IFR International - 03.11.2018

For daily news stories

@ visit http://www.ifre.com

DEALûFORûTHEMSELVESûnûPRICINGûATû
BPûISûEFFECTIVELYûûINSIDEûOFû
THEIRû/P#OûSENIORûUNSECUREDû
FUNDINGûCOSTSvûSAIDûTHEû$#-û
BANKERûh4HATûISûAûGREATû
ACHIEVEMENTûFORûANûINAUGURALû
TRADEv
4HEûlNALûSPREADûOFFERSûAû
PICK
UPûOFûAROUNDûBPûVERSUSû
THEûMOSTûRECENTûlVE
YEARû
3INGAPOREANû#ANADIANûANDû
!USTRALIANûCOVEREDûBONDSû
WHICHûAREûDEEMEDûTHEûCLOSESTû
COMPARABLES
4HEû$#-ûBANKERûEXPECTSû
APANESEûCOVEREDSûTOûTIGHTENûTOû
THOSEûCOMPARABLESûASûTHEûMARKETû
DEVELOPSûANDûSAIDûTHATûIFûLEGISLATIONû
ISûEVENTUALLYûINTRODUCEDûTHEYû
COULDûTRADEûWELLûINSIDEûISSUANCEû
FROMûTHOSEûCOUNTRIES
APANûDOESûNOTûHAVEûCOVEREDû
BONDûLEGISLATIONûINûPLACEûSOûTHEû
õBNûCOVEREDûBONDû
PROGRAMMEûISûSTRUCTUREDûONûAû
CONTRACTUALûBASIS
h7EûCOULDûHAVEûASKEDûTHEû&3!û
lRSTûTOûPUTûCOVEREDûBONDû
LEGISLATIONûINûPLACEûBUTûWEûFELTûWEû

