Citigroup to Join JPMorgan, Goldman

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Citigroup Inc. is the latest Wall Street bank is trying to make money in the reduction of liquidity in the debt markets, selling type of derivative is increasingly being used to bet on corporate bonds.

Citigroup

US lender to extend their offer so-called total revenue swaps to cover the investment-grade debt in the past few weeks, according to two people familiar with the matter, who asked not to be identified because they were not authorized to talk about it. In December, Citigroup began selling TRS indexed Markit Group Ltd. high-yield bonds.

“TPC is a natural extension of the derivatives package of products we offer our customers,” said a spokesman for Citigroup ‘Danielle Romero-Apsilos’.

Derivative financial instruments are attractive to investors because they are intended to make it easier to bet on debt, such as trade credit markets became expensive and liquidity drying up more time. Dealer inventories are reduced, as the rules introduced in order to reduce the risk, keep the banks from holding large positions needed to effectively make markets.

In a total-return swap, buyers pay the London interbank offered rate and get paid if the bond index price rises over the period of the contract. Sellers receive Libor-plus-income if the bond index price declines.

Citigroup became the eighth dealer in derivatives, joining support financial intermediaries in the US, including Goldman Sachs Group Inc., Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley, according to Markit. BNP Paribas SA, Credit Suisse Group AG and Deutsche Bank AG are also traders.

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Marc DeSplinter and John Mann led the team to trade forum, which also handles the overall revenue swaps, the people said.

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