Citigroup (C) 01 (May 08 - Nov 08)

[iam802]

I think it will move down.

Can't imagine any financial institutes doing more trading, more lending, selling more fantastic financial products in 2009.

If their deposit base does not increase, surely that will limit their ability to lend.

And same thing goes for their share price. If it can't go up, then they will incur higher cost of borrowing as well.

The next nail to be hammered into their heart... could be a downgrade from Moody or S&P.

[kennynah]

actually, it does seem plausible that C, like every other financial counters, is faced with price pressure to the downside... but seriously, how could a mere 20bil package give such a boost to the stock price last night...and what is crucial is that there was no sell off at the end of the day...

as for the tier1 capital ratio maintenance, there's also the debt market to borrow money from, fed to print money for them, treasury coffers, etc..besides the depositors money.

cost of borrowing, if not from the money market, is actually lowered now...fed's IR is at 1%... they will lend out at a premium, to mitigate their risk of lending...

however, if unemployment spikes, credit card defaults will occur...this will impact all credit issuers, like C...

[kennynah]

citi strong ya? peo-ing in premarket ...currently at ~6.23

[iam802]

Fitch cuts Citigroup's long-term rating

http://www.forbes.com/feeds/ap/2008/11/ ... 39087.html

Fitch Ratings has downgraded Citigroup Inc.'s long-term issuer default rating, but affirmed its short-term rating on the banking company.

The credit ratings agency cut the long-term rating based on expectations for a recession in the U.S. and a broader, global economic slowdown.

Citi's long-term issuer default rating was cut late Monday to a still investment-grade "A+" from "AA-." The outlook on the rating is stable, Fitch said, because of the deal Citi reached with the government Sunday evening for financial support.

The short-term issuer default rating remains "F1+."

Late Sunday, the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp., announced a plan to help Citi avoid the fate of other financial firms felled by the ongoing credit crisis.

The Treasury Department will provide Citi with an additional $20 billion, on top of an earlier investment of $25 billion. That cash will come from the government's $700 billion bank investment program aimed at providing relief for banks and in an effort to spur lending amid the economic downturn.

The Treasury and FDIC will also help guarantee potential losses on up to $306 billion of risky loans and securities backed by mortgages held by Citi. Under the agreement, Citi will assume the first $29 billion in losses on the assets. After that, the government will absorb 90 percent of the remaining losses, with Citi shouldering the other 10 percent.