Life After Libor: US$4Trn of Loans Will Have to Be Repriced When New Benchmarks Are Introduced

JULY 28 2018 ISSUE 2244 www.ifre.com

Life after Libor: US$4trn of loans will have to be repriced when new benchmarks are introduced

Record-setting €6.5bn Ares fund shows private debt ﬁrepower is growing

China Tower looks to raise up to US$10bn from world’s largest IPO in four years

EMERGING MARKETS LOANS PEOPLE & MARKETS STRUCTURED FINANCE Temasek swoops Bankers weigh ECB gives Carige Clifden’s Fairhold on strong window giant Saudi one more CMBS saga heads to sell US$1.35bn Aramco-Sabic chance to boost to court after 10-year bond debt deal capital withdrawn RNS 05 08 08 10 FINANCING ENERGY PROJECTS IN ASIA CONFERENCE

WEDNESDAY SEPTEMBER 26 2018 | SINGAPORE

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Libor pains or equity markets – at least without paying an eye-watering PREMIUM ûWHICHû#ARIGEûCANûILLûAFFORD f all the regulatory challenges facing the syndicated loan 4OûBEûFAIR ûTHEûBANKûDOESûHAVEûOPTIONSû)TûHASûPLENTYûOFû Omarket, the replacement of Libor as the base rate for assets to sell, not least a stake in a local motorway, and a DEALûPRICINGûCOULDûPROVEûTOûBEûTHEûMOSTûDIFlCULT STAKEûINûTHEû)TALIANûCENTRALûBANKû"UTûITûPLANNEDûTOûSELLûTHOSEû Replacing a forward-looking rate with a backward-looking ASûPARTûOFûITSûlRSTûSTABûATûRAISINGûCAPITALûINû!PRILû0RESUMABLYû risk-free overnight rate by the end of 2021 will be no simple there were good reasons it didn’t do so that are still valid TASK NOW !NDûWHATûWORKSûFORûlXED RATEûCAPITALûMARKETSûMAYûNOTû A merger might be its best option – and that seems to be WORKûFORûmOATING RATEûLOANS WHATûTHEû%#"ûISûPUSHINGûFORû"UTûITSûDIFlCULTûTOûSEEûWHYû As all loan agreements are forward looking, borrowers are anyone would want to buy a narrowly focused bank with a able to calculate borrowing costs in advance, allowing them QUARTERûOFûITSûLOANSûINûARREARSûANDûITSûBOARDûINûDISARRAY TOûMAKEûALL IMPORTANTûCASHmOWûMANAGEMENTûDECISIONSû With that background, if Carige can navigate its way out of Backward-looking replacement rates, on the other hand, will ITSûCURRENTûSITUATIONûINTACTûITûWILLûHAVEûPULLEDûOFFûTHEûlNANCIALû MAKEûITûVERYûDIFlCULTûFORûCORPORATEûTREASURERSûTOûCALCULATEû ESCAPEûACTûOFûTHEûCENTURY BORROWINGûCOSTS Unlike the mooted replacement rates, Libor also includes term and risk premiums so banks are compensated for Summer heat lending money over longer periods of time and for the cost of DOINGûSO his summer is proving unusually hot for Asia’s capital The big issue here is transition economics – how to close T markets – and it’s nothing to do with the record the gap between Libor rates and the selected replacement TEMPERATURESûINûPARTSûOFû*APAN rates, which are likely to be much lower? ,ATEû*ULYûISûSELDOMûAûBUSYûPERIODûFORû!SIANûBONDûBANKERSû Adding forward-looking mechanics to the replacement 4HEûEXPATûORIGINATORSûANDûFUNDûMANAGERSûHAVEûDECAMPEDûTOû rates would help close the gap, but that risks the creation of a THEIRûVILLASûINû"ALIûORûTHEIRûCHATEAUXûINû&RANCEû%VENûISSUERSû &RANKENSTEIN LIKEû,IBORûMARKû))û,EAVINGûTHEûREPLACEMENTû AREûINûSHORTûSUPPLY rates as they are leaves a pricing gap that can only be bridged Not so this year, with a cluster of new issues crossing the THROUGHûAûWHOLESALEûREPRICINGûOFûTHEûLOANûMARKET TAPEûLASTûWEEKû)NVESTMENT GRADEû!SIANûISSUERSûPRINTEDûEIGHTû With around US$4trn of outstanding loans pegged to Libor, new US dollar bonds, and China’s property sector alone THINGSûCOULDûGETûAûLITTLEûMESSY ADDEDûlVEûHIGH YIELDûlNANCINGSûnûTHEûBUSIESTûWEEKûFROMûTHEû SECTORûSINCEû!PRIL Equity markets, too, are busy with a giant international Carige clock ticking listing from China Tower poised to trump Xiaomi as the WORLDSûBIGGESTû)0/ûSINCEû e’ve been here before: an Italian bank, having failed to 4HISûRUSHûTOûMARKET ûHOWEVER ûMEANSûONLYûONEûTHINGû W meet strict targets set by the European Central Bank, )SSUERSûAREûEXPECTINGûMARKETSûTOûGETûWORSE ûNOTûBETTER is given a hard deadline to raise capital in a market that has 3ELLûINû-AY ûANDûGOûAWAYû)TSûAûWELL TRODDENûRITUALûINûTHEû CLOSEûTOûNOûAPPETITEûFORûEXPOSUREûTOûTHEûCOUNTRYSûTROUBLEDû CAPITALûMARKETS BANKINGûSECTOR 7HENûITûCOMESûTOû!SIANûlXEDûINCOME ûBUYERSûHAVEûBEENû Banca Monte dei Paschi di Siena, Banca Popolare di Vicenza NOTICEABLYûABSENTûSINCE ûWELL û-AYû7HILEûTHEûSELLINGûAPPEARSû and Veneto Banca were all in a similar situation just over a to have stopped, thanks to an easing of liquidity conditions YEARûAGOû!LLûTHREEûFAILEDûTOûRAISEûTHEûCAPITALûTHEYûNEEDEDû!LLû in China, there is little to suggest a sustained rally in August THREEûWEREûEVENTUALLYûRESCUEDûBYûTHEû)TALIANûSTATE nûEITHERûINûDEBTûORûEQUITY The ultimatum given to Banca Carige by the ECB to come US President Trump’s constant threats of trade tariffs and up with a new plan (its two recent plans having failed) to currency wars should keep investors on their toes in August’s BOLSTERûITSûCAPITALûFEELSûVERYûSIMILARû!NDûTHEREûAREûMANYûTHATû HOLIDAY THINNEDûMARKETSû&URTHERûOUTPERFORMANCEûINû53û think the bank will end up going the way of its three larger equities is looking ever harder to justify, and even China’s RIVALSûBAILEDûOUT latest move to ease onshore liquidity is no guarantee against In some ways, Carige faces a much harder task than MPS, FURTHERûDEFAULTS 6ICENZAûANDû6ENETOû4HEûRISEûOFûAûCOMBATIVEûRIGHT LEFTû August has also proven a historically volatile month in COALITIONûGOVERNMENTûHASûLEDûTOûAûRUNûONû)TALIANûASSETSû"ANKû recent years, with Europe’s sovereign debt crisis causing funding costs have soared – even for the top-tier, never mind havoc in 2011 and China’s stock market collapse rocking Aû4RIPLEû#ûRATEDûBANKûWITHûITSûBACKûTOûTHEûWALL CONlDENCEûINû It’s also just a few months since a €500m rights issue that For the queue of Asian companies looking to raise capital in WASûMEANTûTOûSORTûTHEûBANKûOUTû!GAINSTûTHATûBACKDROP ûITSû THEûNEXTûFEWûWEEKS ûAûPROLONGEDûBREAKûFROMûTHEûVOLATILITYûOFûTHEû GOINGûTOûBEûDIFlCULTûTOûRAISEûFRESHûCAPITALûINûEITHERûTHEûBONDû SECONDûQUARTERûWOULDûBEûFARûBETTERûTHANûAûWEEKûONûTHEûBEACH

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TOP NEWS 04 LOANS Post-Libor US$4trn of loans will have to be repriced when new benchmarks are introduced. Treasurers face difﬁculties calculating borrowing costs. 04 LOANS In demand Ares forges ahead with record-setting private debt fund. Cash pours into direct lending funds as opportunities grow. 04 EMERGING MARKETS Singapore Temasek swoops on strong window to sell US$1.35bn 10-year bond. State investor breaks six-year absence. 05 EQUITIES Giant China Tower aims for broad base. World’s largest IPO in four years comes with modest cornerstone tranche. 06

Stellar debut Pinduoduo shows that US appeal remains. 07 Jumbo financing Bankers weigh multi-billion dollar Aramco-Sabic debt financing. 08 Breach Carige given one more chance to boost capital. 08 Navya Driverless car maker finds route to IPO. 09 Activist investor Clifden’s Fairhold CMBS saga heads to court. 10

PEOPLE & Way to go Deutsche looks to recapture trading share, yet fixed income and 11 MARKETS equities underperform US peers in Q2. Good news Investment banking profits soar at UBS. Tight control on costs enabled Swiss bank to increase profits by 44% last quarter. 12 M&A Lazard and Moelis post record revenues, helped by hefty global merger and acquisition dealmaking in the first half of this year. 13 Growth Rothschild hires trio for US financial advisory business. 15 Market share UBS beefs up for Asia-US listings. 17 Tumble Nomura’s profit slumps on wholesale banking woes. 18 New regime India’s bad debts draw early bets. 20

BONDS Feedback EBRD snubs Sonia to keep Libor alive. 23 Debut trade Fannie Mae gives SOFR a boost. 23 CASHES EBA sides with UniCredit. 24

EMERGING Torrid time Eskom hopes to lure back investors. Hopes to regain trust. 47 MARKETS New ground Gazprom creates rouble market history. 47 South Korea Issuers ride rebound. 52

LOANS Immigration US shrugs off ﬁnancing protests over detention centres. 55 China Mezzanine loans catch on. 57 Taiwan KKR targets record LBO. 61

EQUITIES Explosive debut Bloom Energy sees boom times after IPO. 75 IPO Spartan approach to SPAC. 75 Expansion Tenable secures beachhead. 82

International Financing Review July 28 2018 3 Top news China Tower’s broad base 06 China developers’ bond rush 06 Bankers weigh Aramco-Sabic jumbo 08

Loan market to reprice if Libor is replaced

Loans Treasurers to face difficulty calculating borrowing costs

BY ALASDAIR REILLY been pushing to replace Libor compensate lenders for the credit documents to include with substitute rates that are length of the contract and are Libor replacement language A staggering US$4trn of based on actual transactions and priced lower than Libor. before the 2021 deadline. outstanding syndicated loans less open to market abuses. They Although the amendments may have to be repriced if Libor have set a deadline of the end of MIND THE GAP give a mechanism for is discontinued, because ûTOûlNDûAûSUITABLEû The gap between the rates and establishing new base rates, they replacement rates could be replacement for Libor. the lack of detail will make it do not effectively address the substantially lower than the Libor is likely to be replaced harder for company treasurers to revisions to the credit margins existing benchmark. with risk-free rates such as the predict the cost of their debt and that will be required, Fitch said. Libor provides an interest rate Secured Overnight Funding Rate match funding, bankers said. benchmark for nearly all for US dollar loans and the h)TSûCERTAINLYûNOTûIDEALû"OTHû COMPLICATED syndicated loans, FRNs and unsecured Sterling Overnight lenders and borrowers need to The Libor replacement process is derivative products, as well as Index Average for sterling loans. know how much will be paid on complicated by the fact that intercompany loans and other Libor is a forward-looking term a loan. It’s important for credit agreements and lenders types of commercial contracts. rate based on one, three, six and CASHmOWûMANAGEMENT vûAûSENIORû have different levels of consent Its replacement will affect 12-month contracts. It provides banker said. rights which need to be agreed every loan contract and make it certainty of funding costs "ASEDûONûHISTORICALûDATAû when agent banks and borrowers MOREûDIFlCULTûFORûTREASURERSûTOû because the interest payable and calculated by the Federal Reserve agree a revised base rate. calculate their borrowing costs. tenor is known in advance, and "ANKûOFû.EWû9ORKûANDûCITEDûINûAû Lenders often have negative h4HISûISûAûSERIOUSûCASHmOWû also offers lenders premiums for report from Fitch Ratings, SOFR consent rights on revised base management issue for corporates,” longer-dated maturities. could be as much as 75bp below rates and are seen to have agreed a loan syndicator said. At the moment, the new RFRs Libor, which would require loan to the new rate if they do not Since banks were found to be are backward-looking overnight pricing to be hiked to maintain object within a limited lDDLINGû,IBORûSUBMISSIONSû rates, which do not take banks’ the original return on a loan. timeframe. Lenders also before, during and after the cost of funds or credit risk into "ORROWERSûANDûLENDERSûHAVEû sometimes have additional lNANCIALûCRISIS ûREGULATORSûHAVEû account. They also do not already been amending existing consultation rights. Ares forges ahead with €6.5bn private debt fund

Loans Cash pouring into direct lending funds as opportunities grow

BY DAVID BROOKE fund, and is in line with its peers as A third of private debt managers “Some funds are taking a THEûINDUSTRYûRAMPSûUPûITSûlNANCIALû on both sides of the Atlantic are portfolio approach to the market ARES MANAGEMENT’s new record- lREPOWER ûDEFYINGûNAYSAYERSûWHOû willing to complete deals at seven and they’ll get a nice credit here breaking €6.5bn European PREDICTEDûTHATûTHEûmEDGLINGûMARKETû times leverage, according to a and there, but others are private debt fund shows that cash would be short lived. SURVEYûBYûLAWûlRMû0ROSKAUER absolute howlers. They spread is continuing to pour into the Alcentra last year raised Direct lending funds continue to their money across the market sector, challenging lenders to €4.3bn for its second fund, triple RELYûONûPRIVATEûEQUITYûlRMSûTOû and a few will go wrong,” one maintain discipline as the market the size of its predecessor, and source transactions. While there fund manager said. grows ever more competitive. ICG has €5.2bn available to has been growth in non-sponsored Several European private debt invest, up from €3bn raised in corporate transactions, advisory CONTINENTAL DRIFT funds have broken fundraising 2015. lRMû'#!û!LITUMûSAIDûTHATûhTHEû The pressure to deploy capital records since early 2017. Ares (AYlNûANDû"LUE"AYûALSOûRAISEDû non-sponsored market is still very has been relieved by a growth in new direct lending fund – the record sums for direct lending small, given the enormous size [of Continental activity outside the lRMSûFOURTHû ûGIVESûAûTOTALûOFû vehicles last year, raising €3.5bn the middle market]”. UK, which remains the most €10bn to invest including and €3bn respectively. Lenders are already running into mature, active and competitive leverage, which will allow it to In a market awash with problems with portfolio companies. private debt market, as banks make far larger commitments. liquidity, concerns about the 0EMBERTON û0ERMIRAûANDû!VENUEû continue to retrench in Europe. “It is now possible for us to effects of competition are recently took control of French Middle market companies in write a €500m ticket,” said growing, as funds become more luggage company Delsey, as did LGT France and Germany are Michael Dennis, co-head of Ares accepting of looser loan with online retailer sofa.com. And continuing to open up to European direct lending. documentation and are willing the private debt market has not alternative sources of capital as 4HEûlNALûSUMûISûMOREûTHANû to offer higher leverage been immune to hits in the UK lawmakers have relaxed twice the size of Ares previous multiples to win deals. retail and casual dining sectors. restrictions on alternative

4 International Financing Review July 28 2018 For daily news stories @ visit www.ifre.com One more chance for Carige 08 Driverless car maker ﬁnds IPO route 09 Clifden CMBS saga latest 10

In a rising interest rate replace the Libor rate, but that environment, some banks could clause would only be triggered if Temasek swoops on try to use their consent rights to no screen rates were available. reprice loans at even higher The revised clause is more levels, which could leave mEXIBLEûANDûALLOWSûLENDERSûTOû strong window lenders lacking consent rights at put a replacement rate in place Emerging Markets Singapore investor breaks six-year absence a distinct disadvantage in without unanimous consent, negotiations, Fitch said. and can be triggered even if BY FRANCES YOON h0EOPLEûUNDERESTIMATEûHOWû Libor is still available. much demand there is for Triple A WORK IN PROGRESS The LMA also tackled the TEMASEK HOLDINGS seized an paper within investor buckets and In Europe, banks are working transition period between opportunity in an improving the help it could create in terms of internally on the issue and also reference rates by including MARKETûTOûSELLûITSûlRSTû53ûDOLLARû bringing the average rating of the with the Loan Market pricing adjustments to reduce the bonds in six years, locking in portfolio up,” said one of the Association, which published a gap between Libor and its successor US$1.35bn of long-term funding people familiar with the deal. revised replacement screen rate via amendments and waivers that from investors hungry for Triple The bonds were well bid in the clause on May 25. do not need 100% lender consent. A assets. aftermarket, moving to a range LMA documentation previously )NûTHEû53 ûTHEû"USINESSû,OANSû Singapore’s investment fund of Treasuries plus 64bp–67bp. included a calculation of interest Working Group of the priced the 3.625% 10-year senior Fair value was estimated clause that gave several options if Alternative Reference Rates bonds at Treasuries plus 72bp, around Treasuries plus 70bp– OFlCIALLYûPUBLISHEDûBASEûINTERESTû Committee is currently SETTINGûITSûlRSTû53ûDOLLARû 75bp, based on a range of data rates - so-called screen rates - are considering Libor replacement benchmark since a US$1.7bn points that include Temasek’s not available, with lenders’ cost of language that could bypass the dual-tranche offering in July 2012. US$1.2bn January 2023s and funds as the last option. consent issue, Fitch said. Orders peaked at US$6.5bn Triple A rated US corporate Agents and borrowers can If Libor is replaced, the BEFOREûSETTLINGûATûAûlNALû credits. negotiate an alternative base question of who bears the cost US$4.7bn, marking one of the The 2023s were cited around rate, but that requires all-lender of the amendments remains highest order books seen in G plus 62bp, and adding a 10bp consent and is seen as a short- UNANSWEREDû"ORROWERSû Asian G3 markets this year. EXTENSIONûFORûAûlVEûTOû YEARû term solution. normally pay amendment costs, The latest deal came in a curve meant the latest deal paid The replacement screen rate but will be reluctant to pay for strong week for primary issuance a minimal new issue concession. clause previously allowed most changes that will increase the ANDûSATISlEDûPENT UPûDEMANDûFORû Meanwhile, Triple A rated US lenders to agree amendments to cost of their loans. high-quality paper among corporate 10-year credits such as investors seeking protection Microsoft and Johnson & Johnson against volatile markets and were trading in the G plus 60bp lending in the last couple of deals as investor resistance in rising interest rates. range. Walmart’s recently priced years, mirroring previous the large cap market encourages “Our USD issuance was in US$2.75bn of 2028 bonds were at developments in the UK. PRIVATEûEQUITYûlRMSûTOûSEEKû response to enquiries from 69bp. As those bonds are SEC- In Germany, historically a other options. institutional investors about registered and are more liquid, DIFlCULTûMARKETûFORûDIRECTû In the middle market, sponsors high-grade USD bonds,” a some investors wanted more lenders to tap due to its are turning to direct lending funds Temasek spokesman said in an spread from Temasek. fragmented banking system, as they prefer the simplicity of email. “These issues increase our Appetite was robust, allowing 48% of leveraged buyout deals in dealing with a single party on a FUNDINGûmEXIBILITYûANDûENHANCEû the leads to tighten guidance THEûlRSTûQUARTERûOFûûWEREû transaction. The traditional four- OURûCAPITALûEFlCIENCYv from the marketing range of funded by private debt funds, bank club deal has “fallen by the The notes will be issued by 90bp–95bp announced on according to GCA Altium. wayside”, one banker said. Temasek Financial (I) and are 7EDNESDAYûMORNINGû0RICINGûWASû France, meanwhile, accounts At the top end of the expected to be rated on par with subsequently tightened further to for a quarter of the overall market, leveraged loan market, sponsors !AA!!!û-OODYS30 ûRATEDû Treasuries plus 80bp area, and ACCOUNTINGûlRMû$ELOITTEûSAID have been pushing the market guarantor Temasek Holdings. lNALLYûTOûBP ûPLUSûORûMINUSûBP h"ANKûRETRENCHMENTûISû hard with borrower-friendly 0EOPLEûFAMILIARûWITHûTHEû US investors bought 46% of continuing to play out across DEALS ûBUTûINVESTORSûAREûlGHTINGû situation said that Temasek has the 144A/Reg S and 3c7 paper, continental Europe, echoing back on aggressive always been opportunistic and Asian accounts 44% and EMEA what took place in the UK documentation and tighter that last Wednesday offered a accounts 10%. SHORTLYûAFTERûTHEûlNANCIALû margin levels, which could good window to capture high- "YûINVESTORûTYPE ûASSETû crisis,” Dennis said. BENElTûPRIVATEûDEBTûFUNDSûBYû grade demand ahead of this managers booked 43%, central allowing them to market week’s potentially disruptive banks and agencies a combined BY THE WAYSIDE THEMSELVESûONûTHEIRûmEXIBILITY "ANKûOFû*APANûANDû&EDERALû 25%, banks 14%, insurers and Large fund sizes means funds “Depending on a sponsor’s Reserve meetings. pension funds a combined 9%, are poised to snap up market needs, they may turn to us instead Risk sentiment has improved corporates 7%, and private banks share from banks in the of the capital markets because in Asia’s primary bond markets and others 1% each. traditional middle market - they need to move quickly and lately after defensive trades with Bank of America Merrill Lynch, despite funds’ higher cost of provide greater certainty of high ratings tightened in Citigroup, HSBCû"$ and Morgan lNANCINGû ûANDûCANûTARGETûBIGGERû execution,” Dennis said. secondary trading. Stanley were bookrunners.

International Financing Review July 28 2018 5 Top news China Tower aims for broad base

Equities World’s largest IPO in four years comes with modest cornerstone tranche

BY FIONA LAU range of HK$1.26–$1.58 each, “If China Tower gets done, it Management (US$300m) and valuing the company at WILLûDElNITELYûSENDûAûPOSITIVEû Darsana Master Fund (US$175m). CHINA TOWER has launched its US$28bn–$35bn. SIGNALûTOûTHEû)0/ûMARKETv Alibaba’s Taobao China is GIANTû(ONGû+ONGû)0/ûAFTERûLININGû The deal is seen as a key test of 4HEûmOATûGOTûOFFûTOûAûGOODûSTARTû PLEDGINGûABOUTû(+M û#.0#û up cornerstone commitments THEû(ONGû+ONGû)0/ûMARKETûGIVENû last week, with the books #APITALû53M û)NVUSû0UBLICû FORûLESSûTHANûAûlFTHûOFûTHEûUPûTOû the around 6% slide in the covered after one day. This was %QUITIESû53MûANDû"EIJINGû HK$68.1bn (US$8.7bn) base deal, benchmark Hang Seng Index so particularly important given the Haidian District State-owned gambling that markets will hold far this year. relatively small cornerstone Capital Operation and lRMûDESPITEûTHEûSUMMERûLULL It also comes as China’s tranche. Management Center US$98.5m. The world’s largest telecoms economy has begun to lose Ten cornerstone investors )#"#û!SSETû-ANAGEMENT û tower operator started momentum amid a government have agreed to invest about Wallong (Hong Kong), a unit of bookbuilding last Monday for a push to reduce debt and an US$1.4bn in total, covering 16%– China National Machinery mOATûTHATûISûSETûTOûSURPASSûTHEû ESCALATINGû3INO 53ûTRADEûCONmICT 20% of the deal – an unusually Industry Corporation, and SAIC HK$42.6bn listing of Xiaomi in “July and August are LOWûPROPORTIONûFORûAûLARGEû)0/û Motor HK Investment have each early July as the world’s largest traditionally quiet months for from a state-owned company. committed to invest US$50m. )0/ûSINCEû#HINESEûE COMMERCEû )0/SûASûMANYûINVESTORSûAREû &ORûEXAMPLE û0OSTALû3AVINGSû giant Alibaba’s US$25bn US taking a summer break. This "ANKûOFû#HINAûSOLDûABOUTûûOFû DIVIDEND RATIO listing in 2014. Including the YEAR ûHOWEVER ûMANYû)0/SûAREû ITSû)0/ûSHARESûTOûCORNERSTONEû The price range represents a greenshoe, China Tower could rushing out as issuers and investors for its HK$59.1bn multiple of 7.1 times to 8.0 times raise up to US$10bn. bankers are worried that the listing in 2016. adjusted Ebitda for 2018 and 6.5 The company is selling about trade war will bring more Hillhouse is leading with a times to 7.3 times for 2019. 43.1bn primary shares, or a 25% uncertainty to the markets,” said US$400m commitment, American Tower and FREEûmOAT ûATûANûINDICATIVEûPRICEû a banker away from the deal. followed by Och-Ziff Capital Crown Castle International, China developers resume bond rush

Emerging Markets Policy-driven rally spurs busiest week for dollar debt since April

BY CAROL CHAN, INA ZHOU “Market sentiment is developers structured their deals on Tuesday afternoon after DElNITELYûMUCHûBETTERûTHANûINû to appeal to investors’ building a strong order book Chinese property developers June or early July. Developers are preferences, with short tenors or from anchor investors. scrambled to print US dollar rushing to launch their deals as mOATING RATEûSTRUCTURESû!ND û On Wednesday, GREENLAND bonds last week, taking full the window may be short-lived crucially, all of last week’s high- HOLDING GROUP ûRATEDû"A""""n û advantage of a policy-driven in a volatile market,” a DCM yield issuers provided THEûlRSTûHIGH YIELDû#HINESEû rally that some investors warned banker from a Chinese bank 30bp–50bp new issue property developer to issue US may be short-lived. said. concessions. DOLLARûmOATING RATEûBONDS û Six developers raised a “Moreover, many developers REOPENEDûTHEûûmOATERSûITû combined US$2.2bn, marking are set to announce their half- BIGGER SIZES sold last month to raise an extra the busiest week for new issues year earnings in August. They YUZHOU PROPERTIES ûRATEDû"A""n US$300m. from the sector in more than want to complete their bond ""n ûLEDûTHEûLATESTûBATCHûOFû Then, on Thursday, China three months. issuance ahead of the blackout property names last Monday, AOYUAN PROPERTY GROUP ûRATEDû" In a reversal of the recent trend, period.” reopening its 7.90% May 2021 " ""n ûREOPENEDûITSûû most of the deals drew decent The Chinese high-yield bond senior notes offering with a tap senior notes due 2020 issue for a demand, closing two to three market has rallied since mid-July more than double the original tap of US$175m. (See Emerging times covered, and their bonds after authorities provided more issue size. Markets section for details of the TRADEDûlRMERûINûTHEûSECONDARYû liquidity for the domestic The risk-on tone encouraged deals.) market. That was a stark contrast market and softened the others to rush out deals. On The previous week, the to new issues as recently as July deleveraging push in the Tuesday morning, SUNAC CHINA 0EOPLESû"ANKûOFû#HINAûTOOKû 11, when a US$200m offering lNANCIALûSECTORû!ûSURPRISEû HOLDINGS ûRATEDû"" ""n û steps to ensure ample liquidity from repeat issuer Agile Group liquidity injection into the opened books for a two-year new by allowing commercial banks struggled to clear the market and banking sector last Monday note issue and SINO-OCEAN GROUP to tap its medium-term lending immediately traded wider. ADDEDûFURTHERûCONlDENCEûTHATû HOLDING ûRATEDû"AA"""nû facility, helping them to expand Rather than a sustained China would support the (Moody’s/Fitch), came out with lending and increase investment rebound, however, many market economy amid an escalating THREE YEARûmOATING RATEûNOTES in bonds issued by lower-rated participants saw the rush of trade war with the US. CHINA FORTUNE LAND DEVELOPMENT, companies onshore. issuance as a sign the renewed Still, despite an improvement RATEDû"" ûBYû&ITCH ûDASHEDûOUTû Last Monday, the central bank interest in the sector may be in sentiment, bankers and with a print of three-year notes unexpectedly injected temporary. issuers remain realistic. All six with initial guidance of 9.5% area Rmb502bn (US$74bn) into the

6 International Financing Review July 28 2018 For daily news stories @ visit www.ifre.com

both US-listed, and India’s comfortable level,” said a fund "HARTIû)NFRATELûAREûTRADINGûATû manager. Pinduoduo shows that 18.8 times, 19 times and 7.5 China Tower was formed in times Ebitda, respectively, 2014 from the tower operations US appeal remains for the next 12 months, of China’s three state-backed according to Thomson Reuters telecoms providers – China Equities China-to-US listings remain in focus data. Mobile, China Telecom and “The EV/Ebitda of China China Unicom – in a bid to BY FIONA LAU strong demand, but decided to Tower is very competitive streamline operations and leave something on the table to compared with the listed peers. reduce duplication. PINDUODUO made a stellar debut secure a decent aftermarket This helps compensate for the As of the end of June, the last week after its US$1.6bn performance,” said the person. not-so-high dividend payout company operated 1.9m tower .ASDAQû)0/ ûPROVINGûTHATûTHEû53û 0INDUODUOûSOLDûMû ratio of the company,” said a sites and had 2.8m tenants. It remains an attractive listing American depositary shares, or person close to the deal. plans to use 60% of the proceeds venue for fast-growing Chinese about 6.8% of the enlarged share China Tower plans a dividend for capital expenditure, 30% for companies despite stepped-up capital, at the top of the US$16– payout ratio of at least 50% of its loans repayment and 10% for competition from Hong Kong. ûPRICEûRANGEû!TûTHEûlNALû ANNUALûDISTRIBUTABLEûNETûPROlT û general working capital. The shares of the Chinese price, the company was valued according to the prospectus. The deal will price on August online group discounter soared as at about US$24bn, compared That is lower than some 1. Share trading will start on MUCHûASûûOVERûTHEû)0/ûPRICEûOFû with a US$15bn valuation in investors would like. August 8. US$19 when trading started last April. “Although the company is CICC and Goldman Sachs are Thursday, before closing at projected by its underwriters THEûJOINTûSPONSORSûFORûmOATû4HEû US$26.70 for a 41% gain. MORE TO COME to enjoy a 10%–20% growth two banks are also joint global The massive gain gave 0INDUODUOûISûONEûOFûTHEûLARGESTû rate in the future, we do think coordinators and joint investors food for thought after Chinese listings in the US this year this investment should also bookrunners with Bank of Hong Kong lured the HK$42.6bn and more are expected. Electric generate a decent dividend America Merrill Lynch and JP 53BN û)0/ûOFû#HINESEû vehicle manufacturer NIO is yield. A payout ratio of at least Morgan. There are 11 other joint smartphone maker Xiaomi and planning to raise about US$1.5bn 70% could be a more bookrunners. the US$4bn-plus listing of online after the summer, while TENCENT food delivery-to-ticketing services MUSIC ENTERTAINMENT is looking to provider Meituan Dianping with raise US$3bn–$4bn in October. lNANCIALûSYSTEMûVIAûITSûONE YEARû adding that the strong recovery the introduction in April of new “Chinese issuers are still MLF, even though no MLF loans in the past two weeks was partly listing rules to attract Chinese interested in US listings, were due to mature on the day. driven by short covering. TECHNOLOGYûANDûBIOTECHûlRMS especially if their comparables Also last Monday, the State Moreover, concerns over The enthusiastic reception for are listed there. US investors are Council announced that it would pricing have made some LOSS MAKINGû0INDUODUO ûWHICHûWASû also very sophisticated in ADOPTûAûMOREûVIGOROUSûlSCALû developers hesitate. For example, only founded in 2015 by former valuing fast-growing Chinese policy to help tackle external COUNTRY GARDEN HOLDINGS, which Google engineer Colin Huang, has companies,” said an ECM banker uncertainties, in an apparent the NDRC announced recently shown how the US market can focused on US-Chinese listings. reference to the current trade had registered an offshore bond reward a fast-growing Chinese However, US investors are also tensions with the US. quota, is heard to be still in STARTUPû0INDUODUOûISûAûPLATFORMû selective. Some smaller Chinese discussions with investors. that allows consumers to group )0/SûDIDûNOTûTRADEûWELLûEARLIERû SHORT-TERM BOOST The last time so many together to get bigger discounts. this year, and the enthusiasm Market participants reckoned Chinese developers were in the h)NVESTORSûBELIEVEû0INDUODUOû AROUNDû0INDUODUOûDIDûNOTûHELPû that the policy adjustment was dollar market was the week can keep up its tremendous other candidates. unlikely to provide a long-term beginning April 16, when 12 growth. The support of existing Last week, AURORA MOBILE and stimulus to the China high-yield DEALSûPRINTEDû"ANKERSûEXPECTû SHAREHOLDERSûFORûTHEû)0/ûALSOû CANGO raised less than targeted sector. supply from the sector this time HELPEDûBOOSTûCONlDENCE vûSAIDûAû FROMûTHEIRû53û)0/SûAFTERûSELLINGû “The support [to the bond will be much weaker than that person close to the deal. fewer shares. market] will be short term,” said seen in April. 0INDUODUOSûREVENUEûSOAREDûTOû Aurora Mobile, a mobile data a Hong Kong-based fund The April deluge of US dollar 2MBBNû53M ûINûTHEûlRSTû aggregator, raised US$77m from a manager. “The painstaking offerings from Chinese quarter of 2018 from Rmb37m a .ASDAQû)0/ ûûLESSûTHANûTHEû deleveraging effort is being put developers, combined with year previously. Losses remained US$125m target at the top end of off, but China will – and has to – fears of rising default risks, broadly steady at Rmb201m the US$8.50–$10.50 range. Cango, a tackle the issue at a more practically shut down the China versus Rmb207.7m a year earlier. provider of automotive transaction appropriate time.” high-yield market for the past Existing shareholders Tencent services in China, raised US$44m A Hong Kong-based fund two months. Holdings and Sequoia Capital FROMûAû.93%û)0/ûAFTERûCUTTINGûTHEû manager from a Sino-foreign A DCM banker at a Chinese had indicated an interest in deal size by as much as 71%. joint venture was also sceptical SECURITIESûlRMûNOTEDûTHATû purchasing up to US$250m each "OTHûCOMPANIESûTRADEDûWELLûONû about the recent rebound. developers have so far used most INûTHEû)0/ûBUTûWEREûEVENTUALLYû their debut last Thursday, with “The credit fundamentals of their offshore debt quotas allocated just US$150m each. Aurora shares up 3.5% to US$8.80 remain unchanged – for from the NDRC. Moreover, the The books were about 20 and Cango up 13.8% to US$12.52. example, developers’ mounting blackout period around interim times covered, said another CICC, Credit Suisse, China ONSHOREûRElNANCINGûPRESSUREû results will also push some person close to the deal. Renaissance and Goldman Sachs remains imminent, especially names to wait until September “The company could have set were the bookrunners on FORûTHEû3INGLEû"ûNAMES vûHEûSAID û before launching new deals. the price higher given the 0INDUODUO

International Financing Review July 28 2018 7 Top news Bankers weigh multi-billion dollar Aramco-Sabic debt ﬁnancing Loans Aramco’s Sabic acquisition takes heat off IPO plans

BY SANDRINE BRADLEY "ANKERSûAREûHAVINGûINTERNALû however, as negotiations will be SELLûSHARESûINû!RAMCOûINûANû)0/û discussions about Aramco’s led from the top by Saudi planned for 2018, which was "ANKERSûAREûDISCUSSINGûAû potential need for external debt Arabia’s reforming crown aiming to raise more than POTENTIALûJUMBOûlNANCINGûOFûUPû lNANCING ûWHICHûCOULDûBEûLOANSû prince, Mohammed bin Salman. US$100bn for a new sovereign to US$70bn to back oil giant or bonds. Aramco has not yet “We would like to get out and wealth fund. SAUDI ARAMCO’s acquisition of a sent a request for proposals to its meet people to discuss this but I 4HEû)0/ûHASûBEENûDELAYEDûUNTILû majority stake in SAUDI ARABIA lenders, sources said. don’t think anyone will be at least 2019, which means that BASIC INDUSTRIES CORP. “Nothing has happened yet knowledgeable enough. This is Aramco’s relationship banks will Aramco is aiming to buy a but all banks are looking at it,” being led from the top by the be expected to provide any controlling stake in one banker said. crown prince, I don’t think lNANCINGûFORûTHEû3ABICûPURCHASEû PETROCHEMICALûOUTlTû3ABIC ûANDû The possibility and size of a people at the Aramco level even at very low rates to land a role in could buy all of the 70% stake potential debt deal depends know what is going on,” he said. THEûPOTENTIALû)0/ OWNEDûBYûTHEû0UBLICû)NVESTMENTû WHETHERûVENDORû0)&ûWILLûREQUIREû Aramco declined to comment. “The US investment banks, all Fund, Saudi Arabia’s top certainty of funds for the three Japanese banks, all the sovereign wealth fund. acquisition, which could mean LENDERS KEEN French banks, some of the Riyadh-listed Sabic, the that Aramco has to raise cash !ûLARGEûPOTENTIALûDEBTûlNANCINGû German banks and a lot of world’s fourth-biggest upfront, rather than paying over could boost Middle Eastern Middle East banks, including the petrochemicals company, has a a longer period. lending, which sank to only Saudi banks, will be willing to market capitalisation of “Aramco may need to raise US$4.4bn in the second quarter - lend as much as possible,” a SR385.2bn (US$103bn) and a 70% some upfront cash which might the lowest quarterly total since second banker said. stake would cost roughly be paid in a number of agreed the second quarter of 2004 - and "ANKSûTHATûAREûUNLIKELYûTOûBEû US$70bn. instalments and might include a would attract appetite from local INVOLVEDûINûTHEûPOTENTIALû)0/û *0û-ORGANûANDû-ORGANû3TANLEYû bridge loan,” the banker said. and international banks. would be less keen to lend at low have been picked to advise on Getting information on a In early 2016, the crown rates, as banks’ return on capital the deal, Reuters reported. POTENTIALûDEALûCOULDûBEûDIFlCULT û prince said that he planned to remains under pressure.

Carige given one more chance to boost capital

People & Markets Italian bank has been in breach of requirements since January

BY GARETH GORE look into other options – to draw a line under its troubles. lRSTûTWOûATTEMPTSûTOûRAISEû including being sold or merged. "UTûLOSSESûSINCEûTHENûANDûAû capital, which it said had BANCA CARIGE has been granted “The supervised entity shall failure to meet business targets “strongly negatively affected not ONEûlNALûCHANCEûTOûMEETûITSû PRESENTûTOûTHEû%#"ûATûTHEûLATESTûBYû have further set it back. ONLYû"ANCAû#ARIGE ûBUTûALSOû capital obligations, with the 30 November 2018 a plan … to SEVERALûOTHERûlNANCIALûANDû %UROPEANû#ENTRALû"ANKûGIVINGû restore and ensure in a ITALIAN CLEAN-UP corporate issuers”. the Italian lender until the end sustainable manner compliance Carige is the last of four banks The bank roadshowed a Tier 2 of November to come up with a with capital requirements,” the TARGETEDûBYûTHEû%#"ûINûAûCLEAN UPû bond earlier this year, but the new plan of action after two central bank wrote. “This plan of the Italian system. The others deal never came. Carige says that previous efforts ended in failure. should assess all options including nû"ANCAû-ONTEûDEIû0ASCHIûDIû it is still working towards such a The bank has been under a business combination.” 3IENA û"ANCAû0OPOLAREûDIû6ICENZAû transaction, which would count pressure to boost its capital since ANDû6ENETOû"ANCAûnûWEREûALLû towards its capital, but analysts failing to meet a new target on “Capital raises will be bailed out last year after failing are pessimistic about a deal January 1. A plan drawn up in exceptionally tough, to raise capital privately. actually printing. April to sell assets including especially without a It may struggle to avoid a Equity capital may be equally properties, a stake in a motorway, new plan, and it leaves similar fate. Appetite for Italian DIFlCULTû)TSûLASTûRIGHTSûISSUE û and shares in the Italian central assets has worsened since the completed in December, was bank never came to fruition. the door open for a FOURûBANKSûlRSTûSTARTEDûEFFORTSûTOû painful for those involved. Carige drew up a second plan merger” raise capital in 2016, not least Underwriters insisted on unusual last month, centred around the because of the rise of a back-out clauses to protect issuance of Tier 2 bonds to boost The latest ultimatum comes combative right-left coalition themselves. Take-up among ITSûTOTALûCAPITALû"UTûTHEû%#"û just seven months after a €500m government in the country. shareholders was just 66%. rejected the plan, and has since rights issue – the bank’s third in Indeed, Carige blamed market “Funding conditions are far written to the bank urging it to as many years – that was meant conditions for the failure of its worse for the bank than back in

8 International Financing Review July 28 2018 For daily news stories @ visit www.ifre.com

“If there is a deal it will be RElNANCEûNEARLYû53BNûOFû extremely cheap – double digit external debt by October. A Driverless car maker pricing. We wouldn’t get any potential change of ownership ancillary business so why would is unlikely to alter these plans, ﬁnds route to IPO we lend so cheaply?” a third bankers said. banker said. The company has a US$1bn Equities Priced below guidance, Navya trades up bond which is due to mature on October 3 and has hired banks BY ROBERT VENES unable to achieve that target “This is being led from for an international bond within an initial bookbuilding the top by the crown offering. The timing and terms 4HEûLASTûMAJORû%UROPEANû)0/û period of six days and so books prince, I don’t think of the issue have yet to be before the summer holidays were held open an extra two days people at the Aramco decided. FAILEDûTOûATTRACTûSUFlCIENTû until last Monday, but with no level even know what Sabic also had a US$1bn term demand to cover the deal, but changes in deal structure. is going on” loan that matured on July 18, and autonomous vehicle maker The rub is that bookbuilding expects to use drawings on its NAVYA managed to rescue the had been accelerated from the existing US$2bn revolving credit mOATûONCEûITûSLASHEDûTHEûSIZEûOFû typical two weeks as investors had The acquisition of the Sabic facility to repay that loan until the the fundraising and valuation of already seen the management stake could also impact the 53BNûRElNANCINGûISûCOMPLETEDû the company. and a reasonably speedy covered TIMINGûOFû!RAMCOSûPLANNEDû)0/ û Discussions are currently 4HEûENDûRESULTûWASûAûõMû)0/û message was anticipated. the state oil giant’s chief underway, bankers said. - 25% less than the minimum target executive, Amin Nasser, said “We are discussing various - yet the company secured the cash Last minute earlier this month and could even things with Sabic, something it needs to sustain it for the next 12 restructurings have REMOVEûTHEûNEEDûTOûDOûTHEû)0/ may come. It has not been really MONTHS ûWHILEûTHEûlNALûPRICEûOFûõû 0)&ûCOULDûRECEIVEûUPûTOû53BNû agreed what purpose the money per share was vindicated by a been unusually from the Sabic sale, which would will be used for,” a fourth positive aftermarket, even without common this year, but GIVEûSUFlCIENTûFUNDSûTOûEMBARKûONû banker said. a greenshoe. have provided mixed ambitious infrastructure and The term loan was originally Ultimately the deal’s small results for investors development projects planned for agreed in 2013 via a club size meant that whatever the the Kingdom. syndicate and paid 50bp over outcome it wouldn’t have any ,IBORû4HEûlVE YEARûREVOLVINGû BEARINGûONû)0/SûWHENûTHEû A revision of the structure SABIC REFINANCING credit was put in place in market reopens in September. came on Monday morning, just 3ABIC ûWHICHûISûRATEDû!! ! û December 2015 and pays 25bp Nonetheless Navya shows once a couple of hours before the said in May that it expected to over Libor. again that investors are not put BOOKSûWEREûDUEûTOûCLOSEû0RICINGû off when they disagree with inevitably came at the bottom of proposed valuations and are revised guidance of €7-€9 versus keen to engage with sellers. the original €9-€12 price range. March, when they pulled their totalling €3.1bn, it is unlikely to Shares in the French electric The restructured deal added Tier 2 deal,” said Tom be able to earn its way to better vehicle company closed at €7.15 the option to cut the deal by 25% +INMONTH ûAûlXEDûINCOMEû capital ratios. on Tuesday when the stock while existing shareholders 360 STRATEGISTûATû!".û!-2/ûh7Eû "ADûLOANûSALESûMIGHTûBEûONEûWAYû DEBUTEDûONû%URONEXTû0ARISû4HATû #APITALû0ARTNERS û+EOLIS û6ALEOû cannot see a Tier 2 as possible out: a quarter of the bank’s 2.1% gain underplays the success of and Graviatino upped their without a new plan being outstanding loans are in arrears. It THEûlRSTûDAYûOFûTRADINGûWHEREûTHEû aggregate order to €11.8m, up CONlRMEDv has sold off two portfolios totalling opening price was €7.90 and the from €8.575m previously. “Capital raises will be €2bn of face value in the past year, FULL DAYû67!0ûWASûõû4HEû !ûBANKERûONûTHEûmOATûSAIDûTHATû exceptionally tough, especially but any new transactions could shares moved up to €7.30 on the book was made up of a without a new plan, and it actually make capital ratios worse Friday morning. Volume was combination of North American leaves the door open for a if the bid is too low. extremely light all week with and French investors, with support merger as a potential scenario Another problem the bank VOLUMEûONûEVENûTHEûlRSTûDAYû from UK, Swiss and German in the ongoing talks.” faces is politics. The chairman, representing little more than 1% of money. The size of the deal and the his deputy and two board the shares placed with investors. sector involved meant interest was OTHER OPTIONS members have resigned in Originally, Navya had targeted largely from technology specialists. Still, the bank has some options recent weeks, while local €50m in primary proceeds, with The banker acknowledged it was to get its capital ratio up to the businessman Vittorio an increase option up to €57.5m. not a long list of investors ûREQUIREDûBYûTHEû%#"ûITû -ALACALZAûnûWHOûOWNSûAûlFTHû Navya needed the cash. The participating, referring to it as stood at 12.23% at the end of the of the bank – has called for company said at the start of hSOMEWHEREûBETWEENûANû)0/ûANDûAû lRSTûQUARTER û)TûHOPESûTOûDISPOSEû the dismissal of the entire bookbuilding it had a cash private placement”. Retail took 4% of assets, including a bad loan board. position of €6m, allowing it to of the shares. platform and merchant banking h4HEûmEEINGûOFûTHEûCHAIRMANû carry out planned activities only Last minute restructurings book. and board members in quick so far as the end of August 2018. have been unusually common Much will depend on market succession show the struggles Navya estimated that it requires this year, but have provided conditions, however. The bank that the lender will have,” said €31m to continue operations for mixed results for investors. Two cannot afford to accept low Kinmonth. “It is not a good sign another 12 months. are currently more than 15% bids that might eat through to convince investors, both Joint bookrunners Credit Suisse ABOVEûTHEûREVISEDû)0/ûPRICE ûBUTû CAPITALû!ND ûAFTERûlVEû domestic and abroad, to place and Natixis, the latter in four are more than 15% down, consecutive years of losses faith in the company.” cooperation with ODDO BHF, were with Saferoad steady at up 1.7%.

International Financing Review July 28 2018 9 Top news

Clifden’s Fairhold CMBS saga heads to court Structured Finance Mysterious Irish Stock Exchange RNS announcement was quickly withdrawn

BY CHRIS MOORE The follow-up court hearing is Clifden had already upset might make people decide they scheduled for August 8–10 and some investors when in late want to be out of it now,” said Activist investor CLIFDEN has will revolve around whether 2017 it offered to sell them a the securitisation lawyer. been forced to defend its Clifden validly appointed portfolio of mortgages that later A number of attempted aggressive attempt to take over administrators and whether a turned out to be still securitised restructurings have so far come DEFAULTEDû5+û#-"3ûFAIRHOLD subsequent agreement to sell in those RMAC deals and that to nothing and there are SECURITISATION in the High Court THEû#-"3SûASSETSûTOû#LIFDENûWASû Clifden did not own. concerns the government of England and Wales after the valid. Its tender documents offered planned leasehold reform could issuer successfully applied for a “I think [Hussain] faces an attractive prices for the RMAC also jeopardise recoveries. high court injunction freezing uphill struggle, I don’t see what bonds but investors who “Fairhold must rank as the the raid. basis he has,” said a participated found their bonds world’s most shopped deal,” This came after the Irish securitisation lawyer. tied up and locked from trading, said the real estate adviser. “It’s Stock Exchange removed an The deal’s offering circular while Clifden repeatedly been hanging around for so unauthorised regulatory says a noteholder is not entitled extended the tender offer many years.” announcement that said to enforce or take action against DEADLINEûTOûBUILDûAûSUFlCIENTû administrators had agreed to the issuer unless the trustee fails stake that would give it control. ISSUER DENIAL sell the assets to Clifden. to act when bound to do so. And Clifden’s subsequent notices Ever since Clifden announced Fairhold was a £329m deal the trustee is only bound to act implied it was entitled to act, its tender offer, the issuer and created in 2006 backed by after being directed to by at least and vote, on behalf of the Ad Hoc Group have publicly sheltered housing ground rents 25% of the Class A noteholders. noteholders who had tendered challenged Clifden across a collected by a management A source close to Clifden, and whose bonds were locked, series of Irish Stock Exchange company owned by Vincent however, noted a section of the even if Clifden didn’t complete RNS announcements authored Tchenguiz. 5+Sû"ANKRUPTCYû#ODEûTHATûSAYSû the tender and hadn’t actually by the issuer. Clifden, run by former anyone dealing with the bought the bonds from "UTûTHEû*ULYûû securitisation banker Rizwan administrator of a company “in investors. announcement that an Hussain, announced a tender good faith and for value need “That upset Fortress investors administrator had been offer for Fairhold bonds in not inquire whether the and insulted the intelligence of appointed and would sell to February. administrator is acting within THEûMARKET ûANDûITSûBACKlREDû Clifden was not written by the It wanted control of at least his powers”. spectacularly,” said one real issuer. It took an identical form 25% of the Class A notes, which The source said Clifden has estate adviser, with investors to previous issuer RNS would allow it to issue submitted around 1,000 pages now more wary about announcements except that the directions to the deal’s trustee of documents in support of its participating in Clifden tenders. words “in administration” were and potentially take over the actions and expected the judge Market participants say added, in brackets, to the issuer #-"3 to look at whether the Clifden did have a chance of name. Despite failing to get past appointment process was valid, taking control over the RMAC Five hours after it was 25%, on July 12 Clifden applied whether the two administrators DEALSûANDûNETTINGûAûaMûPROlT û published its contents were to the High Court to appoint consented and whether the BUTûINûTHEûENDû0ARATUSûHADû mATLYûDENIEDûVIAûAûNOTICEûFROMû administrators to the asset sale was the right thing for enough time to call those deals the issuer. SECURITISATIONû306ûANDûTHENû THEû#-"3 ANDûRElNANCEûTHEMûWITHûAûNEWû A spokesman for Euronext announced to the market that issue. Dublin, which owns the Irish the administrators had been UNNERVING Fairhold is a far more 3TOCKû%XCHANGE ûSAIDûTHEûlRSTû appointed and had agreed to sell Clifden’s conduct in 2018 has complex deal than any in the announcement was the Fairhold assets to a Clifden infuriated and unnerved many RMAC series. The underlying unauthorised and had been vehicle. in a market that is far happier assets themselves are removed. It is not clear from court ANALYSINGûCASHmOWSûTHANû performing, but costly interest- A validly appointed documents if the appointments mounting defences against raids RATEûANDûINmATIONûSWAPSûPUSHEDû administrator would be entitled were formally made, and the from hedge funds. the deal into default in 2015, to issue deal notices, but it is not issuer, trustee and even two Its initial tender offer for when the so-called Ad Hoc clear if Euronext would ADMINISTRATORSûTHEMSELVESûmATLYû Fairhold came weeks after Group of investors was formed routinely check whether an denied the appointments were trying a similar tactic on pre- and a new trustee, GLAS, was insolvency proceeding was valid and have successfully CRISISû5+û2-"3ûDEALSûISSUEDû appointed. legitimate before accepting applied for a injunction freezing under the RMAC name and now “There is a lot of risk built notices under such the whole process. RUNûBYû&ORTRESS OWNEDû0ARATUS into this transaction, which circumstances.

10 International Financing Review July 28 2018 People &Markets

Jill Schwartz UBS’s David Fabio 15 joins BAML 17 Chin tells 17 Madar joins from Barclays IFR the bank is Barclays as global as executive vice looking to equity head of G10 FX chairman of corporate underwriting to trading in another and investment bounce back from a senior departure banking tough time in Asia from Deutsche Bank

FRONT STORY RESULTS Deutsche looks to recapture trading share Fixed income, equities underperform US peers in Q2

DEUTSCHE BANKûISûCONlDENTûITSûONCE DOMINANTû h7EûHAVEûRETAINEDûTHEûNUMBERûFOURû 6ONû-OLTKEûSAIDûTHEûCUTSûINûTHEûDIVISIONû lXEDûINCOMEûTRADINGûBUSINESSûCANûRECAPTUREû POSITIONûINû&)#û;lXEDûINCOMEûANDûCURRENCIES=û WEREûhWELLûADVANCEDvûANDûTHEûPERFORMANCEû MARKETûSHAREûDESPITEûAûBRUISINGûSECONDû THROUGHûALLûTHEûCHANGESûINûTHEûFRANCHISEû HEREûWASûSTARTINGûTOûhLEVELûOUTvû(EûALSOûSAIDû QUARTER ûWHENûITûLAGGEDûRIVALSûAGAINûWITHûAû %VERYûONCEûINûAûWHILEûWEûWILLûMISSûOUTûONû THATûCOMPAREDûTOû53ûPEERSû$EUTSCHEûWASû ûFALLûINûREVENUESûTOûõBNûAFTERûHEAVYû REVENUESûANDûTHATûCANûFEELûDISAPPOINTING û AFFECTEDûBYûADVERSEû&8ûADJUSTMENTS RESTRUCTURINGûMEASURES BUTûWEûAREûCOMFORTABLEûWEûAREûINûTHEûRIGHTû $EUTSCHEûEARMARKEDûõMûTOûCOVERûTHISû h/URûGOALûISûTOûBUILDûFROMûHEREûANDû AREASûWITHûMARKETûLEADINGûPOSITIONS YEARSûRESTRUCTURINGûCOSTS ûTHOUGHûTHEûBANKû RECAPTUREûMARKETûSHAREûINûTHISûBUSINESS vû h7EûDONTûWANTûTOûBEûAûMID TIERûPLAYERû;INû INDICATEDûITûCOULDûENDûUPûBEINGûLOWERû)TûISû SAIDû*AMESûVONû-OLTKE ûCHIEFûlNANCIALû OTHERûAREAS=ûANDûHAVEûSTRONGûQUARTERSûONCEû AIMINGûTOûREDUCEûHEADCOUNTûBYû ûTOû OFlCERûh4HESEûREVENUESûEXISTûINûTHEûMARKETû INûAûWHILEv BELOWû ûBYûTHEûENDûOFûTHEûYEARûANDûCAPû PLACEûANDûOURûJOBûISûTOûRECAPTUREûTHEû !ûDAYûAFTERûTHEûRESULTSûWEREûRELEASEDûTHEû OVERALLûANNUALûEXPENSESûATûõBN RIGHTFULûSHAREûTHATû$EUTSCHEû"ANKûSHOULDû &)#ûDIVISIONûSUFFEREDûAûBLOW ûASû"ARCLAYSûSAIDû !ROUNDûûFRONTûOFlCEûJOBSûACROSSûTHEû HAVEv ITûHADûHIREDû$EUTSCHESûGLOBALûHEADûOFû CORPORATEûANDûINVESTMENTûBANKûWEREûCUTû (EûWASûCONlDENTûTHEûBANKûHASûTHEûRIGHTû FOREIGNûEXCHANGEû&ABIOû-ADARûTOûLEADûITSû&8û DURINGûTHEûQUARTER ûOUTûOFûAûGROUPûTOTALûOFû SETûOFûBUSINESSESûTOûPRODUCEûFUTUREûGROWTHû TRADINGûANDûSALESûSEEûSEPARATEûSTORY û(EûHADû ûJOBûLOSSES AFTERûITSûLATESTûRESTRUCTURINGûINû-AY ûWHENûITû BEENûWITHûTHEûBANKûFORûûYEARS h4HEûHEADCOUNTûREDUCTIONûINûTHEûQUARTERû CUTûITSûEQUITIESûFOOTPRINTûGLOBALLYûANDûLARGELYû WILLûHELPûDRIVEûCOSTSûLOWERûINûTHEûCOMINGû PULLEDûOUTûOFû53ûRATESûTRADING EQUITIES CUTS PERIODS vûSAIDûCHIEFûEXECUTIVEû#HRISTIANû h7EûAREûRUNNINGûOURûOWNûRACEûANDûGOINGû $EUTSCHEûALSOûLAGGEDûRIVALSûINûEQUITIESû4HEû 3EWING THROUGHûRESTRUCTURINGûWHENûSOMEûOFûOURû BIGûlVEû53ûBANKSûREPORTEDûANûAVERAGEûû PEERSûAREûNOTû4HATûSAID ûWEûTHINKûWEûHAVEûAû RISEûINûSECOND QUARTERûEQUITIESûREVENUES ûANDû ADVISORY REVIVAL FOUNDATIONûFROMûWHICHûTOûBUILD ûANDûHOPEû 5"3ûENJOYEDûAûûINCREASEû"UTû$EUTSCHESû $EUTSCHEûWASûCONlDENTûREVENUESûFROMû OVERûTIMEûWEûCANûPERFORMûANDûCLOSEûTHEûGAPû PULLBACKûLOOKEDûPOORLYûTIMEDûANDûITSû ORIGINATIONûANDûADVISORY ûUPûûTOûõMûINû WITHûOURûPEERS vûSAIDûVONû-OLTKE ûREJECTINGû EQUITIESûREVENUESûDROPPEDûûTOûõMûSEEû THEûSECONDûQUARTER ûCOULDûPICKûUPûINûTHEû CRITICISMûOFûTHEûRESTRUCTURINGûPLAN CHART SECONDûHALFûOFûTHEûYEARû3EWING ûWHOûTOOKûUPû DEUTSCHE: LOSING GROUND HISûPOSTûINû!PRIL ûSAIDûITûHASûSCOREDûhCLEARû SUCCESSESvûTHISûYEAR H1 REVENUES VS H1 2017, IN US$bn (EûSAIDûTHEûBANKûHADûAûLEADûROLEûONûSEVENû 18 OFûTHEûûLARGESTû)0/SûTHISûYEARûGLOBALLYûANDû +10% 16 FOURûOFûTHEûlVEûLARGESTûTRANSACTIONSûINû 14 'ERMANY ûASûWELLûASûBEINGûACTIVEûINûLEVERAGEû +24% 12 DEBTûCAPITALûMARKETS 10 h4HEREûAREûENCOURAGINGûSIGNSûOFû 8 -15% STABILISATIONûTHERE vûVONû-OLTKEûSAID 6 +9% !NALYSTSûWEREûLESSûCONVINCEDû!NDREWû 4 #OOMBSûATû#ITIGROUPûCALLEDûTHEûBANKSû 2 REVENUEûTARGETSûhASPIRATIONALv 0 h-ANAGEMENTûHAVEûPREVIOUSLYûINDICATEDûANû JPM H1 2018 Goldman H1 2018 UBS H1 2018 Deutsche H1 2018 H1 2017 H1 2017 H1 2017 H1 2017 EXPECTATIONûFORûû#)"ûREVENUEûTOûBEûHIGHERû THANû ûEVENûAFTERûAûDIPûINû ûWHICHûWEû FICC Equities Advisory/underwriting THINKûISûEXTREMELYûAMBITIOUS vûHEûSAID Source: Thomson Reuters Christopher Spink

International Financing Review July 28 2018 11 h4HISûISûOURû#ROATIAûMOMENTû2IGHTûNOW ûWEûAREû CONTENDERS ûNOTûFRONTRUNNERSv UBS INVESTMENT BANK CHIEF ANDREA ORCEL, BELLWETHER P14

Investment banking proﬁts soar at UBS !ûTIGHTûCONTROLûONûCOSTSûENABLEDûUBSSû 5"3ûSAIDûITûWASûNOWûRECOGNISINGûDAY ONEû DRIVENûBYûDERIVATIVESûANDûPRIMEûBROKERAGE û INVESTMENTûBANKûTOûINCREASEûPROlTSûBYûû PROlTSûONûCERTAINûSTRUCTUREDûRATESûPRODUCTSûINû WHEREû5"3ûAPPEARSûTOûHAVEûPICKEDûUPû LASTûQUARTER ûASûAûSTRONGûSHOWINGûINûDEBTûANDû THISûAREA ûWHICHûHADûPREVIOUSLYûBEENûDEFERREDû MARKETûSHAREûFROMû%UROPEANûRIVALS EQUITIESûTRADINGûHELPEDûLIFTûTHEû3WISSûBANKSû 4HEûBANKûSAIDûSINCEûISSUINGû YEARûBONDSûOFû %QUITYûDERIVATIVESûREVENUESûROSEûûTOû REVENUESûBYû ITSûOWNûEARLIERûTHISûYEARûITûWASûNOWûABLEûTOû 3&RMûANDûlNANCINGûSERVICES ûWHICHû 5"3ûSAIDûADJUSTEDûPRE TAXûPROlTSûWEREû DECLAREûPROlTSûMOREûQUICKLYûONûTHESEûNOTES INCLUDESûPRIMEûBROKERAGE ûWASûUPûûATû 3&RMû53M ûINûTHEû!PRIL *UNEû %VENûWITHOUTûTHEûADDITIONALû3&RMûFROMû 3&RMû#ASHûEQUITIESûWASûmATûATû3&RMû QUARTERû2EVENUESûROSEûTOû3&RBNûANDû THISûACCOUNTINGûMEASUREûANDûTHEû-ARKITûSALEû UBS: BUOYANT Q2 TRADING EXPENSESûWENTûUPûûTOû3&RBN ûMEANINGû PROCEEDS û5"3Sû&2#ûREVENUESûWEREûUPûû Q2 REVENUE CHANGE VS Q2 2017, IN % THEûADJUSTEDûRATIOûOFûCOSTSûTOûINCOMEû FROMûAûYEARûAGOû4HEûBANKûALSOûINTRODUCEDûANû DROPPEDûBYûûPERCENTAGEûPOINTSûTOû ELECTRONICûlXEDûINCOMEûTRADINGûPLATFORMûAû 4HEûlXEDûINCOME ûRATESûANDûCURRENCIESû YEARûAGO ûWHICHûHADûALSOûBOLSTEREDûREVENUES 40 UNITûWASûRESPONSIBLEûFORûMOSTûOFûTHEûTOP h4HEûBANKûHASûCAPTUREDûSHAREûANDûTHINKSûTHISû 30

LINEûIMPROVEMENTûASûITSûREVENUESûJUMPEDû CANûCONTINUE vûSAIDû#ITIGROUPûANALYSTû!NDREWû 20 ûTOû3&RMûONûANûADJUSTEDûBASIS û #OOMBSû(EûHIGHLIGHTEDûhPOSITIVEûMOMENTUMû OUTPERFORMINGûITSûRIVALSûWHOûHAVEûSOûFARû xûDRIVENûBYûAûSLIGHTûIMPROVEMENTûINûINDUSTRYû 10 REPORTEDû4HEûlGURESûFORûTHEûCOMPARABLEû VOLATILITYvûASûWELLûASû5"3SûhINVESTMENTûINû 0

YEAR EARLIERûQUARTERûINCLUDEDûANû3&RMû ELECTRONICûEXECUTIONûOVERûTHEûPASTûYEARv -10 GAINûFROMûTHEûSALEûOFûITSûSTAKEûINû)(3û -20 -ARKIT EQUITIES CHEER US big 5 UBS Deutsche Bank banks average h4HEûKEYûDIFFERENCEûWASûTHEûHIGHERûLEVELû %QUITIES û5"3SûBIGGESTûINVESTMENTûBANKINGû -30 OFûVOLATILITYûSEEN ûPARTICULARLYûCOMPAREDûTOû BUSINESS ûALSOûPUTûINûAûGOODûPERFORMANCE û FICC Equities Advisory/underwriting THEûLEVELSûSEENûTHROUGHOUTûLASTûSUMMER vû WITHûREVENUESûUPûANûADJUSTEDûûYEAR ON SAIDûCHIEFûlNANCIALûOFlCERû+IRTû'ARDNER YEARûTOû3&RBNû4HEûPERFORMANCEûWASû Source: Company results, IFR calculations

7IKRAMANAYAKESûUNITûDELIVERSûABOUTûAû Macquarie names ﬁrst female CEO THIRDûOFûTHEûBANKSûPROlTû"YûHELPINGûSETûUPû ANDûGROWûTHEûASSETûMANAGEMENTûUNITûINTOû !USTRALIANûINVESTMENTûBANKûMACQUARIE GROUPûHASû ANDûECONOMICûHEADWINDSûFORûlNANCIALû -ACQUARIESûMOSTûSUCCESSFULûDIVISION û APPOINTEDûITSûlRSTûFEMALEû#%/ ûPROMOTINGûTHEû COMPANIES 7IKRAMANAYAKE û ûHASûBEENûCENTRALûTOûITSû HEADûOFûITSûFUNDSûUNITûShemara Wikramanayake to h)TSûALWAYSûAûCHALLENGINGûDECISIONûBUTûAFTERû STRATEGYûOFûOFFSETTINGûTHEûHIGHûVOLATILITYûOFû THEûMOSTûSENIORûINVESTMENTûBANKINGûPOSITIONû ûYEARSûITûFELTûLIKEûTHEûTIMEûISûRIGHT vû-OOREûSAIDû TRADITIONALûINVESTMENTûBANKINGûANDûCAPITALû CURRENTLYûHELDûBYûAûWOMANûGLOBALLY ONûANûANALYSTûCALLûBEFOREûTHEûBANKSûANNUALû MARKETSûBUSINESSESûWITHûMOREûSTABLEûUNITSû (ERûELEVATIONûALSOûMARKSûAûNEWûPHASEûFORûAû MEETING ûREFERRINGûTOûHISûSTEPPINGûDOWN SUCHûASûFUNDSûMANAGEMENT lNANCIALûCONGLOMERATEûKNOWNûFORûITSûSTRONGû h7ITHû3HEMARA ûWEûHAVEûAûREALLYû RECORDûOFûBEATINGûPROlTûEXPECTATIONSûANDûTHEû OUTSTANDINGûSUCCESSORv MALE-DOMINATED INDUSTRY LARGEûPAYûPACKAGESûOFûITSûlERCELYûCOMPETITIVEû -ACQUARIEûCOUPLEDûITSûANNOUNCEMENTûOFû 7IKRAMANAYAKESûAPPOINTMENTûMAKESûHERûAû STAFFû7IKRAMANAYAKESûPREDECESSORS û!LLANû -OORESûDEPARTUREûWITHûAûFORECASTûOFûAûPROlTû LONELYûlGUREûINûTHEûTOPûRANKSûOFûWORLDû -OSSûANDû.ICHOLASû-OORE ûLEDû!USTRALIASûBIGGESTû INûLINEûWITHûTHEûPREVIOUSûYEAR INVESTMENTûBANKING ûAûMALE DOMINATEDû INVESTMENTûBANKûFORûAûDECADEûORûMOREûEACH 4HEûBANKSûSHARESûHAVEûSURGEDûûOVERû INDUSTRYû*0û-ORGANSûCHIEFûlNANCIALûOFlCERû 3HEûWILLûTAKEûTHEûREINSûFROMû-OOREûINû THEûûYEARSûUNDERû-OORESûLEADERSHIPûASûITû -ARIANNEû,AKEûISûONEûOFûSEVERALûCONTENDERSû .OVEMBERûATûAûTIMEûOFûINTENSEûREGULATORYû REGULARLYûGREWûPROlTSûANDûBEATûFORECASTS TOûREPLACEû*AMIEû$IMON ûMAKINGûHERûTHEû Who’s moving where…

BARCLAYS has hired is expected to start in MORGAN STANLEY will report to Rob former JP Morgan mid-September. has hired Sigal Zarmi as Rooney, who was banker Rob Jeffries to Jeffries was most head of transformation, tapped to oversee the head its coverage and recently head of the a new position in its bank’s technology efforts advisory business for chemicals group at JP technology division. in May. Rooney chemicals in its Morgan, which he Zarmi joined the bank previously oversaw corporate and joined in August 2009 from Pricewaterhouse technology and served investment bank, after nine years at Coopers, where she was as the ﬁrm’s head of based in New York. Citigroup as head of network global chief Europe, Middle East and Barclays said Jeffries chemicals. He had information ofﬁcer. She Africa. would join as a vice- another stint with JP has also served in a chairman and global Morgan before that, similar capacity at GE head of chemicals. He focused on M&A. Capital Americas. Zarmi

12 International Financing Review July 28 2018 People &Markets

5"3ûHASûBEENûBUILDINGûUPûITSû53ûEQUITIESû BUSINESSûTOûBALANCEûITSûTRADITIONALLYûSTRONGERû Lazard, Moelis post record revenue %UROPEANûANDû!SIANûFRANCHISES LAZARDûISûHAVINGûAûGOODûYEARûANDûITûCOULDû QUARTERûFROMûAûYEARûAGO ûBUTûTHATûINCLUDESû %QUITIESûINû!SIA 0ACIlCûALSOûBENElTEDûFROMû GETûBETTERûSTILLû4HEûINDEPENDENTû AûDISASTROUSûQUARTERûATû"ANKûOFû!MERICAû #HINESEû! SHARESûNOWûBEINGûINCLUDEDûINûTHEû-3#)û INVESTMENTûBANKûBEATûEXPECTATIONSûBYû -ERRILLû,YNCH ûWHEREû-!ûREVENUESûWEREû INDICES ûCAUSINGûAûRUSHûOFûBUSINESSûINûTHISûAREA POSTINGûlNANCIALûADVISORYûREVENUEûOFû OFFû )Nû%UROPE ûWHEREû-I&)$û))ûTRADINGûRULESû 53MûINûTHEûSECONDûQUARTERû ûUPûJUSTûû #ROSS BORDERûACTIVITYûREMAINEDûSTRONGû TOOKûEFFECTûINû*ANUARY û5"3ûDIDûNOTûSPLITûOUTû FROMûAûYEARûAGO ûBUTûSETTINGûAûNEWû FORû,AZARDûINûTHEûQUARTER ûACCOUNTINGûFORû REVENUESûFROMûRESEARCHûANDûTRADING ûASûITûISû QUARTERLYûRECORD ALMOSTûûOFûITSûANNOUNCEDûTRANSACTIONû NOWûOBLIGEDûTOûDOûFORûCLIENTSû-OSTûBANKSûSAYû h7EûAREûSEEINGûHEALTHYû-!ûACTIVITYû VOLUME ITûWILLûTAKEûATûLEASTûAûYEARûFORûTHEûREALûIMPACTû ACROSSûTHEû!MERICAS û%UROPEûANDû!SIA vû ,AZARDûTAKESûAûBIGGERûPORTIONûOFûITSû OFûTHEûNEWûREGULATIONSûTOûBEûSEEN SAIDû,AZARDûCHIEFûEXECUTIVEû+ENû*ACOBS REVENUEûFROMû%UROPEANûDEALSûTHANûRIVALSû h-I&)$û))ûHASûNOTûHADûAûBIGûIMPACTûSOûFAR vû ,AZARDûWASûEXPECTINGûTOûSTRUGGLEûTOû ANDûTHEûBANKûSEESûAûTURNûINûTHEû SAIDû'ARDNERûh)TSûSTILLûAûBITûEARLYûANDûITûWILLû MATCHûLASTûYEARSûSECONDûQUARTER ûWHICHû ENVIRONMENTû2IVALSûWEREûNOTûSOûSURE û TAKEûTWOûORûTHREEûQUARTERSûTOûSEEv WASûITSûPREVIOUSûBESTûQUARTERûEVERû"UTû HOWEVER /NûTHEûADVISORYûANDûUNDERWRITINGûSIDE ûWHICHû MOMENTUMûACCELERATEDûTHROUGHûTHEû %UROPEûCONTINUESûTOûBEûDOWNûSLIGHTLY û 5"3ûCALLSûCORPORATEûCLIENTûSOLUTIONS ûACTIVITYûWASû QUARTERûANDûAûFEWûTRANSACTIONSûCLOSEDûMOREû SAIDû+ENû-OELIS ûFOUNDERûANDû#%/ûOFû MOREûSUBDUEDû/VERALLûREVENUESûWEREûDOWNûû QUICKLYûTHANûANTICIPATED -OELISûû#Oûh)ûTHINKûTHEûNUMBERSûOFû ATû3&RM ûDRAGGEDûBACKûINûPARTICULARûBYûEQUITYû )TûWASûBULLISHûONûPROSPECTSûTOOûh4HEû ANNOUNCEDûTRANSACTIONSûANDûCLOSEDû CAPITALûMARKETS ûDOWNûûTOû3&RM SECONDûHALFûOFûTHEûYEARûSTILLûLOOKSûPRETTYû TRANSACTIONSûISûDOWNûPRETTYûSIGNIlCANTLYû h)Nû%#-ûWEûHAVEûSEENûLESSûLIQUIDITYûFORûBLOCKû GOOD vû*ACOBSûSAIDû4HEûSUMMERûMONTHSû YEAR OVER YEARûINû%UROPEû"UTûWEû TRADESûINû%-%!ûTHANûAûYEARûAGOû"REXITûANDû)TALYû AREûTRADITIONALLYûUSEDûTOûBUILDûBACKLOGû CONTINUEûTOûBEûVERYûOPTIMISTICûABOUTûTHEû AREûPUTTINGûINVESTORSûOFFûAûLITTLE vûSAIDû'ARDNER h!NDûTHENûYOUûKINDûOFûGETûLUCKYûINû TALENTûBASEûTHATûWEREûHIRINGûTHERE vûHEû $EBTûCAPITALûMARKETSûWEREûALSOûSLIGHTLYû 3EPTEMBERûANDû/CTOBERv SAID LOWERûTHANûLASTûYEAR ûREmECTINGûTHEûWEAKERû 'LOBALû-!ûDEALMAKINGûHITûAûRECORDû !CCORDINGûTOû4HOMSONû2EUTERS û MARKETûACROSSûTHEû3TREET 53TRNûINûTHEûlRSTûHALFûOFûTHISûYEARûANDû %UROPEANû-!ûINCREASEDûûATûTHEûHALFû Christopher Spink ,AZARDûADVISEDûONûFOURûOFûTHEûûLARGESTû YEARûMARKûFROMûAûYEARûAGO GLOBALûANNOUNCEDûDEALS ûANDûFOURûOFûTHEûû MOELISûREPORTEDûREVENUEûOFû53M û ONLYûOTHERûPOSSIBLEûFEMALEû#%/ûOFûAûMAJORû LARGESTûCOMPLETEDûTRANSACTIONS UPûûCOMPAREDûWITHûTHEûYEARûAGOû INVESTMENTûBANK h4HEûROBUSTûGLOBALû-!ûMARKETûFORû QUARTERû)TûWASûALSOû-OELISûBESTûQUARTERû h7EûDONTûHAVEûAûLOTûOFûFEMALESûINûLEADERSHIPû LARGEûSTRATEGICûTRANSACTIONSûPLAYEDûTOû EVER INûTHEûlNANCEûSECTOR vû7IKRAMANAYAKE ûANû ,AZARDSûSTRENGTHS vû*ACOBSûSAID h7EûCONTINUEDûTOûCAPITALIZEûONûAûROBUSTû !USTRALIANûOFû3RIû,ANKANûORIGIN, TOLDûJOURNALISTSû *ACOBSûSAIDûTHEûCURRENTûHISTORICûLEVELûOFû ENVIRONMENTûFORû-!ûANDûEXPERIENCEDû INûTHEûCALLû TRANSACTIONSûAREûBEINGûDRIVENûBYû GROWTHûACROSSûOURûADDITIONALûSTRATEGICû h7EûNEEDûTOûPROVIDEûMOREûmEXIBILITYû;AND=û TECHNOLOGICALûDISRUPTIONûSPREADINGûACROSSû ADVISORYûOFFERINGS vû-OELISûSAID WEûNEEDûTOûALLOWûMOREûmEXIBILITYûTOûMALES û INDUSTRIES ûSPURRINGûSTRATEGICûACTIVITYûASû EVERCOREûREPORTEDûADVISORYûREVENUEûOFû TOûAûHAVEûMOREûBALANCEûINûTHEIRûLIFEûANDû WELLûASûSHAREHOLDERûACTIVISM 53MûINûTHEûSECONDûQUARTER ûUPûû ALLOWûFEMALEûPARTNERSûxûTOûTAKEûAûFRONTûLINEû COMPAREDûWITHûTHEûYEARûAGOûPERIODû4OTALû INûCAREER vûSHEûSAID BEATING BULGE BRACKET REVENUEûINûTHEûQUARTERûWASû53M ûUPû 7IKRAMANAYAKEûWASûTHEûBANKSûSECOND $IRECTûCOMPARISONSûWITHûTHEûBULGEûBRACKETû HIGHESTûPAIDûPERSONûINûTHEûûlNANCIALûYEAR û BANKSûAREûTOUGHERûNOWûTHATû,AZARD ûLIKEûITSû %VERCORESûPUSHûINTOûEQUITYû ACCORDINGûTOûITSûANNUALûREPORT ûEARNINGû!Mû INDEPENDENTûRIVALS ûDOESûNOTûSTRIPûOUTû-!û UNDERWRITINGûISûBEGINNINGûTOûPAYûOFFû4HEû 53M ûLESSûONLYûTHANû-OOREûWHOûTOOKû ADVISORYûFEESûFROMûRESTRUCTURINGûFEES lRMûREPORTEDûUNDERWRITINGûREVENUEûOFû HOMEû!Mû /NûAVERAGEûTHEûlVEûLARGESTû53ûBANKSû 53M ûMOREûTHANûDOUBLEûAûYEARûAGO Paulina Duran, Colin Packham WEREûUPûûINû-!ûREVENUESûINûTHEûSECONDû Philip Scipio

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Sam Powers has joined Advance/Newhouse, WESTPAC BANKING been with Standard BANK OF AMERICA CAA, TPG and Viacom. CORPORATION has Chartered. Fung, who MERRILL LYNCH to BAML recently hired appointed Anita Fung left HSBC in 2015, is a head its Americas Randy Russell from as a non-executive non-executive director media and telecom Deutsche Bank as a director and member of China Construction investment banking managing director in of its Asia advisory Bank and Hong Kong group. He joins from the TMT group. board, effective Exchanges and UBS, where he was October 1. Fung is best Clearing. head of Americas TMT. known for her 19-year Powers will join the stint with HSBC, ﬁrm this autumn. He including as Hong has advised on deals Kong chief executive. for clients including She has also previously

International Financing Review July 28 2018 13 Bellwether Bellwether: n. From the practice of placing a bell around the AûCOACHûANDûGAVEûUPûMANAGINGûONEûBUNCHûOFûANNOYINGû neck of a castrated ram so that it might lead its ﬂock MILLIONAIRESûFORûANOTHER

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COWEN has hired executive committee. Gareth Thomas has Wallace, who was Erika Irish Brown has and Lehman Brothers. Parker Weil from Stifel Weil has served as an been named HSBC’s recently appointed as joined GOLDMAN She will take up the as vice-chairman of adviser, underwriter regional head of global HSBC’s head of global SACHS to head its new role on July 30, investment banking at and placement agent banking for the Middle banking for Europe. efforts to recruit, retain replacing Anilu its investment bank, on numerous IPOs, East, North Africa and Thomas, who will and advance diverse Vazquez-Ubarri, who Cowen & Co. Weil was add-on financings and Turkey. The move will relocate to Dubai, will professionals as chief joined TPG Capital in previously head of the M&A transactions. be effective in be responsible for the diversity officer. She June as part of the industrials and natural September. Thomas is execution, leadership was previously private equity firm’s resources investment currently HSBC’s co- and delivery of HSBC’s Bloomberg’s first chief own effort to promote banking group for head of public sector global banking diversity and inclusion diversity and gender Stifel Financial Corp for global banking, strategy in the region. officer, and has led balance. and was on Stifel’s based in London. He diversity hiring efforts investment banking will succeed Matthew at Bank of America

14 International Financing Review July 28 2018 People &Markets BAML poaches Schwartz from Barclays BANK OF AMERICA MERRILL LYNCHûLUREDûJill 3CHWARTZûWASûMOSTûRECENTLYûGLOBALûHEADû !MERICASûRISKûSOLUTIONSû0RIORûTOûJOININGû"ARCLAYSû Schwartz FROMû"ARCLAYSûASûEXECUTIVEûVICEû OFûLEVERAGEDûlNANCEûATû"ARCLAYSû3HEûWASû INû û3CHWARTZûWASûATû*0û-ORGANûFORûûYEARS CHAIRMANûOFûGLOBALûCORPORATEûANDû ALSOûHEADûOFûTHEûDIVERSITYûCOUNCILûFORû !Tû"!-,ûSHEûWILLûBEûRESPONSIBLEûFORû INVESTMENTûBANKING "ARCLAYSû)NTERNATIONAL ûWHICHûINCLUDESûTHEû hDEEPENINGûCLIENTûRELATIONSHIPSvûACROSSû 3CHWARTZûWILLûJOINû"!-,ûTHISûAUTUMNû3HEû INVESTMENTûBANK INVESTMENTûBANKINGûANDûDRIVINGûGREATERû WILLûBEûBASEDûINû.EWû9ORKûANDûREPORTûTOû 3HEûHASûHELDûAûNUMBERûOFûSENIORûROLESûATû COLLABORATIONûACROSSûCAPITALûMARKETSû #HRISTIANû-EISSNER ûHEADûOFûGLOBALûCORPORATEû "ARCLAYS ûINCLUDINGûCO HEADûOFûDEBTûCAPITALû PRODUCTS ANDûINVESTMENTûBANKING MARKETSûANDûRISKûSOLUTIONSûASûWELLûASûHEADûOFû Philip Scipio

Rothschild hires trio for US advisory INVESTMENTûBANKINGû(EûHASûALSOûWORKEDûATû $EUTSCHEû"ANKûANDû3ALOMONû"ROTHERS ROTHSCHILD & COûHASûHIREDûTHREEûSENIORûBANKERSû DIRECTORûINûITSû,OSû!NGELESûOFlCE 2OTHSCHILDSûADVISORYûBUSINESSûREPORTEDûAû FORûITSûlNANCIALûADVISORYûBUSINESSûINûTHEû5NITEDû /STOWûWASûCO HEADûOFû5"3Sû!MERICASû ûFALLûINûlRST QUARTERûREVENUESûTOûõMû 3TATES ûAûREGIONûITûHASûEARMARKEDûFORûGROWTH lNANCIALûINSTITUTIONSûGROUPû(EûJOINEDûTHEû COMPAREDûWITHûTHEûSAMEûPERIODûAûYEARû 4HEû0ARIS LISTEDûINVESTMENTûBANK ûWHICHûHASû 3WISSûBANKûINûûFROMû#REDITû3UISSEûANDû EARLIER ûWEAKERûTHANûPEERS TRADITIONALLYûFOCUSEDûONû%UROPEANûCLIENTS ûHASû HADûPREVIOUSLYûWORKEDûATû-ORGANû3TANLEY (OWEVER ûTHEûlRMûISûSEVENTHûINû4HOMSONû HIREDûMike OstowûHEADûOFû.ORTHû!MERICANû (ERBSTûWORKEDûATû5"3ûFORûûYEARS ûLEADINGû 2EUTERSûLISTûOFû-!ûADVISERSûFORûCOMPLETEDû lNANCIALûINSTITUTIONSûANDûJonathan Herbst as ITSûTELECOMSûPRACTICEûINûTHEû!MERICAS DEALSûBYûVALUE ûYEAR TO DATE ûlVEûPLACESû HEADûOFû.ORTHû!MERICANûMEDIAûANDûTELECOMS û $AYALANûPREVIOUSLYûWORKEDûATû(OULIHANû HIGHERûTHANûTHEûEQUIVALENTûlGURESûLASTûYEARû BOTHûFROMû3WISSûBANKû5"3û/STOWûWILLûWORKûINû ,OKEYûINûITSûTECHNOLOGY ûMEDIAûANDûTELECOMSû &ORûANNOUNCEDûDEALSûTHEûlRMûHASûFALLENûSIXû .EWû9ORKûANDû(ERBSTûINû#HICAGO GROUPû"EFOREûTHATûHEûWASûATû5"3ûASûWELL û PLACESûTOûTHûYEAR TO DATE Raj DayalanûWILLûALSOûJOINûASûAûMANAGINGû WHEREûHEûWASûCO HEADûOFûINTERNETû Christopher Spink

'ERMANû&EDERALû-INISTRYûOFû,ABOURûANDû3OCIALû Lazard picks M&A chiefs !FFAIRSûFROMûûTOûû0REVIOUSLYûHEûSERVEDû ASûAûMEMBERûOFûTHEûEXECUTIVEûBOARDûOFûTHEû LAZARDûNAMEDûPeter OrszagûHEADûOFû.ORTHû ,AZARDûFROMû#ITIGROUPûWHEREûHEûWASûVICEû %UROPEANû#ENTRALû"ANK !MERICAûMERGERSûANDûACQUISITIONSûANDû*oerg CHAIRMANûOFûCORPORATEûANDûINVESTMENTûBANKINGû !SMUSSENûANDû/RSZAGûWILLûHELPûDRIVEû-!û AsmussenûHEADûOFû%UROPEû-! ûELEVATINGûTWOû ANDûCHAIRMANûOFûTHEûlNANCIALûSTRATEGYûANDû CLIENTûMARKETINGûINITIATIVESûALONGSIDEûTHEû SENIORûEXECUTIVEûWITHûDEEPûGOVERNMENTûTIESû SOLUTIONSûGROUPûFORûABOUTûlVEûYEARS BANKSûlNANCIALûADVISORYûCOUNTRY ûSECTORûANDû INûTHEû53ûANDû%UROPE (EûPREVIOUSLYûSERVEDûASûDIRECTORûOFûTHEû PRACTICEûLEADERS ûACCORDINGûTOûAûMEMOûFROMû !TûTHEûSAMEûTIME û!LEXANDRAû3OTOûWASû OFlCEûOFûMANAGEMENTûANDûBUDGETûINûTHEû ,AZARDû#//û!LEXû3TERN NAMEDûCHIEFûOPERATINGûOFlCERûOFûlNANCIALû /BAMAûADMINISTRATIONûFROMû*ANUARYûû 3OTOûHASûBEENûWITHû,AZARDûFORûûYEARS ADVISORY ûGLOBALLYû3OTOûHADûBEENûOPERATINGû UNTILû*ULYûû&ROMû*ANUARYûûTOû .EWû9ORK BASEDû,AZARDûALSOûSAIDûITûHASû CHIEFûFORûlNANCIALûADVISORYûINû%UROPE $ECEMBERû û/RSZAGûWASûTHEûDIRECTORûOFû HIREDûFORMERû2"#ûBANKERûHenry Michaels as a !LLûTHREEûPOSITIONSûAREûNEW THEû#ONGRESSIONALû"UDGETû/FlCE SENIORûADVISORûFORûlNANCIALûINSTITUTIONSûINû /RSZAGûJOINEDû,AZARDûINûûASûAû !SMUSSENûJOINEDû,AZARDûINûûASûAû .ORTHû!MERICA ûBASEDûINû.EWû9ORK MANAGINGûDIRECTORûANDûAûVICEûCHAIRMANûOFû MANAGINGûDIRECTORûINûTHEûlNANCIALûADVISORYû -ICHAELSûWASûCO HEADûOFûTHEû53ûlNANCIALû INVESTMENTûBANKING ûADVISINGûCLIENTSûONû-!û GROUPû(EûHADûûYEARSûOFûEXPERIENCEûINûTHEû INSTITUTIONSûGROUPûFORû2"#û#APITALû-ARKETS û ANDûOTHERûlNANCIALûANDûSTRATEGICûMATTERS PUBLICûSECTORûASûANûECONOMISTûANDûPOLICYMAKERû WHEREûHEûHASûWORKEDûSINCEû ,ARGELYûSEENûASûANûECONOMIST ûHEûJOINEDû -OSTûRECENTLYûHEûSERVEDûASûSTATEûSECRETARYûATûTHEû Philip Scipio

Please contact us if you have information about job moves: [email protected]

Pedro Balcao has JP MORGAN has GREENHILL has Deutsche, he worked CREDIT SUISSE has syndication and been appointed as head appointed Rui hired Tom Widener with large corporate hired Andy Tan in distribution for the APAC of US equity capital Fernandes to the newly from Deutsche Bank as and industry-focused Singapore as head of financing group, who markets and LatAm created role of head of head of power and financial sponsor syndicate for South-East joined in March. Tan joins syndicate at global equity derivatives utilities corporate clients for transactions Asia. Tan will be after a 12-year stint with SANTANDER, filling structuring. Fernandes advisory. Widener across the power and responsible for the United Overseas Bank, what is a new role at the joined the firm 11 years spent a decade at utilities sector. He syndication and where he most recently Spanish bank, a source ago and was formerly Deutsche, most worked for Bear distribution of financing was a director in the said. Balcao has worked head of EMEA recently as vice- Stearns and Merrill transactions across the sector solutions group. at Santander since structuring. He will chairman and a Lynch before that. bank’s Asia-Pacific He also led loan 2012, most recently as report to Fater Belbachir, managing director in financing group’s syndications for head of research and global head of equities the bank’s natural products. He reports to borrowers such as and strategy for Mexico. volatility trading. resources group. At Sergio Morita, head of Marina Bay Sands.

