Restructuring Adviser: Houlihan Lokey

In uncertain and changing markets, it requires clarity of vision to take account of events, and even predict and map them. But this needs to be allied to an ability to act – anytime, anywhere – and few can combine all these facets. Deutsche Bank proved yet again in 2013 that it can offer the full global package and is IFR’s Bond House of the Year. Deutsche Bank’s mantra is “Passion to Perform”, and its credentials throughout the IFR Awards period showed it has not yet tired of doing so, adding market share across almost all product lines in spite of already occupying a top-tier position. Complacency, it appears, is not a word that features in the bank’s dictionary. It raised more debt for more issuers from more countries than ever before, acting for clients in some 70 jurisdictions across 24 currencies and hitting pockets from high-grade to high-yield and everything else in between. “While some of our competitors concentrated on their traditional strengths, we managed to demonstrate widespread progress across the breadth of the various markets,” said Miles Millard, head of capital markets and treasury solutions. And it was this breadth that made for a truly impressive year that saw the bank extend its reach to virtually every corner of the bond world. “We spotted the trends and the pitfalls and were able to navigate our way through them,” said Millard. To do this, and more importantly advise clients how to deal with whatever particular situation arises, requires commitment on a global scale, said Chris Whitman, head of global risk syndicate. “We are deeply embedded in the local markets; we are not just ‘suitcase bankers’,” he said, adding that Deutsche had not risked its franchise by the “juniorisation” of staff.Euro strength The euro market has always been a traditional area of strength for the bank, and so it remained throughout 2013. In the corporate arena, Deutsche was at the forefront of trends such as unrated mid-cap issuers coming to market and longer-dated issuance, as exemplified by Hera’s 15-year, a deal that played to investor appetite for yield by having both a long tenor and coming from a peripheral issuer. A myriad Deutsche-led established European credits provided regular fare throughout the year, although it also acted for a number of US and Asian issuers drawn to the currency by competitive funding rates as the US dollar/euro basis swap moved as a result of Fed tapering fears and concerns regarding the country’s debt ceiling. This dollar nervousness particularly affected markets that historically rely heavily on the currency, such as high-yield and emerging markets. But here, too, Deutsche provided leadership and proved the doubters wrong, many having predicted an enforced early close to the funding year for such issuers, only to see the market bounce back. Hakan Wohlin, the bank’s head of global debt origination, described the events as “the rise, fall and rise of EM”, and its leadership in both that sector and high-yield was notable, leading to Deutsche to win IFR’s Global and European High-Yield and EMEA Emerging Markets Awards. Back in euros, another major theme was the growth of the corporate hybrid market, as investors searched for yield and issuers looked to lock in tight funding costs. Deutsche was again highly active, lead-managing notable deals, many of which also included US dollar or sterling components, further demonstrating its cross-currency prowess. But while the product became more mainstream, there was still room for differentiation, one example being KPN’s multi-tranche deal, where the amount raised allowed it to limit the size of a rights issue. Another was DONG’s return, which was accompanied by a buyback of existing paper that had lost its S&P equity credit – liability management once again being an important facet of Deutsche’s franchise, and not just in corporates but around the world and across currencies in sovereigns (for example, Greece, Mexico and Uruguay) and financials (RBS,

