“Citibank, a part of Citigroup Inc. based in New York, is entering the investment-grade bond market today. This move comes after a gap of four years, mainly because its deposits have started to decrease from the high levels seen during the pandemic.
Citibank, which offers services like savings accounts, credit cards, and mortgages, is planning to issue fixed-rate and floating-rate notes in up to three separate parts. The longest portion, which is a five-year fixed-rate segment, is expected to have a yield of 1.18 percentage points above Treasury rates.
Initially, there were discussions about it being around 1.4 percentage points higher, but this has changed. Please note that these details are confidential. Citigroup is overseeing this bond sale, but they have chosen not to comment on it at this time.”
The debt levels of bank operating companies took a hit after they saw a huge influx of deposits during the pandemic. Jesse Rosenthal, who heads US financials at CreditSights Inc., mentioned this in a note on Tuesday.
“We may see these banks turning to greater debt funding at the operating company level when the mix of funding that they relied on during the Covid era returns to normal as a result of falling deposits” he said. Citibank’s recent move is in line with what other banks like Bank of America Corp., Morgan Stanley, and Wells Fargo & Co. have been doing—they’ve been issuing bonds at the bank-level in recent months.
The last time Citibank NA entered the market was back in May 2019, when they raised $3 billion.This new deal is part of a resurgence in corporate bond sales that followed the Federal Reserve’s decision to take a more cautious approach on Wednesday, causing several companies to hold off temporarily.
This week, Citibank is joining the list alongside Canadian Imperial Bank of Commerce, Australia & New Zealand Banking Group Ltd., and Credit Agricole SA.
As for CIBC, ANZ, and Credit Agricole, they haven’t provided comments in response to inquiries at this time.
