SECOND TEAM (TIE)

Drausio Giacomelli, Hongtao Jiang & teams  Deutsche Bank Securities

Alvaro Vivanco & team  UBS

Deutsche Bank and UBS share second-place honors in this sector, which hasn’t garnered enough votes to warrant publication since 2007 (and before that, 2004). Deutsche last ranked in this category in 2004; its four-member crew is now co-directed by newcomers Drausio Giacomelli and Hongtao Jiang, both of whom are headquartered in New York. “The Deutsche Bank team has a strong combination of local knowledge and quantitative analysis,” says one money manager. In July 2010 the analysts recommended overweighting Argentina’s sovereign debt; the previous month the country had restructured most of what remained of the debt stemming from its default some eight years earlier, and the team believed that the spreads on Argentina’s five-year credit default swaps, then at 885 basis points, would narrow thanks to the country’s strong economic growth and ability to tap central bank reserves, as well as the ample liquidity in the local market, among other factors. “Against this backdrop, and given the then-elevated spreads, we believed further significant tightening in the credit spreads would ensue,” says Jiang. They were right. In March, after the spreads on the CDSs had narrowed to 590 basis points and the dollar-denominated bonds were trading at $86.25 — up from $74.75 at the time of the upgrade — the group told clients to take profits. Since then the spreads has risen to 635 basis points and the price of the bonds had slipped back to $85.40, through July. Argentina also figured prominently in the recommendations of the UBS duo led by Stamford, Connecticut–based newcomer Alvaro Vivanco. The pair recommended Argentina’s gross-domestic-product-linked warrants back in April 2010, when the dollar-denominated instruments were trading below $6. “We did not think that the chances of default were as high as the market was pricing, and we liked the very high yield to the next payment of this security and the overall high discount to their theoretical value, which is based on our models,” Vivanco explains. At the end of July 2011, the warrants were trading at $17.60.