Brace yourselves, this might come as a shock to IFR readers: not all bankers are brave, courageous and bold, striding onwards and upwards with rhino-like hides, impervious to the whims of the media. Some, in fact, are ego-ridden, paranoid, fragile flowers who constantly worry they are being slighted by agenda-driven hacks obsessed with doing them down. A case in point: when I was a comms person at Deutsche Bank, the head of equities called me to a meeting ostensibly to talk about media strategy. What I got instead was a diatribe about Merrill Lynch’s equities team getting great media coverage while poor old Deutsche kept getting a kicking. And what was I doing about it? A few months later, I had moved to Merrill Lynch. The head of international banking called me to his office. Why, he asked curtly, do journalists write glowing reports about Deutsche’s equities business and the opposite about Merrill’s? And what was I doing about it? Honestly, I haven’t made that up. Indifferent Some bankers genuinely think the media has got it in for them. Crazy, I know. The truth is, journalists are indifferent to banks and bankers, which is how it should be. They will write about both with great verve and purpose but have neither time nor inclination to foment an evil plot to discredit an individual banker or to favour one bank over another. But bankers can be very sensitive indeed. So sensitive, in fact, that at the first sign of a non-fawning journalist on the horizon, they are on the phone berating their PR person. If a story is involved, and the banker’s positioning is not to their liking, they will blame PRs for poor prep, or poor stewardship of an article, for not evaluating quotes more thoroughly, for not exploring the context, or for not knowing who else is being quoted – and even in what order those quoted will appear. In short, for not giving them star billing in an article that reads like the banker had written it. Out of the window goes the confident swagger with which bankers boast among themselves about their media savvy and supposed cosy relationships with senior writers and editors. In its place is insecurity. How will their role in this story look in front of colleagues, competitors, regulators and family? What is their reputational damage? So we PRs mollycoddle. We whisper soothing words. We tell them how great they are and how evil is the media. We point to the positives in an article that inevitably get overlooked by the thin-skinned banker who focuses laser-like on a sentence at the bottom of the article which, they cry, could have been crafted in a more positive style. And despite advising the banker to let the fuss blow over (so to speak), we often find ourselves promising to call the journalist and ask if they can change anything in the online version of the story, knowing a) we probably won’t because it is embarrassing to do so, and b) the journo will probably tell us where to go even if we did. We say things like “they need us more than we need them”, even when it is not always true. We commit to identifying other journalists, so-called friendlies, who might, with a fair wind and a very nice lunch, pen a lovely account of the banker’s team or business. Bluster It is important for PRs to remember that for all their bluster, bankers have feelings too. For those who don’t worry about their image too much and see media interaction as part of the job, do it efficiently and build good relationships, we adopt a similarly pragmatic approach. It is a pleasure to work with such colleagues and the journalists appreciate it too. As a result, these bankers are rarely stung by the media – and take any less-than-ideal coverage on the chin. For those who are super touchy and try hard to groom their image, we put on kid gloves. We select them for media engagements where we figure the likelihood of nasty fallout is minimal. We chaperone tightly and follow up clos

Investors last week shrugged off concerns about loose covenants and their dislike for sponsor payouts when they piled into a US$5bn secured debt offering from vehicle battery supplier Clarios that marked one of leveraged finance’s biggest dividend recaps in recent years. The borrower, backed by private equity firm Brookfield, sold US$700m of five-year bonds and two seven-year term loan Bs that totalled US$4.3bn in US dollars and euros as it sought to pay US$4.5bn to its shareholders. Citigroup and JP Morgan were respective lead-lefts on the bond and loans. Pricing on the US dollar loan and bond came inside the 7.3% average auto sector yield on the ICE BofA index after some 25bp tightening. Orders on the bond alone swelled to around US$6bn despite Moody’s having downgraded Clarios to B2 from B1 on expectations that its debt-to-Ebitda ratio would jump to six times from 4.5. And while investors have