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AWARDS

2018
AWARDS FOR EXCELLENCE

THE 24 ANNUAL TH

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EDITOR
Foreword
Matthew Davies
+44 (0)20 7542 7504
m.davies@refinitiv.com
DEPUTY EDITOR
Owen Wild
SPECIAL REPORTS EDITOR
Philip Wright
SUBEDITOR
Ian Edmondson
CONTRIBUTORS
Lynn Adler, Priscila Azevedo Rocha,
Yoruk Bahceli, Thomas Blott,
Sandrine Bradley, Prakash Chakravarti,
Matthew Davies, John Doran,
Eleanor Duncan, Helene Durand,
Alice Gledhill, Gareth Gore,
Natalie Harrison, William Hoffman,
Robert Hogg, Paul Kilby, Stephen Lacey,
Fiona Lau, Chris Mangham,
Chris Moore, Keith Mullin,
Adrian Murdoch, Takahiro Okamoto,
Jonathan Penner, Lucy Raitano,
Alasdair Reilly, Tom Revell,
David Rothnie, Sudip Roy,
Jonathan Schwarzberg, Philip Scipio,
Robert Sherwood, Michelle Sierra,
Steve Slater, Christopher Spink,
Daniel Stanton, Solomon Teague,
Robert Venes, Tessa Walsh,
John Weavers, Aaron Weinman,
IFR AWARDS 2018
Owen Wild, Joy Wiltermuth,

S
Philip Wright o here’s a funny thing. The one asset class that the great
EDITORIAL ASSISTANT and good of the global economy seems to be worried about
Anna Farish – leveraged loans – is just about the only one that has made
PRODUCTION money for investors in 2018.
Head of production: Clive George Corporate bonds? In the red. EM bonds? In the red. Equities? In the
IFR production manager: Carole Styles
Senior production executive: Gavin White
red. Financials? In the red. You name it, investors have lost money on
average in nearly all global markets.
– ADVERTISING & SPONSORSHIP SALES
GLOBAL HEAD
Shahid Hamid +65 97555031 The difference, of course, is that loans are floating rate and offer
& SPONSORSHIP SALES DIRECTOR
ADVERTISING
some protection against rising rates. Hence the rush to get exposure
Leonie Welss +44 (0)20 7542 7752 (whether directly or via loan funds and CLOs) and damn the credit
GLOBAL ADVERTISING PRODUCTION MANAGER concerns or the lack of sensible covenants.
Gloria Balbastro +44 (0)20 7542 4348 As a consequence, leveraged finance was arguably the big markets
IFR story of 2018.
30 South Colonnade, Canary Wharf, London E14 5EP It certainly was for IFR.
Tel +44 (0)20 7250 1122
In fact, it was on the day of the IFR Awards Gala Dinner in
REPRINTS OR LICENCE TO COPY
January 2018 that news broke that the part of Thomson Reuters
For further information on how to obtain reprints, or a
licence for reproducing any article in the IFR Awards 2018, that publishes IFR was to be purchased in a leveraged buyout by a
please contact Gloria Balbastro +44 (0)20 7542 4348 consortium led by private equity giant Blackstone. The carved out
E-MAIL ADDRESSES company – named Refinitiv – finally came into being in October.
firstname.lastname@refinitiv.com The deal was funded by US$13.5bn of bonds and loans, plus
US$1bn of preferred equity, which has a 14.5% PIK coupon, and a
UNAUTHORISED PHOTOCOPYING IS ILLEGAL.
The contents of this publication, either in whole or part, may not be US$750m revolving credit facility. Not forgetting US$3bn of equity.
reproduced, stored in a data retrieval system or transmitted in any We usually read the loan docs of such high-profile deals, but
form or by any means, electronic, mechanical, photocopying, recording
or otherwise without written permission of the publishers. Action will we did so for this one with extra interest (especially the part about
be taken against companies or individual persons who ignore this US$650m of cost savings).
warning. The information set forth herein has been obtained from
sources which we believe to be reliable, but is not guaranteed. The deal, which turned out to be a great success, was a useful
reminder that the activities that IFR writes about – and the deals we
Registered Office: Refinitiv, 30 South Colonnade, Canary Wharf,
London E14 5EP recognise via these awards – are not abstract intellectual exercises or
Printed in England by Wyndeham Grange Ltd, Brighton, Sussex.
get-rich-quick schemes for those involved, but have profound real-
ISSN: 1357-8375. world consequences.
© Refinitiv 2018.
All of us would do well to remember that.

IFR Awards 2018 International Financing Review 1


CONTENTS
IFR AWARDS 2018

FEATURES

16 Year in Numbers

18 Looking to the future – at last


A decade on from the demise of Lehman
Brothers – and with a new generation of leaders
at the helm – the banking sector has reached a
turning point. Legacy issues from the crisis have
faded in intensity and, while some potentially
formidable challenges lie on the horizon, the
industry narrative has at last shifted to thinking
about the future.

24 Europe’s banks fight back 24


Only a small number of European banks have the
firepower and geographic reach to compete with
rampant US rivals. The rest must either focus on
pockets of excellence or merge.

26 A rock and a hard place?


Over the decades, Japanese banks have been
criticised, fairly or unfairly, as having a boom-bust
approach to international business. How do the
international ambitions of Japan’s major financial
groups stack up today amid ongoing monetary
stimulus at home and a challenging environment
overseas? Is it different this time?

29 A brave new world 31


With the US Federal Reserve shrinking its balance
sheet and the ECB emerging from quantitative
easing, the bond market is likely to present
opportunities in corporate debt.

31 Beyond the Chinese wall


The barriers around China’s capital markets
are coming down, just as politicians threaten to
escalate Sino-US tensions into an all-out trade war.

34 Green finance extends reach


It may not have been a record-breaking year for
issuance, but Green finance has conquered new
markets such as Schuldschein and commercial
paper. Green structured finance is next. 34

2 International Financing Review IFR Awards 2018


IT COMES DOWN TO
OUR CLIENTS AND
THE PROGRESS THEY
MAKE EVERY DAY.
People everywhere hope to see their ambition come to life.
This explains why we’re doing some of the most important
work in finance anywhere.

Across a network that includes over 1,000 cities, we’re building


foundations for progress that are enabling our clients to
transact, save, finance, invest and grow.

We’re proud of the awards we receive, but even prouder


of the progress that we help our clients make every day.

citi.com/progress

© 2019 Citibank N.A., London Branch. Citi and Citi with Arc Design are registered service marks of Citigroup Inc.
Citi in the UK is authorised and regulated by the Financial Conduct Authority.
CONTENTS
CONTINUED
IFR AWARDS 2018

38 Bank of The Year


JP Morgan dominates investment banking in a
way no other institution has in the modern era.
Whatever the measure – wallet share, market
share, revenue, profits, share price performance,
or sheer presence – JP Morgan is the answer.
For the second year running, it is IFR’s Bank of
the Year.

41 Bond House 58 Bank for Governments


While other banks have struggled to hold on to HSBC showed commitment to public-sector clients
their market share as issuance has fallen, HSBC through good times and bad, and enhanced its
stood out for its ability to generate momentum reputation as the go-to bank for sovereigns in
across the international bond markets. need of financing and advice.

44 Equity House 60 Bank for Financial Sponsors


Goldman Sachs was on the offense as it charged With private equity and strategic investors fast
down the opposition to reclaim lost ground – growing in importance, Goldman Sachs has
leading bold deals, operating across borders and shown its ability to adapt and innovate to serve its
reacting to tougher markets. clients.

47 Loan House 62 SSAR Issuer


Goldman Sachs’ expertise in acquisition and Labels are notably tricky to shake off, but in a
leveraged financing made it the go-to partner year when echoes of the European peripheral
for companies of all sizes and credit ratings in crisis resonated loudly, the Kingdom of Spain
transformative or regular deals. successfully managed to do so and execute
one of the biggest European sovereign funding
49 Emerging Markets Bond House programmes with flair.
A stellar year for Citigroup in all three developing
regions has seen it dominate EM primary markets in 64 Financial Issuer
2018. The US bank got clients into the market early, A sharp deterioration in conditions posed a major
which has proven crucial in a year of volatility. challenge to borrowers in 2018. Nordea’s funding
team had the additional hurdle of a strategic re-
52 M&A Adviser and Capital Markets Adviser domiciliation to Finland.
During a busy year for major cross-border M&A
deals, Rothschild shone as a flexible adviser on 66 Corporate Issuer
both the buy and sell sides. It also grew its capital Bayer’s US$66bn acquisition of Monsanto required
markets advisory effort from an already dominant an enormous fundraising effort across asset
position by focusing on every variable in a classes. Each slice was market-defining, but the
challenging market. company’s deft strategy meant that each was
easily absorbed by an enthusiastic investor base.
54 Restructuring Adviser
As the end of cheap money pushes the restructuring 68 Financing Package
market into a new cycle, Houlihan Lokey rode the The loan and bond financing backing the carve-
crest of the burgeoning wave of global restructuring out of Refinitiv not only defined 2018, but seemed
negotiations in 2018 as the geographical growth of to hold the fate of the debt markets in the
its practice in the lean years bore impressive fruit. balance.

56 Bank for Financial Institutions


In a year marked by mammoth fintech
fundraisings, M&A among US regional banks,
bumper insurance deals and the never-ending
struggle of European banks, Citigroup took a raft
of advisory roles while continuing to provide
much of the routine plumbing that financial firms
need for their daily chores.

4 International Financing Review IFR Awards 2018


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what’s good in Germany.

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Everybody knows what the label “made in Germany” means. These attributes can also be
applied to NRW.BANK, the explicitly guaranteed development agency of the state of
North Rhine-Westphalia. So whether it be Autobahns or NRW.BANK bonds you
can be sure of the perfect safety solution under a seal of recognized quality
and reliability – made in Germany.
www.nrwbank.com/investorrelations
CONTENTS
CONTINUED
IFR AWARDS 2018

BONDS
US Bond House 69
US Bond 70
Yankee Bond 70
Euro Bond House 72
Euro Bond 74
Yen Bond House 76
Yen Bond 74
Sterling Bond House 78
Sterling Bond 79
Swiss Franc Bond House 80
Swiss Franc Bond 79
Niche-Market Bond 82
North America Investment-Grade Corporate Bond House 83
North America Investment-Grade Corporate Bond 70
Europe Investment-Grade Corporate Bond House 84
Europe Investment-Grade Corporate Bond 82
North America Financial Bond House 86
North America Financial Bond 85
Europe Financial Bond House 72
Europe Financial Bond 85
SSAR Bond House 41
SSAR Bond 79
Covered Bond House 41
Covered Bond 87
SRI Bond House 88
SRI Bond 87
North America High-Yield Bond House 90
North America High-Yield Bond 89
Europe High-Yield Bond House 91
Europe High-Yield Bond 74

STRUCTURED FINANCE
North America ABS House 92
North America ABS Issue 93
North America MBS House 94
North America MBS Issue 93
EMEA Structured Finance House 95
EMEA Structured Finance Issue 96
Asia-Pacific Structured Finance Issue 96

6 International Financing Review IFR Awards 2018


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sustainable future

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Sustainability
Awareness Bonds
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CONTENTS
CONTINUED
IFR AWARDS 2018

EMERGING MARKETS
Emerging EMEA Bond House 49
Emerging EMEA Bond 97
Latin America Bond House 49
Latin America Bond 97
Asia Bond House 41
Asia Bond 98

LOANS
Americas Loan House 47
North America Loan 99
Latin America Loan 99
EMEA Loan House 101
EMEA Loan 100
Asia-Pacific Loan House 102
Asia-Pacific Loan 100
North America Leveraged Loan 103
EMEA Leveraged Loan 103
North America Mid-Market Loan 104

EQUITIES
North America Equity House 44
North America IPO 105
North America Secondary Equity Issue 105
Latin America Equity House 44
Latin America Equity Issue 106
EMEA Equity House 107
EMEA IPO 108
EMEA Secondary Equity Issue 108
Asia-Pacific Equity House 44
Asia-Pacific IPO 109
Asia-Pacific Secondary Equity Issue 109
US Mid-Market Equity House 110
EMEA Mid-Market Equity House 111

STRUCTURED EQUITY
Americas Structured Equity House 112
Americas Structured Equity Issue 113
EMEA Structured Equity House 114
EMEA Structured Equity Issue 113
Asia-Pacific Structured Equity House 116
Asia-Pacific Structured Equity Issue 115

8 International Financing Review IFR Awards 2018


THE WINNERS
IFR AWARDS 2018

TOP AWARDS
Bank of the Year JP Morgan
Bond House HSBC
Equity House Goldman Sachs
Loan House Goldman Sachs
Emerging Markets Bond House Citigroup
Capital Markets Adviser Rothschild
M&A Adviser Rothschild
Restructuring Adviser Houlihan Lokey
Bank for Financial Institutions Citigroup
Bank for Governments HSBC
Bank for Financial Sponsors Goldman Sachs

ISSUER AWARDS
SSAR Issuer Kingdom of Spain
Financial Issuer Nordea
Corporate Issuer Bayer
Financing package Refinitiv’s US$13.5bn loan and bond financing

BOND AWARDS
US Bond House Goldman Sachs
US Bond CVS Health’s US$40bn nine-tranche bond
Yankee Bond Bayer’s US$15bn eight-part bond
Euro Bond House BNP Paribas
Euro Bond Recordati’s €1.3bn dual-tranche bond
Yen Bond House Mizuho Securities
Yen Bond Lloyds Banking Group’s ¥169bn triple-tranche Samurai
Sterling Bond House NatWest Markets
Sterling Bond EIB’s £1bn five-year bond
Swiss Franc Bond House UBS
Swiss Franc Bond Nestle’s SFr1.5bn dual-tranche bond
Niche-Market Bond World Bank’s A$110m two-year bond
North America Investment-Grade Bank of America Merrill Lynch
Corporate Bond House
North America Investment-Grade CVS Health’s US$40bn nine-tranche bond
Corporate Bond
Europe Investment-Grade Societe Generale
Corporate Bond House
Europe Investment-Grade University of Cambridge’s £600m dual-tranche bond
Corporate Bond
North America Financial Bond House Citigroup
North America Financial Bond Royal Bank of Canada’s US$1.8bn five-year bond
Europe Financial Bond House BNP Paribas

10 International Financing Review IFR Awards 2018


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THE WINNERS
CONTINUED
IFR AWARDS 2018

Europe Financial Bond Novo Banco’s €400m Tier 2 10-year bond


SSAR Bond House HSBC
SSAR Bond EIB’s £1bn five-year bond
Covered Bond House HSBC
Covered Bond Nordea Mortgage Bank’s €2bn dual-tranche bond
SRI Bond House Credit Agricole
SRI Bond ING’s €2.6bn-equivalent dual-tranche bond
North America High-Yield Bond House Morgan Stanley
North America High-Yield Bond Uber’s US$2bn dual-tranche private placement
Europe High-Yield Bond House Deutsche Bank
Europe High-Yield Bond Recordati’s €1.3bn dual-tranche bond

STRUCTURED FINANCE AWARDS


North America ABS House Barclays
North America ABS Issue Air Lease’s US$545m securitisation
North America MBS House Citigroup
North America MBS Issue Gramercy Property Trust’s US$3bn CMBS
EMEA Structured Finance House Lloyds Bank
EMEA Structured Finance Issue Income Contingent Student Loans 1 (2002–2006)
Asia-Pacific Structured Finance Issue Bayfront Infrastructure’s US$458m project finance CLO

EMERGING MARKETS AWARDS


Emerging EMEA Bond House Citigroup
Emerging EMEA Bond Metinvest’s US$1.35bn dual-tranche bond and tender
Latin America Bond House Citigroup
Latin America Bond GOL’s US$500m seven-year bond
Asia Bond House HSBC
Asia Bond ChemChina’s US$6.4bn-equivalent six-tranche bond

LOAN AWARDS
Americas Loan House Goldman Sachs
North America Loan Comcast’s US$39bn acquisition financing
Latin America Loan Petrobras’ US$4.35bn revolving credit facility
EMEA Loan House BNP Paribas
EMEA Loan Melrose’s £4.5bn acquisition loan
Asia-Pacific Loan House Citigroup
Asia-Pacific Loan GLP’s US$4.1bn acquisition loan
North America Leveraged Loan ION Trading’s US$2.1bn-equivalent acquisition loan
EMEA Leveraged Loan TDC’s €5.9bn public-to-private acquisition loan
North America Mid-Market Loan Big Ass Solutions’ US$250m acquisition loan

12 International Financing Review IFR Awards 2018


THE WINNERS
CONTINUED
IFR AWARDS 2018

EQUITY AWARDS
North America Equity House Goldman Sachs
North America IPO Elanco Animal Health’s US$1.7bn IPO
North America Secondary Equity Issue Centene’s US$2.86bn follow-on
Latin America Equity House Goldman Sachs
Latin America Equity Issue PagSeguro Digital’s US$2.6bn IPO
EMEA Equity House Morgan Stanley
EMEA IPO Adyen’s €947m IPO
EMEA Secondary Equity Issue Cineworld’s £1.7bn rights issue
Asia-Pacific Equity House Goldman Sachs
Asia-Pacific IPO Innovent Biologics’ HK$3.8bn IPO
Asia-Pacific Secondary Equity Issue Naspers’ HK$77bn Tencent Holdings block trade
US Mid-Market Equity House Cowen
EMEA Mid-Market Equity House Peel Hunt

STRUCTURED EQUITY AWARDS


Americas Structured Equity House Morgan Stanley
Americas Structured Equity Issue Twitter’s US$1.15bn six-year convertible bond
EMEA Structured Equity House UBS
EMEA Structured Equity Issue Swiss Re’s US$500m six-year convertible bond
Asia-Pacific Structured Equity House Credit Suisse
Asia-Pacific Structured Equity Issue LG Chem’s US$610m dual-currency convertible bond

14 International Financing Review IFR Awards 2018


At your side
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Leverage our worldwide presence
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www.commerzbank.com/worldwide
Despite the challenges facing the German banking industry, there are bright spots, notably in serving the local and international needs
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Germany’s best bank, Commerzbank, is focusing on both these opportunities.
THE YEAR IN NUMBERS
REVIEW OF THE YEAR 2018

GLOBAL INVESTMENT BANKING FEES BY REGION




¥2.65trn
EMEA
„ PROCEEDS FROM SOFTBANK’S IPO OF US$23bn
ITS MOBILE ARM, THE SECOND-BIGGEST -11% 
Asia-Pacific
LISTING EVER US$23bn
-8% 
Americas
US$48bn
-5% 


US$3trn Global
US$93bn
-7% 
„ AMOUNT OF OUTSTANDING CORPORATE
DEBT RATED TRIPLE B, THE HIGHEST Jan–Nov fees in US$ billions, with % change from a year earlier
Source: Refinitiv
LEVEL EVER

BIGGEST IPOS OF ALL TIME


  PROCEEDS RAISED, US$bn

One-third 61% Issuer Date Nation Proceeds

2014 25.0

„ DECLINE IN ISSUANCE IN US HIGH-YIELD „ MONETARY POLICY RATE IN ARGENTINA,


MARKET, AS INVESTORS BECOME MORE WHERE AUTHORITIES ARE STRUGGLING 2018 23.5
PICKY WITH A FINANCIAL CRISIS

2010 22.1

2006 22.0
COLLAPSE IN EMERGING MARKET CURRENCIES
INDEXED LEVEL AGAINST US DOLLAR, JANUARY 1=100
2010 20.5
110

100 2008 19.7

90 2010 18.1

80 1998 18.1

70
1999 16.6

60
2012 16.0

50
1996 12.5

40
January April July October 2006 11.2

— Argentinian peso — Turkish lira South African rand Russian rouble

Source: Refinitiv Source: Refinitiv

16 International Financing Review IFR Awards 2018


UNDERWRITING AND ADVISORY FEES GLOBAL INVESTMENT BANKING FEES
FEES BY BUSINESS TYPE US$bn Managing No of Total Share
bank or group issues US$(m) (%)
120
Bonds
1 JP Morgan 3,808 6,410.9 7.0
2 Goldman Sachs 2,392 5,815.2 6.3
100 Equities
3 Morgan Stanley 3,053 4,695.2 5.1
Loans 4 BAML 3,575 4,571.8 5.0
80 5 Citigroup 3,285 4,249.0 4.6
Advisory
6 Credit Suisse 1,953 3,138.0 3.4
60 7 Barclays 2,489 2,926.1 3.2
8 Deutsche Bank 2,188 2,356.5 2.6
40 9 Wells Fargo 2,663 1,946.0 2.1
10 HSBC 2,697 1,827.6 2.0
20 11 RBC CM 2,013 1,792.0 2.0
12 Mizuho Financial 3,053 1,704.1 1.9
0 13 UBS 1,009 1,581.9 1.7

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
14 BNP Paribas 1,966 1,494.5 1.6
15 MUFG 2,314 1,370.6 1.5
Source: Refinitiv 16 Sumitomo Mitsui 2,625 1,344.0 1.5
17 Jefferies 826 1,302.2 1.4
18 Bank of China 2,375 1,215.0 1.3
  19 Lazard 252 1,044.0 1.1

US$30.85bn Zero 20 TD Securities


21 BMO CM
22 Rothschild & Co
1,532
1,234
341
925.6
879.5
866.3 0.9
1.0
1.0

23 Credit Agricole CIB 1,278 789.3 0.9


„ BRIDGE LOAN TAKEN OUT BY TAKEDA „ DEALS THAT HAVE TAKEN ADVANTAGE 24 SG CIB 1,062 752.8 0.8
PHARMACEUTICAL TO BUY SHIRE, THE OF SINGAPORE WEIGHTED VOTING RULES 25 CITIC 2,698 746.6 0.8
LARGEST-EVER LOAN IN ASIA SINCE LAW CHANGED IN JUNE Total 47,652 91,874.1
Source: Refinitiv. Jan-Nov 2018

 
BIGGEST LEVERAGED LOANS OF ALL TIME
PROCEEDS RAISED, US$bn
Issuer Date Nation Proceeds
625bp €7.99
2007 38.5 „ HIKE BY THE CENTRAL BANK OF TURKEY „ NEW INTRADAY LOW FOR DEUTSCHE
IN SEPTEMBER, IN AN EFFORT TO HALT A BANK, AS PROBLEMS CONTINUE TO
PLUNGE IN THE LIRA HOBBLE THE LENDER
2015 30.5

 

51% 50.3
1988 27.4

2016 26.3

„ SHAREHOLDING THAT FOREIGN BANKS ARE „ INTRADAY HIGH FOR THE CBOE
2008 19.7 CHASING IN THEIR CHINESE JOINT VENTURES VOLATILITY INDEX IN FEBRUARY; IT BEGAN
AFTER RULES WERE FINALLY EASED THE YEAR BELOW 10

2008 17.9

A POOR YEAR FOR BANK STOCKS


% GAIN OR LOSS, JAN-NOV
2007 16.3

Deutsche Bank
2008 16.1

Credit Suisse

2005 15.8
Goldman Sachs

2006 15.5
Barclays

2018 15.5
HSBC

2007 14.6 JP Morgan

-50 -40 -30 -20 -10 0 10

Source: Refinitiv Source: Refinitiv, Jan–Nov 2018

IFR Awards 2018 International Financing Review 17


IFR AWARDS 2018 FEATURES

A decade on from the demise of Lehman Brothers – and with a new generation of leaders
at the helm – the banking sector has reached a turning point. Legacy issues from the
crisis have faded in intensity and, while some potentially formidable challenges lie on
the horizon, the industry narrative has at last shifted to thinking about the future.

LOOKING TO THE
FUTURE – AT LAST
BY KEITH MULLIN

P
ainful memories of the global
lNANCIALûCRISISûMAYûSTILLûBEûFRESH ûBUTû
there is an almost tangible sense that
THEûBANKINGûINDUSTRYûHASûlNALLYûGOTû
UPûTHEûCONlDENCEûTOûRE WRITEûTHEûPLAYBOOK
The world’s major banks have restructured
ANDûRE TOOLEDû-ARSHALLEDûBYûAûTOUGHûNEWû
regulatory and supervisory regime, they have
REDUCEDûRISK WEIGHTEDûASSETS ûRE SIZEDûEMPLOYEEû
populations, rebalanced client portfolios, rebuilt
PRODUCTûPLATFORMS ûRE THOUGHTûGEOGRAPHICALû
footprints and redesigned IT, data management
and other operational architectures. They are
simpler and less fragmented organisations,
better capitalised, less leveraged and more liquid.
“We are getting toward the end of a
REGULATORYûSUPER CYCLE vûSAIDû-ATTHIEUû
,EMERLE ûSENIORûPARTNERûATû-C+INSEYûANDûTHEû
lRMSûLEADûONû%UROPEANûCAPITALûMARKETSûANDû
investment banking.
“From that point of view, regulators have
achieved one of their primary goals, with
much higher capital ratios than 10 years ago.
If you see this as a proxy for the ability of
banks to absorb shocks, then you have a
much stronger and sounder banking sector
THANûûYEARSûAGOv
Getting to this point has not been easy. It
has been a decade of looking backwards,
trying to make the best of a bad situation,
lXINGûPOORûGOVERNANCEûANDûDEALINGûWITHûTHEû
consequences of bad, sometimes illegal and
occasionally criminal, behaviour.
The theme of cultural revolution in banks
HASûARGUABLYûBEENûOVER ENGINEEREDûFORûEFFECTû
"UTû53BN PLUSûINûlNESûMETEDûOUTûTOû
BANKSûFORûCRISIS ERAûWRONGDOINGûWILLûHAVEûHADû
THEIRûIMPACTû!SûWILLû53BN PLUSûINû
additional annual compliance costs the
industry is estimated to have taken on.
The key challenge for banks is how they
BREAKûOUTûOFûTHEûPERIODûOFûLOWûPROlTABILITYû

18 International Financing Review IFR Awards 2018


IFR AWARDS 2018 FEATURES

4HEûLONG RUNûCYCLEûOFûMASSIVEûCENTRALûBANKûLIQUIDITYûSTIMULUSûVIAû But banks today are leaner, meaner, cleaner and better placed to
ULTRA LOWûINTERESTûRATESûANDûQUANTITATIVEûEASINGûHASûCRUSHEDûBANKSû deal with incoming challenges. Bankers are cautiously optimistic.
NETûINTERESTûMARGINS ûWHILEûTHEûLOW GROWTHûENVIRONMENT û h'LOBALûMARKETSûHAVEûSTARTEDûCORRECTINGûAFTERûAûSTRONGûMULTI
regulatory restrictions and a degree of risk aversion have severely year run and we’ve witnessed a repricing of assets as both interest
CURTAILEDûMONEY MAKINGûOPPORTUNITIESû4HISûHASûSQUEEZEDûRETURNSû RATESûANDûTRADEûTENSIONSûHAVEûRISEN vûSAIDû&RANCKû0ETITGAS ûHEADûOFû
on much higher equity bases. INTERNATIONALûATû-ORGANû3TANLEYûh"UTûTHEûECONOMICûBACKDROPû
“Banks are starting to realise that they cannot cut their way to continues to be positive, with strong levels of activity, investment
greatness, and the old architecture of the industry is increasingly ANDû;-!=ûBACKLOGv
BEINGûDISRUPTEDûBYûREGULATION ûDATAûANDûTECHNOLOGY vûSAIDû,EMERLE
“The only response to this is offence, not defence. Banks need to SUCCESSION
look forward. They need to think about growth, about really Notwithstanding some potentially thorny issues on the horizon,
transforming their operating model at scale, about new threats the fact that many of the world’s major banks have started to pull
such as cyber and about a completely different people model. the trigger on executive succession is a key factor supporting the
h4HEûSECTORûNEEDSûTOûRAISEûITSû2/%ûABOVEûCOSTûOFûEQUITYû2/%ûISû notion of a shift into a different part of the strategy cycle,
STABLEûBUTûUNSPECTACULAR ûESPECIALLYûINû%UROPE ûANDûREVENUESûAREû especially where succession is predicated not on removing
moving sideways overall. Corporate and investment banks will incumbents by apportioning blame for legacy failures but on
NEEDûTOûlNDûNEWûAREASûOFûGROWTH ûWHICHûCANûBEûTRICKYûINûAûMARKETû CREATINGûAûFORWARD LOOKINGûDYNAMIC
WHICHûISûOVERALLûmAT vûSAIDû,EMERLE *USTûATûSOMEûOFûTHEûBIGGESTûBANKSû".9û-ELLON û$EUTSCHEû"ANK û
“But there are interesting niches to be found. The challenge is 'OLDMANû3ACHS û(3"# û-IZUHOûANDû3-"#ûHAVEûALLûHADûNEWûBOSSESû
for individual banks to identify what will be relevant for them, THISûYEARûANDûLASTû3ANTANDERûANDû3TATEû3TREETûGETûNEWû#%/SûINû
where they can beat the competition – which increasingly  ûWHILEûTHEREûISûGOSSIPûANDûSPECULATIONûABOUTûOTHERû#%/û
INCLUDESûNEWûNON BANKûENTRANTSûnûTHROUGHûINNOVATIVEûBUSINESSû vacancies at other major banks opening up in short order.
MODELSv "ANKSûSUCHûASû*0û-ORGANûANDû-ORGANû3TANLEYûMADEû
organisational changes in 2018 that are widely seen as grooming
CHALLENGES, BUT NEW ONES exercises for future leaders. Others are expected to make such
With the US Federal Reserve already in tightening mode and the announcements in 2019. And new faces have occupied the corner
%UROPEANû#ENTRALû"ANKûWINDINGûDOWNûITSûASSET PURCHASEû OFlCESûOFûAûHOSTûOFûOTHERûLARGEûBANKS ûTOO
programme with expectations of a rate rise in autumn 2019, the New chief executives bringing in new ideas and implementing
underlying scenario is changing. ORGANISATIONALûCHANGESûTOûEXECUTEûTHEMûWITHOUTûTHEûMIND CLUTTERû
-ONETARYûAUTHORITIESûWILLûREMAINûCAUTIOUSûABOUTûTHEûPACEûOFû of restructuring or the baggage of the crisis will give rise to a series
rate increases and will be particularly keen to avoid any disorderly of exciting new opportunities. Banks will clearly still need to
IMPACTSûFROMûTHEûNORMALISATIONûOFûHIGHLY DISTORTEDûASSETûPRICESû demonstrate growth in revenue and market share, but what the
4HEûmOW THROUGHûTOûHIGHERûMARGINSûANDûBETTERûBANKûEARNINGSûISû NEWûBANKû#%/SûANDûNEWûDIVISIONALûHEADSûAREûDElNITIVELYûNOTû
DElNITELYûOUTûTHEREûBUTûITûWILLûBEûGRADUAL TASKEDûWITHûDOINGûISûlXINGûORûRECREATINGûWHATûWASûTHEREûBEFOREûTHEû
h)TûDOESûFEELûLIKEûTHISûCYCLEûISûFADINGûANDûTHEûBENElTûFORûBANKSû crisis. Those days are not coming back.
PROlTABILITYûWILLûBEûCONSIDERABLEû"UTûTHEûVIEWûLOOKINGûFORWARDSû
WILLûSTILLûBEûCHALLENGING vûSAIDû*ONATHANû7ILLS ûAûPARTNERûINûTHEû TECHNOLOGY
corporate and investment banking practice of Oliver Wyman. A new generation of leaders is looking at banking strategy and
“There are numerous structural issues that senior management TACTICSûTHROUGHûAûDIFFERENTûSETûOFûLENSESû%NVIRONMENTALû
ALSOûSTILLûNEEDSûTOûADDRESSûlERCEûCOMPETITIONûFORûMARKETûSHAREû SUSTAINABILITY ûCYBER RISKûANDûBETTERûGOVERNANCEûINCLUDINGûGREATERû
ACROSSûALLûPRODUCTS ûAûSECULARûDECLINEûINûPROlTABILITYûACROSSûCASHû GENDERûDIVERSITY ûAREûALLûHIGHûONûTHEûAGENDAû"UTûDRIVINGûATTRACTIVEû
equities, the challenge of strategic adjustments to Brexit in an marginal returns will centre increasingly on the application of
%-%!ûREGIONûTHATûALREADYûGENERATEDûLOWû2/% ûTHEûNEEDûTOû DISRUPTIVEûTECHNOLOGIESûANDûOPEN ARCHITECTUREûTECHNOLOGYû
REPOSITIONûlXED INCOMEûBUSINESSûPORTFOLIOSûASûVOLATILITYûRETURNSûTOû PLATFORMS ûAUTOMATION ûDIGITALISATION ûARTIlCIALûINTELLIGENCE û"IGû
MACRO ûANDûASûCREDITûPARTICULARLYûLEVERAGEûlNANCE ûCOMESûUNDERû $ATA ûCLOUDûCOMPUTING ûANDûTOOLSûANDûAPPSûACROSSûRETAIL ûCONSUMER û
PRESSUREûFROMûANûINCREASINGûINTEREST RATEûENVIRONMENTv corporate, institutional and investment banking.
“Harnessing technology to solve problems and create
opportunities for clients is critical for success in 2019 and
BEYOND vûSAIDû3TEPHANIEû#OHEN ûCHIEFûSTRATEGYûOFlCERûATû'OLDMANû
3ACHSûv7EûAREûINVESTINGûINûDISRUPTIVEûPLATFORMSûANDûEMBRACINGû
unique partnerships. Ultimately, it’s about ensuring that we are at
“Banks are starting to realise that they the forefront of innovation so we can deliver differentiated
cannot cut their way to greatness, and PRODUCTSûANDûSERVICESv
This mode of thinking captures the Zeitgeist. Clare Woodman,
the old architecture of the industry HEADûOFû%-%!ûATû-ORGANû3TANLEY ûSAYSûCORPORATESûREMAINûFOCUSEDû
on exercising opportunities around strategic growth while
is increasingly being disrupted by ENSURINGûTHEûASSETûMIXûOFûTHEIRûBUSINESSûMODELûISûlNANCIALLYû
sound. Additionally, she says, margin pressure is leading to a
regulation, data and technology” RENEWEDûPUSHûONûCOSTûEFlCIENCYûh"UTûDRIVINGûALLûTHOSEû
IMPERATIVES vûSHEûSAID ûhISûANûINTENSIlCATIONûOFûFOCUSûONû

20 International Financing Review IFR Awards 2018


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sustainability and technology – and, increasingly, workforce “As plain boys at school dances have
DIVERSITYv
-C+INSEYSû,EMERLEûBELIEVESûONEûOFûTHEûMOSTûEXCITINGûAVENUESû known for generations, your chances
being explored by a number of players is how to partner with
OTHERSûTOûCREATEûTECHNOLOGY DRIVENûVENTURESûTHATûRE INVENTû of being left without a dance partner
elements of the business.
“This is especially true in some of the most challenged areas of is a function of both your own relative
trading, for example, where it is increasingly clear that
TRADITIONAL ûINCREMENTALûMEASURESûWONTûWORKû.ON BANKûMARKET attractiveness and the remaining
MAKERSûHAVEûSHOWNûTHATûAûTECHNOLOGY DRIVENûMODELû
UNENCUMBEREDûBYûLEGACYûARCHITECTUREûCANûBEûVERYûPOWERFUL vûHEû number of potential partners”
said.
h7HILEûEFlCIENCYûMETRICSûHAVEûIMPROVEDûOVERALL ûCOSTSûREMAINû
sticky and traditional measures alone won’t be enough to restore h4HERESûAûPARADOXûATûTHEûHEARTûOFûTHEû%UROPEANûBANKINGû
#)"SûTOûSUSTAINABLEûPROlTABILITYûLEVELSû3OûDIGITISATION û INDUSTRYû4HEûCURRENTûLANDSCAPEûISûOVER BANKEDûANDûTHEREûISûANû
ELECTRONIlCATIONûANDûAUTOMATIONûWILLûNEEDûTOûMOVEûFROMûTHEûLABû almost universal acceptance that competition between fewer,
TOûFULL SCALEûINDUSTRIAL STRENGTHûIMPLEMENTATIONû7HOLESALEû STRONGERûBANKSûWOULDûBEûTOûEVERYONESûBENElTûCUSTOMERS û
BANKINGûHASûBEENûBEHINDûRETAILûONûTHISûBUTûISûSTARTINGûTOûCATCH UPv SHAREHOLDERSûANDûREGULATORS vûSAIDû/LIVERû7YMANSû7ILLS ûWHOû
believes consolidation would resolve many of the problems facing
CONSOLIDATION %UROPEANûBANKSûASûLARGERûBANKSûWOULDûIMMEDIATELYûENJOYûSCALEû
Banks still dealing with problem exposures are clear outliers BENElTS ûDRIVINGûDOWNûOPERATIONALûANDûFUNDINGûCOSTSûANDû
RATHERûTHANûSECTOR REPRESENTATIVEû4HEûONLYûMAJORûBANKûSTILLû improving returns.
WRITHINGûINûAûPOTENTIALLYûEXISTENTIALûCRISISûISû$EUTSCHEû"ANK ûWHOSEû 0AN REGIONALûBANKSûCOULDûDIVERSIFYûRISKûACROSSûPRODUCTSûANDû
FUTUREûASûAûSTAND ALONEûBANKûREMAINSûINûDOUBTû4HEûGOSSIPûFORû CLIENTûTYPESûWHILEûWELLûCAPITALISEDû%UROPEANûBANKSûCOULDûDEEPENû
MUCHûOFûûREVOLVEDûAROUNDûANûINCREASINGLYûCHEAPû$EUTSCHEû the region’s capital markets and invest in innovation. Retail and
being taken over or merging with Commerzbank at some point to CORPORATEûCLIENTSûWOULDûBENElTûTHROUGHûBETTERûPRODUCTSûANDû
form a national and regional champion, something ardently better pricing. The end of central bank stimulus could accelerate
DESIREDûBYû'ERMANûANDû%UROPEANûPOLITICIANSûASûAûBULWARKûAGAINSTû the process by taking away the protection it provided to weak
further encroachment by US banks. banks that enabled them to avoid restructuring. The emerging
)NûTHISûREGARD ûTHEûPOLITICALûNARRATIVEûINû%UROPEûHASûCHANGEDû RESOLUTIONûFRAMEWORKûWITHûITSûIN PRINCIPLEûENDûTOûTAXPAYER FUNDEDû
4HEûERAûOFûREGULATORYûlXATIONûWITHûSIZEûANDûPRE OCCUPATIONûWITHû bank bailouts could also provide impetus for takeovers.
banks being Too Big to Fail has given way to a new focus on %UROPEANû"ANKINGû5NIONûWASûDESIGNEDûPARTIALLYûTOûBEûAûCOREû
PROMOTINGûBANKINGûEFlCIENCYûANDûSUPPORTINGûLARGE SCALEûSECTORû hCONDITIONûPRECEDENTvûFORûCROSS BORDERûCONSOLIDATIONûBUTûFEWû
CONSOLIDATIONûnûPARTICULARLYûCROSS BORDERûMERGERSûOFûLARGEûBANKS observers believe the conditions are in place today, although the
4HATûISûAû DEGREEûPOLICYûTURNûASûTHEûREALISATIONûDAWNSûONû SECTORûLOOKSûLIKEûITûISûHEADINGûINûTHEûRIGHTûDIRECTIONû-AXIMISINGûVALUEû
POLICYMAKERSûTHATû%UROPEûINûPARTICULARûREMAINSûHEAVILYûOVER such that banks can go into a merger as highly valued as possible has
BANKEDûANDûHASûAûHIGHLYûUNDER DEVELOPEDûCORPORATEûBONDûMARKETû partially been achieved by restructuring, cost reduction and banks
There are too many branches, too many employees, too many testing the balance between traditional and digital models.
BANKSûWITHûCHRONICALLYûLOWû2/%SûANDûLOWûMARKETûSHARESûOFFERINGû Better asset quality and lower NPL ratios will improve
undifferentiated products and services and exhibiting poor CONlDENCEûAMONGûBUYERSûABOUTûTHEûTRUEûVALUEûOFûTHEûASSETSû
organic capital creation. they’re buying. A more convoluted condition is a level playing
This creates a scenario ripe for disruption by challengers and lELDûINû%UROPEû4HEREûMAYûWELLûBEûAûSINGLEûRULEBOOKûBUTûBANKû
DISRUPTIVEûTECHNOLOGIESû,OW LEVELûCONSOLIDATIONûISûTAKINGûPLACEû regulation still differs between countries, as do tax codes, legal
SLOWLYûATûTHEûMARGINSûBUTûLARGE SCALEûCROSS BORDERûSHIFTSûLOOKû systems and political attitudes to foreign ownership. The highest
unlikely in the present cycle, particularly given the way capital POTENTIALûSYNERGIESûWILLûCOMEûFROMûCROSS BORDERûMERGERSûBUTûTHEû
regulations and resolution frameworks have evolved. RISKûOFûNOTûREAPINGûTHEûFULLûBENElTSûBECAUSEûOFûLOCALûDIFlCULTIESûISû
4HEûOPERATIONALûREALITIESûOFûRUNNINGûAûLARGEûCROSS BORDERûBANKû also higher.
DEALINGûWITHûRING FENCING ûSUBSIDIARISATIONûANDûINTERMEDIATEû An important driver of consolidation and one that is impossible
holding companies would appear to run counter to the notion of a to time is the return of animal spirits.
single market and the lofty ambitions of banking and capital h-ERGERSûAREûEXPENSIVEûANDûCOMPLEXûANDûITûCANûBEûHARDûTOû
markets union. ENSUREûTHATûSHAREHOLDERSûBENElTû#%/SûNEEDûTOûHAVEûAûCLEARû
STRATEGY ûCONlDENCEûINûTHEIRûABILITYûTOûEXECUTEûASûWELLûASûAûHIGHû
“Non-bank market-makers have RISK APPETITE vûSAIDû7ILLS
“When consolidation in an industry does start, it can move
shown that a technology-driven model surprisingly quickly. As plain boys at school dances have known
for generations, your chances of being left without a dance
unencumbered by legacy architecture partner is a function of both your own relative attractiveness and
the remaining number of potential partners. However shy the
can be very powerful” GATHERING ûASûSOONûASûTHEûlRSTûCOUPLEûPAIRSûOFF ûTHINGSûCANûMOVEû
QUICKLYv z

22 International Financing Review IFR Awards 2018


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IFR AWARDS 2018 FEATURES

/NLYûAûSMALLûNUMBERûOFû%UROPEANûBANKSûHAVEûTHEûFIREPOWERûANDûGEOGRAPHICûREACHûTOû
compete with rampant US rivals. The rest must either focus on pockets of excellence
or merge.

EUROPE’S BANKS
FIGHT BACK

BY DAVID ROTHNIE There’s no doubt that US banks enjoy a number of structural


advantages in investment banking. For a start, the US capital

T
HEûSALEûINû*UNEûûBYûTHEû5+ûGOVERNMENTûOFûAûûSTAKEû markets are the deepest and most liquid in the world, and account
in Royal Bank of Scotland served as a stark reminder about FORûHALFûOFûGLOBALûCORPORATEûlNANCEûFEES ûWHICHûAREûALSOûHIGHERûTHANû
HOWûTHEûFORTUNESûOFû53ûANDû%UROPEANûBANKSûHAVEûDIVERGEDû INû%UROPE
SINCEûTHEûlNANCIALûCRISIS US banks also took their medicine early, with the US Treasury
4HEûDEALûWASûHIGHLYûSYMBOLICûFORû%UROPESûCAPITALûMARKETSû forcing them to recapitalise in 2008 with the enforced Troubled
BANKERS ûNOTûJUSTûBECAUSEûITûRESULTEDûINûAûaBNûPAPERûLOSSûFORûTHEû5+û Asset Relief Programme. The US authorities also encouraged
taxpayer a decade after RBS was bailed out, but because the consolidation as a response to the crisis, with Bank of America
INVESTMENTûBANKSûSELECTEDûBYûTHEû5+ûGOVERNMENTûTOûHANDLEûTHEûSALEû TAKINGûOVERû-ERRILLû,YNCH ûANDû*0û-ORGANûBUYINGû"EARû3TEARNS
were all American. h)NûTHEûINITIALûAFTERMATHûOFûTHEûlNANCIALûCRISISû53ûBANKSûHADûAûSCALEû
The RBS deal was just another opportunity for US banks to notch and capital advantage and were further helped by a domestic
UPûANOTHERûWINûONû%UROPEANûSOIL ûWHEREûTHEYûHAVEûALREADYûMADEû ECONOMYûTHATûHASûCONSISTENTLYûGROWNûOVERûTHEûLASTûDECADE vûSAIDû
record gains since the crisis. 3TEPHENû$AINTON ûGLOBALûHEADûOFûEQUITIESûATû"ARCLAYS
Globally, they have established a dominant market share in every !NDûINûTHEûLASTûûYEARS ûTHEû30ûHASûRISENûBYûûWHILEûTHEû
INVESTMENTûBANKINGûPRODUCT ûACCORDINGûTOûANALYSISûOUTlTû#OALITIONû %UROSTOXXûHASûCLIMBEDûBYûAûRELATIVELYûSLUGGISHûûh4HESEûSTRUCTURALû
DURINGûTHEûlRSTûHALFûOFû û53ûBANKSûSECUREDûûOFûGLOBALûINVESTMENTû advantages have enabled US banks to follow strategies that have
BANKINGûREVENUES ûWHILEû%UROPEANûRIVALSûGRABBEDûONLYû BEENûCONSISTENT vûSAIDû$AINTON

24 International Financing Review IFR Awards 2018


FEATURES IFR AWARDS 2018

$URINGûTHEûSAMEûPERIOD û53û-!ûACTIVITYûHASûREACHEDûNEWûHIGHS û with the US, and I would just point out that four quarters in a row we
ANDûBETWEENûûANDûû53ûDEBTûCAPITALûMARKETSûPOSTEDûTHREEû have gained market share.
successive years of record volumes, factors that played to the v4HEûREALITYûOFûWHATûISûHAPPENINGûWITHûOURûMARKETSûFRANCHISEû
strengths of big US universal banks with a home market advantage – REALLYûBELIESûTHEûPROPOSITIONûTHATûWEûCANTûCOMPETEv
and that allowed them to print money that can be put to use "ARCLAYSûDIFFERSûFROMûMOSTûOFûITSû%UROPEANûRIVALSûINûTHATûITûHASûAû
elsewhere. SIGNIlCANTûFOOTHOLDûINûTHEû53ûTHANKSûTOûITSûûPURCHASEûOFûTHEû
.OWûTHEYûAREûALSOûBECOMINGûDOMINANTûINû%UROPE ûWHEREûMANYû .ORTHû!MERICANûBUSINESSûOFû,EHMANû"ROTHERSû&ORûOTHERû%UROPEANû
HOME GROWNûINVESTMENTûBANKSûHAVEûTAKENûAûRADICALLYûDIFFERENTû lRMSûTHATûLACKûAû53ûPRESENCE ûAûCHOICEûISûEMERGINGûnûEITHERûDIVERSIFYû
approach. While US banks have pressed home their advantage, their business away from investment banking to seek more stable
%UROPESûBANKSûHAVEûPULLEDûINûTHEIRûHORNS ûCUTTINGûHUGEûSWATHESûOFû returns, or gain scale through consolidation.
their trading operations, exiting countries and product lines.
)NûMANYûWAYS ûTHEYûONLYûHAVEûTHEMSELVESûTOûBLAMEû%UROPEANû MIND-SET SHIFT
banks were slow to adapt and as a result some are still trying to %ARLIERûTHISûYEAR ûAûREPORTûBYû-ORGANû3TANLEYûANDû/LIVERû7YMANû
lGUREûOUTûTHEIRûPOST CRISISûFUTUREûORûHAVEûDIALLEDûDOWNûTHEIRû RAISEDûTHEûPROSPECTûOFûBIG TICKETû-!ûASûAûSHOTûATûREDEMPTIONûFORû
commitment to investment banking. %UROPESûBANKS
/NGOINGûRESTRUCTURINGûMEANSûTHATû%UROPEANûBANKSûHAVEûSUFFEREDû h7EûSEEûSCALEûPLAYERS ûBROAD BASEDûCORPORATEûFRANCHISESûANDû
from strategic introspection, which has compounded their SPECIALISTûPLAYERSûBEINGûWELLûPLACED vûTHEûREPORTûSAIDûh7EûBELIEVEûTHISû
competitive disadvantage. RAISESûPROFOUNDûQUESTIONSûFORû%5ûPOLICYMAKERSûOVERûTHEûFUTUREûSHAPEû
!SûANûINDICATIONûOFûTHEûLEVELûOFûUPHEAVAL û$EUTSCHEû"ANKûINû!PRILû OFûTHEûWHOLESALEûSECTORûINû%UROPEv
APPOINTEDû#HRISTIANû3EWINGûASûITSûTHIRDû#%/ûINûSIXûYEARSû(ISû But for mergers to take place would require a fundamental shift in
PREDECESSORû*OHNû#RYAN ûWHOûWASûOUSTEDûAFTERûSTRUGGLINGûTOûTURNûTHEû MINDSETûAMONGû%UROPEANûREGULATORS ûBANKûMANAGEMENTûANDû
LENDERûAROUND ûSUMMEDûUPûTHEûBANKSûPROBLEMSûINû*ANUARYûWITHûHISû SHAREHOLDERSû3INCEûTHEûCRISISûREVEALEDûBANKSûTOûBEûhTOOûBIGûTOûFAILv ûTHEû
customary bluntness. prevailing regulatory backdrop has gravitated against big bank mergers.
h7EûBEGANûRESTRUCTURINGûABOUTûlVEûYEARSûLATERûTHANûTHEûBANKSûINû Plus, bankers say management’s number one priority is still
THEû53 vûHEûSAIDûv5NFORTUNATELY ûWEûDIDûNOTûCAPITALISEûONûOURû PRESERVATIONûOFûCAPITALûANDûNOû#%/ûWOULDûTAKEûTHEûRISKûTHATûAûDEALû
ADVANTAGESûAFTERûTHEûlNANCIALûCRISISûANDûADJUSTEDûOURûBUSINESSûMODELû WOULDûDESTROYûVALUEû4HEREûISûALSOûAûLACKûOFûCONlDENCEûABOUTû
FARûTOOûLATEv WHETHERûBANKSûHAVEûSUFlCIENTLYûCLEANEDûUPûTHEIRûBALANCEûSHEETS
Nonetheless, in 2018 the prospect of big bank mergers resurfaced
DITHERING with reports that Germany’s Commerzbank could be a target, either
$EUTSCHESûDITHERINGûCOSTûITûITSûPOSITIONûASû%UROPESûTOPûCORPORATEû FROMû$EUTSCHEûORû".0û0ARIBAS
lNANCEûHOUSEûINûTERMSûOFûFEESûAND ûACCORDINGûTOû2ElNITIVûDATA ûITû At the same time, there was talk that UniCredit of Italy might be
NOWûLANGUISHESûINûEIGHTHûPOSITIONûFORûTHEûlRSTûTHREEûQUARTERSûOFû CONSIDERINGûAûTIE UPûWITHû&RANCESû3OCIETEû'ENERALEû"OTHûDEALSûHAVEû
 ûBEHINDû#REDITû3UISSEûANDû"ARCLAYSû!LLûOFûTHEûTOPûlVEûSPOTSûAREû LOGIC ûBUTûBANKERSûSAYûTHEYûAREûSOMEûWAYûOFFûh"OTHû$EUTSCHEûANDû
occupied by US banks. 5NI#REDITûHAVEûORGANICûTURNAROUNDûPLANSûTHATûTHEYûHAVEûTOûlNISHû
7HILEû53ûBANKSûHAVEûENJOYEDûAûSTRUCTURALûADVANTAGE û%UROPESû lRST vûSAIDûONEû&)'ûBANKER
investment banks have faced economic and regulatory headwinds. 4HEREûISûAûGROWINGûSENSEûTHATû%UROPEANûPOLICYMAKERSûSHOULDûSTARTû
The region’s economy has stuttered while regulations have been to support consolidation, while one senior banker argues that the
tougher than in the US, with local supervisors introducing strict REGULATORYûCLIMATEûCOULDûBEûCHANGINGûh-OSTû%UROPEANûBANKSûALREADYû
TARGETSûONûLEVERAGEûRATIOSûANDûCOMPENSATION ûWHILEûINûTHEû5+ûTHEû HAVEû#%4ûRATIOSûABOUTûTHEû' 3)"ûBUFFERûLIMITS ûSOûMERGINGûWOULDNTû
INTRODUCTIONûOFûTHEûhSENIORûMANAGERSûREGIMEvûHASûMADEûINDIVIDUALSû MAKEûTHATûMUCHûDIFFERENCEûTOûTHEIRûCOSTûOFûCAPITAL vûSAIDûONEûSENIORû
more accountable – and the industry less attractive. banker.
h&ROMûAûSCALEûPOINTûOFûVIEWûTHEû%UROPEANûBANKSûHAVEûAûCHALLENGEû Consolidation has certainly begun in selective areas such as
but from a return on resources perspective we are right up there. EQUITIES ûWHEREûTHEûREVISEDû-ARKETSûINû&INANCIALû)NSTRUMENTSû
Not being the biggest doesn’t preclude us from being the best in $IRECTIVEûAKAû-I&)$û)) ûISûFORCINGûSMALLERûBROKERSûTOûMERGEûASûBIGGERû
TERMSûOFûPROlTABILITYûORûPROVIDINGûGREATûVALUEûFORûOURûSHAREHOLDERS vû banks grab a larger share of equities sales, trading and research
SAIDû*ASONû"ARRON ûINTERIMûGLOBALûHEADûOFûEQUITIESûATû5"3 business from institutional clients. AllianceBernstein is currently in
&ACEDûWITHûAûRAMPANTû53ûBANKINGûINDUSTRY û%UROPESûBANKSûHAVEû TALKSûTOûACQUIREûSPECIALISTû5+ûRESEARCHûlRMû!UTONOMOUSûANDûTHATûISûAû
RE TOOLEDûASûRETURNS DRIVENûlRMSûFOCUSINGûONûAREASûTHATûCONSUMEûLESSû trend that many expect to continue in 2019.
capital.
A patchwork competitive environment has emerged, where banks FIGHTBACK BEGINS
have developed pockets of excellence, either by region or product, 3OMEûBELIEVEûANûOPPORTUNITYûMAYûBEûEMERGINGûFORûAû%UROPEANû
where they can compete on level terms. UBS has cut back its FICC lGHTBACKû4HEûPROSPECTûOFûAûSLOWDOWNûINûTHEû53ûCOULDûPROVIDEûTHEû
business, for example, but remains a top four player in global spark, while some US banks may review their exposure outside their
equities. Local rival Credit Suisse is coming to the end of a revamp home market.
that has seen it moving capital from its markets division into Asian h%UROPEANûCOMPANIESûDONTûJUSTûWANTûAûGROUPûOFû53ûBANKSûASûTHEIRû
wealth management. only potential counterparties. There is an opportunity for a leading
/NLYûAûSELECTûNUMBERûOFû%UROPEANûlRMSûHAVEûTHEûlREPOWERûANDû GLOBALû%UROPEANûINVESTMENTûBANKûTOûTHRIVEvûSAIDû"ARCLAYSû$AINTON
AMBITIONûTOûCOMPETEûASûFULLY INTEGRATEDûCORPORATEûANDûINVESTMENTû h%UROPEANûBANKSûCANûRECOVERûBUTûTHEYûNEEDûAûMOREûPOSITIVEû
BANKSû".0û0ARIBASûISûACCELERATINGûANûEXPANSIONûOFûITSû%UROPEANû ECONOMICûCYCLEûINû%UROPE ûWHEREûINTERESTûRATESûNEEDûTOûBEûHIGHER vû
corporate and investment banking activities, including a big push in SAIDû3AMIRû!SSAF û#%/ûOFû(3"#SûGLOBALûBANKINGûANDûMARKETSûDIVISION
THEû5+ ûINûORDERûTOûBRIDGEûTHEûGAPûWITHû53ûRIVALS v)NûTHEûSHORTûTERMûnûINûTHEûNEXTûTHREEûTOûlVEûYEARSûnû)ûTHINKûITûISû
-EANWHILE û"ARCLAYSûHASûCOMEûOUTûlGHTINGû3PEAKINGûDURINGûTHEû DIFlCULTûTOûCATCHûUPûBUTûITûDEPENDSûWHATûTHEYûAREûTRYINGûTOûCATCHûUPû
BANKSûTHIRD QUARTERûRESULTSûCALL û#%/û*ESû3TALEYûTOLDûANALYSTSûh4HEREû with. Is it size, return on equity, or market share? If you know where
HASûBEENûAûCOMMENTûTHATû%UROPEANûINVESTMENTûBANKSûCANTûCOMPETEû TOûCOMPETEûTHENûITûCANûWORKv z

IFR Awards 2018 International Financing Review 25


IFR AWARDS 2018 FEATURES

/VERûTHEûDECADES û*APANESEûBANKSûHAVEûBEENûCRITICISED ûFAIRLYûORûUNFAIRLY ûASûHAVINGûAû


BOOM BUSTûAPPROACHûTOûINTERNATIONALûBUSINESSû(OWûDOûTHEûINTERNATIONALûAMBITIONSû
OFû*APANSûMAJORûFINANCIALûGROUPSûSTACKûUPûTODAYûAMIDûONGOINGûMONETARYûSTIMULUSûATû
home and a challenging environment overseas? Is it different this time?

