It looks like government-sponsored Citigroup has ambled back to the racetrack, cash in hand, ready to put big bucks down on Long Nose in the third.

Felix Salmon walks us through Citigroup's latest gamble:

Warner Chilcott is paying $3.1 billion to buy the drugs business of Procter & Gamble. How much of that is its own money, and how much is debt? In the wake of the blowup of so many leveraged loans, one might expect the proportion of the sale price funded by banks to be low. After all, the banks don’t seem to be very keen to lend to anybody these days. But in fact, the banks are providing not half, not 75%, not even 95% of the total — they’re putting up a whopping 129% of the acquisition price.

Six banks, led by J.P. Morgan Chase & Co. and Bank of America Corp. and including Credit Suisse Group AG, Citigroup Inc., Barclays PLC and Morgan Stanley, are expected to put up as much as $4 billion in financing for the transaction. Roughly $3 billion will go toward the acquisition, with the remainder refinancing $1 billion in existing Warner Chilcott debt.

This would be the fourth-largest "leveraged loan" of 2009 in the U.S. and the largest globally for an acquisition, according to data provided by Dealogic....

A leveraged loan is typically defined as a loan made to a borrower with a credit rating below investment-grade or that already carries a good amount of debt.

So, with $45 billion in TARP funds invested in Citigroup, the federal government owns about 36% of the megabank, and yet Citigroup is once again making bets that helped get into doo-doo so deep that the federal government is now a major owner. Remind me: Why was TARP created in the first place?

Image by Flickr user Thomas Hawk used under a Creative Commons license.