International Financing Review July 28 2018 15 h7EûAREûRUNNINGûOURûOWNûRACEûANDûGOINGûTHROUGHû RESTRUCTURINGûWHENûSOMEûOFûOURûPEERSûAREûNOTv DEUTSCHE BANK CFO JAMES VON MOLTKE, P11 Capital markets week ahead: China Tower, Eskom, WiZink

NAILING YOUR COLOURS TO THE MAST TOGGLEûINûTHEû%UROPEANûMARKETûCAMEûINû ALL RIGHTû3WISSûTECHNOLOGYûCOMPANYû #HINAû4OWERûWILLûBEûHOPINGûTHEûSUMMERû $ECEMBERûWHENû###ûRATEDû"URGERû+INGû ,EONTEQûWRAPSûUPûITSû3&RMû53M û LULLûWONTûDENTûDEMANDûFORûITSûMAMMOTHû &RANCEûSOLDûõMûNOTESûATû RIGHTSûISSUEûONû4HURSDAY ûWHENû (ONGû+ONGû)0/ ûWHICHûPRICESûONû SUBSCRIPTIONûENDSû!ûRESULTûISûDUEûAûDAYû 7EDNESDAYû4HEûWORLDSûLARGESTûOPERATORû LATERû,EONTEQûISûSEEKINGûTOûBUILDûAûLARGEû OFûMOBILEûPHONEûMASTSûISûTARGETINGûASû SOUND BUSINESS Wireless speaker CAPITALûBUFFERûFORûFUTUREûBUSINESSûGROWTHû MUCHûASû53BNûFROMûTHEûDEAL ûWHICHû MANUFACTURERû3ONOSûHOPESûTOûRAISEûABOUTû FOLLOWINGûTHEûCOMPLETIONûOFûITSûTURNAROUNDû WOULDûRANKûITûAMONGûTHEûBIGGESTûû)0/Sû 53MûINûPRIMARYûPROCEEDSûFROMûAû STRATEGYû,ARGESTûSHAREHOLDERû2AIFFEISENû EVERûnûANDûTHEûLARGESTûSINCEû!LIBABAûRAISEDû 53Mû.EWû9ORKû)0/ûONû7EDNESDAYû 3WITZERLANDûHASûCOMMITTEDûTOûEXERCISINGûITSû 53BNûWHENûITûWENTûPUBLICûFOURû 0RIVATEûEQUITYûGIANTû++2 ûWHICHûOWNSûû RIGHTSûnûBUTûPLANSûTOûREDUCEûITSûSTAKEûOVERû YEARSûAGO OFûTHEûCOMPANY ûWILLûBEûSELLINGûSOMEûOFûITSû TIME 4HEûCOMPANY ûWHICHûOPERATESûALMOSTû SHARESûASûPARTûOFûTHEûLISTINGû!SûOFû-ARCH û MûTOWERûSITESûACROSSû#HINA ûHASûLINEDûUPû 3ONOSûCUSTOMERSûHADûREGISTEREDûMOREû ûCORNERSTONEûINVESTORSûTHATûHAVEû THANûMûPRODUCTSûINûMûHOMESû AT CLOSE QUARTERS 3TAN#HARTûISûAMONGû COMMITTEDûTOûJUSTûUNDERûAûlFTHûOFûTHEûDEALû GLOBALLY AûPOSSEûOFû%UROPEANûBANKSûSETûTOûRELEASEû 7HILEûWELCOME ûTHATûISûANûUNUSUALLYûLOWû EARNINGSûTHISûWEEKû)TûKICKSûOFFûAûBUSYû PROPORTIONûFORûAûLARGEû)0/ûFROMûAû#HINESEû WEEKûOFûRESULTSûALONGSIDEû#REDITû3UISSEû STATE OWNEDûCOMPANYû0OSTALû3AVINGSû"ANKû ONû4UESDAYû".0û0ARIBAS û)NTESAû3ANPAOLOû OFû#HINAûSOLDûABOUTûûOFûITSû)0/ûSHARESûTOû ANDû,LOYDSûFOLLOWûAûDAYûLATER ûAHEADû CORNERSTONEûINVESTORSûFORûITSûLISTINGûINû OFû"ARCLAYSûANDû3OCIETEû'ENERALEûONû 4HURSDAYûANDû2"3ûANDû#REDITû!GRICOLEû ONû&RIDAY

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16 International Financing Review July 28 2018 People &Markets UBS beefs up for Asia-US listings

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BARCLAYSûHASûHIREDûFabio Madar FROMû SECTOR ûHAVINGûIDENTIlEDû&8ûASûAûKEYûBUSINESSû .OVEMBERûANDûAREûALSOûCO HEADSûOFû $EUTSCHEû"ANKûASûGLOBALûHEADûOFû'ûFOREIGNû LINEûFORûTHEûBANKûINûITSû-AYûRESTRUCTURINGû MARKETS EXCHANGEûTRADINGûANDûDISTRIBUTION PLANû"ARCLAYSûISûONEûOFûITSûMAINûRIVALSûINûTHEû 4HEYûREPORTûTOû4IMû4HROSBY ûCHIEFû 4HEû"RITISHûBANKûSAIDû-ADARûWILLûLEADûTHEû AREA EXECUTIVEûOFû"ARCLAYSû)NTERNATIONAL ûWHICHû GLOBALû&8ûBUSINESSûACROSSûTRADINGûANDûSALESû "EFOREûJOININGû$EUTSCHEûINû û-ADARû INCLUDESûITSûINVESTMENTûBANK (EûHADûAûSIMILARûROLEûATû$EUTSCHE ûWHEREûHEû WORKEDûATû,EHMANû"ROTHERSûANDû#ITIGROUP "ARCLAYSûALSOûAPPOINTEDûJames Hassett as HASûWORKEDûFORûTHEûLASTûûYEARS ûLATTERLYûASû (EûWILLûREPORTûTOû-ICHAELû,UBLINSKY û GLOBALûHEADûOFûEMERGINGûMARKETSûMACROû GLOBALûHEADûOFû&8 GLOBALûHEADûOFûMACRO ûANDû'UYû3AIDENBERG û TRADING ûINCLUDINGû&8ûANDûRATESû(ASSETTûHASû 4HEûMOVEûCAMEûAûDAYûAFTERû$EUTSCHEûSAIDû GLOBALûHEADûOFûDISTRIBUTIONûANDûSTRUCTURING û BEENûATûTHEûBANKûFORûûYEARS ITûWANTEDûTOûREGAINûMARKETûSHAREûINûTHEû WHOûTHEMSELVESûONLYûJOINEDû"ARCLAYSûLASTû Christopher Spink

International Financing Review July 28 2018 17 h.OWûTHATûREGIMEûISûGOINGûAWAYûANDûTHATûSCARESû PEOPLE ûANDûTHATûISûAûBIGûPOSITIVEv DEUTSCHE BANK’S AMIT KHATTAR ON CHANGES TO INDIA’S BANKRUPTCY LAWS, P20

ANDûINVESTMENTûBANKINGûBUSINESSESûINû Nomura’s proﬁt slumps on %UROPEûANDû!SIA &ORûTHEûLASTûlSCALûYEAR ûITûRECORDEDûAûPRE TAXûLOSSûOFûcBNûAFTERûBOOKINGûAûcBNûHITû wholesale banking woes INûTHEû!MERICASûDURINGû1 ûBECAUSEûOFûAû NOMURAûHADûAûROUGHûLASTûQUARTERûASûNETûPROlTû CHANGESûINûCENTRALûBANKûMONETARYûPOLICYû SPIKEûINûPROVISIONSûANDûAûHIGHERûEFFECTIVEûTAXû TUMBLEDûûTOûcBNû53M ûFOLLOWINGû GLOBALLY RATE DECLINESûINûREVENUEûACROSSûITSûTHREEûBUSINESSû 4HESEûSAMEûCONDITIONSûFAILEDûTOûLIFTû LINES .OMURASûRESULTS ûWHICHûSAWûREVENUEûFROMû Nomura’s revenues from )TSûPERFORMANCEûINûWHOLESALEûBANKING û EQUITIESûTRADINGûFALLûûTOûcBN ûWHILEû WHICHûCOMPRISESûGLOBALûMARKETSûANDû REVENUEûFROMûlXEDûINCOMEûFELLûBYûMOREû equities trading fell 7% and INVESTMENTûBANKING ûWASûPARTICULARLYû THANûAûTHIRDûTOûcBN revenue from ﬁxed income fell TROUBLINGûASûITûRECORDEDûAûLOSSûOFûcBNûINû )TSûINVESTMENTûBANKINGûREVENUESûWEREû by more than a third THEû!PRIL *UNEûQUARTER ûVERSUSûAûPROlTûOFû DOWNûûATûcBNû4HISûSTILLûCOMPAREDû cBNûAûYEARûAGO UNFAVOURABLYûWITHûANûûGAINûAMONGûTHEû53û /VERALLûREVENUEûFROMûWHOLESALEûBANKINGû BANKSûDURINGûTHEûSAMEûPERIOD FELLûûYEARûONûYEARûTOûcBNûWITHû ,ASTûYEARSûLOSSûREVERSEDûAûGAINûAûYEARû REVENUEûFROMûINVESTMENTûBANKINGûDOWNûû SETBACK EARLIERûTHATûHADûMARKEDûTHEû*APANESEûBANKSû ATûcBNûANDûREVENUEûFROMûGLOBALûMARKETSû 4HEûLATESTûRESULTSûWILLûBEûPARTICULARLYû lRSTûOVERSEASûPROlTûINûSEVENûYEARS û DOWNûûATûcBN DISAPPOINTINGûFORûMANAGEMENTûAFTERûAû UNDERSCORINGûITSûSUSCEPTIBILITYûTOûONE OFFû )TSûRESULTSûnûFORûTHEûlRSTûQUARTERûOFûITSû SUCCESSFULûSTARTûTOû ûATûLEASTûFORûITSû FACTORS lNANCIALûYEARûnûWEREûINûSTARKûCONTRASTûTOûTHEû WHOLESALEûDIVISION .OMURAûRECORDEDûAûcBNûLOSSûINûITSû BIGûlVEû53ûBANKS ûWHICHûREPORTEDûSOLIDû )TûPOSTEDûSTEADYûGAINSûINûlXEDûINCOMEû OVERSEASûBUSINESSûDURINGû!PRIL *UNE TRADINGûRESULTSûANDûANûINCREASEûINû DURINGûTHEû*ANUARY -ARCHûQUARTER ûWITHû 4HEûBANKûRECORDEDûAûûDECLINEûINûREVENUEû INVESTMENTûBANKINGûFEEûINCOMEûDURINGûTHEû REVENUESûUPûûATûcBN ûANDûAûûSURGEû TOûcBNûINûITSûDOMESTIC FOCUSEDûRETAILû QUARTERû2EVENUEûFROMûlXEDûINCOME û INûEQUITIESûREVENUESûASûITûBENElTEDûFROMû DIVISION ûWHICHûITûATTRIBUTEDûTOûINVESTORû COMMODITIESûANDûCURRENCYûTRADINGûROSEûû MOREûVOLATILEûMARKETûCONDITIONS DISQUIETûOVERû53 #HINAûTRADEûFRICTION ONûAVERAGEûACROSSûTHEûlVEûBANKS ûWHILEû "UTû.OMURASûLATESTûQUARTERLYû 2EVENUEûFROMûASSETûMANAGEMENTûFELLûû REVENUEûFROMûEQUITIESûJUMPEDû PERFORMANCEûWILLûRAISEûQUESTIONSûAGAINû TOûcBN ûALTHOUGHûITûNOTEDûTHATûASSETSû 4HEû53ûBANKSûBENElTEDûFROMûRECENTû ABOUTûTHEûVIABILITYûOFûITSûBUSINESSûOUTSIDEû UNDERûMANAGEMENTûREACHEDûAûRECORDûHIGHûOFû VOLATILITYûLINKEDûTOûESCALATINGûTRADEû *APAN ûWHICHûHASûBEENûDEBATEDûEXTENSIVELYû cTRNûDURINGûTHEûQUARTER TENSIONSûBETWEENû#HINAûANDûTHEû53ûANDû SINCEûITûACQUIREDû,EHMANû"ROTHERSûEQUITIESû Thomas Blott

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

that shocked peers and left its of the unsold underwritten shares loss for its second quarter. While fellow underwriter at a significant they expected to receive, sparking the losses were in line with earlier disadvantage. The bank apparently near universal outrage among ECM guidance, the results showed abided by the FSA’s rules, but bankers in the UK. a near complete capitulation was felt to have breached the Morgan Stanley bankers said the across the firm’s mortgage and gentleman’s agreement that traders acted independently of the commercial lending businesses. operates in the UK. ECM team, on the assumption that The good news – such as it When subscription closed for the bank would be left with stock is – is that additional capital will the HBOS rights issue at 11am and this would mitigate its risk. By not be needed. The bad news is on Friday July 18, most in the the end of trading on Friday the that housing markets are likely market assumed that little would bank had acquired a short position to remain problematic until the happen until the deal’s two equal to 2.347% of HBOS’s stock, middle of next year. From July 26 2008 issue bookrunners – Morgan Stanley and but it did not notify the market until The second quarter was “clearly Not the done thing Dresdner Kleinwort – launched after the rump issue was completed a disappointing performance for The relatively successful result for the placement of the rump the on Monday. which we take responsibility”, said the £4bn HBOS rights issue was following Monday. newly appointed Wachovia CEO overshadowed last week by the But when Citi published results Prudently paranoid Robert Steel in a conference call hedging activity of underwriter that led the banking sector higher and Management at Wachovia threw on Tuesday that lasted more than Morgan Stanley. The US bank HBOS’s stock finally moved above in the towel last week, once again, two hours. “We are serious about began selling the stock ahead of the 275p rights issue price, traders at with a fresh series of write-downs getting on top of these issues the rump placement in a move Morgan Stanley chose to dump some that led to a record US$8.9bn quickly.”

18 International Financing Review July 28 2018 People &Markets Houlihan Lokey launches syndicated loan platform

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BNP PARIBASûHASûCREATEDûAûNEWûUNITûCALLEDû )TûWILLûBRIDGEûEXISTINGûCREDITûUNITSûOFûGLOBALû 4HEûBANKûHASûALSOûAPPOINTEDûChristopher GLOBALûCREDITûMARKETSû!MERICASûANDû MARKETSû!MERICASûANDûGLOBALûBANKINGû!MERICAS BlumûASûHEADûOFûLEVERAGEDûlNANCEûFORû.ORTHû APPOINTEDûMatthew SalvnerûASûITSûHEADûANDû 4HEûNEWûUNITûWILLûBEûBROKENûINTOûHIGH !MERICA Dan CozineûASûDEPUTYûHEAD GRADEûlNANCE ûASSETûlNANCEûANDû "LUMûJOINEDû".0ûINûEARLYû*ULYûFROMû 4HEûUNITûINTEGRATESûALLûPRIMARYû SECURITISATIONûANDûLEVERAGEDûlNANCE $EUTSCHEû"ANKûWHEREûHEûWASûCO HEADûOFû ORIGINATION ûlNANCINGûANDûSYNDICATIONû 3ALVNERûWASûPREVIOUSLYûHEADûOFûPRIMARYûANDû LEVERAGEDûDEBTûCAPITALûMARKETSû(EûHASûCLOSEû ANDûSECONDARYûSALES ûTRADINGûANDû CREDITûMARKETSû!MERICASûANDûGLOBALûHEADûOFû TOûûYEARSûOFûEXPERIENCEûINûLEVERAGEDû RESEARCHûACROSSûCREDITûPRODUCTSûINTOûONEû ASSETûlNANCEûANDûSECURITISATION ûWHILEû#OZINEû lNANCEûANDûHIGH YIELD PLATFORM WASûHEADûOFûlNANCINGûSOLUTIONSû!MERICAS Shankar Ramakrishnan

UK seeks to restore Barclays STRATEGYûANDûVIEWEDûASûAûMISSTEP vûSAIDû #HARLESû+UHN ûAûPARTNERûATûLAWûlRMû#LYDEûû #O court case over 2008 cash call "ARCLAYS ûWHICHûSAIDûINû-AYûITûEXPECTEDû THEû3&/ûTOûTRYûTOûREINSTATEûTHEûCASE ûPLANSû "RITAINSûFRAUDûOFlCEûISûSEEKINGûTOûRESURRECTûAû "ARCLAYSûHADûBEENûCHARGEDûOVERûPAYMENTSû TOûOPPOSEûTHEûAPPLICATIONû)TûDECLINEDûTOû HIGH PROlLEûPROSECUTIONûOFûBARCLAYSûOVERû TOû1ATARIûINVESTORSûINûCONNECTIONûWITHûAûTWO COMMENTûONûTHEûSUBSTANCEûOFûTHEû3&/Sû UNDISCLOSEDûPAYMENTSûTOû1ATARIûINVESTORSû PARTûaBNû53BN ûEMERGENCYû CASE DURINGûTHEûCREDITûCRISIS ûTWOûMONTHSûAFTERûAû FUNDRAISING ûANDûAû53BNûLOANûTOû1ATARûATû 4HEûCASEûCENTRESûONûAGREEMENTSûBETWEENû ,ONDONûCOURTûDISMISSEDûITSûCASE THEûHEIGHTûOFûTHEûCREDITûCRISISûINûû4HEû "ARCLAYSûANDû1ATARIûINVESTORSûDURINGûTWOû 4HEû3ERIOUSû&RAUDû/FlCEûHADûBEENûPRAISEDû DEALûALLOWEDûTHEûBANKûTOûAVOIDûAûSTATEûBAILOUT FUNDRAISINGSûINû*UNEûANDû/CTOBERû ASûhFEARLESSvûFORûTAKINGûONûONEûOFûTHEûWORLDSû 4HEû3&/ûSAIDûITûHADûAPPLIEDûTOûTHEû(IGHû 1ATARû(OLDING ûPARTûOFûTHEû1ATARû LARGESTûBANKSûWHENûITûlRSTûCHARGEDû"ARCLAYSû #OURTûFORûPERMISSIONûTOûSERVEûAûDRAFTû )NVESTMENTû!UTHORITYûSOVEREIGNûWEALTHû ANDûFOURûFORMERûSENIORûEXECUTIVESûnû INDICTMENT ûAûRAREûLEGALûPROCEDUREûONCEû FUND ûANDû#HALLENGER ûANûINVESTMENTûVEHICLEû INCLUDINGûAûFORMERûCHIEFûEXECUTIVEûnûWITHû CALLEDûAûhVOLUNTARYûBILLûOFûINDICTMENTv û OFûFORMERû1ATARIûPRIMEûMINISTERû3HEIKHû CRIMINALûOFFENCESûINû*UNEû WHICHûALLOWSûPROSECUTORSûTOûCHALLENGEûAû (AMADûBINû*ASSIMûBINû*ABRûAL 4HANI ûINVESTEDû "UTûTHEûPROSECUTIONûFELLûATûTHEûlRSTûHURDLEû DECISIONûMADEûINûTHEûLOWERû#ROWNû#OURT MOREûTHANûaBNûINû"ARCLAYS AFTERûAû,ONDONûCOURTûINû-AYûTHREWûOUTûITSû 4HEû3&/ûLASTûAPPLIEDûFORûAûVOLUNTARYûBILLûOFû !UTHORITIESûEXAMINEDûWHETHERûPAYMENTSû CHARGESûOFûCONSPIRACYûTOûCOMMITûFRAUDûANDû INDICTMENTûUNSUCCESSFULLYûINûAû7ELSHû FROMû"ARCLAYSûTOû1ATARûATûTHEûSAMEûTIME û UNLAWFULûlNANCIALûASSISTANCEûAGAINSTû MININGûRIGHTSûCASEûINûûnûANDûLAWYERSû SUCHûASûhADVISORYûSERVICESûAGREEMENTSvûANDû "ARCLAYSû0LCûnûANDûAûCHARGEûOFûUNLAWFULû SAIDûITûWASûAûRISKYûSTRATEGY THEû53BNûLOAN ûWEREûHONESTûANDûPROPERLYû lNANCIALûASSISTANCEûAGAINSTûITSûSUBSIDIARY û h4HEû3&/ûISûATTEMPTINGûAûSECONDûBITEûOFû DISCLOSED "ARCLAYSû"ANKû0LC THEûCHERRY ûWHICHûCOULDûBEûAûHIGH RISKû Kirstin Ridley

International Financing Review July 28 2018 19 h7EûDONTûHAVEûAûLOTûOFûFEMALESûINûLEADERSHIPûINûTHEû lNANCEûSECTORv NEW MACQUARIE CEO SHEMARA WIKRAMANAYAKE, P12 India’s bad debts draw early bets

)NDIASûRECENTLYûREVISEDûBANKRUPTCYûREGIMEûISû NEWû)"#ûREGIMEûHASûCREATEDûOPPORTUNITIESûTOû h$EPENDINGûONûTHEûSIZEûOFûTHEûDEALûINû OPENINGûUPûNEWûlNANCINGûOPPORTUNITIESûFORû hBEûACTIVEûINûALLûKINDSûOFûlNANCINGû QUESTION ûWEûCANûEITHERûDOûITûBYûOURSELVES ûORû FOREIGNûBANKS ûALTHOUGHûONLYûAûFEWûAREûREADYû OPPORTUNITIESv ûACCORDINGûTOû!MITû+HATTAR û WORKûINûPARTNERSHIPûWITHûAûNUMBERûOFûOURûHEDGEû TOûJUMPûINûWHILEûTHEûSYSTEMûISûBEINGûTESTED CO HEADûOFûGLOBALûCREDITûTRADINGûFORû!SIA FUNDûCLIENTS vûSAIDû3ESHASAYEEûATû.OMURA !MONGûTHESEûEARLYûMOVERS ûNOMURAûANDû 0ACIlCûh7EûAREûWORKINGûONûlVEûTOûSIXûDEALSû 7HILEûTHEûFOCUSûSOûFARûHASûBEENûONûTHEû DEUTSCHE BANKûSAYûTHEYûAREûREADYûTOûCOMMITû INûTHEûDISTRESSEDûSPACEûRIGHTûNOWv RESOLUTIONûOFûSOMEûOFûTHEûLARGERûSTRESSEDû SIGNIlCANTûTIMEûANDûCAPITALûTOûTHEûDISTRESSEDû CASES ûhTHEûNEXTûROUNDûOFûOPPORTUNITIESûISû DEBTûMARKET ”THAT SCARES PEOPLE” EXPECTEDûTOûCOMEûFROMûAûDIVERSEûGROUPûOFû h)NDIAûISûAMONGûTHEûVERYûFEWûCOUNTRIESûINû 4HEûBANKRUPTCYûREGIMEûGIVESûCREDITORSûAû COMPANIESûANDûFROMûACROSSûAûWIDEûRANGEûOFû !SIAûOUTSIDEûOFûDEVELOPEDûMARKETSûWHEREûTHEREû QUICKERûWAYûOFûRESOLVINGûTHEIRûCLAIMS ûANDû SECTORSv ûSAIDû.OMURASû'UPTAûh7EûAREû ISûANûINSOLVENCYûRESOLUTIONûFRAMEWORKûNOWûANDû COMESûASûTHEû2")ûISûPUSHINGûBANKSûTOûCLEANûUPû TAKINGûAûLONG TERMûVIEWv THISûHELPSûUSûLOOKûATûDISTRESSEDûDEBTûINVESTINGûINû ANûESTIMATEDû53BNûOFûTROUBLEDûLOANS .OMURAûISûINûACTIVEûNEGOTIATIONSûONûAûCOUPLEû AûVERYûDIFFERENTûWAYûASûOPPORTUNITIESûEMERGE vû $EUTSCHESû+HATTARûSAIDûTHEûMOVESûREPRESENTû OFûSITUATIONSûINûTHEûPOWERûANDûREALûESTATEû SAIDû2AHULû'UPTA ûHEADûOFûILLIQUIDûCREDITûTRADINGû hAûMASSIVEûCHANGEûINûWAYûPEOPLEûTHINKûOFû SECTORS ûWHILEû$EUTSCHEûISûINûTHEûPROCESSûOFû FORû!SIAûEX *APANûATû.OMURA BUSINESSESvû4HEûCONTROLLINGûSHAREHOLDERSûOFû CLOSINGûLARGEûDEALSûINûTHEûLASTûPHASEûOFû.#,4 û 4HEûCOUNTRYûINTRODUCEDûAûNEW ûLESSûDEBTOR DELINQUENTûDEBTORûCOMPANIESûCANûNOûLONGERû ACCORDINGûTOûTHEIRûRESPECTIVEûEXECUTIVES FRIENDLYûINSOLVENCYûANDûBANKRUPTCYûCODEûINû STONEWALLûFORûYEARSûINûTHEûCOURTSûASûTHEYûUSEDûTO )NEVITABLY ûTHEREûAREûCHALLENGESûALONGSIDEû û4HEN ûLASTûSUMMER ûTHEû2ESERVEû"ANKûOFû h.OWûTHATûREGIMEûISûGOINGûAWAYûANDûTHATû THEûOPPORTUNITIES )NDIAûFORCEDûLENDERSûTOûBEGINûINSOLVENCYû SCARESûPEOPLE ûANDûTHATûISûAûBIGûPOSITIVE vû h4HEûNUMBERûOFûSTRESSEDûASSETSûENTERINGû PROCEEDINGSûAGAINSTûAûDOZENûMAJORûDEFAULTERSû +HATTARûSAID THEûBANKRUPTCYûCOURTSûISûHUGE ûHOWEVERûTHEû INûTHEû.ATIONALû#OMPANYû,AWû4RIBUNAL û )NTERNATIONALûINVESTORSûSUCHûASûPRIVATEû COURTSûHAVEûLIMITEDûCAPACITYûANDûTHEûPROCESSû PROVIDINGûTHEûlRSTûTESTûOFûRECOVERYûRATESûUNDERû EQUITYûlRMS ûDISTRESSEDûDEBTûFUNDSûANDû ISûSTILLûEVOLVING vûSAIDû$EUTSCHESû+HATTAR THEûNEWûREGIMEû)TûHASûSINCEûADDEDûûMOREû HEDGEûFUNDSûAREûALLûSTUDYINGûTHEûMARKET ûBUTû 2ECOVERIESûINûINITIALûRESOLUTIONSûHAVEûALSOû COMPANIESûTOûTHATûLISTûINûAûBIDûTOûFORCEûLENDERS û CAPITALûCOMMITMENTSûHAVEûSOûFARûBEENûRARE BEENûDELAYEDûBECAUSEûOFûLITIGATION ûINûEFFECTû ESPECIALLYû)NDIANûSTATE OWNEDûBANKS ûTOûDEALû &OREIGNûBANKSûSEEûlNANCINGûOPPORTUNITIESûINû LOWERINGûTHEûREALISEDûINTERNALûRATEûOFûRETURNSû WITHûNON PERFORMINGûASSETS THREEûDIFFERENTûAREASû4HEûlRSTûISûHELPINGû FORûINVESTORS û.OMURASû'UPTAûSAID $ESCRIBINGûTHEûTWINûDEVELOPMENTSûASû COMPANIESûAVERTûDEFAULTûANDûAVOIDûAû "ANKERSûAREûALSOûAWAITINGûCLARITYûAROUNDû hGAME CHANGINGûFORû)NDIAv û!ADITû BANKRUPTCYûPROCESSû3ECOND ûDURINGûTHEû.#,4û INTERPRETATIONûOFûSECTIONû!ûOFû)"# ûWHICHû 3ESHASAYEE ûHEADûOFû.OMURASûSPECIALû PROCESS ûWHICHûTYPICALLYûTAKESûSIXûMONTHSûTOû PREVENTSûRELATEDûPARTIESûFROMûBIDDINGûFORûTHEû SITUATIONSûGROUPûFORû!SIAûEX *APAN ûSAYSûAû ONEûYEAR ûISûTOûPROVIDEûWORKINGûCAPITALûTOûTHEû STRESSEDûASSETS QUARTERûORûMOREûOFûHISûGROUPSûPORTFOLIOûISû STRESSEDûCOMPANYûTOûKEEPûTHEûLIGHTSûONû4HEû )NVESTORSûWHOûLACKûEXPERIENCEûINû)NDIAûAREû LIKELYûTOûCOMEûFROMû)NDIAûINûTHEûNEXTû û THIRDûOPPORTUNITYûISûWHENûTHEûBANKRUPTCYû LIKELYûTOûWAITûTOûSEEûSUCCESSFULûRESOLUTIONSû MONTHSûh7EûCOULDûHAVEûANûEXPOSUREûOFû COURTSûSELLûTHEûASSETSûANDûTHEûBUYERSûNEEDû BEFOREûDIPPINGûTHEIRûTOESûINûTHEûMARKETûh!CCESSû CLOSEûTOûAûFEWûHUNDREDûMILLIONûDOLLARSûINûTHEû lNANCINGûFROMûCAPITALûMARKETSûANDûBANKSû TOûINFORMATIONûTOûCONDUCTûDUEûDILIGENCEûISû NEXTûCOUPLEûOFûYEARSûCOMPAREDûTOûAûSMALLû 4RADINGûDISTRESSEDûDEBTûISûANOTHERûPOSSIBLEûPLAY ANOTHERûKEYûISSUEû&ORûEXAMPLE ûSEVERALûBANKSû BOOKûSIZEûCURRENTLY vûHEûSAID "ANKSûMAYûACTûONûTHEIRûOWNûORûTEAMûUPû MAINTAINûPHYSICALûDATAûROOMS vûSAIDû'UPTA $EUTSCHEû"ANKûISûALSOûBULLISH ûSAYINGûTHEû WITHûPARTNERS ûACCORDINGûTOûTHEûSITUATION Krishna Merchant India promotes corporate bonds )NDIASûMARKETûREGULATORûWANTSûLARGEû GIVENûTHEûLEVELûOFûBADûLOANSûINû)NDIA MARKETSûADHEREûTOûTHEûMANDATORYûûLIMIT vû COMPANIESûTOûMEETûATûLEASTûAûQUARTERûOFûTHEIRû h4HEûPRESSUREûONûTHEûBANKSûWILLûREDUCEû SAIDû2AJEEVû2ADHAKRISHNAN ûHEADûOFûlXEDû FUNDINGûREQUIREMENTSûINûTHEûBONDûMARKETû ANDûTHEûCORPORATEûBONDûMARKETûWILLûDEEPENû INCOMEûATû3")û&UNDSû-ANAGEMENT FROMûTHEûNEXTûlSCALûYEAR FURTHER vûSAIDû+ILLOLû0ANDYA ûHEADûOFûlXEDû 3EBIûHASûPROPOSEDûAûCOMPLIANCEûMECHANISMû 4HEûPROPOSALûFROMûTHEû3ECURITIESûANDû INCOMEûATû%SSELû&INANCEû!-# THATûWOULDûBEûIMPLEMENTEDûINûPHASESûTOû %XCHANGEû"OARDûOFû)NDIA ûPUBLISHEDûONû*ULYû û )Nû)NDIAûTHEREûHASûTRADITIONALLYûBEENûAû SMOOTHûTHEûTRANSITIONûBECAUSEû)NDIAûISûINûAû WOULDûAPPLYûTOûCOMPANIESûWITHûOUTSTANDINGû HIGHûRELIANCEûONûTHEûBANKINGûSYSTEMûTOûRAISEû RISINGûINTERESTûRATEûCYCLEûANDûISSUERSûWILLûWARMû LONG TERMûBORROWINGSûOFû2SBNû53M ûORû FUNDSûBECAUSEûTHEûLOANûMARKETûHASûTENDEDûTOû TOûTHEûIDEAûONLYûGRADUALLY ûSAIDû2ADHAKRISHNAN ABOVE ûAûCREDITûRATINGûOFû!!ûORûABOVE ûANDûPLANSû BEûCHEAPERûANDûDEEPERû(OWEVER ûhTHEûPUSHû 4HEûSHAREûOFûCORPORATEûBONDSûASûAû TOûBORROWûFORûMOREûTHANûONEûYEARû4HEû TOWARDSûTHEûBONDûMARKETûWILLûINCREASEûTHEû PERCENTAGEûOFû'$0ûINCREASEDûDRAMATICALLYûINû FRAMEWORKûWOULDûEXCLUDEûCOMMERCIALûBANKS û VOLUMEûOFûQUALITYûPAPER ûREDUCEûTHEû "RAZIL û2USSIA û#HINAûANDûTHEû5+ûINûTHEûlVEû ANDûEXTERNALûCOMMERCIALûBORROWINGûANDûINTER CONCENTRATIONûONûBANKûBALANCEûSHEETSûANDû YEARSûFOLLOWINGûTHEûIMPLEMENTATIONûOFû CORPORATEûBORROWINGûBETWEENûPARENTû INSTILûCREDITûDISCIPLINEûAMONGûBORROWERSv û BANKRUPTCYûREFORMSûINûTHOSEûCOUNTRIES û3EBIû COMPANIESûANDûTHEIRûSUBSIDIARIESûWOULDûNOTû #AREû2ATINGSûSAIDûINûAûNOTE WROTEû4HEûREGULATORûESTIMATEDûTHATûTHEûSHAREû COUNTûTOWARDSûTHEûRATIO )MPLEMENTINGûTHEûPROPOSALûCOULDûBEûTRICKY û OFûBONDSûASûAûPERCENTAGEûOFû'$0ûWILLûINCREASEû -ARKETûPARTICIPANTSûSAIDûTHEûPROPOSALSûAREû SOûTHEûMARKETûREGULATORûISûTAKINGûGRADUALû FROMûûCURRENTLYûTOûnûBYûnûFORû AûSTEPûINûTHEûRIGHTûDIRECTIONûATûAûTIMEûWHENû STEPSûh3EBIûISûONLYûPROPOSINGûTHATûGOOD ûRATEDû )NDIAûDUEûTOûTHEûBANKRUPTCYûREFORM BANKSûAREûRELUCTANTûnûORûUNABLEûnûTOûLENDû CORPORATESûTHATûHAVEûEASYûACCESSûTOûTHEûBONDû Krishna Merchant

20 International Financing Review July 28 2018 People &Markets

IN BRIEF

Fannie gives Libor replacement SHACKLES STAY ON STANDARD CHARTERED has had its deferred SOFR a boost prosecution agreement with US authorities FANNIE MAEûLASTûWEEKûSAIDûITûPRICEDûTHEûlRST THATûBACKEDû3/&2 ûGAVEûTHEû,IBORûREPLACEMENTû extended for a third time because its compliance is EVERûmOATING RATEûSENIORûUNSECUREDûDEBTû PROCESSûANOTHERûBOOSTûBYûRAISINGû53BNûSELLINGû still not at the necessary standard. The DPA began USINGûTHEûNEWLYûCREATEDû3ECUREDû/VERNIGHTû SIX ûûANDû MONTHûUNSECUREDûNOTES in 2012 and was due to expire on July 28, but the &INANCINGû2ATEû3/&2 ûASûAûBENCHMARK &ANNIEûPRICEDû53BNûINûSIX MONTHûDEBTû bank said it has been extended to December 31. An 4HEû53BNûTHREE PARTûTRADE ûBECAUSEûOFûITSû ATû3/&2ûPLUSûBP ûTHEû53BNû MONTHû independent compliance monitor has also been SIZEûANDûEXECUTION ûISûEXPECTEDûTOûGIVEûSERIOUSû NOTESûATû3/&2ûPLUSûBPûANDû53BNû extended until the end of the year. IMPETUSûTOûTHEûONGOINGûRACEûTOûREPLACEû,IBOR û MONTHûNOTESûATûPLUSûBP “The agreement acknowledges that the group has WHICHûISûEXPECTEDûTOûCEASEûTOûEXISTûFROMû Barclays Capital ûNomura SecuritiesInternational taken a number of steps and made significant progress 3/&2ûHASûONLYûBEENûQUOTEDûSINCEû!PRILû ûBUTûITû ANDûTD Securities USAûWEREûTHEûLEADûMANAGERSû toward compliance with the requirements of the DPA ISûBEINGûTOUTEDûBYû53ûREGULATORSûASûTHEûBESTû FORûTHEûTRADE and enhancing its sanctions compliance programme, ALTERNATIVEûTOûREPLACEû,IBOR ûWHICHûISûBEINGû h7ITHûTHISûMILESTONE ûOURûOBJECTIVEûISûTOû but that the programme has not yet reached the TERMINATEDûAFTERûBEINGûLINKEDûTOûAûSTRINGûOFûTRADERû ACCELERATEûTHEûDEVELOPMENTûOFûTHEû3/&2ûMARKETû standard required by the DPA,” the bank said on Friday. MANIPULATIONûSCANDALSûINûTHEûBANKINGûINDUSTRY ANDûWEûENCOURAGEûOTHERûISSUERSûINûTHEûDEBTû StanChart was fined US$667m in 2012 by US %ARLIER û53û&EDERALû2ESERVEû'OVERNORû MARKETSûTOûFOLLOW vûSAIDû.ADINEû"ATES ûSENIORû authorities for breaking sanctions on Iran, Libya 2ANDALû1UARLESûTOLDûAûCONFERENCEûINû.EWû VICEûPRESIDENTûANDû4REASURERûATû&ANNIEû-AE and other countries between 2001 to 2007. The 9ORKûTHATûDAILYûTRANSACTIONSûUNDERLYINGû3/&2û &ANNIEû-AESûBONDSûRECEIVEDûBROADûINTERESTû settlement included DPAs with the DoJ and the FUTURESû ûATûOVERû53BNû ûWEREûALREADYû FROMûSIXûCATEGORIESûOFûINVESTORSû ûASSETû New York County District Attorney’s Office. The MOREûTHANûTHOSEûUNDERPINNINGû,IBOR MANAGERS ûFUNDS ûCORPORATIONS ûSTATEûANDûLOCALû DPAs were last extended in November, because the 4HEûBENCHMARKûHASûSTILLûNOTûBECOMEû GOVERNMENTS ûCOMMERCIALûBANKSûANDû bank had not improved compliance standards to MAINSTREAMûYETûFORûCASHûPRODUCTS ûBUTûINû INSURANCEûCOMPANIESû ûDEMONSTRATINGûGROWINGû the satisfaction of US authorities. RECENTûWEEKSûTHEû&EDSûPROMOTIONSûANDû DEPTHûOFûAPPETITEûFORûTHEûNEWûBENCHMARK Extra scrutiny from a DPA and having monitors STATISTICSûDEPICTINGûITSûLIQUIDITYûAREûSTARTINGû 4HOUGHû3/&2ûISûNEW ûITSûSIMILARITYûTOû installed can require a bank to have scores more TOûINCREASEûITSûUSE mOATERSûPEGGEDûTOûTHEû&EDûFUNDSûRATEûISûSAIDû compliance staff and add several hundred million #HICAGOû-ERCANTILEû%XCHANGEûINTRODUCEDû TOûHAVEûHELPEDûENSUREûBROADûINTEREST dollars of annual costs, banking sources have THREE MONTHûANDûONE MONTHû3/&2ûFUTURES û &ANNIEû-AEûALSOûRECEIVEDûNOTABLEûINTERESTû previously told IFR. Rival HSBC also had a lengthy WHILEûCLEARINGHOUSEû,#(ûTHISûMONTHûSAIDûITû FROMû!SIANûACCOUNTS DPA with the Department of Justice, but that HADûCLEAREDûTHEûlRSTûDOLLARûINTERESTûRATEû 4RADINGûINûTHESEûSECURITIESûISûASûSUCHû expired in December. SWAPSûREFERENCINGû3/&2 EXPECTEDûTOûBRINGûMOREûFOCUSûTOû3/&2 BASEDû #REDITû3UISSE û'OLDMANû3ACHSûANDû*0û PRODUCTSûANDûHELPûINûITSûACCEPTANCE EXPENSIVE CRASH -ORGANûWEREûAMONGûTHEûlRSTûPARTICIPANTSûTOû #ORPORATEûBONDSûAREûSTILLûUSINGû,IBORûASûAû An IT failure at Britain’s TSB has cost BANCO SABADELL CLEARûSWAPSûUSINGûTHEûRATE ûITûSAID BENCHMARKûFORûTHEIRûmOATING RATEûNOTES ûBUTû more than €200m (US$233m), pushing the Spanish THATûCOULDûCHANGEûINûTIMEûONCEûAûTERMû bank to a quarterly loss, with its effects to be felt TERM STRUCTURE STRUCTUREûWASûESTABLISHEDûFORû3/&2 ûSAIDûONEû for the rest of the year. A botched migration of TSB /Nû4HURSDAYû&ANNIEû-AE ûWHICHûISûPARTûOFûTHEû ANALYST computer systems in April saw thousands of users &EDSû!LTERNATIVEû2EFERENCEû2ATESûCOMMITTEEû Shankar Ramakrishnan locked out of their accounts and a surge in attacks by fraudsters, prompting a regulatory investigation and criticism of its chief executive. JP Morgan bolsters A-share Sabadell, which bought TSB in 2015, booked an extraordinary charge of €203m for the outage, research with five hires including compensation for cases of alleged fraud during the migration and €92.4m for future JP MORGANûHASûHIREDûlVEû#HINA FOCUSEDûRESEARCHû &INANCIALûANDûLei Mu ISûDUEûTOûJOINûINû customer claims. Sabadell had estimated the cost ANALYSTSûINû(ONGû+ONGûASûTHEû53ûINVESTMENTû !UGUSTûFROMû3INOPECû#ORPûASû#HINAû at around £70m last month. It said the latest cost BANKûCONTINUESûTOûADDûTOûITSû! SHAREûCOVERAGE ENERGYûANALYST figure did not include any provisions for potential Billy Feng HASûJOINEDûFROMû5"3û3ECURITIES ûTHEû 4HEûHIRINGSûCOMEûASûSEVERALûINTERNATIONALû fines that TSB could be hit with. SECURITIESûJOINTûVENTUREûPARTLYûOWNEDûBYû5"3 ûASû BANKSûHAVEûBEENûBOLSTERINGûTHEIRû! SHAREû SENIORû#HINAûTECHNOLOGYûANALYSTû(EûPREVIOUSLYû RESEARCHûCOVERAGEûFOLLOWINGûTHEûDECISIONû FIVE FINED WORKEDûATû#,3!ûANDû4HOMSONû2EUTERS LASTûYEARûBYû53ûINDEXûPROVIDERû-3#)ûTOûADDû The European Securities and Markets Authority fined Patrick Xu HASûJOINEDûFROMû.OMURAûASû #HINESEûMAINLANDûSTOCKSûINûITSûBENCHMARKû five Nordic banks €2.48m for issuing credit ratings SENIORû#HINAûINDUSTRIALûANALYSTû(Eû EMERGINGûMARKETSûINDEX without authorisation from the regulator. ESMA said PREVIOUSLYûWORKEDûATû"ARCLAYSûANDû$"3 ,ASTûYEAR û*AMESû3ULLIVAN û*0û-ORGANSû DANSKE BANK, NORDEA, SEB, SVENSKA HANDELSBANKEN *0û-ORGANûHASûALSOûADDEDûHan Fu FROMû HEADûOFûEQUITYûRESEARCHûFORû!SIAûEX *APAN û and SWEDBANK were each fined €495,000. RIVALû-ORGANû3TANLEYûASû#HINAûBASICûMATERIALû TOLDû2EUTERSûTHEûBANKûHADûINCREASEDûITSû The banks had issued credit reports to clients that ANALYSTû(EûPREVIOUSLYûWORKEDûATûINVESTMENTû 'REATERû#HINAûCOVERAGEûBYûûINûûANDû provided opinions on different entities and underlying lRMû-ANDALAYû#APITALû'ROUP HADûAûhFAIRLYûAGGRESSIVEûINVESTMENTûPLANvûINû financial instruments, which ESMA found met the -EANWHILE ûQian Yao HASûJOINEDûASû PLACEûFORûTHEûFOLLOWINGûTWOûYEARS definition of a credit rating under the Credit Rating #HINAûCONSUMERûANALYSTûFROMû(UATAIû Thomas Blott Agencies Regulation.

International Financing Review July 28 2018 21 Trusted answers for trusted advisors.

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FRONT STORY SSA EBRD snubs Sonia to keep Libor alive Investor feedback prompts bank to turn back on alternative reference rate

The EUROPEAN BANK FOR RECONSTRUCTION AND 3ONIAûISûSETûTOûDEVELOPûINTOûTHEû was deemed preferable to the use of a DEVELOPMENT on Wednesday shunned a BENCHMARKûREFERENCEûRATEûINûBOND ûLOANûANDû COMPOUNDEDûOVERNIGHTûRATE ûWHICHû,AURENTû promised new dawn of Sonia-linked sterling DERIVATIVESûMARKETS SAIDûISûANûIMPERFECTûSOLUTIONûFORûINVESTORû mOATING RATEûNOTES ûASûOVERWHELMINGû But the EBRD robustly defended the needs. INVESTORûDEMANDûLEDûTHEûISSUERûTOûTIEûITSû DECISIONûTOûSTICKûWITHû,IBOR ûSAYINGûTHATû h-ANYû;INVESTORS=ûCANTûMANAGEûASSETSûANDû latest issue to the tried-and-tested Libor 3ONIAûCOULDûPROVEûAûMAJORûHEADACHEûFORû liabilities that are structured so that they reference rate. INVESTORSûWHOûNEEDûTOûLOOKûATûTERMûRATESû will only know a couple of days before the The EBRD placed a £450m FRN due July RATHERûTHANûAûCOMPOUNDEDûOVERNIGHTûRATE PAYMENTûISûDUEûWHATûTHEûPAYMENTûIS vûSAIDû ûATûTHREE MONTHû,IBORûPLUSûBP ûINûLINEû )SABELLEû,AURENT ûHEADûOFûFUNDINGûATû%"2$ û Laurent. with IPTs. said there had been little interest on show h4HEYûLIKEûTOûKNOWûTHREEûORûSIXûMONTHSûINû "UTûTHEûNATUREûOFûTHEûTRADEûPROVOKEDû FORûAû3ONIA LINKEDûPRODUCT ûWITHûTHEû ADVANCEûWHATûTHEYûAREûGOINGûTOûPAYûORûWILLû DEBATEûAMONGûMARKETûPARTICIPANTS ûGIVENû reference rate either not signed off for RECEIVE ûSOûTHEûDEVELOPMENTûOFûTERMûRATESû THATûTHEû%UROPEANû)NVESTMENTû"ANKû INVESTORSûASûANûAPPROVEDûPRODUCTûORûNOTû LINKEDûTOû3ONIAûWILLûBEûIMPORTANTûFORûTHEMv HERALDEDûAûaBNûmOATERûINû*UNE ûLINKEDûTOû compatible with the systems of many "OOKSûCLOSEDûABOVEûaM ûANDûAûLEADû THEûSTERLINGûOVERNIGHTûINDEXûAVERAGE ûASûTHEû accounts. POINTEDûTOûTHEûORDERS ûANDûAûTRADEûWHICHûWASû start of a post-Libor world. “EIB’s Sonia-linked bond was good and UPSIZEDûFROMûaM ûASûAûREmECTIONûOFû “The EBRD tend to be at the forefront of IMPORTANT ûESPECIALLYûFROMûAûSIGNALLINGû continued Libor demand. INNOVATION ûANDûTHISûISûTHEûTHINGûMOSTûFOLKSû PERSPECTIVE ûBUTûWEûHADûNINEûBANKSûPITCHINGû “The EIB trade was groundbreaking and AREûTALKINGûABOUT vûSAIDûAûBANKERûAWAYûh!LLû ,IBORûANDûNONEûPITCHINGû3ONIA ûDESPITEûTHEû 3ONIAûDEMANDûWASûEVIDENT ûBUTûDEMANDûFORû HAVEûACKNOWLEDGEDû3ONIAûWILLûBEûTHEûRISK FREEû fact that we asked them about demand for ,IBORûISûALSOûSTILLûVERYûMUCHûTHERE vûSAIDûTHEû REFERENCEû4HISûDOESûMOREûHARMûTHANûGOODv 3ONIA vûSAIDû,AURENT lead. “It’s not as simple as snapping your ,IBOR ûTHEûSTANDARDûREFERENCEûRATEûUSEDûTOû The deal announcement was lNGERSûANDûSWITCHINGûREFERENCEûRATEû.ORûAREû PRICEû53TRNûOFûlNANCIALûCONTRACTS ûWILLû accompanied by fallback language and risk PEOPLEûBEINGûCOMPLACENT ûITûJUSTûTAKESûAûLOTû be phased out completely by the end of warnings which highlighted that Libor will OFûWORKv ûAFTERûTHEûINDEXûWASûUNDERMINEDûBYûAû be phased out in its entirety by the end of Barclays ûNomura and Scotiabank were leads. rigging scandal. ûBEFOREûTHEûlVE YEARûDEALûMATURESû4HATû Robert Hogg Fannie Mae gives SOFR a boost Debut trade could serve as post-Libor template

FANNIE MAE on Thursday said it had priced the The benchmark has still not become ATûPLUSûBPûANDû53BNûOFû MONTHû lRSTûEVERûmOATING RATEûSENIORûUNSECUREDûDEBTû MAINSTREAMûFORûCASHûPRODUCTS ûBUTûINûRECENTû notes at plus 16bp. Barclays ûNomura and TD USINGûTHEûNEWLYûCREATEDû3ECUREDû/VERNIGHTû weeks the Fed’s promotions and statistics were lead managers. Financing Rate (SOFR) as a benchmark. DEPICTINGûITSûLIQUIDITYûHAVEûSTARTEDûTOû 4HEûBONDSûRECEIVEDûBROADûINTERESTûFROMû 4HEû53BNûTHREE PARTûTRADE ûBECAUSEûOFû increase its use. INVESTORSûACROSSûTHEûBOARD ûDEMONSTRATINGûAû ITSûSIZEûANDûEXECUTION ûISûEXPECTEDûTOûGIVEû #HICAGOû-ERCANTILEû%XCHANGEûINTRODUCEDû growing depth of appetite for the new benchmark. serious impetus to the ongoing race to THREE MONTHûANDûONE MONTHû3/&2ûFUTURES û 4RADINGûINûTHESEûSECURITIESûISûALSOûEXPECTEDû REPLACEû,IBOR ûWHICHûISûSCHEDULEDûTOûCEASEûTOû while clearinghouse LCH said in mid-July to bring more focus to SOFR-based products EXISTûFROMû THATûITûHADûCLEAREDûTHEûlRSTûDOLLARûINTERESTû and help in its acceptance. 3/&2ûHASûONLYûBEENûQUOTEDûSINCEû!PRILû û rate swaps referencing SOFR. Corporate bonds are still using Libor as a but it is being touted by US regulators as the #REDITû3UISSE û'OLDMANû3ACHSûANDû*0û BENCHMARKûFORûTHEIRûmOATING RATEûNOTES ûBUTû BESTûALTERNATIVEûTOûREPLACEû,IBOR ûWHICHûISû -ORGANûWEREûAMONGûTHEûlRSTûPARTICIPANTSûTOû that could change in time once a term structure being terminated after being linked to a CLEARûSWAPSûUSINGûTHEûRATE ûITûSAID WASûESTABLISHEDûFORû3/&2 ûSAIDûONEûANALYST string of trader manipulation scandals in the !NDûONû4HURSDAY û&ANNIEû-AE ûWHICHûISûPARTûOFû “SOFR’s increased acceptance in a short banking industry. THEû&EDSû!LTERNATIVEû2EFERENCEû2ATESûCOMMITTEEû PERIODûOFûTIMEûISûVERYûENCOURAGINGûANDû 53û&EDERALû2ESERVEû'OVERNORû2ANDALû THATûBACKEDû3/&2 ûGAVEûTHEû,IBORûREPLACEMENTû should speed up the process of creating a Quarles said earlier this month that daily process another boost by raising US$6bn selling TERMûSTRUCTUREûBASEDûONûTHEûOVERNIGHTûRATE û transactions underlying SOFR futures - at SIX ûûANDû MONTHûUNSECUREDûNOTES which is critical to ensure its use in the OVERû53BNû ûWEREûALREADYûMOREûTHANû &ANNIEûPRICEDû53BNûOFûSIX MONTHûDEBTû CORPORATEûBONDûMARKETv those underpinning Libor. ATû3/&2ûPLUSûBP û53BNûOFû MONTHûNOTESû Shankar Ramakrishnan

International Financing Review July 28 2018 23 EBA sides with UniCredit on WEEK IN NUMBERS 1.625pts CASHES capital treatment THE AMOUNT THAT TESLA’S 5.30% 2025 BONDS FELL BY IN CASH TERMS Rules no breach of EU law ON MONDAY AFTER A REPORT THE ELECTRIC CAR MAKER HAS TURNED TO UNICREDIT subordinated bonds held steady WROTEû#AIUSûINûAûLETTERûTOûTHEû%"!ûRESPONDINGû SOME SUPPLIERS FOR A REFUND OF FOLLOWINGûTHEû%UROPEANû"ANKINGû!UTHORITYSû to its statement. PREVIOUSLY MADE PAYMENTS IN A BID TO assessment that certain instruments known 4HEûHEDGEûFUNDûAPPROACHEDûTHEû%"!ûINû TURN A PROFIT ASû#!3(%3ûQUALIFYûASû#OMMONû%QUITYû4IERû û -AY ûLOBBYINGûFORûAûFORMALûINVESTIGATIONûINTOû despite hedge fund Caius Capital arguing to whether the ECB and the Bank of Italy 96 the contrary. BREACHEDû%5ûLAWûBECAUSEûOFûTHEû#!3(%3û 94 4HEû%"!ûHADûSAIDûTHATûTHEREûHADûBEENûNOû #%4ûCLASSIlCATION 92 breach of European Union law in counting )TûALSOûARGUEDûTHATûTHEûEXISTENCEûOFûTHEû THEûõBNûOFûNOTESûASû#%4û4HEREFORE ûITû #!3(%3ûRENDERSûALLûOFû5NI#REDITSûORDINARYû 90 WOULDûNOTûOPENûAûSPECIlCûINVESTIGATIONûINTOû SHARESûINELIGIBLEûASû#%4û!CCORDINGûTOûITSû 88 the matter. The regulator is carrying out a ANALYSIS ûTHATûWOULDûLEAVEûONEûOFû%UROPESû WIDERûREVIEWûOFûCRISIS ERAûINSTRUMENTS largest banks grossly undercapitalised with a 86 h7HILEûTHEûALLEGEDûBREACHûCOULDûHAVEûAû #%4ûRATIOûOFûLESSûTHANû 84 SIGNIlCANT ûDIRECTûIMPACTûONûTHEû%"!Sû Caius successfully forced West Bromwich OBJECTIVES ûINûPARTICULARûASûREGARDSûACHIEVINGûAû Building Society to clean up legacy hybrid 02/01/18 02/07/18 02/03/18 02/04/18 02/05/18 02/02/18 SOUND ûEFFECTIVEûANDûCONSISTENTûLEVELûOFû securities last year on the grounds that these 02/06/18 REGULATIONûANDûSUPERVISIONûxûTHEû%"!û0ROCEDUREû too were ineligible as CET1. sets out some important factors which weigh $ESPITEûITSûSETBACKûINûTHEûCASEûOFû5NI#REDIT û AGAINSTûTHEûCOMMENCEMENTûOFûANûINVESTIGATION vû THEûFUNDûNOTESûTHEû%"!SûACKNOWLEDGEMENTû it wrote in a letter to Caius Capital. that the issues may be dealt with more 6 5NI#REDITSû!DDITIONALû4IERûûBONDSûBARELYû properly by other bodies or means. THE NUMBER OF YEARS SINCE MOVEDûONû-ONDAYûMORNING ûTHEûlRSTûDAYûOFû “We look forward to pursuing these in TEMASEK HAD ISSUED A US DOLLAR TRADINGûAFTERûTHEû%"!ûPUBLISHEDûITSûLETTERû ORDERûTOûBRINGûTHEûQUESTIONûOFûTHEû#!3(%3û BOND BEFORE LAST WEEK’S US$1.35bn 4HEûõBNûûPERPETUALû.#S ûFORû ELIGIBILITYûTOûAûCLOSEûANDûTOûRESOLVEûLINGERINGû 10-YEAR SALE EXAMPLE ûWEREûTRADINGûINûLINEûTOûAûTOUCHû UNCERTAINTYûFORûSTAKEHOLDERS vûITûSAID HIGHERûINûCASHûTERMSûATû ûACCORDINGûTOû 5NI#REDITûWELCOMEDûTHEû%"!SûDECISION û Thomson Reuters data. ANDûSAIDûITûHASûNOTIlEDûTHEûCOMPETENTû (OWEVER û#AIUSû#APITAL ûWHICHûFOCUSESûONû market authorities of Caius Capital’s actions 90.50 DISTRESSEDûANDûSPECIALûSITUATIONS ûSAIDûINûAû in light of possible market abuse. It is THE CASH PRICE LEVEL THAT response it remains resolute that the EVALUATINGûANYûOTHERûRECOURSEûTOûPROTECTûITSû UNICREDIT’S 5.375% PERP NON-CALL #!3(%3ûTRANSACTIONûFAILSûTOûCOMPLYûWITHû STAKEHOLDERS ûSHAREHOLDERSûANDûBONDHOLDERS û 2025 AT1 BONDS WERE TRADING important aspects of the Capital it said in a statement. AT ON MONDAY – ROUGHLY IN LINE Requirements Regulation. It has taken a Caius Capital refuted UniCredit’s WITH FRIDAY’S CLOSE – AFTER THE TRADINGûPOSITIONûTHATûWILLûBEûPROlTABLEûINûTHEû COMPLAINTûh!TûALLûTIMES ûWEûHAVEûCOMPLIEDû EBA SIDED WITH THE BANK ON THE EVENTûTHATûTHEû#!3(%3ûFALLûINûVALUE WITHûALLûMARKETûREGULATIONSûANDûHAVEûACTEDû CAPITAL TREATMENT OF ITS CASHES “This decision is disappointing and has far- ENTIRELYûPROPERLY vûITûSAID INSTRUMENTS REACHINGûIMPLICATIONS ûLEAVINGûSTAKEHOLDERSû 4HEûBANKûISSUEDûTHEû#!3(%3û ûCONVERTIBLEû in European banks facing continued and subordinated hybrid equity-linked 105 UNCERTAINTY vûITûSAIDûINûAûSTATEMENT SECURITIESû ûINûûUNDERûAûCAPITALûINCREASE ûITSû

4HEû%"!ûSAIDûITûHADûBASEDûITSûASSESSMENTû second during the credit crisis. Noteholders 100 OFûTHEû#!3(%3ûPLACEûINû5NI#REDITSûCAPITALû CANûCONVERTûTHEMûINTOû5NI#REDITûSHARES

STRUCTUREûINûûhONûAûONE OFFûBASISv û #AIUSûBELIEVESûTHEû#!3(%3ûSHOULDûRANKû 95 ARGUINGûTHATûTHEûBULKûOFûTHEûINSTRUMENTS û below the bank’s ordinary shares since ISSUEDûINû ûCOULDûNOTûBEûDISTINGUISHEDû INVESTORSûONLYûRECEIVEûAûCOUPONûIFûAûDIVIDENDûISû 90 FROMûORDINARYûRESERVESûWHENûASSESSINGûTHEû PAIDû)TûBELIEVESûTHISûhCO MINGLINGvûOFûBOTHûTYPESû bank’s share premium under Italian law. of securities is contrary to CET1 guidelines. 85 #AIUSûBELIEVESûTHATûTHEûTREATMENTûOFûTHEû Caius argues that UniCredit should make #!3(%3ûUNDERMINESûTHEû%UROPEANûLEVELû USEûOFûAûCLAUSEûINûTHEû#!3(%3ûTHATûWOULDû 18/01/18 18/12/17 18/07/18 18/03/18 18/02/18 18/04/18 18/05/18 18/06/18 PLAYINGûlELDûANDûRISKSûWEAKENINGûTHEû ALLOWûTHEMûTOûBEûAUTOMATICALLYûCONVERTEDû PERCEIVEDûQUALITYûOFû#%4ûACROSSûTHEû into ordinary shares. That would most likely European Union. result in large losses for holders of the notes. )TûSAIDûTHEû%"!ûHADûNOTûCLEARLYûINDICATEDûIFû The hedge fund said it would take no it had reassessed the instruments’ position FURTHERûLEGALûORûREGULATORYûACTION û €575m in the light of the implementation of CRR in UNDERSTANDINGûTHATûTHEû%"!ûISûALREADYû THE AMOUNT THE ECB BOUGHT 2014. REVIEWINGûSOMEûINSTRUMENTSûISSUEDûBEFOREûTHEû THROUGH ITS CSPP IN TRADES SETTLED “The pre-CRR treatment is therefore only new capital rules were introduced in 2014. IN THE WEEK UP TO JULY 20 OFûLIMITEDûRELEVANCEûTOûELIGIBILITYûTODAY vû Alice Gledhill, Christopher Spink In total, it has bought €164.698bn

24 International Financing Review July 28 2018 BONDS SSAR

TOûRATCHETûINûPRICINGûBYûBPûFROMû)04S û this quarter and has a further €5.5bn to raise printing the notes at swaps plus 2bp. INûTHEûlNALûQUARTERûOFûTHEûYEAR SSAR h)NûGENERAL ûTHEûFEEDBACKûWASûPOSITIVEû7Eû h4HEûDIFlCULTYûWITHûSHORT ENDûPAPERûHASû WEREûGRATEFULûTOûSEEûINVESTORSûCOMINGûINû BEENûTRYINGûTOûlNDûTHATûSWEETûSPOT vûSAIDû WHOûAPPRECIATEDûOURûRARITYûVALUEûANDû +ALINû!NEVû*ANSE ûSECRETARYûGENERALûATûTHEû US DOLLARS SUPERIORûCREDIT vûSAIDû#HAOûh4HEûNEGATIVEû %3-ûh"UTûTHEûBREAKûFROMûNEGATIVEûTOû feedback naturally centred around the tight POSITIVEûYIELDSûHASûBEENûMOVINGûDOWNûTHEû IFC PREYS ON LACK OF DOLLAR PRICINGv CURVEûWITHûINTERESTûRATESûCHANGING ûANDûWEû COMPETITION #ENTRALûBANKSûANDûOFlCIALûINSTITUTIONSû SAWûTHISûPOSSIBILITYûTOûPRINTûTHEûlRSTûPOSITIVE TOOKûûOFûTHEûNOTES ûBANKSûûANDûASSETû YIELDINGûDEALûINûTHEûlVE YEARûAREAûSINCEû The INTERNATIONAL FINANCE CORPORATION took MANAGERSûû"YûGEOGRAPHY ûûWENTûTOû v ADVANTAGEûOFûANûABSENCEûOFûCOMPETINGû33!û !SIA ûûTOûTHEû!MERICASûANDûûTOû%-%! One of the leads said the trade was SUPPLYûTOûBRINGûITSûlRSTû53ûDOLLARû'LOBALû The offering came after the IFC sold a helped by a lack of competing names in the BENCHMARKûOFûITSûlSCALûYEAR ûHITTINGûTHEû 53BNûTHREEûYEARû'LOBALûATûSWAPSûLESSûBPû market. 53BNûMARKûWITHûAûlVE YEARûOFFERING INû*ANUARY ûINûITSûLARGESTû53ûDOLLARûDEBTû h4HERESûNOTûBEENûMUCHûSUPPLY ûSOûIFûYOUû 4HEû4RIPLEû!ûRATEDûISSUER ûAûMEMBERûOFûTHEû offering since 2016. The issuer also placed a HAVEûCASHûTOûSPENDûANDûNEEDûTOûBUY ûTHERESû 7ORLDû"ANKû'ROUP ûSTARTEDûITSûlSCALûYEARûINû US$350m FRN due March 2019 in February. NOTûMUCHûCHOICE vûHEûSAIDûh0EOPLEûWEREûAû *ULYû)TûEXPECTSûTOûISSUEûATûLEASTûONEû'LOBALû Barclays ûJP Morgan ûMizuho and TD led the LITTLEûBITûSURPRISEDûATûTHEûRELATIVELYû BENCHMARKûINûTHEûCURRENCYûEVERYûYEAR û latest transaction. AGGRESSIVEûOPENINGûATûSWAPSûLESSûBP ûINû ACCORDINGûTOû&LORAû#HAO ûGLOBALûHEADûOFû THEûCONTEXTûOFûWHEREûRECENTûlVE YEARûTRADESû FUNDINGûATû)&# ûANDûAûNUMBERûOFûFACTORSû FROMû+F7 û2ENTENBANKûANDû".'ûSTARTEDû"UTû PLAYEDûINTOûTARGETINGûAûlVE YEARûDOLLARûBOND EUROS AFTERûTHEûlRSTûUPDATEûWEûHADûAûLOTûOFûBIGû h4HEûlVE YEARûTENORûWASûSELECTEDûFORû QUALITYûACCOUNTSûCOMEûINv SEVERALûREASONSûASSET LIABILITYûMATCHING ûITû ESM CUTS SWATHE THROUGH FUNDING The issuer was able to set the spread at HADûBEENûTWOûYEARSûSINCEûOURûLASTûlVE YEARû TARGET SWAPSûLESSûBP ûMOVINGûPRICINGûBYûBPû 53ûDOLLARû'LOBALû ûEXCLUDINGûTHEû53BNû from guidance. Leads put the NIP at around 'REENû;BOND=ûWEûDIDûINû/CTOBERûû û The EUROPEAN STABILITY MECHANISM took out 3bp. INVESTORûINTERESTûANDûLACKûOFûlVE YEARû half of its funding needs for the quarter in h)FûYOUûGOûSHORTERûONûTHEûCURVE ûYOUûHOPEû SUPPLY vûSAIDû#HAO ONEûGO ûASûITûPRINTEDûAûõBNûlVE YEARûONû YOUûCANûPRINTûAûLARGERûDEAL ûBUTûWEûWEREû “We were looking to add some liquidity to Tuesday. looking at this more from a maturity point our balance sheet and with the markets 4HEûDEAL ûTHEû%3-SûlRSTûNEWûlVE YEARû OFûVIEW vûSAIDû*ANSEûh/VERûTHEûLASTûFEWû CONDUCIVE ûWEûDECIDEDûTOûMOVEûFORWARDv BONDûSINCEû/CTOBERû ûGAINEDû WEEKS ûWEûHADûHEARDûDEMANDûFROMû $EMAND ûEXCLUDINGûLEADûMANAGERû momentum from orders which peaked INVESTORSûFORûEUROûPAPERûINûTHEûSHORTERûENDû INTEREST ûWASûOVERû53BNû4HEû)&#ûWASûABLEû ABOVEûõBNû4HEû%3-ûPLANSûTOûISSUEûõBNû WHICHûISûPOSITIVEûYIELDINGû-ANYûAREûNOTû

ALL INTERNATIONAL BONDS (ALL CURRENCIES) ALL BONDS IN EUROS ALL US DOLLAR FIXED-RATE GLOBALS 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$(m) (%) bank or group issues €(m) (%) bank or group issues US$(m) (%) 1 JP Morgan 647 178,843.60 7.6 1 BNP Paribas 221 53,028.13 7.2 1 BAML 127 48,557.02 11.9 2 Citigroup 612 164,354.01 7.0 2 SG 183 44,971.56 6.1 2 JP Morgan 122 46,218.92 11.3 3 HSBC 610 143,667.39 6.1 3 HSBC 221 43,109.72 5.9 3 Citigroup 108 39,756.70 9.7 4 Barclays 461 143,317.06 6.1 4 Deutsche Bank 203 42,574.27 5.8 4 Barclays 73 39,151.48 9.6 5 BAML 499 131,155.65 5.6 5 Credit Agricole 170 41,776.38 5.7 5 Goldman Sachs 73 29,966.53 7.3 6 Goldman Sachs 365 118,514.78 5.0 6 JP Morgan 159 40,018.47 5.5 6 Wells Fargo 74 25,241.16 6.2 7 Deutsche Bank 476 112,941.29 4.8 7 Barclays 138 37,657.74 5.1 7 Morgan Stanley 67 21,169.54 5.2 8 BNP Paribas 400 95,997.30 4.1 8 UniCredit 187 36,297.33 5.0 8 HSBC 41 20,584.06 5.0 9 Morgan Stanley 372 93,289.94 3.9 9 Goldman Sachs 100 31,122.43 4.3 9 Deutsche Bank 44 20,085.59 4.9 10 Credit Suisse 338 65,464.68 2.8 10 Citigroup 124 30,868.77 4.2 10 RBC 47 18,916.34 4.6 Total 3,450 2,362,693.62 Total 1,020 731,544.14 Total 243 409,611.48

Including Euro, foreign, global issues. Excluding equity-related debt, Including Euro-preferreds. Excluding equity-related debt, Excluding equity-related debt, ABS/MBS. US Global ABS/MBS. US Global ABS/MBS.

