NIR Group

[QaB2i]

I've given that wise statement a lot of thought.

I think its safe to say that some type of derivative may become 'active' when a Toxic note is bought/sold.
one of the problem i am running into now is how dark pools effect
these Toxic notes. Or better still if the Toxic note remains on the ground floor of the casino and the derivative bets are
bought/sold upstairs etc etc.
That would go some way to explain some of the crazy math and the 'who the heck' is buying all this <Symb>....here was a thought:
It can be assumed as fact that a Toxic Conv Debt/note always sends the referenced equity spinning towards 0.000# and the Tox is so powerful that it almost always eventually succeeds. So, why wouldnt the Holder bet on it?

Lets be Long the crappy debt, then create /buy a derivative that lets Long Debt holder sell a gazillion shares @ PAR
Its not an exchange trade, its not a bet the Debt issuer knows about, its not insurance (although it acts like it)

An early D product, designed by the Debt buyer, held by the Note holder(s), buying a bespoke Deriv' from <?>
Problem I have now is who in their right mind gets on the other side of that bet and at what cost? Wouldn't that same D seller of coverage of gazillion shares at Par be on the hook if suddenly a seemingly 000# stock came back to life and did the markey dance?

Anyway, the very existence of "Toxic" investments sends the stock down in price as the rot sets in. Nice, how the 'markey' does the work for the debt/deriv. :)

Conclusion: its a good thing to avoid buying stock in Companies that have debt of a toxic dilutive nature on the balance sheet.
Unless of course the Issuer can pay down the debt with cash catching the derivative seller short and squeezing his bollocks off.