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.

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
While other banks have struggled to hold on to
their market share as issuance has fallen, HSBC
stood out for its ability to generate momentum
across the international bond markets.
44 Equity House
Goldman Sachs was on the offense as it charged
down the opposition to reclaim lost ground –
leading bold deals, operating across borders and
reacting to tougher markets.
47 Loan House
Goldman Sachs’ expertise in acquisition and
leveraged financing made it the go-to partner
for companies of all sizes and credit ratings in
transformative or regular deals.
49 Emerging Markets Bond House
A stellar year for Citigroup in all three developing
regions has seen it dominate EM primary markets in
2018. The US bank got clients into the market early,
which has proven crucial in a year of volatility.
52 M&A Adviser and Capital Markets Adviser
During a busy year for major cross-border M&A
deals, Rothschild shone as a flexible adviser on
both the buy and sell sides. It also grew its capital
markets advisory effort from an already dominant
position by focusing on every variable in a
challenging market.
54 Restructuring Adviser
As the end of cheap money pushes the restructuring
market into a new cycle, Houlihan Lokey rode the
crest of the burgeoning wave of global restructuring
negotiations in 2018 as the geographical growth of
its practice in the lean years bore impressive fruit.
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
CONTENTS
CONTINUED
IFR AWARDS 2018
58 Bank for Governments
HSBC showed commitment to public-sector clients
through good times and bad, and enhanced its
reputation as the go-to bank for sovereigns in
need of financing and advice.
60 Bank for Financial Sponsors
With private equity and strategic investors fast
growing in importance, Goldman Sachs has
shown its ability to adapt and innovate to serve its
clients.
62 SSAR Issuer
Labels are notably tricky to shake off, but in a
year when echoes of the European peripheral
crisis resonated loudly, the Kingdom of Spain
successfully managed to do so and execute
one of the biggest European sovereign funding
programmes with flair.
64 Financial Issuer
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.
66 Corporate Issuer
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.
68 Financing Package
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.
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 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

 Invest in a
sustainable future

EIB’s
Sustainability
Awareness Bonds
link your investment
with environmental
and social objectives

Learn more at
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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
North America ABS Issue
North America MBS House
North America MBS Issue
EMEA Structured Finance House
EMEA Structured Finance Issue
Asia-Pacific Structured Finance Issue
Barclays
Air Lease’s US$545m securitisation
Citigroup
Gramercy Property Trust’s US$3bn CMBS
Lloyds Bank
Income Contingent Student Loans 1 (2002–2006)
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
Americas Structured Equity Issue
EMEA Structured Equity House
EMEA Structured Equity Issue
Asia-Pacific Structured Equity House
Asia-Pacific Structured Equity Issue
Morgan Stanley
Twitter’s US$1.15bn six-year convertible bond
UBS
Swiss Re’s US$500m six-year convertible bond
Credit Suisse
LG Chem’s US$610m dual-currency convertible bond

14 International Financing Review IFR Awards 2018

At your side
worldwide.
Leverage our worldwide presence
to increase your corporate success.
www.commerzbank.com/worldwide
Despite the challenges facing the German banking industry, there are bright spots, notably in serving the local and international needs
of Mittelstand clients, and in the ability to provide more efficient and better service to retail and corporate clients through online channels.
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
look forward. They need to think about growth, about really
transforming their operating model at scale, about new threats
such as cyber and about a completely different people model.
h4HEûSECTORûNEEDSûTOûRAISEûITSû2/%ûABOVEûCOSTûOFûEQUITYû2/%ûISû
SUCCESSION
Notwithstanding some potentially thorny issues on the horizon,
the fact that many of the world’s major banks have started to pull
the trigger on executive succession is a key factor supporting the
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
“Banks are starting to realise that they
cannot cut their way to greatness, and
BEYONDvûSAIDû3TEPHANIEû#OHENûCHIEFûSTRATEGYûOFlCERûATû'OLDMANû
3ACHSûv7EûAREûINVESTINGûINûDISRUPTIVEûPLATFORMSûANDûEMBRACINGû
unique partnerships. Ultimately, it’s about ensuring that we are at
the forefront of innovation so we can deliver differentiated
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

 In good times and bad times:
always a safe investment.
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take a look at kfw.de/investor-relations
IFR AWARDS 2018 FEATURES

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

www.rentenbank.de

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As a long-standing borrower, Rentenbank has been a reliable and particularly attractive partner for safety-conscious
investors. With the three most important rating agencies awarding us a triple-A rating, Rentenbank is one of the safest
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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

$URINGûTHEûSAMEûPERIODû53û-!ûACTIVITYûHASûREACHEDûNEWûHIGHSû
ANDûBETWEENûûANDûû53ûDEBTûCAPITALûMARKETSûPOSTEDûTHREEû
successive years of record volumes, factors that played to the
strengths of big US universal banks with a home market advantage –
and that allowed them to print money that can be put to use
elsewhere.
with the US, and I would just point out that four quarters in a row we
have gained market share.
v4HEûREALITYûOFûWHATûISûHAPPENINGûWITHûOURûMARKETSûFRANCHISEû
REALLYûBELIESûTHEûPROPOSITIONûTHATûWEûCANTûCOMPETEv
"ARCLAYSûDIFFERSûFROMûMOSTûOFûITSû%UROPEANûRIVALSûINûTHATûITûHASûAû
SIGNIlCANTûFOOTHOLDûINûTHEû53ûTHANKSûTOûITSûûPURCHASEûOFûTHEû
.OWûTHEYûAREûALSOûBECOMINGûDOMINANTûINû%UROPEûWHEREûMANYû .ORTHû!MERICANûBUSINESSûOFû,EHMANû"ROTHERSû&ORûOTHERû%UROPEANû
HOME
GROWNûINVESTMENTûBANKSûHAVEûTAKENûAûRADICALLYûDIFFERENTû lRMSûTHATûLACKûAû53ûPRESENCEûAûCHOICEûISûEMERGINGûnûEITHERûDIVERSIFYû
approach. While US banks have pressed home their advantage, their business away from investment banking to seek more stable
%UROPESûBANKSûHAVEûPULLEDûINûTHEIRûHORNSûCUTTINGûHUGEûSWATHESûOFû returns, or gain scale through consolidation.
their trading operations, exiting countries and product lines.
)NûMANYûWAYSûTHEYûONLYûHAVEûTHEMSELVESûTOûBLAMEû%UROPEANû MIND-SET SHIFT
banks were slow to adapt and as a result some are still trying to %ARLIERûTHISûYEARûAûREPORTûBYû-ORGANû3TANLEYûANDû/LIVERû7YMANû
lGUREûOUTûTHEIRûPOST
CRISISûFUTUREûORûHAVEûDIALLEDûDOWNûTHEIRû RAISEDûTHEûPROSPECTûOFûBIG
TICKETû-!ûASûAûSHOTûATûREDEMPTIONûFORû
commitment to investment banking. %UROPESûBANKS
/NGOINGûRESTRUCTURINGûMEANSûTHATû%UROPEANûBANKSûHAVEûSUFFEREDû h7EûSEEûSCALEûPLAYERSûBROAD
BASEDûCORPORATEûFRANCHISESûANDû
from strategic introspection, which has compounded their SPECIALISTûPLAYERSûBEINGûWELLûPLACEDvûTHEûREPORTûSAIDûh7EûBELIEVEûTHISû
competitive disadvantage. RAISESûPROFOUNDûQUESTIONSûFORû%5ûPOLICYMAKERSûOVERûTHEûFUTUREûSHAPEû
!SûANûINDICATIONûOFûTHEûLEVELûOFûUPHEAVALû$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
ADVANTAGESûAFTERûTHEûlNANCIALûCRISISûANDûADJUSTEDûOURûBUSINESSûMODELû
FARûTOOûLATEv
DITHERING
$EUTSCHESûDITHERINGûCOSTûITûITSûPOSITIONûASû%UROPESûTOPûCORPORATEû
PRESERVATIONûOFûCAPITALûANDûNOû#%/ûWOULDûTAKEûTHEûRISKûTHATûAûDEALû
WOULDûDESTROYûVALUEû4HEREûISûALSOûAûLACKûOFûCONlDENCEûABOUTû
WHETHERûBANKSûHAVEûSUFlCIENTLYûCLEANEDûUPûTHEIRûBALANCEûSHEETS
Nonetheless, in 2018 the prospect of big bank mergers resurfaced
with reports that Germany’s Commerzbank could be a target, either
FROMû$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&)$û))ûISû
forcing banks and brokers to become disciplined about where
they play and the content they produce while ratcheting up their
COSTûBASEû)ûDOûTHINKûTHEû*APANESEûBANKSûWILLûRUNûINTOûHEADWINDSv
DIVERSIFICATION
Nomura has had its fair share of pain since acquiring the Lehman
ensure that clients continue to have access to the same products
ANDûSERVICESû$#-%ûWILLûALSOûLOOKûTOûEXPANDûITSû$#-ûFRANCHISEû
INTOû%ASTERNû%UROPEûANDûTHEû.ORDICûREGION
“Looking further ahead and in terms of what our strategic
journey is, the old business model is changing rapidly on the back
OFûCHANGESûLIKEû-I&)$û))ûANDûLOWERûVOLUMESûANDûLOWûVOLATILITYûINû
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.
4HEûFOCUSûONûINCREASINGûMARKETûSHAREûANDûREVENUESûINû53û$#-û
CONTINUESûANDûTHEûBANKûISûSTICKINGûTOûITSûTARGETûOFûAûTOPûûLEAGUE
managers all over the world who have responsibility for the
table position.
UNITSûISûAûCLEARûINDICATIONûOFûOURûCOMMITMENTûTOûTHISvû#OLEYûSAIDû
Since October 2018, global business lines have been headed by
DOMESTICû*APANESEûBUSINESSûUNITSûASûWELLûASûTHOSEûOUTSIDEû*APAN
“We are leveraging our presence in US dollar debt markets in 4HEû!MERICASûISûAûKEYûGROWTHûAREAû)Nû/CTOBERû-5&'û5NIONû
ORDERûTOûSTRENGTHENûOURû$#-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
business lines”
INTERESTûINCOMEûTOûTRANSFORMûITSûPROlTû
,IKEûITSûMEGABANKûPEERSû3-"#ûISûWORKINGûTOûENHANCEû
relationships with corporate clients and offset lower interest
INCOMEûBYûPIVOTINGûTOûNON
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
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
aren’t pouring money into the markets, mean for the bond markets?
There is no consensus on what is going to happen. There is not
even consensus on what has happened, though most agree that 2018
has been a horrible year.
IFR Awards 2018 International Financing Review
MARKETSûAREûLEADINGûTHEûECONOMYvû+INGûSAID
NORMALISATION
4HEûLANDSCAPEûBECOMESûAûLITTLEûCLEARERûIFûTHEû53ûANDû%UROPEûAREû
considered differently. The Fed is the furthest along. Not only has it
stopped purchases of bonds, it is in the middle of the process of
normalisation and of shrinking its balance sheet.
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
EQUITIESûATû".0û0ARIBASû!SSETû-ANAGEMENT
FRIENDLYûREFORMSû
“But more importantly than that, China realises that
increasing the participation of foreign institutional investors in
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
THEûTRADEûTENSIONSv
INDEX ENDORSEMENT
There is plenty of US interest, too. The biggest endorsement of
QUADRUPLEDûTHEûDAILYûQUOTAûFORûTHEû#ONNECTûSCHEMESv
)NDEXûPROVIDERSûHAVEûALSOûWELCOMEDûINVESTOR
in the local market, including a proposal in November to curb
the use of trading suspensions – a factor that drew international
MIDSTûOFûTHEûûCRASH
“If you think about one of the big issues that remains, the
number of share suspensions, one of the causes has been share
pledges – to prevent margin calls, the main shareholders have to
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
!
SHARESûINûITSûINDEXûTOûûOFûTHEIRûMARKETûVALUEûINûTWOûPHASESû
next year. It has also said it plans to expand the universe of
stocks available in its index to include shares listed on ChiNext,
BIGûTHREEû53ûRATINGûAGENCIESûnû&ITCHû-OODYSûANDû30ûnûTOûSETûUPû
local operations will help address these issues.
/THERûREFORMSûRELATEDûTOûlXEDûINCOMEûANNOUNCEDûTHISûYEARû
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
MANAGERSv
As well as the sheer size of China’s capital markets, Chou
believes the growth of inbound investment is increasing the
appeal of a domestic securities licence.
“There has been a concerted effort from the Chinese
regulators to increase the participation of foreign institutional
POTENTIALLYûMAKINGûITûTHEûlRSTûEASTBOUNDûISSUER
!ûLISTINGûFROMû%UROPESûLARGESTûBANKûWOULDûALSOûSERVEûASûAû
WELCOMEûBOOSTûFORû#HINAûAFTERûANûEXPERIMENTûWITHû#$2SûEARLIERû
THISûYEARûTOûATTRACTûMOREû#HINESEûTECHNOLOGYûCOMPANIESûTOûmOATû
in their home market stuttered when smartphone maker Xiaomi
POSTPONEDûITSûPLANNEDû#$2ûISSUANCEû-ARKETûOBSERVERSûHAVEû
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
buy shares indirectly in the form of depositary receipts.
According to a draft consultation released in August,
HEAVYû53BNû
COMPANIESûLISTEDûONûTHEû,ONDONû3TOCKû%XCHANGEûWILLûBEûABLEûTOû
issue Chinese depositary receipts on the Shanghai Stock
“You now see there are 15-plus well-
MARKETûSTILLûBOASTSûAûTOTALûVALUATIONûOFûOVERû53TRNûANDûTHEû
Shenzhen bourse is the world’s most active by turnover, with
TRADINGûESPECIALLYûBUSYûINûTHEûTECHNOLOGY
ChiNext board. Bond analysts estimate the reweighting of the
MAJORûGLOBALûINDEXESûWILLûADDûABOUTû53BNûOFûFOREIGNûINmOWSû
to the country’s US$10trn domestic debt market.
CLSA’s Lee argues that international participants cannot
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
businesses leverage their
sustainable footprint.

