Opening Bell 05.06.09

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Citi May Need $5B - $10B (Reuters)
The US Government has asked that Citi sit on $55B in capital reserves as a result of the stress tests, which leaves them short somewhere in the neighborhood of $10B. While their ass remains remarkably less sore than that of Bank of America, it would be comforting to know how the authorities arrived at these numbers.
"Citigroup is expected to need to raise capital as insurance against any further downturn in the economy, according to the paper.
The New York bank can easily cover any shortfall and is considering several options to close that gap, the paper cited Citigroup executives as saying."
Judge Rejects Opposition To Chrysler Sale (FT)
"A US bankruptcy judge has rejected an attempt by dissident Chrysler creditors to derail the sale of the ailing carmaker's viable assets to a group of new shareholders, including Italy's Fiat."
BofA Weighs CCB Sale (FT)
The deal could land them as much as $8B; obviously desperately needed at this point. Look at it this way ladies, Lewis is learning a fundamental lesson of life: if you can't whore your way out of it, chances are good you're going to have to sell your shit.
"Bank of America is considering the sale of an $8bn stake in a leading Chinese bank within days in a move that would relieve some of the pressure on its battered balance sheet.
BofA, which is undergoing a crucial US government "stress test", is free to divest about a third of its 16.7 per cent stake in China Construction Bank on Thursday following the expiration of a lock-in period."
GM Likely To Post Loss Tomorrow Ahead Of Bankruptcy (Bloomberg)
"The Detroit automaker may lose $11.34 a share, equal to about $6.9 billion, compared with a net loss of $5.74, or $3.3 billion, for the same quarter a year ago, according to the estimates of five analysts surveyed by Bloomberg."
[...]
"Under GM's latest proposal, the U.S. would control at least 50 percent of 60 billion shares in the restructured GM and a union-run health-care fund would get 39 percent. Unsecured bondholders would get 10 percent and existing shareholders would get 1 percent, GM said. After the exchange was complete, the company would do a 100-for-1 reverse split of the shares.
If 90 percent of the bondholders don't sign up for the GM offer of 225 shares in the new automaker for each $1,000 in principal they hold by May 26, GM plans to file bankruptcy, Henderson said after unveiling the offer."
Flowers Sees Opportunity In Struggling Banks (NYT)
Long story short: Flowers is seeking to invest in US banks, but the authorities don't want PE firms holding majority interest, just minority. The United States thinks PE firms are too risky to hold banks outright, that by allowing them to do so would set the state for the next financial crisis.
REITs Seize Opportunity To Deleverage (WSJ)
"In the past six months, 16 large REITs have repurchased a cumulative $3.9 billion in face value of bonds at a discounted outlay of $2.5 billion. Among the biggest offerings was ProLogis, a warehouse developer, which used $414 million since October to buy bonds with a face value of $641 million."

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