'We’re working with our clients around the world who have access to all sources of liquidity': Citi Co-Head Banking

Citi Co-Head of Banking Tyler Dickson joins Yahoo Finance’s On The Move panel to discuss the outlook for businesses as more people file for unemployment during the coronavirus pandemic.

Video Transcript

- Something you shared with us that would seem like an optimistic sign is that this week your desk actually helped launch one of the first high-yield transactions in nearly a month. Why is that crucial?

TYLER DICKSON: Thank you. I think it's crucial because we're working with our clients around the world to have access to all sources of liquidity. I think importantly, you know, our first priority is to help our clients and our communities in the communities we serve around the world. And as truly the world's only global universal bank, I think we're trying to be helpful do our part in all parts of the world, obviously, with a specific focus on the US in particular.

As we're advising large multinational clients, we're trying to give them key insights on the market. This is obviously a global pandemic, and we're trying to make sure that their access to liquidity, both from the bank markets, where we can provide them loans, but also give them advice and execution capabilities on solutions that rely on the capital markets is important. Over the last week or so, we saw strong reception for investment-grade companies, and we've seen that follow through to allow us to go down the credit spectrum and also help companies that have more leveraged balance sheets access the capital markets.

JULIA LA ROCHE: Tyler, it's Julia La Roche, and I think one thing that's really interesting about Citigroup, you all operate in 170 different countries. You really have a pulse as to what's going on in the world. I was hoping you could give us a bit more color as to the kind of conversations that you're having with business leaders, even governments. What specifically are the pain points that you are hearing on the ground?

TYLER DICKSON: Thanks. I think what we're hearing most from clients, whether it's large, multinational corporates, financial institutions, emerging market champions, or governments and sovereigns, are you know, bespoke solutions that are focused on them addressing their liquidity needs. In some cases, liquidity needs are acute. We know the industries that have been directly impacted by the virus. In other cases, entities and institutions are more focused on the likely recessionary characteristics of economics ahead of us in market dynamics, and they want longer term solutions. So we're working with our colleagues around the clock to help these institutional clients think about all available solutions to get them to the other side of this crisis.

JULIE HYMAN: It's Julie Hyman here. I wanted to ask you as well, since you worked with this broad swath of companies, about restructurings as well, or even in comparison [INAUDIBLE] bankruptcy filings. How many companies do you think are, say as a percentage, vulnerable right now? What their funding run rate right now? How much more time do they have? How much more of this shutdown can you sustain?

TYLER DICKSON: I think a lot of the way we're approaching that issue is what are near-term liquidity needs and available solutions, and then what our longer term liquidity needs. Liquidity is strategic right now. I think restructurings are in that longer term category. In the short term, we're trying to help companies take advantage of what access to sources and uses of capital that they need to think through. Over the longer term, restructuring discussions will occur.

I think we naturally saw impacted industries, you know, quickly ask for help, and we've been providing help where that's appropriate. We've seen those folks who are looking over the intermediate term about how many quarters they need to get through with more flexibility, and that's been a naturally slower pace. I think the good news story is the large banks, particularly the US banks, have very strong balance sheets and capital ratios right now. We're going to do our part to help where we can in the short term. I think the discussion of restructuring of industries that need help will take a little bit longer to determine.

BRIAN CHEUNG: Hey, it's Brian Cheung here. So you mentioned liquidity. It seems the Federal Reserve has really been trying to backstop any sort of issues with liquidity, whether or not it's in US treasury markets, but I want to focus on corporate debt.

I'm wondering on that front, what have we seen in terms of the types of companies that are out there? Have you seen downgrades? Are you worried about defaults, as an extension of Julie's question, and are there certain industries or pockets where you're kind of closely zoning in on?

TYLER DICKSON: Sure. I think it's natural, given the economic uncertainty we're facing and the stress on balance sheets, that there will be downgrades and that there will be bankruptcies and, you know, ultimately, restructurings in certain industries. That's inevitable, when you go through major crises, and this is, obviously, a very significant one in historical context. I think from that perspective, you know, our view is those places that are under the most stress will naturally be those places which have downgrades and, you know, the most challenges. I think it's early in this process to understand the path from here.

We're advising companies on how to think about this from a scenario analysis. In some cases, what's the best case scenario, and then in other cases, what's the worst case scenario? We're spending a lot of time with them, making sure that they can explain to their constituents. First and foremost, their employees, which they care about, helping make their businesses operate. Second, to their either loan, bond, or equity holders, and how they explain how they will navigate the challenging economic consequences ahead.

JULIA LA ROCHE: Tyler, I guess just looking out and kind of tapping into your own experience navigating crises, how do you think this ultimately will change business and maybe even the future of business?

TYLER DICKSON: Wow. That's a conversation that we could spend a lot of time on. I think this crisis, first and foremost, is different from other recent crises. You know, in one way, first, I would say, the banks are well capitalized in this environment, and our corporate clients know we're open for business and are helping them navigate this period of uncertainty. You know, from our standpoint, with capital strength and liquidity, that's distinct from prior periods of time.

I think for your more macro question, I think the questions about how we think about supply chains, how we think about interconnectivity of sources of liquidity, how we think about the interplay between the commercial paper market between the capital markets, between other sources of liquidity, and importantly, how government programs fit into this particular crisis. I think there's been extraordinary work by everyone in coordination with the government entities to provide support to this system using technologies and tool kits that came from prior crises, but this is a different kind of crisis with a broader impact. And the kinds of tools that are being used are going to be different, and I think it will change the landscape. This crisis will change the landscape of a number of industries, and we look forward to trying to help industries move from where we are to where they need to be to be competitive and resilient and, you know, move forward.