EMEA Loan House: BNP Paribas

IFR Awards 2018
4 min read
Tessa Walsh

Forward-thinking: For a consistently strong, versatile and thoughtful approach to the market, which embraced innovation and the uphill task of modernising the syndicated loan market by focusing on green and sustainable lending and digitisation, BNP Paribas is IFR’s EMEA Loan House of the Year.

EMEA Loan House 2018

BNP Paribas has topped the European league tables for nearly a decade and continues to maintain a strong performance across the board in all market segments – from investment-grade to leveraged as well as asset-backed and structured lending.

But this flexibility is matched by the bank’s forward-thinking. BNPP is committed to sustainability in its own right and is gaining a reputation as a leader in sustainable finance. It is also at the forefront of digitisation of the loan market, as the bank lays the groundwork intended to keep it at the top in years to come.

Loans thrived in 2018, but the market was a mixed bag with more acquisition financing but lower volume leading to fewer, larger complex deals and increased market competition as banks scrapped for a limited fee pool.

“2018 has been dominated by jumbo M&A,” said Mark Richmond, managing director in BNPP’s leveraged debt platform.

BNPP’s client breadth and frequency in the market gave the bank unique insight to navigate the year’s ups and downs. The year was marked by generally good conditions in the first half and periodic wobbles in the leveraged market in the second half.

“One of the advantages we talk to clients about is our frequency in the market,” said Charlotte Conlan, EMEA head of high-yield bond and loan syndicate.

The bank originated deals across all geographies in line with 2017’s expansion plan but, as well as fighting for mandates, BNPP is trying to bring advisory to debt structures where it sees the ability to add value and differentiate itself from other banks.

BNPP fought for a role on Daimler’s €11bn refinancing in September, one of the largest deals in Germany in 2018, which it secured by advising on the deal structure, including baskets and sanctions language, and was coordinator, bookrunner and MLA.

It had another win in Germany with a sole mandate on a €5bn deal backing German utility E.ON’s €43bn acquisition of a 77% stake in Innogy from RWE. BNPP’s willingness to underwrite a deal into the double digits earned it the sole lead position in addition to the M&A mandate in a landmark milestone for the bank’s German growth plan to support strategic clients.

The bank showcased its environmental credentials in February on a €2bn refinancing for food and beverage company Danone, which highlighted the introduction of new concepts around the definition of green and sustainable financing.

BNPP was sole sustainability coordinator on Danone’s loan, which was a first in terms of structure as it included environmental, social and governance ratings from two extra-financial ratings agencies to measure its sustainability performance and a B-Corp certification.

Margins on the loan are based on ESG factors and on the percentage of Danone’s consolidated sales covered by B-Corp certificates, which are supplied by B Lab, an organisation that accredits companies that have high standards of social and environmental performance.

“We see the green aspect as the future of part of the loans business, especially on the investment-grade loans side,” said Nicolas Rabier, head of investment-grade loans.

In the leveraged market, private equity activity was on the rise and soaring ambitions brought huge buyouts. BNP Paribas was joint global coordinator on TDC Group’s €3.9bn cross-border term loans in June, which backed Macquarie’s acquisition of Denmark’s leading and incumbent telecoms operator, and is IFR’s EMEA Leveraged Loan of the Year.

The deal was the biggest public-to-private acquisition financing in the European telecoms sector and the biggest take-private deal in the Nordic region since 2006. It also included the biggest post-crisis Term Loan B, which totalled €2.7bn.

“The interesting bit of this year is how much money you can raise now,” Conlan said.

Accelerating digital transformation is a key business priority for BNPP, which earmarked €3bn of spend from 2017 to 2020 to implement a digital transformation programme that aims to improve operational efficiency and customer experience.

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EMEA Loan House: BNP Paribas