North America Investment-Grade Corporate Bond House: Citigroup
Hauling in the catch 2024 was one of the strongest markets in years, providing a perfect issuance backdrop that enabled corporate borrowers across industries to raise funds with minimal fuss. For helping its blue-chip clients make the most of a terrific year for debt underwriting, Citigroup is IFR’s North America Investment-Grade Corporate Bond House of the Year.
It would be hard to imagine a better year than 2024 in which to raise billions in the bond market. Borrowers took advantage of the relentless tightening of credit spreads, which carved out fresh post-financial crisis lows with every passing month. Investors, attracted by lofty all-in yields, clamoured for more bonds while shrugging off Treasury market volatility and inflation fears.
“As you look around, this was the year of liquidity,” said Jeffrey Kania, Citigroup’s co-head of investment-grade capital markets for North America.
Against this market backdrop Citi led hundreds of transactions, ranging from corporate hybrids and M&A-related debt transactions to opportunistic refinancings. Dealmakers for the bank grabbed plenty of business in the second most hectic year for the high-grade corporate bond market apart from Covid 19-affected 2020, maintaining third position on the league table.
The corporate bond franchise’s excellence was best demonstrated by its work in M&A financings.
Shadowed by regulatory scrutiny from the US Federal Trade Commission, 2024 did not see the US$20bn-plus acquisition financings that typically occur at least once a year.
And those concerns were warranted. Victims of the FTC’s gimlet eye included handbag and accessories company Tapestry’s collapsed purchase of Capri Holdings and Kroger’s aborted acquisition of Albertsons, the latter of which Citi supported with a US$10.5bn bond.
Nonetheless, the large transactions that came through the pipeline were often led by Citi. When AbbVie, Bristol Myers Squibb and Cisco printed US$41.5bn of M&A-related bonds in the space of a few days in February, Citi ran every one of those offerings. Despite the hectic calendar, the bank helped those clients generate eye-popping orders at minimal concessions.
Those M&A mandates reflected the bank’s capabilities outside its bond business. Its comprehensive suite of services meant blue-chip borrowers making their first tentative steps towards a transformative merger would consistently turn to the bank.
“It’s not just about doing the loan, doing the bonds, or selling a hedge on the derivative side. It’s a package so the client gets the best advice across all the verticals the firm has to offer, and I think we do that exceptionally well,” said Kania.
Yet 2024 was not all easy going. Among the dozens of stories of smoothly run transactions from highly rated issuers, there were individual episodes of corporate stress on which Citi was asked to lend a hand.
The US bank led Boeing’s US$10bn bond offering in April, which attracted a nearly eight times subscribed order book. The fundraising shored up the plane maker’s liquidity as it faced pressure on its credit rating and challenges delivering its passenger jets amid regulatory restrictions.
“It has been an unbelievable run with [Boeing]. All the advice that we’ve given them over time has gotten to the board level to allow us to be rehired in that position,” said Kania.
Citi helped replenish Intel’s coffers after the company engaged in costly spending for new foundries. Those investments strained its balance sheet and led to Intel releasing earnings that disappointed Wall Street, triggering a sharp drop in its stock price. Despite the negative headlines, Intel hauled in nearly US$20bn of demand for its US$2.55bn bond offering in February.
Even on the most vanilla of transactions, Citi impressed. The bank was an active lead on Procter & Gamble’s US$1.35bn senior unsecured note sale in January, which came at one of the tightest 10-year spreads ever on a US investment-grade corporate bond.
“We fight in this business for every basis point for the borrowers, while at the same time producing a volume of deals that work for the marketplace and leaves the market wanting more,” said John McAuley, Citi’s head of DCM for North America.
That was a function of Citi’s focus on its bond syndication capabilities, an area that Wall Street has sometimes neglected as banks pursue cost savings and efficiencies.
“When you look at the seniority on our syndicate desk, it's unrivalled as well. We still have very senior people who've been doing this for 15 to 20-plus years, who have built a ton of credibility with the buyside,” said Kania.
Citi was a key player in the hybrid market’s renaissance in 2024, obtaining capital for utilities including Evergy, Entergy and CenterPoint Energy. Citi was one of three active leads on CVS Health’s US$3bn hybrid offering in December, which is IFR’s North America Investment-Grade Corporate Bond of the Year.
Amid pressures on the ESG market that have led to dwindling US issuance of such debt instruments, Citi delivered a meaningful amount of business for clients that wanted to highlight their ESG credentials. The bank led labelled bond issues for AES, Verizon, Smurfit Kappa and RWE.
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