The last time a heavyweight Gulf investor injected cash into Citigroup through a convertible bond issue it proved one of the canniest investments in history. So it should be no surprise that shares in the US bank rallied 3 per cent in pre-market trading today after last night’s disclosure that it has raised $7.5 billion in fresh capital from the Abu Dhabi Investment Authority(ADIA).

But ADIA will struggle to replicate the success of its Middle Eastern predecessor. Saudi Arabia’s Prince Alwaleed bin Talal picked up $590 million of convertible stock in Citigroup, then Citicorp, on the day US troops began their ground war against Iraq in January 2001, when the shares were trading beneath $2. Earlier this decade, the shares breached $50.

Coupled with yesterday’s announcement of a second extensive round of job cuts, ADIA’s interest comes as another welcome sign that Citgroup, even without a chief executive, is taking steps to tackle its woes. But the 11 per cent coupon that Citigroup is paying on ADIA’s paper says it all: that level suggests America’s biggest bank is unable to find capital on better terms anywhere else.

That means that, even at this morning’s $31.75, it is only the boldest investor that follows ADIA in.

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