ASAT Finance (Citigroup) - municipal bonds

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2008-03-12

Count of distinct funds: 3
Capital base: $1B ?
Loss: ?

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stories: co.uk, finalternatives.com

Citigroup-sponsored hedge funds are dropping like flies (and being given credit lifelines by sugar daddy Citi). In the latest, ASAT Finance and sister fund group MAT Finance have already used up $600M of emergency funding from the parent company, and have just been given another $400M to stay afloat. A Citi spokesman says:

A spokesman for Citigroup said: "Returns have been hurt by one of the most volatile periods for fixed income, in particular municipal markets, in recent memory."

"The investment from Citigroup provides the funds with additional equity capital and enough liquidity to make margin calls, continue to operate and potentially recover a portion of the decline in net asset values," the spokesman added.

Potentially recover a portion of the decline in values—that doesn't sound too optimistic. We're filing these funds under "imploded" as they likely wouldn't have made it this far without the emergency lifelines.

Numerous sources cite the funds as having total capital around $2B and assets around $15B, which would work out to about 7.5x leverage. However, the distribution between MAT and ASAT is unknown to us. If you have more information, please drop us a line.

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.