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Sitting pretty:
Some things have been the way they are for so long they seem to constitute the natural order. Such is the case with BNP Paribas’ top position in the euro bond market. But far from succumbing to complacency, the bank works tirelessly to ensure this remains the case. BNP Paribas is IFR’s Euro Bond House of the Year.
Libation Management
Coming into the year, Anheuser-Busch InBev was one of several heavily indebted US corporates facing a downgrade to junk, but a six-part bond and liability management exercise managed to flip that script not just for the world’s largest beer maker but for the market as a whole.
AB InBev’s was not the largest US high-grade bond of the year or even the most tightly priced, but it set a path for big Triple B names whose high leverage was weighing on market sentiment.
The brewer caught the market by surprise with a US$15.5bn bond...
New frontiers
Italian utility Enel took a chance in the Yankee market and ultimately prevailed when it issued the first ever sustainable development goals-linked bond, offering an alternative to green bonds and opening the way for a broader set of borrowers to tap the burgeoning ESG space.
In a Yankee market that was overshadowed somewhat by a surge of issuance in euros, Enel’s bond stood out for its innovation in an asset class that saw a surge in interest among US dollar investors and borrowers in 2019.
Stepping away from conventional green bond...
Hats off to Hutch
In a year characterised by low rates, it was difficult to discern a compelling narrative on many deals beyond issuers opportunistically taking advantage of attractive funding levels.
But a debut deal by CK Hutchison Group Telecom Holdings in October was different. Yes, the low-rates environment was an important element. But this was a tale of corporate financing with a clever twist.
CK Hutchison Group Telecom Holdings was a new name to international capital markets though there was a familiar feel about it as the company is...
Global competition
With Japanese investors still crying out for higher-yielding assets in 2019, one bank delivered more cross-border issuance than any of its peers. For its leading role in all the key themes driving the yen market, Mizuho Securities retains its title as IFR’s Yen Bond House of the Year.
Welcome to Japan!
Berkshire Hathaway's stunning ¥430bn (US$3.94bn) six-tranche Global stood out as the biggest international yen offering for almost a quarter of a century. The deal showed the kind of size the yen market can deliver for an overseas borrower, putting Japan firmly on the radar as a source of funding for the world’s biggest companies at a time when Japanese investors are crying out for assets that offer positive yields.
Even bankers away from the deal said it had a positive impact for the wider market.
"This deal proved the depth...
Top of the tree
When you are viewed as one of the most relevant players in your home market, the temptation might be to rest on your laurels. Barclays consciously avoided any such complacency, however, and demonstrated that progress is possible, even from a position of strength. Barclays is IFR’s Sterling Bond House of the Year.
Wind in its sales
Danish offshore renewable power company Orsted brought the winds of change to the sterling market in May when it priced a £900m triple-tranche bond that was the largest ever green offering in the currency.
Orsted not only pushed the boundaries of the sterling green market, but also brought some very rare index-linked supply.
The transaction comprised £350m eight-year and £300m 14-year nominal tranches and a £250m 15-year CPI-linked bond.
That 15-year was the first true corporate widely syndicated CPI-linked transaction...
Back on top
Firmly back at the top of the pile to reclaim its throne after a year of unchallenged leadership across all bond classes, Credit Suisse also rose to the challenges of a deeply negative interest rate environment. The bank is IFR's Swiss Franc Bond House of the Year.
Green shoots
In a big year for green issuance in the Swiss market, Swiss Life brought the first bond in the format from an insurance company in Swiss francs.
Although Swiss Life has been reporting on its ESG and corporate responsibility activities since March 2016, it was only this year that it established a full green bond framework.
Ahead of the deal, the company decided to forego hosting a roadshow, although it did release a net roadshow.
The bond was mandated on November 6 and printed the following day. Books opened for an envisaged SFr500m...
Going long
In a groundbreaking trade for the Australian dollar market, Verizon provided the first public 20-year corporate bond in the currency as part of a A$1.25bn (US$855m) three-part benchmark offering. Underpinned by Taiwanese accounts, the emergence of the long-dated leg addressed a market clamouring for yield.
Far from being a small, bespoke part of the transaction, the 20-year was the largest of the three tranches at A$500m, driven by appetite from coupon-focused life insurers in Taiwan.
“The unique 20-year note opened up a new way for...
The yanks are coming
In a flood of record-breaking reverse Yankee issuance this year, Barclays demonstrated a dominance in leading US domiciled companies in euros while holding its own in domestic US dollar issuance. For its leadership, Barclays is IFR’s US Issuers Bond House of the Year.
Pulling the global levers
While Europe's borrowers naturally gravitate towards their domestic currency, the best advisers are able to sell bonds for their clients across multiple jurisdictions to take advantage of the best funding opportunities and to achieve genuine investor diversification. No bank was better at doing this in 2019 than HSBC, which is IFR's Western Europe Issuers Bond House and Niche-Market Bond House of the Year.
Quick thinking
In addition to leading some of the largest bond deals of the year, Bank of America excelled at recognising opportunistic times in the market and navigating its clients through those periods. It is IFR’s North America Investment-Grade Corporate Bond House of the Year.
Thinking big
The European investment-grade bond market in 2019 was an unusual environment to execute in. This gave issuers opportunities to explore funding in ways they have never been able to before. For its willingness to test boundaries, its expertise across currencies and its ability to achieve record-breaking outcomes, Barclays is IFR's Europe Investment-Grade Corporate Bond House of the Year.
