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Friday, 18th September 2020
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Winning deal provides a solution to an SIV puzzle back
2008 obviously recorded less activity than previously for Ireland’s securitisation industry, however significant events are occurring now both for the future of the industry and for the international reputation of Ireland’s financial services industry in this space. The winner of this year’s Securitisation Deal of the Year is the restructuring of the Cheyne Capital structured investment company (SIV). The Cheyne deal shows how Goldman Sachs International auctioned off the assets belonging to Cheyne’s SIV and how the structure of the deal is likely to provide a template for other defaulted SIVs
The Securitisation Deal of the Year for 2009 is awarded to the high profile restructuring of an Irish company, Cheyne Capital structured investment company (SIV), formerly known as Cheyne Finance plc and now known as SIV Portfolio plc.

The uniqueness of the deal is illustrated in the fact that it involved one of the very first successful restructurings of a SIV which involved a public auction of the underlying portfolio. In addition, the portfolio of assets was managed out of the UK, whilst the underlying auction process was negotiated with the receiver, Deloitte and Touche, and Goldman Sachs International.
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SIVs, which use short term borrowings to buy higher yielding securities, owned more than $400 billion of assets at their peak in 2008. However, the market collapsed as investors shunned SIV debt with concern that the funds held mortgage-linked assets that were losing value and they would be forced into fire sales. Some industry sources claim that Goldman Sachs International appears to have come close to solving the SIV puzzle by auctioning off the assets belonging to Cheyne’s SIV and the structure of the deal is likely to provide a template for other defaulted SIVs.

In terms of timing, David Baxter at A&L Goodbody, who advised Deloitte & Touche, says, ‘It was very important to ensure that there was a clear and transparent auction process in respect of the underlying assets which was in full compliance with all relevant laws and regulations relating to public disclosure and stock exchange rules.’

The fact that a portfolio of underlying distressed bond assets was sold in a very illiquid market is also testament to the innovative and original approach taken by those involved.
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