As opportunistic funds scour the distressed market for value, Citadel Investment Group has decided to pump a $2.55 billion cash infusion into E*Trade Financial Corp. that will come in a two-part investment. Citadel will first purchase E*Trade's complete $3 billion portfolio of asset-backed securities for approximately $800 million. The firm will also purchase $1.75 billion worth of 10-year notes, paying an annual interest rate of about 12.5%. The cash investment will give Citadel a 17% stake in E*Trade.


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