Ranked number one as underwriter of sovereign bond deals over the past 12 months, Morgan Stanley succeeds partly through dominating emerging markets fixed income. EU governments have tapped the markets less over the past year, although when they have Morgan Stanley has been prominent, leading issues from Spain, Austria and Italy.
Italy’s February issue was the largest global yen issue for a sovereign at ¥100 billion. Mike Weston, head of origination, cites Morgan Stanley’s ability to work across different currencies as central to its large volume of mandates: “To have sound business you can’t just say ‘I’m going to do euros’, or ‘I’m going to do dollars’. You’ve got to know what’s going on in the yen market, and got to understand the sterling market. And that’s one thing we pride ourselves on in terms of being very global in our advice.”
As well as global breadth, Morgan Stanley views comprehensive associated services to be crucial when attracting sovereign mandates. As part of this strategy, the company hired Louis de Montpellier in June as an executive director in its European debt capital markets team.
“My brief,” de Montpellier says “is to co-ordinate across divisions in the firm, and try to look at our coverage of sovereigns from different angles: from the perspective of asset management or budget management, for example. That includes securitization, real estate or even privatization.. We put effort into making our products talk to each other, co-ordinate, and offer an overall service to the client.”
De Montpellier is a former director in the debt agency of Belgium’s ministry of finance, and his appointment also underlines Morgan Stanley’s expectations of a lot more work with core EU governments. “European governments will be developing their strategic funding plans,” says Weston “and it’s what goes beyond their vanilla Financings that we’re focusing on. Future convergence plays with the Emu, and the euro, are very important here.” He continues: “We are hoping to help not only the countries which are in the euro already to structure their funding vis-à-vis the Euromarket, but also to help the countries which are soon expected to join the EU. These are countries which will want to restructure their finances with a view to preparing domestically and internationally for the new reality of the euro.”
Elsewhere, Morgan Stanley jointly lead-managed two dollar-denominated issues for Israel, most recently in March. As with its South African sovereign arrangements, Morgan Stanley points to the fact that whileit was re-mandated, its initial co-managers were not.
In the Middle East, Morgan Stanley has continued to work with Lebanon, the region’s most frequent issuer, arranging issues in dollars and euros and including co-leading the country’s biggest ever placement of $400 million.
Tunisia was brought to the euro-denominated market for the first time. And in June, after biding its time through a number of less favourable months, Morgan Stanley jointly led Qatar’s dollar bond, upsized from $1 billion to $1.4 billion.
