Citigroup May Cut Preferred Convert Ratio, BofA Says (Update1)
Share | Email | Print | A A A
By Edgar Ortega
April 14 (Bloomberg) -- Citigroup Inc. is more likely to cut the conversion ratio for its preferred shares now that the common stock is trading above $3.25, according to a Bank of America Corp. analyst.
Citigroup announced plans in February to exchange up to $52.5 billion in preferred shares for common stock to replenish its equity capital. Shares of the New York-based bank closed above the planned conversion price of $3.25 yesterday for the first time since the transaction was announced on Feb. 27.
“The risk of the preferred exchange offer being repriced lower (that is, lower conversion ratios than previously indicated) has increased, in our view,” Tatyana Hube wrote in a report today.
Jon Diat, a Citigroup spokesman, didn’t immediately return a voicemail message seeking comment. The bank hasn’t set a date for the conversion.
Citigroup rose 25 cents, or 6.6 percent, to $4.05 at 12:49 p.m. in composite trading on the New York Stock Exchange. The shares have almost tripled since Feb. 27, when the U.S. government ratcheted up its effort to save Citigroup by agreeing to convert as much as $25 billion of preferred shares into common stock. As much as $27.5 billion in equity may also be exchanged.
To contact the reporter on this story: Edgar Ortega in New York at [email protected].
Last Updated: April 14, 2009 12:54 EDT
Share | Email | Print | A A A
By Edgar Ortega
April 14 (Bloomberg) -- Citigroup Inc. is more likely to cut the conversion ratio for its preferred shares now that the common stock is trading above $3.25, according to a Bank of America Corp. analyst.
Citigroup announced plans in February to exchange up to $52.5 billion in preferred shares for common stock to replenish its equity capital. Shares of the New York-based bank closed above the planned conversion price of $3.25 yesterday for the first time since the transaction was announced on Feb. 27.
“The risk of the preferred exchange offer being repriced lower (that is, lower conversion ratios than previously indicated) has increased, in our view,” Tatyana Hube wrote in a report today.
Jon Diat, a Citigroup spokesman, didn’t immediately return a voicemail message seeking comment. The bank hasn’t set a date for the conversion.
Citigroup rose 25 cents, or 6.6 percent, to $4.05 at 12:49 p.m. in composite trading on the New York Stock Exchange. The shares have almost tripled since Feb. 27, when the U.S. government ratcheted up its effort to save Citigroup by agreeing to convert as much as $25 billion of preferred shares into common stock. As much as $27.5 billion in equity may also be exchanged.
To contact the reporter on this story: Edgar Ortega in New York at [email protected].
Last Updated: April 14, 2009 12:54 EDT
