Citigroup (C) Looks to Unwind $2.2B of CLO Funds
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Price: $140.79 +0.87%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
EPS Growth %: +39.3%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
EPS Growth %: +39.3%
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Citigroup (NYSE: C) shares are trading slightly lower Friday following a report from Bloomberg suggesting the bank may seek to unwind Blackstone Group (NYSE: BX) and Purdential Investment Management collatoralized-loan obligations.
Bloomberg notes the unwinding might be on $2.2 billion of CLOs, which Citi set up for firms.
The CLOs are managed by Blackstone, Prudential Investment Management Inc. and Silvermine Capital Management LLC. Citi is seeking to unravel another in order to gain voting control of the funds.
Citi is making the move in order to dispose of assets held by Citi Holdings, according to Bloomberg. The unit was created with the blessing of CEO Vikram Pandit in 2009 as a "bad bank" for about $600 billion of troubled assets.
CLOs are effectively a pool of high-yield, high-risk or leveraged loans sliced into securities of varying risk and return. The CLOs Citi created allowed funds to purchase lines of credit, typically less liquid and not used often, and pay lower, inconsistent interest rates.
Citi set up nine CLOs between 2003 and 2005 for about $5.1 billion, data from Moody's shows.
The CLO market has bounced back since early in 2010. In January 2010, only about 53 percent of funds holding CLOs were making payments, compared with 84 percent as recent as mid-August of 2011.
Citi has moved up on the news, and is about flat Friday.
Bloomberg notes the unwinding might be on $2.2 billion of CLOs, which Citi set up for firms.
The CLOs are managed by Blackstone, Prudential Investment Management Inc. and Silvermine Capital Management LLC. Citi is seeking to unravel another in order to gain voting control of the funds.
Citi is making the move in order to dispose of assets held by Citi Holdings, according to Bloomberg. The unit was created with the blessing of CEO Vikram Pandit in 2009 as a "bad bank" for about $600 billion of troubled assets.
CLOs are effectively a pool of high-yield, high-risk or leveraged loans sliced into securities of varying risk and return. The CLOs Citi created allowed funds to purchase lines of credit, typically less liquid and not used often, and pay lower, inconsistent interest rates.
Citi set up nine CLOs between 2003 and 2005 for about $5.1 billion, data from Moody's shows.
The CLO market has bounced back since early in 2010. In January 2010, only about 53 percent of funds holding CLOs were making payments, compared with 84 percent as recent as mid-August of 2011.
Citi has moved up on the news, and is about flat Friday.
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