IFR 03.7.2020

International Financing Review March 7 2020 5

For daily news stories

@ visit http://www.ifre.com

Investors keep faith in SBI Cards 12 CB issuance surges 12 Quitting IPOs for lent 13

OFlCEûMOSTLYûWORKINGûINûSPLITû

TEAMSû)TûISûHIGHERûINûHEAVILYû

regulated areas, such as trading.

!ROUNDû,ONDONSûSUBURBSûINû

ADDITIONûTOû#ITIGROUPSû,EWISHAMû

site, MORGAN STANLEY is testing its

site near Heathrow Airport, BNP

PARIBAS and SOCIETE GENERALE are

doing the same in Romford, Essex,

and BARCLAYS has readied its

alternative venue in Northolt, west

,ONDONûINDUSTRYûSOURCESûSAID

GOLDMAN SACHS has its disaster

RECOVERYûSITEûINû#ROYDONûû

minutes from central London. It

sent teams of traders there on

4HURSDAYûTOûENSUREûITûISûlTûFORû

purpose.

In New York, banks have sites

INû.EWû*ERSEYû"ROOKLYNûANDû

BEYONDûASûBACK

UPSûFORûTHEIRû

Manhattan hubs.

)Nû(ONGû+ONGûRECOVERYûSITESû

AREûLOCATEDûINûSOMEûOFûTHEûCITYSû

less upmarket districts,

INCLUDINGû#HAIû7ANûANDû4AIû0O

WHAT IS ALLOWED?

"ANKSûHAVEûHADûDISASTERûRECOVERYû

SITESûANDûBUSINESSûCONTINUITYû

PLANSûFORûYEARSûPARTICULARLYûAFTERû

the 2001 terror attacks in New

9ORKûBUTûFORûMANYûTHISûISûTHEûlRSTû

major test of such sites.

7ORKINGûFROMûHOMEûISûTOUGHERû

for traders and salespeople than

for staff in other areas of a bank,

and regulators are keeping a close

EYEûONûTHEûRISKûTHATûPOSES

4HEû(ONGû+ONGû-ONETARYû

!UTHORITYûHASûBEENûmEXIBLEûINû

allowing traders to work from

home where possible, sources said.

Still, some exchanges require

access via a designated terminal,

USUALLYûOFlCE

BASEDû3ALESûSTAFFû

need to record client

INTERACTIONSûSOûlRMSûNEEDûTOûBEû

CONlDENTûTHEYûCANûMANAGEû

risks, record calls, and report

and monitor trades. Banks also

NEEDûTOûKNOWûTHEYûCANûPROTECTû

THEIRû

ûANDûTHEIRûCLIENTSû

ûDATA

AFME, which represents

%UROPESûWHOLESALEûlNANCIALû

markets, said it was in talks with

banks and regulators about what

needs to be done to ensure markets

are functioning and remain liquid

if the virus outbreak escalates.

h4HEREûAREûREGULATORYûOVERSIGHTû

challenges associated with

working from remote locations

ANDûlRMSûWILLûNEEDûTOûREVIEWûTHEIRû

policies and procedures to ensure

HOWûBESTûTOûCOMPLYûWITHûTHEIRû

REGULATORYûOBLIGATIONSvû!&-%ûSAID

Another challenge is that

BUSINESSûCONTINUITYûPLANSûAREûOFTENû

BASEDûONûUSINGûOTHERûOFlCESû

GLOBALLYûWHICHûMAYûNOTûBEûPOSSIBLEû

with a global spread of the disease.

h"#0SûTYPICALLYûRELYûONûSTAFFûINû

other regions to provide cover

FORûISSUESûINûAûSPECIlCûLOCATIONû

so current plans will need to be

REVISITEDvûSAIDû7ILLû0ACKARDûATû

TECHNOLOGYûANDûMANAGEMENTû

CONSULTANCYû#APCO

MISSING “HOOTS”

Bankers who are not on trading

mOORSûHAVEûMOREûmEXIBILITYûTOû

WORKûFROMûHOMEûHELPEDûBYû

technological advances in

RECENTûYEARS

But roadshows for deals are

being cancelled, or are being

conducted via videoconferencing.

In Hong Kong, two issuers have

been marketing IPOs online, which

could become standard practice if

the outbreak lasts for months.

3OMEûSYNDICATEûTEAMSûAREû

rotating, with some bankers

working from home and others

INûTHEûOFlCEûTOûAVOIDûCONTACTû

with each other.

4HATûCANûCAUSEûDIFlCULTIESû

HOWEVERû/NEûSYNDICATEûBANKERû

SAIDûINûTHEûOFlCEûAûhHOOTûBUTTONvû

is sounded when there is an

update on a deal to alert

SALESPEOPLEûBUTûTHATSûHARDûTOû

REPLICATEûWHENûEVERYONEûISû

WORKINGûREMOTELY „

BUILDINGûMATERIALSûCOMPANYû

SHERWIN-WILLIAMS.

The negative reaction to the

&EDSûCUTûFORCEDûMOSTûISSUERSûTOû

speed up pricing and go straight

from initial price thoughts to

LAUNCHûARGUABLYûATûTHEûEXPENSEû

of some extra tightening.

Even so, on an all-in basis

issuers were able to achieve

ATTRACTIVEûCOUPONSû!û-C$ONALDSû

2030 bond, for example, priced at

AûCOUPONûOFûûnûBPûLESSû

THANûITSûPREVIOUSû

YEARûNOTEû

from August.

