JPMorgan Chase & Co. (JPM), the largest underwriter of corporate bonds worldwide, jumped eight spots to number two in Asia as Li Ka-shing’s Hutchison Whampoa Ltd. (13) picked the bank to manage its return to the market.
JPMorgan moved past Citigroup Inc. (C), Deutsche Bank AG and UBS AG to challenge HSBC Holdings Plc at the top of Asia’s dollar, euro and yen league table. The largest U.S. bank by assets was credited with arranging $7.4 billion of note sales in the region outside Japan in the first six months of 2012, up from $3.2 billion for the same period last year, according to data compiled by Bloomberg. It boosted its market share to 10.6 percent, versus HSBC’s 15.5 percent.
Bond sales in Asia surged 45 percent to a record $70.1 billion in the first half, helping the area’s economy expand 6.3 percent in the three months through March. Sales of corporate bonds globally fell. Hutchison Whampoa is the region’s biggest issuer with JPMorgan arranging five of its eight deals. The Hong Kong-based conglomerate sold no debt in the three major currencies last year.
“We had a lot of clients that were ready to issue at the beginning of this year after we suggested to them to wait out 2011,” said Murlidhar Maiya, the Hong Kong-based head of debt capital markets for Asia ex-Japan at JPMorgan. “Credit is in our DNA, we have risk appetite and we have a growing corporate bank.”
The New York-based bank was in 10th place in 2011, after ranking fifth for the first half of that year. This year it helped 26 issuers in the region sell 40 notes, including helping to arrange $4.27 billion of bonds for Hutchison Whampoa, the data show. The lender is also the top choice for companies issuing in the global corporate bond market in any currency, a position it’s held since 2008.
Citigroup fell from second place to third position, while Deutsche Bank dropped from third to seventh, the Bloomberg compiled data show. Barclays Plc slipped two spots to sixth place and UBS lost four places to the ninth slot, the data show.
James Griffiths, a Hong Kong-based spokesman for Citigroup, declined to comment on the bank’s position in the league tables. Deutsche Bank said it was confident that by end of the year the rankings would look different.
Deutsche Bank, UBS
“There is an element of rotation, luck and a deliberate league table grab by some of our competitors that distorts the standings,” said Herman Van Den Wall Bake, the head of fixed- income capital markets for Asia at the Frankfurt-based lender. “If you look at the number of our deals and the breadth of our business, our platform is in very good shape.”
UBS attributed its drop to banks’ ability to extend credit.
“The ability to lend is increasingly affecting bond league tables over the years,” said Hong Kong-based Paul Au, the head of syndicate at UBS. He added that high-yield bond table rankings offer “a better barometer of skill.”
Standard Chartered Plc climbed two places to fourth, handing it an 8.8 percent market share, while Goldman Sachs Group Inc. rose three spots to fifth, arranging 8.2 percent of sales, the data show. Citigroup fell from second to third.
Investors are shifting funds into higher-yielding asset classes to counter near-zero interest rates in Europe and the U.S. About $6.73 billion was added to emerging-market debt funds in the second quarter, according to research company EPFR Global which is based in the U.S.
Yields on Asian dollar debt fell by 78 basis points, or 0.78 percentage points, to a low in the first half of 4.37 percent on June 29, according to Bank of America Merrill Lynch indexes. The yield on global notes fell 39 basis points to a first-half low of 1.87 percent on June 1.
JPMorgan increased its share of the bond market even as Chief Executive Officer Jamie Dimon said on May 10 the bank lost about $2 billion from derivatives tied to corporate credit markets. The company’s stock has tumbled 12 percent since to $35.88 a share as of July 3.
The cost of insuring the lender’s five-year debt from non- payment climbed 27 basis points to 133.6 basis points the day after Dimon’s revelation, the biggest one-day jump since May 2010, according to data provider CMA, which is owned by McGraw- Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. Credit-default swap prices typically rise as investor confidence deteriorates and fall as it improves.
Moody’s Investors Service downgraded JPMorgan by two notches to A2 on June 21. The bank is now facing a new investigation by U.S. regulators into alleged energy-market manipulation.
JPMorgan helped to arrange three note sales for Indonesia this year totaling $4.25 billion and was one of eight lenders that helped the Philippines open the dollar-bond market for 2012 in January. It’s arranged a total of $5.75 billion in sales for the two Southeast Asian sovereigns this year.
State Bank of India (SBIN) earlier this week hired JPMorgan to arrange a dollar bond alongside Barclays Plc, Bank of America Corp., Citigroup, Deutsche Bank and UBS.
JPMorgan is also one of four banks arranging a U.S. dollar subordinated note for Standard Chartered, which is being marketed today at a yield of 360 basis points over similar- maturity Treasuries.
“We’re not willing to extend capital at unreasonable rates to win business,” JPMorgan’s Maiya said. “If the financial crisis has taught us one thing, it’s that careless deployment of capital will bite us back.”