MF Global Bonds Fall as Creditors of Broker Plan to Meet

Bonds from MF Global Holdings Ltd. plunged today as the firm comes under scrutiny by the FBI and prosecutors and as creditors plan to meet today.

The company’s $325 million of senior unsecured 6.25 percent notes due in August 2016 fell 5 cents to 40 cents on the dollar with a yield of 30.3 percent at 10:51 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The inquiry, in which the U.S. Federal Bureau of Investigation agents are working with prosecutors, is in its preliminary stage, and no information requests had been issued as of the afternoon of Nov. 4, said a person with knowledge of the transaction, who declined to be identified because the matter isn’t public. The decision to begin the probe was made that day or late Nov. 3, the person said.

Creditors seeking a position on a committee that could shape the approach to recoveries are set to meet today at the Millennium Hilton hotel in Manhattan. A trustee overseeing the liquidation of the company’s operating unit, MF Global Inc., started his investigation into possible fraud or misconduct on Nov. 4. MF Global has until Jan. 30 to report a detailed list of its assets and debt.

To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net

To contact the editor responsible for this story: Pierre Paulden at ppaulden@bloomberg.net

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