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Goldman 50 Year Note Test Succeeds, Bond Upsized From $250 Million To $1.3 Billion
As we noted yesterday, Goldman was in the market for a 50 year bond at a token amount of $250 million. We speculated this was merely a test to gauge market interest in the space. Sure enough, courtesy of the Fed's free money, interest was massive, and today, Goldman announced that the deal was upsized. Not only that, but price talk has been reduced from 6.25% to 6.125%. What this means is that bank after bank is about to begin rolling out 50 year and possible longer dated debt issuance, as investors no longer care about bullet maturity repayment but are all looking for yield. And it appears that anything over 6% will get massively oversubscribed, maturity be damned. After all, it is other people's money (hopefully).
Full term sheet
ISSUER: Goldman Sachs Group, Inc.
EXPECTED RATINGS: A1 / A / A+ (Negative / Negative / Negative)
REGISTRATION: SEC Registered
SECURITY DESCRIPTION: Senior Unsecured Notes
TOTAL SIZE: $1.3bn (52mm $25 par notes)
PAR AMOUNT: $25 Par
MATURITY: 50yr (November 1, 2060)
PRICE GUIDANCE: 6.125%
PAYMENT DATES: Quarterly on or about the 1st of February, May, August
and November, beginning February 1st, 2011
OPTIONAL REDEMPTION: The senior notes may be redeemed, at any time
on or after November 1st, 2015
USE OF PROCEEDS: General Corporate Purposes
EXPECTED LISTING: NYSE
QDI: Not Eligible
DRD: Not Eligible
SETTLEMENT: T+5 (11/2/2010)
SOLE BOOKRUNNER: GS
JOINT LEADS: WFS (Physical) / BAML/CITI/UBS
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November 1st 2060 bitchez!
Nice, this is spot on what CB was saying in yesterday's post about the initial 250MM 6.25% offering - they are simply testing the waters for the 50yr note.
Sure enough, we assumed it would be oversubscribed, and heres talk of reducing the rate to 6.125. Hell, im sure the market would even accept 200bps over the 30yr. Neither the US or GS will fail, so either are a good option for the risk-averse.
Can someone answer me this:
Why would Goldman want to price this issuance BEFORE rather than AFTER the elections?
Because when (as a function of pure 1st level pricing) is not particularly germane AM. GS is able to demonstrate their market leadership position since it is doubtful C, WFC or BAC could do this deal right now without it being oversubed by the only real bidders for that dog food, the PD's (well, Warren or the Illinois Teachers retirement fund for private showing fiends). So, GS has set the pace in the first of many more rounds of bank recaps while providing additional clarity to all that wish to believe that there is massive money just waiting to gobble up these half baked, half a centurions that will simply be rolled into other deals as an indexing function to keep the psi up within the 2d, 3rd & 4th deriv markets. The real reason this was run now. Follow ons can always work the compression, but this one sets an October 2010 premaxicompression standard... :)
cheers.
Yep. Kind of like a loss leader. It's the massive OTC derivatives markets behind the scenes, which most of us never get to see, where the big money gets made. Deals like this one form the foundation for all that. But, when the OTC derivatives get bigger than the index market, watch out. The tail will start wagging the dog and there will be nothing that the buyers of these bonds can do but bend over and take it.
it s so crazy it s almost funny
6% yield when inflation is soon to be running at 20% means a 14% haircut,in five years at minus 14% per,my initial investment has lost half its value -where do I sign?
Well, you have to sell these bonds to a bigger fool in a few months, when the 30 year has reached 2.5%!
</dream mode>
Just another example of the WS banks are fast approaching/covering up insolvency???
They desperately need cash. Cash coming in (from loan payoffs) is not keeping up with cash going out (bond pay outs)?
Just wait until the music stops and there is a run on the banks. I already have withdrawn all deposits in advance.
Patriot!
+100
WITHDRAW your money from the banks! Vampire squids locked onto the face of humanity! SAVE YOURSELF!
This is one game of musical chairs, and at stake are your assets. It will take one single catalyst to spur the run- perhaps a massive investigation into JPM's fraudulent practices?- Whatever the case, it is coming soon. It is better to be prepared. GL to you.
