During the Bank’s title sponsorship of the recent BNP Paribas Open tennis tournament in Indian Wells, BNP Paribas hosted a record 10 client conferences, held over a 10-day period and spanning a diverse and comprehensive range of sector, investment and product-oriented topics. These offered deep and expert insight into the solutions and industries supported by BNP Paribas CIB in the Americas, and were attended by over 400 corporate and institutional clients, issuers and investors from North and South America.
During a series of substantive, interactive sessions, the Bank’s senior leadership, economists, and client coverage, trading and research teams fielded questions from clients across sectors ranging from Technology, Media and Telecommunications to Insurance to Transportation. With recent volatility in domestic and global markets, the right products and strategies to deal with a range of economic and market scenarios are more crucial than ever. These events reinforced the importance of our client commitment and the expansion of Corporate and Institutional Banking in the Americas.
Participants at the Yankee Bank Conference discussed banks’ capitalisation and current surplus capital in the global banking system. According to Carl Riccadonna, Chief US Economist at BNP Paribas, the Fed’s actions are likely to trigger a recession in the US in the second half of 2023 to slow inflation.
“When nominal GDP is heading below 5% and the Fed funds rate is above 5%, it’s a prescription for recession,” he said. Riccadonna told BNP Paribas’ inaugural Leveraged Finance Forum attendees that recent events in the banking sector had just “made the medicine the Fed is delivering more potent”.
❝ When nominal GDP is heading below 5% and the Fed funds rate is above 5%, it’s a prescription for recession. ❞
A focus on innovation across industries
The series of conferences offered mostly positive takes on how companies, issuers and investors can innovate to overcome market volatility and economic headwinds. Discussing the increased cost of funding at BNP Paribas’ inaugural Technology, Media and Telecommunication Conference, the Bank’s experts noted that rates, inflation, credit fundamentals and business strategy all need to be considered in this volatile market.
A number of corporate treasurers also explained how they were mitigating their funding risk by extending their debt maturity profiles and tackling debt maturity walls. One treasurer said her company had increased its debt maturities and cash reserves in recent years, but that current borrowing costs and stock market volatility still set the company’s bar for making acquisitions higher.
Clients have access to a toolkit of products and strategies to help them navigate the current economic landscape. At the Structured Products Conference, the Bank’s Structured Products team presented innovative products and portfolio strategies to address the various economic scenarios investors are likely to face this year, including a recession and further increases in inflation and interest rates. The Bank’s top insurance clients discussed rates hedging, credit hedging, and yield enhancement at the Equity Derivatives (EQD) Insurance Solutions Summit.
The view from investors
Nearly all the investors participating acknowledged the current challenging interest rate environment, but described many bright spots. For example, in the aviation sector, participants noted that the industry’s resiliency during the Covid-19 pandemic was an inflection point for them, and that now, with the real economy looking very strong despite market volatility, they are in a position to pursue additional opportunities and investments.
In the loan markets, an aircraft lessor at the Bank’s Transportation Conference described how BNP Paribas had put together an innovative loan structure for the company: “[the Bank] made it extremely easy for us at a very complex time in the markets,” he said. The head of capital markets at a private equity fund stated that deals were still being done, even though sellers were having to reduce their expectations from double-digit to single-digit multiples, given the fund’s cost of capital and ability to pay.
Consistently pursuing sustainability
Sustainability was a central theme throughout the client conferences. Hervé Duteil, Chief Sustainability Officer, Americas, BNP Paribas, said “despite the recent debates in the US, the central point for our businesses is not who is right or wrong, but the fact that ESG has become critical to regulators, investors and society at large”.
❝ Despite the recent debates in the US, the central point for our businesses is not who is right or wrong, but the fact that ESG has become critical to regulators, investors and society at large. ❞
BNP Paribas joined the Net-Zero Banking Alliance in 2020 and already has more renewables than fossil fuels in its portfolio. It has a critical role to play in helping clients to accelerate their own sustainability ambitions, and has been supporting a number of insurance clients in recent years. Innovative sustainable finance approaches include green bonds, sustainable financing notes and sustainability-linked loans.
The values of tennis to advance social change
The Bank’s support of tennis in Indian Wells has advanced social change and sustainability in its communities. Since 2010, men and women have received equal prize money at the BNP Paribas Open, and each year, the Bank awards four BNP Paribas Open Scholarships of US$20,000 each to deserving graduating seniors in the Coachella Valley. Following California’s wildfires of 2020, BNP Paribas launched the Aces for Trees social media campaign and committed to planting two trees for every Ace served during the BNP Paribas Open.
Describing the Bank’s 50-year commitment to global tennis sponsorship as “an amazing adventure”, Jean-Yves Fillion, CEO of BNP Paribas USA, noted “today, the values of tennis, more than ever, align very well to those of the Bank. Yes, it is about competition and winning. But it is just as much about community outreach and support, doing the right thing for our clients, sportsmanship, and equity.”
❝ Today, the values of tennis, more than ever, align very well to those of the Bank. Yes, it is about competition and winning. But it is just as much about community outreach and support, doing the right thing for our clients, sportsmanship, and equity. ❞
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