for Taiwan’s banks, which compete for lenders to lower pricing, especially for HIGHERûPRICINGûTHANûOTHERû!SIANûCREDITSvû
WAFER
THINûPRICINGûONûPLAIN
VANILLAûLOANSûINû HIGH
GRADEûBORROWERSûANûUNPALATABLEû said a fourth loan banker.
ANûOVER
BANKEDûENVIRONMENTûATûHOME proposition for Taiwanese lenders after a Evelynn Lin

International Financing Review April 11 2020 67

 TABCORP RIDES ON A$226m FACILITY
ASIA-PACIFIC Gambling entertainment group TABCORP
HOLDINGSûHASûSIGNEDûAû!MûSHORT
TERMû HOLDINGS is pursuing initiatives to enhance
loan to mitigate the impact of the
AUSTRALIA coronavirus pandemic on its businesses and
lNANCIALS
VIVA ENERGY REIT CLUBS LOAN 4HEûLOANûMATURESûINû*ULYû
QUBE WEIGHS INCREASING DEBT
Import and export logistics company QUBE
its liquidity, including increasing its bank
facilities and monetising its property assets.
The company will have cash and available
UNDRAWNûDEBTûFACILITIESûOFûOVERû!MûAFTERû
!SûATû!PRILûûû4ABCORPûHADûUNDRAWNû the payment of the interim dividend on
VIVA ENERGY REITûHASûCLOSEDûAû!Mû FACILITIESûOFû!MûANDûUNRESTRICTEDûCASHûOFû !PRILû
53M ûFOUR
YEARûREVOLVINGûCREDITûFACILITYû !M Qube has no debt maturing in the short
ASûAûFOUR
BANKûCLUB /THERûTHANûAû!Mû53ûPRIVATEû term and has material headroom to its
The new facility will be used to repay PLACEMENTûWHICHûMATURESûINû$ECEMBERû covenants.
amounts currently drawn under two existing û4ABCORPûHASûNOûOTHERûDEBTûMATURITIESû It is in the process of determining if it can
REVOLVERSûDUEû*UNEûûANDû-AYû UNTILû!PRILû realise some of the substantial value at
The existing facilities with a combined
LIMITûOFû!MûWILLûBEûCANCELLED
future funding requirements given the
Following completion of these initiatives,
6IVAû%NERGYû2%)4ûWILLûHAVEûUNDRAWNûDEBTû
DENOMINATEDû likely to need.
ANDûUNRESTRICTEDûCASHûONûHANDûOFû!M
Its weighted average debt maturity as at
-ARCHûûûWILLûINCREASEûTOûûYEARSû
)Nû-ARCHûûTHEûCOMPANYûPRICEDûAû
53BNû5300ûCOMPRISINGûFOURû53ûDOLLAR
DENOMINATEDûTRANCHESûTOTALLINGû53BNû
ANDûTWOû!USTRALIANûDOLLAR
portions totalling A$195m.
0ROCEEDSûFROMûTHEû5300ûREPAIDûAû!BNû
BRIDGEûlNANCINGûINûCONNECTIONûWITHû
-OOREBANKû,OGISTICSû0ARKûANDûTOûREDUCEûITSû
sizeable capital expenditure it would be
A group of prospective parties has
expressed interest in participating in the
next stage of monetisation or partnering
FROMûûYEARSûWITHûTHEûEARLIESTûDEBTûNOWû Tabcorp’s acquisition of Tatts Group and PROCESSûFORû-OOREBANKû,OGISTICSû0ARKûANDû
DUEûINû*ANUARYû other existing bank debt. certain other property assets, but this is
6IVAû%NERGYû2%)4SûWEIGHTEDûAVERAGEû )Nû$ECEMBERûû4ABCORPûCLOSEDûAû likely to take longer than previously
INTERESTûMARGINûWILLûALSOûDECREASEûTOûû !BNûCLUBûLOANûWHICHûCOMPRISESûAû expected in light of the current
FROMû !MûSIX
MONTHûTERMûLOANûTRANCHEûAû environment.
/Nû-ARCHûûTHEûCOMPANYûSAIDûITûHASû !BNûONE
YEARûTERMûLOANûPIECEûANDûTHREEû )Nûû#LEANû%NERGYû&INANCEû#ORPû
received waivers from lenders on loans !MûREVOLVINGûCREDITûPORTIONSûWITHû PROVIDEDûAû!MûSEVEN
YEARûBILATERALû
TOTALLINGû!MûFOLLOWINGûAûREVIEWûEVENTû THREEûFOURûANDûlVE
YEARûMATURITIESû term loan to Qube to back construction of
triggered from the exit of its controlling THEû-OOREBANKû,OGISTICSû0ARK
shareholder. NATIONAL STORAGE TAPS The development was to switch 1.55m
4HEû!MûINûLOANSûACCOUNTûFORûûOFû FREIGHTûCONTAINERSûATû0ORTû"OTANYûFROMûROADû
the company’s total debt. NATIONAL STORAGE REIT has obtained A$225m TOûRAILûSLASHINGûMOREûTHANûûTONNESûOFû
6IVAû%NERGYû2%)4ûCONTINUESûTOûDISCUSSûTHEû through new loans and also extended carbon dioxide equivalent a year of
review event with lenders on the remaining another smaller facility maturing this year. TRANSPORT
RELATEDûEMISSIONS
!MûOFûFACILITIES
The terms of the facilities remain
unchanged and no fees were paid to lenders
for the waivers.
The facilities carried provisions for a
review event if Viva Energy Group’s
The company raised A$125m from its
existing lenders through a club loan and
ALSOûAûNEWû!MûFACILITYûFROMûJP Morgan,
FOLLOWINGûWHICHûTHEû53ûLENDERûWILLûACCEDEû
into the existing club banking
arrangements.
)NûûAûCONSORTIUMûINCLUDINGû1UBEû
,OGISTICSû(OLDINGSûRAISEDûAû!BNûLOANûTOû
back its acquisition of Asciano Ltd’s ports
business.
FLIGHT CENTRE SEEKS COVENANT WAIVERS
SHAREHOLDINGûINûTHEûFORMERûFELLûBELOWû
In February, Viva Energy Australia, which
is part of Viva Energy Group, agreed to sell
DAYû
ITSûûSTAKEûINû6IVAû%NERGYû2%)4
ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY
SYNDICATED VOLUME (INCLUDING JAPAN)
BOOKRUNNERS: 1/1/2020 TO DATE
!DDITIONALLYû.32ûEXTENDEDûAû.:Mû
53M ûLOANûDUEûINû
These new debt arrangements increase
the company’s total debt facilities to
!BNûANDûUNDRAWNûDEBTûCAPACITYûTOû
!M
.32ûREMAINSûWELLûWITHINûALLûOFûITSûDEBTû
covenant limits and is within its target
Travel and tourism company FLIGHT CENTRE TRAVEL
GROUPûHASûRECEIVEDûCOMMITMENTSûFORû
BILATERALûLOANSûTOTALLINGû!MûFROMûEXISTINGû
banks and is seeking covenant waivers as well
ASû!MûINûEQUITYûFUNDINGûTOûCOPEûWITHûTHEû
impact of the coronavirus pandemic.
The company is also seeking waivers to
Managing No of Total Share GEARINGûRANGEûOFûn COVENANTSûRELATINGûTOûOPERATINGûLEVERAGEûlXEDû
bank or group issues US$(m) (%) “These new arrangements have charge coverage and shareholder funds that
1 Mizuho 179 26,891.44 21.2 SUBSTANTIALLYûINCREASEDû.32SûLIQUIDITYû AREûSCHEDULEDûFORûTESTINGûINû*UNEûûANDû
2 MUFG 320 23,566.35 18.6 position, ensuring it is well placed to $ECEMBERûûANDûAûWAIVERûOFûAûMATERIALû
3 Sumitomo Mitsui 211 17,702.79 14.0 EXECUTEûITSûBUSINESSûPLANûINûTHEûFUTUREvûSAIDû ADVERSEûEFFECTûCLAUSEûASûITûRELATESûTOû#OVID

4 Bank of China 60 8,255.79 6.5 MANAGINGûDIRECTORû!NDREWû#ATSOULIS &LIGHTû#ENTREûISûALSOûLOOKINGûTOûRAISEûABOUTû
5 China Merchants Bk 10 4,856.72 3.8 .32ûISûTHEûLARGESTûOWNER
OPERATORûOFûSELF
!MûINûEQUITYûTOûENSUREûITûHASûTHEû
6 Ag Bank of China 6 2,334.69 1.8 storage centres in Australia and New BALANCEûSHEETûmEXIBILITYûANDûLIQUIDITYûTOû
7 Credit Agricole 7 2,162.14 1.7 :EALANDûWITHûMOREûTHANûûCENTRESû trade through a prolonged period of
8 HSBC 18 2,034.55 1.6 PROVIDINGûTAILOREDûSTORAGEûTOûOVERûû disruption to the travel industry.
9 Indl & Comm Bk China 7 2,026.78 1.6 residential and commercial customers The waivers apply to existing and new
10 Bank of Shanghai 2 2,024.95 1.6 across the two countries. FACILITIESûTOTALLINGû!MûSUBJECTûTOûAû
Total 930 126,890.28 )NûûTHEûCOMPANYûRElNANCEDûITSûDEBTû !MûMINIMUMûLIQUIDITYûCOVENANTûBEINGû
Proportional credit facilities, increasing the overall facility to SATISlEDû4HEûNEWûBILATERALûLOANSûAREûALSOû
Source: Refinitiv SDC code: S3a !MûFROMû!Mû subject to certain conditions.

68 International Financing Review April 11 2020

 LOANS ASIA-PACIFIC

After taking into account the cost saving !NOTHERû53MûFACILITYûTOûSUPPORTûITSû53û even though the pricing is tighter than on
ANDûCAPITALûRAISINGûINITIATIVESû&LIGHTû#ENTREû mortgage services business is in the works. its previous visit last year.
HADûTOTALûAVAILABLEûLIQUIDITYûOFû!BNûASû !SûOFû-ARCHûûTHEûCOMPANYSûDRAWNûDEBTû ANZ, Bank of Shanghai, China Citic Bank
ATû&EBRUARYûûûPRIORûTOûANYûUNWINDINGû PROlLEûHADûANûAVERAGEûDURATIONûOFûûYEARSû)Tû International, Chong Hing Bank, Commerzbank,
OFûWORKINGûCAPITALûONEûOFF
COSTSûTOû HADû!BNû53BN ûOFûGROSSûDEBTû CMB Wing Lung Bank, Credit Suisse, Hang Seng
implement cost saving initiatives or INCLUDINGûBANKûLOANSûANDû53ûPRIVATEûPLACEMENTû Bank, HSBC, Nanyang Commercial Bank, Natixis
additional net operating cash losses. NOTESûWITHûANûAVERAGEûINTERESTûRATEûOFûû and Standard Chartered Bank were the
#OMPUTERSHAREûEXPECTSûNETûDEBTûTOû%BITDAû mandated lead arrangers and bookrunners.
G8 EDUCATION SEEKS COVENANT RELIEF TOûFALLûTOûABOUTûûTIMESûBYûYEAR
ENDûFROMû Other lenders are Banco do Brasil, Bank of
ûTIMESûASûATû-ARCHû Communications, Bank of East Asia, China Bohai
#HILDCAREûSERVICEûPROVIDERûG8 EDUCATION is )Nû-AYûû#OMPUTERSHAREûCLOSEDûAû Bank, Deutsche Bank, Kasikornbank, Raiffeisen
SEEKINGûEQUITYûFUNDINGûOFûABOUTû!Mû 53MûMULTICURRENCYûLOANûWHICHûWASû Bank International, Shanghai Rural Commercial
and covenant waivers on its debt to PRICEDûATûAûCOMPETITIVEûMARGINûOFûBPû Bank and SPD Silicon Valley Bank.
strengthen its balance sheet and increase over the corresponding base rate for the 4HEûLOANûWASûINCREASEDûFROMû53M

mEXIBILITYûAMIDûTHEûCORONAVIRUSûPANDEMIC THREE
YEARûTENORûANDûBPûFORûTHEûlVE
YEARû EQUIVALENTûANDûNOWûCOMPRISESûAû53Mû
'ûHASûWONûCOVENANTûRELIEFûFROMûITSû tenor. 4RANCHEû!ûAûõMû4RANCHEû"ûAû53Mû
lenders for the next two testing periods 4RANCHEû#ûANDûAûõMû4RANCHEû$
ENDINGû*UNEûANDû$ECEMBERûûSUBJECTûTOû &UNDSûAREûFORûRElNANCINGûAû53M

CERTAINûCONDITIONSûBEINGûSATISlEDûINCLUDINGû CHINA EQUIVALENTûTHREE
YEARûLOANûTHEû(ONGû
COMPLETIONûOFûTHEûEQUITY
RAISING +ONG
LISTEDûCOMPANYûRAISEDûINû-AYû
It has also temporarily suspended FOSUN SUCCEEDS DESPITE TIGHT PRICING 4HEûLATESTûDEALûOFFEREDûTOP
LEVELûALL
INûPRICINGû
dividends, with the exception of the OFûBPûANDûBPûFORûTHEû53ûDOLLARûANDûEUROû
DEFERREDûlNALûDIVIDENDûFORûCALENDARûYEARû #ONGLOMERATEûFOSUN INTERNATIONAL has PORTIONSûBASEDûONûINTERESTûMARGINSûOFûBPû
ûWHICHûWILLûBEûPAIDûINû/CTOBERû4HEû INCREASEDûAûTHREE
YEARûDUAL
CURRENCYûLOANûTOû OVERû,IBORûANDûBPûOVERû%URIBORûRESPECTIVELY
company does not expect to declare or pay a 53M
EQUIVALENTûAFTERûANûOVERWHELMINGû The pricing was tighter than that for a
DIVIDENDûINûRESPECTûOFûûBUTûANûINTERIMû response from nine lenders in syndication, 53M
EQUIVALENTûTHREE
YEARûLOANû&OSUNû
DIVIDENDûFORûûMAYûBEûPAIDûSUBJECTûTOû
lNANCIALûPERFORMANCE
The company may seek additional
funding, sell assets or defer capital
Airport Authority returns
EXPENDITUREûIFûITSûOPERATINGûCASHmOWSûANDû
DEBTûFACILITIESûAREûINSUFlCIENTûTOûMEETûITSû
requirements for ongoing operations and
amid turbulence
CAPITALûEXPENDITUREûBECAUSEûTHEû#OVID

„ HONG KONG Borrower back for HK$20bn loan after four years
related lockdown conditions prevail longer
than expected. THE AIRPORT AUTHORITY OF HONG KONG is seeking a The package includes purchasing from four
If it is unable to obtain additional funding HK$20bn (US$2.58bn) five-year loan to fund an home-based airlines in Hong Kong around
on acceptable terms in these circumstances, expansion, returning to the market after four years 500,000 air tickets in advance. These will be
ITSûlNANCIALûCONDITIONûANDûABILITYûTOû as the fallout from the coronavirus pandemic has given away to global visitors and the territory’s
continue operating may be adversely hurt operations and air traffic significantly. residents in a future market recovery campaign
affected. Proceeds from the unsecured loan will fund to be launched when the Covid-19 pandemic is
!SûATû$ECEMBERûûTHEûCOMPANYûHADû the construction of a third runway at Chep over.
!MûOFûAVAILABLEûDEBTûOFûWHICHû!Mû Lap Kok airport and also be used for general AAHK is also offering to pay upfront for the
was drawn. corporate purposes. purchase of ground services equipment from
&OLLOWINGûTHEûEQUITY
RAISINGû'SûNETû ANZ, Bank of China, HSBC, Standard Chartered aviation support services operators, with the aim
DEBTûWILLûBEûREDUCEDûTOû!MûONûANû Bank and Sumitomo Mitsui Banking Corp are the of helping improve the cashflow of the operators.
adjusted basis and adjusted leverage ratio mandated lead arrangers and bookrunners of Its previous visit to the loan market was in
WILLûDROPûTOûûTIMESûFROMûûTIMES the transaction, which offers an interest margin December 2015 for a HK$5bn self-arranged five-
)NûûTHEûCOMPANYûRAISEDû!Mû of 72bp over Hibor. year club deal that paid top-level all-in pricing of
through senior and junior syndicated loans. Banks have been invited to join as MLABs for 80bp based on a margin of 70bp over Hibor.
!38
LISTEDû'û%DUCATIONûOWNSûOPERATESû
franchises, and manages childcare centres
INû!USTRALIAûANDû3INGAPORE
COMPUTERSHARE DIALS IN
COMPUTERSHARE is in the process of
RElNANCINGûITSû53MûSYNDICATEDûLOANû
MATURINGûINû!PRILûûANDûALSOûRAISINGû
ANOTHERûLOANûFORûITSû53ûBUSINESS
4HEûCOMPANYûHADûDRAWNûDOWNû53Mû
OFûTHEûSYNDICATEDûLOANûASûATû-ARCHûû
#OMPUTERSHAREûALSOûHASûFULLYûDRAWNû
top-level all-in pricing of 82bp via a 50bp fee,
while MLAs earn all-in pricing of 81bp via a 45bp
fee. Lead arrangers receive an all-in of 80bp via
a 40bp fee.
A Q&A conference call has been scheduled for
April 24. Commitments are due by May 8.
The deal comes at a time when global air
traffic has collapsed to historically low levels due
to travel restrictions arising from the Covid-19
pandemic.
On Wednesday, AAHK announced a new relief
package worth up to HK$2bn to help airlines and
aviation services operators ease their liquidity
Twenty-one banks provided the revolving
credit facility, with Mizuho Bank as the
coordinator. As at September 2019, there was no
outstanding amount under the facility, according
to AAHK’s 2019 interim report.
The borrower, which operates the Hong Kong
International Airport, is a statutory body fully
owned by Hong Kong’s government. The third
runway is expected to be operational in 2022
and will be able to serve 30 million additional
passengers annually as per HKIA’s Master Plan
2030.
AAHK is rated AA/Aa2/AA+.
ANOTHERû53MûFACILITYûWHICHûITûPUTûINû pressure. Apple Li
place recently.

