) announced offers to buy twelve series of outstanding notes.
This move comes as part of its recent liability management
efforts. As of November 21, 2012, the notes have a total
principal amount outstanding of around $18.4 billion.
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Currently, Citi's offers reach an aggregate of $910 million. 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. On December 19, 2012, the offers will
expire at 11:59 p.m., New York City time, unless extended or
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 about $13.9 billion year-to-date. This also
included its redemption of trust preferred securities. Combined
with the continuing natural maturing of long-term debt that
requires no refinancing, these measures help the company in
achieving lower borrowing costs.
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
After failing the stress test earlier this year, Citi decided
against any capital returns in the resubmitted capital plan and
instead focused on building up its capital levels. Its efforts to
reduce borrowing costs and lower debt levels are encouraging. We
believe such measures will finally aid in improving its overall
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
JPMorgan Chase & Co.
) have a Zacks #2 Rank, which translates into a short-term Buy