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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: tradermike_1999 who wrote (1331)12/10/2000 2:40:36 PM
From: Scott Bergquist  Read Replies (1) of 74559
 
Turkey? What's the big deal??

From Prudent Bear:
This afternoon, Moody's reported it saw an increase in credit card losses during October, as the write-off rate increased for the first time since February 1998 on a year-over-year basis. Also, today Bloomberg reported that so far this quarter Moody's commercial paper downgrades are leading upgrades by a ratio of 5 to 1. Interestingly, Bloomberg also reported today that U.S. Investors Hold $75 million of CP (commercial paper) Sold By Seized Turkish Bank (Demirbank). This was a special purpose entity - funding corp. - headquartered in the Cayman Islands. Or, as stated by Demirbank's U.S. attorney, Demir funding's sole purpose is to issue the commercial paper and on-lend the proceeds to Demirbank in Turkey. With Banc of America Securities and Chase Securities providing letters of credit for this $75 million program, Moody's assigned their top 'A1' rating to this paper. We have written in the past stating our belief that these funding corps' vehicles were financing risky credits through the U.S. commercial paper market, but loans to banks in Turkey? Is this appropriate for U.S. money market funds? Wow. little wonder that spreads between top-tier and second-tier commercial paper shot to records this week. This could provide an important catalyst for a needed reevaluation of the asset-backed commercial paper marketplace.

Remember the LTCM debacle was a Danish-bonds thing...
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