Credit research poll results

OVERALL
Rank 2003	Rank 2002		Euro-zone only	UK-only	Tele-coms	Gen. Indus-tries	Autos	Cons-umer Prods.	Utils.	Bank	Insur-ance	Credit Strat.	Total
1	1	Morgan Stanley - Cathy Gronquist & Team	1	1	383	894	999	616	388	1011	781	898	5968
2	4	Deutsche Bank - Simon Adamson & Team	3	2	308	759	686	941	407	677	648	860	5285
3	6	BNP Paribas - Rick Deutsch & Team	2	5	883	572	629	492	1058	413	382	569	4997
4	2	Goldman Sachs - Paul Griffith, John Fusek & Team	4	8	960	428	496	509	736	737	380	282	4528
5	8	UBS Warburg - Charlie Mounts & Team	6	4	677	430	327	441	665	552	673	364	4128
6	7	CSFB - Said Saffari & Team	7	3	484	697	778	400	325	491	474	458	4106
7	5	JPMorgan - Katherine McCormick & Team	5	7	453	495	495	421	258	344	240	1025	3731
8	10	Citigroup - Thomas Crawley & Team	9	9	323	466	537	662	343	286	214	374	3204
9	12	Barclays Capital - Gary Jenkins & Team	12	10	409	254	427	230	252	198	135	496	2401
10	11	DrKW - Arndt Muthreich & Team	8	13	258	277	311	362	294	287	256	313	2358
11	9	Lehman Bros - John Raymond, David Munves & Team	10	11	421	284	257	343	185	225	210	372	2296
12	3	Merrill Lynch - Chris Francis & Team	13	12	248	342	340	240	161	211	128	328	1998
13	14	ABN Amro - Julia Peach & Team	14	16	314	234	258	165	201	295	145	238	1848
14	20	RBS - Team	17	6	156	215	162	218	449	186	178	160	1723
15	16	Soc Gen - Benoit Hubaud & Team	11	18	243	171	158	187	217	159	98	154	1386
16	13	Bear Stearns -	18	17	214	185	92	125	199	212	87	115	1229
17	18	Bank of America -	20	15	202	131	111	148	180	138	71	120	1101
18	17	Commerzbank Securities - David Manoux & Team	16	19	218	77	104	128	221	143	95	113	1098
19	15	HSBC - Fran Hutchinson & Team	19	14	134	211	173	104	197	89	88	96	1091
20	-	HVB - Stephan Haber, Carmen Hummel	15	21	208	140	128	113	150	95	77	117	1027
21	21	SEB Merchant Banking - Peter Ekegardh & Team	22	22	118	56	38	40	71	43	18	14	398
22	19	ING -Team	21	20	110	-	-	67	100	-	46	56	378

Best in investment grade overall
Cathy Gronquist and team, Morgan Stanley

¡ Catherine Gronquist has a theory about the mounds of sell-side credit research that end up on investors' desks every day. "I think investors get more than they can ever possibly read. I was talking to an investor this morning who said that 'with the best will in the world, I get stacks of stuff and I just can't get through all of it.'" For this reason, she encourages her team not to produce publications for publication's sake. "I also ask what investors like and what they don't like and they're usually quite good at responding," she adds.

Such frank assessment of investor needs could be one reason why Gronquist and her team at Morgan Stanley have come top of investment grade research overall in Europe for the third year running.

Nearly all the poll-winning analysts interviewed emphasized practical advice to investors, but Morgan Stanley's model portfolio helps its analysts to think even more like investors. Gronquist says: "We've experienced ups and downs with our model portfolio in the same way investors have this year, and as with anyone who runs a portfolio there were a few name-specific problems we hit last year, but the model portfolio strategy has been very successful for us." Gronquist thinks that getting research to the investors that matter in a timely and consistent fashion is something that the team have well in hand, although she would like delivery to be even more timely in its reaction to credit events. There have been slight changes of emphasis this year; offering more trading ideas and increasing focus on credit derivatives. "With the increased importance of the credit-derivatives market, cash investors that may not have cared about them now have to care. Even if people can't use them, they are now an important technical input to these markets."

At Morgan Stanley the credit strategists, headed by Neil McLeish, and the sector specialists work very closely together, and the team also works closely with the equity research and equity strategy teams. This is helpful when it comes to some of the most pressing concerns facing the investment-grade market at the moment, such as the credit impact of corporate pension liabilities, where equity analysts such as Trevor Harris has done a lot of work. "We've worked very closely with our equity research and equity strategy guys to get their perspective, whether it's on pensions or earnings, to give more depth to the story," Gronquist says.

Many of the team's key calls from last year and for this are revealed in some of the following sector write-ups, but Gronquist's view on the next six months is that the woes of European corporates are likely to deepen - particularly if the German economy gets worse - and that Europe hasn't seen the last of accounting irregularities.

Another pressing concern is how investment-grade bondholders will be affected if whole companies are targets of leveraged buy-outs on the back of low equity valuations.

Kathryn Tully

BEST TELECOMS
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	1	Goldman Sachs - Felix Kaiser, Loic Cathenod, Andrzej Skiba	960	25.83%	1	5	1	1	2	12
2	6	BNP Paribas - Rick Deutsch, Jean-Yves Guibert	883	27.48%	2	2	2	2	1	1
3	8	UBS Warburg - Duncan Warwick-Champion & Team	677	20.75%	3	1	3	3	4	4
4	7	CSFB - Andrei Gorodilov, Rob Lambert	484	17.33%	5	3	4	6	5	3
5	3=	JPMorgan - Scott Marchakitus & Team	453	19.22%	4	6	8	9	3	2
6	11	Lehman Bros - Sarah Martin, Julie Lamirel, Tatiana Spineanu	421	15.09%	7	8	6	5	7	9
7	5	Barclays Capital - Laura Winchester, Stephan Michel & Team	409	14.98%	8	7	5	8	8	11
8	3=	Morgan Stanley - Matthew James, Steven Franck & Team	383	15.33%	6	4	7	18	6	10
9	10	Citigroup - Thomas Crawley, Kay Turner, Peter Dalena	323	13.44%	15	9	9	13	9	7
10	15	ABN Amro - Roger Appleyard	314	12.26%	10	13	11	4	15	5
11	2	Deutsche Bank - Andrew Welty, Jennifer Shin & Team	308	13.21%	11	12	12	14	10	6
12	13	DrKW - John Pearce, Bradley Bugg	258	11.56%	9	15	16	10	11	8
13	9	Merrill Lynch - Tony Moverley, Sarah Percy-Dove	248	9.67%	16	11	14	11	13	14
14	16	Soc Gen - Joseph D'Virgilio, Suki Mann	243	7.19%	13	16	10	16	18	16
15	19	Commerzbank Securities - Vladen Andriouchtchenko, Alexey Boulgakov	218	7.08%	14	19	17	7	17	17
16	12	Bear Stearns - Barry Murphy	214	7.67%	17	21	15	19	16	13
17	-	HVB - Stephan Haber, Carmen Hummel	208	6.96%	12	18	19	12	12	20
18	17	Bank of America - Peter Plaut, January Streeter	202	6.60%	18	17	13	17	19	19
19	20	RBS - Tim Jagger, Rob Orman, Martyn Carlisle	156	5.42%	22	10	18	20	20	22
20	14	HSBC - Julia Campbell, Satyajit Chatterjee	134	8.02%	21	14	21	22	14	15
21	21	SEB Merchant Banking - Louis Landeman	118	4.01%	20	22	22	15	22	18
22	18	ING -Team	110	4.25%	19	20	20	21	21	21

Best in investment-grade telecoms
Felix Kaiser and team, Goldman Sachs

For the second year in a row, Felix Kaiser and Loic Cathenod have come top of the investment-grade telecoms sector, although they lost their top spot in investment-grade utilities, which they also cover together, to BNP Paribas this year.

The Goldman team is way ahead in the telecoms category once again and the partnership has been bolstered by the addition of Andrzej Skiba in November last year. He moved over from Goldman's equity research team.

Kaiser says it's hard for him to say what distinguishes his team's research since he doesn't read research from other banks. But he thinks the high-grade telecoms team delivers on investors' key needs and certainly spends a lot of time talking to them. "They want sector recommendations and issuer views, but they also want concrete trade ideas, so we emphasize these in our weekly publication." The trading ideas are meant to be as practicable for investors as possible - for example, to buy one bond and sell another or buy a bond and buy protection in another. "We aim to enhance total return, not just to recommend something in isolation," he says.

However, Kaiser says that the idea of delivering trading information can be taken too far: "We are not quick-messaging guys delivering 'go-with-the-flow' trading ideas as news about a particular credit breaks. Some investors can be somewhat isolated in their offices and appreciate the feeling of being tuned into the trading floor environment. We analyze on a systematic and timely basis."

He thinks that in the past year, Olivetti, mmO2 and Telef?a have all been key calls for him and Cathenod. "Olivetti has had a choppy ride but our view that the risk premium was too high on those bonds has proven right in light of recent developments. We took the view that mmO2 bonds were trading too cheaply throughout last year, which worked out to be an accurate call as they have outperformed since the beginning of 2003. Once more, we went into the new year with an outperform recommendation on Telef?a and we're glad we did."

The team's systematic approach to assessing the fundamental and technical picture of an issuer uses a scoring model for each bond to assess its relative value against others in the sector. This was first introduced in December 2001. It does not always work, though. "Using our sector scoring model, we thought that since the summer of last year KPN bonds had become very expensive from a credit quality perspective. We assigned an underperform recommendation to that name, but in fact it did outperform for most of the second half of last year, and has only started to underperform this year. So that hasn't worked quite as well as we would have wished."

