Citigroup offloads assets from SIVs by Finance News Bulletin

Published: 16/12/07

Citigroup has slashed the size of its stressed off-balance-sheet investment funds by more than $15bn in two months through calm side deals with some junior investors, according to populace familiar with the businessThe news that the troubled US bank has been finding ways to offload possessions from its structured investment vehicles (SIVs) without resorting to fire sales comes as Société Générale on Monday became the latest bank to proclaim a post security for its own $43bn vehicle SocGen’s decision follows similar moves by HSBC, Standard Chartered and Rabobank in the history fortnight

The moves appear probable to reduce the demand for the so-called “super-SIV”, conceived by Citigroup, Bank of America and JPMorgan with the backing of the US Treasury as a buyer of last resort for the industry that would prevent fire salesSIVs, which sell contemptible, short-term debt to invest in higher-yielding, longer term possessions, have been at the centre of the praise squeeze as investors have ditched exposure to anything tainted by US subprime mortgagesCiti on Monday refused to remark on benefit sales by its seven SIVs – all of which have been put on watch for downgrades by the rating agencies – but people familiar with the vehicles speak their dimension has been cut from $83bn at the end of September to about $66bn largely by selling pro-rata portions of a SIV’s collection of assets to investors in the most for children notes at market values Citi is also talking to some investors about directly swapping their assets for underlying assets

The SIV industry’s problems are causing headaches for US cash market funds, which are big investors in their debt store of America said on Monday that it was zigzag down its Columbia Strategic Cash Portfolio, after wounded on holdings of paper sold by SIVs The finance is an “enhanced cash” finance, a riskier form of money marketplace fund sold only to institutionsBofA has frozen money redemptions from the fund but is allowing investors to put their split of the assets into a separately managed financial records, handled by BofA

These “redemptions in kind” have reduced the assets in the finance from about $33bn two weeks ago to $12bnBofA supposed that most investors have opted to stay in the fund which will be injury down as the underyling securities mature BofA will not charge any further fees on the fund, which has a mesh asset value of 994 cents on the dollar

General Electric’s asset management component last month repaid investors in its GEAM Trust Enhanced Cash finance at 94 cents on the dollar Copyright The Financial Times Limited 2007Citigroup looks to make choice on leader - Dec-09Citi looks beyond Wall St for new leader - Dec-07Cruz ally quits at Morgan Stanley - Dec-07Ackermann turns down Citigroup job - Dec-04Paulson dismisses Citigroup converse - Dec-04Subprime disaster claims top Morgan banker - Nov-30More in this section© Copyright The monetary Times Ltd 2007 "FT" and "monetary

Visit original article: