Content area
Full Text
In a record-breaking year for CEEMEA bond issuance, JP Morgan has taken a definitive lead over Citi in the 2017 league tables. And with those two banks raising their market shares even further, some say there has been upward pressure on fees, as issuers fear the outcome of not mandating either of the two leaders.
As of December 13, <b>JP Morgan</b> had achieved a 13.2% share of CEEMEA bond bookrunning in 2017, according to Dealogic, having underwritten an apportioned volume of $27bn.
<b>Citi</b>, which has been top of the CEEMEA bond market for the past three years, has a 12.2% market share, having led $25bn of apportioned volume. <b>HSBC</b>, third on the league table, has an 8.7% market share and all other banks’ shares are 5.1% or lower.
“Over the past couple of years a duopoly has developed, and it has now become hard for issuers not to hire JP Morgan or Citi,” said a CEEMEA debt capital markets banker in London. “If you don’t, and a deal doesn’t go well, you could find yourself under heavy criticism. So now, on most trades in CEEMEA, one or both of us tend to appear on the mandate. And we see that momentum continuing.”
One DCM banker said pressure to mandate these two banks had led to Citi and JP Morgan being able to put upward pressure on fees paid to banks to arrange bonds. In the past, bidding wars between banks for some of the most sought-after mandates have meant that some bonds, especially sovereign trades, have been done for zero or very low fees.
“It has put JP Morgan and Citi in a much stronger position for negotiation with regard to fees,” said that DCM banker.
<b>Deutsche Bank</b>, having slipped down the league tables, was also pinpointed as a factor in the rising fee environment for CEEMEA. Deutsche has returned to fourth position this year in the CEEMEA league tables, with a...