Best emerging markets debt house:
HSBC
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Also shortlisted: Citi Deutsche Bank |
| View more 2014 awards |
In recent years, the boom in emerging market bond issuance has offered a quantum of solace for fee-famished emerging market focused investment banks grappling with equity market volatility and rising regulatory costs. Competition remains fierce, however, as the traditionally strong global EM debt houses improve local currency execution capacity and seek a slice of the offshore renminbi market, in addition to arranging deals in G3 currencies.
What’s more, a decent number of regular high-grade borrowers have provided bookrunners with a stable revenue stream, further justifying the costs associated with large-scale global DCM franchises.
With ever-increasing deal sizes and order books amid the global yield drought, issuers continue to demand aggressive pricing terms, while primary markets have remained largely open despite secondary market volatility. This award, therefore, credits bookrunners that have distinguished themselves by opening up new pools of liquidity to a diverse range of issuers through innovative financing solutions.
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| We remain committed, thanks to the depth, diversity and consistency of our platform, to bring issues into new markets, maintain long-term relationships with clients and the buy side Bryan Pascoe |
Against this backdrop, HSBC and Citi remain the undisputed market leaders, despite strong competition, boasting diverse pools of local currency liquidity, buy-side intelligence, increasingly complex product offerings and the ability to generate revenues and execute trades amid bouts of market volatility from last year’s taper tantrum to the sell-off in the first two months of this year.
This year, HSBC edges top spot over the awards period, thanks to its prowess at arranging deals across a greater number of currencies – 14 compared with Citi’s nine – and because of the sheer volume of transactions, having arranged 412 hard-currency and local-currency deals in total, a 5.35% market share. Citi totalled 302 deals, representing a still-impressive 5.22% market share. HSBC also boasts a market-leading position in Islamic bonds, as well as local and international currency deals in Latin America and emerging Asia, while it is consistently on top of international issuance in non-G3 currencies.
HSBC has been involved in key transactions over the awards period, and a driver of structural shifts in the market, including the growth of euro issuance from Asia, bank capital trades and high yield issuance.
Deals include the first ever tier-2 Basle III-compliant bond out of Russia (Russian Standard Bank $200 million); a tier-1 Basle III-compliant bond from Asia (United Overseas Bank S$850 million); India’s first-ever unrated senior US dollar bond issue (Tata Motors $300 million); as well as big hybrid deals from the Mena region. While rival bankers scoff that HSBC’s DCM franchise is disproportionately boosted by its balance-sheet facilities, the large number of liability management exercises and ground breaking deals for sovereigns – including the largest ever deal in CEE, a debut deal out of CIS, and the fifth consecutive mandate from Dubai – underscore issuers’ confidence in the bank’s global EM franchise.
Natural advantages
It is also HSBC’s natural advantages in Asia that mark the firm out, as China’s capital markets begin to match the promise of its real GDP. International issuance from the country has moved from 12th largest by deal nationality in the 2009/10 award period to number one in the same period 2013/14. HSBC was the top arranger for Chinese issuers accessing international markets during the award period, with 112 deals and a 61% market share. It is an ever-growing challenge for the likes of Citi and Deutsche Bank as they seek to capitalize on the most important growth in global debt markets.
HSBC, in its capacity as global coordinator, has been integral to bringing global pools of liquidity to Asian high-yield issuers in US dollars, offshore renminbi and Singapore dollars. Deals include Greenland Holdings’ $700 million three year, which last October was the largest bond issue from a sub-investment grade debut property issuer since 2011, and Beijing Capital Land’s Rmb2.25 billion three- and five-year deal, the largest offshore RMB deal from a Chinese property developer so far this year.
Bryan Pascoe, global head of DCM at HSBC, says of the firm’s DCM prowess: “HSBC remains at the forefront of the most important issuance flow in the emerging markets, China. We remain committed, thanks to the depth, diversity and consistency of our platform, to bring issues into new markets, maintain long-term relationships with clients and the buy side. We are also the only global bookrunner that is truly diversified with respect to arranging deals across currencies.”
