Lehman Brothers
Last year, Deutsche Bank took this award largely because it had managed to replicate its success in Europe in the much larger US asset-backed market. This year, Lehman Brothers has managed to achieve the opposite, coming out top by volume in the US ABS market and dramatically improving its market share in Europe and Asia.
It is also dominant in the global ABCP market, ranking number one in 2003 according to Moody’s market share league table. “The innovation in the ABCP market has been phenomenal and some of the biggest growth in this market is coming out of Europe,” says Nelson Soares, managing director, head of US structured finance origination. “I think we’re going to see more of that for the rest of 2004 and 2005.”
One of Lehman Brothers’ big advantages in ABS is that it has a unified syndicate and structured product sales force, which means that its distribution efforts really are global. “We’ve got a globally integrated ABS business across sales, trading and research,” explains Amany Attia, managing director and head of structured finance at the bank. “We have to be able to talk to clients about distribution in euros, dollars or sterling, for example.”
It also runs one of the largest secondary trading books, with a balance sheet of about $3 billion, and has won Institutional Investor awards for its ABS research.
In the US, where Lehman Brothers leads the competition such as Credit Suisse First Boston and Citigroup, the mortgage market is huge and continues to dominate the ABS market. Here, the bank has worked on a $18 million single-seller conduit facility for Countrywide, for example, the largest of its kind.
But the bank has also led innovative transactions in the past year in Japan, Switzerland, Germany and Italy, to name but a few. Soares says: “We’re also looking at how to introduce non-traditional ABS techniques in the US for a broader array of companies, including whole-business securitization. For example, the rental car companies in the US have become big users of securitization financing.” As Soares points out, this diversification is important for the US market, particularly as the mortgage market declines. “The US focus will continue to be on all of the flow products, but also the creation of new ideas for non-financial issuers as the market evolves.”
Attia attributes part of the bank’s success in ABS to the fact that Lehman Brothers doesn’t rely on its balance sheet but comes up with innovative asset-backed techniques for its clients instead. “We have to anticipate their problems better, provide them with more options and offer them better analytics,” she says.
The bank has already launched the first European ABS index but believes that more work needs to be done in educating the European investor base about the relative value in transactions. It intends to put more effort into research
