March 10 (Bloomberg) -- Citigroup Inc., seeking to bolster capital after repaying bailout funds to the Treasury, is selling trust preferred securities as rising investor demand drives borrowing costs to near the lowest in almost five years.

The 30-year fixed-to-floating rate securities may initially yield about 8.875 percent, according to a person familiar with the offering who declined to be identified because terms aren't set. Citigroup plans to issue as much as $2 billion of the securities as soon as today, another person said.

Citigroup, 27 percent owned by the government, is selling the debt as borrowers sold $13.9 billion of U.S. corporate bonds yesterday, the busiest in more than a month. The New York-based bank's offering shows that liquidity is improving in the markets, which in turn will help the economy, said Daniel Fuss, vice chairman at Loomis Sayles & Co. in Boston.

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