Citigroup Preparing a Debt Sell-Off
Citigroup, feeling the effects of the mortgage crisis, may sell $12 billion in debt in the near future. The problem assets will likely be purchased by private the American investment funds Apollo Management, Blackstone Group and Texas Pacific Group. This information was provided to various press outlets by informed sources. The debts will consist of high-risk leveraged loans, provided to investment companies and hedge funds at a high interest rate for speculative investment on the stock market. Demand has fallen for such loans since the mortgage crisis and so the loans are losing value.
The total value of the Citigroup leveraged loans is estimated at $43 billion. Loans of that type are estimated by Credit Suisse to be worth $0.87 per $1, while they were worth $1.01 per $1 in February. It is reported that the debt will be sold at $0.85 per $1 before April 18, when the bank will issue its quarterly report.
If the sale takes place, it will be the latest step by new Citigroup CEO Vikram Pandit's campaign to restore the bank to health. Since the end of last year, Citi has attracted about $22 billion from Asian sovereign-wealth funds, after writing off $24 billion in bad debt and losses of almost $10 billion. Citigroup stock rose 2.2 percent on the NYSE yesterday to $24.30.
www.kommersant.com
All the Article in Russian as of Apr. 10, 2008
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