Swiss Franc Bond House: UBS

IFR Awards 2018
5 min read
Jonathan Penner

It’s not easy changing the course of one of the biggest banks in a country, but with its strong vision, leadership and innovative deals, and its ability to eat away at its great rival’s leading market position, UBS is IFR’s Swiss Franc Bond House of the Year.

For many years it had been the poor second in the Swiss franc bond market, but UBS has finally caught up with its larger rival, at times even beating it in the league tables over the course of 2018, despite a reduced syndicate function. In the end, Credit Suisse sneaked ahead in the league table but UBS had the more impressive story.

A decade ago, UBS had only half of Credit Suisse’s market share, but a strong vision and long-term plan from Manuel Gadient, head of debt capital markets and syndicate for Switzerland, turned the firm around.

Gadient, a long-time vocal advocate for the Swiss bond market, said that UBS’s success was based on three pillars: identifying market-driving trends early, developing trade ideas based on lead demand, and supplementing conviction trades with hard underwrites.

Identifying trends focused on capturing any open arbitrage windows to cater for international issuers, especially those from emerging markets, and financials. It also involved catering to increasing investor demand for shorter duration, as volatility was high. Finally, and arguably most importantly, UBS spearheaded the return of national champions as investors were pointed to household names.

Armin Peter, UBS’s global head of bond syndicate, said he was “very pleased with the Swiss team, especially in their role as global ambassadors for the Swiss franc”.

UBS works arguably more collaboratively than Credit Suisse, with the syndicate team using the global DCM group to source paper rather than having a separate DCM team in Zurich.

Aside from Gadient on DCM, the syndicate team, led by Andreas Tocchio, has only two members, Florian Hessel and Max Weis, having lost Dominic Wirtensohn earlier in 2018.

From the first EM deal of the year – a SFr175m five-year from Abu Dhabi Commercial Bank, sole led by UBS – through a slew of South Korean issues, including the first commercial bank name from the country with KEB Hana Bank in mid-August, UBS has been at the forefront of emerging markets issuance in the franc in 2018.

UBS also brought new names to the market, as sole lead for Banorte and Korea Water Resources, as well as a deal for rare issuer Korea Gas, not seen in the franc since 2010.

Firm favourites were also well represented, with UBS on Gazprom’s largest emerging markets deal ever in the franc at SFr750m, as well as Pemex’s SFr365m issuance in May.

In total, UBS took a stunning 47.1% share of emerging markets’ issuance in the market.

Financial issuance provided a steady stream of revenue and headlines for UBS, which took a leading role on Canadian bank deals, both senior and covered, from BMO, CIBC and RBC.

It also sole-led a Credit Agricole Home Loan SFH French covered, and was involved in the reopening of the UK sector with Barclays and Lloyds.

Domestically, UBS was a joint lead on the Swiss Life dual-tranche insurance hybrid in March, and on Zurich Insurance’s senior offering in October.

Corporate issuance was a mainstay again, with UBS as sole lead on several of the most interesting deals of the year, including Transurban Queensland and domestic Sika’s SFr550m triple-trancher.

It was also very visible on several high-yield deals, including Aevis Victoria, Zur Rose and Hochdorf Holding’s hybrid.

And UBS was a lead on IFR’s Swiss Franc Bond of the Year, the Nestle SFr1.5bn dual tranche, which beautifully exemplified the firm’s focus on big deals from national champions. Others of a similar ilk included Roche’s SFr900m dual-tranche offering and deals from Schindler, Swisscom and Givaudan.

UBS even managed to slip in a last-minute surprise in mid-November, braving shaky markets to price Panalpina World Transport Holding’s SFr150m 1% four-year, the company’s debut issue and the first Triple B corporate in almost a month.

It went well enough that it sparked a small flurry of announcements from similar names, including LafargeHolcim’s hybrid, also joint led by UBS.

Last, but certainly not least, UBS remained the number one Swiss franc bond trading house, according to SIX, for the seventh year running. Although separate from syndicate and new issues, it serves an important role in supporting clients.

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Swiss Franc Bond House: UBS