Citigroup announces inaugural US dollar green bond
Citigroup is in the market Thursday shopping its first US dollar green bond and the first from a major US bank this year, a Citi spokesperson confirmed.
The four-year non call three fixed-to-float note will be used to fund eligible green projects outlined under Citi's green bond frame work.
Initial price thoughts started at 170bp over Treasuries, which offered some 20bp-25bp of new issue concession, according to a CreditSights report.
The green bond will help fund loans and investments for projects in renewable energy, energy efficiency, sustainable transport, green buildings and water quality and conservation, according to Citi's 2019 green bond framework report.
The report also explicitly states Citi will not knowingly use proceeds to fund nuclear power plants, alternative coal technologies and gas-to-liquid projects.
"Citi's green bond characteristics are strong," CreditSights noted in its report.
"Proceeds are all but legally ringfenced, with Citi making an explicit commitment to allocate exclusively to eligible projects and only hold excess funds in the liquidity portfolio."
This is not Citi's first environmental bond issuance as the US bank first issued a 0.5% €1bn three-year green bond in January 2019.
The last major US bank to issue a green bond was Bank of America in October 2019.
Bank of America's 2.456% six-year non call five fixed-to-float green bond priced at 88bp over Treasuries, but is trading in the context of 144bp over Treasuries this week, according to MarketAxess data.
Citigroup, as sole bookrunner on Thursday's trade, is expected to tighten spreads in close to its own outstanding curve, but could offer some pick up over competitors such as BofA.