Dow +150 NASDAQ +38; the market seems to like Citigroups $7.5 billion capital infusion from Abu Dhabi. China has set up its $250 billion fund and you have to wonder if they are considering similar moves. In any case it is good to see some equity recovery.
The interest on the Citibank loan from Abu Dhabi is a whopping 11%, and was taken by Citi to shore up their portion of the subprime mortgage avalanche:
The investment by the Abu Dhabi Investment Authority will help rebuild Citigroup’s capital levels, which have been eroded by a credit crunch that began in the summer. Citigroup Chief Executive Officer and Chairman Charles Prince resigned earlier this month after the bank, which had already written off billions of dollars, said it was facing as much as $11 billion more in losses.
…
Citi is paying a higher interest rate than companies that borrow on the high-yield, or junk-bond, market; currently they pay roughly 9% for straight bonds…Yesterday, shares of Citigroup fell below $30 each for the first time since 2002, down 6.2% to $29.75 at 4 p.m.
…
Earlier this year, the company announced a plan to slash costs by, in part, eliminating about 17,000 jobs, roughly 5% of its global work force.
Well, that should help the housing market: lay off the mortgage holders!
The current U.S. financial situation is starting to make the 1981 movie Rollover look positively rosy in comparison.
Last 2 posts in Corporate control
- right-to-starve states - November 21st, 2008
- i picked the wrong day to stop using obscenities - November 17th, 2008
Last 2 posts in Economic justice
- right-to-starve states - November 21st, 2008
- First You Were Against the Bailout Before You Were For It - November 20th, 2008
If you liked this post, feel free to subscribe to our rss feeds
