For Immediate Release
Chicago, IL – February 7, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Citigroup Inc. (C), BankUnited, Inc. (BKU), Fifth Third Bancorp (FITB), Regions Financial Corp. (RF) and Pioneer Natural Resources Company (PXD).
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Here are highlights from Wednesday’s Analyst Blog:
U.S. Treasury Offloads Citi Stake
The U.S. Treasury Department announced that it had priced an offering of Citigroup Inc.’s (C) subordinated notes. Through this, the Treasury will completely offload its holding in the company. Notably, Citi was one of the major financial organizations rescued under the government's Troubled Asset Relief Program (:TARP) for $45 billion in 2008.
The Treasury anticipates that the sale of Citi’s subordinated notes will result in proceeds worth $894 million. This will result in the U.S. taxpayers gaining an overall return of roughly $13.4 billion on the initial investment.
Earlier in 2009, the government rescued Citi by sharing the prospective losses of the company on loans worth $301 billion. In return, both the Treasury and the Federal Deposit Insurance Corp. (:FDIC) received preferred stocks that were afterwards converted into trust preferred securities. During late 2009, the loss-sharing deal was terminated by Citi, without the government incurring any loss.
As part of the cessation, the FDIC agreed to transfer $800 million worth of trust preferred securities to the Treasury. In Dec 2012, after the maturity of the debt associated with the FDIC's Temporary Liquidity Guarantee Program, the FDIC transferred the securities to the Treasury. Therefore, the Treasury now returned these securities to Citi in exchange of subordinated notes worth $894 million.
The aforementioned deal is a part of the Treasury’s incessant efforts to offload the TARP's bank investment programs, which stabilized the economy during a major financial crisis in 2008. The offloading of stake will also result in gains for taxpayers.
The Treasury’s stake-offloading initiative is a positive for Citi as it entirely removes the government overhang on the stock. Nevertheless, Citi’s core business is progressing well and the international business is gaining momentum, though the earnings in the coming quarters is expected to remain pressured following the stringent as well as uncertain regulatory environment and the shrinking of its revenue base due to the Citi Holdings business reduction.
Citi currently carries a Zacks Rank #3 (Hold). Other major banks that are performing well include BankUnited, Inc. (BKU), Fifth Third Bancorp (FITB) and Regions Financial Corp. (RF). BankUnited carries a Zacks Rank #1 (Strong Buy) and the other two hold a Zacks Rank #2 (Buy).
Pioneer Drops Barnett Shale Divestment
Texas-based Pioneer Natural Resources Company (PXD) has abandoned its plan to divest its Barnett shale properties. The assets were put up for sale in Sept 2012.
In spite of receiving an unidentified number of bids in Dec 2012, the company believes that not a single one valued the properties correctly. In view of this, Pioneer dropped its efforts to divest the properties in the Barnett shale and has retained the operatorship of these assets.
The Texas-based explorer holds a gross acreage of about 155,000 in the play, the majority of which is located in the field's wetter portions. Production in the fourth quarter of 2012 was 9,000 barrels of oil equivalent per day, of which around 55% was liquids, while the balance accounted for dry gas. Currently, Pioneer has only one rig functional in the play and intends to continue its drilling activities in the region.
Pioneer’s Barnett Shale properties were put under discontinued operations in the third quarter of 2012 due to the divestiture plans. However, with the cancellation of those plans, the financial and operating results for these properties has been reclassified as continuing operations since the fourth quarter of 2012.
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