Standard Chartered Nixes Plans to Provide Liquidity to its SIV

It has been less than two weeks since Standard Chartered looked ready to provide $7.2 billion of liquidity support to its troubled SIV called Whistlejacket. However, deeper losses in the underlying collateral are expected to result in the SIV going into enforcement, which means that Standard Chartered will no longer step in to provide the necessary liquidity to the vehicle. “Standard Chartered would provide liquidity to the SIV, subject to certain preconditions, one of which included that the SIV was not in receivership,” Barclays Capital analysts said. “As a result of yesterday’s trigger breach of the vehicle’s 50% capital note NAV trigger, the precondition is no longer met and the proposal has lapsed.” Whistlejacket’s assets are down significantly from $18.2 billion as of the end of August, the dip partly resulting from asset sales. Standard Chartered stated that it will discuss its liquidity provision to Whistlejacket with the receiver, once appointed. Meanwhile, Moody’s Investors Service has downgraded the ratings assigned to the medium term note and commercial paper programs of Whistlejacket Capital. The Euro MTN and U.S. MTN programs have been downgraded to ‘Ba2’ on review with direction uncertain from ‘Aaa’ on review for possible downgrade. The program’s Euro and U.S. commercial paper as well as its Euro and U.S. MTN programs current rating was cut to ‘not prime’ from ‘Prime-1’ on review for possible downgrade.