Societe Generale is a founding member of the positive impact initiative steering group of the United Nations Environment Programme (UNEP).
Societe Generale is a French credit institution (bank) that is authorised and supervised by the European Central Bank (ECB) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) (the French
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
of Societe Generale. Societe Generale London Branch is authorised by the ECB, the ACPR and the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority
(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$."ûANDû3PARE"ANKûISSUEDû'REENûCOVEREDûBONDS ANOTHERûPARTûOFûTHATûPROCESSvûSAIDû'EMMAû,AWRENCEû0ARDEWûSENIORû
!NTONIOû+EGLEVICHûHEADûOFû'REENûBONDûORIGINATIONûATû5NI#REDITû
said: “These institutions are responding to demand from SRI
investors, who want Green bonds that take a portfolio view as
opposed to a project view. These deals give them exposure to a broad
range of Green assets, be they loans to renewable energy or energy
ASSOCIATEûDIRECTORûINûTHEûLEGALûTEAMûATûTHEû,OANû-ARKETû!SSOCIATION
Nobody keeps track of the number of loans being issued under the
Green loan banner, but anecdotal evidence suggests they are being
well used.
“The principles create a framework that everyone can understand
EFlCIENCYûORûGREENûBUILDINGSv and make Green loans more visible. That is very helpful in raising
%XECUTIONûCOSTSûREMAINûSLIGHTLYûHIGHERûFORû'REENûBONDSûBUTûTHISû THEûPROlLEûOFûNEWûMARKETSvûSAIDû#LAREû$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

 Trusted answers
for trusted advisors.

The answer is Eikon.

Our unique solutions help you serve clients
and prospects with confidence that your advice is solid.

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trusted advisors at financial.tr.com/eikon-ib

© 2015 Thomson Reuters S027976/12-15

 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
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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
7ANTûPROOF û(OWûABOUTûTHIS
•û"ANKSûTHATûWEREûPREVIOUSLYûSNIFFYûABOUTûSUCHûTHINGSû
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-ARCUSûINû'OLDMANSûCASE û"UTûHERESûWHATûTHEYREûUPû
BONDSûAûMARGINALûNUMBERûTWOûTOû'OLDMANûATûûINû
%#-ûANDûNUMBERûONEûATûûINûLOANS ûANDûTHEûSTORYûISû
JUSTûASûIMPRESSIVE
!NDûALLûTHISûISûEVENûMOREûREMARKABLEûINûhPEACEûTIMEv
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

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IFR Awards 2018 International Financing Review 39

BANK OF THE YEAR JP MORGAN

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INITIATIVESûTOGETHER Matthew Davies

40 International Financing Review IFR Awards 2018

 BOND HOUSE
HSBC

GUERRILLA
STYLE
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bank has been strong in emerging markets for some SWAPSûTOûBRINGûINûOFFSHOREûINVESTORSûWHOûCOULDûNOTû
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The bank is, for example, leading the way for global
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IFR Awards 2018 International Financing Review 41

BOND HOUSE HSBC

Alexi Chan
)TûALSOûLEDûAûaBNû$ECEMBERûûFORû
Jean-Marc Mercier
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pipeline, another one of the bank’s
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market for them for years and years
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markets origination. “It’s that
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IFR Awards 2018 International Financing Review 43

 EQUITY HOUSE
Goldman Sachs

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44 International Financing Review IFR Awards 2018

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IFR Awards 2018 International Financing Review 45

EQUITY HOUSE GOLDMAN SACHS

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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
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IFR Awards 2018 International Financing Review 47

LOAN HOUSE AND AMERICAS LOAN HOUSE GOLDMAN SACHS

BRIDGESûWHICHûINCLUDEDûAû53BNûLOANûBACKINGûPACKAGEDûFOODSû !ûõBNûLEVERAGEDûCORPORATEûACQUISITIONûlNANCINGûFORû$OUBLEû"û

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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
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GOODûSHAPEû"UTûEMERGINGûMARKETSûBANKERSû year progressed. It didn’t shirk the challenge.
ATû#ITIGROUPûREALISEDûTHATûDARKûCLOUDSûWEREû “We demonstrated that when the market is tricky,
looming. WEREûTHEûHOUSEûTOûGOûTOvûSAIDû0ETERû#HARLESûHEADûOFû
)NûTHEû53ûTHEû&EDERALû2ESERVEûHADûBEGUNûITSûHIKINGû %-%!ûlXED INCOMEûSYNDICATE
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likely to wind down and then stop. headline grabbing trades that needed the most
4HENûTHEREûWASûTHEûUNPREDICTABILITYûOFûTHEû4RUMPû HAND HOLDINGû)NûEMERGINGû%-%!ûTHEYûINCLUDEDûDEALSû
ADMINISTRATIONûTOûTAKEûINTOûACCOUNTûWHILEûWITHINûTHEû FORûTHEûLIKESûOFû"LOMû"ANKûANDû"ULGARIANû%NERGYû
emerging markets elections later in the year in Brazil Holding.
ANDû-EXICOûHADûTOûBEûCONSIDEREDû!NDûTHOSEûWEREûJUSTû 4HEûFORMERûWASûTHEûlRSTûNON GOVERNMENTûISSUEûFROMû
THEûKNOWNûRISKSûBACKûINû*ANUARYû7HOûKNEWûWHATûELSEû ,EBANONû4HEûLEADSûWHICHûINCLUDEDû$EUTSCHEû"ANKûASû
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This is where the long experience of the emerging THEûlNALûYIELDûINûITSûlRSTûPRICINGûMESSAGEûTOûSEEûWHATûSORTû
MARKETSûTEAMûATû#ITIGROUPûPAIDûOFFû4HEYûREALISEDûTHEû OFûBOOKûTHEYûCOULDûBUILD
BESTûWAYûTOûNAVIGATEûVOLATILITYûISûTOûAVOIDûITûALTOGETHERû There were no realistic comparables, with the
#LEARLYûNO ONEûCOULDûKNOWûWHENûEXACTLYûMARKETSûWOULDû YIELDûBASEDûONûAûPRICE DISCOVERYûPROCESSû4HEûDEALû
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while markets are still good. the region.
#ITIGROUPSûCLIENTSûLISTENEDû)NûTHEûlRSTûQUARTERûWHENû )NûTHEûENDû"LOMû"ANKûWASûABLEûTOûISSUEû53MûOFû
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blocks. REGIONALûNEIGHBOURû%00ûHADûFAILEDûJUSTûAûFEWûDAYSûBEFOREû
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ANDû3TANDARDû#HARTEREDûHADûTRANSACTEDûMOREûVOLUMEû company had said it was targeting a few months ahead
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whisker. TOUGHûMARKETû4HEûCOMPANYûSUBSEQUENTLYûTAPPEDûTHEû
h#OMINGûINTOûTHEûYEARûTHEREûWASûAûDEGREEûOFûHEALTHYû BONDûISSUEûABOUTûAûMONTHûLATERûFORûõMûWITHû
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'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
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ACTEDûASûAûBOOKRUNNERûONûANûEARLIERû53ûDOLLARûTRANSACTION  4HEûCOMPLEXûOFFERINGûGOTûDONEûDESPITEûANûUNCERTAINûECONOMICû
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BECAMEûTHEûlRSTû!FRICANûBORROWERûTOûISSUEûBONDSûATûTHATûTENORûINûTHEû SLIDEûANDûFEARSûTHATûTIT FOR TATûTARIFFSûBETWEENûTHEû53ûANDû#HINAûWILLû
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CROSS CURRENCYûSWAPûISûCLEARLYûMOREûEXPENSIVEûTHANûISSUINGûINû53û of the deal.
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!NDûMANYûOFûTHESEûCOUNTRIESûNEEDûEUROûFUNDINGû)VORYû#OASTûFORû 7HILEû#ITIGROUPûWASNTûTHEûLEADINGûBANKûINûTHEû-IDDLEû%ASTûITûWASû
EXAMPLEûISûAûMEMBERûOFûTHEû7ESTû!FRICANû%CONOMICûANDû-ONETARYû STILLûINûTHEûTOPûTHREEû-OREûPERTINENTLYûITûWASûTHEûNUMBERûONEûBANKû
5NIONûANûORGANISATIONûOFûEIGHTûMAINLYû&RANCOPHONEûSTATESûWHOSEû
CURRENCYûISûTHEû#&!ûFRANC
4HESEûDEALSûWEREûPARTûOFûANûIMPRESSIVEûROSTERûOFûTRANSACTIONSûFROMû
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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
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BANKûONCEûAGAINûTOWEREDûHIGHûABOVEûITSûCOMPETITORSûINûûmEXINGû TOûFOCUSûONûTHEûCRITICALûGEOGRAPHIESvûSAIDû!DRIANû+HOOûCO HEADûOFû
ITSûMUSCLESûINûAûTOUGHûYEARûFORûTHEûASSETûCLASS Asia debt origination.
/VERûTHEûAWARDSûPERIODû#ITIGROUPûSTOODûlRMLYûATOPûTHEûLEAGUEû /NEûAREAûTHATû#ITIGROUPûHASûPUSHEDûHARDûISûINû!ûTRANSACTIONSû
TABLESûWITHûûDEALSûUNDERûITSûBELTûANDûAûMARKETûSHAREûOFûû h,ATEûLASTûYEARûANDûEARLYûTHISûYEARûAûLOTûOFûISSUERSûWEREûHAPPYûTOûGOû
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MID .OVEMBERûûFELLûTOûTHEûEQUIVALENTûOFûAROUNDû53BNûFARû THEû!ûFORMATûPLAYSûTOû#ITIGROUPSûGLOBALûDISTRIBUTIONûSTRENGTHS
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ACCORDINGûTOû)&2ûDATA ONûWASûFORû0APUAû.EWû'UINEAû4HEûSOVEREIGNûPRICEDû53MûOFû
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#ITIGROUPûINûAûDOWNûYEARûTHEûBANKûNEVERTHELESSûEXPANDEDûITSûMARKETû ûAREAûAFTERûORDERSûEXCEEDEDû53BN
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"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
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RATEûRISESûSIGNALLEDûTHEûENDûOFûûYEARSûOFûEXTREMELYûCHEAPû approach early in the new year.
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wealth of experience to call on as markets became trickier. WHEREûTHEû5+ûGOVERNMENTûHADûINDICATEDûAûDESIREûTOû
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52 International Financing Review IFR Awards 2018

