IFR International - 03.11.2018

h)TûSEEMSûASûTHOUGHûTHEYûAREûGOINGûTOûSTAYû
ASûANû!ûRATEDûENTITYûBUTûTHISûISûAû53BN
BNûDEBTûTHATûNEEDSûTOûCOMEûTOûMARKETvû
*ASONû3HOUPûSENIORûlXEDûINCOMEûSTRATEGISTû
WITHû,')-!ûTOLDû)&2
h-OSTûLIKELYûITûWILLûCOMEûWITHûAû
SIGNIlCANTûCONCESSIONûANDûALREADYûITSû
WIDENEDûOUTv
JP Morgan and Goldman Sachs are providing
Aû53BNû
DAYûBRIDGEûLOANûFORûTHEû
ACQUISITIONûWHICHûISûEXPECTEDûTOûBEûTAKENû
out with bonds.
/NûEXPECTATIONSûTHATûTHEûCOMPANYûWILLû
NEEDûTOûSELLûBONDSûTOûlNANCEûTHEûDEALû)"-Sû
EXISTINGûBONDSûWEAKENEDû)TSûûû
ISSUEûIMMEDIATELYûWIDENEDûBPûTOû
Treasuries plus 125bp following the
ANNOUNCEMENTûACCORDINGûTOû-ARKET!XESS
)"-SûDEBTûLEVERAGEûISûLIKELYûTOûRISEûTOû
AROUNDûXûCOMPAREDûWITHûXûCURRENTLYû
ACCORDINGûTOû30
3HOUPûSAIDûTHISû-!ûDEALûISûTYPICALûOFû
what is to be expected in later stages of the
CREDITûCYCLEûWHEREûCOMPANIESûAREû
combining with dissimilar businesses in
HOPESûOFûlNDINGûREVENUEûSYNERGIES
h)TSûAûLOTûOFûDEBTûBUTûITSûSOMETHINGûTHEYû
HAVEûTOûEXECUTEûONûIFûTHEYûREALLYûWANTûTOû
COMPETEûWITHû-ICROSOFTûANDû!MAZONûINûTHEû
CLOUDûSPACEvûHEûSAID

MOODY’S SAYS ALLERGAN’S DEBT
BUYBACK A CREDIT POSITIVE

Drugmaker ALLERGAN said on an earnings call
4UESDAYûTHATûITûHADûREDUCEDûDEBTûINûTHEû
THIRDûQUARTERûANDûSIGNALLEDûITûMAYûBEû
looking to come to the bond market during
THEûFOURTHûQUARTER
-OODYSûWHICHûRATESû!LLERGANûATû"AAû
SAIDûTHEûDEALûREDUCEDûTHEûCOMPANYSû
ABSOLUTEûDEBTûBYû53MûANDûWASûCREDITû
positive.
!LLERGANûISûAûLARGEûINVESTMENT
GRADEûBONDû
issuer and part of a worrisome half of the
53TRNû53ûCORPORATEûBONDûMARKETûTHATûISû
NOWûRATEDûNEARûJUNK

The segment has come on the radar for

potential downgrades as companies fall

short on their debt reduction plans as the

RATINGSûAGENCIESûTAKEûAûHARDERûLOOKûRECENTLYû

at leverage.

&ORûITSûPARTû!LLERGANûAPPEARSûTOûBEû

FOCUSEDûONûKEEPINGûITSûINVESTMENT

GRADEû

ratings.

)TûRETIREDû53BNûOFûDEBTûINûTHEûTHIRDû

QUARTERû$AVIDû.ICHOLSONû!LLERGANSû

EXECUTIVEûVICEûPRESIDENTûANDûCHIEFû2$û

OFlCERûSAIDûDURINGûTHEûCALLûTHATûFOLLOWEDû

earnings.

h!PPROXIMATELYû53BNûOFûTHEû53BNû

ISûEARMARKEDûFORûAûLEVERAGE

NEUTRALû

RElNANCINGûTHATûWEûAREûINûTHEûPROCESSûOFû

executing as we speak as a normal part of

DEBTûPORTFOLIOûMANAGEMENTvûSAIDû

Nicholson.

h!SûSUCHûWEûEXPECTûTOûCONDUCTûONEû

ORûMOREûlNANCINGûTRANSACTIONSûINûTHEû

FOURTHûQUARTERûSUBJECTûTOûMARKETû

CONDITIONSv

!CTAVISûHELPEDûlNANCEûITSû53BNû

PURCHASEûOFû"OTOXûMAKERû!LLERGANûWITHûAû

53BNûBONDûDEALûINûûANDûAû53BNû

EQUITYûRAISEûTHATûHELPEDûTHEûCOMPANYû

MAINTAINûINVESTMENT

GRADEûRATINGS

GE BONDS TRADE WIDER ON NEWS OF

RESTRUCTURE

GENERAL ELECTRIC slid further down the credit

SPECTRUMûWITHûAûTWO

NOTCHûDOWNGRADEûFROMû

-OODYSûONû/CTOBERûûnûTHEûSECONDûRATINGSû

AGENCYûTOûDEMOTEûTHEûCOMPANYûINûTHEû

course of the month.

-OODYSûBROUGHTûTHEûRATINGûDOWNûINTOûTHEû

4RIPLEû"ûBANDûWITHûAûCUTûTOû"AAûFROMû!û

4HATûCREDITûASSESSMENTûISûINûLINEûWITHû30Sû

"""ûRATING

Fitch put GE on negative watch earlier in

the month.

