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I found this article pretty 24 of this week's Barrons

Fund GSO Capital (which operates under the wings of of Blackstone Group) buys credit default swaps (CDS)'s against the debt of home builder Hovnanian Enterprises (HOV).

GSO Capital then approaches HOV and offers them up a nice debt refinance package. All HOV has to do is skip an interest payment on their existing debt.

So HOV buys up some of their own debt through a subsidiary company, and skips paying itself a million dollars in interest on that debt. That triggered the credit default swaps to kick in. GSO collected the money from the writers of the credit default swaps (another hedge fund...Solus Alternative Asset Management).

Solus is suing GSO for it "fraudulent and manipulative scheme." Verdict might be out by now.

I have a feeling that no readers of this board have money in hedge funds, nor dabble in CDSs. But as the article states, sometimes this kind of b.s. might affect the holdings of a small investor.

You can google to get the lastest information on this lawsuit.

Also interesting letter on page 30 slamming Blackrock (different company) about its bond funds.
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