MF Global's European Bonds Find Buyers

Dec 13 2011 | 10:32am ET

George Soros, JP Morgan Chase & Co and “at least one large hedge fund” have bought the Italian bonds that helped bring about the demise of MF Global Holdings, reports the Wall Street Journal.

In all, $4.5 billion of the bonds—mostly Italian short-term debt—were sold through the London clearing house LCH Clearnet just after MF Global’s October 31st bankruptcy filing.

Soros, according to the WSJ, bought $2 billion worth of the bonds at a discount and is now up over $130 million based on the marked-down prices he paid—89 cents on the dollar, compared to a market price of 94 cents.

JP Morgan and the unnamed hedge fund aren’t in nearly as deeply, according to the paper. While there’s serious money to be made on the trade, there are also potential problems: a trader familiar with the bond trade said that it could be difficult to sell these particular bonds before they mature in December 2012.

Another fear is that, with investors so nervous about the European debt crisis, word that a firm had taken a new position in Italian bonds could spark market fears about the investor. Moreover, MF Global bought the European bonds with heavy leverage, which could make them harder to unload.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...