It has been the most difficult 12 months in living memory for financial markets. Compared to the period following the collapse of Lehman Brothers last September, the previous chapter of the crisis – the credit crunch that began in the summer of 2007 – seemed positively mild. The period covered in this report was one of frequent illiquidity and ongoing concern about who would follow Lehman into financial oblivion. But against this backdrop the world kept turning, and companies, countries, financials and individuals competed to secure every...Read more
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The provision of state guarantees for debt obligations issued by financial institutions has been an important step in addressing bank instability and restoring market confidence in the wake of the global financial crisis. But aside the political cost of assuming such high levels of debt, governments must find a way of disengaging with the market so that banks can go back to functioning without their support. Hardeep Dhillon reports.
Moody's has forecasted 300 speculative-grade borrowers will default this year. Given the well-established fact that recession leads to lower recoveries, investors could get a double hit: more defaults and higher losses in each case. Recovery rates could prove to be just as important as defaults in determining the fate of creditors in the loan and bond markets alike. Duncan Wood reports.
Massive increases in government debt have turned the dynamics of the currency market on its head. Central banks have amassed vast holdings of US dollars, a traditional safe haven, but now worry that they will see their value dwindle as the US government pursues its policy of quantitative easing. What happens if central banks try to sell their dollars? And if they did, where would they go? Solomon Teague reports.
Question: Is distressed debt in Asia an opportunity now, an opportunity to come or an opportunity missed? Answer: It’s all of them, depending on what part of the market you’re looking at. While restructuring specialists are only now beginning to see work coming through, those looking for the bottom of the market for distressed credit have probably already missed it. Chris Wright reports.
Since going into conservatorship last year, Fannie Mae and Freddie Mac have had to change their borrowing strategies. Forced by circumstance to borrow hundreds of billions from the US Treasury, the two government-sponsored agencies have only recently made significant headway again in the private funding markets. Timothy Sifert reports.
The Hellenic Republic has continued to pursue a policy aimed at front loading its issuance requirements during the first six months of this year. Although at one point this looked like a tall order, it is back on course having completed over 90% of its stated funding requirement, including the two largest sovereign taps of the year. Mike Winfield reports.
Porsche's refinancing of its 2007 €10bn liquidity line earlier this year was decried by many as a textbook example on how not to do it. The Germany luxury car maker had expected to dictate terms in a lenders market, thus missing its original target of €12.5bn and making the redemption after significant last-minute concessions. David Cox reports.
Tata Group is truly the torchbearer of India Inc’s expansion drive overseas. And no other company in the group epitomises that better than Tata Motors. The Indian automaker has emerged unscathed from the global financial crisis thanks to a year-long refinancing exercise that straddled multiple asset classes and could very well pave the way for other Indian companies. Prakash Chakravarti reports.
For Morgan Stanley, the past year has been truly transformational. Amid a credit crisis that would subsume rivals, the bank weathered a loss of investor confidence that jeopardised its own survival. Throughout it sourced liquidity wherever possible – government investment, strategic equity, joint ventures – and sought to limit risks by reducing leverage and reigning in risks. Stephen Lacey reports.
In January 2009, amid the most severe credit crisis in history, Pfizer tapped the market for US$22.5bn of interim bank financing to back its acquisition of Wyeth. Only five months later it had offloaded the hefty sum in the bond market. The swiftness of the transaction testified to the financial discipline, ironclad lending relationships, vision and timing of the group. Michelle Sierra Laffitte reports.
Roche Holdings blew the corporate market out of the water in 2009 with the largest bond issues ever in dollars, euros and Swiss francs, in spite of unprecedented European issuance volumes. In the process the company broke ranks with tradition by going straight to the bond market to pre-fund a hostile acquisition, bypassing bank lenders. Andrew Perrin and Timothy Sifert report.
Societe de Financement de l'Economie Francaise has been propelled to the upper echelons of the SSA borrower league table since its inception late last year, due to its ongoing capital market presence. This shows no sign of fading. Put simply, its role is to support the French banking industry through the disbursement of the money it raises to those banks which require assistance from the state. Mike Winfield reports.
It was a tough year for Sony, with yen currency movements exacerbating the affects of a global recession that left the consumer electronics firm particularly exposed. As some bankers pondered the chances of the collapse of this world famous brand, others argued the government would never allow the failure of a name synonymous with Japanese industry. The latter argument seems to have been the more convincing. Atanas Dinov reports.
The European convertible bond market came to a gradual halt in 2008. By March 2009 it had been six months since any deal, and even longer since the last fully marketed offer, yet ArcelorMittal dipped its toe in the market with a US$1bn CB issue. Within a month the total proceeds from convertible issuance was US$2.5bn. Owen Wild reports.
General Electric had been a constant feature of the Triple A landscape for many years. Its recent downgrade to Double A might have spelt disaster for the company, but it does not appear to have caused the forced selling and downward spiral that sometimes follows such action. Instead investors have welcomed the clarification and breathed a collective sigh of relief that things were not worse. Timothy Sifert reports.
Instituto de Oficial Credito is one of Europe's largest agency debt issuers with an established profile and widespread investor recognition. The borrower responded rapidly to the downgrade of its guarantor, Spain, earlier this year, and has remained open for business. With annual financing needs of €20bn, it is responsive to the changing tides of investor interest and emergence of the sovereign guaranteed bank sector. Mike Winfield reports.
A skillful and opportunistic borrower, Turkey has always been clever at identifying when best to come to market to achieve its financing requirements. As investors look to cut back their emerging market exposures to minimal levels, the sovereign has distinguished itself by exploiting opportunities as and when they arise, often surprising the markets with its boldness. Savita Iyer-Ahrestani reports.
Mexico's state-owned oil company Pemex has been busy tapping markets near and far as it looks to counteract declining production levels, while also dealing with the global credit crunch. The borrower has adapted well to new realities, despite having to relinquish past pricing standards in the process, and has turned to new markets to fill its financing vacuum - with great results. Paul Kilby reports.
Caisse d'Amortissement de la Dette Sociale, the Triple A rated French social security agency, confirmed that it is aiming to raise €33bn of financing in 2009 following the assumption of an additional €27bn of debt from central government this year. Despite increases to its funding programme, Cades has responded in a pragmatic way to this news as it set about its increased funding. Mike Winfield reports.