Rescue remedy
Using its platform as a European banking powerhouse, BNP Paribas led the global loan markets through the pandemic. From innovative structuring and expert advice, to pursuing ESG goals and providing liquidity financing to borrowers struggling with the Covid-19 fallout, BNP Paribas is IFR's Loan House and EMEA Loan House of the Year.
BNP Paribas has for many years topped the EMEA lending league tables, using its huge balance sheet to support its clients in the loan market. In 2020, with the world economy facing an unprecedented crisis brought on by the Covid-19 pandemic, the bank took its expertise to the global stage, leading by example and quickly adapting to the new challenges.
The bank moved swiftly and decisively to lead the liquidity financing deal flow in spring, harnessing its franchise to react fastest to the crisis that had engulfed the corporate market. It put its big balance sheet to work and used a continuous feed of information from its fully integrated loan and bond desks to provide the best market read to its clients.
That set the tone for the corporate market and established new terms, providing issuers and investors with much-needed confidence.
Teams across the bank and across jurisdictions were completely aligned and primed for execution, providing BNPP with a big advantage over other banks that were uncertain about what to do.
“While others were still tying their shoelaces, we started straight away using our market knowledge and global view of the economy to race ahead,” said Frederic Zorzi, global head of primary markets.
Amid the uncertainty, the bank took the decision to take market risk on behalf of its clients by underwriting liquidity facilities, providing confidence to the market in the process and vital certainty of funds to companies.
Strong at home …
In EMEA, BNPP dominated the loan market during 2020, fully justifying its status as the powerhouse of European loans and leading from the front to raise billions in liquidity for its corporate clients during the Covid-19 crisis while maintaining its leadership in European leveraged loans through an immensely challenging year.
Acting fast as the pandemic hit, the bank underwrote a debut US$10bn loan in March for oil giant BP, the first multi-billion liquidity facility underwritten during the crisis. The financing, arranged also against a background of a severely disrupted oil market, provided a precedent for the wave of additional liquidity facilities raised by European investment-grade borrowers.
BNPP went on to underwrite and arrange similar jumbo financings for Saint-Gobain, Siemens and Safran, winning the bank plaudits from across the market for providing the best read of liquidity in the crisis.
By the end of the first half, and three months into the pandemic, BNPP had garnered an unprecedented 18% market share after delivering more than €50bn of underwritings and supporting strategic clients through syndication processes or the implementation of state-aid programmes in France, Italy and the UK.
Remarkably, BNPP was responsible for more than 42% of all underwritings provided to corporates in the EMEA bank market as liquidity facilities by the end of the second quarter.
The bank’s joined-up structure and vast knowledge pool gave it an unparalleled perspective on the market, a view that was fully backed by the bank’s senior management.
“As a first step, we had the view that the liquidity was there externally. As a second step, there was the follow-on recommendation from senior management to support the economy, sectors and clients, which showed the confidence of the bank internally,” said Charlotte Conlan, head of loan syndicate and deputy head of leveraged finance capital markets.
…and away
During an extremely challenging year for the Americas, BNPP drew on its global footprint to bring international clients to the region’s markets and guide them in building new investor relationships.
“We’re not trying to be all things to all clients,” said Ravi Raghuraman, a director at BNPP in New York, of the European bank’s attitude to its Americas operations.
It is this selectivity, coupled with its global network, that enabled the bank to stand by its clients as Covid-19 and the associated liquidity crunch descended.
“We were able to react quickly when the crisis unfolded because we have good connectivity both with clients and internationally that allowed us to see what was going on and react accordingly,” said Raghuraman.
In Asia, BNP Paribas navigated difficult market conditions to lend support to its clients.
“In a year of unprecedented market dislocation, BNP Paribas stepped up to support both existing and new clients, providing liquidity, strategic tailoring, complex structuring and targeted distribution,” said Christophe Cerisier, head of loan capital markets for Asia-Pacific.
The bank was one of the bookrunners on a US$2.05bn financing for Indonesian instant noodles manufacturer Indofood Sukses Makmur’s acquisition of its manufacturing partner Pinehill, the borrower’s first loan in more than a decade.
The bank did not shy away from difficult sectors, bringing its expertise to borrowers ravaged by the pandemic.
It was also sole arranger on loans for Hong Kong’s Cathay Pacific and Singapore Airlines and one of the bookrunners on repeat financings for Australian carrier Qantas Airways.
ESG pioneer
The bank continued to be a leader in sustainability-linked loans and was instrumental in moving the ESG agenda into the European leveraged markets for issuers and private equity firms. Standout deals included a €2.2bn term loan B backing the take-private of Spanish telecom operator Masmovil that was innovatively structured to include an ESG-linked margin ratchet, and a €2.5bn facility raised by Swedish investment group EQT.
BNPP secured sustainability coordinator roles on deals for Airbus, Proximus, UPM and Neoen, as well as a £2.5bn loan for Tesco in September, which was also the first UK syndicated loan to use risk-free rates rather than Libor from day one.
BNPP applied its European ESG leadership to clients across the Americas, where sustainability-linked loans are less well established.
The bank structured ESG-linked loans for US airline JetBlue, Canadian professional services company WSP Global, Chilean pulp and paper company CMPC and Mexican cement company Cemex.
Cemex's US$3.2bn facility is the largest SLL in the emerging markets and the largest Latin American loan in 2020.
“A lot of firms are saying ESG is a core principle, so I think the more that this permeates the market, and the more investors are looking for this kind of paper, issuers are going to have no choice but to move down that path,” said Raghuraman.
BNPP also demonstrated its sustainability credentials in Asia-Pacific, acting as one of two sustainability coordinators on a A$1.4bn (US$1.03bn) SLL for Australian infrastructure and engineering company Downer EDI. It was the most widely syndicated SLL in the region in 2020.
Lev leader
In the leveraged loan market, the bank used its deep understanding of investor demand to deliver seamlessly for its clients, following up a flurry of deals in Europe at the start of the year with a strong strategy for clients seeking access to the capital markets after the pandemic hit.
With constant feedback from the bank’s combined loan and bond desks, BNPP worked to identify pandemic-resistant sectors and was able to reopen the European LBO loan market in June through the €2.2bn TLB for Masmovil.
The upsized financing closed at the tight end of guidance, effectively signalling that the leveraged loan market was back in business for new issues.
“We had a fantastic run post-summer. The more times you are going to the market, the more information you are getting on deals,” Conlan said.
That same close connection with clients was also evident in the US leveraged loan market.
BNPP remained steady in its commitment to US leveraged loans, providing corporate and sponsor clients – both large cap and middle market – with underwritten financing commitments and backing a variety of event-driven initiatives.
The bank also increased activity on cross-border transactions, using the deep connectivity of its market-leading European leveraged loans franchise on deals for Telenet, Virgin Media and UPC.
The bank expanded its presence in the US “being repeat supporters of targeted sponsor clients and using our global platform to help structure, price and distribute risk for them”, said Roger Kim, a managing director at BNPP in New York.
The bank helped reopen the LBO market with a US$900m TLB for energy company Hamilton Projects, which was one of the first LBO-related financings to emerge against the backdrop of the crisis.
The bank's client base has also grown to include new sponsors, corporate issuers and new sectors, with many debut lead mandates such as Ultimate Software and White Cap, a construction and industrials business, that raised US$2.334bn in acquisition facilities.
In Asia, BNPP was at the forefront of the region’s growing leveraged market.
Highlights included a US$600m financing for the buyout of Indian IT firm Hexaware Technologies, the country’s biggest LBO deal, and a US$169.9m loan for India’s JB Chemicals & Pharmaceuticals.
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