At the IMF/World Bank meetings in Washington in September the great and the good of the international bond markets gathered in their droves to sell their wares to sovereign and supranational issuers. These potential clients remain some of the trophy issuers in debt capital markets, but they are not the kings of issuers they once were.
For much of this decade corporate business has been relatively slight: M&A volumes declined; the surge of corporate bond issuance of the late 1990s and early 2000s dried up, as companies sought to protect their ratings and started to generate huge free cash flows.
That’s all changed. Every investment banker on Wall Street is constantly on the road to S&P 500 companies. Their message: leverage up and buy now, before someone gets you. And beware of the big, bad private equity player coming to stalk you.
In debt, while overall corporate supply remains down, most originators don’t want to talk about the latest jumbo issuance, they want to talk about the benefits of hybrid debt for corporate clients. A handful of issues are the focus of attention in a multi-billion dollar market. These are the trophy mandates of 2005.