Source: Thomson Reuters SDC code: J1 Source: Thomson Reuters SDC code: N1 Source: Thomson Reuters SDC code: O5

EUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING JULY 26 2018 Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover Jul 23 2018 Belgium €705m 0.50 Oct 22 2024 0.167 2.920 Jul 23 2018 Belgium €1.112bn 0.80 Jun 22 2028 0.691 2.660 Jul 23 2018 Belgium €1.171bn 1.45 Jun 22 2037 1.339 1.250 Jul 23 2018 Belgium €618m 2.15 Jun 22 2066 1.896 1.230 Jul 24 2018 UK £2.75bn 1.00 Apr 22 2024 1.094 2.133 Jul 25 2018 Germany €3.201bn 0.00 Oct 13 2023 –0.180 1.140 Jul 26 2018 Italy €2bn 0.00 Mar 30 2020 0.647 1.610 Jul 26 2018 Italy (€i) €1.25bn 1.30 May 15 2028 1.550 1.640 Source: IFR

International Financing Review July 28 2018 25 ELIGIBLEûTOûBUYûNEGATIVE YIELDINGûPAPER ûSOû "ANKSûTOOKûûOFûTHEûNOTES ûCENTRALûBANKSû SMALL KANGAROO MOB THEYûWEREûABLEûTOûBUYûAGAINv ANDûOFlCIALûINSTITUTIONSû ûASSETûMANAGERSû Morgan Stanley ûSociete Generale and ûANDûINSURERSûANDûPENSIONûFUNDSûû"Yû !ûTRIOûOFû33!ûSTALWARTSûTAPPEDû+ANGAROOû UniCreditûWEREûJOINTûLEADûMANAGERS GEOGRAPHY ûûWENTûTOû%-%! ûûTOû LINESûLASTûWEEK ûALTHOUGHûTHEYûRAISEDûJUSTû #ANADA ûûTOû!SIAûANDûûTOûTHEû!MERICAS !Mû53M ûINûTOTALûBETWEENûTHEM BMO ûCIBC ûRBC and Scotiabank were lead 'ERMANûDEVELOPMENTûBANKûKFW ûRATEDû NON-CORE CURRENCIES managers. !AA!!!!!!û-OODYS303COPE ûANDû 4HEû7ORLDû"ANKûALSOûRAISEDû#BN û guaranteed by the Federal Republic of BASIS OPENS UP CANADIAN ROUTE FOR ALTHOUGHûITûWENTûAûTOUCHûLONGERûWITHûAûlVE 'ERMANY ûLASTû4UESDAYûPRICEDûAû!Mû ISSUERS YEARû3USTAINABLEû$EVELOPMENTûBOND INCREASEûOFûITSûû-ARCHûû+ANGAROOû The issuer started marketing the notes at ISSUE ûBRINGINGûTHEûTOTALûOUTSTANDINGûTOû The EUROPEAN INVESTMENT BANK and WORLD BANK swaps plus 2bp area. !M BOTHûJUMPEDûONûAûFAVOURABLEûSHIFTûINûTHEû “Pricing looks good if a tad on the punchy The reopening was priced at 100.369 to Canadian/US dollar basis swap to bring a SIDE vûSAIDûAûBANKERûAWAYûh"UTûSUSTAINABILITYû YIELDûû4HISûWASûEQUIVALENTûTOûBPû combined C$2bn (US$1.53bn) of bonds last ISûAûBIGûFOCUSûFORûLOTSûOFûPEOPLEûANDû)ûEXPECTûAû OVERûTHEû-AYûû!#'"ûANDûBPûOVERû week. LOTûOFûITûTOûBEûPLACEDûDOMESTICALLYv SEMI QUARTERLYûASSETûSWAPS ûINûLINEûWITHû 33!ûISSUERSûHAVEûBEENûEXPLORINGû#ANADIANû $OMESTICû#ANADIANûINVESTORSûDIDûINDEEDû GUIDANCEûOFûBPûAREAûTD Securities was sole DOLLARSûAGAINûAFTERûEXTENDEDûABSENCESûFROMû TAKEûTHEûVASTûMAJORITYûOFûTHEûBONDû$EMANDû lead manager. THEûCURRENCYû4HEû)&# ûFORûEXAMPLE ûBROKEûAû REACHEDû#BN ûANDûTHEûSPREADûWASûSETûINû Two more borrowers followed on Friday. dry spell that had lasted more than 10 years line with IPTs. 4RIPLEû!ûRATEDûNEDERLANDSE WHENûITûSOLDûAû#MûlVE YEARû'LOBALûATû The notes were launched with the WATERSCHAPSBANKûPRICEDûAû!MûINCREASEûTOû swaps plus 3bp in early July. intention of raising awareness of the ITSûû+ANGAROOûDUEû*ULYû ûBRINGINGû !ûLEADûONûTHEû%)"û#BNûTHREE YEARûDEALû SIGNIlCANTûANDûLONG LASTINGûBENElTSûOFû THEûTOTALûOUTSTANDINGûTOû!M said the change in the basis swap has been INVESTINGûINûTHEûHEALTHûANDûNUTRITIONûOFû 4HEûREOFFERûPRICEûOFûûGAVEûAûYIELDûOFû THEûDRIVINGûFORCEûBEHINDûTHEûPICK UPûINû WOMEN ûADOLESCENTSûANDûCHILDREN ûSEMI ANNUALLY ûEQUATINGûTOûAû issuance. The three-year Canadian/US dollar BMO Capital Markets, Scotiabank and TD REOFFERûLEVELûOFûBPûOVERûSEMI QUARTERLYû BASISûTOUCHEDû BPûATûTHEûENDûOFû ûBUTû Securities were lead managers for the World ASSETûSWAPS ûORûBPûOVERûTHEû-AYûû HASûSINCEûTIGHTENEDûTOû BP ûACCORDINGûTOû Bank. !#'"ûHSBC was the sole lead manager. Thomson Reuters data. h4HEûMOVEMENTûINûTHEûBASISûGAVEûANû ALL INTERNATIONAL US$ BONDS ALL SOVEREIGN BONDS IN EUROS opportunity to bring the EIB back to BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE #ANADIANûDOLLARS vûSAIDûTHEûLEADûh7EVEû Managing No of Total Share Managing No of Total Share SEENûAûNUMBERûOFûlVE YEARûTRADESûVERSUSû bank or group issues US$(m) (%) bank or group issues €(m) (%) VIRTUALLYûNOTHINGûTHEûYEARûBEFORE ûBUTûTHREE 1 JP Morgan 432 122,308.96 9.8 1 Barclays 15 11,552.98 12.0 YEARSûISûEVENûRARERûASûITûHASûBEENûSOûCOSTLYv 2 Citigroup 443 120,126.44 9.6 2 Citigroup 16 9,560.05 9.9 The lead had to stretch his mind back to a 3 BAML 367 96,995.58 7.8 3 JP Morgan 13 9,541.35 9.9 three-year deal from KommuneKredit to 4 Barclays 265 86,273.09 6.9 4 BNP Paribas 12 7,660.47 7.9 lNDûAûCOMPARABLEûDEALûFROMûANû33!ûISSUERû 5 Goldman Sachs 249 76,006.70 6.1 5 HSBC 11 7,339.59 7.6 outside of Canada. KommuneKredit brought 6 HSBC 257 69,049.84 5.5 6 NatWest Markets 6 6,826.39 7.1 its trade in 2015. 7 Morgan Stanley 242 64,902.36 5.2 7 SG 11 5,984.29 6.2 4HEû4RIPLEû!ûRATEDûSUPRANATIONALûDREWû 8 Wells Fargo 232 58,737.15 4.7 8 Santander Global 5 4,589.15 4.8 ORDERSûOFû#BN ûANDûPRICINGûCAMEûATû 9 Deutsche Bank 229 53,907.25 4.3 9 BBVA 3 3,813.65 4.0 SWAPSûLESSûBP ûINûLINEûWITHû)04S 10 Credit Suisse 221 44,189.46 3.5 10 Goldman Sachs 7 3,723.50 3.9 h7EûGOTûAûSTRONGûPLACEMENTûWITHûAûVARIETYû Total 1,481 1,245,835.19 Total 34 96,391.70 OFûBANKS ûREALûMONEYûACCOUNTSûANDûCENTRALû Including Euro, foreign and global issues. Excluding equity-related debt, Excluding ABS/MBS. US Global ABS/MBS. BANKSûINVOLVED ûWHICHûALLOWEDûUSûTOûACHIEVEû Source: Thomson Reuters SDC code: N4 SIZE vûSAIDûTHEûLEAD Source: Thomson Reuters SDC code: O1

ALL AGENCY BONDS IN EUROS ALL SUPRANATIONAL BONDS IN EUROS MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS 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 €(m) (%) bank or group issues €(m) (%) bank or group issues €(m) (%) 1 Credit Agricole 18 6,288.80 9.1 1 Credit Agricole 16 5,952.83 9.6 1 UniCredit 31 4,748.13 15.5 2 JP Morgan 17 6,106.07 8.9 2 UniCredit 8 5,177.58 8.4 2 DGZ-DekaBank 22 3,233.62 10.5 3 Goldman Sachs 11 5,901.87 8.6 3 Commerzbank 10 5,126.72 8.3 3 HSBC 20 3,227.37 10.5 4 Commerzbank 14 5,223.00 7.6 4 Barclays 8 5,099.94 8.2 4 LBBW 20 2,478.32 8.1 5 HSBC 22 5,190.59 7.5 5 SG 8 4,176.26 6.8 5 JP Morgan 10 1,877.02 6.1 6 Deutsche Bank 14 4,452.45 6.5 6 HSBC 12 4,069.37 6.6 6 Nord/LB 17 1,819.31 5.9 7 SG 15 4,054.16 5.9 7 Deutsche Bank 9 3,764.58 6.1 7 Deutsche Bank 15 1,810.55 5.9 8 BNP Paribas 11 3,887.74 5.6 8 JP Morgan 7 3,735.22 6.0 8 Credit Agricole 6 1,233.27 4.0 9 UniCredit 9 3,784.17 5.5 9 DZ Bank 9 3,509.88 5.7 9 BBVA 5 950.36 3.1 10 LBBW 9 2,787.38 4.0 10 Goldman Sachs 6 3,120.03 5.0 10 Barclays 7 945.21 3.1 Total 93 68,861.78 Total 53 61,853.75 Total 79 30,730.38

Excluding equity-related debt. Including publicly owned institutions. Excluding ABS/MBS. Excluding ABS/MBS. Source: Thomson Reuters SDC code: N6 Source: Thomson Reuters SDC code: N5 Source: Thomson Reuters SDC code: N7

26 International Financing Review July 28 2018 BONDS CORPORATES

The INTER-AMERICAN DEVELOPMENT BANK followed h)NVESTMENT GRADEûBONDûSPREADSûAREû in what is being seen as Chinese retaliation WITHûAû!MûINCREASEûTOûITSûû+ANGAROOû WIDER ûANDûIFûTHATûPERSISTSûTHATûCOULDûGIVEû for US tariffs. DUEû*UNEû ûBRINGINGûTHEûTOTALûTOû!M potential lenders some concern – Such decisions are now making bond 4HEûTRANSACTIONûHASûAûREOFFERûPRICEûOFûû particularly if they are dependent on that INVESTORSûMOREûCAUTIOUSûABOUTûDEALSûTHATû TOûYIELDûûSEMI ANNUALLY ûEQUATINGûTOûAû market for taking out loan commitments in PRE FUNDûSUCHûACQUISITIONS ûWHICHûFORû REOFFERûLEVELûOFûBPûOVERûSEMI QUARTERLYûASSETû ANûENVIRONMENTûWHEREûTHEREûISûVOLATILITYû companies means higher funding costs and SWAPS ûINûLINEûWITHûEARLIERûGUIDANCE ûORûBPû ANDûAûLOTûOFû-! RELATEDûSUPPLYûCOMING vû DEALûEXECUTIONûUNCERTAINTY OVERûTHEû!PRILûû!#'" another senior banker said. "ANKERSûBELIEVEûISSUERSûUNSUREûABOUTûTHEû Nomura and RBC Capital Markets were lead !VERAGEûINVESTMENT GRADEûSPREADSûHAVEû FATEûOFûTHEIRû-!ûBIDSûMAYûBEûBETTERûADVISEDû managers. gapped out by 19bp since the start of the TOûAVOIDûPRE FUNDINGûTHEMûINûTHISûCLIMATE YEAR ûACCORDINGûTOû)#%û"!-,ûDATA !SûSUCH ûCORPORATEûTAXûCUTSûFROMûûTOû -!ûBONDûDEALSûAREûALSOûUNDERûMOREû ûHAVEûMADEûDEBTûMOREûEXPENSIVEûFROMû INVESTORûSCRUTINYûTHANKSûTOûINCREASEDûCONCERNû ANûAFTER TAXûSTANDPOINT ûWHILEûCOMPANIESûAREû ABOUTûTHEûAMOUNTûOFûLEVERAGEûINûTHEûSYSTEMû REWARDEDûMOREûFORûEQUITY FUNDEDûDEALS ûSAIDû CORPORATES as the credit cycle gets longer in the tooth. a Barclays research report. !Tû53TRN ûTHEûHIGH GRADEûCORPORATEû h4HEûCOMBINATIONûOFûOVERALLûLOWERû bond market has nearly tripled in size in the VOLUMESûANDûAûSHIFTûTOWARDSûMOREûEQUITYû US DOLLARS PASTûûYEARSû!NDûHALFûOFûTHATûDEBTûSITSûINû FUNDINGûSHOULDûRESULTûINûDECLININGûISSUANCE vû THEû4RIPLEû"ûBRACKET ûORûJUSTûABOVEûJUNK Barclays analysts wrote. RISE IN EVENT RISK COULD LIMIT M&A !ûSIZEABLEûPROPORTIONûOFûTHEû4RIPLEû"û 4HEû-!ûBONDûPIPELINEûFORûTHEûREMAINDERû DEBT FUNDING bracket contains companies that loaded up OFûûISûEXPECTEDûTOûBEûINûTHEûAREAûOFûAû ONûDEBTûANDûSACRIlCEDûRATINGSûTOûMAKEû manageable US$50bn - consisting of around 4HEûAVAILABILITYûOFûDEBTûTOûFUNDûAûGROWINGû ACQUISITIONSûINûTHEûPASTûCOUPLEûOFûYEARS ûANDû EIGHTûDEALS ûSAIDûONEûBANKER PIPELINEûOFûLARGEûJUMBOû-!SûCOULDûBECOMEû THENûDIDûNOTûDELIVERûONûPROMISESûTOûBRINGû Deals now in the pipeline include WALT MOREûCHALLENGINGûWITHûAûSHARPûINCREASEûINûEVENTû LEVERAGEûBACKûDOWN DISNEYSû53BNûBRIDGEûLOANûFORûITSû RISKûINûRECENTûWEEKS ûSAIDûBANKERSûANDûANALYSTS h4HEREûISûANûINVESTORûFOCUSûONûHOWûLATEûWEû 53BNûBIDûTOûACQUIREû4WENTY &IRSTû !ûRECORDû53BNûOFûBRIDGEûLOANSûWEREû AREûINûTHEûCYCLEûFROMûAûCREDITûSTANDPOINT vûAû #ENTURYû&OXSûMEDIAûASSETS ARRANGEDûINûTHEûlRSTûHALFûOFûTHEûYEAR ûAûû third senior banker said. %ARLIERûTHISûMONTH ûCONAGRA BRANDS lined up a increase from US$56.6bn in the same half h#OMPANIESûWITHûAGGRESSIVEûDELEVERAGINGû term loan of up to US$1.3bn for its US$10.9bn LASTûYEAR ûACCORDINGûTOû4HOMSONû2EUTERSû,0# STORIESûWILLûHAVEûTOûSUBSTANTIATEûTHOSEû!NDû ACQUISITIONûOFû0INNACLEû&OODS ûREPLACINGûAû 4HISûWASûTHEûHIGHESTûHALF YEARûTALLYûEVER û as far as those stories don’t add up for portion of its US$9bn bridge loan for the merger. TOPPLINGûTHEûPRIORûPEAKûOFû53BNûINûTHEû INVESTORS ûTHEYûWILLûREQUIREûMOREû !NDûHEALTHûINSURERûCIGNA is set to turn to SECONDûHALFûOFûûBYûNEARLYû CONCESSIONSûTOûGETûDONEv THEûBONDûMARKETûSOONûTOûlNANCEûITSû But as worries increase about an 53BNûACQUISITIONûOFû%XPRESSû3CRIPTSû4HATû ECONOMICûCYCLEûATûITSûPEAK ûRISINGûINTERESTû HOLDING ON DEALûCOULDûCOMEûASûEARLYûASû!UGUST ûBANKERSû RATESûANDûAûGLOBALûTRADEûWAR ûDOUBTSûABOUTû !DDINGûTOûALLûTHISûNERVOUSNESSûISûTHEûRISKû SAID ûINûORDERûTOûGETûAHEADûOFûTHEû3EPTEMBERû bond markets being as amenable to bridge THATûREGULATORYûAPPROVALûFORû-!ûDEALSûMAYû post-Labor Day rush. LOANûTAKE OUTSûASûTHEYûHAVEûBEENûINûTHEûPASTû not be as forthcoming as it has been. could start eating into lending appetite. 4HEûREGULATORYûCLIMATEû ûINCLUDINGûLONG û Lenders arranging these bridge loans that DRAGGED OUTûREVIEWûPERIODS ûASûWELLûASû EUROS SUPPORTû-!ûTRANSACTIONSûhAREûDOINGûITûTOû heightened international and security GETûTHEûBONDûDEALS ûNOTûTOûSITûONûTHEûLOANSv û concerns – is already hurting deal-making. PROLOGIS BUILDS ON LOW SUPPLY said one senior banker. Wednesday saw the world’s biggest )FûBONDûINVESTORSûRESIST ûTHISûCOULDûHAVEû smartphone chipmaker QUALCOMM abandon PROLOGIS EURO FINANCE hit the mark last RIPPLEûEFFECTSûONûTHEûPACEûOFû-!ûLENDING û ITSû53BNûBIDûTOûBUYûRIVALû.80 ûAFTERûTHEû 7EDNESDAYûWITHûAûLONGû YEAR ûTHEûlRSTû bankers said. COMPANYûFAILEDûTOûSECUREû#HINESEûAPPROVALû REVERSEû9ANKEEûINûOVERûAûMONTH ûWHICHû

ALL INV-GRADE US CORPORATE BONDS ALL US INVESTMENT GRADE CORPORATE DEBT ALL CORPORATE BONDS IN EUROS BOOKRUNNERS: 1/1/2018 TO DATE (EXCLUDING SOLE SELF FUNDED DEALS) BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share bank or group issues US$(m) (%) Managing No of Total Share bank or group issues €(m) (%) 1 BAML 44 7,564.07 9.7 bank or group issues US$(m) (%) 1 BNP Paribas 103 17,551.08 9.0 2 JP Morgan 42 6,697.77 8.6 1 JP Morgan 249 71,143.53 11.2 2 SG 79 14,810.44 7.6 3 Morgan Stanley 28 5,616.33 7.2 2 BAML 222 67,751.24 10.6 3 Deutsche Bank 80 13,383.53 6.8 4 Wells Fargo 42 5,593.96 7.1 3 Citigroup 216 59,501.40 9.3 4 JP Morgan 72 11,106.17 5.7 5 Citigroup 33 5,407.74 6.9 4 Goldman Sachs 137 46,406.76 7.3 5 Goldman Sachs 42 11,015.74 5.6 6 Barclays 27 4,308.19 5.5 5 Barclays 118 43,047.81 6.8 6 HSBC 78 10,781.79 5.5 7 Mizuho 25 3,820.28 4.9 6 Morgan Stanley 171 42,876.16 6.7 7 UniCredit 58 10,180.56 5.2 8 MUFG 20 3,545.22 4.5 7 Wells Fargo 154 39,094.31 6.1 8 Credit Agricole 61 9,850.75 5.0 9 RBC 21 2,963.42 3.8 8 RBC 90 25,257.88 4.0 9 Barclays 48 8,655.39 4.4 10 Goldman Sachs 17 2,933.15 3.7 9 HSBC 73 23,790.37 3.7 10 BAML 48 8,089.19 4.1 Total 122 78,250.58 10 Credit Suisse 77 19,935.04 3.1 Total 299 195,577.42

Excluding equity-related debt, ABS/MBS, all foreign issues, global issues Total 567 636,441.09 Excluding equity-related debt. FIGs, ABS/MBS. and non corporates.

Source: Thomson Reuters SDC code: F6a Source: Thomson Reuters SDC code: F09a Source: Thomson Reuters SDC code: N8

International Financing Review July 28 2018 27 PRINTEDûmATûTOûFAIRûVALUEûANDûATûTHEûTOPûENDû of its size ambitions. The US REIT began marketing at 115bp- Bond investors not taking BPûOVERûMID SWAPS ûBEFOREûCUTTINGû pricing by 15bp and then launching at the TIGHTûENDûOFûTHATûREVISEDûRANGE Trump’s word on tariffs It has June 2026s issued through a US ENTITY ûWHICHûWEREûATûSWAPSûPLUSûBPûPRE US CORPORATES/HIGH-YIELD Market placing low probability on full implementation MANDATE ûWHILEûAû-ARCHûû'REENûBONDû FROMûAû%UROPEANûENTITYûWASûATûBP û There is a good reason corporate bond investors several industries, sending stocks and the according to Tradeweb prices. have been reluctant to price in the impact of euro higher. Juncker said they also agreed to !NûEXTRAPOLATIONûOFûTHOSEûTWOûSUGGESTEDû US President Donald Trump’s proposed tariffs refrain from imposing new tariffs while talks are FAIRûVALUEûJUSTûINSIDEûBP ûWITHûAûBANKERû on US$200bn of Chinese imports - they are underway. AWAYûAGREEINGûAûNUMBERûAROUNDûTHATûLEVELû sceptical they will ever materialise. The view from some analysts and investors is too. Current US corporate bond valuations suggest that a similar relaxation of tensions with China h4HEûSTARTINGûLEVELûSEEMSûPRETTYûPUNCHYû market participants are placing a low probability on could also be on the cards. BUTû)MûSUREûITLLûGOûVERYûWELL vûTHEûBANKERû an escalation of trade skirmishes between the US Trump has pledged to drastically reduce the said early in the session. and its main trading partners, according to analysts. United States’ trade deﬁcit with China. Earlier h4HERESûBEENûVERYûLITTLEûSUPPLYûAPARTû “The market sides with the view that full this month, his administration imposed duties from real estate and the technicals seem implementation (of the announced tariffs) is on US$34bn of Chinese imports, prompting VERYûSTRONGûTODAYû)TSûQUIET ûYETûINVESTORSûAREû unlikely,” Oleg Melentyev, head of high-yield retaliatory tariffs from China. AROUNDûANDûTHEYVEûGOTûCASHûTOûPUTûTOûWORKû and leveraged loan strategy at Bank of America Raising the stakes of the confrontation, US Prologis has timed its deal fantastically Merrill Lynch, told IFR. ofﬁcials on July 10 announced plans to slap a WELLv “You could describe it as complacency, but my 10% tariff on US$200bn of additional Chinese )TSûRATINGSûAREûALSOûAûDRAWû0ROLOGISûISû!! û personal view is that it is the right position.” imports. BYû-OODYS30 ûWITHûAûLEADûSAYINGûITûISûONEû The market may be right, as Trump has backed Since then, Trump has said he is ready to OFûTHEûFEWû3INGLEû!ûREALûESTATEûCOMPANIESû away from his harsh rhetoric on more than one impose tariffs on all US$500bn of Chinese Unibail-Rodamco and Klepierre are two occasion. imports. others. After criticising the European Union’s trade A confrontation with China of that magnitude policy for months and labelling the block a “foe”, would likely push corporate bond spreads way ALL CORPORATE BONDS IN STERLING Trump gave way at a meeting with European above their current levels, as investors would start BOOKRUNNERS: 1/1/2018 TO DATE Commission President Jean-Claude Juncker on getting more nervous about the risk of a global Managing No of Total Share Wednesday. recession, say analysts. bank or group issues £(m) (%) The two said they agreed to hold talks to According to UBS analysts, average spreads 1 Barclays 10 1,333.17 16.2 reduce tariffs and non-tariff barriers across over Treasuries of junk-rated corporate bonds 2 HSBC 10 1,330.09 16.2 3 Lloyds Bank 8 1,028.98 12.5 4 Morgan Stanley 4 538.57 6.5 )SSUERSûFROMûTHEûSECTORûHAVEûPUMMELLEDû SHAREHOLDERS ûANDûALSOûOFû!$/ûITSELF ûHADûBEENû 5 RBC 3 496.43 6.0 THEûPRIMARYûMARKETûTHISûYEARûANDûHAVEû detained for questioning by Israeli authorities. 6 BNP Paribas 6 467.04 5.7 INTENSIlEDûTHEIRûASSAULTûOVERûTHEûPASTû 2EALûESTATEûSUPPLYûISûEXPECTEDûTOûCONTINUEû 7 MUFG 4 328.21 4.0 MONTH ûWITHûEIGHTûBONDSûPRICING INûTHEûSECONDûHALF ûALBEITûATûAûLESSERûPACEû 8 NatWest Markets 4 321.85 3.9 ADO PROPERTIES ûHOWEVER ûHASûYETûTOûHITûSCREENSû GIVENûTHEûANTICIPATEDûSLOWDOWNûINû-! û 9 Santander Global 3 254.66 3.1 DESPITEûlNISHINGûITSûROADSHOWûOVERûûDAYSûAGOû according to a BNP Paribas research note. 10 Credit Suisse 4 250.00 3.0 FORûTHEûNO GROWûõMûCIRCAûEIGHT YEARûTRADEû!û 0ROLOGIS ûWHICHûPLANSûTOûUSEûTHEûPROCEEDSû Total 27 8,228.70 lead said the company was letting people digest FORûGENERALûCORPORATEûPURPOSES ûOPERATESû Source: Thomson Reuters SDC code: N8a news that the chairman of one of its ACROSSûTHEû!MERICAS û%UROPEûANDû!SIA

ALL INTERNATIONAL STERLING BONDS ALL SWISS FRANC BONDS EXCLUDING ALL INVESTMENT-GRADE BONDS IN EUROS EXCLUDING SECURITISATIONS SECURITISATIONS 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 €(m) (%) bank or group issues £(m) (%) bank or group issues SFr(m) (%) 1 BNP Paribas 145 39,935.29 7.2 1 HSBC 66 10,666.79 14.0 1 UBS 74 8,545.89 27.4 2 SG 139 36,568.06 6.6 2 NatWest Markets 59 8,855.15 11.7 2 Credit Suisse 77 8,471.83 27.1 3 HSBC 169 36,165.67 6.6 3 Barclays 53 7,479.38 9.8 3 Verband Schweizerischer 10 3,838.82 12.3 4 Credit Agricole 128 34,254.03 6.2 4 RBC 41 5,894.29 7.8 4 ZKB 34 3,493.89 11.2 5 JP Morgan 112 33,849.07 6.1 5 Lloyds Bank 36 5,423.60 7.1 5 Raiffeisen Schweiz 22 1,932.24 6.2 6 Deutsche Bank 135 31,610.10 5.7 6 BAML 22 3,681.53 4.8 6 BNP Paribas 14 1,387.35 4.4 7 Barclays 98 31,057.61 5.6 7 Santander Global 17 3,309.28 4.4 7 Deutsche Bank 9 867.55 2.8 8 UniCredit 125 27,393.72 5.0 8 JP Morgan 15 3,249.95 4.3 8 Commerzbank 8 699.25 2.2 9 Goldman Sachs 71 26,987.48 4.9 9 Nomura 25 3,181.33 4.2 9 HSBC 5 435.63 1.4 10 Citigroup 81 22,184.68 4.0 10 Deutsche Bank 14 3,080.36 4.1 10 Bank Vontobel 1 225.00 0.7 Total 723 551,055.22 Total 187 75,971.37 Total 145 31,214.88

Excluding ABS/MBS, equity-related debt. Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Source: Thomson Reuters SDC code: N9 Source: Thomson Reuters SDC code: K05a Source: Thomson Reuters SDC code: K06b

28 International Financing Review July 28 2018 BONDS CORPORATES

could widen by 80bp-90bp from the current citing higher steel and aluminium costs due to tariffs - or know how serious his threats are. 350bp over Treasuries in the event of a “trade tariffs imposed by the Trump administration. “Everything is proposed or threatened at this skirmish escalation” - and by about 200bp in the GM’s 5.40% 2048s - among the most heavily point,” one bond buyer said. “And as investors event of a “full-fledged trade war”. traded corporate bonds that day - widened 10bp on you can’t say damn and sell everything, because But on average, US junk bonds have been Wednesday, according to data from MarketAxess. you would be hung up to dry if the market rallies.” trading within a 60bp range so far this year and General Motors buys most of its steel from US So, what happens if tariffs are levied on are currently 11bp tighter year-to-date, according producers, which have raised prices in reaction to hundreds of billions of Chinese imports in the to BAML data. Investment-grade bond spreads, tariffs on imported steel. end? on the other hand, have widened by 22bp so far “The companies who are giving us negative For one, an all-out trade war could make the this year. outlooks are companies that are meant to be probability of global recession more meaningful. “The trade hit scenario isn’t being priced in at helped by those tariffs,” Melentyev said. “Forget “(The) base case scenario could depress all,” UBS analysts wrote in a note last week. They about it if you are not an intended beneficiary.” profits, increase the volatility of asset prices and argued, however, that investors should brace for There could also be some knock-on effects for M&A. potentially tighten credit conditions via stricter average US high-yield spreads to widen to 425bp Late on Wednesday, the world’s biggest lending standards and rising default rates in by the end of the year. smartphone chipmaker QUALCOMM said it was affected industries,” UBS analysts wrote. EARNINGS HIT abandoning its US$44bn bid to buy rival NXP. Around 15%-17% of US corporate debt could Many analysts feel that another escalation The company failed to secure Chinese approval be “disproportionately impacted” by direct tariff is unlikely, pointing to the harm the limited in what is being seen as retaliation for US tariffs - exposure, according to the UBS report. measures have already had on some companies. real and threatened. Sectors likely to be impacted include “There’s lots of rhetoric around it, but it doesn’t Qualcomm’s bond spreads reacted well on telecommunications, industrial, hardware and change the fact that these tariffs are going to Thursday, with some bonds quoted up to 13bp autos/parts, analysts said. be damaging to the US economy directly,” said tighter than levels the day prior, according to Investors and analysts say the high-yield Melentyev. MarketAxess data. But bankers say the collapse market is less likely to be impacted than Generous tax cuts approved by the Trump of the deal is a bad sign. investment-grade, thanks to the lack of large administration late last year and a strong “The trade war has gone from sabre-rattling multinational issuers in the index. underlying economy had been expected to give and posture to an actual economic result,” one Still, high-yield investors are not running corporate earnings a boost this year, freeing up senior banker said. scared for now. cash for new investments and stock buybacks. “Enough of those kind of events over time will “The market is worrying about it to a certain Recently announced tariffs and higher change investment behaviour and change the degree, but it’s not spooked by it yet,” Ken commodity costs, however, have already led functioning of the markets.” Monaghan, co-director of high-yield at Amundi some companies to make negative revisions to Pioneer, said. their earnings outlooks. NOT SCARED “It’s in my top 10 list of things to be concerned Automaker GENERAL MOTORS said on For the time being, many investors say it is about - but not my top three.” Wednesday it was lowering its full-year forecast, difficult to know the knock-on effects of Trump’s Eleanor Duncan, Davide Scigliuzzo

The lead declined to comment on )NûMID -AY ûTHEû$UTCHû2%)4ûMANDATEDû whether the proceeds would be swapped banks for a €300m–€400m inaugural hybrid STERLING back into US dollars. issue. But around the same time the Italian Bonds for reference come out around POLITICALûCRISISûSTARTEDûTOûUNFOLD ûTAKINGûITSû SMOOTH RIDE FOR CHUNKY M25 DOLLARû,IBORûPLUSûBP ûACCORDINGûTOû)&2û toll on markets. STERLING CALCULATIONS ûAûLONGûWAYûBACKûFROMûAûRECENTû 4HEûDEAL ûTOGETHERûWITHûSIXûOTHERûTRADESû 53Mû3EPTEMBERûûDEALûQUOTEDûINû MANDATEDûAROUNDûTHEûSAMEûTIME ûDIDûNOTû CONNECT PLUS (M25) ISSUERûFOUNDûOVERûaBNûOFû THEûHIGHûS emerge. DEMANDûFORûITSûaMû-ARCHûûSECUREDû 2EVERSEû9ANKEEûVOLUMESûHAVEûDROPPEDû )NûANûEMAILûTOû)&2ûLASTû7EDNESDAY ûTHEû DEAL ûTHEûYEARSûLARGESTûSTERLINGûTRADEûFROMûAû sharply this year compared with the COMPANYûSAIDûh7EûHADûSOMEûUNFORTUNATEû corporate issuer to date. CORRESPONDINGûPERIODûINûû ûAûFUNCTIONûOFû timing regarding the hybrid. In order to 7ITHûBOOKSûMOREûTHANûTWICEûCOVERED û TAXûANDûACCOUNTINGûCHANGES ûCHEAPERû SECUREûFUNDINGûFORûDEBTûMATURINGûNEXTû LEADSûWEREûABLEûTOûTIGHTENûTALKûTOû'ILTSûPLUSû FUNDINGûINûDOLLARS ûANDûFEWERûEUROûBONDSû YEAR ûWEûPUTûTHEûSHORT TERMûREVOLVERûINû BP ûTHEûTIGHTûENDûOFûTHEûBP BPû from US borrowers redeeming this year. PLACEûv lNALûGUIDANCEûRANGEû)04SûWEREûBP “But there are still some US companies But it wants “to keep the option open 130bp. LOOKINGûATûEUROS ûNOTûBECAUSEûITSûSUDDENLYû to make use of the hybrid market in the 4HEûBOND ûRATEDû! ûBYû30 ûHASûAû-ARCHû MOREûATTRACTIVEûBUTûBECAUSEûTHEYREûTRYINGûTOû FUTURE ûIFûITûWOULDûlTûWITHINûOURûFUNDINGû ûLEGALûlNALûMATURITYûBUTûISûFULLYû GETûDIVERSIlCATIONûINTOûTHEIRûBONDSû!NDû STRATEGYv AMORTISINGûWITHûAûWEIGHTEDûAVERAGEûLIFEûOFû SOMEûWILLûALWAYSûHAVEûNATURALûNEEDSûFORû The Italian crisis also saw motorway some 13.3 years. EUROS vûTHEûBANKERûAWAYûSAID and airport infrastructure company !ûBANKERûAWAYûFROMûTHEûTRADEûSAIDûTHEû !TLANTIAûGIVEûUPûONûITSûNEWûISSUEû STARTINGûLEVELûLOOKEDûVERYûWIDEûFORûTHEû WERELDHAVE CHOOSES REVOLVER FOR PLANS ûWHICHûWEREûALSOûANNOUNCEDûINûMID RATING ûPOINTINGûTOûaMû*ULYûSûFROMû REFI INSTEAD OF HYBRID May. 4RANSPORTûFORû,ONDONû!A!! !! ûATû'ILTSû The company turned instead to the loan PLUSûBPû"UTûHEûRECKONEDûTHEREûMIGHTûBEûAû WERELDHAVE may not go down the hybrid market in early July to complete the premium built in because of its “more ROUTEûTOûRElNANCEûDEBTûMATURINGûNEXTûYEAR û lNANCINGûOFûITSû!BERTISûACQUISITION COMPLICATEDûSTRUCTUREv after recently signing a €350m short-term (See Loans section for more on !ûLEADûBANKER ûWHOûDECLINEDûTOûCOMMENTûONû REVOLVER 7ERELDHAVESûREVOLVER FAIRûVALUE ûREFERENCEDûDIFFERENTûCOMPARABLES û

International Financing Review July 28 2018 29 INCLUDINGû! ! û(IGHû3PEEDû2AILû&INANCEû )NûAûRESEARCHûNOTEûLASTûWEEK û*0û-ORGANû CONDITIONSûFORûHIGH RATEDûlNANCIALûISSUERSûINû .OVEMBERûSûATû'ILTSûPLUSûBPûANDû!!!û analysts said domestic sterling credit is the US dollar market. $WRû#YMRUû7ELSHû7ATERû-ARCHûSûATûBP CONSIDEREDûAûHAVENûBYû5+ûINVESTORS ûWITHû 4HEû5+ûMUTUALûPRINTEDûAû53BNûSIX YEARû 0ROCEEDSûWILLûRElNANCEûLOANûFACILITIESû RETAILûFUNDSûSEEINGûaBNûINûYEARûTO DATEû NON CALLûlVEûlXED TO mOATINGûNOTEûTHATûCAMEû linked to a 30-year contract for INmOWSûDESPITEûTHEû"REXITûNEWS 15bp inside initial price thoughts. IMPROVEMENTûWORKSûTOûTHEû-ûMOTORWAYû h(OWEVER ûIFûAûTAIL RISKûSCENARIOûDOESû 4HEû!2EGû3ûOFFERINGûBEGANûATûBPû The company was awarded the £6.2bn emerge (either ‘no deal’ or a Corbyn AREAûOVERû4REASURIESûWITHûLEADSûLATERû contract in early 2009 and shortly after GOVERNMENT ûWEûEXPECTûDOMESTICûNAMESûTOû ANNOUNCINGûGUIDANCEûOFûPLUSûBPû nBP û INKEDûAûaBNûFUNDINGûPACKAGE ûACCORDINGû BEGINûTOûPRICEûINûAûSIGNIlCANTLYûHIGHERûRISKû ASûBOOKSûGREWûINûEXCESSûOFû53BN TOû0&) û)&2SûSISTERûPUBLICATION PREMIUM vûTHEYûSAID 4HEREûWASûAûBITûOFûPRICEûSENSITIVITYûBUT û 0&)ûINû!PRILûSAIDûITûHADûCHOSENûTOûGOûDOWNûTHEû STILL û.ATIONWIDEûWASûABLEûTOûPRICEûATûTHEû PUBLICûBONDûROUTEûINSTEADûOFûAûPRIVATEû TIGHTûENDûOFFûAûlNALûBOOKûOFû53BN PLACEMENT ûANDûCITEDûMARKETûRUMOURSûTHATûLEADSû NON-CORE CURRENCIES Leads reckoned the premium was 9bp. HADûPUTûANûINDICATIVEûPRICEûOFûBPûOVERû'ILTSûONû Last week’s offering followed the deal during the funding competition. MONASH UNI REVISITS CLIMATE BONDS Nationwide’s debut in the senior non- !CCORDINGûTOûANûINVESTOR ûHOWEVER ûTHEû PREFERREDûFORMATûINû-ARCH ûWHICHûWASûAû )04SûDIDûNOTûREmECTûTHEûRISKSûASSOCIATEDûWITHû MONASH UNIVERSITYûISûPLANNINGûTOûSELLû!Mû dual-currency offering in euros and dollars. the trade. 53M ûOFû#LIMATEûBONDSûINûAû53ûPRIVATEû 4HATûõBN EQUIVALENTûTRIPLE TRANCHEû h#OMINGûATûTHEûWRONGûTIMEûOFûYEAR ûTOOû placement. transaction comprised a €1bn eight-year BIG ûAMORTISING û0&)û ûITûTICKSûAûNUMBERûOFû 4HEû YEARûSENIORûUNSECUREDûlXED RATEû NON CALLûSEVENûEUROûBOND ûAû53BNûSIX YEARû BOXESûTHATûSHOULDûPROVOKEûDISCOUNTSûBUTûATû TRANSACTION ûITSûTHIRDû#LIMATEûBONDûOFFERING û NON CALLûlVEûANDûAû53Mû YEARûNON CALLû BPûDOESNTûPRICEûINûANYûOFûTHAT vûHEûSAIDû ISûEXPECTEDûTOûBEûPRICEDûBYûTHEûENDûOFûTHISû 10. during the early stages of marketing. month and close in October. Combined demand for the US dollar Bookrunners were Barclays ûHSBCû"$ û Moody’s has assigned the proposed bonds TRANCHESûWASûJUSTû53BNûREmECTINGû and Lloyds. Aû'"û'REENûRATINGû-ONASHûISûRATEDû!Aû tougher issuance conditions at the time. with a stable outlook. 4HEûTWOûDOLLARûBONDSûHAVEûSTRUGGLEDû WALES & WEST BACK WITH STERLING 0ROCEEDSûWILLûPRIMARILYûlNANCEûAûNEWû SUBSEQUENTLY ûWITHûTHEû-ARCHûSûQUOTEDû EXTENSION TECHNOLOGYûEDUCATIONûBUILDING ûWHICHûHASû ATûAû' SPREADûOFûBP ûHAVINGûPRICEDûATû been designed to reduce emissions. 4REASURIESûPLUSûBP ûANDûTHEû-ARCHûSû WALES & WEST UTILITIESûEXTENDEDûITSûCURVEûLASTû -ONASHûISû!USTRALIASûLARGESTûUNIVERSITYûINû ATûBPûFROMûAû4REASURIESûPLUSûBPû Friday with a four-times-subscribed 20-year terms of enrolments. launch. secured benchmark. Nationwide is following the senior non- )NVESTORSûPOUREDûMOREûTHANûaBNûOFû BLACKSTONE SEEKS TO BUY PREFERREDûFORMATûALREADYûADOPTEDûBYûVARIOUSû ORDERSûINTOûTHEûaMûDEAL ûWHICHûPUSHESû INVESTA MTNS %UROPEANûPEERSûASûTHEûMOSTûCOST EFlCIENTû out the company’s maturities by three years way to meet loss-absorbing rules known as TOû!UGUSTû "LACKSTONEû'ROUPSû1UARTZû&INANCEû#Oû)ûISû MREL (minimum requirement for own Leads were able to bring talk in by 13bp SEEKINGûTOûBUYûALLû!Mû53M ûOFû funds and eligible liabilities) in Europe. FROMûTHEû'ILTSûPLUSûBPûAREAû)04SûANDû 'REENû-4.SûDUEû!PRILûûûISSUEDûINû 7HILEû5+ûBANKSûHAVEûMETûTHEIRûTARGETSûBYû could comfortably upsize from the £250m -ARCHûûBYûTHEûINVESTA OFFICE FUND. issuing structurally subordinated MREL initially marketed. The conditional purchase of the notes is FROMûHOLDINGûCOMPANIES ûTHISûOPTIONûISûNOTû !NûINVESTORûSAIDûTHEûTRADEûMAYûBEûTOOûMUCHû SUBJECTûTOûTHEûSUCCESSFULûlNALISATIONûOFû FEASIBLEûFORûBUILDINGûSOCIETIES ûWHICHûAREû DURATIONûFORûHIMûTOûTAKE ûBUTûTHATûPRICINGû Blackstone’s acquisition of all units in the MUTUALLYûOWNED ûNOTûPUBLICûCOMPANIES LOOKEDûGOODûVALUEûATûTHEûSTARTINGûLEVELS )NVESTAû/FlCEû&UND ûANDûTHEûAGREEMENTûOFûTHEû Nationwide’s MREL shortfall was around 7ALESûû7EST ûRATEDû! ûBYû30ûANDû&ITCH û noteholders to liquidate their bond holdings. aBNûATûTHEûENDûOFû ûSOûITûTACKLEDûITSû has not been in the market since raising NAB is coordinating the purchase of the DElCITûTHROUGHûTHEû-ARCHûTRANSACTION û £400m from 12 and long 16-year outings in notes. although it always intended to retain a October 2011. The 2023s were quoted at )Nû*UNE û"LACKSTONEûENTEREDûINTOûANû BUFFERûOVERûITSûMINIMUMûREQUIREMENTS 'ILTSûPLUSûBPûANDûTHEûSûATûBPûPRE AGREEMENTûTOûBUYû)NVESTAû/FlCEû&UND ûAû Bank of America Merrill Lynch ûBarclays û MANDATEûLASTû-ONDAY ûACCORDINGûTOû 2%)4ûFOCUSEDûONû!USTRALIANûOFlCEûBUILDINGS û Citigroup and JP Morgan were the leads on last 4RADEWEBûPRICES ûTHOUGHûTHEûLATTERûWEREûBIDû FORû!BN WEEKSûDEALû4HEûNOTESûAREûEXPECTEDûTOûBEû 5bp or 6bp wider by the end of the week. RATEDû"AA""" !û.ATIONWIDESûEXPECTEDû While the issue was coming alongside a ISSUERûRATINGSûAREû!A!! TENDERûOFFERûFORûITSûaMûû.OVEMBERû S ûTHEûRESULTSûOFûTHEûMAXIMUMûaMû CONDITIONS CONTINUE TO FAVOUR BANK offer will not be announced until FIG ISSUANCE Wednesday. Barclays ûBNP Paribas and NatWest Markets "ANKSûWEREûOUTûINûFORCEûAGAINûLASTûWEEK û are dealer-managers on the tender and were US DOLLARS many fresh from releasing quarter results. ACTIVEûBOOKSûONûTHEûNEWûISSUE The banks - FIFTH THIRD BANK ûPNC BANK and It was last week’s second sterling NATIONWIDE BUILDS MREL BUFFER WITH SUNTRUST BANK - also found a strong reception BENCHMARKû#ONNECTû0LUSû- ûONû4UESDAYû SNP RETURN FROMûANûINVESTORûBASEûTHATûISûSHOWINGûAû found orders of £1.9bn for its chunky preference for higher-rated quality paper aMû-ARCHûûAMORTISERû ûTHEû NATIONWIDE BUILDING SOCIETY returned for its AMIDSTûVOLATILITY currency’s largest corporate trade of the second senior non-preferred trade last )NûRECENTûWEEKSûASûBROADERûMARKETSûHAVEû year (see separate story). 7EDNESDAY ûTAKINGûADVANTAGEûOFûIMPROVINGû TURNEDûVOLATILEûONûCONCERNSûABOUTûAûTRADEû

30 International Financing Review July 28 2018 BONDS FIG

WAR ûDEMANDûFORûBONDSûRATEDûINûTHEû3INGLEû!û tighter in secondary on Thursday. INVESTORSûINû0ORTUGAL û,ONDON û0ARISûANDû BANDûANDûABOVEûHASûINCREASED ûHELPINGû The increased bid for banks is on the back Milan. banks. OFûIMPROVEDûINDUSTRYûEARNINGSûANDûANû It was hoping to sell a €250m no-grow 10- h4HEREûISûLIQUIDITYûAVAILABLEûFORûDEALSû ENVIRONMENTûWHEREûREGULATIONSûWEREû YEARûBULLET ûITSûINAUGURALûISSUE ûTHROUGHû DESPITEûBROADERûMARKETûVOLATILITYûWHICHû BECOMINGûLESSûRESTRICTIVEû3EVENTEENûOFûTHEû CaixaBI ûDeutsche Bank ûGoldman Sachs ûHauck & MEANSûISSUANCEûCONDITIONSûAREûSTILLûVERYû ûBANKSûUNDERû#REDIT3IGHTSûCOVERAGEû Aufhauser and JP Morgan. The issuer CONSTRUCTIVE vûSAIDûONEûSYNDICATEûBANKER (which includes SunTrust and PNC) beat the subsequently said that it had no plans to &IFTHû4HIRDû"ANKû!! ûRAISEDû53BNû street’s consensus estimates in the second bring the deal in the near future. INûTHREEûTRANCHESûOFûTHREE YEARûlXEDûANDû quarter. Fifth Third was one of three that The recent broad repricing means mOATERS ûANDûSEVEN YEARûlXEDûRATEûBONDSûTHATû missed these estimates. INVESTORSûAREûNOûLONGERûFORCEDûDOWNûTHEû were priced about 12bp inside initial price #REDIT3IGHTSûSAIDûITûHASûAûhPOSITIVEû credit spectrum to generate decent returns. TALKûONûBOOKSûOFû53BNû!TûlNALûPRICING û FUNDAMENTALûVIEWûOFû&IFTHû4HIRDûBASEDûONûITSû #REDITû3UISSE ûFORûEXAMPLE ûSOLDûAû53BNû the bonds had about 1bp in concessions. CONSERVATISMûINûLENDINGûINûRECENTûYEARSûASû PERPETUALûNON CALLûlVE YEARû!DDITIONALû4IERûû 0.#û"ANKû!! ûALSOûGOTûAûSOLIDûRESPONSEû WELLûASûRELATIVELYûHIGHERûCAPITALûLEVELSû ATûûEARLIERûINû*ULY ûVERSUSûTHEûûCOUPONû FORûITSû53MûSûTHATûPRICEDûBPû COMPAREDûTOûPEERSv fellow national champion UBS paid in INSIDEû)04SûONûBOOKSûOFû53BNû4HEYû January when it raised a US$2bn perp non- AGAINûPRICEDûWITHûJUSTûBPûINûCONCESSION CALLûlVE 3UN4RUSTû"ANKû"AA! ! ûWENTûAûSTEPû EUROS “In this market when you can buy really further to issue callable debt that again HIGHûQUALITYû!4SûINûTHEûûAREAûWHYûAREû found strong interest. FIDELIDADE POSTPONES EURO TIER 2 YOUûGOINGûTOûBOTHERûWITHû;&IDELIDADE=ûUNLESSû 4HEû53BNûOFFERING ûOFûFOURûNON CALLû ITSûATûûORûSOMETHINGûLUDICROUS ûANDûINûAû THREEûANDûSIXûNON CALLûlVEûlXEDûTOûmOATERSû FIDELIDADE – COMPANHIA DE SEGUROS has rowed market that’s suffering a bit from liquidity ANDûFOURûNON CALLûmOATERS ûWASûmOODEDûWITHû BACKûONûPLANSûTOûSELLûANûUNRATEDû4IERû ûAû ASûWELL vûSAIDûAûBANKERûAWAYûFROMûTHEûLEADS US$2.9bn in orders. They were priced about TRANSACTIONûVIEWEDûASûAûTOUGHûSELLûEVERûSINCEû 4HEûPROSPECTûOFûFURTHERûVOLATILITYûHITTINGû 10bp-13bp inside IPTs for about 4bp of it was mandated. PERIPHERALûBONDSûISûALSOûLIKELYûTOûHAVEû concession. 4HEûCOMPANYûnû0ORTUGALSûLARGESTûINSURER û WEIGHEDûONûINVESTORSûMINDS ûPARTICULARLYûIFû 4HEûBONDSûISSUEDûBYû&IFTHû4HIRD û0.#ûANDû WITHûAûûMARKETûSHAREûnûHADûlNISHEDûAû THEYûALREADYûHOLDûTHEû0ORTUGUESEûSOVEREIGN SunTrust were all quoting about 2bp to 5bp ROADSHOWûTHEûPREVIOUSûWEEK ûHAVINGûMETû Italy’s budget negotiations in September are seen as a potential new source of ALL FINANCIAL INSTITUTION BONDS IN EUROS ALL SUBORDINATED FINANCIAL INSTITUTION UNCERTAINTY ûFORûEXAMPLE ûWHILEû"ANCAû BOOKRUNNERS: 1/1/2018 TO DATE BONDS (ALL CURRENCIES) Carige is also back in the spotlight after the Managing No of Total Share BOOKRUNNERS: 1/1/2018 TO DATE %#"ûREJECTEDûITSûLATESTûCAPITALûPLANû4HEû bank or group issues €(m) (%) Managing No of Total Share LENDERSûTOPûINVESTOR û-ALACALZAû 1 BNP Paribas 47 11,771.51 9.5 bank or group issues US$(m) (%) )NVESTIMENTI ûHASûREQUESTEDûTHEûBOARDûBEû 2 UBS 25 11,534.29 9.3 1 JP Morgan 18 3,193.26 6.9 REMOVED ûINûANûESCALATINGûGOVERNANCEûSPAT 3 Deutsche Bank 37 8,985.43 7.3 2 SG 9 3,106.55 6.7 “If you get the contagion you saw out of 4 SG 29 7,631.54 6.2 3 BNP Paribas 15 3,087.74 6.7 )TALYûEARLIERûINûTHEûYEAR ûITûCOULDûBEûDIFlCULTû 5 HSBC 41 7,624.21 6.2 4 HSBC 17 2,685.62 5.8 and you could be stuck with [the Fidelidade 6 Credit Agricole 23 6,695.95 5.4 5 BAML 13 2,429.82 5.3 BOND= vûAûSECONDûBANKERûSAID 7 Natixis 17 5,999.85 4.8 6 Morgan Stanley 14 2,334.61 5.1 8 JP Morgan 28 5,185.53 4.2 7 UBS 12 2,295.96 5.0 GOLDMAN OFFERS WEEK’S SOLE 9 Morgan Stanley 23 5,142.65 4.2 8 Citigroup 14 2,271.01 4.9 BENCHMARK 10 Goldman Sachs 21 4,577.02 3.7 9 Goldman Sachs 11 2,133.17 4.6 Total 197 123,783.12 10 Deutsche Bank 11 1,948.36 4.2 !ûGOLDMAN SACHS 10.25-year euro senior drew Including banks, insurance companies and finance companies. Excluding Total 68 46,061.01 AûSTRONGûRESPONSEûFROMûINVESTORSûAFTERû equity-related and covered bonds. Excluding publicly owned institutions. limited recent supply in the European Source: Thomson Reuters SDC code: N11 Source: Thomson Reuters SDC code: J3a lNANCIALûMARKET

ALL GLOBAL AND EUROMARKET YEN BONDS ALL SAMURAI BONDS ALL INTERNATIONAL YEN BONDS 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 ¥(m) (%) bank or group issues ¥(m) (%) bank or group issues ¥(m) (%) 1 Sumitomo Mitsui Finl 6 63,650.03 19.5 1 Sumitomo Mitsui Finl 28 278,401.67 22.0 1 Sumitomo Mitsui Finl 34 342,051.69 21.5 2 Nomura 10 60,233.33 18.4 2 Mizuho 32 247,388.33 19.5 2 Mizuho 41 294,821.69 18.5 3 Mizuho 9 47,433.36 14.5 3 Mitsubishi UFJ MS 31 236,255.00 18.6 3 Nomura 37 249,363.33 15.6 4 BAML 2 31,833.33 9.7 4 Daiwa Securities 27 191,846.67 15.1 4 Mitsubishi UFJ MS 33 242,921.67 15.2 5 Daiwa Securities 7 23,916.67 7.3 5 Nomura 27 189,130.00 14.9 5 Daiwa Securities 34 215,763.33 13.5 6 MUFG 1 21,833.33 6.7 6 Natixis 11 47,120.00 3.7 6 BAML 4 61,833.33 3.9 7 HSBC 2 15,000.00 4.6 7 BAML 2 30,000.00 2.4 7 Natixis 11 47,120.00 3.0 8 Barclays 4 11,650.00 3.6 8 Citigroup 5 17,333.33 1.4 8 Citigroup 6 22,819.58 1.4 9 Goldman Sachs 1 10,000.00 3.1 9 BNP Paribas 3 16,125.00 1.3 9 MUFG 1 21,833.33 1.4 10 Mitsubishi UFJ MS 2 6,666.67 2.0 10 Credit Agricole 4 14,500.00 1.1 10 BNP Paribas 3 16,125.00 1.0 Total 24 326,536.30 Total 43 1,268,100.00 Total 67 1,594,636.30

Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Including all Euro, foreign and global issues. Excluding equity-related debt. Source: Thomson Reuters SDC code: K10 Source: Thomson Reuters SDC code: K11 Source: Thomson Reuters SDC code: K12

International Financing Review July 28 2018 31 UK life market adapts to new world order STERLING Insurance sector shake-up drives shift in securities landscape

The shake-up in the UK life insurance sector is committee of the Investment Association (IA), safer - route of engaging with the IA in the case driving a fundamental shift in the landscape for which holds around 43% of the notes, and the of the Tier 1 tender, or to take a more aggressive their securities, as emergent players square up exercise offers investors an attractive voting fee. approach. It has already attached an estimated to larger capital requirements just as others start “It would be odd that, for £550m [of debt], £200m cost to the exercise. to dispense with obsolete bonds. they put the entire [demerger] process in “The expectation would be that we try to Regulatory change, rising costs and jeopardy. That’s why I think they had to pay pitch the tender at a level which is fair to the increasing competition have forced stalwarts 11 points on one of those bonds,” said Filippo bondholders and fair to our shareholders so that such as Prudential, Standard Life Aberdeen and Alloatti, senior credit analyst at Hermes we get the result we require,” CFO Bill Rattray Old Mutual to rethink strategies and transform Investment Management. said in May. their operating models, leaving specialist He also pointed to investor anger around operators such as ROTHESAY LIFE, PHOENIX, fellow insurer Aviva’s recent proposal to cancel RINGING THE CHANGES PENSION INSURANCE CORPORATION and JUST GROUP high-yielding preference shares. Prudential’s forward planning does not stop at to fill that gap. “I think also they want to do the decent thing its consent solicitation. It has also introduced an This will result in a very different line-up in a market that was spooked at the beginning of innovative substitution clause to its £10bn MTN of issuers active in bond markets, while also the year by the misjudgement of Aviva, and avoid programme that could help it pre-capitalise triggering a wave of liability management from any association with that,” he said. M&G Prudential prior to the demerger. long-established borrowers recalibrating their If activated, the clause would effectively flip balance sheets. MORE TO COME a new issue originally sold out of Prudential plc “The acquirers - Phoenix, Rothesay, PIC and STANDARD LIFE ABERDEEN (SLA) will be keeping a into M&G Prudential. That could be an attractive Just - are going to need more capital, so will be close watch on the outcome as it gears up for a option for the group, particularly if the credit more prevalent, while the sellers are having to similar exercise to Old Mutual. market continues to widen in the coming years. restructure their bonds,” said a FIG banker. Until now, the company has been subject It would also remove some of the uncertainty There are already plenty of recent examples to the Solvency II European insurance regime. surrounding the demerger, which may not that point to coming changes. Phoenix, for However, following the sale of its insurance conclude until 2020. example, raised a £500m Restricted Tier 1 business it will be supervised on a CRD IV basis But investors may prove sceptical given the bond in April to help fund its £3.24bn purchase and its estimated capital requirement will drop limited disclosure around M&G Prudential of Standard Life Assurance. Meanwhile, OLD to £1bn from £3.7bn. and the potential change in credit risk, which MUTUAL, in the middle of a four-way split, has ?It has already outlined plans to retire £800m Moody’s highlighted in June. been reducing its stock of sterling liabilities and of Tier 1 debt through a tender “as soon as Prudential plc will focus on life insurance and completed a tender only this month. practicable after completion”, expected in the asset management in the rapidly expanding third quarter. markets of Asia and Africa, as well as the United SWEETENING THE DEAL The exercise should also resolve an awkward States - a very different proposition to savings PRUDENTIAL is the latest borrower to take aim at arrangement that will require SLA to post and investment-focused M&G Prudential. its debt pile. It launched a consent solicitation collateral to Phoenix since the two bonds in But while investors would certainly charge a last week to avoid a potential event of default question are guaranteed by Standard Life premium, there should be a clearing level. on two senior bonds, which would threaten Assurance, the entity being offloaded to “It won’t be everybody’s cup of tea,” said its planned demerger to split the British and Phoenix. It may later attempt to tweak the Hermes’ Alloatti. “There has to be a price for European businesses from its international characteristics of its Tier 2 debt through an LME a substitution clause. But to be fair, you know operations. to make those CRD IV-compliant. more or less what you’re going to get if you end The company is taking no chances. The In the meantime, SLA needs to decide up in M&G Pru.” terms were reviewed prior to launch by a special whether to adopt the more expensive - but Alice Gledhill

4HEû53ûBANKû!""" ! ûRETURNEDûWITHûAû 'OLDMANSûDEALûOFFEREDûAûBPûNEWûISSUEû h)ûKNOWûTHEYVEûBEENûAûBIGûUSERûOFûTHEû õBNûTRANSACTIONûATûSWAPSûPLUSûBP ûJUSTû PREMIUMûATûTHEûBPûAREAû)04S ûAûSIMILARû EUROûMARKETûINûTHEûLASTûFEWûYEARS ûBUTû)û AûWEEKûAFTERûBRINGINGûITSûlRSTûSTERLINGûTRADEû approach to Citigroup. WOULDûHAVEûTHOUGHTûTHEûDOLLARûWASûMOREû for four years. h4HATSûTHEûPRICEûFORûENTRY ûPARTICULARLYûFORû FAVOURABLEûFORûTHEM vûSAIDûONE /RDERSûPASSEDûõBN ûAûSIMILARûRESPONSEû these big US names when the market sees “But the dollar market is generally more TOû#ITIGROUPSûõBNûû.#ûTHATûPRICEDû WHATûTHEYVEûBEENûPAYINGûINûDOLLARS ûANDû OPENûOVERALLûTHANûTHEûEUROûMARKET ûSOû ATûSWAPSûPLUSûBPûTHEûPREVIOUSû4UESDAYû)Tû WHENûTHEYûWANTûTOûTAKEûDECENTûSIZEûOUT vû MAYBEûTHEYûWEREûJUSTûKEENûTOûGETûEUROSûDONEû WASûBIDûMOREûTHANûBPûTIGHTERûASû'OLDMANû SAIDûONEûSYNDICATEûOFlCIAL BEFOREûDOLLARSûFORûTHATûREASONv HITûSCREENS ûACCORDINGûTOû4RADEWEB h;"UT=ûFORûTHEû@CASHûPARKûINSTRUMENTS ûORûAû Ten-year paper has been in strong demand DECENT QUALITYû4,!#ûBOND ûACCOUNTSûAREû PREFERRED SENIOR BACK ON THE MENU OFûLATEû)NDEED ûTHEûõMûû*ULYûû QUITEûHAPPYûTOûINVESTûMONEYû4HEûMARKETûISû FOR DEUTSCHE !A!! ûTHATû7ESTPACûSOLDûEARLIERûTHISû OPENv MONTHûWASûTRADINGûATûBPûOVERûSWAPS ûJUSTû 5NLIKEû#ITIGROUP û'OLDMANûHASûNOTûYETû DEUTSCHE BANKûISûlNALLYûFREEûTOûISSUEûPREFERREDû inside the €650m October 2023 it brought the been to the dollar market since reporting SENIORûDEBT ûWHICHûSHOULDûOFFERûTHEûBELEAGUEREDû SAMEûDAY ûQUOTEDûATûBPûOVERû4HEûSû SECOND QUARTERûEARNINGS ûAûFACTûTHATûHASû BANKûANûATTRACTIVEûSOURCEûOFûFUNDINGûANDûPLACEûITû PRICEDûBPûWIDERûTHANûTHEûS ûATûBP surprised bankers at other institutions. ONûAûLEVELûPLAYINGûlELDûWITHû%UROPEANûPEERS

32 International Financing Review July 28 2018 BONDS FIG

4HEû'ERMANûLENDER ûINûBLACKOUTûPRIORûTOû 201bp but back of where it priced at swaps h!ûPOSITIVEûRATINGSûMOVE ûGOINGûTOû reporting second-quarter results last plus 95bp in January. INVESTMENT GRADE ûMAKESûAûSIGNIlCANTû 7EDNESDAY ûISûSEENûASûAûPRIMEûCANDIDATEûTOû “I think you’ll probably see preferred DIFFERENCEûnûTHEYûWILLûlNDûNEWûOWNERSûATûTHEû open this market after legislation SENIORûFROMûMOSTûOFûTHEû'ERMANûISSUERS ûBUTû INVESTMENT GRADEûLEVEL ûANDûTHEûEXECUTIONû PERMITTINGûISSUANCEûCAMEûINTOûFORCEûOVERû WHETHERûTHEYLLûDOûBENCHMARKS ûANDûINûTHEû CONSIDERATIONSûBECOMEûQUITEûDIFFERENT vûSAIDû the weekend. NEARûTERM û)ûDONTûKNOW vûSAIDûAûSECONDû a banker. h)Fû)ûWEREûTHEM û)ûWOULDûJUSTûBANGûOUTûAû banker. Though both outstanding holdco bonds PREFERREDûSENIORûNOW vûSAIDûONEûSYNDICATEû “I think there is probably room to do AREûEURO DENOMINATED û!)"ûMAYûSETûUPû OFlCIAL some preferred funding in the domestic PROGRAMMESûINûOTHERûCURRENCIESûTOûGIVEû h4HEYVEûACTUALLYûHADûSOMEûHALF DECENTû market without necessarily doing big GREATERûmEXIBILITYûINûMEETINGûITSûTARGET RESULTSûFORûONCE ûTHEYVEûHADûQUESTIONSû INTERNATIONALûTRADES ûTHOUGHû$EUTSCHEû"ANKû Moody’s also upgraded the bank’s around market access for the last couple of ISûANûOBVIOUSûCANDIDATEûFORûDOINGûEXACTLYû baseline credit assessment to baa3 from ba1 YEARS ûSOûYOUDûWANTûTOûGOûOUTûANDûMAKEûAû THATv GIVENûTHEûFASTERûTHANûEXPECTEDûIMPROVEMENTû STATEMENTûANDûDOûAûBIGûDECENTûTRADEv !LTERNATIVELY ûTHEûBANKûMAYûCHOOSEûTOû INûASSETûQUALITYûACHIEVEDûSINCEû $EUTSCHEûPOSTEDûAûûDROPûINûNETûPROlTû UNDERTAKEûAûLIABILITYûMANAGEMENTûEXERCISEû INûTHEûSECONDûQUARTERûFROMûAûYEARûEARLIER ûTOû TOûREDUCEûITSûSTOCKûOFû4,!# ELIGIBLEûDEBT õMûFROMûõM ûBUTûPROlTûANDûREVENUEû “We think that Deutsche Bank could be SWISS FRANCS WEREûBOTHûBETTERûTHANûEXPECTEDûASûITûTRIESûTOû THEûlRSTûMOVERûONûANûEXCHANGEûEXERCISEûTOû BOUNCEûBACKûFROMûTHREEûCONSECUTIVEûYEARSûOFû LOWERûITSûFUNDINGûCOSTS ûEITHERûBYû MORE CANADIAN SENIOR SWISS losses. EXCHANGINGûEXISTINGûDEBTûINTOûNEWûPREFERREDû FROM BMO 'ERMANYSûSOLUTIONûTOûHELPûITSûLENDERSû senior or by calling the outstanding notes comply with loss-absorbing regulation was ANDûRE ISSUINGûATûAûLOWERûSPREAD vûANALYSTSûATû BANK OF MONTREALûTOOKûADVANTAGEûOFûTHEûWIDERû to subordinate outstanding senior BNP Paribas wrote in a note. European market’s focus on the ECB unsecured bonds to other senior liabilities in %UROPEANûPREFERREDûSENIORûONûAVERAGEû meeting on Thursday to bring a long four- the hierarchy of claims after a bank failure. trades around 45bp tighter than comparable year senior unsecured Swiss 4HOSEûCHANGES ûEFFECTIVEûFROMû û non-preferred. That could offer Deutsche a franc-denominated bond issue. applied not only to all new issuance but also SIGNIlCANTûCOSTûSAVINGûOFûAROUNDûõMûFORû Books opened for a minimum SFr200m the banks’ entire stock of senior unsecured EVERYûõBNûEXCHANGEDûORûCALLED ûACCORDINGû 53M ûCLIPûATûGUIDANCEûOFûAûû bonds. Deutsche Bank reported a Total Loss- to BNPP’s calculations. COUPONûANDûYIELD ûEQUIVALENTûTOûMID SWAPSû !BSORBINGû#APACITYûOFûõBNûLASTû Deutsche’s preferred bonds will be rated PLUSûBPûAREA ûORûGOVERNMENTûBONDSûPLUSû 7EDNESDAY ûõBNûANDûõBNûOVERûITSû !! ! 49bp area. RESPECTIVEû-2%,ûANDû4,!#ûREQUIREMENTS The minimum size was upped to SFr425m (OWEVER ûWHATûINITIALLYûAPPEAREDûTOûBEûAû AIB GROUP SENIORS SCREAM TIGHTER AHEADûOFûLAUNCH ûBEFOREû3&RMûWASûPRICEDû SHREWDûMOVEûBACKlREDûASûOTHERû%UROPEANû ON SECOND IG RATING INûLINEûWITHûGUIDANCE ûATûMID SWAPSûPLUSû countries ensured their banks had the BPûGOVERNMENTSûPLUSûBP ûANDûTHEû option of issuing preferred senior alongside AIB GROUP’s senior unsecured bonds screamed EXPECTEDûûCOUPONYIELDûREOFFER THEûNEW ûCOSTLIERûNON PREFERREDûSENIORû tighter by up to 26bp after a Moody’s 4HEûPAPERûISûDUEûONû$ECEMBERûû û Preferred senior bondholders would only upgrade to Baa3 from Ba2 made the bank JUSTûSLOTTINGûINTOûASSETûMANAGERSûû SUFFERûLOSSESûAFTERûLOWER RANKEDûCREDITORS ûSOû INVESTMENT GRADEûWITHûTWOûRATINGSûAGENCIES BASKETSû4HATûWASûHANDY ûASûITûOPENEDûUPû the asset class trades at a tighter spread. Moody’s also lifted the senior debt of the SOMEûLINESûTHATûMAYûHAVEûBEENûlLLEDûINûTHEû The opportunity to issue a cheaper form OPCO û!LLIEDû)RISHû"ANKSûPLC ûBYûTWOûNOTCHESû ûlVE YEARûBASKETûAFTERûOTHERû#ANADIANû OFûSENIORûDEBTûISûPARTICULARLYûVALUABLEûFORû TOû!û4HEûUPGRADESûREmECTûEXPECTATIONSûOFû BANKSûPRICEDûAûCOMBINEDû3&RMûINûTHEû $EUTSCHEû"ANK ûGIVENûITSûFUNDINGûCOSTSûHAVEû REDUCEDûLOSSûGIVENûFAILUREûFORûCREDITORSûGIVENû past few weeks. shot up as it undergoes a painful !)"SûGROWINGûLOSS ABSORBINGûCAPACITY )TûCAMEûONûTHEûHEELSûOFûSTRAIGHTûlVE YEARû restructuring. &ITCHûALREADYûRATESû!)"û'ROUPSûSENIORû bonds from RBC and CIBC – and was priced )TSûõBNûûSENIORûDUEû*ANUARYûû DEBTû"""nû)TûISû"" ûATû30 ûBUTûONûPOSITIVEû INûLINEûWITHûTHEMûTOO ûWHENûADJUSTEDûFORûTHEû "AA""" """ ûWASûQUOTEDûLASTûWEEKû outlook. slightly shorter maturity. It was also the AROUNDûBP ûINSIDEûTHEûYEARSûWIDEûOFû 4HEûADDITIONALûINVESTMENT GRADEûRATINGû LARGESTûOFûTHEûTHREE ûBEATINGû#)"#Sû3&RMû opens the bonds up to a wider pool of and RBC’s SFr350m. ALL COVERED BONDS (ALL CURRENCIES) INVESTORS ûWHICHûSHOULDûLEADûTOûANû 3WISSûASSETûMANAGERSûTOOKûTHEûMAJORITYûOFû BOOKRUNNERS: 1/1/2018 TO DATE IMPROVEMENTûINû!)"SûFUNDINGûCOSTS THEûPAPERûATû ûJUSTûSHYûOFûTHEûûTHEYû Managing No of Total Share 4HATûISûPARTICULARLYûVALUABLEûGIVENûTHEû TOOKûOFû#)"#SûDEALû!ûTOTALûOFûûACCOUNTSû bank or group issues US$(m) (%) GENERALûDRIFTûWIDERûINûSPREADSûOVERû û TOOKûPARTûFORûANûAVERAGEûTICKETûOFû3&RM 1 LBBW 50 8,747.15 5.9 ALTHOUGHûTHEûBANKSûNEEDSûAREûRELATIVELYû UBSûWASûSOLEûLEADûONûTHEûDEAL ûASûITûHADû 2 UniCredit 51 8,704.30 5.9 LIMITEDû)TSû-2%,ûTARGET ûTOûBEûMETûBYû been on the other two. BOMB was co- 3 Natixis 39 8,317.28 5.6 *ANUARYûû ûWASûRECENTLYûSETûATûûOFû manager. 4 HSBC 44 8,220.71 5.6 RISK WEIGHTEDûASSETS ûINûLINEûWITHûITSû Canadian lenders are ramping up senior 5 Commerzbank 45 7,949.27 5.4 PREVIOUSLYûSTATEDûGUIDANCEûOFûõBNnõBN issuance ahead of the implementation of 6 Deutsche Bank 35 6,872.65 4.7 !)"û'ROUPSûõMûû-ARCHû û 4,!#ûRULESûINûTHEûCOUNTRY ûDUEûTOûTAKEûEFFECTû 7 Credit Agricole 33 6,377.84 4.3 WHICHûWASûBARELYûSUBSCRIBEDûINûAûDIFlCULTû from September 23. Senior debt issued 8 Credit Suisse 31 6,370.65 4.3 MARKETûLASTûMONTH ûRALLIEDûBPûTOûBPû BEFOREûTHENûWILLûBEûGRANDFATHERED ûBUTûALLû 9 SG 30 5,906.69 4.0 OVERûSWAPS ûACCORDINGûTOû4RADEWEBûPRICESû)Tû SUBSEQUENTûISSUANCEûWILLûBEûMOREûEXPENSIVEû 10 Barclays 29 5,541.48 3.8 PRICEDûATûBPû4HEûõMûû*ULYûSû bail-in-able debt. Total 195 147,576.37 ALSOûSHOTûTIGHTER ûTOUCHINGûBPûOVERûSWAPSû "-/ûISûRATEDû!A! !!n ûTHEûSAMEûASû Source: Thomson Reuters SDC code: J15a FROMûBP CIBC.

