Tag: finance

Over the past two weeks, we’ve begun to document (see here and here) what may end up being a dramatic unwind in the CLO market.

Supply all but vanished in the wake of the crisis but staged a comeback starting in 2012 and by 2014, issuance was running at a $125 billion per year clip. As we noted last week, that’s roughly the equivalent of how much auto loan-backed paper came to market last year.

The problem is that stress on US O&G occasioned by the Saudi’s quest to bankrupt America’s oil patch is contributing to what certainly looks like a HY meltdown and that, in turn, has very real consequences for CLO collateral pools. In fact, 1.4% of assets held by US CLOs have either been downgraded or placed on credit watch negative this year, according to S&P.

New issue spreads are rising, issuance is collapsing, and both S&P and Moody’s recently downgraded several CLO 2.0 tranches for the first time ever.

Unless you think the acute stress in the HY market is set to abate – and trust us, it’s not – then you can bet that things are about to get very ugly, very quickly at least for junior CLO tranches.

For those curious to know how this debacle plays out, history offers a useful guide. As Morgan Stanley notes, first come the downgrades, then come the over collateralization triggers, and it’s all downhill from there.

“From late 2007, CLO equity investors suffered from a sharp decline in loan prices followed by a rapid increase of asset downgrades. The number of US CLOs failing junior OC triggers climbed and led to an increasing number of deals missing payments to equity tranches,” the bank wrote, in a note out Friday. “The proportion of deals cutting off payments to equity tranches peaked in 2Q 2009, right after the bottoming of loan prices and the peak of loan downgrades in 1Q 2009.”

This dynamic (i.e. declining loan prices, downgrades, and missed payments in the equity tranches) is likely to repeat itself this time around. Have a look at the following, which shows that just as the preponderance of CCC+ loans peaked, things quickly went to pieces and didn’t recover for years. 

Here’s Morgan on where we stand and where we’re headed if history is any guide:

A decline in loan prices leading to a pickup in asset downgrades has already happened in the current US credit cycle, just in a more stretched fashion. US leveraged loans started a long selloff journey from 3Q 2014, when average BB/B loans bids were at 99.41 and average CCC loan index bids were at 97.23. By 4Q 2015, average bids of BB/B loans were at 95.30 and the average bids of CCC loans plunged to 80.28. About one year after loans started to sell off, in 4Q 2015, the downgrade/upgrade ratio of US loans started to increase to significantly above 1 and is currently standing at 2.29.

It is likely that US CLOs’ OC cushion will erode and/or breach the junior OC test as downgrades in loans accumulate. In our recent report, A CLOser Look at Asset Downgrades, January 29, 2016 , we introduced a framework to estimate the impact of loan issuers’ one-year rating migration on CLOs. Assuming that excess CCC assets in a CLO portfolio are carried at 60% of par value, and that defaulted assets are carried at 50% of par value, our framework projects that on average the junior OC cushion of US CLO 2.0 deals with a reinvestment period ending in 2017 or later will decline by 1.61% over the next 12 months, and 6.8% of these deals are projected to fail the junior-most OC test in 12 months.

As Morgan goes on to note, CLO tranche spreads generally lag movements in the underlying bonds: 

“In the current US credit cycle, we have already observed considerable weakness in CLOs after loans started to sell off in later 2014,” Morgan observes. “The spreads of US CLO 2.0s BB and single-B (which are rare in CLO 1.0s) widened significantly in October 2014 as loan prices first started to fall, with the BB/B loan index bid starting to drop from par in March 2014. Following suit, US CLO new issue spreads widened. From September to October 2014, they moved from an average of 650bp to 700bp for BBs and from 775bp to 830bp for single-Bs. While in the first few months of 2015 there was a short rally in loans and CLOs, CLO mezzanine tranches capitulated quickly to the second, deeper dip in loan prices in 2H2015.“

So how bad are things going to get you ask? Well, probably really bad – to put it colloquially. “Both loans and CLOs have had severe peak-to-trough price losses and strong rebounds. Putting these into context, the peak-to-trough price decline of the BB/B US loan index was 38 points from par, and the peak-to- trough price declines of US CLO single-A’s, BBB’s, BB’s were 71.4 points (by 88%), 71 points (by 92%), and 64.9 points (by 96%) respectively,” Morgan warns, summing things up.

