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NOVEMBER 30 2019 ISSUE 2311 www.ifre.com NYSE plans direct listing 2.0: primary capital could be raised at opening trade Back with a bang: Greece becomes second most traded European sovereign CDS ChemChina sows seeds for A-share listing of agribusiness with US$10bn fundraising PLUS: US ECM ROUNDTABLE PEOPLE & MARKETS BONDS LOANS EMERGING MARKETS Does the S in Intesa raises LVMH sparkles China’s largest %3'ûlTûWITHû €750m from WITHû53BNû ever bond helps the E and G, ‘circular Tiffany yield curve take investors ask economy’ bond acquisition loans shape 06 06 07 08 1 IFR Cover 2311.indd 1 29/11/2019 19:17:29 #ifrawards CELEBRATING THE 25TTH AWARDS DINNER THE 2019 IFR AWARDS GALA DINNER JANUARY 28 2020 | GROSVENOR HOUSE, LONDON BOOK YOUR TABLES AT IFRAWARDS.COM MX00000 - IFR A4 Flyer v5.indd 1 20/11/2019 15:01 Upfront OPINION INTERNATIONAL FINANCING REVIEW Force for good OFlCES û#HINESEûSHOPPINGûCENTRESûANDûRECENTLYûAûCOMMERCIALû COMPLEXûINû-ILAN rading volumes of Greek credit-default swaps have &OREIGNûINVESTORSûAREûSHOWINGûINTEREST ûTOOû,ENDLEASEû Trocketed this year to levels not seen since the height of 'LOBAL ûWHICHûBUNDLEDûTHEû-ILANûPROPERTYûTOGETHERûWITHûAû the eurozone crisis. Singapore shopping mall, drew a range of backers from Hong That’s a notable development given that politicians +ONGûHEDGEûFUNDû3EGANTIIûTOû4HAILANDSû4-"û!SSETû BLAMEDûTHESEûCREDITûDERIVATIVESûFORûPOURINGûOILûONûTHEûlREû -ANAGEMENTûANDû53 BASEDû"LACK2OCK back then; not to mention complicating Greece’s historic 4HEû2%)4ûPRODUCTûISûCERTAINLYûINûDEMANDû!TûAûTIMEûWHENû debt restructuring. GLOBALûRATESûAREûmATLINING ûINCOMEûSTOCKSûANDûPROPERTYûASSETSû The cause of this latest boom is in fact far less sinister. The AREûLIKELYûTOûREMAINûPOPULARûFORûTHEûFORESEEABLEûFUTUREû2%)4S û cost of protecting against a Greek debt default has declined with stable distributions and underlying assets, provide SHARPLYûTHISûYEAR ûREmECTINGûTHEûIMPROVEDûPOLITICALûANDûlSCALû exposure to both. standing of the country. "UTû3INGAPOREû2%)4SûONLYûWORKûIFûTHEYûATTRACTûLOCALûBUYERS û Instead, it is Greece’s own use of a different breed of and Singaporean investors are extremely suspicious of derivatives contract – those designed to hedge against moves overseas assets. Trusted local sponsors have a better chance in interest rates – that explains the surge in CDS interest. of success, but listings of entirely foreign portfolios are rare. 'REECESûDEBTûOFlCEûHASûSIGNIlCANTLYûREDUCEDûTHEûAMOUNTû 5/"û(AMPSHIREûISûSTILLûSTRUGGLINGûTOûLISTû53ûGROCERYûSTORES û OFûITSûDEBTûLINKEDûTOûmOATINGûINTERESTûRATESûINûRECENTûYEARSû!Sû ANDûREPORTSûOFûANûUNEXPECTEDûREPAIRûBILLûTOûTHEû1UEENû-ARYû recently as 2016, 70% of its debt (which mainly consisted of mOATINGûHOTEL ûNOWûOWNEDûBYû3INGAPORE LISTEDû%AGLEû LOANSûFROMûOFlCIALûINSTITUTIONSûSUCHûASûTHEû)-&ûANDûTHEû%5 û (OSPITALITYû2%)4 ûHAVEûNOTûHELPEDû WASûLINKEDûTOûmOATINGûRATESû4HATûHASûDECLINEDûTOûJUSTû ûATû Without a pipeline of global assets, the Singapore market LEASTûINûPARTûTHANKSûTOûTHEû'REEKûDEBTûOFlCEûUSINGûINTEREST will eventually become less relevant – especially as countries RATEûSWAPSûTOûlXûMOREûOFûITSûLIABILITIES