From Kenya With Love

In late 2007 the Kenyan government proudly announced the imminent debut of its sovereign bond issue. Naturally, a proud day for Kenya. (Pause). An ill omen for me.  I was part of the team which went on to pitch for the deal.

For many emerging market bond issues, the process of raising capital via what’s called the Debt Capital Markets (DCM) generally begins with the receipt of a Request For Proposal (RFP).   The potential issuer (i.e. emerging market entity) will send out an RFP to a select number of investment banks inviting them to participate in the deal by completing a series of questions contained within the RFP.  In essence an RFP is an invitation to obtain an invitation.

I used to tell people that working on emerging market bond issues, be it in from the Middle East or sub-Saharan Africa, was tantamount to showcasing a questionable bikini model to big modelling agencies.  Let me elaborate. My client, the emerging markets issuer, was ‘potentially’ a bombshell – that’s what I would tell all the agencies.  In reality, she was at the time far from stunning.  Sure, you could take her out but it was best to go somewhere with poor lighting and few VIPs, if you catch my drift. However, what I’d always emphasize was that she was growing sexier by the day (high growth rate!). That’s what made her so unique and so different from all the others. What’s more, she was exotic and, for much less than the ‘other’ girls, had more tricks to light up the catwalk with.  Yet agencies tend to be very cautious.  And they were scared of the danger my ‘alternative’ beauty could unleash.  To be fair, some of these models have been known to suddenly erupt into all sorts of nasty behavior, let completely loose on the catwalk, scream wildly and leap onto onlookers.  Between you and I, that is what I have always loved about a so-called emerging market issuer: its unpredictability.  How could anyone ever get excited about a boring Scottish water company, dull power plant in Virginia?

The bank’s viewpoint on these kind of deals was ambivalent.  On the one hand some senior bankers saw it as fresh meat and were therefore desperate – think of inmates in solitary confinement – to get their hands on the deal.  On the other hand, some couldn’t care less and would start checking emails on their blackberry as soon as they heard the slightest mention of a what they considered a ‘suspicious’ jurisdiction.  For my managing director it was a matter of credentials. Helping the Government of Kenya come to the market was not a very lucrative deal for our team per se. Rather, it was something to boast about.  ‘Our investment bank was responsible for bringing the Government of Kenya to the international capital markets!’ Then the rest of the bank would have the orgasmic pleasure of adding a slide in their various marketing presentations about how the bank successfully led a landmark transaction. That’s actually one of the remarkably effective ways investment banks shared resources. Every achievement was shared across the firm.  Failures were summarily orphaned, of course.

So one day, like many others before, we received an e-mail in our inbox from our Managing Director.  The subject line read FW: Kenya RFP.  The body of the message contained two lonely words: “get started”.   There was also an attachment. The first thing I did was to quickly open the document and find out the deadline.  This was always my first concern.  Because if was due within a few days then my life would be turned inside out.  It had happened before.  On a Thursday afternoon, say around 6pm, you receive an RFP with a deadline for first thing Monday morning.  And they’re 3 or 4 hours ahead so you need to have it done by Sunday night.  Kiss the weekend goodbye.  So, I start perusing the Kenya RFP. It was there on the first page: “RFP due by Tuesday 5pm (Kenya time).” It was Monday afternoon so there was time.  But then I noticed something peculiar. The document was almost 20 pages long.

I’d seen and worked on over a dozen RFPs until now and they were never longer than 10 pages. Just like a questionnaire, you had to address specific questions.  But, unlike those you come across which ask you to circle the right answer these ones required long answers.  Sometimes a single question required you to prepare up to 10 slides.  And you couldn’t always simply tweak existing slides. At times, fresh thinking was required. Extremely time consuming.

As I started going through the questions I immediately grew concerned.  The Ministry of Finance (Kenya) wasn’t only looking to get clarity on who we were, what we’d done and how we were going to make the transaction a success. These guys wanted to know absolutely everything there was to know about everything.  There were far too many questions. I knew it then. This was going to be a painful process.

We had several very big, time-intensive projects going on at the time which was challenging enough for us.  Now a massive RFP was thrown in which, itself, required a great deal of time and energy as we soon learned.  My schedule over the coming days went as follows:

Monday: spent 6.5 hours on Kenya RFP throughout the day. Left the office at 2:20am.

Tuesday: got to the office at 7:00am sharp.  Worked on the Kenya RFP from 11:30pm to 5:00am.  Got home at 6:00am, showered and ordered a taxi to take me to work. No sleep at all.

Wednesday: got to the office at 7:45am and got a bad look from the team Managing Director for being 15 minutes late to a morning meeting. Worked on Kenya RFP from 11:30am until 3:00pm and then from 10:00pm until 2:30am

Thursday: I arrived at the office at 7:45am and was a zombie most of the day. Four different people commented on the way I looked.  Horrible.  Normally, senior bankers love nothing more than people slaving but I was looking so rough one senior banker told me I was actually going to cause concern amongst others.

Then it hit the television screens: serious political dissatisfaction sparks further violent protests across Kenya.  The situation didn’t look good at all.  I was practically brain dead but none the less could tell that the footage I was seeing was not conducive to bond issues.  I was sure we were off the hook.  I had just enough energy to break a smile.  I decide to approach our Managing Director (MD).

The ibanker: struggling to keep both eyes open “the situation in Kenya is really bad.  I think the whole debut bond issue is off the table.”
MD: “I read the news.  Just keep working towards the deadline.”
The ibanker: “this is more than just a few dozen protesters. It’s widespread. People are dying.  There’s no way a bond issue will happen.  And it’s taking us a lot of time to complete the RFP.”
MD: “you guys have done RFPs before. Just finish it quickly like the others. Easy.”
The ibanker: I try to position myself in front of him so he can see the state I’m in, nevermind the analyst on our team who can barely hold his head up straight anymore “it’s much more comprehensive than any of the others we’ve done.  We’ve got 137 slides and we are still…maybe…60 slides away.  And it’s the first draft.”
MD: staring straight at his computer screen and reading his Outlook messages “I don’t care. Unless they call it off we keep going.”
The ibanker: “call it off?  I’m sure they have better things to do than call this off.”

The MD didn’t say a word. I could tell he was exasperated and so I returned to my seat and shared the disappointing news with my colleagues.  That’s when an idea struck: call the Ministry and see what their stance was on the RFP.

On the last page of the RFP I found a name and contact number. I put on my headset, dialled the Kenyan number and continued working on the RFP.  The line must have rang two dozen times before someone picked up.  Finally! I reached the individual at the Ministry who was the point person for liaising on the RFP.  We exchanged greetings and then i got straight to the point:

The ibanker: “we haven’t heard from you and were wondering if the bond issue was still something you considered. The RFP deadline is”

Before i could even finish my sentence, he burst out laughing.  This went on uninterrupted for a good ten seconds before he dropped the phone.  Even as he picked it up he continued to laugh. And as soon as he took a break I heard him speak to others in the room and then all of them burst out in laughter.  Then the line cut off.  Did they hang up the phone on me?

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