Citi to sell fixed-income index unit to LSE for US$685m

[MUNICH] Citigroup Inc agreed to sell its fixed-income analytics and index business to the London Stock Exchange Group Plc for US$685 million in cash following a strategic review of the unit.

The transaction includes Citigroup's fixed-income analytics platform, The Yield Book, and indexes including the World Government Bond Index, the New York-based bank said in a statement Tuesday. The business generated US$107 million of revenue in 2016, LSE said in a separate statement. The deal is expected to close in the second half of the year.

The Yield Book traces its roots to books about bond data that Salomon Brothers began publishing in the 1960s. It offers a range of analytical tools for investors and traders in corporate, government and mortgage bonds, as well as derivatives and other kinds of securities, according to its website.

Salomon Brothers, the Wall Street firm that essentially created the modern fixed income market, started Yield Book in 1989 as a software tool for helping customers calculate bond yields.

"This partnership will help accelerate the growth of our business," Richard Burns, global head of The Yield Book and Citi Fixed Income Indices, said in the statement.

"As part of London Stock Exchange Group, our clients will benefit from continued investment and strengthening of our analytics platform, together with a broader range of indexing capabilities."

Citigroup has been exploring a sale of The Yield Book since at least July 2016, according to people familiar at the time. The fourth-largest US bank by assets has sold a number of units across its sprawling consumer and investment bank operations over the past two years to shore up capital, lower expenses and boost returns.

LSE plans to generate US$30 million of revenue synergies over the first three years, as well as US$18 million of cost savings, the London-based firm said in its statement. The Yield Book serves about 350 institutions globally, while the fixed-income indices have about 300 clients.

Bloomberg LP, the parent company of Bloomberg News, competes with other trading analytics companies.

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