Deutsche Reorganizes Junk Group, Aims High
November 22, 1999
Deutsche Banc Alex. Brown last week reshuffled its European high yield operations to include emerging market corporates, a move designed to vault the firm to the top of the underwriting league tables.
The combined effort, headquartered in London, will be headed by Jeff Lubin, formerly of BT Alex. Brown before its merger with Deutsche, and Youssef Khlat.
Lubin said Deutsche's aim is to be one of the top three underwriters in European high yield and emerging markets corporate, but even that is an interim goal. Eventually, the firm wants to take the top spot. "We have aspirations to be number one," he said.
As it stands now, Deutsche is already achieving its immediate goal. The bank has an 8.4% market share in the European high yield market and ranks third among underwriters, compared with last year's 3% market share and 12th slot in the league tables for the corresponding time frame, according to Thomson Financial Securities Data.
Interestingly enough, Deutsche doesn't even crack the top 10 among U.S. junk underwriters. For the U.S. market, Deutsche ranked 12th for the first three quarters of the year with $1.7 billion in high yield deals underwritten and a 2.1% market share, according to TFSD.
Europe has become a huge focus of the group, Lubin said last week, and the two markets - high yield and emerging markets corporates - have become more similar. The pros who work on those issues have to understand credit as much as political risk and sovereign issues, he said, which was part of the underlying reason for the internal move.
He said the bank would be hiring extra people, provided "the markets cooperate," but he didn't elaborate as to how many new hires he has planned. Deutsche has been on a hiring spree of late, though, hiring away as many as eight managing directors from Merrill Lynch alone (HYR 11/8/98).
The approach for the European market will be similar to Deutsche's strategy in the U.S. market: a fairly broad net as far as sectors are concerned, but with a special emphasis on telecom, media, and financial sponsors. There also will be energy, chemicals and transportation in the mix, Lubin said.
The extra attention in Europe, however, won't be at the expense of other regions of the world, he said. Latin America will continue to be a source of business under the guidance of director Ron Lee.
Lubin and Khlat will report to Richard Byrne, global head of high yield capital markets.