Chapter 882 LIBOR Rates

   "Soros announced the return of all external investors' funds and converted the Quantum Fund into a family fund."

  Gao Dongfang said lightly, "In addition to these, Soros also announced his complete retirement. This old guy should not be in such a bad health, right?"

   "I don't know that."

  Zhong Shi poured out a cup of tea, took two sips, and then said slowly, "He is already over seventy years old, and he should be at the point where he can't do what he wants."

   "I don't quite believe it!"

Regarding Zhong Shi's statement, Gao Dongfang just shook his head vigorously, "Based on what I know about him, I think this guy will never give up his career unless he is dying. This is a high-level profession." Manager, the current change must be due to some reason, do you know?"

   "Why are you interested in this?"

  Zhong Shi asked without answering, "Even if Soros retires, it is just a trivial matter for us. Is there any important reason for this?"

   "I heard he came to Hong Kong last week!"

Gao Dongfang stared into Zhong Shi's eyes, and said slowly, "Someone saw him at the airport, and you. You should know that this guy is quite popular in the market, although we don't think he has any The conspiracy and tricks of the people have to be used. But if you can grasp why he came here, then it is not a bad thing after all."

   "I suggested he do it!"

Having said this, it is no longer meaningful for Zhong Shi to continue to cover up. He immediately admitted, "Because of certain things, he was punished. In order to make up for his fault, he had to give up investing with the outside world. personal connection, and a personal announcement of retirement."

"I think he will make some remedial measures in the future, such as donating a large sum of money to schools or research institutions, actively participating in politics, donating a large sum of money to a certain party, and other similar measures. Specifically I don't know how to do it, but I can be sure that there will be such measures. Now you should understand, what happened to him, right?"

   "I probably understand what's going on!"

  Gao Dongfang nodded silently and remained silent for a while.

  Political and business relations have always been the first consideration of businessmen. Even in the United States with a completely free market economy, it is necessary to have a good relationship with political groups, because it means that there are political forces protecting your interests. Of course, all of this is based on the rule of law and compliance.

  If the violation is involved in the investigation, then the political forces will only disentangle the relationship in the fastest time.

   Obviously, Soros did not commit a crime, otherwise what awaits him now is a trial. What he is doing now is obviously repairing public relations and re-establishing a good image. This shows that the problems that have occurred are limited to the moral level.

  However, what frightened Gao Dongfang was not the fact that Soros suddenly announced his retirement, but the role played by Zhongshi in this matter, which he never thought of. Although he knew that Zhong Shi was very popular in the United States before, he never thought that Zhong Shi could even influence the U.S. government now.

  Recalling that when I first took office, I planned to compete with Tianyu Fund. But now, although Huatou has made some achievements, it is not worth mentioning compared with Tianyu Fund, which is as powerful as it is.

  Sometimes, the gap between people is so huge.

   "Okay, I'm not looking for you today for this matter."

After deliberating for a while, Gao Dongfang said, "Huatou is going to expand its funds. Because our return on investment has exceeded expectations, the top management has decided to expand our fund management scale. However, this money is not going to be withdrawn from the treasury, and the investment area is also limited." It is impossible to set it at home, so the top management decided to issue bonds to raise funds, and the scale of overseas fundraising should not exceed 20 billion U.S. dollars at most.”

   "Are you going to let me buy some of it?"

  The corners of Zhong Shi's mouth twitched slightly, and he said with some displeasure, "How many shares do you want me to buy? Hey, you guys can really make trouble for me."

  Gao Dongfang, who hadn't appeared for a long time, suddenly came to the door. He must have something to discuss, and Zhong Shi knew this very well. But he never expected that Gao Dongfang would propose such a thing, which was really hard for him to accept.

   You must know that compared with Tianyu Fund, the rate of return of Huatou is really too low. This kind of fundraising is a complete waste of funds for Zhong Shi, so he is quite unhappy.

   "No, no, no!"

Gao Dongfang quickly denied it, "Zhong Sheng, you are wrong. I didn't seek you to raise funds from you. I also know what the situation is. The reason I approached you was to take advantage of your relationship. Is it feasible."

  In fact, Gao Dongfang did have Zhong Shi’s idea, because Tianyu Fund can easily subscribe for the shares that Huatou wants to issue. However, after this opinion was reported, it was decisively rejected by the top management. Because this kind of behavior is suspected of moral kidnapping, and the other point is that Huatou’s return on investment is indeed not as good as that of Tianyu Fund. Doing so will only consume Zhong Shi’s patriotic enthusiasm.

"Our initial idea is to issue 20 billion US dollars of bonds in London. Of course, both the pound and the euro are acceptable, and the currency is basically negligible. But in the process of actual operation, we found that the LIBOR of the market benchmark is a bit low, It doesn't seem to be quite in line with market lending rates, so I want to use your connection to see what's going on."

  The so-called LIBOR is the London Interbank Offered Rate, which is the interest rate set by large international banks when they borrow funds from peers.

   To put it simply, LIBOR was originally the interest rate of Eurodollars, including all interest rates of overnight, one week, two weeks, one month, two months to twelve months.

