Is Goldman Spokesman Michael DuVally Lying? Goldman's 47-52 Market In YRC CDS Would Indicate So...
Earlier, Goldman Sachs, which has a propensity for pissing pretty much everyone off these days, got in some hot water with the Teamsters, for allegedly "actively soliciting bond trades for clients and
underwriting credit-default swaps to benefit from a failed
exchange and resulting bankruptcy." We won't comment on this as we have repeatedly said it is quite farfetched to say that CDS in itself can create the kind of death spirals that those unfamiliar with the product tend to believe occur courtesy of CDS traders. However what did catch our attention was the following claim made by Goldman spokesman Michael DuVally: “Goldman does not have a position in [YRC], nor are
we making markets in the company’s bonds or credit-default
swaps.” That we will comment on, because it appears to be an outright lie.
Yesterday, December 16th, at 10:46 am Goldman trader Josh Hershman sent out a Bloomberg run to clients in which Goldman made a market in YRC 5 year CDS as 47-52 (we won't comment on that bid/ask spread, suffice it to say these kinds of spreads will guarantee Goldman keeps raking in the billions for years to come.) This is a market, and also highlighting that "25MM CASH AND CDS TRADING HERE POST EXTENSION" doesn't really help your case. DuVally either does not understand what making markets is, or, much worse, is blatantly lying to Bloomberg. Both cases require additional elaboration by Goldman. In either case we suggest Michael go straight to the corner top floor office, with a dunce hat, for a stern reprimand.
And just to make sure there is absolutely no confusion, Goldman also makes a market in YRC's Term Loan, which was quoted 68-74. We look forward to Goldman's refutation of these allegations.