Emerging Markets Bond House, Latin America Bond House and Emerging EMEA Bond House: Citigroup

IFR Review of the Year 2014
8 min read
Sudip Roy, Paul Kilby

In a year in which political and market risks have intensified, one firm has stood out as the complete emerging markets bank, with its consistency across all borrower types and every developing region putting it ahead of its competitors. Citigroup is IFR’s Emerging Markets Bond House, Latin America Bond House and Emerging EMEA Bond House of the Year.

Winning any IFR award is tough. Winning one twice in a row takes some doing. So for Citigroup to take IFR’s Emerging Markets Bond House for the second consecutive year, again edging out HSBC in the process, is a testament most of all to the firm’s consistency.

While HSBC has executed more deals – largely because of its Asia franchise – Citigroup has completed transactions in more countries, at 48.

Citigroup, moreover, is the only bank to be in the top two of the league tables for international bond deals for every emerging region – Asia; Central and Eastern Europe, the Middle East and Africa; and Latin America.

It is also the only bank to be in the top two for international transactions for emerging markets governments and agencies; financials; and corporates, with its high-yield business, in particular, standing out.

It is this breadth and depth that allows Citigroup to adjust to sudden risks.

Nowhere was this better demonstrated than in the emerging EMEA region, where the stand-off between Russia and Ukraine led to shrinking volumes in line with the large (though not complete) absence of the biggest issuing country in the market.

Yet Citigroup has continued to thrive. Indeed, it was one of the few firms to have seen its market share grow.

“One of the challenges is to grow market share when we already have 10% [as the US bank did in 2013] and deals are often four or five-handed,” said William Weaver, head of CEEMEA debt capital markets at Citigroup.

Its market share for the calendar year of 2014 up to the end of the awards period was more than 12.50%, nearly two percentage points higher than in 2013.

Moreover, Citigroup also executed the most number of deal tranches, demonstrating that its league table position was not artificially boosted by big sovereign issuances. Indeed, Citigroup also topped the high-yield table for the emerging EMEA region over the awards period.

One of the criticisms laid at Citigroup’s door is that it is a deal churner. In one sense it is. So what? Most banks would love to have the roster of clients that Citigroup does.

In CEEMEA, moreover, this year it has had to prove itself to be more than just a machine to sustain revenues in a shrinking market.

“We’ve had to re-invent ourselves and find new markets,” said Peter Charles, head of EMEA fixed-income syndicate. “It’s not been business as usual this year.”

One growth area that Citigroup cottoned onto early was euro issuance, which accounts for more than one-third of emerging EMEA issuance volumes, as issuers sought to take advantage of historically low rates.

While the bank was involved in some standard euro trades, such as for Poland and Romania, it was also a lead for some not-so obvious issuers in the single currency – Israel, Russian Railways and South Africa, for example. Remarkably, despite being a US bank, Citigroup topped the emerging EMEA euro league table for the awards period.

Citigroup led in other key areas too – sovereigns, financials, high-yield corporates, Turkey, Africa and subordinated debt. For these reasons Citigroup is IFR’s Emerging EMEA Bond House of the Year.

Even better

It’s a similar story in Latin America. With 58 deals under its belt from 13 different countries and US$18.83bn-plus in new issue volumes credited to the bank (distorted somewhat by a US$5bn deal for PDVSA), Citigroup stands head and shoulders above its rivals, and is, for the second consecutive year, IFR’s Latin America Bond House of the Year.

“2013 was a good year, but 2014 was even better,” said Chris Gilfond, co-head of Latin American capital markets origination.

More than the volumes, however, Citigroup had a notable presence in the trends that dominated Latin American headlines. Whether it was liability management, marquee trades for blue-chip names, off-the-run sovereigns or debut corporate names, the US bank was there.

It also showed consistency in its ability to provide underwriting in core currencies, namely US dollars, euros, yen and a variety of local currencies.

In a market where banks increasingly have to share the spoils with a string of leads, bringing complex and innovative trades with higher fees is essential to the economics of any bank with a DCM business in Latin America.

Citigroup was involved on more than its fair share of such deals. These ranged from Mexican debut names, such as data centre operator KIO Networks (Sixsigma) and gas pipeline company Fermaca, to a rare hybrid offering for Chilean utility AES Gener and a jumbo US$1.1bn bond issue for Chilean LNG terminal GNL.

It also led Ecuador’s return after a long absence from the capital markets following its 2008 default.

With some help from the liquidity-induced search for yield, leads managed to position the credit positively despite its reputation as a serial defaulter, resulting in a tightly priced and upsized US$2bn 10-year at 7.95%.

“It was hard to position but once we positioned it we did so effectively,” said Gilfond. “And then it was a big surprise to the upside in terms of demand. We had a close to five times oversubscribed transaction.”


In Asia, while Citigroup cannot boast the volumes or deal numbers of HSBC, it’s still comfortably ahead of the rest of the pack. “We’ve got a very solid positioning in all the key areas,” said Adrian Khoo, co-head of Asia debt origination.

In China, the bank can point to jumbo issuances, such as Sinopec’s US$6bn triple-tranche offering, which bolstered its league table positions. But more noteworthy are deals such as Lenovo’s US$1.5bn 10-year from April, which was the biggest unrated issue from Asia. Citigroup acted as sole global co-ordinator.

One big theme in China (and increasingly throughout Asia) has been bank capital. While, again, HSBC has proven to be the dominant force in this area, Citigroup has had its fair share of success, present on all the key Basel III deals from China – including deals from Bank of Communications, China Construction Bank, China Citic Bank and Bank of China (a remarkable US$6.5bn AT1 preferred share issue).

Away from China, the bank pushed boundaries in more niche markets. From Taiwan, Citigroup acted as a joint bookrunner for a US$300m note issue from ASE Group, which was the first ever Green bond offering in Asia. It was sole bookrunner, meanwhile, on a US$300m bond deal from Banglalink, which became the first Bangladeshi issuer to sell debt in the international capital markets.

Citigroup has also been one of the guiding forces behind Indian issuers’ increasing use of the international capital markets, acting as bookrunner on, among others, Tata Steel’s US$1.5bn offering in July – the biggest high-yield US dollar bond from the country – and Tata Motors’ US$750m dual-tranche in October, which reopened an Asian high-yield market that was still in the midst of a period of volatility.

Despite their success, Citigroup’s bankers aren’t resting on their laurels. They know that not every deal works and, occasionally, they have some stinkers. But as Gilfond said: “If every deal works, we’re not testing the art of what’s possible. We’re not working hard enough.” Rivals should beware.

To see the digital version of the IFR Review of the Year, please click here.

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Flying the EM flag
Emerging Market Bond House, Emerging EMEA Bond House and Latin America Bond House 2014