Re: How dodgy is the Citibank-Abu Dhabi deal?
There are a few big differences in the issues
1) The citi issue is a mandatory convertible to common shares and the CFC issue is not. More risk on this citi convert to the equity downside. So this isnt really a loan, its a equity issuances as the money will never be repaid in cash, just shares of Citi
2) The CFC convertible price was below market value at the time of issuances and the citi is at a varabile convertible amount but all above current market price.
3) Abu Dhabi had to sign a lockup agreement not to buy more or short C shares. BAC could have just shorted enough CFC shares to hedge their investment
SteveOMS
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