 M&A ADVISER AND CAPITAL MARKETS ADVISER ROTHSCHILD

TRIPLE-TRACK PROCESS
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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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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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IFR Awards 2018 International Financing Review 55

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Citigroup

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56 International Financing Review IFR Awards 2018

 BANK FOR FINANCIAL INSTITUTIONS CITIGROUP

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IFR Awards 2018 International Financing Review 57

 BANK FOR GOVERNMENTS
HSBC

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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
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60 International Financing Review IFR Awards 2018

 BANK FOR FINANCIAL SPONSORS GOLDMAN SACHS

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


Treasury’s plans either. It was a textbook example of how to do a
seamless political transition.”
Just over three weeks after Rajoy’s ousting, Spain was back in the
market with another 10-year benchmark albeit in smaller size – at
€7bn on demand of more than €24bn.
SSAR ISSUER KINGDOM OF SPAIN
Pablo de Ramon-Laca Clausen
This has allowed the Tesoro to tackle some trickier projects such
as the €6bn 30-year for which it received over €26.2bn of demand in
a year when duration has been a less prominent theme.
“Spain has managed to extend duration, which is particularly
important when, as an issuer, you have a large amount of funding to
4HEûDEALûPUTûTOûRESTûFEARSûTHATûVOLATILITYûWOULDûSPREADûLIKEûWILDlREû
ALSOûGIVINGûTHEûMARKETûTHEûlRSTûGLIMPSEûINTOûINVESTORSûAPPETITEûFORû
peripheral Europe, although that is a label that de Ramon-Laca says
YEARûINmATION
LINKEDûISSUEûTHATûCAMEûINû3EPTEMBERûWASû
DOESûNOTûREmECTûINVESTORSûVIEW
“Investors … trade in nuance and can spot an underrated
investment when they see one,” he said.
“In 2018, those that have treated Spain as ‘periphery’ have missed
out on a relative-value opportunity; our 10-year yield is now much
further below Italy than it is above Germany. The market seems to
be treating Spain like a semi-core credit, but … the market has
moved beyond these simple labels.”
TRANSPARENCY, PREDICTABILITY
Many praise the Tesoro’s transparent and predictable market
operations. When it comes to syndication, it uses the so-called early bird
approach, whereby investors that submit orders before any indication
of price is published obtain more bonds than if they had waited.
“To have a critical mass when you go out with a deal helps with
execution risk,” said Alex Barnes, head of SSA syndicate at Citigroup.
“Having achieved this, they want to maintain this. The
bookbuilding process for a sovereign can be complex but Spain is
keen to be fair. They’ve been through the sovereign crisis and
understand that times can get tough.”
Spanish bonds also offer value when so little can be found in an
ECB-dominated world.
“The main factor behind Spain’s success in the bond market this
year is that our bonds offer strong value given their rating, which is
clearly on its way up,” said de Ramon-Laca.
IFR Awards 2018 International Financing Review
do,” said Myriam Zapata, a director in the SSA DCM team at Credit
Agricole. “It’s what the taxpayer wants.”
)TSûõBNû
its longest in the format yet.
“Spain is always trying to push the boundaries,” said Zapata.
“The 15-year linker was impressive given that Spain is still a
newby in that market – they only started issuing linkers recently.”
3PAINûBROUGHTûITSûlRSTûLINKERûINû-AYûûANDûHASûSINCEûISSUEDû
€22.5bn via syndications in the format.
TOP OF THE CLASS
Spain has also proven a good student when it comes to paying back
its European Stability Mechanism loans. A €3bn voluntary
repayment in September was the ninth by the country, taking
Spain’s outstanding debt to ESM down to €23.7bn from €41.3bn.
The Spanish Tesoro has also made the most of the good times
under the European Central Bank’s Asset Purchase Programme.
From a 4.07% average, its cost of debt has gone down to 2.47% while
the average maturity has gone up from 6.2 years in 2013 to 7.5 years.
De Ramon-Laca therefore expects the transition to a non-ECB
buying world to be smooth.
“We expect the impact of the end of net purchases to be limited,”
he said.
“The reduction of net purchases has been done in a gradual
fashion and disruption so far has been minimal. We are convinced
that, as the Eurosystem gradually bows out of the Spanish debt
market, other investors will gradually pour in.”
Helene Durand
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
the eurozone from Sweden in September
2017, seeing the relocation to Finland as
PLACINGûITûONûAûLEVELûPLAYINGûlELDûWITHû
European peers in a more predictable regulatory
environment within the banking union.
)TûWASûTHEûlRSTûLARGEûLENDERûTOûRELOCATEûITSû
HEADQUARTERSûOUTSIDEûOFûAûMERGERûh)TûWASûAûDElNINGû
smallest coupon to date achieved for any European
Additional Tier 1 transaction in sterling, euros or US dollars.
Despite pricing some 125bp through the next lowest euro
AT1 coupons, the deal pulled in more than €5bn of orders
from over 380 investors and was trading up half a point by the
ENDûOFûTHATûWEEKû!Sû.ORDEASûlRSTûCAPITALûISSUANCEûFOLLOWINGû
its decision to relocate, the results bore out investors’ strong
CONTINUEDûAPPETITEûANDûCONlDENCEûINûTHEûBANK
MOMENTûINûOURûBANKSûHISTORYvûSAIDû/LAû,ITTORINûHEADûOFû
long-term funding at Nordea.
4HEûRE
DOMICILIATIONûWASûCOMPLETEDûONû/CTOBERûû instruments, effecting technical amendments to those
2018, the culmination of a remarkably smooth process
in which the need to recalibrate Nordea’s liability stack
in advance played a pivotal role. The bank also faced a
higher funding target than in 2017, demanding regular
trips to the wholesale market.
Despite the complexities, Nordea managed to issue
around €24.5bn across 13 benchmarks, about 350 taps
It came on the tail of an intricate consent solicitation
targeting 14 tranches of outstanding capital
BONDSûTOûREmECTûTHEûMOVEûTOû&INLAND
The bank was eager for the consent solicitation, which also
updated subordination provisions to permit the issuance of
senior non-preferred, to complete before its AGM in March.
After some debate over the premium, it opted for 20 cents
over 15 to strike the right balance with bondholders.
In the event it achieved a more than 90% acceptance
ANDûPRIVATEûPLACEMENTSûACROSSûSEVENûCURRENCIESûANDûlVEû
PRODUCTSû/VERûTHATûPERIODûITûACHIEVEDûHISTORICALLYûTIGHTû
pricing, reopened dormant markets and pioneered a
new asset class for the Nordics.
That success was rooted in extensive investor dialogue
to communicate clearly the implications of the Finnish
move, which also helped Nordea retain its best-in-class
INVESTORûRELATIONSûPROlLE
While ratings agencies deemed the move credit-
neutral – and the bank remained committed to
protecting its Double A ratings – it was “very important
to keep our investors really informed”, said Petra
Mellor, chief treasury manager and head of bank debt
at Nordea.
Members of the team conducted more than 500
meetings, an increase on the previous year’s 400,
spanning 30 different countries globally.
SETTING THE BAR
The bank started IFR’s awards period on a high, proving just
how low investors were willing to go on November 21 2017
with its no-grow €750m 3.5% perp non-call 2025, the
64
rate, successfully eliminating documentation
uncertainty for investors ahead of the move. The results
also served as a springboard for the AT1 transaction,
announced just one day later.
“It de-risked the AT1 because of the very strong support,”
said Littorin: “It was a conscious sequencing of two trades.”
WINDOW SHOPPING
As in the case of Nordea’s peers, 2018’s torrid
investment backdrop forced its funding team to be ever
more nimble in its execution strategy. The fact that the
Finnish move shortened its available issuance windows
for internal reasons made that challenge even steeper.
“This year there were days when we stood down and
others when we accelerated,” said Mellor. “Windows
have opened quickly and shut quickly.”
Nordea was also shrewd in the way it interacted with
its advisers, tending to mandate deals relatively late in
the process. That enabled it to continue bilateral
discussions with individual banks for longer, particularly
important in a year when views on pricing and
execution could vary wildly.
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.
The bank’s €1bn seven-year senior non-preferred issue in June was
THEûlRSTû3.0ûINûANYûCURRENCYûFROMû3WEDENûANDûFEATUREDûCONTRACTUALû
subordination to permit issuance ahead of the legal
IMPLEMENTATIONSûINû3WEDENûANDû&INLANDû)TûALSOûISSUEDûTHEûlRSTû
benchmark SNP in Norwegian kroner.
NEW GROUND
Nordea also excelled in the covered bond market, returning after a
13-month absence to issue three tranches.
Its €750m 15-year in February was the tightest in this tenor to-date –
part of a €2bn dual-tranche issue and IFR’s Covered Bond of the Year
– while its €1bn seven-year in May reopened the covered bond sector
after a period of volatility, setting the tone for the rest of the month.
In the preferred senior segment, its €1bn four-year FRN was priced
at the tightest spread for any syndicated bond in this format since
THEûlNANCIALûCRISIS
AWARDûPERIODû4HEûBANKûDIDûHOWEVERûPUBLISHûITSûlRSTû'REENû"ONDû
Impact Report in July 2018, showing its Green bond asset portfolio
more than doubled its volume to €1.7bn.
Away from the public market it was active in private placements,
placing €1.6bn of senior debt. It also successfully divested three non-
performing loan portfolios to Nordic investors, triggering material
capital gains for the group.
4HEûBANKûCAMEûUNDERûSCRUTINYûINû/CTOBERûFOLLOWINGûALLEGATIONSûOFû
money laundering by investor Bill Browder. It is also facing a US
probe over potential breaches of sanctions. But at the time of writing
.ORDEAûHADûNOTûRECEIVEDûANYûlNESûORûSANCTIONS
In its third-quarter report, the bank said: “The outcome of some
investigations is pending and it cannot be excluded that these
investigations could lead to criticism or sanctions.”
But those allegations should not detract from the funding team’s
achievements, managing as it did the recalibration of its liability
stack while also implementing a multi-billion issuance programme
7HILEû.ORDEAûDIVERSIlEDûINTOûMULTIPLEûCURRENCIESûITSûLOCALû
investor base remained an important source of funding that offered
relative stability at times of stress in broader markets. It issued a
combined €10bn-equivalent of domestic covered bond debt.
It also demonstrated considerable leadership and innovation across
PREFERREDûBONDSûINûTHEû.ORDICSûALSOûINSTILLEDûCONlDENCEûINûMARKETSû
against a tempestuous backdrop.
Despite those challenges, the bank managed to lock in funding at
competitive levels while balancing the objectives of investors and
regulators. Its bold reopening of markets and inauguration of senior
NON
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
acquisition of agrochemicals group Monsanto.
The acquisition was vast in its ambition, creating the
largest seeds producer and pesticides maker in the
world.
Such a transformative M&A transaction – the largest
outbound acquisition by a German company and the
largest all-cash deal ever – required an equally enormous
lNANCINGûEFFORT
"AYERSûSKILLûWASûINûPUTTINGûINûPLACEûAûmEXIBLEûFUNDINGû
package and constructively using the months waiting
for regulatory approvals to make the back-end funding
more manageable.
“We were managing the loan package to allow for any
uncertainty, including a friendly or hostile trade, a long
h%ACHûINDIVIDUALûPIECEûOFûTHEûlNANCINGûISûNOTABLEvû
said Frank Heitmann, a managing director covering
German clients at Credit Suisse and previously head of
equity-linked at the time of the mandatory CB issue.
“They are some of the biggest trades of the year
across asset classes and the concurrent execution of
the rights issue, euro and US dollar bond – as well as
the exchange offer – was a unique challenge. But
Bayer’s successful de-risking strategy made it a lot
easier,” Heitmann said
The mandatory issue in November 2016 was the
largest ever seen in Europe and the largest equity-linked
trade globally since 2003, but only a downpayment on a
planned US$19bn of equity issuance.
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
America Merrill Lynch.
All this, and the sheer heft of the transaction, meant
PRIMARYû)0/ûINû
that bankers had to manage a good deal of risk.
For starters, the acquisition facility backing the deal
was a mammoth US$56.9bn – the third-largest corporate
loan of all time, split into a US$46.9bn bridge loan, a
53BNûTHREE
YEARûLOANûANDû53BNûlVE
YEARûLOAN proceeds” across the €7.7bn of accelerated sales.
Although the loan closed in 2016, the underlying
acquisition was completed in June 2018, making the
loan eligible for the IFR Awards this year.
TAKE ME OUT
The loan was initially committed to by Bank of America
Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP
Morgan, and was syndicated to a further 21 banks. The take-
OUTûTHATûFOLLOWEDûWASûAûMASTERûCLASSûINûRElNANCINGûRISK
4HEûSERIESûOFûACQUISITIONûFACILITYûRElNANCINGûSTEPSû
included: €4bn of mandatory convertible bonds, €4.5bn
66
OFûTHEû-ONSANTOûPURCHASEûCLOSINGûENDINGûAûSERIESûOFûlVEû
block trades and an exchangeable bond issue.
#OVESTROûCOMPLETEDûAûRESTRUCTUREDûALL
/CTOBERûûATûõûPERûSHAREû4HEûSTOCKûHADûDOUBLEDû
within 12 months and peaked at a close of €95 on
January 19 2018 – up 295%. The remarkable performance
of the stock enabled Bayer to book €4.5bn of “excess
4HEûSCALEûOFûTHEûlNANCINGûMEANTûALLûOPTIONSûWEREû
considered from the outset and in April 2018 a €3bn
equity investment was secured from Singapore
sovereign wealth fund Temasek. The transaction was
SIGNIlCANTûASûTHEûRIGHTSûISSUEûANDûBONDûlNANCINGûWOULDû
follow regulatory approval and this 3.6% sale came
BEFOREûTHATûCONlRMATIONû4HEûCOMPANYûALSOûHADNTû
given Temasek any discount.
“The Temasek investment came ahead of the
acquisition receiving regulatory approval but the at-
market placing of €3bn of equity gave the market
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
Bayer and its banks moved quickly once the 21-month antitrust
review came to an end, with the acquisition wrapped up at the start
of June and the bond issue and rights issue announced within a
fortnight.
Management was on the road selling the €6bn rights issue to
investors at the same time as it embarked on a two-day US$20.75bn
bond sale extravaganza.
The company relied on the US market for the lion’s share of the
volume, pricing a US$15bn eight-tranche US dollar bond offering.
But the bond issue came with a twist for investors: it wasn’t
MATURITYûPROlLEû"ARCLAYSû".0û0ARIBASû#ITIGROUPûANDû#REDITû3UISSEû
were the leads on the euro offering.
The company’s rights issue – the largest equity deal in EMEA of
2018 – ended days later with a take-up of 98.3%, with the remaining
shares dribbled into the market over one day. The company had
many relationship banks to keep happy and took the unusual
approach of naming all 20 banks involved as joint bookrunners –
giving them equal league table credit.
The senior bookrunners, with underwriting of 11.49% each, were
BAML, Credit Suisse, Goldman, HSBC and JP Morgan.
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
144A/Reg S format.
That format usually means that a premium is required, as the
bonds may not be eligible to enter many bond indices. But it also
means the issuer can sidestep the time-consuming process of
registering with the SEC.
Added to all of that, Bayer had not done a US dollar deal since
2014, meaning it was an unfamiliar face for the market – albeit one
with crucial rarity value.
IFR Awards 2018 International Financing Review
RIGHTSûPRICEû7HILEûTHEûDEALûCOULDNTûHAVEûBEENûBETTERûmAGGEDûITSû
scale meant there were some questions about whether pricing was
unnecessarily aggressive.
Shares were trading below the €81 rights issue price within
two months, showing that the banks had borne real risk as
such a large acquisition comes with risk of delivering on the
promises and, in the case of Monsanto, potentially costly legal
liabilities.
Eleanor Duncan, Owen Wild
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 name that spawned 1,000 terrible puns
(not least by IFR). The deal hung over the
market from January until September in a
nerve-racking nine-month underwrite before it was
ABLEûINûTHEûMOSTûCOST
the size of the loans, reducing the bonds – and cutting the
YIELDûONûBOTHû4HISûSAVEDû2ElNITIVûMOREûTHANû53MûINû
INTERESTûPAYMENTSûOVERûTHEûLIFEûOFûTHEûlNANCINGS
“We surprised ourselves and the market [with] what
WASûDO
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$2.5bn).
Kaufman, the senior managing director who leads
"LACKSTONESûDEBTûMARKETSûACTIVITIESûh7EûHADûTHEûBENElTûOFû
timing and hitting a really good window when we brought
it to market in September given what then happened.”
4HEû53BNûLOANûANDûBONDûlNANCINGûBACKINGûAû
Blackstone-led consortium’s buyout of a 55% stake in
4HOMSONû2EUTERSûlNANCIALûDATAûANDûTECHNOLOGYûDIVISIONû
ANDûINCLUDINGû)&2 ûWASûTHEûBIGGESTûBUYOUTûlNANCINGû
"OTHûTRANCHESûHADûANû/)$ûOFûûCOMPAREDûWITHû
guidance of 99–99.5 and traded well on the break.
The US dollar loan was priced at 375bp over Libor, inside
guidance of 400bp–425bp and the euro loan at 400bp over
Euribor, compared with original guidance of 425bp.
The US$1.25bn senior secured bond was priced at
6.25%, compared with guidance of low 7%, while the
€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
some of the biggest bond issuers in the
technology and healthcare sectors had less
NEEDûTOûBORROWûTOûlNANCEûCAPEXûANDûSHAREû
ITSûAPPEALûWASûANûUNUSUALûDISCOUNTûOFFEREDûONûTHEûBONDSû
WHENûTHEYûWEREûPRICED
4HATûWASûINûRESPONSEûTOûPUSHBACKûBYûINVESTORSûONû
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
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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
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CHAINû#63û(EALTHSû53BNûNINE PARTû INûAûCHOPPYûMARKETûENVIRONMENTûWELLûINTOûAû )NVESTORSûCLAIMEDûTHEûMOVEûWASûAûBIGûWINû
JUMBOû53ûDOLLARûBONDûISSUEûTOûBACKûTHEû &EDûHIKINGûCYCLEvûSAIDû"ARBARAû-ARINIELLOû FORûTHEûBUYSIDEûANDûSAIDûTHEYûEXPECTEDûITûTOû
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RECORDûAûPRECEDENTûFORûPRICINGûANDûWASûTHEû "ARCLAYSûh9OUûHADûAûLOTûOFûUNCERTAINTYûABOUTû “This was a way that we thought elegantly
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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
PRE FUNDEDûAûDEALûBEFOREûREGULATORYû TRANCHESûGIVINGûTHEMûGREATERûCOMPENSATION sinking stocks rattling markets, after the sale
APPROVALûWITHûAûUNIQUEûCOMPENSATIONû )NVESTORSûHAILEDûITûASûAûBREAKTHROUGHûWITHû #63ûBONDSûMANAGEDûTOûTRADEûINûTHEûSECONDARYû
PLANûFORûINVESTORSûIFûTHEûTAKEOVERûWENTû #63ûBREAKINGûWITHûTRADITIONûOFûPRICINGû-!û TIGHTERûTHANûWHEREûTHEûOFFERINGûWASûPRICED
SOUTH BONDSûCLOSERûTOûPAR John Doran