But for those who are inclined to take a glass-half-full approach (and that’s obviously us), the bright side is that CLO spreads will recover faster than the underlying loans: “…the glass-half- full view is that in percentage terms, the price recovery in CLO junior mezzanine tranches out of the credit cycle was asymmetrically higher than that of loan prices.”

So there you go BTFD-ers. If you can manage to pick a bottom in bad loan performance you can get an asymmetric risk-reward opportunity in CLO junior mezz. What could go wrong? 

In any event, we’ll close with an amusing compare and contrast exercise. 

Morgan Stanley, February 9: “We reiterate our view that the levels of distress in the US market may create ‘option-like’ payoffs in CLO equity in the secondary market, especially in deals by managers who are better ‘credit pickers'”.  

Morgan Stanley, February 26: “If the current US credit cycle lasts longer than the 2008-09 cycle, we think more vintages of US CLOs are likely to miss payments to equity tranches, and it may take longer for managers to cure the failed coverage tests.”

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With CDS markets implying around a 40% probability of default, Moody's has issued a warning over Valeant's deleveraging prospects (and ability to deliver sustainable growth) putting $31 billion of biotech debt on watch for downgrade. VRX bonds are down dramatically on the day.. not the forst day back at work Pearson was hoping for.

As Moody's writes, this rating action reflects concerns that Valeant’s underlying operating performance is weaker than Moody’s previous expectations, potentially impeding the company’s deleveraging plans, the agency said.

Valeant's Ba3 Corporate Family Rating (under review for downgrade) reflects its good scale in the global pharmaceutical industry with annual revenue above $10 billion, its strong diversity, its high profit margins, and its good cash flow. The ratings are supported by low exposure to patent cliffs, and growth from successful products like Jublia (antifungal) and Xifaxan for irritable bowel syndrome. In addition, the ratings are supported by management's commitment to reduce debt/EBITDA, using excess cash flow for debt repayment.

 

However, the ratings also reflect moderately high financial leverage (pro forma gross debt/EBITDA of 5.5x), and significant business challenges related to Valeant's pricing strategy and aggressive acquisition appetite.

 

Valeant is confronting significant scrutiny on its pricing practices, including those on products acquired through acquisitions, and uncertainty related to government investigations. In late 2015, Valeant announced it was terminating its relationship with specialty pharmacy distributor Philidor, and Valeant is transitioning to a new distribution arrangement with Walgreens.

Company’s CFR Ba3 on review for downgrade affecting about $31 billion of rated debt

Bonds are reacting… 2025s down over 2.5pts on the day…

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Submitted by James Stafford via OilPrice.com,

With lithium prices skyrocketing beyond wildest expectations, talk heating up about acquisitions and mergers in this space and a fast-brewing war among electric car rivals, it’s no wonder everyone’s bullish on this golden commodity that promises to become the ‘’new gasoline”.

Moreover, land grabs, rising price predictions, and expectations of a major demand spike are leaping out of the shadows of a pending energy revolution and a new technology-driven resource era.

For once, we have agreement across the board on a commodity: Demand for lithium will continue to rise throughout the year–and beyond–spurred by the rise of battery mega/gigafactories and a burgeoning energy storage business that will change the way we live.

That’s why Goldman Sachs calls lithium the “new gasoline”. It’s also why The Economist calls it “the world’s hottest commodity”, and talks about a “global scramble to secure supplies of lithium by the world’s largest battery producers, and by end-users such as carmakers.”

In fact, as the Economist notes, the price of 99%-pure lithium carbonate imported to China more than doubled in the two months to the end of December—putting it at a whopping $13,000 per ton.

