Poptastic Adyen's Shares Double on Debut After

JUNE 16 2018 ISSUE 2238 www.ifre.com

Poptastic Adyen’s shares double on debut after €950m US-style Amsterdam IPO

AT&T cleared to buy Time Warner, but its debt, at US$160bn and growing, worries investors

Stuck in limbo: MAR adds to difﬁculties as bond mandates pile up across the globe

LOANS LOANS EQUITIES EMERGING MARKETS Loan investors Envision’s Turkey’s SOK China regulators score small US$9.9bn LBO abandons slam low- victories against adds to deal controversial fee bond covenant creep bonanza buyback underwriting 08 08 11 14 REGISTER TODAY!

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TOP NEWS 04 EQUITIES Poptastic Adyen soars following US-style IPO. Payments company’s ﬂoat in Amsterdam leads to “unprecedented” book and share price rise. 04 BONDS Ruling AT&T legal win to spur another jumbo bond. Investors await deluge of debt to fund new round of M&A deals. 04 BONDS Debt pile Extent of AT&T’s debt worries investors; concentration limits and potential downgrades give world’s biggest corporate borrower reasons to fret. 06 LOANS Investment pressure Investors on large European LBO loans are winning concessions on documents, but these are small victories. 08

Strong volumes Envision leveraged buyout adds to deals bonanza. 08 Limbo Market abuse regulation adds to aggro as mandates pile up. 10 Premium Retailer SOK abandons controversial buyback. 11 Runaway competition Chinese regulators slam low-fee underwriting. 14

PEOPLE & Regulation EU banks in US stress test spotlight; capital should be fine, but 15 MARKETS qualitative test harder to call. Tech edge HSBC targets 11% return and steps up revenue push; sets out plans to turn round the US business. 16 Conflict Compensation decision looms in Banco Popular spat. Creditors will have opportunity to respond to EU draft decision. 17 Chairman BNP Paribas shakes up Americas CIB leadership. 19 Sour investments Deutsche Bank offloads US$1bn of shipping loans. 21 Falling volatility Markets may not price Brexit risks until they hit. 23

BONDS Dovish guidance ECB signals ready, steady, go for primary; BTPs lead charge. 25 Monsanto Bayer to make history with funding. 26 Vivat Investors call the shots in tough trade. 36

EMERGING Debut Ecobank hopes to beat tough market conditions with ﬁrst deal. 57 MARKETS Ecuador Sovereign meets investors in US. 57 Asia Green debt supply doubles. 62

LOANS Conﬂict Tensions rise as private equity-backed investors push limits. 67 Curbing defaults China banks to track credit risk. 69 Support E.ON powers over the line. 72

EQUITIES India Four shrimp IPOs put on ice. Investors want lower valuations. 85 China Lufax seeks US$2bn amid IPO delay. 87 Snafu IQVIA returns with sponsor block. 94

STRUCTURED Zero-cost ﬁnancing RH exposes short sellers with convertible bond. 101 EQUITY Marijuana Canopy funds expansion. 101 5G promise Intelsat pumps equity engines. 102

International Financing Review June 16 2018 3 Top news AT&T’s debt worries investors 06 Loan investors score small victories 08 Envision adds to bonanza 08

Poptastic Adyen soars following €950m US-style IPO Equities Payments company’s float in Amsterdam leads to “unprecedented” book and share price pop

BY OWEN WILD "ANKSûHADûBEENûDELUGEDû managers wanted to buy that WHEREûITûISûTYPICALûFORûSUCHû WITHûINTERESTûEVERûSINCEûTHEû THEYûHITûINSTITUTIONALûLIMITS OFFERINGSûTOûSELLûONLYûAûSMALLû ADYEN’s €946.9m Euronext COMPANYûPUBLISHEDûITSû portion of the issuer’s shares with Amsterdam IPO was the INTENTIONûTOûmOATû/NEûHEADûOFû the stock underpriced to ensure a hottest European ECM ticket in syndicate that worked on the “We won’t be POPûONûTHEûlRSTûDAYûOFûTRADINGû years, thanks to a combination DEALûSAIDûAûBOOKûOFûDEMANDû ringing the bell – or 4HEûGOODûSENTIMENTûTHATûCREATESûISû that is rare in Europe: a fast- COULDûHAVEûBEENûPUTûTOGETHERû sounding the gong – DEEMEDûHELPFULûFORûWHENûINSIDERSû GROWINGûPROlTABLEûTECHû ONûTHEûlRSTûDAYûOFûPRE tomorrow” LOOKûTOûREDUCEûTHEIRûHOLDINGSû company, scarcity of stock and marketing and demand was MOREûSIGNIlCANTLYûMONTHSûLATERûATû AûREASONABLEûVALUATIONû4HEû LATERûDESCRIBEDûASû AûHIGHERûVALUATION pop in the Dutch payments “unprecedented”. "YûSELLINGûAûSMALLûPORTIONûATû company’s share price that "ANKERSûJUSTIlEDûTHATûCLAIMû AûVALUATIONûOFûõBNûANDûTHENû FOLLOWEDûWASûINEVITABLEûnûIFû BYûVIRTUEûOFûTHEûNUMBERûOFû 3OMEûINVESTORSûHAVEûBEENû SEEINGûITûCLOSEûATûõBNûONû PERHAPSûLARGERûTHANûEXPECTEDû ORDERSûFROMûACROSSûTHEûWORLDû engaged with the company for THEûlRSTûDAY ûTHEûTOTALûPAPERû with shares more than HUNDREDS ûQUALITYûOFûINVESTORSû six months and a few for as RETURNûISûõBN ûEQUIVALENTû DOUBLINGûONûTHEIRûlRSTûDAYûOFû ANDûTOTALûORDERûSIZESû4HEû LONGûASûTWOûYEARS ûWITHû!DYENû to €424 per share. trading. company tried to satisfy as ANDûTHEûSELLERSûKEENûTOûBRINGûINû !û4-4ûBANKERûONûTHEûDEALû Shares opened at €400 apiece, MANYûINVESTORSûASûPOSSIBLEû SHAREHOLDERSûWHOûWILLûSTICKû pointed out that pricing at 48 two-thirds higher than the IPO WHENûONLYûûOFûTHEû around for many years, TIMESûûEARNINGSûISNTûREALLYû price of €240, and within two company was up for grabs, but ALTHOUGHûTHEûûRETURNûINûAû cheap. Main peer Square now hours topped out at €503.90. THISûSTILLûMEANTûûOFûORDERSû matter of hours weakened the TRADESûATûOVERûûTIMES ûBUTûITû 3HARESûENDEDûTHEûlRSTûDAYûATû WEREûZEROED LONG TERMûCOMMITMENTûOFû HASûEARNEDûTHATûVALUATION û õ ûGIVINGûTHEûCOMPANYûAû A second head of syndicate SOMEûINVESTORS DELIVERINGûAûûRETURNûSINCEû MARKETûCAPITALISATIONûOFû said that some institutions PRICINGûITSû)0/ûBELOWûGUIDANCEû €13.5bn. By Friday some of the WEREûNOTûABLEûTOûSUBMITûORDERSû SMALL PORTION INû.OVEMBERû INITIALûHEATûHADûFADEDûWITHû FORûTHEIRûTOTALûDEMANDûASûSOû 4HEûDEALûWASûMODELLEDûONûTHEûWAYû He added that the shares then at €427.50. MANYûINDIVIDUALûPORTFOLIOû TECHûCOMPANIESûLISTûINûTHEû53 û MOTIVATIONûFORûTHEû)0/ûNOTûTOû AT&T legal win to spur another jumbo bond Bonds Investors await deluge of debt to fund new round of M&A deals

BY ELEANOR DUNCAN CLOSEûTHEûMERGERûONûORûBEFOREû THEûGLOBALûTELECOMS ûMEDIAû !44ûBONDSûSEEûSTORYûONû June 20. and entertainment space, page 6). AT&T’SûCOURTûVICTORYûONû4UESDAYû 4HEûTRIALûLASTEDûFORûSIXû ACCORDINGûTOû4HOMSONû ISûLIKELYûTOûMEANûTHEûCOMPANYû WEEKS ûWITHûTHEûGOVERNMENTû 2EUTERSûDATAû)TûWOULDûALSOûBEû “We will closely WILLûRETURNûTOûTHEûBONDûMARKETû SUINGûTOûSTOPûTHEûDEALûOVERû THEûTHûLARGESTûDEALûINûANYû review the court’s TOûFUNDûITSû53BNûACQUISITIONû concerns about its impact on sector, the data showed. opinion and consider OFû4IMEû7ARNER ûINVESTORSûTOLDû competitors and consumers. 4HEûRULINGûCLEARSûTHEûWAYûFORû IFR. h7EûWILLûCLOSELYûREVIEWûTHEû THEûTELECOMSûGIANTûTOûRESTARTûITSû next steps in light of *UDGEû2ICHARDû,EONûOFûTHEû53û court’s opinion and consider MERGERûENGINE ûANDûCOULDû our commitment to District Court for the District NEXTûSTEPSûINûLIGHTûOFûOURû prompt a jumbo bond issue preserving competition OFû#OLUMBIAûRULEDûTHEûDEALû COMMITMENTûTOûPRESERVINGû SIZEDûUPûTOû53BN ûTWOû for the beneﬁt of COULDûGOûAHEADû ûOVERûAûYEARû COMPETITIONûFORûTHEûBENElTûOFû INVESTORSûSAID American consumers” AFTERûITûWASûlRSTûANNOUNCED American consumers,” !FTERû!44ûABSORBSû4IMEû 4HEûRULINGûCAMEûWITHûNOû !SSISTANTû53û!TTORNEYû'ENERALû 7ARNERûDEBT ûTHEûCOMBINEDû h4HEREûISûNOûWAYûTOûESCAPEûIT vû conditions, and the judge -AKINû$ELRAHIMûSAIDûINûAû COMPANYûWILLûBEûSITTINGûONûAû *ASONû3HOUP ûSENIORûPORTFOLIOû URGEDûTHEûGOVERNMENTûNOTûTOû statement. DEBTûPILEûOFûSOMEû53BN û MANAGERûATû,EGALûû'ENERALû SEEKûAûSTAYûOFûRULING 4HEûMERGER ûINCLUDINGû LEAVINGûSOMEûTOûWONDERûHOWû )NVESTMENTû-ANAGEMENTû !44û'ENERALû#OUNSELû$AVIDû DEBT ûWOULDûBEûTHEûFOURTHû much capacity the bond !MERICA ûTOLDû)&2 ûREFERRINGûTOû -C!TEEûSAIDûTHEûCOMPANYûWILLû LARGESTûDEALûEVERûATTEMPTEDûINû market has for yet more !44SûNEEDûFORûCAPITAL

4 International Financing Review June 16 2018 For daily news stories @ visit www.ifre.com MAR adds to aggro 10 Xiaomi shows China’s hand 10 SOK abandons buyback 11

maximise proceeds but to TOMORROWûnûWORKING vûHEû bookrunners were ABN AMRO, 53ûTHEYûAREûSPOILTûFORûCHOICEûWITHû PROVIDEûSOMEûLIQUIDITYûFORû wrote. Bank of America Merrill Lynch and growth companies”. SHAREHOLDERSûINûAû YEARûOLDû .OTABLYûMANAGEMENTûTOOKûAû Citigroup. Bankers were cautious about COMPANY ûPROVIDEûACQUISITIONû day off from the one-week HOWûMUCHûCOULDûBEûLEARNEDû CURRENCY ûANDûFORûPUBLICITY ROADSHOWûnûALREADYûHALFûTHEû “I do think the standard FROMû!DYENSûNON TRADITIONALû #%/û0IETERûVANûDERû$OESû LENGTHûOFûNORMALûINû%UROPEûnû 25% free-ﬂoat needs European IPO as it is such a WROTEûTOûEMPLOYEESûFOLLOWINGû FORûITSûANNUALûEMPLOYEEûPARTYû to be looked at. We unique asset. No other company THEûPRICINGûh7EûWONTûBEû that brings together CANûBOASTûAûCLIENTûLISTûOFû.ETmIX û RINGINGûTHEûBELLûnûORûSOUNDINGû EMPLOYEESûFROMûITSûûOFlCESû always try to solve for E"AY û5BER û3POTIFYûANDû THEûGONGûnûTOMORROWû7HILEû AROUNDûTHEûWORLD maximum size and &ACEBOOKû9ETûTHEYûALLûPOINTEDûTOû ITSûDElNITELYûIMPORTANTûTOû Morgan Stanley and JP Morgan price in European IPOs THEûLOWûFREE mOATûASûAûPOSITIVEû CELEBRATEûSUCCESSES ûINVESTORû WEREûJOINTûGLOBALûCOORDINATORS û and that doesn’t work” THATûSHOULDûBEûMIMICKEDûBYû LIQUIDITYûISûNOTûSOMETHINGûWEû with the out of order OTHERS ûALSOûNOTINGûTHATû3IEMENSû CELEBRATEû)TûDOESûINûITSELFûNOTû ARRANGEMENTûHIGHLIGHTINGû (EALTHINEERS ûONEûOFûTHEûMOSTû IMPACTû!DYENû4HATSûWHYû once again just how much this 5NFORTUNATELYûFORûTHOSEû SUCCESSFULû%UROPEANû)0/SûTHISû EVERYONEûWILLûBEûINûTHEûOFlCEû WASûAû53 STYLEûmOATû*OINTû BANKS ûONEûASPECTûOFûTHEûDEALû YEAR ûALSOûHADûAûûFREE mOAT DIDûNOTûFOLLOWûTHEû53ûMODELûnû h)ûDOûTHINKûTHEûSTANDARDûû ADYEN SHARES TAKE OFF the fee pot is just €25.2m. FREE mOATûNEEDSûTOûBEûLOOKEDû INTRADAY PRICE, € ATû7EûALWAYSûTRYûTOûSOLVEûFORû UNIQUE ASSET MAXIMUMûSIZEûANDûPRICEûINû 500 %UROPEANûBANKERS ûINCLUDINGû European IPOs and that 490 THOSEûTHATûWEREûONLOOKERSûFORû doesn’t work,” said the second 480 !DYEN ûWEREûPARTICULARLYû head of syndicate.

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420 INûTHEû53 ûYETûBYûTHEûENDûTHEûDEALû SELLERSûWILLûHAVEûVERYûDIFFERENTû

410 HADûGLOBALûAPPEALûANDûBANKERSû OBJECTIVES ûBUTûTHISûISûAûTEMPLATEû 400 SAIDûTHEREûHADûBEENûNOûLISTINGû that makes perfect sense with LOCATIONûDISCOUNTûANDûADDITIONALû THEûRIGHTûASSETSûANDûWEûWILLû Wednesday Thursday Friday attention from staying at home. CONTINUEûTOûTALKûWITHûTHEû Source: Thomson Reuters As the sector banker said, “in the RELEVANTûAUTHORITIESv

4OûGETûTHEûDEALûDONE û!44û MUCHûOFûWHICHûWILLûBEûFUNDEDû /Nû7EDNESDAY ûSTRAIGHTû Other tie-ups in the MIGHTûlNDûITSELFûHAVINGûTOûPAYûUPû in the credit markets. AFTERûTHEû!444IMEû7ARNERû REGULATORYûQUEUEûINCLUDEûTHEû ASûMARKETûVOLATILITYûHASûINCREASED û “CEOs and bankers are going BIDûWASûAPPROVED ûCOMCAST 53BNûPLANNEDûT-MOBILE WITHûAVERAGEûHIGH GRADEûBONDû to tout this decision as a sign of ANNOUNCEDûAû53BNûBIDûFORû ACQUISITIONûOFûRIVALû3PRINT spreads widening by more than AûMOREûBENIGNûREGULATORYû 21st Century Fox. !NOTHERûWILDûCARDûCOULDûBEû BPûOVERûTHEûLASTûYEAR ATTITUDEûTOWARDSûCONSOLIDATION vû WHETHERû6ERIZON û!44SûMAINû 4HEûLASTûTIMEû!44ûTAPPEDû SAIDû$AVIDû+NUTSON ûHEADûOFû “CEOs and bankers competitor, is forced to respond to THEûCAPITALûMARKETSûnûINû*ULYû credit research at Schroders. are going to tout this THEûACQUISITIONûWITHûAûMEGAû-!û ûnûTHEûCOMPANYûONLYûHADû !NDûASûTHEûCYCLEûCONTINUESû decision as a sign of a DEALûOFûITSûOWN û*ANELLEû7OODWARD û TOûPAYûINVESTORSûBPnBPûINû to mature, companies are more benign regulatory GLOBALûCO HEADûOFûINCOMEûATû"-/û new issue concessions when it MOREûLIKELYûTOûFUNDûTHEIRû 'LOBALû!SSETû-ANAGEMENT ûSAID BROUGHTûAû53BNû ACQUISITIONSûWITHûDEBT ûLEAVINGû attitude towards !44ûANDû6ERIZONûAREûTWOûOFû BLOCKBUSTERûBONDûDEALû CREDITûINVESTORSûATûAûFURTHERû consolidation” THEûLARGESTûCORPORATEûISSUERSûINû designed to part-fund the DISADVANTAGE ûHEûSAID THEûINDEX ûEACHûWITHûAûCAPITALû proposed merger. h7EûCOULDûSEEûSOMEûPRESSUREû 4HEû53ûCABLEûCOMPANYûMAYû STACKûOFûWELLûOVERû53BN !ROUNDû53BNûOFûTHOSEû ONûSPREADS vû+NUTSONûSAID HAVEûTOûRAISEûASûMUCHûASû h4HEûQUESTIONûTHENûBECOMESû bonds were taken out at 101 in 53BNûOFûDEBTûTOûlNANCEû HOWûINVESTORSûMIGHTûLOOKûATû !PRILûASûPARTûOFûAûMANDATORYû EARLY BIRD THATûDEAL ûACCORDINGûTOûAû the composition of the redemption because the merger !44SûBONDûDEALûCOULDûCOMEû CreditSights report. BENCHMARKûINûTERMSûOFûSCALINGû HADûNOTûBEENûCOMPLETED SOONERûRATHERûTHANûLATER ûASûTHEû 4HEû53ûSTANCEûONû!44Sû RISKûANDûEXPOSURE vû7OODWARDû -ARKETûPLAYERSûADDEDûTHATû COMPANYûWILLûWANTûTOûGETû PURCHASEûOFû4IMEû7ARNERûHASû said, referring to BAML’s high- THEYREûEXPECTINGûTHEûDEALSû AHEADûOFûAûGROWINGû-!ûBONDû FORMEDûAûBIGûPIECEûOFûTHEû-!û grade corporate index. “How APPROVALûTOûUNLEASHûFURTHERû PIPELINEûTHATûINCLUDESû PUZZLEûWHENûITûCOMESûTOû MUCHûABSOLUTEûRISKûLEVELûDOûYOUû -!ûACTIVITYûDOWNûTHEûROADû û Comcast, Shoup said. competition. want for any one issuer?”

International Financing Review June 16 2018 5 Top news AT&T’s debt, bigger than most countries’, worries investors Bonds Concentration limits and potential downgrades give world’s biggest corporate borrower reasons to fret

BY GARETH GORE THEYûCOULDûSIMPLYûDITCHûTHEIRû CONCENTRATIONûLIMITSûISûLIKELYûTOû FORû53BNûOFûINTERESTû SAFETYûLIMITS ûFREEINGûTHEMûUPû become more acute. PAYMENTSûAûYEARûAFTERûTHEûDEAL û 7HENûAT&TûVISITEDûSOMEûOFûITSû TOûBUYûEVENûMOREûDEBTû)TSû h4HEREûAREûSOMEûTECHNICALû THOSEûCOSTSûAREûMULTIPLEûTIMESû BIGGESTûBONDHOLDERSûLATEûLASTû UNCLEARûHOWûMANYûAGREEDû"UTû issues around companies with COVEREDûBYûTHEûCOMBINEDû YEAR ûITûHADûANûUNUSUALûREQUEST the fact that such a request was THISûMUCHûDEBTûnûITûPUSHESûTHEû COMPANYSûFREEûCASHmOW 53ûBONDûFUNDSûHADûOVERûTHEû deemed necessary is an BUYSIDEûTOûTHEûLIMITûINûTERMSûOFû h4HEYûARENTûJUSTûPILINGûONû PREVIOUSûTHREEûYEARSûlNANCEDû ILLUSTRATIONûTHATû!44SûDEBTûISû how much they can own,” said DEBT ûTHEYûAREûALSOûBRINGINGûINû the biggest expansion in the starting to become an issue for .EILû"EGLEY ûWHOûRATESû!44û AûLARGEûAMOUNTûOFûCASHmOWûnû company’s 137-year history, the market. FORû-OODYSûh!ûLOTûOFûTHESEû 4IMEû7ARNERûGENERATESûABOUTû BUYINGûUPûONEûBONDûDEALûAFTERû h4HEûONLYûWAYûTOûDESCRIBEû INVESTORSûAREûCAPPEDûOUTûINû 53BNûOFûFREEûCASHmOWûEVERYû ANOTHERûASûITûBUILTûUPûAûWARû THEûSIZEûOFûTHEûDEBTûISû terms of where they stand in YEAR vûSAIDû,INDSAYû'IBBONS ûANû CHESTûTOûlRSTûBUYûSATELLITEû46û ‘terrifying’,” said Craig Moffett, the index. After speaking with ANALYSTûATû#REDIT3IGHTSûh)ûTHINKû PROVIDERû$IREC46ûANDûTHENûTHEû AûPARTNERûATûRESEARCHûADVISORYû MANYûBONDûINVESTORSûOVERûTHEû THEûSTRATEGICûRATIONALEûFORûTHEû 4IMEû7ARNERûMEDIAûEMPIREû)Nû lRMû-OFFETT.ATHANSONûh7Eû past year, many appear to be ACQUISITIONûISûSOUND ûANDû)ûLIKEû THOSEûTHREEûYEARS û!44SûDEBTû HAVEûNEVERûSEENûANYTHINGûOFû FULLûUPûONûCAPACITYv TOûSEEû!44ûDIVERSIFYûAWAYû HADûDOUBLEDûnûTOûMOREûTHANû THISûSCALEûBEFOREû)Fû!44ûWEREû !44ûDOESNTûIMMEDIATELYû FROMûWIRELESS ûWHEREû 53BN AûRAPIDLYûGROWINGûCOMPANY û need to come to bond markets: PENETRATIONûISûVERYûHIGHûANDû But concerns were mounting THEûDEBTûWOULDûRAISEûSOMEû ITûHASûOVERû53BNûOFûCASHûONû COMPETITIONûISûlERCEv THATûTHEû53ûBONDûMARKET ûTHEû eyebrows; but it isn’t growing ITSûBALANCEûSHEETûnûMOSTLYû DEEPESTûOFûTHEMûALL ûMIGHTûBEû nûPROlTûANDûREVENUESûAREû RAISEDûINûTHEûBONDûMARKETûnû A MILLION LOST CUSTOMERS TOOûSMALLûFORûWHATûHADûBECOMEû shrinking. I don’t know why PLUSûTHEûUNTAPPEDû53BNû /THERSûAREûLESSûSURE ûPOINTINGû THEûWORLDSûMOSTûINDEBTEDû the market isn’t more BANKûLOAN ûWHICHûSHOULDûBEû out that the company’s company. concerned.” ENOUGHûTOûCOVERûTHEûCASHû PREVIOUSûBIGûACQUISITION ûITSû -OODYS ûWHICHûPUTû!44û PORTIONûOFûTHEû53BNû PURCHASEûOFû$IREC46ûFORû “They aren’t just piling ONûREVIEWûFORûDOWNGRADEû ACQUISITIONûOFû4IMEû7ARNERû 53BNûINû ûHASNTûBEENû on debt, they are also AFTERûTHEû4IMEû7ARNERûDEALû "UTûLENDERSûSAYûTHATû!44ûISû the game-changer that was bringing in a large WASûANNOUNCED ûWARNEDûLATEû EXPECTEDûTOûSELLûMOREûBONDSû PROMISEDû2ECENTûlGURESûHAVEû LASTûYEARûTHATûITSûDEBTûLEVELSû OVERûCOMINGûMONTHSûTOûPAYûOFFû BEENûDISAPPOINTINGû!44ûHASû amount of cashﬂow” hCOULDûTESTûTHEûDEPTHûOFûTHEû THEûBRIDGEûLOAN LOSTûOVERûAûMILLIONû53ûCABLEûANDû credit market”. So far, -ANYûBELIEVEûTHATûTHEû SATELLITEûCUSTOMERSûSINCEûTHEû HOWEVER ûTHEûMARKETûSEEMSû ACQUISITIONûOFû4IMEû7ARNER û DEALû%VENûWHENûITSûNEWû !44SûMOUNTINGûDEBT û TOûHAVEûHARDLYûBLINKEDûASûTHEû ANDûITSûSTABLEûOFûCONTENTûTHATû INTERNETû46ûSERVICEûISûFACTOREDû LARGERûTHANûTHATûOFûMOSTû COMPANYûPILEDûONûDEBTûITSû INCLUDESû("/ û7ARNERû"ROTHERSû IN û!44ûNOWûHASûFEWERûVIDEOû COUNTRIES ûHADûALREADYûBEGUNû LASTûFORAYûINTOûTHEû53ûDOLLARû 0ICTURESûANDû#.. ûWILLûBEû CUSTOMERSûINûTHEû53ûTHANûITûHADû TOûTESTûTHEûLIMITSûOFûTHEûMARKETû MARKETûLASTû*ULY ûFORûAû TRANSFORMATIVEûFORû!44û4IMEû JUSTûAFTERûITûBOUGHTû$IREC46 3OMEûFUNDSûHADûLOADEDûUPûSOû 53BNûDEALûnûTHEûTHIRD 7ARNERûISûAûCASH GENERATINGû h4HEYûTHOUGHTûTHATûGETTINGû MUCHûONû!44ûDEBTûTHATûTHEYû BIGGESTû53ûDOLLARûCORPORATEû beast, and in some ways the INTOûTHEûPAYû46ûBUSINESSûWASû were starting to hit BONDûDEALûEVERûnûDREWû 53BNûDEALûWILLûPAYûFORûITSELFû going to be a good CONCENTRATIONûLIMITSûTHATû 53BNûOFûORDERS 7HILEû!44ûWILLûBEûONûTHEûHOOKû differentiator for them, but I restrict how much of a company’s debt they can take CASH FLOODING OUT AT&T PILES ON THE DEBT on. "UTû!44SûDEBTûBINGEûTOOKû OUSTANDING DEBT 4HEûCONCENTRATIONûLIMITSû PLACEûAGAINSTûAûBACKDROPûOFû PROBLEMûWOULDûONLYûGROWû CASHûmOODINGûINTOû53ûCORPORATEû US$bn 200 WORSEûONCEûTHEû4IMEû7ARNERû bond funds, and there are now DEAL ûWHICHûWASûAPPROVEDûONû signs that trend is starting to 4UESDAY ûWENTûTHROUGHû!44û REVERSE ûASûINTERESTûRATEûRISESû 150 WILLûINHERITûTHEûDEBTûOFûTHEû take effect. media empire, taking its debt 4HEûI3HARESûI"OXXû$OLLARû 100 TOû53BNû!NDûWITHûAû )NVESTMENTû'RADEû#ORPORATEû 53BNûBANKûLOANûTHATûHADû "ONDû%4& ûTHEûLARGESTûCORPORATEû BEENûLINEDûUPûTOûPART lNANCEû BONDû%4&ûWITHûMOREûTHANû 50 the purchase needing to be 53MûOFû!44ûBONDS ûHASû PAIDûOFF ûFURTHERûBONDûSALESûAREû SEENûNETûASSETSûFALLûBYûALMOSTûAû 0 expected. lFTHûSINCEûTHEûENDûOFûLASTûYEAR 2014 2015 2016 2017 2018 !44ûHADûAûSUGGESTIONûFORû !NDûWITHûLESSûCASHûSLOSHINGû the funds it was meeting with: around, the issue of Source: Company reports

6 International Financing Review June 16 2018 For daily news stories @ visit www.ifre.com

think if anything it has made pretty quick descent into junk ANDûPROBABLYûNOTûEVENûWITHû )TSûlRSTûATTEMPTûATû THEûBUSINESSûINHERENTLYûMOREû territory.” HALFûTHATûAMOUNTûOFûDEBTû4HEYû monetising assets didn’t quite RISKYûGIVENûTHEûSTRUCTURALû WOULDûGETûTOûTHEûPOINTûWHEREû GOûACCORDINGûTOûPLAN ûHOWEVERû CHALLENGESûINûTHATûMARKET vû CAUSING A CALAMITY THEIRûBACKSûWOULDûBEûAGAINSTû 7HENûITûTRIEDûTOûmOATûITSû,ATINû SAIDûONEûANALYSTûWHOûASKEDûNOTû Indeed, a ratings downgrade is THEûWALL ûANDûTHEYûWOULDûHAVEû !MERICANûTELEVISIONûASSETSûINû TOûBEûNAMEDûBECAUSEû!44ûISû something many fund to do something such as take a !PRIL ûAûDEALûITûHOPEDûWOULDû SUCHûAûBIGûCLIENTûFORûHISûBANKû managers fret about. In 2013, CLOSERûLOOKûATûTHEû RAISEûASûMUCHûASû53M û h4HEYûAREûBASICALLYûDOUBLINGû CHIEFûEXECUTIVEû2ANDALLû APPROPRIATENESSûOFûITSûDIVIDENDû INVESTORSûWERENTûSOûKEENû DOWNûWITHû4IMEû7ARNERû4HEYû Stephenson said maintaining POLICYv !44ûSTARTEDûOUTûSEEKINGû are getting out of their core THEûCOMPANYSû3INGLEû!ûRATINGû 53nûPERûSHARE ûBUTûTHENû competency.” WASûAûhPRIORITYvû"UTû!44Sû SACROSANCT DIVIDEND DROPPEDûTHEûPRICEûTOû53n DEBTûBINGEûSINCEûTHENûHASûLEDû $IVIDENDSûAREûANûINTERESTINGû û7HENûITûWASûUNABLEûTOû “There is simply no to downgrades from Moody’s, TOPICûWHENûITûCOMESûTOû!44û SELLûEVENûATûTHATûLEVEL ûITû conceivable way that 30ûANDû&ITCHû/Nû&RIDAY û 4HEûCOMPANYûNEVERûCEASESûTOû DECIDEDûTOûDITCHûTHEûDEAL AT&T could be a junk Moody’s downgraded the REMINDûINVESTORSûTHATûITûHASû company another notch to INCREASEDûITSûDIVIDENDûEVERYû RISING RATES bond issuer – the "AA ûCITINGûITSûhELEVATEDû YEARûSINCEûITSû)0/ûINûûnûANDû Another risk is rising rates, market simply isn’t LEVERAGEv ûLEAVINGû!44ûJUSTû is committed to continue WHICHûWILLûMAKEûRElNANCINGû large enough” TWOûNOTCHESûABOVEûJUNK!û DOINGûSOû!NALYSTSûSAYûTHATû DEBTûTHATûROLLSûOFFûMOREû DOWNGRADEûTOûJUNKûCOULDû POLICYûISûAûMASSIVEûCONSTRAINTû EXPENSIVEû4HEûCOMPANYûHASû 7HILEû!44SûMOBILEûPHONEû POTENTIALLYûHAVEûCATASTROPHICû ONûITSûABILITYûTOûPAYûDOWNûDEBTû REGULARûBONDûMATURITIESû businesses are doing better, consequences on the bond )TûALREADYûEATSûUPû53BNûOFû COMINGûUPûnûTOûTHEûTUNEûOFû MARGINSûAREûTHIN ûANDûHAVENTû market. FREEûCASHmOW ûANDûTHATûWILLû ABOUTû53BNûAûYEARûOVERûTHEû BEENûENOUGHûTOûPREVENTûAûSLIDEû h4HEREûISûSIMPLYûNOû rise once new shares are NEXTûDECADEûnûALTHOUGHûMOSTû INûOVERALLûPROlTABILITYûSINCEûTHEû CONCEIVABLEûWAYûTHATû!44û ISSUEDûASûPARTûOFûTHEû4IMEû OFûITSûDEBTûISûONLYûDUEûAFTERû $IREC46ûACQUISITIONû3OMEûAREû COULDûBEûAûJUNKûBONDûISSUERûnû 7ARNERûDEAL 2027. But, with a commitment STARTINGûTOûWORRYûTHATûTHEûLARGEû THEûMARKETûSIMPLYûISNTûLARGEû h4HEûCOMPANYûHASûOPINEDû TOûINCREASEûTHEûDIVIDEND ûHOWû AMOUNTSûPAIDûFORû$IREC46ûANDû enough,” said Moffett. “And it ABOUTûDELEVERAGING ûBUTû MUCHûLEEWAYûWILLûITûHAVEûTOû 4IMEû7ARNERûnûANDû WOULDûCAUSEûAûCALAMITYû FRANKLYûITûISûHARDûTOû support rising interest costs? acquisitions made many years because insurance companies IMMEDIATELYûTAKEûTHEMû 7HATûIFûREVENUESûFALTERû PRIORûnûMAYûLEAVEûTHEûCOMPANYû ANDûOTHERSûTHATûHAVEûRATINGû SERIOUSLY vûSAIDû+IMBALLû further? VULNERABLEûTOûHUGEûWRITEDOWNSû OBLIGATIONSûWOULDNTûBEûABLEûTOû h7ITHûSOûMUCHûOFûFREEû h7ELLûBEûFOCUSEDûONûPAYINGû THATûCOULDûUNDERMINEûTHEû HOLDûIT ûSOûYOUûWOULDûHAVEû CASHmOWûGOINGûTOWARDSû DOWNûOURûTOTALûLEVELûOFûDEBTûTOû SUSTAINABILITYûOFûITSûDEBT MASSIVEûREDEMPTIONSû)Tû PAYINGûTHEûDIVIDENDûANDûTHEû REDUCEûTHEûIMPACTûOFûPOTENTIALû h)FûYOUûLOOKûATûTHEûBALANCEû SIMPLYûWOULDNTûBEûANûOPTIONû COSTûOFûINTEGRATINGû4IMEû RATEûINCREASES vûSAIDû!44û SHEET ûTHEREûISûAûLARGEûAMOUNTû TOûALLOWûTHEMûTOûBEû 7ARNER ûTHEûCOMPANYûDOESNTû h7EûHAVEûHADûAûTREMENDOUSû ALLOCATEDûTOûNON TANGIBLEû downgraded.” REALLYûHAVEûMUCHûROOMûFORû CAPABILITYûTOûBORROWûANDûHAVEû ASSETSûSUCHûASûGOODWILL ûOFTENû 4HEûMANûWHOûWILLûHELPû MANOEUVREûINûTERMSûOFûPAYINGû BORROWEDûATûATTRACTIVEûRATESû LINKEDûTOûPASTûACQUISITIONS vû make that decision at Moody’s down debt. Redemptions are and spread out the maturities SAIDû3COTTû+IMBALL ûPORTFOLIOû AGREEDûnûALTHOUGHûHEûSAIDûTHATû ALSOûGOINGûTOûTAKEûUPûAûLOTû OVERûDECADESû/URûDEBTû MANAGERûATû"-/û'LOBALû!SSETû !44ûHASûOPTIONS MOREûCASHmOWûTHANûTHEYûDIDû PORTFOLIOûHASûAûWEIGHTEDû Management. “If you go into a “If they were downgraded in the past.” AVERAGEûMATURITYûOFû scenario where things don’t go AGAINûxûTHATûISûWHENûITûWOULDû "EGLEYûSAIDûITûISûUNLIKELYûTHATû APPROXIMATELYûûYEARSûxûAû TOOûSMOOTHLY ûTHEYûMAYûHAVEû GETûDICEYûFORû!44 vûSAIDû !44Sû3TEPHENSONûANDûHISû high percentage of our debt to start writing down these "EGLEYûATû-OODYSûh4HEREûISû TEAMûWILLûCUTûTHEûDIVIDENDûnû has interest rates that are INTANGIBLESûONûTHEûBALANCEû NOûCOMPANYûINûTHEûHIGH YIELDû UNLESSûFORCEDûTOûh)TSûFAIRûTOû LOCKEDûINv SHEETûnûTHATûCOULDûCAUSEûAû space with that much debt, SAYûTHATûCUTTINGûTHATûDIVIDENDû 4OûBEûFAIR û!44ûHASûTIMEûONû might be a career-ending its hands. AT&T’S FALLING SHARES MOVE ûANDûSOûITûISûUNLIKELYûTOû h4HEûISSUEûHEREûISNTû CLOSING PRICE happen,” he said. WHETHERûORûNOTû!44ûISûGOINGû !44ûDECLINEDûTOûMAKEû to go bankrupt; there is no US$ ANYONEûAVAILABLEûTOûTALKûINû REALISTICûSCENARIOûWHEREû!44û 44 DETAILûABOUTûHOWûITûPLANNEDûTOû is going to go bankrupt,” said 42 reduce debt, but it did say in a -OFFETTû4HEûREALûQUESTIONûISû statement that it is SIMPLYûCANûTHEYûDELEVERAGEû 40 hCOMFORTABLEûWITHûTHEû fast enough to satisfy the 38 CURRENTûlNANCIALûPROlLEû RATINGSûAGENCIESûnûBECAUSE ûIFû of the business”. It said that THEYûCANT ûTHENûTHEREûWILLûBEû 36 GROWINGûPROlTS ûLESSûCAPITALû ANûINEVITABLEûCALLûFORûTHEû 34 SPENDING ûLOWûINTERESTûRATESû COMPANYûTOûCUTûITSûDIVIDENDû

32 ANDûLOWERûTAXûRATESûWILLûHELPû and to use cash to pay down ITûTOûBRINGûDOWNûLEVERAGEû debt.” 30 2017 2018 LEVELSûh7EûWILLûALSOûBEû “It isn’t a question of opportunistic in monetising SOLVENCY ûITSûAûQUESTIONûOFû Source: Thomson Reuters assets,” it said. priorities,” he said.

International Financing Review June 16 2018 7 Top news Loan investors score small victories

Loans Investors on large European LBO loans are winning concessions on documents

BY MAX BOWER ratchets; and capping Ebitda documents) due to the work of !Nû-&.ûCLAUSEûALLOWEDûTHEû ADD BACKSûATûûOFûTHEûINITIALû RESEARCHûlRMS ûINCLUDINGû issuer to raise a further €1.8bn- )NVESTORSûAREûWINNINGû lGURE #OVENANTû2EVIEWûANDû$EBTû EQUIVALENTûOFûDEBTûTHATûPAIDû CONCESSIONSûONûLEVERAGEDûLOANû %XCLUSIVEû'ROUPSûõMû %XPLAINED 100bp and 50bp more than the DOCUMENTSûONûLARGEûBUYOUTû 4ERMû,OANû"ûALSOûHADûhPAGESû 7HILEûPRIVATEûEQUITYûlRMSû EXISTINGûFACILITY ûWITHOUTû DEALS ûINCLUDINGûTHOSEûFROMû and pages” of changes, a AREûASSURINGûINVESTORSûTHATûTHEYû increasing interest payments to $ANISHûTELECOMSûGROUPûTDC PERSONûCLOSEûTOûTHEûDEALûSAID û WILLûNEVERûUSEûTHEûPROVISIONS û EXISTINGûDEBTûHOLDERS and French cyber security after the buyside objected to INVESTORSûAREûSUSPICIOUSûTHATû h)/.ûPISSEDûEVERYONEûOFF vûAû lRMûEXCLUSIVE GROUP, but these TERMSûTHATûAREûTYPICALLYû AGGRESSIVEûTERMSûCOULDû ,ONDON BASEDûPORTFOLIOûMANAGERû AREûSMALLûVICTORIESûASûTHEû RESERVEDûFORûLARGER ûMOREûLIQUIDû EVENTUALLYûBEûTRIGGERED ûASû said. PRESSUREûTOûINVESTûISûALLOWINGû DEALS MANYû%UROPEANûDEALSûCONTAINû )NVESTORSûMAYûNEEDûMOREû documentation to become 4HEûCHANGESûAFFECTEDû PORTABILITYûCLAUSESûTHATûCANû DEALSûLIKEû)/.ûTOûFULLYûAPPRECIATEû MOREûAGGRESSIVEûOVERALL EVERYTHINGûFROMûTHEû-&.ûCLAUSEû TRANSFERûTHEûlNANCINGSûTOûNEWû THEûmEXIBILITYûTHATûWEAKûLENDINGû 3EVERALûRECENTûBUYOUTûLOANSû to restricted payments and the OWNERSûIFûCOMPANIESûAREûSOLD TERMSûNOWûGIVEûPRIVATEûEQUITYû HAVEûUNDERGONEûRAFTSûOFû ABILITYûTOûINCURûINCREMENTALû h3OMEûINVESTORSûHAVEûACTUALLYû SPONSORS ûEVENûTHOUGHû changes to their documents debt. SAIDûTOûMEûTHEYûONLYûNOWû awareness has been rising for AFTERûVIGILANTûINVESTORSûPUSHEDû 4HEYû;INVESTORS=ûGETûAûCOUPLEû appreciate the consequences of SOMEûTIME ûTHEûlRSTûINVESTORû BACKûAGAINSTûPRIVATEûEQUITYû OFûCHANGESûTOûMAKEûTHEMSELVESû CERTAINûDOCS ûEVENûAFTERûPLAYINGû said. lRMSûWANTINGûGREATERû FEELûBETTERûBUTûITSûSTILLû SEVERALûDEALSûTHATûHADûTHEM vûTHEû h,OANûINVESTORSûSTILLûCANTû mEXIBILITYûTOûMANAGEûTHEIRû TERRIBLE vûAûHEADûOFûLEVERAGEDû HEADûOFûLEVERAGEDûlNANCEûSAIDû REALLYûTAKEûAûPRINCIPLEDûSTAND vû INVESTMENTS lNANCEûSAID h4HATûWASûSHOCKINGûTOûLEARN ûASû THEûHEADûOFûLEVERAGEDûlNANCEû 4$#ûMADEûSEVERALûCHANGESûTOû )NVESTORSûAREûBECOMINGû WEVEûOFTENûBEENûTRYINGûTOûPUSHû SAIDûh4HERESûMOREûPRESSUREûTOû ITSûRECENTûõBNûEQUIVALENTû MOREûAWAREûOFûTHEûPOTENTIALû BACKûONûTHEIRûBEHALFv INVESTûSTILLûCOMPAREDûTOûBONDSv BUYOUTûLOAN ûINCLUDINGûUPDATINGû CONSEQUENCESûOFûOVERLOOKINGû )NVESTORSûCITEDûTHEûRECENTû THEûMOSTûFAVOUREDûNATIONûCLAUSE û certain terms (often couched in INCREMENTALûTERMûLOANûDEALûFORû “DOESN’T MAKE SENSE” WHICHûALLOWSûCOMPANIESûTOûRAISEû DENSEûLEGALISTICûLANGUAGEûANDû lNANCIALûSOFTWAREûlRMûION -OODYSûSAIDûLASTûWEEKûTHATû ADDITIONALûDEBTûADDINGûMARGINû WELLûHIDDENûINûLOANû TRADINGûASûPARTICULARLYûALARMINGû the presence of “non- Envision LBO adds to deal bonanza

Loans Global PE-backed M&A stands at US$192bn this year, the highest level since 2007

BY JONATHAN SCHWARZBERG h7EREûSEEINGûSOMEûVERYû support its acquisition by h)TSûREALLYûBACKûONûTOûTHEû LARGEû;BUYOUT=ûTRANSACTIONSû CONGLOMERATEû"ERKSHIREû ELEPHANTûDEALSû ûTHEû53BNû 0RIVATEûEQUITYûlRMû++2Sû 4HEûACTIVITYûLEVELûISûGOINGûTOû (ATHAWAYûANDûPRIVATEûEQUITYû and up,” Hourihan said. 53BNûLEVERAGEDûBUYOUTûOFû BEûVERYûINTENSEûCERTAINLYû lRMû'û#APITAL "UYOUTûlNANCINGûINûTHEû53û ENVISION HEALTHCAREûHASûHELPEDû through the summer and I "LACKSTONEûISûBUYINGûAûû STANDSûATû53BNûSOûFARûDURINGû BOOSTûPRIVATEûEQUITYûDEALû think into the third quarter,” STAKEûINû4HOMSONû2EUTERSû&2û THEûSECONDûQUARTERûWITHûNEARLYû VOLUMESûTOûLEVELSûNOTûSEENûSINCEû AûLEVERAGEDûlNANCEûBANKERû UNIT ûWHICHûINCLUDESû)&2 53BNûINûPROGRESS ûACCORDINGû BEFOREûTHEûlNANCIALûCRISIS said. TOû4HOMSONû2EUTERSûDATAû,"/û 'LOBALûPRIVATEûEQUITY BACKEDû ++2SûDEALûISûITSûSECONDûMULTI BIG DEALS VOLUMEûINûTHEûlRSTûQUARTERû -!ûSTANDSûATû53BNûTHISû BILLIONûACQUISITIONûWITHINûTWOû 3OLIDûECONOMICSûANDûCERTAINTYû TOTALLEDû53BNû&ORûTHEûlRSTû YEAR ûWHICHûISûUPûûOVERûLASTû WEEKS ûHAVINGûANNOUNCEDûTHEû about the new administration in HALFûOFû ûVOLUMEûREACHEDû year at this time and the highest 53BNûPURCHASEûOFûBUSINESSû THEû53ûHAVEûCREATEDûAûRISK ONû 53BN LEVELûSINCEû ûWHENûVOLUMEû SOFTWAREûPROVIDERûBMC SOFTWARE ENVIRONMENTûINûWHICHûPRIVATEû HADûALREADYûTOPPEDû53BNûBYû on May 29. EQUITYûSPONSORSûHAVEûBEENûMOREû PUMPING UP LEVERAGE June 11, according to data from )NûADDITIONûTOûTHEû++2ûDEALS û WILLINGûTOûCOMMITûTOûLARGERû 4HEû%NVISIONûlNANCINGûWILLûADDû 4HOMSONû2EUTERS PRIVATEûEQUITYûlRMû"LACKSTONEû transactions. TOûTHESEûTOTALS ûBUTûITûISûNOTû 4HEûBUYOUTûmURRYûCOMESûASû EARLIERûTHISûYEARûANNOUNCEDûTHATû !SûAûRESULT ûMERGERSûANDû expected to be offered to PRIVATEûEQUITYûlRMSûSEEKûTOûTAKEû ITûHADûAGREEDûTOûBUYûAûûSTAKEû ACQUISITIONûACTIVITYûTHISûYEARûHASû INVESTORSûUNTILûAFTERû,ABORû$AYû ADVANTAGEûOFûVERYûSUPPORTIVEû in THOMSON REUTERSû&INANCIALû BROADLYûFAVOUREDûLARGERû on September 3. CREDITûMARKETS ûCOUPLEDûWITHûAû ANDû2ISKûBUSINESSûINûAûDEALû transactions, said Marc-Anthony %NVISIONSûBUYOUTûISûEXPECTEDû record amount of dry powder VALUEDûATû53BNû4HEû Hourihan, co-head of Americas TOûBEûlNANCEDûWITHû53BNûOFû AVAILABLEûFORûPURCHASESû)Nû transaction is backed by a -ERGERSûû!CQUISITIONSûATû5"3 û lRST LIENûLOANûDEBTûANDû53BNû ADDITION ûBANKERSûHAVEûCITEDû 53BNûlNANCING ûWHICHûWILLû bringing to memory 2015 and OFûSENIORûNOTESû4HISûWILLûPUTû STRONGûFUNDAMENTALSûASû BEûTHEûLARGESTû,"/ RELATEDûCREDITû 2016 - as opposed to 2017 when LEVERAGEûATûTHEûCOMPANYûINûTHEû CORPORATEûTAXûREFORMûPROPELSûTHEû since 2013 when food maker HJ THEûDEALûCOMPOSITIONûFAVOUREDû 7.1 times to 7.4 times area with economy. (EINZûLINEDûUPû53BNûTOû SMALLERûDEALS adjustments.

8 International Financing Review June 16 2018 For daily news stories @ visit www.ifre.com

QUANTIlABLEûCARVE OUTSvûHASû COULDûGIVEûEVENûMOREûmEXIBILITYû DOCUMENTATIONûLITERALLYûDIDNTû 2ESERVEûANDû%#" ûWOULDûBEû EVOLVEDûRAPIDLYûTHISûYEARû THANûWASûINITIALLYûTARGETED ûEVENû make sense,” he said. USEFUL ûBUTûCURRENTLYûLOOKû #ARVE OUTSûOFTENûINCREASEûANû in today’s market. A partner at a "ANKERSûAREûCALLINGûFORûHELPû UNLIKELY ûTHEûLEVERAGEDûlNANCEû ISSUERSûABILITYûTOûDRAINûCASHû LAWûlRMûINû,ONDONûSAIDûTHATûTHEû TOûPUSHûBACKûAGAINSTûPRIVATEû head said. out of secured entities before SHEERûSIZEûANDûCOMPLEXITYûOFû EQUITYûlRMSûMOREûAGGRESSIVEû h4HEûNEXTûBESTûTHINGû INVESTORSûCANûRESPOND MANYûLENDINGûAGREEMENTSûTODAYû requests. Standardised WOULDûBEûIFûTHEûPROCESSûWASû 4HISûCANûBEûDONEûBYû is making them GUIDELINESûONûDOCUMENTATION û MOREûPUBLICûSOûITûWASûMOREû LOOSENINGûLEVERAGEûANDûASSETû INCOMPREHENSIBLE SIMILARûINûSTYLEûTOûTHEû DIFlCULTûFORûSPONSORSûANDû SALEûCOVENANTS ûORû h7EûHAVEûSEENûSOMEû LEVERAGEDûLENDINGûGUIDELINESû LAWYERSûTOûGETûAWAYûWITHû MANIPULATINGû%BITDAûlGURESû transactions where the ROLLEDûOUTûBYûTHEû53û&EDERALû this,” he said. HIGHER ûANDûISûCOMMONLYû referred to as the “J Crew TRAPDOORvûAFTERûTHEû53û CLOTHINGûRETAILERûlRSTûUSEDûTHEû CLAUSEû4HEûVALUEûOFû%BITDAû ADD BACKSûONûAûRECENTûDEALû WASûLARGERûTHANûTHATûOFûTHEû acquisition it funded, a ,ONDON BASEDûLAWYERûSAID $ESPITEûINVESTORSû CONCESSIONS ûTHEûASSAULTûONû LENDINGûSTANDARDSûISû ACCELERATINGûASûPRECEDENTSûGETû EVERûMOREûAGGRESSIVEû Documents are “deteriorating FASTERûTHANûOURûRATINGSûSCALEû can catch up,” a managing director at a ratings agency said. 4HEûLENGTHûANDûDENSITYûOFû DOCUMENTSûISûMAKINGûLENDINGû TERMSûSOûCONVOLUTEDûTHATûTHEYû

4HEûDEALûHASûALREADYûCAPTUREDû THEûEYESûOFûINVESTORSûWHOûAREû WAITINGûTOûLOOKûATûTHEûlNANCIALSû FORûTHEMSELVES h)TûWILLûGETûAûLOTûOFûATTENTION û BUTûITSûAûLOTûOFûLEVERAGE vûSAIDû ONEûINVESTOR 4HEûBUYOUTûISûONEûOFûMANYû RECENTLYûWITHûLEVERAGEûWELLû SOCIETE GENERALE PIONEERS POSITIVE IMPACT ABOVEûTHEûSIXûTIMESûLEVELûTHATû MARKETS SOLUTIONS FEDERALûREGULATORSûHADûSAIDû OUR SUSTAINABLE INVESTMENT OFFERING WOULDûCALLûFORûADDITIONALû INCREASE THE COMBINES FINANCIAL PERFORMANCE WITH SCRUTINY ûUNLESSûALLûSENIORûDEBTû ENVIRONMENTAL, SOCIAL & GOVERNANCE PARAMETERS ACROSS: ORûHALFûOFûALLûDEBTûCOULDûBEûPAIDû POSITIVE IMPACT DOWNûWITHINûlVEûTOûSEVENûYEARS û TOP RANKED SRI RESEARCH ACCORDINGûTOûFEDERALûLEVERAGEDû OF YOUR BUSINESS STANDARD & CUSTOM INDICES SIMPLE OR STRUCTURED INVESTMENT SOLUTIONS LENDINGûGUIDANCEûIMPLEMENTEDû in 2013. CIB.SOCIETEGENERALE.COM/POSITIVE #OMPTROLLERûOFûTHEû Currency Joseph Otting REINFORCEDûLASTûMONTHûTHATû banks can step outside the GUIDELINESûIFûTHEYûPROCEEDû JUDICIOUSLYûANDûHAVEûTHEû CAPITALûTOûSAFELYûDOûSO Citigroup, Credit Suisse, Morgan Stanley, Barclays, Goldman Sachs, Jefferies, UBS, Royal Bank of Canada, Societe Generale is a founding member of the positive impact initiative steering group of the United Nations Environment Program (UNEP). HSBC, Mizuho and KKR Capital Societe Generale is a french Société Anonyme (limited company) with share capital of € 1 009 897 173,75, whose registered head office is located at 29 boulevard Haussmann – 75009 Paris (France), Markets AREûPROVIDINGûTHEû registered with the Paris trade and companies registry under number 552 120 222 - © Getty Images - FRED & FARID Paris. lNANCINGûFORûTHEû%NVISIONûDEAL

International Financing Review June 16 2018 9 Top news MAR adds to aggro as mandates pile up Bonds Multiple deals stuck in limbo due to market volatility and regulations

BY SUDIP ROY, HELENE DURAND PUBLICûWHENûTHEYûMIGHTûNOTû Quite how issuers get around COUNTRYSûPOLITICALûDIRECTIONû/ILû otherwise want to. THISûISûNOTûCLEAR ûBUTûTHEûUPSHOTû ANDûGASûCOMPANYû%NIûHASûHELDû .EARLYûûPOTENTIALûBONDûDEALSû h-!2ûHASûMADEûITûAûLOTûHARDERû is that an increasing number BACKûITSûDEALûINûTHEû53ûDOLLARû ACROSSûTHEûWORLDûAREûSTUCKûINû ANDûBURDENSOMEûTOûPULLûAûDEALû OFûDEALSûHAVEûBECOMEûSTUCKûINû market for the same reason. LIMBOûASûVOLATILEûMARKETû TOGETHERûOFFûSCREENSû)TSûAûLOTû NO MANSûLAND /THERS ûINCLUDINGûAûPOTENTIALû conditions put off issuers from MOREûCHALLENGING vûSAIDûAû$#-û EUROûHYBRIDûOFFERINGûFROMû%LIAû GOINGûAHEADûWITHûOFFERINGS ûEVENû syndicate banker. KEEPING REGULAR 3YSTEMû/PERATOR ûHAVEûBEENû AFTERûUNDERTAKINGûEXTENSIVEû h.OW ûYOUûNEEDûTOûPUTûAûDEALû In the European high-grade caught up in the broader MARKETINGûWITHûINVESTORS out there which might not market, which is accustomed to MALAISE -ANYûOFûTHESEûWOULD BEû APPEALûTOûEVERYONEûANDûYOUû REGULARûDEALûmOW ûTHEREûAREû )TûISûAûSIMILARûTALEûINûTHEû BORROWERSûlNISHEDûTHEIRû DElNITELYûHAVEûINCREASEDû eight transactions on the %UROPEANûlNANCIALSûSECTOR û roadshows weeks ago, but a MARKETûRISK ûANDûSOMEûDEALSû SIDELINESûWAITINGûTOûlNDûAû WHEREûPUBLICûMANDATESûAREûJUSTû combination of uncertainty AREûPROBABLYûNOTûGOINGûTOûGETû decent window. the tip of the iceberg. ABOUTûMONETARYûPOLICYûINûTHEû53û done.” 4HISûlGUREûDOESûNOTûINCLUDEû !ûEUROû!4ûFORû%RSTEû'ROUPû and Europe and heightened )TûISûAûVIEWûSHAREDûBYûOTHERû THEûRECENTûPULLEDûTRADESûOFû Bank that was mandated in mid- POLITICALûRISKSûHASûSTALLEDû syndicate bankers, who say that 'ERMANûMEDIAûCOMPANYû -AYûHASûYETûTOûEMERGE ûWHILEû ISSUANCEûPLANSûASûPRICINGûPOWERû POTENTIALûBORROWERSûAREû "ERTELSMANNûANDû53ûWHITEûGOODSû some second and third-tier HASûINCREASINGLYûMOVEDûTOWARDSû becoming more cautious about MANUFACTURERû7HIRLPOOLû û )TALIANûBANKSûHAVEûLOSTûMARKETû INVESTORS PUTTINGûDEALSûONTOûSCREENS û TRANSACTIONSûTHATûFAILEDûTOûGETû access. !ND ûIRONICALLY ûREGULATIONû SUGGESTINGûTHEûPIPELINEûOFûDEALSû OVERûTHEûLINEûAFTERûINITIALûPRICINGû "ANCAû#ARIGE ûFORûEXAMPLE û INTRODUCEDûTOûIMPROVEûMARKETû COULDûBEûEVENûBIGGERûTHANûTHEû terms had been announced. mandated banks for a euro 10- TRANSPARENCYûHASûPOTENTIALLYû NEAR ûIDENTIlEDûBYû)&2 7HILEûTHEû%UROPEANûHIGH YEARûNON CALLûlVEû4IERûûINû made the situation worse for h7EREûHAVINGûTOûBEûAûBITûMOREû GRADEûMARKETûISûNOTûSHUTû ûASû67û -ARCH ûBUTûTHATûTRADEûISûUNLIKELYû BORROWERSûWHOûAREûLEFTûHANGINGû mEXIBLEûANDûLEAVEûTHINGSû ANDû#ARREFOURûHAVEûSHOWNûOVERû to emerge in the near future. WITHûSUSPENDEDûDEALS hanging out there. You can do the past week - neither is it open h4HEREûISûDElNITELYûAûPIPELINEû 4HEû%5SûMARKETûABUSEû the roadshow and if there’s a TOûALL THEûQUESTIONûISûHOWûCLOSEûTHOSEû REGULATION ûWHICHûCAMEûINTOû trade, you can do it as soon as it 3OMEûISSUERS ûSUCHûASû)TALIANû projects are,” the second EFFECTûINû*ULYû ûAFFECTEDûLONG lNISHES ûBUTûTHERESûALSOûTHEû SHIPBUILDERû&INCANTIERIûANDû syndicate banker said. standing practices such as OPTIONûOFûWAITINGû7EREûSEEINGû transport infrastructure “On some mandates, we were SOUNDINGûOUTûINVESTORS ûANDûISû THEûIMPACTûOFû-!2ûPLAYINGûOUT vû COMPANYû!TLANTIA ûHAVEûSTALLEDû HAVINGûGONOûGOûCALLSûDAILY ûBUTû FORCINGûISSUERSûTOûMAKEûDEALSû said a second syndicate banker. because of fears about the that’s not the case any more as Xiaomi CDR shows China’s hand

Equities Onshore portion grows to at least 50% of IPO after CSRC feedback

BY FIONA LAU, KEN WANG h4HEû#32#ûWANTSû8IAOMIûTOû 3ELLINGûMOREûSHARESûASû#$2Sû INTERNET OR HARDWARE? SELLûMOREûSHARESûINû#HINAûASû may pressure Xiaomi’s 8IAOMIûISûLOOKINGûFORûAûVALUATIONû XIAOMISûDECISIONûTOûSELLûMOREûOFû ITSûTHEûlRSTû#$2ûINûTHEû VALUATION ûACCORDINGûTOûBANKERSû OFûATûLEASTû53BN ûACCORDINGûTOû its IPO to onshore Chinese DOMESTICûMARKETû4HEYûHOPEûAû away from the transaction. PEOPLEûCLOSEûTOûTHEûDISCUSSIONSû)Tû INVESTORSûTHANûPREVIOUSLYû SUCCESSFULûANDûSIZEABLEû8IAOMIû h4HEûREGULATORûMAYûREQUIREû ISûTENTATIVELYûLOOKINGûTOûSELLû PLANNEDûHASûUNDERLINEDûTHEû LISTINGûWOULDûHELPûATTRACTû Xiaomi to set its offering price at ABOUTûûOFûITSûENLARGEDûSHAREû REGULATORSûINmUENCEûONûTHEû MOREûGIANTûTECHNOLOGYû AûDISCOUNTûTOûTHEûVALUATIONûITû CAPITALûINûTHEûCOMBINEDûLISTING û INAUGURALûISSUEûOFû#HINESEû COMPANIESûTOûLISTûATûHOME vû GETSûFROMûTHEûOVERSEASûMARKET û IMPLYINGûAûFUNDRAISINGûSIZEûOFû depositary receipts. SAIDûONEûOFûTHEûPEOPLE so as to ensure a decent ROUGHLYû53BN 8IAOMIûSAIDûINûITSûLATESTûlLINGû /THERûPEOPLEûCLOSEûTOûTHEûDEALû aftermarket performance,” said 4OûACHIEVEûTHEûVALUATIONû LASTû4HURSDAYûTHATûTHEû#$2û TOLDû)&2ûEARLIERûTHATû8IAOMIûWASû AûBANKERûCLOSEûTOûANOTHERû TARGET ûWHICHûSOMEûHAVEûSEENûASû TRANCHEûWILLûACCOUNTûFORûATûLEASTû PLANNINGûTOûSELLûABOUTûûOFûITSû POTENTIALû#$2ûOFFERING AGGRESSIVE û8IAOMIûISûPOSITIONINGû ûOFûITSûPROPOSEDûDUALûLISTINGû IPO as CDRs and the rest as Hong h"UTûFROMûMYûPOINTûOFûVIEW û ITSELFûCLOSERûTOûITSûINTERNETûPEERSû INû3HANGHAIûANDû(ONGû+ONGûANDû +ONG LISTEDûSHARES THEûOVERSEASûVALUATIONûWILLûBEûAû than other hardware makers. ATûLEASTûûOFûITSûENLARGEDûCAPITAL 4HEû#32#ûDIDûNOTûREPLYûTOû key reference for Xiaomi’s CDRs 4HATûPITCHûISûONEûOFûûPOINTSû 4HEûCOMPANYûISûGOINGûWITHûAû EMAILSûSEEKINGûCOMMENT ANDûOTHERûPOTENTIALû#$2û the CSRC has asked Xiaomi to bigger CDR tranche after 4HEûLATESTû#$2ûlLINGûALSOûSAYSû offerings as the domestic CLARIFYûINûFEEDBACKûTOûITSû#$2û RECEIVINGûGUIDANCEûFROMûTHEû 8IAOMIûWILLûSETûITSû#$2ûPRICEû MARKETûLACKSûPRICE DISCOVERYû APPLICATION ûPOSTEDûONûTHEû #HINAû3ECURITIESû2EGULATORYû BASEDûONûPRICINGûCONSULTATIONS û ABILITYûSINCEûTHEûREGULATORûHASû #32#SûWEBSITEûONû*UNEûû7HY û Commission, according to ANDûTHATûTHEûPRICEûWILLûBEûNOû TIGHTLYûCONTROLLEDûPRICESûOFû)0/Sû THEûREGULATORûASKED ûISû8IAOMIû PEOPLEûFAMILIARûWITHûTHEû higher than the offer price of the in the past few years,” said the BILLINGûITSELFûASûANûINTERNETû situation. (ONGû+ONGûTRANCHE banker. COMPANYûINûTHEûlLINGûANDûNOTûAû

10 International Financing Review June 16 2018 For daily news stories @ visit www.ifre.com

PRICINGûHASûMOVEDûSOûMUCHû3Oû their mandated banks to put SOK abandons in those cases, we’re DEALSûONûSCREENS monitoring, but not on a day-to- A fourth banker said “it day basis, and waiting for the made sense” for issuers to controversial buyback MARKETûTOûIMPROVEv UNDERTAKEûINVESTORûMEETINGSû BUTûTHAT ûBECAUSEûMARKETSûHAVEû Equities Retailer planned to buy shares at a premium NEGATIVE TERRITORY BARELYûSTAYEDûSTABLEûTHISûYEAR û .OWHEREûISûTHEûPROBLEMûOFû by the time a roadshow has BY OWEN WILD WHICHû9ILDIZûHOLDSûAûFURTHERû STALLEDûDEALSûMOREûAPPARENTû ENDEDûPROSPECTIVEûPRICINGû ûOFû3/+ûAREûSUBJECTûTOû than in emerging markets - TERMSûHAVEûOFTENûBECOMEû SOK MARKETLERûWASûTHEûSOLEû LOCK UPS PERHAPSûNOTûSURPRISINGLY IMPOSSIBLE SURVIVORûFROMûAûTRIOûOFû4URKISHû In the 16 days it had been #ORPORATESûANDûlNANCIALû 4RADEûlNANCEûINSTITUTIONû RETAILERSûTHATûATTEMPTEDûTOûmOATû PUBLICûPRIORûTOûTHEûBUYBACKû institutions in Asia, CEEMEA !FREXIMBANK ûFORûEXAMPLE ûHASû in May, but its IPO success has ANNOUNCEMENT û3/+ûSAWûITSû and Latin America account for YETûTOûGOûAHEADûWITHûAûlVEûTOû BEENûUNDERMINEDûBYûAûPLANûTOû SHARESûCLOSEûATûTHEûISSUEûPRICEû ûTRANSACTIONSûTHATûHAVEûBEENû SEVEN YEARû53ûDOLLARûBONDûAFTERû buy back shares from its major ONLYûTWICEûANDûBELOWûONûEVERYû announced on screens this year COMPLETINGûAûROADSHOW ûBECAUSEû SHAREHOLDERûATûAûPREMIUMûTOûTHEû other occasion. BUTûHAVEûFAILEDûTOûPROGRESSû THEûYIELDûONûITSûSûHASû market price. further, according to IFR data. jumped 50bp since the 4HEûMOVEûWASûLATERû One banker at a ﬁrm Some of these mandates - beginning of May. abandoned, but the discount involved in the IPO said POSSIBLYûMANYû ûWILLûBEûLEFTûTOû 3TILL ûWHEREûONCEûITûWASûTABOOû GROCERSûPLANûEXTENDEDûTHEû investors were furious WITHER ûNEVERûAGAINûTOûSEEûTHEû TOûHOLDûOFFûAûDEALûAFTERûMEETINGû LOSSESûINVESTORSûHADûALREADYû on Monday and the IPO LIGHTûOFûDAY INVESTORSû ûESPECIALLYûINûHIGH INCURREDûONûTHEû)0/ûANDûWILLûDOû h)TûHIGHLIGHTSûTHATûMARKETSû grade markets - there is now an nothing to boost the poor banks were not aware AREûVERYûDIFFERENTûTOûTHEûPASTû ACCEPTANCEûOFûTHEûNEWûREALITYû SUCCESSûRATEûOFû4URKISHû)0/S of the plan in advance TWOûYEARS ûWHEREûDELAYSûORû THATûEXECUTIONûISûNOûLONGERû 4WOûlLINGSûTOûTHEûMARKET ûONEû CANCELLATIONSûDIDûNOTûHAPPEN vû straightforward. AFTERûTHEûCLOSEûONû*UNEûûANDû /NEûBANKERûATûAûlRMû said one emerging markets And when - if ? - credit ANOTHERûLASTû-ONDAYûMORNING û INVOLVEDûINûTHEû)0/ûSAIDû banker in London. markets experience a sustained CONlRMEDûTHATû3/+ûHADûBOUGHTû INVESTORSûWEREûFURIOUSûONû )Nû!SIAûALONEûTHEREûHAVEûBEENû rebound, then there’s a big 33.4m shares from its major Monday and the IPO banks ûSUCHûFAILURES ûMOSTLYûFROMû PIPELINEûTOûGETûTHROUGHû4HENû SHAREHOLDERûmATûTOûTHEû4,û WEREûNOTûAWAREûOFûTHEûPLANûINû China. bankers may start worrying PRICINGûONûITSû4,BNû ADVANCEû!NOTHERûBANKERûSAIDû ABOUTûAûSUPPLYûGLUTûANDûTHEû 53M û)0/ the company was ringing DEALS ON SCREENS EFFECTûTHATûMAYûHAVEûONûCREDITû 4HEûREPURCHASEûPRICEûOFû AROUNDûSHAREHOLDERSûINûAû 'IVENûALLûTHIS ûTHEûQUESTIONû SPREADSû2IGHTûNOW ûHOWEVER û 4, ûWASûAûûPREMIUMû MOVEûTHATûDIDûHELPûSHARESû arises as to why so many THATûLOOKSûLIKEûAûGOODûPROBLEMû TOûTHEûCLOSINGûPRICEûOFû4,û RECOVERûGROUNDûTOûENDû treasurers are continuing to ask TOûHAVE on June 8, and the news -ONDAYûATû4, ûDOWNûû TRIGGEREDûAûCOLLAPSEûINû3/+Sû ONûTHEûDAYûANDûûBELOWû share price. At one stage on the IPO price. hardware company, when most PRE DEALûRESEARCHûREPORTSûSEENû Monday morning shares were 3HARESûFELLûAûFURTHERûû OFûITSûREVENUESûAREûFROMû by IFR. DOWNûûONûTHEûDAYûASû ONû4UESDAYûEVENûASûTHEû SMARTPHONEûSALES CLSAûGIVESû8IAOMIûAû53BNn INVESTORSûREACTEDûTOûAûMOVEû discount grocer said that the !CCORDINGûTOûTHEûlLING û BNûVALUATIONûASûOFû*UNEûBASEDû THATûCLEARLYûFAVOUREDûTHEû 33.4m shares repurchased 8IAOMISûINTERNETûSERVICESû on a sum-of-parts approach, MAJORûSHAREHOLDERûATûTHEû are subject to the company’s BUSINESSûACCOUNTEDûFORûONLYû USINGûAûMULTIPLEûOFûûTIMESû expense of other )0/ûLOCK UPûOFûûMONTHSû)Fû ûOFûTOTALûREVENUESûINû û 2019 earnings for the hardware SHAREHOLDERS THEûSHARESûAREûTRADINGûBELOWû VERSUSûûFROMûSMARTPHONEû UNITûANDûXnXûFORûTHEû 4HEû4,MûPURCHASEûFROMû THEû4,ûPRICEû3/+ûPAIDûATû SALES internet business. 9ILDUZû(OLDINGûWASûEVENûMOREû THEûENDûOFûTHEûLOCK UPûTHENû h8IAOMISûINTERNETûSERVICES Morgan Stanley ANALYSTSûPUTû REMARKABLEûASûTHOSEûMû 9ILDIZûWOULDûPAYû3/+ûTHEû RELATEDûGROWTHûISûEXPECTEDûTOûBEû FAIRûVALUEûFORûTHEûCOMPANYSû SHARES ûEQUIVALENTûTOûûOFû difference. MAINLYûDRIVENûBYûCUSTOMERSûINû EQUITYûATû53BNnBN û THEûCOMPANY ûWEREûONLYû &INALLY ûONû7EDNESDAYû China but future growth in that EQUALûTOûAûû0%ûOFû purchased at the time of the AFTERNOON û3/+ûSAIDûTHEû MARKETûISûLIMITEDû&ORûOVERSEASû XnXûBASEDûONûNON )&23û IPO in mid-May. BUYBACKûWOULDûNOTûGOûAHEADû MARKETSûSUCHûASû)NDIA ûITûWILLû NETûEARNINGSûFORECASTSû4HEûBANKû 7HENûTHEû)0/ûHADûTOûBEû ANDûSHARESûlNALLYûBEGANûTOû take time for Xiaomi to generate forecasts Xiaomi’s 2018 adjusted REPRICEDûINûORDERûFORûTHEûDEALû RISE ûBUTûBARELYûENOUGHûTOûTRIMû MEANINGFULûINTERNETûSERVICESû INCOMEûWILLûREACHû2MBBNû TOûBEûCOMPLETED û9ILDUZû THEûLOSSES REVENUE vûSAIDûAû(ONGû+ONG 53BN ûINûûANDû STEPPEDûINûTOûlLLûTHEûFUNDINGû Shares ended the week on BASEDûINVESTORûWHOûHASû Rmb15.6bn in 2019, up from gap and ensure the discount 4HURSDAYûATû4, ûSOûTHEû ATTENDEDûAû8IAOMIûINVESTORû Rmb5.4bn in 2017. GROCERûRECEIVEDûTHEû4,BNû embarrassing exercise has cost education session. India is a Goldman Sachs VALUESû8IAOMIû 53M ûTARGETEDûFORûDEBTû SHAREHOLDERSûnûWHOûWEREû major market for the company’s ATû53BNnBN repayment. ALREADYûBELOWûWATERûnûAûûLOSSû COMPETITIVELYûPRICEDûHANDSETS "OOKSûOFûTHEû(ONGû+ONGû 4HISûWASû9ILDUZSûONLYû for nothing. 4HEûTHREEûJOINTûSPONSORSûONû TRANCHEûWILLûOPENûONû*UNEûû DIRECTûINVESTMENTûANDûASûITû Bank of America Merrill Lynch, 8IAOMISû)0/ûHAVEûVALUEDûTHEû with pricing on June 28. came as part of the IPO was Credit Suisse, JP Morgan and Unlu smartphone maker at a range of Citic Securities, CLSA’s parent, NOTûLOCKED UPû ûTHOUGHûTHEû Menkul Degerler WEREûJOINTûGLOBALû 53BNnBN ûACCORDINGûTOû ISûLEADINGûTHEû#$2ûSALE two other entities through coordinators on the IPO.

International Financing Review June 16 2018 11 Top news

Risk appetite rises in Japan PROJECTûlNANCINGSûANDûAIRCRAFT RELATEDûDEALS h7EûPLANûTOûINVESTûcBNûINû Equities/Bonds Recent deals reveal rising demand for growth investments FOREIGNûCREDITûINûlSCALûûTOû ûANDûHAVEûINVESTEDûcBN û BY STEVE GARTON LASTûlNANCIALûYEARûCOMINGûFROMû DECISIONSûANDûRELYûONû%NGLISH ORûûOFûOURûPLAN ûSOûFAR vûSAIDû outside Japan. LANGUAGEûDOCUMENTATION +ENû9ONEYAMA ûINTERNATIONALû 7HEREûINûTHEûWORLDûCANûAûLOSS .ONETHELESS ûTHEûTWOûDEALSû credit and structured products MAKINGûTECHNOLOGYûCOMPANYûRAISEû OFFERûAûCLEARûSIGNûTHATûRISKûAPPETITEû PREVIOUSLY IMPOSSIBLE group manager at Meiji Yasuda. OVERû53BNûINûANû)0/ûVALUEDûATû is back on the menu in Japan as CORNING ûAû53 BASEDûGLASSMAKERû h4OûMEETûOURûTHREE YEARûTARGET û more than 27 times 2020 earnings? INVESTORSûANDûCOMPANIESûGOûINû WITHûMODESTû"AA""" ûRATINGS ûISû WEûWILLûAGGRESSIVELYûCONTINUEû *APANûISûUNLIKELYûTOûBEûTHEûlRSTû search of higher returns. AûCASEûINûPOINTû(AVINGûSOLDûSEVEN û WITHûOURûCREDITûINVESTMENTSv answer to that question, but the !NDûTHEREûAREûOTHERûEXAMPLESû 10 and 20-year bonds on its debut 4AKAYUKIû9ABE ûWHOûSHARESûTHEû cBNû53BN ûLISTINGûOFûUSED OFû*APANSûANIMALûSPIRITS in the yen bond market in August SAMEûTITLE ûSAIDûTHEREûWEREûTWOû GOODSûMARKETPLACEûMERCARI is the START TODAY ûTHEûLOCALû 2017, it returned at the end of MAINûDRIVERSûBEHINDû-EIJIû9ASUDASû LATESTûSIGNûTHATûTHEûCOUNTRYSûCAPITALû E COMMERCEûGROUPûANDûTHEûCLOSESTû -AYûFORûANOTHERûcBNûOFûLONG DECISIONûTOûINVESTûINûFOREIGNûCREDITû markets are shrugging off their COMPARABLEûFORû-ERCARISû)0/ ûHASû term funding, through a HIGHERûRETURNSûANDûDIVERSIlCATION LONG HELDûCONSERVATIVEûREPUTATION SOAREDûûSINCEûTHEûENDûOFû-ARCHû THREE TRANCHEûDEALûTHATûBANKERSû h)NûTHEûULTRA LOWûINTERESTûRATEûANDû )NûTHEûPASTûMONTH û,LOYDSûANDû It is poised to change its name to said attracted another new group HIGH VOLATILITYûENVIRONMENT ûWEû #REDITû!GRICOLEûHAVEûTURNEDûTOû :OZOûLATERûTHISûYEARûTOûMATCHûITSû OFû*APANESEûINVESTORS FOCUSûONûCREDITûINVESTMENTSûASûAû the yen bond market to raise POPULARûINTERNETûFASHIONûBRAND û 3UCHûLONG DATEDûDEALSûWEREû source of excess return for us,” he LOW COSTûREGULATORYûCAPITAL ûANDû :OZOTOWN ûANDûTRADESûATûAûFARûMOREû PREVIOUSLYûIMPOSSIBLEûFORûAû4RIPLEû added, stressing that Japan’s 4RIPLEû"ûRATEDûBORROWERSûRANGINGû RACYûFORWARDûEARNINGSûMULTIPLEû B rated debut borrower in the MONETARYûPOLICYûHADûFORCEDû FROMûAû53ûGLASSûMAKERûTOû THANû-ERCARIûATûCLOSEûTOûûTIMESû CONSERVATIVEûYENûMARKET ûBUTû INVESTORSûTOûRETHINKûTHEIRûAPPROACH )NDONESIASûGOVERNMENTûHAVEû THEûûCONSENSUSû)NVESTORSû Japanese fund managers are 4HEûCOUNTRYSûBIGGESTûMONEYû found enthusiastic supporters RECEIVEDûAûDISCOUNTûBOTHûFORû lNDINGûTHEMSELVESûFORCEDûTOûTAKEû MANAGERSûAREûALSOûEXPLORINGûNEWû for their debt. Mercari’s short track record and for more duration risk and go down RISKSû'0)& û*APANSûBIGGESTûPENSIONû )Nû!PRIL û3OFT"ANKûCOMPLETEDûAû ITSûRISKYûOVERSEASûEXPANSION ûASûITSû THEûCREDITûCURVEûTOûBOOSTûRETURNSû FUND ûWITHûOVERûcTRNûUNDERû RElNANCINGûOFûOVERSEASûBONDSû 53ûBUSINESSûISûSTILLûLOSINGûMONEY Loss-absorbing senior bank bonds management, this year dropped a THATûCLEARSûTHEûWAYûFORûANû)0/ûOFû 4HEûRETAILûENDûOFûTHEû*APANESEû HAVEûBECOMEûESPECIALLYûPOPULAR REQUIREMENTûFORûDOMESTICûlXED ITSû*APANESEûTELECOMSûUNITû!ND û CAPITALûMARKETSûISûSYMPTOMATICû -EXICO ûWITHûAûLOWû3INGLEû!û INCOMEûINVESTMENTSûTOûBEûRATEDûATû INûTHEûMOSTûSTRIKINGûEXAMPLE û of a broader growth in risk RATING ûALSOûDREWûAûSTRONGû LEASTû4RIPLEû" *APANSû4AKEDAû0HARMACEUTICALû APPETITEû%VERYWHEREûINû*APAN û RESPONSEûINû!PRILûTOûAûcBNû 3IMILARLY û*APANû0OSTû"ANK û INû-AYûAGREEDûAû53BNû ATTENTIONûISûMOVINGûFROMûCAPITALû FOUR PARTû3AMURAIûTHATûINCLUDEDû which manages ¥207.7trn, said in ACQUISITIONûOFû5+ LISTEDû3HIRE ûAû PRESERVATIONûTOûACCUMULATIONû 10-year and 20-year tranches. ITSûLATESTûSTRATEGICûUPDATEûITûWOULDû record for a Japanese company. from safety to risk. h7EûHAVEûSEENûASSETûMANAGERSû CUTûITSûHOLDINGSûOFûGOVERNMENTû 4AKEDASûPLANNEDûTAKEOVER ûINû (ENCE û3OFT"ANKûHADûNOûTROUBLEû ANDûTRUSTûBANKSûBECOMEûAûLOTû BONDSûANDûINCREASEûITSûALLOCATIONûTOû PARTICULAR ûISûAûREVOLUTIONARYûSTEPû RAISINGûcBNûFROMûRETAILûBONDû MOREûACTIVE vûSAIDû+AZUMAû-UROI û CREDITûANDûALTERNATIVEûINVESTMENTSû FORûAû*APANESEûCOMPANY ûINVOLVINGûAû INVESTORSûINû*UNE ûCUTTINGûTHEû debt syndication manager at INûAûBIDûTOûIMPROVEûRETURNS bigger target company and funding COUPONûRATEûFROMûITSûLATESTûRETAILû -ITSUBISHIû5&*û-ORGANû3TANLEYû THROUGHû53ûDOLLARûDEBTûANDûAû outing despite dropping the 3ECURITIESûh4HEYûAREûLOOKINGûFORû CAPITAL OPPORTUNITIES DILUTIVEûOVERSEASûEQUITYûRAISING GUARANTEEûFROMûITSûTELECOMSûUNIT LONGERûDURATIONûANDû%-ûNAMESv &IVEûYEARSûAFTERû(ARUHIKOû+URODAû -ANYûOFûTHOSEûDEALSûWOULDûHAVEû One head of Japanese corporate Meiji Yasuda Life Insurance set took the reins at the Bank of Japan BEENûUNTHINKABLEûONLYûAûFEWûYEARSû lNANCEûARGUESûTHATûITûISûAûMYTHû UPûAûNEWûTEAMûLASTûYEARûTOûINVESTûINû and embarked on an audacious AGO ûBUTûTHEûCOMBINATIONûOFûULTRA THATûINVESTORSûCANNOTûlNDûGROWTHû FOREIGNûCREDIT ûINCLUDINGû3AMURAIû MONETARYûEASINGûCAMPAIGN ûLOWû LOWûDOMESTICûYIELDSûANDûREFORMSûTOû INû*APANû)NDIVIDUALûINVESTORSûAREû BONDS ûOVERSEASûCORPORATEûBONDS û DOMESTICûYIELDSûAREûBECOMINGûAû CORPORATEûCULTUREûISûlNALLYû ESPECIALLYûWILLINGûTOûSUPPORTûRISKYû and structured products such as PROBLEMûFORûEVERYONE SHOWINGûRESULTS VENTURES ûANDûMID CAPûCOMPANIESû h4HEûMINDSETûISûCHANGING vû INûPARTICULARûAREûLOOKINGûTOûEXPAND GROWTH IN FASHION SAIDû4AMAOû3ASADA ûCO HEADûOFû “Japan has been sitting on HOT E-COMMERCE STOCK START TODAY WAS MERCARI’S MAIN COMP INVESTMENTûBANKINGûFORû*APANûATû HIGHûCORPORATEûPROlTSûANDûVERYû 4,500 25,000 "ANKûOFû!MERICAû-ERRILLû,YNCHû LOWûRATESûFORûYEARS vûHEûSAIDû 24,500 “Japanese companies are known h0EOPLEûAREûGETTINGûDESPERATEûTOû 4,000 24,000 FORûBEINGûVERYûCONSERVATIVE ûBUTû enhance returns.” 23,500 EVERYONEûCARESûABOUTûMARGINSû )NûlXEDûINCOME û*APANESEû 3,500 23,000 now.” INSTITUTIONALûINVESTORSûHAVEûBEENû 22,500 Cynics insist that Mercari and EXPERIMENTINGûWITHûLARGERû 3,000 22,000 4AKEDAûAREûEXCEPTIONSûTOûTHEû ALLOCATIONSûTOûOVERSEASûBONDSû 21,500 RULEû!NDûITûISûTRUEûTHATûONLYûONEû ANDûWELCOMINGûFOREIGNûISSUERSû 2,500 21,000 OTHERû*APANESEûTECHNOLOGYûlRMû INûTHEûLOCALûMARKETû4HATûHASû 20,500 MAKESûITûONû#"û)NSIGHTSûLISTûOFû DRIVENûDEMANDûFORû3AMURAIû 2,000 20,000 SO CALLEDûUNICORNS ûWHILEû4AKEDAû BONDS û4OKYOû0RO BONDSûANDûnû Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 ISûALREADYûANûINTERNATIONALû MOSTûRECENTLYûnû'LOBALûYENû Start Today Nikkei 225 (Right axis) company, with a French CEO BONDS ûWHEREûINVESTORSûNEEDûTOû ANDûûOFûITSûREVENUESûFORûTHEû make much quicker order Source: Thomson Reuters Eikon

12 International Financing Review June 16 2018 For daily news stories @ visit www.ifre.com

h)TSûBECOMEûVERYûHARDûFORû EQUITYûFUNDSûMOREûCONlDENCEûTOû INVESTORS vûSAIDûAûDEBTûDISTRIBUTIONû pursue buyout opportunities,” Mood changes as banker at a European bank. said Sasada at BAML. !CQUISITIONSûAREûCERTAINLYû European IPOs ﬂy coming thick and fast. Last month, RISKY BUSINESS #"!ûSOLDûITSûSTAKEûINû"O#OMû,IFEûTOû "ANKERSûCAUTIONûTHATûOVERSEASû Equities All but one flotation priced off the bottom in June Mitsui Sumitomo Insurance. In EXPANSIONSûHAVEûRARELYûTURNEDûOUTû THEûSAMEûWEEK û!.:ûSOLDûITSûSTAKEû WELLûFORû*APANû)NûTHEûTECHNOLOGYû BY ROBERT VENES BEGINSûTRADINGûONû7EDNESDAY û INûAû#AMBODIANûJOINTûVENTUREûTOû sector, Rakuten wrote down WHILEûALLûTHEûOTHERSûAREûUPû 4OKYO LISTEDû*û4RUSTû!NDûTHENûLASTû HUNDREDSûOFûMILLIONSûOFûDOLLARSûONû European ECM is approaching from IPO pricing. WEEK û4OYOTAûAGREEDûTOûINVESTû EARLIERûINVESTMENTSûINûTHEûLIKESûOFû the end of the second quarter +OJAMOûWASûJUSTûAûSLIVERû 53BNûINû3OUTH %ASTû!SIANûRIDE 0LAYCOMûANDû"UYCOMû)Nû INûSIGNIlCANTLYûBETTERûHEALTHû ABOVEûITSû)0/ûPRICEûONû&RIDAYSû HAILINGûAPPû'RAB INVESTMENTûBANKING û.OMURASû than at the beginning, with debut but the others are Some companies, such as ,EHMANû"ROTHERSûSAGAûISûWELLû the majority of IPOs in the past mYING ûWITHû0ORTûOFû4ALLINNûTHEû 4AKEDA ûHAVEûOUTGROWNûTHEIRû KNOWN ûWHILEû*APANû0OSTûLOSTûAû two weeks pricing off the next weakest performer, up domestic market, or are facing PACKETûONû!USTRALIASû4OLLû(OLDINGS BOTTOMûOFûTHEIRûRESPECTIVEû SPECIlCûCHALLENGESûEXPIRINGû /VERSEASûEXPOSUREûHASûCAUSEDû RANGESûANDûTRADINGûINûPOSITIVEû $ESPITEûCOMINGûOFFûAûLITTLEû PATENTSûAREûSETûTOûEATûINTOû4AKEDASû SOMEûCONCERNûINûlXEDûINCOME û territory. FROMûITSû4HURSDAYûHIGHS û!DYENû Japanese earnings as generic TOOû*APANSûlNANCIALûWATCHDOGû 4HATûISûAûREMARKABLEûSHIFTû WASûSTILLûUPûMOREûTHANûûONû COMPETITORSûEMERGE û/THERSûHAVEû WARNEDûREGIONALûBANKSûTOûCURBû CONSIDERINGûTHATûINû!PRILûANDû Friday afternoon, with ANûEYEûONûLONG TERMûDEMOGRAPHICSû POTENTIALûLOSSESûONûFOREIGNûBONDSû -AYûû)0/SûWEREûCANCELLED û Netcompany the next best THATûWILLûDENTûCONSUMPTIONû!NDû and other securities in May after just one of which was down to PERFORMER ûUPûûATûTHATû *APANSûGOVERNANCEûCODEûHASûPUTû 53û4REASURYûYIELDSûSPIKED ANû-!ûBIDûPROVINGûMOREû STAGE ûHAVINGûALREADYûFULLYû CORPORATEûLEADERSûUNDERûPRESSUREûTOû 3OMEûBANKERSûEXPECTûTHISûWILLû ATTRACTIVEûTHANûTHEûmOATû3INCEû exercised the greenshoe after DELIVERûREAL ûTRANSPARENTûRETURNS RESULTûINûAûMOREûCAUTIOUSûAPPROACHû THEN ûONLYû&RENCHûRAILû four days of trading. h,ARGE SCALEûMERGERSûWOULDûGIVEû TOûFOREIGNûCURRENCYûINVESTMENTS û equipment maker DELACHAUX ECM bankers pointed to a SMALLERûBUSINESSESûTHEûCONlDENCEû DRIVINGûADDITIONALûDEMANDûFORû GROUP has terminated its IPO, NUMBERûOFûFACTORSûTHATûHAVEû TOûGOûFORûAû53BNûACQUISITIONû HIGHER YIELDINGûYENûINVESTMENTS AGAINûDUEûTOûAûDUAL TRACKû contributed to the uptick in RATHERûTHANûAû53BNûDEAL vûSAIDû 4HEREûISûNOûDOUBTûTHATû LISTING-!ûPROCESS SENTIMENT ûINCLUDINGûTHEûFACTû (IDEKAZUû(ARADA ûCO HEADûOFû*APANû expansion is risky. 4HEûSHIFTûISûNOTûJUSTûTHATû THATûTHISûWAVEûOFûCOMPANIESû INVESTMENTûBANKINGûATû"!-, "UTûFORûEVERYûHIGH PROlLEûmOP û DEALSûAREûGETTINGûDONE ûBUTûTHATû OFFERSûGROWTHûANDûMOREûREALISTICû “Japanese companies tend to THEREûISûAûLESSûWELL KNOWNûSUCCESSû they are being priced off the ISSUERûEXPECTATIONSûONûVALUATIONû say no to acquisitions because STORYû-5&'SûPRE CRISISûACQUISITIONû bottom of the range - THANKSûTOûTHEûFAILURESûEARLIERûINû they are too risky or too OFû5NION"AN#ALûHASûWONûANALYSTSû SOMETHINGûTHATûSIMPLYûDIDûNOTû the quarter. EXPENSIVE ûBUTûNOWûTHEYûAREû ACCLAIMûASûAûFOOTHOLDûINûTHEû APPEARûTOûBEûVIABLEûEARLIERûINû “It has been hard for under huge pressure to grow.” IMPORTANTû53ûDOLLARûMARKET ûANDû the quarter. CORPORATEûCLIENTSûASûEQUITYû 4HEûCAPITALûMARKETSûHAVEûANû ITSû-ORGANû3TANLEYûINVESTMENTûINû h)NVESTORSûCONTINUEûTOûWANTû MARKETSûAREûVERYûHIGHûBUTû IMPORTANTûROLEûTOûPLAYû3OFT"ANKû ûISûNOWûWIDELYûSEENûASûAû IPO product and the macro )0/ûDISCOUNTSûHAVEûGROWNû ISûCONSIDERINGûAû4OKYOûLISTINGûFORû MASTERSTROKEûnûAFTERûDIVIDENDSû backdrop hasn’t been that bad,” 7EûAREûSEEINGûPROPERû)0/û ITSûTELECOMSûUNITûTOûRAISEûMONEYû ACCOUNTEDûFORûûOFûTHEûGROUPSû SAIDû*AMESû&LEMING ûCO HEADûOFû discounts at the moment,” FORûITSûGIANTû6ISIONû&UNDû4AKEDAû OVERALLûPROlTûINûTHEûLASTûlNANCIALû %#-ûATû"ANKûOFû!MERICAû-ERRILLû SAIDû&LEMINGûh%XPECTATIONSû is to issue both debt and equity year. ,YNCHûh)TûWASûAûFAILUREûOFû HAVEûBEENûRESETûBYûFAILURESû to fund its Shire acquisition. 2ISKûAPPETITEûALSOûFUELSû VALUATIONûCALIBRATIONûTHATû 9OUûNEEDûTOûGETûTHEûVALUATIONû 3HARP ûNOWûOWNEDûBYû4AIWANSû INNOVATION RESULTEDûINûTHEûRECENTûSUB right from the get-go. &OXCONN ûSAIDûINûEARLYû*UNEûITû 3TARTû4ODAYSû:OZOTOWNûHASû OPTIMALû)0/ûPERFORMANCEû7Eû )NVESTORSûPUNISHûYOUûIFûYOUû WOULDûISSUEûcBNûOFûNEWû FOUNDûAûNICHEûINûE TAILORING û AREûSEEINGûTHATûCHANGEûALREADYû are greedy from the start.” stock to pay off preferred stock where it sends consumers a in June.” 4HEREûISûCONSENSUSûONûHOWû HOLDERSûANDûFUNDûITSûACQUISITIONû POLKA DOTTED ûSKIN TIGHTûSUITûANDû Dutch payments company QUICKLYûTHEûCHANGEûHASûCOMEû OFû4OSHIBASû0#ûBUSINESS COLLECTSûDETAILEDûSIZEû ADYEN has attracted the most h4HEûMOSTûIMPROVEMENTûINû)0/û !ûLOCALûMARKETûFORûGROWTHû measurements from user- attention, but since the SENTIMENTûHASûBEENûINûTHEûLASTû STOCKSûISûALSOûIMPORTANTûINû generated smartphone pictures. BEGINNINGûOFû*UNEû$ANISHû)4û SEVERALûDAYS vûSAIDûAûHEADûOFû%#-û ATTRACTINGûPRIVATEûEQUITYû -OREûTHANûONEûMILLIONûCUSTOMERSû SERVICESûBUSINESSûNETCOMPANY, ATûAû53ûBANKûONûAûNUMBERûOFû INVESTMENTû53ûBUYOUTûGIANTû HAVEûPLACEDûORDERSûSINCEûTHEû )TALIANûREFRIGERATIONûANDûAIRû RECENTû)0/Sûh4HISûISûALLûABOUTû "AINû#APITALûPROVEDûTHATû h:OZOSUITvûWASûINTRODUCEDûLASTû conditioning group CAREL REALûGROWTHûASSETS ûOFûWHICHû CONCEPTûINû.OVEMBER ûWHENûAû .OVEMBER ûANDûTHEûCOMPANYûHASû INDUSTRIES, Estonia’s PORT OF THEREûHASûBEENûAûMASSIVEû cBNûBLOCKûTRADEûCOMPLETEDûITSû ROLLEDûITûOUTûFORûFREEûTOûCUSTOMERSû TALLINN û3WEDISHûGAMBLINGû SCARCITYûINû%UROPE ûPARTICULARLYû staggered exit from restaurant WHOûBUYûFROMûITSû:OZOTOWNû SERVICEûBETTER COLLECTIVE, INûTHEûLASTûSEVERALûMONTHSv GROUPû3KYLARK ûTHREEûYEARSûAFTERû PLATFORMû)TûEXPECTSûTOûSHIPûMûTOû 'ERMANûFURNITUREûRETAILERû h)NûTHISûMARKET ûINVESTORSû its IPO. MûINûITSûlRSTûYEAR HOME24ûANDû)CELANDSûARION BANK HAVEûBEENûCAUTIOUSûONûTHEû "LACKSTONEûANDûOTHERSûAREû )FûBANKERSûCANûlNDûNEWûWAYSûTOû HAVEûALLûPRICEDûINûTHEûTOPûHALFû OVERALLû)0/ûDIRECTION ûINûTHEû STAFlNGûUPûINû4OKYO ûFURTHERû CONNECTûTHEûDOTS ûCAPITALûRAISINGSû of their price ranges, with just SENSEûOFûAREûTHEYûFULLYûVALUEDûORû CHALLENGINGûTHEûIDEAûTHATû FORûTHEûLIKESûOFû-ERCARIûMAYûNOû &INNISHûREALûESTATEûGROUPû is there room to go higher? In GROWTHûISûHARDûTOûlNDûINû*APAN LONGERûBEûTHEûEXCEPTIONû KOJAMOûANDû5+ûSUBSEAûCABLEû WHICHûCASE ûLOW GROWTHûSTOCKSû û h3UCCESSFULûEXITûCASESûTHROUGHû Additional reporting by Takahiro protection business TEKMAR EVENûIFûTHEYûAPPEARûOPTICALLYû THEûCAPITALûMARKETSûGIVEûPRIVATEû Okamoto PRICINGûATûTHEûBOTTOMû4EKMARû cheap - are not a must-own.”