As your well aware, if and when this scenario unfolds, USDs will probably be your last concern after the initial shock to the unawares sheople..
I'm relatively new to posting on ZH but have posted my positioning on another board. as long as cash (paper money) holds value to those who believe it holds value, I will continue to buy gold, silver and food/survival supplies. I am NOT a doomsdayer by any means- I do not believe in the Mayan calendar end/a giant asteroid colliding with the earth/humans going the way of the dinosaurs/the antichrist coming/etc etc etc. I do however, believe this corrupt financial system will collapse very shortly and the global financial system will be reset. In short, the world will emerge from circa 1880's and, given that knowledge is collective, civilizations next great ascent will occur much more rapidly than before (the 130 years it took to get society from 1880 to 2010 will occur in 20 years or less.)
In the longer term, our future is bright. The short term however, is going to be hell.
BTW- The sheeple who ignore the facts will be caught off guard; these are the ones who sit at home in their McMansions and watch Dancing With the Stars and Jersey Shore. To them, reality is TV. My heart goes out.
I turned off my TV service about 1.5 years ago. Is Jersey Shore a TV show. I used to vacation at OC NJ with my kids when they were young.
As for the WTSHTF scenario: irregardless of the all the squawking about ancient calendars, the lights over NY and TX, or chemtrails ... I think we all can agree it certainly is not gonna be the same as the 80's.
BTW, Bernake is the anti-Christ and 666 is the purity of your gold and silver eagle upside down. ;) Costa Rica is lookin' better all the time.
Remember, Treasuries are "risk free"
LMAO!
What was the backend? The affiliate program for [TBD]...
Honestly, this is unfuckingbelievable. But, hey, I can see where a 50-year bond @ 6.125%, essentially backed by the full faith and money-printing credit of the good ole USA, could be construed as a pretty good deal.
Btw, for anyone interested in silver, one more push up today and a close above 24.10 in the Dec10 would be significant for silver and gold.
And some folks still think the feds' activities have been focused nearly entirely on getting the available $ into stocks...
Some breathing room to support their bonuses.
I assume the geniuses at CALPERs are a buyer. They generally are the last guys into the boat before it capsizes.
+++
They'll buy others, too.
Think they'll buy Morgan Stanley 75 year bonds, BAC 100 years? Cuz the banks can NEVER fail . . . Ahhhhhh the pension funds. They have already failed. How does 6.125 % fulfill their 8% plan? It all just keeps getting worse!!!
Hey, compared to everything else, 6.125% comes pretty close to meeting their 8% target. They they'll just have to pick up the other 178.5 bp by hook (member fees) or by crook (bailouts). Besides they only have to worry about nominal values, not having to worry at all about purchasing power that they are helping to destroy.
In other words, it's a great political solution... today.
CalPERS probably bought the whole $1.3 billion
+1. Pension funds desperate for yield. They dont have the luxury of thinking long term right now as they are fighting for near term solvency.
Again, just as ZH and I expected, perpetual bonds to cover insolvency. What matters is not what occurs in the period following the 50+ years (all of them will be dead anyways) but the next few weeks and months.
Soon, the public will discover the big banks are all insolvent-- thus the perpetual bond issuance soon to come at all big banks. Race to the gates.
http://www.nytimes.com/2010/10/26/business/26tarp.html
How about that lie?
Shouldn't leave many dollars for crap equities...you know...on the bright side.
And I would agree with you in principle...but something tells me there is simply not enough time left for these banksters to pull off the next leg in their crime wave.
The term given for it later will be "defunding," and it will be Average Joe who will be engaged in that act. Methinks it is all too late...
Like people escaping a burning theatre, the door will only let so many through. First to panic, lives.
The handwriting is on the wall. The events taking place are occurring faster than I had anticipated, by two months indeed. I concur with your sentiment about the time left- there is no time remaining for the banks but that will not stop them from attempting to cover over their fraud one last time, before the house of cards tumbles. They will be caught with their pants down.
