(Bloomberg) - Jefferson County, Alabama, took a step toward removing Citigroup Inc. from an upcoming $2.5 billion municipal-bond transaction after the bank announced it was shuttering its public finance division.
The county, which filed for bankruptcy in 2011, initially chose Citigroup to serve as lead manager on the sale that is set to price in January.
County commissioners held a work session on Tuesday and considered a resolution authorizing the sale of the bonds. Citigroup, set to lead the underwriting group, was no longer mentioned as an underwriter in that resolution. Instead, Raymond James Financial Inc. was named the book runner, or lead manager, for the transaction.
The county commissioners will take a formal vote on the resolution on Thursday, according to a county spokesperson.
A spokesperson for Citigroup declined to comment.
In a memo to staff last week, Citigroup executives said the public finance business is “no longer viable given our commitment to increase the firm’s overall returns.” The memo said the wind-down of the department would be complete by the end of the first quarter.
“We will continue to support our municipal clients on all pending capital issuances, including execution of pipeline transactions as well as transition to other underwriters as appropriate,” the memo said.
Citigroup has longstanding ties to Jefferson County, which was responsible for what was at the time the largest US municipal bankruptcy. The bank was the lead manager on the 2013 debt refinancing that was a key part of the county’s debt-cutting plan. The January sale will refinance those securities.
Offering documents for the $2.5 billion of sewer revenue warrants were published on Thursday, the same day Citigroup released its memo.
--With assistance from Martin Z. Braun.
By Amanda Albright and Skylar Woodhouse