On the upside, Kaiser acknowledges that he was one of the few high-grade telecoms analysts to remain neutral on the sector for most of last year. "We went into the year with an overweight which worked well in the beginning but in the summer when conditions in financial markets were very difficult we had to change our recommendation," he says. "For the rest of the year, the underlying trends for telecoms continued to be positive. This was in line with our expectations. Less expected was that despite a couple of important negative rating actions and weak and choppy equity markets, investors were willing to continue to accept a comparatively narrow telecom risk premium after telecom bond prices had rallied back in late summer." Kaiser recalls that there was one period of good total return performance for telecom bonds from July to October 2002, but although the sector has been relatively well supported since, it hasn't shown clear outperformance against the overall universe of corporate bonds.

At a time when so many analysts are overweight on telecoms, he doesn't think the sector will outperform this year either, despite the fact that investors are increasingly buying into the improving credit story, absorbing around e12 billion of telecom issuance since January alone.

"I think it's been a choice of the lesser evil. Last summer, problems in other sectors such as autos and utilities started to surface and investors began to say 'look, we've spent an enormous amount of time understanding the telecom story over the 18 months and we know what the problems are'. But our view from here is that it's going to be hard for the sector to outperform the overall universe of corporate bonds, not because the credit stories are not continuing to improve, but because there are so many bonds outstanding," says Kaiser. As Kaiser points out, most of the credits in this sector are rated triple-B flat or triple-B minus. He thinks that in periods when investors reassess their appetite for risk, this sector could suffer. "These bonds will only start to outperform if investors begin to view these credits as safe utility-type names, but we need that reassessment first," he adds.

Investors will have to negotiate the minefield of telecom bonds without his guidance. At press time, Kaiser was set to to move to the corporate risk solutions group at Goldman Sachs, aimed at assisting the bank's corporate clients. Cathenod and Skiba will continue to take care of high-grade telecoms and utilities research.

Kathryn Tully

BEST GENERAL INDUSTRIES
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	1	Morgan Stanley - David Meade & Team	894	26.77%	1	1	1	1	1	8
2	3	Deutsche Bank - Andrew Griffiths & Team	759	23.58%	2	3	3	2	2	3
3	6	CSFB - Said Saffari, Cassie Barrett	697	21.11%	5	2	2	3	6	2
4	7	BNP Paribas - Vivek Tawadey, Cyril Benayoun	572	20.40%	3	5	4	7	3	1
5	5	JPMorgan - Derek Ferguson, Tom Mitchell, Jonathan Todd	495	18.99%	4	6	7	4	4	4
6	10	Citigroup- Bob Buhr, Elena Ciampichetti	466	16.27%	6	4	5	10	5	15
7	4	UBS Warburg - Eddie Clarke, Angeli Mulchand & Team	430	15.21%	8	7	6	5	10	9
8	8	Goldman Sachs - Paul Griffith, Marios Broustas, Stefano Donati	428	14.15%	7	13	8	8	7	14
9	2	Merrill Lynch - Beth Fusco, Simon Atkinson, Chris Malone	342	12.85%	10	12	9	12	11	10
10	9	Lehman Bros - Mark Wade, Pilar Gomez-Bravo	284	11.20%	11	10	15	6	9	13
11	12	DrKW - Arndt Muthreich, Rik Fennema, Rick Mattila	277	10.97%	9	14	16	9	8	5
12	11	Barclays Capital - Jon Scoffin & Team	254	10.97%	15	11	14	11	12	6
13	14	ABN Amro - Robert Manning, Hans Peter Lorenzen, Alistair McCreadie	234	9.55%	14	15	11	15	15	7
14	18	RBS - Chris Saysell, Rob Orman, Tim Jagger	215	7.43%	18	8	10	13	18	20
15	13	HSBC - Simon Cowie, Philippe Landroit	211	8.61%	17	9	13	14	14	12
16	15	Bear Stearns - Jens Jantzen, Matthew Little	185	7.19%	16	17	18	19	13	11
17	16	Soc Gen - Mustaq Rahaman, Pierre Bergeron	171	5.54%	12	21	12	18	17	17
18	-	HVB - Felix Fischer, Sven Kreitmair	140	5.07%	13	18	19	17	16	16
19	20	Bank of America - Dan Purser, Julien Raffelsbauer	131	4.13%	20	16	17	21	19	19
20	17	Commerzbank Securities - Dusan Meszaros	77	3.66%	19	19	20	16	20	18
21	21	SEB Merchant Banking - Karin Erlander, Ebba Lindahl	56	2.36%	21	20	21	20	21	21

Best in investment-grade general industries & autos
David Meade and team, Morgan Stanley

David Meade and his team take first place in both the high-grade autos and high-grade general industries categories this year for the second time. This is particularly impressive given that there are only two people in the team; Meade worked alongside Emma Bewley, who joined from investment banking in November 2001.

After receiving this accolade, Meade left Morgan Stanley after 10 years last month to become a buy-side analyst at one of the bank's key clients, Fidelity Investments (see main story). He says that in the past year, the team focused a lot more on differentiating between individual names in both sectors - those with real problems and those just suffering from negative market sentiment - at a time when so many individual names were under pressure.

It was a challenging year: "We just continued to get the job done, trying to make research insightful and relevant, but we spent a lot of time looking at key credits. It was very much the year that you had to distinguish between key names. For example, we preferred DaimlerChrysler to Ford or General Motors."

Meade says that among the team's key calls on general industries was its turn to negative in early summer last year on some German corporates, including Heidelberg Zement and ThyssenKrupp. It also turned negative on Bayer late last year, which proved to be fortuitous when the credit widened by about 150bp in March. At press time, Moody's had just put the company on review for a possible downgrade. The team first went negative on aero-engine maker Rolls-Royce last October. "We also thought that Fiat was very expensive last year but then lots of people did," says Meade.

He is not optimistic that the pain is over and thinks that triple-B credits in particular are going to get worse before they get better.

Meade says the credit analysis has to be linked to practical trading ideas and valuations. "You have to be sure that what you say makes sense from an investment point of view," he says. "If investors aren't able to buy something there's not much point in recommending it."

Meade's expertise will be missed by Morgan Stanley. Cathy Gronquist says she aims to hire another analyst to work alongside Bewley. In the meantime, Brian Jacoby and Jason Vivas, credit analysts in the aerospace and defence, autos and conglomerates group in New York will be providing support on some of the global names.

Kathryn Tully

BEST AUTOMOTIVES
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	1	Morgan Stanley - David Meade & Team	999	29.48%	1	2	1	1	2	8
2	8	CSFB - Said Saffari, Cassie Barrett	778	23.11%	4	1	2	3	6	2
3	5	Deutsche Bank - James Maxwell & Team	686	22.17%	2	6	4	2	4	5
4	3	BNP Paribas - Vivek Tawadey, Cyril Benayoun	629	20.64%	3	3	3	5	3	1
5	11	Citigroup- Elena Ciampichetti, Eleanor Price	537	18.04%	6	5	5	7	5	7
6	7	Goldman Sachs - Paul Griffith, Marios Broustas, Stefano Donati	496	16.04%	7	7	6	4	7	6
7	4	JPMorgan - Derek Ferguson & Team	495	18.99%	5	8	7	8	1	3
8	12	Barclays Capital - Juan Carrion, Chet Luy	427	14.98%	9	4	8	6	8	4
9	6	Merrill Lynch - Simon Atkinson	340	12.74%	10	10	10	10	11	15
10	2	UBS Warburg - Angeli Mulchand	327	11.67%	11	9	9	13	12	11
11	10	DrKW - Christophe Boulanger, Eric Sharper	311	12.03%	8	13	11	9	9	9
12	14	ABN Amro - Steven Zhu	258	8.73%	15	15	12	12	13	10
13	9	Lehman Bros - Mark Wade	257	10.97%	12	14	14	11	10	13
14	19	HSBC - Simon Cowie, Philippe Landroit	173	7.08%	17	11	13	19	15	12
15	20	RBS - Chris Saysell	162	6.37%	18	12	15	14	20	16
16	16	Soc Gen - Suki Mann, Pierre Bergeron	158	5.42%	13	17	16	16	16	17
17	-	HVB - Sven Kreitmair	128	5.42%	14	20	18	17	14	20
18	18	Bank of America - Dan Purser, Julien Raffelsbauer	111	3.89%	20=	16	17	21	18	19
19	15	Commerzbank Securities - Michie Yana	104	4.83%	16	19	19	15	19	18
20	13	Bear Stearns - Team	92	4.83%	19	18	20	20	17	14
21	21	SEB Merchant Banking - Wilhelm Hogstrom, Ebba Lindahl	38	1.42%	20=	20	21	18	21	21

