IFLR European Capital Markets Forum 2019: meet the speakers

Author: IFLR Correspondent | Published: 19 Mar 2019
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IFLR’s European Capital Markets Forum returns to London’s Waldorf Hilton for its 16th year on April 4.

Bringing together around 300 bankers’, corporate and funds counsel and private practice lawyers just a week after the initial planned Brexit deadline, the UK’s impending exit is likely to be a recurring theme throughout the day. Panellists will also discuss: the Prospectus Regulation, UK IPO reforms, the transition from Libor to risk-free rates, fintech’s influence on the capital markets, and much more.

For more information on the forum, to view the agenda or register to attend, please contact Bonnie Wat.

Read more on these topics at IFLR’s sister publication, Practice Insight:

Brexit: market prices in article 50 extension

STS: issuers look for securitisation alternatives

Prospectus Regulation aggravates Brexit headache

Banks’ Libor plans unchanged by FCA comment

What do you spend most of your time working on at the moment?

Steve Gandy, global head of private debt mobilisation notes and structuring, Santander

I spend most of my time working on significant risk transfer transactions. For a new issuer they can take up to a year to prepare; for repeat issuers it’s between three and six months.

Ben Novick, EMEA investment banking legal, UBS

Regulatory work is taking up a huge amount of time as we prepare for Brexit and face numerous questions about European, US and UK regulation.

On the transactional front the UK market has been very quiet, but we have seen some activity for sponsors in the realms of relisting spun-off entities.

Maurizio Pastore, vice president, Euronext

I spend most of my time assisting debt issuers in understanding the potential impact of Brexit and how to prepare contingency plans for their UK-listed securities in this unfortunate scenario.

That involves promoting the listing of ECP [euro commercial paper], non-performing loans (NPLs), and green, social, and sustainable bonds on our exchange. It also involves collecting client feedback regarding upcoming changes to the risk factors regime under the new Prospective Regulation.

And a new, ambitious Euronext project will promote and sustain the on-exchange trading of debt securities.

Avisha Sookhee, director and counsel, Citi

My time is currently divided between transaction work, Securitisation Regulation implementation, and Brexit planning. The new securitisation framework is technically in force, but without the regulatory technical standards, there’s a lot of grappling around trying to figure out how to comply. We’re having a lot of discussions with clients and law firms on interpretation on multiple points such as what a transaction summary means and the differences between public and private deals. It will take some time before market practice evolves.

Sean Taor, head of European DCM and syndicate, RBC Capital Markets

There are currently many external factors affecting sentiment within the fixed income markets, which makes debt capital markets both a constant challenge and opportunity. However, all things considered, 2019 has exceeded expectations so far, with investor appetite for new issues generally strong across all asset classes.

Outside of the new issue markets there are many regulatory challenges to adapt to and prepare for; with Mifid II and the transition from Libor being the two most pressing.

In addition, Brexit planning – namely making sure RBC is able to service its clients under every potential scenario – is vitally important.

What do you think will be the biggest challenge for your market in the next 12 months?

Steve Gandy, Santander

The Securitisation Regulation presents new challenges. The famous Esma templates are giving everybody heartburn in an attempt to comply. We don’t know when the new templates will come into force, and what, if any, transitional provisions there will be. There’s quite a lot of trepidation on the part of issuers entering into deals over concerns they’re missing something from the template.

The new regulation’s capital calibrations are also making transactions less economically viable and less efficient. We’re having to experiment with different structures. It’s inevitable that we will have to sell thicker tranches and/or mezzanine tranches to make them work, so now we’re trying to establish whether or not investors will be there for us on those mezzanine tranches.

Ben Novick, UBS

Brexit and the US/China trade issues will continue to create severe market dislocation and volatility.

Maurizio Pastore, Euronext

Both a hard Brexit and a lengthy postponement of the UK’s exit from the EU will prolong market uncertainty. The threat of a stronger populist presence in the new European Parliament and its impact on the new EU Commission is also a challenge.

Geopolitical instability, for instance the US/China tariff war, populist movements gaining ground, and central banks’ interest rate movements could all have a negative impact on the issuing pipeline, and on the buyside.

Avisha Sookhee, Citi

The two biggest challenges are the Securitisation Regulation and resulting market practice, and of course Brexit. The main questions around Brexit such as whether London can still have a place for capital markets and structured finance activity or moving all activities into the EU will also be dependent on client and investor attitudes and requirements, and the regulatory environment.

Sean Taor, RBC Capital Markets

Economic growth drives DCM opportunity, and while recent data has been less robust, the overall global picture is still encouraging.

If that growth did stall, driven by any negative macro event, then the ability of issuers to raise finance would deteriorate.

Do you foresee opportunities? Where are they?

Steve Gandy, Santander

Despite the regulatory uncertainty, it does open up new opportunities for banks with standardised asset portfolios. If banks get their models approved by regulators and designated as advanced internal ratings-based asset (IRB) portfolios, they can sell securitisations without the need to involve external ratings agencies. But this hasn’t been the case for banks with standardised portfolios – now with the new SEC-SA approach, we can do unrated deals.

This presents opportunities especially in jurisdictions like Latin America, where the country’s sovereign rating can create a stubborn cap on the deal’s rating, which can ruin the economics of a deal.

Ben Novick, UBS

I possibly expect some emerging markets work, such as from Kazakhstan and Egypt. Russia was beginning to stir, but recent events have pushed back there as well.

I foresee a difficult 12-18 months for equity markets in Europe.

Maurizio Pastore, Euronext

I expect to see a moderate increase in the issuance of structured products, securitisation and NPLs. It’s clear that green and sustainable bonds are on the up.

Automation will also have a big impact on access to capital markets and corporate solutions.

Avisha Sookhee, Citi

The Securitisation Regulation presents an opportunity to reassess techniques as we attempt to make transactions more cost-effective for clients.

So far in our experience investors don’t seem to see the new framework as an opportunity as gaining the STS [secure, transparent and standardised] label remains to be tested. There have been a handful of deals, and many are exploring the possibility, but the majority are still weighing up the costs and benefits. That doesn’t mean it’s all stopped – and the current busyness levels are revealing – but the regulatory environment makes activities a lot riskier than in the past.

Sean Taor, RBC Capital Markets

Despite all the negative headlines I see reasons for optimism. The global economy is still growing, the cost of borrowing is still at historically low levels, and investors have record cash balances to invest.

While there are undoubtedly challenges, the fixed income markets have always adapted and delivered, and found a way to maintain issuers’ access to capital. In addition we are seeing more work done around the value of the social good, with fixed income leading the way on ESG [environmental, social and governance] financing.