Underscoring a strong push into worldwide investment banking, Chase Manhattan Corp. climbed back into first place last year as an underwriter of Eurobonds for Latin American governments and corporations.
Information compiled by Securities Data Co., an affiliate of American Banker, showed that Chase arranged nearly $3.2 billion worth of bond issues on behalf of Latin sovereign and corporate issuers in 1997.
"It's fairly clear evidence that they are capable of building up a business from their existing customer base," said David Berry, a banking analyst at Keefe, Bruyette & Woods Inc. "The trend is toward more revenues from capital markets and less from corporate lending."
Alongside the surge in Eurobond issues, Chase remained strong in traditional lending, ranking as the top syndicator of loans to Latin American borrowers, with more than $16 billion of such loans outstanding. BankAmerica Corp. was ranked second, with $13.2 billion; J.P. Morgan & Co., third, $12.9 billion; and Citicorp, fourth, $11.3 billion, according to LPC/Gold Sheets, a New York data base.
J.P. Morgan was also ranked third in Eurobond underwritings, with $3.1 billion worth of issues; Deutsche Bank was ranked second, with $3.16 billion. Only two other U.S. banking companies-Citicorp and BankBoston Corp.-figured among the top 25 arrangers of Latin Eurobonds. Citicorp was ranked eighth, with $1.5 billion of issues, and BankBoston, a relative newcomer, was ranked ninth, with $1.25 billion.
The upturn in Latin bond underwriting activity at Chase came after a slowdown during 1995 and 1996 while Chemical Banking Corp. was merging with Chase. It last ranked as the top arranger of Latin debt issues in 1993, when it underwrote nearly $2.8 billion worth of issues. In 1994, however, Chase dropped to sixth place and in 1995, to eighth, before rising back to fifth place in 1996, with $1.7 billion worth of issues.
Latin American debt issues have been burgeoning as investors gained confidence in the region. However, recent turmoil in Asia combined with a loss of confidence among investors in markets such as Latin America and Eastern Europe could lead to a slowdown in issues this year.
"The market has slowed, and the pricing has become more expensive for issuers, reflecting the rising risk premium applied to all emerging markets," said Brent Erensel, director of Latin American bank equity research at UBS Securities LLC.
He added, however, that the market for Latin Eurobond issues should resume growing later in the year as "the risk premiums return to more normal levels and economic fundamentals realign themselves."