Bank for Governments: Citigroup

IFR Awards 2020
9 min read
Gareth Gore, Steve Slater

Support crew
The Covid-19 pandemic left governments fighting on all fronts during 2020, and their partners in the finance industry were key to saving lives and livelihoods. For its wide-ranging support to the public sector in every corner of the globe, Citigroup is IFR’s Bank of the Year for Governments.

Bank for Governments

Governments were in many ways the central protagonists of 2020. Beginning in China at the start of the year, then Europe a few weeks later and eventually everywhere on the planet, those in charge faced truly difficult decisions about how to save lives – and also how to save their economies from a crisis unprecedented in any of our lifetimes.

But they didn’t act alone. Behind the scenes, every one of them turned at some point to their trusted partners in the financial sector to fund the fight, to facilitate vital services and to provide financial assistance to those that needed it. From being the problem in the last global crisis, the finance industry transformed itself into being a vital part of the solution this time around.

Citigroup stood out for its role in supporting governments throughout the year. The bank, through its public sector team of 100 dedicated bankers – assisted by an additional 270 bankers on the ground – provided vital advice and financial solutions to more than 750 public sector clients in 160 countries throughout the year.

“We feel like this year Citi has performed at a different level,” said Julie Monaco, who runs the public sector team from New York. “When this crisis hit, it became very evident to us in March how well positioned we were, because we are the only bank that has an end-to-end banking team that is covering everything from transaction banking all the way through investment banking.”

Early on, as countries were scrambling to understand what was happening and what their options were, Citigroup stepped in to provide assistance. It quickly developed a Global Government Covid-19 Response Tracker that provided daily updates of how events and responses were unfolding around the world, drawing on its vast local presence, and giving its clients vital information.

At the height of the uncertainty in March, a time when border closures were making even the most routine activities impossible for some clients, it proved its mettle. When a global development sector client found it simply couldn’t get cash to its missions, Citigroup stepped in with a plan across several countries, numerous airports and multiple local journeys to get money to critical humanitarian programmes on the ground.*

The bank was also selected by Gavi, the Vaccine Alliance to be the financial adviser on the procurement of Covid-19 vaccines for poor countries. Citigroup will assist the public-private initiative with advice on structures to mitigate sovereign, credit and operational risk as it procures and distributes vaccines from pharmaceutical manufacturers to dozens of countries.

“Our reach to just about every country in the world allowed us to really be in the centre of the response to Covid,” said Monaco. “It was everything from helping clients on basic supply chain management, helping identify fraud that happened early on as people were trying to secure PPE, engaging directly with development banks around the world, to figuring out all the programmes they were announcing.”

Vital financing

Once the initial panic was over, Citigroup quickly stepped up to help governments and other public bodies raise the cash they needed. It was a lead bank on a US$3bn Covid-19 social bond from the African Development Bank at the end of March, the development bank’s largest-ever trade in the US dollar market – and at the time the biggest social bond ever done.

The deal was notable not just because of the order book, which secured 20 new investors for the AfDB, but also because of an interest rate swap that Citigroup provided alongside the transaction. This was done during a period of acute market volatility and huge changes in sovereign bond markets. The bond’s success was to a considerable degree down to the commitment of the bank’s swaps desk.

That was just one of dozens of trades for public sector clients. Citigroup was a lead on several record-breaking bond sales – €15bn from Spain, €14bn from Italy, £12bn from the UK, as well as US$7bn transactions from Abu Dhabi and Saudi Arabia. It also printed many other landmark deals, including a US dollar bond for China, a century bond for Israel, a 50-year for Indonesia and a 30-year for Egypt.

The latter was the country’s largest-ever international bond – and biggest for any African country – and provided it with a vital US$5bn, in effect allowing it to pre-fund its needs for the year ahead. Egypt followed up with a US$750m green bond less than four months later, the first from the Middle East. Both deals were the culmination of deep ties to the country through thick and thin.

“We’ve been on the ground in Cairo now for over 30 years, so we are a major foreign bank player in the Egyptian local government, local currency and foreign currency marketplace,” said David Walker, who heads the EMEA public sector team. “We're in constant dialogue with them and involved in all sorts of work on the ground.”


Of course, not every country has had access to markets. Some were already in financial trouble before the pandemic, and the cost and economic fallout of the virus has pushed a handful over the edge. Citigroup has been a vital partner for those governments – particularly in Latin America and Africa – that have found themselves unable to stay current on their debts.

When Ecuador needed help restructuring US$18bn of foreign currency debt, it turned to Citigroup for help. The bank helped structure a complex two-stage solution that gave Quito breathing space in the early part of the pandemic. Investors agreed to defer interest payments and waive cross-acceleration and cross-default clauses. A full restructuring followed a few months later.

The bank was already an adviser to the government going into the crisis and was mandated quickly to find a solution. Its work came at a critical time, just as the International Monetary Fund and World Bank were working on their debt service suspension initiative for the poorest countries, and helped to establish important precedents that were later used by dozens of other countries, including the G20’s debt service suspension initiative.

“We were the advocates for them not to default,” said Jay Collins, vice-chairman for banking, capital markets and advisory, who worked on the initiative. “And this is critical, because it led the way for our role in DSSI. We believed that there was the potential to ask the market constructively to extend, that an extension was something we could get consent for, and that sovereigns shouldn't need to default in order to be given time.”

“Our advice – and this was embraced by Ecuador, the IMF, US Treasury and others – was that default would be a bad precedent and a market-moving event at a very bad time,” said Collins. “We worked closely with the Fund – and we ultimately were able to get the market not only to extend, but then to restructure the debt of Ecuador.”

Equity success

The bank was also a critical player in a number of big government equity sales. In Saudi Arabia, it was a global coordinator on the US$29bn IPO of Aramco, which took years of hard work. While many banks took part, Citigroup’s subsequent work for the kingdom – it advised Sabic on its sale to Aramco and the sovereign wealth fund on its purchase of a stake in Jio Platforms – indicates how its work was valued.

Citigroup was also involved in some of the other big privatisations of the year. It was joint global coordinator on the €1.8bn IPO of Francaise des Jeux, the French state lottery, which was the largest listing in the country for 15 years. It was also lead adviser to Abu Dhabi Power on its reverse merger into TAQA, creating a national champion and one of the largest utility companies in the region.

Airlines were of course among those companies worst affected by the pandemic, and Citigroup worked closely with those governments that had major stakes in carriers. It was financial adviser to Agence des participations de l'Etat on the €7bn bailout of Air France, completed a €500m rights issue for Finnair and advised Austria on a support package for its flagship carrier.

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