Goldman Sachs dominated equity capital markets this year. Whether sliced by region, product, risk appetite or sector, the US bank emerged in the top slot across the board. It was the bank of choice for corporates, sponsors and governments alike. In a first ever global sweep, Goldman Sachs is IFR’s Equity House of the Year, Asia-Pacific Equity House, EMEA Equity House and Americas Equity House of the Year. Goldman Sachs’ haul of every equity house award IFR has to offer in 2013 is unprecedented – and entirely deserved. It added to its strengths from the previous year, and filled in the gaps where it had fallen short. Take European IPOs: Goldman went from completing just one IPO in the previous awards period to 19 in the 12 months to November 15 2013. And this was not a result of the bank being tagged on to the end of syndicates at late stages; it held the most global co-ordinator slots on IPOs as well. In fact, it is difficult to find any point of weakness among Goldman’s deal tombstones this year. Without any manipulation the bank has a US$18.8bn lead over its next nearest rival, JP Morgan; this equates to 27% of the rival bank’s league table credit. The bank is top in the US, EMEA and Asia-Pacific. When it comes to jumbo issuance of US$1bn and up – whether split by IPOs or blocks – it is also number one. And no other firm continues to make ECM such a top priority. “We are as proud of our performance in ECM this year as we have ever been,” said Stephen Pierce, global head of ECM. “We feel we have been able to do something special for our clients, and that has manifested in the performance across all of the regions – which is very consistent at number one so far this year. We are dominant in all of the regions that matter,” he said. “Not only do we feel dominant in each of the component regions but also in the sectors that matter. And if you look at just the biggest, most high-profile deals in each of the regions, we have had well more than our expected market share in each of those.” Goldman’s presence on the largest deals is even more impressive considering the geographical and sectoral spread that involved. Many foreign banks have wavered in their commitment to Japan, for example, not least because of years of disappointing issuance and subsequently poor revenues. Yet in 2013 Japan hosted both the largest deal globally – the ¥747bn (US$7.8bn) follow-on in Japan Tobacco – and the second-largest IPO, a US$4bn deal for Suntory Beverage and Food. Goldman was joint global co-ordinator with Daiwa on the JT sale, in which the government cut its stake to 40% at a tight 2% discount. And it was joint bookrunner on Suntory, which is IFR’s Asia-Pacific Equity Issue of the Year. In fact, the bank dominated jumbos across the globe. It retained top slots on the transactions that marked the US government’s US$7.6bn exit from AIG as well as AIG’s US$6.5bn sale of AIA. Other banks have come and gone during the selldown processes, but Goldman has been an active lead on every deal. Add in bookrunner roles on telecoms firm KPN’s €3bn rights issue, the Swedish government’s SKr21.6bn (US$3.375bn) sale in bank Nordea, the US$5.5bn rights issue by China Merchants Bank and the US$3.6bn IPO by PICC, and Goldman was a bookrunner on eight of the top 10 issues globally. “Everyone knows the goal – number one in whatever you are focused on,” said Pierce.Winning at home Perhaps Goldman’s biggest challenge in 2013 was at home, where it had not taken top spot in six years. After last year’s fourth-place finish in the US, the bank was ubiquitous, whether on block trades or marketed offerings of new issues. And a changed attitude towards risk was required to regain first place in the US. “Certain firms have made using their balance sheet and risk trades a major part of their strategy,” said Pierce. “We are not going to do that, but we changed the way we do block trades, the way we target them, and focused on … where [capital commitment] would matter most.” No

For leading complex event-driven deals and driving the development of a truly global credit market by championing the cross-border migration of European and Asian issuers to the US leveraged loan market, Deutsche Bank is IFR’s Loan House and Asia-Pacific Loan House of the Year. It was not a standout year for M&A financing, but Deutsche Bank was a force to be reckoned with in acquisition and structured finance. The bank showed its ability to commit capital and leadership by sole-underwriting deals, by being willing to handle transactions for companies with difficult credit stories – and by helping drive development of a truly global credit market. Indeed, the German powerhouse led from the front in all market segments and in every region and helped to champion cross-regional lending and a more global investor base by introducing foreign companies to the US institutional loan market. “When it comes to ‘what is your ability to conduct business where your clients need you around the world’, we stand above and beyond anyone else in our ability to do that – and have proven it time and again, whatever the situation,” said Rob Danziger, head of investment-grade loan syndications, Americas. “Whether it is a general liquidity facility in South-East Asia, whether it is a first-time transaction