But what you might not know is that this playing field is fast becoming a battlefield that has huge names such as Apple, Google and start-up Faraday Future throwing down for electric car market share and even reportedly gaming to see who can steal the best engineers.

Apple has now come out of the closet with plans for its own electric car by 2019, putting it on a direct collision course with Tesla. And Google, too, is pushing fast into this arena with its self-driving car project through its Alphabet holding company.

Then we have the Faraday Future start-up—backed by Chinese billionaire Jia Yueting–which has charged onto this scene with plans for a new $1-billion factory in Las Vegas, and is hoping to produce its first car next year already.

Ensuring the best engineers for all these rival projects opens up a second front line in the war. They’ve all been at each other’s recruitment throats for months, stealing each other’s prized staff.

And when the wave of megafactories starts pumping out batteries—with the first slated to come online as soon as next year–we could need up to 100,000 tons of new lithium carbonate by 2021. It’s an amount of lithium we just don’t have right now.

The war is definitely on, and lithium prices are the immediate and long-term beneficiary. It all depends on batteries, so it all depends on lithium.

The Lithium Oligopoly Ends Here, In Nevada

This is where the lithium oligopoly ends. It's where new entrants to the lithium mining game step in to forge a very lucrative future.

Right now, lithium isn't even traded as a commodity; rather, it is managed through an oligopoly of three or four major global suppliers who have managed supply and demand for decades. That's why everything is priced on a contract basis.

This year could see that change, which makes it a prime time to get in on lithium.

"The few major suppliers who have so far been responsible for all lithium supply and demand are not going to be able to meet new demand. This is why 2016 will be a very interesting year for anyone with the foresight to see the end of this oligopoly and the potential decoupling of lithium from other commodities," Dr. Andy Robinson, COO of Pure Energy Minerals (OTMKTS:HMGLF), told Oilprice.com.

Producers are now working quickly to stake their claims and position themselves strategically to become key suppliers.

So far, so good. Pure Energy, for one, is the only player in Nevada that has managed a conditional agreement with a company building the world’s largest battery factory, which is located only four hours from Pure Energy’s proposed mine.

There has been other movement in this space as well–broader, global movement that gives us even more reason to be bullish on lithium.

The fourth quarter of 2015 and the beginning of this year have seen a lot of talk about Australia's mining giant Rio Tinto considering entering the hot lithium space.

A Major Long-Term Game

This is an energy revolution that is still in its early days, but it’s such a hot commodity right now that chances to get in on the long-term game are narrowing by the day. And Nevada—ground zero in this revolution–is already raking in the benefits because it is the only U.S. state that both produces lithium and holds vast new resource potential.

In 2013 alone, Nevada doubled lithium production capacity, according to the USGS–and that is just the tip of the iceberg given all of the new exploration going on and the fast and furious land-grabbing.

The next wave of battery factories are expected to increase global battery capacity by some 150% by 2020. Within this prediction, electric vehicles will have a projected 20-30% compounded annual growth rate through 2025, so the demand for lithium appears endless.

Some say the lithium market is already at a supply deficit, and the rising prices make new projects even more attractive.

The lithium oligopoly is already a dinosaur, and new lithium projects on highly prospective land forwarded by companies with lower market caps and strong management are what investors will be looking for.

The brine is the place to be, and right now Pure Energy has the only brine resource in North America. It is also directly adjacent to the only producing lithium mine in North America, Albermarle Silver Peak Mine (NYSE:ALB). Lithium sourced from brine, or salty water, is the most cost-effective out there because it is easier and cheaper to extract.

There are billions of reasons to be bullish on lithium, and bullish on Nevada. Goldman Sachs gets it. Not only will lithium feed massive portable energy storage applications, but it will be a "key enabler of the electric car revolution and replace gasoline as the primary source of transportation fuel.”

This commodity that isn't yet a commodity in trading terms is about to break free from the oligopoly. Get there first.

