Best Agent for International US Private Placements – NatWest Markets
A feature of many privately-transacted industries is that in the good times it is sometimes hard to know which firms are on top — it takes a crisis to find out.
That was particularly true in the US private placement market in 2020, as issuers put aside their wallet-sharing or bank rotation inclinations and turned to the agents that they trusted the most.
NatWest Markets was a clear winner, continuing to place a wide range of new deals but also working with clients that required help navigating financial covenant waiver processes.
“Clearly, a lot of issuers were impacted by Covid and needed relief from financial covenants,” says Robert Busby, head of private placements at NatWest Markets in Stamford, Connecticut. “A large part of our work last year was supporting our clients through amendment and waiver processes. That can be a process involving a lot of negotiation and it’s important to find a deal that works to provide the issuer the flexibility it needs while ensuring investors still feel they have some covenant protection.”
NatWest Markets amended over $5bn of private placement debt for seven issuers across its corporate and infrastructure client base. What’s telling, though, is that the bank led six of those deals on a sole basis as borrowers looked to give mandates to their most trusted partner. It was vindication of the bank’s approach to the market, says Busby. “We see our role as not just doing a one-off deal for an issuer but to be with them throughout the lifecycle of the notes.”
Busby says that one of the team’s strengths is its stability over recent years. “It meant that when we had to adapt to a changing market, we had a very experienced team across our hubs in Stamford and London who have seen these market cycles before and knew how to react.”
He adds: “We quickly had to retool and reallocate resources within the team to support those issuers that needed help in dealing with investors but also to find issuers less impacted by the pandemic that were looking to raise funding.”
In a tough year for non-US issuance — while overall USPP market volume was relatively stable at around $95bn, domestic market share rose from around 50% to around 70% — that nimble approach by the bank helped some of those borrowers, such as Bellway Homes and Great Portland Estates, to market.
What’s more, the team has clearly defined its purpose —under a group-wide initiative fostered by chief executive Alison Rose — as helping its customers access pools of institutional investor liquidity across the globe to support investment in the real economy. It’s instructive that it sees the US private placement business in global terms.
“We still call it the USPP market but it’s really broadened beyond that in the last few years — and that’s where we I think we genuinely outperform our peers,” says Busby. “A mentality of only seeing it as a US market leaves a lot of investors on the table. This is particularly so in Europe given the rise of private side infrastructure investment funds there, but also out of Asia where we’re seeing more demand than we did historically.”
He adds: “We see ourselves as a global private placement team where a significant amount of what we’re placing now is to European or Asian investors. The US will, of course, remain the heart of the market given the deep liquidity available, but it’s great to see issuers benefit from more diversity in the investor base.”
On the issuance side, deals from non-US names should be back on the rise soon, with Busby expecting some element of catch-up in the second half of this year as corporates start to term out debt taken on from relationship banks during the pandemic. NatWest Markets is well-placed to lead the revival.