This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Citigroup Up as Offer Sees Strong Demand

Citigroup closing share price included in this update. Adds information on final terms of the TrUPs sale.

NEW YORK ( TheStreet) -- Citigroup (C - Get Report) shares continued their upward trajectory Wednesday as the bank priced a sale of up to $2 billion worth of trust-preferred securities amid heavy investor interest.

The trust preferred securities, or TruPS, saw "huge" demand from both institutional and retail investors, according to Dow Jones, which said orders exceeded $5 billion.

The yield on the 30-year fixed-to-floating rate securities was initially expected to be 8.875%, but Dow Jones said Citigroup, emboldened by the impressive demand, lowered it to 8.625%, and ended up launching it Wednesday afternoon with a yield of 8.50%. The report cites an unnamed person familiar with the deal.

Final pricing on the deal, the report said, was for 80 million units with a par value of $25 each that have the 8.50% yield, mature in March 2040 and are noncallable for five years. The ratings on the TrUPs were 'BB-' for Standard & Poor's and 'Ba1' for Moody's; both below investment grade as noted by the company in the prospectus it filed Tuesday with the Securities and Exchange Commission in relation to the offering.

Also, according to the prospectus, the company believes tax treatment of the payments associated with the TrUPs will be as interest, rather than dividends.

More than 100 million shares changed hands in premarket action after the stock gained more than 7% in Tuesday's session on massive volume. The shares closed 3.7% higher at $3.96 on Wednesday. The session's high was $4.07, and volume totaled more than 1.2 billion, more than double its three-month trailing daily average of 534 million. The intraday break above $4 is significant as the stock hadn't seen that level reached since intraday trading on Dec. 8, just before news of its TARP repayment plans began to circulate. At the same time, the stock's inability to finish there or higher is telling as well, and short interest in the stock has been building of late. The stock is now up 15.4% year-to-date.

The reasons behind the initial rally on Tuesday were many. The heavy demand for the TrUPs was a contributing factor as news of the initial terms and strong interest from both institutional and retail investors leaked out early in the afternoon. Optimism was also fueled by bullish comments by both famed investor Bruce Berkowitz, who has built up a sizable stake in the company, and fixed income research firm CreditSights, which said the company, from both a debt and equity perspective, was "back from from the brink and back in business."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
C $54.21 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs