The Federal Reserve Bank of New York plans to begin more extensive sales of the nonagency residential mortgage-backed securities in its Maiden Lane II LLC portfolio into an improved market for the bonds, turning down AIG’s offer to buy back the securities.
The New York Fed said it did not want to sell the portfolio as a single block to reduce the likelihood a single entity ends up with exposure to the assets and give a larger set of investors a chance to bid on them. It said it would take care not to disrupt the market when selling the securities.
Sales of the securities are slated to take place both individually and in segments over time and as market conditions warrant. It will sell the securities through investment manager BlackRock Solutions. It has no fixed timeframe for the process.
BlackRock may begin circulating the first bid list sale early next week via multiple broker-dealers. The New York Fed said it would also accept investor inquiries over time about specific parcels of securities, but said it would not accept any of these bids without putting them into competition with other interested investors.
The Fed originally purchased the assets in 2008 when it had to help bail out companies like AIG.
