Citigroup Announces Full Redemption of Series J Preferred Stock
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Insights
Citigroup's redemption of its outstanding Preferred Stock, Series J, is a strategic move that aligns with its liability management strategy. By doing so, Citigroup is effectively reducing its cost of capital, as preferred stock typically carries a higher dividend rate compared to debt instruments. This action may improve Citigroup's net interest margin by decreasing the amount paid out in dividends, which could have a positive impact on the company's profitability and earnings per share in the long-term.
Moreover, the redemption could be viewed favorably by credit rating agencies, potentially leading to improved credit ratings. This, in turn, can reduce borrowing costs and enhance Citigroup's ability to raise capital in the future. Investors should note that while this redemption will eliminate future dividend payments for holders of the preferred shares, it reflects a solid capital position and financial strategy aimed at optimizing the company's balance sheet.
From a market perspective, Citigroup's announcement to redeem Preferred Stock, Series J, may signal confidence in its financial position and a proactive approach to capital management. This could be interpreted as a positive indicator by the market, potentially leading to a favorable response from investors who value efficient capital structure and strategic liability management. The redemption also illustrates Citigroup's responsiveness to regulatory changes and market conditions, which is crucial for maintaining a competitive edge in the financial industry.
It is important to monitor the reaction of the stock market to such redemptions, as they can influence investor sentiment and stock performance. A reduction in outstanding preferred shares can also lead to a more streamlined equity structure, which might be easier for investors to analyze and value.
The redemption of preferred shares must be executed in accordance with the terms set forth in the prospectus and relevant securities laws. Citigroup's adherence to the specified redemption procedures, such as providing notice to shareholders and setting a fixed redemption price, demonstrates compliance with legal and regulatory requirements. This action helps maintain investor trust and corporate governance standards.
Legal considerations also include the potential impact of regulatory changes on Citigroup's capital structure. The company's decision to redeem these shares may be influenced by regulatory capital requirements and changes in the regulatory landscape that govern financial institutions. By managing its preferred stock in this manner, Citigroup is ensuring that its capital structure remains aligned with both its corporate strategy and regulatory obligations.
The redemption date for the Preferred Stock and related Depositary Shares is March 29, 2024 (the “Redemption Date”). The cash redemption price, payable on the Redemption Date for each Depositary Share, will equal
The redemption announced today is consistent with Citigroup’s liability management strategy, and reflects its ongoing efforts to enhance the efficiency of its funding and capital structure. Citigroup’s redemptions are based on several factors, including without limitation, the economic value, regulatory changes, potential impact on Citigroup's net interest margin and borrowing costs, the overall remaining tenor of Citigroup's debt portfolio, capital impact, as well as overall market conditions.
Beginning on the Redemption Date, the Depositary Shares representing the redeemed Preferred Stock will no longer be outstanding and dividends will no longer accrue on such securities.
Computershare Trust Company, N.A. (“Computershare”) is the paying agent for the Depositary Shares. The paying agent’s address is Computershare Trust Company, Attn: Corporate Actions, 150 Royall Street,
For further information on the Preferred Stock and the related Depositary Shares, please see the prospectus at the following web address: https://www.citigroup.com/rcs/citigpa/akpublic/storage/public/ps_7125seriesj.pdf
About Citi
Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of
Additional information may be found at www.citigroup.com | Twitter: @Citi | LinkedIn: www.linkedin.com/company/citi | YouTube: www.youtube.com/citi | Facebook: www.facebook.com/citi
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228775402/en/
Media Contact:
Danielle Romero Apsilos
212 816 2264
danielle.romeroapsilos@citi.com
Fixed Income Investor Contact:
Peter Demoise
212 559 2718
peter.demoise@citi.com
Source: Citigroup Inc.
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