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

THE RIGHT MEDICINE

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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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-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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ITSûTRADITIONALLYûSTRONGûCORPORATEûFRANCHISEûALTHOUGHûITûPROVEDûAûTRICKYû OFFEREDûSOMEûTRANSATLANTICûVARIETY
YEARûTOûNAVIGATEûINûTHEûCORPORATEûMARKETû!Sû-ARKû,YNAGHûHEADûOFûTHEû !ûMYRIADûOFûMANDATESûFROMûTHEûGREATûANDûGOODûOFûAGENCIESûANDû
BANKSûCORPORATEûDEBTûPLATFORMûFORû%-%!ûSAIDûh7EûHADûTOûDIGûDEEPûTHISû SUPRANATIONALSûFROMû%UROPEûANDûTHEûRESTûOFûTHEûWORLDûDULYûFOLLOWEDû
YEARûCLIENTSûBECAMEûMOREûDISCERNINGûINûTHEûDIFlCULTûMARKETSv TESTAMENTûTOûTHEûBANKSûLONG
STANDINGûASSOCIATIONûWITHûSUCHûISSUERS
)TûSTILLûMANAGEDûTOûSECUREûAûROLEûONûTHEûBULKûOFûTHEûYEARSûMILESTONEû h4HEREûHASûTOûBEûTRUSTûANDûRELATIONSHIPSûAREûBUILTûUPûOVERûAûLONGû
TRANSACTIONSûHOWEVERûEVENûASûTHEûAWARDSûPERIODûDREWûTOûAûCLOSEûASû TIMEvûSAIDû:ORZIûh7EûHAVEûANûINTEGRATEDûTEAMûTHATûOFFERSûWHATûWEû
MULTI
TRANCHEûJUMBOûDEALSûFORû6OLKSWAGENûANDû4AKEDAûDEMONSTRATEDû BELIEVEûISûTHEûBESTûADVICEûTOûCLIENTSv
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
I
NûAûHIGH YIELDûMARKETûDOMINATEDûBYû OPERATINGûCOMPANYûREQUIRINGûADDITIONALû HIGH YIELDûCAPITALûMARKETSûATû$EUTSCHEû"ANKû
HEADLINE GRABBINGû,"/SûEXECUTINGûAû mEXIBILITYûINûTHEûDOCUMENTATION which led the deal as global coordinator
CHALLENGINGûTRADEûWASNTûENOUGHûTOû #6#SûLIMITEDûSTAKEûALSOûMEANTûTHATûTHEû WITHû#REDITû3UISSEûANDû*EFFERIES
STANDûOUTûFROMûTHEûCROWD bond deal would be followed by a mandatory ,EADSûALSOûMANAGEDûTOûPRICEûSUCHûAû
)TALIANûPHARMACEUTICALû2ECORDATIû TENDERûOFFERûFORûTHEûREMAININGûSHARESû4HEû COMPLICATEDûTRADEûAGAINSTûAûBACKDROPûWHEREû
MANAGEDûTOûBEûNOTICEDûPRICINGûINû/CTOBERû SPONSORûAGREEDûTOûOFFERûTHEûõûPERûSHAREû THEûSPREADûBETWEENû"UNDSûANDû"40SûWIDENEDû
THEûLARGESTû,"/ûOUTûOFû)TALYûAGAINSTûAûMARKETû IMPLIEDûBYûTHEûPRICEûPAIDûTOûTHEû2ECORDATIû throughout marketing and reached its widest
INCREASINGLYûSPOOKEDûBYûTHEûCOUNTRYSû FAMILYûWHICHûWASûSIGNIlCANTLYûLOWERûTHANû LEVELûSINCEû*UNEûû4HEûLEADSûWEREû
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
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IGHTENINGûCURRENCYûBASISûSWAPSûEASINGû -IZUHOûTOGETHERûWITHû.OMURAûHELPEDû"ANCOû
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.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
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linked bonds as a solution to the transitioning away from WEREûGOODûISSUINGûOPPORTUNITIESûBUTûTHEREûWEREûALSOû
,IBORûTOûRISK FREEûRATESûANDûNAILINGûDOWNûTHEûOPTIMALûSTRUCTUREû PERIODSûOFûGREATûVOLATILITYv
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,INE ûANDûPERMANENTûWRITEDOWNûFEATURESû0HOENIX  "OTHûTRANSACTIONSûFEATUREDû.AT7ESTûONûTHEûTOPûLINEûASû
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THEûABSOLUTEûCOREûOFûWHATûWEûDOv hybrid criteria change brought about tender offers from
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DURINGûTHEûAWARDSûPERIODûBYûBPûACCORDINGûTOû and NatWest was again to the fore with numerous
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PARTNER
)TûWASûNOTûPLAINûSAILINGûINûANYûMARKETûINûû
HOWEVERûESPECIALLYûASûTHEûYEARûPROGRESSED
NatWest had no magic wand and found itself in the
UNENVIABLEûPOSITIONûOFûSHELVINGûTRADESûFROMû2#)û"ANQUEû
ANDû43"û"ANKûTHEûLATTERûASû"REXITûHEADLINESûWROUGHTû
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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
domestic market, selling a
3&RBNûDUAL
TRANCHEûSIXûANDû
franc bond, the leads defended their
While it is unusual to see that degree of $OUBLEû!ûRATEDûCORPORATEûQUALIFYûASû(1,!û
tightening during the marketing of a Swiss ,EVELû
!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
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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
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RIVALSûLEADINGûMARKETûPOSITIONû5"3ûISû)&2Sû3WISSû&RANCû"ONDû(OUSEûOFûTHEû9EAR

