Interactive Data Corporation (NYSE: IDC), a leading provider of financial market data, analytics and related solutions, today announced that its Pricing and Reference Data business will offer Prism’s valuations for loans made available by the Federal Reserve Bank of New York in connection with the Term Asset-Backed Securities Loan Facility (TALF). Through an exclusive agreement with Prism Valuation, Interactive Data is able to offer valuations for TALF loans, along with other complex financial instruments such as OTC derivatives and structured products.
The TALF loan valuation process takes into account the value and assumptions of the underlying asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) collateral, the terms of the loan, and the value of the theoretical put option embedded in the loan. Borrowers under the TALF program must value both the TALF-eligible securities and liabilities (TALF loans) for financial reporting purposes. Interactive Data already offers independent evaluations for the underlying TALF-eligible ABS and CMBS. In collaboration with Prism Valuation, Interactive Data now offers valuations for TALF loans.
“The TALF program has afforded U.S. companies a new avenue to raise capital, and we have observed that an increasing number of our clients — mutual funds, institutional asset managers, insurance companies and hedge funds — believe the program offers investment opportunities,” said Liz Duggan, managing director, Evaluations, Interactive Data. “A valuation provider needs a comprehensive understanding of these hard-to-value instruments, including the optionality embedded within the loans. We have collaborated with Prism Valuation to provide our clients with valuations that reflect the unique characteristics of TALF loans.”
“Under financial reporting standards, many financial institutions that choose to borrow under the TALF program will value these loans at fair value,” said Dushyant Shahrawat, senior research area director for TowerGroup. “Data providers like Interactive Data (and their solutions) can fill a unique industry need by providing valuation information for these loans that is not otherwise available in the industry.”