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HG bonds: Citadel Finance places $600M of notes in bond market debut; terms

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HG bonds: Citadel Finance places $600M of notes in bond market debut; terms

Citadel Finance LLC today completed a $600 million offering of 3.375% 5-year senior notes due March 9, 2026, at T+275, or 25 bps through early whispers.

The issuer, a newly created financing vehicle incorporated in 2020, netted a first-time rating assignment of BBB- at S&P Global Ratings on March 1, 2021. The outlook is stable.

The BBB- rating and stable outlook extend across affiliated open-ended funds Citadel Kensington Global Strategies Fund Ltd. (Kensington), Citadel Kensington Global Strategies Fund II Ltd. (Kensington II), and Citadel Wellington LLC (Wellington). S&P Global Ratings today characterized Citadel Finance LLC as "core to the funds," which trade in equities, fixed income and macro, credit, commodities and quantitative strategies.

"Our ratings on Kensington and Wellington reflect the funds' successful 30-plus-year record, low leverage (as measured by our adjusted value at risk [VaR]-to-net asset value [NAV] ratio), strong portfolio diversification, and focus on investing in liquid securities. However, the funds' dependence on short-term wholesale funding, the lack of permanence in their capital base, and their demonstrated high risk appetite weigh on the ratings," S&P Global Ratings stated today.

S&P Global Ratings Inc. made the ratings assignment under expectations for Citadel to raise about $500 million from today's offering. Terms:

Issuer Citadel Finance LLC
Ratings BBB- (S&P)
Amount $600 million
Issue 144A/Reg S senior notes
Coupon 3.375%
Price 99.531
Yield 3.478%
Spread T+275
Maturity March 9, 2026
Call Make-whole T+50 until notes are callable at par from one month prior to maturity
Trade (date) March 3, 2021
Settle March 8, 2021
Bookrunners BofA/GS/UBS
Price talk Guidance T+275; IPT T+300 area
Notes Proceeds for general corporate purposes