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Best Debt house: Barclays |
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Also shortlisted: Deutsche Bank and HSBC |
When Euromoney named Barclays its best global debt house this time last year it was just 48 hours after chief executive Bob Diamond had resigned. The adverse publicity the bank has been subject to over the subsequent 12 months is a severe – and unusual – test of its resilience and the regard in which it is held by clients. That Barclays has put in another top-three performance this year, playing a pivotal role in the reopening of the peripheral markets in Europe, innovating on the structuring front and gaining share in some markets, is testament to this. It has therefore been named our best global debt house again. “Clients moved closer to us this year,” says Mark Bamford, head of global fixed-income syndicate at Barclays in New York. “We did more business in the third and fourth quarters of 2012 than we did in the first two quarters. We were an easy house not to mandate, but the fact that clients continued to deal with us was very telling.”
The past 12 months have been an extraordinary time in debt capital markets. Liquidity was such that no one batted an eyelid at the $17 billion Apple trade in April or Petrobras’s $11 billion issue in May. But these deals were just the most high-profile examples of how distorted central bank-driven demand for credit had become. In conditions such as this, a debt house needs to distinguish itself by doing the tough trades and Barclays did these time and again over the past year. Having managed Iceland’s return to the market in 2011, Barclays brought taps from Ireland (€2.5 billion) and Portugal’s (€2.5 billion), and subsequently lead managed Ireland’s €5 billion 10-year deal in March.
“We had been working on the return of peripheral issuers for 12 months,” explains Lee Cumbes, head of SSA DCM Emea at Barclays. “We stayed with these issuers. The rating migration among eurozone sovereigns has been well documented, but we knew there was a real depth of global support.”
In the first six weeks of this year, Barclays priced €23 billion of peripheral debt for Italy, Spain, Ireland, Portugal, Spain’s Fade and Instituto de Crédito Official, and Madrid. “We had to give peripheral issuers confidence because of the political consequences of failure” says Charlie Berman, chairman DCM Emea. “The job wasn’t to sell bonds to investors, it was to give confidence to issuers.” This it certainly has done. On June 26 2012 Barclays executed five benchmark transactions for eurozone sovereigns in a single day.
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| Mark Bamford: clients have moved closer to Barclays |
Barclays also demonstrated its ability to push the boundaries on the corporate side. The 20-year €1 billion euro-denominated issue for AT&T in December was the longest benchmark euro corporate deal in more than two years, and led the way for a spate of further MTN issuance. Barclays’ strength in peripheral markets also changed the dynamic in the burgeoning corporate hybrid market – another key development in Europe this year. The hybrid deals the bank led for peripheral issuers such as Telecom Italia and Iberdrola would have been unthinkable this time last year. It also reopened the high-yield markets for peripheral issuers, with trades for Energias de Portugal and Brisa in September last year. Barclays’ US franchise went from strength to strength, with the firm picking up share in this key market. It either financed or advised on three of the largest M&A-related bonds in the past year, and had conviction that bond investors would look through the credit and buy Xtrata’s $4.5 billion deal in October last year. It dominates GSE issuance and is the only top-three non-US bank in the ABS rankings.
In FIG, the bank has brought balance sheet advisory capital products, liability management and rating advisory under one umbrella. Strategic financing in FIG has been dominated by contingent capital – the firm’s 7% high-trigger transaction being the result of a two-year interaction with the UK’s FSA and HM Revenue and Customs.
“The FIG DCM franchise has been defined by attention to content and structuring as the way in – you live and die by content and structuring,” says Allen Appen, head of FIG DCM Emea.
The blurring of investor bases was also in evidence in the emerging markets business, where Barclays has inked a series of landmark trades. The $2 billion-equivalent Vimpelcom deal in February was the first multi-currency trade to include Euroroubles and was sold to telecoms investors rather than emerging markets buyers. “In the world we are moving into you had better be competent in local markets,” says Jonathan Brown, head of bond syndicate, Europe. “These are not markets you can meet halfway.”
The DCM team at Barclays deserves credit for holding its nerve over the past tumultuous year at the bank. “It has been a tough 12 months for us as a firm, but it has reinvigorated our focus,” says Jim Glascott, head of global DCM in New York. “We have a depth and breadth of business that no one else has and we have made sure it is sound and profitable. The balance sheet is in good shape.” And they aren’t taking anything for granted. “There are some difficult days ahead in the next six months – you can’t just muscle your way through it any more,” says Berman. “But we look forward to more challenging markets.”
