Awards for Excellence 2014: Best global debt house

Best global debt house: Deutsche Bank

The recent coverage that Deutsche Bank’s overall fixed income franchise has attracted does not alter the fact that the German bank has had a banner year in debt. It has been front and centre of every big development that took place in the market over the year: high yield, bank capital, corporate hybrids, the return of the periphery, inaugural deals, long-dated and multi-currency issuance, liability management, debt financed share repurchases and the renaissance of the ABS market. It is, therefore, Euromoney’s global debt house for 2014.

There is no doubt that the shine came off Deutsche’s year in the first quarter of 2014 when it was rotated off a number of mandates and announced a 10% drop in FICC revenues. However, JPMorgan and Citi announced FICC falls of 21% and 18% for the same period, and Deutsche’s record throughout our awards period cements its position at the forefront of the industry. “We have seen a fall in fixed income revenues but so has the competition and so has the industry,” says Hakan Wohlin, global head of debt origination at Deutsche Bank in London. “Anshu Jain and Jürgen Fitchen have made a very publicly visible statement about Deutsche Bank’s commitment to fixed income that I don’t think many CEOs would have the courage to do. This is an enormous statement about our commitment to fixed income and DCM is critical to that.”

That commitment to the business was clearly visible over the last 12 months when the bank arranged over 1,000 international bonds for issuers from 75 countries. It is the only house to rank in the top five most issued international bond currencies and is ranked top five across emerging markets. But it is not just about the numbers; it is about being at the centre of market developments as they happen. One of the most striking stories in DCM over the last year has been the growth in high yield, particularly in Europe. Deutsche is one of the leading leveraged finance houses, ranking number one for leveraged loans and two for high yield bonds in Europe. Its US and Asia businesses were very active and it was instrumental in the record breaking Numericable trade, the largest European term loan B for Ziggo and the largest PIK deal since the crisis for Schaeffler.

Hakan Wohlin: Deutsche has become known as a capital house

The other strong theme of the last year has been bank capital. In addition to the bank’s own recent landmark AT1 trade it was involved in, among others, the first replicable AT1 structure for SG, the first tier 2 CoCo to receive equity treatment from S&P for Crédit Agricole and Lloyds’ landmark £5 billion ECN to AT1 exchange. “This is the stuff we like,” says Wohlin. “We were viewed as a senior funding house but we are now known as a capital house. We have been actively engaged with regulators and investor education on bank capital.”

Another strong story over the last year has been the return of the periphery. “We have been at the forefront of demand regeneration at the periphery,” says Chris Whitman, head of global risk syndicate at Deutsche. “You have to have been doing a good job for these issuers even when they didn’t have market access. It is a totally different step to re-engage in Greece. We did the first corporate back (OTE) and we stayed invested. We are not suitcase bankers at Deutsche Bank and this has served us well.” Deutsche arranged more DCM deals for peripheral European issuers than any other bank over the period – 80 deals with a combined value of €17.5 billion. These included Greece’s €3 billion five year in April, its first syndicated deal since the restructuring.

A less welcome market event in fixed income over the last year was the “taper tantrum”, volatility between May and September 2013 triggered by The Fed’s indication that it would taper its QE purchases. Any global debt house worth its salt needs to show leadership in good times and bad and Deutsche did just this, re-establishing a fair clearing level for SSA bonds with the EIB issue on August 28. Where some leading DCM houses pulled high yield deals during this period Deutsche Bank did not and it also got difficult deals done, such as the £655 million first pure cashflow whole business securitization for the AA and Gardner Denver’s $3.3 billion note and loan financing in July. Deutsche demonstrated its capabilities while EM paper was under pressure, executing deals for AngloGold and Nigeria among others. Indeed, on September 9 it arranged a $7 billion deal for Russia (the largest EM deal of the year) and a $2 billion deal for South Africa on the same day.

“Our DCM business is not based on lending relationships,” says Wohlin. “The people that hire us need to structure bonds and sell them. When you hire a lead manager you don’t do it based on a lending relationship: the lead manager league tables tell the best story of all in terms of who is the best fixed income house.” He argues that mandates from issuers such as Apple, for which Deutsche Bank was one of two lead books on its $12 billion deal in May this year, demonstrate how the bank is perceived in the market. “We were not hired by Apple because of a large lending ticket. They had trust that we could distribute securities better than other banks.”