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 of Justice.
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 business.
"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 Management.
"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.
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 memory.
"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 Matthew Davies)