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Deals of the Year 2012: Maiden Lane III

Maiden Lane III
Size $7.9 billion unwinding of Max CRE CDO
Date April 2012
Lead dealers Barclays, Deutsche Bank
return to the Global Deals of the Year index

Wall Street traders typically believe that the business of profiting from capital flows works best with minimal interference, but given the impact that the US government, in the form of the Federal Reserve, had on the structured finance market last year their perceptions might well have changed.

The Fed’s first commercial real estate CDO sale in April from its $47 billion Maiden Lane III portfolio of toxic AIG assets, assumed as part of the insurer’s 2008 bailout, not only boosted liquidity and pricing transparency but was a defining moment in the recovery of the structured finance market, which since the credit crisis has been as good as dead.

The $7.9 billion MAX CRE CDO sale – the largest individual sale of illiquid CDO securities from Maiden Lane by the Fed – was remarkable on many levels, not least because it enabled the Fed to rid itself of a large chunk of once toxic, crisis-era liabilities, while at the same time making a tidy profit for US taxpayers.

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