Category Archives: bonds and loans

GM’s Whining Bondholders

Posted on March 31, 2009 by Felix

Andrew Ross Sorkin takes aim at GM’s bondholders today: Not three hours after the president spoke on Monday I received an e-mail message from a group representing G.M. bondholders — people who are likely to have an enormous influence over … Continue reading →

Posted in bailouts, bonds and loans | 48 Comments

The Kanjorski Meme, Mark II

Posted on February 16, 2009 by Felix

Tyler Cowen is now talking about the Kanjorski Meme Mark I (I thought I’d dealt with that one already) — but that’s not the end of the story, as Sam Jones demonstrates today. Sam has what you might call the … Continue reading →

Posted in bonds and loans, Politics | 2 Comments

Auto Financing Datapoint of the Day

Posted on February 2, 2009 by Felix

Alex Kellogg reports: AutoNation Inc., the largest chain of auto dealers in the U.S., in December secured only 22 auto loans for car buyers from Chrysler Financial and nine from GMAC, down from 823 and 1,527 a year earlier, respectively. … Continue reading →

Posted in bonds and loans | 1 Comment

Let the Government Buy Corporate Bonds

Posted on January 29, 2009 by Felix

What’s the difference between spending hundreds of billions or even trillions of dollars on loans, on the one hand, and loaning out the money directly, on the other? All of the "bad bank" proposals have one thing in common: that … Continue reading →

Posted in bonds and loans, derivatives | 1 Comment

Partial Defaults

Posted on January 26, 2009 by Felix

Can we please stop using the term "partial default"? It annoys me, mainly because nobody has a clue what it means. Jean Pisani-Ferry, for instance, on the subject of Greece, talks about "a vicious circle in which its debt would … Continue reading →

Posted in bonds and loans | 1 Comment

Fragmented Bondholders

Posted on January 21, 2009 by Felix

During the Great Moderation, institutional fixed-income investors had boring, if lucrative, lives. They’d buy paper, clip coupons, and make money. Now, however, faced with a stream of high-profile defaults, they’re going to have to start justifying their former paychecks by … Continue reading →

Posted in bonds and loans | 1 Comment

Sovereign Default: A Conversation

Posted on January 19, 2009 by Felix

I’m trying out an experiment, here: Paul Kedrosky and I will be chatting live on the subject of sovereign defaults. Feel free to join in!

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TED Spread Datapoint of the Day

Posted on January 15, 2009 by Felix

‘Cos we all need some good news today: The TED spread is now in double digits! I wonder how much credit for this is going to be taken by Neel Kashkari. Me, I just call it the moral hazard trade.

Posted in banking, bonds and loans | 1 Comment

Crazy Ecuador

Posted on January 14, 2009 by Felix

A couple of major developments on the Ecuador front: yesterday, finance minister Elsa Viteri came out with the rather stunning decision that the country would make the coupon payments on its 2015 global bonds — despite deciding to default on … Continue reading →

Posted in bonds and loans, emerging markets | 1 Comment

Tribune Implosion Datapoint of the Day

Posted on January 6, 2009 by Felix

How low can recovery rates go? Today the CDS auction on Tribune’s defaulted bonds settled at 1.5 cents on the dollar, which is low but in line with expectations of bondholders essentially getting nothing once the secured creditors have been … Continue reading →

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Ecuador’s Ingenious Descending Auction

Posted on January 2, 2009 by Felix

There’s something quite elegant about Ecuador’s proposed bond auction. It’s not doing a typical old-bonds-for-new-bonds exchange, which no one would tender into. And it’s not trying to buy up its debt in the secondary market, where it could be picked … Continue reading →

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The Riskiness of Bonds

Posted on January 2, 2009 by Felix

Yesterday I questioned the wisdom of retail investors buying bonds in this market, and boy did I get an earful back, especially from many of the commenters at Seeking Alpha. They accused me of not drawing the distinction between Treasuries … Continue reading →

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What Does GMAC’s Bond-Exchange Failure Mean for Detroit?

