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Gold/Mining/Energy : Enron - Natural Gas Industry -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (697)	11/26/2001 4:29:53 PM
From: Softechie	Read Replies (2) \| Respond to of 1433

Citigroup Has $2.38 Billion Less To Lose On Enron Due To Swaps 26 Nov 15:24 By Christine Richard Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Citigroup Inc. (C) is expected to extend a hand to Enron Corp. (ENE) by renegotiating a $690 million payment due Nov. 27. But investors shouldn't be concerned that the financial services giant is too exposed to the embattled energy trading company. Citigroup already may have laid off the loan and other exposure via a series of credit default swap transactions. That means more institutional investors left holding the bag if Enron isn't ultimately rescued from financial collapse by a takeover proposed by Dynegy Inc. (DYN). Over the last few years, Citigroup has entered into at least six transactions that effectively would allow the bank to lay off the equivalent of $2.384 billion in Enron exposure. Citigroup was instrumental in setting up Enron Credit Linked Notes Trust, Enron Credit Linked Notes Trust II and Yosemite Securities Trust I, which together raised $1.750 billion; Enron Sterling Credit Linked Notes Trust and Yosemite Securities Co., which raised a combined GBP325 million; and Enron Euro Credit Linked Notes Trust, which issued EUR200 million. Citigroup, which acts as the default swap counterparty to the trusts, receives the return on the portfolio of single-A-plus-or-better-rated securities, purchased with the proceeds of the offerings, in exchange for providing the payout on the Enron exposure, according to Mary Ryan, director of synthetic securities ratings at Standard & Poor's. As long as Enron remains out of bankruptcy, Citigroup continues to make payments on the notes, Ryan said. If Enron defaults, Citigroup would cease making payments to the trust. The single-A-plus-or-higher-rated securities in the trusts would go to Citigroup in exchange for the same nominal amount of now in-default Enron debt obligations. And with speculation mounting that Dynegy will reduce, or maybeeven scrap, its offer to buy Enron, the chances of a such a default-driven transfer would appear to be rising. These notes essentially are synthetic Enron debts, meaning they act like Enron bonds in many respects, but lack key components that make holders true creditors of Enron. For instance, the holders of these notes, because they don't possess actual Enron obligations - and won't unless the company defaults - are not involved in negotiations to restructure or rollover debt. It has been reported that Enron is engaged in active negotiations over the terms of its debts with creditors. The synthetic notes all carry a rating equivalent to Enron's rating of triple-B-minus from Standard & Poor's and Baa3 from Moody's Investors Service. The rating on the securities has been downgraded in recent weeks to reflect the downgrades in Enron's ratings. Citigroup officials did not respond to requests for further details on the transactions. -By Christine Richard, Dow Jones Newswires; 201-938-2189; christine.richard@dowjones.com (This story was originally published by Dow Jones Newswires) Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved