In a year when market conditions swung wildly, one bank combined flawless execution with a focus on market development, featuring on more of the region’s landmark deals than any of its competitors. For the first time since 2007, Citigroup is IFR Asia’s Bond House of the Year.
Asian issuers faced a year of mixed fortunes in the international bond markets in 2015, as near-perfect conditions gave way to months of uncertainty over the Greek debt crisis and China’s stock-market crash. Through the ups and downs, Citigroup was a constant presence on the most significant international deals from Asia, and the only top house to make it through IFR’s review period without a failed G3 deal to its name.
Citigroup’s lean team of debt capital markets specialists did more than their fair share to develop the Asian bond markets, helping lead many of the year’s milestone trades across the entire region. While Citigroup has thinned out its structure and slashed billions of dollars from its balance sheet since its own 2008 crisis, it has hung on to its corporate relationships across Asia and clawed back its share of the G3 market, proving that it is possible to be a top bond house without piling on credit risk in the process.
Early in the IFR review period, Citigroup added to its credentials in Asia’s burgeoning technology sector as joint bookrunner on Alibaba’s US$8bn debut in the bond markets. The multi-tranche trade smashed the record for the biggest international offering from an Asian credit and required a bold sales pitch, pricing more in line with US technology names than any of its regional peers.
In May, Citigroup helped South Korean corporate issuers find a way to access offshore investors and diversify their funding sources, bringing department store operator Shinsegae to market with a US$300m credit-enhanced perpetual, the first bank-guaranteed hybrid globally.
It followed this with a top-line mandate on the PRC’s first core Tier 2 capital offering for China Life Insurance in June. The deal introduced a new format for regulatory capital, but came before Chinese authorities had clarified what constituted a trigger event. Careful structuring and comprehensive investor education around the deal’s extendible maturity paid off, as China Life met its US$1.28bn target at a yield of just 4%.
Citigroup also worked on two landmark covered bonds in 2015, first as a joint bookrunner on DBS Bank’s US$1bn trade, Asia’s first statutory covered bonds, and then as one of three leads – and the only US house – on a US$500m Triple A benchmark from Kookmin Bank, half of which went to US investors.
“We’ve been tested in origination and in execution,” said Duncan Phillips, head of Asia debt syndicate at Citigroup. “It’s been a challenging year, but it’s been an interesting year.”
Citigroup scored key roles across the region and across asset classes. It demonstrated its structuring abilities on a US$289m offering for Delhi International Airport in January, the first high-yield issue from Asia in 2015 and a rare international issue from India’s infrastructure sector.
The bank followed that up with a tightly priced US$650m debut from Adani Ports, and also led a US$750m trade for Reliance Industries, the only 30-year issue from an Indian company in 2015. Sovereign deals for Pakistan and Sri Lanka showed its expertise in other areas of South Asia.
It worked on many of the year’s biggest deals, including Petronas’ US$5bn multi-tranche issue in March, the largest from a South-East Asian issuer and then Asia’s largest dual-currency offering for Sinopec the following month, as well as a US$3.8bn trade for CNOOC.
The year included prestigious transactions, such as the Republic of Indonesia’s US$4bn offering in January, its largest to date, as well as a liability-management exercise for the Republic of the Philippines, and Bank of China’s groundbreaking US$4bn Silk Road bonds, which involved simultaneous issues in US dollars, euros, Singapore dollars and renminbi. Citigroup was also present when Bank of Communications and China Construction Bank raised US$2bn each in Additional Tier 1 and Tier 2 securities, respectively.
Citigroup demonstrated expertise in the euro market, too, as the currency became more attractive to Asian issuers. As well as euro tranches on multi-currency deals, it printed euro issues for National Australia Bank, Transurban and Beijing Energy Investment Holdings, among others.
Citigroup was equally at home leading deals for inaugural issuers and repeat customers alike. It showed itself to be the bank of choice for issuers during fluid market conditions, rising to the head of the league table for IFR’s review period with 112 deals for US$24.2bn in Asia Pacific, excluding Japan.
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