IFLR 1000
The Guide to the World's Leading Financial Law Firms

After a slow recovery from the crisis, the US capital markets are starting to gain momentum. Whilst transactions are skewed towards the mid-market for many firms, most report that the volume of deals has picked up over the last year. Low interest rates have made it an attractive time for companies to borrow, and as a result of high liquidity, there is no shortage of lenders. However, the markets have been hit by several curveballs, in the form of US deficit discussions, the European debt crisis, disruptions in the Middle East and the earthquake, tsunami and subsequent nuclear spill in Japan. As a result, it has been a bumpy ride for capital markets lawyers. "It was a tough year last year, but there's been a lot of excitement," says one partner.

The surge in liquidity was partly due to the Federal Reserve's quantitative easing programs, which kept cash flowing through the markets for most of 2010 and the first half of 2011. QE1, which ran from November 2008 to March 2010, involved the Fed purchasing $175 billion of agency debt securities and $1.25 trillion of mortgage-backed securities, in addition to purchases of Treasuries. It was followed by QE2, which started in August 2010, when the Fed began reinvesting principal payments it had acquired during QE1 in longer-term Treasury securities. By November 2010, the central bank had decided to purchase $600 billion of long-term US Treasury bonds. QE2 came to an end in June 2010, and with no plans announced for QE3 at the time of going to press, there has been widespread speculation about the effects this will have on the markets. By increasing demand, QE2 also contributed to the vibrancy of the bond market, which has been flourishing. "I think the bond market will continue to be strong for the next couple of years," says one attorney.

Despite Standard & Poor's downgrade of the US credit rating in August 2011, demand for long- and medium-term Treasury bonds unexpectedly rose in the days following the demotion. With the stock market in turmoil, investors flocked to the relative safety of Treasury notes. The reduction from impeccable AAA status to AA+ followed months of political debate over how to fix the country's budget deficit, and a last-minute compromise which was unsatisfactory to many parties on all sides of the debate. The downgrade was met with outrage from politicians and businesspeople, who pointed to a $2 trillion error in Standard & Poor's initial calculations of the country's projected debt-to-GDP ratio. With interest rates kept artificially low, yield-hungry investors have also turned to the stock market for greater returns. Although conditions have been volatile, multiples have been rising, and some lawyers express surprise at the return of dividend deals. "Interest rates are low - that's driving the multiples above where they should be because people have nowhere to put their money," says one practitioner.

The IPO market has also become more active, although lawyers report some fits and starts. Deal flow has been hampered in some cases by what buyers perceive as unrealistic asking prices. Whilst stocks have risen, most have not yet returned to pre-2007 levels. This has caused tension between sellers, who believe their companies are undervalued in relation to earning potential, and buyers, who believe asking prices are steep in view of current market conditions.

Unsurprisingly, lawyers report that the high-yield market is "as hot as it's ever been". "It's very difficult to find a good return, so there's a lot of money flowing into the high-yield market," says one attorney. "High-yield transactions started to come back late 2009, early 2010. Everyone assumed that when the banking market got hot that would take some of the steam out of the high-yield market, but that hasn't happened. A lot of bond holders got money from refinancing and they pumped it back into the system."

As borrowers sought to take advantage of low interest rates, attorneys enjoyed what one describes as "an enormous wave" of recapitalisation and refinancing work. Companies which were starved for capital during and immediately after the economic crisis began fundraising frantically as the markets opened up over the last year. "Some issuers have anticipated future funding issues and so have funded themselves," says one partner. "That's going to provide a lot of companies with a cushion in case rates start to rise." Lawyers note that they are also seeing more LBOs, although these have not yet returned to pre-crisis peaks.

Going forward, attorneys cite uncertainty as the biggest issue. "People are worried that interest rates are going to rise, and about problems in the world causing problems in the capital markets," says one lawyer. "Every deal is a race to get it done as quickly as possible." With debt still hanging over the real estate sector, rising interest rates could push some borrowers into default, which may put pressure on portfolio estates and have far-reaching ramifications. "Volatility in the market and the fear about a double-dip recession and housing issues are going to continue to be the biggest challenges," says another partner. "I think there's going to be a real flight back to quality as a result of the instability."

