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Best Emerging markets debt house: HSBC |
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Also shortlisted: Citi and Goldman Sachs |
Between April 2012 and March 2013, bond issuance from the emerging markets surpassed the trillion-dollar level, reaching $1.29 trillion. That compares with an already large $977 billion in the previous 12 months.
HSBC stayed well ahead in the league tables. According to Dealogic, the bank’s share of emerging market issuance was almost a full percentage point ahead of Citi’s, while Citi’s lead over the number three, JPMorgan, was only 20 basis points.
HSBC is way ahead of international rivals in many of the biggest markets, such as Brazil. It also has a clear lead, for example, in the Middle East. In both Brazil and the Middle East, HSBC’s market share is roughly double that of Citi.
And in the biggest region and the biggest country – Asia and China – HSBC’s lead over its global rivals is particularly strong. In emerging Asia, HSBC is the only international bank with a position in the top five in the DCM league table.
Citi increased its share in emerging Asia in dollar, euro and yen deals, particularly outside China. Yet even excluding China, HSBC is well ahead in Asia, with almost double Citi’s share. HSBC also remains top in Asian G3 issuance.
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| Bryan Pascoe, global head of DCM at HSBC |
Furthermore, even if Citi stepped up in some areas in emerging Asia, HSBC matched that by increasing its market share in Latin America, as Citi’s market share slightly decreased in a region that is closer to its home market. This award recognizes banks for taking the opportunity to develop broader and more sophisticated markets, rather than for raising debt for regular if sometimes ill-managed issuers that might struggle to sell bonds in more normal conditions.
Managing Eurobond access for Ukraine in the absence of an IMF deal might gain less recognition, for example, than the innovative $1.1 billion-equivalent global peso deal for América Móvil (a deal in which HSBC played a leading role).
Goldman Sachs’s business model is such that more of the bonds it managed tended to be sole-led high-yield deals and market debuts. However, Citi and above all HSBC still managed more of the groundbreaking deals.
Within the over-arching trend of an expanding emerging debt market, HSBC was instrumental in the sub-trends that defined the year, such as hybrid deals and bank capital, local-currency Eurobonds, and the rise in debut issuers.
Overall, HSBC was central to a year in which emerging market issuers became more sophisticated and mainstream. Take the $11 billion six-tranche deal for Brazilian energy firm Petrobras, one of the largest-ever emerging market bonds.
The winning bank was also bookrunner on the largest-ever international sukuk, from the State of Qatar (a $4 billion deal), as well as the first-ever 30-year sukuk, for Saudi Electricity Company.
The latter points to HSBC’s lead over global rivals in another country, Saudi Arabia, that dominates its region, as China does in Asia (where HSBC also managed a $3 billion deal in five-, 10- and 30-year tranches for energy firm Sinopec).
It was not just about investment-grade names. “High yield is an important market for us, and we have made a lot of positive progress in building up our high-yield platform,” says Bryan Pascoe, global head of DCM at HSBC.
Aside from 10 Latin American high-yield bonds, the bank was particularly successful in Asian high yield, in Chinese property, with innovative deals for such names as Gemdale and for Indonesian tyre firm Gajah Tunggal, for example.
HSBC’s lead in local-currency issuance was amply demonstrated this year. For example, it was the only international bookrunner on a Rmb23 billion ($3.8 billion) deal, including a Rmb5.5 billion retail tranche, for the finance ministry in Beijing.
HSBC was a big player in the burgeoning number of local-currency Eurobonds. One example was the América Móvil global peso deal. The bank was also bookrunner on the first ever Eurolira deal, for Akbank.
HSBC’s centrality to the growth of offshore renminbi (dim sum bonds) continued. Examples included the first dim sum bond from Andean development bank CAF, and an innovative renminbi sukuk for Malaysian telecoms firm Axiata.
It is similarly easy for HSBC to find examples of bookrunning hybrid bonds and bank capital. Standout deals here include a €1.75 billion perpetual for Hong Kong conglomerate Hutchison Whampoa, the first euro-denominated hybrid from Asia.
In bank capital, it managed a $2 billion 10-year tier 2 deal for Sberbank in Russia, the largest-ever emerging market subordinated bond, as well as the first-ever Shariah-compliant tier 1 deal, for Abu Dhabi Islamic Bank, among other deals.