A ROCK AND
A HARD PLACE?
BY KEITH MULLIN

T
HEûPERIODûSINCEûTHEûGLOBALûlNANCIALûCRISISûHASû
coincided with a time of heavy investment by
*APANESEûlNANCIALûINSTITUTIONSû#OMINGûOUTûOFûTHEû
upheaval of their own 1990s banking crisis and the
ECONOMICûTORPORûOFûTHEûPOST ûPERIODûATûHOME û*APANSû
restructured and rejuvenated banks looked overseas for
growth from an enviable position of strength.
-ITSUBISHIû5&*û&INANCIALû'ROUPSûPURCHASEûOFûAûûSTAKEû
INû-ORGANû3TANLEYûANDû.OMURAûBUYINGû,EHMANû"ROTHERSû
%UROPEANûANDû!SIANûBUSINESSESûWEREûTHEûMOSTûHIGH PROlLEû
EXAMPLESûOFû*APANESEûBANKSûMOVINGûOUTûINTOûTHEûWORLD
But other banks acquired huge portfolios of assets from
INTERNATIONALûPLAYERSûFORCEDûINTOûPANICKEDûPOST CRISISûDELEVERAGING û
in the process further globalising their geographical, client and
PRODUCTûFOOTPRINTSû-IZUHOSûACQUISITIONûOFû2"3Sû.ORTHû!MERICANû
loan portfolio, for example, added bankers in key areas such as
DEBTûORIGINATIONûANDûLEVERAGEDûlNANCE
*APANSûMEGA COMMERCIALûBANKSûALSOûACQUIRED ûBOUGHTû
strategic stakes in or arranged joint ventures with Asian
BANKSûTOûROUNDûOUTûTHEIRûOFFERINGSûINûFAST GROWINGûMARKETSû
closer to home.
h4HEû*APANESEûBANKSûAREûONûOURûRADARû4HEYûHAVEûHADûMADEû
AûLOTûOFûPROGRESSûINûTHEIRûNON *APANû;#)"=ûGROWTHûSTRATEGIES û
EVENûTHOUGHûûHASûBEENûAûCHALLENGINGûYEARûFORûTHEM vû
SAIDûTHEûHEADûOFûRESEARCHûATûAûLEADINGûMARKETûANALYTICSûlRM
h4HEIRûFOCUSûISûDIFFERENTûTOûTRADITIONALûINVESTMENTûBANKSû
THEû*APANESEûMEGA COMMERCIALûBANKSûAREûMAINLYûFOCUSINGûONû
LENDING ûlNANCING ûCORPORATEûDERIVATIVES ûANDûTRANSACTIONû
banking products associated with traditional banking
BUSINESSûLINESv
)Nû#)" ûTHEûTHREEûMEGA COMMERCIALûBANKSûHAVEûLEDûWITHû
THEIRûLARGEûBALANCEûSHEETSûANDûHAVEûLONGûBEENûLEADINGûCROSS
BORDERûSYNDICATEDûLENDERSû2ElNITIVSûINVESTMENTûBANKINGû
FEEûDATAûCOVERINGû-!ûADVISORY û$#- û%#-ûANDûSYNDICATEDû
LENDING ûHADûTHEûTHREEûMEGABANKSûPLUSû.OMURAûINûTHEûTOPûû
GLOBALûFEEûEARNERSûATûTHEûNINE MONTHûûSTAGE
.OTABLY û-IZUHO û-5&'ûANDû3UMITOMOû-ITSUIû&INANCIALû
Group heavily outperformed the market: while the global
FEEûPOOLûFELLûûYEAR ON YEAR û-IZUHOûINCREASEDûITSûTAKEûBYû
 û-5&'ûBYûûANDû3UMITOMOûBYû ûANDûTHEYûALLû
gained market share.
)TûISûFAIRûTOûSAY ûTHOUGH ûTHATûWHILEûTHEû*APANESEûHOUSESûAREû
SLOWLYûBUILDINGûBETTERûNON *APANû$#-ûPROlLESûPARTICULARLYû

26 International Financing Review IFR Awards 2018


FEATURES IFR AWARDS 2018

-IZUHOûANDû-5&' ûTHEYûAREûNOTûYETûCOMPETINGûONûTHEûTOPûTABLEû DIVISION ûISûCAUTIOUSLYûUPBEATûEVENûTHOUGHûHEûFACESûAûSIGNIlCANTû


and their international equity and advisory businesses lack scale. UPHILLûTASKûTOûHITûTHEûWHOLESALEûDIVISIONSû&9nûPRE TAXû
INCOMEûTARGETûOFûcBNncBNû53BNnBN ûDOUBLEû
THORNY TASK THEûcBNûREPORTEDûFORûTHEûMOSTûRECENTûFULLûlSCALûYEARûTHATû
*APANESEûBANKSûNEEDûINTERNATIONALûPROlLESûNOWûMOREûTHANûEVERû ENDEDûINû-ARCHûû!TûTHEûHALF YEARûSTAGE ûTHEûDIVISIONûMADEûAû
GIVENûCONDITIONSûATûHOME ûWHEREû"O*ûSTIMULUSûHASûKILLEDûNETû cBNûPRE TAXûLOSS
INTERESTûMARGINSûANDûUNDERMINEDûPROlTS ûANDû*APANSûAGEINGû h-ARKETûCONDITIONSûREMAINûVERYûCHALLENGING ûBUTûTHEûCHANGESû
demographic has curtailed future business opportunities. WEVEûMADEûTOûOURûWHOLESALEûBUSINESSûSINCEû!PRILûûHAVEûLEFTûUSû
But the thorny task confronting management now is not just with a solid core operating business with a proven track record.
BUILDINGûBUSINESSûPROlLESûTHATûAREûLESSûRELIANTûONûLENDING ûITSû /URûmOWûMACROûBUSINESS ûDESPITEûAûCHALLENGINGûLASTûFEWûQUARTERSû
WEAVINGûEVERYTHINGûINTOûAûCOHERENTûnûANDûMOREûPROlTABLEûnûGLOBALû in some regions, continues to be a large contributor to overall
WHOLEûWITHûAûCONVINCINGûSTRATEGICûBACK STORYû4HEûBANKSûAREû PROlTABILITYûFORûWHOLESALE vû!SHLEYûSAID
WORKINGûONûTRANSFORMINGûBUSINESSûPROlLESûBYûSELECTIVELYûRE In terms of priorities, Nomura will continue to focus on
allocating capital to areas of higher return, and exiting reinforcing its agency execution business Instinet by positioning it
UNPROlTABLEûCLIENTûRELATIONSHIPS ASûAûMULTI ASSETûPLATFORM
Thorny because they are faced with achieving that amid parallel "USINESSûDIVERSIlCATIONûISûHIGHûONûTHEûAGENDAûONEûAREAû
initiatives to cut costs, reduce headcount, and close branches at earmarked for growth is the Americas advisory franchise. Nomura
home. And they are attempting to do it against the backdrop of LAUNCHEDûAûPRIVATE SIDEûBUSINESSûUNITûnûCLIENTûlNANCINGûANDû
potentially tricky global market conditions and challenging solutions – in April, taking content from IB advisory, client
industry headwinds. coverage, and sales and structuring in global markets to create a
h4HEû*APANESEûBANKSûFOCUSEDûONûLENDINGûASûAûGATEWAYûTOûENTRY û SUITEûOFûSTRUCTUREDûCREDITûPRODUCTSû4HEûlRMûISûROLLINGûTHISûOUTû
USINGûACCESSûTOûCHEAPûFUNDING vûSAIDû"ENJAMINû1UINLAN û#%/ûOFû INTERNATIONALLYûWITHûAûVIEWûTOûINCREASINGûCROSS SELLING
CONSULTINGûlRMû1UINLANûû!SSOCIATES h!LONGSIDEûTHEûIMPLEMENTATIONûOFûCLIENTûlNANCINGûANDû
“While they have been able to capture loan market share with solutions, Nomura is in a good position to take advantage of
cheap balance sheet, they have been less successful transitioning GROWINGûDEMANDûFORûlNANCINGûANDûSOLUTIONS ûESPECIALLYû
that traction into the capital markets and securities space. Brand CORPORATES vûSAIDû!SHLEY ûWHOûBELIEVESû.OMURAûCANûADDûVALUEûINû
IDENTITYûISûAûKEYûFACTORûHEREû.O ONEûCARESûABOUTûTHEûBRANDûOFûAû the space between traditional bank lending and leveraged loans,
bank offering cheap funding, but they do care about who’s doing for example.
THEIRû)0/ûORûADVISINGûTHEMûONû-! vûHEûSAID
h!ûCOREûSTRENGTHûOFûTHEû*APANESEûBANKSûISûTHEIRûCROSS BORDERû SUSTAINABLE PROFITS
BUSINESS ûPREDOMINANTLYûLOOKINGûAFTERûTHEûNEEDSûOFû*APANESEû $AIWASûPUSH ûMEANWHILE ûINCLUDESûAûMOVEûTOûBUSINESSûDIVERSIlCATIONû
corporates and funds. Tapping into international corporates has alongside more standard measures of increasing throughput from
BEENûMOREûOFûAûSTRUGGLEûFORûTHEMv %#-ûANDû$#- ûANDûSTRENGTHENINGûTHEû-!ûPLATFORM
Of course, building sustainable businesses in the US, which is 4HEûlRMûACQUIREDû53ûBOUTIQUEûINVESTMENTûBANKSû3AGENTû
WHATûTHEû*APANESEûBANKSûAREûSEEKINGûTOûDO ûISûNOTORIOUSLYûDIFlCULT !DVISORSûANDû3IGNALû(ILLû(OLDINGSûINû ûFORMINGû$#3û!DVISORYû
“Anyone trying to break into the US has to have a powerful TOûFOCUSûONû-!ûADVISORYûANDûPRIVATEûCAPITALûRAISINGû7ITHûTHEû
value proposition to win market share from the major American EXISTINGû,ONDON BASEDû$#û!DVISORYûMID CAPû-!ûBUSINESS û$AIWAû
BANKSû)FûTHEû*APANESEûBANKSûWANTûTOûDOûTHAT ûlNEûBUTû)DûSAYûTHEYû HASûAû STRONGûADVISORYûPLATFORMû!TûTHEûTIMEûOFûTHEû53û
REALLYûNEEDûTOûFOCUSûONûTHEûCROSS BORDERûCONNECTIVITYûBETWEENûTHEû ACQUISITIONS ûITSûPRESIDENTûANDû#%/û3EIJIû.AKATAûSAIDûEXPANDINGû
53ûANDû*APANûANDûLOOKûTOûDOMINATEûTHATûSPACE vû1UINLANûSAID THEû-!ûADVISORYûBUSINESSûWASûCOREûTOûTHEûlRMSûSTRATEGICûGROWTH
“As long as they play to their competitive niches and core )NûTHEûNEARûTERM ûTHEûKEYûFOCUSûFORû$AIWAû#APITALû-ARKETSû
STRENGTHS ûTHEYLLûDOû/+û"UTûTHISûISûNOTûTHEûMOSTûFORTUITOUSûTIMEûTOû %UROPEûINû,ONDONûISûTOûMAKEûSUREûTHEûBUSINESSûISûPROTECTEDû
be adopting a generalist approach. This is especially the case in the THROUGHû"REXITû!ûNEWLY ESTABLISHEDûSUBSIDIARYûINû&RANKFURTûWILLû
CURRENTûREGULATORYûCLIMATE ûWHEREûLEGISLATIONûSUCHûASû-I&)$û))ûISû ensure that clients continue to have access to the same products
forcing banks and brokers to become disciplined about where ANDûSERVICESû$#-%ûWILLûALSOûLOOKûTOûEXPANDûITSû$#-ûFRANCHISEû
they play and the content they produce while ratcheting up their INTOû%ASTERNû%UROPEûANDûTHEû.ORDICûREGION
COSTûBASEû)ûDOûTHINKûTHEû*APANESEûBANKSûWILLûRUNûINTOûHEADWINDSv “Looking further ahead and in terms of what our strategic
journey is, the old business model is changing rapidly on the back
DIVERSIFICATION OFûCHANGESûLIKEû-I&)$û))ûANDûLOWERûVOLUMESûANDûLOWûVOLATILITYûINû
Nomura has had its fair share of pain since acquiring the Lehman lXED INCOMEû!ûKEYûSTRATEGYûFORûUSûISûlNDINGûNEWûREVENUEûLINES vû
BUSINESSES ûYETû3TEVEû!SHLEY ûGLOBALûHEADûOFûTHEûlRMSûWHOLESALEû SAIDû+EITHû-EEKINS ûCHIEFûEXECUTIVEûOFû$#-%ûANDûCHAIRMANûOFû$#û
Advisory. “Part of that will be a greater focus on Green and SRI
products but beyond that, we are looking to put more capital to
USEûINûINNOVATIVEûNEWûBUSINESSûAREASv
“The Japanese banks focused on $#-%ûISûLOOKINGûATûPOTENTIALûBOLT ONûACQUISITIONSûASûWELLûASû
building new business lines, including potentially through joint
lending as a gateway to entry, using ventures. A recent departure was the establishment of a principal
INVESTMENTSûBUSINESSûPROVIDINGûDEBTûlNANCEûINû5+ûREALûESTATEû)TûISû
access to cheap funding” NOWûLOOKINGûTOûEXPLOITûOTHERûPOTENTIALûOPPORTUNITIESûINûTHEû%-%!û
region, including in Africa.

IFR Awards 2018 International Financing Review 27


IFR AWARDS 2018 FEATURES

“The only way banking businesses today will survive will be


creating new sources of revenue away from traditional business
“We are leveraging our presence in
lines. Our strategy is to diversify our revenue streams, as income
from our regular businesses dries up. We will continue offering
US dollar debt markets in order to
SALESûANDûTRADINGûCAPABILITIESûTHATSûBREADûANDûBUTTERûBUSINESSûBUTû strengthen our DCM business in Europe
WHEREûWILLûTHATûBEûINûlVEûYEARSû!SûSTANDALONEûBUSINESSES ûUNLESSû
YOUûHAVEûPRIMARYûORIGINATIONûCAPACITY û)ûQUESTIONûITSûLONG TERMû and Asia”
VIABILITY vû-EEKINSûSAID

COLLABORATIVE
-IZUHOûANDû-5&'ûHAVEûBOTHûADOPTEDûINTEGRATIONûSTRATEGIESûUSINGû Although it will come with a temporary decrease in earnings, we
THEûh/NEû-IZUHOvûANDûh/NEû-5&'vûTAG LINESû-IZUHOSûCOREû MUSTûFOLLOWûITûTHROUGH vû.OBUYUKIû(IRANO ûGROUPû#%/ûSAIDûATûTHEû
STRATEGYûFORûEXPANDINGûITSûBUSINESSûWITHûNON *APANESEûCOMPANIESû lSCALûHALF YEARûRESULTSûPRESENTATIONûONû.OVEMBERûû/NûTHEû
ISûCENTREDûONûTHEû'LOBALû ûAûGROUPûOFûAROUNDûûGLOBALûBLUE EARNINGSûPOINT ûTHEûGROUPSûTARGETEDû2/%ûOFûnûINû&9ûISû
chip companies. FORECASTûTOûBEûSIGNIlCANTLYûBELOWûTHEûnûMEDIUMûTOûLONG
/NûTHEûNUMBERS ûTHEûBREAKDOWNûOFûNON INTERESTûINCOMEûBYû term goal.
BUSINESSûATûTHEûlSCALûHALF YEARûSTAGEûSHOWEDûAûûYEAR ON YEARû h7EûWILLûLEVERAGEûOURûSTATUSûASûAûTOP TIERûGLOBALûDEBTûHOUSEûTOû
INCREASEûINûBANKINGûINCOMEûOUTSIDEû*APANûTOûcBN ûWITHû!SIAûOUT help clients tap into new pools of liquidity, such as the Samurai
PERFORMINGûTURNINGûINûAûPLUSûûPERFORMANCE û4HEûINTERNATIONALû market, while adopting a disciplined approach towards event
COMPONENTûOFûGROUPûSECURITIESûREVENUES ûMEANWHILE ûWASûmATûATû lNANCEûANDûACQUISITIONûlNANCEûINITIATIVESûACROSSû!SIA vûSAIDû
cBNû&OLLOWINGûAûSHARPûDIPûINûlSCALû(û ûNETûINTERESTûINCOMEû 'EOFFREYû#OLEY ûINTERNATIONALûHEADûOFû-5&'SûSECURITIESûBUSINESS
FROMûINTERNATIONALûOPERATIONSûHASûBEENûSHOWINGûCONSISTENTûHALF “For the past three years, we’ve been in growth mode,
YEARLYûINCREASES ûHITTINGûcBNûATûTHEûûlSCALû(ûSTAGE launching a number of initiatives to build upon our group’s strong
,OANûGROWTHûOUTSIDEûOFû*APANûCONTINUESûTHEûINTERNATIONALûLOANû FOUNDATIONûANDûGLOBALûREACHû%VENûWITHûTHIS ûOURûMARKETSûPLATFORMû
BALANCEûINCREASEDûûYEAR ON YEARûATûTHEûlSCALûHALF YEARûSTAGEûTOû ISûSTILLûINûTHEûNASCENTûSTAGESûOFûITSûEVOLUTION vû#OLEYûSAID
53BN ûPROPELLEDûBYûAVERAGEûLOANûSPREADSûTHAT ûATûBP ûWEREû “Historically, we’ve been focused on corporates, and while they
ûHIGHERûTHANûSPREADSûONûLOANSûTOûLARGEûCORPORATEûCUSTOMERSûINû will continue to form our central core of clients, there is a huge
*APANû/FFûTHEûBACKûOFûTHAT ûPROlTSûFROMûNON *APANESEûTRANSACTIONû OPPORTUNITYûFORûUSûTOûEXPANDûINTOûlNANCIALûINSTITUTIONSûTHROUGHû
BANKINGûHAVEûRISENûSTEADILYûFROMû53MûFORûlSCALûlRST HALFû OURûSUITEûOFûORIGINATION ûSTRUCTURINGûANDûDISTRIBUTIONûCAPABILITIESv
ûTOû53MûAûYEARûLATER ûTOû53MûINûTHEûLATESTûNUMBERSû 4OûDOûTHISûONûAûGLOBALûBASIS ûTHEûlRMûISûBLURRINGûLINESûBETWEENû
FORûTHEûlSCALûûlRST HALFû0ROlTSûCAMEûPREDOMINANTLYûFROMû ENTITIESûh4HEûDE SILOINGûOFûOURû*APANESEûANDûNON *APANESEûBUSINESSû
Asia. UNITSûISûAûCLEARûINDICATIONûOFûOURûCOMMITMENTûTOûTHIS vû#OLEYûSAIDû
4HEûFOCUSûONûINCREASINGûMARKETûSHAREûANDûREVENUESûINû53û$#-û Since October 2018, global business lines have been headed by
CONTINUESûANDûTHEûBANKûISûSTICKINGûTOûITSûTARGETûOFûAûTOPûûLEAGUE managers all over the world who have responsibility for the
table position. DOMESTICû*APANESEûBUSINESSûUNITSûASûWELLûASûTHOSEûOUTSIDEû*APAN
“We are leveraging our presence in US dollar debt markets in 4HEû!MERICASûISûAûKEYûGROWTHûAREAû)Nû/CTOBER û-5&'û5NIONû
ORDERûTOûSTRENGTHENûOURû$#-ûBUSINESSûINû%UROPEûANDû!SIAû!LSO û "ANKûACQUIREDû)NTREPIDû)NVESTMENTû"ANKERS ûAûREGIONALûMID
we are developing a global sales and trading framework, market investment banking boutique based in Los Angeles. The
developing competitive products and improving our business lRMûISûALSOûFOCUSEDûONûGROWINGûITSûLEVERAGEDûlNANCEûBUSINESS û
INFRASTRUCTURE vûSAIDûAûSENIORû-IZUHOûSPOKESPERSONû+EYûAREASûOFû where it recently led its initial Term Loan B transactions.
FOCUSûINCLUDEûTRANSACTIONûBANKING û53ûSTRUCTUREDûlNANCEûANDû53û h%NTRYûINTOûTHISûSPACEûSTRATEGICALLYûTIESûTOûOURûACTIVITYûINûTHEû#,/û
NON INVESTMENT GRADEûACTIVITIES market, having launched CLO warehousing in the past year, and
-5&'ûISûUNDERGOINGûAûPROCESSûOFûMOREûCLOSELYûINTEGRATINGûITSû BUILDINGûOUTûOURûLOANûTRADINGûOPERATIONS vûSAIDû#OLEY
commercial banking, trust banking and securities businesses as it 3-"#SûMEDIUM TERMûPLANûISûFOCUSEDûONûSEVENûCOREûBUSINESSû
SEEKSûTOûBUILDûANûORIGINATION TO DISTRIBUTEûAPPROACHûANDûSHIFTûAWAYû areas. In the CIB sphere, this includes an aspiration to increase
FROMûITSûLOAN CENTRICûBUSINESSûMODEL market share in key global markets and strengthen sales and
“We are working on enhancing product capabilities … and trading capability.
REPLACEMENTûOFûLOW PROlTABILITYûASSETSûWITHûHIGHûPROlTABILITYû /NûTHEûINTERNATIONALûFRONT ûGROUPû#%/û4AKESHIû+UNIBEûSAIDûATû
ASSETSû)TûISûAûSHIFTûFROMûAûVOLUMEûFOCUSûTOûAû2/%ûFOCUSûAPPROACHû THEû"OF!û-ERRILLû,YNCHû*APANûCONFERENCEûINû3EPTEMBERûTHATûTHEû
GROUPûISûWORKINGûTOûIMPROVEûASSETûEFlCIENCYûBYûREBALANCINGûTHEû
BUSINESSûPORTFOLIOûINûFAVOURûOFûGLOBALûPRODUCTSûSUCHûASûHIGH PROlTû
ASSETSûANDûPROJECTûlNANCEûWHEREûTHEûGROUPûHASûSTRENGTHSû!NDûLIKEû
“The only way banking businesses ITSûRIVALS ûPROMOTINGûCROSS SELLINGûISûHIGHûUPûTHEûLISTûOFûPRIORITIES
Among major international initiatives is a push not just to
today will survive will be creating new STRENGTHENûGLOBALûPRODUCTSûBUTûTOûPROMOTEûCROSS SELLINGûTOû
IMPROVEûASSETûEFlCIENCY ûANDûMID TOûLONG TERMûGROWTHûINû!SIAû
sources of revenue away from traditional ,IKEûITSûMEGABANKûPEERS û3-"#ûISûWORKINGûTOûENHANCEû
relationships with corporate clients and offset lower interest
business lines” INCOMEûBYûPIVOTINGûTOûNON INTERESTûINCOMEûTOûTRANSFORMûITSûPROlTû
structure. z

28 International Financing Review IFR Awards 2018


FEATURES IFR AWARDS 2018

7ITHûTHEû53û&EDERALû2ESERVEûSHRINKINGûITSûBALANCEûSHEETûANDûTHEû%#"ûEMERGINGû
from quantitative easing, the bond market is likely to present opportunities in
corporate debt.

A BRAVE NEW
WORLD

BY ADRIAN MURDOCH -ATTû+ING ûGLOBALûHEADûOFûCREDITûPRODUCTSûSTRATEGYûATû#ITIGROUP û


explained the two main schools of thought. Central banks, he said,

I
Nû3EPTEMBERû ûTHEûTHENû53û&EDERALû2ESERVEûCHAIRû*ANETû RECKONûTHATûTHISûYEARûHASûBEENûONEûOFûBADûLUCKûh-ARKETSûSHOULDûBEû
9ELLENûANNOUNCEDûTHEûGREATûUNWINDINGûOFûTHEûCENTRALûBANKSû FOLLOWINGûTHEûECONOMYûANDûTHEûECONOMYûISûINûGOODûSHAPE vûHEûSAID û
year stimulus programme. It would be as uneventful as ADDINGûTHATûCENTRALûBANKSûSHRUGûOFFûTHEûmATNESSûOFûTHEûYIELDûCURVE
hWATCHINGûPAINTûDRYv ûSHEûSAID ûWITHûlNGERSûCROSSED The other school of thought is that there is too much money
%UROPEANû#ENTRALû"ANKûPRESIDENTû-ARIOû$RAGHIûFOLLOWEDûSUITûINû*UNEûTHISû chasing too few assets and with the end of quantitative easing,
year, saying that he intended to reduce the monthly pace of asset purchases vulnerabilities are becoming visible again. “If that is the case, the
TOûõBNûUNTILûTHEûENDûOFû$ECEMBERûANDûTHENûENDûPURCHASESûALTOGETHER MARKETSûAREûLEADINGûTHEûECONOMY vû+INGûSAID
So what’s going to happen now? What does the new world of
monetary policy, one in which two of the world’s biggest central banks NORMALISATION
aren’t pouring money into the markets, mean for the bond markets? 4HEûLANDSCAPEûBECOMESûAûLITTLEûCLEARERûIFûTHEû53ûANDû%UROPEûAREû
There is no consensus on what is going to happen. There is not considered differently. The Fed is the furthest along. Not only has it
even consensus on what has happened, though most agree that 2018 stopped purchases of bonds, it is in the middle of the process of
has been a horrible year. normalisation and of shrinking its balance sheet.

IFR Awards 2018 International Financing Review 29


IFR AWARDS 2018 FEATURES

'UYû-ILLER ûCHIEFûMARKETûSTRATEGISTûANDûHEADûOFûMACROECONOMICSûATû a long way already in terms of rate hikes. We are more constructive
Zurich Insurance, believes that this both makes sense and is a on the bond market given how far we have come over the past three
REmECTIONûOFûAûSTRONGû53ûECONOMY YEARSûANDûSEEûANûINCREASEDûPOSSIBILITYûOFûPOSITIVEûRETURNS vûWROTEû
“It is perfectly reasonable to normalise monetary policy. The #HRISû0ARISEAULT û&IDELITYSûHEADûOFûlXEDûINCOMEûANDûGLOBALûASSETû
FUNDAMENTALSûWARRANTûHIGHERûRATES vûHEûSAIDû4HATûNOTED ûASûPOLICYû allocation, in a note to clients.
TIGHTENINGûTAKESûEFFECT ûANDûSOMEûOFûTHEûlSCALûMEASURESûWEARûOFF ûTHEû
economy is likely to slow in the year ahead. SAFETY NET
The wild card, or perhaps more appropriately the loose cannon, is "UTûWHILEûTHEû53ûISûLOOKINGûCLEARLYûINTOûTHEûPOST 1%ûWORLD û%UROPEûISû
53ûPRESIDENTû$ONALDû4RUMPû4HEûWAVEûOFûGLOBALû1%ûCOUPLEDûWITHûHISû JUSTûEMERGINGûFROMûITûANDûINûMANYûWAYSûSTILLûHASûAûSAFETYûNETûlRMLYû
tax cuts have allowed US markets to shrug off his idiosyncratically attached.
antagonistic style. Christoph Rieger, head of rates and credit research at
Indeed, there is a persuasive argument that US markets are likely #OMMERZBANK ûDESCRIBESûTHEû%#"SûRETREATûFROMû1%ûASûAûhSMOOTHû
to calm down next year now that Trump’s economic agenda has EXITv ûIFûINDEEDûYOUûCALLûITûANûEXITûATûALL
been constrained by losing the House of Representatives to the h4HEû%#"ûDOESûNOTûWANTûTOûCALLûITûTHEûENDûOFû1% ûRATHERûTHEûENDûOFû
$EMOCRATSûINûTHEû.OVEMBERûMID TERMûELECTIONS THEûNET ASSETûPURCHASEûPROGRAMME vûHEûSAID
h(ADû4RUMPûRETAINEDû;THEû(OUSE= ûTHENûTHEREûCOULDûHAVEûBEENûANû .OTûONLYûDOESûTHEû%#"ûHAVEûmEXIBILITYûANDûINTENTûTOûPURCHASEûDEBTû
INCREASEûINûTHEûDElCITûANDûHIGHERûRATESû(EûWOULDûHAVEûFOLLOWEDû INûAûMARKET NEUTRALûMANNER ûITûHASûALSOûMADEûITûVERYûCLEARûTHATû
THROUGHûWITHûADDITIONALûSTIMULUSûMEASURES vûSAIDû'ORDONû"ROWN û interest rates are going nowhere any time soon.
CO HEADûOFûGLOBALûPORTFOLIOSûATû7ESTERNû!SSETû-ANAGEMENT )NûAûNOTEûINû.OVEMBER û$EUTSCHEû"ANKûCAPTUREDûGENERALûMARKETû
SENTIMENTûWHENûITûSAIDûTHATûTHEû%#"ûISûUNLIKELYûTOûHIKEûTHEûDEPOSITû
EM PESSIMISM FACILITYûRATEûUNTILû3EPTEMBERûNEXTûYEARûnûANDûTHENûBYûONLYûBP
While Trump’s main focus has always been the equity markets 4HISûMEANSûTHATûBONDûYIELDSûAREûLIKELYûTOûRISEûINû%UROPE ûBUTûONLYû
h4RUMPSûSCORECARDûISûTHEûSTOCKûMARKET vûISûHOWûONEûBANKERûPUTûIT û very slowly, and the negative yields in shorter term German Bunds
global collateral damage has been felt in emerging debt markets, are here to stay for the foreseeable future.
where costs of borrowing have rocketed in US dollar terms. The US Certainly, the additional concern of Italy is going to keep a lid on
MIGHTûhONLYvûMAKEûUPûûOFûGLOBALû'$0 ûBUTûMOSTûECONOMIESûAREû any sudden moves.
reliant on some form or other on the US dollar. Its strength has h)TALYûHASûCREATEDûUNCERTAINTYûANDû)TALYSûPROBLEMSûAREû%UROPESû
caused problems. PROBLEMS vûSAIDûONEûANALYSTûINû&RANKFURT ûWHILEûANOTHERûCAUTIONEDû
The impact has been most keenly felt in Turkey, Argentina and against underestimating the problem.
Indonesia. With all of the problems that Italy’s budget scrap with the
h%-ûMARKETSûAREûCURRENTLYûPRICEDûFORûEXTREMEûPESSIMISM vûSAIDû %UROPEANû#OMMISSIONûBRINGSûTOûTHEûTABLE ûITûISûNOûWONDERûTHENûTHATû
Francis Scotland, director of global macro research at Brandywine few are expecting any dramatic movements upwards in debt prices.
Global. h4HEû%#"ûISûMANAGINGûTHEûEXITûASûCLEARLYûASûITûCANû9ES ûITûHASû
The tricky part is to work out how much of the bad news is now SIGNALLEDûTHEûENDûOFû1% ûBUTûITûHASûALSOûANCHOREDûTHEûLOWûRATESûFORûTHEû
factored into bond prices. Some markets such as Argentina and FUTUREû$OûWEûEXPECTûAûMARKETûMELTDOWNû)ûDONTûTHINKûSO vûSAIDû%RICû
Turkey clearly overshot, and as one portfolio manager makes clear: #HERPION ûGLOBALûHEADûOFû$#-ûBONDûSYNDICATEûFORû3OCIETEû'ENERALE
h.OTûALLûEMERGINGûMARKETSûAREûCREATEDûEQUALLYv (EûRECKONSûTHATû YEARûEUROûSWAPûRATESûMIGHTûRISEûTOûûATûTHEû
All eyes are on China, not only because of its own slowdown in ENDûOFûTHEûlRSTûQUARTERûOFûûANDûPERHAPSûûATûTHEûENDûOFûTHEû
growth, but also because of the trade tensions that have dominated SECONDûQUARTERûh3OMEûWOULDûSAYûTHATûITûISûAûûRISE û)ûSAYûTHATûITûISû
the news this year. ONLYûBP vûHEûSAID
And this is where it loops back to the US. Scotland is pragmatic Certainly, issuance volumes are likely to be maintained or slightly
about the threats and calls US pressure on China “mutually assured higher.
DESTRUCTIONv h)ûEXPECTû%UROPEûNEXTûYEARûTOûBEûBACKûINûNETûPOSITIVEûISSUANCE vû
'IVENûTHATûûOFûTHEû30ûûCOMESûFROMûMANUFACTURING û SAIDû%RICû"RARD ûGLOBALûHEADûOFûlXEDûINCOMEûATû!MUNDI ûONEûOFû
protectionism is likely to blow back into the US economy. Analysts %UROPESûLARGESTûASSETûMANAGERSûWITHûMOREûTHANûõTRNûOFûASSETSû
throw a retreat in commodity prices and the rise in oil prices into under management.
the mix, and most now see not a recession, but a meaningful The reason for his bullishness on issuance is that banks certainly
SLOWDOWNûINûTHEû53ûNEXTûYEARûGROWTHûDOWNûTOû  need to keep up, or indeed increase, their funding levels for
This scenario – and it certainly appears the most plausible – will PRAGMATICûANDûREGULATORYûREASONSû-OREûTOûTHEûPOINT ûGIVENûTHATûTHEû
see a more incremental rate at which the Fed hikes interest rates. MAJORITYûOFûDEBTûISûmOATINGûRATE ûISSUERSûAREûMOREûCONCERNEDûABOUTû
h3INCEû$ECEMBERû ûWEVEûSEENûSEVENûINTERESTûRATEûINCREASESûOFû spreads than absolute rates.
BP ûWHICHûHAVEûBROUGHTûTHEûTARGETûRANGEûFORûTHEûFEDERALûFUNDSûRATEû So where does this leave buyers? There are still likely to be too few
TOûBETWEENûûANDûû4HISûWOULDûINDICATEûTHATûWEûHAVEûCOMEû deals to go around and money is likely to continue to chase them. If
THEREûISûONEûBRIGHTûSPOTûINûTHEûSIGHTSûOFûINVESTORS ûITûISû%UROPEANû
corporate debt.
h)NVESTMENT GRADEûCORPORATESûAREûTRADINGûATûTIGHTûPRICESûANDû)û
“Italy has created uncertainty and EXPECTûTOûSEEûSOMEûREPRICING vûSAIDû#HERPIONû(EûEXPECTSûTHATûTOûKICKû
INûINû1ûWHENûTHEûBUYINGûPOWERûOFûTHEû%#"ûDISAPPEARSûh4HATû
Italy’s problems are Europe’s REPRESENTSûAûSERIOUSûBUYINGûOPPORTUNITY vûHEûSAID
"UTûASûEVERYûlNANCIERûEMPHASISES ûCAREFULûSELECTIONûISûNEEDEDû!û
problems” blind rush in will not work and it makes sense to evaluate bonds on an
individual basis rather than at a country or even at a sector level. z

30 International Financing Review IFR Awards 2018


FEATURES IFR AWARDS 2018

The barriers around China’s capital markets are coming down, just as politicians
THREATENûTOûESCALATEû3INO 53ûTENSIONSûINTOûANûALL OUTûTRADEûWAR

BEYOND THE
CHINESE WALL

BY THOMAS BLOTT LOOKûATûlXEDûINCOME ûWHEREû#HINAûANNOUNCEDûAûNUMBERûOFû


changes to the market infrastructure following the launch of

C
hina’s role in the global economy is under intense Bond Connect during the previous year, the pace of change has
scrutiny, thanks in no small part to the US president’s been quite staggering. And more importantly for foreign
4WITTERûACCOUNTû"UTûWHILEû$ONALDû4RUMPûCONTINUESûTOû INVESTORS ûACCESSûTOû#HINAûHASûNEVERûBEENûSOûEASY vûHEûSAID
rail against unfair competition, intellectual property Recent changes go beyond improving access for foreign
THEFTûANDûCURRENCYûMANIPULATION û#HINASûlNANCIALûMARKETSûAREû INVESTORSû)Nû!PRIL û#HINASûSECURITIESûREGULATORûlNALLYûGAVEûTHEû
lNALLYûOPENINGûUP green light for foreign investment banks to hold majority stakes
“The theme of the opening up of China’s economy to the rest in their securities joint ventures and lifted similar restrictions on
of the world has been talked about for decades, but the pace of shareholdings for fund management and life insurance
CHANGEûINûTHEûLASTûûMONTHSûHASûBEENûREMARKABLE vûSAIDû*ULIENû COMPANIESû2EGULATORSûHAVEûlNALISEDûAûTRADINGûLINKûBETWEENû
+ASPARIAN ûHEADûOFûSECURITIESûSERVICESûFORû(ONGû+ONGûATû".0û 3HANGHAIûANDû,ONDON ûANDûREVIVEDûPLANSûFORûOVERSEAS LISTEDû
Paribas. companies to issue depositary receipts in China.
“Whether you look on the equities side, where we had the h)FûYOUREûTALKINGûABOUTûTHEûOPENINGûUPûOFû#HINASûlNANCIALû
INCLUSIONûOFû#HINAû! SHARESûINûTHEû-3#)ûINDEX ûORûWHETHERûYOUû sector, the real shift arguably began with the launch of the Stock

IFR Awards 2018 International Financing Review 31


IFR AWARDS 2018 FEATURES

#ONNECTûTRADINGûLINKûBETWEENû3HANGHAIûANDû(ONGû+ONGûSEVERALû
YEARSûAGO vûSAIDû!LEXIOUSû,EE ûHEADûOFû#HINAûCAPITALûACCESSûATû
“China realises that increasing the
CLSA. “But whereas for the past several years the focus has been
on testing the robustness of different access channels, we are
participation of foreign institutional
now entering a different phase, which is about foreign investors
STEPPINGûUPûTHEIRûPARTICIPATIONv
investors in its domestic capital markets
4HEûTRILLION DOLLARûQUESTION ûOFûCOURSE ûISûWHETHERûTENSIONSû is crucial to its long-term development”
with the US will lead China to change course. Will regulators
TARGETû53 BASEDûBANKSûANDûASSETûMANAGERSûINûRETALIATIONûFORûTRADEû
tariffs? Or will the chilling effect on global growth force Chinese
policymakers into a more protectionist stance to defend INVESTORSû$ESPITEûTHEûESCALATIONûOFûINTERNATIONALûTENSIONS ûHEû
economic growth? SEESûTHATûPROCESSûASûAûONE WAYûSTREET
-OSTûMARKETûOBSERVERSûAREûCONlDENTûTHATû#HINAûWILLûCONTINUEû “If you look at the rate of reforms since the launch of Stock
to open its capital markets – gradually – even if tensions with the #ONNECT ûITûHASûBEENûREMARKABLE vûSAIDû#HIAûh7HENûTHEûTRADEû
US escalate further. TENSIONSûlRSTûSTARTEDûTHEREûCOULDûHAVEûBEENûCONCERNSûABOUTû
“I think it’s partly due to the foreign reserves being under WHETHERû#HINAûWOULDûBACK PEDAL ûBUTûWEûACTUALLYûHAVEûSEENû
pressure, so there is an incentive for the government to attract them accelerate some of the opening up measures. In April, they
FOREIGNûINVESTMENT vûSAIDû#AROLINEû9U ûHEADûOFû'REATERû#HINAû QUADRUPLEDûTHEûDAILYûQUOTAûFORûTHEû#ONNECTûSCHEMESv
EQUITIESûATû".0û0ARIBASû!SSETû-ANAGEMENT )NDEXûPROVIDERSûHAVEûALSOûWELCOMEDûINVESTOR FRIENDLYûREFORMSû
“But more importantly than that, China realises that in the local market, including a proposal in November to curb
increasing the participation of foreign institutional investors in the use of trading suspensions – a factor that drew international
ITSûDOMESTICûCAPITALûMARKETSûISûCRUCIALûTOûITSûLONG TERMû criticism when over 1,000 companies halted their shares in the
development. So I don’t expect them to shift position because of MIDSTûOFûTHEûûCRASH
THEûTRADEûTENSIONSv “If you think about one of the big issues that remains, the
number of share suspensions, one of the causes has been share
INDEX ENDORSEMENT pledges – to prevent margin calls, the main shareholders have to
There is plenty of US interest, too. The biggest endorsement of suspend shares when the market slides – but we have actually
#HINASûREFORMSûSOûFARûCAMEûFROMû-3#) ûWHICHûBEGANûADDINGû seen regulators look to tighten a lot of the rules around
! SHARESûTOûITSûBENCHMARKûEMERGINGûMARKETSûINDEXûTHISûYEARû VOLUNTARYûSUSPENSIONSûTHISûYEAR vûSAIDû#HIAûh4HISûISûDURINGûAûYEARû
4HEû.EWû9ORK BASEDûINDEXûPROVIDERûFORMALLYûINCORPORATEDûû WHENûTHEûBENCHMARKû3HANGHAIûINDEXûISûDOWNûv
LARGE CAPûMAINLANDûSTOCKSûWITHûANûINITIALûWEIGHTINGûOFûûOFû /NûTHEûlXEDûINCOMEûSIDE ûTHEûLACKûOFûSECONDARYûMARKETûLIQUIDITYû
MARKETûCAPITALISATIONûINû*UNEûBEFOREûINCREASINGûTHEIRûWEIGHTINGû also remains an issue along with the lack of rating differentiation
TOûûINû3EPTEMBER between credits, although plans announced this year to allow the
-3#)ûHASûSINCEûOUTLINEDûPLANSûTOûINCREASEûTHEûWEIGHTINGûOFû BIGûTHREEû53ûRATINGûAGENCIESûnû&ITCH û-OODYSûANDû30ûnûTOûSETûUPû
! SHARESûINûITSûINDEXûTOûûOFûTHEIRûMARKETûVALUEûINûTWOûPHASESû local operations will help address these issues.
next year. It has also said it plans to expand the universe of /THERûREFORMSûRELATEDûTOûlXEDûINCOMEûANNOUNCEDûTHISûYEARû
stocks available in its index to include shares listed on ChiNext, include the introduction of delivery versus payment settlement, the
#HINASûEQUIVALENTûOFû.ASDAQ ûASûWELLûASûTOûMID CAPû! SHARES ûINûAû introduction of block trading and further clarity around taxation,
SINGLEûPHASEûNEXTû-AY EFFECTIVELYûFULlLLINGûTHEûTHREEûPREREQUISITESûLAIDûOUTûEARLIERûTHISûYEARû
2IVALûINDEXûPROVIDERû&43%û2USSELLûWENTûAûSTEPûFURTHERûWHENûITû for inclusion in the Bloomberg Barclays Global Aggregate Index.
ANNOUNCEDûPLANSûTOûADDû û! SHARES ûCOMPRISINGûLARGE ûMIDû
and small cap stocks to its main indices in three phases from INVESTMENT BANKING
*UNEûûTOû-ARCHûû%LIGIBLEûSTOCKSûWILLûHAVEûANûINITIALû %FFORTSûBYû"EIJINGûTOûIMPROVEûACCESSûFORûFOREIGNûINSTITUTIONALû
WEIGHTINGûOFûûOFûMARKETûCAP INVESTORSûHAVEûGONEûHAND IN HANDûWITHûREFORMSûTOûLIFTû
&ORû#HINû0INGû#HIA ûHEADûOFûRESEARCHûFORû!SIA 0ACIlCûATû-3#) û restrictions on foreign banks operating onshore. In April, the
index inclusion highlights how quickly China is updating its China Securities Regulatory Commission introduced new rules
regulatory framework to accommodate foreign institutional ALLOWINGûFOREIGNûBANKSûTOûHOLDûûSTAKESûINûTHEIRûSECURITIESû*6S û
UPûFROMû ûANDûALSOûREMOVEDûRESTRICTIONSûAROUNDûOBTAININGû
licences.
0REVIOUSLY ûFOREIGNûlRMSûHADûTOûMEETûCERTAINûCRITERIA û
“When the trade tensions first started including a long operating track record, before applying for key
LICENCESû)NûMANYûCASES ûREGULATIONSûPROHIBITINGû*6SûFROMûHOLDINGû
there could have been concerns about the same licences as their domestic shareholders prevented
them from applying for brokerage licences altogether.
whether China would back-pedal, but /NLYû(3"# ûWHICHûINVESTEDûUNDERûAûSPECIlCûDEALûBETWEENû
#HINA û(ONGû+ONGûANDû-ACAU ûCURRENTLYûHOLDSûAûMAJORITYûSTAKEû
we actually have seen them accelerate INûAûSECURITIESû*6 ûBUTûTHEûCHANGESûTOûTHEûRULESûHAVEûTRIGGEREDûAû
new wave of enthusiasm among international banks. UBS, which
some of the opening up measures” ISûONEûOFûONLYûTWOûBANKSûTOûBENElTûFROMûMANAGEMENTûCONTROLû
'OLDMANû3ACHSûISûTHEûOTHER ûISûONûTHEûBRINKûOFûBECOMINGûTHEû

32 International Financing Review IFR Awards 2018


FEATURES IFR AWARDS 2018

lRSTûFOREIGNûBANKûTOûRAISEûITSûSTAKEûTOûûAFTERûTWOûOFûITSû
partners, China Guodian Capital and Cofco Group, announced
“There has been a concerted effort from
they had agreed to cut their shareholdings.
-ORGANû3TANLEYûHASûALSOûAPPLIEDûTOûINCREASEûITSûSTAKEûINûITSû*6û
the Chinese regulators to increase the
TOû ûWHILEû*0û-ORGAN ûWHICHûWALKEDûAWAYûFROMûITSû participation of foreign institutional
PARTNERSHIPûWITHû&IRSTû#APITALû3ECURITIESûINû ûHASûAPPLIEDûTOû
SETûUPûAûNEWû*6û#ITIGROUPûISûLOOKINGûTOûEXITûFROMûITSûPARTNERSHIPû investors in the domestic capital
WITHû/RIENTû3ECURITIESûTOûFORMûAûNEWû*6ûWITHûMAJORITYûCONTROL û
WHILEûAûHOSTûOFûOTHERûBANKS ûINCLUDINGû$"3û'ROUPûANDû.OMURA û markets”
AREûLININGûUPûTOûENTERûTHEûMARKETûFORûTHEûlRSTûTIME
China’s willingness to liberalise access for foreign investment
banks initially took a number of commentators by surprise. The
CSRC has even said it will remove the cap on foreign investment %XCHANGE ûWHILEû33% LISTEDûCOMPANIESûWILLûISSUEûGLOBALû
banks altogether within three years. Ray Chou, partner at Oliver DEPOSITARYûRECEIPTSûONûTHEû,3%û4HEûMAJORûDIFFERENCEûBETWEENû
Wyman, reckons this should be viewed in the context of efforts THEûTWOûISûTHATû,3% LISTEDûCOMPANIESûCANûONLYûISSUEû#$2SûBACKEDû
to increase the participation of foreign institutional investors in by existing shares, at least for the time being, whereas Chinese
THEûDOMESTICû! SHAREûMARKET COMPANIESûAREûABLEûTOûISSUEû'$2SûBACKEDûBYûNEWûSHARES
h/NEûOFûTHEûBIGûCHANGESûTHATûTOOKûPLACEûWASûINûEARLYû û The new trading link has already attracted early interest, with
when China changed the rules to allow foreign asset managers (UATAIû3ECURITIESûSETûTOûBECOMEûTHEûlRSTûTOûLISTû'$2SûUNDERûTHEû
TOûLAUNCHûPRIVATEûSECURITIESûFUNDSûTHROUGHûLOCALûSUBSIDIARIES vû scheme. In the other direction, the scheme has allowed HSBC to
SAIDû#HOUûh9OUûNOWûSEEûTHEREûAREû PLUSûWELL KNOWNûGLOBALû DUSTûOFFûLONG DORMANTûPLANSûFORûAûDOMESTICû#HINESEûLISTING û
asset managers that have registered already as private fund POTENTIALLYûMAKINGûITûTHEûlRSTûEASTBOUNDûISSUER
MANAGERSv !ûLISTINGûFROMû%UROPESûLARGESTûBANKûWOULDûALSOûSERVEûASûAû
As well as the sheer size of China’s capital markets, Chou WELCOMEûBOOSTûFORû#HINAûAFTERûANûEXPERIMENTûWITHû#$2SûEARLIERû
believes the growth of inbound investment is increasing the THISûYEARûTOûATTRACTûMOREû#HINESEûTECHNOLOGYûCOMPANIESûTOûmOATû
appeal of a domestic securities licence. in their home market stuttered when smartphone maker Xiaomi
“There has been a concerted effort from the Chinese POSTPONEDûITSûPLANNEDû#$2ûISSUANCEû-ARKETûOBSERVERSûHAVEû
regulators to increase the participation of foreign institutional even questioned whether this meant China had shelved its plans
INVESTORSûINûTHEûDOMESTICûCAPITALûMARKETS vûHEûSAIDû-EANWHILE û TOûENCOURAGEûTECHNOLOGYûlRMSûTOûLISTûVIAû#$2SûINDElNITELY
FOREIGNûBANKSûAREûWELL POSITIONEDûTOûSUPPORTûGLOBALûINVESTORSû In contrast, market observers expect the development of the
moving onshore and you will likely see increasing appetites London trading link to be relatively smooth.
AMONGûMOREûFOREIGNûBANKSûAPPLYINGûTOûSETûUPû*6SûFOLLOWINGûTHEû h4HEûSTRUCTUREûTHEYûHAVEûFORû3HANGHAI ,ONDONû#ONNECTûISû
CHANGEûINûRULESûAROUNDûOWNERSHIPv DIFFERENTûTHANûTHEûPREVIOUSû3TOCKû#ONNECTûSCHEMES vûSAIDû
Of course, for foreign investment banks looking to move +ASPARIANûATû".0û0ARIBASûh4HEûFACTûTHATûYOUûHAVEûDEPOSITARYû
onshore, the relaxation of rules around ownership and licences receipts means that you avoid some of the issues around having
ISûONLYûHALFûTHEûBATTLEû%VENûONûAûLEVELûPLAYINGûlELD ûCOMPETINGû different time zones, while there is already an established
WITHûDOMESTICûSECURITIESûlRMSûFORûLUCRATIVEûSECONDARYûMARKETû FRAMEWORKûFORûCLEARINGûANDûSETTLEMENTûOFû$2SûINû,ONDONv
business will be an uphill battle given their superior scale and
ingrained local connections. STAKING A CLAIM
$ESPITEûTHEûENTHUSIASM ûTHEREûAREûSTILLûAûLOTûOFûOUTSTANDINGûISSUESû
CONNECT FOUR before China is able to claim its place in the global capital
Following on from the success of the Shanghai and Shenzhen markets that the size of its economy warrants.
3TOCKû#ONNECTûTRADINGûLINKSûWITHû(ONGû+ONGûASûWELLûASû"ONDû China’s capital markets may still lack some of the features
#ONNECT û#HINAûHASûINSTITUTEDûAûTRADINGûLINKûWITHûTHEû5+ ûKNOWNû global players would like, but the rewards at stake make them
ASû3HANGHAI ,ONDONû3TOCKû#ONNECTû)NûCONTRASTûTOûTHEûEXISTINGû IMPOSSIBLEûTOûIGNOREû%VENûOFFûITSûRECENTûHIGHS ûTHEû#HINESEûSTOCKû
TRADINGûLINKSûWITHû(ONGû+ONG ûINVESTORSûWILLûONLYûBEûALLOWEDûTOû MARKETûSTILLûBOASTSûAûTOTALûVALUATIONûOFûOVERû53TRNûANDûTHEû
buy shares indirectly in the form of depositary receipts. Shenzhen bourse is the world’s most active by turnover, with
According to a draft consultation released in August, TRADINGûESPECIALLYûBUSYûINûTHEûTECHNOLOGY HEAVYû53BNû
COMPANIESûLISTEDûONûTHEû,ONDONû3TOCKû%XCHANGEûWILLûBEûABLEûTOû ChiNext board. Bond analysts estimate the reweighting of the
issue Chinese depositary receipts on the Shanghai Stock MAJORûGLOBALûINDEXESûWILLûADDûABOUTû53BNûOFûFOREIGNûINmOWSû
to the country’s US$10trn domestic debt market.
CLSA’s Lee argues that international participants cannot
“You now see there are 15-plus well- afford to ignore reforms, even if progress at times appears slow.
“To take one example, ChiNext, which has had its issues and is
known global asset managers that GOINGûTHROUGHûTHEûlRSTûCYCLEûOFûRESTRUCTURING ûHASûSTILLûBEENû
phenomenally successful in my view. If you look at the increase
have registered already as private fund in total turnover and trading volumes since it was launched,
THEREûISûNOûCOMPARISONûINûOTHERûEMERGINGûECONOMIES vûHEûSAID
managers” h9OUûSHOULDûNEVERûUNDERESTIMATEûWHATû#HINAûISûCAPABLEûOFû
DOINGv z

IFR Awards 2018 International Financing Review 33


IFR AWARDS 2018 FEATURES

ûHASûBEENûANûEXCITINGûYEARûFORû'REENûFINANCEû)TûMAYûNOTûHAVEûBEENûAûRECORD
breaking year for issuance, but the product has conquered new markets such as
Schuldschein and commercial paper.

GREEN FINANCE
EXTENDS REACH

BY SOLOMON TEAGUE But that is not to say Green’s innovation phase is over, according
to Orith Azoulay, global head of CIB Green and sustainable hub at

T
o focus on simple issuance numbers when it comes to Green Natixis. “We are nowhere near done with product innovation – there
lNANCEûINûûWOULDûBEûTOûMISSûTHEûREALûSTORYû9ES ûOVERALLû AREûAûMILLIONûTHINGSûWEûCANûDESIGNûINûTHEûAREAûOFûBOTHûlNANCINGûANDû
ISSUANCEûWASûmATûORûAûLITTLEûDOWNûONû ûREmECTINGûTHEû INVESTMENTûPRODUCTSûANDûSOLUTIONS vûSHEûSAID ûSPECIlCALLYûCITINGû
BROADERûBONDûMARKETûENVIRONMENTûTHOUGHû%UROPEANûANDû 'REENûSTRUCTUREDûlNANCEûANDûSECURITISATION
EUROûCURRENCYûISSUANCEûWASûUPûYEAR O ûYEAR ûOVERCOMINGûAûDROPûINûNON -EANWHILE û"ELGIUMûANDû)RELANDûADDEDûTHEIRûNAMESûTOûTHEûLISTûOFû
'REENûEURO DENOMINATEDûBONDûISSUANCE û"UT ûMOREûTOûTHEûPOINT ûû sovereigns that have gone Green, following France and Poland. The
SAWû'REENûlNANCEûEXTENDûITSûREACHûINTOûNEWûASSETûCLASSES 5+ûANDûTHEû.ETHERLANDSûAREûBOTHûCONSIDERINGûISSUESûINû ûWHILEû
)Nû3EPTEMBERûALONE ûRENEWABLEûELECTRICITYûOUTlTû%NCAVISûLAUNCHEDûTHEû Sweden has been considering the move for years but has so far
lRSTû'REENû3CHULDSCHEINûINûAûõMûDEAL ûWHILEû6ASAKRONAN ûAû3WEDISHû refrained, citing its low borrowing requirements.
REALûESTATEûCOMPANYûTHATûISSUEDûONEûOFûTHEûlRSTû'REENûCORPORATEûBONDSû
INû ûISSUEDûTHEûlRSTûCOMMERCIALûPAPERûTOûCOMPLYûWITHû)#-!Sû'REENû LEADING THE WAY
BONDûPRINCIPLESû4HEûDEAL ûINûPARTNERSHIPûWITHû3%" ûCAMEûWITHûTHREEû Outside the sovereign space, however, Sweden leads the way. In
TRANCHES ûAMOUNTINGûTOû3+RMû53M û4HISûFOLLOWEDû2ABOBANKSû  ûûOFû3WEDISHûKRONA DENOMINATEDûBONDûISSUANCEûWASû'REEN û
lRSTû'REENû#0ûISSUE ûFORûANûINITIALûõBN ûINû!UGUST UPûFROMûûINûû)NûTHIS û3WEDENûISûANûOUTLIERû4HEûMARKETûISûSTILLû
#HRISTOPHERû+AMINKER ûHEADûOFûRESEARCH ûCLIMATEûANDûSUSTAINABLEû INûITSûINFANCY ûANDûTHEûROUGHLYû53BNûINû'REENûBONDSûOUTSTANDINGû
lNANCEûATû3%" ûSAIDûh)NûISSUINGû'REENûCOMMERCIALûPAPER û'REENû COMPRISESûHALFûOFûONEûPERCENTûOFûTHEû53TRNûBROADERûBONDûMARKET
lNANCEûHASûNOWûMOVEDûTOûCONQUERûONEûOFûTHEûLASTûCORNERSûOFûTHEûDEBTû 4HEûROUGHLYûûOFû!USTRALIANûDOLLARûISSUANCE ûANDûûOFû
CAPITALûMARKETSv Canadian dollar issuance, marked as Green in 2018 is closer to the

34 International Financing Review IFR Awards 2018


THE FUTURE
IS YOURS
TO CRAFT
Pioneering positive
impact solutions, we help
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Societe Generale is a founding member of the positive impact initiative steering group of the United Nations Environment Programme (UNEP).
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Prudential Control and Resolution Authority) and regulated by the Autorité des Marchés Financiers (the French financial markets regulator) (AMF).This document is issued in the U.K. by the London Branch
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(FCA) and the PRA. Details about the extent of our authorisation, supervision and regulation by the above mentioned authorities are available from us on request. ©Getty Images – November 2018.
IFR AWARDS 2018 FEATURES

average. This leaves plenty of room for growth, and most expect the As with bonds, Green loans have to meet certain standards in
coming year to see a resurgence of Green issuance, including a lot of terms of reporting and management. The principles are applied by
RElSûOFûAGENCYûANDûMUNICIPALû'REENûBONDSûISSUEDûINû MARKETûPARTICIPANTSûONûAûDEAL BY DEALûBASIS
4HEûBIGGESTûDRIVERûFORû'REENûlNANCEûISûTHEûBANKSû""6!ûISSUEDû “The lenders already do a lot of due diligence on the loans they
'REENûSENIORûNON PREFERREDûBONDSûINû-AYûAûõBNûSEVEN YEARûDEAL û make, and reviewing the Green credentials of the borrower is just
WHILEû.ORWAYSû$."ûANDû3PARE"ANKûISSUEDû'REENûCOVEREDûBONDS ANOTHERûPARTûOFûTHATûPROCESS vûSAIDû'EMMAû,AWRENCEû0ARDEW ûSENIORû
!NTONIOû+EGLEVICH ûHEADûOFû'REENûBONDûORIGINATIONûATû5NI#REDIT û ASSOCIATEûDIRECTORûINûTHEûLEGALûTEAMûATûTHEû,OANû-ARKETû!SSOCIATION
said: “These institutions are responding to demand from SRI Nobody keeps track of the number of loans being issued under the
investors, who want Green bonds that take a portfolio view as Green loan banner, but anecdotal evidence suggests they are being
opposed to a project view. These deals give them exposure to a broad well used.
range of Green assets, be they loans to renewable energy or energy “The principles create a framework that everyone can understand
EFlCIENCY ûORûGREENûBUILDINGSv and make Green loans more visible. That is very helpful in raising
%XECUTIONûCOSTSûREMAINûSLIGHTLYûHIGHERûFORû'REENûBONDS ûBUTûTHISû THEûPROlLEûOFûNEWûMARKETS vûSAIDû#LAREû$AWSON û#%/ûATûTHEû,-!
has not dented interest. Increased regulatory attention on the risks However, some have found the principles’ use of proceeds
AROUNDûCLIMATEûCHANGE ûINCLUDINGûmOODINGûANDûWILDlRES ûRAISESûTHEû REQUIREMENTûPROBLEMATICû3EGREGATINGûASSETSûTOûBEûUSEDûFORûAûSPECIlCû
POSSIBILITYûOFûNON GREENûPROJECTSûORûISSUANCEûBEINGûPENALISED ûFORû project can be impractical and deters potential borrowers. For
example with higher capital ratios or tax, which could equalise INVESTORSûTOO ûCONDUCTINGûDUEûDILIGENCEûONûAûPROJECT BY PROJECTûBASISû
pricing. ISûTIME CONSUMINGûAND ûFORûSOME ûPROHIBITIVE
And while costs might be higher, “there is less execution risk with Banks have therefore developed an alternative, the Sustainability
Green bonds because you have this large additional group of SRI )MPROVEMENTû,OAN ûORû%3' LINKEDû,OANû4HEûISSUERûISûRATEDûBYûANû%3'û
INVESTORS vûSAIDû+EGLEVICHûh4HATûCOULDûBEûAûBIGûDRIVERûNEXTûYEARû RATINGûAGENCYûSUCHûASû-3#)ûORû3USTAINALYTICSûANDûTHEûINTERESTûMARGINû
Issuers that want to take execution risk off the table can do that by on the debt is adjusted based on the sustainability achievements of the
ISSUINGû'REENûBONDSv borrower, with the proceeds available for general corporate purposes.
Investors have been lured into the Green market with evidence 0HILLIPSûWASûTHEûlRSTûTOûISSUEûANû3),ûINû!PRILûûANDûTHEûPRODUCTûHASû
that returns are higher for Green and environmental social PROLIFERATEDûSINCEûTHEN ûTOûPERHAPSûAROUNDûûDEALSû4HEû,-!ûISûPREPARINGû
governance products. TOûPUBLISHûAûSECONDû'REENûLOANûFRAMEWORKûTOûCOVERû3), TYPEûDEALS ûTHOUGHû
“Across many asset classes, the addition of a Green component ITûHASûNOTûCONlRMEDûWHENûTHATûFRAMEWORKûWILLûBEûPUBLISHED
CREATESûAûLOWERûRISKûPROlLE ûREDUCINGûTHEûCAPITALûINSTITUTIONSûNEEDûTOû 2OLANDû-EES ûDIRECTORûOFûSUSTAINABLEûlNANCEûATû).' ûSAIDûh4HEû
HOLDûAGAINSTûIT vûSAIDû%MMAû(ARVEY ûMID CORPORATEûDEBTûORIGINATORûATû PRODUCTûISûLIKELYûTOûBEûPOPULARûINû%-%! ûWHEREûAûLOTûOFûCOMPANIESûDOû
"ARCLAYSûh4AKEûTHEû"ARCLAYSû'REENû(OMEû-ORTGAGEûPRODUCT ûFORû have an holistic approach to management and isolating cash for a
EXAMPLE ûSTATISTICSûSHOWûMOREûENERGY EFlCIENTûHOMESûAREûLESSûLIKELYû SPECIlCûPURPOSEûISûMOREûDIFlCULTv
TOûDEFAULTûANDûTHATûALLOWEDûUSûTOûOFFERûAûMOREûCOMPETITIVEûPRODUCTv 7HILEûTHEû'REENûLOANûANDûBONDûFORMATûISûEXPLICITLYûIMPACT
This means that in an increasingly deep secondary market, Green ORIENTED û%3' LINKEDûLOANSûAREûMOREûSUSTAINABILITYû
BONDSûCANûOUTPERFORMûTHEIRûNON 'REENûPEERS ûANDûOFTENûDISPLAYûLESSû PERFORMANCE ORIENTED ûSAIDû!ZOULAYû4HEûTWOûSERVEûDIFFERENTû
volatility. purposes and some issuers have used both.
#HRISTOPHERû&LENSBORG ûHEADûOFûCLIMATEûANDûSUSTAINABLEûlNANCEûATû h!MONGûOTHERûTHINGS û%3' LINKEDûLOANSûPROVIDEûINTERNALûVALUEûFORûTHEû
3%" ûSAIDûh'REENûISSUANCEûEMPOWERSûCORPORATEûTREASURERSûITûGIVESû issuer because they directly tie its sustainability performance to its cost
them useful feedback about how they should position their OFûFUNDINGû-OSTû%3' LINKEDûLOANSûSOûFARûHAVEûBEENûREVOLVINGûFACILITIES û
COMPANIESû)NVESTORSûDElNITELYûAPPRECIATEûISSUERSûDOINGû'REENû so this is less of an investor story than Green term loans or Green bonds
BONDSûITûSIGNALSûTOûTHEMûTHATû# LEVELûDISCUSSIONSûAREûBEINGûHADû ASûDElNEDûSOûFARûBYû,-!ûANDû'REENûBONDûPRINCIPLES vûADDEDû!ZOULAY
AROUNDûTHEûRISKûANDûOPPORTUNITY SIDESûOFû'REENûlNANCEv -EESûSAIDûh!ûVARIATIONûONûTHEû3),ûIDEAûISûINSTEADûOFûHAVINGûTHEû
!NOTHERûSIGNIlCANTûDEVELOPMENTûINû'REENûlNANCEûINûûCAMEû ISSUERûRATED ûTHEûDEBTûISûISSUEDûAGAINSTûSPECIlCû+0)S ûBEûTHATû
INû-AYûWHENûTHEû%UROPEANû#OMMISSIONûPUBLISHEDûAû4EN 0OINTû greenhouse gas emission reductions, renewable energy use or
Action Plan, designed to encourage sustainable investment and SOMETHINGûELSEû4HEûPRODUCTûISûmEXIBLEûITûCANûBEûTAILOREDûTOûTHEû
increase transparency. BUSINESSûNEEDSûOFûTHEûCLIENTv
)NûTHEûSHORTûTERM ûTHEû%#SûPLANûANDûTHEûPOTENTIALûFORûREGULATORYû !ZOULAYûSAIDûh,INKINGûAûLOANûTOûINTERNALûSUSTAINABILITYû+0)SûISûAû
uncertainty “has probably contributed to the relatively low issuance better option than linking to a rating. This gives issuers the leeway
this year, as the market considers the implications for their own TOûCHOOSEûTHEû+0)SûTHATûBESTûREmECTûWHATûTHEYûAREûTRYINGûTOûACHIEVEûnû
BUSINESSESv ûSAIDû+EGLEVICHû"UTûTHATûDAMPENERûSHOULDûBEGINûTOûCLEARû MOREûIMPORTANTLYû+0)SûTHATûHAVEûANûOPERATIONALûREALITYûFORûTHEû
as the market absorbs the new rules. BORROWER ûONûWHICHûTHEYûHAVEûAûGREATERûINmUENCEûANDûCONTROLû
WITHOUTûBEINGûEXPOSEDûTOûMETHODOLOGYûCHANGESv
GREEN LOAN ALTERNATIVE 4HISûUNDERLINESûTHEûIMPORTANCEûOFûmEXIBILITYû7HILEûSTRICTû
!ûLOTûOFûTHEûACTIONûINû'REENûlNANCEûINûûHASûCOMEûOUTSIDEûTHEû DElNITIONSûWILLûGIVEûINVESTORSûCONlDENCEûINûTHEûMARKET ûITûISûALSOû
bond market. Bond investors gravitate towards benchmark size deals important that regulation does not put off potential issuers.
OFû53MûORûMORE ûMAKINGûITûHARDûFORûMANYûISSUERSûTOûDOû'REENû “If an initiative is good for the environment and leads to an
BONDSû!NDûWITHûREGULATIONûANDûINDUSTRYûDElNITIONSûSTILLûBEINGû institution improving its environmental performance, it should be
formulated, many investors are cautious about Green bonds that ENCOURAGEDûTOûPARTICIPATEûINûTHISûMARKET vûSAIDû+EGLEVICHûh7EûDOûNOTû
MAYûNOTûCOMPLYûWITHûTHATûCLASSIlCATIONûINûTHEûFUTURE WANTû'REENûlNANCEûTOûBEûANûEXCLUSIVEûCLUBûANDûSHOULDûNOTûALLOWû
For this reason, “issuance of Green bonds is mainly focused on STRICTûDElNITIONSûTOûDISCOURAGEûISSUERSv
frequent bond issuers and focused on certain sectors with large 5LTIMATELY û'REENûlNANCEûWILLûBENElTûFROMûAûHIGHERûLEVELûOFû
CAPEXû;SPENDING=ûONûGREENûPROJECTSv ûSAIDû0ETERû%LLEMANN ûMANAGINGû NUANCE ûSAIDû2HIANû-ARIû4HOMAS ûGLOBALûHEADûOFû'REENûBANKINGûATû
DIRECTORûLOANûMARKETSûFORûTHEû5+ûATû!".û!-2/ Barclays. “Credit ratings are not binary – they aren’t just strong or
Green loans provide an alternative, more suitable to smaller or WEAK ûTHEREûISûAûSPECTRUMû%VENTUALLYûWEûCOULDûSEEûAûSIMILARûNUANCEû
LESSûREGULARûISSUERSû)Nû-ARCH ûTHEû,OANû-ARKETû!SSOCIATIONûLAUNCHEDû INûTHEû'REENûMARKET ûBUTûlRSTûWEûNEEDûSTRONGERûDElNITIONSû7Eû
the Green Loan Principles to help encourage borrowers to tap the welcome any steps to provide more clarity in that sense, but there is
market. These voluntary guidelines were designed to closely follow a balancing act and we must be careful not to limit the ability to
the format laid down in the Green bond market. INNOVATE vûSHEûSAID z

36 International Financing Review IFR Awards 2018


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BANK OF THE YEAR
JP Morgan

INSATIABLE
APPETITE
*0û-ORGANûDOMINATESûINVESTMENTûBANKINGûINûAûWAYûNOûOTHERûINSTITUTIONûHASûINûTHEû
MODERNûERAû7HATEVERûTHEûMEASUREûnûWALLETûSHARE ûMARKETûSHARE ûREVENUE ûPROFITS û
SHAREûPRICEûPERFORMANCE ûORûSHEERûPRESENCEûnû*0û-ORGANûISûTHEûANSWERû&ORûTHEûSECONDû
YEARûRUNNING ûITûISû)&2Sû"ANKûOFûTHEû9EAR

