It's really not quite that simple...
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Soros bought $2 billion of ITALIAN bonds from MF Global...
- Thread starter ASusilovic
- Start date
MF Global's irresponsibility is more than apparent here. Rather than try and liquidate at market price as a price taker, they'd rather ruin whatever chances they might have had to receive a better value for their creditors by negotiating give away programs that won't ever be profitable for them.
If they needed to sell $2 billion, move the market down, then try getting a deal. I know without flooding the market with these bonds they would have gotten a much higher price for MFG's creditors. It's obvious they don't care what happens to the firm, but Soros probably knew he'd make an immediate profit from the haircut, and where this article becomes silly is thinking Soros would hedge immediately with the position by going short. He doesn't do that, and it makes no sense to, either. He might be after watching the price go back to levels before the deal, but not immediately after. That's total rubbish.
If they needed to sell $2 billion, move the market down, then try getting a deal. I know without flooding the market with these bonds they would have gotten a much higher price for MFG's creditors. It's obvious they don't care what happens to the firm, but Soros probably knew he'd make an immediate profit from the haircut, and where this article becomes silly is thinking Soros would hedge immediately with the position by going short. He doesn't do that, and it makes no sense to, either. He might be after watching the price go back to levels before the deal, but not immediately after. That's total rubbish.
Huh? Amico, you really need to get your sh1t together...Quote from bwolinsky:
MF Global's irresponsibility is more than apparent here. Rather than try and liquidate at market price as a price taker, they'd rather ruin whatever chances they might have had to receive a better value for their creditors by negotiating give away programs that won't ever be profitable for them.
If they needed to sell $2 billion, move the market down, then try getting a deal. I know without flooding the market with these bonds they would have gotten a much higher price for MFG's creditors. It's obvious they don't care what happens to the firm, but Soros probably knew he'd make an immediate profit from the haircut, and where this article becomes silly is thinking Soros would hedge immediately with the position by going short. He doesn't do that, and it makes no sense to, either. He might be after watching the price go back to levels before the deal, but not immediately after. That's total rubbish.
What price do you think MFG traded at if it weren't the mkt price? There was no "give away program". MFG had to liquidate a portfolio of arnd EUR 2bn worth of peripheral bonds that normally trade in the mkt in EUR 10mil clips. So they went arnd a bunch of dealers and found one who gave them the best price on the whole book. Problem is that everyone on the street knew about this and was busy front-running the trade. Soros took advantage of it and lifted a whole bunch of dealers in the mkt who were desperately axed to sell. This is exactly the sort of firesale that happens during forced liquidations and there's nothing special about the MFG case.
What is true about it