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.
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.