With what one rival describes as "kind of a monopoly in the market for high-yield leveraged debt", Cahill Gordon & Reindel continues its reign as the sole occupant of tier one in the high-yield rankings. According to research by Bloomberg, the firm enjoyed a 36% share of the US high-yield debt market, advising underwriters in nearly 200 deals that generated more than $95 billion in aggregate proceeds. "Cahill is far and away the market leader in terms of volume and deals," says another peer. "They focus their corporate practice primarily on doing high yield, and they have got a great foothold there."

Competitors identify partner Douglas Horowitz as a rising star. "He's up-and-coming," says one practitioner. "He's one of those guys you will hear more about." Another lawyer, who has sat across the table from Horowitz, says, "He was very practical, was willing to give tough advice to his client to make sure we did the deal the correct way, and he was very knowledgeable in securities law."

Notable transactions include Cahill's work on the widely-publicised $5.3 billion buyout of Del Monte Foods, by a group of private equity companies led by KKR. The firm represented the initial purchasers, led by Merrill Lynch, Morgan Stanley, Barclays Capital, and JPMorgan Securities, in the $1.3 billion offering of senior notes by KKR affiliate Blue Merger Sub. Cahill also represented JPMorgan Chase Bank as administrative agent, and arrangers including JPMorgan Securities and Merrill Lynch, on $2.7 billion of secured credit facilities to partially finance the acquisition.

Cahill also has a strong presence in the equity space. The firm worked on the IPO of hospital operator HCA Holdings, which was valued at around $4.35 billion and was reportedly the largest private equity-backed IPO in US history. Cahill represented Bank of America Merrill Lynch, Citi and JPMorgan as underwriters. The firm also represented the underwriters and affiliates of the underwriters in bank and bond financings for the 2006 LBO of HCA, and subsequent debt financings.

As "a wonderful international shop" with a top-of-the-range debt and equity practice, Cleary Gottlieb Steen & Hamilton commands the respect of peers and clients. Competitors describe the firm as a leader in the convertible debt market, while customers appreciate the attentiveness of its partners. "They are absolutely accessible and responsive," says one client. "When we are on an active matter, I have access to the partners who are responsible – no matter what time of the day or night."

Competitors identify "senior statesman" Alan Beller, a former director and senior counsellor at the Securities and Exchange Commission, as a driver of the firm's success. "If there's ever a cutting edge issue, he's usually on it," says one peer. "He's a terrific lawyer and he knows his stuff." In September 2010, partner John Palenberg transferred to Cleary's New York branch after practicing in the firm's offices in England and Germany.

In September 2010, the firm advised Petrobras in its $67 billion SEC-registered global equity offering, the largest ever. Petrobras will use part of the proceeds to pay $42 billion to the Brazilian government for the right to extract up to five billion barrels of oil equivalent from Brazil's presalt layer. With Petrobras being partially government-owned, the deal received increased scrutiny, particularly in connection with its use of the proceeds.

The firm has also worked on several matters related to Citigroup's recovery from the financial crisis. These included advising underwriters led by Morgan Stanley in the $10.5 billion SEC-registered offering of Citigroup common stock in December 2010. The stock was acquired by the US Department of the Treasury under the Troubled Asset Relief Program (TARP).

As a small but powerful force, Cravath Swaine & Moore is regarded by peers as the Napoleon of law firms in the capital markets. "You're not going to see the volume of deals at Cravath, but you're going to see the quality," says one rival. Competitors note that the firm's team includes "some of the leaders in the securities area" and is "competitive across a range of products".

The securities team is led by William Whelan, who was singled out for praise by peers. "He's a terrific, well-rounded lawyer on the debt and equity side," says one competitor. "He's all over all aspects of the deal. I usually see him on the underwriter side and I have a lot of confidence in his abilities." In June 2010, partner Ronald Cami left Cravath to join private equity firm TPG as a general counsel. In December that year, prominent partner Gregory Shaw retired from the firm.

In May 2011, Cravath advised on the $7.5 billion registered secondary stock offering of The Mosaic Company, a producer and marketer of agricultural products. The firm represented the underwriters, led by Credit Suisse, JP Morgan and UBS Investment Bank. The shares were listed on the NYSE.The firm also advised clients in Lion Capital's acquisition of Bumble Bee, the largest producer of canned seafood in North America. Cravath represented the initial purchasers, JPMorgan, Wells Fargo Securities, Barclays Capital and Jefferies & Company, on the $605 million high-yield senior secured debt offering of Bumble Bee Acquisition. The company was merged into Bumble Bee Holdings, a wholly-owned subsidiary of Bumble Bee Foods.