Big, bold debut
Oil and gas group Wintershall Dea set a record in September when it priced the largest ever bond offering from a debut corporate borrower.
To land the €4bn four-part bond, leads Barclays, Bank of America, JP Morgan and Societe Generale had to navigate volatility in oil prices and a surge in global geopolitical tensions.
Wintershall Dea was formed in May from the combination of BASF's oil and gas unit Wintershall with Dea, a vehicle of Russian billionaire Mikhail Fridman.
The company's offering came after that merger and ahead of...
Regional road trip
In a year where FIG issuance was down, Morgan Stanley adapted to broaden its efforts among regional banks and insurance companies while also emerging as one of the leaders in the transition away from Libor. For these efforts, Morgan Stanley is IFR’s North America Financial Bond House of the Year.
Preferred way
The transition away from Libor has been anything but smooth, but BB&T helped solidify a sliver of stability in the preferred market in July when it became the first regional bank to price a perpetual note with a fixed-reset structure.
The big six US banks are largely promoting the Federal Reserve’s new benchmark – the secured overnight financing rate – but they have taken different views over complicated structural details such as suspension periods, look backs, compounding interest rates, backward-looking term rates and fallback...
The right notes
For getting a tune out of every asset class and major currency in a year of troubled mood music, HSBC is IFR's Europe Financial Bond House of the Year.
Out of the park
An inaugural Additional Tier 1 issue is a significant undertaking for any bank. Making a first impression in the riskiest and most costly end of the capital structure is never straightforward.
For Commerzbank, the feat was even more complicated given merger talks with larger rival Deutsche Bank. Still, its US$1bn Reg S-only perp non-call 2025 AT1 debut generated frenzied demand, surpassing expectations and changing perceptions of the bank.
Commerzbank had long been conspicuous by its absence in the AT1 market. It began preparations...
At the top table
The stakes were high for the Asian Infrastructure Development Bank as it approached its bond market debut in May.
The US$2.5bn five-year transaction was the culmination of more than three years of preparation and investor work for the freshly created multilateral development bank that will seek to fill an estimated US$26trn infrastructure funding gap. It was also a test of the structure of a bank in which China holds a 30.9% stake.
Positioning the name on a par with its peer group was therefore key for AIIB, the first MDB...
Old school
For consistent leadership in a challenged euro market, a position at or near the top of the league tables and for combining an international focus with an old school touch, Landesbank Baden-Wuerttemberg is IFR's Covered Bond House of the Year.
How low can you go?
While many issuers in the covered bond market sought to avoid negative yields by printing with longer tenors, Berlin Hyp adopted the opposite approach selling a short-dated deal that achieved the lowest ever yield in the sector. The landmark €1bn 0.01% three-year note, issued in August, priced at a yield of minus 0.588%, which was through the European Central Bank's deposit rate.
"The market environment was a strange one," said Bodo Winkler, head of funding and investor relations at Berlin Hyp. "Every day you looked at the...
Hitting its stride
In a year that saw loan financing lose its lustre and bonds come back into vogue, one bank stood out for bringing the right deals at the right time and boasting a string of successes against an uncertain backdrop. Morgan Stanley is IFR’s North America High-Yield Bond House of the Year.
Bigger and better
2019’s largest US high-yield bond – a US$4.875bn two-parter that helped broadcaster Sinclair fund its US$8.2bn acquisition of sports broadcasting rights from Walt Disney – created a whole new credit for investors on the hunt for higher-quality assets amid concerns about an economic downturn.
The bond offering was part of a financing package that also comprised US$1.385bn of cash, a US$3.3bn term loan, a US$650m revolver, as well as US$1.025bn of preferred stock. JP Morgan was left lead on the bond deal.
All this was put towards...
A year of extremes
In a year when the very notion of high-yield bonds came under scrutiny, given some of the levels at which issuers were able to raise funds, there were still several other hairier stories that required careful handling. For its ability to manage both extremes, Goldman Sachs is IFR's Europe High-Yield Bond House.
Bond, high-yield bond
British film studio Pinewood, where 23 out of 25 of the James Bond films have been shot, leant on its new property rental credentials in order to transform itself as a credit.
The outcome was a £550m senior secured six-year non-call two bond in September that was the biggest high-yield offering in sterling in 2019.
The deal came off the back of two long-term rental contracts with Disney and Netflix of 12 and 10 years, respectively.
Pinewood used those two leases as the springboard for a new, punchier approach to its debt model...
Trade tensions between Beijing and Washington are threatening to spill over into capital markets, with some policymakers even calling for a ban on Chinese listings in the US. Just how far can it go?
As Japanese fund managers broaden their search for yield, international issuers are finding they no longer need to spend the time and money to prepare local language documentation. Old habits die hard, however, and lengthy marketing periods are still standard practice.
Primary bond markets have proved a testing ground for the transition from inter-bank offered rates to new alternative risk-free rates. But the abundance of issuance referenced to Sonia and SOFR should not obscure the unfortunate fact that most of the proceeds have immediately been swapped back to Libor by the borrowers.
Is the traditional green bond market threatened by the emergence of transition bonds, SDG bonds, general-purpose bonds with environmental targets and other debt classes intended to encompass wider environmental goals? Does it matter if new market segments are more effective at reducing the emission of greenhouse gases?
As another painful year for Europe’s banks draws to a close, the need for big bank consolidation has never been greater.
