Americas Loan House: Barclays

IFR Review of the Year 2016
5 min read
Michelle Sierra

Reaping the benefits

Barclays started to build its US leveraged franchise in 2006 by hand-picking staff from competitors and a decade later is a powerhouse in leveraged and investment-grade financing. For cementing a leading position among US banking titans, Barclays is IFR’s Americas Loan House of the Year.

Barclays mounted a serious challenge to dominant US lenders in 2016 and was the top-placed non-US bookrunner in the award period, as the transatlantic investment bank targets global growth.

“In 2017 we will continue to invest in this business … and we certainly have ambition to be in the top three, not only in the US but globally as well,” said Jean Francois Astier, the bank’s global head of leveraged finance.

It was a very good year for Barclays, particularly in leveraged finance, where the bank topped the highly competitive US leveraged buyout bookrunner, institutional new money bookrunner and second-lien bookrunner league tables.

Barclays’ push started 10 years ago with targeted hiring from rivals and further strengthened its leveraged finance capability with the acquisition of Lehman Brothers in 2008. In 2015, the firm added a big name from JP Morgan, bringing in Jes Staley as its chief executive.

“Jes Staley has helped them [Barclays] a lot coming over from JP Morgan. He’s brought over a mentality of lending and gets the sponsor game. He’s been around for a while. I think that’s empowered a lot of the people in that franchise,” said Michael Konigsberg of Apollo Management, which worked with Barclays on several deals this year.

Barclays’ consistent efforts paid off and its leveraged franchise shone in 2016. The bank underwrote 20 leveraged buyouts, giving it a 9.7% market share and the top bookrunner position, according to Thomson Reuters data. Citigroup was second with an 8.09% market share.

“I call 2016 Barclays’ breakthrough year. We had massive market share gains in the US and, depending on the league table, we are in the top three in most of them,” Astier said.

Barclays was also the biggest institutional new money bookrunner in the first three quarters of the year with an 11.65% market share, the data show, pipping Bank of America Merrill Lynch’s second place and 9.01% market share.

The bank was the top second-lien bookrunner with a 26.62% market share, a long way off Deutsche Bank’s 12.24% market share. Barclays was second in the sponsor league table with an 8.01% market share behind BAML’s 11.21% share, according to the data.

Global ambitions

Barclays’ growing prowess in US leveraged finance was matched by a strong year in global lending, including a leading role on Anheuser-Busch InBev’s US$75bn acquisition facilities supporting the US$110bn takeover of SABMiller, the biggest acquisition financing ever.

Barclays was a financial adviser to AB InBev on the acquisition and was bookrunner and mandated lead arranger on the financing, which was sold globally.

The bank was active in US investment-grade lending and participated in US$9bn of loans backing US smartphone chipmaker Qualcomm’s US$46bn purchase of Netherlands-based NXP Semiconductors, and a US$6.5bn financing backing chipmaker Broadcom’s acquisition of network switch-maker Brocade.

Barclays arranged some of the biggest US leveraged loans of 2016, including the buyouts of security systems company ADT, healthcare provider MultiPlan, Petco Animal Supplies and martial arts promotion company Ultimate Fighting Championship.

The bank backed Apollo Global Management’s purchase of ADT in February with a US$4.7bn financing package at one of the most volatile points of the year, which included a US$1.555bn term loan and a US$3.14bn high-yield bond.

“We underwrote it in February literally as the Street was selling numerous bonds and loans at 90 OID and 80s on the bonds. To take on a financing of this magnitude in those market conditions looks easy now but certainly at the time was not,” said Tim Broadbent, head of Americas leveraged loan syndicate at Barclays.

Strong demand during syndication allowed the company to tighten pricing on the term loan to 450bp over Libor and the original issue discount to 99 from 98, vindicating the bank’s judgement.

“We tell sponsors and corporate acquirers, we will be there for you,” said Peter Toal, head of leveraged finance syndicate. “When markets are volatile … we will show you the financing and allow you to proceed on whatever strategic event you have going on.”

Less than two months after ADT’s deal was completed in April, Barclays returned to the market to reprice its debt. Interest rates were cut by 75bp to 375bp over Libor – the joint lowest LBO loan pricing of 2016.

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Americas Loan House: Barclays