Merrill Lynch dials for more dollars
This evening, it's Merrill Lynch that is out dialing for dollars. Specifically, the company is taking a $5.7 billion writedown and raising another $8.5 billion in capital. Some $3.4 billion of the shares being sold are going to go to Temasek Holdings, the Singapore sovereign wealth fund. Merrill earlier this year raised $6.6 billion in capital, a sizable chunk of which came from Temasek.
Here's something else that really jumps out at you:
"On July 28, 2008, Merrill Lynch agreed to sell $30.6 billion gross notional amount of U.S. super senior ABS CDOs to an affiliate of Lone Star Funds for a purchase price of $6.7 billion. At the end of the second quarter of 2008, these CDOs were carried at $11.1 billion, and in connection with this sale Merrill Lynch will record a write-down of $4.4 billion pre-tax in the third quarter of 2008."
Is Merrill saying that a portfolio of securities with a face value of $30.6 billion was sold for $6.7 billion? Roughly 22 cents on the dollar? What does that "mark" now mean to the value of similar assets that other banks or brokers might be holding?