Posted on December 31, 2008 by Felix

The GMAC bond-exchange results are out, and the screws that GMAC applied on December 10 — tender your bonds or we won’t become a bank or get TARP funds — seem to have had some effect, with the percentage of … Continue reading →

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Is Buying Bonds Really a Good Idea?

Posted on December 31, 2008 by Felix

The WSJ’s Brett Arends has learned his lessons this year, and shares them with us, including these ones: 4. Invest more, not less. Is that a guffaw from the peanut gallery? I don’t blame you. Your savings just fell 40% … Continue reading →

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A Victory for GMAC Holdouts?

Posted on December 29, 2008 by Felix

It looks like anybody who refused to participate in the GMAC bond tender offer is going to end up feeling pretty smug: The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of … Continue reading →

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Ecuador Own-Goal Datapoint of the Day

Posted on December 15, 2008 by Felix

Just how much damage can one president do by defaulting on a single $30 million coupon payment? Well, he can cut off his country’s access to US markets, via the Andean Trade Promotion and Drug Eradication Act, and he can … Continue reading →

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Further Adventures in GM Debt

Posted on December 15, 2008 by Felix

GMAC’s brinkmanship would seem to have worked: Late Friday, the company received a reprieve from lenders, who agreed to amended terms of a $38 billion restructuring of debt obligations that were threatening to overwhelm the company. But the 10% (ish) … Continue reading →

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Ecuador’s Small Investors

Posted on December 14, 2008 by Felix

Since I wrote about Ecuador on Friday, there’s been a trickle of emails coming in from individual investors who hold the country’s bonds. These two came in quick succession: I’m not into locking up on default for months/years while the … Continue reading →

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Information Transformation

Posted on December 12, 2008 by Felix

Justin Fox has a great post on Bengt Holmström’s distinction between low-information and high-information assets: There are low-information assets–cash, bank deposits, money-market securities–where, most of the time, nobody really needs to know anything about their underlying value. Then there are … Continue reading →

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The GMAC Game of Chicken

Posted on December 11, 2008 by Felix

The NYT does a good job today of explaining what’s going on at GMAC, although it doesn’t quantify the haircut that the company is asking bondholders to accept; my commenters put it in the 10% range, which seems roughly right. … Continue reading →

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How to Deal With GM’s Bondholders?

Posted on December 10, 2008 by Felix

If the comments on my GMAC bond entry earlier this morning are any indication, it’s going to be harder than I think a lot of people anticipate to bail in GM’s bondholders as part of any government bailout. Here’s three: … Continue reading →

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GMAC’s Recalcitrant Bondholders

Posted on December 10, 2008 by Felix

Can someone explain what’s going on with this GMAC tender offer? The basics of the situation are clear: back on November 20, GMAC (which is 51% owned by Cerberus and 49% owned by GM) offered to swap existing bonds for … Continue reading →

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Should Treasury Issue 100-Year Bonds?

Posted on December 3, 2008 by Felix

Peter Fisher was, until 2004, the Treasury official in charge of bond issuance. So when he says that Treasury should start issuing 100-year bonds, it’s worth paying attention. "If you issued a 100-year bond and had principal and interest pay … Continue reading →

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Super-Seniors: Your Questions Answered

Posted on December 2, 2008 by Felix

Super-seniors are not easy things to understand, as you’ll know if you managed to trudge through my attempted explanation. I got some good questions in the comments, here’s my attempt at the answers. Eli and fresnodan both bring up the … Continue reading →

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Understanding Synthetics

Posted on November 28, 2008 by Felix

Over the past few days, two very smart people have asked me about a passage in Michael Lewis’s cover story for Portfolio in which he talks about synthetic CDOs without actually using the term. They said that they didn’t quite … Continue reading →

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