You heard it here, folks. Kiss Citigroup goodbye. Sure, we'll be accused of rumor-mongering, but really now... is it that hard to see?
Citigroup annonced today that it is issuing a $2.5 Billion 30 year bond issue, 84% of which it is underwriting itself. The yield on this baby is a whopping 6.875%. This is pretty darn close to junk status, folks. They need capital so bad they're willing to take almost all the risk of underwriting the entire issue. Give the state of the credit markets, this is a do or die, in my opinion.
When the chief exectuive of sovereign wealth fund Dubai International Capital says your going to need "a lot more money" to weather the storm... you've got problems. Just what is "a lot more money" to the guy who back in November gave Citigroup $7.5 Billion?
Let's not forget the $12.5 Billion in stock issued and sold to the Kuwait Investment Authority and Prince Alwaleed Bin Talal Alsaud of Saudi Arabia.
They've also slashed their divident by a whopping 41%.
This is a fire sale, and it's not going to do any good. Citigroup is a sinking ship. Sure, they can make the argument that they have lots of business channels and lots of cash flow. Cash flowing right out the door on the heals of the billions of dollars of bad mortgages that leveraged billions more in exotic derivative investments.
Classic train wreck if I ever saw it.
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