The discount on when-issued shares of Citigroup Inc. decreased today from 5% to around 1.5%.  Citigroup buyers planning to hold until Friday can buy discounted "when issued" (formerly preferred exchange) shares on the open market rather than the common shares.  They will likely convert to common shares by Friday.  As of 12 p.m. eastern, volume on when issued shares represented about 11% of total C volume.  They currently trade under symbol C.WD.

The trading discount has been weighing on the price of common Citigroup stock, helping bring it down over 3% today.  At the same time the when-issued shares should significantly lessen the blow when the exchange is complete, since many Citigroup preferred exchange participants waiting to sell their exchanged Citigroup common shares are now able to sell before that date they were to receive their shares.

Citigroup shares trade significantly under book value of $4.25 while other financial institutions trade well above book value, according to Barrons - a likely result of the Citigroup exchange offer's current effect on the common shares.