North America Financial Bond House: Citigroup

IFR Review of the Year 2015
4 min read
Shankar Ramakrishnan

All figured out

Financial institutions are under continued pressure to raise capital due to tougher new regulations, and when they need to turn to the bond markets, they often turn to Citigroup. The bank delivered smooth execution even when a borrower’s particular needs took a deal into uncharted territory. Citigroup is IFR’s North America Financial Bond House of the Year.

Whether it was for regulatory capital, debut issuance or Yankee offerings, when financials needed to come to the bond market this year, Citigroup was often the bank of choice.

Citigroup led 99 deals for a market share of 11.1% in Thomson Reuters’s FIG league tables during the IFR awards period.

The bank was an appealing choice for issuers, able to leverage its global presence into a strong performance in primary markets in what was by many metrics a very tough year for raising new debt.

Volatility, headline risk and macro turmoil were just a few of the obstacles that made issuance challenging in 2015. But Citigroup repeatedly showed it could deliver flawless execution, even on innovative and structurally complex transactions where there was little in the way of a road map to follow.

As banks around the world rushed to meet total loss-absorbing capacity requirements and become compliant with the requirements of Basel III, Citigroup reaped the benefits of investing so heavily in its financial sector business.

Citigroup showed particular strength when it came to Yankee deals, stretching from Bank of Montreal and Bank of Nova Scotia all the way Down Under to Westpac, Macquarie and ANZ to get new deals over the line.

The bank was a powerful force in the Yankee covered bond space, acting as joint bookrunner on DBS Bank’s US$1bn inaugural covered issue as well as on a US$1.75bn offering from the Royal Bank of Canada.

In the Tier 2 space, it was lead underwriter on sub transactions such as ABN AMRO’s US$1.5bn offering in July and Santander UK Group’s US$1.5bn September trade – the company’s debut holdco level Tier 2 issuance in any currency. Citigroup also landed the role as lead underwriter for Rabobank’s dual-tranche offering in July and Societe Generale’s US$1.5bn April deal.

Meanwhile, for Intesa Sanpaolo’s US$1bn 7.7% perpetual non-call 10-year AT1 debut, Citigroup was one of five bookrunners that helped the issuer amass a significant US$6bn order book.

And when it came to US domestic issuers, the bank earned its high standings in the league tables, repeatedly delivering the goods for both repeat and first-time issuers.

One outstanding highlight was American Express’s US$1,000 par perpetual preferred non-call five-year offering in February, which was priced at 4.9% with virtually no concession to secondaries. The US$850m trade attracted US$2.9bn of orders from more than 250 investors.

Citigroup served as bookrunner on Blackstone’s US$350m 30-year notes – the issuer’s first trip to the senior unsecured market in 2015. It was also an active bookrunner on AIG’s US$2bn senior unsecured notes offering.

The bank also demonstrated leadership when it came to the liability management space, acting as a lead dealer-manager for one of the largest corporate liability management transactions, by General Electric Capital in September, when it announced an offer to exchange holders of GECC debt into newly issued debt by GE Capital International Funding.

By October 2, the early participation date, a whopping US$53.9bn of principal in old notes had been tendered. A total US$36bn of new six-month, five-year, 10-year and 20-year notes were issued in the exchange, allowing GE to achieve substantial interest and economic savings.

“It was a very difficult year in which our expertise and strength to capture mindshare with both buyside and sellside came to the forefront,” said Peter Aherne, the bank’s head of investment grade capital markets and syndicate.

“We differentiated ourselves relative to peers by providing thoughtful global advice, navigated changes in markets [and] sentiment, and achieved execution levels that were unparalleled.”

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North America Financial Bond House: Citigroup cartoon
North America Financial Bond House: Citigroup