Matt Levine, Columnist

Not Everyone Appreciates CDS Creativity

Also Uber, Steinhoff, unicorn loans and useless cryptocurrencies.

January 18, 2018 at 2:39 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

Provide news feedback or report an error

Site feedback:

Take our Survey

Hovnanian.

We have talked a few times recently about Hovnanian Enterprises Inc., which got favorable financing from Blackstone Group's GSO Capital Partners through some credit-default-swap market machinations. GSO had bought CDS protection that would pay off if Hovnanian defaulted. Hovnanian will refinance its debt with a series of new instruments, including a favorable new term loan from GSO but also some new 22-year bonds with a comically below-market interest rate of 5 percent, which should trade at something like 50 cents on the dollar. Those bonds -- along with more valuable bonds, adding up to an attractive total package -- will be issued in exchange for some of its old bonds, pushing out its debt maturities and relieving some of its financial pressure.