what is capital notes

--Capital notes are long-term junior securities issued by SIVs which pay the highest return but absorb the first losses. However, the decision by the agency to put on review the ratings of capital notes issued by some of the biggest bank-run SIVs is even more significant. These include three run by Citigroup, the largest player in the sector, two run by HSBC and one by MBIA, the US bond insurer. --Also on review are notes from SIVs run by HSH Nordbank, Standard Chartered, Rabobank, SocGen, Bank of Montreal and Banque AIG. --While only the capital notes for most of these vehicles are on review at present, Mr Kerlogue said senior SIV debt ratings remained vulnerable to declining market values of assets and the inability to refinance maturing notes.