Citigroup (NYSE: C) said it will not issue any additional notes for three of its exchange traded notes (ETNs). The Citi ETNs subject to the creation suspensions are the C-Tracks on Citi Volatility Index ETN (NYSEArca: CVOL), C-Tracks ETNs linked to the Miller/Howard MLP Fundamental Index (NYSEArca: MLPC) and the C-Tracks ETN Miller/Howard Strategic Dividend Reinvestor (NYSEArca: DIVC).
Investors should be aware that ETNs are not exchange traded funds. The C-Tracks ETNs are subject to the credit risk of Citigroup, the underwriting bank. If Citigroup defaults on its obligations, an investor could lose some or all of his or her investment. Additionally, any changes to Citigroup’s credit rating may affect the ETN’s value.
“Citigroup Inc. expects that its affiliate Citigroup Global Markets Inc. (“CGMI”) may continue to sell any of these exchange-traded notes that it now holds or in the future may acquire,” according to a statement issued by Citigroup.
“Due to market supply and demand, the price of the exchange-traded notes may trade at a premium above their closing or intraday indicative value. Any such premium may subsequently decrease at any time and for any reason, resulting in financial loss to sellers who paid this premium,” added New York-based Citi.
DIVC tries to reflect the performance of the Miller/Howard Strategic Dividend Index, which is comprised of 30 companies that equally weighted and selected based on certain quantitative fundamental factors such as dividend yield, expected growth of dividend yield, market valuation relative to book value, return on invested capital relative to price-to-earnings ratio and trailing 26-week stock price momentum.