The trade that reportedly took down MF Global was a premature bet on Italian and Spanish bonds, which, if held to maturity would have paid off handsomely for the company and its CEO Jon Corzine.
While it was always a good bet that Spain and Italy would not default, there have been periods of a lot of volatility. And it seemed that MF Global did not have the balance sheet heft to withstand that volatility.
We’ve been talking a lot about the comeback in peripheral borrowing costs, but we’d forgotten about the Corzine angle until @fullcarry tweeted about it.
With borrowing costs at 2-year lows in Italy (and getting there in Spain), Jon Corzine’s bet is paying off big time… way too late.