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JPMorgan Team Becomes Debt Powerhouse
JPMorgan's Therese Esperdy is winning share in a volatile debt capital market.
In a fixed-income business in which corporate CFOs are always pressing to shave a few extra basis points off their interest rates, Therese Esperdy has a difficult message for borrowers: Dont quibble about the cost, just get the deal done.
Esperdy, 48, JPMorgan Chase & Co.s head of global debt capital markets, played a key role in financing Roche Holdings $46.8 billion takeover of the 44 percent of U.S. biotech company Genentech that it didnt already own. Her team at JPMorgan was part of a syndicate of banks that helped underwrite a record $16.5 billion package of notes and bonds in the U.S. The debt was issued in February, when credit markets were beginning to revive after a near total shutdown in late 2008. Given market conditions and the size of the transactions, Esperdy couldnt be sure that the deal would go through. So she advised the Basel, Switzerlandbased pharmaceuticals giant to focus on getting it done, even if that meant offering a big premium to investors. Roche paid 345 basis points above comparable U.S. Treasury yields on the ten-year tranche of its issue; by comparison, Pfizer paid 325 basis points over Treasuries on a $3.25 billion issue of ten-year notes in March. This is not a time to fight about basis points, Esperdy told management. Look at the larger impact of getting the deal done. Be in a position to take advantage of opportunities.
That drive has helped Esperdys team grab market share during one of the credit markets most challenging periods in living memory. The bank ranked first in global debt capital markets during the first quarter of 2009, according to Dealogic. Thats up from No. 2, behind Bank of America Corp.Merrill Lynch & Co., in 2008. In January, JPMorgan served as the book runner on a $5 billion bond offering for Anheuser-Busch InBev. The following month it was joint lead manager for a $5 billion bond issue by health care products company Novartis in addition to working on the Roche package.
The rise to the top of the league table caps 12 years of hard work for Esperdy. She was a rising star at Lehman Brothers Holdings, running debt capital markets for financial institutions, when Chase Manhattan Bank came calling in 1997. At the time, Chase was a leader in loan syndication, but not a force in the bond business. Esperdy says she seized the opportunity to build a debt capital markets business from the ground up. She convinced the Chase loan group to let her set up meetings with their clients so she could develop the business. Thanks to her spadework and the merger that created JPMorgan Chase & Co. in 2000 the team has grown from ten to 70 bankers, 40 in the U.S. and 30 in Europe. Esperdy, who often eschews her office for a seat on the trading floor, spends much of her time meeting with corporate treasurers to drum up business.
James Turner, a former colleague from Esperdys days at Lehman who now runs debt capital markets at BNP Paribas, recalls how she once insisted on joining a Lehman golf outing even though she didnt play the game. She didnt want someone else with her client, he says. As Esperdy puts it, I have no problem with confidence.
The eldest of three daughters, Esperdy says she gets her drive from her father, a retired property/casualty insurance executive at Cigna Corp. We were taught to set high goals for ourselves, she says. Esperdy grew up in Florida and Pennsylvania, enrolled in college at 16 and earned a bachelors degree in English literature from Chestnut Hill College in Philadelphia.
She took her first job in strategic and financial planning, joining her father at Cigna. In 1989 she earned an MBA from Yale University. After business school, she joined the capital markets team at what was then Shearson Lehman Brothers Holdings.
Citing weak economic fundamentals, Esperdy warns that the credit markets havent seen the worst of the financial crisis, the current rally notwithstanding. Things are changing rapidly, and clients must take market variability into account, she says.