Morgan Stanley is set to grow its debt capital markets and leveraged finance business as revenues in the sector have remained high throughout 2021, says chief operating officer Jonathan Pruzan.
The Wall Street bank, which has typically lagged US rivals in DCM, will “continue to grow” its debt advisory business, Pruzan told an industry conference on 14 September.
“The high-yield market and leveraged loan markets are relative to last year, clearly, at record paces,” he said. “We like this business. We’ll continue to invest in it, and we think that’s got some legs to it.”
A record $4trn in mergers and acquisitions deals this year have grabbed the most attention, but investment banks also continue to rake in high fees in debt capital markets. Banks have made $22.8bn so far this year in revenues from DCM, according to Dealogic, up from $22.3bn at the same point last year, when companies rushed to the debt markets to shore up balance sheets in the early stages of the Covid-19 pandemic. This has increased from $16.9bn in the first nine months of 2019.
Morgan Stanley ranks fifth in the DCM league tables, according to Dealogic, with $1.1bn in revenues behind JPMorgan, Bank of America, Citigroup and Goldman Sachs.
“We’ve had a very strong first half within our business model, within our risk appetite,” said Pruzan. “We’d like to continue to grow that business. So we are making investments, but again, within our risk framework.”
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