Citigroup close to sale of troubled debt: report

Discussion in 'Wall St. News' started by Cdntrader, Apr 8, 2008.

  1. Citigroup close to sale of troubled debt: report

    By John Letzing, MarketWatch
    Last update: 7:10 p.m. EDT April 8, 2008Print E-mail RSS Disable Live Quotes
    SAN FRANCISCO (MarketWatch) -- Citigroup Inc. is nearing a deal to sell some $12 billion in troubled debt to private equity firms for an average price of slightly less than 90 cents on the dollar, according to a report published Tuesday.

    The online edition of The Wall Street Journal reported that Citigroup originally issued the leveraged loans and bonds in hopes of passing them on to investors, only to see demand dry up with the advent of the ongoing credit crunch.

    Citigroup is now on the verge of selling the unwanted loans and bonds to buyout firms including Apollo Management, TPG and Blackstone Group, the report said, citing people familiar with the matter.

    The report said the deal would be "the largest single sale of leveraged loans in recent memory." It comes amid hope that the credit market has bottomed out and is poised for a recovery, the report said.
  2. Watch Meredith go on air tomorrow and declare how Citi will still goto $5 no matter what.
  3. Looks like futures are up on this. Could be major.
  4. Citigroup May Sell $12 Billion of Junk-Grade Loans, Person Says

    By Bradley Keoun

    April 8 (Bloomberg) -- Citigroup Inc. is in talks to sell $12 billion of junk-grade corporate loans to Apollo Management LP, Blackstone Group LP and TPG Inc. as part of an effort to shrink the bank's balance sheet, a person familiar with the matter said.

    The loans are a portion of the $43 billion of leveraged- buyout debt Citigroup was stuck with last year after credit markets froze, said the person, who declined to be identified because the negotiations are private. The biggest U.S. bank by assets may complete the sale next week, when it reports first- quarter results, the person said. The loans may fetch about 90 cents on the dollar, the Financial Times reported earlier today.

    Citigroup Chief Executive Officer Vikram Pandit is selling assets to reduce risks on the bank's $2.2 trillion balance sheet after a record fourth-quarter loss and writedowns on mortgages and bonds depleted the company's capital. Pandit is poised to dispose of more than $200 billion of the company's assets, which increased by almost $700 billion from 2005 through 2007.

    Daniel Noonan, a Citigroup spokesman, and Steven Anreder, a spokesman for Apollo, declined to comment. Spokesman for Blackstone and TPG didn't return messages seeking comment.
  5. Citigroup Close to Selling $12 Billion in Loans, Bonds

    Reuters | 08 Apr 2008 | 06:38 PM ET

    Citigroup, the largest U.S. bank, is close to selling about $12 billion of leveraged loans and bonds to a group of private equity firms, people familiar with the situation said on Tuesday.

    Mark Lennihan / AP

    The sale would be to private equity firms including Apollo Group, Blackstone Group and TPG, at an average price slightly below 90 cents on the dollar, the persons said.

    A sale could be made final by the time Citigroup reports first-quarter results on April 18, they said.

    Shares of Citigroup rose about 4 percent in extended trade on Tuesday.

    Citigroup, Apollo and TPG declined to comment. Blackstone was not immediately available for comment. The possible sale was earlier reported by the Financial Times and The Wall Street Journal.

    A sale could help New York-based Citigroup dent its exposure to leveraged loans, which totaled about $43 billion at year end. Further sales are possible, one of the people said.

    Like other banks, Citigroup issued the debt to help finance leveraged buyouts. Last summer's credit crunch caused investors to stop buying much of this debt, leaving lenders stuck holding the debt on its books, often at below face value.

    Last month, Oppenheimer & Co analyst Meredith Whitney estimated that 10 major investment banks, including Citigroup, had about $197 billion of leveraged lending exposure.

    Copyright 2008 Reuters
  6. AAA30


    So they will take a 1.2B hit on that portion of the loans will they have to Mark down the the 31 billion for an additional 3.1B hit? Has this paper already been Marked down?

    Nice to see that someone out there is buying it and that they are attempting to clean their holdings up.
  7. at an average price slightly below 90 cents on the dollar, the persons said.

    I have this awful feeling that this is how Wall St. is operating.

    "We need to unload make an offer."
    "Well, we're thinking a price slightly below 90 c on the dollar."
    "Sold. BTw, what's "that price slightly below 90c on the dollar?"
    "Ok. Where do we sign"?.
  8. hahahaha

    if it's worth 90 cents on the dollar, why the f is Citi selling it?

    reason: the Fed will backstop somebody for 100 cents on the dollar..

    taxpayer gets f'd again...
  9. troubled debt and they're getting 90 cents on the dollar for it? something doesn't smell right