A sign with the MUFG logo, and inset portraits of Fabianna Del Canto and Antoine Baudron.

The co-heads of EMEA capital markets at Japan’s biggest bank outline the division’s success in the hybrid capital debt space and areas of growth that they will look to capitalise on in 2023 to Andrew MacDowall.

With markets starting to stabilise after a torrid year of inflation and interest rate rises, deal-makers who prepared for the calm after the storm are well-placed to reap the rewards. The capital markets team at MUFG are among those benefitting from their groundwork, say Fabianna Del Canto and Antoine Baudron, who were appointed co-heads of Europe, the Middle East and Africa (EMEA) capital markets at Japan’s largest bank in February this year.

“Last year was a difficult year for capital markets, clearly,” says Mr Baudron. “But we’ve had a very strong start to 2023, with a good number of transactions executed. Since the beginning of the year, we’re top of the league tables for euro-denominated EU-and French-based investment grade corporate and hybrid transactions.”

Career history: Fabianna Del Canto 

2023 Co-head of EMEA capital markets, MUFG

2022 Head of UK and EEMEA capital markets, MUFG

2019 Head of business development, agora Digital Capital Markets

2017 Managing director, leveraged loan and high- yield syndicate, Barclays

2015 Managing director, investment grade syndicate, Barclays

As co-heads of MUFG’s EMEA capital markets business, Ms Del Canto and Mr Baudron oversee a full suite of products from investment grade through to sub-investment grade, leveraged loans and equity capital markets, both in origination and syndication.

The capital markets division’s largest regional presence remains in London, with most of MUFG’s origination and credit sales operations for EU clients being executed through the Paris branch of the bank’s Dutch entity, set up as the UK left the EU. Mr Baudron is based in the French capital, while Ms Del Canto sits in the London office.

Both have long experience in capital markets: Mr Baudron has been with MUFG for more than 20 years, while Ms Del Canto’s CV includes Goldman Sachs, Barclays and fintech Agora Digital Capital Markets. But their backgrounds differ somewhat, and thus their appointment is intended to bring a range of complementary skills. Mr Baudron has historically focused more on origination and client coverage, whereas Ms Del Canto has more experience in risk management and syndication. Together, they aim to grow and diversify MUFG’s EMEA operations, building on the success of the past few months.

Market positioning

“We’ve served as a global coordinator on a number of key hybrid transactions,” says Ms Del Canto. “This was a part of the market that was particularly stressed and very strategic for a number of European corporates, which were facing a lot of refinancing pressure. It was particularly exciting for us to be named in a leadership role and being an active bookrunner in transactions that are so strategic in nature, really redefining and pricing how the market looks at these instruments.”

She says that MUFG’s success in the hybrid space reflects work put in late last year, during a period of high market stress. “We were anticipating that there would be a point in time when we would find appropriate market access and a window — and that ended up being the start of this year,” she says.

“We’ve done a lot of work in positioning with issuers for this moment. This is an area where we excel, which is combining our core capabilities in a way that we can effectively address client needs. We’ve been able to use our expertise of liability management flexibly, and can really differentiate in terms of client dialogue and service.”

Career history: Antoine Baudron  

2023 Co-head EMEA capital markets, MUFG, and head of Paris branch, MUFG Securities (EU)

2019 Head of EU capital markets and head of Paris branch, MUFG Securities (EU)

2015 Head of France, Iberia and Switzerland debt capital markets (DCM); MUFG Securities EMEA London

1998 Executive director DCM, MUFG Securities EMEA

1991 Executive director DCM, Daiwa Capital Markets Europe

In January 2023, MUFG acted as the global coordinator for a €1bn green hybrid bond issue by Spanish electricity company Iberdrola, one of the world’s largest renewables producers. The transaction effectively refinanced a portion of Iberdrola’s existing hybrid bonds nearing reset date. The issue, oversubscribed 3.2 times, achieved a coupon of 4.875% and was described by MUFG as “very impressive”. The coupon was lower than recent hybrid issues, taking advantage of favourable market conditions following other hybrid transactions the same week and a drop in rates due to positive central bank indications. The issue also led to new liquidity and interest in Iberdrola’s outstanding bonds.

The same month, MUFG acted as global coordinator and joint bookrunner on a €600m hybrid bond issued by Eurofins Scientific, a Luxembourg-based laboratories company. Closed in a final day and upsized from an initial €500m, the transaction was 2.5 times oversubscribed and achieved fixed annual coupon of 6.875%, 0.375 points below initial price thoughts. The deal allowed Eurofins to return to its targeted capital structure and leverage, to refresh its hybrid curve and prepare for future hybrid transactions, having been unable to issue in 2022 due to market conditions.