International Financing Review April 11 2020 69

SIGNEDûINû*ULYûLASTûYEARû4HEûûFACILITYû The borrower’s most recent visit to the
OFFEREDûTOP
LEVELûALL
INûPRICINGûOFûBPûANDû LOANûMARKETûWASûINû*ULYûûFORûAû53Mû HONG KONG
BPûBASEDûONûMARGINSûOFûBPûOVERû,IBORû THREE
YEARûONSHOREûTERMûLOANû)TûOFFEREDûTOP

ANDûBPûOVERû%URIBORûFORûTHEû53ûDOLLARûANDû LEVELûALL
INûPRICINGûOFûBPûOVERû,IBORûBASEDû RIGHT LANE UPS LOAN TO US$400m
euro portions, respectively. ONûAûMARGINûOFûBPûANDûANûAVERAGEûLIFEûOFû
&OSUNû)NTERNATIONALûISûRATEDû"A""û ûYEARS RIGHT LANE, a wholly owned subsidiary of
-OODYS30  ,EGENDû(OLDINGSûHASûINCREASEDûAûTHREE
YEARû
BEIJING ENTERPRISES BACK TERMûLOANûTOû53MûFROMû53MûAFTERû
CMB FINANCIAL LIFTS SAMURAI attracting six banks in general syndication.
BEIJING ENTERPRISES CLEAN ENERGY GROUP has Bank of China, Credit Agricole CIB, HSBC,
CMB FINANCIAL LEASINGûHASûCLOSEDûITSûDUAL
LAUNCHEDûAû53MûTHREE
YEARûLOANû Natixis and Standard Chartered were the
TRANCHEû3AMURAIûLOANûATûANûINCREASEDûSIZEûOFû following close on the heels of a larger club mandated lead arrangers and bookrunners
cBNû53M ûWITHûTHREEûLENDERSû deal it closed last month. OFûTHEûBULLETûlNANCINGûWHICHûOFFEREDûTOP

joining in general syndication. Deutsche Bank is the sole mandated lead LEVELûALL
INûPRICINGûOFûBPûBASEDûONûANû
MUFG and SMBC had targeted closing at arranger and bookrunner of the latest bullet INTERESTûMARGINûOFûBPûOVERû,IBOR
the end of January after launching the loan BORROWINGûWHICHûHASûANûUNSPECIlEDû Mandated lead arrangers are Bank of China
INûMID
$ECEMBERû(OWEVERûSIGNINGûWASû greenshoe option. (Macau), China Construction Bank, Fubon Bank
delayed until the end of March because of The deal offers an interest margin of and Nanyang Commercial Bank. The lead
the coronavirus pandemic. 155bp over Libor. arranger is Hang Seng Bank, while the
4HEûDEALûWASûSTRUCTUREDûWITHûAûONE
YEARû -,!SûJOININGûWITHû53MûORûABOVEûEARNû arranger is CMB Wing Lung Bank.
tranche to attract liquidity from Japanese TOP
LEVELûALL
INûPRICINGûOFûBPûVIAûAûBPû 4HEûBORROWERSû(ONGû+ONG
LISTEDûPARENTûISû
investors, which are not familiar with FEEûWHILEûLEADûARRANGERSûTAKINGû5MnMû the guarantor.
#HINESEûCREDITS RECEIVEûANûALL
INûOFûBPûVIAûAûBPûFEE &UNDSûAREûTOûlNANCEûTHEûGENERALûWORKINGû
4HEûONEûANDûTHREE
YEARûTRANCHESûOFFERû &UNDSûAREûFORûRElNANCINGûGENERALû capital requirements of the company,
INTERESTûMARGINSûOFûBPûANDûBPûOVERûYENû corporate purposes, funding its interest INCLUDINGûBUTûNOTûLIMITEDûTOûRElNANCINGû
Libor, respectively. reserve account and paying fees and debt.
4HEûLOANûISû#-"û&INANCIALû,EASINGSû expenses related to the facility. 2IGHTû,ANESûPREVIOUSûLOANûWASûINû-ARCHû
SECONDû3AMURAIûBORROWINGûITSûHAVINGûRAISEDû "EIJINGû%NTERPRISESû#LEANû%NERGYû'ROUPûISû LASTûYEARûWHENûITûRAISEDûAû53M

AûcBNûTHREE
YEARûDEBUTûlNANCINGûINû a directly owned subsidiary of Beijing EQUIVALENTûTHREE
YEARûBORROWINGû"/#û
$ECEMBERû Enterprises Water Group, which is #REDITû!GRICOLEû.ATIXISûANDû3TAN#HARTûWEREû
4HEûBORROWERûONûTHEûLATESTûLOANûISû#-"û providing a letter of comfort to the facility. THEû-,!"SûONûTHATûDEALûWHICHûPAIDûAûTOP

International Leasing Management, a fully Last month, the borrower raised a LEVELûALL
INûOFûBPûORûBPûBASEDûONû
OWNEDûANDû(ONGû+ONG
INCORPORATEDûUNITûOFû (+BNû53M ûTHREE
YEARûCLUBûLOANû MARGINSûOFûBPûOVERû,IBORûORûBPûOVERû
#-"û&INANCIALû,EASING FROMûlVEûLENDERSû#HINAû%VERBRIGHTû"ANKû %URIBORûRESPECTIVELYûFORûTHEû53ûDOLLARûANDû
The parent will provide a keepwell #-"û7INGû,UNGû"ANKû&UBONû"ANKû(ONGû euro tranches.
agreement and a liquidity support deed as +ONG û(ANGû3ENGû"ANKûANDû(UAû8IAûWEREû #HINASûSTATE
BACKEDû,EGENDû(OLDINGSû
credit enhancement for the deal.
#-"û&INANCIALû,EASINGûISûAûWHOLLYûOWNEDû
unit and the sole leasing business arm of
#HINAû-ERCHANTSû"ANK
#-"û)NTERNATIONALû,EASINGû-ANAGEMENTû
the lenders to that transaction, which offers
a margin of 155bp over Hibor.
Listed in Hong Kong, Beijing Enterprises
#LEANû%NERGYû'ROUPûISûAûPRODUCERûANDû
distributor of renewable energy. Beijing
which has businesses ranging from
investments to real estate, holds about 29%
of Lenovo Group.
ISûRATEDû"""û30 ûWHILEûPARENTûCOMPANYû Enterprises Group, which is owned by INDIA
#-"û&INANCIALû,EASINGûISûRATEDû!"""û Beijing’s municipal government, is the
-OODYS30  borrower’s ultimate parent company. DUO JOINS ONGC REFI

EVERBRIGHT FINANCIAL RAISES US$303m BCEG UPS MAIDEN LOAN 3TATE OWNEDûONGC VIDESHûHASûCLOSEDûAûlVE
YEARûRElNANCINGûOFûUPûTOû53BNûWITHûTWOû
3TATE OWNEDûEVERBRIGHT FINANCIAL LEASING has #HINAûSTATE OWNEDû"EIJINGû#ONSTRUCTIONû banks joining the deal as a result of reverse
OBTAINEDûAû53MûTHREE YEARûONSHOREû Engineering Group has increased its debut enquiries.
TERMûLOANûFROMûûLENDERS THREE YEARûLOANûTOû53MûFROMû53Mû Bank of China and Intesa Sanpaolo
Bank of East Asia, BMCE Bank Group, Chang after attracting eight banks in limited COMMITTEDû53MûANDû53Mû
Hwa Commercial Bank, CMB Wing Lung Bank, syndication. respectively, as mandated lead arrangers
E Sun Commercial Bank, East West Bank, Hua Natixis was the sole mandated lead and bookrunners.
Nan Commercial Bank, Kasikornthai Bank, arranger and bookrunner of the transaction, Nine banks were mandated as original
Kookmin Bank, Korea Development Bank, Land WHICHûOFFERSûALL INûPRICINGûABOVEûBPûVIAû MLABs and underwriters in February. They
Bank of Taiwan, Mega International an interest margin of 195bp over Libor. are Bank of Baroda, DBS Bank, Korea
Commercial Bank and Woori Bank joined as Mandated lead arrangers are Hua Xia Bank, Development Bank, First Abu Dhabi Bank, MUFG,
participants. China Construction Bank, Maybank, Shanghai State Bank of India, SMBC and United Overseas
SMBC was the mandated lead arranger Pudong Development Bank, Shanghai Pudong Bank.
and bookrunner of the transaction, which Development Bank London branch and China The deal was not syndicated because of
OFFEREDûTOP LEVELûALL INûPRICINGûOFûBPû CITIC Bank International. Lead arrangers are unstable market conditions following the
BASEDûONûANûINTERESTûMARGINûOFûBPûOVERû China Minsheng Banking Corp, Luso Internatinal coronavirus pandemic.
,IBORûAûPARTICIPATIONûFEEûOFûBPûANDûANû Banking and Siam Commercial Bank. The interest margin on the loan is below
AVERAGEûLIFEûOFûûYEARS The borrower is BCEGI (HONG KONG), a BPûWITHûTHEûALL INûINûTHEûLOWûS
Funds are for working capital purposes. SUBSIDIARYûOFû"#%'ûWHICHûISûTHEûGUARANTOR The overseas unit of Oil and Natural Gas

70 International Financing Review April 11 2020


Indian lockdown rattles lenders
„ ASIA-PACIFIC No respite for FI borrowers as economy grinds to a halt
India’s embattled financial institutions are
facing further challenges in attracting overseas
funding as the coronavirus pandemic threatens
to cut growth in the world’s fifth-largest
economy to 30-year lows.
Loan syndications for Indian borrowers in
recent weeks point to growing concerns among
offshore lenders of a further deterioration in
asset quality as a result of the sharp decline in
economic activity and rising unemployment.
India enforced a 21-day lockdown on March 25 to
combat the Covid-19 pandemic.
In the past month, financial institutions
including PNB HOUSING FINANCE and debut
borrower HDB FINANCIAL SERVICES have closed
loans with limited syndication.
The reception from offshore lenders
underscores the weak sentiment towards the
Indian financial sector, which is already reeling
from a series of defaults.
“Confidence in the financial sector is low
and one of the issues people have had is non-
performing assets,” said a loan syndications
banker at a global bank.
“We are only hoping that there are no fresh
spurts of NPAs. Otherwise it could be an even
longer journey to recovery.”
BANKING SECTOR WOES
NPAs at Indian banks are not a new concern,
with a system-wide bad loan ratio of 9% as of
March 2019, according to the Reserve Bank of
India.
Since the lockdown began on March 25,
Fitch has cut India’s GDP growth forecast for
the fiscal year ending March 2021 to 2% from
5.1% previously. This year could see the slowest
growth in the country in 30 years, the ratings
agency said.
Moody’s on April 2 changed its outlook for the
Indian banking system to negative from stable,
warning that the lockdown will eventually lead
to pressure on profitability and capital.
India’s banking sector suffered another blow
in mid-March when the RBI seized control of
beleaguered Yes Bank, the country’s fifth-largest
private sector bank, which recorded a surge in gross
bad loans to 18.87% of total loans for the quarter
ending December 31 from 2.1% a year earlier.
Non-banking financial companies have
been wrestling with tight liquidity following
defaults and credit scares that began with
missed payments from Infrastructure Leasing
& Financial Services in September 2018.
Dewan Housing Finance, another major NBFC,
defaulted on its debt last June.
“Debt capital will continue to remain a
challenge for most NBFCs,” said one Mumbai-
based banking analyst. “There are lenders
and investors who at this point in time are
only comfortable with certain names and not
the others, so access to funding still remains
constrained to a few.”
Since 2018, NBFCs have increasingly relied
on Indian banks for funding and most banks are
now near their exposure limits, he said.
POOR APPETITE
Several NBFCs had lined up offshore
borrowings late last year, but few
LOANS ASIA-PACIFIC
international lenders joined the deals despite
the rarity value and strong parentage of the
borrowers.
Last week, PNB Housing Finance, a unit of
state-owned Punjab National Bank, announced
it had raised another US$100m through co-
financing loans from two foreign lenders. That
followed a month after it closed a US$75m
three-year bullet term loan with only one
bank joining after nearly six months of general
syndication.
LIC Housing Finance, a subsidiary of state-
owned insurance giant Life Insurance Corp of
India, is returning to the offshore loan markets
after nearly 17 years. It is expected to close a
US$200m three-year loan without general
syndication, having attracted only one bank in
senior syndication so far.
In mid-March, HDB Financial Services, the
NBFC unit of India’s largest private sector
lender HDFC Bank, increased a three-year loan
to US$530m from US$300m despite only two
banks joining in general syndication. State Bank
of India, one of the three leads, took a final hold
of US$250m, increasing its initial underwritten
commitment by US$150m.
In 2019, Indian NBFCs raised a combined
US$3.07bn from offshore syndicated loans,
according to Refinitiv LPC data. Overall, Indian
loan volumes fell 24.5% year-on-year to
US$18.20bn.
Deal flow from India also declined 23% year-
on-year in the first three months of 2020 to
US$4.95bn.
Mirzaan Jamwal

#ORPûHADûSENTûAûREQUESTûFORûPROPOSALSûFORûAû amortising facility, returning to the loan COMPLETEDûAûYEARûEARLIERûINû*ULYûûWHICHû

53MûlVE YEARûBULLETûLOANûWITHûAû markets less than a year after signing a OFFEREDûTOP LEVELûALL INûPRICINGûOFûBPû
GREENSHOEûOFûUPûTOû53MûINû$ECEMBER slightly larger loan last June. ONSHORE ûANDûBPûOFFSHORE ûBASEDûONû
0ROCEEDSûWILLûBEûUSEDûTOûRElNANCEûAû Bank of China, Korea Development Bank, MARGINSûOFûBPûONSHORE ûANDûBPû
53BNûlVE YEARûFACILITYûCOMPLETEDûINû Maybank, Mizuho Bank, OCBC, RHB Bank, SMBC OFFSHORE ûOVERû,IBORû4HEûFACILITYûHASûANû
-ARCHûû4HATûDEALûHADûPAIDûTOP LEVELû and Sumitomo Mitsui Trust Bank are the banks AVERAGEûLIFEûOFûûYEARS
ALL INûPRICINGûOFûBPûBASEDûONûANû on the deal. The borrower, controlled by the
interest margin of 95bp over Libor and a The borrower is still weighing up the Indomobil Group, provides motor vehicle
REMAININGûLIFEûOFûûYEARS likelihood of a launch into general ANDûHEAVY DUTYûEQUIPMENTûlNANCINGû
,ASTû3EPTEMBERûTHEûCOMPANYûRAISEDûAû syndication at a later stage. services.
53MûlVE YEARûTERMûLOANûTHATûPAIDûTOP LEVELû 4HEûLOANûHASûANûAVERAGEûLIFEûOFûûYEARS
ALL INûPRICINGûOFûBPûVIAûAûMARGINûOFûBPû Last year, Indomobil Finance nearly KESTREL REFI ON HOLD
OVERû,IBORûANDûANûAVERAGEûLIFEûOFûûYEARSû TRIPLEDûTHEûSIZEûOFûITSûTHREE YEARûLOANûTOû
0ARENTûCOMPANYû/.'#ûPROVIDEDûAûGUARANTEE 53MûFROMû53MûAFTERûNINEûBANKSû ADARO ENERGYûANDûPRIVATEûEQUITYûlRMûEMR
joined in general syndication. CAPITALûAREûPOSTPONINGûTHEûRElNANCINGûOFûAû
4HEûBORROWINGûPAIDûTOP LEVELûALL INûPRICINGû 53BNûACQUISITIONûLOANûUNTILûMARKETû
INDONESIA OFûBPûONSHORE ûANDûBPûOFFSHORE û conditions improve.
BASEDûONûINTERESTûMARGINSûOFûBPûONSHORE û The duo were considering raising funds from
INDOMOBIL FINANCE PICKS EIGHT ANDûBPûOFFSHORE ûOVERû,IBORûRESPECTIVELYû BOTHûLOANSûANDûBONDSûFORûTHEûRElNANCING
ANDûANûAVERAGEûLIFEûOFûûYEARS A group of new and existing lenders were
has mandated
INDOMOBIL FINANCE INDONESIA 0RICINGûONûTHEûûDEALûWASûTIGHTERûTHANû shortlisted after they submitted proposals in
EIGHTûLENDERSûONûAû53MûTHREE YEARû ONûAû53MûTHREE YEARûAMORTISINGûLOANû &EBRUARYû2OTHSCHILDûISûTHEûADVISER

International Financing Review April 11 2020 71

 !DAROûANDû%-2ûHADûRAISEDûAûBORROWINGû The wholly owned group executed a The company has debt facilities totalling
COMPRISINGûAû53BNûlVE
YEARûSENIORû NUMBERûOFûBANKûRElNANCINGSûINûTHEûPASTû .:MûMATURINGûBEFOREû$ECEMBERûûû
LOANûANDûAû53MûSUBORDINATEDûPIECEûINû three months, boosting its total bank INCLUDINGûAû.:Mû53ûPRIVATEûPLACEMENT
!UGUSTûûTOûBACKûTHEûPURCHASEûOFûANûû FACILITIESûBYû.:MûTOû.:M Auckland Airport will seek covenant
STAKEûINû2IOû4INTOSû+ESTRELûCOKINGûCOALûMINEû !SûOFû-ARCHûûTHEûGROUPûHADû.:Mû WAIVERSûTHROUGHûTOû$ECEMBERûûûFROMû
in Australia’s Queensland state for A$2.25bn OFûDRAWNûDEBTûANDû.:MûOFûUNDRAWNû EXISTINGû5300ûNOTEHOLDERSûINûTHEûNEARûTERMû
53BNûTHEN  bank facilities. consistent with the approach taken with its
!.:û#)-"û"ANKû$"3û"ANKû-5&'û/#"#û Infratil has major stakes in TRUSTPOWER banking group.
"ANKû3TANDARDû#HARTEREDûANDû3-"#ûWEREû  ûWELLINGTON INTERNATIONAL AIRPORTû û !SûATû-ARCHûûûTHEûBORROWERûHADû
the mandated lead arrangers and RETIREAUSTRALIAû ûCANBERRA DATA CENTRES AROUNDû.:MûOUTSTANDINGûUNDERûITSû
bookrunners of the senior loan, which  ûTILT RENEWABLESû ûLONGROAD 5300ûNOTEûPROGRAMMEûEXCLUDINGû.:Mû
attracted seven other lenders. ENERGY  ûANDûVODAFONE NEW ZEALAND of expected derivative gains if the notes
4HEûSENIORûDEBTûISûSPLITûINTOûAû53BNû   were to be repaid.
AMORTISINGûTERMûLOANûAû53MûREVOLVINGû .EWû:EALANDûUTILITYûGENERATORûRETAILERû Auckland Airport has cancelled its interim
CREDITûFACILITYûANDûAû53MûBONDINGûFACILITYû 4RUST0OWERûWHICHûHASû.:MûOFûBANKû DIVIDENDûFORû&9ûANDûISûALSOûSUSPENDINGûALLû
comprising unfunded environmental bonds. It facility headroom, is looking to extend debts future dividends while the debt covenant
PAYSûANûINTERESTûMARGINûOFûBPûOVERû,IBOR OFû.:MûANDû.:MûTHATûCOMEûDUEûINû waivers are in place.
3OUTHû+OREASû-ERITZû3ECURITIESûPROVIDEDû July and October, respectively.
THEû53MûMEZZANINEûLOANûWHICHûALSOû Meanwhile discussions are progressing
HASûAûlVE
YEARûMATURITYûANDûPAYSûANûINTERESTû with lenders and shareholders about the THAILAND
rate of around 12%. funding required to enable Wellington
*APANSû-ITSUIûû#OûRETAINEDûITSûûSTAKEûINû Airport to maintain operations, undertake FWD’S INSURANCE LOAN DRAWS ONE
the Kestrel mine, which is located in the Bowen necessary investment, and repay
"ASINûREGIONûANDûPRODUCESûHIGH
QUALITYûCOKINGû APPROACHINGûlNANCINGûMATURITIES Only one bank has joined in limited
COALûFORûSTEELûMANUFACTURINGû)TûHASûSIGNIlCANTû 2ETIRE!USTRALIAûISûWORKINGûWITHûITSû SYNDICATIONûOFûAû53BN
EQUIVALENTûLOANû
RESERVESûOFûûMILLIONûTONSûANDûISûINûTHEûLOWEST
banking group to repurpose existing backing the acquisition of the life insurance
cost quartile of comparable mines. facilities for working capital requirements UNITûOFû3IAMû#OMMERCIALû"ANKûBYûPAN
!SIANû
AFTERûHAVINGûCOMPLETEDûAûRElNANCINGûINûTHEû life insurer FWD GROUP FINANCIAL SERVICES.
SECONDûQUARTERûOFûû OCBC Bank participated in the deal, which
JAPAN 4ILTû2ENEWABLESûANNOUNCEDûONû was closed in March, as a mandated lead
Wednesday a capital return of arranger.
JOGMEC SEEKS ¥480bn JUMBO LOAN APPROXIMATELYû!Mû)NFRATILSûSHAREûISû Standard Chartered Bank was the original
!M ûBYûWAYûOFûAûCOURTûAPPROVEDûSCHEMEû mandated lead arranger, bookrunner and
JAPAN OIL GAS & METALS NATIONAL CORP has of arrangement that is expected to be coordinator of the transaction, while CMB Wing
LAUNCHEDûAûcBNûONE
YEARûBULLETû COMPLETEDûINûTHEûlRSTûHALFûOFû&9 Lung Bank, DBS Bank, Mizuho Bank, Scotiabank and
lNANCINGûFORûITSûSECONDûLOANûOFûTHEûYEAR SMBC joined the deal in the senior phase prior
4HEûINTERESTûRATEûONûTHEûGOVERNMENT
AIRPORT BOOSTS BALANCE SHEET to its launch into limited syndication.
guaranteed loan will be determined through 4HEûTHREE
YEARûFACILITYûCARRYINGûAûLETTERûOFû
a conventional auction, with pricing bids AUCKLAND INTERNATIONAL AIRPORT is taking awareness and ownership undertaking from
DUEûONû!PRILû several steps including obtaining covenant &7$ûFOUNDERûANDû(ONGû+ONG
BASEDûTYCOONû
Mizuho Bank is the agent. waivers and extensions on bank debt as well 2ICHARDû,IûOFFERSûANûINTERESTûMARGINûOFû
$RAWDOWNûISûSLATEDûFORû!PRILûûANDû ASûANûEQUITYûRAISINGûOFûUPûTOû.:BNû AROUNDûBPûOVERû,IBORû4HEûLOANûWASûPRE

proceeds will be for operating funds. 53M ûTOûTACKLEûTHEûFALLOUTûOFûTHEû FUNDEDûINû3EPTEMBER
The borrower’s last visit to the loan
MARKETûWASûINû&EBRUARYûFORûAûcBNû
ONE
YEARûBULLETûTERMûLOANûWITHûAûSIMILARû
structure and zero interest rate.
*/'-%#ûTAPSûTHEûLOANûMARKETûMULTIPLEû
times in a year and typically raises a large
loan in April.
ûDURINGûTHATûPERIOD
NEW ZEALAND
INFRATIL ASSESSES REFI
#OVID
ûRECOVERY
INFRATIL is assessing whether the company or
ITSûPORTFOLIOûOFûENTITIESûREQUIREûRElNANCINGûORû
debt extensions because of the coronavirus
pandemic.
The infrastructure investment company
coronavirus pandemic. /Nû3EPTEMBERûû&7$ûANNOUNCEDûTHEû
4HEûCOMPANYûHASûWONûSIGNIlCANTûSUPPORTû COMPLETIONûOFûITSûACQUISITIONûOFû3#"û,IFEû
from its lenders, including extensions to all !SSURANCEûFORû"TBNû53BN ûANDûTHEû
BANKûFACILITIESûCOMINGûDUEûBEFOREû$ECEMBERû APPOINTMENTûOFû$AVIDû+ORUNICûASû#%/ûOFûTHEû
ûûANDûWAIVERSûFORûPOTENTIALûCOVENANTû target company.
breaches that could arise from the adverse
operating environment associated with the
IMPACTûOFû#OVID
Auckland Airport is raising equity to reinforce
its balance sheet and ensure it remains well EUROPE/MIDDLE
capitalised, with the aim of ensuring it is well EAST/AFRICA
POSITIONEDûFORûAûPOST
The covenant waivers from its lenders are
conditional upon successful completion of BELGIUM
the equity raising, which will provide
Auckland Airport with pro forma adjusted TELENET REINFORCES LIQUIDITY
LIQUIDITYûOFûAROUNDû.BN
That liquidity would also include cash on Liberty Global’s Belgian cable and mobile
HASûAû.:Mû53M ûBANKûFACILITYû HANDûOFû.:MûPLUSûCOMMITTEDûUNDRAWNû company TELENETûHASûAGREEDûAûõMû

EXPIRINGûTHISû*ULYû.:MûOFû)&4û BANKûLOANSûTOTALLINGû.:MûASûATû-ARCHû year revolving credit facility, replacing the
BONDSûMATURINGûINû*UNEûûANDû ûûANDûADJUSTEDûCAPITALûMARKETSûDEBTû COMPANYSûõMû2#&SûANDûINCREASINGû
.:MûOFû)&4ûBONDSûDUEûINû*UNEû MATURINGûBEFOREû$ECEMBERûû liquidity.

