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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (28597)	10/18/2007 4:09:22 AM
From: Madharry	Respond to of 78711

How many of these things are out there? this is beginning to remind me of enron- no ability to refinance debt, and debt being called because of credit ratings being reduced. Cheyne Finance SIV Won't Pay Debt as It Falls Due (Update2) By Sebastian Boyd and Neil Unmack Oct. 17 (Bloomberg) -- Cheyne Finance Plc, the structured investment vehicle managed by hedge fund Cheyne Capital Management Ltd., will stop paying its debts, a receiver from Deloitte & Touche LLP said. Deloitte is negotiating a refinancing of the SIV or a sale of its assets, according to an e-mailed statement today. Cheyne Finance's debt with different maturities will now be pooled together, rather than shorter term debt being repaid sooner, Neville Kahn, a receiver from Deloitte said today in a telephone interview. ``It doesn't mean we have to go out and fire-sell any assets, quite the opposite in fact,' Kahn said. ``The paper that falls due today or tomorrow won't be paid as it falls due.' Cheyne Finance appointed receivers in September to oversee the management of its assets after the SIV was forced to liquidate assets to repay maturing commercial paper. SIVs have dumped about $75 billion of securities since July after being unable to roll over their short-term debt, prompting the U.S. Treasury to broker talks between Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, to create an $80 billion fund to buy the assets. SIVs, with $320 billion of assets, invest in securities from mortgage-backed debt to bank bonds. They finance their investments by selling commercial paper, debt that comes due in 270 days or less, and medium term notes, which mature in nine months or longer. Investors in the past three months have avoided asset-backed commercial paper on concern that delinquency rates on home loans to people with bad credit will continue to rise and hurt the value of mortgage bonds held by SIVs. `Insolvency Event' Cheyne issued $8 billion of short-term debt to buy securities linked to home loans, according Moody's Investors Service. The receivers declared an ``insolvency event,' Deloitte said. That means the SIV is unable to pay its debts when they are due, according to its prospectus. Moody's cut the SIV's top credit ratings on Oct. 4 by as many as 12 levels to Ba3, three steps below investment grade, citing the deterioration in the market value of Cheyne's portfolio. London-based Cheyne Capital was set up in 1999 by Stuart Fiertz and Jonathan Lourie, two former Morgan Stanley bankers. The hedge-fund manager oversees about $12 billion in funds investing in both debt and equity markets. ``We are very pleased with the progress being made to implement a financing or a whole-book solution of which we are in advanced negotiations,' Kahn said in the statement. ``Today's determination has not had a detrimental effect on these negotiations and we have no need for immediate liquidation of assets in the book.' Kahn is one of three Deloitte receivers working on Cheyne Finance, with Nick Edwards and Nick Dargan. ``In our view people should not take this as a precedent for other SIVs,' he said.