IFR 02.29.2020

(Jacob Rumans) #1
22 International Financing Review February 29 2020

h7EûAREûTHEû!MERICANûBANKûTHATûHASûMOREûUPSIDEû


INûBOTHûSHAREûANDûREVENUESv
MANOLO FALCO, CO-HEAD OF BCMA AT CITIGROUP ON US EXPANSION PLANS, P16

CS helped Barbados restructuring


!ûSYNDICATEDûLOANûFROMûCREDIT SUISSEûPLAYEDûAû
CRITICALûPARTûINû"ARBADOSûSOVEREIGNûDEBTû
RESTRUCTURINGûCOMPLETEDûINû$ECEMBER û
ACCORDINGûTOûAûPAPERûPUBLISHEDûBYû
)NTERNATIONALû-ONETARYû&UNDûSTAFFûLASTûWEEK
4HEû53MûFACILITY ûlRSTûARRANGEDûINû û
HADûAûPAINFULûCOUPONûSTRUCTUREû4HEûINTERESTû
PAYABLEûWASûLINKEDûTOûTHEû#ARIBBEANûCOUNTRYSû
CREDITûRATING ûRATCHETINGûUPûIFûITûWASûDOWNGRADED
4HATûHAPPENEDûMANYûTIMESûDURINGûTHEû
LIFETIMEûOFûTHEûLOANû"ARBADOSûWASûRATEDû""" û
BYû30ûINû ûBUTûBYûTHEûENDûOFû ûSIXû
MONTHSûBEFOREûITûDEFAULTED ûTHEûINTERESTûRATEû
HADûRISENûTOûûFOLLOWINGûSEVERALûDOWNGRADES
#REDITû3UISSEûANDûOTHERûINVESTORSûINûTHEû
FACILITYûAGREEDûTOûACCEPTûTHEûSAMEûTERMSûASû
BONDHOLDERSûUNDERûTHEûRESTRUCTURINGû
AGREEMENTûREACHEDûINû/CTOBER ûSWAPPINGû

THEIRûLOANûNOTESûFORûBONDSûOFûVARYINGû
MATURITIESûPAYINGûCOUPONSûOFûJUSTû
3WAPPINGûLOANSûFORûBONDSûRARELYûHAPPENSû
BUTûWASûSEENûASûAûCRITICALûPARTûOFûTHEû
TRANSACTION ûACCORDINGûTOû!NDREWû3HUTTER ûAû
PARTNERûATûLAWûlRMû#LEARYû'OTTLIEB ûWHICHû
WASûADVISINGû"ARBADOSûONûTHEûDEAL
3EVERALûBONDHOLDERSûWEREûKEENûFORûTHEûNEWû
ûBONDSûTOûBEûINCLUDEDûINûTHEû*0û-ORGANû
%MERGINGû-ARKETû"ONDû)NDEXû4HATûCOULDûONLYû
HAPPENûIFûTHEûAGGREGATEûAMOUNTûWASûOVERû
53M ûBUTûAFTERûTAKINGûAûHAIRCUTûTHEûBONDSû
ONLYûAMOUNTEDûTOû53M
h)NûORDERûTOûREACHûTHISûNUMBER ûAFTERûTAKINGû
INTOûACCOUNTûTHEûûPRINCIPALûHAIRCUT ûMOREû
THANûTHEûTHREEûSERIESûOFûEUROBONDSûNEEDEDûTOûBEû
INCLUDEDûINûTHEûEXCHANGEûFORûTHEûNEWûû
BONDS vûSAIDû3HUTTER

2EACHINGûTHEû53MûLEVELûWASûACHIEVEDûBYû
PERSUADINGûTHEûLOANûNOTEHOLDERSûTOûALSOûACCEPTû
BONDSûASûPARTûOFûTHEûRESTRUCTURINGû3OMEûOFûTHEû
NOTEHOLDERSûALSOûHELDûPOSITIONSûINûTHEûBONDS
4HEû53MûEXTERNALûDEBTûRESTRUCTURINGû
WASûDWARFEDûBYûTHEû53BNûOFûDOMESTICûDEBTû
THATûHADûBEENûRESTRUCTUREDûINû3EPTEMBERû
û3OMEûOFûTHISûWASûHELDûBYûTHEûCENTRALû
BANKûANDûTHEûNATIONALûINSURANCEûSCHEME
4HEû)-&ûPAPERûALSOûSAIDû"ARBADOSûHADû
INITIALLYûDEFAULTEDûONûAûBILATERALûLOANû
GUARANTEEDûBYû#ANADA ûWHILEûKEEPINGû
PAYMENTSûCURRENTûONûAûFACILITYûFROMû#HINA
#ANADAûONLYûCONSENTEDûTOûTHEû)-&ûlNANCINGû
TOû"ARBADOSûINû/CTOBERûûIFûITûWASûREPAIDû
ARREARSûAND ûIFûTHEûLOANûWASûRESTRUCTURED ûTHATû
OTHERûBILATERALûLENDERS ûSUCHûASû#HINA ûWOULDûBEû
GIVENûTHEûSAMEûTREATMENTû5LTIMATELYûTHATûDIDû
NOTûHAPPENûASû"ARBADOSûDECIDEDûNOTûTOû
RESTRUCTUREûTHEûDEBT
Christopher Spink

