09 November 2022: IEM Finance Survey: Primary dealers as perceived by investors

IEM Finance conducted the 20th online annual survey of French primary dealers’ (SVTs) clients from 5 September 2022 to 23 September 2022. Its aim is to assess the quality of commercial relationship and services provided by primary dealers to their clients, as well as clients’ views on the functioning of the French government debt market.

In 2022, 175 investors, representing a total of 125 institutions (Asset Management companies, Banks, Insurance companies...), responded to the questionnaire. This corresponds to a response rate of 24.0% in terms of respondents and 48.7% in terms of institutions surveyed.

Main results of the survey:

1-    The French government debt market:

-    Investor satisfaction is very high on the functioning of French government debt market, both in France and abroad. Among all investors, 99.3% declared to be “very satisfied” or “satisfied”, against 98.3% in 2021, reaching its highest level since 2014.

-    Liquidity and transparency are highly valued by investors, who consider these criteria to be important for a sovereign issuer, such as France. They were 91.3% to assess liquidity as “very important” and 74.7% of them had the same assessment regarding transparency. The last time the level of expectation was that high regarding liquidity dates back to 2008. As far as transparency is concerned, it is the highest level ever recorded. 56.2% of investors also consider predictability as “very important”, here again the highest level ever recorded since the launch of the survey in 2003.

-    Liquidity is considered to be satisfactory (“very satisfactory” or “satisfactory”) by a very large number of investors for OAT, BTF and inflation-linked bonds. Among investors who were able to provide their opinion, they were respectively 96.2%, 90.3% and 72.4% to assess it as satisfactory.

-    Beyond information provided by AFT, a vast majority of investors (92.7%) were “satisfied” by the information received from French public institutions on economic policy and public finances.

-    A large majority of investors declared that they were “very satisfied “or “satisfied” by the tapping of existing securities. Among investors who expressed their opinion, 97.7% declared to be satisfied (against 95.0% last year).

-    The share of investors who declared to have bought a Green fixed-rate OAT continued to increase and reached 63.4% in 2022, compared to 30.9% in 2018. Nearly three quarters of them (74.2%) declared to have bought it for its green specific feature.

-    More than one quarter of surveyed investors also declared to have bought the first green inflation-linked French sovereign bond, launched on 25 May 2022. Among these investors, 58.5% bought it for the combination of its green and its inflation-linked features. 14.6% bought it only for its green feature and 26.8% only for its inflation-linked feature.

2-    The Primary dealers - SVTs:

-    On fixed-income markets overall, the top-five most frequently quoted primary dealers by investors as being their main partner are:

2022 2021

1 - J.P. Morgan
2 - BNP Paribas
3 - Citi
4 - Société Générale
5 - Crédit Agricole - CIB
5 - Deutsche Bank

1 - J.P. Morgan
2 - BNP Paribas
3 - Citi
4 - Barclays
5 - Nomura

-    On the French government debt market, the top-five most frequently quoted primary dealers by investors as being their main partner are:

2022 2021
1 - BNP Paribas
2 - Crédit Agricole - CIB
3 - Société Générale
4 - Citi
5 - J.P. Morgan
1 - BNP Paribas
2 - J.P. Morgan
3 - Crédit Agricole - CIB
4 - Société Générale
5 - Deutsche Bank

-    For investors, being a primary dealer is still the most important criterion for the selection of an intermediary (the share of investors surveyed who consider this criterion as “very important or important” is 79.8%), followed by the League Table published by AFT at the beginning of the year, which assesses the performance of primary dealers on the primary and secondary markets and in terms of the quality of the service offered (43.3%).

-    Investors also gave their opinion on attention paid to the quality of various services offered by primary dealers:

o    The quality of pricing remains largely ahead of investor expectations. In 2022, 94.2% of them were assessing it as “very important” and 100% of them were assessing it as “very important” or “important”. It is the highest level observed since the launch of the survey in 2003.
o    Information, advice and sales coverage, as well as research, come in second and third place respectively and also gained importance, for the second consecutive year. The two services were considered to be “very important” by 62.4% and 39.8% of investors respectively, against 59.0% and 38.2% in 2021 respectively.
o    The survey also reveals a slight increase of the importance attached to the quality of post-market services (back/middle office) for the fourth consecutive year. It was considered as "very important" by 30.1% of investors in 2022, against 29.7% in 2021.

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