Fee-ble excuses

Among the many miseries perpetrated by MiFID, there’s one aspect which has particularly caught this newspaper’s eye: the disclosure of the fees paid to banks for new bond issues.

  • By Owen Sanderson
  • 04 Jan 2018
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Banks are already taking radically different approaches to meeting this new regulatory obligation.

Some seem to not bother at all, others direct enquiries to a managed website, while others still will disclose new issue fees to any investor who asks (few bother). Other banks append a fee range to their new issue announcements, while others are more specific.

Whether it matters depends on the market. Some markets have open fee schedules, but for others, obfuscation has hitherto been the order of the day.

Transparent fees could discourage some practices such as printing zero fee trades for league table credit. But equally, they could encourage banks to push more of their deal-related income into less transparent ancillary business, such as new issue swaps.

While MiFID is supposed to help investors, fee transparency might mostly help the biggest syndicate operations in the Street. If opening the bond fee kimono encourages a price war, banks offering full service investment banking operations will be best placed to win, driving pure financing houses out of the market.

That could leave issuers paying lower upfront costs, but facing a smaller pool of counterparties in the long run.

The example of the US market, which has long enjoyed fee transparency, might be instructive. Disclosure has done nothing to erode issuance fees that have stayed high and stable for years. But the pool of banks offering top tier bond distribution is far smaller than in Europe.

Whatever the eventual effect, though, the market urgently needs some consistency. There is no excuse for the huge spread of approaches taken so far — if disclosure is to apply at all, it must apply fairly to all.

  • By Owen Sanderson
  • 04 Jan 2018

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 303,213.49 1178 8.03%
2 JPMorgan 296,939.86 1296 7.86%
3 Bank of America Merrill Lynch 277,801.06 936 7.35%
4 Barclays 230,549.51 858 6.10%
5 Goldman Sachs 205,902.82 678 5.45%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 43,227.81 174 7.06%
2 JPMorgan 38,825.76 78 6.34%
3 Credit Agricole CIB 33,071.14 158 5.40%
4 UniCredit 32,366.25 145 5.29%
5 SG Corporate & Investment Banking 31,330.98 120 5.12%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 13,024.03 55 8.93%
2 Goldman Sachs 12,162.67 59 8.34%
3 Citi 9,451.48 53 6.48%
4 Morgan Stanley 8,054.41 48 5.52%
5 UBS 7,856.75 31 5.39%