An Essential League

League tables have long been prized by investment bankers for pitching business to governments, public and private companies. Occasionally they are scorned as tools for marketing to the uninformed. But as US and international capital markets become more transparent, issuers appraise them as interesting and useful yardsticks to measure a bank’s expertise. Regular issuers judge the success of a bond or an equity issue on its syndication in the primary market, and more importantly, on its performance in the aftermarket. However, a first-time issuer is likely to measure a banks success on the amount of repeat business the investment bank wins from issuers.

Along with investment bankers stand other advisors, just as critical to the success of a deal, but largely overlooked in league tables. Data on the involvement of law firms in financial transactions is not nearly as accurate as information collected on investment banks. What is apparent is that long and valued relationships exist between bankers, issuers and their lawyers, but determining who excels in which area of advisory is more difficult to ascertain. Thomson Financial claims to have some of the most complete figures to date, but many deals lack data on advisory mandates. Thomson Financial collects data on legal advisors from filings from the US Securities Exchange Commission’s (SEC) Electronic Data Gathering Analysis and Retrieval system (EDGAR), and from information submitted by law firms to Thomson. Currently, there is much debate on how credit to legal advisors on deals should be apportioned. But without more collaboration from law firms with financial data providers such as Thomson and Dealogic, tabulating relative performance of law firms in a variety of areas will not be possible.

Sovereigns sweep the decks
The top 20 Latin American issues into international markets during the first half of 2001 amounted to US$14.877 billion compared to $15.35 billion in the first half of 2000. Sovereign bond issues from Brazil, Mexico, Panama, Colombia, and Argentina accounted for 11 of the issues, totaling $9.134 billion. Latin American issuers took advantage of two interest rate cuts in the US at the beginning of the year to issue bonds more cheaply.  The top three bonds placed during the first half of 2001, Brazil’s $1.48 billion five-year global bond, Mexico’s $1.47 billion 10-year global bond and Telmex’s $994.1 million five-year senior notes, were all issued before the end of January. Seven of the top 10 bonds were issued during the first quarter of 2001.

Brazil led the way with five sovereign bonds totaling $4.51 billion. Of the top 20 deals, 11 issues were placed into the US public and private marketplaces, accounting for a total of $9.48 billion. Arnold & Porter advised Brazil on the region’s largest international issue, a $1.483 billion five-year global bond placed with a 10.25% coupon led by Bear Stearns and Morgan Stanley. Telefonos de Mexico (Telmex), Mexico’s largest telecommunications company, issued the largest international corporate bond in the region:  a  $944.1 million five-year bond with a 8.25% coupon, led by JP Morgan Securities and Merrill Lynch. It was 144a eligible and therefore also placed with private investors in the US market.

Cleary Gottlieb Steen & Hamilton retained the top spot as    legal advisor to Latin American sovereign issuers in the foreign markets during the first half of 2001.  Cleary Gottlieb advised on a total of  $5.233 billion on 13 issues, an increase of 10% over the total number of issues it advised on for the whole of 2000 and an increase of over 100% in total issues during the same period last year. Cleary Gottlieb Steen & Hamilton was legal advisor to sovereign issuers on six of the top 20 issues, including Mexico’s $1.472 billion 10-year global bond. Arnold & Porter took second place with a total of $4.318 billion, advising on seven issues. It advised Panama on its $745.1 million 10-year global bond with a 9.625% coupon led by JP Morgan and Morgan Stanley.  Sullivan & Cromwell finished fourth as legal advisors to sovereign issuers, with $398 million and two deals, but was the top advisor to managing underwriters. Sullivan & Cromwell provided counsel to the lead managers on 10 deals totaling $9.74 billion out of the top 20 deals totaling $14.88 billion. It advised lead managers on the top five deals.

Corporates favor Cleary
Cleary Gottlieb moved into Sullivan & Cromwell’s position as the top advisor to corporate issuers of Latin American bonds for the first half of this year. It advised on six issues worth $3.51 billion. Cleary Gottlieb advised on a total of three issues worth $1.149 billion for the whole of last year. Cleary Gottlieb advised on an issue for Telefonos de Mexico (Telmex) worth $994.1 million and one for Petroleos Mexicanos (Pemex) worth $990 million. In May, it advised Telmex on another $503.3 million five-year bond.

