Citigroup begins tender offer for $380 million of three notes series

By Toni Weeks

San Luis Obispo, Calif., Feb 9 – Citigroup Inc. announced the start of an offer to purchase for cash up to $380 million of notes from three series, according to a press release.

The company is offering to purchase up to $95 million of its outstanding $850 million of 5.875% subordinated notes due 2033, up to $220 million of its outstanding $2 billion of 6.125% subordinated notes due 2036 and up to $65 million of its outstanding $667,517,000 of 6.875% senior notes due 2038.

The total consideration with respect to a note series will be equal to the price that equates to a yield to maturity equal to a fixed spread over the applicable yield, which will be based on the bid-side price of a reference Treasury security at 2 p.m. ET on Feb. 24.

The total consideration for each series will be based on the 3% Treasury due Nov. 15, 2044, with a fixed spread of 190 basis points for the 5.875% notes, 200 bps for the 6.125% notes and 155 bps for the 6.875% notes.

Holders who tender by 5 p.m. ET on Feb 23 will receive the total consideration, which includes an early tender premium of $30.00 per $1,000 principal amount of notes. Settlement for these notes is expected Feb. 26.

Those who tender after the early tender date will not receive the early tender premium.

Tendered notes may be withdrawn by the early tender date.

If the principal amount of tendered notes of any series exceeds the tender cap, Citi will accept tendered notes for that series on a pro rata basis. If a series of notes is fully subscribed up to the maximum cap for a note series as of the early tender date, then any notes of that series tendered after the early date will not be accepted.

The offers expire at 11:59 p.m. ET on March 9.

The offer is contingent on holders validly tendering an aggregate principal amount of each series of notes greater than or equal to the maximum series tender cap applicable to each series of notes.

Since 2013, Citigroup has redeemed or retired $22.2 billion of securities, excluding exchanged securities, of which $9.8 billion was redeemed or retired in 2014, according to the release.

The offer is consistent with Citigroup’s liability management strategy and reflects its ongoing efforts to enhance the efficiency of its funding and capital structure.

The bank will continue to consider opportunities to redeem or repurchase securities based on economic value, potential impact on its net interest margin and borrowing costs, the overall remaining tenor of Citi’s debt portfolio, capital impact and overall market conditions, the release said.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) is the sole dealer manager for the offers. Global Bondholder Services Corp. (866 470-4300 or 212 430-3774) is the depositary and information agent.

Citigroup is a financial services company based in New York City.

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