The Challenger - UBS

  • 21 Jun 2006
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Muscle to topple leaders

UBS has been hiring busily this year, but even before that, had an impressive franchise from sovereigns to high yield. By Adam Harper.

Our Contender for the top house in Asian international bonds, UBS, has emerged as an Asian fixed income powerhouse with the muscle to topple Citigroup and Deutsche Bank from the top of the league tables. With one of the most complete franchises in Asian DCM, allied with a fast-growing team of bonds specialists, the bank is no doubt causing some alarm in the rest of the market.

UBS has certainly made many a headhunter's quarter so far this year, with a string of senior appointments. This year alone, the bank has hired Fergus Edwards from JP Morgan to join the syndicate desk led by Cristian Jonsson, Paul Gregory from Barclays Capital and Rob Thomson from JP Morgan have joined the debt capital markets team led by Ranobir Mukherji. The bank also brought over two hybrid capital specialists — John Needham and Robert Fitzgerald — from its business in Australia.

"We realised at the end of last year that the Asian business was changing and that it was essential that we have the right team," says Mukherji, head of debt capital markets for Asia. "So we went out late last year, identified the best people in the business and brought them in."

And UBS made a key change in management in February. Patrick O'Brien, head of Asia Pacific debt capital markets, returned to London and was replaced in Hong Kong by John Lechte, who also became deputy head of fixed income for the region.

One of the most impressive aspects of the bank's bond franchise in recent times has been its breadth.

UBS has excelled in sovereign deals, leading two out of three of the Philippines' impressive deals in 2005, as well as its dual tranche offering in January, along with Indonesia's $2bn 11 and 29 year deal in March. The bank has also established a leading position in Asia's more lucrative markets, namely high yield and bank capital — it led the first hybrid tier one deals issued by banks in the Philippines and Malaysia.

"We are determined to have a balanced structure to our business," says Mukherji. "We will do high profile deals that are good for our league table standing at break-even rates and then high yield deals which make us some money." He adds that the bank is less interested in poorer quality credits that still demand low fees.

In any case, Jonsson says UBS is able to make its primary franchise pay in other ways. "Primary fees are low, but our trading operations do make money on sovereign and high grade paper, which appeals to many key accounts. For us, it is a question of being able to provide the full product spectrum to our issuer clientele and to our investor base."

Mukherji admits that there are parts of the debt business in which UBS is still building a presence, such as private finance — the lucrative and murky private bond market where credits that might not succeed in public markets raise money from specialist investors.

"We have not done enough high yield in North Asia so far," he adds. "However, we are working on a Chinese deal now, which was mandated as a result of having hired the right people in DCM. We will continue to focus on what we do best — sovereign/quasi sovereign bond issues, high yield bonds, bank capital and private financing. We also continue to be on the cutting edge of technology, be it hybrid capital or Islamic funding."

Key staff: John Lechte (head of Asia Pacific  DCM), Ranobir Mukherji (head of DCM for Asia), Cristian Jonsson (head of syndicate)
Important hires in the past year: Fergus Edwards, Rob Thomson, Paul Gregory
Best deal of 2006: Excelcomindo Finance Co BV, $250m 7.125% January 2013 callable January 2010
Front office headcount: 90 DCM professionals in 16 countries across Asia
League table positions (2001-05):
4, 7, 8, 3, 5 

  • 21 Jun 2006

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 101,974.94 404 8.29%
2 Citi 95,105.34 354 7.73%
3 Bank of America Merrill Lynch 82,200.55 309 6.68%
4 Barclays 81,531.75 289 6.63%
5 HSBC 65,681.57 320 5.34%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 8,921.11 17 10.11%
2 Deutsche Bank 5,429.08 13 6.15%
3 Commerzbank Group 5,145.35 21 5.83%
4 BNP Paribas 4,907.83 23 5.56%
5 UniCredit 3,906.86 15 4.43%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 2,328.59 11 11.59%
2 Morgan Stanley 1,958.99 12 9.75%
3 Bank of America Merrill Lynch 1,598.67 7 7.96%
4 JPMorgan 1,371.27 7 6.83%
5 UBS 1,229.93 7 6.12%