CSFB
When news that affects the high-yield market breaks it is often the first to come out with a view. When the new-issue market gets tough, it usually increases its market share to as much as 50%. It has occupied the top spot in the US high-yield underwriting league table since 1993.
The leveraged finance group that dominated the US market while at Donaldson, Lufkin & Jenrette has continued to do so since the bank sold up to CSFB in 2000. The past 12 months have been no exception. In the face of stiff competition from Citigroup and Deutsche Bank, CSFB?s high-yield franchise has increased its underwriting market share, as well as retaining its number one research ranking in Institutional Investor.
The team has managed this in the face of upheavals elsewhere at CSFB and the departure of long-time head of the leveraged finance group Bennett Goodman. He had run the operation since 1995, and left last year looking to set up his own business, only to be lured back to run a new alternative capital division by recently ousted CEO John Mack. Last month Goodman, who is the winner of this year?s capital markets achievement award, persuaded Tripp Smith, who was made co-head after he left, to join him in the alternative capital division to be head of capital markets. Smith?s co-head, Doug Ostrover, is now sole head of leveraged finance.
Change at the top did not hurt the franchise, and the list of the group?s achievements in the past 12 months is impressive. CSFB was the top underwriter of dividend recap bonds, of floating-rate notes structured as bonds, of zero-coupon bonds and of the triple-C-rated sector. In Europe, where the firm competes with Deutsche Bank, it was involved in the largest ever European leveraged buyout. The $4.4 billion package for Seat Pagine included Europe?s largest ever high-yield bond issue, for e1.3 billion, on which CSFB acted as joint bookrunner.
?Issuers place a premium on execution, especially in more difficult markets,? says Tim O?Hara, global head of high-yield capital markets. One deal he is particularly proud of is the $1.75 billion bond for Dynegy last summer. ?There was a lot of speculation that it wouldn?t get done,? he says. ?We?d had the rapid back-up in treasury rates in July, and several deals were pulled as a result.? One, for Calpine, did go ahead, with Goldman Sachs as the lead, but it was not well received, which added to the rumours that Dynegy would be a flop. As if turned out, Dynegy?s transaction helped to stabilize the market. Another favourite was January?s $1.375 billion deal for United Rentals. ?It built the path for the high-yield liability management trend this year,? says O?Hara.
