Reuters: Bankruptcy News: Asian Reg S market cools as tone turns

Reuters: Bankruptcy News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Asian Reg S market cools as tone turns Sep 28th 2012, 14:10 By Helene Durand Fri Sep 28, 2012 10:10am EDT LONDON, Sept 28 (IFR) - The seemingly unstoppable dollar Reg S market had a bit of a wobble this week, potentially closing off a valuable funding avenue for banks and corporates seeking to raise capital. Concerns about the eurozone sovereign crisis weighed on sentiment and reduced what had seemed insatiable investor appetite, causing new issues to struggle in the after-market. European financial institutions and corporates have become more and more reliant on the dollar Reg S market to sell racier, higher yielding structures. In September alone, banks sold USD3bn of Tier 2 debt in the market versus the EUR1.75bn sold in the single currency. Corporates sold USD1.35bn versus EUR750m, in keeping with the trend that has been prevalent through 2012. While optimistic market participants generally agree that the pull-back would likely be temporary and that conditions would recover once China's Golden week is over and the market has consolidated, a more permanent shut-down would be of concern, as the pipeline - though smaller than it was a couple of weeks ago - is not completely empty. The senior and subordinated financial indices, which had been steadily grinding tighter since the end of July, retraced some of their gains this week. Markit's Senior Financials index was quoted as tight as 185bp on September 21 but widened out to 210bp, while the Subordinated index that went as low as 302bp on September 14 hit 353bp on Wednesday. "Deals that have come this week have done OK and came at decent levels, however, there is no doubt that this market was a lot healthier up until last week," said a syndicate banker. "A lot of investors that had been underweight are now well covered and are a bit more cautious." Demand for an Erste Bank USD500m 10.5NC5.5 Tier 2 reached USD2.5bn, far less than the USD8bn book Danske gathered two weeks ago for a USD1bn 25NC5. Instead of trading up well above par like the Danske or the ABN issue, Erste struggled in the after-market and was quoted at 99.75/100 on Friday. Meanwhile, a USD650m perpetual non-call five-year for ArcelorMittal captured USD2.5bn of demand but was seen as low as 98.7 in the after-market. It was back above par by Friday. While the market was open long enough for these two issuers to get through the door, others that had been looking at launching deals have put their plans on hold for now. Raiffeisen Bank International (RBI), which concluded an Asian roadshow two weeks ago and was heavily tipped as a candidate for issuing Tier 2, is now monitoring the market and will likely wait until the week of October 8 to bring a deal. Bankers also said that the particular issuers going to the market this week could explain why demand has proved less solid than previously. "A name like Erste does not resonate much with Asia, as good a bank as it is," said a DCM banker. "As for Arcelor, this was a real market opener and the first time we've seen a true cyclical do a hybrid deal, and it definitely looked like more difficult sale than we have seen in the past." Another banker argued that it was not just Arcelor but also the deal's structure that was challenging. However, one syndicate banker said the fact that deals could get done, despite the backdrop, was proof of the market's resilience. "The Erste and Arcelor deals had USD2.5bn books when everything was gapping wider," said one. "They actually show that things can get done for trickier names even when conditions are tricky and I don't think what we have seen this week is a reflection of a fundamental change in tone." (Reporting by Helene Durand, Editing by Ciara Linnane, Julian Baker) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions