Hey John!! Found a Forbes article that states that the final cost of the Lehman CDS unwind was about $8 Billion:
Of course that also means the banks, funds and insurance companies that sold it are out $365 billion, which is the difference between the price of Lehman's bonds as set in the auction and the remaining 91.375 cents in face value.
It won't be easy to draw up a quick winners and losers column, however. Buyers of insurance are also sellers and vice versa. The International Swaps and Derivatives Association says all this netting out means the ultimate payout among trading partners may be closer to 2% of the gross outstanding $400 billion, or $8 billion.
Still, the arcane, mostly unwatched, corner of the markets known as credit default swaps, estimated at $61 trillion in notional value, continues to drive the broader markets into a free fall because investors are skittish about which firms are exposed and to how much...............
...................The auction, conducted Friday at the invitation of the International Swaps and Derivatives Association and administered by Markit and Creditex, involved bidding by 14 of Wall Street's biggest (remaining) banks. There were more sellers than buyers in the morning, when the initial pricing was set at 9.75 cents on the dollar. An order imbalance of $4.9 billion, with more sellers than buyers, pushed the final price down by the 2 p.m. reporting deadline.
According to data released about the auction, the three biggest sellers were Goldman Sachs (nyse: GS - news - people ), offering $1.47 billion either for itself or customers, followed by Deutsche Bank (nyse: DB - news - people ), offering $870 million, and Credit Suisse, offering $755 million.
forbes.com
Kind of interesting that, after all that consternation and hulla-balloo in advance of the Lehman CDS unwind, it only wound up actually costing $8 Billion.
But that strange order imbalance at the end of the auction strikes me as being the work of Paulson and the Treasury TARP program. Call me suspicious.
Hawk |