International Financing Review July 28 2018 33 !Tû53TRN ûTHEû4RIPLEû"ûBRACKETûCONSTITUTESû 7ITHûTHEûPACEûOFûINmOWSûINTOûHIGH YIELDû ûOFûTHEûENTIREû)'ûCORPORATEûBONDûMARKETû)Tû JUNKûFUNDSûSLOWING ûINVESTORSûAREûBECOMINGû HIGH-YIELD is also larger than both the high-yield and INCREASINGLYûSELECTIVEûABOUTûTHEûPRICEûTHEYû LEVERAGEDûLOANûMARKETSûCOMBINED are willing to pay for certain credits. 4HEûCONCERNûISûTHAT ûIFûAûSIZEABLEû “Until we see cash coming back into the UNITED STATES proportion of Triple B debt is downgraded to ASSETûCLASS ûTHEûBUYSIDEûISûGOINGûTOûBEûMUCHû JUNK ûITûCOULDûCAUSEûBORROWINGûCOSTSûTOûRISEûIFû more diligent on who they are allocating JUNK BOND PICKERS AWAIT FALLEN INVESTORSûAREûUNABLEûTOûABSORBûTHEûADDITIONALû CAPITALûTO vûONEûINVESTORûSAID ANGEL BOON SUPPLYû ûANDûEVENûLEAVEûSOMEûSMALLERûJUNKû (IGH YIELDûFUNDSûSAWûJUSTû53Mû companies without access to capital. enter the asset class for the week ending (IGH YIELDûBONDûINVESTORS ûWHOûHAVEûBEENû *ULYû ûDOWNûFROMûTHEû53BNûTHEû STARVEDûFORûNEWûISSUESûTHISûYEAR ûCOULDûBEûSETû ON THE OTHER HAND WEEKûBEFORE ûACCORDINGûTOû,IPPERûDATA for a treat if a large swathe of Triple B But others beg to differ. Independent oil and gas company CREDITSûAREûDOWNGRADEDûTOûJUNK ûACCORDINGû !Nû!RMAGEDDONûSCENARIOûSEEMSûUNLIKELYû #OMSTOCKûENDEDûUPûPRICINGûITSû53Mû TOû-ICHAELû4EMPLE ûDIRECTORûOFûCREDITû INûTHEûNEARûTERM ûACCORDINGûTOûANALYSTSûFROMû EIGHT YEARûNON CALLûTHREE YEARûBONDûATûû RESEARCHûATû!MUNDIû0IONEER RATINGSûAGENCYû30û'LOBAL on July 20. High-yield issuance is running some 4HEYûBELIEVEûTHATûWHILEûTHEûCURRENTû 4HEû4EXAS BASEDûCOMPANY ûRATEDû#AA"" û US$34.6bn below last year’s tally due to a POPULATIONûOFû4RIPLEû"ûlRMSûINûTHEû53ûISûLARGE ûITû ALSOûUPPEDûITSûYIELDûTOûûFROMûINITIALû DECLINEûINûRElNANCINGûACTIVITYûANDûASû SHOULDûREMAINûSTABLEûFROMûAûCREDITûPERSPECTIVEû PRICEûTALKûOFûûAREA COMPANIESûRELYûMOREûHEAVILYûONûCASHûANDû in the near to medium-term horizon. -EANWHILE û%0ûCOMPANYû"RUINû"" û THEIRûOWNûSTOCKûTOûlNANCEû-! )NûADDITION ûTHEREûAREûAROUNDûûCOMPANIESû FACEDûSIMILARûPUSH BACKûFROMûINVESTORSûWHOû )NûADDITION ûMANYûJUNK RATEDûCOMPANIESû in the US that are considered to be potential disliked the fact that US$200m of the WITHûFUNDINGûNEEDSûHAVEûFOUNDûMOREû FALLENûANGELSûATûTHISûTIMEû4HOSEûISSUERSûHAVEû US$600m bond was being used to fund a ATTRACTIVEûOPPORTUNITIESûINûTHEûLOANûMARKETû LESSûTHANû53BNûINûDEBT û30ûSAID special equity contribution. WHEREûTHEûDEMANDûFORûmOATING RATEûLOANû Other analysts agree. The energy company had been looking to products remains robust. )NûAûREPORTûRELEASEDûONû*ULYû û"!-,û price an eight-year non-call three structure "UTûINVESTMENTûOPPORTUNITIESûINûHIGH analysts said that the demotion of a string of AFTERûSOUNDINGûOUTûINVESTORSûWITHûAûYIELDûOFû yield could get a boost if a deterioration in """ ûCORPORATEûNAMESûTOûJUNKûTERRITORYûISû balance sheet among the companies sitting LIKELYûTOûHAPPENûOVERûAûPERIODûOFû ûYEARSû But market push-back left Bruin delaying ONûTHEûCUSPûOFûJUNKûLEADSûTOûAûSWATHEûOFû RATHERûTHANûINûAûGIANTûhmUSHv the deal by a day and shortening the tenor to downgrades. “That leaking nature of fallen angel risk - AûlVE YEARûNON CALLûTWOûTHATûWASûTALKEDûATû Estimates on the amount of Triple B ASûOPPOSEDûTOûAûBIGû@mUSHû ûMAKESûITûMUCHû ûANDûPRICEDûTOûYIELDûAûHIGHERû ISSUANCEûTHATûCOULDûBEûDOWNGRADEDûOVERûTHEû MOREûMANAGEABLE vûANALYSTSûWROTE NEXTûSEVERALûYEARSûRANGEûBETWEENû53BNû !ûMOREûMANAGEABLEûSWATHEûOFûDOWNGRADESû “It’s not necessarily Comstock or Bruin- ANDû53BN ûACCORDINGûTOû4EMPLE ISûGOODûNEWSûFORûMANAGERSûSUCHûASû4EMPLE û SPECIlC ûBUTûTHEûMARKETûISûBEINGûAûLITTLEûMOREû “This deluge spells opportunity for who hope to make hay of such opportunities. DISCERNINGûBETWEENûCREDITS vûAûSECONDû INVESTORS vûHEûWROTEûINûAûNOTEûISSUEDû4HURSDAYû h!SûLONGûASûEXISTINGûOWNERSûOFûTHATûDEBTû INVESTORûSAID morning. “One might categorise the current ARENTûFORCEDûTOûSELLûTHEIRûEXPOSURES ûTHEû “There isn’t a lot of money coming into high-yield market as desert dry - which a DAMAGEûISûSOMEWHATûLIMITED vûHEûTOLDû)&2 THEûASSETûCLASS ûANDûINVESTORSûHAVEûTHEûNEXTû DELUGEûOFûFALLENûANGELSûCOULDûREHYDRATEv RECESSIONûATûTHEûBACKûOFûTHEIRûMINDS vûHEû 4HEûARGUMENTûINûFAVOURûOFûPOTENTIALû BRUIN, COMSTOCK FACE PUSH-BACK said. FALLENûANGELSûISûTHISûONCEûAûCOMPANYûHASû BEENûDOWNGRADEDûTOûJUNK ûITSûCOSTûOFûCAPITALû 4WOûENERGYûNAMES ûBRUIN E&P PARTNERS and LIFEPOINT BONDS JUMP AFTER APOLLO GOESûUP ûSOûMANAGEMENTûSTARTSûTOûFOCUSûONû COMSTOCK RESOURCES ûHAVEûFALLENûVICTIMûTOû ACQUISITION debt reduction by selling assets and CHANGINGûSENTIMENTûINûTHEûJUNKûBONDû DIRECTINGûFREEûCASHmOWûTOûREDUCINGûDEBT market after being forced to back up on LIFEPOINT HEALTH bonds were up sharply on h)TSûONEûOFûTHEûBESTûTIMESûTOûINVESTûINû pricing on recent deals. -ONDAY ûFOLLOWINGûNEWSûTHATûPRIVATEûEQUITYû THESEûSECTORS vû4EMPLEûSAID h7EREûVERYûEXCITEDûBYûDOWNGRADESûOFû ALL US$ DENOMINATED HIGH-YIELD BONDS ALL NON-DOLLAR DENOMINATED HIGH-YIELD BONDS COMPANIESûWITHûVERYûATTRACTIVEûBUSINESSû BOOKRUNNERS – 1/1/2018 TO DATE 1/1/2018 TO DATE MODEL ûBECAUSEûTHEûCOMPANIESûINTERESTSû Managing No of Total Share Managing No of Total Share become aligned with debtholders’. It ends bank or group issues US$(m) (%) bank or group issues €(m) (%) UPûBEINGûAûVERYûEXCITINGûTIMEûTOûINVESTûINû 1 JP Morgan 100 14,778.63 11.0 1 JP Morgan 35 3,408.38 8.2 CROSSOVERûFALLENûANGELS vûHEûSAID 2 Goldman Sachs 79 9,611.47 7.1 2 Deutsche Bank 31 3,391.14 8.1 !ûLOTûOFûHAIRûHASûBEENûPULLEDûOUTûOVERûTHEûSIZEû 3 BAML 87 8,756.61 6.5 3 BNP Paribas 35 2,763.02 6.6 OFûTHEû4RIPLEû"ûMARKETûINûRECENTûMONTHSû!Tû 4 Barclays 67 8,637.80 6.4 4 Credit Suisse 26 2,262.39 5.4 53TRN ûTHEû4RIPLEû"ûRATINGSûBRACKET ûWHICHû 5 Deutsche Bank 75 8,563.03 6.4 5 HSBC 27 2,215.39 5.3 SITSûJUSTûABOVEûJUNK ûISûLARGERûTHANûITûHASûEVERû 6 Wells Fargo 65 8,527.32 6.3 6 Citigroup 20 2,159.23 5.2 BEENû)TûISûANûUNPRECEDENTEDûSITUATION ûANDûTHEû 7 Credit Suisse 69 8,095.76 6.0 7 BAML 19 2,155.06 5.2 POTENTIALûRAMIlCATIONSûHAVEûSPLITûOPINION 8 Citigroup 71 7,965.62 5.9 8 Goldman Sachs 23 2,080.24 5.0 “The size of that thing that is sitting on 9 Morgan Stanley 64 7,725.45 5.7 9 Barclays 19 1,835.18 4.4 TOPûOFûYOUû ûITSûNEVERûBEENûBIGGERûINûTHEû 10 RBC 44 5,112.15 3.8 10 Morgan Stanley 12 1,463.43 3.5 WHOLEûHISTORYûOFûTHEûMARKET vû/LEGû Total 262 134,505.34 Total 95 41,798.30 -ELENTYEV ûHEADûOFûHIGH YIELDûCREDITûSTRATEGYû Including US domestics, Euro, foreign, globals. Excluding equity-related debt. Excluding equity-related debt. ATû"ANKûOFû!MERICAû-ERRILLû,YNCH ûSAID Source: Thomson Reuters SDC code: B5 Source: Thomson Reuters SDC code: B6

34 International Financing Review July 28 2018 BONDS HIGH-YIELD

lRMû!POLLOû'LOBALû-ANAGEMENTûWASûBUYINGû ALL EUROPEAN HIGH-YIELD ISSUERS ALL ASIAN HIGH-YIELD ISSUERS the company in a US$5.6bn deal. 1/1/2018 TO DATE 1/1/2018 TO DATE 4HEûHOSPITALûOPERATORSûûSû ûONEû Managing No of Total Share Managing No of Total Share OFûTHEûMOSTûHEAVILYûTRADEDûBONDSû-ONDAYû û bank or group issues US$(m) (%) bank or group issues US$(m) (%) WEREûQUOTEDûASûHIGHûASû ûOVERûSIXû 1 JP Morgan 39 5,430.79 9.1 1 Haitong Securities 35 1,768.47 7.0 POINTSûFROMû&RIDAYSûCLOSINGûLEVELS û 2 Deutsche Bank 35 4,823.63 8.1 2 Citic 23 1,565.37 6.2 ACCORDINGûTOû-ARKET!XESSûDATA 3 BNP Paribas 38 3,719.50 6.2 3 Deutsche Bank 17 1,389.51 5.5 "Yû4HURSDAY ûTHEûBONDSûHADûRISENûANOTHERû 4 Barclays 25 3,556.65 6.0 4 Bank of China 18 1,354.25 5.3 POINTûTOûûDESPITEû-OODYS û30ûANDû 5 Citigroup 24 3,244.51 5.4 5 Guotai Junan Securities 32 1,334.66 5.3 Fitch placing the company’s Ba2/BB-/BB 6 Goldman Sachs 28 3,240.13 5.4 6 JP Morgan 7 1,275.24 5.0 RATINGSûONûREVIEWûFORûDOWNGRADEûONû 7 Credit Suisse 26 2,941.87 4.9 7 Morgan Stanley 12 1,176.84 4.6 Tuesday. 8 BAML 18 2,695.31 4.5 8 Credit Suisse 15 1,054.92 4.2 While spreads usually widen on the back 9 HSBC 26 2,618.36 4.4 9 BAML 11 1,006.95 4.0 of a buyout as markets fret about added 10 Morgan Stanley 17 2,335.59 3.9 10 HSBC 20 983.17 3.9 LEVERAGE ûINûTHISûCASE ûSHORTûCOVERINGûANDûAû Total 106 59,619.09 Total 75 25,318.56 ûCHANGE OF CONTROLûCLAUSEûPROVIDEDû Excluding equity-related debt. Excluding equity-related debt. SUPPORT ûSAIDûINVESTORS Source: Thomson Reuters SDC code: B06c Source: Thomson Reuters SDC code: B06d 3HORTûSELLERSûHAVEûTAKENûAûSHINEûTOûTHEû SECTOR ûWHICHûHASûFACEDûHIGHERûMEDICALû “They’re both related to general trade and COSTS ûFEWERûPATIENTSûANDûPROlTûPRESSURESû EUROPE/MIDDLE EAST/ TRANSPORTATION ûANDûOBVIOUSLYûITSûBEENûAûBIGû from changes to Medicare and Medicaid AFRICA focus this week with all the talk about tariffs policies. in the US and China. But it’s been better Prior to Monday’s acquisition WFS, CEVA UNSHAKEN BY TRADE NOISE SINCEûTHEû4RUMP *UNCKERûMEETING ûANDû ANNOUNCEMENT ûTHEûSûHADûTRADEDûATû TRADE RELATEDûNAMESûAREûDOINGûMUCHûBETTERv AROUNDû ûOFFûAûYEARLYûLOWûOFû WORLDWIDE FLIGHT SERVICES and CEVA LOGISTICS !ûTHIRDûINVESTORûREFERENCEDû#-!û#'-û" û h4HEûBONDSûHAVEûOVERSHOTûAûBITûTOûTHEû went ahead with offerings last Friday BYû30 ûASûAûPOTENTIALûCOMPARABLE ûSAYINGû UPSIDEûBECAUSEûOFûTHEûSHORTûCOVERINGûASûWELLû DESPITEûINVESTORSûEXPRESSINGûCONCERNSûABOUTû WFS should come closer to where the ASûTHEûREALISATIONûTHATûTHEYûHAVEûAûû THEIRûCREDITûPROlLESûANDûTHEûTIMINGûONûTHEû French container transportation and CHANGEûOFûCONTROLûPUT vûANûINVESTORûSAID back of geopolitical noise. shipping company is trading. !POLLOSûDEALûWILLûBRINGûTOGETHERû,IFE0OINTû Promontoria Holding 264 – the entity #-! ûWHICHûOWNSûûOFû#EVA ûHASûõMû ANDû!POLLOSû2##(û(EALTH#AREûPARTNERS û Cerberus will use to raise funding for its OFûû*ANUARYûSûTRADINGûONûANûû two hospital companies that operate mainly PURCHASEûOFûAIRûCARGOûHANDLERû7&3ûnûSETûlNALû HANDLEûATûAûYIELDûTOûMATURITYûOFû û in the rural United States. TERMSûATûûONûITSûõMû.#ûlXED RATEû according to Tradeweb prices on Friday. Barclays ûCitigroup ûRBC Capital Markets and tranche and at Euribor plus 625bp on the They are callable from October 2020. Credit SuisseûWILLûlNANCEûTHEûTRANSACTION õMû.#ûmOATERû"OTHûWEREûATûTHEûTIGHTû -EANWHILE û#EVAûWASûABLEûTOûSETûPRICEûTALKû 030û)NVESTMENTSû#REDITû53!û,,#ûANDûANû end of talk. INSIDEûTHEûMID SûWHISPERSûATûnû AFlLIATEûOFû1ATARû)NVESTMENTû!UTHORITYûWILLû 4HEûNOTESûAREûRATEDû""ûBYû-OODYS30 4HEûõMû.#ûBONDûWASûPRICEDûATûTHEû ALSOûPROVIDEûPARTûOFûTHEûDEBTûlNANCING û 7HISPERSûWEREûREPORTEDLYûûAREA ûBUTû tight end of the range. according to LPC. WEREûLATERûALSOûHEARDûINûTHEûHIGHûS ûWITHûANû 4HEREûASûWELL ûCONCERNSûEMERGEDûOVERûTHEû INVESTORûCITINGûSOMEûUNCERTAINTYûDURINGûTHEû DOCUMENTATION ûBUTûTHEûRECENTû)0/ûANDû TESLA’S JUNK BOND DROPS SHARPLY PRE MARKETINGûEXERCISE SUBSEQUENTûDELEVERAGINGûHAVEûBEENûPRAISEDû 7HILEûPUSH BACKûONûPRICINGûISûUNCLEAR û 4HEûNOTESûAREûEXPECTEDûTOûBEûRATEDû"""nû 4HEûSOLEûJUNKûBONDûISSUEDûBYûTESLA fell there was also widespread talk in the STABLEPOSITIVE SHARPLYûONû-ONDAY ûMIRRORINGûAûSLUMPûINûITSû MARKETûTHATûCOVENANTSûHADûBEENûAMENDEDû v#EVAûHADûPROBLEMSûINûTHEûPASTûBUTûITû shares in pre-market trading after a report TOûDELETEûAûhHUGEûLIENSûLOOPHOLEvûANDûAû LOOKSûLIKEûTHEYVEûGOTûAûNEWûlNANCIALû the electric carmaker has turned to some correction made to clarify one of the biggest STRUCTUREûANDûCOMPLETEûNEWûMANAGEMENT û SUPPLIERSûFORûAûREFUNDûOFûPREVIOUSLYûMADEû debt baskets. SOûITûSHOULDûMAKEûITûMOREûINVESTABLE vûTHEû PAYMENTSûINûAûBIDûTOûTURNûAûPROlT #OVENANTû2EVIEWûHADûmAGGEDûAûFEWûKEYû THIRDûINVESTORûSAID Tesla has asked some suppliers to refund CONCERNSûINûTHEûORIGINALûDOCUMENTATION û !POLLOûRAISEDû3&RBNû53BN ûLISTINGû MONEYûPAIDûSINCEû ûTHEû7ALLû3TREETû including about liens. THEûCOMPANYûONûTHEû3)8û3WISSû%XCHANGEûINû *OURNALûREPORTEDûONû3UNDAY ûCITINGûAûMEMO h4HEûLIENSûCOVENANTûPOTENTIALLYûALLOWSûANû May. )TSûSHARESûFELLûMOREûTHANûûBEFOREûTHEûBELL unlimited amount of tack-on notes to be 0ROCEEDSûnûTOGETHERûWITHûAûPREVIOUSLYû 4ESLASûûûBOND ûWHICHûITûSOLDûINû SECUREDûALONGSIDEûTHEûINITIALûNOTES ûSUBJECTû ANNOUNCEDû4ERMû,OANû"ûDUEû ûAû THEûSUMMERûOFû ûWASûDOWNûûPOINTSû TOûCOMPLIANCEûWITHûTHEûDEBTûCOVENANTû4HISû REVOLVINGûCREDITûFACILITYûDUEû ûANDûCASHû ATûAûCASHûPRICEûOFû ûACCORDINGûTOû COULDûPERMITûUNLIMITEDûCOLLATERALûDILUTION vû ONûHANDûnûWILLûBEûUSEDûTOûREPAYûEXISTINGûDEBT -ARKET!XESS THEûRESEARCHûlRMûWROTEûONû4HURSDAY )TûWASûTHEûMOSTûHEAVILYûTRADEDûBONDûINû Leads did not reply to requests for SCHENCK PROCESS MARKETING €100m early trade. comment. JUNE 2023S 4HEûMEMO ûWHICHûTHEû73*ûSAIDûWASûSENTû !ûSECONDûINVESTORûHADûPOINTEDûTOûTHEû BYûAûGLOBALûSUPPLYûMANAGER ûDESCRIBEDûTHEû WEAKûDOCUMENTATION ûESPECIALLYûGIVENûTHATû SCHENCK PROCESS ûVIAû0LATINûû'MB( ûLASTû request as essential to Tesla’s continued the new owner has been open about more Friday started marketing €100m June 2023 operation and characterised it as an ACQUISITIONS ûFURTHERûINCREASINGûITSûEXPECTEDû SENIORûSECUREDûNOTESûATûAû ûALL INû INVESTMENTûINûTHEûCARûCOMPANYûTOûCONTINUEû XûLEVERAGE YIELDûINCLUSIVEûOFû/)$ THEûLONG TERMûGROWTHûBETWEENûBOTHûPLAYERS û h4HEûTIMINGûFORû7&3ûANDû#EVAûWASûALSOûAû 4HEûTRANSACTION ûVIAûSOLEûGLOBALû Reuters reported. BITûDIFlCULT vûHEûSAID coordinator Deutsche Bankû"$ ûANDûJOINTû

International Financing Review July 28 2018 35 ALL INTL AUSTRALIAN DOLLAR BONDS AUSTRALIAN DOMESTIC BONDS GLOBAL DIM SUM BONDS 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 A$(m) (%) bank or group issues A$(m) (%) bank or group issues Rmb(m) (%) 1 TD Securities 50 3,543.28 15.6 1 National Australia Bank 55 15,568.47 22.0 1 HSBC 47 15,244.02 32.1 2 Nomura 29 2,592.98 11.4 2 ANZ 39 14,146.10 20.0 2 Standard Chartered 32 13,997.44 29.5 3 RBC 35 2,503.11 11.0 3 Westpac 39 9,472.41 13.4 3 Credit Agricole 21 5,475.80 11.5 4 Mizuho 13 1,757.95 7.7 4 CBA 28 9,358.40 13.2 4 Bank of China 4 2,005.77 4.2 5 Deutsche Bank 20 1,615.56 7.1 5 UBS 18 5,726.43 8.1 5 Citic 4 1,903.34 4.0 6 ANZ 11 1,457.91 6.4 6 Deutsche Bank 9 4,276.41 6.0 6 BNP Paribas 4 1,241.00 2.6 7 JP Morgan 10 1,435.73 6.3 7 Citigroup 9 3,554.44 5.0 7 Goldman Sachs 2 1,075.00 2.3 8 NAB 9 1,100.28 4.8 8 BAML 6 1,415.34 2.0 8 DBS 1 1,000.00 2.1 9 Daiwa Securities 14 1,086.74 4.8 9 JP Morgan 5 1,211.10 1.7 =8 KGI Financial Services 1 1,000.00 2.1 10 CBA 7 649.25 2.9 10 Macquarie 6 963.96 1.4 10 China Merchants Bank 1 750.00 1.6 Total 149 22,699.81 Total 98 70,859.92 Total 111 47,488.94

Including preferreds. Excluding equity-related debt. Including preferreds. Excluding equity-related debt. Source: Thomson Reuters SDC code: K1 Source: Thomson Reuters SDC code: AJ02 Source: Thomson Reuters SDC code: AS24a

bookrunners Credit Suisse ûGoldman Sachs and ASSETûQUALITYûWHILEûGROWING ûBUTûPOINTEDûTOû UniCredit ûWASûEXPECTEDûTOûBEûRATEDû"" certain risks. Proceeds will be used to repay in full a h$ESPITEûENJOYINGûAûLEADINGûPOSITIONûINû STRUCTURED FINANCE bridge facility used for the June acquisition THEûREVOLVINGûCREDITûCARDûMARKETûINûTHEû of thermal processing equipment company )BERIANû0ENINSULA û7I:INKSûOVERALLûSCALEûISû Raymond Bartlett Snow. SMALLû4HIS ûCOUPLEDûWITHû7I:INKSû EMEA MBS )Nû$ECEMBER ûTHEû'ERMANûMEASURINGû MONOLINEûFOCUS ûRESULTSûINûAûLACKûOFûBUSINESSû TECHNOLOGYûGROUPûPRINTEDûAûûõMû DIVERSITYûANDûEARNINGS ûANDûMAKESûITû CERBERUS PAYS UP FOR AUBURN 9 REFI June 2023 bond to back its acquisition by VULNERABLEûTOûCHANGESûINûTHEûREGULATORYûANDû Blackstone. COMPETITIVEûENVIRONMENT vûTHEûAGENCYûSAID Cerberus-owned originator CAPITAL HOME $ESPITEûHAVINGûTHEûSAMEûMATURITY ûTHEû Goldman Sachsû"$ ûANDûUBS are physical LOANS priced TOWD POINT MORTGAGE FUNDING NEWûBONDûCANNOTûBEûAûTAPûOFûTHEûEXISTINGû BOOKRUNNERS ûWITHûNatWest MarketsûAûJOINTû 2018-AUBURN 12ûONû&RIDAYûAFTERNOON û ONE ûGIVENûTHATûITûISûTRADINGûBELOWûPAR ûWITHû bookrunner. RElNANCINGûITSûEXISTINGû!UBURNûûDEALûWHICHû AûûHANDLEûONû&RIDAY ûACCORDINGûTOû The last PIK toggle in the European WILLûBEûREDEEMEDûINû!UGUST Tradeweb prices. market came in December when Triple-C -ARKETûPARTICIPANTSûHADûEXPECTEDûTHEûDEALû RATEDû"URGERû+INGû&RANCEûSOLDûõMûlVE TOûSTRUGGLEûITûMAYûBEûTHEûLASTûCONSUMERûDEALû WIZINK ON PIK TOGGLE ROAD YEARûNON CALLûTWOûNOTESûATû before the summer break and it followed a "EFOREûTHAT ûINû*ULY û"A"" û!LLFUNDSû"ANKû glut of sterling supply which had helped MULHACEN PTE (WIZINK) is on the road until CLEAREDûAûõMûSEVEN YEARûNON CALLûTHREEûATû push the whole market wider. 4UESDAYûWITHûAûõMûISSUEûOFûlVE YEARûNON ûINSIDEû ûTALK ûASûINVESTORSû &IVEûWEEKSûEARLIERû4WENTY&OURûPRICEDûITSû call two senior secured PIK toggle notes snapped up paper before supply dried up for -ALTû(ILLûû"4,ûDEALûATûBPûOVERû,IBORû"UTû BACKINGûITSûACQUISITIONûBYû!NETO ûANûINDIRECTû the summer. Friday’s new issue was forced to sell its subsidiary of Varde Partners. 4HISûSUMMER ûHOWEVER ûMIGHTûBEûQUITEû aMû4RIPLEû!SûBPûWIDER ûATûAû 4HEûDIGITALûBANK ûWHICHûSPECIALISESûINû BUSYûGIVENûAûSTRONGûPIPELINE discount margin of 100bp. IPTs on Monday REVOLVINGûCREDITûINû3PAINûANDû0ORTUGAL ûSAIDû “Supply has been running a little below HADûBEENûBP BP proceeds will go towards the proposed EXPECTATIONSûINûTHEûLASTûFEWûWEEKSûANDûTHEû !LLû40-&ûTRANCHESûWEREûPRICEDûBELOWûPARû PURCHASEûOFûTHEûûSTAKEû!NETOûITûDOESûNOTû market feels quite stable so there should be 4HEûaMû#LASSû"SûCAMEûATûBP ûTHEû already own in the company. AûFEWûMOREûDEALSûCOMING vûAûTHIRDûINVESTORû aMû#LASSû#SûATûBP ûTHEûaMû#LASSû The shares will be bought for an said. $SûATûBPûANDûTHEûaMû#LASSû%SûATûBP undisclosed sum from Banco Popular h"UTûAûLOTûOFûNAMESûHAVEûBEENûTRADINGûATû 4HEûaMûPORTFOLIOûCOMPRISESûlRST Espanol. NEGATIVEûLEVELS ûSOûGENERALLYûPEOPLEûAREûVERYû RANKINGûMORTGAGES ûOFûWHICHûûAREû 7HILEûANûINVESTORûRECKONEDûTHEûTRADE û CAUTIOUSûRIGHTûNOWv BUY TO LETû3EASONINGûISûAROUNDûûYEARS ûTHEû RATEDû" "" ûRINGSûAûFEWûALARMûBELLSûGIVENûITû WEIGHTEDûAVERAGEûORIGINALû,46ûISûûANDû ISûAû0)+ûTOGGLEûFROMûAû3PANISHûBANK ûANOTHERû NEXANS AIMS FOR SENIOR UNSECURED CURRENTûINDEXEDû,46ûISûû3OMEûûOFû was more optimistic. loans are current (less than one month in h3PAINûHASûBEENûAûGROWINGûECONOMY ûINû NEXANS is on the road from Monday until arrears). RECOVERYûMODEû!NDû7I:INKûSEEMSûTOûBEûTHEû 7EDNESDAYûFORûAûõMûlVE YEARûSENIORû Barclays and Morgan Stanley WEREûJOINTûLEADS MARKETûLEADERûINûTHISûNICHE ûHIGH GROWTHû unsecured transaction. BUSINESS vûTHEûSECONDûINVESTORûSAID 4HEû&RENCHûCABLEûMANUFACTURER û""û h3OûITSûAûMATTERûOFûHOWûCONSERVATIVEûTHEû STABLE ûBYû30 ûHASûPICKEDûBNP Paribas ûCredit EMEA ABS underwriting is and what the asset quality Agricoleû"$ ûANDûSociete GeneraleûASûJOINTû LOOKSûLIKEv bookrunners. FIRST GREEK AUTO ABS SOLD FOR HERTZ When assigning its rating to the notes last 0ROCEEDSûWILLûBEûUSEDûTOûlNANCEû FRANCHISEE AUTOHELLAS 7EDNESDAY û30ûSAIDûITûEXPECTSû7I:INKûTOû upcoming debt maturities and the BEûABLEûTOûCONTINUEûDELIVERINGûGOODûRETURNSû repayment of a facility agreement. 'REEKûCARûRENTALûCOMPANYûANDû(ERTZû ANDûPRESERVINGûADEQUATEûCAPITALISATIONûANDû 4HEûISSUEûISûEXPECTEDûTOûBEûRATEDû"" franchisee AUTOHELLAS has sold a €101m auto

36 International Financing Review July 28 2018 BONDS STRUCTURED FINANCE

LEASEû!"3 ûWHICHû30ûSAYSûISû'REECESûlRSTû BOTHûINûlXEDûRATEûFORMATûANDûPAYû û The bonds are backed by a €139m lease SECURITISATIONûFROMûAûNON lNANCIALû WHILEûTHEûõMû#LASSû!ûISûANû&2.ûWITHûAû PORTFOLIO ûWHICHûHASûANû MONTHûREVOLVINGû company. Stormharbour was arranger. COUPONûOFûBPûOVERûONE MONTHû%URIBORû period. Some €50m the portfolio comprises AUTOWHEEL SECURITISATION closed on )SSUEûPRICESûANDûAVERAGEûLIVESûWEREûNOTû RESIDUALûVALUESû!ûHIGHûûCOMPRISESûDIESELûCARS 4HURSDAY ûSELLINGûTHREEûTRANCHESûOFûSENIORû disclosed. !UTOHELLASûISûTHEûEXCLUSIVEûFRANCHISEEûINû NOTESûRATEDû" """nûBYû30ûANDû3COPE 4HEûRATEDûNOTESûGETûûCREDITû 'REECEûOFû(ERTZû4HEûNEWûISSUEûSECURITISESû 4HEûõMû#LASSû!ûANDûõMû#LASSû!ûAREû ENHANCEMENTûFROMûAûõMûUNRATEDû#LASSû* AROUNDûûOFûITSûLEASEûBOOK 30ûSAYSû!UTOHELLASûHASûAûhSOLIDûPRESENCEvû ALL EUROPEAN ISSUERS GLOBAL STRUCTURED FINANCE IN EUROS INûTHEû'REECEûAUTOûLEASEûMARKETû)TûSTARTEDû BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE OPERATINGûINûûANDûNOWûRANKSûSECONDûINû Managing No of Total Share Managing No of Total Share THEûCOUNTRYûWITHûAûûMARKETûSHAREû4HEû bank or group issues US$(m) (%) bank or group issues €(m) (%) COMPANYûREPORTEDûPOSITIVEûlNANCIALûRESULTSû 1 BAML 16 4,310.89 8.8 1 SG 6 2,906.52 11.5 OVERûTHEûPASTûûYEARS 2 SG 7 3,644.36 7.4 2 Credit Agricole 7 2,748.36 10.9 3 Lloyds Bank 13 3,557.59 7.2 3 UniCredit 8 1,874.41 7.4 TWO ITALIAN NPL ABS CLOSED 4 BNP Paribas 15 3,471.38 7.1 4 BNP Paribas 7 1,740.61 6.9 5 Credit Agricole 7 3,365.76 6.8 5 Commerzbank 3 1,648.06 6.5 Two Italian non-performing loan 6 Citigroup 13 3,154.50 6.4 6 BAML 4 1,461.65 5.8 SECURITISATIONSûCLOSEDûONû4HURSDAY ûWITHû 7 UniCredit 8 2,254.29 4.6 7 Cooperatieve Rabobank 2 1,355.98 5.4 BANCA NAZIONALE DEL LAVORO issuing JUNO 1 SRL 8 Commerzbank 3 1,996.65 4.1 8 Morgan Stanley 4 1,052.00 4.2 and C.R. ASTI issuing MAGGESE SRL. 9 Morgan Stanley 7 1,899.76 3.9 9 JP Morgan 2 1,013.91 4.0 BNL’s Juno 1 issued €163.9m of notes 10 Cooperatieve Rabobank 2 1,640.72 3.3 10 Citigroup 4 992.76 3.9 backed by a portfolio with a gross book Total 75 49,205.60 Total 40 25,282.39 VALUEûOFûõMû!ROUNDûûBYû'"6 ûAREû Includes securitisations, credit-linked notes (Euro, foreign, global and Includes securitisations, credit-linked notes (Euro, foreign, global and SECURED ûWITHûûOFûTHOSEûLOANSûBACKEDûBYû domestics) and excludes CDOs. domestics) and excludes CDOs. RESIDENTIALûPROPERTIESû4HEûSERVICERûISû0RELIOSû Source: Thomson Reuters SDC code: B16n Source: Thomson Reuters SDC code: B16g #REDITû3ERVICING

NEW ASSET–BACKED SUMMARY DETAILS: WEEK ENDING 27/7/2018 Issuer Amount (m) WAL Coupon (%) Bookrunner(s) Rating Asset type AutoWheel Securitisation DAC €25 – 2.750 StormHarbour NR/BBB–/NR ABS AutoWheel Securitisation DAC €32.3 – 1mE+285bp StormHarbour NR/BBB–/NR ABS AutoWheel Securitisation DAC €15 – 2.75 StormHarbour NR/BBB–/NR ABS AutoWheel Securitisation DAC €28.8 – Variable StormHarbour NR/NR/NR ABS Bluemtn Fuji Eur Clo III €207 – E+90bp Barclays Capital Aaa/NR/AAA CLO Bluemtn Fuji Eur Clo III €10 – 1.400 Barclays Capital Aaa/NR/AAA CLO Bluemtn Fuji Eur Clo III €32.9 – E+170bp Barclays Capital Aa2/NR/AA CLO Bluemtn Fuji Eur Clo III €23.1 – E+225bp Barclays Capital A2/NR/A CLO Bluemtn Fuji Eur Clo III €17.5 – E+313bp Barclays Capital Baa2/NR/BBB CLO Bluemtn Fuji Eur Clo III €24.5 – E+526bp Barclays Capital Ba2/NR/BB CLO Bluemtn Fuji Eur Clo III €10.5 – E+707bp Barclays Capital B2/NR/B– CLO Bluemtn Fuji Eur Clo III €0.5 – na Barclays Capital NR/NR/NR CLO Bluemtn Fuji Eur Clo III €32.95 – na Barclays Capital NR/NR/NR CLO Connect Plus £892 – 2.607 Barclays/HSBC/Lloyds NR/A+/NR ABS EVGRN 2018-2 US$750 1.96 1mUSL+35bp TD Securities/JP Morgan/BAML NR/AAA/AAA ABS NHLT 2018-2 US$205.718 1.41 3.188 Barclays/Credit Suisse/Nomura Aaa/NR/NR RMBS NHLT 2018-2 US$55.386 2.49 3.552 Barclays/Credit Suisse/Nomura Aa3/NR/NR RMBS NHLT 2018-2 US$15.825 2.78 3.817 Barclays/Credit Suisse/Nomura A3/NR/NR RMBS NHLT 2018-2 US$15.824 2.94 4.171 Barclays/Credit Suisse/Nomura Baa3/NR/NR RMBS NHLT 2018-2 US$11.078 3.11 5.060 Barclays/Credit Suisse/Nomura Ba3/NR/NR RMBS NHLT 2018-2 US$12.659 3.28 6.000 Barclays/Credit Suisse/Nomura NR/NR/NR RMBS NZES 2018-FNT2 US$184.4 3.09 3.790 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS NZES 2018-FNT2 US$45.394 3.09 4.090 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS NZES 2018-FNT2 US$74.604 3.09 4.680 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS NZES 2018-FNT2 US$98.596 3.09 4.920 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS NZES 2018-FNT2 US$91.344 3.09 5.120 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS NZES 2018-FNT2 US$74.107 3.09 5.950 Citigroup/JP Morgan/BAML/Credit Suisse NR/NR/NR RMBS OSCAR US Funding IX LLC US$65.6 – na Mizuho Securities P1/NR/NR ABS OSCAR US Funding IX LLC US$97.6 – na Mizuho Securities Aaa/NR/NR ABS OSCAR US Funding IX LLC US$92.2 – na Mizuho Securities Aaa/NR/NR ABS OSCAR US Funding IX LLC US$115.3 – na Mizuho Securities Aaa/NR/NR ABS Pepper Residential Sec Tr No. US$250 1.7 1mUSL+88bp Citigroup/NAB Aaa/AAA/NR RMBS VMOT 2018-A US$300 3.0 1mUSL+52bp Citigroup/Mizuho Aaa/NR/AAA ABS

International Financing Review July 28 2018 37 GLOBAL SECURITISATIONS IN STERLING SECURITISATIONS – ALL EUROPEAN RMBS ALL INTL ISSUERS (EXCLUDING SELF-FUNDED) 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 £(m) (%) bank or group issues €(m) (%) bank or group issues US$(m) (%) 1 Lloyds Bank 13 1,790.02 16.4 1 BAML 14 2,688.40 13.4 1 JP Morgan 68 16,824.78 9.7 2 BAML 13 1,528.17 14.0 2 Lloyds Bank 9 2,210.78 11.0 2 Citigroup 71 15,022.76 8.7 3 Citigroup 8 1,112.41 10.2 3 BNP Paribas 7 1,590.44 7.9 3 Credit Suisse 65 14,142.40 8.2 4 MUFG 1 1,006.20 9.2 4 Citigroup 8 1,587.90 7.9 4 BAML 63 13,894.50 8.0 5 BNP Paribas 8 857.92 7.9 5 Morgan Stanley 7 1,571.55 7.9 5 Wells Fargo 50 12,070.22 7.0 6 Natixis 5 662.92 6.1 6 JP Morgan 4 1,393.88 7.0 6 Deutsche Bank 51 10,264.99 5.9 7 HSBC 5 607.13 5.6 7 Cooperatieve Rabobank 2 1,355.98 6.8 7 Goldman Sachs 31 8,633.23 5.0 8 Deutsche Bank 3 532.57 4.9 8 SG 1 1,074.57 5.4 8 Barclays 36 8,520.29 4.9 9 Morgan Stanley 3 455.44 4.2 9 Credit Agricole 1 1,015.28 5.1 9 Morgan Stanley 26 6,563.18 3.8 10 JP Morgan 2 333.75 3.1 10 NatWest Markets 3 607.45 3.0 10 SG 12 5,069.52 2.9 Total 32 10,925.70 Total 36 20,014.21 Total 319 172,909.42

Including Euro, foreign, global and domestics, excluding CDOs. Including Euro, foreign, global and domestics, excluding CDOs. Includes securitisations, PFI bonds and credit-linked notes. Excludes US global ABS/MBS, CDOs and self funded issues.

Source: Thomson Reuters SDC code: B16i Source: Thomson Reuters SDC code: B10a Source: Thomson Reuters SDC code: J10d

-AGGESEûHASûAûõMûPORTFOLIOûANDû DRYDEN 63 GBP CLO 2018 ûANNOUNCEDûINû-AY û /LDERû#24ûBONDS ûINCLUDEDûINûTHEûlRSTû issued €195.2m of asset-backed notes. The was priced on Friday afternoon by sole ONE ûAREûIMPACTEDûBYûPAYDOWNS û PORTIONûOFûSECUREDûLOANSûISû ûOFûWHICHû bookrunner NatWestû.AT7ESTûWASûJOINTû amortisation and often see multiple ûAREûBACKEDûBYûRESIDENTIALûPROPERTIESû PLACEMENTûAGENTûWITHû'REENS,EDGE UPGRADESûnûALLûOFûWHICHûCANûINmUENCEûPRICES 0RELIOSûISûSERVICER -ARGINSûWEREûWELLûWIDEûOFûEQUIVALENTû 4HEû#24XûAGGREGATEûnûWHICHûREFERENCESûALLû TRANCHESûINûEUROSû4HEûDEALSûaMû4RIPLEû CRT bonds issued since 2013 – had a !SûCAMEûATûBPûOVERû,IBOR ûVERSUSûBPû WEIGHTEDûAVERAGEûMARKETûVALUEûOFûMOREûTHANû EMEA CLO OVERû%URIBORûFORûEURO DENOMINATEDû#,/û ûASûOFû*ULYû ûACCORDINGûTOû&ONTANILLA !DAGIOû6))ûWHICHûPRICEDûATûTHEûSAMEûTIME .EWERûBONDSûPRICEûCLOSERûTOûPAR ûWHICHû BLUEMOUNTAIN FUJI CLO PRICED $RYDENûALSOûISSUEDûAûaMûlXEDûRATEû4RIPLEû make them a closer comparable for bonds !ûATûû4HEû$OUBLEû!SûANDû3INGLEû!Sû priced in the primary market. BLUEMOUNTAIN FUJI MANAGEMENT priced WEREûINûSPLITûFORMATSûTOOû4HEû$OUBLEû!Sû h4HEûROLLINGûNEWûISSUESûVERSIONûOFû#24Xû õMû#,/ûNEWûISSUEûBLUEMOUNTAIN FUJI were a £29.1m FRN at plus 210bp and a EMULATESûCONTINUOUSûREINVESTMENTûINTOûTHEû EUR CLO IIIûONû4UESDAYûVIAûINITIALûPURCHASERû aMûlXEDûRATEûATû ûANDûTHEû3INGLEû!Sû LATESTûISSUES vû&ONTANILLAûSAID Barclays. WEREûAûaMû&2.ûATûPLUSûBPûANDûAû "YûSTICKINGûWITHûNEWERûNOTES ûTHEû#24Xû 4HEû!AA!!!û-OODYS&ITCH û&2.SûCAMEû aMûlXEDûRATEûATû 2.4ûINDEXûALSOûTRACKSûMOREûFREQUENTLYû ATûBPûOVERû%URIBOR ûWHILEûTHEû!A!!ûANDû -ARGINSûONûTHEûaMû4RIPLEû"S ûaMû traded and liquid securities. !!ûTRANCHESûWEREûPRICEDûATûBPûANDû $OUBLEû"SûANDûaMû3INGLEû"SûWEREûBP û 4HOUGHûNEW û#24ûBONDSûHAVEûGAINEDûINû BP ûRESPECTIVELY BPûANDûBP POPULARITYûAMONGûINVESTORSûLOOKINGûTOûBUYû 4HEû"AA"""ûANDûTHEûTWOûSUB INVESTMENTû The deal has a two-year non-call period MORTGAGEûBONDSûWITHOUTûGOVERNMENTû grade tranches were priced below par. The ANDûAûFOUR YEARûREINVESTMENTûPERIOD guarantees. Baa2/BBB tranche came with a discount CRT bonds were created after the MARGINûOFûBP ûTHEû"A""ûTRANCHEûATû MORTGAGEûCRISISûTOûHELPûREDUCEûTAXPAYERû BPûANDûTHEû""nûATûBP US MBS EXPOSUREûTOû&REDDIEûANDû&ANNIESûLARGEû The deal has a non-call period of 1.9 years mortgage portfolios. ANDûREINVESTMENTûPERIODûOFûûYEARSû0LEASEû NEW CRT INDEX ROLLS OUT The amount of CRT bonds outstanding see summary details table for the full capital has roughly doubled since the end of 2015 structure. "ONDûINVESTORSûHAVEûANOTHERûWAYûTOûGAUGEû WHENûVOLUMEûSTOODûATûABOUTû53BN û their performance in the burgeoning credit ACCORDINGûTOû3)&-!ûDATA AXA IM PRINTS ADAGIO VII risk transfer (CRT) bond market. "OTHû#24XûINDICESûTRACKûRETURNSûONûANû -ARKû&ONTANILLASû-&ûû#OûRELEASEDûLASTû AGGREGATEûBASIS ûANDûACROSSûUPPERû AXA INVESTMENT MANAGERSûPRICEDûõMû -ONDAYûAûSECONDûVERSIONûOFûITSûTOTALûRETURNû MEZZANINE ûLOWERûMEZZANINEûANDû ADAGIO VII CLO on Friday through arranger #REDITû2ISKû4RANSFERû2ETURNû4RACKINGû)NDEXû SUBORDINATEDûTRANCHES ûWHICHûCARRYûVARYINGû Goldman Sachs. The seniors came at 91bp #24X ûWHICHûWILLûTRACKûONLYû#24ûBONDSû degrees of risk. OVERûTHREE MONTHû%URIBOR ûINûTHEûMIDDLEûOFû issued in the past 12 months by FREDDIE MAC 90bp-92bp price guidance. and FANNIE MAE. MBS DEAL PRICINGS !TûTHEûOTHERûENDûOFûTHEûSTACKûTHEû$OUBLEû 4HISûINDEXûWILLûBEûINûADDITIONûTOûTHEûlRSTû "SûCAMEûATûAûDISCOUNTûMARGINûOFûBPûOVERû #24XûINDEXûnûTHATûTRACKEDûEVERYû#24ûBONDû It is a rare thing when a CMBS deal in the US ANDûTHEû3INGLEû"SûCAMEûATûBPûOVER ISSUEDûSINCEûû4HEûDEBUTûINDEXûLAUNCHEDû gets downsized. But that is what happened INû!PRILûTOûPROVIDEûAûBENCHMARKûFORûRETURNSû recently when a group of banks tried to sell PGIM SELLS FIRST POST-CRISIS across the roughly US$50bn CRT market. US$400m of bonds backed by the CHRISTIANA STERLING CLO 4HEûNEWûINDEXûnû#24Xû2OLLINGû.EWû)SSUESû MALL in Delaware. (RNI) – will more closely track new-issue The deal was in the market for about two PGIMûHASûPRICEDûTHEûlRSTûFULLYûSTERLINGû PERFORMANCE ûANDûGIVEûTHEûMARKETûAûCLEARERû weeks before it was priced. DENOMINATEDûLEVERAGEDûLOANû#,/ûSINCEûTHEû picture of CRT bonds issued in the past 12 "UTûBYûLATEûLASTûWEEK ûBarclays ûSociete lNANCIALûCRISIS months. Generale and Deutsche Bank had cut the deal’s

38 International Financing Review July 28 2018 BONDS STRUCTURED FINANCE

SIZEûTOû53MûTOûGETûITûACROSSûTHEûlNISHû Citigroup are the mortgage loan sellers/ #ONNECTICUTû!VEû3ECURITIESûCAS 2018-C05). line. originators. Bank of America Merrill Lynch structured the Retail woes made the mall-backed deal a #OLLATERALûûCOMMERCIALûMORTGAGEûLOANSû deal and Nomura was co-lead manager and HARDERûSELLûWITHûINVESTORS ûAûBANKERûWITHû SECUREDûBYûûPROPERTIESûACROSSûûSTATES û JOINTûBOOKRUNNERû#O MANAGERSûWEREû knowledge of the trade said. ACCORDINGûTOûANû30ûPRE SALE Citigroup ûGoldman Sachs ûMorgan Stanley and 4HEûSECURITISATION ûCALLEDûBBCMS 2017-CHRS û Wells Fargo. was part of a bigger US$550m loan on the GOLDMAN SACHS MORTGAGE 2018-TWR #OLLATERALû-OREûTHANû ûSINGLE PROPERTY ûWHICHûWASûSLATEDûTOûBEûPARCELLEDû GOLDMAN SACHS MORTGAGE priced a new family mortgage loans with an aggregate out into one or more future CMBS commercial mortgage pass-through GSMS outstanding unpaid principal balance of TRANSACTIONS ûACCORDINGûTOûAû+"2!ûPRESALE 2018-TWR. Goldman Sachs was lead underwriter. APPROXIMATELYû53BNû4HEûLOANSûINûTHISû TPL Property Owner LP is the mortgage loan REFERENCEûPOOLûHAVEûORIGINALûLOAN TO VALUEû CMBS PRICED borrower. RATIOSûOFû ûANDûWEREûACQUIREDûFROMû #OLLATERALû#ONSISTSûOFûONEûLOANûSECUREDûBYû $ECEMBERûûTHROUGHûTOû-ARCHû BBCMS 2018-CHRS ONEûMIXED USEûPROPERTYûINû4OWERû0LACE ûAû ,ARGESTûTRANCHEû#LASSû- û53Mû !FlLIATESûOFû2%)4ûGENERAL GROWTH PROPERTIES SQûFTûOFlCEûTOWERûANDûADJACENTûRETAILû RATEDû""ûPRICEDûATûONE MONTHû,IBORûPLUSû and real estate fund the MORGAN STANLEY PRIME PLAZAûLOCATEDûINû!TLANTA û'EORGIA ûACCORDINGû 235bp PROPERTY FUND (PRIME) priced a downsized TOûANû30ûPRE SALEûREPORT 53Mû3!3"û#-"3ûTRANSACTION ûCALLEDû MFA FINANCIAL BBCMS 2018-CHRS. The deal was initially sized at MSC 2018-MP MFA FINANCIAL INCûPRICEDûAû!2EG3 û US$400m. Barclays ûSociete Generale America !ûNEWû53Mû#-"3ûTRANSACTIONû US$236m seasoned RPL/NPL residential MBS and Deutsche BankûWEREûJOINTûBOOKRUNNERS called MORGAN STANLEY CAPITAL TRUST 2018-MP has transaction called MFRA 2018-NPL2. Credit Suisse co-lead managers. been priced. Morgan Stanley was sole was sole bookrunner. #OLLATERALû"ORROWERSûINTERESTSûINûTHEû manager and bookrunner. #OLLATERALûPOOLûCONSISTSûOFû û.0,û MûSQUAREûFOOTû#HRISTIANAû-ALL ûAûSUPERû #OLLATERALû"ENElCIALûOWNERSHIPûINûAû mortgage loans. REGIONALûMALLûLOCATEDûINû.EWARK û$ELAWARE PORTIONûOFûANûINTEREST ONLY û YEARûlXED ,ARGESTûTRANCHEû#LASSû! û53Mû ,ARGESTûTRANCHEû#LASSû!û53Mû rate whole loan secured by leasehold YEARû7!,ûPRICEDûATûAûûYIELD YEARû7!,ûRATEDû4RIPLEû! ûPRICEDûATûSWAPSû INTERESTSûINûANûAPPROXIMATELYû ûSQûFTû plus 105bp. PORTFOLIOûOFûEIGHTûURBANûRETAILûANDûOFlCEû NATIONSTAR HECM PROPERTIESûLOCATEDûINû.9 û-! û$# û#!ûANDû&, NATIONSTAR MORTGAGE priced a US$316.49m BANK 2018-BNK13 ,ARGESTûTRANCHEû#LASSû!û53Mû RMBS for Nationstar HECM Loan Trust (NHLT !û53Mû#-"3ûCONDUITûNON AGENCYû YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû 2018-2). BarclaysûSTRUCTURED ûCredit Suisse and transaction called BANK 2018-BNK13 was priced. SWAPSûPLUSûBP Nomura JOINTûBOOKRUNNERSû#O MANAGERû Wells Fargo ûMorgan Stanley and Bank of America Jefferies. Merrill LynchûWEREûCO LEADûMANAGERSûANDûJOINTû NCMS 2018-850T #OLLATERALû0OOLûINCLUDESû ûINACTIVEû BOOKRUNNERSû#O MANAGERûAcademy Securities !û53Mû#-"3ûDEALûBACKEDûBYûAû STOREYû HOMEûEQUITYûCONVERSIONûMORTGAGESû(%#-S û #OLLATERALûûLOANSûONûûPROPERTIESû OFlCEûBUILDINGûATûû4HIRDû!VENUEûINû and 99 real estate owned (REO) properties. )NITIALûPOOLûBALANCEû53 Manhattan has been priced. The loan to 4HEûSERVICERûFORûTHEûDEALûISû.ATIONSTARû ,ARGESTûTRANCHEû#LASSû!û53Mû BORROWERû(.!ûHADûAûHIGHûû,46 û Mortgage. YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû ACCORDINGûTOû30SûMETRICSû.ATIXISûLEDûTHEû ,ARGESTûTRANCHEû#LASSû!û53Mû INTERPOLATEDûSWAPSûPLUSûBPûVERSUSû DEAL ûCALLEDûNCMS 2018-850T. YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû GUIDANCEûOFûBPûAREA %$3&ûPLUSûBPûVERSUSûGUIDANCEûATû%$3&û RMBS PRICED plus 50bp-55bp. BMARK 2018-B5 !ûNEWû53BNûNON AGENCYû#-"3ûCONDUIT û FANNIE MAE NEW RESIDENTIAL called BENCHMARK 2018-B5 MORTGAGE TRUST ûWASû FANNIE MAEûHASûPRICEDûAû53MûCREDITû NEW RESIDENTIALûPRICEDûAû53Mû-32û launched. JP Morgan ûDeutsche Bank and RISKûTRANSFERû2-"3ûFROMûITSû#!3ûSHELFûCALLEDû RESIDENTIALû-"3ûTRANSACTION ûCALLEDû.2:û

US ASSET-BACKED SECURITIES GLOBAL STRUCTURED FINANCE IN US$ STRUCTURED FINANCE – ALL INTL ISSUERS 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 Citigroup 120 43,947.39 17.6 1 Citigroup 184 66,691.83 16.0 1 JP Morgan 68 16,824.78 8.9 2 JP Morgan 70 19,564.31 7.8 2 JP Morgan 145 47,072.72 11.3 2 Citigroup 73 15,515.88 8.2 3 BAML 62 16,259.58 6.5 3 Wells Fargo 132 41,084.70 9.9 3 BAML 68 15,445.17 8.1 4 Deutsche Bank 58 13,968.43 5.6 4 Credit Suisse 123 39,459.04 9.5 4 Credit Suisse 65 14,142.40 7.4 5 RBC 46 13,122.29 5.2 5 BAML 119 37,656.70 9.1 5 Wells Fargo 55 13,252.29 7.0 6 Barclays 53 12,873.57 5.1 6 Goldman Sachs 74 26,483.98 6.4 6 Deutsche Bank 52 10,890.26 5.7 7 Wells Fargo 53 10,884.15 4.3 7 Morgan Stanley 64 22,303.14 5.4 7 Barclays 42 10,276.26 5.4 8 Mizuho 33 8,977.25 3.6 8 Barclays 77 20,272.69 4.9 8 Goldman Sachs 32 8,825.50 4.6 9 Credit Suisse 40 7,445.00 3.0 9 Deutsche Bank 77 19,012.42 4.6 9 Morgan Stanley 30 7,669.40 4.0 10 Goldman Sachs 30 6,919.54 2.8 10 RBC 55 16,274.17 3.9 10 RBC 23 6,059.33 3.2 Total 437 250,405.64 Total 763 415,882.77 Total 348 189,850.07

Excludes MBS. Including securitisations (Euro, foreign, global and domestics, excluding Includes securitisations, PFI bonds, self-funded issues and credit-linked CDOs) and PFI bonds. notes. Excludes US global ABS/MBS and CDOs.

Source: Thomson Reuters SDC code: F14 Source: Thomson Reuters SDC code: B16b Source: Thomson Reuters SDC code: J10c

International Financing Review July 28 2018 39 (NZES) 2018-FNT2. Citigroup structured, JP GLOBAL CDOs ALL EUROMARKET CDOs Morgan ûBank of America Merrill Lynch and BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE Credit Suisse WEREûJOINTûBOOKRUNNERS Managing No of Total Share Managing No of Total Share #OLLATERALû3ECUREDûBYûASSETSûCONSISTINGû bank or group issues US$(m) (%) bank or group issues US$(m) (%) PRIMARILYûOFûMORTGAGEûSERVICINGûRIGHTSû 1 Citigroup 62 31,617.89 27.4 1 Citigroup 17 7,711.98 14.1 owned by NRM. 2 Morgan Stanley 9 4,690.39 4.1 2 Morgan Stanley 6 3,055.09 5.6 ,ARGESTûTRANCHEû#LASSû!û53Mû 3 Deutsche Bank 7 3,573.68 3.1 3 BAML 9 3,031.79 5.5 YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû 4 Credit Suisse 8 3,514.72 3.0 4 Credit Suisse 7 2,907.72 5.3 interpolated swaps plus 90bp. 5 BAML 10 3,506.54 3.0 5 BNP Paribas 8 2,611.23 4.8 6 JP Morgan 6 3,012.51 2.6 6 Deutsche Bank 4 2,207.16 4.0 PEPPER RESIDENTIAL 7 BNP Paribas 8 2,611.23 2.3 7 JP Morgan 4 2,194.86 4.0 PERMANENT CUSTODIANS LTD priced a US$250m 8 Barclays 7 1,573.24 1.4 8 Barclays 7 1,573.24 2.9 non-conforming and prime RMBS 9 Greensledge CM 4 1,505.13 1.3 9 Goldman Sachs 4 1,470.33 2.7 TRANSACTION ûCALLEDû0EPPERû2ESIDENTIALû 10 Goldman Sachs 4 1,470.33 1.3 10 Wells Fargo 5 1,062.82 1.9 Securities Trust No 21 (PRST NO.21). Citigroup Total 229 115,258.12 Total 113 54,736.54 and NABûJOINTûBOOKRUNNERSû$EALûALSOû Including Euro, foreign, global, US domestics. Excludes global and domestic. INCLUDEDû!USTRALIAûDOLLARûTRANCHES ,ARGESTûTRANCHEû#LASSû! Uû53Mû Source: Thomson Reuters SDC code: B12 Source: Thomson Reuters SDC code: J11 YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû ONE MONTHû,IBORûPLUSûBP interest from insurance companies to Single tranche: #LASSû!û53Mû opportunity funds to clients with a YEARû7!,ûRATEDû!!!û$"23 ûPRICEDûATû RENEWABLE ENERGYûFOCUS ûTHEûPERSONûSAID interpolated swaps plus 125bp. US ABS h7EûEXPECTûMOREûOFûTHESEûDEALSûINûTHEû FUTURE vûTHEûPERSONûSAID COMMONBOND CLEAN FUND’S DEBUT COMMERCIAL 4HEû#LEANû&UNDûDEALûCOMESûJUSTûAûMONTHû COMMONBOND INCûPRICEDûAû53Mû PACE ABS after California adopted more stringent PRIVATEûSTUDENTûLOANû!"3ûTRANSACTION ûCALLEDû ENERGYûEFlCIENCYûSTANDARDSûFORûHOMESûANDû CommonBond Student Loan Trust (CBSLT California-based lender CLEAN FUND priced a COMMERCIALûBUILDINGS ûWHICHûCOULDûBEûAû 2018-B-GS). Goldman Sachs structured the deal 53MûSECURITISATIONûnûTHEûlRSTûRATEDû BOONûFORûTHEûFUTUREûOFû0!#% ANDûWASûAûJOINTûBOOKRUNNERûWITHûBarclays û DEALûOFûITSûKINDûTOûPOOLûENERGY SAVINGûTAXû 4HEûREQUIREMENTS ûWHICHûGOûINTOûEFFECTûATû Citigroup and Guggenheim. liens on commercial buildings. THEûSTARTûOFû ûWILLûCALLûONûALLûNEWû #OLLATERALû0RIVATEûSTUDENTûLOANS 4HEûBONDûDEAL ûRATEDû4RIPLEû!ûBYû$"23 û residential homes to include solar ,ARGESTûTRANCHEû#LASSû! û53Mû BUNDLEDûUPûûPROPERTY ASSESSEDûCLEANû installations and for healthcare buildings to YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû ENERGYû0!#% ûTAXûLIENSûONûBUILDINGSûINûSIXû COMPLYûWITHûNEWûENERGYûEFlCIENCYû interpolated swaps plus 63bp. states. standards. 0!#%ûLIENSûHELPûPROPERTYûOWNERSûlNANCEû h0!#%ûPROGRAMMESûSTANDûTOûBENElTûASû DISCOVER BANK BUILDINGûIMPROVEMENTS ûFROMûINSTALLINGû BUILDERSûLOOKûFORûlNANCINGûALTERNATIVESûTOû DISCOVER BANK priced an upsized US$900m ENERGY SAVINGûAPPLIANCESûTOûMAKINGûSEISMICû PAYûFORûTHESEûNEWûENERGYûEFlCIENCYûANDû FROMû53M ûCREDITûCARDû!"3 ûCALLEDû RETROlTS ENERGYûRENEWALûREQUIREMENTS vû-ORNINGSTARû DISCOVER CARD EXECUTION NOTE TRUST (DCENT) 4HEûLIENSûTYPICALLYûAREûREPAIDûINûlVEûTOûû said in a related report. SERIES 2018-A4. RBC structured the deal and YEARS ûACCORDINGûTOûTHEû$"23ûPRE SALE WASûAûJOINTûBOOKRUNNERûWITH MUFG. !NDûWHILEûTHEû#LEANû&UNDûBONDSûCAMEû OTHER DEALS GROW #OLLATERALû#REDITûCARDûPAYMENTS WITHûAûLONGû YEARûWEIGHTEDûAVERAGEûLIFE û %LSEWHEREûINû!"3 ûDEALûVOLUMEûWASûRATHERû 3INGLEûTRANCHEû#LASSû!û53Mû the deal still hit its pricing target of MUTED ûWITHûONLYûAûHANDFULûOFûNAMESû YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûINûLINEû interpolated swaps plus 125bp to yield coming after a US$15bn deluge of supply hit with guidance at interpolated swaps plus ûACCORDINGûTOûAûPERSONûWITHû the prior week. 23bp. knowledge of the trade. 3TILL ûMANYûDEALSûTHATûDIDûEMERGEûWEREû $IRECTûCOMPARABLEû$#%.4û !û “I think this is a good signal to the market able to grow. û53BNû YEARû7!,ûRATEDû THATûCOMMERCIALû0!#%ûCANûGETûDONE vûAûPERSONû !UTOûLENDERûWORLD OMNI increased its bond 4RIPLEû!ûPRICEDûATûINTERPOLATEDûSWAPSûPLUSû with knowledge of the transaction told IFR. SALEûTOû53BNûFROMûJUSTûUNDERû53M BP “There is a ton of demand for these types TORONTO-DOMINION increased the size of its OFûBONDSv %VERGREENûCREDITûCARDûDEALûTOû53MûFROMû ENTERPRISE FLEET FINANCING 4HEûDEBUTûDEAL ûCALLEDûCLEAN PACE 2018-1 û 53M ûANDûCARûRENTALûCOMPANYû ENTERPRISE FLEET MANAGEMENT priced an TOOKûMOREûLEADûTIMEûTHANûTHEûTYPICALû!"3û ENTERPRISE grew its auto lease deal to US$1bn UPSIZEDû53BNûFROMû53M ûAUTOûmEETû deal. FROMû53M LEASEûTRANSACTION ûENTERPRISE FLEET FINANCING DBRS issued its bond pre-sale report on (EFF 2018-2). JP Morgan structured the deal and *ULYû ûANDûTHEûDEALûPRICEDûLASTû7EDNESDAYû US ABS DEAL PRICINGS WASûAûJOINTûBOOKRUNNERûWITHûHSBC ûRBC and through Credit Suisse. Wells Fargo. -AINSTREAMû!"3ûDEALSûOFTENûGOûMUCHû CLEANFUND COMMERCIAL #OLLATERALû.OTESûWILLûBEûSECUREDûBYû faster. DISCOVER BANKûLASTûWEEKûROLLEDûOUT û CLEANFUNDûPRICEDûAû53MûCOMMERCIALû payments on a pool of open and closed-end UPSIZEDûANDûPRICEDûITSû YEARû4RIPLEû!û 0!#%û!"3 ûCLEAN 2018-1 ûVIAûCredit Suisse. VEHICLEûmEETûLEASEûCONTRACTSûFORûCARS ûLIGHT rated US$900m credit card deal from #OLLATERALû0OOLûOFûû0!#%ûASSESSMENTSû DUTYûTRUCKSûANDûOTHERûVEHICLESûORIGINATEDûBYû 53M ûWITHINûAûMATTERûOFûHOURS AGAINSTûCOMMERCIALûPROPERTIESûINûSIXûSTATESû EFM. "UTûWHILEû#LEANû&UNDûTOOKûITSûTIME ûITûDIDû WITHûANû7!ûINTERESTûRATEûûANDû7!û ,ARGESTûTRANCHEû#LASSû! û53Mû ENDûUPûWITHûAûPOSITIVEûOUTCOME ûANDûDREWû original term of 22.9 years. YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû%$3&û

40 International Financing Review July 28 2018 BONDS STRUCTURED FINANCE

Clifford pledges more after CLO debut ASIA-PACIFIC Project loan securitisation shows potential of Reg S format

Singapore’s CLIFFORD CAPITAL laid out plans the city state as an infrastructure financing hub. subordinated tranche will be retained. to securitise more infrastructure debt after The Monetary Authority of Singapore, which had Initial guidance for the Class A tranche was breaking new ground last week with Asia’s first talked about an infrastructure debt take-out Treasuries plus 140bp–150bp; 185bp–195bp collateralised loan obligation backed by project facility since 2015, put it on its roadmap for the for the Class B tranche; and 315bp area for the finance borrowings. transformation of the financial industry last year. Class C tranche. Clifford Capital is the collateral The US$458m transaction, priced last Work began in earnest on this transaction manager. Wednesday, comprised multiple classes of around nine months ago, according to Premod US dollar-denominated senior secured notes Thomas, head of corporate strategy at Clifford REG S DEMAND backed by cashflows from a portfolio of project Capital. Investors looked at CLOs in the US market finance loans from across Asia-Pacific and the In sourcing the pool of loans, the structured to provide price comparisons, and added a Middle East. finance specialist looked to provide quality and premium over similar Triple A rated bonds. “The next step will be to keep the momentum diversification, while requiring banks to hold Sources close to the deal said that investors took going and do a follow-up transaction as soon on to a portion of the loans to ensure their time to examine the structure and seek internal as possible, and build this over time into a very interests were aligned. Time was also spent approvals, given that it was the first of its kind significant asset class,” said Clive Kerner, CEO of discussing the structure with the rating agency from the region, but bookbuilding started with Clifford Capital. and educating investors on this new kind of healthy anchor demand, following a thorough He estimated that a similar transaction transaction. pre-marketing process. could follow in the next 12–18 months, with the Projects underlying the loans needed to be The bonds were offered under Reg S, meaning minimum size likely to be around US$500m. complete, or close to completion, with loans that onshore US investors, traditionally the “The focus for now is on establishing this asset denominated in US dollars to avoid a currency biggest market for CLOs, could not participate. class,” he said. mismatch and with a floating rate. “A lot of accounts that would have looked Clifford, in which Singapore state investment More than 55 loans were considered for at this couldn’t get involved, so that was a company Temasek Holdings has a 40.5% stake, the portfolio initially, before this was whittled challenge, but it shows that the Reg S market sold three tranches of notes through issuing down to 37 loans covering 30 projects in Asia is developed enough to handle this kind of vehicle Bayfront Infrastructure with ratings and the Middle East. Many of the loans have transaction,” said a source close to the deal. ranging from Aaa to Baa3 and weighted average credit support from export credit agencies or Asian investors bought 65% of the paper, of lives of 3.7 to 9.8 years. multilateral institutions. which 26% went to Singapore-based accounts. As well as giving institutional investors access A US$320.6m Class A tranche, with an Europe took 23% and the Middle East 12%. to a new asset class, the transaction aims to expected rating of Aaa (Moody’s), was priced Bank treasuries booked 33%, insurers 22%, free up bank balance sheets. The proceeds from at six-month Libor plus 145bp with a weighted asset managers 21%, pension funds and the issue will be used to acquire a portfolio of average life of 3.7 years and an expected endowments a combined 17%, and private banks collateral obligations from Clifford Capital, DBS, maturity of 7.4 years; a US$72.6m Class B and family offices a combined 7%. HSBC, MUFG, SMBC and Standard Chartered. tranche rated Aa3 was priced at 195bp over with Citigroup and Standard Chartered were joint a WAL of 8.6 years and expected maturity of 9.4 global coordinators. DBS, HSBC and SMBC NINE MONTHS’ WORK years; and a US$19.0m Class C rated Baa3 was Nikko were joint bookrunners, and MUFG was The transaction had the encouragement of the priced at 315bp over with a WAL of 9.8 years and co-manager. Singapore government, which wants to promote expected maturity of 10.4 years. A US$45.8m Daniel Stanton

PLUSûBPûVERSUSûGUIDANCEûATû%$3&ûPLUSû TORONTO-DOMINION BANK 3INGLEûTRANCHEû !û53Mû 35bp. TORONTO-DOMINION BANKûPRICEDûAûmOATING RATEû YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû $IRECTûCOMPû%&&û û û#LASSû 53MûUPSIZEDûFROMû53M ûCREDITû one-month Libor plus 52bp. ! û53Mû YEARû7!,ûRATEDû4RIPLEû!û card asset-backed securitisation called $IRECTûCOMPû6-/4û !û û priced at EDSF plus 34bp. EVERGREEN CREDIT CARD TRUST (EVGRN) SERIES 2018-1 53MûTHREE YEARû7!,ûRATEDû4RIPLEû!û VIAûJOINTûLEADSû ûTD Securities ûJP Morgan and priced at one-month Libor plus 50bp. PROGRESS RESIDENTIAL Bank of America Merrill Lynch. PROGRESS RESIDENTIALûPRICEDûAû53Mû #OLLATERALû#REDITûCARDûPAYMENTS WORLD OMNI lVE YEARûTERMûSINGLE FAMILYûRENTALû!"3û 3INGLEûTRANCHEû#LASSû!û53Mû WORLD OMNI priced a US$1.0bn (upsized from called PROG 2018-SFR2. Goldman Sachs YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûINûLINEûWITHû 53M ûPRIMEûAUTOûLOANû!"3ûCALLEDû STRUCTUREDûTHEûDEALûANDûWASûAûJOINTû guidance at one-month Libor plus 35bp. 7ORLDû/MNIû!UTOû2ECEIVABLESû4RUSTû bookrunner with Bank of America Merrill 7/!24û # ûMUFG structured the Lynch ûDeutsche Bank and Morgan Stanley. VOLVO FINANCIAL SERVICES DEALûANDûWASûAûJOINTûBOOKRUNNERûWITH Bank #OLLATERALû3INGLE FAMILYûRENTALS VOLVO FINANCIAL SERVICES priced a US$300m of America Merrill Lynch ûMizuho and Wells ,ARGESTûTRANCHEû#LASSû!û53Mû EQUIPMENTûmOORPLANû!"3ûTRANSACTION ûVOLVO Fargo. YEARû7!,ûPRICEDûATûSWAPSûPLUSûBP FINANCIAL EQUIPMENT MASTER OWNER TRUST, SERIES ,ARGESTûTRANCHEû#LASSû!û53Mû $IRECTûCOMPû02/'û 3&û û 2018-A (VMOT 2018-A). Citigroup structured the YEARû7!,ûRATEDû4RIPLEû!ûPRICEDûATû%$3&û #LASSû!û53Mû YEARû7!,ûPRICEDû DEALûANDûWASûAûJOINTûBOOKRUNNERûWITHû PLUSûBPûVERSUSûGUIDANCEûATû%$3&ûPLUSû ATûSWAPSûPLUSûBP Mizuho. 13bp-15bp.

International Financing Review July 28 2018 41 $IRECTûCOMPû7/!24û "û û 4HEû53Mû! UûNOTESûWITHûAû YEARû 4HEû! S û! U û! AûANDû!ûTRANCHESû #LASSû!û53Mû YEARû7!,ûRATEDû 7!,ûPRICEDûATûONE MONTHû,IBORûPLUSûBP û AREûALLûRATEDû!AA!!!û-OODYS30 û 4RIPLEû!ûPRICEDûATû%$3&ûPLUSûBP from guidance of 90bp–95bp area. 4HEû#LASSû" û# û$ û%ûANDû&ûNOTESûAREû 4HEû!Mû#LASSû! AûNOTESûWITHûAû YEARû RATEDû!! û! û""" û""ûANDû" ûRESPECTIVELY û 7!, ûANDûTHEû!Mû#LASSû!ûANDû!Mû BYû30 ASIA-PACIFIC MBS #LASSû"ûNOTES ûBOTHûWITHû YEARû7!,S ûPRICEDûATû CBA ûNAB and WestpacûWEREûJOINTûLEADû BP ûBPûANDûBP ûRESPECTIVELYû'UIDANCEû MANAGERSûFORûTHEû!USSIEûDOLLARûTRANCHES ûANDû PEPPER PRICES DUAL-CURRENCY RMBS WASûONE MONTHû""37ûPLUSûBPûAREA ûBPn Citigroup and NAB were leads for the US BPûAREAûANDûLOWûSûAREA ûRESPECTIVELY dollar component. Non-bank lender PEPPER GROUP has priced a 4HEû!Mû#LASSû# û!Mû#LASSû$ û !BN EQUIVALENTû53M ûNON !Mû#LASSû% ûANDû!Mû#LASSû&ûNOTESû MEMBERS EQUITY TAKES IOIS conforming offering of US dollar and PRICEDûATûONE MONTHû""37ûPLUSûBP û !USTRALIANûDOLLARû2-"3 ûTHROUGHûPEPPER PRS 21. BP ûBPûANDûBPû!NûUNRATEDû MEMBERS EQUITY BANK was last week taking The deal was increased from an initial !Mû#LASSû'ûNOTEûWASûRETAINED INDICATIONSûOFûINTERESTûFORûITSû!Mû SIZEûOFû!M 4HEû7!,ûFORûBOTHûTHEû#ûANDû$ûTRANCHESûISû 53M ûSMHL SERIES SECURITISATION FUND 4HEû!Mû#LASSû! SûNOTESûWITHûAû ûYEARSûFORûTHEû%ûTRANCHEûITûISûûYEARSûFORû 2018-1 RMBS. YEARû7!,ûPRICEDûATûONE MONTHû""37ûPLUSû THEû&ûTRANCHEûûYEARSûANDûFORûTHEû'û !û!Mû#LASSû!ûTRANCHEûWASûINDICATEDû BP ûFROMûGUIDANCEûOFûBPûAREA tranche 5.0 years. at initial price thoughts of one-month

GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 27/7/2018 Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%) SSAR US DOLLARS Jul 24 2018 IFC US$2bn Jul 31 2023 2.875 99.525 MS+2 / T+15.25 2.978

EUROS Jul 24 2018 ESM €4bn Jul 31 2023 0.1 99.94 MS-19 / B+37.3 0.112

Jul 25 2018 Hessen €500m Aug 2 2028 0.625 98.982 MS-16 / B+40.4 0.731 STERLING Jul 24 2018 EBRD £450m Jul 31 2023 3mL+5 100 3mL+5 -

Jul 26 2018 ADB £100m incr Dec 15 2023 1.375 100.301 G+30 1.312 (£550m) NON CORE Jul 20 2018 EIB TL100m Aug 1 2023 16 98.375 TGB-214 17.016 Jul 23 2018 EIB TL100m incr Sep 18 2021 8.75 79.147 TGB-195.5 17.999 (TL2.275bn) Jul 24 2018 KfW A$100m incr Mar 15 2028 3.2 100.369 ASW+38 / 3.155 (A$500m) ACGB+44.85 Jul 24 2018 EIB C$1bn Jul 30 2021 2.25 99.661 MS-4 / GOC+33 2.368

Jul 25 2018 Quebec C$500m incr Dec 1 2048 3.5 109.407 GOC+75 3.024 (C$10.5bn) Jul 26 2018 IBRD (Green) C$1bn Aug 3 2023 2.5 99.613 MS+2 / GOC+39.9 2.583

Jul 27 2018 IADB A$50m incr Jun 26 2029 3.15 - ASW+41 / - (A$175m) ACGB+53.25 Jul 27 2018 NWB A$50m incr Jul 17 2028 3.45 101.7 ASW+52 / 3.249 (A$875m) ACGB+59.115 CORPORATES US DOLLARS Jul 23 2018 Ashtead Capital US$600m Aug 1 2026 5.25 100 T+231 5.25

Jul 23 2018 Berkshire Hathaway Energy US$1bn Jan 15 2049 4.45 99.97 T+135 4.452

Jul 23 2018 SMBC Aviation Capital US$500m Jul 15 2023 4.125 99.86 T+133 4.156 Finance Jul 24 2018 The Narragansett Electric US$350m Aug 1 2028 3.919 100 T+97 3.919 Company Jul 25 2018 Aviation Capital Group US$300m Jul 30 2021 3mL+67 100 3mL+67 3mL+67

42 International Financing Review July 28 2018 BONDS SUMMARY DETAILS

""37ûPLUSûBPnBPûAREAûAû!Mû!"û !ûANDû"ûNOTESûCOMESûFROMûVARIOUSûSOURCES û TRANCHEûATûPLUSûBPûAREAûAû!Mû"û ASIA-PACIFIC ABS INCLUDINGûSUBORDINATIONûFROMû2MBMûOFû TRANCHEûATûBPnBPûAREAûAû!Mû#û SUBORDINATEDûUNRATEDûNOTES û2MBMûOFû TRANCHEûATûMIDûSûAû!Mû$ûTRANCHEûATû FAFC SET FOR AUTO LOAN ABS IN CHINA OVERCOLLATERALISATION ûANDûAûLIQUIDITYûRESERVEû MIDûTOûLOWûBPûAREAûANDûAû!Mû%û OFû2MBM ûACCORDINGûTOû&ITCHû&ITCHûHASû tranche at high 500s. FORD AUTOMOTIVE FINANCE (CHINA) ûAûWHOLLYû ASSIGNEDûEXPECTEDûRATINGSûOFû!! û!! ûANDû 4HEû!ûTRANCHEûISûRATEDû!AA!!!û OWNEDûSUBSIDIARYûOFû&ORDû-OTORû#REDIT ûISûSETû ! ûTOûTHEûTHREEûSENIORûTRANCHESûRESPECTIVELY -OODYS30 û4HEû!" û" û#ûANDû$ûTRANCHESû for its second trade of securities backed by "OTHûTHEû#LASSû!ûANDû!ûNOTESûAREûRATEDû!!!û AREûRATEDû!!! û!! û!ûANDû"""ûBYû30 û auto loans in China. BYû#HINAû#HENGXINûANDû#HINAû"OND ûWHILEûTHEû RESPECTIVELY ûWHILEûTHEû%ûTRANCHEûISûNOTû !û2MBBNû53M û#LASSû!ûlXED RATEû #LASSû"ûTRANCHEûISûRATEDû!! ûBYûTHEûTWOûAGENCIES RATEDû4HEûWEIGHTEDûAVERAGEûLIFEûFORûTHEû!"û TRANCHE ûAû2MBBNû#LASSû!ûmOATING RATEû !TûTHEûCUT OFFûDATEûOFû*UNEû ûTHEûCOLLATERALû TRANCHEûISûûYEARSûANDûFORûTHEûOTHERSûITûISû TRANCHEûANDûAû2MBMûmOATING RATEû#LASSû POOLûCONSISTEDûOFû ûAUTOûLOANSûWITHûAû ûYEARS B tranche will be offered to institutional balance of Rmb4bn. NABûISûARRANGERû)TûISûALSOûJOINTû INVESTORSûINû#HINASûINTERBANKûBONDûMARKET China Merchants Securities is lead lead manager with ANZ ûCBA and "OOKSûWILLûOPENûONû!UGUSTûû4HEûOFFERINGû underwriter and bookrunner on the Macquarie. WILLûALSOûBEûAVAILABLEûTOûOFFSHOREûINVESTORSû OFFERING ûWITHûHSBC Bank (China) and MUFG The transaction may launch as early as VIAûTHEû"ONDû#ONNECTûLINK Bank (China) ASûJOINTûLEADûUNDERWRITERSûHSBC this week. 4HEûCREDITûENHANCEMENTûFORûTHEû#LASSû! û ISûlNANCIALûADVISERûONûTHEûOFFERING

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

MS+4 area, 0-1 >US$3.9bn Aaa/AAA Barc/JPM/Miz/TD Amers 38%, EMEA 23%, Asia 39%. CB/ MS+3 area OI 61%, Bks 32%, AM 7%.

MS-18 area 1 >€9bn Aa1/-/AAA MS/SG/Uni Euro Area 48%, UK/Switz 34%, RoEur 7%, MEA 6%, Asia 5%. FM 39%, Bks 37%, CB/SWF 21%, Ins/PF 2%, Other 1%. MS-15 area 0-1 >€550m -/AA+ Deka/DB/GS/Helaba/Uni -

3mL+5 area(I/G) - >£450m Aaa/AAA/AAA Barc/Nomura/Scotia UK 53.1%, Asia 19.4%, EMEA 16.4%, US 11.1%. Bks/PB 64.5%, OI 19.6%, AM 5.3%, Corp 5.3%, Local govt 3.3%, Other 2%. G+30 area - - Aaa/AAA/AAA Nomura/RBC -

- - - Aaa/AAA/AAA Nordea - - - - Aaa/AAA/AAA Citi/Nordea -

ASW+38 area - - Aaa/AAA/Scope TD - AAA MS-4 area(I/G) -3 vs USD >C$1.2bn, 35 acs Aaa/AAA/AAA BMO/CIBC/RBC/Scotia EMEA 45%, Can 21%, Asia 20%, Amers 14%. Bks 52%, CB/OI 26%, AM 20%, Ins/PF 2%. - - - Aa2/AA-/AA-/AH NBF/RBC/TD -

MS+2 area(I/G) - >C$1.1bn Aaa/AAA BMO/Scotia/TD Can 59%, EMEA 28%, US 10%, Asia 3%. Bks/Tsy/Corp 44%, AM/Ins/PF 39%, CB/OI 17%. ASW+41 (the #) - - Aaa/AAA Nomura/RBC -

- - - Aaa/AAA HSBC -

5.25/5.50%, N/A US$2.7bn Ba2/BBB-/BBB- BAML/Barc/Citi/DB/HSBC/JPM/ - 5.25-5.375% Lloyds/MUFG/NatWest/Santan/ STRH/WFS T+150 area, 2 US$1.25bn A3/A-/BBB+ Citi/JPM/Scotia/WFS - T+135 (the #) T+155 area, 3 US$2.4bn BBB+/A- CA-CIB/Citi/GS/JPM/RBC/SMBC - T+135 (+/-2) T+115 area, -2 US$1.1bn A3/A- Barc/MS/MUFG - T+100 (+/-3) L+95/100, FRN US$1.7bn NR/A-/BBB+ Barc/BNPP/GS/JPM/Miz - 3mL+70 (+/-3)

International Financing Review July 28 2018 43 GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 27/7/2018 (CONTINUED) Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Jul 25 2018 Aviation Capital Group US$500m Aug 1 2025 4.125 98.64 T+145 4.353

Jul 25 2018 Burlington Northern Santa US$750m Dec 15 2048 4.15 99.25 T+112.5 4.194 Fe Jul 26 2018 SL Green Realty Corp US$350m Aug 16 2021 (Aug 2019) 3mL+98 100 3mL+98 3mL+98

EUROS Jul 25 2018 Prologis €700m Jan 5 2029 1.875 99.452 MS+100 / B+160.4 1.934

STERLING Jul 24 2018 Connect Plus (M25) Issuer £892m Mar 31 2039 (13.3yr WAL) 2.607 100 G+115 2.607

Jul 27 2018 Wales & West Utilities £300m Aug 3 2038 3 99.591 G+132 3.005

NON CORE Jul 23 2018 Power Corporation of C$250m Jul 31 2038 4.455 100 GOC+218 4.455 Canada Jul 26 2018 Canadian National Railway C$350m Jul 31 2028 3.2 99.542 OTC+97 3.254 Jul 26 2018 Canadian National Railway C$450m Jul 31 2048 3.6 98.5 GOC+136 3.683 FINANCIALS US DOLLARS Jul 23 2018 Fifth Third Bank/Cincinnati US$500m Jul 26 2021 3.35 99.98 T+63 3.359 OH Jul 23 2018 Fifth Third Bank/Cincinnati US$300m Jul 26 2021 3mL+44 100 3mL+44 3mL+44 OH Jul 23 2018 Fifth Third Bank/Cincinnati US$750m Jul 28 2025 3.95 100 T+103 3.95 OH Jul 23 2018 PNC Bank US$750m Jul 26 2028 4.05 99.76 T+112 4.08

Jul 24 2018 SunTrust Bank/Atlanta GA US$500m Aug 2 2022 (Aug 2021) 3.502 100 T+77 3.502

Jul 24 2018 SunTrust Bank/Atlanta GA US$300m Aug 2 2022 (Aug 2021) 3mL+59 100 3mL+59 3mL+59

Jul 24 2018 SunTrust Bank/Atlanta GA US$500m Aug 2 2024 (Aug 2023) 3.689 100 T+87 3.689

Jul 25 2018 Nationwide Building Society US$1bn Aug 1 2024 (Aug 2023) 4.363 100 T+155 4.363

Jul 26 2018 Comerica US$850m Jul 31 2023 3.7 99.99 T+85 3.702

EUROS Jul 25 2018 Goldman Sachs €1.5bn Nov 1 2028 2 99.427 MS+115 / B+167.2 2.063

SWISS FRANCS Jul 26 2018 BMO SFr450m Dec 30 2022 0.05 100 MS+22 / Eidg+49 0.05

NON CORE Jul 23 2018 TD A$400m Jul 26 2019 3mBBSW+46 100 3mBBSW+46 - COVERED BONDS None this week HIGH YIELD US DOLLARS Jul 20 2018 Comstock Resources US$850m Aug 15 2026 (Aug 2021) 9.75 95.988 T+762 10.5

Jul 23 2018 Bruin E&P Partners US$600m Aug 01 2023 (Aug 2020) 8.875 100 - 8.875

Jul 26 2018 Party City Holdings US$500m Aug 01 2026 (Aug 2021) 6.625 100 T+370 6.625

EUROS Jul 27 2018 Ceva €300m Aug 1 2025 (Aug 2021) 5.25 100 B+521 5.25

Jul 27 2018 WFS (Promontoria Holding €400m Aug 15 2023 (Aug 2020) 6.75 100 - 6.75 264 BV)

Jul 27 2018 WFS (Promontoria Holding €260m Aug 15 2023 (Aug 2019) E+625 100 E+625 - 264 BV)

44 International Financing Review July 28 2018 BONDS SUMMARY DETAILS

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

T+170 area, 2 US$1.2bn NR/A-/BBB+ Barc/BNPP/GS/JPM/Miz - T+150 (+/-5) T+135 area, 5.5 US$3.6bn A3/A+ JPM/MS/WFS - T+120 (+/-5) 3mL+115 area, FRN US$900m BBB-/BBB BMO/DB/TD - 3mL+98 (the #)

MS+115/120, 0 - A3/A- BNPP/GS/JPM - MS+100/105

G+125/130, - >£1.9bn -/A+ Barc/HSBC/Lloyds Ins 70%, FM 24%, PF 5%, Other 1%. G+115/120 G+145 area, - >£1.2bn -/A-/A- Barc/BNPP/NatWest - G+135 (+/-3)

GOC+220 (+/-2) - - -/A/-/A/Egan Jones BMO/RBC - BBB+ OTC+99 (+/-2) - - A2/A/-/A BMO/RBC/Scotia/TD - GOC+139 (+/-3) - - A2/A/-/A BMO/RBC/Scotia/TD -

T+75/80, 1 US$900m A3/A-/A- FITB/JPM/MS/RBC - T+65 (+/-2) L equiv, FRN US$2bn A3/A-/A- FITB/JPM/MS/RBC - 3mL equiv T+110/115, 1 US$2bn A3/A-/A- FITB/JPM/MS/RBC - T+105 (+/-2) T+130 area, 3 US$2.7bn A3/A- Citi/JPM/MS/PNC - T+115 (+/-3) T+87.5 area, 4 US$1bn Baa1/A-/A- Citi/CS/GS/STRH - T+80 (+/-3) 3mL+hi 60s, FRN US$700m Baa1/A-/A- Citi/CS/GS/STRH - 3mL equiv T+100 area, 4 US$1.2bn Baa1/A-/A- Citi/CS/GS/STRH - T+90 (+/-3) T+170 area, 3 US$3bn Baa1/BBB+ BAML/Barc/Citi/JPM - T+160 (+/-5) T+mid/hi 90s, 2 US$2bn A3/BBB+/A JPM/MS/RBC - T+85/90

MS+130 area 15 >€3.25bn A3/BBB+/A GS UK/Ire 37%, Ger/Aus/Switz 25%, Fr 12%, Asia 10%, Scandi 7%, S.Eur 5%, Other 4%. AM 57%, Ins/PF 18%, SSA 14%, Tsy/ PB 6%, HF 5%.

0.05% cpn/yld 0 SFr450m, 35 acs Aa2/A+/AA- UBS Swiss 99%, Other 1%. AM 78.3%, Tsy 12.5%, Ins 4.3%, PB 4%.

