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◆ Slovenia debut emblematic of issuers tapping Japanese market despite carry trade chaos 
◆ Being all things to all investors in the covered bond market 
◆ Corporate issuers keep it short and sweet

This week we take an in-depth look at the techniques bond issuers are using in the race to get as much funding done before the US election. Benchmark issuance resumed early this year after the summer lull and it is clear that issuers are keen to get their bonds sold as quickly as possible. We focussed on three tactics.

One was investor diversification. Slovenia made its debut in the Samurai market this week but it is not alone among what have traditionally been considered emerging market sovereigns in doing so. Mexico was a recent issuer and there are plenty of countries in the pipeline. We examine the attractions and difficulties of the Japanese market, especially in light of the recent market volatility caused by the Bank of Japan putting up rates and the effect that had on the so-called yen carry trade.

We also looked into the diminishing demand for long-dated debt. Bonds with long tenors were a hot ticket all year but demand has dwindled of late. We find out why through the lens of the corporate bond market and what issuers are doing to adjust.

In the covered bond market a third tactic was in play: appealing to as many investors at possible at once. TD priced a slug of covered bond issuance in euros this week that you would more commonly find in the dollar market for unsecured debt. We discuss what the Canadian issuer was trying to achieve, whether it succeeded and if the technique will catch on.

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◆ Why benchmark issuance has resumed earlier than usual
◆ What lies ahead for capital markets
◆ African issuers switch out of loans to bonds

Unpredictable weather is increasingly a feature of modern times. Indeed, as GlobalCapital recorded this week's show, summer appeared to have ended abruptly in its corner of the UK, with distinctly autumnal weather dampening both the pavements and the mood despite there still being a chunk of August to go.

The bond market was also looking distinctly unseasonal this week too, as issuers across asset classes resumed public benchmark bond issuance early compared to most years. We look at what got done, the health of the market and why issuers have gone early.

We also discuss what African borrowers are planning as they switch from loan funding to bond markets and what is driving that behaviour. Plus the latest from defaulted Ethiopia's negotiations with creditors.

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◆ Banks need a bond market leader, just not a French one 
◆ From Golden Goose to lame duck 
◆  CMBS problems, rise of solar ABS

Europe's banks have been unwilling or unable to issue bonds since French president Emmanuel Macron sent the markets into a tailspin a couple of weeks ago by calling parliamentary elections. We explain why the uncertainty the election is causing is so bad for so many bond issuers, and also which banks can restart issuance in their market.

We also look at a triumphant return to sustainability-linked bond issuance for Enel, the Italian power company which created the structure. But it wasn't all good news from the country this week. Golden Goose, the maker of expensive trainers, pulled it IPO. We examine why.

In securitization, we looked into problems in the commercial real estate sector that are hitting investors but rather more cheerily, we find out why solar ABS might be coming to Europe.

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A number of senior bond bankers in Europe’s corporate bond market cannot for figure out why investors are buying what they have to sell.

With US inflation above expectations this week suggesting central banks could be about to raise interest rates imminently, yet again, some bankers are having a hard time figuring out why you’d buy anything now that you could buy at a much better yield by waiting a couple of weeks.

We explain how deals are getting done in such a volatile market and what is driving investors into the market when they know bigger returns could be had by waiting.

We also look at what a fresh round of investment banking job cuts in the US might bring and whether there are in fact signs of hope that suggest the cuts might not be that severe.

Finally, we talk about the drive to get bankers back to the office. It could be a handy way to prune excess staffing numbers as those who crave flexibility leave the industry but, as we discover, balancing what is best for the business with what is best for the people that make it happen is far from a settled issue.

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Almost a year ago, we discussed the energy crisis for the first time on this podcast — how energy companies were using the capital markets in the face of higher demand for their product and what it meant for inflation. A year on, things are much worse.

Russia’s invasion of Ukraine a few months later has turbocharged that crisis to the point where this week governments are once again unveiling fiscal support packages to help people and businesses through. We look at where the capital markets might be used to fund the response and whether they can shoulder the burden with shrinking central bank monetary support.

But we also revisit what the energy companies — and others linked to the sector — are doing now that they are facing extreme swings in the price for gas, what it means for their finances and what they need from the capital markets to navigate through it. 

And speaking of volatile markets, we discuss how one investment bank has recalibrated its primary bond business in credit markets in a way it thinks will help it to act more quickly and decisively just when such qualities may make the difference not just between winning a bond mandate or losing it but in being able to execute it without losing your shirt in the process.

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Earth Wind and Fire’s September, a nostalgic paean to the joys of the first month of autumn, might strike a chord with those involved in the business of raising bonds for companies and banks this year.

Traditionally — along with January — one of the busiest months in the primary market calendar, most Septembers offer a bumper harvest of bond issuance as investors return form their summer holidays refreshed and with new piles of cash to deploy for the final quarter of the year.

But this year, things are very different. With no central bank buying to prop the market and a whole host of economic horrors facing it from soaring energy costs, inflation and the prospect of a global recession, issuers will face a far tougher time persuading debt investors to part with their money.

We examine the perils facing banks and companies for what will be one of the trickiest months of the year to see which issuers are the most vulnerable, what kind of market they will face and how they can navigate it to raise vital funding.

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Perenna is a company hoping to change the way home buyers borrow money in the UK with a system borrowed from Denmark. It claims its way of lending money will make housing more affordable. We test that claim and look into how this change could affect the covered bond and residential mortgage backed securities (RMBS) markets.

With the number of publicly listed companies seemingly in secular decline, we discuss how stock exchanges and regulators around the world are competing to persuade companies to list with them — especially exciting, new tech firms. We examine what a company needs from an IPO and the public trading of its stock and what it wants to avoid, and how the various reforms are helping or hindering those aims. 

