Laut einem Bericht auf bloomberg.com haben sowohl die Westdeutsche Landesbank WestLB als auch die HSH Nordbank zusammen mehr als 15 Mrd. Dollar in ihre SIVs gesteckt:
WestLB, HSH Nordbank Bail Out $15 Billion of SIVs (Correct)
By Neil Unmack and Aaron Kirchfeld
(Corrects to say WestLB comments came in verbal statement and not in an e-mail in story published yesterday.)
Dec. 3 (Bloomberg) -- WestLB AG, Germany's third-largest state-owned bank, and Hamburg-based HSH Nordbank AG provided financing to more than $15 billion of troubled investment funds to prevent a fire sale of their assets.
WestLB provided a credit line for its $11 billion structured investment vehicle called Harrier Finance to repay commercial paper, a spokesman for the Dusseldorf-based bank said in a statement today. HSH Nordbank said it will provide backup funding to cover all commercial paper issued by its 3.3 billion- euro ($4.8 billion) Carrera Capital SIV, spokesman Reinhard Schmid said in an interview.
Moody's Investors Service said on Nov. 30 it may downgrade $105 billion of SIVs, the biggest credit-rating cuts since subprime mortgages contaminated the bond market, because of a slump in net asset values. SIVs, companies that use short-term debt to invest in higher-yielding securities, have reduced their assets to $298 billion from $400 billion in August by selling holdings or restructuring, according to Moody's.
``Most SIVs have been working on some form of restructuring to avoid having to sell into a depressed market,'' said Priya Shah, a credit analyst at Dresdner Kleinwort in London. ``We've not seen as much firesale activity as was expected back in the summer.''
Treasury Secretary Henry Paulson has been working with Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the biggest U.S. banks, to form an $80 billion ``SuperSIV'' fund to help avoid forced sales by buying SIV assets. The Treasury aims to have the master liquidity enhancement conduit, or M-LEC, running by yearend.
Falling Value
``Every day that goes by we are seeing more restructuring and liquidity provision by sponsors,'' Shah said in an interview today. ``The longer M-LEC takes, the less of a need there will be for it.''
HSBC Holdings Plc, the second-biggest manager of the companies, said last week it will bail out its two SIVs by taking on $45 billion of their assets.
By contrast, Citigroup, the largest manager of SIVs, said it will avoid any steps that would force it to consolidate the companies on its balance sheet. The New York-based bank has provided $7.6 billion for its SIVs by buying commercial paper, as of Oct. 31. Citigroup said its SIV assets have dropped to $66 billion from $83 billion on Sept. 30.
The average net asset value of SIVs sponsored by firms including Citigroup declined to 55 percent from 71 percent a month ago, according to Moody's. The NAV is the amount that would be left over for investors if a SIV was forced to sell holdings and repay debt.
Tango Finance
The SuperSIV is ``more likely than not, albeit there's an increasing feeling that it will be there to benefit only a handful of banks, Citigroup obviously among them,'' Royal Bank of Scotland Group Plc analyst Tom Jenkins wrote in a note to clients today.
MBIA Inc., the largest bond insurer, has cut its Hudson- Thames Capital SIV to about $400 million from $2 billion by asking capital note holders, who own the lowest ranking debt, to buy the fund's assets, Chief Financial Officer Chuck Chaplin said last week.
WestLB is helping its Harrier SIV after the bank provided a credit line last month to its smaller Kestrel Funding company, which has $2.9 billion of senior debt.
``WestLB is convinced that it is acting in the best interest of both SIVs and investors,'' it said in the statement.
HSH Nordbank is providing Carrera Capital with a liquidity line, a loan that can be drawn to repay all short-term debt if the company is unable to issue commercial paper. HSH Nordbank, which announced it would restructure the SIV on Nov. 7, had its SIV ratings confirmed by Moody's last week after completing the restructuring, Oliver Schreiber, a senior vice president at HSH Nordbank in Kiel, said in an interview.
Whistlejacket
Rabobank Groep has reduced its SIV ``significantly,'' spokesman Jan-Willem ter Avest in Utrecht, Netherlands, wrote in an e-mailed response to questions today. Rabobank's Tango Finance, with $7.8 billion of debt, faces a possible downgrade on its senior notes, Moody's said on Nov. 30. The company had about $14 billion in July, according to Standard & Poor's.
Tango reduced its assets through ``swaps'' with the holders of 40 percent of its capital notes, ter Avest said.
Standard Chartered Plc is exploring alternative financing solutions for its Whistlejacket Capital Ltd. SIV, London-based spokesperson Tim Baxter said last week in an interview.
Bank of Montreal is working with investors on a ``permanent resolution'' for its SIVs, Yvan Bourdeau, chief executive officer of the Canadian lender's BMO Capital Markets unit said in an analyst conference call last week.
To contact the reporter on this story: Neil Unmack in London at nunmack@bloomberg.net
Last Updated: December 4, 2007 04:46 EST