BEST CONSUMER PRODUCTS
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	4	Deutsche Bank - James Maxwell & Team	941	25.12%	1	2	1	1	1	1
2	10	Citigroup - Elena Ciampichetti, Bob Buhr, Eleanor Price	662	19.93%	2	3	3	2	2	7
3	1	Morgan Stanley - Ilona Brom, Areti Loizou & Team	616	20.05%	4	1	2	4	3	8
4	3	Goldman Sachs - Thomas Mazarakis, Stefano Donati, Julia Svennerstal	509	16.27%	6	4	4	3	6	6
5	7	BNP Paribas - Francois Lauras, Jean-Yves Coupin	492	17.69%	3	9	6	5	5	2
6	6	UBS Warburg - Heidi Wettenhall	441	14.15%	8	6	5	6	9	9
7	2	JPMorgan - Jonathan Todd & Team	421	16.98%	7	8	8	9	4	5
8	8	CSFB - Clark McPherson, Aye Aye Myat	400	13.44%	9	7	7	7	10	3
9	9	DrKW - Stephanie Foster, Robert Dockray	362	12.97%	5	10	10	8	7	4
10	11	Lehman Bros - Pilar Gomez-Bravo	343	12.15%	10	13	9	11	8	12
11	5	Merrill Lynch - Jason Carley, Olek Keenan	240	9.20%	14	12	11	13	12	14
12	12	Barclays Capital - Jon Scoffin & Team	230	9.91%	12	11	15	12	11	10
13	19	RBS - Rob Orman	218	7.67%	17	5	14	10	15	19
14	15	Soc Gen - Julian Lim, Nathalie Cuadrado	187	6.01%	11	16	12	15	18	16
15	14	ABN Amro - Claire Mc Guckin, Richard Morawetz	165	7.08%	13	19	16	14	14	11
16	20	Bank of America - Dan Purser, Julien Raffelsbauer	148	4.60%	20	14	13	18	21	17
17	17=	Commerzbank Securities - David Manoux, Michie Yana	128	4.95%	15	18	17	17	19	20
18	13	Bear Stearns - Team	125	5.78%	18	20	20	16	13	15
19	-	HVB - Carmen Hummel, Felix Fischer	113	4.36%	16	22	19	19	17	18
20	16	HSBC - Belinda Hull	104	5.78%	19	15	18	22	16	13
21	17=	ING - Team	67	2.48%	21	21	21	21	20	21
22	-	SEB Merchant Banking- Ebba Lindahl	40	1.65%	22	17	22	20	22	22

Best in investment-grade consumer products
James Maxwell, Deutsche Bank

James Maxwell has been the consumer products analyst at Deutsche Bank for the past three years. Until the middle of last year he also covered building materials on the industrial side. He took on autos when the bank lost its auto analyst and his colleague covering industrials took building materials off his hands.

After being voted fourth by institutional investors last year, Maxwell has easily topped this year's poll. He says his better calls include French food retailer Casino Guichard and Ahold, the Dutch retail group. Ahold has been the big European scandal story this year, not just in the high-grade consumer products sectors but in the credit markets generally. European investors who have been suspicious since accounting scandals were discovered in the US last year were vindicated when, in February, Ahold became the first European company following the US troubles to be investigated by US authorities for allegedly inflating its earnings.

Maxwell has been negative on Ahold for a long time, having put an underweight recommendation on the credit in July. "We didn't like the acquisition-led growth strategy and it hasn't really done anything to address its balance sheet. We also felt the food business could face margin erosion," says Maxwell. He adds: "I'm not bold enough to say we spotted their current problems but what happened at Ahold reflected our concerns."

Maxwell has had an overweight recommendation on Casino since August. He admits he was a bit early with this call because spreads widened after he made it. However, he felt the company's exposure to Latin America was overplayed last year and that the market had already factored in off-balance-sheet commitments. "We concluded off-balance-sheet obligations were factored into ratings and were being priced into spreads," he says. Casino's bonds have begun to tighten this year.

One of the main challenges Maxwell expects this year is dealing with crossover credit. But the bank is prepared to deal with fallen angels. Once a company has been downgraded by two rating agencies there is a short transition phase as the high-yield team picks up coverage of the fallen angel.

Other challenges for European credit over the coming year include off-balance-sheet issues, pension liabilities and slowing growth that could squeeze margins. For example, UK supermarket group J Sainsbury featured when Standard & Poor's placed 12 European corporates on watch because of pension liabilities in February.

The best course for the current markets is to stay defensive, says Maxwell. He recommends "those names with further momentum behind profit recovery such as Marks and Spencer". Other defensives include Unilever, Coca-Cola, Carrefour, Sodexho and Tesco. He also advises investors to avoid consumer cyclicals such as hotels until visibility becomes clearer.

Julie Dalla-Costa

BEST UTILITIES
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	2	BNP Paribas - Marc Watton, Adrien Fourcade	1058	26.18%	1	1	1	1	1	1
2	1	Goldman Sachs - Felix Kaiser, Loic Cathenod	736	21.82%	2	6	3	2	2	2
3	3	UBS Warburg - Tom Lyons & Team	665	19.22%	3	3	2	4	5	9
4	19	RBS - Andrew Burton, Siobhan Pettit	449	11.79%	11	2	4	3	16	15
5	7	Deutsche Bank - Anke Richter & Team	407	16.16%	4	7	6	7	3	4
6	5	Morgan Stanley - Jeffrey Burch, Areti Loizou & Team	388	13.92%	6	5	5	6	7	12
7	10	Citigroup - Michael Ridley & Team	343	13.44%	13	4	7	8	8	10
8	8	CSFB - Patrick G. Hughes, Orlando Finzi	325	13.09%	7	9	10	11	4	5
9	9	DrKW - Joshua Galaun	294	10.73%	5	8	8	9	11	6
10	4	JPMorgan - Maria Garcia-Lomas & Team	258	12.38%	9	12	15	19	6	3
11	12	Barclays Capital - Andrew Moulder, Neil Beddall & Team	252	10.73%	14	10	16	10	9	8
12	16	Commerzbank Securities - Roberto Pozzi	221	6.37%	12	14	12	5	20	19
13	17	Soc Gen - Herve Gay, Florence Roche	217	6.84%	8	17	9	17	19	17
14	14	ABN Amro - Michael Charlton, Sharon Vieten	201	8.73%	15	19	18	12	14	7
15	13	Bear Stearns - Team	199	7.43%	18	18	11	20	15	11
16	15	HSBC - Fran Hutchinson, Rodolphe Ranouil	197	8.37%	17	11	13	22	10	14
17	11	Lehman Bros - Tatiana Spineanu, Mark Wade	185	7.43%	16	16	17	16	12	18
18	20	Bank of America - Michael Dolan, Agnes De Royere	180	6.13%	19=	15	14	18	18	16
19	6	Merrill Lynch - Olek Keenan	161	7.08%	19=	13	19	14	17	13
20	-	HVB - Franz Rudolf, Stephan Haber	150	5.54%	10	21	21	13	13	20
21	18	ING - Team	100	3.66%	21	20	20	21	21	21
22	21	SEB Merchant Banking - Carin Frost	71	2.00%	22	22	22	15	22	22

Best in investment-grade utilities
Marc Watton and Adrien Fourcade, BNP Paribas

After being beaten to first place in 2001 by Morgan Stanley and in 2002 by Goldman Sachs, the BNP Paribas high-grade utilities team has at last been voted the best, and by quite a margin. Its success can be attributed to persistent efforts by its two members, who have been working together for just over two years. Marc Watton and Adrien Fourcade cover some 40 to 50 companies between them.

They are based in London but spend a lot of time travelling. "Investors like it that we travel a lot to see them," says Watton. He's usually out of the office two days a week and Fourcade also travels while trying to ensure that one of them is always in the London office for clients to contact. They feel that investors appreciate and benefit from the fact that they try to visit investors and companies as often as possible. Between them they can also communicate with issuers and investors in French, English, Spanish and German.

The two have made good calls over the past year. They flagged UK energy company Innogy as a good target for German utility RWE when it said it was looking to expand. "RWE already owned Thames Water in the UK so there were clearly some synergies if they were to buy Innogy," says Watton. Investors would have done well to buy Innogy, as when the acquisition bid was announced in March its bonds tightened.

Another good call involved water company Vivendi Environnement. VE was created in 2000 by Vivendi Universal and so its credit quality was linked to the parent company and was affected when Vivendi Universal came under pressure following accusations of accounting fraud, which it admitted to in June last year. It performed poorly because of its aggressive acquisition strategy. "We held our recommendation and said don't sell VE bonds. In the end the VE story came good and it became a stable, predictable credit again," says Watton. The parent sold an 80% stake in VE in June 2002 and announced plans to sell the remaining holding by 2004.

The team expects the year ahead to be one of internal consolidation for utilities following their acquisitions during 2000, 2001 and the beginning of 2002. The market saw a busy start to the year with issues from a number of European companies. The 30-year end of the European credit market was opened with deals from Electricit?e France and RWE, which both initially attracted good demand.

Watton and Fourcade also believe that the market needs to gain a better understanding of the technical issues between parent companies and their subsidiaries. "For example, the bonds of RWE, Innogy and Thames [Water] all belong to the same group but are trading at different levels which means that someone, somewhere doesn't understand something," says Watton.