We also take a closer look at the biggest market of them all, New York, which seems to be taking a rather different approach to regulation from the rest of the world and debate what the consequences of that may be.

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The Rhine, which flows through Germany's industrial heartlands, is drying up and that could spell trouble for the corporate bond market.

A number of industrial giants — investment grade bond issuers with around €66bn of debt between them — all of a sudden can no longer use the river in the ways they are used to.

They are struggling to get materials in, carry out their processes and to ship their goods out. It is the second time the river has run low in just four years. The last time it was this low was over 100 years ago.

We examine what the ramifications of this will be for the companies affected and their debt and for their suppliers and customers, but also whether this is a prime example of the true costs of failing to tackle environmental sustainability — perhaps the defining long term problem facing capital markets and society at large.

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Nancy Pelosi, speaker of the US House of Representatives, riled China this week by dropping in on Taiwan. The ripples of the visit spread across the Asian bond market, already suffering from myriad pressures both local and global.

Issuers pulled deals as investors worried about just how far China would go in its retaliation but it was not such a bad week for every borrower, as Singapore demonstrated. We look at how the diplomatic dispute will hurt the Asian bond market in the weeks and months ahead.

In Europe, trouble is brewing in the collateralised loan obligation (CLO) market. The investors which stump up the cash to allow issuers to put CLOs together in the first place are being squeezed to the point where it is becoming uneconomical for them to put money in. We examine the causes driving this and what the CLO market can do to overcome it and keep the deals flowing.

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From the German equity capital markets, through leveraged finance, to the hairier parts of the blue chips’ balance sheets, raising capital is not easy if you’re a corporate treasurer.

We take a look at the problems hindering Frankfurt-listed companies from raising equity capital and what they propose to do about it — not to mention the perils they face if they do.

But we also look at the barren leveraged finance market. Sponsors and banks in this deal desert had found an oasis in the form of direct lenders. But now the well looks to be running dry, we investigate why and what the alternatives are.

We also look ahead to what must surely be a day of reckoning fast approaching for companies with hybrid capital — a complex type of funding designed to improve an issuer’s debt metrics and credit ratings. The market for hybrid debt has been moribund but it cannot remain that way forever. We talk about what is likely to happen when it reopens and what affect this will have on the companies that use it.

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A wave of emerging market bond defaults could be about to hit, judging by where EM sovereign bonds trade against US Treasuries. But are we really looking down both barrels of a default deluge or is the situation more nuanced than the numbers suggest? 

Meanwhile, one very high profile emerging market borrower, Ukraine, is asking for a debt standstill. We look through what that means for the country, its investors and its future in the capital markets.

We also look at whether multilateral development banks are going to swell their borrowing programmes in the coming years to help extend greater funding to the developing world and we also assess a momentous day in the eurozone as the ECB raised rates for the first time in 11 years but, critically, also launched its latest policy tool — the snappily named Transmission Protection Instrument.

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Cryptocurrencies have had a rough time of late but they are clearly no flash in the pan. That has driven regulators to intensify their efforts to gain control over this financial frontier.

The Bank of England’s deputy governor this week sounded a warning that if the crypto world wasn’t brought under control soon, it risked suffering its own Hindenberg moment, referring to the time the famous German airship exploded ending, perhaps prematurely, the development of what could have been a useful technology.

Of course, there have already been explosions in the crypto markets but regulators are keen to find a way to bring stability to their more useful parts to allow them to flourish. We look at who is trying to bring which bits of crypto to heel and how they plan to do it.

Banks have a big part to play in this too. Following the recent release of the ECB’s climate stress test for the lenders it regulates, we discuss how banks’ involvement in the notoriously energy-hungry crypto markets should be done with the aim of greening it as it develops.

We also investigate the latest turmoil in Italian politics. Prime minister Mario Draghi offered to resign this week, sending Italian sovereign debt yields and spreads to Bunds higher, just as his former employer the European Central Bank is expected to reveal its new tool for keeping those very numbers under control. We take a look at what this means for Italy and how SSA borrowers will adapt their funding tactics to cope with ever more frequent disruption — this was not after all the first shock of the week with US inflation coming in above expectations at 9.1%.

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We reveal why capital markets often barely flicker even when there is the sort of huge political disruption that took place in the UK this week, when prime minister Boris Johnson said he would resign following a series of scandals and a rebellion within his own government.

Closer to capital markets, we take a look at the next leap forward in sustainability-linked bonds. Chile may have brought the first sovereign deal but Uruguay could be next. It has been considering issuing once since not long after the first ever version of the product arrived from Italian energy company Enel in September 2019. We explain why Uruguay’s bond could be such an important one for this nascent asset class and what the consequences could be for other sovereign issuers.

We also see how a revival of an esoteric corner of the US securitisation market is helping power companies in the country increase their ESG spending and whether the same market could develop in Europe.

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◆ Politics panic slaps SSAs, FIG but what of corporate bonds? 
◆ EU denied its wish 
◆ Introducing Primary Market Monitor

Well, you can't say we didn't warn you. On last week's show we talked about European elections and the likelihood of volatility following the ECB's historic rate cut.

Et voila!

French president Emmanuel Macron's decision to call snap parliamentary elections in the wake of far-right successes in the EU equivalent has caused havoc in bond markets this week. SSA and FIG issuers abandoned deal plans. We discuss which bits of the market are still working, just how bad this bout of volatility is compared to recent times and what new issuance prospects are for the immediate future.

The EU didn't have a vintage week as a borrower either. It priced a successful syndication, though as we discover, it lacked the glossy finish of other deals. Then it was denied access to MSCI's government bond indices. We reveal why this matters so much to the borrower, and the way forward.

