Emerging EMEA Bond House: JP Morgan

IFR Awards 2023
5 min read
Edward Clark

Trend leader

JP Morgan’s leadership across all the key market trends that ran through emerging Europe, the Middle East and Africa in 2023 – from distributing high-yield corporate risk at times of heightened volatility to guiding Middle East issuance and to developing FIG activity in Central and Eastern Europe – made it the standout bank in the region. JP Morgan is IFR’s Emerging EMEA Bond House of the Year.

Issuance in emerging Europe, Middle East and Africa stood out among emerging markets, bouncing back after a weak 2022. No bank was better placed to make the most of this dynamic and successfully bring a range of credits and products to market than JP Morgan.

“We were on 51% of all tranches, a lot more than in 2022 when it was 35%,” said Stefan Weiler, head of CEEMEA debt capital markets at the US bank.

It’s not just the volume of the business that JP Morgan transacted that stood out, but also the diverse nature. One area in which it was dominant was sub-investment-grade corporates. The bank was involved in 17 of the 24 deals in this sector. “The high-yield market remains challenging,” said Weiler, adding that the bank’s success in the area points to the “knowledge we have of the market and the influence we have with investors".

Deals include a US$300m bond for CEE utility Energo-Pro to refinance the bridge loan backing its acquisition of two Spanish companies, as well as high-yield sukuk for Middle East real estate companies Damac and Dar Al-Arkan.

JP Morgan also helped Israeli generic drugmaker Teva Pharmaceutical Industries execute a US$2.5bn-equivalent new issue in conjunction with a tender offer to tackle the company's wall of maturities due over the next few years.

The bank was also instrumental in driving deals at the upper end of the ratings spectrum, such as the Public Investment Fund’s debut in the Islamic financing market, on which JP Morgan acted as a joint global coordinator and active bookrunner.

The Saudi sovereign wealth fund was able to raise US$3.5bn, leaning into local demand and achieving tight pricing, despite coming to market in October, only weeks after the conflict between Israel and Hamas began and the prospect of issuance out of the Middle East seemed uncertain.

Turkish risk was absent from primary bond markets for much of the year, but when conditions were right and spreads for local issuers had moved tighter, JP Morgan was there to help issuers access the market.

It led the first Turkish corporate deal since January 2022, a US$400m five-year bond issued by household appliance manufacturer Arcelik. The bank also delivered the sovereign’s return to the sukuk market and even placed a rare Turkish Tier 2 bond, issued by QNB Finansbank.

There was a wave of US dollar issuance from CEE issuers during 2023, including from the likes of Poland, Hungary and Slovenia – again JP Morgan was to the fore. US dollar borrowing had largely fallen out of favour for these issuers following the onset of QE, but with the change in monetary policy, it was back on the table.

“The investor base wanted this type of issuance,” said Alexander Karolev, head of CEEMEA bond syndicate at JP Morgan. “Most of these trades came flat or through the cost of funding in euros. We spent time gaining knowledge, getting reverse enquiries and positioning issuers.”

Another big theme was the growth of the CEE bank funding market to meet MREL-requirements. JP Morgan again led the pack. It worked with debut names such as Raiffeisen Bank Romania, as well issuers that had tapped the market previously, including the likes of Ceska sporitelna and Slovenska sporitelna.

JP Morgan was able to distribute these deals not only to local accounts, but also to an international audience. “Regional investors have been important, but we’ve also educated other investors around the MREL product,” said Karolev. “We’ve even seen interest from the Middle East and Asia.”

One other area where the bank has distinguished itself is Ukraine. JP Morgan is working with other financial institutions on the concept and strategy of the Ukraine Development Fund, while also signing a memorandum of understanding with the economy ministry, helping advise the government across a number of areas including financial stabilisation, credit ratings and liquidity management.

The bank also led Ukrainian corporate MHP’s liability management exercise. In September, for example, it acted on a buyback of bonds due in 2024, which resulted in the poultry group repurchasing US$151m of its US$500m notes.

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