US Bond House: Morgan Stanley
Blockbuster year Lower rates and sanguine economic data were catalysts for a boom in US bond issuance in 2024, leading issuers across the credit spectrum to try to shoot for the moon. For shepherding the year’s most creative and complex deals to market, Morgan Stanley is IFR’s US Bond House of the Year.
There was no scarcity of deals in 2024. On the back of rate cuts and the encouraging economic data that fuelled them, issuers raised almost unprecedented amounts of capital in the US bond market. Borrowers were keen to push out maturities and pursue event-driven offerings that were unthinkable in a higher-rate environment.
Overall investment-grade corporate bond issuance in the US rose 27.6% to US$1.57trn in 2024 versus the year before, according to LSEG data. This was the second highest on record, behind only the US$1.85trn in 2020. And while high-yield volumes did not break any records, issuance was up 67.5% to US$283.7bn.
Morgan Stanley stood out as an underwriter amid this swirl of issuance. Borrowers chose the bank more often than not when they needed to achieve the extraordinary – from complex M&A financings to first-time issuance.
These strengths are among the reasons why Morgan Stanley was able to maintain its position near the top of the bond league tables for yet another year. In LSEG’s US investment-grade table, Morgan Stanley held the fourth spot for a second year in a row. It was ranked fifth on the table for US high-yield corporate bonds, one place above its 2023 result.
For a prime example of the bank’s prowess across the credit spectrum look no further than its leadership in high-grade debt IPOs. The two most high-profile first-time bond offerings in the investment-grade market came from Netflix and Uber Technologies. Morgan Stanley was lead-left on both.
“I think this is a consequence of, number one, our technology investment banking franchise, and number two, the fact that we do a really nice job making sure that we shepherd these issuers through their scaling and growth,” said Michelle Wang, co-head of investment-grade corporate coverage. “They went from high yield to IG and, you know, we just stay very close to them.”
Indeed, when Netflix and Uber last came to the bond markets as high-yield issuers in 2020 and 2021, respectively, Morgan Stanley was also lead-left.
It was no doubt that long-term attention to its clients that helped the bank win active bookrunner roles on several other debt IPOs, including deals from AGCO, Solventum, Atlassian, Syensqo and AppLovin.
Morgan Stanley also did not shy away from taking on top billing on reputation-making financings backing mergers and acquisitions. When AbbVie came to market in February to raise capital for acquisitions of drug developers Cerevel and ImmunoGen, it selected the bank to be lead-left on the US$15bn seven-part bond, which turned out to be the year’s biggest offering. It did not hurt that Morgan Stanley was also buyside adviser on both purchases.
While Morgan Stanley’s considerable M&A franchise does help win top roles on event-driven financings, it was not the only reason the bank did well. When BlackRock twice came to market to finance two acquisitions (GIP and Preqin), it tapped Morgan Stanley for lead-left roles, despite the fact that the bank advised on neither of the purchases.
“[BlackRock] is obviously the most sophisticated, largest investor in fixed-income markets, and they came to us both times to lead what were their most important deals,” said Teddy Hodgson, global co-head of investment-grade debt capital markets. “I think that tells a great story.”
What's more, in a year when leveraged buyout volumes remained unexpectedly depressed, Morgan Stanley was able to hold steady in the high-yield bond market. It had leading roles on deals for Bombardier, Howden Group, Restaurant Brands, Royal Caribbean Cruises, TransDigm and Univision, among others.
It also dominated lucrative dealmaking in the high-yield insurance sector, including lead-left spots on US$1.75bn of bonds for The Ardonagh Group in February and on US$1.7bn of notes backing a dividend for Alliant Insurance in September.
Perhaps its most interesting high-yield trade was related to the US$15.5bn buyout of Truist Financial’s insurance business by Stone Point Capital and Clayton Dubilier & Rice. Morgan Stanley was sellside adviser on the LBO and led the March bond offering that helped fund the purchase. The sale of bonds was upsized to US$3bn and became the largest single buyout bond of 2024.
“The Truist Insurance LBO for Stone Point and CD&R to us was really the case study that set the foundation for what was to come in the rest of the year,” said Cody Gunsch, head of North America leveraged finance syndicate.
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