72 International Financing Review April 11 2020

 LOANS EMEA

4ELENETûHASûACCESSûTOûõMûOFûADDITIONALû Thales had €2.9bn in cash and cash "ANCOû3ANTANDERû".0û0ARIBASû#ITIGROUPû
liquidity under separate loans, bringing the equivalents. #REDITû!GRICOLEû#)"û#REDITû3UISSEû$EUTSCHEû
company’s total liquidity buffer to €555m )Nû*ANUARYû4HALESûRElNANCEDûAûõMû "ANKû3OCIETEû'ENERALEû"ANCOûDEû3ABADELLû
ONûTOPûOFûõMûOFûCASHûANDûCASHû bond that was due to mature in April. The !LLIEDû)RISHû"ANKSû#OMMERZBANKû
EQUIVALENTSûHELDûATûTHEûENDûOFû COMPANYSûNEXTûBONDûMATURITYûISûõMûINû 2ABOBANKû#REDITû)NDUSTRIELûETû#OMMERCIALû
4HEûNEWû2#&ûRElNANCESû4ELENETSûõMû -ARCHû ,Aû"ANQUEû0OSTALEû-EDIOBANCAû"ANCAûDIû
2#&û!0ûWHICHûWASûDUEûTOûMATUREûINû 4HEûEXISTINGû2#&ûWASûARRANGEDûINû #REDITOû&INANZIARIOûANDû2AIFFEISENû"ANKû
$ECEMBERûûANDûITSûõMû2#&û!'ûTHATû $ECEMBERûûVIAûAûGROUPûOFûûBANKSûWITHû International were lenders.
WASûDUEûTOûMATUREûINû*UNEû ".0û0ARIBASû#REDITû!GRICOLEû#)"ûANDû(3"#û 4HEûlNANCINGûINCLUDESûAûMAXIMUMû
4HEûlNANCINGûPAYSûAûMARGINûOFûBPû ASûGLOBALûCOORDINATORSûONûTHEûlNANCING LEVERAGEûCOVENANTûOFûûTIMESû!TûTHEûENDûOFû
OVERû%URIBORûWITHûAûûmOORûLOWERûTHANûTHEû The company expects the greatest impact ûLEVERAGEûWASûûTIMES
BPûPAIDûONûTHEû2#&û!'ûANDûTHEûSAMEûASû of the pandemic to be on its civil aviation As a key supplier to the food industry,
THEûSHORTER
DATEDû2#&û!0 business, which generated sales of around Verallia’s production sites have remained
!ûCOMMITMENTûFEEûOFûûOFûTHEû õBNûINû operational during the crisis, adapting
applicable margin on undrawn funds Thales has launched an action plan to deal production volumes.
remains the same. with the crisis including a reduction of In Northern Europe, Italy and Iberia, the
Bank of America, "ELlUS, BNP Paribas, CIC, TEMPORARYûWORKûUSINGûGOVERNMENT
company’s plants have continued to
Credit Suisse, Deutsche Bank, Goldman Sachs, supported furlough programmes in operate at a sustained level. However, in
ING, JP Morgan, KBC Bank, MUFG, NatWest, countries that provide them, and a hiring France and Latin America, operations are
Rabobank, Royal Bank of Canada, Bank of Nova freeze in support functions. more affected by the availability of
Scotia and Societe Generale are lenders. 4HEûCOMPANYûISûALSOûDEFERRINGûNON
CRITICALû workforce and a decline in demand from
investments including in research and certain customers.
ONTEX FULLY DRAWS development, IT and real estate as well as
reducing discretionary spend and
Hygiene product maker ONTEX has fully controlling working capital to mitigate the GERMANY
DRAWNûITSûõMûREVOLVINGûCREDITûFACILITYûASû impact of the crisis on demand and supply
it seeks to protect itself from the chains. SCHAEFFLER GETS GREEN SSD
UNCERTAINTIESûCAUSEDûBYûTHEû#OVID
û 4HEûCOMPANYûHASûSCRAPPEDûAûlNALû
pandemic. DIVIDENDûTOûSAVEûõM Automotive and industrial supplier
!TûTHEûENDûOFû-ARCHûJUSTûõMûOFûTHEû2#&û SCHAEFFLERûHASûPLACEDûAûDEBUTûõMû
was drawn but the company decided to PEUGEOT ADDS €3bn LOAN 3CHULDSCHEINDARLEHENûINCLUDINGûGREENû
DRAWûTHEûREMAININGûõMûTOûPROVIDEû TRANCHESûTOûlNANCEûAûPORTFOLIOûOFûSUSTAINABLEû
lNANCIALûmEXIBILITY #ARMAKERûPEUGEOTûHASûAGREEDûAûõBNû projects.
4HEû2#&ûMATURESûINû.OVEMBERûû
along with the company’s fully drawn
ûPANDEMIC EIGHT
YEARûTRANCHESûWITHûlXEDûANDûVARIABLEû
õMûTERMûLOAN
/NTEXûALSOûHASûõMûDRAWNûUNDERûAû
MONTHûEXTENSIONûOPTIONSû
SYNDICATEDûLOANûTOûINCREASEûITSûlNANCIALû 4HEûlNANCINGûCOMPRISESûTHREEûlVEûANDû
SECURITYûDURINGûTHEû#OVID
4HEûlNANCINGûISûFORûANûINITIALûûMONTHSû interest rates.
WITHûTWOûTHREE
!ROUNDûõMûOFûTHEûlNANCINGûWILLûBEû
õMûBILATERALûLOANûWHICHûMATURESûINû ANDûISûINûADDITIONûTOû0EUGEOTSûõBNûCREDITû USEDûTOûlNANCEûAûPORTFOLIOûOFûSUSTAINABLEû
.OVEMBERû line. PROJECTSûINûLINEûWITHûTHEû3CHAEFmERSûGREENû
/NTEXSûûPRODUCTIONûFACILITIESûREMAINû “This operation reinforces our ability to lNANCEûFRAMEWORKûWHICHûISûINDEPENDENTLYû
open and operating with limited face up this exceptional situation and EVALUATEDûBYû3USTAINALYTICS
disruptions, but uncertainty remains over PREPAREûTHEûFUTUREvûSAIDû0HILIPPEûDEû2OVIRAû 4HEûPROJECTSûFOCUSûONûPRODUCTSûFORûZERO

the duration of the pandemic and its impact #&/ûOFû'ROUPEû03! emission mobility such as electric motors
on the company’s operations, supply chain 0EUGEOTSûCREDITûLINEûWASûAMENDEDûANDû and electric axles as well as products for
partners and customers. EXTENDEDûINû-AYûûVIAû3ANTANDERû".0û GENERATINGûCLIMATE
FRIENDLYûENERGYûUSINGû
The company has also suspended 0ARIBASû#ITIGROUPû#REDITû!GRICOLEû#)"û wind power.
dividends until visibility over the impact of $EUTSCHEû"ANKû)#"#û.ATIXISûANDû3OCIETEû
the crisis improves. Generale as bookrunners and mandated EMEA LOANS BOOKRUNNERS – FULLY
lead arrangers. SYNDICATED VOLUME
After exercising an extension option, BOOKRUNNERS: 1/1/2020 TO DATE
FRANCE õMûOFûTHEûlNANCINGûISûDUEûINû-AYûû Managing No of Total Share
WHILEûTHEûREMAININGûõBNûISûDUEûINû-AYû bank or group issues US$(m) (%)
THALES BOLSTERS LIQUIDITY  1 Deutsche Bank 30 8,001.53 5.7
2 BNP Paribas 42 7,990.50 5.7
Aerospace and defence group THALES has VERALLIA DRAWS €200m 3 UniCredit 34 7,378.01 5.2
signed a €2bn syndicated credit facility to 4 BofA Securities 23 6,503.61 4.6
BOLSTERûITSûLIQUIDITYûINûCASEûTHEû#OVID
û Glass bottle and jar maker VERALLIA has 5 Commerzbank 28 6,302.84 4.5
pandemic persists or gets worse. DRAWNûõMûOFûITSûõMûREVOLVINGûCREDITû 6 Santander 32 6,252.02 4.4
The facility, which is for an initial 12 facility, increasing its liquidity in response 7 Credit Agricole 33 6,206.51 4.4
MONTHSûPLUSûAûSIX
MONTHûEXTENSIONûOPTIONû TOûTHEû#OVID
ûCRISIS 8 Sumitomo Mitsui 21 5,894.70 4.2
is on top of the company’s undrawn €1.5bn 6ERALLIAûHADûLIQUIDITYûOFûõMûASûOFû!PRILû 9 HSBC 30 5,594.85 4.0
revolving credit facility that matures in The company arranged a €2bn 10 Citigroup 21 5,387.80 3.8
$ECEMBERû RElNANCINGûASûPARTûOFûITSû)0/ûINûû4HEû Total 192 140,796.63
4HEûlNANCINGûSTRENGTHENSû4HALESûALREADYû lNANCINGûINCLUDEDûTHEûlVE
YEARû2#&ûANDûAû Proportional credit
ROBUSTûlNANCIALûPOSITIONû!TûTHEûENDûOFûû õBNûlVE
YEARûTERMûLOAN Source: Refinitiv SDC code: R17

International Financing Review April 11 2020 73

 0ROCEEDSûWILLûALSOûBEûUSEDûTOûINVESTûINû
MAKINGû3CHAEFmERSûWORLDWIDEûPRODUCTIONû
more sustainable through the limiting of
waste and waste water, and reduced energy
consumption.
4HEûlNANCINGûWASûARRANGEDûBYûBayernLB,
3CHULDSCHEINDARLEHENûTHATûMATURESûINû
November.
4HEûCOMPANYûPLANSûTOûISSUEûANû33$ûTOû
replace the bridge loan when more
favourable market conditions allow.
'ERRESHEIMERûSIGNEDûAûõMûSYNDICATEDû
4HEûMULTICURRENCYûlNANCINGûISûFORûANû
initial three years with options to extend to
!PRILû
Citigroup, ING and Nordea coordinated the
lNANCINGûWITHûBarclays, Danske Bank, DNB,
HSBC, Mizuho, MUFG and SEB also
Helaba, ING Bank and UniCredit, with ING as LOANûINû3EPTEMBERûREPLACINGûAûõMûLOANû participating.
green adviser. on improved terms.
4HEû33$ûWASûMARKETEDûTHROUGHûTHEû6#û 4HATûlVE
YEARûlNANCINGûWITHûTWOûONE
YEARû
Trade digital platform. extension options was coordinated by SWEDEN
5NI#REDITû"ANKûALONGûWITHû#OMMERZBANKû
TUI SECURES €1.8bn $EUTSCHEû"ANKû(3"#ûANDû,""7ûASû SECURITAS SIGNS €847m REFI
bookrunners and mandated lead arrangers.
Travel group TUIûHASûSIGNEDûAûõBNû 3ECURITYûSERVICESûGROUPûSECURITAS has signed
BRIDGINGûLOANûWITHûSTATE
OWNEDûKfW after REWE PUMPS UP LIQUIDITY ANûõMûMULTICURRENCYûREVOLVINGûCREDITû
receiving the necessary approval of lenders FACILITYûREPLACINGûITSû53MûANDûõMû
ONûITSûõBNûSYNDICATEDûREVOLVINGûCREDITû 2ETAILûANDûTOURISMûGROUPûREWE has signed a 2#&ûTHATûWASûDUEûTOûMATUREûINû
facility. €1bn syndicated credit line to increase its 4HEûlNANCINGûISûFORûANûINITIALûlVEûYEARSû
4HEû+F7ûLOANûISûPARTûOFû'ERMANYSû#OVID
AVAILABLEûLIQUIDITYûDURINGûTHEû#OVID
ûCRISIS with the possibility to extend by a further
19 state support programme. 4HEûlNANCINGûISûAVAILABLEûTOûUSEûOVERûTHEû two years.
With international travel restrictions next 15 months and is in addition to the Commerzbank, Danske Bank and ING Bank are
IMPLEMENTEDûTOûDEALûWITHûPANDEMICû45)û company’s €2bn syndicated loan. coordinating mandated lead arrangers and
applied for the loan to limit the impact of “Thanks to this measure, our company BOOKRUNNERSûONûTHEûlNANCINGûWITHûBBVA,
the crisis on its business. currently has a total liquidity reserve of Citigroup, CIC, KBC, SEB and UniCredit as
45)ûHASûSUSPENDEDûITSûTOURûOPERATORû more than €2.5bn and is thus equipped for mandated lead arrangers and bookrunners.
mIGHTûHOTELûANDûCRUISEûPROGRAMMES ALLûPOSSIBLEûlNANCIALûCHALLENGESûTHATûMAYû 5NI#REDITûISûFACILITYûAGENT
4HEûADDITIONALûCREDITûFACILITYûMEANSû45)û
EQUIVALENTûlNANCINGû
HASûACCESSûTOûõBNûOFûCASHûANDûAVAILABLEû
facilities.
/NEûOFûTHEûCONDITIONSûONûTHEûlNANCINGûISû
THATû45)ûWAIVESûDIVIDENDûPAYMENTSûFORûTHEû
term of the loan.
45)Sû2#&ûMATURESûINû*ULYûû,ENDERSû
ARISEûFROMûTHEûCRISISvû2%7%û#&/û#HRISTIANû
Mielsch said.
4HEûlNANCINGûISûBEINGûPROVIDEDûBYû
Commerzbank, DZ Bank, ING and SEB.
IRELAND
4HEûPREVIOUSûõM
WASûARRANGEDûINû*ANUARYûûVIAû
COORDINATINGûBOOKRUNNERSû#ITIGROUPûANDû3%"
H&M STRENGTHENS LIQUIDITY
#LOTHINGûCOMPANYûH&M HENNES & MAURITZ has
INCLUDEû#ITIGROUPû5NI#REDITû"ANKûOFû SIGNEDûAûõMûREVOLVINGûCREDITûFACILITYûTOû
!MERICAû"ANKûOFû#HINAû"ARCLAYSû AVOLON FULLY DRAWS STRENGTHENûITSûLIQUIDITYûBUFFERûANDûlNANCIALû
#OMMERZBANKû#REDITû!GRICOLEû#)"û$."û mEXIBILITYûINûRESPONSEûTOûTHEû#OVID
ûCRISIS
"ANKû(3"#û).'û,LOYDSû.ATIXISûANDû3OCIETEû International aircraft leasing company AVOLON 4HEûlNANCINGûISûFORûûMONTHSûWITHûANû
Generale. HASûFULLYûDRAWNûITSû53BNûUNSECUREDû ADDITIONALûSIX
MONTHûEXTENSIONûOPTION
revolving credit facility, increasing its liquidity 4HEû2#&ûISûINûADDITIONûTOûTHEûCOMPANYSû
RIB SOFTWARE SECURES DEBUT ASûTHEû#OVID
ûPANDEMICûSEVERELYûIMPACTSû UNDRAWNûõMû2#&ûSIGNEDûINûûTHATû
airlines across the globe. MATURESûINû
#ONSTRUCTIONûSECTORûTECHNOLOGYûCOMPANYûRIB The drawdown means Avolon had more SEB COORDINATEDûTHEûNEWû2#&ûWHICHûWASû
SOFTWAREûHASûAGREEDûAûõMûDEBUTû THANû53BNûOFûLIQUIDITYûATûTHEûENDûOFûTHEû supported by relationship banks BNP Paribas,
SYNDICATEDûLOANûTOûlNANCEûACQUISITIONSû lRSTûQUARTERûINCLUDINGûUNRESTRICTEDûCASHû Danske Bank, Standard Chartered Bank and
PLANNEDûFORûûANDû and undrawn secured warehouse facilities. Commerzbank.
4HEûlNANCINGûISûFORûlVEûYEARSûPLUSûTWOû
ONE
YEARûEXTENSIONûOPTIONSûANDûPAYSûBPû
over Euribor.
4HEûlNANCINGûWASûLEDûBYûLBBW, together
with Commerzbank, Deutsche Bank and HSBC as
bookrunners and mandated lead arrangers.
Raiffeisenlandesbank Oberoesterreich also
participated.
French electrical equipment group
)Nûû!VOLONûEXTENDEDûTHEûMATURITYûOFû (-ûSAIDûITSûLIQUIDITYûREMAINSûGOODûASûITû
THEû2#&ûBYûûMONTHSûTOû!PRILûûANDû works to set up a combination of different
reduced the facility margin to 125bp over lNANCINGûARRANGEMENTS
,IBORûWHILEûINCREASINGûTHEûSIZEûTOû53BN
“We are currently facing the most
challenging period in the history of TURKEY
COMMERCIALûAVIATIONû4HEûGLOBALûmEETûHASû
been effectively grounded as countries work AKBANK USES ACCORDION
HARDûTOûSLOWûTHEûSPREADûOFû#OVID
vû!VOLONû
3CHNEIDERû%LECTRICûHASûLAUNCHEDûAûõBNû #%/û$OMHNALû3LATTERYûSAID AKBANKûHASûINCREASEDûITSûRElNANCINGûBYû
VOLUNTARYûPUBLICûTAKEOVERûOFû2)"û3OFTWAREû 53MûTOû53M
EQUIVALENTûAFTERûUSINGû
that will be entirely funded from its existing an accordion feature.
cash.
GERRESHEIMER BRIDGES REPAYMENT
0HARMAûANDûHEALTHCAREûPACKAGINGûGROUPû
GERRESHEIMERûHASûAGREEDûAûõMûTWO
YEARû SUSTAINABILITY
LINKEDûREVOLVINGûCREDITû
NORWAY
TELENOR AGREES €2bn SLL
Telecoms operator TELENOR has signed a €2bn
commitment deadline, an accordion
/Nû!PRILûû!KBANKûSIGNEDûAû53M
EQUIVALENTûFACILITYûWITHûAûGROUPûOFûûBANKSû
from 12 countries, setting a pricing
benchmark for other Turkish bank borrowers.
For banks that were unable to meet the
bridge loan with its core banks to cover the FACILITYûREPLACINGûANû2#&ûOFûTHEûSAMEûSIZEû mechanism was put in place giving lenders
REPAYMENTûOFûAûõMû THATûWASûDUEûTOûMATUREûINû!PRILû until April 9 to join the deal.

