Thursday, January 29, 2009

Goldman Prices $2 Billion 10 Year Notes Without FDIC Backing

In what many expected to be a test of whether financial companies can raise capital without the implicit guarantee of the government, Goldman managed to price $2 billion of non-FDIC insured notes at 500 bps over comparable treasuries. In absolute terms, the notes priced with a 7.5% coupon to yield 7.779%. While the rate is high, the fact that it could even price is notable as all capital raises by financial institutions in recent months were backed by the full faith of the Federal Reserve's printing presses. The pricing is even more remarkable as today GS stock is down a little over 5%.

Indicatively, GS 5-year CDS last traded around 275, after hitting an all time high of 620 the day after Lehman filed Chapter 11. Sphere: Related Content
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3 comments:

James said...

I dont think this proves anything. Unless we are going to bailout everyone again.

Stan Jonas said...

THIS COMMENTARY MIGHT BE HELPFUL.. FORGIVE THE HYPERBOLE..

REAL WORLD INTEREST RATES "COLLAPSING?"?

GOLDMAN SACHS OUTSTANDING 10 YRS HAVE TRADED 200MM TODAY AROUND THE 7.375 LEVEL...
MORGAN STANLEY 10 YRS HAVE TRADED 125MM AROUND THE 7.90 LEVEL..

THE NEW 2 BILL GOLDMAN SACHS 10 YR CAME AT 500 OVER ABOUT AN HOUR AGO AND IS ALREADY TRADING 471 OVER 10 YRS..TIGHTENING 29 BASIS IN AN HOUR...THAT IS 2 POINTS PROFIT ....

THAT IS 2MM DOLLARS PROFIT IF YOU BOUGHT 100MM.....BETTER THAN TRADING STOCKS!!!

SECONDARY CORPORATE TRADING IS 16 BILLION SO FAR TODAY..

Tyler said...

good commentary. keep it coming