Goldman Sachs Group is near completing the rescue of a $7 billion (Dh25bn) structured investment vehicle, a source familiar with the matter said, boosting hopes for a revival in the market for mortgage assets in which the SIV invested.
"I can say the FT report is correct," the source said, referring to a story in yesterday's Financial Times. The structured investment vehicle (SIV), formerly run by hedge fund Cheyne Capital, was invested in asset-backed securities and collateralised debt obligations (CDOs).
Receivers would auction the top-rated assets to brokerages and other banks to determine prices, and the assets would then be put in a new vehicle, the daily said. The SIV's current creditors could hold on to the new vehicle or Goldman Sachs could seek other investors.
Deloitte & Touche – which is acting as receiver of the SIV – declined to comment, as did Goldman.
"The good news is that we are capable of valuing these assets and that we can move on from this phase to the next one," said Jeroen van den Broek, a credit strategist at financial group ING.
But Van den Broek warned that if there were very few bidders for the assets, this might hurt the valuation of similar assets throughout the financial markets. SIVs hit trouble last August when liquidity in the credit markets dried up, preventing them from raising funds and also causing the value of their assets – mainly bank debt and asset-backed securities – to drop.
SIVs, held by banks, hedge funds or other financial institutions, issue a mixture of short-term debt and capital to buy longer-term assets, which pay more interest than the amount they pay on their notes.
Goldman will also restructure a number of other failed vehicles, some of which were formerly run by hedge funds and others by Standard Chartered Bank and Germany's IKB bank.