in new markets, whether it is a cross-border M&A – we tend to drive the process.” Success came in the investment-grade market by concentrating capital on the bank’s closest clients and increasing exposure to those firms. In the leveraged space, Deutsche’s transatlantic sales and trading platforms in loans and high-yield bonds provided unmatched market intelligence as well as close relations with investors and sponsors, giving the bank the ability to price and distribute risk efficiently. An integrated P&L book for loans and bonds – in a better year for revenue generally – helped Deutsche book more volume as it moved between different markets. “We’re not worried if it’s Europe or the US, or a loan or a bond. We’re focused on what’s best for the client, not Deutsche Bank,” said Nick Jansa, head of EMEA leveraged DCM. That kind of fluid view about where to place deals allowed Deutsche to lead the way when it came to taking a global view of credit, particularly in leveraged lending, as the bank helped match borrowers with investors regardless of their physical location. European companies including ceramics components maker CeramTec and chemicals manufacturer Oxea tapped the US institutional market for cheaper, covenant-lite US dollar loans. Australian companies such as Alinta Energy and Nine Entertainment followed suit with deals that spanned markets, currencies and debt instruments. And Asian companies raised euro deals as well in 2013 as the markets began to converge, with US investors looking abroad for fresh supply and larger fund managers starting to market themselves as global funds – and Deutsche helping to set the pace.Winning at home… Deutsche was also dominant in its EMEA home market, even though increased competition meant that the bank’s well-established team had to work harder to win mandates, especially in leverage. The bank was sole underwriter on M&A debutante Altana’s €375m bridge loan as well as M&A regular SAP, as the German software maker took a €1bn loan to buy Switzerland-based Hybris. The underwritten £2.56bn loan backing Schneider Electric’s acquisition of Invensys was another win. Underwriting big primary deals and multicurrency loans helped grow market share and increase volume in European leverage for Deutsche, to a 11.5% market share during the review period, from 2.76% in the 12 months beforehand. The bank was also active in introducing covenant-lite and covenant-loose loans to European companies. Deutsche was initially the sole underwriter of the €1.45bn covenant-loose, senior leveraged loan for German metering company ISTA, the largest purely euro-denominated sponsored buyout loan this year,

In its second full year following a major reorganisation, Credit Suisse achieved a stellar 2013, proving itself to be one of the most savvy and sophisticated structurers. For combining crucial roles in landmark US transactions, and important roles in Europe, Credit Suisse is IFR’s Structured Finance House and Americas Structured Finance House of the Year. In 2013 Credit Suisse boasted groundbreaking inaugural structuring mandates and dominated the most challenging and innovative deals. The bank created two brand new asset classes in the US that will have deep repercussions for their respective industries: GSE risk-sharing MBS (Freddie Mac’s first STACR deal) and solar ABS (SolarCity). The importance of these two milestones cannot be overstated. It also resurrected European CLOs, one of the come-back stories of the year. In ABS, the bank continued to build on the residual-sale market it developed in 2011 (via a nuanced auto deal for Huntington Bancshares), and now holds 100% market share for structuring balance-sheet management advisory and regulatory capital transactions for regional banks such as Fifth Third Bank (first issuance since 2008), California Republic Bank (repeat sole bookrunner assignment), M&T Bank (inaugural deal) and issuers such as Hyundai (first residual structured for a new-issue captive). “They have been the best securitisation bankers I have ever worked with,” said Lee Whatcott, the director of capital markets at California Republic Bank, who has been in the securitisation business since the 1980s. With Credit Suisse’s guidance and expertise, the bank, a newcomer to the auto-finance industry, achieved regulatory capital relief through its first-ever off-balance-sheet auto ABS. Its first deal surfaced in late 2012, followed by two more in June and November 2013. The latter transaction garnered a Triple A rating from DBRS – quite a feat for an issuer less than three years into its auto finance programme. “Credit Suisse helped us to achieve a