Citigroup Preferred Security Yields 10%. Is It Too Good to Be True?

An unusual

Citigroup

preferred stock issue has an outsize current yield of about 10% at a time when most preferreds from big banks yield in the 6% to 7% range.

The $2.2 billion Citigroup Capital Series XIII issue, which is publicly traded on the NYSE as C Pr N, is a special type of preferred known as a trust preferred securities, or Trups. The Citigroup Trups were issued to the federal government in the wake of the financial crisis, and Treasury then sold them into the public markets in 2010.