Citigroup Inc. announced on February 8, 2026 that it will redeem its entire Series X preferred stock and will issue a new 6.25% non‑cumulative preferred stock, Series II, while completing several bond redemptions. The announcement marks a significant shift in the bank’s capital mix toward a more debt‑heavy structure, a move that management expects to lower the weighted‑average cost of capital (WACC).
The Series X preferred stock, which carries a 3.875% dividend, represents $2.3 billion of depositary shares. Citigroup scheduled the redemption for February 18, 2026, thereby removing a relatively low‑cost preferred equity tranche from its balance sheet and freeing up capital for future use. The redemption also reduces the bank’s preferred equity dilution risk and aligns the capital structure with regulatory capital requirements.
On February 2, 2026, Citigroup filed a Certificate of Designation to create Series II preferred stock. The offering was priced on January 27, 2026, and closed on February 3, 2026, raising $800 million in aggregate liquidation preference. The new series carries a 6.25% dividend, higher than the Series X rate, but the issuance is part of a broader strategy to replace older preferred equity with a more flexible, perpetual instrument that can be redeemed after February 15, 2031. The higher dividend is offset by the bank’s increased debt capacity, which is expected to lower overall financing costs.
In addition to the preferred equity moves, Citigroup completed several bond redemptions. A $2.5 billion redemption of notes due 2027 was announced on January 23, 2026, with the redemption executed on January 28, 2026. Earlier, a $2.75 billion redemption of notes due 2026 was announced on September 24, 2025, and the redemption closed on September 29, 2025. The bank also holds a 4.6% bond maturing March 9, 2026, with an outstanding amount of $1.5 billion. These actions demonstrate Citigroup’s active liability management program, aimed at optimizing the mix of debt maturities and coupon rates.
The combined effect of redeeming lower‑cost preferred equity, issuing a new preferred series, and reducing high‑coupon debt is to shift the capital structure toward a higher proportion of debt. While the new Series II preferred stock carries a higher dividend, the overall weighted cost of capital is projected to decline, as the bank’s debt base is expected to have a lower coupon rate than the old preferred equity. This restructuring provides Citigroup with greater flexibility for future financing, supports its strategy to return value to shareholders, and positions the bank to better manage regulatory capital buffers and market‑rate fluctuations. The move also signals management’s confidence in the bank’s ability to maintain profitability while pursuing growth initiatives.
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