NEW YORK, May 22 (IFR) - The New York Fed on Tuesday announced that Credit Suisse had won the latest auction of mortgage-linked collateralized debt obligations from its Maiden Lane III portfolio of assets assumed from AIG during the insurer’s bailout in 2008.
Credit Suisse beat out six other broker-dealers vying for $691 million in slices of the Putnam Structured Product CDOs, which were put together in 2002 and backed by both residential and commercial mortgage bonds.
In the run-up to today’s auction, at least one of the dealers, RBS, was pitching a so-called resecuritization of the Putnam CDOs to investor clients, which would have restructured the complex security into a form that contained a new Triple A rating.
Today’s Putnam CDO sale will be the first of two auctions from Maiden Lane III this week. On Thursday, the Fed will sell $1.67 billion in slices of the Duke High Grade Funding CDOs after postponing the auction for these CDOs last week.
Last Thursday, the Fed postponed the Duke CDO sale due to documentation issues.
“There was additional information concerning the Duke CDO that had not been made available for the bidders,” the Fed said last Friday in an explanation to the market of why the sale was delayed.
Citigroup, Deutsche Bank, Goldman Sachs, Guggenheim Securities, Merrill Lynch, Morgan Stanley and RBS will be vying for the Duke CDOs, which are backed by high-grade RMBS.
The Fed has successfully sold assets in both Maiden Lane II and Maiden Lane III portfolios this year, reflecting higher demand for such mortgage-backed securities that were at the heart of the 2007-2009 financial crisis.
The Fed sold all of its “Triaxx” CDOs earlier this month, which were the first CDOs sold out of Maiden Lane III that were backed by RMBS. Merrill Lynch won that auction.
In April, Barclays and Deutsche Bank won the hard-fought bidding for the two so-called Max commercial real estate CDOs totaling $7.5 billion, backed by CMBS.