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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (8542)6/7/2008 9:19:06 AM
From: Real Man  Read Replies (1) | Respond to of 71410
 
CDS are underpricing actual credit risk during good times,
pushing bonds higher, and overpricing credit risk during bad
times, as demand for them soars. Someone long bonds is short
GM stock. That's what it's telling me, and they gonna get
what's coming to them. They have more than 5 days to cover -g-



To: RockyBalboa who wrote (8542)6/8/2008 5:38:33 PM
From: RockyBalboa  Respond to of 71410
 
The now cash settled CDSs might be overpriced with 1200bp as the settlement prices are prone to manipulation in the current optional cash settlement regime; but GMs bonds have the say. Considering that they never defaulted they trade 850bp over treasuries which is by any means a large spread.
I´d rather think a debt restructurning where GM could shed half of its debt into new equity is a viable solution with good recovery rates for bondholders and a lot of upside.


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