Quigley’s Corner 05.15.19 : Citibank NA Veteran-Friendly Debt Offering
Investment Grade New Issue Re-Cap – Bank and Fin Dominate; Citibank NA Issues Veteran Deal Honoring Memorial Day Month of May
Today’s IG Primary & Secondary Market Talking Points –Mischler Earns Passive Co-Manager Role for Caterpillar 3-Part
Syndicate IG Corporate-only Volume Estimates for This Week and May
Citibank, N.A. Honors Our Veterans With Memorial Day Issuance
The “QC” 2019 Geopolitical Risk Monitor
Global Market Recap
NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches
New Issues Priced
Indexes and New Issue Volume
2019 Lipper Report/Fund Flows – Week Ending May 8th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
IG New Issue Pipeline
IG M&A Pipeline Highlights – $194.58 Billion in Cumulative Enterprise Value
Economic Data Releases
Rates Trading Lab
Tomorrow’s Calendar
Investment Grade New Issue Re-Cap – Bank and Fin Dominate; Citibank NA Issues Veteran Deal Honoring Memorial Day Month of May
Today the IG dollar DCM hosted 6 issuers across 9 tranches totaling $11.65b. The SSA space was inactive with one deal announced from JBIC and slated as tomorrow’s business.
90.1% of today’s issuance ($10.5b), however, hailed from the bank and finance space with American Express ($3b), Citibank, N.A. ($3b), HSBC ($3b) and Wells Fargo ($1.5b) dominating the leaderboards today. But it was Citibank N.A. that wins my featured “Deal-of-the-Day” honors for its Memorial Day issuance in honor of our great nation’s veterans and service-disabled veterans. If I’m writing about it you know what that means – Mischler Financial, our nation’s oldest Service Disabled Veteran owned broker-dealer was an active 2.50% Co-Manager.
Let’s first review the primary market numbers for this week and month:
- The IG Corporate-only WTD total is 84.42% of this week’s syndicate midpoint average forecast or $22.05b vs. $26.12b.
- MTD we’ve priced 60.89% of the syndicate forecast for April IG Corporate-only new issuance or $75.40b vs. $123.83b.
- There are now 7 new issues in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points –Mischler Earns Passive Co-Manager Role for Caterpillar 3-Part
- The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 9 IG Corporate-only new issues was <13.39> bps.
- ICE BAML’s IG Index was unchanged at +124. Friday was a holiday. (It’s post-Crisis low is +90 set on 2/01).
- Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.18 vs. 1.19. (1.57 represents the high on 1/03/2019; 0.85 is the post-Crisis low set on 2/01/2018).
- Standard & Poor’s Investment Grade Composite Spread was unchanged at +163. (+125 represents its post-Crisis low set 2/02).
- Investment grade corporate bond trading posted a final Trace count of $20.4b on Tuesday versus $15.8b on Monday and $18.2b the previous Tuesday.
- The 10-DMA stands at $17.2b.
Syndicate IG Corporate-only Volume Estimates for This Week and May
| IG Corporate New Issuance | This Week 5/13-5/17 |
vs. Current WTD – $22.05b |
May 2019 |
vs. Current MTD – $75.40b |
| High-End Avg. | $27.46b | 80.30% | $124.48b | 60.57% |
| Midpoint Avg. | $26.12b | 84.42% | $123.83b | 60.89% |
| Low-End Avg. | $24.77b | 89.02% | $123.19b | 61.21% |
| The High | $35b (2) | 63.00% | $140b (2) | 53.86% |
| The Low | $15b (1) | 147.00% | $100b (2) | 75.40% |
Citibank, N.A. Honors Our Veterans With Memorial Day Issuance
The deal invitation arrived at exactly 9:03 am this morning from Morgan Forester at Citigroup Global Capital Markets Inc. Fixed income Capital Markets. Mischler Financial, our nation’s oldest Service Disabled Veteran broker dealer was invited to serve as an active 2.50% Co-Manager on today’s landmark $2b 2-part 3nc2 3a2 exempt Senior Fixed-to-floating and FRNS transaction due 5/20/2022. Citibank, N.A. issued today’s transaction in honor of Memorial Day later this month and featured only veteran-owned and service-disabled firms. Once again team Citi led the way in our financial services industry with this honorable and meaningful issuance. We thank everyone at team Citi. These mandates originate from the top down at that financial institution as they do with all issuer’s mandates. So, from Michael Corbat (CEO) to retiring President, Jamie Forese; from Peter Aherne, (Head: NA Capital Markets and Syndicate) and Jim Hennessy, (Managing Director, Fixed Income Syndicate) to Doug McKeever, (Citibank, N.A. Deputy Treasurer), Peter Kapp, (Citigroup Inc. Assistant Treasurer) Faisal Essa (M.D. Treasury Capital Markets) and Elissa Steinberg, (Director FX and Capital Markets.) Thank each of you. It doesn’t stop there, however, as we all know that such mandates are ingrained into the corporate culture of any organization and permeates all of its employees. So, thanks to the entirety of Team Citi and a special shout to Adnes Hernandez, who played the point on today’s bookbuild mechanics and her teammates Mehmet Durgun and Wendy Zhou. It’s always a great pleasure working with all of you.
