Asset managers of between seven and eight market-value CBOs have sent legal documents to investors requesting ratification of amendments to avoid early amortization events. The deals could go into early AM because they are coming dangerously close to breaching their minimum net-worth tests, which are calculated once per year.
"This is a legitimate fear," said one market-value CBO asset manager familiar with the amendments. "If a market-value CBO breaches its minimum net-worth test, it amortizes and liquidates its portfolio. This is not what we want in these bad markets."