Investors in the European financial sector are scrambling to establish how much banks have pledged in credit lines to so-called “conduits” after Sachsen LB became the second German bank to be rescued amid credit market turmoil. The German savings banks association had to take over a ?17.3bn credit facility that Sachsen had pledged to one of its special investment funds, or conduits, late on Friday. The conduit, Ormond Quay, borrowed in the short-term commercial paper market and invested in asset-backed securities. The rescue was triggered when commercial paper investors refused to refinance Ormond Quay and Sachsen was unable to provide the credit it had pledged.

This entry was posted by Gwen Robinson on Monday, August 20th, 2007 at 5:42 and is filed under Capital markets, Hedge funds. Tagged with Ormond Quay, Sachsen. Edit this entry.