Comments on: Merrill and National Australia Bank CDO Writedowns Linked, and Not the Way You’d Expect, Either http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo.html Sun, 22 Nov 2009 01:01:02 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Ginger Yellow http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo.html#comment-12237 Ginger Yellow Tue, 29 Jul 2008 15:19:00 +0000 http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo-writedowns-linked-and-not-the-way-youd-expect-either/#comment-12237 The Crikey article bases its arugment (mainly) on the fact that the sale was executed (though not completed) before NAB's writedown. It claims that NAB, Merrill and APRA were in communication over the deal before the announcement, although it provides no source or evidence for the claim. I'm very skeptical, personally, but I'm doing some digging anyway. The Crikey article bases its arugment (mainly) on the fact that the sale was executed (though not completed) before NAB’s writedown. It claims that NAB, Merrill and APRA were in communication over the deal before the announcement, although it provides no source or evidence for the claim. I’m very skeptical, personally, but I’m doing some digging anyway.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo.html#comment-12235 Anonymous Tue, 29 Jul 2008 14:49:00 +0000 http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo-writedowns-linked-and-not-the-way-youd-expect-either/#comment-12235 this should give hank paulson some idea of how well that covered bond market is going to trade. when you're trying to get others to put your cr@p on their books, you'll pay a price.<br/><br/>aside from that. i don't follow the chain of events cited above. didn't NAB's writedowns come first, before the surprising to only some(those who didn't hammer the stock on monday) writedown/capital raising announcement after the close? above makes it sound like merrills announced a writedown first. this should give hank paulson some idea of how well that covered bond market is going to trade. when you’re trying to get others to put your cr@p on their books, you’ll pay a price.

aside from that. i don’t follow the chain of events cited above. didn’t NAB’s writedowns come first, before the surprising to only some(those who didn’t hammer the stock on monday) writedown/capital raising announcement after the close? above makes it sound like merrills announced a writedown first.

]]> By: Ginger Yellow http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo.html#comment-12215 Ginger Yellow Tue, 29 Jul 2008 09:29:00 +0000 http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo-writedowns-linked-and-not-the-way-youd-expect-either/#comment-12215 Um, is there any evidence these are the same CDOs? Crikey doesn't provide any. Moreover, the real question is why NAB didn't write down the positions earlier - as far as I know this is the first time they've even acknowledged they existed, despite taking the conduits in which they were held on balance sheet many months ago.<br/><br/>Also, this CDO sale is dodgy in a way very reminiscent of Lehman's R3 deal. Merrill's is providing 75% finance for the sale on a non-recourse basis, meaning of course that it is still exposed to 75% of the sale value. Yet they're not counting that as part of their ABS CDO exposure. Presumably it shows up somewhere else on the balance sheet, and they will no longer have to mark it to market, but it's still ABS CDO exposure. Um, is there any evidence these are the same CDOs? Crikey doesn’t provide any. Moreover, the real question is why NAB didn’t write down the positions earlier – as far as I know this is the first time they’ve even acknowledged they existed, despite taking the conduits in which they were held on balance sheet many months ago.

Also, this CDO sale is dodgy in a way very reminiscent of Lehman’s R3 deal. Merrill’s is providing 75% finance for the sale on a non-recourse basis, meaning of course that it is still exposed to 75% of the sale value. Yet they’re not counting that as part of their ABS CDO exposure. Presumably it shows up somewhere else on the balance sheet, and they will no longer have to mark it to market, but it’s still ABS CDO exposure.

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