It looks like the government has bailed out Gross again. Barry Ritholz reports:
A friend Andrew, all around big firm Analyst, writes:
“Correct me if I’m wrong, but didn’t PIMCO just win another game of chicken with the authorities when it refused to tender its GMAC debt for restructuring? Didn’t that effectively force the Fed to use clause 13(3) to save GMAC?
As I understand it, a debt restructuring would have smoothed GMAC’s conversion into a bank holding company, but PIMCO balked and didn’t tender because a restructuring also meant big losses for PIMCO. I don’t believe Tarp funds are senior to any existing GMAC debt, so GMAC debt will probably rally now that it got Bank Holding Company status without the restructuring…I’m not a bond guy but I think that’s how it’ll work…meaning PIMCO wins again at the expense of the taxpayer.
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