(Mark Your Calendars: RealShare Distressed Assets Convenes in Dallas on May 3 & 4.)
NEW YORK CITY-The Federal Reserve Bank of New York has sold off the entirety of the toxic collateralized debt obligations it acquired in 2008 from American International Group Inc. after taxpayers bailed out the failed insurance company from the brink of collapse. Following a competitive bid process, Barclays Capital Inc. and Deutsche Bank Securities Inc. emerged as the winning bidders for the Maiden Lane III LLC portfolio.
In a statement issued late Thursday, William C. Dudley, president of the New York Fed, says the bid represents a “good value for the public” and “significantly exceeds” the original price paid for the assets, noting that the sale marks “another important milestone in the wind-down of our crisis-era intervention.” However, a spokeswoman for the New York Fed tells GlobeSt.com that a price will not be disclosed until the Fed files its quarterly report on July 16.
During the bid process, the New York Fed called upon eight broker-dealers to submit bids, including Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Goldman Sachs & Co., Merrill Lynch Pierce, Fenner & Smith Inc., Morgan Stanley & Co. LLC and Nomura Securities International Inc., as well as Deutsche and Barclays.
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The assets have a face value of $7.5 billion, and are composed of securities from 103 commercial-mortgage bond offerings, according to Bloomberg. After AIG was bailed out in 2008, Maiden Lane III LLC borrowed $24.3 billion from the New York Fed, which together with an equity contribution of $5 billion provided by AIG, was used to purchase a portfolio of US dollar denominated CDOs from counterparties of AIG, the Fed’s website says.
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