HSBC details Cullinan SIV restructuring plan

LONDON, Jan 31 (Reuters) - HSBC (HSBA.L: Quote, Profile, Research) on Thursday set out restructuring proposals for its Cullinan structured investment vehicle (SIV), which it says holds $27.1 billion of assets.

SIVs are vehicles that issue short- and medium-term debt and invest the proceeds in longer-term securities, mainly bank debt and asset-backed securities.

They have been scrambling to reinvent themselves after the credit crisis of last summer simultaneously hit their access to funding and reduced the value of their investments.

HSBC said in a statement it had set up two new vehicles, called Mazarin Funding Limited and Barion Funding Limited, and would offer Cullinan income note investors -- the most junior investors -- the chance to exchange their holdings for income notes in the two vehicles. In conjunction with that, a proportion of Cullinan's assets will be transferred to the new vehicles.

The new vehicles will have no market value triggers, HSBC said, and have greater certainty of funding.

"The initial response to the Cullinan restructuring plan has been very positive and it is anticipated there will be a high acceptance rate," HSBC said.

Mazarin is structured as an asset-backed commercial paper (ABCP) conduit that is backed by a 100 percent liquidity facility from HSBC.

ABCP markets saw their own turmoil over the summer, but analysts have said that bank-backed conduits have now stabilised.

Barion is a term funded vehicle.