The perfect mix
In a record year for CEEMEA issuance, JP Morgan led the way. The bank not only acted as lead manager on a greater volume of new issuance than any other bank during the awards period but it was also global coordinator on more deals, cementing its role as the region’s go-to bank. JP Morgan is IFR’s Emerging EMEA Bond House of the Year.
In a market that is increasingly consolidating into the hands of a few banks, JP Morgan continues to be the standard bearer.
It is the bank’s leadership quality that really stands out: it acted as a global coordinator on more deals than any other – 21 – in the awards period.
“For a glo-co role you want the bank you can trust and will provide you with the best outcome,” said Stefan Weiler, head of CEEMEA debt capital markets at the firm.
“Some glo-co roles are down to the leadership we’ve taken on pricing, at other times the issuer has seen us as the best coordinating bank.”
Nowhere has JP Morgan’s global coordinator status been more evident than in Russia, where it took the role on 10 transactions. And in many cases, it’s not a lender.
Indeed, JP Morgan continues to lead the pack for Russian corporates. With the sovereign’s transactions out of bounds for international houses and issuance from financials limited to a handful of private-sector entities thanks to sanctions imposed against state-owned lenders, the corporate sector is the best gauge of banks’ strengths in Russia.
Of the 30 separate tranches issued by Russian corporates over the awards period, JP Morgan has been lead manager on 21 of them, with clients ranging from regulars, such as Gazprom and Norilsk Nickel, to debutants, such as Rusal and Petropavlovsk.
Like other areas of the credit markets, Russian yields have compressed significantly thanks to the global liquidity glut. But while the domestic bid for these deals remains a significant reason behind their tight pricing levels, Russia is not a simple churn-and-print market, with the international investor base critical to the outcome.
“It’s becoming more challenging to sell Russian corporate deals as there’s increasingly less value on the table,” said Nick Darrant, executive director at JP Morgan. “Therefore, you can’t just print by numbers. Each is a bespoke credit story.”
In terms of Eastern Europe, it’s not just Russia where JP Morgan has led the way. It has also acted on transactions for issuers from Belarus, Georgia, Kazakhstan and, most significantly, Ukraine.
“Ukraine is arguably the biggest story of the year,” said Weiler.
While the sovereign’s US$3bn comeback trade, which was its first since Russia’s annexation of Crimea, grabbed the headlines, the deals for two corporate issuers – agribusinesses Kernel and MHP – were arguably more impressive. Both preceded the sovereign’s transaction and both, significantly, repriced Ukrainian risk.
Another area JP Morgan continues to dominate is the Middle East. In the sovereign sector, the bank led every deal except for Israel, where it’s not a primary dealer.
That included Kuwait’s debut transaction, as well as Saudi Arabia’s debut in the international sukuk market, and the kingdom’s return to the conventional US dollar market.
And while that second conventional deal, which raised US$12.5bn, may have lacked the wow factor of the sovereign’s US$17.5bn debut last year, it was still the largest EM bond of the year.
The big test in this instance was the market’s capacity to absorb so much Saudi issuance – US$39bn including the sukuk – in just 12 months. In the event, there were no problems whatsoever, with the order book peaking at about US$40bn.
At the other end of the ratings scale, with the search for yield intensifying, the bank was able to bring riskier sovereigns to the market, such as Iraq and Lebanon. In the case of the former, it was its first bond deal as a standalone issuer in more than a decade.
Not just sovereigns
JP Morgan’s Middle East franchise is more than just sovereigns, though. In October it was one of the leads on a rare project bond, for example, for a subsidiary of Abu Dhabi National Oil Company – a US$3.037bn dual-tranche offering that comprised a 12-year bullet and a 30-year amortiser.
One region where the bank perhaps lags is Africa, where it has missed out on the flow from Nigeria in particular.
Still, there are notable achievements within its Africa portfolio, including a dual-tranche offering from Ivory Coast that included the first euro-denominated bond issue by a sub-Saharan sovereign outside of South Africa.
The bank was also a lead manager on Senegal’s first bond offering in three years, a deal that helped reprice other African sovereigns tighter.
JP Morgan has also led the way in niche currencies, including a lari-denominated Eurobond issue for Bank of Georgia, and in liability management transactions, where it was involved in more such exercises (13) than any other bank.
To see the digital version of this review, please click here.
To purchase printed copies or a PDF of this review, please email gloria.balbastro@tr.com.