3mBBSW+46 area - - Aa1/AA- TD -

10% area, - - Caa1/B/B BAML/BMO/FITB/COSC/Regions/ - 10.5% Natx 8.25%/8.5%, - - B3/B+ JPM - 8.875% 6.75% area - - B1/B- GS/JPM/CS/DB/BAML/WFS/Barc/ - MUFG

Mid 5%s, - - B1/BB- GCs HSBC/CS, JBs BNPP/Citi/ING/ - 5.25%/5.5% Uni 6% area, - - B2/B GCs/phys BAML/Barc, JBs Citi/RBC/ - 6.5%/6.75%, ING 6.75% E+625/650 - - B2/B GCs/phys BAML/Barc, JBs Citi/RBC/ - ING

International Financing Review July 28 2018 45 GLOBAL DEBT: SOVEREIGN FOREIGN CURRENCY LONG-TERM RATINGS (27/7/2018)

Moody’s S&P Fitch Moody’s S&P Fitch Sovereign 1 2 3 4 5 6 Sovereign 1 2 3 4 5 6

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

46 International Financing Review July 28 2018 EMERGING MARKETS

China 48 Indonesia 50 Philippines 50 Singapore 50 South Korea 51 Bulgaria 52 Turkey 53 Saudi Arabia 53 Aruba 53 Brazil 54 Trinidad & Tobago 54

FRONT STORY AFRICA Eskom hopes to lure back investors Troubled power company hoping to regain investors’ trust

South African company ESKOM is hoping to any different to its recent past, as the over the past month or so - though how return to the international market for the company became the most visible symbol of much that has been driven by relative lRSTûTIMEûINûTHREEûYEARSûASûITûTRIESûTOûREGAINû the previous government’s mismanagement value rather than a belief in the Eskom (B2/ a footing with bond investors after a torrid of the economy. CCC+) story is less clear. few years bedevilled by management “The fear is it’s not a turnaround story, It will be interesting to see what sort of CRISES ûlNANCIALûLOSSESûANDûMOUNTINGûDEBTS but a solvency issue – Eskom’s emergency pick-up over the sovereign curve accounts The beleaguered power company is R20bn bridge loan from February comes will want on the guaranteed notes. South relying on a state guarantee to attract due at the end of August in addition to Africa’s September 2025s are trading at investors for an up to 10-year benchmark US$98.1m in coupon payments spread 5.05%, 50bp-55bp lower than where they US dollar bond, while also hoping that its over the month,” said Citigroup analysts were a month ago. REFORMûSTORYûWILLûLUREûSUFlCIENTûDEMANDû last week before the deal was announced. “I suspect it will price ‘relatively’ tight to for a possible non-guaranteed note. “We expect Eurobond issuance and the sovereign,” said Uday Patnaik, head of Last week Eskom said it had secured a ;DEVELOPMENTûlNANCEûINSTITUTIONS=ûTOûCOVERû EM debt at LGIM, who reckons the deal US$2.5bn loan from China Development the balance, but Eskom doesn’t have long should pull Eskom’s overall curve tighter Bank, which means that it has raised 62% to pick its medicine.” versus the sovereign. OFûITSûFUNDINGûNEEDSûFORûTHISûlNANCIALûYEAR )NûITSûLASTûlNANCIALûYEAR û%SKOMûREPORTEDûAû The roadshow begins on Monday and South Africa’s ruling party also wants loss of US$175m. It already has US$20bn of ends on Wednesday. Absa, Barclays, JP Morgan greater private-sector investment in the state-guaranteed debt. Drastic action is needed and Standard Bank will be the lead managers. company, and has not ruled out the for a company that has 47,000 employees. The guaranteed notes are expected to be possibility of splitting up its operations. Still, if recent secondary moves are rated Baa3 by Moody’s and BB by S&P. The Talk, though, is one thing, action is another anything to go by, then the signs are non-guaranteed bonds, if they happen, will and the deal’s success will come down to how decent. The company’s February 2025s be rated B3/CCC+. much investors believe Eskom’s future will be have gone from a mid-8s yield to 7.76% Sudip Roy Gazprom creates rouble market history

Russian issuer breaks new ground on domestic turf

Russia’s GAZPROM on Tuesday sold the biggest 2OUBLEûlNANCINGûWILLûLIKELYûBECOMEûEVENû BYû.AFTOGAZûTOûSEIZEûTHEû2USSIANûlRMSû corporate bond in the rouble market, more important for Russian issuers given the foreign assets. illustrating the depth of local liquidity. growing clamour in the US for stiffer It is due to risks that the proceeds would The state-owned oil and gas company issued sanctions against Russian entities and be frozen by Naftogaz that Gazprom stopped a Rbs40bn (US$650m) 8.10% note due July 2048 individuals. plans for a potential sterling issue in June, with a put option in July 2025. The deal priced Gazprom is exempt from sanctions and, in according to banking sources. at par with an effective yield to worst at 8.26%, theory, is the best-placed Russian issuer to No formal announcement was made for just 54bp over the sovereign’s curve. sell international debt. the transaction but it had long been “It was the largest corporate deal in Russia However, its strategy is complicated by a rumoured in the market. ever done in one go and also quite ambitious long-running dispute with Ukrainian state- Bankers say they don’t expect Gazprom to in terms of maturity for locals. It came at a owned Naftogaz over payments, a change tack anytime soon for an time when local rouble markets are far from consequence of the deterioration in relations international issue. “They’re not receptive to easy, with US rates going through a degree of between Russia and Ukraine. DISCUSSINGûSPECIlCûDEALS vûSAIDûTHEûBANKERû turbulence,” said Dmitry Gladkov, global A ruling by a Stockholm arbitration court away from the rouble transaction. HEADûOFûlNANCING ûATûRenaissance Capital, in February was meant to conclude the Another banker said Gazprom has plenty which was a lead on the deal along with dispute. of cash on its balance sheet so doesn’t have Gazprombank, Sberbank CIB and VTB Capital. But Naftogaz said Gazprom has not an urgent need to raise funds offshore. A banker away from the deal said it complied with the ruling, which obliged the The company has about US$24bn of cash, illustrated the depth of the local market. “So Russian company to resume gas supplies to INCLUDINGûDEPOSITS ûACCORDINGûTOûAûlRST QUARTERû much for extinguishing local liquidity,” he 5KRAINEûATûAûMARKETûREmECTIVEûPRICEûANDûTOû earnings presentation, of which 27% is in US said. “The local markets are incredibly liquid.” pay a US$2.6bn settlement. dollars and 16% in euros. Excluding deposits, The book topped Rbs49bn with more than Last month Gazprom won an interim its cash holdings are about US$15bn. 55 investors participating. appeal court ruling that suspends attempts Sudip Roy, Robert Hogg

International Financing Review July 28 2018 47 uncertainties, which include trade tensions “The outlook for the Asia credit market is WITHûTHEû53û)NûPARTICULAR ûITûSAIDûlNANCIALû DIFlCULTûTOûPREDICTûAMIDûGLOBALûECONOMICû ASIA-PACIFIC institutions should be guided to ensure that uncertainties: it is important to grab the ,'&6SûREASONABLEûlNANCINGûNEEDSûAREûMET window available for bond issuance,” the The People’s Bank of China has also banker said. CHINA INJECTEDûSIGNIlCANTûLIQUIDITYûINTOûTHEû 2ESEARCHûlRMû#REDIT3IGHTSûSAIDûTHATûMOSTûOFû lNANCIALûSYSTEMûANDûSAIDûITûWOULDûALLOWû its clients remain wary of the LGFV sector, GANSU LGFV PRINTS RARE BENCHMARK commercial banks to tap its medium-term preferring only to invest in higher-quality loans, helping them, among other things, to credits such as larger LGFVs with strong GANSU PROVINCIAL HIGHWAY AVIATION TOURISM increase investment in onshore bonds of BUSINESSûPROlLESûATûHIGHERûGOVERNMENTûLEVELS INVESTMENT GROUP, seizing upon improved lower-rated companies. “Nobody seemed keen to invest in the sentiment in Chinese credit, on Thursday In addition to better risk appetite, Gansu smaller LGFVs such as county-level entities. PRICEDû53MûOFûSENIORûNOTESûINûTHEûlRSTû Highway’s bookrunners also lined up Everyone admitted that the lack of visibility benchmark-sized US dollar bond from a SIGNIlCANTûANCHORûINTERESTûBEFOREûSENDINGû INûTHEûlNANCIALûSTRENGTHûANDûVIABILITYûOFû LOCALûGOVERNMENTûlNANCINGûVEHICLEûINû OUTûlNALûPRICEûGUIDANCEûONû4HURSDAYû most LGFVs was a challenge to investors,” months. morning. CreditSights wrote in a note. “The Chinese government’s recent shift “Anchor interest covered 70%-80% of the 'ANSUû(IGHWAYSûDEALûDREWûAûlNALûBOOKû towards a more accommodative policy deal size before we pushed out the deal,” of over US$475m from 35 accounts. By stance was supportive for the LGFV sector said the banker, and the improved investor type, 55% went to banks, 35% went and gave room for us to launch the deal,” sentiment also attracted other investors. to fund managers, and 10% went to private said a banker on the transaction. Another supporting factor was the relatively BANKS ûCORPORATESûANDûSECURITIESûlRMSû!û The 6.25% three-year notes were priced at sparse offshore bond supply from Gansu, a geographical breakdown was not available. 99.328 to yield 6.50%, unchanged from price north-central province, relative to other areas The proceeds will be used for business guidance. such as Jiangsu, Yunnan and Tianjin. development, including general corporate The Reg S issue offered a moderate 10bp– “The issuer is the only LGFV in Gansu purposes and debt repayment. 15bp new-issue concession, according to the province that has issued offshore bonds, Bank of China, Barclays and Citigroup were banker. The notes have expected ratings of meaning that supply from Gansu is limited,” global coordinators. They were also BBB–/BBB– (S&P/Fitch), in line with the the banker said. The importance of the bookrunners and lead managers along with issuer. issuer to the provincial government also Industrial Bank Hong Kong branch, China LGFV bonds have been hit by heavy sell- GIVESûINVESTORSûCONlDENCE ûTHEûBANKERûSAID Construction Bank (Asia), Tensant Securities, offs in the past few months as a number of Gansu Highway is the only enterprise China Citic Bank International, China Everbright LGFVs and state-owned enterprises have authorised by the provincial government to Bank Hong Kong branch and Guotai Junan defaulted on asset-management products manage and operate transport International. and trust loans. New US dollar issuance of infrastructure projects in the province. LGFVs has been partly closed since late )TûlRSTûTAPPEDûTHEûOFFSHOREûBONDûMARKETû GREENLAND TAPS 2021 FLOATERS April, with only a small number of private with US$500m three-year bonds in placements taking place. November 2016. It then priced €410m GREENLAND HOLDING GROUP ûTHEûlRSTûHIGH YIELDû But China’s recent easing measures have (US$480m) three-year bonds last November. Chinese property developer to issue US given impetus to the sector. LGFV bonds The banker said his bank was gauging DOLLARûmOATING RATEûBONDS ûHASûREOPENEDûTHEû have staged a broad-based rally because of interest in other potential LGFV issuers ûmOATERSûITûSOLDûLASTûMONTHûTOûRAISEûANû HOPESûTHATûlSCALûANDûMONETARY POLICYû before investors headed off on holiday. extra US$300m. adjustments will help ease the sector’s These include YIWU STATE-OWNED CAPITAL The additional bonds were sold at 100.02, lNANCIALûDIFlCULTIES OPERATION, rated Baa3 by Moody’s, and TIANJIN or three-month US dollar Libor plus 485bp, China’s State Council on Monday FREE TRADE ZONE INVESTMENT HOLDING GROUP, UNCHANGEDûFROMûlNALûPRICEûGUIDANCE unveiled plans to adopt a more vigorous rated Baa2/BBB+ (Moody’s/Fitch), by end-July Following the tap, the outstanding size of lSCALûPOLICYûTOûHELPûTACKLEûEXTERNALû or early August. the September 2021 senior unsecured Reg S notes, rated Ba2 by Moody’s, is US$550m. ALL INTL EMERGING MARKETS BONDS ALL INTL EMERGING MARKETS BONDS 4HEûTAPûATTRACTEDûlNALûORDERSûOFûMOREû BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE than US$800m from 62 accounts. Asia took Asia-Paciﬁc Managing No of Total Share 99% of the notes and Europe 1%. By investor Managing No of Total Share bank or group issues US$(m) (%) type, 53% went to fund managers and asset bank or group issues US$(m) (%) 1 Citigroup 155 36,498.93 9.8 managers, 33% went to banks and securities 1 HSBC 131 14,334.15 8.0 2 HSBC 184 30,460.15 8.2 lRMS ûûTOûSOVEREIGNûWEALTHûFUNDS ûANDûû 2 Citigroup 74 9,329.02 5.2 3 JP Morgan 95 22,927.00 6.2 to private banks and corporates. 3 Bank of China 98 8,835.66 4.9 4 Deutsche Bank 74 20,441.33 5.5 The Shanghai-based developer, rated Ba1/ 4 Standard Chartered 81 7,989.32 4.4 5 Standard Chartered 121 19,547.16 5.3 BB/BB–, plans to use the proceeds mainly for 5 Morgan Stanley 41 7,396.87 4.1 6 BNP Paribas 89 14,226.59 3.8 DEBTûRElNANCINGûANDûTHEûREMAINDERûFORû 6 BNP Paribas 58 6,893.22 3.8 7 BAML 67 11,141.89 3.0 general corporate purposes. 7 Credit Suisse 45 5,873.39 3.3 8 Morgan Stanley 56 10,750.63 2.9 Greenland Global Investment is the issuer 8 Citic 61 5,529.95 3.1 9 Credit Suisse 63 10,315.38 2.8 and Greenland Holding Group the guarantor. 9 UBS 56 5,154.60 2.9 10 Bank of China 102 10,295.56 2.8 BOC International was sole global 10 Credit Agricole 42 5,046.84 2.8 Total 617 371,831.97 coordinator as well as joint bookrunner and Total 402 180,074.98 Excluding equity-related debt. joint lead manager with China Industrial Excluding equity-related debt. Securities International, Haitong International and Source: Thomson Reuters SDC code: L4 Source: Thomson Reuters SDC code: L1 Orient Securities (Hong Kong) on the reopening.

48 International Financing Review July 28 2018 EMERGING MARKETS ASIA-PACIFIC

YUZHOU SELLS US$425m notes due 2020, bringing the total issue size Fixed income investor meetings in ADDITIONAL BONDS to US$425m. Singapore and Hong Kong and a global The new bonds were priced at 7.45%, in investor call began on Wednesday for the YUZHOU PROPERTIES, rated Ba3/BB–/BB–, has LINEûWITHûlNALûGUIDANCEûBUTûTIGHTERûTHANû proposed senior unsecured notes. tapped its 7.90% May 11 2021 senior notes initial guidance of 7.70% area. The issue size The Reg S notes, if issued, are expected for US$425m to bring the total issue size to was capped at US$175m. to be rated Baa1/BBB (Moody’s/S&P). US$625m. Asia accounted for 98% of the Reg S notes, Hong Kong-listed CMPort has a portfolio The additional Reg S notes were sold at and the rest went to Europe. Fund and asset of 32 ports in 17 countries and regions, ûTOûYIELDû ûUNCHANGEDûFROMûlNALû managers bought 76%, banks 16% and according to its website. guidance. private banks 8%. 4HEûTAPûDREWûlNALûORDERSûOFûMOREûTHANû The notes have expected ratings of B2/B/ CHINA ISSUERS EYE OFFSHORE BONDS US$1.5bn from 147 accounts. Of the notes, BB–. 96% went to Asia and 4% to Europe. By The Hong Kong-listed Chinese real estate Chinese commercial lender ZHONGYUAN BANK investor type, 81% were fund managers, 14% company plans to use the proceeds to and 12 other issuers have registered with BANKSûANDûSECURITIESûlRMS ûûPRIVATEû RElNANCEûDEBTûANDûFORûGENERALûWORKINGû the state planning agency, the National banks, and 2% insurers. capital. Development and Reform Commission, to Proceeds from the tap will be used for China Industrial Securities International, China sell offshore bonds. DEBTûRElNANCING Merchants Securities (HK), Deutsche Bank, and Zhongyuan Bank, based in central The original three-year non-call two OCBC Bank were joint lead managers and the Henan province, announced in January notes, rated B+/BB– (S&P/Fitch), were priced joint bookrunners. that its board had approved a plan to sell on May 3 at par to yield 7.90%. Guangdong-based Aoyuan last Wednesday offshore preference shares to raise up to After the latest tap, the Hong Kong-listed said it expected to record an increase of Rmb10bn (US$1.56bn) to replenish its Chinese real estate company has used all of AROUNDûûINûITSûCOREûNETûPROlTûINûTHEûlRSTû Additional Tier 1 capital. the offshore debt issuance quota it received half from a year earlier. The other registrants are BEIJING MO MO EARLIERûTHISûYEAR ûACCORDINGûTOûRESEARCHûlRMû TECHNOLOGY, XIWANG GROUP, HUMANWELL Lucror Analytics. SUNAC CHINA DRAWS CHUNKY DEMAND HEALTHCARE (GROUP), WUHU CONCH INVESTMENT, The timing of the reopening was good, SUNING APPLIANCE GROUP, LINGNAN ECO&CULTURE- right after China injected more liquidity into SUNAC CHINA HOLDINGS (B2/B+/BB–) on Tuesday TOURISM, SICHUAN PROVINCIAL INVESTMENT GROUP, the markets and softened the deleveraging drew orders of more than US$1.5bn from 88 JIANGSU ZHONGNENG POLYSILICON TECHNOLOGY initiative, Lucror wrote in a note. accounts for a US$400m two-year senior DEVELOPMENT, AVIATION INDUSTRY CORPORATION Credit Suisse was sole coordinator and active bond offering. OF CHINA, BEIJING CAPITAL GROUP, CHINA bookrunner on the tap. BOC International and The deal was priced at par to yield 8.625%, EVERBRIGHT GROUP and CHINA MERCHANTS GROUP, Yuzhou Financial Holdings were added as joint having tightened from initial guidance of 9% according to the NDRC. bookrunners at a later stage. area. The agency did not say when the Asia took 78% of the Reg S notes and EU registrations were approved. CFLD SELLS US$200m BONDS accounts 22%. Fund managers and securities lRMSûBOOKEDû ûBANKSûANDûINSURERSûAû SANDS CHINA PLANS BOND OFFERING Property developer CHINA FORTUNE LAND combined 11%, private banks 6% and others DEVELOPMENT, rated BB+ by Fitch, has raised 3%. Macau casino operator SANDS CHINA plans to US$200m from an offering of three-year US The Hong Kong-listed Chinese real estate conduct a 144A/Reg S offering of senior dollar notes. company plans to use the proceeds for debt unsecured notes, according to a stock The notes were priced at par to yield 9.0%, RElNANCINGû)TûHASûAûCALLûOPTIONûONûITSû EXCHANGEûlLINGûLASTû4HURSDAY being tightened from initial price guidance US$400m of 8.75% 2019 bonds on August 23. Barclays Capital, Goldman Sachs and Bank of of 9.5% area. The new bonds are expected to be rated America Merrill Lynch have been appointed CFLD (Cayman) Investment is the issuer of B3/B/BB–. as joint bookrunners. the notes and CFLD the guarantor. HSBC, Morgan Stanley, China Citic Bank The Hong Kong-listed company, a The issue is expected to be rated BB+ by Fitch. International, China Industrial Securities 70%-owned subsidiary of Las Vegas Haitong International, CCB International and International, CMB International, Guotai Junan Sands, intends to use the proceeds to repay CEB International are joint global International, ICBC International and Nomura in full its outstanding term loans under the coordinators on the offering. They are also were joint global coordinators and joint VML credit facility and for general joint bookrunners and joint lead managers bookrunners. corporate purposes, including capital with China Industrial Securities International, JP Sunac’s contracted sales rose 76% year-on- expenditure. Morgan and Yuexiu Securities. YEARûTOû2MBBNû53BN ûINûTHEûlRSTûHALFû No other details, including currency and Earlier this month, CFLD announced that of 2018, and the company indicated that tenor, were provided. its controlling shareholder, China Fortune lRST HALFûREVENUEûWASûLIKELYûTOûINCREASEûBYû Moody’s on Thursday assigned a Ba1 Land Holding, had agreed to sell 582.1m more than 200% over the same period a year rating to the proposed notes. shares, or 19.7%, of the mid-sized property earlier. lRMûTOû0INGû!Nû!SSETû-ANAGEMENTûFORû YANZHOU COAL MAKES COC OFFER Rmb13.8bn (US$2.02bn), making the latter CMPH SETS SAIL IN US DOLLARS CFLD’s second-largest shareholder. YANZHOU COAL MINING is offering to buy back CHINA MERCHANTS PORT HOLDINGS, rated Baa1/ its US$550m 5.73% notes due 2022 at a CHINA AOYUAN PRICES US$175m TAP BBB (Moody’s/S&P), has mandated Bank of cash price of 101 after a change-of-control China (Hong Kong), DBS Bank, HSBC, MUFG and clause was triggered. CHINA AOYUAN PROPERTY GROUP, rated B1/B+/BB–, UBS as joint global coordinators for a US The offer will be open from July 30 to has priced a US$175m tap of its 6.35% senior dollar bond. !UGUSTû ûACCORDINGûTOûAûlLING

International Financing Review July 28 2018 49 GLOBAL EMERGING MARKETS BOND DETAILS: WEEK ENDING 27/7/2018 Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)

Jul 23 2018 Land Transport Authority of S$1.5bn Jul 30 2058 3.45 100 SOR+54 3.45 Singapore Jul 23 2018 Nonghyup Bank US$500m Jul 30 2023 3.875 99.3 T+122.5 4.031

Jul 24 2018 BEH €150m incr Jun 28 2025 3.5 100 B+346.4 3.5 (€550m) Jul 24 2018 Sunac China US$400m Jul 27 2020 8.625 100 - 8.625

Jul 24 2018 Sino-Ocean US$700m Jul 31 2021 3mL+230 100 3mL+230 -

Jul 24 2018 China Fortune Land US$200m Jul 31 2021 9 100 - 9

Jul 25 2018 Temasek Holdings US$1.35bn Aug 1 2028 3.625 99.576 T+72 3.676

Jul 25 2018 Posco US$500m Aug 1 2023 4 99.481 T+130 4.116

Jul 25 2018 Greenland Holding US$300m incr Sep 26 2021 3mL+485 100.02 3mL+485 - (US$550m) Jul 26 2018 Industrial Bank of Korea US$500m Aug 2 2021 3mL+60 100 3mL+60 - (Social)

Jul 26 2018 Beijing Capital US$400m Aug 2 2021 3mL+257.5 100 3mL+257.5 -

Jul 26 2018 Gansu Highway US$350m Aug 2 2021 6.25 99.328 T+3748 6.5

Jul 26 2018 China Aoyuan Property US$175m incr Jan 11 2020 6.35 98.516 - 7.45 (US$425m) Jul 26 2018 Hyundai Capital Services ¥12.4bn Jul 31 2020 0.34 100 OS+24 0.34

Jul 26 2018 Hyundai Capital Services ¥5.5bn Aug 2 2021 0.4 100 OS+29 0.4

Jul 26 2018 Hyundai Capital Services ¥4.1bn Aug 2 2023 0.65 100 OS+49 0.65 Jul 26 2018 Cagamas S$65m Aug 3 2020 2.52 100 - 2.52 Jul 26 2018 Aruba US$125m Jan 31 2029 6.5 100 T+355.1 6.5

The notes, issued by subsidiary Yancoal Singapore from Monday for the proposed The new trade will not have a JBIC guarantee International Resources Development with the notes, which are expected to be rated on par and will be a standalone yen issue, the likes of Hong Kong and Shanghai-listed coal producer with the issuer. which the sovereign frequently sold from 1978 as guarantor, were issued in May 2012. to 2000, according to Thomson Reuters data. State-owned parent Yankuang Group’s The return to the Samurai market was stake in Yanzhou Coal was reduced to less PHILIPPINES ANTICIPATEDûASû0HILIPPINEûOFlCIALSûMETû than 50.1% on May 21 after some holders of Japanese investors in June. It was then the parent’s exchangeable bonds converted REPUBLIC READY FOR reported that Manila aims to raise as much as them into Yanzhou Coal shares. SAMURAI RETURN US$2bn from yen and US dollar-denominated This triggered the change of control bond issues before the year-end. provision in the bond agreement, which The REPUBLIC OF THE PHILIPPINESûLASTûWEEKûlLEDûAû Daiwa, Mitsubishi UFJ Morgan Stanley, kicks in if the Chinese government ceases to securities registration statement to issue Mizuho, Nomura and SMBC Nikko are the leads. own and control 50.1% of the guarantor. 3AMURAIûBONDSûFORûTHEûlRSTûTIMEûINûEIGHTûYEARS However, on July 10, Yankuang Group The sovereign is planning to offer three, bought Yanzhou Coal shares over the lVE ûSEVEN û ûANDû YEARû3AMURAIûBONDS û SINGAPORE counter, raising its stake from 49.8% to 51.8%. with the caveat that one tranche or more may be cancelled, according to the LTA EXTENDS SINGAPORE’S registration statement. CORPORATE CURVE INDONESIA -ARKETINGûHASûNOTûOFlCIALLYûSTARTEDûYET Pricing is scheduled for August 8, but the Singapore’s LAND TRANSPORT AUTHORITY added to INTILAND DEVELOPMENT PICKS BANKS statement says it may be pushed back about THEûCITY STATESûPROlLEûASûAûREGIONALûHUBûFORû FOR US DOLLAR NOTES one week. The Bank of Japan’s policy board LONG TERMûINFRASTRUCTUREûlNANCEûWITHûAû is meeting this week amid much speculation S$1.5bn (US$1.1bn) 40-year bond, the longest INTILAND DEVELOPMENT, rated B2/B (Moody’s/ about potential monetary-policy tweaks, in the currency since 2010. The notes priced Fitch), has mandated Citigroup and UBS which may affect the timing of the last Monday at par to yield 3.45%, in line with as joint bookrunners and joint lead Philippine offering. initial price guidance of 3.45% area. managers for a US dollar senior unsecured The country last visited the yen market in No corporate issuer has issued bonds at bond. 2010 with a ¥100bn 10-year bond carrying a such a long tenor since Temasek Holdings The Indonesia-based property developer guarantee from Japan Bank for International SOLDû3INGAPORESûlRSTû YEARûNOTEûINû û will meet investors in Hong Kong and Cooperation. raising S$1bn.

50 International Financing Review July 28 2018 EMERGING MARKETS ASIA-PACIFIC

Pricing steps NIP (bp) Book size Ratings Bookrunners Distribution

3.45% area - - - DBS/OCBC/StCh/UOB -

T+145 area, - US$1.7bn A1/A+ BAML/CA-CIB/SG/UBS/HSBC Bank 39%, FM 33%, CBank/Ins 18%, HF/ T+125 (+/-2.5) PB/Sec 10%. Par - - Ba2/-/BB Citi -

9% area, - US$1.5bn B3/B/BB- HSBC/MS/CNCBI/CISI/CMBI/Guotai Asia 78%, EU 22%. FM/Sec 80%, Bank/ 8.625% Junan/ICBCI/Nomura Ins 11%, PB 6%, Other 3%. 3mL+250 area, - - Baa3/-/BBB- HSBC/GS/UBS/CNCBI/SPDB - 3mL+230 9.5% area - - -/-/BB+ Haitong /CCBI /CEBI/CISI/JPM/ - YueXiu T+90/95, T+80 US$4.7bn Aaa/AAA BAML/Citi/HSBC/MS US 46%, Asia 44%, EMEA 10%. AM 43%, area, T+75 area +/-3 CB/Agcy 25%, Bks 14%, Ins/PF 9%, Corp 7%, PB 1%, Other 1%. T+155 area, - US$2.8bn Baa1/BBB+ BAML/BNPP/HSBC/StCh Asia 54%, Amers 33%, EMEA 13%. FM T+130/135 63%, Ins/PF 25%, Bks 11%, PB 1%. 3mL+485 (the #) - US$800m Ba2 BOCI/CISI/Haitong/Orient Asia 99%, Eur 1%. FM/AM 53%, Bks/Sec 33%, PB/Corp 11%, SWF 3%. 3mL+85 area, - >US$1.3bn, >80 acs Aa2/AA- Citi/CMZ/CA-CIB/HSBC Asia 45%, US 28%, EMEA 27%. CB/Agcy 3mL+60/65 53%, Tsy 27%, FM/Ins 17%, Corp/PB/ Other 3%. 3mL+285 area, - .US$1.1bn -/-/BBB HSBC/DBS/CICC/CNCBI/CMBI/ Asia 98%, Other 2%. FM 57%, Bks 32%, 3mL+260 (+/-2.5) GuotaiJunan/Orient/SPDBI Retail/Other 11%. 6.5% (the #) - US$475m -/BBB-/BBB- BoC/Barc/Citi/Industrial/CCBA/ Bks 55%, FM 35%, PB/Corp/Sec 10%. CNCBI/Everbright/GuotaiJunan 7.7% area - US$850m after IPG B2/B/BB- CISI/CMSHK/DB/OCBC Asia 98%, Eur 2%. FM/AM 76%, Bks 16%, PB 8%. OS+23/27, - - -/A-/JCR A+ Citi/MUMSS/Miz - OS+24/26, OS+24/25 OS+29/31, - - -/A-/JCR A+ Citi/MUMSS/Miz - OS+29/30 OS+49/50 - - -/A-/JCR A+ Citi/MUMSS/Miz - 2.52% (the #) - - A3 CIMB - - - - -/BBB+/BBB- CIBC/CS -

Unlike Temasek’s tightly held bonds, the The establishment of a 40-year benchmark This is the third yen deal from South new notes from LTA, whose paper tends to be furthers Singapore’s goal to become an Korea after the June 12 summit between more liquid, are more likely to set a new local infrastructure funding hub for the region. As the US and North Korea. benchmark. The Singapore government does part of the push, the government has The transaction comprised ¥12.4bn not issue bonds with tenors longer than 30 encouraged statutory boards to raise funds in 0.34% two-year, ¥5.5bn 0.40% three-year, years and the Singapore dollar SOR curve the local market for large-scale projects. ANDûcBNûûlVE YEARû4HEûSPREADSû stops at 30 years as well. Minister for Finance Heng Swee Keat in over yen offer-side swaps were 24bp, 29bp, The deal was LTA’s second new offering this &EBRUARYûmOATEDûTHEûIDEAûOFûEXTENDINGû and 49bp, all inside the tighter end of the year, after the statutory board sold S$1.2bn of guarantees to boost fundraising in the local price guidance ranges during the soft- 10 and 30-year bonds at 2.75% and 3.35% in bond market for such projects. sounding period of 25bp–30bp area, March. This was followed by a S$300m tap of Infrastructure spending in the city-state is 30bp–35bp area, and 50bp area, due to the 30-year bonds in late March. EXPECTEDûTOûRISEûTOû3BNûINûlSCALû ûAû quite strong demand for the capped offer Despite the large issuance in March, LTA sharp jump from S$8.5bn in 2011. The bulk of size. drew robust demand for its new offering. the expenditure is in housing and transport, Investor demand already exceeded Distribution data were not disclosed but including a new terminal at Changi airport. (YUNDAISûEXPECTATIONSûBEFOREûOFlCIALû ORDERSûWEREûMOREûTHANûSUFlCIENTûTOûINCREASEû Still, bankers are not expecting an marketing began. the size from a S$1bn minimum target. IMMEDIATEûmOODûOFûLONG DATEDûDEBTûOFFERINGSû “It went oversubscribed on Friday [July Insurance companies and fund managers as there are only a few issuers who require = û$AYû4WOûOFûSOFT SOUNDING vûSAIDûAû were major purchasers of the notes. such tenors to match long-term assets. banker on the deal. “That helped us Lacking comparable references, joint lead NARROWûGUIDANCEûRANGESûSTEADILYvû/FlCIALû managers and bookrunners DBS, OCBC, marketing started on July 23. Standard Chartered Bank and UOB had to price SOUTH KOREA Strong demand and a capped issue size the new notes using LTA’s 2048s as a guide. also helped the deal price well inside the “The 2048s priced at a spread of 37bp over HYUNDAI SHRUGS OFF JGB VOLATILITY issuer’s US dollar curve. According to SOR and the new 2058s are at a spread of 54bp calculations by market sources, the over an extrapolated 40-year SOR,” said one HYUNDAI CAPITAL SERVICES returned to the Samurai trade was about 10bp–20bp inside banker involved in the deal. “That does give a 3AMURAIûMARKETûFORûTHEûlRSTûTIMEûSINCEû in all three tranches. decent premium for investors. In addition, the October 2015 with a total ¥22bn (US198m) “Everyone may start looking to issue absolute yield of 3.45% is optically a nice pick-up THREE TRANCHEûTRANSACTION ûINCLUDINGûAûlVE Samurais if they look at this deal,” said a over the 3.35% paid on the 30-year notes.” year piece, the issuer’s longest tenor so far. second banker on the deal.

International Financing Review July 28 2018 51 The main buyers of the Hyundai Samurai were trust banks and asset managers, but, as Issuers ride IG rebound has been the case in recent deals, regional investors also participated, taking more SOUTH KOREA Strong response to investment-grade offerings as investor THANûûOFûTHEûTOTALûVOLUMEû4HEûlVE YEARû appetite returns tranche attracted a life insurer as well. The deal went smoothly, brushing aside Three South Korean issuers sold US dollar bonds The notes priced 22.5bp inside initial guidance the spike in JGB market volatility. JGB yields last week, taking advantage of pent-up demand at 122.5bp and at the tight end of final guidance HITûlVE MONTHûHIGHSûTHISûWEEKûONûREPORTSû for investment-grade credit after a turbulent of Treasuries plus 125bp, plus or minus 2.5bp. that the Bank of Japan will debate policy second quarter. This was nearly flat to the issuer’s curve, tweaks at its meeting on July 30 to July 31 to NONGHYUP BANK, rated A1/A+/A–, gained strong although the outstanding bonds had widened make its monetary policy more sustainable. traction among Asian investors for a US$500m since the mandate announcement. NongHyup’s Leads said the higher volatility had no five-year bond last Monday, giving the issuer 2022s were trading at G plus 118bp and 5bp was impact on the Hyundai deal. “The yen credit room to tighten pricing to 122.5bp over Treasuries, added for a one-year curve extension. market has been unaffected since Monday comfortably inside initial guidance of the 145bp area. Both bankers said the fundamentals of the ;*ULYû=ûEVENûTHOUGHû*'"SûAREûVOLATILE ûANDû Steelmaker POSCO, rated Baa1/BBB+ credit were also not easy for US investors to such stability is this market’s superiority,” (Moody’s/S&P), priced a US$500m five-year bond comprehend. said a third banker on the deal. at Treasuries plus 130bp on Wednesday, before NongHyup plays a quasi-policy role in South Citigroup, Mitsubishi UFJ Morgan Stanley and INDUSTRIAL BANK OF KOREA (Aa2/AA–/AA–) came Korea’s agricultural sector, but is owned by the Mizuho are the leads on the deal, which is a day later with a US$500m three-year Social National Agricultural Cooperative Federation, rated A–/A+ by S&P/JCR. floating-rate note that priced at Libor plus 60bp. not the government. However, Fitch sees “an Posco drew the largest order book, pulling extremely high likelihood” that the government LOTTE P&D PLANS SUSTAINABILITY BOND in more than US$2.8bn for its first visit to the would provide support to the bank if required. international markets since April 2011. IBK and By investor type, banks took 39% of the deal, LOTTE PROPERTY & DEVELOPMENT has mandated NongHyup attracted US$1.3bn and US$1.9bn, fund managers accounted for 33%, central banks Mizuho Securities, Societe Generale and Standard respectively. and insurers took 18%, and hedge funds, private Chartered as joint global coordinators and The size of the books reflects growing appetite banks and securities firms 10%. joint bookrunners for a US dollar- for South Korean credits, which have strengthened The 144A/Reg S senior unsecured notes have denominated Sustainability bond. over the summer. Asian investment-grade and expected ratings from Moody’s and S&P on par !ûSERIESûOFûlXED INCOMEûINVESTORûMEETINGSû high-yield credits performed poorly in the second with the issuer. in Asia began last Thursday. quarter, but investors have begun warming to Government-owned IBK, which provides The Reg S senior unsecured notes have an primary markets again after recent new issues development finance and related banking unconditional and irrevocable guarantee performed well. services to small and medium-sized enterprises from Kookmin Bank and an expected NongHyup tightened 1bp–2bp the day after it in South Korea, attracted large orders from Moody’s rating of Aa3. priced, while Posco was 5bp tighter at the end of last socially conscious investors from the US, who Lotte Property & Development operates the week. IBK’s notes were also bid 2bp tighter on Friday. placed tickets as big as US$250m. 123-story Lotte World Tower and Mall, a major Investors valued Posco’s rarity value and Asia took 45% of the 144A/Reg S notes, US tourism and shopping complex in Seoul. improving fundamentals. The steelmaker’s debt buyers 28% and EMEA 27%. By investor type, reduction and robust earnings won it a one- central banks and agencies bought a combined SK BROADBAND EYES DOLLAR BOND notch Moody’s upgrade to Baa1 last month. 53%, bank treasuries 27%, fund managers and A week later, S&P revised its outlook to insurers a combined 17%, and corporate investors, SK BROADBAND, rated A–/A– (S&P/Fitch), has positive, heralding a possible rating upgrade over private banks and others booked 3% in total. hired BNP Paribas, Citigroup and HSBC to the next 12–24 months. Pricing tightened 25bp from initial guidance of ARRANGEûlXEDûINCOMEûINVESTORûMEETINGSûINû “The quality of books was pretty impressive Libor plus 85bp area. At that level, some bankers Asia and Europe, starting on July 30. even for a Triple B name. We really had the who’s even viewed IBK’s bonds as tighter than other A US dollar-denominated Reg S offering with who in it,” said a banker on the deal. state-owned issuers such as Export-Import Bank a short to intermediate maturity may follow. Posco also allocated the largest share of its of Korea and Korea Development Bank, which The company is a leading provider of bonds to North America compared with the would have paid Libor plus 61bp–62bp for a new IPTV, broadband and VOIP services in South other two deals, with 33% of the deal heading three-year issue, said another banker on the deal. Korea. stateside. Asia booked 54% and the remainder The transaction has expected ratings of Aa2/ went to EMEA. AA– (Moody’s/Fitch). Proceeds will be used to Fund managers accounted for 63% of the finance social projects. 144A/Reg S senior unsecured notes, followed Citigroup, Commerzbank, Credit Agricole and by insurers and pensions at 25%, banks 11% and HSBC were joint bookrunners for IBK, while IBK EUROPE/AFRICA private banks 1%. Securities was co-manager. Posco tightened pricing from initial guidance Bank of America Merrill Lynch, BNP Paribas, of Treasuries plus 155bp area, later revised to a HSBC and Standard Chartered were joint BULGARIA final Treasuries plus 130bp–135bp range. The bookrunners on the Posco trade. fixed-rate notes have expected ratings on par Bank of America Merrill Lynch, Credit Agricole, BEH EKES OUT MORE SIZE FROM 2025s with the issuer. HSBC, Societe Generale (B&D) and UBS were joint NongHyup did not release geographic coordinators for NongHyup. NH Investment & BULGARIAN ENERGY HOLDING printed a €150m tap distribution statistics, but two bankers said US Securities was co-manager. of its June 2025s on Tuesday, taking care of demand was modest due to the tight pricing. Frances Yoon SOMEûUNlNISHEDûBUSINESSûAFTERûTHEûORIGINALû offering found the going tough.

52 International Financing Review July 28 2018 EMERGING MARKETS AMERICAS

In the latter half of June, BEH had just central bank’s announcement. It staged a bit Aramco could possibly take the entire 70% crept over the line with a €400m seven-year of recovery to 4.86 by the end of the week holding owned by Saudi Arabia’s sovereign priced at par to yield 3.50%. though headline risks remain acute. wealth fund, Public Investment Fund (see A reverse enquiry prompted state-owned This was brought to the fore by a tweet on Top News). "%(ûTOûREOPENûTHEû*UNEûSûATûAûPARûlXEDû Thursday by Trump, who threatened to hit Sabic, rated A1/A-/A+, has a US$1bn bond price. The notes were bid just below par, Turkey with sanctions unless it freed an maturing this October, which was sold in according to Thomson Reuters data. American pastor. 2013 through Sabic Capital. The same unit !NûINTERNATIONALûlNANCIALûINSTITUTIONû Andrew Brunson is on trial for terrorism raised a US$1bn term loan in 2013, which gained board approval to purchase up to 20% charges, which he has denied. A court fell due in July. of the aggregate principal amount - ordered last week that he be moved to house presumably the same development bank arrest after 21 months in detention. that had an anchor order of up to 20% on the “The United States will impose large original offering. sanctions on Turkey for their long time The issuer is rated Ba1 by Moody’s and BB detainment of Pastor Andrew Brunson, a AMERICAS by Fitch. great Christian, family man and wonderful Citigroup was sole bookrunner and lead. human being,” Trump tweeted. Trump’s statement prompted an angry ARUBA response from Ankara, escalating tensions TURKEY between the two Nato allies. ARUBA RETURNS TO DOLLAR MARKET

CONFIDENCE IN COUNTRY TESTED ARUBA raised US$125m last week through a TO THE LIMIT REGIONAL 10-year bond, returning to the dollar market after a long absence, but at a substantial )TûWASûANOTHERûDIFlCULTûWEEKûFORûTURKEY as UNITED GROUP SEEKS CONSENT premium to the curve. the sovereign’s bonds were hit by a The deal, which was sold as a private whirlwind of policymaking decisions which UNITED GROUP has announced a consent placement, was priced at par to yield 6.5%, BAFmEDûECONOMISTS ûANDûWILDûTALKûOFû solicitation relating to its outstanding or a little less than 200bp over where the sanctions from US President Donald Trump. €575m of 4.375% senior secured notes due SOVEREIGNSûlVE YEARûBONDûWASûTRADING Turkey’s central bank met on Tuesday for July 2022. The yield was also higher than the THEûlRSTûTIMEûSINCEûTHEûCOUNTRYSû The consent is to amend the special average borrowing cost of 4.21% incurred presidential election and changes to the mandatory redemption provisions in LASTûYEARûWHENûTHEûSOVEREIGNûlNANCEDûITSELFû administration. All eyes were on how much connection with the completion of the almost exclusively in the domestic market, it would raise policy rates by, with many proposed acquisition of NOVA Croatia and according to Fitch. analysts expecting at least a 100bp hike POP Slovenia, from CME Media Enterprises At 6.5% the deal was heard attracting from the level of 17.75%. BV. attention, at least among local accounts who However, some analysts suspected the The Croatian transaction is scheduled to favoured bonds from Aruba, which is a opposite might happen. “We think the close on July 31, and the Slovenian constituent country of the Netherlands. central bank will hold rates steady on 24 transaction is subject to antitrust and “Two of my desks wanted to participate,” July. Erdogan has tightened his grip on the regulatory approvals. said a Caribbean investment banker. “It is a central bank, and higher interest rates do The consent fee is 0.125%. The consent good sovereign. They have always paid back NOTûlTûWITHû4URKEYSûGROWTHûSTRATEGY vûSAIDû requires the receipt of valid and unrevoked their debt.” ABN AMRO strategists in a note on Monday. consents of holders representing 90% in Fitch agrees, noting that Aruba has an And so it proved. With President aggregate principal amount of the notes “impeccable repayment record” with the Erdogan’s power assured, the country has outstanding. Netherlands giving it access to development returned to where policy was before the The solicitation agents are Credit Suisse and funds and emergency assistance in the event election was called, focusing on growth KKR. OFûlNANCIALûSTRESS RATHERûTHANûTAMINGûINmATION ûWHICHûATû 15.39% in June (on an annualised basis) is at ALL INTL EMERGING MARKETS BONDS its highest in 14 years, according to Reuters. BOOKRUNNERS: 1/1/2018 TO DATE But interest rates in Turkey have a much Europe/Africa more powerful role than a pure economic MIDDLE EAST Managing No of Total Share lever. And in that sense the central bank did bank or group issues US$(m) (%) nothing to assuage investor worries about 1 Citigroup 30 9,612.07 14.9 its independence and the overall direction SAUDI ARABIA 2 JP Morgan 27 6,676.19 10.3 of policymaking, when it decided to leave its 3 Deutsche Bank 16 5,703.42 8.8 policy rate unchanged. SABIC MANDATES BANKS FOR 4 VTB Capital 11 5,157.69 8.0 Naturally, after the no-change INTERNATIONAL BOND 5 HSBC 15 4,157.98 6.4 announcement, Turkish assets blew out. In 6 Standard Chartered 8 3,504.97 5.4 the bond market, for example, the yield on Saudi Arabian conglomerate SABIC has hired 7 BNP Paribas 15 3,266.79 5.1 the February 2028s gapped out by 30bp to banks for an international bond offering, 8 Goldman Sachs 7 2,709.87 4.2 7.22% before recovering some 10bp or so to according to sources. 9 SG 13 2,578.20 4.0 quoted at 7.12%. The timing and nature of the trade 10 UniCredit 10 1,632.86 2.5 The lira, meanwhile, was threatening to remain to be seen, given news that state- Total 68 64,556.84 hit 5 against the dollar as it went from 4.73 owned oil company Saudi Aramco is seeking Excluding equity-related debt. at Tuesday’s London open to 4.93 after the to a buy a controlling stake in Sabic. Source: Thomson Reuters SDC code: L2

International Financing Review July 28 2018 53 %VENûSO û!RUBAûHASûSEENûPUBLICûlNANCESû Such concerns have weighed on the now and September 2019, according to suffer with gross public debt standing at credit’s curve, which has suffered -OODYSûWHICHûDOWNGRADEDûTHEûlRMûAû 86.8% of GDP, according a Fitch report substantial price declines this year as some notch to B1 over a year ago. released in May. question the long-held belief of government In April, S&P also revised its outlook on a Last month, S&P revised the outlook on its support. BB rating to negative from stable, citing BBB+ sovereign rating to negative, citing a “The market is concerned,” said Omar RElNANCINGûRISKS rising debt burden. Fitch already rates it Zeolla, a credit analyst at Oppenheimer Yet while the government has shown a BBB-, with a negative outlook. & Co. reluctance to provide fresh capital, many h4HEûNEGATIVEûOUTLOOKûREmECTSûATûLEASTûAû “It seems the government is not willing to assume - including the rating agencies - that it one-in-three chance of a downgrade within give a guarantee and they are telling the would ultimately come to Petrotrin’s rescue. the next two years based on the risk of a company to go out on its own and “I don’t see how the government would worsening government debt burden,” S&P RElNANCEv allow a default as that would impact the said. The 2019s, which have US$850m government’s credit quality,” said Zeolla. Fitch said that US$187m in external maturing on August 14 next year, were Indeed, the importance of the energy borrowing was approved earlier this year as trading as low as 98.00 last week, down from sector, which according to S&P accounts for THEûISLANDûLOOKSûTOûRElNANCEûAûMATURITYû 107 on January 2, according to MarketAxess a third of government’s revenues and falling due in August. data. almost 80% of exports, makes Petrotrin’s Aruba was last in the dollar market in Once investment grade, the company has WOESûDIFlCULTûTOûIGNORE 2012 when it was rated A/BBB and issued the suffered a steady decline in its credit quality S&P still rates Trinidad BBB+, but moved US$253m 2023 bond at par to yield 4.625%, AMIDûPOORûlNANCIALûRESULTSûANDûRISINGû its outlook to negative in April. or 295.6bp over Treasuries, according to IFR leverage. And it is “keeping an eye” on Petrotrin’s data. With the maturity date just a year away, bond maturities as well as debt from all Last week, the 10-year bond came at a EFFORTSûAREûNOWûBEINGûMADEûTOûlNDûWAYSûTOû STATE OWNEDûlRMS ûWHICHûCOMPRISEûABOUTû spread of 355.1bp over Treasuries. The bond address the sizable bond payment, not to 14% of GDP, said Julia Smith, S&P’s primary matures on January 31 2029, with a target mention other maturities such as US$750m sovereign analyst. funding date of August 7. in outstanding 2022s. While that debt isn’t guaranteed by the Credit Suisse and CIBC were leads on the “There are number of local and global government and hence isn’t a factor in debt bond. banks already talking to Petrotrin about analysis for the sovereign rating, “we are restructuring the bonds and general liability incorporating the risk the sovereign faces on management,” said a Caribbean investment this debt,” she said. BRAZIL banker based in Trinidad. The government has recently appointment “The solution may be a combination of a new board with a mandate to bring GENERAL SHOPPING UPS PURCHASE these options and these players.” 0ETROTRINûBACKûTOûPROlTABILITYûANDûIMPROVEû PRICE ON BOND TENDER While part of the decline in the 2019 bond performance, but that could take years. is the natural pull-to-par near maturity, a “Local banks are waiting to see what GENERAL SHOPPING E OUTLETS DO BRASIL has widening spread to the sovereign could reports Petrotrin’s board will issue about increased the purchase price on an up to REmECTûDOUBTSûABOUTûTHEûGOVERNMENTSû formal plans to restructure and resuscitate US$90m cash tender for its 10% perpetual willingness to act as payer of last resort. the company,” said the Trinidad-based bonds. “The drop is not your natural course of banker. The company, formally known as General price decay down to maturity,” said a trader. “The government will do whatever is Shopping Brasil, had been offering holders “If you compare the yield to where the necessary to ensure that the bond payment a buyback price of 95.00 if they validly sovereign is trading it is a sizable spread DUEûINûûISûSATISlEDû4HISûISûAûMUST ûASûTHEû tender by the early-bird date of July 24. (differential).” way this is handled will impact the But it is now offering par to holders At a secondary yield of about 10.40%, the sovereign and NGC (the National Gas if they tender by an expiration date of 2019 spread differential to the sovereign’s 2020 Company of Trinidad) as global bond issuers August 7. is now 660bp versus just 148bp in early May. also.” The buyback is subject to the company’s It is a similar story further up the curve ABILITYûTOûlNANCEûTHEûTENDERûFROMûTHEû where the Petrotrin 6% of 2022s is being bid ALL INTL EMERGING MARKETS BONDS release of funds held in escrow guaranteeing at around 9% versus a 4.45% bid on BOOKRUNNERS: 1/1/2018 TO DATE secured debt that General Shopping intends Trinidad’s 2024s. Middle East to repay through a credit line. That stands in contrast to other oil-rich Managing No of Total Share Dealer managers are Merrill Lynch, Pierce, nations in the region like Mexico and Brazil, bank or group issues US$(m) (%) Fenner & Smith and Itau BBA. where the spread between the sovereign 1 Standard Chartered 31 8,146.50 13.5 and state oil companies is in the 145bp- 2 Citigroup 15 5,800.56 9.6 150bp range. 3 HSBC 24 5,610.43 9.3 TRINIDAD & TOBAGO “They don’t have enough cash to meet the 4 Deutsche Bank 7 4,152.37 6.9 US$850m maturity that is due in August 5 JP Morgan 8 3,544.32 5.9 BANKS TALK TO PETROTRIN AS CLOCK next year,” said Michael Roche, an emerging 6 Barclays 10 3,062.96 5.1 TICKS ON HEFTY BOND MATURITY MARKETûlXED INCOMEûANALYSTûATû3EAPORT 7 Credit Suisse 7 2,571.38 4.3 Roche calculates that as of March 31, 8 Al Khaliji Commercial Bank 2 2,082.76 3.5 Banks are talking to Trinidad’s PETROTRIN Petrotrin had just US$144m of cash against 9 Goldman Sachs 3 1,930.39 3.2 about how to tackle a hefty bond payment total debt of US$1.728bn, giving a net 10 Credit Agricole 8 1,830.20 3.0 next year as markets fret about just how the leverage ratio of 8x. Total 68 60,265.04 TROUBLEDûSTATE OWNEDûOILûlRMûWILLûSTAYû The US$850m maturity is part of over Excluding equity-related debt. current on its debt. US$1.2bn of debt Petrotrin owes between Source: Thomson Reuters SDC code: L5

54 International Financing Review July 28 2018 LOANS

Australia China India 58 Hong Kong 59 Indonesia 59 Malaysia Vietnam Czech Republic û France û Germany Netherlands Spain UK United States Leveraged Loans û Restructuring 72

FRONT STORY LEVERAGED LOANS US shrugs off ﬁnancing protests Pressure builds on banks ﬁnancing detention centres

The US leveraged loan market has appeared $ESPITEûTHEûPROTESTS û'%/û'ROUPSû this time, but many have ongoing review to shrug off protests at the centre of a US$792m term loan has held steady, quoted processes based on the publicity national immigration debate that saw illegal at 99.75-100 cents on the dollar on Thursday, surrounding the issue,” a senior banker said. immigrants separated from their children, unchanged from Tuesday, according to two A CoreCivic spokesperson did not respond ASûADVOCATESûTAKEûAIMûATûBANKSûlNANCINGû SOURCESû#ORE#IVICSû53MûTERMûLOANûISû to an email seeking comment. In June the companies that run detention centres. not widely quoted. company released a statement that said it Advocacy groups in New York gathered “You do have categories of investments does not advocate for or against legislation or on Wednesday near JP Morgan Chief that are toxic,” said Richard Farley, chair of policies and does not enforce immigration %XECUTIVEû/FlCERû*AMIEû$IMONSûAPARTMENT û LEVERAGEDûlNANCEûATûLAWûlRMû+RAMERû,EVINû laws or policies. It said that none of its calling on the bank to stop lending to .ATAmISûû&RANKELûh"UTû)ûDONTûSEEûANYû facilities provides housing for children that private prison and immigration detention evidence that the [US Immigration and are without parental supervision. companies, according to the Center for Customs Enforcement (ICE)] issue is 0OPULARû$EMOCRACY ûONEûOFûTHEûPROTESTû anywhere near a level of toxicity where organisers. banks would be concerned with “It is understood that banks Banks including JP Morgan and Bank of reputational risk.” are largely comfortable with America Merrill Lynch have extended more $IMONûSENTûAûMESSAGEûONû*UNEûûTOûALLû53û lending to the sector at this than a combined US$2.5bn of loans and JP Morgan employees saying the bank time, but many have ongoing other debt to the Boca Raton, Florida-based strongly supports US immigration reform, GEO GROUP and Nashville, Tennessee-based noting the problems are “tearing apart our review processes based on the CORECIVIC, operators of private prisons and body politic and damaging our economy,” publicity surrounding the issue” detention centres. according to the memo. Immigration is the subject of a heated He noted that the Business Roundtable, a In an April lender presentation to cut its NATIONALûDEBATEûAFTERû0RESIDENTû$ONALDû GROUPûOFû53ûCHIEFûEXECUTIVEûOFlCERSûTHATûHEû INTERESTûPAYMENTS û'%/û'ROUPûOFFEREDûANû Trump in April signed a memorandum chairs, had released a statement urging “the industry overview of immigration ending the policy known as ‘catch and Administration to end immediately the enforcement, according to a source. It RELEASE ûINûWHICHûILLEGALûIMMIGRANTSûWEREû policy of separating accompanied minors HIGHLIGHTEDû4RUMPSûEXECUTIVEûORDERûTOûENDû not held while awaiting a court hearing. from the parents. This practice is cruel and @CATCHûANDûRELEASEûASûWELLûASûADDITIONALû contrary to American values.” government funding available for more “The Wall Street ﬁrms are in *0û-ORGANûHELPEDûlNANCEûBOTHû'%/û detention beds. some ways hiding behind the 'ROUPûANDû#ORE#IVICû".0û0ARIBAS û"!-, û -OODYSû)NVESTORSû3ERVICEûONû4UESDAYûSAIDû Barclays, SunTrust and Wells Fargo also led '%/û'ROUPSû"ûCORPORATEûFAMILYûRATINGû veil. Without these investments, '%/SûlNANCING ûWHILEûAûGROUPûINCLUDINGû REmECTSûITSûSOLIDûLIQUIDITYûPOSITION ûSTABLEû these companies simply 3UN4RUST û"!-,ûANDû0.#ûJOINEDû*0û-ORGANû operating performance and increased couldn’t operate” INûARRANGINGû#ORE#IVICSûCREDITûFACILITY û capital market access. ACCORDINGûTOûREGULATORYûlLINGS '%/û'ROUPûISûAûLONGSTANDINGûSERVICEû A JP Morgan spokesperson declined to provider to the government and does not comment. have a role in setting criminal justice or Massive protests followed after immigration policies and does not advocate accompanied children were separated from SERIOUS SITUATION for or against criminal justice or their parents at the border. Following a Wells Fargo said it respects the seriousness immigration enforcement and detention court order, the government said on OFûTHEûCOUNTRYSûONGOINGûDEBATEûABOUTû policies, a company spokesperson said in an Thursday that around 1,400 of the immigration and the criminal justice emailed statement. He said the facilities it approximately 2,500 children separated system. manages on behalf of the federal from their parents had been reunited with “However, we do not as a corporation take government have never housed their families, Reuters reported. positions on public policy issues that do not unaccompanied minors. Advocates are now turning their attention DIRECTLYûAFFECTûOURûCOMPANYSûABILITYûTOûSERVEû ,ASTûYEARû-OODYSûREVISEDû'%/û'ROUPSû to the banks backing detention centres. customers and support team members,” a rating outlook to stable from negative and h4HEû7ALLû3TREETûlRMSûAREûINûSOMEûWAYSû bank spokesperson said. #ORE#IVICSûOUTLOOKûTOûSTABLEûFROMûNEGATIVEû hiding behind the veil,” said Ana Maria Spokespeople for other lenders either AFTERû!TTORNEYû'ENERALû*EFFû3ESSIONSû&EBRUARYû Archila, co-executive director of the Center declined to comment or did not return calls 2017 memorandum, reversing the US Justice FORû0OPULARû$EMOCRACYûh7ITHOUTûTHESEû seeking comment. $EPARTMENTSû!UGUSTûûPLANSûTOûPHASEûOUTû investments, these companies simply “It is understood that banks are largely its use of privately-operated prisons. COULDNTûOPERATEv comfortable with lending to the sector at Kristen Haunss, Jonathan Schwarzberg, Yun Li

International Financing Review July 28 2018 55 ASIA-PACIFIC Tsinghua Unigroup taps

AUSTRALIA €1.5bn bridge

SIX FUND A$502m MACARTHUR WIND ASIA-PACIFIC Chinese tech giant snaps up French smartcard components maker Linxens FARM REFI State-owned technology conglomerate TSINGHUA Failure to get local regulatory approval Six lenders, including a non-bank investor, UNIGROUP has wrapped up a €1.5bn (US$1.75bn) has previously scuttled Tsinghua’s offshore HAVEûFUNDEDûAû!Mû53M ûSEVEN bridge loan for its proposed acquisition of French investment plans, such as share purchases year term loan for Malaysian power smartcard components maker Linxens. totalling US$2.6bn from three Taiwanese chip producer MALAKOFFûTHATûRElNANCESûAûû Credit Suisse, Deutsche Bank, Industrial & makers – Powertech Technology, ChipMOS facility for the Macarthur wind project in Commercial Bank of China and Natixis are the Technologies and Siliconware Precision !USTRALIASû6ICTORIAûSTATE banks providing the 12-month bridge loan, which Industries – that fell through in 2016 and 2017. Blackrock Real Assets, BNP Paribas, ING Bank, was signed and funded earlier this month. Soon after, Tsinghua Unigroup made its Mizuho Bank, OCBC Bank and Societe Generale The proceeds will fund Tsinghua Unigroup’s debut in the offshore loan market, more than have committed to the term loan. €2.2bn acquisition of Linxens, which was doubling its three-year loan to US$701m from a The deal is secured on a non-recourse signed over a month ago but has not yet been US$300m target. Bank of China, Credit Suisse basis over the mortgage of shares, land and announced publicly. and Standard Chartered were the mandated LEASE ûASûWELLûASûlXEDûANDûmOATINGûCHARGESûOFû Tsinghua Unigroup’s acquisition of Linxens lead arrangers and bookrunners, while 11 other the assets and the assignment of rights over from private-equity group CVC Capital Partners lenders joined at different levels. The loan paid the project documents. needs approval from the company’s union as top-level all-in pricing of 263.33bp based on an 4HEûFACILITYûRElNANCESûAû!MûlVE YEARû well as regulators in France and Germany. interest margin of 220bp over Libor. LOANûRAISEDûINû ûWHICHûRElNANCEDûTHEû The acquisition will be a key test of European In 2015, Tsinghua Unigroup made an informal then project loan for the Macarthur wind regulators’ stance on Chinese investment in US$23bn offer for US giant Micron Technology, farm. the region, which has been on the rise amid the which was rejected by the Idaho-based Malakoff owns a 50% indirect participating country’s worsening trade relations with the US. chipmaker amid national security concerns – a interest in the unincorporated joint venture Credit Suisse was the sell-side adviser to CVC, rationale that has increasingly been used to of the Macarthur wind farm through which acquired Linxens in July 2015 from Astorg block Chinese deals in sensitive US industries. Malakoff Wind Macarthur – a wholly owned Partners for €1.5bn and raised a dual-currency So far this year, China has spent US$45.5bn Australian subsidiary of Malakoff US$1bn financing to support the leveraged on European assets, more than double year- International. Malakoff acquired the stake in buyout. ago levels, while its investments in the US have ûFROMû-ERIDIANû%NERGYSûWHOLLYûOWNEDû Before the Linxens deal, Tsinghua Unigroup dropped by 75% to US$1.9bn, according to subsidiaries Three River Holdings No 2 and accumulated a stake in Dialog Semiconductor, Thomson Reuters data. Meridian Energy Australia. buying into share price weakness as the Anglo- Linxens, headquartered close to Paris, has Malakoff International is a wholly owned German chipmaker faced uncertainty over its €535m in annual sales and employs 3,500 subsidiary of Malakoff. business relationship with Apple, its largest people at nine production sites globally. It also Malakoff last raised a US$80m three-year customer, toward the end of last year. has offices in China, Singapore and Thailand. LOANûTHATûRElNANCEDûAûDEALûTHATûFUNDEDûITSû The company, which does not have a US purchase of an indirect stake in a power and STAKE-BUILDING presence, according to its website, makes water desalination plant in Bahrain in 2012. The stake, held via two wholly owned connectors crucial for communication between The deal paid top-level all-in pricing of subsidiaries, reached 9% in December, according smart cards and electronic readers. It also AROUNDûBPûBASEDûONûANûINTERESTûMARGINû to company filings, making the Chinese investor makes antennas and inlays for applications OFûBPûOVERû,IBOR the single largest shareholder in Dialog. such as contactless payment, transport and Tsinghua did not respond to requests for access. ASIA-PACIFIC LOANS BOOKRUNNERS – FULLY comment at the time. Kane Wu, Prakash Chakravarti SYNDICATED VOLUME (INCLUDING JAPAN) BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share /Nû*ULYû û3IRTEXûSAIDûTHATûTHEû53û&EDERALû bank or group issues US$(m) (%) CHINA Trade Commission had granted early 1 Mizuho 273 49,989.96 16.5 termination of the waiting period for the 2 Sumitomo Mitsui Finl 320 33,662.82 11.1 CDH PREPS SIRTEX ACQUISITION LOAN buyout, clearing a major hurdle for the deal 3 MUFG 423 32,881.99 10.9 to go through. The transaction has already 4 Bank of China 172 32,246.84 10.6 Bank of China Macau branch is preparing to BEENûAPPROVEDûBYû!USTRALIASû&OREIGNû 5 ANZ 56 12,307.35 4.1 launch a US$700m dual-tranche loan Investment Review Board. 6 HSBC 50 10,830.08 3.6 backing CDH INVESTMENTSûACQUISITIONûOFû In mid-June, Chinese alternative asset fund 7 Standard Chartered 46 8,126.66 2.7 Australian liver cancer treatment specialist MANAGERû#$(ûANDûITSûPARTNER û#HINAû'RANDû 8 Citigroup 24 5,604.23 1.9 Sirtex Medical. Pharmaceutical and Healthcare Holdings, 9 Citic 6 5,227.39 1.7 The deal is expected to offer all-in pricing emerged as the winners of Sirtex with a 10 Indl & Comm Bank China 16 4,937.56 1.6 OFûMOREûTHANûBP A$1.9bn (US$1.4bn) offer, trumping a rival Total 1,588 302,932.38 BOC Macau has underwritten the facility, BIDûFROMû53 BASEDû6ARIANû-EDICALû3YSTEMS Proportional credit WHICHûCOMPRISESûAû53MûlVE YEARûTERMû !CCORDINGûTOûAû3IRTEXûSTOCKûlLINGûONû*UNEû Source: Thomson Reuters SDC code: S3a loan and a US$400m 18-month bridge. û#$(ûWILLûULTIMATELYûOWNûûOFûTHEû

56 International Financing Review July 28 2018 LOANS ASIA-PACIFIC

COMPANY ûWHILEû#'0ûWILLûOWNûTHEû Funds are for working capital and CHINA AIRCRAFT LEASING BACK remainder. RElNANCING FOR LOAN )NûEARLYû*ULY û(ONGû+ONG LISTEDû#'0û !ûBANKûMEETINGûISûSLATEDûFORû!UGUSTûûINû announced a rights issue of up to (ONGû+ONG ûANDûTHEûDEADLINEûFORû CHINA AIRCRAFT LEASING GROUP HOLDINGS is (+BNû53M ûTOûPAYûFORûTHEû commitments is August 24. returning to the loan market for a US$790m acquisition. The balance consideration for six-year loan after raising a smaller deal last the acquisition will be funded by existing COUNTRY GARDEN BACK FOR LOAN October. cash. Credit Suisse, Societe Generale and Shanghai Australia is proving an attractive Property developer COUNTRY GARDEN HOLDINGS Pudong Development Bank are the mandated destination for Chinese investment in the is seeking a four-year term loan of up to lead arrangers and bookrunners, while China healthcare sector, with A$5.5bn in deals US$2bn, which will be its second deal of the Everbright Bank, Credit Agricole CIB and agreed since 2015, according to Thomson year. Industrial & Commercial Bank of China (Asia) Reuters data. An arranger group is forming on the dual- JOINEDûASû-,!S CURRENCYûlNANCING ûWHICHûISûEXPECTEDûTOûBEû The deal offers an interest margin of 210bp NETEASE LAUNCHES US$500m PRICEDûATûBPûALL IN OVERû,IBORûANDûHASûAûlVE YEARûAVERAGEûLIFE MAIDEN LOAN #OUNTRYû'ARDENSûLATESTûLOANûISûSIMILARûTOûAû ,EADûARRANGERSûCOMMITTINGû53MûORû US$1.25bn-equivalent four-year facility it MOREûWILLûRECEIVEûALL INûPRICINGûOFûBPû Nasdaq-listed Chinese web portal NETEASE signed in October. That loan paid top-level all-in with a participation fee of 100bp, while has launched a US$500m debut syndicated PRICINGûOFûBPûBASEDûONûANûINTERESTûMARGINûOFû ARRANGERSûJOININGûWITHû53MnMûEARNû loan. BPûFORûANûAVERAGEûLIFEûOFûûYEARS all-in pricing of 227bp with an 85bp fee. ANZ, Citigroup, DBS and HSBC are the 4HEûCOMPANYSûMOSTûRECENTûLOANûWASûAû ,EADûMANAGERSûJOININGûWITHû53MnMû mandated lead arrangers and bookrunners of (+BNû53M ûTHREE YEARûFACILITYû earn all-in pricing of 224bp with a 70bp fee, the three-year revolving credit facility, which signed in April. backing its acquisition of a while co-lead managers joining with PAYSûANûINTERESTûMARGINûOFûBPûOVERû,IBOR 15% stake in real estate service provider US$15m–$29m earn all-in pricing of 221bp Banks committing US$50m or more will E-House (China) Enterprise Holding. BNP with a 55bp fee. EARNûANûALL INûPRICINGûOFûBPûVIAûAûBPû 0ARIBASûWASûTHEûSOLEû-,!"ûANDûPRE FUNDEDû The borrower is CHINA AIRCRAFT GLOBAL, a FEEûFORûTHEû-,!ûTITLE ûWHILEûCOMMITMENTSû that facility, which offered a top-level all-in special-purpose vehicle owned by China below US$50m receive an all-in of 110bp PRICINGûOFûBPûVIAûAûBPûMARGINûFORûANû !IRCRAFTû,EASINGû4HEûFUNDSûWILLûBEûUSEDûTOû via a 45bp fee for the lead arranger title. average life of 2.5 years. buy 18 aircraft. Mezzanine loans catch on in China ASIA-PACIFIC InfraRed NF agrees US$88m mezzanine loan to Keyne Properties

Mezzanine loans are on the rise among China’s For example, Agile Group’s 2022 US dollar small developer – ran out of cash to continue the small and medium-sized property developers bonds now yield 8.39%, up from 4.5% in March. construction. Previous creditors included China as the country’s regulators continue to restrict It paid 8.5% for a three-year non-call two bond Huarong Asset Management and affiliates, which access to traditional bank financing. issue on July 11. The mid-sized developer, rated also helped to restructure and rescue the project. Last month, Chinese regional developer KEYNE Ba2/BB (Moody’s/S&P), also paid top level Keyne will use the mezzanine financing to PROPERTIES raised a US$88m mezzanine loan all-in pricing of 520bp over Libor/Hibor for its postpone pre-sales of the outstanding one to finance a mixed residential and business HK$12.13bn-equivalent (US$1.55bn) four-year million square metres of mostly residential project. China-focused real estate fund manager refinancing this month – richer than that for its saleable area in the hope that the local InfraRed NF Investment Advisers provided the peers and its own previous borrowings. government will approve a higher selling price at two-year offshore loan that carries a one-year a later date. extension option. ALTERNATIVE FINANCE The local government in Yanzhou recently InfraRed NF has emerged as one of several InfraRed NF is seeing more opportunities as increased the price cap for the project to providers of alternative funding to SME property traditional liquidity pools dry up. It is eyeing Rmb10,500 (US$1,543) per square metre from developers that are facing a funding squeeze and bigger individual deals of between US$100m Rmb9,000 two years ago. Similar existing flats higher financing costs onshore and offshore, as and US$300m-plus and expects to close one or nearby are fetching 20%–30% more. Beijing has restricted their borrowing options and two more deals before the end of the year. Together with senior debt, the financing has international investors remain wary of default risk. As well as funding restrictions, Chinese a loan-to-value ratio of 65%. The mezzanine “Developers need some breathing space. developers face administrative price caps on piece comes with several protections against For them, it makes perfect sense to borrow our new projects in a bid to rein in housing inflation, downside risk, including security against a money,” said Grant Chien, investment director at leading to new homes being priced lower than portfolio of US$900m in assets, a share pledge InfraRed NF. “Our strategy is really a simple one: existing units in some areas. of an offshore vehicle that controls the Yangzhou we pick either the local champions or the best- Keyne’s mezzanine loan will help finance a project and more than three times debt coverage selling projects in that city.” residential-led project of approximately two on principal and interest. There are multiple The facility for privately owned Keyne has an million square metres, which also includes a inter-creditor agreements with other lenders. overall return in the high teens, which is more hotel, office and retail space in Yangzhou, a city InfraRed NF is a joint venture between InfraRed expensive than offshore bank loans or high-yield in Jiangsu province. Capital Partners and the Vervain Group, part of bonds, although pricing on those instruments is The company acquired the project as a non- Hong Kong property developer Nan Fung. also rising. performing asset after the previous owner – also a Yan Jiang

International Financing Review July 28 2018 57 ,ASTû/CTOBER û#HINAû!IRCRAFTû,EASINGûRAISEDû The loan comprises a Rmb100m offshore MARGINSûOFûBPûANDûBPûOVERû,IBOR û a US$425m 4.5-year pre-delivery payment tranche, solely taken by E Sun, and a RESPECTIVELYû&ACILITIESû ûûANDûûHADû lNANCINGûVIAûUNITû#!,#û0$0ûû#HINAû 2MBMûONSHOREûPORTION ûWHICHûWASû REMAININGûAVERAGEûLIVESûOFû ûûANDû %VERBRIGHTû"ANKû(ONGû+ONGûBRANCHûANDû syndicated. Both portions pay an interest 5.42 years, respectively. )#"#û!SIA ûWEREûTHEû-,!"SûOFûTHATûFACILITY û margin of 108.5% of the PBoC rate. Meanwhile, Jio is also in the market for a which offered a top-level all-in pricing of China Merchants Bank Beijing branch, East cBNû53M ûSEVEN YEARû3AMURAIû BPûBASEDûONûAûMARGINûOFûBPûOVERû West Bank (China), Hana Bank (China) and Land bullet term loan, which pays top-level all-in ,IBORûANDûANûBPûFEE Bank of Taiwan Tianjin branch joined the deal PRICINGûOFûBPûBASEDûONûAûMARGINûOFûBPû ASû-,!"SûKorea Development Bank Qingdao OVERû4IBORûANDûHASûAûGUARANTEEûFROMû2), DONGSHAN PRECISION FUNDS branch is a participant. MULTEK BUY WITH US$176m LOAN The loan offered top-level all-in pricing of HDFC TO LAUNCH US$750m LOAN ûOFûTHEû0"O#ûRATEûVIAûAûTOP LEVELû SUZHOU DONGSHAN PRECISION MANUFACTURING CO PARTICIPATIONûFEEûOFûBPû4HEû0"O#ûRATEûFORû Mortgage lender HOUSING DEVELOPMENT FINANCE LTDûHASûRAISEDûAû53MûlVE YEARûTERMû ONE YEARûLOANSûISû CORP LTD is expected to launch its US$750m LOANûTOûlNANCEûITSû53MûACQUISITIONûOFû Signing is slated for the end of this month lVE YEARûLOANûSHORTLY 3INGAPORE BASEDû&LEXû,TDSûNON 53ûPRINTEDû and the facility is expected to be drawn in ANZ, Barclays, Citigroup, DBS Bank, First Abu circuit board business. mid-August. Dhabi Bank, HSBC, Mizuho Bank, MUFG and China Minsheng Banking Corp underwrote The deal follows a US$80m three-year Sumitomo Mitsui Banking Corp are the the facility and ended up with US$100m amortising term loan the borrower signed in mandated lead arrangers and bookrunners through its Shanghai free trade zone February. Bank SinoPac (China) and of the bullet loan. United Overseas Bank joined branch, while Bank of China committed a Industrial Bank Beijing branch were the the deal, which has been pre-funded by the combined US$75.5m via branches in Macau -,!"SûOFûTHATûDEAL ûWHICHûPAIDûAûTOP LEVELû NINEûLEADS ûINûSENIORûSYNDICATIONûASû-,!" and Seoul. BOC Macau branch is the facility ALL INûPRICINGûOFûBPûOVERû,IBORûBASEDû Bank presentations are scheduled for the agent. The amortising facility offered an ONûAûMARGINûOFûBPûFORûANûAVERAGEûLIFEûOFû WEEKûOFû!UGUSTûûINû3INGAPOREûANDû4AIPEI ALL INûPRICINGûOFûMOREûTHANûBPûOVERû,IBOR 2.775 years. ($&#SûLASTûVISITûTOûTHEûINTERNATIONALûLOANû The borrower is wholly owned special- The borrower is a fully owned unit of MARKETûWASûINû*ULYûûFORûAû53MûlVE PURPOSEûVEHICLEû-ULTEKû'ROUPû(ONGû+ONG û Industrial Bank. YEARûTERMûLOANûWITHûûBANKS ûOFûWHICHûû ,TDû3HENZHEN LISTEDû3UZHOUû$ONGSHANû joined in general syndication. Citigroup, 0RECISIONûCONTROLSûTHEû306ûVIAûITSûFULLYû $"3 û3TATEû"ANKûOFû)NDIAûANDû3-"#ûWEREûTHEû OWNEDûUNITû(ONGû+ONGû$ONGSHANû(OLDINGû INDIA -,!"SûONûTHEûDEAL ûWHICHûPAIDûTOP LEVELû ,TD ALL INûPRICINGûOFûBPûBASEDûONûANûINTERESTû The Suzhou-based precision metal and RELIANCE INDUSTRIES MANDATES 17 MARGINûOFûBPûOVERû,IBORûANDûANûAVERAGEû electronics product maker agreed in March remaining life of 4.82 years. TOûBUYû.ASDAQ LISTEDû&LEXSû-ULTEKûBUSINESS û Indian conglomerate RELIANCE INDUSTRIES has INCLUDINGûûlRMSûINû:HUHAI û(ONGû+ONG û mandated 17 banks on a US$2.7bn IRFC LAUNCHES 10-YEAR SAMURAI -AURITIUSûANDûTHEû"RITISHû6IRGINû)SLANDS RElNANCING ûWHICHûISûITSûSECONDûBORROWINGû 4HEûBORROWERSûSHARESûASûWELLûASûTHEû SINCEû$ECEMBER State-owned INDIAN RAILWAY FINANCE CORP has shares and assets of the target companies The mandated lead arrangers and launched its US$250m-equivalent 10-year form part of the security for the loan. bookrunners are ANZ, Bank of America Merrill Samurai loan into general syndication. 3UZHOUû$ONGSHANûANDûITSûSUBSIDIARIESû(ONGû Lynch, Barclays, BNP Paribas, Citigroup, Credit Mandated lead arrangers and +ONGû$ONGSHANû0RECISIONû5NIONû Agricole, DBS Bank, First Abu Dhabi Bank, HSBC, bookrunners Mizuho Bank, MUFG and /POELECTRONICû#Oû,TD û- &LEXû#AYMANû MUFG, Mizuho Bank, Scotiabank, Societe Sumitomo Mitsui Banking Corp pre-funded Islands Inc and Multi-Fineline Electronix Generale, Standard Chartered, Sumitomo Mitsui cBNû53M ûONû-ARCHû 3INGAPOREû0TEû,TDûSERVEûASûGUARANTORS Banking Corp, UOB Bank and Westpac. The bullet loan has a remaining life of 9.5 4HEûPARENTûCOMPANYSûBIGGESTû 4HEû-,!"SûûAREûEXPECTEDûTOûLAUNCHûITûINTOû years, assuming lenders participating in shareholder and chairman Yuan Yonggang, general syndication around mid-August. general syndication are transferred in by another shareholder and company general Roadshows are slated for September. September 28. It pays an interest margin of manager Yuan Yongfeng, and their spouses The facility will comprise three tranches, BPûOVERûYENû,IBOR also provided personal guarantees for the two of which have amortising repayments. Banks are invited to join as lead arrangers loan. 0ROCEEDSûWILLûRElNANCEûPORTIONSûOFûLOANSû with tickets of ¥2bn or above for The transaction was completed on Reliance signed in 2012, 2014 and 2015. participation fees of 190bp translating into Thursday after gaining approvals from The leads on the latest loan were also the top-level all-in pricing of 100bp. Arrangers shareholders and Chinese regulators. SENIORû-,!"SûONûAû53BNûlNANCINGû2),û committing ¥1.0bn–¥1.9bn earn fees of SIGNEDûINû$ECEMBERû4HATûFACILITYûCOMPRISESû 142.5bp for 95bp all in. INDUSTRIAL BANK FINANCIAL a 2.5-year loan of US$815m and €150m 4HEûDEADLINEûFORûRESPONSESûISû!UGUSTûû CLOSES BULLET 53M û&ACILITYû ûFORû2), ûANDûSEPARATEû with signing targeted in the week of US$1bn 4.75-year (Facility 2) and US$500m 3EPTEMBERûû4HEûPROCEEDSûWILLûlNANCEûTHEû INDUSTRIAL BANK FINANCIAL LEASING has closed a YEARû&ACILITYû ûPORTIONSûFORûITSû2ELIANCEû COMPANYSûACQUISITIONûOFûROLLINGûSTOCK 2MBMû53M ûONE YEARûTERMûLOANû Jio Infocomm unit. 4HEûPRICINGûONû)2&#SûLOANûISûTIGHTERûTHANû AFTERûlVEûBANKSûJOINEDûINûGENERALû 2),Sû53ûDOLLARûANDûEUROûTRANCHESûPAIDûTOP THATûONûAûcBNû YEARû3AMURAIûLOANûFORû syndication. LEVELûALL INûPRICINGûOFûBPûANDûBPûBASEDû Indian state-owned NTPC, which closed in E Sun Commercial Bank is the facility agent ONûINTERESTûMARGINSûOFûBPûANDûBPûOVERû EARLYû!PRILû-IZUHO û-5&'ûANDû3-"#ûWEREû and original mandated lead arranger and ,IBORûANDû%URIBOR ûRESPECTIVELYû*IOSû&ACILITYû THEû-,!"SûOFûTHATûLOAN ûWHICHûPAIDûTOP LEVELû bookrunner on the bullet transaction, ûANDû&ACILITYûûOFFEREDûTOP LEVELûALL INû all-in pricing of 105bp based on a margin of which had an initial target of Rmb500m. pricing of 105bp and 110bp based on 95bp over Tibor and a weighted average

58 International Financing Review July 28 2018 LOANS ASIA-PACIFIC

remaining life of 10 years. Eight other FIRST PACIFIC RETURNS WITH LOAN ANZ, CIMB Bank, CTBC Bank, DBS Bank, OCBC Japanese banks joined the deal in general Bank and Sumitomo Mitsui Banking Corp were syndication. FIRST PACIFIC is returning to the loan market the mandated lead arrangers, bookrunners IRFC and NTPC are rated Baa2/BBB–/BBB– FORûAû53MûSIX YEARûLOAN ûFORûTHEûlRSTû and underwriters of the borrowing. -OODYS30&ITCH time in three years. The deal pays top-level all-in pricing of IRFC is returning to the loan markets after Mizuho Bank is the mandated lead arranger BPûONSHORE ûANDûBPûOFFSHORE û more than two years. In November 2015, it and bookrunner of the transaction, which based on interest margins of 110bp raised US$400m in three-year money to offers an interest margin of 120bp over ONSHORE ûANDûBPûOFFSHORE ûOVERû,IBORû)Tû RElNANCEûAûlVE YEARûLOANûITûHADûCLOSEDûINû ,IBORûANDûHASûANûAVERAGEûLIFEûOFûûYEARS HASûANûAVERAGEûLIFEûOFûûYEARSû .OVEMBERûû-IZUHO û-5&'ûANDû3-"#û ,EADûARRANGERSûCOMMITTINGû53MûORû )NDOMOBILû&INANCESûLASTûVISITûTOûTHEûLOANû WEREûTHEû-,!"S MOREûWILLûRECEIVEûALL INûPRICINGûOFûBPû market was in January last year for a with a participation fee of 50bp, while 53MûNEW MONEYûlNANCINGûTHATûWASû arrangers joining with US$15m–$29m earn increased from US$100m. CTBC, Mizuho HONG KONG ALL INûPRICINGûOFûBPûWITHûAûBPûFEE "ANK û/#"#ûANDû3-"#ûWEREûTHEû-,!"SûOFû The borrower is a special-purpose vehicle the three-year amortising facility, which H&H REFI HITS LIMITED SYNDICATION OWNEDûBYû&IRSTû0ACIlC ûWHICHûISûALSOû ATTRACTEDûûOTHERûLENDERS providing a guarantee. 4HATûlNANCINGûPAIDûTOP LEVELûALL INûPRICINGû (ONGû+ONG LISTEDûPAEDIATRICûNUTRITIONALû &IRSTû0ACIlCûLASTûTAPPEDûTHEûLOANûMARKETû of 205.8bp (onshore) and 185.8bp (offshore) products maker HEALTH AND HAPPINESS VIAûITSûUNITû&0û&INANCEûWITHûAû53Mû based on margins of 175bp (onshore) and INTERNATIONAL HOLDINGS, formerly known as three-year club in November 2015. BPûOFFSHORE ûOVERû,IBORûANDûANûAVERAGEû Biostime International Holdings, has (ONGû+ONG LISTEDû&IRSTû0ACIlCûHASûBUSINESSû LIFEûOFûûYEARS LAUNCHEDûAû53M EQUIVALENTûTHREE YEARû interests in South-East Asia in telecoms, The borrower, controlled by the RElNANCINGûINTOûLIMITEDûSYNDICATION infrastructure, food products and natural )NDOMOBILû'ROUP ûPROVIDESûMOTORûVEHICLEû Goldman Sachs is the mandated lead resources. ANDûHEAVY DUTYûEQUIPMENTûlNANCINGû arranger and bookrunner of the facility, services. WHICHûCOMPRISESûAû53M EQUIVALENTû TEXHONG BACK WITH HK$1bn LOAN Participants are Maybank, Taiwan term loan and a US$50m-equivalent Cooperative Bank, First Commercial Bank, Korea revolving credit facility. The overall facility TEXHONG TEXTILE GROUP is returning to the loan Development Bank, Apple Bank for Savings, Bank is available in US and Australian dollars. MARKETûFORûAû(+BNû53M ûTHREE YEARû of Taiwan, Bank SBI Indonesia and Taishin The interest margins range from 150bp loan after raising a smaller deal last year. International Bank. TOûBPûOVERû,IBOR""39ûTIEDûTOû((Sû Sumitomo Mitsui Banking Corp is the RATINGSûFROMû-OODYSûANDû30û4HEûINITIALû mandated lead arranger and bookrunner of DELTA MERLIN LOAN CLOSES WITH NINE margin is 200bp. the transaction, which offers an interest -,!SûCOMMITTINGû53MûORûMOREûWILLû MARGINûOFûBPûOVERû,IBORûANDûHASûANû A US$215m term loan for Indonesian textile RECEIVEûALL INûPRICINGûOFûBPûWITHûAû average life of 2.7 years. manufacturer DELTA MERLIN DUNIA TEXTILE has participation fee of 100bp, while lead ,EADûARRANGERSûCOMMITTINGû(+MûORû closed with nine banks joining in general arrangers joining with US$50m–$74m MOREûWILLûRECEIVEûALL INûPRICINGûOFûBPû syndication. EARNûALL INûPRICINGûOFûBPûWITHûANû WITHûAûPARTICIPATIONûFEEûOFûBP ûWHILEû BNP Paribas, ING Bank, Maybank and 85bp fee. Arrangers joining with US$25m– ARRANGERSûJOININGûWITHû(+MnMû Standard Chartered were the mandated lead MûEARNûALL INûPRICINGûOFûBPûWITHûAû EARNûALL INûPRICINGûOFûBPûWITHûAûBPû arrangers and bookrunners of the 70bp fee. fee. transaction, which was reduced from a The borrower is BIOSTIME HEALTHY AUSTRALIA A site visit and bank meeting are expected US$250m target and will be signed soon. INVESTMENT ûANûINDIRECTûUNITûOFû((û((û TOûBEûHELDûINû*IANGSUûPROVINCESû8UZHOUûCITYû The deal paid top-level all-in pricing of and other units are guarantors of the senior ORûINû3HANGHAIûFROMû*ULYûûTOû*ULYûû 520.77bp (onshore) or 495.77bp (offshore) secured term loan. Commitments are due on August 17. based on interest margins of 490bp 4HEûFACILITYûWILLûRElNANCEûAû53Mû The funds are for capital expenditure and ONSHORE ûANDûBPûOFFSHORE ûOVERû,IBOR three-year senior secured term loan that the general corporate purposes. Funds are for working capital and to BORROWERûSIGNEDûINû!PRILûûWITHûû 4HEûBORROWERûOBTAINEDûAû(+MûTHREE RElNANCEûAû53MûLOANûSIGNEDûINû LENDERS ûINCLUDINGû-,!"SûANDûUNDERWRITERSû YEARûRElNANCINGûINû!PRILûLASTûYEARû#HIYUû 3EPTEMBERûû!.: û".0û0ARIBAS û$EUTSCHEû 'OLDMANû3ACHSûANDû)NDUSTRIALûû "ANKINGû#ORPûWASûTHEû-,!"ûOFûTHATû Bank, Indonesia Exim, StanChart and #OMMERCIALû"ANKûOFû#HINAû4HEûû lNANCING ûWHICHûOFFEREDûTOP LEVELûALL INû Sumitomo Mitsui Banking Corp were the BORROWINGûCOMPRISEDûAû53MûTRANCHEû pricing of 180bp over Hibor via a margin of -,!"SûOFûTHATûDEAL ûWHICHûCOMPRISEDûAûlVE and a US$210.5m-equivalent portion in 170bp over Hibor and a 27bp upfront fee. year term loan Tranche A and a three-year Australian dollars and paid a top-level all-in Founded in 1997, Texhong has operations term loan Tranche B. The respective margins PRICINGûOFûBPûBASEDûONûAûMARGINûOFûBPû INûMAINLANDû#HINA û6IETNAMûANDû-ACAO FORû4RANCHESû!ûANDû"ûWEREûBPûANDûBPû for an average life of 2.5 years. OVERû,IBOR ûANDûTHEûTOP LEVELûFEESûWEREûBP Proceeds from the US$50m senior secured Mandated lead arrangers and multi-currency revolver will be used for INDONESIA bookrunners are Standard Chartered, BNP general corporate purposes and working Paribas, ING Bank and Maybank. Union Bank of capital. INDOMOBIL INCREASES LOAN TO US$275m India is a mandated lead arranger. 4HEû53MûLOANûWASûUSEDûTOûRElNANCEû ,EADûARRANGERSûAREûTaiwan Cooperative Bank, a bridge loan of the same size, which backed PT INDOMOBIL FINANCE INDONESIA has increased Indonesia Eximbank, Aozora Bank and Shinhan "IOSTIMESû!BNû53BNûTHEN û its three-year amortising loan to US$275m Bank. Arrangers are NEC Capital, J Trust Bank, ACQUISITIONûOFûANûûSTAKEûINû!USTRALIANû from the US$100m target after attracting Bank of Panhsin and Shanghai Commercial & vitamin maker Swisse Wellness. eight banks in general syndication. Savings Bank.

