Citigroup near sale of $12 bln loans: sources Reuters
That is a positive move for the banking sector in general. However the devil is in the details. The discount is a mundane 90 cent on the dollar, that is not enough for the private equity group to make enough return to satisfy their hurdle rates. So the deal has to be leveraged. Maybe it is to the tune of 10 to 1 to generate satisfactory returns for private equity investors.
The $12 billion question is who is going to provide the leverage? May be Citi will provide financing? That will be fine deal making by Citi management. It would be very interesting to see the details of this deal. May be credit problems for Citi are over or it is just the begining!
That is a positive move for the banking sector in general. However the devil is in the details. The discount is a mundane 90 cent on the dollar, that is not enough for the private equity group to make enough return to satisfy their hurdle rates. So the deal has to be leveraged. Maybe it is to the tune of 10 to 1 to generate satisfactory returns for private equity investors.
The $12 billion question is who is going to provide the leverage? May be Citi will provide financing? That will be fine deal making by Citi management. It would be very interesting to see the details of this deal. May be credit problems for Citi are over or it is just the begining!
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