I
f, as the old saying goes, imitation is the sincerest EFlCIENCIESûANDûTOûIMPROVEûINTERNALûCOOPERATIONû
FORMûOFûmATTERY û*0û-ORGANûSHOULDûFEELûVERYûmATTEREDû *0û-ORGANûMADEûTHATûMOVEûINû
indeed. •û"ANKSûAGAINûMOSTûNOTABLYû'OLDMANû3ACHS ûAREûSHIFTINGû
)TûWASNTûLONGûAGOûTHATûTHEREûWASûAûDEBATEûABOUTû AWAYûFROMûHEDGEûFUND HEAVYûCLIENTûBASESûnûANDûTOWARDSû
the best model for global banks. One side was CORPORATESû!GAIN û*0û-ORGANûISûALREADYûTHERE
EXEMPLIlEDûBYû'OLDMANû3ACHSûBRAINS ûASûLITTLEûCAPITALû
COMMITMENTûASûPOSSIBLE ûADVISORYûANDûTRADING LED ûTHEû )NûOTHERûWORDS ûWHEREVERûRIVALûBANKSûREPOSITION ûTHEYû
OTHERûBYû*0û-ORGANûAûONE STOPûSHOP ûLENDING HEAVY û lNDûTHEMSELVESûUPûAGAINSTû*0û-ORGAN ûAûHUGELYû
FORTRESSûBALANCEûSHEET ûBIGûONûTHEûhPLUMBINGvûOFûTHEû POWERFUL ûENTRENCHEDûINCUMBENTûATûTHEûTOPûINûTERMSûOFû
BANKINGûSYSTEM  LEAGUEûTABLESûANDûWALLETûSHAREûANDûWITHûUNRIVALLEDûSCALE
&ORûAûTIME ûITûSEEMEDûASûIFû'OLDMANûANDû-ORGANû 4HEûREALûPROOFûISûINûTHEûNUMBERSûANDûAûQUICKûJOURNEYû
3TANLEY ûWEREûONûTHEûRIGHTûSIDEûOFûTHEûARGUMENTûANDûTHATû ROUNDûTHEûFEEûLEAGUEûTABLESûTELLSûTHEûSTORY
*0û-ORGANûANDûTOûANûEVENûGREATERûEXTENTû#ITIGROUP ûWEREû *0û-ORGANSûSHAREûOFûGLOBALûINVESTMENTûBANKINGûFEESûFORû
on the wrong side. THEûlRSTûûMONTHSûOFûûWASû ûACCORDINGûTOû2ElNITIVû
It doesn’t seem that way any more. DATA ûWAYûAHEADûOFû'OLDMANûINûSECONDûPLACEûATû
)NDEED ûINûAûREVERSEûOFûTHEûPRE lNANCIALûCRISISûDAYSû .OTûONLYûISû*0û-ORGANûONûCOURSEûTOûEARNûTHEûMOSTûFEESû
WHENûBANKSûWEREûDOINGûTHEIRûBESTûTOûBEûLIKEû'OLDMANû INûTHEûINDUSTRYûFORûTHEûTHûSTRAIGHTûYEAR ûBUTûITSûSHAREûOFû
-ERRILLû,YNCH ûASûITûWASûTHEN ûWASûEVENûRUMOUREDûTOû fees is growing. For the same period last year, it earned a
HAVEûAûh'OLDMAN EMULATIONûUNITvûWHOSEûJOBûWASûTOû WALLETûSHAREûOFû
WORKûOUTûWHATû'OLDMANûDIDûANDûCOPYûIT û*0û-ORGANûNOWû 3PLITûTHEûLATESTûNUMBERûREGIONALLYûANDû*0û-ORGANûISû
ISûTHEûINSTITUTIONûGLOBALûBANKSûAREûMOSTûKEENûTOûCOPY NUMBERûONEûATûûINûTHEû!MERICASûANDûNUMBERûONEûATû
!NDûTHEûCOPY CATSûINCLUDEûEVENûTHEûMIGHTYûHOUSEûOFû ûINû%-%!û3PLITûBYûASSETûCLASSûNUMBERûONEûATûûINû
'OLDMAN BONDS ûAûMARGINALûNUMBERûTWOûTOû'OLDMANûATûûINû
7ANTûPROOF û(OWûABOUTûTHIS %#-ûANDûNUMBERûONEûATûûINûLOANS ûANDûTHEûSTORYûISû
•û"ANKSûTHATûWEREûPREVIOUSLYûSNIFFYûABOUTûSUCHûTHINGSû JUSTûASûIMPRESSIVE
AREûPUSHINGûTOûDEVELOPûRETAILûBANKINGûOPERATIONSû !NDûALLûTHISûISûEVENûMOREûREMARKABLEûINûhPEACEûTIMEv
-ARCUSûINû'OLDMANSûCASE û"UTûHERESûWHATûTHEYREûUPû h)TSûPARTICULARLYûPLEASINGûTHATûWEREûMAKINGûPROGRESSû
AGAINSTûABOUTûûOFû53ûHOUSEHOLDSûHAVEûAûRELATIONSHIPû ATûAûTIMEûWHENûCOMPETITIONûISûHARDERûTHANûEVER vûSAIDû
WITHû*0û-ORGANû#HASEûASûDOûABOUTûFOURûMILLIONûSMALLû $ANIELû0INTO ûWHOûRUNSûTHEûCORPORATEûANDûINVESTMENTû
BUSINESSES BANKûh4HISûISûNOTûANûABNORMALûTIMEûLIKEûTHEûlNANCIALû
•û"ANKSûINCLUDINGû"ANKûOFû!MERICAûANDû'OLDMANûAREû CRISISûANDûYETûWEREûSTILLûBUILDINGûTHEûFRANCHISEûSTRONGLYv
TRYINGûTOûBUILDûREGIONALû53ûINVESTMENTûBANKSû"UTû*0û 6ISWASû2AGHAVAN ûTHEûBANKSû%-%!ûCHIEF ûAGREEDûh7Eû
-ORGANSûCOMMERCIALûBANKûHASûABOUTû ûINVESTMENTû HAVEûBEENûTHOUGHTûOFûASûAûBETTERûBEARûMARKETûHOUSEû"UTû
BANKERSûACROSSû53ûCITIESûûOFûTHEûCOMMERCIALûBANKSû WEûHAVEûNOWûEXTENDEDûOURûLEADûINûAûBULLûMARKET vûHEûSAID
CLIENTSûUSEû*0û-ORGANSûTREASURYûSERVICESûINû ûûnû /NûTHEûTRADINGûSIDEûOFûTHEûINDUSTRYûTHEûBANKûISûEVENû
ORû53BNûnûOFû*0û-ORGANSû.ORTHû!MERICAûINVESTMENTû STRONGERû*0û-ORGANûISûEASILYûNUMBERûONEûINûREVENUESû
banking fees came from commercial bank clients. FROMûTRADINGûOVERALLû$URINGûTHEûlRSTûNINEûMONTHSûOFûTHEû
•û"ANKSûINCLUDINGû#ITIGROUPûANDû7ELLSû&ARGOûHAVEû YEARûTHEûLATESTûDATAûAVAILABLE û*0û-ORGANûHADûTRADINGû
COMBINEDûDIVISIONSûTOûLOOKûMOREûLIKEû*0û-ORGANSû REVENUESûOFû53BNûnûOVERû53BNûMOREûTHANûITSû
CORPORATEûANDûINVESTMENTûBANKûINûORDERûTOûINCREASEû CLOSESTûRIVAL ûSECOND PLACEDû#ITIGROUPû)TûWASûTHEûCLEARû

38 International Financing Review IFR Awards 2018


BANK OF THE YEAR JP MORGAN

Daniel Pinto

LEADERûWITHûNEARLYû53BNûOFûREVENUES ûINûlXEDûINCOME ûCURRENCYû /NEûOFû*0û-ORGANSûHIGHLIGHTSûINûTHEûHIGH YIELDûMARKETûWASûITSû


ANDûCOMMODITIES ûANDûWASûVYINGûFORûNUMBERûTWOûSPOTûWITHû'OLDMANû LEAD LEFTûPOSITIONSûONûTHEû53BN EQUIVALENTûOFûBONDSûTHATûHELPEDû
BEHINDû-ORGANû3TANLEY ûWITHû53BNûOFûREVENUESûINûEQUITIES lNANCEûTHEûACQUISITIONûOFû4HOMSONû2EUTERSû&INANCIALûû2ISKû
h/URûEFlCIENCYûMEANSûWEûCANûPRICEûOURûSERVICESûAGGRESSIVELYûANDû DIVISIONûnûNOWûRENAMEDû2ElNITIV ûANDûWHICHûINCLUDESû)&2ûnûBYûAû
SECUREûCLIENTSûTHATûWAY vû0INTOûSAID CONSORTIUMûLEDûBYû"LACKSTONEû4HATûDEALûWHENûCOMBINEDûWITHûTHEû
#USTODYûANDûFUNDûSERVICESûAREûANOTHERûAREAûWHEREû*0û-ORGANû 53BNûLOANûCOMPONENT ûISû)&2Sû&INANCINGû0ACKAGEûOFûTHEû9EAR
STANDSûOUTû)TûISûANûAREAûWHEREûTHEûBANKûDIFFERENTIATESûITSELFûFROMû *0û-ORGANûWASûALSOûONEûOFûFOURûACTIVEûBOOKRUNNERSûONûTHEû
7ALLû3TREETûRIVALSûBECAUSEûTHEûCOMPETITIONûAREûNOTûTHEûUSUALûSUSPECTSû 53BNûBONDûSALEûTHATûlNANCEDûTHEûACQUISITIONûOFûHEALTHûINSURERû
BUTûTHEûLIKESûOFû".9û-ELLONûANDû3TATEû3TREET !ETNAûBYû#63û)&2Sû53û"ONDûANDû.ORTHû!MERICAû)NVESTMENT 'RADEû
4HEûBANKûHASûJUMPEDûTOûNUMBERûTWOûINûTHEûASSETSûUNDERûCUSTODYû #ORPORATEû"ONDûOFûTHEû9EAR ûTHEû53BNûBONDûDEALûFORû"AYER
CHARTûSECONDûONLYûTOû".9 ûANDûNOWûHASûSOMEû53TRNûINûITSûCAREûnû -ONSANTOû)&2Sû9ANKEEû"ONDûOFûTHEû9EAR ûANDûTHEû53BNûBONDû
UPû53TRNûSINCEûTHEûSTARTûOFûû4HATûWASûINûLARGEûPARTûTHANKSûTOûAû lNANCINGû7ALMARTSûACQUISITIONûOFû)NDIANûE COMMERCEûlRMû&LIPKART
DEALûTOûTAKEû53TRNûOFû"LACK2OCKûASSETSûBUTûALSOûDUEûTOû*0û-ORGANû )TûWASûALSOûAûBOOKRUNNERûONûANûUNUSUALûLONGûlVE YEARû53BNû
WINNINGû3OUTHû!FRICASûlRSTûEVERûINTERNATIONALûCUSTODYûDEAL ûINûWHICHû SENIORûmOATERûFORû!44ûTHATûWASûDRIVENûBYûREVERSEûENQUIRYûFROMûINVESTORS
ITûON BOARDEDûNEARLYû ûFUNDSûFROMûFUNDûMANAGERû#ORONATION .ESTLESû53BNûBONDûISSUEûWASûANOTHERûOFûTHEûBANKSûLANDMARKû
!NDûWHILEûh&ANCY $ANvûINVESTMENTûBANKERSûMIGHTûDISMISSûTHEû DEALSû4HEû3WISS BASEDûFOODûANDûBEVERAGEûlRMûRECEIVEDûAROUNDû
CUSTODYûFUNCTIONûASûBORING ûITûISûAûSTICKYûANDûLUCRATIVEûBUSINESSû 53BNûOFûORDERSûFORûTHEûDEAL ûWHICHûWASûITSûlRST EVERû!ûDOLLARû
!NALYSISûOUTlTû#OALITIONûRECKONSûTHATû*0û-ORGANSû ûEMPLOYEESû BOND ûENABLINGûITûTOûTARGETûDOMESTICû53ûINVESTORS
INûCUSTODYûCANûBOASTûAûCOLLECTIVEûOPERATINGûMARGINûOFû The bank was also at the forefront of many of the year’s most
4HEûRESULTûOFûALLûTHESEûSUPERLATIVESûISûPRETTYûSIMPLEû4HROUGHûTHEû INTERESTINGû&)'ûDEALSûûnûINCLUDINGû.ATIONWIDESûBAIL INûSENIORûNON
lRSTûNINEûMONTHSûOFû û*0û-ORGANSûCORPORATEûANDûINVESTMENTû PREFERREDûANDû2ABOBANKSûDEBUTûSENIORûNON PREFERRED
BANKûGENERATEDûTHEûMOSTûREVENUEû53BN ûTHEûMOSTûPROlTû )NûTHEûEUROûBONDûMARKET û*0û-ORGANûWASûTHEûHIGHESTûRANKEDûNON
53BN ûANDûTHEûHIGHESTû2/%û ûINûTHEûINDUSTRY %UROPEANûBOOKRUNNERûINû ûAHEADûOFûAûNUMBERûOFûESTABLISHEDû
!NDûTHERESûANOTHERûRESULTû*0û-ORGANûISûTHEûONLYûMAJORûBANKû regional players.
WHOSEûSHAREûPRICEûISûINûPOSITIVEûTERRITORYûTHISûYEARûUPûTOûTHEûENDûOFû )TûACTEDûASûLEAD ûFORûEXAMPLE ûONûBOTHû3PAINSûõBNû YEARûBONDûINû
.OVEMBER ûALBEITûITûISûONLYûUPûSOMEûû)TSûSHARESûAREûTRADINGûATûAû *UNEûANDûITSûõBNû YEARûLINKERûINû3EPTEMBERû)NûTHEûlNANCIALSû
PRICE TO BOOKûRATIOûOFûû/THERûBANKSûSTRUGGLEûTOûGETûTOûONEûTIMESû SECTOR û*0û-ORGANûWASûAûLEADûONûARGUABLYûTHEûMOSTûBONDûIMPORTANTû
DEALûOFûûnûAûõMû YEARûNON CALLûlVEû4IERûûBONDûFORû.OVOû
WHAT REALLY MATTERS "ANCOû)&2Sû%UROPEû&INANCIALû"ONDûOFûTHEû9EAR 
!NDûYETûWHATûREALLYûDElNESûAû"ANKûOFûTHEû9EARûFORû)&2ûPURPOSESûISûNOTû )NûTHEûCORPORATEûMARKET ûMEANWHILE ûONEûKEYû*0û-ORGANûTRADEûWASû
THEûNUMBERSûnûIMPORTANTûTHOUGHûTHEYûAREûnûBUTûTHEûDEALSû)&2 ûAFTERû 4AKEDAû0HARMACEUTICALSûõBNûMULTI TRANCHEûOFFERINGûONû
ALL ûISûAûMAGAZINEûTHATûCARESûABOUTûCAPITALûMARKETSûDEALSûABOVEûALL .OVEMBERû ûTHEûLASTûELIGIBLEûDATEûFORûTHISûYEARSûAWARDSû4HEûDEALû
!NDû*0û-ORGANûCANûBOASTûAûCRACKINGûROSTERûOFûDEALSûINûTHEû)&2û WASû4AKEDASûDEBUTûINûTHEûSINGLEûCURRENCY
awards period. *0û-ORGANûALSOûREMAINSûONEûOFûTHEûFEWûTRULYûGLOBALûEMERGINGû
4HEREûISNTûSPACEûHEREûTOûGOûINTOûTHEMûALLû"UTûITûISûWORTHûTOUCHINGû MARKETSûHOUSES ûWITHûITSûEMERGINGû%UROPE û-IDDLEû%ASTûANDû!FRICAû
ONûAûREPRESENTATIVEûSAMPLE FRANCHISE ûINûPARTICULAR ûAûSTANDOUTûPERFORMER

IFR Awards 2018 International Financing Review 39


BANK OF THE YEAR JP MORGAN

!û53BNûGUARANTEEDUNGUARANTEEDûTWO TRANCHEûBONDûFORû3OUTHû #O HEADûOFûDIGITALûANDûPLATFORMûSERVICESû$AVIDû(UDSONûISûTHEû


!FRICANûSTATE OWNEDûUTILITYû%SKOMûSHOWCASEDûHOWûTHEûBANKûISûABLEûTOû INVESTMENTûBANKSûhDIGITALûTSARvû)NûAûWORLDûWHEREûREPORTINGûLINESû
lNDûINNOVATIVEûWAYSûFORûITSûCLIENTSûTOûRAISEûFUNDS MATTER ûHEûREPORTSûDIRECTLYûTOû0INTOûANDûHASûCAPITALûMARKETSûBANKERSûINû
his reporting line.
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)TûWASûAûSIMILARûSTORYûINûTHEû%#-ûWORLD ûWHEREû*0û-ORGANûWASûONCEû (UDSONûSAYSûTHEû#)"ûEMPLOYSûSOMEû ûINûTHEûTECHûTEAMûnûOFû
again a deal machine. WHICHûMOREûTHANû ûWRITEûCODE
4HEûBANKûWASûONûTHEûTOPûLINEûFORûDEALSûJUDGEDûBYû)&2ûTOûBEûTHEûBESTû !NDûTHEYûHAVEûPRETTYûCLEARûINSTRUCTIONSû$ONTûWORRYûABOUTû
INûEACHûREGIONû%LANCOû!NIMALû(EALTHSû53BNûmOATûINû.ORTHû UNDERMININGûTHEûBANKSûENTRENCHEDûPOSITIONûWORRYûABOUTû
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õMû)0/ûOFûPAYMENTSûCOMPANYû!DYENûINû%-%!ûANDûTHEûlRSTû h9OUûHAVEûTOûBEûWILLINGûTOûDISRUPTûYOURSELF vûSAIDû(UDSONûh)FûYOUREû
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"IOLOGICS ûINûTHEû!SIA 0ACIlC YEARSûOUTûANDûWORKûOUTûHOWûTOûADAPTûTOûWHATEVERSûCOMINGv
)NûFACT ûITûWASûRAREûTOûSEEû*0û-ORGANûOPERATINGûINûANYTHINGûOTHERû (UDSONSûTECHIESûAREûWORKINGûONûEVERYTHINGûFROMûMACHINEû
THANûTHEûMOSTûSENIORûPOSITIONSû)Nû%-%!ûITûWASûAûGLOBALûCOORDINATORû LEARNINGûTOûPREDICTûBESTûTIMESûFORûCAPITALûRAISES ûTOûTHEûROLL OUTûOFûAû
ONûEVERYûONEûOFûITSûû)0/S ûINCLUDINGûTHEûTHREEû%UROPEANûISSUERSûITû CORPORATEûlNANCEûDASHBOARDûTHATûALLOWSûCLIENTSûTOûMONITORûGLOBALû
TOOKûTOûTHEû53 ûAûFEATûNOûOTHERûBANKûCOULDûMATCH markets with data, research and analytics.
*0û-ORGANûWORKEDûONûSEVENûOFûTHEûûLARGESTûTRADESûOFûTHEûYEAR û ,IKEûMANYûOTHERûINSTITUTIONS û*0û-ORGANûISûEXPERIMENTINGûWITHû
INCLUDINGûTHEûõBNûRIGHTSûISSUEûTHATûWRAPPEDûUPû"AYERSûlNANCINGûOFû blockchain. For example, its interbank information network is looking to
THEû-ONSANTOûACQUISITION ûTHEûõBNû)0/ûOFû3IEMENSû(EALTHINEERSûANDû USEûBLOCKCHAINûTOûMAKEûCROSS BORDERûPAYMENTSûFASTERûANDûMOREûEFlCIENT
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)NûLOANûLAND ûASûWELLûASûAûKEYûROLEûONûTHEûAFOREMENTIONEDû2ElNITIVû !SûONEûEXAMPLEûOFûTHEûFRUITûOFûSUCHûANûATTITUDE û(UDSONûPOINTSûTOû
LOANS û*0û-ORGANûWASûALSOûONEûOFûTHREEûJOINTûGLOBALûCOORDINATORSûONûAû THEûCUSTODYûOPERATION ûWHEREû*0û-ORGANûHASûINTRODUCEDûAûPRODUCTû
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2ElNITIVûlNANCING ûANDûDESPITEûINEVITABLEûCOMPARISONSûTOûTHEûLARGERû SECRET SAUCE?
DEAL û!KZOSû53BNûLOANûANDû53BN EQUIVALENTûBONDûISSUESû !SKû0INTOûANDûHISûCOLLEAGUESûWHYû*0û-ORGANûISûSOûGOODûATûWHATûITû
WEREûHIGHLYûSUCCESSFULûINûTHEIRûOWNûRIGHT DOESûWHAT ûINûOTHERûWORDSûISûTHEûSECRETûOFûTHEûBANKSûSUCCESS ûANDû
*0û-ORGANûISûCURRENTLYûLEADINGûTHEûDOLLAR DENOMINATEDûLOANûFORûTHEû THEYûSTRUGGLEûTOûPUTûITûINTOûWORDS
HIGHLYûANTICIPATEDû53BNûUNDERWRITTENûDEBTûlNANCINGûFORûTHEû 4HEREûISûANûALMOSTûPATHOLOGICALûFEARûOFûCOMPLACENCYûnûONEûTHATû
53BNûACQUISITIONûOFû*OHNSONû#ONTROLSû)NTERNATIONALSûPOWERû COMESûFROMû0INTOûHIMSELFûh0ASTûSUCCESSûDOESûNOTûGUARANTEEûSUCCESSû
SOLUTIONSûBUSINESSûBYûPRIVATEûEQUITYûlRMû"ROOKlELDû"USINESSû INûTHEûFUTURE vûHEûSAID
0ARTNERSû4HEûDEALûWILLûLAUNCHûINû )NSIDERSûSAYûTHATû0INTOûOFTENûHARKSûBACKûTOûHOWûEASILYû*0û-ORGANû
4HEûBANKûCONTINUEDûTOûPLAYûAûLEADINGûROLEûINûINVESTMENT GRADEû LOSTûITSûWAYûINûEQUITIESûTRADINGûINûûWHENûITûSAWûOTHERSûMOREû
ACQUISITIONûlNANCING ûTOO WILLINGûTOûINVESTûINûTECHNOLOGYûCOMEûROARINGûPASTû)TûHASûTAKENûUNTILû
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ONEûOFûTHEûLARGESTûEVERûBRIDGEûLOANSûFORûAû53ûINVESTMENT GRADEûCOMPANY THANûOTHERûBANKSûANDûTHOSEûWHOûHAVEûJOINEDûFROMûOTHERûINSTITUTIONSû
)Nû%UROPE ûTHEûBANKûUNDERWROTEûAûõBNûLOANûINû.OVEMBERûFORû TESTIFYûTHATûTHEûBACK STABBINGûANDûJOCKEYINGûFORûPOSITIONûISûMUCHûLESSû
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EXPERIENCEûMANAGEMENTûlRMû1UALTRICS 0INTOûPOINTSûTOûTHEûFACTûTHATûHEûCANûBEûTHEûHEADûOFûTHEûINVESTMENTû
!NDû*0û-ORGANûWASûONEûOFûTHREEûCOORDINATORSûONû3AUDIû!RABIASû BANKINGûUNITûOFûAû53ûHEADQUARTEREDûBANKûWHILEûBEINGûBASEDûINû
SOVEREIGNûWEALTHûFUNDû0UBLICû)NVESTMENTû&UNDSû53BNûLOANûTHATûWASû ,ONDONûASûPROOFûOFûTHATû(EûDOESNTûQUITEûSAYûIT ûBUTûTHEûIMPLICATIONûISû
SIGNEDûINû3EPTEMBERû4HEûDEALûWASûTHEûlRSTûCOMMERCIALûLOANûFORû0)& ûWHICHû THATûATûAûMOREûPOLITICALûORGANISATIONûITûWOULDûBEûIMPOSSIBLEûTOûBEû
ISûTASKEDûWITHûHELPINGûTOûDELIVERû3AUDIû!RABIASû6ISIONûûREFORMûPLAN AWAYûFROMûHEADQUARTERSûFORûLONGûFORûFEARûOFûBEINGûPLOTTEDûAGAINST
h%VERYûCOUNTRYûWHEREûTHEREûWASûAûREFERENCEûDEALûTOûDO ûWEûWEREûONû h7EûHAVEûAûCULTUREûOFûPARTNERSHIPûANDûTEAMûWORKû3OûWEûDONTû
IT vûSAIDû2AGHAVAN WASTEûAûLOTûOFûENERGYûINûBACK STABBINGûANDûPOLITICS vû0INTOûSAID
)NûTHISûHEûISûSUPPORTEDûBYû2AGHAVANûh'ETTINGûTOûTHEûTOPûISûTHEûEASYû
THE FUTURE BITû3TAYINGûTHEREûISûHARD vûHEûSAIDûh7EûHAVEûDONEûITûBYûFOCUSINGûONû
3OûWHATûOFûTHEûFUTURE THEûCLIENT ûBEINGûCOLLEGIATEûANDûAVOIDINGûSNOBBERYûABOUTûSOMEûAREASû
7ILLûRIVALSûBEûABLEûTOûCLOSEûTHATûHISTORICALLYûABNORMALûGAPûINûTHEû OFûBANKINGûnûFORûUSûAûDOLLARûISûAûDOLLARv
FEEûTABLESû7ILLû*0û-ORGANûSLIPûBACKûINTOûTHEûPACKû0OSSIBLY ûBUTûTHEû #YNICSûWOULDûDISMISSûTHEûhCULTUREvûSTUFFûASûCLICHEDûANDû
BANKûCERTAINLYûHASûLOTSûOFûWEAPONSûTOûSTAVEûOFFûTHREATSû0ERHAPSûMOSTû PLATITUDINOUSû!NDûITûISûTRUEûTHATûEVENûTHOSEûWHOûWORKûATû*0û-ORGANû
IMPORTANTLY ûATûAûTIMEûWHENûBANKINGûISûATûRISKûOFûBEINGûDISRUPTEDûBYû STRUGGLEûTOûREALLYûIDENTIFYûnûORûATûLEASTûARTICULATEûCLEARLYûnûTHEûBANKSû
INTERNALûANDûEXTERNALûFORCES ûITûHASûANûENORMOUSûAMOUNTûOFûMONEYûTOû hSECRETûSAUCEvûBEYONDûGENERALITIES
INVESTûnûANDûAûWILLINGNESSûTOûSPENDûITûRATHERûTHANûDISTRIBUTEûITûINû 4HEYûAREûSOLID ûCAREFULûPEOPLEûBIGûONûTEAMûWORKûANDû
DIVIDENDSûORûSTOCKûBUYBACKS  PROFESSIONALISMûWHOûDONTûGOûINûFORûMESSIANICûmIGHTSûOFûFANCYûORû
*0û-ORGANûHASûAûTECHûINVESTMENTûPROGRAMMEûOFû53BN ûWITHû GREATûDOLLOPSûOFûTHEûhVISIONûTHINGv
SOMEWHEREûBETWEENûûANDûûOFûTHATûTHEûBANKûDOESNTûPUBLICLYû !NDûISNTûTHATûWHATûBANKERSûAREûSUPPOSEDûTOûBEûLIKEûINûTHISûPOST
DISCLOSEûTHEûEXACTûSPLIT ûBEINGûSPENTûINû#)"û!SûCO PRESIDENTSûATûGROUPû lNANCIALûCRISISûPERIOD
LEVEL û0INTOûANDû'ORDONû3MITHûOFûTHEûCONSUMERûBANKûOVERSEEûTECHû 4HEûTHINGûIS ûITûWORKSû*USTûLOOKûATûTHEûRESULTS
INITIATIVESûTOGETHER Matthew Davies

40 International Financing Review IFR Awards 2018


BOND HOUSE
HSBC

GUERRILLA
STYLE
7HILEûOTHERûBANKSûHAVEûSTRUGGLEDûTOûHOLDûONûTOûTHEIRûMARKETûSHAREûASûISSUANCEûHASû
FALLEN û(3"#ûSTOODûOUTûFORûITSûABILITYûTOûGENERATEûMOMENTUMûACROSSûTHEûINTERNATIONALû
BONDûMARKETSû)TûISû)&2Sû"ONDû(OUSE û33!2û"ONDû(OUSE û#OVEREDû"ONDû(OUSEûANDû
!SIAû"ONDû(OUSEûOFûTHEû9EAR

I
TSûBEENûAûTOUGHûYEARûINûTHEûDEBTûCAPITALûMARKETSûnû THEûlRMSûTHATûRANKEDûHIGHERûINûTHEû53ûDOLLARûLEAGUEûTABLE û
ANDûTHATSûBEENûREmECTEDûINûLOWERûISSUANCEûVOLUMESû ONLYû"ARCLAYSûBETTEREDû(3"#SûPERFORMANCE
'LOBALûCROSS BORDERûSUPPLYûFELLûBYûMOREûTHANû h/URûPROGRESSûINûDOLLARSûHASûBEENûAûJOURNEYûBUTûITSû
53BNûINûTHISûYEARSûAWARDSûPERIODûCOMPAREDû EARNEDûUSûTHEûRIGHTûTOûBEûONûTHEûTOPûDEALS vûSAIDû2AYû
WITHûTHEûLAST ûACCORDINGûTOû2ElNITIVûDATA ûAûDECREASEûOFû $OODY ûTHEûOTHERûCO HEADûOFûTHEûCAPITALûMARKETSûGROUP
SOMEû (3"#ûHASûBEENûONûSOMEûOFûTHEûBIGGESTû9ANKEEûDEALSûOFû
All of the leading global banks saw a fall in their THEûYEAR ûINCLUDINGû"AYERSû53BNûOFFERINGûASûPARTûOFû
MARKETûSHARE ûEXCEPTûONEû(3"# ITSûACQUISITIONûFUNDINGûFORû-ONSANTOûANDû6ODAFONESû
4HEû5+ûBANKûINCREASEDûITSûSHAREûOFûALLûINTERNATIONALû 53BNûDEAL ûITSûlRSTûINûTHEûDOLLARûMARKETûINûMOREû
BUSINESSûBYûBPûTOûû4HATûMIGHTûNOTûSOUNDûAûLOT ûBUTû THANûlVEûYEARS ûAGAINûFORûACQUISITIONûlNANCINGûREASONS
GIVENûTHATûTHEûBANKSûABOVEû(3"#ûINûTHEûGLOBALûLEAGUEû "UTûITSûNOTûJUSTû9ANKEESû2IGHTûACROSSûTHEûSPECTRUMû
TABLEûnûTHEû53ûTRIOûOFû*0û-ORGAN û#ITIGROUPûANDû"ANKûOFû (3"#ûISûPROVIDINGûSOLUTIONSûTOûITSûCLIENTSûNEEDS
!MERICAû-ERRILLû,YNCHûnûALLûSUFFEREDûMARKETûSHAREûFALLSûOFû !ûGOODûEXAMPLEûISû$AIMLER ûAûCOMPANYûTHATû(3"#ûHASû
MOREûTHANûBP ûITSûQUITEûAûFEAT ûESPECIALLYûGIVENûTHEû HELPEDûRAISEûFUNDSûINû53ûDOLLARS ûSTERLING ûOFFSHOREû
SLUMPûINûOVERALLûISSUANCE RENMINBIûANDûONSHOREûRENMINBIûnûTHEûLATTERûREQUIRINGû
4HEûREASONûBEHINDûTHISûGROWTHû#ONSISTENCYû4HEû THEûBANKûTOûUSEûSTRUCTUREDûPRODUCTSûSUCHûASûTOTALûRETURNû
bank has been strong in emerging markets for some SWAPSûTOûBRINGûINûOFFSHOREûINVESTORSûWHOûCOULDûNOTû
TIMEûBUTûMAYBEûDIDNTûALWAYSûPUNCHûITSûWEIGHTûINûOTHERû OTHERWISEûPARTICIPATEûDUEûTOûMEMBERSHIPûREQUIREMENTS
AREASû.OTûTHISûYEAR h4HEûGLOBALûNATUREûOFûOURûPLATFORMûHASûBEENûCRITICALûINû
h7EVEûHADûAûPRE EMINENTûYEARûINûEMERGINGûMARKETSû GIVINGûUSûTHEûINTELLIGENCEûTOûADVISEûCLIENTSûONûTHEûBESTû
AGAINûBUTûTHISûYEARûWEVEûMARRIEDûTHATûWITHûAûLEADINGû MARKETSûANDûWINDOWS vûSAIDû!DAMû"OTHAMLEY ûGLOBALû
POSITIONûINûAûRANGEûOFûOTHERûMARKETS vûSAIDû!LEXIû#HAN û head of debt syndicate.
WHOûWASûAPPOINTEDûEARLIERûTHISûYEARûTOûCO HEADûAûNEWû 4HISûYEARûTHATûADVICEûHASûBEENûMOREûIMPORTANTûTHANûATû
GLOBALûCAPITALûMARKETSûGROUPûTHATûBRINGSûVARIOUSû ANYûTIMEûSINCEûTHEûlNANCIALûCRISISûGIVENûTHEûVOLATILEû
BUSINESSESûSUCHûASûDEBTûANDûEQUITYûCAPITALûMARKETS û NATUREûOFûMARKETS
LEVERAGEDûANDûACQUISITIONûlNANCE ûSTRUCTUREDûlNANCEû 4HEûBANKûCHARACTERISESûûASûONEûOFûhGUERRILLA STYLEvû
ANDûCORPORATEûRISKûSOLUTIONSûUNDERûONEûUMBRELLA ISSUANCEûnûTHATûISûBORROWERSûHAVINGûTOûBEûAGILEûTOûTAKEû
The bank is, for example, leading the way for global ADVANTAGEûOFûOPPORTUNITIESûINûDIFFERENTûCURRENCIESûANDû
lNANCIALûISSUERSûOVERûTHEûAWARDSûPERIODûANDûISûTOPûTHREEû markets.
FORû33!2ûANDû32) ûASûWELLûASûEMERGINGûMARKETSû)NûTERMSû h7EûCOULDûFORESEEûTHISûYEARûWOULDûBEûTOUGHER vûSAIDû
OFûCURRENCIES û(3"#ûISûRANKEDûNUMBERûONEûFORûNON 'û *EAN -ARCû-ERCIER ûGLOBALûCO HEADûOFûDEBTûCAPITALû
TRANSACTIONS ûNUMBERûONEûINûSTERLING ûTHIRDûINûEUROSûANDû MARKETSûh"ORROWERSûHADûTOûBEûREADYûTOûJUMPûINv
SEVENTHûINû53ûDOLLARS %QUALLY û(3"#ûHADûTOûBEûREADYûTOûHELPûBORROWERSûJUMPû
INû*ANUARYûANDû3EPTEMBERûWEREûTWOûOBVIOUSûWINDOWSû
DOLLAR GAINS WHENûLIQUIDITYûWOULDûBEûBETTERûnûAND ûLIKEûOTHERûBANKS û
4HATûDOLLARûRANKINGûMIGHTûNOTûSEEMûMUCHûTOûBOASTûABOUT û (3"#ûTARGETEDûTHOSEûTWOûMONTHSû"UTû(3"#ûWASûINûTHEû
BUTûAGAINûTHEûBANKSûRELATIVEûPERFORMANCEûISûIMPRESSIVEû MARKETSûONûALMOSTûûDAYSûTHISûYEAR
(3"#ûRECORDEDûAûBPûGAINûINûMARKETûSHAREûINû53ûDOLLARû h7EûDEMONSTRATEDûINûTIMESûOFûVOLATILITYûOURûABILITYûTOû
TRANSACTIONSûWHEREASûTHEûBIGûlVEû53ûlRMSûTHATûRANKEDû TAKEûCLIENTSûTOûDIFFERENTûMARKETSûSUCHûASûTHEû9ANKEE û
AHEADûOFûTHEû5+ûBANKûSAWûTHEIRûMARKETûSHARESûDECLINEû/Fû LOCALûCURRENCY ûSUKUK vûSAIDû-ERCIER

IFR Awards 2018 International Financing Review 41


BOND HOUSE HSBC

Alexi Chan
)TûALSOûLEDûAûaBNû$ECEMBERûûFORû
Jean-Marc Mercier
+F7 ûTHEûISSUERSûLARGESTûINûTHEûCURRENCY
4HEûMOVEûINûTHEûBASISûALSOûOPENEDûUPû
OPPORTUNITIESûFORûFOREIGNûISSUERSûLOOKINGû
ATûTHEû%UROPEANûMARKET ûINCLUDINGûANû
INAUGURALûEUROûDEALûFORûTHEû0ROVINCEûOFû
!LBERTA ûHELPINGû(3"#ûBRINGûSOMEû
PROJECTSûTHATûHADûLONGûBEENûINûTHEû
pipeline, another one of the bank’s
STRENGTHSûINû33!
h7EûHADûBEENûMONITORINGûTHEûEUROû
market for them for years and years
ANDûYEARSûANDûlNALLYûTHEûSTARSû
ALIGNEDûWHENûTHEûBASISûMOVEDûINû
THEIRûFAVOUR vûSAIDû(ECTORû3NUGGS û
HEADûOFûPUBLICûSECTORûDEBTûCAPITALû
markets origination. “It’s that
KINDûOFûLONG GESTATIONûPRODUCTû
THATûHELPSûSETûUSûAPARTv
(3"#ûALSOûHELPEDûITSûCLIENTSû
ACCESSûDURATIONûINûTHEûEUROû
MARKET ûINûAûYEARûWHENûLONG
DATEDûVOLUMESûDROPPEDûBYû
ABOUTû ûWHETHERûITûWASû
BRINGINGûAûõBNû YEARû
benchmark for the
+INGDOMûOFû3PAINûORûMOREû
BESPOKEûTRADESûSUCHûASû
!USTRIASûTAPûOFûITSû#ENTURYû
bond.
(3"#ûPLAYEDûAûPIVOTALû
role in the growth and
DEVELOPMENTûOFû
SUSTAINABLEûlNANCING û
LEADINGûGROUND BREAKINGû
INAUGURALûISSUANCESûACROSSû
MULTIPLEûREGIONSûANDû
CURRENCIES
h4HEûPUBLICûSECTORûHASûBEENûAû
REALûDRIVERûOFûSUSTAINABLEûlNANCEû
!NDûTHISûWASûIRRESPECTIVEûOFûWHETHERûTHEûISSUERûWASûSEEKINGûAû ANDûCONTINUESûTOûBE vûSAIDû3NUGGSûh)Nû ûWEûNOTûONLYûBROUGHTû
JUMBO SIZEDûDEALûORûSOMETHINGûMOREûNICHE NEWûISSUERSûTOûTHEûMARKETûBUTûALSOûREPEATûISSUERSv
(3"#ûWORKEDûONû)RELANDSûINAUGURALû'REENûBONDûANDûWASûALSOûAû
SPOTTING CHANGES LEADûMANAGERûONûAûDEALûFORû3OCIETEûDUû'RANDû0ARISûTHATûWASûNOTûONLYû
(3"#SûABILITYûTOûSPOTûCHANGESûINûMARKETûCONDITIONSûEARLYûANDûDELIVERû THEûlRSTûEVERûBONDûISSUEûFROMûTHEûBORROWERûBUTûALSOûTHEûlRSTû
COMPETITIVEûFUNDINGûWASûKEYûTOûTHEûBANKûCLINCHINGûTHEû33!2û(OUSEû TRANSACTIONûTOûBEûLAUNCHEDûFROMûAûFULLYû'REENû%-4.ûPROGRAMME
OFûTHEû9EARûAWARD )TûALSOûLEDûTHEû%UROPEANû)NVESTMENTû"ANKSû53ûDOLLARûSEVEN YEARû
h7EûDONTûJUSTûDOûTHEûBIGûõBNû+F7ûTRADES ûWEûALSOûDOûSMALLERû #LIMATEû!WARENESSû"OND ûWHICHûWASûTIMEDûTOûCOINCIDEûWITHûTHEû
TRANSACTIONSûFORûTHEûSMALLERûREGIONSûnûNOTûJUSTûTHEûLEAGUEûTABLEûTRADESû )#-!û'REENû!'-ûINû(ONGû+ONG
THATûCANûMAKEûORûBREAKûTHEûNUMBERS vûSAIDû!SIFû3HERANI ûCO HEADûOFû "UTûWHILEûPLAINûVANILLAûLARGEûBENCHMARKSûFORMûAûLARGEûPARTûOFû
THEû33!ûANDû&)'ûSYNDICATEûFORû%-%!ûATû(3"# BANKSû33!ûBUSINESS ûûWASûALSOûAûYEARûWHENûINNOVATIONûCAMEûTOû
!SûTHEûLISTûOFûNON EXECUTEDûMANDATEDûORûPULLEDûCORPORATESûANDû THEûFOREûASûBANKS ûISSUERSûANDûINVESTORSûSTARTEDûTOûCONSIDERûTHEûMOVEû
lNANCIALûINSTITUTIONSûDEALSûGREWûINû ûVOLATILITYûINûTHEûPUBLICû TOûAûWORLDûOFûRISK FREEûBENCHMARKS
sector market manifested itself in other forms. (3"#ûWASûONûTHEûTOPûLINEûONûTHEû%)"SûaBNû3ONIA LINKEDû
h/NEûOFûTHEûBIGûTHEMESûTHISûYEARûHASûBEENûTHEûMOVEûINûTHEûCROSS TRANSACTION û)&2Sû33!ûANDû3TERLINGûBONDûOFûTHEûYEAR ûAûDEALûTHATû
CURRENCYûBASIS ûWHETHERûITSûTHEûEURO53ûDOLLARûBASISûORûTHEû53ûDOLLAR CRACKEDûOPENûTHEûMARKETûANDûWASûNOTûONLYûFOLLOWEDûBYûOTHERûPUBLICû
STERLINGûBASIS vûSAIDû3HERANIûh7EûWEREûATûTHEûHEARTûOFûTHATûTRENDûANDû SECTORûISSUERSûSUCHûASûTHEû!SIANû$EVELOPMENTû"ANKûBUTûALSOûlNANCIALû
HELPEDûOURûISSUERSûMAXIMISEûTHEIRûCOSTSûOFûFUNDINGv INSTITUTIONS
4HEûMOVES ûWHICHûSAWûTHEûBASISûMOVINGûFROMûNEGATIVEûTOûPOSITIVE û h4HISûWILLûBEûTHEûNORMûINûûANDû%)"ûKICKEDûITûALLûOFF vûSAIDû
HADûAûMATERIALûIMPACTûONûISSUANCEûPATTERNS 3HERANI
&ORûEXAMPLE û(3"#ûBROUGHTûAûaBNû$ECEMBERûûFORûTHEû
7ORLDû"ANKûINûMID *ANUARY ûTHEûLARGESTûSTERLINGû33!ûBENCHMARKû COVERED SONIA
SINCEû ûWHICHûITûLATERûFOLLOWEDûWITHûTRADESûFORû53ûDOLLAR BASEDû )NDEED ûAû3ONIAûTRANSACTIONûWASûTHEûMOSTûIMPORTANTûINûTHEûSTERLINGû
ISSUERSûSUCHûASû.)" û%$#ûANDû1UEBEC COVEREDûBONDûMARKETûTOO

42 International Financing Review IFR Awards 2018


BOND HOUSE HSBC

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been critical in giving us the intelligence MANAGEDûTOûCONVINCEûNEWûNAMESûSUCHûASû)NDONESIANûSTATE OWNEDû
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to advise clients on the best markets and TOûINCORPORATEûTENDERûOFFERSûASûPARTûOFûTHEIRûPRIMARYûISSUEûSTRATEGIES
4HROUGHOUTûHEIGHTENEDûVOLATILITY û(3"#ûMANAGEDûTOûREACTûQUICKLYû
windows” ANDûBRINGûTAILOREDûDEALSûTOûMATCHûCHANGINGûINVESTORûDEMAND
Sudip Roy, Helene Durand, Tom Revell, Daniel Stanton

IFR Awards 2018 International Financing Review 43


EQUITY HOUSE
Goldman Sachs

HUT! HUT!
HUT!
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done. AHEADûOFûTHEû53MûTAKENûBYû-ORGANû3TANLEY ûWHICHû
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America, in addition to the global title. 53BNû)0/ûFROMû"RAZILIANûPAYMENTSûPROVIDERû
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h)TûSEEMEDûTOûUSûTHATûWHEREûTHEûREGIONûWASûONûAû dabbled in Brazilian stocks before, something that was
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competitors were doing, it made a lot of sense to step BEYONDûTHEûUSUALûLOCALûINVESTORS
FORWARD vûSAIDû2ICHARDû-C.EIL ûCO HEADûOFû,ATINû!MERICAû h)TûISûTHEûlRSTûTIMEûINûMYûEXPERIENCEûINûWHICHûITûWASû
INVESTMENTûBANKING PROVENûTHATûBYûLISTINGûINûTHEû53ûWEûCOULDûDOûTWOûTHINGSû
4HATûPAIDûOFFû'OLDMANûTOOKûSECONDûSPOTûINûTHEû,AT!Mû BENCHMARKûINTERNATIONALûCOMPSûTOû"RAZILûANDûBRINGû53û
LEAGUEûTABLESûDURINGûTHEûAWARDSûPERIOD ûCAPTURINGûAû GLOBALûDEMANDûINTOû"RAZIL vûSAIDû6AZQUEZ

44 International Financing Review IFR Awards 2018


EQUITY HOUSE GOLDMAN SACHS

HOME AND AWAY )0/ûOFûVIDEOûSTREAMINGûCOMPANYûI1IYI ûTHEû53BNû.ASDAQûLISTINGû


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year. EXTENDEDûITSûREPUTATIONûASûTHEûGO TOûHOUSEûFORûTHEûBIGGESTûDEALSûINûTHEû
4HEû53ûINVESTMENTûBANKûLEDûSIXûOFûTHEûû53BN PLUSû!SIA 0ACIlCû STATE OWNEDûSECTORû)TûWASûONEûOFûTWOûSPONSORSûONûTHEû(+BNû
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EQUITY LINKEDûBYûMOREûTHANû Tower, the biggest listing globally in two years.
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FUTURE of weeks.
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TECHNOLOGYûCOMPANIESûTOûTHEû53ûMARKETû)TûLEDûTHEû53BNû.ASDAQû PLACEMENTûFORû4OSHIBAûINûLATEû.OVEMBERû ûREPAIRINGûAûHOLEûINûTHEû

IFR Awards 2018 International Financing Review 45


EQUITY HOUSE GOLDMAN SACHS

ELECTRONICSûMAKERSûBALANCEûSHEETûANDûREMOVINGûTHEûTHREATûOFûAû “It’s a combination of hustle, good


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2ESOURCESûONûTHEûBACKûOFûRISINGûOILûPRICESûASûTHEû53ûPULLEDûOUTûOFûTHEû conflicts”
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“We had out-sized economics .93%û'OLDMANûWASûONEûOFûTHREEûBANKSûTHATûEARNEDû53MûANDû
PROVIDEDûINVESTORûCONTACTSûFORûAûNON DEALûROADSHOW
in most of these transactions. 'OLDMANSûSURGEûISûCLEARESTûINûTHEûCLEANESTûMETRICûOFûALLûnûEQUITYû
UNDERWRITINGûINûITSûlNANCIALûRESULTSû)NûTHEûlRSTûNINEûMONTHSûOFûû
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'OLDMANSûREVENUEûOFû53BNûISûJUSTû53MûBEHINDû*0û-ORGAN û
share game. We are pitching WHILEû-ORGANû3TANLEYûWASûAHEADûATû53BNû4HEûMOMENTUMû
BELONGSûTOûJUSTûONEûBANK ûWITHû'OLDMANSûREVENUESûUPûûINûTHATû
to lead” period.
Owen Wild, Paul Kilby, Fiona Lau

46 International Financing Review IFR Awards 2018


LOAN HOUSE AND AMERICAS LOAN HOUSE
Goldman Sachs

INTELLECTUAL
CAPITAL
'OLDMANû3ACHSûEXPERTISEûINûACQUISITIONûANDûLEVERAGEDûFINANCINGûMADEûITûTHEû
GO TOûPARTNERûFORûCOMPANIESûOFûALLûSIZESûANDûCREDITûRATINGSûINûTRANSFORMATIVEûORû
REGULARûDEALSû&ORûLIVINGûUPûTOûITSûCLIENTSûTRUST ûTHEûBANKûISû)&2Sû,OANû(OUSEûANDû
!MERICASû,OANû(OUSEûOFûTHEû9EAR

D
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year. PERENNIALûUNDERWRITERûONûTHEû3TREETûACROSSûLOANSûANDû
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ALSOûHAVEûTHEûLEADINGûINVESTMENTûBANKINGûFRANCHISE û 53ûINVESTMENT GRADEûACQUISITIONûlNANCINGS ûWITHûAûLEADû
ALMOSTûPOUNDûFORûPOUND ûSECTORûBYûSECTOR vûSAIDû#HRISTINAû ARRANGINGûROLEûONûûBRIDGEûLOANSûOFûMOREûTHANû53BN û
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4HISûFOCUSEDûTHEûBANKSûEXISTINGûSKILLSûONûSTRATEGICûANDû 53ûSOFTWAREûCOMPANYû2EDû(AT
TRANSFORMATIVEûACQUISITIONS ûPARTICULARLYûCROSS PRODUCTû 'OLDMANûCOMMITTEDû53BNûASûLEADûARRANGERûOFû
BUYOUTûLOANSûFORûPRIVATEûEQUITYûlRMSûOFûVARYINGûSIZE û BRIDGEûLOANSûANDûSERVEDûASûLEADûARRANGERûONû53BNûOFû

IFR Awards 2018 International Financing Review 47


LOAN HOUSE AND AMERICAS LOAN HOUSE GOLDMAN SACHS

BRIDGES ûWHICHûINCLUDEDûAû53BNûLOANûBACKINGûPACKAGEDûFOODSû !ûõBNûLEVERAGEDûCORPORATEûACQUISITIONûlNANCINGûFORû$OUBLEû"û


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SMALLERûRIVALû0INNACLEû&OODS ûWHICHûWASûTHEûLARGESTûSOLELYû 'OLDMANSûABILITYûTOûGIVEûDIFFERENTIATEDûADVICEû4HEûDEALûBACKEDûTHEû
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sponsors. COMMUNITYûAIMEDûFORûEVER LARGERûDEALSû4HEûõBNûTERMûLOANûWASû
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franchise. LEADERûWITHûõBNûOFûPROPERTYûASSETSûINûûCITIES
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WASûONEûOFûTHEûLARGESTûCOVENANT LITEûLOANSûCOMPLETED Tessa Walsh, Michelle Sierra

48 International Financing Review IFR Awards 2018


EMERGING MARKETS BOND HOUSE
Citigroup

OUT OF THE
BLOCKS
!ûSTELLARûYEARûFORû#ITIGROUPûINûALLûTHREEûDEVELOPINGûREGIONSûHASûSEENûITûDOMINATEû%-û
PRIMARYûMARKETSûINûû4HEû53ûBANKûGOTûCLIENTSûINTOûTHEûMARKETûEARLY ûWHICHûHASû
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A
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GOODûSHAPEû"UTûEMERGINGûMARKETSûBANKERSû year progressed. It didn’t shirk the challenge.
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likely to wind down and then stop. headline grabbing trades that needed the most
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emerging markets elections later in the year in Brazil Holding.
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while markets are still good. the region.
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blocks. REGIONALûNEIGHBOURû%00ûHADûFAILEDûJUSTûAûFEWûDAYSûBEFOREû
"YûTHEûENDûOFû-ARCHûITûWASûALREADYûTOPûOFûTHEûLEAGUEû ANDûGOTûAûDEALûDONE ûGLADûNOûDOUBTûTOûTAKEûõMûATûû
TABLESûINû,ATINû!MERICAûANDûEMERGINGû%UROPE ûTHEû FORûAûSEVEN YEARûNOTEûISSUE ûEVENûIFûPRICINGûWASûSTUCKûATû
-IDDLEû%ASTûANDû!FRICAûnûPOSITIONSûITûWOULDûNEVERû GUIDANCE
RELINQUISHûINûûnûWHILEûINûEMERGINGû!SIAûONLYû(3"#û !NDûALTHOUGHûTHEûSIZEûWASûBELOWûTHEûõMûTHEû
ANDû3TANDARDû#HARTEREDûHADûTRANSACTEDûMOREûVOLUMEû company had said it was targeting a few months ahead
OUTûOFûTHEûINTERNATIONALûlRMS ûANDûTHEûLATTERûBYûAû OFûTHEûTRADE û"%(ûWASûSTILLûABLEûTOûEXTENDûITSûCURVEûINûAû
whisker. TOUGHûMARKETû4HEûCOMPANYûSUBSEQUENTLYûTAPPEDûTHEû
h#OMINGûINTOûTHEûYEAR ûTHEREûWASûAûDEGREEûOFûHEALTHYû BONDûISSUEûABOUTûAûMONTHûLATERûFORûõMûWITHû
PARANOIAûTOûDOûTHEûBESTûFORûOURûCLIENTS vûSAIDû#HRISû #ITIGROUPûASûSOLEûLEAD
'ILFOND ûHEADûOFû,ATINû!MERICAûCAPITALûMARKETSû h4HESEûWEREûDIFlCULTûTRADESûTOûMANOEUVRE vûSAIDû
ORIGINATIONûATûTHEûlRMûh#LIENTSûVOTEDûWITHûTHEIRû #HARLES
MANDATESv
)TûWOULDûBEûWRONG ûTHOUGH ûTOûTHINKûOFû#ITIGROUPûASûAû TRUSTED ADVISERS
mAT TRACKûBULLY ûABLEûTOûEXECUTEûTRANSACTIONSûONLYûWHENû 4HESEûTRADESûWEREûTWOûOFûMOREûTHANûûOVERûTHEûAWARDSû
THEûGOINGûWASûGOODû4HEûlRMûWASûSMARTûTOûGETûASûMUCHû PERIODûTHATûTHEûBANKûEXECUTEDûINûEMERGINGû%-%! ûMOREû
BUSINESSûDONEûUPFRONTûBUTûLIKEûEVERYûOTHERûBANKû than any other bank.

