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Is Ubs Guaranteeing Blackrocks Returns

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by Felix Salmon
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May 08 2008 12:00am EDT

Is UBS Guaranteeing BlackRock's Returns?

Michael de la Merced got a timely interview with BlackRock's Laurence Fink this week, and the resulting story is well worth reading. But one question is not cleared up: what does this mean, exactly, on the subject of the $15 billion of subprime paper that BlackRock is buying from UBS?

Mr Fink is being cautious, demanding a 15pc return on the assets or UBS will have to take further writedowns, but the deal remains significant.

Is UBS really guaranteeing BlackRock a 15% return? And if so, what's the point of "selling" the paper to BlackRock in the first place?

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