Citigroup May Sell $12 Billion of Junk-Grade Loans, Person Says

April 8 (Bloomberg) -- Citigroup Inc. is in talks to sell $12 billion of junk-grade corporate loans to Apollo Management LP, Blackstone Group LP and TPG Inc. as part of an effort to shrink the bank's balance sheet, a person familiar with the matter said.

The loans are a portion of the $43 billion of leveraged- buyout debt Citigroup was stuck with last year after credit markets froze, said the person, who declined to be identified because the negotiations are private. The biggest U.S. bank by assets may complete the sale next week, when it reports first- quarter results, the person said. The loans may fetch about 90 cents on the dollar, the Financial Times reported earlier today.

Citigroup Chief Executive Officer Vikram Pandit is selling assets to reduce risks on the bank's $2.2 trillion balance sheet after a record fourth-quarter loss and writedowns on mortgages and bonds depleted the company's capital. Pandit is poised to dispose of more than $200 billion of the company's assets, which increased by almost $700 billion from 2005 through 2007.