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Clearly. But it's not as if demanding equity rights along side a debt financing is unprecedented. Certainly, it is a damn sight more precedented than the Fed
by rlucas 6y ago
Clearly. But it's not as if demanding equity rights along side a debt financing is unprecedented. Certainly, it is a damn sight more precedented than the Fed buying corporate bonds!
- tptacek 6y agoThe Fed bought the bonds on the open market. You negotiate the sticker price of a new car. You don't negotiate the price of a can of Coke.
- cinquemb 6y ago> The Fed bought the bonds on the open market That was facing a situation with no bids on many issuances from AAA to C rated CUSIPs. And true, you don't negotiate the price of a can of Coke, but if people stopped buying Coke in masses, stores would be incentivized to lower their prices just so it can clear the shelves… ~46% of the IG market is rated BBB (which was the situation before the covid19 btw), where the overall market is trading over par by about 14% on average spells doom for anyone buying the IG market now and holding to maturity… unless you can sell at higher prices to the greater fool: FRBNY leveraging future tax payer money from the treasury lol The situation is even worse with WMT senior unsecureds[0]: you have walmart paper coming due in 2040 trading at +150 that yields 5.625 from par (100), whose gonna wanna get in and hold those bags now to maturity? Nobody but FRBNY leveraging future tax payer money from the treasury lol [0]: https://pastebin.com/raw/warjCE4M https://pastebin.com/raw/warjCE4M
- rlucas 6y agoAre you suggesting that the Fed was strictly a price-taker and so de minimus that it had no price effect? In which case, why did the Fed get involved?
- tptacek 6y agoBecause the intervention they were applying was based on a broad market index, not a specific concern for Walmart.