Top Firm To Close Fund After 53% Fall In Value In Month

The Financial Times reports that Citigroup is to liquidate its Corporate Special Opportunities hedge fund, after it lost 53% of its value last month.

At its peak, the fund, which invested mainly in debt backing European private equity deals, had a net asset value of some $4.2bn. Citi has already bailed it out to the tune of $770m in credit lines and equity influsion. The fund's net asset value is currently thought to be $58m, with debt of around $800m.

Citi's stock continued to fall in New York trading Tuesday, and is currently at 13-year lows. Deutsche Bank bank analyst Michael Mayo has now speculated in a note to clients that Citi is likely to post a loss for 2009 too. The note said: 'Citi's news that it is cutting 50,000 jobs shows it is taking tough actions, but it still is not likely enough to offset declining revenues and higher credit costs'.

Finally, Bloomberg reports that Philip Falcone's Harbinger Capital is thought to be sitting on a paper loss of $200m after betting that truck and engine maker Navistar International Corp.'s stock price would rise. The stock has fallen 63% this year. The news agency also reports that Standard & Poor's has cut the counterparty ratings on two of Citadel Investment Group's biggest hedge funds. The agency has cut the ratings on the Kensington Global and Wellington funds from BBB+ to BBB.

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