The Dutch government selected five bidders in a first auction of U.S. mortgage bonds with a face value of $5.1 billion.
The broker dealers include Bank of America Corp. (BAC:US), Credit Suisse Group AG (CSGN), Deutsche Bank AG, Goldman Sachs Group Inc. (GS:US) and Morgan Stanley (MS:US), the Hague-based Dutch State Treasury Agency said in a statement today. BlackRock Inc. (BLK:US) is running the auction. Bids are due Dec. 11.
The Netherlands last month said it planned to sell $12 billion U.S. mortgage bonds it acquired during the 2009 bailout of ING Groep NV. (INGA) Many of them were tied to riskier borrowers who didn’t document their incomes.
ING, the Netherlands’ biggest financial-services company, said Nov. 1 that the market value of the bonds was 6.4 billion euros ($8.7 billion), about 71 percent of the face amount. The government may see a gain of almost 800 million euros, Finance Minister Jeroen Dijsselbloem said.
ING received a 10 billion-euro capital injection in October 2008, when residential mortgage-backed securities, or RMBS, held at its U.S. units plunged in value after foreclosures soared and property prices fell.
In a second round of aid in January 2009, the Netherlands assumed 80 percent of the risk on a 27.7 billion-euro portfolio of mainly Alt-A mortgage bonds.
The government started the auction “based on the continued improvement in the U.S. housing market and a high level of interest by investors for non-agency RMBS securities,” the treasury agency said on Dec. 4. It expects to complete the sale within 12 months, though the process may be halted if market conditions change.
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