Citigroup Close to Selling $12 Billion in Loans, Bonds


Citigroup, the largest U.S. bank, is close to selling about $12 billion of leveraged loans and bonds to a group of private equity firms, people familiar with the situation said on Tuesday.

Mark Lennihan

The sale would be to private equity firms including Apollo Group, Blackstone Groupand TPG, at an average price slightly below 90 cents on the dollar, the persons said.

A sale could be made final by the time Citigroup reports first-quarter results on April 18, they said.

Shares of Citigroup rose about 4 percent in extended trade on Tuesday. The shares closed regular market hours 3.4 percent lower at $23.76.

Citigroup, Apollo and TPG declined to comment. Blackstone was not immediately available for comment. The possible sale was earlier reported by the Financial Times and The Wall Street Journal. (Video: Citigroup's plan to unload billions in leveraged loans and bonds)

A sale could help New York-based Citigroup dent its exposure to leveraged loans, which totaled about $43 billion at year end. Further sales are possible, one of the people said.

Like other banks, Citigroup issued the debt to help finance leveraged buyouts. Last summer's credit crunch caused investors to stop buying much of this debt, leaving lenders stuck holding the debt on its books, often at below face value.

Last month, Oppenheimer & Co analyst Meredith Whitney estimated that 10 major investment banks, including Citigroup, had about $197 billion of leveraged lending exposure.