) announced plans to expand its outstanding notes buyback offer
size to $1.195 billion. This reflects an increase of $285 million
from the previously announced size of $910 million. This increase
in notes buyback comes as part of its recent liability management
The offer for buyback relates to twelve series of outstanding
notes. It includes offers for notes on a fixed spread basis as
well as a fixed-price basis. The maturity dates of these notes
range between 2013 and 2016. Also, the prior declared early
tender date for notes validly tendered pursuant to the offers has
been extended to December 21, 2012, 11:59 p.m., New York City
Further, based on factors such as economic value, possible impact
on Citi's net interest margin and borrowing costs as well as the
overall residual tenor of its debt portfolio, the company will
seek buyback prospects for its long-term as well as short-term
As a matter of fact, with a decent liquidity position, Citi has
opted for measures to manage its liability efficiently. Notably,
excluding these offers, Citi has lowered its outstanding
long-term debt by nearly $14 billion year to date. This also
included the redemption of trust preferred securities. Combined
with the continuing natural maturity of long-term debt that
requires no refinancing, these measures help the company achieve
lower borrowing costs.
Following the failure in the stress test earlier this year, Citi
decided against any hike in capital returns in the resubmitted
capital plan. Instead, it focused on building its capital levels.
For the company that had over $271 billion in long-term debt at
the end of September 2012, efforts to reduce borrowing costs and
lower debt levels are encouraging. We believe such measures will
finally aid in improving its overall profitability.
Citi currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering its fundamentals, we also
have a long-term Neutral recommendation on the stock. Among its
Bank of America Corp.
) also have a Zacks #3 Rank.
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