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Citigroup Dives Into Sterling Bond Market Ahead of Brexit Summit

Priscila Azevedo Rocha

(Bloomberg) -- Citigroup Inc. is set to price its second sterling bond this year, after rushing into the market before a European Union meeting that will be key for Brexit.

The lender offered the previously unannounced 650 million pound ($833 million) bond just a day after reporting better-than-expected earnings, and as U.K. and EU negotiators seek to hammer out a Brexit accord before a summit starting on Thursday. Optimism that a deal can be reached has bolstered the pound and U.K. assets this week.

We “wanted to get ahead of the EU summit given the recent positive tone,” said Tim Michael, a Citigroup bond syndicate managing director.

The U.S. bank was able to tighten pricing on the seven-year note by about 10 basis points to 140 basis points above gilts at final terms, Michael said. Citi is the sole bookrunner on the deal.

READ MORE: Citigroup GBP650m 7Y UKT+140

The offering came amid varying news reports that suggested the Brexit talks were either close to success or near collapse. The pound swung between gains and losses as U.K. Prime Minister Boris Johnson sought a deal that can satisfy EU leaders as well as garnering support from divided U.K. lawmakers ahead of the country’s planned Oct. 31 departure from the EU.

Citigroup last sold a syndicated sterling note in January after an almost 10-year absence. It priced the 750 million-pound five-year bond at 175 basis points over gilts. Those notes have since tightened by more than 50 basis points, according to pricing source CBBT.

To contact the reporter on this story: Priscila Azevedo Rocha in London at pazevedoroch@bloomberg.net

To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, Neil Denslow

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