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UK Debt Capital Market Forum

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UK Debt Capital Market Forum UK Debt Capital Market Forum 1st March 2019 Join the discussion at slido.com #DebtForum Key Highlights from 2018 Bond listings surpassed 1,000 transactions for the first time since 2012 Innovation & Efficiency New bond issuances on - New rules tailored for insurance linked LSE in 2018, the second securities highest in Europe, - Integrate value-add products in Issuer 1,068 raising an equivalent of Services, including new emerging $452 billion. technologies - SONIA linked securities Key wins Switches Commitment 20 to the Future Key bond wins for LSE in 2018 The number of high profile include IDB’s largest ever bond corporates and sovereigns that (USD4bn), IFC’s debut green have added a London listing or - Issuer Services for Debt Sterling bond (GBP350m), Kingdom of Saudi moved their listing to London in Issuers - Product Innovation, Arabia’s debut sovereign issuance on LSE (USD the past 18 months citing: 2bn), Lloyds 1st SONIA linked bond (GBP750m), including leading on rules for ICBC’s largest green bond on LSE (USD500m), - Increased global investor new products Wijaya Karya debut Komodo bond (IDR5.4bn), base - Efficient review process st and CCB’s 1 sustainability bond on ISM - Higher visibility and timelines for admission (USD1bn) - Added value services Source: Dealogic, LSE, January 2019 2 Business Overview Overview for 2019 Developing DCM at LSE Dr Darko Hajdukovic Head of Fixed Income, Funds & Analytics Join the discussion at slido.com #DebtForum Global Funding Trends in Debt Capital Markets (1/2) Aggregate global bond volumes and deal count Aggregate global bond volumes (USD terms) – regional breakdown 14 45k 100% 40k 90% 12 35k 80% 10 RoW 30k 70% Australasia 8 25k 60% Volume ($ trillion) ($ Volume No. deals No. East Asia 50% 6 20k Japan 15k 40% 4 Europe 10k 30% 2 5k 20% North America 0 0k 10% 2014 2015 2016 2017 2018 2019 YTD 0% 2014 2015 2016 2017 2018 2019 Volume ($ trillion) Deal count (RHS) YTD Source: Dealogic, February 2019 4 Global Funding Trends in Debt Capital Markets (2/2) Sterling Denominated Global Bond issuance (£bn) - 2018 Sterling Denominated Global Bond issuance (£bn) 200 150 UK 100 41% 59% Outside UK 50 0 2014 2015 2016 2017 2018 2019YTD Financials Corporates SSAs China Offshore Bond issuance ($bn) Global Green Bond issuance ($bn) 300 250 Forecasted issuance* 250 200 200 150 150 100 100 50 0 50 2014 2015 2016 2017 2018 2019 YTD 0 USD CNH EUR Other currencies 2015 2016 2017 2018 2019YTD Source: LSE Data, Bloomberg, Dealogic, Climate Bond Initiative, February 2019 *Forecast data according to CBI 5 1Forecast 2019 issuances based on 2018 issuances volumes in January and February as a proportion of total annual issuance Momentum in London Listings Continues The strongest year for bond issuance in the past five year period — 1,068 bonds were issued on London Stock Exchange in 2018 and accounted for $452bn in debt capital raised. — This amounts to the strongest year - in terms of bonds issued - in the past 5 year period. — LSE ranks second in debt capital raised among leading global bond listing venues in 2018. No. of Bonds Issued on LSE since 2013* Capital Raised by Leading Bond Listing Venues in 2018 Domestic 1,200 1,200 46% International 1,068 54% 990 972 1,000 932 1,000 Breakdown of 897 864 902 issuers in London, 2018 800 800 600 600 452 No. Bonds Issued Bonds No. 400 400 315 Capital Raised ($bn)Raised Capital 205 200 200 0 0 2013 2014 2015 2016 2017 2018 LUX LSE DUB SGX Source: Bloomberg, as of Jan 3, 2019 Note: Based on individual tranches issued. Duplicates for 144A and RegS are consolidated. Structured Products are excluded 6 Access to the Broad Investor Pools UK investors play a crucial role in global bond offerings Geographic investor breakdown Selected LSE debt issuance with strong UK investor presence for recent LSE listed debt issuances (>$500m size) 1% 1% IFC, July 2018 - GBP350m EBRD, February 2019 - GBP800m 14% 12% 4% 2% 5% 52% 25% 29% 41% 86% Republic of Nigeria, Nov 2017 - US$3bn Prudential, January 2015 - GBP300m 7% 3% 32% 22% 48% 28% 68% 20% UK Europe (ex UK) Americas Asia MENA Other Source: Dealogic, Bloomberg, January 2019 7 2018 Listings Summary Diversity in London Stock Exchange debt listings Currency split of LSE 2018 listings Industry split of LSE 2018 listings 4% Financials EUR 3% 10% 2% USD 3% 2% Government 2% 3% 2% 28% GBP 4% SEK Utilities 2% CNY Consumer Staples 6% NOK 24% Consumer Discretionary JPY 61% TRY Communications 20% 24% AUD Other Others Geographical split of LSE 2018 listings Tenor split of LSE 2018 listings 2% UK 9% 0-3y 23% 12% 26% EU (ex UK) 3-5y 13% Oceania 19% 5-8y Supranational 8-10y North America 4% 17% 10-30y 14% Asia 17% Africa 30y+ 16% 28% Source: LSE, Bloomberg, January 2019 Currently listed