Shrewd operator
Numerous borrowers were undone in 2022, when Russia’s invasion of Ukraine crippled issuers’ capacity to act, the market was shut for vast swathes of time and trades fell by the wayside. For its ability to manoeuvre clients through a hazardous environment, Goldman Sachs is IFR’s Emerging EMEA Bond House of the Year.
Goldman Sachs isn’t the biggest operator in the Emerging EMEA primary bond market – it’s not leading the league tables by volume or number of deals. What it is, though, is a shrewd operator that understands the needs of its clients and how to distribute risk in difficult markets.
One of the bank’s justifiably proudest achievements of 2022 was to successfully execute every deal it publicly announced – a feat few others could boast of in such a febrile environment. “Every single deal we brought to market we printed,” said Neil Slee, head of emerging markets bond syndicate in London. “Sometimes we had to take our time, but we found ways.”
In the toughest year for issuers and investors since the financial crisis, the bank was able to navigate the challenge thanks to the skills of both the primary and secondary markets desks. Take its deals for Turkey, EM’s biggest issuer of the year, as the sovereign battled to reach an international funding target that at times seemed well beyond its reach.
The bank worked on three deals which contributed to Turkey meeting its US$11bn external funding goal. One of the trades came in March, a US$2bn September 2027 bond, while the other two printed in November and December as the market tone improved, with the placement of a US$1.5bn January 2028 note that was subsequently tapped for a further US$2bn.
Even when the primary market appeared to be shut, the bank was providing updates as conditions were changing quickly. “With their first conventional deal in March, a week beforehand we were saying there was no window – but within a week that had reversed. Turkey is so core to EM that having the trading franchise and being able to see all the flow go through makes a huge difference,” said Slee.
Market intelligence also helped with smaller, more niche trades. One of the themes of the past 12 months has been banks in Central and Eastern Europe striving to meet regulatory requirements. However, these are difficult deals to execute, often dependent on some key investors to get them over the line.
One such issuer was Slovenian lender Nova KBM, which came to market in January to meet MREL requirements. It was its debut international deal. Goldman was able to help the issuer print a €300m three-year non-call two senior non-preferred bond, €50m more than it had initially targeted.
Rather than rushing after completing its roadshow, Nova KBM took a week to bring two critical anchor orders on board before opening the bookbuild. The deal was the result of Goldman’s EM and FIG syndicate desks working together, identifying the key investors and then getting them comfortable with the risks involved.
“What we learnt this year is that you need to have a bottom-up approach,” said Praneil Doolabh, an executive director covering Israel and CEE.
While Goldman doesn’t seek to be on every trade, it does want to be on the landmark deals – as illustrated by some of its transactions in the Middle East. It was a global coordinator on Saudi Arabia’s US$5bn deal in October, for example, which included the kingdom’s first liability management exercise. Goldman was also a dealer-manager for a tender offer for Oman, as the sovereign used a liquidity windfall to manage its liabilities.
“We are proud of those transactions as they moved the Middle East to a different level of sophistication by bringing liability management into their toolbox,” said Rajiv Shah, head of MENA financing and risk management in Dubai.
The bank was also a lead manager for the only high-yield sovereign trade from the Middle East during the year – for Jordan. But perhaps the biggest highlight was acting as a global coordinator on the debut transaction from the Public Investment Fund, Saudi Arabia’s sovereign wealth fund.
PIF announced itself on the international stage by including a century bond as part of its US$3bn triple-tranche offering, which was also in green format. “The 100-year was a clear statement that they were bringing something different into the market and that the market would support them with long-term funding,” said Slee.
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