Navigating a Changing Financial Landscape

Key Themes from Natixis CIB’s 4th Annual FIG DCM Conference

Financial markets are entering a period in which resilience, competitiveness and adaptability are becoming increasingly interconnected.

That was the central theme of Natixis CIB’s 4th Annual FIG DCM Conference, which brought together more than 200 participants, including 50 issuers from 22 jurisdictions and more than 60 leading institutional investors from eight countries, facilitating more than 550 one-to-one meetings.

Across two keynote addresses and three panels, discussions covered the resilience of the global economy, the changing role of banks, the competitiveness of European financial institutions and the dynamics shaping credit markets. A common theme emerged: the financial landscape is becoming more interconnected, competitive and complex, requiring institutions to look beyond traditional geographic and asset-class boundaries.

economies are already altering the dynamics of global demand, with implications extending well beyond the energy sector.

Demographic change is also emerging as a major long-term economic force. Ageing populations will affect labor supply, public finances, consumption, and productivity gains. Artificial intelligence adds another layer to this transformation, with the potential to reshape business models and productivity while requiring substantial investment in infrastructure.

Ultimately, the ability of companies and financial institutions to adapt to several simultaneous transitions may become as important as their ability to navigate traditional economic cycles.

The banking discussion – hosted by Andrew Peacock - Executive Director, Head of Bank Capital, Natixis CIB, and with Fergus Blackstock – Head of Funding, Liquidity, and Collateral, Commonwealth Bank of Australia; Scott Forest - Head of Treasury DCM & Capital Strategy, NatWest Group; Micael Johansson - Head of Group Treasury Funding, Swedbank AB; Jerôme Legras, Managing Partner, Head of Research, Axiom; and, Romain Miginiac - Fund Manager & Head of Research, Atlanticomnium – highlighted how far the sector has evolved since the global financial crisis. A decade of regulatory reform has resulted in stronger capital and liquidity positions, while recent years have brought a significant improvement in profitability and asset quality.

The focus is consequently shifting from how banks can be safer, to how they can deploy capital efficiently, compete internationally, and support the financing needs of the wider economy.

While markets continue to value strong capitalization and prudent balance sheets, investors are increasingly attentive to the price being paid for that resilience. With credit spreads relatively tight, the discussion has moved towards valuation, yield, and the compensation available for different forms of risk.

The evolution of Additional Tier 1 capital provided a useful example. AT1 remains an important source of bank capital, while its complexity and the experience of recent market stress have prompted debate about how the instrument could evolve. The broader challenge is preserving loss-absorbing capacity while ensuring that capital instruments remain economically viable for issuers.

The discussion also highlighted differences between jurisdictions. While regulatory principles have become increasingly international, their implementation remains shaped by local market structures, supervisory frameworks, and resolution regimes. Simplification and greater harmonization can therefore support comparability and cross-border investment, but regional differences are unlikely to disappear.

For banks, this creates a strategic challenge: maintaining resilience while ensuring that capital, funding, and balance sheets can be used effectively.

Competitiveness and resilience should not be viewed as competing objectives. They can reinforce one another. The structural challenges, however, remain significant. Fragmentation across European markets continues to constrain scale and cross-border integration, while differences in business models, revenue generation, and market structures mean that European banks do not always capture the same benefits of scale as their international peers.

There is also an important distinction between cost efficiency and productivity. European banks manage substantial lending volumes per employee and operate with comparatively contained costs but generate less revenue per employee than some international peers. How then can they diversify revenues, absorb fixed technology and infrastructure costs, exploit scale, and develop business models capable of competing in increasingly international markets.

At the same time, the boundaries of banking itself are changing. Banks remain central to financing Europe’s households and businesses, but non-bank financial intermediation is expanding, particularly in corporate finance. This creates a more interconnected financial ecosystem in which banks, capital markets, and non-bank institutions increasingly operate alongside one another. Understanding competitiveness therefore requires a system-wide perspective.

Cross-border activity is another part of this evolution. Greater integration is creating opportunities for banks to compete for clients, funding, and investment opportunities across jurisdictions, while international funding markets are broadening access to capital.

The policy question is consequently becoming more nuanced. It is about identifying and removing barriers that prevent banks from operating efficiently and competing effectively, while preserving the confidence and stability on which the financial system depends.

This balance matters beyond the banking sector itself. Europe needs a financial system capable of mobilizing capital for innovation, digitalization, defense, and the green transition.

Moderated by Christopher Agathangelou - Managing Director, Global Head of IG Bond Syndicate, Natixis CIB, with Badis Chibani - Senior Credit Analyst: Financials, Neuberger Berman; Adrian Cighi - Credit Analyst, Financials, M&G; Jenna Collins – Portfolio Manager, Fixed Income, Brevan Howard; and Thibault Douard - Fund Manager, Groupama – the investor discussion brought these themes directly into the credit markets.

