NEWS - "Banks gamble with Lehman debt"
(TRANSLATED GERMAN Article)
When the U.S. bank Lehman Brothers four years ago suddenly collapsed, losing hedge funds, banks and investment managers, the accounts were talking at the Lehman's London office, access to cash, other assets and trading positions in the billions. Many still do not know how much of it they will meet again.
But Wall Street is betting now that the requirements are met in full - and their value may be even higher. When sign company insolvency, creditors then sell their demands often to quickly get money, they often take for substantial reductions in purchasing. For such claims, there is a hot market.
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Claims against the British Lehman subsidiary are currently trading at premiums. Pictured: Scene from the London office in 2008.
In the case of Lehman now some big investors have entered. Amazingly, they paid for claims against the London-daughter more than 100 percent of the original value, it is unanimously of buyers and sellers as the trustee of the Lehman subsidiary.
Usually need seller of claims against bankrupt companies discounts of at least half or more take to the original value. Since Lehman makes no exception: Due from other than the London subsidiary are valued at the market much lower.
Investors rely on the Trustee
In London, prices are driven by the hope that we will succeed to the Trustee, sufficient to enable bulk to service all claims and we have also to pay interest, as is provided by the UK law.
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For creditors who have sold their assets in some years ago, because they were anticipating heavy losses, the development comes as a surprise. The buyers can look forward to unexpectedly high profits. For loans to bankrupt companies has now developed a vibrant trade, have discovered the hedge funds and banks in search of higher returns for themselves.
At the price of the most recent deals in this market can be read off the growing optimism that connects especially with failed financial institutions. Claims against the collapsed a year ago derivatives broker MF Global went a few days ago to 90 cents on the dollar on the table. Cheated customers of Bernard L. Madoff Investment Securities were last 60 percent to their demands in the hope that at the end of an even higher rate springs out.
Lehman Brothers in London, whose daughter was primarily used by hedge funds and other investors to handle their trades, recently transferred some assets to former customers who could not access their accounts long. Thousands continue to hang in the air, however, because the money was not in segregated accounts. These subordinated creditors can expect their first payment in November.
Agreement with Lehman U.S. drove prices
Prices for Lehman's London-claims recently made a set up after the Trustee had recently announced an agreement with the run-off U.S. brokerage business of Lehman, passed with the reciprocal financial assets totaling $ 38 billion.
If bankruptcy court and the Supreme Court confirmed for England the agreement, would Lehman Brothers International Europe, the British Lehman subsidiary, to get more than $ 1 billion for its creditors holding unsecured claims and. Several billion for a separate group of creditors
The latest report to creditors shows that the British Lehman subsidiary has secured assets for £ 11 billion of subordinated debt. In addition, receivables from third parties and other Lehman companies that will bring a minimum of an additional 600 million pounds. Given another, unrecognized assets investors are, therefore, that the British subsidiary will be able to meet the current demands completely.
At the most, to the claims of creditors could amount to up to 55 billion pounds. But Tony Lomas, the trustee conducts the settlement of transactions, waving off in this sum. It is conceivable that in the end only loans of 15 billion pounds remained. A majority of the loans had been namely provided by other Lehman companies, and they often lacked any basis, he said.
Law plays into the hands of creditors
British law creditors could sweeten the situation. Insolvent companies are then required to make interest payments if they reach the point of being able to repay their debts. In this case, an interest rate of 8 percent per year would result. Therefore, some buyers expect in the market, more than 130 percent of the nominal debt level regain the 2008th
Among the most recent sales of Lehman claims include those $ 400 million owed the bankrupt bank Claren Road Asset Management, a hedge fund in New York. It sold its debt to about 100 percent of the sum, as market participants and others concerned with the business people said.
State Street Bank sold a 300 million dollar debt for more than 96 cents on the dollar, said informants from the environment of the transaction. Converted into pounds, it will be even more than 100 percent. Who are the buyers of the loans, meanwhile, is not clear.
Among the major investors in Lehman claims include Goldman Sachs , Bank of America and the Royal Bank of Scotland , like to hear from market circles. All three financial groups, both on behalf of customers and operate in their own interest. Other buyers and holders of Lehman's assets are otherwise hedge funds like Elliott Management, King Street Capital Management and Paulson & Co. Officially manifested none of the investors.
Lomas will not comment on the trustee estimates of investors. "It is too early to estimate how big is the chance that we are able to serve all demands," he said, "This is even more true for the question of the legal obligation of interest payments."