74 International Financing Review April 11 2020


Banks assess refi needs as
INûPRICEûOFûBPû
appetite dives
„ TURKEY Borrowers expected to take smaller refinancing loans
Turkish banks are assessing their loan
refinancing needs, with some considering asking
for smaller deals, as the fallout from the Covid-
19 pandemic erodes both borrower and lender
appetite and pushes pricing up.
Bank borrowers tap the loan market twice
each year for refinancing deals, with the first
round of deals due around now.
“All them will do smaller deals this time
around,” a banker said.
AKBANK has just closed its first refinancing
ûPANDEMICûHITSûTHEû
of 2020 – a US$605m-equivalent one-year
facility – but it was forced to increase pricing
ûHASû
mid-syndication due to market volatility created
2OYCESû
by the pandemic.
rollover rates in recent years, which has reflected
a lower demand for foreign currency credit from
borrowers.
However, the banks still had a huge US$144bn
of foreign debt outstanding at end of 2019,
US$67bn which comprises short and long-term
loans, with a huge US$82bn maturing in 2020.
If there is a full market shutdown, Fitch
estimates banks would need a more moderate
US$35bn–$40bn to service their debt, on the
assumption that relatively stable sources of
funding – primarily intra-group facilities and
some foreign customer deposits – would not
need to be repaid.
The banks also have decent foreign currency
LOANS EMEA
COMMITMENTSûANDûBPûOVERû%URIBORûFROMû
BPûFORûTHEûEUROS
4HEûLOANûNOWûPAYSûANûALL
over Libor for the dollar tranche and
BPûOVERû%URIBORûFORûTHEûEUROûTRANCHE
Abu Dhabi Commercial Bank, Bank of America,
Emirates NBD Capital, ICBC and Standard
Chartered Bank are coordinators,
bookrunners and mandated lead arrangers
on the transaction.
UK
ROLLS-ROYCE DRAWS RCF, TAPS EXTRA
ROLLS-ROYCE has fully drawn its £2.5bn
revolving credit facility and has lined up an
ADDITIONALûaBNûSYNDICATEDû2#&ûTOûINCREASEû
LIQUIDITYûASûTHEû#OVID
company’s airline customers.
4HEûBIGGESTûIMPACTûFROMû#OVID
BEENûONûENGINEûmYINGûHOURSûINû2OLLS
CIVILûAEROSPACEûBUSINESSû7IDEBODYûmYINGû
The margin was increased to 190bp over Libor liquidity buffers – US$81bn at the end of 2019 HOURSûFELLûBYûAROUNDûûINûTHEûlRSTûQUARTERû
from 125bp for the dollar commitments and – supported by foreign currency deposit inflows WITHûAûROUGHLYûûREDUCTIONûINû-ARCH
165bp over Euribor from 105bp for the euros. The and a reduction in foreign currency lending With increasing numbers of airlines
loan now pays an all-in price of 225bp over Libor
for the dollar tranche and 200.24bp over Euribor
for the euro tranche.
Akbank’s success in securing its new loan
should encourage others to follow and refinance
as normal, a second banker said.
“It is hard to say yet what will happen. This
TERMûDEPOSITû4HEû
is a completely new situation, but Akbank has
since 2018 which would be enough to cover the
US$35bn–$40bn debt service estimate.
However, liquidity could become strained by
a prolonged market disruption and significant
foreign currency deposit withdrawals by
businesses and households facing cash
shortages in the economic downturn.
So Turkish bank borrowers heading to the loan
GROUNDINGûmEETSûINûRECENTûWEEKSûmYINGû
hours are expected to fall further with an
expected reduction in engine delivery and
maintenance, repair and overhaul
volumes.
#ASHûFROMûTHEûDRAWNûREVOLVERûHASûBEENû
PLACEDûONûSHORT
drawdown and new credit facility increases
successfully closed its deal. My gut feel is that market now will have to weigh up how much OVERALLûLIQUIDITYûTOûaBNûGIVINGûTHEû
they should be fine, subject to accepting a price they want to borrow, taking into account lender company cash headroom in case there is a
move,” the second banker said. appetite during the pandemic, how long the prolonged reduction in trading. The
TURK EXIMBANK has opted for a smaller pandemic could go on for and therefore impact company’s gross cash balance is £5.2bn.
financing. It has launched a €300m one-year their liquidity positions and how much they have 4HEûaBNû2#&ûWHICHûMATURESûINûû
syndicated loan that will refinance the one-year to pay for these loans considering a decreased WASûAMENDEDûINû!PRILûûVIAû3ANTANDERû
tranches of a US$630m equivalent loan that was appetite domestically for dollar funding. "ANKûOFû!MERICAû"ARCLAYSû".0û0ARIBASû
signed in April 2019 and the two-year tranches of As a result, bankers expect to see much smaller #ITIGROUPû#REDITû!GRICOLEû#)"û$"3û"ANKû
a US$670m equivalent loan that was signed in rollover rates on Turkish bank refinancings. 'OLDMANû3ACHSû(3"#û*0û-ORGANû,LOYDSû
March 2018. “The banks will have to balance uncertainty -5&'û-IZUHOû2OYALû"ANKûOFû3COTLANDû
as to how long this crisis will continue with how 3OCIETEû'ENERALEûANDû3-"#ûASûBOOKRUNNERSû
INCREASED CHALLENGE much they have to pay for the loans,” said a third and mandated lead arrangers.
A report published by Fitch said Turkish banks banker. 4YPICALLYûTHEûlRSTûQUARTERûISû2OLLS
2OYCESû
could find it increasingly difficulty to refinance
US$82bn of foreign debt that matures in 2020
as investors become more risk averse during the
coronavirus pandemic.
ûWEREû
“They have enough to repay the (foreign LOWûPOINTûFORûLIQUIDITYûREmECTINGûNORMALû
currency) debt in the short term and if they roll adverse seasonal working capital
over smaller amounts. But if the current crisis movements.
continues for a prolonged period the situation (EADWINDSûRELATEDûTOû#OVID
Fitch said Turkish banks’ external debt could become more difficult and test their AROUNDûaMûBEFOREûTHEûCOMPANYSû
had been reduced since 2018, largely due to liquidity positions.” mitigating actions.
repayments of loans and bonds and lower Sandrine Bradley The company is looking to cut cash
EXPENDITUREûTOûSAVEûATûLEASTûaMûOFû
CASHmOWûINûûINCLUDINGûREDUCINGûNON

The dollar tranche has now increased to of March, Akbank said it was targeting critical capital expenditure, consulting,
53MûFROMû53MûANDûTHEûEUROû 53
M
CONTRACTORûCOSTSû
TRANCHEûHASûINCREASEDûTOûõMûFROMû
õM
Five additional banks have joined the deal
bringing the total to 29, and the number of
2OYCEûHASûONEûDEBTûMATURITYûDUEûINû
PROFESSIONALûFEESûANDûSUB
0RICINGûONûTHEûLOANûWASûALSOûINCREASEDû
during syndication as the bank reacted to
market volatility created by the coronavirus
pandemic.
as well as the reduction of salary costs across
its workforce. The company is also
SCRAPPINGûITSûlNALûDIVIDENDûFORû
2OLLS
countries represented in the deal to 15. 4HEûMARGINûWASûINCREASEDûTOûBPûOVERû ûAû53MûBONDûMATURINGûINûTHEû
At the launch of the deal at the beginning Libor from 125bp for the dollar second half of the year.

International Financing Review April 11 2020 75

 BABCOCK DRAWS RCF HOLIDAYSûTHROUGHOUTûûTOûPRESERVEû TOû7(û3MITHSûaMûREVOLVINGûCREDITû
MAXIMUMûmEXIBILITYûTOûOPERATEûTHEûBUSINESSû facility.
)NFRASTRUCTUREûENGINEERINGûlRMûBABCOCK through the crisis. As part of the agreement, the company
INTERNATIONALûHASûFULLYûDRAWNûITSûaMû 3ANTANDERûHASûALSOûINCREASEDûITSûSUPERû has also agreed a waiver on its covenants in
revolving credit facility to provide the SENIORûREVOLVINGûCREDITûFACILITYûTOû42'Sû !UGUSTûûANDû&EBRUARYûûWITHûAûNEWû
company with substantial liquidity during CANTEEN
STYLEû*APANESEûNOODLEûCHAINû COVENANTûINûPLACEûFORû&EBRUARYû
THEû#OVID
ûCRISIS WAGAMAMAûTOûaMûFROMûaMûPREVIOUSLYû The agreed package is conditional on WH
4HEûCOMPANYûHASûACCESSûTOûAROUNDûaBNû adding to the group’s overall debt facilities. 3MITHûRAISINGûNEWûEQUITY
OFûBORROWINGûFACILITIESûINCLUDINGûTHEû2#& 42'ûAGREEDûAûaMûREVOLVINGûCREDITû 7(û3MITHûSAIDûTHATûWASûINûTALKSûWITHû(-û
"ABCOCKûRENEWEDûTHEûlVE
YEARû2#&ûINû FACILITYûINûûTOûBACKûITSûaMûACQUISITIONû Treasury and the Bank of England to access
3EPTEMBERûVIAûAûCLUBûSYNDICATEûOFû!.:û OFû7AGAMAMAûANDûTOûRElNANCEûDEBT THEû#OVIDû#ORPORATEû&INANCINGû&ACILITY
3ANTANDERû"ARCLAYSû".0û0ARIBASû(3"#û*0û “These are unprecedented times for our $UEûTOûTHEûHIGHûNUMBERûOFûSTOREûCLOSURESû
-ORGANû,LOYDSû.AT7ESTûANDû3-"# BUSINESSûANDûOURûSECTORvûSAIDû42'ûCHIEFû WH expects revenues in April to be down by
3OûFARûTHEûCOMPANYûHASûSEENûLIMITEDû executive Andy Hornby. AROUNDûaMûORûûYEAR
ON
YEARûWITHûAû
impact from the virus on trading, with the “Against this backdrop we have taken REDUCTIONûINûOPERATINGûPROlTûOFûAROUNDû
vast majority of its services continuing, but decisive action to improve our liquidity, aM
some areas of its business are running at reduce our cost base and downsize our 7(û3MITHûISûTAKINGûAûRANGEûOFûMITIGATINGû
REDUCEDûLEVELSûINCLUDINGûSHORT
CYCLEûWORKû OPERATIONSv
and some training and transportation
activities.
Babcock is looking to reduce and defer
NON
ESSENTIALûOPERATINGûANDûCAPITALû
expenditure where possible. The company
will consider the use of government
programmes to help manage areas of
inactivity where they exist and has also
EXECUTIVEûDIRECTORûPAYûANDûFEESû
postponed annual pay increases for its
senior management team.
"ABCOCKûWONûAûCONTRACTûFROMûTHEû5+û
aMûONûITSû
ACTIONSûTOûMANAGEûITSûCOSTûBASEûANDûCASHmOWû
42'ûISûLOOKINGûTOûPROTECTûPROlTABILITYûANDû targeting reduced operating costs of around
to conserve cash including reducing capital aMûINûTHEûSECONDûHALFû4HEûCOMPANYûISû
EXPENDITUREûFORûûBYûATûLEASTûaMûANDûISû also looking to reduce capital expenditure
LOOKINGûTOûSAVEûAROUNDûaMûTHROUGHû by around £29m.
OPERATIONALûEFlCIENCIES
!ûSIGNIlCANTûNUMBERûOFû42'SûSTAFFûHAVEû
been furloughed, while executive director
ANDûNON
have been cut. NORTH AMERICA
Online fashion company ASOS is close to
AGREEINGûANûINCREASEûOFûaM
GOVERNMENTûTOûMANUFACTUREûû
VENTILATORSûASûPARTûOFûTHEû5+Sû6ENTILATORû
ûCRISIS
#HALLENGE
WALGREENS BOOTS NETS US$3.1bn
European airline EASYJET requested a full
TO
%BITDAûCOVENANTûTESTûFORûTHEûNEXTûû
DRAWDOWNûOFûITSû53Mû2#&ûANDûHASû
ISSUEDûaMûOFûCOMMERCIALûPAPERûTHROUGHû
THEû"ANKûOFû%NGLANDSû#OVIDû#ORPORATEû
Financing Facility.
4HEûCOMPANYûGROUNDEDûITSûENTIREûmEETûOFû
AIRCRAFTûAFTERûTHEû#OVID
ûPANDEMICûSAWû Financing Facility.
national lockdowns and travel restrictions
YEARû2#&ûWASûARRANGEDûINû*ULYûVIAû
aMû2#&ûTOûENSUREûITûCANûWEATHERûTHEû UNITED STATES
#OVID
4HEûCOMPANYûISûALSOûADJUSTINGûTHEûNET
DEBT
months. 0HARMACEUTICALûRETAILERûWALGREENS BOOTS
As part of the balance sheet bolstering, ALLIANCEûHASûSIGNEDû53BNûOFûLOANSûTHISû
!3/3ûISûSELLINGûNEWûSHARESûREPRESENTINGûUPû month to increase its cash position and
TOûûOFûITSûEQUITYûASûWELLûASûLOOKINGûTOûTAPû PRESERVEûlNANCIALûmEXIBILITYûINûLIGHTûOFû
THEû"ANKûOFû%NGLANDSû#OVIDû#ORPORATEû uncertainty resulting from the coronavirus
pandemic.
4HEûlVE
The borrower has agreed two revolving
implemented across many European "ARCLAYSû".0û0ARIBASû#ITIGROUPû(3"#ûANDû credit facilities and amended two more, which
countries. Lloyds. allows for additional borrowing capacity.
The company is looking to maximise !3/3ûHASûSTRESS
TESTEDûITSûLIQUIDITYûUNDERû !û53Mû
DAYû2#&ûWASûLEDûBYû
liquidity in case of an extended grounding different scenarios and is comfortable that administrative agent JP Morgan.
period. with mitigating actions there is enough *0û-ORGANûWASûALSOûADMINISTRATIVEûAGENTû
By April 9, the company had expected to liquidity under the facility. ONû53BNû
DAYû2#&ûWITHûMizuho,
HAVEûACCESSûTOûAROUNDûaBNûOFûCASHûRESERVES !3/3ûSAIDûITûHASûREDUCEDûNON
STRATEGICû NatWest, Truist Bank, US Bank and UBS ASûCO

4HEû53Mû2#&ûSECUREDûAGAINSTû costs which, combined with stronger syndication agents.
aircraft assets, was provided by a syndicate performance than anticipated in the January 4HEûLOANSûMATUREûONû-ARCHûûûANDû
OFû3ANTANDERû"ANKûOFû!MERICAû"ANKûOFû and February sale period, has seen a strong AREûPRICEDûATûBPûOVERû,IBORûWITHûAûBPû
#HINAû"ARCLAYSû".0û0ARIBASû#ITIGROUPû lRST
HALFûPROlTûANDû%BITûMARGIN commitment fee.
(3"#û"ANKû,LOYDSû-ORGANû3TANLEYû3OCIETEû 4HEûCOMPANYûAMENDEDûAû53BNû2#&û
'ENERALEû-5&'ûANDû3-"# WH SMITH GETS ADDITIONAL LOAN THATûMATURESûINû*ANUARYûûTOûADDû53BNû
The company will continue to consider with Wells Fargo as administrative agent.
further liquidity and funding options. 2ETAILERûWH SMITHûHASûAGREEDûAûaMûSHORT
4HEûINITIALûLOANûPAIDûBPûOVERû,IBORûUNTILû
term bank loan as it looks to strengthen its MATURITYûTHENûBPûOVERû,IBORûIFûEXTENDEDû
TRG GETS LOAN WAIVER, UPS RCF balance sheet and liquidity position after 4HEûNEWûFACILITYûPAYSûBPûOVERû,IBOR
#OVID
ûTRAVELûRESTRICTIONSûHASûSEENûALLûTHEû 4HEûCOMPANYûALSOûAMENDEDûAû53BNû
THE RESTAURANT GROUP has agreed a waiver of company’s stores at airports and railway 
DAYûCREDITûFACILITYûCOMPRISINGûAû
THEûHALF
YEARûCOVENANTûTESTûONûITSûLOANSûASû stations temporarily close. 53MûTERMûLOANûANDûAû53Mû2#&û
THEû#OVID
ûPANDEMICûTAKESûITSûTOLLûONûSALESû 4HEûlNANCINGûISûFORûANûINITIALûûMONTHSû 3UMITOMOû-ITSUIûISûTHEûADMINISTRATIVEûAGENTû
across the company’s pubs, bars and but may be extended by seven months at on the agreement. The amendment converts
restaurants. the company’s discretion. THEûREVOLVERûINTOûAû
DAYûTERMûLOANû
The company said previously that it will BNP Paribas, HSBC and Santander UK are MATURINGûINû-AYûûANDûPAYINGûBPû
work with its lenders to seek covenant PROVIDINGûTHEûlNANCINGûWHICHûISûINûADDITIONû over Libor.

76 International Financing Review April 11 2020

 LOANS AMERICAS

LEADûARRANGERûWITHû".0û0ARIBASû#ITIGROUPû

GM reduces loan refi target "ANKûOFû!MERICAûANDû-5&'