International Financing Review July 28 2018 59 Mizuho Bank arranged the loan, which is split into seven tranches with tenors Wpd sends RFP for wind ranging from 4.5 to 10 years. Three of the seven tranches pay interest margins ranging from 27.5bp to 50bp over three- farm project month Tibor, while the other four TRANCHESûCARRYûlXED RATEûINTEREST ûWHICHûISû TAIWAN First phase to raise NT$64.7bn yet to be determined. Aozora Bank, Hyakugo Bank, Mizuho Trust & German wind project developer WPD is Guanyin project, to be built two kilometres off Banking, MUFG, Nishi-Nippon City Bank, Resona requesting proposals for a NT$64.7bn (US$2.1bn) Taoyuan County’s coast, will be commissioned in Bank, Senshu Ikeda Bank, Sumitomo Mitsui 18-year project financing to fund the first phase 2021 with about 350 MW. Banking Corp and Sumitomo Mitsui Trust Bank of an offshore wind project in Taiwan’s Yunlin In June, a NT$18.7bn project financing was JOINEDûINûSYNDICATIONû$RAWDOWNûISûSLATEDû area. signed to back the second stage of the 128MW FORû*ULYû Sumitomo Mitsui Banking Corp is the Formosa I OWF, Taiwan’s first commercial-scale 4HEûFUNDSûWILLûRElNANCEûAûcBNûlVE financial adviser on the deal, which comprises offshore wind project. BNP Paribas was the YEARûTERMûLOANûCOMPLETEDûINû*ULYûûANDû a NT$25.88bn commercial loan tranche and a coordinator and financial adviser of the 16- a ¥10.5bn three-year term loan closed in NT$38.819bn ECA tranche with insurance cover year financing, which comprises a NT$16.6bn July 2015. Mizuho arranged both loans. from EKF, Hermes and Atradius. commercial term loan tranche and a portion with 4HEûBORROWERûINVESTSûMAINLYûINûOFlCEû The deadline for responses is August 20, and insurance cover from EKF. buildings in Tokyo, Osaka and Nagoya. the deal is expected to close by the end of this The other banks lending to the commercial year. tranche included ANZ, Cathay United Bank, KENEDIX RAISES ¥12.7bn LOAN Separately, Wpd will raise another project Credit Agricole CIB (documentation bank), financing of about NT$55bn to back the second DBS Bank, EnTie Commercial Bank, ING Bank KENEDIX RESIDENTIAL INVESTMENT CORP is set to phase of another offshore wind project in (modelling bank), KGI Bank, MUFG (insurance sign a ¥12.7bn (US$114m) bullet term loan Taiwan’s Guanyin area next year. bank), Societe Generale (technical bank) and for real estate acquisitions, the Tokyo The projects are part of Taiwan’s ambitious Taipei Fubon Commercial Bank. Stock Exchange-listed real estate target to install 5.5GW of offshore wind power The interest margin on the commercial investment trust said. capacity by 2025. On April 30, the country’s tranche was 230bp over Taibor during the Sumitomo Mitsui Banking Corp is arranging Minis try of Economy announced the award of construction period. The margin will step down the facility, which comprises a ¥5.7bn 1.5- 1GW of grid connection capacity to Wpd for the to 200bp after the start of operations, which is year tranche and a ¥7bn 7.5-year portion implementation of the two projects. expected sometime in 2020. The EKF-covered WITHûRESPECTIVEûINTERESTûMARGINSûOFûBPû The Yunlin project, to be built eight kilometres tranche offered margins ranging from 86bp to and 52.5bp over one-month Tibor. off Yunlin County’s coast, will be commissioned 116bp. Aozora Bank, Bank of Fukuoka, Development in 2020/2021 with about 650–700 MW. The Evelynn Lynn Bank of Japan, Mizuho Bank, Mizuho Trust & Banking, MUFG, Nippon Life Insurance, Resona Bank, Shinsei Bank and Sumitomo Mitsui Trust total project cost is estimated at ¥20bn Bank joined in syndication. JAPAN (US$180m). Signing and drawdown are slated for *ULYûûANDû!UGUSTû ûRESPECTIVELYû4HEû TRIO SIGNS DESALINATION JOGMEC SIGNS ZERO-INTEREST LOAN REIT mainly invests in residential PROJECT LOAN buildings. JAPAN OIL GAS & METALS NATIONAL CORPSûLATESTû Three Japanese banks signed a US$114m 20- cBNû53M ûONE YEARûBULLETûTERMûLOANû YEARûLOANûFORûTHEû*'#û#ORP LEDû3HARQIYAHû has priced with a zero interest rate after raising a MALAYSIA desalination project in Oman on July 11, HEAVYûOVERSUBSCRIPTIONûOFûUPûTOûcBN ûTHEû Nippon Export & Investment Insurance (Nexi) state-backed company said on July 20. FLY SIGNS AIRCRAFT PURCHASE LOAN said. The interest rate on the government- Nexi will provide 100% political and 90% guaranteed loan was determined through New York-listed FLY LEASING has signed a commercial risk coverage to the loan, which CONVENTIONALûAUCTIONS ûSIMILARûTOû*/'-%#Sû US$1.27bn secured loan backing its was provided by MUFG, Shinsei Bank and previous zero-interest loan in April. Mizuho PURCHASEûOFûAIRCRAFTûFROMû-ALAYSIASûmAGSHIPû Sumitomo Mitsui Trust Bankû4HISûISû.EXISûlRSTû Bank is the agent. Several lenders, including budget airline AirAsia. insurance coverage for a seawater regional banks, joined in syndication. BNP Paribas, Citigroup, Commonwealth Bank desalination plant project. Shinsei is $RAWDOWNûISûSLATEDûFORû!UGUSTûû of Australia and Deutsche Bank are the original PROVIDINGû53MûTOûTHEûPROJECTû Proceeds are for operating funds. mandated lead arrangers and bookrunners The borrowing entity is AL ASILAH /NûITSûLASTûVISITûINû!PRIL û*/'-%#ûRAISEDû of the facility, which was reduced slightly DESALINATION ûOWNEDûBYû*APANSû*'#û û cBNûTHROUGHûAûONE YEARûTERMûLOANû FROMûAû53BNûTARGETûFirst Abu Dhabi /MANSû5NITEDû)NFRASTRUCTUREû$EVELOPMENTû that was also heavily oversubscribed. Bank and MUFG Union BankûJOINEDûASû-,!"S û ûANDû3OUTHû+OREASû$OOSANû(EAVYû while Fifth Third Bank and Korea Development )NDUSTRIESûû#ONSTRUCTIONû MCUBS MIDCITY SIGNS REFI BankûCAMEûINûASû-,!SûBEFOREûTHEûLAUNCHûINTOû The project is expected to begin general syndication. operations in April 2021 and to sell about MCUBS MIDCITY INVESTMENT CORP has signed a The deal comprises a US$574.5m term 80,000 cubic metres of desalinated water cBNû53M ûBULLETûLOANûFORû LOANûTRANCHEû!ûFORû&LYû,EASINGûANDûAû PERûDAYûTOû/MANû0OWERûû7ATERû RElNANCING ûTHEû4OKYOû3TOCKû%XCHANGE 53MûTERMûLOANûTRANCHEû"ûFORûINCLINE B Procurement for more than 20 years. The listed real estate investment trust said. AVIATION.

60 International Financing Review July 28 2018 LOANS ASIA-PACIFIC

Tranche A is further split into a -IZUHOûALSOûLEDûTHEûûDEAL ûWHICHûHADû 53MûTWO YEARûTRANCHEûANDûAû TAIWAN a three-year tenor with a two-year extension 53MûlVE YEARûPORTION ûWHILEû option and offered a margin of 108bp over TRANCHEû"ûCOMPRISESûAû53MûTWO QUANTA COMPUTER INCREASES LOAN THREEûORûSIX MONTHû,IBORû4HEûBORROWERû YEARûTRANCHEûANDûAû53MûlVE YEARû would pay any excess interest rate beyond a portion. QUANTA COMPUTER has increased a three-year BPûDIFFERENCEûBETWEENû4!)&8ûANDû,IBOR 4HEûTWOûANDûlVE YEARûTRANCHESûOFFEREDû loan to US$880m from the US$550m target Mandated lead arrangers and TOP LEVELûALL INûPRICINGûOFûBPûANDû after attracting 19 banks in general bookrunners are Mizuho Bank, HSBC, BP ûRESPECTIVELY ûBASEDûONûINTERESTû syndication. Metrobank, MUFG, United Overseas Bank, Bank of MARGINSûOFûBPûANDûBPûOVERû,IBORû Mizuho Bank was the mandated lead China Taipei, Bank of Communications Taipei, ANDûESTIMATEDûAVERAGEûLIVESûOFûûANDû arranger and bookrunner of the transaction, Bank of Taiwan, Cathay United Bank, Chang Hwa 4.01 years. WHICHûCOMPRISESûAû53Mû4RANCHEû!ûFORû Commercial Bank, E Sun Commercial Bank, First &LYû,EASINGûISûMANAGEDûBYûAIRCRAFTûLEASEû 1UANTAûANDûAû53Mû4RANCHEû"ûFORûITSû Commercial Bank, Hua Nan Commercial Bank, giant BBAM. Cayman-incorporated subsidiary QUANTA Land Bank of Taiwan, Mega International Mandated lead arrangers and INTERNATIONAL. Commercial Bank and Taiwan Cooperative Bank. bookrunners are BNP Paribas, Citigroup, The interest margins for Tranches A and B Mandated lead arrangers are Taishin Commonwealth Bank of Australia, Deutsche AREûBPûANDûBPûOVERû,IBOR ûRESPECTIVELYû International Bank, EnTie Commercial Bank and Bank, MUFG Union Bank and First Abu Dhabi The Taiwanese notebook computer maker Shanghai Commercial & Savings Bank. Sumitomo Bank. Mandated lead arrangers are Fifth will pay any excess interest rate beyond a Mitsui Banking Corp is a participant. Third Bank and Korea Development Bank. BPûDIFFERENCEûBETWEENû4!)&8ûANDû,IBOR Participants are Societe Generale, KeyBank, "ANKSûJOININGûASû-,!"SûWEREûOFFEREDûAû MAO TE SEEKS NT$7bn RECAP LOAN National Australia Bank, TIAA Bank, DVB Bank, top-level upfront fee of 15bp. Funds are to First Commercial Bank, Bank of East Asia, Chang RElNANCEûAû53MûREVOLVINGûCREDITû 4AIWAN BASEDûINVESTMENTûlRMûMAO TE Hwa Commercial Bank, E. Sun Commercial Bank FACILITYûSIGNEDûINû!UGUSTûûANDûFORû INTERNATIONAL INVESTMENT is seeking a and Columbia State Bank. working capital purposes. .4BNûlVE YEARûLOANûTOûRECAPITALISEûCABLEû KKR targets record LBO TAIWAN Goldman Sachs underwrites US$1bn LCY loan in KKR’s ﬁrst Taiwanese buyout

KKR is to borrow around US$1bn to support Despite cutting the margin by 30bp to 220bp Carlyle acquired the controlling stake in EBC its leveraged buyout of Taipei-listed speciality over the secondary CP rate, nearly 20 banks joined in 2006 from the ex-chairman of Eastern Media chemicals producer LCY CHEMICAL, braving a the financing, but Taiwanese regulators rejected International for an undisclosed sum. Carlyle and challenging regulatory environment that has the buyout after lengthy reviews in June 2011. Eastern Media International (21.32%) have tried curbed private equity dealmaking to date. “Our government was not in favour of global repeatedly to offload their stakes since mid 2015. The NT$47.8bn (US$1.56bn) buyout of LCY PE firms’ buyouts of high-profile companies Before the successful sale to Mao Te, the Chemical is set to be the largest private equity- in the past as they were concerned about pair’s last attempt was in June 2017, but Taiwan’s backed acquisition in Taiwan. KKR is heading a the foreign investors’ long term operational National Communications Commission blocked consortium of investors, including employees commitment and the investment’s impact on telecommunication services provider Taiwan and family members. competition within the sector,” a second loan Optical Platform Group’s proposed purchase of a Goldman Sachs is underwriting and banker from a Taiwanese state-owned bank said. 65% stake in EBC. arranging the debt financing, and Taiwan’s Four lenders, including sole lead CTBC Bank, liquid banks are awaiting news of any EXIT HURDLES were expected to complete a NT$13.5bn club syndication with interest, given the country’s Several other private equity buyouts have run loan for Taiwan Optical’s buyout. previous lack of buyout loans. into similar objections from Taiwanese regulators In 2016, Dan Mintz, a producer of Hollywood The island’s leveraged finance industry is more recently, most notably a string of buyouts films including Iron Man 3, backed out, seven littered with failed deals due to lengthy review in the cable television industry. months after announcing an agreement with periods and scrutiny from multiple regulators. In January, Carlyle Group finally sold a 62.4% Carlyle and Eastern Media International to buy “There has been little global private equity stake in cable TV operator Eastern Broadcasting their combined 82.2% stake in EBC in December interest in Taiwan over the past couple of years,” to Taiwanese investment firm MAO TE 2015. a Taipei-based senior loans banker said. INTERNATIONAL, which is owned by local property In February 2017, South Korean private equity KKR last attempted a buyout in Taiwan in tycoon Chang Kao-shiang, for NT$11.4bn after firm MBK Partners also suffered a blow to its April 2011, but local regulators blocked its several attempts. plan to sell its stake in cable TV company China US$1.6bn bid to take electronic component CTBC Bank is leading a NT$7bn five-year loan Network Systems. manufacturer Yageo private, citing insufficient for Mao Te. (See Taiwan Syndicated Loans.) Taiwan’s Far EasTone Telecommunications protection of minority shareholder rights, among “It took a long time for Carlyle to get an exit and Morgan Stanley Private Equity Asia other reasons. as Taiwan’s regulators take a cautious approach withdrew a joint bid for CNS, which disappointed A NT$31.1bn debt package was syndicated to approving foreign investment in or exiting lenders who had committed to a NT$46.8bn in May that year and raised an oversubscription certain sensitive industries such as public loan backing the buyout. that allowed joint bookrunners and underwriters utilities and the media sector … which can also That deal also suffered a drawn-out UBS and Nomura to cut pricing on the deal lead to delays in the approval process,” a third regulatory process that lasted nearly 20 months. through a reverse flex. loan banker in Taipei said. Evelynn Lin

International Financing Review July 28 2018 61 television operator Eastern Broadcasting, 4HEûlNANCINGûCOMPRISESûAû53Mû in which it owns a controlling stake. (See BRIDGE TO EQUITYûTHATûMATURESûONû*UNEûû Taiwan Box) EUROPE/MIDDLE 2019; a US$185m one-year bridge loan; and a CTBC Bank is the mandated lead arranger EAST/AFRICA 53MûlVE YEARûTERMûLOAN and bookrunner of the transaction, which Nordea and SEB, acting as mandated lead has attracted four to six banks in limited arrangers, underwriters and bookrunners syndication. CZECH REPUBLIC ONûTHEûlNANCING ûHAVEûAGREEDûTOûPROVIDEû The deal offers an interest margin of BACK STOPRElNANCINGûFACILITIESûINûRELATIONûTOû 125bp over Taibor, with a pre-tax interest CZECH REPUBLIC’S EPIF CLOSES EXISTINGûlNANCING RATEûmOORûOFûû,ENDERSûAREûBEINGûOFFEREDû €1.5bn LOAN Ahlstrom-Munksjo is planning to launch a a top-level upfront fee of 25bp. €150m rights issue in the fourth quarter to Earlier this month, Mao Te, owned by Czech energy infrastructure company EP PARTûlNANCEûTHEûACQUISITION 4AIWANESEûPROPERTYûTYCOONû#HANGû+AO INFRASTRUCTURE (EPIF) has closed a €1.5bn The acquisition comes after Ahlstrom- shiang, acquired a 10.8% stake in EBC from loan with a group of around 20 banks. The Munksjo announced the roughly €100m minority shareholders, bringing its total facility includes several tranches with purchase of Brazilian paper mill Caieiras in shareholding to 94.5%. MATURITIESûRANGINGûBETWEENûFOURûANDûlVEû April. Banco Citibank agreed to provide That helped Mao Te conclude a process years. lNANCINGûFORûTHATûDEAL that began last August when Chang The loan was 100% oversubscribed before !HLSTROM -UNKSJOûHADûNETûDEBTûOFûõMû ESTABLISHEDûTHEûINVESTMENTûlRM ûWHICHû BANKSûCOMMITMENTSûWEREûSCALEDûBACKûANDû ASûATû-ARCHûû4HEûACQUISITIONSûAREû has mainly engaged in property WILLûBEûUSEDûTOûRElNANCEûTHEûCOMPANYSû expected to increase that by around €475m, investments and trading of building existing debt. ASSUMINGûTHEû53MûPURCHASEûPRICEûFORû materials in Taiwan. !TûTHEûBEGINNINGûOFû û%0)&SûPARENTû Expera and taking into account the rights In November, Mao Te acquired a company - Czech energy giant EPH - created issue. ûSTAKEûINû%"#ûFROMû%ASTERNû EPIF by carving out some of its strongest -EDIAû)NTERNATIONALûFORû.4BN û assets including a 49 percent stake in Slovak and followed it up with the purchase gas pipeline operator Eustream, which FRANCE INû&EBRUARYûOFûAûûSTAKEûFROMû delivers Russian natural gas via Ukraine to PRIVATEûEQUITYûGIANTû#ARLYLEû'ROUPû the European Union and European gas to ATOS BACKS SYNTEL BUY WITH DEBT for NT$11.4bn. Ukraine. #ARLYLEûHADûRAISEDûAû.4BNûLOANû %0(ûSOLDûAûûSTAKEûINû%0)&ûINû/CTOBERû French digital services group ATOS SE is INû*ULYûûTOûFUNDûTHEûLEVERAGEDû ûTOûANûINVESTORSûGROUPûLEDûBYû-ACQUARIEû BACKINGûITSû53BNûACQUISITIONûOFû53 BASEDû buyout. The three-tranche loan paid top- Infrastructure. INFORMATIONûTECHNOLOGYûlRMû3YNTELûWITHûAû LEVELûALL INûPRICINGûOFûBETWEENûBPû 4HEûDEBTûBEINGûRElNANCEDûINCLUDESûAûlVEû FULLYûUNDERWRITTENûDEBTûlNANCINGûFROMûBNP and 222.24bp based on initial margins of YEARûõBNûLOANûRAISEDûBYû%0(ûWHICHûCLOSEDû Paribas and JP Morgan. between 190bp and 205bp over the INû$ECEMBERûûVIAûARRANGERSû#ITIGROUP û 4HEûlNANCING ûWHICHûCOMPRISESûAûMIXTUREû primary CP rate and a blended average life ).' û3OCIETEû'ENERALEûANDû5NI#REDITûANDû of euros and US dollars and maturities, will of 5.57 years. was used to fund the reorganisation of the be used to fund the acquisition and to group. RElNANCEûEXISTINGûDEBTû4HEûAVERAGEûCOSTûOFû EPIF is an energy infrastructure utility THEûlNANCINGûISûAROUNDû VIETNAM business focused on gas transmission, gas 4HEûTRANSACTIONûISûINûLINEûWITHû!TOSû and power distribution, heat and power lNANCIALûPOLICYûWITHûANûENDûOFû*UNEûûPROû BIDV EXTENDS DEADLINE FOR generation and gas storage. FORMAûNETûLEVERAGEûRATIOûOFûBELOWûAROUNDûû US$150m LOAN The company controls the Eustream gas TIMESûWITHûAROUNDûõBNûOFûNETûDEBT transmission pipeline, the largest gas The combined company will target strong The deadline for BANK FOR INVESTMENT & corridor for deliveries of Russian gas to deleveraging over the next two years using DEVELOPMENT OF VIETNAMSû53MûTHREE Western, Central and Southern Europe, ANTICIPATEDûFREEûCASHûmOWûGENERATIONûWITHû YEARûBULLETûLOANûATTRACTEDûAROUNDûlVEû with principal operations in Slovak Republic targeted leverage of less than 0.5 times by lenders, with another half-dozen expected and Czech Republic. the end of 2020. to join. After the acquisition, Atos will Cathay United Bank is the mandated lead substantially increase headroom under its arranger and bookrunner of the FINLAND existing 2.5 times leverage covenant at RElNANCING ûWHICHûHASûAû53Mû AROUNDûõBNûINû$ECEMBERûûUPûFROMû greenshoe option and offers an interest AHLSTROM-MUNKSJO NETS US$615m around €1.7bn as of June 2018. MARGINûOFûBPûOVERû,IBOR FOR EXPERA ACQUISITION The acquisition is expected to close by the -,!SûJOININGûWITHû53MûORûMOREûORû end of 2018. 53MnMûWILLûRECEIVEûTOP LEVELûALL INû &INNISHûlBRE BASEDûMATERIALSûlRMûAHLSTROM- )Nû$ECEMBERûû!TOSûBACKEDûITSûFAILEDû PRICINGûOFûBPûORûBPûWITHûUPFRONTû MUNKSJO HASûSECUREDûAû53MûLOANû õBNûBIDûFORû$UTCHûCYBERûSECURITYûlRMû FEESûOFûBPûORûBP ûRESPECTIVELYû,EADû backing its acquisition of US-based speciality 'EMALTOûWITHûANûUNDERWRITTENûlNANCINGû arrangers joining with US$20m–$29m paper producer Expera. from two major international banks EARNûALL INûPRICINGûOFûBPûWITHûAûBPû The acquisition will expand the covering the full amount of the offer. fee, while arrangers joining with US$15m– COMPANYSûPRESENCEûINû.ORTHû!MERICA û Atos tapped the loan market for a €1.8bn, MûEARNûALL INûPRICINGûOFûBPûWITHûAû strengthening its offering of advanced YEARûLOANûRElNANCINGûINû.OVEMBERû 20bp fee. CUSTOM MADEûlBREûBASEDûMATERIALSûANDû 2014. Both extension options were 4HEû6IETNAMESEûGOVERNMENTûOWNSûAû ALMOSTûTRIPLINGûTHEûCOMPANYSûNETûSALESûINû exercised. MAJORITYûSTAKEûINû")$6 the US.

62 International Financing Review July 28 2018 LOANS EMEA

ORANO SIGNS DEBUT €780m aMûACQUISITIONûOFû#HANNELû,INKû Co-ordinating bookrunning mandated SYNDICATED LOAN %NTERPRISESû&INANCEû0LCSû#,%& û#LASSû'û LEADûARRANGERSûONûTHEûlNANCINGûAREûBNP INmATION LINKEDûBONDSûHELDûBYû'ERMANûSTATE Paribas, Citigroup, Deutsche Bank, MUFG, and French nuclear materials company ORANO, owned FMS Wertmanagemen. UniCredit ûWITHû$EUTSCHEû"ANKûALSOûACTINGûASû previously New Areva, has signed a €780m The loan, which is due to mature on facility agent. revolving credit facility with a group of nine .OVEMBERû ûPAIDûANûINITIALûMARGINûOFû Bookrunning mandated lead arrangers are international banks. BPûOVERû,IBORûSTEPPINGûUPûTOûBPûOVERû BBVA, Banco Santander, Bank of America Merrill, The undrawn debut syndicated loan was time. Bank of China, Bank of Communications, Barclays, signed on July 11 and strengthens the !FTERûTHEûPURCHASEûBONDSû'ETLINKûHASûTHEû BayernLB, China Construction Bank, Commerzbank, COMPANYSûLIQUIDITY option, up to 2025, to acquire any or all of Credit Agricole CIB, Goldman Sachs, HSBC, ICBC, JP The loan is for three years plus two one- THEû#LASSû'û.OTESûANDORûTHEû'û.OTESû Morgan, LBBW, Lloyds Bank, Mizuho Bank, Royal year extension options. owned by FMS. Bank of Canada, Societe Generale, Standard New Areva was created through the Chartered, SMBC, and TD Bank. corporate restructuring of Areva in 2017 Mandated lead arrangers are ANZ Banking that saw the company sell off its nuclear GERMANY Group, Danske Bank, DBS Bank, DZ Bank, Helaba, REACTORûBUSINESSû û.EWû.0û ûTOû%$& ING Bank, Intesa Sanpaolo, SEB, and Wells Fargo. New Areva changed its name to Orano in VNG SIGNS €700m EARLY LOAN ,EADûARRANGERSûAREû"ANKûOFû.EWû9ORKû January. REFINANCING Mellon, Bank of Nova Scotia, CM-CIC, Erste Orano is involved in the production and 'ROUPû"ANK û.ATIXIS û2AIFFEISENû"ANKû recycling of nuclear materials, waste 'ERMANûNATURALûGASûCOMPANYûVERBUNDNETZ GAS International, US Bank, and Westpac management, and the dismantling of AG 6.' ûHASûSIGNEDûAûõMûlVE YEARû Banking Corp. nuclear power plants. SYNDICATEDûLOANûTOûRElNANCEûITSûEXISTINGûõBNû “We have made optimal use of the loan, which was due to mature in 2020. favourable conditions in a volatile BUREAU VERITAS COMPLETES The loan was signed via coordinating environment and have created a long-term €600m LOAN REFINANCING banks BNP Paribas, Commerzbank and LBBW, liquidity buffer with the early renewal of the along with other arranging banks DZ Bank existing credit line,” said Bodo Uebber, &RENCHûCERTIlCATIONûCOMPANYûBUREAU VERITAS and UniCredit. Commerzbank is $AIMLERûBOARDûMEMBER COMPLETEDûAûõMûMULTICURRENCYû documentation agent. $AIMLERûSELF ARRANGEDûITSûPREVIOUSûõBNû revolving credit facility (RCF), replacing the Clifford Chance advised the bank LOANûINû3EPTEMBERûû4HATûlNANCINGûALSOû COMPANYSûEXISTINGûõMû2#&ûONûMOREû syndicate, which totals 11 banks, down HADûAûlVE YEARûMATURITYûWITHûTWOûONE YEARû favourable terms. from 14 banks on the previous deal, which extension options. The new facility was part of the was arranged in January 2015. That facility, which was coordinated by COMPANYSûlRST HALFûFUNDINGûACTIVITY ûWHICHû ,EIPZIG HEADQUARTEREDû6.'ûISûINVOLVEDûINû ".0û0ARIBAS û$EUTSCHEû"ANKûANDû(3"# ûPAIDû ALSOûINCLUDEDûAûõM û MONTHûZERO the trading and sale, transportation, and a margin of 27.5bp over Euribor. COUPONûSENIORûlXED RATEûBOND storage of natural gas. The company has $AIMLERûISûRATEDû!ûBYû30 û!ûBYû-OODYSû 4HEûFUNDINGûFURTHERûDIVERSIlEDûTHEû around 1,200 employees and reported sales and A- by Fitch. COMPANYSûSOURCESûOFûDEBT ûWHICHûINCLUDESû OFûAROUNDûõBNûINû the bank loan market, euro-denominated The company is majority owned by BANKS ASSEMBLE FOR SCOUT24’S bonds, US private placements, Schuldschein Energie Baden-Wuerttemberg, which has €1bn LOAN REFI notes and commercial paper. 74.21% share. 4HEû2#&ûISûFORûlVEûYEARSûPLUSûTWOûONE YEARû 4HEûBANKûGROUPûHASûEMERGEDûONû'ERMANû extension options and closed oversubscribed DAIMLER SIGNS €11bn LOAN REFINANCING digital marketplace operator SCOUT24SûõBNû with commitments from a group of 14 lVE YEARûSYNDICATEDûLOAN ûWHICHûRElNANCESû banks. 'ERMANûCARûMAKERûDAIMLER has signed an its existing €800m loan and backs its all-cash Bookrunners and mandated lead €11bn syndicated revolving credit facility, €285m acquisition of comparison website arrangers are Bank of America Merrill Lynch, replacing its existing €9bn credit line on operator Finanzcheck.de. Barclays Bank, BNP Paribas, Credit Agricole CIB, SIGNIlCANTLYûIMPROVEDûTERMS HSBC, Natixis and Societe Generale. $AIMLERûDOESûNOTûINTENDûTOûDRAWûTHEû EMEA LOANS BOOKRUNNERS – FULLY Mandated lead arrangers are Banco CREDITûLINE ûWHICHûISûFORûlVEûYEARSûPLUSûTWOû SYNDICATED VOLUME Santander, Commerzbank, CIC, ING Bank, Mizuho one-year extension options, but will use it to BOOKRUNNERS: 1/1/2018 TO DATE Bank, NatWest, and UniCredit Bank. SECUREûSUFlCIENTûlNANCIALûmEXIBILITY Managing No of Total Share HSBC France is facility agent. $ESPITEûTHEûHIGHERûAMOUNTûOFûTHEûFACILITY û bank or group issues US$(m) (%) The previous facility was arranged in July the commitment fee to be paid on the 1 BNP Paribas 119 37,602.89 9.3 2012 and subsequently amended in 2014, lNANCINGûISûLOWERûTHANûTHEûPREVIOUSûFACILITY 2 JP Morgan 46 28,152.40 6.9 extending the maturity to April 2019. 4HEûlNANCINGûSHOWSûTHATûTHEûDOWNWARDû 3 SG 86 23,697.18 5.8 pressure on pricing in the investment-grade 4 Credit Agricole 107 23,215.28 5.7 GETLINK EYES REFINANCING OF syndicated loan market is being maintained 5 Citigroup 56 19,559.59 4.8 £190m LOAN as banks in Europe remain underlent and 6 Deutsche Bank 66 19,447.49 4.8 keen to book assets, especially at the higher 7 UniCredit 92 19,187.53 4.7 GETLINK SE ûFORMERLYû'ROUPEû%UROTUNNEL û end of the credit spectrum. 8 HSBC 75 16,627.07 4.1 INTENDSûTOûRElNANCEûANûEXISTINGûaMû 4HEûlNANCINGûCLOSEDûSIGNIlCANTLYû 9 ING 78 15,730.29 3.9 bank loan in the second half of 2018. oversubscribed with more than 40 banks 10 BAML 43 14,702.02 3.6 4HEûlNANCINGûWASûPUTûINûPLACEûINû from Europe, Asia and America Total 443 406,017.47 February to part fund English subsidiary PARTICIPATING ûREmECTINGû$AIMLERSûGLOBALû Proportional credit %UROTUNNELû!GENTû3ERVICESû,TDSû%!3, û business, the company said. Source: Thomson Reuters SDC code: R17

International Financing Review July 28 2018 63 4HEûlNANCINGûISûBEINGûPROVIDEDûBYûAû -OBILCOM $EBITELSûõMûACQUISITIONûOFû %STABLISHEDûINû.OVEMBERû û'OSHAWKû group of nine banks led by joint Media Broadcast. COUNTSû(ONGû+ONGSû#HOWû4AIû&OOKû coordinators and bookrunners ABN AMRO %NTERPRISESû,TDûANDû.73û(OLDINGSû,TDûASû and UniCredit Bank. The banking syndicate GIESECKE + DEVRIENT GETS DEBUT equal shareholders. also comprises BayernLB, ING Bank, LBBW, DZ €200m SCHULDSCHEIN Bank, BNP Paribas, Helaba and NordLB. UniCredit Bank is also facility agent. 'ERMANûSECURITYûTECHNOLOGYûCOMPANYû ITALY Ashurst advised the banks. GIESECKE + DEVRIENT has placed a debut €200m 4HEûUNSECUREDûlNANCINGûINCLUDESûAû 3CHULDSCHEINDARLEHENû33$ AMPLIFON BACKS GAES GROUP õMûTERMûLOANûANDûAûõMûREVOLVINGû Proceeds will be used for general BUY WITH LOAN credit facility (RCF), of which €70m is drawn. corporate purposes including supporting There is also a €500m RCF which will be operational growth in the areas of payment, Italian hearing aid distributor AMPLIFON is used for acquisitions and has a three-year connectivity, identities, and digital security. lNANCINGûITSûõMûACQUISITIONûOFû3PANISHû maturity plus two one-year extension 4HEûlNANCING ûWHICHûWASûARRANGEDûBYû HEARINGûAIDûRETAILERû'!%3û'ROUPûWITHûAûlVE options. BayernLB and DZ Bank, comprises tranches year term loan fully underwritten by Pricing is based on a net debt to Ebitda WITHûMATURITIESûOFûlVE ûSEVENûANDûûYEARS UniCredit. grid and Socut24 expects to save €2.4m a High demand from investors – including Post-acquisition leverage is expected to be YEARûONûTHEûlNANCINGûAFTERûTHEûACQUISITIONûOFû savings banks and cooperative intuitions as AROUNDûûTIMESûANDû!MPLIFONûEXPECTSûAû &INANZCHECKDEû4HEûRElNANCINGûWILLûHAVEûAû WELLûASû'ERMANûCOMMERCIALûBANKSûnûSAWûTHEû RAPIDûDELEVERAGINGûTHANKSûTOûSTRONGûCASHûmOWû one-off cost of €4.1m in 2018. original target more than double. GENERATIONûAFTERûTHEûCOMBINATIONûWITHû'!%3 Scout24 is acquiring Finanzcheck.de from 'IESECKEû û$EVRIENTûAGREEDûAûõMûLOANû The acquisition is expected to close by the Acton Capital Partners, btov Partners, RElNANCINGûINû-AYûûVIAû"AYERN," û end of the fourth quarter. (IGHLANDû%UROPE û(ARBOUR6ESTû0ARTNERSûANDû #OMMERZBANK û$EUTSCHEû"ANK û$:û"ANK û !MPLIFONûISûACQUIRINGû'!%3ûFROMûTHEû &INANZCHECKDESûFOUNDERûANDûCHIEFû HSBC, and UniCredit, according to Thomson 'ASSOûFAMILYû'!%3ûHADûREVENUESûOFûAROUNDû EXECUTIVEûOFlCERûANDûOTHERS 2EUTERSû,0#ûDATA €210m in 2017 with adjusted Ebitda of In April, Scout24 repaid €250m of its 4HATûlVE YEARûlNANCINGûCOMPRISEDûAû AROUNDûõM existing syndicated loan using proceeds €120m term loan, a €180m revolving credit from its debut €215m Schuldschein and facility and a €500m guarantee facility. PIRELLI CLOSES €525m SCHULDSCHEIN EXCESSûCASHûmOWû4HEûLOANûTOTALLEDûõMû -UNICHûHEADQUARTEREDû'IESECKEû û after the repayment. $EVRIENTûGENERATEDûSALESûOFûAROUNDûõBNû Italian tyre maker PIRELLI has closed a €525m 4HEûCOMPANYûAGREEDûTHEûUNSECUREDûlVE INûû4HEûCOMPANYSûCUSTOMERûBASEû 3CHULDSCHEINDARLEHENû33$ YEARûSYNDICATEDûLOANûINû$ECEMBERûûFORû mainly comprises central and commercial 4HEû33$ûWILLûBEûUSEDûTOûRElNANCEûEXISTINGû õM ûCOMPRISINGûAûõMûTERMûLOANûANDû banks, mobile network operators, business DEBT ûFURTHERûOPTIMISINGû0IRELLISûSTRUCTUREû a €200m revolving credit facility. enterprises, governments, and public and keeping costs in check in the context of The term loan was fully drawn, while the authorities. a volatile credit market. revolver was initially €80m drawn. The 4HEûlNANCINGûCOMPRISESûAûõMûTHREE COMPANYûMADEûTWOûõMûREPAYMENTSûONû YEARûTRANCHE ûAûõMûlVE YEARûTRANCHEûANDû THEûlNANCINGûINû!UGUSTûûANDû*ANUARYû IRELAND a €20m seven-year tranche. 2018. Pirelli tapped the loan market in July 2017 GOSHAWK AVIATION INCREASES FORûAûõBNûLOANûRElNANCINGûINû*ULYûûVIAû FREENET USES €280m BRIDGE LOAN LOAN TO US$430m global coordinators JP Morgan, Banca IMI FOR CECONOMY STAKE BUY ANDû-5&' $UBLIN BASEDûAIRCRAFTûLEASINGûCOMPANYû ChemChina agreed to become the 'ERMANûINDEPENDENTûTELECOMSûPROVIDERû GOSHAWK AVIATION LTDûHASûINCREASEDûITSûlVE majority owner of Pirelli in March 2015, as FREENET backed its acquisition of a 9.1% stake YEARûTERMûLOANûTOû53MûAFTERûSIXûBANKSû PARTûOFûAûõBNûDEAL in consumer electronics retailer Ceconomy joined in general syndication. with a €280m bridge loan from UniCredit. Sole mandated lead arranger and UniCredit acted as bookrunner, bookrunner Agricultural Bank of China Hong NETHERLANDS coordinator facility agent and sole lender on Kong branch launched the deal in March at an the loan. INITIALûSIZEûOFû53M WERELDHAVE AGREES €350m Freenet announced at the end of June that The Chinese bank then signed and pre- SHORT-TERM REVOLVER it was acquiring the stake through a rights FUNDEDûTHEûFACILITYûATû53MûONû-AYû issue, representing a consideration of By the end of June, SG Asset, First $UTCHûPROPERTYûCOMPANYûWERELDHAVE has €277.4m. Commercial Bank, Hua Nan Commercial Bank AGREEDûAûõMûTWO YEARûSYNDICATEDû &REENETûAGREEDûAûõMûlVE YEARû and Taiwan Business Bank joined to close the revolving credit facility (RCF) that will serve syndicated loan in October 2017 via DEALûATû53Mû-OREûRECENTLY ûRoyal Bank as a liquidity bridge. ARRANGINGûBANKSû"AYERN," û#OMMERZBANK û of Canada and Chong Hing Bank came in to 4HEûlNANCINGûISûINûADDITIONûTOûTHEû ,""7ûANDû5NI#REDITû4HATûLOANûCOMPRISEDûAû INCREASEûTHEûLOANûSIZEûTOû53M COMPANYSûEXISTINGûõMû2#& ûWHICHûWASû õMûAMORTISINGûTERMûLOANûANDûAûõMû The bullet deal offered a top-level all-in EXTENDEDûBYûONEûYEARûTOûûINû&EBRUARY ûASû revolving credit facility. PRICINGûOFûBPûBASEDûONûANûINTERESTû WELLûASûAûRECENTûõMûRElNANCINGûOFûAû 4HEûlNANCINGûWASûUSEDûTOûCOMPLETEûTHEû MARGINûOFûBPûOVERû,IBOR MATURINGûFACILITYûINû"ELGIUMûFORûlVEûYEARS RElNANCINGûOFûAûBRIDGEûLOANûTHATûWASûPUTûINû 4HEûBORROWERSûAREû$IONYSUSû!VIATIONû$!#û 4HEûCOMPANYûAGREEDûITSûEXISTINGûõM û PLACEûINû-ARCHûûTOûBACKû&REENETSû ANDû-AGUEYû$UTCHû!VIATIONû"6û4HEû lVE YEARûSYNDICATEDû2#&ûINû&EBRUARYûû €714m acquisition of a stake in Swiss GUARANTORûISû'OSHAWKû!VIATIONû&UNDSûAREû VIAû!".û!-2/ û"ARCLAYS û".0û0ARIBAS û).'û telecoms provider Sunrise and subsidiary for general corporate purposes. Bank, Royal Bank of Scotland and Rabobank.

64 International Financing Review July 28 2018 LOANS EMEA

4HATûlNANCINGûHADûTWOûONE YEARû $EVELOPMENTû"ANKûTOûPARTLYûlNANCEûITSû placement lenders, led by Pricoa Capital in extension options and also included a Medupi coal power plant. CONJUNCTIONûWITHû-ET,IFEû)NVESTMENTû €100m accordion facility. Management, and comprises a €150m seven- Schipol-headquartered Wereldhave is a year facility and an €80m 10-year facility, closed-end investment company focused on SPAIN both with bullet repayments. shopping centres in France, Belgium, the The blended annual interest cost on the Netherlands and Finland. CELLNEX GOES GREEN ON €500m TWOûTRANCHESûISûAûlXEDûRATEûOFû LOAN RENEWAL

QATAR Spanish wireless infrastructure company SWEDEN CELLNEX TELECOM has renewed its existing OOREDOO SIGNS US$200m LOAN €500m syndicated loan, partly linking the NOBIA AGREES SKr2bn LOAN REFI applicable interest margin to its Qatari telecoms company OOREDOO has ENVIRONMENTAL ûSOCIALûANDûGOVERNANCEû%3' û Swedish kitchen specialist NOBIA has agreed SIGNEDûAû53MûlVE YEARûTERMûLOANûFROMû sustainability rating. Aû3+RBNû53M ûlVE YEARûSYNDICATEDû KfW IPEX-Bank TOûFUNDûTHEûCOMPANYSû 5NDERûTHEûRENEWALûTHEûlNANCINGûHASûBEENû LOAN ûRENEWINGûANûEXISTINGû3+RBNû investment programme, sourced from its EXTENDEDûTOû syndicated facility. European supply chain partners. 4HEû%3'ûRATINGûWILLûBEûPROVIDEDûBYû 4HEûlNANCINGûWASûALSOûUSEDûTOûFUNDû Ooredoo signed a US$1bn six-year Sustainalytics, an independent provider of .OBIASûRECENTûACQUISITIONûOFû$UTCHûKITCHENû REVOLVINGûCREDITûFACILITYûINû*UNEûû4HATû %3'ûRESEARCHûANDûRATINGSû#ELLNEXûWASûADDEDû supplier Bribus, which was announced loan was used for general corporate TOû3USTAINALYTICSû%3'ûSUSTAINABILITYûINDEXû EARLIERûINû*ULYû!ROUNDû3+RBNûOFûTHEûLOANû PURPOSES ûINCLUDINGûTHEûRElNANCINGûOFûDEBTû on June 29. is drawn. that was due to mature in March 2017. 4HEûlNANCINGûWASûORIGINALLYûARRANGEDûINû 4HEûPREVIOUSû3+RBNûFACILITY ûWHICHûWASû 1ATARû.ATIONALû"ANK û!.:û"ANKINGû !UGUSTûûVIAûAûCLUBûSYNDICATEûOFû"ANCAû arranged in 2014 with a group of three 'ROUP û"ANKûOFû!MERICA -ERRILLû,YNCH û"ANKû IMI, Barclays, BNP Paribas, Caixabank, banks, was due to mature in 2019. OFû4OKYO -ITSUBISHIû5&* û#ITIGROUP û$"3 û 'OLDMANû3ACHS û).' û-EDIOBANCA û-ORGANû Nobia agreed to acquire Bribus for an (3"# ûANDû-IZUHOûPROVIDEDûTHATûlNANCING Stanley, Natixis, Royal Bank of Scotland, INITIALûCASHûCONSIDERATIONûOFûõMûPLUSûAû 3ANTANDER û3OCIETEû'ENERALEûANDû5NI#REDIT variable consideration of up to €5m. SOUTH AFRICA 4HEûlNANCINGûHADûAûlVE YEARûMATURITYû with two one-year extension options. UAE SOUTH AFRICA’S ESKOM GETS APPLUS DIVERSIFIES DEBT ON US$2.5bn LOAN €830m REFI EMIRATES NBD IN TALKS TO ROLL OVER US$1.7bn LOAN 3OUTHû!FRICASûSTATEûUTILITYûESKOM has signed 3PANISHûTESTING ûINSPECTIONûANDûCERTIlCATIONû Aû53BNû2BN ûLOANûAGREEMENTûWITHû company APPLUSûHASûAGREEDûAûõMû EMIRATES NBD û$UBAISûLARGESTûLENDER ûISû China Development Bank which will be used to RElNANCING ûREPLACINGûITSûEXISTINGûõMû discussing the rolling-over of a US$1.7bn FUNDûTHEûCOMPANYSûBUILDINGûPROGRAMME û senior secured loan that was due to mature SYNDICATEDûLOANûITûSIGNEDûINûûWITHû INCLUDINGûITSû+USILEûPOWERûSTATION in June 2020. international banks. The facility is guaranteed by the 4HEûRElNANCINGûCOMPRISESûANûUNSECUREDû 4HEûûLOAN ûDUEûINû*UNEû ûSAWûTHEû government and will allow Eskom to draw õMûMULTICURRENCYûLOANûANDûAûõMû53û participation of 19 banks and offered a margin DOWNûONûTHEûCASHûOVERûAûPERIODûOFûUPûTOûlVEû private placement. OFûBPûOVERû,IBOR û4HOMSONû2EUTERSûDATAû years. Applus said it had taken advantage of show. The bank is trying to renew that loan 4HEûLOANûCOMPLETESû%SKOMSûCOMMITMENTû favourable market conditions including with better rates, a source said. TOûIMMINENTLYûSECUREûûOFûITSûlNANCIALû historically low long-term euro interest %MIRATESû."$ûPOSTEDûAûûRISEûINûSECOND year 2018/2019 funding requirement, as laid RATESûANDûTOûDIVERSIFYûITSûSOURCESûOFûlNANCE QUARTERûNETûPROlTûTHISûMONTH ûBOOSTEDûBYûAû OUTûINûTHEûCOMPANYSûRESULTSûPRESENTATIONû 4HEûLOANûCOMPRISESûAûõMûlVE YEARû climb in net interest income and a drop in ONû*ULYû ûSAIDû#ALIBû#ASSIM û%SKOMSûACTINGû TERMûLOANûANDûAûõMûlVE YEARûREVOLVINGû provisions to cover bad loans. CHIEFûlNANCIALûOFlCER credit facility. Both facilities have two one- 4HEûBANKûMADEûAûNETûPROlTûOFû$HBNû Eskom - which is emerging from a year extension options. 53M ûINûTHEûTHREEûMONTHSûTOû*UNEû ûITû leadership crisis - admitted last November The drawn margin at current leverage SAIDûINûAûSTATEMENT ûCOMPAREDûWITHû$HBNû that it is experiencing liquidity problems. levels is 110bp over Euribor. in the corresponding period of 2017. h"OTHûLOCALûANDûINTERNATIONALûlNANCIALû Applus amended and extended its markets have demonstrated an improved previous loan in June 2015, extending the ADCB BACK WITH US$400m LOAN APPETITEûFORû%SKOMSûCREDITûANDûWEûAREû maturity by one year to June 2020 and CONlDENTûTHATûWEûWILLûFULLYûEXECUTEûTHEû REDUCINGûTHEûMARGINûTOûBPûOVERû%URIBORû ABU DHABI COMMERCIAL BANK PJSC is returning to required funding for the year. Our liquidity from 225bp previously. the market for a US$400m loan after a near levels are continuing to improve and our Banco Santander, BNP Paribas, Caixabank, two-year absence. lNANCIALûSUSTAINABILITYûISûONûTHEûMENDv û Credit Agricole CIB, Mizuho and Societe Generale Mizuho Bank is the initial mandated lead Cassim said. were mandated lead arrangers and joint arranger and bookrunner of the facility and In February Eskom signed a R20bn bookrunners on the new loan, while Bank of China joined with the same title (US$1.7bn) short-term facility with a Barclays, Citigroup and MUFG are mandated before launch. consortium of local and international banks. lead arrangers. The loan is equally split into a three-year In July 2017 Eskom signed a US$1.5bn The private placement is being provided TRANCHEûANDûAûlVE YEARûPORTIONû/NLYûTHEû 2BN ûLOANûAGREEMENTûWITHû#HINAû by two well-recognised US private lVE YEARûTRANCHEûISûBEINGûSYNDICATED

International Financing Review July 28 2018 65 4HEûINTERESTûMARGINSûAREûBPûANDûBPû IG GROUP AGREES £200m LOAN REFI 4HEûlNANCINGûISûCOMMITTEDûTOû3EPTEMBERû OVERû,IBORûFORûTHEûTHREEûANDûlVE YEARû ûALONGûWITHûTHEûREMAININGûaMû pieces, respectively. The marketed 5+ûlNANCIALûSPREADûBETTINGûCOMPANYûIG GROUP uncommitted accordion. The company also REMAININGûLIFEûISûûYEARS HASûAGREEDûAûaMûLOAN ûREPLACINGûITSû HASûAûaMûUNCOMMITTEDûOVERDRAFTûFACILITY ,EADûARRANGERSûCOMMITTINGû53MûORû EXISTINGûaMûREVOLVINGûCREDITûFACILITYû2#& Post-acquisition Huntsworth will have MOREûWILLûRECEIVEûALL INûPRICINGûOFûBPû 4HEûlNANCINGûISûUSEDûFORûLIQUIDITYûRISKû INCREASEDûNETûDEBTûOFûaMûANDûLEVERAGEûOFû with a participation fee of 50bp and management and is drawn on during 2.5 times last twelve months Ebitda, up arrangers joining with US$20m–$29m periods of high broker margin levels or in FROMûaMûANDûûTIMESûBEFOREûTHEû EARNûALL INûPRICINGûOFûBPûWITHûAûBPû advance of events that could result in acquisition. fee. elevated broker margin requirements, The company plans rapid deleveraging in Managers joining with US$10m–$19m including important political events. the second half. EARNûALL INûPRICINGûOFûBPûWITHûAûBPû 4HEûlNANCING ûWHICHûWASûAGREEDûWITHû The facility was originally arranged in fee. Commitments are due on August 10. FOURû5+ûBANKS ûCOMPRISESûAûaMûTHREE ûFORûaMûVIAû"ARCLAYS û(3"#û"ANKûANDû )Nû.OVEMBERû û!$#" ûWHICHûISûRATEDû YEARûTERMûLOANûANDûAûaMûONE YEARû2#&û ,LOYDSû"ANK. 4HEûlNANCINGûWASûVOLUNTARILYû !! û30&ITCH ûRAISEDûAû53MûTHREE with a one-year extension option. REDUCEDûTOûaMûINûûANDûINCREASEDûTOû year senior unsecured term loan via Wells The previous RCF, which was with aMûINû*ULYû Fargo with top-level all-in pricing of "ARCLAYS û(3"# û,LOYDSûANDû2OYALû"ANKûOFû The facility was amended and extended in 115.4bp, a margin of 95bp and a 59bp 3COTLAND ûCOMPRISEDûAûaM ûONE YEARû March 2018, extending the maturity to upfront fee. facility with a one-year extension option, September 2021. ANDûAûaM ûTHREE YEARûFACILITY %STABLISHEDûINûûASûTHEûWORLDSûlRSTû UK-FINDEL EXTENDS £100m LOAN UK SPREADûBETTINGûlRMû)'û'ROUPûGENERATESûTHEû majority of its revenue from leveraged 5+ûMULTI CHANNELûRETAILERûFINDEL has STENN INTERNATIONAL CLOSES UP TO trading services including contracts for EXTENDEDûTHEûMATURITYûOFûITSûEXISTINGûaMû US$500m FINANCING DIFFERENCEûANDûSPREADûBETTINGûINûTHEû5+ûANDû revolving credit facility by one year to Ireland). $ECEMBERû 5+ BASED ûNON BANKûTRADEûlNANCEûPROVIDERû The company also offers non-leveraged 4HEûlNANCINGûWASûORIGINALLYûARRANGEDûINû STENN INTERNATIONAL LTD has closed an up to share dealing and wealth-management ûFORûaMûVIAûMANDATEDûLEADûARRANGERSû 53MûSENIORûlNANCINGûFACILITYûWITHû products. "ARCLAYS û(3"# û)#"# û,LOYDSûANDû2OYALû"ANKû Natixis. of Scotland; and participant Allied Irish Banks. The funding, which is supported by trade RICARDO COMPLETES £150m LOAN REFI 4HEûFACILITYûWASûREDUCEDûTOûaMûINû lNANCEûINSURANCEûFROMûGLOBALûINSURERû!)' û !PRILûûAFTERûTHEûSALEûOFû+ITBAG ûREDUCEDû ISûINûADDITIONûTOûAû53MûPLATFORMû 5+ûENGINEERING ûTECHNICAL ûENVIRONMENTALû TOûaMûINû-ARCHû ûANDûTOûaMûINû launched by Stenn and credit-focused and strategic consultancy RICARDO PLC has -ARCHûû4HEûlNANCINGûWASûDUEûTOû ALTERNATIVEûASSETûMANAGEMENTûlRMû#RAYHILLû COMPLETEDûAûaMûLOANûRElNANCING û REDUCEûBYûAûFURTHERûaMûINû-ARCHû #APITALû-ANAGEMENTûINû INCREASINGûITSûEXISTINGûaMûFACILITYûANDû Retailer and distributor Findel is active in 4HEûlNANCINGûWILLûHELPû3TENNûPROVIDEû extending the maturity of the loan out to the home shopping and education supplies TRADEûlNANCEûTOûADDITIONALûCUSTOMERSûANDû *ULYûûONûIMPROVEDûTERMS market. The company had revenues of geographical markets currently 4HEûINCREASEDûlNANCINGûSUPPORTSûTHEû aMûINû UNDERSERVEDûBYûTRADITIONALûBANKûlNANCING COMPANYSûACQUISITIONûANDûINVESTMENTû The company has seen an increase in growth strategy. DEMANDûFORûmEXIBLEûSHORT TERMûlNANCINGû Existing lenders Lloyds and HSBC have from both suppliers and buyers. been joined by NatWest and Bank of Ireland. “In light of the increasing globalisation of The previous facility was originally NORTH AMERICA supply chains, Basel III restrictions on trade arranged in June 2015 and was due to lNANCE ûANDûGLOBALûSHIFTSûINûTARIFFû MATUREûINû*UNEûû4HEûlNANCINGûHELPEDû regulations, banks are being compelled to lNANCEû2ICARDOSûaMûACQUISITIONûOFûRAILû UNITED STATES limit their participation in some trade CONSULTANCYûlRMû,LOYDSû2EGISTERû2AIL lNANCEûSEGMENTS ûSUCHûASûTRADEûBETWEENû The loan paid a margin ranging between IBM AMENDS AND EXTENDS EMERGINGûANDûDEVELOPEDûECONOMIES vû'REGû BPûANDûBPûOVERû,IBORûDEPENDINGûONû US$10.25bn OF LOANS +ARPOVSKYûANDû!NDREYû0OLEVOY û3TENNSûCO leverage. founders said. INTERNATIONAL BUSINESS MACHINES CORP (IBM) has “Stenn provides working capital to all HUNTSWORTH TAPS ACCORDION AMENDEDûANDûEXTENDEDûAû53BNûlVE types of companies around the world, from FOR ACQUISITION year credit agreement. large corporates to mid-size and smaller The company also said it has amended COMPANIESûTHATûDONTûHAVEûADEQUATEûACCESSû 5+ûPUBLICûRELATIONSûANDûHEALTHCAREû and extended a US$2.5bn three-year credit TOûCROSS BORDERûTRADEûlNANCE vû+ERSTINû#û communications group HUNTSWORTH has agreement and subsequently entered a new Braun, president of Stenn said. EXERCISEDûaMûOFûITSûaMûACCORDIONû 53BNû DAYûCREDIT “With this new facility in place, we are facility, increasing its multi-currency 4HEû53BNûlVE YEARûCREDITSû MOREûPREPAREDûTHANûEVERûTOûlLLûTHESEû REVOLVINGûCREDITûFACILITYûTOûaMûFROMû MATURITYûWASûEXTENDEDûTOû*ULYû û funding gaps.” aMûPREVIOUSLY The revised three-year credit facility 3TENNûOPERATESûGLOBALLYûANDûHASûOFlCESû The increased facility will be used to help entered in July 2017 factors in, among ,OSû!NGELES û$ALLAS û.EWû9ORK û,ONDON û fund the US$72.2m acquisition of healthcare changes, the possible discontinuation of (AMBURG û3TUTTGART û3INGAPORE û(ONGû+ONG û MARKETINGûAGENCYû'IANTû#REATIVEû3TRATEGY û ,IBORûWHILEûEXTENDINGûTHEûMATURITYûTOû*ULYû 3HANGHAI û'UANGZHOUûANDû#HONGQING which was announced earlier this month. û ûACCORDINGûTOûTHEûlLING

66 International Financing Review July 28 2018 LOANS LEVERAGED LOANS

4HEû DAYûLOANûCANûBEûUSEDûFORûGENERALû revolver can be extended for two six-month corporate purposes. periods. JP Morgan, BNP Paribas, Citigroup and RBC The revolver and US dollar-based facilities LEVERAGED LOANS are joint lead arrangers and joint can be increased by a total of US$1bn, and bookrunners. the Canadian dollar-based term loan can be 0RICINGûFORûTHEûlVE YEARûANDûTHEûTHREE YEARû doubled in size. UNITED STATES FACILITYûISû#$3 BASED ûRANGINGûONûAûRATINGSû KeyBank is administrative agent. There are grid from a minimum margin of 10bp to a ûLENDINGûBANKS WESTINGHOUSE TWEAKS US$3.055bn maximum margin of 112.5bp. Bank of America Merrill Lynch, JP Morgan and LOAN STRUCTURE 4HEûlVE YEARûFACILITYûALSOûPAYSûAûFACILITYûFEEû Deutsche Bank are US joint lead arrangers. ranging from 4bp to 10bp, while the three- BAML, JP Morgan and RBC are Canadian joint WESTINGHOUSE ELECTRIC CO has tweaked the year facility pays a commitment fee ranging lead arrangers. BAML and JP Morgan are joint STRUCTUREûONûAûPROPOSEDû53BNûCREDITû from 4bp to 9bp. bookrunners. FACILITYûBACKINGûITSûPURCHASEûBYû"ROOKlELDû $RAWNûPRICINGûONûTHEûNEWû DAYûLOANûISû Based on current credit ratings, pricing Asset Management. ALSOû#$3 BASEDûWITHûAûmOORûOFûBPûANDûAû FORûTHEûREVOLVERûISûBPûOVERû,IBORûANDû 4HEûDEBTûNOWûINCLUDESûAû53BNûlRST CAPûOFûBPû4HEREûISûALSOûAûBPûCOMMITMENTû pricing for the term facilities is 90bp over LIENûSEVEN YEARûTERMûLOANûANDûAû53Mû fee. the benchmark. There is a 15bp facility fee. second-lien eight-year term loan as opposed The joint bookrunners were joined by Welltower has investment-grade ratings TOûTHEûORIGINALLYûPROPOSEDû53BNûlRST Mizuho, Mizuho, Banco Santander, Bank of OFû"AAûBYû-OODYSû)NVESTORSû3ERVICEûANDû lien term loan and US$450m second-lien America Merrill Lynch, Barclays, Deutsche Bank, """ ûBYû30 term loan. HSBC Bank, Societe Generale, Wells Fargo, MUFG, WESTLAKE CHEMICAL said it amended and Credit Suisse LEADSûTHEûlRST LIENûTRANCHEû Commerzbank, Credit Suisse, Goldman Sachs, ING, EXTENDEDûAû53BNûlVE YEARûSENIORû while Goldman Sachs leads the second-lien SMBC, TD Bank, UniCredit, US Bank, Bank of unsecured revolving credit facility, to be loan. Joint arrangers include Deutsche Bank, China, ANZ Banking Group, DBS, PNC, Standard used for working capital and general BMO, Royal Bank of Canada, Barclays and Credit Chartered, Bank of Nova Scotia, BBVA, Banco corporate purposes. Agricole. Bradesco, CIBC, Danske Bank, Lloyds, Raiffeisen 4HEûMATURITYûWASûPUSHEDûOUTûTOû*ULYûû 'UIDANCEûONûTHEûlRST LIENûPORTIONûlRMEDû Bank International, Northern Trust, and State from August 2021, the company said in a ATûBPûOVERû,IBORûWITHûAûûmOORûANDûAû Street Bank. statement. JP Morgan leads. discount of 99.5 after initially circulating in VENTAS INC said it extended the maturity The company, based in Houston, Texas, is THEûBPnBPûOVERû,IBORûRANGEûWITHûAû and reduced pricing on a US$900m term an international manufacturer and supplier ûmOORûANDûAûDISCOUNTûOFûû4HEûDEALû loan facility, with Bank of America Merrill of petrochemicals, polymers and building includes a 25bp leverage-based stepdown. ,YNCHûASûADMINISTRATIVEûAGENT products. Pricing on the second-lien term loan is 4HEûNEWûCREDITûINCLUDESûAû53MûTERMû 7ESTLAKEû#HEMICALûISûRATEDû"""ûBYû30û NOWûINûTHEûBPnBPûOVERû,IBORûRANGEû LOANûDUEûINûûANDûAû53MûTERMûLOANû ANDû"AAûBYû-OODYSû)NVESTORSû3ERVICE WITHûAûûmOORûANDûAûDISCOUNTûOFûû maturing in 2024, and the total facility can The SHERWIN-WILLIAMS CO said it VERSUSûINITIALûGUIDANCEûOFûBPûOVERû,IBORû be increased to US$1.5bn, according to a amended an existing credit agreement, with WITHûAûûmOORûANDûAûDISCOUNTûOFû REGULATORYûlLING Citigroup as administrative agent 4HEûlRST LIENûLOANûWILLûHAVEûSIXûMONTHSûOFû 4HEûEXISTINGûFACILITY ûALSOûWITHû"!-,ûASû and issuing bank, that increases the amount soft call protection. The second-lien loan administrative agent, was set to mature in AVAILABLEûUNDERûTHEûCOMPANYSûREVOLVINGû will now have hard call protection of 2020. letter of credit by US$125m 102/101 as opposed to the original proposal, Based on credit ratings, the new loans are to a total of US$875m, according to a WHICHûWASûNON CALLABLEûFORûTHEûlRSTûYEARû PRICEDûATûBPûOVERû,IBOR REGULATORYûlLING followed by hard call protection of !CCORDINGûTOûAûSEPARATEûlLING ûTHEû Of the total, US$200m matures June 20, company as of the end of March said the û53MûCOMESûDUEû$ECEMBERû û 4HEûCORPORATEûRATINGûISû""û4HEûlRST LIENû existing facility was priced at 97.5bp over 2021, US$150m matures June 20, 2022, loan is rated B1/B. The second-lien loan is ,IBOR 53MûEXPIRESû$ECEMBERû ûûANDû rated Caa1/B–. 3ENIORûUNSECUREDûDEBTûRATINGSûFORû6ENTASû 53MûMATURESû*UNEû û AREû"AAûBYû-OODYSû)NVESTORSû3ERVICEûANDû 4HEûAMENDMENTûISûTOûTHEûCOMPANYSû AMERICAS LOANS BOOKRUNNERS – FULLY """ ûBYû30 CREDITûAGREEMENTûDATEDû-AYû û SYNDICATED VOLUME 6ENTASûISûAûREALûESTATEûINVESTMENTûTRUSTû Separately, as previously reported BOOKRUNNERS: 1/1/2018 TO DATE with about 1,200 assets that provides capital BYû,0# ûTHEûCOMPANYûANDûSEVERALû Managing No of Total Share to seniors housing, healthcare companies subsidiaries last week announced a new bank or group issues US$(m) (%) and research 53BNûlVE YEARûCREDITûFACILITYûTOûBEûUSEDûFORû 1 BAML 722 220,095.12 12.1 general corporate purposes and working 2 JP Morgan 643 200,951.03 11.1 WELLTOWER AGREES US$3bn LOAN capital needs. The facility can be increased 3 Wells Fargo 503 147,093.50 8.1 by up to US$750m and matures July 19, 4 Citigroup 343 117,342.66 6.5 Healthcare-focused real estate investment 5 Goldman Sachs 237 77,904.26 4.3 trust WELLTOWER INC said it agreed to a Citigroup is administrative agent. Citi, 6 Barclays 277 76,411.07 4.2 53BNûREVOLVINGûCREDIT ûASûWELLûASû 7ELLSû&ARGO û"ANKûOFû!MERICAû-ERRILLû,YNCH û 7 RBC 273 70,603.61 3.9 US$500m and C$250m term facilities, JP Morgan and US Bank are joint lead 8 Morgan Stanley 178 66,314.41 3.7 replacing existing facilities of the ARRANGERSûANDûJOINTûBOOKRUNNERSûONûTHEûlVE 9 MUFG 178 62,616.21 3.5 same size. year credit. 10 Deutsche Bank 221 54,683.89 3.0 The revolving credit matures July 19, Credit ratings for the paint and coatings Total 2,580 1,813,043.60 2022 and the term facilities are due July 19, COMPANYûAREû"""ûBYû30ûANDû"AAûBYû Proportional credit ûACCORDINGûTOûAûREGULATORYûlLINGû4HEû -OODYS Source: Thomson Reuters SDC code: R7

International Financing Review July 28 2018 67 discount of 99.5. The term loan will have six months of soft call protection Loan protections hit weakest at 101. /Nû*UNEû û!DVISORû'ROUPûANNOUNCEDû that it was acquiring Signator and planned level on record to merge it into Royal Alliance Associates )NC ûONEûOFû!DVISORû'ROUPSûFOURûEXISTINGû LEVERAGED LOANS Conditions continue to favour borrowers INDEPENDENTûlRMS Signator is a dual-registered broker- Protections for loan lenders hit their “Protections remain distressingly weak on dealer and investment advisor that counts weakest level ever as conditions continue to average,” analysts at the ratings firm wrote in MOREûTHANû ûlNANCIALûPROFESSIONALSû favour borrowers in the US$1trn US leveraged the report, adding “investors should remain and approximately US$50bn in client loan market, according to Moody’s Investors wary given the risks presented by most loan assets and is part of John Hancock. Service. documents and the likelihood that any steadying A lender meeting has been scheduled The Loan Covenant Quality Indicator (LCQI) of covenant protection is temporary.” FORû*ULYûûTOûLAUNCHû53BNûOFûLOANSû dropped to 4.12 in the first quarter of 2018 from Some loan terms give borrowers the ability to backing the three-company merger of 4.00 in the fourth quarter of 2017, according to a move or sell collateral, which can hurt investors, software providers TRITECH SOFTWARE SYSTEMS report from the ratings firm. according to the report. INC, SUPERION LLC and APTEAN SOFTWARE LLC. LCQI is a two-quarter rolling average of loan Moody’s said the ability for large unrestricted 4HEûDEALûINCLUDESûANû53MûlRST LIENû covenant quality scores that Moody’s uses to subsidiary asset transfers and weak mandatory SEVEN YEARûTERMûLOANûANDûAû53MûlVE measure covenant protections in the syndicated prepayment provisions that allow companies to sell year revolving credit facility. leveraged loan market. collateral without using the proceeds to repay loans !û53MûSECOND LIENûEIGHT YEARûLOANû The index runs from 1, which is the strongest “challenge the fundamental notion that collateral supporting the merger has been privately ranking, to 5, which is the weakest. The previous will be available to backstop a loan and provide some placed. worst grade was 4.1 set in the third quarter last minimum recovery value in a bankruptcy scenario.” Antares Capital, Macquarie Capital and year. Kristen Haunss SunTrust have underwritten the debt backing the merger. Tritech is backed by Bain Capital while The Westinghouse acquisition was DYNATRACE SETS GUIDANCE ON Superion and Aptean are sponsored by announced in January and is valued at US$1.18bn REFI 6ISTATû%QUITYû0ARTNERSû4HEûCOMBINEDû 53BNû"ROOKlELDû"USINESSû0ARTNERSû,0û company will provide software for and institutional partners purchasing the Application performance management municipalities and public safety agencies. Pittsburgh-based business are kicking in software company DYNATRACE has set The merger was announced July 24. US$1bn of equity in addition to the debt. GUIDANCEûONûAû53BNûlRST ûANDûSECOND 7ESTINGHOUSEûISûAûUNITûOFû*APANSû4OSHIBAû LIENûCREDITûFACILITYûTHATûRElNANCESûDEBT AIS HOLDCO LAUNCHING US$450m #ORP ûANDûlLEDûFORûBANKRUPTCYûINû-ARCHû 4HEûCREDITûINCLUDESûAû53M ûlVE YEARû M&A LOAN after billions of dollars in cost overruns at REVOLVER ûAû53M ûSEVEN YEARûlRST LIENû two nuclear power plants it designed and is term loan and a US$170m, eight-year AIS HOLDCO is set to launch a US$450m credit CONSTRUCTINGûINû'EORGIAûANDû3OUTHû#AROLINA second-lien term loan. fa cility backing the acquisition of business 4HEûBORROWERûISû"ROOKlELDû7%#û(OLDINGSû)NC 4HEûlRST LIENûTERMûLOANûISûGUIDEDûATûBPû SERVICESûPLATFORMû!FlNIONû)NSURANCEû Payment technology provider VERIFONE OVERû,IBORûWITHûAûûmOORûANDûISûOFFEREDûATûAû Solutions by Mill Point Capital. SYSTEMS INC set guidance on Wednesday on 99.5 original issue discount. Jefferies leads the deal, which includes a US$2.2bn of loans backing its buyout by The second-lien term loan is guided at 53MûREVOLVER ûAû53M ûSEVEN YEARû PRIVATEûEQUITYûlRMû&RANCISCOû0ARTNERS BPûOVERû,IBORûWITHûAûûmOORûANDûISû lRST LIENûTERMûLOAN ûANDûAû53M ûEIGHT Credit Suisse is leading the deal with offered at a discount of 99. year second-lien term loan. Barclays and Royal Bank of Canada. #ALLûPROTECTIONûONûTHEûlRST LIENûTRANCHEûISû 4HEûlRST LIENûTERMûLOANûHASûûSOFTûCALLû Commitments are due on August 8. expected at 101 soft call for six months, protection for six months, while the 4HEûDEALûINCLUDESûAû53BNûlRST LIENû while the second-lien tranche is callable at second-lien tranche is callable at 102, 101. TERMûLOAN ûAû53MûSECOND LIENûTERMûLOANû 102 in year one, then at 101 in year two. Mill Point Capital, a middle market and a US$250m revolving credit facility. Jefferies is leading the bank syndicate. The PRIVATEûEQUITYûlRM ûANDû!FlNIONû'ROUPû 4HEûSEVEN YEARûlRST LIENûTERMûLOANûISû deal launched on Monday afternoon. ,,#ûONû*ULYûûANNOUNCEDûTHATûTHEYûHADû expected to price in the 400bp–425bp over #OMMITMENTSûAREûDUEû!UGUSTû entered an agreement for Mill Point to ,IBORûRANGEûWITHûAûûmOORûANDûAûDISCOUNTûOFû $YNATRACEûISûBASEDûINû7ALTHAM û-! ACQUIREû!FlNIONû)NSURANCEû3OLUTIONSû!)3 û 99.5. The loan will have six months of soft ADVISOR GROUP INC has launched US$700m of The acquisition is expected to close in the call protection. loans backing the acquisition of Signator third quarter of 2018. Pricing on the eight-year second-lien term Investors Inc and a dividend AIS is a business services platform with loan is expected in the 800bp–825bp over recapitalization. expertise in the distribution, marketing and ,IBORûRANGEûWITHûAûûmOORûANDûAûDISCOUNTûOFû Barclays LEADSûTHEûTRANSACTIONû,IGHTYEARû administration of a broad range of 99. The tranche includes hard call protection #APITALûANDû030û)NVESTMENTSûAREûTHEûlNANCIALû SIMPLIlED ûGUARANTEED ISSUEûINSURANCEû of 102/101. sponsors. Commitments are due August 9. products. 4HEûISSUERûISûRATEDû""ûWHILEûTHEûlRST LIENû 4HEûDEALûINCLUDESûAû53MûSEVEN YEARû Retirement services provider NEWPORT loan is rated B1/B and the second-lien loan is lRST LIENûTERMûLOANûANDûAû53M ûlVE YEARû GROUPûISûREADYINGû53MûINûlRST LIENû rated Caa1/B–. revolver. credit facilities for launch. The buyout was announced on April 9 and 'UIDANCEûOPENEDûINûTHEûBP BPû RBC Capital Markets, SunTrust, Capital One CARRIESûANûENTERPRISEûVALUEûOFû53BN OVERû,IBORûRANGEûWITHûAûûmOORûANDûAû and Fifth Third are joint lead arrangers.

