June 19, 2008

Banks not closing for securitzation but closing loans for balance sheet.

Return of recourse loans / personal guarantees.

Counterparty Risk Index (CDR). The CDR counterparty risk index, created by research firm Credit Derivatives Research, will track the average of the market spreads of five-year credit default swaps for 15 of the largest banks and brokers that deal in credit derivatives. Credit default swaps are contracts that insure the payment of the bonds that a bank issues. For instance, if a five-year credit default swap that guarantees USD10m (EUR6.45m) of Goldman Sachs debt trades at 105 basis points, this represents a cost of USD105,000 per year. The value of a credit default swap therefore moves inversely to the risk that a bank will default.

Healthcare REITs could be bright spot in lousy RE market.

Some hedge funds have already started to position themselves as a merchant bank with investment banking capabilities to originate structures. This allows the manager to change cash flows as he wants them, and to be a principal investor. Hedge funds have started to build their own channels of origination and enter direct lending. These hedge funds will be able to build a strong financial services company-type balance sheet - a "real" corporate balance sheet to borrow and raise equity against.