Cheyne SIV To Default

Oct 18 2007 | 8:10am ET

A structured investment vehicle run by hedge fund Cheyne Capital Management will default on its debts, the fund’s receiver said. Cheyne Finance is experiencing an “insolvency event,” making it unable to pay its debts when they are due. The SIV, which saw its credit rating slip to junk earlier this month, will combined its debt regardless of maturity, meaning it won’t pay its commercial paper debt sooner than its longer-term notes.

SIVs, which invest in mortgage-backed securities, have been roughed-up by this summer’s subprime mortgage market debacle.

Receiver Deloitte & Touche said it is negotiating a refinancing of Cheyne Finance, and that an asset sale is neither imminent nor inevitable.

“We are very pleased with the progress being made to implement a financing or a whole-book solution of which we are in advanced negotiations,” Deloitte’s Neville Kahn said. “Today’s determination has not had a detrimental effect on these negotiations and we have no need for immediate liquidation of assets in the book.”


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