The Federal Reserve Bank of New York announced the sale of the rest of the securities in the Maiden Lane II LLC (ML II) portfolio.
In this latest sale, the New York Fed sold assets with a current face amount of $6.0 billion from ML II through a competitive process to Credit Suisse.
The deal was prompted by an unsolicited offer from Morgan Stanley to BlackRock Solutions, the investment manager for ML II, to buy the assets.
The five broker-dealers included in the competitive process were Barclays Capital, Credit Suisse, Merrill Lynch, Morgan Stanley, and RBS Securities. The broker-dealers were selected based on the strength of each of their recently submitted offers to acquire ML II securities.
This will be the third sale of ML II assets this year. The first two were held on Jan 19 and Feb 8.
In the last sale, Goldman Sachs beat four other firms, Credit Suisse, Barclays Capital, Morgan Stanley and RBS Securities.
The Feb 8 sale was prompted by an unsolicited offer from Credit Suisse, which won the first competitive process on Jan. 19.
The bank's management of the ML II portfolio will result in the full repayment of the $19.5 billion loan extended by the New York Fed to ML II. It will also generate a net gain for the benefit of the public of roughly $2.8 billion, which includes $580 million in accrued interest on the loan.
“The completion of the sale of the Maiden Lane II portfolio has resulted in significant gains for the public and marks an important milestone in the wind-down of the extraordinary interventions necessitated by the financial crisis,” William Dudley, president of the New York Fed, said.
The net proceeds from this sale along with proceeds from previous sales, as well as cash flow the securities generated while held by ML II, allow the full repayment of the New York Fed's senior loan plus interest, the junior AIG deferred purchase price plus interest, and offer residual income, which will be distributed in accordance with the ML II agreements.
Consistent with its March 2011 announcement about the disposition procedures for ML II, which allowed for the types of reverse inquiries that Morgan Stanley made, the New York Fed directed BlackRock to conduct a sale via a competitive process.
The New York Fed decided to move forward with the transaction only after determining that the winning bid represented good value for the public.
Net proceeds from the sale will be reported as part of the portfolio's normal reporting schedule on April 16. In keeping with previously declared policy, the New York Fed will also offer further information about all ML II deals such as an account showing the acquirer and the price paid for each individual security on May 29.
