Citi’s $2.5 Billion Bond Issuance Levels Up With Black-Owned Firms

Wall Street giant Citi
C
group is exclusively working with four Black-owned investment firms for a strategic $2.5 billion bond issuance. The bonds which were priced last month will be distributed by Blaylock Van, CastleOak Securities, Global Oak Capital Markets and Loop Capital Markets. Will this move by the banking giant actually reinforce its commitment to creating racial equity in the capital markets? 

The Breakdown You Need To Know: The bond deal, done in commemoration of Dr. Martin Luther King Jr. Day, and CultureBanx reported marks it’s the second time in recent weeks that a large U.S. financial services firm has made such a move. For this transaction, Citi issued a $2.5 billion six-year non call 5-year fixed-to-floating rate note indexed to SOFR.  

Minority-owned broker dealers, Black-owned firms in particular, have historically and largely been shut out of the capital markets. Yet, recent data shows that investing in these firms is good business,” Citi Chief Financial Officer Mark Mason said in a statement. Mason is among the top Black executives in the industry. 

In December 2020, Allstate
ALL
announced that it priced $1.2 billion of 5-year and 10-year senior notes via a syndicate made up of only minority, women and veteran-owned business enterprises. Additionally, last September Verizon Communications
VZ
hired Loop Capital and another Black-led firm, Siebert Williams Shank, as lead underwriters of a $1 billion green bond offering. 

Citi’s Culture & Capital: Since 2015, Citi has tapped more than 30 firms owned by underrepresented groups for bond issuances totalling more than $150 million. A recent GPS report from Citi found that U.S. GDP could increase by $5 trillion dollars over the next five years if the key racial wealth gaps for African Americans across housing, wages, education and investments are closed today. 

“The successful execution of this transaction demonstrates the benefits of providing greater access to the capital markets to traditionally underrepresented firms,” said Citi Treasurer, Michael Verdeschi.

Situational Awareness: This move could further help  Citi as it looks to strengthen its expansion of core business activities with minority-owed broker dealers, and depository institutions. In September 2020, the bank said it would set aside more than $1 billion to support initiatives that help close the racial wealth gap and increase economic mobility for people of color. The initiative outlined four key features for Citi to build on with these including: facilitating greater access to banking and credit for communities of color, expanding access to home ownership for Black Americans, increasing focus on anti-racist practices in the financial services industry, and boosting investments in Black-owned businesses.

During the same month of the aforementioned initiative, Citi CEO Michael Corbat emphasised that addressing racism and closing the racial wealth gap is the “most critical challenge we face in creating a fair and inclusive society” and that Citi was committed to using its resources and influence to “combat the impact of racism in our economy.”