Citibank (NYSE: C) announced on Tuesday that it will be offering $2 billion in $25 par 30-yaer trust preferred securities, referred to by many as TRUPS, as part of its ongoing agreement with federal regulators in repaying its federal bailout funds.
Back in December, Citibank agreed to sell the trust preferred securities to boost its capital ratios after it repaid 420 billion in trust preferred securities held by the Treasury Department.
The securities offered on the market on Tuesday are yielding around 8.875%, with significant demand from institutional and retail investors, according to several sources.
Moody’s Investors Service and Standard & Poor’s both have recently modified their methodologies in rating these types of securities because of the risk of regulators forcing financial institutions to skip payments to investors in this form of hybrid securities.
Expected ratings on the securities offered by Citibank are Ba1 / BB-.