As for retiring President Jamie Forese, Citigroup and Citibank would not be the company it is today without your exceptional stewardship these past 34 years. The legacy you leave behind will endure long after. We’ll all miss one of the truly great guys in our financial services industry. Godspeed!
These are the types of stories about the bulge bracket banks in our financial services industry that needs and deserve to get much more attention in the media and inside the halls of the Beltway. It’s my privilege and honor to help do my part therein right here in the “QC.”
We also express our sincerest thanks to our fabulous high-quality middle markets investors who make up our best-in-class distribution network for choosing to do your business with me and Mischler Financial. Without you there is no value-add and this mandate is reduced to a check-the-box one. So, thank you all.
In recognition of the great things our competitors in the veteran and service-disabled veteran owned broker dealer do day in and day out please allow me to recognize them here in the “QC.” All good people doing good things in their own way to help our nation’s veterans and their families. Thank you all as well:
Academy Securities, Inc.
American Veterans Group, PBC
AmeriVet Securities Inc.
Bancroft Capital, LLC
Drexel Hamilton, LLC
Mischler Financial Group, Inc.
Multi-Bank Securities, Inc.
Roberts & Ryan Investments Inc.
Citibank, N.A. Deal Dashboard
Use of proceeds:
………and here’s a snap shot of today’s final Citibank book sizes and oversubscription rates – the measure of investor demand:
Today’s cumulative 2-part book size was $3.80b or 1.27-times oversubscribed. Here’s a look at how the books were split:
| CITI Issue | Tranche Size | Books at-the-Top |
Final Book Size |
Bid-to-Cover Rate |
| 3nc2 F-t-F | 1,500 | $2.2b | 2b | 1.33x |
| 3nc2 FRNs | 1,500 | $1.9b | 1.8b | 1.06x |
……and here’s a check of spread compression from IPTs thru the launch and final pricing, NICs, where the paper is currently trading:
| CITI Issue | Ratings | IPTs | GUIDANCE | LAUNCH | PRICED | SPREAD COMPRESSION |
NIC (bps) |
TRADING at the BREAK |
+/- (bps) |
| 3nc2 F-t-F 5/20/2022 |
Aa3/A+ | 3mL+equiv | 3mL+equiv | 3mL+equiv | 3mL+60 | <12> bps | 0/Flat | 3mL+58/57 | <2> |
| 3nc2 FRNs 5/20/2022 |
Aa3/A+ | +80a | +68 # | +68 | +68 Back-end: 3mL+59.6 |
<12> bps | 0/Flat | 68/65 | 0/flat |
Final Pricing – Citibank, N.A.
C $1.5b 3NC2 3a2 exempt due 5/20/22 FRNs at 3mL+60 at $100.00
C $1.5b 2.2844% 3NC2 3a2 exempt Fixed-to-Floating due 5/20/22 @ $100.00 to yield 2.844% T+68 Back-end: 3mL+59.6 bps.
A Look at Citigroup’s Veteran Initiatives
They put us in a deal; they work with us to grow our platform meaningfully; they encourage us to build out the right way by encouraging and rewarding high quality distribution so that our SDVBE platform grows in a sustainable way so that we are around for many years. When they do all that the least I can do is make sure I get THEIR story out there as to the wonderful ways in which one of nation’s largest banks helps our veterans and service disabled veterans and their families. So, without further ado here are only some of those ways Team Citi gives back to those who have given or are ready to give their lives so that we can all do what we do.
Please take the time to read these folks! Today’s landmark $2b two-part Memorial Day month issuance is only one of myriad socially responsible veteran mandates at Team Citi. Learn about some of the other ways that Citigroup gives back to our veteran community. Thank you!
New Photo Exhibit – Bring Them Homes: Photographs of Resilience
In celebration of Veterans Day, Citi Community Development launched a photo exhibition highlighting residents of the Bring Them Homes initiative. Read more in this blog by LISC and coverage in the Associated Press.
Spotlight on Reston, VA Citi Salutes Network: Delivering Care Packages to VA Hospital
On June 26th 2018, volunteer’s from Citi’s Reston, VA Office delivered several hundred care packages to the Washington, DC Veteran’s Hospital as part of Citi’s Global Community Day.
Spotlight on Citi Salutes Sioux Falls Network
Members and friends of the Citi Salutes Network in Sioux Falls spent two days working at the Volunteers Of America Berakhah House, which provides homeless veterans with transitional housing before they are permanently placed in a housing program. Citi Volunteers carried out various interior and exterior projects including landscaping, beautification, garage clean up, and creating a well-organized system for handing out supplies to each veteran when they transition to their new apartment.
