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New York Fed Solicits Bids for MAX CDO Holdings in Maiden Lane III LLC

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According to the press release, “The New York Fed today announced that it has initiated a competitive bid process in response to several reverse inquiries for the MAX CDO holdings in the Maiden Lane III LLC portfolio (ML III). The New York Fed has directed BlackRock Solutions, the investment manager for ML III, to conduct a competitive bid process for the entirety of the MAX CDO holdings, consistent with past practices. All-or-none bids will be due on April 26, 2012, at which point the New York Fed will decide whether to sell depending on the strength of the best bid.

The following eight broker-dealers have been invited to submit bids for the MAX CDO holdings based on the strength of their expressions of interest in these holdings:

  • Barclays Capital Inc.
  • Citigroup Global Markets Inc.
  • Credit Suisse Securities (USA) LLC
  • Deutsche Bank Securities Inc.
  • Goldman, Sachs & Co.
  • Merrill Lynch Pierce, Fenner & Smith Incorporated
  • Morgan Stanley & Co. LLC
  • Nomura Securities International, Inc.

Consistent with the current investment objective of ML III, the New York Fed, through BlackRock Solutions, is exploring the sale of assets held by ML III, including the MAX CDO holdings. There is no fixed timeframe for the sales; at each stage, the Federal Reserve will sell an asset only if the best available bid represents good value for the public, while taking appropriate care to avoid market disruption.

Currently, the New York Fed publishes on its website each month a list of all the securities held by ML III. In order to allow the public to track progress of asset dispositions, the New York Fed will also provide a list of any holdings sold by ML III within the previous month. In addition, it will provide quarterly updates on total proceeds from sales, including a breakdown by counterparty. Finally, after ML III sells its last position, the New York Fed will provide further details regarding these transactions, including a security-by security listing that shows which entity purchased the security and the price it paid ML III, ensuring timely accountability without jeopardizing the ability to generate maximum sale proceeds for the public.”

Read more: Press Release

Cassa Depositi e Prestiti Guides Companies to Find Opportunities in Naples Region

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The Cassa Depositi e Prestiti Group (CDP) and its investee companies, which include Fincantieri, Italgas, Snam, and Terna, have reached an agreement with the Municipality of Naples and the Authority of the Central Tyrrhenian Sea Port System. The entities will cooperate to provide for the development of Naples and its surrounding area. There will be a focus on helping the institutions and the community at large through financial support, real estate, and infrastructure investment, and support for local businesses. Signatories can help to provide technical expertise and planning, loans, and oversee public projects. Further, assistance and consulting will be provided, particularly as they relate to interventions and renegotiation of contract terms for the purposes of freeing up capital. Sustainable mobility will be a priority, with natural gas and biomethane forming the core fuels of the future. The group will be developing the ports, which will include the construction of emission-reducing structures.

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PIVOT: Federal Reserve Signals Zero Rate Hikes in 2019

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The Federal Reserve made a decision to hold interest rates steady and indicated that no more hikes will be coming for 2019. Federal Reserve Chairman Jay Powell addressed the media saying that the Chinese and European economies have slowed ‘substantially’. Despite low U.S. employment, Powell explained to the media that the U.S. has the lowest labor force participation rate among developed nations.

There were four interest rate hikes in 2018.

The Federal Reserve committee intends to conclude the reduction of its aggregate securities holdings in the System Open Market Account (SOMA) at the end of September 2019. Essentially, the Federal Reserve is ending quantitative tightening in September 2019. Furthermore, the committee intends to slow the reduction of its holdings of Treasury securities by reducing the cap on monthly redemptions from the current level of US$ 30 billion to US$ 15 billion beginning in May 2019.

In a March 20, 2019 statement called “Balance Sheet Normalization Principles and Plans”, a portion of it reads, “The Committee intends to continue to allow its holdings of agency debt and agency mortgage-backed securities (MBS) to decline, consistent with the aim of holding primarily Treasury securities in the longer run.

Beginning in October 2019, principal payments received from agency debt and agency MBS will be reinvested in Treasury securities subject to a maximum amount of $20 billion per month; any principal payments in excess of that maximum will continue to be reinvested in agency MBS.

Principal payments from agency debt and agency MBS below the $20 billion maximum will initially be invested in Treasury securities across a range of maturities to roughly match the maturity composition of Treasury securities outstanding; the Committee will revisit this reinvestment plan in connection with its deliberations regarding the longer-run composition of the SOMA portfolio.

It continues to be the Committee’s view that limited sales of agency MBS might be warranted in the longer run to reduce or eliminate residual holdings. The timing and pace of any sales would be communicated to the public well in advance.”

source: Federal Reserve website

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Tencent Contemplates A.S. Watson Investment

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Tencent Holdings Limited is contemplating a bid to acquire Temasek Holdings’s ownership stake in A.S. Watson, an Asian beauty and health retailer. Temasek Holdings has been trying to offload its 10% stake in A.S. Watson. The price tag could be around US$ 3 billion.

Alibaba Group Holding Limited has also expressed interest in the A.S. Watson investment.

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