Venezuela, Bond Ethics & Argentina (Short Ethics)

We're big fans of Bloomberg's Matt Levine. He has written some great stuff on Venezuela and we like how he takes a piss out of Eaton Vance Corp. in this piece. Putting aside high-yield issuances, though, folks in the distressed space know these ethical dilemmas all-too-well: in the claims trading space. To our knowledge, that space isn't as prolific or lucrative as it once was before the proliferation of expedited 363 sales and prepacks but there are still some exceptions and sometimes those exceptions can be dicey. We were thinking about this very subject while watching HBO's (fairly) new Bernie Madoff pic. When Madoff went down, claims traders started licking their chops looking for opportunities to arbitrage. So what happened? Moms and Pops accepted offers to sell their claims for pennies on the dollar to funds. Why? Because many just lost their life savings and needed liquidity, that's why. Why did the funds do this? You know, because of their fiduciary duty to generate alpha for LPs, of course. Those that didn't partake because of ethics? Well, quite frankly, they didn't make money like some of the big boys did. Which also means that those bros didn't get paid. "Honey, why wasn't your bonus bigger this year?" "Because management wouldn't let me make money off the backs of financial victims, baby." Ethics have costs, we suppose. Elsewhere in the realm of ridiculousness, Argentina, the Lucy to yield-starved investors' Charlie Brown, issued a 100-year bond. Choice quote: "The market has a short memory." You think? We wonder whether there's a PIK toggle feature: at this point nothing would surprise us.