Bank for Governments: Rothschild & Co
Breaking new ground For its pioneering role in developing new structures to help war-torn and financially distressed countries in tricky situations – from Ukraine and Ivory Coast to the Bahamas – get back onto a sounder footing, Rothschild & Co is IFR’s Bank for Governments.
As a trusted adviser to governments for more than 200 years, you’d be forgiven for thinking it might be difficult to come up with something that hasn’t been done before. Rothschild, however, is known for its innovation – the firm played a leading role in pioneering privatisation during the 1980s and helped the eurozone navigate uncharted waters during its crisis years – and in 2024 the firm once again led the way, with one groundbreaking transaction after another.
The year will go down as a record one for the firm, having notched up more than 40 disclosable transactions for government clients raising more than US$100bn between them – and countless other confidential assignments.
Several of those deals have broken the mould, opening up new options and structures to capitals across the world, with Rothschild frequently playing an essential role in the conception, gestation and birth of these new financing formats.
Such vital work has assisted governments across the globe, reaping benefits for hundreds of millions of citizens – often in countries where every penny counts. And it’s often been done in the most difficult of circumstances – including countries experiencing war, navigating severe climate challenges or financial distress. Its focus, global presence and unrivalled dealflow has put it at the centre of the dialogue between international institutions, opinion makers and investors.
“When it comes to countries which are in a soul-searching exercise and where access to private markets is a bit expensive or a bit uncertain, then they call on us and we try to explore avenues other than the plain vanilla options,” said Eric Lalo, head of sovereign advisory at Rothschild. “This is what we have done on several occasions in several situations. We've been really, really proud to have launched some very innovative products and solutions and instruments.”
Return trip
The year started with the firm helping reestablish market access for sub-Saharan Africa after more than two years without a single sovereign deal. Ivory Coast reopened the market in January with the sale of US$2.6bn of bonds – just one leg of a four-part transaction that also included a tender offer, loan prepayment and cross-currency swap.
Rothschild was sole financial adviser, with the deal marking its 18th transaction for the country in the past decade. Later in the year, the firm was also by Ivory Coast’s side as it became the first nation to carry out a €400m debt-for-development swap using a €500m guarantee from the World Bank. The savings are earmarked for education projects.
Shortly after Ivory Coast's deal in January, Rothschild advised on a debut US dollar transaction from Benin, raising US$750m – which, together with a concurrent tender offer and cross-currency swap, was able to finance most of the country’s public expenditure in 2024.
Rothschild has been working closely with the country for some time and helped it gain an upgrade in its credit outlook last year – a critical step towards making the deal possible. After the deal, Benin had its rating upgraded.
“This year is a great testimony to our business model,” said Stephane Charbit, a sovereign advisory banker at the firm. “Many of these transactions date back one, or two, or three, or four years – to before the pandemic even started. It proves that the right business model for a bank is to advise governments – to advise on the long term – and to have the three pillars that we see as very complementary: policy, financing and restructuring.”
The firm has for many years been leading the way with a blended finance approach for countries that may struggle to finance themselves at reasonable levels in public markets – by tapping into help provided by multilateral development banks. Rothschild worked closely with the World Bank ahead of the launch of a new debt guarantee facility in July. Benin, advised by Rothschild, was the first country to take advantage of it, signing a €200m loan facility.
Restructuring
Rothschild has also extended its track record of innovation to the restructuring world, where it has been a critical player in many of the year’s big sovereign deals. It was sole financial adviser to Ukraine in a US$20.5bn debt restructuring for the war-torn country. While the deal launched in July is not a definitive solution for Kyiv, it nonetheless helped create some breathing space – and did so in record time, with the deal executed in just four months, one of the shortest timeframes ever for a sovereign restructuring.
“I think it's actually a very good example of where the connectivity we have as a firm and as a team with the official sector is extremely helpful,” said Charbit – particularly with the International Monetary Fund. “The fact that they can trust us, and have seen us in many different situations, really helped facilitate a great responsiveness. Even in the middle of summer, we had three to four touchpoints per day. We anticipated a number of methodological points that were crucial to the deal.”
Rothschild’s longstanding relationships across the official sector were also crucial in the case of Sri Lanka, where the firm first suggested a new macro-linked structure for its new bonds that proved critical to getting the country’s US$12.6bn sovereign debt restructuring over the line. While the firm was officially advising creditors – and not the government – its input in developing the novel format was central to unlocking a two-year long deadlock and helping Sri Lanka access additional official support.
The new bonds will see future principal and coupon payments vary depending on how the economy actually performs compared to the IMF’s baseline projections, which could well be a vital tool in future sovereign restructurings. Crucially for investors, it is specifically designed to be fully index eligible – helping to address drawbacks of so-called value-recovery instruments used in past restructurings.
“Sri Lanka was the first case and it was very, very complex because of the probabilistic approach and modelling,” said Lalo. “We had endless discussions, but I really hope that it will be the prelude to more resilient financial types of instruments for sovereigns in the future.”
Rothschild also advised international creditors in Ghana’s US$13.1bn sovereign debt restructuring, which was negotiated using the G20’s common framework – only the third ever. Having advised on one of the previous two deals, the firm was ideally placed.
It also advised the Republic of Congo on a US$2.5bn domestic debt exchange, which boasted the voluntary participation of a dozen regional banks, buying the government crucial fiscal breathing space.
Optimisation
Much of the year was also spent on the bread-and-butter work of helping sovereigns to better optimise their balance sheets – either directly or through work with state-owned enterprises and sovereign wealth funds. In Morocco, it worked with phosphate mining firm OCP – the largest state-owned entity – to secure €190m of financing for a new university campus and is working with state-owned railway operator ONCF on a US$9bn investment programme ahead of the 2030 FIFA World Cup.
In the United Arab Emirates, Rothschild was sole financial adviser to ADQ on its inaugural Eurobond offering. In Angola, the firm has been financial adviser to national oil company Sonangol in preparation for an IPO, which is expected in 2026 or 2027. It has also continued to support several governments and SOEs in the structuring and execution of landmark credit-enhanced financing transactions – including Benin.
As well as helping oil producers, the firm has been assisting sovereigns to meet climate change commitments. For example, it helped structure a debt-for-nature swap, in conjunction with the Inter-American Development Bank and others, for the Bahamas, generating US$124m in funding for marine conservation efforts over the next 15 years. As part of the transaction, the Caribbean state raised a US$300m credit-enhanced loan that also tapped private sector support.
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