The Rockefeller swank

10/18/24 • 27 min

◆ Iconic NYC spot powers CMBS revival
◆ Gilt market braces for Labour Budget
◆ Banks plan bonds for November undaunted by US election
The US CMBS market lapped up its biggest deal of the year this week, backed by loans on New York's famous Rockefeller Center. We look into what the deal tells us about the revival of offices and the pipeline for the CMBS market, which has been troubled for years by changing working practices and high interest rates.

In the UK, the Gilt market is gearing up for the new government's first Budget, due at the end of the month. The government says there is a £20bn hole in the public finances and that it wants to invest. But how much extra Gilt issuance can the market stand? We find out.

Finally, the big risk event of the year for capital markets — the US election on November 5 — does not appear to be causing quite as much peril as it did earlier in the year, to the extent that Europe's banks are already planning to bring deals in its immediate aftermath across the capital stack.

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UK leads charge to T+1 but brews up a storm

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◆ T+1 is coming but is it worth the hassle?
◆ Despite appearances, bank bond issuers are not getting it all their own way
◆ Where the EU slots into the reshuffled SSA pack
The UK has launched a draft framework for settling securities trades a day after deals are done — T+1 settlement. The EU is expected to follow, with both markets aiming to catch-up the US, which cut settlement time down to one day in May. But not everyone is thrilled at the prospect as they face up to the burden of paying for everything required to make it happen.

In the FIG market, banks seemingly have the upper hand over investors but there was plenty this week to suggest that they cannot simply do whatever funding they want at a price of their choosing. We look at the treacherous undercurrents at work.

Finally, we revisit a story from last week's show where we explored how the landscape of the European government bond market is changing. Well, no story about the SSA market is complete without considering where the EU fits in. In the week in which it executed another blockbuster syndication, we investigate where the jumbo-sized issuer sits — something it has been urging the market to consider for a long time, itself.

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Is HSBC about to power up in investment banking?

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◆ New CEO revamps HSBC to be leaner and meaner
◆ What markets think of idea to make UK water sector non-profit
◆ The swap spread dynamic hammering SSA bonds
New HSBC boss Georges Elhedery is restructuring the bank. It's what new CEOs do; and it has certainly been tried at HSBC before, with mixed results. But plenty of people think this time could be different. We explain why Elhedery's plan could work and what the motivations are behind it.

A corporate restructuring idea that received a less enthusiastic reception was one to make the UK's troubled water companies — privately owned — operate as non-profits. The sector is in crisis and requires huge investment. The thought is that money previously funnelled into private hands by way of dividends should be used to pay for it. We talk through the ramifications and the reaction in capital markets.

Finally, we look into the accelerating tightening of the spread between Bund yields and interest rate swaps in euros and why this could cause a headache for supranational and agency bond issuers.