Positive progression
In a difficult and highly competitive year characterised by patchy M&A, subdued refinancing activity and macroeconomic minefields, HSBC was one of the only banks to raise its market profile by continuing to invest in its franchise as competitors fell back. For this reason, HSBC is IFR’s EMEA Loan House of the Year.
HSBC’s ascent to the top of the bookrunner league tables in Europe, the Middle East and Africa topped a strong year that showcased the bank’s enviable financing capabilities despite volatile and challenging market conditions, underscoring its position as one of the world’s best capitalised and rated institutions.
The bank climbed five places to bag the number one bookrunner slot in the award period ending November 15 2015, with volume of US$41bn in 182 deals, giving it a 7% market share – a position that was reinforced by leading roles on some of the year’s biggest deals.
“We have made enormous progress in volume, innovation and landing trophy, landmark deals including some of the largest financings in Europe. In terms of the loan product and progress made relative to the competition, no-one can touch us,” said Richard Jackson, HSBC’s global head of leveraged and acquisition capital financing.
While the wider markets were rocked by a range of issues from Greece to China, oil, energy, and commodities, the loan market continued to steadily provide capital to key clients. HSBC’s big balance sheet allowed it to commit capital quickly and selectively for clients in rapidly evolving market conditions.
“This year has been macro-driven. It’s rare to see such change so quickly, but we’re in a better position as a result of these changes. We’re very conscious in a challenging year for banks, we’ve been very successful and progressive,” said James Horsburgh, managing director in HSBC’s capital financing, global banking and markets team.
HSBC deployed its big balance sheet to best effect despite increased risk and continued to prioritise and emphasise the loan product in ways that other banks do not, which allowed it to turn in a strong performance in every sub-sector of the loan asset class in a diverse range of transactions.
“The DNA of the firm is credit. We have a financing-led strategy and loans are still very important. We lead with our core product – you won’t get an M&A advisory role without a balance sheet commitment,” Horsburgh said.
Loans sit within HSBC’s global and corporate banking business and leverage its loan capital markets and corporate advisory platforms. HSBC’s loan platform is part of the wider capital financing division, which provides a full suite of capital and advisory solutions through its debt, equity, M&A and asset liability management teams.
Key deals
HSBC’s acquisition financing franchise provided underwriting and financing support in landmark deals for its corporate clients.
A 150-year relationship with conglomerate Hutchison Whampoa and the proximity of HSBC’s chief executive Stuart Gulliver in Hong Kong allowed the bank to win a sole underwriting role on a £6bn bridge loan facility backing its £10.25bn acquisition of O2 in March.
Long-standing relationships were also a feature of HSBC’s prominent bookrunning and MLA role on a US$33.75bn acquisition financing backing Israeli pharmaceutical company Teva Pharmaceutical Industries’ US$40.5bn purchase of Allergan’s generics business in July.
HSBC was the first bank to respond and was credit approved within three days, which allowed it to commit a larger amount than required. The deal will be financed with a US$27bn bridge loan to debt and equity issues and is expected to close in the first quarter of 2016.
The bank also acted as mandated lead arranger on a £10bn bridge loan supporting Shell’s £47bn acquisition of BG Group, which replaced a £3bn interim bridge loan provided in April 2015 and gave the bank a joint bookrunning role on Shell’s four-tranche US$10bn bond issue in May 2015.
HSBC was also sole global coordinator on Glencore’s US$15.25bn refinancing and amend-and-extend transaction, which secured the commodity trader’s finances before it was rocked by tumbling commodity prices in September.
The bank’s strong emerging markets franchise and cross-border capabilities gave a string of mandates in the Middle East, including a US$3bn three-year senior unsecured term loan for Qatar National Bank, a bookrunner role on a US$1.1bn five-year senior unsecured term loan for Dubai’s DP World, and bookrunner and coordinator position on a US$10bn loan for Saudi Aramco.
”We are very strong in the Middle East, where we’ve done more deals than anyone else,” Horsburgh said.
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