DealZone

Shares in Russian aluminium group Rusal fell heavily on their debut, as a broad market slump across Asia and worries over the group’s debt and legal issues dogged its landmark $2.2 billion Hong Kong IPO.

And in other media:

Greece is wooing China to buy up to 25 billion euros of its bonds in its efforts to avert one of Europe’s biggest debt crises, the Financial Times and Wall Street Journal reported.

Private equity groups including CVC Capital Partners and Carlyle are preparing to finance a 5 billion euro bid for German cable provider Kabel Deutschland, the FT reported.  Read the story here.

Highlights from the Thomson Reuters Investment Banking scorecard:

QATAR PRICES BIGGEST MIDDLE EASTERN BOND ON RECORD
This week’s $7 billion offering from the State of Qatar marked the largest bond offering from a Middle Eastern issuer on record and the second multibillion dollar offering from Qatar this year.  For year-to-date 2009, debt capital markets activity from Middle Eastern issuers totals $38.6 billion, a 120% increase over last year at this time.
The offering, which was led by Barclays, Credit Suisse, Goldman Sachs, JP Morgan and Qatar National Bank, bested the previous Middle Eastern record, a $3.2 billion offering from UAE-based real estate developer, Nakheel Co PJSC.

TECH DEALS DOMINATE RECORD TAIWAN M&A ACTIVITY
Taiwan’s Innolux Display Corp agreed to merge with Chi Mei Optoelectronics Corp, a manufacturer of LCD TV panels in a merger valued at $13.1 billion, including debt.  The deal ranks as the largest merger in Taiwan’s history.
M&A activity in Taiwan totals $26.1 billion for year-to-date 2009, nearly five times last year’s total and the largest annual period for M&A activity in Taiwan on record.  High technology mergers account for just over 60% of activity in Taiwan this year, while financials account for $6.1 billion or 23%.

UNITYMEDIA IN BIGGEST BUYOUT EXIT THIS YEAR
Germany’s Unitymedia GmBH, a provider of cable television and internet services was acquired by Englewood, Colorado-based Liberty Global Inc in a deal valued at $5.2 billion.  A portfolio company of BC Partners and Apollo Management LP, the sale marks the biggest M&A exit for a buyout consortium this year.
Worldwide M&A activity for buyout-backed companies totals $75.0 billion for year-to-date 2009, a 58% decrease from last year at this time when activity totaled $177.5 billion.

Highlights from this week’s Thomson Reuters Investment Banking scorecard:

ASIA PACIFIC IPOs UP 65%
Malaysian telecommunications provider, Maxis Bhd, raised $3.3 billion in an initial public offering this week, the biggest IPO from a Malaysian issuer on record.  Asia Pacific offerings account for 59% of global IPO activity this year and total $49.2 billion for year-to-date 2009, a 65% increase over last year at this time.
In Asia, China International Capital Co, CITIC and UBS account for nearly 35% of overall IPO activity, by proceeds, this year while Morgan Stanley has lead managed the most offerings in the region, with 14.

AUSTRALIAN M&A TOTALS $130.9 BILLION
Australian target M&A activity totals $130.9 billion for year-to-date 2009, a 58% increase over the year ago period.  Deal activity in the materials, financial and industrial sectors accounts for nearly 80% of overall activity.
A bid for Melbourne-based Transurban Group, an operator and developer of electronic tolling systems by an investor group comprised of Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan for $8.9 billion topped the list of biggest deals this week.

HIGH TECH CORPORATE DEBT UP 34%
This week’s $4.9 billion bond offering from Cisco Systems brings year-to-date corporate debt volume in the high tech sector to $56.9 billion, a 34% increase over last year.  Ranking as the largest US high tech bond for year-to-date 2009, it also marks Cisco’s second debt offering this year.
As the global credit markets have rebounded this year, a number of high technology names have stepped into the bond market with multi-billion offerings including Hewlett-Packard, Oracle, Microsoft and IBM.

 ”Cocos” has become the user-friendly name for a new type of hybrid bond created to help UK bank Lloyds raise money from investors to break away from a government insurance scheme for bad loans.

This nickname seems to have caught on in financial circles as it is much snappier than the bonds’ official title: Enhanced Capital Notes.

The name Cocos seems to have derived from “contingent convertible,” which describes one characteristic of these bonds – they convert to equity in certain circumstances.

Rating agencies Moody’s and S&P regularly publish figures on how many companies have defaulted on their debt, and the numbers are rising fast.

S&P’s latest report, which came out on Thursday, shows the global speculative-grade bond default rate increased to 8.58% in July, up slightly on June, and a massive hike on the record low of 0.79% hit in November 2007.

It is less clear what will happen next. Earlier this year the agencies predicted defaults amongst speculative grade borrowers could reach 20 percent — a huge increase — but now agencies have rowed back and are painting a slightly less bleak picture.

Bond sales are at a record, equity markets are at year-highs, private equity firms are sitting on huge cash piles -- Blackstone alone has $29 billion -- and banks are lending to each other again.

The ingredients should all be there for a resurgence of cash-driven mergers and acquisitions. But instead, the market is in hibernation.

So far the value of all M&A deals completed this year totals $990 billion. You have to go back to 2003 -- when the total for the year was $1.23 trillion -- to find a figure this low, according to Thomson Reuters data.

*This post was updated after the bond priced*

British Airways unveiled a $1 billion fundraising aimed at securing its future earlier on Friday, including $540 million in bank loans that had been earmarked for its pension funds as a safety net against the airline going bust.

The fundraising also included a 350 million pound ($570.5 million) convertible bond, which was over 7 times covered, pointing to healthy investor appetite.

Convertible bonds have become an increasingly important source of finance for firms in Europe. The instrument allows companies to raise capital paying less interest than standard bonds, while avoiding an immediate dilution of earnings per share because investors look to gains in share prices over a medium term.

Faced with big debts and falling revenues, companies across the world are hiring experts and pondering options.

One option is to swap old bonds for new, exchanging looming maturities for redemptions a few years off. Another is to buy back debts trading at discounted prices.

UK broadcaster ITV (ITV.L) is the latest company to swap its bonds, one of the most successful of a string of exchanges Reuters predicted back in April.

Preliminary first-quarter data from Thomson Reuters on mergers and acquisitions (M&A) and capital markets are out. And unsurprisingly, spring has not sprung in investment banking, with the big exception of a record deluge of corporate bonds.

Fees across investment banking (M&A, loans, and debt and equity capital markets) halved, while fees for completed M&A topped that with a 68 percent fall. Overall announced M&A fell by a third, compared to the same period last year, to $444 billion.

And even that figure is flattered by two huge pharma deals, which bankers doubt will be followed by more of the same, and a flurry of bank bailouts.

Global stocks rose on Tuesday night as Barack Obama‘s history-making victory became apparent.

“People are hoping that we are seeing a path here to a resolution of one key uncertainty on the investment scene; who will be the leader of the free world,” said David Dietze, chief investment strategist at Point View Financial Services, Summit, New Jersey.

U.S. Treasury prices fell as the safe haven bid waned with global stocks rising. The 2-year note’s price traded down 3/32 for a yield of 1.44 percent.