Davis Polk & Wardwell has what one competitor describes as "the best all-round practice" in capital markets. Its partners have long been "the go-to people" in debt and equity, according to competitors. The firm also climbs a tier in this year's high yield rankings, following widespread feedback about its flourishing practice. "Davis Polk has been putting in more of an effort in high yield, and more resources," says one competitor.

Davis Polk has earned a reputation as a pioneer, with some of the largest and most complex high-yield offerings in history under its belt. The firm advised issuer Freeport McMoRan, an international mining company, on the largest high-yield debt deal ever. Its partners also helped pioneer the technique of privately placing notes under Rule 144A and following with a registered exchange offer - a strategy now used in the majority of all high-yield financings. "I am a big fan of Davis – they do great work," says one client. "I think their lawyers are exceptionally capable and loyal."

The firm also advised the underwriters on the $23.1 billion initial public offering of General Motors Company, the largest-ever IPO. As selling shareholders, the US Department of the Treasury, Canada GEN Investment Corporation and UAW Retiree Medical Benefits Trust sold common stock of General Motors, and General Motors sold shares of its 4.75% Series B mandatory convertible junior preferred stock. The deal closed in December 2010 and included a simultaneous registered public offering in Canada, a directed share program, and private placements in over 40 jurisdictions around the world.

Rivals are impressed by Debevoise & Plimpton's securities work, particularly on the issuer side. "Debevoise has a very good corporate practice," says one competitor. "They have some very good capital markets lawyers there. They end up in a lot of transactions." The firm recently promoted Paul Rodel, a former associate, to partner.

The firm recently advised American International Group and AIA Group on AIA Group's $20.5 billion IPO and listing on the Hong Kong Stock Exchange. The transaction, which closed in October 2010, was the largest IPO in Hong Kong's history.

On the high-yield side, Debevoise acted as counsel to Reynolds Group Holdings in its $1.5 billion offering of 7.125% senior secured notes due 2019 and $1.5 billion offering of 9% senior notes due 2019. The $3 billion deal closed in October 2010.

Gibson Dunn & Crutcher is a respected presence in the US debt & equity market. Over the past three years, the firm has helped its clients raise over $135 billion in public and private offerings of equity and debt.

The firm recently represented Hewlett-Packard in a $3 billion public offering of global notes and floating rate notes, in September 2010, and a $2 billion public offering of global notes in December that year.

The firm also advised Wells Fargo Securities as underwriters in a $2.5 billion offering of medium term notes issues by Wells Fargo & Company. The offer was made in March 2011.

Kirkland & Ellis has a solid capital markets practice, with particular expertise in reverse-LBO public offerings, where a company that was taken private or acquired in a LBO is selling new stock to the public, and in high-yield debt offerings, with the proceeds used for acquisitions or refinancing of existing debt.

In March 2011, the firm represented General Motors as the selling security holder in its $1 billion offering of 8.5% fixed-rate perpetual preferred stock of Ally Financial.

Other notable work includes representing Clearwire, a provider of wireless broadband services, in the offering of $3.4 billion of high-yield notes and a $380 million secondary offering of subscription rights to purchase common stock. Clearwire plans to use the net proceeds from this offering, in December 2010, for working capital and general corporate purposes.

Described as "a high yield factory" by peers, Latham & Watkins continues to be a strong contender in capital markets. The firm has helped raise billions of dollars for companies in every industry, and its capital markets practice is supported by over 2,000 attorneys around the world. "Latham is a market leader on the underwriter side and also has an issuer side," says one competitor. Another peer notes that partner Kirk Davenport is an experienced lawyer, who "has always had a great marketing edge."

The firm represented clients on $327 billion in debt offerings and $38 billion in public equity offerings in 2010, including over $10 billion in IPOs. In the high yield space, it advised on more than $62.6 billion in high-yield corporate debt issued in 2010.

The firm recently advised Barclays bank on a $3.5 billion Rule 144A/Reg S investment-grade bond offering by Williams Partners.

Mayer Brown is regularly involved in some of the most complex capital markets transactions. The firm represents some of the largest companies in the world, including international banks and financial institutions and companies included in the Fortune 100, FTSE 100, DAX and Hang Seng indexes. "They do both debt and equity and usually [have] very decent volume," says one competitor.

