Ailing securitisation market leaves Citi and AIG with unwanted assets
By Francesco Guerrera, Henny Sender, Aline van Duyn , , in New York 2010-02-08
The securitisation market’s failure to recover from its slump during the crisis is complicating efforts by Citigroup and other troubled financial groups such as AIG to sell unwanted assets and repair their balance sheets, bankers and executives say.
People close to the situation said that Citi had opened talks with private equity groups and hedge funds over the sale of $3bn worth of car loans as part of its efforts to cleanse its balance sheet of billions of dollars in troubled assets.
To make the business more attractive, Citi is believed to have offered to provide the buyers of the loans with finance for a few years after the sale.
Bankers said that the initial response from potential bidders had been encouraging.
Some of the Citi loans have already been securitised under the term asset-backed securities loan facility (Talf), a US government programme aimed at supporting the ailing securitisation market.
However, some private equity groups and hedge funds that have looked at the assets said that the lack of a thriving market for securitised bonds, which are backed by cash flow from loans, made the assets less attractive. They added that the absence of a fully functioning securitisation market increased the uncertainty over how buyers could fund the loans once Citi’s credit facility expired.
“Private equity can’t make a bid on anything where the business model requires a bet that the external funding markets and securitisation comes back,” said the head of capital markets at a big private equity firm.
英国《金融时报》 记者 联合报道 2010-02-08