A look at Merrill's deal on CDSs

We've heard a lot about how Merrill Lynch's deal with Lone Star valued its collateralized debt obligations at 22 cents on the dollar--and the implications that it might have for Citigroup and others that will likely try to offload their portfolios. The New York Times takes a look at another Merrill Lynch deal, one that seeks to unwind credit default swap positions. The operative number here is 13 cents on the dollar. That's what Merrill's deal with XL Capital values Merrill's $3.7 billion in CDSs. Like CDOs in general, you can't apply this across the industry, but it is indicative of what it will take for banks to offload their CDSs. New York regulators would indeed like other banks to take similar steps. The health bond insurers depends on it.

For more:
- here's the New York Times article

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Another Merrill Lynch shocker: $5.7 billion more in writedowns

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