Julie Dalla-Costa

BEST BANK
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	-	Morgan Stanley - Jackie Ineke, Olivia Guillard, Carlo Mareels	1011	28.66%	1	1	1	1	1	4
2	-	Goldman Sachs - Louise Pitt, Helene Frebault	737	23.47%	3	2	2	3	3	5
3	-	Deutsche Bank - Simon Adamson, Liz Elton & Team	677	21.70%	2	4	3	2	4	1
4	-	UBSW - Chuck Mounts, Damien Regent, Raj Malhotra & Team	552	17.69%	6	3	4	4	6	7
5	-	CSFB - Leslie Mapondera	491	13.33%	4	6	5	5	8	11
6	-	BNP Paribas - Otto Dichtl, Rafael Villarreal	413	15.80%	5	5	6	6	5	2
7	-	JPMorgan - Edward Marrinan & Team	344	14.50%	8	8	10	7	2	3
8	-	ABN Amro - Richard Thomas, Alasdair Prescott, Julia Peach	295	10.02%	9	10	8	8	10	6
9	-	DrKW - Nigel Myer, Jonathan Crown	287	10.61%	7	11	9	9	7	8
10	-	Citigroup - Kathrina Evans, Kana Norimoto,	286	10.26%	10	13	7	11	9	9
11	-	Lehman Bros - Paul Fenner-Leitão, John Raymond	225	8.61%	11	12	11	16	11	14
12	-	Bear Stearns - Olivier Szwarcberg, Tiago Parente	212	7.55%	15	16	14	13	13	13
13	-	Merrill Lynch - Jeff Spencer, Garrett Walsh	211	8.49%	12	15	15	10	14	12
14	-	Barclays Capital - Larissa Knepper & Team	198	8.61%	18	9	16	15	12	10
15	-	RBS - Corinne Cunningham, Lidia Zazzera	186	7.31%	17	7	13	12	20	16
16	-	Soc Gen - Robert Montague, Philippe Bodereau, Florence Marion	159	5.66%	13	17	12	21	18	17
17	-	Commerzbank Securities - Ian Centis, Beate Munstermann	143	5.54%	14	18	18	14	15	20
18	-	Bank of America - Peter Plaut, January Streeter	138	5.66%	19	14	17	17	17	15
19	-	HVB - Luis Maglanoc, Elena Guglielmin	95	4.01%	16	20	20	18	16	19
20	-	HSBC - Tobius Grun, Zaman Khan	89	5.07%	20	19	19	20	19	18
21	-	SEB Merchant Banking - Jonas Larsson	43	1.89%	21	21	21	19	21	21

Best in investment-grade banks
Jackie Ineke, Olivia Guillard and team, Morgan Stanley

Morgan Stanley's team has carved a niche for itself by focusing more on structural and regulatory issues surrounding the intricacies of bank capital than on credit-specific subjects, though the analysts have to keep on top of what's happening to individual banks too. Its flagship publication is the yearly Bank Capital A to Z, which the team says goes into the subject at a level of detail others can't match. Jackie Ineke, director and head of the team, doesn't pretend its speciality is the most glamorous area of the capital markets.

"We ran a seminar on FRS 17 three weeks ago, and we got a good response despite it being a fairly hideous subject," she says. "In general we try to react as quickly as possible to any regulatory news. It's dry and tough but there are a lot of research teams out there and most of the time they're probably making similar credit calls, so we need to go into these areas to distinguish ourselves."

The team prides itself on responding quickly and in depth to new structures and regulatory changes, giving investors a rapid insight into their implications. When in mid-2002 the UK's Financial Services Authority announced that it would allow non-innovative tier 1 capital issuance, Ineke and Guillard managed to bring out a detailed report within 24 hours. Clients have since told them they were the only research team to do this for at least a week.

Ineke wrote most of the report in spare moments during a trip to Frankfurt. Getting the information involved a lot of work for the whole team. But this is this kind of thing that has driven Morgan Stanley to the top of the poll for the third year running.

Another area Ineke highlights that has attracted good investor feedback is the way the team responds to corporate failures with detailed analysis of the banks that are exposed.

Each analyst has definite expertise, but work is divided up more by client than by market. Ineke deals mostly with the US and UK, while Guillard speaks to French customers and Carlo Mareels handles Italian enquiries. As well as creating better, more consistent client relationships, this encourages analysts to talk to each other and gain expertise in all areas. Ineke says: "At any one time I will be writing a comparison of Tonics versus Topics, Carlo will be previewing Bank Intesa and Olivia will be in meetings in Paris. We all have to be pretty versatile in what we cover.

"Pension deficits are going to continue to be a very interesting area. For example, Lloyds TSB's pension deficit was around e2 billion at the end of last year. They shifted into equities, and now we estimate it has increased to e3 billion."

But in broad terms the team remains bullish on bank capital for 2003. Ineke says: "Outside Germany we haven't seen much of a downturn in asset quality."

Tom Marshall

BEST INSURANCE
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	-	Morgan Stanley - Fiona Thompson, Jackie Ineke	781	21.70%	2	1	1	1	1	3
2	-	UBS Warburg - Damien Regent	673	18.16%	3	2	2	3	2	5
3	-	Deutsche Bank - Liz Elton, Simon Adamson & Team	648	19.10%	1	3	3	2	4	2
4	-	CSFB - Leslie Mapondera	474	12.50%	5	4	4	4	9	14
5	-	BNP Paribas - Rafael Villareal	382	13.68%	4	7	6	8	3	1
6	-	Goldman Sachs - Donna Halverstadt	380	12.15%	6	11	5	5	6	7
7	-	DrKW - Nigel Myer, Jonathan Crown	256	9.20%	7	6	7	6	8	6
8	-	JPMorgan - Edward Marrinan & Team	240	10.50%	8	9	10	11	5	4
9	-	Citigroup - Kathrina Evans, Kana Norimoto	214	7.78%	10	8	8	9	10	10
10	-	Lehman Bros - Pilar Gomez-Bravo	210	6.84%	9	10	9	10	7	12
11	-	RBS - Corinne Cunningham	178	5.66%	12	5	11	7	12	20
12	-	ABN Amro - Tristan Whittingham	145	5.42%	11	19=	12	13	11	16
13	-	Barclays Capital - Team	135	5.19%	20	12	13	14	13	9
14	-	Merrill Lynch - Christian Dinesen & Team	128	6.25%	15	13	16	12	15	8
15	-	Soc Gen - Florence Marion	98	4.13%	13	16	14	18	19	15
16	-	Commerzbank Securities - Team	95	3.89%	16	17	15	17	18	19
17	-	HSBC - Tobius Grun, Zaman Khan	88	4.48%	18	14	17	22	17	11
18	-	Bear Stearns - Team	87	3.89%	17	21	18	19	14	13
19	-	HVB - Luis Maglanoc, Elena Guglielmin	77	3.07%	14	18	20	21	16	17
20	-	Bank of America - Team	71	2.83%	21	15	19	15	20	18
21	-	ING - Team	46	2.00%	19	22	21	16	21	21
22	-	SEB Merchant Banking - Jonas Larsson	18	1.06%	22	19=	22	20	22	22

Best in investment-grade insurance
Fiona Thompson, Jackie Ineke

Fiona Thompson joined Morgan Stanley's credit research department in April 2002, after working in the bank's counterparty credit unit, at Standard & Poor's, in the insurance industry, and before that as a musician. Last year's stockmarket-driven credit gyrations can hardly have been what she was expecting - insurance has traditionally been a comparatively stable sector. Not only has it not been very stable over the year - it's been positively dramatic at times. "I wouldn't say this has been the most stressful year of my career," she says, "but it's certainly been the most interesting. Suddenly people want to talk to me about insurance at dinner parties."

Because insurance credit is so bound up with the stockmarket values of insurers' own portfolios, the sector has become a focal point for the much-trumpeted correlation of debt and equity price movements. That's meant an unprecedented degree of cooperation between debt and equity research departments.

Thompson says: "Nobody expected the stockmarket falls we've seen recently. When I joined, a lot of insurance names looked cheap, but they've got cheaper since. It has sometimes been hard as a credit analyst over the past year to keep only the credit story in mind - it's been extremely important to have a view on the equity market's direction, and I rely on our equity strategists for that.

Trading decisions have sometimes been hard as well, when equities and bonds are sending different signals."

This cooperation works both ways. Thompson sits with the bank analysts - also top of their category - and contributes information from her own field to their overall credit views. She says: "Jackie will be writing about Lloyds TSB and where I can I'll try to provide information on its insurance subsidiary, Scottish Widows, that I think might affect her view - for example, will it need any more support?"

This is the first time the insurance category has been included in this survey, and Thompson has won it in her first year on the Morgan Stanley desk. She modestly attributes her success to the lack of competition: "There aren't many insurance analysts around. Three or four of the big houses have them, but really just by covering it you stand out." But she adds that clients have appreciated several of her efforts in particular - for example, her seminar on the use of future profits and subordinated debt within insurance capital structures as firms start to manage balance sheets more actively.

Her main publication is the yearly Insurance Essentials, which she says gives a thorough grounding in the basics of investing in the sector, detailing areas such as bond structures and rating agency treatment. This year's issue has just come out, and she is now working on a product for hedge funds detailing long and short capital structure arbitrage trades across bond and credit default swap markets that should appear within the next few months. She has also just taken over responsibility for the property sector, with assistance from Morgan Stanley's ABS research department. Next year could be even more of a challenge.

Tom Marshall

BEST CREDIT STRATEGY
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	6	JPMorgan - Matt King & Team	1025	31.96%	1	2	1	2	1	1
2	2	Morgan Stanley - Neil McLeish, Steve Dulake & Team	898	28.18%	3	1	2	3	2	6
3	5	Deutsche Bank - Peter Conroy & Team	860	25.35%	2	3	3	1	3	4
4	4	BNP Paribas - Alan Capper, David Brickman, Geraud Charpin & Team	569	19.46%	4	7	4	4	4	2
5	10	Barclays Capital - Gary Jenkins, Jim Reid	496	17.10%	7	4	5	7	6	3
6	8	CSFB - Krishna Memani, Recai Gunesdogdu	458	14.50%	8	6	6	5	9	11
7	11	Citigroup - Roberto Fumagalli, Etienne Varloot, Dennis Adler	374	14.74%	6	10	9	8	5	10
8	9	Lehman Bros - David Munves, Robert McAdie	372	13.44%	9	9	8	11	7	9
9	7	UBS Warburg - George Bory & Team	364	12.74%	12	5	7	9	13	13
10	3	Merrill Lynch - Crispin Southgate, Jon Jonsson, Barnaby Martin	328	13.44%	10	8	12	6	10	7
11	12	DrKW - Alison Miller, Ben Bennett	313	10.97%	5	11	11	10	8	8
12	1	Goldman Sachs - Willem Sels, Thomas Mercier	282	10.50%	11	13	10	12	12	15
13	14	ABN Amro - Graham McDevitt, Adrian Van Den Bok	238	10.85%	13	15	15	13	11	5
14	16	RBS - Team	160	5.54%	17	12	13	17	19	18
15	15	Soc Gen - Suki Mann, Guy Stear, Julien Turc, Jerome Legras	154	6.96%	15	21	16	16	15	14
16	20	Bank of America - Raja Visweswaran	120	3.30%	21	14	14	19	20	19
17	-	HVB - Thorsten Weinelt, Jochen Felsenheimer	117	4.25%	14	20	18	18	14	17
18	13	Bear Stearns - Team	115	5.31%	19	16	21	15	16	12
19	17	Commerzbank Securities- Graham Robertson	113	3.77%	16	18	19	14	18	21
20	19	HSBC - Andre de Silva	96	5.07%	18	19	17	20	17	16
21	18	ING - Team	56	2.00%	20	17	20	22	21	20
22	21	SEB Merchant Banking - Peter Ekegardh	14	0.71%	22	22	22	21	22	22

Best in investment-grade credit strategy
Matt King and team, JPMorgan

Matt King and Jakob Due, the high-grade strategy team at JPMorgan, have leapt up the rankings this year from sixth to first place.