   Later, with the development of the mechanism, LIBOR included currencies such as the euro, the Japanese yen, and the British pound, gradually forming the benchmark interest rates for these currencies within Europe.

  LIBOR is an important interest rate for bank lending. More precisely, LIBOR refers to the London Interbank Offered Rate, which refers to the short-term lending rate between banks. As an important benchmark indicator in the financial market, it directly affects the pricing of financial products such as interest rate futures, interest rate swaps, industrial and commercial loans, personal loans, and housing mortgage loans, as well as the formulation of monetary policies.

The current LIBOR pricing mechanism is that 20 large banks submit their lending rate valuations to the British Bankers Association at 11 a.m. London time, and the latter removes the arithmetic mean of the highest and lowest interest rates that account for 1/4 of the total number of quotation lines , which is the LIBOR rate of the day, which is then applied to the pricing of various loans, derivatives and other financial instruments.

"Um?"

  As soon as he heard this, Zhong Shi's expression changed immediately, and he asked in a deep voice, "Are you sure there is something wrong with this benchmark interest rate?"

  He is too aware of the importance of this interest rate. You must know that a fluctuation of one basis point means a change in profits of hundreds of millions. If there's something wrong with that number, the whole thing is pretty dire.

   "I'm not sure either!"

Seeing Zhong Shi's serious appearance, Gao Dongfang felt a little guilty, and after a moment of silence, he said, "One of our underwriters, HSBC Bank, gave us a quotation, which is not the same as the quotation given to us by another underwriter, Citigroup. Yes. After analyzing the two quotations, we feel that there are some problems. The most important thing is that the two sides can't agree on this matter at all, so I will ask you to see if you have heard of the European Similar questions."

   "You mean, there is a certain price difference between the dollar quotes in Europe and the dollar quotes in the United States?"

Zhong Shi suddenly realized, "But isn't this a normal thing? Are you sure they are giving the same quotation? Do you know that some quotations have different interest rate quotations because of different underwriting methods? "

  Bond sales are generally divided into underwriting and reimbursement. As the name implies, underwriting is to yell in the market, and underwriting means that in addition to the sold part, the underwriter has to eat the unsold part. These two schemes have their own advantages and disadvantages, which mainly depend on the strength of the underwriter and the popularity of the bond varieties. Naturally, because of the different methods, the underwriters will choose different pricing strategies.

   "Of course I know this!"

Seeing that Zhong Shi hadn’t heard what was going on, Gao Dongfang couldn’t help feeling a little anxious, and couldn’t help but strengthen his tone, “The underwriting method is the same. But what HSBC told us was LIBOR, and what Citigroup told us was the quotation from the Federal Reserve. .It makes us wonder that the ten-year dollar loan rate is not the same thing, there is a huge room for arbitrage.”

  Although LIBOR and the Fed's benchmark interest rate are not the same thing, it is generally believed that the interest rate between LIBOR should be higher than the Fed's benchmark interest rate. Because the Fed's benchmark interest rate is the price at which banks lend to the Fed, and LIBOR is the price at which banks lend to each other.

  But now the price quoted by HSBC to Huatou is lower than the Fed's benchmark interest rate, so there is a problem.

  Strictly speaking, HSBC’s quotation is very attractive to Huatou. After all, if the interest rate is low, it will have to pay a little less money when repaying the principal and interest in the future. However, after studying the quotations from HSBC and Citigroup, the top management of Huatou could not make up their minds, because they did not want their funds to become arbitrage capital among banks.

  With a capital of 20 billion U.S. dollars, even if there is a difference of one basis point, the arbitrage space can reach tens of millions of U.S. dollars, not to mention that this is a long-term loan with a term of up to 10 years.

   At least in terms of issuance, Huatou does not intend to choose a side between European banks and American banks.

   "Moreover, the most important thing is that our commercial banks have currency swaps in Europe and the United States. If interest rates are involved, it will be a big deal!"

Gao Dongfang went on to explain, "The current high-level executives have a grand plan, which is to go out of the RMB operation and become one of the world's reserve currencies. If you don't know what's tricky in it, and you can't take the initiative in pricing power, then Even if the renminbi can be successfully operated, it can only be reduced to a tool to be manipulated in the end.”

"So this time, I am not only here on behalf of Huatou, but also the capital and currency of China as a whole. In the future, if we issue more RMB products internationally, we will not only need the initiative of the exchange rate, but also the interest rate. Be proactive. The $20 billion right now is just a stepping stone."

"I understand!"

  Hearing this, Zhong Shi still didn't understand, and immediately nodded solemnly, "How much do we have to do in this matter to meet the high-level requirements?"

   "Find out what the **** is going on!"

  Gao Dongfang replied without hesitation, "Although we don't intend to interfere with their activities, it is impossible for us to achieve their goals."

"I understand!"

  Zhong Shi nodded solemnly.

  Neither of the two of them expected that just a small detail in the bond sales of Huatou would soon turn into a big storm sweeping the audience, and many well-known big banks would be involved in this storm.

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  (end of this chapter)