Mission United for Veterans Day
Leading up to Veterans Day, Citi Volunteers in New York City and Long Island City sold T-shirts to raise funds in support of Mission United, a campaign sponsored by the United Way of Long Island (UWLI) that helps raise funds to provide veterans and military families with emergency financial assistance, job training and key referrals to secure careers. 100% of the proceeds directly benefit UWLI’s Veterans assistance programs that provide support to local veterans and their families.
Bring Them Homes: Inclusive Housing for Veterans on Long Island
On any given night, nearly 40,000 homeless veterans sleep on America’s streets. Citi is committed to providing inclusive and affordable housing options for our nation’s heroes. Working with the Local Initiatives Support Corporation (LISC) and the National Equity Fund (NEF) on the Bring Them Homes initiative, Citi is proud to support Concern for Independent Living and all veterans and military families.
North American Service Initiative: Spotlight on Chicago
In Chicago, Citi volunteers distributed 200 hygiene kits which the Veterans Administration estimates will reach 800 veterans and their families. Citi team members were joined by the representatives from the Illinois Department of Veterans Affairs.
Operations and Technology Employees Volunteer
More than ninety Citi operations and technology employees participated in a Citi Salutes Affinity Network charity project to donate care packages for homeless veterans. Volunteers filled 125 drawstring bags with donated toiletries. The bags will be delivered to the Washington DC Veterans Hospital and homeless Veterans organizations throughout Chicago.
USO Bike Build
During Fleet Week, Citi participated in the annual “Operation: That’s My Ride!” event hosted by the USO, in which volunteers assembled bikes to be delivered to the children of U.S. service men and women.
NYC Memorial Day Event Highlight
In New York City, Citi volunteers assembled care packages for homeless veterans. The team filled nearly 1,500 bags and packed 8 boxes of supplies that will be shared with 7 Citi sites to distribute.
2018 Military Times Best for VETS Index
Citi was recognized by VETS Indexes for being included in the 2018 Military Times Best for VETS Index. To celebrate the launch, Citi rang the NASDAQ closing bell and Managing Director, Christopher Perkins, participated in an interview on NASDAQ TV.
R.E.D. Fridays
Remember Everyone Deployed (RED) Friday was created to remind people of military service members overseas. In Jacksonville, Citi employees wore red every Friday throughout the month of May.
Columbia University and Citi Announce National Expansion of Columbia’s Center for Veteran Transition and Integration
The Columbia University Center for Veteran Transition and Integration and Citi are collaborating to provide specialized tools and resources that address the unique challenges facing transitioning veterans who are entering the classroom and workplace. With $300,000 in support from Citi Community Development, the national expansion of the Center aims to scale up educational programming and support to reach 10,000 veterans and military family members who are making the transition to two- and four-year colleges, graduate and professional schools, civilian life, and the workforce.
CSUN Launches Clinics to Help Veterans with their Taxes in Collaboration with Citi Community Development
With funding support from Citi Community Development, the California State University Northridge has trained veteran volunteers as IRS-certified tax filers with the goal to assist an estimated 4,500 of their veteran peers in filing their taxes, claiming tax credits and developing positive financial budgeting habits. Throughout tax season veteran volunteers will provide support to veterans at nine veteran centers throughout Los Angeles County. This innovative peer-to-peer approach is aimed to increase veteran EITC filing for the 2017 tax year.
Combat to Classroom
In 2018, Citi Salutes is joining forces with NationSwell on a new editorial series that will explore the innovative solutions emerging for veterans and military families in the areas of housing, financial resilience, military transition and employment. The first installment, “Combat to Classroom” focuses on education, and the importance of programs tailored to helping veterans transition into higher education and internship opportunities that can increase their long-term career and economic growth.
From all of us here at Mischler Financial, we send our five-star salute to Citigroup, Inc. and Citibank, N.A.
The “QC” 2019 Geopolitical Risk Monitor
Above is the opening extract from Quigley’s Corner aka “QC” Wednesday, May 15, 2019 edition distributed via email to institutional investment managers, lead underwriter syndicate desks and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest diversity-certified broker-dealer owned and operated by Service-Disabled Veterans.
The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of Mischler’s primary debt capital markets desk. Commentary includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming deal pipeline.To receive Quigley’s Corner, please email: [email protected] or via phone 203.276.6646
*Sources: Bank of America/Merrill Lynch, Bloomberg, Bond Radar, Dow Jones Newswire, IFR, Informa Global Markets, Internal Mischler, ITC Markets, Market News International, Prospect News, Stone & McCarthy Research, Refinitiv, Thomson Reuters and of course, a career of sources, contacts, movers and shakers from syndicate desks to accounts; from issuers to originators; from academicians to heads of research, and a host of financial journalists, et al.
