LOL!!!
Of course they are!
Look here FRiend...you challenge me on my CDS statements - which are backed up by insignicant people like the Governor of New York and the SEC Chairman - then I ask you for proof of your rebuttal - and you give me this?
Let me give you a little 'edumacating':
Bonds are really high on the pecking order when it comes to insolvent companies. Of course they're going to have some residual value.
Sigh...
Do you really think Governor Patterson and Christopher Cox have traded distressed debt?
That they would actually be more knowledgeable than someone who has?
Bonds are really high on the pecking order when it comes to insolvent companies. Of course they're going to have some residual value. Sigh...
Your typical plain vanilla corporate bonds (i.e. senior or senior subordinated holdco unsecured debentures) are not that high in "the pecking order", smart guy.
They come before preferred stock and common equity and warrants in a workout, but they come after: taxes, mechanics' liens, A/R facilities, letters of credit, trade claims, capital lease obligations, first lien bank obligations, second lien indebtedness, operating company debt and of course debtor-in-possession facilities.
In many bankruptcies the holders of corporate bonds are either wiped to zero or are given warrants with strike prices so high that they are worth practically zero.
In a financial company bankruptcy - which typically involves enormous amounts of debt that are structurally senior to corporate bonds and an asset base that consists mostly of troubled loans - bonds rarely recover a cent.
I should be sighing: I gave you a detailed breakdown of the mechanics of the CDS market and your response was that Governor Patterson is really scared of CDS.
And you will continue to spread the same FUD regarding CDS despite the fact that I have given you the real deal.