The Citi Deal: Was the Media's Interpretation of the Deal Just Plain Wrong?

I must admit, when I saw the barebones characteristics of the Citi-Abu Dhabi deal, I thought it was an "incredible" sweetheart deal for Ahu Dhabi. 11% yield on a convert just seemed outlandish given that the media was comparing this deal to straight junk bonds that weren't convertible and were at about 9% yields.

It appears the media had misrepresented the underlying economics of the deal and the appropriate comparisons that one should make when analyzing this deal.

Portfolio Magazine's Felix Salmon puts it into perspective well here.

Salmon based his perspectives on a post by another blogger who outline the underlying economics and tradeoffs to arrive at 11% being reasonable.