online.wsj.com - 11/5/2009
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All banks benefit from the Federal Reserve's zero-interest-rate policy, but Goldman Sachs Group appears to be benefiting more than most. The Wall Street firm's filing on Wednesday contained an eye-popping number: The interest rate on its long-term borrowings was a minuscule 0.92% in the third ...
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Thursday links: the carry trade
Abnormal Returns —
... The economics behind how mutual fund fees are set. (Atlantic Business)
Just how big are Wall Street bonuses going to be for 2009? (WSJ, NYTimes)
Why would any board of directors provide incentives to CEOs to do deals? (Breakingviews)
Goldman Sachs (GS) is paying less on its long term debt than Uncle Sam. (WSJ)
Aswath Damodaran on the issues involved ...
Goldman, the interest-rate hedging king
FT Alphaville —
... , via the Wall Street Journal , flagged a story that possibly sheds some light on how this might have been possible. In short, Goldman appears to have hedged its long-term fixed-rate borrowings very effectively with floating-rate swaps. This means that when interest rates plummet, so do one of Goldman’s main expenses: it never overpays for its debt relative to current rates. Indeed as the WSJ pointed out: The interest rate on its long-term borrowings was a minuscule 0.92% in the third quarter, down from 3.53% in the third quarter of 2008. This $203 billion of debt is Goldman’s ...
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Goldman’s quick links
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Originally posted 2008-05-08 22:45:29. Republished by Old Post Promoter
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