Citi may look to issue convertibles: investors

NEW YORK (Reuters) - Citigroup Inc (C.N) may look to issue convertible securities as it considers raising capital to exit the government's Troubled Asset Relief Program, investors said.

The convertibles could be mandatory convertible preferred securities, which are preferred shares that mandatorily convert in the future to common stock. Citigroup has issued these securities to raise equity before, the investors noted.

The convertible securities might help the bank tap a broader array of investors to raise capital.

Some investors might be drawn to the dividend or interest that convertibles pay, which can help reduce the investor's downside, two portfolio managers said. Neither had spoken to the bank about the securities, and both asked not to be named because they were not authorized to speak to the press.

Citigroup plans to issue about $15 billion of common stock to help repay money borrowed under TARP, sources said earlier on Thursday.

(Reporting by Dan Wilchins; editing by John Wallace)