Finally, GlobalCapital is about to launch a new data product: Primary Market Monitor. We tell you what it is, what it does and how you can get an early look at it.

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In the same week that the Green and Social Bond Principles provided a ton of new guidance on how to apply its formula to different types of security, which we discuss, we take a look at how the capital markets are offering investors different way to fund the green transition.

Green capital raising is a rare bright spot in the equity markets these days but it is not all plain sailing. We look at what went wrong with Plenitude’s IPO, the listing of Eni’s renewable business. It was supposed to be a banner event for the market but instead, it got pulled. The listing of De Nora, another jumble of activities under one roof with an ESG flavour, did get done. We take a look at what it takes to raise equity capital for a green company and what deals may be round the corner.

But it isn’t just public equity markets ploughing money into the green transition. Private funds are buying up various unglamourous companies — bins and buses — and helping them on their green journey. We look into what is driving this trend and what the funds’ motivations may be.

Finally, it was a shocking week in the primary bond markets with deals getting hooked left, right and centre. We reveal what market experts told us were the best ways to navigate the primary bond market when it is in this state and discuss whether a pulled deal is anything to be embarrassed about any more.

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It was not that long ago that we ran a number of stories and podcast episodes about banks battling for staff so that they could get record volumes of deals through the capital markets. With inflation rampant, recession looming and interest rates on the rise, some markets have dried up as M&A grinds to a halt. Now bankers fear for their jobs, with one likening the situation to the dotcom bubble bursting two decades ago.

Tech firms don’t have to go so far back in time to recall a torrid spell in financial markets. As the world emerged from the Covid pandemic, tech companies went from being the belles of the ball to being the empty beer bottles. As their valuations plummeted, they kept away from raising equity capital. But this week, Ocado, the online grocer, brought a deal to market. We discuss why it had to come in such a terrible market, whether other tech firms will do the same and what their options are.

Finally, we discuss what went down at Euromoney’s Global Borrowers and Investors Forum this week, where the ECB’s plans to control government bond spreads was the subject of some very lively debate. We look into why some find the idea of yet more bond market intervention so objectionable.

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Last week the ECB laid out its plans for its monetary policy. That surely was enough to convince bond markets that it had a grip on both rampant inflation and government bond spreads, right? Wrong.

This week it had to convene an unscheduled meeting of its governing council so that it could figure out how to manage spreads in the government bond market. Dealing with inflation is the bank’s core mission; dealing with spreads is something it has had to take on during many years of crisis. In some ways, the two objectives are mutually exclusive. So we discuss what the ECB is up to and what the consequences will be.

We also talk about the much more immediate consequences of the US Federal Reserve’s historic 75bp rise for emerging market bond issuers. Their market is shut but will that lead to financing problems for a number of economically vulnerable countries?

We also dissect what incoming EU regulations that demand investment firms get a read on what their clients’ sustainability ambitions might be for their portfolios mean for the asset management industry. This is a huge piece of rule making that will require a mountain of work on the buy-side and it is due to come into force in August. But the industry appears to be far from ready to deal with it.

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We wouldn’t normally talk about a capital markets conference on the podcast but next week sees one of the biggest — Global ABS, the biggest gathering for the European securitization market — resume its pre-pandemic full, physical form at its regular haunt, Barcelona. It comes just as the securitization markets in Europe are in a rough state.  

We discuss what the thousands of delegates at the meet-up will be talking about and where their market is headed — which is also the topic of our newest podcast which is about securitizaton, Another Fine Mezz, available now on globalcapital.com.

There are also changes afoot in the leveraged buyout market, as private lenders muscle in on business that has traditionally been run by banks. We examine what this means long term for LBOs. 

And in the corporate bond market, we investigate the rise of the glocos — global coordinators that is, a title banks in a bond syndicate are taking on, what it means (if anything) and why the term has started to appear.

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From bonds to equities, issuers are finding it harder to raise capital. Inflation, invasion and disruption, not to mention rising interest rates, are shortening the times when the financial markets are stable enough to allow issuers to come to the market with deals. 

We look into what that means for the rest of the year in bond and equity markets and discover that it is forcing issuers to crowd into the same, smaller windows for new issuance than they have been used to for the last few years. We highlight the problems that will cause some of them.

We also discuss what may be something of a Martin Luther moment in socially responsible investing. Stuart Kirk, HSBC’s head of responsible investing, boldly went and named his criticisms with the ESG finance industry at an industry event recently. His critique has caused a furore in a part of the capital markets where there is often too cosy an alliance of — at least in terms of what is said publicly — bland, good intentions. We discuss whether Kirk had a point — after all, he is no global warming denier or an outsider to financial markets — and how the ESG finance sector and HSBC should respond.

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There is no doubt that bond markets are becoming tougher places from which to raise money. Even in the public sector bond markets, where issuers flock in times of trouble, what are typically issuers prized for their rarity are now enjoying less demand because investors have come to value highly the ability to sell out of positions easily given the volatility.

But at least borrowers are getting their funding done there. In the emerging markets, which so often bear the brunt of capital markets and economic turmoil, there is a rather different problem. Here, issuers are having to come to terms with rising yields, widening bond spreads and no end in sight to the volatility as they face the prospect of recession, a strong dollar and rampant inflation; all of which makes life tough for them in the capital markets. On the podcast this week we question why more of them aren’t trying to do more to issue bonds before the situation grows even worse.

Elsewhere, travel and tourism sector companies have been making the most of rising passenger numbers and fewer restrictions to raise equity capital to pay down debts. But they too face risks to their recovery from the pandemic. We investigate what they are and whether their capital markets revival will be short lived.

