Comments on: NewSpeak Watch: What Does "Sale" Mean? (LBO Loan Edition)

By: Vermont Trader

Vermont Trader — Wed, 13 Aug 2008 12:25:00 +0000

First time comment.. love the site and read it every day.

All they are doing is doubling down. Their models are telling them that these things are cheap still but the models are based on the past 20 years and the future may not unfold as the models predict.

By: etc

etc — Wed, 13 Aug 2008 10:11:00 +0000

When yves and others talk about a discount on the sale price, are they talking about (i) pretending the buyer had personal liability in an entity with significant real assets other than the purchased loans, (ii) asking what the seller would charge the buyer for a put obligating the seller to buy the loans as par (i.e., a liquidity put), and (iii) discounting the purchase price by the premium for the liquidity put?

Or are people hypothesizing something else to get to a lower purchase price than the stated purchase price?

By: Ginger Yellow

Ginger Yellow — Wed, 13 Aug 2008 09:56:00 +0000

I wrote a comment piece on Merrill’s CDO “sale” making much the same point a couple of weeks ago. My publication should be putting it and our other comment pieces online for free soon. I’ll post a link if and when we do.