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  #1  
Old 11-27-2007, 05:21 PM
hotmark777 hotmark777 is offline
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Default How dodgy is the Citibank-Abu Dhabi deal?

Am I the only one who is smelling something extremely fishy with this? Citibank are paying 11% yield on a 7.5 billion loan, while a company which is in grave danger of going under (Countrywide) paid 7.25% in a similar deal with Bank of America? Citibank bonds currently offer 6% yields.

Why did they opt for this very expensive form of funding (for an amount far from impossible to get through other means), or is there a bigger picture or something i am not understanding?

Could the Arabs have been politcally pressured to make such a move by the Americans, and is this some kind of undercover donation? What other reasons could there be?
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  #2  
Old 11-27-2007, 05:30 PM
hawk59 hawk59 is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

read this for one POV

http://seekingalpha.com/article/5546...-interest-rate
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  #3  
Old 11-27-2007, 06:02 PM
hotmark777 hotmark777 is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

Thanks. From what i see this high coupon was designed to deduct taxes. However isnt the revenue from selling an option taxable? Thus the although the 11 percent is tax deductable, the 8 percent they receive on options is taxable so why not just pay out a 3 percent coupon?
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  #4  
Old 11-27-2007, 08:18 PM
SteveOMS SteveOMS is offline
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Default 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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  #5  
Old 11-28-2007, 05:03 AM
pig4bill pig4bill is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

[ QUOTE ]
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

[/ QUOTE ]

The CFC money will never be repaid to BofA either. [img]/images/graemlins/smile.gif[/img]
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  #6  
Old 11-30-2007, 07:26 PM
deep throat deep throat is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

You are exactly right, there is something very fishy. The reason Citi had to go to a single investor, and a foreign investor, is because they are in violation of their criminal settlement agreements signed with the NY District Attorney's Office and SEC in 2003, in return for not being prosecuted in the Enron case. This is also why they are paying 11% as they could have never raised the capital normally.

Also, reports say that when converted the securities will not exceed 4.9% ownership.... that is just window dressing at this time. If the deal was 5% or more, the Federal Reserve Board [FRB] would have to approve the deal because it's a foreign investor. They are just saying that when converted, Citi is not going to give more than 5%.

The FRB is up to their eyeballs in a huge scandal that includes Citigroup, Chase, HSBC, Bank of America, and many more major banks, plus, all the federal banking regulators, Federal Reserve, hence, the FRB had to help Citi in an attempt to keep the lid on.

The big scandal makes everything we have ever seen in the past look like child's play. To give you an idea of what that means, $915 Billion in current credit card asset backed securities on the street right now are fraudulent, and this is tiny compared to what's really going on.

As for Abu Dhabi Investment Council (ADIC), jointly owned by the Abu Dhabi Gov. and the National Bank of Abu Dhabi, the ADIC's proposed $7.5 Billion investment is in fact one co-conspirator loaning money to another co-conpsirator, both parties involved in the big conspiracy no one knows about, except a very small group, including myself.

The fish smell is going to get a whole lot worse very soon. Stay tuned.... I'll keep you up to date, unless they kill me.
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  #7  
Old 11-30-2007, 08:08 PM
DoubleDealDecker DoubleDealDecker is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

It depends on what the meaning of the word "is" is.
Basically, I agree with everything above.
IMO, the AbuDhabians got a real nice deal. They dumped off a bunch of cheap oildollars they didn't know what to do with for a real nice chunk of a world wide franchise Bank O'Money the little petro pirates can loot in the future. The U.S. government, or whatever, won't let ShitiBank go broke, and our noble AbuAllies are getting it dirt cheap. Did they hit the bottom...I don't have the foggiest idea. I do know this it definitely not ShitiBank's top.
Any further opinions on this matter, positive, negative, drunk, sober, and even vicious would be appreciated. Please discuss.
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  #8  
Old 11-30-2007, 10:19 PM
Exsubmariner Exsubmariner is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

[ QUOTE ]
The FRB is up to their eyeballs in a huge scandal that includes Citigroup, Chase, HSBC, Bank of America, and many more major banks, plus, all the federal banking regulators, Federal Reserve, hence, the FRB had to help Citi in an attempt to keep the lid on.

The big scandal makes everything we have ever seen in the past look like child's play. To give you an idea of what that means, $915 Billion in current credit card asset backed securities on the street right now are fraudulent, and this is tiny compared to what's really going on.


[/ QUOTE ]

Wait a minute. Did I just read that right? You said banks have been selling credit card asset back securities that are fraudulent on the scale of trillions of dollars?

Could you please explain a couple of things in simple terms?

First what exactly is a credit card backed asset security? To me, that sounds like debt selling. You are selling someone the debt someone else holds on a credit card? To be fraudulent this must mean that the debts are false and the cards are held by dead people or people like me have a buttload more credit card debt than they know about??????
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  #9  
Old 12-01-2007, 10:49 AM
tippy tippy is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

One day everyone is going to wake up and realize what this deal really is. Abu Dahbi didn't take a stake to make money. They got plenty of money. And there are surely better investments than a scandal ridden bank.

They took a stake for the intellectual property aspect. Oil is going to run out one day. These guys have money from the oil and they need to develop a banking system. Their future is in becoming the worlds banker, not oil supplier.

7.5Billion for the innerworkings of the worlds largest bank? Yeah that is a pretty sweet deal.

And if anyone wants to enter into the UAE or Dubai banking game, you got to pay to play. Call the 11% terms a cover charge. When do we see Citigroup opening up some Dubai branches?

And we thanked them...
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  #10  
Old 12-01-2007, 01:32 PM
centaurmyth centaurmyth is offline
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Default Re: How dodgy is the Citibank-Abu Dhabi deal?

[ QUOTE ]
They took a stake for the intellectual property aspect. ... Their future is in becoming the worlds banker, not oil supplier.


[/ QUOTE ]

Though I don't know what the current state of banking in the UAE is (2004 report), my gut reaction was similiar: What's their ulterior motive?

Agreed, this move diversifies their economic development in a time where they are radically changing banking regulation and allows them an element of control over international penetration. There is not a better investment, on that scale, for many reasons: market timing, short-term convertible nature, below the FRB radar, adding to their position, political & economic positioning, ADIA/Saudi image boost, and more I'm sure...

I wonder wtf Deep Throat is referencing when it comes down to this type/size of investment. Speculation on conspiracy theories of this scale is rampant, have anything real?

Obviously, the biggest players are re-positioning in a dramatically and rapidly changing global economic climate. But, I can't see from the sidelines if "all boats are being held up by a false high tide" as a distraction from a larger macro-economic shift out of American dominance occurring both organically and through manipulation. Sure it's possible, but without any evidence and given the circumstances, it's just an all-around shrewd move by both sides.
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