Sell-Side, Indie Analysts Say Citi Spreads Will Come Back

  • 15 Sep 2002
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At least one independent analyst and one sell-side analyst argue that the recent sell-off in the bonds of Citigroup is overdone. Though some spread widening is justified, given the substantial legal risks the firm is facing from issues such as predatory lending, IPO allocations and analyst independence, bondholders should continue to add to positions, says Kathy Shanley, analyst at Gimme Credit, an independent research firm. Shanley argues that "the risk of a large legal settlement should be viewed within the perspective of a very large and diversified earnings base--especially by bondholders, who are less worried about growth in earnings per share."

Citigroup's 5.625% notes of '12 (Aa2/A+) were trading at 143 basis points over Treasuries last Monday, while the Wells Fargo 5.5% notes of '12 (Aa2/A+) were trading at 96 basis points over the curve.

Ian Jaffe, analyst at Bear Stearns, says that while Citigroup will continue to trade at a discount to regional banks such as Wells Fargo until the political and legal issues facing the firm and the investment banking industry as a whole blow over, he believes the issues will ultimately be resolved, either as an industry issue or by individual firms. Jaffe says he sees no evidence that the activities of Salomon Smith Barney are demonstrably different from industry-wide practices.

  • 15 Sep 2002

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 1,505.59 4 23.31%
2 SG Corporate & Investment Banking 1,292.64 1 20.01%
2 Rabobank 1,292.64 1 20.01%
4 BNP Paribas 598.25 2 9.26%
5 TD Securities Inc 241.54 1 3.74%