Citi
The bank’s emerging markets business has excelled despite the tough conditions and Citi’s own troubles.
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Also shortlisted in this category: |
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Atiq Rehman: Great year despite the crunch |
The character of the emerging markets has changed substantially from a year ago. For both borrowers and their intermediaries it has often been a case of going back to basics and taking advantage of the opportunities when the market has allowed. That means banks have had to stay focused and flexible and play to their core strengths.
No bank exemplifies this better than Citi, whose breadth, depth and ability to channel its resources throughout all developing regions has kept it ahead of the pack.
The bank’s emerging markets debt business has excelled despite the tough market conditions and its own difficulties. “Despite the credit crunch, business has been good if not better in terms of numbers in most regions than the year before,” says Atiq Rehman, co-head of the EMEA capital markets business.
The data bear out Rehman’s comment as, according to Dealogic, Citi has surpassed its 2006-07 volumes in the period for all regions except central Asia and Asia-Pacific.
Particularly impressive is the way Citi has kept up its pace of business this year. Emerging markets have remained relatively resilient to the credit crunch, although at times primary markets in some countries and regions have shut. And when opportunities have arisen to bring issuers to market, Citi has stepped up to the mark more often than not. By the end of May, Citi was ranked first in the league tables for all emerging markets international bonds year-to-date, according to Dealogic. It was also first in the league tables in the 12 months from May 2007.
Citi’s loans business has also performed well, with only BNP Paribas and Calyon lending more money. Citi’s use of its balance sheet has been critical, especially when liquidity in the bond markets dried up.
These awards, though, are about more than just market share. They are about innovation and breadth of business too. Nothing illustrates this better than Citi’s local-currency capabilities. Both Credit Suisse and Deutsche Bank, the other shortlisted banks, have lead managed important local-market transactions. Neither, though, can compete with Citi’s local-currency business.
In Peru, for example, the US bank completed a landmark deal when it priced a $1.5 billion-equivalent transaction for the Republic in July 2007. This was not only the largest local-currency deal ever in the international markets from Peru but also the largest new-issue transaction that the sovereign had ever done. More than that, in one stroke, the deal helped the government complete almost all of its financing needs for the pre-payment of $1.75 billion in Paris Club debt.
In the same month, Citi helped Egypt bring its debut local-currency Eurobond to market. The E£6 billion ($1.13 billion) five-year deal attracted EGP13.7 billion in orders from 99 investors. The bond satisfied the issuer’s needs to price inside the domestic yield curve and created a local-currency benchmark in the international market. These two deals are the tip of the iceberg – Citi brought deals denominated in 10 different currencies to market over the past year.
Aside from its local-currency business, Citi has delivered a strong mix of international bonds for all types of clients and in a range of structures – sovereigns, corporates, financial institutions, debut borrowers, companies seeking financing for acquisitions, liability management trades, and so on. Other debt houses can point to a diverse client and product range too but not to the same extent as Citi.
In Africa, Citi acted as a lead manager on the debut bonds for Ghana and Gabon, their $750 million and $1 billion 10-year deals respectively. South Africa, Morocco and Tunisia also issued via Citi.
As well as performing well in the sovereign market, Citi continued to lead in the corporate and high-yield sectors with deals from Gazprom, Irsa, Peermont and Vimplelcom.
A deal that highlights Citi’s strength across the debt markets was the groundbreaking $8 billion strategic financing for Sabic in August. Citi completed the financing through a $1.5 billion bond that tapped the deep liquidity pools available in the Middle East and a $6.4 billion loan for which the bank acted as co-lead arranger. The financing helped Sabic in its $11.6 billion acquisition of GE Plastics last year, a transaction in which Citi was sole adviser to the Saudi firm.
In structured credit, where Citi has fallen short in previous years, it has arranged several important transactions. Last month, it priced the $57.5 million Enterprise CDO for portfolio manager Sidbank. The structure is a first of its kind local-currency deal that employs what Citi calls “dynamic leverage.”
Enterprise has issued five- and seven-year principal-protected notes that are structured to obtain non-recourse leverage on a portfolio of emerging market local-currency sovereign debt.