0RICINGûISûBASEDûONûAûRATINGS
BASEDûGRIDû
ANDûRANGESûFROMûBPûOVERû,IBORûWITHûAûBPû
„ US Carmaker will also pay up for debt facility fee to 91bp and 9bp.
GENERAL MOTORS has opted to extend the
maturities on US$6bn in revolving loans rather
than refinance a US$16.5bn credit facility
following discussions with its bank group.
The company went out to its JP Morgan
and Citigroup-led bank group in early March,
requesting to push maturities on the US$16.5bn
in revolving credit facilities as part of its regular
YEARûREVOLVINGûCREDITûFACILITY
liability management operations.
The transaction was meant to roll over
maturities, but leave pricing unchanged.
Since discussions over the refinancing
began, the Covid-19 pandemic has worsened
The new plan will only address the short-term
maturities of the US$2bn loan and the US$4bn
loan.
GM is offering 30bp to lenders that choose to
roll over their commitments. The fee will be paid
to lenders on the one-year loan and lenders of
the three-year loan.
The 364-day loan is looking to pay 25bp
undrawn, while the three-year loan may pay
40bp undrawn. When fully drawn, the loans
could pay 175bp over Libor.
An option to convert the US$2bn RCF into a
term loan after one year is also expected to be
&ORûITSû!!ûRATINGûTHEûMARGINûISûBPû
with a 5.5bp fee.
VF DRAWS DOWN US$1bn
#LOTHINGûCOMPANYûVF, owner of Timberland
and The North Face brands, will draw down
THEû53BNûREMAININGûUNDERûITSû53BNû
lVE
The company said the drawdown is among
THEûACTIONSûITûISûTAKINGûTOûPRESERVEûlNANCIALû
liquidity in light of the coronavirus pandemic.
*0û-ORGANûISûTHEûADMINISTRATIVEûAGENTûONû
the loan, and lead arranger and bookrunner
and GM is facing a longer-than-expected removed. WITHû"ANKûOFû!MERICAû"ARCLAYSû(3"#û53û
shutdown of its plants and considerable GM’s 364-day loan currently pays 12.5bp undrawn, Bank, and Wells Fargo.
revenue losses. while the three-year pays 15bp undrawn. The drawn The company had already drawn down
Complicating negotiations further, the margin on the two facilities is 125bp over Libor. 53BNûFROMûTHEûREVOLVERûLASTûMONTHûASûAû
company decided to draw down US$16bn on The new refinancing plan will leave in place hPROACTIVEûPRECAUTIONARYûMEASUREvûINûLIGHTû
its revolver on March 27 while the refinancing the US$10.5bn credit facility. Pricing on the five- of the outbreak’s economic impact.
talks were taking place “to shore up liquidity
and strengthen its financial position due to
global market uncertainty from the coronavirus
pandemic,” the company said.
The originally proposed refinancing included
a US$2bn 364-day loan and a US$4bn three-
year loan. It also included a US$10.5bn five-year
facility.
The company has previously drawn down
ATûLEASTû53BNûOFûADDITIONALûDEBT
year is expected to stay unchanged at 125bp over
Libor and 17.5bp undrawn.
Commitments were due on April 10.
GM also has a US$3bn revolving credit agreed
in January 2019 when it refinanced the other
three tranches. The new loan increased the
company’s borrowing capacity to US$19.5bn.
Michelle Sierra
The facility, which remains undrawn,
MATURESûONû-ARCHûû
0RICINGûFORûTHEûLOANûISûBASEDûONûRATINGSû
ANDûRANGESûFROMûBPûOVERû,IBORûWITHûAû
BPûFACILITYûFEEûTOûBPûWITHûAûBPûFEE
6&ûISûRATEDû!ûBYû30ûANDû!ûBYû-OODYS
AT&T CALLS UP TERM LOAN
Telecoms company AT&T has signed a
53BNûTERMûLOANûTHATûMATURESûONû
$ECEMBERû
Bank of America is administrative agent on
the deal. Citigroup is the syndication agent.
Walgreens Boots Alliance is rated BBB by 4HEûUPSIZEDû53BNûFACILITYûISûPRICEDû #ITIGROUPûBBVA, Goldman Sachs, JP Morgan,
30ûANDû"AAûBYû-OODYS ONûAûRATINGS
BASEDûGRIDû&ORû!!ûORûHIGHERû ICBC, RBC, Societe Generale, TD Bank and Wells
THEûMARGINûISûBPûOVERû,IBORûWITHûAûBPû Fargo are lead arrangers and bookrunners.
MONDELEZ DRAWS US$2.25bn FACILITYûFEEûFORû!!
ûITûISûBPûANDûBPû 4HEûLOANûISûPRICEDûATûBPûOVERû,IBORûANDû
FORû"AA"""ûITûISûBPûANDûBPûFORû"AA proceeds will be used for general corporate
Food manufacturer MONDELEZ INTERNATIONAL """ûITûISûBPûANDûBPûANDûFORû"AA purposes.
HASûDRAWNû53BNûFROMûAû53BNû """
ûORûLOWERûITûISûBPûANDûBP )Nû3EPTEMBERûTHEûCOMPANYûSIGNEDûAû
revolving credit facility and also increased a -ONDELEZûISûRATEDû"AA"""""" 53BNûTERMûLOANûWITHû"ANKûOFû!MERICAûASû
SECONDûFACILITYûBYû53MûTOû53BN the agent.
-ONDELEZûBORROWEDû53BNûUNDERûTHEû ESTEE LAUDER BORROWS US$1.3bn
revolving credit line to complete its AMERICAS LOANS BOOKRUNNERS – FULLY
ACQUISITIONûOFû'IVEûû'Oû0REPAREDû&OODSûONû #OSMETICSûCOMPANYûESTEE LAUDER has SYNDICATED VOLUME
April 1. BORROWEDû53BNûUNDERûITSû53BNû BOOKRUNNERS: 1/1/2020 TO DATE
4HISûDRAWûWASûINûADDITIONûTOû53BNûITû revolving credit facility in response to the Managing No of Total Share
tapped on March 12, to bolster liquidity in coronavirus pandemic. bank or group issues US$(m) (%)
light of the uncertainty in the global The company has closed retail stores and 1 BofA Securities 293 83,367.34 13.0
markets brought on by the coronavirus reduced production at its manufacturing 2 JP Morgan 249 82,743.30 12.9
pandemic. and distribution centres. 3 Citigroup 161 56,389.77 8.8
-ONDELEZûSIGNEDûTHEû53BNûREVOLVERû It has also suspended its repurchase of 4 Wells Fargo 198 44,555.01 6.9
ONû-ARCHû shares and said it could not estimate the 5 Morgan Stanley 61 23,746.58 3.7
*0û-ORGANûISûTHEûADMINISTRATIVEûAGENTûONû IMPACTûTHEûVIRUSûWILLûHAVEûONûITSûlNANCIALû 6 Credit Suisse 80 23,421.38 3.6
THEû
DAYûSENIORûUNSECUREDûREVOLVER condition. 7 Barclays 109 20,914.38 3.3
Mondelez increased the size of another The company has approximately 8 Goldman Sachs 109 20,566.68 3.2

DAYûSECONDûFACILITYûBYû53MûTHROUGHû 53MûINûCOMMERCIALûPAPERûOUTSTANDINGû 9 RBC 101 20,273.73 3.2
lead arrangers and bookrunners Citigroup ASûOFû-ARCHûû 10 BMO 100 16,716.78 2.6
and BBVA. Morgan Stanley, TD Securities and US )TûSIGNEDûTHEû53BNûlVE
YEARûREVOLVERû Total 969 642,929.80
Bank AREûCO
DOCUMENTATIONûAGENTSûONûTHISû INû/CTOBERûû*0û-ORGANûISûTHEû Proportional credit
loan. administrative agent, and bookrunner and Source: Refinitiv SDC code: R7

International Financing Review April 11 2020 77

 !44ûHASûTWOû53BNûCREDITû and replaces it with a minimum liquidity SENIORûNOTESûDUEûûANDû53Mûû
AGREEMENTSûTHATûMATUREûONû$ECEMBERûû covenant based on unrestricted cash, cash SENIORûNOTESûDUEû
ûANDû$ECEMBERûûûWITHû#ITIGROUPû EQUIVALENTSûSHORT
TERMûINVESTMENTSûANDû 0ROCEEDSûFROMûTHEûBONDSûWILLûBEûUSEDûTOû
as the administrative agent. unused capacity under the facility.
!44ûISûRATEDû"""ûBYû30 The minimum liquidity requirement is
53BNû/NCEûTHEûCOMPANYûPAYSûTHEû
AUTOZONE GETS US$750m outstanding amount on its convertible
senior bonds due in June, the minimum
Auto parts retailer AUTOZONE has signed a LIQUIDITYûREQUIREMENTûDROPSûTOû53BN
53Mû
DAYûLOANûTHATûWILLûINCREASEûTHEû The company said there was no guarantee
company’s access to liquidity in light of the THATûADDITIONALûDEBTûlNANCINGûWILLûBEû
current macroeconomic conditions. available in the future or that it would be
US Bank is the administrative agent. Bank available on commercially reasonable terms.
REPAYûAROUNDû53BNûOFûDEBTûUNDERû+$0Sû
ûCREDITûAGREEMENTûANDûTHEûREMAINDERûTOû
repay outstanding commercial paper.
+$0ûSAIDûTHEûINCREASEûINûITSûLIQUIDITYû
would far exceed potential increased needs
even in the event of a prolonged downturn.
OMNICOM SIGNS US$400m LOAN
Advertising and marketing company
of America, PNC, Mizuho and Truist Bank are !SûOFû$ECEMBERûûTHEûCOMPANYûHADû OMNICOMûHASûSIGNEDûAû53Mû
DAYûLOANû
BOOKRUNNERSûANDûCO
SYNDICATIONûAGENTSûJP 53BNûINûCASHûSHORT
TERMûANDûLONG
with a group of banks.
Morgan is the documentation agent. term investments. Citigroup, Bank of America, Mizuho and US
0RICINGûISûONûAûRATINGS
BASEDûGRIDû&ORû "OOKINGûISûRATEDû!!n Bank are lead arrangers and book managers.
""""AAûORûHIGHERûTHEûMARGINûISûBPû 3UBSIDIARYû/MNICOMû#APITALûISûTHEû
OVERû,IBORûWITHûAûBPûFACILITYûFEEûFORû""" AUTONATION AMENDS RCF borrower and Omnicom Group is guarantor.
"AAûITûISûBPûANDûBPûANDûFORû"""n 0RICINGûONûTHEûSHORT
TERMûFACILITYûISûBASEDû
"AAûORûLOWERûITûISûBPûANDûBP #ARûDEALERûAUTONATION has amended and ONûAûRATINGSûGRIDû&ORû!!nûORûHIGHERûTHEû
There is a 25bp utilisation fee. RESTATEDûITSû53BNûREVOLVINGûCREDITû MARGINûISûBPûOVERû,IBORûFORû"AA"""ûITû
!UTOZONEûISûRATEDû"""ûBYû30ûANDû"AAûBYû agreement. ISûBPûANDûFORû"AA"""ûORûLOWERûITûISû
Moody’s. The amendment has lower commitment BP
4HEûCOMPANYûHASûAû53BNûlVE
YEARûLOANû fees and margins, extends the maturity to 0ROCEEDSûWILLûGOûTOWARDSûGENERALû
DUEû.OVEMBERû -ARCHûûûANDûPROVIDESûFORû,IBORû corporate purposes.
replacement. /MNICOMûISûRATEDû"AA"""
ENTERPRISE PRODUCTS NETS US$1bn JP Morgan is the administrative agent on In February, Omnicom extended the
the loan. Bank of America, Truist Bank and Wells MATURITYûOFûAû53BNûREVOLVINGûCREDITû
Midstream energy company ENTERPRISE Fargo are syndication agents. FACILITYûBYûlVEûYEARSûTOû&EBRUARYû
PRODUCTS PARTNERSûHASûSIGNEDûAû53BNû
0RICINGûISûLINKEDûTOûLEVERAGEûRATIOSû&ORûû
day revolving credit. TIMESûORûMOREûTHEûMARGINûISûBPûOVERû,IBORû INTERPUBLIC GETS US$500M
Citigroup is the administrative agent. JP WITHûAûBPûCOMMITMENTûFEEûFORû
û
Morgan, MUFG, Mizuho, TD Bank, Scotiabank, TIMESûITûISûBPûANDûBPûFORû
û Advertising and marketing company
RBC and Truist AREûCO
SYNDICATIONûAGENTSû TIMESûITûISûBPûANDûBPûANDûFORûLOWERû INTERPUBLIC GROUP OF COMPANIES signed a
Each of the banks has committed than 1.5 times it is 112.5bp and 12.5bp. 53Mû
DAYûREVOLVINGûCREDITû
53M The current consolidated leverage ratio is agreement.
0RICINGûFORûTHEûREVOLVERûISûONûAûRATINGS

ûTIMES Citigroup is the administrative agent, JP
BASEDûGRIDû&ORû!!ûTHEûMARGINûISûBPû !UTO.ATIONûISûRATEDû"""
ûBYû30ûANDû"AAû Morgan is the syndication agent, and Bank of
OVERû,IBORûWITHûAûBPûFACILITYûFEEûFORû!!nû by Moody’s. America and Morgan Stanley are
ITûISûBPûANDûBPûFORû"AA"""ûITûISû documentation agents. Other lenders are
BPûANDûBPûFORû"AA"""ûITûISûBPû KEURIG DR PEPPER BOLSTERS LIQUIDITY BBVA, BNP Paribas and Wells Fargo.
ANDûBPûANDûFORû"AA"""nûITûISûBPû 0RICINGûISûBASEDûONûTHEûCOMPANYSûCREDITû
ANDûBP $RINKSûCOMPANYûKEURIG DR PEPPER is lining up ratings and opens at 125bp over Libor with a
4HEûCOMPANYûHASûANOTHERû53BNûlVE
Aû53BNû
DAYûREVOLVINGûCREDITûFACILITYû 25bp facility fee.
YEARû2#&ûWHICHûWASûSIGNEDûINû3EPTEMBERû as it seeks to increase its liquidity in case of &ORû""""AA"""ûITûISûBPûANDûBPû
ûANDûAû53BNû
DAYû2#&ûWHICHû AûPROTRACTEDûDOWNTURNûCAUSEDûBYûTHEû#OVID
FORû""""AA"""ûITûISûBPûANDûBPûANDû
WASûSIGNEDûINû3EPTEMBERû 19 pandemic. FORûLOWERûTHANû""""AA"""ûITûISûBPûANDû
The company’s consolidated liquidity is 4HEûFACILITYûISûPARTûOFûAûRElNANCINGû BP
APPROXIMATELYû53BNûINCLUDINGûTHEû
three credit agreements and unrestricted
cash on hand.
%NTERPRISEû0RODUCTSû0ARTNERSûISûRATEDû"""û
BYû30
BOOKING AMENDS US$2bn RCF
PROGRAMMEûTHATûALSOûINCLUDESûAû53BNû
bond issue.
JP Morgan is administration agent on the
facility, which is expected to be signed on
!PRILû
4HEû2#&ûWILLûREPLACEû+$0Sû53Mû
DAYû2#&ûFROMû-AYûANDûPROVIDEûTHEûCOMPANYû
WITHû53MûOFûADDITIONALûlNANCING
4HEûCOMPANYûISûRATEDû"""ûBYû30ûANDû
Baa2 by Moody’s.
The company is required to maintain a
LEVERAGEûRATIOûOFûûTIMESûORûLESSûUPûTOû
3EPTEMBERûûANDûûTIMESûAFTERûTHAT
TEEKAY LNG BAGS REFI
Online travel reservation company BOOKING 4HEûFACILITYûPAYSûBPnBPûOVERû,IBORû LNG carrier owner and operator TEEKAY LNG
HOLDINGSûHASûAMENDEDûITSû53BNûREVOLVINGû depending on debt ratings. HASûRElNANCEDûITSûEXISTINGû53Mû
credit facility as the spread of the 5NDRAWNûFUNDSûPAYûAûBPûCOMMITMENTû unsecured revolving credit facility with a
coronavirus has curtailed demand for fee. GROUPûOFûûINTERNATIONALûBANKS
hotels, airlines and restaurants, and hit the 4HEREûISûAûTOTALûNETûLEVERAGEûlNANCIALû 4HEûEXISTINGû2#&ûWHICHûWASûDUEûTOû
BORROWERSûlNANCIALûRESULTS covenant. mature in November, has been replaced by a
The amendment suspends its maximum The bonds, which were priced on TWO
YEARûFACILITYûOFûTHEûSAMEûAMOUNTûANDû
LEVERAGEûRATIOûCOVENANTûUNTILû-ARCHûûû 7EDNESDAYûCOMPRISEû53Mûû PRICINGûOFûBPûOVERû,IBOR

78 International Financing Review April 11 2020

 LOANS LATIN AMERICA

4HEûlNANCINGûHELPSûSTRENGTHENû4EEKAYû
,.'SûLIQUIDITYûPOSITIONûOFûAROUNDû53Mû
ANDûINCREASEDûlNANCIALûmEXIBILITY
Citigroup is bookrunner and mandated
Direct lenders support
LEADûARRANGERûONûTHEûlNANCINGûWITHûCredit
Agricole CIB, Danske Bank, DNB Bank, JP Morgan,
existing investments
Morgan Stanley, Nordea and Swedbank as
mandated lead arrangers. „ US MIDDLE MARKET Firms also open for new opportunities
Bank of America, BNP Paribas, ING, Societe
Generale and SMBC also participated. Firms that lend to small and mid-sized There were US$26.26bn of middle market
4EEKAYûPROVIDESû,.'ûANDû,0'ûSERVICESû companies are looking to shore up existing loans issued in the first quarter, down from
PRIMARILYûUNDERûLONG TERMûFEE BASEDû investments amid market volatility caused by US$33.06bn in the last three months of 2019,
CHARTERûCONTRACTSûTHROUGHûINTERESTSûINûû the coronavirus pandemic, but are still open for according to Refinitiv LPC data.
,.'ûCARRIERSûûMID SIZEû,0'ûCARRIERSûANDû new deals as valuations fall. “Right now it is defence first,” said Richard
SEVENûMULTI GASûCARRIERS Managers of business development Byrne, president of Benefit Street Partners,
companies have been reaching out to an investment manager that oversees about
INGREDION AGREES BRIDGE borrowers to gauge their financial health and US$27bn in assets. “But if you have excess
ascertain their plans to weather any economic cash, we think it is a very good time to deploy
Ingredients group INGREDION is backing its hit that may result from market volatility. capital, even though we may not be at the
aMûACQUISITIONûOFû,ONDON LISTEDû “It’s an extremely challenging time, and our bottom yet.”
SWEETENERûMAKERû0URE#IRCLEûWITHûAû DAYû overall disposition is to be incredibly cautious in
bridge loan from Citigroup. deploying capital,” said Craig Packer, co-founder DRY POWDER
4HEûACQUISITIONûCOMESûASû0URE#IRCLEûWASû of Owl Rock Capital Partners, which oversees Private equity firms are sitting on about
FACINGûAûSIGNIlCANTûCHALLENGEûINûREPAYINGûAû BDCs that lend to US middle market businesses. US$2trn of dry powder, according to Morgan
PORTIONûOFûITSû53MûLOANûMATURINGûINû “The vast majority of our resources will be Stanley, and may want to capitalise on the dip
November after breaching covenants on used to support existing portfolio companies in valuations.
multiple occasions, as well as the impact of and work with sponsors to make sure they Several funds have “available capital, and
THEû#OVID ûPANDEMIC have enough wherewithal to get through,” he there are opportunities as a result of the
The company secured waivers in February said. “But we and other (direct lenders) are current disruption in the credit space”, said
on its previous defaults combined with an positioned and can extend (new capital) in John Mahon, a partner at law firm Schulte
ADDITIONALû53MûREVOLVINGûCREDITûFACILITYû moderation.” Roth & Zabel. “We see funds looking to provide
ANDûANû53MûUNSECUREDûSUBORDINATEDû The virus has interrupted supply chains, liquidity to companies if they can do so on
loan provided by shareholders. closed retail operations, and reduced consumer attractive terms.”
4HEûFUNDINGûPROVIDEDûMUCH NEEDEDû demand, pushing the world economy towards Some deals that were in the works as the
SHORT TERMûLIQUIDITYûBUTûTHEûCOMPANYûSTILLû recession. Companies have laid off workers or impact of the virus spread are still waiting in
faced probable covenant breaches. put them on leave for the near term. the pipeline, while others made it through.
0URE#IRCLEûHADûBEENûEXPLORINGûALTERNATIVEû Businesses are also examining their balance Owl Rock recently teamed up with Benefit
lNANCINGûOPTIONSûTOûRElNANCEûTHEûDEBT sheets, looking for ways to cut costs and Street Partners for a US$117m unitranche
4HEûLOANûWASûAGREEDûINûûANDûCOMPRISEDû determine their access to capital, in some financing to support growth at GoHealth, a
Aû53MûFOUR YEARûTERMûLOANûANDûAû instances drawing on their revolving lines of portfolio company of Centerbridge Partners
53MûTHREE YEARûREVOLVINGûCREDITûFACILITY credit for more liquidity. that provides an online marketplace for health
-ALAYSIA BASEDû0URE#IRCLEûPRODUCESûPLANT Art Penn, founder of PennantPark insurance.
based sweeteners to the global food and Investment Advisers, which lends to middle Owl Rock extended a US$55m incremental
beverage industries. market companies with Ebitda between first-lien term loan to support Rise Baking
US$10m-$50m, said his firm has already Co, a portfolio company of Olympus Partners
received requests for revolver drawdowns. that produces goods for supermarkets’ in-
“We stand ready to fund those house bakeries. The financing will back Rise’s
commitments,” he said. “We have liquidity acquisition of Dawn Foods North American
LATIN AMERICA and are able to do so. Every company takes a frozen manufacturing business. It also provided
different tack – some draw all of the revolver a first-lien credit facility to support Hellman
and some draw none. It’s a case-by-case & Friedman’s buyout of software security
BRAZIL decision based on the company’s need for company Checkmarx.
liquidity.” While lenders continue to focus on existing
BRASKEM DRAWS THE LOT No businesses PennatPark lends to have investments, they await new opportunities.
asked for additional funding, Penn said, but it is “There is a tremendous amount of
0ETROCHEMICALSûCOMPANYûBRASKEM has drawn possible they will in the future. uncertainty, and we know that; activity is
DOWNûITSûENTIREû53BNûREVOLVINGûCREDITûFACILITYû “As each day of new information sinks in slowing, and we expect market activity in
to shore up liquidity against the coronavirus and the length and breadth of the shutdown the second quarter to be down significantly,”
pandemic, which has led businesses to cease (continues), I think (lenders) will focus more Packer said. “But BDCs are designed to lend to
OPERATIONSûANDûWORKERSûTOûSELF ISOLATEûINûORDERû inward to help existing companies rather than US-based companies. We think the economy
to slow the spread of the virus. sign new deals until we get a sense of the will get through this and come back strongly
The company had been evaluating bottom and when and how this ends,” he said. … and there are reasonable places to extend
whether to draw on its revolver since last “Our top priority is for our existing investors, credit responsibly.”
month after several other Latin American and how we protect them.” Kristen Haunss
companies had drawn on their credit lines.

