SIV Managers Take Action
An article published by Bloomberg takes a look at MBIA’s recent collapse of its Hudson Thames SIV as bond insurers are feeling the heat. According to the article:
- MBIA Inc., the largest bond insurer, is winding down its structured investment vehicle after failing to find buyers for the SIV’s short-term debt since August, Chief Financial Officer Chuck Chaplin said.
- MBIA has shrunk its Hudson Thames Capital SIV to about $400 million from $2 billion through asset sales to bondholders, Chaplin said.
- SIVs, which borrow short term debt to buy higher yielding assets, are collapsing as contagion from U.S. subprime mortgage defaults drives investors away from asset-backed debt.
- Most banks and asset managers that operate SIVs are working on plans to restructure the companies and don’t expect the business model to survive, Moody’s Investors Service analysts said earlier this month. The New York-based ratings company said today that HSBC’s SIV restructuring doesn’t affect the bank’s credit ratings.
It’s amazing how a company can depend so greatly on the liquidity of the currency and the confidence of the consumer. As soon as these problems arise, any company dealing with credit- (or home equity line of credit loans) companies which usually strive- begin feeling the heat to keep their heads above water. It will be interesting to see how long this crisis lasts, and who will be left when it is over.
November 29, 2007 | Filed Under Home Equity Line of Credit
Comments
Leave a Reply
You must be logged in to post a comment.