Top stories
EFSF soothes nerves
The €5bn long five-year deal for the European Financial Stability Facility was a trade that had to work. A failure, or even a lukewarm response, would have been a disaster. A book approaching €45bn sent a powerful message and helped to reaffirm faith in the eurozone’s ability to resolve its problems. Michael Winfield reports.
BES to sell €2.6bn loan portfolio
The sale by Portugal’s Banco Espirito Santo (BES) of a €2.6bn portfolio of project and corporate loans sent shockwaves around the loan market last week, as the bank tried to stem heavy lending losses arising from persistently high funding costs.
Price trumps distribution
Volkswagen last week managed to price another auto ABS transaction at remarkably tight levels. But only 25 investors came into the deal, as the number of buyers taking part in the primary market for European ABS continues to shrink. Quite simply, spreads on the Triple A tranche looked too aggressive for many real-money fund managers. Jean-Marc Poilpre reports.
Nielsen leads LBO IPOs
Nielsen Holdings has set the mould for private equity firms looking to exit portfolio holdings through initial public offerings. The most significant aspect is that the media tracker’s IPO did not represent a true exit, but merely a transfer of risk on to the public markets. A rational approach towards capital management and willingness of its financial backers to suspend profit-taking are key takeaways for other LBO-backed companies waiting in the wings. Robert Sherwood reports.
Russians in demand
VimpelCom and Novatek made full use last week of a favourable primary market backdrop to print five and 10-year benchmarks that will help fund their ambitious acquisition plans. Together with the previous week’s seven-year Single B TMK print, this year’s early deals underline the huge appetite across the credit curve for Russian corporates that have good stories to tell. John Weavers reports.
Garuda sets high benchmark
After a drama-filled journey, restructured state-owned airline Garuda last week priced its Rp4.7trn (US$520m) IPO bringing to an end years of negotiations. The public offering got over the line even after the Indonesian Ministry of Finance set the price range at Rp750–Rp1,100 per share – double the level that bookrunners had advised institutions would pay. The impact was a loss of major foreign participation, but for the government pricing was key.
Vol spurs CDS arb
Credit skew trades have had to evolve in line with changes in market dynamics brought about by the financial crisis as liquidity migrated from single-name credit default swaps towards credit indices. There are still lucrative opportunities for those brave enough to enter into such trades as the European sovereign debt crisis and ensuing volatility in credit indices helped to drive numerous dislocations over recent months. Christopher Whittall reports.
Mandiri priced three times on Ministry indecision
Bank Mandiri completed its Rp11.7trn (US$1.3bn) placement and rights issue with pricing at a tight discount, but the process to get there was painful for both bookrunners and investors thanks to the Indonesian government.
Comment: Keith Mullin
ICB report: don’t hold your breath
Scanning the 150-plus responses and 1,500 pages of comment received on the back of the UK’s Independent Commission on Banking’s call for evidence, you’ve got to almost feel sorry for the five commission members headed by Sir John Vickers.
Up Front
Wake up time
Banco Espirito Santo’s decision to sell a €2.6bn loan portfolio set off a small bomb under the staid world of European syndicated lending. Many took it as a sign that medium-sized banks might no longer be able to afford to own long-dated or higher-risk assets.
Who's CRO-ing now?
The transformation of chief risk officers from laughable nonentities of the pre-crisis era to the coolest kids in school reached its apotheosis this week with the stunning news that Hollywood has made a financial drama on the subject. Not only that, the film, called “Margin Call”, stars Demi Moore as a chief risk officer.
January sales
With capital markets shut for many financial institutions on the eurozone’s periphery, banks are turning to asset sales as a last resort to pay higher capital bills. Banco Espirito Santo was the first to sell a portfolio of loans last week, with bankers now in conversation with dozens of its peers considering similar action, as Gareth Gore reports.
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