EMEA Structured Finance House: Citigroup
Expanding the universe The European securitisation market has historically been light years behind the US in terms of esoteric asset classes and innovation, while in the Middle East and Africa it is still in its infancy. For pushing the boundaries in all three regions and leaving clients thoroughly satisfied, Citigroup is IFR’s EMEA Structured Finance House of the Year.
In Europe, Citigroup’s fruitful efforts to develop rare asset classes and bring them to the public market orbited around two main themes in 2024 – residential solar panels and mortgages for older borrowers.
“From an innovation standpoint, I think we've actually done a lot of new asset classes, not just this year but over the years,” said Milind Chaukar, head of the EMEA and APAC ABS and residential mortgage business.
The US bank was arranger for the first European solar ABS, German company Enpal’s Golden Ray 1 transaction, having provided warehouse financing for the company 18 months before, establishing Citi as a leader in this burgeoning area.
In the field of later-life lending, Citi landed public placements backed by mortgages originated by specialist lender LiveMore and equity-release loans originated by insurer Aviva – a notoriously tricky asset class that requires careful structuring.
“I think this is going to grow in a very big way,” said Chaukar of the equity-release product, saying it would be useful, for example, for borrowers that had taken out interest-only mortgages as they approached maturity. “I think far from being niche, this is actually going to become quite a big product.”
In more conventional asset classes, Citi was instrumental in steering debut issuers such as Tandem Bank and AUTO1 Group to the market, and taking a fresh look at structural features such as pro rata amortisation in UK RMBS.
“Over the last 20-plus years we have shown that we can innovate, and that if clients want to do something new, they normally come to us,” said Sebastian Walf, head of EMEA ABS.
The bank also stood out in 2024, as in previous years, for its broad geographical reach.
While public ABS markets are not well developed in parts of the Middle East and Africa, Citi continued to lay the groundwork with private transactions.
It made a successful reentry into the Middle East, providing a Dh1.8bn (US$500m) private warehouse backed by micro consumer loans to a client in the UAE, and maintained a presence in Africa with a US$110m senior facility backed by South African auto loans provided to Toyota Motor.
These deals built on Citi’s decades-long legacy of developing ABS in emerging markets. In 2010, it worked on the first rated auto ABS in the UAE for Emirates NBD.
More recently, in 2023, the bank arranged an off-grid solar securitisation in Kenya that attracted the participation of commercial lenders as well as development finance institutions.
“Now with speciality lenders and buy now, pay later growing in the [Middle East], securitisation is becoming much more relevant there again and so 15 years later we’re actually going back there,” said Walf. “We just closed large warehousing lines, we have more deals in the pipeline, so it’s becoming an interesting region. We are going back into it and we’ll grow private and maybe one day also public deals.”
Even while stretching the limits in terms of asset classes and jurisdiction, Citi’s structured finance team managed to keep clients happy.
“Citi has proven to be the most pragmatic and also in a way the most sophisticated,” said a funding official at one issuer that worked with several banks during the year.
“They provide a complete package ... and they’re client-oriented,” said another official with many years' experience as a repeat issuer.
Rounding out Citi’s structured finance practice is one of the most active CLO franchises in Europe with a top-five league table position, according to LSEG data.
Market participants put the strong showing down to the team’s structuring and distribution capabilities and also to a unique delayed draw solution for Triple A rated tranches.
“Citi can bring a lot to the table there,” said one CLO manager.
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