How to earn a crust in debt capital markets

As the one bright spot in dark markets, DCM is the business that everyone wants to be in this year. But a distinction is emerging between those banks that are crowding into the space and those that are able to make money from it. To be one of the latter takes more than just a strong league table showing; it takes a global franchise and a sharp eye for opportunity.

In 2007, the top-five debt capital markets houses globally netted fees of $8.1 billion from primary underwriting between them. Heady days indeed, but the DCM bandwagon was already spinning wildly out of control.

Once the wheels finally came off with Lehman Brothers’ collapse in September 2008 these revenues collapsed, with the same five banks chalking up $4.2 billion of DCM fees between them for 2008 – a 50% slump in 12 months. The climb back out of the pit has been stuttering and unpredictable.

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