For this Trump blames Osama bin Laden, even though on Sept. 10, the share price was already below $2. Now it's the bondholders' turn to suffer: Trump says he won't pay the $88 million in debt payments due today unless the bondholders cut him a new deal.
It's the bondholders who get stiffed.
It is the bondholders and home buyers who are the government's chief concern.
When such companies get into trouble, the main sufferers are bondholders rather than banks.
Next in line among creditors are bondholders, with stockholders having lower priority and assuming more risk.
(In the case of Cyprus, the creditors in question were bondholders, and depositors with more than €100,000 in their accounts).
What he apparently didn't reckon on was bondholders who might get very fussy about their collateral.
Buying shares in Bear Stearns would help ensure that the deal goes through, and so it's possible that bondholders are buying up the still-cheap shares in hopes of guiding the JPMorgan takeover to completion.
(See "GMAC Far From A-OK" and "GMAC Barrels Downhill").. It's unclear why bondholders are dragging their feet, but they could simply be trying to hold out for a better deal.
It's arguable that bondholders would have gotten a better deal under those circumstances.
