The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Bond Outlook November 28th

Another “Tuesday effect”, with Abu Dhabi buying into Citigroup, does not mean a change of fortunes. Now another securities class, “auction bonds” is contributing to the loss of confidence.

Bond Outlook [by bridport & cie, November 28th 2007]

The “Tuesday effect” has struck again, as if, every week, the mood of stock markets (but not of bond markets) turns momentarily positive, usually on the basis of some item of good news and despite the black picture overall. This week the “good news” was the USD 7.5 billion purchase of hybrid bonds in Citigroup by the Abu Dhabi Investment Authority suggesting that confidence in financial institutions may be returning. The deal is complicated, with the ADIA facing mandatory conversion, and the conversion ratio decreasing as Citigroup’s share price increases, however, does a yield of 11% suggest a return of confidence? Is there not an element of desperation (one analyst estimates the deal will reduce earnings by about 5% next year) in the world’s biggest bank accepting a Mideast sovereign wealth fund as its new largest shareholder with scarcely a murmur from US authorities? The authorities only require approval for a 5% holding -- ADIA is at 4.9%, and largest shareholder until this deal was Prince Alwaleed, not officially a sovereign wealth fund, but in Saudi there is little difference between state and ruling family).

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree