North America High-Yield Bond: Gap’s US$2.25bn senior secured bond

Ford Motor’s largest ever bond was brought to market in April as the beleaguered US automaker struggled to cope with the fallout of the coronavirus pandemic and desperately needed to shore up liquidity. With the company warning of an expected US$2bn loss in the first quarter, and having been reduced to junk status by two ratings agencies, the US$8bn deal showed investors were willing to show faith in companies that were severely impacted by the Covid-19 crisis. “Until that transaction was complete, people were wondering if Ford had access to...

Automakers were hit hard during the pandemic as production issues mounted and sales declined, but perhaps no automaker was hit harder than Nissan Motor. The Japanese automaker ended the calendar year with US unit sales down 33% – more than double the decline seen at US competitors General Motors and Ford Motor. And while Ford contended with a one-notch downgrade to high-yield, Nissan’s fall was steeper. It was downgraded twice by S&P and Moody’s in quick succession, moving from a low Single A credit to the verge of high-yield with Baa3/BBB–...

Germany’s €6.5bn 10-year inaugural green bond was a milestone in sustainable finance as its innovative twin-bond structure finally made it possible to measure the elusive green premium or­ “greenium” in a benchmark deal that also created a liquid green curve as a reference rate for European markets. The ability to clearly show the price advantage of issuing green debt has forever changed the dialogue with investors, and creating a liquid curve will have long-lasting implications for markets and central banks as the greening of the financial...

Mizuho Securities focused its efforts in 2020 on supporting the yen bond market through a challenging time. It helped global issuers minimise risks in a volatile period and helped Japanese borrowers access essential funds in response to the coronavirus crisis. The international yen bond market made a quiet start to the year 2020 because the pricing levels the market was able to offer to foreign issuers were already less favourable than in the US dollar and euro markets. The onset of the Covid-19 pandemic only worsened those dynamics, as central...

Inflation is hard to come by in slow-growth Japan, despite the central bank’s best efforts, but one issuer still managed to almost double the previous record with the biggest yen bond in history. Nippon Telegraph and Telephone's ¥1trn (US$9.6bn) four-tranche offering smashed a record that had stood for almost 10 years. It showcased the depth of liquidity available to top issuers in Japan, as well as the yen market’s ability to support major acquisition financings. But it was the extent of demand that left market participants stunned. The book...

In terms of magnitude, the sterling bond market might not rival its US dollar or euro peers. That does not come without compensation, however, with its smaller scale offering opportunity for diverse themes that can become muddled and opaque in the hectic activity elsewhere. This is not lost on James Mariott, head of FI and SSA DCM advisory at NatWest Markets. “I think the most noteworthy development of the year was the level of leadership we were able to show across all key aspects,” he said. “What differentiates us is our attention to detail...

It takes some courage to issue your first Restricted Tier 1 transaction three months into a national lockdown when there hasn’t been one at all for two months before restrictions began. But that is exactly what Legal & General Group did in June. And it was well rewarded for its efforts, managing to raise the maximum amount targeted considerably inside guidance despite there being no new issue concession – and still attracting an order book that was seven times covered. There was some background to the story, as the sterling market had played...

Credit Suisse closed coverage gaps in 2020, further developed its green and ABS businesses and captured a high share of primary issuance in the Swiss franc market. From March, the Covid-19 pandemic caused a fall in economic activity of unprecedented magnitude. But it also created opportunities that Credit Suisse was able to seize, bearing testimony to the breadth, strength, quality and innovation of its Swiss franc franchise. Despite ultra-volatile rates, Credit Suisse retained its number one position overall and, in some segments, increased...

In March, Ford Motor Credit suffered the indignity of becoming a fallen angel but in the primary debt markets its appeal to investors remains undiminished. So much so that in November the auto company’s financing arm decided to return to the Swiss franc bond market after an absence of almost 20 years. It was the first sub-investment-grade international corporate issue in the currency for five years, and the first US corporate issuer in more than three years. Much has changed since Ford was last in the Swiss market in 2001 when it was rated A2/A...

xxxx The bank is one of the few that can call itself truly global and that is reflected in its leadership in local and niche markets. “These markets have become more important for our clients,” said Ali Hussain, HSBC’s global head of MTNs and structured notes. That’s reflected in the burgeoning Formosa market, where HSBC is one of the few banks that can underwrite and do the billing and delivery for 144A bonds. Among its highlights in the Formosa market were the debut deals it brought for Sabic and Sharjah. Sabic’s US$500m 30-year note was...

The Australian dollar market was more miss than hit for much of the year for international issuers with pricing often not attractive enough. But that still didn’t prevent the biggest ever deal in the Kangaroo market by a sovereign, supranational or agency borrower when in November the World Bank broke its own record with a A$1.65bn (US$1.2bn) dual-tranche offering, comprising A$1.1bn 5.5-year and A$550m 10-year notes. The World Bank is no stranger to big deals but the size was even more impressive given the context of a year of limited supply...