The joined-up approach that BNP Paribas takes to corporate financing came into its own this year, allowing its debt markets teams to better navigate the volatile market and help clients first scrambling for liquidity and then to adapt to the post-crisis economy.
“Within debt markets we have brought our lending business together with our capital markets business to give us, as a result, an entirely neutral approach around funding opportunities for clients,” says Mark Lynagh, co-head of debt markets EMEA. “In dislocated markets, as we saw in the first half of the year, that approach proved effective in terms of being able to advise on what were very fast moving markets in terms of credit appetite from banks, and in terms of debt capital markets which were swinging wildly.”
The bank has been widely recognised as being on the front foot very early in the crisis as it provided credit support to clients while also advising on capital markets options. “We try and lead with an advisory approach. It means that if the right advice is to not enter when markets are choppy then we’re likely to provide capital in another form whether that’s off our own bat or from elsewhere,” says Lynagh.
Its regional set-up across Europe also proved a key differentiator and advantage in the Covid crisis. It has fully integrated coverage teams in Paris, Milan, Frankfurt, Madrid and Brussels, in addition to offices in the US and Asia. “Having teams on the ground who understand the local situation, the government rhetoric and the mood in the country, was very powerful and very effective during the crisis,” says Lynagh.
The model might be regional from an origination perspective but it’s global from a funding opportunity perspective, says Rupert Lewis, head of European syndicate. He points to the recent dollar hybrid issuance by Australian shopping centre owner Scentre as the perfect example. “We talked about a euro deal but because we’re completely agnostic over which market we target, when dollars was offering more aggressive pricing, we in Europe were out there selling the deal, not sitting back and pushing for a euro deal. We just don’t have those silos.”
Fred Zorzi, global head of primary markets, is particularly pleased with the strides the bank has made in the US. “It has been a true global effort in terms of advice, whether it is American or Asian issuers accessing the European market or the progress we have made with the our Yankee franchise and European and Asian issuers accessing the US market,” he says.
ESG is ever more central to corporate strategy, including funding, as well as increasingly a key plank of investor mandates and BNP has been at or near the top of the bookrunner rankings. While the topic briefly took a back seat during the Covid crisis, while issuers prioritised liquidity, it’s come back much stronger since.
The ESG activity of the bank fits together in the way that BNP is advising its corporate clients on adapting to the post-Covid economic environment, says Giulio Baratta, head of IG finance DCM, EMEA. “As businesses are adjusting their strategies they are also showing stakeholders that the more resilient they are, the better suited they are to current and future challenges. This is where ESG comes into play.”
He points to the €1bn green bond issued by Daimler in early September as a prime example — the deal was priced through the issuer’s outstanding curve in the first clear demonstration of what’s been dubbed the ‘greenium’. “It shows that a sustainability strategy supported by the industrial strategy of a firm will be welcomed by investors. It is what they want to see,” says Baratta.
Other transactions in which BNP has helped clients adjust to the post-Covid world include the $12bn multi-currency hybrid issued by oil major BP to boost its sustainable transition and, the €850m deal for Ryanair which re-opened the public benchmark markets for airlines at the start of September.
BNPP’s corporate franchise also benefits from consistency of coverage with the senior leadership, including Zorzi, Lynagh, Baratta and Lewis all having been at the bank for well over a decade. That pays off on transactions such as a $12bn hybrid issued by BP in June this year. “The same BNP Paribas syndicate team that has been covering BP globally for at least the last 12 years did that deal,” Lynagh points out. “In difficult times, people turn to who they trust.”
