Goldman Sachs and Blackstone Group recently resolved a monthslong standoff over a controversial derivatives trade that had alarmed regulators and investors in the $11tn credit-default swaps market.
The Wall Street giants had taken opposite sides of a bet on bonds issued by home builder Hovnanian Enterprises Inc. The trades, engineered by Blackstone’s GSO Capital Partners, involved the home builder intentionally skipping a small interest payment earlier this month in exchange for an attractive financing package from the private equity house.
