Citigroup upsizes tender offer for four series of notes; sets pricing

By Susanna Moon

Chicago, March 16 – Citigroup Inc. said the cash tender offer for up to $1,525,000,000 of four series of notes was oversubscribed for two series by the early tender deadline of 5 p.m. ET on March 13.

Citigroup increased the maximum series tender cap for the 3.953% notes and the 1.7% notes and left the tender sub-cap for the other two series unchanged.

As a result, it accepted $2.33 billion of notes for purchase and the total could go higher if more are tendered.

The issuer also set pricing for the offer.

The company accepted tenders for:

• $57,138,000 of its $926,664,000 outstanding of 4.587% senior notes due 2015 with a tender offer sub-cap of $200 million. The purchase price was set at $1,028.10 per $1,000 principal amount;

• $975,996,000 of its $1,833,000,000 outstanding of 3.953% senior notes due 2016 with a tender sub-cap of $975,996,000, raised from $550 million. The purchase price was set at $1,037.56 per $1,000 principal amount;

• $988,135,000 of its $1.5 billion outstanding of 1.7% senior notes due 2016 with a tender sub-cap of $988,135,000, up from $450 million. The purchase price was set at $1,010.01 per $1,000 principal amount; and

• $310,933,000 of its $1,055,000,000 outstanding of 5.85% senior notes due 2016 with a tender sub-cap of $325 million. The purchase price was set at $1,066.59 per $1,000 principal amount.

All the purchase prices include a $30.00 per $1,000 early tender premium that will only be paid to holders who tendered by the early deadline.

The company accepted for purchase all of the notes tendered by the early deadline, with settlement set for April 1.

Because the amount of tendered 3.953% notes and 1.7% notes exceeded the series tender cap, Citigroup will not purchase any more of these notes tendered after the early deadline, according to a company press release. However it will continue to accept notes from the other two series covered by the tender.

The tender offer will continue until 11:59 p.m. ET on March 27. The offer began on March 2.

Tendered notes may no longer be withdrawn, as of the early tender date.

Pricing for each note series was set at 2 p.m. ET on March 16 using a yield to maturity of a fixed spread over the yield, which was based on the bid-side price of a reference Treasury security.

The purchase price for the 4.587% notes will be set using the 0.25% Treasury due Dec. 15, 2015, with a fixed spread of 55 basis points; for the remaining series, the price will be based on the 0.5% Treasury due Feb. 28, 2017 with a fixed spread of 25 bps for the 3.953% notes, 30 bps for the 1.7% notes and 30 bps for the 5.85% notes.

The total purchase price includes an early tender premium of $30 per $1,000 principal amount of notes tendered by the early deadline.

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

The offer is contingent on holders tendering an amount of each series of notes at or above the maximum series tender cap for that series of notes.

Since 2013, Citigroup has redeemed or retired $22.7 billion of securities, excluding exchanged securities, of which $500 million has been redeemed or retired in 2015, according to a previous press release.

Citigroup said the offer is consistent with its 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 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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