Citigroup Sells Three-Year Debt With 2012 Goal of $20 Billion
Citigroup Inc. (C) sold $1.25 billion of three-year notes in its third bond sale this year as the bank, facing maturities from a 2008 emergency credit program, plans during 2012 to raise as much as $20 billion in capital markets.
The third-biggest U.S. bank by assets issued 2.65 percent notes to yield 230 basis points, or 2.3 percentage points, more than Treasuries, according to data compiled by Bloomberg. Wells Fargo & Co. (WFC), the largest U.S. mortgage lender, sold $1.25 billion of five-year floating-rate notes, the data show.
Citigroup, which sold $3.5 billion of five- and 30-year debt last month, tapped the market as yields on bank debt fall to 4 percent as of yesterday from 4.8 percent at the start of the year, Bank of America Merrill Lynch index data show. New York-based Citigroup plans to issue $15 billion to $20 billion of long-term debt this year after selling $15 billion of the securities in 2011, Treasurer Eric Aboaf said on a Jan. 24 earnings call.
“TLGP debt represented a significant amount of maturities in 2011 and is the bulk of our maturities in 2012,” Aboaf said on the call, referring to the U.S. government’s Temporary Liquidity Guarantee Program enacted in 2008 to stem a global financial crisis. “This wave of maturities is an industrywide situation, which came about as many banks issued TLGP and other government-guaranteed debt in 2008 and 2009,” he said.
The bank cut borrowing costs from a $500 million sale of 3.625 percent, three-year debt in December at a spread of 323.9 basis points, the data show.
John Deere Offering
John Deere Capital Corp., a finance unit of the world’s largest farm equipment maker, sold $1.5 billion of debt today in three parts, said a person with knowledge of the offering, who declined to be identified citing lack of authorization to speak publicly. The Deere & Co. unit issued 28-month floating rate notes and five- and 10-year fixed-rate debt, the person said.
Wells Fargo sold the five-year floating-rate notes to yield 110 basis points above the three-month London interbank offered rate, Bloomberg data show. Three-month Libor (US0003M) is 0.492 percent today.
Citigroup has $38 billion of TLGP-related debt due this year and $22.6 billion of unrelated debt maturing, according to a presentation on Citigroup’s website. Last year, it had $20.3 billion of TLGP debt mature and $30.4 billion of non-TLGP debt.
The bank’s three-year debt “would be attractive all the way to a spread of 170 basis points,” Morningstar Inc. analyst James Leonard said in a research note today. The bank is “the best-capitalized” of the four-largest U.S. banks, he said, citing core Tier 1 capital of 11.8 percent and a Tier 1 ratio at 13.6 percent.
To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
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