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ORûMANYûYEARSûITûHADûBEENûTHEûPOORûSECONDûINûTHEû "ANKûSOLEûLEDûBYû5"3ûnûTHROUGHûAûSLEWûOFû3OUTHû+OREANû
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CAUGHTûUPûWITHûITSûLARGERûRIVALûATûTIMESûEVENû THEûCOUNTRYûWITHû+%"û(ANAû"ANKûINûMID !UGUSTû5"3ûHASû
BEATINGûITûINûTHEûLEAGUEûTABLESûOVERûTHEûCOURSEûOFû been at the forefront of emerging markets issuance in
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)DENTIFYINGûTRENDSûFOCUSEDûONûCAPTURINGûANYûOPENû REVENUEûANDûHEADLINESûFORû5"3ûWHICHûTOOKûAûLEADINGû
arbitrage windows to cater for international issuers, ROLEûONû#ANADIANûBANKûDEALSûBOTHûSENIORûANDûCOVEREDû
ESPECIALLYûTHOSEûFROMûEMERGINGûMARKETSûANDûlNANCIALSû FROMû"-/û#)"#ûANDû2"#
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5"3ûWORKSûARGUABLYûMOREûCOLLABORATIVELYû YEARûINCLUDINGû4RANSURBANû1UEENSLANDûANDûDOMESTICû
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the syndicate 3&RMûDUAL TRANCHEûOFFERINGûANDûDEALSûFROMû3CHINDLERû
team, led by 3WISSCOMûANDû'IVAUDAN
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has only two MID .OVEMBERûBRAVINGûSHAKYûMARKETSûTOûPRICEû
members, Florian 0ANALPINAû7ORLDû4RANSPORTû(OLDINGSû3&RMûûFOUR
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Wirtensohn announcements from similar names, including
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&ROMûTHEûlRSTû ,ASTûBUTûCERTAINLYûNOTûLEASTû5"3ûREMAINEDûTHEû
%-ûDEALûOFûTHEû number one Swiss franc bond trading house, according
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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
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binding bond issue has been created,
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The new bond does not fully embrace
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John Weavers

EUROPE INVESTMENT-GRADE CORPORATE BOND

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

TOP HONOURS
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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
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William Hoffman

IFR Awards 2018 International Financing Review 83

 EUROPE INVESTMENT-GRADE CORPORATE BOND HOUSE
Societe Generale

GREY MATTER
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$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
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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
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BIGGESTûCOUPONûOFûANYûPUBLICûEUROû The fact that more bonds were exchanged ACCESSûANDûIMPLYINGûINVESTORSûBOUGHTûINTOû
TRANSACTIONûSOLDûINûTHEûlNANCIALûSECTORûOVERû THANûTENDEREDûSHOWEDûTHATûINVESTORSûDIDûNOTû ITSûTURNAROUNDûSTORYûEVENûIFûTHEûBANKûISûFARû
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MOSTûCHALLENGINGûANDûCOMPLEXûDEALSû4HISû DOWNûTHEûCAPITALûSTRUCTURE 4HEûDEALSûSUCCESSûALSOûREmECTSûTHEûISSUERSû
WASûNOTûJUSTûABOUTûCAPITALûOPTIMISATIONû )NûANûUNUSUALûTWISTûBOOKRUNNERSû*0û PRACTICALITYûINûSWALLOWINGûTHEûPRICEûITû
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liability management exercise, together 4HEREûWASûNOûNEEDûTOûINmATEûTHEûYIELDûNORû PARTICULARLYûTIMELYûINûHINDSIGHTû)TûALSOû
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IFR Awards 2018 International Financing Review
0ORTUGUESEû2ESOLUTIONû&UNDûAFTERûORDERSû LOW
PASSEDûõMû4HATûWASûDESPITEûTHEûBOYCOTTû no shortage of struggling banks across
OFûVARIOUSûINVESTORSûWHOûSUFFEREDûLOSSESû %UROPE
WHENûTHEû"ANKûOFû0ORTUGALûTRANSFERREDû Alice Gledhill
85
 NORTH AMERICA FINANCIAL BOND HOUSE
Citigroup

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Natalie Harrison

86 International Financing Review IFR Awards 2018

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

BEYOND THE OBVIOUS

T
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HEADûOFûLONG TERMûFUNDINGûATû.ORDEAû"ANKû 4HEûDEALSûSUCCESSûWASûATTRIBUTEDûINûPARTû COVEREDûBONDûSPREADSûLATERûINûTHEûYEARûASûTHEû
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AFTERûHEAVYû*ANUARYûSUPPLYûHADûSTRUGGLEDû CONSENSUALûPRICINGûTEMPLATEûTHATûOTHERû &INLANDûWHICHûWASûCOMPLETEDûONû/CTOBERû
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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
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maturity with its Green holdco debut, h7HENûAûBANKûISSUESûAû
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and stick to the highest standards in terms MOREûCONVENTIONALû
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longest in the single currency, while the OEKOMûANDûWASûPRE
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dollar tranche was the biggest in that "ONDSû)NITIATIVE MOVEûPRICINGûFROMû)04SûBYûBPûONûTHEûEUROû
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YEARûMATURITYûISû Robert Hogg

IFR Awards 2018 International Financing Review 87

 SRI BOND HOUSE
Credit Agricole

STEERING THE WAY

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blurred message, when BEENûMOREûOFûAûSLOW
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the success of this BUREAUCRACYûANDûNEBULOUSûDECISION
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market has been based .ONETHELESSû#REDITû!GRICOLEûSUPPORTEDûTHEû+INGDOMûOFû
ONûCLARITYv "ELGIUMûASûITûJOINEDûTHEûRANKSûOFûSOVEREIGNSûTOûSELLû'REENû
#REDITû!GRICOLEû BONDS
coordinated the #REDITû!GRICOLEûALSOûWONûIMPORTANTûREPEATûBUSINESSû
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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
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mEXIBLEûTERMS LEAD LEFTûPLACEMENTûAGENTû-ORGANû3TANLEY. FRONT END
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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
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secured term loans, one in 2016 and another in WASûTHEûLARGESTûOFûITSûKINDûEVERûTOûBEûSOLDû SUCHûASûTHEûRIDE HAILINGûCOMPANYûWHICHûISû
û7ITHûTHOSEûTWOûLOANSûANDûAû53BNû ANDûATTRACTEDûMOREûTHANûûINVESTORSû EXPANDINGûITSûPLATFORMûINTOûNEWûAREASûSUCHû
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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
of contacts to ensure that each panel consists of the most senior, knowledgeable and relevant market practitioners.

Whether a full-day conference, half-day seminar or 90-minute roundtable, each event provides rich content and
unrivalled networking capabilities for attendees – and excellent marketing opportunities for sponsors.

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
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h)ûLIKEûTHEIRûCOURAGEû7HENûWEûSAIDûWEûWANTEDûTOûDOûAû h7EûWEREûIMPRESSEDûWITHûTHEIRûEXECUTIONû
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BANKSûAREûMOREûRISK AVERSEv 'ROUPûh4HEûPRICINGûANDûDEMANDûTHEYûHADûINDICATEDûWASû
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ANOTHERûCASH BURNINGûBUSINESSûANDûONEûTHATûHASûTURNEDû Natalie Harrison
TOû-ORGANû3TANLEYûTOûLEADûEVERYûSINGLEûONEûOFûITSûEIGHTû
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ANDûKEYûINVESTMENT GRADEûACCOUNTSûFORûTHEûlRSTûTIME

LOFTY VALUATIONS
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STAYûHIGHûINûCOMPETITIVEûMARKETSûANDûPROVIDEûAûDEEPû
CUSHIONûFORûBONDHOLDERS

