Citi works with Black-owned firms on $2.5B affordable housing bond

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Citi has issued and syndicated a $2.5 billion affordable housing bond, using five Black-owned financial firms to underwrite and distribute the security to investors.

The five companies are: Blaylock Van; CastleOak Securities; Global Oak Capital Markets; Loop Capital Markets; and Security Capital Brokerage. Citigroup Global Markets also participated in the dual tranche transaction, which priced on Jan. 18 and settled on Jan. 25.

"Safe and affordable housing is an important platform for financial stability and economic mobility, yet it is scarce and too expensive in many urban areas across the country," Mark Mason, Citi's chief financial officer, said in a press release. "Citi has been the No. 1 affordable housing development lender in the U.S. for the past 11 years and this bond issuance is reflective of our commitment to increase the availability of affordable housing units within the communities we live and work."

This transaction was rated A3 by Moody's, BBB by Standard & Poor's and A by Fitch, with all three rating agencies giving it a stable outlook. It was registered with the Securities and Exchange Commission and sold on the open market.

In September 2020, Citi and the Citi Foundation announced a $1.1 billion three-year commitment, titled Action for Racial Equity. This past November, the company revealed it had already invested $1 billion, putting it on track to far exceed its original commitment.

"Security Capital is proud to have been part of this transaction," President and CEO Nathan L. Lewis said. "We truly appreciate the opportunity to partner with Citi in supporting affordable housing and look forward to future opportunities to work together."

Citi issued its first affordable housing bond in October 2020. CastleOak, Blaylock Van and Loop Capital Markets participated in that transaction for which Citi worked exclusively with a total of nine women-, veteran- and minority-owned broker-dealers.

Banks are judged on their Community Reinvestment Act performance and Citi is not the only one to step up its support in this area recently. New York Community Bank entered into a deal with the National Community Reinvestment Coalition to provide $28 billion in loans and other support to neighborhoods and small businesses. NYCB is awaiting approval to merge with Flagstar Bancorp and this agreement could help win government support for the transaction.

Overall, since 2015, Citi has worked with over 30 firms owned by minorities, women and veterans totaling more than $150 billion in bond issuance.