Tuesday 13th October 2015
NEWS TICKER, OCTOBER 13TH 2015: NEWS TICKER: The Lyxor Hedge Fund Index was down -1.4% in September. 3 out of 11 Lyxor Indices ended the month in positive territory. The Lyxor CTA Long Term Index (+4.0%), the Lyxor CTA Long Term Index (+2.3%), and the Lyxor L/S Equity Market Neutral Index (+0.4%) were the best performers. In contrast with the sell-off by last fall, the current recovery process is proving more laborious, says Lyxor. Continued soft macro releases, several micro turbulences (VW, GLEN, the US Healthcare) and signs that the Fed might be more concerned about global growth, drove markets to re-test the end-of-August lows. L/S Equity Long bias funds and Event Driven funds were yet again the main victims. Conversely, CTAs, Global Macro and L/S Equity funds with lower or variable bias, successfully navigated challenging times - British payments processor Worldpay Group Ltd priced its listing on the London Stock Exchange (LSE) today at 240 pence per share, valuing the business at £4.8bn in the largest IPO of this year on the LSE. Payments processing giant Worldpay (WPG) managed to list this morning at 240p, right in the sweet spot of an initial 225p-260p marketing rage which was subsequently narrowed to 235-250p. It currently trades +4% at 250p equating to a positive market debut in light of a slower pace of listings The UK company, which qualifies for FTSE 100 inclusion, processes £370bn in payments from 400,000 merchants every year and handles around 40pc of web-based transactions in Europe. Worldpay earlier this year rejected an offer of up to 6.6 billion pounds, including debt, from French rival Ingenico Group SA. Last year Worldpay made an underlying profit of £765m on revenues of £3.6bn. In the first six months of this year, sales rose 13pc to £465.7m, pushing profits up by the same amount to £182.6m. As of the end of September, the London stock market had welcomed 93 flotations raising £5.3bn this year, a significant drop from the £11bn generated from 136 listings in the same period last year - This week’s major London IPOs have had mixed fortunes. and a cooling in appetite for new paper over the last two years. However, motor insurer Hastings Direct (HSTG), which came to market yesterday, could only manage to get its IPO away at 170p which was well below its 180-185p indicated range. Worldpay’s IPO success most likely reflects the global preference for digital and consumer focused firms - The gross return of the SS&C GlobeOp Hedge Fund Performance Index for September 2015 measured -1.56%. Hedge fund flows as measured by the SS&C GlobeOp Capital Movement Index declined 1.13% in October. “SS&C GlobeOp's Capital Movement Index for October 2015 was -1.13%, down from the previous month's 0.62%, reflecting primarily seasonal factors,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies. “Comparing year-over-year flows, the -1.13% for October 2015 was virtually identical to the October 2014 reading of -1.12%, with both inflows and outflows closely in line for the comparative periods. We have been analysing our Capital Movement Index and Forward Redemption Indicator carefully in the wake of recent market volatility. October's results are certainly indicative of overall stability in hedge fund allocations.” - Zurich UK is in talks with its staff over cutting 29 jobs across the administrative and support teams for retail sales as part of a restructuring process. Zurich UK has entered a period of consultation with its support and administrative staff and it is expected 29 jobs will be cut as a result. The decision has been made to realign all Zurich UK's resources to focus on key areas of protection and wealth, and is expected to help the company deliver increased efficiency and co-ordination of services to advisers and their clients. The company has also re-aligned its platform offices in Leeds and Bristol to become the North and South offices, focusing on the two regions instead of two cities – South Africa’s National Union of Mineworkers (NUM) has signalled that there won’t be any agreement signed between the union