Sterling Bond House: HSBC

IFR Review of the Year 2013
5 min read
Philip Wright

Local hero

Momentum is often an overused word in the bond markets, and normally a reference to banks picking up business as issuance surges. But one institution managed to increase its underwriting volumes in a currency where supply slumped, leaving competitors in its wake. HSBC is IFR’s Sterling Bond House of the Year.

While occupying top spot in any bond underwriting league table is not necessarily an indicationof a worthy awards winner, it certainly does no harm if it is combined with a franchise that encompasses the major themes that have characterised any given market throughout the year.

HSBC managed to achieve both of these feats, adding significantly to its market share, while also acting for a wealth of credits across the asset class spectrum, from SSAs, through financials to corporates.

“We were very much at the top table,” said Bryan Pascoe, the bank’s head of global DCM, “and this was reflected in the breadth and variety of our business.”

Indeed, from a volume perspective, HSBC’s achievements were impressive. It claimed a market share of 14.3% – up more than 36% from 2012 – and acted on some 100 transactions in a year that saw overall issuance drop by around 15% and all other banks in the upper echelons of the league table take a lower proportion of the available business.

The high-grade sector has always been one in which HSBC has been active, and this last year was no different. In an arena that has in some years been characterised by opportunistic agency and supranational taps – and no one would accuse HSBC of not playing a full role in those situations ­– it managed to act as bookrunner on numerous notable transactions.

The EIB turned to HSBC when it launched its largest ever new issue in the currency in January – a £1bn five-year – which also attracted the agency’s largest ever book of £2bn. That the bank was involved should have come as no surprise, however, as it has been the EIB’s number one bookrunner every year since 2007.

As far as sovereigns were concerned, HSBC acted as joint lead manager on Finland’s first sterling fixed-rate benchmark since 1997 in September, the timing of which was strategically chosen to deliver an attractive cost of funding versus domestic euro issuance.

Closer to home, HSBC was not only a joint bookrunner on the UK DMO’s maturity extending £5bn 2068 index-linked deal, it also acted as duration manager on what was the largest duration event the sterling market had ever witnessed.

It also lead managed two deals for Network Rail – fives and 10s – and has now acted on all its new benchmark deals since 2005. Another example of repeat business was the fact that working on Transport for London’s 20-year in September meant that HSBC was the only bank to be active on each of its last five benchmarks.

Aside from these highlights, HSBC was also a trusted partner for the likes of the EDC, IDB, IFC, KfW and World Bank.

In the financials arena, HSBC truly showed its form and was active across the covered bond, senior unsecured and subordinated sectors.

In the former, which saw a dearth of domestic issuance as the Bank of England’s funding for lending scheme proved more compelling, it introduced overseas borrowers such as Stadshypotek, ANZ and Credit Mutuel-CIC to the market, all with debuts.

And this theme of providing an alternative funding route for non-domestic issuers was reprised in the senior market, where SEB and GECC returned with the help of HSBC, and MetLife and Allianz included sterling tranches in multi-currency deals.

But this overseas prowess should come as no surprise. As Pascoe said: “We are very local – everywhere.”

As far as subordinated issuance was concerned, transactions for the likes of Liverpool Victoria – with its debut capital markets transaction – and Bupa – which attracted £5bn of demand for a £500m capped issue – demonstrated that HSBC was still a force to be reckoned with in the domestic market.

Subordinated deals were also a theme in the corporate world, where HSBC led issues for well-known names like National Grid and Veolia, not to mention being a global co-ordinator on EDF’s record-breaking multi-trancher, as well as unrated Pennon’s debut.

In the senior market, the end of 2012 saw HSBC play a role in GlaxoSmithKline’s £1.4bn 15 and 33-year transaction, as well as subsequently acting for Rolls-Royce and Daimler in the high-grade arena and the likes of The AA, Electricity North West and Bakkavor in a growing high-yield presence.

And as evidence that the bank recognises the value of continuing to learn rather than rest on its laurels, HSBC jointly led a 40-year deal for the University of Manchester, building on the foundations laid by Cambridge in 2012.

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