Reborn Capital Empire

Chapter 201 Credit Default Swap

…

In fact, they had already reached an agreement on Guo Shouyun. On the premise of ensuring the interests of all parties, if the hound plan can be successfully completed, then of course hello, hello, hello everyone. But if they fail in the end, they have nothing to lose. Instead, he can reap a lot of interest from a large amount of funds loaned to Guo Shouyun.

Of course, if they are not satisfied with the 8% rate of return, they can also securitize the loan and put it into the market as a derivative. In short, there are many ways to make money, and several major financial giants who master the advantages of customers and channels have full confidence in this.

Driven by such interests, this roundtable meeting is destined to lead to no constructive agreement.

When Jeffrey Gilling left the private club with a gloomy expression, Oliver Baring chased after him.

"Mr. Jilin, can we chat together?"

"Next time, there are still things in Enron that I need to take care of!" Jeffrey Gilling shook his head.

What he said just now was not a shirk. Although the current An Ran looked like a flower to the outside world, the undercurrent was already surging inside. This period has been propped up entirely by the huge revenues earned from California's energy crisis.

But both Jeffrey Gilling and Enron CFO Andrew Fastow, who worked on California's energy crisis, understand that this kind of gray income cannot last. If you want to continue to maintain the Enron Empire, you must find new sources of income.

They teamed up with Goldman Sachs, Morgan, Citi, and Bank of America to launch the "Hound Project". In addition to attacking Guo Shouyun, the largest Enron short in the financial market, they also had the idea of ​​taking the opportunity to make money, or taking Guo Shouyun's companies with amazing profits into their hands.

But unfortunately, Guo Shouyun sold the most profitable Thornbird Publishing Company to Amazon, much to the disappointment of Jeffrey Jilin, who was most optimistic about this piece, but fortunately, the Matrix Group is also good.

"Mr. Jilin, I have some different ideas about the 'Hound Project', I hope I can share with you!" Oliver Baring did not leave.

Geoffrey Gilling's eyes flashed, and his sharp eyes stared at the smiling and very confident Oliver Balin. After a while, he said slowly, "Get in the car!"

"thanks!"

Oliver Baring smiled slightly, pulled out Lincoln's extended trunk and sat in.

"I don't have much time to delay, so just say what you think!" Jeffrey Gilling said quickly.

A descendant of a declining old European nobleman, if it weren't for the fact that the other party had a lot of money in his hands, and he was still his own ally, he would not have anything to do with the other party.

Oliver Baring nodded, "I believe that Mr. Jilin has also seen that the four Morgan, Goldman Sachs, Citi and Bank of America, which had made enough profits in the previous increase in Enron's stock price, were not very interested in the success of the 'Hound Project'. concerned."

Geoffrey Gilling frowned, which was also his dissatisfaction. In the past ten years, they had sucked enough blood from An Ran to support their rapid development, but at the critical moment, none of them were really willing to help.

But even so, Geoffrey Jilin didn't compare to these four companies. After all, the declining Enron had a huge gap in strength compared to them, so he could only suffer by himself.

"So...what's your opinion?"

"I think we can change our minds. Find the solution from the inside!" Oliver Baring's eyes twinkled.

"internal?"

"Yes. ... Google, LinkedIn, PayPal, Guo's, Phoenix, and even Apple, which has just been acquired by Guo Shouyun, each company has internal contradictions that are not known to the outside world. If we find it right, we can use our hands Make some articles with the capital in the company. Even if it cannot have a fundamental impact on the development of these enterprises in the end, it will also produce continuous chaos, disrupt their development steps, and then affect their earnings. When Bruce Guo’s industry When the chain is not so healthy, I believe that Goldman Sachs and Morgan will find it on their own like vultures without our urging.”

After a moment of thought, Jeffrey Gilling's eyes became brighter and brighter, "Mr. Baring, if you're all right for a while, I think we can sit down and discuss your entire plan in detail."

"Of course, it's my pleasure!"

A triumphant smile appeared on the corner of Oliver Baring's mouth.

If it is said that he participated in the Hound Project when he first came to the United States, it was just to take a breath, teach Guo Shouyun a lesson, and then retrieve the beauty he liked. But now this purpose has quietly changed, especially after learning about the good development prospects of Guo Shouyun's companies.

If he can take them as his own, it will be the most solid foundation for his great dream of reviving the Bahrain family.

