(Adds Rabobank comment)
LONDON, March 18 (Reuters) - Tango Finance, the structured investment vehicle set up by the Netherlands’ Rabobank [RABN.UL], has sold all its assets to raise cash to repay senior debt.
“Rabobank has successfully concluded an orderly sale of Tango’s assets as envisaged in December,” Sipko Schat, a member of Rabobank’s executive board, said in a statement. “This prepares the way for unwinding Tango and the repayment of senior liabilities”.
Rabobank in December said Tango had assets of 5.2 billion euros ($8.2 billion), down from 9.7 billion in July. The bank then decided to take the remaining assets of Tango on to its balance sheet.
SIVs issued a mixture of senior short- and medium-term debt and subordinated capital and invested the proceeds in asset-backed securities and bank debt.
They got caught out by a double whammy as their funding dried up and the value of their assets fell sharply due to the subprime mortgage crisis.
That led to swingeing downgrades for some SIV debt issues and caused a number — including IKB’s IKBG.DE Rhinebridge and Standard Chartered’s (STAN.L) Whistlejacket — to enter receivership.
Many analysts say the SIV business model is now permanently broken as a result.
Moody’s Investors Service on Thursday confirmed the top Aaa and Prime-1 ratings on Tango’s senior debt as a result of the asset sales, the agency said on Tuesday. It had previously been considering cutting the ratings.
“The confirmation of the ratings of Tango’s senior debt programmes follows the sale of all remaining assets from Tango,” Moody’s said. “The sum of the funds available to Tango will be sufficient to repay senior debt as it falls due.” However, Moody’s cut Tango’s subordinated income notes to C from Caa3 as these notes are expected to suffer losses due to declines in the value of the assets. (Reporting by Richard Barley; Editing by David Holmes)