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Goldman To Offer $2.5 Billion In 30 Year Bonds, 170 bps Wide Of Treasurys

Tyler Durden's picture


In an attempt to lock in the last vestige of cheapish 30 Year rates, Goldman is now in the market to raise $2.5 billion in 30 year bonds. Per Bloomberg: "Goldman Sachs Group Inc. is marketing $2.5 billion of 30-year debt in its first sale of the bonds in more than three years, as investors accept the lowest premiums since April for bank bonds with similar credit grades." For those who think that the bonds should come in well inside of the US 30 Year, which last traded at around 4.6%, we have some bad news: "the notes from the fifth-biggest U.S. bank by assets may
pay 170 basis points more than similar-maturity Treasuries,
according to a person familiar with the offering, who declined
to be identified because terms aren’t set." Yes, we don't understand either how the OpCo can issue bonds at richer yields than the HoldCo, but such is life when one is part of a theatrical performance in which the roles of master and puppet are reverse.

And speaking of theatrics, here is the official party line spin on what precipitated this desire to lock in long-term rates, per Dow Jones:

Some have speculated that the Goldman deal may have come about from an inquiry from an investor with long-dated liabilities, such as a group of pension funds or insurance companies, and a need to offset those liabilities with long-dated assets.

Pension funds may be more motivated to increase their allocations to bonds now because they are better funded thanks to improvements in their stock portfolios.

Since new 30-year issues have been hard to come by recently, many pensions and insurance companies that want to own longer assets have been picking them up in the secondary market.

According to data from online trading platform MarketAxess, the volume of high-grade bonds with maturities of 30 years or longer sold by customers back to dealers was lower in the fourth quarter than in the third quarter of 2010.

Uh, yeah. There are $5 trillion in mismatch duration securities in America, and some pension fund is suddenly demanding to match their book. Right. Of course, inflationary expectations have nothing to do with this. Nothing at all.


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Fri, 01/21/2011 - 15:59 | 894265 Bam_Man
Bam_Man's picture

"the notes from the fifth-biggest U.S. bank by assets may pay 170 basis points more than similar-maturity Treasuries."

Unless you are a bond bear, buy them with both fists. For all practical purposes they are US Treasuries.

BTW, did anyone notice that honored guests at last night's WH State Dinner included Mr. & Mrs. Blankfiend? Oh, and Mr. & Mrs. Jamie Demon as well.

Fri, 01/21/2011 - 16:28 | 894362 DaveyJones
DaveyJones's picture

a president can dream can't he? 

Fri, 01/21/2011 - 16:00 | 894267 cowdiddly
cowdiddly's picture

You know its getting bad when you bounce a check, and they call the bank to inquire if they have the funds available to cover the draft.

Fri, 01/21/2011 - 16:00 | 894270 confimationbias
confimationbias's picture

Previously posted by T Rex:

Fri, 01/21/2011 - 16:01 | 894274 JLee2027
JLee2027's picture

Debt Peddlers rejoice!

Fri, 01/21/2011 - 16:03 | 894283 buzzsaw99
buzzsaw99's picture

Does this mean the squid plans to be around in 30 years, or not?

Fri, 01/21/2011 - 16:38 | 894402 AccreditedEYE
AccreditedEYE's picture

+1 LOL

Fri, 01/21/2011 - 17:30 | 894560 papercanteen
papercanteen's picture

This means the squid is concerned it might not be, but would love for you to ease its concern by taking on that risk yourself through their bonds.   Personally I'm not putting money on Goldman being around in 5 years, much less 30.

Fri, 01/21/2011 - 16:06 | 894294 Dr. Porkchop
Dr. Porkchop's picture

...well, castles made of sand......fall into the sea,




Fri, 01/21/2011 - 16:15 | 894332 ThisIsBob
ThisIsBob's picture

Matthew 7:24,  heathens.

Fri, 01/21/2011 - 16:46 | 894428 snowball777
snowball777's picture

Jesus sounds like a vinyl-siding salesman in that one.

Fri, 01/21/2011 - 17:03 | 894487 JLee2027
JLee2027's picture

Not to believers.

Sat, 01/22/2011 - 07:53 | 895527 snowball777
snowball777's picture

Or other vegetables.

Fri, 01/21/2011 - 18:12 | 894664 asdasmos
asdasmos's picture

"Is God willing to prevent evil, but not able?
Then he is not omnipotent.
Is he able, but not willing?
Then he is malevolent.
Is he both able and willing?
Then whence cometh evil?
Is he neither able nor willing?
Then why call him God?"

- Epicurus

Fri, 01/21/2011 - 18:33 | 894713 Optimusprime
Optimusprime's picture

Clever but not telling.


This is the same Epicurus who did away with himself because of a love affair that did not pan out?  Sounds like a deep one.

Sat, 01/22/2011 - 07:56 | 895530 snowball777
snowball777's picture

Perhaps you and God disagree on what constitutes 'evil'; file under 'mysterious ways'.

And Epi isn't the first aesthete to rationalize his way out of morality.

Fri, 01/21/2011 - 16:37 | 894400 walküre
walküre's picture

what a great compilation of epic fail.

imagine the investors would have bought gold or silver instead of sand dunes in the sea...

my property is on solid ground, protected from elements, high enough if there was a flood or tsunami with a view.. what more could I ask for.

sand dunes, sand islands, desert tax havens.. what's that word again? mirage.. yes it's all a mirage.

fast forward 100 years later, the desert is back to being a desert and my grand kids will enjoy the land their grand father bought in foresight.

Fri, 01/21/2011 - 16:10 | 894312 plocequ1
plocequ1's picture

Let me guess. Taxpayer

Fri, 01/21/2011 - 16:11 | 894317 Comrade de Chaos
Comrade de Chaos's picture



buy the dip?


or be true for daddy ?

Fri, 01/21/2011 - 16:13 | 894324 topcallingtroll
topcallingtroll's picture

If anything says top in bond prices it is goldman sachs loading up on some long term debt. Im calling a top here too. Tops everwhere i look. Kinda scary.....i am so long stocks i am starting to notice brown stains in my undies.

Fri, 01/21/2011 - 16:22 | 894346 buzzsaw99
buzzsaw99's picture

There should be a zero spread. The squid is guaranteed by the gubbermint.

Fri, 01/21/2011 - 16:25 | 894351 DB Cooper
DB Cooper's picture

They'll sell them to Ben - Ben will buy anything from the Bankstas as long as it will make things more expensive for the rest of us.

Fri, 01/21/2011 - 16:35 | 894390 kjmck
kjmck's picture

Again, Leonard Cohen warned us


Fri, 01/21/2011 - 16:44 | 894419 snowball777
snowball777's picture

Awesome...I'll take delivery of my coupon in actual pounds of flesh please (inflationary Larry need not apply).

Fri, 01/21/2011 - 16:48 | 894433 Mercury
Mercury's picture

Take down that 30yr. fixed mortgage now if you don't already have one...

Fri, 01/21/2011 - 16:55 | 894458 bluehorsesandal
bluehorsesandal's picture

New GS 6.25 41 trading at 157/155


Fri, 01/21/2011 - 16:57 | 894460 Savonarola
Savonarola's picture

Time for another Bonfire.

Fri, 01/21/2011 - 17:37 | 894587 john milton
john milton's picture

riots in albania, three dead, forty injured...they were demonstrating against corrupt regime...surely they aint as bad as gs...

Fri, 01/21/2011 - 18:25 | 894697 satansanus
satansanus's picture

those bonds will trade at a discount. Hell GS may even try to beat the bonds down , then buy em back cheap like RAS bastard cohens did.



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