As being reported this morning, the financial giant gets a $20 billion infusion from the Treasury Department and the feds' backing on about $306 billion in loans and securities (Citigroup shoulders the first $29 billion worth of losses). Still unclear is what will be included in that $306 billion portfolio of sick assets. From David Gaffen at Marketbeat:
Various analysts have different estimates for Citi’s risky assets. Meredith Whitney of Oppenheimer puts it at $120 billion, and others have noted that the company still had $820 billion in off-balance-sheet arrangements, of which $667 billion was in mortgage-backed securities. With shares expected to rise, analysts will be watching to see if the gains erode quickly, or if this provides a boost to investor confidence that carries through to a number of different credit markets, beyond just helping Citi’s stock price. “We expect to be able to tell early-on if these actions do in fact restore investor confidence, which we have been concerned about, and could weigh on customer confidence,” writes Jason Goldberg, analyst at Barclays Capital.
Citigroup shares were up over 50 percent in premarket trading. With the stock still only trading at around $5.50 a share, the big question is how sustainable that upturn will be.