Posted on 11/19/2008 8:00:42 PM PST by TigerLikesRooster
Citi shares in record slump, CDS spreads widen
Bank takes on $17 billion of SIV assets, shuts another hedge fund
By Alistair Barr, MarketWatch
Last update: 4:41 p.m. EST Nov. 19, 2008
SAN FRANCISCO (MarketWatch) -- Citigroup Inc. shares slumped a record 23% Wednesday and credit-default swap spreads on its debt widened after the bank took on more than $17 billion in assets from structured investment vehicles and shut another hedge fund.
Citi shares slumped 23% to close at $6.40. The previous biggest one-day drop was 21.7% during the market collapse on Oct 19, 1987. CDS spreads on Citi were trading at more than 360 basis points during afternoon action, up from a 240 basis points yesterday, according to Phoenix Partners Group. CDS are a common type of derivative contract that pay out in the event of default. When CDS spreads widen it means investors are willing to pay more for protection against defaults. A spread of 360 basis points means an investor buying $10 million worth of protection must pay $360,000 a year.
Citi said it will purchase the final $17.4 billion of assets still in structured investment vehicles, or SIVs, that the bank advised.
(Excerpt) Read more at marketwatch.com ...
Ping!
I read an article the other day that made a persuasive case that General Electric was doomed too. Hard to believe, but GE is mostly a finance company now. Many CEOs have lost credibility because they say one thing and another happens. It is a scary time and its far from over.
Even though I was a bear from 1998 to October of this year, and short to some degree all that time, this is going way farther than is good for any of us.
Are there any CDSs that are worth anything? Didn’t Lehman’s swaps come out to be worth about 5 cents on the dollar? Are banks still holding these as assets on their books?
So many questions!
that’s a mouth-dropper, isn’t it?
Citibank is the most evil, vicious, predatory financial company on Earth. I have a bottle of champagne waiting for the day that outfit goes belly up.
I'm wondering if anyone has any real math that shows how Citi can actually survive - expecially in this climate.
It seems that they and their stakeholders are hoping for some type of miracle.
Do you have any examples you can post? I like it when evil gets stomped.
I take it that you never did business with BankOne.
Citi is run by the 3 Stooges.
I have a Citibank VISA card with a 4.99% balance transfer for the life of the balance. I paid off my other higher-interest cc debt with this transfer.
Does this offer disappear if the bank does? Just wondering.
The Feds cannot afford to let Citi unravel; too much damage.
Having said all of that, Citi will hang on until things improve, but will be broken up and sold off piecemeal.
Probably not, if the deal is exactly as you describe. You really need to examine the fine print, however. The new bank could charge whatever they want for new charges, but if there is a binding contract with no qualifications for the transfered balance, someone should be stuck for the deal. But again, it would all depend on the fine print.
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