The Covid-19 crisis has presented
numerous challenges in terms of market volatility and adapted ways of working,
and BNP Paribas investment banking teams have stepped up to support clients
throughout this time. Euromoney acknowledges this in its latest regional Awards
for Excellence, in which BNP Paribas is named Western Europe’s Best Investment
Bank and Western Europe’s Best Bank for Financing, alongside investment banking
awards for Belgium and France.
George Holst, Head of the Corporate Clients Group, and Valerie Jourdan, Co-Head of Debt Markets EMEA, look back on the past few months and explain the role capital markets – and their teams in BNP Paribas – played in helping corporates and investors navigate the complex challenges faced. They also look to the future and assess the opportunities for corporates to use sustainable finance.
What role did capital markets play in assisting corporates and investors during the Covid-19 crisis in EMEA?VJ: The first reaction was for Corporates to draw on liquidity lines in place with their banks, and then they turned quickly to the debt markets to raise capital – in the form of loans or bonds, mostly – and we helped them do that.
BNP Paribas investment banking teams stepped up to support clients throughout this year
GH: What was indeed noteworthy is the speed at which this money was raised. Capital markets segments reopened one after the other in the space of a few weeks. Banks played their role as intermediaries, providing liquidity and underwriting the issuance, not only in investment grade but also in the leveraged segment, well relayed by supportive investors, and eventually also in the equity space. Our local coverage teams had the proximity to address our client needs unwaveringly.
VJ: Markets have stabilised and we are now entering the next phase: we are advising our clients on their capital structure, primarily rebalancing debt and equity.
GH: And naturally, we are at their side to analyse the reshuffling at play in their industrial ecosystem, helping them identify restructuring and growth opportunities.
How important is digital innovation in supporting clients?GH: Let’s face it, most banks run a complex and secure IT infrastructure that could make it challenging to move fast on digital innovation. Yet, the sudden constraints imposed by the confinement have accelerated our transformation and mobilised our IT and banking teams in partnership, changing anchored habits almost overnight.
VJ: I agree; we have seen digital acceleration in multiple places. Obviously, we had all our meetings with clients online, but one of the most striking examples of this change was IPOs, as we have started running virtual roadshows – something hardly done ever before and that has been very well received by investors and issuers alike.
In what ways did your teams’ adapt given the unprecedented environment of H1 2020?GH: Client contact is part of our bankers’ DNA, hence not being able to physically meet with clients was unprecedented and has required that we adapt. Equally, brainstorming together is a key driver of our success. At BNP Paribas, we have benefitted from the support of our IT colleagues, who have done a tremendous job in deploying additional connection capacity and innovative communication tools that comply with the highest security standards, so that we could keep our external and internal engagement intact and intense.
VJ: On the capital markets side, all teams, either working from home or at their desks, have been able to maintain the same level of service to their clients. This has not been a walk in the park and was made possible thanks to the dedication of our teams.
Looking ahead, how do you think the Covid-19 crisis will change corporates’ liquidity and funding strategies?GH: We see two major trends for H2 2020 onwards. The first change has to do with the management of liquidity lines. Corporates have drawn on lines and increased them in many instances, but there are many other ways to increase liquidity on a balance sheet, working capital or leasing solutions for instance. The second consequence is that the additional debt that has been taken on in the past three months now needs to be “digested”. Very early on, we started to discuss balance sheet restructuring with our clients, including public and private equity support. This may also lead to the reshaping of some industries, with changes in business and operating models, which in turn trigger asset disposals or consolidation.
VJ: I would add a third development, towards more sustainable financing. The trend towards sustainability is actually not Covid-19 related as it started some time ago already, but the profound change in the corporate planning strategies at play offers a superb opportunity to accelerate on that front, for the better.