International Financing Review June 16 2018 13 Top news

China slams low-fee underwriting Emerging Markets Runaway competition among underwriters raises questions over due diligence

BY INA ZHOU h)ûONCEûmEWûTOû3ICHUANû 4OûPLEASEûREGULATORSûANDû homogeneous. It doesn’t make PROVINCEûTOûPITCHûAûSMALLû IMPROVEûLEAGUEûTABLEûRANKINGS û much difference for issuers, #HINESEûSECURITIESûlRMSûHAVEû COUNTY LEVELû,&'6ûONLYûTOûBEû SOMEûSECURITIESûlRMSûHAVEû PARTICULARLYûCENTRALû3/%S ûTOû RESORTEDûTOûLOWûnûORûEVENûZEROû TOLDûBYûTHEûCOMPANYû GONEûALLûOUTûTOûWINûOVERûSUCHû PICKûSECURITIESûlRMû!ûORû" ûSOû nûFEEûUNDERWRITINGûOFFERSûTOû chairman that it had been ISSUERS ûPARTICULARLYûBIGûlRST underwriting fees become the win business in the country’s approached by 12 other TIMEûCENTRALû3/%S ONLYûCRITERIA vûSAIDûTHEû cut-throat exchange-traded SECURITIESûlRMSûALREADY vûHEû &ORûEXAMPLE ûTHEYûPITCHEDû syndicate banker. bond market, but the tactic RECALLED THEûLOWESTûFEESûTOûOUTBIDû 2EPEATûISSUERSûHAVEûLESSû HASûEARNEDûTHEMûLITTLEûMOREû 4HEû3!#ûSAIDûINûTHEûNOTICEû competitors, and then NEEDûFORûINVESTMENTûBANKINGû than the attention of dated June 11 that when compensated the DCM team SKILLS ûDOCUMENTATIONûCANûBEû REGULATORS brokerages are marketing INTERNALLY EASILYûREPURPOSEDûFROMû 4HEûVICIOUSûCOMPETITIONû bond issues, they need to be h4HEûBENElTSûOFûSECURINGûBIGû PREVIOUSûlLINGSûANDûSOMEû prompted the Securities “market orientated and 3/%ûDEALSûAREûMANIFOLDûITû ISSUERSûHAVEûFRIENDLYûINVESTORSû !SSOCIATIONûOFû#HINA ûAûSELF ADHEREûTOûLEGALûPRINCIPLESvû)Tû SOLIDIlESûYOURûRANKINGSûINûTHEû to support their fundraisings. REGULATORYûBODYûUNDERûTHEû added that the SAC and CSRC LEAGUEûTABLES ûANDûTHATûWILLû !DDITIONALLY ûAûVOLATILEûBONDû #HINAû3ECURITIESû2EGULATORYû WEREûHIGHLYûFOCUSEDûONû HELPûYOUûIMMENSELYûWHENû MARKETûMAKESûITûVERYûDIFlCULTû Commission, to issue a stern “market-disrupting PITCHINGûlRST TIMEûPRIVATELYû EVENûFORûARRANGERSûTOûSEIZEûAû WARNINGûTOûBROKERSûLASTûWEEK BEHAVIOURvûANDûWOULDûPUNISHû OWNEDûISSUERSû-OREOVER ûYOUû good issue window. In a notice seen by IFR, SAC those who engaged in such ALSOûMAKEûTHEûREGULATORSû Another DCM banker with a SAIDûITûHADûREVIEWEDûû practices. happy,” said the syndicate *6ûSECURITIESûlRM ûWHOûUSEDûTOû PRIMARYûDEALSûINûTHEûEXCHANGE 4HEû3!# ûWHICHûBEGANû banker. WORKûONûINTERNATIONALûBONDû traded bond market between COLLECTINGûFEEûDATAûLASTû “So from a broader cost- DEALSûBUTûRECENTLYûSWITCHEDûTOû October 2017 and March 2018 /CTOBER ûSAIDûITûWOULDûISSUEû BENElTûPERSPECTIVE ûTHEû China’s onshore bond market, ANDûFOUNDûTHATû ûORû û INDIVIDUALûWARNINGSûTOû MONEYûYOUûLOSEûONûAûSINGLEû said the concerns of domestic carried no fee. A further 62 SECURITIESûlRMSûTHATûHADû trade can be compensated in #HINESEûISSUERSûWEREûVERYû DEALSûPAIDûTHEûUNDERWRITERSû UNDERWRITTENûAûLARGEûNUMBERû many other ways,” he said. different. ûORûLESSûOFûTHEûPROCEEDSû OFûLOW FEEûDEALS “But the consequence is that h4HEûlRSTûQUESTIONûFROMû RAISED ûFARûLOWERûTHANûTHEû It said that, when necessary, 3/%ûISSUERSûAREûBEINGûSPOILEDû ISSUERSûISûALWAYSû@#ANûYOUû AVERAGEûUNDERWRITINGûRATEûOFû ITûWOULDûWORKûWITHûTHEû#32#û ANDûHAVEûNOûRESPECTûFORû buy our notes?’ No. ‘Okay, ûRECORDEDûINûTHEûPERIOD to conduct on-site inspections market prices.” THENûCANûYOUûHELPûUSûSECUREû )TûWASûTHEûlRSTûTIMEûTHEû to probe whether adequate He said other issuers, such APPROVALûFROMûREGULATORS û REGULATORûHASûADDRESSEDûTHEû ANDûPROPERûDUEûDILIGENCEûHADû ASûPROPERTYûDEVELOPERS ûWEREû 3TILLûNOû4HATSûWHENû)ûKNOWûITû price war in underwriting that been performed for bond MOREûLUCRATIVEûBUTûSUBJECTûTOû is time for me to go,” said the has come with the rapid issues. UNPREDICTABLEûPOLICYûCHANGES banker. expansion of the exchange- Bond offerings from In the interbank bond traded bond market since STATE-OWNED “CHARM” DEVELOPERSûHAVEûDROPPEDû MARKET ûWHEREûTHEû0EOPLESû 2015. !ûCLOSERûLOOKûATûTHEû SHARPLYûSINCEûLATEûûWHENû Bank of China is the main 4HATûYEAR ûTHEû#32#û TRANSACTIONSûlNGEREDûBYûTHEû THEûCENTRALûGOVERNMENTû REGULATOR ûUNDERWRITERS û REMOVEDûMANYûOFûTHEûOBSTACLESû SAC shows that 49 of the 52 stepped up efforts to rein in MOSTLYûBANKS ûAREûSAIDûTOûBEû to the issuance of corporate ZERO FEEûDEALSûWEREûFORû property prices. SLIGHTLYûBETTERûBEHAVEDûTHANû BONDSûANDûALLOWEDûPROPERTYû SECURITIESûlRMS ûANDûONLYû 5NDERWRITERSûAREûFACINGûAû SECURITIESûlRMSûINûTHEû DEVELOPERSûTOûISSUEûBONDSûONû three were bond issues TRIPLEûWHAMMYûOFûUNFETTEREDû exchange-traded bond market. THEû3HANGHAIûANDû3HENZHENû ARRANGEDûBYûSECURITIESûlRMSû COMPETITION ûPOLICY DRIVENû 4HEû.ATIONALû!SSOCIATIONûOFû stock exchanges. In the past for corporates. DELEVERAGING ûANDûRISINGû &INANCIALû-ARKETû)NSTITUTIONALû three years, new issues of -EANWHILE ûMOSTûOFûTHEû DEFAULTûRISKS )NVESTORS ûWHICHûOPERATESû corporate bonds on the two ISSUERSûOFûTHEûûDEALSûWITHû h4HEûSITUATIONûISûPAINFULûFORû under the PBoC, has a BOURSESûTOTALLEDû2MBTRNû FEESûNOTûEXCEEDINGûûWEREû us. On the one hand, big SOE GUIDANCEûFEEûRATEûOFûûFORû 53TRN ûACCORDINGûTOû LARGEûSTATE OWNEDûCOMPANIES û DEALSûDONTûMAKEûUSûPROlTûONû -4.SûANDûûFORûSHORT TERMû OFlCIALûDATA SUCHûASû3$)#û0OWERû(OLDINGS û the other hand, the paper of COMMERCIALûPAPER ûMARKETû h4HEûMARKETûHASûDElNITELYû WHICHûTRADITIONALLYûHAVEûMOREû PROPERTYûDEVELOPERSûANDû,'&6Sû participants said. BECOMEûOVERLYûCROWDEDûAFTERû bargaining power than ISûVERYûHARDûTOûSELLûTHISûYEAR vû "UTûCOMPETITIONûISûNOûLESSû these years of expansion, and PRIVATELYûOWNEDûISSUERS SAIDûTHEûlRSTû$#-ûBANKER SEVEREûANDûMOSTûBANKSûOFFERû UNPRINCIPLEDûCOMPETITIONûRISKSû A senior syndicate banker DISCOUNTSûOVERûTHOSEû UNDERMININGûTHEûWHOLEûINDUSTRY û based in Beijing said the race LITTLE DIFFERENTIATION benchmark rates, they said. ” said a Beijing-based DCM to woo state issuers had been &EWûUNDERWRITERSûBELIEVEûTHEû “I think the status quo is BANKERûWITHûAûLARGEû#HINESEû hot since 2016, when the 3!#SûWARNINGûWILLûBRINGû DIFlCULTûTOûCHANGEû)TûISûEASYûFORû SECURITIESûlRM ûNOTINGûTHEREûWEREû CSRC prioritised bond DISCIPLINEûBACKûTOûTHEûMARKET underwriting fees to go down, CURRENTLYûOVERûûBROKERSû OFFERINGSûFROMûHIGH QUALITYû “At the end of the day, the BUTûVERYûDIFlCULTûTOûMAKEûTHEMû COMPETINGûFORûBONDûDEALS SOEs. SERVICESûWEûPROVIDEûAREûVERYû go up,” said the second banker.

14 International Financing Review June 16 2018 People &Markets

Creditors Industrials Jean-Yves of Banco dealmaker Fillion is to Popular will be Larry Slaughter has chair BNP Paribas’ given the chance to joined BAML from corporate and be heard by the Lazard as executive investment banking European Commission vice chairman for in the Americas as it over their claims for its corporate and shakes up leadership compensation investment bank in the region

FRONT STORY REGULATION EU banks in US stress test spotlight Capital should be ﬁne, but qualitative test harder to call

All the big banks are expected to pass the h!ûTIGHTû##!2ûRESULTûMAYûSPEEDûUPûTHEû WELLûCAPITALISEDûANDûPASSEDûTHEûQUANTITATIVEû lRSTûPARTûOFûTHEû53û&EDERALû2ESERVESûSTRESSû DELEVERAGINGûOFûTHEûWHOLEû53ûBUSINESS vû TEST ûITûFAILEDûTHEûQUALITATIVEûTESTûDUEûTOûPOORû test process on Thursday, but there will be 3TOKLOSAûSAIDûINûAûNOTEû RISKûMANAGEMENTûANDûlNANCIALûPLANNING INTENSEûSCRUTINYûOFûDEUTSCHE BANK and other Last year, the trust unit was allowed to %UROPEANûlRMSûUNDERGOINGûTHEûPUBLICû TWIN TEST SKIPûTHEûQUALITATIVEûTEST ûBUTûFORûûTHEû PROCESSûFORûTHEûlRSTûTIME 4HEû53û&EDûISûDUEûTOûRELEASEûTHEûRESULTSûOFû ENTIREû53ûBUSINESSûISûBEINGûTESTEDûANDûSOûRISKû 3OMEûMAYûHAVEûTOûlXûPARTSûOFûTHEIRû THEûANNUALû$ODD &RANKû!CTû3TRESSû4ESTû MANAGEMENTûISSUESûCOULDûONCEûMOREûTRIPû SYSTEMSûANDûOPERATIONSûIFûTHEYûFAILûTHEû $ &!34 ûONû*UNEû ûWHICHûDETERMINESûHOWû THEûBANKûUP hQUALITATIVEvûPARTûOFûTHEûHEALTHûCHECK ûORû BANKSûWOULDûWEATHERûAûSEVEREûRECESSIONû 30ûDOWNGRADEDû$EUTSCHEû"ANKSûCREDITû KEEPûMOREûCAPITALûCONTAINEDûINûTHEIRû53û 4HEû&EDûWILLûRELEASEûRESULTSûOFûTHEûTESTûONû RATINGûTOû""" ûFROMû! ûTHISûMONTHûFOLLOWINGû OPERATIONS CAPITALûLEVELS ûTHEû#OMPREHENSIVEû#APITALû REPORTSûTHATûTHEû&EDûHADûDESIGNATEDûONEûOFû Deutsche has set out plans to restructure !NALYSISûANDû2EVIEWû##!2 ûONû*UNEûû4HEû ITSû53ûBUSINESSESûASûhTROUBLEDvûLASTûYEARû ANDûCUTûBACKûITSû53ûINVESTMENTûBANK ûMOSTû LATTERûDETERMINESûHOWûMUCHûCAPITAL ûIFûANY û !NALYSTSûSAYûTHATûCOULDûMAKEûPASSINGûTHEû NOTABLYûBYûCUTTINGûEQUITIESûTRADINGû"UTûNONEû BANKSûCANûRETURNûTOûSHAREHOLDERS QUALITATIVEûTESTûAûTALLûORDERûFORûTHEûBANK OFûTHOSEûCHANGESûWILLûBEûREmECTEDûINûTHEû ##!2ûCONTAINSûTHEûQUALITATIVEûTESTû 4HISûYEAR ûûBANKSûWILLûBEûSUBJECTûTOûBOTHûAû UPCOMINGûSTRESSûTESTûRESULTS ûANDûIFû$EUTSCHEû ELEMENTS ûWHEREûBANKSûAREûASSESSEDûFORûTHEIRû QUANTITATIVEûANDûQUALITATIVEûEVALUATIONûOFûTHEIRû GETSûAûWEAKûRESULTûFROMûTHEû&EDûITûCOULDûSPURû OPERATINGûSYSTEMS ûRISKûCONTROLSûANDûOTHERû CAPITALûPLANNINGûCAPABILITIES ûANDûlVEûNON 53û THEû'ERMANûBANKûTOûCUTûITSû53ûOPERATIONSû FUNCTIONS ûANDûCANûBEûFORCEDûTOûREMEDYû BANKSûAREûTAKINGûTHEûTESTûFORûTHEûlRSTûTIMEû EVENûDEEPER ûHARDERûANDûFASTER DElCIENCIESûORûFACEûSTIFFûPENALTIES INCLUDINGû$EUTSCHE û#REDITû3UISSEûANDû".0û h7ITHûTHEûSTRESSûTESTûCUT OFFûDATEûOFû $EUTSCHEûISûRESTRUCTURINGûINûTHEû53ûASûFASTû 0ARIBASûSEEûTABLE û4HOSEûBANKSûDIDûPARTICIPATEû $ECEMBERû ûWEûTHINKûITûUNLIKELYûTHATû ASûITûCANûINûANûEFFORTûTOûIMPROVEûPROlTABILITYû in the test last year in a dry run, but the results THEûû##!2ûWILLûTAKEûINTOûACCOUNTû$"Sû ANDûPROTECTûITSûREVENUES WEREûKEPTûPRIVATE ûACCORDINGûTOûSOURCES !PRILûSTRATEGYûUPDATE ûGIVENûTHEûLACKûOFû )TûHASûHADûTROUBLEûPASSINGûTHEû&EDSû##!2û h4HEûSTRESSûTESTûISûEXPECTEDûTOûBEûMOREû DETAIL vûSAIDû-ORGANû3TANLEYûANALYSTû in the past when only its Trust unit was challenging this year than last year, but -AGDALENAû3TOKLOSA SUBJECTEDûTOûTHEûTESTû7HILEûTHEûUNITûWASû MOSTûBANKSûHAVEûSUFlCIENTûCAPITALûTOûABSORBû that stress and still return capital at a higher BANKS FACING CCAR TEST LEVELûVERSUSûLASTû##!2 vûSAIDû+EEFEû"RUYETTEû BANKS FACE VARYING DEGREES OF SCRUTINY UNDER CCAR, DEPENDING ON THEIR SIZE AND û7OODSûANALYSTû"RIANû+LEINHANZL SYSTEMIC IMPORTANCE With banks concerned about a tougher Subject to global Subject to Only subject to TEST ûHOWEVER ûITûMIGHTûCAUSEûSOMEû New to CCAR 2018 market shock counterparty default quantitative portion of CCAR MANAGEMENTûTEAMSûTOûBEûMOREûCAUTIOUSû Barclays US BAML BAML Ally Financial, American Express ABOUTûHOWûMUCHûCAPITALûTHEYûASKûTOûRETURNû BNP Paribas USA Barclays US Bank of NY Mellon BB&T, BBVA Compass TOûINVESTORS Credit Suisse USA Citigroup Citigroup BMO Financial, BNP Paribas USA HSBC ûFORûEXAMPLE ûSAIDûITûISûHOPINGûTOûGETû Deutsche Bank USA Credit Suisse USA Goldman Sachs CIT Group, Citizens, Comerica APPROVALûFROMûTHEû&EDûTOûREPATRIATEûJUSTûOVERû RBC USA Deutsche Bank USA JP Morgan Discover Financial, Fifth Third 53BNûOFûEXCESSûCAPITALûFROMûTHEû53ûAFTERû UBS Americas Goldman Sachs Morgan Stanley Huntingdon, KeyCorp, M&T Bank THEûTESTûRESULTSûAREûIN HSBC North America State Street MUFG Americas, Northern Trust !BOUTûûMONTHSûAGOû53ûAUTHORITIESûSAIDû JP Morgan Wells Fargo Regions Financial (3"#ûCOULDûSTARTûRETURNINGûSOMEûOFûTHATû Morgan Stanley, RBC USA Suntrust Banks, Santander USA capital back to headquarters, and since then UBS Americas, Wells Fargo Zions Bancorporation ITûHASûPULLEDû53BNûBACK Source: US Federal Reserve Philip Scipio

International Financing Review June 16 2018 15 “God willing, we will conduct an operation AGAINSTû-OODYSûAFTERû*UNEûv TURKISH PRESIDENT RECEP TAYYIP ERDOGAN GETS IN A MOOD WITH MOODY’S, BELLWETHER P18

HSBC targets 11% return and steps up revenue push

HSBCûAIMSûTOûINCREASEûREVENUESûATûABOUTûûAûYEARû (3"#ûHASûBEENûTHROUGHûAûDEEPûRESTRUCTURINGû BANKINGûANDûBYûINTERESTûRATESûMOVINGûHIGHER û BYûSTEPPINGûUPûINVESTMENTûINû!SIAûANDûNEWû OVERûTHEûPASTûSIXûYEARSûUNDERûPREVIOUSû#%/û ANDûTHEûBANKûWILLûMAINTAINûITSûPUSHûTOû TECHNOLOGYûANDûTRYINGûTOûREVIVEûITSû53ûOPERATIONS û 3TUARTû'ULLIVER ûWHOûSOUGHTûTOûlXûCOMPLIANCEû recycle low-returning assets to higher WHICHûITûSAIDûSHOULDûHELPûITûIMPROVEûRETURNûONû PROBLEMSûANDûSIMPLIFYûAûBANKûTHATûHADûBECOMEû RETURNINGûPRODUCTSûANDûRELATIONSHIPS TANGIBLEûEQUITYûTOûATûLEASTûûBYû TOOûUNWIELDYûANDûSPRAWLINGû'ULLIVERûSOLDûORû %UROPESûBIGGESTûBANKûINTENDSûTOûINVESTû EXITEDûûBUSINESSESûANDûGEOGRAPHIESûANDû US TURNAROUND 53BNnBNûINûTHEûNEXTûTHREEûYEARSûONû SLASHEDûTHEûBALANCEûSHEETûBYû &LINTûALSOûSETûOUTûPLANSûTOûTURNûROUNDûTHEû53û TECHNOLOGYûANDûOTHERûGROWTHûINITIATIVESûTOûGETûANû "UTûTHEûSHRINKINGûALSOûWIPEDûOUTûAûLOTûOFû BUSINESS ûBYûFOCUSINGûONûINTERNATIONALû EDGEûDURINGûhAûPERIODûOFûDISRUPTIVEûTECHNOLOGICALû THEûINCOMEû2EVENUESûSLUMPEDûTOû53BNû ACTIVITIES CHANGEv ûCHIEFûEXECUTIVEû*OHNû&LINTûSAIDûLASTûWEEKû INûûFROMû53BNûINû ûBEFOREû (3"#Sû53ûRETURNSûHAVEûBEENûSLUGGISHûFORû )TûWASû&LINTSûlRSTûSTRATEGYûUPDATEûSINCEûTAKINGû NUDGINGûBACKûTOû53BNûLASTûYEAR YEARSû%XECUTIVESûHAVEûLOOKEDûTWICEûEACHûYEARû OVERûASû#%/ûATûTHEûENDûOFû&EBRUARY &LINTûINTENDSûTOûGETûREVENUESûBACKûTOûNEARû ATûTHEû53ûSTRATEGYûANDûTHISûTIMEû&LINTûSAIDûHEû h!FTERûAûPERIODûOFûRESTRUCTURING ûITûISûNOWû 53BNûBYû ûANDûPINPOINTEDûSEVERALû BROUGHTûINûANûINDEPENDENTûCONSULTINGûlRMûTOû TIMEûFORû(3"#ûTOûGETûBACKûINTOûGROWTHû AREASûTOûACHIEVEûTHAT consider whether to shrink, bulk up by MODE vû&LINTûSAIDûh)NûTHEûNEXTûPHASEûOFûOURû (EûEXPECTSûTOûGETûANûEXTRAû53BNûOFû ACQUISITION ûORûKEEPûAûSIMILARûSIZE STRATEGYûWEûWILLûACCELERATEûGROWTHûINûAREASûOFû REVENUESûFROMûTAKINGûADVANTAGEûOFûTHEû )TûHASûOPTEDûTOûKEEPûAûSIMILARûSIZE ûBUTûWILLû STRENGTH ûINûPARTICULARûINû!SIAûANDûFROMûOURû BANKSûINTERNATIONALûNETWORK ûINCLUDINGû AVOIDûTAKINGûONûTHEûBIGû53ûBANKSûFORûDOMESTICû INTERNATIONALûNETWORKv GETTINGû53BNûMOREûFROMûTHEûGLOBALûTRADEû BUSINESSûANDûINSTEADûTARGETûMOREûINTERNATIONALû &ROMûûTOûû(3"#ûAIMSûTOûDELIVERûhMID ANDûRECEIVABLESûlNANCEûBUSINESSûANDûANOTHERû ANDûMID MARKETûCORPORATESû'"-ûWILLûTARGETû SINGLE DIGITvûPERCENTAGEûGROWTHûINûREVENUE û 53MûFROMûTRADEûlNANCE FOREIGNûMULTINATIONALûCLIENTSûINûTHEû53 SLIGHTLYûABOVEûTHEûhLOWûTOûMID SINGLE DIGITvû &LINTûDIDûNOTûANNOUNCEûANYûMAJORûCHANGESû h7EûINTENDûTOûMAKEûSUREûTHEûBUSINESSûISû PERCENTAGEûGROWTHûINûOPERATINGûEXPENSESû)TûWILLû FORûTHEûINVESTMENTûBANK ûWHICHûHASûCUTûITSû FOCUSINGûONûTHEûINTERNATIONALûOPPORTUNITY vû AIMûTOûGROWûRISK WEIGHTEDûASSETSûBYûnûAûYEAR ASSETSûINûRECENTûYEARSûINûANûATTEMPTûTOû &LINTûSAIDûh)TSûNOTûAûPARTICULARLYûEXCITINGû &LINTûISûTARGETINGû2O4%ûOFûGREATERûTHANûû IMPROVEûPROlTABILITY STRATEGYûANDûWILLûTAKEûAûLITTLEûBITûOFûTIMEûTOû BYûû(3"#ûHADûPREVIOUSLYûTARGETEDûAû (EûSAIDûTHEûGLOBALûBANKINGûANDûMARKETSû IMPLEMENT ûBUTûWEREûCONVINCEDûITSûTHEû RETURNûONûEQUITYûOFûMOREûTHANû ûBUTû BUSINESSûSTILLûHADûSOMEûLOW RETURNINGûASSETSû RIGHTûONEûFORûTHEûGROUPv REPEATEDLYûFELLûSHORTûINûRECENTûYEARSû)TSû2O%û THATûCOULDûIMPROVE ûANDûITSûRETURNSûSHOULDû 4HEûBANKûSETûAûMODESTûTARGETûOFûGETTINGû WASûûLASTûYEARûANDûITSû2O4%ûWASû also be helped by expanding transaction 2O4%ûABOVEûûFORûTHEû53ûBUSINESSûBYû

#ENTURYû&OX ûADDINGû53BNûTOûTHEû AT&T adds to potential record M&A tally ANNOUNCEDûDEALûTALLYûSOûFARûTHISûYEARû2IVALû With AT&TSû53BNûACQUISITIONûOFûTIME ANDûATTORNEYS ûHOWEVER ûSAWûTHEûEFFORTûBYûTHEû $ISNEYûHADûPREVIOUSLYûBIDû53BN WARNERûBACKûONûTRACK ûûISûONûPACEûTOûBEûAû $/*ûASûANûATTEMPTûTOûCARRYûOUTûAûVENDETTAûAGAINSTû RECORDûBREAKINGûYEARûFORû-!ûTRANSACTIONS AûMEDIAûOPERATIONûONûBEHALFûOFûTHEûPRESIDENT HEFTY FEES 3OûFARûTHROUGHûMID *UNEû53TRNûINû 53û&EDERALû*UDGEû2ICHARDû,EONûSWEPTû 4IMEû7ARNERûISûEXPECTEDûTOûPAYû53MûINû DEALSûHAVEûALREADYûBEENûANNOUNCEDûGLOBALLYû ASIDEûTHEûGOVERNMENTSûOBJECTIONûTOûTHEûDEALû INVESTMENTûBANKINGûADVISORYûFEESû53Mû ûTHEûBESTûlRSTûHALFûEVERû4HATSûUPûMOREûTHANû LASTûWEEK ûRULINGûTHEû$O*ûHADûFAILEDûTOûPROVEû to ALLEN & CO û53MûTOûCITIGROUP and ûFROMûTHEûSAMEûSTAGEûOFûLASTûYEAR û THEûDEALûVIOLATEDûANTITRUSTûLAW 53MûTOûMORGAN STANLEY ACCORDINGûTOû4HOMSONû2EUTERS “Antitrust theory and speculation cannot !44ûISûEXPECTEDûTOûPAYûAROUNDû53MûINû 4HEû!44ûDEAL ûANNOUNCEDûINû ûWASû TRUMPûFACTS vûHEûWROTE TOTALûFEESûTOûTHEIRûADVISORSûPERELLA WEINBERG, JP BLOCKEDûBYûTHEû4RUMPû*USTICEû$EPARTMENTûINû !SûTHEû!44ûDEALûWASûCLEAREDûTOûMOVEû MORGAN, and BANK OF AMERICA MERRILL LYNCH, ûONûANTITRUSTûGROUNDSû-ANYû-!ûADVISERSû FORWARD ûCOMCASTûMOVEDûTOûTAKEOVERûSTû ACCORDINGûTOû&REEMANû#ONSULTING Who’s moving where…

LAZARD has hired and are leaving as it Eric Krueger has joined Merrill Lynch in Mark Sooby and Harris reorganises its US SAXO BANK from programme and Ghozali from Deutsche investment banking Barclays as global electronic trading. Bank as managing operations and cuts head of client services. Saxo has made a directors advising staff. Sooby had been He will report to number of hires in companies in the oil with BAML for more Damian Bunce, chief recent months. Bunce and gas sector, than a decade, most client ofﬁcer. Krueger joined from Sberbank, working out of recently responsible for was at Barclays for where he was head of Houston. Sooby and energy acquisitions nine years, most electronic markets. Ghozali joined and divestitures in the recently as head of Deutsche Bank last Americas. Ghozali was cash execution sales year from Bank of with BAML from 2011 across EMEA. Before America Merrill Lynch to 2017. that he worked at

16 International Financing Review June 16 2018 People &Markets

PEARL RIVER DISAPPOINTS &LINTûWANTSûREVENUESûFROMû(ONGû+ONGûTOûRISEû Compensation decision looms BYûATûLEASTû53BNûAûYEARûASû(3"#ûDRIVESû HOMEûITSûDOMINANTûPOSITIONûINûTHEûTERRITORY in Banco Popular spat (EûEXPECTSûTOûDOUBLEûREVENUESûFROMûTHEû 4HEû%UROPEANû5NIONSû3INGLEû2ESOLUTIONû 4HEûBONDHOLDERûGROUPûHASûCOMPLAINEDû 0EARLû2IVERû$ELTAûREGIONûTOûABOUTû53Mû "OARDûSAIDûCREDITORSûOFû"ANCOû0OPULARûWILLû PREVIOUSLYûTHATû$ELOITTEûMIGHTûBEûCONmICTEDû BYûûFROMû53MûLASTûYEAR ûBUTûHEû HAVEûTHEûOPPORTUNITYûTOûRESPONDûTOûITSûDRAFTû in preparing the report since it also ACKNOWLEDGEDûINCOMEûFROMûTHEûREGIONûHADû DECISIONûONûWHETHERûTHEYûSHOULDûRECEIVEû PRODUCEDûTHEûVALUATIONûREPORTûFORûTHEû32"û BEENûSLOWERûTHANûHOPED COMPENSATIONûFOLLOWINGûITSûRESOLUTION ANDû%#ûINûTHEûDAYSûBEFOREûTHEûDECISIONûTOû h7EûHAVENTûGROWNûREVENUEûASûFASTûASûWEû 4HEû32" ûINûCONJUNCTIONûWITHûTHEû RESOLVEû0OPULARûWASûTAKEN WOULDûHAVEûLIKED ûMAINLYûDUEûTOûMARGINû %UROPEANû#OMMISSION ûPUTû0OPULARûINTOû h$ELOITTEûSHOULDûNOTûHAVEûBEENûSELECTEDûTOû PRESSURES vû&LINTûSAIDûOFûTHATûREGION RESOLUTIONûINû*UNEûûANDûTHENûSOLDûITûTOû PREPAREûTHISûREPORT vûSAIDû2ICHARDû%AST ûLEADû (EûSCALEDûBACKûITSûMEDIUM TERMûTARGETûTOû SANTANDERûFORûAûNOMINALûõ ûAFTERû0OPULARSû PARTNERûATûLAWûlRMû1UINNû%MANUEL ûWHICHû GETTINGûATûLEASTû53BNûINûREVENUESûFROMûTHEû JUNIORûBONDHOLDERSûHADûTHEIRûINSTRUMENTSû REPRESENTSûTHEûBONDHOLDERûGROUP 0EARLû2IVERûREGION ûRATHERûTHANûTHEû53BNû CONVERTEDûINTOûEQUITY h(AVINGûPROVIDEDûTHEûINITIALûVALUATIONûFORû PROlTûITûHADûPREVIOUSLYûLOOKEDûFOR !FTERûSUCHûRESOLUTIONS ûTHEûREGULATORSûINVOLVEDû THEû32" ûTHEYûAREûEFFECTIVELYûBEINGûASKEDûTOû )TûISûALSOûTARGETINGûMOREûREVENUESûFROMûITSû AREûREQUIREDûBYûTHEû%5ûTOûDETERMINEûIFûCREDITORSû REVIEWûTHEIRûOWNûWORKû4HEYûAREûCLEARLYûNOTû HOMEû5+ûMARKET ûINCLUDINGûATûLEASTû RECEIVEDûWORSEûTREATMENTûTHANûIFûTHEûBANKûHADû INDEPENDENTûANDûREMAINûCONmICTEDv 53MûFROMûRETAILûBANKINGûASûITûTARGETSû SIMPLYûBEENûWOUNDûUPû4HEû32"ûSAIDûITûHADûNOWû 4HEû32"ûSAIDûITûWOULDûSETûOUTûTHEûTIMELINEû MOREûMORTGAGEûGROWTHûANDûAûSIMILARûEXTRAû RECEIVEDûAûREPORTûONûTHISûFROMû$ELOITTE INûMID *ULYûANDûPUBLISHûITSûDRAFTûDECISIONû AMOUNTûFROMû5+ûCORPORATEûBANKING 4HEû32"ûSAIDûITûWOULDûPROVIDEû SOONûAFTER ûTOGETHERûWITHûTHEûREDACTEDûREPORTû &LINTûSAIDû(3"#ûINTENDEDûTOûSUSTAINû “shareholders and creditors with the right to BYû$ELOITTE DIVIDENDSûATûCURRENTûLEVELSûANDûBUYûBACKû BEûHEARDvûBEFOREûADOPTINGûITSûlNALûDECISIONû "OTHûTHEûBONDHOLDERûANDûSHAREHOLDERû SHARESûTOûNEUTRALISEûTHEûISSUANCEûOFûSTOCKûASû ONûWHETHERûTHEYûQUALIFYûFORûCOMPENSATION GROUPSûAREûSTILLûAWAITINGûTHEûOUTCOMEûOFûANû AûRESULTûOFûSCRIPûDIVIDENDSû(3"#ûISSUESûSCRIPû 4OûENABLEûTHIS ûTHEû32"ûSAIDûITûWOULDû 32"ûAPPEALûTOûTRYûTOûGETûAûFULLERûVERSIONûOFû DIVIDENDSûAMOUNTINGûTOûABOUTû53BNûINûAû PUBLISHûITSûDRAFTûDECISIONûTOGETHERûWITHûAû $ELOITTESûPRE RESOLUTIONûVALUATIONûREPORT TYPICALûYEAR NON CONlDENTIALûVERSIONûOFûTHEûREPORT 4HEûREPORTûINCLUDEDûONLYûLIMITEDû 4HEûBANKûEXPECTSûTOûKEEPûITSûCOMMONû !NYûBONDHOLDERûORûSHAREHOLDERûMUSTûlRSTû INFORMATIONûONû0OPULARSûREQUESTûFORû EQUITYû4IERûûRATIOûABOVEûûFORûTHEûNEXTû REGISTERûWITHûTHEû32" ûWHICHûWILLûTHENû EMERGENCYûLIQUIDITYûASSISTANCE ûWHICHûTHEû THREEûYEARS ANNOUNCEûDETAILSûOFûTHEûPROCESSûANDûHOWû GROUPSûBELIEVEûWASûKEYûTOûTHEûDECISIONûTAKENû Steve Slater REGISTEREDûPARTIESûSHOULDûSUBMITûCOMMENTS TOûRESOLVEûTHEûBANK h!FTERûREVIEWINGûTHEûSUBMITTEDû 4HEREûHAVEûALSOûBEENûûSEPARATEûCASESû )NûTHEûSTû#ENTURYû&OXûTRANSACTION û&OXû COMMENTS ûTHEû32"ûWILLûADOPTûITSûlNALû BROUGHTûATûTHEû%UROPEANû#OURTûOFû*USTICEû WILLûPAYû53MûINûADVISORYûFEESûTOû DECISIONûONûWHETHERûCOMPENSATIONûNEEDSûTOû AGAINSTûTHEû%#ûANDû32"û4HEûCOURTûHASûSAIDûITû GOLDMAN SACHS, CENTERVIEW and DEUTSCHE BANK, BEûGRANTEDûTOûTHEûAFFECTEDûSHAREHOLDERSûANDû WILLûLISTENûTOûAûREPRESENTATIVEûSIX BASEDûONûTHEûEARLIERûBIDûFROMû$ISNEY ûSAIDû CREDITORS vûTHEû32"ûSAID The bondholder group said that it would &REEMANSû*EFFREYû.ASSOF REGISTERûTOûCOMMENTûONûTHEû32"SûDRAFTû h)DûESTIMATEûTHATû#OMCASTûWILLûPAYû CONFLICTED? DECISION ABOUTû53M 53MûINûFEESûFORûTHEû !ûGROUPûOFûBONDHOLDERS ûINCLUDINGû0IMCO û 3EPARATELYû*UDGEû%DGARDOû2AMOS ûWHOûISû ADVISORYûWORK vû.ASSOFûSAIDûh3INCEûITSûAû !NCHORAGEûANDû!LGEBRIS ûANDûTHEûBANKSû HEARINGûANûAPPLICATIONûINûAû.EWû9ORKûCOURTû CASHûBID ûTHEREûWILLûBEûDEBTûlNANCINGûFEESûASû FORMERûBIGGESTûSHAREHOLDERû!NTONIOûDELû FROMûTHEûCREDITORSûTOûGETû3ANTANDERûTOûUNVEILû WELLûnûTHOSEûWILLûLIKELYûRUNûMUCHûHIGHERvû 6ALLEûANDûASSOCIATEDûINVESTORSûHAVEûBOTHû MOREûINFORMATIONûONûTHEûTRANSACTION ûSAIDûTHEû "!-,ûANDû7ELLSû&ARGOûAREûLEADINGûTHEû SEPARATELYûlLEDûLEGALûACTIONSûAGAINSTûTHEû32"û %#ûWOULDûNOTûBEûALLOWEDûTOûlLEûITSûSUBMISSIONû lNANCING ANDû%#ûCOMPLAININGûTHATûALTERNATIVEûCAPITALû SUPPORTINGû3ANTANDERûCONlDENTIALLY Philip Scipio RAISINGSûWEREûNOTûCONSIDERED Christopher Spink

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KEYBANC CAPITAL He was previously Kelvin Goh has joined promoted to head of MARKETS hired Tom head of internet and CITIGROUP as head of APAC FIG IB. Goh joins Mazzucco as a digital media insurance in the from Morgan Stanley, managing director and investment banking for financial institutions where he was most head of global internet Citigroup and has also group of its Asia- recently head of and digital media worked at UBS, Pacific investment South-East Asia FIG, investment banking in Lehman Brothers and banking division. Goh, head of Singapore IB its technology group in Merrill Lynch. KeyBanc who will also be head and chief operating San Francisco. is the investment of corporate finance for officer for South-East Mazzucco joined from banking arm of Singapore, is due to Asia IB. Jefferies, where he was KeyCorp. join in September and most recently head of will report to Simon the internet practice. Yuan, who was recently

International Financing Review June 16 2018 17 Bellwether Bellwether: n. From the practice of placing a bell around the "ELLWETHERûWOULDûLOVEûTOûSPENDûSOMEûTIMEûINSIDEûTHEû neck of a castrated ram so that it might lead its ﬂock 4OULOUSEû3CHOOLûOFû%CONOMICSûLIBRARY ûWHEREûPRESUMABLYû THEREûAREûVOLUMESûBYû*OHNû-AYNARDû+EYNESûTHATûSTANDû %6%.4û2)3+û(!3ûAûHABITûOFûMAKINGûFOOLSûOFûFORECASTERSûANDû UNREADûONûSHELVES ONEûOFû).'SûECONOMISTSûCOULDûBEûFEELINGûTHEûHEATûFOLLOWINGû !NDûTHEûCRUCIALûQUESTIONûISûDOûTHEYûHAVEûAûSWAPSûDESK û AûREGIMEûCHANGEûINû3PAIN /RûTOûBEûMOREûPRECISEûAûhGOT GOT SWAPvûDESKûFORûUNWANTEDû !NDûBYûTHATûWEûDONTûMEANûTHEûOUSTINGûOFûPRIMEûMINISTERû CARDSû*OEû(ARTûANYONE -ARIANOû2AJOYûBUTûTHEûSACKINGûOFû3PAINSûFOOTBALLûCOACHûONû THEûEVEûOFûTHEû7ORLDû#UP 452+%93û02%3)$%.4û)3ûINûAûMOODûWITHû-OODYS ).'Sû)ANû7RIGHTûnûNOûRELATIONûTOûTHEû46ûPUNDITûANDû 2ECEPû4AYYIPû%RDOGANûHASûTHREATENEDûTOûCONDUCTûANû FORMERû%NGLANDûANDû!RSENALûSTRIKERûOFûTHEûSAMEûNAMEûnûHASû hOPERATIONvûAGAINSTûTHEûRATINGûAGENCY ûLESSûTHANûTWOûWEEKSû 3PAINûDOWNûASûWINNERSûBASEDûONûTHEûFACTûTHATûTHEûVALUEûOFû AFTERûITûPLACEDû4URKEYûONûREVIEWûFORûAûDOWNGRADE ITSûSQUADûEXCEEDSûTHATûOFûALLûTHEûOTHERûCOUNTRIES “God willing, we will conduct an operation against 7ITHûTHEû7ORLDû#UPûNOWûKICKEDûOFF ûBANKûECONOMISTSû -OODYSûAFTERû*UNEûû-OODYSûISûMAKINGûUNNECESSARYû CANTûAGREEûONûWHOûWILLûWIN ûBUTûTHEYVEûWHITTLEDûDOWNûTHEû STATEMENTSûDESPITEûTHEûFACTûTHATûWEûAREûNOTûAûMEMBERûOFûITû POTENTIALûCANDIDATESûTOûAûFAMILIARûQUARTET 7HATûAûSHAME vûTHEû4URKISHûPRESIDENTûWASûQUOTEDûASûSAYINGû 5"3ûPREDICTSûAûWINûFORû'ERMANYûANDû.OMURAûISûPREDICTINGû BYûTHEû!NADOLUû!GENCY THATû&RANCEûWILLûBEATû3PAINûINûTHEûlNAL 4HISûSOUNDSûLIKEûAûROBUSTûWAYûOFûDEALINGûWITHûAû !NALYSTSûATû'OLDMANû3ACHSûHAVEûGONEûAûSTEPûFURTHER ûANDû DOWNGRADEû4HEûh'ODû7ILLINGvûBITûISûTHEûMOSTûCHILLINGû INûAûMOVEûTHATûWILLûFRIGHTENûTHEûOTHERû)ANû7RIGHTûANDûHISû -AYBEûTHEYREûGOINGûTOûHIREû'OLDMANû3ACHS FELLOWûFORMERûPROSûNOWûEARNINGûTHEIRûCORNûASûPUNDITSûINû 46ûSTUDIOS ûTHEûBANKûHASûUSEDûMACHINEûLEARNINGûTOûANALYSEû */(.û&,).4û345#+ûTOûTHEûSCRIPTûWITHûHISûSTRATEGYûUPDATEûFORû EACHûTEAMûANDûHASûCOMEûUPûWITHûTHEûCONCLUSIONûTHATû (3"# 'ERMANYûWILLûBEATû"RAZILûINûTHEûlNAL 4HEûBANKûWILLûPLAYûTOûITSûSTRENGTHSûVIAûAûDOUBLE DOWNûINû "UTû"ELLWETHERûPREFERSûTHEûAPPROACHûTAKENûBYûTHEû !SIA 4OULOUSEû3CHOOLûOFû%CONOMICS ûWHICHûHASûSTUDIEDûTHEû .OTûSOûMUCHû"ELTûANDû2OADûASû"ELTûANDû"RACES PICTURESûOFûMOREûTHANû ûPLAYERSûFROMûTHEû0ANINIû )TSûAûSAFEûOPTION ûBUTûWILLûITûRESULTûINûHIMûEMULATINGûHISû 7ORLDû#UPûSTICKERûALBUMSûOFûEVERYûTOURNAMENTûSINCEû NAMESAKEû$OUGLASû&LINT ûTHEûBANKSûFORMERûCHAIRMANûWHOû BAGGEDûAûKNIGHTHOODûINûTHEû1UEENSûBIRTHDAYûHONOURSûLISTû 4HEIRûCONCLUSION ûWHICHûTHEYûARRIVEDûATûBYûUSINGû RECENTLY AUTOMATEDûFACE READINGûSOFTWARE ûWASûTHATûhTEAMSûWHOSEû 'IVENûTHATûSOMEûOFûTHEûMOSTûCOLOURFULûAKAûSCANDALOUS û PLAYERSûLOOKEDûANGRIERûORûHAPPIERûPERFORMEDûBETTERûINû EPISODESûOFû(3"#SûHISTORYûOCCURREDûONûTHEûWATCHûOFû3IRû THEûGROUPûSTAGEûOFûTHEû7ORLDû#UPûCOMPAREDûTOûMOREû $OUGLAS û*OHNûMAYûHAVEûTOûLIVEûAûLITTLEûIFûHEûWANTSûAûGONGûATû INEXPRESSIVEûTEAMSv THEûENDûOFûHISûTENUREû Who’s moving where…

MUFG promoted Bill now has 175 Frederic Jallot, head New York-based BANK OF NEW of sales and Davidson to lead its technology clients of credit trading at brokerage AUERBACH YORK MELLON has relationship technology sector globally, with about NOMURA, is to leave GRAYSON has hired hired Stephan management, will within the bank’s two-thirds based in the the bank only a year Angel de la Fuente as Koschmieder to head focus on BNY Mellon’s global corporate and US. Davidson, based in after joining from head of equities to lead business development custody, depositary investment banking San Francisco, is Citigroup, where he the ﬁrm’s global sales for Germany, Austria and fund accounting group. As global head keeping his role as was head of EMEA and research initiatives. and the Central and services. of technology banking, head of the US credit trading. Last De La Fuente joined Eastern Europe region. Davidson will focus on technology banking month Nomura’s head from Kepler Cheuvreux, In the newly created deepening existing team. of equities and where he was country role, Koschmieder, who relationships and execution services head for North America. spent 11 years at increasing MUFG’s Todd Sandoz left to Prior to that he worked Euroclear as the client roster. The bank join Barclays. at JP Morgan. director and unit head

18 International Financing Review June 16 2018 People &Markets BNP Paribas shakes up Americas CIB leadership BNP PARIBASûNAMEDûJean-Yves FillionûCHAIRMANû REGIONALLYûANDûTOû9ANNû'ERARDIN û".0SûHEADû 6EYRESûJOINSûTHEû!MERICASûTEAMû OFûITSû!MERICASûCORPORATEûANDûINVESTMENTû OFûCORPORATEûANDûINSTITUTIONALûBANKING û FROMû".0Sû!SIAû0ACIlCûGROUP ûWHEREû banking group in addition to his current GLOBALLYû(AWLEYûHASûBEENûWITHû".0û0ARIBASû HEûHASûSERVEDûASûTHEû#%/ûOFûTHEû".0û ROLEûASûCHIEFûEXECUTIVEûOFû".0û0ARIBASû53! SINCEû ûWORKINGûINû4OKYO û(ONGû+ONG û 0ARIBASû3INGAPOREûBRANCHûASûWELLûASû &ILLIONûHASûBEENûWITHû".0û0ARIBASûFORûû ,ONDONûANDû.EWû9ORK THEûHEADûOFû#)"û3OUTHEASTû!SIAûSINCEû YEARS ûûOFûWHICHûHEûHASûSPENTûINûTHEû53û)Nû "OTHûPROMOTIONSûAREûEFFECTIVEû /CTOBERûû(EûWILLûREPORTûTOû HISûEXPANDEDûROLEûHEûWILLûBEûRESPONSIBLEûFORû IMMEDIATELY (AWLEY THEûBANKSûREGIONALûCORPORATEûSTRATEGYûANDû Pierre VeyresûWASûNAMEDûDEPUTYûHEADûOFû#)"û Philippe RicardûWASûNAMEDûCHIEFûOPERATINGû WILLûSPONSORûTHEûBANKSûRELATIONSHIPSûWITHû !MERICAS ûSUCCEEDINGû(AWLEY ûEFFECTIVEû OFlCERûINûTHEû#)"ûREPLACINGû"RUNOûD)LLIERS û THEûREGIONSûMOSTûIMPORTANTûCLIENTSûANDû 3EPTEMBERûû(EûWASûALSOûNAMEDûHEADûOFûTHEû WHOûRELOCATESûTOû0ARIS ûEFFECTIVEû!UGUSTûû EXTERNALûSTAKEHOLDERS CORPORATEûPLATFORMû!MERICAS ûWHICHûINCLUDESû 2ICARDûWILLûCONTINUEûTOûSERVEûASû#//ûOFû".0û Bob HawleyûWILLûREPLACEû&ILLIONûASû#%/ûOFû CORPORATEûCOVERAGE ûlNANCINGûSOLUTIONS û 0ARIBASû53! THEû#)"ûGROUPûANDûWILLûREPORTûTOû&ILLIONû ADVISORY ûCREDITûANDûPORTFOLIOûMANAGEMENT Philip Scipio BAML hires industrials dealmaker Slaughter

BANK OF AMERICA MERRILL LYNCH has hired û(EûPREVIOUSLYûSPENTûûYEARSûATû*0û (ARMANûLASTûYEAR û*OHNSONû#ONTROLSûDEALûFORû EXPERIENCEDûDEALMAKERûLarry Slaughter as -ORGAN ûINCLUDINGûASûCO HEADûOFû%UROPEANû 4YCOûINûûANDû'%SûPURCHASEûOFû!LSTOMSû EXECUTIVEûVICEûCHAIRMANûOFûITSûGLOBALû -!ûANDûCHAIRMANûOFûDIVERSIlEDûINDUSTRIALS ENERGYûBUSINESSûINû CORPORATEûANDûINVESTMENTûBANKINGûBUSINESS û 3LAUGHTERûHASûSPENTûTHEûLASTûlVEûYEARSûINû "!-,ûSAIDûHEûISûTHEûBANKSûlRSTûEXECUTIVEû FOCUSEDûMAINLYûONûINDUSTRIALûCLIENTS .EWû9ORK ûBUTûTHEû!MERICANûSPENTûMOREûTHANû VICEûCHAIRMANûAPPOINTEDûOUTSIDEûTHEû53ûANDû 3LAUGHTERûWILLûJOINû"!-,ûFROMû,AZARD û ûYEARSûINû,ONDONûPREVIOUSLY ûANDûWORKEDûONû WILLûREPORTûTOû#HRISTIANû-EISSNER ûHEADûOFû WHEREûHEûHASûBEENûVICEûCHAIRMANûOFû MANYûBIGûCROSS BORDERûDEALSûINûTHEûINDUSTRIALSû '#)" INVESTMENTûBANKINGûSINCEûJOININGûINû*UNEû SECTOR ûINCLUDINGû3AMSUNGSûPURCHASEûOFû Steve Slater HSBC hooks Salmon from BoE to oversee markets conduct

HSBCûHASûHIREDûSENIORû"ANKûOFû%NGLANDû MARKETSûANDûTHEû5+SûOFlCIALûFOREIGNû MONITORINGûANDûREMEDIATINGûCONTROLû EXECUTIVEûChris Salmon ASûITSûGLOBALûCHIEFû EXCHANGEûRESERVESûONûBEHALFûOFû(-û4REASURY FAILURES CONTROLûOFlCERûFORûGLOBALûMARKETSûINûITSû That included increased scrutiny on He will replace Kevin Sawle, who is retiring INVESTMENTûBANK lNANCIALûMARKETûCONDUCT ûANDû3ALMONûWASû ATûTHEûENDûOFûTHEûYEARû3AWLEûHASûSPENTûû 3ALMONûWILLûJOINû(3"#ûINû3EPTEMBERûANDû ONEûOFûTHEûARCHITECTSûOFûTHEûGLOBALûCODEûOFû YEARSûATû(3"# ûMOSTLYûINûGLOBALûMARKETS û BEûRESPONSIBLEûFORûTHEûRISKûANDûCONTROLû CONDUCTûFORûFOREIGNûEXCHANGEûMARKETSûTHATû ACROSSûFOREIGNûEXCHANGE ûRATESûANDûEMERGINGû ENVIRONMENTûWITHINûGLOBALûMARKETS ûWITHûAû WASûLAUNCHEDûLASTûYEARû(ISûPREVIOUSûROLESûATû MARKETSû(EûHASûBEENûCHIEFûCONTROLûOFlCERû PARTICULARûFOCUSûONûCONDUCTûANDûSUPERVISION û THEû"O%ûINCLUDEûEXECUTIVEûDIRECTORûANDûCHIEFû SINCEû ACCORDINGûTOûAûMEMOûTOûSTAFFûSEENûBYû)&2 CASHIERûFORûBANKINGûSERVICESûFROMûûTOû 3ALMONûWILLûSITûONû(3"#SûGLOBALûMARKETSû 3ALMONûHASûWORKEDûFORûMOREûTHANûû ûANDûPRIVATEûSECRETARYûTOû-ERVYNû+INGû EXECUTIVEûCOMMITTEEûANDûREPORTûTOû4HIBAUTû YEARSûATûTHEû"ANKûOFû%NGLANDû3INCEû ûHEû FORûTHREEûYEARSûWHENûHEûWASûGOVERNOR DEû2OUX ûGLOBALûHEADûOFûMARKETS ûANDû2UPERTû HASûBEENûEXECUTIVEûDIRECTORûFORûMARKETS û (3"#ûSAIDû3ALMONSûROLEûWILLûINCLUDEû *OLLEY ûCHIEFûCONTROLûOFlCERûFORûGLOBALû LEADINGûTHEûMANAGEMENTûOFûTHEûCENTRALû ENSURINGûCONSISTENTûGOVERNANCEûOFûRISKû BANKINGûANDûMARKETS BANKSûPOLICYûOPERATIONSûINûlNANCIALû ACROSSûTHEûGLOBALûMARKETSûPLATFORMûANDû Steve Slater

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BANK OF AMERICA Morrison has worked Felicity Chan has east Asia real estate in Dimitar Karaivanov Pranjal Srivastava, MERRILL LYNCH has at BAML for 12 years, been named CREDIT the investment has joined LAZARD’s head of equity capital appointed Gordon starting in Sydney in SUISSE’s head of banking and capital middle market markets at ICICI Morrison as head of 2006 before equity syndicate for markets business. advisory practice as a SECURITIES, has natural resources for transferring to London south-east Asia. Chan Voon was earlier part managing director. resigned, a source Australia and New in 2011 and then was earlier part of the of the Singapore Karaivanov was said. His next move is Zealand. Based in Houston in 2015. He is South-East Asia equity property equity previously at RBC not known. Srivastava Sydney, he will oversee due to relocate in capital markets team research team and has Capital Markets where was with the ﬁrm for a coverage across September. and has been with the been with the bank for he advised ﬁnancial total of 20 years. metals and mining, oil bank for 14 years. 12 years. institutions. and gas, Credit Suisse also transportation and appointed Yvonne power and utilities. Voon as head of south-

International Financing Review June 16 2018 19 h!ûTIGHTû##!2ûRESULTûMAYûSPEEDûUPûTHEû DELEVERAGINGûOFûTHEûWHOLEû53ûBUSINESSv MORGAN STANLEY ANALYST MAGDALENA STOKLOSA ON DEUTSCHE BANK, P15 Capital markets week ahead: Blocked pipeline, Bayer, Agibank CLEARING THE BLOCKAGEû#HOPPYûMARKETSû 3PECTRUMû"RANDSûBATTERIESûANDûLIGHTINGû TAKING A PUNTû5NIVERSITYûOFû#AMBRIDGEûISû DURINGûTHEûLASTûFEWûWEEKSûHAVEûLEDûTOûAûBITûOFû BUSINESSES ûAûDEALûTHATûHASûPROMPTEDûAû SETûTOûBRINGûTHEûBIGGESTûBONDûDEALûSEENûSOûFARû AûBACKLOGûINûTHEûBONDûPIPELINE ûWITHûALMOSTû DOWNGRADEûFROMû-OODYSû#IRSA û THISûYEARûINûTHEûSTERLINGûMARKETû7HILEûTHEû ûDEALSûACROSSûTHEûWORLDûSTUCKûINûLIMBOû MEANWHILE ûISûTAPPINGûMARKETSûTOûFUNDûITSû EXPECTEDûSIZEûHASûNOTûBEENûDISCLOSED û )TALIANûISSUERSûINûPARTICULARûHAVEûBEENûSHUTû BUYOUTûBYû"LACKSTONE -OODYSûSAIDûTHEûPROPOSEDûISSUANCE ûTOûBEû out, with issuers including shipbuilder RATEDû!AA ûWASûFORûUPûTOûaMû0ARTûOFû &INCANTIERI ûTOLLûROADûOPERATORû!TLANTIA ûOILû GOING PUBLICû!FTERûûYEARSûASûAûPRIVATEû #AMBRIDGESûOFFERINGûMIGHTûBEûINû#0) LINKEDû PRODUCERû%NIûANDûLENDERû"ANCAû#ARIGEûALLû COMPANY û3WISSûENGINEERINGûCOMPANYû FORMATûANDûHAVEûANûAMORTISINGûSTRUCTUREû SITTINGûONûSTALLEDûDEALS +LINGELNBERGûMAKESûITSûSTOCKûMARKETûDEBUTû AFTERûTHEûlRSTûûYEARS "UTûWITHûSENTIMENTûIMPROVING ûANDû ONû4UESDAYû)TSûRAISINGûUPûTOû3&RMû IMPORTANTûMEETINGSûFROMûTHEû53û&EDERALû 53M ûFROMûTHEû)0/ ûWITHûMOSTûOFûTHEû 2ESERVEûANDû%UROPEANû#ENTRALû"ANKûLASTû PROCEEDSûGOINGûTOûTHEûFOUNDINGûFAMILY û WEEKûOUTûTHEûWAY ûBANKERSûAREûHOPEFULûTHATû WHICHûISûSELLINGûABOUTûHALFûITSûSTAKEû"ANKERSû the blockage in the pipeline will begin to on the deal said last week that the deal was CLEARû7ITHûlNANCIALSûSETûTOûGOûSTALEûATûTHEû COVEREDûWITHINûAûDAYûOFûLAUNCHING ENDûOFûTHEûQUARTERûINûJUSTûAûCOUPLEûOFûWEEKS û BONDûMARKETSûCOULDûBEûSETûFORûAûBUSYû BOOTING UPû"ANKSûMEETûTHISûWEEKûTOûDISCUSSûAû FORTNIGHT 53BNûLOANûBACKINGûTHEûACQUISITIONûOFû"-#û 3OFTWAREûBYû++2û4HEûPRIVATEûEQUITYûlRMûSAIDûINû -AYûTHATûITûPLANNEDûTOûBUYû"-#ûFROMûAûGROUPûLEDû BYûRIVALSû"AINû#APITALûANDû'OLDENû'ATEû#APITALûINû ALL STRESSED OUTû4HEû53û&EDERALû2ESERVEû AûDEALûVALUEDûATû53BNû$ISCUSSIONSûWILLûTAKEû RELEASESûTHEûRESULTSûOFûTHEûlRSTûPARTûOFûITSû PLACEûINû,ONDONûONû-ONDAY ûBEFOREûMOVINGûONû STRESSûTESTSûONû4HURSDAY ûAHEADûOFûAûSECONDû TOû.EWû9ORKûONû4UESDAYû#REDITû3UISSEûISûLEADINGû ROUNDûOFûRESULTSûDUEûAûWEEKûLATERû4HEûTESTSû THEûTRANSACTION AREûMANDATEDûUNDERûTHEû$ODD &RANKû!CT û ANDûAREûAûFORWARD LOOKINGûASSESSMENTûOFû ECO-WARRIOR û3ENTIMENTûTOWARDSûEMERGINGû CAPITALûSUFlCIENCYû2ESULTSûFROMûTHEûTESTSû MARKETûISSUERSûHASûTAKENûAûBIGûKNOCKûOVERû WILLûBEûAûKEYûDETERMINANTûINûWHETHERûTHEûBIGû RECENTûWEEKS ûBUTûTHATûHASNTûPUTûOFFûPAN BANKSûCANûMAKEûPAYOUTSûTOûSHAREHOLDERS SEED FUNDINGû"AYERûWRAPSûUPûAûõBNûRIGHTSû !FRICANûLENDERû%COBANK ûWHICHûISûMEETINGû ISSUEûONû4UESDAY ûTHEûlRSTûSTEPûINûAûMAJORû INVESTORSûTHISûWEEKûAHEADûOFûITSûBONDûMARKETû THE LAST RITES Indian engineering CAPITALûRAISEûFROMûTHEû'ERMANûDRUGMAKERûASû DEBUTû/NEûSOURCEûCLOSEûTOûTHEûDEALûSAIDûhTHERESû CONSULTANCYûlRMû2ITESûHOPESûTOûPRICEûITSû ITûSEEKSûTOûREPAYûAû53BNûBANKûLOANûTAKENû MERITûINûHAVINGûINVESTORûENGAGEMENTvûANDûSAIDû -UMBAIûDEBUTûONû&RIDAY ûALMOSTûAûDECADEûAFTERû OUTûTOûFUNDûITSûPURCHASEûOFûAGRO CHEMICALû AûDECISIONûWILLûBEûMADEûABOUTûWHETHERûAûDEALû THEûLISTINGûWASûlRSTûPROPOSEDû)TSûSEEKINGûUPû GIANTû-ONSANTOû4HEûCOMPANYûISûALSOû MATERIALISESûONCEûMEETINGSûAREûOVER TOû2SBNû53M ûFROMûTHEûLISTING û PLANNINGûTOûISSUEûõBNûOFûBONDSûINûDOLLARSû PROVIDINGûAûNICEûPAYDAYûFORûTHEûGOVERNMENT û ANDûEUROS ûPOSSIBLYûASûEARLYûASûTHISûWEEKû4HEû OPENING A NEW ACCOUNTû5+ûLENDERû-ETROû"ANKû WHICHûISûALSOûPLANNINGûTOûSELLûSTAKESûINûFOURû 53BNûACQUISITION ûlRSTûANNOUNCEDûû ISûEXPECTEDûTOûMAKEûITSûBONDûMARKETûDEBUTûWITHû OTHERûCOMPANIESûOVERûTHEûCOMINGûMONTHSû!Nû MONTHSûAGO ûlNALLYûCLOSEDûEARLIERûTHISûMONTH Aû4IERûûCAPITALûRAISEûTHATûWILLûBEûUSEDûTOûBOLSTERû )0/ûWASûPLANNEDûINû ûBUTûWASûPULLEDû ITSûBALANCEûSHEETûANDûFUNDûFURTHERûGROWû/NLYû BECAUSEûOFûWEAKûMARKETûCONDITIONS THE REAL DEALû"RAZILIANûLENDERû!GIBANKû FOUNDEDûINû ûONEûOFûAûNUMBERûOFûNEWûSO HOPESûTOûRAISEû2BNû53M ûFROMûITSû CALLEDûCHALLENGERûBANKSûINûTHEû5+ ûTHEûlRMûHASû )0/ûONû4HURSDAYû*USTûOVERûHALFûOFûTHEû RAISEDûOVERûaBNûOFûEQUITYûnûINCLUDINGûaMû LAST WEEK IN NUMBERS proceeds will go towards strengthening the FROMûAûLISTINGûTWOûYEARSûAGOû7ILLûlXEDûINCOMEû US$180bn –û$EBTûOWEDûBYû!44ûONCEûITSû BANKSûCAPITALûBUFFERS ûWHILEûTHEûREMAINDERû INVESTORSûBEûASûWELCOMING ACQUISITIONûOFû4IMEû7ARNER ûAPPROVEDû WILLûGOûTOû#%/ûANDûMAJORITYûSHAREHOLDERû last week, goes through -ARCIANOû4ESTA ûWHOûISûUSINGûTHEûDEALûTOûCASHû PUBLIC PROPERTYû53ûREALûESTATEûINVESTMENTû Six –û-ONTHSûLEFTûFORûTHEû%#"SûõTRNû OUTû!GIBANKûHASûGROWNûRAPIDLYûINûRECENTû TRUSTû%SSENTIALû0ROPERTIESûHOPESûTOûRAISEû ASSETûPURCHASEûPROGRAMME ûWHICHûENDSû YEARSûANDûSEESûFURTHERûPOTENTIALûINûTHEû 53MûFROMûITSû)0/ûONû7EDNESDAYû4HEû INû$ECEMBER COUNTRYSûUNDER BANKEDûMIDDLEûCLASS 2%)4ûOWNSûûPROPERTIES ûWHICHûAREûMOSTLYû €300m –û!MOUNTûTHATû$UTCHûINSURERû leased to tenants such as restaurants, car 6IVATûRAISEDûTHROUGHûAûPERPETUALûNON CALLû RECHARGING THE BATTERIES High-yield WASHES ûCONVENIENCEûSTORES ûAUTOûSHOPSûANDû SEVENû24ûISSUANCE ISSUERSû%NERGIZERûANDû#IRSAû'AMINGûAREûSETû GYMSû)TûWASûCREATEDûTWOûYEARSûAGOûWHENû US$1bn –û3HIPPINGûLOANSûOFmOADEDûBYû TOûVISITûTHEûMARKET ûWITHûBOTHûEYEINGû FAMILYûINVESTMENTûlRMû%LDRIDGEû)NDUSTRIESû $EUTSCHEû"ANK ûASûITûSEEKSûTOûDRAWûAûLINEû FUNDINGûFORûCROSS BORDERûACQUISITIONSû53û BOUGHTûAûPORTFOLIOûOFûûPROPERTIESûFROMû UNDERûITSûPROBLEMS BATTERYûMANUFACTURERû%NERGIZERûISûBUYINGû 'ENERALû%LECTRICû#APITAL

20 International Financing Review June 16 2018 People &Markets

CASESûIMPOSSIBLE ûWITHOUTûAûLOCALûSUBSIDIARYv StanChart eyes two Asian hubs )Nû&EBRUARY û3TAN#HARTûSAIDûITûWOULDûFULLYû STANDARD CHARTERED is looking at LINESû)TûINCLUDEDûHALVINGûTHEûNUMBERûOFû CONSOLIDATEûITSû3INGAPOREûOPERATIONSûINTOûITSû consolidating its Asian businesses in two REGIONALûDIVISIONSûTOûFOURû'REATERû#HINAûANDû LOCALûSUBSIDIARY û3TANDARDû#HARTEREDû"ANKû MAINûHUBSûINû(ONGû+ONGûANDû3INGAPOREûASûITû .ORTHû!SIAû!3%!.ûANDû3OUTHû!SIAû!FRICAûANDû 3INGAPORE û4HEûBANKûSAIDûITûWOULDûTRANSFERû CONTINUESûTOûSTREAMLINEûITSûOPERATIONS THEû-IDDLEû%ASTûANDû%UROPEûANDûTHEû!MERICAS ITSûCOMMERCIAL ûCORPORATEûANDûINSTITUTIONAL û 4HEûEMERGINGûMARKETSûLENDERûWOULDûRUNû h4HISûISûINûLINEûWITHû3TANDARDû#HARTEREDSû ANDûPRIVATEûBANKINGûBUSINESSESûFROMûTHEû MOSTûOFûITSû3OUTH %ASTû!SIANûANDû3OUTHû!SIANû TRANSITIONûINûTHEûLASTûCOUPLEûOFûYEARS vûSAIDû LOCALûBRANCHûINTOûTHEûSUBSIDIARY BUSINESSESûFROMû3INGAPOREûANDûITSû.ORTHû ONEûSOURCEûh4HEYVEûBEENûBURNEDûINûTHEûPASTû The Anglo-Asian bank incorporated its !SIANûUNITSûFROMû(ONGû+ONG ûTWOûSOURCESû ANDûHAVEûBEENûPARINGûBACKûTHEIRûPRESENCEûINû 3INGAPOREANûSUBSIDIARYûINû ûTRANSFERRINGû FAMILIARûWITHûTHEûPROCESSûSAID AûNUMBERûOFûMARKETSû4HEIRûPLANSûAREûAû its retail and business banking businesses as “The group is strongly capitalised and is SYMPTOMûOFûTHATûOVERALLûDE RISKINGv WELLûASûPARTSûOFûITSûCOMMERCIALûBANKINGûUNITû highly liquid, and as you would expect, we It is unclear at this stage whether plans to )TûSAIDûITûEXPECTEDûTOûTRANSFERûTHEûTHREEûOTHERû CONTINUALLYûLOOKûATûWAYSûOFûOPTIMISINGûTHEû CONSOLIDATEûSOMEûENTITIESûWILLûINVOLVEûCLOSINGû BUSINESSESûWITHINûTHEûNEXTûûTOûûMONTHS û GROUPSûCAPITALûANDûLIQUIDITYûSTRUCTURES vûTHEû DOWNûANYûLOCALûSUBSIDIARIESûORûSIMPLYû SUBJECTûTOûREGULATORYûAPPROVAL BANKûSAID TRANSFERRINGûCERTAINûASSETSûTOûTHEûLARGERû 4HEûMOVEûWASûINTERPRETEDûATûTHEûTIMEûASû 3INCEûTAKINGûUPûTHEûREINSûTHREEûYEARSûAGO û 3INGAPOREûANDû(ONGû+ONGûSUBSIDIARIES ANûEFFORTûTOûMEETûINTERNALû4,!#û CHIEFûEXECUTIVEû"ILLû7INTERSûHASûSPENTûAûGOODû !NALYSTSûSAIDû3TAN#HARTûCOULDûCONDUCTûAû REQUIREMENTS ûSETûBYûTHEû&INANCIALû3TABILITYû CHUNKûOFûHISûTIMEûEXITINGûAûNUMBERûOFûMARKETSû LOTûOFûITSûBUSINESSûTHROUGHûITSûHUBS ûALTHOUGHû "OARD ûFORûMATERIALûSUBSIDIARIESûOFûGLOBALû ANDûSIMPLIFYINGûAûCORPORATEûSTRUCTUREûTHATûHADû THEûBANKûMAYûSTILLûRELYûONûLOCALûSUBSIDIARIESû SYSTEMICALLYûIMPORTANTûBANKS COMEûTOûBEûSEENûASûTOOûSPRAWLINGûANDûUNWIELDY FORûCERTAINûPRODUCTS 4HEû&3"ûLISTSûAûNUMBERûOFûREQUIREMENTSûFORû %ARLIERûTHISûYEAR û3TAN#HARTûSOLDûITSûûSTAKEû h)TûDEPENDSûONûWHATûTHEûBUSINESSûIS vûSAIDû WHENûAû' 3)"ûSUBSIDIARYûQUALIlESûASûMATERIALû INû!SIAû#OMMERCIALû"ANK ûBRINGINGûTOûANûENDû -ICHAELû0ULI ûASSOCIATEûDIRECTORûATû30ûINû INCLUDINGûIFûITûHOLDSûMOREûTHANûûOFûTHEû ITSû YEARûPARTNERSHIPûWITHûTHEû6IETNAMESEû 3INGAPOREûh)FûITSûAû53ûDOLLARûLOAN ûTHEYûCANû GROUPSûTOTALûRISK WEIGHTEDûASSETSû!CCORDINGû LENDERû4HEûBANKûHADûALREADYûSOLDûITSûRETAILû DOûTHATûOUTûOFû3INGAPOREû'IVENûTHEYûHAVEûAû TOûRESEARCHûFROMû&ITCH ûTHEû3INGAPOREANû BUSINESSESûINûTHEû0HILIPPINESûANDû4HAILAND STRONGûTRADEûlNANCEûBUSINESS ûTHEYûCANûDOû SUBSIDIARYûWILLûACCOUNTûFORûûOFû3TAN#HARTSû )Nû û7INTERSûANNOUNCEDûPLANSûTOû THATûFROMû3INGAPORE ûWHEREASûFORûRETAILû ASSETSûPOST MERGER ûUPûFROMûûCURRENTLY REORGANISEûTEAMSûONûGEOGRAPHICûANDûBUSINESSû BANKING ûITûBECOMESûVERYûDIFlCULT ûORûINûSOMEû Thomas Blott StanChart to hire 750 for new Warsaw ofﬁce

!SIA FOCUSEDûBANKûSTANDARD CHARTERED said it INTERNATIONALûBANKSûANDûOTHERûCOMPANIES û INû#HINA û)NDIAûANDû-ALAYSIAûnûWILLûBEû was setting up a new global business PARTLYûDUEûTOûITSûCHEAPERûLABOURûCOSTS run by Rowena Everson, who has been SERVICESûHUBûINûTHEû0OLISHûCAPITALûOFû7ARSAW û 7ALLû3TREETûBANKSû'OLDMANû3ACHSûANDû*0û PROMOTEDûTOûCHIEFûEXECUTIVEûOFû3TANDARDû THEûLATESTûEXPANSIONûBYûAûMAJORûBANKûOUTSIDEû -ORGANûHAVEûSAIDûTHEYûAREûALSOûPLANNINGûTOû #HARTEREDûGLOBALûBUSINESSûSERVICESûINû ,ONDON û%UROPESûBIGGESTûlNANCIALûCENTRE INCREASEûTHEIRûPRESENCEûTHERE 0OLANDûFROMûHERûCURRENTûROLEûASûAûMANAGINGû !ûSPOKESMANûFORû3TAN#HARTûSAIDûTHEû 3TANDARDû#HARTEREDSûNEWûOFlCE ûWHICHûISû DIRECTORûANDûHEADûOFûBUSINESSûSUPPORT û 7ARSAWûOFlCEûWASûLIKELYûTOûHOUSEûASûMANYû EXPECTEDûTOûOPENûINû3EPTEMBER ûWILLûHOUSEûAû RISKûANDûGOVERNANCEûFORû%UROPEûBASEDûINû ASûûSTAFFûWITHINûTHEûNEXTûlVEûYEARS ûASû RANGEûOFûOPERATIONSûSERVINGûTHEûBANKSû ,ONDON FUNCTIONSûNORMALLYûPERFORMEDûBYûITSû!SIANû GROWINGû%UROPEANûANDû53ûCLIENTûBASE û 4HEûDECISIONûTOûSETûUPûITSûlRSTû%UROPEANû GLOBALûBUSINESSûHUBSûMIGRATEûTOû7ARSAW INCLUDINGûTECHNOLOGYûANDûlNANCEûSERVICES û GLOBALûBUSINESSûSERVICESûHUBûINû0OLAND û 0OLAND ûBYûFARûTHEûLARGESTûCOUNTRYûINûTHEû cyber security, and traditional banking RATHERûTHANû"RITAINûnûWHEREûTHEûBANKûHASûITSû %UROPEANû5NIONSûEASTERNûWING ûHASûHADû ACTIVITIES HEADQUARTERSûnûHADûNOTHINGûTOûDOûWITHû STRONGûECONOMICûGROWTHûOVERûTHEûPASTû 4HEû7ARSAWûOPERATIONûnûWHICHûJOINSû "REXIT ûTHEûSPOKESMANûADDED DECADEûANDûHASûPROVEDûATTRACTIVEûFORû AûNETWORKûOFûSIMILARLYûSTRUCTUREDûHUBSû Sinead Cruise, Lawrence White Deutsche ofﬂoads US$1bn of shipping loans

DEUTSCHE BANKûHASûFOUNDûBUYERSûFORûTHEûBULKû DECLINEDûTOûCOMMENT ûWHILEû6ARDEûWASûNOTû FORûVARIOUSûREASONSûITûHASûNOTûHAPPENEDû4HISû OFûITSûBADûSHIPûLOANSûASûITûSEEKSûTOûDRAWûAûLINEû IMMEDIATELYûAVAILABLEûFORûCOMMENT TIMEûROUNDûTHEYûHAVEûBEENûMOREûFOCUSEDû UNDERûSOURûINVESTMENTSûINûTHEûSECTORûANDûTOû 4HEREûWASûNOûWORDûONûTHEûPRICEûTAGûFORû ANDûDECISIVE vûONEûOFûTHEûSOURCESûSAID STARTûAûFRESHûPUSHûINûTRANSPORTûLENDING û THEûBUNDLEûOFûLOANS $EUTSCHEû"ANKûHASûBEENûLOOKINGûTOûSHRINKû PEOPLEûCLOSEûTOûTHEûMATTERûSAID &INANCEûSOURCESûSAIDûTHEûPORTFOLIOûWASû ITSûEXPOSUREûTOûSHIPPINGûANDûOTHERûMARITIMEû 'ERMANYSûmAGSHIPûLENDERûHASûAGREEDûTOû EXPECTEDûTOûINCLUDEûSOMEûPERFORMINGûLOANSûFROMû LENDING ûSUCHûASûPORTûFACILITIES ûOVERûTHEûLASTû SELLûAûNON PERFORMINGûSHIPûLOANûPORTFOLIOû SHIPOWNERSûRATHERûTHANûJUSTûDISTRESSEDûDEBT COUPLEûOFûYEARSû!TûTHEûENDûOFû-ARCH ûITSû WITHûAûNOTIONALûVALUEûOFû53BNûTOûINVESTORSû h$EUTSCHEûHASûMADEûVARIOUSûEFFORTSûTOûTRYû EXPOSUREûTOûTHEûOVERALLûSECTORûSTOODûATûõBN û /AKû(ILLû!DVISORSûANDû6ARDE ûONEûOFûTHEû ANDûRECONlGUREûPARTSûOFûITSûPORTFOLIOû OFûWHICHûõBNûWEREûFORûVESSELûlNANCING SOURCESûSAIDû$EUTSCHEû"ANKûANDû/AKû(ILLû INCLUDINGûSALESûOVERûTHEûPASTûTWOûYEARSû"UTû Jonathan Saul

International Financing Review June 16 2018 21 h!FTERûAûPERIODûOFûRESTRUCTURING ûITûISûNOWû TIMEûFORû(3"#ûTOûGETûBACKûINTOûGROWTHûMODEv HSBC CEO JOHN FLINT, P16

New German senior bank debt to aid Deutsche’s derivatives

DEUTSCHE BANKSûDERIVATIVESûBUSINESSûCOULDû WHICHûHAVEûNOTûCHANGEDûTHEûCLASSIlCATIONSû 4HATûISûSTILLûBELOWûTHEûBPûLEVELûITû RECEIVEûAûlLLIPûFROMûPLANSûBYû'ERMANYûTOû OFûTHEIRûBANKSûDEBT TOUCHEDûINû3EPTEMBERû ûWHENûINVESTORSû ALLOWûITSûBANKSûTOûISSUEûAûNEWûFORMûOFûSENIORû 4HATûHASûNOTûPROVEDûTOOûONEROUSûFORûMANYû FEAREDû$EUTSCHEûMIGHTûHAVEûTOûPAYûUPûTOû UNSECUREDûDEBTûFROMû*ULYû LENDERS ûSINCEûTHEYûHOLDûSIGNIlCANTûLEVELSûOFû 53BNûINûlNES 'ERMANûBANKSûHAVEûBEENûCONSIDEREDûATûAû deposits that pay next to no interest at )Fû$EUTSCHEûWEREûABLEûTOûISSUEûAûMOREû DISADVANTAGEûTOûRIVALSûINû&RANCEûANDûOTHERû PRESENTû(OWEVER ûFORûTHOSEûWRITINGû SENIORûFORMûOFûDEBTûAGAIN ûTHENûTHEû#$3û EUROZONEûCOUNTRIESûAFTERûLEGISLATORSûSAIDûINû DERIVATIVESûITûHASûPROVEDûEXPENSIVE ûSINCEû AGAINSTûTHATûWOULDûPROBABLYûBEûLOWEREVELSû ûTHATûITSûOUTSTANDINGûDEBTûINûTHISûCLASSû THEIRûCREDITûDERIVATIVESûHAVEûBEENûPRICEDû )NûTURN ûTHEûBANKûWOULDûBECOMEûAûMOREû SHOULDûBEûSUBORDINATEDûINûORDERûTOûQUALIFYûASû AGAINSTûTHEûMOSTûSENIORûOUTSTANDINGûDEBT ATTRACTIVEûCOUNTERPARTYûFORûTHOSEûWISHINGûTOû CAPITALûTHATûCANûBEûBAILEDûIN !SûTHISûISûNOWûSUBORDINATED ûSUCHû#$3ûISû DOûDERIVATIVESûTRANSACTIONSûWITHûTHEûBANK 4HATûHELPEDû'ERMANûBANKSûINûTHEûSHORTû WIDERûSINCEûITûISûMOREûLIKELYûTOûPAYûOUTû4HATû h4HESEûRATINGSûAREûIMPORTANTûNOTûJUSTûFROMû TERM ûBYûENSURINGûTHEYûCOMPLIEDûSWIFTLYûWITHû MAKESûITûMOREûEXPENSIVEûFORûPOTENTIALû AûFUNDINGûCOSTûPERSPECTIVE ûBUTûALSOûFROMûAû NEWû%UROPEANûRULESûTHATûCAMEûINûATûTHEûSTARTû COUNTERPARTIESûINûDERIVATIVESûTRADESûTOûDEALû COUNTERPARTYûPERSPECTIVE vûSAIDû!MITû'OEL û OFûûREQUIRINGûBANKSûTOûBUILDûUPûSUCHû WITHû'ERMANûBANKSûSUCHûASû$EUTSCHEûSINCEû ANALYSTûATû"ARCLAYS ûINûAûNOTEûh#LIENTSûOFû CAPITAL ûCALLEDûTHEûMINIMUMûREQUIREMENTûFORû THEYûHAVEûTOûPAYûMOREûTOûHEDGEûPOSITIONSû $EUTSCHEû"ANKûWILLûBEûREFERENCINGûEITHERûTHEû OWNûFUNDSûANDûELIGIBLEûLIABILITIES ûORû-2%, THROUGHûBUYINGû#$3 SENIORûPREFERREDûORûSENIORûUNSECUREDv 4HEûRECENTûDOWNGRADEûOFûTHISûhSENIORû 'OELûSAIDûMOREûTHANûûOFûCOUNTERPARTIESû COUNTERPARTY PERSPECTIVE PREFERREDvûCLASSûOFû$EUTSCHESûDEBTûTOû4RIPLEû WEREûREFERENCINGûTHEûSENIORûPREFERRED ûWHICHû "UTûITûHASûALSOûMEANTûTHATû'ERMANûBANKSû " ûBYû30ûHASûEXACERBATEDûTHISû4HEûBANKSû HADûBEENûDOWNGRADEDû7ITHûITûNOWûhTWOû WISHINGûTOûSUPPLEMENTûTHEIRûSENIORûDEBTû lVE YEARû#$3ûMOVEDûOUTûFROMûBPûTOû notches below the nearest peer, this we HAVEûHADûTOûPAYûHIGHERûCOUPONSûCOMPAREDû BPûDURINGû-AYûASûTHEûMARKETûFRETTEDûOVERû THINKûWILLûLEADûTOûFURTHERûMARKETûSHAREûLOSSv with peers in other European countries, $EUTSCHESûFUTUREûSTRATEGY Christopher Spink

FROM THE ARCHIVE: 10 years ago this week THE FINANCIAL CRISIS

fail, the UK regulator called for Shake-up at Lehman after Vale to build war chest a review of capital-raising by US$2.8bn loss Brazilian mining giant Vale filed listed companies, and has taken Lehman Brothers went cap-in-hand documents with securities regulators immediate action to improve the to its top shareholders once again last for what stands to be the largest-ever transparency of short-selling in week, and followed up with a stunning equity offering by a Latin American rights issue stocks. overhaul of top management. The company. Vale plans to raise up In the current markets, the result was the demotions of CFO Erin to US$15bn by selling preferred stakes are certainly high. Last week Callan and COO Joseph Gregory. and voting shares in the US and alone saw US$56bn-equivalent A US$6bn capital increase was in Brazil in an all-primary offering. raised from rights issues in Europe, designed to calm nervous investors It filed for a US$14bn deal, with a of which US$34bn was from just alongside the pre-announcement of US$1bn overallotment option likely two UK deals – RBS and Imperial a larger-than-expected, US$2.8bn to be added, according to company From June 14 2008 issue Tobacco. European ECM volumes loss for the second quarter. officials. FSA takes aim at the right to short this year almost doubled as a result Estimated revenues in capital Despite the size of the deal, The £4bn HBOS rights issue of last week’s activity. markets are negative US$2.4bn, analysts in the US and in Brazil teetered on the verge of collapse last While the FSA continues to including negative US$3bn in fixed agree that this is just the tip of the week when aggressive short-selling view short-selling as a legitimate income and a drop in ECM revenues iceberg. Vale provided few details on sent the stock tumbling through technique in assisting liquidity, the from US$1.4bn to US$600m. its plans, providing only a boilerplate the 275p rights offer price. Coming regulator stressed its concern that Callan, who was still in place at “proceeds will be used for general hot on the heels of the difficulties the rights issue process provides the launch of the capital increase corporate purposes, which may surrounding the Bradford & Bingley greater scope for activity that last Monday, said that the bank had include financing its programme of rights issue, the prospect of a failed might amount to market abuse, achieved its target over the quarter of organic growth based on its US$59bn rights issue from the UK banking particularly in volatile conditions. reducing gross and net leverage to less investment plan, strategic acquisitions sector stirred the Financial Services Therefore, as of June 20, all short- than 25 times and less than 12.5 times, and increased financial flexibility”. Authority into action. selling in companies undertaking respectively, before the capital increase. For analysts, the last part of the In a bid to avoid the catastrophic rights issues must be disclosed The bank had been energetically selling statement sent a clear message: implications for the country’s where the position relates to 0.25% off pieces of its portfolios of mortgages Vale is out shopping and it plans to financial system were a deal to or more of the issued shares. and other problematic loans. spend big.

