IFR Magazine – June 08, 2019

The change in tone brought 10 borrowers
to the primary market offering
US$13.825bn, including a riskier crossover
credit HCA HEALTHCARE, which priced a US$5bn
three-part bond that garnered order books
of more than US$21bn.
Additionally, markets received a boost on
Thursday from reports that the US may delay this
WEEKSûûTARIFFûRATEûONûIMPORTSûFROMû-EXICO û
SENDINGûTHEû$OWûASûMUCHûASûûPOINTSûHIGHER
4HEû#$8û)'û9ûTIGHTENEDûûPOINTSû
over the week and the 10-year Treasury yield
stabilised.
However, the threat of tariffs on China
never went away as just two issuers
announced deals on Thursday.
".0û0ARIBASûESTIMATESûTHEû53ûCOULDûLOSEû
BPûOFû'$0ûGROWTHûTHISûYEARûFROMûTHEû
already announced tariffs, while another
30bp would be shaved off if Trump increases
the rate to 25% on all Chinese goods.
h7HATûWASûGETTINGûINCORPORATEDûINTOûTHEû
market initially was this view that, even
though we’ve seen the deal with China fall
apart spectacularly, there was still likely to be
SOMEûDE
ESCALATIONûATûTHEû' vûSAIDû*ASONû
Shoup, head of global credit strategy for Legal
ANDû'ENERALû)NVESTMENTû-ANAGEMENTû!MERICA

“Now the market is digesting that there

MIGHTûNOTûBEûDE

ESCALATIONûATûTHEû'ûxûANDû

there will be greater pain in the markets

before there is any resolution.”

Tariffs alone are not enough to push the

53ûINTOûAûRECESSIONûSAIDû$ANIELû!HNû".00Sû

CHIEFû53ûECONOMISTûANDûHEADûOFû-ARKETSûû

North America.

However, there is an incalculable cost to

long-term potential economic growth,

TECHNOLOGICALûADVANCEMENTûANDûTHEûFREEûmOWû

of ideas and resources around the world.

“The broader strategic relationship

between [the US and China] is deteriorating

and it’s hard to see the spirit of a deal

maintaining, even if they come to a deal and

they stick to the letter of it,” Ahn said during

a media event.

“The bigger impact ultimately, we

believe, is not from these tariffs but a

broader trend toward the decoupling of the

world’s two largest economies.”

FISERV PITCHES INVESTORS ON

US$10bn-$12bn BOND TO FUND M&A

FISERV began marketing a US$10bn-US$12bn

BONDûONû7EDNESDAYûTOûHELPûFUNDûITSû

US$22bn purchase of payment processing

lRMûFIRST DATA - the largest digital payments

acquisition ever.

4HEûlNANCIALûSERVICESûTECHNOLOGYû

provider has mandated Citigroup, JP Morgan

and Wells Fargo on the deal, which was set to

price as soon as last week, according to

sources, although it ultimately held off.

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the bond market in September 2018 with a

two-part US$2bn bond.

The 10-year note priced at Treasuries plus

115bp and had since widened out to a

'

SPREADûOFûBPûASûOFûLASTû4HURSDAYû

ACCORDINGûTOû-ARKET!XESSûDATA

The latest issuance will be used in part to

SWAPûHIGH

YIELDûDEBTûISSUEDûBYû&IRSTû$ATAû

RATEDû"A""

""

    ûINTOûINVESTMENT

GRADEû

paper.

#REDIT3IGHTSûEXPECTSû&ISERVSûGROSSû

LEVERAGEûTOûINCREASEûTOûûTIMESûONûAûPROû

FORMAûBASISûCOMPAREDûWITHûûTIMESûATûTHEû

end of the third quarter of 2018.

The company suspended share

repurchases until the transaction’s expected

close in the second half of 2019.

-ANAGEMENTûSAIDûITûISûLOOKINGûTOûREDUCEû

leverage to “historical levels” in the two

years following the close. CreditSights said

three times gross leverage is achievable

WITHINûûMONTHSûANDûCOULDûMOVEûLOWERûIFû

synergies are realised.

&ISERVûESTIMATESûITûCANûGENERATEû53Mû

of run-rate cost savings and an added

US$500m of revenue through the

acquisition, according to a press release.

That would help generate annual free

CASHmOWûEXCEEDINGû53BNûWHICHûWOULDû

go toward debt reduction, the company said.

&ISERVûALSOûPRESENTSûINCREASEDû%3'ûRISKSû

largely because it does not produce an

annual sustainability report.