HADûTOûSHOWûTHEREûISûDEMANDûFORû

COVEREDûBONDSûANDûTHEûPRODUCTûISû

WELCOMEDûBYûINVESTORSvûSAIDû

/UCHIYAMAûh7EûFELTûSTRONGLYûTHATû

THISûWASûNECESSARYûTOûENCOURAGEû

THEûREGULATORûTOûMOVEûFORWARDv

#OVEREDûBONDûMARKETSûINûTHEû

5+û#ANADAûANDû!USTRALIAû

SIMILARLYûBEGANûWITHûWELLû

RECEIVEDûCONTRACTUALûISSUANCEû

BEFOREûLAWSûWEREûIMPLEMENTED

4HEûSTRUCTUREûOFû3-"#Sû

PROGRAMMEûOFFERSûDUALûRECOURSEû

BUTûISûUNUSUALûINûTHATûTHEûBONDSû

AREûSECUREDûAGAINSTûAûPORTFOLIOû

OFûRESIDENTIALûMORTGAGE

BACKEDû

SECURITIESûORIGINATEDûBYûTHEû

BANKûRATHERûTHANûAûPORTFOLIOûOFû

MORTGAGESû4HEûRETAINEDû4RIPLEû

!û2-"3ûASSETSûWILLûSTAYûONûTHEû

BANKSûBALANCEûSHEETûBUTûWILLûBEû

SEGREGATEDûINûAûTRUST

3OMEûCOVEREDûBONDûISSUERSû

HAVEûUSEDû2-"3ûINûTHEIRûPOOLSû

INûTHEûPASTûBUTûWITHûLIMITSûANDû

THEûPRACTICEûISûBEINGûPHASEDûOUTû

INû%UROPE

3-"#SûPROGRAMMEûISûRATEDû

!AAûBYû-OODYS„

Goldman gets stuck with

Bureau Veritas stock

„ Equities Bank tests ABB market with €400m sell-down

BY ROBERT VENES

)NVESTMENTûlRMû7ENDELûTHEû

LARGESTûSHAREHOLDERûINûBUREAU

VERITASûSOLDûAûûSLUGûOFûTHEû

&RENCHûCERTIlCATIONûAGENCYûONû

-ONDAYûEVENINGûTHOUGHûNOTûALLû

OFûITûWASûPLACEDûINûTHEûMARKETû

LEAVINGûGoldman SachsûWITHû

UNDISTRIBUTEDûSTOCK

4HEREûWASûNOûCOVEREDû

MESSAGEûFROMû'OLDMANû3ACHSû

DURINGûTHEûõMûACCELERATEDû

BOOKBUILDûWHICHûTHEûBANKûWASû

RUNNINGûONûAûSOLEûBOOKRUNNERû

BASISûFOLLOWINGûANûAUCTIONû

!CCORDINGûTOûAûBANKERûINVOLVEDû

THEûAUCTIONûWASûRUNûBYûTHEûSELLERû

ANDûITSûLAWYERSûBUTûFOLLOWINGûAû

õBNû!""ûINû3AFRANûINûEARLYû

/CTOBERûTHATûLEFTûTHREEûBANKSû

WITHûUNDISTRIBUTEDûSTOCKûRISKû

APPETITEûWASûRELATIVELYûLIGHTû

FROMûRIVALS

!ûSTICKûISûNOûONESûIDEAûOFûAû

FAVOURABLEûOUTCOMEûASû

ACKNOWLEDGEDûBYûTHEû53ûBANKû

BUTûTHEREûAREûVALIDûREASONSûNOTû

TOûBEûOVERLYûCRITICAL

.OVEMBERûISûTYPICALLYûAûBUSYû

MONTHûFORûACCELERATEDû

BOOKBUILDûTRADESûANDû'OLDMANû

ISûHIGHLYûACTIVEûINûTHEûPRODUCTû

/VERûTHEûPASTûTHREEûYEARSûTHEû

.OVEMBERû!""ûTALLYûTOTALSû

53BNû53BNûANDû

53BNûWITHû'OLDMANû

INVOLVEDûINûSEVENûOUTûOFûû

DEALSûlVEûOUTûOFûûDEALSûANDû

FOURûOUTûOFûûDEALSûRESPECTIVELY

!SûAûRESULTûNOTûONLYûWASûTHEû

"UREAUû6ERITASûTRADEûANû

IMPORTANTûTESTûOFûWHETHERûANDû

WHEREûINVESTORSûWILLûBUYû

ACCELERATEDûTRADESûINûTHEûCURRENTû

DIFlCULTûMARKETûBUTûALSOûAû

DEMONSTRATIONûTHATûONEûOFûTHEû

MOSTûACTIVEûBANKSûINûTHEûPRODUCTû

STILLûHASûAPPETITE

!ûBANKERûAWAYûFROMû'OLDMANû

