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Best Global high-yield house: Credit Suisse |
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Also nominated: BAML, Deutsche Bank and JPMorgan |
It is not often that markets have a year like the high-yield bond market has just had. The combination of low global interest rates and the resultant search for yield has meant that appetite for the asset class has soared. It has also meant that high yield has become a global market – European issuance grew 73% in 2011 by May to become an important part of the sector. Credit Suisse has demonstrated innovation and strength across the board and consequently is Euromoney’s global high-yield house for the year.
“In high yield we are a global firm,” says Marc Warm, managing director in high-yield capital markets at Credit Suisse in New York. “We are not a US firm with other activities. We have a strong franchise on both sides of the Atlantic.” This is reflected in the bank’s involvement in the largest deals in the market this year: in the US the $3 billion Reynolds trade in October (which was the largest LBO of 2010 and second-largest high-yield transaction globally in 2010) and in Europe KabelBW in March this year – the largest high-yield deal of 2011 to date – and the Wind refinancing in November, which was the largest high-yield deal of 2010 and largest European secured note ever. The global nature of Credit Suisse’s high-yield franchise is also demonstrated by the number of US dollar and dual-currency deals it has done for European companies.
Credit Suisse’s top-tier distribution platform came to the fore this year as it placed a succession of benchmark deals. It was sole bookrunner on NXP’s $1 billion deal in July, which was the largest triple-C deal since 2009, and was left lead on Huntington Ingalls Industries, a $1.2 billion new issue for a first-time high-yield issuer. The bank claims the strongest high-yield distribution platform and was ranked number one for overall quality, understanding and acting on clients’ needs and investment strategies and trade ideas in Greenwich Associates’ 2010 investor survey.
“When markets are strong the big money-centre banks can have the advantage,” says Warm. “Our loan book is far smaller but we did our biggest deals in pockets of dislocation – this is how you define yourself.”
Although the bank tops the European high-yield rankings it is brains rather than brawn that distinguished Credit Suisse in Europe this year. In March, the bank brought the first secured FRN since 2007, for bathroom products supplier Grohe, and was on four of the seven FRN deals that followed.
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“We are likely to see an increase in volatility, which will be good for our market share. We have had to navigate some very difficult markets” |
“This was a new product in Europe this year,” says Mathew Cestar, managing director and head of EMEA leveraged finance at Credit Suisse. “The client wanted more call flexibility on the structure and this unlocked the market for the series of deals that followed.” Credit Suisse was also left lead on the Picard deal in September – the first French high-yield issue to use the new double LuxCo structure that opened up the French marketplace – and was also left lead on the €1.2 billion Ziggo refinancing that took out the mezzanine debt of the Dutch cable operator in April 2010. That deal was the largest sponsor refinancing of 2010 and the largest single euro tranche and largest single-B debut since 2007. It also incorporated a change-of-control clause that is subject only to a leverage test – the first time this has been done in Europe – to create a truly portable financing.
As Euromoney’s awards process was under way the high-yield markets witnessed a sharp retrenchment, a sign of how unstable sentiment has become in the face of the grim macroeconomic situation. “We are likely to see an increase in volatility, which will be good for our market share,” says Cestar. “We have had to navigate some very difficult markets.”
The Wind deal was a good example of this. Wind Telecomunicazioni had initially planned to issue a €3.2 billion deal in November as part of a wider €6.6 billion refinancing. Dislocation in the market led to the high-yield component being reduced to €2.7 billion. “We sized and priced the deal into demand,” says Cestar.
The Credit Suisse team expects choppier conditions in high yield and sees this as playing to its strengths. “We have a research-focused culture, so investors are comfortable buying in volatile times,” says Cestar. “This is when our research activity and sales force come to the fore. Second-tier players do not support deals in the aftermarket.” The bank has 20 high-yield and eight high-grade analysts and strategists in the US. The average tenure of the team is 15 years, which gives it a very strong feedback loop with the investor base. “We are global and we do big, cross-border deals that perform in a volatile marketplace,” says Warm. “This is because we have the right structures to reflect the market and because of the strength of our sales and trading platform.”
