Tuesday, January 15, 2008 1 comments ++[ CLICK TO COMMENT ]++

CDOs to Bail Out CDOs :)

CAK pointed out this article talking about HSBC's plan to issue CDOs of bond insurer surplus notes.

HSBC Holdings Plc, Europe's biggest bank by market value, set up a collateralized debt obligation to repackage so-called surplus notes sold by insurance companies to bolster capital, according to Standard & Poor's...

The securities will carry the top investment-grade credit ratings, S&P said. HSBC will enter into an agreement with bond investors to protect them against currency swings, the surplus notes defaulting or declining in value.



First of all, does this mean HSBC expects a lot more surplus notes to be issued? I can't see them creating a CDO using primarily MBIA's notes along with possibly a few older issuances from others. Is it a good guess to say Ambac may be going that route?... All quiet at Ambac. I can even hear the wind whispering. I just hope they aren't having problems raising money, and instead are trying to hammer out a good deal.

I find the CDO issuance quite funny LOL... CDOs are one of the things that caused all these problems in the first place, and HSBC is creating a CDO of notes that were used to bail out the CDO problems... CDOs to the rescue of CDOs :)

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1 Response to CDOs to Bail Out CDOs :)

cak
January 15, 2008 at 12:08 PM

This is Alpha's take.

MBIcdo

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