Rating: Aa1/AA-/AA+
Amount: Eu1.25bn
Maturity: 10 October 2013
Issue/re-offer price: 99.736
Coupon: 3.95%
Spread at re-offer: mid-swaps plus 17bp, 38.5bp over the 3.75% July 2013 Bund
Launch date: Thursday 28 September
Payment date: 10 October
Lead mgr: Citigroup
Bookrunner's comment:
This came at the tight end of price talk, which was mid-swaps plus 17bp to 18bp, equal to a Bund spread of 38.5bp.
Citigroup is active in euros and sterling, as half of its funding is in non-dollar products, making this a core market.
We looked at various opportunities in recent weeks, and felt that there would be good demand for a seven year fixed rate instrument. This maturity is good for absolute rates, but not so far out that we would struggle to locate demand for a quality double-A name.
Timing helped, as there was not too much other issuance to distract investors. Also, the borrower priced a dollar deal the day before, and the day we announced the transaction, Moody's raised the rating on Citibank to Aaa, which obviously helped investor sentiment for the credit.
We priced a larger deal than anticipated at the tight end of guidance, which says it all. Distribution was quite granular: the book encompassed 100 accounts, and there was pan-European sponsorship.
Citigroup has done a lot of investor work in recent years to keep people informed of its credit, and that has paid off. France, Germany and the Netherlands were the main buying centres, with participation from Ireland, Scandinavia, the Middle East and Asia. Asset managers and insurance companies are most attracted to high quality paper at this maturity.
Market appraisal:
"...this was quite a success. The deal was backed by strong demand from asset managers and insurance investors and not all sold to the usual bank buyers who would buy it on an asset swaps basis.
There was a lot of real money in the book."
