HSBC plans record-breaking SIV

HSBC has launched the largest ever structured investment vehicle (SIV) launch, with an initial portfolio of over $6 billion, called Asscher Finance.

The SIV will invest in 90% AAA-rated asset-backed securities (ABS), while the minimum rating for any investment is A-/A3. The SIV has a three-tier capital structure. The top tier consists of commercial paper (CP), the second tier is European and US denominated medium-term notes (MTNs), the third tier includes both A-rated mezzanine notes and BBB-rated income notes. The latter tranche, made up of both the mezzanine and income notes, will issue $550 million of notes. HSBC also has a $23 billion CP programme, Solitaire Funding, that invests in ABS.

The bank’s first SIV, Cullinan Finance, launched in September 2005 and now has $35 billion under management. Cullinan can invest securities rated BBB-/Baa3 or above.

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