Most Impressive FIG House in Euros, Best Bank for Funding Advice and Support to Financial Institutions During the Covid-19 Pandemic: BNP Paribas
What is striking about BNP Paribas’s FIG business this year is not just the volume of deals, or the landmark transactions it has worked on — and there have been plenty of those — but the diversity of issuer, product and geography.
Just in 2020, it has worked on 10 out of the 21 additional tier one trades to hit the market, as well 13 tier twos, and 50 senior and covered bonds.
Among those were a clutch of rare names, such as a €500m inaugural non-preferred senior from Argenta Spaarbank in January, and a £650m return for Bupa in June with its first senior since 2017 and its first tier two since 2016. Delivering small and sub-benchmark deals was also a BNP Paribas speciality this year, with deals such a €400m additional tier one for Banco BPM in January, a €200m Jyske Bank tier two in January and just recently, a €300m Scor tier two.
To be the go-to bank for such trades requires perhaps more than it does for the bigger and more glamourous side of the market.
“If you are an infrequent issuer, if you’re looking to do something different, difficult or indeed small, there is a real credit story to be told, and there is real depth of reading the market that is required,” says Christopher Bond, head of FIG debt capital markets, EMEA at BNP Paribas. “Issuers need a bank that they can feel confident will have the conversations with investors and explain the credit, work out fair value and effectively de-risk the exercise for the client.”
It also helps to have a team that provides its full attention to the deal, whatever the size.
“We take a lot of professional pride in getting the smaller and more difficult deals done. Sometimes issuers have a smaller transaction to do, but it’s just as important for them, and it’s just as important for us.”
Getting to the top in European FIG increasingly means getting to the top in ESG issuance — and that’s only going to grow since BBVA with its green additional tier one and De Volksbank with its green tier two this year inaugurated the next evolution of the market.
“It goes beyond green bonds — for financial institutions, that’s just the tip of the iceberg,” says Bond. “A lot of the work and advisory we do is how funding and capital issuance interlinks with a client’s broader institutional ESG strategy.”
“It’s one thing to issue a dated unsubordinated green use of proceeds bond, but it’s quite another thing to extrapolate that to the concept of a subordinated perpetual tier one. All parties need to work together to communicate on and understand the risk factors and the underlying issuer intention and commitment.”
BNP Paribas has also been recognised by the market for the funding advice and support it provided during the Covid-19 pandemic.
The key to its Covid response was the focus and the speed with which it answered the needs of clients, says Fred Zorzi, global head of primary markets at BNP Paribas.
“To do so, we stepped up our communication with the team across sales, trading, syndicate and debt capital markets because we knew we didn’t just have to make sure our clients were receiving information in a timely manner but that the information was directly relevant to the issuer,” he says. “The only way to be relevant is to have a view across all these areas of capital markets and research.”
The group is particularly proud of the advice it was able to give around market timing, says Bond.
“Already in late January we could see something coming, we didn’t know what, but started to advise issuers, especially higher spread names from southern Europe to take advantage while levels hit lows,” he notes. “And likewise, in April, we advised some of the lower-beta issuers to hold back. At that time could see the flows, see that investors were not panicking and see that these issuers could come when the market was going to be more receptive just a little while later.”
It didn’t just give that advice to clients, however, but took it for the bank’s own funding plans.
“Clients were seeing issuance at spreads that were much, much wider than they had been in February, but our view then — which we took for our own funding — was that they should wait,” says Bond. “We felt strongly about that and I think our clients appreciated it.”