Citibank raises US$5 billion in first bank-level bond since 2019

CITIBANK tapped the investment-grade bond market on Tuesday (Sep 26) with its first bank-level debt offering in four years as deposits recede from their pandemic-era highs.

The New York-based bank, the operating company of Citigroup which offers saving accounts, credit cards and mortgages, sold US$5 billion in fixed- and floating-rate notes in three parts, according to a person familiar with the matter. The longest portion, a US$2.5 billion five-year fixed-rate tranche, yielded 1.18 percentage point over Treasuries after earlier discussions for about 1.4 percentage point, said the source, who asked not to be identified as the details are private.

Citigroup managed the bond sale. A representative for the bank declined to comment.

Bank operating company debt footprints have shrunk significantly after massive deposit inflows during the pandemic, Jesse Rosenthal, head of US financials at CreditSights, said in a note on Tuesday.

“As that Covid-era funding mix shifts back towards normal, driven by declining deposits on the back of monetary policy, we would expect incremental debt funding at the OpCo level,” he said. Citibank’s transaction follows debt sales by Bank of America, Morgan Stanley and Wells Fargo & Co which have all sold bank-level bonds in recent months.

Citibank was last in the market in May 2019, when the company raised US$3 billion, according to data compiled by Bloomberg.

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Its most recent deal came after multiple companies stood down in separate trading sessions following the Federal Reserve’s hawkish pause on Wednesday. Citibank joined the Canadian Imperial Bank of Commerce (CIBC), Australia & New Zealand Banking Group (ANZ) and Credit Agricole, which also raised debt this week.

CIBC, ANZ and Credit Agricole did not respond to requests for comment. BLOOMBERG