February 2002
Taking more from a shrinking market
Last year was marvellous for the debt markets. Despite all the setbacks, such as the collapses of Enron, Argentina and others, frequent interest rate cuts and huge corporate financing programmes kept the banks in clover. This year doing deals will be much tougher. Corporates have less borrowing to do and interest rates may rise. Banks will have to fight harder than ever for market share to keep revenues up.
Most investment bankers were delighted to see the end of
2001 - a truly terrible year in which many lost friends and
colleagues in the World Trade Centre. Work itself provided little
consolation. M&A and equity capital market volumes declined
precipitously, robbing firms of earnings in their highest-margin
businesses. Most cut staff and bonuses. Those investment bankers
who have held on to their jobs returned to work in January praying
that an economic recovery would reignite the equity markets and
prompt corporations to finance new investments and
mergers&acquisitions. Most of them are looking forward
hopefully to 2002 on the simple grounds that it can't be as bad as
2001.
There was one group of bankers, though, that didn't want 2001 to
end - the primary and secondary debt markets teams that profited
mightily last year from a happy combination of falling interest
rates and surging corporate new-issue volume....
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