Citi bails out SIVs
Citigroup, the largest U.S. bank, said it is absorbing seven off-balance-sheet structured investment vehicles, taking responsibility for their $49 billion in assets to avoid a fire sale. The SIVs were worth $87 billion in August. (MarkeWatch) Citi’s bailout of its SIVs is the largest of several similar moves by other banks, and it likely spells an end to a planned “SuperSIV” rescue fund coordinated by the U.S. Treasury. “That was really the last major outstanding piece of the SIV problem,” said analyst Peter Crane of Crane Data. (Bloomberg) Moody’s cut Citi’s credit rating last night, saying probable “sizable writedowns” ahead will weigh on the bank’s already-strained capital levels. (Reuters)
Lufthansa buys JetBlue stake
German airline Lufthansa bought a 19 percent stake in U.S. carrier JetBlue Airways for $300 million, providing JetBlue with much-needed cash. JetBlue is still struggling to recover from a Valentine’s Day storm that stranded hundreds of passengers and started a 50 percent slide in its stock price. (Bloomberg) Lufthansa is buying 42 million new shares at $7.27 each, a 16 percent premium over JetBlue’s Dec. 12 closing price. The deal gives the German airline a seat on JetBlue’s board, and potentially a greater presence at New York’s JFK airport, where JetBlue handles about 29 percent of all traffic. (
U.S.-China talks end modestly
Three days of high-level U.S.-China economic talks in Beijing ended with deals on food, drug, and tourism accords, but no real deals on opening China’s financial services market. “The biggest issue we have with China right now is economic nationalism,” said U.S. Treasury Secretary Henry Paulson, who led the U.S. delgation. (The New York Times, free registration required) China’s $200 billion sovereign investment fund, China Investment Corp., meanwhile, invited foreign money managers to bid on portfolios to manage. The fund has an estimated $70 billion to invest overseas. (MarketWatch)
The season of the goat
A rare confluence of holidays is providing a moment of inter-faith agreement in New Jersey—both Christians and Muslims want fresh goat meat. The Muslim holiday Eid al-Adha falls on Dec. 19 this year, the closest it will be to Dec. 25 in about three decades. New Jersey slaughters a third of the goats in the U.S., in a niche market filled by small mom-and-pop slaughterhouses. This year’s holiday mix is quadrupling the output at some of those processors. “We make it to the other side of Christmas, we won’t have to worry for another 30 years,” said Charles Seugling, whose family has owned a slaughterhouse in Pequannock, N.J., for 90 years. (Bloomberg)