22 International Financing Review June 16 2018 People &Markets

Markets may not price Brexit IN BRIEF ANZ CUTS risks until they hit AUSTRALIA AND NEW ZEALAND BANKING GROUP said it will cut about 60 staff positions from its markets !ûCATASTROPHIC ûMESSYû"REXITûMIGHTûBEûLOOMINGû AGREEMENTûONûAû MONTHûPOST "REXITû division across the world due to “challenging” FORû"RITAINûNEXTûYEARûBUTûJUDGINGûBYûHOWûTHEû TRANSITIONûMAYûHAVEûSOOTHEDûNERVES conditions and “ongoing headwinds”. The job cuts POUNDûISûTRADING ûONEûWOULDûHARDLYûKNOWûITû impact 30 employees in Australia and a similar )NCREASINGLY ûITûSEEMSûAûRISKûISûNOTûAûRISKûFORû WHERE’S THE VOL? number across Asia, Europe and the United lNANCIALûMARKETSûUNTILûITûACTUALLYûHITS )NVESTORSûRECKONûMARKETSûHAVEûSTOPPEDûSECOND States, equating to roughly 7% of its workforce. 4HEûCALMûINûSTERLINGûATûSUCHûAûJUNCTUREûISû GUESSINGû"REXITûTALKS ûPREFERRINGûTOûSITûONûTHEû ANZ has found itself at the centre of one of LEADINGûSOMEûTOûDRAWûPARALLELSûWITHû)TALYSû SIDELINESûUNTILûTHEûCRUNCHûPOINTûFORûAVOIDINGûAû Australia’s biggest cases of alleged white-collar MINI CRISISûWHEREû ûMONTHSûOFûRELATIVEû hHARDvûORûDISORDERLYû"REXITûHITSûHOME crime following cartel conduct investigation by the CALMûFOLLOWINGû-ARCHûûELECTIONSûEXPLODEDû !SûAûRESULT ûLEVELSûOFûVOLATILITYûINûTHEûPOUNDû country’s competition watchdog over a A$2.5bn ONTOûMARKETSûATûTHEûENDûOFû-AY ûPROMPTINGû AGAINSTûTHEûDOLLARûHAVEûALMOSTûHALVEDûSINCEû stock issue, and Australian banks are also being PANICKYûLAST MINUTEûSELLING *ANUARYû!GAINSTûTHEûEUROûVOLATILITYûISûWELLû investigated for a series of bad behaviour. 4HEûPOUND ûWHICHûCRASHEDûTOû YEARûLOWSû BELOWûTHEûûAVERAGE The bank said conditions were challenging and AGAINSTûTHEûDOLLARûIMMEDIATELYûAFTERû"RITAINSû h-ARKETSûRETAINûAûSENSEûOFû@NOTHINGûISû it had to respond to headwinds. *UNEûûVOTEûTOûLEAVEûTHEû%UROPEANû5NION û AGREEDûUNTILûEVERYTHINGûISûAGREED vûSAIDû-IKEû HASûSINCEûRECOVEREDûABOUTûHALFûOFûTHOSEûLOSSESû !MEY ûHEADûOFûSTERLINGûPORTFOLIOSûATû0IMCO WIN WIN In recent weeks it has traded within tight 4HEûSIGNSûAREûTHATûINVESTORSûAREûNOTû New York’s highest court curbed the state attorney RANGESûEVENûASûDEBATESûONûHOWûTOûEXITûnû PREPARINGûFORûBIGûMOVESû)MPLIEDûVOLATILITY ûAû general’s ability to fight fraud on Wall Street, WITHINû,ONDONSûPOLITICALûESTABLISHMENTûANDû MEASUREûOFûEXPECTEDûPRICEûSWINGS ûISûTWO awarding a victory to CREDIT SUISSE as it tries WITHû"RUSSELSûnûGROWûMOREûHEATED THIRDSûOFûITSûûHIGHûANDûISûBELOWûYEAR AGOû to end a US$11bn lawsuit over risky mortgage 4HATûISûDESPITEûTHEûPOSSIBILITY ûALBEITûSLIM û LEVELS securities. The state Court of Appeals said New OFûAûhNO DEALû"REXITvûnûEXITINGûTHEû%5ûWITHOUTû !NOTHERûDERIVATIVEûMARKETûPOSITIONINGû York’s top law enforcement officer has just three AûTRADEûAGREEMENTûINûPLACE GAUGE ûRISKûREVERSALS ûSHOWSûTHATûDEMANDûFORû years to bring claims under the Martin Act, a 1921 4HEûREASONûMIGHTûBEûTHATûCURRENTû CALLûOPTIONSûONûTHEûPOUNDûnûESSENTIALLYûAûVIEWû law granting that office broad power to pursue EXCHANGEûRATESûnûûBELOWûPRE REFERENDUMû ANûASSETûWILLûCLIMBûINûVALUEûnûHASûRISENûINû civil and criminal cases over securities fraud LEVELSûnûADEQUATELYûPRICEûTHATûWORST CASEû RECENTûMONTHS ûCOMPAREDûWITHûDEMANDûFORû without having to prove intent to defraud. SCENARIOû/RûTHATûMARKETSûAREûCONlDENTûTHEû put options, which are used to hedge against It overturned earlier decisions saying the WORSTûWILLûBEûAVERTED PRICEûDECLINES attorney general should have six years to bring "UTûTHEûCALMûMAYûALSOûREmECTûAûBROADERûSHIFTû 4HEûOVERALLûGAUGEûHASûTURNEDûLESSûNEGATIVE û claims. INûMARKETûPSYCHOLOGY ûINCREASINGLYûEVIDENTûINû SUGGESTINGûMARKETSûHAVEûBECOMEûLESSû The decision could doom a November 2012 recent years, whereby risk is ignored until it CONCERNEDûABOUTûAûNO DEAL lawsuit brought by then-Attorney General Eric hits traders squarely between the eyes - the Schneiderman accusing Credit Suisse of lying MOSTûRECENTûEXAMPLEûBEINGû)TALY DOING NOTHING about the quality of RMBS loans it sold in 2006 h.OûONEûSEEMSûTOûHAVEûAûCLUEûWHATSûGOINGû -ARKETûRELUCTANCEûTOûPRICEû"REXITûSCENARIOSû and 2007, resulting in big losses for investors. TOûHAPPENûORûEVENûWHATûTHEûWORSTûCASEû INûADVANCEûHASûECHOESûOFûOTHERûBIGûBINARYû Credit Suisse also said last week it will get SCENARIOûWILLûBEû)NûLIGHTûOFûTHATûTHEû EVENTS ûINCLUDINGûTHEû"REXITûREFERENDUMû US$385m from its bankruptcy claim against PREVAILINGûATTITUDEûISûLETSûJUSTûIGNOREû"REXITû ITSELF ûTHEû53ûELECTIONûOUTCOMEûANDûTHEûû Lehman Brothers Holdings, less than the FORûNOWûANDûFOCUSûONûTHEû"ANKûOFû%NGLANDSû 3COTTISHûINDEPENDENCEûVOTE US$1.2bn it sought from the failed US investment RATEûHIKES vûSAIDû-ARKUSû3CHOMER ûCHIEFû )NûALLûTHOSEûCASES ûTRADERSûPREFERREDûTOû bank for terminated derivatives transactions. ECONOMISTûATû0INE"RIDGEû)NVESTMENTS TRADEûONûNEAR TERMûNEWS ûIGNORINGûOTHERû )TûWASûEXPECTATIONSûOFû"O%ûRATEûHIKESûTHATû POSSIBILITIESûUNTILûTHEYûBECOMEûREALITY BREAKING BAD? DROVEûSPECULATORSûBULLISHûSTERLINGûPOSITIONSû 5+ûSTOCKSûTOOûMIRRORûTHEûFALLûINû"REXITû India has set up a panel of experts to explore TOûTHREE YEARûHIGHSûINû&EBRUARY ûBUTûASûPOLICYû SENSITIVITYû5+ûSTOCKSûHAVEûBOUNCEDûBACKûANDû mechanisms for resolving the burgeoning bad tightening bets ebbed, positioning has HIGHûSTREETûBETTINGûINTERESTûHASûDWINDLEDûnû debts plaguing its financial sector, including the RETURNEDûTOûNEUTRAL û53û#OMMODITYû&UTURESû AMOUNTSûWAGEREDûINû-AYûWEREûLESSûTHANûAû establishment of a “bad bank”, the country’s 4RADINGû#OMMISSIONûDATAûSHOW THIRDûOFû*ANUARY û"ETFAIRûSAID interim finance minister said. 0RIMEû-INISTERû4HERESAû-AYSûVICTORYûLASTû h)ûDONTûWANTûTOûSAYûMARKETSûAREûNOTûRATIONALû The panel, which has been given two weeks WEEKûINûDEFUSINGûAûPARLIAMENTARYûREBELLIONû BUTûITûFEELSûLIKEûTHATSûTHEûWAYûRATIONALûMARKETû to submit its recommendations, will examine OVERûTHEûGOVERNMENTSû%5ûWITHDRAWALûBILLû actors are dealing with risks that they are whether banks need to set up an asset DIDûFUELûAûSMALLûSTERLINGûBOUNCEû"UTûTHATûHASû UNABLEûTOûPRICEûnûJUSTûASSUMEûTHEûWORSTûCASEûORû reconstruction company or asset management ALREADYûlZZLEDûOUT SAYûLETSûDOûNOTHINGûANDûFOCUSûONûSOMETHINGû company to take up the stressed assets from their -AYSûWINûMAKESûAûhNOûDEALvûSCENARIO ûTHEû ELSE vû0INE"RIDGESû3CHOMERûSAID balance sheets. ONEûMOSTûFEAREDûBYûMARKETS ûLESSûLIKELYû"UTûITû "UTûMARKETSûAREûHARDLYûPRICINGûTHEûWORSTû Indian banks, already burdened by a near- DOESûNOTûOVERCOMEûOTHERûHURDLESûAGREEINGû NO DEALûSCENARIO record Rs9.5trn (US$141bn) of soured loans as of WHATûSORTûOFû"REXITûDEALûHERûPARTYûWANTS ûANDû 3TERLINGûHASûRECOVEREDûHALFûITSûPOST last year, reported a further rise in bad loans in the THENûGETTINGûTHEûNODûFROMûTHEû%5 REFERENDUMûPLUNGEûFROMû53ûTOûBELOWû first quarter after the central bank withdrew half a ,ASTûYEAR ûTHEûPOUNDûSWUNGûONûALMOSTû 53û dozen loan-restructuring schemes and tightened EVERYû"REXITûHEADLINE ûBUTûAû-ARCHû Tommy Wilkes,Tom Finn some rules.

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SSAR 27 Corporates 30 FIG 34 Covered Bonds 39 High-Yield 40 Structured Finance 42

FRONT STORY EUROPEAN CREDIT ECB signals ready, steady go for primary ECB tone prompts talk of heavy supply BTPs lead the charge in tightening

Dovish guidance from the ECB on interest The big test will come with German REmECTIONûOFûDIFFERENCESûBETWEENû rates on Thursday offered the much chemicals company BAYER’s jumbo offering JURISDICTIONSûANDûISSUERûPROlLES hoped-for signal that issuers were wanting, to fund its takeover of US seed maker At the other end of the risk scale, the with a host of mandates promising plenty Monsanto. Although the bulk of the BANKûCAPITALûMARKETûWILLûGETûITSûlRSTûTESTûINû of primary activity in the coming days. US$20bn-equivalent funding will come nearly two months, a €100m AT1 deal from “The market is primed for action, after from the US dollar market, the euro part is Sydbank in May notwithstanding, after [last] week’s central bank action,” said Chris still likely to be the biggest in that sector Portugal’s CAIXA GERAL DE DEPOSITOS announced Tuffey, head of investment-grade capital for several weeks (see separate story). a Tier 2 mandate (see separate story). markets at Credit Suisse. “We think there is “We still have a good four weeks before The deal sums up a more bullish mood a sizeable pipeline ready and waiting.” the summer break starts to kick in,” said a towards peripheral debt over the last few second banker. “There’s a situation where days. The spread between 10-year Bunds we could see a fair level of activity, but right and BTPs compressed to 220bp on Friday, “We have seen NIPs quite high wnow I don’t see a lot of issuers willing to go for example, having touched 300bp in late compared to one month ago, THEûSAMEûDAYûASû"AYERû"AYERûWILLûBEûlRSTûTOû May and 270bp on June 8. and you might still need to start be cleared and this might incite some other Fears about a Eurosceptic direction in generous next week. But we issuers to pull the trigger.” Italian politics - and what that would mean It was not just investment-grade for the ECB’s ability and desire to support the have seen some transactions CORPORATESûTAKINGûCONlDENCEûFROMûTHEû bond markets - had led investors to lighten tighten by 20bp, and conﬁdence %#"SûDOVISHûREASSURANCEû)NûlNANCIALS û POSITIONSûANDûBEûSHORTûEUROûCREDITûFORûTHEûlRSTû should come back.” NORDEA BANKûJUMPEDûTHEûQUEUEûWITHûAûlVE time since September 2011, according to a year senior non-preferred, while LBBW was investor survey conducted by BAML. out with a covered trade, although that And, therefore, the US bank reckons the market has been relatively busy as other market reaction to the ECB meeting “can Some borrowers decided to get in ahead funding markets largely dried up. simply be explained by the exceptionally of the expected wave of supply by pricing Societe Generale analysts said the ECB’s bearish positioning of investors, most deals on Friday. In the investment-grade decisions were neutral for covered bonds, NOTABLYûINûlNANCIALSv corporate market, German conglomerate but that they expect issuers in the asset As investors cover more shorts, further JAB HOLDINGS, French utility ENGIE and class to have to offer higher concessions, tightening in credit spreads is likely, Swedish car safety supplier AUTOLIV all which will in turn cause widening in though how long the rally lasts remains to jumped into a market that has the wind at secondary spreads. be seen. Sustained rallies have proven its back after the ECB tempered any They said reduced involvement by the DIFlCULTûTHROUGHOUTûTHEûCOURSEûOFûTHISû concerns that it will adopt a hawkish tone central bank will mean a more accurate year, though at least investors now have ANYTIMEûSOON ûEVENûASûITûOUTLINEDûTHEûlNALû more clarity about the ECB’s QE phase of its asset purchase programme. RISKS EASE programme. Although it is too soon to draw any THE SPREAD BETWEEN 10-YEAR BUNDS AND BTPs In addition to stating that interest rates DElNITIVEûCONCLUSIONS ûBANKERSûWILLûTAKEûSOMEû will not be hiked until at least mid-2019, comfort that new issue concessions could be bp the central bank’s president, Mario Draghi, 300 smaller than the average of recent weeks. said that net asset purchases will be halved 280 For example, Engie (A2/A-/A), priced a €750m to €15bn a month from October, with the 260 10-year with a 5bp premium at 50bp over mid- FORMALû1%ûPROGRAMMEûlNISHINGûATûTHEûENDû 240 swaps, 15bp tighter than initial levels. of the year. 220 Even Single A rated corporates, such as However, that does not mean the ECB 200 German energy company Innogy, were will be turning off the taps. 180 having to pay double-digit concessions in “Unlike the Fed, the ECB will not be 160 late May and early June. reducing the size of its balance sheet by 140 “We have seen NIPs quite high allowing bonds to run off,” said Chris Iggo, 120 compared to one month ago, and you CHIEFûINVESTMENTûOFlCERûFORûlXEDûINCOMEû 100 might still need to start generous next 01/03/ 01/04 01/05 01/06 at AXA Investment Managers. week,” said a syndicate banker. “But we 2018 “In other words, the ECB put remains in have seen some transactions tighten by place for a long time to come.” BP ûANDûCONlDENCEûSHOULDûCOMEûBACKv Source: Thomson Reuters Robert Hogg, Pauline Renaud

International Financing Review June 16 2018 25 Bayer to make history with WEEK IN NUMBERS Monsanto acquisition funding 31% THE PERCENTAGE OF RESPONDENTS Demand set to be strong despite issuance format TO BAML’S MONTHLY INVESTOR SURVEY WHO THINK A TRADE WAR IS THE BIGGEST 'ERMANûCHEMICALSûlRMûBAYER is this week “While there aren’t many synergies, Bayer TAIL RISK TO MARKETS. TRADE TENSIONS likely to price one of the largest 144A/Reg S is looking at the growth of populations in HAVE BEEN THE MOST DOMINANT MACRO format multi-tranche bonds ever seen in the emerging markets and ageing populations RISK FOR INVESTORS THIS YEAR US dollar market, and follow it with a jumbo and is seeing an increasing need within % Biggest risks euro trade to fund its US$63bn takeover of healthcare and an increasing demand for 35 US seed maker Monsanto. higher-quality food,” Hebert said. 30 Bankers and investors said they expect If anything, two downgrades in recent 25 Bayer to raise at least US$14bn in bonds with weeks may push up Bayer’s pricing 20 no SEC registration rights, with maturities premium. The last time the company issued, 15 across the curve from three to 30 years. it was Single A. But since the Monsanto 10 It will then tap the euro market with a acquisition, ratings agencies have differing 5 multi-tranche, multi-billion euro deal. opinions about the credit. 0 Trade war Fed/ECB hawkish Euro/EM The bonds, because of their 144A/Reg S for S&P cut it by two notches to BBB on June 4 policy mistake debt crisis life format, may not be eligible to enter on expectations of higher leverage. Moody’s Source: BAML many bond indices, although the response is downgraded it one notch to Baa1. The still expected to be overwhelming. company still has an A- rating from Fitch. “Bayer is a name that is underheld and there The acquisition will increase Bayer’s US$180bn will be a lot of interest - particularly for those adjusted debt/Ebitda to about 3.5 times two THE AMOUNT OF DEBT THAT AT&T IS who believe in the deleveraging story,” said YEARSûAFTERûCLOSING ûBUTûFREEûCASHmOWû EXPECTED TO HAVE OUTSTANDING ONCE ITS 'REGORYû3TAPLES ûCO HEADûOFûlXEDûINCOMEû.ORTHû generation of €3.0bn-€3.5bn annually should ACQUISITION OF TIME WARNER, WHICH WAS America at Deutsche Asset Management. enable it to gradually delever, S&P analysts APPROVED LAST WEEK, GOES THROUGH Bayer has not done a US dollar deal since said. 2014, according to IFR data. And Monsanto’s Leads on the US dollar leg are Bank of last US dollar deal was priced in 2015. America Merrill Lynch, Credit Suisse, Goldman 39.76bp The 144A/Reg S format may not hurt Sachs, HSBC and JP Morgan. THE SPREAD ON THURSDAY BETWEEN interest for the bonds but investors could TWO AND 10-YEAR TREASURY YIELDS, demand a few basis points in premium for EURO MARKET TEST WHICH COMPRESSED FURTHER FOLLOWING it, said bankers. 4HEûEUROûLEGûWILLûBEû"AYERSûlRSTûSINCEû-ARCHû LAST WEEK’S FOMC. THE CURVE HAS BEEN The 144A rule was introduced to 2015, when it printed a €1.3bn hybrid, with FLATTENING SINCE LATE 2016 encourage non-US companies and private a lead saying the company is very cash- bp lRMSûTOûTAPûTHEûMARKETûWITHOUTûHAVINGûTOû generative and does not typically need to 150 undergo the disclosure requirements of a issue debt. 120 full public SEC registration. With volatility having taken its toll on

While it makes for a cheaper format, 144A supply over the past few weeks, bankers 90 deals have historically not been included in expect the jumbo trade, with maturities major bond indices, meaning that many ranging from four to 12 years, to be a good 60 index-dedicated funds could not buy them. test for the European market. However, since 2014, all 144A corporate “I don’t think a Bayer trade will 30 bond deals became TRACE-eligible and necessarily reprice the market, but it might 4/1/17 4/7/17 4/1/16 4/1/18 4/3/17 4/7/16 4/5/17 4/9/17 4/3/16 4/3/18 4/5/16 4/9/16 4/5/18 4/11/17 therefore have more price clarity. affect multi-tranche deals in terms of curve 4/11/16 “It’s not as large an issue as it was in prior and what they need to pay between the years,” Eddie Hebert, managing director at different maturities,” said the banker. PPM America, said. “A lot of 144A names trade But bankers and investors alike think the €300m more often and most are included in indices.” market will have no problem absorbing THE AMOUNT THAT DUTCH INSURER But because Bayer has opted to issue its Bayer’s deal given the recent dearth of VIVAT RAISED THROUGH A PERP NON- bonds without registration rights, they supply. CALL SEVEN RT1 ISSUANCE LAST WEEK, might not be included in some indices. In “Recent books have been pretty big so far €50m MORE THAN THE MINIMUM SIZE IT the end, however, that may not matter. because investors have cash on the sidelines HAD VERBALLY TOLD THE MARKET. THE “Investors like diversity and this deal will provide that they’re looking to put to work,” said DEAL, WHICH PRICED IN LINE WITH INITIAL that along with liquidity because of its size, so the one portfolio manager. GUIDANCE AT 7%, COULD IN THEORY HAVE 144A format would only mean maybe a few basis “People know that Bayer has been coming RAISED UP TO €500m points in concession,” said a senior banker. for a long time, so they’ve made space for it. Investors said they were excited about the )ûTHINKûITûWILLûGOûlNEûBUTûITûWILLûNEEDûTOûCOMEû growth story. with generous premiums, in the 20bp-30bp €1.024bn Bayer announced its bid for Monsanto in bracket.” THE AMOUNT THE ECB BOUGHT 2016 but had to go several rounds with Leads on the euro deal are Barclays, BNP THROUGH ITS CSPP IN TRADES SETTLED antitrust regulators in Europe and US to get Paribas, Citigroup and Credit Suisse. IN THE WEEK UP TO JUNE 8 the takeover approved. Eleanor Duncan, Pauline Renaud In total, it has bought €158.364bn

26 International Financing Review June 16 2018 BONDS SSAR

Cades set the spread for the €1bn notes The agency has been systematically due October 2023 in line with guidance at shrinking its funding programme of late. SSAR OATs plus 14bp. Leads saw that as around After raising €8.7bn in the mid and long- 3bp back of fair value. term markets in 2017, it aims to issue €4bn “Versus OATs it looked good, but on an in 2017. US DOLLARS absolute swaps basis I thought it was Teams from Cades and Agence France extremely tight,” said one banker away. Tresor announced a merger at the beginning KOMMUNINVEST OFFERS SOLE DOLLAR “This was only a handful of basis points back of October 2017, with Cades transferring HIGHLIGHT of KfW, which clearly doesn’t work given operational responsibility for all its funding the credit differentials. One is a Bund proxy, activities to AFT. In a week of thin US dollar supply from SSA the other is Double A French risk.” “The market needs to get their head issuers, KOMMUNINVEST brought the solitary Cades is rated Aa2 by Moody’s and AA by round the fact that the days of the €3bn trade with a US$2.5bn sale. Fitch. A lead saw the spread which Cades was trade from Cades have gone,” said the 4HEû3WEDISHûLOCALûGOVERNMENTûlNANCINGû able to achieve as a positive development. lead. “The borrowing needs of Cades will agency returned to dollars only two weeks “France is at a super-tight level, so I think after its last visit to the greenback, placing therefore Cades was impressive from this ALL US DOLLAR FIXED-RATE GLOBALS new paper due October 2020 before the point of view,” said the lead. “It was a record BOOKRUNNERS: 1/1/2018 TO DATE window shuts for summer. low of 2bp back of KfW, where it is usually Managing No of Total Share “The summer is approaching, which will in the mid-teens. This was probably Cades’ bank or group issues US$(m) (%) see a slowdown in different regions, so after TIGHTESTûPRINTûVERSUSûITSûPEERSûINûlVEûYEARSv 1 BAML 106 38,754.69 11.4 a relatively quiet start to the year #ADES ûWHICHûISûINûCHARGEûOFûlNANCINGûANDû 2 JP Morgan 104 36,554.43 10.7 Kommuninvest are addressing their needs amortising French social security debt, has 3 Citigroup 98 32,465.96 9.5 now,” said a lead after the mandate was amortised over half of the debt it assumed 4 Barclays 59 31,779.58 9.3 ANNOUNCEDûh)TûDElNITELYûHELPSûTHATûTHEû since Cades was founded in 1996, taking the 5 Goldman Sachs 66 27,599.36 8.1 dollar market has been very robust.” sum to €139.5bn at the end of 2017. 6 Wells Fargo 62 21,212.05 6.2 Dollar issuance at the beginning of June The deal was the second offering from 7 Deutsche Bank 39 17,898.31 5.3 went smoothly after a slow May, with Cades this year, after the issuer sold a US$2bn 8 RBC 43 17,703.97 5.2 pent-up demand unleashed upon the likes three-year in January at swaps plus 10bp. 9 HSBC 36 17,401.41 5.1 of KfW and Denmark’s municipal funding The banker away questioned the size that 10 Morgan Stanley 55 15,802.90 4.6 agency KommuneKredit. Cades was able to take out of the market in its Total 207 340,792.88 In May, Triple A rated Kommuninvest latest trade. The lead defended the size given Excluding equity-related debt, ABS/MBS. printed US$1bn March 2021s on books of RECENTûCHANGESûINûTHEûISSUERSûISSUANCEûPROlLE Source: Thomson Reuters SDC code: O5 more than US$2bn despite pricing through its curve at swaps plus 6bp. The notes had ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS tightened by Monday to be bid at around BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE plus 4bp, according to Tradeweb. Managing No of Total Share Managing No of Total Share Bank of America Merrill Lynch, Citigroup, SEB bank or group issues US$(m) (%) bank or group issues €(m) (%) and TD were bookrunners. 1 JP Morgan 544 144,348.54 7.4 1 BNP Paribas 176 42,080.67 7.0 2 Citigroup 501 135,366.42 6.9 2 SG 155 37,640.16 6.3 3 Barclays 375 120,329.47 6.2 3 Deutsche Bank 163 35,179.65 5.8 EUROS 4 HSBC 488 113,947.61 5.8 4 JP Morgan 137 34,587.10 5.8 5 BAML 408 105,440.46 5.4 5 Credit Agricole 135 34,358.07 5.7 FRENCH PUT THEIR STAMP ON SSA 6 Goldman Sachs 300 99,823.11 5.1 6 HSBC 178 32,873.78 5.5 7 Deutsche Bank 392 95,408.33 4.9 7 Barclays 110 30,164.16 5.0 Three French issuers jumped at the chance to 8 BNP Paribas 329 80,074.07 4.1 8 UniCredit 146 28,442.37 4.7 issue before the ECB meeting on Thursday, 9 Morgan Stanley 292 74,220.51 3.8 9 Goldman Sachs 81 25,748.78 4.3 ALTHOUGHûITûWASûDIFlCULTûTOûPICKûOUTûAûWINNERûWITHû 10 SG 218 56,006.50 2.9 10 Citigroup 106 24,280.10 4.0 KfW and ESM stealing much of the limelight. Total 2,739 1,948,365.27 Total 812 601,479.48 CADES drew comment for both the size of Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt, US Global ABS/MBS. US Global ABS/MBS. its €1bn trade, and pricing that came very close to KfW’s €5bn June 2023s. Source: Thomson Reuters SDC code: J1 Source: Thomson Reuters SDC code: N1

EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING JUNE 13 2018 Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover Jun 12 2018 Netherlands €2.15bn 0.000 Jan 15 2024 0.090 — Jun 12 2018 Finland €986m 1.125 Apr 15 2034 1.126 1.30 Jun 13 2018 Italy €2bn 0.050 Apr 15 2021 1.160 1.67 Jun 13 2018 Italy €2.13bn 1.450 May 15 2025 2.370 1.34 Jun 13 2018 Italy €468m 3.250 Sep 1 2046 3.420 1.95 Jun 13 2018 Italy €1.033bn 3.450 Mar 1 2048 3.540 1.30 Jun 13 2018 Switzerland SFr206.2m 0.500 Jun 27 2032 0.296 2.33 Jun 13 2018 Portugal €412m 4.950 Oct 25 2023 0.746 2.72 Jun 13 2018 Portugal €588m 2.125 Oct 17 2028 1.919 2.28 Jun 13 2018 Germany €1.535bn 0.500 Feb 15 2028 0.480 1.08 Source: IFR

International Financing Review June 16 2018 27 decrease, so they don’t need to borrow a liked,” said a lead. “We were just below KFW ESCHEWS PRICE FOR SIZE large size. This is about the right project full subscription, but only missed by a at the right price.” very small margin, so there’s nothing to KFWûHASûRETURNEDûTOûTHEûlVE YEARûPOINTûOFûTHEû The books closed at €1.65bn, including be concerned about when it comes to curve for a trade that went big on size, €350m of lead interest. secondary trading.” although at the cost of moving the pricing The lead said the timing of the trade made needle. AFL INCHES OVER LINE sense despite the presence of two major The Triple A rated agency sold February players in the market on the same day, 2023s earlier this year at swaps less 26bp. AGENCE FRANCE LOCALE had to wrestle its way given the ECB meeting due on Thursday and This time round, it raised €5bn in June TOûTHEûlNISHûLINEûONû4UESDAY ûASûTHEû BETTERûSENTIMENTûTHANKSûTOû)TALYûAFlRMINGû 2023s, in line with initial guidance at swaps French agency found its €500m no-grow its commitment to the euro. less 24bp. 10-year overshadowed by both KfW and h4HEûFUNDINGûOFlCERûISûNOTûAûTRADER vûHEû That level was 3.5bp-4bp back from fair ESM being out on the same day. said. “If you want to bet on the ECB, go for VALUE ûWHICHûAûBANKERûAWAYûSAIDûREmECTEDû “The timing looks a bit unfortunate as it. But I would never blame an issuer for price sensitivity from investors before the we have the big trades with KfW issuing taking a window when the global macro ECB meeting and any potential implications and ESM basically in the same 10-year backdrop is good.” for QE. segment,” said a banker off the deal. “It was quite normal to start 4bp wide in “ESM is very appealing given the IDF TAKES GREEN BITE order to get the size, but the fact they’ve not liquidity, so it can be harder to get been able to tighten suggests investors are a traction for AFL and get close to the target ILE DE FRANCE pushed its curve out to bit nervous ahead of Thursday,” he said. LEVEL ûBUTû)ûTHINKûITûSHOULDûSTILLûBEûlNEv uncharted territory after opting for the Leads, however, said that the issuer had AFL’s last book update showed demand long end of a proposed 10 to 15-year adopted a pragmatic approach to pricing in short of the target size, at over €475m. maturity. order to secure a sizeable trade. The issuer set the spread at OATs plus The region, which mandated in late “It was a qualitative pricing process, in 30bp, unchanged from the previous day’s May for a benchmark transaction, opened that investors weren’t saying I want x IPTs. books on a €500m no-grow June 2033 million at x price, but were instead asking “It was a bit challenging, with KfW and Green bond. The deal’s tenor extended us to take into account the market ESM in the market, so we probably did beyond the €500m 12-year Green bond volatility,” said a lead. not get the full attention we would have that IdF sold in March 2017. “The KfW guys are seasoned funding The issuer started taking IoIs at OFlCERSûANDûKNEWûTHEREûWASûNOûPOINTû ALL AGENCY BONDS IN EUROS interpolated OATs plus low/mid 20s. jeopardising the transaction for 1bp of BOOKRUNNERS: 1/1/2018 TO DATE Guidance was set at plus 22bp area and tightening. Better to secure a nice deal with Managing No of Total Share then revised to plus 21bp (+/-1bp), before good secondary performance rather than bank or group issues €(m) (%) printing at the tight end. trying to grab a last single basis point.” 1 JP Morgan 15 5,670.63 9.5 Books closed in excess of €1bn, Leads saw the notes trading 2.5bp tighter 2 Credit Agricole 15 5,454.74 9.1 excluding lead interest. in the secondary market, which for them 3 Goldman Sachs 8 5,055.92 8.4 “It had very strong domestic support,” REmECTEDûSTRONGûQUALITYûINûTHEûORDERûBOOK 4 Commerzbank 10 4,215.25 7.0 said a banker on the deal. “It’s a maturity Final demand was over €7.5bn, excluding 5 HSBC 15 4,104.93 6.8 that French insurers like, but we also had lead interest, with more than 130 individual 6 Deutsche Bank 11 3,889.14 6.5 the Netherlands and Germany involved.” orders. 7 SG 14 3,717.51 6.2 BNP Paribas, Credit Agricole and JP Morgan “The combination of top credit quality 8 BNP Paribas 8 3,154.32 5.3 led the Cades transaction. and liquidity remains a key attraction and 9 UniCredit 7 3,076.13 5.1 Joint leads for AFL were Barclays, Credit an anchor for international investors, 10 LBBW 9 2,787.38 4.6 Agricole and JP Morgan. especially in more uncertain times,” said Total 72 59,951.67 Credit Agricole, HSBC, Natixis and Societe Otto Weyhausen-Brinkmann, head of new Excluding equity-related debt. Including publicly owned institutions. Generale were the lead managers for Ile de issues at KfW. Source: Thomson Reuters SDC code: N6 France. Credit Agricole, Deutsche Bank and Goldman Sachs were lead managers. ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE ESM FINISHES QUARTER ON A HIGH Managing No of Total Share Managing No of Total Share bank or group issues €(m) (%) bank or group issues €(m) (%) The EUROPEAN STABILITY MECHANISM bolted a 1 Credit Agricole 14 5,703.28 12.4 1 UniCredit 25 3,139.44 13.1 further €1.5bn on to its March 2027s as the 2 Commerzbank 9 4,973.53 10.8 2 DGZ-DekaBank 19 2,955.60 12.3 issuer completed its funding programme for 3 UniCredit 6 3,795.35 8.2 3 HSBC 17 2,692.20 11.2 the quarter with a trade that was well 4 JP Morgan 7 3,735.22 8.1 4 LBBW 15 1,974.54 8.2 oversubscribed. 5 Barclays 6 3,706.15 8.0 5 Nord/LB 14 1,527.60 6.4 ESM’s reopening tempted in orders of 6 Goldman Sachs 5 2,839.64 6.2 6 JP Morgan 8 1,321.43 5.5 more than €4bn and it was also able to move 7 Deutsche Bank 7 2,666.55 5.8 7 Deutsche Bank 10 1,201.70 5.0 pricing by 1bp inside initial talk for a print 8 BAML 7 2,519.04 5.5 8 Credit Agricole 5 1,084.44 4.5 at swaps less 11bp. 9 SG 5 2,463.56 5.3 9 BBVA 5 950.36 4.0 “The size they wanted was the driver 10 HSBC 8 2,314.38 5.0 10 DZ Bank 8 764.24 3.2 behind them considering a tap,” said a lead. Total 43 46,127.99 Total 67 24,038.47 “They want to be out in the market like a Excluding ABS/MBS. Excluding ABS/MBS. sovereign, and give themselves a pretty Source: Thomson Reuters SDC code: N5 Source: Thomson Reuters SDC code: N7 strict calendar.”

28 International Financing Review June 16 2018 BONDS SSAR

4HEûOFFERINGûlNISHEDûTHEûSUPRANATIONALSû %5ûOFlCIALSûHAVEûREPEATEDLYûSAIDûTHEû funding requirement for this quarter and meeting will be crucial to seal Greece’s NON-CORE CURRENCIES followed a €2bn 15-year syndication in May. lNANCIALûFUTURE ûASûDECISIONSûWILLûNEEDûTOûBEû “Today’s strong order book shows that made on the use of about €40bn that is still CPPIB BRANCHES OUT INTO GREEN trust in the stability of the euro area is unspent under the €86bn eurozone-funded TERRITORY unbroken and that investors can see well bailout programme which expires on past the recent market volatility. This August 20. CANADA PENSION PLAN INVESTMENT BOARD has laid helped the ESM close its second consecutive /FlCIALSûAREûCONSIDERINGûSEVERALûOPTIONSû OUTûITSûINTENTIONûTOûBECOMEûTHEûlRSTûPENSIONû successful deal this year,” said Siegfried to reduce debt servicing costs for Athens, fund to issue a Green bond. Ruhl, ESM head of funding and investor including an extension of maturities and CPPIB has announced plans over the past relations. grace periods of up to 15 years on some year to invest more than C$3bn (US$2.3bn) The order book was dominated by banks, €130bn of loans issued to Greece under the in the renewable energy sector. which took 65% of the allocation. Fund second bailout. The proceeds of the sale will be used to managers took 16%, insurers and pensions They are also considering a buy-out of provide additional funding for CPPIB to funds 11% and central banks and sovereign expensive loans worth more than €20bn increase its holdings in renewables and wealth funds 8%. from the International Monetary Fund and ENERGY EFlCIENTûBUILDINGS The total size of the March 2027s will eurozone central banks due over the next The issuer’s overarching Green bond become €4.5bn following settlement of the decade. FRAMEWORKûDElNESûELIGIBLEûINVESTMENTû issue. They would be replaced with cheaper categories as wind and solar energy, Bank of America Merrill Lynch, Commerzbank loans from the European Stability sustainable water and wastewater and HSBC were the joint lead managers. Mechanism, the euro zone bailout fund. management, and green buildings. In exchange for accepting strict oversight Poul Winslow, global head of capital markets, KOMMUNEKREDIT SIGNALS of the implementation of structural said: “The issuance of Green bonds is a logical GREEN INTENTIONS reforms, including on tax and pensions, next step to CPPIB’s investment-focused approach Greece could also get next week new loans to climate change, and we are pleased to be a Denmark’s municipal funding agency OFûABOUTûõBN ûAûSENIORû%UROGROUPûOFlCIALû pioneer amongst pension funds in this regard.” KOMMUNEKREDIT has named leads for a Green bond. said on Wednesday. At the end of March 2018, the CPP Fund The Triple A rated issuer has appointed The loans, along with money already totalled US$356.1bn. Credit Agricole, JP Morgan and SEB as joint lead accumulated, would create a cash buffer for managers. Greece that would cover its borrowing needs RENTENBANK HARVESTS QUIET MARKET KommuneKredit begins its roadshow on for the next 18 to 24 months. It could June 18 and will also make itself available AMOUNTûTOûABOUTûõBN ûOFlCIALSûSAID German agriculture agency RENTENBANK (Aaa/ for investor calls. It is targeting a euro- That would facilitate Greece’s full return AAA/AAA) had the SSA Kangaroo market all denominated benchmark in the seven-year TOûMARKETûlNANCING ûANDûCOULDûALLOWû!THENSû to itself last week, where it raised A$200m to 10-year part of the curve. to issue bonds when market conditions are (US$150m) from an 11-year bond through better and yields lower, over the next 18 joint lead managers Deutsche Bank and Mizuho. GREECE NARROWS TIMING WINDOW months. The 3.20% May 25 2029s priced on FOR BOND !THENSûRETURNEDûTOûMARKETûlNANCINGûWITHû Thursday at 99.610 for a yield of 3.2425%, AûlVE YEARûBONDûINû*ULYûûANDûISSUEDûAû 42bp wide of asset swaps and 50.25bp over The Greek Government could discuss the seven-year bond in February, which the April 2029 ACGB. timing of a possible new bond issue after contributed to the cash buffer. THISûWEEKSûMEETINGûOFûEUROZONEûlNANCEû Reuters reported in early June that Greek AUCKLAND GOES GREEN ministers which is expected to decide on authorities had decided to push back by a debt relief measures for Athens, the few months plans for a new bond issue due AUCKLAND COUNCIL, rated Aa2/AA, has appointed economy minister said, reported Reuters. to increased political risk in Italy that has ANZ as arranger and lead manager and BNZ Heavily indebted Greece, shut out of bond rocked eurozone debt markets. and Westpac as co-managers for New markets in 2010, has gone to the markets twice over the last 12 months in a bid to ALL INTERNATIONAL US$ BONDS ALL SOVEREIGN BONDS IN EUROS build a cash buffer that could reassure BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE investors after its third bailout programme Managing No of Total Share Managing No of Total Share ends in August. bank or group issues US$(m) (%) bank or group issues €(m) (%) “All our efforts are focused on the 1 Citigroup 371 102,074.95 9.8 1 Barclays 13 10,043.53 11.9 Eurogroup of June 21 where we expect to 2 JP Morgan 357 94,792.36 9.1 2 Citigroup 15 8,718.69 10.4 have an agreement on debt relief,” Greece’s 3 BAML 304 77,369.31 7.5 3 JP Morgan 12 8,380.90 10.0 Alternate Minister of Economy and 4 Barclays 219 74,233.61 7.2 4 NatWest Markets 6 6,826.39 8.1 Development, Alexis Charitsis, told a news 5 Goldman Sachs 209 65,264.32 6.3 5 BNP Paribas 10 5,658.66 6.7 conference on Wednesday in Brussels. 6 HSBC 211 59,250.52 5.7 6 HSBC 9 5,546.89 6.6 Asked whether Greece could issue new 7 Morgan Stanley 203 55,399.89 5.3 7 SG 9 4,754.51 5.7 bonds before the end of its bailout 8 Wells Fargo 188 48,367.11 4.7 8 Goldman Sachs 7 3,723.50 4.4 programme, he said: “Any other discussions 9 Deutsche Bank 191 46,245.02 4.5 9 Santander Global 4 3,428.70 4.1 happen after the 21st”. 10 RBC 127 35,460.55 3.4 10 ING 3 3,087.00 3.7 4HEû%UROGROUPûOFûEUROûZONEûlNANCEû Total 1,197 1,036,456.57 Total 29 84,149.52 ministers will discuss possible new debt Including Euro, foreign and global issues. Excluding equity-related debt, Excluding ABS/MBS. US Global ABS/MBS. relief measures for Greece in the meeting in Luxembourg. Source: Thomson Reuters SDC code: O1 Source: Thomson Reuters SDC code: N4

International Financing Review June 16 2018 29 :EALANDSûlRSTûMUNICIPALû'REENûBONDûOFFER û expected to open this week. Rebellion without rebels: trying The council intends to raise up to NZ$150m (US$104m) plus an additional .:MûINûOVERSUBSCRIPTIONSûFORûAûlXED RATEû to change Bayer covenants lVE YEARûBONDûOFFEREDûTOû.EWû:EALANDûRETAILû and institutional investors. CORPORATES CreditSights throws hat into exchange offer ring 4HEûPROCEEDSûWILLûRElNANCEûDEBTûANDûBUYû electric trains and equipment. Independent research firm CreditSights has But it irked investors who felt they were not offered to help high-grade investors organise compensated enough for new Bayer bonds and engage pharmaceutical and chemicals (rated A3/A-), which may lack protections such company BAYER to improve terms on its proposed as change of control provisions and events of bond exchange offer. default clauses, said Brady. CORPORATES But the effort to bring a group of like-minded Moreover, as the new bonds come under a 144A investors together is falling short, even as M&A- format, they may not be eligible for all indices, related exchanges come under closer scrutiny. disqualifying them from certain investor portfolios. US DOLLARS “There is a short window of time to negotiate Bondholders would rather keep the Monsanto and investors could get better terms, but debt with a Bayer guarantee and original COMCAST PREPARES FINANCING unfortunately - apart from a few enquiries - we protections or exchange it, but only at a better FOR 21ST CENTURY FOX BUY don’t seem to be getting much interest from price than the one being offered, he said. bondholders to mobilise,” said Andrew Brady, Brady feels the time is ripe for negotiations COMCAST on Wednesday said it has “Highly analyst at CreditSights in New York. since Bayer is expected to raise over US$20bn of #ONlDENTû,ETTERSvûFROMûBank of America Bayer’s exchange offer, which comes on the bonds in dollars and euros to fund its Monsanto Merrill Lynch and Wells Fargo for its US$65bn back of its US$63bn takeover of Monsanto, acquisition. 21st Century Fox bid. expires on July 10. But if bondholders want to !ûh(IGHLYû#ONlDENTû,ETTERvûISûAûNOTEûFROMû get an early participation premium, they have to COMFORT VERSUS CONFRONTATION ANûINVESTMENTûBANKINGûlRMûTHATûSAYSûITûISû respond by June 25. The diffused nature of the global investor base in HIGHLYûCONlDENTûITûWILLûBEûABLEûTOûARRANGEû The lack of enthusiasm so far may be in part the US$6trn high-grade bond market has simply THEûlNANCINGûFORûAûSECURITIESûDEAL due to the changing make-up of investors, many made it difficult to even locate bond owners, let Comcast’s competing bid for 21st Century of whom are scattered around the globe. Also, alone get them in a group that could stand up to Fox is the largest all-cash deal of all time, investors holding high-grade debt are not likely to corporates. surpassing Bayer’s US$63bn merger with raise a fuss since their holdings are generally safe. Activism interest is limited also because unlike Monsanto, according to Thomson Reuters Indeed, high-yield or junk investors are quicker junk debt, there is little worry about a major Deal Insight data. to join forces, complain, fight and wrestle with default in high-grade. Comcast said its all-cash proposal is not issuers over covenants and exchanges. And in “It is usually an argument over a few basis SUBJECTûTOûAûlNANCINGûCONDITION some recent cases, have forced issuers to pull points [in high-grade], so not everyone is excited It is proposing to acquire 100% of deals and revamp their terms. about spending time fighting against changes in outstanding shares of 21st Century Fox for Nevertheless, CreditSights said it felt indentures,” said Brady. US$35.00 per share in cash. compelled to respond to some of the calls they He said in his experience with the industries he It also said it would reimburse the were getting about the proposed Bayer bond covers, high-grade issuers always got away with US$1.525bn break-up fee paid to 21st Century exchange. such “coercive” exchange offers and investors Fox by Disney for a total cost to Comcast of “We have been getting complaints from usually just complained and let it go. US$4.025bn in the “highly unlikely” scenario investors who feel forced to accept these There was one recent case of bondholders that Comcast’s transaction does not close. exchanges even though they are against their winning and that was only because they held “There was little in Comcast’s interests, only because they are not able to some 80% of one tranche and probably knew announcement to reassure its credit organise and present a united front,” said Brady. each other, Brady noted. investors,” CreditSights analysts wrote in a Bayer, just days after completing its That was when Potash Corp of Saskatchewan report Wednesday. acquisition of Monsanto, offered to exchange Inc and Agrium merged to form Nutrien. The The deal will take Comcast’s net leverage 16 tranches of Monsanto bonds for new Bayer terms on just one tranche out of 10 Agrium to above four times, according to executives notes. The German company also was seeking bonds that were exchanged by Nutrien in March speaking on a conference call Wednesday. investor consent to remove certain covenants were enhanced following push-back. That number would include the leverage and restrictive provisions. One banker admitted there has been incurred from Comcast’s acquisition of a Those consenting to this would get paid US$1 increased focus on the high-grade bond 39% stake of Sky, which the US media per US$1,000 principal and an extra US$50 for indentures and covenants, but push-back company is also hoping to buy. early participation. was limited because terms have not been too And if Comcast decides to pursue the “So, even though we don’t hold any bond egregious and demand still outstripped supply. remaining 61% of Sky, the company’s net positions, we decided to help them by offering There were grumbles recently, but little action leverage could rise again to 4.6 times, to organise a group of at least 50% of the yet, against QUALCOMM, which saved a point by CreditSights said. Monsanto bondholders that can engage with the making whole bonds at par ahead of a special “It is clear that Comcast no longer views company,” Brady said. mandatory redemption at 101. itself as a Single A credit,” analysts wrote. The offer at first glance seems a Analysts said the move could hurt their ability One analyst on the call expressed surprise straightforward move by an acquirer to issue debt in the future at optimal rates. at the proposed increase in leverage, noting consolidating debt under the parent company. Shankar Ramakrishnan the company has been “historically conservative on the leverage front”.

30 International Financing Review June 16 2018 BONDS CORPORATES

Comcast executives said they plan to cut Manger, bought in late May for £1.5bn, and ago, Engie still offers relative value to net leverage by half a turn each year with Dr Pepper Snapple, which it agreed to buy in investors.” FREEûCASHmOWûTOûARRIVEûATûûTIMES early January for US$18.7bn. The A2/A– French utility company printed “We are very focused on getting our “We haven’t really looked at other a €750m long 11-year leg, part of a triple- leverage back down,” one Comcast holdcos for fair value because some are trancher, at swaps plus 40bp last September. executive said. much lower rated, others better, some are It was quoted at plus 42bp pre- The company is expecting to maintain its CSPP-eligible, others aren’t,” said the announcement, having traded as tight as investment-grade ratings. banker. 21bp at the beginning of the year. Moody’s has warned it may cut Comcast’s CreditSights analysts referenced Exor, Its latest deal was a Green hybrid, which A3 rating, citing concerns about higher also BBB+, and expected attractive launched in January at a 1.5% yield, one of the debt levels, especially in light of Comcast’s concessions on the new JAB paper, citing a lowest for a subordinated corporate issue. simultaneous US$30bn all cash bid for potential supply pick-up now that the end of Global coordinators were Societe Generale Sky. QE has been announced, recent market and UniCredit (B&D), joined by BBVA, ING and S&P and Fitch both have A- ratings on volatility and Bayer’s looming jumbo euro MUFG as active bookrunners. Comcast. deal. Swedish automotive safety supplier Comcast’s move sets up a bidding war A second banker, away from the trade, AUTOLIV, rated A– (stable) by S&P, had no with rival Walt Disney, which already has said he was not surprised to see so many DIFlCULTYûCOVERINGûITSûINAUGURALûBOND ûAû agreed to a US$52bn deal with Fox. deals coming on a Friday given the õMûlVE YEARûTHATûLUREDûMOREûTHANû Investors said they would prefer not to see conditions and reckoned they would provide €2.8bn of demand. a protracted bidding war between Disney a good market test. The deal priced 20bp inside IPTs at 55bp and Comcast. “Compared to the last couple of weeks, over swaps. In the absence of a curve, a “The landscape might shift and the this window represents a very good banker away referenced recent auto-related winner might become the loser if things are opportunity and we now have to discuss trades, including Knorr-Bremse, and pegged RADICALLYûDIFFERENTûINûlVEûYEARSûTIME vûSAIDû TRAFlCûINûTHEûMARKETûANDûCOMPETINGûSUPPLYû fair value at 45bp after adjusting for ratings 'REGORYû3TAPLES ûCO HEADûOFûlXEDûINCOMEû I expect around €10bn–€15bn of supply next and CSPP. North America at Deutsche Asset week given the Bayer deal, overhang from In early June, German braking systems Management. the pipeline and opportunistic trades.” manufacturer Knorr-Bremse printed a Bookrunners were BayernLB, Commerzbank, €750m seven-year at 50bp over mid-swaps Deutsche Bank, HSBC (B&D) and Rabobank. EUROS ENGIE got an opportunistic 10-year over the ALL INV-GRADE US CORPORATE BONDS line despite only offering a low 20bp BOOKRUNNERS: 1/1/2018 TO DATE CORPORATE ISSUERS QUEUE JUMP concession at IPTs. Managing No of Total Share As leads eroded the initial 65bp area bank or group issues US$(m) (%) Bolstered by improved sentiment after the spread on offer, the books gradually 1 BAML 45 8,928.94 10.6 ECB’s dovish pledge on rates, corporates declined to settle at €1.25bn pre-rec at the 2 JP Morgan 43 7,994.28 9.5 OPENEDûTHEûmOODGATESûLASTû&RIDAYûTOûPRINTû lNALûTERMS 3 Morgan Stanley 26 6,606.43 7.9 €2.75bn of paper across four tranches. The €750m deal priced at 50bp over mid- 4 Citigroup 31 6,537.53 7.8 Deal-hungry investors threw €6.5bn of swaps, leaving a 5bp premium, according to 5 Barclays 29 5,576.31 6.6 orders at JAB HOLDINGS’ €1.5bn dual-trancher, bankers who referenced its outstanding 6 Wells Fargo 39 5,046.38 6.0 Friday’s biggest trade. bonds. 7 Mizuho 22 3,950.46 4.7 The strong demand meant the trade Last Wednesday, Schneider Electric’s 8 MUFG 18 3,308.12 3.9 printed well inside IPTs of swaps plus 140bp €750m nine-year also came with a single 9 Goldman Sachs 17 3,300.88 3.9 area for the eight-year and 175bp area for digit concession but at a spread more than 10 Credit Suisse 16 2,998.10 3.6 THEû YEARû4HEûlNALûSPREADSûWEREûBPû twice that of an otherwise identical trade Total 109 83,941.98 for the €750m shorter note and 150bp for sold only six months ago. Excluding equity-related debt, ABS/MBS, all foreign issues, global issues and non corporates. the €750m longer piece. ”Engie is not ultra cheap but neither was Those levels, however, are wider than Schneider. Compared to a couple of months Source: Thomson Reuters SDC code: F6a JAB’s last dual-tranche outing in May 2017, when the German investment holding ALL US INVESTMENT GRADE CORPORATE DEBT ALL CORPORATE BONDS IN EUROS company priced €750m sevens at swaps plus (EXCLUDING SOLE SELF FUNDED DEALS) BOOKRUNNERS: 1/1/2018 TO DATE 85bp and €750m 11s at 115bp. Combined BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share books then were €5.5bn. Managing No of Total Share bank or group issues €(m) (%) The former was trading at plus 78bp pre- bank or group issues US$(m) (%) 1 BNP Paribas 83 14,483.19 8.9 announcement last Friday and the latter at 1 JP Morgan 217 59,761.13 11.2 2 SG 68 12,625.84 7.8 plus 120bp, according to Tradeweb prices. 2 BAML 190 55,285.88 10.4 3 Deutsche Bank 67 11,611.69 7.1 Both were quoted 6bp–7bp softer by mid 3 Citigroup 188 51,087.30 9.6 4 Goldman Sachs 36 9,837.79 6.0 afternoon. 4 Goldman Sachs 118 37,778.41 7.1 5 JP Morgan 61 9,732.54 6.0 The deal started 35bp back of fair value, 5 Morgan Stanley 143 35,876.25 6.7 6 HSBC 66 9,349.18 5.7 according to a lead who referenced JAB’s 6 Barclays 100 35,744.16 6.7 7 Credit Agricole 50 8,368.37 5.1 curve. That implies a fairly limited 10bp 7 Wells Fargo 131 32,627.47 6.1 8 UniCredit 45 8,107.81 5.0 premium compared with the 20bp-plus 8 RBC 74 21,594.62 4.1 9 BAML 41 6,851.99 4.2 concessions often seen in the past couple of 9 Deutsche Bank 66 18,155.06 3.4 10 ING 39 6,773.35 4.2 weeks. 10 HSBC 62 17,218.17 3.2 Total 239 162,804.54 JAB, rated Baa1/BBB+, owns a number of Total 471 533,158.65 Excluding equity-related debt. FIGs, ABS/MBS. CONSUMERûPRODUCTSûlRMSûINCLUDINGû0RETû!û Source: Thomson Reuters SDC code: F09a Source: Thomson Reuters SDC code: N8

International Financing Review June 16 2018 31 on books in excess of €2bn. It was trading The deal priced at a 2.875% yield, well Joint bookrunners were BNP Paribas mATûTOûTHEûREOFFERûPRICEûLASTû&RIDAY ûACCORDINGû inside the 3.25% area IPTs. (B&D), Erste Group, ING, JP Morgan, MUFG to Tradeweb prices. OMV already has two hybrids, although and Societe Generale. JP Morgan (B&D) was sole global bankers ignored one of them given a coordinator on Autoliv, joined by Morgan relatively short next call date in December SCHNEIDER REPEATS TENOR BUT Stanley and SEB as bookrunners. 2021. The other, callable in December DOUBLES SPREAD 2025, traded with a subordination OMV CHOOSES HYBRID DESPITE premium of roughly 200bp. SCHNEIDER ELECTRIC covered a €750m nine- SHAKY SECONDARIES Factoring in the shorter call structure on YEARûALMOSTûlVEûTIMESûLASTû7EDNESDAY ûBUTû the new deal and given six-year senior fair had to pay more than twice the spread of OMV tested appetite for subordinated paper last value around swaps plus 30bp, fair value an otherwise identical trade it sold only six 4UESDAYûWITHûTHEûlRSTûHYBRIDûSINCEû)TALIANû appeared to be somewhere in the 2.75% months ago. political risk shook markets in mid-May. area. Books closed around €3.7bn, pre- Despite wobbly sector secondaries, the Unlike Enel - which sold a €1.25bn dual- RECONCILIATION ûATûTHEûlNALûSWAPSûPLUSûBPû Austrian oil and gas company was tranche hybrid alongside a tender and spread - the tight end of the 60bp-65bp encouraged by improved market sentiment exchange offer in mid-May - OMV will use guidance range and 20bp inside IPTs. and strong investor feedback, according to the proceeds for general corporate In December, the French energy bankers. purposes. MANAGEMENTûANDûAUTOMATIONûSOLUTIONSûlRMû Books for the no-grow €500m perp non- “It’s always good to see the hybrid priced a €750m 0.875% nine-year at swaps call six peaked at around €2bn but fell off market expand a little bit rather than plus 27bp on much scantier orders of €1.3bn. SHARPLYûTOûAROUNDûõBNûATûlNALûTERMS BEINGûDRIVENûBYûRElNANCINGûONLYû)TLLûBEûANû Although opening last Wednesday at While an investor said the book drop was interesting barometer,” said a second plus 48bp, those December 2026s have a sign of caution among buyers, a banker investor early in the session. marginally outperformed a 26bp widening away commended the leads for “pushing The recent volatility has taken its toll on in swap terms for the iBoxx industrial boundaries” when pricing the deal. hybrid secondaries, in particular Enel, with goods and services index - of which “It was the right outcome because the both legs of the recent trade bid last Tuesday Schneider is a part - over the last six trade got done at a very attractive price,” the four or so points lower than reoffer, months. banker said. according to Tradeweb prices. Senior corporate spreads across all sectors have gained 23bp during the same ALL INVESTMENT-GRADE BONDS IN EUROS ALL CORPORATE BONDS IN STERLING period, now back to levels last seen in BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE March 2017. Managing No of Total Share Managing No of Total Share The old nines softened further on the bank or group issues €(m) (%) bank or group issues £(m) (%) mandate announcement to swaps plus 1 BNP Paribas 115 30,670.67 6.8 1 Barclays 8 868.44 17.2 55bp, according to Tradeweb prices. 2 SG 118 30,076.45 6.7 2 HSBC 8 862.03 17.1 Schneider also has March 2025s at plus 3 JP Morgan 97 29,910.76 6.6 3 Lloyds Bank 6 684.37 13.6 37bp pre-mandate, implying fair value at 4 Credit Agricole 102 28,079.69 6.2 4 NatWest Markets 5 432.58 8.6 around plus 53bp. 5 HSBC 135 26,924.87 6.0 5 Credit Suisse 4 250.00 5.0 “There’s clearly appetite to add bonds, 6 Deutsche Bank 113 26,558.56 5.9 6 MUFG 3 248.53 4.9 but at a price, depending on the nature of 7 Barclays 78 25,140.55 5.6 7 Morgan Stanley 2 243.03 4.8 the issuer and exercise,” said a lead 8 Goldman Sachs 59 22,631.89 5.0 8 BNP Paribas 3 209.05 4.2 banker. 9 UniCredit 97 20,875.73 4.6 9 RBC 2 174.49 3.5 “In this market, there are clear 10 Citigroup 74 17,706.71 3.9 10 Deutsche Bank 1 149.34 3.0 differences between on-the-run and off- Total 579 451,636.47 Total 20 5,036.62 the-run names in terms of comfort that Excluding ABS/MBS, equity-related debt. can be given to issuers with regard to Source: Thomson Reuters SDC code: N9 Source: Thomson Reuters SDC code: N8a landing price levels.” CreditSights analysts, who in December ALL INTERNATIONAL STERLING BONDS ALL SWISS FRANC BONDS EXCLUDING cited potential M&A risk and EXCLUDING SECURITISATIONS SECURITISATIONS recommended passing on the Schneider BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE issue, have now changed their Managing No of Total Share Managing No of Total Share recommendation on the credit to “market bank or group issues £(m) (%) bank or group issues SFr(m) (%) perform”. 1 NatWest Markets 50 7,849.43 13.5 1 Credit Suisse 66 7,094.76 27.5 “While Schneider did eventually get 2 HSBC 51 6,792.09 11.7 2 UBS 56 6,059.42 23.5 round to M&A earlier in the year, we 3 Barclays 39 5,985.80 10.3 3 Verband Schweizerischer 7 3,416.40 13.2 acknowledged that the L&T deal was 4 RBC 34 4,930.66 8.5 4 ZKB 31 3,260.22 12.6 structured in a fashion which would have 5 Lloyds Bank 30 4,690.59 8.1 5 Raiffeisen Schweiz 16 1,525.19 5.9 a limited impact on credit metrics.” 6 Santander Global 14 3,054.62 5.2 6 BNP Paribas 13 1,287.35 5.0 India’s Larsen & Toubro agreed to sell its 7 JP Morgan 13 2,979.29 5.1 7 Deutsche Bank 8 666.14 2.6 electrical and automation business for 8 BAML 15 2,975.79 5.1 8 Commerzbank 7 586.51 2.3 Rs140bn (US$2.1bn) to Schneider, in 9 Nomura 21 2,844.10 4.9 9 HSBC 5 435.63 1.7 partnership with Temasek, which will take 10 Deutsche Bank 10 2,763.87 4.7 10 Bank Vontobel 1 225.00 0.9 a 35% stake. Total 146 58,198.38 Total 117 25,823.87 HSBC, JP Morgan, MUFG (B&D), Natixis and Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Societe Generale were bookrunners on the Source: Thomson Reuters SDC code: K05a Source: Thomson Reuters SDC code: K06b latest bond deal.

32 International Financing Review June 16 2018 BONDS CORPORATES

VALEO COVERS SEVENS MORE In March, SAP’s €1.5bn triple-trancher left ORûmOATING ûSENIORû2EGû3ûTRANSACTIONûWITHûAû THAN SIX TIMES 35bp on the table on all legs but bankers at maturity of three to eight years. the time pointed to the German software Blackstone is buying a 55% stake in VALEO was the only corporate to dip its toe lRMSûDISTORTEDûSECONDARIES Thomson Reuters’ F&R unit, which includes into the European market on Monday as ManpowerGroup had €400m September IFR. caution prevailed ahead of Thursday’s ECB 2022s trading at 20bp over mid-swaps pre- meeting. announcement, according to Tradeweb FITCH, S&P DOWNGRADE BT TO BBB The seven-year trade lured some €3.8bn prices. of orders, easily enough to support a €600m “It’s a very defensive trade,” said one Fitch has downgraded BT GROUP by one notch issue size - increased from the expected banker away from ManpowerGroup. “At the to BBB, saying it expects leverage to increase €500m amount indicated as marketing same time, they’ve done some work with ANDûFREEûCASHmOWûTOûBEûNEGATIVEûAFTERû began. investors so it might be that they see the dividends for the next three to four years. The bond priced at 87bp over mid-swaps, curve way steeper.” “The [leverage] increase is driven by a 18bp inside the tight end of IPTs. An investor welcomed the cautious combination of factors that include sizeable The French automotive supplier, rated approach, saying that “it’s not a market pension contributions, reduced funds from Baa2/BBB (both stable), has a number of where you can slam dunk anymore in terms operations and higher capital expenditure deals outstanding, including January 2024s of bringing an issuance and getting it done”. for both mobile spectrum investments and quoted at mid-swaps plus 57bp and March Part of the proceeds will be used to repay INCREASEDûROLLOUTûlBREûINûTHEû5+ vû&ITCHû 2026s at plus 83bp, according to pre- outstanding notes. ManpowerGroup has a wrote. announcement Tradeweb prices. €350m bond maturing on June 22. S&P has also downgraded BT to BBB from An interpolation of those two points Active bookrunners were Barclays, BNP BBB+ on weaker-than-expected revenues suggests fair value at around 74bp, a level Paribas (B&D) and JP Morgan. and Ebitda over the next couple of years. also eyeballed by a banker away from the “Operating risks, along with Brexit- trade, implying a 13bp concession. GBL DRIVE-BY HITS THE MARK related uncertainties, currently weaken our The two reference points widened 8bp to view of BT’s business risk compared with 9bp after the mandate was made public. In another sign of improved stability, some of its peers,” S&P wrote. An investor reckoned the deal looked unrated holding company GROUPE BRUXELLES Both ratings have stable outlooks. Almost quite cheap at IPTs but said he would adopt LAMBERT last Tuesday launched a €500m no- two months ago, Moody’s downgraded BT a wait-and-see approach given the potential grow seven-year on books of €1.25bn. and its subsidiary EE to Baa2 from Baa1, also for tightening. The trade printed at 130bp over swaps, CITINGûWEAKENINGûCASHmOWûGENERATIONûANDû In early June, four euro deals also started 15bp inside the tight end of initial pricing. delays in deleveraging prospects. between 30bp and 40bp back of fair value, A lead gauged fair value at 105bp-110bp, Last week’s downgrades came shortly LEAVINGûBP BPûPREMIUMSûATûlNALûTERMSû û referencing a number of deals including after BT announced CEO Gavin Patterson AûFURTHERûCONlRMATIONûOFûTHEûSHIFTûINûPRICINGû GBL’s May 2024s at plus 85bp, Baa1/BBB+ would step down later this year, saying a power from issuers to investors against a rated JAB Holdings’ May 2024s at 78bp, and change of leadership was needed to backdrop of political uncertainty and unrated SEB’s May 2024s at 108bp. restructure the operator. volatility. GBL sold the €500m May 2024s a year ago “But given that a majority of calls [in early at swaps plus 95bp. June] ended in no-go calls, some borrowers The last unrated trade came in mid-April, STERLING are obviously not ready to pay the price,” courtesy of Sixt Leasing’s €250m four-year. said the banker. That priced at a yield of 1.75%, or swaps plus INVESTORS TO TAKE A PUNT “The market is not shut but if you didn’t 149.5bp, and was substantially better at ON CAMBRIDGE accept the market conditions then, it’s a bit 1.29% bid, or swaps plus 112bp last Tuesday. DIFlCULTûTOûCONVINCEûPEOPLEûTOûJUMPûINûTODAYv Global coordinators on GBL were BNP UNIVERSITY OF CAMBRIDGE is likely to bring this Paribas (B&D) and Societe Generale, joined by year’s biggest sterling corporate issue so far, GENEROUS PREMIUM HELPS CM-CIC, HSBC, ING and KBC as bookrunners. having mandated Barclays, HSBC and Morgan MANPOWERGROUP TAKE OFF Stanley for an up to 60-year senior unsecured HOCHTIEF, BLACKSTONE bond. MANPOWERGROUP started out cheaply last PROPERTY PARTNERS ON THE ROAD While the expected size has not been Tuesday and was easily able to cover its no- disclosed, Moody’s said the proposed GROWûõMûEIGHT YEAR ûlNDINGûORDERSûOFû HOCHTIEF is planning a no-grow €500m seven- issuance, to be rated Aaa, was for up to over €3.2bn. YEARûSENIORûUNSECUREDûlXED RATEûTRANSACTION £600m. 4HEûTRADEûWASûTHEûlRSTûREVERSEû9ANKEEû It has mandated Commerzbank, HSBC, The last sizeable sterling deal came in since Whirlpool pulled its €500m 10-year on Mizuho and Societe Generale to arrange early December from a key rival: the May 23. Before cancelling, leads had set the investor meetings starting on June 18. University of Oxford’s £750m Century bond. spread at 100bp over swaps, unable to The German construction group, rated That printed at 85bp over the July 2068 Gilt tighten from IPTs despite the 30bp BBB (stable) by S&P, is on the road for two but has widened to more than 100bp bid, concession on offer. days. according to Thomson Reuters data. Strong demand for ManpowerGroup BLACKSTONE PROPERTY PARTNERS EUROPE Part of Cambridge’s offering might be in meant the bookrunners could knock 25bp HOLDINGS will hold investor meetings CPI-linked format and have an amortising off the tight end of IPTs for a launch at plus between June 19 and June 21 via Bank of STRUCTUREûAFTERûTHEûlRSTûûYEARSû-OODYSû 100bp. Two bankers away thought fair value America Merrill Lynch and Morgan Stanley. said the CPI-linked bond matches was in the 60bp area, suggesting a The real estate company, rated BBB– expectations of CPI-linked rental income whopping 40bp concession - this year’s (positive) by S&P, is targeting an inaugural from the staff accommodation to be built biggest. SINGLEûORûDUAL TRANCHEûBENCHMARKûlXEDûAND using the proceeds.

International Financing Review June 16 2018 33 An investor said the CPI format might be The German chemicals company last It would be Veolia’s second offering under well received given the pressure on issued sterling in January 2017, selling its Rmb15bn Panda bond programme PENSIONûSCHEMESûTOûIMPROVEûTHEIRûDElCITS £300m 1.75% March 2025s at plus 75bp. The approved by the National Association of h4RUSTEESûHAVEûLONG DATEDûINmATION LINKEDû deal was trading at 70bp last Thursday. Financial Market Institutional Investors. liabilities, so buying something like this to Henkel £300m September 2022s at 42bp In September 2016, Veolia privately placed match those makes a lot of sense,” he said. and Unilever £350m February 2022s at 52bp Rmb1bn three-year Panda bonds at par to Cambridge made its bond market debut were also used as reference points. yield 3.50% in the interbank market. The in October 2012 with a £350m 40-year at HSBC, Morgan Stanley and NatWest Markets notes were quoted at 5.52%/5.42% early last 60bp over Gilts. The deal was trading at (B&D) were joint bookrunners. week, according to Thomson Reuters data. plus 71bp on Thursday. An investor said early in the session he Bank of China is lead arranger on the “Although Cambridge’s debt will would probably pass on the trade, which offering. increase substantially following the bond he expected to come too tight, even for a issuance from approximately £350m to Single A. MERIDIAN ENERGY NETS NZ$200m £950m, debt metrics will remain strong “But seeing them in sterling is not relative to similarly rated international surprising, given there’s been a lot of MERIDIAN ENERGY, rated BBB+ (S&P), raised the peers, with spendable cash and underperformance in euros over the last few maximum NZ$200m (US$140m) it was investments to debt of 3.2x inclusive of the MONTHSûANDûISSUESûHAVEûBEENûPULLEDû9OUû seeking from a retail offer of seven-year proposed bond issuance,” Moody’s analysts certainly get more execution certainty in SENIORûUNSECUREDûlXED RATEûNOTES wrote. sterling at the moment,” he said. The 4.21% June 27 2025s priced at par last EXPERIAN FINANCE is the other sterling issuer The deal, which the banker said was part Friday, at the tight end of mid-swaps plus in the pipeline, having mandated Barclays, OFû"!3&SûFUNDINGûDIVERSIlCATIONûSTRATEGY û 130bp–140bp guidance. ING, MUFG, Santander and Wells Fargo for a comes a month after BASF found €3bn of ANZ Bank New Zealand and Westpac were Reg S transaction with an expected demand for a €1.25bn two-tranche outing to joint lead managers with Deutsche Craigs and intermediate tenor. The UK roadshow starts buy assets from Bayer. Forsyth Barr as co-managers. on June 18. The credit score company is The sterling reoffer level came out a In March 2017, the electricity generator rated Baa1/A-. couple of basis points through euro mid- and retailer, which is 51% owned by the New swaps, according to IFR calculations. That Zealand Treasury, issued a NZ$150m 4.88% BASF TAKES CENTRE STAGE was inside interpolated bid-side BASF euro seven-year retail note priced at mid-swaps fair value in the swaps plus low to mid- plus 150bp. Corporates left the euro market untouched single-digit range. on ECB Thursday, leaving BASF to bring a no- grow £250m four-year a month after coming in euros. NON-CORE CURRENCIES “There were some Brexit discussions in FIG the past two days and we are now in a VEOLIA EYES PANDA BOND RETURN position where the sterling market can resume. The euro market will have to wait French water management company VEOLIA US DOLLARS until tomorrow or next week to reopen,” ENVIRONNEMENT is eyeing a return to the said a banker on the deal last week. Panda bond market after its debut offering HSBC SWOOPS ON DOLLAR Demand topped £1.5bn, enabling leads to less than two years ago, according to market AND STERLING MARKETS set the spread 12bp inside IPTs at Gilts plus sources. 63bp. The lead did not comment on fair The company intends to raise Rmb1.5bn HSBC HOLDINGS, rated A2/A/AA-, made another value but pointed to BASF’s 0.875% October (US$234m) from a private placement of one- big push into the bond markets last week, 2023s, which were spotted at 49bp pre- year Panda bonds in China’s interbank tapping US dollars and sterling in size, with announcement, according to Tradeweb market, but has not yet decided on a launch the dust barely settled on the growth plans prices. date, according to sources. announced by the bank’s new CEO. It printed a US$3bn 11-year non-call 10 ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION lXED TO mOATERûANDûAûaBNûlVE YEARûTHATûGOûAû BOOKRUNNERS: 1/1/2018 TO DATE BONDS (ALL CURRENCIES) long way to helping the bank hit 2018 Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE targets for minimum requirements for own bank or group issues €(m) (%) Managing No of Total Share funds and eligible liabilities (MREL). 1 UBS 23 11,257.63 11.3 bank or group issues US$(m) (%) Following the dollar offering, the bank 2 BNP Paribas 37 9,606.04 9.6 1 BNP Paribas 13 2,866.06 6.8 has already raised over US$14bn-equivalent 3 Deutsche Bank 31 7,624.46 7.6 2 SG 7 2,760.13 6.6 of the up to US$17bn in senior MREL/TLAC- 4 SG 27 7,047.98 7.1 3 JP Morgan 15 2,748.05 6.5 compliant debt targeted for 2018. 5 Natixis 13 5,127.09 5.1 4 HSBC 14 2,327.25 5.5 “Getting US$3bn done in a single tranche 6 HSBC 31 4,623.92 4.6 5 UBS 12 2,295.96 5.5 is not a trivial achievement,” said one 7 Credit Agricole 15 4,428.53 4.4 6 BAML 11 2,167.62 5.2 syndicate banker. “They have a pretty big 8 JP Morgan 25 4,385.80 4.4 7 Goldman Sachs 10 2,008.17 4.8 stack of TLAC to get through and this deal 9 Morgan Stanley 18 4,150.01 4.2 8 Deutsche Bank 11 1,948.36 4.6 will help them in that pursuit.” 10 Barclays 18 3,160.51 3.2 9 Morgan Stanley 12 1,942.51 4.6 9ETûWHILEû(3"#ûLARGELYûHADûTHEûMARKETûTOû Total 156 99,922.21 10 Citigroup 12 1,884.06 4.5 itself on a quiet day, the recent abundance Including banks, insurance companies and finance companies. Excluding Total 59 42,006.35 of bank supply could have dented demand equity-related and covered bonds. Excluding publicly owned institutions. and impacted pricing, said a banker away Source: Thomson Reuters SDC code: N11 Source: Thomson Reuters SDC code: J3a from the deal.

34 International Financing Review June 16 2018 BONDS FIG

Just last month, HSBC had raised a “After the golden years of issuance in In March QBE bought back US$291m of its whopping US$6bn through three and six- 2016 and 2017 we may be facing a more US$300m 3.0% May 25 2023 Reg S bond YEARûmOATERS ûASûWELLûASûAûSIX YEARûlXED RATEû challenging credit market as rates increase through a tender offer. tranche. and quantitative easing is wound down,” LLOYDS BANKING GROUP also found that there said one syndication manager on the trade. was not as much size available compared NAB attracted tepid demand for the EUROS with its early May foray when it printed a shorter-dated, 3.25-year, tranches with the dual-tranche US$2.25bn trade. This time, it 53MûA ûlXED RATEûANDû53Mû CNP TO BRING PANACHE TO RT1 only raised a US$500m three-year at 32bp !2EGû3ûmOATING RATEûNOTESûATTRACTINGûAû MARKET AS PIPELINE BUILDS over Libor. MODESTûCOMBINEDûlNALûORDERûBOOKûOFû !TûAûlNALûSPREADûOFû4REASURIESûPLUSûBP û US$1.1bn. CNP ASSURANCESûWILLûBECOMEûTHEûlRSTûTOP TIERû HSBC’s bonds offered a concession of 10bp Such lacklustre interest meant the leads insurer to bring Restricted Tier 1 paper to over estimated fair value and came just were only able to move 5bp in from 85bp the euro market, a deal expected to herald 12bp-17bp tight to initial price thoughts. area initial price thoughts and print the further supply as other insurers seek to HSBC’s 4.041% March 2028s had been 3.375% September 20 2021s 80bp wide of RElNANCEûOLDû4IERûûDEBT trading at a G-spread of 148bp, putting fair 4REASURIESû4HEû YEARûmOATERûPAYSûAû The French issuer, rated A1/A, has value on a new 2028 at around 153bp. coupon of three-month Libor plus 58bp. mandated HSBC and Morgan Stanley as global The deal came on the back of HSBC’s The new issue concession was estimated coordinators and Credit Suisse, Natixis, Societe latest strategy update as it shifts into growth at 6bp to 10bp using the NAB January 2021s Generale and UniCredit as joint leads for the mode under its new CEO John Flint. and more recent Australian major bank euro perpetual non-call 10 deal. Europe’s biggest bank sees revenues issues as comparables. The RT1 market is still in its infancy and growing 5% a year as it plans to invest )NûCONTRASTûTHEûA û53MûûlVE has been relatively slow to build. CNP’s RT1 US$15bn-$17bn in Asia and new technology YEARû'REENûBONDûSECUREDûHEALTHYûlNALû will be only the third to come in euros, over the next three years. orders of US$1.3bn and priced 15bp tighter following deals from ASR Nederland and That, plus a revival of its US operations, is than 105bp area initial price thoughts at Vivat. expected to improve returns on tangible Treasuries plus 90bp. This, however, is expected to change. equity to 11% or more by 2020. 4HEûlVE YEARûNEWûISSUEûCONCESSIONûWASû “Insurance companies haven’t been under HSBC intends to get an edge during “a estimated to be 1bp–6bp based on the NAB pressure to issue new instruments given the period of disruptive technological change”, April 2023s and other recent major bank generous grandfathering treatment given to SAIDû&LINTûONû-ONDAY ûINûHISûlRSTûSTRATEGYû issues. their outstanding debt,” said a lead. update since taking the CEO post in February. QBE TO BUY BACK GREEN 2022s ALL SAMURAI BONDS CreditSights said the switch from BOOKRUNNERS: 1/1/2018 TO DATE RESTRUCTURINGûTOûGROWTHûMODEûREmECTEDû QBE INSURANCE GROUP, rated A– (S&P), has Managing No of Total Share what “HSBC has already been saying for launched a tender offer to repurchase up to bank or group issues ¥(m) (%) some time in earnings calls, so there was US$100m of its US$300m Reg S 3% October 21 1 Mizuho 24 166,095.00 23.7 little surprise in the update”. 2022 Green bond as Australia’s largest global 2 Sumitomo Mitsui Finl 19 157,875.00 22.5 The GSIB rounded off the week with a insurer looks to reduce its debt-to-equity ratio 3 Nomura 21 149,970.00 21.4 aBNûSELF LEDûlVE YEARûTHATûCAMEûATûBPû further towards a 25%–35% target range. 4 Mitsubishi UFJ MS 16 96,095.00 13.7 over Gilts, 10bp tighter than IPTs. The minimum and maximum purchase 5 Daiwa Securities 15 77,720.00 11.1 “It’s hard to judge from the outside prices for the tender offer are US$960 and 6 Natixis 6 23,220.00 3.3 as we don’t know how big the book US$980 per US$1,000, respectively. 7 BNP Paribas 3 16,125.00 2.3 was, but they’ve done big size, which The offer, via dealer managers HSBC and 8 Credit Agricole 4 14,500.00 2.1 suggests strong demand,” a banker NAB, closes on June 19 ahead of pricing the Total 25 701,600.00 away said. following day and expected settlement on Excluding equity-related debt. “It’s clearly the best holdco in sterling June 22. Source: Thomson Reuters SDC code: K11 and they tapped into that strong demand that we’ve seen at the short end of the ALL GLOBAL AND EUROMARKET YEN BONDS ALL INTERNATIONAL YEN BONDS sterling market. Sterling is working well - BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE THEREûAREûDElNITELYûPEOPLEûLOOKINGûATûITv Managing No of Total Share Managing No of Total Share bank or group issues ¥(m) (%) bank or group issues ¥(m) (%) NAB DRAWS MIXED RECEPTION 1 Sumitomo Mitsui Finl 5 53,650.03 20.5 1 Sumitomo Mitsui Finl 24 211,525.03 22.0 2 Nomura 8 46,566.67 17.8 2 Mizuho 32 209,861.69 21.8 NATIONAL AUSTRALIA BANK (Aa3/AA–/AA–) found 3 Mizuho 8 43,766.69 16.7 3 Nomura 29 196,536.67 20.4 mixed appetite for a US$1.6bn three-part 4 Daiwa Securities 7 23,916.67 9.1 4 Mitsubishi UFJ MS 18 102,761.67 10.7 senior unsecured bond offering last 5 MUFG 1 21,833.33 8.3 5 Daiwa Securities 22 101,636.67 10.6 Monday, in contrast to the overwhelmingly =5 BAML 1 21,833.33 8.3 6 Natixis 6 23,220.00 2.4 positive reception Westpac and ANZ 7 Barclays 4 11,650.00 4.5 7 MUFG 1 21,833.33 2.3 enjoyed in May. 8 HSBC 1 10,000.00 3.8 =7 BAML 1 21,833.33 2.3 Joint lead managers Bank of America Merrill =8 Goldman Sachs 1 10,000.00 3.8 9 BNP Paribas 3 16,125.00 1.7 Lynch, JP Morgan, NAB and RBC Capital Markets 10 Mitsubishi UFJ MS 2 6,666.67 2.5 10 Credit Agricole 4 14,500.00 1.5 said US investors continue to express little Total 15 261,550.05 Total 40 963,150.05 concern about the ongoing Australian Excluding equity-related debt. Including preferreds. Including all Euro, foreign and global issues. Excluding equity-related debt. banking scandals, suggesting other factors may have been at work. Source: Thomson Reuters SDC code: K10 Source: Thomson Reuters SDC code: K12

International Financing Review June 16 2018 35 Vivat sets high mark for RT1 market FINANCIALS Investors call the shots in tough trade for Dutch insurer

VIVAT found enough takers for a debut Restricted “It looks cheap, but then this is not an easy GROWING PIPELINE Tier 1 bond last week, though investors had the credit and I didn’t expect a riot,” a banker away With the trade done, this could be the impetus upper hand in dictating the terms under which said. “The window looked good today and you for others to come though pricing power, as Vivat they were willing to buy one of Europe’s trickier, can’t criticise the issuer for wanting to pull the demonstrated, has very much shifted in favour and still evolving, financial credit stories. trigger.” of investors. The Dutch insurer, which had indicated it Controversy around its parent company, Bankers say the pipeline for subordinated could raise up to €500m, ended up printing a Anbang Insurance Group, caused its €650m financial debt has been growing, with at least €300m trade on books that were over €450m at 2.375% 2024 senior to widen 100bp, to 306bp five Additional Tier 1s waiting to come to market, the last update. over swaps, when Anbang’s chairman was as well as a number of Tier 2 mandates. “The trade set out as a minimum €250m arrested last June, for example. “The subordinated pipeline has been missing transaction with a view of potentially upsizing He was sentenced to 18 years for fraud last for the last month, but if the rates market is okay subject to demand,” said Chris Agathangelou, month and the government seized control of post Fed and ECB, we should be able to get head of financial institutions syndicate at Anbang in February. things done,” a DCM banker said. NatWest Markets, one of the leads on the trade. The transaction via ABN AMRO, BNP Paribas, The only supply in Europe in recent weeks “The €250m number was presented in the Deutsche Bank and NatWest Markets is part of a was a €100m Additional Tier 1 for Sydbank at investor presentation and net roadshow showing broader capital optimisation plan. the end of May and a €500m Tier 2 for BFCM in the effects on the solvency position for Vivat. The company also bought back €150m of mid-May. When demand peaked at €450m, the issuer was an old and costly €400m 9% 2041 NC2021 “There’s better execution in the dollar market able to upsize to €300m, still inside the cap of Tier 2 bond issued out of opco SRLEV, allowing compared to euros and sterling, but things are €500m.” a higher portion of its Tier 3 debt stack to be executable, although new issue premiums have The perpetual non-call seven-year, which counted toward its capital. It reported €428m of gone up massively.” can be permanently written down, was at the ineligible Tier 3 capital at year-end 2017. He said issuers could have to pay as much as shorter end of the PNC7 to PNC10 range it was “The buyback of the Tier 2 and on-siding 50bp to get AT1 trades done, and between 25bp considering and priced at 7%, in line with the 7% of the Tier 3 is super-efficient; own funds are and 37.5bp for Tier 2. area guidance. not reduced by the eliminated Tier 2, yet the “People were very relaxed going into this year. “Clearly, investors are setting the price,” a borrower saves interest on the 9% SRLEV notes Credit looked like a wonderful place, but given lead said. “This is an evolving credit that’s not bought back,” said Agathangalou. what we’ve experienced in February, March, April broadly followed, has a bit of history and is not “This was a smart trade for a company and May, if there’s a good window, you have to everyone’s cup of tea.” that is making good progress with its capital get your deal done.” It is not the first time Vivat has found investors in management and business strategy.” ERSTE GROUP BANK is one of the issuers that the driving seat. A €650m seven-year senior priced Overall, the measures should bolster its could finally emerge, having mandated banks for in May last year also priced in line with IPTs. Solvency II ratio, after it slipped to 162% from a euro AT1 in mid-May, while France’s CCR RE is Nor was this a surprise, given that Vivat is one 175% last year. looking to bring a €100m-€150m debut RT1. of Europe’s more challenged financial issuers “It feels to me like they’re under pressure and (See separate story for news of CNP and its BB- rated deal came after a period of that the regulator is following them closely,” an assurances’ RT1 plams.) marked bond market volatility. investor who bought the deal said. Helene Durand

“However, absolute levels, whether it’s “Therefore it becomes a question of cost Thomson Reuters data. While the trade will coupons or spread, are very low and it and whether you have the view that it might provide a reference point for pricing, AT1 makes sense to lock them in, especially become more expensive and you want to paper from issuers such as HSBC and BNP when we have QE ending and Brexit. We’ve save the cheaper Tier 2 option for later.” Paribas will also offer markers. been telling issuers that if they need capital Expectations are that rates will begin to But there are differences between bank in the next 18 months or so, now is the rise over the coming months as the AT1 paper and RT1. The latter, for example, time.” European Central Bank draws a line under does not have loss absorption features at the CNP has a US$500m 6.875% perp due for its asset purchase programme. point of non-viability. call in July 2019 as well as a 6% €750m CNP has capacity to issue €2bn of Tier 2 The trigger for potential losses, however, September 2040 callable in September 2020. and Tier 3 and €2bn of RT1. COULDûBEûMOREûDIFlCULTûTOûPINPOINTûASûITûISû “Issuers have seen appetite in the market The RT1 is expected to be investment- based on insurers’ Solvency Capital for the product, seen deals go well and the grade at Baa3/BBB-, much higher than the Requirement, which is more volatile than asset class develop,” the lead said. “We also Double B rated ASR and Vivat trades. banks’ AT1. have more clarity on the structure now, at “Their credit quality is amazing and this CNP had a buffer of at least €12.4bn at least in certain countries, which also helps.” WILLûBEûTHEûlRSTûMEANINGFULûINVESTMENT year-end 2017 to mandatory coupon CNP said the rationale for the RT1 was to grade trade in RT1,” the second lead said. cancellation, with distributable items of RElNANCEûLEGACYûSECURITIES ûSUBJECTûTOû h!32ûWASûAûGOODûTEST ûBUTûTHISûISûTHEûlRSTû €8.5bn. regulatory approval. time we will see a frequent and well- The deal is part of a bustling pipeline for “The real constraint to doing RT1 is recognised issuer in this market.” insurance subordinated debt, which LEVERAGEûGIVENûTHERESûNOûADDEDûBENElTûWITHû ASR’s €300m 4.625% deal priced in 2017 includes a €300m-€400m 10-year bullet Tier S&P to do RT1 over Tier 2,” another lead said. was yielding 4.61% on Friday, according to 2 for Belgian newcomer P&V ASSURANCES SCRL.