-C$ONALDSûGOTûTHATûCOUPONû

despite concerns that several

hundred store closures in China

due to the spread of the

coronavirus could impact

earnings and that similar

closures could come to the US.

SAME STORY

It was a similar tale in the euro

market. BERKSHIRE HATHAWAY

(which also did a US dollar deal),

UK publisher RELX and US

MANUFACTURINGûCOMPANYû

HONEYWELL all printed euro notes

with 0% coupons.

&RANCESûSCHNEIDER ELECTRIC

equalled its lowest-ever coupon

WITHûAûõMûû-ARCHûû

note (it matched the coupon on

its September 2024 bond).

4HEû2%,8ûANDû(ONEYWELLû

DEALSûnûAûõBNûTRIPLE

TRANCHERû

and €1bn two-part offering,

RESPECTIVELYûnûPRINTEDûONû

4UESDAYû4HEIRûSUCCESSFULû

OUTCOMESûGAVEûCONlDENCEûTOû

SYNDICATEûOFlCIALSûTOûPUTûlVEû

more euro deals on screens the

FOLLOWINGûDAY

2EMARKABLYûALLûOFûTHEMû

priced with slim new issue

concessions, including a debut

õMû

YEARûTRANSITIONûBONDû

FROMû5+ûUTILITYûCADENT GAS,

WHICHûARGUABLYûCAMEûINûLINEû

with fair value.

h4HEûTRADESû;ONû4UESDAY=û

proved there is a good amount of

LIQUIDITYûTHEREû)NVESTORSûSIGNALLEDû

THATûWHENûWEûWEREûREADYûTOûGOû

THEYûWEREûREADYûTOûFOLLOWûnû

markets are open, constructive

ANDûREADYvûSAIDû#HRISTIANû2EUSCHû

CO

HEADûOFûGLOBALûlNANCINGûANDû

ADVISORYûATû5NI#REDIT

3YNDICATESûBEGANûDEALû

EXECUTIONûCONSERVATIVELYûWITHû

INITIALûPRICEûTHOUGHTSûBPn

40bp back of fair value. But

strong order books enabled

them to wipe out most of those

concessions.

h)NITIALûNEWûISSUEûPREMIUMSû

from IPTs are greater than

BEFOREûTHEûVOLATILITYûBUTûBECAUSEû

THATûLIQUIDITYûISûTHEREûYOUûAREû

ABLEûTOûTIGHTENûSUBSTANTIALLYvû

said Reusch.

STAYING FAITHFUL

7HILEûCREDITûMARKETSûHAVEûBEENû

ROILEDûBYûTHEûSPREADûOFûTHEûVIRUSû

LARGELYûTRIGGEREDûBYûEXCHANGE

traded funds selling, DCM

BANKERSûSAIDûREAL

MONEYû

ACCOUNTSûHAVEûSOûFARûSTAYEDû

faithful to the asset class,

although the latest funds data

showed that euro investment-

grade funds suffered

US$5.25bn-equivalent of net

OUTmOWSûACCORDINGûTOû%0&2û

Global.

And while spreads have

WIDENEDûTHEYûHAVEûNOTûBLOWNû

OUTû4HEûI"OXXûNON

lNANCIALSû

INDEXûHASûWIDENEDûBYûBPû

SINCEû&EBRUARYûûTOûSWAPSûPLUSû

BPûTHEûLEVELûITûWASûBACKûINû

LATEû3EPTEMBERûWHENûPRIMARYû

markets were thriving.

h7EVEûNOWûSEENûAûDECENTû

spread widening but even so

WEREûONLYûBACKûTOûAVERAGEû

LEVELSûOFûTHEûLASTûlVEûYEARSûSOûITSû

NOTûHUGELYûCOMPELLINGvûSAIDû

*OHNû4AYLORûCO

HEADûOFû

%UROPEANûlXED

INCOMEûATû

AllianceBernstein.

h7EûAREûATûAVERAGEûRISKûLEVELSû

INûOURûPORTFOLIOSûBUTûYOUûWOULDû

need to see spreads widen

another 100bp to start thinking

that the market is cheap.”

4AYLORûSAIDûTHEûMARKETûWASû

BEINGûSUPPORTEDûNOTûONLYûBYûTHEû

%#"SûQUANTITATIVEûEASINGû

STRATEGYûBUTûALSOûFROMû

reinvestments from its previous

PROGRAMMESûhWHICHûAREûPRETTYû

big this month”.

Despite the strong response

FROMûINVESTORSûTOûLASTûWEEKSû

deals, bankers are not getting

CARRIEDûAWAYû4HEûCREDITûMARKETSû

remain vulnerable to headline

risks.

h4HEûREALûTESTûWILLûBEûWHENûWEû

SEEûFURTHERûVOLATILITYû$Oû;NEWû

ISSUES=ûGOûBELOWûREOFFERûORûDOû

THEYûHAVEûENOUGHûJUICEûTOû

ABSORBûTHEûVOLATILITYvûSAIDûAû

DCM banker in London.

Additional reporting by William

Hoffman, Ed Clark and Helene

Durand (^) „
4 IFR Top news 2323 .p 4 - 14 .indd 5 06 / 03 / 2020 19 : 26 : 34