Everything, everywhere
For being at the forefront of event-driven financing in its home market and internationally in a year of exceptional market volatility, for the depth of its lending relationships and for its unrivalled footprint across the globe, Citigroup is IFR’s Loan House and Americas Loan House of the Year.
The global loan market during 2022 was dominated by turmoil, spurred by funding cost increases, capital constraints and a dislocation with the bond market, but Citigroup maintained its determination to support its loan clients and provided some of the largest corporate acquisition financings of the year.
In a year during which there was a noticeable lack of transformative and major M&A activity, Citigroup held a leading role in many of the largest global financings. They included the US$32bn bridge loan backing semiconductor firm Broadcom’s approximately US$61bn acquisition of cloud services provider VMware, and the US$17.4bn bridge loan that supported US supermarket chain Kroger’s proposed purchase of peer Albertsons Companies.
“We pride ourselves on the long-standing relationships we have with our clients. We have a big global franchise and as a result we serve a lot of really large global clients, and we tend to lead with those clients. Nine out of the top 10 deals, Citigroup is a lead on, and is admin agent on a number of those,” said Carolyn Kee, chair of the debt capital markets group at Citigroup. “We’ve made the best possible outcome from what was definitely a difficult acquisition financing market.”
Citigroup underwrote 50% of a US$17bn bridge facility for Philip Morris International’s acquisition of Swedish Match. The largest European acquisition financing of 2022, it included an element of Swedish krona, with the loan sized to maximise market capacity from lenders.
It also demonstrated Citigroup’s ability to support clients achieve their transformational strategies – PMI said the acquisition would allow it to create a comprehensive smoke-free product portfolio.
Citigroup also underwrote 50% of a £4.1bn bridge financing to support French industrial conglomerate Schneider Electric's acquisition of a 41% stake in UK industrial software company Aveva. Preserved confidentiality and swift execution allowed the facility to be placed ahead of the M&A announcement and a best-efforts term loan was launched post-announcement and syndicated alongside the bridge. It received strong support from the core bank group, with significant scaleback on the bridge and term loan.
“The global nature of the franchise, the consistency and seniority of the team, the expertise level and the amount of repeat business we do … that is important to note with respect to all our underwriting franchises,” said Peter Aherne, co-head debt capital markets for North America.
Through the macroeconomic challenges, Citigroup’s global reach and long-standing relationships with its clients enabled the bank to manage transactions.
Citigroup was one of the underwriters of a US$1.7bn bridge facility backing Glencore’s agricultural commodities arm Viterra's acquisition of the grain and ingredients business of US-based Gavilon. The successful and timely execution of the financing was instrumental in supporting the M&A process and having been consecutive coordinator on Viterra’s RCFs, Citigroup highlighted its ability to support its core global clients.
“The prototypical client of Citi is a manifestation of Citi. It is large, multinational, and tends to operate in dozens of countries around the world. We can provide all sorts of services to those types of organisations,” said Aherne.
Home advantage
In the US, Citigroup was bookrunner on 515 credit agreements, representing a market share of 8.49%. For acquisition-related facilities, it was bookrunner on 57 transactions with a market share of 9.5%.
In the final weeks of 2022, Citigroup led a US$28.5bn bridge loan for biotechnology company Amgen to back its US$27.8bn offer to buy pharmaceuticals firm Horizon Therapeutics. The Broadcom and Amgen loans represented the ninth and 10th largest US dollar investment-grade bridge loans of all time.
Citigroup was able to overcome challenges faced by the loan market by managing the assumptions of its clients and building buffers into syndication strategies in the expectation that lender groups would shift.
The transition from the outgoing Libor reference rate also necessitated an increased level of interaction with clients in order to educate and advise on the alternatives available.
“The leadership that we were able to show clients in transitioning to SOFR was important. The team was extremely engaged and active in pushing to help clients through that transition,” said Kee.
In a year of volatility, reliability was key. Citigroup leveraged its ability and strong client relationships to dominate the refinancing market. It claimed to lead 90% of the 10 largest RCF refinancings on a volume and deal count basis in 2022, including US$12.3bn facilities for Walt Disney and a US$12bn RCF for AT&T, as well as raising a new US$3.15bn RCF and amending a US$2.73bn and a US$4.62bn RCF for construction machinery and equipment company Caterpillar.
“That consistent year-in, year-out support that we provide with a team here that’s got a lot of long-standing relationships continues to be incredibly important. It helps us feed a lot of other businesses across the capital markets,” said Kee.
Worldwide leader
Citigroup’s ability to lead significant acquisition-related financings reached each corner of the globe, even as volatility took many by surprise.
Citigroup’s leveraged finance team advised clients, helping to reframe mindsets and position them to manoeuvre through challenging market conditions with violent intraday swings.
In the US it executed "must do" financings, such as Crocs’ first large-scale M&A transaction that backed the footwear brand’s purchase of HeyDude for US$2.5bn.
The transaction, backed by Crocs’ inaugural US$2bn term loan B, marked a significant transformation of the company’s capital structure. Citigroup guided Crocs by accelerating syndication of the loan in January to achieve the most attractive pricing possible as market conditions deteriorated.
Elsewhere, it acted as underwriter and bookrunner on a US$2.9bn deal to back CDPQ’s acquisition of a 22% minority stake in DP World’s port and free-zone assets in Dubai, one of the outstanding loan transactions in EMEA in 2022.
Citigroup supported CDPQ in structuring the financing with an optimal distribution strategy within an ambitious timeline. The success of the transaction underscored Citigroup’s leadership position in the Middle East, supporting the sale of the stake in a “crown jewel” asset, which is at the core of the UAE’s economy, driving 11% of the country’s GDP.
In the same region, Citigroup was sole coordinator of a landmark US$1.5bn RCF for Saudi Arabia's Kingdom Holding Company. The loan, which refinanced two facilities into a new RCF, achieved the company’s key priorities of cost-effective funding and streamlined funding structure. The facility was increased from US$1.1bn by rationalising KHC’s core relationship bank group and adding new lenders, despite aggressive pricing and challenging market conditions.
Optimal use
In Asia-Pacific, Citigroup employed a niche approach, selectively lending in areas that matched its strengths and attempting to make optimal use of its balance sheet with an eye on making better returns.
One of the highest-profile loans it led as sole ESG structuring adviser and joint coordinator was a US$6.5bn amendment and extension exercise for Chinese internet giant Ant Group. The A&E led to the borrower converting facilities of US$3bn and US$3.5bn into a sustainability-linked loan in November, marking the first SLL from China’s technology sector.
Citigroup’s ESG credentials were also highlighted by a NZ$590m (US$379m) debut SLL for Todd Energy in May, for which the majority of banks were first-time lenders. The same month Citigroup wrapped up a debut S$860m (US$621m) SLL for Lendlease Global Commercial REIT’s acquisition of a controlling stake in Singapore’s Jem shopping centre.
Successfully distributed leveraged financings also added spice to Citigroup’s deal flow in Asia with a US$700m borrowing for the take-private of Hong Kong-listed gaming hardware maker Razer attracting a blowout response. There was also strong appetite for Sajjan India’s US$330m buyout loan in May.
“[We are] pioneering the ESG trend by establishing clients’ inaugural ESG financing benchmarks," said Benjamin Ng, co-head of Asia debt capital markets, loans and acquisition finance.
Combining loan and bond solutions was one of Citigroup’s strengths and was critical amid market volatility. One such example was tech giant Lenovo, for which Citigroup was one of the coordinators of a US$2bn loan that was increased from US$1.5bn, as well as convertible and conventional bonds.
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