Citi Keeps Credit Overweight

Citigroup Asset Management in London plans to maintain its modest overweight in credit and remain cautious on duration through the end of the year, according to David Scott, head of global fixed income.

  • 15 Oct 2004
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David Scott

Citigroup Asset Management in London plans to maintain its modest overweight in credit and remain cautious on duration through the end of the year, according to David Scott, head of global fixed income. The manager has $148 billion in fixed income globally, benchmarked against a variety of indices.

In credit, Citigroup is focused on single-As and triple-Bs based on the yield premium they offer. Meanwhile triple- and double-A bonds are moving in line with the swaps curve and offer little protection against event or attribution risk, he noted. "If one or two investments go wrong here, it quickly wipes out any benefit that might have been had across the whole rating class."

At the other end of the credit spectrum, Scott is positive on high yield, but only moderately. "The risk-reward is still attractive, even though it's not as compelling as it has been since spreads have come in significantly over the past year." Scott declined to reveal Citigroup's allocation split across credit classes.

Citigroup would reconsider these positions if the U.S. economy slowed considerably in response to the Federal Reserve's tightening. Scott also noted the last time the Fed and the European Central Bank tightened in unison was in the late 1990s and should this occur in 2005 it would likely put a damper on the market.

The fund manager is cautious on duration because he anticipates the Fed will raise rates faster and higher than the market expects. "We think U.S. interest rates will reach 3-3.5% by the end of 2005, while the Fed Funds contract indicates interest rates will cap out at 2.5% by mid-'05." He added the historical neutral level for the Fed Funds rate is close to 4%. Scott declined to reveal Citigroup's average duration.

  • 15 Oct 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 358,291.38 1348 9.06%
2 JPMorgan 320,704.66 1461 8.11%
3 Bank of America Merrill Lynch 318,128.31 1104 8.04%
4 Goldman Sachs 236,643.87 789 5.98%
5 Barclays 231,197.41 895 5.84%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 35,007.57 165 6.53%
2 Deutsche Bank 34,880.53 120 6.51%
3 Bank of America Merrill Lynch 31,805.65 97 5.93%
4 BNP Paribas 27,920.60 169 5.21%
5 SG Corporate & Investment Banking 24,398.89 138 4.55%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 19,745.92 80 8.85%
2 Morgan Stanley 16,334.63 83 7.32%
3 Citi 15,972.34 95 7.16%
4 UBS 15,487.17 60 6.94%
5 Goldman Sachs 14,053.61 76 6.30%