Primary debt poll 2007: Service please


Jethro Wookey
Published on:

Banks are often inclined to monitor new issue league tables for evidence of their performance in fixed income. In Euromoney’s debt poll, though, those banks’ clients get to tell their side of the story. Quality and quantity, their views suggest, by no means always equate.

Primary debt poll 2007: Service please
Primary debt poll 2007 results
Primary debt poll 2007: Overall categoriesPrimary debt poll 2007: Best service provision
Primary debt poll 2007: Investor relationsPrimary debt poll 2007: Best by currency
Primary debt poll 2007: Best by productPrimary debt poll 2007: Methodology

Jethro Wookey reports.
THE EUROMONEY DEBT poll was conceived as an alternative measure of debt house performance to the more traditional, volume-driven league tables. Just because something is the biggest, it isn’t necessarily the best. Euromoney asked the world’s biggest borrowers to name what they thought were the best debt underwriters in 23 different categories, covering service provision, currencies, and products.

It soon became clear that the banks that conduct the largest deal volumes are not necessarily the ones that provide the best service to their clients.

Many borrowers dislike the way some debt houses aggressively pursue market share with subsidized trades and blanket coverage. Aggressive selling might win business but it doesn’t win many friends."We avoid subsidized trades, where banks are just trying to buy league table position," says one borrower. "We look for houses that meet our needs at the time."

Only Deutsche Bank can make a realistic claim to being a market leader in both the quantity and quality of the debt service it provides to borrowers. "It is culturally ingrained in Deutsche Bank to be the biggest provider of client services across the globe. It is our absolute number one priority," says Zia Huque, global head of syndicate at Deutsche. "Ours is the pursuit of client service, not league table. Be it capital markets access, derivatives solutions, primary and non-primary markets, we believe we are the best at it, and we pursue it aggressively."

Miles Millard, Deutsche Bank

"In pursuit of our agenda, we maintain a broader and deeper coverage footprint than our competition"
Miles Millard, Deutsche Bank

Winning ways

On that front, it’s not all good news for Deutsche. The German bank has been knocked off the top spot that it held last year by this year’s success story in the poll, UBS. The Swiss bank has climbed from fourth last year to claim first place in the poll, aided by the results in coverage, secondary market support, issuer research, ratings advisory, euro issues and inflation-linked products. UBS won them all. The bank insists that its success results from increasing recognition by borrowers of the investments that have been made on the debt side over the past several years rather than through its having made a big improvement to its services over the past 12 months. "There has been no significant change in the way we do business," says Mark Wheatcroft, co-head of debt syndicate at UBS. "We have always been competitive, and are strongly positioned with our key clients."

UBS might have benefited from the composition of the respondents in the poll, which are predominantly financial institutions and frequent issuers. A bank that focuses more on, say, corporates might have scored lower than the quality of its service might warrant. But the respondents in the poll are the biggest borrowers in the world, and thus demand the best service. Right now, they appear to be getting it best from UBS.

Top 20 Global DCM Bookrunners
29 May 2006 – 29 May 2007 YTD
Pos.Bookrunner parentsDeal value $mlnNumber total market% share of
2Deutsche Bank458,20314856.70
4Merrill Lynch432,83518056.33
5Lehman Brothers378,3619915.53
6Barclays Capital361,50013785.28
7Morgan Stanley333,95311154.88
10Credit Suisse296,5499984.33
11Goldman Sachs291,0707234.25
12Bank of America265,9549783.89
14Bear Stearns194,2345042.84
15ABN Amro168,0005462.46
17BNP Paribas143,5165532.10
18Société Générale123,5573521.81
19Countrywide Securities 117,4263851.72
Source: Dealogic

There might not, as UBS claims, have been any single significant change in the bank’s strategy but it is now delivering more products and doing more in securitization than ever before. UBS has increased its personnel and is at the forefront of innovation in the markets, as can be seen in the recent deals with Nationwide, Fortis and Swiss Re. UBS acknowledges this but maintains that its success in the poll is not attributable to recent changes. "The team has grown but we feel our success is down to increased recognition," says Roberto Isolani, head of fixed-income capital markets for EMEA and APAC at UBS.


In any event, UBS’s success in this year’s poll is not reflected in the league tables. As of the end of May, the bank only ranked eighth in Dealogic’s all international bonds bookrunners table. Another debt house to outperform its league table position is JPMorgan. The US bank came third overall in the poll, but came first in what many would consider to be two of the most important areas of debt underwriting: execution and distribution. "These results illustrate the progress that we feel we have made, which isn’t captured in the league tables," says David Marks, head of FIG DCM at JPMorgan. "It is often hard to get a sense of how you’re doing relative to the competition but we feel we’re making progress, and this poll confirms it."

Last year, Deutsche Bank came out on top in execution, followed by Citi, UBS and JPMorgan. This year, that foursome has reversed, with JPMorgan coming first, followed by UBS, Citi and Deutsche. In distribution, JPMorgan finishes ahead of Deutsche Bank, UBS and last year’s winner, Citi.


