League tables: Deutsche ahead as Q4 promises strong volumes

With EEMEA volumes set to reach, and likely surpass, last year’s $65 billion of Eurobond issuance, Deutsche Bank is narrowly leading the battle for league table supremacy.

Although Deutsche has a clear lead of 1.6 percentage points in market share over its rivals, less than 0.5 points separates the institutions occupying second to fifth position. Banks in positions two to four had executed exactly the same number of trades in the year to October 23, with Barclays Capital claiming the highest number of overall issues at 29.

Although banks increasingly claim to make most of their profits from private, rather than league table trades, league tables can be ignored at banks’ peril. As one emerging market syndicate head puts it, a solid league table position is equivalent to a calling card that gives access through a client’s front door.

Deutsche, which has always finished in the top two in recent years, boasts the most consistent record. Citigroup has been in the top two in recent years, but is now in fourth place.

“I have been impressed with JPMorgan’s performance so far this year,” says a head of emerging market syndicate. Although the US bank ranks only fifth it has lost some prominent bankers in the last year including Fawzi Kyriakos-Saad to Credit Suisse and Jonathan Brown to UBS.

Other banks to impress include Barclays, which has been continuing its solid ascent up the EEMEA league tables. Outside the top 10 in 2004, it registered 10th place in 2005, and is in sixth place for the year to date.

Replicating success

Two of the top three banks in EEMEA – Deutsche Bank and UBS – replicate their leading positions in the global emerging market tables. But Credit Suisse, which claims second place in the EEMEA league table, lags a poor seventh in the global rankings, while HSBC occupies third position globally but can only manage seventh in the EEMEA region.

The EEMEA pipeline looks strong until the end of 2006, with several syndicate heads predicting that the market should remain open until at least early December. “Last year private banks shut up shop early for Christmas,” says a second syndicate head, “which caught out some banks planning late deals, but we do not believe that will happen this year.”

A number of Ukrainian banks are eyeing up the market after Bank Forum, the country’s 12th largest bank, achieved a modestly oversubscribed $100 million debut in October, while the Ukrainian sovereign will bring a likely 10-year euro issue in early November. Russian financial institutions too have plenty of deals still to sell.

Other sovereigns with business still to come this year include Lithuania, which is planning a €600 million issue before the year-end, and Turkey, which is expected to tap one of its existing bonds for its remaining $400 million or so of funding needs for the year.

Nigeria, though, appears to have shelved plans for its inaugural dollar bond, to be used to repay London Club debt, despite having mandated Citigroup, JPMorgan and Merrill Lynch for an issue. The sovereign instead intends to repay the debt using cash.

New investor class adds to demand

One relatively new class of investor driving the demand for EEMEA debt is banks’ prop desks. “Before we saw insurance companies and pension funds, and then banks,” says the second syndicate head. “Now, we are seeing lots of prop desks, to the extent that they are now being covered properly by the sales desks across The Street.”

Eurobond volumes might though be challenged by the growth in local-currency denominated debt, as issuers are increasingly turning to issues that avoid the risk of hard-currency transactions.

Further league tables