by John LeFevre
I reach up to the countertop—the half bottle of cabernet sauvignon, the Jack Daniel’s, the pistachios, the Toblerone. And the fucking Moët.
Finally. She looks into the bag, surveying her loot. “Stop. Now too much.” She then reaches in and pulls out the Pringles and the Toblerone, pauses for a few seconds, and then pulls out a mini Bacardi, sets them back down on the countertop gently, and says, “Okay, this good, la.”
And then just like that, she goes off on her way, stuffed laundry bag of loot over her shoulder like some kind of Singaporean Ritz-Carlton Santa Claus/whore prancing along in her four-inch Lucite hooves, marching to the drumbeat of the damned.
I shower, suit up, and head downstairs for day two of our Asian investor conference, and then successfully forget all about the experience.
That is, until two weeks later, when my secretary hands me my expenses and reminds me the minibar is not covered under T&E. The minibar bill? S$198. I owe her S$2.
Conference Call
Etiquette
The audible sound of Mase rapping “What You Want” is faintly yet unmistakably playing over what is an otherwise intensely challenging conference call. We all try to avoid acknowledging the obvious, but there is an overriding sense of “Are you fucking hearing this too?”
Finally, I speak up. “Hey, Henry, can you please turn down the music in your car. We’re having a hard time hearing you.” I’m generally well composed on client calls, but it’s hard to get the words out without cracking up.
We are approaching the end of the Asian investor roadshow for a high-yield deal for a Thai telecom provider, and the reception isn’t exactly what we had promised the client. Surprise, surprise.
“What? I’m not even in—”
Before Henry can complete his defense, I cut him off with “Oooo-kay. Well, let’s just try and continue.” Right on cue, the music fades away.
Now begins the process of moonwalking the client back to the reality that their funding cost is going to be at least 25 basis points higher than what we had been guiding them just a few weeks before. Normally, this wouldn’t be a huge problem; we’d just blame “adverse market conditions” or imply that the company’s performance on the roadshow is not instilling sufficient confidence in the minds of investors. However, these guys are experienced in the realm of investor relations and capital markets, and they have already been getting feedback from their other relationship banks with respect to overall market conditions that vary from “robust” to “highly receptive to new issues.”
I’m quick to point out that our competitors are simply upset at not being included in the deal and are just trying to sabotage the execution process. None of this changes the fact that we have a very unhappy client.
My priority at this point is to make sure that all blame gets shifted away from us and onto our joint bookrunner, so that we aren’t put in the box and excluded from their future deals. Looking at the company’s debt maturity profile, I know they’ve got to come back to the capital markets each of the next two years, and they have a long list of lending relationships, all of which represent mouths that expect to be fed in the form of bond mandates. Fucking up this deal provides the perfect excuse to leave us out of the next deal and rotate another bank in. This is always the big test for banks when it comes to repeat issuers—seeing which banks they retain from the previous deal and which they replace.
“Market conditions have continued to deteriorate overnight; it’s less evident in quantifiable data, but we’re definitely seeing diminished investor risk appetite on the heels of some modest weakness in credit spreads as well as some poor-performing new issues over the course of the last few days. In fact, a few key investors who have been looking closely as this deal, doing their homework and getting approvals internally, have now moved firmly to the sidelines.”
We say more or less the exact same thing any time we are trying to work an issuer’s expectations back from where we set them when we were trying to convince them to announce the transaction. “I realize we had told you to expect an outcome in the context of 9%; however, it is now quite evident that printing a trade at 9.25% would be a fantastic result in the current market environment.”
This is never an easy call to have. They need $500 million, and now after they get halfway through a roadshow, which required board-level approvals predicated on specific funding targets, we’re shifting the goalposts. But they’re already pregnant; they know it and we know it. Walking away from a deal at this point in the process would be disastrous, for them and us.
It seems masochistic to develop a habit of overpromising clients, but that’s often what it takes to fight for and win these sought-after mandates. Even after the mandate is secured, it’s another battle trying to convince some issuers to get off the sidelines. “Do you think the market conditions will be better if we wait until January?” If I’ve made my P&L for the year and our compensation numbers have already been submitted, then the answer is an emphatic: “Yes, sit tight. You’ll get a better deal printed in January.” If it’s early October and it’s been a rough year, then the answer is even more emphatic: “The clear window for optimal execution is right now.” Irrespective of what’s in the client’s best interests, there’s no point in bringing a really lucrative deal to market once bonus numbers have been set; come January 1, everything resets to zero. Not only would you not get paid for it, but having a strong pipeline going into year-end also provides good job security.
In our defense, we’ve done a phenomenal job to produce a transaction at this level; the only issue is that it’s just slightly short of the client’s target. Once we get them over this hump, they’ll be very pleased with the outcome and, more important, the way that the deal is perceived and talked about in the financial press.
