Best Bank for Distribution - DZ BANK
Germany is the ancestral home of covered bonds, so it’s no surprise that to win an award for distribution, a dealer must be strong in the German market. But covered bonds are also Germany’s greatest export success story in the capital markets, so strength at home isn’t enough — a dealer must also have a deep reach into the large community of institutional asset managers across Europe and Asia as well as into official institutions across the globe that are investing in the asset class.
DZ Bank ticks all those boxes, providing intense sales coverage wherever covered bonds are found in portfolios. “It’s true that we have a special bid from the German co-operative sector and our German home market,” says Matthias Ebert, head of covered bonds at DZ Bank, “but our investor reach goes far beyond Germany and includes all key investors in the asset class in Europe and Asia.”
DZ Bank’s fixed income sales force comprehensively covers covered bond investors out of various locations in Germany, centrally from Frankfurt and locally in the Apac time zones from Hong Kong and Singapore.
“In order to be a leading dealer for investors in covered bonds, we need to provide our salespeople with strong insights into all types of covered bond structures and housing markets across the globe and all‑encompassing market making,” says Norbert Schäfer, global head of institutional sales at DZ Bank.
DZ generates this in-depth knowledge with three dedicated research analysts for covered bonds and four full-time covered bond traders. “We make markets in more than 1,500 covered bonds globally on all trading platforms”, says Horst Senzel, head of covered bond trading and a veteran in the market.
“Our sales force is well known for being experts in the covered bond product. Through having that type of knowledge and experience, we were able and willing to provide liquidity and serve investors even when markets were shaky during the Covid crisis.”
In recent years, new technologies and platforms have disrupted the traditional distribution business, with automation becoming more common. But, while investors can hook up to these new systems and directly place orders, that doesn’t mean that dealers will not have a role in the process. For DZ Bank, the placement of bonds is a lot more than the technical execution of an order.
“The way we understand placement, it is not about just connecting with an investor and placing bonds to them,” says Ebert. “It is about building trust, getting issuers in front of the relevant investors in meetings or roadshows and getting research to investors and giving them a continuous view on the big topics, specific issuers or the market itself.”
Investors appreciate this deep expertise in the product. Daniel Rauch, the portfolio manager at Union Investment responsible for covered bonds, says that when he works with dealer banks, it is important that they have a specific strength in covered bonds. “In my view, it is important that a dealer is deeply rooted into the covered bond market and provides the full service package from trading, to sales coverage to covered bond research. Exactly what DZ Bank does!” he says.
In the ESG bond market, issuers want to ensure that the right investors — those with specific ESG credentials — are being allocated bonds, and DZ is supplying a systematic way of doing that through its ESGlocate database.
It contains information in 20 different fields across four categories about investors and the mandates that they manage, giving issuers the knowledge to make the right choices about who they allocate their bonds to.
In the Best Bank for Distribution category, DZ Bank came out top in the investor poll by a distance — it also came joint-top in the issuer poll. And while this year it trailed its rivals in the peer survey, it still works as hard with its syndicate partners as it did when it topped that category last year.
“We follow a decidedly collaborative approach with all the stakeholders in a transaction execution — and that includes the other dealers in the syndicate team,” says Friedrich Luithlen, head of DCM at DZ Bank.
“In order books, we want to maintain high levels of accountability and transparency in order to keep competition constructive and improve the services that we provide as an industry.”