Jefferies the Next Domino to Fall?
Jesus H. Christ how many people bought these shitty periphery bonds knowing full well that these countries have no shot of making good on their payments?
The market is just gobbling up those rumors. Jefferies was smart enough to release exact disclosure to the PIIGS. Hopefully that'll be the end of that. Only Greek bonds have failed to make payments so far (50%).....well if they pass the freaking vote.
Wasn't Jeffries just a flash crash by HFT? Only down 7% now as opposed to 20 a few minutes ago....
No it's because they were downgraded by Egan Jones- the same rating agency that was the first to downgrade the U.S. and MF. They are safe today, but anything goes when Europe is having a bad day.
"Jefferies has no meaningful net exposure to European sovereign debt" - we shall see!
"The company said it has a short position on $178 million of Spanish debt-- a position that profits as Spanish debt weakens -- and has exposure to about $140 million of debt from other European nations, mainly Italy.
Jefferies said its net short exposure of about $38 million is equal to about 1 percent of its net worth, or shareholders equity."
Seems like an over-reaction by the market. Kinda like the whole MS incident a few weeks back..
Agreed. I think anyone who is suspected of having big exposure to PIIGS debt is going to get wrecked from fear.
The biggest BS in all of this is the fact that companies who bought this exposure bought CDS (to hedge there positions) but now since this is a voluntary default, the credit event isn't taking place, so the CDS will not be triggered. In turn, effecting banks,investors,AM like this with this kind of exposure.....
I would love to know what kind of arm twisting the ECB did in-order to get the banks to "voluntarily" accept the haircut.
*Side note... if now Greece defaults due to this potential referendum, that 50% haircut could go to 100%, but begs the question, is that a credit event?Will this trigger CDS?
"Either you get 0%, or 50%"
True story.
Failure of the referendum will be a credit event. Interesting things can happen when the CDS notional is larger than the number of bonds in existence though.
what a ride...+/- 20% in one day
While I understand the concern, isn't a significant portion of Jefferies revenue derived from investment banking operations rather than its brokerage? MFG was purely a futures and commodities broker-dealer and had no IBD.
JEF in IBD is considered weak. Their syndicate team (DCM) actually was the lead on the recent offering (in August!) for MFs latest bonds issuance. Imagine how happy the Street is with loading up on THAT. Lots of revenge to be paid out, i suspect.
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