Fixed Income Discount Advisory Co. (FIDAC) has been appointed the collateral manager for McKinley Funding III Ltd., a collateralized debt obligation (CDO) that has experienced an event of default due to downgrades, says FIDAC's parent company, Annaly Capital Management Inc.
McKinley III was formed in 2006 with $1.5 billion original face amount of residential and commercial mortgage-backed securities and other financial assets. FIDAC was appointed to help restructure the CDO to maximize value for the bondholders and to perform asset management services on the portfolio on an ongoing basis.
"We're pleased to be able to provide restructuring and portfolio management services to McKinley," says Wellington Denahan-Norris, Annaly's vice chairman, chief investment officer and chief operating officer. "We believe that [events of default] and other portfolio problems will continue to emerge in the marketplace, but solutions other than liquidations can be implemented that minimize losses and avoid further market dislocations."
Annaly's FIDAC subsidiary earns investment advisory fee income and other service fee income, and is also an auction agent for liquidations of CDOs and other mortgage portfolios.
SOURCE: Annaly Capital Management