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HSBC Holdings Plc’s rescue of its Asscher Finance Ltd. structured investment vehicle will mean 70 percent losses for bondholders including a Spanish unit of Credit Suisse Group. London-based HSBC is restructuring Asscher to prevent it from having to sell assets at fire sale prices to repay maturing debt. Asscher has $5.9 billion of debt outstanding, including $468 million of mezzanine notes. HSBC is the second-largest bank manager of the funds after Citigroup in New York. Both Citigroup and HSBC have problems related to with SIV’s ( structured investment vehicles).
Moody’s Investors Service cut Asscher’s mezzanine debt by 15 levels to Caa2, eight steps below investment grade, from A2 since November. HSBC restructured its Cullinan Finance Ltd. SIV earlier this month with $26 billion of senior debt after investors exchanged their holdings for bonds in two new companies. The SIV will be wound down after its assets are transferred to the new investment companies and its existing senior debt matures.
This article, HSBC’s SIV Rescue and Asscher Notes – A Big Loss?, is just one of our articles from our Bank Horror Stories, HSBC Secrets Part 3
Bank Horror Stories monitors banking problems and customer complaints and has done so since 1999. Writers hold no stock positions. Some material is used under the fair use copyright act.
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