Managing curveballs
Deutsche Bank was a go-to house for SSAR issuers in 2023 as the market threw curveball after curveball. Its ability to expand its business, grow market share and provide liquidity to its clients particularly stood out, making Deutsche Bank IFR’s SSAR Bond House of the Year.
For much of 2023, it was not an easy time for a bank to display its skills in the SSAR market. But Deutsche Bank did just that.
The work it did was borne out in the rankings, with the bank a top three bookrunner across IFR’s sovereign, supranational and agency euro league tables. The rankings were the result of Deutsche more generally regaining its poise and confidence after turbulent times. The key, according to Ade Ademakinwa, head of DCM syndicate for Europe, Middle East and Africa, was for the bank to be comfortable in its own skin.
Despite what Deutsche’s league table rankings might suggest, that has meant being selective about which business it gets involved with, Ademakinwa said: “We don't do business for the sake of scale. We do business because it's profitable.”
Even with that selectivity, Deutsche is still ranked second in IFR’s sovereign euro bond league table, with a volume of more than €17.2bn and a market share of 9.07%.
“We've found our sweet spots for where we want to be [in the sovereign market],” said Katrin Wehle Becker, head of SSA DCM. “For some sovereign partnerships this might be a natural number one [ranking], for others it's a top five position, for others it's a top three. But you barely find us out of the top 10."
The bank’s sovereign strategy resulted in getting a mandate for three out of Germany’s four syndicated deals in 2023 as well as a number two spot in the 2023 Bund auction rankings.
Its activities in the sovereign area also include placing Spain’s €13bn October 2033 bond last June and acting as duration manager for Italy’s €5bn October 2053 deal in February.
As well as sovereigns, Deutsche’s tactical approach has found it well represented with different types of issuers, ranging from multilateral development banks to Canadian regions and Nordic SSAs.
“We do business because we add value to our client base,” said Ademakinwa. “And that value isn't just about balance sheets, it's about ideas.”
As in 2022, many of the most valuable ideas were ones that got issuers to where the greatest pool of cash lay. The ability to deliver issuers into those deeper pockets of demand proved of paramount importance for SSAs in 2023 if they wanted their deals to perform.
Issuers that showed sensitivity to buyers’ demand were rewarded. Deutsche was on the successful October European Union syndication which surprised some market participants with its dual-tranche structure: the EU included an unexpected short-dated tap to reduce the burden on the longer-dated note, where volatility at the time was concentrated. Investors put in €48bn of orders for the €4bn April 2044 bond and €37bn for the €3bn October 2026 tap.
Strong links between the primary business and secondary traders help achieve that at Deutsche, according to Mark Lewellen, co-head of capital markets in EMEA. “There's a shared accountability,” he said, for performance in both the primary and secondary markets.
The market intelligence the primary team gets from that joined-up approach helps issuer clients navigate thorny markets.
A willingness to have difficult conversations also helps. “It's our ability to give them the truth [that gives issuers value],” said Neal Ganatra, head of SSA syndicate. “Sometimes it's easier said than done. But we've had a number of conversations where we've told issuers not to do transactions … when the market does feel choppy, when we're getting the intelligence from sales, trading, when we have this whole ecosystem that's telling us that this is not the ideal time to do something.”
“We've seen multiple examples from [SSAs] where they have said, ‘thank you very much for that advice’, because it really differentiated how the trade was going to be executed."
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