The Champion - Credit Suisse
Smart is beautiful
To win in Latin American bonds, being big helps, but being smart is better, as Credit Suisse has proved. By Danielle Robinson.Since January 2005 to the end of April this year, Credit Suisse has bagged the biggest share of the best-paying, high profile sovereign and corporate deals. Not by cutting fees to get the most plain vanilla deals, or by being a big lender, but by developing innovative solutions for sovereigns and corporates.
"A core business underwriting plain vanilla bonds is the bedrock," says Paul Tregidgo, managing director and head of global debt capital markets for Credit Suisse in London. "You have to demonstrate a track record to investors and issuers that you can consistently price, place and trade risk in the asset class.
"But that is the beginning not the end. The different needs of sovereigns and corporates in the region are developing so fast that you always have to be at the cutting edge and thinking about the next stage of the game."
Having always been among the leaders in the business of liability management, Credit Suisse led Brazil's C Bond exchange last year, along with JP Morgan, and was the only bookrunner that appeared on both Mexican dollar and euro denominated warrant trades.
It snatched a bookrunner position on virtually all of the Mexican blue chip corporate issuers from under the noses of big universal banks giving loans at razor-thin margins in the hope of winning better paying business.
Those borrowers included America Movil, Televisa, Pemex and Telmex, some of which gave Credit Suisse repeat business during the year.
America Movil's two international offerings in 2005, a $1bn 30 year bond issue and its ground-breaking PS5bn ($460m) 10 year peso denominated global bond, were both led by Credit Suisse.
Telmex mandated Credit Suisse and JP Morgan to lead manage its $1.3bn offering of fives and 10s early last year and also chose Credit Suisse to do its inaugural peso global, along with Deutsche Bank, in January this year. Even issuers who didn't use Credit Suisse as their lead on their original deals mandated it for re-openings — Axtel, Posadas, and Vena being examples.
It expects to maintain a leading position in the business by focusing on new financing trends in local currency.
"We helped start the domestic mortgage backed market in Mexico and we believe local ABS will continue to be a big sector," says Michael Schoen, managing director in charge of Latin American debt capital markets at Credit Suisse in New York.
The Credit Suisse-led deal for Sucasita in December 2003 was the first in that market, and CS has been a clear leader since.
"Also increasingly important will be the growth of global local currency deals," adds Schoen. "It is a long term trend because it is the appropriate thing for many countries and corporates."
The bank has also been quick to jump on new trends. "We were not the first to get into the Asian retail-targeted perp market but we were one of the leaders by the end of last year," said Schoen.
The bank also has one of the best reputations on the Street for introducing tough high yield credits to the US market and providing solid after-market support.
"If you are a high yield borrower and you recognise you will not necessarily have automatic access to the international markets, you need to go with an experienced execution team," says Rob Kay, managing director and head of US syndicate in New York.
|Key staff: Sue Romo Latin DCM, Felipe Garcia Latin DCM, Charles Achoa Latin DCM
Key clients: America Movil, Mexico, Brazil, Companhia Siderúrgica Nacional
Important hires in the past year: Ricardo Fernandez, hired from JP Morgan to focus on Mexican local DCM
League table positions 2001-05: 3, 3, 2, 7, 1