"Soros may have allegedly bought $2 billion bonds but he may have allegedly only paid $ 200 million or about 10% on the dollar for the alleged bonds.
Transaction was done at arm's length by a third party administrator, charged with liquidating the European bonds that MF had bought on margin for underlying repo-to-maturity contracts (high-yield sovereign bonds of Italy, Spain, and France) and they were offered to several bidders through a mechanism of Dutch Auction. I don't see how Soros could get much better discount deal than any of the other qualified bidders would agree to.
..... A number of large investors passed on the bonds ..... < snip > ..... the overwhelming majority of the European sovereign debt portfolio was liquidated by LCH before the second week in November. ..... < snip > About $2 billion worth of European bonds owned by MF Global were bought by billionaire investor George Soros's family fund ..... < snip >
This is a typical, well-executed liquidation of a large relatively illiquid financial estate. The administrator, correctly, was willing to do the transaction as fast as possible, especially for such a large tranche ($2B) and Soros has no problem with cash or collateral, so he can easily hold these short-term bonds to maturity and collect interest (or sell them at higher price as the interest on the new bonds came down and price of the bonds rises), in addition to buying at discount.
Additionally, through this transaction, Soros, who is very involved in eurozone markets, indirectly signals and expects to bolster the confidence in the Euro (€ currency) which may help his other positions.
Since Dodd-Frank required new reporting and reserves maintanence, many hedge funds eliminated their public listings and either shut down, scaled down, broke apart their operations or, like Soros, became "family" funds that do not require SEC disclosures.
Thus, the drive for more "transparency" and "accountability" presumably expected after passing Dodd-Frank reform, actually made hedge fund world less transparent and less visible from the outside. Another case of "Law of unintended consequences" and pretentious "good intentions".
By this time George Soros is semi-out of it. This is his ravenous sons and the Soros family organization who interestingly enough own part of Dinosaur BBQ in NYC and NY State.
George Soros is capable but only some days. This is my take. But it helps to hoist the old bugger up there as a boogeyman.
As short-term bonds, Soros likely purchased them at, say, a 10% discount from par, not 90% as the comment to the CNBC article surmises. Because of the lower risk of short-term bonds, Soros, or any other buyer, could have hypothecated them for, say, 90% margin credit. That is probably the source of the $200 million figure. That’s how much cash Soros has into the purchase.