Citigroup Inc. (C) expects to issue $3 billion to $6 billion more in long-term debt this year than it previously estimated.
In a regulatory filing, the bank, which is still 18% owned by the U.S. government, said it now expects to sell approximately $18 billion to $21 billion in long-term debt this year “to maintain and solidify its structural liquidity” and to extend the length of time it has to pay down debt supporting its businesses.
The bank, which sold about $8 billion of debt through June 30, may sell another $10 billion to $13 billion through December, Aboaf said today. That includes about $2 billion of retail structured notes each half of the year, he said. The figures exclude about $3 billion of local bond sales this year by the bank’s foreign units.
“Without all of those assets, we don’t need as much debt funding as we once did,” said Treasurer Eric Aboaf.
Chief Executive Officer Vikram Pandit is shrinking the bank’s $1.94 trillion balance sheet following its federal bailout in 2008 and has earmarked about 24 percent of the assets for eventual sale or liquidation. The bank repaid $20 billion of the $45 billion of bailout money it received, and the Treasury Department is selling shares it got by converting the remaining $25 billion into common stock.
“Citi continues to review its funding and liquidity needs and may adjust its expected issuances for the remainder of 2010 due to market conditions or regulatory requirements, among other factors,” the New York-based bank said in its quarterly report filed with the Securities and Exchange Commission.
Citigroup sold $85 billion of debt last year, when it was taking advantage of a government program enacted in the wake of the credit crisis that allowed banks to sell debt with federal guarantees. The bank sold $47 billion of long-term debt in 2008.
Before the credit-crisis, Citigroup sold about $37 billion in 2007 and $30 billion in 2006, Aboaf said.
“This is pretty modest by historical standards and will stay modest by historical standards because of all the progress we’ve made in de-risking and reducing the balance sheet,” he said.
On a conference call today with investors, Aboaf said Citigroup doesn’t plan to refinance the debt sold under the Federal Deposit Insurance Corp.’s Temporary Liquidity Guarantee Program, as the bank further reduces its overall debt load.
Citigroup has $20.3 billion of TLGP debt maturing in 2011, out of $45 billion in overall long-term maturities that year. In 2012, it has $38 billion of TLGP maturities, out of $68.2 billion overall.
Excluding local country sales, the company is expected to sell about $20 billion of debt in each of those years.
