Asia-Pacific G3 International DCM League tables: There’s life in the old Bull yet


Lawrence White
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Bank of America/Merrill Lynch tops DCM bookrunner tables.

Asia-Pacific G3 International DCM Bookrunner Ranking (1/1/09 – 22/1/09)
RankBookrunner parentsValue ($mln)No.% share
1Bank of America/Merrill Lynch2,278515.9
4Barclays Capital1,457210.2
6Deutsche Bank1,29139.0
7Goldman Sachs1,04117.3
9RBC Capital Markets62414.4
10Credit Suisse51823.6
Source: Dealogic
A glance at the debt league table for G3 currency bonds in the first three weeks of the year in Asia shows Bank of America/Merrill Lynch in the number one slot, a result that might surprise those who had assumed the merger of the two banks would – at least temporarily – adversely affect the resulting entity’s investment banking deal flow.

Bank of America/Merrill Lynch tops Dealogic’s league table for Asia-Pacific G3 currency debt with accreditation on five deals for a total value of $2.278 billion. The bank is lucky in two respects: first that the Dealogic ranking includes Australia, where three of the US firm’s deals originated and, second, that the system of awarding equal apportionment to all bookrunners on a given deal favours firms that worked on deals with fewer bookrunners. With issuers in the first few months of this year not keen on gambling on a single house, key deals are being widely mandated, with two $2 billion Korean bank deals having five bookrunners (see story on page 48). Bank of America/Merrill Lynch worked alongside JPMorgan and Barclays Capital on a deal of $2.5 billion for Macquarie Bank, meaning that just the three of them shared league table credit for the year’s largest Asia-Pacific deal so far.

Pecking order

Quibbling over league table credit aside, the news will be heartening for management at the US bank, and the league table as a whole makes interesting reading for those considering what changes there will be in the pecking order of Asia-Pacific debt banks in the light of changes in the investment banking industry as a whole over the past few months. Deutsche Bank and HSBC, two of the region’s traditional debt powerhouses and less affected than others by the crisis, are still performing well and were the only two banks mandated on all three of the key deals outside Australia: the bonds for the Republic of the Philippines and for the two Korean financial institutions, KDB and Kexim.

"The key at the moment is your recent track record," says an official from one of the banks in the top five of Dealogic’s league table, "because clients want to know what you’ve done during the crisis, not what happened before Lehman went down."

That banker and others asked agree that this might lead to the region’s top debt houses, universally agreed to be Deutsche Bank, Citi, HSBC and Merrill Lynch (with the fifth slot much-debated), pulling away from the competition as a cycle of positive reinforcement takes place, with issuers turning to.

"The key at the moment is your recent track record,
because clients want to
know what you’ve done
during the crisis, not
what happened before
Lehman went down"

The rewards will be tangible: fees for the Kexim deal, for example, amounted to $10 million (50 basis points), up dramatically from about 10bp last time the bank did such a deal. Banks with sound reputations in the present environment can afford to hold out for such fees, whereas those banks without a recent track record might face internal pressure to reduce their fees in an effort to get their names on a deal and "get back in the game", as one banker at an institution fortunate enough not to be in that position puts it.

Bigger deals

A comparison of this year’s league table for January with last year’s shows another striking change: in January 2009, $14.3 billion of credit was apportioned from just 12 deals by the 20th of the month; in 2008, by comparison the entire month accounted for $8.9 billion from a total of 59 deals. The difficult market environment this year means that only sovereign entities and top-rated corporates can come to market, resulting in fewer but much bigger deals than has been usual in recent years. That will also make the competitive landscape tougher: there are fewer deals available with which to establish a recent track record, and missing out on a given deal will hurt more when most of them are hitting the $2 billion mark and paying out higher fees. Of course, these league tables show only G3 currency bonds – for which read US dollars, given the current reluctance to issue in euro or yen – and, given the high volume of local-currency deals expected this year, there will be room for banks versed in Asia’s local markets to make some headway in them.

One notable absence from this year’s January G3 Asia-Pacific league table is Nomura, which managed third place in January 2008 but now – with the digestion of Lehman Brothers’ Asia-Pacific investment banking business under way – finds itself unable to crack the top 10. It is early days yet, of course, and Lehman was never a top bookrunner of international bond deals in Asia. However, management in Tokyo might well be concerned that the money it has spent on retaining staff from the US bank has not yielded a mandate on one of the big deals launched during a bumper January for debt in the region.