Euro Bond House: HSBC

IFR Review of the Year 2015
5 min read
philip wright

Strength, innovation, access

Taking an already strong franchise to the next level is never an easy proposition. Developing one asset class without neglecting another is a balancing act, and growing all at once is a remarkable achievement. But that is what HSBC managed, for which it is IFR’s Euro Bond House of the Year.

A successful year in the bond markets can be measured by any number of metrics. Volume of business is one obvious way, although qualitative considerations are equally important.

HSBC managed to combine these elements, not only adding to its league table tally but also notching up an impressive list of debutants as well as a string of repeat mandates.

“Our key strategic objectives were threefold,” said Jean-Marc Mercier, global co-head of DCM at HSBC. “They revolved around strength, innovation and access.”

Long since a force to be reckoned with in the SSA sector, HSBC proved its credentials yet again. The bank managed noteworthy deals for such market stalwarts as KfW – its €5bn three-year at the end of September was the largest syndicated deal with a negative yield, for example – and EIB, whose first new five-year EARN since January 2013 saw HSBC play an integral role.

Its expertise was also important at the heart of the eurozone, with the ESM awarding it a number of mandates. As well as being present on the issuer’s first deal of the year – again with a negative yield – HSBC was also a bookrunner on its €6bn three-year, the largest non-sovereign deal of 2015.

And size played an important role throughout the year, with HSBC also active on the largest deal – Spain’s €9bn 10-year – as well as Italy’s €6.5bn 32-year, which was not only the longest in the sector but one of the biggest.

Elsewhere in the periphery, it was active for Ireland, Portugal and Cyprus, while a triple-tranche deal for Bulgaria and a 10-year for Poland spoke of EM crossover capabilities. Mexico’s Century bond encapsulated a number of the important themes.

The bank was also represented in some of the sector’s rarities, such as AFL’s inaugural transaction in any market, British Columbia’s euro debut, CEDB’s first deal in over a year, Finland’s first long-end transaction since 2012 and an uncommon euro deal from NIB.

The last was an environmental bond, and HSBC’s growing capabilities in the SRI/Green arena were also on display throughout the year, with deals from fellow SSA issuers, ICO, EIB, FMO, and NWB, through a social covered bond for Kutxabank, to corporates like Vestas and TenneT.

Elsewhere in the corporate world, HSBC was at the forefront of the year’s themes. The reverse Yankee wave saw it active on Coca-Cola’s groundbreaking five-tranche jumbo, as well as deals for the likes of Colgate-Palmolive, PPG, Kellogg, GE, Whirlpool and BorgWarner.

It steered issuers through periods of unpredictability, where a strong start to 2015 turned into one that threw up a number of challenges.

“As a result of the volatility, it was paramount to be able to navigate around the market. You have to have the right resources available for deployment,” said Adam Bothamley, global head of debt syndicate.

The result was the usual impressive roster of corporate stalwarts, sometimes with an innovative twist, such as an increased usage of FRNs, while there was no surprise that HSBC was at the forefront of issuance from diversifying Asian borrowers.

Its credentials were also on display in the hybrid arena, from Total’s dual-trancher early in the year, through Deutsche Boerse’s July market-reopener, to such tricky trades as Lufthansa’s understandably delayed transaction.

The bank displayed similar expertise in the financials sector, where a strong year in insurance saw it active on subordinated deals from the likes of Swiss Re, Allianz, Ageas, Aviva, Intesa Sanpaolo Vita, SACE, Danica and ASR, combining such elements as innovative liability management, Solvency II grandfathering and simple market reintroduction.

It complemented this on the banking side with a number of mandates across the Additional Tier 1 and Tier 2 markets, casting light into the TLAC/MREL abyss.

The largest and tightest FRN since 2010 – from Rabobank – saw HSBC at the helm, as did transactions from such diverse jurisdictions as Japan, Canada and Ireland, as well as other peripheral eurozone countries. A rare deal from the Gulf – for Emirates NBD – further underlined its credentials.

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Euro Bond House: HSBC cartoon
Euro Bond House: HSBC