The environment remains supportive in several respects. Bank fundamentals are generally robust, while technical factors – including sustained investor inflows – have helped drive credit spreads tighter. At the same time, tighter valuations mean that investors are increasingly focused on whether the compensation available for taking additional risk remains sufficient.

This distinction between fundamentals and technicals emerged as an important theme. Strong fundamentals can support credit performance, but abundant demand can also compress spreads to levels where the margin for error becomes smaller. Investors therefore need to consider not only the underlying credit quality of an issuer, but also valuation, liquidity, maturity, optionality, and the broader supply environment.

The growth of issuance from large technology companies and hyperscalers adds another dimension. Significant funding requirements from these companies are creating additional supply of highly rated debt, increasing competition for investor capital across markets.

For financial institutions, this reinforces the importance of differentiation. The discussion pointed to opportunities beyond the most heavily followed issuers and markets, including smaller institutions and less crowded geographies. Here, investor knowledge of individual business models and local banking systems can become particularly valuable.

The discussion of AT1 and Tier 2 also reflected this more selective approach. Rather than viewing the market simply through the lens of headline spreads, investors are increasingly considering extension risk, call economics, liquidity, and the behavior of different investor bases under stress.

Ultimately, the investor perspective reinforced a broader point running through the conference: in a market where capital is abundant, but opportunities are increasingly differentiated, selection matters.

The final panel extended the conversation into one of the most significant developments in modern credit markets.

Moderated by Deborah Marzetti, Vice President, FIG DCM Americas, Natixis CIB, with Katlin Howard, Managing Director, Head of BDC Unsecured Funding, Blue Owl, Jose Santamaria, Head of BDC Unsecured Funding, Golub, and Cecile Mayer Levi, Head of Private Debt, Tikehau Investment Management, they discussed the rise of private credit and the growing role of Business Development Companies, or BDCs.

Private credit has evolved substantially since the global financial crisis. As banks became more constrained in certain areas of lending, private-credit managers increasingly stepped in to provide financing to middle-market and sponsor-backed companies.

In the United States, the BDC structure has helped broaden access to private credit by allowing public investors to participate in portfolios of private loans. Europe has followed a somewhat different path, with private debt funds developing progressively into an increasingly mainstream component of corporate finance over the past 15 years.

The evolution reflects a broader transformation of financial intermediation: public and private markets are no longer operating as entirely separate channels. Different sources of capital increasingly work alongside one another to finance businesses, infrastructure, and the wider economy.

A key question occupying the market is when will transaction activity accelerate? Deal activity has remained relatively subdued, with a mismatch between buyers’ and sellers’ valuation expectations contributing to delays in transactions. At the same time, the pipeline is gradually developing, with sponsors beginning to prepare for potential liquidity events and a significant amount of unrealised private-equity value still to be monetised.

Another major theme was the evolution of valuations and NAVs within private-credit vehicles. Recent volatility has been driven to a significant degree by movements in market spreads, rather than widespread deterioration in underlying credit quality. As those market effects stabilize, greater differentiation between managers may emerge through the actual performance of their portfolios.

The same principle applies to the impact of artificial intelligence. Software and technology businesses represent an important part of many private-credit portfolios, making the potential disruption from AI an important consideration. Yet the discussion stressed the need for nuance.

AI is not simply a risk to existing business models. For some companies it can also create opportunities to improve productivity, margins, and products. The relevant question for lenders is therefore not simply whether a company operates in technology, but how exposed its specific business model is to disruption, how defensible its competitive position is, and how effectively management can adapt.

And so, what characteristics matter when markets become more challenging? Credit selection was one element, while experience across different market cycles was another. But the discussion also emphasized the resilience of the manager’s own balance sheet and funding structure.

Diversified funding sources, relationships with multiple banking partners, and access to both bank and capital-markets financing can provide important flexibility when markets become less predictable. Similarly, the position of the lender within the capital structure and the ability to manage underperforming exposures can influence outcomes over a full credit cycle.

This suggests that assessing private-credit managers increasingly requires looking beyond portfolio yield. Underwriting discipline, funding resilience, liquidity management, experience, and the ability to navigate stressed situations are all part of the picture.

Taken together, the conference discussions painted a picture of a financial system is undergoing multiple simultaneous transitions. Banks must combine safety with efficiency; investors must navigate tight valuations; and regulators must support resilience while allowing capital to flow efficiently. Success in the next phase of the financial markets will be defined by how effectively participants adapt to these intersecting trends.