Presenting The Current MF Global Ratings At Moody's, S&P And Fitch

[dkf]

http://www.zerohedge.com/news/presenting-current-mf-global-ratings-moodys-sp-and-fitch

And the winners are.... Moody's Ba2-; S&P: BBB-; Fitch: BB+;  Congratulations to Egan-Jones for once again being the only rating agency worth their money and calling this collapse in advance.

[FarCenter]

1. Hiring Jon Corzine as CEO was probably a bad idea

After all, someone who has a severe accident on the Garden State Parkway doing 91 mph while not wearing a seat belt probably has too high a tolerance for risk taking.

Guess he can now spend all his time bundling contributions from Wall Street for Obama.

[FarCenter]

2. MF Global and the repo-to-maturity trade

If ever there was an example of an “overnight repo Black Swan” event, MF Global’s “repo-to-maturity” laddered trades seem to be it. Though, in this case, they’re probably better described as the realisation of the “short-term repo Black Swan”.

A.k.a institutions’ growing tendency to risk it in the short-term repo universe, to beat the crappy returns being offered in the “risk-free” market.

So, while most of the media has been commonly referring to MF’s sovereign bond positions as proprietary bets gone wrong, there’s more to it than just that.

If anything this was a financing position (or liquidity trade) — not a bet on the future direction of the bonds themselves.

What’s more, if executed properly the trade should — at least on paper – have posed little or no risk.

http://ftalphaville.ft.com/blog/2011/10/31/717181/mf-global-and-the-repo-to-maturity-trade/

[dkf]

3. Good stuff. Thanks.

[dkf]

4. This sounds like the goods...

"If repo contracts were reneged upon, this would not only have left MF with a sudden liquidity issue — especially if they couldn’t find a fresh counterparty — but also with a sudden need to mark-to-market the bonds."

I wonder who pulled this trigger. Sigh.