Citigroup Gains The Most As Global Debt Capital Markets Grow By Over $2 Trillion In Q3

by Trefis Team
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Global debt capital markets swelled at an unprecedented rate over Q3 2017, as companies around the globe raised $2.07 trillion in debt for the quarter – making it the best period on record for the debt origination industry. With debt origination volumes remaining elevated at over $1.76 trillion for each of the first two quarters of the year, the figure for year-to-date 2017 is already $5.6 trillion – well above the average annual figure of $5.26 trillion for the industry over 2008-2015. Even a lukewarm fourth quarter should help this figure cross the record figure of $7 trillion – making 2017 the best ever year in terms of total debt capital raised. As seen over the first two quarters of 2017, growth in the industry was primarily driven by record high levels of investment-grade corporate debt issuances in the U.S. coupled with a noticeable increase in debt origination volumes for India, Mexico, Russia and Brazil.

Although the five largest U.S. investment banks have a presence in these emerging economies, the fragmented nature of these markets and considerable local competition resulted in an overall reduction in their combined market share from almost 30% in Q1 2017 to 23% in Q3 2017.

Debt origination volumes for individual banks are taken from Thomson Reuters’ latest investment banking league tables. It should be noted that the largest debt capital market deals employ more than one investment bank, so the market share figures are not exclusive.

Citigroup retained its position at the top of the debt capital market league tables for the second consecutive quarter – something we attribute to the bank’s better foothold compared to its peers in emerging markets. It should be noted that the global debt capital market has been dominated by JPMorgan over recent years, with the largest U.S. bank capturing the #1 position in terms of total debt origination deals completed in all but three quarters over 2012-2016 (Q3 2015, Q4 2015 and Q4 2016). While JPMorgan emerged stronger from the economic downturn with its acquisition of Bear Stearns, Citigroup’s significant debt capital market losses over 2008-09 forced it to shrink these operations. But recent trends suggest that Citigroup is looking to regain lost ground  in the industry – with the bank recently announcing plans to refocus its efforts on collateralized debt obligations (CDOs), which fell out of favor after the downturn.

You can see how changes in Citigroup’s share of the debt origination industry impact our price estimate for the bank’s shares by making changes to the chart below.

See the links below for more information and analysis about the 5 largest U.S. investment banks:

See full Trefis analysis for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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