Corporate treasurers say tougher regulatory requirements are forcing them to hire more bookrunners for their bond issues.
The number of bookrunners on Asian bond deals is continuing to escalate, but corporate issuers say they are under pressure to hire more of their relationship banks, as regulations have raised the importance of keeping banks on side.
In recent weeks, a string of Asian issues have sported an unusually high number of bookrunners. Shanghai Electric's €600 million five-year bond featured 12, while Garuda Indonesia hired 15 to arrange global investor meetings. China Cinda Asset Management's US$3 billion dual-tranche offering had 17, a record for a US dollar issue from Asia.
Seven Asian issuers have hired 10 or more bookrunners for dollar bonds this year.
Steve Baseby, an associate policy and technical director at the Association of Corporate Treasurers, said this trend had worsened as higher capital requirements and stricter compliance rules raised banks' costs of doing business.
"Keeping the relationship with the banks becomes more critical as bank balance sheets are getting more tied up in securing capital," Baseby said. "The important thing here is the background of the changing regulatory environment. It doesn't matter how big you are. Banks still have to do a KYC and credit analysis and set up trading systems. You can't just cold-call banks up to do a trade."