Coming Force in Financial Institution Bonds — TD Securities
The FIG debt capital markets business is as competitive as they come but TD Securities has established itself over the last few years by building a reputation as a house that will go the extra mile for issuers.
TD Securities has long had a respected SSA business but when Edward Arden, global head of financial institutions, joined the firm in 2016 to build a global FIG business, it was almost a blank slate.
“We knew we had to try to think a little bit smarter and try to hustle a little bit harder,” he says. In practice that has meant engaging with clients on their terms, and focusing on changing perceptions of TD rather than pitching for a mandate at the expense of a wider discussion.
“The way we talk about it as a team is to imagine we’re sitting on the client side of the table, so we’re not pitching but we’re thinking as an issuer and what our constraints and objectives would be,” he says. “We always want the client to feel like they come out of a conversation, a meeting, a pitch or a strategy session, smarter and better informed than when we went in.”
Starting from a focus on US dollar covered bonds and then senior debt, the FIG franchise has grown, using Arden’s baseball metaphor, by hitting singles. From its first joint bookrunner role in 2015 on a Lloyds Bank dollar senior FRN to breaking open the sterling market with a Wells Fargo senior deal in 2019 and its first dollar additional tier one mandate for ING Groep in 2020, it has progressed step by step.
It’s done that by avoiding the traditional errors made by investment banks expanding into new markets — either by attempting to quickly offer a full suite of product which dilutes effectiveness, or by sticking to a very narrow offering that quickly turns dialogue with issuers into a monologue about a single product or currency.
“The critical turn for us was going aggressive on capital early on which raised perceptions of TD. When you are trying to create value-added mindshare, the opportunities in covered and senior are much more limited than in capital.”
The move paid dividends over the last year as central banks turned on the liquidity taps in response to the Covid-19 crisis, leaving banks with less market funding to do and more balance sheet optimisation.
Perhaps nowhere has the value-added ethos of TD been clearer than in its approach to Libor transition, which it recognised early on would become a huge challenge for the market. Its work on the New York Federal Reserve’s Alternative Reference Rates Committee (ARRC) put it in the box seat for pitching Sofr and Sonia business, but it was the extra-mile ethos that really established TD in the market.
“Most issuers will just go with whatever the consensus solution is but the real impact of Libor transition for any bank will be how they face their own customers and manage their own business. We’ve gone out and connected senior operations people at TD Bank to show how we’ve been navigating those transition issues ourselves.”
Likewise, its approach to the wave of ESG-related transactions that has swept the market is based on engagement with clients, and not just pitching another off-the-shelf green bond framework.
“The real impact that you can have with a client on ESG is not just aligning a framework with the requirements. That’s table stakes,” he says. “Where clients really benefit is a wider discussion of how they can deal with the green transition — and as a bank from a resource-based economy we have a lot to share about what we’ve learned that can be helpful to other financial institutions globally.
“We know that if we are helping our clients do their jobs better, then the right decisions will be made at the right time.”
Issuers have also appreciated what Arden calls TD’s after-sales service. “A lot of people forget that for an issuer, a deal is not over after it has priced,” he says. “That means there needs to be vigilance in providing secondary liquidity, it means following up investor engagement discussions and ensuring that the next deal will be a success.”
Now it’s made that change in mindset, where next for the group?
“We are proud of our efforts and proud that they’ve been recognised by our clients with this award,” says Arden. “As sensible opportunities present themselves in European markets, we’re going to resource it effectively to ensure we can keep creating great client experiences.”