tag:blogger.com,1999:blog-3782644139927778760.post1941099098957692264..comments2008-03-04T09:56:34.988-05:00Yves Smithhttp://www.blogger.com/profile/03506020285476330865noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3782644139927778760.post-29538216504367210492008-03-04T09:56:00.000-05:002008-03-04T09:56:00.000-05:002008-03-04T09:56:00.000-05:00I read Birgit's piece, and whilst I have a lot of time for her generally, I believe she is off the mark. She's definately right that the rolling off of senior debt is a massive challenge to the asset markets (no-brainer), but I believe she's been overly simplistic in this assessment. <BR/><BR/>Firstly, asset sales will be driven by net redemptions, not gross. Given that many SIVs (including the largest) are funded for the next 2-3 months, this should cushion the readjustment process. In addition, Birgit's numbers include Cullinan (fully restructured as of Feb 21st) and Asscher (currently negotiating restructuring), both of which contribute(d) significantly to the MTN market. Finally, the headline numbers do not take into account the funding facilities that have been committed / put in place by sponsors such as Citi and Dr, which will clearly be drawn down as / when necessary to meet senior debt redemptions. At the expense of capital note holders, I should add.Tomhttp://www.blogger.com/profile/06585621267924289558noreply@blogger.comtag:blogger.com,1999:blog-3782644139927778760.post-76490145994151882452008-03-03T06:27:00.000-05:002008-03-03T06:27:00.000-05:002008-03-03T06:27:00.000-05:00The difference is that SIVs have global assets, and fear over SIV sales is the main thing that has crippled ABS markets in Europe and Australia, where credit issues are minimal. It's no surprise that the US MBS market is screwed, CDO liquidations or no.Ginger Yellowhttp://www.blogger.com/profile/06103410278129312943noreply@blogger.comtag:blogger.com,1999:blog-3782644139927778760.post-32268552710457327792008-02-29T09:09:00.000-05:002008-02-29T09:09:00.000-05:002008-02-29T09:09:00.000-05:00As serious as this may be ($100 billion in forced SIV liquidation), the real monster is CDO forced liquidation. <BR/><BR/>There are about $2 trillion in CDOs outstanding. As the MBS gets downgraded going forward, CDOs will go into "technical default" en masse. Technical default usually leads to forced liquidation. <BR/><BR/>I think this could very well lead to systemic financial meltdown. There is no bailout scheme that can prevent this because of the dispersion and multitude of entities involved. Welcome to the brave new world of securitization.Anonymousnoreply@blogger.com