It will be telling to see if other TBTF institutions follow in GS footsteps here and issue sizeable long term bonds.
Would be what I think is the final big act in the play. Taking the desperate pension money out behind the woodshed. Absolutely criminal how this is going to play out. That really sad part is that we have been talking about this coming for quite some time... well over a year or more.
Hey CL, hows it going dude? No posting on swarm lately?
Looks like Buffet will get his money back.
The head of the wall st mafia would not pay great grandad back if he knew they were headed to implosion.
They want to get him out of the house so he cannot muscle in on the action.
I'll bet though that GS expects to be the last bank standing after the implosion. Right now they're paying Uncle Warren 10% on $10B, which I'm sure they would love to get out from under. Just look how it will all work. Warren gets paid his capital back, GS gets lower cost debt, and the pensions will end up as worthless paper promises, redeemable for squat.
Just another example of the wealth transfer effect of currency debasement, the only play in their book.
Another fleecing of the baby boomer pension funds is in progress now. These people make it look so easy..Amazing.
...buy now and put your kids through college when they turn into grandparents.
Companies that issue a lot of debt before hyperinflation are making the smart move. 50 years is a safe bet that inflation will make that debt meaningless in that timeframe.
LOL. More ignorance and populist nonsense regarding Goldman Sachs.
LOL. More rhetoric without any actual fact(s) as to why you see this as "populist nonsense".
FAIL.
Can't write, fight or even counterfeit Chemba. A triple threat that is an epic fail at any one of the three chief pursuits of our age. Gotta say that perhaps this would better suit you as an avatar.
http://www.vegalleries.com/hbopc/0152pen02.jpg
Would the real Chumba please stand up
Day trading is only dead because buy and hold is back with fed and HFT manipulation. That's why volume is down - those who want in are in and the rest of the day trades are robots trading with each other.
I'll gladly repay you with interest 50 years from now, for a hamburger today!....sucker.
Let the game continue...Just when the can was nothing but a mere sliver of tin, they replace it with a bigger can to kick! Dreamers, that's all they are...Nothing but dreamers!
http://www.youtube.com/watch?v=YbJqswLi3uE
GS to itself:
Heads I win, tales I win.
BIDU is super cheap. should be at $20,000 a share easy.
GS has just invented a new method for selling you crap bonds that they will later buy back from you at half price . Great idea. Perhaps they will also short them right out of the gate. Oh wait, they already did that by planning to float much more than they need (1.2B versus 250M).
Look at it this way: GS is short-selling bonds and plan to buy them back later when the value has dropped.
Fucking brilliant.
I'm sure they'll be plenty of bids when rates start creeping higher....GS will be buying these back for pennies on the buck.
this is nuts..these banks are fucked up six ways till 2060..the toilet paper investors should really pump the brakes and think about for a minute...matter fact..take 5! what is going on in the world? are the stupid people growing in mass..I guess this thins out the herd. was down by gs today. saw an interesting bunch of people buying silver today..actually, all the booths were filled..very interesting indeed
Come on in Dear, the water's fine.
I would love to sell 50 year mudduck bonds. 8% no worries. Want more? Step right up, we aint never gonna run outa these babies.
Blackrock and Pimpco are probably the biggest takers - Bury the holdings deep in some bond fund somewhere - that nobody ever looks - and which is priced by some whore pricing service - that provides mutual fund sucker pricing that is nothing close to what reality will be when the lemmings all decide to eject from bond funds.
Not just hopefully all OPM, definitely all OPM.
Mostly pension funds justifying it on grounds that they can hold to maturity and GS is too big to be allowed to fail. I doubt anybody obliged to mark it to market would want any.
Why in the world would anybody - let's say an individual - want to tie up 20, 30, 50,000 with the promosie of 6.125 interest and your money back in 50 years. The concept is ludicrous on its very face, but I guess that's where we're at today. Nothing makes sense. I give up. Cash, silver, raw land, tools of trades and vehicles. That's it. And fuck 'em if they want a piece of the action, i.e. taxes. It's every man for himself.
