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Ash4781

Cheyne Capital Fund Posts Loss On Subprime Slump

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

June 25 (Bloomberg) -- Queen's Walk Investment Ltd., a fund investing in the riskiest portions of bonds backed by mortgages, reported a net loss caused by the slump in the U.S. subprime market and fewer U.K. borrowers paying penalty charges.

The losses were caused by ``significant developments'' in the U.S. and U.K. mortgage markets, the statement today said. U.K. borrowers are increasingly waiting until the end of their discount periods before repaying their loans, which reduces the revenue from penalty charges for early repayments, according to the statement.

Revenue from penalty charges. How do they know how much that's going to be ?

Edited by Ash4781

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Revenue from penalty charges. How do they know how much that's going to be ?

Well they have written it down by 50% as starters for 10 - maybe there is further to go - more worrying they are reducing leveraging to 6.6 times assets - so that means that it was at least 13.2 assets before!!!!!!!!!!

During the first quarter of this year, Queen’s Walk wrote down the value of these securities by almost 50 per cent, officials said on Monday.

Lucky this isn't a systemic issue and that all other Hedge Fund CDOs are sensibly priced . . . . . . . . oh well it was worth a try!

Full article (very bear) at http://www.ft.com/cms/s/ee9a9066-2347-11dc...0b5df10621.html

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Well they have written it down by 50% as starters for 10 - maybe there is further to go - more worrying they are reducing leveraging to 6.6 times assets - so that means that it was at least 13.2 assets before!!!!!!!!!!

Lucky this isn't a systemic issue and that all other Hedge Fund CDOs are sensibly priced . . . . . . . . oh well it was worth a try!

Full article (very bear) at http://www.ft.com/cms/s/ee9a9066-2347-11dc...0b5df10621.html

How do they price these things ?

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How do they price these things ?

They use a machine to generate a theoretical price.

The actual price is what the secondary market is willing to pay - pennies on the dollar!

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They use a machine to generate a theoretical price.

The actual price is what the secondary market is willing to pay - pennies on the dollar!

So the cash they have is less than last year's losses. That's comforting for the shareholders when the debt commitments are now only 6.6 times the balance sheet assets. Are they technically solvent?

Good thing that UK pemsion funds aren't investing in such funds... Ooops !

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