Introduction to Finance Presentation

1
Introduction to FinancePresentation

• Shin Yin Lee
• shin.lee_at_imperial.ac.uk
• Loan Capital Markets, Citigroup
• 29 October 2003

2
Executive Summary
Over the course of my ten-week internship I had
the opportunity to participate in a number of
deals at different stages along the syndicated
loan process. While initially my contribution was
limited to small, specific tasks such as bank
analyses and comparables, I gradually began to
attain some continuity in my work on each deal
(see diagram above). In addition thereto, I
worked on several non-deal-specific tasks -
preparation of the European Loan Market Update
newsletter provided me with an overview of the
loan market. For example, the recent trend has
been for fewer but larger transactions and
comparison of market volumes between 2002 and
2003 has to take into account the falling US
dollar. The Integrated Solutions Package
(Cross-Sell Report) identified the interaction of
the loan capital markets division with other
business areas of the firm including debt capital
markets, securisation and investment banking. It
was clear that syndicated loans have often been
the key component in securing additional business
such as bond issues and MA advisory work. The
investment banking division provides ongoing
coverage of clients and contacts the relevant
product specialist (e.g. loan, bond) when
required. Important elements of the subsequent
pitch include an overview of the client, the
proposed syndication strategy, comparable
transactions for the country, rating, and
industry, while Citigroup credentials affirm our
position as a leading arranger of syndicated
loans. Being awarded Best Debt House for Egypt
by Euromoney magazine recently has positioned us
well to win the mandate from an Egyptian borrower
with whom we are currently working. After signing
the mandate, launching material including the
information memorandum, bank meeting slides and
invitation letter is prepared. The transaction is
launched to the market following a deal briefing
to the sales team, which maintains ongoing
dialogue with lending banks and the client
through the syndication. Post closing, a memo
briefly summarising the deal, with emphasis
placed on the analysis of the syndication and the
overall market response, is prepared. A
transaction which closed recently had a difficult
syndication because of tight pricing, while the
majority of transactions are oversubscribed
(though not necessarily increased). Though the
different stages are similar for each deal, each
facility and client has specific characteristics
depending on country, industry and loan purpose,
which require special attention. For example, a
facility arranged for Kazakhmys, a Kazakh copper
producer, had to be secured against export and
sales contracts, which is not usually seen in the
high grade market. A pharmaceuticals conglomerate
chose not to refinance its existing facility to
take advantage of more competitive pricing after
establishing stable revenue streams due to
internal focus on another treasury operation.
Financing for an Eastern European power company
for acquisition of a distribution company in a
neighbouring country is currently pending and is
dependent on confirmation that the acquisition
will not affect the consumers in the home
country. It is evident that unlike more
standardised and market driven debt products such
as bonds, there is no place for a one size fits
all financing solution, which given the
prevalent relationship nature of the transaction
requires a more tailored approach.
Shin Yin Lee (Loan Capital Markets)
3
Outline

• Introduction
• Syndicated Loan Process (Part One)
• Egyptian deal
• Syndicated Loan Process (Part Two)
• Kazakhmys deal
• A Tailored Approach
• Interaction with Other Business Areas
• Cross Sell Report
• European Loan Market Newsletter
• Conclusion

4
Syndicated Loan Process

• Industry and regional coverage
• Identify financing need
• Research
• Pricing
• Syndication strategy
• Pitch
• Greenlight/credit approval
• Mandate documents

5
Syndicated Loan Process (contd)

• Info Memo
• Invitation letter
• Deal briefing
• Launch
• Intralinks
• Signing/documentation
• Closing memo

6
A Tailored Approach

• Though the different stages are similar for each
  deal, each facility and client has specific
  characteristics depending on country, industry
  and loan purpose, which require special
  attention.
• Kazakhmys
• Pharmaceuticals conglomerate
• Eastern European power
• There is no place for a one size fits all
  financing solution
• relationship nature of the transaction requires a
  more tailored approach

7
Interaction with Other Business Areas

• Cross-Sell report
• Syndicated loans often vital in securing
  additional business
• Euro Newsletter
• Recent loan market trends
• Citigroup deals in market and recently closed
• Rating actions
• Citigroup credentials

8
Conclusion

• What I have learnt over the course of the summer
• Syndicated loan process
• Relationships are key
• Attention to detail
• Ideas for the future
• Central information database
• Standard formatting procedures/templates
• Thank you for your attention!
• QA