Friday 25th July 2014
slib33
FRIDAY ANALYSTS TICKER: July 25th 2014 - According to Adam Cordery, global head of European fixed income, Santander Asset Management, and fund manager for the Santander Euro Corporate Short Term and Euro Corporate bond funds, “Pricing of risk assets doesn’t offer much of a margin for error at the moment. And now Europe is starting to go on holiday, market liquidity may get poorer than normal, and any buys today may well have to be holds until September. It is always interesting to note what yields are required to attract clients to financial products. Twenty years ago, bond funds offering yields of 10%+ could generally attract lots of client interest very quickly. However as rates have come down over the years, so the yields clients demand have fallen. Now 4% seems to be the new 10%, he say. Cordery thinks that unfortunately, investors often want today the yield/risk mix that was available last year, so the products that get launched, sold and bought in size may be more risky than people think. “Products with 4% yield will sell well today, but to get to a 4% yield in Euro you need to invest in a portfolio with an average rating of single-B, and that is far from being risk-free. I get the impression the conventional wisdom today is to think that interest rates must surely go up soon and the main risk to bond portfolios is an increase in bund yields. Because of this many investors are buying short-duration products and floating rate notes, perhaps viewing them as a safe choice, almost like cash. It is possible however that these products may yet prove to have a considerable sensitivity to changes in credit market spreads and/or bond market liquidity, and may prove to be no protection at all.” - Commenting on the RBS share price jump, Dr Pete Hahn of Cass Business School, says “It's hard to tell whether the RBS share price jump today is more about relief or optimism. The former is about fewer fines, fewer losses on loans, and fewer costs in a shrinking business and possibly dividends for shareholders. And there's the rub, owning shares (as opposed to interest bearing debt) should be about optimism and long-term growth in dividends. But from a shrinking business? Few would argue that RBS' retail and corporate bank had efficiencies to be gained and cash flow that might be converted to dividends; yet like most banks, RBS' cost of equity remains stubbornly and appropriately above its ability to provide a return on that equity. For shareholders, current improvements should mean dividends in the medium term but a recognition that RBS may lack any merit for new investment and delivering any long-term dividend growth - not good. While many large retail banks are getting safer, in some aspects, and we often speak of them in terms of moving toward utility type models, banks take risks, are cyclical, face competition, have new business challengers, and are simply are not utilities. Investors shouldn't get ahead of themselves here.” - According to the monthly survey held by the central bank of Turkey, the country’s capacity utilization (CU) rate declined slightly to 74.9% in July from 75.3% in June. Meanwhile, seasonally adjusted (SA) CU also declined to 74.3% from 74.7% in June, writes Mehmet Besimoglu at Oyak Yatirim Research. As for manufacturing confidence, the index declined to 109 from 110.7 in May. On SA basis, the index also edged down slightly to 106.4 from 107.2. SA capacity utilisation was broadly stable in 1H14, averaging at 74.7%. This is the same level with the 2013 average. Despite the political turmoil and volatility in financial markets, activity has been relatively resilient. Export recovery & government spending supported production in 1H. Following the elections, public spending relatively decelerated. The turmoil in Iraq also decelerated export recovery from June. Nevertheless, we still expect 3.5% GDP growth in 2014, writes Besimoglu.

VTB Capital places TRY300m ($167.6m) bond issue

Thursday, 26 April 2012
VTB Capital places TRY300m ($167.6m) bond issue VTB Capital plc has successfully issued a three-year, TL 300 million ($167.6m) bond in Turkey, with a coupon of 11.28%. Underwritten by Garanti Securities, an agency of Garantibank, with Fokus Holding as advisor, the bonds were sold exclusively to local Turkish qualified investors, making VTB Capital plc the first ever foreign entity to have issued a local currency bond that has been distributed locally in Turkey. http://www.ftseglobalmarkets.com/

VTB Capital plc has successfully issued a three-year, TL 300 million ($167.6m) bond in Turkey, with a coupon of 11.28%. Underwritten by Garanti Securities, an agency of Garantibank, with Fokus Holding as advisor, the bonds were sold exclusively to local Turkish qualified investors, making VTB Capital plc the first ever foreign entity to have issued a local currency bond that has been distributed locally in Turkey.

A landmark deal for both VTB Capital and the Turkish capital markets in general, this transaction also represents a milestone in terms of the tenure offered in the Turkish market, with only one other local non-Sovereign entity having offered a three-year bond previously.

Priced at 11.28%, VTB Capital plc has achieved a favourable pricing level, paying a spread over the three-year Turkish Sovereign on par with the largest domestic Turkish banks.

Atanas Bostandjiev, CEO, UK and International, of VTB Capital plc, the bond, " underlines the strategic importance of Turkey for VTB Group, and will lay the foundations from which VTB Capital will look to grow its business operations in the country.”

Makram Abboud, CEO Middle East & Africa and Co-Head of the International Multi-Product Structured Origination and Distribution group for VTB Capital plc, notes: “I believe that trade and financial flows between Russia and Turkey will significantly increase in the very near future and VTB Capital is well positioned to help facilitate these flows and support our clients.As we continue to grow our international presence aggressively, we are evaluating various financing opportunities in the region, and in particular within Turkey. The proceeds will be utilised accordingly.”

"We were issuing Turkish bonds so naturally we needed to choose a strong local player to act as underwriter. Garanti Securities is one of the leading private banks in the local market." adds Abboud. "The transaction was fully sold down to Turkish investors.The bonds are priced at 11.28% so VTB Capital plc has achieved a favourable pricing level, paying a spread over the three-year Turkish Sovereign on par with the largest domestic Turkish banks."



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