The first bid list for the Maiden Lane II portfolio has begun to circulate, according to market reports. The sale is the first since the Federal Reserve rejected AIG’s offer to repurchase the securities for $15.7 billion.
The reports said that the bid list comprises around $1.5 billion face value in securities. Maiden Lane II was created by the Federal Reserve Bank of New York to buy the mortgage securities from the struggling insurer in 2008 at the height of the market crisis. Last week, the Fed said it rejected AIG's offer to by the Maiden lane II assets.
It said its investment manager, BlackRock Solutions, would sell the securities in the portfolio — which were acquired during the bailout of AIG — "individually and in segments over time."
The first sale will include, market reports indicated, more Alt-A mortgages and less subprime paper, which comprises around 33.64% of the total Maiden Lane II portfolio.
"The reason you are seeing less subprime on list number one is because that clearly is the largest subset of what they own and since they are very mindful of not flooding the market with paper and causing prices to fall apart [the Fed] put less on there," said Jesse Litvak, a managing director at Jefferies & Co., in an e-mail. "Clearly all the dealers have done their homework and price talk is already out there from everyone, now we just have to wait and see what Wednesday brings when prices are submitted for bids."
According to a report by CNBC, AIG is among the investors considering a bid for this initial Maiden Lane asset sale.