IFR 03.7.2020

4 International Financing Review March 7 2020

TOP NEWS

Virus tests bond liquidity 06 Portfolio trading gains traction 06 Lenders join Thai shopping spree 10

Next stop Croydon: banks ready DR sites

„ People & Markets Traders now working at remote sites as coronavirus precaution

BY IFR REPORTERS

Investment banks are enacting

plans to cope with the spread of

the coronavirus, with JP MORGAN,

CITIGROUP and ING splitting trading

operations and a host of other

lRMSûPREPARINGûFORûEMPLOYEESûTOû

WORKûREMOTELYûATûDISASTERûRECOVERYû

sites in New York and London.

#ITIGROUPûISûACTIVELYûTRADINGûATû

its remote site in Lewisham,

about seven miles from its

#ANARYû7HARFûBASEûINû,ONDONSû

lNANCIALûDISTRICTûSOURCESûSAIDû

About 10% of its traders are at

the back-up site and will be kept

separate from colleagues at the

main trading site, the sources

told IFR. Citigroup said it was

monitoring the situation and

would adjust its operations as

NECESSARY

JP Morgan is moving traders in

New York and London to remote

LOCATIONSûWHEREûTHEYûWILLûSTAYûUNTILû

further notice, it said in a memo to

sales and trading staff. A source said

the biggest waves of moves will be

ONû-ONDAYû)TSûBACK

UPûSITESûINCLUDEû

Basingstoke, 50 miles to the

southwest of London.

JP Morgan also extended its

ban on non-critical international

travel to domestic travel,

affecting all its global locations.

Most major banks have now

banned international travel.

7ORRIESûABOUTûTHEûSPREADûOFûTHEû

VIRUSûESCALATEDûONû4HURSDAYûWHENû

HSBC said a member of its research

DEPARTMENTûINûITSû#ANARYû7HARFû

headquarters tested positive for

coronavirus. He has self-isolated

and the bank sent about 100 staff

home. Its building remained open.

Trading sites are a particular

concern for banks and regulators,

ASûTHEûNEEDûTOûCONDUCTûACTIVITYûINûAû

secure environment makes that

HARDûTOûDOûREMOTELYû!SûAûRESULTû

BANKSûHAVEûBEENûTRYINGûTOûMAKEû

SUREûANYûKINKSûAREûWORKEDûOUT

).'ûWASûTHEûlRSTûMAJORûBANKû

to separate its trading operations

in Europe, when it started using

remote facilities in London,

Amsterdam, Frankfurt, New

9ORKûANDû-ANILAûONû-ONDAYûASû

WELLûASûITSûMAINûTRADINGûmOORSû)Tû

HADûALREADYûSPLITûTRADINGû

operations in Hong Kong and

Singapore.

The move affected about 200

PEOPLEûGLOBALLYûINûITSûlNANCIALû

MARKETSûANDûTREASURYûDIVISIONSûAû

spokesman said. He said it was a

PRECAUTIONARYûMOVEûh4HEûIDEAûISû

that these colleagues are not in

contact with the others.”

In Madrid, BBVA moved about

100 traders - or a quarter of its

TRADINGûmOORûTHEREû

ûTOûITSû

back-up site in the suburb of Las

2OZASûASûPARTûOFûITSûCONTINGENCYû

planning for the coronavirus.

IN THE SUBURBS

Most banks have split trading

operations in Asia between the

OFlCEûBACK

UPûSITESûANDûHOME

!NECDOTALLYûABOUTû

ûOFû

investment bank staff in Hong

Kong still seem to be in the

No time to die for bonds

„ Bonds Corporates back in the groove, as issuers thrive despite virus headlines

BY SUDIP ROY

)NVESTMENT

GRADEûPRIMARYû

markets on both sides of the

Atlantic were back humming

last week in spite of further

VOLATILITYûINCLUDINGûTHEûCOLLAPSEû

INû53û4REASURYûYIELDSûWITHûTHEû



YEARûBENCHMARKûBIDûATûû

ONû&RIDAYûnûAûFALLûOFûMOREûTHANû

20bp in a matter of hours.

4HEûMOVESûAREûAûREmECTIONûOFû

JUSTûHOWûMUCHûUNCERTAINTYûTHEREû

is about the global economic

outlook. Bankers will have to

continue assessing issuance

OPPORTUNITIESûONûAûDAILYûBASISûBUTû

THEYûCANûTAKEûHEARTûFROMûTHEû

ACTIVITYûINûBOTHûTHEû53ûDOLLARûANDû

euro corporate markets last week.

&ORûAûCOUPLEûOFûDAYSûITûSEEMEDû

that the sell-off that happened at

THEûENDûOFû&EBRUARYûnûONEûOFûTHEû

biggest sell-offs in risk assets in

THEûPASTûDECADEûnûBARELYûHADûANYû

IMPACTûONûTHEûABILITYûOFûTHEû

PRIMARYûMARKETûTOûOPERATEûATû

FULLûCAPACITY

After a rare blank week in the

US corporate market the week

before, as fears grew about the

NOVELûCORONAVIRUSûPRIMARYû

issuance roared back, with more

than 20 corporate issuers

launching deals in the US, while in

Europe borrowers were pricing

with new issue concessions of

between zero and 5bp.

h)TSûCRAZYûTOûTHINKûTHATûAFTERû

ONLYûTHEûSECONDûOPENûDAYûSINCEûTHEû

sell-off, new issue concessions are

BACKûTOûZEROvûSAIDûAû$#-ûSYNDICATEû

BANKERûINû,ONDONûONû7EDNESDAY

This was 24 hours after another

DRAMATICûDAYûFORûlNANCIALû

MARKETSûASûANûEMERGENCYûRATEûCUTû

BYûTHEû53û&EDERALû2ESERVEûONû

4UESDAYûSPREADûPANIC

4HEûBPûCUTûTHEûlRSTû

between-meetings rate

REDUCTIONûBYûTHEûCENTRALûBANKû

SINCEû/CTOBERûûSPOOKEDû

7ALLû3TREETûWITHû53ûEQUITIESû

FALLINGûALMOSTûûWHILEûTHEûYIELDû

ONû

YEARû4REASURIESûFELLûBELOWû

ûFORûTHEûlRSTûTIMEûINûHISTORY

"UTûTHEûPRIMARYûMARKETSû

proved their resilience with the

seven US issuers out at the time

getting their transactions done

without a hitch.

h/FûCOURSEûINVESTORSûWILLûBEû

SELECTIVEûGIVENûTHEûVOLATILITYûINû

the marketplace, but the

UNDERLYINGûDEMANDûGLOBALLYûFORû

53ûDOLLARûlXED

INCOMEûREMAINSû

robust,” said Jonathan Duensing,

director of investment-grade

credit at Amundi Pioneer.

4HEûDEALSûONû4UESDAYûINCLUDEDû

a three-part MCDONALD’S bond and

a two-part transaction from

Source: IFR

0

10

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60

70

80

90

10/01/202017/01/202024/01/202031/01/202007/02/202014/02/202021/02/202028/02/202006/03/

High-grade High-yield ABS CMBS RMBS

$bn

US BOND SUPPLY REBOUNDS AFTER SHARP DROP

4 IFR Top news 2323 .p 4 - 14 .indd 4 06 / 03 / 2020 19 : 26 : 34