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Friday, December 07, 2007

S&P Cuts Capital Notes of 13 SIVs

by Calculated Risk on 12/07/2007 07:01:00 PM

From Bloomberg: S&P Cuts Capital Notes of 13 SIVs, More Cuts Possible (hat tip John)

Standard & Poor's said it lowered credit ratings on capital notes of 13 structured investment vehicles and placed debt of 18 SIVs on negative outlook ...

Orion Finance Corp., managed by asset manager Eiger Capital Ltd., became the fourth SIV to enter ``enforcement mode,'' requiring the appointment of a trustee to protect senior debt holders. Premier Asset Collateralized Entity Ltd., an SIV sponsored by Societe Generale SA is close to breaching capital tests that would trigger enforcement, S&P said in a statement.
``We do not see asset values rising appreciably in the coming months, and we could see price erosion continue,'' S&P analysts led by Nik Khakee in New York and Katrien van Acoleyen in London wrote in a report today. ``Also, we cannot see investors returning to the market in sufficient numbers to reverse the funding problem, and we are aware that not all restructuring plans are yet final.''
Ratings on junior debt of Premier Asset and K2 Corp. ... were cut to below investment grade. Rankings on capital notes of Five Finance Corp., Sedna Finance Corp. and Zela Finance Corp., three SIVs run by New York-based Citigroup Inc., were also lowered.

The ratings cuts reflect ``the increased likelihood that capital investors in these vehicles will see actual losses materialize,'' the S&P analysts said.
What is a Friday without some rating cuts?