IFR Top 250 2007: On the racetrack

And so it continues. In spite of a few temporary setbacks, the credit markets have remained robust for yet another year, with cash-rich investors providing a solid foundation on which borrowers can build. Although issuers have been more than happy to indulge this demand, supply has still been eagerly snapped up as buyers look to put all that money to work. The background to this continuingly positive overall environment in global credit markets is created by the potent mix of ongoing mega-deal speculation, increasing institutional liquidity and...

Last year’s worldwide M&A volumes looked hard to beat at the end of 2006, but at the half-way stage, 2007 looks as if it could be well on its way to doing so. The figures speak for themselves: worldwide M&A volumes totalled US$2.33trn (€1.75trn) for the year to June 12, an increase of 61% on this time last year. Within that total, Europe has seen an 83% increase in deal volumes, amassing a staggering US$961.8bn (€722.7bn) of deals and outpacing the US, which has seen a 52% increase in volume, with deals valued at US$917bn (€689bn). These...

Call it being blase; call it being used to high volumes of business, but market observers have been saying for much of the year that it feels quiet. The truth is that it is not. Overall supply is not in the least out of step with the recent past, and the amount issued actually represents an incremental increase over the last couple of years. According to Thomson Financial data, the amount of international bond paper issued across all unsecured asset classes in the first five months of 2007 was US$1.907trn equivalent, up from US$1.546trn in...

As liquidity continues to slosh around the debt markets in search of a home, financial sponsors have taken the opportunity to push for terms as favourable as possible on three key borrower issues: lower pricing, freer cash flows and ever more flexible borrower terms. Behind this drive is an imbalance in the relative strength of borrowers and lenders, with relatively few new money deals being chased by a significant oversupply of liquidity. Changes are also taking place in a context of exceptionally low default rates, where risk has been...

Borrowing conditions in the high-grade European and the Middle Eastern loan markets remain exceptionally benign. The global glut of liquidity means borrowers continue to enjoy highly competitive pricing with favourable documentation. While the continuation of the global merger boom means borrowers are taking full advantage, with both large and medium cap firms funding their expansion plans through the loan market. The level of liquidity now available in the euro-loan market means facilities in the tens of billions of dollars are no longer...

The US sub-prime housing meltdown has caused uproar in the securitisation and equity markets over the past year, as sub-prime lenders have succumbed to margin calls and lines of credit have evaporated. Unsurprisingly, sub-prime securitised issuance has fallen, and new deals are increasingly looking to monoline wraps to provide investors with protection. But what a difference a year makes, as 2006 and 2007 prove to be near polar opposites in terms of the state of the US home equity ABS market. In 2006, spreads on new issue ABS were tight and...

EM managed to avoid what has become a "traditional" spring sell-off. Local markets comfortably outperformed external debt in the first months of 2007 with domestic bonds posting a 9.1% year-to-date gain in the first half of 2007 versus 2.9% for EM Eurobonds, before an early June correction triggered a bout of profit taking. And even the early June sell-off was a comparatively painless affair as investors took a more mature approach toward local markets, instead of rushing for the exits all at once. "The difference this year is conviction," said...

With a wholesale funding ratio of 45% of its overall balance sheet, and sizeable annual balance sheet growth in the order of 20% or more over the last three or four years, "recourse to the wholesale capital markets is an integral part of Bank of Ireland's core strategy," according to Paul Flynn, director of the bank's wholesale liability group. There are three core pillars driving Bank of Ireland's funding needs: the domestic retail business in Ireland, where it has a commanding market share; growth of its loan books in the UK through its...

When it comes to its sovereign debt, Brazil has ambitious goals. The sovereign is adopting a twin approach to taking out and converting US$52.2bn worth of dollar and euro-denominated paper into local currency and a few hard currency benchmarks. On the way, investors can expect a number of strategic moves from the BB+ sovereign. These include the creation of a new 10-year euro benchmark, a new 20-year dollar-denominated benchmark, a new 30-year Reais-denominated benchmark, more unpopular buybacks and greater distribution to Asian investors....

Fabio Barbosa, chief financial officer of Brazilian iron-ore miner Companhia Vale do Rio Doce, plays down his firm's reputation as an aggressive user of the debt markets – although he acknowledges the reputation is not entirely unwarranted. Instead of asking lenders what they can offer, CVRD typically submits its terms and waits to see who will bite. But in spite of its assertiveness, CVRD never fails to attract a long line of suitors to its deals. Proof of that was the gargantuan loan it sought last year when it bought Canadian nickel miner...

Enel, working with Acciona, a Spanish infrastructure and renewable energy group, snatched Endesa from under the nose of E.ON, the German power company that had been struggling for 18 months to overcome Spanish resistance to its bid. E.ON opened its attempt to take over Endesa with an offer of €27bn, before that figure grew to €42.32bn over the course of more than a year. However, it finally settled for a stake worth €10bn in the Spanish utility, taking assets split between Spain, Italy and France. What made E.ON, which had considered legal...