IFR Awards 2018 International Financing Review 49


EMERGING MARKETS BOND HOUSE CITIGROUP

"UTûPERHAPSûMOREûIMPRESSIVEûTHANûTHEûNUMBERûOFûDEALSûONûWHICHû 4HEûBANKûPRINTEDûAû53Mûû YEARûNON CALLûlVEûISSUEûATû


#ITIGROUPûHASûACTEDûASûAûBOOKRUNNERûISûTHEûNUMBERûITûHASûACTEDûONûASû PAR ûWITHûSIGNIlCANTûTIGHTENINGûFROMûTHEûSTARTINGûPOINT ûWHICHûWASû
a global coordinator. THEûûAREA ûANDûANûINCREASEûINûSIZEûnûBYû53M
#ITIGROUPSûHITûRATIOûASûAûGLOBALûCOORDINATORûASûOPPOSEDûTOûJUSTûAû "ARCLAYSû!FRICAûWASûFORMEDûINûûTHROUGHûCOMBININGû!BSAû
BOOKRUNNERûnûNINEûTOûONEûnûISûFARûBETTERûTHANûANYûOTHERûRIVALû)TûSHOWSûTHATû 'ROUPûANDû"ARCLAYSû!FRICANûOPERATIONSû"YûTHEûENDûOFû û"ARCLAYSû
CLIENTSûWANTEDû#ITIGROUPûTOûDRIVEûTHOSEûDEALSûRATHERûTHANûACTûASûAûPASSENGER HADûREDUCEDûITSûSHAREHOLDINGûTOûûFROMû
h7EûWANTûTOûBEûTHEûGLOBALûCOORDINATORû7EûWANTûCLIENTSûTOûTURNûTOû "UTûPERHAPSûTHEûMOSTûIMPRESSIVEûTRANSACTIONû#ITIGROUPûWASû
USûFORûADVICEûANDûLEADERSHIPûONûTRANSACTIONS vûSAIDû3AMADû3IROHEY û INVOLVEDûINûWASûNOTûFROMû!FRICAûBUTûFROMûTHEû-IDDLEû%ASTûnûAû
HEADûOFû#%%-%!ûDEBTûCAPITALûMARKETS 53BN EQUIVALENTûOFFERINGûFROMû$UBAISûPORTûOPERATORû$0û7ORLD
4HISûADVICEûCOULDûBEûEXTENDINGûDURATION ûLIABILITYûMANAGEMENTûORû $0û7ORLDûUNDERTOOKûAûMULTI TRANCHEûTRANSACTIONûCOMPRISINGû
DIFFERENTûCURRENCYûMIXES SIMULTANEOUSû)SLAMICûANDûCONVENTIONALûBONDSûINû53ûDOLLARS ûEUROSû
One of the key themes earlier this year, for example, was African and sterling. There was also a liability management exercise.
SOVEREIGNSûISSUINGûINûTHEûEUROûMARKET ûWITHû)VORYû#OAST û3ENEGAL û The scope of the deal was rare in ambition for an emerging
%GYPTûANDû4UNISIAûALLûDOINGûSOûINûû#ITIGROUPûWASûINVOLVEDûINû markets borrower, with many typically sticking solely to dollars as
THREEûOFûTHOSEûDEALS ûTHEûONLYûEXCEPTIONûBEINGû%GYPTûFORûWHICHûITû THEûMOSTûCOST EFFECTIVEûFUNDINGûOPTION
ACTEDûASûAûBOOKRUNNERûONûANûEARLIERû53ûDOLLARûTRANSACTION  4HEûCOMPLEXûOFFERINGûGOTûDONEûDESPITEûANûUNCERTAINûECONOMICû
4HEû)VORYû#OASTûDEALûEVENûINCLUDEDûAû YEARûTRANCHEûASûTHEûCOUNTRYû BACKDROPûINû$UBAI ûWHEREûRESIDENTIALûPROPERTYûPRICESûCONTINUEûTOû
BECAMEûTHEûlRSTû!FRICANûBORROWERûTOûISSUEûBONDSûATûTHATûTENORûINûTHEû SLIDE ûANDûFEARSûTHATûTIT FOR TATûTARIFFSûBETWEENûTHEû53ûANDû#HINAûWILLû
SINGLEûCURRENCYû7HILEûTHEûCOSTûOFûFUNDINGûAFTERûTAKINGûINTOûACCOUNTûTHEû SPILLûOVERûINTOûAûTRADEûWARû#ITIGROUPûWASûONEûOFûTWOûBANKSûONûALLûLEGSû
CROSS CURRENCYûSWAPûISûCLEARLYûMOREûEXPENSIVEûTHANûISSUINGûINû53û of the deal.
DOLLARS ûITSûREALLYûAûMOOTûPOINTûASûITSûDOUBTFULûTHATûANYûBANKûWOULDû h7EûHADûTOûGOûTOûDIFFERENTûPARTSûOFûTHEûINVESTORûUNIVERSEûTOûGETûITû
ENTERûINTOûAûSWAPûWITHûSUCHûAûRISKYûCREDITûBECAUSEûOFûTHEûCOSTSûINVOLVED TOGETHER vûSAIDû7ILLIAMû7EAVER ûHEADûOFû%-%!ûDEBTûCAPITALûMARKETS
!NDûMANYûOFûTHESEûCOUNTRIESûNEEDûEUROûFUNDINGû)VORYû#OAST ûFORû 7HILEû#ITIGROUPûWASNTûTHEûLEADINGûBANKûINûTHEû-IDDLEû%AST ûITûWASû
EXAMPLE ûISûAûMEMBERûOFûTHEû7ESTû!FRICANû%CONOMICûANDû-ONETARYû STILLûINûTHEûTOPûTHREEû-OREûPERTINENTLY ûITûWASûTHEûNUMBERûONEûBANKû
5NION ûANûORGANISATIONûOFûEIGHTûMAINLYû&RANCOPHONEûSTATESûWHOSEû
CURRENCYûISûTHEû#&!ûFRANC
4HESEûDEALSûWEREûPARTûOFûANûIMPRESSIVEûROSTERûOFûTRANSACTIONSûFROMû
!FRICAûGENERALLYû#ITIGROUPûWASûALSOûINVOLVEDûINûTRADESûFORû'HANA û
WHICHûINCLUDEDûITSûlRST EVERû YEARûBONDûISSUE ûANDûTWOûSEPARATEû “We want to be the global coordinator.
TRANSACTIONSûFORû.IGERIA ûHELPINGûTHEûSOVEREIGNûRAISEûAûCOMBINEDû
TOTALûOFûABOUTû53BNûINûTHEûPROCESS We want clients to turn to us for advice
)TSûSUCCESSûINûTHEûREGIONûWASNTûJUSTûCONlNEDûTOûSOVEREIGNSû)Nû
!PRIL ûFORûEXAMPLE û#ITIGROUPûWASûONEûOFûTHEûLEADSûONûAû4IERûûNOTEû and leadership on transactions”
OFFERINGûFROMû"ARCLAYSû!FRICAû'ROUP

50 International Financing Review IFR Awards 2018


EMERGING MARKETS BOND HOUSE CITIGROUP

“We continue to push boundaries and DEALSûINûTHEûINVESTMENTûGRADEûSPACE ûINCLUDINGûLIABILITYûDRIVENûBONDSû


FROMûQUASI SOVEREIGNSûSUCHûASû0ETROBRASûANDû0EMEX
put new stories into the market” )TûALSOûWORKEDûONûAûRAREûHYBRIDûFROMû-EXICANûBREADûMAKERû"IMBOû
ASûITûSOUGHTûTOûCURTAILûDOWNGRADESûFROMûTHEûRATINGûAGENCIES ûWHILEû
CONTINUINGûTOûMAKEûINROADSûAMONGûDEBUTûISSUERS
4HATûWASûNOTûALWAYSûEASYûATûAûTIMEûWHENûINVESTORSûWEREûGROWINGû
INCREASINGLYûRISK AVERSEûANDûWEREûLESSûINCLINEDûTOûBUYûNEWûANDûOFTENû
JUNK RATEDûCREDITS
INû!FRICA û2USSIAûANDûTHEû#)3 ûANDûTHEûRESTûOFû#ENTRALûANDû%ASTERNû
%UROPEûOVERûTHEûAWARDSûPERIOD ûACCORDINGûTOû2ElNITIVûDATA PUSHING HARD
!SIAûWASûTHEûONLYûREGIONûWHEREû#ITIGROUPûDIDNTûENDûUPûNUMBERûONEû
LATIN POWER INûTHEûLEAGUEûTABLESûBUTûONLYûTHEû(3"#ûJUGGERNAUTûBEATûITûh)Nû!SIA û
!NOTHERûREGIONû#ITIGROUPûDOMINATEDûWASû,ATINû!MERICAû4HEû53û WEVEûCONTINUEDûTOûMAINTAINûAûSTRONGûPOSITIONû4HEûCOMMITMENTûISû
BANKûONCEûAGAINûTOWEREDûHIGHûABOVEûITSûCOMPETITORSûINû ûmEXINGû TOûFOCUSûONûTHEûCRITICALûGEOGRAPHIES vûSAIDû!DRIANû+HOO ûCO HEADûOFû
ITSûMUSCLESûINûAûTOUGHûYEARûFORûTHEûASSETûCLASS Asia debt origination.
/VERûTHEûAWARDSûPERIOD û#ITIGROUPûSTOODûlRMLYûATOPûTHEûLEAGUEû /NEûAREAûTHATû#ITIGROUPûHASûPUSHEDûHARDûISûINû!ûTRANSACTIONSû
TABLES ûWITHûûDEALSûUNDERûITSûBELTûANDûAûMARKETûSHAREûOFû û h,ATEûLASTûYEARûANDûEARLYûTHISûYEARûAûLOTûOFûISSUERSûWEREûHAPPYûTOûGOû
VERSUSûSECOND PLACEDû*0û-ORGAN ûWHICHûBOASTEDûûDEALSûANDûAû THROUGHûTHEû2EGû3ûROUTEû"UTûASûCONDITIONSûHAVEûGOTûMOREû
MARKETûSHAREûOFû CHALLENGING ûWHEREûWEVEûHADûTHEûOPPORTUNITYûTOûPIVOTûTHEûCLIENTûANDû
4HATûISûANûIMPRESSIVEûACHIEVEMENT ûGIVENûMARKETûSHARESûAMONGû GETûMOREûCERTAINTYûOFûEXECUTION ûWEVEûGONEûDOWNûTHEû!ûROUTE vû
MOSTûOTHERûCOMPETITORSûWEREûINûTHEûSINGLEûDIGITSûASûBANKSûFOUGHTû SAIDû*AMESû!RNOLD ûHEADûOFû!0!#ûSYNDICATE
TOOTHûANDûNAILûOVERûSCRAPSûINûAûVERYûLOWûVOLUMEûYEARûFORûTHEûREGION 4HATûDOESNTûMEANûTHEûlRMûISNTûSTILLûTRYINGûTOûCAPITALISEûONû
,ATINû!MERICANûCROSS BORDERûBONDûOFFERINGSûINûTHEûûMONTHSûTOû REGIONALûLIQUIDITYûTHROUGHû2EGû3 ONLYûDEALSûWHEREûAPPROPRIATEûBUTû
MID .OVEMBERûûFELLûTOûTHEûEQUIVALENTûOFûAROUNDû53BN ûFARû THEû!ûFORMATûPLAYSûTOû#ITIGROUPSûGLOBALûDISTRIBUTIONûSTRENGTHS
SHORTûOFûTHEû53BN EQUIVALENTûSEENûINûTHEûûAWARDSûPERIOD û 0ERHAPSûTHEûMOSTûINTERESTINGû!SIA 0ACIlCûDEALû#ITIGROUPûWORKEDû
ACCORDINGûTOû)&2ûDATA ONûWASûFORû0APUAû.EWû'UINEAû4HEûSOVEREIGNûPRICEDû53MûOFû
Whether its dominant position helped or worked against YEARûBONDSûATûPARûTOûYIELDû ûWELLûINSIDEûINITIALûGUIDANCEûOFû
#ITIGROUPûINûAûDOWNûYEAR ûTHEûBANKûNEVERTHELESSûEXPANDEDûITSûMARKETû ûAREA ûAFTERûORDERSûEXCEEDEDû53BN
SHAREûCONSIDERABLYûnûUPûFROMûûINû 4HEû!2EGû3ûOFFERINGûMARKEDûTHEûENDûOFûAû YEARûJOURNEYûTOû
h)FûYOUûAREûNUMBERûONEûANDûPICKINGûUPûMARKETûSHARE ûTHATûMEANSû THEûINTERNATIONALûMARKETSûANDûUNDERLINEDûTHEûAPPEALûOFûAûNEWû
YOUûAREûDOINGûSOMETHINGûRIGHT vûSAIDû'ILFONDûh4HOSEûBASISûPOINTSûOFû FRONTIERûCREDITûDESPITEûTHEûRECENTûTURMOILûINûOTHERûEMERGINGûMARKETS
MARKETûSHAREûAREûHARDûFOUGHTûxûû)NûAûSHRINKINGûWATERHOLEûTHEû h7EûCONTINUEûTOûPUSHûBOUNDARIESûANDûPUTûNEWûSTORIESûINTOûTHEû
ANIMALSûTENDûTOûlGHTv MARKET vûSAIDû#HARLES
'EOFFû(UNTER ûHEADûOFûEMERGINGûMARKETSûSYNDICATE ûSAIDûITû !NOTHERûDEALûTHATûlTSûINTOûTHATûCATEGORYûWASûAûTRADEûFROMû
REmECTEDûTHEûTEAMSûKNOW HOWûh)NûAûDIFlCULTûENVIRONMENT ûISSUERSû )NDONESIA ûWHICHûINû&EBRUARYûBECAMEûTHEûlRSTûSOVEREIGNûBORROWERûTOû
TURNEDûTOûEXPERIENCEDûDEALERS vûHEûSAID GOû'REENûINû!SIAû!û53BNûlVE YEARûSUKUKûISSUEûWASûALSOûTHEû
5NDERSTANDABLYû#ITIGROUPSûDEBTûCAPITALûMARKETSûUNDERWRITINGû WORLDSûlRSTû)SLAMICû'REENûBONDûFROMûAûSOVEREIGNû4HEûDUAL TRANCHEû
FEESûSHRUNKûOVERûTHEûAWARDSûPERIODûnûTOû53MûFROMû53MûINû TRADEûALSOûINCLUDEDûAûNON 'REENû53BNû YEARûSUKUKûISSUE
THEûPRIORûYEARûnûBUTûITûSTILLûBEATûOTHERûlNANCIALûINSTITUTIONSûBYûAû 7HILEûSOMEûQUIBBLEDûABOUTû)NDONESIASû'REENûCREDENTIALSûnûTHEû
DECENTûAMOUNT ûACCORDINGûTOû2ElNITIVûDATA COUNTRYûISûTHEûWORLDSûlFTHûLARGESTûEMITTERûOFûGREENHOUSEûGASESûANDû
.UMBERûTWOûANDûTHREEûnû*0û-ORGANûANDû"ANKûOFû!MERICAû-ERRILLû ONEûOFûTHEûWORLDSûLARGESTûEXPORTERSûOFûTHERMALûCOALûnûTHEûDEALûWASûATû
,YNCHûnûGARNEREDû53MûANDû53MûINûFEES ûRESPECTIVELY least a step in the right direction.
4HEûRESULTSûCAMEûAFTERûTHEû53ûBANKûADJUSTEDûITSûSTRATEGYûINûTHEû 4OûENCOURAGEûGREENûINVESTORS ûTHEûISSUERûSTRUCTUREDûONLYûTHEû
,ATINû!MERICAûRETAILûBANKINGûSPACEûnûAûMOVEûTHATûULTIMATELYû SHORTER ûlVE YEARûTRANCHEûASûAû'REENûBONDûISSUE ûSINCEûTHOSEûBUYERSû
BENElTEDûITSû$#-ûBUSINESS û'ILFONDûSAID AREûTYPICALLYûNOTûDURATIONûPLAYERS
7HILEûMAINTAININGûITSûLARGEûCONSUMERûBANKSûINû#HILEûANDû-EXICOû 4HEû'REENûBONDûANDû'REENûBONDûFRAMEWORKûRECEIVEDûAûh-EDIUMû
nû"ANCOûDEû#HILEûANDû"ANAMEXûnû#ITIGROUPûRETRENCHEDûINû"RAZIL û 'REENvûRATINGûFROMûTHEû#ENTERûFORû)NTERNATIONALû#LIMATEû2ESEARCHû
!RGENTINA û0ERU û#OLOMBIAûANDû#ENTRALû!MERICA #ICERO ûWHICHûPROVIDESûANûINDEPENDENTûASSESSMENTûOFûTHEû
h7EûHAVEûDIVESTEDûSEVERALûOFûOURûCONSUMERûBUSINESSESûINûTHEû ENVIRONMENTALûIMPACTûOFûELIGIBLEûPROJECTS
REGIONûTOûREALLYûNARROWûANDûREFOCUSûTHEûSTRATEGYûATûAûGLOBALûLEVELûANDû .ORWAY BASEDû#ICEROûDESCRIBESû-EDIUMû'REENûASûITSûSECONDû
,ATINû!MERICAûHASûBEENûAûBENElCIARYûOFûTHAT vûSAIDû'ILFOND HIGHESTûRATING ûhFORûPROJECTSûANDûSOLUTIONSûTHATûREPRESENTûSTEPSû
h)NûALLûTHESEûPLACESûWEûENJOYEDûVARYINGûDEGREESûOFûSUCCESSûINûTHEû TOWARDûTHEûLONG TERMûVISION ûBUTûAREûNOTûQUITEûTHEREûYETv
CONSUMERûBUSINESS ûBUTûDIDûNOTûREACHûTHEûSCALEûTOûBEûANûEFFECTIVEû )NDONESIASû'REENûBONDûANDû'REENûSUKUKûFRAMEWORKûINCLUDEûITSû
LONG TERMûCOMPETITORv PLEDGESûUNDERûTHEû0ARISû!GREEMENT ûTHEûGLOBALûDEALûAIMEDûATû
4HEûMOVEûALLOWEDû#ITIGROUPûTOûREDEPLOYûCAPITALûRAISEDûFROMûTHESEû combating climate change.
ASSETûSALESûANDûDOUBLEûITSûEFFORTSûONûITSûINSTITUTIONALûBUSINESS 3OMETIMESû#ITIGROUPSûEFFORTSûFAILû!SûWITHûMANYûBANKSûITûSUFFEREDû
h0EOPLEûSAYûWEûWEREûEXITINGûTHATûPARTûOFûTHEûREGION ûBUTûWHATûWEû THEûODDûPULLEDûTRADEûLASTûYEARûnûMOSTûNOTABLYûFORû5KRAINIANûSTATE
WEREûREALLYûDOINGûISûREINVESTINGûCAPITALûINTOûAûCOREûBUSINESSûINûTHEû OWNEDûUTILITYû.AFTOGAZû"UTûTHATûWASûAûRAREûMISSTEP
REGION vû'ILFONDûSAIDûh7EûACTUALLYûHAVEûMOREûASSETSûINû!RGENTINAû $ESPITEûALLûTHEûHURDLESûnûANDûASûTHEûYEARûEVOLVED ûFURTHERûRISKSûTHATû
THANûWHENûWEûHADûTHEûCONSUMERûBUSINESSv COULDNTûHAVEûBEENûFORESEENûONû*ANUARYû ûSUCHûASûTHEûECONOMICû
&IRINGûONûALLûCYLINDERS û#ITIGROUPûWASûABLEûTOûCAPTUREûAûBROADûRANGEû CRISESûINû!RGENTINAûANDû4URKEY ûADDEDûTOûTHEûCHALLENGESûTHATûNEEDEDû
OFûMANDATESûINûCOUNTRIESûACROSSû,ATINû!MERICAûANDûTHEû#ARIBBEAN TOûBEûOVERCOMEûnû#ITIGROUPûSHONE
!SIDEûFROMûSOVEREIGNûMANDATESûFROMûTHEûLIKESûOFû!RGENTINA û h7EVEûSTILLûCOMEûUPûASûAûLEADERûINûALLûTHREEûREGIONS vûSAIDû7EAVER
"RAZIL û#OLOMBIAûANDû5RUGUAY û#ITIGROUPûLEDûSOMEûOFûTHEûBIGGESTû Sudip Roy, Paul Kilby

IFR Awards 2018 International Financing Review 51


M&A ADVISER AND CAPITAL MARKETS ADVISER
Rothschild

FINE
ADJUSTMENTS
$URINGûAûBUSYûYEARûFORûMAJORûCROSS BORDERû-!ûDEALS û2OTHSCHILDûSHONEûASûAûFLEXIBLEû
ADVISERûONûBOTHûTHEûBUYûANDûSELLûSIDESû)TûALSOûGREWûITSûCAPITALûMARKETSûADVISORYûEFFORTû
FROMûANûALREADYûDOMINANTûPOSITIONûBYûFOCUSINGûONûEVERYûVARIABLEûINûAûCHALLENGINGû
MARKETû2OTHSCHILDûISûBOTHû)&2Sû-!û!DVISERûANDû#APITALû-ARKETSû!DVISERûOFûTHEû9EAR

“T
HISûWASûANûEND OF CYCLEûYEAR vûSAIDû!DAMû ORûWITHDRAWû4HATûENSUREDûTHEûSAGAûWASûCONDUCTEDûOVERû
9OUNG ûCO HEADûOFûEQUITYûADVISORYûATû LESSûTHANûTHREEûMONTHS ûWITHû-ELROSEûPERSUADINGûûOFû
2OTHSCHILDû4HEû!NGLO &RENCHûlRMûANDûITSû '+.ûSHAREHOLDERS ûINCLUDINGûACTIVISTû%LLIOTT ûTOûACCEPTûITSû
CLIENTSûWEREûPOISEDûTOûTAKEûADVANTAGEûBEFOREû TWICE ENHANCEDûOFFERûONû-ARCHû ûHAVINGûMADEûITSûlRSTû
RATEûRISESûSIGNALLEDûTHEûENDûOFûûYEARSûOFûEXTREMELYûCHEAPû approach early in the new year.
MONEY ûWHILEûTHEûLONGEVITYûOFûITSûADVISERSûMEANTûTHEYûHADûAû The contest happened against a political backdrop
wealth of experience to call on as markets became trickier. WHEREûTHEû5+ûGOVERNMENTûHADûINDICATEDûAûDESIREûTOû
/NûTHEû-!ûSIDE û2OTHSCHILDûCARRIEDûOUTûTWOûDEALSûFORû TOUGHENûUPûTAKEOVERûPROCEDURESûFURTHERûTOûPROTECTû
LONG TERMûCLIENTSûTHATûSEEMEDûLIKEûTHEûlNALûACTûINûTHEIRû ASSETSûDEEMEDûVITALûFORûNATIONALûSECURITYû!SûAûDEFENCEû
corporate dramas. CONTRACTOR û'+.ûMIGHTûHAVEûQUALIlED
!USTRALIANûMEGAMALLûOPERATORû7ESTlELD ûFORûWHICHû 2OTHSCHILDûWASûABLEûTOûBRINGûITSûEXPERTISEûINû
THEûlRMûHADûPREVIOUSLYûACTEDûINûTHEûDEMERGERûOFûITSû GOVERNMENTûRELATIONSûTOûENSUREûTHISûPOTENTIALûSTUMBLINGû
!USTRALIANûANDû.EWû:EALANDûASSETSûINû ûHIREDû BLOCKûWASûOVERCOME
2OTHSCHILDûAGAINûINûITSûLANDMARKûCOMBINATIONûWITHû
$UTCH &RENCHûACQUIRERû5NIBAIL 2ODAMCOûTOûCREATEûAû GOVERNMENT’S CHOICE
GLOBALûGROUPûWITHûõBNûOFûASSETS /NûTHEûDEBTûADVISORYûSIDEû2OTHSCHILDûCONTINUEDûTOûBEû
2OTHSCHILDSûUNIQUEûTALENTûTOûADVISEûCLIENTSûONû ACTIVEûWITHûGOVERNMENTûCLIENTS
STRATEGICû-!ûASûWELLûASûEQUITYûRAISINGSûANDûLISTINGSûWASû )TûACTEDûFORû'REECEûONûITSûSUCCESSFULûDEBTûEXCHANGEû
to the fore in this deal. TARGETINGûõBNûOFûBONDSûWITHûMATURITIESûFROMûûTOû
In addition to the headline merger, the transaction  ûISSUEDûASûPARTûOFûTHEûCOUNTRYSûûDEBTû
ALSOûINVOLVEDûTHEûSUBSEQUENTûDEMERGERûOFûRETAILû RESTRUCTURINGû4HEûPROPOSALûTOûAMALGAMATEûTHESEûINTOû
TECHNOLOGYûPROVIDERû/NE-ARKETûONTOûTHEû!USTRALIANû lVEûMOREûLIQUIDûBENCHMARKûBONDSûHADûANûûTAKE UP
3TOCKû%XCHANGEû4HEûWHOLEûDEALûCLOSEDûINû*UNEûWITHINû 4HEûlRMûREMAINSûPRE EMINENTûINûDEBTûADVISORYûh7EûHAVEû
SIXûMONTHSûOFûITSûANNOUNCEMENT ûSOMEûFEATûINûAûBEARû THEûADVANTAGEûOFûSCALE vûSAIDû(ELIERû$RAGE 3MITH ûAûMANAGINGû
market for retail property. DIRECTORûINûTHEûDEBTûADVISORYûTEAMûh7EûSEEûMOREûmOWûANDû
h7EûHAVEûHADûAûVERYûLONGûRELATIONSHIPûWITHûTHEû,OWYû MOMENTUM ûGIVINGûUSûAûDEEPûLEVELûOFûINSIGHTv
FAMILY ûWHOûFOUNDEDû7ESTlELD vûSAIDû0HILIPPEû,Eû 4HISûENABLEDûTHEûlRMûTOûPICKûTHEûRIGHTûMOMENTûTOû
"OURGEOIS ûGROUPû#%/ûATû2OTHSCHILDûh3MALLERûOPERATORSû LAUNCHûTHEûlRST EVERû5+ûINmATION LINKEDûBONDSûUSINGû#0)û
AREûSTRUGGLINGûINûTHEûSECTORûBUTûLARGERûDESTINATIONûMALLSû ASûAûMEASUREûRATHERûTHANû20) ûWHENûITûADVISEDûTHEû
AREûMOREûRESILIENTv 5NIVERSITYûOFû#AMBRIDGEûONûAûaMû YEARûISSUEûINû
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52 International Financing Review IFR Awards 2018


M&A ADVISER AND CAPITAL MARKETS ADVISER ROTHSCHILD

TRIPLE-TRACK PROCESS
4HEûlRMûISûALSOûDEVELOPINGûAûSTRATEGICûCAPITALû
ADVISORYûBUSINESS ûWHICHûCANûHELPûCLIENTSû
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BALANCEûSHEETûTOûPUTûTOûUSEûFORûACQUIRERS Christopher Spink, Owen Wild

IFR Awards 2018 International Financing Review 53


RESTRUCTURING ADVISER
Houlihan Lokey

GLOBAL
REACH
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THEûOILûPRICEûnûCOMPLETEDûITSûDEALûUSINGûAû53û#HAPTERûû #ROATIANûGOVERNMENTûANDûRESULTEDûINûCREDITORSûTAKINGû

54 International Financing Review IFR Awards 2018


RESTRUCTURING ADVISER HOULIHAN LOKEY

OVERûTHEûCOMPANY ûINCLUDINGû2USSIASû3BERBANKû4HEûLATTERûWASûLEFTû After tense negotiations, Odebrecht reached an agreement with


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ATûTHATûMOMENTû#OMPANIESûINûSIMILARûSITUATIONSûFAILEDûWHENûLONG PULLINGûINûTOTALûFEESûOFû53M
TERMûCONTRACTSûWEREûPULLEDûLEAVINGûTHEMûUNABLEûTOûSERVICEûDEBT Sandrine Bradley, Philip Scipio, Christopher Spink

IFR Awards 2018 International Financing Review 55


BANK FOR FINANCIAL INSTITUTIONS
Citigroup

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"ABEJ û#ITIGROUPSûGLOBALûHEADûOFûlNANCIALûINSTITUTIONS DEBTûANDûEQUITYûCAPITALûMARKETS

56 International Financing Review IFR Awards 2018


BANK FOR FINANCIAL INSTITUTIONS CITIGROUP

#ITIGROUPûISûONEûOFûTHEûBIGGESTûPLAYERSûINûALLûTHOSEûAREASû)Tû -2%,ûORûWHATEVER ûWEûCANûDOûITûxûITSûQUITEûAûSIMPLEûSTEPûTOû


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close to clients, and help them plan strategy. SECURITIESûATûTHEûSAMEûTIMEûITûWASûSELLINGûAûPORTFOLIOûOFûNON PERFORMINGû
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ANDûSTRUCTURINGûh3OûIFûTHEûANSWERûISûDOLLARSûORû4IERûûORûEUROSûORû Steve Slater, Gareth Gore

IFR Awards 2018 International Financing Review 57


BANK FOR GOVERNMENTS
HSBC

LOCAL
HEROES
&ORûITSûCOMMITMENTûTOûPUBLIC SECTORûCLIENTSûTHROUGHûGOODûTIMESûANDûBAD ûANDûFORûITSû
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EVENûASûOTHERSûPULLEDûBACK ADVISERûONûAûSERIESûOFûPUBLIC PRIVATEûPARTNERSHIPûPROJECTSû

58 International Financing Review IFR Awards 2018


BANK FOR GOVERNMENTS HSBC

INûTHEûHEALTHûANDûEDUCATIONûSECTORSû)TûWASûALSOûAûLEADûARRANGERûONûAû INFRASTRUCTURE FINANCE


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MAKEûTHISûWORKv Gareth Gore, Steve Slater

IFR Awards 2018 International Financing Review 59


BANK FOR FINANCIAL SPONSORS
Goldman Sachs

FAMILY
FORTUNES
7ITHûPRIVATEûEQUITYûANDûSTRATEGICûINVESTORSûFASTûGROWINGûINûIMPORTANCE û'OLDMANû
3ACHSûHASûSHOWNûITSûABILITYûTOûADAPTûANDûINNOVATEûTOûSERVEûITSûCLIENTSû&ORûITSû
NEVER ENDINGûINNOVATION ûBREADTHûOFûEXPERTISEûANDûCOMMITMENTûTOûTHEûINDUSTRY û
'OLDMANû3ACHSûISû)&2Sû"ANKûOFûTHEû9EARûFORû&INANCIALû3PONSORS

W
HENûYOUREûATûTHEûTOPûOFûYOURûGAME ûITSû ANDûBUILDINGûRELATIONSHIPSûWITHûMANAGEMENTûnûAFTERû
easy to become complacent. After a MANYûOFû'OLDMANSûRIVALSûHADûMOVEDûONûnûHASûHELPEDû
RECORD BREAKINGûYEARûINûûFORûITSû GENERATEûAûHUGEûAMOUNTûOFûANCILLARYûBUSINESSûFORûTHEû
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the Wendel family.
COVERAGE EXPANSION
)NûTHEûPASTûYEARûALONE û'OLDMANûHASûINCREASEDûITSû SELLSIDE DOMINANCE
COVERAGEûOFûSUCHûSPONSORûPORTFOLIOûCOMPANIESûBYûMOREû "UTûTHEûYEARûHASNTûJUSTûBEENûABOUTûDEEPENINGûITSûCLIENTû
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60 International Financing Review IFR Awards 2018


BANK FOR FINANCIAL SPONSORS GOLDMAN SACHS

IDEAS ûlNANCING ûADVISINGûANDûHELPINGûARRANGEûEXITSûFORûLONG RUNNINGû OPTIONûISûVERYûVALUABLEûTHEYûCOMEûIN ûTHEYûOWNûIT ûTHEREûISûNOûDISTRIBUTIONû


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BANKûnûSHOWINGûITSûCOMMITMENTûTOûCLIENTSûEVENûDURINGûTHEûMOSTû aBNû)0/ûINû/CTOBER
VOLATILEûPARTûOFûTHEûYEAR !NDûAFTERûANOTHERûBUMPERûYEAR ûTHEûTEAMûISûALREADYûSETTINGûITSû
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ACQUISITIONûnûWEûWORKûCOLLABORATIVELYûTOûGETûTHEûBESTûSOLUTIONûFORûTHEû BUILDûONûTHEûPROGRESSûITûHASûMADEûTHISûYEAR
CLIENT ûFULLûSTOP vûSAIDû-ASSûh4HEREûAREûTIMESûWHEREûTHEûPRIVATEûCREDITû Gareth Gore, Steve Slater

IFR Awards 2018 International Financing Review 61


SSAR ISSUER
Kingdom of Spain

SPANISH
STEPS
Labels are notably tricky to shake off, but in a year when echoes of the eurozone’s
peripheral crisis resonated loudly, the Kingdom of Spain successfully managed
to reposition itself. For executing one of the biggest European sovereign funding
programmes with flair, Spain is IFR’s SSAR Issuer of the Year.

2
018 started on a high note for the Spanish Spain’s net external debt-to-GDP has been on a
Tesoro. Fresh off a one-notch Fitch upgrade to downward path, dropping to 85.2% from 99% in 2015.
A– on January 19, it was straight out of the The private sector debt dynamics have also been
blocks with a new 10-year as it set out to tackle a moving in the right direction, going from 217.8% of GDP
€215bn gross borrowing programme. in 2010 to 156.4% now, below the 162% eurozone
That €10bn bond was no mean feat for the country’s average.
DEBTûMANAGEMENTûOFlCEû/NLYûAûFEWûMONTHSûBEFORE û Growth has also been healthy, hitting 2.5% – higher
Spain was suffering from political unrest as the central than the euro area rate of 2.1%. The country’s
government clashed with Catalonia over the region’s bid unemployment rate has also been coming down, to
for independence. 15.3% overall. While youth unemployment remains
But that political upheaval did little to deter investors. high, it has also fallen from 2013–14 when it was at 57%
Instead, they poured more than €43bn of demand into to below 35%.
the deal, the largest order book in the history of Spanish
government bond syndications and the second largest SAILING THROUGH THE STORM
book in the history of the European sovereign, But for all of the good economic work and ability to ride
supranational, agency and regional market. out the noise in Catalonia, it was an exogenous shock
That investors have such a fondness for the credit is that most threatened Spain in 2018.
not by chance but the result of structural reforms The storm clouds came from Italy: after the formation
undertaken by the government after it was granted a of a surprise government coalition between the Five Star
€100bn lifeline for its banks in 2012. Movement and the League, the spread between Italy’s
And indeed, Fitch was not the only rating agency to 10-year benchmark and Germany’s blew out.
reward Spain with an upgrade. Moody’s, S&P and DBRS From 113bp at the end of April, it hit 273bp in May
also upgraded the sovereign by one notch in 2018, WHENûCONCERNSûlRSTûmAREDûUPû)TûCONTINUEDûTOûWIDENûTOû
taking Spain’s ratings to Baa1/A–/A–/A. the low 300s as a spat between Italy and the European
“Spain’s investor base is changing as its credit Commission over the country’s budget showed no signs
improves,” said Pablo de Ramon-Laca Clausen, head of of going away.
funding and debt management at the treasury. And while Spain was to an extent buffeted by the
“Rating upgrades, especially the latest round of them, HEADWINDS ûITSûSPREADSûSTAYEDûRELATIVELYûlRMû)TSû YEARû
OPENEDûTHEûPROVERBIALûmOODGATESûTOûLARGEûPOOLSûOFû widened by 64bp versus Germany’s 10-year to 129bp at
savings that previously did not invest in Spain, namely the end of May, where it has since stabilised.
certain very high-quality Asian and European That stability came even though Spain that had to
institutional investors.” navigate its own political crisis after prime minister
The country has wind in its sails. “Spain is growing -ARIANOû2AJOYûWASûOUSTEDûFROMûOFlCEûINûEARLYû*UNEûAFTERû
faster than the eurozone average, with a consistent his party was implicated in a corruption scandal.
current account surplus,” de Ramon-Laca said. “It is true that Italian politics provoked some volatility
“Whatever else is happening, that fundamental fact in the SPGB market, but the market proved very resilient
ensures that Spain winds down its national debt, and was rapidly prepared to absorb new issuance in
provides more employment opportunities, reins in the early June,” said de Ramon-Laca.
GOVERNMENTSûDElCITûAND ûASûAûRESULTûOFûALLûTHIS ûIMPROVESû “The change in the Spanish government had no
INVESTORSûCONlDENCEûINûITSûCREDITv impact on the markets, and it did not change the

62 International Financing Review IFR Awards 2018


SSAR ISSUER KINGDOM OF SPAIN

Pablo de Ramon-Laca Clausen

Treasury’s plans either. It was a textbook example of how to do a This has allowed the Tesoro to tackle some trickier projects such
seamless political transition.” as the €6bn 30-year for which it received over €26.2bn of demand in
Just over three weeks after Rajoy’s ousting, Spain was back in the a year when duration has been a less prominent theme.
market with another 10-year benchmark albeit in smaller size – at “Spain has managed to extend duration, which is particularly
€7bn on demand of more than €24bn. important when, as an issuer, you have a large amount of funding to
4HEûDEALûPUTûTOûRESTûFEARSûTHATûVOLATILITYûWOULDûSPREADûLIKEûWILDlRE û do,” said Myriam Zapata, a director in the SSA DCM team at Credit
ALSOûGIVINGûTHEûMARKETûTHEûlRSTûGLIMPSEûINTOûINVESTORSûAPPETITEûFORû Agricole. “It’s what the taxpayer wants.”
peripheral Europe, although that is a label that de Ramon-Laca says )TSûõBNû YEARûINmATION LINKEDûISSUEûTHATûCAMEûINû3EPTEMBERûWASû
DOESûNOTûREmECTûINVESTORSûVIEW its longest in the format yet.
“Investors … trade in nuance and can spot an underrated “Spain is always trying to push the boundaries,” said Zapata.
investment when they see one,” he said. “The 15-year linker was impressive given that Spain is still a
“In 2018, those that have treated Spain as ‘periphery’ have missed newby in that market – they only started issuing linkers recently.”
out on a relative-value opportunity; our 10-year yield is now much 3PAINûBROUGHTûITSûlRSTûLINKERûINû-AYûûANDûHASûSINCEûISSUEDû
further below Italy than it is above Germany. The market seems to €22.5bn via syndications in the format.
be treating Spain like a semi-core credit, but … the market has
moved beyond these simple labels.” TOP OF THE CLASS
Spain has also proven a good student when it comes to paying back
TRANSPARENCY, PREDICTABILITY its European Stability Mechanism loans. A €3bn voluntary
Many praise the Tesoro’s transparent and predictable market repayment in September was the ninth by the country, taking
operations. When it comes to syndication, it uses the so-called early bird Spain’s outstanding debt to ESM down to €23.7bn from €41.3bn.
approach, whereby investors that submit orders before any indication The Spanish Tesoro has also made the most of the good times
of price is published obtain more bonds than if they had waited. under the European Central Bank’s Asset Purchase Programme.
“To have a critical mass when you go out with a deal helps with From a 4.07% average, its cost of debt has gone down to 2.47% while
execution risk,” said Alex Barnes, head of SSA syndicate at Citigroup. the average maturity has gone up from 6.2 years in 2013 to 7.5 years.
“Having achieved this, they want to maintain this. The De Ramon-Laca therefore expects the transition to a non-ECB
bookbuilding process for a sovereign can be complex but Spain is buying world to be smooth.
keen to be fair. They’ve been through the sovereign crisis and “We expect the impact of the end of net purchases to be limited,”
understand that times can get tough.” he said.
Spanish bonds also offer value when so little can be found in an “The reduction of net purchases has been done in a gradual
ECB-dominated world. fashion and disruption so far has been minimal. We are convinced
“The main factor behind Spain’s success in the bond market this that, as the Eurosystem gradually bows out of the Spanish debt
year is that our bonds offer strong value given their rating, which is market, other investors will gradually pour in.”
clearly on its way up,” said de Ramon-Laca. Helene Durand

IFR Awards 2018 International Financing Review 63


FINANCIAL ISSUER
Nordea

MOVING
ON UP
A sharp deterioration in conditions posed a major challenge to borrowers in 2018.
Nordea’s funding team had the additional hurdle of a strategic re-domiciliation to
Finland, but the bank’s ability to navigate the pitfalls with foresight and flair makes it
IFR’s Financial Issuer of the Year.

N
ordea proposed moving its headquarters into smallest coupon to date achieved for any European
the eurozone from Sweden in September Additional Tier 1 transaction in sterling, euros or US dollars.
2017, seeing the relocation to Finland as Despite pricing some 125bp through the next lowest euro
PLACINGûITûONûAûLEVELûPLAYINGûlELDûWITHû AT1 coupons, the deal pulled in more than €5bn of orders
European peers in a more predictable regulatory from over 380 investors and was trading up half a point by the
environment within the banking union. ENDûOFûTHATûWEEKû!Sû.ORDEASûlRSTûCAPITALûISSUANCEûFOLLOWINGû
)TûWASûTHEûlRSTûLARGEûLENDERûTOûRELOCATEûITSû its decision to relocate, the results bore out investors’ strong
HEADQUARTERSûOUTSIDEûOFûAûMERGERûh)TûWASûAûDElNINGû CONTINUEDûAPPETITEûANDûCONlDENCEûINûTHEûBANK
MOMENTûINûOURûBANKSûHISTORY vûSAIDû/LAû,ITTORIN ûHEADûOFû It came on the tail of an intricate consent solicitation
long-term funding at Nordea. targeting 14 tranches of outstanding capital
4HEûRE DOMICILIATIONûWASûCOMPLETEDûONû/CTOBERûû instruments, effecting technical amendments to those
2018, the culmination of a remarkably smooth process BONDSûTOûREmECTûTHEûMOVEûTOû&INLAND
in which the need to recalibrate Nordea’s liability stack The bank was eager for the consent solicitation, which also
in advance played a pivotal role. The bank also faced a updated subordination provisions to permit the issuance of
higher funding target than in 2017, demanding regular senior non-preferred, to complete before its AGM in March.
trips to the wholesale market. After some debate over the premium, it opted for 20 cents
Despite the complexities, Nordea managed to issue over 15 to strike the right balance with bondholders.
around €24.5bn across 13 benchmarks, about 350 taps In the event it achieved a more than 90% acceptance
ANDûPRIVATEûPLACEMENTS ûACROSSûSEVENûCURRENCIESûANDûlVEû rate, successfully eliminating documentation
PRODUCTSû/VERûTHATûPERIODûITûACHIEVEDûHISTORICALLYûTIGHTû uncertainty for investors ahead of the move. The results
pricing, reopened dormant markets and pioneered a also served as a springboard for the AT1 transaction,
new asset class for the Nordics. announced just one day later.
That success was rooted in extensive investor dialogue “It de-risked the AT1 because of the very strong support,”
to communicate clearly the implications of the Finnish said Littorin: “It was a conscious sequencing of two trades.”
move, which also helped Nordea retain its best-in-class
INVESTORûRELATIONSûPROlLE WINDOW SHOPPING
While ratings agencies deemed the move credit- As in the case of Nordea’s peers, 2018’s torrid
neutral – and the bank remained committed to investment backdrop forced its funding team to be ever
protecting its Double A ratings – it was “very important more nimble in its execution strategy. The fact that the
to keep our investors really informed”, said Petra Finnish move shortened its available issuance windows
Mellor, chief treasury manager and head of bank debt for internal reasons made that challenge even steeper.
at Nordea. “This year there were days when we stood down and
Members of the team conducted more than 500 others when we accelerated,” said Mellor. “Windows
meetings, an increase on the previous year’s 400, have opened quickly and shut quickly.”
spanning 30 different countries globally. Nordea was also shrewd in the way it interacted with
its advisers, tending to mandate deals relatively late in
SETTING THE BAR the process. That enabled it to continue bilateral
The bank started IFR’s awards period on a high, proving just discussions with individual banks for longer, particularly
how low investors were willing to go on November 21 2017 important in a year when views on pricing and
with its no-grow €750m 3.5% perp non-call 2025, the execution could vary wildly.

64 International Financing Review IFR Awards 2018


FINANCIAL ISSUER NORDEA

Ola Littorin

The bank’s inaugural US dollar-denominated senior non-preferred advantage of the growing acceptance of callable structures among
bond from August was a case in point. Though typically a quiet US buyers. Pricing just two weeks after the bank’s inaugural US
period for the market, Nordea spotted a window to front-run the dollar SNP, at 175bp over Treasuries, it came as much as 10bp
heavy competing supply that was expected, and indeed emerged, through where the bank would have priced a hypothetical shorter
following Labor Day. EUROû YEARûNON CALLûlVEûONûTHEûSAMEûDAY
Having checked investors were at their desks, it successfully
PRICEDûAû53BNûlVE YEARûDUAL TRANCHEûTRADEûTHATûWASûPRICEDûATûAû STRIKING THE BALANCE
negative new issue concession when compared with Nordea’s Nordea’s inaugural Green bond, sold in June 2017, fell outside IFR’s
outstanding senior curve. AWARDûPERIODû4HEûBANKûDID ûHOWEVER ûPUBLISHûITSûlRSTû'REENû"ONDû
The bank’s €1bn seven-year senior non-preferred issue in June was Impact Report in July 2018, showing its Green bond asset portfolio
THEûlRSTû3.0ûINûANYûCURRENCYûFROMû3WEDENûANDûFEATUREDûCONTRACTUALû more than doubled its volume to €1.7bn.
subordination to permit issuance ahead of the legal Away from the public market it was active in private placements,
IMPLEMENTATIONSûINû3WEDENûANDû&INLANDû)TûALSOûISSUEDûTHEûlRSTû placing €1.6bn of senior debt. It also successfully divested three non-
benchmark SNP in Norwegian kroner. performing loan portfolios to Nordic investors, triggering material
capital gains for the group.
NEW GROUND 4HEûBANKûCAMEûUNDERûSCRUTINYûINû/CTOBERûFOLLOWINGûALLEGATIONSûOFû
Nordea also excelled in the covered bond market, returning after a money laundering by investor Bill Browder. It is also facing a US
13-month absence to issue three tranches. probe over potential breaches of sanctions. But at the time of writing
Its €750m 15-year in February was the tightest in this tenor to-date – .ORDEAûHADûNOTûRECEIVEDûANYûlNESûORûSANCTIONS
part of a €2bn dual-tranche issue and IFR’s Covered Bond of the Year In its third-quarter report, the bank said: “The outcome of some
– while its €1bn seven-year in May reopened the covered bond sector investigations is pending and it cannot be excluded that these
after a period of volatility, setting the tone for the rest of the month. investigations could lead to criticism or sanctions.”
In the preferred senior segment, its €1bn four-year FRN was priced But those allegations should not detract from the funding team’s
at the tightest spread for any syndicated bond in this format since achievements, managing as it did the recalibration of its liability
THEûlNANCIALûCRISIS stack while also implementing a multi-billion issuance programme
7HILEû.ORDEAûDIVERSIlEDûINTOûMULTIPLEûCURRENCIES ûITSûLOCALû against a tempestuous backdrop.
investor base remained an important source of funding that offered Despite those challenges, the bank managed to lock in funding at
relative stability at times of stress in broader markets. It issued a competitive levels while balancing the objectives of investors and
combined €10bn-equivalent of domestic covered bond debt. regulators. Its bold reopening of markets and inauguration of senior
It also demonstrated considerable leadership and innovation across NON PREFERREDûBONDSûINûTHEû.ORDICSûALSOûINSTILLEDûCONlDENCEûINûMARKETSû
PRODUCTSûANDûMARKETSû&ORûEXAMPLE ûITSû.+RBNûlVE YEARû&2.ûCOVEREDû more broadly, as well as smoothing the way for other borrowers.
BONDûWASûTHEûlRSTûJOINTLYûSYNDICATEDûBENCHMARKûCOVEREDûINûTHISûCURRENCY û “We want to be a regular and very professional issuer,” said Mellor.
an approach that gave Nordea better control over price and size. “We want to be a leader in the market, pave the way for the market
)TûALSOûLANDEDûTHEû.ORDICûREGIONSûlRSTûEVERûCALLABLEû!2EGû3û and leave the market in a better place.”
Tier 2 bond in the Yankee market, a 15-year non-call 10 that took Alice Gledhill

IFR Awards 2018 International Financing Review 65


CORPORATE ISSUER
Bayer

IN FULL
BLOOM
Bayer’s US$66bn acquisition of Monsanto required an enormous fundraising effort
across asset classes. Each slice was market-defining, but the company’s deft strategy
meant that each was easily absorbed by an enthusiastic investor base. Bayer is IFR’s
Corporate Issuer of the Year.

M
OREûTHANûTWOûYEARSûOFûTOILûlNALLYûPAIDûOFFû of excess proceeds from selling shares in Covestro, a
for German drugmaker Bayer in June €3bn private placement, a €6bn rights issue, a US$15bn
when it completed a complex multi-stage US dollar bond issue, and a €5bn euro bond offering.
lNANCINGûTOûSUPPORTûITSû53BNû h%ACHûINDIVIDUALûPIECEûOFûTHEûlNANCINGûISûNOTABLE vû
acquisition of agrochemicals group Monsanto. said Frank Heitmann, a managing director covering
The acquisition was vast in its ambition, creating the German clients at Credit Suisse and previously head of
largest seeds producer and pesticides maker in the equity-linked at the time of the mandatory CB issue.
world. “They are some of the biggest trades of the year
Such a transformative M&A transaction – the largest across asset classes and the concurrent execution of
outbound acquisition by a German company and the the rights issue, euro and US dollar bond – as well as
largest all-cash deal ever – required an equally enormous the exchange offer – was a unique challenge. But
lNANCINGûEFFORT Bayer’s successful de-risking strategy made it a lot
"AYERSûSKILLûWASûINûPUTTINGûINûPLACEûAûmEXIBLEûFUNDINGû easier,” Heitmann said
package and constructively using the months waiting The mandatory issue in November 2016 was the
for regulatory approvals to make the back-end funding largest ever seen in Europe and the largest equity-linked
more manageable. trade globally since 2003, but only a downpayment on a
“We were managing the loan package to allow for any planned US$19bn of equity issuance.
uncertainty, including a friendly or hostile trade, a long Plastics-making subsidiary Covestro was listed in
period of regulatory approval and a change in the White /CTOBERû ûWITHû"AYERûRETAININGûAûSIGNIlCANTû
House,” said Lars Moeller, a director in debt capital shareholding that was sold over subsequent years. The
MARKETSûATû#REDITû3UISSE ûWHICHûWASûLEADûlNANCIALû last slice of Covestro was cleared in May 2018, just ahead
adviser and structuring bank for Bayer alongside Bank of OFûTHEû-ONSANTOûPURCHASEûCLOSING ûENDINGûAûSERIESûOFûlVEû
America Merrill Lynch. block trades and an exchangeable bond issue.
All this, and the sheer heft of the transaction, meant #OVESTROûCOMPLETEDûAûRESTRUCTUREDûALL PRIMARYû)0/ûINû
that bankers had to manage a good deal of risk. /CTOBERûûATûõûPERûSHAREû4HEûSTOCKûHADûDOUBLEDû
For starters, the acquisition facility backing the deal within 12 months and peaked at a close of €95 on
was a mammoth US$56.9bn – the third-largest corporate January 19 2018 – up 295%. The remarkable performance
loan of all time, split into a US$46.9bn bridge loan, a of the stock enabled Bayer to book €4.5bn of “excess
53BNûTHREE YEARûLOANûANDû53BNûlVE YEARûLOAN proceeds” across the €7.7bn of accelerated sales.
Although the loan closed in 2016, the underlying 4HEûSCALEûOFûTHEûlNANCINGûMEANTûALLûOPTIONSûWEREû
acquisition was completed in June 2018, making the considered from the outset and in April 2018 a €3bn
loan eligible for the IFR Awards this year. equity investment was secured from Singapore
sovereign wealth fund Temasek. The transaction was
TAKE ME OUT SIGNIlCANTûASûTHEûRIGHTSûISSUEûANDûBONDûlNANCINGûWOULDû
The loan was initially committed to by Bank of America follow regulatory approval and this 3.6% sale came
Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP BEFOREûTHATûCONlRMATIONû4HEûCOMPANYûALSOûHADNTû
Morgan, and was syndicated to a further 21 banks. The take- given Temasek any discount.
OUTûTHATûFOLLOWEDûWASûAûMASTERûCLASSûINûRElNANCINGûRISK “The Temasek investment came ahead of the
4HEûSERIESûOFûACQUISITIONûFACILITYûRElNANCINGûSTEPSû acquisition receiving regulatory approval but the at-
included: €4bn of mandatory convertible bonds, €4.5bn market placing of €3bn of equity gave the market

66 International Financing Review IFR Awards 2018


CORPORATE ISSUER BAYER

"AYERSûEQUITYûlNANCINGûSTRATEGYûTOû
protect its Triple B rating turned out to
be crucial for the bond execution.
“Having the equity in place meant
less ratings uncertainty, meaning more
pricing tension for the issuer,” Moeller
said. “The calibration of ratings was key
to the debt working.”
The US$15bn issue was the largest
bond Bayer had ever done, and included
a 30-year tranche – the longest Bayer
had ever issued.
The market gobbled it up, allowing
the company to pull in spreads by as
much as 20bp from initial talk through
the bookbuild.
That cropped the new issue
concessions down to 7bp–9bp – and all
that despite broader market volatility
sparked by fresh worries about a global
trade war.
Active leads BAML, Credit Suisse,
Goldman Sachs, HSBC, and JP Morgan
elected to market only via calls with
investors so they could reach as many
accounts as possible.
In total, bankers spoke with 225
investors over just three days, Moeller
said.
The sweat paid off, with demand
totalling US$45bn from 350 investors.

EURO SUCCESS
Bayer had similar success with the euro
leg, with investors pouring more than
FURTHERûCONlDENCE ûBOOSTINGûTHEûSHAREûPRICEûANDûHELPINGûWITHû €21bn of orders into the €5bn four-tranche outing.
de-risking the rights issue,” Heitmann said. Bankers used off-the-run maturities of 4.5, eight and 11.5-year
TENORSûANDûAûFOUR YEARûmOATERûTOûCOMPLEMENTûANDûSMOOTHû"AYERSû
REVIEW FINISHES MATURITYûPROlLEû"ARCLAYS û".0û0ARIBAS û#ITIGROUPûANDû#REDITû3UISSEû
Bayer and its banks moved quickly once the 21-month antitrust were the leads on the euro offering.
review came to an end, with the acquisition wrapped up at the start The company’s rights issue – the largest equity deal in EMEA of
of June and the bond issue and rights issue announced within a 2018 – ended days later with a take-up of 98.3%, with the remaining
fortnight. shares dribbled into the market over one day. The company had
Management was on the road selling the €6bn rights issue to many relationship banks to keep happy and took the unusual
investors at the same time as it embarked on a two-day US$20.75bn approach of naming all 20 banks involved as joint bookrunners –
bond sale extravaganza. giving them equal league table credit.
The company relied on the US market for the lion’s share of the The senior bookrunners, with underwriting of 11.49% each, were
volume, pricing a US$15bn eight-tranche US dollar bond offering. BAML, Credit Suisse, Goldman, HSBC and JP Morgan.
But the bond issue came with a twist for investors: it wasn’t Pricing was a relatively tight 20% discount to the theoretical ex-
registered with the SEC, and was one of the largest deals ever seen in RIGHTSûPRICEû7HILEûTHEûDEALûCOULDNTûHAVEûBEENûBETTERûmAGGED ûITSû
144A/Reg S format. scale meant there were some questions about whether pricing was
That format usually means that a premium is required, as the unnecessarily aggressive.
bonds may not be eligible to enter many bond indices. But it also Shares were trading below the €81 rights issue price within
means the issuer can sidestep the time-consuming process of two months, showing that the banks had borne real risk as
registering with the SEC. such a large acquisition comes with risk of delivering on the
Added to all of that, Bayer had not done a US dollar deal since promises and, in the case of Monsanto, potentially costly legal
2014, meaning it was an unfamiliar face for the market – albeit one liabilities.
with crucial rarity value. Eleanor Duncan, Owen Wild

IFR Awards 2018 International Financing Review 67


FINANCING PACKAGE
Refinitiv’s US$13.5bn loan and bond financing

CLOSE TO HOME
The loan and bond financing backing the carve-out of Refinitiv not only defined
2018, but seemed to hold the fate of the debt markets in the balance. For a successful
conclusion to a dramatic saga, the deal is IFR’s Financing Package of the Year.

M
UCHûHASûALREADYûBEENûWRITTENûABOUTû2ElNITIV û the size of the loans, reducing the bonds – and cutting the
the name that spawned 1,000 terrible puns YIELDûONûBOTHû4HISûSAVEDû2ElNITIVûMOREûTHANû53MûINû
(not least by IFR). The deal hung over the INTERESTûPAYMENTSûOVERûTHEûLIFEûOFûTHEûlNANCINGS
market from January until September in a “We surprised ourselves and the market [with] what
nerve-racking nine-month underwrite before it was WASûDO ABLEûINûTHEûMOSTûCOST EFlCIENTûWAY vû+AUFMANûSAID
SUCCESSFULLYûSYNDICATEDûINûWHATûPROVEDûTOûBEûAûmEETINGû The loans consisted of a US$6.5bn seven-year Term
WINDOWûOFûOPPORTUNITYûBEFOREûTHEûMARKETSûTURNEDûINû/CTOBER Loan B (originally US$5.5bn) and a US$2.75bn-equivalent
“It’s always better to be lucky than good,” said Jonathan euro-denominated Term Loan B (originally US$2.5bn).
Kaufman, the senior managing director who leads "OTHûTRANCHESûHADûANû/)$ûOFû ûCOMPAREDûWITHû
"LACKSTONESûDEBTûMARKETSûACTIVITIESûh7EûHADûTHEûBENElTûOFû guidance of 99–99.5 and traded well on the break.
timing and hitting a really good window when we brought The US dollar loan was priced at 375bp over Libor, inside
it to market in September given what then happened.” guidance of 400bp–425bp and the euro loan at 400bp over
4HEû53BNûLOANûANDûBONDûlNANCINGûBACKINGûAû Euribor, compared with original guidance of 425bp.
Blackstone-led consortium’s buyout of a 55% stake in The US$1.25bn senior secured bond was priced at
4HOMSONû2EUTERSûlNANCIALûDATAûANDûTECHNOLOGYûDIVISIONû 6.25%, compared with guidance of low 7%, while the
ANDûINCLUDINGû)&2 ûWASûTHEûBIGGESTûBUYOUTûlNANCINGû €860m senior secured bond was priced at 4.5%,
SINCEûTHEûlNANCIALûCRISIS ûANDûREDElNEDûMARKETûCAPACITYû compared with 5% area. Both bonds mature in May 2026.
7ITHûSUCHûAûHIGHûPROlLE ûITûWASûALSOûAûDEALûTHATûNONEû US$1.575bn of unsecured bonds were priced at 8.25%,
concerned could afford to get wrong. compared with initial talk in the low 9% area, and €365m
“When we were looking at it this time last year and of unsecured bonds were priced at 6.875%, compared with
pulling it together, we were talking about the art of the talk of around 7%. Those bonds mature in November 2026.
possible. Any deal of that size if it got hung would affect The loans are rated B2/B/BB, while the bonds are rated
risk appetite,” Kaufman said. B2/B/BB+ (secured tranches) and Caa2/B–/B+ (unsecured).
4HEûDEALûWASûMOREûTHANûlVEûYEARSûINûTHEûMAKINGûh)Tû 4HEûDEBTûlNANCINGûALSOûINCLUDESû53BNûOFûPREFERREDû
WASûlRSTûSTRUCTUREDûINûû7EûREVISITEDûITûINûûANDû equity, which has a 14.5% PIK coupon, plus a US$750m
took a proposal to Thomson Reuters’ management in revolving credit facility.
THEûSUMMERûOFûûTHATûLAIDûOUTûTHEûBENElTSûOFûJOININGû h7EûAREûVERYûEXCITEDûABOUTûTHEûFUTUREûOFû2ElNITIVû)TSû
forces. They thought it was a powerful proposal,” said an incredible business that we’re excited to own, invest
Martin Brand, a senior managing director at Blackstone in and accelerate,” Brand said.
and the man most responsible for the deal. Tessa Walsh
The transaction was also one of the year’s least
conventional buyouts and most challenging deals due to its
aggressive documentation.
#REDITûRESEARCHûlRMû#OVENANTû2EVIEWûSAIDûTHATû
2ElNITIVûHADûSOMEûOFûTHEûWEAKESTûINVESTORûPROTECTIONSû
SEENûSINCEûTHEûlNANCIALûCRISISûWITHûhDEFECTIVEvûSPONSOR
style covenants “riddled with loopholes”.
“We are aware of our reputation … and try to do the
right thing. But if the market is willing to lend with
CERTAINûmEXIBILITYûFORûOURûCOMPETITORS ûTHERESûNOûREASONû
why it would not be the same [for us],” Kaufman said.
The arranging banks timed the deal impeccably and a
cautious syndication strategy paid off as the US$5.5bn
unsecured bond bridge was sold in June and the debt
WASûPRE MARKETEDûINûORDERûTOûlNDûlRMûANCHORûORDERS
Bank of America Merrill Lynch was lead left on the loans
and JP Morgan was sole global coordinator on the bonds.
The syndication went smoothly as investors balanced
the need to play in a benchmark deal against Ebitda
adjustments and a credit story predicated on cost-cutting.
After a roadshow led by David Craig, the man who was
TOûBECOMEû2ElNITIVSû#%/ ûTHEûMOSTûENTHUSIASTICûDEMANDû
came from loan market investors – in the US in particular David Craig
– which allowed Blackstone to recut the deal by upping

68 International Financing Review IFR Awards 2018


US BOND HOUSE
Goldman Sachs

GAME-CHANGER
53ûINVESTMENT GRADEûBONDûVOLUMESûDROPPEDûFORûTHEûFIRSTûTIMEûINûEIGHTûYEARSûINûû
AFTERûTAXûREFORMûREDUCEDûTHEûNEEDûFORûSOMEûCOMPANIESûTOûBORROWû&ORûITSûSTRATEGYûOFû
FOCUSINGûONûITSû-!ûSTRENGTHSûTOûWINûHIGH GRADEûMARKETûSHAREûANDûFORûTACKLINGûSOMEû
TOUGHûHIGH YIELDûBONDûSTORIES û'OLDMANû3ACHSûISû)&2Sû53û"ONDû(OUSEûOFûTHEû9EAR

T
ax reforms announced in late 2017 meant ITSûAPPEALûWASûANûUNUSUALûDISCOUNTûOFFEREDûONûTHEûBONDSû
some of the biggest bond issuers in the WHENûTHEYûWEREûPRICED
technology and healthcare sectors had less 4HATûWASûINûRESPONSEûTOûPUSHBACKûBYûINVESTORSûONû
NEEDûTOûBORROWûTOûlNANCEûCAPEXûANDûSHAREû TRADITIONALûSPECIALûMANDATORYûREDEMPTIONûLANGUAGEûTOû
BUYBACKS ûASûTHEYûCOULDûREPATRIATEûOVERSEASûCASHûINSTEAD HELPûPROTECTûTHEIRûRETURNSûFROMûRISINGûRATES ûANDûWORRIESû
3Oû'OLDMANû3ACHSûDECIDEDûITûWOULDûLEVERAGEûITSû ABOUTûLOSSESûONûBONDSûINûTHEûEVENTûTHATûREGULATORSû
LEADINGûPOSITIONûASûANû-!ûADVISERûTOûWINûBONDû BLOCKEDû-!ûDEALS
MANDATESûFORûACQUISITIONûlNANCINGS ûWHICHûPICKEDûUPûINû 4OûHELPûADDRESSûSOMEûOFûTHOSEûSENSITIVITIES û#63ûBROKEû
ûFROMûPRIORûYEARûLEVELSû"UTûTHOSEûDEALSûWEREûNOTûTHEû WITHûTHEûTRADITIONûOFûPRICINGû-!ûBONDSûCLOSEûTOûPAR
EASIESTûTOûSELLûINûûASûTHEûCORPORATEûBONDûMARKETû h)TûWASûFELTûBYûTHEûBUYSIDEûTHATûTHISû;DISCOUNT=ûWASûAûMOVEû
came under strain amid weaker foreign demand, INûTHEûRIGHTûDIRECTIONû)TûWASûWELCOMEDûANDûITûLEDûTOûVERYû
NEGATIVEûRETURNS ûGEOPOLITICALûWORRIESûANDûRISINGûRATES STRONGûBOOKBUILDINGûACROSSûALLûTHEûTENORS vûSAIDû&INE
h7EûKNEWûGOINGûINTOûTHISûYEARûTHATûOURûOPPORTUNITYûSETû #63ûENDEDûUPûBREAKINGûRECORDSûWITHûTHEûBIGGESTûORDERû
WOULDûBEûINû-! ûANDûWEûHADûAûGAME PLANûTOûATTACKûASû BOOKûEVERûSEENûINûTHEû53ûDOLLARûHIGH GRADEûMARKET
much of that business as we could,” said Jonny Fine, head .OTûEVERYû-!ûDEALûTHATûFOLLOWEDûWASûASûWARMLYû
OFû!MERICASûINVESTMENT GRADEûSYNDICATEûATû'OLDMAN RECEIVEDû"UTû'OLDMANûDIDNTûPUTûALLûITSûEGGSûINûONEûBASKETûASû
The bank ranked number one in the US dollar bridge ITûWASûALSOûAûGO TOûADVISERûONûMANYûOFûTHEûYEARSûBANKûCAPITALû
LOANSûLEAGUEûTABLE ûANDûWASûAûBOOKRUNNERûONûlVEûOFûTHEû TRADESûnûANOTHERûSIGNIlCANTûDRIVERûOFûVOLUMESûINû
ûLARGESTû-!ûBONDûlNANCINGSûTHISûYEAR ûINCLUDINGûTHEû !MONGûTHEûHIGHEST PROlLEûBANKûDEALSûTHATû'OLDMANû
53BNûISSUEûTHATûlNANCEDûDRUGMAKERû"AYERSû HELPEDûLEADûWASûTHEûlRSTûSENIORûBAIL INûDEALûFROMû2OYALû
ACQUISITIONûOFû-ONSANTO "ANKûOFû#ANADAûAû YEARûISSUEûFROMû)NTESA ûWHICHûWASû
)TûWASûALSOûONEûOFûFOURûACTIVEûBOOKRUNNERSûONûTHEû THEûlRSTû9ANKEEûPUBLICûBENCHMARKûINûTHISûTENORûFROMûAû
53BNûBONDûISSUEûTHATûlNANCEDûTHEûACQUISITIONûOFû 3OUTHERNû%UROPEANûBANKûANDûAûDEBUTû53ûDOLLARûHOLDCOû
HEALTHûINSURERû!ETNAûBYûPHARMACYûCHAINû#63ûnûTHEû FROMû)RELANDSû!)"û'ROUP ûWHICHûWASûALSOûITSûlRSTûDOLLARû
largest bond deal of the year and one that was seen as a DEALûSINCEûTHEûlNANCIALûCRISIS
LITMUSûTESTûOFûRISKûAPPETITEûATûTHEûTIME !û53BNûDEBUTûISSUEûFROMû-ACAUûCASINOûOPERATORû
Getting it right was absolutely crucial as there were 3ANDSû#HINAûWASûANOTHERûONEûOFûITSûSTANDOUTûTRADES û
BILLIONSûMOREû-!ûBONDûDEALSûINûTHEûPIPELINE WHICHûAFTERûSOMEûWELLûTHOUGHT OUTûMARKETINGûENDEDûUPû
"IGû-!ûDEALSûMAYûHAVEûBEENûPOPULARûINûTHEûPAST ûBUTû BEINGûAûBLOWOUT
THEYûWEREûLESSûINûVOGUEûWITHûTHEûBUYSIDEûTHISûYEARû h)TSûONEûOFûTHEûMOSTûFASCINATINGûDEALSû)VEûEVERûWORKEDû
)NVESTORSûHAVEûGROWNûMOREûCAUTIOUSûABOUTûEXCESSIVEû ONû)TûWASûHARDûTOûGETûINVESTORSûTOûUNDERSTANDûTHEûSTORYû
LEVERAGE ûANDûPARTICULARLYûABOUTûTHEûENORMOUSûGROWTHûINû BECAUSEûTHERESûNOûGAMINGûINDUSTRYûINû53û)' vûSAIDû&INE
4RIPLEû"ûDEBTûTHATûNOWûACCOUNTSûFORûAROUNDûHALFûOFûTHEû "UTûTELLINGûTHEûSTORYûISûSOMETHINGû'OLDMANûDOESûWELL û
53TRNûHIGH GRADEûMARKET INCLUDINGûINûHIGH YIELDûnûWHEREûVOLUMESûALSOûFELLû
4HATûMADEûTHEûSUCCESSûOFûTHEû#63ûTRADE ûRATEDû"AA SIGNIlCANTLYûONûYEARûEARLIERûLEVELSûANDûWHEREûTHEûBANKû
""" ûEVENûMOREûNOTABLEû/NEûOFûTHEûTHINGSûTHATûHELPEDû HASûAûTOPûTHREEûSPOTûINû2ElNITIVûLEAGUEûTABLES
)TûWASûLEAD LEFTûONûAû53BN EQUIVALENTûBONDû
lNANCINGû++2SûBUYOUTûOFû"-#û3OFTWAREûnûTHEûlRSTûOFûFEWû
SIZEABLEû,"/ûlNANCINGSûTHATûPRICEDûINûLATEûSUMMERûONWARDS
)TûWASûAûBUSINESSûINVESTORSûALREADYûKNEWûUNDERûTHEû
OWNERSHIPûOFû"AINû#APITALûANDû'OLDENû'ATE ûANDûWHOSEû
BONDSûATûONEûPOINTûHADûFALLENûTOûTHEûLOWûSûONûCONCERNSû
ABOUTûMAINFRAMEûCOMPUTERSûANDûTHEûCOMPETITIONûTHEYû
FACEDûWITHûTHEûCLOUD
"UTû'OLDMANûMANAGEDûTOûREPOSITIONûTHEûCREDITûANDû
PRICEDûTHEû53BNûDOLLARûTRANCHEûATûPARûTOûYIELDû

h)TûWASûAûNON PERFECTûEXPERIENCEûOWNINGûTHEû
OUTSTANDINGûPAPER ûBUTûWEûBELIEVEDûINûTHEûSTORYûANDûWEû
RE EDUCATEDûTHEûMARKET vûSAIDû+EVINû3TERLING û'OLDMANSû
HEADûOFû53ûLEVERAGEDûlNANCEûCAPITALûMARKETS
Natalie Harrison

IFR Awards 2018 International Financing Review 69


US BOND AND NORTH AMERICA IG CORPORATE BOND
CVS Health’s US$40bn nine-tranche bond

