In an unpredictable year, one bank picked up market share by offering corporates an unglitzy but vital solution to their problems: consistency. Societe Generale is IFR’s Europe Investment-Grade Corporate Bond House of the Year.
Bankers selling European high-grade bonds were finally given a chance to differentiate themselves on execution in 2018, a year characterised by wider spreads and higher yields.
And Societe Generale did just that, edging up the ranks from fifth to second in the league tables over the awards period, according to Refinitiv data, which encompasses euros, sterling and Swiss francs.
Its climb up the league tables is even more impressive considering it isn’t really a player in the latter two currencies.
Its sales pitch? Dependability. In a year where three deals were pulled in the European corporate credit market, Societe Generale didn’t have a single failed transaction.
“This year posed significant challenges,” said Demetrio Salorio, the bank’s global head of debt capital markets. “When conditions were choppy, euro specialists prevailed. But among the banks which were favoured this year because conditions were not easy to read, we have done better.”
Of course, in order to get this award, a bank has to be involved in the big-hitters: the flow deals and the M&A-related trades of the year.
And SG was, landing the plum role of global coordinator on Sanofi’s €8bn bumper issue in March – the largest corporate trade of the year.
But where the French bank distinguished itself was in the trades where a little more brain-power was required.
“We were involved in the landmark deals of 2018, but we also did the grey-matter trades,” said Eric Cherpion, head of global bond syndicate. “Innovation is an important part of our story; providing tailored solutions for clients and leadership in times of market stress with an experienced team.”
THE RIGHT CALL
One case in point: Telefonica. Societe Generale helped the company become the first issuer to take advantage of the change in S&P’s new criteria on the refinancing of hybrids that went beyond addressing only 2018 call dates.
Dutch energy company Alliander was the first European company to conduct a liability management exercise and new issue after the relaxation in rules related to the refinancing of hybrids within five years of issuance. But that was to address a bond offering due for call in November 2018.
Telefonica targeted six notes stretching from 2018 to 2024 both to reduce its cost of hybrid capital and push out maturities by an average of 1.5 years.
“Telefonica wanted to do the deal in a more holistic way and buy back longer-dated bonds,” said Cherpion.
Societe Generale advised Telefonica from the first day that S&P announced its change in methodology.
And the issuer hit the market in size, pricing a €2.25bn dual-tranche hybrid.
Approaching the primary market in March was no walk in the park. Telefonica was also facing the daunting task of opening the corporate hybrid market after a one-month hiatus thanks to broader market volatility.
“We were able to challenge the market norms from different angles,” said Cherpion.
Another example of the bank’s sense of timing was its approach to Italian credits in a year of alarming political headlines from the country.
Amid the turmoil, Societe Generale was able to find a window for such borrowers, and scooped mandates for three out of four of the Italian trades priced following the start of BTP volatility in May.
Snam, Iren and CNH Industrial were quickly ushered in to the market in September, during a couple of weeks of improved sentiment.
The bank’s nose for opportunistic timing also came in handy when it was looking to help rare issuers Siemens and Michelin access the public debt markets.
Michelin turned to Societe Generale in August, when it was looking to issue debt for the first time since 2015.
It was an ambitious trade in itself: a €2.5bn triple-tranche outing that included a 20-year leg at a time when increased volatility was dampening risk appetite.
But the borrower hit the market just at a time when buyers were happy to go longer for strongly rated names, and found over €6.8bn of orders – and ample demand for the 2038 bond.
Siemens was another rare issuer for Societe Generale to guide in August, with its first deal since 2015, and the first deal of over €2bn since the summer’s volatility.
The German conglomerate is the perfect example of Societe Generale’s doggedness.
“We covered Siemens like a flow issuer, even though it’s incredibly rare,” Cherpion said. “We would call them every two weeks, so when they were ready to come back to the market, we would be ready.”
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