Insurance company cuts CBO positions loose with no reserve

A US insurance company based in the midwest auctioned five old-vintage CBOs with no minimum prices ensuring all positions cleared on Wednesday at 11am New York time. Likely motivating the no-reserve auction was the fact that the company had a failed b-wic in early December of approximately 20 positions where none of the bonds traded, says a CDO banker familiar with the matter.

In respect to the buyer’s wishes on this week’s auction, the dealer refused requests to release covers (second best bids) on the trades. Instead the firm sent the following note: "All bonds traded and the buyers have been notified. We will not be releasing cover information given the low levels involved. Many thanks for all the work and happy holidays."

CBO b-wic due 11am EST 16 December