Dan Zwirn Quoted in Financial Times Article

The Financial Times' Tracy Alloway has published a new article titled, "Markets: The debt penalty" that discusses the shrinking of Wall Street bond-trading desks as banks hold more capital. Due to the financial crisis, big banks have reduced their business in dealing with corporate bonds, writes Alloway, as the amount of bond risk the banks hold is lessened.

Later, Alloway discusses exchange traded funds (ETFs) and their expansion to track corporate debt. In May, Fed Chairman Ben Bernanke hinted that the US central bank might phase down the emergency bond-buying program it launched during the financial crisis. When this occurred, market interest rates began to rise:

“When that happened, volume went to zero,” says Dan Zwirn, managing partner of Arena Investors, a hedge fund focused on special-situation lending to companies."

Alloway went on to discuss the lack of liquidity in the secondary bond market. While some officials believe that an increase of liquidity in the market would help if the corporate bond bubble burst. But Dan Zwirn said, "As soon as the dealer gets out of balance to a point where he can be accused of prop trading, he says I’m not doing it."

Click here to read the full article (registration required).



Dan Zwirn is Managing Partner of Arena Investors, and is married to Monica Keany.