In May 2010, the firm advised Abbott Laboratories in its issuance of $3 billion of notes. These included $750 million of 2.7% notes, due 2015, $1 billion of 4.125% notes, due 2020, and $1.25 billion of 5.3% notes, due 2040.

The firm also counselled Bank of America Merrill Lynch, as underwriter, in a high-yield issuance of $600 million 6.875% senior notes, due 2018, by Regency Energy Partners and Regency Energy Finance.

Morrison & Foerster continues to be regarded as a strong contender in US capital markets law. The firm advised issuers and underwriters on over $315 billion in securities offerings in 2010.

In a deal which closed in May 2010, the firm represented underwriters Goldman Sachs, Incapital and Banc of America Securities in a $5 billion update to a Rabobank Nederland New York Branch medium-term deposit notes program.

The firm also advised the Borgata Hotel and Casino in Atlantic City in its $1 billion dividend recapitalisation transaction in August 2010. The transaction consisted of an $800 million Rule 144A offering and a $150 million credit facility, underwritten by Bank of America Merrill Lynch.

The capital markets practice of O'Melveny & Myers is widely recognised for its long history of successfully advising issuers and underwriters. In August 2010, the firm appointed partner Eric Reimer to co-chair its corporate finance/capital markets practice.

In a deal which closed in February 2011, the firm represented the Government of Singapore as lead investor in a syndicate formed by Silver Lake. The government and other investors acquired a 65% interest in Skype Technologies from eBay for $1.9 billion. The transaction involved a complex series of equity issuances, debt features, corporate governance features, and intellectual property and tax issues.

The firm also advised International Lease Finance in its sale of $3.9 billion of senior secured notes and $500 million of senior unsecured notes. The $4.3 billion proceeds from the issuance and sale of the notes were used to repay the company's $3.9 billion outstanding secured loans extended to the company by AIG Funding, from the Federal Reserve Bank of New York. The deal closed in August 2010.

Paul Weiss Rifkind Wharton & Garrison continues to be regarded as a talented force in the capital markets sphere. "They have got a small but good group of capital markets lawyers," says one competitor. A client remarks, "They have a very strong expertise, particularly in cross-border Canadian-US securities and M&A. I think they are probably the most known firm in that respect."

In a deal which closed in November 2010, the firm represented the Government of Canada as selling stockholder in General Motors' $23.4 billion initial public offering of common stock and convertible preferred stock, the largest IPO in North American history.

The firm also advised the Bank of Tokyo Mitsubishi UFJ, the largest bank in Japan, in a $2 billion Rule 144A/Reg S offering of senior notes, with Morgan Stanley, Mitsubishi UFJ Securities and JPMorgan as joint bookrunning managers. The deal closed in September 2010.

Shearman & Sterling has a world-renowned capital markets practice, and has worked on some of the most complex and innovative transactions for over 100 years. "We see them on a lot of deals," says one peer. Competitors note that Shearman is a particularly strong on transactions with a Latin American component, and the firm counts the first registered IPO of a Brazilian company with the US SEC amongst its achievements.

The firm has strong ties with the SEC. A number of partners previously held positions within the organisation, giving the firm's team useful insights in the current regulatory environment. In March 2011, partner Lona Nallengara left to join the commission.

In a deal which closed in September 2010, Shearman & Sterling advised on the $67 billion Petrobras offering, the largest in history. The disclosure issues faced by the company were complex, because Petrobras is a huge company and is partially owned by the Brazilian government. Petrobras will use $42 billion of the money from the sale to buy rights to extract up to five billion barrels of oil from waters off the coast of Brazil from the country's government. Shearman represented underwriters Bank of America Merrill Lynch, Bradesco BBI, Citi, Itau BBA, Morgan Stanley, and Santander.

The firm also represented Citi, Credit Suisse, Deutsche Bank Securities, JPMorgan and RBS as joint book-running managers in a registered shelf takedown of investment-grade notes by American Tower Corporation. The $1 billion deal closed in December 2010.

The debt and equity practice of Sidley Austin continues to command the respect of rivals. "Sidley is always high-grade," says one competitor, while another remarks, "Sidley does a lot of equity and a lot of investment grade debt." Peers identify senior counsel Norman Slonaker as "a big name".

In a $2.4 billion deal which closed in January 2011, the firm acted as designated underwriters' counsel in connection with HCP's $2.4 billion issuance of notes. Sidley Austin advised Bank of America Merrill Lynch, Citigroup, JPMorgan Chase, UBS, and Wells Fargo on the transaction.