BoE ‘turbo-charges’ moves to ditch Libor


The BANK OF ENGLANDûTOLDûBANKSûLASTûWEEKûTOû
ACCELERATEûTHEIRûEFFORTSûTOûDITCHûTHEû,IBORû
INTERESTûRATEûBENCHMARKûIFûTHEYûWANTûTOû
AVOIDûFACINGûMOREûPUNITIVEûTERMSûWHENû
BORROWINGûFROMûTHEûCENTRALûBANK
4HEû"O%ûWANTSû,IBOR ûWHICHûBANKSûWEREû
lNEDûBILLIONSûOFûPOUNDSûFORûTRYINGûTOûRIG û
REPLACEDûWITHûTHEûCENTRALûBANKSûOWNûOVERNIGHTû
hRISK
FREEvû3ONIAûRATEûBYûTHEûENDûOFû
-ARKETûPARTICIPANTSûHAVEûSTARTEDûTOûUSEû
3ONIAûFORûNEWûFUTURESûCONTRACTS ûBUTû
PROGRESSûINûTHEûCASHûLOANSûMARKETûHASûBEENû
SLOWER ûWITHûQUESTIONûMARKSûOVERûWHATû
HAPPENSûTOûMANYûhLEGACYvûCONTRACTSûWITHû
TERMSûTHATûGOûBEYONDû

,IBORûAVAILABLEûINûSTERLINGûDOLLARûANDû
OTHERûCURRENCIES ûISûUSEDûTOûPRICEûCONTRACTSû
LIKEûHOMEûLOANSûANDûCREDITûCARDSûWORTHû
AROUNDû53TRNûGLOBALLY
h7EûNEEDûTOûSEEûANOTHERûDECISIVEû
ACCELERATIONûINûEFFORTûINûûTOûENSUREû
RISK
FREEûRATESûAREûADOPTEDûACROSSûTHEû
FULLûRANGEûOFûSTERLINGûBUSINESS ûANDû
,IBORûISûLEFTûBEHINDûFORûGOOD vû"O%û
EXECUTIVEûDIRECTORûFORûMARKETSû!NDREWû
(AUSERûTOLDûANû)3$!ûDERIVATIVESû
INDUSTRYûCONFERENCE
(AUSERûSAIDûTHATûFROMû/CTOBER ûTHEû"ANKû
WILLûSTARTûINCREASINGûhHAIRCUTSvû
PROGRESSIVELYûONû,IBOR
LINKEDûCOLLATERALû

USEDûBYûBANKSûTOûBORROWûFROMûTHEûCENTRALû
BANK ûMEANINGûMOREûCOLLATERALûWOULDûBEû
NEEDEDûTOûCOVERûTHEûSAMEûAMOUNTû
BORROWEDû(EûSAIDûANYû,IBOR
LINKEDû
COLLATERALûISSUEDûAFTERû/CTOBERûûWILLûBEû
INELIGIBLEûFORûUSEûATûTHEû"O%
4HEû"O%ûWILLûALSOûPUBLISHûAûhCOMPOUNDEDvû
3ONIAûINDEXûFROMû*ULYûTOûHELPûTHEûTRANSITIONû
FROMû,IBORûINûLOANS
h4HESEûINITIATIVESûAREûAIMEDûATûTURBO
CHARGINGûSTERLINGûTRANSITION ûHELPINGûTHEû
MARKETûDELIVERûAGAINSTûITSûCOMMITMENTûTOû
TRANSITIONûAWAYûFROMû,IBORûANDûFURTHERûDE
RISKINGûSTERLINGûMARKETS vû(AUSERûSAID
Huw Jones

