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Best Global emerging markets debt house: Deutsche Bank |
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Also nominated: Credit Suisse and HSBC |
While the eurozone’s peripheral economies struggle to stave off default, most emerging markets borrowers continue on their merry way. Indeed for certain issuers, such as Mexican wireless services provider América Móvil or Korean power company Kepco, the term emerging markets is a misnomer. They are solid investment-grade firms whose successes reflect the increasing maturation of the asset class.
Ten years ago a crisis in Europe would have meant that bond markets were shut for developing-country borrowers. Today, the challenge they face is not market access but market timing. The funding options available to borrowers in Asia, Latin America, central and eastern Europe, and even the Middle East and Africa, have never been greater.
Intermediaries, therefore, have to be innovative, nimble, consistent and committed, especially as nearly every bank is allocating greater resources to their emerging markets business.
No bank fits the bill better than the winner of this year’s award, Deutsche Bank, which has been a model of consistency across all emerging regions and whose deals stand out for their quality.
In central and eastern Europe, for example, it was the architect of Hungary’s $3.75 billion dual-tranche offering in March, including a debut 30-year tranche. It was the biggest-ever dollar bond out of the region – remarkable for a country that less than three years before was forced to turn to the IMF and EU for a $25 billion standby facility.
Hungary subsequently tapped the 30-year tranche for a further $500 million – 60 basis points inside the original – and then raised another €1 billion of seven-year bonds in May. Deutsche was the only bank to be on all three Hungary transactions. Elsewhere in emerging Europe, Deutsche led debut transactions for Montenegro, Albania and Russian shipping company Sovcomflot. Its deal for Development Bank of Kazakhstan was also a highlight, being the first bond by a Kazakh financial institution since April 2008.
In the Middle East and Africa, Deutsche was involved in Abu Dhabi state-owned Ipic’s $4.4 billion multi-tranche deal, which reopened the international markets to Middle East borrowers after the political crises in Egypt and Tunisia. It was the first time a non-financial borrower from the UAE had tapped the euro and sterling markets simultaneously. The German firm was also one of the leads on Afren’s $450 million, five-year senior secured bond. Afren became the first sub-Saharan Africa corporate to borrow internationally.
In Latin America, its deals include Mexico’s century sovereign bond, América Móvil’s $3.1 billion-equivalent euro and sterling dual-tranche offering, Odebrecht’s project bond, Santander Chile’s floating-rate notes, Braskem’s and CSN’s perpetual bonds, and issues by regular borrowers such as Brazil and Pemex.
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“We treat emerging markets with a lot of respect” |
In Asia, Deutsche worked on deals for a range of borrowers including Kexim, Posco, State Bank of India and Bumi Resources. It was especially strong in the high-yield sector, including a landmark deal for Temasek-owned Stats ChipPac, a transaction that generated the biggest-ever order book for an Asian high-yield issuer.
In addition in the offshore renminbi market, although Deutsche might not be as dominant as HSBC, it has had some notable successes including bonds for Unilever, Melco Crown Entertainment, Shui On Land and Evergrande Real Estate Group – the last two were synthetic renminbi transactions.
One of the criticisms of Deutsche has been that its local-currency business trails others. That reputation is no longer justified. It cannot boast the volumes of HSBC or Citi but over the past year it has been involved in pioneering local-currency transactions, especially those placed in the international markets: the P44.1 billion ($1 billion) 2021 bond for the Philippines in September was Asia’s first ever global local-currency offering; a $800 million-equivalent global TES bond for Colombia in April 2010, which was tapped for another $500 million in July was Latin America’s first local-currency sovereign bond since 2007; and the R40 billion ($1.4 billion), seven-year bond for Russia in March was its first rouble-denominated international offering. In January, Deutsche led the first-ever Ukrainian hyrvnia-denominated bond for a bank when Ukreximbank launched a Hrn2.38 billion ($298 million), three-year deal. In Latin America, Deutsche’s transaction for Banco Santander Chile in September was the first Eurolocal bond out of the region since 2006.
“One of the biggest challenges we face is to be consistent in all regions,” says Martin Hibbert, head of central and eastern Europe, Middle East and Africa debt origination at Deutsche Bank. “But we treat emerging markets with a lot of respect and recognize that in many cases they are investment-grade credits where market access is not an issue. Instead, it’s a question of getting the timing right.”
