Whenever the financial crisis happen the concept of bad banks becomes common. In 2009 during the sub-prime crisis so called Lehman crisis the concept of bad banks was very famous.
As per the information from Bloomberg:
The Bank of Portugal unveiled a 4.9 billion-euro ($6.6 billion) bailout over the weekend that will leave shareholders and junior bondholders with losses, while sparing senior creditors and unsecured depositors. Banco Espirito Santo, once the country’s largest lender by market value, will be split in two, with depositors and healthy assets joining the newly formed Novo Bank while bad loans and junior creditors stay with the old bank until it can be shut down.
“To regulators in Frankfurt and Brussels, this must have seemed the safest way to isolate any residual and tail risks” related to the bank’s Angolan unit and loans to other parts of the Espirito Santo group, Citigroup Inc.
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Who could have seen this coming? Has Argentina turned defaulting into an art-form ?
So the Argentina’s second default this century is finally done. Referring to Bloomberg, by defaulting today, Argentina may trigger bondholders claims of as much as $29 billion — equal to all its foreign-currency reserves. Just remember that the last 2 days have seen ‘smart money’ buy Argentine bonds and stocks to all-time record highs.
Some more information from Bloomberg :
If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws. View full article »
Talking about Arbitrage – drama film directed by Nicholas Jarecki and starring Richard Gere. A troubled hedge fund magnate desperate to complete the sale of his trading empire makes an error that forces him to turn to an unlikely person for help.
It is well-known that risk arbitrageur play an important role in the market for corporate control. After a tender offer, the trading volume increases dramatically in large part because of risk arbitrageurs activity. They take long positions in the target stock, in the hope that the takeover will go through. They are also usually hedged by taking short positions in the acquirer’s stock.
Risk arbitrage used to be a very inconspicuous activity, but in mid-70s, the emergence of Ivan Boesky and the increasing volume of corporate takeover deals contributed to make it more visible. Attracted by the high rewards, many firms started new arbitrage departments and more people became involved in this activity. View full article »
I am a big fan of Traders Guns and Money the book written by Satyajit Das, the definitions Knowns and Unknowns revealed by him is the classic work. The reality is always to make sure that you have a seat when the music in this game of musical chairs for high stakes stops (referring to the examples for the crisis happened in the past). As a result of it some interesting statements the management of the firms make but the intensity is something to thought about:-
Statement: As a Leading dealer with a global platform, we are the major player in the market.
- Translation: We have spent a fortune to build this business and are now prepared to spend millions more subsidizing your requirements.
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It’s amazing to see the enthusiasm people towards stock markets these days. Although there is trouble in Iraq that is impacting the prices of the crude oil. Indian Railways revising the fares and the inflation do not look good. But the world is still bullish on the Indian markets; even the domestic investors are aggressively greedy on the markets.
Some of these points will help you to check your portfolio health ;)
- Saying “I’ll be greedy when others are fearful” is much easier than actually doing it.
- The gulf between a great company and a great investment can be extraordinary.
- Not a single person in the world knows what the market will do in the short run. End of story.
- The analyst who talks about his mistakes is the guy you want to listen to. Avoid the guy who doesn’t — his are much bigger.
- You don’t understand a big bank’s balance sheet. The people running the place and their accountants don’t, either.
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