…

"Boss, Qin is here?"

"Let him in!"

Although several days have passed, Guo Shouyun is still a little embarrassed when facing Wendy. He knew that this was the result of Eastern thinking in his bones. In contrast, Wendy was much more calm. Different cultures determine different patterns of thought and behavior.

After glancing at the man sitting on the sofa, some dodging her gaze, Wendy smiled slightly, turned and walked out. She finally discovered the not-so-genius aspect of the man she admired.

"boss!"

Seeing Qin Zhicheng walk in, Guo Shouyun quickly regained his shrewd and capable look.

"sit!"

"OK!"

After he sat down, Wendy handed him a glass of water.

"thanks!"

"You're welcome!"

After smiling, Wendy turned around and walked out.

"How is it, has the investigation come to a conclusion?"

"Have it!"

Having said that, Qin Zhicheng took out a large stack of documents from his briefcase and put them in front of Guo Shouyun. Before the practical use of tablet computers, the office mode was relatively 'clunky'.

“These are the details of the bonds issued by WorldCom, and Arthur Andersen. There are 37 bonds in total, involving funds of $18.362 billion. Of these, 21 are rated AAA by Standard & Poor’s, Moody’s and Fitch, and the remaining 16 All of them are above Grade A.”

As the second largest telephone and telegraph company in the United States and one of the five largest law firms in the world, WorldCom and Arthur Andersen are naturally the top rated among all American companies, and it is only natural that the bonds they issue have high ratings.

Guo Shouyun flipped through the documents in his hand, and an excited smile gradually appeared on his face.

The reason why he asked Qin Zhicheng to collect information on these bonds was to play a financial derivative product called 'credit default swap'.

If you look at professional financial terms, 'credit default swaps' are not easy to understand. Because it's not really a swap product at all. It is an insurance policy, mainly for corporate bonds, with semi-annual premium payments and fixed terms.

For example, you could pay $200,000 a year for a 10-year credit default swap on $100 million in GE bonds. The maximum amount you can lose is $2 million (200,000 per year for ten years in a row).

The maximum you can get is $100 million if GE defaults on its debt repayments over the next ten years, leaving bondholders with nothing.

It's a zero-sum bet: If you get $100 million, the guy who sold you the CDS loses $100 million. It's also an asymmetric bet, just like roulette. You may lose the chips you put on the table, but if you bet right, you will get 30, 40, or even 50 times your capital.

Of course, it is not easy to obtain excess returns. Because the price of 'CDS' is not determined by any independent analysis, but by the ratings of bonds by Fitch, Moody's and Standard & Poor's. If you want to insure a triple-A bond that is considered risk-free, known as a credit default swap, you pay 20 basis points, or 0.20%; for riskier A-rated bonds, you pay 50 basis points, That's 0.50%; for the more insecure 3B-rated bond, you pay 200 basis points, or 2%.

Because corporate bonds have a higher priority than stocks, the risk of default is low. Therefore, the probability of credit default swaps is also very low. That's why, if you want to make outsized returns by buying a business's credit default swaps, it's best to investigate which business is facing failure. Obviously, this is a very risky job. Of course, high risk also means high reward.

The most important thing is that this kind of speculative product, which is very risky to others, has very low risk to Guo Shouyun~www.wuxiaspot.com~ because he knows very well which company will fail in the future.

Also, investing in credit default swaps requires less money than shorting a company's stock. If he insures $10 billion in triple-A corporate debt for 10 years, then he only needs to pay $20 million a year. If the other party defaults at any point in the decade, he will reap $10 billion. Of course, the premise is that the financial insurance company he insures can afford to pay.

Looking at the information in his hand, Guo Shouyun seemed to hear the sound of gold coins falling into the purse. He realized it was a better speculative market for him than stocks and futures. And after investing, he doesn't need to pay attention every day, he just needs to wait for the harvest period with peace of mind. After thinking about this clearly, Guo Shouyun's heart became hot.

Putting down the documents, he raised his head and asked in a hurried tone, "Old Qin, how many people are in your team now?"

"One finance, one legal, three analysts, two negotiators, one assistant, plus I have nine people in total!" Qin Zhicheng said quickly.

"Add three financial negotiators, and then your next task is to help me buy WorldCom and Arthur Andersen's credit default swaps. By the way, and Enron!"

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