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Bloomberg
Citigroup Inc is underwriting a $1.2 billion bond sale for the Dallas Fort Worth International Airport, the largest deal it has managed since reentering the Texas municipal-bond market after being temporarily sidelined last year over the bank’s firearms policy.
The transaction would be a major win for the bank’s public finance business, which has seen its standing in the Lone Star State slide after a GOP law sought to keep companies that “discriminate†against firearms entities from working in Texas. Citi, which limits its business with gun retailers but has repeatedly said it complies with the law, has only underwritten four Texas deals amounting to $216 million since the legislation went into effect in September.
The bank was ranked as the 22nd biggest underwriter of Texas municipal-bond deals over the seven-month period ended on March 31, down 17 slots from the same period a year earlier, according to data compiled by Bloomberg. Meanwhile other large banks including Bank of America Corp, Goldman Sachs Group Inc and JPMorgan Chase & Co haven’t underwritten a bond deal by a Texas city or the state during that time.
It hasn’t been easy for Citigroup to rebuild its business in the state. It lost two major bankers, Mario Carrasco and Mark Tarpley, to competitors. Even though Citi provided a written verification of its adherence to the law, it has been accused of not being able to comply by industry group National Shooting Sports Foundation. The group also pleaded its case to the Texas Attorney General’s office, which oversees bond deals.
Citigroup has repeatedly said it doesn’t see its policies as violating Texas’s new law. The bank “simply requires our clients to use best practices when selling firearms,†it said in a June blogpost.
Meanwhile, the DFW Airport is in the midst of a borrowing spree. It plans to sell $3.1 billion of debt between the 2022 and 2025 fiscal years in part to help fund a $5.9 billion capital program designed to equip the facility to support more passengers, according to investor roadshow documents.
The population of the DFW area is expected to surpass that of Chicago’s by about 2033, according to the documents.
The $1.2 billion deal, slated to price as early as this week, is federally taxable. Its proceeds will be used to finance improvements to the airport and make a payment to a reserve fund, the preliminary offering documents say.