Italy was left to foot the entire bill when Morgan Stanley (NYSE:MS) cut its “net exposure” in the country by $3.4 billion, according to information just surfacing. The firm made the announcement in January that it had cut its exposure by unwinding derivative contracts from the 1990s that had backfired, but it didn’t tell investors that Italy paid that entire amount to the bank to exit a bet on interest rates.
The second-most indebted nation in the European Union, Italy chose to cancel the transactions because it was cheaper than renewing, according to a source with direct knowledge of the Treasury’s payment. With record debt totaling $2.5 trillion, Italy has lost more than $31 billion on its derivatives at current market values….
Find out more at http://wallstcheatsheet.com/stocks/why-did-italy-pay-morgan-stanley-3-4-billion.html/
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