SUPERFICIALLY, THE SUMMER of 1969 hardly looked propitious for the launch in London of a new monthly magazine dedicated to coverage of the international capital markets. US equities would spend most of the year on the slide as speculation grew that America would start the 1970s in recession. In June, the month of Euromoney's launch, that had prompted Fortune magazine to describe 1969 as a "lost year" for the US economy, with obvious implications for much of the rest of the world.
Granted, in Europe the German economy was racing along, growing at almost 8% in 1969. But Britain, which by now was establishing its credentials as Europe's foremost financial centre, was still reeling from the sterling crisis and devaluation of November 1967. For the British economy, things were about to become a good deal worse.
For the young bankers whose careers were then being shaped by the evolution of the Eurobond market, with London at its centre, did any of this matter? Paradoxically, probably not. In the 1970s they would be subject to crippling tax rates, disruptive industrial action and power cuts but the misfortunes of the UK economy were largely irrelevant to their career prospects or, by extension, Euromoney's.
"The year 1969 was interesting for being a time when the City's position as the capital of the Euromarket was completely unaffected by the trials and tribulations of the UK economy and of sterling, because it was a market that was denominated largely in dollars and Deutschmarks," recalls Stanislas Yassukovich, then a partner at White Weld in London. That focus, he adds, probably did little for the City's public image in the UK. "There was perhaps a sense that certain sections of the City were becoming too concerned with their international functions and not sufficiently interested in raising capital for British industry," he says.
Kari Nars has read Euromoney since its launch, and would come to prominence in the 1980s as one of the world's most respected borrowers during his first stint as the director of finance and head of treasury management for Finland. In 1969, he worked at the IMF, and he recalls an era that stood at the threshold of far-reaching change. "In 1969, capital markets were narrow and underdeveloped and the international currency market was highly regulated," he says. "I believe that the founders of Euromoney had a vision that markets would open up and develop very rapidly, and they were right. Two years later we had the first Big Bang with the untying of the dollar from the fixed gold standard. That was something that very few people could have foreseen in 1969 but it really opened up a new world in terms of currencies and innovations in banking."
Several other influences made the timing of Euromoney's launch felicitous. At the start of 1969, Minos Zombanakis had opened the new London office of Manufacturers Hanover, having persuaded his bosses that he had a revolutionary idea for mobilizing short-term deposits into medium-term loans. Soon afterwards, the Kingdom of Iran became his guinea pig for an $80 million facility that was 50% oversubscribed and acted as the curtain raiser for the syndicated loans market, which would emerge as an important area of coverage for Euromoney.
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It was, however, the Eurobond market that served as the raison d'être for the new monthly, stealing a march on other publications.
Although survivors from the late 1960s say that the magazine's title was a stroke of brilliance, it was not just Patrick Sergeant who was playing with the words "euro" and "money" in the late 1960s. So too was Eric Roll, who had joined SG Warburg in 1967 after a distinguished career in academia and public service, and who today – aged 96 – continues to work for UBS, arriving each morning at about 10 am. In the late 1960s, Roll had toyed with the idea of inventing a new currency unit, which he named the moneta. "That was an early attempt to think in terms of a common currency for most of the European currencies, so I suppose it would have been the forerunner to the euro," is how Lord Roll recalls the project today.
The Eurobond market, meanwhile, was becoming more diverse in terms of currencies. The early 1970s with rising issuance in denominations ranging from the European Monetary Unit (EMU) to the Dutch guilder, Canadian and New Zealand dollars and even Lebanese pounds and Kuwaiti dinars.
Formalizing a fly-by-night adventure
It was not just rising Eurobond volumes that called out for a new publication chronicling the market's expansion. In 1969, Richard Weguelin of Rothschild had written to competitors in the dealing community suggesting that they should meet to consider solutions to the increasing chaos surrounding settlement and delivery of Eurobonds. His initiative resulted in the formation of the Association of International Bond Dealers (IABD), the forerunner of the International Securities Market Association (Isma), which has overseen the functioning of the Eurobond market ever since. This marked the transition of the Eurobond market from a fly-by-night and ill-disciplined adventure into a formally structured part of the international financial system.
Euromoney helped in that formalization. "There was constant talk about how unregulated and dangerous the market was," says Yassukovich. "But people mistook lack of regulation for an absence of reliable information and statistics. Euromoney immediately made an important contribution by being the market's publication of record and compiling information on its size and depth."
Although that increasingly formalized market was dominated in 1969 by a few players, it was also attracting a cornucopia of banks from Europe and the US. When, for example, an announcement appeared marking the sale at the end of May 1969 by Standard Oil of $50 million of bonds due in 1984, the tombstone named 111 banks below that of the deal's lead manager, Morgan & Cie International.
The smaller underwriters played an important role. Charles McVeigh, now co-chair of European investment banking at Citigroup, explains that in the retail-dominated Eurobond market of the late 1960s and early 1970s, underwriters were crucial. "If there were 100 banks in a syndicate, even the last on the list would have been likely to have had its demand filled on a typical issue," he says. "Smaller European private banks participated as underwriters in the Eurobond market because they would have been confident that they could sell $25,000 here or $15,000 there, and spreads were wide enough to earn them a decent turn. Junior underwriters were considered vital players in the new-issue market, which is why you saw such big syndicates."
