Global Finance: Fed Sells Out Latest AIG Bond Offering
NEW YORK -- The Federal Reserve Bank of New York on Thursday sold all 29 subprime mortgage bonds on offer in its latest sale from a portfolio of securities acquired from American International Group.</br></br>The securities, held in a legal entity called Maiden Lane II, sold for what the Fed had estimated their fair current value to be, $878.6 million. The debt was part of a clutch of so-called toxic bonds the central bank acquired when it rescued the failing insurer in 2008.</br></br>Market participants said the small number and size of assets on offer helped the Fed to sell out its entire list.</br></br>"To be sure, a lower-dollar list presents a less-challenging hurdle for both buyers and sellers," Walter Schmidt, a senior vice president for FTN Financial Capital Markets in Chicago, wrote in a note to clients. "Still, it was good for the market to see that the entire . . . list traded after such a low hit rate on the previous list."</br></br>The Fed had been selling bonds with a face value of about $1.5 billion almost each week since April 6, and some market participants have said the process is too drawn out and is depressing prices on all subprime residential mortgage bonds.