King partly attributes this to the performance of their recommendations. The team's model portfolio introduced in September 2000 had outperformed JPMorgan's Maggie index (its aggregate euro index) by 106 basis points last year and by more than 10bp for six consecutive months by this March. "Clients seem particularly impressed since the markets have been so bad," says King.

The portfolio's performance is tracked daily. King says this focuses the minds of all the credit and sector analysts. "We measure the performance of our recommendations religiously, publishing a full breakdown on the website every day. Because the analysts are measuring their own performance I think they are more focused on delivering value than some of our competitors."

King says the investor focus in the past year has not really been on sectors but the big picture outlook and how that can be applied to individual names. "Our job is not to just look at the fundamentals, we are here to call when the market is cheap."

The team has done that with great success on several occasions in the past year. Notably, sector analyst Jonathan Todd had already identified accounting concerns at Ahold and put it on underweight in advance of that company's blow-up in February. So the model portfolio was short on Ahold, which meant the portfolio made 4bp on the back of the blow-up.

King is also proud of his recommendation six months ago that investors buy a diversified basket of what he refers to as ugly-duckling credits. "Last October, we recommended , we recommended buying names such as France Telecom, Deutsche Telekom and the auto names when market sentiment was particularly bearish." The call on auto names worked particularly well. The team finally advised investors to take profit on their auto recommendations this March, since these bonds were liquid and vulnerable to the outbreak of war, weak macro data and consumer spending. Since October, this position had earned them over 10bp in return on the model portfolio. "Autos in the last six months has been a fantastic call for us," says King.

King says that the team pursues a deliberately contrarian view of the market because that is where the balance of risk is in the team's favour, being overweight on low-quality names with the scope to improve and underweight on those that have already tightened. In particular, he prefers to have numerous small allocations in risky names rather than a few, large positions in defensive names that may not turn out to be so safe after all. Ahold is a glaring example.

This is reflected in his current recommendations: overweight in triple-Bs and double-Bs and underweight non-cyclicals and utilities.

He also recommends companies on Standard & Poor's pension liabilities watch list where they have widened or on the back of further pension-related downgrades. More generally he is advising investors to stay long in credit now a long-talked about post-war rally seems to have started prematurely. He will change this if everyone else goes long. "What counts is the balance of risks relative to how everyone's positioned," he points out.

It's a brave strategy to set themselves against the market, but it's one investors clearly find refreshing, probably because it is working.

Kathryn Tully

BEST CREDIT DERIVATIVES
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	-	JPMorgan - Marcus Schueler, Jakob Due	106	6.49%	1	2	1	3	1	1
2	-	Deutsche Bank - John Tierney	86	5.31%	3	7	5	4	2	3
3	-	Morgan Stanley - Viktor Hjort & Team	71	4.60%	2	1	2	1	5	2
4	-	Goldman Sachs - Simon Morris, Olga Martchoukova & Team	71	4.72%	4	3	4	2	3	4
5	-	Merrill Lynch - Chris Francis, Atish Kakodkar, Barnaby Martin	59	2.95%	7	6	7	7	4	10
6	-	DrKW - Team	53	2.83%	8	12	11	10	6	11
7	-	Lehman Bros - Dominic O'Kane, Robert McAdie	50	2.71%	9	5	8	6	7	9
8	-	CSFB - Said Saffari & Team	41	3.18%	5	4	3	5	8	5
9	-	Citigroup- Sanjay Mithal, Glen McDermott	36	2.83%	11	9	10	11	9	7
10	-	UBS Warburg - Meyrick Chapman	29	2.00%	6	10	6	8	10	8
11	-	Bear Stearns - Team	25	2.24%	12	11	12	12	11	6
12	-	Commerzbank Securities - Iain Barbour & Team	20	1.30%	10	8	9	9	12	12

Best in credit derivatives strategy
Marcus Schueler, Jakob Due, JPMorgan

Credit derivative markets are developing so quickly that a category that didn't exist last year is now a fully fledged branch of research for many banks.

There are still many approaches. Some banks just put out weekly reports highlighting major movements. JPMorgan claims its integrated credit trading structure and depth of data and analytic capability set it apart from the pack. Clients seem to agree.

Marcus Schueler, co-head of credit derivatives markets for Europe, says: "It's a real team effort - what we do spans credit research, credit strategy, marketing and sales. It's not really possible to pull all these things together unless you have a truly integrated credit trading business. We don't see CDS as a standalone product, but as a central component of the credit universe."

Schueler's own background in sales and marketing is complemented by Jakob Due, a credit strategist, and quantitative analyst Riccardo Galletto. This integration of data and analytics between different bits of the credit business has been the focus of the team's efforts over the past year.

CDS markets have opened up new kinds of trading strategy for active funds. This has been where the bank has been putting much of its resources in CDS.

Schueler says: "Interest in basis trading between CDS and other debt markets has been one of the biggest growth areas in 2002, and that should continue this year. We're about to launch Credit Navigator, an integrated tool to monitor debt movements and spot relative value opportunities. The main driver behind this has been hedge fund interest, but there have also been plenty of more traditional fund managers interested in developing total return and market neutral strategies."

The distinction between bond and CDS customers is disappearing fast. The team is working on increasing the derivatives strategy's place in the bank's monthly credit research publication. Another plan is to create a model CDS portfolio, bringing greater accountability to recommendations and moving the focus to portfolio-level decisions.

One might expect these opportunities for arbitrage across different debt instruments offering exposure to the same underlying credit, and between debt and equity of the same issuer, to be disappearing as more funds target them. Schueler claims that's not yet the case.

One example that he says made clients money was the recommendation in October 2002 that clients take advantage of an inverted curve by buying five-year protection and selling three-year, effectively buying two-year protection starting in three years.

He says: "I'm slightly surprised at how much potential there still is in basis trading and capital structure arbitrage. One reason so many opportunities still exist is the problem of gathering enough quality data, and our database gives us an advantage here. But the market will become more efficient - the same assets won't trade 50 basis points apart in different currencies for ever. The limiting factor will be access to assets - even if you've spotted a good opportunity, basis trading doesn't work if your counterparty's trading set-up makes you go through the bid-offer twice."

Tom Marshall

BEST ASSET BACKED
2003	2002		Score	% Hi-grade votes	Eurozone	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	2	Deutsche Bank - Ganesh Rajendra & Team	114	6.01%	2	1	2	2	1	2
2	9=	DrKW - Birgit Specht & Team	86	4.72%	1	2	7	1	2	1
3	1	Morgan Stanley - Robert Paterson & Team	67	4.13%	3	5	3	3	3	4
4	8	JPMorgan - Chris Flanagan, Edward Reardon	54	3.77%	4	10	1	9	4	6
5	4	CSFB - James Crispin, Harry Noutsos	51	3.07%	5	6	6	6	5	10
6	3	Merrill Lynch - Alex Batchvarov, Jenna Collins & William Davies	45	3.54%	6	4	5	5	7	3
7	9=	Lehman Bros - Krishna Prasad	40	2.00%	9	3	4	12	6	16
8	6	Goldman Sachs - Kyle Nagel & Team	33	1.77%	10	12	16	4	8	14
9	11	Barclays - William Lloyd, Phil Adams, Markus Niemeier	29	2.00%	12	7	8	7	11	7
10	-	UBS Warburg - Andrew Dennis	28	1.53%	14	11	13	10	9	13
11	7	Citigroup - Stephanie Ziar, Lakhbir Hayre, Darrell Wheeler	28	1.89%	11	13	11	13	10	11
12	13	Commerzbank Securities - Iain Barbour, Jennifer Thym, Katie Hostalier, Frank Damerow	27	1.77%	7	8	9	8	12	5
13	-	HVB - Fritz Engelhard, Katja Hofmann	23	1.77%	8	15	12	14	13	9
14	-	ABN Amro - William Ross	21	1.42%	13	14	10	11	14	12
15=	12	RBS - Team	13	1.06%	16	9	15	15	15	15
15=	14	Bear Stearns - Team	13	1.30%	15	16	14	16	16	8

Best in ABS
Ganesh Rajendra and team, Deutsche Bank

Ganesh Rajendra is delighted to come top of the asset-backed securities sector this year, so much so that he took time out from his honeymoon in Malaysia for a brief chat on the phone. In fact, Deutsche's ABS team has been making steady process for a few years, coming fourth in 2001 and then being narrowly pipped to the post for first place by Morgan Stanley in 2002.

