Tricolor Bonds Drop as Banks Brace for Writedowns Tied to Lender

Bonds from Tricolor Holdings LLC plunged on Wednesday after a Bloomberg report that banks are bracing for potentially hundreds of millions of dollars of writedowns tied to the subprime car lender.

Tricolor asset backed securities issued earlier this year traded as low as 12 cents on the dollar on Wednesday, according to traders, extending declines that started earlier this week after a report last week said the company had furloughed most of its staff.

The subprime lender sold$328.1 million of asset backed securities in March in five parts, followed by a similar $217.8 million offeringin June ...