The bank is known globally for its entrepreneurial and creative culture, and Coady notes that the strong relationship between the US and European teams allows for an exchange of ideas and approaches. “We’ve got the flexibility to be very solution-driven,” she says. “You can see that in some of the trades we’ve done in the US, and that is going to help us continue to differentiate ourselves from other arrangers in the European market.”
In a true testament to Jefferies’ hard work building a world-class European CLO team, the firm’s first year of primary activity saw it play a leading role in league tables, drive market momentum and stand out as the clear winner of GlobalCapital’s CLO Arranger of the Year award.
“We are incredibly thankful for the trust our clients have put in us,” says Laura Coady, head of securitized markets group for EMEA and co-global head of CLOs. She also attributes this success to Jefferies’ expertise in rapidly developing leading franchises.
Although Jefferies only brought its first European CLO in February of 2021, the product is very much “part of Jefferies’ DNA,” says Coady.
We started to work with managers looking to open warehouses at a time when many other banks were dealing with existing warehouses and market uncertainty. What put us in a great position were the strong relationships we’d built up over the years.
Jefferies is one of the leaders in US leverage finance and the company has long been a force in the US CLO market. Over the last few years, it has built a strong European HY secondary trading franchise and more recently a secondary loan trading desk to bolster their growing primary European Leverage Finance activity. Add its strength in secondary securitization distribution, and it was a natural next step to build a leading primary CLO franchise in Europe. To that end, the firm spent much of 2020 putting in place a team with all the necessary experience and market knowledge.
“It was a great opportunity for us to build something from scratch while working with clients we’d known for years,” says Coady who joined Jefferies in 2020. She was followed in September by primary CLO co-heads Hugh Upcott Gill and Luis Leon Carsi. All three had worked closely together in the past and now, in a post-pandemic world rocked by volatility, they began to build Jefferies’ CLO pipeline.
“We started to work with managers looking to open warehouses at a time when many other banks were dealing with existing warehouses and market uncertainty,” says Coady. “What put us in a great position were the strong relationships we’d built up over the years.”
At a time in late 2020, when the success of potential vaccines was still in doubt, the team was able to source a wide array of equity investors to build transactions to bring to market in early 2021, which proved very attractive for CLO managers looking to continue to expand their platforms in a time of uncertainty. All this meant that when 2021 arrived, the bank had a stellar pipeline of strong names ready to go.
“Our success in the initial part of 2021 was down in large part to our team’s experience fitting together with Jefferies platform,” says Upcott Gill. “We are very grateful that well-established names, such as Permira initially, and then Sound Point and Cairn trusted us early to deliver great execution for them. Thankfully we were able to demonstrate our capabilities and build a great pipeline of over 30 deals in 2021.”
In its first year in the European CLO primary, Jefferies finished second in the league table for all CLO trades. This podium finish was the case both in terms of deals volumes and total number of deals - a remarkable result for a debut year. The firm brought 32 transactions for a total of €13.2bn, giving it a market share of over 13%.
The firm’s performance was, if anything, more impressive in the red-hot reset and refinance segment, which exploded into life in 2021. Jefferies finished a clear first in the league table, with 22 refi deals to its name for a total of almost €9bn. Despite much more challenging circumstances, the firm has kept the momentum going into 2022, dominating the first quarter of the year and delivering almost twice the number of transactions as its closest competitor.
“Moving from strength-to-strength is a key focus for us and we want to maintain the impact we made in 2021,” says Upcott Gill. “It’s important for us to be able to deliver for clients in all environments, including the recent volatility”.