Bond traders emerge as bonus winners

While other investment bankers tighten their belts, the City's bond traders are set for a happy new year after achieving a record level of fixed-income business this year.

While other investment bankers tighten their belts, the City's bond traders are set for a happy new year after achieving a record level of fixed-income business this year.

A number of senior bond traders are in line for the level of bonuses usually associated with the late-1990s. Bob Diamond, head of Barclays Capital and a bonds specialist, is understood to have received £10m and 100 of his colleagues are rumoured to be in line for £1m each.

Investment bankers on the fixed-income desk at Salomon Smith Barney are also expected to receive hefty pay-outs, after the bank did the most bond underwriting in the City this year, capturing10 per cent of the market. Deutsche Bank moved to second place due to its growing role in the US market.

Bond traders have emerged as the big winners in an otherwise austere bonus season. According to the private equity brokers Close Wealth Management, financial movers and shakers will receive between 10 per cent and 30 per cent of their salary as bonuses – a paltry sum for those who often double their income at bonus time.

But some equity analysts believe the level of windfalls paid to their colleagues in fixed-income divisions will be so high that investment banks will not save much on their annual bonus pay-round overall.

One bond trader said: "Bonuses paid to bond traders will make up for the cuts in bonuses which corporate finance and IPOs are receiving."

Martin Smith, Close's chief executive, said: "The stock market has suffered this year and there have been few mergers and acquisitions and even fewer flotations. But the fixed-income markets have thrived in 2001 and many people in this field can expect fat cheques."

Global bond issues totalled $1,680bn (£1,170bn) this year, a 15 per cent increase on last year, according to Dealogic, a capital markets research boutique. In the fourth quarter, issuance was up 36 per cent year-on-year at $383bn.

High-profile bond issues include British Telecom's £6.2bn bond in January, which was followed by a major 30-year offer by GlaxoSmithKline. Ford Motor became the largest corporate issuer in the international bond markets, raising $37bn.