IFR International - 03.11.2018

LASTû4UESDAY ûLIFTINGûITûABOVEûRECENTûNON
Green deals from its peers.
4HEûlNALûBOOKûSTOODûATûOVERûõMûFROMû
ûACCOUNTS ûATûTHEûLARGERûENDûOFûTHEûRANGEû
SEENûFORû4RIPLEû!û'ERMANû0FANDBRIEFEûINû
recent months.
,EADSûABN AMRO, DZ Bank and HSBC
OPENEDûBOOKSûFORûTHEûõMûNO
GROWû
$ECEMBERûûISSUEûWITHûGUIDANCEûOFûBPû
AREAûTHROUGHûMID
SWAPSûAREAû!FTERûANûHOUR û
books were reported above €500m with
guidance unchanged.
(ALFûANûHOURûLATER ûTHEûLEADSûlXEDûTHEû
SPREADûATûMINUSûBPûWITHûBOOKSûOVERû
õM ûEXCLUDINGû,-S
h4HEûEARLYûUPDATEûDIDûNOTûLOOKûTHATû
BULLISH ûBUTûINûTHEûEND ûANûõMûBOOKû
EXCLUDINGû,-SûISûQUITEûGOODûFORûAû'ERMANû
COVEREDûTHESEûDAYS vûSAIDûAûBANKERûAWAY
Bankers said the speed of execution was
impressive.
h)TSûSTILLûAûDIFlCULTûMARKETûFORû'ERMANû
COVEREDS vûSAIDûAûLEADûSYNDICATEûBANKERûh4HEû
'REENûANGLEûREALLYûHELPEDûINûTHISûCASE û
BECAUSEûWEûQUICKLYûCROSSEDûTHEûõMûLINEû
4HENûYOUûGETûTHEûBALLûREALLYûROLLINGû)NVESTORSû
AREûOFTENûWAITINGûFORûTHATûMESSAGEv
!ûNUMBERûOFû.ORDICûACCOUNTSûJOINEDûTHEû
book late in the process with sizeable
ORDERS ûHEûADDED
!ROUNDûûOFûTHEûBOOKûWASûMADEûUPûOFû
green accounts.
"ASEDûONûTHEûBIDûSIDEûOFû-UN(YPSûCURVE û
FAIRûVALUEûFORûTHEûNEWûLONGûlVE
YEARûWASû
AROUNDûMINUSûBPû4HATûSAID ûTHEûREOFFERû
spreads of recent new issues are more
indicative of realistic clearing levels.
"ANKERSûPOINTEDûTOûAûõBNûlVE
YEARû
FORû).'
$I"A ûPRICEDûATûMINUSûBPûONû/CTOBERû
ûANDûTRADINGûAROUNDûMINUSûBPûBID ûANDûAû
õMûSEVEN
YEARû'REENû0FANDBRIEFûFORû
"ERLINû(YP ûPRICEDûATûMINUSûBPûONû/CTOBERû
12 and trading at around minus 3.5bp.
h)FûYOUûADJUSTûFORûTHEûBIGGERûSIZEûOFû).'
$I"AûORûTHEûLONGERûMATURITYûOFû"ERLINû(YP û
THISûSPREADûISûBASICALLYûINûLINE vûSAIDûAûBANKERû
AWAY
-UN(YPûISSUEDûTHEûlRSTûSUSTAINABLEû
COVEREDûBONDûINû ûAûõMû%3'ûlVE
YEARûTHATûlNANCEDûLENDINGûTOûHOUSINGû
cooperatives. It has since been absent from
the sustainable market as it overhauled
internal processes and established its Green
bond framework.
4HEûPROCEEDSûOFûTHEûDEALûWILLûlNANCEû
'REENûMORTGAGEûLOANSûANDûCERTIlEDû
sustainable commercial mortgage loans.
4HEûDEAL ûDUBBEDûANûh%COLOGICALû%3'vû
0FANDBRIEF ûISûTHUSûTHEûlRSTû'REENûCOVEREDû
BONDûFROMû'ERMANYûBACKEDûBYûANDû
lNANCINGûRESIDENTIALûMORTGAGES
-UN(YPSû'REENûBONDûFRAMEWORKûISû
ALIGNEDûWITHû)#-!Sû'REENû"ONDû0RINCIPLESû
ANDûHASûRECEIVEDûAûSECOND
PARTYûOPINIONû
FROMû)33
/EKOM

