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Citigroup (C) looks to offload $500M of credit risk associated with loans to foreign shipping...

Citigroup (C) looks to offload $500M of credit risk associated with loans to foreign shipping companies. The bank is offering investors annual coupons of 13-15% to assume the risk. If you think this sounds like a synthetic CDO you'd be right. Investors' insatiable appetite for yield is creating demand for the securities for the first time since the crisis. (Previously: CLO issuance rises anew)
Comments (4)
  • Come on down all you underfunded pension funds. You can always sue the bank five years from now.
    29 Mar 2013, 09:52 AM Reply Like
  • Great yield.

     

    Just make sure you short the shippers to hedge.
    29 Mar 2013, 12:36 PM Reply Like
  • chase the yield and jump over the cliff...follow the sheeple....we are back where we were in 2008...junk selling junk
    29 Mar 2013, 12:59 PM Reply Like
  • Is this the same thing that was reported a few days ago? It might be a good thing if there are risk-takers (I know there are lots of ill-gotten gains all over the world seeking for a place, not a refuge, to park their funds, especially in China and Russia), not your average investor-joe, who are able to handle the risk for higher returns (risk-takers know that nothing ventured, nothing gained), because it shows that the Citi of today is no more that of yesteryear, which was prone to taking all kinds of risky ventures, in their efforts to divest themselves of such risky burdens. That means Citi is being cautious and prudent, but it comes at a price, which bodes well for Citi's future. Cutting losses is the best way to get rid of painful ulcers that can bleed any institution to death

     

    There're actually nothing bad or wrong about high-risks investments, provided there's full disclosure. Banks and various financial institutions routinely offer higher-return investments, which they also caution would entail greater risks, so this is actually nothing new, although the volume is an eye-opener, more so that Citi is actually dumping them, because in the old days, they would swallow these up without batting any eye-lids, as I was aware that some of these investments carried returns north of 25% and I had always warned against them. Business seemed to be booming all over the world in those days that anyone trying to grow a new business was desperate and willing to part with attractive rates to get funds for their deals. Such people and such deals will never go away. Everything is basically supply and demand.

     

    I certainly hope that Citi knows what they're doing because it can blow up in their faces, if not properly and strictly managed. The crooks and swindlers are always attracted to high-returns investments, like bait for sharks. Risk-takers didn't obtain their funds earning a regular wage and they can be ruthless, unless you're their equal at their game. I've been there and done that.
    30 Mar 2013, 08:20 AM Reply Like
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