thanks. I thought you might be using its meaning as the term prostitutes but then again ceo corizine was a governor and was from the Goldman. http://en.wikipedia.org/wiki/Wowser
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"MF Global Drops by Most Since 2008" http://www.bloomberg.com/news/2011-...ns-on-deferred-tax-restructuring-charges.html "Its $325 million of 3.375 percent convertible notes due in August 2018 fell 18.6 cents to 48.5 cents on the dollar, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. "
Corzine clause in recent bond sale: "Call MF Global's CEO Jon Corzine the $325 Million Dollar Man " http://www.cnbc.com/id/45034792 Less well known is that back in August, the commodities giant sold $325 million of five-year unsecured bonds that included a provision that would offer higher interest rates if Mr. Corzine left the firm for a government job.
what are the chances that majority of bondholders would rescind the clause and accept a lower rate if he leaves and the bonds get paid off earlier? if there is a 60% haircut on the southern european sovereign bonds what happens to mf global?
The earnings release says "As of September 30, 2011, MF Global maintained a net long position of $6.3 billion in a short-duration European sovereign portfolio financed to maturity (repo-to-maturity), including Belgium, Italy, Spain, Portugal and Ireland" so a 60% haircut (at this stage) is unlikely, especially for Italy, Spain and Belgium. There is a chance that bondholders could rescind that clause, but given today's announcement, they would have to raise new debt (or equity) at much higher interest rates. So in practice, the clause will probably remain. In my eyes the biggest concern for the company in the coming weeks and months is a significant loss of customer assets and trading revenue. I will assume that the net trading revenue for this quarter will be lower than last quarter, and that they will report another quarterly loss. With Moodys close to cutting their credit rating to junk, the future looks bleak.
S&P commentary: https://www.lcdcomps.com/lcd/f/article.html?rid=800&aid=12332757 "High-grade: MF Global debt lurches to distressed levels after loss "
Here is some more detail on the PIIGS bonds held by MF: http://ftalphaville.ft.com/blog/2011/10/25/711566/mf-globals-eurozone-trades/ includes a link to http://www.mfglobalinvestorrelation...4911&p=irol-newsArticle&ID=1620914&highlight= which is repeated here http://finance.yahoo.com/news/MF-Global-Reports-Second-bw-3226318076.html "MF Global Reports Second Fiscal Quarter 2012 Results" **** all figures in millions total $6,292 Italy $3,213 Spain $1,111 Belgium $603 Portugal $997 Ireland $368 latest maturity for portfolio is December 2012.