| Primus' subsidiary, Primus Financial Products has completed its third credit mitigation transaction. Primus Financial assigned a portfolio of credit swaps with its largest single counterparty, comprising notional principal of $2.65B of bespoke tranche transactions and approximately $250M of single name credit swaps, to a newly formed subsidiary which is wholly owned by Primus Financial. Primus Financial paid its subsidiary an assignment fee of $100M. The subsidiary and the counterparty have agreed to restructure the portfolio such that the single name credit swaps are terminated and the bespoke tranche transactions are revised to reflect a new notional principal totaling $1.75B. In addition, the attachment points on certain of the restructured tranche transactions have been increased. The subsidiary has paid the counterparty a restructuring fee of $10M. Future credit swap premiums payable by the counterparty on the restructured portfolio are approximately $15M less than the future premiums on the portfolio prior to restructuring. The last restructured tranche matures in December 2014. Each of the three credit mitigation transactions included certain reference entities which Primus Financial concluded had a high risk profile. Any capital remaining at the final maturity of the credit swaps in the two subsidiaries will be returned to Primus Financial. :theflyonthewall.com |
