And the “fire sale” at Bear Stearns continues. Yesterday, we told you about Merrill Lynch’s plan to auction $850 million of risky loans on Wednesday after rejecting a Bear Stearns offer to buy them directly. Now, Deutsche Bank and JPMorgan have joined the fray.
Deutsche Bank plans to sell $350 million of collateralized debt obligation (CDO) assets seized from the funds. JPMorgan began selling its share of seized assets on Tuesday, but halted its sale yesterday after some backdoor dealings with Bear Stearns helped it eliminate its exposure to the fund.
This “fire sale” is dampening the prices of CDOs and other mortage-backed bonds everywhere. Once prices are revealed in this wave of sell-offs, other holders will realize they own “junk in investment-grade clothing,” as one mortgage broker called it. Funds will start asking for more collateral, lenders and investors will want their money back… and so it goes.
Deutsche Bank plans to sell $350 million of collateralized debt obligation (CDO) assets seized from the funds. JPMorgan began selling its share of seized assets on Tuesday, but halted its sale yesterday after some backdoor dealings with Bear Stearns helped it eliminate its exposure to the fund.
This “fire sale” is dampening the prices of CDOs and other mortage-backed bonds everywhere. Once prices are revealed in this wave of sell-offs, other holders will realize they own “junk in investment-grade clothing,” as one mortgage broker called it. Funds will start asking for more collateral, lenders and investors will want their money back… and so it goes.
No comments:
Post a Comment