In its largest dollar-denominated sale over the past one year (without taking guarantee from FDIC), Citigroup has issued $2.5 billion of 30-year bonds due July 15, 2039, at 97.971 to yield 8.310% or 380 basis points over comparable US Treasuries – reported Bloomberg.
According to Merrill Lynch’s US Corporate Master index, investment-grade bond yields, relative to similar-maturity Treasuries, have tightened in the recent past. It is amid a lack of new issuance as companies report second-quarter earnings and, as a consequence bond spreads narrowed. Against this backdrop, Citigroup wanted to take advantage of the situation.
In an e-mail, Danielle Romero-Apsilos, spokewoman at Citigroup said that Citi has been continuously evaluating capital markets opportunities to achieve its strategic financing objectives. Rich Lee, managing director of fixed income at Wall Street Access, a broker-dealer in New York, commented: “Right now everybody is tripping over themselves to buy paper. Lots of accounts are waiting for new issues to satisfy their needs. They’ve been sitting on their hands for a couple weeks, and they’ve been reaching because there’s no paper out there.”
Rizwan Hussain, Gregory Peters and Adam Richmond, analysts at Morgan Stanley, are of the opinion that: “With the new issue opportunity under the TLG Program winding down, financials are going to have to start making a bigger presence in corporate new issue markets. With risk-taking once again ramping up, banks will once again have to rely on the traditional corporate market,” reported the newspaper.
