Security Capital Defends Termination of CDO Contracts
Bloomberg News March 20, 2008 (New York)
By Jody Shenn

Security Capital Assurance Ltd. defended its decision to cancel collateralized debt obligation contracts with Merrill Lynch & Co. saying the securities firm breached agreements by shifting control rights to at least one third party.

Bank losses may rise if default protection bought from companies such as XL fails to pay off. Other bond insurers may also seek to cancel $100 billion of contracts on CDOs tied to subprime mortgages that they wrote if they're unable to shore up capital through other means [causing them to lose the “Triple-A” rating], according to Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance.

END OF EXCERPT

Article is available via the above link to subscribers of Bloomberg.com.

Clients of Tavakoli Structured Finance also have access to proprietary TSF research, which is not published in any other paid or public forum.

Please click here for other articles.