STOCK MARKET WATCH -- Friday, 4 May 2012

[Demeter]

32. Citigroup, Credit Suisse, Goldman Said to Prepare CDO Bid

http://www.bloomberg.com/news/2012-04-23/citigroup-credit-suisse-goldman-said-to-prepare-cdo-bid.html

Credit Suisse Group AG (CSGN), Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS) are teaming up to bid on $7.49 billion of commercial-real estate securities the Federal Reserve Bank of New York took on in the 2008 rescue of American International Group Inc., according to three people with knowledge of the auction.

The group expects to distribute its preliminary price estimates tomorrow on the debt, composed of two collateralized debt obligations issued by Deutsche Bank AG (DBK) in 2007 and 2008. Final bids are due on April 26 by 9 a.m. in New York, said the people, who declined to be identified because the negotiations are private.

The New York Fed invited eight broker-dealers to compete for the so-called MAX CDOs after receiving “several” unsolicited bids for the holdings in its Maiden Lane III LLC portfolio, according to an April 10 statement. The other banks invited to bid are Barclays Plc (BARC), Deutsche Bank AG, Bank of America Corp. (BAC), Morgan Stanley (MS) and Nomura Holdings Inc.

The CDOs could be sold intact or broken into pieces, though an interest-rate swap contract with Barclays would need to be paid out to access the underlying bonds, eating into profits, JPMorgan Chase & Co. (JPM) analysts said in a report last week. The consortium of the three banks is not looking to break up the deals, the people said.