Banks use PDCF to shift risky debt

Investment banks could be getting rid of unsaleable high-risk loans by using them as collateral to borrow funds from the Federal Reserve through the primary dealer credit facility (PDCF).

According to a Morgan Stanley report, some of the new collateralised debt obligations issued in March were made up of the restructuring of transactions that were previously market-value collateralised loan obligations, but were downgraded or had hit liquidation triggers. All of the March CDO issuance was in leve

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