Structured investment vehicles tank in 2007
The value of SIVs dropped nearly 50% by the close of 2007, a Moody’s report revealed.
Values of investors’ structured investment vehicles dropped nearly 50% by the close of 2007, a Moody’s Investors Service report revealed today.
SIVs borrow from the asset-backed commercial paper market in order to finance long-term debt securities like mortgage-backed securities, bonds and collateralized debt obligations.
The net value asset of SIVs, dropped 53% from July to the end of December, said Henry Tabe, Moody’s team managing director for structured finance operating companies and co-author of the report.
The U.S SIV sector has seen a steady decline in assets under management from almost $400 billion in July to roughly $300 billion by mid-November to around $200 billion by mid-December.
The Moody’s report said the number of SIVs sold from June 1 to November 16 fell by 16% with $55.6 billion sold in that five and a half month period.
“Managers and sponsors of SIVs now acknowledge that the senior debt investor base is unlikely to return to the sector in the absence of fundamental changes to the business model,” said Mr. Tabe.
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