News
Yahoo block breaks Japan record
Equities Altaba’s US$4.3bn sell-down is largest overnight tradeBY CANDY CHANA record US$4.3bn block trade
in YAHOO JAPAN has put overnight
bookbuilds on the radar for
potential vendors looking to
dispose of sizable stakes in
Japanese companies.
US-based Altaba, formerly
known as Yahoo, turned to the
equity markets last Monday to
sell a US$2.5bn stake in Yahoo
Japan. After a strong response,
Altaba increased the block and
sold its entire 23.9% stake in the
Japanese web portal for ¥481bn
(US$4.3bn).
The block of 1.36bn Yahoo
Japan shares priced at ¥
each, slightly above the bottom
of the indicative price range of
¥353–¥360, a discount of 4.6%
Monday’s close of ¥371.
The choice of an overnight
block trade stands out in
Japan, where vendors typically
sell major stakes through
marketed follow-ons, a process
that can take weeks fromannouncement to pricing.
At US$4.3bn, the Yahoo Japan
block smashes the previous
record for an overnight block,
dating back to 2005 when
Germany’s DaimlerChrysleroffloaded its stake in vehicle
manufacturer Mitsubishi
Motors Corporation in a
¥141bn sale.
“In the rest of the world,
block offerings happenextremely frequently but
Japan is just waking up a little
bit for this type of offering
which would minimise market
impact,” said a banker away
from the Yahoo Japan deal.CBs go green 06 Iron Man producer defaults 07 Korea tightens twice 08
Aussie banks weather slowdown
Bonds Credit spreads, ratings hold steady despite scandals and falling house pricesBY JOHN WEAVERSAnalysts and investors are
playing down fears for the health
of the Australian banking sector
despite mounting pressure from
falling house prices and damning
financial scandals.
A further tightening of lending
criteria since the start of the
Royal Commission into banking
practices earlier this year has
accelerated a credit squeeze,
which in turn fuelled a 2% annual
fall in national house prices in
August, headed by Sydney’s 5.6%
year-on-year tumble.
That has led to predictions
that slower lending and a
weak housing market will denteconomic growth, with serious
consequences for the country’s
major banks - among the world’s
biggest and most frequent
issuers.
Economist Paul Dales at
Capital Economics warns
that Australia will probably
experience the longest and
deepest housing downturn in
the country’s modern history,
but stops short of predicting a
recession.
“Our base case scenario is for
a gradual, 12% decline in house
prices from a peak in July 2017
to the end of 2021, with a 20%
chance of recession and 10%
chance of a financial crisis over
the next five years,” Dales toldIFR.
Despite those challenges,
Capital Economics forecasts
average annual GDP growth of
around 2.5% in the next five years.
“The RBA’s scope to cut
interest rates and the stimulatory
impact of a weaker Australian
dollar, especially for services,
provides a strong buffer for the
economy,” Dales said.
Ratings agencies and DCM
bankers are taking a relaxed
view of the implications for
bank ratings and wholesale
funding, respectively.
“We maintain a stable outlook
for the Australian banking system
because banks will continue to
benefit from favourable economicconditions over the next 12-
months,” said Moody’s in an
outlook report published on
September 10.
Moody’s acknowledged
profitability challenges resulting
from slowing credit growth,
increasing competition and
rising funding and operation
costs, but it is sufficiently
confident to maintain current
ratings, which include globally
high Aa3 readings and stable
outlooks for the country’s four
major banks.
The agency cites strong GDP
growth, expected to be around
3% in 2019, a healthy labour
market and steady capital
metrics following a period of
capital accumulation starting in
2015.
Moody’s also pointed to lower
wholesale funding needs because
of slower mortgage loan growth,