Rabobank, a Citigroup SIV Dumps Half Its Assets
Reuters with the latest big business exiting from the housing market:
A structured investment vehicle (SIV) managed by Dutch bank Rabobank and Citigroup has sold almost half its assets, 4.5 billion euros ($6.6 billion), as the fund could not find sufficient refinancing, Rabobank said on Wednesday.
“The market has dried up. It is all related to what is happening in the United States,” a Rabobank spokesman said, confirming a report in Dutch daily Het Financieele Dagblad about the declining size of the fund, called Tango Finance.
The fund currently holds about 5.5 billion euros in assets, down from 10 billion euros in the summer, and could reduce its holdings further to reduce investment risks, the spokesman said.
“Basically, what Tango is doing now is called unwinding,” he said, adding that the market value of Tango’s currently held assets is about 97 to 98 percent of their nominal value.
This exit will lead to pricing declines in the real estate market as well as a further decline in demand for real estate related investments. Many homeowners will seek a mortgage payoff plan as a means of surviving such a decline with equity intact.
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