How debt houses win business, and how their clients get advice, is one of the most important facets of the services that banks provide. Another similarity between UBS and JPMorgan is their approach in this area. Most banks are dependent on one person dealing with each client but UBS and JPMorgan prefer to introduce their clients to the whole debt team. "One observation that has been made of JPMorgan, and this has been borne out by independent research, is that when clients meet us, they meet with larger teams than with other investment banks," says Marks.

Roberto Isolani, UBS

"The team has grown but we feel our success is down to increased recognition"
Roberto Isolani, UBS

There are advantages and disadvantages to this approach. On the one hand, it preserves the emphasis on teamwork. On the other, is it efficient to have three or four people in a meeting where two will do? At UBS, the debt team all sit together, and their strategy is one that relies on openness of communication. Banks that depend on a single team member dealing with each client might benefit from efficiency but they rely completely on the quality of that one member and risk losing business if he or she leaves the company. Which approach clients prefer varies between borrowers but the success of UBS and JPMorgan in this year’s poll suggests that clients are generally warming to the team approach employed by these two banks. "We are, particularly in fixed income, perceived as a very integrated business," says Roberto Isolani at UBS. "Ours is a coordinated, solution-driven approach."

Many borrowers have expressed concerns about the aggressive sales techniques employed by debt houses. Naturally, no bank can maintain a strong fixed-income franchise without winning new business but certain borrowers chafe under the forceful methods employed by some banks. Successful debt houses must strike a balance between chasing new business and showing a high level of understanding of each of the clients they court. "The most important thing is that debt houses have an understanding of our institution," says Sven Lautenschläger, L-Bank’s international funding officer. "These banks have to be able to listen to what we’re saying. When a debt house is calling us again and again despite us telling them we don’t [need] the liquidity, it can get very annoying."

UBS seem to have found the balance, coming first by a considerable distance in coverage. After UBS come Barclays Capital, Deutsche Bank, Merrill Lynch and Morgan Stanley. With the exception of Deutsche, all of these have improved on their positions in last year’s poll. Morgan Stanley appears to be a firm that is becoming much more client focused, with strong showings in issuer research (second, from ninth last year) and deal-related investor relations (second from 10th). Deutsche Bank has fallen from second to third in coverage but maintains that this is not indicative of the service it offers. "In pursuit of our agenda [to be the best provider of primary services to clients], we maintain a broader and deeper coverage footprint than our competition," says Miles Millard, head of DCM in Europe at Deutsche Bank.


As was the case last year, the results in the various currency categories played to banks’ traditional strengths. US banks dominate in the US dollar market, Japanese banks in yen, and so on. But there are, on closer inspection, banks that are strong across the currency spectrum. UBS is the highest-ranking non-US bank in US dollar issues and the highest-ranking non-UK bank in sterling issues.

"When clients meet us, they meet with larger teams than with other investment banks"
David Marks, JPMorgan

In US dollar issues, the top bank is JPMorgan, up from fifth last year. Second is Merrill Lynch, followed by Goldman Sachs, Morgan Stanley and, in fifth, Citi, falling from another of last year’s first-place positions. JPMorgan’s David Marks says that the bank is moving towards becoming a truly global organization, and will look to improve its position in the other currencies in next year’s poll, having made large investments in several local markets, such as Canada. "Our strategy [for currencies] is to focus on client needs but also on the pieces of business where we feel we can add the most value," he says.

New category

The liability management category is new to this year’s poll, reflecting its growing importance to the debt markets. US banks dominate, with Lehman Brothers in first position, followed by Citi, Goldman Sachs and Merrill Lynch. In hybrids, Lehman came first by a significant margin, over Merrill Lynch, UBS and Deutsche Bank in second, third and fourth respectively. Banks are focusing on hybrid products more and more, as they recognize their growing importance among investors. "Hybrid products have been a significant focus for us over the last three years, as we have improved content provision and structuring capability," says Miles Millard. Deutsche came sixth in hybrids last year, making the category one of the few in which the bank has improved on last year’s poll.

Fall of the French

One interesting outcome of this year’s Euromoney debt poll is the seeming decline in frequent issuers’ views of the two big French banks, BNP Paribas and Société Générale. SocGen has fallen from 12th overall last year to 16th this year. It scored just one position in the top 10, for syndicated investment-grade loans, and although it has climbed in some categories (swap provision, non-core currencies and MTNs) its overall position of 16th from 12th reflects a general decline in poll results.

BNP Paribas has similarly disappointing results in the poll. It fell from eighth overall in last year’s poll to 12th this year. In fact BNP Paribas has fallen in every category apart from sterling issues, in which it remains steady at fifth. BNP Paribas says that it has a strong franchise that is in fact healthier than last year, so it may be that the larger borrowers, such as the respondents in the poll, haven’t done enough business with the French banks for them to register a high score.

In an environment of intense competition, debt houses can sometimes overlook the things that are most important. The Euromoney debt poll seeks to discover what the borrowers really think of the people who are responsible for so much of their money. Unsurprisingly, they look for top-quality service but that often requires amounts of time that are not conducive to maximizing returns. In a benign credit environment, banks might point to their profits as the only indicator of performance they need but when liquidity begins to dissipate and business is not so abundant, borrowers will remember the debt houses that took the best care of them, and reward them accordingly.