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(Bloomberg) — Citigroup Inc. has been dropped from the group of banks poised to handle the biggest-ever municipal-bond transaction from Texas after the state’s attorney general’s office determined the firm “discriminates” against the firearms industry, barring it from underwriting most government borrowings in the state.
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The Texas Natural Gas Securitization Finance Corp. board met on Thursday and took action to “reconstitute” the syndicate on the $3.4 billion deal, according to Lee Deviney, executive director of the Texas Public Finance Authority, the state agency overseeing the borrowing. Citigroup had been listed in the original iteration of the underwriting firms approved by the board in May and is no longer included in the final group.
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A spokesperson for Citigroup declined to comment.
Read More: Citi Again Faces Texas Ban Over Gun Law, Whipsawing Muni Work
Citi’s removal from the deal isn’t a surprise after Attorney General Ken Paxton’s office last month said that they would no longer “approve any public security issued on or after today’s date in which Citigroup purchases or underwrites the public security,” according to a Jan. 18 letter to bond counsels written by Leslie Brock, assistant attorney general chief of the public finance division.
The $3.4 billion transaction will raise money to bail out natural gas utilities stung by financial losses from the deadly storm that struck the state in February 2021. The financing is designed to spread out the sky-high energy costs over decades to avoid burdening residents with abnormally high energy bills.
Citigroup is the second bank to be removed from the transaction. UBS Group AG was kicked off the deal in October after the state listed them among firms it considers to “boycott” the fossil fuel industry.
