Some banks talk about “delivering the bank” to clients but that is hard with so many individuals spread across so many teams and reporting lines. Bank of America does things differently. Its debt capital markets structure under Jeff Tannenbaum, head of EMEA DCM and leveraged finance, combines bonds, loans, derivatives, structuring, ESG, liability management and syndicate in a single team.
“The set-up is very deliberate,” he says. “It means that whoever is speaking to a client from the group, we all have the same responsibility: to advise the client in the best way from a balance sheet perspective. We’re able to look at a client’s problem and provide a solution using all the different tools, and then syndicate can come in under the same umbrella to provide certainty of execution. There has really been a need in such challenging markets for issuers to turn to banks that have a strong global presence and can provide a full suite of solutions across capital markets together with market distribution.”
The unprecedented market volatility this year created an environment in which the capital markets advice that issuers need from their banks has been what Tannenbaum calls absolutely critical.
“With this backdrop, more so than ever before,” he says, “there has really been a need in such challenging markets for issuers to turn to banks that have the full suite across debt capital markets and debt advisory.”
Having a very strong trading platform is a key part of the primary effort, as it allows the bank to see the precursors to what become market trends. “We can see what is happening in real time because of our trading franchise,” says Marcus Hiseman, head of EMEA corporate DCM and corporate fixed income solutions.
The year’s biggest theme on the product side was the rise of hybrid capital issuance, culminating in the $12bn five tranche, three currency deal for BP in June. It was the largest ever corporate hybrid in a single visit to the market and the largest ever dollar Reg S hybrid, and attracted the largest ever order book for a corporate hybrid.
“It was effectively the first tax deductible IFRS equity accounted perpetual under new UK hybrid capital instrument rules and we spent a lot of time on that knowing it was critical to the client that they would get the equity treatment and meet its objectives on gearing,” says Piotr Rejmer, global head of DCM capital products.
“That transaction summed up what we have been able to do with a range of clients: how we can move the boundaries of markets and deliver what hasn’t been done before.”
BofA also delivered on acquisition financing, working for clients including luxury goods conglomerate LVMH in its $17bn bid for jeweller Tiffany, and for BAE Systems in its $2bn acquisition of a unit of US firm Raytheon. For BAE, the bank was front and centre on the deal.
“We were sole adviser on the M&A, we were sole underwriter on the bridge financing and then advised on the bond market takeout — and all of that across one of the most volatile markets we have ever seen,” says Hiseman. “Clients know we can give best in class execution advice around the takeout, but that we will also be there for them when they need the liquidity to support their M&A objectives.”
The firm’s investment in its people and platform has also helped give it a central role on the deals where it is a bookrunner. “Our philosophy is to constantly invest into our global platform,” says Hiseman. “As a result, we are often trusted in a deal with the documentation process, the investor positioning and the deal roadshow. We can take on those kind of roles because we have the resources and infrastructure behind us to be there for clients.”
Tannenbaum points to a remarkable statistic: this year it has worked on 21 bond sales for clients with whom it had never been before done a deal, in addition to its regular clients and those who returned after an absence.
Why was that? Because, in a period of high volatility, issuers are no longer concerned about rotating their banks and keeping people happy. They want certainty of deal execution. Or, as Tannenbaum puts it: “To win a mandate you always need to be good. In difficult times, you need to be the best.”
