Barclays Capital has completed the restructuring of a $1.8bn (€1.3bn) structured investment vehicle run by UK hedge fund Cairn Capital that ran into funding problems in the face of increasingly tough conditions in the commercial paper market.
Barclays and Cairn said in a statement today they have restructured the Cairn High Grade Funding I vehicle, one of several so-called SIV-lite funds that Barclays helped arrange. SIV-lites rely on short-term commercial paper to fund portfolios of longer-dated securities.
The two companies said the restructuring was made necessary by “the closure of the ABCP market on which Cairn High Grade Funding I had relied for funding”.
The fund has been converted into a cashflow collateralised debt obligation, meaning that it will no longer rely on the asset-backed commercial paper market for funding. The fund’s outstanding asset-backed commercial paper borrowings will be redeemed as they mature, and replaced by longer-term funding.
Barclays is providing the senior debt financing for the restructuring, and the bank said it has hedged that exposure.
Source: efinancialnews.com
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Interesting post on BarCap
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