TURNING POINT
I
TûWASûBIG ûBOLD ûCOMPLICATEDûnûANDûAû "ANKûOFû!MERICAû-ERRILLû,YNCH û"ARCLAYS û Each of the selected tranches would see
BLOWOUTûDEALû&ACINGûREGULATORYû 'OLDMANû3ACHSûANDû*0û-ORGANûWEREûACTIVEû #63ûBUYûBACKûTHEûBONDSûATûAûCASHûPRICEûOFû
CHALLENGES ûMARKETûVOLATILITY ûRISINGû BOOKRUNNERS ûUNDERûTHEû3-2ûCLAUSEûIFûTHEû!ETNAûDEALû
RATES ûANDûDOUBTFULûINVESTORS ûDRUGSTOREû h4HISûWASûTHEûlRSTûJUMBOûDEALûTOûBEûPRICINGû FAILED
CHAINû#63û(EALTHSû53BNûNINE PARTû INûAûCHOPPYûMARKETûENVIRONMENT ûWELLûINTOûAû )NVESTORSûCLAIMEDûTHEûMOVEûWASûAûBIGûWINû
JUMBOû53ûDOLLARûBONDûISSUEûTOûBACKûTHEû &EDûHIKINGûCYCLE vûSAIDû"ARBARAû-ARINIELLO û FORûTHEûBUYSIDE ûANDûSAIDûTHEYûEXPECTEDûITûTOû
ACQUISITIONûOFûHEALTHûINSURERû!ETNAûSETûAû HEADûOFû!MERICASûDEBTûCAPITALûMARKETSûATû BEûTHEûMOULDûFORûCOMPANIESûGOINGûFORWARD
RECORD ûAûPRECEDENTûFORûPRICING ûANDûWASûTHEû "ARCLAYSûh9OUûHADûAûLOTûOFûUNCERTAINTYûABOUTû “This was a way that we thought elegantly
53ûHIGH GRADEûMARKETSûTHIRDûBIGGESTûISSUEû whether you can get another one of these THREADEDûTHEûNEEDLE vûSAIDû-ARINIELLOû
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The order book reached US$120bn at one REDEMPTIONûCLAUSE ûWHICHûSETûAû )Nû/CTOBER ûTHEû$EPARTMENTûOFû*USTICEû
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offered a new model for healthcare, and OFFERûINVESTORSûAûDISCOUNTûONûSOMEûOFûTHEû %VENûWITHûTHEûTHREATûOFûAûTRADEûWARûANDû
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APPROVAL ûWITHûAûUNIQUEûCOMPENSATIONû )NVESTORSûHAILEDûITûASûAûBREAKTHROUGH ûWITHû #63ûBONDSûMANAGEDûTOûTRADEûINûTHEûSECONDARYû
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SOUTH BONDSûCLOSERûTOûPAR John Doran

YANKEE BOND
Bayer’s US$15bn eight-part bond

THE RIGHT MEDICINE


G
ERMANûPHARMACEUTICALûCOMPANYû 3ACHS û(3"# ûANDû*0û-ORGANûELECTEDûTOû h5SUALLY ûTHERESûAûBPûDIFFERENTIALû
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That was largely because the merger took BONDûINDICES ûANDûHADûTHEûPOTENTIALûTOû SPREADSûBYûASûMUCHûASûBPûFROMû)04Sû
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APPROVALûnûMAKINGûITûAûSUPREMELYûWELL "UTûFORû"AYER ûTHEûRISKûPAIDûOFF ûWITHû BPûINûNEWûISSUEûCONCESSIONSû-ATURITIESû
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SCREENS ûACTIVEûLEADSû"ANKûOFû!MERICAû !NDûTHEûLUREûOFûTHEûCREDITûMEANTû"AYERû WRAPPEDûUPûTHEûBONDûlNANCING
-ERRILLû,YNCH û#REDITû3UISSE û'OLDMANû DIDNTûNEEDûTOûPAYûUPûFORûTHEûPRIVILEGE Eleanor Duncan

70 International Financing Review IFR Awards 2018


CONFIDENCE EARNED.
#1 in Bloomberg All Bonds Peruvian League Table (2017 – 2018YTD)
#1 in Bloomberg All Bonds Chilean League Table (2018YTD)
#2 in Bloomberg Power & Utilities League Table (2014 – 2018YTD)
LQ%ORRPEHUJ3DFLœF$OOLDQFH/HDJXH7DEOH (2018YTD)*
*Based on number of transactions

Republic of Peru

PEN 10,350,000,000 US$1,500,000,000 US$680,000,000 US$370,000,000


Cash & Switch Tender Offer for Reopening of 7.000% 5.250% Senior Notes 5.600% Senior Notes
Multiple Bonds and New Bonos Senior Notes due 2047 due 2029 due 2028
Soberanos due 2029 6.000% Senior Notes due 2029

Global Coordinator, Initial Joint Bookrunner Joint Bookrunner Joint Bookrunner


Purchaser & Joint Dealer Manager
November 2018
November 2018 September 2018 October 2018 October 2018

Republic of Chile

US$2,000,000,000 US$500,000,000 US$500,000,000 CLP 1,050,000,000,000


6.500% Senior Notes 6.625% Senior Notes 7.500% Senior Notes 4.0% Bonos de la Tesoreria due 2023
due 2029 due 2026 due 2026 4.7% Bonos de la Tesoreria due 2030

Joint Bookrunner Joint Bookrunner Joint Bookrunner Joint Bookrunner

October 2018 October 2018 October 2018 June 2018

Cometa Energia

US$1,000,000,000 €346,132,000 US$860,000,000 US$200,000,000


US$3,680,917,000
4.875% Senior Notes Tender Offer for Multiple 6.375% Senior Notes 4.51% Private Placement
due 2028 Series of Bonds due 2035 Notes due 2028

Joint Bookrunner Joint Dealer Manager Joint Global Coordinator Sole Financial Advisor & Swap
Unwind Syndication Manager

June 2018 June 2018 April 2018 March 2018

US$300,000,000 US$550,000,000 US$600,000,000 US$600,000,000


6.250% Senior Notes 8.875% Subordinated Reopening & New Issue of 4.000% Senior Notes
due 2025 Perpetual Not es 5.875% Senior Notes due 2027 due 2025
7.375% Senior Notes due 2026 and Tender Offer Notes due 2021

Joint Bookrunner Joint Bookrunner Joint Bookrunner and Dealer Manager Joint Bookrunner

January 2018 November 2017


February 2018 February 2018 December 2017 November 2017

GLOBAL BANKING AND MARKETS A D V I S O RY S E R V I CE S • RISK MANAGEMENT • TRADING • F I N A N CI N G • R E S E A R CH

™ Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia

Nova Scotia is authorised by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the
extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorised by the UK Prudential Regulation Authority and regulated by
EURO BOND HOUSE AND EUROPE FINANCIAL BOND HOUSE
BNP Paribas

SMELLS LIKE
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72 International Financing Review IFR Awards 2018


EURO BOND HOUSE AND EUROPE FINANCIAL BOND HOUSE BNP PARIBAS

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nûTHEûFORMERûALSOûSTRADDLINGûCURRENCIES Philip Wright, Alice Gledhill

IFR Awards 2018 International Financing Review 73


EURO BOND AND EUROPE HIGH-YIELD BOND
Recordati’s €1.3bn dual-tranche bond

BEAUTIFULLY COMPLEX
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BUDGETûDRAMAû)TûACHIEVEDûTHISûDESPITEû THEûSHAREûPRICEûATûTHEûTIMEûOFûTHEûAGREEMENTû VINDICATEDûAS ûWHILEûTHEû"UND "40ûSPREADûDIDû
PRESENTINGûAûHIGHLYûCOMPLICATEDûSTRUCTUREû ANDûINûLINEûWITHû#6#SûDESIREûFORûAûLIMITEDû TIGHTENûAFTERû2ECORDATISûPRICING ûTHEûGAINSû
TOûANûINCREASINGLYûWARYûINVESTORûBASE STAKEû(OWEVER û)TALIANûVOLATILITYûPUSHEDûTHEû WEREûQUICKLYûLOSTûASûTHEûBATTLEûBETWEENû2OMEû
4HEûõMûSEVEN YEARûNON CALLûONEû shares near that mark when the deal was ANDû"RUSSELSûONLYûINTENSIlEDûTHEREAFTER
mOATERûANDûõMûSEVEN YEARûNON CALLû being executed, which meant uncertainty 4HEûDEALûISûPROMISINGûFORûCAPITALûMARKETSû
THREEûlXED RATEûNOTESûWEREûSOLDûTOûFUNDû AROUNDûTHEûCOMPANYSûFUTUREûOWNERSHIPû AHEAD
THEûPURCHASEûOFûAûûCONTROLLINGûSTAKEû STRUCTUREûANDûTHEûPOTENTIALûFORûFURTHERûDEBT “If we look at where the next stage for the
BYû#6# ûANûUNUSUALLYûLOWûSTAKEûFORûAû )NVESTORSûALSOûHADûTOûGRAPPLEûWITHûAû -!ûANDû,"/ RELATEDûVOLUMESûAREûGOINGûTOû
BUYOUT UNIQUEûPERMITTEDûSELL DOWNûCLAUSEûTOû BE ûSPONSORSûAREûLOOKINGûATûPUBLIC TO
The notes, while senior secured, were ACCOUNTûFORû#6#SûLIMITEDûOWNERSHIPûANDû PRIVATES vû4OOMEYûSAID
ISSUEDûBYûHOLDINGûCOMPANYû2OSSINI ûMAKINGû FACILITATEûITSûEVENTUALûEXITû!NOTHERû h7EVEûESSENTIALLYûCREATEDûAûNEWûPRODUCTû
THEMûRELIANTûONûDIVIDENDSûFROMûTHEû INNOVATIONûWASûTHEûHOLDINGûCOMPANYû This deal is being used as a case study by not
OPERATINGûCOMPANYû"UTûTHEûSTRUCTUREûALSOû mOATER ûGIVENûTHATûTHEûBUYERûBASEûFORûTHOSEû ONLYû#6#ûBUTûAûBROADûBRUSHûOFûOURûSPONSORû
INCLUDEDûõMûOFûSUBORDINATEDûNOTESû NOTESûOPTSûFORûPRIORITYûDEBT clients, who thought that the technology
ISSUEDûTOûTHEû2ECORDATIûFAMILY ûOUTSIDEûTHEû “With this one, the beauty is in the WASûEXTREMELYûINTERESTINGv
REACHûOFûCREDITORS ûBUTûlNANCEDûTHROUGHûTHEû COMPLEXITY vûSAIDû$IARMUIDû4OOMEY ûHEADûOFû Yoruk Bahceli

YEN BOND
Lloyds Banking Group’s ¥169bn triple-tranche Samurai

TLAC, TLAC, BOOM


"
OOMINGûDEMANDûFORûLOSS ABSORBINGû OVERSEASûBRANCHESûWOULDûLARGELYûESCAPEû 0RICINGûALSOûHELPED ûASûTHEûBANKûCHOSEûTOû
senior debt emerged as a key theme HIGHERûRISKûWEIGHTINGSûONûINVESTMENTSûINû PRIORITISEûSIZEûRATHERûTHANûTHEûTIGHTESTû
in the yen market in 2018, and Lloyds LOSS ABSORBINGûBONDS POSSIBLEûPRICE ûACCORDINGûTOûBANKERSûONûTHEû
"ANKINGû'ROUPûWASûATûTHEûFOREFRONTû Limiting the changes to bonds from global DEALû3TILL ûPRICINGûWASûCOMPETITIVEûCOMPAREDû
OFûTHEûTREND ûBRINGINGûTHEûlRSTûDEALûTOûDRAWûTHEû SYSTEMICALLYûIMPORTANTûBANKSûMEANTûLOSS WITHûITSûFUNDINGûOPTIONSûINû53ûDOLLARSûANDû
ATTENTIONûOFûREGIONALûBANKûINVESTORSûFOLLOWINGûAû absorbing senior debt from banks such as EUROSû4HEûlVE YEARûCAMEûmATûTOûORûINSIDEûITSû
CLARIlCATIONûOFûBANKûCAPITALûRULES ,LOYDSûnûWHICHûFOLLOWSûTHEû%5SûMINIMUMû FUNDINGûOPTIONSûINûTHEûTWOûCURRENCIES ûWHILEû
4HEû5+ûBANKSûTRIPLE TRANCHEûOFFERINGûINû requirement for own funds and eligible THEû YEARûWASûATûLEASTûBPûINSIDEûITSûNEWû
-AY ûSOLDûFROMûITSûHOLDINGûCOMPANYûTOû LIABILITIESû-2%, ûBUTûISûNOTûAû' 3)"ûnûWOULDû ISSUEûLEVELSûINûDOLLARSûANDûEUROS
COUNTûTOWARDSûTHEû%5SûDElNITIONûOFûTOTALû BEûTREATEDûTHEûSAMEûASûPREFERREDûSENIORûDEBT ,IFEûINSURERSûALSOûPARTICIPATED ûENABLINGû
LOSS ABSORBINGûCAPACITY ûKICKEDûOFFûAûRUNûOFû 4HEûIMPACTûOFûTHEûNOTICEûWASûCLEARû,LOYDSû ,LOYDSûTOûISSUEûAû YEARûTRANCHEûnûITSûLONGESTû
SIMILARûDEALSûASûOTHERûGLOBALûISSUERSûLINEDûUPû HADûISSUEDûHOLDCOûBONDSûINûYENûINû$ECEMBERû INûTHEû3AMURAIûMARKETûSINCEû
TOûTAPûAûNEWûGROUPûOFû*APANESEûBUYERS 2017, but raised a much more modest -ITSUBISHIû5&*û-ORGANû3TANLEY û-IZUHO û
,LOYDSûRAISEDûANûIMPRESSIVEûcBNû cBN ûSPLITûBETWEENûcBNûSIX YEARûANDû .OMURAûANDû3-"#û.IKKOûLEDûTHEûDEAL
53BN ûSPLITûBETWEENûcBNûû cBNû YEARûTRANCHESû)NûTHEû-AYûISSUE û The transaction had been closely watched
lVE YEAR ûcBNûû YEAR ûANDû regional banks and shinkin banks more than ASûAûLITMUSûTESTûOFûAPPETITEûFORûLOSS ABSORBINGû
cBNûû YEARûBONDSû4HEûSPREADSû DOUBLEDûTHEIRûALLOCATIONSûTOûcBNûANDûcBN û SENIORûDEALSûFOLLOWINGûTHEû&3!ûGUIDELINES ûANDû
OVERûYENûOFFER SIDEûSWAPSûWEREûBP ûBPû FROMûcBNûANDûcBN ûRESPECTIVELY ITSûSUCCESSûENCOURAGEDûSEVERALûOTHERûFOREIGNû
ANDûBP ûRESPECTIVELY ,LOYDSûSUCCESSûWASûNOûACCIDENTû4HEûBANKû BANKSûTOûFOLLOWûSUITûWITHû4,!# STYLEûDEALSûOFû
The deal was notable for the increased MAKESûAûPOINTûOFûVISITINGû*APANûTWICEûAûYEARû THEIRûOWNû#REDITû!GRICOLE û"0#% û".0û0ARIBAS û
PARTICIPATIONûOFûREGIONALûBUYERS ûINCLUDINGû TOûMEETûINVESTORSûANDûBROADENûITSûNAMEû (3"# û"ARCLAYS û3OCIETEû'ENERALE ûANDû5"3ûALLû
SEVERALûlRST TIMEûINVESTORSûINûLOSS ABSORBINGû recognition, and held roadshows in early FOLLOWEDûDURINGû)&2SûREVIEWûPERIOD ûTHEûLASTû
DEBT ûAFTERû*APANSû&INANCIALû3ERVICESû!GENCYû -AYûINû4OKYO û/SAKAûANDûINûTWOûOTHERû SIXûALLûRAISINGûMOREûTHANûcBNûEACH
CLARIlEDûTHATûDOMESTICûBANKSûWITHûNOû REGIONS Takahiro Okamoto

74 International Financing Review IFR Awards 2018


Global SRI Expertise:
A Decade of Ground-Breaking Deals
International Bank for
Reconstruction and Japan Railway Construction,
African Development Bank Development Transport and Technology Federal State of
Mitsui O.S.K. Lines, Ltd BPCE S.A. Mitsubishi Estate Co., Ltd Agency BPCE S.A. North Rhine-Westphalia
AUD ‘Industrialise CAD ‘Sustainable
JPY ‘Green Bond’ JPY ‘Social Samurai Bond’ JPY ‘Green Bond’ Africa Bond’ Development Bond’ JPY ‘Green Bond’ JPY ‘Social Samurai Bond’ EUR ‘Education Bond’
2018 2018 2018 2018 2018 2018 2018 2018

HANJIN INTERNATIONAL
CORPORATION

Japan Railway Construction, Development Bank of


Transport and Technology Landwirtschaftliche Bank Nederlandse Nederlandse Japan Inc Hanjin International African Development Bank
Agency Rentenbank Gemeenten WaterschapsBank N.V. Corporation BPCE S.A.
SEK ‘Renewable USD ‘DBJ Sustainability AUD ‘Industrialise
JPY ‘Green Bond’ Energy Bond’ USD ‘Sustainability Bond’ USD ‘Green Bond’ Bond’ USD ‘Green Bond’ Africa Bond’ JPY ‘Social Samurai Bond’
2017 2017 2017 2017 2017 2017 2017 2017

Development Bank of
Asian Development Bank African Development Bank Japan Inc
Banco Del Estado Chile Eurofima Japan International Central American Bank for
AUD, TRY, USD USD ‘Improve the quality Cooperation Agency Economic Integration Banco Del Estado Chile
USD “Environmentally of life for the people of USD ‘DBJ Sustainability
AUD ‘Women Bond’ ‘Green Bond’ Friendly Railway Bond” Africa Bond’ Bond’ JPY ‘JICA Social Bond’ ZAR ‘Green Bond’ JPY ‘Women Bond’
2017 2017 2017 2016 2016 2016 2016 2016

Nederlandse Inter-American
WaterschapsBank N.V. Corporación Crédit Agricole Corporate Crédit Agricole Corporate Japan International Development Bank
Andina de Fomento & Investment Bank Nacional Financiera SNC & Investment Bank Asian Development Bank Cooperation Agency
USD ‘Education, Youth, and
USD ‘Green Bond’ TRY, ZAR ‘Water Bond’ AUD, NZD ‘Green Bond’ USD ‘Green Bond’ TRY ‘Green Bond’ TRY ‘Water Bond’ JPY ‘JICA Bond’ Employment (EYE) Bond’
2016 2016 2016 2015 2015 2015 2014 2014

International Finance
Crédit Agricole Corporate International Finance Corporation African Development Bank Development Bank of European Investment Bank
& Investment Bank Corporation Rabobank Nederland Japan Inc Asian Development Bank
BRL ‘Banking on USD ‘Infrastructure for JPY ‘Climate
AUD, MXN ‘Green Bond’ BRL ‘Inclusive Bond’ Women Bond’ Africa Bond’ TRY, MXN ‘Agri Bond’ EUR ‘DBJ Green Bond’ Awareness Bond’ BRL ‘Water Bond’
2014 2014 2014 2014 2014 2014 2014 2014

International Finance International Finance


Crédit Agricole Corporate Corporation Facility for Immunisation Japan International International Finance
& Investment Bank Asian Development Bank Nordic Investment Bank Rabobank Nederland Cooperation Agency Corporation
AUD TRY ‘Banking on USD FRN
TRY ‘Green Bond’ BRL ‘Water Bond’ Women Bond’ BRL ‘Environmental Bond’ AUD, ZAR ‘Agri Bond’ Reg$/144A Bonds JPY ‘JICA Bond’ ZAR ‘Microfinance Bond’
2014 2014 2013 2013 2013 2013 2013 2013

International Finance
International Finance The Export-Import Corporation Japan International
Facility for Immunisation Rabobank Nederland Bank of Korea Cooperation Agency Rabobank Nederland Asian Development Bank The World Bank
TRY, ZAR
TRY, ZAR ‘Vaccine Bond’ AUD, ZAR ‘Agri Bond’ AUD, ZAR ‘Water Bond’ ‘Microfinance Bond’ JPY ‘JICA Bond’ TRY ‘Agri Bond’ TRY ‘Water Bond’ AUD ‘Green Bond’

2013 2013 2013 2012 2012 2012 2012 2012

Inter-American International Finance European Bank


Development Bank Japan International International Finance Corporation European Investment Bank for Reconstruction European Investment Bank
Nordic Investment Bank Cooperation Agency Facility for Immunisation and Development
BRL ‘Poverty ZAR, AUD TRY ‘Climate ZAR, AUD ‘Climate
ZAR ‘Environmental Bond’ Reduction Bond’ JPY ‘JICA Bond’ BRL ‘Vaccine Bond’ ‘Microfinance Bond’ Awareness Bond’ ZAR ‘Microfinance Bond’ Awareness Bond’
2011 2011 2011 2011 2010 2010 2010 2010

Inter-American International Finance


International Finance Development Bank International Finance Facility for Immunisation International Finance
Asian Development Bank Facility for Immunisation African Development Bank The World Bank Corporation The World Bank Facility for Immunisation
BRL ‘Poverty ZAR, AUD, NZD
ZAR, AUD ‘Water Bond’ ZAR ‘Vaccine Bond’ Reduction Bond’ ZAR ‘Education Bond’ NZD ‘Green Bond’ AUD ‘Microfinance Bond’ ‘Vaccine Bond’ USD ‘CO2-Linked Bond’ ZAR ‘Vaccine Bond’
2010 2010 2010 2010 2010 2009 2009 2008 2008

Daiwa Securities Group Inc. is listed on The Tokyo Stock Exchange and includes a number of firms as its subsidiaries, including Daiwa Securities Co. Ltd. and is regulated by Japan’s Financial
Services Agency. Its global subsidiaries are authorised to do business within their respective jurisdictions. These include: Daiwa Capital Markets Hong Kong Ltd. (Hong Kong), regulated by the Hong
Kong Securities and Futures Commission, Daiwa Capital Markets Europe Limited (London), authorised and regulated by the Financial Conduct Authority and a member of the London Stock Exchange,
and Daiwa Capital Markets America Inc. (New York), a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission, a futures commission merchant regulated by the U.S.
Commodity Futures Trading Commission, and a primary dealer in U.S. government securities. Daiwa Capital Markets America Inc. is a member of the Securities Investor Protection Corporation (SIPC).
YEN BOND HOUSE
Mizuho Securities

A VINTAGE YEAR
9ENûBONDûISSUANCEûREBOUNDEDûINûûASûGEOPOLITICALûTENSIONSûEASEDûANDûGLOBALû
ISSUERSûCAPITALISEDûONûBETTERûSWAPûRATESûANDûRISINGû*APANESEûRISKûAPPETITEû&ORûDOINGû
MOREûTHANûITSûPEERSûTOûCONNECTûISSUERSûANDûINVESTORS û-IZUHOû3ECURITIESûISû)&2Sû9ENû
"ONDû(OUSEûOFûTHEû9EAR

T
IGHTENINGûCURRENCYûBASISûSWAPS ûEASINGû -IZUHO ûTOGETHERûWITHû.OMURA ûHELPEDû"ANCOû
GEOPOLITICALûTENSIONSûBETWEENûTHEû53ûANDû 3ANTANDERûTOûMAKEûITSû3AMURAIûDEBUTûINû$ECEMBERû
.ORTHû+OREAûANDûCLARIlCATIONSûONûHOLDINGSû 2017, an encouraging signal for the yen market,
OFûLOSS ABSORBINGûBONDSûPROVIDEDûAûTRIOûOFû ESPECIALLYûSINCEûITûSOLDûSENIORûNON PREFERREDûBONDSû
tailwinds for the yen bond market in 2018, and RATHERûTHANûOLD STYLEûSENIORûBONDS
-IZUHOû3ECURITIESûWASûAHEADûOFûTHEûGAMEûONûALLûTHREEû 3INCEû û-IZUHOûHADûBEENûASSISTINGû3ANTANDERû
FRONTS GROUPûCOMPANIESûTOûSELLû0RO BONDS ûINCLUDINGû"ANCOû
&IVE YEARûDOLLARYENûBASISûSWAPSûTIGHTENEDûFROMûTHEû 3ANTANDERû#HILE û3ANTANDERû)NTERNATIONAL û3ANTANDERû
nBPûAREAûINûEARLYûûTOûAROUNDûnBPûDURINGû 5+ûANDû3ANTANDERû#ONSUMERû&INANCE
)&2SûREVIEWûPERIOD ûMAKINGûTHEûYENûMARKETûMOREû "AIL INûBONDSûWEREûmAVOURûOFûTHEûYEARûINû*APAN ûANDû
ATTRACTIVEûFORûFOREIGNûBORROWERS NINEûGLOBALûBANKSûmOCKEDûTOûTHEûYENûMARKETûTOûSELLû
*APANSû&INANCIALû3ERVICESû!GENCYûINû!PRILûPROVIDEDû THEIRûBAIL IN ABLEûBONDSûAFTERûTHEû&3!SûCLARIlCATION û
RELIEFûTOûMANYû*APANESEûREGIONALûBANKSûWITHû all of which drew enormous demand from regional
GUIDELINESûTHATûTHEIRûINVESTMENTSûINûBAIL INûBONDSû INVESTORS
FROMûOVERSEASûBANKSûWOULDûLARGELYûESCAPEûHIGHERûRISKû -IZUHOûHELPEDûBRINGûSEVENûOFûTHEûNINEûTOûMARKET û
WEIGHTINGSû-EANWHILEûONûTHEû+OREANûPENINSULA û NOTûJUSTûBYûACTINGûASûBOOKRUNNERûBUTûALSOûBYûKEEPINGû
GEOPOLITICALûTENSIONSûEASEDûAFTERûTHEûHISTORICûSUMMITû INVESTORSûUPDATEDûWITHûREGULARûRESEARCHûREPORTSûONû
BETWEENûTHEû53ûANDû.ORTHû+OREA how much each global bank needed to raise from
-IZUHOSûCONSTANTûENGAGEMENTûWITHûISSUERSûANDû BAIL INûBONDSûANDûTHEûLEGISLATIVEûPROGRESSûREGARDINGû
INVESTORSûMEANTûITûWASûBEST PLACEDûTOûCAPTUREûTHEûKEYû LOSS ABSORBINGûSECURITIESûINûEACHûCOUNTRY
DEALSûOFûTHEûYEARûWHENûTHEûTAILWINDSûSTARTEDûTOûBLOW )NûTHEûlRSTûTRADEûAFTERûTHEû&3!ûANNOUNCEMENT û
h3INCEûLASTûYEARûANDûEVENûTHEûYEARûBEFORE ûWEûHAVEû -IZUHOûHELPEDû,LOYDSûTOûSELLûLOSS ABSORBINGûSECURITIESû
BEENûPROACTIVELYûMAKINGûSALESûPITCHESûTOûISSUERSûANDû INûAûcBNû53BN ûTHREE PARTûDEALûTHATûWASûTHEû
PROVIDINGûINFORMATIONûTOûINVESTORS ûANDûTHESEûEFFORTSû BIGGESTûYENûOFFERINGûDURINGûTHEû)&2ûREVIEWûPERIODû
STARTEDûTOûBEARûFRUIT vûSAIDû-ASAYAû-IZOBUCHI ûHEADûOFû The deal attracted increased demand from regional
GLOBALûDEBTûCAPITALûMARKETSûATû-IZUHO INVESTORSûANDûSHOWEDûWHATûWASûPOSSIBLEûFORûNON
h7EûHAVEûALSOûASSISTEDûINVESTORûRELATIONSûWORKûAûLOTû PREFERREDûANDûREGULATORYûOFFERINGS
MOREûTHISûYEARûTHANûLASTûYEAR ûANDûTHISûSURELYûHELPEDû -IZUHOSûMETICULOUSûPREPARATIONSûONûTHISûDEALûANDû
TOûBRINGûINVESTORûFEEDBACKûANDûISSUERûNEEDSûTOGETHERv MANYûOTHERSûPRODUCEDûAûVINTAGEûYEAR ûASûITSûCOLLECTIONû
-IZUHOûSURPRISEDûOTHERûBANKSûBYûOPENINGûTHEûDOORû OFûKEYûMANDATESûHELPEDûITûSTANDûOUTûFROMûTHEûPACK
OFûTHEûYENûMARKETûFORû3OUTHERNû%UROPEANûISSUERSû !MONGûOTHERûDEALSûFROMûlNANCIALûISSUERS û-IZUHOû
ALSOûBROUGHTû5"3ûBACKûTOûTHEûYENûMARKETûAFTERûAû
YEARûABSENCE ûWITHûSIMILARûSUCCESS
)Nû*UNE û-IZUHOûREINTRODUCEDû%XPORT )MPORTû"ANKû
Masaya Mizobuchi
OFû+OREAûTOûTHEûYENûMARKET ûTAKINGûADVANTAGEûOFûTHEû
EASINGûOFûTENSIONSûONûTHEû+OREANûPENINSULAû)TSû
cBNûDUAL TRANCHEûDEALûCAMEûJUSTûAûFEWûDAYSûAFTERû
THEû53 .ORTHû+OREAûSUMMITûINû3INGAPOREû)NûORDERûFORû
the issuer to return to the Samurai market so swiftly,
-IZUHO ûWORKINGûWITHû$AIWA ûASSISTEDûWITHûAûNON
DEALûROADSHOWûINû&EBRUARY
+EXIMûSAWûTHEûTOTALûBOOKûREACHûCLOSEûTOûcBN û
ANDûITSûDEALûPAVEDûTHEûWAYûFORûYENûISSUESûFROMûOTHERû
3OUTHû+OREANûBORROWERS ûINCLUDINGûTWOûMOREû
3AMURAIûBONDSûVIAû-IZUHOûANDûOTHERûLEADS
-IZUHOûALSOûCONTINUEDûTHEûGROWTHûOFûGLOBALûYENû
BONDSûWITHûAûcBNûDEBUTûFORû53ûREALûESTATEûANDû
LOGISTICSûGROUPû0ROLOGISûINû3EPTEMBER ûANDûWASû
INVOLVEDûINûBRINGINGû#HINAû%ASTERNû!IRLINESûTOûTHEû
0RO BONDûMARKETûWITHûAûDEBUTûcBNûCREDIT ENHANCEDû
DEALûINû-ARCH
Takahiro Okamoto

76 International Financing Review IFR Awards 2018


STERLING BOND HOUSE
NatWest Markets

BUILDING MOMENTUM
7HILEûITûHASûBEENûONûSOMETHINGûOFûAûJOURNEYûOVERûTHEûPASTûFEWûYEARS û.AT7ESTû-ARKETSû
NEVERûTOOKûITSûEYEûOFFûTHEûBONDûBALLû)TûSTUCKûVALIANTLYûTOûTHEûTASKûINûHAND ûESPECIALLYûINû
ITSûHOMEûMARKETû.AT7ESTû-ARKETSûISû)&2Sû3TERLINGû"ONDû(OUSEûOFûTHEû9EAR

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"UTûVOLUMEûnûANDûTHEûRESULTINGûINCREASEDûMARKETûSHAREûnû "REXITûADDEDûFURTHERûCOMPLEXITY ûALTHOUGHû.AT7ESTûWASû
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linked bonds as a solution to the transitioning away from WEREûGOODûISSUINGûOPPORTUNITIES ûBUTûTHEREûWEREûALSOû
,IBORûTOûRISK FREEûRATES ûANDûNAILINGûDOWNûTHEûOPTIMALûSTRUCTUREû PERIODSûOFûGREATûVOLATILITYv
FORûINSURANCEûCOMPANIESû2ESTRICTEDû4IERûûISSUANCE h&ORûOURûPART ûWEûPUTûAûLOTûOFûWORKûIN vûSAIDû0EBERDYû
In the case of the former, NatWest was one of the banks h4HEREûWEREûNON DEALûROADSHOWS ûLENDERûDAYS ûANDû
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)NûTHEûCASEûOFûTHEûLATTER û.AT7ESTûHELPEDûSTRUCTUREû24û while the banking sector saw Santander issue an inaugural
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THEûABSOLUTEûCOREûOFûWHATûWEûDOv hybrid criteria change brought about tender offers from
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4HEûBANKûACHIEVEDûAûNUMBERûONEûPOSITIONûINûPUBLICû +OMMUNE+REDITûUNDERTOOKûAûTENDERûANDûSWITCHûOFFER
SECTORûISSUANCE ûFORûEXAMPLE ûINCREASINGûITSûMARKETûSHAREû !SûEVER ûARBITRAGEûANDûDIVERSIlCATIONûPLAYEDûTHEIRûPART û
DURINGûTHEûAWARDSûPERIODûBYûBP ûACCORDINGûTOû and NatWest was again to the fore with numerous
2ElNITIVûDATA ûTOûûFROMû TRANSACTIONSûFROMûOVERSEASûISSUERSûLOOKINGûFORûAûSTRONGû
PARTNER
)TûWASûNOTûPLAINûSAILINGûINûANYûMARKETûINû û
HOWEVER ûESPECIALLYûASûTHEûYEARûPROGRESSED
NatWest had no magic wand and found itself in the
UNENVIABLEûPOSITIONûOFûSHELVINGûTRADESûFROMû2#)û"ANQUEû
ANDû43"û"ANK ûTHEûLATTERûASû"REXITûHEADLINESûWROUGHTû
HAVOC ûANDûRELAUNCHûONEûFORû3OUTHERNû(OUSING
h.OûONEûLIKESûTOûPULLûAûTRANSACTIONûBUT ûEQUALLY ûIFûYOUû
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ABOUTûMAKINGûTHEûRIGHTûDECISIONv
.AT7ESTûDIDûJUSTûTHATûFORûTHEûMAINûPART ûANDûWASû
REWARDEDûWITHûANûIMPRESSIVEûROSTERûOFûBUSINESSûINûRETURNû
!NDûITûISûINûNOûMINDûFORûTHATûTOûCHANGEûh7EûAREû
AMBITIOUSûANDûVERYûMUCHûINûGROWTHûMODE vûSAIDû0EBERDY
Philip Wright

78 International Financing Review IFR Awards 2018


STERLING AND SSAR BOND
EIB’s £1bn five-year bond

SETTING THE BLUEPRINT


T
ACKLINGûTHEûCHALLENGESûPOSEDûBYûAû 4HEREûISûTHEREFOREûVERYûLITTLEûTIMEûLEFTûFORû aMûNEWûISSUEûRUNûTOûMAKEûSUREûEVERYTHINGû
POST ,IBORûWORLDûISûNOûMEANûFEAT û the market to make the transition to the new WORKED
BUTûTHEû%UROPEANû)NVESTMENTû"ANKû reference rate, which is set to become the 4HISûWASûFOLLOWEDûBYûAûWEEK LONGû
TOOKûAûBOLDûSTEPûINûûWHENûITû new benchmark not only for bonds, but also MARKETINGûPERIOD ûSTARTINGûWITHûTHEûDEALû
PRICEDûTHEûlRSTûEVERûBONDûLINKEDûTOûTHEû LOANSûANDûDERIVATIVESûMARKETS ANNOUNCEMENTûONû-ONDAYûANDûCULMINATINGû
NEWLYûREFORMEDûSTERLINGûOVERNIGHTûINDEXû Unlike Libor, which is determined by WITHûPRICINGûONû&RIDAY ûGIVINGûTHEûMARKETû
AVERAGEû3ONIA  bank quotes, Sonia is based on actual ENOUGHûTIMEûTOûPUTûTHEûlNALûTOUCHESûTOûTHEû
4HEûaBNûlVE YEARû&2.ûSETûTHEûBLUEPRINTû transactions and therefore harder to PREPARATIONS
for further issuance in the market, which MANIPULATE 4HEûSUPRANATIONALûPRINTEDûTHEûaBNû*UNEû
WENTûONûTOûGROWûTOûaBNûINûJUSTûOVERûFOURû 4HEûSUPRANATIONALûLEFTûLITTLEûTOûCHANCEûANDû ûATûBPûOVERû3ONIA ûINûLINEûWITHûINITIALû
MONTHS ûSPURRINGûNOTûJUSTûOTHERûPUBLIC STARTEDûWORKûONûTHEûPROJECTûINû!PRILûû PRICINGûTHOUGHTS ûANDûOFFERINGûAûBPû
SECTORûISSUERSûSUCHûASûTHEû7ORLDû"ANKûANDû 4HEû"ANKûOFû%NGLANDûISû3ONIASû PREMIUMûOVERû%)"Sû,IBORûCURVE
THEû!SIANû$EVELOPMENTû"ANKûBUTûALSOû ADMINISTRATORûANDûHASûOFFEREDûITSûSUPPORTûFORû %)"SûEFFORTûPAIDûOFFûHANDSOMELYûlNALû
lNANCIALûSECTORûBORROWERS ALLûINITIATIVESûTOûSTEPûAWAYûFROMû,IBOR û books for the trade were in excess of
!ûPREVIOUSûATTEMPTûINûûTOûOPENûTHEû INCLUDINGûTHEû%)"SûBOND aBN ûWITHûûINVESTORSûONBOARDû3INCEû
MARKETûDIDûNOTûGOûFAR ûASûONLYûAûFEWûINVESTORSû "EFOREûGOINGûLIVEûWITHûTHEûDEAL ûTHEûISSUERû THEN ûMOREûANDûMOREûBUYERSûHAVEûJOINEDûTHEû
COULDûSETTLEû3ONIA LINKEDûBONDS HADûTOûAMENDûTHEûDOCUMENTATIONûMULTIPLEû FRAY ûINCREASINGûTHEûINVESTORûBASEûTOûMOREû
(OWEVER ûTHISûTIMEûAROUND ûTHEûSTAKESû TIMESûANDûADJUSTûTHEûINDEXûCALCULATIONS THANû
WEREûHIGHERû,IBOR ûUSEDûTOûPRICEû )TûALSOûENGAGEDûWITHûTHEû"ANKûOFû%NGLAND û 4HEûINCREASEDûFAMILIARITYûWITHûTHEûPRODUCTû
53TRNûOFûlNANCIALûCONTRACTS ûWILLûBEû THEû&INANCIALû#ONDUCTû!UTHORITY ûWORKINGû also means marketing time has gone down,
PHASEDûOUTûCOMPLETELYûBYûTHEûENDûOFû û GROUPSûANDûINVESTORSûONûTHEûTOPIC reducing execution risk considerably and
after being undermined by a rigging &INALLY ûLEADûMANAGERSû(3"# û.AT7EST û PUTTINGûTHEûMARKETûINûGOODûSTEADûFORû
SCANDAL 2"#ûANDû4$û3ECURITIESûCONDUCTEDûAûDUMMYû Priscila Azevedo Rocha

SWISS FRANC BOND


Nestle’s SFr1.5bn dual-tranche bond

GO HOME AND GO BIG


N
ESTLEûMADEûAûRAREûAPPEARANCEûINûITSû While it is unusual to see that degree of $OUBLEû!ûRATEDûCORPORATE ûQUALIFYûASû(1,!û
domestic market, selling a tightening during the marketing of a Swiss ,EVELû
3&RBNûDUAL TRANCHEûSIXûANDû franc bond, the leads defended their !LLûTHEûOTHERûINVESTORûTYPESûTOOKûPARTûASû
YEARûBONDûTHATûEXEMPLIlEDûONEûOFû decision to do so, asserting that the wider WELL ûWITHûASSETûMANAGERS ûINSURERS ûPENSIONû
THEûMAJORûTHEMESûRUNNINGûTHROUGHûTHEûYEAR STARTINGûLEVELSûGRABBEDûTHEûATTENTIONûOFûTHEû FUNDSûANDûPRIVATEûBANKSûALLûPILINGûINû)Nû
Where 2017 had been a year of new MARKET ûGIVINGûTHEMûTHEûTRACTIONûTOûTIGHTEN total, there were around 125 orders for each
CORPORATEûNAMESûCOMINGûWITHûSMALLERûANDû 4HEûBOOKûCLOSEDûJUSTûSHYûOFû3&RBN ûWITHû TRANCHE
FREQUENTLYûLOWER RATEDûORûUNRATEDûDEALS û THEûSHORTERûBONDSûCLOCKINGûUPûAROUNDû 4HEûDEALûWASûHUGEûONûAûRELATIVEûBASIS û
2018 saw a resurgence of “national 3&RBNûOFûORDERS ûWHILEûTHEûLONGERû WITHûTHEû3&RMûSIX YEARûBEINGûTHEûBIGGESTû
CHAMPIONSvûnûHOUSEHOLDûNAMESûBRINGINGû TRANCHEûSAWûSOMEû3&RMûOFûINTEREST SINGLEûTRANCHEûINûAûCORPORATEûBONDûEVERûINû
BIG ûmASHYûTRADES &INALûNEWûISSUEûPREMIUMSûWEREûBPûANDû THEû3WISSûMARKET ûANDûTHEûFULLû3&RBNûTOTALû
.ESTLEûPRINTEDûONEûOFûTHEûBIGGESTûANDû BPûVERSUSûITSûLONGER ûLESSûLIQUIDûANDûOUTûOFû BEINGûTHEûLARGESTûDUAL TRANCHEûCORPORATEûINû
mASHIESTûDEALSûEVERûINûTHEû3WISSûFRANCû THEû53ûENTITY û3WISSûFRANCûCURVEû!GAINSTûITSû ATûLEASTûlVEûYEARS ûACCORDINGûTOûONEûLEADû
MARKETûINûEARLYû*UNE ûAFTERûSEVERALûWEEKSûOFû own euro secondaries, the bonds came OFlCIAL
MONITORINGûTHEûMARKET NEARLYûmATûTOûTHEûCURVE ûWHENûADJUSTEDûFORû )TûALSOûOSTENSIBLYûBEATûEARLYûSû
7ITHûANûINVESTORûLISTûREADINGûLIKEûAûv7HOSû CROSS CURRENCYûBASISûSWAPS 3&RBNû2OCHEûDEAL ûWHICHûHADûTHREEû
Who” of the Swiss market, the deal was "ANKûTREASURYûACCOUNTSûWEREûPARTICULARLYû TRANCHES ûALTHOUGHûONEûWASûAûhNEAR RATESû
LAUNCHEDûBEFOREûLUNCHTIMEûASûAû3&RMûSIX INTERESTEDûINûTHEûDEAL ûESPECIALLYûTHEûSHORTERû INSTRUMENTvû MONTHûNOTEûISSUE
YEARûATûSWAPSûPLUSûBPûANDûAû3&RMû YEARû TRANCHE ûOFûWHICHûTHEYûTOOKû ûPILINGû 4HEûTHREEûPOWERHOUSESûOFûTHEû3WISSûBONDû
ATûPLUSûBP ûBOTHûUPSIZEDûTOûNEARLYûDOUBLEû INTOûAûTOP QUALITYûCORPORATEûNAMEûGIVINGû MARKETûnû#REDITû3UISSE û5"3ûANDû:+"ûnûWEREû
THEûINITIALûINDICATEDûSIZEûANDûBPûINSIDEûTHEû BPnBPûOFûPICK UPûTOûTHEIRûUSUALûCOVEREDû JOINTûLEADûMANAGERS
WIDEûENDSûOFûINITIALûGUIDANCE FAREû"ONDSûFROMû.ESTLE ûASûITûISûAûDOMESTICû Jonathan Penner

IFR Awards 2018 International Financing Review 79


SWISS FRANC BOND HOUSE
UBS

TURNING OF THE TIDE


)TSûNOTûEASYûCHANGINGûTHEûCOURSEûOFûONEûOFûTHEûBIGGESTûBANKSûINûAûCOUNTRY ûBUTûWITHûITSû
STRONGûVISION ûLEADERSHIPûANDûINNOVATIVEûDEALS ûANDûITSûABILITYûTOûEATûAWAYûATûITSûGREATû
RIVALSûLEADINGûMARKETûPOSITION û5"3ûISû)&2Sû3WISSû&RANCû"ONDû(OUSEûOFûTHEû9EAR

F
ORûMANYûYEARSûITûHADûBEENûTHEûPOORûSECONDûINûTHEû "ANK ûSOLEûLEDûBYû5"3ûnûTHROUGHûAûSLEWûOFû3OUTHû+OREANû
3WISSûFRANCûBONDûMARKET ûBUTû5"3ûHASûlNALLYû ISSUES ûINCLUDINGûTHEûlRSTûCOMMERCIALûBANKûNAMEûFROMû
CAUGHTûUPûWITHûITSûLARGERûRIVAL ûATûTIMESûEVENû THEûCOUNTRYûWITHû+%"û(ANAû"ANKûINûMID !UGUST û5"3ûHASû
BEATINGûITûINûTHEûLEAGUEûTABLESûOVERûTHEûCOURSEûOFû been at the forefront of emerging markets issuance in
 ûDESPITEûAûREDUCEDûSYNDICATEûFUNCTIONû)NûTHEûEND û THEûFRANCûINû
#REDITû3UISSEûSNEAKEDûAHEADûINûTHEûLEAGUEûTABLEûBUTû5"3û 5"3ûALSOûBROUGHTûNEWûNAMESûTOûTHEûMARKET ûASûSOLEû
HADûTHEûMOREûIMPRESSIVEûSTORY LEADûFORû"ANORTEûANDû+OREAû7ATERû2ESOURCES ûASûWELLûASûAû
!ûDECADEûAGO û5"3ûHADûONLYûHALFûOFû#REDITû3UISSESû DEALûFORûRAREûISSUERû+OREAû'AS ûNOTûSEENûINûTHEûFRANCûSINCEû
MARKETûSHARE ûBUTûAûSTRONGûVISIONûANDûLONG TERMûPLANû 
FROMû-ANUELû'ADIENT ûHEADûOFûDEBTûCAPITALûMARKETSûANDû &IRMûFAVOURITESûWEREûALSOûWELLûREPRESENTED ûWITHû5"3û
SYNDICATEûFORû3WITZERLAND ûTURNEDûTHEûlRMûAROUND ONû'AZPROMSûLARGESTûEMERGINGûMARKETSûDEALûEVERûINûTHEû
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DEVELOPINGûTRADEûIDEASûBASEDûONûLEADûDEMAND ûANDû MARKETSûISSUANCEûINûTHEûMARKET
SUPPLEMENTINGûCONVICTIONûTRADESûWITHûHARDûUNDERWRITES &INANCIALûISSUANCEûPROVIDEDûAûSTEADYûSTREAMûOFû
)DENTIFYINGûTRENDSûFOCUSEDûONûCAPTURINGûANYûOPENû REVENUEûANDûHEADLINESûFORû5"3 ûWHICHûTOOKûAûLEADINGû
arbitrage windows to cater for international issuers, ROLEûONû#ANADIANûBANKûDEALS ûBOTHûSENIORûANDûCOVERED û
ESPECIALLYûTHOSEûFROMûEMERGINGûMARKETS ûANDûlNANCIALSû FROMû"-/ û#)"#ûANDû2"#
)TûALSOûINVOLVEDûCATERINGûTOûINCREASINGûINVESTORûDEMANDû )TûALSOûSOLE LEDûAû#REDITû!GRICOLEû(OMEû,OANû3&(û
FORûSHORTERûDURATION ûASûVOLATILITYûWASûHIGHû&INALLY ûANDû &RENCHûCOVERED ûANDûWASûINVOLVEDûINûTHEûREOPENINGûOFû
ARGUABLYûMOSTûIMPORTANTLY û5"3ûSPEARHEADEDûTHEûRETURNû THEû5+ûSECTORûWITHû"ARCLAYSûANDû,LOYDS
OFûNATIONALûCHAMPIONSûASûINVESTORSûWEREûPOINTEDûTOû $OMESTICALLY û5"3ûWASûAûJOINTûLEADûONûTHEû3WISSû,IFEû
HOUSEHOLDûNAMES DUAL TRANCHEûINSURANCEûHYBRIDûINû-ARCH ûANDûONû:URICHû
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HEûWASûhVERYûPLEASEDûWITHûTHEû3WISSûTEAM ûESPECIALLYûINû #ORPORATEûISSUANCEûWASûAûMAINSTAYûAGAIN ûWITHû5"3ûASû
THEIRûROLEûASûGLOBALûAMBASSADORSûFORûTHEû3WISSûFRANCv SOLEûLEADûONûSEVERALûOFûTHEûMOSTûINTERESTINGûDEALSûOFûTHEû
5"3ûWORKSûARGUABLYûMOREûCOLLABORATIVELYû YEAR ûINCLUDINGû4RANSURBANû1UEENSLANDûANDûDOMESTICû
THANû#REDITû3UISSE ûWITHûTHEûSYNDICATEû 3IKASû3&RMûTRIPLE TRANCHER
TEAMûUSINGûTHEûGLOBALû$#-ûGROUPû )TûWASûALSOûVERYûVISIBLEûONûSEVERALûHIGH YIELDûDEALS û
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'ADIENTûONû$#- û CHAMPIONSû/THERSûOFûAûSIMILARûILKûINCLUDEDû2OCHESû
the syndicate 3&RMûDUAL TRANCHEûOFFERINGûANDûDEALSûFROMû3CHINDLER û
team, led by 3WISSCOMûANDû'IVAUDAN
!NDREASû4OCCHIO û 5"3ûEVENûMANAGEDûTOûSLIPûINûAûLAST MINUTEûSURPRISEûINû
has only two MID .OVEMBER ûBRAVINGûSHAKYûMARKETSûTOûPRICEû
members, Florian 0ANALPINAû7ORLDû4RANSPORTû(OLDINGSû3&RMûûFOUR
(ESSELûANDû-AXû YEAR ûTHEûCOMPANYSûDEBUTûISSUEûANDûTHEûlRSTû4RIPLEû"û
7EIS ûHAVINGûLOSTû CORPORATEûINûALMOSTûAûMONTH
$OMINICû )TûWENTûWELLûENOUGHûTHATûITûSPARKEDûAûSMALLûmURRYûOFû
Wirtensohn announcements from similar names, including
EARLIERûINû ,AFARGE(OLCIMSûHYBRID ûALSOûJOINTûLEDûBYû5"3
&ROMûTHEûlRSTû ,AST ûBUTûCERTAINLYûNOTûLEAST û5"3ûREMAINEDûTHEû
%-ûDEALûOFûTHEû number one Swiss franc bond trading house, according
YEARûnûAû3&RMû TOû3)8 ûFORûTHEûSEVENTHûYEARûRUNNINGû!LTHOUGHûSEPARATEû
lVE YEARûFROMû FROMûSYNDICATEûANDûNEWûISSUES ûITûSERVESûANûIMPORTANTû
!BUû$HABIû ROLEûINûSUPPORTINGûCLIENTS
#OMMERCIALû Jonathan Penner

80 International Financing Review IFR Awards 2018


No 1 underwriter of SFr bonds*.
Excellence and
commitment since 1991.
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NICHE-MARKET BOND
World Bank’s A$110m two-year bond

OUT OF THE BLOCKS


F
EWûBONDSûOVERûTHEûDECADESûCANûCLAIMû In technological terms, the deal looks more #"!ûSECUREDûSOLE LEADûMANAGERûSTATUSû
AûPOTENTIALLYûREVOLUTIONARYûIMPACTû LIKELYûTOûBECOMEûTHEûPROTOTYPEûFORûTHEûBONDû thanks to its credible track record in the
ONûCAPITALûMARKETS ûBUTûTHEû7ORLDû MARKETSû&ACEBOOKûTHANûITSû-Y3PACE ûHELPINGû SPACE ûHAVINGûPREVIOUSLYûPUTûTOGETHERûANû
"ANKûANDû#OMMONWEALTHû"ANKûOFû USHERûINûREVOLUTIONARYûNEWûTOOLSûTHATûWILLûRESULTû EXPERIMENTALûCRYPTOBONDûFORû1UEENSLANDû
!USTRALIAûWONûTHATûRIGHTûWITHûTHEûWORLDSû INûGREATERûTRANSPARENCYûANDûMOREûEFlCIENCY 4REASURYû#ORPûINû*ANUARYûûUSINGûITSû
lRSTûPUBLICûOFFERINGûOFûBLOCKCHAINûBONDS 4HISûISûTHEûlRSTûTIMEûGLOBALLYûTHATûAûLEGALLYû CAPITALûMARKETSûBLOCKCHAINûPLATFORM
4HEû)NTERNATIONALû"ANKûFORû2ECONSTRUCTIONû binding bond issue has been created, The new bond does not fully embrace
ANDû$EVELOPMENTSû!Mû53M ûû allocated, transferred and managed solely BLOCKCHAINûTECHNOLOGY ûASûPAYMENTSûAREû
TWO YEARû+ANGAROOûMAYûBEûMODESTûINûSIZEûANDû USINGûDISTRIBUTEDûLEDGERûTECHNOLOGY MADEûVIAûTHEûEXISTINGû37)&4ûSYSTEMûTOûAVOIDû
SHORTûINûTENOR ûBUTûITSûIMPLICATIONSûCOULDûBEû 4HEû7ORLDû"ANKûGAVEûTWOûREASONSûFORû THEûû!USTRALIANûGOODSûANDûSERVICESûTAXûONû
HUGEûIFûTHEûGROUNDBREAKINGûTRADEûISûREPLICATEDû !USTRALIAûBECOMINGûTHEûVENUEûFORûITSûlRSTû lATûCURRENCY LINKEDûTOKENS
ANDûIMPROVEDûTOûESTABLISHûAûNEW ûMOREû BLOCKCHAINûISSUE h7EûAREûYETûTOûWORKûOUTûTHEûBENElTSûINû
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"LOCKCHAINûADVOCATESûEMPHASISEûTHEû COMMUNITYûHASûSHOWNûITSELFûTOûBEûRECEPTIVEûTOû FORûTHISûBONDûBUTûWEûHAVEûDEMONSTRATEDûTHEû
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"ANKûANDûSOLEûLEADûMANAGERû#"! EMBRACEûTHEûTECHNOLOGY John Weavers

EUROPE INVESTMENT-GRADE CORPORATE BOND


University of Cambridge’s £600m dual-tranche bond

TOP HONOURS
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DEBTûTOûFUNDûREVENUE GENERATINGûPROJECTS û h7EûWEREûTRYINGûTOûSOLVEûFORûTHEûUNKNOWNû LAUNCHINGûATûPLUSûBPûONûBOOKSûOFûaMû
ANDûTHISûDEALûWASûNOûDIFFERENT ANDûENCAPSULATEûTHATûINûAûBONDûDOCUMENT vû 4HEû#0)ûBONDS ûWHICHûPRINTEDûATûPLUSûBP û
It was the second bond sold to raise money for SAIDû#HARLOTTEû7EIR ûHEADûOFûCORPORATEû$#-û commanded slightly less attention, with
#AMBRIDGESûAMBITIOUSûNEWû.ORTHû7ESTûPROJECTû FORûTHEû5+ûANDû.ORTHERNû%UROPEûATû"ARCLAYS ORDERSûOFûaM
in the town, which will include accommodation h)TûWASûAûBIGûFACT lNDINGûMISSIONûFORûUSv h#AMBRIDGESûlRSTûTRANSACTIONûWASûAû
FORûSTAFFûANDûPOST GRADUATEûSTUDENTS 4HEûTHREE DAYûMARKETINGûEFFORTûINVOLVEDûAû SEMINALûMOMENT ûANDûOPENEDûTHEûmOODGATESû
"UTûTHISûTIMEûAROUND ûLEADSû"ARCLAYS û lot of leg work from leads to educate FORûUNIVERSITYûlNANCE vûSAIDû$ANIELû3HANE û
(3"#ûANDû-ORGANû3TANLEYûTAILOREDûTHEû INVESTORSûnûANDûTOûMAKEûSUREûTHATûTHEû MANAGINGûDIRECTORûATû-ORGANû3TANLEYûh4HISû
STRUCTUREûTOûDEALûWITHûFUTUREûINmATION ûWITHû INNOVATIVEûSTRUCTUREûWOULDNTûPUTûOFFûANYû DEALûWILLûALSOûBEûAûKEYûSTEPûTOûLOOKûBACKûONv
2OTHSCHILDûADVISING KEYûACCOUNTS Eleanor Duncan

82 International Financing Review IFR Awards 2018


NORTH AMERICA INVESTMENT-GRADE CORPORATE BOND HOUSE
Bank of America Merrill Lynch

EAT IT ALL UP
)NûAûYEARûDEFINEDûBYûVOLATILITYûFORûCORPORATEûISSUERS ûONEûBANKûNAVIGATEDûTHOSEû
CHALLENGESûEXPERTLYûWHILEûAVOIDINGûPITFALLSûANDûRACKINGûUPûTHEûMOSTûVOLUMEû"ANKû
OFû!MERICAû-ERRILLû,YNCHûISû)&2Sû.ORTHû!MERICAû)NVESTMENT 'RADEû#ORPORATEû"ONDû
(OUSEûOFûTHEû9EAR

I
TûWASNTûCLEARûTHATûTHEûlRSTûWEEKûOFû/CTOBERû 4HATûVOLUMEûINCLUDESûTHEûTHREEûLARGESTûTRADESûOFûTHEû
PROVIDEDûTHEûRIGHTûWINDOWûTOûANNOUNCEûAûJUMBOû YEARûnû#63 û#OMCASTûANDû#IGNAûnûASûWELLûASû9ANKEEûISSUESû
-!ûDEALûTOûFUNDû#OMCASTSûACQUISITIONûOFû"RITISHû FORûTHEûLIKESûOFû"ACARDI û3ANDSû#HINA û4ENCENTûANDû
PAY 46ûCOMPANYû3KY 6ODAFONE
4HEREûWEREûMURMURSûOFûVOLATILITYûRESULTINGûFROMû53 hûDEMONSTRATEDûHOWûDEEPûANDûLIQUIDûTHEûHIGH
#HINAûTRADEûTALKS ûTHEû YEARû4REASURYûRATEûWASûONûTHEû GRADEûBONDûMARKETSûAREûDESPITEûTHATûVOLUMESûAREûLIGHTERû
RISEûANDûELECTIONûRHETORICûWASûRAMPINGûUPû0ERHAPS û THANûTHEYûWEREûAûYEARûAGO vû+ARPûSAID
#OMCASTûSHOULDûWAIT "!-,ûRECOGNISEDûTHATûTECHûISSUANCEûWASûBOUNDûTOûTAKEû
"UTû"ANKûOFû!MERICAû-ERRILLû,YNCHûCONVINCEDû#OMCASTû a hit in 2018 because US tax reform allowed tech
TOûPUSHûFORWARDûASûTHEûMARKETûWASûCOMINGûOFFûTHEû COMPANIESûTOûUSEûOVERSEASûCASHûINûLIEUûOFûISSUINGûNEWû
HOTTESTûMONTHûOFûTHEûYEARûnû3EPTEMBERûSAWû53BNûINû DEBTû3UREûENOUGH û53ûINVESTMENTûGRADEûCORPORATEûTECHû
DEBTûDEALSûnûANDûSENTIMENTûCANûCHANGEûFAST ISSUANCEûFELLûûYEAR ONûYEARûINûûTOû53BN û
)TûWASûAûGOODûCALL ûASûINVESTORSûLINEDûUPûBEHINDûTHEû ACCORDINGûTOû)&2ûDATA
second largest deal of the year, swelling order books to The bank decided early on to focus on the food and
53BNûFORûTHEû53BNûTRANSACTION BEVERAGEûSECTORûASûAûGROWTHûAREAû)TûSERVEDûASûACTIVEû
4HEûMARKETûIMMEDIATELYûSOUREDûANDûNEVERûREALLYû BOOKRUNNERûFORû'ENERALû-ILLS û+EURIGû$Rû0EPPER û
RECOVEREDûTHROUGHûTOûTHEûYEAR ENDû4HEûFOLLOWINGûWEEK û #ONSTELLATIONû"RANDSûANDû.ESTLE
THEûBENCHMARKû YEARû4REASURYûRATEûCLIMBEDûTOûITSû "!-,ûEVENûHELPEDû#ONAGRAû"RANDSûISSUEûAûSEVEN PARTû
HIGHESTûLEVELûINûSEVENûYEARSûANDûTHENûTHEû$OWû*ONESû 53BNûBONDûDURINGûMID /CTOBERSûHYPER VOLATILEû
)NDUSTRIALû!VERAGEûDROPPEDûOVERûûPOINTSûONû/CTOBERû markets, which one syndicate banker coloured by
ûnûTHEûTHIRDûBIGGESTûONE DAYûFALLûONûRECORDûnûASû SAYINGûh)VEûNEVERûSEENûENûMASSEûSOûMANYûISSUERSû
0RESIDENTû$ONALDû4RUMPûLASHEDûOUT ûSAYINGûTHEû&EDERALû HOLDINGûOFFv
2ESERVEûHASûhGONEûCRAZYv 7ITHûTHEûEXCEPTIONûOFûTHEûTWOûLONGEST DATEDûTRANCHES û
h(ADûWEûTRIEDûTOûWAITûANDûTHREADûTHEûNEEDLEûTHROUGHûAû #ONAGRAûBONDSûHAVEûTRADEDûTIGHTERûORûONûPARûWITHû
MOREûPERFECTûMARKET ûINûHINDSIGHT ûTHATûWOULDûHAVEûBEENû PRICING
AûBIGûMISTAKE vûSAIDû!NDREWû+ARP ûMANAGINGûDIRECTORûATû h"EINGûABLEûTOûTALKûWITHûINVESTORSûABOUTûPRODUCTûINûAû
"!-, DYNAMICûSECTORûWASûIMPORTANTûANDûHAVINGûAûHOLISTICûVIEWû
)NûAûYEARûOFûDECLININGûISSUANCE û"!-,ûLEDûTHEûLEAGUEû OFûTHEûSPACE ûASûOPPOSEDûTOûANYûONEûINDIVIDUALûTRANSACTION û
TABLESûINûûWITHûNEARLYû53BNûINûCORPORATEûFUNDINGû WASûAûKEYûCOMPONENT vû+ARPûSAIDûh"EINGûONûSOûMANYûOFû
ACCUMULATEDûFORûITSûCLIENTSûANDûAûûMARKETûSHARE ûINû THOSEûTRADESûHELPEDûUSûGETûTHEûEXECUTIONûWEûDIDv
PARTûTHROUGHûTHEûORGANISATIONSûABILITYûTOûNAVIGATEû $ESPITEûTHISûVIEWûOFûTHEûSECTOR û"!-,ûDODGEDûAûBULLETû
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ACQUISITIONûOFû3NYDERS ,ANCEû4HEûDEALûENDEDûUPûBEINGû
ONEûOFûTHEûMOSTûDISASTROUSûTRADESûOFûTHEûYEAR
#AMPBELLûWASûDOWNGRADEDûTOûONEûNOTCHûABOVEûJUNKû
Andrew Karp FOLLOWINGûTHEûTRADEûASûSPREADSûONûITSû YEARûNOTESû
WIDENEDûMOREûTHANûBPûFROMûPRICING
"!-,ûWASûALSOûAMONGûTHEûBOOKRUNNERSû
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MORE vû+ARPûSAIDûOFûWHATûDElNEDûISSUANCEûTHISûYEARû
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MIGHTûNOTûBEûIDEALûINûORDERûTOûGETûTHEûBESTûEXECUTIONv
William Hoffman

IFR Awards 2018 International Financing Review 83


EUROPE INVESTMENT-GRADE CORPORATE BOND HOUSE
Societe Generale

GREY MATTER
)NûANûUNPREDICTABLEûYEAR ûONEûBANKûPICKEDûUPûMARKETûSHAREûBYûOFFERINGûCORPORATESû
ANûUNGLITZYûBUTûVITALûSOLUTIONûTOûTHEIRûPROBLEMSûCONSISTENCYû3OCIETEû'ENERALEûISû)&2Sû
%UROPEû)NVESTMENT 'RADEû#ORPORATEû"ONDû(OUSEûOFûTHEû9EAR

