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Category Archives: bonds and loans
The Other Side of the Vulture Fund Story
I missed this on Sunday – coincidentally, a day before Portfolio’s story about vulture funds came out – but Tony Allen-Mills has a very good article in the UK’s Sunday Times about the long-running fight between Elliott Associates and Congo-Brazzaville. … Continue reading
Posted in bonds and loans, development, hedge funds
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Defending the Vulture Funds
Ooh boy. Condé Nast Portfolio, in its July issue, is running a major article about vulture funds by Joshua Hammer. Hammer certainly did a lot of reporting: he not only spoke to high-profile vulture investor Michael Sheehan, but even went … Continue reading
Posted in bonds and loans, development, hedge funds
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The Long Crisis
Jesse Eisinger reckons that America is cognitively incapable of understanding a long crisis as opposed to a short one: As a culture, we’ve gotten so good at disseminating and assimilating an idea and then moving on, that we can no … Continue reading
Posted in banking, bonds and loans, economics, stocks
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Fixing Libor, Redux
The FT’s Lombard column asks a good question today: Why is Libor used as a basis for US loans in the first place? Dollar Libor started life three decades ago as a "eurodollar" index – meaning it was mostly used … Continue reading
Posted in banking, bonds and loans
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Brokers Should Unlock Their ARSs
Bloomberg’s Darrell Preston has found three investors in auction-rate securities who have found buyers for their holdings. That’s the good news. The bad news is that these investors’ brokers are refusing to let the owners sell. Franklin Biddar bought $100,000 … Continue reading
Posted in banking, bonds and loans
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The Sorry Story of Jefferson County’s Sewer Bonds
One of Andrew Clavell’s best posts is the one where he was giving advice, retrospectively, to a Pennsylvania school board which was being sold swaptions by investment bankers: Admitting you don’t know is pure alpha; you will not claim to … Continue reading
Posted in bonds and loans, derivatives
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Is Libor Dead?
It’s time to hoist Henri Tournyol Du Clos from the comments; he’s always insightful, but what he said about Libor last night is particularly spot-on: The problem is that unsecured fixed rate interbank lending is an activity that firmly belongs … Continue reading
Posted in banking, bonds and loans
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Credit Crunch Silver Linings, Student Loan Edition
Apparently Citibank, along with many other lenders, is moving out of the student-lending business, at least for some smaller schools. Good. Let’s move student lending back into the hands of the government, where it belongs.
Posted in bonds and loans
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CDOs Return
Accrued Interest has a very good post in defense of CDOs, explaining that they make a lot more sense than SIVs or hedge funds playing in the credit space: In most cases, SIVs collapsed not because they took on too … Continue reading
Posted in bonds and loans
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Canadian Law: No Friend to LBOs
The news out of Quebec today really is quite stunning: a court has held that bondholders in Canada can effectively block a leveraged buy-out if their bonds will be downgraded to junk (as most are, in such situations). Steven Davidoff … Continue reading
Posted in bonds and loans, law
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Pimco Datapoint of the Day
Bill Gross has enormous latitude to invest his Total Return Fund wherever he likes. But even so, investors who have entrusted that fund with well over $100 billion might raise their eyebrows at this: As of April 30, Gross’s Total … Continue reading
Posted in bonds and loans
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The Beginning of the End of the Credit Crisis?
David Gaffen is watching the VIX decline to levels well off its March highs, and back towards its lowest point of the year to date. Meanwhile, Alea is watching financial-instution credit default swap spreads decline to levels well off their … Continue reading
Posted in bonds and loans
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Why Bank Debt Looks Attractive
Pimco’s investment professionals spent three days this month with the likes of Alan Greenspan, Nassim Taleb, and Mike Spence in something the bond manager calls its "Secular Forum". It fell to Mohamed El-Erian to sum it all up, and to … Continue reading
Posted in bonds and loans
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How the Credit Crunch Hits NYC Renters
You thought New York City landlords were notoriously greedy and aggressive? Wait till you see what private-equity companies get up to when they enter the space. Gretchen Morgenson reports: In the last four years, developers backed by private equity firms … Continue reading
Posted in bonds and loans, housing
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Is UBS Guaranteeing BlackRock’s Returns?
Michael de la Merced got a timely interview with BlackRock’s Laurence Fink this week, and the resulting story is well worth reading. But one question is not cleared up: what does this mean, exactly, on the subject of the $15 … Continue reading
Posted in bonds and loans
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S&P Stops Rating Bonds Which Aren’t Being Issued
I missed this on Thursday: Standard & Poor’s will stop rating new bonds composed of U.S. second mortgages, saying it’s too hard to assess the debt while the housing slump continues… The unit of McGraw-Hill Cos. said today that it … Continue reading
Posted in bonds and loans
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Is Illiquidity Just Another Word for Uncertainty?
If Steve Waldman could only dumb his prose down a bit, he’d be perfect for Slate’s new business site: he’s great for compellingly contrarian takes on the news. Today, he takes a shot at liquidity, saying that it’s not necessarily … Continue reading
Posted in bonds and loans
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The State of Catastrophe Bonds
The panel on catastrophe bonds coincided with the release of a Milken Institute report on the topic. Catastrophe bonds make a huge amount of sense, in theory. The cost of Hurricane Katrina was over $65 billion in insured losses alone. … Continue reading
Posted in bonds and loans, insurance, milken 2008
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The State of Credit
The Milken Global Conference kicked off this morning with a panel moderated by Mike Milken on the only possible subject: credit. It was a high-level panel, with some high-level discourse: one of the most sophisticated conversations I’ve ever tried to … Continue reading
Posted in bonds and loans, milken 2008
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Heloc Securitization Datapoint of the Day
The biggest losses in the mortgage world have generally been taken on second liens – what in the real world are generally known as home equity lines. If you have a mortgage and a home equity line, and you default … Continue reading
Posted in bonds and loans, housing
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The Nascent Secondary Market in Auction-Rate Securities
The Restricted Securities Trading Network in auction-rate securities has been up and running now since March, with 7-10 transactions taking place per day. That’s not an enormous number of trades, but it’s enough to see pretty clearly what the clearing … Continue reading
Posted in bonds and loans
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Can We Trust the TIPS Spread?
Add Wolfgang Münchau to the list of inflation hawks. If the Fed ignores inflation while putting out more urgent fires in the financial markets, he says, "the US bond market would implode, the current account deficit would become impossible to … Continue reading
Posted in bonds and loans
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Is There a Need for NYbor?
Are European banks significantly riskier than American banks? Looking at RBS’s decision to raise $24 billion in new capital, it certainly seems that way: the move will take RBS’s tier-one capital from a normal-for-Europe 4.5% up to a normal-for-the-US 6%. … Continue reading
Posted in banking, bonds and loans
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A Sensible Way of Buying Fixed-Income Risk
In a world where the Charles Schwab YieldPlus fund has fallen more than 25% this year alone, statements that bond funds just aren’t risky enough are likely to be met with a hollow laugh from some quarters. But it’s true: … Continue reading
Posted in bonds and loans, personal finance
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How UBS Lost Money on Super-Senior Bonds
Yesterday I speculated that the reason banks got stuck with so many toxic super-senior CDO tranches was that they were unable to sell the things. Turns out, not so much. Check out the UBS report on its subprime losses (pdf … Continue reading
Posted in banking, bonds and loans
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