High-Yield Bond House: Deutsche Bank
Deutsche Bank was the runaway leader in bringing debut issuers to market, structuring deals intelligently and finding pockets of demand, making it the High-Yield Bond House of the Year.
Asian high-yield bond volume was almost non-existent in previous years, but a revival in 2024 brought Deutsche Bank back to the forefront as the clear leader in the segment.
“We have never stopped providing solutions to our clients in the last two years,” said Ed Tsui, head of DCM and syndicate for Asia Pacific. “We’re building this market one issuer at a time.”
That work was apparent in the debut deals Deutsche was able to bring to market. There was pent-up demand from investors, but they were still selective, so debut high-yield names required significant investor engagement to succeed.
In the case of Sorik Marapi’s US$350m 7.75% green amortising bond, investors had questions about potential cross-border risks. The renewable energy producer is Indonesian, but it is 95% Chinese-owned, necessitating ring-fencing of assets by sole lead Deutsche, in addition to investor education on the company’s technology.
For Piramal Capital and Housing Finance, Deutsche introduced the Indian non-bank financial company to the international market, explaining the company’s business and management changes in recent years, and allowing it to raise US$300m from a 7.8% 3.5-year sustainability bond.
The bank helped debut a new structure for repeat issuer Shriram Finance when it sold a US$300m social bond backed by commercial vehicle and construction equipment loans. The structured finance approach, unusual for an Indian borrower, took months of preparation, engagement with regulators and investor work to get across the line.
“Once we have taken a capital market issuer out, we almost always do their repeat bonds,” said Sameer Gupta, head of South Asia DCM. “The whole business is about finding those new targets and maintaining relationships in the old ones.”
One example comes from the bank’s efforts in Mongolia, where it has become a go-to bank for issuers. Deutsche co-led Golomt Bank’s debut US$300m 11% three-year deal in May and was sole lead on a privately placed US$500m offering by Ulaanbaatar, split between an original deal and a tap. It also led an exchange offer for Mongolian Mortgage Corporation in January.
The Golomt Bank trade was particularly important, as it was the first standalone offshore issue from a Mongolian commercial bank for 12 years, setting a fresh benchmark for the sector. Deutsche used the debut to rebuild the investor base for credits from the country.
The bank’s work reached around the region, as it continued its strong hold in Macau working with gaming names. The Chinese high-yield primary market was quiet compared to its heyday, but Deutsche helped reopen it by bringing conglomerate Fosun International, a well-regarded name that had cut leverage with asset sales while Asia’s high-yield market was closed. A tender offer alongside the new deal provided additional demand and helped the issuer manage its maturities, in a transaction that caused its existing bonds to rally in the secondary market.
In Australia, it brought US dollar deals from the resources sector for Coronado Finance and Karoon Energy, the latter of which was a debut.
Deutsche’s guidance played an important role in taking companies from distress to fresh bond deals using approaches like liability management exercises. A case in point was Indian metals and mining company Vedanta Resources. Deutsche worked on US dollar trades in September, October and November to tackle the company’s outstanding 13.875% coupon notes, lower its borrowing costs, rebuild its ratings and make it a formidable player in the high-yield market once again.
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