Henry from Deutsche Bank goes to speak. “Listen, just to reaffirm what John said, we’re all working and pushing our sales forces to get guys to commit and to remove their price sensitivity. We’re going to continue to push until London opens, but that’s when we’ll need the green light from you to refine the price guidance. And as John said, right now, it’s looking like the right price is not going to be at the tight end of the range. What I would suggest is . . .”
Mase’s “What You Want” mysteriously starts in again, this time not quite as subtly as before.
“Hey, Henry, we can’t hear you again. Can you please turn down the radio in your car again?” This is the ultimate sin. It’s now almost 10 a.m. and I have implied to the client that Deutsche Bank is obviously not taking this deal very seriously. I’ve already made it clear that I have been glued to my desk since 7 a.m., calling investors and whipping salespeople to try to pull this deal together.
As I am holding my iPod earphone up to my alternate receiver, I have to mute my own headset to prevent people from hearing me laughing. I can barely keep it together.
Henry can’t really protest too much without coming off as overly defensive. He tries to reassure everyone that he’s not the source, is glued to his desk, and is equally focused on this deal. My hope is that there is some doubt lingering in the client’s mind and that it’s still there in six months when they are thinking about which of us to include in the next deal.
I wish I could take full credit for having thought of this trick. , my counterpart at Goldman Sachs, whom I would later be hired to replace, is credited with having invented it. Typically, we’d just play music on the internal bookrunner-only calls as a means of stopping bankers from speaking for the sake of speaking. However, I’ve just taken it up to a whole new level—doing it on a client call in an attempt to undermine a competitor.
Within seconds, I get an instant message from Henry, “FU(K YOU, DIKHEAD.” He’s typing like a twelve-year-old because Bloomberg explicitly prevents the use of most swear words on its platform. It is physically impossible to send a Bloomberg message with an identifiable swear word in it; hence, no one on
Wall Street was surprised by Mayor Bloomberg’s subsequent Big Gulp ban.
Later that day, I get a call from Henry, who also happens to be a close friend of mine. “Well fucking played. I’m going to have to add that move to my arsenal.” This wasn’t the first time dirty tricks like this have been employed and it wouldn’t be the last.
Undermining our competitors on deals that we’re working together on isn’t even the primary motivation for conference call antics. We’re just trying to overcome the monotony and tediousness of the vast majority of these calls by entertaining ourselves and each other.
The most painful conference calls are for the deals where there are more than three bookrunners, because it means there will be a minimum of fifteen or twenty bankers on every single call; the good news is that these are the perfect environment for relative anonymity with virtually zero accountability.
In 2005, we get mandated along with six other banks for a rare and prestigious US$ benchmark deal for the China Development Bank, the state-owned Chinese bank. This deal is a nightmare, starting with the fact that the fees are virtually zero—so it’s purely a franchise trade. With so many bankers involved, and each one of them trying to distinguish themselves in front of the client, the conference calls carry on endlessly.
Deals like this are incredibly boring. We don’t actually have to do anything—like when no one noticed when you lip synced in choir as a kid. With seven bookrunners, we take turns leading the calls, with one person delivering the message that has already been discussed and agreed on as a group, prior to the client call. This means I have to speak only once every seven calls, or every three days or so.
The anointed syndicate desk will provide an update on the deal, and in the interest of saving time, each bank will take turns simply saying, “JPMorgan agrees,” or “Citi agrees.” This tacit agreement whereby people shut the fuck up works relatively well, until it comes to this douche at UBS, Ewan Hunt. “UBS agrees; however, I’d also like to reiterate . . .” and then he drones on for a full five minutes, providing absolutely no new information. This of course snowballs, compelling other bankers, not to be outdone in front of the client, to also take turns rehashing the recommendation. A simple ten-minute client update turns into an hour-long dick-waving contest.
When it’s not my turn to lead the call, I don’t even bother. I’ll dial in, say something to make my presence known to the client, and then just grab an analyst. “Listen in and let me know if I need to hop back on.”
The price guidance discussion is going to be a shitshow. We need to get our price guidance recommendation signed off on by the client and then release it as early as possible during the Asian morning, so that we can confirm as many Asian orders as possible to generate momentum for the European open, in order to confirm those orders and keep the momentum going into the US open. It’s imperative to communicate this number as early as possible.
On the morning of the big call, I purposefully dial in to the call ten minutes early and am prompted by the automated operator to record my name. Standard protocol dictates that you simply state the name of the bank, saying only “Citi.” This morning, for my name, I say “UBS” in the most obnoxiously nasally sounding accent I can think of. Then I put that line on hold. When the call is due to start, I dial back in as myself using a new line.
In the middle of the call, it becomes expectedly contentious. Bankers are turning on one another and undermining the process by asking loaded questions on the client’s behalf. “I understand that the syndicate recommendation is +100 basis points over the ten-year US Treasury, but what if we modified to a range of +90 to +100?”
As Madame Wu Li, a senior China Development Bank executive, is finishing an impassioned speech about why she will not accept our recommendation, I release the holding line that’s been blinking away on my dealerboard for the last hour. The automated voice interrupts her: “Now exiting the call: UBS.”