I have 100k. I need money for living expenses. I need about 6k/year gross to live. If I just draw it down my 100k is gone before year 17. This investment keeps me going for fifty years and I still may have the 100k at the end. So I find twenty to twenty-five of these and that is my plan. Before factoring in the credit risk factor it is a very good deal. And yes, lions and tigers and bears: taxes, fees and inflation all loom and always will.
The formula for the proper liquidation rate for your silver and raw land to generate cash for living expenses may be superior but it is also complex. If you have tons of it and you are good at it you may consider offering a deal like this yourself. Not everyone can manage assets into steady, long lasting streams of income.
Why in the world would anybody - let's say an individual - want to tie up 20, 30, 50,000 with the promosie of 6.125 interest and your money back in 50 years.
Being that it's a coupon bond - you actually "get your money back" (get 100% return) in about 12 years.
Personally it doesn't seem like a bad deal at all to me, if you don't believe the SWHTF within the next 15 years or so.
Maybe somebody bought $1 billion and lock in a 50 year inflation swap at 200 basis points. That's 4.125% with MINIMAL credit risk.
Kinda like a 50 year CD for rich people, since FDIC protects so little anyway. This says something about their view on the future cost of borrowing, expected returns, and as pointed out helps test the waters for more deals.
Hey by the way, if you insist on putting back these non-performing or near underwater mortgages we are gonna roll out a rapid-refi to all our customers and chop your return on the performing notes, especially the juiciest ones.
Pay attention Bernie Madoff, this is how you run a LEGAL ponzi scheme!
Are these the new Savings bonds? Seriously, you cannot deny a bond bubble with the stuff they are selling now. 5 years we will look back and watch T.V. documentry about how country wide..er... Goldman sold 50 year bonds to Ninja buyers who shouldnt have been buying.
EDIT: perhaps we are not at the top yet. When you see netflix 50 year bonds, time to close positions.
I would rather face the mexican cartels with a 22 than buy any shit these assholes have to sell.
thank you top tick GS.....last week GS told clients to front run equities ahead of POMO days..... we have had 2 pomo days since that top tick - and low and behold both days are red!!!
DOW weekly chart shows the rising wedge contained within the megaphone pattern. This remains a very bearish picture and we should
get a breakout soon.
http://stockmarket618.wordpress.com
Does anyone have a simple multi-contingent (two level inference) simple algorithm to protect against HTF flash crashes? In other words my Trailing % short stops are working against me so I need to check the validity of the drop in price on my trigger.
Anyone have a standard trigger say for GDXJ or SLV? I can put together a few of these pretty easily -- just wanted to know if anyone else had some insight.
IF
(stock, index, etc..) does (last bid ask change % etc) (Price)
THEN
(stock, fund, etf) (Action: sell/buy) (quantity) (type: trailing stop %, price, etc) (time in force: good until cancelled)
http://www.youtube.com/watch?v=zJN-wrtuWOg&feature=related
Damn...how do I get a 100 year mortgage? Negative yield anyone?
To me its amazing anyone is buying bonds or treasuries right now. Yield or no yield...we are in uncharterted waters..rough waters...and I have no idea where we are going week to week...let alone 50 years from now...these were sold way to easy...so are the government treasuries...it stinks to me...I´ll take hard gold and silver...for interest dating back some 3000 years
This bond is callable in 5 years (GS owns the option to call it). I would dare say, am doubting this bond sees the final maturity. That'll also significantly shorten the bond's duration.
Let me understand. Goldman offers bonds at a yield of 6.25%. A bunch of buyers step up and firmly commit to that yield. Then Goldman changes the yield in their favorto 6.125%.
How would you feel if you went to the grocery store to buy something and when you got to the checkout counter the cashier marked the price tag up 5%? Where I come from, behavior like this is called false advertising, welching, and lying. How did this become common practice on Wall Street?
The thing that perplexes me the most is why anyone deals with these pirates. The only explanation I can come up with is that their clients are completely desperate and have no other choice (U.S. Government included). I’m finally starting to understand the true foundation of Wall Street’s business model. They like things the way they are right now. This works for them.
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