FROMû)NDIAûTOûTHEû0HILIPPINESûROLLûOUTû2%)4ûPRODUCTSûOFûTHEIRû !SûMARKET INTERESTûRATESûHAVEûDECLINEDûSHARPLYûTHISûYEARûTOû own. record lows, Greece is likely to be sitting on paper losses on 4HEûNEXTûBATCHûOFû3 2%)4ûCANDIDATESûINCLUDESû5+ûOFlCESû those swaps trades. That, in turn, encourages the banks on ANDûSTUDENTûACCOMMODATIONûINûTHEû53ûANDû5+û4HATûISû the other side of these trades to buy Greek CDS to hedge precisely the kind of diversity the Singapore market needs. their increased counterparty exposure to Greece. Greece would currently be better off if it hadn’t hedged its interest-rate risk. But it seems uncharitable to criticise ESG questions OFlCIALSûFORûTAKINGûTHEûDECISIONûTOûLOCKûINûWHATûWEREûATûTHEû time historically low interest rates. Neither can you blame he move to lump environmental, social and governance Greece’s swap counterparties for hedging their exposure to Tissues in one pot as a way of measuring how “good” an the country using CDS, as regulations encourage them to do. INVESTMENTûISûONûNON lNANCIALûGROUNDSûISûPROBLEMATIC In short, this appears to be an example of derivatives !NDûTHATûISûPARTICULARLYûTHEûCASEûFORûSOVEREIGNûDEBT markets working as they’re meant to. Or, to put it another Sometimes a country can make strides on the WAY û#$3ûISNTûALWAYSûASûSCARYûASûITûlRSTûAPPEARS environmental front, possibly by imposing carbon taxes or reducing fuel subsidies, but those same moves can spark a social crisis, since the changes hurt the poor Diversity challenge disproportionately. 4HATûISûTHEûCASEûINû#HILE ûWHICHûWASûTHEûlRSTûSOVEREIGNûTOû INGAPOREûISûHANDS DOWNû!SIASûLEADINGûMARKETûFORû2%)4Sû)Tû ISSUEûGREENûBONDSûINûTHEû!MERICASûBUTûISûCURRENTLYûSTRUGGLINGû Sis also a tiny island, with a limited supply of high-quality to contain unrest sparked by a hike in rail fares, which properties that can be transferred to the capital markets. highlights how thin the country’s social safety net is. Sooner or later, investors will need to broaden their horizons. )TSûANûISSUEûINûDEVELOPEDûCOUNTRIES ûTOOû)Nû&RANCE ûFORû 3INGAPORESû2%)4ûMARKETûISûBOOMING ûWITHûAûNEAR ûGAINû example, an environmentally well-intentioned rise in fuel INûTHEû3 2%)4ûINDEXûANDûAûRECORDû3BNûOFûNEWûEQUITYûRAISEDû taxes had to be reversed after mass protests. SINCEûTHEûSTARTûOFû 4HEûTRUTHûISûTHATûTHEû%3'ûCATEGORYûMIGHTûSIMPLYûBEûTOOû %FFORTSûTOûEXPANDûTHEûMARKET ûHOWEVER ûHAVEûPROVEDû BLUNTûAûTOOLûnûESPECIALLYûASûTHEû%ûCANûEASILYûCLASHûWITHûTHEû3 FRUSTRATINGû)Fû3INGAPOREûISûTOûREMAINû!SIASûTOPû2%)4û -ANYûFUNDSûUSEûAûTHIRD PARTYûMEASUREûOFû%3'ûTOûGIVEûTHEIRû destination, that will have to change. products a sheen of respectability but the better ones will 4HEREûAREûSOMEûPOSITIVEûSIGNSû!ûSELECTûGROUPûOFûSPONSORSû have to start focusing on how pro-green measures interact HAVEûMANAGEDûTOûLISTûFOREIGNûASSETSûINûTHEûCITY ûINCLUDINGû53û WITHûTHOSEûDESIGNEDûTOûBEûSOCIALLYûBENElCIAL International Financing Review November 30 2019 1 2 IFR Upfront 2311 p1-2.indd 1 29/11/2019 19:22:40 WE ARE REFINITIV Connecting the financial community to what’s next. We equip a network of over 40,000 global institutions with best-in-class data, technology, and expertise that helps support new, more agile ways of working. From trading to investing, from market regulation to risk, our insight drives the financial industry forward. Find out how our insight can inform – and transform – your business. refinitiv.com The Financial and Risk business of Thomson Reuters is now Refinitiv. 