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War in Ukraine, the pandemic and the recovery from it, rampant inflation and the end of the era of cheap money — people in the capital markets have a lot to think about when allocating or raising money. But are they missing the biggest problem of all: China’s slowing economy? 

A growing number of market participants think so. China as a producer of goods sold to the world and a key consumer of plenty of the world’s commodities and finished goods, is an integral part of the global economy and therefore, a driver of what is possible in the capital markets. Hopes of a revival in European stock market listings are now foundering as investors look long and hard at which companies are the most reliant on a Chinese economy dogged by lockdowns and port and factory closures.

We discuss who will be hit and how hard. We also look into how problems in other emerging market countries may effect their ability to raise funding in the bond market and where else they might go for cash instead.

We also take a look at some new bonds that were priced this week in different parts of the market and figure out what they tell us about how borrowers will have to approach a volatile bond market in the weeks and months to come.

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Normally when central banks make policy decisions that they were expected to, capital markets activity carries on unencumbered. But not this week.

The 50bp interest rate increased from the Federal Reserve on Wednesday was long anticipated but while markets appeared to take the news well at first, by Thursday things had gone sour once more making issuance difficult. Certainly, there’s a lot to feel grim about in the economic realm — supply chain disruption, war in Ukraine, rampant inflation and possibly a looming recession. Meanwhile, investors and issuers are dealing with the gradual withdrawal of central bank economic stimulus.

 All of that makes the capital markets a tougher place to navigate and picking the right deal to do at the right time a harder task than it has been for years. This week, we look across debt and equity capital markets to examine how they will respond and discuss whether some borrowers are in for an unduly rough ride or whether this is simply the return of the good old days when investors discerned between the good credits and the bad.

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It’s not just raw materials and components that are hard to get hold of nowadays. The European leveraged finance market is bang on trend and experiencing some supply chain disruption of its own. We explain which parts of the market are just starting to work again and which are about to seize up and how that will proliferate across other parts of the capital markets. 

Naturally, we also find a way to crowbar a discussion of Elon Musk’s planned purchase of Twitter into the mix and examine how the leveraged finance market might help or hinder that deal.

We also look at how the bond market for financial institutions trying to raise funding is changing. We test the idea that it may become a market of haves and have-nots in terms of cheap, easy access to bond market funding. 

Then we turn to sustainable finance. We discuss how investors are making bigger demands of issuers who want to print sustainability-linked bonds and the knock-on effects this will have on their supply chains and on the products and services they produce as the capital markets learn ever more about how to account for and mitigate emissions.

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It was just a fortnight ago that we reported on what could turn out to be a swathe of job losses in the equity capital markets. But all is not lost; not only are some companies readying initial public offerings to give ECM bankers something to do, for those still left wondering if they’re facing the chop next, there is a hiring spree afoot elsewhere in the capital markets. We tell you where that is and what you can expect to be paid.

That hiring spree, like everything else in the capital markets, has been driven by what central banks are up to and the effect that has on bond issuance. We saw that influence manifest in other parts of the bond market this week too and we discuss whether the differing speeds of central bank monetary policy change will make this a year one of short lived opportunities for cheap funding in different markets. We discuss what borrowers will benefit from that and what they will need to do to take advantage.

Finally we highlight a growing trend in private lending — net asset value loans made to private equity funds. It’s an old technique so why is it having such a resurgence? Subscribe to the GlobalCapital podcast at wherever you get yours from to find out.

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◆ Private credit, regulation and cuddly toys at Global ABS in Barcelona 
◆ What the European parliamentary elections mean for EU bonds and Capital Marekts Union
◆ Will volatility follow the ECB's historic rate cut?

The incursion of private credit into the securitization market, and how securitizations are regulated, were two of the big topics at Europe's biggest industry conference this week. We were joined by our colleagues from the Another Fine Mezz podcast to discuss all of that, the best freebies at the event and the perils of live podcasting.

Meanwhile, the ECB made its first cut to interest rates in five years on Wednesday. It was well expected but now uncertainty is back as capital markets puzzle over where next for rates.

Finally, June's EU parliamentary elections will have an influence not only on securitization regulations but also the future of the EU as a bond issuer and the path to Capital Markets Union. We discuss the likely outcomes.

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If ever there was a week to demonstrate the interconnectedness of the international capital markets to what is going on in the rest of the world — in this case the awful events in Ukraine — this was it. On the podcast this week we follow a thread that starts with the appalling situation in eastern Europe and ends in the US securitization markets by way of looking at how companies are responding to the heightened uncertainty that the war has brought to the global economy, how it has affected their financing needs and how this is influencing the capital markets in turn.

We also discuss why so many companies are making their public bond market debuts at the moment and finally, we turn our attention to the equity markets where, again, the war in Ukraine is resulting in some interesting behaviour from sellers of large stakes in public companies — trying to hide their identity when they come to market. We examine what they are doing, why they are doing it and, ultimately, whether it is a good idea or not.

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It was only recently that GlobalCapital reported on both the huge amounts of business being done in the capital markets and the tussle between banks to hire enough staff to cope with it all. Record volumes meant soaring pay, especially among the massed legions of junior bankers as firms competed for staff. But the equity capital markets in particular have just had a dreadful quarter with very few pockets of activity and some recently hectic parts of the market all but closed. Already, bankers are starting to fear lay-offs cannot be far away. 

We discuss this week whether they are right to fear a wave of redundancies or whether this is a knee-jerk reaction and that business will come bounding back as markets grow used to life with inflation, the war in Ukraine and its wider economic effects.

We also highlight how certain groups of investors are returning to parts of the bond market they had abandoned for years, proving that rising rates and widening credit spreads are not all bad news for bond issuers.

