Citigroup in talks to sell junk debt

Citigroup Inc. is in talks to sell $12 billion of junk-grade corporate loans to Apollo Management, Blackstone Group 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 part of $43 billion of leveraged-buyout debt that Citigroup was stuck with last year after credit markets froze.

The company, the biggest U.S. bank as measured by assets, could complete the sale by next week, when it is expected to report first-quarter results. The loans reportedly could fetch about 90 cents on the dollar.

Citigroup is selling assets to reduce risks on its $2.2-trillion balance sheet after large write-downs of mortgage-related holdings depleted the company’s capital.

Spokesmen for Citigroup and Apollo declined to comment. Blackstone and TPG representatives didn’t respond to messages seeking comment.