Deals
The Great Blackstone Swaps Saga Just Became a Whole Lot Crazier
- Hovnanian’s latest debt exchange adds new wrinkle in CDS drama
- Move follows speculation GSO plan could be foiled in auction
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One of the strangest Wall Street brawls in recent memory keeps getting stranger.
For months now, Blackstone Group LP’s credit unit, GSO, has been trying to profit from a sweetheart debt refinancing it offered an ailing New Jersey homebuilder. The plan calls for Hovnanian Enterprises Inc. to engineer a default that allows GSO to cash in on $333 million of insurance-like derivatives. Unsurprisingly, firms that sold the insurance, including Goldman Sachs Group Inc., protested. One hedge fund even sued, alleging fraud.