September 15, 2009
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News: Another Round of Federal Bail Out
Another round of federal bailout money saw two of the largest credit card companies selling off at least $20.6 million in credit debt. Both CitiGroup and JP Morgan Chase & Co. lead the way in the largest sale since the federal program began earlier this year in February. According to Bloomberg, CitiGroup sold $5 billion of government-guaranteed securities, and for the first such offering since May, JPMorgan sold $1.5 billion. Royal Dutch Shell Plc with its Shell Oil credit cards also sold $5 billion in the sale. The sale comes in the wake of the one year anniversary of the nation's largest U.S. bankruptcy filing by Lehman Brothers which caused a worldwide disaster. According to experts, the country is seeing an increased demand for the sale of good credit card and other loan debt which is having a positive result by lowering borrowing costs.
In the sale, JP Morgan Chase doubled its original offering of a variety of credit debt due in January 2015 at 3.75 percent. Chase will also be selling $2 billion in credit card debt. CitiGroup's debt has a higher return currently paying at 5.4 percent. CitiGroup, the third largest financial institution based on assets, sold $1.5 billion of two debt of 1.25 percent notes and $1 billion of three year debt. Credit card and financial organizations weren't the only firms selling debt; there were several other corporations at the bargaining table. Among those selling U.S. debt included Cenovus Energy Inc., an oil and refining company; Concho Resources Inc., an oil and natural gas producer; Avista Corp, an electricity and natural gas provider; home construction company, Toll Brothers Inc; an investment company, SM Investments Corp; and a German bank and financial organization, the Landwirtschaftliche Rentenbank.
The nation's largest bank by assets, Bank of America Corp., wasn't a participant in sale. It's not known why, but the available of higher amounts of prime credit card debt being offered for sale is a welcomed sign by most accounts. Experts have been cautious but optimistic recently in saying that the recession is at its end. Statistics have also indicated a modest increase in consumer spending for the month of August which would be a sign in the right direction.