CFI.co Meets LBBW: Hard Work, Excellent Results

Since the financial crisis, few markets have experienced more changes than debt capital markets. It all started with struggling government bonds in select countries. Subsequent measures of the ECB like the APP have brought about an additional dimension to market dynamics. A source of stability and additional demand, the ECB has also impacted the market in unprecedented ways. Negative spreads and yields have consequently led to the crowding out of traditional investors. And while buying financial issuers time to get ready for the future, there clearly remains a risk of overreliance on central bank policies.

Given the slow pace of consolidation in the market, it is no surprise that uncertainty frightens the market particularly whenever a potential end of ECB policies is being expected. Adding to all this the ongoing changes on bail-in regulation across Europe and understanding the respective implications across different formats and currencies, gives a taste of what a successful debt capital markets set-up needs to deliver.

LBBW’s Dirk Kipp, head of Financial Institutions and Markets, feels this environment has helped his people to establish themselves as a partner of choice for issuers looking to explore the full potential of the German investors base. This applies to LBBW’s vast corporate client base as much as to FIG and SSA issuers targeting the EUR market.

As LBBW is itself a regular issuer, its debt capital market set-up serves both direct corporate objectives and those of LBBW’s partners in Europe and abroad: a winning combination in the eyes of everyone at LBBW where the cooperation in funding-related matters is extremely close.

Ever since, German investors have appreciated LBBW as a very solid credit. Streamlining its successful business model and getting prepared for future challenges early, however, has set the bank further apart in the last couple of years. This has spurred interest from international investors and allowed the bank to embrace issuance in additional formats and currencies beyond its traditional strength for covered bonds. Under Patrick Steeg, its new head of ALM who came from its debt capital markets team, LBBW has issued the tightest senior un-preferred benchmark from Germany in the last ten years – an impressive evidence of how quality pays off in capital markets.

And as the leading Landesbank, LBBW is constantly evaluating options in the market and looking at new opportunities such as sustainable funding to develop its underlying green business. It makes sure to be ahead of the curve on capitalisation and to be well-prepared for periods of increased market volatility – a strategy which has been rewarded by stronger investor confidence.

With a strong focus on distribution, LBBW’s head of Primary Markets Patrick Seifert believes this strong in-house cooperation puts the LBBW in a unique position to deliver quality debt capital markets advice to other clients as well. Its stable and committed set-up proves highly complementary to the more traditional investment banks in the market.

A former Head of Treasury himself, Dirk Kipp knows the importance of flawless execution of funding operations. Delivering quality funding has become more of a stretch lately. Issuers are busy with strategic considerations like business models, digital disruption, regulation and cost-cutting. The least treasurers want to worry about is getting their funding done and they simply expect their respective partners to be on top of things – whatever the market conditions.

In 2016/2017, LBBW has lead-managed transactions from 2Y to 25Y for amounts from €50m to €5bn. After all, no size fits all. Same message on the issuer side: beyond household names like Daimler, Rabobank, Nordea Bank, KfW and EIB, LBBW has been entrusted by many first-time issuers like Polish PKO Bank Hipoteczny and BRFkredit from Denmark.

Repeatedly living up to these expectations is what LBBW’s debt capital markets team takes pride in. And making sure that every issuer gets the best possible deal – regardless of size, markets and name recognition. And because it is not necessarily the best credit which gets the best issue placed in the market, LBBW’s dedicated deal teams keep providing the comfort corporate, FIG and SSA issuers are looking for – after all, Germans have a reputation for hard work.