Credit Suisse Group put more than $1.7 billion of mortgage-backed securities seized from Thornburg Mortgage Inc. up for auction Thursday.
The securities, backed by prime and alternative-A loans, were held as collateral and released Wednesday, after Thornburg said it would file for bankruptcy protection. The securities range in value from single digits to 80 cents on the dollar, according to a list of assets up for sale. They include $1 billion of interest-only bonds.
Credit Suisse, JPMorgan Chase & Co. and Royal Bank of Scotland Group PLC are among the Thornburg lenders taking back collateral the Santa Fe, N.M., company had pledged to borrow $4.7 billion. Suzanne O'Leary Lopez, a Thornburg spokeswoman, said Wednesday that the lenders aim to liquidate the collateral.
Mehernosh Engineer, a credit strategist at BNP Paribas SA in London, said the auction may hamper the U.S. plan to support purchases of toxic debt.
"Once you get an auction of these assets, it will show a fair price," Engineer said. "If the Treasury goes ahead and holds its own auction, and prices are very different, you have to question why there is such a big price differential."