Friday April 16 2010
This is the sort of conversation that usually takes place at pay day loan offices, ie, the borrower is forever short making the payment. Ah the world of subprime sovereign debt. Argentina is offering a debt swap. Which is to say, will you take this lesser payment which is at least more than we failed to pay in the last deal we suckered you into so that we can peddle some more of this paper to other pigeons? Note that some of these bonds traded as low as 11 cents on the dollar after the Lehman blow up. So, don't buy the initial issue, just wait for fall after the inevitable default, then try to pick the bottom. These bonds are a sort of option on defaulting borrowers staying who after all have to come back to the table and raise money again.
We are studying the equity side of the balance sheet in class. For some borrowers, the accounting equation is an elastic proposition.
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