Citigroup (C) announced that it has committed to provide a support facility that will resolve uncertainties regarding senior debt repayment currently facing the Citi-advised Structured Investment Vehicles (“SIVs”).
Citi will consolidate the SIVs’ assets and liabilities onto its balance sheet under applicable accounting rules.
Given the high credit quality of the SIV assets, Citi’s credit exposure under its commitment is substantially limited. Approximately 54% of the SIV assets are rated triple-A and 43% double-A by Moody’s, with no direct exposure to sub-prime assets and immaterial indirect sub-prime exposure of $51 million
Taking into account this commitment, Citi still expects to return to its targeted capital ratios by the end of the second quarter of 2008
Not the best news the new management could have released just after moving into the corner offices.
Douglas A. McIntyre
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