Swiss Franc Bond House: Credit Suisse

IFR Review of the Year 2017
4 min read
Jonathan Penner

New challenges

In a year that presented new challenges that needed fresh thinking to overcome, and despite major changes in its bond team, one bank stood out. For its leadership, innovation and consistent approach, Credit Suisse is IFR’s Swiss Franc Bond House of the Year.

As the market said goodbye to three venerable figures in Credit Suisse’s Swiss franc bond franchise, the bank brought together a new team. But the changes didn’t affect the pace or quality of its business.

Syndicate veterans Andre Schmid and Jean Marc Favre, as well as originator Danny Gut, all retired in late 2016, leaving a new guard of Damien Aellan, Micha Peier and Alex Schnurrer to step up and complement the talents of Ben Heck, head of investment-grade capital markets and Dominique Kunz, head of debt capital markets.

The team kept up the previous year’s momentum, coming a clear top in the league tables with a market share of about 30% over the awards period.

With the government curve trading with negative yields out to 12 years and credit spreads continuing to tighten, bankers had to respond to investors’ needs, with private banks searching for yield products, bank treasuries looking for Level 1 assets and institutional investors seeking diversification.

Credit Suisse took the lead in bringing unrated and cross-over issuers to the market, and by positioning itself as the bank of choice for such transactions it took a dominant 39% market share in that growing segment.

The cross-over sector is peculiar to the Swiss market. Technically, the bonds are largely high-yield, but they are sold mainly to retail investors on the basis of name recognition. Unlike mainstream high-yield paper, they do not usually have covenants, nor are they callable.

Credit Suisse was instrumental in bringing the likes of MSC Cruises, Gategroup, Proman Holding and Groupe Acrotec to the market.

Covering the other end of the credit spectrum, the bank was a leader in the SSA sector. It led in Level 1 qualifying deals for the likes of Province of Ontario, Land Niederosterreich and Munifin, as well as the usual Swiss cantons and cities.

It increased its share for Triple A and Double A issuance by 11 percentage points, reaching 36% in 2017. For SSA and public sector issuers, Credit Suisse remained the number one underwriter, leading all but one deal from international borrowers.

And across all sectors Credit Suisse led issuers from 19 countries, more than any other bank.

It also led transactions for 17 debut borrowers, taking a 53% market share by the measure, and showcasing its continued commitment to bringing new issuers to the market. Highlights included Partners Group, Verizon and Santander.

Duration became a growing trend and in this area too Credit Suisse stood above others. It led the longest bonds for domestic and international issuers, with Ville de Lausanne’s 2042s and Finland’s Municipality Finance’s 2038s respectively.

As for product development, there were three areas where Credit Suisse proved its credentials.

The first was the emergence of the senior non-preferred sector. Credit Suisse may not have grabbed the first Swiss franc senior non-preferred trade but it easily took gold for the biggest and best with Santander’s SFr400m six-year in May. The transaction was key in demonstrating that the Swiss market can offer significant depth for the product and putting it on the radar for other potential issuers.

In the small but growing structured credit space, Credit Suisse had earlier pioneered the Swiss ABS market and in 2017 it led both ABS deals in the Swiss market – from Multilease’s First Swiss Mobility programme.

In addition, Credit Suisse upped its game by hiring a dedicated ABS specialist in Zurich in an effort to further expand the market segment.

No other bank has a dedicated ABS structuring capability as part of its investment banking offering in Switzerland, giving Credit Suisse a clear strategic advantage in the field.

Finally, having led EIB’s debut Green bond in the currency in early 2014, Credit Suisse was lead manager, documentation agent and coordinator on the first corporate Green bond in the franc, for Helvetia Environment, with Vigeo Eiris certification.

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Swiss Franc Bond House: Credit Suisse