The firm also acted as issuer's counsel to DaVita, in connection with its issuance of $1.55 billion of notes. The deal closed in October 2010.

Simpson Thacher & Bartlett is involved in some of the most demanding securities matters in the US, including AIG, Enron, HealthSouth and the IPO allocation cases. The firm represents major financial firms along with Fortune 500 corporations and their officers and directors. Competitors note that it has particular expertise in issuer-side work, where "they have the most active practice", according to one peer. The firm's capital markets work benefits from its dominance in private equity.

The firm has a reputation for nurturing talent. One rival identifies partner John Ericson as an up-and-coming star. "He's a young guy but I think he's good," says the competitor. In January 2011, Igor Fert, who advises investment banking clients on underwritten offerings of debt and equity securities, was promoted to partner. Clients say they appreciate Simpson's "prompt", "insightful" and "accurate" advice.

The firm recently represented HCA Holdings, the largest non-governmental hospital provider in the US, in the largest-ever IPO backed by private equity in the US. The $4.35 billion offering of common stock for the company closed in March 2011. This followed a complex series of transactions, including corporate reorganisation, to enable it to complete a dividend recapitalisation. Following the reorganisation, HCA Holdings issued $1.525 billion of senior notes due in 2021, using the proceeds plus cash to pay a $2 billion distribution to stock and option holders.

With experience in debt and equity instruments both domestically and worldwide, Skadden Arps Slate Meagher & Flom has developed an impressive roster of clients. The firm advises organisations including BlackRock, Coca-Cola, Revlon and HCP. "They do a lot of work on the issuer side," says one competitor. Partner Matthew Mallow retired from the firm in 2010.

In a deal which closed in May 2011, the firm advised BlackRock in its $1.5 billion offering of notes. The offering was done in two tranches – a $750 million offering of floating rate notes due in 2013, and a $750 million offering of 4.25% notes due in 2021. Skadden also advised the private equity firm in a $9.6 billion secondary offering of its common stock by Bank of America and The PNC Financial Services Group. This transaction, which significantly transformed the ownership structure of the company, closed in November 2010.

Other notable work includes advising drugstore chain Rite Aid on its $650 million high-yield offering of 8% senior secured notes, due in 2020. The deal, which closed in August 2010, also involved the incurrence of a new $1.175 billion revolving credit facility. The proceeds of the offering were used, together with available cash, to repay a $648 million loan due 2015 under its senior secured credit facility, and to fund related fees and expenses.

Sullivan & Cromwell has played a role in the development of the capital markets in the United States for nearly a century. The firm is known for its innovation and work on some of the largest and most interesting deals. "Sullivan & Cromwell tends to do larger, Fortune 50-type transactions," says one competitor, while another notes that the firm is "probably most known for IPOs and equity offerings."

The firm frequently represents financial institutions, and has an impressive volume of work in this area. It has recently been advising companies such as Chrysler and AIG on transactions designed to help fully or partially repay their obligations to the US Treasury. "They are very quick in their turnaround," says one client. "They are very well-versed in law and they have always satisfied us."

In July 2011, Sullivan & Cromwell advised Goldman Sachs on its SEC-registered offering of $2.5 billion principal amount global notes, which are due in 2016.

On the high-yield side, it represented Cablevision in the media provider's SEC-registered offering of $1.25 billion of dual-tranche, high-yield senior notes.

Weil Gotshal & Manges continues to be amongst the top choices for banks, issuers and financial sponsors seeking legal advice in debt and equity matters. The firm is known for its expertise in cross-border matters, and has more than 50 capital markets lawyers worldwide. It recently lost partner Boris Dolgonos, who joined Jones Day in November 2010, but remains strong with star lawyers such as Matthew Bloch, Alex Lynch and Rodney Miller.

Weil Gotshal advised NBC Universal and General Electric in NBC Universal's $5.1 billion offering of senior unsecured notes, which formed part of the financing necessary to complete General Electric's $37.25 billion joint venture with Comcast for ownership of NBC Universal. The transaction, which closed in September 2010, was one of the largest media deals in recent years.

The firm also acted as counsel to Microsoft in two offers of investment-grade senior unsecured notes. These included a $4.75 billion offer in September 2010 pursuant to Microsoft's shelf registration, comprising of two tranches that achieved the lowest coupons for corporate debt in history, and a February 2011 offer of $2.25 billion.