 |
February 18, 2008 |
|
|
|
 |
WHISTLEJACKET CAPITAL: S&P Junks Notes on NAV Test Failure Standard & Poor's Ratings Services placed the issuer credit, CP, and MTN ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its ratings on the capital notes issued by Whistlejacket and White Pine. The ratings on the capital notes remain on CreditWatch with negative implications, where they were placed Dec. 7, 2007. In addition, S&P lowered its issuer credit rating on Whistlejacket Capital Ltd., the structured investment vehicle that was created as a result of the merger of Whistlejacket Capital Ltd. and Whistlejacket Capital LLC with White Pine Corp. Ltd. and White Pine Finance LLC. Standard & Poor's also lowered its ratings on Whistlejacket's commercial paper and medium-term notes. On Feb. 11, 2008, S&P received notification that Whistlejacket breached the 50% net asset value test. NAV is typically calculated as the market value of the assets and cash minus the senior liabilities, and the NAV test is calculated as the NAV as a percentage of capital. This breach means that a mandatory acceleration event has occurred and the vehicle has entered enforcement mode. Therefore, the security trustee will now manage the vehicle. Standard & Poor's will wait for the security trustee to contact us regarding its next steps. Other vehicles that have already entered enforcement mode have appointed a receiver that, when faced with the prospect of selling assets to repay the liabilities, has either stopped liability payments or declared the vehicle insolvent. The rating actions on Whistlejacket reflect the uncertainty regarding the pending security trustee decisions and, if a receiver is appointed, the receiver's actions. As with other SIVs that have entered enforcement mode, there are several possible outcomes: -- The senior creditors elect on a formal standstill agreement, which would suspend the payment maturity dates until a certain date; -- The senior creditors and the security trustee, in consultation with an enforcement manager, decide on the next actions to take (in this scenario, payment dates could arrive and this would result in a payment default); -- The senior creditors and the security trustee, in consultation with an enforcement manager, decide to liquidate the portfolio and are able to repay the senior creditors in full; or -- The senior creditors and the security trustee, in consultation with an enforcement manager, decide to liquidate the portfolio and are unable to repay the senior creditors in full due to further erosion in the asset portfolio's value. Whistlejacket is the first bank-sponsored SIV to enter enforcement mode. Most other bank-sponsored SIVs have either arranged for full liquidity support to the SIV or proposed capital injections to support the SIV. Standard Chartered Bank (A+/Stable/A-1) and HSBC Holdings PLC (AA-/Stable/A-1+) are the two banks that have proposed setting up new structures to replace the old ones. This rating action reflects the uncertainty associated with those efforts closing quickly. The vehicle is managed by Standard Chartered Bank, which is responsible for purchasing assets, managing the portfolio, and overseeing the issuance of the CP and MTNs. As of Feb. 11, 2008, Whistlejacket's outstanding senior liabilities are approximately US$6.953 billion. The portfolio composition is approximately: -- Financial debt: 43%; -- RMBS: 12%; -- CDOs/CLOs: 17%; -- CMBS: 9%; and -- Other structured finance: 19%. The portfolio valuation and NAV tests are based on mark-to- market prices that the manager updated and reported to Standard & Poor's. Ratings Whistlejacket Capital Ltd. Rating To From -- ---- Issuer credit BB/Watch Neg/B AAA/Negative/A-1+ CP B/Watch Neg A-1+ MTNs BB/Watch Neg AAA Capital notes CCC-/Watch Neg BB-/Watch Neg Capital notes CCC-/Watch Neg B-/Watch Neg |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Asia Pacific. To receive the Full TCR-AP please CLICK HERE.
