Citigroup to Sell $12 Billion of FDIC-Backed Bonds

[Idealism]

Source: Bloomberg

Jan. 23 (Bloomberg) -- Citigroup Inc. plans to sell $12 billion of notes guaranteed by the Federal Deposit Insurance Corp. as Chief Executive Officer Vikram Pandit’s tries to bolster capital and save the bank from insolvency.

The sale would be the biggest offering of debt backed by the FDIC since banks began using the government’s Temporary Liquidity Guarantee Program on Nov. 25, according to data compiled by Bloomberg. The offering by Citigroup and its Citigroup Funding unit would surpass GE Capital Corp.’s $10 billion sale on Jan. 5.

Dwindling capital and a sinking stock price has already forced Pandit to take $45 billion in cash from the U.S. government and abandon the bank’s decade-old strategy of selling multiple financial services under one roof. Citigroup is now returning to the FDIC program for the first time since Dec. 4 as $42.2 billion of debt matures this year, Bloomberg data show.

“A lot of it is to refinance existing debt maturities,” said Joe Scott, a banking industry analyst at Fitch Ratings in New York. “It helps them maintain adequate liquidity, and it’s part of maintaining the viability of a very systemically important institution.”

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=autqFMJezyUU

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Citi is scrambling to raise capital, after having their stock price tank 30% this past week and a half. They are on the verge- if not already- of insolvency. Nationalization looks like a real possibility.

[bemildred]

1. Tsk, who knew that over-leveraging could lead to this sort of trouble?

Has this sort of thing ever happened before?
:sarcasm:

[Idealism]

2. "Nobody saw this coming."

Except those of us who did, and who shook our heads wondering why no one else saw it.

[dixiegrrrrl]

3. "has already forced Pandit to take $45 billion in cash from the U.S. government "?

FORCED ?????

I have dwindling capital....can I be forced to take gov't money?


Jay-sus...dump that black hole of a bank already......

[htuttle]

4. I talked to my brother the Republican bond broker the other day

In the course of our conversation, I asked him whether they were swimming in bailout money like everyone else.

He said, "No", they hadn't gotten any bailout funding.

I suggested that they hadn't done badly enough to deserve it. Next time, just fuck up really bad, and THEN you'll be rolling in the dough.

Judging by the silence on the other end of the phone, I think our conversations will be a bit different from now on...