"
ANKERSûSELLINGû%UROPEANûHIGH GRADEûBONDSûWEREû COMPANYû!LLIANDERûWASûTHEûlRSTû%UROPEANûCOMPANYûTOû
lNALLYûGIVENûAûCHANCEûTOûDIFFERENTIATEûTHEMSELVESû conduct a liability management exercise and new issue
on execution in 2018, a year characterised by AFTERûTHEûRELAXATIONûINûRULESûRELATEDûTOûTHEûRElNANCINGûOFû
WIDERûSPREADSûANDûHIGHERûYIELDS HYBRIDSûWITHINûlVEûYEARSûOFûISSUANCEû"UTûTHATûWASûTOû
!NDû3OCIETEû'ENERALEûDIDûJUSTûTHAT ûEDGINGûUPûTHEû ADDRESSûAûBONDûOFFERINGûDUEûFORûCALLûINû.OVEMBERû
RANKSûFROMûlFTHûTOûSECONDûINûTHEûLEAGUEûTABLESûOVERûTHEû Telefonica targeted six notes stretching from 2018 to
AWARDSûPERIOD ûACCORDINGûTOû2ElNITIVûDATA ûWHICHû ûBOTHûTOûREDUCEûITSûCOSTûOFûHYBRIDûCAPITALûANDûPUSHû
ENCOMPASSESûEUROS ûSTERLINGûANDû3WISSûFRANCS OUTûMATURITIESûBYûANûAVERAGEûOFûûYEARS
)TSûCLIMBûUPûTHEûLEAGUEûTABLESûISûEVENûMOREûIMPRESSIVEû “Telefonica wanted to do the deal in a more holistic
CONSIDERINGûITûISNTûREALLYûAûPLAYERûINûTHEûLATTERûTWOû WAYûANDûBUYûBACKûLONGER DATEDûBONDS vûSAIDû#HERPION
CURRENCIES 3OCIETEû'ENERALEûADVISEDû4ELEFONICAûFROMûTHEûlRSTûDAYû
)TSûSALESûPITCHû$EPENDABILITYû)NûAûYEARûWHEREûTHREEûDEALSû THATû30ûANNOUNCEDûITSûCHANGEûINûMETHODOLOGY
WEREûPULLEDûINûTHEû%UROPEANûCORPORATEûCREDITûMARKET û !NDûTHEûISSUERûHITûTHEûMARKETûINûSIZE ûPRICINGûAû
3OCIETEû'ENERALEûDIDNTûHAVEûAûSINGLEûFAILEDûTRANSACTION õBNûDUAL TRANCHEûHYBRID
h4HISûYEARûPOSEDûSIGNIlCANTûCHALLENGES vûSAIDû !PPROACHINGûTHEûPRIMARYûMARKETûINû-ARCHûWASûNOû
$EMETRIOû3ALORIO ûTHEûBANKSûGLOBALûHEADûOFûDEBTûCAPITALû WALKûINûTHEûPARKû4ELEFONICAûWASûALSOûFACINGûTHEûDAUNTINGû
MARKETSûh7HENûCONDITIONSûWEREûCHOPPY ûEUROû TASKûOFûOPENINGûTHEûCORPORATEûHYBRIDûMARKETûAFTERûAûONE
SPECIALISTSûPREVAILEDû"UTûAMONGûTHEûBANKSûWHICHûWEREû MONTHûHIATUSûTHANKSûTOûBROADERûMARKETûVOLATILITY
FAVOUREDûTHISûYEARûBECAUSEûCONDITIONSûWEREûNOTûEASYûTOû “We were able to challenge the market norms from
READ ûWEûHAVEûDONEûBETTERv DIFFERENTûANGLES vûSAIDû#HERPION
/FûCOURSE ûINûORDERûTOûGETûTHISûAWARD ûAûBANKûHASûTOûBEû !NOTHERûEXAMPLEûOFûTHEûBANKSûSENSEûOFûTIMINGûWASûITSû
INVOLVEDûINûTHEûBIG HITTERSûTHEûmOWûDEALSûANDûTHEû-! APPROACHûTOû)TALIANûCREDITSûINûAûYEARûOFûALARMINGûPOLITICALû
RELATEDûTRADESûOFûTHEûYEAR HEADLINESûFROMûTHEûCOUNTRY
!NDû3'ûWAS ûLANDINGûTHEûPLUMûROLEûOFûGLOBALû !MIDûTHEûTURMOIL û3OCIETEû'ENERALEûWASûABLEûTOûlNDûAû
COORDINATORûONû3ANOlSûõBNûBUMPERûISSUEûINû-ARCHûnû WINDOWûFORûSUCHûBORROWERS ûANDûSCOOPEDûMANDATESûFORû
THEûLARGESTûCORPORATEûTRADEûOFûTHEûYEAR THREEûOUTûOFûFOURûOFûTHEû)TALIANûTRADESûPRICEDûFOLLOWINGû
"UTûWHEREûTHEû&RENCHûBANKûDISTINGUISHEDûITSELFûWASûINû THEûSTARTûOFû"40ûVOLATILITYûINû-AY
the trades where a little more 3NAM û)RENûANDû#.(û)NDUSTRIALûWEREûQUICKLYûUSHEREDû
BRAIN POWERûWASûREQUIRED INûTOûTHEûMARKETûINû3EPTEMBER ûDURINGûAûCOUPLEûOFûWEEKSû
h7EûWEREûINVOLVEDûINûTHEû OFûIMPROVEDûSENTIMENT
landmark deals of 2018, but 4HEûBANKSûNOSEûFORûOPPORTUNISTICûTIMINGûALSOûCAMEûINû
WEûALSOûDIDûTHEûGREY MATTERû HANDYûWHENûITûWASûLOOKINGûTOûHELPûRAREûISSUERSû3IEMENSû
TRADES vûSAIDû%RICû#HERPION û ANDû-ICHELINûACCESSûTHEûPUBLICûDEBTûMARKETS
head of global bond -ICHELINûTURNEDûTOû3OCIETEû'ENERALEûINû!UGUST ûWHENû
SYNDICATEûh)NNOVATIONûISûANû ITûWASûLOOKINGûTOûISSUEûDEBTûFORûTHEûlRSTûTIMEûSINCEû
IMPORTANTûPARTûOFûOURûSTORYû )TûWASûANûAMBITIOUSûTRADEûINûITSELFûAûõBNûTRIPLE
PROVIDINGûTAILOREDûSOLUTIONSû TRANCHEûOUTINGûTHATûINCLUDEDûAû YEARûLEGûATûAûTIMEû
FORûCLIENTSûANDûLEADERSHIPûINû WHENûINCREASEDûVOLATILITYûWASûDAMPENINGûRISKûAPPETITE
times of market stress with "UTûTHEûBORROWERûHITûTHEûMARKETûJUSTûATûAûTIMEûWHENû
ANûEXPERIENCEDûTEAMv BUYERSûWEREûHAPPYûTOûGOûLONGERûFORûSTRONGLYûRATEDû
NAMES ûANDûFOUNDûOVERûõBNûOFûORDERSûnûANDûAMPLEû
THE RIGHT CALL DEMANDûFORûTHEûûBOND
/NEûCASEûINûPOINTû4ELEFONICAû Siemens was another rare issuer for Societe Generale
3OCIETEû'ENERALEûHELPEDûTHEû TOûGUIDEûINû!UGUST ûWITHûITSûlRSTûDEALûSINCEû ûANDûTHEû
COMPANYûBECOMEûTHEûlRSTû lRSTûDEALûOFûOVERûõBNûSINCEûTHEûSUMMERSûVOLATILITY
ISSUERûTOûTAKEûADVANTAGEûOFûTHEû 4HEû'ERMANûCONGLOMERATEûISûTHEûPERFECTûEXAMPLEûOFû
CHANGEûINû30SûNEWûCRITERIAûONû 3OCIETEû'ENERALESûDOGGEDNESS
THEûRElNANCINGûOFûHYBRIDSû h7EûCOVEREDû3IEMENSûLIKEûAûmOWûISSUER ûEVENûTHOUGHû
that went beyond ITSûINCREDIBLYûRARE vû#HERPIONûSAIDûh7EûWOULDûCALLûTHEMû
addressing only EVERYûTWOûWEEKS ûSOûWHENûTHEYûWEREûREADYûTOûCOMEûBACKû
ûCALLûDATES TOûTHEûMARKET ûWEûWOULDûBEûREADYv
$UTCHûENERGYû Eleanor Duncan

84 International Financing Review IFR Awards 2018


NORTH AMERICA FINANCIAL BOND
Royal Bank of Canada’s US$1.8bn five-year bond

BETTER OFF
S
EVERALûBANKSûTURNEDûTOûTHEû53ûDOLLARû “There was heightened focus around #ANADASûISûMOREûINVESTOR FRIENDLYûBECAUSEû
market in 2018 to raise cash for whether or not the market would charge as OFûAûhNOûCREDITORûWORSEûOFFvûPOLICYû#ANADASû
REGULATORYûCAPITALûFORûTHEûlRSTûTIME û MUCHûASûITûHADûBEENûCHARGINGûTHEû%UROPEANû $EPOSITû)NSURANCEû#ORPûWILLûCOMPENSATEû
BUTûTHEû53BNûBAIL INûBONDûFROMû banks, who had been doing their debut INVESTORSûIFûTHEYûINCURûGREATERûLOSSESûTHANû
2OYALû"ANKûOFû#ANADAûSTOODûOUTûAMONGû BAIL INûDEALSûATûAROUNDûBPûTOûBPv UNDERûAûLIQUIDATIONûSCENARIOû"AIL INûDEBTû
THEMûALL 2"#ûSOLDûAû53MûlVE YEARûmOATING RATEû HOLDERSûWOULDûRANKûPARIûPASSUûWITHûDEPOSITORSû
4HEûINAUGURALûDEALûWASûTHEûlRSTûFROMûAû NOTEûISSUEûTHATûWASûPRICEDûATûTHREE MONTHû FORûTHEûPURPOSESûOFûTHEûLIQUIDITYûCALCULATION
#ANADIANûISSUERûINûTHEû53ûDOLLARûMARKET û ,IBORûPLUSûBP ûANDû53BNûOFûlVE YEARû h7EûHADûAûGOODûSTORYûTOûTELL vûSAIDû$AVIDû
and was announced shortly after the new lXED RATEûBONDSûPRICEDûATû4REASURIESûPLUSû 0OWER ûHEADûOFûTERMûFUNDINGûANDûCAPITALû
#ANADIANûBAIL INûREGIMEûCAMEûINTOûEFFECTûONû BP ûWHICHûWASûMUCHûTIGHTERûTHANûINITIALû MANAGEMENTûFORû2"#SûTREASURYûGROUP
3EPTEMBERû PRICEûTHOUGHTSûOFû4REASURIESûPLUSûLOWûS h"UTûWEûBECAMEûAûBITûALARMEDûINûOURûlRSTû
2"#ûHADûSOLDûAû#ANADIANûDOLLAR 4HEûlNALûPRICINGûINDICATEDûAûBAIL INû MEETINGSûINûTHEû53 ûASûINVESTORSûHADûCLEARLYû
DENOMINATEDûBAIL INûDEALûTHEûWEEKûPRIOR û PREMIUMûOFûJUSTûBP NOTûYETûUNDERSTOODûHOWûTHEû#ANADIANû
but it was the US dollar transaction that was h4HATûWASûBYûFARûTHEûTIGHTESTûPREMIUMû regime was differentiated from those of
REALLYûEXPECTEDûTOûSERVEûASûAûBENCHMARKûFORû COMPAREDûTOûSOMEûOFûITSûHIGH QUALITYûPEERSû OTHERûJURISDICTIONSv
PRICINGûINûOTHERûCURRENCIES INûOTHERûJURISDICTIONS vûSAIDû0ETERû!HERNE û )NûORDERûTOûGETûTHEûBUYSIDEûUPûTOûSPEED û
So getting the execution right really HEADûOFû.ORTHû!MERICAûCAPITALûMARKETSûATû 2"#ûRAMPEDûUPûEFFORTSûTOûMEETûWITHû
MATTERED #ITIGROUP INVESTORSûACROSSûTHEû53ûnûAûMOVEûTHATû
h/UTûOFûALLûTHEûNEWûBAIL INûREGIMES û "UTûITûWASNTûCLEARûTHATûKINDûOFûPRICINGûWASû ULTIMATELYûPAIDûOFF
#ANADAûWASûTHEûBIGûONEûBECAUSEûITSûTHEû ACHIEVABLEûFROMûTHEûGET GO ûASûBOTHûRATINGû "ANKûOFû!MERICAû-ERRILLû,YNCH û#ITIGROUP û
HIGHESTûQUALITYûJURISDICTIONûANDûITSûBANKSû AGENCIESûANDûINVESTORSûWEREûNOTûFULLYûAWAREû 'OLDMANû3ACHS û-ORGANû3TANLEYûANDû2OYALû
trade closest to US regional banks,” said OFûTHEûDISTINCTIONSûBETWEENûTHEû#ANADIANû "ANKûOFû#ANADAûWEREûBOOKRUNNERSûONûTHEû
,AURAû$RUMM ûHEADûOFû&)'û$#-ûFORû2"#ûINû BAIL INûFRAMEWORKûANDûTHOSEûINûOTHERû DEAL
.EWû9ORK COUNTRIES Natalie Harrison

EUROPE FINANCIAL BOND


Novo Banco’s €400m Tier 2 10-year bond

RESCUE ACT
I
NûAûYEARûOFûHISTORICALLYûTIGHTûPRINTSûITû THEûNEWûNOTESûRATEDû#AA### û)NûTHEû SEVERALûSECURITIESûBACKûFROMû.OVOû"ANCOûTOû
MAYûSEEMûCONTRARIANûTOûRECOGNISEû.OVOû EVENT ûTHOSEûINVESTORSûACCOUNTEDûFORû "%3ûINûLATEû
"ANCOSûõMûû YEARûNON CALLû õMûANDûNEWûMONEYûTHEûREMAININGû 4HEûOUTCOMEûMARKEDûAûPIVOTALûSTEPû
lVEû4IERûûBONDû)TûCARRIES ûAFTERûALL ûTHEû õM FORWARDûFORû.OVOû"ANCO ûPROVINGûITSûMARKETû
BIGGESTûCOUPONûOFûANYûPUBLICûEUROû The fact that more bonds were exchanged ACCESSûANDûIMPLYINGûINVESTORSûBOUGHTûINTOû
TRANSACTIONûSOLDûINûTHEûlNANCIALûSECTORûOVERû THANûTENDEREDûSHOWEDûTHATûINVESTORSûDIDûNOTû ITSûTURNAROUNDûSTORYûEVENûIFûTHEûBANKûISûFARû
THEûPERIOD NECESSARILYûWANTûTOûREDUCEûTHEIRûEXPOSURE û FROMûBEINGûOUTûOFûTHEûWOODSû$ESPITEûTHEû
"UTûTHATûCOUPONûISûTESTAMENTûTOûTHEû BUTûWANTEDûTOûUSEûTHEûOPPORTUNITYûTOûGETû WIDENINGûINûCREDITûSPREADS ûTHEûBONDSûAREû
EXECUTIONûRISKûINHERENTûINûONEûOFûSû ACCESSûTOûAûMOREûLIQUIDûSECURITYûANDûMOVEû BIDûTIGHTERûTHANûREOFFER ûATûANûûYIELD
MOSTûCHALLENGINGûANDûCOMPLEXûDEALSû4HISû DOWNûTHEûCAPITALûSTRUCTURE 4HEûDEALSûSUCCESSûALSOûREmECTSûTHEûISSUERSû
WASûNOTûJUSTûABOUTûCAPITALûOPTIMISATIONû )NûANûUNUSUALûTWIST ûBOOKRUNNERSû*0û PRACTICALITYûINûSWALLOWINGûTHEûPRICEûITû
HAVINGûNEAREDûRESOLUTIONûLASTûYEAR ûTHEûDEALû -ORGANûANDû-ORGANû3TANLEYûSETûAûMINIMUMû NEEDEDûTOûPAYûINûORDERûTOûAPPEASEûITSû
WASûINTEGRALûTOûTHEûBANKSûSURVIVAL YIELDûOFû ûAûSWEETENERûINûONEûOFûTHEû regulator and unlock the next stage of its
.OVOû"ANCOûWASûCARVEDûOUTûOFûFAILEDû TOUGHESTûISSUANCEûBACKDROPSûFORûYEARSûANDû RECOVERYûPROCESS
0ORTUGUESEûLENDERû"ANCOû%SPIRITOû3ANTOû OFFSETTINGûTHEûLIMITEDûPREMIUMûBUILTûINTOû 'IVENûTHEûDETERIORATIONûINûISSUANCEû
The bond was announced alongside a THEûLIABILITYûMANAGEMENTûEXERCISE CONDITIONSûOVERû ûTHEûDEALûLOOKSû
liability management exercise, together 4HEREûWASûNOûNEEDûTOûINmATEûTHEûYIELD ûNORû PARTICULARLYûTIMELYûINûHINDSIGHTû)TûALSOû
DESIGNEDûTOûSHOREûUPûCAPITALûANDûREDUCEû CALLûONûTHEûBACKSTOPûPROVIDEDûBYûTHEû PROVEDûTHEREûISûDEMANDûFORûSUB BENCHMARK û
THEûINTERESTûEXPENSEûOFûûOUTSTANDINGû 0ORTUGUESEû2ESOLUTIONû&UND ûAFTERûORDERSû LOW RATEDûPAPERûATûAûTIMEûWHENûTHEREûISûSTILLû
SECURITIES PASSEDûõMû4HATûWASûDESPITEûTHEûBOYCOTTû no shortage of struggling banks across
%XISTINGûBONDHOLDERSûWEREûINVITEDûTOû OFûVARIOUSûINVESTORSûWHOûSUFFEREDûLOSSESû %UROPE
tender their bonds for cash or switch into WHENûTHEû"ANKûOFû0ORTUGALûTRANSFERREDû Alice Gledhill

IFR Awards 2018 International Financing Review 85


NORTH AMERICA FINANCIAL BOND HOUSE
Citigroup

FLYING FIG
)NûAûYEARûWHENûBANKSûLOOKEDûTOûTHEû53ûDOLLARûBONDûMARKETûTOûSELLûDEBUTûCAPITALûDEALS û
ANDûFLATTERûYIELDûCURVESûANDûMARKETûVOLATILITYûSAWûBOTHûOPPORTUNITIESûANDûDISRUPTIONS û
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#ITIGROUPûWASûATûTHEûFOREFRONTûOFûALMOSTûALLûOFûTHEM û YEARS ûHAVINGûLASTûISSUEDûTHEûSECURITIESûINûûWHENûITû
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h(AVINGûONLYûONEûCALLûDATEûREDUCESûTHEûCOMPANYSû
mEXIBILITYû)TûSIGNALSûTOûINVESTORSûAûHIGHERûLIKELIHOODûOFû
THEûCALLûBEINGûEXERCISEDûGIVENûTHEûLOSSûOFûCAPITALûCREDITû
STARTINGûlVEûYEARSûBEFOREûTHEûlNALûMATURITYûDATEv
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STRUCTUREDû4IERûûINSTRUMENT û9ANKEEûISSUERSûSUCHûASû
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)TûTOOKûSEVERALûWEEKSûTOûGETûAPPROVALûFROMûTHEû&EDERALû
2ESERVEûINûORDERûTOûVERIFYûTHATûTHEûRESETûDIDNTûCONSTITUTEû
AûCOUPONûSTEP UP ûWHICHûWOULDûHAVEûDISQUALIlEDûITûFROMû
RECEIVINGû4IERûûCAPITALûTREATMENT
“It was only a US$500m trade but had a great deal of
FOCUSûBYûBOTHûREGULATORSûANDûTHEû3TREETû)TûWASûDONEûATûBANKû
LEVELûVERSUSûHOLDINGûCOMPANYûANDûWEûWEREûABLEûTOûMOVEû
PRICINGûINûSIGNIlCANTLYûnûBPûFROMû)04S vûSAIDû!HERNE
Natalie Harrison

86 International Financing Review IFR Awards 2018


COVERED BOND
Nordea Mortgage Bank’s €2bn dual-tranche bond

BEYOND THE OBVIOUS


T
HEûPASTûYEARûHASûBEENûAûPERIODûOFû BPûAREA ûWITHûBOOKSûCLOSINGûATûOVERûõBN 4HEûDUAL TRANCHEûAPPROACHûALLOWEDû
VOLATILITYûANDûREPRICING ûMARKET 4HEûõMû YEARûTRANCHEûWASûPRICEDûATû .ORDEAûTOûREAPûBANKûTREASURYûDEMANDûWITHû
MOVINGûTWEETSûANDûPULLEDûDEALS û BPûTHROUGHûSWAPS ûINSIDEûGUIDANCEûOFûPLUSû THEûlVE YEARûANDûYIELD SEEKINGûINSURERSûANDû
requiring issuers to be calculated BPûAREA ûWITHûBOOKSûOVERûõBN ASSETûMANAGERSûWITHûTHEû YEAR
YETûNIMBLEû4HISûAPPLIEDûEVENûTOûCOVEREDû 4HEûlVE YEARûTRANCHEûISûTHEûTIGHTESTûNON 4HEûDEALûWASûTHEûlRSTûBENCHMARKûCOVEREDû
BONDS ûOFTENûLABELLEDûBANKSûhRAINYûDAYvû 'ERMANûEUROûBENCHMARKûCOVEREDûBONDûOFû BONDûFROMû.ORDEASû&INNISHûARMûSINCEû
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ENVIRONMENTûBETTERûTHANû.ORDEAû-ORTGAGEû EVERûBENCHMARKûCOVEREDûINûTHATûPARTûOFûTHEû such large deals, but it wanted to take
"ANKSûRECORD SETTINGûõBNûDUAL TRANCHE û CURVEûnûANDûTHEûONLYûONEûTOûBEûPRICEDûINû MAXIMUMûADVANTAGEûOFûTHEûOPPORTUNITYûITû
lVEûANDû YEARûDEALûINû&EBRUARY NEGATIVEûTERRITORYû!SûSPREADSûWIDEN ûTHESEû HADûSPOTTED ûSAIDû,ITTORIN
h;=ûWASûVERYûBENIGN ûVERYûROSY ûITûWASû records are unlikely to be challenged any )TûWASûTIMEDûTOûAVOIDûTHEû*ANUARYûRUSHûANDû
VERYûEASYûTOûBEûANûISSUER vûSAIDû/LAû,ITTORIN û TIMEûSOON STILLûGETûOUTûAHEADûOFûEXPECTEDûWIDENINGûINû
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h"UTû;=ûWASûMOREûVOLATILE ûANDûWEû TOûAûCHANGEûOFûSTRATEGYû.ORDEAûOFFEREDû %#"ûREDUCEDûCOVEREDûBONDûPURCHASESû)TûWASû
EXPECTEDûTHATv SLIGHTLYûHIGHERûPREMIAûTHANûWASûTHEûNORMûINû ALSOûDONEûWELLûAHEADûOFû.ORDEASûHEADLINE
The deal was brought into a market that, THEûMARKETûATûTHEûTIMEû)TûSETûAûMOREû GRABBINGûRE DOMICILIATIONûFROMû3WEDENûTOû
AFTERûHEAVYû*ANUARYûSUPPLY ûHADûSTRUGGLEDû CONSENSUALûPRICINGûTEMPLATEûTHATûOTHERû &INLAND ûWHICHûWASûCOMPLETEDûONû/CTOBERû
WITHûBROADERûVOLATILITYûANDûINCREASEDû ISSUERSûWOULDûFOLLOW 0ETRAû-ELLOR ûCHIEFûTREASURYûMANAGERûATû
INVESTORûSELECTIVENESSû)TûWASûNOTûANûOBVIOUSû 4AKINGûADVANTAGEûOFûAûWINDOWûWITHû .ORDEAû"ANK ûSAIDûTHATûTOûSUCCEEDûINû û
WINDOWûANDûNOTûANûOBVIOUSûTRADE UNUSUALLYûHIGHûUNDERLYINGûSWAPûRATES ûTHEû ISSUERSûHADûTOûBEûTIMELY
,EADSû"ARCLAYS û#REDITû3UISSE û$EUTSCHEû ISSUERûWASûALSOûABLEûTOûOFFERûINVESTORSû “Windows shut as quickly as they
"ANK û.ATIXISûANDû.ORDEAûPRICEDûTHEû RELATIVELYûHIGHûCOUPONS ûOFûûANDû OPENED vûSHEûSAIDûh9OUûHADûTOûGOûONûAûDAY
õBNûlVE YEARûTRANCHEûATûBPûTHROUGHû  ûWHILEûSECURINGûTHOSEûRECORD SETTINGû BY DAYûBASISv
SWAPS ûTIGHTENEDûFROMûGUIDANCEûOFûMINUSû FUNDINGûLEVELSûFORûITSELFûINûSPREADûTERMS Tom Revell

SRI BOND
ING’s €2.6bn-equivalent dual-tranche bond

BREAKING THE BARRIERS


I
.'û'ROEPûSETûNEWûBENCHMARKSûFORû SAIDû6LADIMIRû-ITROI ûAû$#-ûBANKERûFOCUSINGû RAREûINûTHEûlNANCIALSûSENIORûMARKET ûEVENûINû
lNANCIALûISSUERSûINûTERMSûOFûSIZEûANDû ONûSTRUCTURINGû32)ûBONDSûATû).' COVEREDSûWHEREûBANKSûTENDûTOûEXTENDûEVENû
maturity with its Green holdco debut, h7HENûAûBANKûISSUESûAû YEARûBOND ûITSû FURTHERû4HEûPREVIOUSû YEARûSENIORûBANKû
WHILEûSTICKINGûlRMLYûTOûITSû CLEARûTHEûWEIGHTEDûAVERAGEûLIFEûOFûTHEû BENCHMARKûWASûFROMû#ITIGROUPûINû/CTOBERû
SUSTAINABILITYûPRINCIPLES PORTFOLIOûISûNOTûûYEARSû3OûITûISûMAKINGûAû 
4HEûOFFERINGûACHIEVEDûAûRAREûCOMBINATIONû PROMISEûTHATûTHISûPORTFOLIOûWILLûBEûDYNAMICû ING chose that maturity, rather than a
INûTHEû'REENûFORMATûFORûAûlNANCIALûISSUERûOFû and stick to the highest standards in terms MOREûCONVENTIONALû YEAR ûASûITûALREADYûHADû
DURATION ûCURRENCYûDIVERSIlCATIONûANDûSIZEû OFûALLOCATIONûANDûIMPACTûREPORTINGv TWOûûSENIORûBENCHMARKSûOUTSTANDINGû
VIAûAûõBNû YEARûBONDûTRANCHEûANDûAû ).'Sû'REENûBONDûFRAMEWORKûISûALIGNEDû 4HEûSCARCITYûVALUEûOFû YEARûPAPERûANDûGOODû
53BNûLONGûSEVEN YEARûTRANCHEûINûEARLYû WITHû)#-!û'REENûBONDûPRINCIPLESû)Tû DEMANDûFORûDURATIONûSUPPORTEDûTHEûDEAL
.OVEMBERû4HEûEUROûTRANCHEûWASûTHEû RECEIVEDûAûPOSITIVEûEVALUATIONûFROMû)33 4HEûAPPROACHûPAIDûOFFûASû).'ûTOOKû
longest in the single currency, while the OEKOMûANDûWASûPRE CERTIlEDûBYûTHEû#LIMATEû ADVANTAGEûOFûIMPROVEDûMARKETûCONDITIONSûTOû
dollar tranche was the biggest in that "ONDSû)NITIATIVE MOVEûPRICINGûFROMû)04SûBYûBPûONûTHEûEUROû
CURRENCYûFORûAû'REENûDEALûBYûAûlNANCIALû While ING has issued euro and US dollar TRANCHEûANDûBPûONûTHEûDOLLARûLEGû4HEû
INSTITUTION 'REENûBONDSûINûOPCOûSENIORûFORMATûVIAû).'û BONDSûOFFEREDûNEWûISSUEûPREMIUMSûOFû
4HEûBONDûPROCEEDSûWILLûFUNDû).'SûõBNû "ANK ûTHEûNEWûISSUESûFROMû).'û'ROEPûWEREû AROUNDûBPûANDûBPûRESPECTIVELY
ELIGIBLEû'REENûLOANûPORTFOLIO ûWHICHû ITSûlRSTûHOLDCOû'REENûBONDSû4HEûPROCEEDSû 4HEûLEADSûONûTHEûDEALûWEREû"ANKûOFû
includes loans relating to renewable energy WILLûGOûTOWARDSûMEETINGûTHEûBANKSû-2%,û !MERICAû-ERRILLû,YNCH û#REDITû!GRICOLE û
AROUNDûTHEûGLOBEûANDûENVIRONMENTALLYû ANDû4,!#ûREQUIREMENTS ûANDûFUNDûGROWTHûINû #REDITû3UISSE û).' û3%"ûANDû3TANDARDû
SOUNDûBUILDINGSûINûTHEû.ETHERLANDS ).'Sû'REENûASSETûPORTFOLIO #HARTEREDû4HEûBONDSûWEREûRATEDû
“The size of the deal and the size of the 4HEûDUAL TRANCHEûSTRATEGYûWASûSEENûASû "AA!n! 
'REENûPORTFOLIOûBACKINGûITûISûUNPARALLELED vû ESPECIALLYûAMBITIOUSû4HEû YEARûMATURITYûISû Robert Hogg

IFR Awards 2018 International Financing Review 87


SRI BOND HOUSE
Credit Agricole

STEERING THE WAY


4HEû32)ûMARKETûINûûWASûCHARACTERISEDûBYûSUBTLEûINNOVATIONSûFORû'REENûANDû
3USTAINABLEûBONDSû&ORûITSûLEADINGûROLEûINûFOCUSINGûONûNOVELûYETûROBUSTûINSTRUMENTSû
AMIDûAûSHIFTINGûLANDSCAPE û#REDITû!GRICOLEûISû)&2Sû32)û"ONDû(OUSEûOFûTHEû9EAR

I
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SOMEûOFûTHEûYEARSûMOSTûINNOVATIVEûTRANSACTIONSû BORROWERSûINûADOPTINGûTHEûFORMAT
!MONGûTHOSE ûAûUNIQUEûSTRUCTUREûFORû3OCIETEûDUû 4HEû&RENCHûBANKûHELPEDûBREAKûTHATûIMPASSEûWHENûITû
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ISûCHANGINGûTHEûBEHAVIOURûOFûBORROWERS COMPANYû$ANONESûõMûSEVEN YEARûSOCIALûBOND
3TATE OWNEDû3'0ûWASûSETûUPûTOûlNANCEûONEûOFû%UROPESû 4HEûBROADENINGûOFûTHEûINVESTORûBASEûFORû32)ûSECURITIESû
LARGESTûINFRASTRUCTUREûPROJECTS ûONEûTHATûWILLûSEEûTHEû HASûPROVIDEDûAûPLATFORMûFORûBORROWERSûTOûEXPANDûTHEIRû
OPENINGûOFûFOURûNEWûUNDERGROUNDûLINESûAROUNDû0ARISû)Tû ambitions when they can tie a Green framework to their
SOLDûAûõBNû/CTOBERûûBONDûISSUEûINûITSûDEBUTû BORROWINGûACTIVITIESû#REDITû!GRICOLEûPLAYEDûANû
TRADE IMPORTANTûROLEûFORûTWOûlNANCIALûISSUERSûnû).'ûANDû""6!û
3'0SûõBNûMEDIUMûTERMûNOTEûPROGRAMME ûWHICHû nûWHICHûACHIEVEDûRESULTSûTHATûCOULDûNOTûHAVEûBEENû
#REDITû!GRICOLEûWORKEDûONûASûAûJOINTûGLOBALûCOORDINATOR û ACHIEVEDûWITHOUTûTHEûBACKINGûOFû32)ûACCOUNTS
ISûTHEûlRSTûOFûITSûTYPEûTOûBEûENTIRELYû'REEN ).'ûISSUEDû'REENûBONDSûFORûTHEûlRSTûTIMEûVIAûITSû
h4HEûDIFlCULTYûWASûNOTûSOûMUCHûINûBUILDINGûTHEû HOLDCOûANDûBROKEûRECORDSûALONGûTHEûWAYû4HEûDUAL
PROGRAMMEûBUTûMAKINGûTHEûCOMMITMENTûFORûTHEû currency offering, backed by documentation that one
COMINGûYEARSûANDûCONVINCINGûTHEMûOFûTHEûVALUEûOFûTHEû BANKERûAWAYûFROMûTHEûDEALûCALLEDûhBEST IN CLASSv û
ROUTE vûSAIDû4ANGUYû#LAQUIN ûHEADûOFûSUSTAINABLEûBANKINGû INCLUDEDûAûõBNû YEARûTRANCHEûTHATûWASûTHEûLONGESTû
ATû#REDITû!GRICOLEûh4HISûWASûAûLEAPûFORWARDûASû3'0ûCANû HOLDCOûOFFERINGûINûTHEûSINGLEûCURRENCY ûANDûAû53BNû
MAKEûTHEûCLAIMûTOûBEûTHEûlRSTûPURELYû'REENûISSUERv note tranche was the biggest in that currency for a
!SûTHEû32)ûFOOTPRINTûHASûEXPANDED ûSOûHAVEûVOICESû 'REENûDEALûBYûAûlNANCIALûINSTITUTION
GROWNûLOUDERûINûOFFERINGûOPINIONSûONûWHATûCONSTITUTESûAû ""6!ûALSOûCREATEDûAûMILESTONEûASûITûOPENEDûUPûTHEû
3USTAINABILITYûBOND 3PANISHû'REENûMARKETûFORûTHEûCOUNTRYSûBANKSûINû-AYû)TSû
%FFORTSûHAVEûBEENû õBNûSENIORûNON PREFERREDûWASûTHEûLARGESTû'REENûBONDû
MADEûTOûDEVELOPû ISSUEûATûTHEûTIMEûFROMûAûEUROZONEûBANKû!SûWELLûASû
DElNITIONS ûWITHûSOMEû ACHIEVINGûSIZE ûTHEûLENDERûALSOûPAIDûNOûNEWûISSUEû
ISSUERSûPRINTINGûBONDSû PREMIUM
BASEDûONûTHEû5.Sû .ATURALLYûWITHûAûGLOBALûPRODUCT û32)ûREQUIRESûAûBANKûTOû
Sustainable LOOKûBEYONDûITSûBORDERSû)SSUERSûRUSHEDûOUTûOFûTHEûBLOCKSû
$EVELOPMENTû'OALSû INû!SIA 0ACIlC ûASûBORROWERSûLINEDûUPûTOûSATEûFAST GROWINGû
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h4HEûDElNITIONSûOFû #REDITû!GRICOLEûPLAYEDûITSûPARTûINûTHATûGROWTH û
THEû3$'SûAREûTOOûWIDEû PARTICULARLYûINûTHEûGROWINGûSCENEûINû3OUTHû+OREA
and some are 'OVERNMENT OWNEDû)NDUSTRIALû"ANKûOFû+OREAûPRINTEDû
contradictory,” said THEûlRSTû3OCIALûBONDûFROMûAû3OUTHû+OREANûISSUERûWITHûAû
#LAQUINûh)TSûTOUGHûFORû 53MûmOATERûINû*ULYûANDû+OOKMINû"ANKûBECAMEûTHEû
INVESTORSûWHOûCANûENDû lRSTûlNANCIALûISSUERûTOûENTERûTHEûSOCIALûMARKET ûWITHûAû
UPûINCLUDINGûASSETSû 53MûTHREE YEAR
which can be #REDITû!GRICOLEûWASûAûJOINTûBOOKRUNNERûFORûBOTH
CONTRADICTORYû)TSûAû 4HEûDEVELOPMENTûOFûTHEûSOVEREIGNû32)ûMARKETûHASû
blurred message, when BEENûMOREûOFûAûSLOW BURNERûASûBANKSûTACKLEûGREATERû
the success of this BUREAUCRACYûANDûNEBULOUSûDECISION MAKINGûPROCESSESû
market has been based .ONETHELESS û#REDITû!GRICOLEûSUPPORTEDûTHEû+INGDOMûOFû
ONûCLARITYv "ELGIUMûASûITûJOINEDûTHEûRANKSûOFûSOVEREIGNSûTOûSELLû'REENû
#REDITû!GRICOLEû BONDS
coordinated the #REDITû!GRICOLEûALSOûWONûIMPORTANTûREPEATûBUSINESSû
WORKINGûGROUPûTHATûLEDû WHENû!GENCEû&RANCEû4RESORûREOPENEDûITSû'REENûBONDû
TOûTHEûPUBLICATIONûOFû ISSUEûDUEûû4HEûRESULTINGûõBNûTAP ûTHREEûTIMESûTHEû
THEû3OCIALû"ONDû TYPICALûSIZEûOFûANû/!4ûAUCTION ûMADEûTHEûõBNûISSUEû
0RINCIPLESûINûû4HEû the largest and most liquid Green bond offering in the
PRINCIPLESûWEREûAIMEDû MARKET
ATûHELPINGûBRINGûNEWû Robert Hogg

88 International Financing Review IFR Awards 2018


NORTH AMERICA HIGH-YIELD BOND
Uber’s US$2bn dual-tranche private placement

SUMMONING INVESTORS
0
ROVINGûITûHADûACCESSûTOûTHEûHIGH 4HEû53BNûTWO PARTûBONDûOFFERINGûSTOODû TOûITSûCHESTûnûITûMADEûTHEûSETTLEMENTûPROCESSû
yield market was a big win for Uber OUTûFORûSEVERALûREASONSû/NEûWASûITSûSIZE ûWHICHû MOREûCOMPLEX
in 2018 after it reached its US$5bn WASûINCREASEDûFROMûTHEû53BNûORIGINALLYû h)TûTRADESûLIKEûANYûHIGH YIELDûBOND vûSAIDû
SECUREDûDEBTûCAPACITYû)TSûBONDû TARGETEDûANDûCAMEûINûAûVOLATILEûMARKETûTHATûLEDû !NDREWû%ARLS û-ORGANû3TANLEYSûHEADûOFû
DEBUT ûSTRUCTUREDûASûAûPRIVATEûPLACEMENT û OTHERûCORPORATEûISSUERSûTOûSTANDûDOWN .ORTHû!MERICAûLEVERAGEDûlNANCEûh"UTûTHEû
OPENEDûANOTHERûPOCKETûOFûLIQUIDITYûONûVERYû )TûWASûPRICEDûINûLINEûWITHûPRICEûTALKûVIAû BACK ENDûWASûJUSTûASûCHALLENGINGûASûTHEû
mEXIBLEûTERMS LEAD LEFTûPLACEMENTûAGENTû-ORGANû3TANLEY. FRONT END
4HEûBONDûISSUEûALLOWEDûTHEûCASH BURNINGû 4HEû53MûlVE YEARûNON CALLûTWOûTRANCHEû h53û"ANKû;THEûESCROWûBANK=ûHADûTOûSENDû
START UPûTOûLOCKûINûLONG TERMûlXEDû CLEAREDûATûPARûTOûYIELDûûANDûTHEû53BNû out more than 500 bonds to all the accounts,
BORROWINGûINûAûTIMELYûWAY ûHELPEDûTOûPROTECTû EIGHT YEARûNON CALLûTHREEûATûPARûTOûYIELDûû and we had to contact hundreds of sub funds
its interest rate risk in a rising rate "OTHûTRANCHESûWEREûSTILLûABOVEûREOFFERûWEEKSû TOûENSUREûTHEûBACKûOFlCESûWEREûSETûUPv
ENVIRONMENT ûANDûWASûPROOFûOFûINVESTORû LATER ûWHENûMANYûOTHERûNEWûISSUESûWEREûNOT 4HEûBONDSûINVESTMENT GRADEûCOVENANTS û
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h"EFOREûTHEûBONDûDEALûWEûHADûDONEûTWOû  ûOFûTHEû3ECURITIESû!CT ûWASûALSOûUNUSUALû)Tû 4HATûISûAûMUST HAVEûFORûGROWTHûCOMPANIESû
secured term loans, one in 2016 and another in WASûTHEûLARGESTûOFûITSûKINDûEVERûTOûBEûSOLD û SUCHûASûTHEûRIDE HAILINGûCOMPANY ûWHICHûISû
û7ITHûTHOSEûTWOûLOANSûANDûAû53BNû ANDûATTRACTEDûMOREûTHANûûINVESTORSû EXPANDINGûITSûPLATFORMûINTOûNEWûAREASûSUCHû
REVOLVER ûWEûWEREûATûOURûSECUREDûCAPACITYûCAP vû INCLUDINGûLEADINGûHIGH YIELDûMUTUALûFUNDSû ASû5BERû%ATS
SAIDû3YDNEYû-EHEULA ûWHOûRUNSûCAPITALûMARKETSû ANDûASSETûMANAGERS ûWITHûlNALûORDERSûOFû !NDûWHATûHELPEDûGETûINVESTORSû
ANDûSPECIALûPROJECTSûFORû5BERûANDûMETûWITHû AROUNDû53BN COMFORTABLEû4HATûWOULDûBEûTHEû53BNû
INVESTORSûDURINGûTHEûMARKETINGûOFûTHEûDEAL h)TûISûPRETTYûUNPRECEDENTEDû.ORMALLY û POTENTIALû)0/ûVALUATION
h7EûCOULDNTûGOûTOûTHEûLEVERAGEDûLOANû PRIVATEûPLACEMENTSûAREûSOLDûTOûFOURûORûlVEû h9OUREûNOTûDOINGûCASHmOWûANALYSISûONû
market any more, and the market for LARGEûINSURANCEûCOMPANIES vûSAIDû-EHUELA 5BER ûBECAUSEûITûDOESNTûHAVEûANY vûONEûBONDû
UNSECUREDûDEBTûLOOKEDûVERYûATTRACTIVEû)Tû While the structure meant Uber could get BUYERûTOLDû)&2ûh9OUREûTHINKINGûOFûTHEû)0/ûnû
WASûWAYûCHEAPERûTHANûEQUITY ûANDûNOTû to market quicker with less onerous THATSûAûBIGûEQUITYûCUSHIONûBENEATHûYOUv
mOATING RATEûINTERESTûLIKEûTHEûLOANSv DOCUMENTATIONûnûANDûKEEPûlNANCIALSûTIGHTû Natalie Harrison

CAPITAL MARKETS INSIGHT:


THOUGHT LEADERSHIP EVENTS FOR 2019
IFR, PFI and LPC thought leadership events bring together high calibre panels of speakers to deliver timely and
authoritative insight into the trends and outlooks for specific markets.

Discussions are researched and moderated by experienced members of our editorial teams, who use their extensive network
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Whether a full-day conference, half-day seminar or 90-minute roundtable, each event provides rich content and
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For more information on our 2019 programme of events, contact paul.holliday@refinitiv.com.

IFR Awards 2018 International Financing Review 89


NORTH AMERICA HIGH-YIELD BOND HOUSE
Morgan Stanley

CASH TO BURN
)NûAûYEARûWHENû53ûJUNKûBONDûVOLUMESûDROPPEDûSHARPLYûANDûPORTFOLIOûMANAGERSûFACEDû
ONEûREFINANCINGûTRADEûAFTERûANOTHER ûONEûBANKûSTOODûOUTûBYûDOINGûTHINGSûDIFFERENTLYû
&ORûREDEFININGûHOWûSTART UPSûACCESSûCAPITAL û-ORGANû3TANLEYûISû)&2Sû.ORTHû!MERICAû
(IGH 9IELDû"ONDû(OUSEûOFûTHEû9EAR

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MAJORITYûOFûNEWûISSUANCEûnûAROUNDûTWO THIRDSûnûWASûFROMû !ûCRUCIALûFEATUREûWASûTHEûINVESTMENT GRADEûCOVENANTSû
BORROWERSûLOOKINGûTOûRElNANCE INûBOTHû.ETmIXûANDû5BERûBONDS
!SûAûRESULT ûMANYûTECHNOLOGYûCOMPANIESûGOTûTHEûATTENTIONû h(IGH GROWTHûCOMPANIESûAREûINûANûENVIRONMENTû
OFûTHEûBUYSIDEûLOOKINGûFORûDEALSûTOûBUYûATûATTRACTIVEûRATES WHEREûTHEYREûCHANGINGûTHEIRûBUSINESSûMODELSûALLûTHEû
h4HEûCOMPOSITIONûOFûTHEûHIGH YIELDûMARKETûISûSUCHûTHATûAûLOTû TIME vûSAIDû%ARLSûh)FûTHEYûCANTûDOûTHATûWITHOUTûWORRYINGû
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h4HEREûARENTûAûLOTûOFûHIGH YIELDûCOMPANIESûTHATûHAVEû BONDûBUYERSû0RIVATELYûOWNEDûSHAREDûOFlCEûSPACEû
SIGNIlCANTûGROWTH ûSOûTHEûIDEAûTHATûTHEûMARKETûISûNOWû PROVIDERû7E7ORKSûDEBUTûDEALûHASûNOTûBEENûAûGOODû
attracting some of those issuers is an interesting PERFORMERûINûSECONDARYûTRADING
DEVELOPMENTv -ORGANû3TANLEYûWASûONEûOFûNINEûBANKSûONûTHEûDEAL ûBUTû
-ORGANû3TANLEYSûINNOVATIONûINûTHISûAREAûWASûSINGLEDû DIDNTûLEADûITûh7EûHADûAûVIEWûTHATûTHEûDEALûSHOULDûHAVEû
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RANKINGS ûWHEREûTHEûBANKûHOLDSûTHEûNINTHûSPOTûWITHûû !NDûTHEREûIS ûOFûCOURSE ûAûLOTûMOREûTOû-ORGANû3TANLEYSû
MARKETûSHAREûOVERûTHEûAWARDSûPERIOD LEVERAGEDûlNANCEûBUSINESS
h7EûMAYûBEûMOREûLIKEû&OURû3EASONSûTHANû-ARRIOTTûBUTû )TûHASûPRICEDûDEALSûFORûTOUGHûSTORIES ûINCLUDINGû#ANADIANû
WEûLIKEûITûTHATûWAY vûSAIDû!NDREWû%ARLS ûHEADûOFû.ORTHû MINERû"AFlNLAND ûWHOSEûBONDûISSUEûWASûUPSIZEDûTOû
!MERICAûLEVERAGEDûlNANCEûATû-ORGANû3TANLEY 53MûFORûAûYIELDûOFûû4HEûISSUERSûPRIORûDEAL ûLEDûBYû
/NEûSATISlEDûCLIENTûISûRIDE HAILINGûNETWORKû5BER û ANOTHERûBANK ûSAWûTHEûYIELDûHIKEDûBYûOVERûBPûTOû
WHICHûCHOSEûTHEûBANKûASûTHEûLEFT LEADûPLACEMENTûAGENTû -ORGANû3TANLEYûALSOûSOLDûANûUPSIZEDû53BNûDEBUTû
FORûITSûINAUGURALûJUNKûBONDûISSUEûTHATûWASûSTRUCTUREDûASûAû BONDûOFFERINGûFORû4HEû3TARSû'ROUPûTOûHELPûlNANCEûITSû
3ECTIONûA  ûPRIVATEûPLACEMENTû)TûISûTHEûLARGESTûEVERûOFû ACQUISITIONûOFû3KYû"ETTINGûANDû'AMINGûnûONEûOFûTHEû
ITSûKINDûTOûBEûPRICEDûANDûISû)&2Sû.ORTHû!MERICAû(IGH LARGESTûGAMINGûLEVERAGEDûlNANCINGSûINûHISTORY
9IELDû"ONDûOFûTHEû9EAR !SûSOLEûLEAD û-ORGANû3TANLEYûDECIDEDûTHEûBESTûOPTIONûWASû
h4HEYVEûDONEûANûINCREDIBLEûJOB vûSAIDû3YDNEYû-EHEULAû TOûlNANCEûINû53ûDOLLARSûEVENûTHOUGHûTHEûCOMPANYûHASûNOû
OFû5BERSûCAPITALûMARKETSûANDûSPECIALûPROJECTSûTEAMûv4HEYû REVENUESûTHERE ûANDûSWAPSûBACKûINTOûEUROSûANDûSTERLINGûASû
GOTûUSûCOMFORTABLEûWITHûTHEûCAPITALûSTRUCTURE ûANDû)ûFEELû DOINGûSOûWASûCHEAPERû4HEûSPREADûDIFFERENTIALûBETWEENûTHEû
LIKEûTHEYûREALLYûUNDERSTANDûOURûSTORYv BONDûANDûCONCURRENTûLOANûWASûALSOûVERYûLOWûATûJUSTûBP
h)ûLIKEûTHEIRûCOURAGEû7HENûWEûSAIDûWEûWANTEDûTOûDOûAû h7EûWEREûIMPRESSEDûWITHûTHEIRûEXECUTIONû
PRIVATEûPLACEMENT ûTHEYûWEREûSUPPORTIVEû3OMEûOTHERû CAPABILITIES vûSAIDû$IVYESHû'ADHIA ûCHAIRMANûOFû4HEû3TARSû
BANKSûAREûMOREûRISK AVERSEv 'ROUPûh4HEûPRICINGûANDûDEMANDûTHEYûHADûINDICATEDûWASû
)NVESTORSûCOMPAREDû5BERûTOûSTREAMINGûGIANTû.ETmIX û VERYûATTRACTIVE ûANDûTHEYûLIVEDûUPûTOûITv
ANOTHERûCASH BURNINGûBUSINESSûANDûONEûTHATûHASûTURNEDû Natalie Harrison
TOû-ORGANû3TANLEYûTOûLEADûEVERYûSINGLEûONEûOFûITSûEIGHTû
HIGH YIELDûBONDûISSUESûSINCEûûASûITûSOUGHTûTOûFUNDûITSû
INCREASEûINûORIGINALûCONTENT
4HEûBANKûLEDûTWOû.ETmIXûDEALSûINûûINCLUDINGûITSû
LARGESTûEVERûTRADEûnûAû53BNûUNSECUREDûISSUEûINû!PRILûTHATû
WASûUPSIZEDû4HATûDEALûATTRACTEDûSEVERALûTOPûûBLUE CHIPû
ACCOUNTSûTHATûWEREûPREVIOUSLYûUNDERWEIGHTûORûUNINVOLVED û
ANDûKEYûINVESTMENT GRADEûACCOUNTSûFORûTHEûlRSTûTIME

LOFTY VALUATIONS
4OûBEûSURE ûTHEREûAREûRISKSûINVOLVEDûWITHûSUCHûHIGH
GROWTHûBUSINESSESûTHATûAREûSPENDINGûMOREûTHANûTHEYû
EARNû/NEûOFûTHOSEûISûWHETHERûLOFTYûEQUITYûVALUATIONSûWILLû
STAYûHIGHûINûCOMPETITIVEûMARKETSûANDûPROVIDEûAûDEEPû
CUSHIONûFORûBONDHOLDERS

90 International Financing Review IFR Awards 2018


EUROPE HIGH-YIELD BOND HOUSE
Deutsche Bank

COMPLEXITY UNRAVELLED
,EVERAGEDûBUYOUTSûDOMINATEDûû"UTûWHILEûMANYûBANKSûMANAGEDûDEALS ûJUSTûONEû
WASûCONSISTENTLYûTHEREûFORûTHEûTRICKIERûNAMESû&ORûEXECUTINGûTHEûMOSTûCOMPLEXû,"/Sû
INûAûVOLATILEûYEAR û$EUTSCHEû"ANKûISû)&2Sû%UROPEû(IGH 9IELDû"ONDû(OUSEûOFûTHEû9EAR

"
uyouts returned with a bang in 2018 after a RISKSûANDûTHEûPOORûTRADINGûPERFORMANCEûOFû#IRSASûMAINû
RELATIVELYûQUIETû ûWITHûHIGH YIELDûISSUANCEû COMPARABLEû#ODERE ûWHICHûISSUEDûBONDSûINûû4OûGETû
VOLUMESûFROMû-!ûANDû,"/SûREACHINGû THEûDEALûOVERûTHEûLINE û$EUTSCHEûHADûTOûREJIGûTHEûDEALû
õBNûnûMOREûTHANûDOUBLINGûTHEûPREVIOUSû STRUCTUREûANDûOFFERûHEAVYûDISCOUNTSûONûPRICING
YEARSûTOTAL h'IVENûITSûSIZEûAûLOTûOFûOTHERûPEOPLEûWOULDûHAVEûPULLEDû
$EUTSCHEû"ANKûEXECUTEDûMOREûOFûTHOSEûDEALSûTHANûANYû THATûDEALû)ûDONTûTHINKûWEûWOULDûHAVEûBEENûABLEûTOûDOûITû
OTHERûBANK IFûWEûWERENTûASûALIGNEDûBETWEENû%UROPEûANDûTHEû53û
!CCORDINGûTOû$IARMUIDû4OOMEY ûHEADûOFûHIGH YIELDû ACROSSûOURûBUSINESSES vû4OOMEYûSAID
CAPITALûMARKETSûATûTHEûBANK ûSPONSORSûTENDENCYûTOûGOûFORû 4HENûINû*ULYûCAMEû'ERMANûMETERINGûCOMPANYû
BIGûANDûINNOVATIVEûDEALSûPLAYEDûRIGHTûINTOû$EUTSCHESû 4ECHEMSûBUYOUT ûONEûOFûTHEûMOSTûHIGHLYûLEVEREDûDEALSû
STRENGTHûh7EûFEELûWEûAREûUNIQUELYûPOSITIONEDûINû%UROPEû THEûMARKETûHADûSEENûINûAûWHILEû$EUTSCHEûGOTûINVESTORSû
TOûSUPPORTûTHEMûFROMûAûHIGH YIELDûPERSPECTIVE vûHEûSAID ONûBOARDûDESPITEûTHEûFACTûTHATûTHEûDEALûDOCUMENTATIONû
&IRSTûINûLINEûWASû$ANISHûTELCOû4$# ûINûWHATûWASûTHEû would allow Techem to incur further debt that could
LARGESTûPUBLIC TO PRIVATEû%UROPEANûTRANSACTIONûSINCEûTHEû DRIVEûNETûLEVERAGEûTOûNEARLYûûTIMES
lNANCIALûCRISISû$EUTSCHEûGOTûINVESTORSûONûBOARDûWITHûAû 7HEREûTHEREûWASûINVESTORûPUSHBACK û$EUTSCHEû
STRUCTUREûTHATûWOULDûSEEû4$#ûSEPARATEûITSûNETWORKûFROMû MANAGEDûTOûINNOVATEû7HILEûAûCLAUSEûTHATûWOULDûHAVEû
ITSûRETAILûBUSINESS ûWHILEûSELLINGûITSû.ORWEGIANûASSETSû ALLOWEDûTHEûCOMPANYûTOûPAYûDIVIDENDSûBYûINVESTINGûINû
4HISûREQUIREDûAûLOTûOFûWORKûWITHûINVESTORS ûGIVENûTHEû UNRESTRICTEDûSUBSIDIARIESûTHATûAREûNOTûBOUNDûBYûTHEûDEALSû
RARITYûOFûTHEûSTRUCTURE COVENANTSûTHATûIRKEDûINVESTORSûWASûREMOVED ûITûYANKEDû
h)TûISûONEûOFûTHEûLARGESTûSPONSOR OWNEDûSUBORDINATEDû BACKûmEXIBILITYûBYûGETTINGûTHEûCOMPANYûTOûMAKEûDIRECTû
,"/ûBONDSûANDûTHEûLARGESTûTHISûYEAR vû4OOMEYûSAIDûOFûTHEû DIVIDENDûPAYMENTSûATûAûHIGHERûLEVERAGEûLEVELûTHANû
õBNûTRANCHEûOFûTHEûDEAL ûWHICHûALSOûINCLUDEDûAû ORIGINALLYûPLANNED
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EQUIVALENTûINûEUROSûANDû53ûDOLLARSûDESPITEûGAMINGûSECTORû TRANCHEûDEALûWASûTHEûLARGESTûEVERû)TALIANû,"/ ûANDûCAMEû
DESPITEûHEIGHTENEDûANXIETIESûAROUNDûTHEûCOUNTRYSû
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4HEûDEALûlNANCEDû#6#SûPURCHASEûOFûAûûSTAKEûINûTHEû
COMPANY ûHIGHLYûUNUSUALûGIVENûTHATûTHISûMEANTûONLYûJUSTû
MAJORITYûOWNERSHIPû"UTûTHEûCOMPLEXITIESûDIDNTûENDû
THEREû#6#SûPURCHASEûMEANTûTHATûITûHADûTOûLAUNCHûAû
mandatory tender offer on the remaining shares,
LEADINGûINVESTORSûTOûQUESTIONûTHEûCOMPANYSûOWNERSHIPû
ANDûTHEûPROSPECTûOFûFURTHERûINDEBTEDNESS
$EUTSCHEûALSOûHELPEDûINVESTORSûGETûTHEIRûHEADûAROUNDû
a subordinated note issue outside their reach, which
WOULDûSTILLûBEûlNANCEDûTHROUGHûTHEûOPERATINGûCOMPANY û
WHOSEûDIVIDENDSûTHEûBONDHOLDERSûWEREûRELIANTûONûFORû
COUPONûPAYMENTS
)NûADDITIONûTOûTHEûTRADESûITûLED û$EUTSCHEûWASûALSOûAû
GLOBALûCOORDINATORûONûTHEûBUYOUTûlNANCINGûFORû&LORAû
&OODûnûTHEûCARVE OUTûOFû5NILEVERSûSPREADSûBUSINESSûTHATû
WASûBOUGHTûOUTûBYû++2û)TûALSOûSERVEDûASûBOOKRUNNERûONû
!KZOû.OBELSûSPECIALITYûCHEMICALSûBUSINESSûBUYOUTûBYû
#ARLYLE ûANDûTHEûBUYOUTûBYû"LACKSTONEûOFû4HOMSONû
2EUTERSû&INANCIALûANDû2ISKûDIVISION ûWHICHûINCLUDESû)&2
Yoruk Bahceli

IFR Awards 2018 International Financing Review 91


NORTH AMERICA ABS HOUSE
Barclays

WHOLE-BUSINESS SPICE
Consumer appetite for new debt kept US ABS running at a steady pace – at least until
the autumn, when a fresh barrage of deals faltered. For helping the market regain
MOMENTUMûJUSTûWHENûITûNEEDEDûITûMOST û"ARCLAYSûISû)&2Sû.ORTHû!MERICAû!"3û(OUSEû
of the Year.

