版本:
中国

BoE bond list sparks hunt for next chosen ones

LONDON, Sept 16 (IFR) - The Bank of England wrongfooted sterling investors this week when it released an early list of bonds eligible for its corporate bond purchase programme, sparking a hunt for profits in paper that has not yet made the cut.

The BoE wants to buy up to £10bn of corporate bonds over the next 18 months, and on Monday outlined the £110bn of securities it will target in the secondary market from September 27.

The 271 eligible bonds were issued by 92 companies that make a "material contribution to the UK economy", the central bank said, and included foreign names like Apple, McDonald's and PepsiCo.

That caused confusion among credit strategists, whose focus was as much on bonds that didn't make the list as on those that did.

"We've yet to hear a convincing explanation for the exclusion of RWE, GKN, Telefonica and Iberdrola," wrote Citigroup strategist Matt King on Wednesday.

"All four have a significant UK presence, with thousands of UK employees. We wouldn't be surprised to see some of these issuers making the list in future."

But as King noted, determining which bonds could yet become eligible is not "simply an academic issue", it could be extremely profitable, at least judging by how euro-denominated bonds have traded since the introduction of the European Central Bank's corporate sector purchase programme.

"Though deciphering the arcana of the [BoE scheme] may not be most investors' idea of fun," he wrote, "if the 23% outperformance of CSPP eligible bonds relative to the rest of the euro investment-grade market since March is any guide, it's not something they can afford to miss."

CONSISTENT INCONSISTENCY

Analysts' head-scratching has centred on the apparent inconsistency of the BoE's eligibility criteria.

Barclays credit strategist Zoso Davies questioned why whole business securitisations from Anglian Water and Thames Water were eligible as they appeared to violate the ban on complex or non-standard structures.

Bank of America Merrill Lynch's Barnaby Martin wondered why Transport for London was preferred to Network Rail, adding that the BoE's approach was more "subjective" than that taken by the ECB.

He was also surprised that Birmingham Airport's senior unsecured bonds made the cut ahead of senior secured deals from Heathrow and Gatwick, even though the latter structures are eligible for the programme.

"Given the significant number of surprises in yesterday's list of securities, we expect the market to price in a good chance that several changes will be made," wrote Davies.

"Our intuition, however, is that this line of inquiry will result in more 'unofficial rules' being uncovered, rather than broad swathes of bonds being added to the list."

STERLING WORK

The BoE's goal is to drive investment in the UK by lowering borrowing costs.

Governor Mark Carney told MPs last week that the programme was already working, pointing to a surge in sterling corporate issuance since its announcement.

National Grid Gas Finance - which has four bonds on the eligible list - printed the biggest ever corporate sterling trade on Tuesday, selling £3bn across four tranches.

The central bank has single-handedly "lifted the sterling market out of irrelevancy," one head of corporate DCM told IFR.

The effects of the purchase programme could double the corporate volume expected in the currency this year to £20bn-£25bn, he added.

MACBOOKS AND MOET

For now the BoE will only buy bonds in the secondary market - in contrast to the ECB, which plays in primary deals - and ultimately wants its £10bn portfolio to reflect the shape of the outstanding corporate bond market.

Electricity companies therefore account for 25% of the eligible bond list, while "consumer, non-cyclical" credits have the second biggest share at 15%.

"Buying in secondary is a more sensible approach, as it is less distortive and does not disturb the bookbuilding process as much, nor the relationship between issuers and their investors," said Brendon Moran, global co-head of corporate origination at Societe Generale.

However, the inclusion of firms like Apple - which was recently ordered to send Ireland 13bn of unpaid taxes - and LVMH Moët Hennessy, the Paris-based luxury goods maker, has drawn criticism from many market participants.

Some are unhappy that issuers from sectors like social housing and infrastructure have been overlooked, while others have questioned whether the real economy will actually benefit.

"The BoE action is positive for the economy in terms of signaling support and underlining the resolve of the central bank," said Moran.

"That said, the beneficiaries remain the large multinational borrowers who issue bonds regularly and arguably are in less need of support than other parts of the economy."

(Reporting by Tom Porter)

更多 公司新闻(英文)

热门文章

编辑推荐

文章推荐