The global debt capital market picked up considerably in 2012,
after suffering from extremely poor demand over the second half of
2011 in the wake of deteriorating economic conditions in Europe.
Data compiled by Thomson Reuters shows that the size of the global
debt capital market in 2012 was $5.6 trillion - a good 10% higher
than the figure for 2011 and the highest since 2009. More
importantly, the spurt in higher demand for high yield corporate
debt, helped global investment banks pocket handsome fee revenues,
with Thomson Reuters estimating a 28% increase in debt underwriting
fees for the year.
In this article, which is a part of our series on the relative
performance of the country's biggest investment banks, we focus on
the debt underwriting unit at Goldman Sachs (
), Morgan Stanley (
Bank of America-Merrill Lynch
) and Citigroup (
). See also
U.S. Investment Bank Review 2012: Equity
See the full Trefis analysis for Goldman Sachs
| JPMorgan | Morgan Stanley | Bank of America |
Performance By Market Share
The results of an investment bank's debt underwriting unit over
a period depends largely on the economic conditions prevalent at
that time, as companies around the world tend to shelve plans to
raise capital by issuing new debt under a weak economic situation.
This is why the largest driver of debt underwriting fees for the
banks is the size of the global debt capital market, followed by
the actual share of each bank. The share of each of the five U.S.
banks in this $5.6 trillion global debt origination figure for 2012
is summarized in the chart below:
Deal Size ($ Bil)
|Bank of America
As seen above, JPMorgan leads the global debt underwriting
business with the diversified banking group holding the top spot
for six years over the last decade. The bank has maintained one of
the top three positions in the industry for well over ten years
now. It must be mentioned here that the German banking giant
Deutsche Bank (
) and U.K.-based Barclays (BCS) ranked second and third
respectively among global debt underwriters for the year 2012.
Performance In Terms Of Fees Earned
When it comes to the fees earned from underwriting debt, Bank of
America emerges at the top of the list with the bank adding 16% to
its debt underwriting fees for 2011, to earn $3.4 billion in 2012.
The total fees for these five banks taken together jumped up 21% in
2012, from $10.4 billion to $12.6 billion. While JPMorgan reported
the slowest growth in these revenues (13%), Goldman booked the
highest growth (53%).
The following table is based on the quarterly results announced
by the banks over the last two years, and summarizes their fees for
providing debt underwriting services to their global clients.
|Bank of America
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