and the Chamber of Mines (COM), at least until tomorrow morning. As the majority union, representing 72% of employees represented in the coal wage negotiations, the NUM must agree to the latest offer from the mining companies – Anglo American Coal, Delmas, Exxaro, Kangra, Koornfontein, Msobo and Glencore – represented by the COM, if the coal sector strike is to come to an end - APEC’s Energy Ministers from the 21 APEC member economies concluded their meeting on Tuesday in Cebu, the Philippines, by adopting the Cebu Declaration and Instructions, a joint statement on the the region’s energy priorities. Ministers instruct the region’s energy stakeholders to promote and collaborate on initiatives under the theme: “Towards an Energy Resilient APEC Community,” as well as create a task force on energy resilience to implement disaster-proofing of energy infrastructure, introducing energy efficiency technologies, promoting the use of clean energy and improving energy trade and investment in APEC. - Singapore property firm Perennial Real Estate Holdings (PREH) is launching a maiden issue of three-year bonds to the retail market with an annual payout of 4.65 %. Up to SGD150m of the bonds will be offered to the public although some may be re-allocated to institutional and other investors if applicable, PREH said in a statement. DBS is the sole manager and book-runner. The total issue size can be raised to SGD300m if the public offer is oversubscribed. The maiden bond offering further diversifies the firm’s sources of funding, though they have one of the shortest tenures among retail bonds issued by Singaporean companies in recent years. PREH's offer comes after jewellery firm Aspial Corporation's issuance in August, which offered a coupon rate of 5.25% over a five-year tenure - Major Asian bourses edged lower in trading today and major European equity indices fell in early trading, with energy-related shares leading the losses on profit-taking after a fall in crude oil prices yesterday. Continued concerns over China’s economic outlook and the prolonged rout in the commodities markets is beginning to take on more characteristics of a crisis, than simply market corrections. Most Asian markets fell after Chinese trade data signalled weakening global and domestic demand. Japan's Nikkei Stock Average fell 1.1%, Australia's S&P/ASX 200 lost 0.6% and Hong Kong's Hang Seng Index was down 0.5%. Indonesia's JSX fell 2.6% and South Korea's Kospi shed 0.1%. In brighter mode, the Shanghai Composite Index finished up 0.2%, while the Straits Times Index (STI) ended 33.61 points or 1.12% higher to 3032.11, taking the year-to-date performance to -9.90%. The top active stocks today were SingTel, which gained 1.56%, DBS, which gained 0.45, UOB, which gained0.91%, Noble, which gained 9.57%and Keppel Corp, with a 0.13%advance. The FTSE ST Mid Cap Index gained 1.18%, while the FTSE ST Small Cap Index rose 0.90 - The US Federal Reserve staving off a rate rise last month has given the markets breathing space and market focus will hone in on Federal Reserve Bank’s James Bullard, who will give a speech at the annual meeting of the National Association for Business Economics in Washington - According to Eurobank, the Greek government submitted to Parliament yesterday a bill containing the first set of fiscal and structural measures that will permit the disbursement of ca €2bn from the first instalment of €26bn of the €86bn loan agreed in August under the Third Economic Adjustment Programme for Greece. The bill is expected to be voted on late on Friday this week - InvestCloud, Inc, a provider of cloud-based front and middle-office solutions focused on digitizing customer experiences and internal operations for global investment advisors, today announced it has raised $45 million in growth equity funding. The round was led by FTV Capital and will be used to further invest in the company’s state-of-the-art platform and functionality, enhance customer service, and expand the company’s global footprint. Richard Garman, FTV Capital managing partner, has joined InvestCloud’s board of directors -