36 International Financing Review June 16 2018 BONDS FIG

It has mandated Natixis as sole lead for an complete grab-athon for corporates. We also ever further away and will be no later than unrated deal, and will launch following saw strong demand for sterling trades which January 1 2019. investor meetings running during June tells you there’s a lot of cash out there.” Like Santander and Danske before it, the 20-22. BNP Paribas, Bank of America Merrill Lynch, bank used contractual language to be able to The pipeline is also rumoured to include a CaixaBI, Credit Agricole, Credit Suisse and push ahead. self-led bancassurance Tier 2. UniCredit are leads on the CGD deal. “We got plenty of questions around the legislation, how it will work, who the CGD TO COMPLETE RECAP JIGSAW NORDEA SEIZES FRIDAY WINDOW supervisor will be, but that didn’t translate WITH TIER 2 FOR SNP FIRST into anything material when it came to pricing,” the lead said. CAIXA GERAL DE DEPOSITOS is getting closer to NORDEA BANK pulled the trigger on an He estimated the new issue premium at PUTTINGûTHEûlNALûTOUCHESûTOûAûõBNû inaugural senior non-preferred transaction THEûlNALûBPûOVERûMID SWAPSûTOûBEûAROUNDû recapitalisation plan agreed with Brussels LASTû&RIDAY ûTHEûlRSTûSUCHûDEALûFROMûAû 5bp–8bp. Danske Bank’s €1.25bn May 2023 almost two years ago, having mandated Swedish bank, getting ahead of what is priced in May at 53bp over was bid around banks for a Tier 2 bond. expected to be a busy coming week for 10bp wider on Friday. The Portuguese lender is hoping to sell a lNANCIALûISSUANCE Barclays, BNP Paribas, Goldman Sachs, JP NO GROWûõMû YEARûNON CALLûlVE ûHELPEDû .ORDEAûPRICEDûAûõBNûlVE YEARûATûBPû Morgan and Nordea were lead managers. by a more supportive market backdrop in over mid-swaps, 15bp tighter than IPTs on the wake of the ECB’s dovish books over €3.25bn. It was joined in the KBC AND SVENSKA HB NEXT IN pronouncements last Thursday. primary market by HSBC Holdings, which GREEN SENIOR LINE The transaction, rated B2/B+ (Moody’s/ PRICEDûAûaBNûSELF LEDûlVE YEARûATûBPûOVERû Fitch), was initially meant to be an Gilts, 10bp tighter than IPTs. KBC GROUP NV and SVENSKA HANDELSBANKEN will Additional Tier 1. “The market has been improving all week become the next banks to join the Green However, that was changed into a Tier 2 and, while there was nothing unexpected in bond fray, with both lining up senior after DG Comp, the European Commission’s what Mr Draghi said, it was maybe a bit unsecured trades to continue the sector’s department for competition, agreed in May more dovish, with rate hikes expected expansion. that it would be compliant with the bank’s further down the line,” a lead on Nordea The number of banks setting up Green subordinated debt requirement included in said. bond frameworks is on the increase and the the recapitalisation plan. “Issuers’ psychology may be changing a €4bn issued in the European market year-to- Peripheral debt, which was knocked bit as well. They now believe that things date already surpasses the €1.5bn raised sideways by the political uncertainty in could get worse. The major issues such as over the same period in 2017. Italy, has rallied strongly in recent days. QE ending, Italy, Trump have not gone away And as the market grows, so do issue “If (Chinese-owned Dutch insurer) Vivat and there’s a risk that sentiment could turn, sizes. BBVA’s €1bn seven-year priced in May can get done, then this can get done at a so issuers seize the window when they can.” was the largest Green deal from a eurozone level that’s palatable for the issuer,” a lead He added that the corporate pipeline had lNANCIALûINSTITUTION ûFORûEXAMPLE said. had a bearing on the deal’s timing. The announcements come as the latest “It’s a name investors are willing to spend “There’s a lot of supply expected next guidelines from ICMA concerning the sector time on. It’s state owned and has a big WEEK ûANDûNOTûJUSTûlNANCIALS vûHEûSAIDû emerged last Thursday, updating the Green market share in Portugal. They’ve also done “There’s a big corporate pipeline, with Bond Principles and mapping the AT1.” transactions like the Bayer deal. And that Sustainable Development Goals (SDG). The bank’s €500m 10.75% perp non-call will come 30bp–40bp cheaper, so it might KBC is due to issue its debut Green in a 2022 AT1 was bid at 6.55%, down from 7.78% not be so easy to get deals done and there’s holdco format as early as the week of June on May 29 according to Thomson Reuters risk of indigestion.” ûINûWHATûWILLûALSOûBEûTHEûlRSTûBENCHMARKû data. That Nordea could jump into the market Green issue from a Belgian bank. It will Among other Portuguese subordinated only a day after announcing the trade follow an inaugural €4.5bn 15-year OLO ISSUES ûAûõMû YEARûNON CALLûlVEû4IERûû speaks to how much the asset class has from the Belgian sovereign priced in March. for Banco Comercial Portuguese was bid at evolved since Credit Agricole brought the Last Thursday marked the last day of the 5.45% on Friday from a 2018 high of 6.15% at lRSTûSUCHûTRADEûINû$ECEMBERû roadshow arranged by joint structuring the end of May. Since then, banks from Spain, Italy and advisers ABN Amro and Credit Agricole. #'$ûREPORTEDûCONSOLIDATEDûNETûPROlTûOFû Denmark have joined in building stacks of Svenska HB is expected to follow, having õMûINûTHEûlRSTûQUARTERû)TSûPHASED INûANDû loss-absorbing debt. mandated Handelsbanken Capital Markets last fully implemented CET1 ratios both stood at In the case of Nordea, it estimates it will Wednesday as sole Green structuring 13.6% in March, while non-performing loans raise about €10bn from 2018 to 2021 to adviser, and Bank of America Merrill Lynch, have been reduced by €3.3bn over the past ensure TLAC compliance. Handelsbanken Capital Markets and HSBC as lVEûQUARTERS ûDOWNûûCOMPAREDûWITHû It has indicated it might need to raise joint leads. December 2016. additional SNP once it is under the The Swedish bank plans to issue a euro The transaction is the tip of the iceberg in supervision of the Single Resolution Board. lVE YEARûSENIORûUNSECUREDûFOLLOWINGûAû what is expected to be a busy week of supply The bank is due to move its headquarters to roadshow starting on June 18. FORûlNANCIALûDEBTû4HEûMARKETûHASûNOTûREALLYû Finland in October 2018. Both banks will use proceeds for projects been tested in size since mid April but Despite its relatively small target, Nordea such as renewable energy, clean BANKERSûAREûCONlDENTûTHATûNEWûDEALSûWILLûBEû has been eager to get going with its SNP transportation, pollution prevention and well received. programme even though Sweden’s green buildings. “We didn’t see much come through this legislation for SNP is under consultation and KBC’s choice of holdco format will allow week but what did come went really well,” a will only be applied from December 29 the bank to continue building its stack of senior syndicate banker said. “It was a 2018. The implementation for Finland is loss absorbing debt.

International Financing Review June 16 2018 37 KBC has roughly a €1.2bn to €1.3bn MREL reached a scale where a capital raise outside making the most of more stable market gap versus the 2019 targets, according to the equity market is appropriate.” conditions to bring a short-dated benchmark ING analysts. They think the Green bond An enthusiastic UK challenger bank that that surprised on the upside. should be priced in line with the bank’s refers to itself as a disruptor in the sector The Swedish lender, rated Aa2/AA-/AA, existing holdco curve. and calls its customers fans, Metro Bank was priced a £500m June 2022 trade via Deutsche However, a lead disagreed. founded in 2010 and has raised more than Bank and Nomura on books over £725m, “I was really sceptical at the beginning on £1.3bn of equity since inception. allowing for pricing at 83bp over Gilts, the Green,” he said. “However it does give you a “They don’t have a rating at the moment, tight end of high 80s IPTs. price advantage.” therefore Tier 2 debt is the type of “That was an awesome trade,” said a Some market participants have attributed instrument that can garner interest from a banker away. “It’s not every day that you can THEûPRICINGûBENElTSûTOûTHEûFACTûTHATû'REENû broad spectrum of investors,” the lead said. get a £500m trade done in sterling. We’ve bonds have tended to be smaller than non- “With an unrated senior, you don’t get the NOTûSEENûTHATûMUCHûSUPPLYûBELOWûlVE YEARû Green issues. same range of investors.” and investors are looking to park their cash The lead said that depending on feedback, Metro reported a 13.6% CET1 ratio for the in liquid assets. It’s a well-loved name and +"#SûTENORûWASûLIKELYûTOûBEûINûTHEûSAMEûlVEû lRSTûQUARTERûOFû ûAûDROPûVERSUSûTHEûû one that people have lines for. I was to seven-year bucket as Svenska’s. it reported at the end of 2017. surprised not to see anyone else hit the The transactions follow publication of 4HEûBANKûSAIDûTHEûDEALûWASûTHEûlRSTûSTEPûASû market after them.” ICMA’s updated versions of principles it starts to diversify and mature its capital Svenska Handelsbanken’s deal was more concerning Green as well as Social and base, adding that 2018 is the right time to or less a copycat of the Bank of Montreal’s Sustainable bonds. STARTûTOûOPTIMISEûASûITûHASûTURNEDûTOûPROlT £300m June 2022 issue priced in mid-March Key changes of the 2018 editions released “Our debt raise is all about continued that came at 83bp over Gilts, having also during the fourth Green Bond Principles GROWTH ûWHICHûDRIVESûOURûPROlTABILITY vû started marketing in the high 80s. AGM in Hong Kong include international Craig Francis Donaldson, Metro Bank’s CEO 3ENIORûlNANCIALûSTERLINGûISSUANCEûHASû and national initiatives to produce green said during the bank’s Q1 earnings call. increased versus 2017’s level, with £8.375bn TAXONOMIESûANDûCLASSIlCATIONS ûANDûANû He said that banks Metro had spoken to raised year to date versus £6.35bn, though emphasis on the timely reporting by issuers indicated that there would be strong some of this increase is a result of UK banks to investors in the case of material interest for this debt issue. ramping up their primary market activity. developments. 5NDERLYINGûPRE TAXûPROlTûROSEûTOûaMûINû “Investors have cash in sterling and the ICMA recommends issuers appointing the three months to March 31 2018, short end is the perfect place to park it,” said EXTERNALûREVIEWûPROVIDERSûTOûCONlRMûTHEû compared with £2m a year earlier. another banker away. “They started at a alignment of their bond with the principles, Like other UK banks, Metro Bank used the sensible level. It’s basically a copycat of and so has released new guidelines for this. cheap liquidity provided by the Bank of BMO’s deal done back in March.” A “high-level mapping” of the UN’s SDGs England under the Term Funding Scheme, to eligible project categories and a drawing £3.8bn but now needs to wean framework for impact reporting of social itself off the cheap central bank money. SWISS FRANCS bonds were also published. It currently plans to raise around £750m Changes to the Green Bond Principles’ of MREL-qualifying debt by January 1 2020. BUSY SWISS WEEK FOR FINANCIALS TEXTûITSELFûINCLUDEûTHEûRECOGNITIONûOFûlVEû The Tier 2 will be issued out of its resolution high level environmental objectives, such as entity. )TûWASûAûBUSYûWEEKûFORûlNANCIALSûINûTHEûFRANCû climate change mitigation and pollution The sterling market has been broadly with a senior insurance and a bank AT1 prevention. It also introduces a new notion - resilient to recent market volatility. Svenska raising SFr800m between them. And more the distinction between these Handelsbanken printed a £500m June 2022 names are lining up. environmental objectives and the projects trade last Monday on books in excess of ZURICH INSURANCE COMPANY, rated A1/A+, designed to meet them. £725m. opened the session on Monday, mandating ICMA said that over 85% of Green bond -ETROû"ANKSûUNIQUEûPROlLEûMEANSûTHATû ZKB as sole lead for a CHF200m-plus 6.5-year issuance in 2017 was aligned with its comparables are thin on the ground. senior unsecured bond due December 18 principles. “Clydesdale, TSB and Sainsbury’s Bank are 2024. the sort of names people will take a look at Books opened at mid-swaps plus 28/30bp but the Metro story and business model is (0.458%/0.478%), before announcing a STERLING quite unique,” the lead said. “This is a pure minimum SFr300m with levels set at UK play that doesn’t have conduct issues or -3 BP ûlNALLYûPRICINGûFORû3&RM METRO BANK LOOKS FOR NEW FANS IT legacy problems.” 4HEûlNALûSPREADûGAVEûNOûNEWûISSUEû IN DEBT MARKET Sainsbury’s Bank is the most recent of the premium, and went to mainly insurers, with three comparables to have come to market. good interest from banks and asset METRO BANK has set its sights on a Tier 2 It priced a £175m unrated 10NC5 Tier 2 with managers. capital raise for its bond market debut as it a 6% coupon at the end of November 2017. It VONTOBEL HOLDING followed with a perpetual looks to bolster its balance sheet and further has since rallied and was quoted at 4.50% non-call October 2023 Additional Tier 1 deal. grow its business. last Wednesday, according to Thomson Initial levels were announced on Tuesday at The UK challenger bank has mandated Reuters. 2.75%/3% with books opening on Wednesday Bank of America Merrill Lynch and RBC and at 2.625%/2.75% for a minimum SFr350m concluded investor meetings on June 14 for SHORT STERLING OFFERS SAFE deal. the unrated 10NC5 trade. HARBOUR FOR FINANCIALS 4HATûWASûRElNEDûTOûAûlNALûûYIELDû “It’s their debut bond deal,” said a lead. and a minimum SFr400m size before lunch, “The fact that it’s subordinated gives it SVENSKA HANDELSBANKEN eschewed the euro before pricing at par for SFr450m at a spread additional appeal. The company feels it has market in favour of sterling last week, of 260.5bp over mid-swaps.

38 International Financing Review June 16 2018 BONDS COVERED BONDS

As this was Vontobel’s debut, there was AROUNDûlVEûYEARSûBEFOREûREPLACEMENTûORû NOûCURVEûTOûPRICEûAGAINSTû/NEûLEADûOFlCIALû maturity. said “for the size, 2.625% is pretty aggressive In September 2017, CBA issued a €1bn COVERED BONDS outcome pricing wise.” 1.936% 12-year non-call seven Tier 2 note, a For a comparable, Raiffeisen Schweiz’s month after Westpac and Australia and New SFr400m 2% perpetual callable in May 2023 Zealand Banking Group sold A$350m 12- EUROS was yielding just under 2% ahead of the new year non-call seven and A$225m 15-year Vontobel. That deal was issued in April, non-call 10 Tier 2 Eurobonds, respectively. DNB’S GREEN WINS NORWEGIAN coming at par or spread of mid-swaps plus In January 2017, National Australia Bank COVERED RACE 195.75bp. issued a A$275m 15-year non-call 10 T2 note 2AIFFEISENûISûBIGGERûANDûALSOûBENElTSûFROMû off its global MTN programme before DNB BOLIGKREDITT racked up over €2bn of a strong support from its Genossenschaft PRINTINGûTHEûlRSTûMAJORûBANKûRETAILû4IERûû demand for its seven-year debut Green network of 255 banks. offering since 2013. The A$800m ASX-listed covered bond, scoring the biggest book seen Credit Suisse and Vontobel were lead note had a 11.5-year non-call 6.5 structure – in the sector in recent weeks at one of the managers and bookrunners, with Raiffeisen the longest maturity and call date yet for most competitive starting and landing Schweiz as co-lead. domestic T2 issues. points versus fair value. Vontobel Holding is rated A3 on a senior Westpac’s new subordinated note has The issuer announced the mandate on a basis, and the issue was provisionally rated expected ratings of Baa1/BBB from Moody’s/ day that was already occupied with Baa3. 30 ûFOURûANDûlVEûNOTCHESûBELOWûTHEûBANKSû Norwegian supply: Monday saw both Raiffeisen Schweiz is rated A2, with its Aa3/AA– senior unsecured ratings. SPAREBANK 1 BOLIGKREDITT and MORE BOLIGKREDITT AT1 also rated Baa3. OFFERûlVE YEARûTENORS The proceeds of the Vontobel deal will be NAB TRUST SERVICES REPACKAGES “But DNB’s a great brand name and USEDûTOûlNANCEûTHEûACQUISITIONûOFû.OTENSTEINû LOANS Norway as a country is solid as a rock,” said a La Roche Private Bank and for other general banker away from the trade. business purposes. Unrated NAB TRUST SERVICES, wholly owned by While SpaBol and More Boligkreditt both IKB DEUTSCHE INDUSTRIEBANK, unrated, has National Australia Bank, has issued a debut started with around 7bp premiums, in line mandated UBS to lead a Swiss roadshow in A$200m (US$150m) senior secured Green with recent trades, DNB only offered 5bp Zurich on June 26. It joins PBB DEUTSCHE PASS THROUGHûmOATING RATEûNOTEûWITHûAû before landing with a 3bp concession. PFANDBRIEFBANK in the pipeline. weighted-average life of 3.2 years. Orders at the initial swaps plus 5bp area NAB was sole lead manager for last Friday’s guidance crossed €1bn within an hour, and transaction, which priced in line with DNB went on to print a €1.5bn deal at plus NON-CORE CURRENCIES guidance at three-month BBSW plus 160bp. 2bp. The notes repackage eight NAB Trust The market has not witnessed a €2bn-plus SCARCITY SUPPORT FOR WESTPAC TIER 2 Services loans to environmentally friendly book since ING sold a €1.75bn 10-year at the industries. start of April. WESTPAC priced a self-led A$725m (US$550m) The NAB low-carbon shared portfolio SpaBol received €1.7bn-plus of orders for YEARûNON CALLûlVEû4IERûûNOTEûLASTû &2.SûHAVEûBEENûCERTIlEDûBYûTHEû#LIMATEû its €1bn seven-year Green bond in January, Thursday, in line with guidance at three- Bonds Initiative. the only other bank to have sold a Green month BBSW plus 180bp. covered this year. 4HEûTRANSACTIONûBENElTEDûFROMûSOMEû SG READIES TAIWAN GREEN BOND “It was a lot of plusses for one deal,” said a SCARCITYûVALUEûASûTHEûlRSTûDOMESTICû second banker away from DNB. “Everything wholesale major bank Tier 2 print since SOCIETE GENERALE has obtained regulatory was spot on to get the result they got.” September 2016. approval to issue up to NT$15.6bn Although not quite the blowout that DNB The country’s four biggest lenders raised (US$523m) of new dollar-denominated achieved, SpaBol and More Boligkreditt also a combined A$3.425bn from eight issues in Green bonds in Taiwan. BENElTEDûFROMûTHEûBETTERûBACKDROP this market between March 2014 and The Financial Supervisory Commission A third banker away could not recall the September 2016, but they subsequently said on June 12 that the French bank’s last time Norway had two active deals and looked elsewhere for their Basel III- 4AIPEIûBRANCHûWASûTHEûlRSTûFOREIGNûBANKûTOû one mandate out all on the same day, and compliant T2 capital needs, to jurisdictions secure such approval. that typically offer longer tenors and often The bond proceeds will be used for major ALL COVERED BONDS (ALL CURRENCIES) larger size. infrastructure projects in Taiwan, such as BOOKRUNNERS: 1/1/2018 TO DATE As domestic investors are generally offshore and onshore wind power Managing No of Total Share unwilling to extend duration too far beyond development, solar energy development bank or group issues US$(m) (%) THEûTRADITIONALûlVE YEARûSWEETûSPOT ûALLûNINEû and other renewable energy plans, the FSC 1 LBBW 40 7,556.42 6.1 Tier 2 wholesale trades have been either said in a press release. 2 Natixis 32 7,451.63 6.0 YEARûNON CALLûûORû YEARûNON CALLûlVEû According to a market source, SG is 3 UniCredit 38 7,258.35 5.8 instruments. LOOKINGûATûAûTENORûOFûlVEûTOûûYEARSûANDûTHEû 4 HSBC 38 7,055.56 5.7 In January Commonwealth Bank of lRSTûISSUEûISûLIKELYûTOûBEûFORû.4BNûYuanta 5 Commerzbank 34 6,378.84 5.1 Australia sold a groundbreaking US$1.25bn Securities is lead arranger on the offering. 6 Credit Suisse 26 5,912.63 4.8 4.326% 144A/Reg S 30-year bullet Tier 2 note. The source said more foreign banks were 7 Deutsche Bank 25 5,720.86 4.6 4HEûlRSTûPUBLICûOFFERINGûOFûITSûKINDûFROMû preparing to issue new dollar-denominated 8 Credit Agricole 26 5,213.36 4.2 THEû!SIAû0ACIlCûREGIONûISûNOTûTOûEVERYûISSUERSû Green bonds. 9 SG 24 4,947.53 4.0 taste, however, as such ultra-long tenors are Previously, foreign banks were only 10 BNP Paribas 23 4,848.37 3.9 a mismatch against the length of Australian allowed to issue foreign currency- Total 159 124,083.36 mortgages, which have an average life of denominated Green bonds in Taiwan. Source: Thomson Reuters SDC code: J15a

International Financing Review June 16 2018 39 said he was surprised all three went so well GREENûANGLEûDElNITELYûGIVESûYOUûAûBITûOFûANû according to Covenant Review, could have given how aggressively they were edge,” said the third banker. given creditors a good argument covenants marketed from the start. ING was the sole green structuring had been breached. SpaBol’s €1bn deal crossed €1.2bn in adviser, together with Credit Agricole, “What they did was probably within the orders via BNP Paribas, Commerzbank, Danske DNB Markets, LBBW and UniCredit as joint bounds,” Scott Josefsberg, an analyst at the Bank and UniCredit. More Boligkreditt leads. COVENANTûANALYSISûlRMûTOLDû)&2ûONû4HURSDAY garnered a more modest book of Prior to SpareBank 1 Boligkreditt, only Many investors who had feared a €350m-plus for its €250m issue through Berlin Hyp and Deutsche Hypo had broken complete spin-off of Chewy have become LBBW and Nordea. into the Green covered bond market. Caja more sanguine over the past couple of On Friday, SpaBol and More Boligkreditt Rural Navarra offered the variation of a weeks, partly thanks to a better-than- WEREûTRADINGûMOREûORûLESSûmATûTOûREOFFER ûATû Sustainable covered issue in April. expected earnings in the company’s most plus 2bp and 7bp, respectively. DNB was Hot off the heels of DNB, LANDESBANK recent quarter. bid marginally tighter at 1.7bp. BADEN-WUERTTEMBERG swooped in last Friday The market shrugged off a S&P’s one- “DNB priced correctly and the credit is to announce plans for an inaugural Green notch downgrade of the company to CCC on the Rolls-Royce of the Nordics,” said a lead. COVERED ûAûõMûlVE YEAR Thursday, which the agency said was on the The bank has mandated ABN AMRO, DZ back of an increased change that the THE COLOUR OF MONEY Bank, LBBW, Swedbank and UBS to joint company may pursue a distressed debt Bankers away agreed that the green manage what will be this year’s third exchange in the next year. element was a supporting but not a Green euro covered benchmark. deciding factor for DNB’s trade. “It’s not like if it had been a 15-year EUROPE/MIDDLE EAST/ Green bond they would have had a similar AFRICA book just because it was Green,” said the second banker. “The two key drivers here HIGH-YIELD JUMBO BUYOUT SPREE HITS HIGH-YIELD were the name and tenor.” A fourth banker envisaged a similar Three cross-border jumbo high-yield deals landing point had DNB opted for a UNITED STATES backing acquisitions started marketing last conventional covered format. week, testing appetite prior to larger LBOs h9OUûDOûHAVEûTHEûADVANTAGEûOFûOPENINGû PETSMART ENJOYS SECOND waiting in the pipeline. new pockets of money, and over time WEEKLY RALLY Danish telecoms group TDC is looking to THEREûWILLûBEûAûPRICINGûBENElTû!TûTHEû ISSUEûõBN EQUIVALENTûOFûlVE YEARûNON CALLû moment, I don’t think there is that much PETSMART bonds enjoyed another move two senior notes in euros and US dollars, value that investors would pay more.” higher last week, as concerns the company’s rated B3/B–/B–. “But that broader investor base means decision to spin off part of Chewy to its US battery manufacturer ENERGIZER is out YOUûBENElTûMOREûINûSECONDARYûANDûTHENû private equity sponsors might have violated with a B2/BB– rated US$1.25bn-equivalent you can build deal two or three on it.” covenants subsided. eight-year non-call three senior, looking to The lead said the pricing advantage can Unsecured bonds of the retailer had raise US$500m in dollars and US$750m- be minimal, depending on the name and GAINEDûASûMUCHûASûlVEûPOINTSûOVERûTHEûWEEKû equivalent in euros. trade, averaging 1bp in covereds and 2bp- as of Thursday, bringing gains so far this Spanish casino group CIRSA GAMING is 3bp in senior. month to over 16 points, according to looking to raise €1.56bn-equivalent in a Bankers nevertheless concur that “going MarketAxess data. triple-tranche euro and US dollar offering green” in the covered sector, already a safe The latest lift came from a disclosure on that comprises a seven-year non-call one haven in recent volatility, adds an extra 4UESDAY ûlRSTûREPORTEDûBYû"LOOMBERG ûTHATû EUROûmOATERûANDûlXED RATEûSEVEN YEARûNON cushion. the company valued Chewy at US$4.45bn. call three tranches in both currencies. The “I think this DNB deal did show that 4HATûWASûBELOWûTHEû53BNûlGUREûSOMEû bonds are expected to be rated B2/B+. when markets are bit trickier, having that investors were assuming and which, TDC will fund its buyout by a Macquarie- led consortium and Cirsa by Blackstone, ALL US$ DENOMINATED HIGH-YIELD BONDS ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS while Energizer will fund its acquisition of BOOKRUNNERS – 1/1/2018 TO DATE 1/1/2018 TO DATE Spectrum Brands’ batteries and lighting Managing No of Total Share Managing No of Total Share businesses, which includes the household bank or group issues US$(m) (%) bank or group issues €(m) (%) names Rayovac and Varta. 1 JP Morgan 85 12,205.90 10.5 1 Deutsche Bank 24 2,791.05 8.7 2 Goldman Sachs 70 8,377.58 7.2 2 JP Morgan 29 2,640.49 8.2 NEW RISK TEST 3 BAML 80 7,917.35 6.8 3 BNP Paribas 26 2,144.21 6.7 4HEûDEALSûAREûTHEûlRSTû,"/ûHIGH YIELDûBONDSû 4 Barclays 59 7,863.48 6.8 4 BAML 16 2,129.33 6.6 tapping the European market since deals 5 Deutsche Bank 63 7,357.88 6.4 5 Credit Suisse 20 1,781.55 5.5 from Flora, Refresco and Fedrigoni tested 6 Wells Fargo 55 7,120.59 6.2 6 HSBC 19 1,569.38 4.9 risk appetite in April. 7 Credit Suisse 60 6,929.34 6.0 7 Goldman Sachs 16 1,549.85 4.8 While leads on TDC are looking at pricing 8 Morgan Stanley 55 6,544.43 5.7 8 Morgan Stanley 9 1,440.51 4.5 around 7% on the euros, the US dollar 9 Citigroup 58 6,361.48 5.5 9 Barclays 14 1,257.29 3.9 tranche has been whispered at 9% area, 10 RBC 42 4,863.43 4.2 10 Citigroup 10 998.89 3.1 according to sources. Total 229 115,724.35 Total 72 32,123.56 A banker away from the deal noted the Including US domestics, Euro, foreign, globals. Excluding equity-related Excluding equity-related debt. wideness of the euro whispers, especially debt. GIVENûTHATûTHEûPAPERûISûlVE YEARû(Eû Source: Thomson Reuters SDC code: B5 Source: Thomson Reuters SDC code: B6 suggested that wide pricing could spook

40 International Financing Review June 16 2018 BONDS HIGH-YIELD

banks on the upcoming Akzo Nobel buyout, “From the investor side, investors weren’t period on June 24 and would otherwise have given a similar structure that includes buying so much in May, so they potentially to wait until after Q2 results on July 24. subordinated bonds. have more appetite to buy in June,” he said. Outokumpu will use proceeds to 4HEûlNANCINGûPACKAGEûFUNDINGûTHEû TDC concluded its US roadshow on RElNANCEûAûõMûûSENIORûSECUREDû buyout for Akzo Nobel’s chemical business Thursday and Energizer was scheduled to do 2021 note. It will pay a call premium of by Carlyle Group and GIC is expected later so on Friday. While the two meet European 105.4375 to take the notes out, which are in the summer. investors this week, Cirsa’s roadshow will callable from June 16. In the last round of LBO deals in April, move to the US on Tuesday. The deal came at an interesting time, investor push-back against aggressive terms Deutsche Bank (B&D) and HSBC are joint having been announced shortly after the US painted a mixed picture. Refresco and global coordinators on TDC, and Barclays introduced tariffs on steel imports from Fedrigoni had to amend documentation, (B&D), JP Morgan, Bank of America Merrill Lynch, Europe on May 31. while Flora tightened pricing despite a Citigroup, MUFG, TD Securities and Standard h)TSûTHEûlRSTûLINEûOFûQUESTIONINGûFORû covenant package rated by Moody’s as the Chartered are running Energizer. Deutsche everybody,” a lead said early in marketing. weakest on a euro-denominated bond. All Bank (B&D), Barclays and UBS are joint global “It’s a curiosity point more than anything three bonds are now bid below reoffer. coordinators on Cirsa. else.” Analysts at Covenant Review warned The company said in an investor earlier that the restricted payments OUTOKUMPU TAPS BETTER WINDOW presentation that its facilities in Europe, covenant in TDC’s deal, which regulates Mexico and the US predominantly serve capacity to pay dividends and make other Finnish stainless steel maker OUTOKUMPU local customers, which it expects will payments away from creditors, will permit a PRICEDûITSûRElNANCINGûTRADEûAFTERûDECIDINGûTOû mitigate the impact of the new measures. SIGNIlCANTûLEVELûOFûCAPACITYûTOûMAKEû wait for a better market conditions -ARKETûPARTICIPANTSûIDENTIlEDû3CHMOLZû û distributions to junior stakeholders. following the end of its roadshow on June 7. Bickenbach as the main comparable. The The other large LBO waiting in the The €250m six-year non-call two senior Swiss steel group’s €200m senior secured pipeline is for a 55% stake in Thomson secured trade priced at 4.125%, the midpoint 5.625% July 2022s (July 2019 call) was at 4.6% Reuters’ F&R unit, which includes IFR, by of 4%-4.25% guidance, which was in line while Outokumpu was pricing, but that note Blackstone. The deal is expected to be with IOIs heard in the low-to-mid fours. is rated B2/B+, compared with the Ba3 rating launched after the summer. Investors looking at the deal that spoke to on Outokumpu’s new issue. Outokumpu has IFR acknowledged Outokumpu’s track a corporate rating of B1 (stable). CURRENCY DYNAMICS record in deleveraging but cited concerns With TDC operating in Denmark and around the cyclicality of the business. NORDIC MARKET Norway, a source close to the deal said the Adjusted Ebitda more than doubled to One banker away from the deal expressed company was tapping the US dollar market €631m in 2017 from €309m in 2016, scepticism about Nordic deals in general, to diversify its funding base, expecting according to an investor presentation, while citing an illiquid market and weak around two-thirds of the money to be raised leverage fell to 1.7 times in 2017 from 4 documentation. through the euro portion of the deal. times in 2016. Nordic high-yield bonds typically have On the other hand, Spectrum’s battery h4HEYVEûMASSIVELYûIMPROVEDûCASHmOWSû less developed covenant packages than and lighting business and Cirsa have over the last couple of years, but that’s mainstream European trades. substantial operations in both Europe and mainly been due to their operating The weakness of Outokumpu’s the Americas. The EMEA region accounted environment,” one of the investors said. DOCUMENTATIONûWASûmAGGEDûBYûSEVERALû for 45% of Spectrum Batteries’ operations for h&ORûME ûTOOûMUCHûOFûTHEIRûCASHmOWSûHADû investors. It allows Outokumpu to release all or THEûlSCALûYEARû ûCOMPAREDûWITHûûFORû come from exogenous factors. part of the transaction guarantees or securities North America, while Central and South “If you look at the fact they’re paying a if the issuer receives a Ba2 or BB rating and 50% American operations accounted for 53% of 5.5% call premium to get this done now, of secured creditors agree, according to the Cirsa’s Ebitda in 2017. there’s reason to be cautious,” he added. notes’ prospectus, sources said. The deals add euro debt to Energizer and Early in marketing, Outokumpu’s head of Normally, the guarantees would fall away US dollar debt to Cirsa’s capital structure. At investor relations told IFR the company if an issuer was upgraded to investment- present, Energizer has a US$600m 5.5% wanted to issue before going into a silent grade instead, the sources said. senior unsecured 2025 note issue (June 2020 call), while Cirsa’s €950m bond debt is all in ALL EUROPEAN HIGH-YIELD ISSUERS ALL ASIAN HIGH-YIELD ISSUERS euros, according to Thomson Reuters data. 1/1/2018 TO DATE 1/1/2018 TO DATE Managing No of Total Share Managing No of Total Share VOLUME BOOST bank or group issues US$(m) (%) bank or group issues US$(m) (%) The deals will also provide a welcome boost 1 JP Morgan 33 4,358.22 9.4 1 Haitong Securities 33 1,679.28 7.4 to volumes in the European market after a 2 Deutsche Bank 27 3,385.74 7.3 2 Deutsche Bank 15 1,666.07 7.4 muted May. A mere €4.5bn-equivalent of 3 BNP Paribas 29 2,813.75 6.1 3 Morgan Stanley 11 1,468.59 6.5 high-yield bonds were priced in euros and 4 Barclays 20 2,619.16 5.7 4 Citic 21 1,416.88 6.3 sterling in May, according to IFR data, a 55% 5 Goldman Sachs 22 2,547.95 5.5 5 BAML 11 1,348.70 6.0 decrease on April’s levels. It remains to be 6 BAML 17 2,471.01 5.4 6 Guotai Junan Securities 29 1,213.96 5.4 seen whether this will be an advantage or 7 Credit Suisse 20 2,159.86 4.7 7 JP Morgan 6 984.70 4.3 disadvantage. 8 Citigroup 16 1,969.89 4.3 8 Bank of China 14 973.68 4.3 “Supply risk is probably the bigger 9 HSBC 19 1,907.45 4.1 9 Credit Suisse 14 914.49 4.0 pressure over the next couple of weeks. 10 ING 13 1,714.08 3.7 10 Goldman Sachs 7 850.21 3.8 Whether indigestion happens depends on Total 82 46,127.87 Total 66 22,648.41 how big the marginal supply is,” said an Excluding equity-related debt. Excluding equity-related debt. investor. Source: Thomson Reuters SDC code: B06c Source: Thomson Reuters SDC code: B06d

International Financing Review June 16 2018 41 Moody’s upgraded Outokumpu’s ratings were issued in November 2015 and paid a 7% Around 82% of market value comes from one notch in November. coupon. areas within the “Randstad” banding of BNP Paribas and Nordea (B&D) were Amsterdam, Rotterdam, The Hague and coordinators, with Danske Bank and Swedbank Utrecht. as joint leads. The loans have a combined Day 1 LTV of 62.2% and yield of 10.9%. The vacancy rate is STRUCTURED FINANCE 20.5%. The expected maturity is May 2023 ASIA-PACIFIC ANDûTHEREûISûAûlVE YEARûTAILûPERIODû#ALLû protection runs until May 2021. NEXTDC PLANS UNRATED RETURN EMEA MBS Goldman Sachs is sole arranger and lead manager. It will hold a site visit on NEXTDC has mandated NAB to arrange GOLDMAN ANNOUNCES DUTCH Wednesday with pricing expected next week. investor meetings for a potential Australian CMBS KANTOOR FINANCE 2018 dollar bond issue. MORGAN STANLEY ADDS TO NEXTDC’s previous visit to the local GOLDMAN SACHS has announced a €235.44m CMBS SUPPLY market was in May 2017 when it raised Dutch multi-borrower CMBS, KANTOOR A$300m (US$224m) from the sale of 6.25% FINANCE 2018, Goldman’s second CMBS of the MORGAN STANLEY announced a new multi- four-year wholesale senior unsecured notes, year after it sold UK deal Ribbon Finance in borrower European CMBS on Thursday, a dubbed Notes III, also arranged by NAB. May. day after Goldman Sachs announced its own The unrated data-centre provider used the Five notes are being offered, rated by S&P deal Kantoor. proceeds to redeem its A$60m Notes I and and DBRS. They are a €137.75m AAA/AAA, a Morgan Stanley’s CMBS is LIBRA (ELOC 31), A$100m Notes II at the next optional call €19.95m AA/AAL, a €28.5m A+/AL, a securitising a single loan from Morgan date of June 16 2017. €34.77m BBB+/BBBL and a €14.47m BB-/BBL. Stanley on a portfolio of logistics properties Notes I were issued in June 2014 with a The previous Dutch CMBS came four in Germany and the Netherlands owned by lVE YEARûNON CALLûTWO AND HALFûSTRUCTUREûANDû years ago with Deutsche Bank’s Deco 2014- MStar Europe. MStar is a joint venture paid a coupon of 8.0%. Notes II, with an Tulip. However, another new CMBS was between Starwood Capital Group and M7 identical maturity date of June 16 2019, announced this week, Libra (ELOC 31), Real Estate. which also includes Dutch properties as well The portfolio was acquired by MStar in ALL INTL ISSUERS (EXCLUDING SELF-FUNDED) as German ones. The two new trades will ûANDû ûlNANCEDûBYûLOANSûFROMû BOOKRUNNERS: 1/1/2018 TO DATE push year-to-date European CMBS issuance Deutsche Bank and Bank of America Merrill Managing No of Total Share beyond €2bn-equivalent. Lynch. The loans were securitised in bank or group issues US$(m) (%) +ANTOOR ûWHICHûMEANSûhOFlCEvûINû$UTCH û respective CMBS deals Deco 1 JP Morgan 50 12,257.87 9.3 securitises two loans from Goldman Sachs 2015-Charlemagne and Taurus 2015-3, and 2 Credit Suisse 54 11,998.41 9.1 SECUREDûONûûMAINLYûOFlCEûBUILDINGSûINûTHEû have since repaid. 3 BAML 44 10,752.87 8.2 Netherlands. One loan, for €184.97m, is to The new CMBS’s senior loan pays 200bp 4 Wells Fargo 41 10,649.16 8.1 Czech conglomerate PPF, while the other, over three-month Euribor and is sized at 5 Citigroup 50 9,987.43 7.6 totalling €58.37m, is to Credit Suisse and €282.5m but only €232.5m, or 82%, will be 6 Barclays 28 7,317.05 5.6 Qatar Investment Authority joint venture sold to the SPV. Morgan Stanley will retain 7 Deutsche Bank 37 7,135.60 5.4 Aventicum Capital Management. the remaining €50m. 8 Goldman Sachs 23 6,970.07 5.3 4HEûlRSTûLOANûRElNANCESûANûEXISTINGû A 5% interest in the securitisation will also 9 SG 11 4,975.87 3.8 portfolio owned by PPF since 2014 and is be held by Morgan Stanley as a vertical risk 10 Morgan Stanley 18 4,944.57 3.8 MADEûUPûOFûSEVENûOFlCES ûONEûMIXEDûOFlCEû retention loan, leaving €221m of notes rated Total 230 131,731.17 and leased hotel, and one retail property. from Triple A to Double B to be sold to Includes securitisations, PFI bonds and credit-linked notes. Excludes US The second loan funded the purchase of investors. global ABS/MBS, CDOs and self funded issues. NINEûOFlCEûPROPERTIESûBOUGHTûBETWEENû The loan has an initial LTV of 67.5% and Source: Thomson Reuters SDC code: J10d October 2017 and April 2018. gross rental income of €32.6m. There are 50 properties at 88.3% occupancy. There are ALL EUROPEAN ISSUERS GLOBAL STRUCTURED FINANCE IN EUROS 443 tenants, and light industrial properties BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE MAKEûUPû ûOFlCESûûANDûOTHERSû Managing No of Total Share Managing No of Total Share Pricing is expected within the next three bank or group issues US$(m) (%) bank or group issues €(m) (%) weeks. Morgan Stanley is arranger and lead 1 SG 6 3,550.71 9.4 1 SG 6 2,906.52 13.9 manager, Wells Fargo is co-manager. 2 BAML 12 3,517.44 9.4 2 Credit Agricole 6 2,300.19 11.0 3 BNP Paribas 11 2,896.51 7.7 3 UniCredit 7 1,497.73 7.1 TWENTYFOUR ANNOUNCES 4 Credit Agricole 6 2,842.07 7.6 4 BNP Paribas 5 1,468.46 7.0 MALT HILL NO.2 5 Citigroup 8 2,320.56 6.2 5 BAML 4 1,461.65 7.0 6 Lloyds Bank 10 2,018.86 5.4 6 Cooperatieve Rabobank 2 1,355.98 6.5 TWENTYFOUR ASSET MANAGEMENT has mandated 7 UniCredit 7 1,814.67 4.8 7 Commerzbank 2 1,271.38 6.1 Bank of America Merrill Lynch and JP Morgan as 8 Cooperatieve Rabobank 2 1,640.72 4.4 8 Citigroup 4 992.76 4.7 joint leads for UK buy-to-let RMBS MALT HILL 9 Commerzbank 2 1,557.03 4.1 9 Morgan Stanley 3 831.10 4.0 NO.2. BAML is sole arranger. 10 MUFG 1 1,398.52 3.7 10 Standard Chartered 1 675.22 3.2 The deal securitises mortgages bought Total 52 37,587.95 Total 31 20,955.81 from Coventry Building Society, which Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, credit-linked notes (Euro, foreign, global and originated them through its Godiva brand. A domestics) and excludes CDOs. domestics) and excludes CDOs. roadshow began on Thursday and pricing is Source: Thomson Reuters SDC code: B16n Source: Thomson Reuters SDC code: B16g due this week.

42 International Financing Review June 16 2018 STRUCTURED FINANCE

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 15/6/2018 Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type ACAR 2018−2 US$98.09 0.59 2.940 Wells Fargo/Deutsche Bank NR/AAA/NR ABS ACAR 2018−2 US$27.63 1.54 3.460 Wells Fargo/Deutsche Bank NR/AA/NR ABS ACAR 2018−2 US$49.74 2.22 3.700 Wells Fargo/Deutsche Bank NR/A/NR ABS ACAR 2018−2 US$39.376 3.12 4.070 Wells Fargo/Deutsche Bank NR/BBB/NR ABS ACAR 2018−2 US$19.34 3.12 5.160 Wells Fargo/Deutsche Bank NR/BB−/NR ABS ACAR 2018−2 US$13.824 3.55 6.290 Wells Fargo/Deutsche Bank NR/B/NR ABS AALLC 2018−1 US$77.872 3.20 3.870 Deutsche Bank NR/A/NR ABS AALLC 2018−1 US$26.242 3.20 4.510 Deutsche Bank NR/BBB/NR ABS AALLC 2018−1 US$26.028 3.20 6.650 Deutsche Bank NR/BB−/NR ABS CLUB−2018−P1 US$207.860 0.99 3.390 JP Morgan/Citigroup NR/NR/NR ABS CLUB−2018−P1 US$27.36 2.56 4.070 JP Morgan/Citigroup NR/NR/NR ABS CLUB−2018−P1 US$44.46 3.31 5.210 JP Morgan/Citigroup NR/NR/NR ABS CASL 2018−A US$83.400 6.23 1mUSL+120bp Barclays/Credit Suisse NR/A/NR ABS CASL 2018−A US$86.440 6.23 4.13 Barclays/Credit Suisse NR/A/NR ABS CASL 2018−A US$13.250 6.70 4.750 Barclays/Credit Suisse NR/NR/NR ABS CASL 2018−A US$15.930 7.52 5.500 Barclays/Credit Suisse NR/NR/NR ABS GCAR 2018−2 US$176.690 0.84 — Wells Fargo/JP Morgan NR/AA/NR ABS GCAR 2018−2 US$52.840 2.42 — Wells Fargo/JP Morgan NR/A/NR ABS GCAR 2018−2 US$39.590 3.33 — Wells Fargo/JP Morgan NR/BBB/NR ABS GCAR 2018−2 US$30.270 3.90 — Wells Fargo/JP Morgan NR/BB−/NR ABS DEFT 2018−1 US$258 0.33 2.450 Barclays/RBC CM/Societe Generale NR/A1+/F−1+ ABS DEFT 2018−1 US$296 1.26 2.970 Barclays/RBC CM/Societe Generale NR/AAA/AAA ABS DEFT 2018−1 US$75 1.26 1mUSL+30bp Barclays/RBC CM/Societe Generale NR/AAA/AAA ABS DEFT 2018−1 US$250.525 2.24 3.180 Barclays/RBC CM/Societe Generale NR/AAA/AAA ABS DEFT 2018−1 US$40.166 2.75 3.340 Barclays/RBC CM/Societe Generale NR/AA/AA ABS DEFT 2018−1 US$28.837 2.91 3.530 Barclays/RBC CM/Societe Generale NR/A/A ABS DEFT 2018−1 US$43.255 2.92 3.850 Barclays/RBC CM/Societe Generale NR/BBB/BBB ABS RENEW 2018−1 US$139.974 1.80 3.950 Barclays/Morgan Stanley/Natixis NR/NR/NR ABS SC GERMANY AUTO 2018−1 €561 1.80 1mE+40bp Banco Santander/Societe Generale/UniCredit Aaa/NR/NR ABS SMB 2018−B US$214 1.00 1mUSL+32bp Credit Suisse/Goldman Sachs/JP Morgan Aaa/NR/AAA ABS SMB 2018−B US$283 5.49 3.600 Credit Suisse/Goldman Sachs/JP Morgan Aaa/NR/AAA ABS SMB 2018−B US$139 5.49 1mUSL+72bp Credit Suisse/Goldman Sachs/JP Morgan Aaa/NR/AAA ABS SMB 2018−B US$50.5 9.77 4.000 Credit Suisse/Goldman Sachs/JP Morgan Aa2/NR/A ABS Tagus STC €650 2.70 1.100 Banco Santander/Stormharbour Partners A1/NR/A− ABS TCF 2018−2 US$350 5.04 4.235 RBC CM/BAML/Wells Fargo NR/A/NR ABS TCF 2018−2 US$17.9 5.04 5.105 RBC CM/BAML/Wells Fargo NR/BBB/NR ABS TRL 2018−1 US$200 5.01 3.820 BAML/Credit Suisse NR/A/NR ABS TRL 2018−1 US$282.5 9.99 4.620 BAML/Credit Suisse NR/A/NR ABS WFCM 2018−1745 US$116 9.95 3.874 Wells Fargo NR/AAA/NR CMBS WFCM 2018−1745 US$25.8 9.95 3.874 Wells Fargo NR/AA−/NR CMBS WFCM 2018−1745 US$19.3 9.95 3.874 Wells Fargo NR/A−/NR CMBS WFCM 2018−1745 US$5.15 9.95 3.874 Wells Fargo NR/BBB+/NR CMBS

A £317.5m Triple A is being offered, with TRINIDAD ON THE DECK UCI ANNOUNCES PRADO VI a 2.7-year WAL and a step/call date of May SPANISH RMBS 2021. Below the seniors is an unrated IPTs were released on Thursday for UK RMBS £33.4m Class Z, which will be retained. TRINIDAD MORTGAGE SECURITIES 2018-1 from MARS UCI announced Spanish RMBS PRADO VI on 4WENTY&OURSûlRSTû2-"3ûWASû-ALTû(ILLû CAPITAL and MAGELLAN HOMELOANS. The deal is Thursday via joint arrangers and joint leads No.1 in May 2016, which sold £263.3m 2.31- expected to price this week via Deutsche Bank BNP Paribas and Santander. The deal is year Triple As backed by BTL mortgages also and Morgan Stanley. offering a €351m four-year Class A, rated originated by Coventry. They were priced at The deal’s 2.9-year Triple As are at 85bp Triple A by DBRS and AA+ by Fitch. 135bp over three-month Libor. area over three-month Libor. The rest of the Calls are available on request and pricing Last year TwentyFour sold a BTL deal off a NOTESûHAVEûlVE YEARûAVERAGEûLIVESû4HEû!! is due this week. different shelf, Oat Hill, securitising AAL Class Bs are at 120bp-130bp, the A+/AL UCI’s previous RMBS was in October when mortgages originated by Capital Home Class Cs at mid/high 100s, the A-/BBBL Class Prado V sold a €339m Aa2/AA+ (M/F) 3.9-year Loans. Ds at 200bp area and the BBB/BBL Class Es at tranche at three-month Euribor plus 38bp. Paragon’s Paragon Mortgages 25 is the mid/high 200s. 4HEûNEWûDEALûSECURITISESû ûlRSTû most recent publicly offered BTL-only RMBS. The BB/BL Class F and unrated Class G are ranking prime mortgages for a total €429m Priced in April, the deal’s 4.21-year Triple As shown as “call desk”, as is the unrated Class and average outstanding principal of €137k. came at 65bp over three-month Libor. X piece. The weighted average current interest rate

International Financing Review June 16 2018 43 is 199bp, seasoning is 68 months and the THEû5+ ûPRICEDûITSûlRSTûûDEALûLASTûWEEK û WA CLTV is 68%. EMEA ABS selling senior notes off German auto ABS SC 3OMEûûOFûTHEûLOANSûPAYûAûlXEDûRATEûFORû GERMANY AUTO 2018-1. LIFE ûûAREûlXEDûFORûANûINITIALûPERIODû EDP REVIVES VOLTA VI The deal issued €561m of 1.8-year Triple BEFOREûSWITCHINGûTOûmOATING ûANDûTHEû As at a discount margin of plus 13bp over REMAININGûûAREûmOATING RATEûLOANS EDP - ENERGIAS DE PORTUGAL priced its VOLTA VI one-month Euribor, well inside the plus securitisation last week after postponing the 18bp print achieved by its previous German 2018 POPOLARE BARI RMBS RATED deal two weeks earlier because of broader deal in June last year. market volatility sparked by fallout from The most recent comparable deal this BANCA POPOLARE DI BARI has issued an Italian the Italian elections. YEARûWASû"-7Sû"3+9û!UTOû,OANSûûINû!PRIL û RMBS called 2018 POPOLARE BARI RMBS. The deal EDP’s Volta programme securitises which sold €1bn slightly shorter 1.4-year has been rated by Moody’s and DBRS but statutory receivables payable by Portuguese seniors at plus 12bp. VW deals Driver was not been seen marketed to investors electricity consumers. The new deal was Fourteen and VLC 26 also priced Triple As at and has been retained. It was arranged by JP lead-managed by StormHarbour and Santander 12bp this year, at 1.2-year and 1.3-year Morgan. Totta. WALs. The SPV issued a €684.2m Class A rated “Although this is Portugal and not Italy, Santander, SG and UniCredit, joint leads on Double A, and a €48.3m Class B rated A3/A+. and although it is ABS and not government, last week’s new issue, had gone out with The respective margins over Euribor are there is always some spillover effect and we IPTs on Monday in the mid-teens. Guidance 40bp and 70bp. There are also two unrated thought investors were not ready to commit on Wednesday was plus 14bp (+/–1bp) and junior tranches sized at €77.5m and €16.9m, at that time,” said Paulo Gray, managing the book went more than 2.2x covered at PAYINGû%URIBORûmAT director at StormHarbour. that level before pricing later in the day at They are backed by a static portfolio of “Being a regulatory asset the deal also has the plus 13bp print. lRSTûLIENûMORTGAGES ûWITHû7!ûSEASONINGûOFû some correlation with Portuguese 5.23 years. Around 37% of the loans were government bonds,” he said. CREDITO VALTELLINESE ISSUES originated in 2010 or earlier. The WA LTV is Gray said the new issue came at 102bp ARAGORN NPL 2018 48%. over PGBs, compared with a 99bp margin for the previous Volta trade in November. Two subsidiaries of the CREDITO VALTELLINESE PERMANENT COMING THIS WEEK The new deal is slightly longer, with a 2.7- BANKING GROUP issued an Italian non- year weighted average life versus 2.2 years performing loan securitisation last week but A UK and US roadshow took place last week for Volta V. the deal was not publicly marketed. for PERMANENT 2018-1ûTHEûlRSTû5+û2-"3ûFROMû Volta VI was postponed before any initial The SPV, ARAGORN NPL 2018, issued a LLOYDS’ master trust since November 2016 pricing levels were released and the leads €509.5m Class A rated BBBL/BBB- (DBRS/ ANDûITSûlRSTûTOûSELLûDOLLARSûSINCEû/CTOBERû then waited for the Barcelona conference to Scope) and a €66.8m Class B rated CCC/B, as 2015. end before opening the books on Monday. well as a €10m unrated Class J. UK meetings and calls took place on IPTs were 1.00%-1.10% for the €650m senior They are backed by a €1.67bn portfolio (by Monday, followed by four days of roadshows notes, rated A1/A- by Moody’s and Fitch. gross book value) of secured (75.4%) and across the US. More calls are scheduled for 4HEûlNALûCOUPONûWASûûANDûTHEûNOTESû unsecured (24.6%) loans originated by the start of this week, and pricing is due were priced at par. Volta V had printed Credito Valtellinese and Credito Siciliano. later in the week. seniors at 0.85%. The secured portion is backed by 43% The deal is offering a 1.95-year dollar residential and 57% non-residential tranche and a 2.93-year sterling tranche. SANTANDER CONSUMER BANK properties, with 47% of the properties in the There is also a retained £1bn 6.8-year layer. PRICES GERMAN AUTOS Lombardy region. All are rated Triple A. Some 91% of borrowers are companies Lloyds and Wells Fargo are joint leads for SANTANDER CONSUMER BANK, which tapped the and the rest individuals. The top 10 the dollars, with Lloyds sole lead on the asset-backed market three times last year borrowers make up 8.2% of the pool and the sterling. with auto deals from Germany, Finland and top 100 make up 39.4%. #ERVEDû#REDITû-ANAGEMENTûISûlRSTûSPECIALû GLOBAL SECURITISATIONS IN STERLING SECURITISATIONS – ALL EUROPEAN RMBS servicer, Credito Fondiario is second special BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE servicer and master servicer and Cerved Managing No of Total Share Managing No of Total Share Master Services is back-up servicer. bank or group issues £(m) (%) bank or group issues €(m) (%) The SPV issued a €509.5m Class A rated 1 Lloyds Bank 10 1,077.52 15.0 1 BAML 10 2,012.12 14.3 BBB- and a €66.8m Class B rated Single B, as 2 BAML 9 1,009.57 14.0 2 Cooperatieve Rabobank 2 1,355.98 9.6 well as a €10m unrated Class J. 3 MUFG 1 1,006.20 14.0 3 Citigroup 5 1,183.07 8.4 4 BNP Paribas 6 679.39 9.4 4 BNP Paribas 4 1,177.94 8.4 BBVA STRUCTURES SPANISH AUTO ABS 5 Citigroup 4 668.78 9.3 5 SG 1 1,074.57 7.6 6 Natixis 4 512.92 7.1 6 Lloyds Bank 7 1,052.33 7.5 BBVA has structured a Spanish auto ABS, 7 HSBC 4 457.13 6.4 7 Credit Agricole 1 1,015.28 7.2 BBVA CONSUMER AUTO 2018-1. The deal is not 8 RBC 3 242.14 3.4 8 Morgan Stanley 4 997.66 7.1 publicly offered. 9 NatWest Markets 2 237.95 3.3 9 Natixis 4 582.42 4.1 4HEû306ûWILLûISSUEûSIXûTRANCHESûOFûlXED 10 Barclays 2 197.50 2.7 10 NatWest Markets 2 510.80 3.6 rate notes totalling €800m and topped by a Total 20 7,193.73 Total 22 14,074.95 €728m Class A rated AAL by DBRS. Including Euro, foreign, global and domestics, excluding CDOs. Including Euro, foreign, global and domestics, excluding CDOs. The €919m portfolio holds 101,709 loans with a weighted average interest rate of Source: Thomson Reuters SDC code: B16i Source: Thomson Reuters SDC code: B10a 7.7%, seasoning of 19 months and average

44 International Financing Review June 16 2018 STRUCTURED FINANCE

remaining maturity of 63 months. It h9OUûHAVEûESTABLISHEDûCOMPANIESûWHICHû Largest tranche: Class A US$116m; 9.95- revolves to January 2020. have survived the 10-year crisis and are year WAL; rated Triple A; priced at Bank of America Merrill Lynch arranged the looking for funding for projects.” interpolated swaps plus 83bp. deal, which is due to close on June 18. Schmidt-Ott was previously a co-founder OFû'ERMANY BASEDû#APITALû%FlCIENCYû'ROUPû RMBS PRICED which sold six SME securitisations under EMEA CLO the PREPS label from 2014 to 2017 using a FREDDIE MAC STACR similar platform. FREDDIE MAC priced a US$1.050bn single- SPANISH SMES GET NON-BANK Those deals mainly securitised German family RMBS under its STRUCTURED AGENCY BE-SPOKE FUNDING assets and the loans earned a much lower CREDIT RISK shelf called STACR 2018-DNA2. spread, of around 3.6%. The last of them, Barclays and Nomura joint bookrunners. 4HEûlRSTûPUBLICû3PANISHû3-%û#$/ûSINCEû PREPS 2007-1, failed to repay noteholders Collateral: Residential mortgage loans. 2007, shown to investors during the in full, leaving a small shortfall. Deals off a Largest tranche: Class M-2 US$525m; 6.25- Barcelona conference, appears to be a rival programme managed by HSBC year WAL; rated B+/BB+; priced at textbook example of a non-bank lender Trinkaus & Burkhardt also struggled one-month Libor plus 215bp versus using securitisation to step in where banks during the crisis. guidance at plus 215-225bp. lNDûITûHARDûTOûTREAD h9OUûDOûHAVEûTOûLOOKûATûTHEûTRACKûRECORDû Spanish banks may have an appetite for [of the sector],” said one ABS investor. “But SME risk but the types of loans to be back then they were lending to companies US ABS securitised in the new deal - ALHAMBRA SME which didn’t know economic stress, FUNDING 2018-1 - are particularly capital whereas now all the companies do, so I’m FREEDOM FLIES intensive for bank lenders. HAPPYûTOûGIVEûTHEMûTHEûBENElTûOFûTHEû !TûOVERûlVEûYEARSûTHEûLOANSûAREûRELATIVELYû doubt.” Consumer lender FREEDOM FINANCIAL NETWORK long, they are made to non-investment Be-Spoke lends to SMEs with sales of SOLDûITSûlRSTûASSET BACKEDûBONDûANDûSTRONGû grade companies, and are unsecured with more than €20m and typically around demand from investors should help pave no personal guarantees. €40m. They need a private credit rating of the way for similar deals. “We are trying to play where the banks Single B minus from DBRS and Spanish The US$270m consumer loan deal priced have a capital disadvantage,” said Lars rater Axesor. on Wednesday via Credit Suisse and SunTrust. Schmidt-Ott, managing director at the The loan structure is four years with no The company was founded in 2002 in originator, BE-SPOKE CAPITAL. “The scarcity in amortisation and then seven quarterly Silicon Valley as a debt settlement company, the system is not liquidity, it’s capital,” he amortisations to 5.5 years. They have a helping consumers that fall on hard times said. 6.9% spread. negotiate the amount they owe. Its According to one investor, “This is what Alhambra could price before or after the customers have reduced their debt by 45% Capital Markets Union is all about, summer break. on average, according to rating agency spreading the risk across more capital DBRS. markets players than just banks.” But the company, which earns a fee of A central plank of the European US MBS between 15% to 25% of the debt initially Commission’s Capital Markets Union plan is enrolled each time a settlement is arranged, to channel more non-bank lending to SMEs, US CMBS AND RMBS DEAL PRICINGS has branched out into other areas. a need which can only become more acute It also makes loans to some of the same as central bank funding starts to taper away. CMBS PRICED customers looking to get back on track and Be-Spoke, which has an Irish parent, improve their credit score, and earns began its Spanish operation in 2015. Since ATRIUM HOTEL origination fees when they are made. September last year it has extended 41 loans ATRIUM HOTEL PORTFOLIO TRUST (AHPT) 2018-ATRM Some of the loans, as well as those made sized between €2m and €12m and totalling PRICEDûAû53MûmOATING RATEû#-"3û to consumers that are not part of the debt around €200m. The target size for the Goldman Sachs and JP Morgan were co-lead relief program, were used as collateral for its securitisation is €400m. managers and joint bookrunners. debut securitisation. The lending model still relies on bank Collateral: First-lien mortgage loan Deals backed by consumer loans are not participation - the loans are being secured by lodging properties and hotels. new. But the buy side takes into warehoused by NatWest. But that facility is Largest tranche: Class A US$200.879m; consideration issuers’ different business structured as a securitisation and Be-Spoke 6.99-year WAL; rated Triple A; priced at models. holds a hefty equity position, meaning 95bp over one-month Libor. Many marketplace lenders, for example, NatWest’s exposure is to a senior rated do their business online with limited portion. WELLS FARGO COMMERCIAL restrictions on the use of proceeds. But in The term securitisation will offer rated MORTGAGE TRUST the case of Freedom Financial, loan proceeds notes from Triple A to Single B, as well as a WELLS FARGO COMMERCIAL MORTGAGE TRUST priced under the debt relief programme are used to retained junior tranche, via lead manager Aû53MûlXED RATEû#-"3ûCALLEDû7&#-û pay off delinquent debt directly. NatWest. 2018-1745. The lead manager and sole Other consumer lenders, meanwhile, With the warehouse emptied, Be-Spoke bookrunner was Wells Fargo. have brick-and-mortar stores which some will begin originating for a second #OLLATERALû3ECUREDûBYûAûlRST LIENû investors believe offer more robust transaction, still focusing primarily on mortgage on the borrower’s interests in the underwriting standards as customers and Spain but with the possibility of investing in STOREYûMIXED USEûOFlCE ûRETAILûANDû lenders sit face-to-face when arranging new other European countries. residential tower located between West loans and thus limits potential for fraud. “From a risk point of view I prefer Spain 55th and West 56th Streets in Midtown Freedom pitches itself somewhere in because of survivor bias,” said Schmidt-Ott. -ANHATTAN û.EWû9ORK between, said a person close to the deal.

International Financing Review June 16 2018 45 “It’s not a marketplace lender. It is more akin “If you are going delinquent on some “Freedom wanted a broad investor base, to a OneMain or a Lendmark,” said the person. credit card debt, you can often settle for as they plan to come to market “It doesn’t have branches, but it doesn’t 45-50 cents on the dollar. But you have to frequently,” said the person. originate to sell and directly calls its SAVEûTHATûMONEYûlRST vûSAIDûTHEûPERSON “They would like to issue three to four customers to work out loan terms.” “A lot of distressed borrowers fall times a year.” Operating entities within FFN include behind because of a life event such a Freedom Debt Relief (FDR), Freedom divorce. They’re not sub-prime borrowers, AIRCRAFT ABS WITH TRADABLE Financial Asset Management (FFAM) and and if they do make regular payments over EQUITY HITS MARKET bills.com. six months, it helps show they are serious The three subsidiaries have served over about getting out of debt.” GENERAL ELECTRIC’s aircraft arm is expected 580,000 clients, settled over US$8.1bn on Their FICO score can recover relatively to price a unique asset-backed bond on behalf of consumers and have over quickly once a debt settlement has been Friday with a tradeable equity slice that US$6.2bn of consumer debt under made. WILLûBEûSOLDûVIAûAûCLEARINGHOUSEûFORûTHEûlRSTû management, according to DBRS. Average FICO scores have drifted from time, according to three people familiar 562 at origination of the loan to 656 with the transaction. FIGHTING BACK currently, according to DBRS. The US$586.9m offering, called STARR Freedom’s insight into its customers’ The loans carry hefty average interest 2018-1, is comprised of three classes of notes PAYMENTûHISTORYû ûSPECIlCALLYûTHOSEûINûITSû costs of 22.9%, have about eight months of rated Single A to Double B and a US$91m debt relief programme - was something payment history, and make up almost 60% class of unrated equity. investors liked, the person said. of the overall loan collateral. The The US$430m class of 5.10-year Single Those customers are required to make remainder have an average FICO score of As launched at 140bp over interpolated regular contributions into an account to 724 and an average interest rate of 14.7%. swaps, slightly wider than 135bp area help build enough cash before debt guidance. negotiations can begin. The ones that FIRST OF MANY The US$120m slug of 5.10-year Triple Bs make regular payments make prime As do almost all newcomers to capital launched at 5.625% and the US$36.9m of candidates for a loan. markets, Freedom paid a premium over 3.53-year Double B notes launched at 7% - established borrowers’ rates to get its deal both in line with earlier whispers. STRUCTURED FINANCE – ALL INTL ISSUERS done, but demand was decent. The Class A Selling equity in aircraft ABS deals is not BOOKRUNNERS: 1/1/2018 TO DATE was 1.6x covered and the Class B almost new, but having it sliced up and sold Managing No of Total Share lVEûTIMESûCOVERED ûTHEûPERSONûSAID THROUGHûAûCLEARINGHOUSEûISûAûlRST bank or group issues US$(m) (%) Its largest one-year Class A, rated A by “We’ve sold equity before,” said one ABS 1 JP Morgan 50 12,257.87 8.5 DBRS, priced in line with guidance at banker familiar with the matter. But they 2 BAML 48 12,105.39 8.4 100bp over EDSF with a yield of 3.645%. were sold only to a narrow set of buyers 3 Credit Suisse 54 11,998.41 8.3 The slightly longer dated 2.78-year Class B, with aircraft industry expertise, and who 4 Wells Fargo 43 10,995.74 7.7 just US$34.2m in size and rated BBB, planned to hold the investment to term. 5 Citigroup 52 10,480.55 7.3 cleared at interpolated swaps plus 170bp. Och-Ziff Management’s aviation unit 6 Barclays 31 8,207.40 5.7 That was tighter than guidance of will manage the equity slice for a fee, and 7 Deutsche Bank 38 7,760.86 5.4 180bp-190bp, which helped reduce the the deal is being marketed to hedge funds, 8 Goldman Sachs 24 7,162.35 5.0 overall cost of borrowing. The issuer asset managers and insurance companies. 9 SG 15 5,688.91 4.0 retained the Class C. The 5.84-year equity tranche was already 10 Morgan Stanley 20 5,655.73 3.9 Another consumer loan ABS was in 1.9x subscribed a week ago, according to Total 248 143,719.60 market at the same time: LendingClub’s two of the people. It carried yields in the Includes securitisations, PFI bonds, self-funded issues and credit-linked one-year Class A, rated A- by KBRA, priced teens, said another source. notes. Excludes US global ABS/MBS and CDOs. at EDSF plus 80bp with a yield of 3.423%. GE CAPITAL AVIATION SERVICES plans to use Source: Thomson Reuters SDC code: J10c That was just a bit lower than the Freedom proceeds from the bond to buy a portfolio trade. of 24 aircraft, said a KBRA presale. Deutsche Bank is a lead structuring agent US ASSET-BACKED SECURITIES GLOBAL STRUCTURED FINANCE IN US$ and joint lead bookrunner. Citigroup is a BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE joint structuring agent and bookrunner. Managing No of Total Share Managing No of Total Share Aircraft ABS are getting a lot of attention bank or group issues US$(m) (%) bank or group issues US$(m) (%) from investors looking for yield. 1 Citigroup 90 34,259.64 18.6 1 Citigroup 137 49,996.06 15.5 Last year a post-crisis record of US$6.6bn 2 JP Morgan 54 15,923.03 8.6 2 JP Morgan 110 37,866.81 11.7 aircraft ABS was issued, according to Wells 3 BAML 42 12,679.60 6.9 3 Wells Fargo 102 32,641.85 10.1 Fargo data. 4 RBC 35 9,409.43 5.1 4 Credit Suisse 93 31,326.07 9.7 CASTLELAKE sold Single As earlier this 5 Barclays 38 9,142.07 5.0 5 BAML 84 29,519.57 9.1 month at 125bp over interpolated swaps, 6 Deutsche Bank 44 9,103.59 4.9 6 Goldman Sachs 58 21,515.08 6.7 or 5bp less than the similar bonds sold by 7 Wells Fargo 40 7,729.35 4.2 7 Morgan Stanley 48 17,617.81 5.4 MERX AVIATION in April. 8 Mizuho 20 6,089.72 3.3 8 Barclays 54 14,818.21 4.6 9 Goldman Sachs 24 5,885.66 3.2 9 Deutsche Bank 56 12,990.39 4.0 US ABS DEAL PRICINGS 10 Credit Suisse 30 5,783.46 3.1 10 RBC 44 12,561.31 3.9 Total 317 184,111.55 Total 570 323,332.49 The ABS primary market is headed for Excludes MBS. Including securitisations (Euro, foreign, global and domestics, excluding another busy week with at least 12 deals CDOs) and PFI bonds. due to price as issuers cram in deals before Source: Thomson Reuters SDC code: F14 Source: Thomson Reuters SDC code: B16b quarter-end and the July 4 holiday.

46 International Financing Review June 16 2018 STRUCTURED FINANCE

It looks set to be an auto-heavy week, at EDSF plus 45bp versus guidance at EDSF Direct comp: Class A-2A (10/17/17) with deals backed by prime and subprime plus 40-45bp. US$295.4m (DEFT 2017-2); 1.20-yr WAL; loans and rental leases pre-marketing from Direct comp: Class A (3/14/18) US$99.4m rated Triple A; priced at EDSF plus 30bp. ALLY, FORD, GM FINANCIAL, MECHANICS BANK, (ACAR 2018-1); 0.53-year WAL; rated Triple SANTANDER and HERTZ. A; priced at EDSF plus 43bp. FREEDOM FINANCIAL A private student loan deal for LOAN FREEDOM FINANCIAL priced its inaugural SCIENCE, which had been expected to price COINSTAR US$270m FREED 2018-1 consumer loan ABS. by Friday, is now due this week, while COINSTAR LLCûPRICEDûAû53MûlXED RATEû Credit Suisse structured the deal and was a NAVIENT is also pre-marketing a student senior secured whole business joint bookrunner with SunTrust. loan trade. A timeshare ABS from MARRIOTT securitisation called Coinstar Funding Collateral: Consumer loans. is also up for grabs, among others. (COIN 2018-1). Guggenheim Securities was Largest tranche: Class A US$222.15m; They follow a hectic pace for issuance sole structurer and bookrunner. 1.03-year WAL; rated Single A; launched at last week, with 13 deals already cleared for Collateral: Coinstar branded kiosks in EDSF plus 100bp versus guidance at EDSF around US$4.7bn by Thursday; if two deals the United States, existing and future plus 100bp area. price as expected on Friday - an aircraft agreements with retail and product lease deal from STARR and a single-family partners in the United States, and GLOBAL LENDING SERVICES rental trade from INVITATION HOMES - volumes intellectual property. GLOBAL LENDING SERVICES priced a will top US$6.35bn. Largest tranche: Class A2 US$100m; US$299.39m sub-prime auto ABS The IH deal, however, may be upsized, with 4.70-year WAL; rated Triple B; priced transaction, GLS AUTO RECEIVABLES ISSUER TRUST one investor said. at interpolated swaps plus 215bp. (GCAR) 2018-2. Wells Fargo structured the deal “It’s not been an easy week,” one and was a joint bookrunner with JP Morgan. syndicate banker said. “Deals have COLLEGE AVE Collateral: Sub-prime auto retail progressed modestly slower than College Ave priced a US$199.29m private instalment sales contracts. expected.” student loan ABS transaction for COLLEGE Largest tranche: Class A US$176.69m; Issuers are cramming in deals before AVE STUDENT LOANS (CASL 2018-A). Barclays (str) 0.84-year WAL; rated Double A; priced at quarter-end and the July 4 holiday. was sole bookrunner along with Credit EDSF plus 70bp versus guidance at EDSF Another syndicate banker said the tone Suisse as joint co-lead manager. plus 65-70bp. in the market remains healthy, and Collateral: Private student loans. investor demand robust. Largest tranche: Class A-2 US$86.44m; INVITATION HOMES Dell’s trade - one of the biggest deals of 6.23-year WAL; rated A/AA (low); priced at INVITATION HOMES was expected to price a THEûWEEKûATûROUGHLYû53Mû ûREmECTEDû interpolated swaps plus 120bp versus 53BNûSINGLE FAMILYûRENTALûmOATING RATEû that with spreads pulled in sharply from guidance interpolated swaps plus 120-125bp. ABS transaction, called IHSFR 2018-SFR3, on Triple A to Triple B. Friday. Deutsche Bank structured the deal and Its US$296m Triple A 1.26-year tranche DELL FINANCIAL SERVICES was a joint lead manager with JP Morgan. priced at EDSF plus 30bp, which was DELL FINANCIAL SERVICES priced a Collateral: 5,531 single-family rental pulled in from 35-37bp guidance. Its Triple US$991.783m (no-grow) small/medium properties. B rated 2.92-year slice cleared at swaps plus ticket equipment lease/loan-backed Largest tranche: Class A US$500.884m; 100bp. It was guided at 110bp-120bp and transaction for DEFT 2018-1. Barclays 2.10-year WAL; rated Triple A; guidance at whispered at 125bp area. structured the deal and was a joint one-month Libor plus 90-100bp. h4HERESûDElNITELYûAûLOTûOFûDEALSûINûTHEû bookrunner with RBC Capital Markets and market, but the dollar volume isn’t Societe Generale. LENDINGCLUB overwhelming,” said the syndicate banker. Collateral: Small/medium ticket LENDINGCLUB priced a US$294.4m Most of the deals were under US$500m, equipment lease-backed transaction. (US$279.68m offered) self-sponsored and got absorbed, he said. Largest tranche: Class A-2A US$296m; prime unsecured consumer loan 1.26-year WAL; rated Triple A; priced at transaction, CLUB 2018-P1. JP Morgan structured ACCELERATED TIMESHARE EDSF plus 30bp versus guidance at EDSF the deal and was a joint bookrunner with A US$130.142m timeshare ABS transaction plus 35-37bp. Citigroup. called ACCELERATED TIMESHARE (AALLC) 2018-1 priced via Deutsche Bank as lead manager. GLOBAL CDOs ALL EUROMARKET CDOs Collateral: Vacation ownership interval BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE (timeshare) loans; according with S&P’s Managing No of Total Share Managing No of Total Share presale. bank or group issues US$(m) (%) bank or group issues US$(m) (%) Largest tranche: Class A US$77.872m, 1 Citigroup 46 23,853.56 31.1 1 Citigroup 15 6,910.09 19.3 with 3.2-year WAL; rated A (S&P); priced at 2 Morgan Stanley 6 2,731.01 3.6 2 Credit Suisse 5 2,441.15 6.8 interpolated swaps plus 100bp. 3 Credit Suisse 5 2,441.15 3.2 3 Morgan Stanley 4 2,100.21 5.9 4 JP Morgan 4 2,100.56 2.7 4 BAML 5 2,021.42 5.6 AMERICAN CREDIT ACCEPTANCE 5 BAML 5 2,021.42 2.6 5 BNP Paribas 5 1,913.04 5.3 AMERICAN CREDIT ACCEPTANCE priced a 6 BNP Paribas 5 1,913.04 2.5 6 JP Morgan 3 1,690.86 4.7 US$248m sub-prime asset-backed 7 Deutsche Bank 2 1,088.69 1.4 7 Goldman Sachs 3 1,047.84 2.9 securitisation, ACAR 2018-2. Wells Fargo 8 Goldman Sachs 3 1,047.84 1.4 8 Deutsche Bank 1 632.95 1.8 structured the deal and was a joint 9 Nomura 3 702.07 0.9 9 Barclays 3 554.18 1.5 bookrunner with Deutsche Bank. 10 RBC 1 561.30 0.7 10 Natixis 2 462.30 1.3 Collateral: Sub-prime auto. Total 153 76,785.59 Total 76 35,822.78 Largest tranche: Class A US$98.09m; Including Euro, foreign, global, US domestics. Excludes global and domestic. with 0.59-year WAL; rated Triple A; priced Source: Thomson Reuters SDC code: B12 Source: Thomson Reuters SDC code: J11

International Financing Review June 16 2018 47 Collateral: Consumer loans in its near- TRINITY INDUSTRIES And as the market has developed, some prime programme. TRINITY INDUSTRIES LEASING COMPANY priced a issuers have been able to sell much larger Largest tranche: US$218.80m; 0.99-year US$482.5mm railcar lease ABS transaction, deals. WAL; rated A-; priced at EDSF plus 80bp. TRL 2018-1.Bank of America Merrill Lynch Real estate lender LOANCORE CAPITAL sold Direct comp: Class A (11/29/17) structured the deal and was a joint THEûBIGGESTû#2%û#,/ûSINCEûTHEûlNANCIALû US$239.4m (CLUB 2017-P2); 0.97-yr WAL; bookrunner with Credit Suisse. crisis last month. Its largest US$473.8m rated A-; priced at EDSF plus 85bp. Collateral: Railcar leases. Triple A rated 3.65-year tranche priced at Largest tranche: Class A2 US$282.5m; one-month Libor plus 113bp. RBC GOLDEN CREDIT CARD with 9.99-year WAL; rated Single A; priced RBC GOLDEN CREDIT CARD TRUST priced an at interpolated swaps plus 165bp versus MORE VARIETY upsized US450m (increased from guidance at plus 165-175bp. Participants at the conference were US$300m) credit card ABS called GCCT 2018-3. optimistic about the future of CRE CLOs, RBC sole lead manager. TRITON INTERNATIONAL noting growing interest for the product. Collateral: Credit cards. TRITON INTERNATIONAL priced a US$367.9m “The great thing about CLOs is that Largest tranche: Class A US$450m; with (increased from US$300m) container lease people are willing to listen to the story,” 2.91-year WAL; rated Triple A; priced in transaction, TRITON CONTAINER FINANCE VI LLC said Chung. line with guidance at one-month Libor (TCF), SERIES 2018-2.RBC structured the deal “They are underwriting the real estate, plus 32bp. and was a joint bookrunner with Bank of underwriting the business plans and America Merrill Lynch and Wells Fargo. sponsorship. It’s more of a full picture than RENEW FINANCIAL Collateral: Container leases. CMBS.” RENEW FINANCIAL priced a US$169m property Largest tranche: Class A US$285.4m; For now, CRE CLOs mostly have static assessed clean energy (PACE)/Green Bond 5.04-year WAL; rated Single A; priced at pools but some bankers predict managed securitization, RENEW 2018-1. Barclays interpolated swaps plus 128bp versus deals, which allow the issuer to alter the structured the deal and was a joint guidance at plus 125-130bp. underlying pool of loans, may surface in bookrunner with Morgan Stanley and Natixis. Direct comp: Class A (8/16) US$428.15m; the second half. Collateral: PACE bonds. 5.13-year WAL; rated A; priced at 3.65% These will come with some safeguards, Largest tranche: Class A US$147.342m; yield. including restrictions on types of loans 5.39-year WAL; rated AAA/AA; priced at that can be added to the pool – but the interpolated swaps plus 100bp. extra complexity was needed and probably Direct comp: Class A (10/17/17) US CLO prompt a pricing premium. US$174.133m RENEW 2017-2; 5.61-year “Bankers tell me that it’s necessary to do WAL; rated Double A; priced at BANKERS BULLISH ON CRE CLOS a few static deals before it will be possible interpolated swaps plus 115bp. to do a managed trade,” said Chung. “But Commercial real estate CLO issuance is managed deals will hopefully become SALLIE MAE BANK well on track to hit a post credit crisis high more of an evolution as long as investors SALLIE MAE BANK priced an upsized this year with bankers predicting up to get comfortable.” US$686.5m (increased from US$497.5m) US$15bn of supply in the second half. student loan ABS called PRIVATE EDUCATION Volumes for this year are already STUDENT LOAN (SMB) 2018-B. Credit Suisse running at US$6.4bn, according to Wells ASIA-PACIFIC MBS structured the deal and was a joint Fargo. That’s almost as much as the bookrunner with Goldman Sachs and JP US$7.5bn of supply in the whole of 2017. AMP BANK SETS RMBS GUIDANCE Morgan. “We’re on pace to double that [2017 Collateral: Private student loans. tally] to US$12bn–$15bn,” said AJ Sfarra, a Initial price guidance has been released for Largest tranche: Class A2A US$283m; banker at Wells Fargo Securities and one AMP BANK’s indicative A$750m PROGRESS 2018- with 5.49-year WAL; rated Triple A; priced of the panelists at an event during last 1 RMBS offering, expected to launch this at interpolated swaps plus 67bp versus week’s CRE Financial Council conference week. guidance at interpolated swaps plus 70bp INû.EWû9ORK Westpac is arranger and joint lead area. #2%û#,/SûAREûOFTENûRISKûASûTHEYûlNANCEû manager with Deutsche Bank, Macquarie, Direct comp: Class A2A (10/31/17) PROPERTIESûINûAûSTATEûOFûmUXûBUTûAREû MUFG and NAB. US$268m SMB 2017-B; 5.73-year WAL; considered to be much safer than CDOs, For the A$690m Class A notes with a 2.9- rated Triple A; priced at swaps plus 75bp. WHICHûBLEWûUPûDURINGûTHEûlNANCIALûCRISIS year weighted-average life, price talk is They are now viable alternatives to bank one-month BBSW plus 112bp area. STARR LTD/STARR USA LLC WAREHOUSEûLINESûTOûHELPûlNANCEûTHEû For the A$40.875m Class ABs, A$11.25m A US$586.9m aircraft lease securitization revamp of “transitional” properties that Class Bs and A$6.975m Class Cs, all with called STARR AIRCRAFT (STARR 2018-1) was have low vacancy rates and are past their 6.0-year WALs, guidance is one-month expected to price on Friday. Deutsche Bank prime, said bankers. BBSW plus 160bp area, 180bp area and structured the deal and was a joint lead “CLO pricing has come in a lot. The mid-to-high 200s area, respectively. bookrunner with Citi. INITIALûlNANCINGûCOSTSûAREûBETTERûTHANû The A$0.9m Class D notes have been Collateral: Portfolio consists of 23 warehouse lines,” said James Chung, Chief preplaced. narrowbody aircraft and a widebody )NVESTMENTû/FlCERûATû"RIDGEû)NVESTMENTû As an originator-remote special purpose aircraft, according to KBRA presale. Group. vehicle, Progress 2018-1 should not be Largest tranche: Class A US$430m, with BRIDGE priced its debut CRE CLO earlier impacted by AMP Bank’s reputation- 5.1-year WAL; rated A/A; launched at this year, a US$510.23m issue. Its roughly damaging domestic scandals. 140bp over interpolated swaps versus Triple A US$275m two-year tranche priced AMP Bank sold an enlarged A$1.1bn 135bp area guidance. at Libor plus 85bp. offering of prime RMBS last December

48 International Financing Review June 16 2018 STRUCTURED FINANCE

through Progress 2017-2. The A$1.012bn Class A notes, with a weighted-average life of 3.0 years, priced at one-month BBSW Avanti prints rare Kiwi RMBS plus 95bp. The A$58.85m Class AB, A$17.05m Class NEW ZEALAND Market otherwise moribund as RBNZ prepares new B, A$10.78m Class C and A$1.32m Class D mortgage instrument notes, all with 5.4-year WALs, priced at one-month BBSW plus 140bp, 180bp, AVANTI FINANCE gave the New Zealand RBNZ FEEDBACK 265bp and 575bp, respectively. securitisation market a welcome shot in the The RBNZ is looking to revive the moribund arm last Tuesday with only the fifth issuance of RMBS market by replacing self-securitised or residential mortgage-backed securities since internal RMBS with a proposed new format for ASIA-PACIFIC ABS the global financial crisis. mortgage bonds, called Residential Mortgage The consumer lender printed a NZ$200m Obligations. PUBLIC SNAPS UP ASTREA ABS (US$140m) offering of prime and non- RMOs, a cross between covered bonds and conforming RMBS, AVANTI RMBS 2018-1, which RMBS, would theoretically improve the risk ASTREA IV reported strong oversubscription was increased from an indicative minimum position of the RBNZ by promoting the use for the retail tranche of its securitisation of issue size of NZ$150m. of higher quality and potentially more liquid CASHmOWSûFROMûPRIVATEûEQUITYûFUNDS ûINûTHEû Australian and New Zealand wholesale mortgage bonds as collateral in the bank’s lRSTûOFFERINGûOFûASSET BACKEDûSECURITIESûTOû investors bought the entire structure and, while lending operations. the Singapore public. there was no participation by investors who RMOs would also support New Zealand The retail part of the Class A-1 tranche, were new to New Zealand RMBS, several who market lenders by creating an additional which comprised S$121m (US$90m) of the attended the roadshow indicated a desire to be funding instrument for residential mortgages S$242m total for that tranche, drew orders involved in subsequent Avanti RMBS offerings. and promote a deeper capital market through of nearly S$890m, translating to coverage “NZ$200m for a debut issuer shows there the availability of simple, comparable and of 7.4 times. is good depth in the market, which can only transparent mortgage bond instruments, The ABS priced on June 5 following encourage further supply, though I am not according to a November 2017 RBNZ press bookbuilding for institutional and aware of any new potential RMBS trades being release. accredited investors, who placed orders of readied for sale in the rest of 2018,” said Simon In March the Australian Securitisation US$1.8bn-equivalent. Subscription for the O’Connell, director of structured finance at Forum, the trade body of the Australian and public ran during June 6-12. arranger Westpac New Zealand, which was on New Zealand securitisation markets, led The Class A-1 notes priced at a yield of all four previous post-financial crisis RMBS negative feedback to the RMO proposal. The 4.350%, from initial guidance of 4.625% trades. ASF argued that these instruments cannot be area. The US$210m Class A-2 tranche The NZ$140m Class A1 and NZ$41m Class tailored to meet specific investor requirements priced at 5.500%, from 5.625% area, and the A2 notes, both with 2.3-year weighted-average and will suffer from investors’ lack of familiarity US$110m Class B priced at 6.750%, from lives and respective 30% and 9.5% credit with the new type of security. 7.000% area. support, priced in line with guidance at one- In a response to the feedback, the RBNZ Expected ratings are A/A (S&P/Fitch) for month BKBM plus 125bp and 200bp. Pricing last month noted the preference for the new the A-1 notes, A (Fitch) for the A-2 tranche, was not disclosed for the four junior tranches. collateral standard to allow several RMBS and BBB (Fitch) for the B. Two of the previous four RMBS were sold structures that, while becoming simpler, retain Credit Suisse, DBS and Standard Chartered by non-bank lender Resimac in September conventional mortgage bond features, as were joint lead managers. 2014 and November 2017, for NZ$150m and well as for instruments that pay some or all Astrea is a vehicle of Azalea Asset NZ$250m, respectively. investors back more quickly as proposed in Management, an indirect subsidiary of This followed two NZ$100m RMBS offerings RMOs. Additional flexibility was also requested state investment holding company TEMASEK from New Zealand Finance and PSIS, which is in mortgage loan standards. HOLDINGS. Over the course of the four Astrea now a co-operative bank, both in 2010. “The Reserve Bank considers that the ABS transactions, Temasek has gradually The country’s four major banks have proposed standard can be adjusted in been opening up access to more types of focused exclusively on the deep, liquid, these areas while still meeting the investors. overseas covered bond markets for their underlying goals to improve critical features, “The question now is whether this mortgage-backed issuance in recent years, documentation and information infrastructure. opens the way for retail to invest in other with ASB, Westpac New Zealand and Bank It is also willing to discuss the proposed securitisation structures, like RMBS,” said of New Zealand raising a combined €2.25bn transition path with stakeholders again,” the a source close to the deal. (US$2.63bn) in the covered Eurobond market review said. in 2017 alone. The RBNZ plans to consult on a revised BANK OF NINGBO READIES ABS The majors are expected to stick to the proposal and finalise the mortgage bond offshore covered arena, at least until the collateral policy review in the second half of BANK OF NINGBO is this week set to launch Reserve Bank of New Zealand provides clarity 2018, although work on certain details such as Rmb3bn (US$467m) of securities backed by on its planned new mortgage-backed domestic operational aspects, legal documentation and consumer loans in China’s interbank bond security, the details of which are still being information platform may take longer. market. worked out. John Weavers The trade comprises Rmb2.64bn senior Class A notes, Rmb9.2m senior Class B notes, and Rmb268m subordinated are rated AAA/AAA and AA+/AA+ (China Books will open on June 21. notes. Bond/ China Lianhe), respectively. Citi Orient Securities is sole lead The Class A and Class B notes, both with The unrated subordinated tranche will UNDERWRITER ûBOOKRUNNERûANDûlNANCIALû an expected maturity date of May 26 2019, be retained by the originator. adviser on the offering.