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For more than a decade, Europeans and Americans have only known low interest rates and central banks soothing debt markets with endless lashings of liquidity, through buying bonds. In recent years, the European Central Bank has been buying up to 40% of every corporate bond and covered bond issued in the eurozone, as well as vast quantities of public sector bonds.

But it is pulling out — meaning the euro bond market is losing its biggest investor. Can it cope? Even the best rated supranational, sovereign and agency borrowers are having a tough time — the market was so volatile this week they could no longer price deals over the usual benchmark of mid-swaps.

But lower down the credit spectrum the effects are likely to be much more painful.

The Swiss franc bond is usually a placid place, where conservative investors soberly swallow low yielding, low risk bonds. But it does contain a streak of adventure — the more gamesome investors, especially wealthy individuals investing through private banks, like to buy emerging market bonds, which provide much higher returns.

Some shine has come off this year, though. This week Russian Railways, which has issued in Swiss francs, tried to pay an interest coupon but could not because of sanctions. Russian borrowers are quite big in Swiss francs, partly because rich Russians’ Swiss bank accounts invest in the deals. Could this put Swiss investors off their emerging market food?

Listen to GlobalCapital’s podcast to find out.

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A month into Russia’s war on Ukraine, capital markets are getting more used to the risk it poses, and a wider range of issuers are able to raise money. But riskier types of deal — emerging markets, high yield and equities — are still virtually impossible.

Emerging market bond issuance did resume with deals for Nigeria and Turkey, but then the brakes were slammed on again this week when Jay Powell, chairman of the US Federal Reserve, startled bond aficionados by hinting that some of the Fed’s rate hikes this year could be double-sized: 0.5% in one go. On this week’s GlobalCapital podcast, George Collard, EM bonds reporter, explains how this is affecting countries from Latin America to the Middle East, and gives an update on the efforts by Russian borrowers to pay interest on their bonds — while Western authorities try to stop some of them.

Mike Turner, public sector bonds reporter, says even some of the highest quality borrowers in the world, such as the European Union and German state bank KfW, are finding the bond market full of traps at the moment. What investors liked one day, the next they hate.

A good equity deal got done in Iceland, however, where the government sold $400m worth of shares in Islandsbanki, one of the three banks it had to nationalise in 2008. Victoria Thiele, equities reporter, asks if this could lead to more privatisations of former zombie banks in Iceland and elsewhere in Europe — such as Spain, the UK and Ireland.

Occasionally capital markets produce something truly cheering. Jon Hay, sustainability editor, explores the World Bank’s ‘rhino bond’, issued this week, which enables investors to finance rhino conservation in South Africa in an innovative way – by giving up their interest payments.

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Banks might finally be held to account for the damage to the environment their bond and equity underwriting does. Elsewhere, three Russian companies might face bankruptcy thanks to the effect of sanctions on their convertible bonds.

While it has been fairly straightforward to measure what emissions a loan or an investment funds, assessing the part a bank’s capital markets deal arranging business plays in polluting the planet — working on an oil company IPO, or lead managing a bond for a mining company, say — has been harder to acknowledge.

 Now, work is underway to shed light on this vital part of greening the financial system just as HSBC — a big bank in this business — committed to disclose the impact of its capital markets business for oil, gas, power and utilities clients, following shareholder pressure.

But what will these disclosures tell us? How long will they take to arrive? And most importantly, how will they get banks to reduce their impact via the capital markets?

Meanwhile, three Russian companies are facing an existential threat thanks to the convertible bonds they issued running up against sanctions. We have discussed Russian defaults on the podcast before but these companies, thanks to a combination of Western sanctions, and those of their own government, face bankruptcy if they cannot find the money to buy back the bonds they sold to investors. So far, the bondholders — who likely don’t want to or can’t own a Russian business in a different sector to their own — are working with lawyers and the companies themselves to work out how to resolve a complicated situation.

We discuss how they ended up in this mess and what the remedies may be in what is, in the parlance of our times, an unprecedented time for this part of the capital markets.

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The full implications of the Russian invasion of Ukraine for the capital markets are still far from clear. As we recorded this episode, European leaders were meeting at Versailles to discuss, among other things, another gigantic borrowing programme for the EU that could be funded in the bond markets — this time to fund defence and energy. We discuss all that we know so far on this developing story and whether it will make the EU the sort of permanent capital markets presence that defines it as the eurozone’s benchmark issuer.

The EU wasn’t the only European institution considering its response, however. A key European Central Bank meeting on Thursday gave the first indication of what monetary policy makers plan to do to combat inflation now that war threatens both even greater rising costs and lower growth. The US Federal Reserve and the Bank of England will follow next week.

Closer to the eye of the storm we look at what the world’s major banks are doing about their businesses in Russia. Goldman Sachs and JP Morgan are pulling out but, as we discover, it’s not simply a case of packing up and going home when your clients are all trying to do the same. 

Finally, we look into something just as complex but where there is even less transparency — whether Russian issuers will be willing and able to comply with the country’s decree that they only pay their bond obligations in roubles, whether that will result in mass defaults and what the long term implications of that will be.

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The Russian invasion of Ukraine has given capital markets participants in the West compelling legal, moral and financial reasons to question, and indeed halt, their involvement in financing the country and its businesses.

Swathes of new sanctions have forbidden all sorts of financing activity, but critically, investors and companies like index providers — which provide a framework for so much investment in Russian assets — are now going beyond what is laid out in the proscriptions as they look to disentangle themselves from Russian capital markets.

The effects will likely be catastrophic for Russia, especially its equity markets. But if westerners are forced to sell their Russian assets all at once into a market with no buyers, it won’t just be Russia that feels the financial pain.