International Financing Review April 11 2020 79

 Braskem’s Mexican peer ORBIA, formerly due to the market volatility brought on by the /Nû7EDNESDAYûTHEûlRST
LIENûLOANûWASû
KNOWNûASû-EXICHEMûDREWûDOWNû53BNû coronavirus pandemic. QUOTEDûATûANûAVERAGEûBIDûOFû
ûCENTSûONû
FROMûITSû53BNûREVOLVERûLASTûMONTH &IBRAû4ERRAlNAûHASûDRAWNû53MûFROMû the dollar in the secondary market, up from
"RAZILûSTATE
OWNEDûOILûPRODUCERûPETROBRAS ITSû53Mû2#&ûTHATûMATURESûINû*ANUARYû ANûAVERAGEûBIDûOFû
ûCENTSûAûWEEKûEARLIER
ALSOûSAIDûITûHASûDRAWNûONû53BNûINûDOLLAR
ûWHILEû&IBRAû5NOSûWITHDRAWALûWILLûADDû Last week, Jefferies also arranged a
denominated revolving loans. 0SBNû53M ûINûLOCALûCURRENCYûANDû 53MûADD
ONûFORûRESTAURANTûANDûCASINOû
"RASKEMûRAISEDûITSû53BNûREVOLVINGû
CREDITûFACILITYûINû-AYû
4HEûlVE
YEARûFACILITYûPAYSûBPûOVERû,IBORû
"YûDRAWINGûONûMOREûTHANûTWO
53MûINûCASH company GOLDEN NUGGETû)TûPAYSûBPûOVERû
&IBRAû4ERRAlNASûLOANûPAYSûBPûOVERû,IBORû ,IBORûWITHûAûû,IBORûmOORûANDûAûû/)$ûSEEû
)TûRENEWEDûITSû2#&ûINû&EBRUARYûû!TûTHEû 4OPû.EWS
THIRDSûOFûTHEû TIMEû&IBRAû4ERRAlNAûEXTENDEDûTHEûMATURITYû Fitch downgraded Everi to B from B+ and
facility, however, the margin will increase by TOûûFROMûûREDUCEDûTHEûSPREADûBYû assigned a BB rating to the incremental
BP BPûFROMûBPûOVERû,IBORûANDûREDUCEDûTHEû transaction. The company’s senior secured debt
!".û!-2/û".0û0ARIBASû#REDITû!GRICOLEû SIZEûOFûTHEûREVOLVERûTOû53MûFROMû was also downgraded to BB from BB+ and its
#ITIGROUPû3ANTANDERûANDû3-"#ûARRANGEDû 53Mû#ITIGROUPûLEDûTHEûTRANSACTION UNSECUREDûBONDSûWEREûCUTûTOû###ûFROMû"
the transaction. )Nû*ULYû&IBRAû5NOûSIGNEDûAûSUSTAINABILITY
%VERISû4,"ûHASûAûûTIMESûNETûSECUREDû
linked revolver with 11 banks. leverage maintenance covenant, but this
4HEûlVE
YEARûFACILITYûCOMPRISEDû0SBNû MAYûNEEDûTOûBEûAMENDEDûTOûREmECTûTHEû
MEXICO INûLOCALûCURRENCYûANDûUPûTOû53MûCANûBEû LIKELIHOODûTHATûTHEûCOMPANYSûDEBT
TO
%BITDAû
drawn in dollars. RATIOûWILLûSWELLûABOVEûûTIMESû&ITCHûSAID
CEMEX DRAWS US$1.14bn BBVA and Santander were bookrunners and ,EVERAGEûCOULDûINCREASEûTOûûTIMESûINû
lead arrangers on the transaction. BBVA is ûDUEûTOûTHEûCOMPANYSûEXPOSUREûTOûTHEû
#EMENTûPRODUCERûCEMEX has drawn on its also the sustainability agent on the deal, gaming industry, which has been impacted
53BNûREVOLVINGûCREDITûFACILITYûTOûBOLSTERû WHICHûWASûTHEûlRSTûSUSTAINABILITY
LINKEDû by the coronavirus pandemic, the ratings
liquidity in response to the coronavirus revolver in Latin America. agency said.
pandemic. 2OUGHLYûTWO
THIRDSûOFûTHEûCOMPANYSû
)NûADDITIONûTOûTHEûDRAWûDOWNû#EMEXûSAIDû
ITûHASûALSOûRECEIVEDûALMOSTû53MûFROMû
asset sales.
ISOLATEûTOû
The company will suspend operations in
-EXICOûUNTILûATûLEASTû!PRILûûINûLINEûWITHû
guidelines from the government and is
LIENûDEBTûWASûCUTûTOû"ûFROMû"A
revenues are directly tied to activities at
casinos, which remain closed as businesses
CEASEûOPERATIONSûANDûPEOPLEûSELF
LEVERAGED LOANS limit the spread of the virus, Fitch said.
Moody’s downgraded Everi to B2 from B1
ANDûITSûlRST
evaluating postponing investments that UNITED STATES !TûTHEûENDûOFû$ECEMBERû%VERIûHADû
WEREûBEINGûCONSIDEREDûFORû ROUGHLYû53MûINûCASHûANDûAû53Mû
)Nû*ULYûû#EMEXûCLOSEDûAû53BN
EVERI LAUNCHES ADD-ON
equivalent loan package that included the
53BNûlVE
YEARûREVOLVER
revolving credit facility, which it drew down
on in March, Moody’s said.
3LOTûMACHINEûCOMPANYûEVERI PAYMENTS has 4HEûREVOLVERûMATURESûINû
"ANORTEû3ANTANDERû""6!û".0û0ARIBASû LAUNCHEDûAû53MûINCREMENTALûTERMûLOANû"û
#ITIGROUPû#REDITû!GRICOLEû(3"#û).'û*0û via Jefferies to shore up the company’s liquidity.
Morgan, Bank of America and Mizuho led 4HEûNON
FUNGIBLEûDEBTûISûBEINGûOFFEREDûATû ASIA-PACIFIC
the transaction. BPûOVERû,IBORûWITHûAûûmOORûû/)$û
ANDûCANûNOTûBEûCALLEDûFORûTHEûlRSTûTWOûYEARS SOUTHERN CROSS MEDIA TUNES IN
REITS TAP RCFS &OLLOWINGûTHATûCALLûPROTECTIONûISûSETûATûû
for six months. SOUTHERN CROSS MEDIA GROUP is looking to amend
FIBRA TERRAFINA and FIBRA UNO real estate The incremental loan, which is being covenants and draw down on existing debt as
investment trusts have drawn on their ATTACHEDûTOûAû4,"ûTHATûMATURESûINû-AYûû WELLûRAISEûABOUTû!Mû53M ûTHROUGHû
revolving credit facilities to bolster liquidity pays a 25bp fee. equity to boost its liquidity.

US LEVERAGED LOANS EUROPEAN LEVERAGED LOANS EMEA SPONSORED LOAN BOOKRUNNERS

BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE BY VOLUME: 1/1/2020 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 BofA Securities 174 30,651.25 10.5 1 Barclays 17 3,629.43 9.4 bank or group issues US$(m) (%)
2 JP Morgan 130 26,807.80 9.2 2 JP Morgan 17 2,758.50 7.2 1 BNP Paribas 11 1,978.90 7.6
3 Citigroup 88 22,725.86 7.8 3 Deutsche Bank 18 2,740.76 7.1 2 Deutsche Bank 12 1,836.03 7.1
4 Wells Fargo 99 17,853.20 6.1 4 BNP Paribas 15 2,649.10 6.9 3 Morgan Stanley 7 1,734.58 6.7
5 Credit Suisse 68 17,792.56 6.1 5 Goldman Sachs 14 2,056.77 5.3 4 HSBC 8 1,553.84 6.0
6 Goldman Sachs 97 17,730.88 6.1 6 HSBC 11 2,013.69 5.2 5 Sumitomo Mitsui 6 1,552.90 6.0
7 Barclays 83 15,530.84 5.3 7 Sumitomo Mitsui 7 1,872.06 4.9 6 Barclays 10 1,520.78 5.9
8 Morgan Stanley 49 12,475.03 4.3 8 Morgan Stanley 8 1,768.71 4.6 7 JP Morgan 10 1,387.04 5.4
9 Jefferies 43 10,152.92 3.5 9 NatWest Markets 12 1,647.63 4.3 8 Credit Suisse 12 1,385.83 5.4
10 RBC 58 10,075.06 3.5 10 Santander 9 1,508.61 3.9 9 Natixis 4 1,166.75 4.5
Total 515 290,996.01 Total 57 38,518.02 10 Goldman Sachs 9 1,149.12 4.4
Total 34 25,902.60
Excluding Project Finance. Excluding project finance. Western Europe only included. Excluding project finance.
Source: Refinitiv SDC code: P2 Source: Refinitiv SDC code: P10 Source: Refinitiv SDC code: P13

80 International Financing Review April 11 2020


Lamar’s debt draw shows shift
for cash in lev loans
„ US Borrower drew just two months after new TLB
Outdoor advertising firm LAMAR MEDIA‘s decision
to draw down US$535m from its revolving
credit facility due to macroeconomic uncertainty
illustrates the shift among corporate borrowers
brought on by the coronavirus pandemic.
The withdrawal came just two months after
Lamar locked in a spread on a new term loan B,
which was agreed when US companies looking
to slash borrowing costs rushed to the leveraged
loan market to find yield-hungry investors
willing to accept lower prices if only to have an
opportunity to put money to work.
That momentum quickly vanished, as the
coronavirus battered financial markets and
brought new syndicated transactions to a
dramatic halt.
Lamar’s US$600m seven-year loan was
offered at 150bp over Libor, one of the tightest
spreads seen on a broadly syndicated US
leveraged loan since energy company KINDER
MORGAN and WEIGHT WATCHERS priced debt at the
same rate 13 years earlier.
JP Morgan and Wells Fargo led the loan.
“Lamar’s a great business because of valuable
real estate and locked-in, contracted revenues,
so lenders like their cashflow,” said one investor
Australia’s largest radio group is
amending its syndicated loan due January
ûTOûINCREASEûTHEûLEVERAGEûCOVENANTûTOû
ûTIMESûFROMûûTIMESûFROMû*UNEûûû
familiar with Lamar’s loan. “But (the drawdown),
shows how widespread the virus is through the
market. The company’s prospects get worse the
longer no one is going out.”
Known for its billboards on highways and
mass transit services, Lamar benefits from the
high-margin nature of the advertising business.
Its ability to convert printed billboards into
digital advertisements is also an avenue of
growth for the company, according to a January
23 report from Moody’s.
Despite company ratings of Ba2/BB, Lamar’s
revolver and senior secured term loan are
graded Baa3 by Moody’s - investment-grade
- which helped the company obtain the rarely
seen 150bp margin.
“That 150bp is a low return, but at the same
time we still want that relationship with Lamar.
And it’s a durable business even during a
recession,” a second investor said.
TOP PERFORMER
The strength of Lamar is also reflected in the
performance of the loan in the secondary
market. The term loan was quoted at an average
bid of 93-95 cents on the dollar on April 6. The
!MûTHEûPROûFORMAûNETûDEBTûTOû%BITDAû
RATIOûWILLûDECREASEûTOûûTIMESûFROMûû
times.
LOANS RESTRUCTURING
LPC 100 comprising the 100 most liquid US
loans, was at 87.8 cents on the same day.
The Lamar loan bottomed at a bid of 83-85
cents on March 19 alongside much of the
institutional term loan market, but has slowly
ticked up after being offered at par on January 30.
“The low point so far was the middle of March,
but higher quality loans like Lamar are going to
attract a bid,” said the second investor.
Despite the upside, however, investors are
cautious that the longer the pandemic freezes
the broader economy, the company faces a
tough road to preserve its cash balance.
In addition to drawing on its revolver, Lamar
has slashed capital expenditure for 2020 to
US$58m from US$130m, suspended acquisition
activity and implemented a hiring freeze.
With customers confined to their homes,
market sources are wary of businesses curtailing
advertising.
“In a prolonged downturn, things like movie
posters and films going straight to streaming
services hurts. The new James Bond film should
have a subway ad, but that’s not going to be
there,” the first investor said.
Aaron Weinman
As the company did not receive a bid that
could pay all obligations under the term
loan agreement, it constituted an immediate
event of default.
TOû*UNEûû $UEûTOûTHEûDEFAULTûTHEûINTERESTûMARGINû
!DDITIONALLYûTHEûNETûDEBT
TO
%BITDAûANDû payable in cash under the loan
INTERESTûCOVERAGEûRATIOSûATû$ECEMBERûû AGREEMENTûISûNOWûBPûOVERû,IBORû
ûWILLûBEûCALCULATEDûONûAû1û&9û RESTRUCTURING WHICHûINCLUDESûAûBPûPAY
IN
KINDûFEEû
annualised basis, instead of the customary 4HEREûISûALSOûANûADDITIONALûBPûDEFAULTû
TRAILINGû
MONTHûBASIS rate fee.
3OUTHERNû#ROSSû-EDIAûINTENDSûTOûDRAWû UNITED STATES Akorn, which develops and markets
DOWNû!MûFROMû!MûOFûEXISTINGûDEBTû generic and prescription pharmaceuticals,
to further enhance liquidity in its bid to AKORN PLANS RESTRUCTURING ISSUEDûDEBTûINûûTOûlNANCEûITSû
navigate uncertain macroeconomic ACQUISITIONSûOFû(I
4ECHû0HARMACALûANDû
conditions arising from the coronavirus 0HARMACEUTICALûCOMPANYûAKORN plans to 6ERSA0HARM
pandemic.
4HEûCOMPANYûWILLûNOTûDECLAREûAûlNALû
DIVIDENDûFORû&9ûAFTERûHAVINGûCANCELLEDûTHEû
interim dividend for the year.
4ECHû
As per the terms of the syndicated loan,
sign a restructuring support agreement with
AûGROUPûOFûLENDERSûNOûLATERûTHANû!PRILûû
after it failed to sell its business by a March
ûDEADLINE
4HEûCOMPANYûALSOûSAIDûITûWILLûlLEûFORû
5NDERûTHEû!PRILûûCREDITûAGREEMENTûAû
53MûTERMûLOANûDUEû!PRILûûANDûAû
53MûREVOLVERûTHATûMATUREDûINû*ULYûû
WASûISSUEDûTOûlNANCEûTHEû(I
acquisition.
the company is prohibited from paying
dividends while the amended leverage
covenant applies or while the leverage ratio
EXCEEDSûûTIMES
4HEûCOMPANYûEXPECTSûTHATûNOû&9û
#HAPTERûûBANKRUPTCYûPROTECTIONûNOûLATERû
than May 1.
Akorn entered a standstill agreement
with lenders last May to discuss an
AMENDMENTûOFûITSû!PRILûûCREDITû
)Nû*UNEûûAû53MûINCREMENTALû
LOANûFUNGIBLEûWITHûTHEû!PRILûûLOANûWASû
issued to back Akorn’s purchase of
6ERSA0HARM
!KORNûHASû53MûOUTSTANDINGûINû
dividends will be paid. agreement. On February 12, the agreement TERMûLOANûDEBTûOFû3EPTEMBERûûINCLUDINGû
-EANWHILEûPROCEEDSûFROMûTHEû!Mû was amended to extend the standstill period ANûAGGREGATEû0)+ûFEEûOFû53MûANDûNON

equity funding will reduce net debt by FORû!KORNûTOûSELLûTHEûBUSINESSûBYû-ARCHû CASHûINTERESTûOFû5M

International Financing Review April 11 2020 81

 QUANTUM AMENDS LOAN AGREEMENTS pay down Quorum has to make, as administrators will take immediate control
determined by parties providing the equity of the company’s business.
$IGITALûCONTENTûHOSTûQUANTUM has amended commitment. .-#ûHASûSEENûITSûSTOCKûMOREûTHANûHALVEûINû
ITSûûCREDITûAGREEMENTSûFORûITSûTERMûLOANû 1UORUMSû53BNûPRE
PETITIONûDEBTû VALUEûSINCEû$ECEMBERûAFTERûSHORT
SELLERû
ANDûREVOLVERûTOûALLOWûFORûlNANCIALûmEXIBILITYû COMPRISESû53MûDRAWNûUNDERûITSûASSET
-UDDYû7ATERSûQUESTIONEDûITSûlNANCIALû
given the coronavirus spread. BASEDûLENDINGûFACILITYû53MûUNDERûITSû statements.
The company and its lenders are still in SENIORûSECUREDûREVOLVERûAû53MûSENIORû The company’s troubles have also been
discussions to further amend both credit SECUREDûTERMûLOANû53MûINûUNSECUREDû compounded by doubts over the size of the
agreements by May 15. ûSENIORûNOTESûANDû53MûINûlNANCEû shareholdings of major investors, including
4HEûTERMûLOANûHADû53MûOUTSTANDINGû lease obligations. FOUNDERûANDûFORMERûCO
CHAIRû"2û3HETTY
WHILEûTHEûREVOLVERûHADû53MûOFû 0ARTIESûTHATûSIGNEDûTHEûRESTRUCTURINGûDEALû ,ASTûWEEKû5!%SûTOPûBANKSûDISCLOSEDû
AVAILABILITYûASûOFû$ECEMBERûû4HEûREVOLVERû WITHû1UORUMûINCLUDEûFUNDSûAFlLIATEDûWITHû hundreds of millions of dollars of exposure
HADû53MûDRAWNûATûTHEûENDûOFû ++2û#REDITû!DVISORSû!POLLOû'LOBALû TOû.-#û$UBAIû)SLAMICû"ANKûSAIDûITûHASûAû
5NDERûTHEûTERMûLOANûCREDITûAMENDMENTû -ANAGEMENTû'OLDMANû3ACHSû/AKû(ILLû 53MûEXPOSUREûWHILEûSUBSIDIARYû.OORû
the company received permission from Advisors, GoldenTree Asset Management, "ANKûHASûAûFURTHERû53Mû%MIRATESû."$û
lenders to defer a scheduled amortisation "LACK2OCKû#ASPIANû#APITALû"RIGADEû#APITALû SAIDûITûHADûANûEXPOSUREûOFû$HMû
payment due on April 1 until the next -ANAGEMENTûANDû$AVIDSONû+EMPNERû 53M ûINCLUDINGû$HMûLINKEDûTOû
quarter. The amendment permits Quantum #APITALû-ANAGEMENTûAMONGûOTHERS its Emirates Islamic Bank unit.
to reduce its cash interest payment for the Quorum, which provides care to patients
lSCALûFOURTHûQUARTERûENDINGû-ARCHûûTOû in rural areas, was spun off from DEBENHAMS IN ADMINISTRATION AGAIN
ûFROMûûWITHûTHEûREMAININGûPORTIONû #OMMUNITYû(EALTHû3ERVICESûINû!PRILûû
BEINGûPAYMENT
IN
KINDû4HEûCOMPANYûISûALSOû 4HEûlNANCINGûPACKAGEûINCLUDEDûTHEûISSUANCEû 5+ûDEPARTMENTûSTOREûOPERATORûDEBENHAMS
exempt from complying with the total net OFûTHEûPRE
PETITIONûCAPITALûSTRUCTUREû went into administration on Thursday for
leverage ratio covenant for the quarter. INCLUDINGûTHEû53MûûSENIORû the second time in 12 months, seeking to
The revolver amendment waives the
company’s compliance with its leverage
ratio covenants for the fourth quarter.
53û"ANKûISûTHEûTERMûLOANûAGENTûANDû0.#ûISû
the revolver agent.
NOTESûAû53MûREVOLVERûAû53Mû!",û
FACILITYûANDûTHEû53MûTERMûLOAN
#%/û"OBû&ISHûSAIDûTHATûTHEûASSOCIATEDûDEBTû
and high interest rate the business inherited
DURINGûTHEûûSPIN
protect itself from legal action by creditors
during the coronavirus crisis that could have
pushed it into liquidation.
7ITHûTHEû5+ûINûLOCKDOWNûDURINGûTHEû
OFFûHADûIMPACTEDûTHEû PANDEMICû$EBENHAMSûû5+ûSTORESûAREû
)NûLIGHTûOFûTHEûCORONAVIRUS
RELATEDû COMPANYSûlNANCES CLOSEDûWHILEûTHEûMAJORITYûOFûITSûû
CHALLENGESû1UANTUMûALSOûREVISEDûFOURTH
QUARTERûREVENUEûGUIDANCEûTOû53MûFROMû
53M
53M
QUORUM SEEKS US$100m DIP
workers are being paid under the
government’s furlough scheme. It continues
EUROPE/MIDDLE EAST/ to trade online.
AFRICA The retailer previously went into
administration in April last year, wiping
NMC TALKS FAIL out equity investors including Mike
Acute care hospital operator QUORUM HEALTH !SHLEYSû3PORTSû$IRECTûANDûISûNOWûOWNEDû
HASûlLEDûFORû#HAPTERûûBANKRUPTCYû Healthcare company NMC HEALTH said it BYûAûLENDERûCONSORTIUMûCALLEDû#ELINEû5+û
PROTECTIONûAFTERûSIGNINGûANû!PRILûûPRE
expects to be placed into administration in .EW#Oû
packaged deal with creditors. due course, following weeks of uncertainty $EBENHAMSûSAIDûADMINISTRATORSûFROMû&20û
The company is seeking court approval relating to its debt levels and undisclosed Advisory will work with the management
FORû53MûINûDEBTOR
IN
POSSESSIONû shareholder dealings. TEAMûTOûGETûTHEû5+ûBUSINESSûINTOûAûPOSITIONû
lNANCINGûWHICHûISûPRICEDûATûBPûOVERû .-#ûWASûUNABLEûTOûREACHûAGREEMENTûWITHû TOûRE
OPENûANDûTRADEûFROMûASûMANYûSTORESûASû
,IBORûWITHûAûûmOOR its creditors despite strenuous efforts to possible when lockdown restrictions are
'LOBALû,OANû!GENCYû3ERVICESûISûTHEû$)0û address their concerns. lifted by the government.
agent. !BUû$HABIû#OMMERCIALû"ANKûONEûOFûTHEû #HIEFûEXECUTIVEû3TEFAANû6ANSTEENKISTEû
4HEûPLANûWHICHûWILLûSLASHû53MûOFû MAJORûLENDERSûTOû.-#û(EALTHûlLEDûANû SAIDûHEûANTICIPATEDûTHEûlRMSûOWNERSûANDû
PRE
PETITIONûDEBTûALSOûINCLUDESûTHEûISSUANCEû APPLICATIONûEARLIERûTHISûMONTHûINûAû5+ûCOURTû lenders would make additional resources
OFûAûlRST
LIENûEXITûFACILITYûCOMPRISINGûAû to put the company into administration. available to fund the administration period.
senior secured revolver and a senior secured Faisal Belhoul, executive chairman of However, the group’s business in Ireland
term loan facility. The company will also .-#û(EALTHûURGEDûBANKSûANDûCREDITORSûTOû looks doomed.
RECEIVEû53MûINûEQUITYûCOMMITMENTSû keep the company’s credit lines open even if $EBENHAMSûSAIDûITûEXPECTEDû
upon its exit from bankruptcy. it goes into administration. administrators to appoint a liquidator to the
4HEûlNALûSIZINGûOFûTHEûlRST
LIENûFACILITYû )FûTHEûCOURTûAPPROVESû!$#"SûREQUESTûTOû 
STOREû)RISHûOPERATIONûWHICHûEMPLOYSû
will depend on the size of an aggregate cash PUTû.-#ûINTOûADMINISTRATIONûTHEûJOINTû 

