Citigroup in $15 Billion Medium-Term Note Programs

June 1, 2005

Cleary Gottlieb represented the agents, led by Citigroup Global Markets, in a $10 billion medium-term note program and a $5 billion retail medium-term notes program established by Citigroup Funding.  Citigroup Funding is a newly-organized, wholly-owned subsidiary of Citigroup Inc. established to provide funding to Citigroup and its subsidiaries.  All of the debt securities issued by Citigroup Funding will be fully and unconditionally guaranteed by Citigroup Inc.  As a subsidiary issuer of guaranteed securities, Citigroup Funding will not be required to file periodic reports under the Exchange Act.  Both of Citigroup Funding’s MTN programs commenced on June 1 following the effectiveness of its new $10 billion shelf registration statement on May 3.

Citigroup Funding takes the place of Citigroup Global Markets Holdings in the Citigroup corporate finance structure.  Holdings will no longer issue securities or file periodic reports under the Exchange Act.  All of Holdings’ outstanding debt securities, and that of its predecessor Salomon Smith Barney Holdings, will be fully and unconditionally guaranteed by Citigroup Inc.  Cleary is designated underwriters’ counsel for Citigroup Funding, as it was for Holdings.

Medium-term note programs allow issuers to “take down” securities from their existing shelf registration statements with a minimum of transaction costs.  These lowered costs facilitate offerings of smaller amounts of securities than would otherwise be the case, and assist issuers in managing their liabilities and cash more precisely.  Often, an entire issue is sold to a particular end purchaser (usually a pension fund, mutual fund or other institutional investor).  In many cases the end purchaser actually initiates the transaction, specifying the characteristics of the security it wants to buy and approaching the issuer (or the investment bank acting as agent for the program) to request that a security meeting those characteristics be issued.

Unlike other medium-term note transactions, the retail medium-term notes are marketed and sold to individual retail investors and offer a wide range of notes with varying terms.  Typically, an issuer offers multiple notes for sale each week, each with different characteristics such as maturities, interest rates and call features.  These weekly offers are posted to a limited selling group through a password-protected website.  At the end of the offering period, a designated purchasing agent acquires all the notes from the issuer and resells them to participating members of the selling group, who then place the notes with their retail investor clients.  A single, streamlined pricing supplement disclosing information on all notes sold in a given week is filed with the SEC and supplements the general terms of the retail medium-term notes found in the prospectus supplement and base prospectus.