JPMorgan
During the past year, the global loan markets have seen a marked change in the type of lending activity. Although volumes have remained relatively steady, M&A and situational financing volumes are significantly down with corporate refinancings representing approximately 80% of activity. Loan liquidity is at unprecedented levels, fuelling a return to margin levels not seen since the mid-1990s. Against the backdrop of an increasingly commoditised loan market, JPMorgan continues its leadership of the global loan markets across the entire credit spectrum. “Product differentiation has become increasingly difficult in these markets but you need to be consistent in your strategy through both the good and bad times. Our global loan platform continues to be an important revenue contributor as well as being the foundation for the bulk of our other investment banking advice and product services” says Kristian Orssten, co-head of European loan capital markets. Despite clients being spoilt for choice, JPMorgan continues to be at the centre of the largest and highest-profile transactions. The use of the Reverse Market Flex methodology, to enable borrowers to trim margins when a deal is strongly oversubscribed, has been a common feature of the US loan markets for many years, but has been frowned upon in Europe until recently. JPMorgan used its leadership position to employ this technology successfully in the Weetabix and Stabilus leveraged loan transactions. This has since been followed by other firms. “Given the increasingly dynamic loan market investor and the depth of current liquidity, we feel it is important that our clients benefit from reverse flex where appropriate. The concept is more akin to a bond model but can introduce a more disciplined and transparent pricing approach between investors and issuers” says Mr Orssten.