good reason to like the credit, the positive reception for Clarios’ mega dividend recap also underscores the pent-up appetite among buyside accounts starved of new money options in a market dominated by refinancings and repricings. “There was big demand for it, which is surprising given the use of proceeds,” said one investor. “It speaks to the lack of significant supply at the moment.” Private equity firms that remain under pressure to monetise investments are likely to pay attention to the success of Clarios, which Brookfield and Canada’s CDPQ bought in 2019 with US$3bn in equity and another US$10.2bn of debt financing. “They are taking out all that equity and then some,” said Mike Schueller, a senior portfolio manager at Allspring Global Investments. Going big The size of last week’s sponsor payout puts Clarios alongside some of the largest deals of this type in recent years, including Swedish security company Verisure, which in January 2021 landed a dividend recap package worth €4.4bn (about US$4.5bn at the current exchange rate). More recently, UK-headquartered vehicle glass repair and replacement company Belron hit the euro and US dollar debt markets in October to fund a €4.3bn payout to its owners. More dividend recaps are likely this year. Some investors suggest stubbornly high interest rates and an uncertain economic backdrop may mean private equity firms will continue to struggle with exits through more traditional means. Clarios abandoned an IPO before deciding on last week’s debt deal. “I do think we will see more dividend deals versus outright sales of companies to at least give some capital back to sponsors,” said John Sherman, a portfolio manager at asset management firm Polen Capital. Indeed, last week also saw cybersecurity provider Proofpoint bring an upsized US$1.35bn term loan to pay its owner Thoma Bravo. The market backdrop certainly favours borrowers. High-yield bond and loan investors still need to put inflows to work in fresh assets. And, if the Clarios deal is any indication, they will turn a blind eye to sponsor-friendly language in debt packages. Analysts at Covenant Review described the covenants on the Clarios bond as “extremely aggressive” and “among the worst we have ever seen". Schueller said: “We may be just starting to get to that part of the cycle where investors will start viewing that as tomorrow’s problem and for the time being there is cash to invest." Reasons to buy Even so, Clarios did pass certain sniff tests that the buyside typically applies in such cases. Not only did it deleverage in the run-up to the dividend recap – cutting about US$2.1bn of debt between 2020 and 2024, according to Fitch – but it also enjoys strong cashflow generation. “The business can withstand that debt load, and I think the free cashflow will still be meaningful [even] with the burden from the dividend,” said a buyside analyst looking at the bond. The analyst sees the c

UK equity capital markets have hit the ground running in 2025, with £3.72bn of stock sold across two accelerated bookbuilds last week. On Monday, JP Morgan was sole bookrunner on a rare sale in British American Tobacco that raised £1.22bn for exiting Luxembourg-listed investment firm Reinet. The previous liquidity event in BAT was a £197m institutional trade in 2023. The following night, JP Morgan and Morgan Stanley led a 10-bank syndicate for Pfizer's £2.5bn sale in UK consumer healthcare firm Haleon. UK block trades of at least US$1bn total just under US$27bn since the start of 2022, representing around 40% of European activity by proceeds and number of deals. Approximately 85% came from sales in Haleon by GSK and Pfizer, and in IFR's parent LSEG by a Blackstone-led consortium following the sale of Refinitiv. By comparison, the next most active countries are Germany and Denmark for US$1bn-plus blocks, which both tally US$7.8bn across four and three deals, respectively: Deutsche Post, Deutsche Telekom, Mercedes-Benz and Siemens Energy in Germany; and DSV, Coloplast and Zealand Pharma in Denmark. There has been little trouble in digesting such a regular run of jumbo UK blocks – nor for a £7bn rights issue by National Grid in June. Last week’s Haleon trade was high single-digit times subscribed despite being the seventh jumbo sale in the name since May 2023. A £2.24bn LSEG sale in September 2023 was the third of that year and still drew more than £12bn of demand. But that does not necessarily translate into particular demand for UK stocks, said Tom Swerling, global head of ECM at Barclays. “There are idiosyncratic reasons for the sales we’ve seen in the UK this week, rather than there being a particular story around UK names,” he said. “It is true that there has been real depth of demand for large liquid names in the UK, and you have seen that with LSEG, Haleon, BAT