90 International Financing Review IFR Awards 2018

 EUROPE HIGH-YIELD BOND HOUSE
Deutsche Bank

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

"
uyouts returned with a bang in 2018 after a RISKSûANDûTHEûPOORûTRADINGûPERFORMANCEûOFû#IRSASûMAINû
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mandatory tender offer on the remaining shares,
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a subordinated note issue outside their reach, which
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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
unemployment, which recently fell to its
lowest point in 50 years, optimism in the US
securitisation market grew in 2018, leading
to a tightening of spreads for much of the year despite
high volumes.
!MIDûAûmOODûOFûPAPERûBACKEDûBYûAUTOûLOANSûANDûOTHERû
forms of consumer credit, the lift-off in whole-business
securitisations – mostly from big restaurant operators –
In the middle of that volatility, Taco Bell was having
“go, no-go” calls with its bankers about the timing of its
planned US$1.2bn whole-business deal.
“At the end of October, we watched the broader equity
markets close in the red,” said Jed Gold, assistant treasurer
at Yum! Brands, the parent company of Taco Bell.
“The VIX had spiked from 12 to 25. And we were
having discussions if this was the right market, or time
to wait.”
was one of the main themes of the year. 5LTIMATELYû"ARCLAYSûADVICEûWASûTOûFORGEûAHEADûANDû
Barclays has played a pivotal role in the growth of the that turned out to be the right call for Taco Bell.
SECTORûOVERûTHEûPASTûlVEûYEARSû$URINGûTHATûPERIODûSOMEû Not only was the deal increased in size to US$1.45bn,
US$25bn of whole-business securities have been sold,
YEARûCLASSûONû
according to S&P data.
TIMEûLOWûOFûBPûOVERû
This year, that leadership role continued. Barclays was
the number one bookrunner in the whole-business
BUTûPRICINGûALSOûNARROWEDûPUTTINGûITSûlVE
PARûWITHûTHEûSECTORSûALL
interpolated swaps, according Ben Fernandez, specialist
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
patch of volatility that saw other deals widen and even
downsize.
really Barclays as the key partner as structurer.”
Barclays rivals the biggest US banks when it comes to
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
WORLDûOFûAIRCRAFTûlNANCEûWITHûAû
new structure that raises the bar
exactly the same time during the marketing notes narrowed to 17% from initial talk
process. around 18%.
“Before in this market, you never had any The number of equity investors also rose
FORûTRANSPARENCYûEFlCIENCYûANDû
liquidity.
Air Lease was able to raise US$544.87m in
July through the sale of Thunderbolt II
(TBOLT 2018-A), a new kind of aircraft
securitisation that took weeks to price
clue how much equity was contributed, nor
what the equity was getting as a return, and
no idea what the manager was earning for
their performance,” said Ryan McKenna,
head of corporate strategy at Air Lease.
“That seemed very wrong.”
from three in Thunderbolt I to 20 in
Thunderbolt II. And in secondary trading,
pricing on the tradable equity notes has
narrowed to 16.3%, according to Bank of
America Merrill Lynch data.
Carla Schriver, a vice-president at
INSTEADûOFûMONTHSûOPENEDûUPûITSûlNANCIALSû
to the public and turned illiquid equity
BASEDûlNANCIALû changed the old ways of doing business in
notes into tradable securities.
“We took the view, along with Air Lease,
that you had to do more than just change
the form,” said Carl Anderson, a managing
director at Bank of America Merrill Lynch,
who worked on the transaction.
“You had to go a step further in terms of
information to make this work.”
To forge a new path, McKenna spent
MONTHSûBUILDINGûAûWEB
model that would be updated regularly and
report everything from engine maintenance
reports to aircraft lease extensions.
“I thought, if we provide this level of
disclosure, all participants would know
EXACTLYûWHEREûTHEûMONEYûISûmOWINGûANDû
how to track it.” McKenna said.
The strategy has more than paid off.
Goldman Sachs, said that Thunderbolt II has
aircraft ABS, which previously had been
more akin to negotiated M&A transactions
with a handful of key investors rather than
broadly syndicated securitisations.
“Thunderbolt just fundamentally changed
that,” Schriver said.
Bank of America Merrill Lynch was global
coordinator, and a joint structuring agent
&ORûTHEûlRSTûTIMEûINVESTORSûINû
Thunderbolt II – irrespective of whether
they were buying debt or equity – were
given the same level of information at
NORTH AMERICA MBS ISSUE
Gramercy Property Trust’s US$3bn CMBS
IN THE CLEAR
T
he leveraged buyout of Gramercy
Property Trust by Blackstone
for US$7.6bn was the largest
take-private of a REIT in 2018,
one of the biggest such trades in the
4HEûDEALSûBIGGESTûSLUGûOFû3INGLEû!ûRATEDû
notes narrowed to be priced at 130bp over
interpolated swaps from talk in the 135bp
range. And its novel tradable “GAPS” equity
Securitisation of single-asset and single-
borrower loans made up a bigger share of the
CMBS market in 2018 than the more
traditional conduit business, where 70 or so
property loans are bundled into one bond deal.
with Mizuho and Goldman Sachs. Citigroup,
BNP Paribas and MUFG were also joint
bookrunners.
Joy Wiltermuth
market,” said Kenneth Cohen, US head of
COMMERCIALûREALûESTATEûlNANCEûATû"ANKûOFû
America Merrill Lynch, a co-lender on the
transaction.
“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
COMMERCIALûREALûESTATEûlNANCINGSûFORûTHEû
SECTORSûLARGESTûPROPERTYûOWNERSû)TûTAPPEDûTHEû
CMBS market and also used its own balance
sheet to win deals when there was no shortage of
competition for loans from other banks, thrifts,
government-backed lenders and life insurance
companies.
There is no bigger name than Blackstone in
commercial real estate and it was Citigroup that the
PROPERTYûGIANTûPICKEDûTOûLEADûTHEûDEBTûlNANCINGûONûITSû
US$7.5bn leveraged buyout of Gramercy Property Trust,
the largest structured US real estate deal since the global
lNANCIALûCRISIS
It was anchored by a US$5.5bn debt package that
closed in October, of which US$3bn came from a CMBS
loan. Collateral for the CMBS is made up of a large swath
of industrial properties that dot the country, with
Citigroup providing 60% of the funding and Bank of
America Merrill Lynch the rest.
!NOTHERûGLOBALûREALûESTATEûCOLOSSUSû"ROOKlELDû
selected Citigroup to lead-manage a landmark
TRANSACTIONûTHISûTIMEûTHEû53BNûRElNANCINGûOFûITSû
sprawling Atlantis Resort in the Bahamas – and just
ahead of the hurricane season.
)TûISNTûEVERYûDAYûTHATûTHEû#-"3ûMARKETûlNANCESûAû
Caribbean mini-city of four seaside hotels, several
restaurants, a casino, a water park and a desalination
plant. It even mortgaged dolphins.
Pricing on the bonds, totalling US$1.2bn, widened
some from initial talk, but they were still priced within
expectations. Citigroup also sold another US$650m of
mezzanine loans backing the property to three
investors.
But beyond the glitziest real estate transactions,
Citigroup also kept originating a stream of conduit loans
for benchmark CMBS deals.
By mid-November, it had pooled loans into a dozen
conduit deals with other top banks, and ranked third in
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
“We began talking with counterparties about M&A,
big transactions, the single-asset/single-borrower
business, and thought we had to really pursue that
BACKEDû
aggressively.”
BACKDROPûALSOûHIGHLIGHTEDûONEûOFû#ITIGROUPSûSTRENGTHSûnû
its long-standing presence in the CMBS space, which
through its Salomon Brothers heritage can be traced
BACKûTOûTHEûCREATIONûOFûTHEûVERYûlRSTûMORTGAGE
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.
“Eventually, conditions would emerge that would enable
full resurrection.”
7ITHûTHEû"ANKûOFû%NGLANDSûTERMûFUNDINGûSCHEMEû
ceasing to lend from February UK banks would need ABS
lRSTûDEALûINûlVEûYEARSûANDû!LDERMORESûlRSTûINûFOURû)Tû
arranged a debut for Atom Bank, which operates
exclusively over mobile phone apps, and led deals from
specialist lenders such as Paragon and Charter Court.
The Lloyds team credits its range of mandates to the
INVESTORSûONCEûAGAINûBUTûTHEREûWEREûDOUBTSûTHEûlCKLEû
sterling market could absorb a supply spike on its own.
In anticipation of this, Lloyds had started re-engaging
US accounts in 2017, traditionally big buyers of UK paper
but feeling neglected after UK supply in dollars dried up.
Just US$400m of dollar-denominated UK RMBS was
sold in 2017, but that ballooned to US$4.7bn in 2018,
WITHûlVEûCREDITûCARDûDEALSûADDINGûAûFURTHERû53BN
“Our view was that 2018 would be about proving the
market would be there for the big treasuries and the
smaller players,” said Matthew Cooke, global head of the
securitised products group at Lloyds.
planning work it carried out with smaller lenders to
prepare them well in advance for the withdrawal of
central bank liquidity schemes.
h9OUûDONTûGETûPAIDûFORûTHATûADVISORYûWORKûBUTûWHENû
YOUûLOOKûHOWûCLIENTSûREWARDEDûUSûTHISûYEARûITSûBEENûDEALû
after deal,” said Cooke.
More consumer mandates came from autos, where
Lloyds was a lead on three UK deals and two German
ones, and UK credit cards. And behind the scenes the
bank has worked to build a private placement market
for smaller UK and European asset-backed issuers.
If the end of the TFS marked a turning point for the
2IVALûSYNDICATEûOFlCIALSûACKNOWLEDGEûTHEûGROUNDWORKû MARKETûANDûPLAYEDûTOû,LOYDSûFOCUSûONûTHEû5+ûCONSUMERû
,LOYDSûCARRIEDûOUTûWITHû53ûACCOUNTSûANDûTHOSEûINVESTORSû TWOûOFûTHEûYEARSûOTHERûBIGûDEVELOPMENTSûCOMPLETELYû
ready appetite for UK risk meant the sterling market was passed the bank by.
never completely overwhelmed in 2018. Lloyds has no involvement in the leveraged loan CLO
Not that the sterling market felt congested at the start or CMBS markets, both of which grew strongly through
OFûTHEûYEARûWITHû*ANUARYûANDû&EBRUARYûlNDINGûEXTREMELYû û"UTûITûISûAûSIGNûOFûTHEûBANKSûSTRENGTHûINûITSûCOREû
strong demand in the currency. mandate that as well as topping the league tables for
%UROPEANûDEALSûEXCLUDINGû#$/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
preparation, interrupted by two
general elections and a Brexit
referendum, the UK government
SECURITISEDûINû$ECEMBERûûSOMEûaBNû
of legacy student loans, creating a new and
highly complex asset-class.
Sole arranger Barclays had been
mandated in July 2013 and the end-result
was Income Contingent Student Loans 1
(2002–2006), a securitisation so elaborate
brought the initial marketing process to a
juddering halt a couple of months after it
WASûOFlCIALLYûUNVEILEDûEARLYûINû
The deal then failed to immediately
reappear after the June election due to the
uncertainties of a hung parliament and
when it did, it had to cope with heightened
concerns about the UK economy after Brexit.
"UTûSUCHûWASûTHEûDEBUTSûSUCCESSûTHATûTHEû
GOVERNMENTSûaBNûISSUANCEûTARGETûWASû
HIKEDûBYûANûADDITIONALûaBNûINûTHEûû
accounts were involved in the marketing
process, which included over 90 meetings.
h4HEREûWEREûlVEûITERATIONSûOFûENGAGINGû
investors, which was absolutely
unprecedented,” said Edward Ballin, a director
ATû"ARCLAYSûh)VEûNEVERûWITNESSEDûTHISûSORTûOFû
intensity over this sort of time period.”
Close to 40 investors participated.
7HILEûTHEûaMû#LASSû!ûRATEDû!! û
targeted traditional ABS investors, the
aMû!û!! ûWASûDESIGNEDûFORû
that its model came with a 90-page user
RATEû
manual to help investors run it.
The type of student loans in question –
WHICHûAREûONLYûREPAIDûWHENûAûBORROWERSû
income crosses a certain threshold – had
Autumn budget: marketing for the second
deal began in October.
4HEûSECURITISATIONûTARGETEDûAûaBNû
portion of the oldest loans in the pre-2012
book, arguably the weakest cohort as this
INSURANCEûCOMPANIESûSELLINGûlXED
scheduled amortisation paper.
"ELOWûTHEûSENIORSûCAMEûTHEûaMû
Class B (BBB) RPI-linker, and at the bottom of
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
its very execution was in considerable doubt
after a snap post-Brexit general election
ASIA-PACIFIC STRUCTURED FINANCE ISSUE
Bayfront Infrastructure’s US$458m project finance CLO
CAPITAL IDEA
C
LIFFORDû#APITALSûlRSTûSECURITISATIONû
OFûPROJECTûlNANCEûLOANSûREVIVEDû
Asian interest in collateralised loan
stack was publicly sold to investors.
There may only be around 20 dedicated
sterling buyers but around 200 different
combined 47.7% of the pool, but the portfolio
also included frontier markets such as Papua
New Guinea and Mongolia.
Barclays, Credit Suisse, Lloyds and
JP Morgan were joint bookrunners.
Chris Moore
Asia booking 65% of the notes, Europe
taking 23% and the Middle East 12%.
A US$320.6m Class A tranche, with
obligations, created a new asset
CLASSûFORûTHEûREGIONûANDûENHANCEDû3INGAPORESû
CLAIMûASûAûCENTREûFORûINFRASTRUCTUREûlNANCING
Singapore-based Clifford Capital set out to
lNDûAûWAYûTOûBRINGûMOREûINSTITUTIONALû
INVESTMENTûINTOûINFRASTRUCTUREûINû!SIA
0ACIlCû high investment grade. Banks were required
and the Middle East, and settled on a structure
that would overcome many of the hurdles in
attracting fund managers to individual projects.
The portfolio approach, with dozens of
PROJECTûlNANCEûLOANSûASûTHEûUNDERLYINGû
collateral pool, appealed to buyside investors
looking to diversify, and freed up bank
balance sheets for the next round of projects,
creating a template for future deals that can
HELPûCLOSEû!SIASûINFRASTRUCTUREûFUNDINGûGAP
Around three-quarters of the underlying
projects were already operational, and many
of the loans had support from export credit
agencies or multilateral institutions, helping
to boost the ratings of the securities to a
was priced at 195bp over with a WAL of
to hold on to part of the exposure to ensure
their interests were aligned with investors
in the CLOs.
A sensible premium over CLOs in the US
market helped generate momentum in tricky
conditions in July – perhaps the worst month
of the year for the Asian credit market – and
the lead managers lined up substantial anchor
orders before launch. Bookbuilding ran for a
week, with some fund managers needing to
ANûEXPECTEDûRATINGûOFû!AAû-OODYS û
was priced at six-month Libor plus 145bp
with a weighted average life of 3.7 years
and an expected maturity of 7.4 years;
a US$72.6m Class B tranche rated Aa3
8.6 years and expected maturity of 9.4 years;
and a US$19.0m Class C rated Baa3 was
priced at 315bp over with a WAL of 9.8 years
and expected maturity of 10.4 years. A
US$45.8m subordinated tranche was
retained.
Bayfront Infrastructure is the issuing
vehicle and Clifford Capital is the collateral
manager.
Citigroup and Standard Chartered were
#LIFFORDû#APITALûSOURCEDûûLOANSûFROMûlVEû complete internal approval processes, given JOINTûGLOBALûCOORDINATORSû$"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
transactions can beat Ukrainian mining
and steel company Metinvest’s dual-
tranche offering in April.
As well as new notes, the deal included a
tender offer and consent solicitation that
WEREûDESIGNEDûTOûPUTûAûDIFlCULTûFEWûYEARSûFORû
the company behind it.
As a result of Russia’s invasion of the
Crimea, Metinvest (B–/B) had to go through
a debt restructuring between 2015 and
2017.
The outcome of the restructuring meant
that the bulk of the company’s debt
portfolio consisted of two instruments:
US$1.2bn of 9.3725% secured PIK Eurobonds
due December 2021 and a US$1.1bn secured
PRE
EXPORTûlNANCINGûFACILITY
PXF facility were due to mature in 2021.
Bondholders, moreover, were subordinate to
the creditors of the PXF. Another problem
for investors was that from 2019, the cash
coupon on the bonds was to be converted
into part PIKs.
Metinvest’s management was keen on
RElNANCINGûBOTHûINSTRUMENTSûONûMARKETû
terms.
In order to do so, however, it had to
overcome a number of hurdles. It needed an
agreement with the lending banks to
RElNANCEûTHEû08&û)TûALSOûHADûTOûGETû
agreement with investors to swap their
positions in the old bonds with new bonds
through a tender offer and parallel new
issuance to fund the buy-back.
4HEûCOMPANYûALSOûHADûTOûlNDûAûSOLUTIONûTOû
cash format; and a softening of covenants in
line with the new issue.
All the parts were interlinked and failure
of any single element would have meant the
entire transaction could have collapsed.
However, it succeeded in all aspects.
The tender generated a remarkable 90%
participation rate by the early deadline,
enabling Metinvest to buy back just over
US$1bn of the 2021s, while 97% of existing
holders expressed their support for the
consent.
At the same time, Metinvest issued two new
bonds: US$825m of 7.75% due 2023s and
US$525m of 8.50% due 2026s. It was the largest
ever transaction from a Ukrainian corporate.
But more than that, the deal helped
Metinvest lower its average cost of debt and
The two instruments shared the same
security, the same cash sweep and other
technical structural elements. However, for
lNANCEûAûPORTIONûOFûTHEû08&
both the company and bondholders, the
nature of the debt was troublesome.
There was, for example, a very high
RElNANCINGûRISKûASûBOTHûTHEûBONDSûANDûTHEû
LATIN AMERICA BOND
GOL’s US$500m seven-year bond
GOOD TIMING
B
razilian discount airline GOL
tapped the market while emerging
markets were still hot to bring an
upsized US$500m seven-year bond
offering, successfully reintroducing itself
after a tough restructuring to create a
cheaper benchmark issue.
And while the rough and tumble world of
the airline business doesn’t guarantee ultimate
success for the issuer itself, the timing and
triumph of the deal proved to be a rare event in
a year strewn with victims of market volatility.
Bankers were particularly impressed
with the efforts of Richard Lark, the
any outstanding old bonds that were not put
forward for tender to align the economic
and contractual terms of those 2021 notes
with those of the contemplated new issue.
Proposed amendments included the
removal of common security and cash
SWEEPûCONVERSIONûOFûTHEûCOUPONûTOûlXEDû
“For us, it was a major exercise, which
EFFECTIVELYûRElNANCEDûTHEûMAJORITYûOFûOURû
existing unsecured bonds,” Lark said.
Coming on the heels of a successful deal
from rival Azul, the issuer took advantage
of improving credit metrics and a relatively
quiet market in December to move ahead
with the deal.
Fitch had upgraded GOL by two notches to
Single B a month before and the time
seemed ripe to take the plunge. The airline
had gone through a big operational shift and
it seemed the right time to re-tell its story
and reposition itself in the bond market.
MITIGATEûRElNANCINGûRISKû-EANWHILEûEXCESSû
proceeds from the new issue were directed
TOûPRE
Deutsche Bank and ING were the global
coordinators and were joined on the books
by Natixis and UniCredit.
Sudip Roy
6.56% on the call date in 2021, bringing
added demand to the new issue, which was
upsized from US$350m to US$500m.
Starting with initial price thoughts of
mid 7%, leads were able to tighten pricing
BYûBPûFROMûSTARTûTOûlNISHûBEFOREûPRINTINGû
at a yield of 7.25%.
Rating agencies were pleased with the
move. S&P upgraded GOL to B from CCC– in
the wake of the deal, noting that more
upgrades could be on the cards.
The deal was quickly followed by a
US$150m tap of the 2025s at an even lower
yield of 7% – the tight end of price talk –
COMPANYSûCHIEFûlNANCIALûOFlCERûBOTHûINû
terms of the timing of the deal and what its
outcome meant for GOL.
With investors coming off a stellar 2017
in Latin America, Lark was keen to plant
THEûAIRLINESûmAGûBACKûINûTHEûINTERNATIONALû
capital markets before presidential
elections in Brazil and monetary tightening
in the US soured the tone.
IFR Awards 2018 International Financing Review
Hoping to turn over a new leaf following
a nasty debt restructuring, the company
recalibrated risk perceptions of the credit
by tendering its expensive 8.875% 2022
bonds for a new cheaper benchmark bond
issue.
A tender price of 106.50 on the existing
bonds offered a decent premium and had
investors reconsidering the exit yield of
just as the market was starting to look
wobbly. Bankers were suitably impressed,
saying that management had transformed
the credit.
Bank of America Merrill Lynch, Credit
Suisse, Morgan Stanley, BTG Pactual,
Evercore, Santander, BCP and Safra acted as
leads on the trade.
Paul Kilby
97
 ASIA BOND
ChemChina’s US$6.4bn-equivalent six-tranche bond

