Citigroup (C), a large money center bank, today said it has received $7.5 billion from Abu Dhabi Investment Authority in exchange for convertible bonds that yield 11 percent. Citigroup will use the proceeds to help rebuild its capital structure.
Citigroup is down 43 percent from its late May 2007 high (chart). The company has taken billion dollar write downs for losses on mortgage investments.
So far Citigroup has maintained its cash dividend, which currently yields almost seven percent. But more losses and write downs, job cuts and restructuring charges are on the way, so the dividend may be in jeopardy.
Be very cautious with this stock. Just because it is down significantly does not necessarily make it a great buy.