Comments on: Merrill Lynch CDO Sale Proves Investment Bank Balance Sheets Can’t Be Trusted

By: flajack

flajack — Sun, 03 Aug 2008 18:33:00 +0000

Looking to purchase CDO’s? Specifically non performing assets.
I represent a group of prive investors and we are prepared to pay 10cents to 20 cents on a dollar. 300 Million – 400 million CDO’s to start.

By: Chad Brand

Chad Brand — Thu, 31 Jul 2008 20:51:00 +0000

As of 6/30, I believe they had them marked at $11.1B, versus par of $30.6B, so ~ 36 cents…

By: Anonymous

Anonymous — Thu, 31 Jul 2008 20:46:00 +0000

Then they were valuing 2006/7 CDOs at par? Wow.

Thanks for the answer.

By: Chad Brand

Chad Brand — Thu, 31 Jul 2008 12:08:00 +0000

It appears that they swapped CDO’s for a corporate loan simply to rid their balance sheet of much of the worst CDO exposure they had, even if it was for a firesale price. Thain is just trying to clean out as much toxic stuff as possible.

The press release noted that their remaining CDO exposure is mostly 2005 vintage and earlier. This means they sold lots of 2006/2007 vintage, which is when underwriting standards were the loosest and defaults have been highest.

By: Anonymous

Anonymous — Thu, 31 Jul 2008 00:06:00 +0000

In case you’re interested, I thought I’d add that Pluris publishes a state of ARS which gives you a good idea of the companies holding some of this stuff. (No, I don’t work for Pluris).

http://www.plurisvaluation.com/ars/holders_survey.htm