George Soros Buys Italian Government S/T Debt, Part of ~$2 billion Purchase of European bonds formerly owned by MF Global
By Jacob Wolinsky
Investor George Soros’s family fund bought about $2 billion of European bonds formerly owned by MF Global Holdings Ltd., the very debt that helped force the securities firm to file for bankruptcy protection Oct. 31, according to people close to the matter.
Under the direction of MF Global’s former chief executive, Jon S. Corzine, the firm accumulated $6.3 billion of short-term debt issued by various European nations, mostly from Italy, in a bid to boost trading profits. Over the summer, this debt led to nervousness by investors, regulators and ratings companies, resulting in the firm’s collapse just over a month ago.
Though MF Global sold about $1.5 billion of this European debt in the days leading up to the bankruptcy filing, about $4.8 billion remained. Those leftover bonds were turned over to KPMG LLP, MF Global’s bankruptcy administrator in London.
These positions were offered to a number of big investors immediately after MF Global’s collapse, according to investors who had a chance to buy the bonds. The sales process was run by MF Global’s London clearing house, LCH Clearnet, according to a spokeswoman for KPMG.
Though a number of large investors passed on these bonds, Mr. Soros’s interest was piqued, according to people close to the matter.
Earlier this year, his firm moved a chunk of its holdings into safe, liquid investments, giving Mr. Soros the ability to write the approximately $2 billion check for MF Global’s bonds.
The 81-year old investor, together with his investment team at Soros Fund Management, purchased the bonds for below the market price at the time, in a transaction involving JP Morgan Chase & Co., according to these people. Other large investors also bought some of these European bonds once held by MF Global, according to people close to the matter. A spokeswoman for J.P. Morgan declined to comment.
Mr. Soros’s firm still holds the majority of the positions it acquired, the people said.
More can be found at the Wall Street Journal.