|
| Citi raises $5 bn through govt-backed bonds: report |
| Press Trust of India / London Sep 16, 2009, 15:50 IST |
|
Citigroup has raised $5 billion via government-backed bonds, a move which may make it difficult for the financial services major to persuade the US government to lower its 34 per cent stake in the bank, a media report says.
According to the Financial Times, Citigroup raised $5 billion through government-guaranteed bonds on Tuesday under an emergency facility that will expire in six weeks. The facility has been abandoned by most of Citi's rivals as market conditions have improved.
"Citi's move to tap the government-backed plan, introduced at the height of the crisis last year could complicate attempts by its management to persuade the government to reduce its 34 per cent stake in the bank," the daily said.
Attributing to people close to the situation, the report said Citi was in early talks with the US Treasury over a plan that would enable the company to raise capital by selling shares and enable the authorities to pare their holding.
But Citi's decision to sell two and three-year bonds backed by the Federal Deposit Insurance Corporation (FDIC) could reinforce the perception that the bank, which has received $45 billion in federal aid, is still not back to full health, the report noted.
FDIC-backed debt is cheaper to issue than normal debt because investors are prepared to accept a lower interest rate because of the government guarantee.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