U
nderpinned by a strong economy and low In the middle of that volatility, Taco Bell was having
unemployment, which recently fell to its “go, no-go” calls with its bankers about the timing of its
lowest point in 50 years, optimism in the US planned US$1.2bn whole-business deal.
securitisation market grew in 2018, leading “At the end of October, we watched the broader equity
to a tightening of spreads for much of the year despite markets close in the red,” said Jed Gold, assistant treasurer
high volumes. at Yum! Brands, the parent company of Taco Bell.
!MIDûAûmOODûOFûPAPERûBACKEDûBYûAUTOûLOANSûANDûOTHERû “The VIX had spiked from 12 to 25. And we were
forms of consumer credit, the lift-off in whole-business having discussions if this was the right market, or time
securitisations – mostly from big restaurant operators – to wait.”
was one of the main themes of the year. 5LTIMATELY û"ARCLAYSûADVICEûWASûTOûFORGEûAHEADûANDû
Barclays has played a pivotal role in the growth of the that turned out to be the right call for Taco Bell.
SECTORûOVERûTHEûPASTûlVEûYEARSû$URINGûTHATûPERIOD ûSOMEû Not only was the deal increased in size to US$1.45bn,
US$25bn of whole-business securities have been sold, BUTûPRICINGûALSOûNARROWED ûPUTTINGûITSûlVE YEARûCLASSûONû
according to S&P data. PARûWITHûTHEûSECTORSûALL TIMEûLOWûOFûBPûOVERû
This year, that leadership role continued. Barclays was interpolated swaps, according Ben Fernandez, specialist
the number one bookrunner in the whole-business in esoteric ABS at Barclays.
ARENA ûACTINGûASûLEFTûLEADûONûlVEûOFûTHEûYEARSûû “All banks within our banking group are important,”
securitisations. And it not only led but upsized the Gold said. “But on this particular transaction it was
BIGGESTûWHOLEûBUSINESSûDEALûOFûTHEûYEAR ûDURINGûAûDIFlCULTû really Barclays as the key partner as structurer.”
patch of volatility that saw other deals widen and even Barclays rivals the biggest US banks when it comes to
downsize. CAPTURINGûMARKETûSHAREûOFûmOWûBUSINESSûFROMûREPEATû
ABS issuers that have used the sector for funding for
decades.
)TSûCOMBINEDûmOWûANDûESOTERICûTRADESûPLACEDû"ARCLAYSû
second in the US ABS league tables over the IFR awards
PERIOD ûACCORDINGûTOû2ElNITIVûDATA
“We marry the everyday colour that you get from
doing all those deals, and constantly have dialogue with
OURûCLIENTSûONûTHEûmOWûSIDE ûTOûBEûABLEûTOûREALLYû
outperform on the esoteric side,” said Marty Attea, head
of securitised products origination at Barclays.
Those insights were essential in September and
October when markets got wobbly, but for seven out of
nine weeks the number of individual transactions
executed was in the double-digits.
That was partly due to a push from issuers looking to
quickly turn loans into bonds before the year-end
holidays.
Even before autumn, new issuance had been running
HIGHûASû53ûCONSUMERSûEMBRACEûOFûDEBTûCONTINUED
Household debt rose another 1.6% in the third quarter
of 2018 to set a US$13.51trn all-time record, according to
data from the Federal Reserve Bank of New York.
And while consumers still appear better able to
manage their debts than parts of corporate credit, cracks
have been emerging in the ABS market.
When uncertainty set in and volatility kicked up,
Barclays showed its mettle to win and execute more
deals.
h&RANKLY ûITSûGREATûFORûBUSINESS vû!TTEAûSAIDûh)TûISû
higher stress, but clients need us.”
Joy Wiltermuth

92 International Financing Review IFR Awards 2018


NORTH AMERICA ABS ISSUE
Air Lease’s US$545m securitisation

OPENING UP
A
ir Lease changed the arcane exactly the same time during the marketing notes narrowed to 17% from initial talk
WORLDûOFûAIRCRAFTûlNANCEûWITHûAû process. around 18%.
new structure that raises the bar “Before in this market, you never had any The number of equity investors also rose
FORûTRANSPARENCY ûEFlCIENCYûANDû clue how much equity was contributed, nor from three in Thunderbolt I to 20 in
liquidity. what the equity was getting as a return, and Thunderbolt II. And in secondary trading,
Air Lease was able to raise US$544.87m in no idea what the manager was earning for pricing on the tradable equity notes has
July through the sale of Thunderbolt II their performance,” said Ryan McKenna, narrowed to 16.3%, according to Bank of
(TBOLT 2018-A), a new kind of aircraft head of corporate strategy at Air Lease. America Merrill Lynch data.
securitisation that took weeks to price “That seemed very wrong.” Carla Schriver, a vice-president at
INSTEADûOFûMONTHS ûOPENEDûUPûITSûlNANCIALSû To forge a new path, McKenna spent Goldman Sachs, said that Thunderbolt II has
to the public and turned illiquid equity MONTHSûBUILDINGûAûWEB BASEDûlNANCIALû changed the old ways of doing business in
notes into tradable securities. model that would be updated regularly and aircraft ABS, which previously had been
“We took the view, along with Air Lease, report everything from engine maintenance more akin to negotiated M&A transactions
that you had to do more than just change reports to aircraft lease extensions. with a handful of key investors rather than
the form,” said Carl Anderson, a managing “I thought, if we provide this level of broadly syndicated securitisations.
director at Bank of America Merrill Lynch, disclosure, all participants would know “Thunderbolt just fundamentally changed
who worked on the transaction. EXACTLYûWHEREûTHEûMONEYûISûmOWINGûANDû that,” Schriver said.
“You had to go a step further in terms of how to track it.” McKenna said. Bank of America Merrill Lynch was global
information to make this work.” The strategy has more than paid off. coordinator, and a joint structuring agent
&ORûTHEûlRSTûTIME ûINVESTORSûINû 4HEûDEALSûBIGGESTûSLUGûOFû3INGLEû!ûRATEDû with Mizuho and Goldman Sachs. Citigroup,
Thunderbolt II – irrespective of whether notes narrowed to be priced at 130bp over BNP Paribas and MUFG were also joint
they were buying debt or equity – were interpolated swaps from talk in the 135bp bookrunners.
given the same level of information at range. And its novel tradable “GAPS” equity Joy Wiltermuth

NORTH AMERICA MBS ISSUE


Gramercy Property Trust’s US$3bn CMBS

IN THE CLEAR
T
he leveraged buyout of Gramercy Securitisation of single-asset and single- market,” said Kenneth Cohen, US head of
Property Trust by Blackstone borrower loans made up a bigger share of the COMMERCIALûREALûESTATEûlNANCEûATû"ANKûOFû
for US$7.6bn was the largest CMBS market in 2018 than the more America Merrill Lynch, a co-lender on the
take-private of a REIT in 2018, traditional conduit business, where 70 or so transaction.
one of the biggest such trades in the property loans are bundled into one bond deal. “But much more than the bonds,
last decade – and it went off without And real estate investors have kept THEMSELVES ûITûWASûONEûOFûTHEûlRSTûTIMESûTHATû
a hitch. funding big property deals from well-known WEVEûSEENûAûDEALûPOST CRISISûGENERATEûTHEû
$ESPITEûTHEûDEALSûHUGEûSIZE û"LACKSTONEû borrowers such as Blackstone, even as some type of interest.”
Real Estate Partners VIII was able to parts of the market have begun to look late- All classes of the securitisation priced
raise the bulk of its funding in the cycle. below expectations and 37 out of 66 total
commercial property debt markets in 4HEûPRICEûOFûMID TOWNû-ANHATTANûOFlCEû investors bought its Triple As, according to
October, with a massive US$3bn CMBS sale, properties fell 8% over the past 12 months Citigroup data.
a US$1.6bn syndicated mortgage and after the bid for trophy properties from Asia- The portfolio is 97.4% occupied and spans
mezzanine loan and a US$464m asset sale 0ACIlCûDRIEDûUP ûACCORDINGûTOûDATAûFROMû2EALû 46.4m square feet across 22 states.
bridge loan. Capital Analytics. Morgan Stanley advised Gramercy and
h)TSûUNIQUEûINûTHATûITûWASûTHREEûDIFFERENTû But there was no shortage of demand for %ASTDILû3ECUREDûACTEDûASûTHEû2%)4SûREALû
executions that were concurrent,” said THEûRISKIERûPARTSûOFûTHEû'RAMERCYûlNANCING û estate consultant. Citigroup and Bank of
$AVIDû"OUTON ûAûCO HEADûOFû#ITIGROUPSû#-"3û with both the mezzanine portion of the !MERICAû-ERRILLû,YNCHûWEREû"LACKSTONESû
and loan originations group, who was lead- securitisation and its mortgage loans placed lNANCIALûADVISERS
LEFTûONûTHEûDEBTûlNANCINGûANDûANû-!û with a mix of high-quality pension and debt A Blackstone-led consortium owns
adviser on the buyout. fund investors. a 55% stake in the company that owns
“We raised US$12bn of demand for a “A lot of CMBS investors had been IFR.
US$3bn CMBS.” wanting to see a larger CMBS deal come to Joy Wiltermuth

IFR Awards 2018 International Financing Review 93


NORTH AMERICA MBS HOUSE
Citigroup

CITI GOES BIG


A slowdown in boom-era CMBS refinancing meant that to remain relevant property
lenders were forced to get creative. For winning many of the biggest mega deals and
DELIVERING û#ITIGROUPûISû)&2Sû.ORTHû!MERICAû-"3û(OUSEûOFûTHEû9EAR

C
ITIGROUPûLEDûMANYûOFûTHEûYEARSûBIGGESTû !NOTHERûGLOBALûREALûESTATEûCOLOSSUS û"ROOKlELD û
COMMERCIALûREALûESTATEûlNANCINGSûFORûTHEû selected Citigroup to lead-manage a landmark
SECTORSûLARGESTûPROPERTYûOWNERSû)TûTAPPEDûTHEû TRANSACTIONûTHISûTIMEûTHEû53BNûRElNANCINGûOFûITSû
CMBS market and also used its own balance sprawling Atlantis Resort in the Bahamas – and just
sheet to win deals when there was no shortage of ahead of the hurricane season.
competition for loans from other banks, thrifts, )TûISNTûEVERYûDAYûTHATûTHEû#-"3ûMARKETûlNANCESûAû
government-backed lenders and life insurance Caribbean mini-city of four seaside hotels, several
companies. restaurants, a casino, a water park and a desalination
There is no bigger name than Blackstone in plant. It even mortgaged dolphins.
commercial real estate and it was Citigroup that the Pricing on the bonds, totalling US$1.2bn, widened
PROPERTYûGIANTûPICKEDûTOûLEADûTHEûDEBTûlNANCINGûONûITSû some from initial talk, but they were still priced within
US$7.5bn leveraged buyout of Gramercy Property Trust, expectations. Citigroup also sold another US$650m of
the largest structured US real estate deal since the global mezzanine loans backing the property to three
lNANCIALûCRISIS investors.
It was anchored by a US$5.5bn debt package that But beyond the glitziest real estate transactions,
closed in October, of which US$3bn came from a CMBS Citigroup also kept originating a stream of conduit loans
loan. Collateral for the CMBS is made up of a large swath for benchmark CMBS deals.
of industrial properties that dot the country, with By mid-November, it had pooled loans into a dozen
Citigroup providing 60% of the funding and Bank of conduit deals with other top banks, and ranked third in
America Merrill Lynch the rest. the CMBS league table.
That CMBS portion was split into US$2.5bn of bonds 7AYûBACKûINû*ANUARY ûONEûOFû#ITIGROUPSûCONDUITûDEALSû
and US$500m of mezzanine loans. hit the post-crisis low of swaps plus 66bp for 10-year
“Coming into this year, we did acknowledge there was Triple A paper.
GOINGûTOûBEûAûLOTûLESSûINûTERMSûOFû;RElNANCING=û#-"3û Later in the year, market volatility pushed spreads
MATURITIES vûSAIDû$AVIDû"OUTON ûCO HEADûOFû53û#-"3ûANDû on similar bonds to around 90bp. But the rockier
REALûESTATEûlNANCEûATû#ITIGROUP BACKDROPûALSOûHIGHLIGHTEDûONEûOFû#ITIGROUPSûSTRENGTHSûnû
“We began talking with counterparties about M&A, its long-standing presence in the CMBS space, which
big transactions, the single-asset/single-borrower through its Salomon Brothers heritage can be traced
business, and thought we had to really pursue that BACKûTOûTHEûCREATIONûOFûTHEûVERYûlRSTûMORTGAGE BACKEDû
aggressively.” deals in the 1970s.
For many investors, buying into a series of conduit
deals backstopped by Citigroup makes the bonds more
attractive from a liquidity perspective.
h!SûûPROVED ûTHEûSECURITISEDûMARKETSû!CHILLESû
heel is liquidity,” one portfolio manager said. “We prefer
predictable conduit issuance and issuers with a lot of
deals outstanding already, where multiple dealers are
making consistent and predictable markets.”
This year, private-label residential mortgage bond
issuance had set a new annual post-crisis record of
US$100bn by November.
/NEûOFû#ITIGROUPSûMOREûNOTABLEû2-"3ûTRANSACTIONSû
was helping Australian mortgage lender Pepper Homes
come to the deep well of the US dollar market with its
expanded mortgage product.
Citigroup was a joint lead on the US dollar portion of
0EPPERSûlRSTûDUAL CURRENCYûANDûCROSS BORDERû
transactions from its I-Prime shelf. The programme
includes a higher portion of investor loans and loans
WITHûINTEREST ONLYûPERIODSûTHANû0EPPERSûSTANDARDûPRIMEû
transactions.
Joy Wiltermuth

94 International Financing Review IFR Awards 2018


EMEA STRUCTURED FINANCE HOUSE
Lloyds Bank

GETTING REAL
In a year when UK issuance of dollar-denominated securitisations ballooned to
US$6.5bn, one bank towered above rivals in winning mandates from clients large
ANDûSMALLû,LOYDSû"ANKûISû)&2Sû%-%!û3TRUCTUREDû&INANCEû(OUSEûOFûTHEû9EAR

“N
ational service” is how Allen Appen, But by July, sterling spreads gapped out and some
HEADûOFûBONDûlNANCINGûATû,LOYDS û issuers with multi-currency platforms dropped sterling
DESCRIBESûTHEûBANKSû5+ FOCUSEDû altogether to sell only dollars.
STRUCTUREDûlNANCEûBUSINESSûh4HISû Lloyds was involved in most of the US dollar securitisations,
group is all about supporting the real economy.” WHICHûKICKEDûOFFûWITHû#LYDESDALEû"ANKSû,ANARKû û2-"3û
4HATûREALûECONOMYûHADNTûSEEMEDûTOOûDESPERATEûFORû INû*ANUARY ûITSûlRSTûDOLLARûTRANCHEûSINCEû
support from securitisation in previous years. Even once the Lloyds led a second Lanark, a deal for Virgin Money
stigma of sub-prime receded, central bank liquidity schemes and one off its own Permanent shelf, and two from
were providing many lenders with cheaper funding sources. 3ANTANDERSû(OLMESûPROGRAMME ûALLûWITHûDOLLARûPIECES
But Lloyds had faith that the market would be needed “Our ability to take UK product to other credit
again and had been preparing for the end of central markets is second to none,” said Appen.
bank support. The bank brought sterling RMBS from smaller UK
“The securitisation market in Europe, however badly LENDERSûTOO ûINCLUDINGû7ESTû"ROMWICHû"UILDINGû3OCIETYSû
damaged it was, was not going to disappear,” said Appen. lRSTûDEALûINûlVEûYEARS ûANDû!LDERMORESûlRSTûINûFOURû)Tû
“Eventually, conditions would emerge that would enable arranged a debut for Atom Bank, which operates
full resurrection.” exclusively over mobile phone apps, and led deals from
7ITHûTHEû"ANKûOFû%NGLANDSûTERMûFUNDINGûSCHEMEû specialist lenders such as Paragon and Charter Court.
ceasing to lend from February UK banks would need ABS The Lloyds team credits its range of mandates to the
INVESTORSûONCEûAGAIN ûBUTûTHEREûWEREûDOUBTSûTHEûlCKLEû planning work it carried out with smaller lenders to
sterling market could absorb a supply spike on its own. prepare them well in advance for the withdrawal of
In anticipation of this, Lloyds had started re-engaging central bank liquidity schemes.
US accounts in 2017, traditionally big buyers of UK paper h9OUûDONTûGETûPAIDûFORûTHATûADVISORYûWORKûBUTûWHENû
but feeling neglected after UK supply in dollars dried up. YOUûLOOKûHOWûCLIENTSûREWARDEDûUSûTHISûYEARûITSûBEENûDEALû
Just US$400m of dollar-denominated UK RMBS was after deal,” said Cooke.
sold in 2017, but that ballooned to US$4.7bn in 2018, More consumer mandates came from autos, where
WITHûlVEûCREDITûCARDûDEALSûADDINGûAûFURTHERû53BN Lloyds was a lead on three UK deals and two German
“Our view was that 2018 would be about proving the ones, and UK credit cards. And behind the scenes the
market would be there for the big treasuries and the bank has worked to build a private placement market
smaller players,” said Matthew Cooke, global head of the for smaller UK and European asset-backed issuers.
securitised products group at Lloyds. If the end of the TFS marked a turning point for the
2IVALûSYNDICATEûOFlCIALSûACKNOWLEDGEûTHEûGROUNDWORKû MARKET ûANDûPLAYEDûTOû,LOYDSûFOCUSûONûTHEû5+ûCONSUMER û
,LOYDSûCARRIEDûOUTûWITHû53ûACCOUNTS ûANDûTHOSEûINVESTORSû TWOûOFûTHEûYEARSûOTHERûBIGûDEVELOPMENTSûCOMPLETELYû
ready appetite for UK risk meant the sterling market was passed the bank by.
never completely overwhelmed in 2018. Lloyds has no involvement in the leveraged loan CLO
Not that the sterling market felt congested at the start or CMBS markets, both of which grew strongly through
OFûTHEûYEAR ûWITHû*ANUARYûANDû&EBRUARYûlNDINGûEXTREMELYû û"UTûITûISûAûSIGNûOFûTHEûBANKSûSTRENGTHûINûITSûCOREû
strong demand in the currency. mandate that as well as topping the league tables for
%UROPEANûDEALSûEXCLUDINGû#$/ûANDû#,/S ûITûSTILLûISûPLACEDû
a respectable fourth when all deals are included.
Allen Appen 4HATûFOCUSûDOESNTûMEANûTHEûBANKûCANTûPUSHûTHEû
innovative, pointy-headed product too. It has built expertise
in synthetic risk transfer, selling three deals at the end of
2017.
One of those, Mespil Securities, was joint lead-
managed with Mizuho for Bank of Ireland. The deal
bought protection on a mezzanine slice of risk from a
PORTFOLIOûOFûLEVERAGEDûACQUISITIONûlNANCEûLOANSûANDû
REDUCEDû"ANKûOFû)RELANDSû#%4ûRATIOûBYûAROUNDûBP
Lloyds also shed junior risk on a similar portfolio of its
own, and on a commercial property portfolio.
“This group … is not focused on arbitrage or
REPACKINGûPRODUCTû7EREûSUPPORTINGûTHEûREALûECONOMY vû
said Cooke.
Chris Moore

IFR Awards 2018 International Financing Review 95


EMEA STRUCTURED FINANCE ISSUE
Income Contingent Student Loans 1 (2002–2006)

EXAMS PASSED
A
fter four and a half years of brought the initial marketing process to a accounts were involved in the marketing
preparation, interrupted by two juddering halt a couple of months after it process, which included over 90 meetings.
general elections and a Brexit WASûOFlCIALLYûUNVEILEDûEARLYûINû h4HEREûWEREûlVEûITERATIONSûOFûENGAGINGû
referendum, the UK government The deal then failed to immediately investors, which was absolutely
SECURITISEDûINû$ECEMBERûûSOMEûaBNû reappear after the June election due to the unprecedented,” said Edward Ballin, a director
of legacy student loans, creating a new and uncertainties of a hung parliament and ATû"ARCLAYSûh)VEûNEVERûWITNESSEDûTHISûSORTûOFû
highly complex asset-class. when it did, it had to cope with heightened intensity over this sort of time period.”
Sole arranger Barclays had been concerns about the UK economy after Brexit. Close to 40 investors participated.
mandated in July 2013 and the end-result "UTûSUCHûWASûTHEûDEBUTSûSUCCESSûTHATûTHEû 7HILEûTHEûaMû#LASSû!ûRATEDû!! û
was Income Contingent Student Loans 1 GOVERNMENTSûaBNûISSUANCEûTARGETûWASû targeted traditional ABS investors, the
(2002–2006), a securitisation so elaborate HIKEDûBYûANûADDITIONALûaBNûINûTHEûû aMû!û!! ûWASûDESIGNEDûFORû
that its model came with a 90-page user Autumn budget: marketing for the second INSURANCEûCOMPANIES ûSELLINGûlXED RATEû
manual to help investors run it. deal began in October. scheduled amortisation paper.
The type of student loans in question – 4HEûSECURITISATIONûTARGETEDûAûaBNû "ELOWûTHEûSENIORSûCAMEûTHEûaMû
WHICHûAREûONLYûREPAIDûWHENûAûBORROWERSû portion of the oldest loans in the pre-2012 Class B (BBB) RPI-linker, and at the bottom of
income crosses a certain threshold – had book, arguably the weakest cohort as this the stack the unrated deeply discounted
never been securitised before. contains a higher proportion of lower-paid #LASSû8 ûWHICHûWASûSIZEDûATûaBNûANDû
4HEû5+ûGOVERNMENTûHADûAûaBNûBOOKûOFû borrowers, because the better-paid ones CAMEûATûANûûCASHûPRICE ûRAISINGûaMû
broadly similar loans made to students who have already repaid. for the government. The challenges around
started university in 2012 or earlier, and 4HEû!"3ûRAISEDûaBN ûAûûDISCOUNTû this tranche should not be underestimated,
WANTEDûTOûRAISEûaBNûBYûSELLINGûAûPORTIONû And unusually for a European deal, with one investor likening it to looking into
OVERûAûlVE YEARûPERIOD especially of this size, the complete capital a crystal ball.
3OûTHISûlRSTûDEALûHADûTOûBEûREPEATABLE ûBUTû stack was publicly sold to investors. Barclays, Credit Suisse, Lloyds and
its very execution was in considerable doubt There may only be around 20 dedicated JP Morgan were joint bookrunners.
after a snap post-Brexit general election sterling buyers but around 200 different Chris Moore

ASIA-PACIFIC STRUCTURED FINANCE ISSUE


Bayfront Infrastructure’s US$458m project finance CLO

CAPITAL IDEA
C
LIFFORDû#APITALSûlRSTûSECURITISATIONû combined 47.7% of the pool, but the portfolio Asia booking 65% of the notes, Europe
OFûPROJECTûlNANCEûLOANSûREVIVEDû also included frontier markets such as Papua taking 23% and the Middle East 12%.
Asian interest in collateralised loan New Guinea and Mongolia. A US$320.6m Class A tranche, with
obligations, created a new asset Around three-quarters of the underlying ANûEXPECTEDûRATINGûOFû!AAû-OODYS û
CLASSûFORûTHEûREGIONûANDûENHANCEDû3INGAPORESû projects were already operational, and many was priced at six-month Libor plus 145bp
CLAIMûASûAûCENTREûFORûINFRASTRUCTUREûlNANCING of the loans had support from export credit with a weighted average life of 3.7 years
Singapore-based Clifford Capital set out to agencies or multilateral institutions, helping and an expected maturity of 7.4 years;
lNDûAûWAYûTOûBRINGûMOREûINSTITUTIONALû to boost the ratings of the securities to a a US$72.6m Class B tranche rated Aa3
INVESTMENTûINTOûINFRASTRUCTUREûINû!SIA 0ACIlCû high investment grade. Banks were required was priced at 195bp over with a WAL of
and the Middle East, and settled on a structure to hold on to part of the exposure to ensure 8.6 years and expected maturity of 9.4 years;
that would overcome many of the hurdles in their interests were aligned with investors and a US$19.0m Class C rated Baa3 was
attracting fund managers to individual projects. in the CLOs. priced at 315bp over with a WAL of 9.8 years
The portfolio approach, with dozens of A sensible premium over CLOs in the US and expected maturity of 10.4 years. A
PROJECTûlNANCEûLOANSûASûTHEûUNDERLYINGû market helped generate momentum in tricky US$45.8m subordinated tranche was
collateral pool, appealed to buyside investors conditions in July – perhaps the worst month retained.
looking to diversify, and freed up bank of the year for the Asian credit market – and Bayfront Infrastructure is the issuing
balance sheets for the next round of projects, the lead managers lined up substantial anchor vehicle and Clifford Capital is the collateral
creating a template for future deals that can orders before launch. Bookbuilding ran for a manager.
HELPûCLOSEû!SIASûINFRASTRUCTUREûFUNDINGûGAP week, with some fund managers needing to Citigroup and Standard Chartered were
#LIFFORDû#APITALûSOURCEDûûLOANSûFROMûlVEû complete internal approval processes, given JOINTûGLOBALûCOORDINATORSû$"3 û(3"#ûANDû
institutions, as well as its own book, covering THATûTHISûOFFERINGûWASûTHEûlRSTûOFûITSûKIND SMBC Nikko were joint bookrunners, and
30 projects. Australia, Indonesia and Vietnam The Reg S securities attracted strong MUFG was co-manager.
were the biggest exposures, accounting for a demand from a variety of investors, with Daniel Stanton

96 International Financing Review IFR Awards 2018


EMERGING EMEA BOND
Metinvest’s US$1.35bn dual-tranche bond and tender

MOVING ON
I
n terms of sheer complexity, few PXF facility were due to mature in 2021. cash format; and a softening of covenants in
transactions can beat Ukrainian mining Bondholders, moreover, were subordinate to line with the new issue.
and steel company Metinvest’s dual- the creditors of the PXF. Another problem All the parts were interlinked and failure
tranche offering in April. for investors was that from 2019, the cash of any single element would have meant the
As well as new notes, the deal included a coupon on the bonds was to be converted entire transaction could have collapsed.
tender offer and consent solicitation that into part PIKs. However, it succeeded in all aspects.
WEREûDESIGNEDûTOûPUTûAûDIFlCULTûFEWûYEARSûFORû Metinvest’s management was keen on The tender generated a remarkable 90%
the company behind it. RElNANCINGûBOTHûINSTRUMENTSûONûMARKETû participation rate by the early deadline,
As a result of Russia’s invasion of the terms. enabling Metinvest to buy back just over
Crimea, Metinvest (B–/B) had to go through In order to do so, however, it had to US$1bn of the 2021s, while 97% of existing
a debt restructuring between 2015 and overcome a number of hurdles. It needed an holders expressed their support for the
2017. agreement with the lending banks to consent.
The outcome of the restructuring meant RElNANCEûTHEû08&û)TûALSOûHADûTOûGETû At the same time, Metinvest issued two new
that the bulk of the company’s debt agreement with investors to swap their bonds: US$825m of 7.75% due 2023s and
portfolio consisted of two instruments: positions in the old bonds with new bonds US$525m of 8.50% due 2026s. It was the largest
US$1.2bn of 9.3725% secured PIK Eurobonds through a tender offer and parallel new ever transaction from a Ukrainian corporate.
due December 2021 and a US$1.1bn secured issuance to fund the buy-back. But more than that, the deal helped
PRE EXPORTûlNANCINGûFACILITY 4HEûCOMPANYûALSOûHADûTOûlNDûAûSOLUTIONûTOû Metinvest lower its average cost of debt and
The two instruments shared the same any outstanding old bonds that were not put MITIGATEûRElNANCINGûRISKû-EANWHILE ûEXCESSû
security, the same cash sweep and other forward for tender to align the economic proceeds from the new issue were directed
technical structural elements. However, for and contractual terms of those 2021 notes TOûPRE lNANCEûAûPORTIONûOFûTHEû08&
both the company and bondholders, the with those of the contemplated new issue. Deutsche Bank and ING were the global
nature of the debt was troublesome. Proposed amendments included the coordinators and were joined on the books
There was, for example, a very high removal of common security and cash by Natixis and UniCredit.
RElNANCINGûRISKûASûBOTHûTHEûBONDSûANDûTHEû SWEEPûCONVERSIONûOFûTHEûCOUPONûTOûlXEDû Sudip Roy

LATIN AMERICA BOND


GOL’s US$500m seven-year bond

GOOD TIMING
B
razilian discount airline GOL “For us, it was a major exercise, which 6.56% on the call date in 2021, bringing
tapped the market while emerging EFFECTIVELYûRElNANCEDûTHEûMAJORITYûOFûOURû added demand to the new issue, which was
markets were still hot to bring an existing unsecured bonds,” Lark said. upsized from US$350m to US$500m.
upsized US$500m seven-year bond Coming on the heels of a successful deal Starting with initial price thoughts of
offering, successfully reintroducing itself from rival Azul, the issuer took advantage mid 7%, leads were able to tighten pricing
after a tough restructuring to create a of improving credit metrics and a relatively BYûBPûFROMûSTARTûTOûlNISHûBEFOREûPRINTINGû
cheaper benchmark issue. quiet market in December to move ahead at a yield of 7.25%.
And while the rough and tumble world of with the deal. Rating agencies were pleased with the
the airline business doesn’t guarantee ultimate Fitch had upgraded GOL by two notches to move. S&P upgraded GOL to B from CCC– in
success for the issuer itself, the timing and Single B a month before and the time the wake of the deal, noting that more
triumph of the deal proved to be a rare event in seemed ripe to take the plunge. The airline upgrades could be on the cards.
a year strewn with victims of market volatility. had gone through a big operational shift and The deal was quickly followed by a
Bankers were particularly impressed it seemed the right time to re-tell its story US$150m tap of the 2025s at an even lower
with the efforts of Richard Lark, the and reposition itself in the bond market. yield of 7% – the tight end of price talk –
COMPANYSûCHIEFûlNANCIALûOFlCER ûBOTHûINû Hoping to turn over a new leaf following just as the market was starting to look
terms of the timing of the deal and what its a nasty debt restructuring, the company wobbly. Bankers were suitably impressed,
outcome meant for GOL. recalibrated risk perceptions of the credit saying that management had transformed
With investors coming off a stellar 2017 by tendering its expensive 8.875% 2022 the credit.
in Latin America, Lark was keen to plant bonds for a new cheaper benchmark bond Bank of America Merrill Lynch, Credit
THEûAIRLINESûmAGûBACKûINûTHEûINTERNATIONALû issue. Suisse, Morgan Stanley, BTG Pactual,
capital markets before presidential A tender price of 106.50 on the existing Evercore, Santander, BCP and Safra acted as
elections in Brazil and monetary tightening bonds offered a decent premium and had leads on the trade.
in the US soured the tone. investors reconsidering the exit yield of Paul Kilby

IFR Awards 2018 International Financing Review 97


ASIA BOND
ChemChina’s US$6.4bn-equivalent six-tranche bond

CHEMICAL REACTION
C
hina National Chemical Corp (or inside initial guidance at mid-swaps plus chemical sector, there was some wariness
ChemChina) pushed the 150bp. over whether the Syngenta acquisition, the
boundaries of the international A 20bp–25bp premium against its largest ever by a Chinese company, might
capital markets in March with secondary curve gave investors the yet be affected.
Asia’s biggest Reg S-only bond issue, raising CONlDENCEûTOûPARTICIPATEûANDûENSUREDûGOODû On top of that, Syngenta had postponed
53BNûACROSSûSIXûTRANCHESûnûlVEûINû53û secondary performance. At the time, Asian its own US dollar offering the previous
dollars and a €1.2bn long four-year in euros. high-grade issuers were still grappling with September, creating an overhang as
4HEûlRSTûJUMBOûTRADEûFROMû!SIAûSINCEû the new market reality, having become investors waited to see if it would return for
markets weakened in February was also a ACCUSTOMEDûTOûPRINTINGûmATûTOûORûINSIDEûTHEIRû its own jumbo trade to help with the
record from China’s corporate sector, and curves for the past two years, but such acquisition funding. In the end, that trade
tied with Sinopec’s 2015 deal as the largest premiums soon became standard practice. came the month after ChemChina had
international bond from a Chinese state- The deal came in March, when investors settled investors’ concerns and shown what
owned enterprise. and issuers were still getting to grips with was possible in the Reg S market.
0ROCEEDSûWEREûUSEDûTOûRElNANCEûBRIDGEû new market conditions for emerging market Bank of America Merrill Lynch, Barclays,
loans used to acquire Swiss seeds and pesticide credits. Even with an established state-owned BNP Paribas, BOC International, China Citic
maker Syngenta for US$43bn, showing that name such as ChemChina, there was no Bank International, Commerzbank, Credit
the bond market was a viable way to fund guarantee that investors would show enough Agricole, Credit Suisse, First Abu Dhabi Bank,
M&A and giving other Asian issuers the interest to print the size it was targeting. HSBC, Industrial Bank Hong Kong branch,
CONlDENCEûTOûFOLLOWûLATERûINûTHEûYEAR Since the start of the year, China had Morgan Stanley, MUFG, Natixis, Rabobank,
The US dollar portions all priced 15.0bp– begun discouraging some companies from Banco Santander, Societe Generale and
17.5bp inside guidance – and a US$100m making too many large overseas UniCredit were joint global coordinators and
2048 at 5.5% in response to reverse acquisitions, and while ChemChina had joint bookrunners for the bond offering.
enquiries. The euro tranche was priced 15bp emerged as a national champion in the Daniel Stanton

AWARDS FOR EXCELLENCE

ND
THE 22
ANNUAL
IFR ASIA
AWARDS
DINNER
FEBRUARY 26 2019
FOUR SEASONS, HONG KONG

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98 International Financing Review IFR Awards 2018


NORTH AMERICA LOAN
Comcast’s US$39bn acquisition financing

PLUGGED IN
A
FTERûAûLONGûANDûTWISTYû-!ûROAD û expanding its international footprint to BANKSû"ANKûOFû!MERICAû-ERRILLû,YNCHûANDû
INCLUDINGûAûDUELûWITHûAûMOUSE û BETTERûCOMPETE 7ELLSû&ARGO
53ûCABLEûCOMPANYû#OMCASTûTOOKû h)NûMANYûWAYSûTHISûDEALûDElNEDûTHEû 7HENûTHEûBIDûWASûRAISEDûINû*ULYûTOû
CONTROLûOFû"RITISHûPAY 46û MARKETûINûTERMSûOFûWHATûLENDERSûWEREû aBN ûTHEûINCREASEûWASûFUNDEDûBYû
COMPANYû3KYûINû/CTOBER ûANDûTHEûaBNû LOOKINGûFORûINûTERMSûOFûENHANCEDû #OMCASTSûEXISTINGû53BNûREVOLVINGûCREDITû
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LATIN AMERICA LOAN


Petrobras’ US$4.35bn revolving credit facility

A NEW FRONTIER
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razilian energy giant Petrobras ûINSTITUTIONS ûWHICHûALLOWEDûTHEûCOMPANYû OFûAûlVE YEARûREVOLVERûTERMEDûOUTûITSûDEBTû
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RECEIVEDû53BNûINûCOMMITMENTSûFROMû PRICEDûTHATûOPTIONûOUTûOFûREACHû4HEûSECURITYû Aaron Weinman

IFR Awards 2018 International Financing Review 99


EMEA LOAN
Melrose’s £4.5bn acquisition loan

MIGHTY TURNAROUND
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ASIA-PACIFIC LOAN
GLP’s US$4.1bn acquisition loan

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100 International Financing Review IFR Awards 2018


EMEA LOAN HOUSE
BNP Paribas

FORWARD-THINKING
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Tessa Walsh

IFR Awards 2018 International Financing Review 101


ASIA-PACIFIC LOAN HOUSE
Citigroup

REACHING NEW HEIGHTS


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MAKERû4HEûLOANû Prakash Chakravarti

102 International Financing Review IFR Awards 2018


NORTH AMERICA LEVERAGED LOAN
ION Trading’s US$2.1bn-equivalent acquisition loan

ALL EYES ON ION


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TIMESûINûTHEûSYNDICATIONûDEPENDINGûONûTHEû AGGRESSIVEûSTRUCTUREû)VEûSEENûALLûYEAR vûSAIDû Jonathan Schwarzberg

EMEA LEVERAGED LOAN


TDC’s €5.9bn public-to-private acquisition loan

ONE VISION
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EXISTINGûDEBT /)$ûANDûTRADEDûWELLûONûTHEûBREAK Tessa Walsh

IFR Awards 2018 International Financing Review 103


NORTH AMERICA MID-MARKET LOAN
Big Ass Solutions’ US$250m acquisition loan

BIG ASS TURNS HEADS


)
&2SûMID MARKETûLOANûOFûTHEûYEARûRAISEDû DOINGûAûCLUBBED UPûDEALûORûDOINGûAû 4HEûVOLUMEûTHATûITûDOESûHASûASSISTEDûTHEû
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h)TûWASûFOURûTOûlVEûTIMESûOVERSUBSCRIBED vû ENOUGHûTHATû"IGû!SSû3OLUTIONSûWASûABLEûTOû CONTROLSûFORûINDUSTRIAL ûAGRICULTURAL û
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lNANCEûCAPITALûMARKETSûATû#REDITû3UISSEûh)Tû PRICINGûFURTHERûTOûBPûOVERû,IBORû4HEû COMPANYSûHEADQUARTERSûAREûINû,EXINGTON û
REALLYûSHOWSûWHATûSERVICESûWEûCANûDELIVERûTOû REPRICEDûLOANûCONTINUESûTOûREMAINûABOVEûPAR +ENTUCKY ûWITHûADDITIONALûOFlCESûINû
AûMIDDLE MARKETûSPONSORû4HEYûWOULDûNEVERû #REDITû3UISSEûHASûREALLYûCARVEDûOUTûAûNICHEû !USTRALIA û-ALAYSIA û3INGAPORE ûANDû#ANADA
HAVEûCOMEûANYWHEREûCLOSEûTOûTHISûEXECUTIONû FORûITSELFûINûSERVINGûMIDDLE MARKETûSPONSORSû Jonathan Schwarzberg

AWARDS FOR EXCELLENCE

THE 16 TH

ANNUAL
PFI AWARDS
DINNER
FEBRUARY 6 2019
Event sponsor:
THE HILTON PARK LANE, LONDON

PFIAwards.com
BOOK YOUR TABLES
#pfiawards
AT PFIAWARDS.COM

104 International Financing Review IFR Awards 2018


NORTH AMERICA IPO
Elanco Animal Health’s US$1.7bn IPO

FOUR LEGS BETTER


I
FûSPIN OFFSûAREûDESIGNEDûTOûILLUMINATEû SHARESûCLOSEDûTHEIRûDEBUTûSESSIONûûABOVEû OFû53M ûAûûMARGINûCOMPAREDû
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shares priced at US$24, above the US$21– MANYû,ILLYûSHAREHOLDERSûPUTûUPûTHEIRûHANDSû TAX FREEûûDAYSûLATERû%LANCOûSETûITSûSTANDALONEû
ûMARKETINGûRANGE ûWITHûEXERCISEûOFûTHEû wanting to buy. capital structure with US$2bn of debt sold in
MûGREENSHOEûEXTENDINGû%LIû,ILLYSûTAKEûTOû While there are substantial differences !UGUST ûFOLLOWEDûBYûAû53MûTERMûLOANû
US$1.7bn, the largest US-listed healthcare BETWEENû%LANCOûANDû:OETIS ûTHEûPOSITIVEû 4HOSEûFUNDS ûPLUSûTHEû)0/ûPROCEEDS ûmOWEDû
)0/ûSINCEû0lZERûSPUN OFFû:OETISûINû EXPERIENCEûONûTHEûLATTERûMEANTûINVESTORSû UPSTREAMûTOû,ILLY ûWITHûAûSMALLûPORTIONûHELDûBACKû
%LANCOûWASûNOTûONLYûAMONGûTHEûLARGESTû)0/Sû could see a possible path for Elanco. In the TOûLEAVEû%LANCOûWITHû53MûINûCASH
OFûTHEûYEARûBUTûTHEûMOSTûLUCRATIVEûASûWELL ûASûITSû PASTûYEAR û%LANCOûGENERATEDûADJUSTEDû%BITDAû Stephen Lacey

NORTH AMERICA SECONDARY EQUITY ISSUE


Centene’s US$2.86bn follow-on

CHURCH AND STATE


H
ealthcare and M&A are fraught launched a two-day bookbuild ahead of the h9OUûHAVEûTOûREMEMBERûTHEREûWASû
with regulatory risks and US MARKETûOPENûONû!PRILûûTHATûCANVASSEDû CONCERNûTHATû;0RESIDENT=û4RUMPûWASûTAKINGû
health insurer Centene’s NEARLYûûINSTITUTIONSû$ESPITEûTHEû AIMûATûTHEû!FFORDABLEû#AREû!CT vûSAIDû#HONG
US$3.75bn purchase of New COMPRESSEDûMARKETINGûSCHEDULE ûINVESTORû The State of New York added another political
York insurer Fidelis Care proved particularly DEMANDûSWELLEDûTOûMOREûTHANû TIMESûTHEû HURDLEûBYûDEMANDINGûAûTAKEûOFûTHEûPROCEEDSû
tricky. Unlocking the regulatory process MûSHARESûPLACEDûATû53 ûANûALL INû FROMûTHEûSALEûOFû&IDELIS ûHOLDINGûUPûITSûBLESSINGû
REQUIREDûAûCHUNKYûlNANCIALûSETTLEMENTû 2.4% discount to the pre-launch reference. &IDELIS ûAûNON PROlTûINSURERûOWNEDûBYûTHEû
between the Catholic Church, Fidelis’s The day after pricing, Centene shares #ATHOLICû#HURCH ûBENElTEDûFROMûSTATE SPONSOREDû
owner, and the State of New York. soared to US$114.24 and closed that week at a PROGRAMMESûSUCHûASû-EDICAIDûANDûSHOULDûSHAREû
Centene’s US$2.86bn equity raise in May, then record-high of US$116.65. The AûSPLITûOFûTHEûPROlTS ûTHEûTHINKINGûWENT
ITSûlRSTûPUBLICûSALEûOFûSTOCKûINûMOREûTHANûAû UNDERWRITERSûEXERCISEDûTHEIRûûGREENSHOEû The church agreed to pay US$1.5bn to the
decade, proved a catalyst not only for the OPTIONûONûMûSHARESûBYûTHEûENDûOFûTHEûWEEK STATEûANDû#ENTENEûADDEDû53MûTOûTHEû
acquisition but to attract new shareholders #ENTENE ûRATEDû"A"" ûTERMEDûOUTûTHEû ACQUISITIONûCOSTûBYûPROMISINGûATûLEASTû
able to fund growth. REMAININGû-!ûCONSIDERATIONûWITHûAû 53MûOFûADDITIONALûREVENUEûANDûAû
h4HEREûARENTûTHATûMANYûLARGEûLIQUIDITYûEVENTSû US$1.8bn eight-year high-yield bond sale the FURTHERû53MûTOûTHEûSTATEûOVERûlVEûYEARS
like this,” said Russell Chong, head of healthcare following week where funds were put in .EWû9ORKû'OVERNORû!NDREWû#UOMO ûWHOûATû
ECM origination at Citigroup. “Within the larger escrow until the acquisition closed in July. ONEûTIMEûSOUGHTûTOûCLAIMûûOFûTHEû53BNû
MUTUALûFUNDûCOMPLEXES ûTHEREûWEREûAûNUMBERû #ENTENEûHADûEXPECTEDûTOûWRAPûUPûTHEû SALEûPRICE ûCHAMPIONEDûTHEû53BNûWINDFALLûASûAû
of new funds that participated. PURCHASEûINûTHEûlRSTûQUARTERûOFûûHAVINGû VICTORYûFORûTAXPAYERSû4HEûCHURCHûTOOKû53BNû
h4HEREûWASûDEMANDûNOTûJUSTûFROMû AGREEDûTHEûDEALûINû3EPTEMBERûû/NûTHATû into its coffers, Centene gained a foothold in one
healthcare-dedicated funds but also growth- ORIGINALûTIMELINE ûTHEûCOMPANYûWASûTOûHAVEû OFûTHEûLARGESTû53ûHEALTHCAREûMARKETS ûINVESTORSû
oriented funds.” FUNDEDûINûLATEû ûBUTûPOLITICALûRHETORICûATû PROlTED ûANDûINVESTMENTûBANKSûTOOKûTHEIRûTAKEû
Citigroup, along with Barclays, Evercore, THEûTIMEûPRESSUREDûVALUATIONSûOFûHEALTHCAREû !ûRAREûWIN WIN WIN WIN WINûOUTCOME
SunTrust Robinson and Wells Fargo insurers. Stephen Lacey

IFR Awards 2018 International Financing Review 105


LATIN AMERICA EQUITY ISSUE
PagSeguro Digital’s US$2.6bn IPO

REDRAWING BOUNDARIES
B
RAZILIANûPAYMENTSûPROVIDERû #ONlDENCEûINûAûGLOBALûBIDûWITHûAûBROADERû THEûBIGGESTûmOATûOUTûOFû,ATINû!MERICAûINûFOURû
0AG3EGUROû$IGITALûREDREWûTHEû MINDSETûMADEûALLûTHEûDIFFERENCEûINû*ANUARYû years.
BOUNDARIESûINû,ATINû!MERICASû WHENû"RAZILSûPOLARISEDûELECTORALûLANDSCAPEû )NûAûRAREûMOVEûFORû,AT!MûISSUERS û
PRIMARYûEQUITYûMARKETSûWITHûITSû WASûSTARTINGûTOûDAMPENûAPPETITEûAMONGû%-û PagSeguro priced above the range (pricing at
53BNû)0/ ûOPENINGûTHEûREGIONSûTECHûSPACEû accounts and locals for the country’s assets. 53ûCOMPAREDûWITHûTHEû53n
to a global audience and laying the ground for 2EACHINGûTRADITIONALûBUYERSûWASûMADEû ûRANGE û)TûPROVEDûAûBIGûPAYDAYûFORûTHEû
AûSTRINGûOFûSIMILARûNAMESûTOûFOLLOW HARDERûONCEû"RAZILIANûREGULATORSûPROHIBITEDû BANKS ûWHICHûSHAREDû53MûOFû
)NûAûRAREû53ûLISTINGûFROMû"RAZIL û0AG3EGUROû in-country roadshows unless the stock was underwriting fees.
DElEDûPASTûEXPERIENCEûINûSELLINGû,AT!Mû listed locally. -ANYûOFûTHEû53ûACCOUNTS ûWHICHûMADEûUPû
SECURITIESûANDûPOSITIONEDûITSELFûAMONGûGLOBALû h7EûWERENTûSHYûTOûlNDûTHEûVERYûBESTû 74% of the book, had never bought a
and US tech investors hungry for new lNTECHûINVESTORSûALLûOVERûTHEûWORLD vûSAIDû,YLEû "RAZILIANûSTOCKûBEFORE ûBRINGINGûAûFRESHûVIEWû
OPPORTUNITIESûINûEMERGINGûMARKETS 3CHWARTZ ûWHOûRUNSû'OLDMANSû,AT!Mû%#-û TOûTHEû,AT!MûMARKETûANDûBETTERûVALUATIONSû
,AT!Mû)0/SûHAVEûTYPICALLYûLUREDûONLYû BUSINESSûALONGSIDEû6AZQUEZûh7EûLETûTHEMû FORûTHEûCOMPANY
EMERGINGûMARKET DEDICATEDûACCOUNTS ûLOCALû COMPETEûFORûTHEûASSETûANDûCREATEûSCARCITY ûANDû 4HEûlNALû)0/ûPRICEûVALUEDû0AG3EGUROûATûû
investors and on occasion sovereign wealth ULTIMATELYûPRICEûTHEûTRANSACTIONûATûLEVELSûTHATû TIMESûFORWARDûEARNINGS ûWELLûOVERûLOCALû
FUNDSûh)TûWASûTHEûlRSTûTIMEûINûALLûMYûYEARSû EXCEEDEDûTHEûCLIENTSûEXPECTATIONSv peers such as Cielo, as tech investors instead
as a banker that we were able to get Such accounts liked PagSeguro’s LOOKEDûTOû53ûCOMPSûSUCHûASû3QUAREûANDû
crossover investors – US tech funds, growth disruptive potential as a provider of 0AY0AL ûWHICHûATûTHEûTIMEûTRADEDûATûûTIMESû
FUNDSûnûACTUALLYûBUYINGûINTOûAû"RAZILIANû TECHNOLOGYûSOLUTIONSûFORûSMALLûANDûMEDIUM ANDûûTIMESûOVERûEARNINGS
STOCK vûSAIDû&ACUNDOû6AZQUEZ ûCO HEADûOFû SIZEDûCOMPANIESûINûAû"RAZILIANûlNANCIALû “Very little was placed locally because all
,AT!Mû%#-ûATû'OLDMANû3ACHS ûWHICHûACTEDû SECTORûSTILLûDOMINATEDûBYûBIGûBANKS the buyers at higher values were offshore,”
as sole global coordinator. An order book of US$25bn allowed the SAIDû3CHWARTZûh7EûDEMONSTRATEDûTHATûWEû
"ANKûOFû!MERICAû-ERRILLû,YNCH û"RADESCO û COMPANYûTOûUPSIZEûTHEûDEALûTOû53BN û COULDûTAKEûAû"RAZILIANûASSETûANDûEXECUTEûITûONû
#REDITû3UISSE û$EUTSCHEû"ANK û)TAUû""!ûANDû MAKINGûITûTHEûSECONDûLARGESTû)0/ûOFûAûNON 53û a global standard.”
JP Morgan were bookrunners. ISSUERûONûTHEû.EWû9ORKû3TOCKû%XCHANGEûANDû Paul Kilby

MAKE THE MOST OF


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IFRAwards.com #ifrawards

106 International Financing Review IFR Awards 2018


EMEA EQUITY HOUSE
Morgan Stanley

THE GOOD SHEPHERD


By doing whatever it takes to get deals done, Morgan Stanley survived a difficult year
with a higher success rate than its peers. Giving clients honest advice and finding
THEûRIGHTûINVESTORS û-ORGANû3TANLEYûSHEPHERDEDûITSûCLIENTSûTOûMARKET ûMAKINGûITû)&2Sû
EMEA Equity House of the Year.

“T
his year it was crucial to know how to RANGEûFORûAûõBNûVALUATIONû5PûAGAINSTûAûFALLINGûMARKET û
navigate volatility, be creative, be the stock traded poorly, but the leads had found a deal
UNAFRAIDûTOûDOûTHINGSûDIFFERENTLYûANDûlNDû that worked for owners Santander and BBVA. “We were
a path to distribution,” said Martin OUTûTHEREûWITHûSOMEûOFûTHEûTOUGHESTûASSETSûINûTHEûTOUGHESTû
Thorneycroft, head of EMEA ECM at Morgan Stanley. MARKETSû4HEYûWANTEDûITûDONE vûSAIDû4HORNEYCROFT
"YûBEINGûONûTHEûTOPûLINEûONûTHEûVASTûMAJORITYûOFûITSû /NûTHEûlNALûDAYûOFûBOOKBUILDINGûFORûTHEû,ONDONû
deals Morgan Stanley was able to drive the direction of LISTINGûOFû)SRAELSû%NERGEANû/ILûANDû'AS ûTHEûDEALûWASûSTILLû
TRADESûINûDIFlCULTûTIMESûnûSOMETIMESûTAKINGûTHEûHELMû 53MûSHORTûOFûCOVERAGEû4HEû)0/ûWASûALWAYSûGOINGûTOû
when its peers were advising to cancel. BEûAûTOUGHûASKûASûPOSITIVEûCASHmOWûGENERATIONûWASûONLYû
/Nû)0/SûINûPARTICULARûITûWASûEASYûTOûCANCELûINûûWITHû PREDICTEDûINû ûBUTûTHEûLEADSûFELTûTHEREûWASûAûDEALûTOû
MANYûREACHINGûFORûTHEûhPOORûMARKETûCONDITIONSvûEXCUSEû BEûDONEû3OûTHEûVALUATIONûWASûCUT ûWITHûPRIMARYûSHARESû
"UTûTHEûREALITYûISûTHATûFEWûFAILEDû)0/SûEVERûRETURNûANDûITû INCREASEDûTOûSECUREûNECESSARYûFUNDSûFORûINVESTMENT
WASTESûTHEûHUGEûINVESTMENTûOFûTIMEûBYûMANAGEMENT $ESPITEûAûTOUGHûEARLYûAFTERMARKET ûANDûNOûSTABILISATIONû
-ORGANû3TANLEYûHADûMOREûTHANûITSûFAIRûSHAREûOFûTROPHYû as shareholders would not sell at the new valuation, the
DEALSûnûITûRANûHALFûOFûTHEûûLARGESTûTRADESûnûBUTûITûWASûONû STOCKûWASûTRADINGûMOREûTHANûûABOVEûPRICINGûANDû
THEûSMALLERûDEALSûWHEREûEVERYûORDERûWASûHARDûFOUGHTû ABOVEûTHEûTOPûOFûTHEûORIGINALûPRICEûRANGE ûBYûTHEûENDûOFû
that the value of hiring the US bank was illustrated best. the awards period.
!ROUNDûû%-%!û)0/SûWEREûCANCELLEDûDURINGûTHEûREVIEWû The bank also got container shipping group CMA-CGM
PERIOD ûWITHû-ORGANû3TANLEYûHAVINGûTHEûLOWESTûNUMBERûOFû TOûCOMMITûASûAûCORNERSTONEûINVESTORûFORûTHEûALL PRIMARYû
PULLEDûmOATSûATûJUSTûTWOûnû'ERMANûPUBLISHERû3PRINGERû.ATURE û mOATûOFû3WITZERLANDSû#%6!û,OGISTICSûûHOURSûBEFOREûTHEû
INûAûWEEKûWHENûTHREEûOTHERû)0/SûWEREûCANCELLED ûANDû3PANISHû prospectus was due and in the process slashed the
OILûANDûGASûGROUPû#EPSA ûWHICHûWITNESSEDûAûSIZEABLEûDISCOUNTû CHALLENGINGû3&RBNûPROCEEDSûTARGETûTOûAûMOREû
TOûITSûPEERSûEVAPORATEûDURINGûMARKETINGûASûSTOCKSûFELLûINûLATEû MANAGEABLEû3&RM
/CTOBERûh4HEYûPAINûMEûEVERYûDAY vûSAIDû4HORNEYCROFT %VENûBANNERûDEALSûSUCHûASû+NORR "REMSESûõBNûmOAT û
7HENûITûFELTûLIKEûSOMEûBANKSûWEREûTHROWINGûDEALSûATû PRICEDûAGAINSTûMARKETûANDû)0/ûCANCELLATIONûCARNAGEûINû
the wall to see if they would stick, Morgan Stanley was /CTOBER ûREQUIREDûBANKERSûTOûDIGûDEEPû'IVENûTHEûTIMINGû
SNIFlNGûOUTûEVERYûLASTûINVESTORûANDûSHEPHERDINGûTHEMû ANDûSIZING ûDEMANDûHADûTOûBEûDRAWNûFROMûALLûCORNERS ûWITHû
into the book. -ORGANû3TANLEYûBRINGINGûINûACCOUNTSûINûTHEûTOPûûOFûTHEû
4HATûWASûEVIDENTûFROMûTHEûlRSTûmOATûOFû ûWITHû book that the bank had never spoken to before.
3PANISHûHOMEBUILDERû-ETROVACESAûTARGETINGûAûõBNû 7ITHûMARKETSûTRENDINGûDOWNWARDS û-ORGANû3TANLEYû
VALUATIONûINû&EBRUARYû)TûSOONûBECAMEûCLEARûTHATû STILLûPUTûMONEYûTOûWORKûONûACCELERATEDûSALESûWITHûABOUTûAû
INVESTORSûWEREûEXTREMELYûPRICE SENSITIVE ûWITHûOTHERû THIRDûOFûTHEûMOREûTHANûûOFûITSû!""SûONûRISK
EARLYûmOATSûALSOûSTRUGGLING !ûlRMûCOMMITMENTûWASûKEYûONûAû3+RBNû53M û
The solution was the still relatively rare decision to DUAL CLASSûSELLDOWNûBYû)NDUSTRIVARDENûINûSTEELMAKERû33!"û
RESTRUCTUREûANû)0/ ûWITHûNEWûPRICINGûBELOWûTHEûORIGINALû Without Morgan Stanley backstopping the A shares for
the client, the deal would not have gone ahead. The
EXECUTIONûWASûEXEMPLARYûANDûBACKEDûUPûTHEûRISKûDECISIONû
WITHûTHEûlRSTûTHREEûORDERSûCOVERINGûTHEû!ûSHAREûTRANCHE
4HEû!""ûHAULûINCLUDEDûTHREEûOFûTHEûlVEûLARGESTû
SELLDOWNS ûCOMPRISINGûAûaBNûTRADEûINû2"3ûANDûAûõBNû
deal in Safran on behalf of the UK and French
GOVERNMENTS ûRESPECTIVELY ûANDûAûõBNûSALEûINû!DYENû
THATûECLIPSEDûTHEûõMûmOAT û)&2Sû%-%!û)0/ûOFûTHEû9EAR
4HEREûWEREûALSOûlRSTûPOST )0/ûSELLDOWNSûINû$ELIVERYû
(ERO û(ELLO&RESH û4#3 û"ASIC &ITûANDû"ANCAû&ARMAFACTORING
h5LTIMATELY ûITûCOMESûDOWNûTOûGOODûJUDGEMENTûANDû
doing what it takes,” said Thorneycroft. Whether that
INVOLVEDûNAVIGATINGûTHEûlRSTûTESTûOFûTHEû5+ûREGISTRATIONû
DOCUMENTûWITHû&UNDINGû#IRCLE ûORûBEINGûONûRISKûFORûANû
UNHEARDûOFû&RIDAYûAFTERNOONû!""ûINû$ELIVERYû(ERO û
Morgan Stanley left no stone unturned.
Robert Venes

IFR Awards 2018 International Financing Review 107


EMEA IPO
Adyen’s €947m IPO

WHIZ KID
$
UTCHûPAYMENTSûlRMû!DYENûBROUGHTû in the year, eBay had even signed up with TYPICALû53ûTECHûSTYLEûLISTING ûOFFERINGûJUSTû
SOMEûSPARKLEûTOû%-%!û)0/SûINû û !DYENûINûPLACEûOFûITSûFORMERûSUBSIDIARYû0AY0AL ûOFûTHEûCOMPANYûTOûINVESTORSûnûAû
enticing investors with its lean US- h)TûALMOSTûDOESNTûMATTERûIFû!DYENûGROWSû DECISIONûTHATûALSOûREmECTEDûTHEûDIFlCULTYûINû
style listing, star-studded client base its client base or not – it still grows, say, 35% convincing any shareholders to sell.
ANDûMETEORICûGROWTHûINûAûYEARûOTHERWISEû because their clients do,” said Magnus 4HEûIDEAûWASûTOûCREATEûAûPOPûONûTHEûlRSTû
DOMINATEDûBYûESTABLISHEDûINDUSTRIALû Andersson, head of cash ECM coverage for day of trading, with the scarcity of shares
heavyweights and corporate spin-offs. EMEA at Morgan Stanley. CREATINGûAûFEVERISHûAFTERMARKET
!TûõM ûITSû%URONEXTû!MSTERDAMû Morgan Stanley – occupying a US-style #RUCIALLY ûPRICINGûATûûTIMESûûEARNINGSû
LISTINGûWASûTHEûSIXTHûLARGESTû)0/ûBYûDEALûSIZE û LEAD LEFTûSLOTûnûANDû*0û-ORGANûWEREûJOINTû WASûFARûFROMûCHEAP ûESPECIALLYûINûTHEû
but the spectacular rise in its share price GLOBALûCOORDINATORS ûANDûJOINTûBOOKRUNNERSû %UROPEANûCONTEXT ûANDûKEYû53ûPEERû3QUAREû
MAKESûITûTHEûBEST PERFORMINGûSTOCKûTOûGOû WITHû!".û!-2/ û"ANKûOFû!MERICAû-ERRILLû HADûDELIVEREDûAûûRETURNûFROMû)0/ûTOûEARNû
PUBLICûINû%UROPEûTHISûYEARû!SûOFû.OVEMBERû Lynch and Citigroup. ITSûûTIMESûMULTIPLEû/THERûCONCEPTûSTOCKSû
 ûSHARESûWEREûUPûûFROMû)0/ûPRICING û European investors grabbed the that looked to achieve punchy pricing later in
VALUINGûTHEûCOMPANYûATûAROUNDûõBN opportunity to play the US tech titans THEûYEARûFOUNDûTHEIRûLISTINGûEXPERIENCEûTURNû
!TûûYEARSûYOUNGERûONûAVERAGEûTHANûTHEû WITHOUTûTHEûSINGLE NAMEûRISKûANDûINûTHEIRû sour once trading began.
OTHERûlVEûCOMPANIESûTOûACHIEVEûBILLIONûDOLLARû HOMEûMARKETû!NûAVALANCHEûOFûDEMANDûWASû 4HEûmOATûALSOûHELPEDûTURNûTHEûTIDEûINû
LISTINGSûINû û!DYENûSTANDSûOUTûFROMûTHEû EVIDENTûFROMûQUEUESûOUTûTHEûDOORûATû %UROPEûWHENûû)0/SûHADûCANCELLEDûINûTHEû
CROP ûMAKINGûDOûWITHOUTûTHEûREPUTATIONûANDû MARKETINGûEVENTSûTHATûTRANSLATEDûINTOûOVERû PREVIOUSûTWOûMONTHSû4OOûFEWûEVENTSûPUTû
TANGIBLEûASSETSûTHATûBENElTEDûTHISûYEARSû ûLINESûOFûDEMANDû4HEû)0/ûWASûCOVEREDûINû MONEYûINûINVESTORSûPOCKETSûTHROUGHûTHEû
OTHERûPRAISEWORTHYû)0/S an hour, priced at the top of its range and YEAR ûYETû!DYENSûmOATûCREATEDûENORMOUSû
Instead, it offered its unique status as an agile THEûSHARESûCLOSEDûTHEIRûlRSTûDAYûUPû value for old and new shareholders. And
TECHûlRMûWITHûAûGLITTERINGûCLIENTûBASEû 4HEûSTRUCTUREûOFû!DYENSû)0/ûWASûASû investors were soon calling on shareholders
CONTAININGûSOMEûOFûTHEûWORLDSûLARGESTûTECHû unique as its client list. Bucking Europe’s DIRECTLYûTOûBREAKûTHEûLOCK UPûANDûSELLûMORE
OUTlTSûSUCHûASû5BER û.ETmIXûANDû3POTIFYû%ARLIERû TRENDûFORûûFREE mOATS ûITûOPTEDûFORûAû Lucy Raitano

EMEA SECONDARY EQUITY ISSUE


Cineworld’s £1.7bn rights issue

GOING TO THE MOVIES


W
ith FIG recapitalisations off EARLYû$ECEMBERûPROVIDEDû#INEWORLDûWITHû FOCUSûONûTAKE UPû-ANAGEMENTûCOMPLETEDûAû
THEûMENUûFORûTHEûlRSTûTIMEû COMFORTûFROMûTHEûOFFûTHATûTHEûDEALûCOULDûGOû GLOBALûROADSHOW ûMEETINGûMOREûTHANûû
in years, a wave of M&A- ahead. INVESTORSûBETWEENûDEALûANNOUNCEMENTûANDû
BASEDûEQUITYûlNANCINGSû h4HISûWASûTHEûMOSTûCHALLENGINGûRISKûINûAû SETTINGûRIGHTSûISSUEûTERMS
WASûEXPECTEDûTOûREPLACEûTHEMûINûû4HATû VERYûLONGûTIME vûSAIDû4OMû*OHNSON ûHEADûOFû 4HEûRESULTûWASûAûûTAKE UP ûANûEXCEPTIONALû
WAVE ûTHOUGH ûFAILEDûTOûMATERIALISEûWITHûJUSTû EMEA ECM at Barclays. The rights issue was RESULTûEVENûINûAûGOODûMARKET ûWHICHûWASûRARELYû
AûFEWûEXCEPTIONSû!NDû#INEWORLDûWASû THEûLARGESTûINûTHEû5+ûSINCEû$ECEMBERûû THEûBACKDROPûINûû4HEû6)8ûVOLATILITYûINDEXû
CERTAINLYûEXCEPTIONAL ANDûTHEûSECONDûLARGESTûINû%-%!ûINûû JUMPEDûFROMûûINûTHEûDAYSûBEFOREû
4HEû5+ûCINEMAûCHAINûANNOUNCEDûAû BEHINDû"AYERSûLONG AWAITEDûõBNûCAPITALû subscription began to 37.32 on day one, before
TRANSFORMATIVEûACQUISITIONûOFû53ûPEERû2EGALû increase in June. FALLINGûAGAINûTOûûBYûTHEûDAYûAFTERû
%NTERTAINMENTû'ROUPûINûEARLYû$ECEMBERû The initial response was poor, with shares SUBSCRIPTIONûWRAPPEDûUPû!SûAûRULEûOFûTHUMB û
ûFORûANûEQUITYûVALUEûOFû53BN ûTAKINGû FALLINGûûWHENûTHEûDEALûWASûLEAKEDû %#-ûSTRUGGLESûONCEûTHEû6)8ûPUSHESûABOVEû
ITSû ûSCREENSûUPûTOû ûANDûACCESSINGû (AVINGûTHEû'REIDINGERûFAMILY û#INEWORLDSû %VENûTHEûRUMPûSHOWEDûHEAVYûDEMAND û
THEû53ûBOXûOFlCEûWITHûANNUALûTAKINGSûOFû largest shareholder with a 28% stake, WITHûTHEûTOPûûORDERSûTAKINGûAROUNDûTWO
MOREûTHANû53BN ONBOARDûATûANNOUNCEMENTûAûFEWûDAYSûLATERû THIRDSûOFûMûSHARESûSOLDûATûP ûmATûTOû
$OINGûSOûINVOLVEDûAûaBNûRIGHTSûISSUEû WASûVITALû"ARCLAYSûPROVIDEDûAûMARGINûLOANû THEû4%20ûATûLAUNCHû3HARESûTOPPEDûPûINû
THATûWASûLARGERûTHANû#INEWORLDSûMARKETû THATûALLOWEDûTHEûFAMILYûTOûREMAINûWHOLE /CTOBER
CAPITALISATIONûOFûaBNûANDûWOULDûKEEPû !ûDEALûTHATûSHOTû#INEWORLDûFROMûMID CAPûTOû h&ORûAû5+ûMID CAP ûTHISûSHOWEDûANû
LEVERAGEûINûCHECKûATûFOURûTIMES ûWELLûUPûFROMû THEûFRINGESûOFûTHEû&43%ûûINDEXûMEANTûTHEû UNPRECEDENTEDûLEVELûOFûAMBITION vûSAIDû
1.5 pre-deal. The result was a hefty four new BANKSûCOULDNTûSIMPLYûWRITEûAûCHEQUEûANDû *OHNSONû4HEûSAMEûCANûBEûSAIDûOFûTHEûBANKSû
shares issued for every one share outstanding WAITûFORûSHAREHOLDERSûTOûCOMEûINû4HEREûWASû that shouldered the burden against a
at 157p, a 34.1% discount to TERP. NOûNEEDûTOûEXPENDûMUCHûEFFORTûONûSECURINGû shocking tape and the investors that bought
!ûVOLUMEûUNDERWRITEûFROMûJOINTû VOTESûFORûTHEûACQUISITIONûWITHûTHEûFAMILYû INTOû(OLLYWOODSûDREAMûFACTORY
bookrunners Barclays, HSBC and Investec in already on board, which allowed everyone to Robert Venes

108 International Financing Review IFR Awards 2018


ASIA-PACIFIC IPO
Innovent Biologics’ HK$3.8bn IPO

BIOTECH LIFELINE
T
HEû(+BNû53M û)0/ûOFû 4EMASEK BACKEDû)NNOVENT ûANûANTI CANCERû priced the offer slightly off the top at
Innovent Biologics proved Hong drug developer with four antibody products (+ûPERûSHAREûTOûRAISEû(+BN ûCLEARLYû
+ONGûCOULDûSUPPORTûMAJORûLISTINGSû in late-stage clinical trials, was the fourth WITHûANûEYEûONûSECONDARYûPERFORMANCE
OFûPRE REVENUEûBIOTECHûCOMPANIESû biotech listing in the city. The offering was !BOUTûûOFûTHEûSHARESûWEREûALLOCATEDûTOû
!LTHOUGHûNOTûTHEûlRSTûnûORûTHEûLARGESTûnûITSû closely watched as another failed listing long-only funds and healthcare specialists,
mAWLESSûDEBUTûREVIVEDûTHEûSTOCKûEXCHANGESû COULDûWELLûHAVEûSHUTûTHEûMARKET 8% to hedge funds and 2% to others.
efforts to create a sustainable new sector. To raise its chances of success, Innovent 4HEûSTELLARûAFTERMARKETûTRADINGû
(ONGû+ONGû%XCHANGESûANDû#LEARINGûINû SECUREDûûCORNERSTONEûINVESTORSûFORûAûTOTALûOFû PERFORMANCEûOFû)NNOVENTûTHREWûAûLIFELINEûTOû
April introduced new rules to allow the 53M ûORû ûOFûTHEûmOATû3INGAPOREANû biotech listing hopefuls, raising investors’
listing of dual-class shares and pre-revenue STATEûFUNDû4EMASEK ûANûEXISTINGûSHAREHOLDER û CONlDENCEûINûTHEûSECTOR
BIOTECHûCOMPANIESûWITHûATûLEASTûONEûPRODUCTû INVESTEDûAûFURTHERû53MûINûTHEû)0/û/THERû 4HEûCOMPANYûENDEDûITSûlRSTûDAYûOFûTRADINGû
beyond the concept stage. cornerstone investors included US venture ONû/CTOBERûûWITHûAûûGAINûTOû(+û
&OURTEEN ûMAINLYû#HINESE ûBIOTECHû CAPITALûlRMû3EQUOIA û#APITALû'ROUP û6ALUEû 4HEûSTOCKûHITûANûALL TIMEûHIGHûOFû(+ûONû
COMPANIESûRAPIDLYûlLEDûFORû(ONGû+ONGû Partners and Vivo Capital. .OVEMBERû ûORûûABOVEûTHEûISSUEûPRICE
LISTINGSû4HEûlRSTûFEWûDEALS ûHOWEVER ûWEREû 4HEûCOMPANYûALSOûSETûAûREALISTICûVALUATIONû A 15% greenshoe was subsequently fully
disappointing, casting doubts on the city’s target, of about US$2.1bn at the top of the EXERCISED ûRAISINGûANûADDITIONALû(+Mû
NASCENTûEFFORTûTOûBECOMEûAûBIOTECHûLISTINGûHUB (+nûPRICEûRANGEû4HATûWASû for the issuer.
"Yû.OVEMBERû ûSHARESûOFû!SCLETISû0HARMA û MUCHûLOWERûTHANûTHEûFAIRûVALUEûGUIDANCEûOFû #HINAû-ERCHANTSû3ECURITIES û'OLDMANû
THEûlRSTûSUCHûLISTINGûUNDERûTHEûNEWûRULES ûHADû UPûTOû53BNûFROMûONEûOFûTHEû)0/ûSPONSORSû Sachs, JP Morgan and Morgan Stanley were
TUMBLEDûûSINCEûTHEIRû!UGUSTûûDEBUTû(UAû DURINGûPRE MARKETING JOINTûSPONSORSû4HEûFOURûBANKSûWEREûALSOû
Medicine and BeiGene, the other two newly "OOKS ûEXCLUDINGûTHEûCORNERSTONEûTRANCHE û JOINTûGLOBALûCOORDINATORSûWITHû(UATAIû
LISTEDûBIOTECHûlRMSûINû(ONGû+ONG ûWEREûû WEREûMOREûTHANûûTIMESûCOVEREDû$ESPITEû &INANCIALûANDû(3"#ûWASûAûJOINTûBOOKRUNNER
ANDûûBELOWûTHEIRû)0/ûPRICES ûRESPECTIVELY THEûOVERWHELMINGûDEMAND ûTHEûCOMPANYû Fiona Lau

ASIA-PACIFIC SECONDARY EQUITY ISSUE


Naspers’ HK$77bn Tencent Holdings block trade

OVERNIGHT SENSATION
I
NûAûYEARûWHENû(ONGû+ONGSûSTOCKûEXCHANGEû !FTERûMONTHSûOFûPREPARATIONS ûJOINTû US, while Naspers – which trades largely as a
PASSEDûREFORMSûAIMEDûATûBOOSTINGûITSû BOOKRUNNERSû"ANKûOFû!MERICAû-ERRILLû 4ENCENTûPROXYûnûISûQUOTEDûINû*OHANNESBURG
APPEALûTOûTECHNOLOGYûCOMPANIES ûITûISû Lynch, Citigroup and Morgan Stanley $ESPITEûTHEûCHALLENGES ûTHEûBLOCKûWASû
lTTINGûTHATûTHEûCITYSûBIGGESTûTECHûSTOCKû nevertheless went ahead and launched the covered a few hours after launch and ended
SHOULDûBEûATûTHEûHEARTûOFûTHEûMOSTûSIGNIlCANTûnû OFFERûOFûABOUTûMûSECONDARYûSHARES ûORû WELLûOVERSUBSCRIBEDûWITHûMOREûTHANûû
ANDûIMPRESSIVEûnûDEALûOFûTHEûYEAR ABOUTûûOFûTHEûCOMPANY investors participating.
.ASPERSû(+BNû53BN ûSELL Unlike a typical block trade in Asia, the About an hour before the books closed, the
down in internet giant Tencent Holdings deal was launched on a best-efforts basis LEADSûISSUEDûGUIDANCEûOFû(+nûPERû
SHOWEDûTHATû(ONGû+ONGûCANûCOMPETEûONûAû without any wall-crossing and no price SHAREûORûAûDISCOUNTûOFûnû4HEûSHARESûWEREû
LEVELûPLAYINGûlELDûWITHûTHEûWORLDSûBIGGESTû range at launch. Naspers, which still owns a EVENTUALLYûPRICEDûATû(+ûEACH ûORûAûû
EQUITYûlNANCINGûVENUES 31.1% stake in Tencent after the trade, also DISCOUNTûTOûTHEûPRE DEALûCLOSEûOFû(+
!SIA 0ACIlCSûLARGESTûOVERNIGHTûBLOCKûTRADEû SAIDûITûHADûNOûINTENTIONûOFûSELLINGûANYûMOREû 4HEûTOPûûINVESTORSûTOOKûAROUNDûûOFûTHEû
SMASHEDûAûRECORDûINû(ONGû+ONGûTHATûHADû shares for at least three years. DEALûANDûTHEûTOPûûBOUGHTûû$EMANDûCAMEû
STOODûSINCEû6ODAFONEûSOLDûAû(+BNû#HINAû This allowed the banks to build a FROMûGLOBALûTOP TIERûLONG ONLYûFUNDS ûSOVEREIGNû
-OBILEûSTAKEûINûû)TûISûALSOûTHEûTHIRD GENUINE ûGLOBALûBOOKûFROMûTHEûOUTSET û wealth funds and hedge funds. Geographically,
largest on record anywhere in the world. CREATINGûCOMPETITIONûAMONGûINVESTORSû ABOUTûûOFûDEMANDûCAMEûFROMû!SIA ûû
4HEû-ARCHûûSHAREûSALEûWASûALSOûTHEûlRSTû ANDûULTIMATELYûLEADINGûTOûGREATERûPRICEû FROMûTHEû53ûANDûûFROMû%UROPE
FROMû3OUTHû!FRICANûMEDIAûANDûENTERTAINMENTû tension. 4ENCENTûCLOSEDûATû(+ûTHEûDAYû
COMPANYû.ASPERS ûWHICHûHADûSEENûITSû53Mû Launching without a price range also gave following the sell-down, a 4.4% drop on the
INVESTMENTûINûûBALLOONûTOû53BN THEûLEADSûMOREûmEXIBILITYûONûPRICING ûWHICHû day, but left investors who took part in the
The deal was launched a day after Tencent was critical to the deal’s success given that DEALûCOMFORTABLYûINûTHEûMONEYû.ASPERSûGOTû
announced its quarterly results. Slowing THEû$OWûTUMBLEDûûDURINGûBOOKBUILDINGû the best of the bargain, however, after
GAMINGûREVENUESûWORRIEDûINVESTORS û AFTERû$ONALDû4RUMPûANNOUNCEDûFRESHûTARIFFSû 4ENCENTûRETREATEDûFROMûITSûlRST QUARTERû
dragging down the shares by 5% before the ONû#HINESEûGOODSû4ENCENTSû!MERICANû peaks.
sell-down was announced. depository receipts were still trading in the Fiona Lau

IFR Awards 2018 International Financing Review 109


US MID-MARKET EQUITY HOUSE
Cowen

NO DOPES
7HENûNOûBANKûWASûWILLINGûTOûTESTûTHEû53ûMARKETSûSUPPORTûFORûAûPUBLICLYûTRADEDû
CANNABISûCOMPANY û#OWENûSTEPPEDûINûANDûDELIVEREDûTHEûBEST PERFORMINGû)0/ûINûYEARSû
In its centenary year, Cowen is IFR’s US Mid-Market Equity House of the Year.

