Citigroup Dumps Leveraged Loans for $10 Billion
From a person breifed on the matter, who wouldn't be identified because the negotiations are private...
Reeling from $24 billion of writedowns that helped depress its shares to less than half the 2000 high of $54.76,
Sillybank AKA Citigroup is planning to sell $12 billion of leveraged loans at a 15% loss to Apollo Management, Blackstone Group and TPG.
Moving Citigroup's $43 billion of leveraged loans off its books has been a high priority.
The sale to the private equity firms would shield the bank from further declines in the value of the debt,
The leveraged loan market seized up last year after losses on mortgage bonds prompted fixed-income investors to shun assets deemed risky creating a $200 Billion logjam in unsold toxic debt.
Leveraged loans are made to companies with credit ratings below investment grade, or junk (55% of all US corporate debt.)
According to a leveraged loan index from Credit Suisse, leveraged loans traded at an average of 87.36 cents on the dollar last month. In February 2007, they traded at an average of 100.11 cents.
The three firms have agreed to pay in the mid-80 cents on the dollar for the Citigroup loans.
Apollo is expected to buy about half the loans, while TPG and Blackstone will acquire the remainder.
Hattip to Bloomberg and IHT
Reeling from $24 billion of writedowns that helped depress its shares to less than half the 2000 high of $54.76,
Sillybank AKA Citigroup is planning to sell $12 billion of leveraged loans at a 15% loss to Apollo Management, Blackstone Group and TPG.
Moving Citigroup's $43 billion of leveraged loans off its books has been a high priority.
The sale to the private equity firms would shield the bank from further declines in the value of the debt,
The leveraged loan market seized up last year after losses on mortgage bonds prompted fixed-income investors to shun assets deemed risky creating a $200 Billion logjam in unsold toxic debt.
Leveraged loans are made to companies with credit ratings below investment grade, or junk (55% of all US corporate debt.)
According to a leveraged loan index from Credit Suisse, leveraged loans traded at an average of 87.36 cents on the dollar last month. In February 2007, they traded at an average of 100.11 cents.
The three firms have agreed to pay in the mid-80 cents on the dollar for the Citigroup loans.
Apollo is expected to buy about half the loans, while TPG and Blackstone will acquire the remainder.
Hattip to Bloomberg and IHT
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