There must be few people with long careers in international debt capital markets who do not know Paul Tregidgo. Having worked at Credit Suisse and its various affiliates for a total of 32 years, he was a stalwart of the bond world and became renowned in emerging market and sovereign, supranational and agency circles.
He didn’t actually start in banking. First he was an asset finance lawyer, working from 1978 in London and Hong Kong. But when he quit Hong Kong in 1985 to return to Europe, he interviewed with a group of investment banks, keen to dive into the rapidly growing Eurobond market.
He ended up in bond transaction management at 22 Bishopsgate, where the likes of Michael von Clemm, Hans-Joerg Rudloff and Adrian Cooper were building the Eurobond franchise of Credit Suisse First Boston.
“Why CSFB? Because it was the Eurobond powerhouse and Eurobonds were at the centre of the international financial mechanism,” says Tregidgo. “You wanted to go where the action was.”
And he certainly got action – within a day and a half he was on a plane to New Zealand to execute a bond for Petrocorp. It was an age of intense competition – and excitement.
“I remember walking into the office with its huge open plan floor and glass offices, which were unusual then, and then at the hub of everything was the syndicate desk, the centre of all power and magic,” he says.
In 1987, an opportunity came his way that would shape the rest of his career: he went to New York to join CSFB’s operation there. He was supposed to be going for two years: he still lives there now.
He has worked at all the Credit Suisse permutations: First Boston, CS First Boston, CSFB and finally Credit Suisse. When he first arrived, he was doing US domestic bond issue execution but moved to origination after the 1987 market crash, covering frequent borrowers in the mid-west.
His next big break came in 1994, when he formally became head of Latin American DCM, taking the firm to a top-three market-share position – and the complex Brady Bond exchanges still stand out for him from this era.
It was a tough role – the Tequila Crisis in late 1994 was a swift introduction to the realities of emerging markets banking – but it didn’t put him off the asset class. In 1999, he became the global head of emerging markets debt capital markets, before running all of DCM from 2003. In 2006, he was appointed vice-chairman of DCM.
He reflects on his career with a sense of luck at having participated in the development of so many parts of the capital markets environment and, like others of his generation, notes that it was typically the way in which innovations ended up moving further and further from their origins that caused problems that were not envisaged at their birth.
It was all about risk, because that’s what you were taking. Banks had a flexibility to manage risk that has changed dramatically- Paul Tregidgo
“I was very fortunate to witness new business lines and asset classes flourish in a way they had not done before,” he says. “Derivatives, emerging markets, high yield, LBOs, securitizations – to name just a few.
“While they were creative or even ingenious, they all seemed to flow quite naturally from evolving market appetites and dynamics. But we also saw that when some of the financial engineering around them was unconstrained or became overly complex, the seeds of trouble and crisis were sown.”
For Tregidgo, it is the approach to risk that is perhaps the biggest change witnessed in his career.
“I do not remember much talk of bookbuilding in the bond market in the early days – it wasn’t a term that was bandied around much away from convertibles and equity,” he says. “It was all about risk, because that’s what you were taking. Banks had a flexibility to manage risk that has changed dramatically.”
For the better
Has that change harmed the ability of the capital markets to fulfil their function for issuers and investors?
In one way, Tregidgo argues, things may have altered for the better: in the development of market practices and deal structures that are not hostage to transient or idiosyncratic appetite for risk.
“But another way of looking at it is in terms of cost to the issuer,” he adds. “Did issuers believe that unbridled competition on risk appetite was a good way to keep costs down? Well, maybe there was a time, but we have seen consequences for market structure that definitely challenge that.”
Tregidgo might have finally left Credit Suisse, but he is as busy as ever. He spends much of his time now promoting financial inclusion as chair of the advisory council at the Center for Financial Inclusion at Accion and as senior adviser to the Blue Haven Initiative.