Dec. 2 (Bloomberg) -- Citigroup Inc., the second-biggest U.S. bank by assets, Wells Fargo & Co. and GE Capital Corp. are among banks selling bonds backed by the U.S. government to take advantage of cheap funds to refinance debt.

Citigroup sold $5.5 billion of FDIC-guaranteed bonds, split among floating-rate notes maturing in two and three years and fixed-rate debt due in 2012, Bloomberg data show. Wells Fargo will issue three-year fixed- and floating-rate bonds. GE Capital, the lending arm of Fairfield, Connecticut-based General Electric Co., plans to sell three-year fixed-rate notes, according to a filing today with the Securities and Exchange Commission.

The companies follow Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp., which have sold a combined $27.1 billion of the debt since Nov. 21. The Federal Deposit Insurance Corp. agreed to insure bank debt, giving it AAA credit ratings, to help unfreeze credit markets. Until Goldman’s sale on Nov. 25, banks had been unable to sell debt for two months.

Citigroup sold $1 billion of floating-rate notes maturing in two years that pay 55 basis points more than the three-month London interbank offered rate, or Libor, and $750 million of three-year notes that float with one-month Libor and pay a spread of 80 basis points, Bloomberg data show.

The New York-based bank raised $3.75 billion of 2.875 percent notes due in 2011 that priced to yield 188.4 basis points more than U.S. Treasuries of similar maturity. A basis point is 0.01 percentage point.

Wider Spreads

Citigroup spreads were four to five basis points wider than where Bank of America priced its $9 billion offering yesterday, Bloomberg data show. The Charlotte, North Carolina-based bank paid 50 basis points more than three-month Libor on its two-year floating-rate notes, while Citigroup paid a 55 basis point spread; Bank of America paid 76 basis points more than one-month Libor on its three-year floating-rate notes, while Citigroup offered an 80 basis point spread.

Bonds guaranteed through the FDIC’s Temporary Liquidity Guarantee Program are rated Aaa by Moody’s Investors Service and AAA by Standard & Poor’s, the highest rankings.

Wells Fargo, the San Francisco-based bank buying Wachovia Corp., plans to sell fixed- and floating-rate notes backed by the U.S. government as soon as tomorrow, according to a person familiar with the offering. The fixed-rate notes may pay about 85 basis points more than the benchmark midswap rate, and the floating notes may pay about 85 basis points more than three- month Libor, said the person, who declined to be identified because terms aren’t set.

Lend to Customers

“This market offers cost effective financing,” Wells Fargo spokeswoman Julia Tunis said in an e-mailed statement. “Proceeds will be used to continue to lend to our customers as we have consistently done throughout the credit crunch.”

The average yield on non-guaranteed debt issued by AA-rated banks was 7.34 percentage points today, according to Merrill Lynch & Co.‘s U.S. Corporates, Banks, index.

GE Capital’s offering, which will be benchmark in size, may occur as soon as this week, according to a person familiar with transaction. Bank of America, Barclays Plc and Citigroup are helping GE sell the debt, said the person, who declined to be identified because terms aren’t set. Benchmark is typically at least $500 million.

Regions Bank, a unit of Regions Financial Corp., Alabama’s largest bank, plans to sell FDIC-backed bonds in a benchmark offering, according to a person familiar with the bank’s plans. Regions has hired Barclays, Credit Suisse Group Inc., Goldman Sachs and Morgan Keegan to manage the sale, said the person, who declined to be identified because terms aren’t set.

To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net

Last Updated: December 2, 2008 18:12 EST