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Investors pile into Islamic bonds

Wednesday, 23 May 2012
Investors pile into Islamic bonds April and May looked to be banner months for sukuk. Two deals, one from the Saudi Electricity Company (SEC) and the other, from Banque Saudi Fransi, the Saudi lender part-owned by Credit Agricole, marked two rare but popular US dollar denominated issues which were highly prized by investors. The benchmark deals helped underscore growing investor appetite for Islamic bonds. http://www.ftseglobalmarkets.com/

April and May looked to be banner months for sukuk. Two deals, one from the Saudi Electricity Company (SEC) and the other, from Banque Saudi Fransi, the Saudi lender part-owned by Credit Agricole, marked two rare but popular US dollar denominated issues which were highly prized by investors. The benchmark deals helped underscore growing investor appetite for Islamic bonds.

Saudi Fransi, Saudi Arabia’s fifth largest bank, launched $750m five-year Islamic bond mid-month at par amid strong investor demand for the issue in mid-May. The issue is the bank’s first sukuk sale under a recently-established $2bn debt programme. The sukuk came in at a spread of 185 basis points (bps) over midswaps, at the lower end of its ­indicated range. Initial price guidance was 200bps over midswaps. The deal was heavily oversubscribed, attracting investor orders worth $4bn, under­scoring growing investor appetite for sukuk issuance. The sukuk carries a profit rate of 2.947%. Citi, Deutsche Bank and Credit Agricole were arrangers on the deal.

The deal marks the second dollar denominated sukuk emanating from the Kingdom so far this year. Saudi Electricity’s $1.75bn sukuk, issued three weeks earlier, raised the bar with some $17.5bn in investor orders.  The Saudi Electricity Company (SEC), which is rated A1/AA-/AA- all Stable, is the largest utility in the GCC. The issue was made up of a five year $500m tranche and a $1.25bn ten year element. The ­transaction was led by Deutsche Bank and HSBC marked the inaugural ­international sukuk issuance by SEC and the largest international debt capital markets issuance out of Saudi Arabia for some years. The issuer also wanted to achieve a long tenor bond supported by a diversified investor base, which the arrangers helped secure after a comprehensive global road show. The dual-tranche Sukuk transaction was well received globally and generated a large order book with over 440 investors placing orders.

Shortly after the issue the SEC’s chief executive Ali Al Barrak explained, “The sukuk issue is important to us for strengthening our funding mix, accessing longer-tenor financing, broadening our investor base and helping us become more in line with our global peers while supporting SEC’s capital expenditure requirements.”

Saudi Arabian dollar-denominated bonds come to market relatively infrequently, and attract substantial demand when they do; illustrating that Gulf issuers are benefiting from their own economic micro-climate and are providing something of an oasis for investors starved of comprehensive corporate issuance opportunities. 

Investor appetite for the deals was marked and might just be a sign of a growing preference for Islamic instruments. The evidence is still thin: however Banque Saudi Fransi’s existing $650m conventional bond, which carries interest of 4.5% and matures in 2015, was bid at just over 103.97 in the second week of May, to yield about 2.8%, coming under some selling pressure ahead of the new issue.

Also in mid May Islamic Development Bank (IDB) enhanced the size of its medium term notes (NTN) ­programme from $1.5bn to $3.5bn, which will be issued in both London and Kuala Lumpur. The IDB’s forthcoming medium term sukuk (which is expected to range between five and seven years) will be issued under this programme sometime in June and is expected to raise between $750m and $1bn. Funds will be used to provide blended credits in support of capital goods projects in member countries. IDB, which is AAA-rated, priced a $750m five-year sukuk last May at a spread of 35bps over midswaps to yield 2.35%. According to local Saudi press reports, the sukuk will be 144a-compliant and, therefore, open to investors from the United States; though the IDB did not respond to questions about its forthcoming issue. 

Elsewhere, bond traders expect the first restructuring of an Islamic bond.  United Arab Emirates’ Dana Gas, the Sharjah-based energy company, is expected to restructure its $920m sukuk in coming weeks as investor concerns have heightened over the ability of the utility to meet its payment ­commitments. Up to now no Islamic bonds have been renegotiated though there have been examples of outright defaults (in both Saudi Arabia and Kuwait).

Dana has reportedly hired Blackstone, Latham Watkins and Deutsche Bank to advise on the various options for repaying the sukuk. The company is “committed to finding a consensual solution that is equitable to all stakeholders”, it said in a statement to the Dubai stock exchange.

Meantime, the Central Bank of Bahrain (CBB) says its monthly issue of the short-term Islamic leasing bonds, Sukuk Al-Ijaara, has been oversubscribed by 175%. Subscriptions worth BD35mwere received for the BD20m issue, which carries a maturity of 182 days. The expected return on the issue, which matures in mid-November 2012, is 1.34%.

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