Citigroup Sells Debt for 1st Time Since Moody’s Downgrade

Citigroup Inc. (C) issued $750 million of bonds in its first sale after a two-step ratings downgrade from Moody’s Investors Service.

The lender sold $750 million of securities due January 2022 at 250 basis points more than similar-maturity Treasuries in an add-on offering to its 4.5 percent notes issued in October, according to data compiled by Bloomberg. There is $2 billion of debt outstanding on the notes following a $250 million increment on Dec. 7 to the initial sale of $1 billion of the debentures, according to data compiled by Bloomberg.

Moody’s downgraded the New York-based bank on June 21 along with 14 other global lenders. Citi’s ratings were cut to Baa2, two levels above speculative-grade, from A3, according to a Moody’s statement. The extra yield that investors demand to hold bonds from U.S. banks has decreased by 3 basis points since the day before Moody’s announced its decision, to 284 basis points on June 28, Bank of America Merrill Lynch index data show.

The 4.5 percent notes, initially sold by Citigroup on Oct. 25 at a spread of 245 basis points, traded yesterday at 103.53 cents, yielding 4.05 percent with a spread of 247 basis points more than benchmarks. The new debt issued today was rated Baa2 by Moody’s, and A- by Standard & Poor’s, Bloomberg data show.

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net;

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net