bonds are captured only 8 Based on individual tranches issued. Duplicates for 144A and RegS are consolidated. Structured Products are excluded ISM - Innovative Solutions for our Clients Momentum Building 56 bonds 30 issuers $18.7 billion 14 countries — $18.1 billion has been raised listed on London’s Sovereigns and Money raised on Diverse global on ISM since its launch, 75% International corporates International reach of which was raised in 2018 Securities Market Securities Market (ISM) — Q3 was a record quarter for ISM with $4.7 billion raised — 2018 saw a number of ‘firsts’ Across multiple continents ($bn)* Across multiple sectors ($bn)* for ISM including: — CCB’s $1bn issuance, the first sustainability 0.7 1.3 1.0 0.5 1.3 bond issued on ISM 0.4 Energy Africa — The first JPY- 2.1 Financials denominated bond to 5.4 APAC Government be admitted to ISM Health Care — Seplat Petroleum Europe Industrials became the first 11.8 Nigerian ISM issuer Utilities North 12.9 America Source: LSE Data, FactSet, February 2019 *Sector and region graphs are based on the capital raised 9 Benefits of ISM An Efficient and Expedient Process Simplified disclosure regime for certain issuers Local GAAP accepted Enhanced incorporation by reference provisions ISM Common derogations hardwired into Rulebook Applicable Sensible treatment of SPV structures MTF Market Regulation No equity-like requirements for convertibles London Stock Reviewer Enhanced flexibility on inclusion of information Exchange in pricing supplements Listing Documents Admission Particulars Following enhancements to ism are planned in 2019, ― new rules tailored for insurance linked fixed income products , ― an extension of existing incorporation by reference provisions to Designation Professional only include MAR 17 related announcements e.g material press announcements Disclosure ― widening of existing hardwired derogations in relation to ISM Rulebook/MAR Obligations guarantor financials 10 London’s Green Bond Market A truly international green bond market Green bond breakdown* 96 $31bn 12 38 32% Green bonds Total money raised Unique currency Unique bond Government are listed in from green issuances denominations issuers London Financials 15% Utilities Green bond issuance for the last five years 48% 5% Other 10 40 9 35 8 30 7 of bondsNo. 29% 6 25 5 20 EUR 15% 4 15 USD 3 Capital Capital raised ($bn) 10 SEK 2 11% 1 5 GBP - 0 2% INR 2014 2015 2016 2017 2018 42% 1% Capital raised ($bn) No. of bonds Other Source: Bloomberg, February 2019 *Based on total green bond issuances on LSE 11 Data includes active and matured bonds. All duplicate bonds are consolidated LSEG Leading Market Innovation SONIA-linked products Amount Issuer Name Issue Date Tenor Industry Issued (£m) Australia & New Zealand 24/01/2019 750 3 Banks £500m £5tn Banking Group Ltd Capital Raised Registered per Nationwide Building Society 10/01/2019 1000 5 Banks Month Lloyds Bank PLC 14/01/2019 750 3 Banks In absolute terms, LCH have Record listing by EBRD been averaging £5trillion per Royal Bank of Canada 24/01/2019 400 1 Banks marking the issuers largest month of newly registered sterling bond to date SONIA activity Santander UK PLC 20/09/2018 1000 3 Banks Santander UK PLC 12/02/2019 1000 5 Banks Yorkshire Building Society 19/11/2018 500 5 Banks — LCH has long supported the SONIA market, going back to European Bank for 2009 when it initially launched of OIS product eligibility 18/01/2019 550 3 Supranational Reconstruction & Development — On a relative basis, SONIA volumes are now approaching Lloyds Bank PLC 13/09/2018 750 3 Banks 20% of LCH’s cleared Sterling product volumes on a duration-adjusted basis, compared to slightly over 10% International Finance Corp 18/01/2019 500 3 Supranational one-year ago Coventry Building Society 13/11/2018 500 5 Banks — Launched on 30 April this year, CurveGlobal’s three- Royal Bank of Canada 12/10/2018 400 1 Banks month SONIA volume has reached notional £139.6bn Commonwealth Bank of 17/01/2019 260 1 Banks Australia — Trades in CurveGlobal’s innovative Inter Contract Spread Commonwealth Bank of 10/12/2018 125 1 Banks (ICS) generates significant volumes, accounting for 49% Australia of three-month SONIA Royal Bank of Canada 13/09/2018 350 1 Banks Source: Bloomberg, Bank of England, February 2019 Data includes active and matured bonds 12 All duplicate bonds are consolidated LSEG Issuer Services Working with partners to produce premium content for our community www.lsegissuerservices.com 2,833 Total users of Issuer Services portal Company Profile Data Spark Marketplace 32 Marketplace users 12 LSEG Services for quoted companies Source: LSE, February 2019 13 Customised Company Profiles Case study: Joules Group A Wealth of Information Available Source: LSE, February 2019 14 Sterling bond market: Seizing the opportunities Marco Baldini, Head
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