International Financing Review June 16 2018 49 GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/6/2018 Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) SSAR US DOLLARS Jun 12 2018 Kommuninvest i Sverige US$2.5bn Oct 22 2020 2.75 99.777 MS+2 / T+31.7 2.85

EUROS Jun 11 2018 Ile de France €500m Jun 20 2033 1.375 99.704 OATs+20 1.397

Jun 11 2018 Lower Saxony €100m incr Nov 10 2022 0.05 - - - (€500m) Jun 12 2018 Agence France Locale €500m Jun 19 2028 1.125 99.709 OATs+30 1.156

Jun 12 2018 ESM €1.5bn incr Mar 15 2027 0.75 99.705 MS-11 / B+40.2 0.785 (€4.5bn)

Jun 12 2018 KfW €5bn Jun 7 2023 0.125 99.862 MS-24 / B+29.1 0.153

Jun 13 2018 Cades €1bn Oct 25 2023 0.125 99.522 OATs+14 0.215

Jun 13 2018 Lower Saxony €100m incr Sep 13 2021 2.75 - - - (€1.3bn) STERLING Jun 12 2018 FMS WM £50m incr Sep 7 2022 1 98.82 G+30 1.285 (£850m) NON CORE Jun 11 2018 Vellinge kommun SKr150m Nov 24 2002 0.808 100 MS+19.5 0.808 Jun 12 2018 Quebec C$500m incr Sep 1 2028 2.75 98.523 GOC+61 2.918 (C$3bn) Jun 12 2018 EIB NKr250mincr May 25 2021 1 - - - (NKr2.5bn) Jun 13 2018 CPPIB C$1.5bn Jun 15 2028 3 100 GOC+71 3 Jun 13 2018 Montreal C$300m Sep 1 2028 3.15 100 GOC+85 3.145 Jun 14 2018 Rentenbank A$200m May 25 2029 3.2 99.61 ASW+42 / 3.243 ACGB+50.25 Jun 14 2018 Quebec C$500m incr Dec 1 2048 3.5 109.24 GOC+71.5 3.033 (C$10bn) Jun 15 2018 Rentenbank SKr150m incr Oct 4 2027 1.463 102.594 - 1.166 (SKr2.78bn) Jun 15 2018 NIB SKr600m incr May 12 2025 1.05 - - - (SKr1.1bn) CORPORATES US DOLLARS Jun 8 2018 Valmont Industries US$200m incr Oct 1 2044 5 93.51 T+240 5.467

Jun 8 2018 Valmont Industries US$55m incr Oct 1 2054 5.25 92.04 T+270 5.777 Jun 11 2018 Air Lease Corp US$500m Jul 3 2023 3.875 99.18 T+125 4.056 Jun 11 2018 E*TRADE Financial Corp US$420m Jun 20 2028 4.5 99.91 T+155 4.511

Jun 11 2018 PPL Electric Utilities Corp US$400m Jun 15 2048 4.15 99.44 T+108 4.183

Jun 11 2018 Prologis US$400m Sep 15 2028 3.875 99.32 T+100 3.957

Jun 11 2018 Prologis US$300m Sep 15 2048 4.375 98.78 T+135 4.449

Jun 12 2018 Alexandria Real Estate US$450m Jan 15 2024 4 99.93 T+120 4.013 Equities Inc Jun 12 2018 Alexandria Real Estate US$450m Jul 1 2030 4.7 99.92 T+175 4.709 Equities Inc Jun 12 2018 Sanoﬁ US$1bn Jun 19 2023 3.375 99.83 T+60 3.413

Jun 12 2018 Sanoﬁ US$1bn Jun 19 2028 3.625 99.27 T+75 3.713

Jun 14 2018 CME Group US$500m Jun 15 2028 3.75 99.984 T+80 3.752

50 International Financing Review June 16 2018 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+2 area(I), 0 >US$2.65bn Aaa/AAA BAML/Citi/SEB/TD EMEA 73%, N.Amer 17%, Asia 6%, Latam MS+2 area(G) 4%. CB/OI 34%, Bks 26%, FM 27%, PF/ Ins/Corp 13%.

OATs+low/mid 20s, - >€1bn Aa2/-/AA CA-CIB/HSBC/Natx/SG - OATs+22 area, OATs+21 (+/-1) - - - -/-/AAA Deka -

OATs+30 area(I), - - Aa3 Barc/CA-CIB/JPM - OATs+30 area(G) MS-10 area, 1 >€4bn Aa1/-/AAA BAML/CMZ/HSBC Eur 72%, UK/Switz 22%, RoEur 4%, Asia MS-11 (+/-1) 2%. Bks 65%, FM 16%, Ins/PF 11%, CB/ SWF 8%. MS-24 area 4 >€7.5bn, >130 acs Aaa/AAA/Scope CA-CIB/DB/GS Ger 28%, UK 26%, Fr 11%, Benelux 9%, AAA Scandi 5%, RoEur 13%, Asia 6%, Amers 2%. Bks 35%, AM 32%, CB/OI 29%, Ins/ PF 4%. OATs+14 area 3 >€1.65bn Aa2/-/AA BNPP/CA-CIB/JPM UK/Ire 31%, Fr 25%, MEA 13%, Ger/ Aus/Switz 13%, Benelux 12%, S.Eur 5%, Nordics 1%. Bks/PB 41%, FM 29%, CB/OI 19%, Ins/PF 7%, Other 4%. - - - -/-/AAA JPM -

- - - Aaa/AAA HSBC -

- - - -/AAA Swed - - - - Aa2/AA-/AA-/AH CIBC/LBS/NBF -

- - - AAA/AAA/AAA Nordea -

GOC+72 (+/-1) - - AAA/AAA/-/AAA CIBC/RBC - - - - Aa2/AA- CIBC/NBF/VMD - - - - Aaa/AAA/AAA DB/Miz -

- - - Aa2/AA-/AA-/AH NBF/Scortia/VMD -

- - - Aaa/AAA/AAA CA-CIB -

- - - Aaa/AAA Danske -

93.51, N/A N/A Baa3/BBB- JPM -

T+270 area N/A N/A Baa3/BBB- JPM - T+137.5 area 9 undisclosed BBB/BBB BAML/Citi/GS/RBC - T+170 area, 3 US$1.25bn Baa2/BBB BAML/CS/JPM/WFS - T+155/160 T+120/125, 7 US$1bn A1/A BNPP/CS/MS/WFS - T+110 (+/-2) T+125 area, 3 US$2.4bn A3/A- Citi/HSBC/WFS(a)/Scotia(p) - T+105 (+/-5) T+155 area, 3 US$2bn A3/A- Citi/HSBC/WFS(a)/Scotia(p) - T+140 (+/-5) T+135 area, 9 US$1.6bn Baa2/BBB BAML/Citi/GS/JPM - T+125 (+/-5) T+190 area, 9 US$1.4bn Baa2/BBB BAML/Citi/GS/JPM - T+180 (+/-5) T+65/70, 8 US$1.6bn A1/AA Barc/Citi/DB/MS/MUFG - T+60 (+/-5) T+90/95, 3 US$1.8bn A1/AA Barc/Citi/DB/MS/MUFG - T+80 (+/-5) T+100 area, T+85 4 US$2.6bn Aa3/AA- BAML/Barc/JPM - area

International Financing Review June 16 2018 51 GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/6/2018 (CONTINUED) Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Jun 14 2018 CME Group US$700m Jun 15 2048 4.15 99.541 T+110 4.177

Jun 14 2018 Concho Resources US$1bn Aug 15 2028 4.3 99.66 T+140 4.341

Jun 14 2018 Concho Resources US$600m Aug 15 2048 4.85 99.74 T+180 4.866

Jun 14 2018 Ryder System Inc US$450m Jun 9 2023 3.75 99.794 T+98 3.796

Jun 14 2018 PS Co of Colorado US$350m Jun 15 2028 3.7 99.785 T+78 3.726 Jun 14 2018 PS Co of Colorado US$350m Jun 15 2048 4.1 99.727 T+105 4.116 Jun 14 2018 Digital Realty Trust US$650m Jul 15 2028 4.45 99.852 T+152 4.468 Jun 14 2018 General Motors Financial US$1bn 6/19/2023 4.15 99.852 T+137.5 4.183

Jun 14 2018 Deutsche Telekom US$1.2bn 6/21/2028 4.375 99.552 T+150 4.431

Jun 14 2018 Deutsche Telekom US$550m 6/21/2038 4.75 99.349 T+175 4.801

Jun 14 2018 UnitedHealth US$400m Jun 15 2021 3.15 99.946 T+48 3.169

Jun 14 2018 UnitedHealth US$350m Jun 15 2021 3mL+26 100 - - Jun 14 2018 UnitedHealth US$750m Jun 15 2023 3.5 99.95 T+70 3.511

Jun 14 2018 UnitedHealth US$1.15bn Jun 15 2028 3.85 99.828 T+93 3.871

Jun 14 2018 UnitedHealth US$1.35bn Jun 15 2048 4.25 99.312 T+123 4.291

EUROS Jun 11 2018 Valeo €600m Jun 18 2025 1.5 99.644 MS+87 / B+143.9 1.554

Jun 12 2018 Groupe Bruxelles Lambert €500m Jun 19 2025 1.875 99.294 MS+130 / B+186.1 1.984

Jun 12 2018 OMV €500m Perpetual (Jun 2024) 2.875 100 MS+233.5 / 2.875 B+286.7

Jun 12 2018 ManpowerGroup €500m Jun 22 2026 1.75 99.564 MS+100 / B+155.5 1.809

Jun 13 2018 Schneider Electric €750m Jun 21 2027 1.375 99.03 MS+60 / B+114.1 1.491

Jun 15 2018 Autoliv €500m Jun 26 2023 0.75 99.527 MS+55 / B+109.6 0.847 Jun 15 2018 Engie €750m Jun 22 2028 1.375 99.574 MS+50 / B+102.7 1.421

Jun 15 2018 JAB Holdings €750m Jun 25 2026 1.75 99.226 MS+115 / B+171.3 1.855

Jun 15 2018 JAB Holdings €750m Jun 25 2029 2.5 99.867 MS+150 / B+212 2.514

STERLING Jun 14 2018 BASF £250m Jun 21 2022 1.375 99.64 G+63 1.463 SWISS FRANCS Jun 11 2018 Aevis Victoria SFr45m Jun 29 2020 2.25 100 MS+275.3 / 2.25 Eidg+301 Jun 12 2018 Andermatt Swiss Alps SFr50m Jul 6 2023 4 100 MS+400.8 4

NON CORE Jun 11 2018 Stendörren Fastigheter C$250m Jun 18 2021 (Jun 2020) 3mS+425 100 3mS+425 - Jun 11 2018 Canadian Tire Jul 6 2020 2.646 100 OTC+69 2.646 Jun 11 2018 Canadian Tire C$400m Jul 6 2023 3.167 100 OTC+99 3.167 Jun 12 2018 Specialfastigheter SKr250m Jun 25 2048 2.375 100 - 2.375 Jun 13 2018 AF AB SKr500m Jun 20 2023 3mS+125 100 3mS+125 - Jun 14 2018 Klovern hybrid SKr800m Perpetual (Jun 2023) 3mS+600 100 3mS+600 - Jun 15 2018 Median Energy NZ$200m Jun 27 2025 4.21 100 MS+130 4.21

52 International Financing Review June 16 2018 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

T+125 area, T+115 6 US$2.5bn Aa3/AA- BAML/Barc/JPM - area T+160 area, T+145 5 - Baa3/BBB-/BBB- BAML/JPM/WFS - area T+200 area, T+185 3 - Baa3/BBB-/BBB- BAML/JPM/WFS - area T+112.5 area, T+100 8 - Baa1/BBB+/A- BAML/BB&T/BNP/Miz/RBC - area T+90-95, T+80 area 3 US$1bn A1/A/A+ BAML/Barc/CS/RBC - T+115-120, T+105 (#) 7 US$1.2bn A1/A/A+ BAML/Barc/CS/RBC - T+165-170 2 US$1bn Baa2/BBB BAML/JPM/SMBC/USB - T+155 area, T+140 8.5 US$3.2bn Baa3/BBB/BBB Barc/Brad/SMBC/CMZ/TD/WFS - area T+155-160, T+150 10 US$2bn Baa1/BBB+/BBB+ Citi/RBC/TD - area T+180-185, T+175 10 US$1bn Baa1/BBB+/BBB+ Citi/RBC/TD - area T+65 area, T+50 2 US$1.4bn A3/A+/A- BAML/Barc/GS/MS/RBC - area 3mL+equiv - US$1.25bn A3/A+/A- BAML/Barc/GS/MS/RBC - T+80 area, T+72 2 US$2.25bn A3/A+/A- BAML/Barc/GS/MS/RBC - area T+105-110, T+93 2 US$3.5bn A3/A+/A- BAML/Barc/GS/MS/RBC - area T+135-140, T+125 5 US$3.75bn A3/A+/A- BAML/Barc/GS/MS/RBC - area

MS+105/110, 13 ~€4.4bn Baa2/BBB BNPP/CA-CIB/Citi/HSBC/Natx Fr 32%, Ger/Aua 25%, UK 20%, Benelux MS+90 (+/-3) 9%, S.Eur 7%, Nordics 3%, Switz 3%, Other 1%. AM 77%, Ins/PF 9%, OI 6%, Bks 4%, PB 3%, Other 1%. MS+145/150, 25 ~€1.3bn, 117 acs - BNPP/CM-CIC/HSBC/ING/KBC/SG Fr 31%, UK 26%, Benelux 20%, Ger 17%, MS+130/135 Other 6%. FM 74%, Ins 20%, Bks/PB 5%, Other 1%. 3.25% area, 12.5 ~€1.15bn, 152 acs Baa2/BBB BNPP/JPM/Erste/ING/MUFG/SG Ger 21%, Fr 19%, Benelux 17%, UK 11%, 3% (+/-0.125%), Switz 10%, It 9%, Aus 7%, Other 6%. AM 2.875% 66%, Ins 15%, Bks 10%, OI 7%, Other 2%. MS+125/130, 40 >€3.2bn Baa1/BBB Barc/BNPP/JPM - MS+105/110, MS+100/105 MS+80 area, 7 >€4bn, 200 acs Baa1/A- HSBC/JPM/MUFG/Natx/SG Fr 32%, Ger/Aus 22%, UK/Ire 21%, Asia MS+60/65 8%, Benelux 6%, Nordics 5%, Switz 3%, Other 3%. FM 62%, Ins/PF 26%, Bks/PB 7%, OI 5%. MS+75 area - >€2.8bn -/A- JPM(GC)/MS/SEB - MS+65 area, 5 >€1.6bn A2/A-/A GCs SG/Uni, BBVA/ING/MUFG(a), - MS+50/55 CA-CIB/Miz/Natx/Santan(p) MS+140 area, 10 >€3.6bn Baa1/BBB+ BLB/CMZ/DB/HSBC/Rabo - MS+125 (+/-5) MS+175 area, 10 >€2.9bn Baa1/BBB+ BLB/CMZ/DB/HSBC/Rabo - MS+155 (+/-5)

G+75 area 7 >£1.5bn A1/A/A HSBC/MS/NatWest -

2.25% area(I), - SFr45m, >24 acs - UBS Switz 100%. PB 97.2%, Ins 2.8%. 2.25% area(G) 4% area, -- - Vont- 4%

- - - - Swed - OTC+72 (+/-3) - - -/BBB+/-/BBBH BMO/RBC - OTC+102 (+/-3) - - -/BBB+/-/BBBH BMO/RBC - - - - -/AA+ Danske - - - - - HCM/SEB - - - - - Nordea/Swed - MS+130/140 - - -/BBB+ ANZ/WBC -

International Financing Review June 16 2018 53 GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 15/6/2018 (CONTINUED) Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) FINANCIALS US DOLLARS Jun 11 2018 JPMorgan Chase & Co US$1.4bn 4NC3 3.514 100 T+85 3.514

Jun 11 2018 JPMorgan Chase & Co US$1.1bn 4NC3 3mL+61 100 3mL+61 -

Jun 11 2018 National Australia Bank NY US$500m Sep 20 2021 3.375 99.77 T+80 3.453

Jun 11 2018 National Australia Bank NY US$350m Jun 20 2023 3.625 99.67 T+90 3.697

Jun 11 2018 National Australia Bank US$750m Sep 20 2021 3mL+58 100 3mL+58 -

Jun 12 2018 HSBC Holdings US$3bn Jun 19 2029 (Jun 2028) 4.583 100 T+163 4.583

Jun 14 2018 Lloyds Banking US$500m 6/21/2021 3mL+80 100 3mL+80 - EUROS Jun 13 2018 Vivat (RT1) €300m Perpetual (Jun 2025) 7 100 MS+646.3 7

Jun 15 2018 Nordea SNP €1bn Jun 26 2023 0.875 99.893 MS+60 / B+112.8 0.897

STERLING Jun 11 2018 Svenska Handelsbanken £500m Jun 18 2022 1.625 99.685 G+83 1.7 Jun 15 2018 HSBC Holdings £1bn Jun 27 2023 (Jun 2022) 2.175 100 G+135 2.163

SWISS FRANCS Jun 11 2018 Zurich Insurance SFr350m Dec 18 2024 0.5 100.309 MS+28 / Eidg+73.9 0.452

Jun 12 2018 Vontobel Holding SFr450m Perpetual (Oct 2023) 2.625 100 MS+260.5 2.627

NON CORE Jun 11 2018 Canadian Western Bank C$200m incr Jun 29 2020 2.751 99.915 OTC+87 2.794 (C$500m) Jun 11 2018 Nordea Bank NKr500m Dec 18 2020 3mN+30 100 3mN+30 - Jun 12 2018 Nordea Bank SKr700m Jun 17 2020 0.097 100 - 0.097 Jun 13 2018 Sparbanken Sjuhärad SKr650m Jun 21 2021 3mS+75 101.066 - - Jun 13 2018 Sparbanken Sjuhärad SKr300m Jun 21 2021 1.17 100 - 1.17 Jun 14 2018 Westpac T2 A$725m Jun 22 2028 (Jun 2023) 3mBBSW+180 100 3mBBSW+180 - Jun 14 2018 NAB Trust Services A$200m Jun 19 2028 (3.2yr WAL) 3mBBSW+160 100 3mBBSW+160 - COVERED BONDS EUROS Jun 11 2018 Sparebank 1 Boligkreditt €1bn Jun 19 2023 0.375 99.798 MS+2 / B+56.8 0.416

Jun 11 2018 Møre Boligkreditt €250m Jun 19 2023 0.375 99.561 MS+7 / B+62.5 0.464 Jun 12 2018 DNB Boligkreditt (Green) €1.5bn Jun 19 2025 0.625 99.408 MS+2 / B+58.4 0.712

HIGH YIELD US DOLLARS Jun 8 2018 Aleris International US$400m Jul 15 2023 (Jul 2020) 10.75 100 T+798 10.75

Jun 11 2018 Boyd Gaming Corporation US$700m Aug 15 2026 (Aug 2021) 6 100 T+305 6

Jun 13 2008 Blue Racer Midstream US$300m Jul 15 2026 6.625 100 T+369 6.625

Jun 13 2008 MGM Resorts US$1bn Jun 15 2025 5.75 100 T+284 5.75 Jun 13 2008 Ardent Health US$475m Jul 15 2026 9.75 98.628 T+705 10 EUROS Jun 11 2018 Outokumpu €250m Jun 18 2024 (Jun 2020) 4.125 100 B+416.2 4.125

54 International Financing Review June 16 2018 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

T+90/95, 6 - A3/A-/A+ JPM - T+90 (+/-5) 3mL equiv, FRN - A3/A-/A+ JPM - 3mL equiv T+85 area, 6 - Aa3/AA- BAML/JPM/NAB/RBC - T+80 (the #) T+105 area, 6 - Aa3/AA- BAML/JPM/NAB/RBC - T+90 (the #) 3mL equiv, FRN - Aa3/AA- BAML/JPM/NAB/RBC - 3mL equiv T+175/180, 10 US$7.6bn A2/A/AA- HSBC - T+165 (+/-2) 3mL+equiv - - A3/A+ JPM -

7% area, - >€450m -/-/BB- ABN/BNPP/DB/NatWest - 7% MS+75 area, 5-Aug >€3bn Baa1/A/AA- Barc/BNPP/GS/JPM/Nordea - MS+60/63

G+high 80s 6 >£725m Aa2/AA-/AA Danske/Nomura - G+145 area, - - A2/A/AA- HSBC - G+135 (the #)

MS+28/30 0 SFr350m, 50 acs A1/A+ ZKB Switz 100%. Ins 54%, Bks 24%, Am 18%, PF 4%. 2.75%/3%, - >SFr450m, 71 acs Baa3 CS/Vont Switz 100%. Retail/PB 56.7%, Ins 2.625%/2.75%, 23.03%, PF 17.09%, AM 2.97%, Other 2.625% 0.21%.

OTC+90 (+/-3) - - -/-/-/AL RBC/TD -

- - - Aa3/AA-/AA- Swed - - - - Aa3/AA- HCM - - - - -/A- Nordea/Swed - - - - -/A- Nordea/Swed - 3mBBSW+180 area - - Baa1/BBB WBC - - - - - NAB -

MS+4 area, 5 >€1.2bn, >70 acs Aaa BNPP/CMZ/Danske Ger/Aus 54%, Benelux 14%, Fr 8%, MS+3 (+/-1) Nordics 7%, S.Eur 6%, UK 5%, Asia 3%, Other 3%. Bks 62%, AM 20%, OI 11%, Ins/PF 7%. MS+10 area 2 €300m Aaa LBBW/Nordea - MS+5 area 3 >€2bn, ~100 acs Aaa/AAA ING/CA-CIB/DNB/LBBW/Uni Ger/Aus 51%, Benelux 17%, UK/Ire 14%, Nordics 8%, Fr 5%, Asia 3%, Other 2%. Bks/FI 60%, AM 24%, Ins/PF 9%, CB/OI 7%. Green 31%.

10.75%/11%, - - Caa2/CCC+ DB/Barc/BAML/JPM - 10.75% 6%/6.25%, - - B3/B JPM/DB/BAML/WFS FITB/USB/ - 6% STRH/BNP/Citizens/UBS/COSC/ CA-CIB/Key 6.75% area - - B2/B WFS(left)/RBC/TD/BBVA/Capone/ - STRH/USB 5.75% area - - Ba3/BB- Citi/BAML/Barc/BNP/FITB/SMBC - 9.25%/9.5% - - Caa2/CCC+ Barc/Jeff/BAML -

4%/4.25%, - - Ba3 Danske/Swed - 4.125%

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FRONT STORY AFRICA Ecobank hopes to beat the odds Lender plans debut deal though conditions are far from perfect

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Sovereign has US$3bn funding gap this year

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TAPûISSUE PROGRAMME ûHAVEûANûEXPECTEDû"AûRATINGû OFûTHEûNOTESûTOûMAKEûTHEMûFUNGIBLEûWITHû -OREOVER ûBASEDûONûTHEûBONDûOFFERINGû FROMû-OODYS THEûORIGINALûBONDSûINûTHEûSAMEûLINE û CIRCULAR ûHOLDERSûCANûPUTûTHEûBONDSûATûPARûIFû 4HEûBENCHMARKû2EGû3ûISSUEûHADûNOTûBEENû ACCORDINGûTOûAûSTOCKûEXCHANGEûlLING THEûREGISTRATIONûCONDITIONSûHAVEûNOTûBEENû PRICEDûATûTHEûTIMEûOFûWRITING 4HEûBONDS ûISSUEDûVIAûAûREOPENINGûONû SATISlEDûINûFULLûONûORûBEFOREûTHEû 0ROCEEDSûWILLûBEûUSEDûFORûDEBTûRElNANCINGû /CTOBERû ûWEREûSUPPOSEDûTOûBEû REGISTRATIONûDEADLINE ANDûGENERALûCORPORATEûPURPOSE CONSOLIDATEDûWITHûTHEûORIGINALû53Mû 4HEûBONDSûHAVEûFALLENûBYûMOREûTHANûû BOC International and China Citic Bank ûLINEûISSUEDûONû*ULYûû ûBUTûTHISû POINTSûSINCEû-ARCHûANDûWEREûQUOTEDûATû InternationalûAREûJOINTûGLOBALûCOORDINATORS û STILLûHASûNOTûHAPPENED ûONû*UNEû ûTHEûDATEûWHENûTHEû JOINTûLEADûMANAGERSûANDûJOINTûBOOKRUNNERS *IUDINGû'ROUPû&INANCEûLAUNCHEDûAû CONSENTûSOLICITATIONûWASûLAUNCHED û /Nû*UNEû 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COLLECTEDûSALESûPROCEEDSûTOûREPLENISHûLANDûTOû SAIDûTHEûDELAYûWASûDUEûTOûhTECHNICALûISSUESvû 3ECURITIESûANDûPRIVATEûEQUITYûlRMû+UNWUû MAINTAINûITSûBUSINESSûSCALE BUTûDECLINEDûTOûGIVEûDETAILS *IUDINGû)NVESTMENTû(OLDINGSûAREûSOMEûOFû h)TûISûRAREûTHATûBONDSûISSUEDûFROMûAûTAPû ITSûMAJORûOPERATINGûUNITS CCB NEW ZEALAND RAISES NZ$100m HAVEûNOTûBEENûMADEûFUNGIBLEûWITHûTHEû 30ûONû-ARCHûûPLACEDû ORIGINALûBONDSûAFTERûSUCHûAûLONGûTIME vû 4ONGCHUANGJIUDINGSûRATINGSûONûCREDITû CHINA CONSTRUCTION BANK (NEW ZEALAND) ûRATEDû ANOTHERûBANKERûSAID WATCHûWITHûDEVELOPINGûIMPLICATIONS û !!û-OODYS30 ûHASûRAISEDûTHEû.:Mû 4HEûTERM SHEETûOFûTHEûTAPûSTATEDûTHATûTHEû FOLLOWINGûTHEûCOMPANYSûPROPOSEDûNEWû 53M ûMAXIMUMûITûWASûSEEKINGûFROMû CONSOLIDATIONûWOULDûTAKEûPLACEûONûORûAFTERû SHAREûISSUANCEûOFûITSûSECURITIESûSUBSIDIARYû LASTû4HURSDAYSûlVE YEARûlXED RATEûNOTEû &EBRUARYûû ûWHICHûWASûALREADYûLONGERû TOûAûSTRATEGICûINVESTORûWHOûINTENDSûTOûTAKEû OFFERINGûARRANGEDûBYûTHEû.EWû:EALANDû THANûUSUAL AûCONTROLLINGûSTAKE BRANCHESûOFûANZ ûCBA and Westpac. 3OMEûTAPûISSUESûAREûFUNGIBLEû 30ûBELIEVESûTHEûOVERALLûIMPACTûOFûTHEû 4HEûû*UNEûûSûWEREûPRICEDûATû IMMEDIATELY ûWHILEûSOMEûAREûFUNGIBLEû PROPOSEDûTRANSACTIONûONûTHEûCOMPANYSû PAR ûINûLINEûWITHûMID SWAPSûPLUSûBPûAREAû AFTERûTHEû DAYûRESTRICTEDûSALEûPERIOD ûORûASû CREDITûPROlLEûISûPOSITIVEûASûTHEûPROCEEDSû GUIDANCE SPECIlEDûOTHERWISE FROMûTHEûDEALûWOULDûPROVIDEûAûGOODû 0RICINGûCOMPARESûWITHûTHEûBPûMID 4HEû2EGû3ûSENIORûUNSECUREDûBONDS ûRATEDû OPPORTUNITYûFORûTHEûCOMPANYûTOûPAYûDOWNû SWAPSûMARGINûPAIDûBYû!!!n!!nûRATEDû ""ûBYû30 ûCARRYûAûGUARANTEEûFROMûTHEû ITSûDEBT !.:û"ANKû.EWû:EALANDûONû-AYûûFORûAû .:MûûlVE YEARûPRINT ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS ##"û.EWû:EALANDûDEBUTEDûINûTHEûLOCALû BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE MARKETûINû*UNEûûWITHûAû.:MûDUAL Asia-Paciﬁc Managing No of Total Share TRANCHEûISSUEûOFûTHREE YEARûmOATING RATEûANDû Managing No of Total Share bank or group issues US$(m) (%) lVE YEARûlXED RATEûNOTES bank or group issues US$(m) (%) 1 Citigroup 133 34,915.39 10.3 ,ASTû.OVEMBER ûTHEûBANKûPRICEDû.:Mû 1 HSBC 106 12,668.76 8.0 2 HSBC 154 28,851.96 8.5 OFûûlVE YEARûBONDSûATûMID SWAPSûPLUSû 2 Citigroup 61 8,704.53 5.5 3 Deutsche Bank 69 19,679.25 5.8 BP 3 Bank of China 87 8,115.77 5.1 4 JP Morgan 86 19,674.84 5.8 4 Standard Chartered 67 7,162.39 4.5 5 Standard Chartered 106 19,342.77 5.7 WUZHOU INTL DEFAULTS ON SOME DEBT 5 Morgan Stanley 34 6,841.84 4.3 6 BNP Paribas 79 13,488.85 4.0 6 BNP Paribas 50 6,305.88 4.0 7 Morgan Stanley 48 11,011.39 3.3 WUZHOU INTERNATIONAL HOLDINGS ûWHICHû 7 Credit Suisse 43 5,492.28 3.5 8 BAML 60 10,635.75 3.1 SUFFEREDûHEAVYûSELL OFFSûINûITSûSHARESûANDû 8 Citic 51 4,965.74 3.1 9 Credit Suisse 61 9,934.27 2.9 BONDSûLASTûMONTH ûHASûCONlRMEDûTHATûITûISû 9 BAML 36 4,447.28 2.8 10 Goldman Sachs 37 9,725.31 2.9 EXPERIENCINGûlNANCIALûDIFlCULTIESûANDûHASû 10 UBS 47 4,300.26 2.7 Total 512 338,812.47 DEFAULTEDûONûSOMEûOFûITSûOBLIGATIONS Total 325 158,368.58 Excluding equity-related debt. (OWEVER ûTHEû(ONGû+ONG LISTEDû#HINESEû Excluding equity-related debt. REALûESTATEûDEVELOPERûSAIDûINûAûSTOCKû Source: Thomson Reuters SDC code: L4 Source: Thomson Reuters SDC code: L1 EXCHANGEûlLINGûLATEûONû*UNEûûTHATûITSûBOARDû

58 International Financing Review June 16 2018 EMERGING MARKETS ASIA-PACIFIC

WASûNOTûAWAREûOFûANYûPETITIONûTOûWINDûUPûTHEû COMPANYûORûANYûOFûITSûSUBSIDIARIES )TûSAIDûTHEûBOARDûISûLIAISINGûWITHûCREDITORSû Indonesia Inc lines up bonds FORûALTERNATIVEûPAYMENTûARRANGEMENTSûANDû ANûINDEPENDENTûBOARDûCOMMITTEEû ASIA-PACIFIC Domestic issuance up 50% in year to-date as dollar window closes ESTABLISHEDûEARLIERûTHISûMONTHûWILLûCONDUCTû ANûINVESTIGATIONûINTOûTHEûlNANCIALûSITUATIONû Indonesian companies are lining up rupiah bonds PAYING THE PRICE OFûTHEûCOMPANY before borrowing costs rise further, following two In May, PLN paid a hefty price in the US dollar )TûDIDûNOTûGIVEûDETAILSûONûWHATûPAYMENTû rate increases by Bank Indonesia, while dollar bond market. The 6.20% coupon on a 30-year OBLIGATIONSûITûHASûMISSED bond issuance has slowed. tranche was the highest it had paid for dollar 7UZHOUSû(ONGû+ONG LISTEDûSHARESû Domestic corporate bond issuance has surged debt since 2011, according to Thomson Reuters PLUNGEDûûONû-AYûûONûNEGATIVEûLOCALû 50% to Rp60trn (US$4.3bn) in the year to-date, data. The state-owned electricity company had NEWSûREPORTS ûBEFOREûTRADINGûWASûSUSPENDEDû from Rp40trn in the same period last year, also planned to issue Komodo bonds alongside )TSû53MûOFûû53ûDOLLARûBONDSûDUEû according to Mandiri Sekuritas, with more issues the dollar tranches, but postponed that offering. 3EPTEMBERûûSLUMPEDûMOREûTHANûû in the pipeline. PLN is currently marketing onshore rupiah POINTSûTOûûONûTHEûSAMEûDAY Power utility PERUSAHAAN LISTRIK NEGARA is bonds with conventional and sukuk tranches )NûTHEûlLING û7UZHOUûSAIDûûSUBSTANTIALû eyeing Rp3trn from a five-tranche conventional in the range of 7.25%–9.5% for five to 20-year SHAREHOLDERû"OOMû7INû(OLDINGSûSTAKEûINû bond and sukuk issue after dropping plans last tenors. THEûCOMPANYûHASûBEENûCUTûTOûûASûAû month to issue Komodo, or offshore rupiah, notes Indonesian issuers are offering attractive yields RESULTûOFûAûFORCEDûLIQUIDATIONûLINKEDûTOûTHEû due to currency weakness. to domestic investors. UNUSUALûMOVEMENTSûOFûTHEûCOMPANYSûSHAREû SARANA MULTI INFASTRUKTUR is targeting up “There is good demand for rupiah bonds PRICEû!CCORDINGûTOûANûEARLIERûlLING û"OOMû to Rp2trn from a debut offering of Green bonds. from pension and insurance firms because of 7INûHELDûAûûSTAKE MEDCO POWER is planning to raise Rp1.2trn from attractive yields,” said Adi Saputra, portfolio 7UZHOUûAPPLIEDûTOûRESUMEûTRADINGûOFûITSû a triple-tranche conventional and sukuk notes manager for fixed income at Sucor Asset SHARESûONû*UNEûûANDûTHEûSHARESûREBOUNDEDû issue. Management. SOME PELABUHAN INDONESIA IV recently raised Rp3trn “We invest in rupiah bonds of state-owned 4HEûûûBONDSûAREûILLIQUIDû4HEYû and state construction company PEMBANGUNAN enterprises depending on the company’s WEREûLASTûQUOTEDûATûûONû*UNEû û PERUMAHAN printed Rp1.5trn of onshore bonds. financial profile, debt and leverage ratios,” said ACCORDINGûTOû-ARKET!XESS Debt bankers are expecting issuance to surge Saputra. 7UZHOUûDEVELOPSûANDûOPERATESûWHOLESALEû in the near term as companies rush to meet Demand for bonds has also been helped by MARKETSûANDûCOMMERCIALûCOMPLEXESûINû their refinancing requirements before borrowing Bank Indonesia’s rule change to allow banks #HINAû)TSûLIQUIDITYûPOSITIONûHASûLONGû costs rise further and shelf registrations expire in to include bonds in their lending targets, after ATTRACTEDûWARNINGSûFROMûCREDITûANALYSTS December. it switched to a new financing-to-funding ratio -OODYSûHASûAû#AAûNEGATIVE ûRATINGûONû “While the Indonesian central bank has (FFR) this year, replacing the former loan-to- 7UZHOUûANDû#AAûRATINGûONûITSûBONDS û already hiked rates twice, the risk premium for funding ratio (LFR). WHICHûITûSAIDûREmECTEDûTHEûHIGHûLEVELûOFû corporate bonds has not gone up much since Indonesian corporates are continuing to LIQUIDITYûRISK onshore investors are the main buyers and there look at diverse ways to finance the country’s &ITCHûONû-AYûûWITHDREWûITSû###ûRATINGû is ample liquidity in the domestic market,” said infrastructure funding requirement, “as they are ONûTHEûCOMPANYûANDûITSûBONDSûAFTERûITûSAIDû Handy Yunianto, head of fixed income research anticipating a possible infra budget cut next year 7UZHOUûHADûSTOPPEDûPROVIDINGûTHEû at Mandiri Sekuritas. and more investment in social welfare schemes INFORMATIONûITûNEEDEDûTOûMAINTAINûTHEû In May, Bank Indonesia raised rates by 25bp, and human capital”, said Saputra from Sucor RATING the second time it had done so in a span of two Asset Management. That could spur further weeks, to stem the currency’s slide. Higher oil bond issuance onshore. MOODY’S DOWNGRADES HUIYUAN JUICE prices and the strengthening US dollar pushed Indonesia has ventured into unconventional down asset prices and roiled the rupiah, which is instruments such as asset-backed securities, -OODYSûHASûDOWNGRADEDûCHINA HUIYUAN JUICE down 3% in the year to-date. Most economists Komodo bonds, perpetual and recently Green GROUPûBYûTHREEûNOTCHESûTOû#AAûFROMû" û are expecting another 25bp rate increase to 5% bonds to raise funds to meet the massive QUESTIONINGûITSûACCESSûTOûCAPITALûDURINGûAû before the end of this year. infrastructure investment required over the next five PROLONGEDûSHAREûSUSPENSIONû4HEûRATINGSû The surge in onshore deals comes as dollar years, estimated at US$500bn by the World Bank. OUTLOOKûISûNEGATIVE bond offerings from Indonesian companies have However, recently, President Joko Widodo 4HEû(ONGû+ONG LISTEDû#HINESEûJUICEû slowed following the spike in US Treasury yields has made a strategic policy shift and dropped MAKERûSAIDûLASTû-ONDAYûTHATûTHEûSTOCKû in May. US$20bn of planned infrastructure projects to EXCHANGEûHADûORDEREDûITûTOûCONDUCTûAû “It is not as efficient as before to raise funds in focus on social welfare, ahead of next April’s FORENSICûINVESTIGATIONûOFûITSûACCOUNTSûANDû dollars because rates are going up globally,” said presidential and legislative elections. PUBLISHûITSûOUTSTANDINGûûlNANCIALû Euben Paracuelles, an economist at Nomura. Krishna Merchant RESULTSûBEFOREûITSûSHARESûCOULDûRESUMEû TRADING ûAMONGûOTHERûREQUIREMENTS -OODYSûSAIDûTHISûWOULDûDELAYûTHEû HAPPENS ûTHEûCOMPANYSûLIQUIDITYûPOSITIONû THEûPERIODûBETWEENû!UGUSTûûûANDû RESUMPTIONûOFûSHAREûTRADING ûWHICHûMAYû WILLûBEûSEVERELYûIMPAIRED vûTHEûRATINGûAGENCYû -ARCHûû LEADûTOûAûBREACHûOFûTHEûCONDITIONALûWAIVERSû SAID 4HEûTRANSACTIONûWASûSIGNIlCANTûBUTû ONûTHEûCOMPANYSûLOANSû4HEûSTOCKûHASûNOTû (UIYUANûONû-ARCHûûDISCLOSEDûTHATûITûHADû (UIYUANûDIDûNOTûMAKEûANYûANNOUNCEMENTû TRADEDûSINCEû-ARCHû PROVIDEDûLOANSûTOTALLINGû2MBBNû ANDûDIDûNOTûOBTAINûAPPROVALûFROMû h.ON COMPLIANCEûWITHûTHEûCONDITIONALû 53M ûTOû"EIJINGû(UIYUANû"EVERAGE ûAû INDEPENDENTûSHAREHOLDERSû4HEûOMISSIONSû WAIVERûFORûITSûLOANSûWILLûENTITLEûTHEûRELEVANTû COMPANYûûOWNEDûBYûITSûLARGESTû VIOLATEDûSEVERALûLISTINGûRULESûOFûTHEû(ONGû LENDERSûTOûACCELERATEûREPAYMENTSû)FûTHISû SHAREHOLDERûANDûCHAIRMANû:HUû8INLI ûDURINGû +ONGû3TOCKû%XCHANGE

International Financing Review June 16 2018 59 GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 15/6/2018 Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Jun 11 2018 Qingdao Jiaozhou Bay US$120m Jun 14 2021 6.5 98.931 - 6.9 Development Jun 11 2018 China Aoyuan Property US$225m May 10 2021 (May 10 7.5 98.092 - 8.25 Group (incr) (US$425m) 2020)

Jun 12 2018 Future Land Holdings US$200m Mar 20 2022 7.5 98.355 - 8

Jun 12 2018 Mapletree Investments S$200m Jun 21 2021 2.888 100 SOR+69.3 2.888 Jun 13 2018 ICBC Asia (Green) US$200m Jun 21 2021 3mL+75bp 100 3mL+75 3mL+75bp

Jun 13 2018 ICBC Asia (Green) US$200m Jun 21 2023 3mL+85bp 100 3mL+85 3mL+85bp

Jun 13 2018 ICBC Asia (Green) HK$2.6bn Jun 21 2020 3 100 - 3 Jun 14 2018 China Fortune Land US$200m Jun 21 2021 9 100 - 9 Jun 14 2018 Kexim SFr300m Jul 11 2024 0.383 100 MS+27 / Eidg+69 0.383

Jun 14 2018 CCB NZ NZ$100m Jun 19 2023 4.005 100 MS+130 4.004 Jun 15 2018 Greenland Holding Group US$250m Sep 26 2021 3mL+485bp 100 3mL+485 -

-OREOVER ûTHEûTWOûCORPORATEûENTITIESûDIDû 4RADINGûINûTHEûSûANDûTHEûSûLISTEDû Banking Corp Hong Kong branch and DBS Bank NOTûSIGNûANYûFORMALûDOCUMENTATIONûUNTILû ONûTHEû3TOCKû%XCHANGEûOFû(ONGû+ONGûHASû AREûJOINTûGLOBALûCOORDINATORS -ARCHû ûWHENûTHEYûENTEREDûINTOûAûLOANû BEENûSUSPENDEDûSINCEû-AYûûUNTILûFURTHERû 4HEYûAREûALSOûJOINTûLEADûMANAGERSû AGREEMENTûTOûDOCUMENT ûANDû NOTICE ûACCORDINGûTOûTHEûlLING ANDûJOINTûBOOKRUNNERSûWITHûABC SIMULTANEOUSLYûTERMINATE ûTHEûPRIORûLOANû International ûBank of China ûBank of TRANSACTIONSû"YûTHEN û"EIJINGû(UIYUANû PIPELINE BUILDS Communications ûBOSC International ûIndustrial "EVERAGEûHADûPAIDûINûFULLûTHEûPRINCIPALûANDû Bank Hong Kong branch ûHSBC ûMizuho INTERESTûACCRUED WUHAN REAL ESTATE DEVELOPMENT & INVESTMENT Securities and Shanghai Pudong Development &ITCHûCUTû(UIYUANûTOû"ûFROMû" ûINû!PRILû GROUPûHASûMANDATEDûCICC and ICBCûASûJOINTû Bank Hong Kong branch ANDûLEFTûITSûRATINGûONûNEGATIVEûWATCHû#HINAû GLOBALûCOORDINATORSûFORûAûPROPOSEDû53ûDOLLARû 4HEûINVESTMENTûBANKûARMûOFû#HINASû #HENGXINûHASûAûDOMESTICûRATINGûOFû!! BONDûOFFERING )#"#ûWILLûMEETûINVESTORSûINû(ONGû+ONGûANDû (UIYUANûHASû53MûOFûûûNOTESû 4HEûTWOûAREûALSOûJOINTûBOOKRUNNERSû HOLDûGLOBALûINVESTORûCONFERENCEûCALLS û OUTSTANDINGû4HOSEûDROPPEDûEIGHTûPOINTSûLASTû ALONGSIDEûStandard Chartered ûCCB STARTINGûONû*UNEû WEEKûTOû ûACCORDINGûTOû4HOMSONû International ûChina Citic Bank International and 4HEûPROPOSEDû2EGû3ûNOTESûWILLûBEûISSUEDû 2EUTERSûDATAû)TûALSOûHASûAûõMû53M û Industrial Bank Hong Kong branch BYûWHOLLYûOWNEDû"6)ûSUBSIDIARYû(ORSEû ûBONDûDUEû*ULYû 4HEûBOOKRUNNERSûWILLûARRANGEûINVESTORû 'ALLOPû&INANCEûWITHû)#"#û)NTERNATIONALûASû -OODYSûSAIDûTHEû#AAûRATINGûREmECTEDû MEETINGSûINû(ONGû+ONG û3INGAPOREûANDû THEûGUARANTOR (UIYUANSûHIGHûREPAYMENTûRISK ûIMPAIREDû ,ONDON ûWHICHûSTARTEDûONû*UNEûûANDûWILLû 4HEûNOTESûHAVEûANûEXPECTEDû!ûRATINGû SOURCEûOFûFUNDINGûANDûHIGHûCORPORATEû lNISHûONû*UNEû FROMû-OODYS GOVERNANCEûRISK !û2EGû3ûOFFERINGûOFûSENIORûUNSECUREDû ENVISION ENERGY INTERNATIONALûWILLûHOLDûAû BONDSûMAYûFOLLOW GLOBALûlXEDûINCOMEûINVESTORûUPDATEûCALLûONû CERCG APPOINTS ADVISER 4HEûBONDSûAREûEXPECTEDûTOûBEûRATEDû"AA *UNEûûVIAûHSBC ûBank of America Merrill """nû-OODYS30 ûINûLINEûWITHûTHEûISSUER Lynch ûCMB International and China Citic Bank CHINA ENERGY RESERVE AND CHEMICALS GROUP û 4HEûISSUERûISûANûINVESTMENTûANDûlNANCINGû International ûACCORDINGûTOûAûMARKETûSOURCE WHICHûDEFAULTEDûONûITSûOFFSHOREûDEBTûLASTû VEHICLEûFORûCITYûCONSTRUCTIONûFORûTHEû7UHANû !NûIN PERSONûGROUPûMEETINGûWILLûALSOû MONTH ûHASûAPPOINTEDû&4)û#ONSULTINGûASû MUNICIPALûGOVERNMENTûINû(UBEIûPROVINCE ûANDû TAKEûPLACEûATû#-"û)NTERNATIONALSûOFlCEûINû INDEPENDENTûlNANCIALûADVISERûTOûWORKû ISûWHOLLYûOWNEDûBYû7UHANû3TATE OWNEDû!SSETSû (ONGû+ONG TOWARDSûAûhCONSENSUALûSOLUTIONvûINûRELATIONû 3UPERVISIONûANDû!DMINISTRATIONû#OMMISSION 4HEû3HANGHAI HEADQUARTEREDûWIND TOûTHEûPOTENTIALûRESTRUCTURINGûOFûITSûBONDS CCB FINANCIAL LEASINGûHASûHIREDûlVEûBANKSûTOû TURBINEûMANUFACTURERûANDûWIND FARMû 4HEûCOMPANYûALSOûRETAINEDû$&û+INGûASû ARRANGEûlXEDûINCOMEûINVESTORûMEETINGSûINû SPECIALISTûINû!PRILûPRICEDûAû53MûTHREE IDENTIlCATIONûAGENTûTOûASSISTûWITHûTHEû (ONGû+ONG û4ORONTOûANDû,ONDON ûSTARTEDûONû YEARû53ûDOLLARûSENIORû'REENûBONDûISSUEûATû IDENTIlCATIONûOF ûANDûENGAGEMENTûWITH û *UNEû PARûTOûYIELDû BONDHOLDERS ûACCORDINGûTOûAûSTOCKûEXCHANGEû 4HEûlVEûAREûBank of America Merrill Lynch û 4HEûCOMPANYûHASûREGISTEREDûTOûISSUEû lLINGûONû*UNEû Bank of China ûCCB International ûDBS Bank and OFFSHOREûBONDSûWITHûTHEû.ATIONALû #%2#' ûWHICHûCLAIMSûTOûBEûAûSTATE CONTROLLEDû HSBC $EVELOPMENTûANDû2EFORMû#OMMISSION û COMPANY ûFAILEDûTOûREPAYûTHEûPRINCIPALûONûITSû ICBC INTERNATIONAL HOLDINGS ûRATEDû!!nû ACCORDINGûTOûAûSTATEMENTûPOSTEDûONû.$2#Sû 53MûûNOTESûDUEû-AYû ûBLAMINGûITSû -OODYS30 ûHASûHIREDûBANKSûFORûAû WEBSITEûONû-AYû TROUBLESûONûAûLIQUIDITYûCRUNCH PROPOSEDûOFFERINGûOFû53ûDOLLARûSENIORûNOTESû #HINESEûPROPERTYûDEVELOPERûXINHU 4HEûMISSEDûPAYMENTûALSOûTRIGGEREDûAû OFFûITSû-4.ûPROGRAMME ZHONGBAOûPLANSûTOûRAISEûUPûTOû53BNûINûTHEû CROSS DEFAULTûONûOTHERûOFFSHOREûBONDS û ICBC ûStandard Chartered ûAgricultural Bank OFFSHOREûBONDûMARKET INCLUDINGû#%2#'Sû53MûOFûûSû of China Hong Kong branch ûANZ ûChina 4HEûISSUERûWILLûBEû8INHUû"6) û(OLDINGû ANDû(+BNûOFûûûNOTES Construction Bank (Asia) ûChina Minsheng WITHû8INHUû:HONGBAOûASûGUARANTOR û

60 International Financing Review June 16 2018 EMERGING MARKETS ASIA-PACIFIC

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

7% area - - Unrated Zhongtai/Industrial -

8.375% area, 8.30% - - B2/B/BB- CEB Intl/CMBI/CNCBI/DB/JPM/ - +/-5 OCBC /Orient/UBS/ Essence International 8% area - - Ba2/-/BB Haitong/Guotai Junan/Everbright - HK/CMBI/ CNCBI/DBS/CEB Intl/ BoC/Orient/CISI/Future Land Resources Securities 2.888% (the #) - - Unrated OCBC - 3mL+100 area - - A2 ICBC/CA-CIB/ABCHK/BoCom/Citi/ - HSBC/StCh/UBS 3mL+110 area - - A2 ICBC/CA-CIB/ABCHK/BoCom/Citi/ - HSBC/StCh/UBS 3.25% area - - A2 ICBC/CA-CIB/HSBC/ StanChart HK - - - - Unrated Haitong - MS+27 area 0 SFr300m, 35 acs Aa2/AA/AA- UBS Switz 100%. Tsy 50.3%, AM 23.9%, PF 19%, PB 4.1%, Ins 2.7%. MS+130 area - - A1/A ANZ/CBA/WBC - L+500 area, - >US$800m Ba2 BOCI/China Citic Bank International - L+485

ACCORDINGûTOûAûlLINGûTOûTHEû3HANGHAIû3TOCKû )TûALSOûPRICEDûAû(+BNû53M ûTWO 3USTAINABILITYûBONDSûHAVEûELEMENTSûOFûBOTHû %XCHANGE YEARûlXED RATEûTRANCHEûATûPARûTOûYIELDû û 'REENûANDû3OCIALûBONDS 4HEûTENORûOFûTHEûNOTESûWILLûNOTûEXCEEDûlVEû BPûTIGHTERûTHANûINITIALûûAREAû )#"#û!SIAûUSESûTHEû)#"#û'REENûBONDû YEARS ûTHEûCOMPANYûSAID GUIDANCE FRAMEWORK ûWHICHûHASûRECEIVEDûh$ARKû'REENvû 4HEûPLANûHASûBOARDûAPPROVALûANDûNEEDSû "OTHû53ûDOLLARûTRANCHESûWEREûHOVERINGû SHADINGûFROMû#ICEROûANDûWASûEXTERNALLYû SHAREHOLDERSûAPPROVAL AROUNDûPARûONû4HURSDAYûMORNINGûWHILEûTHEû REVIEWEDûBYû:HONGCAIû'REENû&INANCINGû (ONGû+ONGûDOLLARûBONDSûWEREûBIDûATû û #ONSULTANTS ûANDûALIGNSûWITHûBOTHû ACCORDINGûTOûAûTRADER INTERNATIONALûANDû#HINESEû'REENûBONDû HONG KONG 4HEû'REENûBONDS ûTOûBEûISSUEDûUNDERû)#"#û STANDARDS !SIASû-4.ûPROGRAMME ûHAVEûANûEXPECTEDû 0ROCEEDSûWILLûlNANCEûELIGIBLEû'REENûASSETSû ICBC ASIA PRINTS FIRST GREEN BOND !ûRATINGûFROMû-OODYS OFû)#"#û!SIA ûANDORûTHEû)#"#ûGROUP )#"#û!SIAûISû)#"#SûPRINCIPALûCOMMERCIALû $ISTRIBUTIONûSTATISTICSûWEREûNOTûAVAILABLEû INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) BANKINGûUNITûINû(ONGû+ONGûANDûAûDOMESTICû ATûTHEûTIMEûOFûWRITINGû/RDERSûFORûTHEû53û CHOSEûAûDIFlCULTûDAYûFORûITSû'REENûBONDû SYSTEMICALLYûIMPORTANTûBANKûWITHûAûûLOCALû DOLLARûTRANCHESûWEREûSAIDûTOûBEûOVERû DEBUTûLASTû7EDNESDAY ûPRICINGûTHEûlRSTû MARKETûSHAREûBYûASSETS 53BNûWHILEûTHEû(ONGû+ONGûDOLLARû 'REENûISSUEûFROMûAû(ONGû+ONG INCORPORATEDû 4HEû53ûDOLLARûmOATERSûWEREûPRICEDûBPû TRANCHEûHADûOVERû(+BNûATûTHEûTIMEûOFû BANKûONûTHEûSAMEûDAYûASûTHEû53û&EDERALû WIDERûTHANû'REENûmOATERSûFROMû)#"#û,ONDONû lNALûGUIDANCE 2ESERVESûLATESTûPOLICYûDECISION BRANCHûONû*UNEûûANDû"ANKûOFû#HINAû,ONDONû ICBC ûCredit Agricole ûAgricultural Bank of 4HEûRATEDû!!û-OODYS30 ûLENDERû BRANCHûONû-AYû ûBUTûTHEûLATTERûTWOûHAVEû China Hong Kong branch ûBank of ISSUEDû53M EQUIVALENTûOFûSENIORû HIGHERûRATINGS Communications ûCitigroup ûHSBC ûStandard UNSECUREDû'REENûBONDSûDENOMINATEDûINû53û )#"#û,ONDONSû'REENûBONDSûAREûRATEDû!û Chartered Bank and UBSûWEREûJOINTûGLOBALû DOLLARSûANDû(ONGû+ONGûDOLLARS BYû-OODYSûWHILEû"/#û,ONDONSû'REENû COORDINATORSûANDûJOINTûLEADûMANAGERSûFORûTHEû )#"#û!SIAûISûTHEûlRSTûLOCALLYûLICENSEDûBANKû BONDSûAREûRATEDû!!! 53ûDOLLARûTRANCHES INû(ONGû+ONGûTOûOBTAINûPRE ISSUANCEû'REENû ICBC ûCredit Agricole ûHSBC and Standard lNANCEûCERTIlCATIONûFROMûTHEû(ONGû+ONGû GREEN GROWTH Chartered Bank (Hong Kong)ûWEREûJOINTûGLOBALû 1UALITYû!SSURANCEû!GENCYSû'REENû&INANCEû (ONGû+ONGûISûTRYINGûTOûCAPTUREûAûBIGGERû COORDINATORSûANDûJOINTûLEADûMANAGERSûFORûTHEû #ERTIlCATIONû3CHEME SLICEûOFûTHEûRAPIDLYûGROWINGû'REENûlNANCEû (ONGû+ONGûDOLLARûTRANCHE 4HEûRELATIVELYûMODESTûSIZE ûHOWEVER ûWITHû SECTORû&ORûEXAMPLE ûITûPLANSûTOûLAUNCHûAû )#"#û!SIAûANDû#REDITû!GRICOLEûWEREûJOINTû THEûTWOû53ûDOLLARûTRANCHESûFETCHINGûJUSTû (+BNû53BN û'REENûBONDû 'REENûSTRUCTURINGûADVISERS 53M ûSHOWEDûTHATûTHEûDEALûWASûSTILLû ISSUANCEûPROGRAMMEûINûTHEûnûlSCALû CHALLENGINGûDESPITEûTHEû'REENûLABEL YEARûTOûPROVIDEûFUNDINGûFORûPUBLICûWORKSû h)TûWASûNOTûANûEASYûDEALûCONSIDERINGûTHEû PROJECTS MALAYSIA &/-#ûMEETINGûANDûELEVATEDû(IBORûRATEû"UTû 4HEû7ORLDû"ANKûINû!PRILûPRICEDûITSûlRSTû THEûOUTCOME ûBOTHûINûTERMSûOFûISSUEûSIZEûANDû 'REENûBONDûINû(ONGû+ONGûDOLLARSûANDûTHEû MAYBANK ANNOUNCES SWISS PRICING ûWASûQUITEûGOOD vûAûBANKERûONûTHEû lRSTûBENCHMARK SIZEDû'REENûBONDûFROMûAû ROADSHOW DEALûSAID SUPRANATIONALûISSUERûINû(ONGû+ONGû4HEû )#"#û!SIAûPRICEDûAû53MûTHREE YEARû (+BNûTWO YEARûISSUEûWASûPRICEDûATûPARûTOû -AYBANKûISûMEETINGûINVESTORSûAHEADûOFûWHATû mOATING RATEûTRANCHEûATûTHREE MONTHû,IBORû YIELDû COULDûBEûTHEûlRSTûEVERû-ALAYSIANû3WISSûFRANCû PLUSûBPûANDûAû53MûlVE YEARûmOATING ,ASTûMONTH û"/#ûPRICEDûAû(+BNûTWO DEAL RATEûTRANCHEûATûTHREE MONTHû,IBORûPLUSû YEARûlXED RATEû3USTAINABILITYûBONDûATûPARûTOû -ANAGEMENTûWILLûBEûINû:URICHûONû*UNEûû BP ûBOTHûWELLûINSIDEûINITIALûGUIDANCEûOFû YIELDûûVIAûITSû(ONGû+ONGûBRANCH ûTHEû ANDû"ASELûANDû'ENEVAûONû*UNEûûVIAûBNP Paribas BPûAREAûANDûBPûAREA ûRESPECTIVELY lRSTûOFûITSûKINDûFROMûAû#HINESEûISSUERû (Suisse) and UBSû-AYBANKûISûRATEDû!! !

International Financing Review June 16 2018 61 PERISAI WINS RESTRUCTURING SUPPORT

PERISAI PETROLEUM TEKNOLOGIûHASûCROSSEDûAû Green debt supply doubles in Asia MILESTONEûINûITSûDEBTûRESTRUCTURINGûAFTERû CREDITORSûGAVEûOVERWHELMINGûSUPPORTûTOû ASIA-PACIFIC Investors focus on market development as demand outpaces offerings ITSûDEBT FOR EQUITYûPLANûATûAûMEETINGûONû *UNEû Green bond issuance has exploded in Asia- global demand for responsible investments, -OREûTHANûûVOTEDûFORûTHEû-ALAYSIANû Pacific’s international markets this year, with including Green bonds, in emerging market OFFSHOREûMARINEûSERVICESûCOMPANYSû borrowers lining up to sate fast-growing investor countries. SCHEMEûOFûARRANGEMENTûATûTHEûMEETING û appetite despite concerns that the region still “There needs to be more Green sovereign WHICHûWASûHELDûUNDERûTHEûAUSPICESûOFûTHEû lacks the sophistication and oversight seen in the issuance and more emerging market issuance,” (IGHû#OURTûOFû-ALAYA US and Europe. said Ashley Schulten, BlackRock’s head of 4HEûAPPROVALûCOMESûALMOSTûTWOûYEARSû Asian issuers, including those from Japan and responsible investment for global fixed AFTERû0ERISAIûWARNEDûTHATûHOLDERSûOFûITSû Australia, sold 15 public Green bond deals in income, during a panel discussion at the 3Mû53M ûûBONDûISSUEûDUEû US dollars and euros for a combined US$9.2bn annual general meeting of the ICMA Green /CTOBERûûFACEDûHEAVYûLOSSESû)Nû so far this year, more than double the seven and Social Bond Principles in Hong Kong /CTOBERû ûBONDHOLDERSûREJECTEDûTHEû issues worth US$4.6bn in the first half of 2017, last week. COMPANYSûAPPEALûFORûAûFOUR MONTHû according to IFR calculations. Asian borrowers are only just becoming EXTENSIONûTOûTHEûBONDS KOREA HYDRO & NUCLEAR POWER has mandated familiar with Green bonds and the verification 4HEû0ERISAIûGROUPûOFûCOMPANIESûOWESûAû banks for a US dollar Green bond offering, with process that comes with them. The majority TOTALûOFû53MûORû-BNûINûDEBT û meetings to start on Friday. KHNP’s proposed of issuers this year were financial institutions, WHICHûEXCLUDESûDEBTûOWEDûTOûTHEû transaction comes shortly after INDUSTRIAL AND leaving only a handful of deals from corporates COMPANYSûSUBSIDIARIESûANDûASSOCIATEû COMMERCIAL BANK OF CHINA raised US$2.32bn- in China, India and Indonesia. COMPANIESû4HEûLARGESTûAMOUNTûOFûAROUNDû equivalent in two Green issues from its London branch The discrepancies in what qualifies as 53MûISûOWEDûTOûVARIOUSûUNITSûOFû and Hong Kong subsidiary in the past three weeks. “Green” in different countries also prevents 3INGAPORESû/#"#û"ANK Despite the burgeoning new issuance, some dedicated Green funds from actively 5NDERûTHEûSCHEMEûOFûARRANGEMENT ûALLû investors say volumes are not sufficient to meet investing in Asian Green bonds. CREDITORSûOFû0ERISAIûANDûITSûUNITSûWILLû ESSENTIALLYûBEûASKEDûTOûCONVERTûDEBTûINTOû EITHERûSHARESûORûREDEEMABLEûANDû KEXIM HIRES FOR EUROS AND PRINTS IN 4HEûISSUERûWANTSûTOûTAKEûADVANTAGEûOFûTHEû IRREDEEMABLEûCONVERTIBLEûUNSECUREDûLOANû SWISS GEOPOLITICALûDEVELOPMENTSûREGARDINGûTHEû53û STOCKû2#5,3ûANDû)#5,3 û4HEûCOMPANYû ANDû.ORTHû+OREAûTALKSûANDûTHEREFOREûWILLû ALSOûPLANSûTOûRAISEûFUNDSûTHROUGHûAûRIGHTSû KEXIMûHASûMANDATEDûCredit Agricole CIB ûCredit WAITûTOûSEEûHOWûMUCHûFURTHERûPROGRESSûWILLû ISSUEûANDûWILLûENTERûBILATERALûSETTLEMENTû Suisse ûCommerzbank ûHSBC ûANDûINGûTOû BEûMADE ûSAIDûAû#OMMERZBANKûSPOKESMANû AGREEMENTSûWITHûINTER COMPANYûCREDITORSû ARRANGEûAûSERIESûOFûlXEDûINCOMEûINVESTORû 4HEû'ERMANûBANKûISûSOLEûLEAD TOûSETTLEûDEBT MEETINGSûINû%UROPEûSTARTINGûFROMû*UNEû 0ERISAIûWILLûISSUEûSETTLEMENTûSHARESûATû !ûEURO DENOMINATEDûSENIORûUNSECUREDû IBK PLANS SOCIAL BOND -ûPERûSHAREûTOûUNSECUREDûBANKû BONDûOFFERINGûWITHûAûSHORTûTOûINTERMEDIATEû CREDITORSûANDûCREDITORSûTHATûWEREûCOVEREDû TENORûMAYûFOLLOW INDUSTRIAL BANK OF KOREAûHASûHIREDûCitigroup û BYûAûCORPORATEûGUARANTEEûFROMû0ERISAI û 4HEûDEALûFOLLOWSûAû3WISSûFRANCûOFFERINGûBYû Commerzbank ûCredit Agricole and HSBCûTOû WHICHûWILLûINCLUDEûBONDHOLDERSû5NDERûTHEû THEû3OUTHû+OREANûTRADEûlNANCEûINSTITUTIONû ARRANGEûINVESTORûMEETINGSûINû!SIA û%UROPEû PROPOSAL ûBONDHOLDERSûWILLûRECEIVEû AFTERûITûPRINTEDûAûNEWûSIX YEARûNOTEûONû ANDûTHEû53ûSTARTINGûONû*UNEûûAHEADûOFûAû -Mû53M ûOFûVALUE ûWHICHû 4HURSDAY POTENTIALû53ûDOLLAR DENOMINATEDû!2EGû3û INCLUDESûSOMEûACCRUEDûINTEREST ûINûTHEû "OOKSûOPENEDûFORûAû3&RMûMINIMUMûATû 3OCIALûBONDûOFFERING FORMûOFû-MûOFûSHARES û-MûOFû MID SWAPSûPLUSûBPûAREA ûBEFOREûITûWASû 4HEûTRANSACTIONûHASûEXPECTEDûRATINGSûOFû 2#5,3ûANDû-MûOFû)#5,3 UPSIZEDûTOû3&RM PLUS ûANDûTHEûSPREADûSETû !A!!nû-OODYS&ITCH SJ SecuritiesûISûPRINCIPALûADVISERûTOû0ERISAIû ATûPLUSûBPûORû3WISSûGOVERNMENTSûPLUSû 4HEûPROCEEDSûWOULDûBEûUSEDûTOûlNANCEû ONûTHEûRESTRUCTURINGûPLAN ûWHICHû0ERISAIû BP SOCIALûPROJECTS EXPECTSûTOûCOMPLETEûBYûTHEûENDûOFûTHEûYEAR 4HEûlNALûOUTCOMEûSAWû3&RMû*UNEû SûPRICEDûATûPARûTOûYIELDû 4HEûSPREADûOVERûMID SWAPSûATûPRICINGûWASû THAILAND SOUTH KOREA INSIDEûTHEûOFFEREDûSIDEûOFû+EXIMSû3WISSû CURVE ûWITHûITSû3&RMû*ULYûSûOFFEREDûATû PTTGC EXTENDS EARLY-BIRD DEADLINE KHNP JUMPS ON GREEN BANDWAGON SWAPSûPLUSûBP ûACCORDINGûTOû4RADEWEBû AHEADûOFûTHEûNEWûDEAL PTT GLOBAL CHEMICALûHASûEXTENDEDûTHEûEARLY KOREA HYDRO & NUCLEAR POWER ûRATEDû!A!!û 4ICKETSûWEREûFAIRLYûLARGE ûAVERAGINGû BIRDûDEADLINEûONûAûTENDERûOFFERûFORûITSû -OODYS30 ûHASûMANDATEDûBNP Paribas û 3&RMûOVERûTHEûûACCOUNTSûTHATûTOOKûPARTû 53BNûOFûûSENIORûUNSECUREDûNOTESûDUEû Citigroup ûHSBC ûJP Morgan ûKorea Development /FûTHOSE ûJUSTûOVERûHALFûWEREûBANKûTREASURIESû 3EPTEMBERûû Bank and UBSûFORûAû53ûDOLLARû'REENûBOND WITHûASSETûMANAGERSûANDûPENSIONûFUNDSû )TûHADûOFFEREDûTOûREDEEMûTHEûBONDSûATûFACEû &IXEDûINCOMEûINVESTORûMEETINGSûINû!SIA û MAKINGûUPûMOSTûOFûTHEûREST VALUEûIFûBONDHOLDERSûTENDEREDûTHEMûBYû*UNEû %UROPE ûTHEû-IDDLEû%ASTûANDûTHEû53ûWILLû UBS WASûSOLEûBOOKRUNNER ûWITHû+EXIMû ûORûTOûPAYûAûPREMIUMûOFû53ûPERû53 û COMMENCEûONû*UNEûûFORûAû!2EGû3û "ANKû5+ûASûCO LEADû+EXIMûISûRATEDû!A!! INûPRINCIPALûAMOUNTûIFûTHEYûTENDEREDûBYûTHEû TRANSACTION !! EARLY BIRDûDEADLINEûOFû*UNEû 4HEûPROPOSEDûNOTESûWILLûCOMEûWITHûAû !NOTHERû3OUTHû+OREANûLENDER ûKEB HANA 4HEûEARLY BIRDûDEADLINEûHASûBEENûEXTENDEDûTOû SHORTûTOûINTERMEDIATEûMATURITY BANK,ûHADûEARLIERûPOSTPONEDûAûlVE YEARûTRADEû *UNEû ûMEANINGûTHATûALLûBONDHOLDERSûWHOû

62 International Financing Review June 16 2018 EMERGING MARKETS EUROPE/AFRICA

Green bond guidelines published by the Asset manager Amundi has teamed up with these markets, even before starting to measure the People’s Republic of China and the National the International Finance Corporation to create Green impact of that. It’s too soon in the process.” Development and Reform Commission permit the Green Cornerstone Bond Fund, billed as the The hope is that more supply will also build proceeds to be used to fund clean coal projects, world’s largest Green bond fund with a focus on a longer track record of compliance from Asian in contradiction to the Climate Bonds standard emerging markets. issuers. International bodies continue to develop closely followed by European investors. IFC will invest up to US$325m in the new fund standards that can help to better align and The latest Green bonds from Chinese banks, and Amundi will raise additional investments regulate the Green financing market. however, have excluded categories such as clean from international investors to bring the fund’s The European Commission announced last coal from their Green bond programmes to suit size to US$2bn. It aims to be fully invested within month a set of proposals aimed at setting a the stricter global definitions, providing some seven years. standard on sustainable financing. They comprise comfort to global investors. “The reason why we are doing it is to create the first concrete step to establish a unified that market,” said Eric Brard, head of fixed classification system for sustainable economic CHALLENGING CATEGORIES income at Amundi Asset Management. “We activities, setting disclosure requirements for “For US dollar and euro issuance from the want to give an opportunity to Green projects in environmental risk assessments and a new category Chinese, we’ve eliminated a few categories this emerging market space to find a dedicated of benchmarks to help compare carbon footprints. that the broader investor base does not want. source of funding and, at the same time, give China is also driving efforts to require issuers Clean coal is a challenging category for US and the opportunity to investors around the world to disclose and calculate the impact of their European investors,” said Marilyn Ceci, vice chair to access these opportunities in the emerging Green financings. In that way, Asian issuers may of the GBP Steering Group and head of Green markets.” be able to further satisfy investor demand by bonds at JP Morgan, during the conference. Brard said supply generation was the offering Green bonds that have a concrete impact “Transparency and disclosure is key. If you immediate priority rather than focusing on the on improving the environment. disclose what’s in and what’s not it makes it very environmental impact of the bonds themselves “We want to make sure that the issuer has easy for investors.” – even though more investors are clamouring for done what they said they were going to do,” For now, some investors are focusing on bonds with a high beneficial impact. said Orith Azoulay, global head of Green and stimulating issuance volumes first, before ironing “So the idea is to disseminate best practices, sustainable finance at Natixis. out the different Green standards. to facilitate the issuance of new Green bonds in Frances Yoon

SUCCESSFULLYûTENDERûWILLûNOWûRECEIVEûTHEû *USTûUNDERû53MûOFûTHEûSûANDûAû !LLûTHREEûAGENCIESûRATEûTURKEYSûDEBTûASû INCENTIVEûPAYMENTû"ONDHOLDERSûWHOûTENDERû TOUCHûOVERû53MûOFûTHEûSûWEREû NON INVESTMENTûGRADE ûANDûHAVEûHIGHLIGHTEDû THEIRûNOTESûWILLûBEûREQUIREDûTOûSUBSCRIBEûTOûNEWû ACCEPTED CONCERNûABOUTûTHEûECONOMICûOUTLOOKûGIVENû NOTESûISSUEDûBYû'#û4REASURYû#ENTER ûAûWHOLLYû 4HEûTENDERûWASûCONDUCTEDûVIAûMODIlEDû RISINGûAUTHORITARIANISMûANDû%RDOGANSûDRIVEû OWNEDûSUBSIDIARYûOFû044û'LOBALû#HEMICAL ûWITHû $UTCHûAUCTIONûANDûPURCHASEûPRICESûWEREûSETû FORûLOWERûINTERESTûRATES TERMSûIDENTICALûTOûTHEûEXISTINGûBONDS ATûûANDû ûRESPECTIVELY ûABOVEû h'ODûWILLING ûAFTERû*UNEûûWEûWILLûMOUNTû 4HEûLIKE KINDûSWAPûWILLûALLOWûTHEûPARENTû MINIMUMûPURCHASEûPRICESûOFûûANDû ANûOPERATIONûONûTHATû-OODYS vû%RDOGANûSAIDû COMPANYûTOûBENElTûFROMûAûWITHHOLDINGûTAXû DURINGûANûINTERVIEWûWITHûPRIVATEû EXEMPTIONûONûDISTRIBUTIONSûFORûBONDSûISSUEDû !ûBANKERûCLOSEûTOûTHEûTRANSACTIONûSAIDûTHATû BROADCASTERûû46ûLATEûONû7EDNESDAY BYûAûTREASURYûCENTRE THEûEXERCISEûWOULDûHELPûCRYSTALLISEûAûBIDûFORû h4HEYûMAKEûUNUSUALûSTATEMENTSûEVENû Citigroup ûBank of America Merrill Lynch and THEûBONDSû4RADINGûOFû2USSIANûDEBTûHASûBEENû THOUGHûWEûAREûNOTûAûMEMBERûOFû-OODYSxû Standard CharteredûAREûDEALER MANAGERSûFORû AFFECTEDûBYûAûTIGHTENINGûINûSANCTIONSûINû 9OUREûAûlRMûINûSUCHûANûIMPORTANTûPOSITIONû THEûOFFER !PRIL ANDûYOUûTAKEûSTEPSûSAYINGû@(OWûDOû)ûSTAINû 044û'LOBALû#HEMICALûISûAûPETROCHEMICALû Citigroup ûSociete Generale and Sova Capital 4URKEY û(OWûDOû)ûPUTûTHEMûINûAûTOUGHû PRODUCERûANDûANûAFlLIATEûOFûNATIONALûOILû WEREûTHEûDEALERûMANAGERS POSITION û4HEYûWILLûNOTûSUCCEEDv COMPANYû044 ûWHICHûOWNSûAûûSTAKE !ûSPOKESWOMANûFORû-OODYSûDECLINEDûTOû 4HEûNEWûNOTESûAREûEXPECTEDûTOûBEûRATEDû COMMENT "AA"""û-OODYS30 TURKEY ALL INTL EMERGING MARKETS BONDS ERDOGAN TAKES AIM AT MOODY’S BOOKRUNNERS: 1/1/2018 TO DATE Europe/Africa 4URKISHû0RESIDENTû4AYYIPû%RDOGANûHASû Managing No of Total Share EUROPE/AFRICA THREATENEDûTOûTAKEûACTIONûAGAINSTû-OODYSû bank or group issues US$(m) (%) AFTERû*UNEûûELECTIONS ûHISûLATESTûBROADSIDEû 1 Citigroup 26 8,671.37 14.3 AGAINSTûCREDITûRATINGûAGENCIESûTHATûHEûSAYSû 2 JP Morgan 25 6,424.68 10.6 RUSSIA AREûTRYINGûTOûBRINGûDOWNûTHEûECONOMY û 3 Deutsche Bank 15 5,532.15 9.1 REPORTSû2EUTERS 4 VTB Capital 10 4,886.69 8.1 CBOM COMPLETES TENDER OFFER %RDOGAN ûAûSELF DESCRIBEDûhENEMYûOFû 5 HSBC 14 4,021.03 6.6 INTERESTûRATESv ûHASûLONGûCASTûCHRONICû 6 Standard Chartered 8 3,504.97 5.8 CREDIT BANK OF MOSCOWûHASûACCEPTEDûFORû WEAKNESSûINûTHEûLIRAûCURRENCYûASûTHEûWORKûOFû 7 BNP Paribas 13 2,987.79 4.9 PURCHASEûALMOSTû53MûOFûTWOû 7ESTERNûPOWERSûDETERMINEDûTOûWEAKENûHISû 8 SG 13 2,578.20 4.2 OUTSTANDINGûSENIORûNOTES GOVERNMENTû(EûHASûASCRIBEDûTHEûSELL OFFûTOûAû 9 Goldman Sachs 6 2,538.60 4.2 4HEû2USSIANûLENDERûOPENEDûAûBUYBACKû SHADOWYûhINTERESTûRATEûLOBBYvûANDûHASû 10 UniCredit 10 1,632.86 2.7 PROCESSûOFFERINGûTOûPURCHASEûUPûTOû53Mû REPEATEDLYûSINGLEDûOUTû-OODYS û30ûANDû Total 54 60,702.36 ACROSSûITSû53MûûSûANDû &ITCHûFORûTHEIRûCRITICISMûOFû4URKEYSû Excluding equity-related debt. 53MûûS ECONOMY Source: Thomson Reuters SDC code: L2

International Financing Review June 16 2018 63 )NDEED ûONEûSOURCEûRECKONEDûTHEû THREEûAGENCIESûHOLDûTHEûPOWERûBECAUSEû Naftogaz shortlists banks IFûTHEYûALLûSTOPPEDûRATINGûTHEûSOVEREIGNû THENûTHATûWOULDûHAVEûTHEûhGREATESTû IMPACTvû(OWEVER ûHEûDOUBTEDûTHATû for bond deal THEûAGENCIESûWOULDûTAKEûSUCHûDRASTICû ACTION CIS Ukrainian entity assesses banks for Eurobond %ARLIERûINû*UNE û-OODYSûDOWNGRADEDûANDû PLACEDûONûREVIEWûFORûFURTHERûDOWNGRADEûTHEû NAFTOGAZ has shortlisted a group of banks to the transaction but it had long been-rumoured RATINGSûOFûû4URKISHûBANKSû)TûSAIDûTHEû lead manage a Eurobond offering, according in the market. DOWNGRADESûREmECTEDûITSûVIEWûTHATûhTHEû to sources. The appeal court’s judgement is temporary, OPERATINGûENVIRONMENTûINû4URKEYûHASû The Ukrainian natural gas company is yet to while it considers a final decision on Gazprom’s DETERIORATED ûWITHûNEGATIVEûIMPLICATIONSûFORû award the mandate, according to the sources, request that the February 28 arbitration ruling THEûINSTITUTIONSûFUNDINGûPROlLESv who said that any deal will be denominated in be declared invalid, partially or in full. 4HEûLIRAûHASûFALLENûSOMEûûTHISûYEAR û US dollars. “The Court of Appeal finds reason to now HITTINGûAûSERIESûOFûRECORDûLOWSûANDûFORCINGû State-owned Naftogaz is embroiled in a decide that the arbitration ruling until further THEûCENTRALûBANKûTOûAGGRESSIVELYûHIKEûRATESû long-running legal dispute with Gazprom over notice shall not be enforced,” the court said. TOûSTOPûTHEûSELL OFF payments, a consequence of the deterioration Naftogaz, in turn, said the Swedish appeals %RDOGANûANDûHISûRULINGû!+û0ARTYûFACEû in relations between Russia and Ukraine. court decision had been made without the PRESIDENTIALûANDûPARLIAMENTARYûELECTIONSû A ruling by a Stockholm arbitration court in Ukrainian company being heard, and that it ONû*UNEû February was meant to conclude the battle. would request that the decision be reversed. But Naftogaz said Gazprom has not The saga is part of the broader fall-out between complied with the ruling, which obliged the Russia and Ukraine, following Moscow’s annexation ZAMBIA Russian company to resume gas supplies to of Crimea in 2014. The two governments are also Ukraine at a market reflective price and to pay involved in a legal dispute over payments. REPUBLIC DELAYS BORROWING PLANS US$2.6bn. Russia is using London courts to try and force INDEFINITELY On June 13, Gazprom won an interim appeals Ukraine to repay US$3bn it believes is owed. The court ruling that suspends attempts by Naftogaz money stems from a two-year bond issued by ZAMBIAûHASûDECIDEDûTOûDELAYûALLûPLANNEDû to seize the Russian firm’s foreign assets. Ukraine directly to Russia in December 2013. BORROWINGûINDElNITELY ûITSûlNANCEûMINISTERûSAIDû The company said the appeals court ruling Ukraine subsequently carried out a debt ONû4HURSDAY ûSLOWINGûDOWNûTHEûACCUMULATIONûOFû would prevent Naftogaz from trying to seize restructuring, which it said the bonds should be NEWûDEBTûAMIDûWORRIESûABOUTûTHEûRISKûOFûDISTRESS Gazprom’s property outside Russia. subject to. Russia said it should be paid in full as h4HEûDEBTûSUSTAINABILITYûANALYSISûHASû It is due to risks that the proceeds would be a sovereign creditor. The High Court in London CONlRMEDûTHATûWEûNEEDûTOûUNDERTAKEû frozen by Naftogaz that Gazprom has stopped initially found in favour of Russia, but Ukraine MEASURESûTOûBRINGûDEBTûRISKûTOûMODERATEû plans for a potential sterling bond issue, appealed and a judgment is expected shortly. FROMûTHEûCURRENTûHIGHûRISK vû-ARGARETû according to Russian news agency Interfax. No Robert Hogg, Daniel Dickson, -WANAKATWEûTOLDûAûNEWSûCONFERENCEûINûTHEû formal announcement had ever been made for Andrey Ostrouch CAPITALû,USAKA ûREPORTSû2EUTERS 4HEû)NTERNATIONALû-ONETARYû&UNDûREJECTEDû :AMBIASûBORROWINGûPLANSûINû&EBRUARY û %RDOGANûDIDûNOTûELABORATEûONûTHEûNATUREû 4URKEYûSOLICITSûRATINGSûFROMû-OODYSûANDû SAYINGûTHEYûRISKEDûMAKINGûITSûDEBTûLOADû OFûTHEûPOTENTIALûACTION ûBUTûHISûCOMMENTû &ITCHû)TSûRATINGûFROMû30ûISûUNSOLICITEDû HARDERûTOûSUSTAINû4HEûNEWûDEBTû THATû4URKEYûWASûNOTûAûhMEMBERvûOFû 3OMEûANALYSTSûBELIEVEûIFû4URKEYûWEREûTOû MANAGEMENTûPLANûCOULDûNOWûCLEARûTHEûWAYû -OODYSûSUGGESTEDûHEûMAYûHAVEûBEENû DROPû-OODYSûITûCOULDûHAVEûAûBIGûIMPACTûONû FORû:AMBIAûTOûAGREEûAû53BNûLOANû REFERRINGûTOûAûDIFFERENTûAGENCYûALTOGETHER û INVESTORûSENTIMENT AGREEMENTûWITHûTHEû)-& 30 h)NVESTORSûDEPENDûONûTHESEûAGENCIESû 4HEûSOUTHERNû!FRICANûCOUNTRYSûDEBTûPILEû INûMAKINGûTHEIRûINVESTMENTûDECISIONS vû STOODûATû53BN ûORûROUGHLYûAûTHIRDûOFû ALL INTL EMERGING MARKETS BONDS SAIDû4IMû!SH ûAûSTRATEGISTûATû"LUE"AYû '$0 ûATûTHEûENDûOFû-ARCH ûUPûFROMû53BNû BOOKRUNNERS: 1/1/2018 TO DATE !SSETû-ANAGEMENTûONû4WITTERû ATûTHEûENDûOFû û-WANAKATWEûSAID Middle East h#ANCELLINGûITûTOûONEûMEANSûTHATûSOû "ECAUSEûOFûCONTINUEDûSPENDINGûPRESSURESû Managing No of Total Share MANYûFOREIGNûFUNDSûWILLûNOTûBEûABLEûTOû RELATIVEûTOûEXPECTEDûREVENUE ûTHEûlSCALû bank or group issues US$(m) (%) INVESTûINû4URKEYû4OTALûDISASTERûIFûTHATû DElCITûFORûûISûLIKELYûTOûBEûHIGHERûTHANû 1 Standard Chartered 30 8,769.03 14.8 HAPPENSxv THEûûPROJECTEDûINûTHEûBUDGET ûSHEûSAID 2 Citigroup 14 6,706.60 11.3 (OWEVER ûBANKINGûSOURCESûTOLDû)&2ûSAIDû :AMBIASûSûlNISHEDûTHEûWEEKûABOUTûPTû 3 HSBC 23 6,516.49 11.0 THATûIFû4URKEYûWEREûTOûHAVEûONLYûONEû HIGHER ûBIDûATûûACCORDINGûTOû4RADEWEB 4 Deutsche Bank 7 4,152.37 7.0 OFlCIALûRATINGû ûFROMû&ITCHû ûITûWOULDûAFFECTû 5 Goldman Sachs 3 2,896.18 4.9 FUTUREûBONDûISSUESûRATHERûTHANûOUTSTANDINGû 6 Barclays 8 2,722.01 4.6 4URKISHûDEBTûASûTHEûSOVEREIGNûWOULDûSTILLû REGIONAL 7 Credit Suisse 7 2,571.38 4.4 BEûINCLUDEDûINûTHEûINDICES 8 Credit Agricole 9 2,525.20 4.3 "UTûANYûFUTUREûNEWûISSUESûWOULDûONLYûBEû VIVO PULLS UP BEFORE FINISH LINE 9 Morgan Stanley 3 2,405.79 4.1 ABLEûTOûCARRYûSOLICITEDûRATINGS ûWHICHûCOULDû 10 Gulf International Bank 2 2,373.03 4.0 DETERûSOMEûFUNDSûTHATûNEEDûTWOûSUCHû VIVO ENERGYûBECAMEûTHEûLATESTûISSUERûTOû Total 62 59,106.46 RATINGSûTOûBUYûTHEûBONDSû&ORûTHATûREASONû CONCLUDEûTHATûTHEûPRIMARYûWATERSûLOOKû Excluding equity-related debt. BANKERSûDONTûBELIEVEû%RDOGANûWILLûCARRYû RATHERûUNINVITING ûANNOUNCINGûTHATûAûDEALûISû Source: Thomson Reuters SDC code: L5 THROUGHûWITHûHISûTHREATS OFFûTHEûCARDS

