Machismo in New York
Crazy things happen in the Eurobond market. Everyone admits it.
But it's doubtful if the craziness will end in 1986.
Call it what you will, mispricing, under-pricing or aggressive
pricing, was a practice which intensified last year. But there's
been a general reluctance to acknowledge that the true reason for it is
the oldest one in the book: the desire by some houses to increase
market share, to buy their way up the league tables, to shower
themselves with publicity, to prove their machismo in the emerging
global securities market.
Instead, other explanations have been devised. Between 1980 and
1983, the argument for the pricing battles was simple: we can take it,
because we're big and we're hedged. When that line of defence
was breached, the swap factor was wielded in an attempt to convince the
sceptics. "Yes, we're losing money on this issue,...