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Last week we reported that in what has been Saudi Arabia’s biggest victory to date in its war against U.S. oil and gas producers, both Whiting Petroleum, which is North Dakota’s largest oil producer, and Continental Resources would indefinitely suspend fracking operations for the foreseeable future. The reason was simple: oil prices are too low to make incremental drilling and pumping profitable, and instead most shale companies are now entering hibernation, limiting cash outlays in the form of dividends and capex spending, in hopes of weathering the crude oil storm, which has already gone on far longer than even the most pessimistic mainstream pundits expected it would.

Which, of course, is the right response: as the saying goes the cure for low oil prices is low oil prices, and as more shale companies halt drilling, exploring and production, the 3 mmb/d oversupplied oil market will slowly return to equilibrium.

There is logically a flipside to that as well: as those companies which have recently mothballed operations either voluntarily or because they had to when they went bankrupt when oil was at $30, return to market the previously oversupplied market condition will promptly return as well, thereby pressuring oil lower yet again.

The question is at what “breakeven” price does it make sense for US shale companies to return. As Reuters reports, less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; however in just one year this number has changed and quite drastically at that.

We hinted at this three weeks ago in an article which many readers had a hostile reaction to: specifically we warned of “Another Leg Lower In Oil Coming After Many Producers Found To Have Far Lower Breakevens.” As we reported then, “what many thought would be the “breaking” price point for virtually every shale play has just been lowered, and quite dramatically at that. It also means that algos and traders who had reflexively bought any dip below $30 on expectations this is close to the “sweet spot” and where the Saudis would relent, will have to drop their support levels by as much as a third.”

 

Today Reuters confirms that this assessment was stpo on with a report that some shale companies say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation.

Among the companies which are prepared to flip the on switch at a moment’s notice are Continental Resources led by billionaire wildcatter Harold Hamm, which said it is prepared to increase capital spending if U.S. crude reaches the low- to mid-$40s range, allowing it to boost 2017 production by more than 10 percent, chief financial official John Hart said last week.

Then there is rival Whiting Petroleum which may have stopped fracking new wells, added it but would “consider completing some of these wells” if oil reached $40 to $45 a barrel, Chairman and CEO Jim Volker told analysts. Less than a year ago, when the company was still in spending mode, Volker said it might deploy more rigs if U.S. crude hit $70.”

EOG Chairman Bill Thomas did not say what price would spur EOG to boost output this year, but said it had a “premium inventory” of 3,200 well locations that can yield returns of 30 percent or more with oil at $40.

Apache Corp , forecasts its output will drop by as much as 11 percent this year, but said it would probably manage to match 2015 North American production if oil averaged $45 this year.

The reason for the plunging breakeven price? The same one we suggested on February 3: surging, rapid efficiency improvement which “have turned U.S. shale, initially seen by rivals as a marginal, high cost sector, into a major player – and a thorn in the side of big OPEC producers.”

To be sure, while many had expected low oil prices to curb output, virtually nobody had predicted that even a modest jump in oil ($40 is just $7 from here) would lead to a major portion of US shale going back on line.

The threat of a shale rebound is “putting a cap on oil prices,” said John Kilduff, partner at Again Capital LLC. “If there’s some bullish outlook for demand or the economy, they will try to get ahead of the curve and increase production even sooner.”

Which in turn will force the Saudis to immediately retaliate, breach all amusing “production freezes”, and double down their efforts to crush shale.

In fact, some producers have already began hedging future production, with prices for 2017 oil trading at near $45 a barrel, which could put a floor under any future production cuts.

Another risk factor for all those hoping the modest rebound in oil will persist is the record backlog of wells that have already been drilled but wait to get fractured to keep oil trapped in shale rocks flowing. There were 945 such wells in North Dakota compared to 585 in mid-2014, when prices peaked, according to the latest available data from the Department of Mineral Resources. Their numbers are growing as firms like Whiting keep drilling, but hold off with fracking.

Reuters’ summary:

Their latest comments highlight the industry’s remarkable resilience, but also serve as a warning to rivals and traders: a retreat in U.S. oil production that would help ease global oversupply and let prices recover may prove shorter than some may have expected.