64 International Financing Review June 16 2018 EMERGING MARKETS AMERICAS

4HEûISSUERûHADûBEENûHOPINGûTOûMAKEûITSû CURRENCIESûINûTHEûINTERNATIONALûCAPITALû DEBUTûWITHûAû53MûBONDûOFFERINGûTHATû CHILE MARKETSû ûAûNEWûHIGHûFORûTHEûREGION û WOULDûREBALANCEûITSûCAPITALûSTRUCTUREûANDû ACCORDINGûTOû)&2ûDATA FUNDûITSûACQUISITIONûOFû3OUTHû!FRICASû%NGENû BANKS TO RAISE UP TO US$4bn 9ETûWHILEûTHEûlRSTûQUARTERûOFûûENJOYEDû )NTERNATIONAL UNDER NEW CAPITAL RULES ANOTHERûSURGE ûTHEûRECENTûRETREATûOFû "UTûDESPITEûSAYINGûITûHADûRECEIVEDûSTRONGû INVESTORSûFROMûEMERGINGûMARKETSûAMIDû INVESTORûINTEREST û6IVOûSAIDûITûWOULDûTAKEûAû #HILEANûBANKSûWILLûHAVEûTOûRAISEû53BN CONCERNSûABOUTûAûRISINGûDOLLARûANDûPOLITICALû STEPûBACKûFORûTHEûMOMENT ûINûORDERûTOû BNûBETWEENûûANDûûTOûMEETûNEWû RISKSûHASûSLOWEDûACTIVITY MONITORûTHEûMARKETSûFROMûTHEûSIDELINES CAPITALûREQUIREMENTS û&ITCHûSAIDûONû h7EûHADûAûVERYûBUSYûlRSTûHALF ûBUTûOURû h7EûHADûAûGREATûRECEPTIONûHIGHûINTERESTû 4HURSDAY ûCITINGûTHEûLOCALûREGULATORSû SENSEûISûTHATûTHEûSECONDûHALFûWILLûBEûSLIGHTLYû GATHEREDûONûTHEûROADSHOW ûBUTûPRICINGûWASû ESTIMATES SLOWER vûSAIDû#HRISû'ILFOND ûHEADûOFû,ATINû NOTûINûLINEûWITHûTHEûISSUERSûEXPECTATIONS vû 3UCHûNEEDSûAREûBEINGûDRIVENûBYûPROPOSEDû !MERICANûCAPITALûMARKETSûORIGINATIONûINû SAIDûAûBANKERûFAMILIARûWITHûTHEûMATTER REFORMSûTOûTHEûCOUNTRYSûBANKINGûLAWSûTHATû .EWû9ORK h'IVENûTHEûMARKETûBACKDROPûANDûTHEû AIMûTOûCOMPLYûWITHû"ASELû)))ûSTANDARDS h7EûWILLûPROBABLYûENDûTHEûYEARûDOWNûINû FACTûTHATûTHEYûAREûINûNOûURGENCYûTOûISSUE û #HILEANûBANKSûHAVEûLONGûBEENûREQUIREDûTOû THEûORDERûOFû ûINûTERMSûOFûVOLUMESv THEYûHAVEûDECIDEDûTOûHITûPAUSEûANDû ADHEREûTOûSTRICTûREQUIREMENTSûTHANKSûTOûAû 9EARûTOûDATE ûTHEûREGIONSûBORROWERSûHAVEû CONTINUEûTOûMONITORûANYûIMPROVEMENTûINû REGULATORYûFRAMEWORKûTHATû&ITCHûCONSIDERSû RAISEDû53BNûTHROUGHûDOLLAR ûEURO û MARKETûCONDITIONSv TOûBEûONEûOFûTHEûBESTûINû,ATINû!MERICA 3WISSûFRANCûANDûYENûOFFERINGS ûACCORDINGûTOû 4HEûCOMPANY ûWHICHûISûAûRETAILERûANDû h4HEûNEWûRULESûAREûCREDITûPOSITIVEûFORûTHEû )&2ûDATA MARKETERûOFû3HELLûBRANDEDûFUELSûANDû #HILEANûBANKINGûSYSTEM ûASûTHEYûWILLû LUBRICANTSûINû!FRICA ûHADûBEENûLOOKINGûTOû INCREASEûLIQUIDITYûANDûTHEûUSEûOFûSTABLEû EXOTIC DEBT PRICES: 14/6/2018 PLACEûlVE YEARûNON CALLûTWOûORûSEVEN YEARû FUNDINGûSOURCES ûWHICHûSHOULDûIMPROVEû Bid Offer NON CALLûTHREEûGUARANTEEDûNOTES ûVIAû6IVOSû RESILIENCEûDURINGûCYCLICALûDOWNTURNS vûTHEû Americas WHOLLYûOWNEDûSUBSIDIARYû6IVOû%NERGYû RATINGSûAGENCYûSAID Cuba (€) 19.00 20.00 )NVESTMENTS 4HEûAMOUNTûTHATûBANKSûNEEDûTOûRAISEûMAYû Cuba (¥) 18.00 20.00 4HEûOFFERING ûINûCONJUNCTIONûWITHûAû BEûATûTHEûLOWERûENDûOFûTHEûRANGEûIFûTHEYû Guyana/PD–trade 80.00 90.00 REVOLVINGûCREDITûFACILITYûANDûCASHûONûHAND û MAXIMISEûTHEûUSEûOFûNEWû!4ûCAPITALû Honduras trade 30.00 40.00 WOULDûHAVEûBEENûUSEDûTOûREPAYûDEBTûUNDERûANû INSTRUMENTS ûITûSAID Nicaragua/Loans 16.00 19.00 AMORTISINGûTERMûFACILITYûANDûlNANCEûTHEû (OWEVER û!4ûBONDSûHAVEûYETûTOûBEûTESTEDû Suriname trade 10.00 12.00 ACQUISITIONûOFû%NGENû)NTERNATIONALû4HEû INûTHEûLOCALûMARKETûANDûITûREMAINSûUNCLEARû Africa ACQUISITIONûISûTARGETEDûTOûCLOSEûINûTHEûTHIRDû WHETHERû#HILEANûBANKSûAREûWILLINGûTOûUSEû Angola 99.00 100.00 QUARTER SUCHûINSTRUMENTSûINûTHEûGLOBALûCAPITALû Benin 10.00 15.00 6IVOûWASûCREATEDûINû$ECEMBERûû MARKETS Burkina-Faso 8.00 10.00 THROUGHûTHEûCARVE OUTûOFû3HELLSû!FRICANû Cameroon trade 22.00 32.00 DOWNSTREAMûBUSINESS ûEXCLUDINGû3OUTHû Cape Verde trade 75.00 85.00 !FRICAûANDû%GYPT REGIONAL Central African Rep trade 0.50 1.50 4HEûCOMPANY ûWHICHûISûJOINTLYûOWNEDûBYû Congo/trade 25.00 30.00 6ITOLûANDû(ELIOSû)NVESTMENTû0ARTNERS ûOPERATESû LATAM TO SEE FEWER BONDS, Congo (Dem Rep) 3.75 6.75 AûNETWORKûATûNEARLYû ûSERVICEûSTATIONSûINû BUT MORE LOANS AND LOCAL DEBT Cote d’Ivoire 101.50 103.50 ûCOUNTRIESûANDûEXPORTSûLUBRICANTSûTOûAû Equatorial Guinea trade 85.00 90.00 NUMBERûOFûOTHERû!FRICANûCOUNTRIES ,ATINû!MERICANûPRIMARYûBONDûVOLUMESûWILLû Ethiopia 2.00 4.00 JP Morgan and Societe GeneraleûWEREûLEADSû FALLûSHORTûOFûLASTûYEARSûRECORDûLEVELS ûBUTûLOANû Gabon PD-Trade 70.00 78.00 ONûTHEûTRADE ANDûLOCALûMARKETûACTIVITYûAREûONûTHEûRISE û Ghana 88.00 92.00 ACCORDINGûTOûAûSENIORû#ITIGROUPûBANKER Guinea-Bissau trade 7.00 10.00 ,ASTûYEARûSAWûTHEûREGIONSûBORROWERSûRAISEû Guinea 8.00 13.00 ABOUTû53BNûACROSSûAûVARIETYûOFû Kenya trade 45.00 55.00 Liberia PD trade 9.00 12.00 AMERICAS ALL INTL EMERGING MARKETS BONDS Madagascar (trade) 27.00 34.00 BOOKRUNNERS: 1/1/2018 TO DATE Mali PD trade 2.00 6.00 Latin America Mozambique (trade) 6.00 12.00 BRAZIL Managing No of Total Share Senegal 24.00 26.00 bank or group issues US$(m) (%) Sierra Leone PD-trade 1.00 5.00 VALE LAUNCHES TENDER FOR 1 Citigroup 29 10,606.02 17.5 Tanzania 12.00 16.00 2042 BONDS 2 JP Morgan 24 6,420.25 10.6 Uganda trade 16.00 18.00 3 Deutsche Bank 5 5,706.99 9.4 Zambia PD-trade 15.00 22.00 "RAZILIANûMINERûVALEûHASûLAUNCHEDûAûCASHû 4 HSBC 10 5,644.22 9.3 Asia TENDERûTOûPURCHASEûANYûANDûALLûOFûITSû 5 BAML 16 4,227.70 7.0 Bangladesh 70.00 80.00 53BNûOFûûûBONDS 6 Morgan Stanley 9 4,009.35 6.6 Cambodia trade 6.00 12.00 4HEûCOMPANYûISûOFFERINGûHOLDERSûAû 7 BNP Paribas 9 2,929.38 4.8 Mongolia 27.00 38.00 BUYBACKûPRICEûOFû ûWITHûTHEû 8 BBVA 4 2,811.40 4.6 Myanmar trade 27.00 32.00 EXPIRATIONûDATEûSETûFORû*UNEû 9 Santander Global 12 2,553.79 4.2 Nepal trade 13.00 16.00 BNP Paribas ûJP Morgan ûMizuho and 10 Credit Suisse 7 1,608.34 2.6 North Korea/Loans 0.50 2.00 SantanderûAREûACTINGûASûDEALERûMANAGERSû Total 62 60,701.88 Papua New Guinea 85.00 95.00 4HEûTENDERûISûEXPECTEDûTOûBEûFUNDEDûWITHû Excluding equity-related debt. Vietnam 102.00 103.00 CASHûONûHAND ûACCORDINGûTOûAûSOURCE Source: Thomson Reuters SDC code: L3 Source: Wesbruin Capital

International Financing Review June 16 2018 65 THEûTHREEûCOUNTRIESûTHATûTYPICALLYûDRIVEû PRIMARYûACTIVITYûINûTHEûREGION T Rowe Price sees Brazil as !RGENTINEûBORROWERSûHAVEûBECOMEû MEANINGFULûSUPPLIERSûOFûDOLLARûBONDSûEVERû SINCEûSETTLINGûWITHûHOLDOUTSûINûEARLYû buying opportunity "UTûLOOKINGûINTOûTHEûSECONDûHALFûOFûTHEû YEAR ûTHEûCOUNTRYSûCONTRIBUTIONûTOûVOLUMESû BRAZIL Investor is also neutral on Mexico as election looms COULDûDIMûASûTHEûGOVERNMENTûSTAYSûCLEARûOFû DOLLARûISSUANCEûANDûMARKETSûBECOMEûLESSû T Rowe Price sees the recent sell-off as an Yet while AMLO is not necessarily market RECEPTIVEûTOû!RGENTINEûRISK opportunity to add risk in Brazil, but stays neutral friendly by inclination, he will be hemmed in by 4HISûINCLUDESûlNANCINGûFORûTHEûBILLIONSûOFû in Mexico despite cheap valuations, said Richard political constraints. DOLLARSûREQUIREDûTOûINVESTûINû!RGENTINASû Hall, sovereign analyst, at the firm. “We don’t think he will have a majority in PUSHûTOûUPDATEûITSûHIGHWAYS Bonds issued by both the Brazil sovereign and Congress so he will have to work with the PAN 7HILEûJUSTûAûFEWûMONTHSûAGOûTHEû oil firm Petrobras sank earlier this month as the and PRI [parties], which will water down his ASSUMPTIONûWASûTHATûTHEûLIONSûSHAREûOFûTHATû currency came under pressure amid concerns initiatives,” Hall said. WOULDûBEûCOVEREDûINûTHEûINTERNATIONALûBONDû about political risks and a rising dollar. It will also be difficult for AMLO to roll back MARKETS ûOTHERûOPTIONSûMAYûBEûREQUIRED The sovereign’s dollar bonds due 2028 fell a energy reforms or central bank independence h)TûISûTOOûEARLYûTOûJUDGE ûBUTû)ûTHINKûTHEû good two points in the first week of June to hit a given that they are constitutionally protected. BESTûADVICEûISûTOûLOOKûATûALLûlNANCING û low of 90, while Petrobras’s 10-year benchmark, Even so, Hall is not rushing to buy at this stage. OPTIONS vûSAIDû'ILFONDûh"ONDSûAREûGREATûBUTû already under pressure following the resignation “We see valuations as attractive, but the THEREûAREûSTRUCTURALûDISADVANTAGESûSUCHûASû of its CEO, followed a similar trajectory south. short-term is unclear,” Hall said. “It will be better PREFUNDINGûANDûNEGATIVEûCARRYv “We view it as a buying opportunity,” Hall told to look until after the election before adding )NûTHEûMEANTIME û'ILFONDûHASûNOTICEDûANû IFR, adding that Brazil has one of the highest levels [Mexican risk] at this point.” UPTICKûINûBOTHûTHEûLOANûANDûLOCALûBONDûMARKETS of FX reserves in the world for a developing country, That said, Pemex bonds look cheap compared 4HEûATTRACTIVENESSûOFûLOCALûBONDûMARKETSû outside of China, and a low level of external debt. with the sovereign. HASûBEENûDRIVENûINûPARTûBYûRELATIVELYûLOWû The country’s central bank has been The 2028 bonds issued by Pemex have fallen FUNDINGûCOSTSûINûCOUNTRIESûLIKEû"RAZIL û using some of that firepower to shore up the over eight points since mid April, while in spread WHEREûTHEûCENTRALûBANKûHASûAGGRESSIVELYû currency, which flirted with four to the US terms are now trading about 190bp over the CUTûRATESûINûRESPONSEûTOûAûSEVEREûRECESSION dollar in early June before settling at around sovereign curve. h4HISûISûONEûOFûTHEûMARKETSûWHEREûWEûWILLû 3.68 on June 11. The same can be said of bonds issued to help INûFACTûEXCEEDûLASTûYEARSûPERFORMANCEûBYûAû And with Brazilian dollar bonds trading as finance Mexico City’s new airport - a project that SIGNIlCANTûMEASURE vûSAIDû'ILFOND if the country were rated Single B as opposed AMLO had threatened to suspend earlier this year. ,OANûSYNDICATIONSûAREûALSOûUPûABOUTûû to Double B, there is some potential upside The dollar price on the airport’s 3.875% 2028s OVERûLASTûYEARûASûBANKSûAGGRESSIVELYûCHASEû should presidential elections in October turn hit a low of around 87.00 earlier this month, ASSETS ûHELPINGûTOûREPRICEûLOANSûATûTIGHTERû out favourably for the market, he said. marking a close to six point drop since mid April, ANDûTIGHTERûLEVELS ûHEûSAID The question now is whether a leftist according to Thomson Reuters data. candidate can win with the support of the At those levels the bonds look cheap NADB LINING UP SWISS FRANC GREEN popular former president Luiz Inacio Lula especially considering that about 70% of the BOND da Silva, who is out of the race after being airport will be complete by the time AMLO imprisoned for corruption earlier this year. potentially takes office. NORTH AMERICAN DEVELOPMENT BANKûHASû In MEXICO, meanwhile, Hall is more risk “AMLO may find a way to cut costs and put his MANDATEDûCredit Suisse TOûARRANGEûINVESTORû neutral ahead of a July 1 presidential election stamp on the project but the bonds are secured by MEETINGSûACROSSû3WITZERLANDûFROMû*UNEûûTOû that populist candidate Andres Manuel Lopez revenue streams of the existing airport,” Hall said. PRESENTûITSû'REENûBONDûFRAMEWORK Obrador (AMLO) looks increasingly likely to win. Paul Kilby !ûDEBUTû'REENûBONDûBENCHMARKûINûTHEû 3WISSûFRANCûMARKETûMAYûFOLLOWû.!$"ûISûNOû STRANGERûTOûTHEû3WISSûMARKET ûHAVINGûISSUEDû 4HATûFALLSûSHORTûOFûTHEû53BNûOVERûTHEû 5NCERTAINTYûOVERû"RAZILSûELECTIONûOUTCOME û CONVENTIONALûBONDSûINûûANDû SAMEûPERIODûINûûASûACTIVITYûGRINDSûTOûAûHALTû AûLIKELYûWINûFORû-EXICOSûLEFTISTûPRESIDENTIALû .!$"ûISûJOINTLYûOWNEDûBYûTHEû53ûANDû AMIDûAûROUTûINûLOCALûCURRENCIES ûPARTICULARLYû CANDIDATEûANDûAûSWIFTûSENTIMENTûCHANGEûINû -EXICANûGOVERNMENTS ûANDûISûHEADQUARTEREDû THEû!RGENTINEûPESOûANDû"RAZILIANû2EAL !RGENTINAûHASûHITûTHEûZEALûFORûISSUANCEûFROMû INû3ANû!NTONIO û4EXASû)TûISûRATEDû!A !! Make the most of your success stories

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66 International Financing Review June 16 2018 LOANS

Australia China India 70 South Korea 71 Egypt 71 Germany 72 Kuwait 72 Luxembourg 73 Sweden 74 UAE 74 United States Leveraged Loans 77

FRONT STORY US LEVERAGED MARKET Tensions rise as PE pushes limits Conﬂicts between lenders and sponsors over loan terms Some issuers adding debt by taking advantage of loopholes in credit docs

)NVESTORSûAREûTAKINGûTHEûlGHTûAGAINSTûANû LOANSûFORûTHEûMINORITYûGROUPû3ENIORûBANKû THEûETHICSûOFûTHEûSITUATION û$ORMENTûSAIDû assault on leveraged loan documentation to loans hold legal claim to borrowers’ assets 4HEûlRMûSAIDûAFTERûITûDECLINEDûINITIALLYûTHATûITû the courts as more private equity-backed above all other debt obligations and are DIDûNOTûHEARûMOREûFROMû-UDRICKûUNTILûTHEû companies, such as troubled retailer REPAIDûlRSTûINûAûBANKRUPTCY ûBEFOREûOTHERû MINORITYûLENDERSûWEREûNOTIlEDûTHATûTHEû PETSMART ûSEEKûmEXIBILITYûTHATûCOULDûLEADûTOû CREDITORS ûPREFERREDûSTOCKHOLDERSûORû move had been made. raising new debt. common stockholders are paid. 0RIVATEûEQUITYûlRMSûHAVEûBEENûABLEûTOû The New York Supreme Court was critical EXPLOITûSTRONGûINVESTORûDEMANDûFORûmOATING OFûTHEûMOVEûDURINGûARGUMENTSûINû&EBRUARY û “This is a warning to aggressive rate US leveraged loans and weaken loan SAYINGûTHATûTHEûGROUPûOFûLENDERSûDIDûNOTûHAVEû companies and lenders if documentation as demand continues to the right to simply approve a new tranche, they are going to try to use outstrip supply, but this has already ANDûAFlRMEDûTHEûMINORITYûLENDERSûRIGHTûTOû documents in a way that is produced at least two court cases as PARTICIPATEûINûTHEûNEWûDEBTû4HEûMAJORITYû outside of the spirit of the INVESTORSûlGHTûBACK group amended the agreement in April to ,EGALûCONmICTSûHAVEûERUPTEDûAMONGû allow the minority group the same rights. credit agreement” lenders to US retailers such as NOT YOUR “I think it is a warning shot to companies DAUGHTERS JEANS (NYDJ) and J CREW in the last and sponsors to not get cute with credit ûMONTHS ûASûISSUERSûADDEDûEXTRAûDEBTûBYû AGREEMENTS vûSAIDû'EOFFû$ORMENT ûGENERALû EXPLOITINGûLOOPHOLESûINûCREDITûDOCUMENTS COUNSELûOFû/CTAGON /CTAGON ûWHICHûOWNEDû53MûOFûTHEû PetSmart’s owners took steps on June 4 to 4HEû.9$*ûCASEûFOLLOWSûAûLAWSUITûlLEDûLASTû EXISTINGû53MûLOAN ûFOUGHTûTHEûMOVEûINû POTENTIALLYûCREATEûADDITIONALûmEXIBILITYûBYû year by J Crew’s lenders that tried to block court. Although the loan size was small in the creating an unrestricted subsidiary and THEûCOMPANYûFROMûTRANSFERRINGûINTELLECTUALû CONTEXTûOFûTHEûLEVERAGEDûLOANûMARKET û/CTAGONû TRANSFERRINGûûOFûITSûONLINEûCOMPANYû property assets, including its name brand, to SAIDûTHATûITûHADûLITIGATEDûOUTûOFûPRINCIPLE #HEWYûINTOûTHEûFACILITY an unrestricted subsidiary and raising new “We thought this transaction was really )NVESTMENTûlRMû/CTAGONû#REDITû)NVESTORSû debt secured on those assets. precedent-setting, and we didn’t want to see SUEDû.9$*ûANDûAûGROUPûOFûLENDERSûLASTû J Crew, which is owned by TPG Capital THISûCONTINUE vûSAIDû,AURENû"ASMADJIAN ûAû .OVEMBERûAFTERûAûMAJORITYûGROUPûOFûLENDERSû ANDû,EONARDû'REENû0ARTNERS ûOFFEREDûTOûBUYû PORTFOLIOûMANAGERûATû/CTAGON led by Mudrick Capital provided a US$20m 53MûOFûDEBTûBACKûATûPARûIFûLENDERSû #OVENANTû2EVIEW ûAûCREDITûRESEARCHûlRM û loan in May 2017 that ranked senior to an dropped their litigation. The loans were WARNEDûTHATûTHEûSIGNIlCANTûLOOSENINGûOFû EXISTINGû53MûLOANûINûTHEûCOMPANYSû trading at 30 cents on the dollar at the time, covenants remains a risk and that lenders capital structure. according to Breakingviews. need to make sure they have proper voting PetSmart’s lenders are organising, standards in the credit agreements. ACCORDINGûTOûPRESSûREPORTS ûANDûMAYûFOLLOWûAû “While it is encouraging to see that at Legal conﬂicts have erupted similar legal route. S&P cut PetSmart’s LEASTûONEûJUDGEûREADSûTHEûCOMMERCIALû among lenders to US retailers CORPORATEûRATINGûTOû###ûFROMû### ûCITINGû reasonableness standard to potentially such as Not Your Daughters THEûlRMSûUNSUSTAINABLEûCAPITALûSTRUCTUREûANDû preclude NYDJ-style attacks, it would be ill- Jeans (NYDJ) and J Crew in the THEûINCREASEDûRISKûOFûAûDISTRESSEDûDEBTû ADVISEDûFORûINVESTORSûTOûVIEWûTHATûASûTHEû last 12 months EXCHANGEûAFTERûTHEû#HEWYûTRANSFERû0ET3MARTû takeaway in this case,” Covenant Review HASûMOREûTHANû53BNûOFûOUTSTANDINGûDEBT said in a note. NYDJ is a warning to lenders to make sure UNFIT LOANS that loan documentation is tight enough to .9$*ûWASûSEEKINGûTOûRAISEûNEWûLOANSûINûû AVOIDûSIMILARûSITUATIONSûINûTHEûFUTURE ûTHEû AFTERûTHEûCOMPANYSûPERFORMANCEûWEAKENEDû RESEARCHûlRMûSAID The lenders that issued the US$20m loan in line with the broader retail sector. The “I think overall the trend will continue to OWNEDûMOSTûOFûTHEûEXISTINGû53MûLOANû Mudrick Capital-led group, which owned SEEûDOCUMENTSûBECOMEûLOOSER vû"ASMADJIANû ANDûSIMPLYûINFORMEDûTHEûMINORITYûGROUPûOFû SLIGHTLYûMOREûTHANûHALFûOFûTHEûCOMPANYSûDEBT û said. “This is a warning to aggressive their decision without obtaining their provided the new US$20m loan in May 2017. COMPANIESûANDûLENDERSûIFûTHEYûAREûGOINGûTOû consent or inviting them to participate. -UDRICKûALERTEDû/CTAGONûOFûITSûPLANSûINû try to use documents in a way that is outside 4HEû53MûLOANûWASûPROBLEMATICûFORûTHEû !UGUSTûûBEFOREûTHEû53MûLOANûWASû OFûTHEûSPIRITûOFûTHEûCREDITûAGREEMENTv MINORITYûGROUPûASûTHEûMAJORITYûGROUPû ADDED ûBUTû/CTAGONûDECLINEDûTOûPARTICIPATEû NYDJ and Mudrick did not respond to a ESSENTIALLYûCREATEDûAûNEWûCLASSûOFûSENIORû due to concerns over whether this was REQUESTûFORûCOMMENT TERMûLOANS ûSUBORDINATINGûTHEûCLASSûOFûTERMû permitted under the credit agreement and Jonathan Schwarzberg

International Financing Review June 16 2018 67 ASIA-PACIFIC ZTE taps Chinese banks for

AUSTRALIA US$11bn lifeline

MACQUARIE BUILDS GREEN CREDENTIALS CHINA Lenders relieved as company guarantees subsidiary’s debt

&INANCIALûGROUPûMACQUARIE has issued a £2bn Telecoms equipment group ZTE is applying for debts for ZTE (HK), its wholly owned subsidiary LOAN ûINCLUDINGûaMûOFû'REENûDEBT credit lines totalling US$10.7bn-equivalent from and the borrower on the US$450m four-year The Green loan component makes two state-owned banks. loan. -ACQUARIEûTHEûlRSTûlNANCIALûINSTITUTIONûANDû ZTE is seeking US$6bn from China Development ZTE will provide a guarantee for its unit’s THEûlRSTû!USTRALIANûCOMPANYûTOûISSUEûAû Bank and a Rmb30bn (US$4.7bn) credit line from debts for up to US$600m and for maturities of Green loan under the Green Loan Principles Bank of China. The two lenders will determine the up to 66 months. ESTABLISHEDûBYûTHEû!SIAû0ACIlCû,OANû-ARKETû final amounts of the two facilities. On June 7, ZTE agreed to pay up to US$1.4bn Association in March 2018. The move follows a plunge in the company’s in penalties in a settlement with the US 4HEûlNANCINGûCOMPRISESûAûaMûTHREE shares by around 49% in Hong Kong and 27% Department of Commerce, which had imposed YEARû'REENûREVOLVINGûCREDITûFACILITY ûAûaMû in Shenzhen last week in the first three trading the trade ban on the company on April 16. The GENERALûCORPORATEûREVOLVER ûAûaMûlVE sessions since the stock was suspended on April 17. ban prohibited American companies from selling year Green term loan and a £1.12bn The credit lines are expected to provide some to ZTE for seven years, threatening to cut off its lVE YEARûGENERALûCORPORATEûTERMûLOAN relief to ZTE’s lenders, which agreed the week supply chain. 0ROCEEDSûFROMûTHEû'REENûTRANCHESû before last to the company’s request for a waiver To get the ban lifted, ZTE agreed to pay a will be used to support renewable energy of a covenant breach on a US$450m loan. The US$1bn fine, place US$400m more in escrow in PROJECTSûINITIALLY ûANDûENERGYûEFlCIENCY û waiver request was related to the suspension a US-approved bank and overhaul its leadership. waste management, green buildings of trading in ZTE’s shares and the consent from The deal also includes a new 10-year ban that is ANDûCLEANûTRANSPORTATIONûPROJECTSûINûTHEû lenders helped avert an event of default on the suspended unless there are future violations. FUTURE loan. The waiver will remain in effect until July 18, Under the new agreement, ZTE must also 4HEûLOANûWILLûADOPTûTHEûFOURûPILLARSû the maturity date of the loan. retain a compliance team selected by the IDENTIlEDûINû!0,-!Sû'REENû,OANû Trading in ZTE’s shares on the Hong Kong Commerce Department for 10 years. The Principles, which are based on a similar and Shenzhen stock exchanges was suspended company already has a US court-appointed blueprint to the Green Bond Principles, following a US trade ban on the company. Under monitor. seeking to establish best practice across use the terms of the four-year bullet loan, signed in The US$450m loan paid top-level all-in OFûPROCEEDSûPROJECTûEVALUATIONûANDû July 2014, a suspension of ZTE’s shares on the pricing of 265bp via an interest margin of SELECTIONûMANAGEMENTûOFûPROCEEDSûANDû Hong Kong stock exchange for more than 14 225bp over Libor and an upfront fee of 160bp. reporting. trading days constitutes an event of default. BOCHK, Credit Agricole, BNP Paribas and The loan drew strong global demand, Societe Generale were the mandated lead WITHûNOTABLEûINTERESTûFROMû!SIA GUARANTEE arrangers and bookrunners of the maturing loan, HSBCûCOORDINATEDûSYNDICATIONûOFûTHEû ZTE’s lenders will also find comfort from the which attracted eight other lenders in general lNANCINGûASûJOINTûBOOKRUNNERûALONGûWITHû company’s assurance on Wednesday that it will syndication. ING Bank and Bank of China. provide a guarantee to the medium or long-term Evelynn Lin HSBC and ING were Green structuring advisers. Macquarie acquired the UK’s Green Macquarie said that it has led more than -,!SûCOMMITTINGû53MûORûMOREûWILLû Investment Bank (now Green Investment aBNûOFûINVESTMENTûINû'REENûINFRASTRUCTUREû RECEIVEûALL INûPRICINGûOFûBPûVIAûAû Group) in 2017. since 2010 and has supported the creation PARTICIPATIONûFEEûOFûBP ûWHILEûLEADû OFûûGIGAWATTSûOFû'REENûENERGYû ARRANGERSûJOININGûWITHû53MnMûEARNû ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY CAPACITY ûWITHûAûFURTHERûûGIGAWATTSûINûITSû ALL INûPRICINGûOFûBPûVIAûAûBPûFEEû SYNDICATED VOLUME (INCLUDING JAPAN) pipeline. !RRANGERSûJOININGûWITHû53MnMûEARNû BOOKRUNNERS: 1/1/2018 TO DATE ALL INûPRICINGûOFûBPûVIAûAûBPûFEE Managing No of Total Share &UNDSûAREûFORûRElNANCINGûANDûGENERALû bank or group issues US$(m) (%) CHINA corporate purposes. 1 Mizuho 230 36,331.22 16.7 The borrower is BLUESTAR FINANCE HOLDINGS, 2 MUFG 380 27,575.78 12.7 CHEMCHINA UNIT LAUNCHES US$500m AûSUBSIDIARYûOFû#HINAû.ATIONALû"LUESTAR û 3 Bank of China 144 25,243.13 11.6 LOAN WHICHûINûTURNûISûûOWNEDûBYû 4 Sumitomo Mitsui Finl 274 25,171.04 11.6 ChemChina. 5 ANZ 37 8,507.28 3.9 #HINAû.ATIONALû"LUESTARû'ROUP ûAûUNITûOFû #HINAû.ATIONALû"LUESTAR ûAûMAKERûOFû 6 Standard Chartered 24 5,852.12 2.7 state-owned China National Chemical specialty chemical products, is the 7 HSBC 24 5,152.73 2.4 #HEM#HINA ûHASûLAUNCHEDûAû53Mû guarantor, while ChemChina is providing a 8 Citic 5 4,976.48 2.3 three-year loan. LETTERûOFûCOMFORT 9 ICBC 9 3,848.51 1.8 China Development Bank and Credit Agricole )Nû-ARCH û#HEM#HINAûRAISEDûAû53BNû 10 Credit Agricole 15 3,558.85 1.6 are the mandated lead arrangers and dual-tranche term loan. That bullet loan Total 1,306 216,997.56 BOOKRUNNERSûOFûTHEûTRANSACTION ûWHICHûPAYSû OFFEREDûOPENINGûTOP LEVELûALL INûPRICINGûOFû Proportional credit ANûINTERESTûMARGINûOFûBPûOVERû,IBORûANDû BPûANDûBPûOVERû,IBOR ûBASEDûONû Source: Thomson Reuters SDC code: S3a HASûANûAVERAGEûLIFEûOFûûYEARS #HEM#HINASûRATINGSûOFû"AA"""!nû

68 International Financing Review June 16 2018 LOANS ASIA-PACIFIC

CDB FINANCIAL LEASING RETURNS 4HEûBORROWERûSIGNEDûTHEû53Mû Mandated lead arrangers are Agricultural three-year term loan last September Bank of China Seoul, Hitachi Capital Hong Kong, CDB FINANCIAL LEASINGûISûSEEKINGûAû53Mû with eight banks. That deal, which Luso International Hong Kong and State Bank of three-year term loan, sources said, less than CLOSEDûBELOWûITSûINITIALûTARGETûOFû India Hong Kong. AûYEARûAFTERûITûSIGNEDûAû53MûONSHOREû 53M ûOFFEREDûTOP LEVELûALL INûPRICINGû Lead arrangers are Woori Bank Hong Kong, FACILITYûWITHûTHEûSAMEûTENOR OFûBP Woori Global Markets Asia, Cathay United Bank Mizuho Bank (China) and Westpac are the Hong Kong, CTBC Bank, KEB Hana Bank Hong mandated lead arrangers and bookrunners JINJIANG ENVIRONMENT GOES FOR MORE Kong, KEB Hana Global Finance and Shinhan OFûTHEûONSHOREûDEAL ûWHICHûOFFERSûANûINTERESTû Asia. Arranger is BOT Lease Hong Kong. MARGINûOFûBPûOVERû,IBORûFORûANûAVERAGEû Singapore-listed CHINA JINJIANG ENVIRONMENT /NLYû4RANCHEû!ûWASûSYNDICATEDû)TûOFFEREDû LIFEûOFûûYEARS HOLDING has increased a three-year debut TOP LEVELûALL INûPRICINGûOFûBPûBASEDûONûANû MLAs committing US$30m or more earn lNANCINGûTOû53M EQUIVALENTûFROMûAû INTERESTûMARGINûOFûBPûOVERû,IBORûANDûANû ALL INûPRICINGûOFûBPûVIAûAûBPû 53M EQUIVALENTûTARGET AVERAGEûLIFEûOFûûYEARS PARTICIPATIONûFEE ûLEADûARRANGERSûWITHû Standard Chartered was the sole mandated CJEH is the borrower on Tranche A, while COMMITMENTSûOFû53MnMûRECEIVEûALL INû LEADûARRANGERûANDûBOOKRUNNERûOFûTHEû ITSû#HINA BASEDûFULLYûOWNEDûUNITûGREEN PRICINGûOFûBPûVIAûAûBPûFEE ûWHILEû transaction, which now comprises a ENERGY (HANGZHOU) CORPORATE MANAGEMENT is ARRANGERSûCOMINGûINûWITHû53MnMûGETû US$200m Tranche A and a Rmb100m the borrower on Tranche B. CJEH’s units BPûALL INûPRICINGûVIAûAûBPûFEE 53M û4RANCHEû" incorporated outside China and India will China banks to track credit risk

REGULATION Proposed joint lending committees may boost syndication activity

China’s newly merged banking and insurance State-owned China Energy Reserve and for the borrowers and for the lenders,” one regulator has called for banks to work together Chemicals Group missed an offshore bond foreign banker in Shanghai said. “Borrowers to monitor major borrowers, in a move that some payment last month, while eight other issuers will possibly try to minimise the number of bankers say may encourage more syndicated have defaulted on their onshore bonds this year. relationship banks as long as the remaining ones lending. The new CBIRC rules aim to minimise further can meet their financing demand.” The China Banking and Insurance Regulatory shocks by making lenders responsible for Some bankers were also sceptical of the Commission unveiled new lending guidelines consolidating and reporting credit risks. The accuracy of the information shared between the on June 1 with the aim of “preventing excessive joint lending committee would be responsible lenders and the regulator. Offshore borrowings [corporate] fundraising from multiple channels for monitoring and sharing information obtained will also not be covered as other Chinese and effectively containing credit risks arising from every relationship lender to the same regulators bear responsibility for governing them. from high leverage”. borrower and its related companies, as well The proposals call for banks to establish a joint as imposing a cap on the borrower’s total WENZHOU EXPERIMENT lending committee for every borrower with more borrowing. China can point to an earlier experiment where than three lenders and with outstanding debt, The lending committee will also take cooperation between lenders helped reduce including bonds and loans, exceeding Rmb5bn coordinated action when default risks rise, such leverage and forced borrowers to consolidate (US$782m). The committee would be responsible as sending out alerts when total debt reaches a their banking relationships. for monitoring credit risk and reporting all banks’ certain level, convening meetings and advising In 2013, Wenzhou, a port and industrial city exposure to the regulator at regular intervals. members to be more stringent in approving any in Zhejiang province in south-eastern China, Some syndicated loan bankers expect the new borrowings. launched a similar move, signing up 26 banks in move to boost their businesses as the concept One of the borrower’s top three lenders will a self-disciplinary agreement to check excessive of joint lending in the newly released guidelines be elected to chair the committee as well as a lending. appears to promote syndicated lending, with the quarterly meeting, while reporting information A total of 21,542 local companies were part shared goal of mitigating credit risk. regularly to the regulator. Lenders will need to of the trial lending programme as of the end of “Hopefully, we can see more than 15% growth serve at least a month’s notice to the borrower May, while the number of participating banks this year [in China’s syndicated loan volume] before they cut a line of credit. had increased to 48. because of this new regulation,” a senior banker Some bankers fear the rules would squeeze Outstanding debt at these companies has from a major Chinese lender said. out smaller players and international lenders, been reduced by Rmb48.2bn from the pre- Banking regulators in provinces and tilting the playing field in favour of existing major trial level, according to data from the city’s municipalities across China have been asked relationship banks. banking regulator, while the average borrowing to submit their implementation plans and trial The guideline requires borrowers to obtain the relationship for each company fell to 1.08 banks lists of at least 10 corporate borrowers in their committee’s consent before raising any major as of the end of May, from 1.7 at the end of 2013. jurisdictions to CBIRC by the end of this month. financings from sources outside the committee. According to local official Wenzhou Daily A meeting was held on June 8 to discuss details. New lenders are required to join the lending reports, a total of 123 companies defaulted in committee before extending any loan unless it is 2013, and 24% of them had borrowed from CURBING DEFAULTS less than 0.5% of the borrower’s outstanding debt. more than five banks. However, the reports said The move comes as China’s campaign to reduce In either case, the new loan will still need to be the city’s non-performing loan ratio declined to leverage in the economy is crimping access reported to the committee within five working days. 1.92% at the end of 2017 from 4.68% at the end to finance and triggering a rising number of “The joint lending trial, if implemented of June 2014. corporate defaults. seriously, will involve a lot of extra work, both Yan Jiang

International Financing Review June 16 2018 69 ANDûBPûOVERû,IBOR ûRESPECTIVELYû&ACILITIESû ûûANDûûHADûREMAININGûAVERAGEûLIVESûOFû Lenders flock for piece of ûûANDûûYEARS ûRESPECTIVELY û assuming participating lenders were TRANSFERREDûINû$ECEMBER Takeda’s jumbo deal -EANWHILE û*IOûISûALSOûINûTHEûMARKETûFORûAû cBNû53M ûSEVEN YEARû3AMURAIû JAPAN Eye on takeout draws strong response bullet term loan, which pays top-level all-in PRICINGûOFûBPûBASEDûONûAûMARGINûOFûBPû A slew of domestic and international banks have For ratings of A1/A+ or higher, the margin OVERû4IBORûANDûHASûAûGUARANTEEûFROMû2), committed to a major portion of the US$30.85bn is 75bp over Libor, while the commitment fee financing for TAKEDA PHARMACEUTICAL’s £46bn is 7bp. The margin and fees increase to 87.5bp HDFC MANDATES NINE (US$62bn) acquisition of London-listed rare- and 8bp for ratings of A2/A; 100bp and 9bp for disease specialist Shire. A3/A–; 112.5bp and 10bp for Baa1/BBB; 125bp Mortgage lender HOUSING DEVELOPMENT FINANCE A US$15.35bn 364-day tranche has attracted and 12.5bp for Baa2/BBB, and 150bp and 17.5bp CORP has mandated nine banks on a 18 lenders, including several international banks for anything lower. 53MûlVE YEARûLOAN ûWHICHûMARKSûITSû which are eyeing a take-out of the facility that is The margins on the bridge facilities increase RETURNûOFFSHOREûAFTERûTWOûYEARS expected through capital market financings such by 25bp every three months after closing. ANZ, Barclays, Citigroup, DBS Bank, First Abu as bonds. Duration fees start at 50bp 90 days after Dhabi Bank, HSBC, Mizuho Bank, MUFG and The banks joining are Bank of America Merrill closing, rising to 75bp 180 days after closing Sumitomo Mitsui Banking Corp are the Lynch, Bank of China, Barclays, BBVA, BNP and to 100bp 270 days after closing. Duration mandated lead arrangers and bookrunners Paribas, Commerzbank, Credit Agricole CIB, DBS fees apply to outstanding drawn and undrawn OFûTHEûBULLETûLOAN Bank, HSBC, ING Bank, Intesa Sanpaolo, Mizuho commitments. ($&#SûLASTûVISITûTOûTHEûINTERNATIONALûLOANû Bank, Nomura Capital Investment, Norinchukin The US$15.35bn 364-day tranche offered a MARKETSûWASûINû*ULYûûFORûAû53Mû Bank, Societe Generale, Standard Chartered, 17.5bp upfront fee and the US$7.5bn five-year lVE YEARûTERMûLOANûWITHûûBANKS ûOFûWHICHû Sumitomo Mitsui Trust Bank and Wells Fargo term loan offered a 15bp upfront fee. ûJOINEDûINûGENERALûSYNDICATIONû#ITIGROUP û Bank. Lenders will earn fees irrespective of the $"3 û3TATEû"ANKûOFû)NDIAûANDû3-"#ûWEREûTHEû These 18 banks, along with Bank of New York outcome of the acquisition proposal or the -,!"SûOFûTHEûDEAL ûWHICHûPAIDûAûTOP LEVELû Mellon, also committed to a US$7.5bn five- drawdown of the loan. ALL INûPRICINGûOFûBPûBASEDûONûANûINTERESTû year term loan. Takeda will use the proceeds MARGINûOFûBPûOVERû,IBORûANDûANûAVERAGEû of the five-year loan to take out a US$7.5bn BLOCKING MOVE REMAININGûLIFEûOFûûYEARS 364-day tranche that formed part of the jumbo A group of Takeda’s shareholders is trying to acquisition financing. build support to block the Shire acquisition at an BIRLA CARBON ATTRACTS FIVE MORE JP Morgan, MUFG and Sumitomo Mitsui extraordinary general meeting, Reuters reported Banking Corp are the mandated lead earlier. &IVEûADDITIONALûBANKSûHAVEûJOINEDûASû arrangers, bookrunners and underwriters of the Takeda will hold the shareholder meeting later mandated lead arrangers and committed US$30.85bn borrowing, which also included this year or early next year to approve an issue of 53MûCOMBINEDûTOûAû53BNûLOANûFORû two other 364-day tranches of US$4.5bn and new stock to help fund the Shire deal, making it BIRLA CARBON. US$7.5bn, respectively and a US$3.5bn 90- a de facto vote on the deal itself. 4HEûBORROWER ûAûUNITûOFû)NDIANû day portion. These three tranches were not Takeda’s bridge is the largest loan to date conglomerate Aditya Birla Group, previously syndicated. from Asia, easily trumping a ¥2.65trn (then appointed 11 banks on the loan as mandated The 364-day tranches and the US$7.5bn US$23bn) jumbo refinancing in November for LEADûARRANGERSûANDûBOOKRUNNERSû.INEûOFû five-year term loan pay the same margins and SoftBank Group Corp. THOSEûBANKSûWEREûMANDATEDûlRSTûANDûAREû commitment fees based on a ratings grid: Wakako Sato underwriting US$122m apiece, while the two other lenders added later are UNDERWRITINGû53MûEACH provide unconditional and irrevocable The company’s last borrowing was in The nine banks mandated initially are corporate guarantees. $ECEMBER ûWHENûITûSIGNEDûAû53BNûLOANû ANZ, Axis Bank, BNP Paribas, Credit Agricole, CJEH is a waste-to-energy operator in that saw 30 banks, including 17 senior Citigroup, DBS Bank, ICICI Bank, Mizuho Bank China. mandated lead arrangers and bookrunners, and Standard Chartered. JP Morgan and SG Asia PARTICIPATINGû4HATûLOANûCOMPRISEDûAû YEARû JOINEDûSUBSEQUENTLY LOANûOFû53MûANDûõMû53M û The deal has not been launched into INDIA &ACILITYû ûFORû2), ûANDûSEPARATEû53BNû senior or general syndication. YEARû&ACILITYû ûANDû53Mû YEARû 4HEûBORROWINGûISûSPLITûINTOûAû53BNû RIL SEEKS US$2.7bn REFI &ACILITYû ûPORTIONSûFORû2ELIANCEû*IOû MONTHûTERMûLOANûANDûAû53Mû )NFOCOMM month revolving credit, each paying interest Conglomerate RELIANCE INDUSTRIES is seeking RIL’s borrowing was mandated at all-in MARGINSûOFûBPûOVERû,IBOR Aû53BNûRElNANCING ûMARKINGûITSûSECONDû PRICINGûOFûLESSûTHANûBP ûWHILEûSUBSIDIARYû Birla Carbon had previously eyed a BORROWINGûOFûAROUNDûTHATûSIZEûWITHINûSIXû Jio’s was at less than 120bp. 53MûDUAL TRANCHEûLOANûANDûAû53ûDOLLARû months. The new loan will comprise RIL’s US dollar and euro tranches paid top- BONDûOFûAûSIMILARûSIZEû(OWEVER ûBONDû THREEûTRANCHESûWITHûTENORSûOFûTHREEûANDûlVEû LEVELûALL INûPRICINGûOFûBPûANDûBPûBASEDûONû market conditions have not been conducive years. INTERESTûMARGINSûOFûBPûANDûBPûOVERû,IBORû FORûHIGH YIELDûBORROWERSûINûRECENTûWEEKSû RIL is putting together an arranger group ANDû%URIBOR ûRESPECTIVELYû*IOSû&ACILITYûûANDû given the rise in US Treasury yields, because and has asked banks to respond by the end &ACILITYûûOFFEREDûTOP LEVELûALL INûPRICINGûOFû OFûWHICHû"IRLAû#ARBONûSCRAPPEDûTHEûBONDû OFûTHEûMONTH BPûANDûBPûBASEDûONûMARGINSûOFûBPû plans.

70 International Financing Review June 16 2018 LOANS EMEA

0ROCEEDSûFROMûTHEûLOANûRElNANCEûAû &UNDSûWILLûBEûUSEDûFORûINVESTMENTS û 4HEûDEALûPAYSûANûINTERESTûMARGINûOFûBPû 53MûDUAL TRANCHEûlVE YEARûLOANûCLOSEDû RElNANCING ûCAPITALûEXPENDITURE ûWORKINGû OVERû,IBORû&UNDSûAREûFORûWORKINGûCAPITALû INû-ARCHûû4ENûLENDERSûJOINEDûTHEûSIXû capital and general corporate purposes. purposes. MLABs on that deal, which comprised a 4HEûBORROWER ûFORMERLYûCALLEDû,OUISû Last month, Wistron raised a US$800m 53MûTERMûLOANûANDûAû53Mû $REYFUSû#OMMODITIESû!SIA ûLASTûRAISEDûAû THREE YEARûREVOLVINGûCREDITûFACILITYû REVOLVERû4HATûBORROWINGûOFFEREDûTOP LEVELû 53MûTHREE YEARûREVOLVERûINû3EPTEMBERû COMPRISINGûAû53Mû4RANCHEû!ûANDûAû ALL INûPRICINGûOFûBPûBASEDûONûAûMARGINû THATûWASûINCREASEDûFROMûAûTARGETûSIZEûOFû US$280m Tranche B. The interest margins OFûBPûOVERû,IBORûANDûANûAVERAGEûLIFEûOFû US$400m. The deal paid top-level all-in AREûBPûANDûBPûOVERû,IBORûFORû4RANCHESû!û ûYEARS PRICINGûOFûBPûBASEDûONûAûMARGINûOFûBPû and B, respectively. The borrower will pay over Libor. ANYûEXCESSûINTERESTûRATEûBEYONDûAûBPû DIFFERENCEûBETWEENû4!)&8ûANDû,IBOR INDONESIA 7ISTRONSûPREVIOUSû!2ûFACTORINGûBORROWINGû SOUTH KOREA was in June last year, when it signed a PLN VENTURES OFFSHORE 53MûTHREE YEARûLOANû)TûPAIDûAûMARGINûOFû SHINHAN BACK WITH US$300m LOAN BPûOVERû,IBORû!CCOUNTSûRECEIVABLEûFROMû Seven banks are tipped to win the mandate ,ENOVOû'ROUPûBACKûTHEûlNANCING FROMûSTATE OWNEDûPOWERûUTILITYûPERUSAHAAN SHINHAN BANK is returning to the loan market LISTRIK NEGARAûFORûAûDEBUTû53BNû AFTERûAûTHREE YEARûABSENCEûFORûAû53Mû CORPORATEûLOANûOFFSHORE FACILITY The seven lenders are: ANZ, Bank of China Mandated lead arranger and bookrunner Hong Kong, Citigroup, Mizuho Bank, OCBC Bank, MUFGûISûARRANGINGûTHEûDEALûONûAûBEST EFFORTSû EUROPE/MIDDLE Sumitomo Mitsui Banking Corp and UOB. BASISû4HEûDEALûCARRIESûONE ûTHREEûANDûlVE EAST/AFRICA 4HEûlNANCINGûISûTHEûBORROWERSûlRSTû year maturities. dollar-denominated corporate loan and is 4HEûINTERESTûMARGINSûAREûBP ûBPûANDû EXPECTEDûTOûCOMPRISEûTHREEûANDORûlVE YEARû BPûOVERû,IBORûFORûTHEûONE ûTHREEûANDûlVE EGYPT tenors. Launch into syndication is targeted year pieces, respectively. FORûSOMETIMEûINû*ULY -,!SûCOMMITTINGû53MûORûMOREû ELECTRICITY HOLDING NETS US$900m 0,.ûISûAûFREQUENTûBORROWERûINûTHEûBONDû RECEIVEûTOP LEVELûALL INûPRICINGûOFûBP ûBPû MARKETSûANDûAûSPONSOROFFTAKERûONûPROJECTû ANDûBPûVIAûPARTICIPATIONûFEESûOFûBP û State-owned EGYPTIAN ELECTRICITY HOLDING lNANCINGSûINû)NDONESIAû)Nû.OVEMBER û BPûANDûBP ûRESPECTIVELY ûFORûTHEûONE û COMPANYûHASûCOMPLETEDûAû53Mû Cirebon Energi Prasarana raised a THREEûANDûlVE YEARûTRANCHESû,EADûARRANGERSû syndicated loan, Reuters reported. 53BNûlNANCINGûFORûTHEûCONSTRUCTIONûOFû JOININGûWITHû53MnMûEARNûALL INû 4HEûDEBTûFACILITY ûGUARANTEEDûBYûTHEû the Cirebon 2 power plant in Indonesia. PLN PRICINGûOFûBP ûBPûANDûBPûVIAû -INISTRYûOFû&INANCE ûWASûCOORDINATEDûBYû HASûENTEREDûINTOûAû YEARûPOWERûPURCHASEû PARTICIPATIONûFEESûOFûBP ûBPûANDûBP û Credit Suisse and HSBC. It was marketed to AGREEMENTûWITHûTHEûPROJECTûCOMPANY RESPECTIVELYû!RRANGERSûCOMINGûINûFORû other banks at around US$700m but given 53MnMûRECEIVEûALL INûPRICINGûOFû banks’ oversubscription the size has been BP ûBPûANDûBPûVIAûPARTICIPATIONûFEESû RAISEDûTOû53M SINGAPORE OFûBP ûBPûANDûBP ûRESPECTIVELY %%(#ûOFFEREDûLENDERSûAûMARGINûINTERESTû &UNDSûAREûFORûRElNANCINGûANDûGENERALû ANDûBANKûFEESûOFûMOREûTHANûBPûOVERû LOUIS DREYFUS RETURNS FOR US$500m corporate purposes. Libor. )Nû*ULYû û3HINHANûRAISEDûAû53Mû 4HEûDEBTûFACILITYûISûONEûOFûONLYûAûFEWûDEBTû LOUIS DREYFUS CO ASIA has returned to the year senior loan. Mizuho led that deal, while transactions in the market, demonstrating MARKETûWITHûAû53MûTHREE YEARû China Construction Bank, Commerzbank and banks’ increased interest in Egypt, where REVOLVINGûCREDITûFACILITY 3TANDARDû#HARTEREDûJOINEDûASû-,!S business conditions are slowly improving Agricultural Bank of China Singapore, ANZ, UNDERûAûTHREE YEARû)-&ûLOANûPROGRAMMEûTIEDû DBS Bank, UOB Bank and Westpac are the TOûlSCALûANDûECONOMICûREFORMS mandated lead arrangers and bookrunners TAIWAN OFûTHEûlNANCING ûWHICHûCOMESûWITHûANû EMEA LOANS BOOKRUNNERS – FULLY UNSPECIlEDûGREENSHOEûOPTION WISTRON CONTINUES FUNDING SPREE SYNDICATED VOLUME ,OUISû$REYFUSû#OûISûTHEûGUARANTORûOFûTHEû BOOKRUNNERS: 1/1/2018 TO DATE FACILITY ûWHICHûPAYSûANûINTERESTûMARGINûOFû %LECTRONICSûMANUFACTURERûWISTRON has raised Managing No of Total Share BPûOVERû,IBOR 53MûFROMûAû DAYûACCOUNTSû bank or group issues US$(m) (%) Banks will receive top-level all-in pricing RECEIVABLEûFACTORINGûFACILITY ûBARELYûAûMONTHû 1 JP Morgan 34 25,289.02 8.2 OFûBPûANDûTHEûMANDATEDûLEADûARRANGERû AFTERûCLOSINGûAûBIGGERûBORROWING 2 BNP Paribas 82 23,401.26 7.6 TITLEûFORûCOMMITMENTSûOFû53MûANDûABOVEû Mega International Commercial Bank was the 3 SG 63 23,388.38 7.6 VIAûAûPARTICIPATIONûFEEûOFûBP ûALL INûPRICINGû sole mandated lead arranger and bookrunner 4 HSBC 52 16,863.97 5.5 OFûBPûANDûTHEûLEADûARRANGERûTITLEûFORû OFûTHEûTRANSACTION ûWHICHûCOMPRISESûAû 5 Credit Agricole 67 15,644.63 5.1 TICKETSûOFû53MnMûVIAûAûBPûFEE ûORû 53Mû4RANCHEû!ûFORû7ISTRONûANDûAû 6 Deutsche Bank 45 14,582.71 4.7 ANûALL INûOFûBPûANDûTHEûARRANGERûTITLEûFORû 53Mû4RANCHEû"ûFORû"RITISHû6IRGINû)SLANDS 7 Citigroup 42 13,880.11 4.5 53MnMûVIAûAûBPûFEE incorporated AII Holding. The borrower can 8 ING 55 13,635.23 4.4 "ANKSûWILLûGETûAûBPûUTILISATIONûFEEûIFûLESSû DRAWûAûMAXIMUMûOFû53MûCOMBINEDû 9 BAML 30 12,505.04 4.1 THANûAûTHIRDûOFûFUNDSûAREûDRAWN ûAûBPû FROMûTHEûTWOûTRANCHES 10 UniCredit 56 11,560.42 3.8 UTILISATIONûFEEûIFûnûOFûFUNDSûAREû Participants are Chang Hwa Commercial Total 286 308,241.00 DRAWN ûANDûAûBPûUTILISATIONûFEEûIFûMOREû Bank, First Commercial Bank, Bank Sinopac and Proportional credit THANûTWO THIRDSûOFûFUNDSûAREûDRAWN BBVA. Source: Thomson Reuters SDC code: R17

International Financing Review June 16 2018 71 %XISTINGûLENDERSûBank of America Merrill Lynch, BNL, HSBC, Banca IMI, ING, Mediobanca E.ON powers over the line and UniCredit were mandated lead arrangers ANDûBOOKRUNNERSûONûTHEûlNANCING GERMANY All invited banks participated, resulting in oversubscription The previous credit line comprised a õMû2#& ûMATURINGûINû*ULYûûANDûAû E.ON’s €5bn loan backing its €5.2bn takeover There is also a €2bn five-year tranche paying a õMûTERMûLOANûMATURINGûINû*ULYû offer for a minority stake in German energy group margin of 80bp over Euribor. Margins are linked Innogy sailed through syndication, providing a to a ratings grid and there is a 0% floor. textbook example of the strong levels of support BNP Paribas was sole underwriter, mandated KUWAIT that investment-grade loans can command in lead arranger and bookrunner on the financing. today’s market. E.ON invited 15 core relationship banks to KUFPEC SEEKS LOW PRICING After two years of relatively muted loan market participate on the loan on tickets of €400m volumes, banks in Europe remain underlent and each. All invited banks participated, leading to a KUWAIT FOREIGN PETROLEUM EXPLORATION COMPANY, desperate to book assets, especially at the higher substantial oversubscription. AûSUBSIDIARYûOFûSTATE OWNEDû+UWAITû end of the credit spectrum. Bank of America Merrill Lynch, Barclays, 0ETROLEUMû#ORPORATION ûISûSEEKINGûAûlVE “Banks need deals and this puts borrowers in BayernLB, Citigroup, Commerzbank, ING, YEARûLOANûOFûOVERû53BNûWITHûPRICINGûATûAû a very strong position,” a senior banker said. JP Morgan, Helaba, Morgan Stanley, MUFG, LEVELûTHATûMAYûPROVEûTOûBEûTOOûLOWûFORû E.ON’s financing had the added attraction NatWest, SEB, Societe Generale, SMBC and international lenders. of being a substantial new-money deal with a UniCredit joined the loan. The borrower has requested all-in pricing sizeable bridge loan element, in contrast to the High levels of reverse enquiry on the deal OFûBPûOVERû,IBOR lower-yielding bread-and-butter refinancing and demonstrate the depth of interest such transactions The downward pressure on pricing is amend and extend transactions that dominate can capture from the wider market. In the highly COMINGûFROMûREGIONALûBANKS ûGIVINGû the market. unlikely event that some relationship lenders were international lenders no choice but to step The transaction includes a €3bn bridge loan to step away from the deal, there would be plenty AWAYûFROMûTHEûDEAL with an initial maturity of 18 months starting nine of other banks willing to step in and fill any gap. h4HEREûAREûONEûORûTWOûOFûTHEûLARGERû;-IDDLEû months after the earliest of either the signing of E.ON launched the takeover offer for shares Eastern] regional banks driving pricing down the loan or the completion of the takeover offer. in Innogy in April, offering €40 per share for the recently. They are being very aggressive on The bridge pays a margin of 40bp over 23.2% of Innogy not owned by RWE. Shareholders +UFPECûTOûTHEûEXTENTûTHATûNOWûWEûCANTûDOûIT û Euribor, stepping up over time to encourage an will have until July 6 to accept the offer. especially as there is no side business,” said early refinancing. Alasdair Reilly one source at an international bank that was ONû+UFPECSûPREVIOUSûLOAN A second source at another international /THERûDEALSûINCLUDEûAû53MûLOANûFORû FACILITIESûANDûREALIGNSûTHEûCOMPANYSû bank agreed: “The pricing is going down too NATIONAL BANK OF EGYPT ûARRANGEDûBYûAûGROUPûOFû CORPORATEûFUNDINGûSTRUCTURE FARûFORûUSv lenders comprising NBE, HSBC, Standard The loan also broadens the company’s )Nûû+UFPECûSIGNEDûAû53BNûLOANûWITHû Chartered, Citigroup, Emirates NBD, Bank ABC, lNANCIALûBASEûFORûFURTHERûORGANICûGROWTH û -5&' û(3"# û*0û-ORGAN û.ATIONALû"ANKûOFû Rakbank and Commercial Bank of Qatar. The loan PROVIDINGûADDITIONALûSCOPEûFORû-!û +UWAITûANDû2OYALû"ANKûOFû3COTLANDûASû ISûBEINGûSYNDICATEDûTOûAûLARGERûGROUPûOFûBANKS transactions. UNDERWRITERS ûJOINTûBOOKRUNNERSûANDûINITIALû BANQUE MISR, the country’s second largest ,EONIûSAIDûTHATûITûHADûTAKENûADVANTAGEûOFû mandated lead arrangers. That loan was BANK ûWILLûFOLLOWûWITHûAû53MûLOANû FAVOURABLEûMARKETûCONDITIONSûANDûSECUREDû priced at 130bp over Libor. coordinated by Citigroup. highly attractive terms on the loan. +UFPECûISûRESPONSIBLEûFORûEXPLORATION û EEHC is not new to the international loan !ûSERIALû3CHULDSCHEINûISSUER ûATûTHEûENDûOFû DEVELOPMENTûANDûPRODUCTIONûOFûCRUDEûOILû MARKETû)NûûITûRAISEDûAû53MûLOANû û,EONIûHADûAROUNDûõMû33$û and natural gas outside Kuwait. PROVIDEDûBYûAûGROUPûOFû%GYPTIANûBANKSûANDû MATURINGûBETWEENûûANDû )TûWILLûUSEûTHEûLOANûPROCEEDSûFORûGENERALû .ATIONALû"ANKûOFû!BUû$HABIûnûNOWû&IRSTû!BUû Nuremberg-based Leoni provides wires, CORPORATEûPURPOSESûANDûCAPITALûEXPENDITURE Dhabi Bank. OPTICALûlBRES ûCABLES ûCABLEûSYSTEMS ûANDû !NOTHERûUNITûOFû+UWAITû0ETROLEUMû#ORP û 4HEûFOLLOWINGûYEAR ûTHEûUTILITYûBORROWEDû related services. The company has more KUWAIT INTEGRATED PETROLEUM INDUSTRIES õBNûTHROUGHûAûDEBTûFACILITYûBACKEDûBYû than 87,000 employees in 31 countries and COMPANY ûISûINûTHEûMARKETûFORûAûBIGûDEBTû EXPORTûCREDITûAGENCIESûFORûTHEûCONSTRUCTIONû GENERATEDûSALESûOFûõBNûINû TRANSACTION ûALSOûCARRYINGûALL INûPRICINGûOFû OFûTHREEûGAS lREDûPOWERûPLANTSû&ORûTHOSEû AROUNDûBPûOVERû,IBOR PROJECTS ûWORTHûõBN ûITûALSOûRAISEDûAû +)0)#ûISûRAISINGûAû YEARû53BNû US$1.2bn loan with local banks. ITALY lNANCINGûCOORDINATEDûBYûFOURûBANKS ûANDû WILLûPARTLYûBEûBACKEDûBYûTHEû%XPORT )MPORTû PIAGGIO SIGNS €250m REFI "ANKûOFû+OREAû+EXIM ûANDû+OREAû4RADEû GERMANY Insurance Corporation (K-Sure). The loan Scooter maker PIAGGIOûHASûAGREEDûAûõMû will also include a loan denominated in LEONI AGREES DEBUT LOAN lVE YEARûLOANûTOûRElNANCEûITSûEXISTINGû Kuwaiti dinars and backed by local banks, õMûSYNDICATEDûLOAN totalling up to US$800m, with Islamic and 7IREûANDûCABLEûMANUFACTURERûLEONI has 4HEûRElNANCINGûREDUCESû0IAGGIOSûCOSTûOFû conventional tranches. AGREEDûAûDEBUTûõMûSYNDICATEDûLOANûWITHû BORROWINGûANDûEXTENDSûTHEûAVERAGEûLIFEûOFûITSû “KIPIC is also very aggressive,” said the AûGROUPûOFûEIGHTûBANKS LOANSûTOûAROUNDûlVEûYEARS lRSTûBANKERûh7HEREûAûCOUPLEûOFûTHEûREGIONALû 4HEûlNANCING ûWHICHûHASûAûlVE YEARû 4HEûlNANCINGûCOMPRISESûAûõMû BANKSûAREûLEADINGû;ONûPRICING= ûOTHERSûAREû MATURITYûPLUSûTWOûONE YEARûEXTENSIONû REVOLVINGûCREDITûFACILITYûANDûAûõMû FOLLOWINGû ûBUTûITûCANTûLASTû0RICINGûLIKEûTHISû OPTIONS ûREPLACESûEXISTINGûBILATERALûCREDITû amortising term loan. CANûONLYûBEûSUSTAINEDûFORûAûFEWûDEALSv

72 International Financing Review June 16 2018 LOANS EMEA

KIB NETS ISLAMIC LOAN SIGNEDûAûDEBUTûõM EQUIVALENTûSYNDICATEDû LUXEMBOURG LOANûWITHûJOINTûCOORDINATORSû"ANKûOFû KUWAIT INTERNATIONAL BANK has closed a !MERICAû-ERRILLû,YNCHûANDû7ELLSû&ARGO 53MûTHREE YEARûSYNDICATEDûMURABAHAû BANK OF CHINA SIGNS US$1.05bn LOAN That two-year loan was split between a lNANCINGûWITHûAûGROUPûOFûINTERNATIONALûANDû 53MûFACILITYûPAYINGûBPûOVERû,IBORû local banks. BANK OF CHINA LUXEMBOURG has signed a ANDûAûõMûFACILITYûPAYINGûBPûOVERû 4HEûFACILITYûINCREASESû+)"SûLIQUIDITYû 53BNûTWO YEARûTERMûLOANûWITHûAûGROUPû Euribor. position over the medium and long term as OFûûINTERNATIONALûBANKS well as improving its deposits The loan, which was more than doubled concentration. FROMû53MûAFTERûANûOVERSUBSCRIPTION û POLAND 4HEûGENERALûCORPORATEûPURPOSESûlNANCINGû was led by sole coordinator Wells Fargo. PAYSûAûMARGINûOFûBPûOVERû,IBOR Credit Agricole CIB, ING and Mizuho JOINEDûASû COFACE NETS €300m LOAN h4HEûCOMPETITIVEûTERMSûOFûTHISû bookrunners and mandated lead arrangers. lNANCINGûAREûAûCLEARûINDICATORûOFûTHEû Commerzbank, First Abu Dhabi Bank and &RENCHûCREDITûINSURERû#OFACESû0OLISHû HIGHûCONlDENCEûANDûSTRONGûREPUTATIONû Standard Chartered Bank are mandated lead subsidiary COFACE POLAND FACTORING has signed +)"ûENJOYSûINûTHEûBANKINGûARENA vû+)"û arrangers. AûõMûMULTICURRENCYûLOANûTOûPARTLYû said. BNP Paribas, Citigroup and Landesbank REPLACEûEXISTINGûBILATERALûLOANS Standard Chartered Bank coordinated Baden-Wuerttemberg are lead arrangers. The loan, which is available in euros and THEûFACILITYûWITHûFirst Abu Dhabi Bank, 7ELLSû&ARGOûWASûALSOûDOCUMENTATIONû 0OLISHûZLOTY ûISûFORûTWOûYEARSûWITHûANûOPTIONû Boubyan Bank, National Bank of Kuwait AGENT ûWITHû).'ûASûFACILITYûAGENT TOûEXTENDûBYûAûFURTHERûYEAR and Kuwait Finance House also as 4HEûDEALûPAYSûAûMARGINûOFûBPûOVERû,IBOR û Credit Agricole CIB, HSBC, ING Bank Slaski and mandated lead arrangers and has a bullet maturity and includes a one- Natixis were mandated lead arrangers and bookrunners. YEARûEXTENSIONûOPTIONû0ROCEEDSûWILLûBEûUSEDû BOOKRUNNERSûONûTHEûlNANCING &IRSTû!BUû$HABIû"ANKûWASûINVESTMENTû FORûGENERALûCORPORATEûPURPOSES Banco Santander, Commerzbank and Societe agent. )Nû!PRILûû"ANKûOFû#HINAû,UXEMBOURGû Generale were mandated lead arrangers. Knauf secures loans for US$7bn USG buy

GERMANY Takeover backed by €4.156bn-equivalent ﬁnancing

Family-owned building product company GEBR For RCF drawings in US dollars a 20bp increase to 20% from the fourth to the sixth month, and KNAUF has agreed to acquire US-based USG applies across the grid. to 30% after the sixth month. Corp in a transaction valued at US$7bn. The RCF pays a commitment fee of 10% of the There is also a 25bp extension fee on the The acquisition will be financed from existing applicable margin in the third month, rising to backstop loan. cash and committed debt financing. 20% from the fourth to the sixth month. The euro term loan will be used to capitalise The €4.156bn-equivalent financing comprises The earlier of the first utilisation of the Knauf’s bidding company World Cup Acquisition €2.75bn of German facilities and US$1.658bn RCF and six months after the commitment Corp to make the offer while the RCF will be of US dollar facilities equally underwritten by fee starting date the fee will be 35% of the used for the refinancing existing debt at USG Commerzbank and UniCredit. applicable margin. and general corporate purposes. The German facilities comprises a €2.25bn The RCF also pays a utilisation fee of 5bp for The US dollar term loan will be used to part four-year term loan and a €500m three-year drawings of less than 33%, 10bps for drawings of finance the acquisition and pay transaction costs, revolving credit facility. over 33%, and 20bp for drawings of over 67%. while the backstop loan will be used to pay the Repayments on the term loan start at the end put price of USG’s existing 4.875% senior bonds of 2019 with 25% repaid at the end of each year PROJECT WORLD CUP due 2027 and 5.5% senior bonds due 2025. with the remainder paid on maturity. The US dollar facilities comprise a US$800m Knauf said previously that it had a highly The term loan pays an initial 42.5bp over five-year term loan and a US$858.5m one- confident letter from Morgan Stanley for Euribor while the RCF pays 35bp over Euribor year backstop term loan with two six-month up to US$4bn of debt financing to back the with a 0% floor, subsequently ratcheting on a extension options. acquisition. net debt to Ebitda grid. Repayments on the term loan start at the end Under the takeover, USG shareholders will For a net debt to Ebitda ratio of more than of 2019 with 20% repaid at the end of each year receive US$44 per share, comprising US$43.50 3 times, the term loan margin is 122.5bp over with the remainder paid on maturity. per share in cash payable upon closing of the Euribor and the RCF margin is 105bp over The term loan pays an initial margin of 125bp transaction and a US$0.50 per share special Euribor; for 2.5-3.0 times it is 92.5bp and 85bp; over Libor, subsequently ratcheting on a net dividend to be paid after shareholder approval of for 2.0-2.5 times it is 72.5bp and 65bp; for 1.5- debt to Ebitda grid. the transaction. 2.0 times it is 57.5bp and 50bp; for 1.0-1.5 times For a ratio of over 3 times the margin is 165bp; The acquisition, which is expected to close in it is 42.5bp and 35bp; for 0.5-1.0 times it is for 2.5-3.0 times it is 125bp; for 2.0-2.5 times it early 2019, was unanimously approved by USG’s 37.5bp and 30bp; and for lower than 0.5 times it is 100bp and for lower than 2.0 times it is 90bp. board of directors. is 32.5bp and 25bp. The backstop loan pays an initial 75bp over Berkshire Hathaway has agreed to vote its The term loan pays a commitment fee/ticking Libor, stepping up by 20bp every quarter after shares in favour of the transaction. Berkshire fee starting at 10% of the applicable margin in first utilisation. Both facilities have a 0% floor. Hathaway and its subsidiaries own around 31% the third month, rising to 20% from the fourth to Commitment fees/ticking fees start at 10% of of the issued and outstanding shares of USG. the six month, and to 30% after the sixth month. the applicable margin in the third month, rising Alasdair Reilly

International Financing Review June 16 2018 73 !ûõMûREVOLVINGûCREDITûFACILITYûHASûBEENû EXTENDEDûTOûSIXûYEARSûFROMûlVEûYEARSû)TûWASû LMA responds to EC due to mature in July 2021. The amendments are due to come into EFFECTûINû*UNE proposal for NPLs 4HEûlNANCINGûISûPROVIDEDûEQUALLYûBYûDanske Bank, DNB, SEB and Svenska Handelsbanken. EUROPE LMA concerned move could hurt performing cross-border loans 3%"ûISûFACILITYûAGENTûANDûCOORDINATORûONû the amendments in its role as The Loan Market Association is working to avoid which may currently prevent loan transfers documentation agent. unintended consequences stemming from the being made to non-bank institutions. Mandatory 4HEûlNANCINGûWASûORIGINALLYûAGREEDûINû European Commission’s efforts to tackle non- disclosure would, however, introduce significant *ULYûûFORû3+RBN EQUIVALENTûTOû performing loans (NPLs) that it believes could changes to existing market practices based RElNANCEûANûEXISTINGûLOANûANDûTOûREDEEMû cause uncertainty and disruption to primary and around the “buyer beware” principle, according senior secured bonds. secondary loan markets. to the LMA. The three-year term loan paid 100bp over The Commission is trying to encourage the Proposed reporting requirements for transfers Euribor in 2017, the bridge loan paid 100bp development of secondary markets to make to non-banks and the need for non-EU non- OVERû3TIBORûWHILEûTHEûlVE YEARû2#&ûPAIDû it easier for banks to sell NPLs, particularly to banks to appoint an EU representative could BPnBPûOVERû%URIBOR non-bank investors, but the LMA is concerned also discourage non-EU lenders from joining Cloetta’s new commercial paper that the move could hurt performing cross- secondary syndicated loans, the trade body said. PROGRAMMEûOFûUPûTOû3+RBNûAIMSûTOû border European loans by increasing complexity, This could also make it more difficult for EU MINIMISEûlNANCINGûCOSTSûANDûMAINTAINû lengthening settlement times and adding banks to transfer syndicated NPLs from their mEXIBILITYûFORûADDITIONALûlNANCINGûNEEDSûATû unnecessary costs. balance sheets, and reduce secondary market short notice. SEB is lead arranger. EU banks still have billions of euros of liquidity. !NNUALûDEBTûSAVINGSûAREûEXPECTEDûTOûBEû NPLs on in their books after the financial crisis Another proposed requirement for non-bank around SKr20m. that they are trying to reduce. NPLs weigh on transferees to inform authorities before enforcing economic growth by reducing banks’ profitability loans could slow enforcement and hamper and ability to lend, particularly to small and recovery efforts for syndicated loans that have UAE medium-sized enterprises. a mix of that bank and non-bank lenders. It “As currently drafted, this brings the whole of could also make it more difficult to determine L&T UNIT IN MARKET FOR REFI the loan market into scope. It’s meant to improve whether non EU banks’ loan participations were liquidity in the NPL space, but goes against originated by EU banks, and whether they fall Larsen & Toubro’s Middle Eastern unit is market practice and could reduce liquidity and within the scope of the Proposal. SEEKINGûAû53MûRElNANCING efficiency in the market,” said Nicholas Voisey, The LMA has suggested drafting amendments L&T GLOBAL HOLDINGS has hired First Abu Dhabi LMA Managing Director. to carve out syndicated and other wholesale Bank and Standard Chartered as mandated The LMA has now responded to the Proposal loans from the Proposal, and that its LEADûARRANGERSûANDûBOOKRUNNERSûFORûTHEû for a Directive of the European Parliament and of requirements are applied in a more targeted, borrowing, which comes with a remaining the Council on credit servicers, credit purchasers effective and proportionate manner. LIFEûOFûûYEARS and the recovery of collateral, outlining the The Commission has assured the LMA that &UNDSûWILLûRElNANCEû53Mû possible effects on the secondary loan market it is not its intention to disrupt the syndicated OUTSTANDINGûFROMûAû53MûlVE YEARûLOANû and wholesale lending, after meeting the loan market. Member states and the European SIGNEDûINû Commission a month ago. Parliament will review the Proposal over the The Indian parent is providing an The Proposal is part of a comprehensive summer and make possible revisions during the unconditional guarantee. L&T Global’s package of measures published by the European summer with a view to finalising the process PREVIOUSûBORROWINGûCARRIEDûAûLETTERûOFû Commission on March 14, which also ensures before the next EU election in May 2019. COMFORTûFROMûTHEûPARENT that banks allocate capital to cover NPLs, The LMA has made further comments on The interest margin on the latest facilitate debt recovery and help to develop bank other aspects of the Proposal, including the BORROWINGûISûBPûOVERû,IBOR restructuring in member states. Accelerated Extrajudicial Collateral Enforcement, "ANKSûAREûINVITEDûTOûJOINûASû-,!SûWITHû The Commission proposed that Member which can be used by secured creditors to 53MûORûABOVEûFORûPARTICIPATIONûFEESûOFûBP û States should lift any existing restrictions in enforce security via public auction or private sale. TRANSLATINGûTOûTOP LEVELûALL INûPRICINGûOFûBPû national law, such as licensing requirements, Tessa Walsh ,EADûARRANGERSûCOMMITTINGû53MnMû EARNûBPûINûFEESûFORûANûALL INûOFûBP L&T is engaged in engineering, .ATIXISûISûDOCUMENTATIONûAGENTûWHILEû#REDITû REVOLVINGûCREDITûFACILITIESûANDûLAUNCHEDûANû CONSTRUCTION ûGOODSûMANUFACTURING û !GRICOLEû#)"ûISûFACILITYûAGENTû#OFACEûITSELFû UPûTOû3+RBNû53M ûCOMMERCIALûPAPERû INFORMATIONûTECHNOLOGYûANDûlNANCIALûSERVICES SIGNEDûAûõM ûTHREE YEARûSYNDICATEûLOANûINû programme to reduce debt. !UGUSTûûTOûREPLACEûEXISTINGûBILATERALûLOANS !ûõMûTERMûLOANûWILLûBEûREDUCEDûBYû õMûANDûITSûMATURITYûWILLûBEûEXTENDEDûTOû UK FOURûYEARSûFROMûTHREEûYEARSûWITHûANûOPTIONû SWEDEN TOûEXTENDûBYûAûFURTHERûTWOûYEARSû4HEûLOANû MOY PARK SIGNS £100m RCF WASûDUEûTOûMATUREûINû*ULYû CLOETTA AMENDS AND EXTENDS A SKr1bn bridge loan will be reduced by .ORTHERNû)RISHûFOODûCOMPANYûMOY PARK has 3+RMûANDûEXTENDEDûTOûlVEûYEARSûFROMû SIGNEDûAûaMûlVE YEARûMULTICURRENCYû .ORDICûCONFECTIONARYûCOMPANYûCLOETTA has one year. The loan was due to mature in REVOLVINGûCREDITûFACILITYûVIAûBank of Ireland AMENDEDûITSûEXISTINGûTERMûLOANûANDû September. and Barclays.

74 International Financing Review June 16 2018 LOANS NORTH AMERICA

-OYû0ARKûHASûDRAWNûAROUNDûaMûOFûTHEû Separately, the company said it had 4HEûCASHûPORTIONûOFûTHEûTRANSACTIONûISû FACILITY RElNANCEDûANûEXISTINGûCREDITûFACILITYûWITHûAû EXPECTEDûTOûBEûFUNDEDûTHROUGHûCASHûONû The company repaid and cancelled its 53BNûSENIORûUNSECUREDûlVE YEARû hand, newly raised debt and around EXISTINGûaMûRECEIVABLESûlNANCINGûWITHû REVOLVINGûCREDIT ûANDûALSOûRElNANCEDûANû US$2.2bn in new equity. "ARCLAYSû"ANKûFROMûTHEûCREDITûFACILITYûANDû EXISTINGû53MûSENIORûUNSECUREDûTHREE !FTERûTHEûMERGER û)&&ûWILLûREMAINû available cash on hand. year term loan. headquartered in New York and maintain a -ARGINSûRANGEûFROMûBPûTOûBPûOVERû Goldman Sachs is sole lead arranger and presence in Israel. The enlarged company’s ,IBORûWITHûAûûmOOR ûDEPENDINGûONûLEVERAGE BOOKRUNNERûOFûTHEûBRIDGEû4HEûBANKûISûALSOû stock will be listed on both the New York &ORûLEVERAGEûOFûLESSûTHANûûTIMESûTHEû JOINTûLEADûARRANGERûANDûBOOKRUNNERûWITHû 3TOCKû%XCHANGEûANDûTHEû4ELû!VIVû3TOCKû MARGINûISûBPûOVERû,IBORûFORû ûTIMESû HSBC, JP Morgan, Bank of America Merrill Lynch, %XCHANGE ITûISûBPûFORû ûTIMESûITûISûBPûANDû PNC and TD on the revolving and term loan FORûûTIMESûORûMOREûITûISûBP FACILITIESû0.#ûISûADMINISTRATIVEûAGENT ALEXION AMENDS AND EXTENDS !ûCOMMITMENTûFEEûOFûûOFûTHEû Under the merger, GE and its applicable margin is payable on undrawn SHAREHOLDERSûWILLûRECEIVEûAûûSTAKEûINû ALEXION PHARMACEUTICALS has amended and FUNDS the combined company while Wabtec EXTENDEDûITSûCREDITûFACILITIES ûWITHûPROCEEDSû 4HEREûISûALSOûAûBPûARRANGEMENTûFEE SHAREHOLDERSûWILLûRETAINûAûûHOLDING USEDûTOûRElNANCEûAMOUNTSûOUTSTANDINGû "ANKûOFû)RELANDûISûPROVIDINGûaMûOFûTHEû 7ABTECûEXPECTSûTOûUSEûSTRONGûFREEûCASHû UNDERûTHEûEXISTINGûAGREEMENT FACILITYûWHILEû"ARCLAYSûISûPROVIDINGûaMû mOWûTOûPRIORITISEûDEBTûREDUCTIONûANDû 4HEûNEWûlVE YEARûFACILITIESûAREûAû53BNû "ANKûOFû)RELANDûISûALSOûFACILITYûAGENT preserve an investment-grade credit rating. REVOLVINGûCREDITûANDûAû53BNûTERMûLOAN û 4HEûRECEIVABLESûlNANCINGûFROMû"ARCLAYSû The company is rated BBB by S&P and DUEûINûû4HEûPREVIOUSûlVE YEARûFACILITYû WASûPUTûINûPLACEûINû*ANUARYûûANDûPAIDûAû Baa3 by Moody’s. was set to mature in June 2020. MARGINûOFûBPûOVERû,IBORû4HATûlNANCINGû The revolving credit comprises a also included an accordion option allowing IFF TAKES US$350m FOR FRUTAROM BUY US$300m domestic tranche and a US$700m ANûINCREASEûOFûUPûTOûaM GLOBALûTRANCHEû!LEXIONûISûTHEûSOLEûBORROWERû US-based Pilgrims Pride acquired Moy INTERNATIONAL FLAVORS & FRAGRANCES has agreed OFûTHEûDOMESTICûTRANCHEûANDûTHEûTERMû 0ARKûINû3EPTEMBERûûFORûAROUNDûaBN û Aû53MûTHREE YEARûTERMûLOANûASûPARTûOFû FACILITYû4HEûGLOBALûTRANCHEûOFûTHEûREVOLVERûISû INITIALLYûFUNDINGûTHEûDEALûTHROUGHûCASHûONû THEûlNANCINGûOFûITSû53BNûACQUISITIONûOFû AVAILABLEûFORûBORROWINGSûBYû!LEXIONûANDû HAND ûEXISTINGûCREDITûFACILITIESûANDûAû )SRAELSû&RUTAROM ûWHICHûWASûANNOUNCEDûINû subsidiaries. SUBORDINATEDûSELLERûlNANCINGûNOTE ûWHICHû May. !SûOFû*UNEû û53MûOFûBORROWINGSûANDû WASûRElNANCEDûTHROUGHûAû53Mû YEARû 0ROCEEDSûWILLûBEûUSEDûTOûlNANCEûPARTûOFû 53MûOFûLETTERSûOFûCREDITûWEREû bond. THEûCASHûCONSIDERATIONûOFûTHEûACQUISITION û outstanding under the revolving credit RElNANCEûDEBTûATû)&&ûANDû&RUTAROMûANDûPAYû FACILITYûANDûTHEûFULLûAMOUNTûOFûTHEûTERMûLOANû FEESûANDûEXPENSESûINûCONNECTIONûWITHûTHEû FACILITYûWASûOUTSTANDING acquisition. !LEXIONûWILLûSTARTûMAKINGûûAMORTISATIONû The acquisition was originally backed payments annually on the term loan NORTH AMERICA WITHûANûUPûTOû53BNû DAYûUNSECUREDû STARTINGû*UNEûû ûPAYABLEûINûEQUALû BRIDGEûLOANûFROMû-ORGANû3TANLEYû3ENIORû quarterly amounts. &UNDING Pricing is tied to a leverage-based grid that UNITED STATES The new term loan, which amortises by RANGESûFROMûBPûTOûBPûOVERû,IBORû4HEû ûEVERYûYEAR ûPAYSûAûMARGINûBASEDûONûAû INTERESTûRATEûWILLûOPENûATûBPûWITHûAûBPû WABTEC UPDATES FINANCING PLANS ratings grid. COMMITMENTûFEE &ORû! !ûITûISûBPûOVERû,IBORûFORû!!ûITû Bank of America Merrill Lynch was Rail equipment provider WABTEC CORP has ISûBPûFORû! !ûITûISûBPûFORû""" ADMINISTRATIVEûAGENT ûANDûJOINTûLEADû DISCLOSEDûMOREûDETAILSûONûITSûlNANCINGûFORû "AAûITûISûBPûFORû""""AAûITûISûBPû arranger and bookrunner with Citizens Bank, the company’s US$11.1bn merger with GE FORû""" "AAûITûISûBPûANDûFORûLOWERûTHANû DNB Markets, JP Morgan, MUFG, RBC, Sumitomo Transportation, saying it is reducing its """ "AAûITûISûBP Mitsui and SunTrust. bridge loan with a delayed draw term loan. 4HEREûISûALSOûAûBPûCOMMITMENTûFEEûONû 7ABTECûINû-AYûSAIDûITûHADûLINEDûUPûAûFULLYû undrawn amounts. AMERICAS LOANS BOOKRUNNERS – FULLY COMMITTEDû53BNûBRIDGEûLOANûTOûFUNDû Morgan Stanley, BNP Paribas, Citigroup and JP SYNDICATED VOLUME THEû53BNûCASHûPORTIONûOFûTHEûOFFER ûANDû Morgan AREûJOINTûLEADûARRANGERSûANDûJOINTû BOOKRUNNERS: 1/1/2018 TO DATE was planning on replacing the bridge with BOOKRUNNERSûEACHûCOMMITTINGû53MûTOû Managing No of Total Share PERMANENTûlNANCINGûBEFOREûTHEûMERGERû the loan. bank or group issues US$(m) (%) closed. Citizens Bank, CoBank, HSBC, ING, MUFG, 1 BAML 565 175,302.10 13.2 In a press release released last week, Standard Chartered, US Bank and Wells Fargo 2 JP Morgan 489 147,136.72 11.1 7ABTECûSAIDûITûNOWûHASûAû53BNûBRIDGEû also participated, each with a commitment 3 Wells Fargo 397 119,477.45 9.0 commitment and a US$400m senior OFû53M 4 Citigroup 263 85,437.23 6.5 unsecured delayed draw term loan to #OVENANTSûINCLUDEûMAXIMUMûNETûDEBTûTOû 5 Barclays 211 52,767.56 4.0 lNANCEûTHEûCASHûPORTIONûOFûTHEûACQUISITION %BITDAûOFûûTIMESûWITHûSTEP DOWNSûOVERû 6 Morgan Stanley 121 49,889.50 3.8 The bridge commitment will be reduced TIMEûANDûAûTEMPORARYûSTEP UPûTOûûTIMESûFORû 7 Goldman Sachs 184 49,588.42 3.7 BYûANYûALTERNATIVEûlNANCINGûTHATû7ABTECû THEûlRSTûFULLûlSCALûQUARTERûAFTERûFUNDINGûIFûTHEû 8 MUFG 140 49,406.65 3.7 ARRANGESûBEFOREûTHEûDEALûCLOSESû4HEû COMPANYûHASûNOTûISSUEDûATûLEASTû53BNûOFû 9 RBC 213 48,831.15 3.7 PERMANENTûlNANCINGûCOULDûINCLUDEû equity or mandatory convertible bonds. 10 Deutsche Bank 176 42,255.22 3.2 additional loans or long-term notes. )&&ûHASûALSOûAMENDEDûITSûEXISTINGû53BN Total 1,905 1,323,208.32 4HEûACQUISITIONûISûEXPECTEDûTOûCLOSEûEARLYû EQUIVALENTûREVOLVINGûCREDITûFACILITYûTOûALIGNû Proportional credit NEXTûYEAR covenants to those on the new term loan. Source: Thomson Reuters SDC code: R7

International Financing Review June 16 2018 75 The other lenders are Barclays, BNP Paribas, Mizuho, MUFG, Sumitomo Mitsui, SunTrust, Bank Comcast’s record Fox bid signals of Nova Scotia, US Bank, CoBank, BB&T, Intesa Sanpaolo, KeyBank, PNC and Royal Bank of aggressive lending push Canada. US BAML and Wells Fargo line up ﬁnancing CROWN CASTLE UPS RCF

Media company COMCAST’s record all-cash 39% so far this year from the same time last year. Mobile phone tower operator CROWN CASTLE US$65bn bid to buy Twenty-First Century Fox’s The US$326bn of loans completed is the INTERNATIONAL has increased commitments media assets, a day after AT&T’s long-sought highest amount since the same time in 2007. under the company’s senior unsecured acquisition of Time Warner received the green Attention shifts next to DISNEY, and whether REVOLVINGûCREDITûBYû53MûFORûAûTOTALûOFû light, signals an oncoming wave of M&A that it answers Comcast’s bid by increasing its 53BN banks will aggressively compete to finance. US$52bn all-stock agreement to purchase Fox’s The company also pushed out the The federal judge’s ruling in favour of the film, television and international businesses. maturity date to June 14 2023 on its senior US$85bn AT&T/Time Warner tie-up, first announced And still in the regulatory review queue is UNSECUREDûCREDITûFACILITY ûWHICHûINCLUDESûAû in October 2016, without any conditions, removed T-MOBILE’s US$26bn proposed merger with US$2.4bn senior unsecured Term Loan A. an obstacle for debt markets after several huge, Sprint, in what is considered a horizontal 0RICINGûISûLINKEDûTOûRATINGSû&ORû""" "AAû high-profile technology and healthcare deals were deal between two leading wireless carrier the margin is 100bp over Libor and the scuttled by antitrust or national security concerns. competitors. COMMITMENTûFEEûONûTHEûREVOLVERûISûBPû “After the AT&T news, people have a much FORû""""AAûITûISûBPûANDûBPûFORû""" more optimistic view on the regulatory front, and HIGHLY CONFIDENT "AAûITûISûBPûANDûBPûFORû"" "AûITûISû I think that will push bankers to pitch more on As for Comcast’s new financing, banks typically BPûANDûBPûANDûFORû"""AûITûISûBPû M&A,” said one senior banker. “There’s more of provide “highly confident” letters as a tactic ANDûBP a willingness to look at vertical integrations,” in used for large hostile takeovers, which allows S&P rates Crown Castle BBB- while which a company buys a supplier, he said. borrowers to avoid paying fees on funds Moody’s rates the company Baa3. Comcast, in announcing its Walt Disney- committed by banks to a huge deal that may not JP Morgan is administrative agent. JP topping bid, said it had “highly confident” letters take place. Morgan, Bank of America Merrill Lynch, from Bank of America Merrill Lynch and Wells Banks do not immediately tie up their balance Citigroup, Credit Agricole, Mizuho, RBC, TD and Fargo that the banks can secure the needed sheets, as a result, while signalling to markets that Sumitomo MitsuiûAREûJOINTûLEADûARRANGERSûANDû financing for the proposed acquisition. the financing will be there if the deal is approved. JOINTûBOOKRUNNERS A considerable amount of the financing Similarly, five initial banks indicated their required was already lined up before this newly confidence in this way last November for QUALCOMM UPS LOAN TO US$7bn raised bid. In April, the company said it had lined chipmaker BROADCOM’s unsolicited bid to buy up £23bn of loans led by BAML and Wells Fargo. rival Qualcomm. The lending group was later Chipmaker QUALCOMM has increased its term The existing credit comprises up to £16bn of expanded and provided US$100bn of financing LOANûAGREEDûINû-ARCHûTOû53BNûFROMû 364-day loans and up to £7bn of term loans, with – the largest loan package ever – before the US$3bn. the bridge expected to be replaced in part or in deal was ultimately cancelled as President Proceeds support the borrower’s planned full by senior unsecured bonds. Trump blocked the merger over national security ACQUISITIONûOFû.80û3EMICONDUCTORS The AT&T victory “does make people feel a bit concerns. The additional term loan commitments more of a risk appetite for complex transactions Banks remain eager to put money to work HAVEûTHEûSAMEûCONDITIONSûASûTHEûEXISTINGû on the regulatory front,” said another banker. and see a more open dealmaking path after the loan. Vertical transactions tend to be better for the AT&T/Time Warner merger outcome. Goldman Sachs is administrative agent. M&A market because they allow companies to “Now that the judge has given the all-clear, Goldman, Barclays and BNP Paribas AREûJOINTû get into complementary areas for growth, as without conditions, it’s basically a free ride, LEADûARRANGERSûANDûJOINTûBOOKRUNNERS opposed to horizontal deals which focus more on and this will open up other opportunities for China’s markets regulator said on June 1 synergies and cost-cutting, he said. “That can be companies in the space that need to position that it was still reviewing Qualcomm’s pretty helpful to the overall M&A market.” themselves,” a third banker said. PROPOSEDû53BNûACQUISITIONûOFû.80û Corporations buying other companies for Lynn Adler Semiconductors and was in talks with growth have helped drive total M&A lending up Additional reporting by Jonathan Schwarzberg Qualcomm about ways to eliminate the NEGATIVEûIMPACTûOFûTHEûDEAL û2EUTERSûREPORTED

REPUBLIC SERVICES BAGS RCF BAML, JP Morgan and Wells Fargo AREûJOINTû ADP REFINANCES LEADûARRANGERSûANDûJOINTûBOOKRUNNERS Waste management company REPUBLIC 0RICINGûISûLINKEDûTOûRATINGSû&ORû! !ûTHEû Business services company AUTOMATIC DATA SERVICESûHASûAGREEDûAû53BNûREVOLVINGû FACILITYûFEEûISûBPûANDûTHEûMARGINûISûBPû PROCESSINGûHASûRElNANCEDûITSû DAYûANDû CREDITûFACILITYûTHATûMATURESûINû*UNEû OVERû,IBORûFORû""" "AAûITûISûBPûANDû lVE YEARûLOANS 4HEûFACILITY ûWITHûBank of America Merrill BPûFORû""""AAûITûISûBPûANDûBPûFORû !û53BNû DAYûLOANûDUEû*UNEûû Lynch as administrative agent, can be """ "AAûITûISûBPûANDûBPûûANDûFORû ûREPLACESûAû53BNû DAYûLOANûPUTû increased by up to US$1bn. Two one-year "" "AûITûISûBPûANDûBP in place in June last year. MATURITYûEXTENSIONSûCANûBEûREQUESTED 4HEûCOMPANYûISûRATEDû""" ûBYû30ûANDû !û53BNûlVE YEARûCREDITûDUEû*UNEûû 4HEûFACILITYûREPLACESûTWOûEXISTINGû Baa2 by Moody’s. ûWHICHûHASûANûACCORDIONûFEATUREû FACILITIES ûONEûFORû53BNûANDûANOTHERûFORû 0ROCEEDSûWILLûBEûUSEDûFORûRElNANCING û allowing commitments to be increased to 53BN ûALSOûWITHû"!-,ûASû CAPITALûEXPENDITURES ûLETTERSûOFûCREDITûANDû 53BN ûREPLACESûAû53BNûlVE YEARû administrative agent. other general corporate purposes. FACILITYûAGREEDûINû*UNEû

76 International Financing Review June 16 2018 LOANS LEVERAGED LOANS

!NûEXISTINGû53BNûlVE YEARûSIGNEDûINû syndicated loan that was originally agreed in DISTRIBUTION GROUPûLAUNCHEDûAû53MûLOANû June 2017 will continue. 3EPTEMBERûû4HEûGOVERNMENTSû TRANSACTIONûTHATûWILLûBEûUSEDûTOûRElNANCEû JP Morgan is administrative agent. The 53M û YEARûLOANûLEFTûAû53Mû debt. BANKûISûJOINTûLEADûARRANGERûANDûJOINTû SYNDICATEDûFACILITYûINûPLACEûFORûTHREEûYEARS Barclays is sole arranger on the deal, which bookrunner with Bank of America Merrill Previously, Staatsolie tapped the loan COMPRISESûAû53MûlVE YEARûlRST LIENû Lynch, BNP Paribas, Wells Fargo, Citigroup and MARKETûINû-ARCHûûFORûAû53MûlVE TERMûLOANûANDûAû53Mû YEARûASSET BASEDû MUFG. YEARûLOANûnûINCLUDINGûAû53MûREVOLVINGû REVOLVINGûCREDITûFACILITY 0ROCEEDSûWILLûBEûUSEDûFORûGENERALû CREDITûFACILITYûnûVIAû#REDITû3UISSE û&IRSTû The company plans to issue the loan with corporate purposes, including debt Caribbean International Bank (Curacao), pricing tied to a leverage-based grid. The RElNANCING &IRSTû#ARIBBEANû)NTERNATIONALû"ANKû#AYMANû PRICINGûWILLûOPENûATûBPûOVERû,IBORûBASEDû The one-year tranche pays a commitment Islands) and ING Bank. ONûCURRENTûLEVERAGEûOFûBETWEENûFOURûANDûlVEû FEEûOFûBPûANDûTHEûlVE YEARûLOANûPAYSûAû That loan was the company’s second TIMESû4HEûRATEûINCREASESûTOûBPûFORûHIGHERû COMMITMENTûFEEûOFûBP ûBASEDûONûCURRENTû SYNDICATEDûLOANûAFTERûTAPPINGûTHEûMARKETûFORû LEVERAGEûANDûDROPSûTOûBPûFORûLOWERû ratings. Aû53MûLOANûINû3EPTEMBERûûTHATûWASû leverage. S&P rates the company at AA, and arranged by Credit Suisse and ING. 4HEû,IBORûmOORûISûûANDûTHEûDISCOUNTûISû Moody’s rates ADP at Aa3. EXPECTEDûTOûBEû 4HEûTRANSACTIONûINCLUDESûSOFTûCALLû PROTECTIONûOFû In 2012 United Distribution agreed a LEVERAGED LOANS 53MûlRST LIENûLOANûDUEûINû/CTOBERûû LATIN AMERICA ANDûAû53MûSECOND LIENûLOANûDUEûINû!PRILû û4HEûlRST LIENûLOANûPRICEDûATûBPûOVERû UNITED STATES Libor while the second-lien loan priced at SURINAME BP BMC SEEKS US$4.8bn FINANCING S&P lowered the company’s corporate STAATSOLIE NETS US$625m LOAN RATINGûTOû### ûFROMû###ûONû-AYû ûSTATINGû BMC SOFTWAREûISûLININGûUPûAû53 MûCROSS THATûITûVIEWEDûAûRElNANCINGûASûUNCERTAIN û State-owned oil company STAATSOLIE has border loan deal to back its buyout by ANDûAûDEFAULT ûDISTRESSEDûEXCHANGEûORû AGREEDûAû53MûSYNDICATEDûLOAN PRIVATEûEQUITYûlRMû++2ûû#O REDEMPTIONûASûINEVITABLEûWITHINûSIXûMONTHS The loan will be used to repay a "ANKûMEETINGSûAREûSCHEDULEDûFORû-ONDAYû 53MûLOANûPROVIDEûBYûTHEûGOVERNMENTû in London and Tuesday in New York. EDELMAN SEEKS US$2.055bn INûûASûWELLûASûFUNDûTHEûPURCHASEûOFûTHEû Credit Suisse is leading with Goldman Sachs, government’s share in the Newmont mine Jefferies, KKR, Macquarie, Mizuho and Barclays. &INANCIALûPLANNINGûlRMûEDELMAN FINANCIAL is VALUEDûATû53M 4HEûDEBTûCOMPRISESûAû53 MûlRST LIENû INûTHEûMARKETûWITHû53BNûOFûSENIORû The government will use proceeds to TERMûLOAN ûAûõMûlRST LIENûTERMûLOANûANDû SECUREDûCREDITûFACILITIESûBEINGûUSEDûTOû IMPROVEûPUBLICûlNANCES ûREDUCINGûMOREû Aû53MûREVOLVINGûCREDITûFACILITY lNANCEûTHEûCOMPANYSûACQUISITIONûOFû EXPENSIVEûFOREIGNûANDûDOMESTICûDEBTûANDû 4HEûREVOLVINGûCREDITûFACILITYûWILLûMATUREû INDEPENDENTûlNANCIALûADVISORû&INANCIALû eliminating some minor domestic arrears. INûlVEûYEARSûWHILEûTHEûTERMûLOANSûWILLû Engines. h4HEûFOREIGNûCURRENCYûRECEIVEDûFROMû mature in seven years. 4HEûFACILITIESûAREûAû53MûREVOLVINGû Staatsolie will bolster the international 4HEûLOANSûWILLûHAVEûû,IBORûmOORS CREDIT ûAû53BNûlRST LIENû4ERMû,OANû"û RESERVESûOFûTHEûCOUNTRYûWELLûBEYONDûTHEû ++2ûANNOUNCEDûONû-AYûûTHATûITûPLANNEDû ANDûAû53MûSECOND LIENûTERMûLOAN international minimum acceptable levels, TOûBUYû"-#ûFROMûAûGROUPûLEDûBYûPRIVATEû Morgan Stanley LEADSûTHEûlRST LIENûTERMû increasing domestic and international EQUITYûlRMSû"AINû#APITALûANDû'OLDENû'ATEû loan while JP Morgan leads the second-lien CONlDENCE ûANDûREDUCINGûBORROWINGûCOSTSû #APITALû4HEûDEALûISûVALUEDûATû53BN û loan. Barclays, Deutsche Bank and UBS AREûJOINTû and investor risks,” the government said. according to Reuters. arrangers and bookrunners. 4HEûûGOVERNMENTûLOANûPARTû -ARKETINGûSERVICESûPLATFORMûHALO BRANDED 'UIDANCEûONûTHEûSEVEN YEARûlRST LIENûTERMû RElNANCEDûTHEûCOMPANYSûEXISTINGû53Mû SOLUTIONS has launched a US$420m buyout LOANûOPENEDûATûBPûOVERû,IBORûWITHûAûû loan. mOORûANDûAûDISCOUNTûOFûû!ûBPûLEVERAGE US LEVERAGED LOANS 40'û'ROWTHûISûBUYINGûTHEûCOMPANYûFROMû based stepdown is included. BOOKRUNNERS: 1/1/2018 TO DATE !UDAXû0RIVATEû%QUITY The second-lien loan is guided at 700bp over Managing No of Total Share Antares Capital ISûLEADINGûTHEûlNANCINGû ,IBORûWITHûAûûmOORûANDûAûDISCOUNTûOFû bank or group issues US$(m) (%) with SunTrust, Citizens and KKR Financial. 4HEûlRST LIENûLOANûWILLûHAVEûSIXûMONTHSûOFû 1 BAML 325 67,089.23 11.1 4HEûDEALûINCLUDESûAû53MûlRST LIENû SOFTûCALLûPROTECTIONûATûûWHILEûTHEûSECOND 2 JP Morgan 277 62,521.71 10.3 TERMûLOANûDUEûINûûANDûAû53Mû LIENûLOANûHASûHARDûCALLûPROTECTIONûOFû 3 Wells Fargo 219 47,053.96 7.8 DELAYED DRAWûlRST LIENûLOANû)NûADDITION ûTHEû The term loans are being issued on a 4 Barclays 155 34,566.69 5.7 COMPANYûISûLININGûUPûAû53MûSECOND LIENû covenant-lite basis. The revolving credit 5 Credit Suisse 150 33,262.91 5.5 TERMûLOANûDUEûINûûANDûAû53Mû FACILITYûINCLUDESûAûSPRINGINGûLEVERAGEû 6 Goldman Sachs 151 33,199.66 5.5 REVOLVINGûCREDITûFACILITY covenant. 7 Deutsche Bank 152 30,888.22 5.1 'UIDANCEûONûTHEûlRST LIENûDEBTûOPENEDûINû 0RIVATEûEQUITYûlRMû(ELLMANûû&RIEDMAN û 8 Citigroup 132 30,242.30 5.0 THEûBP BPûOVERû,IBORûRANGEûWITHûAû WHICHûOWNSûAûMAJORITYûINTERESTûINû%DELMAN û 9 RBC 126 24,160.55 4.0 DISCOUNTûOFûû4HEûSECOND LIENûLOANûISû ANûINDEPENDENTûlNANCIALûPLANNINGûANDû 10 Morgan Stanley 94 20,144.07 3.3 EXPECTEDûTOûPRICEûATûBPûOVERû,IBORûWITHûAû INVESTMENTûMANAGEMENTûlRM ûSAIDûITûWOULDû Total 1,049 606,726.70 DISCOUNTûOFû COMBINEû%DELMANûANDû&INANCIALû%NGINESû Excluding Project Finance. 4HEûCORPORATEûRATINGûISû"" 4HEûALL CASHûACQUISITIONûISûVALUEDûATûAûTOTALûOFû Source: Thomson Reuters SDC code: P2 Industrial supplies distributor UNITED about US$3.02bn.

