US Investment-Grade Bond House: Morgan Stanley

Yet, as the leaves began to fall from the trees in autumn, the wheels started to come off the wagon. The absence of a rates hike turned into volatility concerns surrounding when the hike would come. A strong dollar put pressure on emerging markets. Would-be president Hillary Clinton said drug companies were making too much money, and the healthcare sector promptly tanked. Depressed oil prices made a mockery of debt-laden E&P companies’ revenue projections. The IPO market quite simply stalled. By the time you read these words, the Fed will...

London, September 1992: That dreaded phone call from your boss – can you come to my office, on the hop? Bloody hell, what whingeing salesman had I beat up this time, or could it be a midday risk exposure check or, worse, yet another meeting with the lawyers. But it was none of those things: instead, at that meeting and several more over the following days I was recruited to help plot an assault on an elderly woman – the Old Lady of Threadneedle Street, aka the Bank of England. I was running Morgan Stanley’s fixed-income balance sheet in...

Issuers breathed a sigh of relief when bond markets finally reopened to high-yield energy companies in February. CrownRock, encouraged by a 20% rally in the price of crude over the previous three days, rushed a deal to market, breaking a three-month hiatus – and in style, gaining US$1.5bn of orders for its planned US$300m deal. As oil rallied back above US$60 over the next few weeks, others followed in its wake. Bumper deals returned as investors bet the precipitous drop in oil – crude had plunged from US$107 a barrel to US$42 in just six...

It is common practice, law firm Neuberger Berman wrote in a client note, to use protective wrap when shipping fragile items. “Regulators have similarly tried to employ regulations to shield investors from a bubble in the US credit market,” it said. In 2013, regulators provided guidance that said leveraged loans should use pro-forma leverage of no more than six times, as measured by total debt/Ebitda; and have the ability to fully amortise secured debt or repay 50% of the total debt over a five to seven-year horizon. It was not until September...

The recent history of Venezuela has been a tale of tragic economic mismanagement and unfulfilled potential. “Recent years have seen the biggest oil boom in history, and yet Venezuela has suffered from perhaps the most wasteful economic management in the world. Its population should enjoy the same living standards as Norway,” said Jan Dehn, head of research at Ashmore. Instead, the population is struggling against violent and relentless economic headwinds that threaten to sink the economy at any time. Real GDP in Venezuela contracted by 4% year...

Argentina likes to confound and lived up to its reputation with the election in late November of conservative Mauricio Macri as president, bringing to an end an era of populism that has isolated and stunted its economy. The result was a clear vote for change, despite the slim margin of victory by the centre-right candidate (Macri won 51.5% of the vote, compared with 48.5% for his Peronist rival, Daniel Scioli of the ruling Frente para la Victoria). But although markets responded enthusiastically to Macri’s pro-business agenda, investors would...

Pre-IPO fundraisings entered the mainstream as a source of funding for fast-growing technology companies in the US and Europe in recent years. But they also have the potential to disrupt the traditional IPO process. Uber Technologies became the world’s most valuable start-up in 2015 with a series of private fundraising rounds that pushed it beyond the US$50bn valuation carried by Facebook before its IPO. But while Facebook’s last round of capital-raising was soon followed by its public market debut, Uber has no such plans. In adopting this...

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Just a couple of years ago, First Data didn’t exactly look headed in the direction of awards territory. Saddled with 9.6 times leverage in the wake of its US$27.5bn buyout in 2007 by KKR – one of the largest LBOs in history – the financial data processing company was struggling to add revenue and get out from under its mountain of debt. But with a remarkable series of capital transactions that included a US$2.8bn IPO this year, First Data reduced its annual interest expenses by US$500m, unlocked major gains in shareholder value – and helped...

When Charter Communications agreed to buy Time Warner Cable in May for US$78.7bn including debt – just over a year after it lost its hostile bid for the cable operator to Comcast – TWC bonds sank. Hours later, when the first details of the financing emerged, and Charter declared its intention of maintaining an investment-grade rating for TWC bonds, they rallied again. Charter president and CEO Thomas Rutledge was sitting pretty. But then the market began to ponder: How can a company like Charter, which only had high-yield debt, pull that off? ...

The themes that dominated the US bond market in 2015 were the massive resurgence of M&A, the billions of dollars of investment-grade bonds that financed those acquisitions and the intense volatility that banks had to navigate along the way. Having a safe pair of hands to steer companies through the ups and downs was crucial, as spreads blew out to three-year wides – and Bank of America Merrill Lynch was at the forefront of many of the biggest and most challenging bond sales. In a year that saw a record US$4.2trn of M&A announced, BAML was a...

As equity was bought back or doled out to finance acquisitions this year, ECM volumes slipped and IPO activity collapsed. This presented an opportunity for a canny bank to attack, carve out niches and accelerate its way up the league tables. Those that best understood risk could pump up returns by using capital judiciously. Credit Suisse was one such bank. While it has a smaller investment-banking footprint than its rivals, Credit Suisse is also lighter on its feet – and that helped it repeatedly find the right solution for clients. Of course...