Our observation three weeks ago was practically identical: since Saudi Arabia had expected that its FX reserve outflow would last only temporarily using $40-50 breakevens, it will have to sell many more US reserves (either TSYs or stocks) to fund the cash shortfall which will persist for far longer until oil catches down to the lowest cost US producers.

What this means is that for the Saudis to declare victory they will have to unleash a sharp downward oil spike that lasts long to put as many marginal producers out of business as possible.

As we said: “In short: the oil price war is about to enter its far more vicious, and far more lethal phase, and while it is unclear who ultimately wins, whether it is Shale or the Saudis, the loser is clear: anyone who bought into bets of an imminent oil bounce.”

But the real punchline has nothing to do with breakeven prices and efficiency and everything to do with balance sheets, because if and when the mass default wave finally hits and hundreds of U.S. corporations undergo debt-for-equity exchanges in which the bondholders end up with the equity keys, then the all-in production costs (AIPCs) will be drastically cut even lower as there will be no interest expense left to cover with operational cash flow proceeds.

As such, the stunning outcome may well be one in which U.S. shale turns Saudi’s “marginal producer” war on its head, and unleashes a massive oversupply spike, one which slowly at first then very fast, leads to the Saudi exhaustion of its FX reserves, until it is Saudi Arabia which itself is pushed out of the low-cost production bracket and is instead forced to deal with far less palatable outcomes such as social insurrection and revolution, as its already precarious welfare state fights for survival in a world in which government oil revenues have trickled to a halt.

What happens to the price of oil then is unclear, but what will need to happen before we get to that point is very clear: oil will have to trade far, far lower from its current price.

And even if it doesn’t, we now have the oil price ceiling bogey: any time a barrel of crude approaches $40, watch as the “marginal” producers do just that, and resume production on very short notice.

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Socialism works so well that this Venezuelan man was caught smuggling… not drugs, not guns…

But food – powdered milk!!!

Source: @Jenn_Abrams

Coming to a Sanders-sponsored America near you soon.

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For a long time, the impact of the collapsing Petrodollar was concentrated almost entirely on African and Mid-east oil exporting nations, of which none has been impacted more perhaps that ground zero itself, Saudi Arabia, which has seen a record surge in its budget deficit as a result of collapsing oil revenue – the result of its ongoing war with the U.S. oil and gas sector and low cost “marginal” producers around the globe. Then slowly, the commodity woes spread to supposedly unshakable, developet nations, such as Norway and Canada, both of which are currently troubled by the impact of plunging crude prices on state revenues and downstream budgets.

Today, another country exposed just how troubled its energy sector has become when Mexico’s largest, state-owned company, Petroleos Mexicanos also known as Pemex, announced not only its 13th consecutive quarterly loss amounting to $9.3 billion, 44% bigger than the previous year, as revenue tumbled by 28% to $15.8 billion, but also a gargantuan $32 billion annual loss and at the same time announced it would slash capex spending to preserve cash and optionality for a future which suddenly looks very bleak.

In a budget report issued today, Pemex also pledged to meet the government’s request that it trim its 2016 budget by 100 billion pesos ($5.5 billion). Pemex will cut as much as $3.6 billion in spending by delaying projects, including expensive offshore wells, Jose Antonio Gonzalez Anaya, the company’s CEO, said in a conference call with investors. Pemex will pursue partners for any future deepwater development, Gonzalez Anaya said.

The report follows an announcement by the state of Mexico to cut back on its lifeline to the troubled oil giant when on February 17 it said it plans to cut 100 billion pesos ($5.5 billion) from the oil giant’s budget in a move aimed at stemming the depreciation of the peso and limiting inflation in Latin America’s second-largest economy amid the slump in international crude prices.

As Bloomberg reports, Pemex lost about $32 billion in all of 2015 as oil prices plunged and the company’s crude output fell for an 11th straight year, according to a financial report released Monday. Pemex hasn’t recorded a profit since 2012. The company had more than $87 billion in debt at the conclusion of the third quarter and owes an estimated $7 billion to service providers.

