As the equity capital markets remained sluggish across Europe last year, financing activity was all about debt. So, it is perhaps no surprise that western Europe’s best bank for financing this year is the one that dominated the debt capital markets league tables working on 509 deals worth $128 billion equivalent for a 7% market share: BNP Paribas. Even in ECM, the French firm ranked number five behind sector leaders BofA Securities and Goldman Sachs.
Europe, Middle East and Africa (EMEA) loan market volumes were down 14%, while the number of deals was 24% lower compared with 2022. Refinancings remained the main driver, accounting for 55% of 2023 volumes versus 49% in 2022, with acquisition related loans accounting for just 9%.
“Refinancing flows doesn’t pay the bills. M&A pays the bills, and it was a poor year for M&A financings,” says Nicolas Rabier, co-head of investment grade finance loan capital markets, EMEA. But he argues that the bank’s position at the top of the league tables gives it unrivalled visibility across the marketplace. “Being number one is not just a question of flows. It means that you see what is going on.”
BNP Paribas was an active bookrunner on the five biggest deals in the year in both euros and sterling. Engie’s €3 billion deal in January was the first multi-tranche and the first 20-year deal priced in 2023 and the bank led eight of the 11 20-year tranches that were done in the year, sourcing ultra-long liquidity for the likes of Bosch, EDF, Enel, Prologis Vodafone and BT.
Liability management was key in such an uncertain environment. Liability management goes beyond DCM. “It is taking a view on how to manage the whole debt stack – not just what needs to be refinanced,” points out Giulio Baratta, co-head of investment grade finance, debt capital markets, EMEA at the bank.
“We reopened the market with opportunistic, short-dated issuance post the summer break and when interest rate curves become very flat, we knew there was a window to start issuing longer dated so we opened the 20-year market. This is very important for liability management. If you start funding too much at the short end you start putting on refi risk.”
The bank played a fundamental role in helping issuers manage maturities across the region in 2023, arranging more than 50% of all amend and extends (A&Es) and refinancings, including the first jumbo A&E of €8 billion for Altice France in January 2023.
A lot of BNP Paribas’ work this year in western Europe combined its scale, execution capability and sustainability prowess. In 2023 the bank was involved in 12 of 14 deals that were debut sustainable finance bond transactions.
The bank had a particularly busy year in real assets, leading on renewables deals and incorporating several innovative new structures
A key mandate during the review period was the bank’s work as sole capital structure adviser to Dutch transmission system operator TenneT in its ongoing strategic evaluation of its German assets. A traditional user of the bond market, the client needed to explore ways to fund its transition. BNP Paribas acted as sole underwriter for a landmark €8 billion term loan to backstop one year of capex to support the energy transition, with the bank structuring a tailored solution for a complex client requirement. “The TenneT transaction was a good example of where we brought an idea to the client that was outside the normal flow,” explains Rabier.
The bank had a particularly busy year in real assets, leading on renewables deals and incorporating several innovative new structures. Its work with Finergy was the first time that variable amortization has been incorporated; a deal for BRUC included both bank and institutional pieces; and the Helios Hydrogen deal was for a hydrogen project in Saudi Arabia.
“2023 was the best year we ever had in real assets despite lower market volumes,” says George Repeczky, head of EMEA real asset syndicate. “This was driven by capitalizing on trends around energy transition and digitalization.”
Like all banks, BNP Paribas is watching the rise of private credit across its financing business but is sanguine about the impact of these funds on the market. “Private credit funds are lending, but they are facing the same issue as everyone else – cycles, leverage and how to get repaid,” Rabier points out.
