The biggest winner in this market from the March demise of Credit Suisse — the leading arranger of Swiss franc bonds for most of the last 20 years — is its acquirer UBS Group AG, though others such as Deutsche Bank AG and BNP Paribas SA have also boosted their share of the niche debt.
“We have indeed seen a lot of new issuance year-on-year and in that sense the collapse of Credit Suisse has not had any impact on the primary market so far,” said Markus Thoeny, a fixed-income portfolio manager at Lombard Odier Asset Management. The competition for market share might mean some banks try to win business in the short term by promising more issuer-friendly terms, he added.
Rising yields in the Swiss markets have opened up arbitrage opportunities for international issuers who can raise funding at cheaper levels than they would in the euro or US dollar markets. Investors who had previously skewed their portfolios toward equities or cash have also returned and poured money into fixed income.
“We are one of the larger of the non-Swiss banks operating in Switzerland and we see a need for competition in that market, given the consolidation of the two largest players. We hear this from clients as well,” said Mark Lewellen, co-head of capital markets at German lender Deutsche Bank. “There is an opportunity in the market for Swiss franc bonds and we’ve recently made a number of hires to help bolster our team in Zurich, both on syndicate and the origination desks.