Citi to the rescue of at-risk SIVs

Citigroup will bail out the seven structured investment vehicles it advises, providing the SIVs with a support facility.

Citigroup today said that it would bail out the seven structured investment vehicles it advises, providing the SIVs with a support facility.
The New York-based bank took $49 billion of SIV assets onto its balance sheets in response to possible senior debt ratings downgrades from Moody’s and Standard and Poor’s, according to a statement from Citigroup.
By shifting the SIV’s assets and liabilities, Citigroup purports to maintain the vehicles’ ratings and pursue a plan to sell the assets.
Currently, 54% of these assets are AAA-rated and 43% are AA rated by Moody’s.
Even though the liquidity of the SIV related asset-backed commercial paper and medium-term notes continues to fall, bank expects that the asset reductions should be enough to meet $35 billion in liquidity requirements through the end of next year.
Citigroup also said that it expects little or no funding requirement from the support facility.
Though Citigroup’s SIVs may have been pulled from the fire, the move may not bode well for the Super SIV the bank is organizing with Bank of America Corp. of Charlotte, N.C. and JPMorgan Chase & Co. Inc. of New York in an attempt to prevent an asset fire sale: In the last few weeks, firms that would have benefitted from the fund backed away from it, while other banks unloaded their rapidly depreciating assets.