The GlobalCapital Podcast

Send us a text

◆ The sheep and the goats in UK water
◆ How EM loses assets but gains deals
◆ US corporates lean to euro bonds
Investment bankers feel like they're on the verge of something good: a boom year in 2025 of mergers and acquisitions, by both corporate and private equity firms, and all the debt and equity financing that goes with it.

The US will be front and centre, all agree, as even the prospect of Donald Trump's presidency is quickening the nerves with hopes of deregulation and M&A being waved through without questions.

Even Trump's harsher moves like tariffs could stimulate deals as companies try to position themselves better.

It's a shoo-in that the US investment banks will do well in this climate, but which of the European banks are chasing them hardest, and managing to outrun their peers? We highlight the winners of 2024 and next year's contenders.

Also this week, Ofwat, the UK water regulator, produced its much-anticipated final determination of the financial parameters for water companies for the next five years. We explore what it does for the sector, especially its sickest member, Thames Water.

And the US Federal Reserve made a "hawkish cut" of interest rates this week. That is crushing the hopes of emerging market bond investors, which have been longing for three years for a strong rate cutting cycle to give them some money inflows at last.

But it could be good news for bond bankers in London, as US companies may turn to the euro and sterling markets for funding next year.

Send us a text

Some corporate borrowers are finding the once verdant loan market a hostile spot to hang out lately, driving some companies to test out bonds for the first time. If a debut deal this week from Germany’s Rewe — which seems to still be able to access loans without any problem — is anything to go by, then the potential debutants planning to take the plunge should feel very confident indeed.

In the world of SSAs, the market has been hit and miss in ways that bankers and issuers find hard to define. There are three major theories as to why, as explored in the podcast, but the most striking one is that the market is holding its billions of euros back for the European Union’s late summer syndicated trade.

Meanwhile, somewhere famously not in the EU has run into some bother. The UK’s second largest city and England’s largest council, Birmingham, is facing a funding crisis. Beyond the acute problems for the city itself, the financial failures have put a significant dent in long held hopes that the UK local authorities might start to take more funding from the capital markets.

Finally, we head to Turkey, where two of the country’s biggest banks — Vakif and Yapi Kredi — were in the market on consecutive days, to the detriment of both deals. The Turkish sovereign has another $2.5bn to raise before the end of the year, so we discuss what can be gleaned from the banks’ outing.

Send us a text

◆ Do investors want unified capital markets coverage?
◆ Corporates fear democracy
◆ Why are FRNs trending?
◆ Second lien mortgages in arrears ― yes please

Banks’ urge to cut costs in debt capital markets, especially syndicate desks, is prompting some to call for the ‘global capital markets’ model: one team for equity and all kinds of debt.

They argue this could heal banks’ disjointed thinking and allay investors’ frustration that they have to say the same thing to five different bankers at every firm. But there are plenty of sceptics...

Few in the corporate bond market expected its rally to last into this year, still less the second quarter. But here we are and it’s still running. A motley bunch crammed into the market this week and found a great reception. As Mike Turner explains, they’re partly packing the funding in to avoid this year’s great big risk event: the US election.

Floating rate notes are the natural product for banks to issue, but normally they don’t much, because most investors prefer fixed rate bonds. So why are investors gagging to buy floaters now, just when everyone agrees interest rates are about to fall? Sarah Ainsworth goes through the ins and outs.

Second lien mortgages are the kind of — shall we say 'challenging' — collateral familiar from the US securitization market, but as George Smith and Victoria Thiele highlight, the UK has produced four deals in the past five months. The latest, from Equifinance, had some pushback in the market, but investors were only joshing and bought it in the end. We ask if lower ranked mortgages are the hot new asset class.

Send us a text

◆ Issuers and investors look for clues after violent price swings
◆ Which borrowers will lead autumn deal spree
◆ How pricing has shifted in primary market
There are moments that change what is to come. When poor US employment data and corporate earnings, and a rise in Japanese interest rates last week sent the markets into a tailspin at the start of this one, it changed how issuers will approach the capital markets when issuance volumes start to ramp up later this month.

And this year, the autumn issuance window is particularly important with the fractious US election threatening to make October and November an ill advised time to be in the capital markets with lots of funding to do.

We discuss how this week's turbulence has changed the picture for borrowers making plans for the rest of the year in terms of timing and pricing of deals.

As one of the characters in Alan Bennett's play The History Boys notes, there are times when events force people down a different course — "and here history rattled over the points", he says. Was this week one where the capital markets headed off down a different track to the one they thought they were on? We find out.

Send us a text

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%.