BCP's Debut €400M AT1 Adds to Peripheral Flurry
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РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS JANUARY 26 2019 ISSUE 2268 www.ifre.com BCP’s debut €400m AT1 adds to peripheral flurry, as BMPS joins the fun with €1bn covered €46.5bn: Spain’s €10bn 10-year grabs largest ever book for a European SSA deal Barclays ‘dead’ without controversial Qatar cash: trial of Varley and three others begins EMERGING MARKETS EMERGING MARKETS BONDS/LOANS EQUITIES Venezuela IL&FS fallout US high-yield As shutdown bonds rally as threatens Indian bond market to drags on, US opposition leader proJect lnance pick up leveraged corporates risk claims power and ABS lnance slack new IPO model 06 07 08 10 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Upfront OPINION INTERNATIONAL FINANCING REVIEW Project mayhem While the market wasn’t closed to peripheral issuers in the second half of last year, access was hampered by Italy’s here in the world can a road builder default on a political ructions inmating funding costs. WUS$600,000 debt payment when it has more than But with noise around Rome’s differences with the EU over US$m locKed away in an escrow account specilcally its budget abating – at least for the time being – issuers from designed to service its debt? Italy, Spain and Portugal have shot out of the blocks to take India, sadly, is the all-too-obvious answer. It is hard to think advantage of a strong technical backdrop. of a country more in need of infrastructure funding but that Investors are cash-rich as order books north of €35.5bn and makes it a riskier proposition for investors. €46.5bn for Italy’s and Spain’s new issues this month demonstrate. The latest bizarre twist relates to IL&FS, a collapsing No doubt these issuers are offering attractive yields. The former giant that has been struggling to service its debts Monte dei Paschi offering, for example, came around 180bp since August. back of where $eutsche Pfandbriefbank priced a lve-year IL&FS, now run by a government-installed board of covered trade two days before. But in BMPS’s case – and for directors who supposedly know what they are doing, has many other peripheral issuers – beggars can’t be choosers. attempted to use temporary relief from its creditors to stop a With no one knowing when the next political explosion will special purpose vehicle from servicing its project debt. take place (and it will come), or where – Spain’s internal wrangles Bondholders, unsurprisingly, disagree with that should not be overlooked – there’s no point sitting on the sidelines. interpretation, but the dispute has frozen the escrow agent The message is simple: get the money in sharpish. into inaction, hence the default. To say this is a dangerous precedent is an understatement. Trillions of rupees of similar project lnancings rely on the Open and shut case understanding that debt service is tied to the project cashmows, not to the health of the sponsor. The entire n the face of it, US corporates pushing ahead with IPOs securitisation industry is also at risk. Owithout getting their prospectuses signed off by the SEC Add the fact that India is only just recovering from a look a little desperate. The lack of mexibility on price or sizing liquidity squeeze – provoked, once again, by an IL&FS default that comes with a route made necessary by the US – and the danger becomes even more apparent. government shut-down seems a high price to pay to go public. India’s regulators need to address this anomaly, and fast. So should the actions of Gossamer Bio and New Fortress The bankruptcy tribunal that granted a moratorium for Energy – two companies that are ploughing ahead with US IL&FS must clarify the limits of its order. And the IL&FS board IPOs despite not being able to get the nod from the SEC – set must be made to see the folly of dragging these arms-length alarm bells ringing for investors? projects down with it. It needs to monetise its assets, not Probably not. destroy them. The SEC review process is clearly important as it typically In the longer run, the understanding of securitisation in takes several months to complete. India needs an overhaul. India’s love of name-lending means New Fortress knows this as it lled conldentially in August that even project lenders are accustomed to taking risk on and publicly in November – this is not a shotgun marriage. the sponsor, when a properly structured SPV must be truly The company marketed its IPO with a US$17–$19 price range bankruptcy-remote. in the hope that the SEC would reopen before its pricing date If the IL&FS saga clariles what is required to keep an SPV last Thursday. away from the clutches of