Best Euro Lead Manager for Covered Bonds - LBBW
It’s human nature; when times are tough you revert to the tried and trusted when you need something doing. And covered bond houses don’t come more tried and trusted than LBBW.
League tables aren’t everything. But they certainly give a good indication.
And when it comes to LBBW, the tables show the results of a clear willingness to commit to covered bonds. That long-standing commitment means that LBBW is again GlobalCapital’s Best Euro Lead Manager for Covered Bonds.
At the heart of LBBW’s success is its focus on the product, as Patrick Seifert, head of primary markets says: “We focus on covered bonds. It isn’t just a by-product. If you call anyone at LBBW, they know what a covered bond is.”
This involves a commitment to always dedicate the necessary resources — even in these times of investment bank cost cutting. As Seifert puts it: “There is no question we do research on a new issuer, there is no question we support trades, there is no question that we look at new developments.”
That attitude has stood the bank in good stead particularly with newer issuers such as Luminor, LHV Pank and re-entrant CRH. While covered bond technology is well understood by the established issuers, that’s often not the case for the newcomers. As Marc Just, head of FIG and SSA origination, puts it: “A lot of the time it’s not mentioned, but new issuers need step-by-step support, with documentation, with advice on how to present themselves, with rehearsals for investor presentations... you need to invest a lot in a new issuer.” But at LBBW that’s OK: “We are confident dedicating resources if we can add value for a client”.
That commitment doesn’t just apply to issuers. LBBW is always in the vanguard of market developments. Back in 2013 it lead-managed the first ESG covered bond for Munich Hyp, followed by the first green Pfandbrief of Berlin Hyp. At the time, Seifert recalls, many investors they met were “not convinced straightaway of this different animal” and “that it would become an established product”. But LBBW had the confidence, it entered into dialogue with the emerging ESG investors and has been running green roundtables at the annual Euromoney/ECBC conference for six years — long before it became fashionable.
An awareness of the bigger picture is still there. As Seifert puts it: “The attitude of finance towards society is changing; you can’t just sit in your dealing room and say you don’t care. There is a responsibility and need for purpose.” In a Covid world, one area where this is evident is funding Europe’s small businesses. LBBW is fully cognisant of that. Hence its close involvement in industry initiatives to make the ESN product work in countries where it is most needed while safeguarding the value of the covered bond brand.
But it is the bank’s ability to execute trades for clients that is core to LBBW’s success. Some argue that with demand for covered bonds far exceeding supply deal execution isn’t a differentiating factor. Tarek Petzold, head of FIG and SSA syndicate, disagrees: “On the one hand you have new issuers who need to establish a price, on the other you have established issuers who need to save the last basis point and need to get the right timing, pricing and execution strategy.”
And when it comes to dealflow, size matters. There is a virtuous circle of information when you see 50 to 60 benchmarks and many private placements every year. As Petzold puts it: “It isn’t rocket science but it is real information which issuers need. Which investors are price sensitive? Who will buy at negative yields? Who can generate critical momentum?”
The commitment of resources to covered bonds isn’t really a choice. As Seifert puts it: “Covered bonds are in our DNA.” It’s an attitude which has kept LBBW consistently in the top three in the league tables for many years, and more importantly has made it GlobalCapital’s Best Euro Lead Manager 2020 for covered bonds.