Junior noteholders in a Societe Generale SIV - Premier Asset Collateralised Entity (PACE) - were not paid back, according to a Standard & Poor’s release yesterday. The rating agency said “the asset sale and repayment of all senior obligations means that there were insufficient funds to repay the remaining capital noteholders” on the 16 June payment date. As a result, S&P lowered the capital notes to D, or default.

S&P said it has withdrawn its ratings on the issuer credit rating and senior ratings of PACE. The withdrawal of ratings follows the repayment of all outstanding commercial paper, medium-term notes and amounts owed under the liquidity facility, using proceeds from the sale of the portfolio. Following this sale, PACE no longer has any assets, said S&P, resulting in the breach of and failure to cure its liquidity and interest rate limit tests. This means that the SIV has entered into an "enforcement" mode of operation.