CITIGROUP Inc, the United States bank that financed private-equity firm Terra Firma Capital Partners Ltd's purchase last year of music company EMI Group Plc, has decided not to sell about US$5 billion of loans provided for the transaction, a person familiar with the matter said.

The loans aren't marketable because of investor anxiety over EMI's future as it undergoes a reorganization orchestrated by Terra Firma Chief Executive Officer Guy Hands, said the person, who declined to be identified because the plans aren't public. Hands said in February that the turnaround was proving "a lot tougher to do than we expected."

Failure to shed the loans is a setback for Citigroup, which is trying to dispose of about US$43 billion of leveraged-buyout loans it was stuck with last year when global credit markets seized up. The EMI financing is not included in the US$12 billion of loans that the bank has agreed to sell to the buyout firms Apollo Management LP, Blackstone Group LP and TPG Inc.

That sale is scheduled to close early this week at a price of about 89 cents on the dollar, the person said. Citigroup may accept the loss to protect itself from deeper losses that would occur if prices declined further, Bloomberg News said.

Of the financing provided to EMI, about US$2.5 billion is scheduled to be refinanced by creating securities that are backed by revenue from music sales, the person said.

Citigroup plunged 21 percent in New York trading this year, partly on concern that writedowns of leveraged loans might add to US$24 billion of losses the bank has taken so far on mortgages, bonds and corporate loans that have tumbled in value.

The leveraged loan market dried up last year after losses on mortgage bonds prompted fixed-income investors to shun assets deemed risky.