Rajendra attributes part of Deutsche's success to the investor-driven focus that he and the team - Markus Herrmann, Carole Bernard, Swen Nicolaus and Nicola Papa - have been implementing since he joined in mid-2001. "Our research is solely targeted at investors," says Rajendra. "Unlike some other research desks on the street, we have less of a journalistic or academic-type approach to our research, but much more investment focus." All the research is sector, issuer or deal driven. The latter includes concrete trading ideas.

Rajendra points out that the investor-led approach is not just about reports but also getting out to meet investors and organizing investor conferences and non-deal roadshows for issuers, both of which bring issuers and investors together.

Rajendra says one of the team's best calls last year was a buy on Ford's triple-A Globaldrive bonds when they widened to 45 basis points over in the secondary market. "We said they were very cheap at the time and indeed they have tightened a lot since then." He also cites the team's buy recommendations on Fiat's auto ABS and Capital One's credit card ABS, which also have performed well.

In terms of sectors, he is pleased that the team remained bullish on the commercial and residential mortgage-backed European markets, even though they were seen as expensive. "With the eruption in corporate credit and headline risk, we remained firm of the view that this sector represented the safest haven, albeit an expensive one. Not only did RMBS continue to outperform from a credit perspective in 2002, spreads in the sector also tightened over much of last year."

Rajendra thinks that the growing stresses facing the corporate bond market in the past year have had a big impact on the corporate ABS market. "In some respects, the market does not appear to be very efficient at pricing credit risk. Take a pure consumer ABS transaction, for example. Spreads are likely to widen should the underlying corporate come under any negative spotlight, even if the asset pool continues to perform well and the deal is tightly structured." This kind of over reaction provides a simple recipe for highlighting relative value trades, such as the Ford Globaldrive call.

Rajendra believes that the European ABS market has matured significantly in the past two years but thinks that corporate credit risk will continue to shape the ABS markets over the next year. He thinks that for the most part, investing in ABS has been a free lunch in the past, with a decent pick-up over corporate bonds, and that investors didn't worry about ratings downgrades or the possibility of default. He points out that now if one CDO suffers a default, the entire sector gets punished. "I think the market is entering an exciting, yet unprecendented period ahead. It's been a pretty predictable market until now but it will be interesting to see how the market reacts to the changing tide in credit this year and how investors reward or penalise issuers in any one sector."

Kathryn Tully

BEST INDICES PROVIDER
2003	2002		Score	% Hi-grade votes	Eurozone only	UK only	Eu10bn+	Eu5-10bn	Eu1-5bn	Eu<1bn
1	2	JPMorgan - Peter Rappoport, Lee McGinty, Francis Diamond	118	6.49%	2	2	2	2	1	1
2	1	Merrill Lynch - Mal Korde & Patrick Tresize	95	5.54%	5	3	4	5	2	2
3	6=	MSCI - Team	91	4.72%	1	1	1	1	3	4
4	3	Lehman Bros - Ravin Onakan, Neil Wardley	86	4.48%	3	4	3	4	4	3
5	-	iBoxx	57	3.30%	4	5	5	3	6	5
6	5	Deutsche Bank - Fergus Lynch & Team	56	3.42%	6	9	6	6	5	6
7	6=	Goldman Sachs - Willem Sels, Thomas Mercier, Fernando Cunha	36	2.48%	9	11	11	9	7	9
8	9	CSFB - Baldwin Smith, Has Tank	33	2.36%	8	7	7	8	8	10
9	10	DrKW - Gunnar Stangl & Team	30	1.65%	10	14	12	13	9	8
10	4	Citigroup - Richard Pagan, Rafey Sayood & Team	28	2.24%	11	10	9	11	10	7
11	8	UBS Warburg - Dipak Chauhan	26	2.00%	7	8	8	7	11	11
12	12	Bear Stearns - Team	13	1.18%	14	13	14	14	12	13
13	11	Barclays Capital - William Lloyd	13	0.94%	12	6	10	10	13	12
14	-	Bank of America - Peter Plaut	7	0.47%	13	12	13	12	14	14

Best indices provider
Peter Rappoport, Lee McGinty, Francis Diamond, JPMorgan

JPMorgan has finally managed to beat Merrill Lynch, which has headed this category for three years. Although Merrill's European credit indices are still widely used, JPMorgan has been rewarded for a year spent developing new indices and adding to existing ones.

Investors are renowned for sticking with an indices provider unless something goes horribly wrong. This is why Lee McGinty, vice-president at JPMorgan, feels the bank has beaten Merrill Lynch this year because of its innovation rather than having a larger number of investors utilizing its cash-bond index. "I'm certain more people use the Merrill Lynch cash-bond index as their benchmark but they [investors] are not seeing innovation there," he says.

The bank's core cash-bond index is Maggie (Morgan Aggregate Index Euro), which was launched in September 2000 and consists of liquid euro-denominated Eurobonds, Pfandbriefe and government bonds. McGinty worked on this. But the real innovations include the development of two new indices over the past year. "The big thing last year was a move towards tradeable credit indices," says McGinty. JPMorgan leads the way with an index called (JPMorgan European Credit Index), introduced in March 2002.

Jeci is a tradeable index that provides a way for investors to quickly trade liquid European credit. McGinty explains that it enables investors to take a short-term view on credit. "The markets have rallied over the past three days and investors can now take a view on credit for such a short period [using Jeci]," he says. This is different to cash-bond indices which cannot be traded.

Other banks have since introduced their own tradable credit indices since. "Jeci was the first and is the most copied way of doing it. There are at least three variants of Jeci at other banks," says McGinty. As yet, investors do not use this index as a benchmark. However, McGinty is convinced that investors will need one once they begin using a lot of credit default swaps.

JPMorgan's newest addition is a subordinated securities indices called Susi, which it introduced in July last year. "Subordinated debt is an increasingly important asset class, and one which - due to the perpetual nature of many of the bonds - is left out of most traditional cash-bond indices," he says.

McGinty believes that tradeable cash-bond indices will die as credit derivatives begin to dominate in the credit space. So investors can expect to see further developments on the credit derivative side by JPMorgan. The bank will also continue to build in more analytics and graphics into the cash indices as McGinty believes these will remain important to investors for years to come.

Julie Dalla-Costa

BEST EMERGING MARKET SOVEREIGNS
2003	2002		Score	% EMS votes	Eurozone only	UK only	Eu1bn+	Eu500m - Eu1bn	Eu250m - Eu500m	Eu100m - Eu250m
1	7	JPMorgan - J. Bayliss, M. Marrese, F. Beddington, S. Sclater-Booth, D. Tonge & Team	47	25.69%	4	1	2	4	1	1
2	2	Deutsche Bank - Jose Luis Daza & Team	40	27.08%	1	2	3	1	3	2
3	8	Goldman Sachs - Paolo Leme, Eric Nielsen	37	24.31%	2	7	12	9	4	3
4	3=	Morgan Stanley - E. Fine, S. Gilmore, R. Barbieri, M. Wiszniewski, J.Valdivia, W. Kane	35	22.92%	7=	5	7	5	2	5
5	1	CSFB - Kasper Bartholdy, Peter Worthington & Team	32	19.44%	3	4	8	3	7	4
6	5	UBS Warburg - Alex Garrard, Boris Vla'dimirov, Michael Gavin & Team	31	19.44%	5	3	1	2	5	6
7	3=	Citigroup - Chris Kelly, Rashique Rahman, Arvind Rajan & Team	28	20.14%	6	6	6	7	6	7
8	6	Merrill Lynch - Isaac Tabor & Team	20	15.28%	7=	10	10	6	8	8
9	10	DrKW - Arnab Das & Team	18	12.50%	9	8	5	11	9	9
10	12	Commerzbank Securities - Dmitri Shemetilo	10	7.64%	10	12	11	10	10	11
11	11	Bear Stearns - Team	8	6.94%	12	9	9	8	11	12
12	9	Lehman Bros - Kaushik Rudra	7	5.56%	11	11	4	12	12	10

Best in emerging-market sovereigns
Jonathan Bayliss, Michael Marrese, Francis Beddington, Stuart Sclater-Booth and Darrell Tonge, JPMorgan

Jonathan Bayliss, managing director and head of JPMorgan's emerging market sovereigns credit strategy team, used to work on the buy side and bases much of his approach to research on the insights into what clients like and dislike that he gained there. For example, he knows investors don't want, and won't use, research that comes and goes according to the whims of the analyst. He says: "Consistency is vital. One of the things clients hate most is when you start off with a product and then give up on it a few months later. The other big thing for us is direct contact with clients. Writing the research and sending it out is only half the job - you need to follow up."

JPMorgan tries to make research disciplined and useful to clients by incorporating all its calls and the banks' overall views into a model portfolio. Bayliss likes the accountability this brings.

"When I was on the buy side I used to find it really annoying when analysts' model portfolios ignored execution costs, so we base ours on tradeable bids and offers," he says. "The result is that our recommendations are starting to create quite a lot of client interest. Sometimes there's so much that prices move and we can't execute on all the demand, which is a nice problem to have."

Bayliss praises the trading calls that Michael Marrese has made around Turkey. In early March, for instance, he went underweight the credit on concerns over its prospective aid package from the US. Stuart Sclater-Booth's relative-value trades in Russia have alerted clients to such phenomena as spread compression of MinFin

bonds to globals. And Francis Beddington's calls on Nigeria and South Africa have created particularly good returns for the model portfolio. Other products that clients like are the monthly survey of investor positioning by country and credit, and the European convergence model portfolio set up in 2002.

