Wednesday, May 13, 2009

What's up with bond holders

My friend Tim has a blog post about why some bond holders have an interest in driving the companies whose bonds they hold into bankruptcy. Basically if you have insured the bond using a Credit Default Swap (a CDS - one of the derivatives that is so much in the news lately) then you get all your money back if the issuer of the bond goes under. You'll get a lot less than that in a settlement.

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