68 International Financing Review July 28 2018 LOANS LEVERAGED LOANS

Proceeds from the funding will be used to intermediates for the polymer, fuel 4HEûCOMPANYûISûOFFERINGûTOûPAYûBP lNANCEû+ELSOûû#OMPANYSûACQUISITIONûOFûAû and lubricant markets, includes a BPûPLUSû,IBORûFORûTHEûSEVEN YEARûLOAN û majority stake in the company. lVE YEARû53MûREVOLVINGûLINEûOFû WITHûAûûmOORûONûTHEûBENCHMARKû4HEûLOANû Existing investors Stone Point Capital and credit that will be undrawn at close, a will be sold at 99.5 cents on the dollar. MANAGEMENTûWILLûRETAINûAûSIGNIlCANTû SEVEN YEARû53BNûlRST LIENûTERMûLOANû The loan, along with a minority interest in the company. and an eight-year US$250m second-lien INVESTMENTûFROMû++2 ûWILLûBEûUSEDûTOû 4HEûCREDITûFACILITIESûINCLUDEûAû53Mû term loan. REPURCHASEûûOFûTHEûCOMPANYSû REVOLVINGûCREDITûANDûAû53MûlRST LIENû JP Morgan is the lead left arranger on the outstanding convertible promissory notes term loan. lRSTûLIENûANDû(3"#ûISûLEADûLEFTûONûTHEûSECONDû and pay fees and expenses. !û53MûSECOND LIENûTERMûLOANûHASûBEENû lien. Commitments are due by August 10. Bank of America Merrill Lynch and KKR are privately placed. 3+ûANNOUNCEDûTHEû3)û'ROUPûBUYOUTûLASTû ARRANGINGûTHEûlNANCINGû#ORPORATEûFAMILYû The company provides services including month. At the close of the transaction SI and term loan B ratings are B1/B, the source retirement plan record-keeping and 'ROUPûANDû!DDIVANT ûWHICHûTHEûINVESTMENTû said. administration, life insurance distribution lRMûHASûOWNEDûSINCEû ûWILLûBEû Commitments are due on August 7. and servicing of retirement plans. combined. Smart home technology provider VIVINT AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL MARRIOTT VACATIONS WORLDWIDE is set to DETAILEDûPRICEûTALKûFORûTHEûCOMPANYSû !MEXû'"4 ûHASûLAUNCHEDûAû53Mû4ERMû LAUNCHûAûlNANCINGûTOûBACKûTHEûTIMESHAREû 53Mû4ERMû,OANû" ,OANû"ûBACKINGûITSûPURCHASEûOFû5+ BASEDû COMPANYSûACQUISITIONûOFû),' Pricing is guided at 475bp-500bp over business travel company Hogg Robinson. JP Morgan ISûLEADINGûTHEûlNANCING ûWHICHû ,IBORûWITHûAûDISCOUNTûINûTHEû ûRANGEû Proceeds from the loan will fund the INCLUDESûAû53MûREVOLVINGûLINEûOFûCREDITû for the 5.5-year loan. purchase of Hogg Robinson as well as allow ANDûAû53MûSEVEN YEARû4ERMû,OANû" ûTHEû There will be 101 soft call protection for !MEXû'"4ûTOûBUYûBACKûSOMEû(OGGû2OBINSONû source said. six months. The loan is covenant-lite. debt in conjunction with the acquisition. Commitments are due on August 9. The The company will use the proceeds to The seven-year loan is guided at a range of borrower is Marriott Ownership Resorts. REDEEMûITSûOUTSTANDINGûûSENIORû BP BPûOVERû,IBORûWITHûAûûmOORûANDû Marriott announced the acquisition in secured notes that mature in 2019, repay is offered at a 99.5 original issue discount. April, saying it would acquire all of the borrowings under an existing revolving line The loan has 101 soft call protection for six OUTSTANDINGûSHARESûOFû),'ûINûAûCASHûANDûSTOCKû of credit, and pay premiums, fees and months and is expected to amortize at an transaction with an implied equity valuation expenses, including repayment of other annual rate of 1%. of US$4.7bn. debt. Morgan Stanley is leading the covenant-lite Bank of America Merrill Lynch is the lead loan with Goldman Sachs. Commitments are SIVANTOS SETS PRICING ON arranger of the deal. Commitments are due DUEûONû!UGUSTû MERGER LOANS !UGUSTûû4HEûBORROWERûISû!08û'ROUP û)NC !MEXû'"4ûLINEDûUPûAûaM û DAYû "LACKSTONEû'ROUPûACQUIREDû6IVINTûINû bridge loan from Morgan Stanley to support Hearing-aid maker SIVANTOSûSETûlNALûPRICINGû the transaction in March, as reported by on dual-currency loans to back its merger ALERA TIGHTENS PRICING ON ,0#û4HEûLOANûWASûPRICEDûATûBPûOVERûTHEû with Widex. US$450m TLB benchmark. 4HEûCOMPANYûWILLûPAYûBPûPLUSû,IBOR û The acquisition was announced on FROMûORIGINALûGUIDANCEûOFûBP BP ûFORû ALERA GROUP has increased the size and &EBRUARYûûANDûISûWORTHûaMûPERû2EUTERSû a US$1.2bn (€990m-equivalent) seven-year TIGHTENEDûPRICINGûONûITSû4ERMû,OANû"ûTHATû calculations. 4ERMû,OANû" WILLûBEûUSEDûTOûRElNANCEûEXISTINGûSENIORû 4HEûLOANûWILLûHAVEûAûûmOORûANDûBEûSOLDû credit facilities and fund signed acquisitions. BOYD CORP TO LAUNCH US$1.615bn at 99.5 cents on the dollar with 101 soft call 4HEû4,"ûISûNOWû53M ûUPûFROMû ACQUISITION FINANCE protection for six months. There is no US$425m previously. Revised pricing on the pricing step-down on the US dollar loan. SEVEN YEARû4,"ûISûATûBPûOVERû,IBOR ûVERSUSû Speciality material-based components )TûALSOûSETûlNALûPRICINGûONûAûõBNû the original guidance in the 450bp–475bp provider BOYD CORP is poised to launch a 53BN ûSEVEN YEARû4ERMû,OANû"ûATûBPû OVERû,IBORûRANGEû4HEûûmOORûANDûAûûSOFTû lNANCINGûTOûBACKûITSûACQUISITIONûBYû plus Euribor from original guidance of call protection for six months is unchanged. 'OLDMANû3ACHSû-ERCHANTû"ANKING BP BP The discount is tightened to 99.75 from 99.5. 4HEûlNANCINGûINCLUDESûAû53BNûlRST )TûWILLûHAVEûAûûmOORûANDûBEûSOLDûATûPARû JP Morgan is leading the deal. Following lien term loan and a US$415m second-lien from original guidance of 99.5 cents on the THEûRElNANCING û!LERAû'ROUPSûPROûFORMAû term loan. dollar. The loan has 101 soft-call protection DEBT TO %BITDAûRATIOûWILLûBEûABOUTûX û Goldman Sachs is the lead arranger on the for six months with one pricing step-down. ACCORDINGûTOû-OODYSû)NVESTORSû3ERVICE lRST LIENûLOANûANDûJP Morgan is lead on the There is a revised ticking fee of 50% of the 4HEûBORROWERûISû!LERAû'ROUPû)NTERMEDIAû second lien. Commitments are due by MARGINûFORûDAYSû ûPOSTûALLOCATIONS û Holdings. August 14. INCREASINGûTOûûOFûTHEûMARGINûFORûDAYSûû !LERAû'ROUPûISûANûINDEPENDENTûINSURANCEû Earlier this month Boyd announced the and beyond. BROKERAGEûANDûADVISORYûlRMûOPERATINGûINû 'OLDMANû3ACHSû-ERCHANTû"ANKINGû Deutsche Bank is leading the euro- BOTHûTHEûEMPLOYEEûBENElTSûANDûPROPERTYû ACQUISITIONûFROMû'ENSTARû#APITAL ûWHICHû denominated loan and JP Morgan is leading and casualty space. acquired the company in 2015. the US dollar tranche. Portable sanitation services provider SI GROUP has scheduled a lender meeting Corporate ratings are B2/B+ and facility UNITED SITE SERVICES has cut the discount on a FORû*ULYûûTOûDISCUSSûlNANCINGûTOûBACKûITSû ratings are B2/B+. US$125m incremental term loan. BUYOUTûBYû3+û#APITALû0ARTNERS 4HEûBORROWERûISû!URISû,UX#O The company will now sell the loan at 4HEûlNANCINGûFORûTHEûCOMPANY ûAû 53ûMOBILEûMARKETINGûlRMûAPPLOVIN CORP 99.75 cents on the dollar from the previous developer and manufacturer of has set price guidance on a US$820m Term PROPOSALûOFûûCENTSû)TûWILLûSTILLûPAYûBPû performance additives and chemical ,OANû" PLUSû,IBORûFORûTHEûLOAN ûWHICHûISûFUNGIBLEû

International Financing Review July 28 2018 69 with existing debt, with a step down to VETCOR ALLOCATES US$450m LOAN Barclays, Credit Suisse and NatWest Markets BPûWHENûCORPORATEûRATINGSûAREû""û are bookrunners. (stable/stable) or better. VETCOR PROFESSIONAL PRACTICES has allocated a #OMMITMENTSûONûTHEû4ERMû,OANû"ûAREû The debt, which matures in 2024, has a 1% 53M ûSEVEN YEARûlRST LIENûTERMûLOAN now due on August 1. mOORûONûTHEûBENCHMARKûANDûûSOFTûCALLû Pricing on the loan cleared in line with ,ONEû3TARûAGREEDûTOûBUYû)MERYSûROOlNGû protection that will be reset for six months. GUIDANCEûATûBPûOVERû,IBORûWITHûAûûmOORû business for €1bn in May at a multiple of Terms on a US$50m incremental second The loan sold at a 99.5 original issue NEARLYûûTIMESûTHEûBUSINESSSû%BITDAûOFû LIENûREMAINûUNCHANGEDûATûBPûPLUSû,IBORû discount and has 101 soft call protection for €115m. with a step down to 750bp when corporate six months. 4HEûROOlNGûUNITûISûPARTûOFû)MERYSûCERAMICû ratings are B2/B (stable/stable) or better. This Jefferies and Golub Capital arranged the loan materials business, which saw declining loan, which is also fungible, matures in ALONGûWITHûAû53MûlVE YEARûREVOLVER earnings last year due to lower housing û)TûHASûAûû,IBORûmOORûANDûWILLûBEûSOLDû 4HEûlRST LIENûFACILITIESûAREûPARTûOFû renovation activity and a challenging at 99.25 cents. 53MûINûDEBTûFUNDINGûTHATûTHEû market for its kaolin product. ,ENDERSûWILLûBEûPAIDûAûBPûCONSENTûFEEû veterinary hospital platform is raising to ,ONEû3TARûPREVIOUSLYûBOUGHTû'ERMANû The borrower is USS Ultimate Holdings Inc. back its acquisition by Oak Hill Capital BUILDINGûMATERIALSûBUSINESSû8ELLAûFORûõBNû !BOUTû53MûOFûTHEûPROCEEDSûWILLûBEû Management. INûLATEû ûSUBSEQUENTLYûBUYINGû3PANISHû used to replenish cash funds used for a recent The company has already pre-placed a peer Ursa last summer. acquisition and to fund two additional 53MûDELAYEDûDRAWûlRST LIENûTERMûLOAN ûAû )MERYSûISûISSUINGûTHEûDEBTûTHROUGHû,3&û acquisitions that have signed letters of intent. US$195m eight-year second-lien term loan Impala Investments. Bank of America Merrill Lynch, Morgan Stanley, and a US$40m delayed draw second-lien Jefferies, Goldman Sachs and Deutsche Bank are term loan. The delayed draw term loans AZELIS SETS FINAL TERMS ARRANGINGûTHEûlNANCINGûFORû5NITEDû3ITEû have a commitment period of 24 months. Services, which is controlled by sponsor #ORPORATEûFAMILYûRATINGSûAREû""û Belgium-based chemicals distribution group Platinum Equity. First-lien facility ratings are B2/B and AZELIS has rescheduled commitments on its second-lien facility ratings are Caa2/ õMû4ERMû,OANû"ûTOû-ONDAYûAFTERNOON û LIGHTSTONE TAKES US$300m ADD ON CCC+. after making some documentation changes. PNC Bank has closed a US$575m 4HEû4,"ûHASûlNALûGUIDANCEûOFûBPûWITHû Power generator LIGHTSTONE is looking to add credit facility the bank provided to Warren, AûûmOORûANDûAûû/)$ ONû53MûTOûITSûEXISTINGûTERMûLOANûDUEûINû Pennsylvania-based UNITED REFINING COMPANY. It is part of a total €1.095bn debt package January 2024 to back a dividend. PNC Business Credit, the asset-based that also includes a €100m six-year revolver, Commitments are due August 1 and Credit lending division of PNC Bank, led the AûõM EQUIVALENTûSTERLING DENOMINATEDû Suisse is leading. transaction, with PNC Bank serving as SEVEN YEARûlRST LIENû4ERMû,OANû" ûAûõMû The new debt will be fungible with the administrative agent, lead arranger and eight-year second-lien term loan and a existing loan and is expected to be issued at bookrunner and PNC Capital Markets as €95m-equivalent Canadian-dollar a discount of 99.5. syndication agent. denominated eight-year second-lien term 4HEûEXISTINGûLOANûISûPRICEDûATûBPûOVERû United will use some of the loan proceeds loan. ,IBORûWITHûAûûmOORû4HEûCOMPANYûLOWEREDû to complete payment for the purchase of 4HEûSTERLINGû4ERMû,OANû"ûANDûTWOûSECOND PRICINGûTOûTHISûLEVELûFROMûBPûOVERû,IBORû %NBRIDGEû0IPELINEû)NCSû, ûPIPELINE ûANDû lien loans have been pre-placed. The term in January. for a multi-year pipeline repair and loans are covenant-lite, while the revolver ,ENDERSûAREûBEINGûOFFEREDûAûBPû improvement project that was completed in includes a springing leverage covenant and consent fee. The transaction will reset soft April 2018, PNC said. ISûPRICEDûATûBPûOVERû%URIBORûWITHûAûû call protection of 101 for six months. Founded in 1902, United is an mOOR 4HEûDEBTûISûRATEDû"A"" û4HEûISSUERûISû INDEPENDENTûRElNERûANDûMARKETERûOFû Joint physical bookrunners are Goldman ,IGHTSTONEû(OLDCOû,,# petroleum products. Sachs, JP Morgan and ING. Joint bookrunner is The borrower is backed by private equity HSBC. lRMSû"LACKSTONEûANDû!RC,IGHTû#APITALû Azelis, which handles sales and Partners. EUROPE/MIDDLE EAST/ development of the Mirasil cosmetics line AFRICA and distributes food and beverage US LEVERAGED LOANS mAVOURINGS ûWASûCONSIDERINGûAûûSTOCKû BOOKRUNNERS: 1/1/2018 TO DATE IMERYS DELAYS BUYOUT LOAN market listing at a valuation of more than Managing No of Total Share COMMITMENTS õBN û2EUTERSûREPORTEDûINû$ECEMBERû bank or group issues US$(m) (%) !PAXûBOUGHTû!ZELISûINûEARLYûûFROMûI û 1 BAML 415 84,866.17 10.2 &RENCHûROOlNGûBUSINESSûIMERYS has delayed WHICHûACQUIREDûITûINûûINûAûõMûDEAL 2 JP Morgan 368 82,853.55 10.0 COMMITMENTSûONûITSûõMûLOANûPACKAGEû 3 Wells Fargo 286 65,551.22 7.9 after widening pricing on the deal. CEVA INCREASES REFINANCING 4 Barclays 209 50,744.36 6.1 !ûõMûSEVEN YEARû4ERMû,OANû"ûISûNOWû LOAN TO US$475m 5 Credit Suisse 203 45,441.78 5.5 offered at 99 from 99.5, with an unchanged 6 Goldman Sachs 194 44,482.21 5.4 MARGINûOFûBPûOVERû%URIBORûWITHûAûûmOOR ,OGISTICSûCOMPANYûCEVA has increased a 7 Deutsche Bank 193 40,382.96 4.9 A €100m eight-year second-lien facility is proposed seven-year term loan backing a 8 Citigroup 172 37,707.88 4.5 SETûATûBPûOVERû%URIBORûWITHûAûûmOOR û RElNANCINGûEFFORTûTOû53MûFROMû 9 Morgan Stanley 140 32,286.05 3.9 WHILEûAûõMûûYEARûREVOLVINGûCREDITû US$400m, sources said. 10 RBC 164 30,406.08 3.7 FACILITYûISûSETûATûBPûOVERû%URIBORûWITHûAûû 4HEû$UTCH BASEDûCOMPANYûALSOûPLANNEDûTOû Total 1,396 830,026.78 mOOR ARRANGEûAû53MûREVOLVINGûCREDITûFACILITYû Excluding Project Finance. 0ROCEEDSûBACKû,ONEû3TARSûCARVE OUTûOFû DUEûINûûCredit Suisse and HSBC served as Source: Thomson Reuters SDC code: P2 )MERYSûROOlNGûBUSINESS joint global coordinators on the deal.

70 International Financing Review July 28 2018 LOANS LEVERAGED LOANS

#EVAûPRICEDûTHEûLOANûATûBPûOVERû,IBORû AFTERûGUIDANCEûCIRCULATEDûINûTHEûBPn BPûOVERû,IBORûRANGEû4HEûLOANûINCLUDESûAû Marlink considers options û,IBORûmOORûANDûWILLûBEûISSUEDûATûAû discount of 99.5, in line with guidance. The company added a 25bp leverage- after divi loan withdrawn based step-down. The loan will have six months of soft call NORWAY Opportunistic deal on hold after investor pushback protection at 101. The corporate ratings and debt ratings are Apax Partners is considering its debt options capital expenditure programme, which was likely B1/BB–. for Norwegian satellite company MARLINK to lead to negative cash flows. The company plans to use the proceeds after a proposed dividend recapitalisation and “The initial pricing seems to have been from the offering pay down US$580m of refinancing failed to find sufficient support in the unattractive for investors. A B3 rating carries term loan debt due 2021 and to buy back leveraged loan market. a higher risk of default than a B2 where the 53MûOFûûlRST LIENûSENIORûNOTESûDUEû An opportunistic €622m leveraged loan for majority of dividend recaps have happened,” said 2020. Marlink was withdrawn last week as selective Alejandro Nunez, a vice president at Moody’s. #EVAûISûALSOûSHOPPINGûõMûOFûSEVEN YEARû loan investors continue to push back on France-based Apax declined to comment. NOTESûTOûBACKûTHEûRElNANCING aggressive deals amid a surge of supply, which Although investors’ appetite for aggressive 0RIVATEûEQUITYûlRMû!POLLOûACQUIREDû#EVAû could see the company turn to the private debt deals may be waning, some dividend INûûANDûTOOKûTHEûCOMPANYûPUBLICûINû market for funds. recapitalisations are still being launched. -AY ûRAISINGû3&RBNû53BN ûONûTHEû3)8û Marlink’s dividend deal failed to find sufficient French private education provider Inseec Swiss Exchange. appetite at a range of different price points due is in the market with a €275m TLB to fund a to concerns about the company’s business after shareholder dividend and repay existing debt. INSEEC U PRICES €275m LOAN it attracted a lower than anticipated credit rating. The company has a higher B2/B credit rating, Arranging banks JP Morgan, BNP Paribas, with a recovery rating of 3. French education provider INSEEC U Credit Agricole, DNB and HSBC were not obliged HASûPRICEDûAûõMû4ERMû,OANû"ûTOû to provide funds as the deal was being sold on a PRIVATE DEBT? lNANCEûAûSHAREHOLDERûDIVIDENDûANDû best efforts basis. Marlink may turn to the private debt market for repay existing debt at the wider end of “It was an aggressive ask from the sponsor funds as non-bank financing continues to grow guidance. about taking out a good chunk of their equity at and increasingly large funds provide an alternative 4HEûSEVEN YEARû4ERMû,OANû"ûPRICEDûATû a time when there are some uncertainties in the to the traditional leveraged loan market. 425bp over Euribor, at the higher end of the business,” said one investor, “Investors don’t need Apax opted to go down this route in 2016 initial guidance of 400bp–425bp. to do deals when the outlook is more uncertain when it financed Marlink’s buyout with a €270m 4HEûLOANûHASûAûûmOORûANDûû/)$ûWITHû and sponsors are trying to push up leverage.” unitranche financing from both Ares and 101 soft call protection for six months. The The transaction is the first European leveraged Tikehau. loan includes a net leverage covenant. loan to be withdrawn in recent months since Private debt funds, which have historically Corporate and facility ratings are B2/B, volatility hit the high-yield market, causing focused on the middle market, are setting new WITHûAûRECOVERYûRATINGûOFû several issues to be postponed or withdrawn. records for the quantum of debt they are raising JP Morgan is global coordinator and Investors are taking a tougher line on and are now able to provide a rival offering for administration agent on the deal. HSBC, ING aggressive transactions after a surge in supply in bigger deals. and Mizuho are joint bookrunners. May and June soaked up liquidity, leaving deals This week Ares announced that it had raised &RENCHûPRIVATEûEQUITYûlRMû!PAXû0ARTNERSû with lower pricing, aggressive documentation a record €6.5bn European private debt fund ACQUIREDû)NSEECû5ûINûû and credit issues exposed. Covenant-lite from institutional investors, which brings the In addition to France, the group has transactions now make up 77% of the market, total amount for Ares to deploy to €10bn when LOCATIONSûINû3WITZERLAND ûTHEû5+ û#HINAûANDû according to S&P. combined with a leveraged facility. the US. Institutional investors are also keeping their Last year, firms such as ICG, Alcentra, Hayfin powder dry for several large buyouts that are and BlueBay all broke their own record raise for AVERYS SETS PRICE TALK ON expected to launch after the summer months private debt vehicles with each raising multi- BUYOUT LOANS including jumbo buyout loans backing the billion funds. buyout of Thomson Reuters’s F&R unit (which The private debt market is not opposed to French storage systems manufacturer AVERYS owns LPC and IFR) and chemicals company dividend recapitalisations, which are typically seen has set price guidance on its €485m loan AkzoNobel. as a tougher ask in the primary leveraged loan PACKAGEûBACKINGû"LACKSTONESûBUYOUTûOFûTHEû Marlink’s leveraged loan consisted of seven- market as they allow private equity firms to reduce business from Equistone. year €280m and US$190m Term Loan B their equity stakes and increase leverage levels. 4HEûõMûSEVEN YEARû4ERMû,OANû"ûISû tranches, an eight-year US$100m second lien One fund manager said: “Dividend recaps guided at 400bp over Euribor, offered at 99- facility and a €92m 6.5-year revolving credit are, in themselves, not a bad thing but the use ûWITHûAûû,IBORûmOOR facility on June 28. The term loans were originally of proceeds is definitely a factor that needs to be An €85m eight-year second-lien facility is offered at 425bp-450bp over Euribor/Libor with taken into consideration when appraising a deal.” guided at 800bp-825bp, and is offered at 98.5 a 0% floor and 99.5 OID. “The fact that an owner may be derisking WITHûAûûmOOR Marlink, which provides satellite navigation their investment through a dividend recap can !ûBANKûMEETINGûTOOKûPLACEûINû,ONDONûLASTû and communication to one in three of the world’s be negative, but it may also be a normalisation Wednesday, with another meeting vessels, received a B3 rating from Moody’s on of the balance sheet due to strong performance scheduled to be held in Paris on Thursday. July 9, which cited concern about Marlink’s asset- and historic cash generation,” he added. JP Morgan is a global coordinator and lite and acquisitive model, as well as its high David Brooke administration agent. Credit Suisse and MUFG

International Financing Review July 28 2018 71 The incremental facility pays in line WITHûTHEûEXISTINGûTERMûLOANûATûBPûOVERû Mothercare completes Euribor, and came at the tight end of offer guidance of 98.5–99. 0ROCEEDSûRElNANCEûSOMEûOFû&ONCIASû refinancing second-lien debt. The company issued €187m of second-lien debt through UK Refi follows successful equity raising 0ARTNERSû'ROUPSûBUYOUTûOFûTHEûlRMû INû UK mother and baby retailer MOTHERCARE has a £12.5m tranche maturing in November 2018, The remaining second-lien debt was also completed the refinancing of its debt facilities with two six-month extension options. repriced from 750bp over Euribor with a following a successful equity raising. The financing includes an accordion facility ûmOORûTOûBPûWITHûAûûmOOR The company held a general meeting on July that allows the company to draw down up to Natixis arranged the deal. 26 during which all the resolutions relating to the £75m. The facility pays a margin ranging from Foncia was last in the market in company’s £32.5m equity raising were passed 200bp to 300bp over Libor. $ECEMBERûWITHûAûREPRICINGûOFûITSûõMû by the required majority of shareholders, paving “Earlier this year Mothercare faced a bleak 4ERMû,OANû"ûTOûBPûOVERû%URIBORûFROMû the way for the new shares to start trading on the future with growing financial stress upon the BP London Stock Exchange on July 27. business and in May, we announced a series Foncia provides a range of services to On July 25 the company said that investors of measures to refinance and restructure residential property owners and tenants, had taken up 77.9% of the shares on open the business. With the support of all of our including joint-property management, offer, with the remaining shares to be taken up stakeholders we have today completed the lease management and rental and following the placing. refinancing of the group,” said Clive Whiley, transaction services. The completion of the equity raising has interim executive chairman. enabled Mothercare to complete its debt However, he said that conditions in the retail restructuring plan. sector remain challenging. “We cannot be Under the terms of the plan, revised complacent, as refinancing the business is just debt facilities of £67.5m will be provided the first step of building a solid foundation for RESTRUCTURING by Mothercare’s existing lenders as per a the future of the Mothercare brand.” restructuring plan agreed in May. The facilities The company voluntary arrangements (CVA) will have a final maturity of December 2020. for Mothercare UK Ltd and Early Learning Centre EUROPE/MIDDLE EAST/ Mothercare currently has a £62.5m revolving Ltd were approved by 75% of creditors in June AFRICA credit facility from HSBC and Barclays, and will go ahead, with 60 stores set to close by comprising a £50m tranche maturing in May June 2019. STEINHOFF’S HEMISPHERE ENTERS 2020, with two one-year extension options; and Sandrine Bradley LOCK-UP WITH CREDITORS

HEMISPHERE INTERNATIONAL PROPERTIES, a unit of are passive bookrunners. Commitments are Blackstone is buying a 55% stake troubled South African retailer STEINHOFF, due on August 7. INû4HOMSONû2EUTERSû&INANCIALû HASûOFlCIALLYûENTEREDûINTOûAûLOCK UPû Blackstone has agreed to acquire ANDû2ISKûUNIT ûWHICHûINCLUDESû,0#û agreement with its creditors while it the Paris-headquartered business from and IFR. implements an agreed debt restructuring. PRIVATEûEQUITYûlRMû%QUISTONEûFORûAROUNDû The company said that 90% in value of €700m. FONCIA ALLOCATES ADD-ON CREDITORSûBEHINDû(EMISPHERESûõMû The company specialises in the making of revolving credit facility had agreed to racking and other metallic furniture &RENCHûREALûESTATEûSERVICESûlRMûFONCIA has enter into the lock-up agreement, which designed for warehouses, and has revenues allocated its €80m term loan add-on at the has now become effective. OFûõM tight end of guidance. Under the terms of the restructuring a new facility will be put in place with a EUROPEAN LEVERAGED LOANS EMEA SPONSORED LOAN BOOKRUNNERS maturity date of three years from the BOOKRUNNERS: 1/1/2018 TO DATE BY VOLUME: 1/1/2018 TO DATE implementation of the restructuring – Managing No of Total Share Europe, Middle East, Africa WHICHûISûEXPECTEDûTOûHAPPENûONû!UGUSTû bank or group issues US$(m) (%) Managing No of Total Share /Nû*ULYûû3TEINHOFFûOFlCIALLYû 1 BNP Paribas 41 8,585.52 8.5 bank or group issues US$(m) (%) entered into a lock-up agreement 2 Credit Agricole 38 7,590.92 7.5 1 BNP Paribas 23 4,520.49 8.9 with the creditors of Steinhoff Europe 3 Deutsche Bank 31 7,010.88 6.9 2 Deutsche Bank 17 4,069.92 8.0 3%!' û3TEINHOFFû&INANCEû(OLDINGû 4 HSBC 26 5,553.39 5.5 3 Credit Agricole 23 3,254.30 6.4 (Finance Holding) and Stripes US 5 SG 27 5,517.04 5.5 4 HSBC 15 3,231.21 6.4 (OLDINGû353() ûREGARDINGûAûlNANCIALû 6 JP Morgan 21 5,324.70 5.3 5 SG 17 3,206.05 6.3 restructuring of the debt related to 7 Goldman Sachs 21 5,012.69 5.0 6 JP Morgan 13 3,007.31 5.9 these entities. 8 Citigroup 17 4,974.35 4.9 7 Goldman Sachs 15 2,724.33 5.4 Steinhoff aims to implement the 9 Natixis 22 4,161.31 4.1 8 Natixis 16 2,688.33 5.3 restructuring of these units within three 10 Barclays 19 3,982.75 3.9 9 Barclays 11 2,252.73 4.4 months and the terms of the restructuring Total 117 101,117.35 10 Citigroup 7 2,110.71 4.2 – as set out under the lock up agreement – Excluding project finance. Western Europe only included. Total 70 50,809.52 will remain in place for three years until Source: Thomson Reuters SDC code: P10 Excluding project finance. $ECEMBERûû ûSUBJECTûTOûANYû Source: Thomson Reuters SDC code: P13 extension.

72 International Financing Review July 28 2018 LOANS LEVERAGED LOANS

FRENCH COURT AGREES ORCHESTRA Premaman in one instalment by 7ILDû"UNCHSûEXISTINGûlNANCIALûLIABILITIESûnû PREMAMAN’S DEBT DEAL September 7 at the latest. õMûOFûWHICHûWILLûBEûCONVERTEDûINTOû There will also be a capital increase, for 7ILDû"UNCHû!'ûEQUITY The Montpellier Commercial Court has a minimum amount of €28.5m, which will Bondholders have also agreed to convert APPROVEDûAûlNANCIALûRESTRUCTURINGûPLANû BEûIMPLEMENTEDûBYû.OVEMBERûûû THEûCOMPANYSûõMûûCORPORATEûBONDSû AGREEDûBETWEENû&RENCHûBABYûANDûCHILDRENSû with creditors getting preferential INTOûNEWûSHARESûOFû7ILDû"UNCHû!'ûBYûWAYûOFû clothing group ORCHESTRA PREMAMAN and its subscription rights. a further capital increase. creditors. /RCHESTRASûDEBTûCURRENTLYûINCLUDESû 4HISûWILLûRESULTûINûAûõMûREDUCTIONûINû Orchestra Premaman entered into a õMûOFûCREDITûLINESûANDûõMû 7ILDû"UNCHSûDEBT ûANDûAûPARALLELûINCREASEûINû CONCILIATIONûPROCESSûONû*UNEûûINûORDERûTOû of guarantees plus €89.1m of bilateral equity. negotiate the debt restructuring. loans. In addition the debt comprises Following the restructuring existing The Montpellier Commercial Court €20m of 2020 bonds, €41.5m of 2021 shareholders will hold around 9% of the APPROVEDûTHEûPLANûONû*ULYûûANDûTHEû Euro private placement bonds company, bondholders around 15% and the signing of the legal documentation to allow ANDûõMûOFûûPRIVATEû INVESTORSûAROUNDû the implementation of the restructuring to placement bonds. In addition Sapinda and SWB Finance will take place on July 25. PROVIDEûTHEû7ILDû"UNCHû'ROUPûWITHû Under the terms of the debt agreement FRENCH COURT APPROVES WILD SHAREHOLDERûLOANSûOFûATûLEASTûõM õMûOFûTHEûCOMPANYSûBANKûDEBTûWILLûBEû BUNCH DEBT RESTRUCTURING The proposed capital increases will be extended until July 2020 and €100m of the subject to a vote at a shareholders meeting GROUPSû ûûANDûûBONDSûWILLûBEû The Commercial Court of Paris has on September 20. extended by one year. approved a restructuring plan agreed “We are pleased to be able to provide a The agreement also allowed Orchestra BETWEENû%UROPEANûlLMûDISTRIBUTIONûANDû lNANCIALûSOLUTIONûTOûTHEûHIGHLYûDECORATEDû 0REMAMANûTOûRAISEûUPûTOûANûADDITIONALûõMû international sales company Wild Bunch 7ILDû"UNCHûlLMûGROUP ûWITHûTHISûINJECTIONû lNANCINGûWITHûAû MONTHûMATURITY SA – a wholly owned subsidiary of Wild of equity capital, alongside a debt /Nû*ULYûûTHEûCOMPANYûAGREEDûAûõMû "UNCHû!'ûnûANDûITSûMAINûCREDITORSû RESTRUCTURINGû!NûINDEPENDENTûlLMû lNANCINGûWITHû"ANQUEû4HEMIS ûSECUREDûBYûAû including investors Sapinda Holding and champion like this with so much heritage, possessory pledge on inventories. SWB Finance. requires stability and support to initiate a The legal documentation relating to the Under the terms of the debt for equity NEWûPHASEûOFûPROlTABLEûGROWTH vû,ARSû ADDITIONALûlNANCINGûWASûSIGNEDûONû*ULYûû restructuring plan SWB Finance, a Sapinda 7INDHORST ûCHIEFûEXECUTIVEûOFlCERûOFû and will be made available to Orchestra 'ROUPûCOMPANY ûWILLûASSUMEûõMûOFû 3APINDAû'ROUP ûSAID

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FRONT STORY US IPOS Bloom Energy sees boom times after IPO Fuel cell maker deﬁes odds with explosive debut

As a private company BLOOM ENERGY has gone used in the Apollo space missions - split !TûTHEûBEGINNINGûOFû û"LOOMûALSOû from high-growth disruptor to uneconomic INVESTORSûINTOûVISIONARIESûANDûSCEPTICS BEGANûRECOGNISINGûhTHEûVASTûMAJORITYvûOFû PARIAHûUNABLEûTOûSCALEûPROlTABLYû)TSû "LOOMSûlNANCIALûRESULTSûWEREûPARTICULARLYû revenue from product sales upfront, rather 53Mû)0/ûANDûHOTûAFTERMARKETûSHOWEDû problematic, a point management willingly THANûOVERûTHEûLIFEûOFûAûCONTRACTûnûûOFû THEREûAREûMANYûINVESTORSûWHOûTHINKûITûMAYû ACKNOWLEDGEDûh7HENû)ûTHINKûABOUTûTHEû ACCEPTANCESûINûTHEûlRSTûQUARTERûOFûûWEREû REVERTûTOûITSûEARLIERûSTATUS HISTORICALûlNANCIALS û)ûTHINKûCOMPLICATED vû BOOKEDûASûREVENUE ûVERSUSûJUSTûûINûlRSTû Bloom, whose venture capital roots date SAIDû"LOOMû#&/û2ANDYû&URRûONûTHEûONLINEû QUARTERû BACKûTOû ûEXPLODEDûONTOûTHEûPUBLICû ROADSHOWûPRESENTATION 2EGARDLESSûOFûACCOUNTING û"LOOMûCANûONLYû EQUITYûMARKETS ûSOARINGûûONûDEBUT ûANDû He advised investors to focus on results BEûPROlTABLEûIFûFUELûCELLSûAREûCOMPETITIVEûTOû DEFYINGûEXPECTATIONSûOFûUNDERWRITINGûBANKS BEGINNINGûINûûONûAûGO FORWARDûBASIS TRADITIONALûPOWER h)ûDIDNTûHAVEû53ûPENCILLEDûIN vûSAIDûONEû #OSTSûHAVEûDROPPEDûFROMûABOVEû53 û BANKERûINVOLVEDûINûTHEûUNDERWRITINGûSYNDICATEû DISTRIBUTED FINANCES PERûKILOWATTûSEVERALûYEARSûAGOûTOû53 ûINû when shares were trading around that level at "LOOMûGENERATEDûAû53MûOPERATINGûPROlTû THEûlRSTûQUARTERû&UELûCELLSûNOWûLASTûOVERûlVEû MIDDAYûONû7EDNESDAY ûTHEûlRSTûDAYûOFûTRADINGû INûTHEûlRSTûQUARTERûONûREVENUEûOFû53M û YEARS ûVERSUSûJUSTûûTOûûMONTHSûONûITSû 4HEûSTOCKûCLOSEDûTHEûlRSTûDAYûATû53 AFTERûLOSINGû53MûANDûPOSTINGûREVENUEûOFû EARLIERûTECHNOLOGIES Bloom climbed rapidly through the day 53MûINûTHEûCOMPARABLEûQUARTERûINû %FlCIENCIESûANDûDURABILITYûHAVEûLOWEREDûTHEû FROMûAûLOWûOFû53û ûVERSUSû53û 4HEûRESULTSûWEREûNOTûCOMPARABLEûATûALL COSTSûOFûFUELûCELLSûTOûûCENTSûPERûKILOWATTû PRICINGû ûANDûPEAKEDûATûTHEû53ûCLOSE "LOOMûDELIVEREDûûOFûITSû KILOWATTû HOUR ûVERSUSûûCENTSûFORûTRADITIONALûPOWER û JP Morgan and Morgan Stanley, the actives of FUELûSTACKSûINûTHEûRECENTûQUARTERûVERSUSûûAû MANAGEMENTûEXPLAINEDûONûTHEûROADSHOW lVEûBOOKRUNNERS ûPLACEDûMûSHARESûTHEû YEARûAGOûnûTHEûNUMBERûOFûFUELûCELLûSTACKSûSOLDû "LOOMSûPLANûNOWûISûTOûBREAKûEVENûONûTHEû NIGHTûBEFOREûATû53 ûTHEûHIGHûENDûOFûAû GREWûBYûABOUTûûBUTûREVENUEûGREWûATûAû COSTSûOFûINSTALLATION ûPASSûTHROUGHûFUELûNATURALû 53nûMARKETINGûRANGE ûTOûVALUEû"LOOMû ûCLIPûYEAR ON YEAR GAS ûCOSTSûONTOûCUSTOMERS ûANDûEARNûAûSMALLûCUTû ATû53BN The reason for the disparity related to FROMûONGOINGûSERVICINGûANDûMAINTENANCE 4HEYûWEREûSIXûTIMESûOVERSUBSCRIBED ûTHOUGHû ONE TIMEûTAXûCREDITûBENElTSûANDûCHANGESûINû "LOOMûHASûJUSTûûMEGAWATTSûOFûITSûFUELû DEMANDûWASûINmATEDûBYû53MûINVESTEDûBYû HOWûITûBOOKSûPRODUCTûSALES cell arrays installed, comparable to a large EXISTINGûSHAREHOLDERSûANDûANOTHERû53Mû "LOOMûHISTORICALLYûBENElTEDûFROMûAû SOLARûORûWINDûFARM HELDûBACKûFORûEXECUTIVESûANDûEMPLOYEES FEDERALûINVESTMENTûTAXûCREDITû)4# ûWHICHû "LOOMûFAMOUSLYûLANDEDû53MûINûAû h4HEûBOOKûINCLUDEDûGOODûANCHORSûTHATû PROVIDEDûCUSTOMERSûWITHûAûTAXûCREDITûWORTHû 3ERIESû"ûROUNDûWAYûBACKûINûûTHATû should be with the company for a long 53 ûPERûKILOWATTûHOUR ûORûûOFûTHEû included participation from New Enterprise TIME vûSAIDûTHEûBANKERûh)ûDONTûWANTûTOû COSTSûOFûAûFUELûSTACKû!FTERûTHEûTAXûBENElTSû !SSOCIATESûANDû+LEINERû0ERKINS discount the importance of a forward LAPSEDûATûTHEûENDûOFû ûTHEûCOMPANYû !SûPARTûOFûTHEû)0/ û"LOOMûWASûABLEûTOûmUSHû valuation, but it became a question of RESPONDEDûBYûLOWERINGûTHEûSELLINGûPRICE 53MûOFûANûû#"ûTHATûWASûTOûMATUREûINû WHETHERûYOUûBELIEVEDûORûNOTv )Nû&EBRUARY ûHOWEVER ûTHEû53ûGOVERNMENTû $ECEMBERûINTOûMûSHARESû(OLDERSû “This company has the potential to be much, REINSTATEDû)4#SûRETROACTIVEûTOûTHEûBEGINNINGûOFû CONVERTEDûATûAûPRICEûOFû53ûPERûSHARE û MUCHûLARGERûAûYEAR ûTWO ûTHREEûFROMûNOWv ûPROVIDINGû"LOOMûWITHûAûONE TIMEû ORûAû53BNûVALUATION Bloom and the potential for fuel cells - 53MûREVENUEûBENElTûINûTHEûlRSTûQUARTER Stephen Lacey

Apollo has committed to invest up to 53MûONûAûBACK ENDûACQUISITIONû4HISû Spartan approach to SPAC ISûONûTOPûOFûTHEûMûFOUNDERûSHARESû PURCHASEDûFORû53 ûTHATûGIVEûITûANû Interim Apollo management will ﬁnd target INITIALûûSTAKEûASûWELLûASûMûOFûhAT RISKvûWARRANTSûFORû53MûTHATûWOULDûBEû !POLLOû'LOBALûISûGOINGûhHEADLESSvûONûITSû While other vehicles have had similar lost if an acquisition is not DEBUTû30!# ARRANGEMENTS ûENERGY FOCUSEDû30!#SûTENDûTOû CONSUMMATED 4HEûPRIVATEûEQUITYûGIANTûlLEDûDOCUMENTSû GOûPUBLICûWITHûAûWELL KNOWNûCHIEFûEXECUTIVEû The public offering comprises 40m units ONû-ONDAYûFORûAû53Mû)0/ûOFû30!#û TOûLEADûTHEûSEARCH with each unit structured as one share and SPARTAN ENERGY ACQUISITION that outlined Apollo “This gives them breadth of opportunity to ONE THIRDûOFûAûWARRANTûEXERCISABLEûATû PARTNERû'EOFFREYû3TRONGûASûINTERIMû#%/ PLUGûTHEûRIGHTûJOCKEYûONTOûTHEûRIGHTûHORSE vûSAIDû 53ûPERûFULLûWARRANT Apollo natural resources head James ONEûINVESTMENTûBANKERûh4HEREûAREûOPPORTUNITIESû Apollo noted that it has invested #ROSSENûISûINTERIMû#&/ ûWITHûAûPERMANENTû ANDûmEXIBILITYûACROSSûAûSUITEûOFûEXECUTIVESv 53BNûACROSSûûNATURALûRESOURCE RELATEDû management team to be selected after the Those appointments could come from the INVESTMENTS ûDATINGûBACKûTOû ACQUISITION !POLLOûSTABLE ûAûTARGET ûORûELSEWHERE Stephen Lacey

International Financing Review July 28 2018 75 WEEK IN NUMBERS 2EDWOODûINû*ANUARYûû% 3HANGûWASûCO FOUNDEDûBYû7ARBURGû0INCUSûANDûTWOû ASIA-PACIFIC entrepreneurs, Sun Dongping and Jeffrey 16% 3HEN ûINû TEN CORNERSTONE INVESTORS HAVE %32SûSHAREHOLDERSûINCLUDEû!0' û#ANADAû SIGNED UP TO INVEST US$1.4bn IN CHINA AUSTRALIA 0ENSIONû0LANû)NVESTMENTû"OARD û'OLDMANû TOWER’S IPO, REPRESENTING 16% OF THE 3ACHS û0''- û0INGû!NûANDû3+û(OLDINGS DEAL AT THE TOP OF THE RANGE. THE LA MANCHA CUTS EVOLUTION STAKE )Nû-AY û#HINESEûONLINEûRETAILERû*$COMû DEAL COULD TOTAL US$8.7bn IF PRICING INVESTEDû53MûINû%32û)Nû*UNE û%32ûSAIDû COMES AT THE TOP OF GUIDANCE, MAKING ,Aû-ANCHAû'ROUPûHASûRAISEDû!Mû ITûHADûCLOSEDûAûPRE )0/ûINVESTMENTûFROMû#ITICû IT THE LARGEST IPO GLOBALLY SINCE 53M ûFROMûTHEûSALEûOFûPARTûOFûITSûSHARESû 3ECURITIESû/NE "ELT /NE 2OADûFUND ûAûPRIVATEû ALIBABA’S US$25bn US LISTING IN 2014 in Australian gold company EVOLUTION MINING equity investment fund of CLSA, without 4HEûBLOCKûOFûABOUTûMûSHARES ûORûûOFûTHEû DISCLOSINGûTHEûINVESTMENTûAMOUNT SHARESûONûISSUE ûWASûPRICEDûATû!ûAPIECE ûAû %32ûCOULDûNOTûIMMEDIATELYûBEûREACHEDûTOû 78 years ûDISCOUNTûTOûTHEûPRE DEALûPRICEûOFû! COMMENTû7ARBURGû0INCUSûDECLINEDûTOû THE BELGRADE STOCK EXCHANGE IS 4HEûDEALûWASûLAUNCHEDûONûû*ULYûWITHûAû COMMENT LOOKING FORWARD TO WELCOMING ITS mOORûPRICEûOFû! !CCORDINGûTOû%32SûWEBSITE ûTHEûCOMPANYû FIRST IPO SINCE 1940 AS FINTEL ENERGIJA There was strong demand from a number manages more than nine million square – THE SERBIAN SUBSIDIARY OF FINTEL OFûLARGEûEXISTINGûINSTITUTIONALûSHAREHOLDERS û METRESûOFûGROSSûmOORûAREAûINûPROJECTSûOWNEDû ENERGIA – HAS BEGUN BOOKBUILDING ACCORDINGûTOûAûSTATEMENTûFROMû,Aû-ANCHAû and under development across China, Japan, FOR A SD3.25bn (US$32.1m) IPO. h)TûISûENCOURAGINGûTOûSEEûSUPPORTûAMONGSTûAû 3INGAPORE û3OUTHû+OREAûANDû)NDIA SUBSCRIPTION RUNS FOR A LENGTHY 90 broad range of investors internationally for DAYS WITH TRADING DUE TO BEGIN IN THISûPLACEMENT vûSAIDû.AGUIBû3AWIRIS û HOPE EDUCATION TO PRICE IPO AT TOP NOVEMBER. WHILE 6.5m NEW SHARES CHAIRMANûOFû,Aû-ANCHA ARE OFFERED AT SD500 APIECE, THE After the sale, La Mancha, the natural HOPE EDUCATIONûISûLIKELYûTOûPRICEûITSû(ONGû DEAL WILL GO AHEAD IF AS FEW AS 1.5m resource investment vehicle of the Sawiris +ONGû)0/ûATûTHEûTOPûOFûTHEûINDICATIVEûPRICEû SHARES CAN BE SOLD FAMILY ûWILLûHOLDûABOUTûMû%VOLUTIONû RANGEûTOûRAISEû(+BNû53M ûPEOPLEû SHARES ûORûAûûSTAKE WITHûKNOWLEDGEûOFûTHEûTRANSACTIONûSAID 4HEREûISûAû DAYûLOCK UPûONûTHEûVENDOR 4HEû#HINESEûCOMPANYûISûLIKELYûTOûSELLû US$20bn Citigroup and JP Morgan are the joint BNûPRIMARYûSHARES ûORûûOFûTHEû ELI LILY IS TO SPIN-OFF ITS ANIMAL BOOKRUNNERSûOFûTHEûTRANSACTION ENLARGEDûSHAREûCAPITAL ûATû(+ûPERûSHAREû HEALTH UNIT ELANCO BY THE END OF THE GIVENûSTRONGûDEMAND ûSAIDûTHEûPEOPLEû4HATû YEAR. ELANCO CONTRIBUTED US$3.085bn WOULDûVALUEûTHEûCOMPANYûATû53BN OF REVENUE IN THE TWELVE MONTHS CHINA 4HEREûISûAûGREENSHOEûOPTIONûOFûUPûTOûMû TO JUNE 30, WHICH USING ZOETIS’ 7X PRIMARYûSHARES FORWARD REVENUE MULTIPLE PUTS THE ESR PLANS HONG KONG IPO 6ALUEû0ARTNERSûWILLûCOMMITû53MûASûAû POTENTIAL VALUATION AT OVER US$20bn CORNERSTONEûINVESTOR ESR, a pan-Asia logistics real estate Hope Education owns and operates colleges developer, owner and operator, is planning and institutes for primary, secondary, higher, 365 days TOûRAISEûABOUTû53BNûFROMûAû(ONGû+ONGû VOCATIONAL ûANDûCONTINUINGûEDUCATIONû)TûISûAû METRO BANK COMPLETED A £303m )0/ûINû ûACCORDINGûTOûPEOPLEûFAMILIARû member of Hope Group, which was co- FUNDRAISING ON TUESDAY NIGHT THAT WITHûTHEûSITUATION founded by Chinese agribusiness tycoon Liu REPRESENTED A 9.9% CAPITAL INCREASE. 4HEûCOMPANY ûBACKEDûBYûPRIVATEûEQUITYû 9ONGHAOûANDûHISûBROTHERS IT CAME 365 DAYS AFTER THE BANK’S lRMû7ARBURGû0INCUS ûISûINûDISCUSSIONSûWITHû 4HEûCOMPANYûISûBACKEDûBYûSEVERALûHIGH PREVIOUS 9.9% CAPITAL INCREASE. POTENTIALûADVISERSûFORûAûPLANNEDû)0/ PROlLEûSHAREHOLDERSûINCLUDINGû#ITICû BOTH DEALS WERE RUN BY THE SAME %32 ûHEADQUARTEREDûINû(ONGû+ONG ûWASû 0RUDENTIALû,IFEû)NSURANCEûANDû#HINAû BANKS AND INVOLVED LENGTHY WALL- formed from the merger of e-Shang and %VERBRIGHT CROSSING THAT MEANT THEY LAUNCHED EFFECTIVELY COVERED ASIA-PACIFIC EQUITIES ASIA-PACIFIC EQUITIES (EX-JAPAN) BOOKRUNNERS: 1/1/2018 TO DATE BOOKRUNNERS: 1/1/2018 TO DATE Managing No of Total Share Managing No of Total Share 6.9% bank or group issues US$(m) (%) bank or group issues US$(m) (%) ATRIA CONVERGENCE TECHNOLOGIES’ 1 Morgan Stanley 57 11,976.43 8.5 1 Morgan Stanley 38 9,898.80 7.9 US$300m–$400m IPO MAY BE DELAYED 2 Citigroup 56 9,507.84 6.8 2 Goldman Sachs 51 9,312.10 7.5 BY THE ENTRY OF RELIANCE JIO INTO THE 3 Goldman Sachs 52 9,364.67 6.7 3 Citigroup 51 9,023.07 7.2 INDIAN BROADBAND MARKET, WHICH 4 UBS 38 7,254.99 5.2 4 UBS 35 6,982.21 5.6 COULD HIT ATRIA’S 6.9% MARKET SHARE 5 CICC 17 6,652.08 4.7 5 CICC 17 6,652.08 5.3 THAT MAKES IT THE THIRD LARGEST 6 BAML 15 6,474.88 4.6 6 BAML 12 5,880.73 4.7 PROVIDER IN INDIA. VODAFONE INDIA’S 7 Credit Suisse 30 5,093.53 3.6 7 Credit Suisse 29 4,920.40 4.0 PLANNED 2016 IPO NEVER HAPPENED AS A 8 Citic 31 4,724.04 3.4 8 Citic 31 4,724.04 3.8 RESULT OF RELIANCE JIO’S ENTRY INTO THE 9 JP Morgan 28 4,312.34 3.1 9 JP Morgan 24 3,542.41 2.8 MOBILE MARKET OFFERING FREE SERVICES. 10 Sumitomo Mitsui Finl 45 3,272.25 2.3 10 China Securities 22 2,976.17 2.4 VODAFONE INSTEAD OPTED TO MERGE Total 1,437 140,554.62 Total 1,302 124,555.20

WITH IDEA, RECEIVING GOVERNMENT Including all domestic and international deals and rights issues Including all domestic and international deals and rights issues APPROVAL FOR THE MERGER LAST WEEK Source: Thomson Reuters SDC code: C4a1 Source: Thomson Reuters SDC code: C4a2

76 International Financing Review July 28 2018 EQUITIES ASIA-PACIFIC

The proceeds will be used to acquire 4HEûBOOKSûWEREûMULTIPLEûTIMESû AURORA MOBILE AND CANGO higher education schools and to construct oversubscribed with strong support from UNDERSHOOT new campuses, as well as to repay debts and global and regional long-only funds and FORûGENERALûCORPORATEûPURPOSES HEALTHCARE FOCUSEDûFUNDSû!LLOCATIONûWASû AURORA MOBILE and CANGO have both raised The deal was priced on July 27 and share HEAVILYûSKEWEDûTOWARDSûLONG ONLYûFUNDSûANDû LESSûTHANûTARGETEDûFROMûTHEIRû53û)0/SûAFTERû TRADINGûWILLûSTARTûONû!UGUSTû HEALTHCARE FOCUSEDûFUNDS ûWITHûTHEûTOPûû SELLINGûFEWERûSHARES Citigroup and China Merchants Securities are INVESTORSûTAKINGûMOREûTHANûTWO THIRDSûOFûTHEû Aurora raised US$77m from a Nasdaq THEûJOINTûSPONSORS DEALûANDûTHEûTOPûûINVESTORSûTAKINGûABOUTû )0/ûAFTERûSELLINGûMû!MERICANûDEPOSITARYû (OPEû%DUCATIONûPOSTEDûAûûPROlTûOFû shares at the bottom of an indicative 2MBMû53M ûONûREVENUESûOFû The company brought in Singaporean PRICEûRANGEûOFû53nûEACHû4HEû 2MBM SOVEREIGNûWEALTHûFUNDû')#ûASûAûCORNERSTONEû 3HENZHEN BASEDûCOMPANY ûALSOûKNOWNûASû INVESTORûFORûANûINVESTMENTûOFû53M *IGUANG ûORIGINALLYûPLANNEDûTOûSELLûMû BEIGENE PLANS SECONDARY LISTING !SCLETISûISûTHEûlRSTû)0/ûCANDIDATEûTOûTAKEû !$3S ADVANTAGEûOFûANû!PRILûûRULEûCHANGEû 4HEûlNALûPRICEûREPRESENTSûAûû0%ûOFû Nasdaq-listed Chinese biotech company BEIGENE ALLOWINGûBIOTECHûlRMSûWITHûNOûPROlTSûORû ISûPLANNINGûTOûRAISEûUPûTOû53BNûFROMûAû REVENUESûTOûLISTûINû(ONGû+ONG Credit Suisse, Deutsche Bank and Goldman SECONDARYûLISTINGûINû(ONGû+ONG ûMAKINGûITûTHEû There is an overallotment option of up to SachsûWEREûTHEûBOOKRUNNERS LARGESTûBIOTECHûmOATûINûTHEûCITYûTHISûYEAR û MûSHARES Meanwhile, Cango raised US$44m from a ACCORDINGûTOûPEOPLEûFAMILIARûWITHûTHEûSITUATION 4HEûCOMPANYSûSHARESûWILLûSTARTûTRADINGû .93%û)0/ûAFTERûCUTTINGûTHEûDEALûSIZEûBYûASû The leads on the deal have started ONû!UGUSTû MUCHûASûû4HEûCOMPANYûSOLDûMû MEETINGûWITHûINVESTORSûFORûTHEûmOAT ûSAIDûTHEû &OUNDEDûINû û(ANGZHOU BASEDû !MERICANûDEPOSITARYûSHARESûATû53ûEACH û PEOPLE ûANDûBOOKBUILDINGûISûEXPECTEDûTOû Ascletis manufactures anti-viral, cancer and the mid-point of an indicative price range of STARTûBYûTHEûENDûOFû*ULY LIVERûDISEASEûDRUGS 53nû)TûORIGINALLYûPLANNEDûTOûSELLû Goldman Sachs and Morgan Stanley are the China Merchants Securities, Goldman Sachs Mû!$3S JOINTûSPONSORS and Morgan Stanley are joint sponsors for the 4HEûlNALûPRICEûREPRESENTSûAûû0%ûOFû 4HEûCOMPANYûPLANSûTOûSELLûABOUTûûOFûITSû )0/ enlarged share capital in the secondary Bank of America Merrill Lynch, Goldman Sachs LISTINGûTOûRAISEû53MnBN ûSAIDûTHEû MINDRAY PLANS BIG CHINEXT IPO and Morgan Stanley were the joint PEOPLE BOOKRUNNERS "EI'ENESûSTOCKûCLOSEDûATû53ûLASTû SHENZHEN MINDRAY BIO-MEDICAL ELECTRONICS, a 4HURSDAY ûGIVINGûITûAûMARKETûCAPITALISATIONû Chinese manufacturer of medical VIVA BIOTECH FILES US$200m IPO OFû53BNû4HEûSTOCKûHASûGAINEDûûSOûFARû devices, has cleared a China Securities THISûYEAR 2EGULATORYû#OMMISSIONûHEARINGûFORûAû VIVA BIOTECH, a Chinese drug discovery BeiGene, an early-stage cancer drug #HI.EXTû)0/ûWHICHûCOULDûRAISEû2MBBNû RESEARCHûSERVICE ûHASûlLEDûAû(ONGû+ONGû)0/û developer, joins a growing list of Chinese 53M that aims to raise around US$200m, BIOTECHûCOMPANIESûLOOKINGûTOûSELLûSHARESûINû 4HEûPLANNEDûmOATûOFû-INDRAY ûWHICHû ACCORDINGûTOûAûPERSONûCLOSEûTOûTHEûDEAL Hong Kong following the introduction of WASûDELISTEDûFROMûTHEû.EWû9ORKû3TOCKû CICC is the sole sponsor on the proposed NEWûRULESûEARLIERûTHISûYEAR %XCHANGEûINû-ARCHû ûISûSETûTOûBEûONEûOFû mOAT (ONGû+ONGSûEXCHANGEûOPERATORûLOOSENEDû THEûLARGESTûONû#HINASû.ASDAQ STYLEû As of April this year, the company had its rules to attract more listings from #HI.EXTûBOARDûAFTERûTHEû2MBBNûLISTINGû NEARLYûûEARLY STAGEûBIOTECHNOLOGYûANDû Chinese new-economy companies, OFû#ONTEMPORARYû!MPEREXû4ECHNOLOGYû pharmaceutical clients worldwide, INCLUDINGûTECHûlRMSûANDûEARLY STAGEûDRUGû #!4, û#HINASûLARGESTûLITHIUMûBATTERYû COVERINGûTHEûDEVELOPMENTûOFû ûDRUGû DEVELOPERS PRODUCER ûINû*UNE targets and more than 7,000 protein !CCORDINGûTOûAûREGULATORYûlLING û"EI'ENESû -INDRAYûSAIDûINûAûREGULATORYûlLINGûTHATûITû STRUCTURES internally developed lead drug candidates PLANSûTOûSELLûUPûTOûMûSHARES ûORûABOUTûû !CCORDINGûTOûTHEûREGULATORYûlLING ûTHEû are in late-stage clinical trials, and it is of the enlarged share capital, to raise funds company offers services that include MARKETINGûTHREEûIN LICENSEDûDRUGSûINû#HINAû for the development of eight projects research, hit screening, lead optimisation from which it has been generating product COSTINGûAûCOMBINEDû2MBBN ANDûDRUGûCANDIDATEûDETERMINATIONû)TûALSOû REVENUEûSINCEû3EPTEMBERû )TûISûUNCLEARûATûTHISûSTAGEûWHETHERû MAKESûSTRATEGICûEQUITYûINVESTMENTSûINû 4HEûCOMPANYûLOSTû53MûINûTHEûlRSTû -INDRAYSû)0/ûCANûREACHûITSûTARGETûSIZEû#!4,û POTENTIALûBIOTECHNOLOGYûSTART UPS QUARTERûOFûûONûREVENUESûOFû53M WANTEDûTOûRAISEû2MBBNûBUTûWASûFORCEDûTOû The company posted total income of CUTûITSûDEALûSIZEûBYûMOREûTHANûHALFûASûITûCOULDû 2MBMû53M ûINûTHEûlRSTûFOURû ASCLETIS COMPLETES LANDMARK IPO NOTûSELLûITSûSHARESûABOVEûTHEûREGULATORSû months of this year, compared with UNWRITTENûVALUATIONûCAPûOFûûTIMESû 2MBMûFORûTHEûSAMEûPERIODûLASTûYEARû)Tû ASCLETIS PHARMAûHASûRAISEDû(+BNû HISTORICALûEARNINGS HADûTOTALûINCOMEûOFû2MBMûINû ûUPû 53M ûFROMûAû(ONGû+ONGû)0/ ûTHEûCITYSû Mindray listed in the US in September FROMû2MBMûINû lRSTûUNDERûNEWûRULESûDESIGNEDûFORûEARLY #HAIRMANûANDû#%/û#HENEYû-AOûOWNSû STAGEûBIOTECHûCOMPANIES !CCORDINGûTOûTHEûlLING û-INDRAYSûNETû ûOFûTHEûCOMPANYûANDûNON EXECUTIVEû The Chinese biopharma company sold PROlTûROSEûûTOû2MBBNûINûûFROMûAû DIRECTORû*OHNû7UûHASûAûûSTAKE MûPRIMARYûSHARESûATû(+ûEACH ûTHEû YEARûEARLIER ûWHILEûITSûREVENUEûGREWûûOVERû 0ROCEEDSûWILLûBEûUSEDûFORûEXPANDINGûTHEû midpoint of an indicative price range of THEûSAMEûPERIODûTOû2MBBN business to add more biotechnology Chinese (+nûAûSHARE ûACCORDINGûTOûPEOPLEû The company still needs written approval start-ups into the portfolio and beef up the CLOSEûTOûTHEûDEAL FROMûTHEû#32#ûBEFOREûITûCANûLAUNCHûTHEûDEAL COMPANYSûCOMMERCIALûANDûRESEARCHû 4HEûlNALûPRICEûTRANSLATESûINTOûAûû0%û Huatai United Securities is the sponsor for capabilities in the biologics and chemistry MULTIPLEûOFû THEû)0/ CONTRACTûMANUFACTURINGûORGANISATIONûSECTOR

International Financing Review July 28 2018 77 !#4ûEARNEDûAûNETûPROlTûOFû2SBNûINûTHEû WORLD CO PLANS TSX RELISTING INDIA lNANCIALûYEARûTOû-ARCHûû ûUPûFROMû 2SBNûINû Clothing company WORLD CO is planning to AAKASH FILES PROSPECTUS FOR UP TO Citigroup, HDFC Bank, ICICI Securities and JP RELISTûONûTHEû4OKYOû3TOCKû%XCHANGEûWITHûAû RS10bn IPO MorganûAREûTHEûBOOKRUNNERS TARGETEDûMARKETûCAPITALISATIONûOFûAROUNDû cBNû53M û4HOMSONû2EUTERSû AAKASH EDUCATIONAL SERVICESûHASûlLEDûAûDRAFTû CREDITACCESS GRAMEEN PLANS IPO $EAL7ATCHûREPORTEDûLASTûWEEK PROSPECTUSûFORûANû)0/ûOFûUPûTOû2SBNû IN AUGUST Nomura and SMBC Nikko have been 53M ûWITHûAûTARGETEDûLAUNCHûBEFOREû appointed to advise on the listing, -ARCHûû -ICROlNANCEûlRMûCREDITACCESS GRAMEEN is tentatively scheduled for the end of !ROUNDûMûSECONDARYûSHARESûWILLûBEû TARGETINGûTHEûLAUNCHûOFûITSû2SBNn2SBNû 3EPTEMBERû4HEûDEALûMIGHTûINCLUDEûAûGLOBALû SOLDûINûTHEû)0/ ûWITHûSELLERSûINCLUDINGû 53MnM û)0/ûINû!UGUST ûPEOPLEû OFFERING FOUNDERSû*#û#HAUDHRY û!AKASHû#HAUDHRYû WITHûKNOWLEDGEûOFûTHEûTRANSACTIONûSAID 7ORLDû#OûDELISTEDûINûûWHENûITûWASû ANDûOTHERûMEMBERSûOFûTHEû#HAUDHRYûFAMILY 0RIMARYûSHARESûOFû2SBNûANDûMû TAKENûPRIVATEûINûAû53BNûMANAGEMENTû &OUNDEDûINû ûTHEûCOMPANYûCOACHESû SECONDARYûSHARESûWILLûBEûSOLDûINûTHEû)0/û BUYOUT STUDENTSûFORûNATIONALûLEVELûEXAMINATIONSûTOû Controlling shareholder CreditAccess Asia &OUNDEDûINû ûTHEû+OBE HEADQUARTEREDû JOINûENGINEERINGûANDûMEDICALûCOLLEGESû!SûOFû OWNSûûOFûTHEûCOMPANYûANDûWILLûBEûSELLINGû fashion clothing company adopted a holding -ARCHûû ûTHEûCOMPANYûEMPLOYEDû THEûSECONDARYûSHARES company structure last year to spin off ûFACULTYûMEMBERSûANDûOPERATEDûû CreditAccess Grameen will be the second brands into separate companies aligned by CLASSROOMûCENTRESûACROSSûûCITIESûINû)NDIAû )NDIANûMICROlNANCEûlRMûPLANNINGûANû)0/û BUSINESSûMODELûANDûMARKETINGûCHANNELS /FûTHESE ûûCENTRESûAREûOPERATEDûTHROUGHû THISûYEARûAFTERû3PANDANAû3PHOORTYû%QUITASû )TûHASûALSOûEXPANDEDûINTERNATIONALLYûINû FRANCHISEEûARRANGEMENTS (OLDINGS û!5û3MALLû&INANCEû"ANKûANDû RECENTûYEARS ûFORûEXAMPLEûESTABLISHINGûAû 4HEûCOMPANYûEARNEDûAûNETûPROlTûOFû 5JJIVANûAREûTHEûCOUNTRYSûOTHERûLISTEDû joint venture with Thai conglomerate SAHA 2SBNûINûTHEûlNANCIALûYEARûTHATûENDEDûONû MICROlNANCEûCOMPANIES 'ROUPûINû -ARCHûû ûVERSUSû2SMûINû 4HEûCOMPANYûREPORTEDûAûNETûPROlTûOFû 7ORLDû#OûPOSTEDûREVENUEûOFûcBNûINû Citigroup, CLSA and Kotak are the 2SMûINûTHEûlNANCIALûYEARûTHATûENDEDûONû THEûYEARûTOû-ARCHû ûDOWNûFROMûcBNû BOOKRUNNERS -ARCHûûûVERSUSû2SMûINûû AûYEARûEARLIER ûACCORDINGûTOûTHEûCOMPANYSû 0ROlTûFELLûBECAUSEûOFûHIGHERûPROVISIONINGûFORû WEBSITEû(OWEVER ûOPERATINGûINCOMEûROSEûTOû ACT TAKES ITS TIME ON US$400m IPO BADûLOANS cBNûFROMûcBNûOVERûTHEûSAMEûPERIOD Credit Suisse, ICICI Securities, IIFL Holdings ATRIA CONVERGENCE TECHNOLOGIES is moving and KotakûAREûTHEûBOOKRUNNERS SLOWLYûONûITSûPLANûFORûAû53MnMû MALAYSIA )0/ûAFTERûAûFALLûINûTHEûSHARESûOFûLOCALLYûLISTEDû PEERS ûPEOPLEûWITHûKNOWLEDGEûOFûTHEû JAPAN QSR TARGETS AUGUST IPO FILING TRANSACTIONûHAVEûSAID The Bangalore-based broadband internet INVINCIBLE RAISING ¥42bn FROM NEW QSR BRANDS ûTHEûOPERATORûOFû+&#ûANDû0IZZAû(UTû SERVICEûPROVIDERûHADûNOTûlXEDûAûTIMETABLEû UNITS INû-ALAYSIAûANDû3INGAPORE ûAIMSûTOûlLEûTHEûDRAFTû FORûTHEû)0/ ûWHICHûHASûBEENûEXPECTEDûINûTHEû PROSPECTUSûFORûANû)0/ûOFû53MnMûWITHû SECONDûHALFûOFûTHISûYEAR INVINCIBLE INVESTMENT, a Japanese real estate the Securities Commission in August, a person -OBILEûPHONEûOPERATORû2ELIANCEû*IOû investment trust, is set to raise ¥42bn WITHûKNOWLEDGEûOFûTHEûTRANSACTIONûHASûSAID )NFOCOMMûISûPLANNINGûTOûSTARTûOFFERINGû 53M ûINûAûFOLLOW ONûOFFERINGûOFûNEWû The Malaysian poultry producer and broadband services from November, which UNITS restaurant operator is targeting a launch HASûTRIGGEREDûFEARSûOFûAûPRICEûWARû3HARESûOFû 4HEû2%)4ûPLANSûTOûSELLû ûUNITSûINûTHEû BEFOREûYEAR END broadband companies Dish TV, Bharti Airtel BASEûDEALûATûc ûPERûUNIT ûREPRESENTINGûAû 132ûHIREDûBANKSûINûLATEûûANDû and Tata Communications have fallen as a DISCOUNTûOFûûTOûTHEûCOMPANYSûCLOSEûOFû INTENDEDûTOûPROCEEDûWITHûTHEû)0/ûLASTûYEAR û RESULT c ûLASTû7EDNESDAY BUTûHELDûBACKûBECAUSEûOFûTHEûWEAKNESSûINû *IOSûENTRYûINTOûMOBILEûINTERNETûSERVICESû !BOUTûûOFûTHEûSHARES ûORû ûUNITS û THEûLOCALûCURRENCYûANDûSTOCKMARKETûAHEADûOFû DISRUPTEDûTHATûMARKETûCONSIDERABLYûANDû are being sold to international investors and THEû-AYûûFEDERALûELECTIONSû!TûONEûTIMEû hit the earnings of incumbents such as ûTOûDOMESTICûINVESTORSû4HEû ITûCONSIDEREDûANûASSETûSALEûINSTEADûOFûANû)0/ "HARTIû!IRTEL û)DEAû#ELLULARûANDû6ODAFONEû international-domestic tranche allocation is Citigroup, Credit Suisse and Maybank are the )NDIA DIFFERENTûFROMûTHEûORIGINALûPLANûOFûû JOINTûGLOBALûCOORDINATORS 0RIMARYûSHARESûOFû2SBNû53M ûANDû VERSUSû 132ûISûTHEûSOLEû+&#ûFRANCHISEEûINû MûSECONDARYûSHARESûWILLûBEûSOLDûINûTHEû There is an overallotment option of -ALAYSIA û3INGAPORE û"RUNEIûANDû#AMBODIA )0/ ûUNITS 4HEûCOMPANYûWASûTAKENûPRIVATEûINûû )NVESTMENTûFUNDû!RGANû-AURITIUSûANDû The domestic public offering ran from by a consortium of CVC and Employees PRIVATEûEQUITYûlRMû4!û&6#)ûAREûAMONGûTHEû *ULYûûTOû*ULYû 0ROVIDENTû&UNDû"OARD ûINûPARTNERSHIPûWITHû VENDORSûOFûTHEûSECONDARYûSHARESû!RGANû The company will use the proceeds to *OHORû#ORPORATION CURRENTLYûOWNSûûOFûTHEûCOMPANYûANDû4!û lNANCEûTHEûPURCHASEûOFûSIXûHOTELûPROPERTIESû û4HEûRESTûOFûTHEûSHARESûAREûOWNEDûBYû Any remaining proceeds will be used for FOUNDERû#HINNASWAMYû3UNDERû2AJUûANDû FUTUREûACQUISITIONS PHILIPPINES SOMEûINDIVIDUALûSHAREHOLDERS Mizuho Securities, Morgan Stanley and SMBC )NûTHEûPROSPECTUS û!#4ûSAYSûITûISû)NDIASû Nikko weREûTHEûJOINTûGLOBALûCOORDINATORSû ROBINSONS BANK LIKELY TO GO PUBLIC third-largest wired broadband internet 4HEYûWEREûALSOûJOINTûBOOKRUNNERSûANDûLEADû SERVICEûPROVIDERûWITHûMûCUSTOMERSûASûOFû managers with Citigroup and Nomura in the ROBINSONS BANK is to be turned into a THEûENDûOFûLASTûYEAR ûAûûMARKETûSHARE INTERNATIONALûOFFERING UNIVERSALûBANKûANDûGOûPUBLICûWITHINûTHEû

78 International Financing Review July 28 2018 EQUITIES EMEA

NEXTûlVEûYEARS ûACCORDINGûTOû*'û3UMMITû 4HEûTIMINGûOFûTHEûPROPOSEDû)0/ûHASûNOTû )Nû#ONTINENTALSûPREVIOUSûEXCURSIONSûINTOû (OLDINGS ûTHEûPARENTûOFûTHEû0HILIPPINEû BEENûDECIDED ûWITHûTHEûSECONDûHALFûOFû/CTOBERû European ECM, Goldman Sachs has been COMMERCIALûBANK SEENûASûTHEûEARLIESTûDATE û6ANû/VERTVELDTûSAID SOLEûBOOKRUNNERûONûTHREEûSELL DOWNSûBYû 4HEûPLAN ûlRSTûREPORTEDûBYûLOCALûMEDIA ûWASû /RIGINALûPLANSûTOûPRIVATISEûUPûTOûûOFû 3CHAEFmER ûRUNNINGûAûõBNûSALEûINû-ARCHû CONlRMEDûINûAûSTOCKûEXCHANGEûlLINGûBYûTHEû "ELlUSûHAVEûBEENûREVISEDûDOWNûTOû ûANDû ûOFmOADINGûAûõBNûSTAKEûWITHûCO HOLDINGûCOMPANYûOFûTHEû'OKONGWEIûFAMILY THEûBANKSûTHATûWILLûRUNûTHEûDEALûHAVEûYETûTOû BOOKSû#OMMERZBANKûANDû5NI#REDITûINû 2OBINSONSû"ANKûISûhALSOûNOTûCLOSINGûITSû BEûDECIDED ûHEûADDED 3EPTEMBERûûANDûAûûSTAKEûINû doors on a prospective partnership with a 3EPTEMBERûûTHATûTOTALLEDûõM FOREIGNûBANKûTHATûCANûADDûVALUEûTOûTHEû Developing solid state battery cell BANK vûACCORDINGûTOûTHEûMEDIAûREPORTûLATERû FRANCE technology for electric vehicles is on CONlRMEDûBYû*'û3UMMIT POWERTRAINSûRADARû3OLIDûSTATEûTECHûISûANû )NûTHEû0HILIPPINES ûUNIVERSALûBANKSûAREû FFP OFFLOADS €63.8m OF ORPEA SHARES alternative to lithium-ion batteries used in allowed to engage in underwriting and IN ABB electric vehicles, being smaller, cheaper and INVESTûINûEQUITIESûOFûNON ALLIEDûUNDERTAKINGSû LESSûmAMMABLEûBUTûTHEûTECHNOLOGYûISûSTILLûINû in addition to all other activities of &&0 ûTHEû0EUGEOTûFAMILYSûHOLDINGûCOMPANY û ITSûINFANCYû0OWERTRAINûWOULDûJOINûAûSLEWûOFû COMMERCIALûBANKS RAISEDûõMûINûANûACCELERATEDûBOOKBUILDû auto companies such as Hyundai, Toyota 2OBINSONSû"ANKûWILLûNEEDûTOûRAISEûITSû on Thursday evening, when it disposed of and Mercedes that already have their eyes CAPITALûTOû0SBNû53M ûFROMû0SBNûTOû ûSHARESûINûRETIREMENTûHOMEû lRMLYûONûTHEûPRIZE meet the capital requirements for a company ORPEA As well as opportunities in electric UNIVERSALûBANKû!CCORDINGûTOûTHEûLOCALûMEDIAû 0RICINGûCAMEûATûõûPERûSHARE û VEHICLES ûTHEûCHALLENGEûOFûQUICK PACEDûPOLICYû REPORT ûITûISûSEEKINGûAUTHORITYûTOûRAISEûITSû REPRESENTINGûAûûDISCOUNTûTOû4HURSDAYSû CHANGESûREGARDINGûEMISSIONSûACROSSûKEYû CAPITALûTOûASûMUCHûASû0SBN CLOSEûOFûõû4HEû!""ûINVOLVEDû&&0ûSELLINGû MARKETSûAREûCITEDûASûREASONSûBEHINDûTHEû "$/û5NIBANK û-ETROPOLITANû"ANKûANDû AûûSTAKEûINû/RPEA ûRETAININGû separation of powertrain and the ensuing 4RUSTûANDû"ANKûOFûTHEû0HILIPPINEû)SLANDSûAREû APPROXIMATELYûûOFûSHAREûCAPITAL ûSUBJECTûTOû )0/û'IVENûTHEûUNITSûRELIANCEûONûSALESûOFû SOMEûEXAMPLESûOFûUNIVERSALûBANKS Aû DAYûLOCK UP diesel and petrol combustion engines, it is &OLLOWINGûAûWALL CROSSING ûBOOKSûLAUNCHEDû particularly vulnerable to the rapid decline CAL-COMP PHILIPPINES PLANS ANDûWEREûCOVEREDûWITHINûûMINUTES ûAû of diesel engine sales in Europe, and being a MID-AUGUST IPO BANKERûINVOLVEDûINûTHEûDEALûSAIDû(EDGEû separate entity could help it to react more funds dominated, balanced by long-only mEXIBLYûTOûTHEûRAPIDLYûEVOLVINGûMARKET Consumer technology company CAL-COMP ACCOUNTSûMETûTHROUGHûTHEûWALL CROSSû4HEû TECHNOLOGY PHILIPPINES is planning to launch BOOKûWASûDOMINATEDûBYû5+ûANDû&RENCHû CONSUS RAISES €131m FOR GROWTH ITSû0SBNû53M û)0/ûINûMID !UGUSTû MONEY PLANS subject to investor demand, a person with &&0ûlRSTûACQUIREDûSHARESûINû/RPEAûINû*ULYû KNOWLEDGEûOFûTHEûTRANSACTIONûSAID ûWHENûITûBOUGHTûûOFûTHEûCOMPANY û Developer CONSUS REAL ESTATEûSECUREDûõMû The company is meeting investors to INCREASINGûTHATûSTAKEûTOûûINû$ECEMBERû through a capital increase that brought in GAUGEûDEMAND many new investors with a view to building )NûTHEûPRELIMINARYûPROSPECTUS ûTHEû The investment group disposed of the LIQUIDITYûINûTHEûSTOCK ûINûADDITIONûTOû COMPANYûSAIDûITûWOULDûSELLûMûSHARESûATûAû SHARESûASûPARTûOFûAûSTRATEGICûREVIEW providing funds for ambitious development MAXIMUMûPRICEûOFû0Sû4HEREûISûAûGREENSHOEû /RPEAûSHARESûCLOSEDûONû&RIDAYûATûõ PLANS OPTIONûOFûMûSECONDARYûSHARES ûWHICHû Societe Generale WASûSOLEûBOOKRUNNER û The fundraising was structured as a rights WOULDûTAKEûTHEûFREE mOATûTOû MANDATEDûONûANûAGENCYûBASIS ISSUEûASûTHEûSIZINGûWASûWELLûBEYONDûAûû #AL #OMPûISûAûSUBSIDIARYûOFû4AIWANSû.EWû CAPITALûINCREASE ûBUTûLEADûBANKSûRANûAûFULLû +INPOû'ROUP )0/ûSCHEDULEûOFûPRE MARKETINGûAHEADûOFû #AL #OMPûMANUFACTURESûEXTERNALûHARD GERMANY SETTINGûTHEûPRICEûATûõûPERûSHAREûANDûTHENû DISKûDRIVES ûTELEVISIONS ûPERSONALûCOMPUTERS û roadshows to help broaden the shareholder LASERûPRINTERSûANDûSMART HOMEûAPPLIANCESû CONTINENTAL HINTS AT 2019 IPO OF REGISTER 4HEû)0/ûFUNDSûWILLûBEûUSEDûTOûEXPANDûITSû POWERTRAIN SPIN-OFF The rights issue was therefore not BUSINESSûINûTHEû0HILIPPINES UNDERWRITTENûANDûHADûAûMAXIMUMûSIZEûOFû BDO CapitalûISûTHEûISSUEûMANAGER Auto parts supplier CONTINENTAL is set for a õMûFROMûANûAPPROXIMATEûûCAPITALû major overhaul of its business structure, INCREASEû)NVESTORSûWEREûADVISEDûTHEûDEALû WITHûEXECUTIVESûHINTINGûATûAûPARTIALûmOTATIONû WOULDûBEûSIZEDûTOûlTûDEMAND ûUNLESSû OFûITSûPOWERTRAINûDIVISIONûBYûMID OVERSUBSCRIBEDû!TûlNALûSIZING ûMûNEWû /NEûOFûlVEû#ONTINENTALûDIVISIONS û SHARESûWEREûISSUED ûREPRESENTINGûAûû EUROPE/MIDDLE POWERTRAINûLOOKSûAFTERûHYBRIDûANDûELECTRICû CAPITALûINCREASE EAST/AFRICA drive systems, batteries and combustion 4HEûPROCEEDSûWILLûHELPûlNANCEû ENGINESû)TûGENERATEDûõBNûINûSALESûLASTû DEVELOPMENTSûANDûADD ONûACQUISITIONSû YEAR ûûOFû#ONTINENTALSûTOTAL 4HEûCOMPANYûHASûAûõBNûDEVELOPMENTû BELGIUM As part of the rejig, powertrain will be pipeline from its focus on nine German bumped up to one of three segments and CITIESû)TSûMODELûSEESûDEVELOPMENTSûSOLDû BELFIUS FLOAT AS SOON AS OCTOBER, transformed into a stand-alone legal entity en masse, typically to insurers, ahead of MINISTER SAYS WITHûAûNEWûNAMEû!ûPARTIALû)0/ûISûEXPECTEDû BREAKINGûGROUNDû&ORûEXAMPLE ûINû TOûLAUNCHûBYûMID ûALTHOUGHûTHEû $ECEMBERûûAûõMûFORWARDûSALEûWASû "ELGIUMûPLANSûTOûmOATûûOFûSTATE OWNEDû company said in a statement that control of agreed with a Bavarian insurer, with the BANKûBELFIUS ûTHEûlNANCEûMINISTERû*OHANû6ANû the powertrain business will not be lRSTûõMûPAYMENTûTHENûRECEIVEDûINû /VERTVELDTûHASûSAID RELINQUISHEDûINûTHEûMIDûORûLONGûTERM !PRIL

