A mere technicality, my good man!
“Banks and hedge funds are trading credit-default swaps, which make payments to holders of General Motors bonds in the event of a default. But GM canceled $40 billion of debt in bankruptcy and has pledged to cut its remaining $4.6 billion bank loan to the bone this year.
That is merely a technicality for the banks and hedge funds that have been actively trading the CDS.
That is merely a technicality for the banks and hedge funds that have been actively trading the CDS.”
When it comes to derivatives, the fun never ends . . .
Wall Street Bets on Debt That Doesn’t Exist
MATT WIRZ And KATY BURNE
WSJ, FEBRUARY 28, 2011