Citi Bolsters Social Bond Market With Biggest Housing Deal Ever

(Bloomberg) -- A series of Wall Street banks have sold social bonds recently, including a $2.5 billion offering from Citigroup Inc., the largest-ever deal of its kind from the private sector, as firms look to meet growing demand for bonds designed to make the world a better place.

Morgan Stanley borrowed $1 billion to help fund affordable housing projects earlier this month. Sales of debt for projects aimed at helping society have surged to a record as borrowers raise funds to address the pandemic.

Citigroup sold the bonds, which mature in four years, to help fund the construction, rehabilitation and preservation of affordable housing for low-and moderate-income populations in the U.S., according to a statement Friday.

“This transaction represents an important next step in expanding Citi’s commitment to ensuring that all families have access to safe and affordable housing,” Citi Chief Executive Officer Michael Corbat said in the statement.

While the bank is one of the biggest lenders to energy companies, the offering is a positive step in pushing forward with its sustainability strategy, according to James Rich, senior portfolio manager of sustainable fixed income at Aegon Asset Management.

“The use of proceeds, governance framework, and reporting in this social bond deal are consistent with industry standards, suggesting its desire for industry change may be genuine,” he said in an interview Friday.

JPMorgan Chase & Co., the biggest bank in the country by assets, issued $1 billion in green bonds last month, its initial foray into issuing the notes. In May, Citi raised $1.5 billion with a dollar-denominated green bond, its first. Meanwhile, Bank of America Corp. sold $1 billion of bonds to fund Covid-19 relief efforts in May, the first sale from a U.S. financial institution to explicitly use the proceeds for such a purpose.

Citi said it partnered exclusively with women, veteran and minority-owned broker-dealers including Blaylock Van LLC, CastleOak Securities, L.P. and Loop Capital Markets LLC to distribute the social bond offering.

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