Fixed-income research poll: part 3

Over the month of September, FinanceAsia once again conducted its annual fixed-income research poll. The poll is designed to reflect the outlook of Asia's fixed-income investor community, of whom 354 voted.

The poll has several components. It seeks to analyse market participants' views on the Asian markets, views on credit rating agencies, as well as voting for the best borrowers and, of course, the best banks at producing credit research. In this third instalment, we reveal who the best banks were this year, as well as the top rating agency.

This year's poll was always expected to throw up some interesting shifts in the top ranks. ThatÆs because in previous years the poll had been dominated by Citigroup; but last year Citi emailed clients to tell them that their fixed-income research model had changed. Credit research analysts became rechristened ascredit sector specialists. This meant they would no longer be printing research reports or anything that could be construed as ôresearchö by the US regulators.

A business decision was also taken to focus on fewer top clients and ensure they got better serviced. It looked like a radical change of approach, and many suspected that Citi would lose its top ranking in our poll.

This has proven to be the case. This year's overall winner was UBS, which moved up from second place. UBS scored an aggregate vote (from the six categories) of 659, versus Citi's 624 votes.

The narrow margin between the votes, however, indicates that Citi still maintains a strong position in fixed-income research. Indeed, it seems that the change of strategy has not been as draconian as the email announcement suggested. Many had thought that the announcement that Citi would no longer publish credit research, amounted to an exit from the business. In fact, its credit sector specialists still send emails to clients with bulletpoint trading ideas; and follow up individually with key clients by phone.

However, the deliberate narrowing of its client base has probably resulted in its slippage in the poll. UBS, which has always jostled for top spot with Citi, has been the main beneficiary, and retains a more universal approach to client coverage.

This year UBS topped four of the six categories. These were: macroeconomic research; investment-grade credit research; high-yield credit research; and fixed-income strategy. Stephen Cheng of UBS was also û once again û voted as the region's top fixed-income analyst; and Jonathan Anderson was the most highly ranked economist.

Citi retained top spot in two categories: sovereign-credit research; and banks and financial sector research. The victory in sovereign-credit research û run by Johanna Chua û is perhaps not surprising, given this area was far less affected. Chua still publishes full research reports and remains an analyst as opposed to a "credit sector specialist". Citi's win in this category was extremely convincing. The victory in the banks and financial sector category can be attributed to So-Yon Sohn, whose popularity with investors has evidently overcome the shift from analyst to credit sector specialist. Citi's Ivan Lee still scored highly in the best analyst category, taking second place in spite of the fact that technically he is not an analyst but a credit sector specialist. Clearly the investors we polled do not make such a semantic distinction.

Other banks that improved their standing in this year's poll include HSBC (which moved to third rank), Merrill Lynch (which moved up to seventh) and Lehman Brothers. A strong player in fixed-income research in the US and Europe, Lehman has made a big push in Asia and jumped to the number nine spot overall and even came fourth in the high-yield category.

In the ever-competitive vote for the rating agency that most influences investment decisions, Standard & Poor's once again topped the poll, and did so with elan. It won all four individual categories (corporates, sovereigns, banks, and structured finance), with Moody's taking second place and Fitch third.

The full results of the poll can be found in the November issue of FinanceAsia magazine.