Goldman bonds are on fire
Whether it is a result of calmer credit markets or the Fed’s open chequebook on Wall Street, Goldman Sachs bonds have enjoyed a scorching rally of late. You may recall a post here three weeks ago that pointed out that Goldman’s A-rated bonds were trading below the bonds of sub-investment grade BB-rated Brazil (see prior post “BB+ Brazil vs. AA- Goldman Sachs” March 11-08).
Well, Goldman’s 2037 subordinated bonds have rallied from about 86 to 96.36, such they the 6.75% bonds are now yielding merely 7.004%, a far cry from the 7.9% implied yield on March 11th.
Brazil’s 2037 debt is trading at 108.07, implying a yield of 6.59%, tighter than the 6.647% at the time of the last post.
Mind you, if you were dumb enough to trim part of your position in RIM (RIM:TSX) to buy the Goldman bonds, you’re still behind the game, as RIM has soared from C$95 to C$117 over the same period.
Who would have been stupid enough to not take their own advice and make that trade (see prior post “No more RIM predictions” June 28-07)?
(disclosure – I own GS, GS bonds, and RIM)