The route to rehabilitation

The rankings reflect the activity of borrowers at the parent level. In some cases, where the overwhelming majority of the borrowing was conducted by an entity that was not the parent, the name of the relevant subsidiary has been used. Borrowing by private equity companies has not been rolled up to the parent level, but where possible, has been attributed to the portfolio company. For structured finance deals using separate special purpose vehicles, credit is attributed to the relevant parent group of the originator of the underlying assets. An...

It has been a struggle for the European economy in the last few years. It has had to contend with the fallout from the global financial crisis, frailty in its internal banking sector and fears of sovereign defaults within the member states. Europe has been languishing in a prolonged low-growth, low-inflation cycle. In its attempts to reflate the economy, the ECB entered into the realms of extreme monetary policy by imposing negative interest rates (dropping the deposit rate to -40bp) and pursuing quantitative easing through its Asset Purchase...

In a turbulent and oftentimes chaotic world, there is something comforting about the market for US dollar-denominated debt. It is an asset class that, like denim, never seems to go out of fashion. Nor is it likely to, at least for the foreseeable future. Each year, wise heads knock together and fret mildly about the asset class’s future. And every time those concerns prove unfounded. Rates do not rise - and issuance surges. Rates do rise - and sales swell again. Emerging-market gloom, domestic political uncertainty, an ongoing crackdown on...

In November 2015, the Financial Stability Board published its final Total Loss-Absorbing Capacity standard for globally systemically important banks. In the EU, the Bank Recovery & Resolution Directive set a minimum requirement for own funds and eligible liabilities for all banks and many other financial institutions. The principle underpinning TLAC and MREL was that lenders, even senior lenders, must take losses in cases of extreme stress. Only by ensuring the state does not need to step in can the financial system become safer. But the...

When Argentina rushed to sell US$7bn of bonds in the days before Donald Trump’s inauguration, it underscored concerns among Latin American borrowers that access to hard currency debt markets was likely to be severely curtailed as the incoming US administration took office and the risk of heightened volatility choked off investor demand for emerging market assets. So far, such concerns are looking overblown. Latin American borrowers had sold US$61bn of foreign currency-denominated bonds year-to-date the end of May, roughly in line with what they...

Russian borrowers have staged a massive comeback in the international bond market with a string of tightly priced transactions, but a heavy reliance on local buyers and continued sanctions for some of the biggest issuers mean that the highly technical market is not quite back at full force yet. Credit Bank of Moscow, Metalloinvest, Rusal, PhosAgro and KOKS printed US$2.7bn of bonds in late April and early May 2017, in the clearest showing yet that the deal drought that followed the US and European Union’s 2014 sanctions over Russia’s...

Taiwan has long perplexed as a geopolitical entity. Regarded as a renegade province by China, 110 miles to its north-west, and ripe for repatriation to the mainland in the latter’s view, the country is a potential tinderbox. Under the leadership of Tsai Ing-wen, elected in early 2016, the situation is less than stable, but the country is spreading its wings in the international debt capital markets thanks to rampant onshore liquidity. This has been spurred in 2017 by the appreciation of the New Taiwan dollar, which has jumped by almost 7% since...

Chinese state-owned enterprises and private companies had raised an equivalent of US$87bn by mid-May 2017 - roughly three times more than they had borrowed at the same point in the calendar a year earlier, according to Dealogic. At the same time, onshore borrowing slid to US$167bn - a fall of around 50%. Bankers say part of the reason for that shift is because Beijing had tightened capital controls and restricted junk-rated property developers from issuing bonds onshore, prompting many to turn to the offshore market instead. Offshore high-yield...

Amid a wave of populist political movements in the West that sent jitters through capital markets, British American Tobacco picked the perfect moment of calm to announce a US$49bn debt-backed acquisition of the 57.8% stake of Reynolds American it did not already own. BAT, rated Baa2/BBB+, raised US$25bn of loans in January to fund the purchase from a relatively small syndicate of banks considering the huge amount, in a deal where even the slightest error in calculations had the potential to scupper the process. “A deal of this size – every...

German life sciences company Bayer has been one of the most creative European bond issuers during the past few years and issued Europe’s biggest ever mandatory convertible bond for €4bn in November 2016. Bayer clinched a US$66bn all-cash takeover of US seeds company Monsanto in September of that year. The merger aims to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers, with the deal now awaiting approved from anti-trust authorities in the United States, Europe and South Africa. The company expects it to be...

It has been a tough year for Deutsche Bank. On the one hand, it posted a loss of €1.4bn for 2016, thanks to restructuring and the need to put together a significant legal provision war chest to fight numerous US Department of Justice inquiries. But perhaps the blow that hurt the most was the one-notch rating downgrade by Moody’s to Baa2 That resulted in a savage 80% cut to the bank’s bonus pool, headcount reduction and changes at the top, with two new deputy CEOs named: former CFO Marcus Schenck and Christian Sewing, who looks after wealth...