HSBC plans $45 billion SIV restructuring

The bank will take the SIVs' assets, which it estimates total $45 billion, onto its own balance sheet. Notes issued by the two SIVs will be exchanged for notes issued by new vehicles, funded either by commercial paper backed by a liquidity facility or by term financing - in both cases provided by HSBC.

Although the SIVs' assets are still strong, with no downgrades and an average rating of Aa1/AA+, the bank said "there is not likely to be a near-term resolution of the funding problems faced by the SIV sector".

HSBC said it expects the new vehicles to operate without market value or net asset value triggers, removing the risk of a forced cash-out. The bank will have to provide around $35 billion of liquidity and term funding, but available liquidity resources are sufficient for this not to affect the bank's balance sheet, HSBC said.

The changeover offer is due by early 2008.

See also: Banks aim to boost liquidity for foundering SIV sector

RBS to restructure Cheyne Finance
How to heal a paper cut
Leaking like a SIV

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: