A decade after BNP Paribas fund freeze, liquidity still haunts ABS
BNP Paribas froze three hedge funds that had invested in subprime mortgages on August 9, 2007. Widely regarded as one of the opening events of the global financial crisis, it stands as a grim reminder and a warning to the market of what can happen when liquidity collapses.
Recalling the early days of the crisis, a bank analyst said that people often fail to realise that ABS actually performed better than the narrative of that time suggests. He added that realised losses in the sector were minimal, especially on the most senior tranches.
But he noted
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