ZitatOriginal von Edel Man
Denke da eher an diejenigen, die sich eine Belehnung bis 100% aufreden ließen--drüben nicht unüblich.
Besonders aber an Hedgefonds, die mit wenigen % Eigenkapital große Räder drehen.
Grüsse
Edel Man
Hallo Edel Man,
in dem Artikel von Paul Tustain ist sehr anschaulich beschrieben, was abgeht mit den CDO’s. Das Problem sind nicht die Subprime-Schuldner, sondern die Hedge-Fonds, die diese Junk-Anleihen in Zeiten steigender Immobilienpreise pyramidisiert und mit Kredit bis zu zehnfach geleveregt haben. Die Papiere haben jetzt keinen Markt und sind nur 50 bis 90% unter den bisherigen Schätzungen verkäuflich. Und – wie sagte DG gestern so schön: Wo eine Küchenschabe ist, da sind noch weitere......8o
June 22, 2007
Bear Stearns and MBS Hedge Funds: What are the real risks today?
by Paul Tustain
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It starts with the humble mortgage. Lots of people in the United States who have no money - they are called sub-prime borrowers - borrowed 100% of the value of a house right at the top of a housing market which has since fallen sharply.
The lenders, however, did not have to worry very much about the risk of default, because they rolled these mortgages into packages called Mortgage-Backed Securities, which they then sold. They got to be off-risk within a few weeks, because by then these MBS belonged to other financial organizations.
But it is not always easy to sell a package of these Mortgage-Backed Securities (MBS). The process of selling such a device demands that the credit quality is assessed - and because the underlying lender is marketing to sub-prime borrowers, the package of debt in the MBS is heavily composed of mortgages quite likely to go into default. So a credit ratings agency will give it a low credit score.
This makes it difficult to sell, which is where a bunch of smart investment bankers join in.
The investment bankers slice the MBS into several chunks or "tranches". These are known as Collateralized Debt Obligations, or CDOs for short. The idea is to create some higher risk assets and some much safer ones, slicing up the MBS into what are called equity, mezzanine and investment-grade bonds.
The equity takes the higher risk, and so it earns the higher return if things go well. But if things start to go wrong, the equity is lost first...and then the mezzanine. However, even if there's quite a high rate of failure in the higher risk end, the investment-grade bonds still get fully paid out. This persuades the credit ratings agencies to give them a respectable stamp of approval, thereby creating out of low-quality mortgages a respectable amount of highly-rated bonds.
In this way the bankers might, for example, convert a large package of MBS into perhaps 70% investment grade bonds, 15% mezzanine, and 15% equity. The original mortgage lender is in a hurry to get the whole MBS off its book, remember, selling the MBS into the financial markets. That way he replenishes his cash and can go out marketing more mortgages to more sub-prime borrowers.
The investment bank is well motivated to slice up the MBS, and it had better be good at selling all this debt on. It won't want to keep much - if any - of the newly created CDO tranches, since the bank earns its money primarily by distributing the MBS, rather than by taking risks with the chance of subprime mortgage borrowers not making their repayments on time.
It is relatively easy to sell the high-grade investment bonds. Stamped with an investment-grade rating, these bonds are sold off to mostly respectable investment institutions. But the mezzanine, and particularly the equity, are less easy to dispose of.
In effect the 30% of the mortgages in the original MBS which were deemed on a statistical basis to be likely to fail, are concentrated into what investment insiders call "Toxic Waste". How can these bonds be sold off?
Enter the hedge fund. Somehow, and possibly even using some its own money, a bank sets up a hedge fund whose objective is to trade in the high-risk CDO equity and mezzanine instruments. Let's say the bank puts up the first $10 million. The hedge fund then buys the equity tranche of the CDO from the bank.
With a bit of luck, and this is what happened over recent years, the housing market goes up. Now the equity is floating higher in the water, because there's a cushion of higher house prices preventing those original sub-prime borrowers from defaulting. This rather obscure equity instrument, which is not traded anywhere and is not liquid, appears to be worth more than it was at issue. It gets marked up in value, and much faster than the underlying houses, because all the price volatility is concentrated in this thin slice of CDO equity.
The hedge fund is now a performer! And that means it will be rewarded by further investment from outside. So what started as a vehicle with a little investment bank money can grow the funds it manages under its own steam - and that can make its managers very rich.
Next, and this is what hedge funds are all about, it will leverage its risk, too. The hedge fund goes out to a lending bank, holding its high-performing but illiquid toxic waste in its hand, and it asks to borrow money using the waste as collateral. The bank has access, whether directly or indirectly, to cheap money from Japan - where interest rates remain at just 0.5% - and so it has the prospect of lending for spectacular profits.
Now the MBS wheel is fully in motion. The hedge fund loses no time in marking up the value of its equity CDOs on the basis of rising house prices. There is an overwhelming pressure to do so, since the hedge fund's managers are rewarded based on performance - a figure which is far too easy to manipulate if your investments are illiquid and hard to value in the absence of an open market price.
The toxic waste gets marked up without the waste itself getting tested on an open market.
The lending bank sees the equity floating higher and higher in the water, and lends more and more cash against it to the hedge fund. Naturally - as with all collateral - it claims the right to sell if the underlying debt gets into trouble, but it certainly doesn't look like a real danger at this stage. The money lent by the bank against the equity goes back to the hedge fund, which buys more CDO equity from the investment bank, which buys more MBS from the mortgage lender, which provides more money to sub-prime borrowers, who then buy more houses, pushing prices higher again.
This appears to be the background to the Bear Stearns hedge fund problem today. Recently, US house prices have turned sharply down, so now the lending banks have asked for their money back and the hedge funds haven't got it. So the collateral needs to be sold. No problem, surely. It's in the books at a few billion dollars after all.
(…)
There is currently no market for this toxic waste. Everyone is taking a breather. All this came to light Thursday - and amazingly the US stock market went up. But it really could turn very nasty. Everyone with a hedge fund holding in any similar market is powerfully motivated to sell today.
(…)
Habe trotzdem letzte Woche vorsichtshalber den mentalen Stopp für das erste Drittel meiner Silberbarren auf 6,73 DL auf Quartalsschlussbasis angehoben 
posted die nicht mal funktionieren,....