StanChart dumps plan to fund SIV

Standard Chartered Plc abandoned a plan to refinance its $7.15 billion Whistlejacket Capital Ltd structured investment vehicle, the largest SIV run by a bank to collapse.

The London-based bank blamed the "continuing deterioration in the market" for its decision, in a statement.

Whistlejacket will become the sixth SIV to default if it doesn't make a payment by Feb 21 when a three-day grace period ends, according to Standard & Poor's. SIVs with more than $20 billion of total assets are in default, including funds managed by New York-based Ceres Capital LLC and Cheyne Capital Management (UK) LLP in London.

SIVs, funds that use short-term borrowing to buy longer- dated assets, are failing because they're unable to attract investors recoiling from securities that package mortgages and other assets. Banks led by HSBC Holdings Plc and Citigroup Inc have stepped in to support their SIVs with more than $140 billion of assets.

Whistlejacket appointed receivers after a decline in the value of its holdings triggered rules forcing it to wind down.

Agencies

(China Daily 02/21/2008 page16)