IFR 07 11 2020 PDF room

JULY 11 2020 ISSUE 2341 www.ifre.comPEOPLE & MARKETS BONDS After record debt binge, investors take stock of corporate America 08 LOANS Surge in weighted assets may curtail syndicated len

JULY 11 2020 ISSUE 2341 www.ifre.com

PEOPLE & MARKETS

BONDS

After record debt binge, investors take stock of corporate America 08

LOANS

Surge in weighted assets may curtail syndicated lending 10

risk-It’s green, but not as we know it: BBVA raises

€1bn from AT1 but investors remain sceptical

SMIC listing surfs China wave: chipmaker

raises Rmb45.3bn from 2020’s biggest IPO

Between a rock and a hard place: US-China tensions hang over banks in Hong Kong

IFR’s

ESG Financing Briefing

IFR’s ESG Financing Briefing is a subscription

service offering daily news, data and analysis

on green and ESG financing from across the Refinitiv Capital Markets Insight Team.

To subscribe or learn more, e-mail

ifr.clientsupport@refinitiv.com

Upfront „ OPINION INTERNATIONAL FINANCING REVIEW

4HEûCITYSûFORTUNESûDEPENDûONûITSûABILITYûTOûCONNECTû#HINAû ANDûTHEûRESTûOFûTHEûWORLDû)TSûGETTINGûINCREASINGLYûDIFlCULTûTOû PLAYûBOTHûSIDES

Form over substance

T HEûCONCEPTûOFûGREENûlNANCINGûISûBECOMINGûSOûNEBULOUSû THATûTHEûUNDERLYINGûPURPOSEûBEHINDûITûISûINûDANGERûOFû GETTINGûLOST

,ASTûWEEK û""6!ûBECAMEûTHEûlRSTûBANKûTOûISSUEûAûhGREENû ISSUEûnûWENTûWELLûENOUGH ûWITHûAûPEAKûBOOKûOFûõBNûALLOWINGû THEû3PANISHûBANKûTOûPRICEûITûINûLINEûWITHûFAIRûVALUE

"UTûTHEûTALKINGûPOINTûWASûTHEûGREENûELEMENTûnûANDû PARTICULARLYûWHETHERûANû!DDITIONALû4IERûûBONDûORûAû4IERûû BOND ûFORûTHATûMATTER ûCANûREALLYûBEûGREENû)NûWHATûWAYûISûITû -OREûTOûTHEûPOINT ûIFûTHEûDEALSûPURPOSEûISûTOûRElNANCEûAûCALLû ISûEVENûHARDERûTOûJUSTIFY

!NDûIFûTHEûPURPOSEûISûAûMIXûOFûMATCHINGûFUNDINGûFORûGREENû PROJECTSûANDûRElNANCINGûAûCALL ûTHENûITûAPPEARSûTHATû""6!ûISû TRYINGûTOûHAVEûITSûCAKEûANDûEATûIT

4HENûTHEREûAREûTHEûSTRUCTURALûRISKSûTHATûGREENûINVESTORSûWILLû HAVEûTOûCONTENDûWITH

(OWûSHOULDûTHEYûWEIGHûUPûEXTENSIONûRISK ûASûTHISûINSTRUMENTû COULDûPOTENTIALLYûTURNûINTOûAûPERPETUALûNOTEûFORûREASONSûOUTSIDEû INVESTORS ûHOWûDOûTHEYûFACTORûINûEXTENSIONûRISKûPRECISELYûBECAUSEû THEREûMAYûBEûGREENûPROJECTSûTOûlNANCEûBEYONDûTHEûCALLûDATE

!NDûDOûGREENûINVESTORSûFULLYûUNDERSTANDûTHEûDEEPLYû SUBORDINATEDûSTRUCTUREûOFûTHEûINSTRUMENTû(OWûMUCHû STOMACHûDOûTHEYûHAVEûFORûANûINSTRUMENTûTHATûCANûDROPûBYûû POINTSûINûTHEûSPACEûOFûûHOURS

$EDICATEDûGREENûACCOUNTSûWANTûMOREûGREENûASSETSûBUTûITSû NOTûATûALLûCLEARûTHATûSUCHûAûLOOSELYûDElNEDûINSTRUMENTûFROMûAû GREENûPERSPECTIVE ûISûTHEûBESTûWAYûTOûINCREASEûSUPPLY

