C. C.PRN Citigroup Capital XIII 7.875% Trust Preferred Securities Loading... : Bullish and Bearish Analyst Opinions

C Pr N trades at $26.25, a premium to its $25 redemption face value, while yielding ~10%. Citi's CFO recently hinted at looking into "structural funding opportunities." If Citigroup redeems the preferred shares at the $25 par value to replace them with cheaper debt (5-6%), investors who bought at a premium will suffer immediate capital losses. Avoid buying this preferred stock at a premium, as the asymmetric downside risk of a near-term redemption outweighs the high yield. Citigroup may delay redemption indefinitely to avoid a $600 million accounting loss, allowing holders to continue collecting the 10% yield.