On the podcast this week, we discuss how banks, index providers and investment managers can cut their risk exposure to Russia and whether they can do it without hurting themselves in the process. We also look into whether a recent sudden interest in buying defence stocks is compatible with the sort of ESG concerns that are being given as a moral justification not to invest in Russia.

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This week’s podcast was recorded the morning after Russia began a full scale invasion of Ukraine.

We look into the immediate effects on the capital markets — what the fresh rounds of sanctions means for Russian issuers and what sort of deals other borrowers will be able to do once enough stability returns to markets.

We also discuss an area of the capital markets where investors are flocking to buy deals that may turn even hotter as a result of the invasion: the IPO market in the Middle East.  

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The remedy recently imposed upon BNP Paribas for a sexual discrimination case it lost in 2019 could have far reaching effects on the gender pay gap and for transparency over incomes — one of the City’s great taboos — more broadly.

Not only did the French bank have to pay Stacey Macken, who won the tribunal, over £2m in compensation but it  has been instructed to conduct a pay audit that will see it produce pay data for all of its London branch staff — from the canteen to the C-suite, via the trading floors — to show whether it is paying people fairly in relation to each other and the jobs they do. No other company has been instructed to do this before though some have done it voluntarily.

Should the data reach the public domain, then it will offer great insight into what BNP Paribas pays and  for what jobs. That data will be valuable to BNP Paribas’s many rivals but should they be thinking about doing a pay audit themselves in an effort to narrow the gender pay gap, pay staff fairly relative to each other and to head off grievances and embarrassing public tribunals brought by their own staff? We discuss the implications. 

We also take a look at an eye catching piece of debt issuance by Turkey — a country with $11bn to raise on the debt markets this year but whose access to those already volatile markets has been complicated by rampant inflation and unorthodox monetary policy. Turkey’s debt officials have found a way to bring a blockbuster deal to complete over a quarter of that funding task in one fell swoop. Listen in to find out how they did it.

Meanwhile, as the IPO market finds its feet again, we discuss what deals will work and what won’t; and finally, we investigate the gigantic problem looming over government debt markets in some parts of the eurozone and what the ECB will do about it.

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Salomon Brothers is back. One of the most storied names of 1980s Wall Street, immortalised in Michael Lewis’s book Liar’s Poker is a registered trademark once again and is planning to get into the financial markets.

Travelers Group swallowed up the original Salomon Brothers in 1998, a firm which merged with Citi in the same year. Citigroup finally dropped the Salomon brand — by then Salomon Smith Barney — 19 years ago. 

 There are some people around the capital markets today who worked at this legendary firm though, as the years go by, more people will have learned about it through books like Lewis’s than through encounters with its former staff. So what is behind the revival?

This week on the podcast we look into who is behind the venture and what they might do with the business. We also ask which famous but defunct City or Wall Street brands might be next.

We also discuss the Bank of England’s plans to unwind corporate quantitative easing and the bond market’s reaction to it. We also examine how the rest of the primary bond market is adjusting to a world where interest rates are almost certainly on their way up for the long term — a set of circumstances that a whole generation of capital markets practitioners, just like working in a world where Salomon Brothers exists, has not experienced before.

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◆ Which banks sell in run-up to rate cuts
◆ South Africa election and the bond market
◆ Saudi Arabia leaves peers behind

Rates volatility returned to the European FIG market this week. We ask what credits investors are buying ahead of a key ECB monetary policy meeting, when it is expected to cut interest rates, and why.

South Africa's election this week was, at the time of writing, likely to result in the African National Congress losing its exclusive grip on power for the first time in 30 years. We discuss what that and the likely outcomes mean for the bond market.

As Saudi Arabia returned to the debt markets with another blockbuster sukuk, we examine just where the issuer sits in the debt capital markets and how it manages to keep investors keen when it has to raise so much compared to its peers.

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Much of the focus in capital markets is on what central banks — and subsequently, issuers of both debt and equity — will do next. We discuss how those policy decisions will affect issuance in the capital markets this year. But meanwhile, a situation is brewing between Argentina, which is in no position to issue debt at all, and the IMF that could have huge repercussions for not only both parties but also the country’s bondholders.

Argentina is no stranger to debt restructuring, the IMF or default. This time, the country owes the Fund $45bn as part of an agreement to help it out of an economic crisis from 2018. That crisis came after Argentina had spent a fleeting but glorious spell as a bond market darling after years locked out of debt markets thanks to a previous default. For a short while, the sovereign, its regional governments and other borrowers printed bonds like there was no tomorrow. When the economic reforms required to sustain such a debt pile failed to materialise, the inevitable happened and Argentina was back at the IMF for funding as it battled with bondholders over what it owed. 

Fast forward to this year and Argentina has reached an “understanding” with the IMF over a new funding package. Perhaps just as well given Argentina is supposed to pay around $3bn of that $45bn by the end of March at a time when it is running low on dollar reserves and has few ways of generating them.  

But an “understanding” of “key principles” is a long way from a final agreement and as always in Argentinian debt negotiations, things are never run smooth. For a start, there are doubts that the possible funding package will help Argentina avoid another debt restructuring in 2024 in any case. Moreover, for an IMF prescription, the package seems unusually light on economic reform, leading to some speculation that securing this agreement is as vital for the Fund as it is for Argentina. And then of course, there is the political dimension, with the financial “understanding” triggering the resignation of a key political figure in protest this week.

We discuss whether that is political posturing or a genuine threat to the IMF and Argentina’s chances of reaching an agreement and what implications that might have for the country and its creditors — both from the official sector and the capital markets.

