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That's a distinct advantage over other types of secured debt, like brokerage account margin loans; suffer a drop in the value of your stock or bond collateral and you'll either have to post more capital or have your collateral seized.
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Companies could also try to get around the requirement by agreeing to pay any costs associated with a bond or collateral pledge.
Instead, following his bent for financial chicanery in earlier novels like "A Conspiracy of Paper" and "The Coffee Trader," he indulges in a fascination — which I doubt will be shared by most readers — with the arcana of bond issues, collateral, short-selling and discount rates.
The bond's collateral is you guessed it the state's share of the tobacco settlement.
After completing this phase, 60% of the bond or collateral for the applicable permit area can be released.
One other ongoing concern: Greece gets much of its short-term borrowing taken care of by the European Central Bank, by using government bond as collateral in exchange for cheap loans.
Greek banks also use their government bonds and government-guaranteed bonds as collateral to raise funds at the ECB but that would no longer be possible after a default, further raising the pressure on Greece's financial system.
A Bloomberg reporter hits Trichet with three questions: did the ECB discussed buying up government bonds to try and reassure the markets; does the eurozone need a proper method to allow its members to default on its loans, and why did the ECB only relax the rules on accepting Greek bonds as collateral, rather than on all EU government bonds?
The European Central Bank has been lending money to Greek banks, accepting Greek bonds as collateral on loans to other banks, and even buying bonds.
And E.C.B. officials have been warning against any form of debt relief — in fact, last week one member of the governing council suggested that even a mild restructuring of Greek bonds would cause the E.C.B. to stop accepting those bonds as collateral for loans to Greek banks.
While MF Global had to fork out cash to buy the bonds, it could get cash back when it posted the bonds as collateral for the repo loans.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com