Citigroup (NYSE: C) has a set of loans to music firm EMI. It had hoped to sell them as part of a $12 billion package of debt that it is unloading to several private equity firms including using Apollo and TPG. But, things at EMI have gotten so bad that buyers want the debt held out of the mix.

According to The Wall Street Journal (subscription required), "The fact that EMI's debt was pulled from the proposed sale suggests it would have attracted prices well below the upper-80s range the other loans command." The total value of the loan to EMI, made by Citi and several other banks, was $4.9 billion.

For Citi, the news has no silver lining. It will probably have to write-down a large portion of its piece of the debt in its first quarter. One of the lessons form the General Electric (NYSE: GE) earnings catastrophe is that March was a terrible month in the credit markets and many financial companies did not see it coming. Earnings for Citi and other banks and brokerages could be worse that expected, as they were at GE's financial groups.

No one should be surprised of Cit has to raise more money.

Douglas A. McIntyre is an editor at 247wallst.com.