Citi announced the issuance of its first affordable housing bond. Officials said the transaction features a $2.5 billion, four-year non-call, three-year fixed-to-floating rate note issuance and is the largest-ever social bond from an issuer in the private sector.
The proceeds will finance the construction, rehabilitation, and preservation of quality affordable housing for low-and moderate-income populations in the United States, according to company officials.
It’s estimated that the large bond could help produce as many as 12,600 affordable housing units.
“As the largest affordable housing lender in the United States, Citi is a leader in the effort to increase the availability of affordable rental housing for the nation’s workforce and most vulnerable populations,” said Citi CEO Michael Corbat. “This transaction represents an important next step in expanding Citi’s commitment to ensuring that all families have access to safe and affordable housing.”
In 2019, Citi Community Capital—the unit through which the firm finances all types of affordable housing and community development projects—reported over $6 billion in lending for affordable rental housing projects. Partnering with developers, nonprofit organizations, and local governments, Citi has helped create or preserve nearly 488,000 affordable housing units over the past decade.
As part of the new transaction, Citi worked exclusively with women, veteran, and minority-owned broker-dealers, including active bookrunners Blaylock Van; CastleOak Securities, Loop Capital Markets, and Samuel A. Ramirez & Co. Academy Securities, Great Pacific Securities, MFR Securities, Roberts & Ryan Investments, and Siebert Williams Shank & Co. also served as co-managers on the transaction.
The move builds on a key objective of Citi’s Action for Racial Equity, a far-reaching effort to provide more than $1 billion in strategic value for communities of color to help close the racial wealth gap, said the company. Through the initiative, Citi has pledged an additional $550 million to support homeownership for people of color and develop affordable housing with minority developers over the next three years.
In conjunction with the bond offering, Citi unveiled a new Social Bond Framework for Affordable Housing to detail how projects and assets will be selected. Citi said it will also publish an affordable housing bond report detailing use of funds and allocation.
“Our Social Bond Framework for Affordable Housing and accompanying inaugural offering strengthens our partnerships with clients around the world and responds to increasing investor interest in social bonds and broader ESG [environmental, social, and governance] initiatives,” said Michael Verdeschi, treasurer of Citi.
Richard Gerwitz, co-head of Citi Community Capital, added, “The pressure on families and individuals to be able to make rent and mortgage payments has increased, with the pandemic exacerbating that stress. This unique offering will provide funding to help confront the challenges we face as a country in providing safe, affordable housing options for the communities where we work and live.”
