Michael Gracie » counterparty risk http://michaelgracie.com Clever Tagline Unavailable At Publication Time Mon, 01 Dec 2008 20:43:27 +0000 http://wordpress.org/?v=2.6 en The ‘Bigger They Are The Harder They Fall’ bet (UPDATED) http://michaelgracie.com/2008/11/19/the-bigger-they-are-the-harder-they-fall-bet/ http://michaelgracie.com/2008/11/19/the-bigger-they-are-the-harder-they-fall-bet/#comments Wed, 19 Nov 2008 21:53:34 +0000 Michael Gracie http://michaelgracie.com/?p=4225

The credit markets are unfriendly, even to the big guys.

Ken Griffin’s Citadel Investment Management just had its counterparty rating cut by S&P:

The ratings were cut to BBB from BBB+ on the Kensington Global and Wellington funds, which tumbled about 40 percent this year. Further reductions are possible if the funds, which oversee $13 billion in assets, don’t improve their investment returns, S&P said today in a statement.

Just a smidgen, although when applied across all trades probably isn’t small change. But just to show nobody is immune:

Spreads on insurance against a debt default by Warren Buffett’s triple-A-rated Berkshire Hathaway are trading about on par with that of the embattled General Electric and worse than Goldman Sachs and Citigroup.

Note: with the amount of volatility in the air, the latter issue could work itself out very quickly. As for the former, I just have to wonder how much stock folks put in S&P decisions anymore.

UPDATE: More on the Buffett bet.

]]> http://michaelgracie.com/2008/11/19/the-bigger-they-are-the-harder-they-fall-bet/feed/ Can swaps rescue subprime? http://michaelgracie.com/2007/12/17/can-swaps-rescue-subprime/ http://michaelgracie.com/2007/12/17/can-swaps-rescue-subprime/#comments Mon, 17 Dec 2007 23:03:36 +0000 Michael Gracie http://michaelgracie.com/2007/12/17/can-swaps-rescue-subprime/

Solution? Or same speech, different day?

It’s a big market, and growing. Nevertheless, you have to be good at playing “Who’s Your Counterparty.”

]]> http://michaelgracie.com/2007/12/17/can-swaps-rescue-subprime/feed/ The Next Dominos: Junk Bond And Counterparty Risk http://michaelgracie.com/2007/11/26/the-next-dominos-junk-bond-and-counterparty-risk/ http://michaelgracie.com/2007/11/26/the-next-dominos-junk-bond-and-counterparty-risk/#comments Tue, 27 Nov 2007 01:59:05 +0000 Michael Gracie http://michaelgracie.com/2007/11/26/the-next-dominos-junk-bond-and-counterparty-risk/

More of this from someone who actually knows what they are talking about.

Side note: Hedge funds heavy on the sell-side will certainly have reason to hurt, but what about institutions who still think they’re safely hedged?

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