California Hospital Sues Citigroup for $20M Over Variable-Rate Bonds

Tri-City Medical Center in Oceanside, Calif., is suing Citigroup for up to $20 million, claiming that the investment bank didn’t warn the hospital about the risk of refinancing debt using variable-rate bonds, according to a report by the Mercury News.

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Tri-City charges that when it refinanced $57 million in old revenue bonds in 2007, Citigroup predicted the variable-rate model would deliver an interest rate of about 3.5 percent, much less than the 6 percent rate the hospital was paying at the time, but the rate eventually exceeded 10 percent.

Read the Mercury News’ report on variable-rate bonds.

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