Not Enough Info

in this article from the FT: "UBS set to finance $15bn securities carrier". The broad strokes of the picture reveal that UBS has sold subprime securities with a nominal value of $22 billion to BlackRock. These securities were written down to $15 billion in March. However, in order to close the deal, UBS had to loan BlackRock $11.25 billion.

Wow! That makes a lot of sense. What they're really doing is buying it from themselves. Actually, their accountants get to move it off balance sheet. Although they now have a loan to BlackRock on the balance sheet, they'll conveniently forget to mention that the loan is backed up by subprime collateral. BlackRock is the clear winner here, as they get a free call option on the subprime junk at a low price, while UBS retains 75% of the risk of loss. In other words, they get paid to let UBS use their name to pretend that they're offloading risk.

But why did I title this post "Not Enough Info"? Because UBS wouldn't tell the FT what the terms of the loan were. Boy, I'd love to see that contract....