IKB-Owned Rhinebridge SIV May Be Unable to Repay Debt Following Asset Sale

Discussion in 'Wall St. News' started by ASusilovic, Oct 18, 2007.

  1. Oct. 18 (Bloomberg) -- Rhinebridge Plc, a structured investment vehicle run by IKB Deutsche Industriebank AG, said it may not be able to pay back debt related to $23 billion in commercial paper programs.

    Rhinebridge suffered a ``mandatory acceleration event'' after IKB's asset management arm determined the SIV may be unable to repay debt coming due, the Dublin-based fund said in a Regulatory News Service release. A mandatory acceleration event means all of the SIV's debt is now due, according to the company's prospectus.

    Rhinebridge, which was forced to sell assets after being shut out of the commercial paper market, said it must now appoint a trustee to ensure that the interests of all secured bondholders are protected.

    ``The manager has been in contact with the security trustee to discuss the occurrence of the enforcement event and the mandatory acceleration event, and further information will be provided to investors in due course,'' the company said.

    Rhinebridge was set up by IKB in June to sell short-term commercial paper to invest in securities with longer maturities and higher yields, including mortgage-backed debt.

    SIVs worldwide have been forced to sell about $75 billion of assets in the past two months to repay maturing debt as investors balked at buying securities linked to money-losing subprime mortgages. SIVs have different operating states to protect investors and allow the fund time to recover from a market slump. Enforcement is typically the last state, and is irreversible.

    Dusseldorf-based IKB had to be bailed out this year by a group led by German state-owned KfW Group because of potential losses related to subprime loans.

    Mandatory accelaration event =>

  2. Bowgett


    Customer: "Uhhhh, you know that money I invested last month?"
    SIV: "Yes?"
    Customer: "I need it back."
    SIV:"You mean like in money, currency that stuff?"
    Customer: "Yes, exactly."
    SIV: "Ummmm, well you see... it's like this...."
  3. SIV= Shitty Investment Vehicle
  4. Bowgett