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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (1561)	11/7/2006 5:35:32 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 6370

The issue is that ISDA had to create a mechanism to allow for a smooth settlement and learning lessons from problematic physical settlements. At the same time one has to wonder whether the tail wags the dog. The tail... evidenced by billions on derivatives tacked on a hundred millions of auctionable debt (face value) which is worth even less -perhaps as little as 100 Mil whereas the payout from CDS will nearly approach notional value.

To: RockyBalboa who wrote (1561)	11/8/2006 3:51:56 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 6370

A coarse review of DRRA filings yields a recovery value of 0 for the junior and about 48 to 58 for the senior debt, using fitchs methods of discounting receivables inventory and on the run expenses. Depending on where to look the AP aren't that letally high nor is the drawn down bank debt. Clearly with the 6.5x geared (notional, 59x at market prices) CDS settlement coming up the price may get a little more depressed. Every dollar counts. Entirely possible that the give away the senior debt below 20. The sellers of CDS may opt out but they have no hand to show. They only can sell bonds but at what price? This requires that various other debt does not get any preferential treatment but attributes little value to any kind of fixed assets. For hedging purposes the trust security and the commons still offer some dollars.