BONDS STRUCTURED FINANCENIBC’S NORTH WESTERLY CLO SELLS
TRIPLE AS AT 91BP
NIBCûPRICEDûITSûlRSTûLEVERAGEDûLOANû#,/ûFORû
ALMOSTûlVEûYEARSûONû4HURSDAYûVIAûMorgan
Stanley, offering generous spreads for a deal
which investors said was something of an
outlier.
Recent CLO new issues have sold their
Triple As in the 80s over Euribor but NIBC’s
new issue NORTH WESTERLY V came with a nine-
handle, printing at 91bp over Euribor.
The Double A FRNs came at 115bp (and
FORûAûûCOUPONûINûlXEDûFORMAT ûTHEû
Single As were 200bp, and the Triple Bs
were 330bp. The Double B and Single B
tranches had been pre-placed, with coupons
of three-month Euribor plus 500bp and
700bp respectively.
The deal’s non-call period runs until
October 2020 and the reinvestment period
is until October 2022.
BOE WARNS ON RISKS OF BOOMING
LEVERAGED FINANCE MARKET
The BANK OF ENGLAND’s June Financial Stability
Report highlighted risks associated with the
increase in non-bank lending to UK
corporates, something bankers say is largely
driven by the surging CLO market.
CLO market participants estimate there
could be over 20 new deals being
warehoused for what is a booming part of
the European asset-backed market.
The Bank of England reports “rapid growth
OFûNON
BANKûlNANCEûOFûCORPORATESûOVERûTHEû
past few years, especially through leveraged
loans”. A record £38bn of leveraged loans
WEREûISSUEDûBYû5+ûNON
lNANCIALûCOMPANIESû
last year, and there have been £26bn in the
lRSTûHALFûOFûTHISûYEAR
The report says that in Q1 2018 non-bank
investors - CLOs and also credit funds -
bought 70% of loans syndicated in the
European market.
It said there was a risk that sustained
growth of corporate credit “could affect the
resilience of the core banking system”.
“It could do so directly, if banks become
unable to distribute some of the leveraged
loans in their underwriting pipeline which
they originally intended to pass to
investors.”
There could also be an indirect effect, “if
highly leveraged companies amplify
economic downturns by seeking to reduce
their debt and thereby raising the risks
BANKSûFACEûONûALLûEXPOSURESv
On the other hand, bank lending to
corporates has been muted, with an increase
of just 2% in the year to April 2018, which
has “limited the overall increase in
corporate leverage and the effect on banks’
resilience”.US ABS
CONFIDENCE REMAINS HIGH FOR US ABSBonds backed by US consumer debt are
EXPECTEDûTOûCONTINUEûTOûSHINEûINûTHEûSECONDûhalf even if trade war tensions rise and the
mid-term elections cause an upset,
according to analysts.
Performance in the asset-backed bond
market hinges on consumer health, which
has been showing strong signs.
h!SûWEûLOOKûAHEADûTOûTHEûNEXTûSIXûMONTHSû
for ABS, we are encouraged by consumer
credit fundamentals,” Deutsche Bank
analysts wrote in their mid-year outlook. “A
healthy labour market, growing wages, and
rising home prices all point to a
continuation of the benign credit
ENVIRONMENTûWEûHAVEûEXPERIENCEDûINûRECENTû
years.”
Households have been adding more debt,
but unemployment hit 3.8% in May, its
lowest point since 2000.
*0û-ORGANûECONOMISTSûEXPECTûTHEû53û
jobless rate to dip further and to hit 3.3% in
the second quarter of 2019.
Volatility tied to US trade war threats and
European elections has pushed high-grade
corporate bonds 32bp wider since the start
of the year, according to ICE BAML data.
By contrast, three-year Triple A rated
prime auto ABS paper has gapped out justUS ASSET-BACKED SECURITIES
BOOKRUNNERS: 1/1/2018–30/6/2018
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 98 36,573.55 18.1
2 JP Morgan 59 17,303.21 8.5
3 BAML 52 14,146.64 7.0
4 Deutsche Bank 55 12,493.52 6.2
5 RBC 38 10,475.04 5.2
6 Barclays 45 10,432.60 5.2
7 Wells Fargo 41 8,067.43 4.0
8 Mizuho 23 6,470.14 3.2
9 Credit Suisse 35 6,447.46 3.2
10 Goldman Sachs 26 6,312.22 3.1
Total 354 202,439.53
Excludes MBS.
Source: Thomson Reuters SDC code: F14
STRUCTURED FINANCE – ALL INTL ISSUERS
BOOKRUNNERS: 1/1/2018–30/6/2018
Managing No of Total Share
bank or group issues US$(m) (%)
1 JP Morgan 57 15,453.66 9.4
2 BAML 57 13,705.34 8.4
3 Citigroup 62 13,478.59 8.2
4 Credit Suisse 56 12,222.14 7.5
5 Wells Fargo 48 11,992.30 7.3
6 Deutsche Bank 49 10,231.32 6.2
7 Barclays 35 8,607.80 5.2
8 Goldman Sachs 27 7,710.82 4.7
9 Morgan Stanley 26 6,658.26 4.1
10 SG 15 5,688.91 3.5
Total 288 163,985.16
Includes securitisations, PFI bonds, self-funded issues and credit-linked notes. Excludes US global ABS/MBS and CDOs.Source: Thomson Reuters SDC code: J10cGLOBAL CDOs
BOOKRUNNERS: 1/1/2018–30/6/2018
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 48 24,940.84 29.4
2 Credit Suisse 7 2,907.72 3.4
3 Morgan Stanley 5 2,712.21 3.2
4 Deutsche Bank 6 2,655.81 3.1
5 BAML 8 2,608.72 3.1
6 JP Morgan 4 2,100.56 2.5
7 BNP Paribas 6 1,962.25 2.3
8 Goldman Sachs 3 1,047.84 1.2
9 Nomura 3 702.07 0.8
10 Barclays 4 566.18 0.7
Total 170 84,812.00
Including Euro, foreign, global, US domestics.Source: Thomson Reuters SDC code: B12GLOBAL STRUCTURED FINANCE IN US$
BOOKRUNNERS: 1/1/2018–30/6/2018
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 158 57,156.93 15.8
2 JP Morgan 124 42,131.72 11.6
3 Wells Fargo 112 36,227.95 10.0
4 Credit Suisse 107 35,365.28 9.8
5 BAML 101 33,184.90 9.2
6 Goldman Sachs 64 23,431.09 6.5
7 Morgan Stanley 56 19,614.93 5.4
8 Deutsche Bank 72 17,227.62 4.8
9 Barclays 66 16,834.77 4.6
10 RBC 47 13,626.91 3.8
Total 657 362,301.26
Including securitisations (Euro, foreign, global and domestics, excluding CDOs) and PFI bonds.Source: Thomson Reuters SDC code: B16bALL EUROMARKET CDOs
BOOKRUNNERS: 1/1/2018–30/6/2018
Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 15 6,706.19 16.3
2 Credit Suisse 7 2,907.72 7.1
3 BAML 8 2,608.72 6.3
4 Morgan Stanley 4 2,100.21 5.1
5 BNP Paribas 6 1,962.25 4.8
6 JP Morgan 3 1,690.86 4.1
7 Deutsche Bank 3 1,289.29 3.1
8 Goldman Sachs 3 1,047.84 2.5
9 Barclays 4 566.18 1.4
10 Natixis 2 462.30 1.1
Total 87 41,194.41
Excludes global and domestic.Source: Thomson Reuters SDC code: J11