GE bonds traded wider on the heels of the

DOWNGRADEûANDûITSûTHIRD

QUARTERûEARNINGSû

CALLûINûWHICHûNEWûCHIEFûEXECUTIVEû,ARRYû

Culp announced plans to restructure the

struggling power unit. Even proposals to

REDUCEûITSûQUARTERLYûDIVIDENDSûHAVEûNOTû

STOPPEDûTHEûSPREAD

WIDENING

4HEûCOMPANYSûûANDûûBONDSûWEREû

AMONGûTHEûMOSTûTRADEDûWITHûSPREADSûWIDERû

ONûTHEûWEEKûBYûBPûANDûBPûRESPECTIVELY.

)TSûSûWEREûASûMUCHûASûBPûWIDER

/NEûBANKERûTOLDû)&2ûTHEûCOMPANYSû

COMMERCIALûFUNDINGûCOSTSûJUMPEDûBPûINû

JUSTûTWOûDAYS

'%û2EUTERSûREPORTEDûISûALSOûCONTENDINGûWITHû

REGULATORYûMATTERSûINCLUDINGûTHEû53û3ECURITIESû

and Exchange Commission and Department of

*USTICEûEXPANDINGûINVESTIGATIONSûTOûINCLUDEûAû

US$22bn writedown of goodwill from GE’s

power division.

!DDITIONALLYûTHEûCOMPANYûWILLû

SIGNIlCANTLYûMISSûITSûFULL

YEARûCASHmOWû

TARGETûOFûABOUTû53BNûANDûCANNOTûESTIMATEû

PROlTSûFORûTHEûYEARûUNTILû#ULPûGETSûMOREû

DETAILûABOUTûITSûAILINGûPOWERûUNITû2EUTERSû

reported.

4HEûCOMPANYSûSHARESûFELLûûTOûAûNINE

YEARûLOWûONû4UESDAYûFOLLOWINGûTHEûNEWS

!NALYSTSûHADûAûPOSITIVEûVIEWûREGARDINGû

'%SûPLANûTOûSLASHûQUARTERLYûDIVIDENDSûOFûû

CENTSûAûSHAREûSAVINGû53BN

Culp noted during the call that there are

NOûPLANSûTOûRAISEûEQUITYûCAPITALû2EUTERSû

reported.

GM BRINGS BOND ON BACK OF

POSITIVE RESULTS

GENERAL MOTORS posted better than expected

PROlTSûONû7EDNESDAYûPROMPTINGû

TIGHTENINGûACROSSûTHEû53ûAUTOMAKERSûCURVEû

as well as new debt issuance from its captive

lNANCEûARMûGM FINANCIAL.

4HEûlNANCINGûARMû"AA""""""ûSTUCKû

TOûTHEûSHORTûENDûOFûTHEûCURVEûCOMINGûWITHûAû

53BNûTHREE

YEARûTRANCHEûTHATûPRICEDûATû

4REASURIESûPLUSûBPûSOMEûBPûTIGHTûTOû

IPTs on the back of a US$1.9bn order book.

)TûALSOûPRINTEDûAû53MûmOATERûWITHûTHEû

SAMEûTENORûATûTHREE

MONTHû,IBORûPLUSûBP

1UARTERLYûRESULTSûONû7EDNESDAYûPROVIDEDû

a nice surprise to a market that had forecast

LOWERûPROlTSûAFFORDINGûTHEûCREDITûAûDECENTû

RUNWAY

h7EûCONTINUEûTOûVIEWûTHEûCOMPANYû

through the lens of its positioning relative

TOûTHEûBROADERû4RIPLEû"ûINDEXûTOûWHICHûITû

CONTINUESûTOûTRADEûMATERIALLYûWIDEvû

CreditSights said.

'-ûREPORTEDûTHIRD

QUARTERûNETûINCOMEûOFû

53BNûCOMPAREDûWITHûAûLOSSûLASTûYEARûOFû

53BNûACCORDINGûTOû2EUTERSûWHILEû

ADJUSTEDû%BITûCAMEûINûATû53BN

$URINGûTHEûEARNINGSûCALLûTHEûAUTOMAKERû

noted that GM Financial would initiate a

53MûDIVIDENDûPAYMENTûTOûTHEûPARENTû

COMPANYûINûTHEûFOURTHûQUARTERûAHEADûOFûTHEû

ûTARGETûACCORDINGûTOûTHEûEARNINGSû

report.

BONDS CORPORATES

ALL INVESTMENT-GRADE BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)

1 BNP Paribas 216 53,890.62 7.1
2 HSBC 236 51,166.69 6.7
3 SG 196 49,907.47 6.6
4 JP Morgan 164 46,122.73 6.1
5 Credit Agricole 184 44,460.07 5.9
6 Deutsche Bank 181 41,582.04 5.5
7 Barclays 134 40,496.99 5.3
8 UniCredit 171 38,782.52 5.1
9 Citigroup 128 32,619.15 4.3
10 Goldman Sachs 92 32,396.34 4.3
Total 1,077 758,951.63
Excluding ABS/MBS, equity-related debt.
Source: Refinitiv SDC code: N9

ALL CORPORATE BONDS IN STERLING

BOOKRUNNERS: 1/1/2018 TO DATE

Managing No of Total Share

bank or group issues £(m) (%)

1 HSBC 16 1,961.64 14.3

2 Barclays 15 1,711.77 12.4

3 RBC 9 1,354.74 9.9

4 Lloyds Bank 13 1,141.78 8.3

5 NatWest Markets 12 955.46 6.9

6 BNP Paribas 11 766.28 5.6

7 Credit Suisse 7 661.72 4.8

8 Citigroup 6 573.55 4.2

9 Morgan Stanley 4 538.57 3.9

10 Deutsche Bank 5 482.61 3.5

Total 46 13,750.40

Source: Refinitiv SDC code: N8a