Emerging Markets Bond House, Asia Bond House, Emerging EMEA Bond House and Latin America Bond House: Citigroup
Dominant force The US bank is a global emerging market powerhouse, a top-two house in each of the three main regions. So dominant was the bank in 2024 that Citigroup is IFR's Emerging Markets Bond House, Asia Bond House, Emerging EMEA Bond House and Latin America Bond House of the Year.
“It’s been a fantastic year for the business,” said William Weaver, vice-chair of international debt capital markets at Citigroup about its EM franchise.
It certainly has. The US bank’s DCM teams have undergone some personnel changes over the past 12–18 months – Weaver took on a new role in 2024 having been head of debt capital markets and syndicate for Europe, the Middle East and Africa – but the EM business hasn’t missed a beat.
No other bank has done as much volume nor transacted with as many issuers. Its global market share by volume is a full percentage point higher than the next best and more than 3.5 percentage points higher than the third-ranked bank, according to LSEG’s league tables.
But league tables only tell part of the story – being on the biggest deals and being active in more countries helps in that respect. What makes Citigroup stand out, however, is its ability to win business across the size spectrum, the issuer spectrum and the ratings spectrum in each and every geography.
“We benefit from being super close to investors,” said Weaver.
Like other fixed-income asset classes, EM issuance had a strong year thanks to a relatively benign macroeconomic backdrop, with inflation in retreat and central banks starting to cut rates.
Yet, unlike other fixed-income asset classes, the technicals were less supportive – EM suffered net outflows, while other bond and credit classes experienced the opposite.
Crossover demand
Finding different pockets of liquidity was the big theme of the year. “When I look at what has been key this year, it’s local or regional demand, such as from Asia or the Middle East, or crossover interest from investment-grade or high-yield, as well as global liquidity,” said Geoffrey Hunter, head of EM syndicate.
It was in emerging EMEA that Citi was arguably most able to demonstrate its integrated global platform. The bank was involved across all geographies and issuer types. “What was interesting was the selective reopening of Africa, the CIS and high-yield activity overall,” said Iman Abdel Khalek, head of CEEMEA debt capital markets.
Poland, Romania and Turkey were very active markets, as was the Middle East.
On many deals, success came from being able to direct cash from investment-grade and high-yield credit funds into EM names, whether that was high-quality names like Saudi Aramco or some of the region’s lower-rated corporates.
“It was about working out which names can benefit from global liquidity and bringing to bear the fund flows from other markets into EM,” said Felix Weiss, head of CEEMEA DCM syndicate.
High-yield credit issuance had been sidelined for almost two years as the move higher in interest rates and, in some cases, weakening fundamentals made accessing the primary market impossible.
But as rates eased in 2024, Citi was well positioned to help those clients return. Notably, the bank excelled in Africa. One standout transaction was the debut bond from African mobile network operator Africell. Leading a business that operates in jurisdictions such as Angola and Sierra Leone into the primary market, even when sentiment is bullish, was not straightforward but the company raised US$300m.
Bank capital trades were another key component of emerging EMEA’s rebound in 2024 and it wasn’t just better-known issuers Citi worked with. More esoteric deals included Additional Tier 1 bonds that it was able to arrange for Georgian lenders Bank of Georgia and TBC Bank.
Citi was also the leading bank when it came to placing bonds for Turkish credits across the sovereign, banks and corporates. Among the well-known names were the likes of Ford Otosan, Erdemir, Ronesans and GDZ – all trusted Citi to deliver their inaugural offerings.
The Middle East has grown into a key region within emerging EMEA and Citi worked to cement its position as one of the leading houses arranging financing for Saudi Arabian and Emirati issuers last year, as well as placing bonds and sukuk transactions for names from Bahrain, Kuwait, Oman and Qatar.
The debut theme was alive and well in the Middle East too, where Citi was on the inaugural issues from Adnoc Murban and ADQ, while also working on more niche complex credit stories, such the first bond offering from Magellan Group, a UAE and UK-based asset manager, which needed to finance its acquisition of Danish Ship Finance.
Back on top
In emerging Asia, Citi wrestled back the top league table position with a market share of 7.2% and US$14.3bn in volume.
“Our success is down to a combination of people on the ground, our overall origination, and giving issuers the right funding solutions by coordinating with our loans colleagues,” said Adrian Khoo, head of Asia bonds. “It is a recovering market, and Citi has been at the forefront of the trends.”
Citi spotted the impact of a change to Taiwanese regulations and led the first offshore bonds from the insurance sector there: Tier 2 issues by Cathay Life Insurance and Nan Shan Life Insurance.
In Greater China it led international comebacks for the sovereign and tech firm Alibaba Group Holding and brought deals for Hong Kong blue chips like CK Holdings and AIA.
The bank continued to play an outsize role in South Korea, one of the most active markets, where it had a 12.1% market share for G3 bonds. Its standout deals included Korea Development Bank’s transition to developed market SSA-style execution and the sovereign’s return to the US dollar bond market, which also marked a shift from the traditional Asian deal style.
Getting these deals done required more than just on-the-ground coverage, but also strong relationships with global investors, and an ability to spot changing patterns of demand.
“European investors are not as excited about Asian credit as they used to be, but that is more than made up for by the Middle East and US investors that have come and set up shop here,” said Rishi Jalan, head of Asia debt syndicate. “We have aligned our sales team in different verticals – credit, rates and FX – which helps when we need to do things like cross-currency swaps.”
A good read of investor demand was vital for a trade like Biocon Biologics’ US$800m debut. The bank introduced the biosimilars pharmaceutical sector to Asian investors and conducted extensive education and investor work ahead of the trade. It took particular skill to reconcile Asian and US investors’ differing views on pricing for the Indian high-yield credit.
Best solution
In Latin America, Citi reopened the market for Argentina, which had been absent from the international primary market for more than five years.
The bank also led the first sovereign green bond offering for the Dominican Republic.
Citi uses an integrated debt solutions platform to provide clients with tailored solutions that combine bond transactions with other debt products.
“Given our approach, when we opt for a bond it’s because that is the best solution. In many transactions this year, the bond was the best solution, but only as a part of a larger transaction that would include a syndicated loan or a local capital markets transaction,” said Adrian Guzzoni, head of Latin American debt capital markets.
Such was the case of a transaction executed by Brazil’s LD Celulose, which aimed to shift from a project finance model to a corporate finance structure. Citi and two other banks committed to a US$1bn syndicated loan to provide the company with the immediate ability to repay in full an existing project finance structure.
To add duration to the capital structure, Citi structured an inaugural US$650m senior secured green bond, which was issued before the syndicated loan was funded. The financing package was broken down as a US$650m green note and a US$350m syndicated term loan.
The US$1.4bn 2030 bond transaction that refinanced LATAM Airlines’ expensive exit financing from Chapter 11 bankruptcy protection was emblematic of the types of complex financing tackled by Citi.
“There was a lot of price discovery and trying to understand how to better execute the refinancing, and it was not clear who the investor base was. So, we did some exploratory exercises that led us to conclude that the company would execute a more attractive deal, with better terms, in the bond market,” Guzzoni said.
The decision to add a fall-away provision to the collateral, added a layer of complexity to the deal.
Still, Citi, which was lead-left on the transaction, was able to generate a peak book of US$7bn, which enabled the bond to price at 7.875%. It meant the company will generate “a huge US$80m a year of savings", said Guzzoni.
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