Citi prices tender offers for four note series in Dutch auction offer

By Susanna Moon

Chicago, Feb. 21 - Citigroup Inc. said investors tendered and that it will accept for purchase $440,956,450.90 of four series of notes under a modified Dutch auction.

The breakdown for the tendered notes is as follows:

• £47,726,000 of the £497,615,000 outstanding (£750 million original issue amount) of 7.625% fixed-rate notes due 2018;

• £82,684,000 of the £251,565,000 outstanding (£400 million) 6.5% senior notes due 2030;

• £55,751,000 of the £535,073,000 outstanding (£800 million) 6.8% senior notes due 2038; and

• €114,657,000 of the €902.49 million outstanding (€1.5 billion) 7.375% fixed-rate notes due 2014.

The tender offers to purchase up to $500 million equivalent of the four series of notes expired at 11 a.m. ET on Feb. 20, with settlement slated for Feb. 28.

Pricing for the offers was set at 9 a.m. ET on Feb. 21 using a benchmark security plus a fixed spread, as follows:

• 5% U.K. Treasury gilt due March 2018 plus a spread of 154 bps, with a benchmark rate of 0.959%, purchase yield of 2.499% and purchase price of 124.139 for the 7.625% notes;

• 4.75% U.K. Treasury gilt due December 2030 plus 140 bps, with a benchmark rate of 2.949%, purchase yield of 4.349% and purchase price of 125.244 for the 6.5% notes;

• 4.75% U.K. Treasury gilt due December 2038 plus 145 bps, with a benchmark rate of 3.299%, purchase yield of 4.749% and purchase price of 130.020 for the 6.8% notes; and

• Interpolated euro mid-swap rate plus 10 bps, with a benchmark rate of 0.471%, purchase yield of 0.571% and purchase price of 108.755 for the 7.375% notes.

After settlement, there will be outstanding £449,889,000 of the 7.625% notes, £168,881,000 of the 6.5% notes, £479,322,000 of the 6.8% notes and €787,833,000 of the 7.375% notes.

The company also will pay accrued interest.

Citigroup Global Markets Ltd. (attn.: liability management group, +44 20 7986 8969 or email liabilitymanagement.europe@citi.com) is the dealer manager, and Citibank, NA, London Branch (attn.: exchange team, +44 20 7508 3867 or email exchange.gats@citi.com) is the tender agent.

The offers reflect the company's continued robust liquidity position and are consistent with its recent liability management initiatives, according to a previous press release.

In 2012, the company reduced its outstanding long-term debt by about $17 billion through liability management initiatives, including the redemptions of trust preferred securities. Along with the natural maturing of long-term debt that requires no refinancing, these initiatives result in lower borrowing costs and reduce the overall level of the company's long-term debt outstanding, the release noted.

The company said it will continue to consider opportunities to repurchase its long-term as well as short-term debt based on several factors, including without limitation the economic value, potential impact on the company's net interest margin and borrowing costs and the overall remaining tenor of its debt portfolio.

The financial services company is based in New York City.

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