Abu Dhabi to infuse $7.5 billion into Citigroup

Abu Dhabi to infuse $7.5 billion into Citigroup

After the infusion of $7.5 billion, ADIA will be the largest shareholder.  I wonder if Prince is going to have ego problems with this investment. 

Citibank is paying 11% interest rate.  That's right it's higher than the junk-bond rate.  Citi's tier 1 capital is below 7.5% so it needs to get capital in any way it can. 

Looks like Oil countries and China are taking the lead in everything these days. 

 

In exchange for its investment, ADIA will receive convertible stock in Citigroup yielding 11% annually. The shares are required to be converted into common stock at a conversion price of between $31.83 and $37.24 a share over a period of time between March 2010 and September 2011. The investment, which came together in about a week, is expected to close within the next several days.

Citi is paying a higher interest rate than companies that borrow on the high-yield, or junk-bond, market; currently they pay roughly 9% for straight bonds. Typically, convertible bonds pay lower interest rates than straight bonds, although a particular bond's structure could affect the interest rate paid.

 

http://online.wsj.com/article/SB119613039399104832.html?mod=hps_us_whats_news