- After serving as joint active bookrunner on CVS Health’s $40 billion debt deal last week, Barclays has now helped lead the three biggest bond offerings on record.
- Business Insider spoke with two Barclays bankers that ran point on the deal to understand how the firm has been able to land such roles.
Make it three of three for Barclays.
The UK bank last week served as joint active bookrunner and marketing coordinator for CVS Health’s $40 billion debt financing, the third-largest bond offering of all time.
The massive deal was the latest feather in the cap of Barclays, which also was a lead underwriter on the two biggest debt offerings in history — Verizon’s record-holding $49 billion offering in September 2013, and AB InBev’s $46 billion issuance in January 2016.
Barclays’ roles in each of those transactions go a long way towards explaining why the firm is among Wall Street’s foremost arrangers of debt deals. The bank finished 2017 ranked seventh for debt capital markets activity in the US by volume, according to Dealogic, making it the leading European bank in the rankings.
And as the chart below shows, Barclays has a history of working on mega-deals. It takes the top 10 largest investment-grade bond offerings and divides each deal value by the number of active bookrunners. Using that methodology, Barclays has accounted for more than $35 billion of transaction value, the third-most all-time out of all financial firms.
Success in the US is critical to Barclays. Speaking to Business Insider in 2017, John Miller, now head of global industry coverage banking at Barclays, said:
“The Americas is super important — it’s a huge chunk of the wallet that we all play for. For Barclays in particular we rely heavily on this market, so therefore it is a must-win market for us.”
Business Insider spoke to Justin D’Ercole, the firm’s co-head of global syndicate, and his colleague Barbara Mariniello, its head of Americas debt capital markets, to find out how Barclays does it in debt capital markets:
One of the few banks with the “full suite”
The firm’s robust balance sheet affords it flexibility, said D’Ercole, who says cash on hand has been deployed effectively and strategically over a long period of time.
In the case of CVS, Barclays was one of three banks, along with Goldman Sachs and Bank of America, that committed close to $50 billion for the transaction when it was originally announced. All three had plum roles on the bond deal.
D’Ercole said the Barclays debt team is able to land plum roles on huge deals because of the chemistry that’s been built within its various teams over a long period. He describes the firm’s fixed-income universe as “tightly knit.”
While Barclays is strictly speaking a European bank, it has a strong position in the US via its crisis-era acquisition of Lehman Brothers’ US operations. And many of those people who joined Barclays as part of that deal continue in key positions today.
“We have people in risk, helping manage our portfolio, people in syndicate and capital markets that have worked together for 15-20 years,” D’Ercole said. “It makes for a very efficient internal process.”
Mariniello agreed, stressing the importance of both a well-oiled process and a team that works well together.
“A lot of the continuity and coordination is important, especially with these big deals,” said Mariniello. “When you can react nimbly to twists and turns, it makes it a lot easier.”
D’Ercole also highlighted Barclays’ breadth of products, saying the bank is one of the few that still publishes credit research in the US, while also touting the firm’s sales and trading operation. Those two elements combine to help D’Ercole and his colleagues provide market color to clients looking to do debt deals.
“We’re one of the few banks that has the full suite,” he said. “There are a lot of banks that might have one piece, or multiple, but not a lot of them cover the full suite. We continue to have a lot of success in this business, because we’re set up the right way.”