Triple A rating earlier than any other new auto issuer, I believe,” Whatcott said. Such a desire to solve client problems lies at the heart of what the bank tried to achieve in 2013. The plan is to “solve client problems, leveraging securitisation technology”, said group head Jay Kim.Building a new platform The Credit Suisse team fought hard since 2011 for its current reputation as a bank that takes on the most difficult deals. Kim defected from Barclays in March of that year – where he was co-head in charge of consumer ABS – and brought along at least 10 senior bankers, including Mike Dryden, an RMBS expert experienced in government advisory. Dryden’s pairing up with the bank’s long-time RMBS guru Peter Sack made Credit Suisse an unstoppable force in resi mortgages, allowing it to complete STACR, participate in all servicer-advance ABS deals issued in 2013, and achieve number one status on all mortgage sector deals, including re-performing, non-performing, new-origination jumbo prime, and re-securitisations. And despite extending significantly less credit relative to its peer group, Credit Suisse is the structuring agent of choice in ABS, having structured a market-leading 27 deals and serving as bookrunner on the most ABS transactions in 2013. Kim’s team revitalised Credit Suisse’s stature in securitisation, steadily ascending league tables over the past two years. Excluding self-funded deals and CLOs, Credit Suisse had climbed to a top-four position as of mid-November. Even the successful first ever single family rental bond from Blackstone’s Invitation Homes division – on which Credit Suisse was co-lead – used the bank’s innovative master trust structure template used in the STORE Capital 2013-1 and 2013-2 transactions. Credit Suisse created and developed that specifically for triple-net leases on CRE properties. The SolarCity deal, meanwhile, is backed by revenues generated by the company’s photovoltaic solar systems and contractual host customer payments acros

The seemingly unending overhaul of banks’ derivatives businesses in response to a changing regulatory regime left the door wide open for those that were first-movers in post-crisis recovery. For defying its critics to finally surge into the top tier across regions and asset classes with a model built to embrace the new regime, Citigroup is IFR’s Derivatives House and Credit Derivatives House of the Year. Regulatory intervention took a heavy toll on derivatives businesses in 2013 as the Dodd-Frank Act took effect, pushing over-the-counter swaps into central clearing and towards electronic execution, while tighter capital and leverage rules further depressed margins. Nowhere was the squeeze felt more acutely than in fixed-income trading where industry revenues plummeted. But while many ran for the exits with scathing cuts across credit and rates, Citigroup seized the opportunity to stake its claim on a top-tier derivatives seat. At US$10.8bn, the bank’s fixed-income markets revenues were down 5% over the first three-quarters versus the previous year, but with many of its rivals down 25%, the US house was a clear outperformer. With its global reach, sound balance sheet, cross-asset capabilities and a business model tailored to the new regulatory regime, Citigroup was the house to watch in 2013 and finally made the seamless transition from momentum player to global derivatives leader. “When people used to think of derivatives leadership, they traditionally thought of Barclays, JP Morgan or Deutsche Bank and probably didn’t think of Citigroup, but that has radically changed,” said Andres Recoder, head of EMEA markets at the bank. “There have been some massive changes in the competitive landscape and we have ‘derivatised’ a lot of our senior management. There has always been strong derivatives DNA at Citigroup and we’re gradually rebuilding that.” Increased regulation and capital requirements saw derivatives activity consolidate to a handful of global players – something Recoder believes will continue to benefit the bank. “One of the consequences of regulatory constraints is that the barriers to just staying in the business, let alone entering the business, are becoming higher. You need critical mass to be fluent across regions, products and institutions and we can sustain that better than others.” The success reflects the bank’s swift action in the wake of the crisis, hiving off around US$850bn of toxic assets into Citi Holdings in early 2009 and leaving the firm to focus on a rebuilding its global capital markets business. Citi Holdings has now shrunk to US$122bn – down 29% in the past year. The results speak for themselves, with