S&P slashes Orion Finance SIV ratings after default

NEW YORK Jan 16 (Reuters) - Standard & Poor's on Wednesday cut its credit ratings on Orion Finance, a structured investment vehicle, after the fund defaulted on its obligations to pay off maturing commercial paper.

S&P lowered the fund's issuer credit rating to "D," for default, from "AAA," the top investment-grade rating. Orion's commercial paper and medium-term note ratings were also cut to "default."

Orion, sponsored by Eiger Capital Management, joins Axon Financial Funding, Victoria Finance, Cheyne Finance and Rhinebridge LLC as SIVs that are in default and have stopped paying current interest and principal, S&P said in a release.

The outstanding amount of Orion's senior debt is approximately $735 million, S&P said.

Structured investment vehicles are specialized funds that raise cash by issuing commercial paper and then invest the proceeds in higher-yielding assets, often U.S. mortgages.

The funds, called SIVs, ran into trouble last year as investors, fearful of exposure to subprime mortgages, refused to provide funding for the vehicles.

(Reporting by Neil Shah; Editing by Diane Craft)