“The global coordinator role is an elevated role,” says Ms Del Canto. “It’s a really heavy lift in terms of liaising with investors and ratings agencies, making sure everything’s done appropriately and the transaction is a success.”

Strategic focus

Developing the hybrid business has been a strategic target for MUFG for some time, with the bank developing a strong team focusing on the segment. Furthermore, MUFG’s liability management team is part of its capital solutions group and works on many of the hybrid and refinancing deals that require reprofiling of a client’s liabilities. With €100bn of hybrid debt needing to be refinanced in Europe during the next three years, according to Mr Baudron, MUFG sees ample scope for further deals to be done.

But the co-heads are under no illusions that the capital markets are entirely out of the woods. “We’ve seen an unwinding, in a very short period, of 15 years of central bank liquidity,” says Ms Del Canto. “Managing some of the forces like rising rates and inflationary pressures are things that many people in the hot seat thinking about issuing and managing their liabilities have not faced before.”

Yet guiding clients through this difficult landscape also presents opportunities for investment banks. Ms Del Canto adds that MUFG has been able to position itself in this uncertain environment not only through its spadework to prepare for market reopening in 2023, but through its experience in a diverse range of product segments. This has allowed it to provide alternative sources of liquidity, through its significant loan origination and capital markets presence, and its expertise in private placements and distributing bank risk, for example. Finding and exploiting financing windows — as with the Iberdrola transaction — is crucial.

She says that the markets for investment grade and hybrid capital debt are, if not returning to pre-2022 levels, at least “functioning well in a more volatile environment”, while in the sub-investment grade segment, higher-rated entities are dominating issuance. Leveraged buyouts, meanwhile, have slowed considerably, as the dust from last year settles.

But MUFG expects a brighter global macroeconomic picture in 2024, and Ms Del Canto says that markets including private equity will return to strength — albeit maybe with “different features, different terms and lessons learned”.

Public markets

As they look to the future, as well as capitalising on MUFG’s growing strengths in hybrid finance, Mr Baudron and Ms Del Canto see the pivot back to public markets by clients continuing as the macroeconomic situation stabilises. They will maintain the offering of alternative products that have proved useful in helping businesses through the difficult past year. Otherwise, priorities include going down the credit curve to diversify into more sub-investment grade corporate debt and build on MUFG’s strengths in project finance.

“We’ve seen an increasing number of corporate clients, who would have used bond or loan markets in a more traditional way, shift towards the project finance market, particularly in the past six months,” says Mr Baudron. “That market is now broadening in terms of the types of risk and deals and sectors that are being underwritten. Renewables has been a long-standing strength in the market, but now we’re seeing a lot more in the digital infrastructure space, where we’re growing our presence.”

Ms Del Canto says that institutional investors are increasingly active in project finance. MUFG is engaging with many as clients in transactions, as well as participating in certain deals as a lender.

“We’re optimistic about this year,” says Mr Baudron. “We see activity in capital markets recovering more quickly than we thought it would at the end of last year. We are still cautious, but it’s very positive.”

EMEA prospects

MUFG established a base in the EU after Brexit for a reason — it is a source of a large volume of business. Mr Baudron expects it to stay that way, with deals in countries like France and Germany, as well as southern European nations, not least in utilities, where there are large-scale investment programmes underway.

Ms Del Canto sees particular promise in the Middle East. MUFG has a presence in Dubai, where markets have been quieter over recent quarters, partly because a glut of liquidity from higher oil prices has obviated the need for other financing for many big companies. But with the region’s governments investing substantial sums in green technology, opportunities for financing large-scale energy transition projects are likely to grow. The hosting of the COP28 UN climate change conference in Dubai at the end of the year, following last year’s gathering in Egypt, is adding momentum to the Middle East and north Africa’s transition drive, she says.

Both she and Mr Baudron highlight MUFG’s product range, but also its consensual culture, in which a strong emphasis is put on ensuring any decisions have the support of the full team — a trait typical of Japanese businesses.

“My first six months were, from a capital markets perspective, a bit slower than I would have expected,” says Ms Del Canto. “But we’ve been seeing what deals we can bring to market. And longer term, what really excites me is the growth of the platform. We have a really strong story to tell with investment grade capital markets, and we are looking to see in what other parts of the market we can become as relevant as we are in investment grade, loan origination and project finance. Can we drive that change? Creating that strategy alongside Antoine is really exciting.”



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