EXTRA HELPINGS
The big headline today of course was the global market knee-jerk positive reaction to the Government's unprecedented $300 plus billion package to act as lender of last resort to Citigroup. But perhaps another headline almost as important was this one from the Wall Street Journal, along with an excerpt of the story:
"Goldman's Massive Bond Sale goes well
Banks, brokers and other financial firms are poised to issue tens
and possibly hundreds of billions of dollars in debt backed by the U.S.
government, following the lead of Goldman Sachs Group
Inc., which received strong interest from investors Monday for $2
billion to $3 billion in bonds it is issuing under a government program.
The Goldman bond offering is expected to be completed Tuesday and is the first major sale in the plan, which was designed to bolster financial firms by letting them borrow easily and cheaply by giving their debt a U.S. guarantee.
Citigroup Inc., General Electric Co. and other companies have signed up to sell bonds under the plan, which could help them resume lending to consumers and businesses and allow them to rebuild capital."
If this does come to pass, it'll go a long way to providing successful CPR* to a global economy seemingly on it's last breaths. The advantage for the buyers of course is obvious:
"For investors, the bonds offer a free lunch -- they are backed by the government, just like Treasurys, but pay higher interest rates. The Goldman bonds, which mature in three years, are likely to yield about two percentage points more than three-year Treasury bonds, or around 3.5%. Goldman's outstanding debt trades at yields of 7% or higher."
It's as close to a free lunch many investors large or small are going to get this year.
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