What issues kept you awake in August and September 2007 and what concerns are keeping you awake now?

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By:
Alex Chambers
Published on:

Jim Esposito, head of syndicate and debt financing at Goldman Sachs
My three young sons.


Jean-François Mazaud, deputy head of capital raising and financing at SG
Trying to properly understand the consequences of the sub-prime crisis and its implications on the financial system and on the real economies around the globe.

The issuance project of our clients, Gazprom, notably when they successfully tapped the dollar market in the middle of August, followed by the EUR and JPY market later in the year.

The fighting spirit of my staff. Making sure that in front of what we were perceiving as a major financial event occurring, our people would remain very concentrated at achieving their objectives and at serving our clients the best they could.

The daily headline news over the summer and after!


Siddharth Prasad, head of EMEA FIG capital markets and financing at Merrill Lynch
A major financial institution would fail and trigger a systemic shock, eg Northern Rock and Bear Stearns.

Liquidity drying up.

Scale of contagion from credit meltdown of banks’ balance sheets.

A lot of unknowns. The lack of understanding by officials in Europe about what the markets were telegraphing and the lack of any co-ordinated policy action.


Roberto Isolani, joint head of global capital markets at UBS
What will be the fall-out in the banking sector?

How long will the crisis persist?

How will we keep everyone busy as markets are clearly going to be shut for a while? Money market funds/SIVs/banks selling ABS portfolios.


Chris Tuffey, head of EEMEA debt capital markets
How big was the exposure of the traditional new issue investor base to the sub-prime sector?

How would the market, in particular the credit derivatives market, react to the failure of a global financial institution?

How long would it take for the credit crunch to work itself out if the source of the problem was the availability of cheap credit, given there is a great deal of leverage to come out of the financial system?

Why was there such a profound differential between the view of the equity and credit markets on the impact of the credit crunch?


Martin Egan, head of primary and global head of debt capital markets at BNP Paribas
Would market instability continue for long?

Initial compensation plan for team.

Usual thoughts on returning to work after summer break.


Miles Millard, European head of debt capital markets, Deutsche Bank
Market uncertainty, spreads, liquidity and outlook.


Stephen Jones, head of European financing solutions group at Barclays Capital
The threat of a systematic banking crises, leading to a bank failing.

Liquidity crunch (CP markets seizing up, SIVs, structured product /CDO unwinds).

Central banks reacting too slowly.

Monoline exposure.


Philippe Dufournier, co-head of global financing, Europe, at Lehman Brothers
Leveraged loans – LBOs account for a significant part of investment banking activity. The dislocation in the leveraged loan market has consequences beyond the loan market itself and into the investment banking food chain, including M&A.

The prospects for materially reduced issuance volumes in debt and equity.


What concerns keep you awake now?


Eamonn Price, former head of FIG capital markets at Lehman Brothers
My three young sons.


Jean-François Mazaud, deputy head of capital raising and financing at SG
The access to liquidity of lower-rated issuers.

More broadly, the impact of the financial crisis on the corporate world.

The currency and commodity disequilibriums.

The risks of contagion of the crisis to developing countries.


Siddharth Prasad, head of EMEA FIG capital markets and financing at Merrill Lynch
Liquidity, liquidity, liquidity.

Capital, capital, capital.

Economic slowdown and inflationary concerns.

Ongoing ability of central banks to be a lender of last resort.


Roberto Isolani, joint head of global capital markets at UBS
How best to position UBS to take advantage of this improvement in market tone.

How best to staff the business and keep up levels of motivation and focus of staff (ability to compensate and retain outperformers).

Money market funds yet to unwind ABS holdings sufficiently.


Chris Tuffey, head of EEMEA debt capital markets at Credit Suisse 
Impact of high commodity prices, in particular energy and food.

Are western economies set to enter recession, and if so how will it impact current valuations of credit.

What is the future for the FRN market?

The continued lack of issuance from the high-yield sector.


Martin Egan, head of primary and global head of debt capital markets at BNP Paribas
How to make money.

What is correct business model?

Has enough differentiation occurred during market volatility?

Are we providing an appropriate service to our clients?


Miles Millard, European head of debt capital markets, Deutsche Bank
Inflation.

House prices.

Oil.

Corporate/counterparty default.


Stephen Jones, head of European financing solutions group at Barclays Capital
Record commodity/oil prices, leading to possible inflation/stagflation.

US recession.

Bank capital ratios/tighter regulation.

The lack of a securitization market, and the impact on banks’ balance sheets.


Eamonn Price, former head of FIG capital markets at Lehman Brothers
The knock-on effect of the financial institutional funding crisis into the wider economy.

The spread between Libor and central bank key lending rates across the globe.

The regulators need to convince the markets that there is liquidity available for as long as is required but at some point the reliance on repo funding needs to end.