Any TALF Takers? Anyone At All?

Yesterday was the first subscription day for interested TALF participants, but due to a seeming lack of preparation and time on both sides, it was extended until tomorrow. Is two days going to make much of a difference?  Probably not.

Notably, it’s not for a lack of interest. The most vocal example is PE pro Wilbur Ross, who expressed his desire to get a piece of the TALF action last week. From what I hear, there are plenty of others in the alternative asset community and elsewhere.

At issue is the timing. As Bloomberg reported:

“A number of people were concerned that some glitches might not have been ironed out this week” in time to meet the first deadline for investors to apply for the Fed loans, said Malcolm Dorris, a senior partner in the securitization group at law firm Dechert LLP in New York.

See, before you can ask for TALF loans to buy up asset-backed securities, you probably want to know which assets you plan to buy with the sellers, or “primary dealers.” The problem, according to one potential TALF participant I spoke with, is that these primary dealers don’t have their ducks in a row.

The primary dealers, which include 16 banks and financial institutions (HSBC, Barclays, Goldman Sachs, UBS, etc.) haven’t boiled down what exactly they’ll be offering, making it hard for the potential buyers to go forward. Wilbur Ross expressed the same concern last week, when he said the degree to which the underlying loans of these securities can be vetted by their buyers is not clear. 

The aforementioned Bloomberg report stated that a $1.3 billion bundle of auto loans from Nissan Motor Co. would be among of the first batch of TALF-qualified offerings.  

TALF, which stands for Term Asset-Backed Securities Loan Facility, is designed by the Fed to open up business and consumer lending.

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