International Financing Review June 16 2018 77 2ADIOLOGYûPRACTICEûMANAGEMENTûlRMû ,IBORûRANGEûWITHûAûûmOORûANDûAûDISCOUNTûOFû LITEûLOANûWILLûHAVEûSIXûMONTHSûOFûSOFTûCALLû RADIOLOGY PARTNERS has launched a û4HEûDEALûINCLUDESûAûBPûLEVERAGE protection at 101. 53BNûRElNANCINGûLOAN based stepdown. 4HEûISSUERûANDûTHEûLOANûAREûRATEDû"" Barclays leads with Golub and Deutsche Bank. 4HEûLOANûINCLUDESûSIXûMONTHSûOFûSOFTûCALLû Power generator and energy storage 4HEûDEALûCOMPRISESûAû53MûlRST LIENû protection at 101. The debt will amortize at company INVENERGYûLAUNCHEDûAû53Mû term loan, along with a US$100m delayed-draw ûPERûYEAR ûWHICHûWILLûBEûPAIDûOUTû lRST LIENûTERMûLOANûTHATûWILLûBEûUSEDûTOû lRST LIENûTERMûLOAN ûANDûAû53MûDELAYED quarterly. RElNANCEûDEBT DRAWûlRST LIENûTERMûLOAN ûTHATûISûBEINGû #6#ûHASûAGREEDûTOûACQUIREûRESINSûMAKERû Credit Suisse is leading with Goldman Sachs. PRIVATELYûPLACEDûAû53MûSECOND LIENûTERMû !/#SûHOLDINGûCOMPANYû4HEû!LPHAû#ORPû Guidance on the seven-year term loan LOANûANDûAû53MûREVOLVINGûCREDITûFACILITY 4HEûlRMûSAIDûITûPLANSûTOûPAIRûTHEûCOMPANYû OPENEDûATûBPûOVERû,IBORûWITHûAûûmOORû 'UIDANCEûONûTHEûlRST LIENûDEBTûOPENEDûATû UPûWITHûITSûPORTFOLIOûCOMPANYû!LIANCYS û ANDûAûDISCOUNTûOFûû4HEûLOANûINCLUDESûSIXû BP BPûOVERû,IBORûWITHûAûûmOORûANDû which is based in Switzerland and also MONTHSûOFûSOFTûCALLûPROTECTIONûATû AûDISCOUNTûOFûû4HEûDELAYED DRAWûPORTIONû makes resins. The debt will be governed by a minimum INCLUDESûAûTICKINGûFEEûTHATûWILLûPAYûOUTûû MERIDIANLINKûISûSHOPPINGû53MûlRST DEBTûSERVICEûCOVERAGEûRATIOûOFûûTIMES OFûTHEûMARGINûAFTERûûDAYSûANDûTHEûFULLû LIENûDEBTûlNANCINGûTHATûFUNDSûPRIVATEûEQUITYû 4HEûFACILITYûHASûBEENûRATEDû"A MARGINûAFTERûûDAYS lRMû4HOMAû"RAVOSûACQUISITIONûANDûMERGERû AVEANNA HEALTHCAREûmOATEDûGUIDANCEûONû The second-lien term loan is guided at OFûTHEûSOFTWAREûCOMPANYûWITHûDIVISIONSûOFû 53MûOFûLOANSûBACKINGûTHEûPURCHASEûOFû BPûOVERû,IBORûWITHûAûûmOORûANDûAû #2)&û,ENDINGû3OLUTIONS Premier Healthcare Services. DISCOUNTûOFû Antares Capital ISûARRANGINGûTHEûFUNDINGû Barclays is leading alongside BMO. 4HEûlRST LIENûDEBTûWILLûHAVEûSIXûMONTHSûOFû Golub Capital ISûJOINTûLEADûARRANGER The debt comprises a US$171m SOFTûCALLûPROTECTIONûATûûWHILEûTHEûSECOND 4HEûlNANCINGûCOMPRISESûAû53MûlVE INCREMENTALûlRST LIENûTERMûLOAN ûASûWELLûASûAû lien term loan will have hard call protection YEARûREVOLVINGûCREDITûGUIDEDûATûAûSPREADûOFû 53MûlRST LIENûDELAYED DRAWûTRANCHE OFû BPûOVERû,IBORûWITHûAûûmOORûANDûAû 'UIDANCEûOPENEDûATûBPûOVERû,IBORû Golub Capital arranged a US$270m 53MûSEVEN YEARûCOVENANT LITEûTERMûLOANû WITHûAûûmOORûANDûAûDISCOUNTûOFûû4HEû DELAYED DRAWûTERMûLOANûFORûTHEûlRMûINû GUIDEDûATûAûSPREADûOFûBPûOVERû,IBORûWITHû DELAYED DRAWûLOANûWILLûPAYûAûTICKINGûFEEûOFû &EBRUARY ûWHICHûBROUGHTûTHEûCOMPANYSû AûûmOOR ûOFûTHEûMARGINûFORûTHEûlRSTûûDAYSûANDû CREDITûFACILITYûTOû53BN 4HEûTERMûLOANûISûOFFEREDûATûAûû/)$ûANDû THEûFULLûMARGINûAFTERûTHAT !UTOûSUPPLYûMANUFACTURERûANDûDISTRIBUTORû HASûûSOFTûCALLûPROTECTIONûFORûSIXûMONTHS 4HEûDEBTûINCLUDESûSIXûMONTHSûOFûSOFTûCALLû BBB INDUSTRIESûISûSEEKINGû53MûINûLOANS !û53MûEIGHT YEARûSECOND LIENûTERMû protection at 101. 4HEûCOMPANYûISûOFFERINGûTOûPAYûLENDERSû loan had been privately placed. Bain Capital-backed Aveanna is a BPûOVERû,IBORûFORûAû53MûSEVEN YEARû Thoma Bravo is buying MeridianLink, as paediatric home healthcare company. lRST LIENûTERMûLOANûTHATûISûOFFEREDûATû well as the ACTion, Synergy, and Achieve )TûISûOFFERINGûTOûPAYûLENDERSûBPûOVERû DIVISIONSûOFû#2)&û,ENDINGû3OLUTIONS ûWHICHû NOVOLEX SHOPS US$1.3bn ADD-ON ,IBORûFORûAû53MûEIGHT YEARûSECOND LIENû will be combined into a single organistion, TERMûLOANûTHATûISûOFFEREDûATû named MeridianLink. Paper and plastic packaging company 4HEûlRST LIENûLOANûWILLûHAVEûûSOFTûCALLû NOVOLEXûOUTLINEDûPRICEûGUIDANCEûFORûAû PROTECTIONûFORûSIXûMONTHS ûWHILEûTHEûSECOND BIG ASS TIGHTENS 53BNûINCREMENTALûlRST LIENûTERMûLOANû lien will have 102, 101, and then par SUPPORTINGûITSûPURCHASEûOFûFOODûCONTAINERû protection. &ANûMANUFACTURERûBIG ASS SOLUTIONS is asking maker Waddington Group. The company is also seeking a US$100m LENDERSûTOûLOWERûPRICINGûONûITSû53Mû #ARLYLE BACKEDû.OVOLEXûANNOUNCEDûTHEû asset-based loan. term loan due in May 2024. Credit Suisse is ACQUISITIONûOFû7ADDINGTONûFROMû.EWELLû UBS is arranging the covenant-lite debt. leading. Brands on May 4. 'UIDANCEûOPENEDûINûTHEûBP BPû 0RICINGûISûEXPECTEDûATûBPûOVERû,IBORû MGM SHOPS US$2.5bn LOAN OVERû,IBORûRANGEûWITHûAûûmOORû4HEû WITHûAûZEROûPERCENTû,IBORûmOORûANDû/)$ûOFû COMPANYûPRICEDûTHEûDEBTûATûBPûOVERû -OVIEûANDû46ûPRODUCTIONûSTUDIOûMETRO- Libor in November 2017 due to strong 4HEREûWILLûBEûûSOFTûCALLûPROTECTIONûFORû GOLDWYN-MAYERûISûARRANGINGûAû53BNû DEMANDûAFTERûORIGINALLYûmOATINGûPRICINGûINû SIXûMONTHS CREDITûFACILITYûTOûPAYûDOWNûDEBTûANDûTOûADDû THEûBP BPûRANGE Credit Suisse ISûLEADINGûTHEûlNANCING û CASHûTOûITSûBALANCEûSHEETûFORûSHAREûBUYBACKS 4HEûNEWûPRICEûWILLûREFRESHûSOFTûCALLû which will be structured as a seven-year JP Morgan is leading the deal, which PROTECTIONûOFûûFORûSIXûMONTHS term loan. JP Morgan, Deutsche Bank, Jefferies, COMPRISESûAû53BNûASSET BASEDûREVOLVINGû 4HEûCOMPANYûANDûTHEûDEBTûAREûRATEDû"" Goldman Sachs, Citigroup and Morgan Stanley CREDITûFACILITY ûAû53MûSEVEN YEARûlRST Logistics company SAVAGE ENTERPRISES, AREûJOINTûARRANGERS LIENûTERMûLOANûANDûAû53MûEIGHT YEARû which specialises in rail, truck and marine .OVOLEXûCUTûPRICINGûONûITSû53BNûTERMû second-lien term loan. transportation, logistics and materials loan due in December 2023 to 300bp over The company plans to pay down its HANDLING ûCIRCULATEDûGUIDANCEûONûAû53BNû ,IBORûFROMûBPûOVERû,IBORûINû!UGUSTû 53Mû4ERMû,OANû!ûANDûAûPORTIONûOFûITSû LOANûBACKINGûTHEûACQUISITIONûOFûAGRIBUSINESSû Corporate ratings are B2 with a negative REVOLVINGûCREDITûFACILITY Bartlett. OUTLOOKûANDû"ûWITHûAûSTABLEûOUTLOOKû&ACILITYû Resins specialist AOC/ALIANCYSûmOATEDû Morgan Stanley leads with Wells Fargo, PNC RATINGSûAREû"" GUIDANCEûONûAû53MûTERMûLOANûBACKINGû Capital Markets and Citigroup. 3EMICONDUCTORûFOUNDRYûGLOBALFOUNDRIES is the company’s purchase by private equity The deal comprises a US$400m asset- in the market with a US$2.1bn seven-year lRMû#6#û#APITALû0ARTNERS BASEDûREVOLVINGûCREDITûFACILITYûANDûAû term loan led by JP Morgan. Citigroup leads with Barclays, Deutsche Bank, US$1.1bn seven-year term loan B. 4HEûLOANûHASûPRICEûGUIDANCEûOFûBP Rabobank and Jefferies. Guidance on the term loan opened in the BPûOVERû,IBORûWITHûAûûmOORû4HEûLOANû Guidance on the covenant-lite seven-year BP BPûOVERû,IBORûRANGEûWITHûAûû WILLûBEûSOLDûATûûCENTSûONûTHEûDOLLARûWITHû TERMûLOANûOPENEDûINûTHEûBP BPûOVERû mOORûANDûAûDISCOUNTûOFûû4HEûCOVENANT ûSOFTûCALLûPROTECTIONûFORûSIXûMONTHS

78 International Financing Review June 16 2018 LOANS LEVERAGED LOANS

!LONGûWITHûAû53MûREVOLVINGûLINEûOFû credit, the term loan will be used to RElNANCEûEXISTINGûDEBTûANDûFORûGENERALû Market slow to adapt to corporate purposes. #OMMERCIALûREALûESTATEûlRMûISTAR is MARKETINGûAû53MûTERMûLOAN electronic trading platforms 4HEûlVE YEARûLOANûHASûPRICEûGUIDANCEûOFû BP BPûPLUSû,IBOR ûWITHûAûûmOORû4HEû US Most trades still done over the phone LOANûWILLûBEûSOLDûATûûCENTSûONûTHEû DOLLARûANDûHAVEûûSOFTûCALLûPROTECTIONûFORû Electronic loan trading volume is rising in the COTTON ANNIVERSARY SIXûMONTHS US leveraged loan market, but these trades still BAML’s Instinct Loans, which started trading )TûWILLûRElNANCEûANûEXISTINGû53Mû make up just a fraction of overall activity as many in June 2016, promised to deliver liquidity to term loan that matures in 2021 and repay participants have yet to embrace the technology. the US leveraged loan market by offering two 53MûOFûûSENIORûUNSECUREDûNOTESûTHATû About US$5bn of loan trades have been daily, thirty-minute trading sessions that allow MATUREûINû completed in the last 12 months on Bank of multiple participants to bid on a specified JP Morgan ISûARRANGINGûTHEûlNANCING America Merrill Lynch’s Instinct Loans platform, number of loans. about even with the prior year, which was While almost US$5bn of purely electronic UFINET MARKETS US$525m TL introduced two years ago. trades was completed on Instinct in its second MarketAxess, a multi-dealer system, said year, about another US$2bn traded as voice )NDEPENDENTûlBREûOPERATORûUFINET trade volume in the first quarter jumped more follow-ups to inquiry initiating from the platform. INTERNATIONAL is in the market with a than 123% year-over-year, but activity was still During that period, 276 different loans were bid 53MûTERMûLOANûTOûBACKûITSûPURCHASEûBYû just US$643m for loans compared with US$47bn or offered during the sessions. PRIVATEûEQUITYûlRMû#INVEN for high-yield bonds. The bank said 15 clients executed 20% or Credit Suisse is leading with UBS, Natixis, Electronic trading across investments more of their total yearly trading volume through Scotiabank and Santander. increased as banks pulled back from making Instinct. The seven-year term loan is guided at markets due to regulatory pressure, and new BAML added new features last year, including BPûOVERû,IBORûWITHûAûûmOORûANDûAû platforms offered liquidity by facilitating multiple a spreadsheet upload tool, which allows clients to DISCOUNTûOFû offers. While other asset classes have started to enter an Excel file into Instinct with names they want 4HEûDEALûINCLUDESûSIXûMONTHSûOFûSOFTûCALLû use electronic systems, most loan trades are still to buy or sell, along with the price they would like to protection. completed over the phone, although lenders are trade at. If the price is matched or bettered, the trade INFINITE ELECTRONICS ûAûSUPPLIERûOFûRADIOû positive about their future use. will be executed, which offers an alternative to a FREQUENCY ûlBRE OPTICûANDûMICROWAVEû “If you look at loan trading, and all credit traditional OWIC or BWIC, said Naboicheck. COMPONENTS ûISûMARKETINGû53MûINûlRST and fixed-income trading, electronic trading The bank also now offers commission-free LIENûCREDITûFACILITIESûINûCONJUNCTIONûWITHûAû is a huge focus for clients, and more and more trading for clients that put in US$25m of bids or dividend recapitalisation. clients are looking at electronic [platforms],” said offers in a session, he said. Antares Capital leads the deal with Golub Alex Naboicheck, head of US par loan trading at “Everything done for Instinct has been to Capital and Ares Management ASûJOINTûLEADû BAML. “The [Instinct Loans] system continues to increase liquidity, and allowing and encouraging arrangers. be successful and client adaption has continued.” clients to put more bid and offers [in the system] 4HEûlRST LIENûFACILITIESûINCLUDEûAû53Mû More than US$714bn of loans were traded in helps accomplish that,” Naboicheck said. lVE YEARûREVOLVERûANDûAû53MûTERMû 2017, up almost 14% from 2016, according to IHS MarketAxess’ electronic loan trading platform loan. The revolver is guided at 400bp Markit, which includes transactions entered into was launched in the second half of 2016, and OVERû,IBORûWITHûAûûmOOR ûWHILEûTHEûTERMû before new-issue loans were completed, but only allows investors to request loan prices from a loan is guided at the same spread with a a small fraction were completed electronically. variety of firms. ûmOOR Platforms can create more liquidity and There are now 13 dealers using the loan Lender commitments to the revolver and streamline trading, but some participants say system including Credit Suisse and Deutsche THEûROUGHLYû53MûINûEXISTINGûTERMûDEBTû their firms do not do enough volume to warrant Bank, and about 40 active clients, according to WILLûRECEIVEûAûBPûAMENDMENTûFEEû4HEû using an electronic system, or are afraid of Sandy White, the high-yield and leveraged loan APPROXIMATELYû53MûINûNEW MONEYû trading away from arrangers who can dictate product manager at MarketAxess. TERMûLOANûCOMMITMENTSûAREûOFFEREDûATûAû future new-issue allocations. Kristen Haunss ûORIGINALûISSUEûDISCOUNT 4HEûFACILITIESûWILLûBEûGOVERNEDûBYûAû MAXIMUMûTOTALûNETûLEVERAGEûCOVENANT GPS is a Burger King and Popeyes PROûFORMAûTRANCHEûWILLûHAVEûûSOFTûCALLû 4HEûTERMûLOANûHASûûSOFTûCALLûPROTECTIONû FRANCHISEE PROTECTIONûFORûSIXûMONTHS FORûSIXûMONTHS Marketing company VESTCOM INTERNATIONAL The company is also privately placing )NûADDITIONûTOûTHEûlRST LIENûFACILITIES ûAû HASûSETûGUIDANCEûONûANûAPPROXIMATELYû US$34m in incremental second-lien term US$170m second-lien term loan has been 53MûTERMûLOANûTHATûRElNANCESû DEBT ûBRINGINGûTHEûTOTALûSIZEûOFûTHATûLOANûTOû privately placed. 53MûINûEXISTINGûDEBTûANDûADDSû53Mû 53Mû0RICINGûACROSSûTHEûENTIREûTRANCHEû )NlNITEû%LECTRONICSûWASûACQUIREDûBYû INûINCREMENTALûFUNDS ISûEXPECTEDûTOûBEûBPûOVERû,IBOR û 'ENSTARû#APITALûINû-AYû Antares Capital leads the transaction. DECREASEDûFROMûBPûONûTHEûEXISTINGû GPS HOSPITALITY will hold a bank meeting 0RICINGûISûGUIDEDûATûBPûOVERû,IBORûWITHû second-lien debt. ONû-ONDAYûTOûLAUNCHûAû53Mû AûûmOORûANDûAûSTEPDOWNûTOûBPûWHENû 0ROCEEDSûFROMûTHEûINCREMENTALûlRSTûANDû RElNANCINGûCREDITûFACILITYûVIAûUBS. TOTALûNETûLEVERAGEûISûLESSûTHANûORûEQUALûTOûû SECOND LIENûDEBTûFUNDûAûDISTRIBUTIONûTOû 4HEûDEALûCOMPRISESûAû53MûREVOLVERû times. shareholders. ANDûAû53MûSEVEN YEARûlRST LIENûTERMû 4HEûNEWûMONEYûISûOFFEREDûATûAûû/)$ û 6ESTCOMûISûBACKEDûBYûPRIVATEûEQUITYûlRMû loan. WHILEûTHEûEXISTINGûPORTIONûCOMESûATûPARû4HEû Charlesbank Capital Partners.

International Financing Review June 16 2018 79 POWERSCHOOL SEALS FINANCING HIGHûOFûABOUTûûTIMESûATûTHEûENDûOFûûTOû The Term Loan A debt is governed by total UNDERûûTIMESûINû-ARCHû û-OODYSû leverage and interest coverage covenants. 6ISTAû%QUITYû0ARTNERS BACKEDûEDUCATIONALû said. The Term Loan B debt is covenant-lite. technology company POWERSCHOOLûlNALISEDû “The upgrade and positive outlook also 6ANTIVûISûRATEDû"A"" û4HEûLOANSûAREû PRICINGûONûTHEûTIGHTûENDûOFûGUIDANCEûFORûAû FACTORSûINûTHEûEXITûOFûITSûREMAININGûlNANCIALû RATEDû"A"""n 53MûlRST LIENûTERMûLOANûSUPPORTINGûTHEû sponsor ownership and management’s Web hosting services company ENDURANCE company’s merger with PeopleAdmin, PUBLICLYûSTATEDûLEVERAGEûTARGETûOFûABOUTûû INTERNATIONAL increased the spread on the ANOTHERûTECHNOLOGYûlRMûINûTHEûlNANCIALû TIMESûANDûITSûVERYûGOODûLIQUIDITY vûSAIDû&AHY REPRICINGûOFûITSû53BNûTERMûLOANûDUEûINû SPONSORSûPORTFOLIO Graphite electrode maker GRAFTECH &EBRUARYû 4HEûlNANCINGûALSOûINCLUDESûAû53Mû INTERNATIONALûINCREASEDûTHEûSIZEûOFûITSû The Credit Suisse-led deal was priced at eight-year second-lien term loan and a INCREMENTALûLOANûTOû53MûFROMû BPûOVERû,IBORûWITHûAûûmOORûAFTERû 53MûREVOLVINGûCREDITûFACILITY 53M INITIALLYûCIRCULATINGûATûBPû%XISTINGû Barclays LEDûTHEûlRST LIENûPORTIONûWITHû The additional proceeds will allow the pricing was 400bp. Credit Suisse leading the second-lien tranche. COMPANYûTOûRElNANCEûITSûENTIREûUNSECUREDû 3OFTûCALLûPROTECTIONûOFûûWILLûBEû Macquarie, Ares, Golub and Jefferies are PROMISSORYûNOTEûINSTEADûOFûJUSTûAûPORTIONûOFûIT REFRESHEDûFORûSIXûMONTHS additional bookrunners. JP Morgan led the transaction, which is %NDURANCEûEXTENDEDûTHEûMATURITYûOFûITSû 4HEûSEVEN YEARûlRST LIENûTERMûLOANûPRICEDû FUNGIBLEûWITHûTHEûCOMPANYSûEXISTINGûLOANûDUEû loan to the current date in June 2017. The ATûBPûOVERû,IBORûWITHûAûûmOORûANDûAû INû&EBRUARYûûANDûPRICEDûATûBPûOVERû DEALûINCLUDESûAûMAXIMUMûSENIORûSECUREDûNETû DISCOUNTûOFûû4HEûLOANûINCLUDESûAû ,IBORûWITHûAûûmOORûANDûAûDISCOUNTûOFû leverage covenant. STEPDOWNûTOûBPûIFûlRST LIENûNETûLEVERAGEû Guidance originally went out with a The company provides cloud-based DROPSûTOûûTIMESû'UIDANCEûCIRCULATEDûATû DISCOUNTûINûTHEû ûRANGE PLATFORMûSERVICESûTOûSMALLûANDûMEDIUM BP BPûWITHûAûûmOORûANDûAûDISCOUNTû The company lined up the loan in sized businesses. OFû &EBRUARYûTOûBACKûAûDIVIDENDûRECAPITALISATIONû 4HEûCORPORATEûRATINGûISû"" ûWHILEûTHEû The second-lien term loan was priced at 4HEûCOMPANYûISûSPONSOREDûBYû"ROOKlELDû LOANûISûRATEDû"" BPûOVERû,IBORûWITHûAûûmOOR ûVERSUSû Asset Management. Blood glucose monitoring systems GUIDANCEûINûTHEûBP BPûOVERû,IBORû 4HEûDEALûWILLûREFRESHûSOFTûCALLûPROTECTIONûOFû marketer LIFESCANûINCREASEDûTHEûSIZEûOFûAû RANGEûWITHûAûûmOORû)TûWASûISSUEDûATû ûFORûONEûYEARû#ALLûPROTECTIONûWASû lRST LIENûLOANûANDûDECREASEDûTHEûSIZEûOFûAû PowerSchool and PeopleAdmin are both SCHEDULEDûTOûRUNûOFFûINû&EBRUARYû SECONDûLIENûASûITûlNALISEDûTERMSûFORû SPONSOREDûBYû6ISTAû%QUITYû/NEXû#ORP û 4HEûISSUERûANDûTHEûDEBTûAREûRATEDû"" 53BNûOFûDEBTûBACKINGûITSû53BNû ANOTHERûPRIVATEûEQUITYûlRM ûISûINVESTINGûINû acquisition by Platinum Equity. the combined company and will be a partial VANTIV ALTERS STRUCTURE (OLDERSûOFûTHEûSIX YEARû53BNû owner. lRST LIENûTERMûLOAN ûINCREASEDûFROMû US FOODSûHASûREPRICEDûITSû53BNûTERMû Payment processing company VANTIV has 53BN ûWILLûBEûPAIDûBPûOVERû,IBORû LOANûTOûBPûOVERû,IBORûWITHûAûûmOOR ûATû ALTEREDûTHEûSTRUCTUREûOFûAû53BNûREPRICINGû WITHûAûûmOOR THEûTIGHTûENDûOFûGUIDANCEûOFûBP BPû deal. 4HEûCOMPANYûWILLûPAYûBPûOVERû,IBORû WITHûAûûmOOR Morgan Stanley led with Credit Suisse and WITHûAûûmOORûFORûTHEûNOWûSMALLER ûSEVEN It was issued at par. NatWest. YEARû53MûSECOND LIENûTERMûLOAN û !ûBPûLEVERAGEDûBASEDûSTEP DOWNûWHENû 4HEûCOMPANYûSHIFTEDû53MûTOûTHEû previously US$300m. consolidated secured leverage is less than or 4ERMû,OANû!ûTRANCHEûANDûDECREASEDûTHEû 4HEûlRST LIENûWASûISSUEDûWITHûAûû/)$ûANDû EQUALûTOûûTIMESûWASûREMOVED Term Loan B3 and the Term Loan B4 each by THEûSECOND LIENûWASûISSUEDûATû The loan is due in June 2023. The 53M 4HEûCOMPANYûALSOûADDEDûAûTICKINGûFEEûTOû TRANSACTIONûREFRESHESûSOFTûCALLûPROTECTIONûOFû 4HEûlNALûSTRUCTUREûINCLUDESûAû53BNû THEûlNANCING ûFORûSIXûMONTHS 4ERMû,OANû! ûASûOPPOSEDûTOû53BNû4HEû 4HEREûWILLûBEûNOûFEEûPAIDûFORûDAYSûn û Citigroup led with KKR, Deutsche Bank, BMO, 4ERMû,OANû"ûWILLûBEû53MûVERSUSû THENûINûDAYSûnûINVESTORSûWILLûRECEIVEûTHEû Goldman Sachs, ING, JP Morgan, Morgan Stanley, 53MûANDûTHEû4ERMû,OANû"ûWILLûBEû FULLûSPREADû3TARTINGûONûDAYû ûINVESTORSûWILLû Natixis, Rabobank, Wells Fargo and Bank of 53BNûINSTEADûOFû53BN BEûPAIDûTHEûFULLûSPREADûPLUSûAû,IBORûmOOR û America Merrill Lynch. !ûSTERLING BASEDû53M EQUIVALENTû WHICHûWASûNOTûSPECIlEDûINûTHEûLENDERûNOTE The company cut the rate on the loan to 4ERMû,OANû!ûANDûAû53BNûREVOLVINGû 4HEûlRST LIENûLOANûCARRIESûûSOFTûCALLû BPûOVERû,IBORûFROMûBPûINû.OVEMBERû CREDITûFACILITYûROUNDûOUTûTHEûTRANSACTION PROTECTIONûFORûûMONTHSûANDûTHEûSECOND ûAFTERûLOWERINGûPRICINGûONûTHEûLOANûTOû 4HEû4ERMû,OANû!ûANDû4ERMû,OANû!û LIENûCANNOTûBEûCALLEDûFORûTHEûlRSTûYEAR û BPûFROMûBPûINû&EBRUARYû mature in January 2023. The Term Loan B3 FOLLOWEDûBYûûANDûûHARDûCALLû Moody’s on June 11 upgraded the ratings MATURESûINû/CTOBERûûANDûTHEû4ERMû,OANû protection. FORûTHEûCORPORATEûANDûTHEûTERMûLOAN ûBOTHûTOû B4 in August 2024. Bank of America Merrill Lynch, Deutsche Bank, "AûFROMû" The interest rate on the Term Loan A debt Goldman Sachs, Jefferies, Credit Suisse, Barclays “The ratings upgrade and positive outlook ISûTIEDûTOûAûGRID ûOPENINGûATûBPûOVERûTHEû and RBC ARRANGEDûTHEûlNANCING REmECTSû53&SûSTEADYûIMPROVEMENTûINû respective benchmarks. The debt amortises operating earnings and credit metrics and BYûûINûEACHûOFûTHEûlRSTûTHREEûYEARSû UBER WRAPS REPRICING OURûVIEWûTHATûOPERATINGûPERFORMANCEûWILLû FOLLOWEDûBYûûDURINGûTHEûFOURTHûYEARûANDû continue to strengthen as management ûDURINGûTHEûlFTHûYEAR Ride hailing company UBER TECHNOLOGIES FOCUSESûONûDRIVINGûSALESûANDûMANAGINGû The Term Loan B debt was also priced at lNALISEDûTERMSûATûTHEûTIGHTûENDûOFûGUIDANCEû COSTS vûSAIDû"ILLû&AHY û-OODYSûSENIORûCREDITû BPûOVERû,IBORûWITHûAûûmOORû4HEûLOANSû ONûTHEûREPRICINGûOFûITSû53BNûTERMûLOANû OFlCER INCLUDEûSIXûMONTHSûOFûSOFTûCALLûPROTECTIONûATû due in July 2023. 4HEûCOMBINATIONûOFûMATERIALûDEBTû ûANDûWILLûAMORTISEûBYûûPERûYEAR 4HEûCOMPANYûCUTûTHEûRATEûTOûBPûOVERû reduction and improved operating earnings 4HEûEXISTINGû4ERMû,OANû!ûANDû4ERMû,OANû ,IBORûWITHûAûûmOORûAFTERûCIRCULATINGû LEDûTOûAûSTEADYûDECLINEûINûLEVERAGEûFROMûAû B debt were priced at 200bp. GUIDANCEûATûBP BPûRANGEû4HEûLOANû

80 International Financing Review June 16 2018 LOANS LEVERAGED LOANS

initially priced at 400bp over Libor with a 1% It sold at par, from 99.75 initially, with a lien tranche is callable at 102 until February floor in July 2016. 12.5bp consent fee. 2019 and then at 101 until February 2020. The transaction was issued at par. Penn also has a US$575.7m Term Loan B, TKC HOLDINGS has wrapped a repricing of its Morgan Stanley led with Bank of America which pays 275bp over Libor. US$1.28bn first-lien term loan subject to a Merrill Lynch, Barclays, Citigroup, Deutsche Bank, Some terms on both the existing facilities grid. Goldman Sachs, HSBC, JP Morgan, Royal Bank of will also be amended. The company cut pricing on the loan to Canada and SunTrust. JP Morgan and Citizens Bank were 375bp over Libor with a 1% floor, based on The new pricing refreshed soft call bookrunners. ratings no worse than B3/B- (stable) and protection of 101 for six months. The debt leverage no higher than 6.5 times. If those amortises at 1% per year. HIRERIGHT OUT WITH MERGER DEAL conditions are not met, pricing will be Federal regulators criticised the original 425bp over Libor with a 1% floor, which was loan after it was issued for failing to meet Background check provider HIRERIGHT has the spread before undertaking the repricing. the leveraged lending guidance offered price guidance on US$1.05bn of debt The loan sold at par. implemented in 2013. to back its merger with General Information The Jefferies-led transaction resets 101 soft This led Uber to directly place in March a Services. call protection for six months, but leaves the US$1.5bn term loan with investors, pricing The company is offering to pay 350bp- existing maturity unchanged at February 1 the deal at 400bp over Libor with a 1% floor. 375bp over Libor for a US$835m first-lien 2023. Toy maker MELISSA & DOUG repriced its term loan with a 0% floor on the benchmark. Corporate family ratings are B3/B. First- US$260m first-lien term loan to 350bp over It is offering to pay 725bp over Libor for a lien facility ratings are B2/B. Libor with a 1% floor from 375bp with 1% US$215m second-lien term loan that also TKC Holdings provides commissary, food floor. has a 0% floor. service and related technology products to Pricing was guided in the 325-350bp over The first-lien will be sold at 99.5 cents on prisons. Libor range, the dollar while the second-lien will be sold The Credit Suisse-led covenant-lite loan, at 99 cents. SOLENIS INCREASES PRICING due in June 2024, was issued at par. The first-lien will have 101 soft call The transaction resets the soft call protection for six months and the second Water treatment company SOLENIS protection at 101 for six months. lien will have 102, 101 hard call protection. INTERNATIONAL increased pricing on its Payment services company EVO PAYMENTS Bank of America Merrill Lynch is the lead refinancing loan, which was scheduled to INTERNATIONAL repriced its US$659.6m term arranger on the first-lien andCredit Suisse is close on Friday. loan to 325bp over Libor with a 0% floor after the lead on the second-lien. Citizens is also an The company is refinancing its existing guidance initially circulated at 275bp-300bp. arranger. debt as it merges with BASF’s paper and The deal, issued at par, includes a 25bp Proceeds from the two loans, along with water chemicals business. stepdown if the company achieves B1/B+ an equity contribution from Stone Point and The company upped pricing to 400bp over corporate ratings. General Atlantic and cash on hand, will be Libor for a US$700m first-lien term loan The Citigroup-led deal includes soft call used to back the combination of HireRight from original talk of 350bp. It will now pay protection of 101 for six months. and GIS, which also provides background 425bp over Euribor for a €475m term loan In December 2017, EVO dropped pricing screenings. from original guidance of 350bp. on the loan to 400bp over Libor from 500bp The two companies announced the It will pay investors 850bp over Libor for a over Libor. merger in May, saying the combined firm US$400m second-lien term loan, up from Building products manufacturer CPG will serve more than 200 countries. 750bp. INTERNATIONAL wrapped a US$225m ACCESS CIG, an information management The interest rate on all facilities will incremental senior secured first-lien term services provider, revised the first- and increase by 25bp if the merger with BASF loan that funds an acquisition. second-lien issue prices for US$105m in Paper & Water does not close and first-lien Jefferies was lead left, joined by Barclays. incremental term debt that funds an net leverage/total net leverage is 4.75 Proceeds from the add-on, which is acquisition. times/5.75 times, the source said. If the fungible with the company’s existing term Jefferies was sole lead on the transaction, merger does not close and first-lien net loan due May 5, 2024, will be used to fund split between an US$85m incremental first- leverage/total net leverage is greater than 5 the company’s acquisition of Versatex. lien term loan due February 2025 and a times/6 times, then the rate increases by The incremental loan priced in line with US$20m incremental second-lien term loan 50bp. the existing term loan at 375bp over Libor due February 2026. A 0% floor on the benchmark for the with a 1% floor. It was issued at a 99.75 OID. The first-lien portion sold at par, US dollar-denominated first- and The transaction also reset 101 soft call compared with the 99.75 discount proposed second-lien loans remained at 0%, while a protection for six months. at launch. The second-lien tranche sold at a floor on the euro-denominated loan The new money brings the total size of discount of 99.75, narrowed from 99.5, remained at 0.5%. CPG’s first-lien term loan to approximately originally. The first-lien will be sold at 99-99.5 cents US$822m. Pricing on the new money is in line on the dollar from original guidance of 99.5, Corporate family ratings are B3/B. First- with the existing term loans at 375bp over and the second-lien will be sold at 97 cents lien facility ratings are B2/B with a 4 Libor with a 0% floor for the first-lien and from 99. recovery rating. 775bp over Libor with a 0% floor for the The first-lien has 101 soft call protection Fasteners maker PENN ENGINEERING has second-lien. Both tranches are fungible with until the earlier of either 12 months from allocated its €140m Term Loan C add-on, the company’s existing term debt, the refinancing date or the joint venture which funds a planned share buyback. respectively, and the maturity dates are closes, from original talk of 101 soft call The loan is incremental to Penn’s unchanged. protection for six months. €92.25m covenant-lite Term Loan C, which The first-lien portion has 101 soft call The second-lien loan has non-call 1 until pays 250bp over Euribor with a 1% floor. protection until August, while the second- the joint venture closes, and then after the

International Financing Review June 16 2018 81

8 Loans 2238 p67-84.indd 81 15/06/2018 19:21:15 close 103, then 102 hard call in year two and Pricing on the covenant-lite seven-year Deutsche Bank, HSBC and UniCredit are 101 hard call in year three. term loan is now 475bp over Libor with a bookrunners. Bank of America Merrill Lynch is the lead 25bp stepdown when net secured leverage B1/B rated Cheplapharm focuses left arranger on the second-lien loan drops to four times. The discount is at 99.5 primarily on acquiring intellectual property and Citigroup is the lead on the first-lien. while the Libor floor is at 0%. rights from pharmaceutical companies for The other bookrunners include Credit Guidance circulated initially at 450bp- products whose patents have expired. Suisse, Deutsche Bank, Natixis, RBC, Macquarie 475bp with a 0% floor and a discount of 99. The deal is set to bring leverage at the and ING. The loan will have six months of soft call business to around 4.2 times Moody’s Pharmaceuticals company ALVOGEN PHARMA protection at 101. adjusted Ebitda. widened the spread on the repricing of its The borrower and the debt are rated B2/B. Cheplapharm largely outsources its US$1.014bn senior secured Term Loan B due L3 Technologies is selling its Vertex manufacturing and distribution, operating in April 2022. Aerospace business to American Industrial an asset-light model that led to Ebitda in Morgan Stanley led with Jefferies. for US$540m. 2017 of €134m from revenues of just €226m. The company cut pricing to 475bp over Frozen food company NOMAD FOODS Nearly 50% of its revenues come from Libor with a 1% floor versus guidance of tightened the discount on the US$300m obesity drug Xenical, cardiology drug 450bp over Libor with a 1% floor at par. add-on to its term loan due in May 2024 Dilatrend and virology drug Cymevene. The loan was previously priced at 500bp backing its €240m acquisition of UK-based Cheplapharm is owned by German over Libor. frozen food company Aunt Bessie’s. entrepreneur Norbert Braun’s family office The transaction will reset soft call The discount is 99.75 as opposed to the Braun Beteiligungs. protection of 101 for six months. The loan is originally circulated price of 99.5. Braun has made over €800m of scheduled to amortize at 5% annually. Credit Suisse led with Goldman Sachs, pharmaceutical company acquisitions in the The issuer is rated B2/B. The loan is rated Deutsche Bank and UBS. last 25 years. B3/B. The term loan priced at 225bp over Libor Electronic components manufacturer and with a 0% floor, the same as the existing TDC MAKES FINAL CHANGES designer CELESTICA set final terms on a loan. The new debt will have soft call US$350m term loan to repay existing debt. protection of 101 until June 20 along with Danish telecoms group TDC made final The company will pay lenders 200bp over the original loan. changes to its €3.9bn-equivalent buyout Libor, tightened from original talk of 225bp- Nomad arranged its US$660m term loan Term Loan B package prior to allocation. 250bp, with a 0% floor. The seven-year loan alongside a €558m term loan as part of a The Term Loan B now comprises a €2.7bn was issued with a 99.5 OID. repricing and add-on transaction in tranche and a €1.2bn-equivalent dollar- The transaction has 101 soft call December 2017. The euro-denominated denominated tranche. protection for six months. loan priced at 275bp over Euribor with a Earlier, the tranches were changed to BAML and Citigroup arranged the 0% floor. €2.65bn and €1.25bn-equivalent from €2bn financing. The borrower and the facility are rated B1/ and €1.9bn-equivalent at launch. BB-. Both pay 350bp over Euribor/Libor, and ARDENT UPS TERM LOAN TO US$825m Transmission systems manufacturer DAYCO sold at 99.5 with a 0% floor. PRODUCTS has finalised terms on a US$470m Several changes to the deal’s other terms ARDENT HEALTH PARTNERS increased its term term loan. were made earlier in the month, with a loan backing a refinancing effort to The company will pay lenders 425bp over 50bp most favoured nation clause with a 12- US$825m from US$765m. Libor, the low end of initial guidance, with a month sunset provision updated, alongside The company also cut a corresponding 0% floor on the benchmark. The loan was margin ratchets. bond offering to US$475m from US$535m. issued at par. There are now two 25bp margin step Barclays led with Jefferies and Bank of Soft call protection of 101 was reset for six downs on the euro tranche at 3.6 times America Merrill Lynch. A US$225m five-year months. leverage and 3.25 times, and a 25bp step asset-based lending facility rounds out the BAML arranged the financing, which down on the dollar tranche at 3.6 times. facility. reworks an existing loan. Moody’s calculates leverage for TDC to The company set pricing on the term loan reach around 6.1 times Ebitda for 2017 at 450bp over Libor with a 1% floor and a following the buyout, compared with 3.5 discount of 99 after guidance circulated at EUROPE/MIDDLE EAST/ times before the deal. 425bp-450bp with a 1% floor and a discount AFRICA TDC generated Ebitda of DKr8.2bn in the 99-99.5 range. (US$1.26bn) in 2017, from revenues of Ardent is backed by Equity Group CHEPLAPHARM MAKES DEBUT DKr20.3bn. Investments, which bought the company S&P noted that the deal’s terms initially from real estate investment trust Ventas in German pharmaceuticals firmCHEPLAPHARM included a debt incurrence basket of €675m, 2015 for US$475m. has launched a €830m seven-year Term Loan with unchecked ability to issue debt if The borrower is rated B3/B. The loan is B deal, its debut in the leveraged loan leverage was below 4.25 times. rated B1/B. market. Distributions from the credit are also Aviation logistics company VERTEX The Term Loan B comprises €530m and a subject to a 4.25 times leverage test and a AEROSPACE SERVICES set pricing at the wide end €300m delayed draw covenant-lite tranches, limit of €565m over the facilities’ lifetime. of guidance and added a stepdown on a alongside a €250m six-year revolving credit Barclays and BNP Paribas were global US$330m first-lien term loan backing its facility. coordinators, physical bookrunners and buyout by private equity firm American The TLB is guided at 375bp-400bp over bookrunners. Deutsche Bank, HSBC, Macquarie Industrial Partners. Euribor with a 0% floor and a 99.5 OID. Capital and Nordea were physical Morgan Stanley led with Royal Bank of Proceeds will refinance existing debt and bookrunners and bookrunners, while Canada and Deutsche Bank. will back planned acquisitions. Citigroup and JP Morgan were bookrunners.

82 International Financing Review June 16 2018

8 Loans 2238 p67-84.indd 82 15/06/2018 19:21:15 LOANS LEVERAGED LOANS

Danske Bank and Nykredit were additional existing term loans at 375bp over Euribor BLACKSTONE EYES €850m LOAN FOR mandated lead arrangers. and 450bp over Libor, respectively. HISPANIA BUY Macquarie alongside three other Danish SMBC is sole bookrunner on the deal. pension funds, PFA, PKA and ATP are There were reports earlier this year that Blackstone may seek to raise a loan of up to acquiring TDC, which provides broadband EQT was looking to sell the Bath, UK- €850m to back its potential takeover of and mobile services across Denmark and headquartered business, however banking Spanish real estate investment trust HISPANIA, Norway, for US$6.7bn. sources said that EQT is now focused on after Spain’s regulator approved its bid on expanding the business. Tuesday. WEENER SHOPS €335m LOAN IVC was in the market with a £200m The financing will be limited to 40% of the add-on in February with proceeds repaying final acquisition price. Dutch packaging firmWEENER PLASTICS acquisition and capital expenditure facilities The loan will mature in May 2021 but will has launched a €335m Term Loan B drawings. have an option to extend by one year. backing its acquisition of Latin American That deal comprised a £150m incremental The financing is expected to pay 225bp peer Proenfar. term loan and a further £50m bank club over Euribor with a 0% floor. The loan is guided at 350bp-375bp over deal. If Hispania’s share price drops below 35% Euribor with a 0% floor and a 99.5 OID. IVC has some £602m-equivalent of of the initial price from April 21, lenders can Proceeds also refinance existing debt at existing term loans currently, denominated demand total prepayment of the loan. Weener. in euros, sterling and Swedish kronor. Blackstone is making the bid through The deal brings leverage at the EQT- Swedish private equity firm EQT acquired investment vehicle Alzette Investment after owned business to 4.1 times. IVC in January 2017 and in May that year acquiring a 16.6% stake in Hispania for Barclays, BNP Paribas, Commerzbank, Credit merged it with its Northern European €315.4m in April. Agricole, ING, Mizuho, SMBC and Societe portfolio company Evidensia. BNP Paribas is providing a €1.59bn bank Generale are bookrunners. guarantee for the offer. The deal also includes a €75m revolving PULSANT FINALISES £145m LOAN credit facility. MINIMAX TIGHTENS OID 3i bought Weener in mid-2015 in a deal UK IT services company PULSANT has finalised backed by a €210m term loan. a £145m stretch senior loan that will German fire protection systems Weener had revenue of €400m in 2017 refinance its existing debt facilities. manufacturer MINIMAX has tightened pricing and counts Colgate-Palmolive, L’Oreal, The loan is split between a £10m on its €423m-equivalent of incremental Nestle, P&G and Unilever as clients. revolving credit facility and a £135m term loans, scheduling allocations for bullet term loan. SMBC is the sole Monday. UNILABS LAUNCHES €250m ADD-ON bookrunner. The deal, which is being arranged by Private credit firms Bain Capital Credit Deutsche Bank, comprises €213m and Swiss medical diagnostics firmUNILABS has and Partners Group are mandated lead €210m-equivalent add-ons to Minimax’s launched a €250m term loan B add-on, after arrangers on the deal, which was syndicated existing euro and dollar Term Loan Bs announcing a collaboration with US peer to banks and institutional lenders. respectively, bringing them to €514m and LabCorp earlier this month. Stretch senior loans are priced between €503m-equivalent in dollars. The seven-year add-on is guided at traditional bank club deals and unitranche The euro loan was offered at 325bp over 300bp over Euribor, subject to a margin loans and are commonly seen in the private Euribor with a 0% floor, while the dollar ratchet test, the same as the existing debt market. loan was offered at 300bp over Libor with a facility. Oak Hill Capital Partners and Scottish 0.75% floor. The offer price on the euro The covenant-lite deal is offered with a Equity Partners acquired the UK company in tightened to 99.75-par and on the dollar to 98.5 OID. There is a 0% floor and soft call 2014. 99.75. protection for six months. Pulsant provides cloud hosting services Proceeds along with €129m of cash on Credit Suisse and JP Morgan are joint and managed network services to balance sheet back Intermediate Capital physical bookrunners. BNP Paribas and companies in the private and public sector. Group’s buyback of shares owned by the Deutsche Bank are passive bookrunners. Apax-owned Unilabs and LabCorp EUROPEAN LEVERAGED LOANS EMEA SPONSORED LOAN BOOKRUNNERS announced a strategic collaboration on June BOOKRUNNERS: 1/1/2018 TO DATE BY VOLUME: 1/1/2018 TO DATE 1 to offer expanded services. The move will Managing No of Total Share Europe, Middle East, Africa expand access to commercialisation bank or group issues US$(m) (%) Managing No of Total Share channels for companion diagnostics in 1 BNP Paribas 27 6,105.72 8.4 bank or group issues US$(m) (%) North America and Europe, particularly in 2 Credit Agricole 21 5,662.70 7.8 1 SG 13 2,817.73 8.6 oncology. 3 SG 20 4,867.65 6.7 2 BNP Paribas 16 2,658.15 8.1 Unilabs was last in the market in October 4 Deutsche Bank 22 4,598.95 6.3 3 Credit Agricole 14 2,422.01 7.4 for a €190m term loan B add-on, backing its 5 Goldman Sachs 16 4,319.95 5.9 4 Deutsche Bank 12 2,312.27 7.0 acquisition of Portuguese peer Base. 6 Citigroup 14 3,766.01 5.2 5 Goldman Sachs 12 2,306.81 7.0 7 HSBC 17 3,487.09 4.8 6 Natixis 11 2,152.83 6.5 IVC PRESCRIBES £150m ADD-ON 8 Natixis 14 3,239.84 4.4 7 ING 10 1,886.60 5.7 9 ING 15 3,236.71 4.4 8 HSBC 9 1,772.67 5.4 UK veterinary care group IVC has launched a 10 JP Morgan 12 3,143.04 4.3 9 RBC 6 1,306.79 4.0 £150m add-on, as it looks to repay drawings Total 70 72,899.80 10 UniCredit 7 1,156.31 3.5 under its acquisition facility. Excluding project finance. Western Europe only included. Total 44 32,893.47 The euro and sterling denominated Excluding project finance. add-on is set to price in line with IVC’s Source: Thomson Reuters SDC code: P10 Source: Thomson Reuters SDC code: P13

International Financing Review June 16 2018 83

8 Loans 2238 p67-84.indd 83 15/06/2018 19:21:15 Danish Kirkbi family, increasing ICG’s Sapec’s deal includes a 25bp consent fee TI AUTO LAUNCHES REFI ownership in the business from 42% to 90%. for investors that roll over to the new Gross leverage for the deal is set to facility, and six months soft call protection UK auto parts maker TI AUTOMOTIVE has increase from 3.5 times Ebitda to 5.5 times at 101. launched a US$1.39bn-equivalent dollar and by the end of 2018, prompting both Moody’s Some €128.3m of the loan is a new money euro term loan add-on and bond refinancing, and S&P to downgrade Minimax to B1/B+. add-on. scheduling a lender call for Monday. BNP Paribas, Credit Agricole, HSBC and The JP Morgan-led deal comprises SAPEC AGRO WIDENS PRICING Rabobank are bookrunners and mandated US$850m and €316m Term Loan B tranches lead arrangers. maturing in 2025. TI is also lining up a SAPEC AGRO has widened pricing on its Proceeds from the add-on will back US$175m add-on. €318.3m Term Loan B to 475bp. acquisitions and a permitted payment. The dollar tranche is guided at 225bp- The covenant-lite loan was initially Moody’s forecasts Sapec Agro’s leverage 250bp over Libor with a 0% floor, with the guided at 375bp-400bp over Euribor, but is for the deal at 6.5 times pro-forma Ebitda of euro at 250bp-275bp over Euribor with a now set at 475bp with a 0% floor and 99.5 €58m for 2018. 0.75% floor. Both are offered at 99.75. OID. Portugal-headquartered Sapec Agro, Proceeds repay TI’s US$221m of 8.75% “It’s not been as easy at it’s a small deal,” a which manufactures crop protection senior unsecured notes. banker said. “It went down to the wire.” products as well as fertilisers, announced The loans were originally issued in 2015 Some smaller deals have struggled to Ebitda of €46m in February, from revenues for Bain Capital’s US$2.4bn acquisition of attract investor appetite this year as jumbo of €240m. the business. Bain floated some 25% of the deals for Flora Foods and TDC have enabled Bridgepoint carved-out Sapec Agro from company on the LSE last year. investors to deploy decent amounts of cash the Sapec Group in late 2016 at a €456m TI makes brake and fuel lines and tanks already. valuation. for the auto industry.

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84 International Financing Review June 16 2018

8 Loans 2238 p67-84.indd 84 15/06/2018 19:21:18 EQUITIES Australia 86 China 86 India 88 Japan 89 Belgium 89 Denmark 89 Finland 90 France 90 Germany 91 Norway 91 Poland 92 UK 92 United States 93

n FRONT STORY INDIA Four shrimp IPOs put on ice Investors want lower valuations in line with listed peers

Indian shrimp producers, the world’s largest planning to launch their IPOs in the first Equirus is also confident that demand will exporters of farmed shellfish, have been half, have held back so far. pick up in the second half. looking to cash in on a buoyant market for “We are looking at July for a possible launch,” “Exporters are increasingly focusing on equity issues, but a recent fall in prices and a banker working on the Devi Seafoods deal said. other markets such as EU and China to the threat of protectionism have thrown According to a Mumbai-based analyst, Devi maintain the growth momentum. Barring their IPO plans into doubt. Seafoods was looking for a P/E multiple of 20 the near-term headwinds which could play Four seafood companies are currently times for the financial year to March 2020. out over the next two quarters, we remain waiting in the wings to launch IPOs: FALCON “However, with the sector’s valuation falling positive on the mid-to-long term prospects MARINE EXPORTS is planning to raise up to to 15 times, investors want the management of aquaculture in India,” the report said. Rs15bn (US$221m), DEVI SEAFOODS up to to leave more on the table,” he said. The IPOs of Falcon, Sandhya and Nekkanti Rs9bn, SANDHYA MARINE FOODS up to Rs6bn and Another negative development has been will include sizeable secondary share NEKKANTI SEA FOODS up to Rs7.5bn. the US Department of Commerce’s decision components while Devi Seafoods will be Conditions seemed ripe for the listings at to increase the weighted average anti- selling only secondary shares. the end of last year, when strong demand dumping duty on shrimp imports from India “Most of these companies are cash-rich and from North American and East Asian to 2.34% from 0.84%. However, these rates don’t need funds to grow. With the fall in the markets fuelled a 33% increase in Indian are preliminary and will only be finalised in sector valuations, investors feel it’s only fair shrimp exports in the first nine months of September, with a possibility that the duty that the vendors bring the IPO prices down,” 2017, according to figures from the UN’s could end up lower, according to Equirus. an ECM banker away from the deals said. Food and Agriculture Organisation. “We do not foresee any significant impact Edelweiss, ICICI Securities and Nomura are But an extended winter in the US, the on margins of Indian shrimp processing the bookrunners on the Falcon IPO. largest export market for Indian shrimp, has companies as they generally pass on such Sandhya Marines will be selling Rs3bn of reduced demand and caused global prices to cost increases to farmers,” the broker said. primary shares and up to 12.6m secondary fall nearly 10% from their recent peaks. shares in the IPO. Karvy and SBI Capital Prices in India have fallen by close to 30% STRONG OUTLOOK Markets are the bookrunners. so far this year, according to a report from An ECM banker working on the Falcon IPO The Nekkanti Sea Foods IPO comprises broking house Equirus Securities. said the nature of the seafood industry is such Rs2.5bn of primary shares and 8m secondary As a result, shares of listed companies in that both demand and earnings are lumpy. shares. Motilal Oswal is the sole bookrunner. the sector such as Avanti Feeds and Apex “However, the long-term growth outlook is Axis Capital, ICICI Securities and Kotak are Frozen Foods are down a respective 26% and strong as the sector is seen as a major foreign working on the Devi Seafoods issue. 42% in the year to-date. exchange earner and the government’s tax Falcon is yet to file the prospectus for its IPO. Devi Seafoods and Nekkanti, which were policies remain favourable.” S Anuradha

company to get bought so close to pricing, Workday’s US$1.55bn takeover Adaptive’s sale marked the second time in less than 18 months that M&A has torpedoed a potentially hot tech IPO. scotches Adaptive IPO In January last year, Cisco Systems agreed to pay US$3.7bn for AppDynamics, or about Eleventh-hour bid highlights M&A floor on software valuations 10 times forward EV/sales, on the night the latter’s IPO was due to price. Human resources software provider WORKDAY “You have a very strong IPO market and a In 2016, Symantec bought Blue Coat Systems swooped in to acquire ADAPTIVE INSIGHTS for very strong M&A market for a lot of these for US$4.65bn and KKR grabbed Optiv Security US$1.55bn on Monday, snapping up the business technology situations, so many will consider for US$1.9bn, though in those cases the targets planning software company just three days dual-tracks as they think about their were yet to launch their IPOs. before it was poised to price a US$123m IPO. options,” one banker close to the deal said. Salesforce.com’s US$6.5bn acquisition in The acquisition valued Adaptive at a hefty Morgan Stanley, Bank of America Merrill Lynch, March of Mulesoft, an early-2017 software IPO, 13.6 times trailing 12-month sales, or more Jefferies and RBC Capital Markets were slated to showed the benefits of going public first. The than double the valuation it was seeking lead the Adaptive IPO. takeover price equated to 2.6 times the IPO price from the IPO at the midpoint of the terms. Despite missing out on the underwriting and about 12 times 2019 EV/sales. The deal provided another leg-up for fees, Morgan Stanley still made out from the Adaptive’s sale underscores the M&A floor on software valuations just when some deal as Adaptive’s M&A adviser, while Allen & software valuations, a key factor underpinning investors were starting to complain they Co advised Workday. strong IPO pricing and aftermarkets. were getting too high. Though it is rare for an IPO-bound Anthony Hughes

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9 Equities and SE 2238 p85-100.indd 85 15/06/2018 20:27:19 WEEK IN NUMBERS fund its acquisition of Coal and Allied Industries from subsidiaries of Rio Tinto. ASIA-PACIFIC Troubled commodities trader Noble Group 48x and one other minority shareholder tried to n DUTCH PAYMENTS COMPANY ADYEN block the highly dilutive offering, but PRICED ITS IPO AT 48 TIMES 2018 AUSTRALIA failed. ESTIMATED EARNINGS YANCOAL AUSTRALIA EYES HONG PROSPA POSTPONES IPO INDEFINITELY KONG LISTING Australian online lender PROSPA GROUP has €503.90 ASX-listed YANCOAL AUSTRALIA is planning a postponed a A$147m (US$110m) listing n SHARES PEAKED AT €503.90 ON dual primary listing in Hong Kong this year indefinitely following an enquiry from the ADYEN’S DEBUT, UP 110% FROM THE €240 that could raise about US$600m–$800m, Australian Securities and Investments IPO PRICE, BEFORE QUICKLY TRADING according to people familiar with the Commission, according to a company LOWER AND ENDING THE DAY AT €455 situation. spokesperson. Yancoal Australia, which is 65.5% owned ASIC approached the company for by Chinese coal giant Yanzhou Coal Mining, information a day before the scheduled is working with advisers on the transaction, listing on June 6 as part of a wider review of 10.3% which is expected to hit the market in the small business loan terms, the spokesperson n SOK MARKETLER AGREED TO BUY 33.4m fourth quarter of the year. said. Prospa decided to defer its listing to SHARES FROM MAJOR SHAREHOLDER The company hopes to improve its engage with the regulator and other YILDIZ HOLDING AT TL10.50, A 10.3% liquidity in the secondary markets through stakeholders. PREMIUM TO WHERE ITS SHARES WERE a listing in Hong Kong, which is closer to its The lender, which mainly serves SMEs, TRADING AT TL9.52. YILDIZ HAD ONLY Chinese shareholders. Cinda International lends between A$5,000 and A$250,000 for BOUGHT THE SHARES ALONGSIDE SOK’S and China Shandong Investment own up to a year. As of last year, the seven-year- IPO IN MID-MAY AND THE PURCHASE respective 16.7% and 5.7% stakes in Yancoal. old company said it had provided more than PRICE WAS FLAT TO THE IPO PRICE. As of June 14, the 90-day average of A$500m in loans to 12,000 businesses. THE REPURCHASE WAS CANCELLED ON Yancoal’s daily trading volume in Australia The IPO of 40.3m shares at A$3.64 each WEDNESDAY was 0.84m shares, according to Thomson would have given Prospa a market Reuters data. On June 14, turnover in capitalisation of A$576m. Yancoal shares was only A$427,800 Major shareholders including Entree (US$323,290). Capital, Square Peg Capital, and AirTree US$2.1bn In response to an IFR story, Yancoal said in a Venture Capital committed over US$47m to n STUNNING FIRST-QUARTER RESULTS statement on June 15 that the company the IPO, the spokesperson said, adding that FROM RH, FORMERLY RESTORATION “continues to consider several options to help the investors continued to support the HARDWARE, CAUSED THE COMPANY’S improve liquidity of its shares and support the company. SHARE PRICE TO JUMP 30.6% ON continued growth of the company”. Macquarie and UBS were the leads on the TURNOVER OF US$2.1bn VERSUS A The board had not made a decision to deal. US$3.3bn MARKET CAP. THE COMPANY pursue such a transaction at this time, it QUICKLY MOVED TO ISSUE A US$300m said. FIVE-YEAR CONVERTIBLE BOND Yancoal, the Australia unit of Yanzhou CHINA Coal, listed on the Australian Securities Exchange on 2012 after merging with UXIN LAUNCHES NASDAQ IPO Gloucester Coal, according to Yancoal’s 7% website. UXIN, one of China’s biggest used-car n XIAOMI PLANS TO OFFER AT LEAST Last September, Yancoal raised marketplaces, has started bookbuilding for 7% OF ENLARGED CAPITAL THROUGH US$2.35bn from a 23.6-for-1 rights issue to a Nasdaq IPO of up to US$475m. ITS ISSUANCE OF CHINESE DEPOSITARY RECEIPTS. AT LEAST HALF OF THE ASIA-PACIFIC EQUITIES ASIA-PACIFIC EQUITIES (EX-JAPAN) CHINESE SMARTPHONE MAKER’S BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE OFFERING WILL BE THROUGH CDRs IN ITS Managing No of Total Share Managing No of Total Share SHANGHAI AND HONG KONG IPO bank or group issues US$(m) (%) bank or group issues US$(m) (%) 1 Morgan Stanley 43 10,409.52 9.2 1 Morgan Stanley 29 8,609.92 8.7 2 Citigroup 44 8,674.46 7.7 2 Citigroup 40 8,268.48 8.3 3 Goldman Sachs 34 7,713.28 6.8 3 Goldman Sachs 33 7,660.71 7.7 116 years 4 UBS 31 6,130.50 5.4 4 UBS 29 5,889.81 5.9 n THE DELACHAUX FAMILY TEAMED 5 BAML 12 5,565.30 4.9 5 CICC 7 5,346.45 5.4 UP WITH CAISSE DE DEPOT ET 6 CICC 7 5,346.45 4.7 6 BAML 9 4,971.15 5.0 PLACEMENT DU QUEBEC TO BUY CVC 7 Credit Suisse 25 4,293.85 3.8 7 Credit Suisse 24 4,120.72 4.1 OUT OF DELACHAUX GROUP AND 8 JP Morgan 23 4,027.08 3.6 8 Citic 24 3,903.17 3.9 THEREFORE AVOID GOING PUBLIC. 9 Citic 24 3,903.17 3.4 9 JP Morgan 19 3,257.15 3.3 CVC SELLING WAS THE DRIVER OF THE 10 Sumitomo Mitsui Finl 38 2,780.22 2.5 10 China Securities 16 2,759.10 2.8 PLANNED IPO WHICH WOULD HAVE Total 1,127 113,349.48 Total 1,021 99,345.99 ENDED ITS 116 YEARS AS A PRIVATE Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues FAMILY BUSINESS Source: Thomson Reuters SDC code: C4a1 Source: Thomson Reuters SDC code: C4a2

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2016 loss of Rmb128m, according to a regulatory filing. It had 38.9 million Lufax seeks US$2bn amid registered individual users as of December 31 2017.

IPO delay VCREDIT PRICES IPO AT BOTTOM

n CHINA Company opts for private placement ahead of delayed listing Chinese online consumer finance provider VCREDIT HOLDINGS has raised HK$1.37bn from a China’s LUFAX aims to raise up to US$2bn in no sources of income or no specific purposes for Hong Kong IPO after pricing it at the bottom fresh funding, valuing one of the country’s the funds. of the indicative price range. largest online wealth management companies The company sold 68.6m primary shares, at US$40bn, as it opts for private investment CORE OPERATION or 14% of the enlarged capital, at the bottom ahead of a delayed listing, said people familiar Lufax has grown into a broader wealth of the HK$20–$23 range. The final price with the deal. management company but consumer lending represents a 2018 P/E of 19.7. Lufax, set up in 2011 by top insurer Ping An remains a core part of operations. Its loan Cornerstone investors China Foreign Insurance Group Co of China, is working with balance was Rmb157bn (US$24.6bn) at the end Economic & Trade Trust and Infinite advisers to raise equity of at least US$1bn, said of May, according to Online Lending House, a Benefits have agreed to buy shares for a the people. They did not disclose potential Chinese tracker of online financial firms. respective US$20m and US$10m. investors or the timeframe. Increased regulatory attention to consumer Credit Suisse, Goldman Sachs and JP Morgan The firm, formally Shanghai Lujiazui finance has prompted online financial firms to were the joint sponsors, and joint global International Financial Asset Exchange, seeks alter their focus. Lufax peer Ant Financial, valued coordinators and joint bookrunners with to fund growth while its IPO is on hold due to at US$150bn in a recent funding round, has Deutsche Bank. Other joint bookrunners were changing regulation in consumer lending, a core shifted emphasis to technology services. BOC International and Haitong International. business, the people said. Lufax raised US$1.2bn in its last funding round Lufax, which declined to comment, hired five in 2016, valuing the firm at US$18.5bn. JIANGXI BANK LAUNCHES IPO banks to work on an IPO in Hong Kong to raise Some existing shareholders are also looking up to US$5bn in the first half of 2018. to sell Lufax shares – totalling US$30m at a JIANGXI BANK has started bookbuilding for its It postponed the IPO amid uncertainty in valuation above US$30bn – because of the IPO Hong Kong IPO of up to HK$7.8bn consumer lending as authorities formulated delay, said one of the people. (US$993.7m). regulations for the fast-growing sector under a Existing investors include BlackPine Private The city commercial bank is selling broader campaign to curb financial risk, sources said. Equity Partners Fund, CDH Investments and 1.17bn primary shares, for a 20% free-float, Under a proposal circulated in December, Guotai Junan Securities, according to data at an indicative price range of HK$5.94– online micro-lenders will need to be licensed and provider Crunchbase. $6.66 each. will be prohibited from lending to borrowers with Fiona Lau, Julie Zhu The price range represents a 2018 forecast price/book ratio of 0.9–1.0 and a 2019 P/B of 0.84–0.92. The company is selling 38m primary Rmb649m for the first three months of Five cornerstone investors have taken up American depositary shares, or about 12.4% 2018. US$491m of the float. They are Yango of its enlarged share capital, at an indicative Investment (US$178m), Road Shine price range of US$10.50–$12.50 each. HONG KONG’S GOT WISE TALENT Developments (US$115m), Sinolending The range represents a 2020 P/E of 10.8– Fintech (US$100m), Zhonghua Financial 12.9 and a market capitalisation of WISE TALENT INFORMATION TECHNOLOGY, the (US$50m) and FTLife Insurance (US$48m). US$3.4bn–$4.0bn. operator of Chinese online recruitment Books will close on June 19 and pricing is There is an overallotment option of 5.7m services provider Liepin.com, has started slated for the same day. primary ADS. bookbuilding for a Hong Kong IPO of up to CCB International and CLSA are joint sponsors. Uxin had earlier been linked with a target HK$3.12bn (US$398m). The two banks are joint global coordinators of up to US$1bn, and its SEC filing indicated The company is selling 88m primary and joint bookrunners with AMTD. The other an offering size of US$500m. Sources close shares, or 17.8% of the enlarged share capital, bookrunners are CMB International, CEB to the deal said the company was offering a at an indicative price range of HK$28.50– International, Essence International, Haitong smaller number of shares than originally $35.50 each, a 2020 P/E of 17.8–22.2. International, ICBC International and Industrial planned. There is an overallotment option of 13.2m Securities International. None of the existing shareholders are secondary shares from Warburg Pincus and For the nine months ended September 30 selling shares. The online auction house Matrix Partners. 2017, Jiangxi Bank’s net profit surged 124% counts KKR, TPG and Warburg Pincus The deal will be priced on June 21. to Rmb2.59bn (US$409m) from Rmb1.16bn a among its backers. The company will use the proceeds for year earlier. The deal is due to be priced on June 26. research and development, acquisitions, As of September 30 2017, Jiangxi Bank Goldman Sachs, JP Morgan and Morgan sales and marketing initiatives and working had total assets of Rmb369bn. Stanley are leading the transaction with CICC capital. and China Renaissance. JP Morgan and Morgan Stanley are the joint GANFENG GETS IPO ASSENT Uxin posted a net loss of Rmb839m sponsors. They are also joint global (US$131m) for the three months ended coordinators and joint bookrunners with GANFENG LITHIUM has received written March 31 2018, widening from a net loss of Huatai Financial and UBS. approval from the China Securities Rmb511m over the same period last year. Its The company posted a 2017 net profit of Regulatory Commission for a proposed revenues surged 93% year-on-year to Rmb7.6m (US$1.2m), a turnaround from a Hong Kong IPO of about US$1bn.

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9 Equities and SE 2238 p85-100.indd 87 15/06/2018 20:27:19 The Shenzhen-listed company plans to sell CONSTRUCTION HEAVY INDUSTRY on the main board The deal sees 25.2m shares on offer, not more than 20% of its enlarged capital in of the Stock Exchange of Hong Kong. representing 12.6% of the company wholly its Hong Kong float. There is also a greenshoe CRCHI, which makes tunnel boring owned by the Ministry of Railways. option of 15% of the base deal size. machines and railtrack systems, plans to The offer will be open for subscription As of June 14, Ganfeng had a market offer no less than 15% of its enlarged between June 20 and June 22. capitalisation of Rmb44bn (US$6.9bn). company capital in Hong Kong, according to Elara Capital, IDBI Capital, IDFC and SBI Citigroup is sole sponsor for the float.CICC a filing from CRCC. There is also a greenshoe Capital are the bookrunners. and Deutsche Bank are also working on the option of 15% of the base deal. The company earned a net profit of transaction. The proposed listing still needs approval Rs3.5bn in the financial year that ended on Proceeds will be used for mergers and from shareholders and regulators. March 31 2017 compared with Rs2.8bn in acquisitions, output expansion, and research 2016. and development, among other things. TWO CLEARED FOR SHANGHAI LISTINGS OBEROI REALTY HIRES BANKS FOR QIP CR CEMENT BUILDS WAR CHEST Hong Kong-listed CHINA ALUMINUM INTERNATIONAL ENGINEERING (Chalieco) and JIANGSU NEW ENERGY OBEROI REALTY has hired JM Financial and Morgan CHINA RESOURCES CEMENT HOLDINGS has raised DEVELOPMENT have received written approval Stanley to manage a qualified institutional HK$4.19bn (US$533.2m) from a top-up from the China Securities Regulatory placement of up to US$200m, a person with placement. Commission to conduct Shanghai IPOs. knowledge of the transaction said. The company sold 450m shares at the Jiangsu New Energy has started pre- The company recently obtained bottom of an indicative price range of marketing for its IPO of about Rmb1.06bn shareholder approval to sell shares for up to HK$9.30–$9.60 each, a discount of 9.9% to (US$165m) from the sale of not more than Rs20bn (US$296m). The timing of the sale the pre-deal spot price. 167m shares, or about 10% of its enlarged has not been finalised. The deal was almost two times covered capital. Nanjing Securities and Huatai United Oberoi develops residential and with about 60 investors participating. Securities are joint sponsors. commercial projects in Mumbai. There is a 90-day lock-up on the company. Chalieco is expected to raise about It reported a profit after tax of Rs4.6bn for Proceeds will be used to develop prefabricated Rmb1.04bn. According to a draft prospectus the financial year to March 31 2018, up from construction and aggregate businesses, repay filed last year, Chalieco planned to raise up Rs3.8bn in 2017. debts and for general working capital. to Rmb5bn through the sale of up to 1.14bn CICC and Goldman Sachs were joint A-shares, or about 29.99% of its enlarged FINE ORGANIC SETS IPO PRICE RANGE bookrunners. company capital. China Merchants Securities is the sponsor of Additives maker FINE ORGANIC INDUSTRIES has HAIER GETS D-SHARE APPROVAL the IPO and joint bookrunner with Citic set a price range of Rs780–Rs783 per share Securities. for an IPO of up to Rs6bn (US$89m). Around Shanghai-listed QINGDAO HAIER has received Proceeds will be used for research and 7.66m secondary shares, 25% of the written approval from the China Securities development, working capital and mergers company, are being sold. Regulatory Commission to issue D-shares in and acquisitions, as well as debt repayment. All six founders are selling. Frankfurt. The IPO will be open for subscription The home appliances manufacturer plans between June 20 and June 22. to issue not more than 400m D-shares. There HONG KONG Fine Organics makes additives that are is a greenshoe option of 15% of the base size. used in the food, cosmetics and paint The Frankfurt listing could raise around IMPRO BEGINS PRE-MARKETING industries. Rmb8.27bn (US$1.3bn), based on the June 12 The company earned a net profit close of Rmb20.68. IMPRO PRECISION INDUSTRIES has kicked off pre- Rs794.8m in the financial year that ended The deal still needs approval from marketing for a Hong Kong IPO of about March 31 2017 versus Rs769.6m in 2016. German regulators. US$200m, according to people close to the deal. Edelweiss and JM Financial are the D-shares, similar to Hong Kong-listed Hong Kong-headquartered Impro, which bookrunners. H-shares, are new instruments being touted makes machined components for a range of by the China Europe International industrial customers, is expected to start EMAMI CEMENT PLANS Q4 IPO Exchange, a joint-venture trading platform bookbuilding for the proposed float on or that the Shanghai Stock Exchange, China around June 21, with pricing slated for EMAMI CEMENT aims to launch an IPO of up to Financial Futures Exchange and Deutsche about June 29. US$250m in the fourth quarter. There will Boerse created in November 2015. BOC International and Morgan Stanley are be a combination of primary and secondary CEINEX markets itself as a gateway for joint sponsors. shares. Kolkata-based Emami Cement has an Chinese firms looking to access European According to a regulatory filing, the annual installed capacity of 4m tonnes of investors, offering renminbi-denominated company posted a 2017 net profit of cement. products, including stocks, bonds and HK$402m (US$51m) on revenue of HK$3bn. CLSA, Edelweiss, IIFL Holdings and Nomura exchange-traded funds on the Frankfurt are working on the IPO. Stock Exchange’s existing infrastructure and under German regulations. INDIA HINDUJA FINANCE FILES FOR RS10bn IPO

CRCC PLANS SPIN-OFF LISTING RITES SETS IPO PRICE RANGE HINDUJA LEYLAND FINANCE has filed a draft prospectus for an IPO that will raise up to China Railway Construction Corporation has State-owned engineering consultant RITES Rs10bn (US$148m). secured board approval for a proposed spin-off has set the price range for an IPO of up to The company is aiming to launch the deal and separate listing of subsidiary CHINA RAILWAY Rs4.7bn (US$69m) at Rs180–Rs185. by the end of the year.

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Everfin Holdings, Hinduja Ventures and of America Merrill Lynch, JP Morgan, Mizuho and The business is targeting €80m of primary IndusInd International will offer a combined SMBC Nikko were passive bookrunners. proceeds, with secondary of up to €15m and 21.9m secondary shares, while Hinduja will Daiwa and Mitsubishi UFJ Morgan Stanley a 15% upsize option. Proceeds will fund also issue Rs5bn of primary shares. were the joint bookrunners for the Japanese growth ambitions. The vendors are planning a pre-IPO offering. The free-float on the Amsterdam line is placement of Rs2bn and, if successful, the around 5%, with expectations of a free-float primary tranche of the IPO will be reduced of around 30% once listed on Euronext accordingly. TAIWAN Brussels. Just 406 units had changed hands Hinduja Finance is part of the Hinduja by late afternoon on the Amsterdam line on Group and provides loans for the purchase M17 PULLS US IPO the day of launch on Thursday. of commercial vehicles. The schedule is expected to be slightly The company earned revenues of Rs21bn Taiwan-based live-streaming company M17 accelerated compared with a full IPO, for the year to March 31 2018 and net profit ENTERTAINMENT has postponed its IPO on the wrapping up in around three weeks, of Rs2.4bn. New York Stock Exchange after obtaining suggesting pricing around June 29. The company filed for a Rs7bn IPO in 2016 US$35m in private capital. ING and Belfius are joint global but did not go ahead as the federal The company said the new round of coordinators and joint bookrunners with government’s demonetisation policy funding will allow it to remain private and ABN AMRO and Bank Degroof Petercam. affected the business of finance companies. flexible, while continuing to expand its Axis, Citigroup and Yes Securities are the business in Asia. XIOR COMPLETES CASH CALL bookrunners this time around. Citigroup On June 7, the company halted its NYSE was not part of the 2016 syndicate, while debut despite setting the price in the REIT XIOR STUDENT HOUSING wrapped up its ICICI Securities and SBI Capital no longer US$60m deal – and even ringing the €134m rights issue on Friday June 8 with feature on the mandate. opening bell. take-up of 94%. The rump was placed on It had priced 7.5m American depositary Friday at €1.74 per right. shares at US$8 each, below the US$10–$12 ING was sole global coordinator and joint JAPAN marketing range. Citigroup and Deutsche bookrunner with Kempen, Bank Degroof Bank were joint bookrunners on the IPO. Petercam and Belfius/Kepler Cheuvreux. MERCARI DRAWS CROWD WITH RARE The delay was not due to a pricing or TECH IPO demand problem, a banker close to the deal told IFR, instead describing the hold-up as a DENMARK The books for the Tokyo Stock Exchange “settlement issue”. IPO of MERCARI, Japan’s biggest used-goods M17 operates the largest live-streaming FULL EXERCISE FOR NETCOMPANY marketplace, were about 30 times covered, platform for “developed Asia”, which according to a person close to the deal. includes the markets of Taiwan, Japan, Four days of trading was enough for The mobile app developer raised ¥122bn South Korea, Singapore and Hong Kong. NETCOMPANY to push the button on fully (US$1.1bn) through the sale of 40.7m shares exercising a 3m-share 15% greenshoe. At the at the top end of the ¥2,700–¥3,000 range, time shares had closed 32% above the IPO already above the earlier indications of price. ¥2,200–¥2,700. There is an overallotment Shares in the IT services business closed option of 2.8m shares. EUROPE/MIDDLE up 30% at DKr201 on debut versus IPO “It is a fantastic book. It is priced at the EAST/AFRICA pricing of DKr155, pushed up to DKr211 by top [of the range] and has a high conviction Monday’s close, and finished at DKr205 on rate across global mutual funds,” the person Tuesday night, when the ‘shoe was said. BELGIUM exercised. On Friday, the shares closed at The institutional tranche was multiple DKr213, up more than 37%. times covered with long-only and sovereign FASHIONABLE FNG TO LIST IN BRUSSELS Post-greenshoe, the deal size totals wealth funds participating, while the retail DKr3,565m (US$564m) and the free-float tranche was 40 times covered, the person Benelux fashion company FNG has launched rises to 46%. said. what is effectively a Euronext Brussels IPO, Danske Bank, Deutsche Bank and Morgan About 50% of the deal went to long-only through a €95m follow-on in the group’s Stanley were joint global coordinators and investors and the top 25 accounts took 60% Euronext Amsterdam line before listing in joint bookrunners with SEB. of the deal. Belgium. “The grey market is trading up 30% so Post-money, Euronext Brussels will obviously it’s going to be well bid,” the become the market of reference. ESTONIA person said. FNG, which operates a buy-and-build The largest IPO in Japan this year, Mercari strategy, has stores in Belgium and the PORT OF TALLINN UP 20.5% ON DEBUT sold 55% of the deal to international Netherlands, as well as operations in France, investors and 45% to Japanese investors. Spain and Germany. Turnover in 2017 was PORT OF TALLINN debuted up 20.5% at the open Selling shareholders included Mercari coin excess of €482m, with adjusted Ebitda of last Wednesday, with the stock opening at founder and CEO Shintaro Yamada, approximately €45m. €2.05 versus pricing of €1.70 on the €147.4m Development Bank of Japan and venture The group has more than 3,000 Nasdaq Tallinn Stock Exchange IPO, from capital firms. Listing will be on June 19. employees with brands including Fred & guidance of €1.40-€1.80. Daiwa and Morgan Stanley were the joint global Ginger, CKS, Claudia Strater, Miss Etam, The shares swiftly came off a little to around coordinators. The two banks were also active Ginger, Promiss, Baker Bridge, Brantano and €1.94 where it spent much of the day before bookrunners on the international offering. Bank Steps. closing at €1.928, up more than 13%.

