"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore
Saturday, February 16, 2013
Goldman Sachs braces for bond market blow up
Goldman Sachs braces for bond market blow up - The Term Sheet: Fortune's deals blogTerm Sheet: "Cohn told Bloomberg, "At some point, interest rates will go higher again, and all of the money that has piled into fixed income over the past three years, some of it will come out." Cohn, perhaps tellingly, noted that a bond crash would be "interesting" for Goldman.
In December, Goldman's CEO Lloyd Blankfein said at a conference sponsored by New York Times that the risk of a bond market crash was growing and that investors appeared unprepared. What's more, Blankfein said Goldman was advising clients to increase their borrowing to take advantage of low rates.
MORE: The old Goldman Sachs is back
Goldman (GS) is taking its own advice. This month alone, Goldman has borrowed $8 billion from the bond market, including a three-part $6 billion debt offering, which was the firm's largest ever. Some of that is refinancing. But the borrowing is up from $5.2 billion in January a year ago. And Goldman has been swapping out some of its 3-year bonds for debt that it won't have to pay back until 2023."