Goldman Sachs Bonds Are on Fire

Whether it is a result of calmer credit markets or the Fed’s open chequebook on Wall Street, Goldman Sachs (GS) 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, and the 6.75% bonds are now yielding merely 7.004%, which is a far cry from the 7.9% implied yield on March 11.

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 Research In Motion (RIMM) 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 RIMM.

Comments

[Warm_Paw]

RIMM has chosen to announce earnings at 5 PM wednesday which means traders have bailed after hours and pre market.
If RIMM wishes to suppress it's share price in this way, I'll contribute by dumping my shares as well.