These are typically issued by insurance companies (from what i know). Are these traded on a secondary market somewhere? For example, can I go onto bloomberg and get a quote on some of these contracts?
I’d be interested to know what’s going on in this space. I left the fixed income world slightly before the meltdown, but we used to bid these out for clients doing huge projects (500 million+). I believe there’s two main types, collateralized and non-collateralized. The collateralized might be with 102% Treasuries or something. What I’m really interested is the non-collaterlized because firms like AIG were doing a ton of these and I wonder what happened to all the investors. Also, all or most of them were wrapped by insurance, but usually had provision where if the insurer was downgraded (like they all were), then the client would get his funds back. I’m sure lots of chaos, but to answer your question, I don’t think they were very liquid and I don’t know of anywhere on bloomberg to look up the rate (keeping in mind there’s a big difference in rate depending on whether its collateralized.)
I don’t think there is a secondary market for these. I’ve dealt with these for DC plans and typically there is a contract b/n the plan sponsor and the stable value manager who invests the assets in anything from bonds to equities, usually managed pretty close to the LB Agg. Then an insurer or group of insurers provide an insurance wrapper on the assets guaranteeing particpants full liquidity at a stable $1 NAV. Obviously the portfolio can be under water, below a $1 NAV, as many are now to varying degrees. If the plan sponsor pulls out of the fund prior to the agreed contract time frame, they could realize big losses and the funds may be paid out over an extended period of time. Due to the uniqueness of each contract and a plan sponsors aversion to pulling out of the contract I doubt they are traded.
I work in the muni world and many of our clients invest in GICs. Due to the binding agreement, the muni could not “sell” their interest in the contract out on a secondary market. If they wanted to get out, they could liquidate the principal and accrued interest but pay a termination fee. A lot of our clients were with AIG and were in GICs that had rating downgrade triggers that allowed AIG to either collateralize or liquidate the investment. Initially AIG liquidated the smaller ones (