Michael Ridpath - Free To Trade

'OK, what happened?'

He was bursting to tell me. 'Well, I rang Cathy yesterday and persuaded her to come out with me. She made all sorts of excuses, but I wasn't going to let her get away with any of them. She finally gave in and we went to a film she said she had wanted to see for years. It was some French rubbish by Truffaut. I thought it was extremely boring and lost all track of what was going on, but she was glued to the screen. Afterwards we had dinner. We talked for hours. She really seems to understand me in a way no other girl ever has.'

Or at least not since Claire last month and Sophie three months ago, I thought a little cruelly. Rob could get quite carried away when he poured his heart out to girls. The funny thing was, often they would get carried away too. But I wouldn't have put Cathy down as a push-over for Rob's technique.

'So what happened?' I asked.

'Nothing,' Rob smiled. 'She's a nice girl. She doesn't go in for that sort of thing on a first date. But I'm seeing her on Saturday. I'm going to take her sailing.'

'Good luck,' I said. This was shaping up to be like Rob's other affairs. He was at the pedestal-building stage, I thought. You had to hand it to him, though. He seemed capable of cracking even the toughest nut.

The light flashed on my phone board. It was Cash.

'I got a couple of things,' he began. 'First, are you coming to our conference?'

'Yes, I'd love to come. Thank you very much,' I said.

'Good,' Cash said. 'And I promise I will set up a meeting with Irwin Piper when he is over. Now, I have another suggestion. Would you like to come to Henley as a guest of Bloomfield Weiss? The firm has a tent every year, and I hear it's a blast. Cathy and I will be there. Bring someone from the office if you like.'

My heart sank. I had no interest in rowing. And I had no interest in this kind of corporate entertainment. It would involve lots of drinking with a crowd of people I didn't know, and didn't want to know. The only good thing was no one would be paying any attention to the rowing. I wanted to say no, but it was always difficult to say no to Cash.

'Thank you very much, I'll have to check whether I am doing anything that weekend. I'll let you know.'

'OK. Give me a call.'

I hung up. Effusive American meets polite Englishman, and neither is comfortable with the result, I thought, feeling slightly guilty.

'What's up?' asked Rob.

'I've been invited to Henley by Bloomfield Weiss, and I feel bad about saying no.'

Rob perked up. 'Bloomfield Weiss, eh? Will Cathy be there?'

'Yes,' I said.

'Well, I think you should go. And I think you should take me with you.'

I protested, but it was useless. The persuasive powers of Rob and Cash combined were too much for me. I rang Cash back to say I would be delighted to come, and I would bring Rob. Cash sounded pleased.

I was sitting at my desk watching the market struggle through the summer doldrums, ably assisted by Debbie. I was bored and irritated. Debbie seemed quite happy with the situation. I watched her work her way through the Financial Times crossword. I was struggling to keep myself busy. I scanned our portfolio, hoping for some ideas.

There were one or two bonds with NV after their name. That reminded me.

'Debbie.'

'Not now, can't you see I'm busy,' she said.

'Did you check the Netherlands Antilles issues? Do we have to worry about those changes to the tax treaty?'

Debbie put down her paper. 'Amazingly enough, I did.' She pointed to a pile of prospectuses. 'I've checked over all our portfolios, and we are all right. None of our bonds is affected. The only Netherlands Antilles bonds we hold are trading below a hundred, so we will make money if the issuer calls them at par.'

'That's a relief. Well done. Thanks very much for doing all that,' I said.

'Hang on a moment. We may be OK on the tax legislation, but I have stumbled across one bond that smells fishy, very fishy indeed.'

'Go on.'

'It's this one.'

She put a bond prospectus down on to the desk in front of me. I picked it up and looked at it. Written on the cover in bold was 'Tremont Capital NV secured 8 per cent notes maturing 15 June 2001', and underneath in slightly smaller type 'guaranteed by Honshu Bank Ltd'. Beneath that was 'Lead Manager Bloomfield Weiss'.

'Well, what's wrong with this?' I asked.

'It's difficult to say exactly,' Debbie began. Then she sat up bolt upright in her chair. 'Christ! Did you see that?'

'What?' I said.

'On Reuters.' She read from the screen in front of her,' "Gypsum Company of America announces agreed offer from DGB…" Who the hell are DGB?'

'It's a German cement company, I think,' I said. 'We were right. There was something going on.'

The lines began to flash. I picked one up. It was David Barratt.

'Did you see DGB has bid for Gypsum?'

'Yes,' I said. 'Reuters suggests it's a friendly. Any reason why the bid shouldn't go through?'

'I don't think so,' said David. 'DGB doesn't have any US operations, so there won't be any anti-trust problems.'

'What's DGB's credit like?' I asked. If DGB was a strong credit, then the risk on our Gypsum bonds would be much less. The bond price would soar.

'Double A minus,' said David. He was like a computer when it came to the details of even the most obscure companies. 'Hold on, my trader is shouting something.' I could hear a fair amount of noise in the background. 'He says DGB is paying for the acquisition with cash and a share placing. That shouldn't harm the credit.'

'Where are the bonds trading?' I asked.

'Hang on.' He was back a moment later. 'He's bidding 95. Do you want to sell your two million?'

I thought for a moment. Ninety-five was too low. 'No thanks. They should be higher than that. Let me know if they move up.'

I put the phone down and shouted across to Debbie. 'What are you hearing?'

'Everyone is looking for these Gypsums. Bloomfield Weiss are bidding 97. I have got Claire on the line here. She is bidding 97½.

Shall I sell?'

I tapped the buttons of my calculator. By my reckoning we should be able to get 98¼. 'No hold on.'

'Let's just take the profit,' said Debbie.

'No, these things are worth three-quarters of a point more.'

'You are so greedy,' she said.

We spoke to three more salesmen, but none was bidding more than 97½ . I was close to giving up when Karen shouted, 'Debbie, Leipziger Bank on four!'

'Who the hell are Leipziger Bank?' said Debbie. 'Tell them to go away, we're busy.'

Leipziger Bank? Now why would an obscure German bank want to talk to us, I wondered. 'I'll talk to them, Karen,' I shouted.

'Good-morning. This is Gunter here. How is it with you? It is a fine day here.'

'Good-morning,' I said. Come on, Gunter, get to the point.

After a little more polite conversation Gunter asked me if I had heard of an issue for the Gypsum Company of America.

'As a matter of fact, I happen to own two and a half million dollars of that issue.'

'Ah good. My trader is bidding 95. This is a very good bid, I believe.'

An appalling bid – at least two points below the market! 'Listen very closely, Gunter,' I said. 'My colleague is on the other line and is just about to sell these bonds to an old friend of ours at 99 . If you bid 99½ right now, then I will sell them to you. Otherwise you will never see these bonds again.'

'Can I have an hour to work on that?' asked Gunter, shaken.

'You can have fifteen seconds to work on it.'

Silence. I looked at my watch. After thirteen seconds, Gunter was back on the line. 'OK, OK we will buy two and a half million Gypsum of America 9 per cents of 1995 at 99½ .''

'Done,' I said.

'Thank you,' said Gunter. 'I look forward to doing a lot more business with you in the future.'