Reach the people who matter

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82 International Financing Review April 11 2020

 EQUITIES
Australia  China  Hong Kong  New Zealand  Singapore  South Korea  Belgium  France 
Sweden  UK  United States  Structured Equity 

„ FRONT STORY US

Wayfair’s private CBs prove way too fair

Serial issuer opts for US$535m private trade
7AYFAIRûTHEûONCEûHIGH mYINGûONLINEû MORE PRIVATES? 7AYFAIRûISûPOISEDûTOûPUTûUPûAûCRUSHINGû
FURNITUREûRETAILERûRAISEDû53MûLASTû 4HEû53ûCONVERSIONûPRICEûONûTHEûNEWû#"Sû QUARTERûONûANûUPTICKûINûREFURBISHMENTSûBYû
WEEKENDûFROMûTHEûSALEûOFûlVE YEARû REPRESENTSûAûûPREMIUMûTOûTHEû53û STAY AT HOMEûCONSUMERSû!FTERûGROWINGûATûAû
CONVERTIBLEûBONDSûTOûAûTRIOûOFûINVESTORS CLOSEûTHEûPREVIOUSû&RIDAYûWHENûTHEûTRANSACTIONû ûYEAR ON YEARûPACEûINû*ANUARYûANDû
7AYFAIRûSHARESûSOAREDûûTOû53û WASûAGREEDûTOûANDûISûûABOVEûTHEûSTOCKSû &EBRUARYûREVENUEûGROWTHûMOREûTHANû
-ONDAYûAFTERûITûDISCLOSEDûTHEûlNANCINGû AVERAGEûCLOSEûOVERûTHEûPRIORûûDAYS DOUBLEDûFROMûTHATûCLIPûINû-ARCHûANDûHASû
ALONGSIDEûAûBUSINESSûUPDATEû"YûTHEûCLOSEûOFû 7AYFAIRûALREADYûHADûNEARLYû53BNûOFû#"Sû CONTINUEDûATûAûSIMILARûPACEûINTOû!PRIL
7EDNESDAYûTRADINGûTHEYûlNISHEDûATû53 OUTSTANDINGûANDûCONVERTIBLEûATûPRICESûBETWEENû h7EûTHINKû;7AYFAIR=ûISûBENElTINGûASûSEVERALû
4HEûNEWûPRIVATELYûPLACEDû#"ûISSUEûBYû 53ûANDû53ûALLûOFûWHICHûNEEDûTOû TRADITIONALûPLAYERSûHAVEûCLOSEDûSTORESvûSAIDû
COMPARISONûCARRIESûAûûCOUPONûANDûISû BEûREPAIDûINûCASHûEVENTUALLYû)TûWOULDûHAVEû ANALYSTSûATû5"3ûh7EûALSOûTHINKûTHERESûBEENû
CONVERTIBLEûATû53ûARGUABLYûMAKINGû HADûTOûBRINGûAûNEWûPUBLICLYûMARKETEDû#"ûATûAû STRENGTHûINûHOMEûASûCONSUMERSûHAVEûINCREASEDû
THISûONEûOFûTHEûMOSTûLOPSIDEDûTRADESûEVERûINû BIGûENOUGHûDISCOUNTûTOûENTICEûINVESTORS SPENDINGûIEûSETTINGûUPûHOMEûOFlCESûANDûPLAYû
FAVOURûOFûINVESTORS CitigroupûANDûGoldman SachsûWHICHûTEAMEDû AREAS vû7AYFAIRûEXPECTSûTOûBEATûORûEXCEEDû
0RIVATEûEQUITYûlRMSû'REATû(ILLû0ARTNERSû UPûLASTû!UGUSTûONûAû53MûPRINCIPALû PREVIOUSLYûANNOUNCEDûGUIDANCEûFORûnû
ANDû#HARLESBANKû#APITALû0ARTNERSû û#"ûISSUEûCONVERTIBLEûATû53û YEAR ON YEARûGROWTHûINûNETûREVENUESûANDûANû
APPARENTLYûNEWûTOûTHEûNAMEûANCHOREDûTHEû ADVISEDû7AYFAIRûONûTHEûNEWûlNANCING ADJUSTEDû%BITDAûMARGINûOFûNEGATIVEûn
lNANCINGû4HEYûWEREûJOINEDûBYû4HEû3PRUCEû h4HEREûISûNOûWAYûTHEYûCOULDûHAVEûACHIEVEDû 7AYFAIRûISûSCHEDULEDûTOûREPORTû1ûRESULTSû
(OUSEû0ARTNERSHIPûONEûOFû7AYFAIRSûLARGESTû THESEûTERMSûONûAûPUBLICLYûMARKETEDû AFTERûTHEûMARKETûCLOSEûONû-AYû
SHAREHOLDERSûWITHûAûûSTAKE TRANSACTIONû)TûWOULDûHAVEûHADûTOûHAVEûCOMEû /NEûREAD THROUGHûOFû7AYFAIRSûDECISIONûTOû
7AYFAIRûAûSERIALûISSUERûOFû#"SûSEEMINGLYû WAYûBELOWûPARvûSAIDûANûEQUITY LINKEDûBANKERû SELLûAûPRIVATEû#"ûISûTHATûITûMAYûBEûDIFlCULTûFORû
COULDûHAVEûACHIEVEDûMOREûATTRACTIVEûTERMSû WHOûWORKEDûONûTHEûTRANSACTIONûh7EûAREû OTHERûSERIALû#"ûISSUERSûTOûFUND
HADûITûOPTEDûFORûAûMARKETEDûALTERNATIVE SEEINGûMOREûPRIVATESûGETTINGûDONEûBUTûNOTû (IGH ENDûFURNITUREûRETAILERû2(ûWHICHûHASû
4HEûREALITYûHOWEVERûISûTHATûTHESEûAREûNOTû NECESSARILYûCOUPLEDûWITHûAûBUSINESSûUPDATEv 53MûOFû#"SûOUTSTANDINGûISûANOTHERû
NORMALûTIMESûANDûAûPUBLICûOFFERINGûMAYûNOTû 7ITHûTHEû#"ûISSUEû7AYFAIRûISûABLEûTOû THATûMAYûOPTûFORûAûPRIVATEûROUTE
HAVEûRESULTEDûINûAûBETTERûOUTCOME BRIDGEûITSûNEAR TERMûLIQUIDITYûNEEDS Stephen Lacey

REIT reliance dims SGX prospects

Issuance totalling S$1.8bn set to be deferred to next year ATTRACTIVEûASSETûTOûSTARTûWITHûASûSTUDENTSûAREû
NOTûBOUNDûBYûANYûLONG
TERMûLEASESû!LLûTHEYû
3INGAPORESûOVER
DEPENDENCEûONûREALûESTATEû TOûINVESTORSûASûHEDGESûAGAINSTûTHEûECONOMICû HAVEûTOûDOûISûFORGOûTHEIRûDEPOSITûANDûLEAVEvû
INVESTMENTûTRUSTSûWILLûDELAYûTHEû)0/ûMARKETSû FALLOUTûFROMûTHEûCORONAVIRUSûCRISISû3INGAPOREû THEû3INGAPORE
BASEDû%#-ûBANKERûSAID
RECOVERYûEVENûAFTERûTHEûCOUNTRYûSTARTSûTOûRETURNû
TOûNORMALûFOLLOWINGûTHEû#OVID
ûPANDEMIC SECTORS
2%)4û)0/SûTOTALLINGû3BNû53BN ûTHATû
WEREûPLANNEDûFORûTHEûlRSTûHALFûOFûûAREûNOWû
LIKELYûTOûBEûPUSHEDûBACKûTOWARDSûTHEûENDûOFûTHEû
AWAITEDû
HOWEVERûLACKSû)0/ûCANDIDATESûFROMûTHESEû 7ITHûSOûMUCHûUNCERTAINTYûITûISûALMOSTû
IMPOSSIBLEûFORû2%)4SûTOûGIVEûDIVIDENDûYIELDû
h/VERûTHEûYEARSû3'8ûHASûBECOMEûTOOû FORECASTSûINûTHEIRû)0/ûPROSPECTUSES
DEPENDENTûONû2%)4Sû4HEûCONTINUEDûLOWû %VENûPROSPECTSûFORû)0/SûBEYONDûTHEûREALûESTATEû
INTERESTûRATESûSHOULDûHAVEûHELPEDûTHEûSECTORû SECTORûAREûNOTûLOOKINGûGOODû4HEûMUCH
YEARûORûINTOûûASûTHEûREALûESTATEûSECTORû BUTûFORûNOWûREALûESTATEûCOMPANIESûAREûJUSTû 53BNû)0/ûFROMûTHAI BEVERAGEûPLANNEDûFORûTHEû
GRADUALLYûGETSûBACKûONûITSûFEETû3OMEûBANKERSû BUSYûCALCULATINGûTHEIRûLOSSESûFROMûTHEû lRSTûHALFûISûALSOûLIKELYûTOûBEûDELAYED
WARNûTHATûEVENûTHISûEXTENDEDûTIMETABLEûMAYûBEû CORONAVIRUSvûANû%#-ûBANKERûSAID 4HEûPLANNEDûSPIN
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ESTATEûCOMPANYûCITY DEVELOPMENTSû3M û 53BNû%#-ûVOLUMEûINû3INGAPORE 4RUSTSû53BNûLISTINGûINû
PUBLISHERûSINGAPORE PRESS HOLDINGSû3M û 4HEû#ITYû$EVELOPMENTSûANDû30(û2%)4SûAREû h7EûAREûLIVINGûINûANûAGEûOFûLOCKDOWNSvûAû
ANDû(ONGû+ONG
BASEDûPROPERTYûGIANTûFAR EAST AIMINGûTOûLISTûSTUDENTûACCOMMODATIONûASSETSû BANKERûWORKINGûONûTHEû)0/ûSAIDûh7ITHûFEWERû
CONSORTIUMû3M  ANDûASûSUCHûAREûNOTûINûMUCHûBETTERûSHAPEû SPORTINGûANDûENTERTAINMENTûEVENTSûWHEREûISû
)0/SûHAVEûCONTINUEDûTOûCOMEûTOûMARKETû WITHûMOSTûFOREIGNûSTUDENTSûRETURNINGûHOMEû THEûSCOPEûTOûCONSUMEûMOREûALCOHOLv
DURINGûTHEûPANDEMICûINûRIVALûlNANCIALûHUBû ANDûCOLLEGESûEXPECTEDûTOûOFFERûONLINEûCOURSESû 4HAIû"EVERAGESû"ANGKOK
LISTEDûSHARESûAREû
(ONGû+ONGûMAINLYûINûTHEûHEALTHCAREûSECTOR INTOûTHEûNEXTûACADEMICûYEAR DOWNûûTHISûYEARû3INGAPORESû&43%û3TRAITSû
4HEûSHARESûOFûHEALTHCAREûE
COMMERCEûANDû h.OûONEûKNOWSûWHENûTHESEûSTUDENTSûWILLû 4IMESûINDEXûISûDOWNû
TELECOMMUNICATIONSûCOMPANIESûAREûATTRACTIVEû GOûBACKû3TUDENTûACCOMMODATIONûWASûAûLESSû Anuradha Subramanyan

International Financing Review April 11 2020 83

WEEK IN NUMBERS
76.35m
„ THE COLLAPSE IN THE SHARE PRICE
OF NASDAQ-LISTED LUCKIN COFFEE
LED TO THE COMPANY’S CHAIRMAN
AND CEO HANDING OVER 76.35m ADRs
TO MARGIN LENDERS LAST WEEK. THE
STOCK REPRESENTS ABOUT 30% OF
LISTEDûOIL SEARCHûHASûCOMPLETEDûAû
THE COMPANY AND WAS WORTH ABOUT
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TURNED TO THE CONVERT MARKET TO CRIPPLEDûDEMAND ENVIRONMENTûTOûCONTINUEûINûTHEûSHORTûTERM
SELL EQUITY. ITS ZERO PREMIUM CBS
PAY A 7% COUPON AND WILL BE SETTLED ASIA-PACIFIC EQUITIES ASIA-PACIFIC EQUITIES (EX-JAPAN)
IN STOCK, MAKING THIS EFFECTIVELY BOOKRUNNERS: 1/1/2020 TO DATE BOOKRUNNERS: 1/1/2020 TO DATE
COMMON STOCK BUT WITH THE Managing No of Total Share Managing No of Total Share
ADDITIONAL DOWNSIDE PROTECTION OF bank or group issues US$(m) (%) bank or group issues US$(m) (%)
A BOND 1 Morgan Stanley 19 4,265.77 9.7 1 Morgan Stanley 15 4,054.14 9.9
2 China Secs 9 3,255.06 7.4 2 China Secs 9 3,255.06 7.9
3 CICC 18 3,007.30 6.9 3 CICC 18 3,007.30 7.3
4 Goldman Sachs 16 2,276.40 5.2 4 Goldman Sachs 15 2,216.77 5.4

Ï25.5% 5 UBS
6 Citic
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8
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2,135.89
5.0
4.9
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6 Citic
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5.2
„ KEROS THERAPEUTICS SOARED 25.5% 7 Citigroup 12 1,662.54 3.8 7 Citigroup 12 1,662.54 4.0
ON DEBUT FOLLOWING ITS UPSIZED 8 JP Morgan 11 1,576.95 3.6 8 JP Morgan 11 1,576.95 3.8
US$96m IPO THAT PRICED AT THE TOP OF 9 BofA Securities 9 1,461.95 3.3 9 BofA Securities 8 1,433.70 3.5
THE RANGE. KEROS IS THE NINTH BIOTECH 10 Macquarie Group 9 1,276.46 2.9 10 Macquarie Group 9 1,276.46 3.1
TO COMPLETE AN IPO IN THE US THIS Total 503 43,813.78 Total 448 41,121.07
YEAR, WITH THE FLOATS IN THIS SECTOR Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues
DELIVERING A RETURN TO DATE OF 19% Source: Refinitiv SDC code: C4a1 Source: Refinitiv SDC code: C4a2

84 International Financing Review April 11 2020

 EQUITIES ASIA-PACIFIC

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International Financing Review April 11 2020 85

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International Financing Review April 11 2020 89

 WH Smith funds quickly for
challenging environment
„ UK Retailer maxes out for non pre-emptive issuance
UK retailer WH SMITH raised £166m on Monday
night in a capital raising flagged earlier in the
day that aims to protect the business against
what it called “the most challenging of trading
environments”.
WH Smith earlier on Monday said it had
secured lending facilities totalling £120m,
conditional on raising new equity. Its shares rose
8.3% during the day, finishing at £10.94 each.
Barclays, BNP Paribas, HSBC and JP Morgan
were bookrunners, with Santander as co-lead
manager. Greenhill advised the company.
Banks wall-crossed investors on Monday so
the deal was covered on indications at launch.
TRAVEL DEMAND PLUNGES
With a business made up of travel and high
street retail stores, WH Smith is suffering from
the dramatic halt in economic activity resulting
from lockdown measures in place across many
countries.
It operates more than 1,700 stores worldwide,
comprising more than 590 UK travel stores, 570
high street stores and over 600 international
outlets.
Its travel branches include stores in airports,
which are likely to be worse hit, as well as
motorway service stations and hospitals. A small
boon comes in the form of WH Smith’s more
than 200 UK post offices, which are still running
as essential services.
“Travel accounts for about 70% of profits
and high street is the rest,” said Kate Calvert,
Investec equity analyst covering retail. “But
travel is going into peak season, while the high
street has already had its peak at Christmas.
With all the airlines either grounded or
significantly cut back, the major impact will be
there.”
Global air travel fell 14.1% in February,
according to the International Air Transport
Association, before European and US lockdowns
had taken force. At the time, Asia-Pacific carriers’
demand was down 41%.
WH Smith released a Covid-19 trading
update on March 12, before more extensive
lockdowns were enforced in the UK and
elsewhere, flagging a material reduction in air
passengers outside Asia and predicting a 15%
drop in revenues.
Conditions have worsened since then and
the exact impact on the company’s finances is
unclear given the general uncertainty over the
pandemic’s progression.
SURVIVING AND PREPARING
As well as raising cash to survive throughout
the crisis, companies are also contemplating
issuing equity as a preparatory measure to be
positioned to seize opportunities as markets
improve.
WH Smith has been focused on international
expansion in recent years, and is thought to have
this long-term strategy in mind as it reinforces
its equity.
“It is probably an element of both; it probably
had the cashflow to get through a prolonged
period, but they don’t want to come out with
huge amounts of debt at the end because they
want to continue with their original expansion
strategy,” said Calvert.
Following its acquisition of Marshall
Retail Group and InMotion in 2019 and 2018,
respectively, WH Smith’s 600 international
stores span 31 countries, including more than
280 travel stores in North America.
LENDERS INCREASE FLEXIBILITY
WH Smith’s combination of an equity raising
with an expansion of its debt facilities also
reflects the reaction of lenders to help borrowers
through the crisis. Increased debt facilities will
allow companies to raise a smaller percentage of
equity quickly, avoiding the risks associated with
larger equity raisings.
No-one wants to raise more equity than
needed, said one ECM banker. “We’re having
chats with debt providers and they are being
flexible, which helps solve for numbers that we
think make sense.”
Several other UK-listed companies have
already tapped the market in recent weeks,
including food concessions business SSP Group.
Like WH Smith, SSP derives most of its
business from concessions in travel locations
including airports, railways stations and
motorway service stations across 35 countries,
but SSP may have been harder hit due to the
fact that its business centres on food.
“Effectively, SSP had lost its working capital,
around £150m, because it is a food business
and as you unwind you will naturally lose the
stock,” said Calvert, “WH Smith will have most
of its stock to sell, although it still has to pay
suppliers”.
The offering of 15.8m shares, representing
a 13.7% capital increase, was priced at £10.50
each, a 4% discount to the £10.94 Monday close.
The stock had closed the day up 8%.
The top 20 accounts took approximately 75% of a
book of more than 110 lines. Senior management also
subscribed for 50,942 shares at the placing price and
the company is subject to a 120-day lock-up.
There was strong support from UK accounts,
with good interest from US investors that had
spent time following the story. A banker involved
said that launching after the close was helpful
in garnering US support. The final book was
several times covered.
Shares held firm on Tuesday and had risen to
£13.10 at 4pm on Thursday.
Combined with a sub-7% capital increase of
£155m in October 2019 to fund the US$400m
acquisition of Marshall, Monday’s trade takes
the total amount of shares issued on a non pre-
emptive basis to 19.9%.
That takes WH Smith to the limit of what the
UK’s Pre-Emption Group has agreed can be
done in a 12-month period, but the key message
of this fundraising was that it should not need to
return to capital markets any time soon.
Lucy Raitano, Robert Venes