Bear markets have unexpected consequences. Perceptions of relative risk can shift radically. Bayliss says: "In the recent flight to quality there's been a remarkable safe haven bid for emerging-market bonds - the inflows have been bigger than I've ever seen. In an environment where most investors will have more bonds in their portfolios than before, emerging-market sovereigns are a good diversification play from a risk management perspective, as well as offering good yields. Inflows this large will not be sustainable indefinitely, but I expect them to continue for several more months at least. I think we're seeing a secular change but at some point I expect flows to become cyclical and for inflows to turn into outflows. But I'm not concerned for the time being."

Bayliss says: "I spend a lot of time talking to money managers about the asset class and how they can position themselves to benefit from the funds flowing into it. We've also been getting a few cold calls from equity managers looking to add some emerging-markets debt to their portfolios." He sees growth this year in wider, more stable benchmark indices. "The lack of diversified indices has historically been a problem - one nasty shock in a concentrated index can have a big impact. We're seeing a trend towards more diversified indices, though European managers tend to be further ahead on this than US ones."

Tom Marshall

OVERALL
2003	2002		Euro-zone only	UK only	Telecoms	Gen. Indus-tries	Cons-umer Prods.	Credit Stra-tegy	Total
1	2	Deutsche Bank - Helen Rodriguez & Team	1	1	180	144	144	163	631
2	4	Goldman Sachs - John Fusek, Paul Griffith & Team	3	2	89	192	79	77	437
3	5	Citigroup - Thomas Crawley & Team	6	4	123	98	121	57	398
4	7	UBS Warburg - Richard Phelan & Team	5	3	91	109	98	86	383
5	1	Merrill Lynch - Chris Francis & Team	7	5	70	67	72	147	356
6	6	JPMorgan - Katherine McCormick & Team	2	6	67	105	61	108	341
7	3	CSFB - Martin Hornbuckle	4	8	73	68	74	89	304
8	8	Morgan Stanley - Bala Ramakrishnan & Team	8	9	72	76	89	-	236
9	10	Lehman Bros - Tom Howard & Team	9	7	55	54	41	72	221
10	14	BNP Paribas - Aizaz Shaikh, Pilar Manzanaro	10	11	66	51	42	-	159
11	9	DrKW - Lior Jassur & Team	11	12	68	42	47	-	157
12	12	Barclays Capital - Gary Jenkins & Team	13	10	60	29	32	-	120
13	13	Bear Stearns - Team	12	14	23	23	16	24	86
14	18	Bank of America -	17=	13	15	18	24	-	57
15	19	Commerzbank Securities - Team	16	16	9	-	-	42	51
16	16	RBS - Team	14	15	12	10	20	-	42
17	11	ING - Team	15	18	10	10	13	-	32
18	-	HVB - Team	17=	17	-	22	-	-	22

Best in high-yield overall
Helen Rodriguez & Team, Deutsche Bank
Best in high-yield telecoms and media
Helen Rodriguez, Sonia Van Dorp and team, Deutsche Bank

Helen Rodriguez and her team at Deutsche Bank were hot on the heels of Merrill Lynch in the race for best high-yield team overall last year. This year they finally made it. Sadly, Rodriguez did not stay at Deutsche long enough to see this, having left in January (see main story). There is no overall European head of high yield at the bank now and the London team now reports to one of the co-heads of US high-yield credit research in New York, David Bitterman.

There have been other changes in personnel -Andrew Welty, another senior analyst, has moved to join the investment grade credit research team at the bank, but the three senior analysts that remain - Sonia Van Dorp, Sven Olson and Lee Hope - are well established and there are several junior analysts. "Sonia, Lee and I have been working together for three years," points out Olson.

Rodriguez's sector responsibilities of telecoms, media and technology have been split between the team. Van Dorp, who covered consumer products and broadcasting, has taken on the rest of the media coverage. Some names classified as technology, such as Xerox, will be covered from the US. Hope has taken on some of the healthcare and services names, adding to his light manufacturing, autos and packaging coverage. Olson continues to cover basic materials and heavy industries.

According to the team, one of the reasons for the reorganization is that there are few European telecom or tech names that trade as high yield any more, as most of these have fallen into the outright distressed category. "The technology sector is very limited - there is only Xerox, " explains Olson. "In terms of pure telecoms that are still around with us, there is only really PTC, Turkcell and Colt."

Van Dorp says: "The main difference between the beginning of 2002 and now is that telecoms and cable used to represent nearly half the market, now it's more like 5%, because you used to have large issuers such as UPC and NTL, which now trade as distressed credits. Those have been replaced by fallen angels such as Ericsson and Alcatel. The bid for telecoms is pretty much non-existent now."

Within the telecoms and media sector, she says the team's best calls have been among broadcasting companies, which were in trouble for a lot of last year. "It was a case of finding the point in the cycle when these credits were starting to recover. We put a buy on them when prices were still very low in October and that proved a very good call." Good calls on broadcasters include SBS Broadcasting in October last year at 80: the same bonds now trading at par. Another was a recommendation on Central European Media, a credit Van Dorp has followed since 1998.

Hope was also particularly happy with a call on BSN Glasspack, a glass packager. "It traded down quite sharply to mid to high 50s last October so I took a closer look at the business and found it was stable and growing and I did not believe it to be over-leveraged. It traded down because one or two other houses had a strong sell on it and there were concerns over liquidity." Hope put a buy on it and since then it has risen into the low 90s.

Olsen made Preem and Petroplus a sell in January 2002 because the heating oil season was over and refiners were going to be under pressure. "Preem was at 104, Petroplus was at 107 at that time but this fell into the 80s by May," he explains. "We thought they were fair value by the low 80s, so moved to hold, the market panicked in the summer and moved into the 50s. We put a strong buy on them and Preem is now at 91 and Petroplus is at 73."

Calls on Ispat, Stagecoach and Xerox also worked out well. Xerox is one of the few crossover credits that is performing well, which is why the team have a generally cautious approach to these companies. The team doesn't start covering them until they are downgraded by Moody's and S&P, a strategy that means they are happy to lose potential upside if the bonds start recovering fast.

"There's no real first-mover advantage in getting into these," says Olson. "Investors who bought Marconi or Corus early in the 80s or high 70s have been sorry that they had. Invensys is another darling of the crossover market that has fallen on hard times. We look at what's coming in our direction and try to sort the fallen angels from the falling knives." They believe Ahold is equally worrisome as it could still fall into distressed levels. The team is, however, bullish on prospects when the Iraq war is over. Among the recommendations now, Hope thinks overweighting packaging a good idea, and Olson has a strong buy on refiners. "The market's up 4% year to date already, which is a much better state than we were in this time last year. It's probably looking as attractive as it has as an asset class for the last three years."

Kathryn Tully

BEST TELECOMS
2003	2002		Score	% of Hi-yield votes	Eurozone only	UK only	Eu450+	Eu150m - Eu450m
1	2	Deutsche Bank - Helen Rodriguez, Sonia Van Dorp & Team	180	43.50%	1	1	1	1	1
2	6	Citigroup - Thomas Crawley, Kay Turner, Peter Dalena	123	29.15%	2	2	2	2	3
3	8	UBS Warburg - Bill Gallagher & Team	91	24.22%	8	5	3	3	8
4	5	Goldman Sachs - John Fusek, Rupert Egan	89	22.87%	3	3	4	4	7
5	3	CSFB - Martin Hornbuckle	73	20.18%	6	10	10	7	2
6	4	Morgan Stanley - Steven Franck, David Gladstone	72	21.08%	5	9	7	6	9
7	1	Merrill Lynch - Sarah Percy-Dove	70	17.94%	7	4	6	8	10
8	10	DrKW - Lior Jassur, Kate Kirby	68	17.49%	10	11	5	12	4
9	9	JPMorgan - Maria Elena Busnardo	67	22.87%	4	7	12	5	5
10	11	BNP Paribas - Aizaz Shaikh, Pilar Manzanaro	66	17.49%	9	12	8	10	6
11	13	Barclays Capital - Alfredo Mattera, Daniel Rekrut & Team	60	13.45%	11	8	11	9	11
12	7	Lehman Bros - Kushal Kumar	55	13.45%	12	6	9	11	12
13	14	Bear Stearns - Team	23	6.73%	13	13	13	13	14
14	15	Bank of America - Team	15	5.38%	15	14	14	14	17
15	17	RBS - Team	12	4.93%	17	15=	17	15	16
16	12	ING - Team	10	4.48%	16	15=	15	16	15
17	16	Commerzbank Securities - Team	9	4.93%	14	19	16	17	13

BEST GENERAL INDUSTIRES
2003	2002		Score	% of Hi-yield votes	Eurozone only	UK only	Eu450+	Eu150m - Eu450m
1	5	Goldman Sachs - Peter Morris, Pierluigi Volini, Andrew Dangerfield	192	44.84%	1	1	1	1	1
2	2	Deutsche Bank - Sven Olson, Lee Hope & Team	144	36.77%	2	3	2	2	2
3	7	UBS Warburg - Richard Phelan, Marcus Strub, Richard Cazenove, Trena Drayton	109	28.70%	5	2	3	5	7
4	6	JPMorgan - Katherine McCormick, Thomas Mitchell	105	26.91%	3	4	4	3	3
5	6	Citigroup - David Newman, Cathy Braganza, Peter Dalena	98	28.70%	6	5	5	4	8
6	9	Morgan Stanley - Bala Ramakrishnan, Kamran Hussain	76	22.42%	4	8	8	6	9
7	3	CSFB - Ben Booth, Martin Hornbuckle	68	21.97%	7	9	10	7	5
8	1	Merrill Lynch - Beth Fusco, Chris Malone	67	21.52%	8	6	7	9	4
9	10	Lehman Bros - Tom Howard	54	11.66%	10	7	6	11	13
10	13	BNP Paribas - Mark Hughes, James Nolan	51	15.25%	9	12	11	8	6
11	11=	DrKW - Lior Jassur	42	10.31%	12	11	9	12	12
12	14	Barclays Capital - Robert Jones, Paul Smith	29	10.31%	13	10	13	10	10
13	11=	Bear Stearns - Team	23	8.97%	14	14	15	14	11
14	-	HVB - Felix Fischer	22	6.28%	11	16	14	13	14
15	16	Bank of America - Dan Purser, Julien Raffelsbauer	18	5.83%	16	13	12	15	15
16=	8	ING - Team	10	2.69%	15	17	17	16	17
16=	15	RBS - Wendy Racine	10	4.04%	17	15	16	17	16

Best in high-yield general industries
Peter Morris, Pierluigi Volini and Andrew Dangerfield, Goldman Sachs

The Goldman Sachs team has zoomed up from fifth last year. Peter Morris and Pierluigi Volini have worked together for the past two-and-half years and were joined by Andrew Dangerfield in July last year. So when asked what they've done differently over the past 12 months they point good-humouredly to the team's newest recruit.

