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Coco Loco! DOJ Slaps Deutsche Bank With $14 BILLION Demand Related To MBS (6% CoCo Bond Yield Spikes To 11.3%)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

The US Department of Justice just slapped Deutsche Bank with a $14 billion demand related to mortgage-backed security abuses.

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The reaction in terms of Deutsche’s stock price was swift.

dbfalls

Of course, there will be negotiations between DOJ and Deutsche Bank to lower the demand amount. Consider the DOJ’s demand the opening salvo.

Then again, how low can Deutsche Bank go? They have declined precipitously since the financial crisis (and The Great Recession) and all the ECB’s negative deposit rates and all the ECB’s asset purchases can’t putt Deutsche Bank together again.

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In other words, in the long-run, today’s decline in Deutsche Bank’s stock price is barely noticeable.

Deutsche Bank’s contingent convertible (Coco) yield for their 6% bond just rose to 11.3%.

dbcoco

Correction! DB’s 6% Coco bond yield just rose to 11.58%.

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If Deutsche Bank cannot negotiate a substantial reduction in the DOJ’s demands, then their top management will likely be spending more time at the Coco Locos beach bar.

coco-loco-beach-bar

 

 

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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