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90 International Financing Review April 11 2020

 EQUITIES EMEA

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%NGLANDSû#OVIDû#ORPORATEû&INANCINGû OPPORTUNISTICûONûTIMINGûANDûFUNDINGûFORû SUPERMARKET INCOME REITûLAUNCHEDûAûPLACINGû
&ACILITY GROWTHûNOTûUNCERTAINTYû ONû4HURSDAYûTARGETINGûUPûTOûaMûTOûPART

0ROCEEDSûWILLûBEûUSEDûTOûlNANCEûAûaMû FUNDûITSûACQUISITIONûOFûTWOûSUPERMARKETû
THE RESTAURANT GROUP RAISES £57m PIPELINEûOFûPROJECTSû!PPROXIMATELYûaMûISû PROPERTIES
GOINGûTOWARDSûSITEûDEVELOPMENTSûaMûONû 0RICINGûONûTHEûPLACINGûISûPûPERûSHAREû
THE RESTAURANT GROUPûRAISEDûaMûINûAûNONû ACQUISITIONSûATûTHEûLEGALûSTAGEûANDûEXPECTEDû REPRESENTINGûAûûDISCOUNTûTOûTHEû
PRE
EMPTIVEû!""ûONû7EDNESDAYû TOûCOMPLETEûWITHINûTHREEûTOûSIXûMONTHSûANDû 7EDNESDAYûCLOSEûOFûPûANDûAûû
INCREASINGûITSûSHAREûCAPITALûBYûTHEû aMûFORûGENERATINGûINCREMENTALûVALUEûINû PREMIUMûTOûTHEûCOMPANYSûLASTûREPORTEDû
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EMPTIONû'ROUP aM MûSHARESûWILLûBEûSOLDû

International Financing Review April 11 2020 91

ECM DEALS: WEEK ENDING 9/4/2020
Stock Country Date Amount Price Deal type Bookrunner(s)
Flight Centre Travel Group Australia 04/07/2020 A$701m A$7.20 Follow-on (primary) Macquarie, UBS
Megaport Australia 04/08/2020 A$50m A$9.50 Follow-on (primary) RBC Capital, UBS
Oil Search Australia 04/08/2020 A$1.16bn A$2.10 Follow-on (primary) Goldman Sachs, Macquarie
Reece Australia 04/07/2020 A$600m A$7.60 Follow-on (primary) JP Morgan
SCA Property Australia 04/08/2020 A$250m A$2.16 Follow-on (primary) Citigroup
Southern Cross Media Group Australia 04/07/2020 A$169m A$0.09 Follow-on (primary) Macquarie
AB Inbev Belgium 04/06/2020 €375.25m €39.50 Accelerated Bookbuild (secondary) Morgan Stanley
CanSino Biologics China 04/07/2020 HK$777m HK$142.50 Follow-on (secondary) Morgan Stanley
China Youzan China 04/08/2020 HK$794m HK$0.64 Follow-on (primary) Jefferies, GF Securities
Shop Apotheke Germany 04/07/2020 €65m €58 Accelerated Bookbuild (primary) Barclays, Deutsche Bank
Auckland International Airport New Zealand 04/07/2020 NZ$1bn NZ$4.66 Follow-on (primary) Citigroup, Credit Suisse, Jarden Securities
Celltrion Healthcare South Korea 04/07/2020 W272bn W77,600 Follow-on (secondary) UBS
Studio Dragon South Korea 04/07/2020 W166bn W73,800 Follow-on (secondary) JP Morgan
Embracer Group Sweden 04/07/2020 SKr1.65bn SKr89 Accelerated Bookbuild (primary) Carnegie, Berenberg
Intouch Holdings Thailand 04/08/2020 Bt6.1bn Bt45.12 Follow-on (secondary) Credit Suisse
ASOS UK 04/07/2020 £247m £247m Accelerated Bookbuild (primary) JP Morgan, Numis, Barclays, BNP Paribas, HSBC
Assura UK 04/06/2020 £185m 77p Accelerated Bookbuild (primary) Stifel, JP Morgan
The Restaurant Group UK 04/08/2020 £57m 58p Accelerated Bookbuild (primary) JP Morgan
WH Smith UK 04/06/2020 £166m £10.50 Accelerated Bookbuild (primary) Barclays, BNP Paribas, HSBC, JP Morgan
Keros Therapeutics US 04/07/2020 US$96.0m US$16 IPO (primary) Jefferies, SVB Leerink, Piper Sandler

3UPERMARKETû)NCOMEû2%)4ûISûINûADVANCEDû h4HISûTRENDûFORû)0/SûISûNOWûBLEEDINGûINTOû 4HEû#OVID ûSHUTDOWNûCOMBINEDûWITHû

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PROMINEûûûûûûûNTûINûEQUITYûCAPITALûMARKETû PLACINGS OPTIONSûDURINGûTHEûEXTENDEDû#OVID 
TRANSACTIONSûASûBORROWERSûTHATûSEEKû ,ARGEûSYNDICATESûAREûLIKELYûTOûSEEûMULTIPLEû INDUCEDûSHUTDOWNûOFûTHEû53ûECONOMY
INCREASEDûLOANSûANDûCOVENANTûWAIVERSûAREû BOOKRUNNERSûTAKINGûPASSIVEûROLES
EXPECTEDûTOûFAVOURûLENDINGûBANKSûWHENû US EQUITIES
SELECTINGûBOOKRUNNERûROLES BOOKRUNNERS: 1/1/2020 TO DATE
)NûTHEûPASTûTWOûWEEKSûSEVERALû5+ LISTEDû Managing No of Total Share
COMPANIESûHAVEûRAISEDûEQUITYûANDû bank or group issues US$(m) (%)
ANNOUNCEDûINCREASEDûmEXIBILITYûFROMû AMERICAS 1 Morgan Stanley 28 4,758.74 17.5
LENDERSû 2 Goldman Sachs 28 4,065.82 14.9
5+ûRETAILERûWH SMITHûWHICHûRAISEDûaMû 3 JP Morgan 32 3,107.80 11.4
ONû-ONDAYûALSOûANNOUNCEDûAûaMûSHORT UNITED STATES 4 BofA Securities 25 2,679.39 9.8
TERMûBANKûLOANûFROMûBNP Paribas, HSBC ANDû 5 Citigroup 18 1,666.88 6.1
Santander UKûINûADDITIONûTOûITSûaMû US ECM TRIES TO SHAKE OFF LULL 6 Jefferies 22 1,350.55 5.0
REVOLVINGûCREDITûFACILITYû4HEûTRIOûOFûLENDERSû 7 Barclays 13 1,190.74 4.4
APPEAREDûALONGSIDEûCORPORATEûBROKERSû !ûRECOVERYûINûTHEû53ûSTOCKûMARKETûINûTHEû 8 Cowen & Co 18 1,101.92 4.0
Barclays and JP Morgan ASûBOOKRUNNERSûONûTHEû PASTûWEEKûCOULDûHELPûPRISEûOPENûTHEû%#-û 9 Wells Fargo 16 929.63 3.4
!""ûSYNDICATEû FUNDINGûWINDOWûBUTûBANKERSûSTILLûEXPECTû 10 UBS 10 887.01 3.3
/NEû%#-ûBANKERûSAIDûLENDINGûBANKSûAREû LITTLEûINûTHEûWAYûOFû)0/SûORûANYûOTHERû Total 147 27,227.30
PUSHINGûTOûFEATUREûONûTHEûACCOMPANYINGû TRANSACTIONSûTHATûREQUIREûEXTENSIVEû Including all domestic and international deals and rights issues
EQUITYûFUNDRAISINGSû MARKETING Source: Refinitiv SDC code: C3r

92 International Financing Review April 11 2020

 EQUITIES STRUCTURED EQUITY

&URTHERûGUIDANCEûFROMûTHEû&EDERALû2ESERVEû 0ROCEEDSûWILLûBEûUSEDûTOûACQUIREû3WEDISHû
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ACQUISITIONS Citic Securities ISûTHEûSPONSOR 53

International Financing Review April 11 2020 93

 Chimera Investment prints 0% premium CBs
„ US Mortgage REIT opts for expensive equity substitute
Troubled mortgage REIT CHIMERA INVESTMENT
got what it was asking for and a little more by
landing US$325m of fresh capital from the sale
of three-year CBs.
While technically a CB, the security is equity
for all intents and purposes. The CB issue is
the first in the US to feature no conversion
premium, making it a proxy of the underlying
stock with the superior downside protection of
a bond.
Credit Suisse, sole bookrunner on the
transaction, located enough interest in that
investment premise to bump the offering size
from US$250m to US$325m, albeit with a
7% coupon that was the wide end of 6%–7%
talk.
Chimera, which is in the midst of a portfolio
liquidation to lower repo borrowings, flagged
plans to reduce its quarterly stock dividend from
50 cents to 30 cents alongside the offering.
With the stock’s 9.4% bounce to US$7.11
on Wednesday (after a 20.2% shellacking
over the Tuesday deal marketing), the implied
annual yield on its shares stands at a lofty
16.9%.
Chimera’s CB will be physically settled in
stock. Typically, in order to gain as-if converted
accounting treatment, most CBs are net-share/
par cash settlement.
“There is a possibility [the security] converts
early depending upon the underlying cash
flows,” explained one equity-linked banker. “If
holders believe the dividend is safe and the
yield higher than the 7% coupon, they can
convert.”
On the base deal and reference price, the
CBs are convertible into 50m shares, about 27%
of the outstanding. Whether straight equity or
convertible that is a large amount of stock to
place.
Investors, in turn, are protected by a bond
floor, of say 80 or 90, but that is only theoretical.
The conversion price represents 0.5x–0.6x
estimated book value of US$12.25–$12.75 at
March 31.
Chimera reduced repo borrowings in Q1
by 45% to US$7bn by selling off slugs of its
agency-backed mortgage portfolio. That left
it with US$221m of cash and US$300m of
unencumbered assets, a thin cushion against
the potential of having its lines of credit
pulled.
While Chimera management did talk about
the potential of redeploying capital in new
investments, this raising is more defensive than
offensive.
Stephen Lacey

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NEWûFACILITYûSUSPENDSûAûMAXIMUMûLEVERAGEû HEALTH CATALYSTûRAISEDû53MûFROMûAû )Nû&EBRUARYûTHEûCOMPANYûBOUGHTû
TESTûUNTILû-ARCHûûûANDûADDSûAû CONVERTIBLEûBONDûlNANCINGûLASTûWEEKûTHEû HEALTHCAREû3AA3ûCOMPANYû!BLEû(EALTHûFORûANû
MINIMUMûLIQUIDITYûCOVENANT HEALTHCAREûDATAûANDûANALYTICSûSOFTWAREû UNDISCLOSEDûAMOUNT
/NûREPAYMENTûOFûTHEûû#"ûTHEû PROVIDERSûlRSTûRETURNûTRIPûTOû%#-ûSINCEûLASTû 4HOUGHûTHEûCOMPANYûPROJECTEDûASûRECENTLYû
MINIMUMûLIQUIDITYûTESTûDROPSûFROMû YEARSû)0/ ASûLATEû&EBRUARYûITSûûREVENUESûWOULDûGROWû
53BNûTOû53BN Goldman Sachs ANDûJP Morgan TOOKûOUTûAûDAYû ATûABOUTûAûûCLIPûANDûEVENûTHOUGHûûOFûITSû
"OOKINGûlNISHEDûûWITHû53BNûOFû OFûMARKETINGû7EDNESDAYûBEFOREûPRICINGûTHEû REVENUEûISûRECURRINGû(EALTHû#ATALYSTûOPTEDûTOû
CASH lVE
YEARû#"SûWITHûAûCOUPONûOFûûANDû WITHDRAWûITSûGUIDANCEûALONGSIDEûTHEûOFFERING

EQUITY-LINKED DEALS WEEK ENDING: 9/4/2020

Issuer Country Date Amount Greenshoe Tenor Coupon/YTM % Premium (%) Bookrunner(s)
Booking Holdings US 08/04/2020 US$750.0m US$112.5m 5y 0.75 37.5 BofA, Deutsche Bank, JP Morgan,
Goldman Sachs
Chimera Investments US 07/04/2020 US$325.0m US$48.8m 3y 7 0.00 Credit Suisse
Health Catalyst US 08/04/2020 US$200.0m US$30.0m 5y 2.5 27.5 Goldman Sachs, JP Morgan
Slack Technologies US 06/04/2020 US$750.0m US$112.5m 5y 0.5 27.5 Morgan Stanley, Goldman Sachs

94 International Financing Review April 11 2020

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International Financing Review April 11 2020 95

 INTERNATIONAL FINANCING REVIEW INDEX

Abu Dhabi 6 Credit Agricole 3, 9 Korea National Oil Corporation 62 Schaeffler 73

Adaro Energy 71 Credit Suisse 19, 38 Korea Resources 62 Securitas 74
Agence Francaise de Developpement 29 Debenhams 82 LafargeHolcim 37 Service Logic 12
Akbank 74, 75 Deutsche Bahn 25 Lamar Media 81 Shanghai Highly Group 93
Akeso 86 Easyjet 76 Landry’s Finance Acquisition Co 12 Shanghai Sanyou Medical 86
Akorn 81 Ecuador 59 Landsea Green Properties 60 Shinhan Bank 61, 62
Akzo Nobel 25 EDP 36 Latvia 63 Shop Apotheke Europe 89
Alam Sutera Realty 23 Embracer Group 89 Lebanon 7, 64 Sichuan Anning Iron and Titanium 87
Ally Financial 2, 33 EMR Capital 71 LifePoint Health 42 Singapore Airlines 88
AMAG Leasing 46 EnBW 36 Lloyds 23, 39 Singapore Press Holdings 83
Amret 67 Enterprise Products Partners 78 Longroad Energy 72 Slack Technologies 10
AMTD Digital 87 Eskom 63 Lonza 25, 35 Slovenia 63
AMTD Group 61 Estee Lauder 77 Luckin Coffee 8 SNCF SA 28
Anheuser-Busch Inbev 88 Eurofima 38 Lundbeck 35 South Australian Government Authority 32
Anworth Mortgage Asset Corp 48 Everbright Financial Leasing 70 Magenta 2020 45 Southern Cross Media Group 80, 85
Argentina 7, 65 Everi Payments 80 Mallinckrodt 42 Sovcombank 63
ASOS 76, 89 Export-Import Bank of Korea 62 Meadowhall Finance 45 Sri Trang Gloves 88
Assura 91 Fannie Mae 47 Megaport 11 SSE 36
AT&T 77 Far East Consortium International 88 Mitsubishi UFJ 39 Standard Bank 19
Auckland International Airport 72, 87 Ferrellgas Partners 42 Mondelez International 77 Standard Chartered 23, 39
Australian Office of Financial Manage 32 Fibra Terrafina 80 National Grid Electricity Transmission 37 Studio Dragon 88
AutoNation 78 Fibra Uno 80 National Silicon Industry Group 87 Sunac China Holdings 60
Autozone 78 Financial Conduct Authority 17, 46 National Storage REIT 68 Supermarket Income REIT 91
Avolon 74 Flight Centre Travel Group 11, 68, 84 Naturgy 37 Svenska Handelsbanken 39
Babcock International 76 Fosun International 69 NatWest 23 Swedbank 22
Bank of Montreal 41 Freddie Mac 47, 48 NCR Corporation 42 Syngenta 25, 36, 43
Bank of Nova Scotia 41 Free State of Saxony 31 New York Mortgage Trust 49 Tabcorp Holdings 68
Basel Committee 23 Fufeng Group 60 New Zealand Zgency 32 TDB 64
BCEGI (Hong Kong) 70 Fullerton Healthcare 61 New Zealand Treasury 32 Teekay LNG 78
Beijing Capital 87 FWD Group Financial Services 72 Ningbo Jintian Copper Group 87 Telenet 72
Beijing Enterprises Clean Energy Group 70 G8 Education 69, 85 NMC Health 82 Telenor 74
Beijing Properties (Holdings) 60 Gajah Tunggal 23 Nordic Investment Bank 32 Tenet Healthcare 42
Berkshire Hathaway 38 Gazprom 7, 59 Nordstrom 42 Thai Beverage 83
Blue Sail Medical 93 Geberit 37 Oil Search 11, 84 Thales 9, 73
BMW US Capital 33 General Motors 33, 77 OMERS 28 The Airport Authority of Hong Kong 69
BNG Bank 27 Geo Energy Resources 61 Omnicom 78 The Restaurant Group 76, 91
Booking Holdings 78, 93 Germany 2 ONGC Videsh 70 Tilt Renewables 72
BP 9 Gerresheimer 74 Ontario Teachers’ Finance Trust 27 Toronto-Dominion Bank 41
Braskem 79 Ginnie Mae 47 Ontex 73 Toyota Australia 25
Brazil 66 Golden Nugget 12, 80 Orbia 80 Toyota Finance Australia 34
Broadcom 33 Golden Wheel Tiandi Holdings 60 Petrobras 80 Trafford Centre Finance 45
Caisse Centrale du Credit Immobilier de Grupo Posadas 65 Petronas 61 TrustPower 72
France 30 HDB Financial Services 71 Peugeot 73 TUI 74
Canadian Imperial Bank of Commerce 41 Health Catalyst 94 Pietra Nera Uno 45 Turk Eximbank 75
Canberra Data Centres 72 H&M Hennes & Mauritz 74 PKO Bank Polski 39 Two Harbors Investment Corp 49
CanSino Biologics 86 HNA Group 61 PNB Housing Finance 71 UBS 16, 19
Capgemini 25, 34 Hong Kong Airlines 61 Prasac Microfinance Institution 67 Uruguay 66
CAR Inc 9, 60 HSBC 19, 23, 39 Province of Alberta 30 Vallourec 89
CDP Financial 27 IDP Education 11 Province of Buenos Aires 65 Veolia 36
Celltrion Healthcare 88 Indomobil Finance Indonesia 71 Prudential 26 Verallia 73
Cemex 80 Indonesia 7 Qatar 6 VF 77
Centerview 19 Infratil 72 Qing Cloud Technologies 86 Viva Energy REIT 68
Centuria Industrial REIT 85 Ingredion 79 Quantum 82 Vodafone New Zealand 7, 2
Chester B1 45 International Monetary Fund 21 Qube Holdings 68 Wagamama 76
Chimera Investment 94 Interpublic Group of Companies 78 Quorum Health 82 Walgreens Boots Alliance 76
China Grand Automotive Services 61 Intouch Holdings 88 Reece 11, 85 Webjet 11
China Merchants Securities 86 Intu Metrocentre Finance 45 Repsol 37 WeDoctor 9
China Singyes Solar Technologies 60 Ireland 30 Republic of Cyprus 30 Weight Watchers 81
China Three Gorges Renewables Group 86 Italy 12 Republic of Indonesia 6 Wellington International Airport 72
China Yangtze Power 85 JAB Holding 36 RetireAustralia 72 WH Smith 76, 90, 92
China Youzan 86 Japan Oil Gas & Metals National Corp 72 REWE 74 World Peace Industrial 67
CHJ Automotive 86 Jingrui Holdings 60 RIB Software 74 Wynn Resorts 41
City Developments 83 Jiuding Group Finance 60 Right Lane 70 Xinhu Zhongbao 60
Clevo 67 JP Morgan 16 Rolls-Royce 9, 75 Xinyuan Real Estate 60
CMB Financial Leasing 70 Keros Therapeutics 93 Ronshine China Holdings 60 Xpeng Motors 86
Coles Group 11 Keurig Dr Pepper 78 Royal Bank of Scotland 21 Yifeng Pharmacy Chain 93
Colombia 66 Kinder Morgan 81 Royal Dutch Shell 9 Zambia 7
Compagnie de Financement Foncier 40 Kintor Pharmaceutical 87 Salzgitter 93 Zhejiang Huahai Pharmaceutical 93
Computershare 69 Korea Development Bank 61 Sanofi 25 Zoom Video Communications 11
Coop-Gruppe 37 Korea East-West Power 62 SCA Property 11, 85

96 International Financing Review April 11 2020

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