The Default Notice — Not all co-op paper is created equal
- 9fin team
Top News
For the past year and change, as cooperation agreements have proliferated, trading desks had begun to publish quotes on loans and bonds that indicated “co-op” or “non-coop”, or “AHG” or “non-AHG”, indicating if paper was owned by an ad hoc group and had an effective co-op in place.
Whether or not parties believed that these agreements were enforceable, or even good for the market, one thing was for sure: They were having an impact on the actual trading prices of the securities. Often the quotes for co-op paper would be higher than those for non-coop paper, depending on whether or not the co-op was perceived to have a critical mass of holdings that would force a company to cut a deal through them. Sometimes non-coop paper would be quoted higher because there was simply more liquidity.