!LTHOUGHûTHEûlNANCIALûTECHNOLOGYûSECTORû

ISûNOTûPARTICULARLYûPRONEûTOû%3'ûRISKSû&ISERVû

ranks 67th among its 102 peers in the

business support services space, according

TOû2ElNITIVû%3'ûDATA

HOME DEPOT TESTS ERRATIC

IG BOND MARKET

HOME DEPOTûLAUNCHEDûAûTWO

PARTû53BNû

BONDûLASTû-ONDAYûTHATûTESTEDûAûVOLATILEûHIGH

grade market stressing over the impact of

PROPOSEDû53ûTARIFFSûONû#HINESEûANDû-EXICANû

goods.

The new US$1bn 10-year note and a

53MûTAPûOFû(OMEû$EPOTSûEXISTINGû

ûûISSUANCEûTIGHTENEDûMOREûTHANû

10bp through launch to price at Treasuries

plus 93bp and 120bp, respectively.

Even though it performed mildly better

THANûMANYûOFûTHEû)'ûDEALSûPRICEDûLASTûWEEKû

(OMEû$EPOTûSTILLûHADûTOûGIVEûUPûAROUNDûBPû

OFûNEWûISSUEûCONCESSIONûACCORDINGûTOû)&2û

calculations.

The spread on the new note was in line

where the company’s previous 10-year issue

from November 2018 priced but offered

13bp of premium over where it was trading

ONû-ONDAYûACCORDINGûTOû-ARKET!XESSûDATA

4HEûûISSUEûORIGINALLYûPRICEDûATûBPû

OVERû4REASURIESûINû-AYûûANDûWASûTRADINGû

ATûPLUSûBPûMIDDAYûONû-ONDAY

Additionally, the 10-year Treasury yield is

NEARLYûBPûLOWERûTHANûWHENû(OMEû$EPOTû

last tapped the market, which allowed

bookrunners to price the new 10-year at a

YIELDûOFûûCOMPAREDûWITHûûONû

the previous note.

Average investment-grade spreads rallied

FORûMUCHûOFûTHEûYEARûUNTILû53û0RESIDENTû

$ONALDû4RUMPûBEGANûTHREATENINGûNEWû

TARIFFSûONûGOODSûFROMû#HINAûANDû-EXICO

ALL INV-GRADE US CORPORATE BONDS
BOOKRUNNERS: 1/1/2019 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)

1 BAML 36 6,145.88 11.0
2 JP Morgan 27 5,060.95 9.0
3 Barclays 18 4,890.26 8.7
4 Wells Fargo 27 4,232.71 7.6
5 Citigroup 20 4,086.07 7.3
6 Morgan Stanley 24 3,587.18 6.4
7 Goldman Sachs 14 2,596.66 4.6
8 Mizuho 17 2,554.18 4.6
9 MUFG 16 2,239.78 4.0
10 Deutsche Bank 12 2,158.86 3.9
Total 70 55,956.29
Excluding equity-related debt, ABS/MBS, all foreign issues, global issues
and non corporates.

Source: Refinitiv SDC code: F6a

ALL US INVESTMENT GRADE CORPORATE DEBT
(EXCLUDING SOLE SELF FUNDED DEALS)
BOOKRUNNERS: 1/1/2019 TO DATE

Managing No of Total Share
bank or group issues US$(m) (%)

1 JP Morgan 205 47,154.45 9.5
2 Citigroup 168 44,613.68 8.9
3 BAML 192 41,762.50 8.4
4 Goldman Sachs 134 36,538.81 7.3
5 Morgan Stanley 136 35,876.40 7.2
6 Barclays 113 33,219.46 6.7
7 Wells Fargo 133 26,383.79 5.3
8 MUFG 79 22,028.84 4.4
9 Mizuho 82 20,412.71 4.1
10 Deutsche Bank 57 18,699.70 3.8
Total 423 498,501.63
Source: Refinitiv SDC code: F09a

ALL CORPORATE BONDS IN EUROS

BOOKRUNNERS: 1/1/2019 TO DATE

Managing No of Total Share

bank or group issues €(m) (%)

1 Barclays 43 14,630.55 8.3

2 BNP Paribas 81 12,854.82 7.3

3 Citigroup 56 11,512.82 6.5

4 Deutsche Bank 52 11,322.65 6.4

5 BAML 41 10,674.67 6.0

6 SG 53 10,085.41 5.7

7 JP Morgan 48 10,078.59 5.7

8 Credit Agricole 55 8,394.58 4.8

9 UniCredit 48 7,843.61 4.4

10 HSBC 51 7,789.70 4.4

Total 210 176,526.39

Excluding equity-related debt. FIGs, ABS/MBS.

Source: Refinitiv SDC code: N8