2 IFR Upfront 2311 p1-2.indd 2 29/11/2019 19:22:41 INTERNATIONAL FINANCING REVIEW Contents NOVEMBER 30 2019 ISSUE 2311 TOP NEWS 04 EQUITIES Rule change NYSE seeks approval for direct listing 2.0. Proposal would allow companies to raise primary capital at opening trade. 04 DERIVATIVES Resurgence Greek CDS is back with a bang. Pick-up follows Greek debt office’s increased swaps use. 04 PEOPLE & MARKETS Contradictions Investors grapple with social unrest. Does the S in ESG fit with the E and G, investors ask. 06 BONDS Sustainable Intesa sells pioneering “circular-economy” bond. Derbyshire yachtswoman at heart of new kind of ESG transaction. 06 Diamond deal LVMH sparkles with US$17bn Tiffany loans. Luxury goods firm to buy jeweller. 07 Benchmark China’s largest ever bond helps yield curve take shape. 08 Growth plan ChemChina sows seeds for A-share listing of agribusiness with US$10bn fundraising. 09 Ready to float Sanlorenzo plots course for Milan IPO. 11 PEOPLE & Reckoning Westpac counts the cost of AML scandal. 13 MARKETS Australian bank to refund retail investors in recent share sale. Brought to book The BoE has fined Citigroup £43.9m for failing to provide accurate regulatory returns for its UK units between June 2014 and end-2018. 14 Sell-off Deutsche has sold assets with a notional value of about US$50bn tied to emerging market debt to Goldman as part of its attempt to shrink. 17 Frankfurt move China is planning to establish a trading link with Germany. 19 Window of opportunity Markets snap up year-end repo liquidity. 19 Under pressure EU banks’ return on equity slides to 7%, and prospects remain bleak. 22 BONDS Opportunity Ageas set for capital refresher with new Restricted Tier 1 issue. 23 SSAR Philippines sponsors first cat bond. 27 Sterling BNS senior attests to pre-election window. 33 EMERGING Landed Avia Solutions finalises debut deal, albeit at high yield. 49 MARKETS Tough Tewoo offers unpalatable choice. 50 Thailand PTTEP prints Asia’s longest bond of year. 51 LOANS Long-distance call Huawei seeks loan despite earlier snub from foreign banks. 57 Chile Minera Escondida nets US$500m. 63 Europe Banks get set for LGC’s £1.4bn buyout loan. 66 EQUITIES Inconvenient Caltex spin-off in doubt after takeover approach emerges. 69 Strong demand Aramco IPO well covered. 69 China PSBC brings mega flotation. 71 STRUCTURED Belgium Akka Technologies debuts in equity-linked with €175m perpetual. 79 EQUITY Japan TOA raises €7bn via Alpine yen CB. 79 S Africa Brait issues CB alongside recapitalisation. 79 International Financing Review November 30 2019 3 3 IFR Contents 2311 p3.indd 3 29/11/2019 19:30:45 Top news Investors grapple with social unrest 06 Intesa’s circular bond 06 LVMH sparkles 07 NYSE seeks approval for direct listing 2.0 Equities Proposal would allow companies to raise primary capital at opening trade BY ANTHONY HUGHES CALLINGûAûhPRIMARYûDIRECTûmOORû select the long-term committed LAWûlRMû$AVISû0OLKûû7ARDWELLû