“These adjustments do not weaken Pemex, they strengthen it,” Gonzalez Anaya said on the call, but that promise sounded hollow especially after the CEO also said on the call that while the company is not facing a solvency crisis, it is facing short-term financial difficulties, prompting some to wonder just what skeleton will come out of the closet if the oil price remains as low as it has been. He also added that the company is now looking for alternative ways to fund refining operations. It is unclear what the non-alternative way is but we assume it has to do with issuing more debt, an avenue which may be closed for the time being.

But the scariest news not only for Mexico’s largest company, but for the energy sector in general, was Pemex’ announcement that it was slashing its oil price forecast by 50% from $50 to $25/bbl…

… a price which if realized will mean that all those who have been buying energy ETFs in hopes ot timing the oil bottom will end up with another round of big, fat, oily donuts, because unlike Pemex no U.S. shale company has the explicit backing of the US government. At least not yet.

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With Donald Trump set for a yuuge victory in tomorrow's Super Tuesday slugfest – oddsmakers see 80% chance of Trump being the nominee – tensions are mounting dramatically within the Republican establishment. As The FT reports, many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton and are urgently rallying around their man Rubio with some senior Republicans saying privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee as one conservative commentator exclaimed "we are on the verge of a real meltdown in the Republican party."

Trump's lead in the polls over his GOP nominee 'peers' continues to grow…

Source: RealClearPolitics

As The FT reports, while Mr Rubio and Mr Trump ramp up their attacks on each other ahead of the March 1 primaries, Republican grandees and lawmakers are turning to the Florida senator as they become increasingly worried that the property tycoon could lock up the GOP presidential nomination within three weeks.

They fear that a victory for Mr Trump could fatally fracture the party and prevent them from winning the White House in November.

 

Many mainstream Republicans believe Mr Trump would struggle to beat Hillary Clinton, the clear Democratic frontrunner after her resounding victory over Bernie Sanders in South Carolina on Saturday, given the comments he has made about Hispanics, Muslims, women, disabled people and people who have criticised his campaign.

But, as the following chart shows, it's far too close to call…

Source: RealClearPolitics

The FT goes on to note that Mr Trump on Sunday issued a thinly-veiled warning that he would consider running as an independent.

“The Republican Establishment has been pushing for lightweight Senator Marco Rubio to say anything to “hit” Trump. I signed the pledge-careful,” he tweeted, a reference to a pledge that all candidates signed to back the party’s eventual nominee.

As panic is setting in within The GOP…

“We are on the verge of a real meltdown in the Republican party,” Hugh Hewitt, the influential conservative radio talk-show host told ABC television on Sunday.

 

Some senior Republicans have said privately that they might consider voting for Mrs Clinton if Mr Trump were to end up as their party nominee. “You’ll see a lot of Republicans do that,” Christine Whitman, the former New Jersey governor who previously compared Mr Trump to Hitler, told the New Jersey Star-Ledger.

 

“We don’t want to. But I know I won’t vote for Trump.”

But none other than Rupert Murdoch chimed in at the craziness and infighting…

Both "establishment" Republicans and Trump need to cool it and close ranks to fight real enemy. Trump, Rubio, Kasich could all win general.

— Rupert Murdoch (@rupertmurdoch) February 28, 2016

And now the neocons are declaring war on Trump (as The Intercept notes)…

Donald Trump’s runaway success in the GOP primaries so far is setting off alarm bells among neoconservatives who are worried he will not pursue the same bellicose foreign policy that has dominated Republican thinking for decades.

 

Neoconservative historian Robert Kagan — one of the prime intellectual backers of the Iraq war and an advocate for Syrian intervention —  announced in the Washington Post last week that if Trump secures the nomination “the only choice will be to vote for Hillary Clinton.”

 

Max Boot, an unrepentant supporter of the Iraq war, wrote in the Weekly Standard that a “Trump presidency would represent the death knell of America as a great power,” citing, among other things, Trump’s objection to a large American troop presence in South Korea.

