ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65
- casetreasury
- Jul 29, 2024
- 1 min read
Facts: ABN Amro was responsible for developing a structured credit product and two series of constant proportion debt obligations (CPDOs). S&P's issued the CPDOs with a AAA credit rating. LGFS marketed products to local councils and government bodies in Australia. In 2006, LGFS secured ABN Amro’s creation of $40M of Australian dollar-denominated issues of the CPDOs (known as the Rembrandt Notes). The councils purchased a total of $16 million worth of Rembrandt Notes and LGFS held onto $24 million (and therefore LGFS was itself a claimant against ABN Amro and S&P). After the onset of the credit crisis, the Rembrandt Notes suffered a dramatic fall in value due to a variety of factors related to the changed credit conditions. This is because of S&P negligently made unjustified assumptions during the modelling.