HIGH-YIELD

UNITED STATES

JUNK ISSUERS FALL VICTIM TO MARKET

VOLATILITY

4HREEû53ûHIGH

YIELDûBONDSûWEREûPULLEDûFROMûTHEû

market in little over a week following the worst

MONTHLYûRETURNSûFORûTHEûASSETûCLASSûINûALMOSTûTWOû

YEARSûANDûWHIPSAWINGûMARKETûVOLATILITY

4WOûDEBUTûHIGH

YIELDûISSUERSû

û%0û

COMPANYûGEP HAYNESVILLEûANDûlNANCIALû

SERVICESûlRMûINTL FCSTONEû

ûCALLEDûOFFûTRADESû

LASTûWEEKûWHILEûWASTEûRECYCLINGûCOMPANYû

GFL ENVIRONMENTALûDROPPEDûANû-!ûBONDûTHEû

PREVIOUSû4HURSDAY

4HATûBRINGSûTHEûTOTALûOFûPULLEDû53ûJUNKû

BONDûDEALSûTOûûTHISûYEARûACCORDINGûTOû)&2û

data.

h(IGH

YIELDûISûVERYûCHALLENGINGûRIGHTûNOWû

BUTûTHEûPIPELINEûISNTûOVERWHELMINGûSOûTHATû

SHOULDûHELPvûONEûSENIORûLEVERAGEDûlNANCEû

banker told IFR.

!VERAGEû53ûJUNKûBONDûSPREADSûHAVEû

WIDENEDûBPûTOûBPûOVERû4REASURIESû

SINCEû/CTOBERûûWHENûTHEYûHITûAûPOST

lNANCIAL

CRISISûLOWûOFûBPûACCORDINGûTOû

)#%û"!-,ûDATA

That had made some investors cautious

that the market was overvalued and ripe for

AûCORRECTIONû!ûSELL

OFFûINûSTOCKSûTURNEDûOUTû

to be the trigger.

h)MûNOTûOVERLYûCONCERNEDûABOUTûITûYETûASû

THEûUNDERLYINGûFUNDAMENTALSûAREûSTILLûPRETTYû

SOLIDûBUTûTHEûMOVESûHAVEûPROBABLYûBEENû

more violent than some people were

EXPECTINGvûSAIDû$OUGû,OPEZûAûPORTFOLIOû

MANAGERûATû!RISTOTLEû#REDITû0ARTNERS

4HEûSELL

OFFûHASûHITûRETURNSû!VERAGEû

RETURNSûWEREûRUNNINGûATûûINûTHEûYEARû

UPûTOûTHEûENDûOFû3EPTEMBERûBUTûTHATûHASû

DWINDLEDûTOûJUSTûûAFTERû/CTOBERSû

WIDENINGû)#%û"!-,ûDATAûSHOW

h4HEûSELL

OFFûINû/CTOBERûISûGOINGûTOûLEAVEû

MONTHLYûEXCESSûRETURNSûWITHûTHEûWORSTû

PERFORMANCEûSINCEûTHEû*ANUARYûû

PUMMELLINGvû#REDIT3IGHTSûANALYSTSûSAIDûONû

7EDNESDAY

h4HEREûISûNOûQUESTIONûTHATû*ANUARYûû

WASûAûMUCHûUGLIERûMONTHûBUTûTHISûMONTHû

;/CTOBER=ûCOULDûKEEPûRATTLINGûMARKET

MAKERSû

ANDûSOMEûINVESTORSûNEARûTERMûGIVENûTHEû

batch of issues ahead from elections to

#HINAûTOûTHEû&EDv

IS IT OVER?

