Майкл Ридпат - The Marketmaker

There was silence as Frewer thought about it. Jamie clung tight to the receiver and winced. ‘OK, OK,’ Frewer said, finally. ‘I’ll be back.’

‘I hope this one doesn’t blow up in our faces,’ said Jamie. He sat still, staring at the phone, not touching it. Nothing was more important than Frewer’s call. We waited for five minutes. It seemed like an hour. Then the direct line to Imperial and Colonial flashed and Jamie pounced. ‘Yes?’

‘Bloomfield Weiss hate it. They told me they’ve got some bullshit computer model that shows that the discos yield half a per cent less than they seem to. The guy’s faxing it over now.’

‘You couldn’t fax me a copy when you get it, could you?’ Jamie asked.

‘All right,’ said Frewer. ‘But what am I going to do with my discos?’

Jamie winked at me. ‘Well, they’re two points cheaper. Why not buy some more? Off Bloomfield Weiss.’

‘Are you sure about this?’ Frewer asked.

‘Course I’m sure. As I said, Ricardo’s on the case.’

So Frewer trotted off to buy twenty million more bonds from Bloomfield Weiss.

But first he sent through his fax. I was waiting by the machine, and took it over to Jamie. It was written by a Ph.D. and used all kinds of arcane mathematical language to prove that the method that everyone was using to calculate the yield on Argentine Discounts was all wrong. I didn’t understand a Greek letter of it. But I did understand that Bloomfield Weiss were trying to screw us.

‘This is all crap!’ Jamie said.

‘Do you understand it?’

‘Of course not. That’s the whole point. Let’s show it to Ricardo,’ Jamie said.

We crossed the square to Ricardo’s desk. He was on the phone, but when he saw the look on Jamie’s face, and the way he was holding the fax, he put it down. Pedro, too, hung up. Pedro’s short dark hair was plastered to his forehead. He was not having a good day.

‘What have you got?’ Ricardo asked.

Jamie handed him the fax.

‘ Carajo !’ Ricardo muttered, and handed it on to Pedro. Then to me. ‘Can you give a copy of this to Charlotte? We need one of her people to come up with a response. The quants out there will want some numbers to get into.’

I nodded, but hovered. I wanted to hear what Ricardo was going to do. He let me stay.

‘OK, so Bloomfield Weiss are doing their best to screw us,’ he went on. ‘They’re flooding the market with bonds, and bad-mouthing the deal to try to get their customers to sell. They want to hurt us. And they have ten times our capital to do it with. Where are the discos trading now, Pedro?’

‘Sixty-six and a half to sixty-seven.’

‘And we’ve got what, eight hundred and fifty million?’

‘Eight hundred and fifty-six.’

This was turning into a gigantic struggle. We were buying hundreds of millions of dollars of bonds and Bloomfield Weiss were selling even more. The price was going down. That meant there were more sellers than buyers. It meant Bloomfield Weiss were winning.

And Bloomfield Weiss had more fire-power than us. With ten times our capital they could afford to carry a much bigger position than we could. We couldn’t afford to buy discos for ever. Bloomfield Weiss could afford to sell them.

Now, for the first time, Ricardo looked worried. He was frowning deeply, and I noticed his wedding ring flying from finger to finger of his left hand. He called together some of the other traders, and told them what was happening. ‘We can’t let them win this one,’ he said. ‘It’s much too public. The world can see what’s going on here. That’s why Bloomfield Weiss sent out this note. They want everyone to know that this is a struggle between us and them. Those bonds have to go up.’

‘Can’t we just keep buying?’ asked Dave.

Ricardo shook his head. ‘We’re way over our limits already. We can hide some of it in Dekker Trust, but we can’t carry a bigger position for any length of time. If we buy more, we have to know it will work.’

Jamie had explained to me that the regulators placed limits on the maximum size of any bond position. Dekker had developed all sorts of ways round these limits, but apparently Ricardo was only willing to go so far.

‘This doesn’t make sense,’ said Dave. ‘It’s a four-billion-dollar issue, and we know three billion is locked away with accounts who will never sell. That leaves a billion, and we’ve got most of that. So where are Bloomfield Weiss getting their bonds?’

‘They have to be selling short,’ said Pedro. ‘I would have known if they’d been sitting on that many bonds.’

‘So they’re borrowing them,’ said Ricardo. ‘From whom, I wonder.’

There was silence. Bloomfield Weiss had flooded the market with bonds, bonds they didn’t own. Pedro thought they must have done this by selling short, which meant borrowing bonds from a friendly holder to sell. Of course, when this friendly holder wanted his bonds back, Bloomfield Weiss would have to buy them out of the market. Bloomfield Weiss’s bet was that by then the price would have fallen so that they could make a large profit. And by that time, they might have forced Dekker out of the market, too.

It wasn’t just fifteen to twenty million dollars at stake here, although that was important enough. It was the future of Dekker Ward in Latin America.

My brain raced. Over the previous couple of days I had read some back copies of the trade press from 1992 when Argentina had negotiated its Brady plan. I had particularly focused on the genesis of the Discounts.

‘It might be US Commerce Bank.’ My voice was hoarse, almost a squeak.

They all turned to me. They were listening.

I cleared my throat. ‘US Commerce Bank. They were the biggest holders of Argentine bank debt in 1992. During the Brady plan negotiations, they insisted on swapping all their bank debt for Discounts, which they preferred to the other classes of bonds for some accounting reason. They may still have them.’

There was silence. Ricardo was watching me closely.

‘Hey, Carlos! Over here!’ Carlos Ubeda stuck his head up from his desk, and hurried over. ‘US Commerce have been trying to break into our market for a while now, haven’t they?’

‘Yes. But they have no credibility. They were only in two deals last year.’

‘So how would they respond to co-lead-managing the biggest deal of the year?’

‘I think they’d jump at it.’

‘I hope you’re right,’ said Ricardo grimly, and he picked up the phone.

I rushed off to make a copy of the Bloomfield Weiss fax for Charlotte. She was sure it was crap and she said she had a pet nuclear physicist who would be able to prove it. I went back to the square, to find everyone subdued, waiting. Frewer and Alejo called back, asking what was going on. Jamie stalled them charmingly. Pedro was getting hit with more and more bonds. The rest of us were lying as low as we could.

It took Ricardo several phone calls. Pedro was holding his price at sixty-six, but he was hurting.

Then, at about six o’clock, Ricardo put down his phone and clapped his hands. The room fell silent, as all phones went on hold.

‘It turns out Nick was right. US Commerce Bank have seven hundred million dollars of Argentine Discounts, all of which they’ve been happy to lend to Bloomfield Weiss. Until today, that is. In an hour, Bloomfield Weiss will receive a demand to deliver seven hundred million dollars of discos back to US Commerce by twelve o’clock tomorrow. And there’s only one place they can get them. Here.’

You could feel the glee around the room.

Dekker Ward bought bonds long into the night.

Seven fifteen the next morning. I had slept little and I suspected few of the others had. But we all felt fresh, and ready to work. We gathered round Ricardo.