Citigroup Tops Global Debt Origination League Table For Second Consecutive Quarter

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Citigroup’s geographically diversified presence, coupled with its focus on the debt capital market over the years, helped the banking giant originate more debt securities than any other investment bank globally for the second consecutive quarter. Notably, Citigroup has reaped the benefits of its strong presence in key developing markets in Asia and Latin America to rank #1 in Thomson Reuters’ debt origination league tables in four of the last six quarters. While the global debt capital market is considerably fragmented, with local players garnering a majority of the market share in countries outside the U.S. and Europe, Citigroup has done well to capture a market share of 6.4% on average over the last six quarters.

However, the five largest U.S. banks helped companies around the world raise $404 billion in new debt for the period – the lowest level in the last five quarters. This represents a combined market share of below 23% for these banks – just the second time these banks have fared so poorly since 2010 (the other occasion being Q4 2016). As we pointed out in a recent article, this trend is not restricted to the largest U.S. banks, as the top 25 investment banks globally have witnessed a sharp decline in their market share compared to Q1.

Notably, JPMorgan has been hard on Citigroup’s heels over recent quarters, with the bank ranking higher than any other global investment bank in the high-yield debt category. However, JPMorgan’s presence is concentrated in the U.S. and Europe, which has allowed it to benefit to a lesser extent from the uptick in debt capital markets in the Asia-Pacific region over recent years (especially in China).

The chart below captures the total size of debt capital market deals completed by the five largest U.S. investment banks since Q2 2017. The green-to-red shading for figures along a row show the variations in deal size for a particular bank over this period.

Debt origination volumes for individual banks were taken from Thomson Reuters’ investment banking league tables for the last five quarters. The table below captures the respective market shares for each of these banks over this period. The green-to-yellow shading for figures in a quarter should help compare the relative standings of these 5 banking giants in a particular quarter.

It should be noted that the largest debt capital market deals employ more than one investment bank, and the market share figures here factor in the proportion of the total proceeds generated by a particular bank.

The Sequentially Lower Market Share Is Expected To Weigh On Debt Origination Fees

Thomson Reuters estimates the combined debt origination fees for these five U.S. investment banks to fall to under $1.7 billion from $1.75 billion in the previous quarter and $1.9 billion a year ago. This represents a decline of more than 10% compared to the year-ago period, even as their wallet share decreased to just 23.6% from an average figure of almost 28% over the last nine quarters.

Notably, JPMorgan is expected to report the highest debt origination fees, despite losing out on the top spot in terms of market share to Citigroup, because of the larger number of deals it participated in (413 vs 386 for Citigroup). This would imply that Citigroup was a part of the largest deals that completed in Q2. As larger deals generate less fees per dollar of debt originated, JPMorgan edged ahead in terms of wallet share.

Details about how changes to Debt Origination Fees (and other Investment Banking Fees) affect the share price of these banks can be found in our interactive model for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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