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Clients must drive big chance for change in post-pandemic capital markets


There has been much discussion since the financial world went into lockdown about how life in the capital markets will change once governments lift restrictions. Chief among those concerns has been whether the usual business of putting deals together needs to burn the Bacchanalian quantities of jet fuel and waste the many hours lurking around airports that capital markets air miles enthusiasts were doing before Covid-19 grounded them. If that is to change, borrowers and investors need to make it happen.

It is quite obvious now that a lot of the travel that took place in the name of vital capital markets business before the pandemic was superfluous. Zipping back and forth to pitch a borrower, run a roadshow, even to thank a borrower for a mandate, or even just a nice spot of lunch in the name of cordial relations, it turns out, was a waste of time, money and carbon dioxide.

Video conferences, emails and the good old telephone, it transpires, can provide perfectly adequate methods for doing the work, much in the way that technology killed off most open outcry trading pits — that was a shock and much resisted, but who now would opt for shouting and hand signals other than for nostalgia’s sake?

Sure, something is lost by grounding the business travellers — conviviality, tradition, the benefit of face-to-face interaction — but something is gained too: a better environment and greener credentials, but above all, time to do more.

Refusing to go back to the old ways of brutal travel schedules should be an obvious area of improvement for market participants so keen to tout their green credentials and, hopefully, improve their quality of life. But it won’t happen unless end clients — the borrowers and the investors — do their bit to show they accept it.

There are clearly some in the markets who still get off on being on the road for so much of their lives, seeing it as a badge of honour, a sign of sacrifice, even of status. For others, it carries a whiff of desperation — that they must be in front of a client to be relevant to them — and it is a chore.

But many have learned that it simply isn’t necessary to rove so much. They win mandates just as well from their desks, be they at home or in the office.

This, of course, has only worked when no one can travel, however. And this is why, when normality resumes — or whatever passes for it in a post-Covid world — things will only really change if investors and issuers encourage it.


Mandates, allocations and investor diversification trump all in the fight for market status, capital raising and income. To be seen to demonstrate the most care for your client, it is often thought that the only expression of true commitment to the relationship is to show up on their doorstep at the drop of a hat. 

It makes everyone involved feel important and well loved. We know of one senior originator who turned up at the Iraqi finance ministry in Baghdad in a tank, hastily arranged earlier that morning, having got the call the night before in Belgravia that the finance minister would be happy to see him the next day.

Meanwhile, two of his colleagues were known to have made a tour of Libya in a bulletproof Hummer under armed guard, this time to extol the virtues of medium term notes.

When you miss out on a mandate, or are underallocated in a new issue, or fail to bring in a new investor, not having travelled to meet the client is an easy way to apportion blame.

And that is why it must be down to borrowers and the buy-side to demonstrate that not hopping on a plane every five minutes can be part of perfectly good client coverage. Failure to attend a physical roadshow is not the sign of an unengaged investor or issuer.

Similarly, the sort of borrowers that demand to be met, as one Russian issuer once did, by a matching fleet of black Mercedes-Benz limousines at every airport on the roadshow, should be met instead with a polite refusal, and where possible, a travelcard.

It is up to clients to prove they understand this by demonstrating that those embarking on a quest to see them in person will not gain extra kudos simply for doing so.

Face-to-face meetings are important, of course. For a first meeting, there is no substitute. Thereafter, there are some things that can only be communicated in person, rather than over the internet or phone.

But for any institution serious about its environmental and social impact, which is all of them, saving on exhausting and unnecessary travel should be the first consideration. And rewarding those who flew for doing so is hypocritical.

Conferences, one-to-one meetings and personal introductions are all entirely necessary to capital markets, which rely, for all their sophisticated technology, on trust and relationships between individuals.

But do frequent borrowers really need a procession of debt capital markets bankers traipsing through their offices every time there is a new mandate to be had?

For bigger gatherings, the markets will never lack for conferences and awards events to attend where everyone can gather together to strengthen the social stitching that holds the business of capital raising together.

Every journey begins...

The best place to start would be to make business travel related to green or social bonds part of the deal’s credentials. Supranational and agency borrowers should take the lead here, as they did when they pioneered the market.

To insist upon seeing dealers in person for pitches for a group of issuers so frequently in the market that some of them talk to investors directly is hypocritical when they are trying to demonstrate their virtues to the rest of the market.

Awarding a climate-related or social funding mandate to a top line of banks that caused the smallest amount of CO2 emissions, or demanded the least unsociable working time for those who brought the trade, would show a thoroughness of approach, not a lack of commitment.

If investors and borrowers do not learn from this pandemic just how much business can be done without the need to travel — and in fact just how much more they can get done if they aren’t spending half their lives on aeroplanes or waiting about to catch one — then it will simply be a return to business as usual once the lockdowns are over. And that will be a fantastic opportunity missed.