Shearman & Sterling came in second place advising one corporate issuer on a deal worth $462.4 million for the first half of 2001. Corporate issuers appeared to favor law firms over in-house counsel as general counsel dropped from second position for the whole of 2000 to fourth position in the first half of 2001. Sullivan & Cromwell came in from nowhere to take the lead position as top advisor to managing underwriters of Latin American corporate bond issues. Sullivan & Cromwell advised managing underwriters on four bond issues totaling $3 billion in the first half of 2001. Davis Polk & Wardwell held the number one spot last year advising managing underwriters on two deals worth $949.8 million. Shearman & Sterling demonstrated steady performance as the second favorite legal advisor to the managing underwriters. Shearman advised on two bond issues valued at $628.3 million in the first half of this year and one two issues totaling $647 million for the whole of last year. Cravath Swaine & Moore jumped from sixth position for the whole of 2000 to third position for the first half of this year.

Criteria Note:    
 – Only non- and limited-recourse facilities are included in our tables.   
 – Non-financier league tables are based on the financial close date, which is the date on which the loan agreement between the borrower and the top-tier banks has been signed and the funds are available for drawdown. Ranking is based on an equal apportionment of the total project cost between organizations.

M  &  A mania Skadden Arps Slate Meagher & Flom won the most mandates as legal advisors for mergers and acquisitions involving Latin American targets. Skadden Arps took part in six deals, with a total value of $17.24 billion. Two out of the top three advisories were for telecom deals. Davis Polk & Wardwell claimed second place with three deals worth a combined $13.57 billion. Davis Polk advised on the Banco Bilbao Vizcaya Argentaria’s $704.54 million stock purchase of Argentine bank Banco Frances.  Argentine firm, Bruchou Fernandez Madero & Lombardi, and Mexican firm, Franck Galicia Duclaud y Robles finished in the top ten, primarily for their role as advisors to Citigroup Inc on the acquisition of the Mexican banking group, Grupo Banacci, in May. Brazilian firm Pinheiro, Neto Advogados, advised on Brazilian telecom company Telesp Celular Participaoes’ $1.11 billion acquisition of Brazilian wireless company Global Telecom. Another Brazilian firm Levy & Salomao Advogados advised on the $670.5 million divesture of Brazilian pulp company Celulose Nipo-Brasileira SA (Cenibra) by investors. The announced acquisition of Grupo Financiero Banamex Accival SA de CV (Banacci) by Citigroup was the largest Latin American M&A transaction announced during the first half of 2001 based on a rank value of $117.4 billion Mexican pesos (US$12.8 billion dollars) paid in cash and common stock.  Salomon Smith Barney acted as financial advisor to Citigroup on the deal. Goldman Sachs advised the target Grupo Banacci. Law firms Davis Polk & Wardwell, Skadden Arps Slate Meagher & Flom, Franck Galicia Duclaud y Robles and Bruchou Fernandez Madero & Lombardi acted as legal advisors to Citigroup. Portugal Telecom’s announced acquisition of the remaining 58.8% interest in Brazilian telecommunications company Telesp Celular Participaoes in January  was the second largest deal in Latin America in the first half of this year. The deal involved a stock swap for the 245.4 billion shares that Portugal Telecom did not already own in Brazilian telecommunications company Telesp Celular Participacoes worth R$5.603 billion (US$2.431 billion. Debevoise & Plimpton and Skadden Arps Slate Meagher & Flom advised Portugal Telecom.

Milbank Tweed Hadley & McCloy excelled again as the top legal advisor on Latin American project finance deals. It clinched the number one position for overall top legal advisor for Latin American projects in 2000 as well as the top position as legal advisor to lenders to project financings. It advised on a total of 14 projects valued at $4.194 billion and advised commercial bank lenders on 12 of the projects. It advised the consortium on two of the projects. Milbank’s largest project finance advisory was the $3.1 billion Barracuda and Caratinga Oilfields Development project in Brazil. It also advised on the $1.77 billion refinancing of the Brazil B-Band Privatization of Area One. Its expertise was spread across a variety of industries, advising on two telecom projects, four power projects and five oil and gas projects as well as four refinancings. White & Case came in second place as overall legal advisor to Latin American projects, with advisories on $2.091 billion on seven deals. It took the top spot as advisor to the consortium on the $1.77 billion refinancing of the Brazil B-Band Privatization facilities. It also came in second place as a legal advisor to lenders on six deals. Shearman Sterling ranked fifth as overall advisor and advised lenders on four projects worth $1.124 billion. Clifford Chance advised on six project finance deals worth $821.67 million and advised consortiums on four projects worth $1.33 billion. Sidley & Austin and Baker & McKenzie shared third place for their advisory on the Barracuda and Caratinga Oilfields Development Projects. Brazilian law firm Tozzini Freire Teizeria e Silva advised on five projects worth $875.68 million.