We also examine how the EU has perhaps scuppered its own plans to guide investors towards sustainable investing and we look at whether banks are worried about lending to Russian clients as the country’s stand-off with Ukraine runs on.

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Compensation is up across the board for investment banking staff and bankers in the capital markets. But where do you have to work to make the big bucks? The GlobalCapital Podcast reveals the answers.

We talk about pay levels — salary and bonus — throughout the ranks and which bits of the bank pay the best to work in. We also talk about what different shops pay and where to locate yourself for the best chance of making top dollar… or euro, or pound.

But are the rising compensation levels sustainable? What will happen once investment banking and capital markets activity slows? All this and the rest of the most interesting stories from the capital markets in this week’s episode, including good news (at the time of recording) from Russia and Ukraine, the beginnings of what could be a rush of oil and gas companies coming to the equity capital markets (be sure to listen to the previous episode for more), plus the new twist on an old trick that Deutsche Bank is pushing to some of its corporate bond issuing clients.

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Last week on the GC Podcast, we questioned whether we had passed the high point of bond market madness — the sorts of new issues that left some market participants wondering why anyone would buy a deal on such parsimonious terms as they watched many more pile in regardless. This week, there was mounting evidence to suggest we had.

Top rated issuers in the SSA and covered bond markets found themselves locked out of longer dated debt — at least at terms they would be happy to pay — as benchmark government bond yields rose further still. Inflation is persistent; even the ECB now thinks so as it revealed in the minutes of December meeting this week. There is no doubt that investors are expecting rates to keep rising and that is driving them into ever more defensive deals at short maturities.

In emerging markets, it is not just the rates picture that is troubling issuers and investors. Russia’s threat to Ukraine and a number of more localised concerns mean that issuers that have mandated banks to bring bonds to market are waiting before doing so. As they watch from the side lines, they will have seen some deals struggle this week while other issuers paid a large premium to issue. Is wating for things to get better a policy that will prove penny wise but pound foolish?

In equity markets, however, there might be a golden chance for capital raising for heavy polluting companies from the oil, gas and mining sectors — and possibly the last one they will ever have. We explain the factors behind that as well as discuss how the IPO market will look for them and everyone else this year.

Finally, and perhaps to redress the ESG balance, we examine a new way to get private capital from the rich world into the developing one in a scheme that may solve one of the biggest riddles in development finance.

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The primary bond market was going gangbusters this week. January is always a busy month but, so far, this one feels busier than others.

Bond markets have run on central bank fuel in the form of low rates and quantitative easing for years. That has led to some startlingly low yields and an era of cheap borrowing. But with rate rises on the way to combat inflation, there is a very real sense that this could be the end of an era.

Amid the flood of new bond issues, issuers are grappling with how to keep lure investors into allowing them to lock in low rates just as the era of cheap money looks set to end. Meanwhile, investors are asking themselves what it would take for them to buy certain bonds that pay what are obviously meagre yields now, let alone how they will compare once rates rise across the board.

All of that has led to some interesting dynamics across the sovereign, supranational and agency, financial institution, corporate high yield and convertible bond markets. The success of some of the deals issued this week looks, at first glance, to be completely counterintuitive, that is until you take a closer look.

On this week’s podcast, we take that closer look to see what is driving bond issuance, whether we witnessing the final throes of the age of cheap money, and how that might affect the rest of the year in the primary capital markets

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January is invariably one of the busiest months in the capital markets calendar for new issuance as borrowers race to get ahead of their funding plans, and those of their rivals. So far this year, it has been no different with huge volumes of bond funding raised across different markets. But underlying the buoyant conditions is a sense of unease that they might not last forever.

This week, we looked at what is causing that unease — from the spectre of rising interest rates and the tightening of central bank monetary policy, to inflation, to protests in Kazakhstan and what risks they pose to other parts of the emerging markets — and how that will affect borrowers looking to issue debt this year.

We also delve into the latest controversial iteration of Europe’s Taxonomy for sustainable activities and how this might affect the sustainable finance market.

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This week was an important one for the primary capital markets, even if there was very little, if any, issuance. The US Federal Reserve, the Bank of England and the European Central Bank all made key monetary policy decisions that laid the ground for what is traditionally one of the busiest months for capital raising all year — January — and beyond. 

We focus on what the ECB said about its plans for bond buying and how this will impact bond markets at the start of next year, particularly for public sector borrowers. The central bank looks to be winding down its Pandemic Emergency Purchase Programme. Knowing that central bank support for the market is going, public sector issuers, which have been the main beneficiaries of the Pepp, will look to get more funding done than usual at the start of the year before the ECB winds down its buying under the programme in March.

But the ECB is mitigating that withdrawal of support by deploying its firepower in different ways. We discuss what these are, how they will affect the capital markets, and which borrowers will benefit.

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First the UK and now the EU have embarked upon a review of whether the way IPOs are done on their turf is fit for modern markets or not.

With €93bn-equivalent raised through IPOs so far this year in EMEA — a number only equalled in the last 21 years in 2007 — there seems to be a case for streamlining the way deals are done and making the market cheaper and more accessible.

But IPO volumes vary from year to year — it will not always be this busy. Will the reforms under discussion be beneficial in the long run? 

Market participants often hail the way IPOs are conducted in the US because they are perceived to require a lot less work. But does that make for a better market with better outcomes for investors and issuers?

On the podcast this week, we discuss what changes have been made in the UK and the EU, what may lie in store, and what market participants want to see from a reformed market for listings on the eastern side of the Atlantic.

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A fertile hunting ground for signs of major shocks affecting capital markets is invariably the parts where the worst rated credits are — where risk is deemed to be highest. That typically means the emerging markets and, as was our subject this week, the leveraged finance market where the most indebted companies raise debt capital.

