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July 2010 | ifr special report | 11 GERMAN CORPORATE FUNDING ROUNDTABLE


process and have quarterly and half-year meetings but who simply want to tap the market now and perhaps again in three years’ time. That lowers the barrier of entry into the market.


I think we will see a lot more large Mittelstand names enter the market. We’re not going to see much growth in large caps; it’s the second line of corporates that will grow. I was asked recently whether the unrated segment represented a new market, but it’s the same market. You talk to the same investors with two differences, they are starting to look at the credit and are not relying on the rating agencies; on the institutional investor side, the criteria for investments have broadened a little, which wasn’t the case three years ago. It was a lot stricter.


Richard Curtis: But you’re also getting the domestic buyer coming in, as Bettina said. The smaller retail targeted deals are almost 100% bought by the country of origin. In an institutional deal you’re seeing 25% Germany, 25% France, 25% UK etc, because institutional buying patterns are similar. But when you target deals more at the domestic investor base, they will accept a lower margin than the institutional investor.


Marc Mueller: At the short end of the curve.


Richard Curtis: Yes, at the short end. You can’t do a 10-year retail deal.


IFR: On the point of duration, we recently saw Deutsche Telekom price a 12-year benchmark, its first at that tenor. They’ve also done a couple of semi-private 10 and 15-year deals as well. Is there a potential opportunity for corporates to issue at the long end of the curve? They can get the pricing that works for them at that point in the curve.


Olaf Sarges: Definitely. You will see more and more issuers locking in the lower yield levels at the long end. The next question on the hunt for yield alongside high-yield or longer maturities in my opinion will be the corporate hybrid market. The rating agencies have now finalised all their methodologies and if M&A activity picks up, I’m certain that more and more corporates will have a look at the balance sheets and that hybrids will play an important role. This won’t be for everyone, but I think for well-rated corporates where the hybrid itself lies within the investment-grade area, I think we’ll see the first examples this year.


Olaf Sarges, UniCredit Group


IFR: Any names in particular? Olaf Sarges: No.


IFR: Does anybody have any thoughts on long-dated issuance?


Richard Curtis: It’s the insurance bid; give me 4% and I’ll buy it as long as it’s a name I recognise and I’m happy with the credit. The curve is so steep. If you get, say, 60bp for two years and the two-year swap rate is 70bp or something, you’re getting 1.3% at that tenor. You’ve got to wait a long time before you get your money back. You might as well just go down to the casino and stick it on black or red, at least you get 50/50 there.


That is not going to encourage people to invest at the short end. Investors always


German syndicated loans — H1 2010 1/1/2010–30/6/2010


Bookrunner


1 Commerzbank 2 Deutsche Bank 3 LBBW


4 UniCredit Group 5 BNP Paribas 6 RBS


7 JP Morgan


8 Goldman Sachs 9 Bof A Merrill Lynch 10 Citigroup


Proceeds Mkt. No. of (US$m) share issues 4,391.1 4,138.5 1,855.4 1,813.0 1,743.4 1,444.5 1,138.8 1,071.1 1,031.1 1,030.6


16.1 15.2 6.8 6.7 6.4 5.3 4.2 3.9 3.8 3.8


11 HSBC 987.4 3.6 12 Barclays Capital 13 Societe Generale


918.5 738.8


14 Societe Europeenne de Banque 722.9 27,281.0


3.4 2.7 2.7


15 WestLB 645.4 2.4 Total


Source: Thomson Reuters


28 21 9


11 6 7 4 2 3 5 6 3 3 2 6


— 40


German syndicated loans — 2009 1/1/2009–31/12/2009


Bookrunner


1 Commerzbank 12,869.4 16.7 2 Deutsche Bank 3 UniCredit Group 4 RBS


5 LBBW 6 BNP Paribas


7 Credit Agricole CIB 8 Barclays Capital


11 Credit Suisse =11 UBS


=11 Santander 14 JP Morgan


11,051.9 6,675.9 6,156.3 4,270.8 4,252.2 4,108.8 3,690.8


3,024.5 2,372.6 2,372.6 2,372.6 2,290.3


9 Bayerische Landesbank Giro 3,432.3 10 Nordea


15 Mitsubishi UFJ Financial Grp 1,555.1 Total


76,935.5 Source: Thomson Reuters


German syndicated loans — 2008 1/1/2008–31/12/2008


Bookrunner 1 Deutsche Bank


4 UniCredit Group 5 BNP Paribas 6 JP Morgan


9 Credit Agricole CIB 10 Citi 11 Barclays Capital


Proceeds Mkt. No. of (US$m) share issues 15,424.6


18.2


2 Commerzbank 8,783.4 10.4 3 RBS


8,198.8 7,299.9 5,575.0 5,104.2


3,414.7 3,381.2 3,316.0 3,233.1


9.7 8.6 6.6 6.0


7 WestLB 4,235.2 5.0 8 HSBC


12 Mitsubishi UFJ Financial Grp 2,293.6 13 Credit Suisse 14 HSH Nordbank 15 LBBW Total


2,203.2 1,421.3 1,187.7


Source: Thomson Reuters


4.0 4.0 3.9 3.8 2.7 2.6 1.7 1.4


84,665.0 100.0


18 28 14 15 11 7


11 4 6 4 3 2 2 5 5


76


Proceeds Mkt. No. of (US$m) share issues 29 22 11 7 9 8 5 5 5 1 2 2 2 5 2


14.4 8.7 8.0 5.6 5.5 5.3 4.8 4.5 3.9 3.1 3.1 3.1 3.0 2.0


— 47


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