TONEûRATEDû"A""

ûCITEDûMARKETû

VOLATILITYûASûTHEûREASONûFORûDROPPINGûITSû

US$350m senior secured issue. It had set

PRICEûTALKûATû

ûINCLUDINGûAû

discount.

'%0û(AYNESVILLEûMEANWHILEûHADû

WIDENEDûTALKûONûITSûTRADEûTOû

û

FROMû

ûAFTERûITûSTRUGGLEDûTOûGAINû

traction.

4HEûQUESTIONûONûMANYûPEOPLESûMINDSû

now is whether there is worse to come.

Yields are looking more attractive: the

AVERAGEûYIELD

TO

WORSTûONûJUNKûBONDSûISûNOWû

ûANDûûONû4RIPLEû#ûRATEDûDEBTûORû

lower.

"UTû,OPEZûSAIDûHEûWASûWAITINGûFORûAûWHILEû

to see if markets settled down before going

BARGAIN

HUNTINGûANDûTHATûVALUATIONSûINû

SECONDARYûLOOKEDûMOREûATTRACTIVEûTHANûTHEû

NEW

ISSUEûMARKET

The riskier Triple C market had held up

PRETTYûWELLûUNTILûMOREûRECENTLYûWHICHûHADû

HELPEDûEASEûCONCERNSûTHATûTHEûSELL

OFFûMIGHTû

REmECTûMOREûWORRISOMEûPROBLEMSû"UTûTHATû

SEGMENTûISûNOWûBEARINGûTHEûBRUNTûWITHû

SPREADSûWIDENINGûBPûINûTHEûûDAYSûUPûTOû

LASTû4HURSDAY

One banker said the leveraged loan

market was also feeling some pressure.

“Momentum has been hard to achieve in

SOMEûSYNDICATIONSûBECAUSEûOFûMARKETû

VOLATILITYû7EREûSEEINGûINVESTORSûRETREATû

FROMûCYCLICALSûANDûPRICINGûONûAûFEWûDEALSû

HASûWIDENEDû)TSûAûRECALIBRATIONûOFûRISKv

ALL ASIAN HIGH-YIELD ISSUERS

1/1/2018 TO DATE

Managing No of Total Share

bank or group issues US$(m) (%)

1 Haitong Securities 41 2,303.79 7.2

2 Citic 25 2,025.37 6.3

3 Credit Suisse 20 1,688.57 5.3

4 Guotai Junan Securities 40 1,651.03 5.2

5 Deutsche Bank 24 1,607.02 5.0

6 HSBC 25 1,521.49 4.8

7 JP Morgan 8 1,518.99 4.8

8 Bank of China  19 1,394.25 4.4

9 Goldman Sachs 9 1,237.67 3.9

10 UBS 22 1,176.67 3.7

Total 93 31,951.90

Excluding equity-related debt.

Source: Refinitiv SDC code: B06d

ALL EUROPEAN HIGH-YIELD ISSUERS

1/1/2018 TO DATE

Managing No of Total Share

bank or group issues US$(m) (%)

1 Goldman Sachs 42 7,001.25 8.5

2 JP Morgan 45 6,105.99 7.4

3 Deutsche Bank 49 6,081.18 7.4

4 Credit Suisse 42 5,484.41 6.7

5 BNP Paribas 53 5,174.27 6.3

6 Citigroup 34 4,499.31 5.5

7 Barclays 34 4,260.06 5.2

8 BAML 27 3,423.85 4.2

9 HSBC 32 3,152.48 3.8

10 Morgan Stanley 20 3,033.37 3.7

Total 139 82,204.22

Excluding equity-related debt.

Source: Refinitiv SDC code: B06c