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

AWARDS FOR EXCELLENCE

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

IFRAsiaAwards.com
BOOK YOUR TABLES
AT IFRASIAAWARDS.COM
#ifrawards

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
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DISTRIBUTIONûANDûTECHNOLOGYûLEADERSHIPû UPûTOûaBNûANDûaBNûOFûTERMûLOANSûVIAûLEADû Lynn Adler

LATIN AMERICA LOAN

Petrobras’ US$4.35bn revolving credit facility

A NEW FRONTIER
B
razilian energy giant Petrobras
YEARûREVOLVERûTERMEDûOUTûITSûDEBTû
crossed a new frontier in its debt
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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
5
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EXTREMELYûHIGHûPROlLEûWHEREûTHEûSCOPEûFORû SUBSTANTIALûUNCERTAINTYûOVERûTHEû-!û Alasdair Reilly

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

DELIVERING SCALE
T
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v4HISûDEALûCOULDûCHANGEûTHEûWAYûWEûLOOKûATû SQUEEZE
OUTûPROCESSûANDûREQUIREDûANûOPCO Barclays and BNP Paribas were global
THEûTELECOMûUNIVERSEûINû%UROPEv HOLDCOûSTRUCTUREûASûWELLûASûTRANSFORMATIVEûASSETû COORDINATORSûWHILEû$EUTSCHEû"ANKû
4HEûõBNûLOANûANDûBONDûPACKAGEû
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EXISTINGûDEBT
IFR Awards 2018 International Financing Review
DISPOSALSûANDûRAPIDûDEBTûREPAYMENT (3"#û-ACQUARIEûANDû.ORDEAûWEREû
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OVERû,IBORûWITHûAûû,IBORûmOORûANDûAûû ARRANGERSû
/)$ûANDûTRADEDûWELLûONûTHEûBREAK Tessa Walsh
103
 NORTH AMERICA MID-MARKET LOAN
Big Ass Solutions’ US$250m acquisition loan

BIG ASS TURNS HEADS

)
&2SûMID MARKETûLOANûOFûTHEûYEARûRAISEDû DOINGûAûCLUBBED UPûDEALûORûDOINGûAû 4HEûVOLUMEûTHATûITûDOESûHASûASSISTEDûTHEû
AûLOTûOFûEYEBROWSûANDûNOTûJUSTûBECAUSEû UNITRANCHEûWITHûDIRECTûLENDERSv BANKûWITHûBIGGERûDEALSûTHEûBANKERSûSAIDû
OFûTHEûNAMEû7HILEûTHEûNAMEûMIGHTû 4HEûlVE YEARûTERMûLOANûWASûLAUNCHEDûINû GIVINGûTHEûCOMPANYûAûFEELûFORûTHEûMARKETû
MAKEûSOMEûBLUSHûTHEREûWASûNOTHINGû /CTOBERûûANDûCLOSEDûONû.OVEMBERûû THATûOTHERûBANKSûNOTûASûACTIVEûMAYûNOTûHAVE
BLUSH WORTHYûABOUTûTHEûEXECUTIONûOFûTHEû û0RICINGûOPENEDûINûTHEûBPnBPû h7EûMIGHTûNOTûMAKEûASûMUCHûOFûAûFEEû
53MûTERMûLOANûBACKINGûPRIVATEûEQUITYû OVERû,IBORûRANGEûBUTûSTRONGûDEMANDûBUILTû BECAUSEûITSûAûSMALLERûDEALvû#OHENûSAIDûh"UTû
lRMû,INDSAYû'OLDBERGSûBUYOUTûOFûFANû FORûTHEûBOOKûASû#REDITû3UISSEûWENTûOUTûTOûITSû ITûJUSTûALLOWSûUSûTOûHAVEûMOREûINFORMATIONû
MAKERû"IGû!SSû3OLUTIONS ROSTERûOFûINVESTORSûALLOWINGûTHEûISSUERûTOû MOREûmOWûWITHûOURûINVESTORSûMOREû
4HEûTRANSACTIONûWASûNOTABLEûINûTHATûNOTû DROPûPRICINGûONûTHEûLOANûTOûBP KNOWLEDGEûABOUTûWHEREûTHEûMARKETûISû
ONLYûWASûITûAû53MûCOVENANT LITEûTERMû )NûTHEûENDûTHEûBOOKûHADûAûTOTALûOFûJUSTû WHEREûINVESTORSûCAREûANDûHOWûTOûKEEPû
LOANûFORûAûFANûMAKERûWITHûLESSûTHANû53Mû OVERû53BNûINûCOMMITMENTSû4HEûDEALûALSOû PRESSUREûPOINTSûONûSUCCESSFULûSYNDICATIONû
OFû%BITDAûBUTûITûALSOûHADûANûORDERûBOOKûOFûû INCLUDEDûAû53MûREVOLVINGûCREDITûFACILITYû 7EûLIKEûDOINGûTHESEûMIDDLE MARKETû
ACCOUNTSûPROVIDINGûAMPLEûLIQUIDITYûFORûAû ANDûAû53MûSUBORDINATEDûSELLERSûNOTE TRANSACTIONSv
MIDDLE MARKETûDEAL .OTûONLYûTHATûTHEûLOANûTRADEDûWELLû "IGû!SSûMANUFACTURESûFANSûLIGHTSûANDû
h)TûWASûFOURûTOûlVEûTIMESûOVERSUBSCRIBEDvû ENOUGHûTHATû"IGû!SSû3OLUTIONSûWASûABLEûTOû CONTROLSûFORûINDUSTRIALûAGRICULTURALû
SAIDû*EFFû#OHENûGLOBALûHEADûOFûLEVERAGEDû RETURNûTOûTHEûMARKETûINû*UNEûûANDûCUTû COMMERCIALûANDûRESIDENTIALûUSEû4HEû
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
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DINNER
FEBRUARY 6 2019
Event sponsor:
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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
VALUEû%LIû,ILLYSû)0/ûOFû%LANCOû!NIMALû OFFERûATû53ûANDûINûMID .OVEMBERûWEREûSTILLû WITHûûATû:OETISûWITHûMANYûINVESTORSû
Health shone bright for both parent UPûûnûSTATEDûDIFFERENTLYûTHATûISûSOMEû EXPECTINGû%LANCOûTOûCLOSEûTHATûûPERCENTAGEû
and subsidiary. 53MûINûPAPERûPROlTS point gap.
"YûTHEûTIMEûTHEûFORMALûROADSHOWûKICKEDû h)TûWASûONEûTHEûBESTûBOOKSûOFûDEMANDû)VEû %LANCOûMANAGEMENTûHASûWORKEDûHARDûTOû
OFFûINûMID 3EPTEMBERûINSTITUTIONALûINVESTORSû EVERûSEENvûSAIDû'ABRIELû'ELMANûHEADûOFû restructure its business by pruning
WEREûFAMILIARûWITHû%LANCOSûPLANSûTOûWRINGû 'OLDMANû3ACHSûHEALTHCAREûORIGINATIONû UNPROlTABLEûBUSINESSûLINESûCONSOLIDATINGû
cost savings out of the business. Elanco h)NVESTORSûLIKEûSPIN OFFSûINûTERMSûOFûHOWû PRODUCTIONûANDû2$ûANDûREDUCINGû
MANAGEMENTûHADûALSOûCONDUCTEDûEXTENSIVEû THEYûCANûPERFORMûPARTICULARLYûFROMû headcount. A consequence has been revenue
pre-deal investor education that gave early COMPANIESûTHATûAREûONûTHEûOTHERûSIDEûOFûAû mATLININGûATûAROUNDû53BNûOVERûTHEûPASTû
MOMENTUMûFROMûAûCOREûûACCOUNTS turnaround. three years, but rather than growth for
'OLDMANû3ACHSû*0û-ORGANûANDû-ORGANû h-OSTûBELIEVEûTHEREûISûSTILLûROOMûFORûSIGNIlCANTû GROWTHûALONEûTHEûCOMPANYSûFOCUSûHASûBEENû
3TANLEYûTHEûLEADSûAMONGûûBOOKRUNNERSû IMPROVEMENTûINûOPERATINGûMARGINSv ONûENHANCINGûPROlTABILITYûANDûGROWINGû
BUILTûUPONûMOMENTUMûOVERûAû DAYûPUBLICû 5NLIKEûMOSTûSPIN OFFSûTHEûFORMERûPARENTû through new products.
ROADSHOWûWITHûûONE ON ONEûMEETINGSûANDû ANDûSUBSIDIARYûAREûINûTHEûSAMEûSECTORû 4HEûMOVEûWASûLUCRATIVEûFORû%LIû,ILLYûWHICHû
MOREûTHANûûINSTITUTIONSûOVERALL providing overlap not only on research SOLDûûOFû%LANCOûTHROUGHûTHEû)0/ûWITHûTHEû
4HEûEFFORTûCULMINATEDûINûMûBEINGû coverage but also on ownership. As a result, REMAININGûûTOûBEûDISTRIBUTEDûTOûSHAREHOLDERSû
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