7ITHûSOûMANYûGREYûAREAS ûITûSEEMSûTHATûGIMMICKSûAREû OVERSHADOWINGûANûEXTREMELYûIMPORTANTûCAUSE

4HEûGREENûCAPITALûMARKETûSHOULDûBEûANûARENAûTOûSUPPORTûTHEû ENVIRONMENT ûNOTûTHEûMARKETINGûDEPARTMENT

Top news

ESG credit derivatives make slow start

„ People & Markets Banks say they are confident that trading activity will grow

BY CHRISTOPHER WHITTALL

Trading in ESG-friendly credit

derivatives has got off to a slow

start, with only a handful of

contracts of the iTraxx MSCI ESG

Screened Europe index changing

hands since its launch in late June

There is no volume or position

data on the new index in the

Depository Trust & Clearing

Corp’s Trade Information

Warehouse, a central repository

that collects data on the

credit-default swap market That

indicates there were fewer than

10 contracts outstanding across

THEûENTIREûMARKETûAFTERûTHEûlRSTû

two weeks of trading

Funds focused on investing in

companies that meet certain

environmental, social and

governance standards have

grown markedly in recent years

to almost US$790bn, according

to Morningstar Bond traders

believe IHS Markit’s

ESG-FRIENDLYû#$3ûINDEX ûHOWEVER

h4HEûEQUIVALENCEûASSESSMENTûPROCESSûHAS ûUNSURPRISINGLY ûBEENûPOLITICISEDûBYûTHEû%5 vûSAIDû%TAYû+ATZ ûAûPARTNERûATûLAWûlRMû!LLENûû/VERY ûNOTINGûTHATû"ARNIERûHADûSAIDûITûMIGHTû

be used to help negotiate other aspects of THEûFUTUREûTRADINGûAGREEMENT

+ATZûSAIDûIFûANûAGREEMENTûCOULDNTûBEûREACHED ûANDûTHEû5+ûLEFTûWITHOUTûAûDEALûONû

$ECEMBERû ûTHATûWASûSUBOPTIMALûFORûBANKS

FUNCTIONûWITHûIT ûBUTûITûISûFARûFROMûIDEALûTOûHAVEûTWOûHUBSûINûONEûREGIONûASûTHATûISûCAPITALûCONSUMPTIVEûANDûRESOURCESûDUPLICATIVE vûHEûSAID

The division will encompass risk management, institutional sales, trading and advisory

work for public sector clients as well as DCM issuance Stergiou will manage SSA clients in addition to his responsibilities

as head of fixed income and currencies coverage for EMEA and global head of macro coverage

Philip Hertlein has

joined BNP PARIBAS

to add firepower

to its sovereign, supranational and agency debt capital markets team, a source said Hertlein has worked at LBBW since 2012, most recently as head of SSA syndicate and origination He will

be based in Frankfurt and join in August and report to Jamie Stirling, global head

of SSA DCM

Bellwether:n From the practice of placing a bell around the

neck of a castrated ram so that it might lead its flock

3EWINGûWASûADMIRABLYûFRANKûINûACKNOWLEDGINGû$EUTSCHESû HISTORICALûFAILINGS ûANDûITûSEEMSûCHURLISHûTOûCRITICISEû

'ERMANYSûBIGGESTûLENDERûnûNOTûWHENûITSûSMALLERûRIVALû

#OMMERZBANKûISûCURRENTLYûAûFARûEASIERûTARGET

SEEINGûTHEûFUNNYûSIDEûASûTHEûDOUBLEûACTûOFû#%/û-ARTINû:IELKEû and chairman Stefan Schmittmann said they were hanging UPûTHEIRûCLOWNûSHOESû4HEûDUOûFELLûFOULûOFû#ERBERUS ûWHICHû also owns a stake in Deutsche and had a sense of humour FAILUREûOVERû#OMMERZBANKSûPLUMMETINGûSHAREûPRICE

û(AMERSûISûTHEûCLOSESTûTHINGû%UROPEANû BANKINGûHASûTOûAûROCKûSTAR ûSOûPERHAPSûITûWASûlTTINGûTHATû).'û INûKEEPINGûWITHûAûCOMEDYûROAST ûALTHOUGHûTHEREûWASûNOûSIGNû )NSTEAD û(AMERSûWASûTREATEDûTOûAûGENTLEûGRILLINGûBYû BROADCASTERûANDûEXECUTIVEûCOACHû2ENEû#ARAYOL ... the bonds demand repayment

Tahoe has US$200m of 11. 25%

bonds due September 11 2020, US$148.77m of 11% bonds due December 10 2020, US$530m of 7.875% bonds due January 17

2021,... Alcentra