NEW YORK, Sept 30 (IFR) - Embattled Deutsche Bank CEO John
Cryan did something unusual at the bank's annual leveraged
finance conference in Arizona this week - he turned up.
It was only the second time in the 24-year history of the
shindig that the bank's CEO actually bothered to attend, and the
timing was anything but auspicious.
Deutsche shares hit a new low as the conference got under
way, as the markets wondered if the bank was even still viable
in the face of a potential US$14bn fine from the US Department
Media are barred from the event, but several attendees told
IFR that Cryan had done a reasonable job of soothing concerns of
investors and executives at the gathering.
In particular, they said, the CEO helped assuage doubts
about the German lender's commitment to its leveraged finance
"Deutsche Bank is going through some volatility but their
leadership in levered finance has been consistent," said Michael
Buchanan, deputy chief investment officer at Western Asset
"I didn't see any indication that internally they had any
desire to pull back. Employee morale seemed good."
Deutsche's stock and bonds rebounded from the week's lows on
Friday morning, after AFP reported that the bank is nearing a
settlement with the US government for a much lower US$5.4bn.
Deutsche declined to comment on the report.
RATES AND VOTES
More than a few attendees said that the major concern at the
conference was not the health of Deutsche at all, but rather US
rates - and US votes.
The first debate between Donald Trump and Hillary Clinton
was broadcast live at the Arizona resort on the first night of
the three-day conference.
And those on hand underscored the uncertainty attached to
one of the most unusual and contentious US elections in recent
"You have to construct and build portfolios that can do well
in both outcomes," said Buchanan, who was one of the speakers on
a credit markets panel. "There is a reasonable amount of
probability that either candidate will take office."
Markets never like that kind of uncertainty, and many raised
questions about the reliability of US election polling, mindful
of the failure to predict the outcome of the Brexit referendum.
Meanwhile, former Secretary of State Condoleezza Rice
stressed the importance of free trade and the need for the
United States to support its allies abroad.
While some saw this as marking a contrast with Trump, two
people in attendance said Rice refrained from directly entering
the election fray.
And apart from the election, participants also expressed
worries about stretched valuations and the potential that an
unforeseen shock could cause a dramatic move wider in spreads.
"This has been a great year for high-yield, but boy that is
a very challenging course for next year," said one. "When the
market is priced to perfection, there is nothing but downside."
Another said: "Some people think valuations are stretched.
And there are a lot of questions on what happens in 2017, and
how long this can continue."
(Reporting by Davide Scigliuzzo; Editing by Marc Carnegie and