Monday, December 3, 2007

liqudity put of CDO

--When cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 credit crunch intensified in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 summer, demand for CDOs dried up. Consequently, banks that arranged CDOs got stuck with subprime assets cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y had intended to eventually place in CDO entities. In addition, as underwriters of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 deals, some were also left with large amounts of CDO bonds cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y could no longer sell. In both cases, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 CDO assets and debt were already on a bank's balance sheet. --But in some cases, banks were suddenly forced to take large amounts of fresh CDO debt onto cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir balance sheet. --Here's how. Some CDO trusts funded cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365mselves by repeatedly selling short-term debt into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 markets. When cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 debt became due after, say, three months, it was supposed to be re-sold to investors, or in market jargon, it would be "rolled over." --In cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 summer, with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 credit crisis deepening, investors had no desire to keep buying any short-term debt issued by CDO trusts. But some banks, in trying to make cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir CDO deals more attractive to investors, had committed to buy that short-term debt if it couldn't be rolled over. Citigroup called that commitment a 'liquidity put,' when explaining why it ended up taking $25 billion of CDO debt onto its books.

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