Merrill has gained a reputation for delivering customised solutions to meet the unique objectives of its clients. For example, it was asked to structure the first Canadian deductible hybrid for Great-West Lifeco. “This was the first instrument of its kind issued by a Canadian company and the first of its kind sold into the Canadian market. Plus, it was done in a very tight timeframe to pre-fund an acquisition,” says Jill Schildkraut-Katz, head of capital products structuring.
For financial services firm The Hartford, Merrill stepped in to structure a contingent hybrid capital facility that provides liquidity and hybrid capital on tap. As the first contingent capital facility to utilise tax-deductible hybrid securities as the underlying, the customised solution resulted in a significant cost saving for the issuer.
The environment will be challenging in the coming months but the market is open to those with the right platform, says Ms Schildkraut-Katz. “Spreads are wider so we are clearly seeing less opportunistic issuance, but deals are getting done for the right issuers. Since the beginning of August, Merrill Lynch placed more than $3bn of hybrids despite volatile markets,” she says.
“While the majority of the US dollar placement has been with retail investors, this demonstrates that if you have an unparalleled integrated platform and the ability to execute deals in any currency and in both the institutional and retail markets, then you can execute the best transactions for your clients even in times of market volatility.”