and with National Grid last year, but I think that’s a global phenomenon rather than UK-specific.” Swerling said what investors want to buy “in real size is big, liquid names that the market has had time to anticipate, understand and digest without surprises, such as we have also seen in recent years in continental Europe with trades in Heineken, DSV and others.” He said that the UK and continental Europe are broadly in the same place in the long-term investment cycle and it will “continue to be somewhat harder for mid and smaller-cap companies to find the critical mass of risk capital to make smaller deals work. More scaled assets will be the theme at this point of the cycle”. Large corporates will continue to rationalise their balance sheets and monetise non-core assets, which has had a UK slant in ECM terms, but should be more diverse this year. Jumbo accelerated activity will also result from M&A financing – such as DSV's DKr37.3bn (US$5.5bn) ABB in October – and government sales. Not broken The UK was comfortably the most active country in EMEA ECM in 2024 with US$33.46bn raised from 257 deals, with Germany second on volume at US$11.12bn and Sweden on issuance with 105 transactions. Globally only the US, India, China and Japan had larger proceeds – Australia had more deals at 1,022 – yet the persistent perception is that the UK market is particularly weak, partly as it is often compared to Europe as a whole rather than other individual nations. “If you only look at IPOs then yes, on volumes, the UK has lagged, but across other venues in Europe they only have one or two large IPOs of note, such as a Galderma in Switzerland, Puig in Spain or CVC in Amsterdam,” said a UK ECM banker. “Unfortunately, London has not had that one big IPO of note and that is probably unlikely to change this year, although there is expected to be some UK IPO activity. But if you look across primary and secondary raises where ther

The Asia-Pacific equity-linked market got off to a strong start in the past two weeks with four deals raising a combined US$1.3bn, including Thailand’s largest equity-linked transaction. Delta International Holding, which is owned by Taiwan-listed Delta Electronics, on Monday raised US$525m from an upsized exchangeable bond, with shares of Thailand-listed Delta Electronics (Thailand) as the underlying. Since the beginning of the year, Chinese budget store chain Miniso Group Holding has raised US$550m from the sale of cash-settled equity-linked securities, Taiwanese semiconductor maker Nuvoton Technology has sold a US$150m convertible bond and Hong Kong’s CTF Services, part of the conglomerate owned by billionaire Henry Cheng and his family, has completed a HK$780m (US$100m) CB. Bankers believe the Asia-Pacific equity-linked market will continue to be busy after a bumper year in 2024 as issuers seek cheap funding, and there will be more geographic diversity in terms of issuers. International equity-linked issuance from APAC ex-Japan reached US$29.1bn in 2024, according to LSEG data. “The outlook for the equity-linked market is expected to be strong this year. This will be driven by a rate cut path that is expected to be slower, with issuers who traditionally tap the straight debt market turning to CBs as a cheaper cost of financing. Many investment-grade issuers did their first CB offering last year and we expect this to continue,” said Cathy Zhang, head of Asia-Pacific ECM at Morgan Stanley. “In addition, there is a continued need to refinance upcoming maturities, while investors remain keen to deploy capital in the product and are increasingly less sensitive on price for the right issuer,” she said. Chinese companies are expected to provide the bulk of the supply, while Taiwanese technology companies will continue to raise funds through CBs on the back of booming demand for artificial intelligence technology. South Korean issuers could potentially return to the market when the country’s short-selling ban ends in March. Rare Thai deal The five-year put three EB of Delta Electronics (Thailand), the first from the country since Charoen Pokphand Foods’ US$275m EB in 2020, was launched with a base size of US$425m. There was a same-day upsize option of US$100m that was fully exercised. The deal, which was sold to a small group of investors, offered equity-linked investors a rare opportunity to buy into a South-East Asian company, diversifying from the usual Chinese and Taiwanese names. The zero-coupon EB was priced at a yield to maturity of 2.05%, the top of the marketed range of 1.55%–2.05%, and an exchange premium of 40% from the 35%–45% range. The deal raised cheap US dollar funding for the Taiwanese parent, while at the same time helping Delta Electronics (Thailand) increase the liquidity of its shares. The Stock Exchange of Thailand imposed