You can’t legislate Draghi’s dreams

It doesn’t matter whether Germany accepts the European Central Bank’s Outright Monetary Transactions scheme or not. Draghi's plan has done its job and if the ECB ever needs to invent a new capital markets bazooka to point at a troublesome debt crisis it can simply invent a new one.

  • By Ralph Sinclair
  • 11 Feb 2014
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Investors in Europe’s peripheral sovereign debt markets seem anything but bothered about the German constitutional court’s strong criticism of what is quite possibly a figment of the capital markets’ collective imagination. And they are right to be.

The OMT scheme from the European Central Bank, if ever used, may be unconstitutional, said the German constitutional court on February 7. Adding to the list of things that look worryingly like spectres of our imagination, the court refused to rule on the OMT, but instead passed it over to the European Court of Justice. 

Whether or not the OMT itself would have been enough to cure investor willies about the fate of the eurozone is beside the point. Its intent was. It showed that central bankers and politicians would do — in Draghi’s words — whatever it takes to keep the zone together. If Germany refuses to accept the OMT it doesn’t matter — another solution will be found.

Investors have seen time and time again politicians and central bankers work through difficulties to pull the bloc together and surmount its problems. That’s a far more important lesson for investors, issuers and bankers to take on board than an instrument with a silly name. And a string of blockbuster deals from the periphery this week shows that it’s a lesson investors have learnt well.

With the announcement of the OMT in September 2012 the European Central Bank pulled off a fantastic conjuring trick of convincing everyone in the market that sovereigns in a spot of funding trouble could be helped by the buying power of the ECB, except that even then they may never have used it.

Countries that wanted the support would have to sign up to assistance from the European Financial Stability Facility, or the European Stability Mechanism and submit themselves to economic reform. They’d then have to prove market access before they could access OMT support.

Those issuers which have exited EFSF/ESM support have market access, and they much prefer to do it on their own two feet than ask the ECB. For those that may need support in years to come, the lesson of the European sovereign debt crisis is that it will be forthcoming — in one format or another.

  • By Ralph Sinclair
  • 11 Feb 2014

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 241,652.19 924 8.19%
2 JPMorgan 223,721.63 996 7.58%
3 Bank of America Merrill Lynch 216,064.78 722 7.32%
4 Barclays 184,894.55 671 6.27%
5 Goldman Sachs 158,954.58 518 5.39%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 32,522.19 61 6.56%
2 BNP Paribas 32,284.10 130 6.51%
3 UniCredit 26,992.47 123 5.44%
4 SG Corporate & Investment Banking 26,569.73 97 5.36%
5 Credit Agricole CIB 23,807.36 111 4.80%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Goldman Sachs 10,167.68 46 8.81%
2 JPMorgan 9,894.90 42 8.58%
3 Citi 8,202.25 45 7.11%
4 UBS 6,098.17 23 5.29%
5 Credit Suisse 5,236.02 28 4.54%