AGREEDûSAYINGûTHATûTHEûTRADEûHADû

BEENûhHELPFULvûANDûhHADûGOTûAû

FEWûCONVERSATIONSûWITHûISSUERSû

GOINGvûTHOUGHûHEûADDEDûTHATûITû

WOULDûPROBABLYûHAVEûBEENûBETTERû

INûTERMSûOFûFULLûDISTRIBUTIONûTOû

HAVEûBEENûDONEûONûANûAGENCYû

BASISûWITHûAûFULLûWALL

CROSSûTOû

DETERMINEûDEMANDûANDû

POTENTIALLYûSOURCEûEARLYûORDERS

(OWEVERûANûAUCTIONûnû

MEANINGûAûBACKSTOPPEDûRISKû

TRADEûnûWASûTHEûPREFERENCEûOFûTHEû

SELLERûANDûITûISûTHEûTRADITIONALû

ROUTEûFORûSPONSORSûANDû

ALTERNATIVEûASSETûMANAGERSû

LOOKINGûTOûMAXIMISEûTHEû

TIGHTNESSûOFûTHEûDISCOUNTû!û

õMûSELL

DOWNûBYû7ENDELûINû

"UREAUû6ERITASûINûûALSOûLEFTû

$EUTSCHEû"ANKûANDû3OCIETEû

'ENERALEûWITHûAûSTICK

!TûûTHEûDISCOUNTûONûAûDEALû

OFûTHISûSIZEûAPPEAREDûRELATIVELYû

SENSIBLEûAûVIEWûSHAREDûBYûTHEû

BANKERûAWAYûFROMûTHEûTRADEûWHOû

ADDEDûTHATûONûSPEAKINGûTOû

INVESTORSûLASTûWEEKûHEûHADûBEENû

TOLDûTHATûAûNUMBERûOFûBUYERSû

INCLUDINGûHEDGEûFUNDSûHADûBEENû

SCALEDûBACKûINûAûBIDûBYû'OLDMANû

TOûENSUREûTHATûTHEûDEALûTRADEDû

WELLûINûTHEûAFTERMARKET

&OLLOWINGûPRICINGûOFûõû

THEûSTOCKûCLOSEDûATûõûONû

4UESDAYûANDûWASûTRADINGûATû

õûONû&RIDAYûAFTERNOONû

ABOVEû-ONDAYSûCLOSEûOFûõû

AROUNDûWHICHûTHEûDEALûWASû

PRICED (^) „
PITCH TO BANKS
DO"ANKSûPITCHûTOûBANKSûISûTHATûITû
CANûEXTRACTûFARûMOREûVALUEûFROMû
SUCHûPORTFOLIOSûTHANûTHEûBANKSû
CANûDOûTHEMSELVESûITûSAWû
COLLECTIONSûINCREASEûBYûûINû
THEûlRSTûTWOûYEARSûOFûMANAGINGûAû
5NI#REDITûPORTFOLIOûFORûINSTANCE
4HEûCOMPANYûRELIESûONûAû
BESPOKEûSOFTWAREûSYSTEMûTHATû
HELPEDûGENERATEûõBNûOFû
COLLECTIONSûLASTûYEAR
h3OMEûBANKSûWEREûINITIALLYû
RELUCTANTûTOûUSEûSERVICERSûTOû
MANAGEûTHEIRûBADûLOANSvûSAIDû
&RANCHIûWHOûSAIDûTHATûSOMEû
INITIALLYûFOCUSEDûONûMANAGINGû
.0,SûTHEMSELVESûh"UTûOVERû
TIMEûEVENûTHEûDOUBTERSûHAVEû
CHANGEDûTHEIRûMINDSû!ûSTRATEGICû
SERVICINGûPARTNERûCANûIMPROVEû
THEûPORTFOLIOûMANAGEMENTv
DO"ANKûISûALSOûTARGETINGû
UNLIKELY
TO
PAYûnûORû540ûnûLOANSû
THATûAREûNOTûYETûCLASSIlEDûASûINû
DEFAULTûANDûRECENTLYûSIGNEDûAûDEALû
TOûMANAGEûAûõBNûPORTFOLIOûOFû
SUCHûLOANSû)TûESTIMATESûTHATû)TALIANû
BANKSûHAVEûMOREûTHANûõBNûOFû
540SûWITHûREGULATORSûEXPECTEDûTOû
CLAMPûDOWNûONûSUCHûEXPOSURES
h)TSûAûHUGEûMARKETûTODAYûTHEû
NETûBOOKûVALUEûOFû540SûISûHIGHERû
THANûTHEûNETûBOOKûVALUEûOFû
.0,SvûSAIDû&RANCHIûh!TûTHEû
SAMEûTIMEûTHEû%#"ûHASûSTARTEDû
TOûFOCUSûONûBANKSûNON
PERFORMINGûEXPOSURESûnû.0,Sû
PLUSû540SûnûWHICHûSHOULDûDRIVEû
BANKSûTOûBECOMEûMOREû
AGGRESSIVEûINûTACKLINGûTHESEû
ASSETSv (^) „