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Fitch Rates Citigroup Global Markets Funding Luxembourg's IDRs 'A' and 'F1'; Outlook Positive
October 14, 2016 / 1:58 PM / a year ago

Fitch Rates Citigroup Global Markets Funding Luxembourg's IDRs 'A' and 'F1'; Outlook Positive

(The following statement was released by the rating agency) CHICAGO, October 14 (Fitch) Fitch Ratings has assigned Long- and Short-Term Issuer Default Ratings (IDRs) of 'A'/'F1' to Citigroup Global Markets Funding Luxembourg (CGMFL) reflecting Citigroup Inc.'s ability and propensity to support CGMFL. KEY RATING DRIVERS IDRs CGMFL is a wholly-owned subsidiary of Citigroup Global Markets Limited (CGML), rated 'A'/'F1' by Fitch. CGML is Citigroup's primary international broker-dealer in the UK, headquartered in London. CGML operates globally, generating the majority of its business in the EMEA region, with the remainder coming from Asia and the Americas. CGML is designated a Material Legal Entity in the Citigroup's Resolution Plan. CGMFL is primarily a funding vehicle for CGML, issuing only structured notes and warrants to non-U.S. investors. CGFML's notes and warrants, which may be principal or non-principal-protected, are guaranteed by CGML. These securities cannot be sold to U.S. persons in the U.S. Given the parent's ability and propensity to support CGMFL, Fitch has equalized the ratings with the parent. Fitch views any required support that may be needed would be immaterial relative to the ability of the parent to provide it. CGMFL is the only structured note issuer of CGML, and accounts for only approximately 1.5% of total funding for Citigroup. Further, Fitch believes that a potential default by this entity would constitute huge reputational risk to the parent. Lastly, Fitch believes there is a high level of management and operational integration that provides support for equalizing the rating with CGML. CGMFL's Positive Rating Outlook is in line with its parent's Rating Outlook. The Outlook on CGML, a Material Legal Entity under Citigroup's Resolution Plan, reflects the likelihood of internal total loss-absorbing capacity (TLAC) as required by the Financial Stability Board (FSB). The Positive Outlook reflects the agency's belief that the internal TLAC of material international operating companies will likely be large enough to meet and exceed Pillar 1 capital requirements and will then be sufficient to recapitalize them. A one notch upgrade is likely once Fitch has sufficient clarity on additional disclosure on the pre-positioning of internal TLAC and its sufficiency in size to cover a default of senior operating company liabilities. Sufficient clarity may, however, take longer to come through than the typical outlook horizon of one to two years. SENIOR DEBT The market-linked debt rating is driven by the guarantee from CGML, and therefore equalized with CGML's IDR. Fitch only rates principal-protected notes, which solely addresses the credit risk of the issuer or guarantor, in this case, CGML. Fitch appends a subscript (emr) to its market-linked note ratings to highlight the variability of the coupon created by the embedded market risk and is excluded from the rating assigned to the note. Fitch would not assign ratings to non-principal protected notes that are issued out of CGMFL. Non-principal protected notes are subject to the lack of repayment of principal at maturity. RATING SENSITIVITIES IDRs CGMFL's ratings would be sensitive to changes in Fitch's view of the relative importance of this entity to CGML or Citigroup, Inc. The ratings may also be impacted by changes in the IDRs of CGML. Further, if CGMFL were to issue any non-guaranteed securities, Fitch may consider notching the rating down from CGML. If CGML's Rating Outlook is revised to Stable, there would be no impact to CGMFL's IDRs; however, its Rating Outlook would also be similarly revised to Stable. SENIOR DEBT The market-linked senior debt rating would be sensitive to any changes in CGML's ratings and/or any changes in the Deed of Guarantee provided by the parent. Further, if debt is issued by CGMFL, and is not covered by the Deed of Guarantee from the parent, its ratings would be notched down from its parent. Fitch has assigned the following rating: Citigroup Global Markets Funding Luxembourg --Long-Term IDR 'A'; Outlook Positive; --Short-Term IDR 'F1'. Fitch has affirmed the following rating: Citigroup Global Markets Funding Luxembourg --Senior unsecured at 'A' (emr). Contact: Primary Analyst Julie Solar Senior Director +1-312-368-3153 Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60602 Secondary Analyst Meghan Neenan Senior Director +1-212-908-0121 Committee Chairperson Christopher Wolfe Managing Director +1-212-908-0771 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 15 Jul 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1013131 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. 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Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. 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