Rhinebridge, a IKB Deutsche Industriebank SIV, suffered a "mandatory acceleration event'' after IKB's asset management arm determined the SIV may be unable to pay back debt coming due, the Dublinbased fund said last week. This mean all of Rhinebridge's debt is now due, according to a company prospectus.

Rhinebridge had $1.2bn in commercial paper outstanding as of 5 October, according to Fitch Ratings. The entity said on 12 October that it had breached a "major capital loss test'' because its net assets fell to less than half the amount it owes holders of its subordinated capital notes after repaying senior debt.

This latest conduit failure . . . coming months after the high profile 17.3bn blow-up of Sachsen LB's Ormond Quay Funding . . . is notable for the speed at which the vehicle went from listing to insolvency. Effectively, Rhinebridge fell apart as soon as its first 90-day loans became due.

SIVs, which borrow from the shortterm commercial paper market to fund purchases of asset-backed securities, have struggled as investors retreated from all but the safest debt.

SIVs have dumped about $75bn of assets as a result. As the liquidity crisis took hold in August, Rhinebridge had to sell $176 m of its assets to cover obligations.

Dusseldorf-based IKB set up Rhinebridge to sell short-term commercial paper to invest in securities with longer maturities and higher yields, including mortgage-backed debt. As of late August, 79% of Rhinebridge's holdings were in the US and 80% in mortgage-backed bonds, which have had high default rates due to a crisis in the American subprime lending market.

A report issue earlier this month by ratings agency Moodys predicted debt securities vehicles that listed in 2007, like Rhinebridge, are set to collapse faster than the vehicles from 2006 and earlier. The first two quarters saw record levels of debt securities listing on the ISE, many of them loaded with US residential mortgages.