John Paulson, the hedge fund manager who made billions
betting against the U.S. mortgage market in 2007, has found something new to
bet against according to a HuffPo report. Paulson told investors on a
recent conference call that he is betting against European sovereign debt,
citing fears about the over-dependence of Spanish banks on support from the
European Central Bank, according to Bloomberg News.
Paulson told investors that he is also buying credit-default
swaps on European debt, according to Bloomberg, which act like insurance
policies that pay out if borrowers fail to pay their bonds.
One question for Paulson's clients could be the bet's
timing: Though Spain has recently moved to the center of the European debt
crisis, replacing Greece, the crisis has been going on for years, and prices
for insurance policies on European debt, including Spanish government bonds,
have soared during that time. Some might argue that the easy money in Europe
has already been made….
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