the newly empowered insolvency With the SEC still shut, changing tack to remove the courts, some good could still come of this sorry situation. delaying amendment from its lling allows an IPO to be /therwise, bankruptcy lawyers are going to lnd themselves priced 20 days later. The trade-off is that the lling must with a lot more work to do. include the exact offering price, but the company now knows where investors want to buy. Gossamer Bio similarly has a clear valuation from its US$230m Club Med funding round in July so has set pricing just 10% higher and has US$100m of demand from insiders for the US$230m IPO. ho would have thought that a Portuguese bank, BCP, Both these companies have clear need for the money. Wwould sell the year’s lrst mainstream AT deal or that Gossamer is a biotech that needs funds to develop its drug a second-tier Spanish lender, Abanca, would issue the lrst portfolio and New Fortress’s IPO pitch depends on massive Tier 2? capex to construct lve liqueled natural gas facilities. In the Or that an Italian corporate, Telecom Italia, would price meantime it is losing money on its single small facility. the only European high-yield offering since November? Could they have waited a few more days? Not without Or that sovereign transactions from both Italy and Spain incurring costs in time and money. Third-quarter results go would each get record order books? stale on February 14 and anything after that date will need The year may be only a few weeks old but the big story in new audited full-year numbers, pushing deals back into Europe’s bond markets – sterling issuance aside – is the March. And there is obviously no certainty that the swelling ranks of peripheral borrowers. Even Monte dei government shut-down will come to an end soon. Paschi has returned to the primary market after being shut It is true that there are some risks in pushing ahead out for a year with a €1bn covered bond offering, despite its without the legal cover of an SEC review, but for these two future still hanging in the balance. companies at least they are risks worth taking. International Financing Review January 26 2019 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS IFR, now appearing on screens everywhere Access IFR via the industry’s most intuitive desktop and mobile platform. On Thomson Reuters Eikon, all the actionable intelligence from IFR is easier to view, search and use in your wider trading, investment, FI and capital raising strategies. The full range of IFR editorial content, now accessible in one location – that’s a powerful combination. Try Thomson Reuters Eikon Free. For more information or a free Eikon trial, go to:GJOancial.thomsonreuters.com/eikon © 201 Thomson Reuters. 03/15. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS INTERNATIONAL FINANCING REVIEW Contents JANUARY 26 2019 ISSUE 2268 TOP NEWS 04 BONDS Rush BCP joins peripheral flurry. Pragmatic approach spurs wave of Southern European issuance. 04 BONDS Insatiable Another blowout as Spain breaks records. Demand for sovereigns shows no signs of waning. 05 PEOPLE & MARKETS Courts Barclays ‘dead’ without controversial Qatar cash: trial of Varley and three others begins. 06 EMERGING MARKETS Turmoil Venezuela bonds rally as opposition claims power. Investors see regime change within reach despite obstacles ahead. 06 Cheaper High-grade borrowers tune into term loans for acquisition deals. 08 Shutdown US corporates try new model for IPO. 10 Into black UBS finally recoups crisis losses. 11 Less drama No spillover from Evergrande tap. 12 PEOPLE & Underperforming UBS confused by equities weakness. Swiss bank trails US MARKETS rivals in equities, M&A and underwriting. 13 Blunt tools EU bail-in regime deterring white knights. Concerns mount that eurozone’s means of dealing with undercapitalised banks are off-putting. 14 Good news PG&E bankruptcy may be premature, as its equipment was found not to be at fault for igniting a 2017 wildfire. 15 Electronic Hong Kong to go paperless on IPOs. 19 New deadline RBNZ extends bank capital consultation. 19 Divorce Goldman warns as UK examines Brexit impact on banks. 20 BONDS Repricing Investors shrug off Triple B threat. 23 Demand No let-up in Sonia-linked whirlwind. 27 Softly softly Volkswagen learns its lessons. 29 EMERGING Support Turkey flies solo in helpful winds. 55 MARKETS Receptive Colombia joins rush to market. 55 New plan Arpeni Pratama charts new course. 60 LOANS Pressure Investors sweat over weakening documentation. 67 Terms ECB publishes benchmark fallback guidance. 71 Worries Leveraged loan risk still elevated. 76 EQUITIES New venue Jubilant heads to US after SGX flop. 81 Block trade ABN CEO expects state sell-downs.