The Federal Deposit Insurance Corp. is selling $2.42 billion of bonds issued by Citigroup Inc. in a transaction that will eliminate U.S. government holdings in the bank linked to the 2008 financial crisis.
Citigroup exchanged the subordinated notes due 2025 and 2043 to the FDIC for other securities used to pay the government for $301 billion of asset guarantees, the New York-based bank said today in a regulatory filing. Citigroup won’t receive any proceeds from the resale to the public.
The 12-year notes may yield about 265 basis points more than similar-maturity Treasuries and the 30-year debt may pay a relative yield of about 285 basis points, according to a person with knowledge of the transaction, who asked not to be identified because terms aren’t set.
The offering is the latest step to end taxpayer support for Citigroup, which took more bailout assistance than any other U.S. lender.
“When the transaction concludes, no U.S. government entity will continue to hold any securities in Citi issued as a result of the financial crisis,” Mark Costiglio, a spokesman for the lender, said by e-mail. “We remain very appreciative of the support provided by the U.S. Treasury, FDIC and American taxpayer during the financial crisis and are pleased that their investment realized a return of more than $13 billion.”
Citigroup issued a combined $7.06 billion in preferred shares to the FDIC and the Treasury as consideration for the loss-sharing protection, provided to help shore up investor confidence in the bank during the worst financial crisis since the Great Depression. The Treasury said in February that it expected to receive $894 million in proceeds from a similar offering.
David Barr, a spokesman at the FDIC, declined to comment on the transaction.