Goldman to the Rescue

Goldman Sachs is close to finalizing a plan to restructure a $7bn investment vehicle formerly run by London-based hedge fund Cheyne Capital, in a move that could potentially usher in a crucial new phase in the credit turmoil.

The US bank’s proposed reorganisation of the so-called structured investment vehicle is set to be just the first of a number of deals that could see about $18bn worth of SIV assets restructured in the coming months.

The deal, which could be signed as early as Tuesday, is likely to be closely watched by the financial industry, since Cheyne is one of the largest independent SIVs – and the deal marks the first time that any collapsed SIV has been restructured in this way.

Deloitte & Touche, which was brought in as receiver for the SIV formerly known as Cheyne Finance, was on Monday close to signing off on the plan. The SIV went into receivership last autumn when the value of its credit assets, such as mortgage-linked securities, plunged.

The Cheyne restructuring, which has been brokered after nearly 10 months of negotiations, will require the receivers to organise an auction of the Cheyne assets in the coming weeks, to establish a transparent price for these instruments. This is important because in recent months it has often proved impossible to value these murky assets.

http://www.ft.com/cms/s/0/db9ed2e0-3bd5-11dd-9cb2-0000779fd2ac.html