Shaky secondary fails to derail euro market

The Faustian bargain that lenders entered into with sponsors and borrowers, maximising returns at the expense of covenant erosion (and therefore control), has been made clear by the collapse of Australia-based cancer care provider Genesis Care. Creditors behind Genesis Care's US$1.5bn multi-currency term loan B knew trouble was brewing at the KKR-backed business last year, and prepared for the worst by appointing advisers Akin Gump and Houlihan Lokey. But because it was a cov-lite loan, that was as far as creditors’ power stretched. The company...

News that the European Union would only fund €40bn in long-term bonds in the second half of 2023, half what it raised in the first six months, proved a boon for the supranational's spreads, which tightened versus European government bonds. However, bankers have questioned how long that reduced spread will last for a supranational that still has significant long-term net funding needs, as well as fundamental differences from sovereign issuers. The spread between the supranational's February 2033s and the 10-year Bund was down by around 4bp...

Europe's first nuclear green bond issue is in prospect after Teollisuuden Voima launched a framework for the product. The utility, a nuclear pure play, operates the most modern nuclear plant in Europe and is central to Finland's net-zero strategy. Lauri Piekarri, senior vice-president for treasury at TVO, welcomed “the possibility to integrate sustainability to our future financing activities”. The framework, which ISS ESG affirmed as aligning with the Green Bond Principles, follows the European Union’s decision to include nuclear in its...

Energy and telecoms cable maker Prysmian has signed a €1bn sustainability-linked revolving credit facility. The five-year financing, which is for general corporate and working capital, replaces the company’s existing undrawn €1bn RCF from April 2019 which was due to mature in 2024. Financing costs are linked to ESG key performance indicators. Banco BPM, BNP Paribas, Citigroup, Credit Agricole CIB, ING, Intesa Sanpaolo and Mediobanca were bookrunners and mandated lead arrangers. Banco Santander, CaixaBank, Commerzbank were MLAs, while BBVA, HSBC...

Fixed income investors are playing an active role in the energy transition and are increasingly using physical climate risk assessments, although progress on their net-zero targets is being hampered by a lack of disclosure and data by corporate issuers, according to a survey by NatWest. As a result, the market is reaching a “friction point” where investors have to meet interim decarbonisation targets while some borrowers have not set or aligned their climate goals with global standards, the UK bank said. NatWest surveyed 225 asset managers...

AST SpaceMobile raised US$59.4m on Tuesday from a surprise primary issue, a painful move for shareholders but one that could avert a negative audit report and give the company more breathing space while it continues to burn cash. Barclays sold 12.5m shares, or about 6% of the space-based mobile broadband network developer and ex-SPAC, at US$4.75, the bottom of the US$4.75–$5.00 range and a massive 25.4% discount to last sale. The offering was upsized from 12m shares at launch. Some investors objected to the level of dilution from another...

A wave of sub-sovereign borrowers is pushing into ESG bond markets in a bid to capitalise on the sector’s strong pipeline of eligible expenditures and to access resurgent investor demand for green, social and sustainable debt. More are to set to follow, including from France, which once set the pace in sub-sovereign sustainable finance but has slowed more recently. "Almost every sub-sovereign in Europe that accesses the debt markets regularly is either looking at ESG, has already started working on it, or has already issued and might even be...

US ECM activity will slow considerably in the coming week due to Tuesday's Fourth of July public holiday, but bankers will be hoping to quickly regain some momentum afterwards and before the summer doldrums set in. The past week marked the first time since February that four US$50m-plus IPOs have been priced, but results were mixed. Thrift store chain Savers Value Village's US$401.3m NYSE IPO was the highlight, drawing heavy demand before pricing above range and debuting up 27.3% on Thursday. But Fidelis Insurance and Kodiak Gas Services both...

American Water Works collected US$900m late on Monday from the sale of a three-year convertible bond. The regulated water utility is paying a 3.625% coupon on a CB that allows investors to convert at share prices above US$171.78, a 22.5% premium to the US$140.23 reference closing price Monday. The pricing came towards the investor-friendly ends of the 3.375%–3.875% and 22.5%–27.5% price talk marketed for one day Monday by JP Morgan and Mizuho Securities. “Investment-grade companies are hyper-focused on price,” said one banker involved in the...

Any investor concerns over the macroeconomic outlook and how that might play out in the credit performance of the UK housing market did not show in the execution of two RMBS transactions – Together Asset Backed Securitisation 2023-1st1 and Brants Bridge 2023-1. "Obviously the credit concerns around the UK housing market . . . are there but, overall, we haven't seen any material deviation from long-standing traditional UK RMBS investors from their strategy," said one syndication official. Together Financial Services found enough demand for its...

Localiza Rent a Car attracted demand from international investors on a R$4.5bn (US$945m) primary follow-on, the second-largest equity raise this year by a Brazilian corporate, and truck-rental provider Vamos followed with a R$1.3bn follow-on, as Brazilian ECM awakens amid the prospect of interest rate cuts, surging commodity prices, and cheap valuations. Localiza priced on Monday the sale of 67.5m shares at R$66.64. The offer price was a 1.3% discount to that day's B3 closing price of R$67.50 and the same as the stock’s R$66.64 price just ahead...

Top US banks easily passed the Federal Reserve’s annual stress test but, unlike in previous years, the test may not only be a measure of how much capital they can return to shareholders. Still, investors drove up bank shares after the results with the top six banks rising 3% on average, led by a 5% rise for Wells Fargo. The bank's shares added 5% on the day after the results were released. JP Morgan stock rose 3% as it is expected to lower capital required for its stress capital buffer from 4% to below 3%. Citigroup didn't come out as well,...