Certain financial institutions have been termed "zombie banks" These are banks that exist, but are not alive in the truest sense. Now we have a zombie bank which may have zombie preferreds.
The Citi exchange has finally closed. Surprisingly, the prices of CprP and CprM have not declines appreciably. In fact, their prices have climbed. It appears as though the shareholder vote to permanently wipe out the dividends in Citi non-cumulative preferred shares has failed (mostly due to poor equity holder participation). It could be that some are speculating that C will now pay dividends on its preferred equity shares. Don't hold your breath. Others may be betting on an exchange with sweeter terms. Don't bet the farm. Chances are that C will simply suspend non-cumulative preferred dividends and equity dividends until it gets enough participation.
The bottom line is that paying the dividends is very unlikely. Tune in tomorrow for the true state of leverage in the U.S.
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