Deals of the year 2010: FDIC $4 billion multi-tranche structured sale guaranteed note

Mortgage securitization markets have been practically frozen since 2008, largely because of the overhang of distressed assets that sit on the balance sheets of banks and the main mortgage agencies Fannie Mae and Freddie Mac, both of which now sit under US government conservatorship. For the Federal Deposit ­Insurance Corp, which has absorbed the assets of 324 failed banks since the beginning of 2008, the challenge was to dispose of its most distressed assets and rebuild its deposit insurance fund without further depressing prices in the underlying market.

Federal Deposit Insurance Corporation (FDIC)
Size: $4 billion multi-tranche structured sale guaranteed notes
Date: March 11, 16, 26
Lead: Barclays Capital
Coupon: zero and fixed coupon

After Barclays Capital had advised the FDIC on the sale of the failed Californian bank IndyMac in early 2009, BarCap and the FDIC began discussing various techniques that would create some liquidity and set a new market level, while also allowing the FDIC to monetize some of its investment. Selling the distressed assets onto the open market was considered a risky option, given the varied estimates of clearing prices of between 10 cents and 50 cents on the dollar.

Access intelligence that drives action

To unlock this research, enter your email to log in or enquire about access