Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Andrew Wessel – JP Morgan
Andrew Wessel – JP Morgan
You mentioned at the very beginning selling the interest in the sell portfolio $120 billion. Can you provide any; frame it for us and how that would transpire, who the natural buyers might be, how it might be structured?
Al Lord
I could, Jack could probably do it even better but it’s a transaction that we’ve looked at in a variety of ways and haven’t answered all the questions that you’re asking particularly with respect to natural buyers. It’s a transaction that we like; that we believe is very doable. Ultimately what we have about $150 or $160 billion of FELP assets which will not increase other then in the short term with the assets that we originate and then put. It represents a diminishing earnings stream and obviously creates an impediment to growing aggregate earnings.
Frankly we’d like to get it off the balance sheet, it weighs very heavily in a lot of different capital calculations that some of which we think are all that relevant, certainly not relevant to us but they are relevant to others. We want to lighten the balance sheet and effectively provide more capital for the remaining businesses. If you’re interested, you obviously are interested because you asked the question, I would recommend that you give Jack a call separately.
Andrew Wessel – JP Morgan
In terms of debt repurchases that appear to be ongoing obviously you had a lot of success with your 2010 tender. The repurchases you’re going to be doing on the open market are you looking out to 2011 now as being the obviously next year for a pretty big hump of corporate debt maturities and with that debt trading in the high 80s it seems like there’s good accretion there for you if you do it or is there nothing really targeted all relative value.
Al Lord
Obviously the market for near term debt is a little tighter then the out year markets. I’m going to let Jack answer the question but I think typically it relates to the source of the cash flows that we have.
Jack Remondi
It depends on where the cash is coming from and what our alternatives are. The 2010 tender was attractive simply because we were sitting on the cash earning basically nothing and you could buy back debt earning 6% or 7% so it was an easy trade to make. We look at those kinds of opportunities all along in terms of cash management as well as opportunities to finance unencumbered loans to term and then use that to buy back longer term debt.
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