iTraxx ESG screening may blacklist big names


IHS MARKITûISûCREATINGûANû%3'
RELATEDûINDEXû
THATûWILLûEXCLUDEûMEMBERSûOFûITSûI4RAXXû-AINû
SUCHûASû$AIMLER û(3"#ûANDû#ARLSBERGûIFûTHEYû
FAILûTOûMEETûTHEûNECESSARYûSTANDARDS
4HEûDATAûCOMPANYûHASûPUBLISHEDûAû
PROVISIONALûMETHODOLOGYûONûITSûCRITERIA û
WHICHûISûNOWûSUBJECTûTOûMARKETûFEEDBACK
4HEûSCREENINGûPROCESS ûWHICHûMEASURESû
THREEûPOTENTIALûEXCLUSIONûCATEGORIES ûWILLûAFFECTû
ûOFûTHEûûMEMBERSûOFûITSû-AINûINDEXûIFûTHEû
DRAFTûMETHODOLOGYûISûIMPLEMENTEDû/THERû
NAMESûAFFECTEDûINCLUDEû"ARCLAYS û6OLKSWAGEN û
!NGLOû!MERICANûANDû)BERDROLA
#OMPANIESûWILLûBEûASSESSEDûAROUNDûVALUE
BASED ûCONTROVERSY
BASEDûANDûRATINGS
BASEDû
EXCLUSIONSû!ûFAILUREûTOûMEETûTHEûTHRESHOLDû
INûONEûOFûTHEûAREASûMEANSûANûEXCLUSIONûFROMû

THEûINDEXû4HEûVALUE
BASEDûCRITERIAûCOVERûAREASû
INCLUDINGûADULTûENTERTAINMENT ûGAMBLINGûANDû
DEFENCE
4HEûFRAMEWORK ûRECOMMENDEDûBYû-3#) ûALSOû
EXTENDSûTOûALCOHOL ûGENETICûENGINEERING ûNUCLEARû
POWERûANDûTHERMALûCOALû)TûMEANSûTHEûEXCLUSIONSû
WILLûAPPLYûTOûWELL
KNOWNûNAMESûINûTHEûFOODûANDû
BEVERAGE ûPHARMACEUTICALSûANDûENERGYûSECTORS
)(3ûWILLûALSOûAPPLYû%3'ûCONTROVERSYûSCORESû
FROMû-3#)û3CORESûAREûGIVENûTOûENTITIESûONûAû
SCALEûOFûûTOûûBASEDûONûTHEIRûCREDENTIALSûINûlVEû
PILLARSûTHEûENVIRONMENTûCUSTOMERSûHUMANû
RIGHTSûANDûTHEûCOMMUNITYûLABOURûRIGHTSûANDû
THEûSUPPLYûCHAINûANDûGOVERNANCE
!ûSCOREûOFûZEROûRESULTSûINûEXCLUSIONûFROMû
THEûINDEXû%NTITIESûTHATûHAVEû-3#)û%3'û
RATINGSûOFû"""ûANDûBELOWûWILLûALSOûBEû

EXCLUDEDûFROMûTHEûINDEXû-3#)ûHASûRATINGSû
FROMû!!!ûTOû###ûBASEDûONûISSUERSûEXPOSUREû
TOûINDUSTRY
SPECIlCû%3'ûRISKSûANDûTHEIRûABILITYû
TOûMANAGEûTHOSEûRISKSûRELATIVEûTOûPEERS
7HILEûTHEûI4RAXXûINDICESûAREûAûREFERENCEû
BENCHMARKûFORûCREDITûDERIVATIVES û).'ûANALYSTSû
SAIDûTHATû)(3û-ARKITSûSCREENINGûPROCESSûCOULDû
HITûCOMPANIESûCREDITûCURVESûIFûOTHERûINDEXû
PROVIDERSûAPPLYûAûSIMILARûPROCESSûTOûCASHûBONDS
4HATûISûUNLIKELYûTOûAFFECTûCURRENTûSPREADSûOFû
THEûSECTORSûORûNAMES ûASûTHEûI4RAXXûISûAû#$3 ûBUTû
INDICESûCOULDûADOPTûAûSIMILARûMETHODOLOGY ûTHEû
).'ûANALYSTSûSAIDûINûAûNOTEûûh)FûBENCHMARKû
INDICESûELIMINATEûHOUSEHOLDûNAMESûSUCHûASû!"û
)N"EV û$EUTSCHEû4ELEKOMûORû%NEL ûTHISûMAYûCAUSEû
SOMEûSIGNIlCANTûWIDENINGûONûTHESEûCURVESv
Robert Hogg

5 IFR PM 2322 p 15 - 24 .indd 22 28 / 02 / 2020 20 : 00 : 20

Free download pdf