According to the Financial Times, in deciding to make its investment in Citigroup the Emirate of Abu Dhabi "assumed the US government would make any investor in Citi whole". They also apparently believed that "Citi is America" as the sophisticated head of another unnamed sovereign fund in the region so carefully summed up the matter.
The article also notes that ADIA plunked down US$7.5 billion after "only three days of due dilgence".
Seems it's not only sophisticated and sober investors and bankers from the West who believe in the implicit guarantee and apparently as well the Great Magic Pumpkin, though it may be lonely in the pumpkin patch at times.
Some hopefully helpful hints:
- "Too big to fail" does not mean too big to have one's share price go down, way down.
- There appears to be a real unmet need in the region, particularly the UAE, for courses in convertible bond/security basics and structuring. And thus a significant business opportunity to be seized.
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