BTM Revs Up Leveraged Finance, Seeks Secondary Trading Op

Bank of Tokyo Mitsubishi (BTM) is planning to build up its leveraged loan portfolio in the U.S., seeking to take bigger pieces of pro rata and "B" loans.

  • 19 Oct 2003
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Bank of Tokyo Mitsubishi (BTM) is planning to build up its leveraged loan portfolio in the U.S., seeking to take bigger pieces of pro rata and "B" loans. The loan group is also seeking approval to set up a secondary trading effort to make markets for deals the bank leads. Spearheading the leveraged loan effort is Chuck Francavilla, senior v.p. in what BTM refers to as its transaction business group.

Francavilla, who joined a few months ago, explained that earlier this year BTM decided to significantly grow its leveraged loan portfolio and is now looking to buy in the primary and secondary. Two years ago, BTM opted to exit the leveraged loan business and has significantly reduced its loan exposure. Francavilla declined to comment on BTM's previous strategy, but noted, "It's the right time for the bank and also the credit cycle." He also declined to comment on the size of the book and what type of credits BTM intends to buy. Before a brief stint in private equity, Francavilla was at Bear Stearns until 2002 for a year, and prior to that was a 20-year Bank of America veteran.

Another recent addition to the bank is Jefferson Stuart, who was a managing director at Deutsche Bank. Stuart, who has a structuring background, will work on investment-grade transactions, said Francavilla. In the long run the aim is to lead leveraged deals, but right now the focus is on participation, he added. Some loan sources questioned how much impact BTM will make. "They have been out of the market for two years after taking some big hits on the investment-grade side," said one source. The loan book has been pared back and that trend is going to be tough to change, he added.

BTM is also looking to reinforce relationships with its clients by starting a secondary trading operation in names the bank leads. "We are attempting to get secondary trading approved," said Chris O'Neill senior v.p. syndications. "[On the investment-grade side BTM] has changed its strategy from being a participant to a lead and if you are going to be a lead, you need to support the facility that you are a lead on by offering a two-way market," O'Neill added. BTM mostly leads structured finance, Latin American transactions and project finance deals in addition to some U.S. corporate deals.

"We will be the bookrunner on a deal and can tell the client that if any of the banks want to buy and sell more, then we will make an orderly market," he said. "Our vision is to explore names exclusively [that] we have a lending or banking relationship with," he added. O'Neill said this would be a low-volume desk with only two or three trades per month. BTM has the existing infrastructure, as the bank has been active on both sides of the market, but has never been a market-maker.

  • 19 Oct 2003

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,171 21 10.72
2 Bank of America Merrill Lynch (BAML) 6,901 20 10.32
3 JP Morgan 4,776 10 7.14
4 Credit Suisse 4,718 9 7.05
5 Lloyds Bank 4,420 14 6.61

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1 Wells Fargo Securities 68,611.22 170 11.38%
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