Citigroup Admits That All Types Of Auction-Rate Securities Have Lost Value
Citigroup, the leading underwriter of auction-rate bonds since 2000, announced in its quarterly earnings report that it has taken a loss of $1.5 billion on its inventory of these securities. According to Michael Quint of Bloomberg.com, the writedown amounted to 20% of the $8.1 billion in auction-rate securities held by Citigroup at the end of 2007.
Most of the loss was in student-loan backed auction-rate securities whose value dropped $971 million. The value of municipal auction-rate debt fell $355 million while tax-exempt and other assets fell $132 million. Citigroup’s holdings of auction-rate securities were valued at $6.5 billion as of March 30, 2008.
Most other Wall Street firms are still valuing auction-rate securities at face value. UBS, however, has started writing down the value of auction-rate securities held in its customer accounts. Reports are that UBS customers are taking haircuts ranging from 3 to 30% on their auction-rate securities.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in counseling institutional and individual investors regarding their auction-rate securities investment problems. For further information, please contact us.
