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Investment Dealers are excited to announce the newest structured finance
product - Constant Obligation Leveraged Originated Structured Oscillating Money
Bridged Asset Guarantees, or COLOSTOMY BAGS. Designed to accommodate the most
sophisticated investment strategies, Colostomy Bags contain the equity
tranches of Structured High Interest Taxable Derivatives, or SH !T, and are
leveraged an infinite amount of times through the innovative use of derivatives.
"Its an actively managed, unlimited liability, open ended investment
with no maturity date, which pays LIBOR plus 5,000 and has no correlation to
traditional investments" said a spokesman for the Investment Dealer who
engineered the product. "It's based on a CDO structure, but it's designed to
default BEFORE the first coupon payment, which you'll agree has no correlation
with stodgy traditional investments and is a perfect fit for portable alpha
scams, er, strategies." Following the default, each month more leverage is
added to the structure to pay for the coupon and the Dealer's fees which are set
at 80%. "We feel the fees are reasonable, given the adrenaline rush you'll
get each month attempting to mark these."
The Colostomy Bags carry a AAAA rating, based on the rating agencies
opinion that they are even safer than Treasuries. "You can't use traditional
credit analysis to value these babies, no sir-ree" said a spokesman for a
rating agency. "Just like Icelandic Banks, we give them the highest rating
because you just know that the Fed will bail out all the hedgies who buy these
things..remember like Long Term Capital? And the best part is, the
beauty of this structure is that the loss given default is NEGATIVE, so by
extension we feel that the CDS will trade through Treasuries."
Inhaling deeply on a fatty, he continued "We've been tinkering with our
model, which served us well for Enron and the Telecoms in '02, and our stress
testing shows that the probability of loss in the senior tranche is close to
zero." The model, constructed of a wishing well, Joseph Jett's trading
blotter, and drawings of Unicorns then collapsed in a heap. "Well, back to the
drawing board!" he cackled.
A real money investor, huddled on the windowsill outside his office,
said he remained optimistic about holding the Colostomy Bags but was a bit
concerned with the 95% decline in value on the first day they traded. "We've
taken a bit of a haircut on these but I'm waiting to see the first servicer
report, which should arrive in a few months. At first I was annoyed that the
dealer who sold them to me refused to make a market in them, but that makes my
job easier since I'm not tempted to sell."
We located a hedge fund manager at a due diligence meeting in the VIP
room at Score's. He said he was skeptical of the structure at first but was
dared into buying it by a fixed income salesman. "He said to me, 'what's wrong
with you, its quadruple A rated, just buy it, what are you a *****?' He also
said it was going into 'an index', although he didn't say which one, but I felt
that I had to buy it. And that was good enough for me, bro'."
Investment Dealers are excited to announce the newest structured finance
product - Constant Obligation Leveraged Originated Structured Oscillating Money
Bridged Asset Guarantees, or COLOSTOMY BAGS. Designed to accommodate the most
sophisticated investment strategies, Colostomy Bags contain the equity
tranches of Structured High Interest Taxable Derivatives, or SH !T, and are
leveraged an infinite amount of times through the innovative use of derivatives.
"Its an actively managed, unlimited liability, open ended investment
with no maturity date, which pays LIBOR plus 5,000 and has no correlation to
traditional investments" said a spokesman for the Investment Dealer who
engineered the product. "It's based on a CDO structure, but it's designed to
default BEFORE the first coupon payment, which you'll agree has no correlation
with stodgy traditional investments and is a perfect fit for portable alpha
scams, er, strategies." Following the default, each month more leverage is
added to the structure to pay for the coupon and the Dealer's fees which are set
at 80%. "We feel the fees are reasonable, given the adrenaline rush you'll
get each month attempting to mark these."
The Colostomy Bags carry a AAAA rating, based on the rating agencies
opinion that they are even safer than Treasuries. "You can't use traditional
credit analysis to value these babies, no sir-ree" said a spokesman for a
rating agency. "Just like Icelandic Banks, we give them the highest rating
because you just know that the Fed will bail out all the hedgies who buy these
things..remember like Long Term Capital? And the best part is, the
beauty of this structure is that the loss given default is NEGATIVE, so by
extension we feel that the CDS will trade through Treasuries."
Inhaling deeply on a fatty, he continued "We've been tinkering with our
model, which served us well for Enron and the Telecoms in '02, and our stress
testing shows that the probability of loss in the senior tranche is close to
zero." The model, constructed of a wishing well, Joseph Jett's trading
blotter, and drawings of Unicorns then collapsed in a heap. "Well, back to the
drawing board!" he cackled.
A real money investor, huddled on the windowsill outside his office,
said he remained optimistic about holding the Colostomy Bags but was a bit
concerned with the 95% decline in value on the first day they traded. "We've
taken a bit of a haircut on these but I'm waiting to see the first servicer
report, which should arrive in a few months. At first I was annoyed that the
dealer who sold them to me refused to make a market in them, but that makes my
job easier since I'm not tempted to sell."
We located a hedge fund manager at a due diligence meeting in the VIP
room at Score's. He said he was skeptical of the structure at first but was
dared into buying it by a fixed income salesman. "He said to me, 'what's wrong
with you, its quadruple A rated, just buy it, what are you a *****?' He also
said it was going into 'an index', although he didn't say which one, but I felt
that I had to buy it. And that was good enough for me, bro'."