And quite a few potential investors these would be: being the smallest of the PPIP participants (by a big margin at that, which begs the question: where is Och Ziff, where is Highbridge, where is MatlinPatterson, where is SAC, where is Silver Point... actually never mind on Silver Point... all these bigger and more successful funds did not apply for PPIP or did not get selected... Inquiring minds would love to know why) you have to raise about 10% of your total AUM. Not only that, but one imagines the traditional LPs who got skewered on the Marathon's recent forays into "liquidating trusts" can not be all that excited about dumping more cash, even with the promise of "incredibly attractive" returns dangling like a skewered worm on a fish lure.
Of course, none of this is to say anyone here is to blame: when the government tells you, and in fact encourages you, to grab taxpayer cash with both hands and virtually guarantees profits you would have to be a fool not to get involved. Especially since these securities, as Bruce pointed out so astutely were "issued at LIBOR + 25 and are now trading with yields in the teens." How could one possibly lose money on that: now that is an arbitrage one could sink their teeth into.