Citigroup to sell 0% Pacers linked to iShares MSCI Emerging Markets

By Laura Lutz

Des Moines, Dec. 18 - Citigroup Funding Inc. plans to price zero-coupon 18-month Premium Mandatory Callable Equity-linked Securities (Pacers) linked to the shares of the iShares MSCI Emerging Markets index fund, according to an FWP filing with the Securities and Exchange Commission.

The securities will be priced at par of $10.

The securities will be subject to mandatory calls at increasing premiums if the shares close at or above their initial level at any time during three-day call periods in each of August 2008, February 2009 and August 2009. The specific call dates will be determined on the pricing date.

The call premiums are expected to be between 11.5% and 13% in August 2008, between 23% and 26% in February 2009 and between 34.5% and 39% in August 2009.

The payout at maturity will be par in cash unless, at any time during the life of the securities, the shares close below 70% of the initial level. In that case, the payout will be a number of shares equal to par divided by the initial share price.

Citigroup said it will apply to list the Pacers on the American Stock Exchange under the symbol "PUO."

The notes are expected to price in January and settle three days later.

Citigroup Global Markets is the agent.

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