Bond House and Europe Investment-Grade Corporate Bond House: BNP Paribas

IFR Awards 2023
8 min read
Sudip Roy

Class of its own

BNP Paribas showed in 2023 what a world-class bond franchise it is. It was yet again the leading bank in the league tables in the euro market, made strides in the US and is now a top-four player in emerging markets. It’s a franchise that’s confident in its abilities, yet not complacent, and strives to keep getting better. BNP Paribas is IFR’s Bond House and Europe Investment-Grade Corporate House of the Year.

BNP Paribas’ bond team is not sitting on its laurels. The engine room of the business remains the euro market, but it has big ambitions for the US and other markets too, including Switzerland, while in emerging markets it has established itself as a top-four player based on LSEG’s league tables.

It's this drive that ensures that BNPP maintains its world-class standards each and every day. It’s not the biggest bond house, although it is gaining market share on that front. It jumped from eighth in LSEG’s league tables for all international bonds in 2022 to fifth in 2023, with a 70bp gain in market share, with only those more dominant in the US above the French lender.

That, though, is only part of the story. What makes BNPP stand out is that its bond team is very good at what it does. Its formula for success sounds simple enough – "to be close to our clients; the honesty of our advice; putting our clients first", said Frederic Zorzi, global head of primary markets.

There was an even bigger premium on quality of advice in 2023, with markets turning more volatile since central banks stopped their bond buying programmes. “[In 2023] things got real. There was much intellectual capital needed, much more credit-intensive work. Experience came to the fore,” said Mark Lynagh, head of global investment-grade finance, who was also recently appointed as co-head of global capital markets for the Americas as part of the bank’s push in that region.

That experience most obviously paid off in its stronghold of the euro market, a segment that remains core to the franchise. “To say the euro market is a part of our DNA is an understatement,” said Zorzi.

It was yet another strong performance in the currency by the bank in 2023, leading about 30% of all deals transacted, according to IFR’s data.

While BNPP is a force to be reckoned with in any area in which it operates, over 2023 it was its investment-grade corporate business that particularly stood out. As well as Bond House, BNPP is IFR’s Europe Investment-Grade Corporate Bond House of the Year too.

The award isn’t simply a reflection of the fact that the French bank was number one in the league tables. It is much more about the bank’s efforts to guide its clients through tricky issuance windows. “It felt like an old-school year,” said Rupert Lewis, head of European syndicate. “You had to roll your sleeves up and get on with it.”

Giulio Baratta, head of investment-grade finance, DCM, for EMEA, said: “Looking back at the 12 months, corporate treasurers had to think about timing and their issuing strategy. Investors were in a similar camp of uncertainty and needed specific guidance.”

BNPP didn’t miss a beat. It was on the biggest deals, the longest deals, hybrids, debut deals, and deals that required innovative management of issuers’ capital structures.

“Everyone relies on us to go the extra mile,” said Thibault Hescot, managing director within the bond syndicate. “Investors also turn to us for ideas and ask us our views on the market.”

First exchange

A good example of a tougher or more innovative deal in which BNPP was involved was the exchange offer for Unibail-Rodamco-Westfield’s €1.25bn perpetual non-call 2023 notes into a new perpetual non-call 5.25-year bond. It was the first exchange in the corporate hybrid market and provided a new workable path for real estate issuers seeking to tackle upcoming calls on their hybrids.

“It wasn’t the most straightforward transaction, but we got a 92% hit rate,” said Hescot. “We have a very integrated desk and so were able to have discussions with AT1 investors and build relationships and bring new investors into corporate hybrids. This is what we brought to Unibail.”

Debut issuers were another important client base. “They are really close to our heart. They require more thoughtful execution,” said Jodie Snow, a fixed-income syndicate banker.

A debut transaction is arguably an issuer’s most important, setting the precedent for its future deals. For that reason, “they want a partner they can trust and rely on”, said Snow.

The French bank was on the vast majority of the year’s debut deals, whether a jumbo trade for German drugmaker Sartorius, which did a €3bn four-tranche deal in September, or a €500m trade in March for Danish jewellery brand Pandora whose deal was a sustainability-linked bond to boot.

“A lot of these transactions are the end point of long-term relationships,” said Lynagh. The bank had provided acquisition financing to Sartorius, and was a lender to Pandora, for instance.

At times, the bank had to provide a solution to what seemed like an impossible task. German retail and tourism group REWE, for example, needed to raise €900m, a much bigger amount than initially anticipated. BNPP stayed calm, contacted investors, and based on the feedback, advised the issuer on the most appropriate pricing strategy. The final book was more than €3.3bn.

Not just euros

BNPP’s corporate business fed into a franchise that was number one in the euro market league table. That franchise includes high-yield, which helped towards the bank also winning IFR’s EMEA Leveraged Finance House of the Year award. But it wasn’t just in euros that the French bank got success.

In emerging markets, especially in Europe, the Middle East and Africa region, it was at the forefront of many US dollar deals.

The three biggest CEE deals of the year (Poland, Hungary and Romania), the three biggest Gulf Cooperation Council bond issues (two by the Saudi Arabian sovereign and the other by its Public Investment Fund) and the biggest African deal of 2023 (Morocco) were all in US dollars and all involved BNPP.

“The challenge we face day to day is clients saying: ‘you’re a euro house’. [Last] year we dispelled that,” said Matt Doherty, head of CEEMEA syndicate.

Much of that success is down to the groundwork and preparation undertaken by the CEEMEA team, led by Alexis Taffin de Tilques, head of DCM for the region. Eighteen months before Slovenia’s return to the US dollar market in September for the first time in nine years, the bank was taking the sovereign to investor meetings throughout the US.

The Swiss market is another in which the bank is a leading player, ranking fifth in the overall league tables for the currency, but the highest-ranked non-domestic bond house.

Following the collapse of Credit Suisse, it has bigger ambitions in the franc market, building on a good performance in 2023 when it spotted pricing opportunities for both domestic and international corporates, such as Nestle, Sandoz, EnBW and Mercedes-Benz.

And then there’s the US market. The bank is investing capital towards growing the business. “We have a good franchise already in the US,” said Lynagh. “We’ve rolled out our global capital markets philosophy and are looking to build that in the US. We’re not trying to become BNP Paribas Europe in the US; where we’re trying to focus is the European nexus.”

That doesn’t mean simply winning more Yankee mandates, but also more US dollar business from big US corporates with strong European connections. BNPP already has longstanding relationships with the blue chips; it’s a question now of expanding them.

Few would bet against the bank succeeding. “We push every year to do better,” said Zorzi.

To see the digital version of this report, please click here

To purchase printed copies or a PDF of this report, please email in Asia Pacific & Middle East and for Europe & Americas.