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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
-ORGANû3TANLEYûHADûMOREûTHANûITSûFAIRûSHAREûOFûTROPHYû
DEALSûnûITûRANûHALFûOFûTHEûûLARGESTûTRADESûnûBUTûITûWASûONû
THEûSMALLERûDEALSûWHEREûEVERYûORDERûWASûHARDûFOUGHTû
that the value of hiring the US bank was illustrated best.
!ROUNDûû%-%!û)0/SûWEREûCANCELLEDûDURINGûTHEûREVIEWû
$ESPITEûAûTOUGHûEARLYûAFTERMARKETûANDûNOûSTABILISATIONû
as shareholders would not sell at the new valuation, the
STOCKûWASûTRADINGûMOREûTHANûûABOVEûPRICINGûANDû
ABOVEûTHEûTOPûOFûTHEûORIGINALûPRICEûRANGE ûBYûTHEûENDûOFû
the awards period.
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
enticing investors with its lean US-
style listing, star-studded client base
ANDûMETEORICûGROWTHûINûAûYEARûOTHERWISEû
DOMINATEDûBYûESTABLISHEDûINDUSTRIALû
heavyweights and corporate spin-offs.
!DYENûINûPLACEûOFûITSûFORMERûSUBSIDIARYû0AY0AL
h)TûALMOSTûDOESNTûMATTERûIFû!DYENûGROWSû
its client base or not – it still grows, say, 35%
because their clients do,” said Magnus
Andersson, head of cash ECM coverage for
EMEA at Morgan Stanley.
ûOFûTHEûCOMPANYûTOûINVESTORSûnûAû
DECISIONûTHATûALSOûREmECTEDûTHEûDIFlCULTYûINû
convincing any shareholders to sell.
4HEûIDEAûWASûTOûCREATEûAûPOPûONûTHEûlRSTû
day of trading, with the scarcity of shares
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
Instead, it offered its unique status as an agile
TECHûlRMûWITHûAûGLITTERINGûCLIENTûBASEû
CONTAININGûSOMEûOFûTHEûWORLDSûLARGESTûTECHû
UPûANDûSELLûMORE
an hour, priced at the top of its range and YEARûYETû!DYENSûmOATûCREATEDûENORMOUSû
THEûSHARESûCLOSEDûTHEIRûlRSTûDAYûUPû value for old and new shareholders. And
4HEûSTRUCTUREûOFû!DYENSû)0/ûWASûASû investors were soon calling on shareholders
unique as its client list. Bucking Europe’s DIRECTLYûTOûBREAKûTHEûLOCK
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
$OINGûSOûINVOLVEDûAûaBNûRIGHTSûISSUEû
THATûWASûLARGERûTHANû#INEWORLDSûMARKETû
CAPITALISATIONûOFûaBNûANDûWOULDûKEEPû
CAPûTOû h&ORûAû5+ûMID
ONBOARDûATûANNOUNCEMENTûAûFEWûDAYSûLATERû THIRDSûOFûMûSHARESûSOLDûATûPûmATûTOû
WASûVITALû"ARCLAYSûPROVIDEDûAûMARGINûLOANû THEû4%20ûATûLAUNCHû3HARESûTOPPEDûPûINû
THATûALLOWEDûTHEûFAMILYûTOûREMAINûWHOLE /CTOBER
!ûDEALûTHATûSHOTû#INEWORLDûFROMûMID
CAPûTHISûSHOWEDûANû
LEVERAGEûINûCHECKûATûFOURûTIMESûWELLûUPûFROMû
1.5 pre-deal. The result was a hefty four new
shares issued for every one share outstanding
at 157p, a 34.1% discount to TERP.
!ûVOLUMEûUNDERWRITEûFROMûJOINTû
bookrunners Barclays, HSBC and Investec in
108
THEûFRINGESûOFûTHEû&43%ûûINDEXûMEANTûTHEû
BANKSûCOULDNTûSIMPLYûWRITEûAûCHEQUEûANDû
WAITûFORûSHAREHOLDERSûTOûCOMEûINû4HEREûWASû
NOûNEEDûTOûEXPENDûMUCHûEFFORTûONûSECURINGû
VOTESûFORûTHEûACQUISITIONûWITHûTHEûFAMILYû
already on board, which allowed everyone to
UNPRECEDENTEDûLEVELûOFûAMBITIONvûSAIDû
*OHNSONû4HEûSAMEûCANûBEûSAIDûOFûTHEûBANKSû
that shouldered the burden against a
shocking tape and the investors that bought
INTOû(OLLYWOODSûDREAMûFACTORY
Robert Venes
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
MARKETING
“International investors are underweight UK. But for UK
investors it is business as usual – they say ‘if we see an
)0/ûSALEûOFûSHARESûINû4)û&LUIDû
issuer we like at the right price, we’ll buy’.”
4HEûNUMBERSûSPEAKûFORûTHEMSELVESû0EELû(UNTûDEALSû
WITHûTHEûODDûEXCEPTION ûRISEûINûTHEûAFTERMARKETûFROMû
DAYûONEûONWARDSû53ûMOBILEûPAYMENTSûPLATFORMû"OKUû
MEETINGSûINûPRE
Bain Capital hired Peel Hunt to work alongside JP
-ORGANûONûITSûlRSTûPOST
3YSTEMSû0EELû(UNTûHADNTûWORKEDûONûTHEû)0/ûANDûFOURû
global banks that did were overlooked.
“The quality of the analysts is crucial. We want to be
NUMBERûONEûINûEACHûSECTORûASûTHATûATTRACTSûTHEûBESTû
ANDû5+ûlNANCIALûADVISERûPLATFORMû)NTEGRAlNûTHEûTWOû institutions and that brings the best issuers,” said
BESTûPERFORMINGû5+ûmOATSûOFûTHEûAWARDSûPERIODûWEREû
TRADINGûûANDûûABOVEûTHEIRû)0/ûPRICINGûRESPECTIVELYû
ASûOFûTHEûCLOSEûONû.OVEMBERû
0EELû(UNTûPUTûITSûABILITYûTOûDISCERNûSENTIMENTûINûTHEû
5+ûMID
Alastair Rae, co-head of ECM syndicate.
Peel Hunt faced an additional challenge on
)NTEGRAlNSûaMû)0/ûINûTERMSûOFûKEEPINGûTHEûDEALû
going when it was unclear if there was going to be any
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
BUILTûMOMENTUMû4HEIRûJUDGEMENTûWASûVINDICATEDûWHENû
TELLING
HUGEûDEMANDûSAWûTHEûDEALûUPSIZEDûFROMûaMûTOûaM
CROSSING THE ATLANTIC
MEALûSUPPLIERû"AKKAVORû4HEûBANKûRESURRECTEDûTHEû
3ECURINGûAûaMûMARKETûCAPûOFFûREVENUESûOFûaû
REQUIREDûAûREMARKABLEûFEATûOFûSTORY
4HEûBANKûWASûCLEARLYûEMBOLDENEDûBYûEARLIERûHEROICSûASû
THEûlRSTûDAYûOFû)&2SûREVIEWûPERIODûMARKEDûTHEûDEBUTûOFû
READY
Peel Hunt has subsequently
hosted events in Seattle and
#ALIFORNIAûTOûPROMOTEûTHEû
opportunity for other
hSWIMMERSvûTOûCROSSûTHEû
aMû)0/ûDAYSûAFTERûITûWASûCANCELLEDûGOINGûSOûFARûASûTOû
OFFERûHARDûUNDERWRITINGûFORûTHEûFULLûDEALûSIZE
0EELû(UNTûCOULDûMAKEûTHATûOFFERûBECAUSEûITûREACHEDû
INVESTORSûTHEûMOREûSENIORûBANKSûCOULDNTû4HREEûMEETINGSû
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
EFlCIENTûPRICINGû;4HEY=ûLOOKûATûCONVERTSûASûCHEAPûDEBTv
David Oakes
Serkan Savasoglu
53BNûCOMBOûSALEûOFûEQUITYû53BN ûANDû-#"û
53M ûTHATûHELPEDûFUNDûAû53BNûACQUISITION
-ORGANû3TANLEYûNOTûONLYûADVISEDû3EMPRAûANDû)&&ûONû
THEIRûACQUISITIONSûBUTûWASûBOOKRUNNERûONûEACHûPIECEûOFû
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
collapse in fees as bankers battle to the last basis point to
secure every possible mandate. The only way to make
money is to offer something different to the client and
THENûBEûREWARDEDûFORûITû5"3ûISûPOSSIBLYûTHEûONLYûBANKû
ACTIVEûINû%-%!ûTOûBOASTûANûINCREASEûINûFEESûINû
LINKEDûHASNTûBEENûSHORTûOFûINûRECENTûYEARSû)Nû
LEDûCONVERTIBLEûINû%UROPEûFORûNEARLYûTWOûDECADESûDATINGû
BACKûTOû6IVENDISûõBNûTHENû53BN û#"ûINû*ANUARYû
4HEûõMûCONVERTIBLEûFORû#ONSUSû2EALû%STATEûINû
November 2017 on the surface seemed to be yet another
vanilla bond for a real estate company – the one thing
EQUITY
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
will also benefit from an extensive pre-and post-event marketing campaign. Sponsoring this unique event
will allow your organisation to directly target the industry’s most senior individuals and align your brand with
industry success.

No other occasion gives you such direct access to the people who shape and drive the global capital markets.
No other event has the same social cachet, industry audience or reputation for excellence.

For more information on sponsoring the IFR Awards Dinner, please contact leonie.welss@refinitiv.com.

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
COMPLETINGûTHREEûOUTûOFûTHEûlVEû#"SûFROMûTHEû#HINESEû
PROPERTYûSECTORûINû*ANUARYûASûDEBT
LADENûDEVELOPERSû currencies and different conversion premiums to
seized a chance to capitalise on surging stock prices.
suited its global funding needs and maximised
INVESTORSûAPPETITEûFORûTHEûDEALûnûASûTHEYûHADûTWOû
choose from.
4HEûBANKûRAISEDû(+BNû53M ûFORû#Ilû #REDITû3UISSEûALSOûBROUGHTûINNOVATIONûTOû6IETNAMûAû
(OLDINGSû'ROUPûANDû(+BNûFORû0OWERLONGû2EALû market that drew increasing attention from
%STATEû!ûTENORûOFûûDAYSûFORûBOTHûDEALSûALLOWEDûTHEû INTERNATIONALûINVESTORSûINûû4HEûBANKûAGAINûASûSOLEû
ISSUERSûTOûMOVEûQUICKLYûASûBONDSûWITHûMATURITIESûUNDERû
UPûSHAREûPLACEMENTûANDûCONVERTIBLEûBONDûISSUEûnû
BOOKRUNNERûHELPEDû6IETNAMESEûPROPERTYûCOMPANYû.Oû
6Aû,ANDû)NVESTMENTû'ROUPûRAISEû53MûFROMûAû
TOP
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)