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Those Citadel Bonds

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There’s been talk for months now about Citadel raising money from the capital markets—much of it centered on rumors that Citadel might go public with an initial public offering of stock, much like Fortress Investment group did earlier this month. But Citadel bigs constantly downplayed the possibility, and lots of folks thought that Citadel might not want to subject itself under the regulatory scrutiny and reporting that come with a public stock offering. But still, there was a sense that there was a lot of money out there up for grabs if Citadel wanted it, and that had to be mighty tempting.
Now they’ve decided to split the difference—hitting up the capital markets for cash in the form of an unsecured bond offering. Citadel will be able to avoid securities disclosure requirements by restricting the offering to “qualified institutional purchasers.” If you’re unfamiliar with the way this works, just think of the requirements to invest in hedge funds—income or wealth requirements meant to guarantee you are a sophisticated investors—but on steroids. (The official term for this is a “Rule 144a Offering.”)
The Financial Times has the details:

Citadel, the hedge fund group, said on Monday it would sell up to $2bn of senior unsecured debt to investors in a deal believed to be the first of its kind.
The offering of five-year notes is the latest attempt by a hedge fund group to tap public markets and establish itself as a mature financial services company. Fortress Investment Group, which has $26bn in hedge fund and private equity assets under management, filed this month for an initial public offering that would value it at $7.5bn

Citadel marks a first with debt sale [Financial Times]