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OK, so they payed $500M about two years early, right? That's very bad for your cash flow, and you lose 2 years worth of interest from that, but in the long run

OK, so they payed $500M about two years early, right? That's very bad for your cash flow, and you lose 2 years worth of interest from that, but in the long run, citibank isn't $500M poorer, right? I'm trying to understand what the real financial impact is. Interest rates aren't very high right now, so can maybe a few percent of the $500M per year? Regarding the UI issue: Not only is it bad that the user interface is weird, but that approval seems to use the same bad UI as entering the data. The approval stage really needs a line like "this will result in a $ X being sent out on $Date to $Recipient".

civil_engineer 6y ago
Citi accidentally transferred the very real risk of default from the creditor to themselves. Revlon bonds trading at 42 cents on the dollar... So, you could say that Citi is out 58% of $500M today. Edit: The 'creditor' in this case is composed of 10 investment advisory firms, who, at one point, thought the interest payments were a good deal for them. But, rest assured that they are quite pleased to be made whole on their bad investment. Source: https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...
jdsully 6y ago
The debt was trading at nearly $0.50 on the dollar because it was questionable whether Revlon could pay. So the funds got a very nice payday.
deleted 6y ago
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reverend_gonzo 6y ago
Not quite. They paid on behalf of of Revlon which is unable to pay. Effectively, Citibank bought a 500m loan at par when its trading at 43c to the dollar. So Citi just gave the lenders a little over $250m and now is stuck with a non performing loan.
Frost1x 6y ago
The sort of financial gymnastics all these groups participating in hoping to leech money off gambles in the structural system vs creating real value makes it difficult for me to have sympathy for any of the parties involved gambling on what will happen. It's like playing poker and you decided to flip one of accidentally showed your hand. Sorry, but you already joined passing the risk game and shamefully faulted out on the low risk scenario due to negligence.

civil_engineer 6y ago

Citi accidentally transferred the very real risk of default from the creditor to themselves. Revlon bonds trading at 42 cents on the dollar... So, you could say that Citi is out 58% of $500M today. Edit: The 'creditor' in this case is composed of 10 investment advisory firms, who, at one point, thought the interest payments were a good deal for them. But, rest assured that they are quite pleased to be made whole on their bad investment. Source: https://www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...

jdsully 6y ago

The debt was trading at nearly $0.50 on the dollar because it was questionable whether Revlon could pay. So the funds got a very nice payday.

deleted 6y ago

[deleted]

reverend_gonzo 6y ago

Not quite. They paid on behalf of of Revlon which is unable to pay. Effectively, Citibank bought a 500m loan at par when its trading at 43c to the dollar. So Citi just gave the lenders a little over $250m and now is stuck with a non performing loan.

Frost1x 6y ago

The sort of financial gymnastics all these groups participating in hoping to leech money off gambles in the structural system vs creating real value makes it difficult for me to have sympathy for any of the parties involved gambling on what will happen. It's like playing poker and you decided to flip one of accidentally showed your hand. Sorry, but you already joined passing the risk game and shamefully faulted out on the low risk scenario due to negligence.