Awards for Excellence 2016
|
|
Also shortlisted: |
|
Citi |
|
Goldman Sachs |
|
HSBC |
|
Morgan Stanley |
The business of financing, for so long dominated by specific products or simply the provision of a large balance sheet, is undergoing a big shift. The mantra now is to be product-agnostic and solutions-driven. Nowhere is this more apparent than in the financing franchise of Bank of America Merrill Lynch.
The bank needed all of its integration and product expertise over the review period for these awards, which included some very ugly market conditions. A surge in high-profile strategic financings for transformational mergers and acquisitions meant that firms had to deliver across a range of products and markets, taking advantage of narrow market windows. At the same time, it had to be able to provide bridge financing of sufficient scale to ensure that the number of parties involved and any potential information leakage could be kept to a minimum.
“At times like this, the commoditization comes out of the business and the advisory aspect of financing really comes into its own,” says Christian Meissner, global head of corporate and investment banking at BAML. “We have the full product suite, every product, every region. We are able to be agnostic, particularly around leveraged finance and equity.”
The firm’s list of marquee deals over the period is testament to that. In Europe they ranged from bookrunner roles for European government equity sell-downs such as the $797 million accelerated bookbuild of Safran shares for the French state and the $3.5 billion IPO of Italy’s Poste Italiane, to multi-currency work on deals such as the $6.5 billion-equivalent hybrid for BHP Billiton – a five-currency deal that was the largest-ever hybrid to have been completed in a day and where the bank was joint bookrunner as well as swap coordinator.
It also continued to build its track record in bank capital deals, including Santander’s £750 million perpetual additional tier-1 deal, which was the first public UK AT1 with a permanent writedown loss-absorption structure, and a $2 billion Basel III-compliant tier-2 capital deal for the Industrial and Commercial Bank of China.
It was the bank’s work on big strategic financings that showcased its breadth and flexibility – and its willingness to stump up hefty underwriting commitments despite difficult markets.
|
|
|
Christian Meissner,
BAML
|
“Certainty of execution on such deals is crucial, and for that you need global scale and balance-sheet capacity,” says AJ Murphy, global head of capital markets. “The one-stop shop allows people to have confidence in the confidentiality, and the strategic conversation around debt has never been more relevant than now.” BAML’s lead left and global coordinator role on the $46 billion bond for Anheuser-Busch InBev, coupled with its joint books position on the subsequent €13.25 billion euro trade and its joint structuring agent role for a $1.47 billion-equivalent formosa bond are highlights from the period. This is particularly impressive because it all came after the bank had bookrun $40 billion of bridge facilities and $35 billion of term loans as the brewer looked to finance its acquisition of SABMiller – a deal where the bank was also providing M&A advice.
But Meissner and Murphy highlight the bank’s work for Dell as the perfect example of the firm’s ability to coordinate multiple financing options in a strategic way for a client. The computer manufacturer was financing its $67 billion acquisition of data storage company EMC in a deal driven by Dell founder Michael Dell alongside his private equity firm MSD Partners and technology investors Silver Lake.
The bank started discussing the deal in August, but by the time it signed up to the financing later in the year, the markets were in bad shape – BAML, however, did not sell down any portion of its bridge commitment. The key issue under discussion was whether or not a company could raise the kind of money the deal required if it were not investment-grade. All options were considered, including equity, preferred and hybrids.
In the end the discussion coalesced on a secured transaction that would allow Dell to access the investment-grade market despite the company being only double-B rated. The resulting $20 billion bond, the largest single component of the financing, was the fourth-largest corporate bond ever and saw a book of $89 billion. Getting the package over the line had taken staff from BAML’s debt advisory, debt capital markets, leveraged finance, investment banking, M&A, sponsors and corporate banking divisions – a team effort if ever there was one.
