Saturday, December 17, 2011
George Soros' Plan for America: He Buys Bad European Debt, You Bail Him Out
Soros Bought $2 Billion Ex-MF Global Europe Debt: Report
Published: Friday, 9 Dec 2011 | 7:07 AM ET Text Size
By: Antonia Oprita
Deputy News Editor, CNBC.com
About $2 billion worth of European bonds owned by MF Global were bought by billionaire investor George Soros's family fund, the Wall Street Journal wrote on Friday, quoting people close to the matter.
Axel Schmidt | AFP | Getty Images
On October 31 MF Global collapsed into the eighth-largest bankruptcy in U.S. history and an estimated $1.2 billion in client funds remains unaccounted for.
According to press reports, the board allowed the company's exposure to European sovereign debt to increase by more than four times to $6.3 billion between late 2010 and shortly before it entered bankruptcy.
The firm, led by former Senator Jon S. Corzine, sold part of the bonds
but still had about $4.8 billion worth of them on its books when it went bankrupt, the Wall Street Journal wrote.
They were turned over to KPMG, MF Global's bankruptcy administrator in London; they were then offered to big investors immediately after the company's collapse by MF Global's London clearing house, LCH Clearnet, the paper said, quoting a KPMG spokeswoman.
A number of large investors passed on the bonds but, according to people close to the matter quoted by the Wall Street Journal, Soros's interest was piqued and he bought around $2 billion of the bonds at a level below the market price at the time.
A spokesman for Soros declined to give details about the company's positions, the paper said.
"While our firm is always in the market, we have a policy of not disclosing
details of our positions," the spokesman said.
KPMG told the paper that the overwhelming majority of the European sovereign debt portfolio was liquidated by LCH before the second week in November.
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Yields on Italian debt came off recently, with the yield on 10-year bonds falling below 6 percent for the first time since October. Soros's move is likely to be regarded by markets as confidence in the euro zone's ability to sort out its debt problems, the paper wrote.
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