the bank now boasting the solid foundations of a Basel III Tier 1 Common Ratio of 10.4% and a supplementary leverage ratio – a measure which clobbered many prominent European competitors in 2013 – of 5.1%. “We did a very quick re-engineering coming out of the crisis and when European markets got hit even harder by the euro crisis, we were already beginning to rebuild. Even in the depths of the financial crisis in 2008 we had an unwavering commitment to our markets business,” said Recoder.Credit boom In rates, Citigroup transformed itself from local markets specialist into bulge-bracket player in the G-10 space, matching the trading prowess it had long shown in foreign exchange. But the real turnaround in its fixed-income division occurred in credit, where it cemented itself as one of the top dealers following the financial crisis. The bank steadily accumulated market share in flow CDS trading on both sides of the Atlantic for single names and indices, while reducing Value-at-Risk by 74% since 2011. Part of the success derives from a determination to be in the vanguard of the shift towards electronic execution. Citigroup launched fully-automated algorithmic market-making in the second half of 2012 for US indices, expanding into Europe in May 2013, which provided a notable bump in wallet share. “The main g

It was a year of great fluctuations, and no bank rode the volatility better than Citigroup, with its leadership in the corporate sector especially standing out. The bank is IFR’s Emerging Markets Bond House and Latin America Bond House of the Year. This was the year of the bull in the emerging markets, but with a difference. Issuance volumes, deal numbers, and a record number of debut issuers all suggested a market running at near-peak levels; indeed, at times, it was getting a little too peaky. But it was also a frantic, seat of the pants year. Just like the cowboy clinging on in a rodeo, there was a periodwhen some sceptics were wondering if the emergingmarketswould survive, never mind thrive. Hanging over the markets was the question: will they or won’t they? That is, would the US Federal Reserve begin to taper its bond-buying? The yield on the 10-year benchmark Treasury note spiked more than 100bp as fears mounted of a cut sooner rather than later. And yet, as the IFR Awards period closed, the Fed had still not moved – and emerging markets bankers could look back on yet another very successful year for the asset class in the primary markets. One statistic illustrates this more than any other: corporates accounted for more than 50% of the year’s issuance. That’s testimony not only to how well many of the governments in the world’s developing nations are managing their finances, but also how the EM bond markets have matured into a mainstream platform for fundraising.Peerless corporate success While every leading bank can point to a strong portfolio of corporate deals, none can match that of Citigroup. The US bank’s share of corporate issuance was US$18.65bn, according to Thomson Reuters – US$3bn more than JP Morgan, over US$4bn more than HSBC and US$5.5bn more than Deutsche Bank. Whether on the biggest deals for the best-known borrowers, such as Petrobras, or more credit-intensive trades for high-yield issuers such as Serbia Broadband, Citigroup played a central role in their success. What stood out in particular was the bank’s presence on deals from debut corporate borrowers, which have accessed the market in record number. Take emerging EMEA, where Citigroup was one of the firms that arranged Rosneft’s jumbo debut transaction in November 2012. The bank was also the only institution to be involved in the maiden deals from Russian petrochemicals firms EuroChem, Sibur and PhosAgro, thereby opening a new sector to investors. In Turkey, where the corporate sector is still in its infancy, Citigroup can point to a distinguished portfolio comprising conglomerate Koc Holdings, glass manufacturer Sisecam, bottling company Coca-Cola Icecek and ports operator Mersin. The latter deal, which printed in August, reopened the Turkish market after a four-month hiatus following social unrest in the country. Other EMEA highlights include some of the toughest transactions, such as Israel Electric, which won IFR’s Bond of the Year for Emerging EMEA. Elsewhere in the region on the sovereign front, one standout feature was its success in Africa, where Citigroup led deals for Morocco (including tap), Nigeria and Ghana (including an exchange of its 2017 notes). Citigroup also proved itself in currencies other than the US dollar, doing international deals in roubles and lira as well as nine trades in euros, including Slovakian energy companies SPP and Eustream. “Some are natural issuers, irrespective of the basis, such as SPP and Eustream,” said William Weaver, head of CEEMEA debt capital markets. “Others such as Gazprombank are more arb-driven and seeking investor diversification.” In the Middle East, meanwhile, Citigroup arguably outshone even HSBC, with particular highlights including sukuk deals for Ras Al Khaimah, Emirates and DEWA.Numero uno Citigroup’s large market share of first-time borrowers, a sector that requires more work but pays bigger fees, is one of the reasons behind its success in Latin America, where it is also IFR’s Bond House o

