Citi: Must Read on Citi Deal

Andrew Clavell has the only lucid analysis I have seen on the Abu Dhabi [sic] cash infusion for Citi. Read it. Now.


  1. Bah. I tried reading it and it was too boring.

  2. I’m not so sure I buy that: Why would Citi not say — “The financing was done at what is essentially Libor plus 1.5%.” — instead of 11% ???
    If this is the case, to release the info of the deal with an 11% handle on it is absurd.
    At best, Citi has shown themselves to be utterly investor tonedeaf. I find it hard to believe they are THAT dumb.

  3. I’m gonna have to disagree with you on whether Andrew Clavell has the only lucid analysis on Citi.
    Consider these annoying reality based factoids:
    Just 6 weeks ago (10/10/07 announcement, 10/17/07 settlement) Citi issued $3.0 B of 5.30% bonds, rated
    AA –
    On 11/20/07, one week ago, Citi issued $474m of bonds with a 5.41%.
    The Abu Dhabi deal with Citi transacts forward stock issuances in four steps from March 2010 thru September 2011, with a call option, and an 11% interim note.
    I have to ask: Why would anyone bother with that if they had access to plain old straight bond issuance at 5.4%?
    Anyone? Anyone? Bueller?

  4. Barry:
    The Abu Dhabi deal repairs tier 1 capital that has been impaired by the recent writedowns.A bond issue doesn’t do that.

  5. (Still no trackback?)
    Not only did I read it, I [blogged it]( (Among other notes: belated points to the FT Alphaville blog for coming back with a good analysis.)