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'Price now' was the right call, finally

Speak to enough sell-side capital markets bankers and a few patterns start to emerge. For all the talk of putting the client first and understanding their needs, the advice from syndicate and DCM shows a certain bias towards doing bond deals.

Rough market? Could get worse, better do a deal. Booming market? Ship it in, lock in levels while you can. 

Looking at the big picture of the last few years though, this has mostly been bad advice. Central banks have repeatedly stepped in to soothe disquieted markets, and yields in euros at least have mostly gone down, down and down again.

There have been blips, sell-offs, volatility, elections and everything else, but in general, an issuer that resisted the pressure to lock in “best ever levels” for the past five years will have done well by that choice. And then the next time they will have done better still as those best ever levels just got better still.

This year, though, could be the year when that classic sell-side advice finally delivers. The borrowers that rushed out in January and early February are sitting pretty; those that sat on their hands might be in trouble.

Figuring out how the coronavirus outbreak plays out for the rest of the year is nigh on impossible — companies are revising their approaches to it on a daily basis and the infected numbers are spiralling higher — but nothing about the response of the last two weeks suggest capital markets are going to be easier this year.

It may have taken a pandemic to prove the sell-side right, but just occasionally, it’s worth listening to the bankers.

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