The risks That Will Shape Markets

Lpc orion engineered carbons pulls loan repricing


´╗┐German carbon black producer Orion Engineered Carbons is the latest company to pull a leveraged loan from the market as a result of investor pushback amid growing volatility and unfavorable wider market conditions, banking sources said. Orion was looking to reduce pricing on its term loans that refinanced the company's debt in August 2014 as part of an IPO. It attempted to shave 100bp off its 397 million euro ($443.93 million) term loan B (TLB) and $356 million TLB to 300bp, but investors objected, the sources said. It was also attempting to shave 25bp off a Libor/Euribor floor, to 75bp from 1 percent. A floor guarantees a minimum return for investors.

Orion is generally perceived to have performed well and net leverage during the first quarter of 2015 stood at 2.8 times, compared to 3.2 times for the same period last year. The financing received a ratings upgrade by Moody's to Ba3 from B1 and by S&P to BB- from B+. It could relaunch the repricing in September or when market conditions improve, the sources said.

"It is not an indication of the quality of the company. The request is mistimed," one of the sources said. Last week, Austrian packaging group Constantia Flexibles pulled a deal that was also looking to cut pricing on its loans to a similar level. A repricing for Spain's Ufinet Telecom, formerly known as GNFT, was also pulled last week amid volatile macro conditions.

A number of companies managed to reprice loans on more attractive terms earlier this year as borrowers took advantage of cash-rich investors' appetite for paper and launched opportunistic deals, amid a lack of new event-driven issuance. But with market conditions weakening amid volatility around Greece and a growing pipeline of new loans, investors have become more selective on which deals to accept. German chemicals and real estate conglomerate Evonik Industries sold its carbon black unit to Rhone Capital and Triton Partners in 2011 for around 900 million euros. ($1 = 0.8943 euros)

Mauritanias central bank says to develop islamic finance


´╗┐Jan 23 Mauritania's central bank says it will develop Islamic finance as part of efforts to modernise the banking system and make long-term loans available to companies."A strategy for the development of Islamic finance is currently being prepared. It will identify the key levers to promote and revitalise the sector to its full potential," central bank governor Sid'Ahmed Ould Raiss said in a speech this month. With 3.2 million people, Mauritania has reserves of iron ore, copper and gold and is encouraging exploration in its offshore oil and gas sector. Its economy grew 6.9 percent in 2013. But local banks have struggled to support the economy with adequate levels of long-term funding, Raiss said. In the first half of 2013, 79.3 percent of all bank credit was in the form of short-term loans of one year or below, a deterioration from 76 percent in 2012.

"One of the main obstacles to private sector development is the scarcity of long-term financial resources."Plans to modernise the financial system will be rolled out over a five-year period, starting in the first quarter of 2014, Raiss said without giving further details.

Islamic finance, which follows religious principles such as bans on interest and gambling, is making inroads in several sub-Saharan countries including Nigeria and Djibouti.

The planned creation of a securities exchange in Mauritania would allow the issuance and trading of both conventional and Islamic financial instruments, including Islamic bonds, Raiss added. Last year saw the launch of two new Islamic lenders in Mauritania: Banque Al Muamalat As Sahiha and Maurisbank. Banque Islamique de Mauritanie started operations in 2011; it is 60 percent owned by the Jeddah-based Islamic Development Bank and 40 percent by Turkey's Bank Asya. Last month, the country's ruling party secured a majority in parliamentary elections, and the once-outlawed Tawassoul Islamist party joined parliament for the first time.