The departure of Marc Pagano, Citi’s managing director for emerging markets credit trading, has raised mixed feelings amongst buy-side traders. Although one in a round of redundancies across trading teams, Pagano was long-serving at the firm.
However, buy-side emerging markets traders note that Citi’s EM trading function was no longer providing the full range of coverage some expected with several citing a withdrawal from Latin American credit. As a result, they are asking if a change in management may lead to a new strategic approach.
“They have been stepping away from LatAm corporate credit for a while,” noted one investment trader. “I believe it wasn’t working for them and initially they have tried focusing only on selective corporate and quasi credits that are more liquid so providing deeper liquidity on those names, then they stopped trading corporate credit due to illiquidity.”
“Some people would say that Citi had stopped trading LatAm credit a few years back,” noted another. “They effectively only traded very large quasi sovereigns. They no longer traded deals that they were sole issuer on and that became a problem for investors. So all-in-all from an investors side we will look to see what the new plan is as the last plan wasn’t working for the buy side, syndicate, investors and it seems Citi’s P&L.”
Pagano’s replacement – and the structure that governs that trading team – are likely to be key when assessing the impact for buy-side traders.
“The question is how he is replaced – do the EM credit traders go up the developed market reporting line like they do at Barclays?” asked another trader, speaking on condition of anonymity. “If so, there could be a cultural shift in how they want to offer liquidity.”
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