Loan House of the Year & Investment Bank of the Year - Citi
January 17, 2018 |
The US lender doubled down on its commitment to Latin America and led the way in the loans, bond and stock markets
The league tables do not tell the whole tale, but they go a long way. Over the 12 months from October 2016, Citi ranked number one in the corporate loans market in Latin America and the Caribbean, according to Dealogic.
The US bank also took the top spot among bookrunners in the cross-border bond market and the equity capital markets. Citi’s dominant positions in the three major financing categories in the region make it the winner of the award for 2017 Investment Bank of the Year, while its runaway market share in corporate loans also makes it the choice for Loan House of the Year.
Citi stayed in first place in Latin America’s syndicated loan market, with nearly 60% of the total volume over the 12-month period, according to Adrián Guzzoni, the head of syndicated loan origination for the region. Counting $4.54 billion in apportioned value from 20 loans, Citi logged a 16.5% market share, more than double the amount lent by JPMorgan, its closest competitor.
Within the major Latin American economies, Citi scored first place in the loans markets in Brazil, Mexico and the Caribbean and Central America. It also logged second place in the Andean region.
The rankings, however, should be put in the context of Latin America’s loan environment. “We saw a pickup in 2017 but we still see light volumes compared to previous years,” Guzzoni says, adding that the need for acquisition capital and project finance has led the turnaround in the syndicated loans market.
Argentina’s state-owned energy company YPF and US conglomerate GE closed the first project finance deal in Argentina in 15 years with their five-year, $220 million syndicated loan in August 2017. Now investment banks are beginning to reengage with borrowers from Argentina and clients from Brazil, where the economic recovery has released pent-up demand for fresh credit, Guzzoni says.
Lenders are also looking at Mexico, where M&A deals call for acquisition finance and where borrowers are widening their banking relationships. Cement maker Cemex, for example, brought in new banks when it signed a $4.05 billion facility with 20 banks, with Citi as one of the joint bookrunners, Guzzoni says.
Competition is a bit stiffer in the cross-border bonds market, but Citi still outpaced its opponents in the 12 months to the end of September, ranking number one in Latin America. With $20.6 billion in deal value, Citi earned a 15.2% market share, beating its closest rivals, JPMorgan and HSBC. Citi’s cross-border business took the top spots in Brazil, the Andes and the Caribbean and Central America, while it ranked second in the Southern Cone and third in Mexico.
Both 2016 and 2917 were record years for cross-border bond issues from Latin America, says Chris Gilfond, Citi’s head of capital markets origination for Latin America. But he expects the market will likely suffer a 5% decline this year, due to the busy political calendar. Brazil, Mexico, Colombia, Paraguay and Venezuela are all scheduled to hold presidential elections in 2018.
In the equity markets, Citi edged out JPMorgan and Morgan Stanley for the top spot, with a 13.8% market share. The bank’s Mexican division, Citibanamex, was one of two coordinators on the IPO for Vista Oil & Gas, marking the first special purpose acquisition company (SPAC) to go public in Mexico.
Now, according to Juan Carlos George, head of equity capital markets for Latin America at Citi, other investors are looking to form SPACs in the region, following Vista’s example.
Citi also helped Azul make its debut on the stock exchange last year, with an April IPO that raised more than $640 million. After its share prices increased 35%, the Brazilian airline came back to the market in September, earning another $360 million from a follow-on offering.
Citi’s leading role in loans, bonds, and stocks illustrates the bank’s commitment to the region. Citi may have sold its consumer divisions in Argentina and Brazil last year, but it has doubled down on its investment banking business in Latin America. “Argentina is a great example,” says Gilfond. “We sold the retail business, but our balance sheet is bigger now.” LF