International Financing Review July 28 2018 79 Major shareholder Aggregate Deutschland 4HEûRIGHTSûWEREûSOLDûFORûõûEACHûANDû "ITMAINûANDû)$'û#APITALû&UND)$'û#APITALû EXERCISEDûRIGHTSûTOTALLINGûõM ûWHILEû#ONSUSû ENTITLEûBUYERSûTOûPURCHASEûMûSHARESûONûAû )NVESTORSû4HEûFORMERûWILLûTAKEûUPû53Mû #%/û!NDREASû3TEYERûADDEDûõMû!BOUTûûOFû FOR ûBASISûATûõ ûWHICHûWASûAûû ANDûTHEûLATTERû53M the portion placed concurrently with DISCOUNTûTOû4%20ûATûLAUNCH CICC and CitigroupûAREûJOINTûBOOKRUNNERSû institutions went to UK accounts, with The rump placing equates to an all-in FORûTHEûDEAL German and Swiss investors notable in the PURCHASEûPRICEûOFûõûPERûSHAREû3HARESû Although based in Norway, web browser REMAININGûDISTRIBUTIONûAROUNDû%UROPE CLOSEDûATûõûONû-ONDAYûANDûWEREû /PERAûISûMAINLYûUSEDûINû#HINA ûANDû"EIJING /Nû4UESDAYûAFTERNOON ûEXISTINGûSHARESû TRADINGûATûõûONû4UESDAYûATûAROUNDû based Kunlun Tech is its main investor, were trading in line with deal pricing at PMûINû,ONDONû"UYERSûOFûTHEûRIGHTSûHADû OWNINGûû-ONTHLYûUSERSûOFûTHEûBROWSERû õûEACHû4HEûNEWûSHARESûBEGINûTRADINGûONû UNTILû*ULYûûTOûEXERCISEûTHEM REACHEDûMûINûTHEûlRSTûTHREEûMONTHSûOFû -ONDAY )NûTOTAL ûMûNEWûSHARESûINûTHEû)TALIANû ûOFûWHICHûMûWEREûSMARTPHONEû Deutsche Bank and UBS were joint global ENERGYûANDûTELECOMSûCABLESûlRMûWEREûSOLDû ANDû0#ûUSERS COORDINATORSûANDûJOINTûBOOKRUNNERSûWITHû TOûRESTOREûlREPOWERûFORûACQUISITIONSû #APITALûRAISEDûINûTHEûmOTATIONûWILLûBEû Baader Bank following the purchase of General Cable for FUNNELLEDûINTOûTHEûCOMPANYSû!)ûRESEARCHû 53BNûINû$ECEMBER ANDûDEVELOPMENTûACTIVITIES Banca IMI, Goldman Sachs and Mediobanca IRELAND WEREûJOINTûBOOKRUNNERSûONûTHEûDEAL SERBIA GREENCOAT PLACING RAISES €111m NIGERIA FIRST BELGRADE IPO SINCE 1940 GREENCOAT RENEWABLESûHASûRAISEDûõMû LAUNCHES THROUGHûAûPLACINGûINVOLVINGûMûSHARES û LAFARGE AFRICA TARGETS N90bn UPûFROMûMûATûLAUNCH ûPRICEDûATûõû CAPITAL INCREASE FINTEL ENERGIJA, the Serbian subsidiary of The offering closed on Monday and )TALYSû&INTELû%NERGIAû'ROUP ûHASûBEGUNûAû REPRESENTEDûûOFûTHEûEXISTINGûSHARESûINû Cement producer LAFARGE AFRICA is planning 3$BNû53M û)0/ûONûTHEû"ELGRADEû THEûRENEWABLEûINFRASTRUCTUREûCOMPANY TOûRAISEû.BNû53M ûTOûREDUCEûDEBT û 3TOCKû%XCHANGE ûTHEûlRSTûLISTINGûINû"ELGRADEû !ûBOOKûOFûAROUNDûûLINESûWASûDOMINATEDû THEûCOMPANYûTOLDûJOURNALISTSûONû4UESDAY SINCEû by domestic, UK and Continental Europe ,AFARGESû#&/û"RUNOû"AYETûSAIDûONûAû 0RICINGûISûSETûATû3$ûPERûSHARE ûWITHû MONEY ûWITHûAûSKEWûTOûLONG ONLYûACCOUNTS conference call that the company would MûNEWûSHARESûOFFEREDûANDûAûMINIMUMû The transaction is conditional on ISSUEûSHARESûTOTALLINGû.BNûTOûEXISTINGû SIZEûSETûATûMûSHARES SHAREHOLDERûAPPROVALûATûANû%'-ûONû!UGUSTû SHAREHOLDERSûBYûTHEûENDûOFûTHEûYEARû)Tû 3UBSCRIPTIONûRUNSûFORûûDAYS ûWITHû The company plans to funnel the FOLLOWSûAû.BNûRIGHTSûISSUEûATûTHEûENDû TRADINGûDUEûTOûBEGINûINû.OVEMBER accumulated funds into a project to OFûûTHATûCONCLUDEDûWITHûûTAKE UP û M&V Investments and Komercijalna Bank are RElNANCEûITSûCREDITûFACILITY ûWITHûAûVIEWûTOû RAISINGû.BN RUNNINGûTHEûmOAT MAKINGûFUTUREûACQUISITIONS The announcement came alongside Fintel closed its largest Serbian wind Davy and RBC WEREûJOINTûBOOKRUNNERS SECOND QUARTERûlNANCIALûRESULTS ûWHICHû PROJECTûTOûDATEûINû&EBRUARY ûTHEûõMû SHOWEDûNETûLOSSESûTOTALLINGû.BNûINûTHEû -7û+OSAVAûWINDûFARMû4HEûCOMPANYûISû THREEûMONTHSûTOû*UNEûûVERSUSûAû.BNû WORKINGûONûTHEûSECONDû-7ûPHASE û ITALY PROlTûRECORDEDûINûû4HEûSHARESûCLOSEDû PLANNINGûTOûRAISEûDEBTûlNANCEûANDûSTARTû DOWNûûONûTHEûDAYûATû. CONSTRUCTIONûATûTHEûBEGINNINGûOFû PRYSMIAN RUMP SNAPPED UP

)NVESTORSûSNAPPEDûUPûMûRIGHTSûINû NORWAY SWITZERLAND PRYSMIAN on Tuesday morning, representing THEûRUMPûLEFTûOVERûFROMûITSûõMûRIGHTSû OPERA PRICES IPO AT TOP OF RANGE AC IMMUNE GREENSHOE BRINGS ISSUE ûWHICHûCONCLUDEDûONû4HURSDAYû*ULYûû FUNDRAISING TO US$99.9m WITHûûTAKE UP Software developer OPERAûRAISEDû53Mû THROUGHûAû.ASDAQû)0/ûWITHûSHARESûPRICEDûATû Swiss biotech AC IMMUNESûAT MARKETûRIGHTSû EMEA EQUITIES THEûTOPûOFûITSû53nûINDICATIVEûPRICEû ISSUEûHASûGROWNûTOû53MûWITHûTHEû BOOKRUNNERS: 1/1/2018 TO DATE RANGE EXERCISEûOFûTHEûM SHAREûGREENSHOE Managing No of Total Share !ûTOTALûOFûMûPRIMARYû!MERICANû The fundraising, structured as a rights bank or group issues US$(m) (%) depositary shares were sold, together with a ISSUEûBUTûINûEFFECTûANûACCELERATEDûBOOKBUILD û 1 Goldman Sachs 43 9,830.55 10.0 GREENSHOEûTOTALLINGûMûSHARES INVOLVEDûMûSHARESûPLACEDûATû53ûONû 2 JP Morgan 37 8,681.56 8.8 4HEûSHARESûOPENEDûATû53ûANDûHADû 7EDNESDAYû*ULYû 3 Citigroup 34 6,069.69 6.2 PUSHEDûUPûTOû53ûSHORTLYûBEFOREûPMû !ûSECONDûRIGHTSûISSUEûWITHûAûWEEK LONGû 4 Credit Suisse 23 4,798.58 4.9 INû,ONDON subscription period, compared with 24 5 Morgan Stanley 33 4,524.46 4.6 Most of the early demand came from the HOURSûFORûTHEûlRST ûINVOLVESûMûNEWûSHARESû 6 BAML 19 4,518.05 4.6 China leg of the roadshow, but US investors at the same price, with subscription having 7 UBS 20 4,245.77 4.3 eventually joined in after gaining comfort begun on July 20 and running through to 8 Deutsche Bank 27 3,909.33 4.0 WITHûTHEûCOMPANYSûEXPOSUREûONûTHEû PMûINû.EWû9ORKûONû*ULYû 9 Barclays 23 3,476.32 3.5 MARKET Jefferies, Leerink Partners and UBS managed 10 Berenberg Bank 30 2,642.92 2.7 #ONCURRENTLYûTOûTHEû)0/ ûANDûSUBJECTûTOûITSû the ABB, and Georgeson is information Total 592 98,173.30 COMPLETION û/PERAûWILLûSELLûAûCOMBINEDû AGENTûFORûTHEûSECONDûPARTûOFûTHEûRIGHTSûISSUEû Including all domestic and international deals and rights issues 53MûOFûSHARESûINûAûPRIVATEûPLACEMENTûTOû The total fundraising across both rights Source: Thomson Reuters SDC code: C4cr bitcoin mining hardware manufacturer ISSUESûISû53MûIFûFULLYûSUBSCRIBED

80 International Financing Review July 28 2018 EQUITIES AMERICAS

SUPERDRY CO-FOUNDER SELLS 6.7% 4HEûFULLûEXERCISEûOFûTHEûM SHAREû UAE STAKE GREENSHOEûTAKESûTHEûTOTALûDEALûSIZEûTOû aMûANDûTHEûFREE mOATûTOû ADIB TARGETS DH1bn RIGHTS ISSUE *ULIANû$UNKERTON ûFORMERûCHIEFûEXECUTIVEû Citigroup was sole global coordinator and and co-founder of SUPERDRY ûSOLDûAûûSTAKEû JOINTûBOOKRUNNERûWITHûEFG Hermes and ABU DHABI ISLAMIC BANK said on Thursday that it INûTHEûFASHIONûRETAILERûONû-ONDAYû*ULYû û InvestecûKBWûWASûLEADûMANAGER INTENDSûTOûRAISEû$HBNû53M ûTHROUGHûAû NETTINGûPROCEEDSûOFûMOREûTHANûaM RIGHTSûISSUE ûWITHûTHEûBANKSûBOARDûALSOû A wall-crossing during the day on Monday GRIT FOLLOW-ON AND LONDON LISTING APPROVINGû53Mû4IERûûSUKUKûANDûTHEû provided indications of interest for more EXTENDS REPAYMENTûOFû53BNûSUKUKûRAISEDûINû û THANûûOFûTHEûSHARESûONûOFFER ûWHICHû THEûlRSTûSHARIA COMPLIANTû4IERûûINSTRUMENT REPRESENTEDûûOFûEXISTINGûSHAREûCAPITALû "OOKBUILDINGûWASûEXTENDEDûFORûTHEûFOLLOW ONû 4HEûOFFERINGûCOMPRISESûMûSHARES û ANDûAPPROXIMATELYûûDAYSûTRADING and London listing of pan-African real estate REPRESENTINGûJUSTûUNDERûûOFûEXISTINGû "OOKSûOPENEDûJUSTûAFTERûTHEûCLOSEûINû,ONDONû investor GRIT REAL ESTATE INCOME GROUP SHAREûCAPITAL ûPRICEDûATû$HûEACHû4HEû WITHûREFERENCEûTOûTHEûMARKETûCLOSEûOFûaû /RDERûBOOKSûFORûTHEûPLACINGSûINû3OUTHû SHARESûCLOSEDûONû4HURSDAYûATû$H ANDûWEREûCOVEREDûAFTERûJUSTûOVERûHALFûANûHOURû !FRICAûANDû-AURITIUSûWEREûEXTENDEDûUNTILû Vice-chairman Khamis Buharoon said in a Just before 7pm investors were warned that PMûINûBOTHûJURISDICTIONSûONû&RIDAYû*ULYûû statement that proceeds will be used to ORDERSûBELOWûaûRISKEDûMISSINGûOUT from Thursday originally, with the London maintain a solid capital buffer while 4HEûDEALûWRAPPEDûUPûATûPMûWITHû LINEûCLOSINGûASûEXPECTEDûONû4HURSDAY CONTINUINGûSTRONGûGROWTH PRICINGûATûa ûAûûDISCOUNTûTOûTHEû 4HEûRE )0/ûCOMPRISESûMûSHARESûATû 4HEûBANKûLASTûISSUEDûEQUITYûINû û CLOSE ûFORûAûaMûTOTAL 53 ûWITHûPROVISIONûFORûANûUPSIZEûTOû RAISINGû$HMûTHROUGHûAû FOR ûRIGHTSû The trade was dominated by UK money MûSHARESûINûTHEûEVENTûOFûSUFlCIENTû ISSUEûTHATûWASûNEARLYûTHREEûTIMESûCOVERED with pricing driven by a couple of very large OVERSUBSCRIPTIONû4HEûEXTENSIONûISûNOTû ORDERS ûWITHûTHEûTOPûûORDERSûTAKINGû EXPECTEDûTOûIMPACTûONûTHEûADMISSIONûDATEû APPROXIMATELYû FORûTHEû,ONDONûLINEûOFû4UESDAY û*ULYû UK 3UPERDRYûSHARESûOPENEDûATûaûONû FinnCapûISûlNANCIALûADVISERûANDûJOINTû 4UESDAYûMORNINGûANDûlNISHEDûTHEûDAYûDOWNû placing agent with AXYS Stockbroking, Baden METRO BANK BACK WITH £303m ûATûa Hill, Exotix Partners and PSG Capital FUNDRAISING UBSûWASûSOLEûBOOKRUNNERûWITHûInvestec as CO BOOKRUNNER ENDAVA PRICES HIGH METRO BANKûRAISEDûaMûTHROUGHûANû $UNKERTONûSTEPPEDûDOWNûFROMû3UPERDRYûINû ACCELERATEDûBOOKBUILDûONû4UESDAYûEVENING û -ARCHû(EûRETAINSûANûûSTAKEûINûTHEû ENDAVA ûAû5+ DOMICILEDû)4ûSERVICESûlRM û WITHûTHEûBOOKûALREADYûCOVEREDûFROMûINDICATIONSû COMPANY ûWHICHûISûSUBJECTûTOûAû DAYûLOCK UP WRAPPEDûUPûITSû)0/ûTOûACHIEVEûAû.EWû9ORKû OFûINTERESTûFOLLOWINGûAûWALL CROSS ûAûBANKERû 3TOCKû%XCHANGEûLISTINGûWITHûABOVE RANGEû INVOLVEDûINûTHEûDEALûSAIDûONû7EDNESDAY DS SMITH REPORTS 96.5% TAKE-UP FOR PRICING )TûCOMESûALMOSTûEXACTLYûAûYEARûAFTERûAû £1bn RIGHTS ISSUE Morgan Stanley, Citigroup, Credit Suisse and VIRTUALLYûIDENTICALûBOOKBUILDûINû Deutsche Bank combined efforts on the "OOKSûOPENEDûSHORTLYûAFTERûTHEû5+ûMARKETû 5+ûPACKAGINGûBUSINESSûDS SMITH has reported PLACEMENTûOFûMû!$3ûATû53 ûVERSUSû CLOSE ûOFFERINGûMûNEWûSHARESûWITHûlXEDû ûTAKE UPûFORûITSûaBNûRIGHTSûISSUE û THEû53 ûMARKETINGûRANGEûANDûMû PRICINGûATûaûEACH ûmATûTOûTHEûMARKETû proceeds from which part fund the SIZING CLOSEû4HEûNEWûSHARESûREPRESENTEDûûOFû õBNûACQUISITIONûOFû%UROPAC %NDAVAûISSUEDûMû!$3ûTOûRAISEû53M û EXISTINGûSHAREûCAPITAL 4HEREûWEREûACCEPTANCESûFORûMûOUTûOFû WHILEûSHAREHOLDERSûSOLDûAûFURTHERûMûTOû 4HEûBANKERûSAIDûTHATûKEYûEXISTINGûSHAREHOLDERSû MûOFFEREDûONûAû FOR ûBASISûATûP ûAû TAKEûTHEûDEALûUPûTOû53Mû4HEûUPSIZEû CAMEûINTOûTHEûBOOK ûJOINEDûBYûNEWûLONG ONLYû ûDISCOUNTûTOû4%20ûOFûP ûBASEDûONû BROADLYûMAINTAINEDûTHEûSAMEûû NAMESûFROMûTHEû53ûANDûTHEû5+û!TûLAUNCH û THEû*UNEûûCLOSEûOFûP PRIMARYSECONDARYûSPLITûASûENVISAGEDûONûTHEû -ETROû"ANKûCHAIRMANû6ERNONû(ILLûINDICATEDû !ûRUMPûOFûMûSHARESûWASûSOLDûONû ORIGINALûMû!$3ûSIZING HEûWOULDûINVESTûUPûTOûaMûINûTHEûPLACING 7EDNESDAYûMORNINGûATûPû4HEûSHARESû !ûMû!$3ûGREENSHOEûCOULDûTAKEûTOTALû There was a lengthy wall-cross in OPENEDûATûPûANDûCLOSEDûTHEûDAYûATûP PROCEEDSûTOû53M ADVANCE ûTHEûBANKERûSAID Goldman Sachs WASûLEADûlNANCIALûADVISERû "ANKERSûSAIDûTHEûBOOKûWASûMULTIPLEûTIMESû RBC was global coordinator with joint alongside JP Morgan and both are joint COVEREDûANDûTHISûWASûTHEûlRSTû)4ûSERVICESû BOOKRUNNERSûJefferies and Keefe Bruyette & Woods BOOKRUNNERSûWITHûCitigroup lRMûTOûPRICEûABOVE RANGEûSINCEû 4HEûFUNDSûWILLûSUPPORTûTHEûBANKSûGROWTHû FOLLOWINGûTHEûaMûACQUISITIONûOFûAû5+û FULL GREENSHOE FOR FAST-RISING ASA MORTGAGESûPORTFOLIOûINû-ARCHû4HEûEXTRAûCAPITALû WILLûALSOûBEûUSEDûTOûACCESSûDEBTûMARKETSûINûTHEû Stabilisation manager Citigroup has fully FUTURE ûTHEûCOMPANYûSAIDûINûAûSTATEMENT EXERCISEDûTHEûûSECONDARYûGREENSHOEûFORû AMERICAS Metro carried out a near identical capital MICROlNANCEûLENDERûASA INTERNATIONAL increase a year ago almost to the day, when !3!û)NTERNATIONALûPRICEDûITSûaMû ITûLAUNCHEDûANOTHERûûOFFERINGûATûaû ,ONDONû3TOCKû%XCHANGEû)0/ûATûP ûTHEû UNITED STATES PERûSHARE MID POINTûOFûTHEûP PûPRICEûRANGEû4HEû 4HEûSAMEûBANKSûWEREûINVOLVED ûALTHOUGHû STOCKûCLOSEDûONûDEBUTûUPûMOREûTHANûûATû SUMMER IPO ACTIVITY HEATS UP 2"#ûWASûPROMOTEDûTOûGLOBALûCOORDINATOR ûWHILEû P ûANDûTHEûSHARESûHAVEûROCKETEDûSINCEû +EEFEû"RUYETTEûû7OODSûRANûLASTûYEARSûTRADE THEN ûCLOSINGûONû4UESDAYûATûPûWHENûTHEû !SûSEASONEDûCOMPANIESûDEALTûWITHûBLACKOUTSû 4HEûCHALLENGERûBANKûWASûESTABLISHEDûINû GREENSHOEûWASûEXERCISED surrounding quarterly earnings, unseasoned ûINûTHEû5+ûWITHûTHEûAIMûOFûDISRUPTINGû 4HEûSHARESûCLOSEDûONû7EDNESDAYûATûPû private counterparts crowded the capital THEûTRADITIONALûHIGHûSTREETûBANKINGûMARKET ANDûATûPûONû4HURSDAY MARKETSûWITHû)0/S

International Financing Review July 28 2018 81 Tenable secures beachhead with US$250m IPO US Cybersecurity specialist touts expansion potential

TENABLE, the latest incumbent in the war on “Any incremental buying and the stock is ForeScout, Splunk, Tanium), Tenable’s software cyber terrorism, raised an upsized US$250.7m going to gap higher,” one hedge fund manager sits at the top, providing a high-level view of on its IPO. that participated in the deal told IFR. “Most of us vulnerabilities and speciﬁc measures. Runaway investor demand allowed for got 10,000 to 50,000 shares. Hell, I saw it. We Tenable sees itself as the top-level domain pricing on Wednesday of 10.9m shares at moved the stock 50 cents.” of cybersecurity; much like ServiceNow is to IT, US$23.00, above the upwardly revised At the IPO pricing, Tenable fetched a high- Workday to HR, or Salesforce to CRM. US$20–$22 marketing on a deal originally single digit multiple of EV-to-2019 sales Tenable counts more than half of the Fortune sized at 9.2m shares and marketed at projected by the underwriting banks. That 500 as customers and 24,000 overall, including US$17–$19. compares with eight times for a comp group of more than 4,400 enterprise-level customers Morgan Stanley, JP Morgan, Allen & Co and security stocks such as Proofpoint, Rapid7 and that pay US$5,000-plus annually. Deutsche Bank were joint bookrunners. Splunk, as well as high-growth software names Last year, its software-as-a-service model Tenable quickly closed any IPO discount (and Okta and ZScaler. generated revenue of US$187.7m, 86% of which there wasn’t much of one) with a 31.5% day-one While there are companies that protect was recurring and representing a 51% increase gain Thursday to US$30.25 as investors fought against threats (Palo Alto Networks, Symantec) year-on-year. to ﬁll out positions. and others that detect and respond (FireEye, Stephen Lacey

/VERALL ûûCOMPANIESûWENTûPUBLICûTHISû OFFERINGûTHATûALLOWEDûFORûBOTHûUPSIZEDûANDû AROUNDûTHEûBLOCKûAûFEWûTIMES ûTHESEûAREûTHEû PASTûWEEK ûTAKINGû53 LISTEDû)0/ûVOLUMESûFORû ABOVE RANGEûPRICING TYPESûOFûSITUATIONSûTOûMAKEûMONEYv THEûYEARûTOû53BN ûALREADYûAPPROACHINGû Bloom Energy, the fuel-cell pioneer, set a 4HEREûWEREûOBVIOUSûPOINTSûOFûPUSHBACKû THEû53BNûRAISEDûINûALLûOFû û path for its future growth with its top-of- THATûINVESTORSûWEREûABLEûTOûEXPLOIT ACCORDINGûTOû4HOMSONû2EUTERSûDATA RANGEû53Mû)0/ûONû4UESDAY Focus Financial has grown through The forward calendar has another Wealth management roll-up Focus ACQUISITIONS ûAûDEMERITûTYPICALLYûMARKEDûFORû 53BNûOFû)0/SûDUEûTOûPRICEûNEXTûWEEK û &INANCIALû0ARTNERSûFACEDûSCRUTINYûOFûITSû EARNINGSûACCRETIONûANDûORGANICûGROWTH though activity slows to just three deals, lNANCIALSûANDûACQUISITIONûSTRATEGY ûFORCINGûITû 7ITHûBACKINGûFROMû#ASTLEû0OINTûANDû++2 ûTHEû ALBEITûOFûEXTREMELYûHIGHûQUALITY TOûACCEPTûAûDISCOUNTEDûVALUATIONûONûITSû)0/ COMPANYûHASûPURCHASEDûMOREûTHANûûWEALTHû Commercial property operator Cushman "ERRYû0ETROLEUM ûAûONCE BANKRUPTû MANAGEMENTûlRMSûSINCEûITûWASûFOUNDEDûINû û7AKElELDû53M ûANDûCONSUMERû #ALIFORNIANû%0 ûALSOûSAWûHEAVYûINVESTORû ELECTRONICSûMAKERû3ONOSû53M ûAREû PUSHBACKûTHATûSAMEûNIGHT ûRESULTINGûINûAû )TûGENERALLYûINCENTIVISESûTHEMûBYûBUYINGûAû EXPECTEDûONû4UESDAY ûWITHû.ETGEARûSPIN OFFû LOWERûTHANûEXPECTEDû53MûONûAû nûSHAREûOFûOPERATINGûCASHûmOWSûANDû !RLOû4ECHNOLOGIESûTHEûFOLLOWINGûDAY RESTRUCTUREDû)0/ rewarding owners with a disproportionate 4HEûBREADTHûOFûRECENTûISSUANCEûISûNOTABLE "IOTECHûWASûREPRESENTEDûWITHû)0/SûFROMû SPLITûABOVEûCERTAINûTARGETSû3TOCKûISûAWARDEDû Technology, and not biotech, dominated !CQUESTIVEû4HERAPEUTICSû53M ûONû ASûPARTûOFûTHOSEûPAYOUTS ACTIVITYûTHISûPASTûWEEK Tuesday and Liquidia Technologies Focus Financial, however, prefers to 3IXûOFûTHEûûCOMPANIESûTHATûWENTûPUBLICû 53M ûONû7EDNESDAYû!ûWHOPPINGûû EVALUATEûITSûOWNûPERFORMANCEûONûNON '!!0û were out of the tech sector, including four BIOTECHSûHAVEûGONEûPUBLICûTHISûYEAR adjusted net income, that, among other items, #HINESEûPLAYSû û0INDUODUOû53BN û EXCLUDESûSTOCK BASEDûCOMPENSATIONûPAID !URORAû-OBILEû53M û#ANGOû53M û FOCUS FINANCIAL’S FUZZY MATH HITS IPO )Nû ûTHEûCOMPANYûREPORTEDûADJUSTEDû ANDû/PERAû53M NETûINCOMEûOFû53MûONûREVENUEûOFû US cybersecurity specialist Tenable For FOCUS FINANCIAL PARTNERS, going public is 53M 53M ûSAWûHUGEûINVESTORûDEMANDûFORûITSû the latest step in the continued 3IMILARLYûSTRUCTUREDû&)'ûROLL UPSûHAVEû CONSOLIDATIONûOFûWEALTHûMANAGEMENT FACEDûSCEPTICISM ûANDûTHRIVEDûONCEûPUBLICû US EQUITIES 0ARTûOFûTHEûROLL UPûSTRATEGYûWASûTOû 'OOSEHEADû)NSURANCE ûAûTECH FOCUSEDû BOOKRUNNERS: 1/1/2018 TO DATE engender loyalty from new, long-term consolidator of personal insurance, accepted Managing No of Total Share SHAREHOLDERS BELOW RANGEû53ûPRICINGûONûITSû)0/ûINû bank or group issues US$(m) (%) Goldman Sachs and Bank of America Merrill !PRILûnûITûNOWûTRADESûATû53û(AMILTONû 1 Morgan Stanley 91 13,632.44 12.6 Lynch ûALONGûWITHûFOURûOTHERûBANKS ûWEREû Lane, the private capital manager, has more 2 JP Morgan 113 12,482.13 11.5 FORCEDûTOûLOWERûTHEIRûSIGHTSûTOûDOûSOû4HEYû THANûTRIPLEDûSINCEûITSû&EBRUARYûû)0/ 3 Goldman Sachs 84 12,150.64 11.2 CONCENTRATEDûALLOCATIONSûOFûMûSHARESû h4HEREûISûAûLACKûOFûAûGROWTHûNAMEûWITHINû 4 Citigroup 74 9,853.36 9.1 ATû53 ûWELLûBELOWûTHEû53nû THEû&)'ûSPACE vûSAIDûONEûBUYSIDERûTHATû 5 Barclays 49 8,423.78 7.8 TARGETED invested in Focus Financial and Goosehead, 6 BAML 75 7,804.99 7.2 &OCUSû&INANCIALûCLOSEDûlRST DAYûTRADINGûONû ANDû(AMILTONûh&OCUSû&INANCIALûISûAûû 7 Credit Suisse 52 5,717.82 5.3 4HURSDAYûATû53 ûûABOVEûOFFER ûONû EARNINGSûGROWERûTHATûTRADESûATûAûûTIMESû0%û 8 Wells Fargo 44 4,768.58 4.4 VOLUMEûOFûJUSTûMûSHARESûnûAIR TIGHT ûEVENû 4OOûEXPENSIVE û'IVEûMEûAûBREAKv 9 Deutsche Bank 33 4,085.39 3.8 CONSIDERINGûTHEûLIKELYûLAYOUTûOFûAûPORTIONûOFû 10 Jefferies 63 3,804.35 3.5 THEûM SHAREûGREENSHOEûOPTION AQUESTIVE SWINGS ON IPO Total 468 108,527.16 h9OUûREALLYûHADûTOûJUSTûTRUSTûTHESEûGUYS vû Including all domestic and international deals and rights issues SAIDûONEûBANKERûINVOLVEDûINûTHEû &ORû53û)0/S ûAûSWINGûDAYûGIVESûCOMPANIESû Source: Thomson Reuters SDC code: C3r UNDERWRITINGûh&ORûINVESTORSûTHATûHAVEûBEENû THEûOPTIONûTOûCONDUCTûADDITIONALûMARKETINGû

82 International Financing Review July 28 2018 NOW AVAILABLE IN THOMSON REUTERS EIKON

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A THOMSON REUTERS SERVICE through conference calls if necessary or 5NLIKEûMOSTûBIOTECHû)0/S ûTHEûPUBLICû ANDûAûûSTEP UPûFROMûTHEû53û ACCELERATEûPRICINGûINûSOMEûCASES VALUATIONûISûUNDERPINNEDûBYûREVENUES equivalent price from a Series D round that AQUESTIVE THERAPEUTICS and its advisors !QUESTIVEûTOOKûINû53MûOFûREVENUEûINû PRICEDûINû&EBRUARY made the deliberate decision at the THEûlRSTûQUARTERûFROMûITSûPARTNERSHIPSûWITHû 0ROCEEDS ûWHENûCOMBINEDûWITHû53Mû OUTSETûOFûMARKETINGûITSû)0/ûTOûDROPûTHEû )DIVIORûANDû-IDATECHûONûSUBLINGUALû from the Series D, provide full funding for an swing day from its roadshow schedule, FORMULATIONSûOFûTHEIRû&$! APPROVEDûDRUGSû)Tû ONGOINGû0HASEû)))ûTRIALûOFûITSûNEWûTREATMENTûFORû rather than get caught up in the swarm also has its own proprietary pipeline of PULMONARYûARTERIALûHYPERTENSION of new issues that priced on Wednesday drugs that are in various stages of clinical 4HEû)0/ûWASûBACKEDûWITHûUPûTOû53MûOFû NIGHT DEVELOPMENT INSIDERûSUPPORT The result was a midpoint outcome on a 4HEûLEADûDRUG ûCALLEDû3YMPAZAN ûISûANûORALû ,IQUIDIAûOPENEDûATû53ûFORûANû 53MûRAISEûTHATûWASûUPSIZEDûANDûTRADEDû SOLUBLEûlLMûVERSIONûOFûTHEûANTI SEIZUREûDRUGû IMMEDIATEûûRETURNûFORûNEWûINVESTORSû4HEû UPûINûTHEûAFTERMARKET CLOBAZAMû!QUESTIVEûSUBMITTEDûAûNEWûDRUGû STOCKûTRADEDûDOWNûTOû53ûATûTHEûCLOSE BMO Capital Markets and RBC Capital Markets APPLICATIONûFORû3YMPAZANûLASTû/CTOBERûANDû ,IQUIDIASûLEADûDRUGûISûAûPOTENTIALûCOMPETITORû PRICEDûMûSHARESûATû53 ûTHEû THEû&$!ûHASûUNTILû!UGUSTûûTOûRULEûONûTHEû to United Therapeutics drug Tyvaso, which MIDPOINTûOFû53 ûMARKETINGûRANGEûANDû DRUGSûAPPROVALûORûTURNûITûDOWN GENERATEDû53MûINûSALESûLASTûYEARûASûAû INCREASEûFROMûMûSHARES TREATMENTûFORûPULMONARYûARTERIALûHYPERTENSION 4HEûDEALûWASûMARKETEDûWITHûUPûTOû LIQUIDIA FUNDS PIVOTAL TRIAL The drug is a dry powder formulation of US$20m of insider support but the the active ingredient in Tyvaso that uses an UNDERWRITERSûCLEARLYûFOUNDûENOUGHûBUYERS LIQUIDIA THERAPEUTICSûRAISEDû53MûONû inhaler to get the drug deep into the !QUESTIVEûRANûUPûûTOûAûHIGHûOFû 7EDNESDAYûINûTHEûTHûBIOTECHû)0/ûTHISû PATIENTSûLUNGSû0ROCEEDSûGIVEû,IQUIDIAû 53ûBEFOREûREVERSINGûCOURSEûINûTHEû YEAR ûACCORDINGûTOû)&2ûDATA 53MûOFûCASH ûWHICHûISûENOUGHûTOû AFTERNOONûTOûAû53ûlNISH ûUPûûBUTû Jefferies and CowenûPRICEDûMûSHARESûATû COMPLETEûANûONGOINGû0HASEû)))ûTRIALûBYûMID BELOWûTHEû53û67!0 53 ûMIDPOINTûTOûTHEû53nûRANGEû

ECM DEALS: WEEK ENDING 27/7/2018 Stock Country Date Amount Price Deal type Bookrunner(s) Evolution Mining Australia 16/07/18 A$257m A$2.79 Follow-on (Secondary) Citigroup, JP Morgan Stella Jones Canada 24/07/18 C$343.6m C$40.63 Accelerated bookbuild (Secondary) TD Securities Aurora Mobile Cayman Islands 25/07/18 US$76.5m US$8.50 IPO (Primary, Secondary) Goldman Sachs, Credit Suisse, Deutsche Bank Pinduoduo Cayman Islands 25/07/18 US$1.63bn US$19.00 IPO (Primary) Credit Suisse, Goldman Sachs, CICC Mall Plaza Chile 26/07/18 US$533.5m US$2.22 IPO (Secondary) JP Morgan, Morgan Stanley Pinduoduo China 26/07/18 US$1.63bn US$19 IPO (Primary) CICC, Credit Suisse, China Renaissance, GS Ascletis Pharma China 26/07/18 HK$3.1bn HK$14 IPO (Primary) China Merchants Securities, GS, Morgan Stanley Aurora Mobile China 26/07/18 US$76.5m HK$8.5 IPO (Primary) Credit Suisse, Deutsche Bank, Goldman Sachs Cango China 26/07/18 US$44m US$11 IPO (Primary) BAML, Goldman Sachs, Morgan Stanley Navya France 23/07/18 €37.6m €7 IPO (Primary) Credit Suisse, Natixis/ODDO BHF Consus Germany 23/07/18 €131m €7.20 Rights issue Deutsche Bank, UBS, Baader Bank Greencoat Renewables Ireland 23/07/18 €111m €1.01 Follow-on (Primary) Davy, RBC Invincible Investment Japan 25/07/18 US$374m ¥45,776 Follow-on (Primary) Mizuho Securities, Morgan Stanley, SMBC Nikko, Citigroup, Normura Opera Norway 27/07/18 US$115m US$12 IPO (Primary) CICC, Citigroup DS Smith UK 24/07/18 £1bn 350p Rights issue Citigroup, Goldman Sachs, JP Morgan Endava UK 26/07/18 US$128.0m US$20.00 IPO (Primary) MS, Citigroup, Credit Suisse, Deutsche Bank Metro Bank UK 24/07/18 £302.84m £34.22 Accelerated bookbuild (Primary) RBC, KBW/Stifel Nicolaus Europe, Jefferies Superdry UK 23/07/18 £71m £12.85 Accelerated bookbuild (Secondary) UBS Aquestive Therapeutics US 24/07/18 US$67.5m US$15.00 IPO (Primary) BMO Capital Markets, RBC Capital Markets Berry Petroleum US 25/07/18 US$182.6m US$14.00 IPO (Primary, Secondary) Goldman Sachs, Wells Fargo, BMO Capital Markets Bloom Energy US 24/07/18 US$270.0m US$15.00 IPO (Primary) JP Morgan, Morgan Stanley Bluebird bio US 24/07/18 US$549.3m US$162.50 Follow-on (Primary) Goldman Sachs, BAML, JP Morgan, Cowen Cadence Bancorporation US 24/07/18 US$355.3m US$28.40 Accelerated bookbuild (Secondary) Goldman Sachs Catalent US 24/07/18 US$400.0m US$40.24 Follow-on (Primary) JP Morgan , MS, RBC CM, BAML, Wells Fargo Focus Financial Partners US 25/07/18 US$534.6m US$33.00 IPO (Primary) Goldman Sachs, BAML, KKR Liquidia Technologies US 25/07/18 US$50.0m US$11.00 IPO (Primary) Jefferies, Cowen Merit Medical Systems US 25/07/18 US$189.0m US$54.00 Follow-on (Primary) Wells Fargo, Piper Jaffray Nabriva Therapeutics US 26/07/18 US$50.0m US$2.75 Follow-on (Primary) Morgan Stanley National Vision US 25/07/18 US$572.4m US$39.75 Follow-on (Secondary) BAML, Citigroup, Goldman Sachs, Jefferies, KKR Noodles & Co US 26/07/18 US$85.0m US$10.00 Follow-on (Primary, Secondary) Jefferies, Citigroup, RBC Capital Markets Reata Pharmaceuticals US 24/07/18 US$216.0m US$72.00 Follow-on (Primary) Jefferies, Leerink Partners, Stifel, Cantor Fitzgerald Redwood Trust US 23/07/18 US$103.3m US$16.50 Accelerated follow-on (Primary) JP Morgan, Wells Fargo, GS, Credit Suisse State Street US 26/07/18 US$1.15bn US$86.93 Accelerated follow-on (Primary) Morgan Stanley Teladoc US 23/07/18 US$352.6m US$67.00 Accelerated follow-on (Primary, Secondary) Jefferies Tenable Holdings US 25/07/18 US$250.7m US$23.00 IPO (Primary) MS, JP Morgan, Allen & Co, Deutsche Bank Veracyte US 25/07/18 US$51.3m US$10.25 Follow-on (Primary) Leerink Partners, WM Blair WilScot US 25/07/18 US$128.0m US$16.00 Follow-on (Primary) Barclays, DB, MS, BAML, Credit Suisse, ING

84 International Financing Review July 28 2018 EQUITIES AMERICAS

Cushman & Wakeﬁeld gains strategic push on US$810m IPO

US Vanke Service takes 4.9% stake to propel APAC expansion

CUSHMAN & WAKEFIELD is garnering plenty of times. Rival commercial real estate operators If the economy does well, these guys will do attention from investors on its up to US$810m Jones Lang LaSalle and CBRE operate extremely well.” IPO. with lower deleverage, at 0.5 and 1.6-times Cushman provides facility management Vanke Service, a Chinese real estate respectively, because of the cyclicality of services for 400 office buildings in 70 countries, conglomerate, staked a 4.9% claim in the commercial real estate. encompassing 3.5bn square feet of commercial commercial properties operator just two days Cushman is offsetting the risk of higher real estate. into the roadshow through a concurrent private leverage with a lower relative valuation. In 2017, Cushman generated adjusted Ebitda placement and set off of pricing of the IPO. The IPO targets a valuation of about 8.5 to of US$528.5m on fee revenue of US$5.3bn, with Morgan Stanley, JP Morgan, Goldman Sachs 9-times 2019 Ebitda, based on the forecast of Americas, EMEA and APAC units contributing and UBS, along with a hefty syndicate of co- the underwriting banks. US$344.6m, US$108.8m and US$75.1m, managers, including minority firms, launched CBRE and Jones Lang LaSalle, by comparison, respectively, to Ebitda. the deal on Monday morning as 45m shares fetch 10 and 9.4-times. Nearly half, 47%, of the 2017 revenue is recurring. were marketed at US$16–$18 apiece. In conjunction with the IPO launch, Cushman Vanke disclosed its investment, which would INDUSTRY TIES released preliminary second-quarter results be sized at 10.2m shares, on Wednesday Cushman CEO Brett White joined in 2015 from calling for adjusted Ebitda of US$169.8m and morning, providing additional momentum to CBRE, providing investor familiarity and the fee revenue of US$1.4bn, both strong gains from the IPO bookbuild. As part of the investment, cache of money made. the US$130.6m and US$1.39bn reported in the the companies plan to explore possible tie-ups The appointment followed consolidation comparable year earlier period. in China. of the legacy business of DTZ and Cassidy Through its legacy of acquisitions, Cushman “This will allow them to accelerate Turley in 2014 with Cushman & Wakefield the does have significant institutional backing. deleveraging by about one-third of a turn,” said following year. Cushman also completed 12 infill TPG, PAG Asia Capital and Ontario Teachers, a banker involved in the underwriting. “If there acquisitions and expects to close on another two which purchased the original DTZ business in was one knock against the company it was debt later this quarter. 2014, will see their combined stakes diluted by leverage.” “The IPO should be well received,” one banker 66.2%, with 137.9m shares held subject to a 180- Cushman’s net leverage, including the IPO involved in the underwriting told IFR. “Cushman day lock-up. and Vanke investment, would stand at four & Wakefield is a benchmark for the economy. Stephen Lacey, Robert Sherwood

BLUEBIRD BIO SWOOPS UP US$550m REATA FUNDS ON DATA READ &ORMERû30!#ûWILLSCOTûUSEDûITSû53Mû follow-on offering as a platform for Serial issuer BLUEBIRD BIOûSECUREDû53Mû REATA PHARMACEUTICALSûRAISEDû53MûAFTERû EXPANDINGûITSûINSTITUTIONALûSHAREHOLDERûBASEû OFûNEWûFUNDINGûFORûANûEXPANDEDûSTUDYûOFûAû ITûPUBLISHEDûPOSITIVEûDATAûFROMûTWOû0HASEû))û ANDûTOûFUNDûANûACQUISITION promising cancer drug that it is developing TRIALSû4HEûSTOCKûPRICEûROCKETEDûûTOû (EDGEûFUNDSûOWNEDûûOFû7ILL3COTû INûCOLLABORATIONûWITHû#ELGENE 53ûONû-ONDAYûFOLLOWINGûTHEûDATAû SHARESûOUTSTANDINGûATûLAUNCH Goldman Sachs, Bank of America Merrill READ 4HEûSTOCKûPRICEûROSEûûDURINGûTHEûONE Lynch, JP Morgan and CowenûPRICEDûMû Jefferies, Leerink Partners, Stifel and Cantor DAYûMARKETINGûEFFORTûBYûBarclays, Deutsche SHARESûATû53 ûAûTHINûDISCOUNTûTOûTHEû FitzgeraldûPRICEDûMûSHARESûONû4UESDAYûNIGHTû Bank, Morgan Stanley, Bank of America Merrill 53ûLASTûSALEûBUTûSIZABLEûTOûTHEû ATû53 ûAûûDISCOUNTûTOûTHEû53û Lynch, Credit Suisse and ING 53ûLAUNCH LASTûSALEûBUTûWELLûABOVEû2EATASû53û 4HEûBANKSûENDEDûUPûPRICINGûANûUPSIZEDû 4HEûOFFERINGûISû"LUEBIRDSûSEVENTHûSTOCKû volume weighted average price over the last OFFERINGûOFûMûSHARESûFROMûMûSHARES ûONû OFFERINGûSINCEûITSû)0/ûINû*UNEûûFORûMOREû ûDAYS 7EDNESDAYûNIGHTûATû53 ûVERSUSûTHEû THANû53BNûOFûPROCEEDSûRAISED 0ROCEEDSûFROMûTHEûOFFERINGûBOOSTû2EATASû 53ûLASTûSALE Bluebird has spent heavily on gene CASHûTOû53MûANDûPROVIDEûFUNDINGûFORû “Management wanted to be very active in therapy treatments for inherited blood 0HASEû)))ûTRIALSûOFûITSûDRUGûBARDOXOLONEû THEûALLOCATIONûPROCESS vûAûBANKERûTOLDû)&2 DISORDERSûLIKEûSICKLEûCELLûDISEASEûANDûBETAû METHYLûINûPATIENTSûWITHûCHRONICûKIDNEYû )NVESTORSûTHATûCONTINUEDûTOûlLLûTHEIRû THALASSEMIA DISEASE POSITIONSûINû4HURSDAYSûAFTERMARKETûDROVEû )TûISûALSOûCO DEVELOPINGûCANCER KILLINGû 2EATAûEXPECTSûTOûREPORTû0HASEû)))ûDATAûINû 7ILL3COTTSûSTOCKûPRICEûABOVEû53û #!2 4ûDRUGSûWITHû#ELGENEû"LUEBIRDûANDû THEûSECONDûHALFûOFûNEXTûYEAR BEFOREûCLOSINGûATû53 ûUPû #ELGENEûRECENTLYûEXPANDEDûAûSTUDYûOFûTHEIRû The measure of a successful acquisition by lead drug as a potential cure for multiple WILLSCOT A SPAC NO MORE Aû30!#ûISûMEASUREDûINûTHEûNEWûCOMPANYSû MYELOMA ûAûFORMûOFûBONEûMARROWûCANCER STOCKûPRICEû!NYTHINGûLESSûTHANû53ûAû The companies plan to increase dosing in !ûMAJORûCONCERNûFORûSOMEûEX 30!#SûISû share and investors probably should have Aû0HASEû))ûTRIALûTOûINCREASEûTHEûLIKELIHOODûOFû replacing hedge funds and arbitrageurs demanded a full return of capital from the APPROVALû4HEûREFORMATTEDûTRIAL ûANNOUNCEDû THATûBUYû30!#û)0/SûWITHûINVESTORSûWHOû 30!#ûSPONSORS last month, will delay any approval into REALLYûWANTûTOûBUYûSTOCKûINûTHEûNEWû &ORûEXAMPLE û&',û(OLDINGSûATû53ûAû COMPANY SHAREûREALLYûHASûNOTûWORKEDûSINCEûTHEû

International Financing Review July 28 2018 85 Berry Petroleum sours on IPO US Investors pick apart formerly bankrupt oil producer

BERRY PETROLEUM, the one-time subsidiary of the cycle. Sponsor overhang. Not a big enough Moreover, net debt leverage would be bankrupt Linn Energy, weathered a tough slog market cap’.” maintained at 1.5–2.0 times throughout the on its reintroduction to the public markets. Pricing on a downsized 13m shares (10.5m cycle. Former creditors of the Californian E&P primary and 2.5m secondary) was set at US$14 Berry spent a portion of the proceeds raised responded in-kind by opting to scale back their apiece, valuing Berry at a rough US$1.1bn market on the IPO to buy back 1.8m shares from former planned selling in the IPO. cap and US$1.4bn enterprise value. creditors Benefit Street Partners and Oaktree Goldman Sachs, Wells Fargo and BMO Capital That equates to a low-4s multiple of EV/Ebitda Capital, scaled back from 4.2m. Markets, the lead bookrunners, sought to broker for 2019 from underwriting bank estimates. Berry did pump out US$24.6m of free a deal on Wednesday morning, the last day of Berry shares plunged 8.6% on debut to close cashflow in the first quarter, so it does have the the IPO bookbuild. on Thursday at US$13.25. ability to remain disciplined. Instead of 18.75m shares, including 6.55m Linn, for perspective, paid US$4.6bn in stock “The reality is there are a lot of E&Ps by selling shareholders, the offering would and assumed debt for Berry back in 2013, but was trading at low-4s 2019 multiple,” a second be reduced by 30%, and pricing was likely to forced to seek bankruptcy protection in May 2016. banker involved in the underwriting told IFR. come at between US$14 and US$15, versus the “Valuations just aren’t that attractive.” US$15–$17 range marketed. INCENTIVES Jagged Peak Energy, a Permian Basin They were oversubscribed, albeit with price Berry, which emerged from bankruptcy in producer, was the last C-Corp E&P to go public sensitivity, but some of the secondary sellers February 2017, sought to provide investors with in January 2017. were unwilling to participate at the lowered assurances. Berry did achieve ancillary benefit of flushing valuation. As a show of capital discipline, it would pay 37.7m Series A convertible preferred shares that “I call it low-hanging fruit,” said one banker of shareholders a 12-cent quarterly dividend, a could be PIK’d into common stock. investor pushback. “[They said] ‘Wrong part of 3.4% annual yield at offering. Stephen Lacey

"LACKSTONE AFlLIATEDû30!#û#&û#ORPûPAIDû Catalent announced the Juniper THEûDISPOSALûBYûPLACINGûMûSHARESûATû 53BNûFORû&IDELITYûû'UARANTYû,IFEûLASTû ACQUISITIONûONû*ULYûû)TûHASûAGREEDûTOûPAYû 53 ûAûûDISCOUNTûTOûLASTûSALEûANDû .OVEMBER *UNIPERûSHAREHOLDERSû53ûAûSHARE ûAû INCREASEûFROMûMûSHARESûLAUNCHED 7ILL3COTûWASûFORMEDûWHENû30!#û$OUBLEû ûPREMIUMûTOû*UNIPERSû53ûPRICEûONû !TûTHISûPACE û++2ûANDû"ERKSHIREûCOULDûBEû Eagle Acquisition acquired equipment *ULYû ONûPACEûTOûDISPOSEûOFûTHEIRûRESIDUALûSTAKEûBYû rental company Williams Scotsman for Catalent estimates that it will need YEAR ENDû/NûTHEûENLARGEDûSELLDOWN ûTHEYû 53MûLASTû.OVEMBERû$OUBLEû%AGLEûWENTû APPROXIMATELYû53MûOFûCASHûTOûFUNDûTHEû REDUCEDûTHEIRûCOMBINEDûSTAKEûTOûABOUTû PUBLICûINû3EPTEMBERûûANDûTHISûWEEKSû TENDERûANDûEXPECTSûTOûCLOSEûTHEûDEALûWITHINû National Vision is doing its part to support FOLLOW ONûWASûSOMETHINGûOFûAûRE )0/ûFORûTHEû THEûCURRENTûQUARTER AûCLEANûEXIT NEWûCOMPANY )TûINTENDSûTOûUSEûTHEûBALANCEûOFûPROCEEDSû The company pre-announced strong Following a couple of bolt-on acquisitions of TOûREPAYûDEBT RESULTSûSIMULTANEOUSûWITHûTHEûDEALûLAUNCHû !CTONû-OBILEû)NDUSTRIESû$ECEMBER ûANDû4YSONû Antibiotics specialist NABRIVA THERAPEUTICS .ETûINCOMEûFORûTHEûSIXûMONTHSûENDEDû*UNEû /NSITEû*ANUARY û7ILL3COTTûANNOUNCEDûITSû RAISEDû53MûOFûNEWûFUNDINGûAFTERû ûISûEXPECTEDûTOûBEûBETWEENû53MûANDû TRANSFORMATIVEûACQUISITIONûOFûOFlCEûTRAILER announcing its acquisition of Zavante 53M ûUPûFROMû53MûINûTHEû MODULARûBUILDINGSûMAKERû-OD3PACEûLASTûMONTH 4HERAPEUTICSûONû4HURSDAY comparable year-ago period, on revenue of The addition of ModSpace would push 4HEûOFFERINGûOFûMûSHARESûWASûHALF BETWEENû53MûANDû53M ûVERSUSû 7ILL3COTSûANNUALûREVENUESûABOVEû53BNû COVEREDûBYûINSIDERSûANDûPRICEDûATû53û 53MûAûYEARûAGO ANDûCREATEû53MûOFûSYNERGIES Morgan Stanley WASûTHEûSOLEûBOOKRUNNER ,IKE FOR LIKEûSALESûGROWTHûISûPROJECTEDûATû 0ROCEEDSûAREûBEINGûUSEDûTOûFUNDûTHEû .ABRIVAûISûISSUINGûMûSHARESûTOû:AVANTEû BETWEENûûTOû ûCONTINUINGûAûSTREAKûOFû 53BNûOFûCASHûITûNEEDSûTOûFUNDûTHEû shareholders and is using proceeds to ûQUARTERSûOFûCONSECUTIVEûGROWTH ACQUISITIONû7ILL3COTTûINTENDSûTOûFUNDûTHEû support the new drug programmes it has MOREûTHANû53MûUNFUNDEDûBALANCEûWITHû ACQUIRED ELI LILLY PUTS SPIN ON ANIMAL LONG TERMûDEBTû4HEûACQUISITIONûISûEXPECTEDû HEALTH UNIT TOûCLOSEûINûTHEûTHIRDûQUARTER NATIONAL VISION CUTS SPONSOR OVERHANG ELI LILLYûADDEDûTOûTHEûPOSTû,ABORû$AYû)0/û CATALENT FUNDS WITH EQUITY queue by announcing plans to spin-off its NATIONAL VISION HOLDINGSûlNANCIALûBACKERSû ANIMALûHEALTHûUNITûBYûTHEûENDûOFûTHEûYEAR Contract drug manufacturer CATALENT raised MADEûAûCLEANûEXITûWITHûANûUPSIZED û53Mû The pharma giant combined the spin-off 53MûOFûEQUITYûlNANCINGûFORûITSû secondary selldown of the discount eyewear with other shareholder treats of strong acquisition of UK-based Juniper RETAILER second quarter earnings and plans to 0HARMACEUTICALS ++2 ûWHICHûTOOKûTHEûCOMPANYûPUBLICûLASTû BUYBACKû53BNûOFûSTOCK JP Morgan, Morgan Stanley, RBC Capital /CTOBER ûANDû"ERKSHIREûWILLûBEûLOCKEDûUPûFORû The path towards divesting animal health is Markets, Bank of America Merrill Lynch and Wells ûDAYS ûAFTERûWAITINGûOUTûTHEû DAYûLOCK UPû WELL TRODDENû0lZERûTRAVERSEDûITûBYûUNLOCKINGû FargoûPRICEDûMûSHARESûONû4UESDAYûNIGHTû FROMûAûSIMILARLYûSIZEDûSELLDOWNûINû-ARCH :OETISûTHROUGHûANû)0/ûSPIN OFFûINûû!NDû ATû53ûAFTERûMARKETINGûTOWARDSûAûlXEDû Bank of America Merrill Lynch, Citigroup, Henry Schein has jettisoned its vet subsidiary in AMOUNTûOFûPROCEEDS Goldman Sachs, Jefferies and KKR accelerated a spin-and-merge transaction that will net it

86 International Financing Review July 28 2018 EQUITIES AMERICAS

53BNûANDûLEAVEûITSûSHAREHOLDERSûWITHûû CONNECTSûWITHû!MAZONSû!LEXAûANDû!PPLESû STATE STREET PRE-FUNDS ACQUISITION OFûTHEûCOMBINEDûCOMPANY 3IRIûVOICEûRECOGNITIONûTECHNOLOGIESû4HEû OVERNIGHT %LIû,ILLYûSHARESûGAINEDûûONû4UESDAYSû company plans to add Google Assistant later announcement to close the session at THISûYEAR "LOCKS ûOFûTHEûTRUEûRISKûVARIETY ûWEREû 53 ûHIKINGûITSûVALUATIONûTOû53BN 4HEû3ONOSû"EAMûOFlCIALLYûLAUNCHEDûONû noticeably absent in one of the busiest ELANCO û%LIû,ILLYSûANIMALûHEALTHûUNIT û *ULYû ûTHOUGHûCUSTOMERSûWEREûABLEûTOûPRE WEEKSûOFûTHEûYEARûFORûTHEûWIDERûEQUITYû GENERATEDûREVENUESûOFû53BNûINûTHEû ORDERûLASTûMONTH CAPITALûMARKETS YEARûTOû*UNEûû7HILEûAûSMALLûPARTûOFûTHEû As a result, Sonos Beam is not included in Morgan StanleyûBROKEûTHEûSILENCEûWITHûAû 53BNûTHEûPARENTûMADEûOVERALLûTHATûISû EXPECTEDûPRELIMINARYûRESULTSûFORûTHEû*UNEû 53BNûCOMMITMENTûONû4HURSDAYûNIGHTû PLENTYûOFûMEATûFORûANû)0/ quarter that call for an Ebitda loss of in STATE STREETû4HEûBANKûATTEMPTEDûTOû Zoetis fetches about 7-times forward BETWEENû53MûANDû53MûANDû OFmOADûITSûPURCHASEûOFûMûSHARESûATû revenue, suggesting a $20bn-plus valuation REVENUEûOFû53MnM 53 ûINûLINEûWITHûTHEû53ûLASTûSALEû ISûPOSSIBLEûFORû%LANCO ANDûAFTERûMARKETINGûATûTHATûlXEDûPRICE NOODLES SPONSORS SEEK EXIT The effort appeared successful, as State SONOS LAUNCHES IPO 3TREETûTRADEDûEARLYûONû&RIDAYûATû53 2ESTAURANTûCHAINûNOODLES & COûTHISûWEEKû 3TATEû3TREETûHADûmAGGEDûEQUITYûASûPARTûOFû 3MART SPEAKERûMAKERûSONOS pushed forward RAISEDû53MûINûITSûlRSTûSTOCKûSALEûINûlVEû ITSû53BN ûALL CASHûPURCHASEûOFû#HARLESû WITHûITSûPLANNEDû)0/ûDESPITEûAûLOOMINGûû YEARS 2IVERû$EVELOPMENTûAGREEDûTOûTHEûPREVIOUSû tariff on products that could blunt future Noodles, which reported its second &RIDAY SALES QUARTERûEARNINGSûRESULTSûLASTûWEEK ûPRICEDû !TûTHEûTIME ûTHEûlNANCIALûSERVICESû Morgan Stanley, Goldman Sachs and Allen MûSHARESûATû53ûONû4HURSDAY ûAûSLIGHTû COMPANYûSAIDûITûPLANNEDûTOûlNANCEûTHEû LAUNCHEDûANûUPûTOû53Mû)0/ûTHATûWOULDû DISCOUNTûTOûTHEû53ûLASTûSALE PURCHASEûWITHû53MûSAVEDûBYû VALUEû3ONOSûASûHIGHûASû53BN Jefferies, Citigroup, RBC Capital Markets, suspending share repurchases through year- 4HEûOFFERINGûISûSTRUCTUREDûASûMû SunTrust Robinson Humphrey and CL King were end, with the balance coming from equity SHARES ûINCLUDINGûMûFROMûSHAREHOLDERS û THEûJOINTûBOOKRUNNERS nûTWO THIRDSûINûTHEûFORMûOFûNEWûCOMMONû BEINGûMARKETEDûATû53nûEACHûFORû .OODLESûREACHEDû53ûAûSHAREûAFTERûITû STOCKûANDûONE THIRDûINûPREFERREDûSTOCK PRICINGûONû!UGUSTû REPORTEDûITSûEARNINGSûLASTûWEEK ûTHOUGHûTHEû $ESPITEûBEINGûWELLûTELEGRAPHED ûTHEûBLOCKû 3PONSORSûLEDûBYû++2ûHADûBEENûHOPINGûTOû PRICEûISûSTILLûAûFRACTIONûOFûITSûPOST )0/ûHIGHSû purchase was an aggressive one given that GETûAûVALUATIONûOFûBETWEENû53BNûANDû lVEûYEARSûAGO this is primary, dilutive capital and well 53BN û2EUTERSûREPORTEDûEARLIERûTHISû 4HEûOFFERINGûINCLUDEDûMûSHARESûFROMû AHEADûOFûEXPECTEDûFOURTH QUARTERûACQUISITIONû MONTH PRIVATEûEQUITYûSPONSORSû#ATTERTONû0ARTNERS û CLOSING That was before the Trump -ILLû2OADû#APITALûANDû!RGENTINAû0RIVATEû !DMINISTRATIONûSAIDûITûWOULDûSLAPûûTARIFFSû )NVESTMENTS ûWHICHûLASTûMONETISEDûATû MERIT AND VERACYTE FUND ON on Chinese manufactured goods, including 53ûBACKûINû$ECEMBERû EARNINGS BEATS 3ONOSûSPEAKERSûMANUFACTUREDûINû#HINA As a group, the sponsors still own more 4HEûTARIFFSûAREûEXPECTEDûTOûTAKEûEFFECTûINû THANûHALFûOFûTHEûCOMPANYûPOST MONEY Surgical device company MERIT MEDICAL 3EPTEMBER Noodles was one of the best performing SYSTEMS capitalised on a second-quarter h)FûTHEûTARIFFûLISTûREMAINSûUNALTERED ûALLûOFû )0/SûOFûûWITHûEXPECTATIONSûOFûITû EARNINGSûBEATûTHROUGHûAû53MûEQUITYû our inbound products to the United States BECOMINGûTHEûNEXTû#HIPOTLEû-EXICANû'RILLû RAISE WOULDûBEûSUBJECTûTOûAûûTARIFFûASSESSEDûONû ORû0ANEARAû"READ -ERITûSHARESûWEREûUPûûONû-ONDAYûAFTERû THEûCOSTûOFûGOODSûASûIMPORTED vû3ONOSûSAIDûINû 4HEûSTORYûHASûNOTûPANNEDûOUT the company reported second-quarter THEûPROSPECTUS Noodles opened no new restaurants in the EARNINGSûOFûûCENTSûAûSHAREûTHATûWEREûû The company is hoping to blunt any SECONDûQUARTERûANDûCLOSEDûSEVENû)TûSTILLû BETTERûTHANûTHEû4HOMSONû2EUTERSû BACKLASHûOVERûPOTENTIALûPRICEûINCREASESûBYû MANAGEDû53MûOFûREVENUEûDURINGûTHEû 3MART%STIMATEûOFûûCENTS APPEALINGûTOûTECH SAVVYûAUDIOPHILES QUARTER ûAûûINCREASEûOVERûTHEûSAMEûPERIODû Wells Fargo and Piper Jaffray Sonos just launched the Sonos Beam, a LASTûYEAR ûTHANKSûTOûITSûûSAMEûSTOREûSALESû OPPORTUNISTICALLYûPRICEDûMûSHARESûATû VOICE ENABLEDûHOMEûCINEMAûSPEAKERûTHATû GROWTH 53ûEACH ûVERSUSûTHEû53ûLASTûSALE

GLOBAL CONVERTIBLE OFFERINGS – EMEA GLOBAL CONVERTIBLE OFFERINGS ALL INTERNATIONAL US CONVERTIBLES 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 18.4 1 Goldman Sachs 41 9,001.83 13.5 1 Morgan Stanley 31 4,734.26 15.9 2 SG 7 1,072.57 10.7 2 JP Morgan 43 6,491.58 9.7 2 Goldman Sachs 29 4,661.31 15.7 3 JP Morgan 6 1,069.08 10.6 3 Morgan Stanley 40 6,094.08 9.1 3 JP Morgan 32 4,374.91 14.7 4 Deutsche Bank 4 1,022.29 10.2 4 BAML 29 4,537.58 6.8 4 BAML 24 3,804.88 12.8 5 Citigroup 5 792.52 7.9 5 Citigroup 19 3,433.92 5.2 5 Citigroup 12 2,305.60 7.7 6 BNP Paribas 6 673.63 6.7 6 Credit Suisse 18 2,677.31 4.0 6 Barclays 11 1,809.97 6.1 7 Goldman Sachs 5 632.75 6.3 7 Deutsche Bank 14 2,576.35 3.9 7 Wells Fargo 10 1,392.38 4.7 8 Morgan Stanley 3 399.50 4.0 8 UBS 7 2,268.82 3.4 8 Deutsche Bank 7 969.83 3.3 9 BAML 3 385.75 3.8 9 Barclays 14 2,113.22 3.2 9 RBC 6 858.45 2.9 10 HSBC 3 343.25 3.4 10 BNP Paribas 11 1,503.79 2.3 10 Credit Suisse 8 814.67 2.7 Total 29 10,069.81 Total 238 66,644.08 Total 77 29,781.87

Including exchangeables. Including exchangeables. Source: Thomson Reuters SDC code: C09d Source: Thomson Reuters SDC code: C9 Source: Thomson Reuters SDC code: C9a

International Financing Review July 28 2018 87 -ERITûMAKESûSINGLEûDEVICESûTHATûAREûUSEDû 4HEûCOMPANYûEXPECTSûTOûREPORTûQUARTERLYû 4HEûSTOCKûWASûTRADINGûEARLYûONû&RIDAYûATû BROADLYûINûSURGERYûANDûMEDICALûPROCEDURES REVENUEûOFû53MnMûVERSUSû 0S ûONûVOLUMEûOFûMûSHARES )TûEXPANDEDûITSûPRODUCTûSUITEûINû&EBRUARYû 53MûINûTHEûPREVIOUSûQUARTERûANDû "ROADERûINTERNATIONALûMARKETINGûANDûAû WHENûITûACQUIREDû"ECTONû$ICKINSONSûLINEûOFû 53MûINûTHEûSAMEûPERIODûLASTûYEAR BULGE BRACKETûSYNDICATEûOFûUNDERWRITERSû BIOPSYûPRODUCTSûFORû53M !RLOûHASûMOREûTHANûMûREGISTEREDûUSERSû contributed to a successful outcome, even 4HEûINVESTMENTûISûPAYINGûOFF INûMOREûTHANûûCOUNTRIESûANDûHOLDSûAûû THOUGHûFOREIGNûINVESTORSûTOOKûDOWNûJUSTûû -ERITSûSECOND QUARTERûSALESûOFû MARKETûSHAREûINûTHEû53ûCONSUMERûNETWORKû OFûTHEûDEALû4HEûOFFERINGûWASûSEVEN TIMESû 53M ûUPûFROMû53MûINûTHEûSAMEû CONNECTEDûCAMERAûSYSTEMSûMARKET OVERSUBSCRIBED ûBANKERSûTOLDû)&2 period last year, include sales from the #HILEûHASûNOTûSEENûANû)0/ûANYWHEREûNEARû ACQUIREDûPRODUCTS THISûLARGEûSINCEû ûWHENûCONSTRUCTIONû Cancer diagnostics company VERACYTE CANADA lRMû)NVERSIONESû,Aû#ONSTRUCCIONûRAISEDû TOPPEDûOFFûWITHû53MûOFûNEWûEQUITYûONû 53MûEQUIVALENT ûACCORDINGûTOû4HOMSONû BETTERûTHANûEXPECTEDûQUARTERLYûRESULTS STELLA-JONES’ PARENT BREAKS TIES 2EUTERSûDATA Leerink Partners and Wm Blair PRICEDûMû A high valuation targeted by the selling SHARESûATû53ûONû7EDNESDAYûNIGHT 3TELLAû*ONESû)NTERNATIONALûCASHEDûOUTûITSû shareholders was a source of investor 3ALESûOFû6ERACYTESûGENOMICûCANCERûTESTSû ENTIREûSTAKEûINû#ANADIANûFORESTRYûCOMPANYû PUSHBACK ûPARTICULARLYûAMONGûFOREIGNû WEREûUPûûTOû53MûINûTHEûSECONDû STELLA-JONESûINûAû#Mû53M û ACCOUNTS QUARTER SELLDOWNûOVERNIGHTûONû4UESDAY “While there was international interest, The company has also reduced its cash 3OLEûBOOKRUNNERûTD SecuritiesûSOLDûMû it would have been more if the valuation BURNûRESULTINGûINûAûNETûLOSSûOFûûCENTSûAû SHARESûINûAûBOUGHTûDEALûATû# ûAûSIZABLEû had more of a traditional discount [seen in SHARE ûAûûIMPROVEMENTûOVERûANALYSTSû ûDISCOUNTûTOûTHEû#ûLASTûSALEûONû OTHERû,AT!Mû)0/S= vûSAIDûONEûOFûTHEû CONSENSUSûOFûAûLOSSûOFûûCENTS 4UESDAY BANKERS TD acted as placement agent on the sale -ALLPLAZAûLOOKEDûEXPENSIVEûRELATIVEûTOû NETGEAR TUMBLES ON ARLO OFûANOTHERûMûSHARESûINûAûCONCURRENTû #HILEANûPEERû0ARQUEû!RAUCO ûASûWELLûASû TECHNOLOGIES SPIN-OFF PRIVATEûPLACEMENTûATûTHEûSAMEûPRICE against other LatAm mall operators, "RITISHû#OLUMBIAû)NVESTMENTû ESPECIALLYûTHOSEûINû"RAZIL NETGEAR had enjoyed a rise in its share price -ANAGEMENT û#AISSEûDEûDEPOT û'0)û#APITAL û 0ARQUEû!RAUCOûTRADESûATû TIMESû%6 TO on the impending spin-off of its home /-%23ûANDû#%/û"RIANû-C-ANUSû û%BITDAû"RAZILIANûMALLûOPERATORSû"2û security unit, ARLO TECHNOLOGIES, but PARTICIPATEDûINûTHEûPRIVATEûPLACEMENT -ALLSûANDû)GUATEMIû%MPRESAûDEû3HOPPINGû investors sent Netgear shares crashing by 4HEûCOMBINEDûMûSHARESûREPRESENTEDû #ENTERSûFETCHûJUSTûûANDû TIMES û ûTOû53ûAFTERûTHEû)0/ûWASû ALLûOFûPARENTû3TELLAû*ONESû)NTERNATIONALSû RESPECTIVELY LAUNCHEDûONû-ONDAYûMORNING REMAININGûSTAKE “While the quality of the asset is high, .ETGEARûISûSEEKINGûAûPUBLICûVALUATIONûOFû 3TELLA *ONESûSHARESûCLOSEDû7EDNESDAYû "RAZILûISûTRADINGûATûAû TIMESûMULTIPLE vûSAIDû 53BNnBNûFORû!RLOûBASEDûUPONûTHEû TRADINGûONûTHEû438ûATû# THEûBANKERûh4HEYûALWAYSûRECOGNISEDûTHEû )0/ûTERMS ûAûHEFTYûCHUNKûOFû.ETGEARSûOWNû )NûCONJUNCTIONûWITHûTHEûSELLDOWN û3TELLA DEPTHûOFûTHEûLOCALûMARKETûWOULDûBEûTHEû 53BNûMARKETûVALUE *ONESûPRE ANNOUNCEDûSECOND QUARTERûEXPECTEDû PRIMARYûDRIVERv Bank of America Merrill Lynch, Deutsche NETûINCOME û%BITDAûANDûSALESûOFû#M û Even so, getting any LatAm deal done "ANKûANDû'UGGENHEIMû3ECURITIESûAREû #MûANDû#M ûRESPECTIVELY these days is seen as an achievement in itself MARKETINGûMûSHARES ûABOUTûûOFûTHEû 3TELLAû*ONESû)NTERNATIONALûISûAûPRIVATELY following the recent rout in the Latin COMPANY ûATû53 ûFORûPRICINGûONû HELD û,UXEMBOURG BASEDûVEHICLEûOFû*AMESû !MERICANûMARKET !UGUSTû *ONESûû3ONS )Nû"RAZILûALONEûNINEû)0/SûHAVEûBEENûPULLEDû “The target valuation for Arlo was not VERSUSûFOURûSUCCESSFULûDEALS ûTHEûBANKERûSAID KNOWNûUNTILûTHEû)0/ûLAUNCHED vû(AMADû “The issue is that volatility in Latin Khorsand, a research analyst with BWS CHILE America has been higher than in other &INANCIALûTOLDû)&2ûh3OMEûINVESTORSûSETûTHEIRû REGIONS vûSAIDûTHEûBANKERûh9OUûCANûSEEûWHYû EXPECTATIONSûTOOûHIGHv MALLPLAZA BRINGS LIFE TO LATAM ITûISûHARDûTOûRAISEûCAPITALv )NVESTORSûBEGANûBUILDINGûOUTûTHEIRû EQUITY MARKET -ALLPLAZASûDEALûCOMESûONûTHEûHEELSûOFûANû positions in Netgear after the Arlo spin-off ALL SECONDARYûSTOCKûSALEûFROMû#OLOMBIASû WASûANNOUNCEDû.ETGEARûSHARESûHADûRUNûUPû MALLPLAZA brought some life to quiet Latin Grupo Energia Bogota, which also was SOMEûûAHEADûOFûTHEûlLINGûTOû53 !MERICANûEQUITYûCAPITALûMARKETSûWITHûAû MOSTLYûPLACEDûAMONGûLOCALûACCOUNTS h4HESEûWEREûNOTûLONG TERMûHOLDERS vû 53M EQUIVALENTû)0/ ûTHEûLARGESTû #REATEDûûYEARSûAGO û-ALLPLAZAûHASûGROWNû SAIDû+HORSANDûh4HEREûISûPROBABLYûVERYû OFFERINGûOUTûOFû#HILEûINûYEARS its operations across the Andean region and little Netgear could have done to prevent 4HEûALL SECONDARYûSTOCKûSALEûWASûFORCEDû now has 20 commercial centres in Chile, THEûSELL OFFv UPONû-ALLPLAZA ûTHEûLARGESTûMALLûOPERATORûINû 0ERUûANDû#OLOMBIA 4HEûSPIN OFFûISûSTRUCTUREDûTOûBEûTAX FREEû #HILE ûAFTERûTHEûFOUNDINGûFAMILIESûEXERCISEDû -ALLPLAZAûREPORTEDûAûPROlTûOFû0SBNû and Netgear intends to distribute the rest of REGISTRATIONûRIGHTSûTOûDIVERSIFYûTHEIRûlNANCIALû 53M ûONûREVENUEûOFû0SBNû ITSû!RLOûSHARESûTOûSHAREHOLDERSûûDAYSû HOLDINGS ûBANKERSûINVOLVEDûINûTHEû 53M ûINûTHEûTRAILINGûûMONTHSû AFTERûTHEû)0/ ûTHOUGHû!RLOûEXECUTIVESûANDû UNDERWRITINGûTOLDû)&2 ENDEDû-ARCHû ûACCORDINGûTOûAûPRESENTATIONû DIRECTORSûWILLûBEûSUBJECTûTOûTHEûSTANDARDû JP Morgan, Morgan Stanley and BanChile, the ONûTHEûCOMPANYSûWEBSITE DAYûLOCK UP global coordinators on the deal, placed Selling shareholders were three families .ETGEARûEXPECTSûTOûINCURû53MûINûONE MûSHARESûATû0S ûEACH ûTHEûLOWERûENDû THATûWISHEDûTOûDIVERSIFYûTHEIRûINVESTMENTS TIMEûCOSTSûANDûLOSTûSYNERGIESûFROMûTHEûSPLITû OFûAû0S n0S ûMARKETINGûRANGEû 4HEû)0/ûOFûûOFûTHEûCOMPANYûLEFTûTHEû !RLOûmASHEDûITSûPRELIMINARYûlNANCIALûRESULTSû 7HILEûTHEûLISTINGûISûONûTHEû3ANTIAGOû3TOCKû SELLINGûSHAREHOLDERSûWITHûABOUTûûOFûTHEû FORûTHEûTHREEûMONTHSûENDEDû*ULYûûINûTHEû %XCHANGE ûTHEYûPLACEDûSHARESûWITHû company, with Chilean retailer Falabella PROSPECTUS INTERNATIONALûACCOUNTSûONûAû!ûBASIS CONTINUINGûTOûOWNûJUSTûUNDERû

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www.ifrbrieﬁngs.com WRITTEN EVERY EVENING AFTER THE MARKETS HAVE CLOSED AND DELIVERED TO SUBSCRIBERS BEFORE THEY RE-OPEN, THE IFR US ECM BRIEFING IS A CONCISE SUMMARY OF THE LATEST DEVELOPMENTS IN THE US EQUITY CAPITAL MARKETS.

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Aakash Educational Services 78 Consus Real Estate 79 Juno 1 Srl 37 Ricardo plc 66 Abu Dhabi Commercial Bank PJSC 65 Continental 79 Just Group 32 Robinsons Bank 78 Abu Dhabi Islamic Bank 81 CoreCivic 55 Kenedix Residential Investment Corp 60 Rothesay Life 32 AC Immune 80 Country Garden Holdings 7, 57 Keyne Properties 57 Rothschild & Co 15 ADO Properties 28 C.R. Asti 37 KfW 26 Sabic 53 Advisor Group Inc 68 CreditAccess Grameen 78 Lafarge Africa 80 Sands China 49 Ahlstrom-Munksjo 62 Cushman & Wakefield 85 Land Transport Authority 50 Saudi Arabia Basic Industries Corp 8 AIB Group 33 Daimler 63 Lazard 13, 15 Saudi Aramco 8 AIS HoldCo 68 Danske Bank 21 LCY Chemical 61 Schenck Process 35 Al Asilah Desalination 60 Delta Merlin Dunia Textile 59 LifePoint Health 34 Scout24 63 Alera Group 69 Deutsche Bank 11, 20, 32 Lightstone 70 SEB 21 American Express Global Business Travel 69 Discover Bank 40 LingNan Eco&Culture-Tourism 49 Sherwin-Williams Co 67 Amplifon 64 DS Smith 81 Liquidia Therapeutics 84 Sichuan Provincial Investment Group 49 Aoyuan Property Group 6 Dynatrace 68 Lotte Property & Development 52 SI Group 69 AppLovin Corp 69 Elanco 87 Macquarie Group 12 Sino-Ocean Group Holding 6 Applus 65 Eli Lilly 86 Maggese Srl 37 Sivantos 69 Aptean Software LLC 68 Emirates NBD 65 Malakoff 56 SK Broadband 52 Aquestive Therapeutics 84 Endava 81 Mallplaza 88 Sonos 87 Ares Management 4 Enterprise 40 Mao Te International Investment 61 Spartan Energy Acquisition 75 Arlo Technologies 88 Enterprise Fleet Management 40 Marlink 71 Standard Chartered 21 Aruba 53 EP Infrastructure 62 Marriott Vacations Worldwide 69 Standard Life Aberdeen 32 ASA International 81 Eskom 47, 65 MCUBS MidCity Investment Corp 60 State Street 87 Ascletis Pharma 77 ESR 76 Members Equity Bank 42 Steinhoff 72 Atos SE 62 European Investment Bank 26 Merit Medical Systems 87 Stella-Jones 88 Atria Convergence Technologies 78 European Stability Mechanism 25 Metro Bank 81 Stenn International Ltd 66 Aurora Mobile 7, 77 Evercore 13 MFA Financial Inc 39 Sunac China Holdings 6, 49 Autohellas 36 Evolution Mining 76 Moelis 13 Suning Appliance Group 49 AutoWheel Securitisation 37 Fairhold Securitisation 10 Monash University 30 SunTrust Bank 30 Averys 71 Fannie Mae 21, 23, 38, 39 Morgan Stanley Prime Property Fund 39 Superdry 81 Aviation Industry Corporation of China 49 Fidelidade – Companhia de Seguros 31 Mothercare 72 Superion LLC 68 Axa Investment Managers 38 Fifth Third Bank 30 Mulhacen Pte (WiZink) 36 Svenska Handelsbanken 21 Azelis 70 Findel 66 Nabriva Therapeutics 86 Swedbank 21 Banca Carige 8 Fintel Energija 80 National Vision Holdings 86 Temasek Holdings 5 Banca Nazionale del Lavoro 37 First Pacific 59 Nationstar Mortgage 39 Tenable 82 Banco Sabadell 21 Fly Leasing 60 Nationwide Building Society 30 Tencent Music Entertainment 7 Bank of America Merrill Lynch 15 Focus Financial Partners 82 Navya 9 Tesla 35 Bank of Montreal 33 Foncia 72 Nederlandse Waterschapsbank 26 Texhong Textile Group 59 Barclays 17, 19 Ford Automotive Finance (China) 43 NetEase 57 Toronto-Dominion Bank 41 BeiGene 77 Freddie Mac 38 Netgear 88 Tritech Software Systems Inc 68 Beijing Capital Group 49 Freenet 64 Newport Group 68 TSB 21 Beijing Mo Mo Technology 49 Gazprom 47 New Residential 39 Tsinghua Unigroup 56 Belfius 79 General Growth Properties 39 Nexans 36 Turkey 53 Berry Petroleum 86 General Motors 29 Nio 7 UBS 12, 17 Biostime Healthy Australia Investment 59 General Shopping e Outlets do Brasil 54 Nobia 65 UniCredit 24 Bloom Energy 75 GEO Group 55 Nomura 18, 20 United Group 53 Bluebird bio 85 Getlink SE 63 NongHyup Bank 52 United Refining Company 70 BlueMountain Fuji Management 38 Giesecke + Devrient 64 Noodles & Co 87 United Site Services 69 BNP Paribas 19 Goldman Sachs 31 Nordea 21 Ventas Inc 67 Boyd Corp 69 Goldman Sachs Mortgage 39 Old Mutual 32 Veracyte 88 Bruin E&P Partners 34 Goshawk Aviation Ltd 64 Ooredoo 65 Verbundnetz Gas AG 63 Bulgarian Energy Holding 52 Greencoat Renewables 80 Opera 80 Verifone Systems Inc 68 Bureau Veritas 63 Greenland Holding Group 6, 48 Orano 63 VetCor Professional Practices 70 Cal-Comp Technology Philippines 79 Grit Real Estate Income Group 81 Orchestra Premaman 73 Viva Biotech 77 Cango 7, 77 Hemisphere International Properties 72 Orpea 79 Vivint 69 Capital Home Loans 36 Hope Education 76 Pension Insurance Corporation 32 Volvo Financial Services 41 Catalent 86 Houlihan Lokey 19 Pepper Group 42 Wales & West Utilities 30 CDH Investments 56 Housing Development Finance Corp Ltd 58 Permanent Custodians Ltd 40 Walt Disney 27 Cellnex Telecom 65 HSBC 21 Petrotrin 54 Welltower Inc 67 Ceva 70 Humanwell Healthcare (Group) 49 PGIM 38 Wereldhave 29, 64 Ceva Logistics 35 Huntsworth 66 Phoenix 32 Westinghouse Electric Co 67 China Aircraft Leasing Group Holdings 57 Hyundai Capital Services 51 Pinduoduo 7 Westlake Chemical 67 China Aoyuan Property Group 49 IG Group 66 Pirelli 64 WillScot 85 China Everbright Group 49 Imerys 70 PNC Bank 30 World Bank 26 China Fortune Land Development 6, 49 Incline B Aviation 60 Posco 52 World Co 78 China Merchants Group 49 Indian Railway Finance Corp 58 Progress Residential 41 World Omni 40, 41 China Merchants Port Holdings 49 Industrial Bank Financial Leasing 58 Prologis Euro Finance 27 Worldwide Flight Services 35 China Tower 6 Industrial Bank of Korea 52 Prudential 32 Wpd 60 Christiana Mall 38 Inseec U 71 Prysmian 80 Wuhu Conch Investment 49 Cigna 27 Inter-American Development Bank 27 PT Indomobil Finance Indonesia 59 Xiwang Group 49 CleanFund 40 International Business Machines Corp 66 QSR Brands 78 Yanzhou Coal Mining 49 Clifden 10 International Finance Corporation 25 Qualcomm 27, 29 Yiwu State-owned Capital Operation 48 Clifford Capital 41 Intiland Development 50 Quanta Computer 61 Yuzhou Properties 6, 49 CommonBond Inc 40 Investa Office Fund 30 Quanta International 61 Zhongyuan Bank 49 Comstock Resources 34 Invincible Investment 78 Reata Pharmaceuticals 85 Conagra Brands 27 Japan Oil Gas & Metals National Corp 60 Reliance Industries 58 Connect Plus (M25) Issuer 29 JP Morgan 21 Republic of the Philippines 50

92 International Financing Review July 28 2018 THE FIRST STEP IN CLO ANALYSIS: DETAILED, ACCURATE, AND TRANSPARENT LPC COLLATERAL

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