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Citigroup Inc. issued a large number of bonds in the Canadian dollar bond market for the first time in nearly 10 years, because Bank of America sought diversified financing after reporting profits.
According to people familiar with the matter, the bank issued fixed rate to floating rate bonds of 1 billion Canadian dollars ($730 million), which will mature within four years and be redeemable in three years. These insiders said that the yield of this transaction was 1.07 percentage points higher than the benchmark interest rate of Canada, and they had preliminary discussions in the range of 1.07-1.10 percentage points. Since they had no right to discuss the matter, these people asked for anonymity.
People familiar with the matter said that the offer attracted orders from 48 buyers, more than twice the size of the transaction. The floating rate part of the issue was cancelled before pricing.
A Citigroup spokesman did not respond to a request for comment.
Data shows that this transaction marks the first large-scale public offering of Citigroup in Canada since 2015. The coupon rate of this $600 million transaction is 4.09% and will expire next year. The data shows that the bank sold its debt denominated in lonie in small pieces in 2021 and 2023.
Monday's deal came after the bank announced better than expected earnings more than a week ago. This is the second time that a large U.S. bank has issued maple bonds in the past week. Previously, Wells Fargo&Co.'s $1.25 billion bond attracted orders twice its size.
At the time of these two transactions, many Canadian companies, including banks, issued bonds overseas, usually to obtain better pricing. This led to a slowdown in supply, and hungry investors wanted to deploy funds.
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