The group expects to distribute its preliminary price estimates tomorrow on the debt, composed of two collateralized debt obligations (CDOs) issued by Deutsche Bank AG in 2007 and 2008. Final bids are due on Thursday, Bloomberg said, citing people who declined to be identified because the negotiations are private.

The New York Federal Reserve invited eight broker-dealers to compete for the so-called MAX CDOs after receiving “several” unsolicited bids for the holdings in its Maiden Lane III LLC portfolio. The other banks invited to bid are Barclays Plc, Deutsche Bank, Bank of America Corp., Morgan Stanley and Nomura Holdings Inc., Bloomberg said.

The CDOs could be sold intact or broken into pieces, though an interest-rate swap contract with Barclays would need to be paid out to access the underlying bonds, eating into profits, JPMorgan Chase & Co. (JPM) analysts said in a report last week.

The two CDOs, which bundle securities culled from 103 commercial mortgage bond deals, are estimated by the Federal Reserve to be worth $4.8 billion as of December, according to the district bank’s website.

The Fed’s Maiden Lane vehicle unwound credit-default swaps that AIG had sold to protect counterparties against losses on mortgage-backed securities. The facility bought the underlying assets that AIG insured for banks, sparing the Wall Street firms from any losses. Lawmakers criticized the payments as a “backdoor bailout” of the companies, Bloomberg said.