The recently detected Omicron variant of the coronavirus is already having an effect on the latter. Three huge financing deals that have been in the pipeline for months are now quite likely to be shoved into next year because investor confidence has ebbed away.

Typically, banks with huge leveraged finance debt positions to sell don’t like holding on to them over Christmas, but that now looks like it will be the case. On the podcast this week, we examine how they have ended up in this situation and what the consequences are likely to be.

Meanwhile, we also discuss credit investment firm Alcentra, which has been put up for sale by its owner, BNY Mellon.

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Turkey has once again defied monetary policy orthodoxy by cutting interest rates in a bid to tackle inflation, which is running at around 20%. The results on the country’s currency, the lira, have not been pretty and it has plummeted in value. But what does that mean for the country’s access to capital markets? This is, after all, a sovereign borrower with a big presence in bond markets and the country’s banks and companies also rely on international funding. 

 We discuss why the reaction to the interest rate cut in the bond market was muted but highlight the risks that loom large for Turkey’s capital markets.

 Meanwhile, the self-styled “CEO of El Salvador — its president Nayib Bukele — is attempting what might generously be called a novel form of sovereign financing. He wants to issue a $1bn bond that pays out based on the performance of Bitcoin. And he wants to use some of the proceeds to build a new city… called Bitcoin City… at the foot of a volcano…

 We deliberate over whether this is a good deal for investors or not (spoiler alert: we don’t think it is) and what Bukele might be up to.

 We also discuss the latest findings from our survey about life in the capital markets after Covid and how it has affected banks’ attitudes to diversity.

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The way people did business and went about their work in the capital markets changed almost overnight in early 2020 with the advent of the coronavirus pandemic — and in ways many would have previously thought impossible.

 Gone were the gruelling roadshows and short haul business trips as deal marketing went online. Gone too was the need to be present in the office or on the trading floor. Compliance and technological worries were swiftly overcome and record volumes of capital markets business were done despite the chaos that the pandemic brought.

Now, as working conditions normalise, it is time for the industry to assess what it will keep from the pandemic experience and what it has missed the most from before. Many bankers have long since resumed normal office working but many expect — and are being given — a greater degree of flexibility. But how much flexibility is the right amount?

Ultimately, capital markets are about relationships. How will building and managing those change now there is a clear expectation that there will be less business travel in the future?

We discuss the findings of the survey and what will the lasting changes be to working life in the capital markets.

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◆ Capital Markets Union: gauffre it 
◆ The EMEA investment banking riddle 
◆ Why EM bond investors keep buying deals that end up under water

Mairead McGuinness, the European Commissioner for financial services, financial stability and Capital Markets Union urged those attending the International Capital Markets Association's conference in Brussels this week to get on with building CMU. But were they listening? We cut through the waffle to discuss the path to a common capital market .

Meanwhile, investment banks are reassessing how they make money from M&A and advisory in the EMEA region. We reveal the new approaches to client coverage and staff pay that are emerging.

Finally, a plethora of borrowers from the emerging markets have been bringing deals at ever tighter spreads and paying very little in new issue premiums. But as we discover, these deals are not performing in secondary trading. We investigate why investors keep showing up for the paper.

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If the COP 26 conference on climate, which concludes this week in Glasgow, has had a consistent theme, it has been trying to agree how much funding the developing world needs from the rich one to combat the most severe consequences of climate change, and how to make sure that funding  gets there.

In this week’s podcast we examine some of the smart and innovative ways capital markets can help bring about climate adaptation in the developing world, and how institutions like development banks can help to mobilise the billions — perhaps trillions — of dollars necessary to prevent a global catastrophe from both public and private purses. 

Like some kind of location scout for a Bond film, we start in the coral reefs of Belize and move to Washington DC’s corridors of global power before considering which other exotic but threatened countries can benefit from global capital flows looking to have a positive impact on the developing world and climate change.

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It’s half time in Glasgow at the COP 26 conference where the world has gathered to thrash out the next steps in the fight against climate change. GlobalCapital, which has been reporting from the front lines of ESG finance since the concept’s inception, has boots on the ground at the event (and not on the other side of Scotland, like CNN) while we have also been involved in a special collaborative project with our sister publications in the Euromoney Institutional Investor stable to bring you — completely free — the most important news, analysis and opinion from the capital markets; banking and finance; and the legal, insurance and tax sectors among others around the latest developments in Glasgow and from the wider green transition (go to euromoney.com/COP26 for more).

 On the podcast this week, we discuss the GFanz initiative — Mark Carney’s $130tr plan to fund the green transition — and what it can and can’t achieve. We examine the UK’s plans to force companies to consider their path to net zero and we look into one of the biggest problems facing COP 26: funding the developing world through the climate crisis.

 Finally, we take a look at what the second week of COP 26 holds in store.

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With record amounts of issuance in the equity capital markets, dealers and issuers have become increasingly reliant upon cornerstone investors to ensure their deals get done.

 A cornerstone investor — one that commits to a large chunk of stock in an IPO before book building begins in exchange for a full allocation of shares — should bring several benefits to a new listing by removing some of the underwriting risk, encouraging other investors to join the deal and in some cases helping the stock to perform once it has been priced.

 But many market participants have complained that you can have too much of a good thing. Plenty of IPOs are being cancelled, postponed or are bombing in the secondary market regardless of cornerstone participation. Yet that is causing bookrunners to sign up ever more cornerstones in deals where they previously would not have been required. This, the critics say, prevents true price discovery, makes stocks illiquid and is inherently unfair, among other bellyaches.

 On this week’s podcast, we discuss the extent of the problem, what can be done about it and what sort of deals need and could do without cornerstone buyers.