Citigroup is in talks with private equity firm Kohlberg Kravis Roberts on funding for the purchase of some of the leveraged loans on its balance sheet, the Financial Times reported on its Web site.
Citigroup has also talked to other private equity firms about such funding, the report said.
According to the FT, people close to the talks say such deals have so far proved difficult to structure.
KKR is raising money for an existing hedge fund to buy leveraged loans and other impaired debt, the report said.
Citigroup and KKR were not immediately available for comment.