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UBS to Open Equity Hose?

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April 01, 2008 – Comments (0)

So, UBS writes down $19 billion worth of junk. Then, it announces it will be raising $15 billion in capital -- my guess via high-payout convertible debt of some kind, because, let's face it, who's gonna give them a pile of money like that without getting paid well, as well as being able to capture a piece of any equity-value increase.

In other words, current equity holders are likely to get a dilution firehose again. (Singapore's $11.5 billion rescue gave that outfit a 9% payout plus nearly 9% equity, IIRC).

But the stock's going up anyway? Welcome to Bizarro world.

 

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