 

Trump has done much to trigger the scorn of neocon pundits. He denounced the Iraq war as a mistake based on Bush administration lies, just prior to scoring a sizable victory in the South Carolina GOP primary. In last week’s contentious GOP presidential debate, he defended the concept of neutrality in the Israeli-Palestinian conflict, which is utterly taboo on the neocon right. “It serves no purpose to say you have a good guy and a bad guy,” he said, pledging to take a neutral position in negotiating peace.

With Trump’s ascendancy, it’s possible that the parties will re-orient their views on war and peace, with Trump moving the GOP to a more dovish direction and Clinton moving the Democrats towards greater support for war.

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As MSCI reported on February 11, today is the day when the previously announced quarterly rebalancing will take place, one which Credit Suisse estimates will see approximately $7.8bn gross trading in DM and $1.2bn in Emerging Markets.

As a reminder, this is how MSCI previewed today’s torrid end of today activity:

• MSCI Global Standard Indexes: Thirteen securities will be added to and ten securities will be deleted from the MSCI ACWI Index. In the MSCI World Index, the three largest additions measured by full company market capitalization will be Jardine Matheson (Hong Kong), Worldpay Group (United Kingdom), and Waste Connections (USA). The two additions to the MSCI Emerging Markets Index will be Axis Bank (India) and Sibanye Gold (South Africa).
   
• MSCI Global Small Cap Indexes: There will be eight additions to and 35 deletions from the MSCI ACWI Small Cap Index.
• MSCI Global Investable Market Indexes: There will be three additions to and 27 deletions from the MSCI ACWI IMI.
  
• MSCI Global All Cap Indexes: There will be two additions to and five deletions from the MSCI World All Cap Index.
  
• MSCI Global Value and Growth Indexes: The three largest additions to the MSCI ACWI Value Index measured by full company market capitalization will be Jardine Matheson (Hong Kong), Axis Bank (India) and Mid-America Apartment (USA), while the three largest additions to the MSCI ACWI Growth Index measured by full company market capitalization will be Worldpay Group (United Kingdom), Waste Connections (USA) and Genmab (Denmark).
  
• MSCI Frontier Markets Indexes: There will be one addition to and no deletions from the MSCI Frontier Markets Index.
  
• MSCI Global Islamic Indexes: Twenty-eight securities will be added to and 32 securities will be deleted from the MSCI ACWI Islamic Index. The three largest additions to the MSCI ACWI Islamic Index measured by full company market capitalization will be Tencent Holdings Li (CN), Kraft Heinz Co (USA) and Innuit (USA). There will be three additions to and two deletions from the MSCI Gulf Cooperation Council (GCC) Countries ex Saudi Arabia IMI Islamic Index.
  
• MSCI US Equity Indexes: There will be no securities added to and four securities deleted from the MSCI US Large Cap 300 Index. The three largest deletions from the MSCI US Large Cap 300 Index will be Continental Resources, Marathon Oil Corp. and Freeport McMoRan B.
  • Four securities will be added to and 14 securities will be deleted from the MSCI US Mid Cap 450 Index. The three largest additions to the MSCI US Mid Cap 450 Index will be Continental Resources, Marathon Oil Corp. and Freeport McMoRan B.
  • Fourteen securities will be added to and no securities will be deleted from the MSCI US Small Cap 1750 Index. The three largest additions to the MSCI US Small Cap 1750 Index will be Diamond Offshore Drill, Pandora Media and Huntsman Corp.
• MSCI China A Indexes: There will be thirteen additions to and nine deletions from the MSCI China A Index. The largest additions to the MSCI China A Index will be Jiangsu Shagang Co A, Beijing Xinwei Telecom A and Jiangsu Sanyou Group A. There will be nine additions to and twelve deletions from the MSCI China A Small Cap Index.

To make it simpler for US traders, here courtesy of Credit Suisse is the list of the top North American buys:

 

And the biggest North American sales:

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