A bank of JPMorgan’s stature is expected to dominate in flow products — and it’s been top of the LatAm bond league tables for several years — but to raise market share also means focusing on bespoke situations.
It began implementing a strategy to do just that several years ago, leveraging the expertise and infrastructure from its global, vertically-organised teams in areas such as liability management, restructuring, private credit, project finance and private placements.
“We can bring our global technology, knowledge and intellectual property to our existing clients in order to serve them more holistically and to find new clients that don’t have size, willingness or intent to go the public markets,” says Lisandro Miguens, head of Latin America debt capital markets.
“We started with this comprehensive approach five years ago and it’s really started to pay off in the last 12 months.”
He points to market share which has grown from a 10%-11% level to 13%-16% now. “It’s a function of being very focused on serving our clients with the flow, but also adding in all of these bespoke opportunities to serve them better.”
Of course, you don’t get to top spot in Latin America DCM unless you can dominate the flow as well as bespoke products, and JPMorgan enjoyed another strong year for sovereign borrowers.
Being close to clients was the key amid the volatility, says Miguens.
“Liquidity needs for sovereigns surged after the start of the pandemic and being close to clients was absolutely critical to understanding what they were going through in each country.
“Because of the pandemic, additional work went into advising sovereigns on their liquidity needs. We spent a lot of time on non-deal related work to craft a narrative for investors and rating agencies and in providing information back to issuers about how the market was thinking about them.”
The year was also about getting and staying closer to corporate clients — particularly those that were struggling in industries like air travel and retail. Miguens points to financings for Avianca Airlines and Colombia’s Ecopetrol as two examples.
It steered Avianca through the US bankruptcy process in what was a very complex deal execution, while for Ecopetrol, it provided loan financing in the form of a bridge when oil prices collapsed in early 2020, followed by a capital markets take-out. “The financing made sure they had the liquidity they required to continue with the capital investments and manage through those difficult times,” he says.
That ability and openness to using its balance sheet for clients when the need arises sets JPMorgan apart in M&A financing, too. “We offer a one-stop shop for clients from balance sheet, take-outs and M&A advisory and that is a big competitive advantage for us.”
ESG has now well-and-truly taken off in Latin America, and Miguens says that JPMorgan has been well-placed because of the groundwork it put in over the last two years when other banks in the region weren’t paying attention.
The team is now fielding an unprecedented number of inbound calls. “Suddenly, inquiry has skyrocketed,” says Miguens. “Clients want to learn about the story, and its something that investors are becoming much more focused on. ESG can have a tangible impact on pricing and also a tangible impact on messaging.”
Another priority area for JPMorgan is the rise of project finance in the bond market. “Sovereigns are using all their fiscal capacity to help the real economy and don’t have the ability to fund capex for new projects and infrastructure,” he says.
“In the foreseeable future, we expect to observe an increase in funding in Latin America through private and public partnerships.”
While the loan market used to monopolise project finance, it has been slowly trending towards the bond market in recent years — a trend accelerated by the Covid-19 crisis. Miguens says that investors are becoming more comfortable with construction risk, allowing banks to refinance loans after a few years rather than having to use balance sheet for the full project life. Additionally, this allows sponsors to re-engineer the capital structure as soon as the construction phase draws to a close.
