By Al Yoon
Credit Suisse (CS, CSGN.VX) bought four of six complex mortgage-debt securities up for auction by the Federal Reserve Bank of New York, according to the New York Fed's website. The assets, which have a total face value of $4.2 billion, were taken on during the 2008 bailout of American International Group (AIG).
The sales of the collateralized debt obligations raise the total face amount sold from the portfolio known as Maiden Lane III to about $23.4 billion this year. Credit Suisse bought nearly $3.5 billion of the CDOs, while Royal Bank of Scotland PLC's (RBS, RBS.LN) RBS Securities and Morgan Stanley (MS) each bought one other CDO.
The sales have become barometers for demand of residential- and commercial-mortgage securities. The underlying bonds are the type of nonguaranteed securities that have fluctuated in value since 2008 as the vagaries of the real-estate recovery make them difficult to assess and as they've been especially sensitive to economic events that have roiled financial markets.
But the mortgage bonds have held up better than other risky debt in recent weeks, in part as the housing market shows signs of bottoming and many funds have raised money to buy the securities that offer high yields, analysts said.
The loan made by the New York Fed to fund the Maiden Lane III portfolio already has been paid off after multiple sales. Loans similar to crisis-era Maiden Lane portfolios have also been repaid.
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