Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (347894)	11/7/2007 9:55:55 PM
From: Secret_Agent_Man	Respond to of 436258

that's a MYTH

To: MythMan who wrote (347894)	11/7/2007 11:26:05 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

How many of my tax Clownbux is it gonna take to get these green by 9:30? cme.com

To: MythMan who wrote (347894)	11/8/2007 5:22:32 AM
From: Giordano Bruno	Respond to of 436258

SIV Rescue Plan Faces New Pressure Moody's Downgrades Funds Amid Worries Of Forced Asset Sales By CARRICK MOLLENKAMP and DAVID REILLY November 8, 2007; Page C1 A rescue plan for investment funds that are one source of credit-market concern is under new pressure after Moody's Investors Service said the funds were liquidating assets to meet financial commitments. The rescue plan, led by Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase & Co., is aimed at providing cash to the funds, known as structured investment vehicles, or SIVs. The plan is aimed at avoiding a forced fire sale of the SIVs assets. In its report, Moody's said it had cut, or might cut, ratings of the debt issued by the funds. Moody's said certain SIVs owned assets with deteriorating values. Some SIVs now could hit financial triggers that would speed up asset sales. Such sales could drag down the prices further, including those of securities to U.S. mortgages, when prices already are low. Moody's, in its report, said it now assumes SIVs would be liquidating assets at distressed prices to pay off financial commitments given the problems SIVs face in issuing new debt or refinancing maturing debt. The breakdown of SIVs is one of a number of concerns paralyzing global credit markets since this summer. In a separate report yesterday, Citigroup said the world's biggest banks could face write-downs totaling $64 billion because of exposure of securities tied to subprime loans. The Moody's moves yesterday will put more pressure on the banks behind the plan, first announced last month, to form a supersize fund to buy some assets from the SIVs. Without the fund in place to purchase assets from the SIVs, they will be more likely to begin selling off assets at whatever prices they can get to raise money for payments they need to meet to investors who have purchased their commercial paper. "They are going to have to sell at some point," said Douglas Long, an executive vice president at London-based Principia Partners, which provides technology support for structured-product managers. "It's not looking pretty." Yesterday, Moody's downgraded, or said might downgrade, debt issued by 16 SIVs. The ratings agency cited the deteriorating value of the assets in the SIVs, which hold $33 billion worth of debt securities. The SIV market is made up of about 30 funds that own some $300 billion in assets. Investors stopped buying debt issued by SIVs earlier this year; they worried that the SIVs could hold assets linked to subprime mortgages and thus could have trouble repaying debt. Moody's said it wasn't taking the ratings actions because of the quality of the assets in the SIVs. Instead, Moody's said the SIVs problems stemmed from the drop in the market value of the assets the SIVs own as investors shun those investments amid the credit crunch. The SIVs have been the focus of attention because Citigroup sponsors seven SIVs. Moody's said it had put the bottom tier of notes issued by several Citigroup SIVs on review for possible downgrade. Citigroup for the first time disclosed details about the SIVs it sponsors in third-quarter financial statements filed earlier this week with the Securities and Exchange Commission. The bank said that as of Sept. 30, the SIVs it was affiliated with had $83 billion in assets, following the sale of $19 billion in assets since July. The three SIVs whose capital notes were placed yesterday on review for possible downgrade by Moody's have a combined $50 billion in assets. Of the seven SIVs, 7%, or nearly $6 billion in assets, are invested in U.S. mortgage-backed securities. However, the bank added that "the SIVs have no direct exposure to U.S. subprime assets and have approximately $70 million of indirect exposure" through investments in collateralized debt obligations. A Citigroup spokesman declined comment. Credit Spreads Widen Investment-grade corporate debt, including that sold by housing agencies Fannie Mae and Freddie Mac, sunk amid heightened concerns that more losses due to subprime investments gone bad are in the cards. "Everybody is nervous about mortgage-related bonds and the financial sector," said Wayne Schmidt, senior portfolio manager at AXA Investment Management. New York Attorney General Andrew Cuomo said his office is sending subpoenas to Freddie Mac and Fannie Mae as part of his probe into the mortgage industry. Risk premiums on agency debt moved sharply wider as a result. Fannie Mae's 5.125% notes due 2009, for example, were 0.07 percentage point wider at 0.58 percentage point over Treasurys. Treasurys See Gain, Yield-Curve Steepens Treasury prices gained and the yield curve -- the gap between short- and long-term maturities -- steepened amid renewed flight-to-quality buying sparked by losses in stocks and another decline in the dollar. The biggest gains came in short-term Treasurys, while there also was a strong bid for Treasury bills. The yield on the two-year note, the most sensitive to official rate changes, declined to 3.590% -- its lowest since June 2005 -- from 3.674% Tuesday.