The timing is perfect. After a few seconds of stunned silence, Madame Wu responds to this great insult with a simple “Hello? Are you still there?,” leaving the UBS team scrambling to reassure her that they are all still on the line.
For the rest of the deal, on every single conference call, someone from one of the other banks would wait for a tense or pivotal moment on the call and say, “I would just like to confirm if UBS are still on the line.”
Another common method of overcoming the boredom of conference calls is to play Conference Call Bingo. The way we play it—with one person tasked with saying certain words on a client call—doesn’t really have anything to do with actual Bingo, but that’s just what we call it.
Our version of the game is hardly an original idea, but it’s hilarious to hear guys who are getting paid so much money attempting to say ridiculous things to an important client while discussing their billion-dollar bond offering. For the most part, we generally only play Bingo on layup trades, which were the majority of deals up until June 2007. For challenging deals, or in the face of difficult market conditions, we don’t mess around. You don’t fuck with your own bonus.
All of this is coordinated and communicated in the Bloomberg chat rooms that are set up for each deal. The chat rooms are the center of our universe. They are a fundamental component of being able to get deals done and are an essential distraction when markets are quiet and things are slow. If the transcripts of some of these chat rooms are ever published, plenty of people will end up fired, divorced, or in jail.
Before a call, the bookrunners collectively put together a list of five terms that the banker leading the call has to work into the client update. For example: “chrysanthemum,” “elephantiasis,” “hemorrhoid,” “Nostradamus,” “butt plug.”
Those examples are actually pretty easy to work into a discussion about the investment grade credit spreads. The client just thinks you’re eccentric, silly, or slightly vulgar. An amateur might get flustered by the prospect of saying “butt plug,” but it’s actually the easiest one on the list—“Investors are currently starved of new telecom paper, but plug that demand we will.”
I prefer trying to make people look stupid with derivatives of words that don’t exist, like “overfantasticality” or “sentimentosity” or “hedgeasaurus,” until a rule was introduced outlawing this strategy.
For morning calls, the stakes will typically be a round of drinks for each missed word, payable at a syndicate deal team lunch later that day. Not that we need an excuse to go day drinking, but that’s exactly what it is.
The guys at Credit Suisse and Deutsche Bank are far and away the best at Bingo—totally fearless and amazingly creative. I am definitely an all-star contender but have a colleague who is so bad that he can’t get more than one or two done. He is notorious for trying to whisper his way through the list, which, of course, is a rule violation, punishable by having to buy an extra round of drinks.
One of the more inane deals I’ve worked on was for the Socialist Republic of Vietnam, along with Deutsche Bank and Barclays. The Vietnamese are so dysfunctional and bureaucratic that we carried the mandate for almost two years. During this time, they insisted on weekly market update calls, even though they clearly had zero intention of any kind of imminent launch. They would set a theoretical execution window for two months out and then insist on discussing it each week as if they were ready to pull the trigger. And then a few weeks before the scheduled announcement date, they’d decide to postpone the deal and set a new date for two months out, leaving some poor analyst scrambling to cancel flights, visas, and hotels.
They just needed to fill up their diaries with meetings and conference calls in order to appear busy on paper, just in case some other government official decided to inquire what the hell they did with their time. After about six months, it became very clear that they wanted to work on this deal in perpetuity.
Because of growing retail and commercial banking activity (meaning more revenue channels) in
Vietnam, we were forced by our senior management to participate in this charade and at least pretend to take it seriously—and take it seriously we did.
Sometimes, I’d adopt a ridiculous accent and lead the call pretending to be the guy from Deutsche Bank, or put on an exceptionally lispy, effeminate Cantonese voice and pose as the guy from Barclays. At one point, the guy from Deutsche Bank took it too far when he pretended to be me, opening the call with what sounded like a terrible Matthew McConaughey impersonation: “Dudes, guuud mornin’. Gotta tell ya, tha markit is lookin’ and feelin’ guud. Investors are rock hard for emerging market sovereign paper right now. Tha bases are loaded; it’s time to take that pigskin and go in for the slam dunk.” After that, some of the relationship bankers asked us to dial it back a notch, but somewhere, a recording of that call still exists.
Despite the request to tone down the antics, we continued to fuck around on the calls. A syndicate banker at Deutsche Bank even downloaded a soundboard of barnyard animal sounds. He started the next call off by apologizing profusely, saying, “I’m sorry if you can’t hear me very well; I’m on the road today on a due diligence trip in Indonesia.” Then he interrupted himself with the sounds of cows mooing and pigs oinking and apologized again. “I’m sorry about the noise.”
The next week, it was my turn. I started off by apologizing for being on my mobile, even though I was sitting at my desk. Then, as I went through an update on market conditions, Deutsche would pipe in a rooster crowing, faintly at first, and then repeating it over and over, slightly louder each time. Part of the game was that I had to play along and come up with an elaborate explanation for whatever sound was played.