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Citigroup to sell US$12bn in leveraged loans, bonds

Citigroup Inc is close to a deal to unload US$12 billion in leveraged loans and bonds to a group of private equity firms, the Wall Street Journal reported on its Web site late on Tuesday.

Citigroup would sell the debt to the firms — including Apollo Management, TPG and Blackstone Group — for an average price slightly below US$0.90, the WSJ reported, citing unnamed people who were briefed on the deal.

The bank hopes to complete the deal by the time it reports first-quarter results next Friday, the report said.

Citigroup representatives did not immediately return a call from reporters seeking comment. WSJ said a Citigroup spokesman declined to comment, and officials from the buyout firms weren’t immediately available.

Citigroup reported holding about US$43 billion of the leveraged loans as of Dec. 31. The bank issued the debt to help finance leveraged buyouts, but when demand for the risky bonds and loans dried up last summer, the bank was left holding billions of dollars in unwanted debt.

Wall Street firms have suffered billions of dollars in write-downs to reflect the diminished value of such loans. More losses are expected when banks report their first-quarter results stating next week.

Citigroup chief executive Vikram Pandit has said ridding the bank of risky assets like leveraged loans and subprime mortgages is a top priority.
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