a trading curb on Delta Electronics (Thailand), the largest company there in terms of market capitalisation, from November to December last year as the bourse operator was concerned Delta's price had risen continuously and substantially above fundamental valuations and the company had a small free-float. Shares in Delta Electronics (Thailand) were up 88% in the past nine months. According to LSEG data, around 36% of the company’s shares are traded publicly. In order to help investors establish hedging positions in relation to the EB, an around US$250m stock borrow facility was offered by the issuer and sole bookrunner HSBC. This arrangement helped create liquidity for the stock. No guarantee The deal was also launched before Delta Electronics (Thailand) entered a blackout period on Tuesday. To catch the issuance window, the deal was structured to avoid the need to go through a lengthy approval process with Taiwanese regulators. The Taiwanese parent did not provide a guarantee or any credit support to the deal and hence no reg

The International Finance Corp has accelerated its groundbreaking use of credit insurance to expand lending in emerging markets with a new US$3bn facility, the World Bank group private sector financier’s first to cover the risk on portfolios of corporate loans. The “Managed Co-Lending Portfolio Programme Real Sector” facility involves 14 insurers: Allianz Trade, Aspen, AXA XL, Axis Capital, Chubb, Everest, The Hartford, HDI Global, Liberty Specialty Markets, Munich Re, Scor, Sompo, Swiss Re and Tokio Marine. That compares with just two in the supranational’s inaugural US$1bn credit insurance programme in 2017. Known as “FIG I”, that inaugural deal with Liberty Mutual and Munich Re covered a portfolio of IFC loans to emerging market financial institutions for lending to end-borrowers. Subsequent deals of US$2bn involved six insurers in 2020 (“FIG II”) and a record US$3.5bn had 13 providers in 2023 (“FIG III”). The IFC's overall "managed co-lending" effort includes this FIG trio, the new real economy facility and a US$10bn-plus second, funded stream involving institutional B loan co-investors such as Allianz, AXA and Eastspring Investments and co-lending trust funds for public sector investors like China’s State Administration of Foreign Exchange and the Hong Kong Monetary Authority. The supranational has mobilised some US$19bn of risk and lending capacity through its various MCPP initiatives. Direct exposure The real economy facility takes the IFC’s growing insurer group – which added Chubb to the 13 FIG III participants and also included all providers that committed to FIG I and II – into new territory. Unlike the FIG programmes, it gives direct exposure to an array of economic sectors. The IFC cites agribusiness and forestry, construction, education, energy, health, life sciences, manufacturing, media and technology, metals and mining, real estate, retail, telecoms, tourism, transport and water and waste management. “You have such a diversity of assets coming in, not only geographically, but structurally,” said Vera Sevrouk, senior syndications officer at the IFC. The IFC’s loans to the sectors covered differ significantly in maturity and size. It appears likely that the facility’s US$3bn capacity will eventually cover hundreds of loans. Moreover, all the IFC’s countries of operation are eligible – including the poorest that qualify for grants and concessional loans from its sister, the International Development Association. Transactions in the IDA countries use credit enhancement via securities or guarantees to get them up to the programme’s Single B rating floor. “It's almost like we are pre-mobilising,” said Kruskaia Sierra-Escalante, senior manager, co-investor solutions at the IFC. “This is a policy that will allow us to effectively provide lending to future projects. We agree upfront with the insurers on eligibility criteria [and] it allows us to do it in a programmatic level for our clients.” Equally, although the IFC has obtained cover on individual real economy corporate loans in the past via some 50 private transactions, “from the insurers’ perspective, they don't need to be going project by project”. Immersive experience Participants in the new facility spent three days at the IFC’s headquarters in Washington to gain insights into its origination and due diligence. This immersive experience, which Sevrouk characterised as “an extremely deep process of understanding each other's risk profiles and investment goals”, included discussions with sector leads, credit officers and industry specialists. Insurers “are putting trust in our ability to identify transactions, do our due diligence. They basically are looking at the risk one, two years ahead of time”, Sevrouk said. “We need to continue to originate good assets so