Yankee Bond House: Wells Fargo
On the right track 2024 saw a distinct absence of most of the chaos and turmoil that rocked markets in 2023, affording creative and entrepreneurial banks the opportunity to focus on their strengths and develop business lines. For building on a mission that started in 2021 to bolster its Yankee bond presence as well as offering innovative solutions to clients, Wells Fargo is IFR’s Yankee Bond House of the Year.
One can draw a line from the decision made in 2021 by Wells Fargo to focus on corporate and FIG issuers in the Yankee bond space from Western Europe and Asia to the end of 2024 and see how that decision morphed into a successful business reaping more clients and a higher place in the banking pecking order.
“It's an interesting space in the debt capital markets, and there's a lot of players active in this space,” said James Marriott, head of international debt capital markets for EMEA and APAC. “It's really at the back end of 2021 that we started to gear up and make some more significant investments into it.”
Once the commitment was made, it was just a matter of time before tactics and strategies were implemented and gains achieved. There were significant investments into its buildout in 2021 and 2022, establishing new teams like the DCM advisory group and UK risk solutions.
To support those efforts, Wells Fargo built a diverse origination team with backgrounds in consulting, ESG and banking, allowing them to bring a broader set of expertise to clients.
The bank also expanded its services. The DCM advisory team’s ability to provide content, sector expertise and distribution support to clients has been a key driver of the Yankee business growth. This advisory-led approach helped differentiate the bank from the competition.
Over 2022 to 2024, Wells Fargo said it added 36 clients to its Yankee DCM business, 20 corporates and 16 banks. This rapid growth translated into a climb in the league table from 12th place in 2020 to sixth in 2024, a year in which the overall bond market booked US$273bn of Yankee issuance.
“We found a way, notwithstanding the fact that there's a lot of banks which are active in DCM, to grow quite successfully our franchise within it,” Marriott said.
Wells Fargo’s prowess in the financial space in 2024 was a sign that borrowers recognised the US bank’s growing leadership in the Yankee market. Bank clients can afford to be selective when deciding who should underwrite their funding forays, so it was noteworthy that many chose Wells Fargo to run their offerings.
Swedbank, CaixaBank, Rabobank and BBVA were among the European financial borrowers that trusted Wells Fargo to deliver senior non-preferred trades for MREL capital. And its banking clients clearly wanted more of what Wells Fargo had to offer, with the US bank earning repeat business from ANZ, BFCM and NatWest.
By applying innovation to product development, Wells Fargo developed leadership in more subordinated sections of borrowers' capital structures like corporate hybrids and Additional Tier 1 notes, allowing the bank to differentiate itself.
It had a key role in NatWest’s US$750m perpetual non-call 10 transaction in November, one of the few US dollar AT1s in 2024 to achieve a back-end spread below 300bp.
The bank received other important AT1 mandates too. Wells Fargo earned its first active bookrunner role for a US$1bn AT1 trade from Societe Generale, the first time since 2020 the French bank had sold the instrument in a non-call 10 format.
Beyond the financial realm, Wells Fargo was a key player in corporate issuance in the Yankee market. That was nowhere more evident than in the back-to-back hybrid offerings it led for UK oil major BP, which had not issued such transactions since 2020.
“This is a year where the investment that has been put into the team around liability management, around hybrids, around rates, has really come together after a two-year build,” said Paddy Duhig, a managing director in Wells Fargo’s EMEA corporate DCM team. “We're very proud of the fact that this year we've been able to do our first corporate hybrid transactions.”
The bank demonstrated its advisory capabilities when it came to Enel’s sustainability-linked bond sale in June. A prolific issuer in the format, Enel was looking for guidance on whether it made sense to continue selling the instrument amid all the noise around the viability of the ESG bond market in the US.
“I think our conversations in the US were able to direct the client to the fact that would be the correct trade to progress with,” said Marriott.
Wells Fargo did not shy away from regular transactions either. It led senior unsecured offerings for Amcor, British American Tobacco and Philip Morris International while showing its longstanding strength in the power and energy sector with trades from Aker BP, EDF and Eni.
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