Sigma creditors in search of advisor -source

By Elena Moya

LONDON, Aug 1 (Reuters) - Creditors of Sigma Finance, a limited purpose finance company managed by London-based investment company Gordian Knot, are looking for an advisor amid concerns about the company's abilities to pay its debts, a source familiar with the situation told Reuters.

In restructurings, creditors usually contact accountancy firms, such as KPMG, PriceWaterhouseCoopers, Deloitte or Ernst & Young, or financial advisors such as Goldman Sachs and Rothschild, to advise them on a debt restructuring.

"They (the creditors of Sigma Finance) are starting to move", the source said, referring to their search for an advisor to help them in a possible debt restructuring.

Gordian declined comment.

Sigma has about $8.6 billion of debt that must be refinanced by Sept. 30, according to Moody's Investors Service.

The credit rating agency cut in July Sigma's long-term debt rating by one notch to "A3," the seventh-highest investment grade, from "A2," and left it on review for another possible downgrade, citing volatility in the credit markets.

Recent restructurings of structured investment vehicles, such as Cheyne, have valued portfolio assets at about 55 percent of their original value.

Sigma, a debt issuer sometimes referred to as a structured investment vehicle, or SIV, is the largest non-bank sponsored structure of this type, though it has different features than many SIVs.

SIVs are disappearing as an investment option as their model of raising short-term debt to invest in longer-term securities has been caught out by the global liquidity squeeze, which has robbed them access to funding.

The value of their assets -- which typically include U.S. subprime-related loans -- has also plunged.

Since disruptions in the commercial paper and medium-term notes markets, Sigma has relied on repurchase agreements, ratio trades and asset sales to pay maturing debt, Moody's said.

"We think Sigma relies on support, which thus far seems to be forthcoming in the form of repo agreements, presumably also from banks and other investors that have an interest in keeping Sigma alive," said Citigroup in a note to investors on Friday.

"Should any of the repo counterparties withdraw its funding (that is, not renew its repo agreement) or demand greater haircuts, there does not seem to be much room for manoeuvring." (Additional reporting by Dena Aubin in New York; Editing by David Holmes)