The three analysts feel that what they offer over and above good individual picks is the big picture. "It's not just the individual names," says Morris. "We've tried to give people the backdrop."

One example is Amsterdam-based oil company Petroplus. The team at Goldman has always been cautious on this credit. When the company initially came to market its underlying volatility was not that apparent. "Since then the underlying volatility of the refining business has become more obvious," says Volini. The team was also cautious because of the company's entrepreneurial management. "That's more appropriate for equity investors than bond investors," says Volini. Investors would have done well to follow the team's advice. When Goldman put the company on underperform at the end of September 2001 the price was 92. It hit 105 on January 30 last year and a low of 45 on August 15. The team removed the recommendation at the end of August when the bond was trading at 51. At the beginning of March the bond was at 77. European corporate pension liabilities have become a high-profile problem this year, with rating agencies getting serious about their potential impact on debt-servicing. The team was considering the impact as early as the summer of 2002 - before the rating agencies downgraded Ford and General Motors.

Fallen angels are a big consideration for the team at Goldman. There have been many of these corporates in the high-yield general industries sector including Invensys, BA, Corus and Fiat. These corporates were often encouraged to have a bull market capital structures with a lot of short-term debt. They are now being forced to sell assets or issue longer-term debt.

Morris says the team deals with this phenomena by beginning to work on companies they feel are likely to fall. For example, says Morris: "We recently did a presentation [to investors] on Heidelberg Cement which has yet to fall." Volini worked on German steel and engineering group ThyssenKrupp before it fell to junk in February.

The team feels it was early in drawing attention to the absence of covenants giving investors strong protection against becoming subordinated in fallen angels last spring. "So, in a typical fallen angel bond the investor has very limited protection, or a weak negative pledge covenant," says Volini. When banks provide finance for such a company existing bond holders are pushed lower in the pecking order of creditors.

Another concern is the uncertainty caused by war in Iraq. The team recommends that investors stick with the more defensive names in high-yield general industries. Of the 60 corporates they cover they highlight Corus and Fiat as particular credits to be wary about. "Corus is a stressed credit with a wide range of potential outcomes," says Volini. "As is also the case for Fiat, the majority of these outcomes are not good for bondholders," he concludes.

Julie Dalla-Costa

BEST CONSUMER PRODUCTS
2003	2002		Score	% of Hi-yield votes	Eurozone only	UK only	Eu450+	Eu150m - Eu450m
1	2	Deutsche Bank - Sonia Van Dorp & Team	144	38.57%	1	4	3	1	1
2	6	Citigroup - David Newman, Cathy Braganza, Kay Turner	121	30.49%	4	1	1	2	4
3	7	UBS Warburg - Marcus Strub, Ee-Yung Yip	98	25.11%	5	2	2	3	7
4	9	Morgan Stanley - Bala Ramakrishnan, Kamran Hussain	89	24.22%	2	7	4	4	5
5	5	Goldman Sachs - John Fusek, Rupert Egan	79	21.08%	8	3	5	5	6
6	3	CSFB - Ben Booth	74	22.42%	3	8	8	6	2
7	1	Merrill Lynch - Sarah Percy-Dove, Olek Keenan	72	20.18%	7	5	7	9	3
8	4	JPMorgan - Mark Bayley	61	15.70%	10	6	6	8	10
9	13	DrKW - Lior Jassur	47	12.56%	9	13	10	10	8
10	10	BNP Paribas - Oleksiy Soroka	42	12.11%	6	12	12	7	9
11	8	Lehman Bros - Tom Howard	41	8.97%	14	10	9	12	13
12	12	Barclays Capital - Daniel Rekrut & Team	32	10.31%	13	9	13	11	11
13	-	Bank of America - Dan Purser, Julien Raffelsbauer	24	6.28%	16	11	11	16	15
14	17	RBS - Wendy Racine	20	6.28%	12	14	14	15	12
15	15	Bear Stearns - Team	16	4.93%	11	15	15	13	14
16	11	ING - Team	13	3.59%	15	16	16	14	16

Best in high-yield consumer products
Sonia van Dorp, Deutsche Bank

The high-yield consumer sector did best in European high-yield last year for the second consecutive year, with a total return of 17.4%. And Deutsche Bank had the best-performing team in the sector. Sonia van Dorp has managed to regain the title she and her team held in 2001 with the aid of junior analyst Patrick Kersting.

The best-performing sector in the group was food and beverages. Property and homebuilding also did well. The result, however, is that the bonds from these companies carry a premium that has made it difficult for the team to make buy recommendations. "Since the end of last year we've had a rather low number of buy recommendations on strong price appreciation," says van Dorp.

The team attributes the bank's short buy list to the rally in the sector at the end of last year. For example, van Dorp says: "We remain negative on the retail and distribution sector while maintaining a positive view on other sectors, specifically food, but it's trading very high so there are not many buy recommendations."

Those buy recommendations that have been issued by the team have tended to perform well. For example, they suggested that investors should buy UK betting services provider Coral on June 11 last year. The total return as at January 14 this year was 32.61%. The team also issued a buy recommendation on the subordinated sterling notes of UK newsagent and convenience store operator TM Group on November 5 2002. This was based on the fact that the company had sold assets to decrease leverage and because it is up for sale, with its bonds to be redeemed at the next call price.

The team names Amsterdam-based office product distributor Buhrmann as its current best pick as a long-term story for investors. "Bond yield is near 13% and the company is fully funded," says van Dorp. She feels Buhrmann is the best buy at the moment, for price reasons, with good recovery prospects over the next year. But, it remains the most risky as well due to its cyclical nature. "The minute we see some sort of recovery in the US market they [Buhrmann] would be the first to benefit from it," she adds.

The main challenge for the coming year, according to van Dorp, is the uncertainty of mid-size companies being able to complete IPOs and the effect this will have on buy-out activity and high-yield debt. Van Dorp uses the recent example of German equipment manufacturer Grohe. "Grohe was recently attempting to pay a dividend through the issuance of senior debt due to the fact that the IPO market is closed to medium-sized companies. Initially this has not been seen favourably by bondholders." Van Dorp also fears that the lack of exits could deter buy-out firms from completing new deals funded by high-yield bond issuance which will constrain the number of deals in the market.

Julie Dalla-Costa

BEST CREDIT STRATEGY
2003	2002		Score	% of Hi-yield votes	Eurozone only	UK only	Eu450+	Eu150m - Eu450m
1	5	Deutsche Bank - David Bitterman, Andrew Van Houten & Hunkar Ozyasar	163	37.67%	5	2	3	1	3
2	2	Merrill Lynch - Chris Garman, Crispin Southgate, Jon Jonsson	147	34.98%	4	1	1	2	4
3	7	JPMorgan - Matt King & Team	108	28.70%	1	5	2	7	1
4	3	CSFB - Sam de Rosa-Farag	89	21.97%	2	3	4	5	6
5	6	UBS Warburg - Richard Phelan & Team	86	24.22%	3	6	5	8	2
6	1	Goldman Sachs - Thomas Mercier, Willem Sels	77	20.63%	6	4	6	6	5
7	-	Lehman Bros - Tom Howard & Team	72	19.73%	8	8	8	4	7
8	4	Citigroup - David Newman, Thomas Crawley	57	17.49%	7	7	7	9	8
9	11	Commerzbank Securities - Team	42	11.21%	10	9	10	3	10
10	9	Bear Stearns - Team	24	8.07%	9	10	9	10	9

Best in high-yield credit strategy
David Bitterman, Andrew Van Houten and Hunkar Ozyasar, Deutsche Bank

Deutsche Bank has done extremely well over the past year, in the eyes of investors, rising from fifth place in 2002 to first in 2003. Tim Barker, a euro and sterling credit strategist and a member of the European high-grade credit strategy team at Deutsche Bank, says: "The main change since last year is that the integration between the two teams [high yield and high grade, US and European] is greater."

This goes some way toward explaining why a high-grade credit strategist and a US high-yield strategist, Hunkar Ozyasar, have been proffered by the bank to discuss its performance in European high-yield credit strategy over the past year in place of Peter Conroy, who is on leave from his post.

The move towards greater integration has been driven by a profusion of fallen angels last year. "That type of company has become such a major part of the markets," says Barker. "What we've tried to do is provide a seamless transition from investment grade to high yield, to cover every step of the way," he adds.

The bank feels the structure of the team is suited to the times. "The increase in volatility and the shift from micro to macro stories over the last five or six months has given an advantage to our team where the high-grade and high-yield [teams] are working closely together," says Ozyasar.

Julie Dalla-Costa

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