DFW HOYA
Platinum Hoya (over 5000 posts)
Posts: 5,861
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Post by DFW HOYA on Jan 31, 2008 21:45:08 GMT -5
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Bay99
Silver Hoya (over 500 posts)
Posts: 510
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Post by Bay99 on Jan 31, 2008 22:19:42 GMT -5
Yikes.
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Post by strummer8526 on Jan 31, 2008 22:43:55 GMT -5
Can someone translate into "knows nothing about credit auctions"? It sounds bad.
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hoyatables
Diamond Hoya (over 2500 posts)
Posts: 2,604
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Post by hoyatables on Jan 31, 2008 23:19:55 GMT -5
I know virtually nothing about finance. Can someone give us a basic primer here? Is this basically Georgetown trying to get someone to buy its debt at what would be considered to be a low price and yet failing to do so? Could it be just that there isn't much of a demand out there, or was Georgetown's debt that risky or bad?
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theexorcist
Diamond Hoya (over 2500 posts)
Posts: 3,506 
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Post by theexorcist on Feb 1, 2008 8:13:54 GMT -5
en.wikipedia.org/wiki/Auction_rate_security has a primer. "Broker-dealers usually bid on their own behalf to prevent failed auctions from happening. This makes failed auctions extremelly rare, although they could occur under certain conditions such as a decline in the issuers credit quality or a disruption in the market." Given the market issues at the time, I'd assume that the issue was the disruption in the market.
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Post by HoyaOnBothSides on Feb 1, 2008 10:30:12 GMT -5
It seems like a terrible time to even attempt something like this - the problem, I'd venture to guess, is not with Georgetown but with bond insurers (MBIA, Ambak), who traditionally wrote insurance on muni bonds but are now in big trouble due to moving more and more business into guaranteeing mortgage-backed securities and their derivatives. With losses from that side the business piling up, MBIA and Ambak are at risk of losing their own AAA ratings, which will impair them from writing new insurance on anything, including Municipal bonds, not to mention the possibility of the companies not even being able to cover their existing policies on low-risk assets. With this uncertainty present, I'd imagine it's difficult for anyone to issue right now.
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Post by HoyaDestroya02 on Feb 5, 2008 11:32:12 GMT -5
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bubbrubbhoya
Golden Hoya (over 1000 posts)
We are the intuitive minds that plot the course. Woo-WOOO!
Posts: 1,369
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Post by bubbrubbhoya on Feb 12, 2008 15:35:06 GMT -5
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Post by HoyaOnBothSides on Feb 13, 2008 15:15:20 GMT -5
Have to imagine this would be a good thing - for municipal bonds themselves, and especially for Mr. Buffet - but this is the last thing ABK and MBI want - they give up collecting premium on their traditional, successful business (insuring actual high-grade bonds) and are stuck with all the crap insurance they wrote on all the subprime-related structures, which they will have to pay-out a ton on, so they will only give up the muni-bond business as a LAST ditch effort to stay solvent and be able to make those payouts as all the subprime structures continue to crap out. It's seemingly damned if they do, damned if they don't, but at this point I don't see the monolines handing over anything to Buffet, and therefore, buyers of these bonds staying on the sidelines. |
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hoyatables
Diamond Hoya (over 2500 posts)
Posts: 2,604
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Post by hoyatables on Feb 16, 2008 9:06:46 GMT -5
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FewFAC
Golden Hoya (over 1000 posts)
Posts: 1,032
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Post by FewFAC on Feb 23, 2008 23:49:17 GMT -5
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