Lehman restructured
The collapse of Lehman Brothers left billions of dollars of structured notes with unhedged exposures, prompting issuers to scramble for new counterparties to restructure trades. Meanwhile, some structured product providers have offered hope to investors in Lehman-issued paper by absorbing the defunct trades into highly geared credit-linked notes. Matt Cameron looks at the restructuring process
In the three weeks following the bankruptcy of Lehman Brothers, the structured products market descended into a frenzy of pricing and restructuring. Two types of Lehman structured trades were affected by the collapse - those for which it acted as the hedge counterparty or dealer in an over-the-counter contract, and structured products issued by the defunct bank. Former counterparties to Lehman were forced to source new hedges while retail investors in Lehman-issued products were left holding
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