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9 Equities and SE 2238 p85-100.indd 89 15/06/2018 20:27:19 Approximately 3m units changed hands Formal coverage was achieved in half an capitalisation is €155m. CEO Alain on debut, representing approximately 3.4% hour, with guidance of €17.55–€17.60 Wilmouth has committed to inject €1m into of the IPO offering. following shortly after. The book closed at the IPO. On Friday, the shares closed at €1.978. 6:30pm in London with pricing at €17.60, a Around 20% of proceeds will go to R&D, Citigroup and Carnegie are joint global 2.76% discount to the €18.10 close. with another 20% on international coordinators and joint bookrunners with The top 10 accounts took 70% of the trade, expansion, and the balance will go towards Erste Group, Swedbank-Kepler Cheuvreux. STJ with UK, US and Nordic accounts opportunistic acquisitions. Advisers and Superia Corporate Finance advised. dominating. The free-float on the base deal is 22.26%- Post-money, Solidium has a 10.7% stake in 29.68% and the market cap on full upsizing Stora Enso, down from 12.3% previously, and exercise of the greenshoe is €155m. FINLAND and subject to a 90-day lock-up. The price range represents an estimated Stora Enso shares opened at €17.90 on 2019 EV/Ebitda of 7.8-8.4 and an EV/sales of CREDIT SUISSE LEFT WITH NESTE STOCK Tuesday and stayed above pricing for much 1.2-1.6. The closest peer is OSS in the US, of the day, but closed at €17.575. which trades at a 2019 EV/Ebitda of 17.16, There was bad news last week for Credit Carnegie and Citigroup were joint but an EV/sales of 1.12. Pricing is generally a Suisse, which failed to fully distribute the bookrunners. discount to other players in the server space Finnish state’s sell-down in oil refiner and such as Advantech, Azitech and Cray in the biofuel company NESTE on Tuesday night. KOJAMO HOLDS ABOVE PRICING ON DEBUT US. There was no covered message for the A 10% retail offer closes on June 20, with sale, which involved 12.8m shares pricing at Real estate business KOJAMO priced its €483m institutional bookbuilding wrapping up on €62.27 each for a €861m deal size. It is Helsinki IPO at €8.50, the bottom of an June 21 at 1pm in Paris. Trading begins on understood that there was an auction on €8.50-€10.00 price range, for a market June 22. Tuesday night in advance of the sale. capitalisation of €2.1bn. Management was in Paris, London and Pricing was a 2.76% discount to the €69.18 Primary proceeds were fixed at €150m, Frankfurt last week and will be in London, close. with selling of €333m coming from Zurich and Paris this week. Neste shares opened at €66.92 on Ilmarinen Mutual Pension Insurance Natixis is sole global coordinator and joint Wednesday and closed at €66.58. Just over Company, Varma Mutual Pension Insurance bookrunner with BNP Paribas and half a million shares trade daily and last Company, The Finnish Industrial Union, Portzamparc. week’s trade represented approximately 18 Trade Union for the Public and Welfare days’ trading. Sectors, Finnish Construction Trade Union, CVC SALE ENDS DELACHAUX IPO The deal was said to be well anticipated, Service Union United PAM, Trade Union with good support from local funds, and PRO and Trade Union of Education in Private equity firm CVC sold its stake in there was scaling back despite not being Finland, and other smaller shareholders. DELACHAUX GROUP to Caisse de depot et fully distributed in order to maintain an The free-float is 22.85%, rising to 26% on placement du Quebec and the Delachaux orderly aftermarket. full exercise of a small 3.5% secondary family for an undisclosed amount on greenshoe. Thursday, effectively ending the rail SOLIDIUM GETS €246m FROM STORA The stock opened strongly at €9.75 but equipment maker’s planned ENSO SALE came off quickly and was trading around €391.9m-€438.3m Euronext Paris IPO. €8.63 on Friday afternoon. The Delachaux family will become the Finnish state body Solidium sold a 1.8% Goldman Sachs, JP Morgan and Nordea were majority shareholder, as it would have done stake in packaging and paper producer joint global coordinators and joint through the IPO. STORA ENSO last Monday night for a €246m bookrunners with OP Corporate Bank. The float was to have been largely return. secondary, with selling of €291.8m-€338.3m The deal was wall-crossed on Monday, coming from CVC. Only €8.2m of a €100m allowing deal to be launched with coverage FRANCE primary raising was to be offered to from indications of interest in excess of 14m institutional investors, with the Delachaux shares offered. 2CRSI COVERED IN FIRST WEEK family putting in up to €56m to secure a 50.1% post-money position and another EMEA EQUITIES High-performance computer server maker €35.8m coming from managers exercising BOOKRUNNERS: 1/1/2018 TO DATE 2CRSI opened books last Monday on a warrants. Managing No of Total Share minimum €38m Euronext Paris IPO with A banker on the float said that there had bank or group issues US$(m) (%) guidance of €7.50-€10 per share. On Friday been no knowledge on the ECM side of a 1 Goldman Sachs 35 8,138.99 10.3 afternoon, investors were informed that the dual-track process and said that it was 2 JP Morgan 28 6,960.51 8.8 base deal was covered, with high order frustrating as there was an allocable deal on 3 Citigroup 30 5,166.89 6.5 conversion from investors met on the the table. 4 UBS 16 4,456.04 5.6 roadshow. Another senior banker on the deal said 5 Morgan Stanley 32 4,434.86 5.6 2CRSi aims to address the explosion in big the IPO would have priced around the 6 Credit Suisse 17 4,060.46 5.1 data, the cloud, blockchain and the internet bottom of the €18.50-€22.50 range, whereas 7 BAML 16 3,791.36 4.8 of things, manufacturing high-end servers the sale was equivalent to mid-range pricing. 8 Deutsche Bank 25 3,483.91 4.4 that use less energy overall, including for A senior banker not involved on 9 Barclays 19 2,797.70 3.5 cooling. Delachaux had said that the deal would be a 10 Berenberg Bank 24 2,392.45 3.0 There is a 15% primary upsizing option, real test of current sentiment. Total 449 79,248.54 taking the deal size to €43.7m, and a 10% “Delachaux is more akin to the assets that Including all domestic and international deals and rights issues primary greenshoe. On the full upsizing and were being sold earlier in the year and in Source: Thomson Reuters SDC code: C4cr exercise of the greenshoe, the market terms of structure [primary proceeds were

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to reduce leverage to 2.75 times], so it would Citigroup and Commerzbank are joint global price range for a deal size of IKr33.9bn have been good to see whether the mood coordinators and joint bookrunners with (US$316m). has changed or whether it has been asset- Bankhaus Lampe. Lazard is advising. There was also a listing in Stockholm specific,” said the senior banker. through depositary receipts priced at Books had been due to close on Thursday. CONSUS TARGETING €300M IN RE-IPO SKr6.11. The Stockholm line opened at BNP Paribas, Citigroup and Deutsche Bank SKr6.50 and had pushed up to SKr6.88 by the were joint global coordinators and joint CONSUS, a residential real estate developer early afternoon. At that point, the Iceland bookrunners with Credit Agricole CIB, HSBC with a focus on Germany’s top nine cities, is line was trading at IKr88.90. and Societe Generale. to re-IPO through a rights issue where the The deal was all-secondary, with selling major shareholder will not participate. largely from Kaupthing. The free-float was Proceeds are primarily funding new 25%, rising to 30.9% on full exercise of a GERMANY acquisitions. 67.875m-share greenshoe. The market The company has a development portfolio capitalisation is IKr135.75bn. HOME24 COMPLETES €150m of 49 projects with a gross development A banker involved said that the book was FRANKFURT FLOAT value of €4.8bn. multiple times covered, with the top 10 Based on Thursday’s €7.34 close on Xetra, accounts taking 50% of the deal and the top The top 10 accounts took about 70% of the deal size would total just under €300m. 25 orders taking 75%. That includes online furniture retailer HOME24’s €150m Major shareholder Aggregate cornerstones Lansdowne Partners and Frankfurt IPO last Thursday. Deutschland, which owns 68.6% of the Milton Asset Management, which were Proceeds were fixed at €150m, with company, will waive subscription rights in committed for US$38m and US$22.5m pricing coming at €23 per share from the rights issue. As a result allocation in the respectively. guidance of €19.5–€24.50. private placement will be subject to Pricing represents a book value of 0.67, The free-float on the base deal is 25%, clawback of up to 30%. slightly below the bottom of the 0.7-0.8 book rising to 28.9% on full exercise of a The CEO Andreas Steyer has committed value expected at the start of pre-marketing 0.98m-share primary greenshoe, which if to invest €2m in the IPO. and a decent discount to the average book exercised in full would take the market A standard IPO schedule mean books value for Nordic banks of 1.0 times. capitalisation up to €597m. opening around July 2 and closing July 13. The banker said that there had been good A banker involved said that there had Deutsche Bank, JP Morgan and UBS are joint US long-only participation, with strong been significant zeroing of orders. bookrunners, with Baader Bank as joint lead support from financial-focused funds and The shares debuted on Friday at €28.50, manager. local pension funds. up nearly 24%, and the stock continued to Arion Bank, Carnegie, Citigroup and Morgan rise, trading at around €29.60 in the EXISTING SHAREHOLDERS BACK Stanley are joint global coordinators and afternoon. GRENKE’S €200m FUNDRAISE joint bookrunners with Deutsche Bank and Berenberg, Citigroup and Goldman Sachs were Goldman Sachs. Fossar, Islandsbanki, joint bookrunners. Financial business GRENKE has raised €200m Landsbankinn and Svenska Handelsbanken are from an offering of 2.04m shares priced at co-lead managers. AKASOL SETS RANGE FOR €109.7m IPO €98, an 8% discount to the €106.5 Wednesday close. Lithium-ion battery maker AKASOL has set a There was no wall-crossing in advance of ITALY price range of €48.50–€64.50 for its the trade, with proceeds to be used to Frankfurt IPO, representing a deal size of strengthen the equity base. CAREL BREEZES UP ON DEBUT €107.27m–€109.7m. The deal ran overnight due to German The float is mostly primary, with the regulations on primary raises, with the Refrigeration and air conditioning business company targeting fixed proceeds of €100m. stock opening on Thursday at €102.10 and CAREL INDUSTRIES wafted on to the Milan stock This will be used for the expansion of pushing up to €103.70 by the close. exchange with a debut up more than 10% at production facilities in Langen, Germany, as Approximately 70% of the deal, the open on Monday. well as for expansion in the US, investments representing 4.5% of existing share capital, A fair wind saw the stock rise further to a in additional test and validation facilities went to the top 10 orders. A banker involved close of €8.25, up 14.6% from the €7.20 and R&D. said that there was good support from pricing. Approximately 3.3m units changed Secondary selling is just 150,000 shares existing shareholders who came into the hands, representing less than 10% of the and there is a 10% greenshoe which, if fully book in decent size. The book was multiple €252m IPO. exercised, would lift the base deal free-float times covered. The stock closed at €8.50 on Thursday and of 33.7% to 40%. Deutsche Bank and HSBC Trinkhaus & was trading around €8.435 on Friday Pricing represents estimated EV/sales for Burkhardt were joint bookrunners. afternoon. 2020 of 1.3–1.7 with key peer Voltabox Goldman Sachs and Mediobanca were joint trading at 1.4. A banker involved said that bookrunners. Akasol had a bigger and higher quality order ICELAND book than Voltabox and there is an expectation that it will trade at a premium ARION BANK UP MORE THAN 14% NORWAY to Voltabox over time. ON DEBUT Books open on Monday, with SHELF DRILLING TO RE-IPO IN OSLO management spending the week in ARION BANK shares opened at IKr86 in Frankfurt, London and Munich, moving on Reykjavik on Friday’s debut, up more than SHELF DRILLING, a Dubai-headquartered to the US the following week. The deal 14% from the IPO pricing of IKr75. The float contractor of shallow-water rigs, has closes on June 27, with trading on June 29. had priced towards the top of an IKr68-IKr79 launched bookbuilding for an Oslo Stock

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9 Equities and SE 2238 p85-100.indd 91 15/06/2018 20:27:20 Exchange IPO, four years after throwing in ABN AMRO, Nordea, Pareto and SpareBank 1 There is a 10% secondary greenshoe the towel on a London listing. The company were joint bookrunners. which, if fully exercised, will lift the free- eventually listed on Norway’s OTC exchange float to 57% from 51.8% on the base deal. The last year, raising US$225m that was market cap is SFr401m-SFr481m. ploughed into the acquisition of three POLAND By Tuesday, books were covered jack-up rigs from Seadrill. throughout guidance on the full deal size Shelf Drilling is targeting primary RUTA CLEARS ORDINARY SHARES IN including greenshoe. proceeds of US$200m-$250m for an equity POLSAT SELL-DOWN Bookbuilding finishes at 2pm in London valuation of US$856m-$998m. on June 19, with a trading debut on June 20. Approximately US$175m of proceeds will be Heronim Ruta, supervisory board member Management was initially in Zurich last used to redeem all of the company’s at CYFROWY POLSAT, sold all his ordinary shares week before moving on to London then preferred shares plus accrued dividends if in the Polish media and telecoms group last Frankfurt. the maximum US$250m is raised, or Tuesday night, with joint bookrunners Berenberg and Credit Suisse are joint global potentially just 50% of the preferred shares Goldman Sachs and Trigon placing 28.2m coordinators and joint bookrunners with at the minimum US$200m raising. The shares at Z22.50. Vontobel. range is US$8-$9. At that price, the sale totalled Z634.5m Proceeds will also finance the purchase of (US$174m) and Ruta is left with 5.9m one or two premium jack-up rigs to be added preference shares representing 0.92% of the UK to its fleet of 38 units, and for general share capital and 1.43% of the votes, subject corporate purposes. to a 90-day lock-up. Pricing was an 8.2% QUILTER COMING CHEAP AND There is also a 15% secondary greenshoe. discount to the Z24.50 close. COVERED QUICK The number of shares offered varies There was no wall-cross ahead of the deal depending on pricing, so the free-float on launching and books were covered after an QUILTER, the rebranded Old Mutual Wealth, the base deal is 47.8%-51.9%, rising to 56% on hour. The majority of the deal went to put out a price range on Monday of full exercise of the greenshoe. domestic accounts, bolstered by 125p–155p per share for its all-secondary In 2014, Shelf Drilling had targeted international long-only funds. The trade London Stock Exchange IPO that will total US$250m with selling from Castle Harlan, represented approximately 50 days of £228m–£283m. CHAMP and Lime Rock, which are providing volume and was comfortably After a day of bookbuilding, the IPO was the greenshoe for the current flotation oversubscribed. covered on the full deal size including attempt. Previously, Goldman Sachs and The shares opened at Z22.70 on Wednesday. greenshoe. Morgan Stanley were top line, with HSBC As Quilter is being spun out of Old and RBC as bookrunners. Mutual, the bulk of the stock is going to Old This time DNB Markets is sole global SWEDEN Mutual shareholders, who are being offered coordinator and joint bookrunner with 86.6% of the stock, with a further 3.8% Clarksons Platou Securities, with Arctic Securities NO GAMBLE ON GREENSHOE FOR reserved for a staff share scheme. and SpareBank 1 as co-managers. BETTER COLLECTIVE As a result, just 9.6% of the stock is to be Books opened last Tuesday and close at placed in the IPO, including a 10% 2pm local time on June 21. There was a full exercise of the 15% primary greenshoe, or 8.7% of the base deal. The greenshoe for gambling services business market capitalisation is £2.37bn–£2.94bn. SCATEC SOLAR FUNDS GROWTH AND BETTER COLLECTIVE on Friday after a full week It also means the free-float on day one is ACQUISITIONS of trading. The IPO priced at SKr54; the 96.2%. stock debuted at SKr60 and closed at SKr66 The range represents an estimated 2019 SCATEC SOLAR raised NKr600m (US$74m) last on Friday, up more than 22%. P/E in the low teens, which compares with Wednesday night to fund growth and Post-greenshoe, the deal size totals peers St James’s Place and Hargreaves enable equity investments in large-scale SKr756m (US$86m), and the free-float is 34.5%. Lansdown of 23.75 and 33.01, respectively. solar projects. Nordea and SEB were joint bookrunners. Management was in London at the start of The fundraising was wall-crossed in the week before moving on to the US. advance to existing shareholders and new Books close on June 22, with trading to international accounts, resulting in enough SWITZERLAND begin on Monday June 25. indications of interest to cover the entire Bank of America Merrill Lynch, Goldman Sachs 10m shares offered. KLINGELNBERG QUICKLY COVERED and JP Morgan are joint global coordinators The trade represented 9.7% of existing share and joint books with BNP Paribas. Rothschild is capital and approximately 37 days’ trading. In another indication of the improving advising. The base fee is 2%, with a Books were covered after half an hour and fortunes for IPOs, books were covered on discretionary 1% incentive fee. the NKr60 price was a 1.6% discount to the the first day of bookbuilding on the NKr62.10 close. SFr207.83m-SFr249.39m (US$211m-$253m) TRITAX EUROBOX TARGETING £300m IN The deal was multiple times covered, SIX Swiss Stock Exchange IPO of gear LONDON FLOAT with the top 20 orders taking approximately machining group KLINGELNBERG. 75% of the trade, with allocations skewed to The deal is largely secondary, with a small Investment manager Tritax has launched a existing and wall-crossed accounts. The primary offering totalling SFr23m-SFr27.7m £300m IPO for TRITAX EUROBOX, an investment register is largely Nordic. for financing bolt-on acquisitions and trust focused on the Continental European Scatec Solar shares opened Thursday at general corporate purposes. logistics market. NKr60.20 and rose slightly for a NKr60.30 A secondary offering from the The fund is focused on a €1.8bn pipeline, close. The shares were trading flat to pricing Klingelnberg family totals 4.1m shares with largely in Germany, Italy, the Netherlands, on Friday afternoon. price guidance set at SFr45-SFr54. Poland and Spain, with proceeds expected to

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be deployed within six to nine months of the MSCI India IMI Index total return over The coming week brings 10 IPOs seeking admission. The fund is targeting an ordinary the medium term. to raise US$1.4bn, but eight are biotech or share dividend yield of 4.75% and a total Peel Hunt is sole sponsor and placing agent. life sciences companies and five are raising return on ordinary shares of 9%. The deal is expected to close in early July. less than US$100m. The deal wraps up on Tuesday July 3, with a The week’s biggest IPO is the US$552m IPO result on July 4 and trading on Monday July 9. RATHBONES RAISES £60m TO BUY of triple-net-lease REIT Essential Properties Jefferies and Kempen are joint bookrunners SPEIRS & JEFFREY Realty Trust, which looks structured to and advisers, with Scott Harris managing an appeal in what might otherwise be a tough intermediaries offer. Investment management firmRATHBONE time to bring a REIT IPO. BROTHERS has raised £60m from an intraday The tech sector brings only one deal, the COSWORTH TO GO TO US placing, with proceeds to finance the US$85.8m IPO of payments/software purchase of Scottish independent wealth company i3 Verticals. Automotive engineering company COSWORTH manager Speirs & Jeffrey. Bankers expect a busy slate of deals to line is eyeing a US IPO in 2019. Rathbones is paying £104m for Speirs & up for the following week, though IPO The company’s chairman told Reuters Jeffrey, with £79m in cash and 1m shares, aspirants will need to launch early next that the New York float would come when subject to a three-year lock-up. week to price in this pre-July 4 window. Cosworth can show sales from hybrid The acquisition was flagged in early April Already there are three IPOs slated for the engines and sensor technologies, expected and there was wall-crossing for the week beginning June 25, the final pricing from the end of Q1 2019. fundraising in the few days before launch. week before the holiday, which falls on a The company has a US$440m order That enabled joint bookrunners Peel Hunt Wednesday this year. backlog through to 2026. and RBC to launch the deal with fixed pricing Among possible or likely launches are of £25 per share, a tiny 0.08% discount to E&P equipment maker AFG, data software TEKMAR FLOATS IN £61.8m AIM IPO Wednesday night’s £25.02 close. It had company Domo, insurance fintech indicative orders for the entire offering. EverQuote, drybulk shipper GoodBulk and Subsea cable protection technology business Formal coverage was achieved after biotechs Forty Seven, Translate Bio and TEKMAR priced its AIM listing at £1.30/share for a around an hour on Thursday, with books Tricida. Several SPACs, including New deal size of £61.8m and a market capitalisation closing at 9am. Frontier, also look poised to launch. of £65m. The free-float was high at 95.1%. Pricing The top 10 accounts took approximately came at the bottom of a 130p-150p price range. 85% of the deal, with allocations skewed to AVALARA SCORES ANOTHER SOFTWARE Trading begins on Wednesday, June 20. existing shareholders and wall-crossed IPO WIN There were several accounts declaring accounts only, with some standing their positions post-admission, with BlackRock corner and others topping up. Tax compliance software company AVALARA holding an 11% stake, Miton Group with Rathbone Brothers shares closed at £26.30 became the eighth software IPO this year to 10.6%, Berenberg with 9.9%, Fidelity on Thursday. increase its marketing range and price at the Worldwide with 8%, Hargreave Hale with high-end or better before delivering another 6.8%, Legal & General with 6%, Henderson UTILICO FUND CANCELS ON MARKET stellar debut for the sector on Friday. Global Investors and Impax with 5.6% each, CONDITIONS After drawing heavy subscription levels, River and Mercantile with 4.6%, Barralina Avalara raised US$180m from the sale of with 4.4% and Threadneedle Asset UTILICO GLOBAL INCOME cancelled plans for a 7.5m shares at US$24, above the US$21-$23 Management and Schroders with 4% each. £100m listing on Friday. The company had range that was revised up from US$19-$21 The top 10 accounts took 75% of the trade, appointed ICM as portfolio manager. UGI earlier in the week. with the book skewed to UK long-only invests in equity and corporate bonds. With sizzling market valuations and M&A accounts. The trust said that it received positive activity buoying the sector, Avalara opened Berenberg was sole bookrunner. interest, but would not be proceeding. on the NYSE on Friday at US$35.00, an The deal was due to close on Monday, immediate gain of 45.8%. ASHOKA INDIA EQUITY TRUST TO RAISE June 18, with trading on Friday June 22. Goldman Sachs, JP Morgan and Bank of £100m Investec and Stockdale Securities were joint America Merrill Lynch led the offering. placing agents, with Scott Harris running an The IPO price valued Avalara at about ASHOKA INDIA EQUITY INVESTMENT TRUST, which intermediaries offer. US$1.6bn or about US$1.5bn in EV terms will invest mainly in securities listed in (the company will have about $150m in net India and companies with a significant cash post-IPO) versus revenues of presence in India, is raising £100m in an LSE US$213.2m last year. Assuming a 20% listing. After admission, the company will growth rate, admittedly below other recent launch a share issuance programme for up AMERICAS hot software IPOs, puts Avalara at less than to 200m shares, expiring after 12 months. five times 2019 EV/sales. The trust is expected to make 20 to 40 “A lot of price targets out there are much investments in what it calls high conviction UNITED STATES higher than the midpoint of the revised opportunities. The founder previously spent range,” one banker close to the deal said. 17 years at Goldman Sachs Asset IPO DELUGE POSES TEST OF INVESTOR “Some of the peers are growing faster but Management, having been CIO and portfolio APPETITE the valuation is well below those names.” manager at GS India Equity from March Last Monday’s scratching of Adaptive 2007 to March 2017. There is no The US IPO market is looking to price a burst Insights’ IPO due to a takeover at twice the management fee, with the investment of IPOs in the next two weeks ahead of the IPO valuation may have helped Avalara’s manager receiving a performance fee summer slowdown, but investors remain cause, though the deal was headed for a subject to delivering outperformance versus choosy outside of the hot tech sector. strong outcome in any case, the banker said.

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Contract research organization IQVIA dusted itself The earlier non-deal was priced at US$101.85 subsequently dismissed the FDA issue as down after last month’s embarrassing disclosure (overnight on May 15) only for the stock to fall immaterial. snafu by reviving a US$1.2bn registered block sell- precipitously - though briefly as it turns out - to Morgan Stanley is believed to have been down by its TPG Capital-led sponsor group. US$91.57 in the immediate aftermarket. willing to re-bid for the stock but it did not get The latest effort came with at least one key That followed an untimely press release from the opportunity to do so. difference. the US Food and Drug Administration that cited Goldman is believed to have initiated the deal, This time it was Goldman Sachs which errors in opioid sales data produced by an arm one banker said. executed the deal as sole books, pushing to one of IQVIA. It was later revealed that IQVIA already Notably, the latest deal also switched side the bank that was ensnared by the earlier knew about the issue yet it did not come up in underwriters’ counsel, using Cahill Gordon & controversy, Morgan Stanley. deal due diligence. Reindel this time instead of White & Case previously. Post-close on Tuesday, Goldman reoffered In a SEC filing alongside the block, IQVIA said 12m shares at US$103.50 each, the bottom of REBOUNDING it was working continuously with the FDA but the US$103.50-$104.50 marketing range and The May block was cancelled two sessions after that the matter “will not have a material adverse 1.4% discount to last sale. it priced (and just ahead of settlement) after deal effect on our business”. With a larger buyback (4m shares versus 2.5m lawyers proved unwilling to provide a so-called If it is any consolation for Morgan Stanley, shares previously), the 12m-share sale was really “negative assurance” letter, a condition of any Goldman’s block also struggled in the only a little larger than the 10m-share block that securities offering that assures all involved there aftermarket, trading below the reoffer price was priced but then extraordinarily cancelled are no material misstatements or omissions in through the rest of the week. before settlement last month, a once-in-a-blue- the prospectus. IQVIA’s sponsors have more stock to sell. moon ECM event. IQVIA and Morgan Stanley had also bowed TPG is down to 16.1m shares or 7.9%, while Excluding the repurchased shares, the net to pressure from angry investors to cancel the the Canada Pension Plan 7.4m shares (3.7%), number of shares laid out for the public was 8m May block. founder Dennis Gillings 9m shares (4.5%) and versus 7.5m on the cancelled deal. While the stock spent a few sessions below Bain Capital 3.8m shares (1.9%). Happily for the sponsors, the price was higher US$100.00, it traded as high as US$105.23 The sponsors can sell more after 30 days. this time around. ahead of the deal’s revival, with analysts having Anthony Hughes

Impressive debut earnings releases in Clean Harbors and Waste Connections, encompass 200 to 300 acres,” Charah COO recent weeks from Pivotal Software, which are similar only as recyclers of other Scott Sewell said in the company’s online Dropbox, DocuSign and others have also forms of industrial waste, trade at 9.6 and roadshow presentation. “Coal ash is the buttressed valuations. 11.3 times 2019 Ebitda. largest industrial waste stream in the US Charah generated adjusted Ebitda of today.” CHARAH PROVIDES SLOW BURN ON US$76m last year on revenues of In 2015, the EPA issued a regulation that REGULATORY REFORM US$430.4m. required monitoring and closure of coal ash The investment thesis is one of steady, facilities within a five to seven-year period. Like it or not, producing power in the US is a predictable cash flow with top-line growth In March, EPA chief Scott Pruitt issued a dirty business, and likely to remain so. Half of 10%–15% per year from a combination of proposed rule that would give states the of all power produced in the US is sourced organic growth and acquisitions. With the authority to set certain alternative from either nuclear or coal. repayment of debt from primary proceeds, performance standards, with a second Nuclear facilities need constant net leverage drops to two times, so there is proposed rule expected by September and maintenance and are costly to capacity to consolidate what one banker final rule by June 2019. decommission, and coal produces industrial characterised as a “mom and pop” industry. Think about that next time you drive your waste. The opportunity is there even if the electric vehicle. Enter CHARAH SOLUTIONS and its IPO regulatory backdrop is muddled. designed to institutionalise the business of Environmental remediation, the other MANNING PLAYS HOT HAND WITH environmental remediation and side of the business, promises to provide a VERRICA IPO maintenance. slow burn of opportunities for years to There were few takers, with dedicated come. Dermatology specialist VERRICA utility and small-cap growth pushing back Of the 1,100 coal ash ponds or landfills PHARMACEUTICALS raised $75m from its IPO, on a lack of clarity over public policy. that US regulators have mandated for allowing it to complete Phase III trials of its Morgan Stanley, Bank of America Merrill Lynch remediation that are estimated to hold lead candidate. and Stifel placed 7.35m shares, including 1.5bn tonnes of coal ash, only 100 have been Bank of America Merrill Lynch, Jefferies and Cowen 2.1m by insiders, at just US$12 each, versus dealt with. priced 5m shares at US$15, versus the US$14- the US$16–$18 price targeted. Duke Energy, Tennessee Valley Authority, $16 range. A US$30m indication from existing Charah closed its debut session Thursday Southern Company and PPL, all customers stockholders helped to buttress the IPO. at US$12, flat to offer. of Charah, have announced plans to spend Still, these orders may be scaled back in The outcome values Charah at just five US$11.7bn by 2023 on clean-up efforts. order to accommodate new investors in times 2019 EV-to-Ebitda - dirt cheap, by any “For years, utilities took this material and what was described as a well oversubscribed measure. sluiced into ponds, massive structures that book.

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Incremental demand drove Verrica to friendly one common share and one-third AvroBio pre-funded the front end of the open trading at US$20, for a 33% gain, but it warrant exercisable at US$11.50. Phase I/II study with US$60m it raised in a then dipped to US$18 on light volume. Far Point closed at US$10.16 on debut on January private placement. Verrica was formed in 2013 to develop a Tuesday. Cormorant Asset Management and new formulation of cantharidin, a substance With the subsequent exercise of the Citadel Advisors anchored the crossover that is derived from beetles, to treat warts overallotment option, Far Point has round alongside existing shareholders led and molluscum, a viral childhood skin US$632.5m to go hunting for acquisitions. by Atlas Venture Partners and Clarus disease. The vehicle is targeting an acquisition in Ventures. Cantharidin was widely used to treat skin the fintech space sized at between US$2bn Cormorant is well known as a crossover diseases until the FDA took it off the market and US$5bn. specialist and likely to reinvest on the public in 1962 because it is poisonous. A differentiator is that Farley, until offering at a step up from the US$8.84 Verrica’s updated version of cantharidin, recently CEO of the NYSE (where he equivalent price set in the crossover round. called VP-102, is a single-use device that returned to ring the opening bell), wants to KEZAR LIFE SCIENCES, another Cormorant- contains a topical formulation of stay on and run the acquired company, backed biotech, is looking to raise US$75m cantharidin that is administered by a doctor. providing management continuity that to fund the development of a drug it The drug is currently undergoing Phase III SPACs have not always had in the past. acquired from Amgen subsidiary Onyx trials in children with molluscum. Third Point put in for up to 4m units on Pharmaceuticals. Small doses of VP-102 delivered to each the offering and has committed to a Jefferies, Cowen, Wells Fargo and WM Blair individual lesion cause blistering which US$200m forward purchase agreement to are marketing 4.67m shares at US$14–$16 triggers a healing response. The cantharidin buy in shareholders that vote against an each. The offering is anchored with a also triggers an immune response at the site acquisition. US$30m indication of interest from existing of infection to kill the virus. Third Point could put in even more capital shareholders. VP-102 expects to report top-line data on a back-end private placement if additional Proceeds will be used to bring Kezar’s from its Phase III trials in the first half of funding is needed to close an acquisition. drug into Phase II trials in patients with a 2019. Public shareholders that stay on board are wide variety of autoimmune disorders, Verrica is the third in a series of biotech likely to be given the same opportunity. including lupus. IPOs from biotech entrepreneur Paul “Farley does not view financing as a XERIS PHARMACEUTICALS is looking to use the Manning. He came on board with Verrica in constraint given the backing of Third Point proceeds from its IPO to pre-fund the 2015. His US$10.4m of seed funding in a and friends,” said one banker. “If you buy in, commercial launch of its Glucagon Rescue Series A round gave him a controlling stake. you will get a seat at the table.” Pen to treat severe hypoglycemia in diabetes The company has raised US$37m patients. privately in subsequent rounds, including a BIG WEDNESDAY FOR BIOTECH IPOS Jefferies, Leerink Partners, RBC Capital Markets US$20m Series C that priced in February at and Mizuho Securities are marketing 5m an equivalent price of US$7.82 per share. Investment bankers are testing the shares at US$14–$16 each. buyside’s capacity for due diligence with Existing stockholders Redmile Group, FAR POINT GIVES INVESTORS SEAT AT seven biotech IPOs this week, including five Deerfield Management, Bay City Capital, THE TABLE deals on Wednesday night. Palmetto Partners, Merieux Developpement Google-backed cell therapy specialist and Wild Basin Investments are in for up to FAR POINT ACQUISITION, the Third Point-backed, MAGENTA THERAPEUTICS will likely get the most US$30m of the deal, according to the Thomas Farley-led special purpose attention as a US$100m-plus IPO but prospectus. acquisition company, landed US$550m of Wednesday’s other deals should not be Xeris completed a Phase III trial of its lead initial funding from its IPO on Monday, an overlooked. product in December and expects to file a increase from the US$400m original target Bain Capital-backed APTINYX is funding new drug application in the third quarter. and up from a US$500m revised target. Phase II trials of its chronic pain drug Credit Suisse and Bank of America Merrill through its IPO. REIT IPO STICKS TO THE ESSENTIALS Lynch placed 55m units at US$10.00, with JP Morgan, Cowen, Leerink Partners and BMO each unit structured as an acquisition- Capital Markets are marketing the Aptinyx The combination of rising interest rates and IPO of 5.3m shares at US$14-$16 each, with concerns about the health of the traditional US EQUITIES insiders putting in for up to US$30m of the retail sector has created tough times for the BOOKRUNNERS: 1/1/2018 TO DATE deal. REIT sector. Managing No of Total Share Aptinyx has already raised US$135m ESSENTIAL PROPERTIES REALTY TRUST, a triple- bank or group issues US$(m) (%) privately, including a US$70m Series B net-lease REIT that launched a US$552.5m 1 Morgan Stanley 77 12,788.28 13.7 round in December. IPO for pricing on Wednesday June 20, has 2 JP Morgan 88 11,006.61 11.8 Bain Capital Life Sciences took down recognised these challenges and gone to 3 Goldman Sachs 65 10,367.45 11.1 US$15m in the private offering for a 6.8% extra lengths to make its pitch as investor- 4 Citigroup 61 8,752.73 9.4 initial stake in the company. Existing friendly as possible. 5 Barclays 41 7,995.10 8.6 shareholders led by Adams Street Partners The deal comes with a separate US$125m 6 BAML 57 6,663.35 7.1 (15%) also re-upped. private placement to sponsor Eldridge 7 Credit Suisse 41 5,010.11 5.4 Gene therapy specialist AVROBIO dosed the Industries, which will emerge with a 44% 8 Deutsche Bank 29 3,975.07 4.3 first Fabry disease patient in a Phase II study stake and has agreed not to sell for at least 9 Wells Fargo 30 3,492.69 3.7 of its lead drug earlier this month and is 365 days instead of the more typical 180-day 10 RBC 31 3,188.75 3.4 now looking for public funding. commitment on an IPO. Total 359 93,421.99 Morgan Stanley, Cowen and Wells Fargo are In terms of corporate governance, the Including all domestic and international deals and rights issues marketing 4.4m shares at US$16–$18 each. REIT is structured with internalised Source: Thomson Reuters SDC code: C3r Insiders are putting in for up to US$37.5m. management rather an external

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Riding a cyclical high, long-haul trucker US “There were some concerns with investors A Quinn family partnership is separately XPRESS ENTERPRISES was forced to accept a huge about where we are in the cycle and the selling US$20m of class B stock to members of discount to public comps on its IPO. sustainability of the American economy,” a the Fuller family at the offering price. A pricing concession was surprising, given a syndicate banker told IFR. “A shortage of drivers US Xpress has taken steps to ready the still-budding turnaround of the business, though should help sustain the cycle by constraining company for public life. A management overhaul the haircut was more extreme than other IPOs supply.” in 2015 initiated a new culture of professional because of its inherent cyclicality. Convincing new investors to pay up for US management focused on improving efficiency by Bank of America Merrill Lynch, Morgan Stanley, Xpress late in the economic cycle was already modernising and cutting operating costs. JP Morgan and Wells Fargo placed 18.1m shares, a tall order, but there were other reasons for Operating ratio, or operating costs as a including 1.4m by insiders, at US$16 each, US$2 pushback. percentage of revenue, is the key metric. below the US$18-$20 range. US Xpress is using the primary proceeds to US Xpress has 6,200 drivers and its fleet The offer values US Xpress just above a five- repay debt from its management buyout in 2007. includes 6,800 tractors and 16,000 trailers. times multiple on a 2019 EV/Ebitda basis and A debt load of roughly US$350m puts leverage at The fleet generated US$425m of revenues in just over 10 times next year’s earnings. just two times adjusted Ebitda, manageable but the three months to March 31 with US$410m of That is a steep discount to comps such as still viewed as high relative to comps. operating expenses for a 96% operating ratio. Knight-Swift Transportation (8.1 times EV/ Family ownership added another layer of The company believes it can reduce its operating Ebitda, 16.8 times PE), Schneider National (7.7 complexity. The IPO gives descendants of co- ratio to 93% by the end of this year. times EV/Ebitda, 18.9 times PE) and Werner founder Patrick Quinn the ability to partly cash Hiring new drivers is critical to the company’s Enterprises (6.5 times EV/Ebitda, 18.2 times PE). out via the secondary component of the deal. long-term growth. Historically low 3.9% These names are up an average 30% in the Max Fuller, who co-founded the business with unemployment has created a shortage of past year. Quinn in 1985, holds another chunk of stock. drivers. Improved profits mean better wages that US Xpress gained a little ground on its Members of the Fuller and Quinn families will own will help US Xpress retain its existing drivers and competitors on the first day of trading. The stock 16m B shares that represent a 71.3% voting interest attract new ones. closed at US$16.68, a 4.3% first-day gain. and convert one-for-one into class A shares. Robert Sherwood

management company, providing better reference to another successful triple-net The company plans to sell 6.65m shares at alignment with the interests of REIT. US$11-$13 per share for pricing on shareholders. As the owner of a portfolio of real estate Wednesday, June 20. As for transparency, Essential is leased to services-based retailers such as fast Cowen, Raymond James and KeyBanc Capital promising to be the first REIT to provide food chains and car washes it is not thought Markets are joint books. same-property or same-store cash rent to be as exposed to e-commerce threats. The company describes itself as at the growth and net operating income growth Nearly 90% of the portfolio is leased to intersection of payments and software, both each quarter. retailers whose customers must physically popular themes in US ECM and broader The deal comes with a US$3-a-share visit them. equity markets. spread across the US$14-$17 marketing Essential goes into the IPO with a CEO and major shareholder Greg Daily range, sometimes a sign that underwriters portfolio of 530 properties leased to 127 invested US$15m of his own money to start i3 are expecting price sensitivity. different tenants operating 112 brands in 42 in 2012, having since made 21 acquisitions. At the midpoint the REIT will generate a US states. Daily previously founded payments 5.4% dividend yield, more than other triple- The biggest tenant is Captain D’s, a companies iPayment and PMT Services, nets National Retail Properties’ 4.5% and seafood restaurant chain representing 6.8% which was sold to NOVA Corp in 1998. Realty Income’s 4.9%. of the rent roll. “We see lots of opportunity in the CEO Pete Mavoides’ former triple-net The REIT has no exposure to big box software and payments space,” Daily said in shop, Spirit Realty Capital, trades on a 9.1% retail, apparel, electronic goods, sporting the online roadshow. yield amid recent woes, though that REIT’s goods, pharmacy or discount general Top-end pricing values i3 at US$330m stock price rose 88.1% from its IPO in 2012 merchandise retailers. versus net revenues of US$90.2m (up 31% until Mavoides’ departure in 2015. Essential is also playing up the success year-on-year) and adjusted Ebitda of “Real estate is so unique and buyers are so of its active asset management, citing its US$24.8m in the year ended March 31, distinct you need people that know what historical ability to buy real estate at cap putting it firmly into small-cap territory. they’re doing to bring one public,” one rates of 7%-plus and sell at 6.3% on The company focuses on the education, hedge fund investor said. average. non-profit, public sector, property “The management team is good and the management, healthcare and business-to- assets are good.” I3 VERTICALS BLENDS PAYMENTS, business “verticals”, through proprietary Goldman Sachs and Citigroup are running SOFTWARE software and payment services embedded in the book along with Barclays, Bank of America third-party software. Merrill Lynch and Credit Suisse. Payments software provider I3 VERTICALS Most of i3’s revenue comes from payment The bells and whistles suggest Essential is launched an US$86.5m Nasdaq IPO with processing services, though after paying not expecting an easy sale, though it is being proceeds going to repay debt and speed its network and interchange fees, this nets to positioned as “STORE Capital 2.0”, a growth. the lower figure.

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Some revenues come from software MatlinPatterson, which also priced a The company increased full-year 2018 subscriptions and services as well, but the US$325m SPAC via Cantor Fitzgerald in guidance to US$250m–$256m and company does not appear to be seeking to March last year, is locked up for 90 days US$722m–$732m for adjusted Ebitda and be valued as a SaaS company. from selling any more Flagstar shares. revenue. One banker close to the deal said the In a presentation, Flagstar highlighted its Cision is the latest success for serial company was being lined up against a variety national mortgage business and its low-risk SPAC entrepreneurs Mark Ein and Dyson of comps, including payments companies. balance sheet, with 71% of assets in lower Dryden, the principal backers of Capitol risk-content assets. It also mentioned its Acquisition III. AT HOME SPONSORS SELL AGAIN diversified revenue stream, with 51% of In addition to Cision, vehicles they revenue from non-interest income, and the managed acquired adventure travel planner After several years of fretting over accretive nature of the previous week’s Lindblad Expeditions, which now trades at e-commerce competition, shares of physical purchase of US$2.3bn of deposits at a cost of US$12.93, agtech firm Agrofresh (US$7.51), retailers have started to make a comeback. 0.04%. and mortgage REIT Two Harbors Shares in home decor superstore retailer Wells Fargo’s sale of branches in Indiana, Investment. and 2016 IPO AT HOME, which gets none of its Michigan, Wisconsin and Ohio is part of its Cision, for its part, traded Friday at sales from e-commerce, have been among previously announced plan to close US$15.18, comfortably above the offering the most impressive performers. hundreds of branches by 2020. price. In one of the week’s biggest block trades, For Flagstar, the acquisition moves Bank of America Merrill Lynch reoffered 8m At funding from wholesale borrowings to core INDUSTRIALS TAKE BIG DISCOUNTS Home shares at US$37.90, the bottom of a deposits, reducing the rate sensitivity of its US$37.90-$38.10 marketing range and a 1.5% funding base and cutting its funding cost by Engineering company CIRCOR INTERNATIONAL discount to last sale. The shares traded 21 basis points. traded down after pricing a US$145.3m modestly above the reoffer price in Flagstar shares trade at about 1.5 times follow-on late on Tuesday. subsequent sessions. tangible book value. The all-secondary follow-on offering of The block represented a sell-down by 3.3m shares was priced at US$44.25per sponsors AEA Investors and Starr CISION PUTS DB IN CHARGE OF share, a 9.3% all-in discount, after two days Investments. They cut their combined stake SECONDARY SELL-DOWN of marketing. to 56.7% from 71.8% previously. Even with the wide discount, it proved They are locked up for 30 days from CISION, the parent of PR Newswire, widened difficult to find a price to make the deal selling any more shares. its free float via a 12m-share, all-secondary work. Later filings showed BAML had purchased stock sale. In what was easily the thinly traded the block for US$37.81 a share, netting The offering, marketed for one day before stock’s most active session in the past 12 US$302.5m for the sponsors. pricing late Thursday, is the second sell-down months, the shares traded in a US$43-$44.51 At Home shares initially struggled when since the company was acquired by former range and with a US$44.04 VWAP before it went public at US$15 in August 2016. But SPAC Capitol Acquisition III last June. closing at US$43.04 in Wednesday’s the stock has taken off in the past year, Notably, Deutsche Bank was sole active aftermarket session. allowing insiders to also let go of 5m shares books on the latest offering. Citigroup, Baird The deal was “multiple times” in December last year at US$24.50 a share and RBC Capital Markets acted as passive oversubscribed, with the top 10 accounts and 6m shares at US$30 in late March. books. This syndicate marked a revision taking 80% of the deal. The block came just days after At Home from the four-handled team led by JP “It’s a good entry point for investors,” one reported first-quarter comparative store Morgan and DB that managed Cision’s banker said. sales growth of 0.9% and reaffirmed its initial secondary sell-down in March. Citigroup and Deutsche Bank led the expectations for 2.5%-3.5% growth and That earlier effort was downsized to offering, which was well flagged since lock- better margins this year. 5.75m shares, from 8m, and priced at ups on seller Colfax Corp expired in recent US$10.75, an all-in 15.2% discount to pre- months and it had made no secret of its MP CUTS FLAGSTAR STAKE launch levels at the time. eagerness to monetise. This time around they sold fully sized deal Colfax collected the shares as part of the Just days after it bought 52 Midwest at US$15.00, a still sizable 10.9% all-in consideration when it sold its fluid handling branches including US$2.3bn in deposits discount to pre-launch levels but a operation to CIRCOR for US$855m last from Wells Fargo, Michigan-based FLAGSTAR reasonable outcome. September. BANCORP priced an all-secondary US$276m GTCR, the former owner of PR Newswire, Yet Colfax cashed out at levels well below stock sale that allowed its major sold 11m shares, reducing its stake to 51.9%, the roughly US$49 per share at which shareholder, alternative asset manager with Capitol Acquisition and the SPAC CIRCOR shares were trading when it agreed MatlinPatterson, to pare its stake. founders contributing the remaining shares. to take the stock. Leads Sandler O’Neill + Partners and KBW Earlier this month, Cision exchanged took out a day of marketing before pricing 6.3m shares to take out all the remaining GRIFFON 8m shares or 14% of the bank at US$34.50, warrants from the SPAC and used as or a 7.4% all-in discount. consideration for the acquisition. GRIFFON, a long-standing maker of home, The deal saw MatlinPatterson cut its stake Cision last month reported first quarter building and defence products, significantly to 47.9% from 61.8%. adjusted Ebitda of US$58.3m on revenue of downsized a follow-on offering to US$88m Launched, unusually, in Monday’s pre- US$179.3m, representing 19.3% and 23% after its share price slumped 19% across open, the offering pressured Flagstar’s stock growth year-on-year. These results benefited three days of marketing. price, which fell 5.3% to US$35.29 while it from a 1.2% increase in the number of The original deal was launched after the was marketed but recovered a little to customers and 2% increase in revenue per close on Monday and comprised 2.5m US$35.67 by Wednesday’s close. customer. primary shares and 5.6m from GS Direct, a

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9 Equities and SE 2238 p85-100.indd 97 15/06/2018 20:27:20 Goldman Sachs affiliate that was looking to October, landscaping products company found enough demand to upsize a all- sell its entire 12.2% stake. Kelkay for US$56m in February and rolling primary overnight stock sale by 14% to Joint books JP Morgan, Goldman Sachs, Baird, steel door maker CornellCookson for US$74m. Deutsche Bank and Wells Fargo ended up US$170m last month. The company also Bookrunners Raymond James, Jefferies, pricing only 4.9m shares, all of which were sold its plastics business in February to Berry KeyBanc Capital Markets and Baird reoffered sold by GS Direct, at US$18 each. The shares Global for US$475m. 4m shares, up from 3.5m at launch late had fallen from US22.90 to US$18.65 while GS Direct took its stake when it backstopped Monday, at US$18.50 apiece. the offering was being marketed. a US$260m rights offering at US$8.50 a share The reoffer price came at the bottom of a Griffon decided to ditch the primary almost a decade ago, in October 2008 when US$18.50–$19.00 range and an 8.8% discount component entirely in light of the share financial markets were in meltdown. to last sale. price fall, while GS Direct opted to sell fewer The offering came less than two months The shares traded nicely above the reoffer shares at those prices. after Griffon paid a US$1 per share special price in subsequent sessions, closing at Griffon is not a familiar name in ECM circles dividend, a nice payday for the exiting US$19.06 on Thursday. since it has not raised equity any time recently. shareholder. The deal marked Jernigan’s return to ECM The prospect of 60-70 days’ trading Other big shareholders include Mario after selling 3.5m shares at the higher price coming onto the market proved a heavy Gabelli’s Gabelli Funds with 15.8% and the of US$22.00 a share in June last year. weight on the shares. Griffon employee share plan with 12.66%. The underwriters collected a fee of 83.25 “Less liquid deals are challenging,” one cents a share or US$3.3m in total on the hedge fund investor said. JERNIGAN AND HERCULES RAISE PRIMARY latest deal. Griffon has been on an acquisition drive Also late Monday, HERCULES CAPITAL, a of late, buying home storage products JERNIGAN CAPITAL, a REIT that provides debt business development company that company ClosetMaid for US$165m in and equity capital to self-storage operators, provides loans to venture capital-backed

ECM DEALS: WEEK ENDING 15/6/2018 Stock Country Date Amount Price Deal type Bookrunner(s) Allied Properties REIT Canada 13/06/2018 C$260.0m C$41.00 Accelerated follow-on (Primary) Scotiabank, RBC Capital Markets, Goldman Sachs Cobalt 27 Capital Canada 11/06/2018 C$300.0m C$9.75 Accelerated follow-on (Primary) TD Securities, Credit Suisse, BMO CM, Scotiabank Transalta Renewables Canada 13/06/2018 C$150.0m C$12.65 Accelerated follow-on (Primary) CIBC World Markets, RBC CM, Scotiabank China Resources Cement China 11/06/2018 HK$4.19bn HK$9.30 Follow-on (Primary) CICC, Goldman Sachs Puxin China 14/06/2018 US$144.0m US$20.00 IPO (Primary) Citigroup, Deutsche Bank, Barclays, Haitong, CICC VCredit Holdings China 12/06/2018 HK$1.37bn HK$20 IPO (Primary) CS, GS, JP Morgan, DB, BOC Intl, Haitong Intl Kojamo Finland 14/06/2018 €483m €8.50 IPO (Primary/Secondary) GS, JP Morgan, Nordea, OP Corporate Bank Neste Finland 12/06/2018 €861m €62.27 Accelerated follow-on (Secondary) Credit Suisse Stora Enso Finland 11/06/2018 €246m €17.60 Accelerated follow-on (Secondary) Carnegie, Citigroup Grenke Germany 13/06/2018 €200m €98 Accelerated follow-on (Primary) Deutsche Bank, HSBC Trinkhaus & Burkhardt home24 Germany 13/06/2018 €150m €23 IPO (Primary) Berenberg, Citigroup, Goldman Sachs Arion Bank Iceland 14/06/2018 IK33.9bn IK75 IPO (Secondary) MS, Citigroup, Carnegie, Arion Bank, DB, GS Intelsat Luxembourg 11/06/2018 US$200.0m US$14.84 Follow-on (Primary) Goldman Sachs, Morgan Stanley Adyen Netherlands 12/06/2018 €946.9m €240 IPO (Secondary) MS, JP Morgan, ABN AMRO, BAML, Citigroup Scatec Solar Norway 13/06/2018 NKr600m NKr60 Accelerated follow-on (Primary) ABN AMRO, Nordea, Pareto, SpareBank1 Cyfrowy Polsat Poland 12/06/2018 Z634.5m Z22.50 Accelerated follow-on (Secondary) Goldman Sachs, Trigon Dubai Islamic Bank UAE 10/06/2018 Dh5.12bn Dh3.11 Rights issue - Rathbone Brothers UK 14/06/2018 £60m £25 Accelerated follow-on (Primary) Peel Hunt, RBC Tekmar UK 14/06/2018 £61.8m 130p IPO (Primary/Secondary) Berenberg At Home US 11/06/2018 US$303.2m US$37.90 Accelerated follow-on (Secondary) BAML Avalara US 14/06/2018 US$180.0m US$24.00 IPO (Primary) Goldman Sachs, JP Morgan, BAML Brighthouse Financial US 14/06/2018 US$1.03bn US$44.50 Follow-on (Secondary) GS, JP Morgan, Morgan Stanley, Wells Fargo Charah Solutions US 13/06/2018 US$88.2m US$12.00 IPO (Primary, Secondary) Morgan Stanley, BAML Circor International US 12/06/2018 US$145.3m US$44.25 Follow-on (Secondary) Citigroup, Deutsche Bank Cision US 14/06/2018 US$180.0m US$15.00 Follow-on (Secondary) Deutsche Bank, Citigroup, RW Baird, RBC CM Far Point Acquisition US 11/06/2018 US$400.0m US$10.00 IPO (Primary) Credit Suisse, BAML Flagstar Bancorp US 11/06/2018 US$276.0m US$34.50 Follow-on (Secondary) Sandler O’Neill, KBW Genco Shipping & Trading US 14/06/2018 US$100.0m US$16.50 Accelerated follow-on (Primary) Jefferies, Fearnley Securities Griffon US 14/06/2018 US$100.5m US$18.00 Follow-on (Primary, Secondary) JP Morgan, Goldman Sachs Hercules Captial US 11/06/2018 US$72.9m US$12.15 Follow-on (Primary) Wells Fargo, Morgan Stanley, Jefferies, KBW Immunomedics US 12/06/2018 US$276.0m US$24.00 Follow-on (Primary) Morgan Stanley, Cowen, Jefferies IQVIA Holdings US 12/06/2018 US$1.24bn US$103.50 Accelerated follow-on (Secondary) Goldman Sachs Jernigan Capital US 11/06/2018 US$66.5m US$18.50 Accelerated follow-on (Primary) Raymond James, Jefferies, KeyBanc Capital, Baird Kadmon US 11/06/2018 US$100.0m US$3.30 Accelerated follow-on (Primary) Jefferies Medpace Holdings US 11/06/2018 US$126.8m US$42.25 Accelerated follow-on (Secondary) Morgan Stanley US Xpress Enterprises US 13/06/2018 US$288.9m US$16.00 IPO (Primary, Secondary) BAML, Morgan Stanley, JP Morgan, Wells Fargo USA Compression Partners US 12/06/2018 US$81.0m US$16.20 Accelerated follow-on (Secondary) JP Morgan Verrica Pharmaceuticals US 14/06/2018 US$75.0m US$15.00 IPO (Primary) BAML, Jefferies, Cowen Warrior Met Coal US 11/06/2018 US$114.6m US$28.65 Accelerated follow-on (Secondary) Credit Suisse

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MetLife exchanges US$1bn debt for Brighthouse stake

n US Deal puts more pressure on depressed annuities provider’s shares

Underwriters struggled to drum up much But on MetLife’s last earnings call on May 3, Adding to the challenging deal dynamics, excitement for the shares of annuities provider the company appeared to back away from that the struggles of last month’s AXA Equitable BRIGHTHOUSE FINANCIAL as former parent MetLife idea. IPO were fresh in investors’ minds (it priced made a full exit from the business it spun off Citing “changed” market conditions and below range and has since traded only modestly last year. higher volatility, CEO Steve Kandarian said higher). With Brighthouse stock lingering around MetLife was exploring alternatives to an equity In a note ahead of pricing, Credit Suisse record lows since it began trading in July last exchange that may provide “better economics”. analysts cited the experience of the Baxter/ year, MetLife opted to proceed with a debt-for- These included a direct sale of Brighthouse shares Baxalta debt-for-equity exchange in 2016 and equity exchange for its remaining 19.3% stake, or an exchange offer for MetLife debt securities. the similar Arconic/Alcoa deal last year to worth US$1.03bn. Brighthouse first filed for the follow-on predict a 5%-8% decline in Brighthouse’s stock. Alongside the debt-for-equity exchange, a confidentially in mid-May, thereby committing it Credit Suisse also lowered its price target syndicate led by Goldman Sachs, JP Morgan, to the debt-for-equity exchange. to just US$35.00 from US$40.50 while the Morgan Stanley and Wells Fargo took two days of At that time, the same four banks began deal was marketed, citing valuations on recent marketing before selling the 23.16m-share stake buying MetLife debt, ultimately agreeing variable annuities block sales and the lower to investors at US$44.50 each, a 3.3% discount to to purchase US$1.12bn in total. MetLife is quality of Brighthouse’s VA book. last sale. exchanging its Brighthouse shares for the debt One investor said there was a “certain The shares traded down 1.7% during held by the banks. audience” for Brighthouse stock, which trades at marketing and were flat in Friday’s aftermarket, a forward price/earnings ratio of just five times, in keeping with the weak share price PRICE PRESSURE but few investors “seemed to care”. performance seen from other recent debt-for- Ahead of the deal, Brighthouse’s shares were In a separate note last week, UBS analysts equity exchanges. down about one-third since the end of January, pointed to “investor apathy” in the life sector, As recently as early May, MetLife seemed a decline that ate into MetLife’s proceeds and noting the firm’s proprietary life index was intent on an equity exchange offer that would complicated the balancing act it was performing trading at a 44% discount to the S&P 500 versus have instead allowed its own shareholders to between maximising proceeds and retaining the a 34% historical average. swap MetLife shares for Brighthouse shares. tax-free status of the transaction. Anthony Hughes

companies, completed a primary stock sale The Bloom Energy Servers installed at Bloom Energy hopes to expand its profit that raised US$72.9m to fund investments Morgan Stanley’s global headquarters in margin by providing its customers with a and acquisitions. midtown Manhattan provide about 6m low-cost source of electricity at a fixed rate A syndicate led by Wells Fargo, Morgan kilowatt hours of clean and uninterrupted and increasing its market share even if it Stanley, Jefferies, and KBW purchased 6m electricity per year. only breaks even on product sales and shares at US$11.78 before reoffering them to Bloom Energy’s founder KR Sridhar is an installation. investors at a fixed price of US$12.15, a 2% ex-NASA rocket scientist who invented the discount to last sale. Bloom Energy Server. KADMON FUNDS LATE-STAGE DRUG Hercules shares had been trading at a The product converts natural gas into significant premium to net asset value of electricity without combustion, without the Investors are taking a second look at KADMON US$9.72 a share at March 31. use of precious/rare earth metals and with HOLDINGS as its lead drug enters the later Hercules told investors later in the week that fewer harmful emissions than conventional stages of development. the latest Fed funds rate increase would add 4 fossil fuels. After pricing a US$100m overnight raise cents a share to its net annual interest income. A typical configuration generates enough on Tuesday night, Kadmon shares gained The shares closed Thursday’s session at energy to power a typical big box store such 9.9% on Wednesday to US$3.68. The surge US$12.48. as Costco, Home Depot and Walmart, all of followed the placement of 30.3m shares at which are all Bloom Energy customers. US$3.30. BLOOM ENERGY POWERS UP IPO Bloom Energy has installed 312 megawatts The financing is the second in as many of Bloom Energy Servers contributing to weeks by a company founded by disgraced Fuel cell company BLOOM ENERGY has filed US$376m of revenue last year and 80% top-line financier Sam Waksal and his brother publicly for a US$100m IPO after sitting in growth. The trend continued into the first Harlan. Gene therapy specialist and former confidential registration for over two years. quarter as the company posted US$169m of Kadmon subsidiary MEIRAGTX separated from The new filing namesJP Morgan, Morgan revenues as of March 31, a 135% improvement the Waksals in its US$75m IPO last week. Stanley, Credit Suisse, KeyBanc Capital Markets over the first quarter of 2017. Kadmon’s affiliation with the Waksals has and Bank of America Merrill Lynch as the joint Bloom Energy generated a gross profit of been a distraction for the company since its books. US$43.67m in the first quarter after a first day as a public company, In addition to being a top-line history of losses from 2013-16, which overshadowing what has turned out to be a underwriter, Morgan Stanley is also a Bloom explains its long stay in confidential solid pipeline of rare disease treatments, Energy customer. registration. including two FDA-designated orphan drugs.

International Financing Review June 16 2018 99

9 Equities and SE 2238 p85-100.indd 99 15/06/2018 20:27:21 Part of investor dissatisfaction stemmed was up 36.3% this year ahead of the deal as Warrior has proven a lucrative from an equity raise last September at US$3, investors anticipate an upturn in the investment for Apollo, Blackstone, Franklin well off the US$12 pricing struck on its IPO drybulk shipping cycle. Funds and KKR. After cashing out as part of two years ago. In an note last month, Jefferies analysts an all-secondary IPO of the restructured Kadmon’s main funding source has been said Genco’s industry-leading balance sheet, Warrior in April 2017, they returned for at-the-market stock sales executed via large and diverse fleet, significant operating another 8m-share sell-down in a block sale Cantor Fitzgerald. leverage (high exposure to spot charter last month at US$24.65. Kadmon’s lead drug KD025 was fast-tracked prices) and discounted stock price made it The stock sales are in addition to by the FDA for a life-threatening condition an attractive play on a drybulk recovery. harvests from a pair of special one-time that is associated with stem cell transplants. Genco, which was profitable last year dividends totalling US$950m, netting the The company announced at the recent after chewing cash in 2016, has a fleet of 60 sponsors and shareholders US$17.74 a Jefferies healthcare conference that the FDA drybulk vessels transporting iron ore, coal, share, on top of the regular five-cent has given the company clearance to use data grain, steel products and other cargoes. quarterly dividend. from an upcoming Phase II trial as a pivotal There appears to be some action in the Warrior closed Tuesday’s session post- study, allowing it to forego Phase III if the drybulk sector at the moment, with the Baltic pricing at US$29.00 - including the dividends data are positive. Kadmon intends to initiate Exchange Dry Exchange rising 2% on Thursday paid, that equates to roughly US$47.00 of the pivotal trial in the third quarter. ahead of the deal on more signs of US economic value, a handsome haul from the US$19.00 Kadmon is also in Phase II trials of KD025 strength (including a higher Fed funds rate). price on the IPO. as a treatment for three other conditions. DRYSHIPS, another drybulk carrier, saw its There was no commitment on dividends Its other FDA-designated orphan drug stock price rise 8.9% in the same session. at the time of the IPO, and certainly no tesevatinib is undergoing a Phase II trial in Meanwhile, GOODBULK, a drybulk operator expectation of such hefty payouts. patients with a rare kidney disorder. formed at the bottom of the cycle in 2016 The financial sponsors no doubt had a role (and the owner of 25 vessels), may launch its in shaping those policies through board GENCO LOADS UP WITH US$100.7m US$100m IPO as early as this Monday. representation. KKR and Franklin vacated GoodBulk publicly filed for its IPO on June their board seats last month, though Apollo Having agreed to buy four drybulk ships for 1, with Morgan Stanley and Credit Suisse slated and Blackstone still hold three of the seven US$141m the previous week, GENCO SHIPPING & to lead the deal. seats. TRADING tapped investors for US$100.7m of Board representation made Apollo and equity late on Thursday. WARRIOR SPONSORS EXTRACT HAUL Blackstone “affiliates” of Warrior and Joint books Jefferies and Fearnley Securities obligated them to conduct stock sales via a priced 6.1m new Genco shares - or 18% of It is rare to see a block upsized. registration statement. KKR and Franklin outstanding - at US$16.50, the midpoint of Credit Suisse did just that by agreeing to will be able to sell via unregistered blocks or the US$16-$17 range and a 9.2% discount to increase a secondary block of WARRIOR to 5m on the open market going forward. the US$18.17 prior close. shares, from 4m at launch. Apollo and Blackstone, the leading sellers Shipping deals have been rare of late but The bank offloaded the shares overnight on this week’s sales, pared their stakes to Genco has just refinanced US$460m of debt on Monday at US$28.65, a 2.6% discount to 8.3% and 4.9%, from 13.1% and 7.7% to help renew its fleet and its stock price the prior close of US$29.42. respectively.

GLOBAL CONVERTIBLE OFFERINGS – EMEA ALL INTERNATIONAL ASIAN CONVERTIBLES GLOBAL CONVERTIBLE OFFERINGS BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share Managing No of Total Share Managing No of Total Share bank or group issues US$(m) (%) bank or group issues US$(m) (%) bank or group issues US$(m) (%) 1 UBS 3 1,849.73 19.0 1 Goldman Sachs 3 2,289.76 25.0 1 Goldman Sachs 32 7,800.51 14.2 2 Deutsche Bank 5 1,188.96 12.2 2 Credit Suisse 5 1,060.59 11.6 2 Morgan Stanley 35 5,481.52 10.0 3 JP Morgan 5 876.58 9.0 3 Nomura 7 938.41 10.2 3 JP Morgan 32 5,167.36 9.4 4 Goldman Sachs 5 815.66 8.4 4 JP Morgan 2 660.45 7.2 4 BAML 25 3,907.48 7.1 5 Morgan Stanley 4 682.83 7.0 5 Sumitomo Mitsui Finl 3 566.61 6.2 5 Deutsche Bank 11 2,166.03 3.9 6 BAML 4 643.25 6.6 6 Daiwa Securities 3 524.29 5.7 6 UBS 6 2,071.68 3.8 7 SG 5 607.79 6.3 7 BNP Paribas 2 475.42 5.2 7 Barclays 12 1,899.41 3.5 8 BNP Paribas 4 584.09 6.0 8 Morgan Stanley 4 460.32 5.0 8 Credit Suisse 11 1,735.63 3.2 9 Barclays 4 469.92 4.8 9 China Merchants Secs 1 333.33 3.6 9 Citigroup 13 1,470.92 2.7 10 Citigroup 4 385.75 4.0 =9 Citic 1 333.33 3.6 10 Citic 3 1,413.99 2.6 Total 25 9,717.23 Total 29 9,167.58 Total 186 54,965.98

Including exchangeables. Including exchangeables. Including exchangeables. Source: Thomson Reuters SDC code: C09d Source: Thomson Reuters SDC code: M10 Source: Thomson Reuters SDC code: C9

EQUITY-LINKED DEALS WEEK ENDING: 15/6/2018 Issuer Country Date Amount Greenshoe Tenor Coupon (%) Premium (%) Bookrunner(s) Canopy Growth Canada 14/06/2018 C$500.0m C$100.0m 5y 4.25 25.0 Cowen, BMO Capital Markets Intelsat Luxembourg 11/06/2018 US$350.0m US$52.5m 7y 4.50 22.5 Goldman Sachs, Morgan Stanley SEA Singapore 13/06/2018 US$500.0m U$75.0m 5y 2.25 32.5 Goldman Sachs GCI Liberty US 13/06/2018 US$415.0m US$62.3m 30y 1.75 30.0 JP Morgan, Deutsche Bank, Citigroup K2m Group US 13/06/2018 US$65.0m US$10.0m 7y 3.00 22.5 JP Morgan RH US 13/06/2018 US$300.0m US$50.0m 5y 0.00 25.0 BAML

100 International Financing Review June 16 2018

9 Equities and SE 2238 p85-100.indd 100 15/06/2018 20:27:21 STRUCTURED EQUITY

n FRONT STORY CONVERTIBLE BONDS RH exposes short sellers with CB High-end retailer lands zero-cost financing

Conventional wisdom worldwide is that investors that had shorted 35.6% of to repurchase US$1bn of our stock when it traditional retailers will be crushed by online outstanding as of June 3, when the stock was undervalued last year.” competitors. stood at US$98.27. There is no looking back from here. RH, the renamed parent of high-end Gary Friedman, RH’s enigmatic CEO, laid RH reported first-quarter EPS of US$1.33, furniture retailer RESTORATION HARDWARE, was the groundwork last year by spending shattering the US$1.02 consensus, despite top- among those expected to be buried. Short US$1bn to buy back nearly half of the line revenue of US$557.4m that came 1% below sellers piled on bets making it one of the company’s shares across two programmes, at consensus (US$563m). The results were driven most heavily shorted stocks on the NYSE. average prices of US$38.24 and US$56.60, by 750bp expansion in gross margins to 38%. RH blindsided detractors with fiscal first respectively. RH now expects gross and operating quarter results Monday that validated a new- The repurchases came as the company was margins for fiscal 2018 of 39.3%–39.6% and age business model. transitioning to the new business model that revenue of US$2.53bn–$2.57bn. On its To prove the point, almost out of spite, it saw it close distribution, leaseback new guidance, that is expected to result in EPS of followed up with US$300m raised from the sale stores it built, and engender loyalty of US$6.34–$6.83 and free cash flow “in excess” of a five-year CB that costs nothing annually customers. of US$260m this year. with dilution offset to double the reference “We are regularly evaluating various low Morningstar analyst Jaime Katz highlighted price, after incorporating a call spread. interest rate financing alternatives and the compounding effect on earnings, noting RH shares ripped 30.6% on Tuesday on the expect to follow the same opportunistic that each 100bp increase in gross would result earnings report to US$155.00. capital allocation approach in the future in 71-cent bump to earnings. Bank of America Merrill Lynch followed up on regarding both sources and uses of capital,” RH will continue sale and leasebacks on Wednesday with the 0% CB that will allow Friedman said in a first quarter earnings new stores constructed as part of a capital- investors to convert at US$193.65, a 25% missive on Monday, a regular practice of efficient, asset-light business. And it will premium to the US$154.92 reference, the disclosing results. continue to focus on a customer loyalty aggressive ends of fixed 0% and 20%-25% “Looking back, had we not been programme that has 405,000 members guidance. opportunistic in responding to the paying US$100 apiece annually to access RH, no stranger to CBs, spent a portion of favourable market conditions through our discounted prices and which accounted for the proceeds to offset dilution to share prices convertible notes financings in 2014 and 95% of core sales last year. above US$309.84 – a ludicrous concept to 2015, we would not have been in a position Stephen Lacey Canopy sprouts roots with C$500m CB Marijuana grower funds international expansion

Cannabis has, until recently, been the third Cowen and BMO Capital Markets Cowen is the first major US bank to join rail of investment banking. accommodated demand by upsizing the CB the fray. The fact that marijuana remains illegal in to C$500m, from C$400m, ahead of pricing Canopy is using proceeds to support both the US and Canada (for the time being), at a 4.25% coupon and 25% conversion expansion initiatives. In addition to Canada, despite being legal for medicinal or recreational premium, the aggressive ends of talk. They where the federal government is currently use in 30 US states, has made the industry off did so on a 144A basis in the US and similar debating legislation to legalise marijuana, the limits to all but the boldest investment banks. exemptions to registration requirements in company has operations in Brazil, Spain and Regulatory oversight by federal agencies Canada and elsewhere. Australia. Medicinal marijuana is legal in and the threat of having your charter “The fact that it got done entirely Brazil and Australia. revoked is a sobering offset to potential institutionally is notable,” one banker involved Pharmaceuticals are an easier space for major financial windfalls. in the underwriting told IFR. “Cannabis stocks banks. GW Pharmaceuticals and Zynerba When CRONOS GROUP became the first in Canada are traded very heavily by retail.” Pharmaceuticals, both banked by bulge bracket marijuana grower to list on a US exchange in There has been progression toward US firms, are among the drug developers that February, it did so as an up-listing to Nasdaq institutionalising the industry, both from the have used cannabis-based therapies. while retaining its quote on TSX Venture perspective of investors and institutions. Canaccord Genuity, the Canadian bank, Exchange. CANOPY GROWTH, another Canadian In February, Canopy secured C$200m in a has an entire investment banking team grower, last month transplanted from the block sale led by GMP Securities and BMO devoted to cannabis. In February, the bank TSX to the NYSE. Capital Markets, making BMO the first of the signalled its expansion plans with the Canopy on Thursday tapped institutions “Big Five” Canadian banks to underwrite a appointment of Shannon Soqui, a former with a C$500m (US$379.2m), five-year CB marijuana deal. BMO, along with GMP Credit Suisse and UBS banker, as head of US that will fund expansion. The CB found Securities, followed up with a C$100m stock cannabis IB. support from European and US accounts. sale for Cronos in April. Stephen Lacey

International Financing Review June 16 2018 101

10 Struct Eq 2238 p101-102.indd 101 15/06/2018 19:57:05 4.75%–5.25% and 17.5%–22.5% talk and CHINA SINGAPORE increased from the US$300m at launch. Intelsat shares closed on Thursday at ZHESHANG SEC GETS CB APPROVAL SEA SELLS US$500m CB US$16.83, up 13.4% from offer, and marking a five-fold increase from the US$3.39 they ZHESHANG SECURITIES has obtained approval Singapore-based internet company SEA has fetched at the beginning of the year. from the State-owned Assets Supervision raised US$500m from a five-year convertible Intelsat seems poised to deliver as a cash and Administration Commission for a bond issue. flow engine. proposed sale of six-year convertible bonds There is a 13-day option to increase the In conjunction with the equity raising, it to raise up to Rmb3.5bn (US$545m). size by US$75m. throttled back capex this year to US$300m- Proceeds will be used to replenish According to a statement from Sea, an $350m, from US$375m-$425m previously, with working capital. Shareholders will review entity affiliated with Tencent Holdings, one similarly sized reductions in 2019 and 2020 to the proposal on June 20. of the company’s principal shareholders, US$325m-$425m and US$300m-$400m. Separately, SHANGHAI HUAFU INVESTMENT has and an entity affiliated with one of the There are high hopes for plans proposed a private placement of five-year company’s directors are expected to submitted last month to use C-band bonds exchangeable into the shares of purchase up to US$50m and up to US$30m, spectrum for 5G networks by mobile SHANGHAI METERSBONWE FASHION AND ACCESSORIES respectively, of the CB. operators in the US. Monetising that to raise up to Rmb2bn. The CB pays 2.25% interest and has a spectrum could unlock US$1bn-$2bn of Shanghai Huafu owns 1.27bn Shanghai conversion premium of 32.5%. value for shareholders, estimate analysts Metersbonwe shares, or about 50.65% of its The company plans to use the proceeds at Cowen. total issued capital. for business expansion and general No one would be happier to unlock that The deal needs regulatory approval. corporate purposes. value than BC Partners, which acquired Goldman Sachs was the sole bookrunner. Intelsat 10 years ago in a US$16.6bn CITIC GUOAN CALLS OFF EXCHANGEABLE buyout. Rather than cut loose its 52.7% stake (now worth a little more than CITIC GUOAN COMMUNICATIONS has scrapped a UNITED STATES US$1bn), the European PE firm injected proposed private placement of another US$30m of equity on the public exchangeable bonds of up to Rmb2bn INTELSAT PUMPS EQUITY ENGINES FOR stock sale. (US$311.3m) after regulatory approval HIGHER ORBIT expired on June 12. GCI LIBERTY TIES UP LOOSE ENDS CGC let the regulatory approval lapse in INTELSAT has rocketed back to life on the consideration of the changes in market promise of 5G next-generation telecoms GCI LIBERTY, the recently spun-off cable conditions and financing costs, according to networks. business of LIBERTY MEDIA, secured US$415m a filing from parent Citic Guoan With that potential evident, but not quite from the sale of a new exchangeable bond Information Industry. reality, the highly-levered satellite operator on Wednesday. CGC planned to issue five-year notes, landed US$550m of fresh equity on Monday The financing unwinds a convoluted which could be exchanged for shares in that will serve as a foundation for a broader arrangement associated with the spin-off of JIANGSU BROADCASTING CABLE INFORMATION alignment of its capital structure. GCI Liberty in March and QURATE RETAIL, the NETWORK after six months. Intelsat raised US$350m from the sale of media subsidiary that holds QVC. CGC holds 591m Jiangsu Broadcasting five-year convertible debt at a 4.5% coupon Specifically, a 1.75% US$750m shares, representing about 15.2% of the and another US$200m of common stock. exchangeable Liberty Media sold in 2016 is company’s total issued capital. Combined proceeds are earmarked to housed at Qurate, but the underlying shares China Merchants Securities and BOC repurchase some of the US$1.02bn principal are held at GCI Liberty. International (China) were joint bookrunners. 7.75% Intelsat Luxembourg notes, either on GCI Liberty paid US$590m of cash to the open market or a formal tender. Qurate on the spin-off and agreed to TWO FIRMS PLAN CB ISSUES The 7.75% notes, which mature in 2021, indemnify for any payments in excess of gained six points on the marketing of the adjusted principal. The new security cures JIANGSU ZHONGTIAN TECHNOLOGY has applied to equity to 91.50-92.50. that indemnity. the China Securities Regulatory Purchasing, say, US$600m principal of the The new and old securities are both Commission for a proposed issue of six-year 7.75% notes at 92 of par would save Intelsat exchangeable into CHARTER COMMUNICATIONS, convertible bonds of up to Rmb3.97bn roughly US$30m in interest expenses and are identical with matching put/call (US$618m). annually - not a lot relative to the US$1bn through October 2023 and final maturity in The manufacturer of fibre-optic cables paid out last year to creditors, but a start in 2046. Also significant is that neither is will use the proceeds for six production tackling a net debt load that now stands at structured with takeover protection. projects and for working capital. US$14.3bn. JP Morgan, Deutsche Bank and Citigroup, the Goldman Sachs Gao Hua Securities is working “This is the beginning of a broader active joint bookrunners, set pricing on GCI on the transaction. refinancing,” one banker involved in the exchangeable at 1.75% coupon, versus talk Separately, HEILAN HOME has received equity underwriting told IFR. of 1.375%-1.875% talk, and 30% premium, written CSRC approval for a proposed issue Goldman Sachs and Morgan Stanley, joint the investor-friendly end of 30%-35% talk. of six-year convertible bonds of up to books, found no lack of investors willing to “Largely investors are comfortable with Rmb3bn. The operator of branded garments foot that bill. the Liberty complex,” said one banker plans to use the proceeds for information They placed 13.5m shares at US$14.84 and involved with the underwriting. “It seems technology projects and logistics, as well as US$350m of the seven-year CB that is unlikely that Charter would get taken over, research and development. Huatai United convertible at a 22.5% premium and a 4.5% but new investors are accustomed to that Securities is the sole bookrunner. coupon, through the aggressive ends of [lack of] protection.”

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11 Masthead 2238 p103.indd 103 15/06/2018 19:43:12 INTERNATIONAL FINANCING REVIEW INDEX

2CRSi 90 Delachaux Group 13, 90 Kexim 62 RH 101 Access CIG 81 Dell Financial Services 47 Kezar Life Sciences 95 Rites 88 Adaptive Insights 85 Deutsche Bank 15, 17, 21, 22 KfW 28 Sallie Mae Bank 48 Adyen 4, 13 Devi Seafoods 85 Klingelnberg 92 Sandhya Marine Foods 85 Agence France Locale 28 Disney 76 Kojamo 13, 90 Santander 17, 47 Akasol 91 DNB Boligkreditt 39 KommuneKredit 29 Santander Consumer Bank 44 Alexion Pharmaceuticals 75 Dryships 100 Kommuninvest 27 Sapec Agro 84 Allen & Co 16 Ecobank Transnational Incorporated 57 Korea Hydro & Nuclear Power 62 Sarana Multi Infastruktur 59 Ally 47 Ecuador 57 Kuwait Foreign Petroleum Exploration 72 Savage Enterprises 78 Alvogen Pharma 82 Edelman Financial 77 Kuwait Integrated Petroleum Industries 72 Scatec Solar 92 American Credit Acceptance 47 EDP - Energias de Portugal 44 Kuwait International Bank 73 Schneider Electric 32 AMP Bank 48 Egyptian Electricity Holding Company 71 Landesbank Baden-Wuerttemberg 40 Sea 102 ANZ Banking Group 23 Emami Cement 88 LBBW 25 Shanghai Huafu Investment 102 AOC/Aliancys 78 Endurance International 80 LendingClub 47 Shanghai Metersbonwe Fashion 102 Aptinyx 95 Energizer 40 Leoni 72 Shelf Drilling 91 Ardent Health Partners 82 Engie 25, 31 Liberty Media 102 Shinhan Bank 71 Arion Bank 13, 91 Envision Energy International 60 LifeScan 80 Societe Generale 39 Ashoka India Equity Investment Trust 93 Envision Healthcare 8 Lloyds 44 SOK Marketler 11 Astrea IV 49 E.ON 72 Lloyds Banking Group 35 Solenis International 81 At Home 97 Erste Group Bank 36 LoanCore Capital 48 SpareBank 1 Boligkreditt 39 AT&T 4, 6, 16, 76 Essential Properties Realty Trust 95 Loan Science 47 Staatsolie 77 Auckland Council 29 European Stability Mechanism 28 Louis Dreyfus Co Asia 71 Standard Chartered 21 Autoliv 25, 31 EVO Payments International 81 L&T Global Holdings 74 Starr 47 Automatic Data Processing 76 Exclusive Group 8 Lufax 87 Start Today 12 Avalara 93 Experian Finance 34 M17 Entertainment 89 Stora Enso 90 Avanti Finance 49 Falcon Marine Exports 85 Macquarie 68 Structured Agency Credit Risk 45 Aveanna Healthcare 78 Far Point Acquisition 95 Magellan Homeloans 43 Svenska Handelsbanken 37, 38 AvroBio 95 Fine Organic Industries 88 Magenta Therapeutics 95 Takeda Pharmaceutical 70 Banca Popolare di Bari 44 Flagstar Bancorp 97 ManpowerGroup 33 TDC 8, 40, 82 Bank of America Merrill Lynch 16, 19 FNG 89 Marriott 47 Tekmar 13, 93 Bank of China Luxembourg 73 Ford 47 Mars Capital 43 Temasek Holdings 49 Bank of Ningbo 49 Freddie Mac 45 Mechanics Bank 47 Thomson Reuters 8 Banque Misr 72 Freedom Financial 47 Medco Power 59 TI Automotive 84 BASF 34 Freedom Financial Network 45 MeiraGTx 99 Time Warner 16 Bayer 25, 26, 30 Ganfeng Lithium 87 Melissa & Doug 81 TKC Holdings 81 BBB Industries 78 GCI Liberty 102 Mercari 12, 89 T-Mobile 5, 76 Be-Spoke Capital 45 Gebr Knauf 73 Meridian Energy 34 Trinity Industries Leasing Company 48 Better Collective 13, 92 GE Capital Aviation Services 46 MeridianLink 78 Tritax EuroBox 92 Big Ass Solutions 78 Genco Shipping & Trading 99 Merx Aviation 46 Triton International 48 Birla Carbon 70 General Electric 46 Metro Bank 38 Turkey 63 Blackstone Property Partners Europe 33 GlobalFoundries 78 Metro-Goldwyn-Mayer 78 TwentyFour Asset Management 42 Bloom Energy 98 Global Lending Services 47 Mexico 66 Uber Technologies 80 Bluestar Finance Holdings 68 GM Financial 47 Minimax 83 UCI 43 BMC Software 8, 77 Goldman Sachs 17, 42 More Boligkreditt 39 Ufinet International 79 BNP Paribas 19 GoodBulk 100 Morgan Stanley 16, 42 Unilabs 83 Bridge 48 GPS Hospitality 79 Moy Park 74 United Distribution Group 77 Brighthouse Financial 99 GrafTech International 80 NAB Trust Services 39 University of Cambridge 33 Broadcom 76 Green Energy (Hangzhou) Corp 69 Naftogaz 64 US Foods 80 BT Group 33 Greenland Holding Group 58 National Australia Bank 35 US Xpress Enterprises 96 Cades 27 Grenke 91 National Bank of Egypt 72 Utilico Global Income 93 Caixa Geral de Depositos 25, 37 Griffon 97 Navient 47 Uxin 86 Canada Pension Plan Investment Board 29 Groupe Bruxelles Lambert 33 Nekkanti Sea Foods 85 Vale 65 Canopy Growth 101 HALO Branded Solutions 77 Neste 90 Valeo 33 Carel Industries 13, 91 Heilan Home 102 Netcompany 13, 89 Vantiv 80 Castlelake 46 Hercules Capital 98 NEXTDC 42 VCredit Holdings 87 CCB Financial Leasing 60 Hertz 47 Nomad Foods 82 Veolia Environnement 34 CCR RE 36 Hinduja Leyland Finance 88 Nordea Bank 25, 37 Verrica Pharmaceuticals 94 CDB Financial Leasing 69 HireRight 81 North American Development Bank 66 Vertex Aerospace Services 82 Celestica 82 Hispania 83 Not Your Daughters Jeans 67 Vestcom International 79 Centerview 17 Hochtief 33 Novolex 78 Vivat 36 Charah Solutions 94 home24 13, 91 Oberoi Realty 88 Vivo Energy 64 Charter Communications 102 Housing Development Finance Corp 70 OMV 32 Volta VI 44 Cheplapharm 82 HSBC 15, 16, 19, 34 Outokumpu 41 Vontobel Holding 38 China Aluminum Intl Engineering 88 i3 Verticals 96 pbb Deutsche Pfandbriefbank 39 Wabtec Corp 75 China Construction Bank (New Zealand) 58 ICBC International Holdings 60 Pelabuhan Indonesia IV 59 Warrior 100 China Energy Reserve and Chemicals 60 IKB Deutsche Industriebank 39 Pembangunan Perumahan 59 Weener Plastics 83 China Huiyuan Juice Group 59 Ile de France 28 Penn Engineering 81 Wells Fargo Commercial Mortgage Trust 45 China Jinjiang Environment Holding 69 Impro Precision Industries 88 Perella Weinberg 16 Westpac 39 China Railway Construction Heavy Ind 88 Industrial and Comm Bank of China 62 Perisai Petroleum Teknologi 62 Wise Talent Information Technology 87 China Resources Cement Holdings 88 Industrial Bank of Korea 62 Perusahaan Listrik Negara 59, 71 Wistron 71 CIRCOR International 97 Infinite Electronics 79 PetSmart 40, 67 Workday 85 Cirsa Gaming 40 Intelsat 102 Piaggio 72 Wuhan Real Estate Dev & Inv Group 60 Cision 97 International Flavors & Fragrances 75 Port of Tallinn 13, 89 Wuzhou International Holdings 58 Citic Guoan Communications 102 Invenergy 78 PowerSchool 80 Xeris Pharmaceuticals 95 Citigroup 16 Invitation Homes 47 Prado VI 43 Xiaomi 10 Cloetta 74 ION Trading 8 Prospa Group 86 Xinhu Zhongbao 60 CNP Assurances 35 IQVIA 94 PTT Global Chemical 62 Xior Student Housing 89 Coface Poland Factoring 73 iStar 79 Pulsant 83 Yancoal Australia 86 Coinstar LLC 47 IVC 83 P&V Assurances SCRL 36 Zambia 64 Comcast 5, 16, 30, 76 JAB Holdings 25, 31 QBE Insurance Group 35 Zheshang Securities 102 Consus 91 J Crew 67 Qingdao Haier 88 ZTE 68 Corning 12 Jernigan Capital 98 Qualcomm 30, 76 Zurich Insurance Company, 38 Cosworth 93 Jiangsu Broadcasting Cable Info Network 102 Quilter 92 CPG International 81 Jiangsu New Energy Development 88 Qurate Retail 102 Credit Bank of Moscow 63 Jiangsu Zhongtian Technology 102 Radiology Partners 78 Credito Valtellinese Banking Group 44 Jiangxi Bank 87 Rathbone Brothers 93 Credit Suisse 23 Jiuding Group Finance 58 RBC Golden Credit Card Trust 48 Cronos Group 101 JP Morgan 16 Reliance Industries 70 Crown Castle International 76 Kadmon Holdings 99 Renew Financial 48 Cyfrowy Polsat 92 Kantoor Finance 2018 42 Rentenbank 29 Dayco Products 82 KBC Group NV 37 Republic Services 76 DEFT 2018-1 47 KEB Hana Bank 62 Restoration Hardware 101

104 International Financing Review June 16 2018

12 Index 2238 p104.indd 104 15/06/2018 20:01:48 THE FIRST STEP IN CLO ANALYSIS: DETAILED, ACCURATE, AND TRANSPARENT LPC COLLATERAL

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