Commerz Debt Swap Plan Cheers Hedge Funds

Feb 24 2012 | 8:41am ET

Commerzbank made a number of hedge funds very happy yesterday with its plan to swap its cut-rate debt for shares.

The German bank, moving to come into compliance with new European core capital rules, said it would exchange subordinated debt and other such securities for shares. The plan could produce some of the biggest profits for hedge funds of the young year.

Hedge funds have been buying up Commerz and other European bank debt. Some hedge funds managed to buy the Commerz debt for as little to 53 to 60 cents on the euro last year, Reuters reports. Other hedge funds told the news agency that Commerz's announcement has opened another lucrative opportunity.

"What I'm doing this morning is buying bonds off people who can't take equity and hedge it," one manager told Reuters.


In Depth

The Benefits Of Private Debt Investing

May 7 2015 | 10:43am ET

Jeffrey Haas is chief operating officer of Old Hill Partners Inc., an SEC-registered...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

How To Generate 6% Yield In A Volatile World

May 22 2015 | 6:41am ET

Private credit comes in many different flavors, all with the common themes of over...

 

Editor's Note