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Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

nytimes.com

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Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#31

Post by mjfl »

bhouston wrote: post #22

Goldman bought a lot of Greece debt that it knew wasn't great and made tons: https://www.thenation.com/article/goldmans-greek-gambit/ Goldman Sachs was also very involved in selling subprime mortages to unwitting investors. Goldman Sach has had to deal with lawsuits that it wasn't acting in its clients' best interests: http://articles.latimes.com/2010/may/16/business/la-fi-hiltz... If Goldman Sachs is involved, you a…

Also realize that the biggest factor in buying bonds at a discount is having the ability to force the borrower to pay you back in full (the reason people are selling at discount is because people don't think they will be paid back). Goldman Sachs is one of the few organizations with the political clout to make sure that happens with Venezuela.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#32

Post by greeneggs »

raverbashing wrote: post #14
xbmcuser wrote: post #5

Earlier quoted context omitted.

Banks control western politicians who will put who ever is in power under pressure to pay of the debt. I used to think people that talk like that are same as the ones that wear tin foil hats. But the last 6-7 years has made me realise that they are not completely bat shit crazy. And the world of power is power is most corrupted and the least in the news.

That works if: - The concerned politician has a slight sense of responsibility (even though paying banks first is less responsible to the people but has long-term goals) - The concerned country has a minimal ability to pay Venezuela has neither at this moment

Venezuela does have a minimal ability to pay. Eventually, default is likely, but they have paid all of their bond obligations so far. (The story you hear is that many of the bonds are held by political allies, so the payments transfer money to them.)

https://www.nytimes.com/2017/04/12/business/venezuela-oil-de...

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#33

Post by jessriedel »

Retric wrote: post #9
bobcostas55 wrote: post #7

Earlier quoted context omitted.

>As happened in Greece Greece had the largest default in history[0], virtually all private debt holders were forced to take a ~70% haircut. [0]: https://en.wikipedia.org/wiki/Private_sector_involvement

That 'haircut' is based on interest assumptions not actual costs. The actual haircut was only 53.5% of the face value so if you bought it from someone else at a higher discount you made significant profit. Assuming you sold it or there will be no second default.

Sorry, are you saying that if a bond is supposed to pay a certain interest which isn't actually paid, that this isn't a partial default because the interest is only an "assumption"? And we should only count the face value of the bond?

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#34

Post by supernumerary »

mjfl wrote: post #31
bhouston wrote: post #22

Goldman bought a lot of Greece debt that it knew wasn't great and made tons: https://www.thenation.com/article/goldmans-greek-gambit/ Goldman Sachs was also very involved in selling subprime mortages to unwitting investors. Goldman Sach has had to deal with lawsuits that it wasn't acting in its clients' best interests: http://articles.latimes.com/2010/may/16/business/la-fi-hiltz... If Goldman Sachs is involved, you a…

Also realize that the biggest factor in buying bonds at a discount is having the ability to force the borrower to pay you back in full (the reason people are selling at discount is because people don't think they will be paid back). Goldman Sachs is one of the few organizations with the political clout to make sure that happens with Venezuela.

Been going on for a while - this is from 2007:

Vulture funds buy up sovereign debt issued by poor countries at a fraction of its face value, then sue the countries in courts - usually in London, New York or Paris - for their full face value plus interest.

https://www.theguardian.com/business/2007/oct/17/debt.law

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#35

Post by [deleted] »

TorKlingberg wrote: post #2

It looks like Goldman Sachs is betting that Venezuela will sort it self out by 2022, and getting a good discount. I'm not sure how that is “making a quick buck off the suffering of the Venezuelan people”, or how the people would benefit if nobody buys the bonds.

[deleted]

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#36

Post by mjfl »

supernumerary wrote: post #34
mjfl wrote: post #31

Earlier quoted context omitted.

Also realize that the biggest factor in buying bonds at a discount is having the ability to force the borrower to pay you back in full (the reason people are selling at discount is because people don't think they will be paid back). Goldman Sachs is one of the few organizations with the political clout to make sure that happens with Venezuela.

Been going on for a while - this is from 2007: Vulture funds buy up sovereign debt issued by poor countries at a fraction of its face value, then sue the countries in courts - usually in London, New York or Paris - for their full face value plus interest. https://www.theguardian.com/business/2007/oct/17/debt.law

As they have every right to do. Taking out a loan is making a legally enforceable promise to pay back the money, and enforcement actions like that are the only reason that people make the loans in the first place. I sure as hell wouldn't buy a Venezuelan bond.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#37

Post by jevgeni »

supernumerary wrote: post #34
mjfl wrote: post #31

Earlier quoted context omitted.

Also realize that the biggest factor in buying bonds at a discount is having the ability to force the borrower to pay you back in full (the reason people are selling at discount is because people don't think they will be paid back). Goldman Sachs is one of the few organizations with the political clout to make sure that happens with Venezuela.

Been going on for a while - this is from 2007: Vulture funds buy up sovereign debt issued by poor countries at a fraction of its face value, then sue the countries in courts - usually in London, New York or Paris - for their full face value plus interest. https://www.theguardian.com/business/2007/oct/17/debt.law

Isn't it shocking that people dare ask for their money back? Surely, this is some kind of scam. /s

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#39

Post by tgb »

1zq wrote: post #26
tgb wrote: post #17

Earlier quoted context omitted.

It's not directly useful for Maduro. They bought the bonds in the secondary market for a seventy percent discount. Maduro made no money off the sale. And at that large of a discount I don't think he'll have an easy time selling new bonds to anyone either.

From the article: > While Goldman Sachs defended its trade by saying that it bought the bonds on the open market from a broker, bankers and traders say the money ultimately ended up in Venezuela’s treasury because the seller was an institution with ties to the government.

Good point.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#40

Post by jevgeni »

conanbatt wrote: post #38

Damn, this is argentina all over again. And this was a HUGE bet also, they must think the government is going to come down any moment.

No, they are betting for either the government to survive, or the new government to honour its previous debts.
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