Here's Your Year-End Financial Checklist for this year

Lpc us syndicated loans initially shrug off trump historic upset

US syndicated loans are little changed and new deals in the queue are still expected to launch as markets start digesting Donald Trump’s surprise presidential election win. Longer-term views hinge on the new administration’s tactics for financial regulation and ripple effects for inflation, markets volatility and interest rates, investors and bankers said. Sector analysis will be critical, based on eventual policy changes impacting everything from healthcare and the environment to commodities and technology, they said.“In conversations with our leading investors, we see no indications of material impact to the loan market,” said Jeff Cohen, head of US loan capital markets at Credit Suisse. “Over the longer term, to the extent that Trump’s policies are inflationary, we could see even greater demand for floating-rate investments.”  Floating-rate loan investors and bankers said they are encouraged by a significant recovery in US stocks from deep overnight losses, though they remain alert for volatile conditions and lingering uncertainties.“We are not seeing any wholesale pulling of deals, and no one is pulling or cancelling bank meetings,” a middle market lender said. “There is still a ton of cash, and I don’t think there is any forced selling.”Lender commitments for a number of loan deals are due over the next two weeks. The biggest is a US$3.87bn credit facility backing the Bass Pro Shops purchase of fellow sporting goods retailer Cabela’s Inc. US syndicated lending for mergers and acquisitions (M&A) was already running at a reduced pace this year, as markets contended with uncertainties tied first to the United Kingdom’s stunning vote to exit the European Union - known as Brexit – and then to worry about the US election outcome and Federal Reserve policy.  At US$1.55trln this year through November 2, US syndicated loan volume was 8% lower than the same period last year and the lowest since 2012, according to Thomson Reuters LPC. Trump’s overnight victory took the markets by surprise sending US stock futures and dollar futures down sharply while safe havens like gold or the Japanese Yen soared. The markets calmed down after the opening and stocks rallied."I, like many, am surprised by the result; I fully expected more of a drop in the market so I'm doubly surprised,” a senior investment-grade banker said.

“The early read is I don't think it's going to have much of an impact,” he said. “Banks will remain eager to pursue deals resulting from whatever M&A unfolds from here on in.”PAIN AND GAIN While demand for floating-rate assets could mount if inflation and rates rise, pain and gain will be felt in various sectors depending on how new policies unfold. Trump has advocated repealing the Affordable Care Act (ACA) and eliminating the Dodd-Frank Act. The president elect has also vowed to change international trade agreements.

“While a reduction in regulatory compliance costs would bolster bank earnings, reduced oversight and a roll-back of requirements would also result in a weakening a of banks' capital and liquidity positions, a negative from a credit perspective,” Moody’s Investors Service wrote in a Wednesday report. Policies that disrupt the flow of goods and services between the US and its trading partners, meantime, would be negative for sectors including autos, oil, technology, Moody’s said. On the flip side, it would be positive for industries facing severe import competition, such as steel and manufacturing subsectors, the rating agency said. Removing the ACA, meantime, could be a long-run positive for health insurers by increasing pricing and underwriting flexibility, analysts and loan market participants agree.“The healthcare sector will see an impact – it will throw ACA into disarray,” one loan trader said. “Pharma names like Valeant, Endo and Mallincrodt are doing better. Valeant, which is a bellwether, is up 75bp from yesterday.”However, any reduction in the number of insured individuals would have credit negative implications for public and private healthcare providers and medical device manufacturers, Moody’s said.

QUEUE THE DEALS There is a temporary lull in loan deal activity Wednesday as markets hash through the implications of Trump’s victory and monitor market swings.“Some meetings scheduled for today or tomorrow may be delayed by a few days to allow accounts to regain focus,” said Cohen. Ultimately, however, “it’s very unlikely we’ll see many postponements.” The roster of at least a half a dozen deals already circulating in the market, in addition to the Bass Pro Shops loan, includes financings in the software, packaging, water treatment and food and beverage sectors. Among the largest, lender commitments are due November 17 for a US$2.1bn cross-border leveraged deal to support contact center software company Genesys’ purchase of call center cloud services company Interactive Intelligence. Meantime, in the midst of the election results, lenders on Wednesday announced that retail shelf-edge marketing company Vestcom International will shop a US$375m loan to back its acquisition by Charlesbank Capital Partners. Investors are still happy to look at the deals in market, as well.“There has been a lot of cash on the sidelines leading up to the election, and we saw that liquidity dynamic play out in the Brexit-like overnight reactions in markets,” said Mark Okada, co-founder and chief investment officer, Highland Capital Management. “Now, investors should be prepared for much of that capital to get put to work.”

Money markets banks borrowing at ecb rises as spain stress grows

* Banks increase borrowing at ECB's seven-day tender* Rise in demand reflects growing Spanish stress* Growing ECB rate cut speculation seen weighing on EuriborBy William JamesLONDON, June 19 Bank borrowing from the European Central Bank rose on Tuesday as turmoil in the euro zone government bond markets pushed more banks to take up the ECB's regular offering of seven-day loans. Demand for the funds, currently used largely by banks who can no longer borrow money affordably elsewhere, rose by 36 billion euros to 167 billion euros. The number of banks bidding at the auction rose to 101 from 94.

"The rise in the number of bidders points to signs of new stress. I would say Spanish names are behind that," said Matteo Regesta, strategist at BNP Paribas in London. Spain has become the focus of the euro zone debt crisis over the last week after a bank rescue plan worth up to 100 billion euros failed to win market confidence and propelled 10-year bond yields above the 7 percent danger level. Spanish banks have suffered huge losses on souring portfolios of property loans and most have been frozen out of the interbank market where banks borrow money to lend on at a profit. Data released on Monday showed Spanish banks' bad loans hit their highest since April 1994.

The increase in seven-day borrowing may herald rising market stress but is unlikely to have a major impact on money market rates, which have been pushed to rock-bottom levels by the huge amount of excess liquidity in the system. Banks' total borrowing from the ECB is 777 billion euros more than their estimated needs, according to Reuters data , with most locked into long-term loans offered by the ECB in December and February to calm a previous bout of stress. That excess of liquidity, along with growing speculation that the ECB may cut interest rates to boost the region's flagging economy, saw the benchmark interbank Euribor rate fall for a third successive session, to 0.657 percent.

The equivalent Libor rate, set by a smaller panel of banks based in London, also fell to a new record low at 0.56557 percent. The prospect of cuts to the ECB's deposit and refinancing rates, boosted by recent comments from ECB policymakers, was the main factor driving rates lower, analysts said. Barclays Capital analysts revised their ECB rate outlook to forecast a 50 basis point cut in the refinancing rate, to 0.5 percent, and a fall in the deposit rate to zero from 0.25 percent."In a scenario of the refi rate at 50 (basis points) and the deposit facility at zero, we would expect EONIA to fix at 10-15 bps in the reserve period, with three-month Euribor likely to decline to 40-45 bps," the bank said in a note. The Eonia overnight rate fixed at 0.334 percent on Monday.