Some of Stanfield Asset Management's CDO investors are so angered with alleged par building trades that they're spilling the beans about the purported transaction. According to sources, Stanfield purchased a total of $13.75 million in Airplanes Pass Through Trust (APTT) notes for two of its vehicles, Stanfield CLO, Ltd. and Stanfield / RMF Transatlantic CDO LTD., despite the fact that the C class and D class notes of APTT had been downgraded in 2001. The alleged trades were made in the third quarter 2002 in order to pull the CDOs through mezzanine overcollaterlization (O/C) tests and continue receiving equity payments. By November 2002, Moody's Investor Service put tranches in both CDOs on watch for downgrade. However, Moody's did not directly tie the downgrade watch to allegations of par building trades, which technically are not an illegal practice. What effect did this all have in the market? When Stanfield returned in November 2002 via Lehman Brothers to sell its Stanfield Carrera CLO, price talk was first at 48 to 50 basis points over Libor. However, say sources, the CLO closed at 58 basis points over. In defense of Stanfield one source said, "It was a win-win trade for them...if the APTT deal defaults the assets can be carried at 30 cents on the dollar." Stay tuned...

* Goldman Sachs was tapped to handle the sell-off of Centre Solutions's CDO holdings, secondary market traders reported. Centre - which is closing its doors - reportedly has CDO holdings at all levels of the capital structure, including equity. IFR Markets

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