Citigroup Leads Hybrid Bond Drop on Bailout Concern

Citigroup Leads Hybrid Bond Drop on Bailout Concern

(Bloomberg) -- Bond investors’ bets on bank nationalizations are hindering already reduced lending by the world’s biggest financial institutions.

The market for securities with characteristics of both debt and equity that Citigroup Inc., Bank of America Corp. and other financial companies used to bolster their capital is in freefall on concern governments will stop banks that took public cash from paying interest. The hybrids, which typically count as regulatory capital to cushion against losses, fell 11 percent last month in the U.S., more than they did in all of 2008, according to Merrill Lynch & Co. index data. Citigroup and Bank of America bonds lost as much as 34 percent of their value.

Subscribe to All American Investor via Email