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Private placement pros are on the move as market dynamics shift

Sustainable finance finally hit the leveraged finance markets this year. The concept is headed for a rollercoaster ride

Big isn’t necessarily the best. But when it comes to being a covered bond issuer, and a green bond issuer this year, it was certainly helpful. According to our poll of market participants, BPCE, one of the biggest issuers in the covered bond market was also one of the best, nominated in an incredible five categories and scooping the prestigious awards for both Issuer of the Year and Best Euro Deal of the Year.

Warren Buffet famously joked that only when the tide goes out do you discover who has been swimming naked. A year when the tide has been a long way out for the covered bond market – low funding needs, negative yields and poor liquidity – has been a true test of covered bond banks. LBBW’s long term commitment to the market, and yet willingness to innovate has been more important than ever and has made them GlobalCapital’s Covered Bond House of the Year.

Almost 650 people responded to this year's poll, showing that GlobalCapital's Covered Bond Awards are a recognition of achievement by the market

They say you only get one chance to make a first impression. In the covered bond market memories of that first deal, and how it establishes an issuer’s relative value and reputation for fair treatment of investors, can persist long after the deal matures.

The covered bond market, long established, standard, slow moving, boring even (but in a good way) isn’t exactly renowned for being the fastest of the financial markets to embrace change. So, when an issuer actually makes innovation work to better fund their business, and at the same time makes their investors happy that’s praiseworthy. And that is exactly what NN Bank, issuer of GlobalCapital’s Best Pioneering Deal of the Year, managed to do last June.

In a year which has seen the overall market shrink, the one sector to really buck that trend is the market for green and ESG covered bonds. So, naturally it has been a focus of attention for covered bond bankers everywhere and the competition to be best bank for ESG issuers was more intense than ever. In the face of stiff opposition, it is Crédit Agricole CIB that took the laurels, adding to their already very impressive credentials in the sector.

Some things in life, like tax returns for example, aren’t exactly glamorous, but they have to be done as the downsides of getting them wrong are just too great. So, it is with maintaining existing covered bond programmes, in particular transitioning them to the new risk free rate benchmarks and managing their liability structures. When the downsides are big, banks need to be able to turn to an adviser that they trust and, according to GlobalCapital’s survey of market participants, this year that bank, the Best Bank for ALM and Libor Transition Management, is NatWest Markets.

On the face of it, with low issuance and the ECB hoovering up bonds as fast as it can, you’d say that selling covered bonds this year hasn’t been that tricky. But selling covered bonds well is a different matter entirely. Tight valuations, a lack of benchmark issuance and negative yields all make sales difficult, but at the same time they all make the information that a good sales team can deliver more important to the whole covered bond value chain. And it is something that LBBW, GlobalCapital’s Best Bank for Distribution has focused on more than ever.

To be voted the Best Bank for Covered Bond Research is an impressive achievement requiring a significant effort and investment of resources. But to repeatedly be voted the Best Bank – in nine of the last 11 years, as Crédit Agricole CIB has – requires more: not just effort and commitment but a willingness to adapt to the myriad changes in the market, and the way participants use research over the last 11 years.

The covered bond market has been a great place to be if you are an issuer in the last twelve months. But what of the investors? Nordea Investment Management (Nordea) has been able to navigate the negative interest rates, poor allocations and central bank led distortions, to generate strong returns and become GlobalCapital’s Covered Bond Investor of the Year.