Rating Agencies Finally Get The NRUC Wake Up Call
When Zero Hedge first discussed the plethora of problems at National Rural Utilities Cooperative Finance Corporation (aka NRUC) over 4 months ago, two things happened very quickly: the company's CDS blew up from 100 bps to over 250 bps overnight, and the company promptly issued a derogatory press release ridiculing everyone and everything associated with Zero Hedge (they were the first but certainly not the last). Immediately thereafter, liked under the advice of counsel, NRUC
promptly retracted the press release but not before The Business Insider managed to keep a
record for posterity. Among the amusing points NRUC's PR touched upon were the following:
On March 8, an anonymous blogger who goes by the alias Tyler Durden (the same name as Brad Pitt’s psychopathic character in the movie “Fight Club”) wrote an unflattering opinion of CFC securities in his blog “Zero Hedge.” The blog, which circulated across the Internet, complained that CFC’s credit default swaps (CDS) were trading too tightly to U.S. Treasuries, a sign of strength. (TD: Looks like the analysis the "circulated across the Internet" hit on a nerve or two, as investors were focused not so much on certain psychopathic characters but rather on the fundamental risk I had exposed, and the company's CDS exploded by 150% in a matter of minutes.)
“The blogger repeats the same old allegations made a few years ago, which are every bit as flawed today as they were then,” said Mike O’Brien, CFC vice president of Corporate Communications. “We do not believe the blogger’s report reflects an understanding of our financial condition or our results of operations, cashflow, ability to service our debt obligations or the strength of our loan portfolio.”
As the Company's CDS has flatlined at a level well over double where it was before Zero Hedge analyzed NRUC, I am not so sure just how flawed my allegations may have been.
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