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CITI Secondary - A Busted Deal?
I wrote yesterday
about my distrust of the Citibank “Exit TARP” plan. My worst fears have
been realized. At the last minute The US Treasury pulled their part of
the deal. Treasury was going to sell up to $5 billion of Citi common
this afternoon. And now they are not. The taxpayers are going to be
stuck with the shares for a long time. The plan to sell these and
another $25b next year is simply not going to happen.
It will be interesting to see the headlines from the company and
Treasury on this one. What are they going to say? Excuses
like, “Market Conditions”, Abu Dhabi did not buy”, are not going to
fly. The stock may pop tomorrow morning from the cut back in the amount
of shares sold. But there is not much upside given that there is a
mountain of shares ($30b) that are on the shelf and have a 4-Sale sign
on them.
This just out from Bloomberg. They did not like the price??? Busted.
Dec. 16 (Bloomberg) -- The U.S. Treasury Department is delaying sales of its Citigroup Inc. common stock because of the low price in the bank’s secondary offering, a person familiar with the matter said.
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http://www.americanbankingnews.com/2009/12/16/fdic-postpones-capital-req...
an absolute must read
the dollar is up because the US recession is over, newspaper says so, and so does Summer...now our hero Bernanke is on cover of Time, so everything is going to be Aok
I don't think you realize that the whole thing was choreographed. I mean, do you really believe Bove when he says the Bandit "went rogue." And do you really believe that Uncle Sam couldn't "let go" and take the loss?
Ridiculous. This is the greatest piece of choreography since Balachine. It means that the U.S. is liquidating its position in the U.S. banking industry. They must have gotten an extremely bad piece of information. Wait for a truly dire announcement.
Another little signal was sent some months ago in the U.S. government's treatment of the GM bondholders. Message? That's how they're going to treat U.S. bondholders.
And why not? Bonds are theft. The U.S. government knows that better than anyone else.
The Citi thing was just another intensification of the government liquidating its position in American society. Think Andrew Mellon's dead? By no means--he's still Secretary of the Treasury. Always has been.
Oh yes, one more thing: the dollar is still rising in Asia trading as the risk reversals crowd the exit doors.
The issue was a DISASTER!
Pandit skipped the Obama meeting on Monday because he and every senior member were courting large investors.
So we now have stock supply from Treasury at $3.25, we have today's supply at $3.15, and we have ADIA on the hook for $7.5B worth at $31.83!
Can the movie script get any better than this? I see this in the 2.70's before long and the PPT will have to work through the holidays because global contagian is lurking as well - Dubai, Greece, ...
And Mr. Krasting keeps his eye on the ball again.
Since it seems that any government for any reason can change the rules of the game, I’m going to work on getting my mortgage waived tonight in a letter to my bank:
“Dear Bank, I was thinking that my mortgage shouldn’t be a mortgage. I think it should be more like document with some suggestions for terms of payment. I’m not sure if my mortgage fits my overall lifestyle right now. And since it seems like you can change your rules, I would like to change mine. If you don’t like that idea, maybe we can compromise on another? I think that we can both solidly agree that my mortgage is “just” a few pieces of paper with words on it, and we’ll leave it at that. Please consider my request because it would make my life easier. Thanks for your time.”
The lies floating around this issue are unbelievable. This is like a junior mining pump and dump. All with gov't collusion at the highest levels. The best lie was it was 17x oversubscribed, even before the price was set. Fuck off. 17x $20 Billion is $340 Billion. Making it the biggest capitalized bank in the world. More realistically, there was no where near enough demand, which is why the price was slashed and the gov't had to cancell their sale. Instead of bragging about their profits, Treasury will likely lose a ton, and maybe, just maybe, somebody might get fired. An out and out junior mining scam.
not a lie dude
probably cause loads of naked shorts in it over the past few weeks who didn't even think a secondary could happen
UMMMMMMMMMMM.....what other ammo you got?
they cancelled their sale because they got abu dhabi. how many times i got to educate people here...can't even twist a few obvious patterns together
I'm sure you all bashed C at 1 buck too. me, i was buying there
"I'm sure you all bashed C at 1 buck too. me, i was buying there"
Gutsiest move I ever saw, Maverick......
Sure you did.
Naked shorts? $340 Billion worth? Sure. Everyone under the sun knew this issue was coming, even Dick Bove.
Abu Dhabi. What has that got to do with anything. They are in the drivers seat...because Citicorp lent Dubai $8billion. In order for Citi to get paid back at par, or somewhat higher than everyone else, Abu Dhabi is going to walk with no problems at all.
Undoubtedly they (AD) were insured.
and as always i'm the one educating people cause they don't get it
the USG has guaranteed a in the hole secondary that will the most successful in history, shorts have nothing
the usg is not selling because the abu dhabi lawsuit came up. now you will see them all negotiate . abu dhabi OWES citigroup 7.5 billion stock investment...2.5 b more than USG was gonna sell this round
lastly, it was 17 times oversubsrcibed.
"lastly, it was 17 times oversubsrcibed"
Right. How many members of the FOMC are there? I think you should lump them in together. This is not the Yahoo! pump'n'dump message board. You clicked the wrong bookmark.
One of my colleagues was asked to buy some of this today by a Citi rep. When she replied "maybe, I'll think about it and get back to you," the response was that Citi needed to know immediately. My colleague responded, "well, in that case, no." I congratulated her on a wise decision.
Thanks for your take on this Bruce. I always appreciate your insights.
"The taxpayers are going to be stuck with the shares for a long time."
Well, for as long as there is a "Citi". I think the bank that never sleeps is about to lay down for good. If they survive 2010, its Lazarus territory.
All the broken banks have miraculously pumped up share prices and issued truck loads of new stock, looks like the last one "Citi" is the rotten egg. Very fitting end to this con-job market "recovery", the engineers are laughing all the way to the bonus window.
"This should tell you a lot of what you need to know for Jan 4, 2010. ... Lock in profits from 2009 and pay the taxes in 2011."
Oh not that nonsense again. The taxes ARE NOT deferred till 2011! Estimated taxes would have to be paid within months.
For individuals, all you need do is pay an amount of (estimated) taxes equal to what you paid last year. You are then liable to pay the remainder due when you file, but no penalty will be assessed because you paid the same amount (during the year as estimated taxes) as you did the previous year.
This can be a substantial amount of additional money that remains untaxed for up to 15 months, particularly if you do sell in early Jan 2010 and have large capital gains, especially if they are short term capital gains, which are taxed at ordinary rates.
Different rules apply to corporations, professional traders etc. But there are a lot of individuals sitting on lots of paper profits who wish to take then early next year. I've noticed very little tax selling so far this year. Plus, don't forget that many people have unused capital loses that will be used to offset those gains.
Party time for many individuals.
This should tell you a lot of what you need to know for Jan 4, 2010. I believe no body is goin' do nuttin' until then. Lock in profits from 2009 and pay the taxes in 2011. It's going to be: Sell, Sell and not buy.
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