Ouch! Merrill Lynch Revalues CDOs at 22 Cents per Dollar
(homeinvestorsllc.com photo.)
Merrill Lynch announced yesterday that oit was revaluing its Collateralized Debt Obligations (CDOs) at 22 cents on the dollar. In other words, they figure 78 cents of every dollar they invested isn't recoverable. Yikes!
Word is, Merrill's revaluation will force Citibank to do the same— and probably dozens of other banks as well. That's got to be hard on the balance sheet. Yet the financial world reacted relatively positively to this announcement. Said one analyst:
What a lovely metaphor (it reminds me of my drinking days)— yet a metaphor that perhaps aptly describes our economic conditions."They've established a benchmark for everyone else. These guys who have cash waiting on the sidelines for the final puke of these securities are now making phone calls trying to find out who else wants to puke, who else wants to sell at 22 cents on a dollar. There, that's where the bottom hits."
Comments