IN BRIEF
SMBC Nikko Securities
Bond mandates lost after scandalSMBC NIKKO SECURITIES has lost out on several
Japanese corporate bond mandates after a
former employee was arrested for alleged
insider trading.
The details of the allegation were not publicly
disclosed, but Reuters said the former employee
was accused of involvement in insider trading
related to office furniture manufacturer Itoki’s
bid to take over its subsidiary Dalton in 2016.
One day after the arrest, on November 30, EAST
JAPAN RAILWAY removed SMBC Nikko from the
lineup of lead managers for its planned long
and ultra-long bond offering, according to
DealWatch, IFR’s sister publication. JR East’s
four-tranche 10, 20, 30 and 40-year bond priced
last Friday via sole bookrunner Mitsubishi UFJ
Morgan Stanley.
TEPCO POWER GRID, HONDA FINANCE, MITSUBISHI
CHEMICAL HOLDINGS and NAGOYA EXPRESSWAY
followed JR East’s lead in dropping SMBC Nikko
from their mandates, according to DealWatch.
SMBC Nikko, which is 100% owned by Sumitomo
Mitsui Financial Group, said in a statement it was
cooperating fully with the relevant authorities
and had set up an investigation committee to
look into the incident.
“We take this matter very seriously and
sincerely apologise to our customers and other
concerned parties for causing great concern and
inconvenience,” the statement said.
Mitsubishi UFJ Morgan Stanley faced a similar
exclusion from deals earlier this year. It was
dropped from several domestic bond offerings
in July after regulators recommended that it be
fined for manipulating JGB futures.CBIRC
New guidelines for banks’ WM unitsChina’s banking regulator last week allowed
banks’ wealth management subsidiaries to
invest directly in the stock market using funds
raised from publicly sold products.
Previously, banks were only able to invest in the
stock market using funds raised from privately
sold bank wealth management products.
The new rules, which were largely unchanged
from a draft version put forward by the CHINA
BANKING AND INSURANCE REGULATORY COMMISSION
in October, come as China seeks to shore up its
stuttering stock market.
Shares on mainland bourses have fallen this
year partly because of a prolonged clampdown
on shadow banking including WMPs issued by
banks.
The new rules state that the wealth
management subsidiaries of commercial banksmust have a minimum registered capital of
Rmb1bn (US$145.7m).
In addition, banks are able to allocate no more
than 20% of funds from WMPs to shares, while
for non-standard debt assets, typically referred
to as shadow loans, this figure is 35%.
According to data from the Banking Sector
Wealth Management Product Registration and
Entrustment Centre, a government body that
tracks the sector, outstanding WMPs stood at
Rmb29.54trn, an increase of 1.69% from the
previous year, although a much smaller increase
compared with the previous year’s 23.6% jump.JBIC
MOUs with Argentina, BNA and CAFJAPAN BANK FOR INTERNATIONAL COOPERATION,
Argentina’s Treasury Ministry and two banks
signed memorandums of understanding on
November 29 to back infrastructure projects in
Argentina.
The two banks are BANCO DE LA NACION
ARGENTINA, the country’s largest commercial
lender, and CORPORACION ANDINA DE FOMENTO, a
regional development finance institution with
19 shareholder countries mainly from Latin
America and the Caribbean.
The MOUs are to boost ties between JBIC
and Argentina and also to promote business
expansion projects by Japanese companies.
On the same day, JBIC and commercial banks
also signed a US$60m credit line for BNA.
JBIC is funding US$36m, while the commercial
lenders are providing the remainder. Nippon
Export & Investment Insurance will provide
insurance coverage to the commercial portion.Invesco
Launch of new Belt & Road fundINVESCO said last Tuesday it has begun
marketing the first Belt and Road fixed income
fund for investors in Europe, the Middle East
and Africa.
Invesco, which launched a similar Hong Kong-
based fund earlier this year that currently holds
US$59.48m in assets, said its new EMEA-
focused fund will invest primarily in a mixture of
US dollar-denominated sovereign, investment-
grade and high-yield corporate bonds from
issuers that could “directly or indirectly benefit
from increasing capital and trade flows,
catalysed by the BRI”.
Invesco said that the fund will invest up to 10%
in equities and will have the ability to raise that
to 30% in periods of higher risk. Invesco did not
disclose a target size or first close date and did
not respond to inquiries. The fund has a target
portfolio yield of 7%.Launched in 2013 by Chinese president Xi
Jinping, the BRI entails the development of
land-based and maritime trading routes,
stretching from Asia to Europe, Africa and the
Middle East. According to Invesco, the BRI
will require US$150bn–$200bn of investment
annually over the next five years.Varde Partners
Upsized fundraising for Asia fundVarde Partners has raised about US$400m
for the VARDE ASIA CREDIT FUND, its first Asia-
dedicated fund, according to a press release last
Monday.
The amount was increased from the target size
of US$250m after commitments were received
from investors such as public and private pension
funds, endowments, foundations and family
offices in Asia, Europe and North America. The
fund closed six months after the launch.
Proceeds are for investing in corporate credit,
stressed and distressed real estate assets, and
providing special situations lending in Asia-
Pacific.
Varde has assets under management of about
US$14bn globally, including more than US$4bn
of investments in 15 Asia Paicifc countries. Its
regional headquarters for APAC is in Singapore
and it opened a Mumbai office last month. The
firm also has offices in Hong Kong, Sydney and
Tokyo.People's Bank of China
Green Investment Principles for the BRIThe PEOPLE’S BANK OF CHINA and the City of
London have teamed up to develop a list of
principles to support green financing related to
the Belt and Road Initiative.
The Green Investment Principles for the Belt
& Road are a code of practice for banks and
corporates to ensure that their BRI-related
investments meet certain sustainability criteria.
The principles include commitments around
environmental and social due diligence, investor
disclosure and allocation of funds to support
sustainability-related research.
The principles were developed by the Green
Finance Committee of the China Society
for Finance and Banking, a body under the
supervision of the PBoC, and the City of
London’s Green Finance Initiative, a quasi-
government entity set up in 2016 to promote
green finance in the UK.
Tracing its origins to 2008 when the World Bank
sold SKr2.325bn (US$350m) of green notes to a
group of Scandinavian pension funds, the green
finance market has grown exponentially in the
last 10 years and has expanded from into other
asset classes aside from bonds, most notably
green loans.People
&Markets