C
ANADIANûMEDICALûCANNABISûGROWERû4ILRAYSûEYE SHARE ûAûûPREMIUMûATûTHEûTIMEûANDûNEARLYûûTIMESû
CATCHINGû.ASDAQûDEBUTûINû*ULYûLEGITIMISEDû THEû)0/ûPRICE
CANNABISûASûANûINSTITUTIONALûINVESTMENTûTHEMEû Cannabis is but one part of the healthcare operation.
ANDûPROVEDûAûMISSEDûOPPORTUNITYûFORû7ALLû #OWENûBOOKRANûûHEALTHCAREû)0/SûTHATûRAISEDûAûTOTALûOFû
3TREETûBANKSûUNABLEûORûUNWILLINGûTOûBANKûTHEûEMERGINGû 53BNû4HEûBANKSûBOOKRUNNERûSHAREûRANKEDûITûFOURTHû
industry. But not for Cowen. INûTHEûSECTORûSECONDûBYûNUMBERûOFûDEALS ûAHEADûOFûMANYû
4HEû.EWû9ORK BASEDûMID MARKETûINVESTMENTûBANKûWASû BULGE BRACKETûlRMSû)NCLUDEûFOLLOW ONSûANDûTHEûBANKû
already well aware of the cannabis industry and its global logged 68 deals totalling a league table share of US$3.45bn
POTENTIAL ûPROVINGûNIMBLERûTHANûRIVALSûTOûLEADûWHATûWASû TOûRANKûITûTHûINûTHEû53ûCOMBINEDûEQUITYûLEAGUEûTABLE
EASILYûTHEûYEARSûHOTTESTûANDûMOSTûTALKEDûABOUTû)0/ !RGUABLY ûNOûCLIENTûHASûBEENûASûEMBLEMATICûOFû
#OWENûSENIORûRESEARCHûANALYSTû6IVIENû!ZERûWASûlRSTûTOû #OWENSûEMERGENCEûASû"LUEBIRDû"IO
IDENTIFYûCANNABISSûEXPLOSIVEûGROWTHûPOTENTIALûINûAûGROUND "UILDINGûFROMûAûCO MANAGERûROLEûONûTHEû)0/ûlVEûYEARSû
breaking initiation of research on the industry two years ago, Cowen capped a long-standing relationship with a
earlier. The view then, and now, was that the industry was BOOKRUNNERûSLOTûONû"LUEBIRDSû53MûFOLLOW ONû
AûLOGICALûEXTENSIONûOFûAûHEALTHCAREûRESEARCHûPRACTICE offering in July.
h7EûAREûAûRESEARCH DRIVENûlRM vûSAIDû,ARRYû7IESENECK û h)FûYOUûWORKûWITHûTHEûBESTûCOMPANIESûANDûDOûAûGOODû
CO PRESIDENTûATû#OWENûANDûAûLONGTIMEû,EHMANû"ROTHERS JOBûFORûTHEM ûTHEYûWILLûCOMEûBACKûTOûYOU vûSAIDû'RANTû
"ARCLAYSûBANKERûWHOûJOINEDû#OWENûINûLATEûûh7Eû -ILLER û#OWENSûHEADûOFûCAPITALûMARKETS
unabashedly believe in the value of our intellectual Allogene Therapeutics, a clinical stage biotech, is
CONTENTûANDûITûHASûTOûBEûCOMBINEDûWITHûREALûMUSCLEv AMONGûTHEûNEXTûGENERATIONûOFûDRUGûDEVELOPERSû)Nû
4HROUGHûAûSERIESûOFûHIGH PROlLEûHIRES û#OWENûHASûû /CTOBER û#OWENûHELPEDûTHEûCOMPANYûRAISEûAûMAMMOTHû
ANALYSTSûATûMANAGINGûDIRECTORûLEVELûINûTHEûHEALTHCAREûGROUP û 53MûONûITSû)0/ ûTHEûLARGEST EVERûBYûAûBIOTECHûINûTHATû
COVERINGûEVERYTHINGûFROMûBIOTECHûTOûLARGEûPHARMAûASûWELLûASû STAGEûOFûDEVELOPMENT
DIAGNOSTICSûANDûMEDICALûDEVICESû/VERALL ûTHEûBANKûCOVERSû Wieseneck and Miller are both quick to acknowledge
MOREûTHANûûCOMPANIESûACROSSûSEVENûVERTICALS that healthcare is volatile.
2IVALS ûPARTICULARLYûATûBULGE BRACKETûlRMS ûCOMPLAINû -ANDATESûSUCHûASûlNANCIALûPAYMENTûPROCESSORû)û
that Cowen “overpays”, but that only underscores 6ERTICALSû53Mû)0/ûINû*UNEûANDûTHEû53MûSPIN
Cowen’s dedication to research. OFFû)0/ûOFû.ETGEARSûHOMEûSECURITYûARMû!RLOû
With US Attorney General Jeff Sessions in January 4ECHNOLOGIESûINû!UGUSTûAREûSIGNPOSTSûOFûDIVERSIlCATION
LABELLINGûCANNABISûAûhDANGEROUSûDRUGvûANDûhMARIJUANAû #OWENûISûLAYINGûTHEûGROUNDWORKûFORûFURTHERûEXPANSION
ACTIVITYvûAûhSERIOUSûCRIMEv ûONûTHEûONEûHAND ûANDû#ANADIANû )Nû.OVEMBER ûTHEûlRMûFORGEDûANûEXCLUSIVEûAGREEMENTû
FEDERALûGOVERNMENTûLEGALISINGûTHEûGREENûSTUFFûINû/CTOBER û with energy-focused adviser Intrepid Financial Partners
ONûTHEûOTHER ûTHEû*ULYûmOATûNEEDEDûCAREFULûPLANNING TOûPROVIDEûCAPITALûMARKETûSERVICESûFORûENERGYûCOMPANIES û
#OWENûOUTLINEDûAûVERYûSPECIlCûSTRATEGYûTOû4ILRAYû tapping into Wieseneck’s deep base of relationships.
MANAGEMENT Intrepid founder Skip McGee and Wieseneck worked
4HEûlRSTûSTEPûWASûAû53MûPRIVATEûPLACEMENTûINû TOGETHERûATû,EHMANû"ROTHERSûANDû"ARCLAYS
January to provide standalone funding and create a !NûAGREEMENTûTOûPURCHASEû1UARTONû)NTERNATIONAL ûALSOû
#ANADIAN DOMICILEDûCORPORATEûSTRUCTUREûDISTINCTûFROMû53û STRUCKûINû.OVEMBER ûPOINTSûTOûCONTINUEDûEXPANSION
private equity backer Privateer Holdings. Robert Sherwood
)Nû-ARCH û4ILRAYûCONlDENTIALLYûlLEDûDOCUMENTSûWITHû
53ûREGULATORSûANDûBEGANûANûEXTENSIVEûINVESTORûEDUCATIONû
Larry Wieseneck
CAMPAIGNûINûPREPARATIONûFORûTHEû)0/ûTHATûCANVASSEDû
SOMEûûINSTITUTIONSûGLOBALLY
h%VERYûTIMEûWEûMENTIONEDûCANNABISûTOûMOSTû Grant Miller
institutional investors they would begin to giggle and
LAUGH vûSAIDû4ILRAYû#&/û-ARKû#ASTANEDAûh4HEYûDIDNTû
believe it was a real industry.”
#OWENûFOLLOWEDûWITHûAûM SHARE ûALL PRIMARYûOFFERINGûINû
*ULYûTHATûITûPRICEDûATû53 ûABOVEûTHEû53nûMARKETINGû
range, and that it allocated 75% to US institutions and the
balance globally – all institutional investors.
Tilray landed the bulk of its working capital needs
WITHûAû53MûlVE YEARû#"ûINû/CTOBERûTHATûPRINTEDû
with a 5% coupon and conversion price of US$167.41 per

110 International Financing Review IFR Awards 2018


EMEA MID-MARKET EQUITY HOUSE
Peel Hunt

NEW AND EXOTIC


5+ûMID MARKETûSPECIALISTSûFACEDûUNIQUEûCHALLENGESûINûTHEûMIDSTûOFû"REXITûUNCERTAINTYû
0EELû(UNTûSTOODûOUTûWITHûBOLDûANDûWELL EXECUTEDûDEALSûTHATûWOOEDûINVESTORSûBYû
OFFERINGûSOMETHINGûNEWûANDûEXOTICûANDûISû)&2Sû%-%!û-ID -ARKETû%QUITYû(OUSEûOFû
the Year.

I
Fû0EELû(UNTSûEQUITYûTEAMûWASûNERVOUSûABOUTûTHEû (UNTûISûNOWûSELLINGûTOûûACCOUNTS ûUPûFROMûûLASTû
CONSEQUENCESûOFû"REXITûnûANDûTHEûMESSYûEXITûPROCESSû YEAR ûANDûDOWNLOADSûHAVEûMOREûTHANûDOUBLEDû/NûAûLIKE
– it certainly didn’t show. Together, they raised over FOR LIKEûBASIS ûREVENUESûAREûUPûANûESTIMATEDû
aBNûFORûûCLIENTSûANDûSNAGGEDûSOLEûBOOKRUNNERû )NûTHEûSMALLûANDûMID CAPûSPACEûHIGHLYûRATEDûANALYSTSû
ROLESûONûTWOûOFûTHEûBESTûPERFORMINGû%UROPEANû)0/S AREûSOUGHTûAFTERû/NûTHEû)0/ûOFû"AKKAVORûINû.OVEMBERû
h!TûTHEûSTARTûOFûTHEûYEAR ûTHEûMOST SHORTEDûPOSITIONûINû  û0EELû(UNTûWASûAûJUNIORûINûAûSIX BANKûSYNDICATE ûYETû
THEû"!-,ûFUNDûMANAGERûSURVEYûWASûVOLATILITY ûNOWûITûISû ITSûANALYSTûCOMPLETEDûMOREûTHANûHALFûOFûTHEû PLUSû
THEû5+ vûSAIDû!LEXû#ARTER ûHEADûOFûEQUITIESûATû0EELû(UNTû MEETINGSûINûPRE MARKETING
“International investors are underweight UK. But for UK Bain Capital hired Peel Hunt to work alongside JP
investors it is business as usual – they say ‘if we see an -ORGANûONûITSûlRSTûPOST )0/ûSALEûOFûSHARESûINû4)û&LUIDû
issuer we like at the right price, we’ll buy’.” 3YSTEMSû0EELû(UNTûHADNTûWORKEDûONûTHEû)0/ûANDûFOURû
4HEûNUMBERSûSPEAKûFORûTHEMSELVESû0EELû(UNTûDEALSû global banks that did were overlooked.
WITHûTHEûODDûEXCEPTION ûRISEûINûTHEûAFTERMARKETûFROMû “The quality of the analysts is crucial. We want to be
DAYûONEûONWARDSû53ûMOBILEûPAYMENTSûPLATFORMû"OKUû NUMBERûONEûINûEACHûSECTORûASûTHATûATTRACTSûTHEûBESTû
ANDû5+ûlNANCIALûADVISERûPLATFORMû)NTEGRAlN ûTHEûTWOû institutions and that brings the best issuers,” said
BESTûPERFORMINGû5+ûmOATSûOFûTHEûAWARDSûPERIOD ûWEREû Alastair Rae, co-head of ECM syndicate.
TRADINGûûANDûûABOVEûTHEIRû)0/ûPRICINGûRESPECTIVELYû Peel Hunt faced an additional challenge on
ASûOFûTHEûCLOSEûONû.OVEMBERû )NTEGRAlNSûaMû)0/ûINûTERMSûOFûKEEPINGûTHEûDEALû
0EELû(UNTûPUTûITSûABILITYûTOûDISCERNûSENTIMENTûINûTHEû going when it was unclear if there was going to be any
5+ûMID CAPûINVESTORûBASEûONûFULLûDISPLAYûTHISûYEAR STOCKûAVAILABLEû)NûTHEûEND ûENOUGHûOFûTHEû STRONGû
Accurately detecting appetite for a niche US tech shareholder register was convinced to sell 27% of the
stock in London, the broker convinced San Francisco- COMPANYûBUTûTHEREûWASûNOûCERTAINTYûANDûSTILLûTHEûSOLEû
based Boku to defy convention and list in the UK. BOOKRUNNERûWASûABLEûTOûBUILDûAûMULTIPLEûTIMESûCOVEREDû
7HILEû"OKUûWASûTINYûWITHûJUSTûûEMPLOYEES ûITSû BOOKû7HENûSHARESûPOPPEDûûONûTHEIRûDEBUT ûTRADINGû
clients – Apple, Google, Facebook, Microsoft and Spotify VOLUMEûREPRESENTEDûONLYûûOFûTHEûDEAL ûSHOWINGûHOWû
– were anything but. Yet UK investors were cautious well allocated it was.
ABOUTûTHEûLOSS MAKINGûlRMûWHENûAûPEERûWASNTû Brightening up a dull August, Peel Hunt single-
DELIVERINGûGROWTHû!NûINITIALûROUNDûOFûMEETINGSûAROUSEDû HANDEDLYûRAKEDûINûaMûFORû5NIVERSITYûOFû/XFORDûSPIN OFFû
INTERESTûBUTûTHEûBANKûOPTEDûTOûPUTûTHEû)0/ûONûHOLD and NHS data partner Sensyne Health, despite its
3IXûMONTHSûLATERûTHEûCOMPANYûWENTûBACKûTOûINVESTORSû NEGLIGIBLEûTURNOVER ûLACKûOFûPEERSûANDûCOMPLEXûSTORYû
WITHûNEWûNUMBERSûSHOWINGûSTRONGûGROWTHûANDûQUICKLYû 3ECURINGûAûaMûMARKETûCAPûOFFûREVENUESûOFûa û
BUILTûMOMENTUMû4HEIRûJUDGEMENTûWASûVINDICATEDûWHENû REQUIREDûAûREMARKABLEûFEATûOFûSTORY TELLING
HUGEûDEMANDûSAWûTHEûDEALûUPSIZEDûFROMûaMûTOûaM 4HEûBANKûWASûCLEARLYûEMBOLDENEDûBYûEARLIERûHEROICSûASû
THEûlRSTûDAYûOFû)&2SûREVIEWûPERIODûMARKEDûTHEûDEBUTûOFû
CROSSING THE ATLANTIC READY MEALûSUPPLIERû"AKKAVORû4HEûBANKûRESURRECTEDûTHEû
Peel Hunt has subsequently aMû)0/ûDAYSûAFTERûITûWASûCANCELLED ûGOINGûSOûFARûASûTOû
hosted events in Seattle and OFFERûHARDûUNDERWRITINGûFORûTHEûFULLûDEALûSIZE
#ALIFORNIAûTOûPROMOTEûTHEû 0EELû(UNTûCOULDûMAKEûTHATûOFFERûBECAUSEûITûREACHEDû
opportunity for other INVESTORSûTHEûMOREûSENIORûBANKSûCOULDNTû4HREEûMEETINGSû
hSWIMMERSvûTOûCROSSûTHEû with investors not in the original book delivered orders of
Atlantic. aM ûANDûITûWASûDOWNHILLûFROMûTHENûON
Research is at the %VENûDURINGûTHISûYEARSûBLOODYû/CTOBER ûWHENûAûDELUGEû
heart of Peel Hunt’s OFûDEALSûWEREûKILLEDûOFFûAMIDûANûINVESTORûRETREAT û0EELû
offering and, while (UNTûBROUGHTû,8)û2EITSûPRIMARYûPLACINGûTOûTHEûMARKETû
ANûIMPLAUSIBLEû 4OGETHERûWITHû"ANKûOFû!MERICAû-ERRILLû,YNCH ûTHEûBANKû
NUMBERûOFûBANKSû GATHEREDûaMûFORûTHEûFUND ûOVERSHOOTINGûTHEûaMû
CLAIMûTOûBEû target and scaling back orders.
BENElCIARIESûOFû h9OUûHAVEûTOûPROVEûTOûINSTITUTIONSûTHATûYOUûPUTûTHEMû
-I&)$û))û lRSTûANDûBRINGûCOMPANIESûTHATûYOUûTHINKûWILLûMAKEûTHEMû
unbundling, MONEY vûSAIDû2AEûh4HATûTRUSTûISûVERYûDIFlCULTûTOûWINûANDû
the broker can very easy to lose.”
prove it. Peel Lucy Raitano

IFR Awards 2018 International Financing Review 111


AMERICAS STRUCTURED EQUITY HOUSE
Morgan Stanley

COAST TO COAST
)NûAûYEARûWHENûTECHNOLOGYûCOMPANIESûDOMINATEDûEQUITY LINKEDûISSUANCE ûMOSTûTRUSTEDû
-ORGANû3TANLEYûTOûLEADûTHEIRûTRANSACTIONSû4HEûBANKûDELIVEREDûLOW COSTûFUNDINGû
TOûISSUERSûANDûGAVEûINVESTORSûAûBALANCEDûWAYûTOûPARTICIPATEû)TûISû)&2Sû!MERICASû
3TRUCTUREDû%QUITYû(OUSEûOFûTHEû9EAR

W
hen David Oakes was shaken out of a /FûTHEûûCOMPANIESûTHATûISSUEDûVANILLAû#"SûVIAû
deep sleep as others were disembarking -ORGANû3TANLEYûDURINGûTHEûCONSIDERATIONûPERIOD ûû
FROMûAû.EWû9ORKûTOû3ANû&RANCISCOûmIGHT û incorporated a derivative to elevate dilution. And while
the experience was not a new one. As Morgan Stanley was not counterparty on all – it was not
the head of tech convertible bond origination for ONû3PLUNK ûFORûEXAMPLEûnûSUCHûDERIVATIVESûAREûAû
-ORGANû3TANLEY û/AKESûHADûGROWNûACCUSTOMEDûTOû SIGNIlCANTûSOURCEûOFûREVENUE
SLEEPINGûTHEûlVE HOURûTRANSCONTINENTALûCOMMUTEûTOûTHEû $OCU3IGNûBENElTEDûFROMûTHATûEXPERTISEûONûAûTWO PART û
West Coast – and he deserved the rest. 53BNûSALEûOFûSTOCKûANDûCONVERTIBLEûDEBTûINû3EPTEMBER ûJUSTû
Of the remarkable 32 US tech companies that sold lVEûMONTHSûAFTERûTHEûE SIGNATUREûPIONEERSû)0/û)SSUINGûAû#"û
CONVERTIBLEûBONDSûDURINGûTHEûCONSIDERATIONûPERIOD û-ORGANû WITHINûLOCK UPûHADûNEVERûBEENûDONEûBEFORE ûGIVENû
3TANLEYûWASûAûBOOKRUNNERûFORû ûGIVINGûITûAûûSHAREûOFû CONSTRAINTSûONûBORROWûFROMûAûLIMITEDûFREE mOATûANDûLOCK UPS
that business apportioned across all bookrunners and earning -ORGANû3TANLEY ûLEAD LEFTûONûTHEû)0/ ûWORKEDûTOûEASEûTHEû
ITû53MûOFûUNDERWRITINGûFEES ûACCORDINGûTOû2ElNITIVûDATA SITUATION ûINûPARTûTHROUGHûALLOWINGûSOMEûSHAREHOLDERSûTOû
3PLUNK ûTHEû3ANû&RANCISCO BASEDûDATAûMINERûTHATû BREAKûTHEûLOCK UPûWITHûAûMûSHAREûSIMULTANEOUSû
-ORGANû3TANLEYûHELPEDûTAKEûPUBLICûINû ûWASûAMONGû secondary offering. A large chunk of stock would also be
those clients that returned to the bank – with a RELEASEDûFROMûLOCK UPûTHEûFOLLOWINGûMONTH
MAMMOTHû53BN ûTWO PARTû#"ûISSUEûINû3EPTEMBER û 0RICINGûONûAû53MûlVE YEARû#"ûISSUEûCAMEûATûAû
THEûLARGESTûlNANCINGûOFûTHEûYEARûONûAûCOMBINEDûBASISûANDû ûCOUPONûANDûûCONVERSIONûPREMIUM ûWITHûTHEû
THEûBIGGESTûBYûAûTECHûCOMPANYûSINCEû capped call offsetting dilution to share prices above
4HEûOPPORTUNISTICûlNANCINGûWASûTYPICALûOFûTECHûDEALSû 53 ûDOUBLEûTHEû53ûREFERENCEûPRICEûFROMûTHEû
through the year. SECONDARYûSTOCKûSALEûANDû53ûOFûTHEû)0/
3PLUNKûWOUNDûUPûPAYINGûAûCOUPONûOFûJUSTûûANNUALLYû -ANDATORYûCONVERTIBLESûWEREûSIGNIlCANTûBALLASTûTOû
ONûTHEû53BNûlVE YEARûTRANCHEûANDûûONûTHEû LARGEûACQUISITIONSûTHROUGHOUTûTHEûYEARûASûWELLûASûTOû
53MûSEVEN YEAR ûWITHûCONVERSIONûATûAûûPREMIUMû accelerate exits.
The advice to split maturities contributed to an upsize from )Nû*ANUARY û3EMPRAû%NERGYûSECUREDû53BNûFROMûTHEû
53BNûATûLAUNCHûTOû53BN ûWITHûGREENSHOESû CONCURRENTûSALEûOFûANû-#"û53BN ûANDûCOMMONû
extending the offering size to US$2.1bn. Splunk spent a STOCKû53BN ûOFFERINGûTOûPRE FUNDûITSû53BNû
portion of the proceeds raised on a capped call to offset stock PURCHASEûOFû4EXASûUTILITYû/NCORûINû-AY û&RANCESû!XAû
DILUTIONûTOûAûûPREMIUMûTOûTHEûREFERENCEûPRICE ACCELERATEDûTHEûDISPOSALûOFû!XAû%QUITABLE ûITSû53ûANNUITIESû
“Technology companies are ideal candidates for BUSINESS ûBYûADDINGûAû53Mû-#"ûISSUEûTOûTHEûUNITSû
CONVERTIBLES vûSAIDû3ERKANû3AVASOGLU ûHEADûOFûEQUITYûSOLUTIONSû 53BNû)0/ûAND ûINû3EPTEMBER û)NTERNATIONALû&LAVORSûû
FORûTHEû!MERICASûh.OTûVERYûASSET HEAVY ûVOLATILE ûGOODûGROWTH û &RAGRANCESûPRIMEDûAûBROADERû-!ûFUNDINGûPACKAGEûWITHûAû
INVESTORûFAMILIARITY ûANDûTHEREûAREûAûLOTûOFûCOMPSûTHATûALLOWûFORû 53BNûCOMBOûSALEûOFûEQUITYû53BN ûANDû-#"û
EFlCIENTûPRICINGû;4HEY=ûLOOKûATûCONVERTSûASûCHEAPûDEBTv 53M ûTHATûHELPEDûFUNDûAû53BNûACQUISITION
-ORGANû3TANLEYûNOTûONLYûADVISEDû3EMPRAûANDû)&&ûONû
David Oakes THEIRûACQUISITIONSûBUTûWASûBOOKRUNNERûONûEACHûPIECEûOFû
Serkan Savasoglu
THEûlNANCINGûUSEDûTOûFUNDûTHEûPURCHASESû4HEûBANKûWASû
AûBOOKRUNNERûONûSEVENûOFûTHEûNINEû-#"SûCOMPLETEDûBYû
53ûCOMPANIESûDURINGûTHEûYEAR ûACCORDINGûTOû)&2ûDATA
7HILEûSOMEûSEEûAûNEEDûTOûSELLûSTOCK ûOTHERSûWANTûTOû
BUYûITûBACKû5NIONû0ACIlCûTURNEDûTOûTHEûBANKûASûONEûOFû
TWOûCOUNTERPARTIESûINû*UNEûTOûEXECUTEûAû53BNû
accelerated share repurchase. Morgan Stanley was also
ONEûOFûTHREEûCOUNTERPARTIESûONû1UALCOMMSû53BNû
!32ûINû3EPTEMBER ûûOFûTHEûCHIPMAKERSûMARKETûCAPûATû
THEûTIMEûANDûTHEûLARGEST EVERû!32
-ORGANû3TANLEYSû!MERICASûEQUITY LINKEDûBUSINESSûSAWû
ITûEARNûBOOKRUNNERûCREDITûOFû53BNûFORûûCOMPANIES û
the highest of any bank by both volume and number.
4HATûWASûGOODûFORûAûûSHARE ûAûBPûGAINûYEAR ON
YEAR ûANDûAû53MûHAULûOFûFEES
Stephen Lacey

112 International Financing Review IFR Awards 2018


AMERICAS STRUCTURED EQUITY ISSUE
Twitter’s US$1.15bn six-year convertible bond

QUICK AS A FLASH
T
witter reacted with lightning speed TIMELINEû7OULDû4WITTERSûBOARDûSIGN OFFûONû (OSTû(OTELSûINû û"OSTONû0ROPERTIESûINû
to word that it would be added to such a large transaction? And would principal 2006 and Dish Networks in 2016.
THEû30ûû)NDEXû&ROMûAûSTANDINGû AUDITORû0W#ûBEûABLEûTOûPROVIDEûCOMFORTûONû 4WITTERûSHARESûROSEûûONûTHEûONE DAYû
START ûITûHADûRAISEDû53BNûFROMû 4WITTERSûPROûFORMAûlNANCIALûRESULTS MARKETINGûTOû53 ûAûTHREE YEARûHIGH ûONû
AûSIX YEARûCONVERTIBLEûBONDûWITHINûûHOURS 4WITTERûSOLDû53BNûOFû#"SûINûûINûWHATû TOPûOFûAûûGAINûONû4UESDAYûONûTHEûINCLUSIONû
30û$OWû*ONESû)NDICESûALERTEDûINVESTORSû was a landmark transaction that came less than ANNOUNCEMENTûANDûAHEADûOFûTHEû#"ûLAUNCH
AFTERûTHEûCLOSEûONû-ONDAY û*UNEûûTHATû AûYEARûAFTERûITSû)0/û4HATûDOCUMENTATIONûCOULDû Much of that buying was either
Twitter would be added ahead of the market BEûUSEDûASûAûTEMPLATEûFORûAûNEWû#" û6ORISûSAID speculative or purely technical.
open the following Thursday. 4WITTERSûBOARDûGAVEûTHEûGO AHEADûONûTHEû h4HEREûISûSOMEûPRE POSITIONINGûTHATû
h7EûBEGANûTHEûPROCESSûOFûEXECUTIONû;AFTERû 4UESDAYûANDû0W#ûPROVIDEDûCOMFORTûLATERûTHATû HAPPENSû;BYûINDEXûTRACKERS= vûSAIDû6ORISûh"UTû
THEûCLOSEûONû-ONDAY= ûPUTTINGûTHEû DAY ûCLEARINGûTHEûWAYûFORûTHEûUNDERWRITERSûTOû most of that buying is programme trading
DOCUMENTATIONûINûPLACE ûTHINKINGûABOUTû MARKETûTHEû#"ûONû7EDNESDAY THATûHAPPENSûATûTHEûCLOSEû;ONû7EDNESDAY=v
SIZE ûSTRUCTUREûANDûPOTENTIALûPRICINGû 'OLDMANû3ACHS û-ORGANû3TANLEYûANDû*0û Twitter did purchase a call spread that
OUTCOMES vûSAIDû4WITTERû#&/û.EDû3EGALû -ORGANûPRICEDûTHEû#"ûATûAûCOUPONûOFûJUSTû allowed the counterparty bank to hedge to
h4HATûPREPARATIONûDIDNTûBINDûUSûBUTûDIDûPUTû ûANDûCONVERSIONûPREMIUMûOFû û arbitrage accounts buying the bonds and
us in a position to bring a proposal to the toward the aggressive ends of talk and OFFSETûDILUTIONûCONSIDERATIONûFROMûTHEû#"ûTOû
BOARDûEARLYû4UESDAYûMORNINGv among the most aggressive coupon/ SHAREûPRICESûABOVEû53 ûAûû
4HEûCONVERSATIONûBETWEENû3EGALûAûLONG PREMIUMûPAIRINGSûOFûANYû53û#"ûSOLDûINû premium to the reference price.
TIMEû'OLDMANûBANKER û-ICHAELû6ORIS ûINûTHEû 4HEREûAREûOBVIOUSûBENElTSûTOûSELLINGûSTOCKû “There are very few companies that
STRUCTUREDûEQUITYûORIGINATIONûTEAMûATû ALONGSIDEûANûINDEXûINCLUSIONû9ET ûDESPITEûAû WOULDûHAVEûBEENûABLEûTOûMOVEûTHISûQUICKLY vû
'OLDMANû3ACHS ûANDû'OLDMANSû!MERICASû TECHNICALûLIFTûFROMûINDEX HUGGERS ûAû#"û SAIDû6ORISûh4OûMAKEûTHEûCALLûWITHINûAûCOUPLEû
%#-ûHEADû$AVIDû,UDWIGûCENTREDûONûTHEû SIMULTANEOUSûTOû30ûûENTRYûISûRARE û HOURSûISûREALLYûUNPRECEDENTEDv
DIFlCULTIESûOFûEXECUTINGûAû#"ûONûAûCOMPRESSEDû having only previously been completed by Stephen Lacey

EMEA STRUCTURED EQUITY ISSUE


Swiss Re’s US$500m six-year convertible bond

INSURER’S INSURANCE
S
WISSû2EûHADûAûSPECIlCûNEEDû4HEû ALONGSIDEû"ANKûOFû!MERICAû-ERRILLû,YNCH û BANKERSûRANûAûTWO DAYûPRE SOUNDINGûPROCESS û
reinsurance giant wanted to replace "ARCLAYS û$EUTSCHEû"ANKûANDû*0û-ORGAN RESULTINGûINûAROUNDûûOFûTHEûDEALûBEINGû
perpetual bonds that had h4HEûSTRUCTUREûINSULATESû3WISSû2EûFROMû allocated to outright investors.
INCORPORATEDûANûANY TIMEûPUTûFEATUREû UNFORESEENûANDûUNQUANTIlABLEûRISKSûANDûISû 4HEûRESULTûWASûAûûCOUPON ûHIGHERûTHANû
ANDûHADûBEENûSOLDûTOûlXED INCOMEûINVESTORS DILUTIVEûONLYûATû3WISSû2ESûDISCRETIONûASûTHEû WOULDûHAVEûBEENûPOSSIBLEûWITHûAûVANILLAû#"û
“We felt that feature was better suited to CONVERTûISûHEDGEDûVIAûAûMIRRORINGûCALLûOPTIONv from a Single A rated company but an
EQUITY LINKEDûINVESTORS vûSAIDû$ANIELû"ELL û )FûCONVERSIONûTAKESûPLACEûWHENûTHEû estimated saving of over 100bp versus
HEADûOFûFUNDINGûATû3WISSû2Eû4HEûCOSTûWOULDû INSURERSûSOLVENCYûRATIOûISûBELOWûûOFûTHEû SELLINGûTOûlXED INCOMEûINVESTORSû
also be lower. MINIMUMûREGULATORYûCAPITALûREQUIREMENT û )TûREMAINSûTOûBEûSEENûIFûTHEûSTRUCTUREûWILLû
The solution was two years in the making THENûAûmOORûPRICEûOFûûOFûTHEûREFERENCEû BEûREPLICATED ûBUTûITûISûANOTHERûOPTIONûFORû
ANDûFARûFROMûSIMPLE ûREQUIRINGûEQUITY LINKED û PRICEûAPPLIESû!TûISSUE ûTHEû3WISSû2EûSOLVENCYû BANKERSûTOûPITCH ûANDûSHOWSûTHEûmEXIBILITYû
HYBRIDûCAPITAL ûDERIVATIVESûANDûlXED INCOMEû LEVELûWASûûOFûTHEûMINIMUMûANDûITû FORûSTRUCTUREDûEQUITYûTOûSOLVEûBESPOKEûISSUES
teams working together with lawyers. WOULDûTAKEûlVEûONE IN  YEARûEVENTSûTOûGETû “The transaction is something we could
!TûITSûHEARTûTHISûWASûAû53MûSIX YEARû CLOSEûTOûTHEûûLEVEL LOOKûTOûREPLICATEûANDûMAYBEûBUILDûUPON vûSAIDû
ISSUEûOFûNON DILUTIVEûCONVERTIBLEûBONDSûnûAû h9OUûWOULDûNEEDûALLûlVEûEVENTSûTOûTAKEû "ELLûh0RIORûTOûREDEEMINGûTHEûPERPETUALûBONDû
structure that may not be old but that seemed PLACEûSOûQUICKLYûTHEYûCANTûTAKEûANOTHERû INû3EPTEMBERû ûWEûHADûTWOûBONDSûWITHû
TOûHAVEûOUTSTAYEDûITSûWELCOMEûINûEQUITY REMEDY vûSAIDû8AVIERû,AGACHE ûHEADûOFû%-%!û roughly US$1bn outstanding that we could
LINKED ûASû#ARREFOURûFOUNDûWHENûITSû.$#"û EQUITY LINKEDûATû$EUTSCHEû"ANK CONVERTûINTOûEQUITYû4HISûTRANSACTIONûREPLACEDû
offering could not be fully sold in March. .ONETHELESS ûAûHURRICANEûINûTHEû53ûPUTûAû THEûlRSTûBONDû4HEûSECONDûBONDûWASûREDEEMEDû
4HEûANY TIMEûCONVERSIONûRIGHTûFORûTHEû potential September 2017 transaction on in September 2018. This transaction shows
issuer and call option hedge provided a THEûBACK BURNERûASûITûCOULDûHAVEûBEENû that we have good access to a new investor
hMARKET FRIENDLYûSOLUTIONûTOûCOST EFFECTIVEû interpreted as driving the deal. base and could therefore do more but we
CAPITALûONûTAPv ûSAIDû!RMINû(EUBERGER ûHEADû )NûORDERûTOûENSUREûTHEûCOMPLEXITYûWOULDû WOULDûNOTûWANTûTOûDOûTOOûMUCHv
OFû%-%!ûEQUITY LINKEDûATû5"3 ûAûBOOKRUNNERû NOTûLIMITûINTERESTûTOûJUSTûHEDGEûFUNDS û Robert Venes

IFR Awards 2018 International Financing Review 113


EMEA STRUCTURED EQUITY HOUSE
UBS

MIXING STYLES
%VERYûEQUITY LINKEDûDEALûLEDûBYû5"3ûWASûUNIQUEûANDûMETûAûCLIENTSûSPECIFICûNEEDû
.OTûWEDDEDûTOûONEûSTYLE û5"3ûMIXEDûFEATURESûANDûADAPTEDûSTRUCTURESûWITHûFLAIRûANDû
ISû)&2Sû%-%!û3TRUCTUREDû%QUITYû(OUSEûOFûTHEû9EAR

W
HENûISSUANCEûFALLSûBYûûINûAûSINGLEû The success of the jumbo convertible was not certain as the
YEAR ûTHOSEûWITHûONEûlGHTINGûSTYLEûlNDû TWOûPREVIOUSûSIZEABLEûDEALSûnûBOTHûBACKSTOPPEDûnûHADûmOPPED û
themselves condemned to obscurity. TRADEDûDOWN ûANDûLEFTûLEADûBANKSûHOLDINGûUNSOLDûBONDS
Standing out in a year when most The convertible was used to repurchase shares from
banks have been reduced to a handful of trades should 3AINT 'OBAINûTOûSETTLEûAûLONG RUNNINGûDISPUTE ûBUTûATûAû
BEûNIGHûONûIMPOSSIBLE ûYETûTHEûTWITCHINGûMUSCLESûOFû5"3û lofty price that meant a convertible was a natural choice.
showed that no two trades need to be alike – and a !Tû3&RBNûITûISûTHEûONLYû%-%!ûEQUITY LINKEDûDEALûTOûTOPû
struggling market is no reason to be unambitious. 53BNûINû ûBUTûMOREûSIGNIlCANTLYûITûISûTHEûLARGESTûSOLE
The slash in activity inevitably is accompanied by a LEDûCONVERTIBLEûINû%UROPEûFORûNEARLYûTWOûDECADES ûDATINGû
collapse in fees as bankers battle to the last basis point to BACKûTOû6IVENDISûõBNûTHENû53BN û#"ûINû*ANUARYû
secure every possible mandate. The only way to make 4HEûõMûCONVERTIBLEûFORû#ONSUSû2EALû%STATEûINû
money is to offer something different to the client and November 2017 on the surface seemed to be yet another
THENûBEûREWARDEDûFORûITû5"3ûISûPOSSIBLYûTHEûONLYûBANKû vanilla bond for a real estate company – the one thing
ACTIVEûINû%-%!ûTOûBOASTûANûINCREASEûINûFEESûINû EQUITY LINKEDûHASNTûBEENûSHORTûOFûINûRECENTûYEARSû)Nû
h%ACHûOFûOURûDEALSûUNLOCKEDûAûPROBLEM ûSOûWEûEARNû FACT ûITûWASûANYTHINGûBUTûORDINARY
PROPERûFEES vûSAIDû!RMINû(EUBERGER ûHEADûOFû%-%!û Consus had completed a backdoor listing in April 2017
EQUITY LINKEDûATû5"3 but just days before issuing the convertible it had wrapped
!ûQUIETûYEARûFORûNEWûISSUESûSHOULDûHAVEûENSUREDûAûBIDû UPûANûALL STOCKûACQUISITIONûTHATûTOOKûITSûMARKETûCAPITALISATIONû
FORûTHEûRAREûDEALSûTHATûDIDûCOMEûALONGû9ETûTHATûDIDNTû FROMûõMûTOûõMû4HEû'ERMANûCOMPANYûWASûSOûNEWû
TURNûOUTûTOûBEûTHEûCASEûASûBANKERSûFREQUENTLYûPUSHEDûTOOû THATûTHEREûWEREûNOûAUDITEDûORûEVENûREVIEWEDûlNANCIALSûTOû
FARûONûTERMSûnûOVER PROMISINGûISûANOTHERûSURE lREûWAYûTOû hand – as was spelt out to investors in bold lettering at the
pick up mandates – leading to the horror of deals where top of every communication to investors.
banks were left holding bonds. When fees are abysmal 0RE SOUNDINGûWASûPATCHY ûBUTûASûWITHû5"3SûOTHERû
there is no cushion to absorb losses on trades and there deals it found good demand upon launch. The year also
was no excuse for such bad business. INCLUDEDûAûFOURTHûCONSECUTIVEûMANDATEûFROMû2!'ûFORûANû
5"3ûTOOKûAûDIFFERENTûPATHû)TûHADûNEVERûBEENûBIGûINû EXCHANGEABLEûINTOû%VONIKûANDûTHEûlRSTû3WISSû#"ûWITHû
NON DILUTIVEûCONVERTIBLEûBONDSûnûAûSTRAIGHT DEBTû SETTLEMENTûmEXIBILITYûFORû3WISSû0RIMEû3ITE
SUBSTITUTEûnûASûTHEYûPAYûBOND STYLEûFEESû9ETûITûWASûATûTHEû h9OUûSEEûONLYûTHEûRESULT vûSAIDû(EUBERGERûh7EûAREû
FOREFRONTûOFûTHEûDEVELOPMENTûOFûANûENHANCEDû.$#"ûFORû talking to investors throughout the process. You need to
3WISSû2EûTHATûDELIGHTEDûTHEûCLIENT ûPUSHEDûTHEû FEELûTHEIRûPULSEûONûSTRUCTURINGûANDûTIMINGv
boundaries of what could be done by relying on Owen Wild
INVESTORSûTRUSTINGûTHEûISSUER ûANDûHASûPOTENTIALûTOûDRIVEû
further issuance in the coming years.
#HRISTENEDûDISCRETIONARYûEQUITYûBONDSûnûHIGHLIGHTINGûTHATû Armin Heuberger
the passing years has seen volumes and nomenclature
BECOMEûLESSûIMPRESSIVEûnûINûAûPUBLICûMARKETûlRST û3WISSû2Eû
has the right to convert the bonds and settle with stock at
any time. The Swiss reinsurer will almost certainly never
EXERCISEûTHATûRIGHT ûBUTûSUCHûANûOPTIONûMEANTûTHEûSTRUCTURINGû
ANDûMARKETINGûHADûTOûBEûCLEARûANDûPRECISEû5"3SûROLEûWASû
CLEARûASûTHEûSTRUCTURINGûBANKûINûAûMULTI BANKûSYNDICATE
4AKINGûAûSOMETIMESûCHALLENGINGûSTRUCTURE ûMAKINGûITû
more complicated and yet at the end getting paid and
seeing it sell easily is an impressive feat.
h)TûISûNOûLONGERûAûDEBTûSURROGATEûnûITûISûEQUITYûONû
DEMAND vûSAIDû+OBYû%NGLENDER ûPARTûOFûTHEûEQUITY LINKEDû
TEAMû)TûISû)&2Sû%-%!û3TRUCTUREDû%QUITYû)SSUEûOFûTHEû9EAR
A standout trade for other reasons is the sole books
mandate for chemicals maker Sika. Fresh from settling a
THREE YEARûPLUSûBATTLEûWITHûSHAREHOLDERSûOVERûITSûFUTURE û
3IKAûSECUREDû3&RBNû53BN ûFROMûANûUPSIZEDû
SEVEN YEARûCONVERTIBLEûBONDûISSUEûTHROUGHûSOLEû
BOOKRUNNERû5"3ûWITHûAûCONVERSIONûPREMIUMûSETûû
ABOVEûITSûALL TIMEûHIGHûSHAREûPRICE

114 International Financing Review IFR Awards 2018


ASIA-PACIFIC STRUCTURED EQUITY ISSUE
LG Chem’s US$610m dual-currency convertible bond

BREAKING THE NORM


A
53MûDUAL CURRENCYû zero yield. The euro tranche was marketed The euro tranche was more popular than
CONVERTIBLEûFROMû3OUTHû+OREANû ATûAûCONVERSIONûPREMIUMûOFûnû THEû53ûDOLLARûONE ûALLOWINGûITûTOûBEûPRICEDûATû
CHEMICALSûMAKERû,'û#HEMûSHOWEDû while the US dollar tranche guidance was THEûMID POINTûOFûTHEûCONVERSIONûPREMIUMûATû
THEûPOTENTIALûFORûINNOVATIVEûEQUITY n û4HEû53ûDOLLARû#"ûWASûPRICEDûATûTHEûLOWû
linked issuance from the country. To simplify the issuance process and allow ENDûOFû
,'û#HEMûLAUNCHEDûTHREE YEARûCONVERTIBLEû GREATERûmEXIBILITYûINûTIMING ûTHEûDEALûWASû &ORû!SIANûINVESTORS ûTHEû,'û#HEMûDEALûALSOû
BONDSûSPLITûBETWEENûõMûANDû53Mû EXECUTEDûASûANûUNDOCUMENTEDûOFFERING û OFFEREDûTHEMûSOMEûDIVERSITYûINûTHEIRû#HINA
tranches on April 10. WHEREûTHEREûISûNOûSPECIlCûDEALûDISCLOSURE heavy portfolios.
3OUTHû+OREANûISSUERSûTYPICALLYûPREFERûTOû )NVESTORSûWEREûCOMFORTABLEûWITHûTHEûLACKû &ORûTHEûISSUER ûTHEûDUAL CURRENCYûSTRUCTUREû
SELLûSUCHûINSTRUMENTSûDOMESTICALLY ûANDû,'û OFûOFFERINGûCIRCULAR ûTHANKSûTOû,'û#HEMSû allowed it to raise funds for overseas
Chem had never previously looked offshore. STATUSûASûAûBLUE CHIPûCOMPANYûWITHûAû INVESTMENTSûASû,'û#HEMûHASûDIVERSIlEDû
(OWEVER ûTHEûACQUISITIONûOFû,'û,IFEû3CIENCESû reputation for good corporate governance. businesses and a global footprint.
the previous year left it looking to monetise !SûAûRESULT ûTHEûDEALûMANAGEDûTOûGENERATEû Credit Suisse was the sole bookrunner.
AûSTASHûOFûTREASURYûSHARES ûANDûTHEû#"ûFORMATû strong demand from investors in Asia and "OTHû#"SûTRADEDûWELLûAûDAYûAFTERûTHEû
met its objectives well. %UROPEûWITHûPARTICIPATIONûMAINLYûFROMû ISSUANCEû4HEû53ûDOLLARû#"ûTRADEDûATûûINû
Despite being a debut international outright buyers. THEûSECONDARYûMARKET ûWHILEûTHEûEUROûWASû
ISSUER û,'û#HEMûWASûNOTûSHYûATûTESTINGûAû The deal had been structured to maximise QUOTEDûATû
NEWûSTRUCTUREû4HEû#"ûISSUEûWASûTHEûlRSTû53û INTERESTûFROMûALLûTYPESûOFû#"ûINVESTORSû3OMEû Credit spread was assumed at 80bp and
DOLLARûANDûEUROûDUAL CURRENCYûOFFERINGûANDû liked the US dollar tranche as it carried a STOCKûBORROWûCOSTûATûBPû)MPLIEDûVOLATILITYû
ALSOûTHEûlRSTûUNDOCUMENTEDûOFFERINGûFROMûAû lower conversion premium and provided for the US dollar tranche was 30. For the
3OUTHû+OREANûISSUER MOREûEQUITYûUPSIDEûTHEûBONDûmOORûENDEDûUPû EUROûPIECE ûIMPLIEDûVOLATILITYûWASûINûTHEû
"OTHûTRANCHESûWEREûLAUNCHEDûATû ATû û/THERSûPREFERREDûTHEûEUROûTRANCHEûASû MID S
AGGRESSIVEûTERMS ûWITHûAûZEROûCOUPONûANDû AûDEFENSIVEûPLAYûINûAûLOW RATEûENVIRONMENT Fiona Lau

2018 IFR AWARDS DINNER:


SPONSORSHIP OPPORTUNITIES

The IFR Awards Dinner represents an unmissable opportunity to promote your brand to the global investment
banking industry’s key decision-makers. Not only will you receive exceptional exposure on the night, you
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will allow your organisation to directly target the industry’s most senior individuals and align your brand with
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IFR Awards 2018 International Financing Review 115


ASIA-PACIFIC STRUCTURED EQUITY HOUSE
Credit Suisse

FORMULA FOR SUCCESS


7ITHûEQUITY LINKEDûISSUANCEûSURGINGûANDûVOLATILITYûBACKûONûTHEûRADAR û#REDITû3UISSEû
stood out with its ability to raise funds across different markets. For its breadth of
BUSINESSûANDûCONTINUEDûINNOVATION ûTHEûBANKûISû)&2Sû!SIA 0ACIFICû3TRUCTUREDû%QUITYû
(OUSEûOFûTHEû9EAR

)
NTERNATIONALûEQUITY LINKEDûISSUANCEûFROMû!SIAû ONEûYEARûDOûNOTûNEEDûTOûBEûREGISTEREDûWITHû#HINASû
MOREûTHANûDOUBLEDûINû ûANDû#REDITû3UISSEûUSEDû .ATIONALû$EVELOPMENTûANDû2EFORMû#OMMISSION
its experience and relationships to do more deals #REDITû3UISSEûALSOûCOMPLETEDûAû(+BNûCONVERTIBLEû
in more countries than any other bank. BONDûISSUEûFORûLONG TERMûCLIENTû#HINAû%VERGRANDEû
The bank was a regular feature in the offshore 'ROUP ûTHEûLARGESTûOFFSHOREûEQUITY LINKEDûDEALûINû!SIA
#HINESEûMARKET ûMOVINGûQUICKLYûTOûSEIZEûAûWINDOWû 0ACIlCûEX *APANûSINCEûûANDûTHEûLARGESTûEVERûFROMû
EARLYûINûTHEûYEAR ûANDûITûALSOûHELPEDûISSUERSûINû!USTRALIA û the Chinese real estate sector.
3OUTHû+OREAûANDû6IETNAMûRAISEûFUNDSûDURINGû)&2Sû Chinese property developers were the biggest source
review period. OFûNEWûCONVERTIBLEûBONDSûINûTHEûYEAR ûWITHûlVEûDEALSû
Credit Suisse impressed with a broad range of public RAISINGûAûCOMBINEDû53BN ûBUTûINVESTORSûWEREûSOONû
DEALS ûCOVERINGûHIGH GRADEûANDûHIGH YIELDûCREDITSûANDûAû looking for alternatives as stock prices weakened.
MIXûOFûSTRUCTURES ûFROMûZEROûCOUPONSûANDûDUAL CURRENCYû 4HEû53MûDUAL CURRENCYû#"ûOFû3OUTHû+OREANû
BENCHMARKSûTOû#"STOCKûPLACEMENTûCOMBOS ûEQUITYû CHEMICALSûMAKERû,'û#HEMûWASûTHEûHIGHLIGHTûOFûTHEû
swaps and liability management. YEARû!ûRAREûSOLEûMANDATEûFORûAûDEALûOFûITSûSIZEûINû!SIASû
)TûISûCLEARûTHEûBANKûVALUESûSTRUCTUREDûEQUITYûnûBOTHû COMPETITIVEûEQUITY LINKEDûMARKET ûTHEûTRANSACTIONûWASû
PUBLICûANDûPRIVATEûnûASûAûCOREûPARTûOFûITSû!SIANûOFFERING û THEûlRSTû53ûDOLLARûANDûEUROûDUAL CURRENCYûOFFERINGûFROMû
ANDûHASûLOSTûNONEûOFûITSûFOCUSûUNDERû!ARONû/H ûWHOûTOOKû Aû3OUTHû+OREANûISSUER
OVERûASûHEADûOFûSTRUCTUREDûEQUITYûORIGINATIONûFORû!SIA )TûGAVEûTHEûISSUERûAûNEATûWAYûTOûMONETISEûTREASURYû
0ACIlCûFOLLOWINGûTHEûRETIREMENTûOFû*IMû-C$ONNELLûINû SHARESûITûHADûACQUIREDûFROMûITSûPURCHASEûOFû,'û,IFEû
2017. 3CIENCESûTHEûPREVIOUSûYEAR ûWHILEûTHEûCURRENCYûMIXû
)TûWASûQUICKûTOûSPOTûMARKETûTRENDSûINû û suited its global funding needs and maximised
COMPLETINGûTHREEûOUTûOFûTHEûlVEû#"SûFROMûTHEû#HINESEû INVESTORSûAPPETITEûFORûTHEûDEALûnûASûTHEYûHADûTWOû
PROPERTYûSECTORûINû*ANUARYûASûDEBT LADENûDEVELOPERSû currencies and different conversion premiums to
seized a chance to capitalise on surging stock prices. choose from.
4HEûBANKûRAISEDû(+BNû53M ûFORû#Ilû #REDITû3UISSEûALSOûBROUGHTûINNOVATIONûTOû6IETNAM ûAû
(OLDINGSû'ROUPûANDû(+BNûFORû0OWERLONGû2EALû market that drew increasing attention from
%STATEû!ûTENORûOFûûDAYSûFORûBOTHûDEALSûALLOWEDûTHEû INTERNATIONALûINVESTORSûINûû4HEûBANK ûAGAINûASûSOLEû
ISSUERSûTOûMOVEûQUICKLY ûASûBONDSûWITHûMATURITIESûUNDERû BOOKRUNNER ûHELPEDû6IETNAMESEûPROPERTYûCOMPANYû.Oû
6Aû,ANDû)NVESTMENTû'ROUPûRAISEû53MûFROMûAû
TOP UPûSHAREûPLACEMENTûANDûCONVERTIBLEûBONDûISSUEûnû
THEûlRSTûCONCURRENTû#"ûOFFERINGûANDûEQUITYûPLACEMENTû
Aaron Oh INû6IETNAMû!Tû53M ûTHEû#"ûPORTIONûWASûALSOûTHEû
largest debut issuance from the country.
4HEûBANKûHASûDOMINATEDû6IETNAMSûEQUITY LINKEDû
SECTORûSINCEûITûBROUGHTû6INGROUP ûTHEûCOUNTRYSûBIGGESTû
DEVELOPER ûTOûTHEûMARKETûINû ûWORKINGûONûALLûSIXû
EQUITY LINKEDûOFFERINGSûFROMû6INGROUPûSINCEûTHEN
$URINGû)&2SûAWARDSûPERIOD û#REDITû3UISSE ûASûAûJOINTû
BOOKRUNNER ûHELPEDû6INGROUPûSUBSIDIARYû6INPEARL ûAû
RESORTûDEVELOPER ûRAISEû53MûINû*UNEûFROMûTHEûSALEûOFû
ANûEXCHANGEABLEûBONDûISSUEûWITHû6INGROUPûASû
UNDERLYINGû6INPEARLûREOPENEDûTHEûDEALûANDûRAISEDûANû
additional US$125m in October – this time with Credit
Suisse as sole bookrunner – to bring it to a total size of
53M ûTHEûBIGGESTûDEALûOFûITSûKINDûINûAûFRONTIERû
market.
)Nû!USTRALIA û#REDITû3UISSEûWASûONEûOFûTHEûTWOûBANKSû
THATûLEDûTHEûõMûSEVEN YEARû#"ûISSUEûFORû#ROMWELLû
0ROPERTYû'ROUP ûTHEûLARGESTû#"ûOFFERINGûINûTHEûCOUNTRYû
SINCEû ûANDûSOLEûBUYBACKûAGENTûONûAûõMû
REPURCHASEûOFûOUTSTANDINGû#"S
Fiona Lau

116 International Financing Review IFR Awards 2018


THANK YOU
Photo: Daphne Cook/Save the Children

FOR TRANSFORMING
CHILDREN’S LIVES
Save the Children would like to thank the investment banking industry for
raising an incredible £1,010,000 at the 2017 IFR Awards Dinner.
Thanks to the continued generosity of the global capital markets community, Save the
Children has now raised £26,631,621 in 25 years at the IFR, IFR Asia and PFI Awards
Dinners.
Together we have helped more children to survive and thrive, such as two-year-old
Monsur Ali (pictured) who receives ongoing support from Save the Children’s nutrition
centre in Bangladesh.
Visit savethechildren.org.uk for more information about Save the Children’s
life-saving work.

Registered charity England and Wales (213890) Scotland (SC039570)