To be number one consistently in your home market is impressive. But to climb the ladder in the US with some high-profile brand names under your belt, while also being well-established in Asia, is simply outstanding. Deutsche Bank, the only bank to rank top three in every region, is IFR’s High-Yield Bond House of the Year. The numbers all but speak for themselves. Of the 17 dual-currency deals brought to the high-yield bond market in 2013, Deutsche Bank was involved in 11 – and it was lead-left on eight of them. Only a bank with the true global reach that Deutsche has could have achieved that. Throughout the awards year it showed that it stands head and shoulders above its peers. Its lead role in the US$2.485bn and €625m high-yield bond financing backing SoftBank’s acquisition of Sprint – the largest high-yield issue on record out of Asia – is one of the best examples of that. The deal was a real coup for Deutsche, given the borrower’sstrong lending relationships with other banks. “When firms want to do transatlantic deals, they hire us,” said Henrik Johnsson, head of EMEA high-yield and loan capital markets. “We’re truly open-minded about the market, something which is unique to Deutsche. There is no infighting.” Those comments allude to the fact that many houses still split revenues on dollar and euro transactions between their respective regional headquarters – a practice that can work against a client’s best interests. Take the example of Amsterdam-based packaging firm Clondalkin. Deutsche advised the company to tap the US leveraged loan market in June – the first time it had ventured out of European debt capital markets. That advice paid off for both parties: Clondalkin achieved outstanding results and diversification, and Deutsche won another lead-left mandate. Most houses claim to be, but Deutsche truly is loan, bond and currency agnostic. That has allowed it to go from strength to strength in Europe, where it has dominated the landscape for years, and to rise up the league tables in the mighty US market.American beauty While Deutsche is the only European bank to nab a top three place in the dominant US high-yield market, with 8.5% of overall share, it has gained the most share versus all of its top 10 peers since 2008. In 2007 it had a 6.6% share and ranked eighth in the league table. Its US roll of honour in 2013 includes leveraged buyouts such as Gardner Denver – which Deutsche executed with first-class style during the market’s “taper tantrum” volatility in the summer – as well as some of the biggest names in telecoms, such as T-Mobile, and huge US brand names like Hilton. In all, it played a role in six of the 10 biggest deals of the year. T-Mobile’s mammoth US$5.6bn deal in October was the largest “new-money” high-yield bond offering since TXU in 2007. The five tranches required a careful balancing act to attract sufficient demand, and the use of proceeds meant investors had to get comfortable with the story. The bonds were refinancing non-reset notes that accounted for half of the US$11.2bn of T-Mobile debt that Deutsche Telekom took on its books to help its 74%-owned US carrier to merge with MetroPCS. The deal cast doubt about Deutsche Telekom’s support of the business. But Deutsche pulled it off, driven by Alex Barth and the bank’s TMT team, who have left-led three T-Mobile deals. The October issue, the second-largest junk offering this year behind Sprint’s US$6.5bn issue, was almost doubled in size from an initial US$3.1bn. By November, most tranches were five to six points higher. Indeed, the bank’s success in the TMT space deserves special praise. In a growing market, it is No.1 for both lead-left in the US and globally this year, following similar success in the two previous years. Outside of that sector Deutsche has also done very well. Being mandated as one of the lead-left banks for hotel chain Hilton’s bond and loan refinancing was a proud moment, said Kevin Sherlock, head of US loan and high-yield cap