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Mixed year for corporate bond sales
stephen taub

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Tag >> collateralized debt obligation
Aug 16

JPMorgan, Cablevision case creates CDO uncertainty

Posted by mcole in securitizationJPMorganDealscompliancecollateralized debt obligationCLOscableBanksBanking


A recent court decision involving JPMorgan and Mexican cable operator Empresas Cablevision sent another blow to the securitization market, and especially to collateralized loan obligations (CLOs), but gave more of a say to borrowers when lenders want to pass on their loans to others. It could have a broad-reaching impact on structured financings.

At the end of July, the US District Court for the Southern District of New York invalidated a participation granted by JPMorgan to another bank in a loan from JPMorgan to Cablevision. The terms of the loan allowed participations, but the court recharacterized the participation as an assignment-which required the borrower's consent.

Aug 09

As go banks, so goes the recovery?

Posted by mcole in Riskmortgagesmortgage backed securitiesFederal Reserve, earnings, Dealscompliancecollateralized debt obligationBanks


If the Federal Reserve Bank of New York requires mortgage originators to repurchase mortgages acquired through the bailouts of companies like American International Group and Bear Stearns, as it said it might, banks could face weaker earnings and reduced lending capacity as a result.

Second-quarter earnings showed that recovery is on its way for banks, with, for example, Morgan Stanley beating analysts' forecasts. But there's still some pressure on the industry.

Jul 20

Why PE returns will remain muted

Posted by mcole in Risk, private equity, leveraged loans, leveraged buyoutDealscollateralized debt obligationCLOs


Private equity deal-making activity may be making a comeback, but the collateralized loan obligation market, which helped fueled the buyout boom prior to the financial crisis, remains sluggish. That suggests we won't see a new LBO boom anytime soon.

PE-sponsored companies last year accounted for 34 percent of distressed exchanges, or so-called "extend and pretend" refinancing, since the deals extend the maturities of high-yield debt that is in technical default without retiring much if any of it. Since these companies were funded mostly with leveraged loans held in CLOs, the exchanges exposed more than 500 CLOs to 96 companies that defaulted in 2009, according to a recent Moody's Investors Service report. That means the CLO market is in no condition to support a new wave of big debt-fueled deals.

Jul 16

Goldman to pay $550 million to settle with SEC

Posted by Stephen Taub in settlementSecurities and Exchange Commissionsec, Mary Schapiro, compliancecollateralized debt obligation

Stephen Taub

Score this one for the Securities and Exchange Commission and chairman Mary Schapiro.

In perhaps their biggest accomplishment since she took over the securities regulator over a year ago, Goldman, Sachs agreed to pay $550 million and reform certain business practices to settle SEC charges that Goldman misled investors in a subprime mortgage product just as the US housing market was starting to collapse.

Apr 29

Why securitization needs Goldilocks

Posted by mcole in securitizationRiskreform, leverage, Dealscollateralized debt obligationCDS


Credit enhancement used to be the magic tool in securitization to minimize losses and boost the quality of collateralized debt obligations. But as the Abacus deal underwritten by Goldman Sachs has showed, such practices often led to overleveraged, overly risky transactions, which turned into losses for all parties, including banks underwriting CDOs, once the market turned against them.

"Synthetic CDOs bring together a number of different factors which ultimately resulted in catastrophic losses for all involved," said the Aite Group in a report on synthetic CDOs this week. Even underwriters, who often kept super-senior tranches on balance sheets, suffered heavy losses.

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