Of all the jobs that have disappeared from the Eurobond market, they don’t come much more archaic-sounding than ‘position clerk’. Martin Egan, global co-head of primary and credit markets at BNP Paribas, knows all about it, however: it was his first job when he joined JPMorgan from school in 1982.
“My job was to sit on the edge of the trading desk, where 12 traders were working day and night, and make sure that at all times I had checked their positions. They would have their own trading blotters, they would produce a buy or sell ticket and I would have to tally those positions. Every day I would agree them with the traders and the settlement office.”
He was working with some formidable names at the time. Role models included head of fixed income David Craig and head of primary markets Len Gayler, as well as Dennis Weatherstone, who started at the firm as a bookkeeper at the age of 16 and eventually rose to be chairman and chief executive – a trajectory that is impossible to imagine happening again any time soon.
Egan left JPMorgan in 1985 to join UBS. At the time, the big Swiss banks were dominant forces in Eurobonds and were in a running battle for market share.
At UBS, Egan was a syndicate trader at first, trading the bank’s new issue positions – which would often be quite large because the business was so competitive. And even when issues were not the lightning-fast ‘bought deals’ pioneered by Michael von Clemm at Credit Suisse First Boston, most deals were effectively bought, with banks competing on the basis of terms.
“Often pricing was so aggressive that you didn’t sell many bonds on the first day – it could be weeks or months before you had sold down completely,” he says.
This was partly a function of the lack of a fixed price reoffer for deals until the late 1980s and a very different fee structure to what would follow.
“You didn’t have one fixed new issue price and you also had your selling concession plus fees, plus the praecipium if you were the lead, which meant that you would own the bonds at a lower price to the others in the deal,” Egan explains.
The new issuance business was in the DNA of all the senior management. They lived and breathed it- Martin Egan
He remembers the big beasts that prowled the market at that time: von Clemm, of course, but also Hans-Joerg Rudloff, also at CSFB, and Armin Mattle at UBS.
“These were super origination bankers who carried their risk envelope in their suit pocket and committed on the front line,” he remembers.
The launch in 1986 of Canada’s $1 billion Eurobond – the Canada Nines – was a defining moment for the Eurobond market.
“The ‘Nines of 96’ were pivotal,” he says. “It was the biggest and most liquid Eurobond ever launched at the time and it would trade almost 24 hours a day, with positions passed from London to New York and then Hong Kong. It was the reference point of the Eurobond market until it matured.”
The same year saw Big Bang transform the London landscape, with UBS acquiring stockbroker Philips & Drew, “which allowed me access to a deep UK sterling franchise,” says Egan.
In 1993, Egan moved to UBS’s biggest rival, CSFB, the firm with the longest legacy in the business. “The new issuance business was in the DNA of all the senior management,” says Egan. “They lived and breathed it.”
By this time instruments were being priced more in line with market clearing levels – engagement between all the parties was broader and deeper. But no sooner had Egan got his feet under the desk than the environment changed fast. The unexpected raising of rates begun by the Federal Reserve in February 1994 would crush the new issue market. New thinking around risk management would be one of the results.
In 2001, Egan joined BNP Paribas. He says it was the first bank that he had worked for with a truly global footprint of corporate clients that used the markets regularly. There was no better time to make that move: the years until the crisis saw the continued rapid expansion of corporate credit activity.
Alongside his day jobs, Egan has always been a strong supporter of market standards. He is a member of the Fixed Income, Currencies and Commodities Markets Standards Board, chairman of the International Capital Market Association (ICMA) primary market practice committee and has also been overall chairman of ICMA.
What is the piece of advice that has lived with him the longest?
“What I learned when I started at JPMorgan and have always tried to follow is that business is all about your client,” he says. “When I started, that was a narrow band, but now there is such a diverse mix of clients that do not all have the same needs, so now more than ever you need the ability to mould your offering to what your client wants.”