According to reports, Citi retaliated by not inviting these investment firms to participate in Citi-led corporate debt issuance deals. These institutions include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management.
These institutions and other companies that are in litigation with Citi will still be able to participate in debt issuance deals if specifically requested by the issuing companies, the sources said. Citi, Bridage, HPS and Symphony were not available for comment.
Citi recently made a messy money transfer, mistakenly sending more than $500 million to 10 asset managers representing Revlon’s creditors. Citi took the case to court, asking them to return the misdirected funds, but a federal judge unexpectedly ruled that the institutions did not have to return the overpayment.
Citi was acting as a lender to Revlon and should have remitted about $8 million in interest to Revlon’s lenders, but accidentally remitted nearly 100 times that amount.
Citi was the world’s third-largest underwriter of corporate debt and loans last year, helping to arrange 324 transactions and issuing a total of about $32 billion, according to the data.
The bank hosting the new debt issue will first send out a transaction notice containing details of the issue size, maturity, timing and other details, as well as access to the financial information of many investment institutions. As potential buyers consider investing in the new debt, the sales team of the sponsoring underwriters will approach these companies individually to answer questions and share preliminary pricing discussions.
Investment institutions that were blocked from participating in the debt issuance transaction were unable to participate in this transaction and had to go to the submarket to trade, to their detriment, as many of the new debt would have risen in price after it was priced.
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