27 cents on the dollar for a CDO. Is that a floor or a ceiling?


	27 cents on the dollar for a CDO. Is that a floor or a ceiling?

jcfalkenberg

12-4-2007 6:03 AM

379 views

tags:

cdo, structured finance, e*trade, citadel, for:macromonitor

jcfalkenberg says:

Might really be a floor , if not a signal we've reached the bottom. Citadel is an early buyer of distressed assets even if this means running the risk of buying to soon.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/9291da4b-ab45-4a8d-b859-b876f8402a8b/71DA69AC-5E35-4741-8390-714221D57A6A/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://online.wsj.com/article_print/SB119664222773711179.html" href="http://online.wsj.com/article_print/SB119664222773711179.html" style="font-size: 11px;">online.wsj.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article_print/SB119664222773711179.html">Ever since debt markets seized up this summer, investors have struggled with the question of how much securities backed by risky mortgages are worth.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article_print/SB119664222773711179.html"><P class="times">Now, thanks to Citadel Investment Group's purchase of $3 billion in debt held by <B>E*Trade Financial</B> Corp., there is at least one answer. Citadel paid an average of about 27 cents on the dollar for these assets. And it received a boatload of E*Trade shares as part of the deal.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://online.wsj.com/article_print/SB119664222773711179.html">While seemingly low, the Citadel price might emerge as something of a market floor, at least for some of the investments involved. It also might signal that some investors are now willing to step in and make a market for these stalled securities. Although it is unlikely that investors would use this floor as a valuation for securities held by <B>Citigroup</B> Inc. and <B>Merrill Lynch</B> & Co. -- both of which have big CDO holdings -- it may at least present a worst-case scenario for these portfolios.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/71DA69AC-5E35-4741-8390-714221D57A6A/blog/" title="blog or email this clip"><img src="http://content9.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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