$3,000 to insure ten million in Ukrainian bonds?

Discussion in 'Economics' started by jasonc, Aug 21, 2009.

  1. jasonc


  2. It could be true....

    Same thing applies to insuring corporate bonds against default.

    Thats why Lahde, Goldman Sachs, and Paulson & Co. came out of the credit crisis looking so good. - They bought credit default risk protection for dirt cheap.
  3. Well, that's what excess liquidity, mis-pricing of risk and all of these pre-credit crunch bad things are all about... Still, while it will depend on the bond maturity, $3000 figure looks too low.

    From what I can see (attached chart is 5Y UKR Sov CDS). it was more like $14,000
  4. How does a default event in Ukrainian government debt get settled?

    In car loads of vodka, AK47 guns and women?
  5. ttbodnar


    I wish if that was the case I would have been all in on Ukranian bonds years ago keeping some for myself and selling the rest on the black market - I would have been way ahead by now
  6. jasonc


    Wow that is ridiculous and even $14,000 seems incredibly low. I dont understand how that ever looked like a reasonable amount considering the uncertainty that can appear even 5 years out.
  7. Sorry, jason, I just realized that I can't do basic arithmetic...

    Simplistically, it's just 1.4% * 10mil = $140k, rather than 14k. DUH! It's still low, obviously.

    These CDS contracts are USD-denominated, so they settle in cold, not-so-hard American dollars. Still, I like makloda's idea better...
  8. Maybe cabbages as well

    Too funny :p